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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
the Securities Exchange Act of 1934 (Amendment No. )
Filed by a party other than the Registrant o
Check the appropriate box:
þ Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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4350 South Monaco Street, Suite 500
Denver, Colorado 80237
Sincerely, | ||||
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Larry A. Mizel | ||||
Chairman of the Board |
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4350 South Monaco Street, Suite 500
Denver, Colorado 80237
SHAREOWNERS
BY ORDER OF THE BOARD OF DIRECTORS, | ||||
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Joseph H. Fretz | ||||
Secretary |
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Denver, Colorado 80237
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Effect of Broker Non-Votes, | ||||
Proposal | Vote Required | Withhold Votes and Abstentions | ||
Election of Directors | The three nominees who receive the most votes will be elected | Broker non-votes and withhold votes have no legal effect | ||
Approve increase in the number of authorized shares of Common Stock | An affirmative vote of the majority of the shares outstanding as of the Record Date | Broker non-votes and abstentions have the same effect as a vote against the proposal |
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1. | The Director has not been an employee of the Company, and no immediate family member of the Director has been an executive officer of the Company, within the last three years. | ||
2. | The Director has not received, and no immediate family member of the Director has received, during any twelve-month period within the last three years, more than $100,000 per year in direct compensation from the Company, other than (a) director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service), (b) compensation paid to the Director for former service as an interim chairman, chief executive officer or other executive officer of the Company, or (c) compensation paid to an immediate family member of the Director as an employee of the Company (other than an executive officer of the Company). |
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3. | (a) Neither the Director nor an immediate family member of the Director is a current partner of a firm that is the Company’s internal or external auditor; (b) the Director is not a current employee of such a firm; (c) the Director does not have an immediate family member who is a current employee of such a firm and who participates in the firm’s audit, assurance or tax compliance (but not tax planning) practice; or (d) neither the Director nor an immediate family member of the Director was within the last three years (but is no longer) a partner or employee of such a firm and personally worked on the Company’s audit within that time. | ||
4. | Neither the Director nor an immediate family member of the Director is, or has been within the last three years, employed as an executive officer of another company where any of the Company’s present executives at the same time serves or served on the other company’s compensation committee. | ||
5. | The Director is not a current employee, and no immediate family member of the Director is a current executive officer, of a company that has made payments to, or received payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues. |
1. | The Director has not directly or indirectly accepted any consulting, advisory, or other compensatory fee from the Company (or any subsidiary), other than (1) in the Director’s capacity as a member of the Board of Directors and any Board committee, (2) fixed amounts under a retirement plan for prior service or (3) dividends to shareowners. | ||
2. | The Director has not been an “affiliated person” of the Company (or any subsidiary), apart from his/her capacity as a member of the Board or any Board committee. An “affiliated person” means a person that directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, the Company. |
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Shares Beneficially | ||||||||||||
Positions and Offices with the Company | Owned as of the | |||||||||||
Name | Age | and Other Principal Occupations | Record Date (1)(2) | Percentage of Class (3) | ||||||||
NOMINEES: | ||||||||||||
Class III | ||||||||||||
Terms Expire in 2006 | ||||||||||||
Steven J. Borick | 53 | Director, President and Chief Executive Officer of Superior Industries International, Inc., President of Texakota, Inc. and a General Partner in Texakota Oil Company | 25,500 | * | ||||||||
David D. Mandarich | 58 | President and Chief Operating Officer of the Company | 3,476,146 | (5) | 7.67 % | |||||||
David E. Blackford | 57 | President, Chief Executive Officer and Chairman of the Board of California Bank & Trust | 31,000 | * | ||||||||
CONTINUING DIRECTORS: | ||||||||||||
Class I | ||||||||||||
Terms Expire in 2007 | ||||||||||||
Herbert T. Buchwald | 75 | Principal in the law firm of Herbert T. Buchwald, P.A. and President and Chairman of the Board of Directors of BPR Management Corporation | 119,823 | * | ||||||||
Larry A. Mizel | 63 | Chairman of the Board of Directors and Chief Executive Officer of the Company | 7,771,237 | (4) | 17.16 % | |||||||
Class II | ||||||||||||
Terms Expire in 2008 | ||||||||||||
Gilbert Goldstein | 87 | Principal in the law firm of Gilbert Goldstein, P.C. | 93,965 | * | ||||||||
William B. Kemper | 69 | Private real estate investor | 57,500 | * |
* | Represents less than one percent of the outstanding shares of Common Stock. | |
(1) | Includes, where applicable, shares of Common Stock owned by such person’s minor children and spouse and by other related individuals or entities over whose shares such person may be deemed to have beneficial ownership. | |
(2) | Includes the following shares of Common Stock subject to options that are exercisable or become exercisable within 60 days of the Record Date at prices ranging from $18.47 to $78.89 per share: Herbert T. Buchwald 102,575; Larry A. Mizel 632,537; Gilbert Goldstein 93,250; William B. Kemper 57,500; Steven J. Borick 25,000; David D. Mandarich 632,537; and David E. Blackford 25,000. | |
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(3) | The percentage shown is based on the number of shares of Common Stock outstanding as of January 31, 2006 and includes shares of Common Stock actually owned and shares of Common Stock subject to options that are exercisable or become exercisable within 60 days of the Record Date. All shares of Common Stock which the person had the right to acquire within 60 days of that date are deemed to be outstanding for the purpose of computing the percentage of shares of Common Stock owned by such person, but are not deemed to be outstanding for the purpose of computing the percentage of shares of Common Stock owned by any other person. | |
(4) | Mr. Mizel has sole voting power over 5,886,599 shares, shared voting power over 1,884,638 shares, sole investment power over 5,886,599 shares and shared investment power over 1,884,638 shares. | |
(5) | Includes 1,886 shares owned by Mr. Mandarich’s minor children. |
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(a) | as to each person whom the shareowner proposes to nominate for election or re-election as a Director: |
(i) | the name, age, business address and residence address of such person, | ||
(ii) | the principal occupation or employment of such person, | ||
(iii) | the class and number of shares of the Company which are beneficially owned by such person and | ||
(iv) | any other information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors pursuant to Rule 14(a) under the Securities Exchange Act of 1934 and any other applicable laws or rules or regulations of any governmental authority or of any national securities exchange or similar body overseeing any trading market on which shares of the Company are traded, and |
(b) | as to the shareowner giving the notice: |
(i) | the name and record address of the shareowner and | ||
(ii) | the class and number of shares of the Company beneficially owned by the shareowner. |
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CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK" -->
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
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Name | Offices Held as of February 6, 2006 | |
Larry A. Mizel | Chairman of the Board of Directors and Chief Executive Officer | |
David D. Mandarich | President, Chief Operating Officer and a Director | |
Paris G. Reece III | Executive Vice President, Chief Financial Officer and Principal Accounting Officer | |
Michael Touff | Senior Vice President and General Counsel |
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Summary Compensation Table
Long-Term | ||||||||||||||||||||||||||||
Annual Compensation | Compensation Awards | |||||||||||||||||||||||||||
Shares | ||||||||||||||||||||||||||||
Name and | Other Annual | Restricted | Underlying | All Other | ||||||||||||||||||||||||
Principal Position | Year | Salary | Bonus | Compensation (3) | Stock Awards (6) | Options (7) | Compensation (9) | |||||||||||||||||||||
Larry A. Mizel, | 2005 | $ | 1,000,000 | $ | 20,500,000 | (1) | $ | 59,140 | (4) | - 0 - | 180,000 | (8) | $ | 7,700 | ||||||||||||||
Chairman of the Board | 2004 | $ | 1,000,000 | $ | 20,119,338 | (1) | $ | 92,196 | (4) | - 0 - | 234,000 | $ | 7,150 | |||||||||||||||
of Directors and Chief | 2003 | $ | 1,000,000 | $ | 10,852,916 | (1) | $ | 107,793 | (4) | - 0 - | 357,500 | $ | 6,600 | |||||||||||||||
Executive Officer | ||||||||||||||||||||||||||||
David D. Mandarich, | 2005 | $ | 830,000 | $ | 20,500,000 | (1) | N/A | - 0 - | 180,000 | (8) | $ | 7,700 | ||||||||||||||||
President, Chief | 2004 | $ | 830,000 | $ | 20,119,338 | (1) | $ | 53,013 | (5) | - 0 - | 234,000 | $ | 7,150 | |||||||||||||||
Operating Officer | 2003 | $ | 830,000 | $ | 10,852,916 | (1) | $ | 58,256 | (5) | - 0 - | 357,500 | $ | 6,600 | |||||||||||||||
and a Director | ||||||||||||||||||||||||||||
Paris G. Reece III, | 2005 | $ | 420,000 | $ | 1,000,000 | (2) | N/A | $ | 150,000 | 70,000 | (8) | $ | 7,700 | |||||||||||||||
Executive Vice President | 2004 | $ | 378,778 | $ | 800,000 | N/A | $ | 150,000 | 91,000 | $ | 7,150 | |||||||||||||||||
Chief Financial Officer and | 2003 | $ | 315,000 | $ | 590,000 | N/A | $ | 150,000 | 100,100 | $ | 6,600 | |||||||||||||||||
Principal Accounting Officer | ||||||||||||||||||||||||||||
Michael Touff, | 2005 | $ | 339,691 | $ | 425,000 | (2) | N/A | $ | 75,000 | 30,000 | (8) | $ | 7,700 | |||||||||||||||
Senior Vice President | 2004 | $ | 309,691 | $ | 325,000 | N/A | $ | 75,000 | 39,000 | $ | 7,150 | |||||||||||||||||
and General Counsel | 2003 | $ | 289,691 | $ | 260,000 | N/A | $ | 40,000 | 44,330 | $ | 6,600 |
(1) | These bonuses were paid in January following the year indicated in accordance with the terms of the M.D.C. Holdings, Inc. Executive Officer Performance-Based Compensation Plan approved by the Company’s shareowners at the 1994 Annual Meeting, as amended (the “Executive Compensation Plan”). The amount of these bonuses is determined based on the Company’s “Adjusted Pre-Tax Return on Average Stockholders’ Equity” (as defined in the Executive Compensation Plan), which must equal or exceed 10% before bonuses are payable. On December 30, 2005, the Compensation Committee amended the Executive Compensation Plan to provide that the Compensation Committee may, in its sole discretion, reduce the amount otherwise payable under the Executive Compensation Plan for any fiscal year by determining, on or before the last day of the fiscal year, that the payment shall not exceed a dollar amount then specified by the Compensation Committee. Also on December 30, 2005, the Compensation Committee specified that the bonus payment to each of Messrs. Mizel and Mandarich for fiscal year 2005 would be the calculated amount under the Executive Compensation Plan, provided that the bonus payment amount would not exceed $20,500,000. Messrs. Mizel and Mandarich consented to this exercise of the Compensation Committee’s discretion for the 2005 fiscal year. All of the 2005, 2004 and 2003 bonuses were paid in cash. | |
(2) | These bonuses were approved by the Compensation Committee on December 30, 2005, and were paid in January of 2006. | |
(3) | The Board of Directors of the Company has determined that it is in the best interests of the Company for its Chief Executive Officer and its Chief Operating Officer to utilize Company aircraft for non-Company business purposes, |
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when the aircraft are not being utilized in the ordinary course of Company business. Accordingly, the Company leases the aircraft to those officers on a non-exclusive basis when the aircraft are not required for Company business. The lease agreements, filed on Form 8-K dated February 25, 2005, require the officers to pay each month the Incremental Expenses incurred by the Company for each flight, as defined in the lease agreements. The Incremental Expenses represent the maximum reimbursement permitted by the Federal Aviation Administration in Federal Aviation Regulation Part 91.501(d). For 2005, Mr. Mizel pre-paid $385,000 and Mr. Mandarich pre-paid $75,000 for future Incremental Expense lease payments. They each incurred, respectively, $309,625 and $38,779, in actual lease payments for 2005. Accordingly, they had a credit at the end of the year of $75,375 and $36,221, respectively. When seats on the aircraft are available on a business flight and occupied for non-business purposes, income is imputed to the attributed officer for federal income tax purposes. | ||
(4) | This includes $25,160 of taxable income in 2005, $75,115 of taxable income in 2004 and $80,000 of taxable income in 2003 imputed for federal income tax purposes for non-business use of Company aircraft as authorized by resolution of the Board of Directors. | |
(5) | This includes $34,461 of taxable income in 2004 and $31,076 of taxable income in 2003 imputed for federal income tax purposes for non-business use Company aircraft as authorized by resolution of the Board of Directors. | |
(6) | In 2005, the Company granted restricted stock awards to Messrs. Reece and Touff, pursuant to Restricted Stock Agreements effective December 30, 2005. The awards were valued at $61.98 per share, the closing price of the Common Stock on December 30, 2005. In 2004, the Company granted restricted stock awards to Messrs. Reece and Touff pursuant to Restricted Stock Agreements effective November 22, 2004. The awards were valued at $59.18 per share, the closing price of the Common Stock on November 22, 2004. In 2003, the Company granted restricted stock awards to Messrs. Reece and Touff pursuant to Restricted Stock Agreements effective November 17, 2003. The awards were valued at $44.68 per share, the closing price of the Common Stock on November 17, 2003. The restrictions on the shares awarded pursuant to the Restricted Stock Agreements lapse as to 25% of such shares each year, commencing on the first anniversary of the award. The restrictions on the shares awarded in these years may lapse in the event of a change in control transaction, will lapse in part in the event of the employee’s death, disability or retirement, and will lapse in total in the event the employee’s employment is terminated by the Company without cause. As of December 31, 2005, Mr. Reece held 7,295 shares of unvested restricted stock with a value of $452,144, and Mr. Touff held 2,954 shares of unvested restricted stock with a value of $183,089. Dividends are paid on the restricted stock. The per share valuations throughout this footnote and every other footnote included with this table have been adjusted to reflect the Company’s May 27, 2003 10% stock dividend, March 23, 2004 10% stock dividend and January 10, 2005 1.3 for 1 stock split. | |
(7) | Pursuant to the stock option plan under which the options were granted, as a result of the 10% stock dividends, the number of shares that may be acquired upon exercise of the options that were outstanding as of the time of the stock dividend increased by 10% and the exercise price of unexercised options decreased by dividing the exercise price by 1.1 for each of the 10% stock dividends. Also, as a result of the 1.3 for 1 stock split, the number of shares that may be acquired upon exercise of the options outstanding as of the time of the stock split increased by 30% and the exercise price of unexercised options decreased by dividing the exercise price by 1.3. | |
(8) | See “Option Grants in Last Fiscal Year,” below. | |
(9) | The amounts in this column consist of Company contributions allocated to the executive officers’ accounts pursuant to the Company’s 401(k) Savings Plan. The Company’s 2005 contribution to these officers was funded in cash. | |
N/A: Disclosure is not required under the SEC’s rules. |
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Individual Grants | Potential Realizable | |||||||||||||||||||||||
Percent of Total | Value at Assumed Annual | |||||||||||||||||||||||
Number of Shares | Options Granted to | Rates of Stock Price | ||||||||||||||||||||||
Underlying | Employees in Fiscal | Exercise Price | Expiration | Appreciation for | ||||||||||||||||||||
Name | Options | Year (3) | ($/Sh) | Date | Option Term | |||||||||||||||||||
5% | 10% | |||||||||||||||||||||||
Larry A. Mizel | 90,000 | (1) | 10.21 | % | $ | 61.98 | 12/30/15 | $ | 3,508,100 | $ | 8,890,214 | |||||||||||||
90,000 | (2) | 10.21 | % | $ | 68.18 | 12/30/15 | $ | 2,950,100 | $ | 8,332,214 | ||||||||||||||
David D. Mandarich | 90,000 | (1) | 10.21 | % | $ | 61.98 | 12/30/15 | $ | 3,508,100 | $ | 8,890,214 | |||||||||||||
90,000 | (2) | 10.21 | % | $ | 68.18 | 12/30/15 | $ | 2,950,100 | $ | 8,332,214 | ||||||||||||||
Paris G. Reece III | 70,000 | (1) | 7.94 | % | $ | 61.98 | 12/30/15 | $ | 2,728,522 | $ | 6,914,611 | |||||||||||||
Michael Touff | 30,000 | (1) | 3.40 | % | $ | 61.98 | 12/30/15 | $ | 1,169,367 | $ | 2,963,405 |
(1) | This option granted on December 30, 2005 is exercisable as to 33-1/3% on each of the third, fourth and fifth anniversary dates. The exercise price is $61.98, the closing price of the Common Stock on the NYSE on the date of grant. | |
(2) | This option granted on December 30, 2005 is exercisable as to 33-1/3% on each of the third, fourth and fifth anniversary dates. The exercise price is 110% of $61.98, the closing price of the Common Stock on the NYSE on the date of grant. | |
(3) | The Company granted options representing 881,500 shares of Common Stock to 184 employees in fiscal 2005. |
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Value of Unexercised | ||||||||||||||||||||||||
Shares Underlying Unexercised | In-the-Money Options | |||||||||||||||||||||||
Shares | Options at Fiscal Year End | at Fiscal Year End(1) | ||||||||||||||||||||||
Name | Acquired on Exercise | Value Realized | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Larry A. Mizel | 285,499 | $ | 19,420,472 | 606,287 | 991,038 | $ | 27,264,460 | $ | 18,999,069 | |||||||||||||||
David D. Mandarich | 285,499 | $ | 20,537,113 | 606,287 | 991,038 | $ | 27,264,460 | $ | 18,999,069 | |||||||||||||||
Paris G. Reece III | 133,233 | $ | 9,023,885 | 169,488 | 330,138 | $ | 7,623,708 | $ | 5,855,886 | |||||||||||||||
Michael Touff | 57,099 | $ | 3,688,939 | 67,637 | 124,151 | $ | 3,047,077 | $ | 1,805,345 |
(1) | The closing price of the Common Stock on December 30, 2005 on the NYSE was $61.98. |
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• | A vesting schedule that would provide for no vesting during the first three years and 33-1/3% vesting per year on the third through the fifth anniversaries of the date of grant; | |
• | The price at which 90,000 shares covered by the option may be purchased shall be equal to the NYSE closing price of the Common Stock on December 30, 2005; and | |
• | The price at which 90,000 shares covered by the option may be purchased shall be equal to 110% of the NYSE closing price of the Common Stock on December 30, 2005. |
COMPENSATION COMMITTEE Steven J. Borick, Chairman William B. Kemper Herbert T. Buchwald |
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OF MDC COMMON STOCK, THE S&P 500 STOCK INDEX
AND A SELECTED PEER GROUP" -->
OF MDC COMMON STOCK, THE S&P 500 STOCK INDEX
AND A SELECTED PEER GROUP
![(PERFORMANCE GRAPH)](https://capedge.com/proxy/PRE 14A/0000950134-06-001928/d32702a3270204.gif)
FIVE YEAR PLOT POINTS | ||||||||||||||||||||||||
12/29/2000 | 12/31/2001 | 12/31/2002 | 12/31/2003 | 12/31/2004 | 12/30/2005 | |||||||||||||||||||
M.D.C. Holdings, Inc. | $ | 100.00 | $ | 139.88 | $ | 142.69 | $ | 266.78 | $ | 396.75 | $ | 373.76 | ||||||||||||
Weighted Avg. Peer Group | $ | 100.00 | $ | 140.52 | $ | 155.26 | $ | 319.60 | $ | 427.53 | $ | 480.19 | ||||||||||||
S&P 500 | $ | 100.00 | $ | 88.11 | $ | 68.64 | $ | 88.33 | $ | 97.94 | $ | 102.75 |
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Steven J. Borick
Herbert T. Buchwald
CHANGE IN CONTROL AGREEMENTS
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Name | Title | |
Larry A. Mizel | Trustee, President and Assistant Secretary | |
Paris G. Reece III | Trustee, Vice President and Secretary | |
Steven J. Borick | Trustee | |
Gilbert Goldstein | Trustee | |
David D. Mandarich | Trustee |
OF THE COMPANY AND OWNERSHIP OF MANAGEMENT
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Number of Shares of Common | Percent | |||||||
Name and Address of Beneficial Owner (1) | Stock Owned Beneficially | of Class (2) | ||||||
Marsico Capital Management, LLC | ||||||||
1200 17th Street, Suite 1600 | ||||||||
Denver, CO 80202 | 3,668,605 | (3) | 8.21 | % | ||||
Greenlight Capital, L.L.C. and affiliates | ||||||||
140 East 45th Street, 24th Floor | ||||||||
New York, NY 10017 | 3,199,950 | (4) | 7.17 | % | ||||
Barclays Global Investors, NA | ||||||||
45 Fremont Street | ||||||||
San Francisco, CA 94105 | 2,767,606 | (5) | 6.20 | % | ||||
Paris G. Reece III | ||||||||
4350 South Monaco St., Suite 500 | ||||||||
Denver, CO 80237 | 432,335 | (6) | 0.96 | % | ||||
Michael Touff | ||||||||
4350 South Monaco St., Suite 500 | ||||||||
Denver, CO 80237 | 191,690 | (7) | * | |||||
All executive officers and Directors as a group (9 persons) | 12,199,196 | 26.26 | % |
* | Less than 1%. | |
(1) | The address of Messrs. Mizel and Mandarich, the Directors who beneficially own more than 5% of the outstanding shares of Common Stock, is 4350 South Monaco Street, Suite 500, Denver, Colorado 80237. (See “Election of Directors” above). | |
(2) | Based on 44,659,380 shares outstanding at January 31, 2006, except as otherwise noted. In calculating the percentage of ownership, all shares of Common Stock the identified person or group had the right to acquire within 60 days of the Record Date by the exercise of options are deemed to be outstanding for the purpose of computing the percentage of the shares of Common Stock owned by such person or group but are not deemed to be outstanding for the purpose of computing the percentage of the shares of Common Stock owned by any other person. As a group, the executive officers and Directors had the right to acquire within 60 days of the Record Date by the exercise of options an aggregate of 1,816,534 shares of Common Stock. | |
(3) | Schedule 13G/A filed with the SEC on February 11, 2005 disclosed beneficial ownership of 2,822,004 shares and sole voting power over 2,236,320 shares, no shared voting power, sole dispositive power over 2,822,004 shares and no shared dispositive power. Beneficial owner confirmed that share amounts and percent of class were as of December 31, 2004 and did not reflect the January 10, 2005 1.3 for 1 stock split. Share amounts, as adjusted for the January 10, 2005 1.3 for 1 stock split, would be: beneficial ownership — 3,668,605 shares; sole voting power — 2,907,606 shares; and sole dispositive power — 3,668,605 shares. Percent of class has been recalculated based on shares outstanding at January 31, 2006. | |
(4) | Schedule 13G/A filed with the SEC on February 14, 2005. Beneficial owner confirmed that share amounts were as of February 2004 and reflected the January 10, 2005 1.3 for 1 stock split. Percent of class has been recalculated |
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based on shares outstanding at January 31, 2006. As disclosed in the Schedule 13G/A, Greenlight Capital, L.L.C. exercises sole voting power and sole dispositive power over 1,476,450 shares, Greenlight Capital, Inc. exercises sole voting power and sole dispositive power over 1,493,400 shares, Greenlight Capital Advisors, L.L.C. exercises sole voting power and sole dispositive power over 230,100 shares and David Einhorn exercises sole voting power and sole dispositive power over 3,199,950 shares. | ||
(5) | Schedule 13G filed with the SEC on January 26, 2006 disclosed beneficial ownership of 2,767,606 shares, sole voting power over 2,553, 285 shares, no shared voting power, sole dispositive power over 2,767,606 shares and no shared dispositive power. | |
(6) | Includes 176,566 shares of Common Stock that Mr. Reece has the right to acquire within 60 days of the Record Date by the exercise of stock options at prices ranging from $18.47 to $26.56 per share. Mr. Reece has sole voting and investment power with respect to the shares set forth in the table. | |
(7) | Includes 71,569 shares of Common Stock that Mr. Touff has the right to acquire within 60 days of the Record Date by the exercise of stock options at prices ranging from $18.47 to $26.56 per share. Mr. Touff has sole voting and investment power with respect to the shares set forth in the table. |
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2005 | 2004 | |||||||
Fees | Fees | |||||||
Audit Fees (1) | $ | 1,272,200 | $ | 1,119,324 | ||||
Audit-Related Fees (2) | 18,190 | 16,650 | ||||||
Tax Fees (3) | 77,190 | 34,992 | ||||||
All Other Fees | -0- | -0- | ||||||
Total Fees | $ | 1,367,580 | $ | 1,170,966 | ||||
(1) | Consists of fees and expenses for the audit of consolidated financial statements and SAS 100 interim reviews, the audit of internal control over financial reporting and services rendered in connection with SEC filings. | |
(2) | Consists of fees and expenses for Sarbanes-Oxley Act Section 404 consultation and other audit-related fees. | |
(3) | Consists of fees and expenses for tax consulting and review services. |
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BY THE ORDER OF THE BOARD OF DIRECTORS, | ||||
![]() | ||||
Larry A. Mizel | ||||
Chairman of the Board | ||||
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OF THE BOARD OF DIRECTORS
I. | ORGANIZATION |
A. | Composition | ||
The Committee shall be comprised of three or more directors designated by the Board. If the Board fails to designate a Chair, the members of the Committee shall designate a Chair by majority vote of the Committee membership. Each member of the Committee shall serve until such member resigns or is removed by the Board. Members may be removed by the Board in its discretion. Each member of the Committee shall be independent as provided by the regulations of the Securities and Exchange Commission (SEC), the listing standards of the New York Stock Exchange and applicable legal requirements. Each member of the Committee must be financially literate or become so within a reasonable period after appointment to the Committee and at least one member of the Committee shall have accounting or related financial management expertise as determined by the Board in its business judgment. Each year, the Company shall disclose in its annual report whether or not at least one member of the Audit Committee qualifies as an “audit committee financial expert,” as defined by SEC regulations. | |||
B. | Access and Resources | ||
The Committee shall have unrestricted access to MDC’s personnel and records, to the Company’s external auditors, and shall have authority to retain independent counsel and other advisers. The Company shall provide the resources necessary for the Committee to discharge its responsibilities including, but not limited to, appropriate funding (as determined by the Committee) for payment of (1) compensation to external auditors for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; (2) compensation to any advisers employed by the Committee; and (3) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties. | |||
C. | Meetings | ||
The Committee shall meet on a regular basis, at least quarterly, and may call additional meetings as required. Further, the Committee, at least once during the year, shall hold separate executive sessions with management, the internal auditors and the external auditors. A quorum of the Committee shall consist of two members or a majority of the Committee membership, whichever is greater. |
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D. | Minutes | ||
Minutes of each meeting shall be in writing and copies provided to Committee members for their approval. A permanent record of approved minutes shall be maintained by the Committee. | |||
E. | Reporting to the Board | ||
At least quarterly, the Committee shall report to the Board regarding its activities. | |||
F. | Indemnification | ||
Each Committee member shall be entitled to indemnification by the Company to the maximum extent permitted by Delaware law, the Company’s Certificate of Incorporation, By-laws and resolutions of the Board. | |||
G. | Compensation and Expense Reimbursement | ||
The Committee members shall be compensated for attendance at meetings as determined by the Board. Travel and other out-of-pocket expenses incurred by Committee members in connection with the performance of their duties shall be documented and reimbursed in accordance with the Company’s expense reimbursement policies. |
II. | FUNCTIONS — EXTERNAL AUDIT MATTERS |
A. | Select External Auditors; Review Independence | ||
The Committee shall be directly responsible for the appointment, compensation, retention, oversight, and termination of the work of any registered public accounting firm engaged (including resolution of disagreements between management and the auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company (external auditors). | |||
Each such external auditor will report directly to the Committee in accordance with New York Stock Exchange listing standards or any other applicable requirements. | |||
To the extent required by New York Stock Exchange listing standards or other applicable requirements, each year the Committee shall obtain from the Company’s external auditor and review a report describing: |
• | The external auditor’s internal control procedures; | ||
• | Any material issues raised by the most recent internal quality control review, or peer review, of the external auditor, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting internal audits carried out by the external auditor and any steps taken to deal with such issues; and | ||
• | All relationships between the external auditor and the Company (in order to assess the external auditor’s independence). |
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B. | Review Annual Audit Plan |
C. | Review Results of the Annual Audit | ||
The Committee shall review the Company’s audited financial statements. The Committee shall discuss the financial statements and the results of the audit with the Company’s external auditor and management, including disclosures under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Form 10-K. The Committee shall recommend to the Board whether or not the audited financial statements should be included in the Company’s Form 10-K. | |||
The Committee shall review with the Company’s external auditor any audit problems or difficulties and management’s response. | |||
Each external auditor that performs for the Company any audit required under the securities laws shall report, prior to the filing of the audit report with the SEC, to the Committee on: the critical policies and practices of the Company, all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, and all other material written communications between the Company’s external auditor and management. | |||
The Committee shall review management’s disclosure as to the effectiveness of their controls and procedures, all significant deficiencies in the design or operation of the internal controls, and any fraud, whether material or not, involving management or other employees who have a significant role in internal controls. | |||
D. | Review of Recommendations for Improvements | ||
Each year the Committee shall obtain from the the external auditor a report of its perception of strengths and weaknesses in the system of internal controls including recommendations for improvements and proposed timetable for implementation. | |||
E. | Review Quarterly Reports on Form 10-Q |
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F. | Release of Material Financial Information |
G. | Review Second Opinion Issues | ||
The Committee shall be notified by Management whenever a second opinion is being sought from an independent public accountant. | |||
H. | Review Management Representation Letters | ||
The Committee shall periodically review management’s representation letters furnished to the external auditors and shall be advised of any difficulties encountered by management in preparing the letter; and by the external auditors as to any difficulties encountered in obtaining the letter. |
III. | FUNCTIONS — FINANCIAL REPORTING MATTERS |
A. | Related Party and Major Transactions | ||
The Committee shall review the major transaction memoranda and 18-month report prepared by Management including a review of material transactions and their effect on the financial statements. In addition, Management shall inform the Committee of related party transactions, including relationships and dollar volume (if applicable), at least quarterly. | |||
B. | Status of Income and Other Tax Reserves and Significant Disputes with Taxing Authorities | ||
At least quarterly, the Vice President of Taxation or the Chief Financial Officer shall report to the Committee on the status of all income and other tax reserves and deferrals and shall update the Committee concerning new or ongoing disputes with taxing authorities. | |||
C. | Other Significant Reserves | ||
The Committee shall be advised by management concerning the existence of and reasons for any other significant accounting accruals, reserves or estimates that have or may have a material impact on the financial statements. | |||
D. | Accounting Policies and Policy Decisions | ||
The Committee shall review: |
• | Any major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles, and major issues as to the adequacy of the Company’s internal controls and any special audit steps adopted in light of material control deficiencies; |
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• | Analyses prepared by management and/or the external auditors setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements including analyses of the effects of alternative GAAP methods on the financial statements; | ||
• | The effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company; and | ||
• | The type and presentation of information to be included in earnings press releases (including any use of “pro forma” or “adjusted” non-GAAP information), as well as review any financial information and earnings guidance provided to analysts and rating agencies. |
IV. | FUNCTIONS — INTERNAL AUDITING MATTERS |
A. | Personnel Decisions | ||
The Company shall employ a Chief Audit Executive to administer an internal audit department, whose duties shall be set by the Committee. The Committee shall have sole responsibility for all personnel decisions regarding the Company’s Chief Audit Executive and is to be consulted by the Chief Audit Executive concerning decisions affecting the other Internal Audit Department personnel, including, but not limited to, hiring, termination and compensation arrangements. | |||
The Committee shall establish clear hiring policies for employees or former employees of the external auditors that meet SEC regulations, New York Stock Exchange listing standards and any other applicable requirements. | |||
B. | Internal Audit Functions | ||
At least annually, the Committee shall review the functions and goals of the Internal Audit Department and may review its findings with Management. |
V. | FUNCTIONS — OTHER MATTERS |
A. | Receipt of Complaints | ||
The Committee shall establish procedures for (1) the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters and (2) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters. | |||
B. | Notification by Management of Fraud or Other Serious Breakdowns in Internal Control | ||
The Committee shall be immediately informed by Management or the Internal Audit Department, as appropriate, of any perceived fraud or other material breakdowns in internal control. Upon being informed, the Committee shall: |
• | Inform the Board; and | ||
• | Oversee management’s response to the situation. |
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C. | Report of Audit Committee | ||
The Committee shall prepare a report to be included in the Company’s annual proxy statement in accordance with SEC regulations. |
D. | Written Affirmations | ||
The Committee shall review and, if required, approve the annual written affirmations to be provided to the New York Stock Exchange and any other exchanges on which the Company’s securities may trade. | |||
E. | Other Responsibilities. |
• | The Committee shall also have responsibility to discuss policies with respect to risk assessment and risk management, including a discussion of guidelines and policies to govern the process by which the Company’s exposure to risk is assessed and managed. | ||
• | The Committee shall perform such other duties and functions as the Board may direct from time to time. |
F. | Annual Performance Evaluation | ||
The Committee shall make provision for an annual performance evaluation of the Committee. |
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CERTIFICATE OF INCORPORATION OF
M.D.C. HOLDINGS, INC.
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints PARIS G. REECE III and MICHAEL TOUFF, or either one of them, as proxies or proxy for the undersigned, each with full power of substitution and resubstitution, to attend the 2006 Annual Meeting of Shareowners and any adjournments or postponements thereof (the “Meeting”) and to vote as designated below, all the shares of Common Stock of M.D.C. HOLDINGS, INC. that the undersigned is entitled to vote. In their discretion, the proxies are hereby authorized to vote upon such other business as may properly come before the Meeting and any adjournments or postponements thereof.
Please specify your choice by clearly marking the appropriate box. Unless otherwise specified, this proxy will be voted “FOR” Proposal 1 and Proposal 2.
x | Please mark your votes as in this example. | |||||
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF MESSRS. BORICK, MANDARICH AND BLACKFORD. | ||||||
1. | ELECTION OF DIRECTORS. | |||||
NOMINEES: Steven J. Borick, David D. Mandarich and David E. Blackford | ||||||
o FOR | o WITHHELD | |||||
o FOR, except vote withheld from the following nominee(s): | ||||||
(continued and to be signed and dated on the other side)
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 2.
2. | To approve an amendment to our Certificate of Incorporation increasing the number of authorized shares of Common Stock. |
o FOR o AGAINST o ABSTAIN
3. | To vote upon such other business as may properly come before the Meeting or any adjournment or postponement thereof. |
Please sign exactly as your name appears on this proxy. Joint owners should each sign individually. If signing as attorney, executor, administrator, trustee or guardian, please include your full title. Corporate proxies should be signed by an authorized officer.
Signature(s): | |
Date: | |
Signature(s): | |
Date: |