Table
of Contents
UNITED
STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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SCHEDULE
14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
x
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Filed by a Party other than the
Registrant
o
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Check the appropriate box:
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o
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Preliminary Proxy Statement
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o
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Confidential, for
Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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x
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Definitive Proxy Statement
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o
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Definitive Additional Materials
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o
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Soliciting Material Pursuant to
§240.14a-12
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ORLEANS
HOMEBUILDERS, INC.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the
appropriate box):
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x
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No fee required.
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o
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to
which transaction applies:
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(2)
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Aggregate number of securities to
which transaction applies:
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(3)
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Per unit price or other underlying
value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and state how it was
determined):
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(4)
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Proposed maximum aggregate value of
transaction:
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(5)
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Total fee paid:
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o
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Fee paid previously with preliminary
materials.
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Check box if any part of the fee is
offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the date
of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration
Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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Table of Contents
ORLEANS
HOMEBUILDERS, INC.
3333 Street Road, Suite 101
Bensalem, Pennsylvania 19020
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 4,
2008
To the Stockholders of Orleans Homebuilders, Inc.:
The Annual Meeting
of Stockholders of Orleans Homebuilders, Inc. (the Company) will be held
on Thursday, December 4, 2008 at 11:00 a.m., Philadelphia time, at
the offices of WolfBlock LLP, 1650 Arch Street, 22nd Floor, Philadelphia,
Pennsylvania 19103 (Conference Room 5), for the following purposes:
1. Election of directors;
2. Approval of the Orleans
Homebuilders, Inc. Amended and Restated Stock Award Plan to increase the
number of shares of Common Stock authorized for issuance under the plan from
400,000 shares to 1,000,000 shares; and
3. Transaction of such other business
as may be properly brought before the meeting or any adjournment thereof.
The Board of
Directors has fixed the close of business on October 27, 2008 as the
record date for determining the stockholders entitled to notice of and to vote
at the meeting. Only stockholders of
record on the transfer books of the Company at the close of business on that
date are entitled to notice of and to vote at the meeting.
It
is important that your shares be represented and voted at the meeting. Please mark, sign, date and return the
enclosed proxy in the envelope provided for that purpose even if you plan to
attend the meeting. A person giving a
proxy has the power to revoke it by written notice to the secretary of the
Company, and any stockholder who is present at the meeting may revoke the proxy
and vote in person. Stockholders who
hold their shares through a broker (in street name) should follow the voting
instructions provided by their broker.
October 28, 2008
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By Order of the Board of
Directors
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MICHAEL
T. VESEY
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President, Chief Operating
Officer and Director
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Table of Contents
ORLEANS
HOMEBUILDERS, INC.
Corporate
Headquarters:
3333 Street
Road, Suite 101
Bensalem, Pennsylvania 19020
Telephone Number: (215) 245-7500
PROXY
STATEMENT
This proxy
statement, which is being sent to stockholders on or about November 3,
2008, is furnished to stockholders of Orleans Homebuilders, Inc. (the
Company) in connection with the solicitation of proxies for the Annual
Meeting of Stockholders (the Annual Meeting), by order of the Board of
Directors of the Company. The meeting
will be held on Thursday, December 4, 2008, at
11:00 a.m.,
Philadelphia time, at the offices of WolfBlock LLP,
1650
Arch Street, 22nd Floor, Philadelphia, Pennsylvania 19103 (Conference Room 5),
for the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders.
The record date of
stockholders entitled to notice of and to vote at the meeting has been fixed as
the close of business on October 27, 2008.
Only stockholders of record at the close of business on the record date
shall be entitled to notice of and to vote at the meeting.
As of October 27,
2008, the Company had outstanding 18,839,141 shares of Common Stock (excluding
98,990 shares held in treasury), par value $0.10 per share, which are eligible
to be voted at the Annual Meeting. Each
share of Common Stock is entitled to one vote.
Table of Contents
VOTING AND REVOCABILITY OF PROXIES
Each share of
outstanding Orleans Homebuilders, Inc. (the Company) Common Stock, par
value $0.10 per share (Common Stock), entitles the holder to one vote,
without cumulation, on each matter to be voted upon at the Annual Meeting. Under the Companys by-laws, the holders of a
majority of the shares of Common Stock issued and outstanding and entitled to
vote at the Annual Meeting shall constitute a quorum for the transaction of
business at the Annual Meeting. Shares
of Common Stock present in person or represented by proxy (including shares
which abstain or do not vote with respect to one or more of the matters
presented for stockholder approval) will be counted for purposes of determining
whether a quorum exists.
Shares of the
Companys Common Stock represented by any unrevoked proxy in the enclosed form
will be voted in accordance with the specifications made on the proxy, if it is
properly executed and received prior to voting at the Annual Meeting. Any properly executed proxy received on a
timely basis on which no specification has been made by the stockholder will be
voted (1) FOR the election as directors of the nominees listed herein
(or for such substitute nominees as may be nominated in the event the initial
nominees become unavailable), (2) FOR approval of the Orleans
Homebuilders, Inc. Amended and Restated Stock Award Plan to increase the
number of shares of Common Stock authorized for issuance under the plan from
400,000 to 1,000,000 shares and (3) in the discretion of the Proxy
Committee of the Board of Directors, upon all other matters requiring a vote of
stockholders which may properly come before the meeting and of which the Board
of Directors was not aware a reasonable time before this solicitation. If the enclosed proxy is executed and
returned, it may, nevertheless, be revoked at any time before it has been
exercised upon written notice to the Secretary of the Company or by delivering
a duly executed proxy bearing a later date.
The proxy shall be deemed revoked if a stockholder is present at the
meeting and elects to vote in person.
The enclosed proxy
is being solicited on behalf of the Board of Directors of the Company and any
costs of solicitation will be borne by the Company. Such costs include preparation, printing and
mailing of the Notice of Annual Meeting of Stockholders, the proxy, this proxy
statement and the Annual Report to Stockholders, which are herewith
enclosed. The solicitation will be
conducted principally by mail, although directors, officers and regular
employees of the Company may solicit proxies personally or by e-mail, telephone
or facsimile. Arrangements will be made
with brokerage houses and other custodians, nominees and fiduciaries for proxy
material to be sent to their principals, and the Company will reimburse such
persons for their reasonable expenses in so doing. The Proxy Committee, selected by the Board of
Directors, consists of Jeffrey P. Orleans, Chief Executive Officer and Chairman
of the Board of Directors of the Company, and Benjamin D. Goldman, Vice
Chairman of the Board of Directors of the Company.
With regard to the
election of directors, votes may be cast in favor of or withheld from each
nominee. Under applicable Delaware law,
votes that are withheld and broker non-votes will be excluded entirely from the
vote and will not affect the outcome of the election of directors, as directors
are elected by a plurality of votes cast.
The proposal to approve the Orleans Homebuilders, Inc. Amended and
Restated Stock Award Plan requires approval by the majority of the shares
present, in person or by proxy, and entitled to vote at the meeting. Under applicable Delaware law, abstentions
with respect to this proposal will have the same effect on the outcome as a
vote against the proposal, and broker non-votes will have no effect on the
outcome of the vote on this proposal.
Jeffrey P. Orleans, Chairman of the Board of Directors and Chief
Executive Officer, controls a majority of the voting power of the Common
Stock. Mr. Orleans has informed the
Company that he intends to vote his shares of Common Stock in favor of the
election as directors of the nominees listed in this Proxy Statement and the
amendment to the Companys Stock Award Plan, which means that the directors
will be elected and the Amendment to the Companys Stock Award Plan will be
approved, regardless of the votes of the Companys other stockholders. Dissenters do not have any appraisal or
similar rights with respect to the election of the directors or the amendment
to the Companys Stock Award Plan.
Table of
Contents
PROPOSAL ONE
ELECTION OF DIRECTORS
The stockholders
are being asked to elect ten directors, who will comprise the entire Board of
Directors of the Company, to serve for the ensuing year and until their
successors are duly elected and qualified.
The nominees are Messrs. Benjamin D. Goldman, Jerome S. Goodman,
Robert N. Goodman, Andrew N. Heine, David Kaplan, Lewis Katz, Jeffrey P.
Orleans, Robert M. Segal, John W. Temple and Michael T. Vesey, all of whom are
currently directors of the Company.
Assuming a quorum is present, the ten nominees receiving the highest
number of votes cast at the meeting will be elected directors. For such purposes, the withholding of authority
to vote or the specific direction not to cast a vote, such as a broker non-vote,
will not constitute the casting of a vote in the election of directors.
In the event that
any nominee for director should become unavailable, which event the Board of
Directors does not anticipate, it is intended that votes will be cast pursuant
to the enclosed proxy for such substitute nominee as may be nominated by the
Board of Directors, unless otherwise indicated by the stockholder on the proxy.
Name
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Age
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Present Position with the Company
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Director Since
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Benjamin D. Goldman
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62
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Vice
Chairman of the Board
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1992
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Jerome S. Goodman(1)(2)
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74
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Director
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2001
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Robert N. Goodman
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56
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Director
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1994
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Andrew N. Heine(2)(3)
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79
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Director
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1994
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David Kaplan(2)(3)(4)
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64
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Director
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1994
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Lewis Katz(1)
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66
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Director
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1987
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Jeffrey P. Orleans(1)
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62
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Chairman of
the Board and Chief Executive Officer
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1983
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Robert M. Segal
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73
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Director
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2002
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John W. Temple(3)(4)
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71
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Director
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2002
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Michael T. Vesey
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49
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Director,
President and Chief Operating Officer
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2001
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(1) Member of the
Executive Committee.
(2) Member of the
Nominating Committee
(3) Member of the Audit
Committee.
(4) Member of the
Compensation Committee.
2
Table of Contents
Directors
Benjamin D.
Goldman was elected the Vice Chairman of the Board in April 1998 and has
been a director since May 1992. From May 1992 until April 1998,
he served as the Companys President and Chief Operating Officer. Mr. Goldman
has been a director of Sterling Bank of New Jersey since March 2002.
Jerome S. Goodman
has been a director since April 2001. Mr. Goodman was a director of
Aetna Inc. from 1988 to May 2001 and retired as Chairman of Travel
One upon the sale of that firm to American Express Company on November 15,
1998. He was a trustee of Resource Asset Investment Trust, a real estate
investment trust, from 1997 to 1999. Mr. Goodman is a director of The
Maine Merchant Bank, LLC.
Robert N. Goodman
has been a director since April 1994. Since 1998, he has served as
President of Resmark Equity Partners, LLC (formerly known as Olympic Realty
Advisors II, LLC), a finance company providing equity and debt capital for
single-family residential homebuilding projects.
Andrew N. Heine
has been a director since April 1994. Mr. Heine is a private investor
who had previously been a practicing attorney and was a director of Citizens
Communications Company from 1975 until 2005.
David Kaplan has
been a director since April 1994. Since 1996, Mr. Kaplan has been a
principal in Autumn Hill Capital, Inc., a real estate advisory and
investment banking firm, and managing partner of Kingsbridge Partners LLC, a
real estate investment firm. Prior to that time, he was a principal of Victor
Capital Group, L.P., which engaged in real estate advisory services and
investment banking.
Lewis Katz has
been a director since 1987. From 1972 to
1997, he was a partner in the law firm of Katz, Ettin & Levine, P.A.,
Cherry Hill, New Jersey and he is now Of Counsel to such law firm. Mr. Katz
is a director of Central Parking Corporation.
Jeffrey P. Orleans
has been a director since 1983 and has served as the Companys Chairman of the
Board and Chief Executive Officer since September 1986. From September 1986
to May 1992, he also served as the Companys President. In addition, Mr. Orleans
was a trustee of Pennsylvania Real Estate Investment Trust from 1986 until June 2004.
Robert M. Segal
has been a director since August 2002. Since February 1, 2007, Mr. Segal
has served as Senior Counsel for the law firm WolfBlock LLP. For more than five
years, prior to assuming his position as Senior Counsel, Mr. Segal was a
partner in that law firm, which serves as the Companys outside general
counsel.
John W. Temple has
been a director since April 2002. For more than five years, Mr. Temple
has been the President and Chief Executive Officer of Temple Development
Company, a real estate development company.
Michael T. Vesey
has been a director since September 2001 and has served as the Companys
President and Chief Operating Officer since April 1998. Mr. Vesey is the brother of Mr. Thomas
R. Vesey, the Companys Executive Vice President, Southern Region.
Director Independence
Under the applicable
rules of the American Stock Exchange, for a director to be considered
independent, the Board of Directors must affirmatively determine that the
director does not have a material relationship with the Company that would
interfere with the exercise of independent judgment. The Board of
Directors has affirmatively determined that each of the following individuals
is an independent director of the Company as defined by the American Stock
Exchange: Jerome S. Goodman, Robert N. Goodman, Andrew N. Heine, David Kaplan,
Lewis Katz and John W. Temple. Accordingly, a majority of the members of
the Companys Board of Directors has been determined to meet the American Stock
Exchanges standards for independence. The
Companys independent directors meet in executive session as often as necessary
to fulfill their duties, but no less than annually.
3
Table of Contents
Committees and Meetings of the Board of Directors
The Board of
Directors held eight meetings and acted three times by written consent during
the fiscal year ended June 30, 2008 (Fiscal 2008). During Fiscal 2008 all incumbent directors
attended in person or by teleconference at least 87% of the total number of
meetings of the Board of Directors and meetings of the committees of the Board
of Directors on which they served during their incumbency, with the exception
of Mr. Michael T. Vesey, who was unable to attend three Board of Directors
meetings during his medical leave of absence, and Mr. Robert N. Goodman,
who attended two of the three Audit Committee meetings held while he was a
member of the Audit Committee in Fiscal 2008.
The Company has
standing Executive, Audit, Nominating and Compensation Committees.
Executive
Committee
The Executive
Committee is comprised of Jeffrey P. Orleans (Chairman), Jerome S. Goodman and
Lewis Katz. The Executive Committee has
and exercises the authority of the Board of Directors in the management of the
business and affairs of the Company between meetings of the Board of
Directors. During Fiscal 2008, the
Executive Committee met once.
Audit
Committee
The Audit
Committee is comprised of John W. Temple (Chairman), David Kaplan and Andrew N.
Heine. On December 6, 2007, David
Kaplan replaced Robert N. Goodman on the Audit Committee. During Fiscal 2008, the Audit Committee met
six
times and each director on the
committee attended each meeting.
The Audit
Committee is governed by the Companys Audit Committee Charter. A copy of the Charter was attached as
Appendix A to the Companys proxy statement for the 2007 Annual Meeting of
Stockholders and may also be obtained free of charge by contacting the Company
at the address appearing on the first page of this Proxy Statement to the
attention of the Chief Financial Officer.
As set forth in the Charter, the
principal purpose of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibility to the stockholders, potential
stockholders, the investment community and others relating to the integrity and
audits of the Companys financial statements, the Companys compliance with
legal and regulatory requirements, the performance of the Companys systems of
internal accounting and financial controls and financial reporting processes,
and the qualifications and independence of the Companys outside auditor. In
discharging its oversight role, the Audit Committee is empowered to address any
matter brought to its attention with full access to all books, records,
facilities and personnel of the Company.
The Audit
Committee has the sole authority to select the outside auditors who will
perform the audit of the Companys financial statements or other audit, review
or attest services, considering independence and effectiveness, and to approve
the fees and other compensation to be paid to the outside auditors. The Audit Committee is also responsible for
overseeing the audit and audit-related services performed by the outside auditors,
including the responsibility and authority to resolve disagreements between
management and the auditors regarding financial reporting. The outside auditors
are to report directly to the Audit Committee and the Audit Committee is to
provide an open avenue of communication among management, appropriate Company
personnel, the outside auditors and the Board of Directors.
Nominating
Committee
The Nominating
Committee is comprised of Andrew N. Heine, David Kaplan and Jerome S.
Goodman. The Nominating Committee
considers and makes recommendations to the Board of Directors with respect to
board qualifications, structure and membership.
A Charter governing the Nominating Committee was adopted by the Board of
Directors in August 2004. A copy of
the Charter governing the Nominating Committee was attached as Appendix B to
the Companys proxy statement for the 2007 Annual Meeting of Stockholders and
may also be obtained free of charge by contacting the Company at the address
appearing on the first page of this Proxy Statement to the attention of
the Chief Financial Officer. The Charter
is not available on the Companys website. The
4
Table of Contents
Nominating
Committee held one meeting during Fiscal 2008 to make a recommendation to the
Board of Directors as to director nominees to be voted upon at the 2007 Annual
Meeting.
Compensation
Committee
The Compensation
Committee is comprised of David Kaplan (Chairman) and John W. Temple. The Compensation Committee reviews and makes
recommendations to the Board of Directors with respect to the Companys
compensation plans, including incentive compensation and equity-based plans,
policies and programs, and administers the Companys equity compensation
plans. Under the Compensation Committee
Charter, the Compensation Committee is also directly responsible for
establishing the salary, bonus and other compensation of the Companys
executive officers other than the Chief Executive Officer. With respect to the Chief Executive Officer,
the Committee is responsible for making recommendations to the Board of
Directors with respect to his salary, bonus and other compensation. The
Compensation Committee met seven times during Fiscal 2008. A copy of the Charter of the Compensation
Committee was attached as Appendix C to the Companys proxy statement for the
2007 Annual Meeting of Stockholders and may also be obtained free of charge by
contacting the Company at the address appearing on the first page of this
Proxy Statement to the attention of the Chief Financial Officer.
See Compensation
Discussion and Analysis beginning on page 11
for
additional information.
Code of Business Conduct & Ethics
The Company has
adopted a Code of Business Conduct & Ethics that includes provisions
ranging from restrictions on gifts to conflicts of interest, and portions of
such code are intended to meet the definition of a code of ethics under
applicable Securities and Exchange Commission rules. All directors,
officers and managers, including the principal executive officer, principal
financial officer, controller and persons performing similar functions, are
required to affirm in writing their acceptance of the code. Copies of the
code can be obtained free of charge by contacting the Company at the address
appearing on the first page of this proxy statement to the attention of
the Companys Chief Financial Officer.
Communication with the Board of Directors
A stockholder who
wishes to communicate with the Board of Directors, or individual directors, may
do so in writing by directing correspondence to a director or directors at the
address appearing on the first page of this proxy statement.
Directors Attendance at Annual Meetings of
Stockholders
It is the policy
of Companys board of directors to expect that all directors attend annual
meetings of stockholders except where the failure to attend is due to
unavoidable circumstances or conflicts.
Eighty
percent of the members of the board of directors attended, either in person or
via teleconference, the Companys Annual Meeting of Stockholders held on December 6, 2007.
Director Compensation
Each director who is not an employee of the
Company is entitled to receive a basic fee of $6,000 annually for his service
on the Companys Board of Directors. In addition, each non-employee director is
entitled to receive an attendance fee of $5,000 for each board meeting ($2,500
if attending via teleconference) and $500 for each committee meeting. Any
director who is also an employee of the Company is not separately compensated
for his service as a director. In
addition to cash compensation, the Company has in the past granted directors
options to acquire Common Stock; however, no options were awarded to Directors
in Fiscal 2008.
5
Table of Contents
The following table sets forth information as
to all compensation paid by the Company for services in the Companys last
fiscal year ended June 30, 2008 to the Companys directors.
Name
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Fees
Earned or
Paid in
Cash ($)
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Stock
Awards
($)
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Option
Awards
($)
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Non-Equity
Incentive Plan
Compensation ($)
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Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings ($)
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All Other
Compensation ($)
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Total ($)
|
|
|
|
|
|
|
|
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|
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Benjamin D.
Goldman (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
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Jerome S. Goodman
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$
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29,000
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|
|
|
|
|
|
|
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$
|
29,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Robert N. Goodman
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|
25,000
|
|
|
|
|
|
|
|
|
|
|
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25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Andrew N. Heine
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|
32,000
|
|
|
|
|
|
|
|
|
|
|
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32,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Kaplan
|
|
36,500
|
|
|
|
|
|
|
|
|
|
|
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36,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Lewis Katz
|
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28,500
|
|
|
|
|
|
|
|
|
|
|
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28,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey P.
Orleans (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Robert M. Segal
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|
31,000
|
|
|
|
|
|
|
|
|
|
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31,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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John W. Temple
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32,500
|
|
|
|
|
|
|
|
|
|
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32,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael T. Vesey
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(1)
Each of Messrs. Goldman, Orleans and
Vesey are employees of the Company who are not eligible for compensation for
their service as members of the Board of Directors.
THE BOARD OF
DIRECTORS RECOMMENDS VOTING FOR THE ELECTION OF EACH OF THE NOMINEES FOR
DIRECTOR.
6
Table of Contents
PROPOSAL TWO
APPROVAL OF THE ORLEANS HOMEBUILDERS, INC.
AMENDED AND RESTATED STOCK AWARD PLAN
The Board of
Directors adopted as of October 17, 2008, subject to stockholder approval,
and now recommends for approval by the stockholders, the Orleans Homebuilders, Inc.
Amended and Restated Stock Award Plan (as amended and restated, the Stock
Award Plan), which is an amendment to and restatement of the Orleans
Homebuilders, Inc. Stock Award Plan, for the purpose of increasing the
number of shares of Common Stock available under the Stock Award Plan from
400,000 shares of Common Stock to 1,000,000 shares of Common Stock. The following is a summary of the material
terms of the Stock Award Plan, and is qualified in all respects by the text of
the Stock Award Plan, a copy of which is attached as Appendix B to this Proxy
Statement filed by the Company with the Securities and Exchange Commission.
Key Provisions of the Stock Award Plan
Under the Stock
Award Plan, the Company may make grants of shares of the Companys Common
Stock, which may or may not be subject to restrictions, to those persons
eligible to participate.
Purpose
The purpose of the
Stock Award Plan is to advance the interests of the Company, its stockholders
and its subsidiaries by providing selected employees, upon whom the Companys
sustained growth and financial success depend, the opportunity to acquire or
increase their proprietary interest in the Company through issuances of shares,
and to work in conjunction with the provisions of the Companys incentive
compensation plans, so as to permit all or a portion of the bonus awards
payable under the Companys incentive compensation plans to be paid by means of
a transfer of shares under the Stock Award Plan. The Stock Award Plan is also
to provide employees receiving shares with additional incentive to devote
themselves to the future success of the Company and to improve the ability of
the Company to attract, retain and motivate individuals upon whom the Companys
sustained growth and financial success depend.
Number of Shares Subject to Grants
The Stock Award
Plan provides for the grant of stock awards (each, an Award) of up to an
aggregate of 1,000,000 shares of the Companys Common Stock, assuming approval
of the Stock Award Plan being submitted for stockholder approval at the Annual
Meeting. The number of shares of Common Stock which may be granted under the
Stock Award Plan is subject to adjustment to reflect changes in the Companys
capitalization. Any Common Stock which has been conveyed back to the Company
pursuant to the terms of the Award under which the Common Stock was granted
will thereafter be available for further grant under the Stock Award Plan.
Administration
The Stock Award
Plan is administered by a committee or committees designated by the Board of
Directors or by the Board of Directors itself in its administrative capacity
with respect to the Stock Award Plan (any committee of the Board of Directors
with administrative responsibility with respect to the Stock Award Plan, or the
Board of Directors itself, as the case may be, which committee is currently the
Companys Compensation Committee, is referred to as the Stock Award Plan
Committee). Subject to the conditions set forth in the Stock Award Plan, the
Stock Award Plan Committee has full and final authority to determine the number
of shares of Common Stock that shall be
subject to any Award, the individual employees to whom and the time or times at
which such Awards shall be granted, the purchase price, if any, for the shares
subject to any Award, and the terms and provisions of the Award agreement,
which may vary from Award to Award, all at the discretion of the Stock Award
Plan Committee. The Committee has the power and authority to (i) interpret
the Stock Award Plan, (ii) adopt, amend and revoke rules and
regulations for its administration that are not inconsistent with the express
terms of the Stock Award Plan, and (iii) waive requirements relating to
formalities or other matters that do not either modify the substance of the
rights intended to be granted by Awards or constitute a material amendment for
any other purpose
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under
the Internal Revenue Code of 1986, as amended (the Code). The actions of the
Committee are final, binding and conclusive on all parties in interest.
Participants
Awards may be
granted under the Stock Award Plan to any person who is an employee of the
Company or any of its subsidiaries. As of October 27, 2008, there were
approximately 447 employees eligible to participate in the Stock Award Plan.
The Stock Award Plan Committee has the sole discretion to determine whether an
individual is an employee eligible to participate in the Stock Award Plan.
Conditions of Vesting and Forfeiture
The Stock Award
Plan Committee may specify in an agreement governing the terms of an Award (an Award
Agreement) any conditions under which the recipient of such Award may be
required to forfeit the shares of Common Stock covered by such Award either
upon termination of the recipients employment or otherwise, and the terms and
conditions under which an Award may become vested.
Amendment, Suspension or Termination
The Board may at
any time and from time to time amend, suspend or terminate the Stock Award
Plan, but may not, without the approval of the Companys stockholders, change
the class of individuals eligible to receive an Award or increase the maximum
number of shares subject to Awards that may be granted under the Stock Award
Plan.
Change in Control
In the event there
is a change in control with respect to the Company, as that is defined in the
Stock Award Plan, the Stock Award Plan Committee may take whatever action it
deems necessary or desirable with respect to Awards which have not yet fully
vested, including, without limitation, accelerating the vesting date applicable
to such Awards.
Effective Date and Term
The effective date
of the original Orleans Homebuilders, Inc. Stock Award Plan was October 1,
2003. The Stock Award Plan, as amended
and restated, was adopted on October 17, 2008. The Stock Award Plan will terminate on the
tenth anniversary of the date of its adoption unless earlier terminated by the
Board of Directors at its discretion.
Terms of Award
The Stock Award
Plan Committee will determine the terms and conditions, if any, applicable to
Awards, which may include a period during which the Common Stock subject to the
Award may not be sold, assigned, transferred, pledged or otherwise encumbered,
conditions or a period of time before which the Awards are not vested, and
conditions in which the Awards are forfeited back to the Company, and a
purchase price that is required to be paid for receipt of an Award. Unless
otherwise determined by the Stock Award Plan Committee, a recipient of an Award
will have the same rights as an owner of Common Stock, including the right to
receive cash distributions and to vote the Common Stock, assuming the purchase
price for the shares, if any, has been paid. Awards under the Stock Award Plan are
to be evidenced by a written Award Agreement in such form as is approved by the
Stock Award Plan Committee.
Certain Federal Income Tax Consequences
The Stock Award
Plan is not subject to the provisions of Section 401(a) of the Code.
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If an Award is
granted under the Stock Award Plan, the recipient or the shares subject to the
Award may or may not be subject to restrictions during a vesting period
established with respect to the Award. If an Award is fully vested as of the
date it is granted, the excess of the value of the shares transferred pursuant
to the Award over the amount, if any, that the recipient is required to pay for
the shares is treated as ordinary compensation income to the recipient, and
will be a deductible compensation expense to the Company (subject to
limitations on deductibility generally applicable to compensation payments). If
the Award is subject to restrictions during a vesting period that are properly
treated as constituting a substantial risk of forfeiture for federal income
tax purposes, the recipient of an Award will generally include in his or her
taxable income for federal income tax purposes the value of the shares over the
amount, if any, paid for the shares, as of the dates the shares become vested.
This income will be treated as ordinary compensation income in determining his
or her tax liability for the relevant year (as explained below).
In general, if
property is transferred to an individual in connection with arrangements
related to compensation for services provided by that individual, the excess of
the fair market value of the property transferred over the purchase price paid
for the property, if any, is treated as taxable compensation income (that is
taxed as additional ordinary income). In the case of an Award granted for no
purchase price, the full value of the shares transferred will be treated as
compensation income of the grantee. This income must be recognized, absent an
election under Section 83(b) of the Code, as explained below, at the
time the shares cease to be subject to a substantial risk of forfeiture.
If shares
transferred pursuant to an Award are subject to forfeiture on, for example, a
termination of employment of the recipient prior to the date the shares vest,
that forfeiture possibility would normally be treated as constituting a
substantial risk of forfeiture for these purposes. The recipient of such an
Award would normally recognize the value of the shares granted as they become
vested, taking into account the value not as of the date the Award was granted,
but as of the vesting date of the shares. On a sale of the shares, the Award
recipient would calculate his or her capital gain or loss by reference to the
value of the shares on the vesting date, and would determine the character of
the gain or loss as long or short term by measuring the holding period starting
as of the vesting date.
The recipient of
an Award that is subject to vesting may, however, make an election under Section 83(b) of
the Code. Such an election will cause the recipient to recognize an amount of
ordinary income equal to the fair market value of the shares transferred as of
the date the Award is granted (rather than as of the vesting date), and on a
subsequent sale of those shares, the holding period would also be calculated by
reference to the grant date rather than the vesting date. If the shares are
subsequently forfeited, the employee may not be able to claim a loss under
applicable tax rules (which only permit recognition of a loss if there has
been a purchase price paid for the shares, and only to the extent of such
purchase price).
To make an
election under Section 83(b) of the Code, a recipient of an Award
that is subject to vesting must file the election no later than 30 days after
the date the Award has been granted. This is done by filing a written statement
with the IRS office where the employee files his or her returns, and a copy
with the Company. A copy of the filing must also be included in the participants
tax return for the year of the purchase. The 83(b) election statement must
contain the following information: the name, address and taxpayer
identification number of the taxpayer, a description of the shares received,
the date of the Award and the taxable year for which the election is made, the
nature of the restrictions on the shares, the fair market value of the shares
as of the Award date, the purchase price paid for the shares, if any, and a
statement indicating that copies of the election have been furnished to other
persons as required. The statement must be signed and must indicate that it is
made under Section 83(b) of the Code. A copy of the 83(b) election
is also required to be filed along with the Award recipients federal income tax
return for the year in which the Award was granted.
In connection with
any event relating to an Award, the Company may require the recipient to remit
or otherwise make available to the Company an amount sufficient to satisfy any
federal, state and/or local withholding tax requirements prior to the deliver
or transfer of any certificate for such shares or take whatever other action
the Company deems necessary to protect its interests with respect to tax
liabilities. The Companys obligations under the Stock Award Plan shall be
conditioned on the Award recipients compliance to the Companys satisfaction,
with any tax withholding requirement.
Awards are subject to the limitations on deductibility of executive
compensation under Section 162(m) of the Code.
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The Employee Retirement Income Security Act of 1974
The Stock Award
Plan is not subject to any provisions of the Employee Retirement Income
Security Act of 1974.
THE BOARD OF DIRECTORS RECOMMENDS
VOTING FOR THE PROPOSAL TO APPROVE THE ORLEANS HOMEBUILDERS, INC. AMENDED AND
RESTATED STOCK AWARD PLAN
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COMPENSATION DISCUSSION AND ANALYSIS
The following
Compensation Discussion and Analysis describes our executive compensation
philosophy, objectives and policies and the compensation of our executive
officers who are identified in the Summary Compensation Table below.
The Compensation
Committee
Committee
Members and Independence
The Compensation
Committee consists of Messrs. David Kaplan (Chairman) and John W. Temple,
both of whom have been determined to meet the American Stock Exchanges
standards for independence. Each member
is a non-employee director as defined under Rule 16b-3(b)(3) of the
Exchange Act, and an outside director as defined in Treasury Regulations Section 1.162-27,
promulgated under the Code. The
Compensation Committee reviews and determines salaries, bonuses and other forms
of compensation for executive officers of the Company, other than the Chief
Executive Officer. With respect to the
Chief Executive Officer, the Compensation Committee recommends the Chief
Executive Officers compensation to the Board of Directors for its
approval. The Compensation Committee
approves any equity grants and any performance bonus criteria for the Chief
Executive Officer.
Compensation
Committee Charter
A copy of the
Compensation Committees Charter was attached as Appendix C to the Companys
proxy statement for the 2007 Annual Meeting of Stockholders. Copies of the Compensation Committees
Charter can be obtained free of charge by contacting the Companys Chief
Financial Officer at the address appearing on the first page of this Proxy
Statement.
Compensation Committee
Interlocks and Insider Participation
For Fiscal 2008,
no employee or officer or former employee or officer of the Company was a
member of the Compensation Committee and there were no relationships involving Messrs. Kaplan
and Temple, the members of the Companys Compensation Committee, required to be
reported pursuant to Item 404 of Regulation S-K.
Role
of Committee
The Compensation
Committee reviews and makes recommendations to the Board of Directors regarding
the Companys compensation plans, including incentive compensation and
equity-based plans, policies and programs.
The Compensation Committee also approves grants and awards of
equity-based compensation, except to the extent the authority to do so is
specifically assigned or delegated to another committee of the Board of
Directors or to the Board of Directors in its entirety. The Compensation Committee also reviews and
approves, for the Chief Executive Officer and other executive officers of the
Company, when, as and if appropriate, employment agreements, severance
agreements and change in control provisions and agreements. The Compensation Committee prepares the
annual report on executive compensation required to be included in the Companys
annual proxy statement.
The Compensation
Committees Charter provides that the Compensation Committee may review and
reassess the adequacy of its Charter and recommend any proposed changes to the
Board of Directors. The Compensation
Committee may conduct a performance evaluation of itself and report to the
Board of Directors and make recommendations with respect to any of the matters
discussed above or any other matters as it deems necessary or appropriate. Finally, the Compensation Committee performs
such other duties and responsibilities, consistent with its Charter, delegated
to the Compensation Committee by the Board of Directors or required under the
provisions of any compensation or benefit plans maintained by the Company.
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Compensation
Philosophy and Objectives
The Compensation
Committee is mindful of the need to align the interests of management with the
interests of the Companys stockholders. The Compensation Committee believes
that the interests of the stockholders will be best achieved by having a
substantial portion of executive cash compensation tied to the annual financial
performance of the Company and by providing incentives to management through
the Companys incentive compensation plans and the selective use of stock
options and other equity-based compensation.
In recent years, due to the downturn in the homebuilding market, the
Compensation Committee has had the difficult task of weighing their belief in
relying heavily on incentive compensation against the Companys need to retain
talented management in this challenging market and has carefully considered,
and in some instances awarded, discretionary bonuses.
The Company relies heavily on
incentive compensation. The Compensation
Committee also understands that in order to retain talented executive officers
necessary for the Companys long-term success, the executive officers must be
appropriately compensated, even during periods with challenging market
conditions. Consistent with this
philosophy, compensation for the Companys executives consists of a base
salary, incentive compensation and, in some cases, discretionary bonuses, stock
awards and stock options or other equity-based compensation. This approach to executive compensation is
reviewed annually by the Compensation Committee and has been found to be
effective in past years.
Compensation
Committee Meetings
The Compensation
Committee met seven times in the last fiscal year and has acted once by written
consent and met twice
since the end
of the last fiscal year to discuss bonuses
related to Fiscal 2008, salaries for Fiscal 2009 and other matters and to take
related actions. Certain members of
management attended some of the meetings and provided guidance in reviewing
items relating to compensation for executives and key senior managers.
Role
of Management in the Compensation-Setting Process
Michael T. Vesey,
the Companys President and Chief Operating Officer, plays an important role in
the assessment and recommendation of compensation for executives reporting to
him as he is in the best position to assist the Compensation Committee in
evaluating the performance and effectiveness of the executives reporting to
him. Generally, Mr. Vesey will
provide proposals regarding changes in compensation levels and amounts as well
as compensation plans to the Compensation Committee, which the Compensation
Committee may use as a base for its discussions.
Jeffrey P.
Orleans, the Chief Executive Officer, may attend meetings during which
salaries, bonuses, and other matters relating to compensation of the executive
officers of the Company other than the Chief Executive Officer are
determined. Though the Chief Executive
Officer may be present at such meetings, he may not vote. Mr. Orleans does not attend meetings, or
portions of meetings, during which his own compensation is discussed or
approved.
Review
of Amounts Payable to Named Executive Officers
Unless otherwise
set by an employment agreement or compensation plan, the salaries and bonus
levels or performance criteria for each of the named executive officers
identified in the Summary Compensation Table (other than the Chief Executive
Officer) is reviewed annually by the Compensation Committee after considering
recommendations from management and other factors the Compensation Committee
determines to be relevant. With respect
to the Chief Executive Officer, final decisions regarding salary and bonuses
are made by the Board of Directors after receiving the Compensation Committees
recommendation. Base salary and bonuses
are considered in the aggregate when determining whether an increase in any
element of compensation should be awarded.
In general, the Compensation Committee reviews each executives total
compensation package and the expectations for the upcoming year, including what
objectives are likely to be achieved by the Company, and sets compensation
accordingly, relying heavily on bonus compensation.
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Ability
to Retain Advisors Inside and Outside Company
The Compensation
Committees Charter does not prohibit the use of an outside compensation
consultant. However, to date, the
Compensation Committee has chosen not to utilize such services. The Compensation Committee may decide to
engage the services of an outside compensation consultant in the future.
Market
Comparisons
The Companys
Compensation Committee does not establish compensation levels strictly based on
market practices. The Compensation
Committee understands the complexity of compensation decisions, the necessity
of a thorough review of Company performance and the value of a review of
industry compensation levels. The Compensation Committee and the Companys
senior management review information regarding total cash compensation for
various positions across all sizes and geographic locations of
homebuilders. While the Compensation
Committee may consider general, publicly available information regarding the
compensation levels and practices of other public homebuilders, it does not fix
base salaries at any particular point within a range of base compensation
levels of other public homebuilders. The Compensation Committee believes that
general knowledge of the compensation practices of other homebuilders is needed
to ensure that the Company is competitive in the homebuilding marketplace for
executive talent and assists the Company in its evaluation of the reasonableness
of the compensation of its executive officers.
The Compensation Committee attempts to create an overall compensation
package that is competitive in the homebuilder marketplace, relying heavily on
incentive compensation. The Compensation
Committee concentrates on total compensation for an officer and recognizes
that, because the Company has historically relied heavily on incentive
compensation, the base salary offered by the Company has been in the lower
range of base salary levels for executive officers at comparable
companies. In recent years, the
Compensation Committee has approved compensation packages that it believes will
attract and retain individuals with the skills necessary to suit the needs of the
Company, which, from time to time, has necessitated base salaries higher than
historical base salaries for the Companys officers, but comparable to
competitive base salaries offered by other homebuilders.
Fiscal
2008 Compensation Committee Actions
The following actions were
taken by the Compensation Committee either during Fiscal 2008 or subsequent to
Fiscal 2008 for the purpose of determining bonus payments related to Fiscal
2008.
C. Dean Amann II Cash Bonus
Plan
On September 7, 2007,
the Compensation Committee approved the inclusion of Mr. C. Dean Amann II
in the Companys Incentive Compensation Plan and the recommendation to the
Board of Directors that the C. Dean Amann II Cash Bonus Plan be terminated,
which the Board of Directors subsequently approved. The Compensation Committee determined that it
would be in the Companys best interests to have the incentive compensation for
the Companys executive management under one plan, instead of having a special
plan solely for Mr. Amann, so as to maintain the unity of the executive
officers in their objective of maximizing Company performance and shareholder
return. In addition, the administration
of one plan would be less of a burden on the Companys resources.
Benefit Plans
On September 27, 2007,
the Compensation Committee approved an amendment and restatement of the Companys
Supplemental Executive Retirement Plan (the SERP) and an amendment and
restatement of the Orleans Homebuilders, Inc. Executive Compensation
Deferral Plan (the Deferral Plan), both effective as of September 27, 2007,
for the purpose of incorporating the changes required by Code Section 409A
and to clarify related definitions and other provisions.
The material changes to the
SERP are as follows:
·
The definition of recognized compensation
was amended to permit (but not require) the committee administering the SERP to
include special bonuses as part of the calculation of bonuses to be included
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in SERP calculations at the committees discretion (rather than having
only regular bonuses being taken into account) and to include bonuses based
upon the award of the bonus, rather than the payment of the bonus. The
definition was also otherwise modified to permit all bonus compensation to be
taken into account appropriately, as some participants receive annual bonuses,
while others receive periodic bonuses during the year.
·
The definition year of service was changed
to include partial years of service (based on full months of service) for
benefit determinations.
·
Provisions were added to the SERP to allow
the payment of the Adjusted Target Retirement benefit to be delayed in order
to comply with Section 409A of the Internal Revenue Code of 1986, as
amended (Section 409A). Generally, the delay will not be more that
six months and will apply only to specified key employees. In addition,
modifications were made to update references to certain regulations and provide
more express examples of necessary compliance in light of regulatory
requirements that compliance provisions be explicit, rather than general, in
accordance with Section 409A.
·
Modifications were made to the provisions
regarding Early Retirement Benefit to make more clear that, absent consent to
an early retirement benefit or a change of control, the termination of
employment by a participant prior to his or her Normal Retirement Date will
result in a forfeiture of benefits under the SERP.
·
Modifications were made to require the use of
a three year compensation average for determining death benefits, rather than
compensation only for the year in which death occurs.
·
The SERP was modified to eliminate a change
in SERP sponsorship as a result of acquisition of only a minority interest in
the Company by another party.
·
Certain provisions were amended to clarify
the administration of the SERP, benefit payments in the case of death, the
available alternate forms of benefits, forfeiture of benefits, and provisions
on the occurrence of a change of control.
·
Additional revisions were made to comply with
Section 409A and to make administration of the SERP less burdensome.
The material changes to the
Deferral Plan are as follows:
·
Deferral of bonus compensation has been
specifically limited to regular bonuses, with the ability to defer from an
extraordinary bonus only permitted at the discretion of the Plans
administrative committee.
·
Revisions related to the definition of Committee
were made to make administration of the Plan less burdensome. These
changes are intended to permit a committee appointed by the Board to take
discretionary actions with respect to the administration of the Plan and to
allow the committee to delegate its responsibilities. Unless otherwise
determined by the Board, the Compensation Committee is the Committee under
the Plan.
·
Revisions were made to conform certain
definitions to the definitions used in the Code or regulations related thereto
and to include specific references to sections of the Code or related
regulations.
See Retirement below for additional
descriptions of these plans.
On October 30, 2007,
the Compensation Committee determined, in compliance with the revised SERP,
that all bonus compensation paid to Messrs. Herdler and Amann should be
considered recognized compensation when computing their SERP benefits.
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Incentive
Compensation
On September 27,
2007, the Compensation Committee adopted an amendment to the Orleans
Homebuilders, Inc. Incentive Compensation Plan, effective September 27,
2007, to clarify that the Company need not pay the entire eight percent (8%) of
the Companys Net Pre-Tax Profits for any Plan Year (as such terms are
defined therein), as authorized by the Incentive Compensation Plan.
In addition, on September 27,
2007, the Compensation Committee approved an incentive compensation arrangement
for its division and regional presidents entitled the Division and Regional
Presidents 2008 Bonus Plan (the Division and Regional Bonus Plan). The Division and Regional Bonus Plan was
first effective for the Companys fiscal year ending June 30, 2008. The Division and Regional Bonus Plan replaces
the Companys Incentive Compensation Plan for Division Presidents that was
adopted on September 9, 2005. See Division
and Regional Presidents 2008 Bonus Plan below for a description of this plan.
On October 30,
2007, with regard to the Companys Stock Award Plan, the Compensation Committee
clarified that any outstanding grants of restricted stock shall fully vest upon
termination of employment as a result of death or disability and that a
qualified disability would be determined by the plan committee established in
the Stock Award Plan. The Compensation
Committee determined that allowing such accelerated vesting was consistent with
the Companys policies of rewarding dedication to the Company and that such
clarification would aid in employee retention.
On December 6,
2007, the Compensation Committee approved a form of Restricted Stock Award
Agreement for any restricted stock award made pursuant to the Companys Stock
Award Plan, a copy of which was filed as Exhibit 10.3 to the Companys
Current Report on Form 8-K filed with the SEC on December 11, 2007.
On December 6,
2007, the Compensation Committee approved the grant of 240,000 shares of
restricted Common Stock to Mr. Garry P. Herdler. The Companys management believed that Mr. Herdler
had made significant contributions to the Company, including his key role in
obtaining needed amendments to the Companys credit facility and trust
preferred documents and that that he was expected to continue to make
significant contributions to the Company.
The Compensation Committee found that this grant would be important to
the retention of Mr. Herdler, particularly as the restricted stock would
vest over a period of time. In addition,
the Compensation Committee determined that the Company should pay Mr. Herdler
a tax gross up amount sufficient to pay income taxes attributable to the
vesting of the restricted stock because Mr. Herdler would realize a
greater economic value from the grant, which would allow the Company to provide
the same economic reward to Mr. Herdler with an issuance of fewer shares
of stock. The Compensation Committee
considered other tax implications of paying Mr. Herdler a tax gross up,
but determined that on balance, this was appropriate for the Company to further
motivate Mr. Herdler to continue to make significant contributions to the
Company while aiding in his retention.
Also on December 6,
2007, the Compensation Committee approved the re-pricing of Mr. Herdlers
240,000 shares of Company Common Stock with an exercise price equal to the fair
market value of the Companys Common Stock on February 27, 2007, which was
$15.60, to the then current fair market value of $4.65. The Compensation Committee determined that
the reasons for granting the 240,000 shares of restricted Common Stock
discussed above were equally applicable to the repricing of Mr. Herdlers
options. In addition, the Compensation
Committee determined that by repricing these options, instead of issuing Mr. Herdler
additional options, would be less dilutive.
On December 20,
2007, the Compensation Committee determined that it would be in the best
interest of the Company to grant an option to purchase 60,000 shares of the
Companys Common Stock to each of Mr. Amann and Mr. Thomas R.
Vesey. The purpose of these grants was
to retain each of the officers and to further motivate them to contribute to
the long-term success of the Company. In
making this decision, the Compensation Committee discussed that, generally, the
officers cash compensation was down significantly compared to prior years and
that equity grants were an appropriate way to provide compensation to officers
and to further motivate them to dedicated themselves to the continued success
of the Company.
On September 26,
2008, the Compensation Committee determined that no bonus payments were payable
for Fiscal 2008 pursuant to the Incentive Compensation Plan. The Compensation Committee discussed what
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discretionary
bonuses might be granted for the purposes of retention and rewarding employees
who had contributed to the Company throughout the fiscal year, despite the
overall downturn in the housing market.
Although the Company and the homebuilding industry in general
experienced a very challenging period during Fiscal 2008, the Compensation
Committee determined that discretionary bonuses for Fiscal 2008 would be an
appropriate reward to those that have contributed to the Companys ability to
meet the challenges posed and would provide incentive to the Companys
executives to continue their efforts on behalf of the Company. As such, the Compensation Committee
authorized the discretionary bonuses set forth in the Summary Compensation
Table.
On September 26,
2008, the Compensation Committee approved certain bonus payments to be made pursuant
to the Division and Regional Presidents 2008 Bonus Plan, including a payment of
$114,343 to Mr. Thomas R. Vesey.
Salary Adjustment
On September 26,
2008, the Compensation Committee approved the reduction of Mr. Amanns
base salary by $200,000, to $325,000, for fiscal year 2009 and beyond in order
to reflect changes in the homebuilding industry and in an effort to realign Mr. Amanns
compensation package with that of the regional executive vice presidents.
Elements of Compensation
The elements of the
Companys executive compensation are base salary, cash bonus, equity-based
compensation awards (in some cases) and perquisites.
Compensation of the Chief Executive Officer
For Fiscal 2008, Mr. Orleans
base salary was $1,100,000. The Compensation Committee believes Mr. Orleans
base salary is competitive with base salaries comparable companies pay their
Chief Executive Officers. Pursuant to
the Incentive Compensation Plan, Mr. Orleans is eligible to receive an
annual bonus equal to 3% of the Companys net pre-tax profits. As the Company had no net pre-tax profits for
Fiscal 2008, Mr. Orleans was not awarded any cash bonus for Fiscal 2008
under the Incentive Compensation Plan.
The Compensation
Committee continues to believe that tying a portion of Mr. Orleans
compensation to the Companys performance properly focuses Mr. Orleans on
the objectives of the Companys stockholders.
The Compensation Committee, however, recognizes that it is in the
Companys best interest that Mr. Orleans be appropriately compensated,
even when market conditions are challenging.
The Compensation Committee discussed whether Mr. Orleans should be
awarded a discretionary bonus for Fiscal 2008, as was awarded to other
executive officers. Mr. Orleans was
awarded a discretionary bonus of $300,000 for Fiscal 2008 for his considerable
sales efforts in a difficult new home sales environment, his retooling of our
product lineup to improve the Companys competitive position within our markets
and his involvement in the Companys efforts to reduce our outstanding debt.
The Compensation
Committee does not intend to recommend an increase Mr. Orleans salary for
Fiscal 2009.
Other Executive Officers Compensation
Base Salary
Historically, the
base salaries were generally in the lower range of base salary amounts for
comparable executive officers at similar companies; however, in recent years,
the Compensation Committee has increased base salaries to approximate
comparable executive officer salaries, while still maintaining incentive compensation
as an important part of an executive officers total compensation. Base salaries are generally adjusted on a
periodic basis, which may not necessarily be annually, based on the performance
of an individual executive, increased responsibilities assumed by such
executive, compensation trends in the real estate industry and general market
compensation levels for comparable positions.
The Fiscal 2008
base salaries for Mr. Herdler, Executive Vice President and Chief
Financial Officer, and Mr. Amann, Executive Vice President were set by
their employment agreements. For Fiscal
2008, the base salary of
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the Companys
President and Chief Operating Officer, Mr. Michael T. Vesey, was
$535,000. The base salary for Fiscal
2008 for Mr. Thomas R. Vesey, Executive Vice President, Southern Division,
was $300,000. For Fiscal 2009, base
salaries for all executives will remain the same with the exception of Mr. Amanns
base salary, which, effective September 22, 2008, was adjusted to $325,000
in order to reflect changes in the homebuilding industry and in an effort to
realign Mr. Amanns compensation package with that of the regional
executive vice presidents.
Incentive Compensation Programs
For Fiscal 2008,
the amount and nature of incentive compensation received by the Companys other
executive officers was determined in accordance with the recommendations of the
Chief Executive Officer and the President and approved by the Compensation
Committee.
Incentive
Compensation Plan
The Compensation
Committee believes that it is important for the Company to further align the
interests of its executive officers and key employees with the interests of the
stockholders by establishing a direct link between executive pay and the
Companys operating financial performance. This element of executive
compensation focuses participants on short-term annual earnings and profit
levels. As discussed above, incentive
compensation for certain executive officers is awarded pursuant to the Companys
Amended and Restated Incentive Compensation Plan (the Incentive Compensation
Plan). The Incentive Compensation Plan
provides for annual bonuses in cash (or stock, upon election) based on the net
pre-tax profits of the Company.
The Incentive
Compensation Plan applies to the Companys corporate executive team and
typically does not apply to the Companys key employees in the southern,
Midwestern or Florida regions. Any bonus compensation awarded to officers
in these regions was awarded at the discretion of the Company based upon the
approval of the Compensation Committee, except that Division Presidents
participated in the Division and Regional Presidents 2008 Bonus Plan described
below.
Pursuant to the
Incentive Compensation Plan, up to 8% of the Companys net pre-tax profits are
made available for distribution to certain executives. The Incentive Compensation Plan sets the
incentive bonuses of Mr. Jeffrey P. Orleans, Chairman and Chief Executive
Officer, and Mr. Michael T. Vesey, President and Chief Operating Officer,
at 3% and 1.5%, respectively, of the Companys net pre-tax profits as
determined in accordance with the Incentive Compensation Plan. Up to an aggregate of 3.5% of net pre-tax
profits is available to be awarded to the Companys other senior officers based
upon the Compensation Committees determination and the recommendations of the
Companys Chief Executive Officer and President. Other than Mr. Orleans, no officer may
receive in excess of 1.5% of the Companys net pre-tax profits as a bonus under
the plan.
With respect to
Fiscal 2008, the Company had net pre-tax losses due to the downturn in the
residential real estate market and no bonuses were awarded under the Incentive
Compensation Plan.
Division and Regional Presidents 2008 Bonus Plan
On September 27,
2007, the Compensation Committee approved an incentive compensation arrangement
for its division and regional presidents entitled the Division and Regional
Presidents 2008 Bonus Plan (the Division and Regional Bonus Plan). The Division and Regional Bonus Plan was
first effective for the Companys fiscal year ending June 30, 2008. The division and regional presidents do not
participate in the Incentive Compensation Plan.
The Division and Regional Bonus Plan replaced the Companys Division
Presidents Plan adopted on September 9, 2005.
The Compensation
Committee believes that it is important for the Company to align the interests
of its division and regional presidents and vice presidents with the interests
of the stockholders by establishing a direct link between their pay and the
Companys operating financial performance in each applicable division or
region. This element of executive compensation focuses participants on
short-term annual earnings and profit levels.
Payments to division and regional presidents under the Division and
Regional Bonus Plan are calculated based upon two components: (a) a set
percentage of net income before taxes and bonuses for each presidents region
or division
17
Table of Contents
(as
such net income may be adjusted by an amount determined by the Compensation
Committee) and (b) the product of a calculation based on division or
regional objectives and goals for the officer in question. Division and regional objectives and goal are
determined on an individual basis and may include all or some of the following:
the ability to manage against a budget, new order levels, speculation home
inventory levels, backlog, lot development, advertising, sales office expenses,
sales commissions, warranty costs and general and administrative expenses. Each participant in the Division and Regional
Bonus Plan must obtain a minimum of 75% of an objective or goal for that
objective or goal to be considered in the determination of the bonus amount
payable pursuant to the second part of the bonus calculation, unless otherwise
approved by the Compensation Committee.
To obtain the middle bonus payable for an objective or goal, the
participant must meet at least 85% of the objective or goal and to obtain the
maximum bonus payable for an objective or goal, the participant must meet 100%
of the objective or goal. The
performance objectives and personal goals are set at a level that is projected
to be attainable.
The Compensation
Committee determined that pursuant to the Division and Regional Bonus Plan for
the Companys 2008 fiscal year, the following method would be used for
determining the bonus for Mr. Thomas R. Vesey, Executive Vice President,
Southern Region: (1) the first part of his bonus will equal 2.5% of the
net income before taxes and bonuses for the Southern Region; and (2) for
the second part of Mr. Veseys bonus, the Company has established
performance goals for the Southern Region with respect to the following
measures (with the approximate weighting of these measures indicated): new orders
(40%), speculative home inventory levels (19%), warranty costs (19%) and
general and administrative expenses (22%).
The maximum bonus available for the second part of this bonus is
$313,000. Based on this computation, Mr. Thomas
R. Vesey received a bonus of $114,343 for Fiscal 2008.
The Compensation
Committee may increase or decrease bonuses, as the Compensation Committee deems
prudent given the totality of the circumstances surrounding a particular bonus
award. Payments pursuant to the Division
and Regional Bonus Plan are subject to a $1,000,000 limitation on the aggregate
compensation (salary, bonus and other compensation) to any one participant
during any fiscal year.
Discretionary Bonuses
The Compensation
Committee has the ability to award discretionary bonuses, irrespective of an
employment agreement or any other compensation plan. Due to the downturn in the homebuilding
industry in Fiscal 2008, no bonuses were awarded pursuant to the Incentive
Compensation Plan and only a fraction of the Fiscal 2008 bonuses were awarded
under the Division and Regional Presidents Plan described above. In an effort to retain the Companys
executive talent, the Compensation Committee awarded discretionary bonuses to
certain executive officers. For Fiscal
2008, Mr. Michael T. Vesey was awarded a discretionary bonus of $150,000
based on the Compensation Committees subjective evaluation of his overall
performance, including his involvement in negotiating the Companys credit
facility amendments and his ability to direct budgeting efforts to reduce
selling, general and administrative expenses and field operating expenses. Mr. Thomas R. Vesey was awarded a
discretionary bonus of $185,657 (which, with the $114,343 bonus paid pursuant
to the Division and Regional Presidents Plan, gave him a total bonus of $300,000) based on the
Compensation Committees subjective evaluation, after consultation with the
Companys President, of his overall performance, including his performance in
reducing costs in the region and acting as division president for the Companys
Charlotte division.
These bonuses were
less than 52%
of the amount each officer would
have received in accordance with the terms of the Incentive Compensation Plan
or Division and Regional Presidents Plan, as applicable, had the Company
achieved the projected profits for Fiscal 2008, and were less than 36% of the
bonuses earned by these executive officers for Fiscal 2007. The Compensation Committee determined that
the minimum bonus pursuant to the employment agreements along with the equity
awards for each of Mr. Herdler or Mr. Amann were sufficient for
Fiscal 2008 and the Compensation Committee did not award either officer a
discretionary bonus.
The Compensation
Committee determined that such discretionary bonuses were necessary to retain
the Companys executive talent in a year in which little to no incentive
compensation, which was historically the majority of an executives
compensation package, would otherwise be awarded. The Compensation Committee debated appropriate
compensation levels and determined that these awards, while far below prior
years, were necessary and appropriate consideration for the executive officers
efforts over the fiscal year.
18
Table of Contents
Equity-Based Compensation
Awards of
equity-based compensation, such as stock options, restricted stock awards and
stock appreciation rights, are intended to align directly the interests of the
Companys executives and the stockholders in the enhancement of stockholder
value. The ultimate value of stock options, restricted stock awards and
stock appreciation rights that have been awarded, or that may in the future be
awarded, is directly tied to the Companys stock price.
Stock
Award Plan.
In October 2003,
the Board of Directors adopted the Orleans Homebuilders, Inc. Stock Award
Plan (the Stock Award Plan). The Stock Award Plan provides for the grant of
stock awards of up to an aggregate of 400,000 shares of the Companys Common
Stock. If Proposal 2 is approved by the
stockholders, the number of shares available pursuant to the Stock Award Plan
will be increased to 1,000,000 shares of the Companys Common Stock. The Stock Award Plan allows for the payment
of all or a portion of the incentive compensation awarded under the Companys
bonus compensation plans to be paid by means of a transfer of shares of Common
Stock. The plan has a ten year life and is open to all employees of the Company
and its subsidiaries. At June 30, 2008, the Company had awarded 395,904
shares of Common Stock under the Stock Award Plan and the Company had 4,096
shares of the Common Stock available to issue under the Stock Award Plan.
Pursuant to the
Stock Award Plan, the Company may provide eligible employees the right to
receive a certain percent of his or her bonus in the form of Company Common
Stock valued at a discount from the market price. No eligible employee
exercised this right with respect to his or her Fiscal 2007 bonus and no
eligible employee has yet exercised this right with respect to his or her
Fiscal 2008 bonus. Generally, any stock
awards granted pursuant to the Stock Award Plan vest in equal annual
installments over three years following the award date. The Company recognizes
compensation expense for the discounts over the vesting periods of the awards.
The Company awarded 240,000 shares of the Companys Common Stock during Fiscal
2008. At June 30, 2008, 56,196 shares of the stock awards were fully
vested and the remaining 339,708 shares will vest through fiscal year 2012. The
aggregate discount of all stock awards under the Stock Award Plan was
approximately $3,805,793 of which $346,999 was recorded as compensation expense
for the fiscal year ended June 30, 2008.
Second
Amended and Restated 2004 Omnibus Stock Incentive Plan
On December 6,
2007, the stockholders approved the Orleans Homebuilders, Inc. Second
Amended and Restated 2004 Omnibus Stock Incentive Plan (the Stock Incentive
Plan), which increased the number of shares of the Companys Common Stock
available under the plan from 1,000,000 shares to 2,000,000 shares and increase
the per person fiscal year grant limitation to 250,000 shares of the Companys
Common Stock.
The Stock
Incentive Plan is intended to recognize the contributions made to the Company
by employees (including employees who are members of the Board of Directors) of
the Company (the Employees), to provide Employees with additional incentive
to devote themselves to the future success of the Company, and to improve the
ability of the Company to attract, retain, and motivate individuals upon whom
the Companys sustained growth and financial success depend by awarding them
grants under the Stock Incentive Plan consisting of options for the purchase of
shares of the Companys Common Stock, awards of restricted stock and/or awards
of stock appreciation rights. The Stock
Incentive Plan is intended to provide an additional incentive to directors of
the Company who are not employees to serve on the Board of Directors and to
devote themselves to the future success of the Company. In addition, the Stock Incentive Plan may be
used to encourage consultants and advisors of the Company to further the
success of the Company.
On December 6,
2007, Mr. Herdlers option to acquire 240,000 shares of the Companys
Common Stock granted as a condition of his employment at an exercise price of
$15.60 per share were repriced to an exercise price of $4.65 per share. Mr. Herdlers options will vest in five
equal installments on each of the first five anniversaries of the effective
date of his employment agreement.
19
Table of Contents
Equity
Compensation Plan Information
The following
table provides certain information with respect to all of the Companys equity
compensation plans in effect as of June 30, 2008.
Plan Category
|
|
Number of
securities to be
issued upon exercise
of outstanding
options, warrants
and rights
|
|
Weighted average
exercise price of
outstanding options,
warrants and rights
|
|
Number of
securities remaining
available for future
issuance under
equity compensation
plans
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved by
security holders
|
|
752,500
|
|
$
|
9.01
|
|
1,277,500
|
|
Equity compensation plans to be approved by
stockholders at the annual meeting
|
|
|
|
|
|
|
|
Total
|
|
752,500
|
|
|
|
1,277,500
|
|
|
|
|
|
|
|
|
|
|
Perquisites
The Company makes
available health care benefits and a 401(k) plan for executive officers on
terms generally available to all Company employees. In addition, the
named executive officers identified in the Summary Compensation Table received
various other personal benefits such as automobile allowances. The Compensation Committee believes that such
benefits are comparable to those offered by other comparable companies.
In Fiscal 2008, the Company paid $81,426 on behalf of Mr. Orleans for
group life insurance, medical insurance and certain automobile expenses.
With the exception of Mr. Orleans, the value of perquisites for the
remaining named executive officers did not exceed the lesser of $50,000 or 10%
of their annual salary and bonus
Severance Agreements
The Company is
currently a party to written employment agreements with Jeffrey P. Orleans,
Garry P. Herdler and C. Dean Amann II.
Michael T. Vesey and Thomas R. Vesey do not have written employment
agreements with the Company. The
decisions to enter into employment agreements with Mr. Herdler and Mr. Amann
and the terms of those agreements were based on the Companys need to attract
and retain talent for the long-term growth of the Company.
Pursuant to the
employment agreements with the foregoing executives, the Company has agreed to
arrangements which will provide severance compensation in certain events of
termination or change in control or pursuant to other triggering events. These arrangements are designed to promote
stability and continuity of senior management.
The Company has adopted certain triggers for the vesting of equity
awards to retain, focus and motivate executives during change in control
discussions and to be competitive with current market practice in order to
attract the best talent. Stock options
and restricted stock will generally vest upon a change in control. Information regarding applicable payments
under such arrangements for the named executive officers identified in the
Summary Compensation Table is provided under the heading Potential Payments
Upon Termination or Change in Control below.
Retirement
On December 1,
2005 the Compensation Committee adopted, and on September 27, 2007 the
Compensation Committee amended, a Supplemental Executive Retirement Plan, which
we refer to in this Proxy Statement as the SERP, and an Executive
Compensation Deferral Plan, which we refer to in this Proxy Statement as the Deferral
Plan. We refer to the SERP and the
Deferral Plan collectively as the Retirement Plans. The descriptions provided below for the
Retirement Plans include the September 27, 2007 amendments. The purpose of the SERP is to provide
supplemental retirement income benefits to participants or their survivors upon
the
20
Table of Contents
participants
retirement or disability, or post-retirement death, and to provide for benefits
to be paid to all participants survivors in the event of a participants death
while employed. The purpose of the
Deferral Plan is to provide participants in the Deferral Plan the opportunity
to accumulate capital on a tax deferred basis. The Retirement Plans are also
designed and have been implemented to increase the incentive of the
participants to remain in the employ of the Company and to increase the Companys
profitability. The Retirement Plans are administered by the Board of Directors
or a committee of the Board of Directors that is authorized by the Board of
Directors to administer the Retirement Plans.
Supplemental Executive Retirement Plan
The Board of
Directors or a committee designated by the Board of Directors selects employees
who will be permitted to participate in the SERP and such participants
benefits level. Generally, participation is limited to key members of
management and other highly compensated employees, including the members of
management defined below as Tier 1 participants.
Generally, the
SERP is intended to provide to each participant who remains continually
employed by the Company until attaining age 65 an annual supplemental
retirement benefit. The benefit to be paid to each participant will be a target
annual amount equal to 0.50% for each year of past service with the Company (to
a maximum of 20 years of past service recognized) plus, (a) for Tier 1
designated participants, 1.00% for each year of future service with the
Company, and (b) for Tier 2 designated participants, 0.75% for each year
of future service with the Company, multiplied by the average of the
participants highest five consecutive base salary and annual bonus as
determined in accordance with the SERP. The benefit is payable for life with a
minimum of 10 years guaranteed.
If a participant
in the SERP should die while employed by the Company, his or her beneficiary
will receive a survivor benefit equal to (a) one hundred percent (100%) of
the average of the participants recognized compensation for the three years
prior to the participants date of death, paid in one lump sum as soon as
practical following death, and (b) fifty percent (50%) of the amount paid
under (a) paid for each of the following four years.
The Company can
amend or terminate the SERP at any time. However, no termination will affect
the participants accrued benefits as determined in accordance with the SERP or
delay any payments to a participant beyond the time that such amount would
otherwise be payable without regard to the amendment.
The Companys
named executive officers are all Tier 1 participants in the SERP.
Deferral
Plan
In addition to the
retirement benefits provided by the SERP, under the Deferral Plan, participants
have the ability to defer a portion of their compensation which will be
credited to an account maintained by the Company for the participant. Amounts
contributed by participants are always vested.
Participant deferral accounts will be maintained by the Company for
recordkeeping purposes only. Participants will have no interest in any assets
which may be set aside by the Company to meet its obligations under the Deferral
Plan.
A participant may
elect to treat all or a portion of his or her deferral account as if it had
been used to purchase one or more specific investments. All of these shadow
investments will be securities or mutual funds which are registered for sale to
investors in the United States. Company securities will not be offered as one
of the shadow investments. Changes in
the value of the shadow investments will be credited or charged to participant
accounts as these changes occur.
Participants may
choose how the deferral amounts in their accounts will be distributed; either (a) in
a lump sum or installments beginning on a specified date, or (b) upon
separation from service. In addition, a participants account will be
distributed in the event of the participants (a) death or (b) disability.
There also is a provision for distributions from participant accounts in the
event of a participants severe financial hardship.
21
Table of Contents
Impact of Performance on Compensation
The Companys
performance impacts the executive officers compensation. As a result of the performance of the Company
in Fiscal 2008, cash bonuses awarded were less than 52% of the amount each
officer would have received in accordance with the terms of the Incentive
Compensation Plan or Division and Regional Presidents Plan, as applicable, had
the Company achieved projected profits for Fiscal 2008, and in the aggregate
were less than 59% of the bonuses earned by the Companys named executive
officers for Fiscal 2007. Stock options
issued in Fiscal 2007 and Fiscal 2008, including those issued to Messrs. Herdler,
Amann and Thomas R. Vesey, had exercise prices in excess of the market price
for the Companys Common Stock on June 30, 2008.
As discussed
above, for Fiscal 2008, no bonuses were awarded pursuant to the Incentive
Compensation Plan. Bonuses awarded
pursuant to the Division and Regional Presidents Plan were a fraction of the
target payout potential.
Stock Ownership and Retention Guidelines
The Company does
not require its named executive officers identified in the Summary Compensation
Table to maintain any set level of Company stock ownership, however, all of our
executives own stock or options in the Company.
In recent years, the Compensation Committee has been approving more
equity incentives in connection with hiring new executives and the Company has
been utilizing the Stock Award Plan pursuant to which certain executives are
given the opportunity to purchase the Companys restricted stock with a certain
percentage of such executives bonus at a discount from the market rate. The increase in the issuance of equity
securities to new executives and offering participation in the Stock Award Plan
has been approved by the Compensation Committee with the intent of aligning the
executive officers interests with the interests and objectives of the Companys
stockholders.
Impact of Regulatory Requirements on Compensation
Deductibility
of Executive Compensation under Code Section 162(m)
Section 162(m) of
the Internal Revenue Code limits the deductibility of compensation in excess of
$1,000,000 paid to certain executive officers, other than a companys chief
financial officer, unless specified criteria are satisfied. The Compensation Committee reviews and
considers the deductibility of executive compensation under Section 162(m).
The Compensation Committee has generally designed the Companys compensation
program in a manner that permits compensation to be deductible. However, the Compensation Committee may award
discretionary bonuses as a result of the downturn in the housing market, which
may not be deductible. In addition,
grants of restricted stock, when and if those grants vest for tax purposes, may
create compensation for the grantee that may be subject to the limitations on
deductibility under Section 162(m).
The Compensation Committee reserves the right to award non-deductible
compensation when it believes such action would be in the best interests of the
Company. This discretion was exercised
in setting Mr. Orleans base salary to $1,100,000 for Fiscal 2008.
Accounting
for Stock-Based Compensation
In 2006, the
Company began accounting for stock-based payments, including stock options and
awards of restricted stock and restricted stock units, in accordance with the
requirements of Financial Accounting Standards Board Statement 123(R) (SFAS
123R). The Compensation Committee
reviews the expenses for stock-based payments under SFAS 123R in connection
with the grant of stock options and award of restricted stock and restricted
stock units.
Conclusion
The Company seeks
to establish a compensation system that allows the Company to attract and
retain experienced and talented individuals that will make substantial
contributions to the Companys long-term growth and profitability using various
elements, including base salary, benefit plans, incentive bonuses
and, at times, discretionary bonuses. Historically, the base
salaries the Company has paid to its executive officers have been
22
Table of Contents
relatively
low and a substantial portion of executive officers compensation was based on
the Companys pre-tax profits or similar performance measures. The
Company believes that having a substantial portion of compensation tied
directly to Company financial performance can be a powerful incentive for
its executive officers and can further align the interests of the executive
officers with the interests of the Companys stockholders. The
Company does, however, recognize that it must be able to retain its executive
officers, which requires offering appropriate and competitive compensation
packages, even in a down market in which the Companys pre-tax profits
may not be consistent with historic levels. Accordingly, the
Company, through its Compensation Committee has taken steps that the
Company believes will help the Company retain its executive
management team, which the Company believes will lead to increases in
stockholder value over the long-term.
Compensation Committee Report
We have reviewed
and discussed the foregoing Compensation Discussion and Analysis with
management. Based on our review and
discussion with management, we recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this proxy statement and in
the Companys Annual Report on Form 10-K for the fiscal year ended June 30,
2008.
The
Compensation Committee
|
|
David
Kaplan
|
John
W. Temple
|
23
Table of Contents
SUMMARY COMPENSATION TABLE
The following table sets forth information as to all
compensation paid by the Company for services in the Companys last fiscal year
ended June 30, 2008 to: (a) the Companys Chief Executive Officer, (b) the
Companys Chief Financial Officer, and (c) the Companys three most highly
compensated executive officers other than the Chief Executive Officer and Chief
Financial Officer (together, the named executive officers).
Name and
Principal Position
|
|
Year
|
|
Salary ($)(1)
|
|
Bonus ($)
|
|
Stock
Awards ($)(2)
|
|
Option
Awards ($)(3)
|
|
Non-Equity
Incentive Plan
Compensation ($)
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compen-
sation
Earnings ($) (4)
|
|
All Other
Compensation ($)(5)
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey P.
Orleans, Chairman and Chief Executive Officer
|
|
2008
|
|
$
|
1,100,000
|
|
$
|
300,000
|
|
|
|
|
|
|
|
|
|
$
|
82,413
|
|
$
|
1,482,413
|
|
|
|
2007
|
|
850,000
|
|
|
|
|
|
|
|
|
|
|
|
24,607
|
|
874,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael T. Vesey,
President and Chief Operating Officer
|
|
2008
|
|
535,000
|
|
150,000
|
|
319,000
|
(7)
|
|
|
|
|
|
|
47,183
|
(7)
|
1,051,183
|
|
|
|
2007
|
|
235,000
|
|
700,000
|
(6)
|
269,000
|
(7)
|
|
|
|
|
|
|
76,350
|
(7)
|
1,280,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garry P. Herdler,
Executive Vice President and Chief Financial Officer
|
|
2008
|
|
450,000
|
|
550,000
|
(8)
|
$
|
187,000
|
(9)
|
$
|
1,252,490
|
(10)
|
|
|
|
|
8,400
|
|
2,447,890
|
|
|
|
2007
|
|
154,038
|
|
400,000
|
(11)
|
|
|
386,000
|
(12)
|
|
|
|
|
227,100
|
|
1,167,138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Dean Amann II,
Executive Vice President
|
|
2008
|
|
525,000
|
|
275,000
|
(13)
|
|
|
736,000
|
(15)
|
|
|
|
|
23,900
|
|
1,559,900
|
|
|
|
2007
|
|
525,000
|
|
900,000
|
(14)
|
|
|
1,355,000
|
|
|
|
|
|
162,252
|
|
2,942,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas R. Vesey,
Executive Vice President Southern Region
|
|
2008
|
|
275,962
|
|
185,657
|
|
|
|
31,784
|
(15)
|
114,343
|
|
|
|
10,980
|
|
618,726
|
|
|
|
2007
|
|
175,000
|
|
282,000
|
(6)
|
|
|
|
|
268,000
|
|
|
|
9,797
|
|
734,797
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Salary amounts reflect the actual base salary payments made to the named
executive officers in fiscal year 2008.
(2)
Represents the dollar amount recognized for financial statement
reporting purposes for the applicable fiscal year in accordance with FAS 123R
of restricted stock, including amounts for awards granted in and/or prior to
the applicable fiscal year. Assumptions used in the calculation of these
amounts are included in footnote 10 to our audited financial statements
for fiscal 2008 included in our Annual Report on Form 10-K for the fiscal
year ended June 30, 2008 and in footnote 10 to our audited financial
statements for fiscal 2007 included in our Annual Report on Form 10-K for
the fiscal year ended June 30, 2007.
Grant Date Fair Value vs. Market Value of
Stock Awards.
Due to the decline in our stock price, if the
stock awards for which expenses are shown in this column were valued in
accordance with the market value of our common stock as of June 30, 2008
rather than the grant date fair value reflected in the Summary Compensation Table, their valuations would differ as
shown in the following supplemental table.
|
|
Based on Grant Date Fair Value
|
|
Based on 6/30/08 Market Value ($ 3.66)(a)
|
|
Name
|
|
Fiscal 2008
|
|
Fiscal 2007
|
|
Total
|
|
Fiscal 2008
|
|
Fiscal 2007
|
|
Total
|
|
Jeffrey P. Orleans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael T. Vesey
|
|
|
|
|
|
|
|
319,000
|
|
269,000
|
|
588,000
|
|
Garry P. Herdler
|
|
$
|
1,116,000
|
|
|
|
$
|
1,116,000
|
|
187,000
|
|
|
|
187,000
|
|
C. Dean Amann II
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas R. Vesey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Reflects values in the Stock Awards column of
the Summary Compensation Table.
(3)
Represents the dollar amount recognized for financial statement
reporting purposes for the applicable fiscal year in accordance with FAS 123R
of stock option awards, including amounts for awards granted in and/or prior to
the applicable fiscal year. The FAS 123R expenses
24
Table
of Contents
for option awards shown are based on the
Black-Scholes valuations of stock options granted, which in turn are based on
the value of our common stock on the date of grant, which was at higher levels
than its market value as of Fiscal 2008 year-end. Assumptions used in the
calculation of these amounts are included in footnote 10 to our audited
financial statements for fiscal 2008 included in our Annual Report on Form 10-K
for the fiscal year ended June 30, 2008 and in footnote 10 to our
audited financial statements for fiscal 2007 included in our Annual Report on Form 10-K
for the fiscal year ended June 30, 2007. In the Companys 2007 proxy
statement, we reported the fair value of stock options as of the last day of
the fiscal year, which has been updated in the Summary Compensation Table to
reflect the 2007 FAS 123R expense for the Company.
Grant Date Fair Value vs.
Market Value of Option Awards.
Due to the decline in the value of our common stock, if the valuation
for Fiscal 2008 expense for the same options were based on their intrinsic
value (calculated as the difference between the value of the option based upon
the share price of Orleans common stock as of the market close on June 30,
2008 of $3.66 and the option exercise price) rather than the FAS 123R expense,
all of the same options would be out of the money and have no intrinsic value
as reflected in the supplemental table below.
Name
|
|
Grant Date
|
|
Share Price
at Grant
Date ($)
|
|
Option Grant
Date Fair
Value
per Share ($) (a)
|
|
Total
Shares
|
|
Intrinsic
Value as of
June 30,
2008 ($)
|
|
Fiscal 2008
Expenses
per SFAS
123R ($) (b)
|
|
Fiscal 2008
Expense
Assuming
Intrinsic
Value as of
June 30, 2008
($)(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey P. Orleans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael T. Vesey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garry P. Herdler
|
|
12/6/2007
|
|
$
|
4.65
|
|
$
|
0.86
|
|
240,000
|
|
|
|
$
|
770,000
|
|
|
|
|
|
2/27/2007
|
|
(d)
|
|
(d)
|
|
(d)
|
|
|
|
482,000
|
|
|
|
C. Dean Amann II
|
|
12/20/2007
|
|
4.03
|
|
2.32
|
|
60,000
|
|
|
|
31,000
|
|
|
|
|
|
6/19/2006
|
|
15.63
|
|
10.62
|
|
250,000
|
|
|
|
705,000
|
|
|
|
Thomas R. Vesey
|
|
12/20/2007
|
|
4.03
|
|
2.32
|
|
60,000
|
|
|
|
31,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
The options grant date fair value per share is
based on the Black-Sholes option pricing model, using assumptions in the
calculation of these amounts as set forth in Footnote 10 to our audited
financial statements for Fiscal 2008 included in our Annual Report on Form 10-K
for the fiscal year ended June 30, 2008.
(b)
Reflects values under Options Awards column of
the Summary Compensation Table, which is the Fiscal 2008 expenses in accordance
with SFAS 123R. In the case of Mr. Herdler, the fair value of his December 5,
2007 stock options represents the change in fair value after the repricing of
his February 27, 2007 option grant.
(c)
The Fiscal 2008 expense if calculated using
the intrinsic value instead of the option grant value.
(d)
The February 27, 2007 option grant to Mr. Herdler
for 240,000 shares was repriced on December 6, 2007; originally, the share
price at grant date was $15.60 and the option grant date fair value per share
was $10.56.
(4)
There were aggregate losses for Fiscal 2008 under the Deferral Plan. The
benefits under the SERP are not effective until September 1, 2010.
(5)
The
compensation reflected in the All Other Compensation column for each of the
named executive officers for 2008 includes Company matching contributions under
our 401(k) Plan and the incremental cost to the Company of perquisites, as
follows:
Name
|
|
Automobile
Usage ($)
|
|
Tax Gross-Up
Payment ($)
|
|
401(k) Plan Company Match
and Profit Sharing ($ )
|
|
Total ($ )
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey P. Orleans
|
|
$
|
73,159
|
(a)
|
|
|
$
|
9,254
|
|
$
|
82,413
|
|
Michael T. Vesey
|
|
8,760
|
|
30,383
|
|
8,040
|
|
47,183
|
|
Garry P. Herdler
|
|
8,400
|
|
|
|
|
|
8,400
|
|
C. Dean Amann II
|
|
8,400
|
|
|
|
15,500
|
|
23,900
|
|
Thomas R. Vesey
|
|
689
|
|
|
|
10,291
|
|
10,980
|
|
(a)
Includes a percentage of the amounts paid for
the services of an automobile driver ($41,760) and for the lease of the Company
vehicle ($31,399).
(6)
|
Reflects discretionary
bonuses that were not paid pursuant to any incentive compensation plan.
|
|
|
(7)
|
Mr. Michael T. Vesey
received an award of 125,000 shares of restricted stock at $20.74 per share
on March 4, 2005, which vests over a period of ten years and for which
he is entitled to tax gross ups as each traunch of this award vests.
Mr. Michael T. Vesey received a tax gross up of $61,936 in Fiscal 2007
and $30,383 in Fiscal 2008.
|
25
Table
of Contents
(8)
|
Includes a $250,000 signing
bonus and a $300,000 guaranteed minimum bonus pursuant to Mr. Herdlers
employment agreement.
|
|
|
(9)
|
Mr. Herdler received
an award of 240,000 shares of restricted stock at $4.65 per share on
December 6, 2007, which vests over a period of five years and for which
he is entitled to tax gross ups as each traunch of this award vests.
|
|
|
(10)
|
On December 6, 2007,
the Company repriced the 240,000 options granted to Mr. Herdler on
February 27, 2007 from an exercise price of $15.60 per share to $4.65
per share, the fair market value on the date of the repricing, which was
above the market price of the Companys Common Stock on June 30, 2008.
All other terms of the options remain unchanged as a result of the repricing.
The incremental value of the modified share option was $0.86 per option, or
$206,400 in aggregate.
|
|
|
(11)
|
Includes a $250,000 signing
bonus and a $150,000 guaranteed minimum bonus pursuant to Mr. Herdlers
employment agreement.
|
|
|
(12)
|
Pursuant to his employment
agreement, Mr. Herdler was awarded an option to purchase 240,000 shares
of Common Stock with an exercise price of $15.60, which was above the market
price of the Companys Common Stock on June 30, 2007.
|
|
|
(13)
|
Includes a $275,000 signing
bonus payable in Fiscal 2008 provided for in Mr. Amanns employment
agreement. Mr. Amann did not receive a discretionary bonus for Fiscal
2008.
|
|
|
(14)
|
Includes $550,000 in
signing bonuses provided for in his employment agreement (a $275,000 bonus
payment in each of August 2006 and June 2007) and a discretionary
bonus of $350,000 for Fiscal 2007.
|
|
|
(15)
|
On December 20, 2007,
the Company granted to each of Mr. Thomas R. Vesey and Mr. Amann
options to purchase 60,000 shares of the Companys Common Stock, respectively.
The stock options vest in five, equal annual installments starting in
December 2009 and have an exercise price of $4.03 per share, the fair
market value on the date of the grant, and expire on December 20, 2017.
The weighted average fair value of the stock option grant was $2.32. The
total fair market value such of each stock option grant was approximately
$139,200. On June 19, 2006, the Company granted to Mr. Amann
options to purchase 250,000 shares of the Companys Common Stock. The stock
options vest in four, equal annual installments starting in June 2007
and have an exercise price of $15.63 per share, the fair market value on the
date of the grant, and expire on June 19, 2016. The weighted average
fair value of the stock option grant was $10.62. The total fair market value
such of the stock option grant was approximately $2,655,000.
|
26
Table of Contents
GRANTS OF PLAN-BASED AWARDS
The following table sets forth information as to each
grant of a plan-based award to the named executive officers for services in the
Companys fiscal year ended June 30, 2008.
|
|
|
|
Estimated Future
Payouts Under Non-Equity
Incentive Plan Awards
|
|
Estimated Future
Payouts Under Equity
Incentive Plan Awards
|
|
All
other
Stock
Awards;
Number
of
Shares
of Stock
|
|
All other
Option
Awards;
Number of
Securities
Underlying
|
|
Exercise
or Base
Price of
Option
|
|
Grant Date
Fair Value
of Stock and
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
($)
|
|
or Units
(#)
|
|
Options
(#)
|
|
Awards
($/share)
|
|
Option
Awards ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey P.
Orleans
|
|
|
|
|
(1)
|
|
(1)
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael T. Vesey
|
|
|
|
|
(1)
|
|
(1)
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garry P. Herdler
|
|
December
6, 2007
|
|
|
(2)
|
|
(2)
|
|
(2)
|
|
|
|
|
|
|
240,000
|
|
|
|
$
|
4.65
|
|
$
|
1,116,000
|
(3)
|
|
|
December
6, 2007
|
(2)
|
|
(2)
|
|
(2)
|
|
(2)
|
|
|
|
|
|
|
|
|
240,000
|
|
4.65
|
(4)
|
206,400
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Dean Amann II
|
|
December 20, 2007
|
|
|
(1)
|
|
(1)
|
|
(1)
|
|
|
|
|
|
|
|
|
60,000
|
|
4.03
|
|
139,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas R. Vesey
|
|
December
20, 2007
|
|
$
|
188,000
|
(5)
|
$
|
596,000
|
(5)
|
$
|
700,000
|
|
|
|
|
|
|
|
|
|
60,000
|
|
4.03
|
|
139,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Payout is based upon a
percentage of net pre-tax profits pursuant to the Incentive Compensation Plan
as discussed in the Compensation Discussion and Analysis above under
Incentive Compensation Programs.
|
|
|
|
(2)
|
|
Payout is based upon a
percentage of pre-tax profits for the Company in accordance with the Herdler
Cash Bonus Plan discussed in the Compensation Discussion and Analysis above under
Cash Bonus Plan for Garry P Herdler.
|
|
|
|
(3)
|
|
Includes Restricted Stock
Award of 240,000 shares of Common Stock at $4.65 per share on
December 6, 2007.
|
|
|
|
(4)
|
|
On December 6, 2007,
the Company repriced the 240,000 options granted to Mr. Herdler on
February 27, 2007 from an exercise price of $15.60 per share to $4.65
per share, the fair market value on the date of the repricing, which was
above the market price of the Companys Common Stock on June 30, 2008.
All other terms of the options remain unchanged as a result of the repricing.
The incremental value of the modified share option was $0.86 per option, or
$206,400 in aggregate.
|
|
|
|
(5)
|
|
Payout is based on the
Division and Regional Presidents 2008 Bonus Plan discussed above in the
Compensation Discussion and Analysis section under Incentive Compensation
Programs.
|
|
|
|
(6)
|
|
Mr. Amanns and
Mr. Thomas R. Veseys 60,000 options vest with respect to 12,000 shares
on each of the first five anniversary dates of the grant date.
|
27
Table of Contents
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets
forth information concerning unexercised options, stock that has not vested,
and equity incentive plan awards to the named executive officers outstanding as
of the end of the Companys last fiscal year.
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
|
|
Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Number of
Shares or Units
of Stock That
Have Not
Vested (#)
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)(1)
|
|
Equity
Incentive Plan
Awards:
Number of
Unearned
Shares, Units
or Other Rights
That Have Not
Vested (#)
|
|
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey P.
Orleans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael T. Vesey
|
|
|
|
|
|
|
|
|
|
|
|
95,000
|
(2)
|
$
|
347,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garry P. Herdler
|
|
48,000
|
|
192,000
|
(3)
|
|
|
4.65
|
(3)
|
2/27/2017
|
|
240,000
|
(4)
|
878,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Dean Amann II
|
|
125,000
|
|
125,000
|
(5)
|
|
|
15.63
|
|
6/19/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
(6)
|
|
|
4.03
|
|
12/19/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas R. Vesey
|
|
|
|
60,000
|
(6)
|
|
|
4.03
|
|
12/19/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Market values reflect the
closing price of the Companys Common Stock on the American Stock Exchange on
June 30, 2008 (the last business day of the fiscal year), which was
$3.66 per share.
|
|
|
|
(2)
|
|
Mr. Michael T. Veseys
equity award vests with respect to 10,000 shares on each of the first five
anniversary dates of the effective date of the grant, which was March 4,
2005. His equity award then vests with respect to 15,000 shares on each of
the next five anniversary dates of the grant date. The Company paid $30,383
in Fiscal 2008 in tax gross ups related to this award. The stock awards
automatically vest in case of disability or death.
|
|
|
|
(3)
|
|
Mr. Herdlers option
award vests with respect to 48,000 shares on each of the first five
anniversary dates of the effective date of his employment agreement,
February 27, 2007. Mr. Herdlers options were re-priced on
December 6, 2007. The stock options automatically vest in case of
disability or death. All other terms of the options remain unchanged.
|
|
|
|
(4)
|
|
Mr. Herdlers equity
award vests with respect to 48,000 shares on each of the first five
anniversary dates of the effective date of the grant, December 6, 2007.
The Company will pay for tax gross ups related to this award. The stock
awards automatically vest in case of disability or death.
|
|
|
|
(5)
|
|
Mr. Amanns option
vests with respect to 62,500 shares on each of the first four anniversaries
of the effective date of his employment agreement, June 19, 2006.
|
|
|
|
(6)
|
|
Mr. Amanns and
Mr. Thomas R. Veseys 60,000 options, granted on December 20, 2007,
vest with respect to 12,000 shares on each of the first five anniversary
dates of the grant date.
|
28
Table of Contents
OPTION EXERCISES AND STOCK VESTED
The following table sets
forth information concerning each exercise of stock options and each vesting of
stock, including restricted stock, during the Companys last completed fiscal
year for the named executive officers on an aggregated basis.
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on Exercise
(#)
|
|
Value Realized on
Exercise
($)
|
|
Number of Shares
Acquired on Vesting
(#)
|
|
Value Realized on
Vesting
($)
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey P. Orleans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael T. Vesey
|
|
40,000
|
|
$
|
196,500
|
|
10,000
|
|
$
|
74,983
|
(1)
|
|
|
|
|
|
|
|
|
|
|
Garry P. Herdler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Dean Amann II
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas R. Vesey
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes Company paid tax
gross-up in the amount of $30,383.
|
29
Table
of Contents
PENSION BENEFITS
The Pension Benefits Table
below shows the actuarial present value of accumulated benefits payable to each
of our named executive officers and the number of years credited to each such
named executive officer under the SERP.
The present values set forth
below have been calculated for all named executive officers assuming that each
will remain in service until normal retirement age as defined under the
SERP. The assumptions set forth in Note 10 to our consolidated financial
statements included in our Annual Report on Form 10-K/A filed with the SEC
on October 3, 2008 are used below and are incorporated by reference.
Name
|
|
Plan Name
|
|
Number of Years
Credited Service(1)
|
|
Present Value of
Accumulated Benefit ($)
|
|
Payments During
Last Fiscal Year ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey P. Orleans
|
|
|
SERP
|
(2)
|
|
20.67
|
|
$
|
1,476,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael T. Vesey
|
|
|
SERP
|
|
|
20.20
|
|
425,293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garry P. Herdler
|
|
|
SERP
|
|
|
1.33
|
|
21,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Dean Amann II
|
|
|
SERP
|
|
|
2.0
|
|
49,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas R. Vesey
|
|
|
SERP
|
|
|
7.9
|
|
130,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For purposes of
calculating the present value of the accumulated benefit, a participants
actual years of service prior to the effective date of the SERP, if any, are
divided in half, as is required under the SERP, but the numbers presented
represent full years of service.
|
|
|
|
(2)
|
|
Retirement and pension
benefits under the SERP become effective on September 1, 2010, five
years after the effective date of the SERP. Death benefits from the SERP,
however, are immediately effective upon a participants death. For additional
information regarding the death benefit, see Potential Payments upon
Termination or Change in Control.
|
30
Table of Contents
NON-QUALIFIED DEFERRED COMPENSATION
The following table sets
forth information with respect to the Companys Deferral Plan, which provides
for the deferral of compensation of the named executive officers on a basis
that is not tax-qualified.
Name
|
|
Executive
Contribution in Last
Fiscal Year
($)(1)
|
|
Registrant
Contributions in
Last Fiscal Year
($)(2)
|
|
Aggregate Earnings
in Last Fiscal Year
($)(2)
|
|
Aggregate
Withdrawals/
Distributions
($)(2)
|
|
Aggregate Balance at
Last Fiscal Year End
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey P. Orleans
|
|
|
|
|
|
$
|
(4,025
|
)
|
|
|
$
|
115,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael T. Vesey
|
|
$
|
105,000
|
|
|
|
(13,291
|
)
|
$
|
557,338
|
|
97,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garry P. Herdler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Dean Amann II
|
|
$
|
155,000
|
|
|
|
(8,057
|
)
|
|
|
174,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas R. Vesey
|
|
|
|
|
|
(902
|
)
|
|
|
83,354
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Mr. Michael T. Veseys
contribution in the Companys last fiscal year is derived from bonuses
awarded for his performance in Fiscal 2007. Mr. Amanns contribution is
derived from both a portion of his Fiscal 2008 salary and a portion of his
bonuses awarded for his performance in Fiscal 2008.
|
|
|
|
(2)
|
|
Since the Company did not
contribute to any earnings of the named executive officers, all amounts in
the column providing information regarding Registrant contributions in the last
fiscal year are zero. Amounts reported for the Aggregate Earnings in the last
fiscal year are based upon earnings exceeding the ordinary investment gains
or losses made by the named executive officer. The same principle applies
with respect to Aggregate Withdrawals/Distributions.
|
31
Table of Contents
EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
Jeffrey P. Orleans
The Company entered into an
employment agreement with Jeffrey P. Orleans in June 1987. While the
initial term of the agreement has expired, it automatically renews for
successive one year terms, unless either the Company or Mr. Orleans gives
notice of termination at least 180 days prior to the end of the then
current term. Pursuant to this employment agreement, Mr. Orleans serves as
the Chairman of the Companys Board of Directors and the Companys Chief
Executive Officer and his base salary is $1,100,000. In addition,
Mr. Orleans is entitled to receive bonus compensation equal to 3% of
certain of the Companys net pre-tax profits, as defined by his employment
agreement. This bonus compensation is awarded in a manner consistent with the
Orleans Homebuilders, Inc. Incentive Compensation Plan.
Mr. Orleans employment
agreement also provides that if his employment terminates as a result of his
death or disability, he or his estate is entitled to receive his base salary
for the lesser of (a) a period of 120 days following such termination
and (b) the balance of the then existing term together with a prorated
portion (based on the number of days employed) of bonus compensation he would
have received had his employment not terminated.
Under Mr. Orleans
employment agreement, he is also entitled to certain fringe benefits, including
health and life insurance generally available to the Companys senior officers.
Garry P. Herdler
On February 27, 2007,
the Company entered into an employment agreement with Garry P. Herdler,
Executive Vice President and Chief Financial Officer of the Company.
Mr. Herdlers employment agreement provides that his employment with the
Company is for an unspecified duration and may be terminated at any time by
either party upon the giving of notice as required by the employment
agreement. Pursuant to the employment
agreement, Mr. Herdlers annual base salary is $450,000 for fiscal years
2007, 2008 and 2009 and $475,000 per year for fiscal years 2010, 2011 and
2012. Mr. Herdler also received a signing bonus payable over three
years in the aggregate amount of $900,000. Generally, Mr. Herdler
must be employed by the Company on the relevant scheduled payment date to
receive each portion of the signing bonus.
In addition, Mr. Herdler is entitled to a semi-annual guaranteed
minimum bonus and an additional annual incentive bonus for the duration of his
employment. Pursuant to his employment
agreement, Mr. Herdler received an option to acquire 240,000 shares of
Company Common Stock with an exercise price equal to the fair market value of the
Companys Common Stock on February 27, 2007, which was $15.60. These options were repriced on
December 6, 2007 to an exercise price of $4.65 per share.
In the event
Mr. Herdlers employment is terminated by the Company without Cause or
Mr. Herdler resigns for Good Reason (as such terms are defined in
Mr. Herdlers employment agreement), Mr. Herdler will be entitled to
receive (a) certain accrued but unpaid bonus amounts, (b) a minimum
of $750,000 if termination occurs in Fiscal 2007, 2008 or 2009, a minimum of
$525,000 if termination occurs in Fiscal 2010 or a minimum of $375,000 if
termination occurs in Fiscal 2011 or 2012, which minimums may be increased
based upon Mr. Herdlers earnings in years prior to termination;
(c) continued participation in the Companys health and other welfare
benefits for employees, in compliance with applicable law, for an 18 month
period following termination, or a shorter period if he is subsequently
employed; and (d) accelerated vesting of the options to acquire Company
Common Stock. Generally, severance payments (other than payment of
certain accrued but unpaid bonuses) will be made in 12 equal installments over
the course of the year following termination and are contingent on
Mr. Herdler signing and not timely revoking a termination agreement.
Upon a Change of Control
(as such term is defined in Mr. Herdlers employment agreement), if
Mr. Herdler is terminated for any reason other than disability or death in
the 120 days immediately prior to a change of control or within one year
following a change of control, he will be entitled to (a) a payment equal
to two times his base salary plus two times the greater of the average annual
bonus or the prior years bonus (as calculated pursuant to Mr. Herdlers
employment agreement) and (b) all of the items set forth in (a),
(c) and (d) in the previous paragraph. In addition, if
Mr. Herdler terminates his employment for any reason during the 30-day
period
32
Table of Contents
immediately preceding the one year anniversary of a Change of
Control, such termination will be considered a termination for Good Reason
entitling Mr. Herdler to such severance.
C. Dean Amann II
Effective June 19, 2006,
the Company entered into an At-Will Employment Agreement with C. Dean Amann II,
Executive Vice President of the Company, which provides that Mr. Amanns
employment with the Company is for an unspecified duration and that his
employment may be terminated at any time by either the Company or
Mr. Amann, for any or no reason.
Mr. Amanns employment
agreement provides for an annual base salary is $525,000, payable in accordance
with the Companys normal payroll practices. Pursuant to his employment
agreement, Mr. Amann was entitled to participate in his own cash bonus
plan, the Amann Cash Bonus Plan; however, during Fiscal 2008, Mr. Amanns
participation in the Incentive Compensation Plan and termination of the Amann
Cash Bonus Plan were approved by the Company.
Mr. Amanns base salary and bonus based on profits is subject to
review and revision by the Company from time to time. For Fiscal 2009, Mr. Amanns base salary
was adjusted to $325,000, effective September 22, 2008. This adjustment reflects changes in the
homebuilding industry and the Companys desire to realign Mr. Amanns
compensation with that of the regional executive vice presidents. Mr. Amann is also entitled to receive a
one-time bonus payable over three fiscal years in the aggregate amount of
$1,100,000, provided that he is employed by the Company on each scheduled
payment date; he has received two of the three annual payments. In addition, Mr. Amanns employment
agreement provides that he is eligible to participate in the Companys insurance
and health benefit plans, supplemental executive retirement plan and executive
compensation deferral plan, subject to their respective requirements, terms and
conditions.
In addition to the above,
pursuant to his employment agreement, Mr. Amann received an option to
acquire 250,000 shares of Company Common Stock with an exercise price equal to
the fair market value of the Companys Common Stock on June 19, 2006, or
$15.63. Mr. Amanns option will vest in four equal installments on each of
the first four anniversaries of the effective date of the employment agreement
and was issued in the form approved by the Companys Compensation Committee
33
Table of Contents
POTENTIAL PAYMENTS UPON
TERMINATION OR CHANGE IN CONTROL
The Company has entered into agreements and
maintains plans that will require the Company to provide compensation to the
named executive officers in the event of a termination of employment or change
in control of the Company. The
compensation payable to each of Messrs. Orleans, Michael T. Vesey,
Herdler, Amann and Thomas R. Vesey in connection with a termination of their
employment or a change in control of the Company on June 30, 2008 is set
forth in the table below. The actual
amounts to be paid to a named executive officer upon termination of his
employment or a change in control of the Company will depend on the
circumstances and timing of such termination or change in control.
This section does not present pension benefit
payments pursuant to the SERP other than in the event of death or change in
control because no participants would have been entitled to any other SERP
payment as of June 30, 2008.
Generally, the SERP requires participants to be credited with five years
of participation in the plan before any retirement or pension payments will be
made, and the SERP has only been in effect since September 1, 2005. For additional information regarding the
SERP, see Supplemental Executive Retirement Plan above under Compensation
Discussion and Analysis - Elements of Compensation - Retirement.
|
|
Termination
for Cause ($)(1)
|
|
Voluntary
Termination
Without Good
Reason ($)(1)
|
|
Involuntary
Termination
Without
Cause or
Resignation
for Good
Reason ($)(1)
|
|
Change in
Control Without
Termination ($)(2)
|
|
Change in
Control with
Involuntary
Termination
Without
Cause or
Resignation
for Good
Reason ($)(1)(2)(3)
|
|
Retirement ($)(1)
|
|
Disability
($)(1)
|
|
Death ($)(1)(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey P.
Orleans
|
|
|
|
|
|
|
|
$
|
1,476,315
|
|
$
|
1,476,315
|
|
|
|
$
|
507,692
|
(5)
|
$
|
3,955,529
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael T. Vesey
|
|
$
|
15,058
|
|
$
|
15,058
|
|
$
|
15,058
|
|
1,009,859
|
(6)
|
1,024,917
|
(6)
|
$
|
15,058
|
|
599,624
|
|
3,467,624
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garry P. Herdler
|
|
25,962
|
|
25,962
|
|
3,057,647
|
(7)
|
1,498,614
|
(8)
|
3,904,462
|
(9)
|
25,962
|
|
2,202,761
|
(10)
|
5,427,761
|
(10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Dean Amann II
|
|
6,058
|
|
6,058
|
|
6,058
|
|
49,513
|
|
55,571
|
|
6,058
|
|
6,058
|
|
3,152,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas R. Vesey
|
|
3,462
|
|
3,462
|
|
3,462
|
|
130,122
|
|
133,584
|
|
3,462
|
|
3,462
|
|
2,237,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes accrued but unpaid vacation pay as of
June 30, 2008.
(2)
Pursuant to the SERP, upon a change in
control, each participant becomes fully vested in his accumulated benefit, the
amount of which is identical to the Present Value of Accumulated Benefit
column presented in the Pension Benefits Table on page 30 of this Proxy
Statement.
(3)
Pursuant to the September 27, 2007
amendment to the SERP, upon a change in control, the participants in the plan
would receive full vesting of their accumulated benefit, which will be payable
subject to the age of the participant and other payment conditions contained in
the SERP.
(4)
Pursuant to the SERP, upon the death of a
participant, his beneficiary is entitled to receive (a) 100% of the
Participants Death benefit Recognized Compensation, paid in a lump sum, and (b) 50%
of such initial payment following each of the next four anniversaries of the
Participants date of death. The death
benefit calculation for each of Messrs. Orleans, Michael T. Vesey,
Herdler, Amann and Thomas R. Vesey is as follows:
34
Table of Contents
|
|
Total
Recognized
Annual
Compensation
and/or Plan
Cap FY 2008
($)
|
|
Total
Recognized
Annual
Compensation
and/or Plan
Cap FY 2007
($)
|
|
Total
Recognized
Annual
Compensation
and/or Plan
Cap FY 2006
($)
|
|
100% of
participants
Death benefit
Recognized
Compensation
(At time of
Death) ($)
|
|
50% of Initial
Payment on
the First,
Second,
Third and
Fourth
Anniversaries
of Death
($)
|
|
Total ($)
|
|
Jeffrey P.
Orleans
|
|
$
|
1,349,837
|
|
$
|
850,000
|
|
$
|
1,248,000
|
|
$
|
1,149,279
|
|
$
|
2,298,558
|
|
$
|
3,447,837
|
|
Michael T. Vesey
|
|
685,000
|
|
935,000
|
|
1,248,000
|
|
956,000
|
|
1,912,000
|
|
2,868,000
|
|
Garry P. Herdler*
|
|
1,000,000
|
|
1,150,000
|
|
N/A
|
|
1,075,000
|
|
2,150,000
|
|
3,225,000
|
|
C. Dean Amann II*
|
|
800,000
|
|
1,297,920
|
|
N/A
|
|
1,048,960
|
|
2,097,920
|
|
3,146,880
|
|
Thomas R. Vesey
|
|
600,000
|
|
743,488
|
|
890,065
|
|
744,518
|
|
1,489,035
|
|
2,233,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Mr.
Herdlers and Mr. Amanns Base Salary and Bonus averages were calculated over a
two year period based on their respective hire dates.
(5)
Mr. Orleans employment agreement
provides that in the event of death or disability, he, or his beneficiary, as
applicable, is entitled to payments totaling 100% of his base salary for 120
days, which equaled approximately $507,692.
(6)
Mr. Michael T. Vesey holds 95,000
unvested shares of restricted stock awarded pursuant to the Stock Award
Plan. If a change in control had
occurred on June 30, 2008, all of his unvested restricted stock would have
vested, which would have had a value equal to approximately $347,700. In addition, Mr. Vesey would have been
entitled to receive a related tax gross up equaling approximately $236,866.
(7)
Pursuant to his employment agreement, Mr. Herdler
would have been entitled to the following severance benefits: (a) cash
severance equal to $825,000 (which is the alternative minimum amount provided
for by his employment agreement); (b) a bonus severance payment of
$700,000 (calculated as (i) any unpaid portion of his signing bonus
($400,000) plus (ii) his accrued bonus ($300,000)); (c) subject to
applicable legal restrictions, continuing health and welfare benefits
maintained at the Companys expense for 18 months with a value of approximately
$29,886; (d) value of his remaining unvested Restricted Stock Award of
240,000 shares ($878,400); and (e) Gross Up of taxes for the Restricted
Stock Award ($598,399).
(8)
Mr. Herdlers 240,000 stock awards vest
immediately upon change of control for a value of $878,400 and gross up taxes
of $598,399.
(9)
Pursuant to his employment agreement, Mr. Herdler
would have been entitled to the following severance benefits: (a) cash
severance of $1,650,000 (which is calculated as two times the sum of his base
salary ($450,000) plus two times his average annual bonus ($375,000)); (b) a
bonus severance payment of $700,000 (calculated as (i) any unpaid portion
of his signing bonus ($400,000) plus (ii) his accrued bonus ($300,000)); (c) subject
to applicable legal restrictions, continuing health and welfare benefits
maintained at the Companys expense for 18 months with a value of approximately
$29,886; (d) value of his remaining unvested Restricted Stock Award of
240,000 shares ($878,400); and (e) Gross Up of taxes for the Restricted
Stock Award ($598,399).
(10)
Mr. Herdlers employment agreement provides that, in the event of
death or disability, he, or his beneficiary, as applicable, is entitled to the
following benefits: (a) a bonus severance payment of $700,000 (calculated
as (i) any unpaid portion of his signing bonus ($400,000) plus (ii) his
accrued bonus ($300,000). Mr. Herdlers
Restricted Stock Awards also vest for a value of $878,400 and gross up taxes of
$598,399.
35
Table of Contents
ADDITIONAL INFORMATION
Executive Officers
In addition to Messrs. Orleans,
Goldman and Vesey, whose biographies appear under Proposal One above, the
following persons serve as executive officers of the Company:
C. Dean Amann II,
45, has been an Executive Vice President of the Company since June 2006. From October 2003 to June 2006, Mr. Amann
was the Rocky Mountain Area President for Pulte Homes, Inc. and from February 2000
to October 2003, Mr. Amann was the Division President Colorado for
Pulte Homes, Inc.
Garry P. Herdler,
39, has been the Companys Executive Vice President and Chief Financial Officer
since February 2007. Mr. Herdler
most recently served two years as an Executive Director with CIBC World Markets
Corp. in New York in both equity capital markets and investment banking. Previously, he spent seven years with
Deutsche Bank Securities, Inc. and its predecessors, Bankers Trust/BT Alex
Brown, as a Director, Leveraged Finance in New York responsible for the origination,
structuring and execution of leveraged finance engagements (high-yield and
leveraged loans) for both corporate and leveraged buyout transactions. Prior to that, he spent approximately seven
years with KPMG, Chartered Accountants, in Vancouver, Canada.
Kyle Upper, 42,
has been the Companys Executive Vice President since June 2006. Prior to that, he had been the Companys Vice
President-Land Acquisition from July 2004 to June 2006. From May 1997 to July 2004 he had
been the Companys Director of Land Acquisition.
Thomas R. Vesey,
44, has been the Companys Executive Vice President, Southern Region since June 2006.
Prior to that, he had been the Companys Division President for Charlotte,
North Carolina from January 2002 to June 2006 and had been employed
by the Company from March 2000 to December 2001 to assist the Company
in evaluating and identifying opportunities for expansion into additional
markets and to assimilate acquisitions into the Companys operations. Mr. Vesey
is the brother of Michael T. Vesey, the Companys President and Chief Operating
Officer.
Mark D. Weaver,
47, has served as the Companys Vice President and Corporate Controller since August 2007
and Principal Accounting Officer since December 2007. Before Mr. Weavers employment with the
Company, he was Vice President and Corporate Controller of Agere Systems Inc. Mr. Weaver
joined Agere in 2001 and served as Director of Accounting Policy and External
Reporting before becoming Vice President and Corporate Controller. Mr. Weaver
is a Certified Public Accountant and earned a Masters of Business
Administration from Fairleigh Dickinson University. He also has a Bachelor of
Science in Accounting from Kings College.
All of the Companys
executive officers serve at the discretion of the Board of Directors.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of
the Exchange Act requires the Companys executive officers and directors and
persons who own more than ten percent of a registered class of the Companys
equity securities (collectively, the reporting persons) to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and to furnish the Company with copies of these reports.
Based on the
Companys review of the copies of the reports received by it, and written
representations, if any, received from reporting persons with respect to the
filing of reports on Forms 3, 4 and 5, the Company believes that all filings
required to be made by the reporting persons for Fiscal 2008 were made on a
timely basis.
36
Table of Contents
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table
sets forth, as of the close of business on September 30, 2008, certain
information with respect to the holdings of (a) each director or nominee
for director and each of the executive officers named in the Summary
Compensation Table, (b) all executive officers, directors and nominees for
director as a group, and (c) each stockholder who was known to the Company
to be the beneficial owner, as defined in Rule 13d-3 under the Exchange
Act of more than 5% of the Companys shares of Common Stock, based upon Company
records or Securities and Exchange Commission records. Each of the persons listed below has sole
voting and investment power with respect to such shares, unless otherwise
indicated.
Name of Beneficial Owner
|
|
Number of Shares
Beneficially Owned
|
|
Percent of Class
|
|
|
|
|
|
|
|
Named Executive Officers and Directors:
|
|
|
|
|
|
Jeffrey P. Orleans, Chairman of the Board
and Chief Executive Officer
|
|
11,277,919
|
(1)
|
59.9
|
%
|
Benjamin D. Goldman, Vice Chairman of the
Board
|
|
1,071,221
|
(2)
|
5.7
|
%
|
Michael T. Vesey, Director and President
and Chief Operating Officer
|
|
462,288
|
(3)
|
2.5
|
%
|
Garry P. Herdler, Executive Vice President
and Chief Financial Officer
|
|
288,000
|
(4)
|
1.5*
|
%
|
C. Dean Amann II, Executive Vice President
|
|
125,000
|
(5)
|
*
|
|
Thomas R. Vesey, Executive Vice President,
Southern Region
|
|
3,799
|
|
*
|
|
Jerome S. Goodman, Director
|
|
167,788
|
(6)
|
*
|
|
Robert N. Goodman, Director
|
|
50,000
|
|
*
|
|
Andrew N. Heine, Director
|
|
|
|
*
|
|
David Kaplan, Director
|
|
69,000
|
|
*
|
|
Lewis Katz, Director
|
|
514,000
|
|
2.7
|
%
|
Robert M. Segal, Director
|
|
68,000
|
(7)
|
*
|
|
John W. Temple, Director
|
|
74,000
|
|
*
|
|
All executive officers and directors as a
group (15 persons)
|
|
14,177,399
|
(8)
|
74.5
|
%
|
|
|
|
|
|
|
Other Beneficial Owners:
|
|
|
|
|
|
T. Rowe Price Associates, Inc.
|
|
1,299,500
|
(9)
|
6.9
|
%
|
*
|
Less than 1% of the
outstanding shares of the Companys Common Stock.
|
|
|
(1)
|
The
shares reflected include (a) 10,000 shares owned by a privately-held
corporation, of which Mr. Orleans is a 50% stockholder, (b) 46,000
shares (of which Mr. Orleans disclaims beneficial ownership) owned by
the Jeffrey P. Orleans Charitable Foundation, and (c) 175 shares owned
by a trust, of which Mr. Orleans is the trustee. 3,978,474 of the shares
of which Mr. Orleans has beneficial ownership have been pledged as
collateral for an annually renewable line of credit. Mr. Orleans
business address is 3333 Street Road, Suite 101, Bensalem, PA 19020.
|
|
|
(2)
|
The shares reflected
include (a) 100,000 shares owned by a trust of which Mr. Goldman is
the trustee and (b) 606,282 shares (of which Mr. Goldman disclaims
beneficial ownership) held in separate trusts and custodial accounts for the
benefit of the children of Mr. Orleans, as to which Mr. Goldman is,
in each case, sole trustee or custodian. Mr. Goldmans business address
is 3333 Street Road, Suite 101, Bensalem, PA 19020.
|
|
|
(3)
|
The shares reflected
include (a) 700 shares (of which Mr. Michael T. Vesey disclaims
beneficial ownership) held as custodian for Mr. Michael T. Veseys minor
children and (b) 95,000 unvested shares of restricted stock issued
pursuant to the Stock Award Plan. Mr. Michael T. Veseys business
address is 3333 Street Road, Suite 101, Bensalem, PA 19020.
|
|
|
(4)
|
The shares reflected
include 48,000 shares subject to options that are currently exercisable or
will become exercisable within 60 days of September 30, 2008. Mr. Herdlers business address is 3333 Street Road,
Suite 101, Bensalem, PA 19020.
|
37
Table of Contents
(5)
The shares reflected include 125,000 shares
subject to options that are currently exercisable or will become exercisable
within 60 days of September 30, 2008.
(6)
The shares are owned by a limited partnership
of which Mr. Goodman controls the general partner.
(7)
The shares reflected include 66,000 shares
(of which Mr. Segal disclaims beneficial ownership) owned by a trust for
the benefit of Mr. Segals children for which Mr. Segals wife is the
trustee.
(8)
The shares reflected include 199,000 shares
subject to options that are currently exercisable or will become exercisable
within 60 days of September 30, 2008.
(9)
The shares reflected include 78,200 shares
for which T. Rowe Price Associates, Inc. has sole voting and dispositive
power. For the remaining shares, T. Rowe
Price Associates, Inc. does not have the power to vote such shares and the
ultimate power to direct the receipt of dividends paid with respect to, and the
proceeds from the sale of, such securities, is vested in the individual and
institutional clients which Price Associates serves as investment adviser. The
business address for T. Rowe Price Associates, Inc. is 100 E. Pratt
Street, Baltimore, Maryland 21202. This
information is based solely on the Schedule 13G filed with the SEC on February 12,
2008 and the Form 13F that T. Rowe Price Associates, Inc. filed with
the SEC on August 14, 2008.
38
Table of Contents
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Audit
Committee Charter provides that all related party transactions shall be subject
to appropriate review and oversight by the Audit Committee. The Companys Code of Business Conduct &
Ethics provides that no director or executive officer of the Company may cause
the Company to enter into any transaction with a relative unless approved by
the Audit Committee. The Companys Code
of Business Conduct & Ethics also requires directors to disclose any
personal interest they may have in a matter which comes before the Board of
Directors.
During
fiscal year 2003 the Company entered into two separate ten year leases for the
rental of office space with a company that is controlled by Mr. Orleans.
The Company took possession of the leased premises and the lease term began in May 2004.
The annual rental for the leased office space is $112,000 and escalates to
$128,000 after the fifth year of the lease. The Company is also responsible for
the payment of its pro rata share of common area maintenance costs.
The
Company places some of its corporate insurance through A.P. Orleans Insurance
Agency, Inc., of which Mr. Orleans is the sole stockholder. The
Company also uses A.P. Orleans Insurance Agency, Inc. to purchase surety
bonds that the Company is required to maintain with various municipalities as
part of its ongoing operations as a developer on specific projects in those
municipalities. The Company paid premiums and fees associated with insurance
policies and surety bonds provided by the entity controlled by Mr. Orleans
of $1,622,000, $2,013,000, and $2,109,000 during fiscal years 2008, 2007, and
2006, respectively.
The
Company leases office space from companies controlled by Mr. Russell Parker,
the former president of the Companys subsidiary, Parker &
Lancaster Corporation. The annual rental for the office space leased from an
entity partially owned by Mr. Parker was $147,000, $129,000 and $129,000
for fiscal years 2008, 2007 and 2006, respectively. The rental expense is
considered to approximate a fair market value rental. The Company paid real
estate title insurance premiums to an entity formerly controlled by Mr. Parker,
of approximately $20,000, and $173,000 for fiscal years 2007 and 2006,
respectively. No premiums were paid to this real estate title insurance company
in fiscal year 2008.
In
November 2006, the Company entered into an agreement of sale to purchase
23 townhouse lots from Mr. Parker. The purchase price is calculated at 20%
of the net sales price, less lot improvement costs, and is payable on a per lot
basis at the time of conveyance of a completed home on the improved lot to a
third party purchaser. During the fiscal year ended June 30, 2008, the
Company closed on five of these lots. At the time of the closings, the Company
paid Mr. Parker a total of $125,000.
The
Company owns fractional interests in aircraft. Mr. Orleans is given
access to Company-owned aircraft for personal use. Mr. Orleans is,
however, required to reimburse the Company for the incremental costs associated
with such personal use. During the fiscal year ended June 30, 2008,
the Company discovered that it had overcharged Mr. Orleans for his
personal use of the Company plane during the fiscal years ended June 30,
2007, 2006 and 2005. The overcharge
occurred due to the Company charging Mr. Orleans based on the full
absorption method rather than based on aggregate incremental costs. The Company reimbursed Mr. Orleans
$1,114,494 for the overcharges in Fiscal 2005, Fiscal 2006 and Fiscal 2007.
The reimbursement of
this amount was approved by the Compensation Committee on August 28, 2008
and Mr. Orleans was reimbursed subsequent to year end. Mr. Orleans reimbursed the Company the
net amounts of $68,099
and
$
300,618
for his
personal use of Company-owned aircraft in Fiscal 2008 and Fiscal 2007,
respectively.
AUDIT COMMITTEE REPORT
The Audit
Committee of the Board of Directors is composed of three independent directors,
in accordance with the requirements of Section 121(A) of the American
Stock Exchange listing standards and the applicable standards of the Securities
and Exchange Commission, and operates under a written charter adopted by the
Board of Directors. The Charter was attached as Appendix A to the Companys
proxy statement for the 2007 Annual Meeting of Stockholders. Copies of
the charter can be obtained free of charge by contacting the Company at the
address appearing on the first page of this proxy statement to the
attention of the Companys Chief Financial Officer.
39
Table of Contents
All of the members
of the Audit Committee are able to read and understand fundamental financial
statements. In addition, John W. Temple has past employment experience in
finance or accounting, requisite professional certification in accounting, or
other comparable experience or background which results in his financial
sophistication, and is an audit committee financial expert within the meaning
of applicable Securities and Exchange Commission rules.
The Audit
Committee of the Board of Directors oversees the Companys financial reporting
process on behalf of the Board of Directors. Management has the primary
responsibility for the financial statements and the reporting process,
including the system of internal control. In fulfilling its oversight
responsibilities, the Audit Committee reviewed the Companys quarterly
unaudited and annual audited financial statements with management, including a
discussion of the quality, not just the acceptability, of accounting
principles, the reasonableness of significant judgments, and the clarity of
disclosures in the financial statements. The Audit Committee also
reviewed and discussed the Companys audited financial statements for Fiscal
2008 with the Companys independent registered public accounting firm.
Specifically, the Audit Committee has discussed with the independent registered
public accounting firm the matters required to be discussed by SAS 61
(Codification of Statements on Auditing Standards, AU Section 380).
The Audit
Committee has received the written disclosures and the letter from the Companys
independent registered public accounting firm, PricewaterhouseCoopers LLP,
required by Independence Standards Board No. 1, Independence Discussions
with Audit Committees, and has discussed with them their independence.
The Audit
Committee discussed with the Companys independent public accounting firm the
overall scope and plans for the audit. The Audit Committee met with them,
with and without management present, to discuss the results of their
examination, their evaluation of the Companys system of internal control, and
the overall quality of the Companys financial reporting. The Committee,
consistent with Section 302 of the Sarbanes-Oxley Act of 2002 and the rules adopted
thereunder, has met with management and the Companys independent registered
public accounting firm prior to the filing of officers certifications required
by that statute to receive any information concerning (a) significant
deficiencies in the design or operation of internal controls which could
adversely affect the Companys ability to record, process, summarize and report
financial data and (b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Companys
internal control over financial reporting.
Based on the
reviews and discussions referred to above, the Audit Committee recommended to
the Companys Board of Directors that the Companys audited financial
statements be included in the Companys Annual Report on Form 10-K for
Fiscal 2008. The Audit Committees recommendation was considered and
accepted by the Board of Directors.
Audit
Committee
|
|
John
W. Temple, Chairman
|
Andrew
N. Heine
|
David Kaplan
|
INFORMATION REGARDING THE AUDITORS
PricewaterhouseCoopers
LLP has been selected to be the independent accountants for the Company for its
fiscal year ended June 30, 2009. A
representative of PricewaterhouseCoopers LLP is expected to be present at the
Annual Meeting to make a statement if desired and to be available to respond to
any appropriate questions.
Audit Fees
The aggregate fees
and expenses charged to the Company by PricewaterhouseCoopers LLP for audit and
audit-related services totaled approximately $1,161,739 and $698,472 for Fiscal
2008 and Fiscal 2007, respectively.
40
Table of Contents
These fees include
fees associated with the audit of the Companys annual financial statements,
the review of financial statements included in the Companys quarterly reports
on Form l0-Q, and the review of the Companys Registration Statement on Form S-8. For Fiscal 2008 and Fiscal 2007, the fees
included fees associated with the audit of the Companys internal controls.
Audit-Related Fees
All fees for
audit-related services were disclosed under the caption
Audit Fees
above.
Tax Fees
The Company did not pay any fees to
PricewaterhouseCoopers LLP for tax services for Fiscal 2008 or Fiscal
2007.
All Other Fees
The aggregate fees
and expenses charged to the Company by PricewaterhouseCoopers LLP for all other
services, which include fees related to licensed accounting software, comfort
letters and consulting related to the Sarbanes-Oxley Act of 2002, were
approximately $10,700 and $13,028 for Fiscal 2008 and Fiscal 2007,
respectively.
The Audit
Committee has considered the nature of the above-listed services provided by
PricewaterhouseCoopers LLP and determined that such services are compatible
with their provision of independent audit services.
The Audit Committee Charter provides that the Audit Committee is
responsible for the pre-approval of all audit and non-audit services performed
by the Companys independent registered public accounting firm. All fees of PricewaterhouseCoopers LLP were
approved by the Audit Committee for Fiscal 2008 and Fiscal 2007.
OTHER MATTERS
The Board of
Directors is not aware at present of any other matters which will or may come
before the meeting and which require a vote of the stockholders. If any such matter is properly brought before
the meeting, the Proxy Committee will vote thereon in its discretion, to the
extent permitted by the rules and regulations of the Securities and
Exchange Commission and Delaware corporate law.
You are urged to mark, sign and date your proxy and return it
immediately.
DEADLINE FOR FILING STOCKHOLDER PROPOSALS FOR 2009 ANNUAL MEETING
Pursuant to
Exchange Act Rule 14a-8(e), proposals which stockholders desire to have
included in the Companys proxy statement for the annual meeting in 2009 must
be submitted in writing and received by the Company at its principal executive
offices on or before June 30, 2009.
Any Stockholder wishing to propose a nominee for membership on the
Companys Board of Directors should submit a recommendation in writing in
accordance with the foregoing, for consideration by the Board of Directors,
indicating the nominees qualifications and other biographical information and
providing confirmation of the nominees consent to serve as a director.
A stockholder may
wish to have a proposal presented at the 2009 annual meeting, but not to have
such proposal included in the Companys proxy statement and form of proxy
relating to that meeting. If notice of
any such proposal is not received by the Company at its principal executive
offices on or before September 19,
2009 (45 calendar days prior to the anniversary of the mailing date of
this proxy statement), then such proposal shall be deemed untimely for
purposes of Securities and Exchange Commission Rule 14a-4(c). Therefore, the Companys Proxy Committee will
be allowed to use its discretionary voting authority to vote against the
stockholder proposal when and if the proposal is raised at the 2009 Annual
Meeting of Stockholders.
41
Table of Contents
The Company has
not been notified by any stockholder of such stockholders intent to present a
stockholder proposal from the floor at this years Annual Meeting. The enclosed proxy grants the Proxy Committee
discretionary authority to vote on any matter properly brought before this years
Annual Meeting.
REQUIREMENTS AND PROCEDURES FOR NOMINATING OR RECOMMENDING FOR
NOMINATION CANDIDATES FOR DIRECTOR
The Nominating
Committee considers any appropriate recommendations for candidates for the
Board of Directors. When considering candidates for the Board, the Nominating
Committee evaluates the totality of each candidates credentials and does not
have any specific eligibility requirements or minimum qualifications that must
be met by a recommended nominee. The
Nominating Committee considers those factors it deems appropriate, including
judgment, skill, independence, education, experience with businesses and
organizations comparable in size or scope, experience as an executive of, or
advisor to, a publicly traded or private company, experience and skill relative
to other Board of Director members, specialized knowledge or experience and
desirability of the candidates membership on the Board of Directors. Depending upon the current needs of the
Board, the Nominating Committee may weigh certain factors more or less heavily.
The Nominating Committee does, however, believe that all members of the Board
of Directors should have the highest character and integrity, a reputation for
working constructively with others, sufficient time to devote to Board of
Director matters and no conflict of interest that would materially interfere
with performance as a director.
Any stockholder of
record, owning at least one percent of stock entitled to vote in the election
of directors who is a stockholder at the record date of the meeting and also on
the date of the meeting at which directors are to be elected, may submit a
nomination for director by following the procedures outlined in Section 2.13
of the Companys By-laws. In general, Section 2.13
provides that a stockholder must provide timely written notice to the Secretary
of the Company not less than 120 days nor more than 150 days prior to the date
of the Companys proxy statement released to stockholders in connection with
the previous years annual meeting. Each
such written notice must set forth: (a) the name and address of the
stockholder who intends to make the nomination (Nominating Stockholder); (b) the
name and address of the beneficial owner, if different from the Nominating
Stockholder, of any of the shares owned of record by the Nominating Stockholder
(Beneficial Holder); (c) the number of shares of each class and series
of shares of the Company which are owned of record and beneficially by the
Nominating Stockholder and the number which are owned beneficially by any
Beneficial Holder; (d) a description of all arrangements and
understandings between the Nominating Stockholder and any Beneficial Holder and
any other person or persons (naming such person or persons) pursuant to which
the nomination is being made; (e) the name and address of the person or
persons to be nominated; (f) a representation that the Nominating
Stockholder is at the time of giving of the notice, was or will be on the
record date for the meeting, and will be on the meeting date a holder of record
of shares of the Company entitled to vote at such meeting, and intends to
appear in person or by proxy at the meeting to nominate the person or persons
specified in the notice; (g) such other information regarding each nominee
proposed by the Nominating Stockholder as would have been required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had the nominee been nominated, or intended
to be nominated, by the Board of Directors; and (h) the written consent of
each nominee to serve as a director of the Company if so elected.
In addition, the
Nominating Committee considers potential candidates recommended by current
directors, Company officers, employees and others. When appropriate, the
Nominating Committee may retain executive recruitment firms to assist in
identifying suitable candidates. The Nominating Committee screens all potential
candidates in the same manner regardless of the source of the recommendation.
In nominating
candidates to fill vacancies created by the expiration of the term of a member
of the Board of Directors, the Nominating Committee determines whether the incumbent
director is willing to stand for re-election. If so, the Nominating Committee
evaluates his or her performance in office to determine suitability for
continued service, taking into consideration the value of continuity and
familiarity with the Companys business.
HOUSEHOLDING OF PROXY
MATERIALS
SEC regulations
permit the Company to send a single set of proxy materials, including this
proxy statement and the Companys annual report, to two or more stockholders
that share the same address. Each stockholder will
42
Table of Contents
continue
to receive his or her own separate proxy card. The Company will deliver
promptly upon written or oral request a separate set of proxy materials to a
stockholder at a shared address that only received a single set of proxy
materials for this year. If a stockholder would prefer to receive his or her
own copy, please contact Garry P. Herdler, Executive Vice President and Chief
Financial Officer at the address appearing on the first page of this proxy
statement. Similarly, if a stockholder would like to receive his or her own set
of the Companys proxy materials in future years or if a stockholder shares an
address with another stockholder and both would like to receive only a single
set of the Companys proxy materials in future years, please contact Mr. Herdler.
ANNUAL REPORT ON FORM 10-K
THE
COMPANY, UPON REQUEST, WILL FURNISH TO RECORD AND BENEFICIAL HOLDERS OF ITS
COMMON STOCK, FREE OF CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM 10-K
(INCLUDING FINANCIAL STATEMENTS AND SCHEDULES BUT WITHOUT EXHIBITS) FOR FISCAL
2008. COPIES OF EXHIBITS TO THE FORM 10-K
ALSO WILL BE FURNISHED UPON REQUEST AND UPON PAYMENT OF A REASONABLE FEE. ALL REQUESTS SHOULD BE DIRECTED TO GARRY P.
HERDLER, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER AT THE OFFICES OF
THE COMPANY SET FORTH ON THE FIRST PAGE OF THIS PROXY STATEMENT.
October 28, 2008
|
By Order of the Board of
Directors
|
|
|
|
|
|
MICHAEL
T. VESEY
|
|
President, Chief Operating
Officer and Director
|
43
x
PLEASE MARK VOTES AS IN THIS EXAMPLE
REVOCABLE PROXY
ORLEANS HOMEBUILDERS, INC.
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, DECEMBER 4, 2008
THIS PROXY IS SOLICITED ON BEHALF
OF
THE BOARD OF DIRECTORS
The
undersigned, revoking all prior proxies, hereby appoints Jeffrey P. Orleans and
Benjamin D. Goldman, or any of them, with full power of substitution, as the
undersigneds proxies and hereby authorizes them to represent and to vote, as
designated herein, all the Common Stock of Orleans Homebuilders, Inc. held
of record by the undersigned on the close of business on October 27, 2008,
at the Annual Meeting of Stockholders to be held on Thursday, December 4,
2008 and at any adjournment or postponement thereof.
1.
ELECTION OF DIRECTORS
Nominees:
Benjamin D. Goldman, Jerome S. Goodman, Robert N. Goodman, Andrew N.
Heine, David Kaplan, Lewis Katz, Jeffrey P. Orleans, Robert M. Segal, John W.
Temple and Michael T. Vesey.
|
For
|
With-
hold
|
For All
Except
|
o
|
o
|
o
|
INSTRUCTION: To withhold authority to vote for any
individual nominee, mark For All Except and write that nominees name in the
space provided below.
|
|
|
|
|
2.
|
APPROVAL
OF THE ORLEANS HOMEBUILDERS, INC. AMENDED AND RESTATED STOCK AWARD PLAN.
|
For
|
Against
|
Abstain
|
o
|
o
|
o
|
3.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
You
are urged to sign and return this proxy so that you may be sure that your
shares will be voted
UNLESS OTHERWISE SPECIFIED, ALL SHARES WILL BE VOTED FOR THE ELECTION
OF ALL NOMINEES FOR DIRECTOR LISTED, FOR THE PROPOSAL TO APPROVE THE AMENDED
AND RESTATED STOCK AWARD PLAN. THIS PROXY ALSO DELEGATES DISCRETIONARY
AUTHORITY TO VOTE WITH RESPECT TO ANY OTHER BUSINESS WHICH MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT OF POSTPONEMENT THEREOF.
Please
be sure to date and sign this proxy card in the box below.
|
|
|
Detach above card, sign, date and
mail in postage paid envelope provided.
ORLEANS HOMEBUILDERS, INC.
PLEASE ACT PROMPTLY
PLEASE COMPLETE, DATE, SIGN, AND
MAIL THIS PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Please
sign exactly as your name appears hereon, date and return promptly. When shares
are held by joint tenants, both should sign. Executors, administrators,
trustees and other fiduciaries should indicate their capacity when signing.
The
above signed acknowledges receipt from Orleans Homebuilders, Inc., prior
to the execution of this proxy, of a Notice of the Annual Meeting of
Stockholders, a Proxy Statement and an Annual Report to Stockholders.
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN
THE SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE
PROVIDED.
0553
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