SCHEDULE 14A/A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)
(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ORLEANS HOMEBUILDERS, INC.
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(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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ORLEANS HOMEBUILDERS, INC.
One Greenwood Square, Suite 101
3333 Street Road
Bensalem, Pennsylvania 19020
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 6, 2002
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To the Stockholders of Orleans Homebuilders, Inc.:
The Annual Meeting of Stockholders of Orleans Homebuilders, Inc. (the
"Company") will be held on Friday, December 6, 2002, at 11:00 a.m., Philadelphia
time, at the offices of Wolf, Block, Schorr and Solis-Cohen 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
Incentive Compensation Plan; and
3. Transaction of such other business as properly may be brought before
the meeting or any adjournment thereof.
The board of directors has fixed the close of business on October 22,
2002 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 withdraw 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 25, 2002
By Order of the Board of Directors
JOSEPH A. SANTANGELO,
Secretary-Treasurer and Chief Financial Officer
ORLEANS HOMEBUILDERS, INC.
Corporate Headquarters:
One Greenwood Square, Suite 101
3333 Street Road
Bensalem, Pennsylvania 19020
Telephone Number: (215) 245-7500
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PROXY STATEMENT
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This proxy statement, which is being sent to stockholders on or about
November 1, 2002, is furnished to stockholders of Orleans Homebuilders, Inc. 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 Friday, December 6, 2002, at 11:00 a.m.,
Philadelphia time, at the offices of Wolf, Block, Schorr and Solis-Cohen 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 22, 2002. 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 22, 2002, the Company had outstanding 11,960,899 shares
of Common Stock, par value $.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.............................................1
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ELECTION OF DIRECTORS..........................................................2
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Directors.................................................................3
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Executive Officers........................................................3
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Committees and Meetings of the Board of Directors.........................4
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Compensation of Directors.................................................5
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APPROVAL OF THE ORLEANS HOMEBUILDERS, INC. AMENDED AND RESTATED INCENTIVE
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COMPENSATION PLAN............................................................5
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Eligibility...............................................................5
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Administration............................................................6
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Bonus Payments Under the Incentive Plan...................................6
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Amendment, Suspension or Termination......................................7
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Tax Aspects...............................................................7
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OTHER MATTERS..................................................................8
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ADDITIONAL INFORMATION.........................................................8
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Section 16(a) Beneficial Ownership Reporting Compliance...................8
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Security Ownership of Certain Beneficial Owners and Management............9
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EXECUTIVE COMPENSATION........................................................11
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Summary Compensation Table...............................................11
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Aggregated Option Exercises in Last Fiscal Year and Fiscal
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Year-End Option Values.................................................13
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Option/SAR Grants Table..................................................13
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Performance Graph........................................................13
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Compensation Committee Interlocks and Insider Participation..............15
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Employment Contracts with Named Executives...............................15
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.......................17
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................18
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AUDIT COMMITTEE REPORT........................................................21
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ADDITIONAL INFORMATION REGARDING THE AUDITORS.................................22
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DEADLINE FOR FILING STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING.............22
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ANNUAL REPORT ON FORM 10-K....................................................23
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Appendix A...................................................................A-1
VOTING AND REVOCABILITY OF PROXIES
Each share of outstanding Orleans Homebuilders, Inc. (the "Company")
common stock, par value $.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 Company's 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 Company's Common Stock represented by any unrevoked proxy
in the enclosed form will be voted in accordance with the specifications made on
such 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 Incentive Compensation Plan; 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.
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, 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 telephone or telegram. 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. 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.
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 effect 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 Incentive Compensation Plan (the "Incentive Plan
Proposal") requires the approval of a 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 the Incentive Plan Proposal will have the same
effect as votes against the proposal, and broker non-votes will have no effect
on the outcome of the vote on the Incentive Plan 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 Proposal
1 and Proposal 2, which means that these proposals will be approved regardless
of the votes of the Company's other stockholders.
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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 Age Present Position with the Company Director Since
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Benjamin D. Goldman(1)(2) 56 Vice Chairman of the Board 1992
Jerome S. Goodman 68 Director 2001
Robert N. Goodman(3) 50 Director 1994
Andrew N. Heine(3) 73 Director 1994
David Kaplan(3)(4)(5) 58 Director 1994
Lewis Katz(1)(4)(5)(6) 60 Director 1987
Jeffrey P. Orleans(1)(2)(6) 56 Chairman of the Board and Chief 1983
Executive Officer
Robert M. Segal 67 Director 2002
John W. Temple 65 Director 2002
Michael T. Vesey 43 Director, President and Chief 2001
Operating Officer
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(1) Member of the committee designated to administer the 1992 Stock Option
Plan for Non-Employee Directors (the "1992 Director Option Plan
Committee"), of which Mr. Orleans is Chairman (the "1992 Directors
Option Plan").
(2) Member of the committee designated to administer the 1995 Stock Option Plan
for Non-Employee Directors (the "1995 Plan").
(3) Member of the Audit Committee.
(4) Member of the Compensation Committee.
(5) Member of the committee (the "1992 Incentive Stock Option Committee")
designated to administer the 1992 Incentive Stock Option Plan (the "1992
Plan").
(6) Member of the Executive Committee.
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Directors
Jeffrey P. Orleans has served as Chairman of the Board and Chief
Executive Officer of the Company since September 1986. From September 1986 to
May 1992, he also served as President of the Company. In addition, Mr. Orleans
is a trustee of Pennsylvania Real Estate Investment Trust.
Benjamin D. Goldman was elected Vice-Chairman of the Board in April
1998 and has been a director of the Company since May 1992. From May 1992 until
April 1998, he served as President and Chief Operating Officer of the Company.
Jerome S. Goodman has been a director of the Company since April 2001.
Mr. Goodman was a director of Aetna Inc. from 1988 to May 2001. Mr. Goodman
retired as Chairman of Travel One upon the sale of that firm to American Express
Company on November 15, 1998. He had served as Chairman of Travel One from 1971
until 1998 and was the sole shareholder from 1971 to 1994. 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 and Marlton
Technologies, Inc.
Robert N. Goodman has been a director of the Company since April 1994.
Since 1998, he has served as President of Olympic Realty Advisors II, LLC, a
finance company providing equity and debt capital for single family residential
homebuilding projects in California. Mr. Goodman owns a controlling equity
interest in JDT Consulting Group, the sole general partner of La Jolla Village
Professional Center Associates, L.P., a California limited partnership.
Andrew N. Heine has been a director of the Company since April 1994.
For more than five years, Mr. Heine has been an attorney and private investor.
Mr. Heine is a director of Citizens Communications Company.
David Kaplan has been a director of the Company 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 of the Company since 1987. From 1972 to
1997, he was a partner in the law firm of Katz, Ettin, Levine, Kurzweil, Weber &
Scialaeba, P.A., Cherry Hill, New Jersey, which has performed legal services for
the Company in the past year, and he is now Of Counsel to such law firm. Mr.
Katz is a director of Central Parking Corporation.
Robert M. Segal has been a director of the Company since August 2002.
For more than five years, Mr. Segal has been a partner in the law firm Wolf,
Block, Schorr and Solis-Cohen LLP, which serves as general counsel to the
Company.
John W. Temple has been a director of the Company 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 of the Company since September
2001 and has served as President and Chief Operating Officer of the Company
since April 1998. From July 1994 to April 1998, he was the Executive Vice
President-Project Management of the Company.
Executive Officers
In addition to Messrs. Orleans, Goldman and Vesey, the following
persons serve as executive officers of the Company:
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Thomas Gancsos, 49, has been the Company's Division Manager for
Richmond, Virginia, since the Company acquired Parker & Lancaster Corporation
("PLC") in October 2000. Prior to that, he had been the Division Manager for PLC
since December 1999. From January 1998 through November 1999, Mr. Gancsos was
self-employed as a consultant and builder of custom homes and, from November
1995 through December 1997, he was the President of the Mid-Atlantic Region for
Ryland Group, a builder of residential homes.
J. Russell Parker, III, 58, has been President of PLC and Parker
Lancaster & Orleans Corporation, both wholly-owned subsidiaries of the Company,
since the Company's acquisition of PLC in October 2000. Prior to the Company's
acquisition of PLC, Mr. Parker had been the President and Chief Executive
Officer of PLC since 1997.
L. Anthony Piccola, 58, has been the Company's Division Manager for
Raleigh, North Carolina, since the Company acquired PLC in October 2000. Prior
to that, he was employed by PLC as the Division Manager for Raleigh for more
than five years.
Joseph A. Santangelo, 48, is Chief Financial Officer, Treasurer and
Secretary of the Company. He has held the position of Chief Financial Officer
since July 1994, and he has been Treasurer and Secretary of the Company since
1987.
Gary G. Schaal, 52, is Executive Vice President-Sales and Marketing of
the Company. He has held that position since September 1995. From July 1987 to
November 1994, Mr. Schaal was a Senior Vice President of Scarborough Corporation
and a Vice President of Scarborough Homes, Inc.
Thomas Vesey, 38, has been the Company's Division Manager for
Charlotte, North Carolina, since January 2002. Prior to that, he 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 Company's operations. From April
1997 to March 2000, Mr. Vesey was employed by Hovnanian Enterprises, Inc. as the
Northeast Region Purchasing Manager.
All of the Company's executive officers serve at the discretion of the
board of directors.
Committees and Meetings of the Board of Directors
The board of directors held three meetings during the fiscal year ended
June 30, 2002 ("Fiscal 2002"). During Fiscal 2002, all incumbent directors
attended in person or by conference call at least 75% 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.
The Company has standing Executive, Audit, Compensation, 1992 Incentive
Stock Option, 1992 Director Option Plan and 1995 Director Option Plan
Committees. The board of directors does not have a standing Nominating
Committee. The functions of a Nominating Committee are carried on by the board
of directors as a whole.
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 2002, the Executive Committee
did not hold meetings, but acted once by written consent.
The Audit Committee selects the independent accountants, reviews with
the independent accountants the adequacy of the system of internal accounting
controls of the Company and discusses with management and the independent
accountants the Company's annual financial statements and principal accounting
matters. During Fiscal 2002, the Audit Committee met once.
The Compensation Committee reviews the general compensation
arrangements and structure of the Company, reviews salaries and other
compensation arrangements for the executive officers and other key employees of
the Company and makes recommendations concerning such compensation to the board
of directors. The Compensation Committee held no formal meetings during Fiscal
2002.
None of the committees that administer the Company's stock incentive
plans held meetings in Fiscal 2002.
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Compensation of Directors
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 board of
directors. This fee is paid in four equal quarterly installments and pro rated
for service less than a full year. In addition, each non-employee director is
entitled to receive an attendance fee of $2,500 for each board meeting 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. Pursuant to the 1992 Directors Option
Plan, Mr. Katz received options to acquire 25,000 shares of Common Stock, which
have been exercised. Pursuant to the 1995 Plan, Messrs. Robert N. Goodman, Heine
and Kaplan were each granted options to acquire 25,000 shares of Common Stock in
1995, which are fully vested. Pursuant to the 1995 Plan, each of Messrs.
Goodman, Heine, Kaplan and Katz were also each granted options to acquire 10,000
shares of Common Stock in 1998, which are fully vested. All stock options were
issued at the fair market value of the Common Stock on the date of grant.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE ELECTION OF
EACH OF THE NOMINEES FOR DIRECTOR.
APPROVAL OF THE ORLEANS HOMEBUILDERS, INC.
AMENDED AND RESTATED INCENTIVE COMPENSATION PLAN
The board of directors, and the Compensation Committee of the board of
directors, believe it is important to align the interests of the Company's
executive officers with those of the stockholders, and have operated an
incentive compensation plan since its initial adoption by the board of directors
on July 18, 1994, that provides for annual bonus compensation that is directly
related to the Company's net pre-tax profits. These bonus arrangements,
including the use of the Company's net pre-tax profit and the formulation by
which individual bonuses are determined, were established and approved by the
Compensation Committee and have been reviewed annually. The Orleans
Homebuilders, Inc. Incentive Compensation Plan (the "Incentive Plan"), as
adopted by the board of directors as of October 23, 2002, is an amendment and
restatement of the existing incentive compensation plan. The implementation of
the Incentive Plan is subject to the disclosure of its material terms to, and
its subsequent approval by the Company's stockholders. No bonuses will be
payable under the Incentive Plan unless and until it has been disclosed to and
approved by the Company's stockholders.
The board of directors of the Company proposes that the stockholders of
the Company ratify and approve the Incentive Plan.
While the Incentive Plan generally continues the incentive compensation
plan that has been in effect since 1994, the amendment and restatement provides
that participation in the Plan by individuals other than Messrs. Orleans and
Vesey shall be determined by the Compensation Committee or such other committee
of the board of directors designated to act as the administrative committee with
respect to the Incentive Plan.
The following summary of the material features of the Incentive Plan
does not purport to be complete and is qualified in its entirety by the full
text of the Incentive Plan, a copy of which is attached hereto as Appendix A.
Eligibility
The executives and key employees who are eligible to participate in the
Incentive Plan are: Jeffrey P. Orleans, Chairman of the Board and Chief
Executive Officer of the Company; Benjamin D. Goldman, Vice Chairman of the
Board; Michael T. Vesey, President and Chief Operating Officer; and those other
executive officers and key employees who are designated as participants by the
administrative committee for the Incentive Plan. No participant in the Incentive
Plan will be entitled to any bonus payment if the participant has ceased to be
employed by the Company or any affiliate of the Company prior to the date of
payment other than where the participant's employment has terminated by reason
of death, disability or retirement.
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Administration
The Incentive Plan is administered by the Compensation Committee of the
Board unless another committee is established by the board of directors to act
as the administrative committee for the Incentive Plan. The membership of the
committee administering the Incentive Plan will in all events consist of two or
more members of the board of directors each of whom qualifies as an "outside"
director under certain Treasury Regulations that relate to Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Million Dollar Cap Rules"). The
administrative committee has the authority and the responsibility for
administering the Incentive Plan in a manner consistent with its terms, making
any and all discretionary determinations that are required or permitted to be
made under the terms of the Incentive Plan, and interpreting the Incentive Plan
document.
Bonus Payments Under the Incentive Plan
No amounts are payable as bonuses under the terms of the Incentive Plan
for any plan year (which is the same as the Company's fiscal year) unless the
Company recognizes some level of net pre-tax profits for that fiscal year. For
these purposes, the Company's net pre-tax profits are the Company's consolidated
operating profits determined before taxes and without taking into account
nonrecurring items, income or loss arising from extraordinary items,
discontinued operations, debt repurchase at a discount, or any bonuses paid or
accrued under the Incentive Plan. The Company's net pre-tax profits are
calculated in accordance with generally accepted accounting principles.
If there are net pre-tax profits for a fiscal year, the administrative
committee for the Incentive Plan will certify the level of such profits and 8%
of such profits will be paid out as bonuses. The bonus payable to Jeffrey P.
Orleans with respect to each plan year is 3% of the Company's net pre-tax profit
for that year and the bonus payable to Michael T. Vesey with respect to each
plan year is 1 1/2% of the Company's net pre-tax profit for that year. The bonus
payable to any other participant in the Incentive Plan will be determined by the
administrative committee, but in no event will the bonus payable to any such
other individual exceed 1 1/2% of the Company's net pre-tax profits for the plan
year. The administrative committee has no authority to increase the maximum
bonus payable to any participant under the Incentive Plan with respect to any
plan year.
The following table sets forth the benefits paid under the terms of the
Company's incentive compensation plan for Fiscal 2002, which plan is being
continued, subject to approval by the stockholders, through the adoption of the
Incentive Plan:
Percentage of
Name Amount Pre-Tax Profits
Jeffrey P. Orleans, Chairman $954,570 3.0%
& CEO
Benjamin D. Goldman, Vice Chairman 416,500 1.3%
Michael T. Vesey, President
& CEO 477,285 1.5%
All Executive Officers as a Group 2,013,355 6.3%
All Other Officers and Key
Employees as a Group 528,418 1.7%
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Amendment, Suspension or Termination
The board of directors has the right to amend or terminate the
Incentive Plan in whole or in part at any time. Unless it is otherwise
prohibited by law, any amendment that may be required to conform the Incentive
Plan to the performance-based compensation requirements of the Million Dollar
Cap Rules may be made by the Compensation Committee or other committee
designated to administer the Incentive Plan, without action by the entire board
of directors. The Incentive Plan may not, however, be amended if that amendment
would change the class of individuals who are eligible to participate in the
Incentive Plan, or the formula by which maximum bonus payments are determined,
without shareholder approval.
Tax Aspects
Amounts payable as bonuses pursuant to the Incentive Plan will be
taxable compensation income to the participant for the taxable year in which the
bonus is actually paid. In general, compensation paid to employees of the
Company constitutes a compensation expense that is deductible for purposes of
the Company's federal income tax determination. Compensation in excess of
$1,000,000 payable to any one of the Company's chief executive officer or any of
its other four highest paid officers for any taxable year may, however, be
non-deductible because of the disallowance of that deduction under the Million
Dollar Cap Rules. It is intended that amounts payable as bonuses pursuant to the
provisions of the Incentive Plan will qualify as "performance-based"
compensation that is exempt from the limitations otherwise imposed pursuant to
the Million Dollar Cap Rules.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE PROPOSAL TO APPROVE
THE COMPANY'S AMENDED AND RESTATED INCENTIVE COMPENSATION PLAN
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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.
ADDITIONAL INFORMATION
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors and persons who own more than ten
percent of a registered class of the Company's 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 Company's 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 2002 were
made on a timely basis except that: Messrs. J. Russell Parker, III, Thomas
Gancsos and L. Anthony Piccola each failed to timely file a Form 3 in connection
with their becoming executive officers of the Company in October 2000 as a
result of the Company's acquisition of PLC in October 2000; Messrs. Parker and
Piccola each failed to timely file a Form 5 for the fiscal year ended June 30,
2001 ("Fiscal 2001") for their anticipated receipt of Common Stock in connection
with the Company's purchase of PLC and in connection with their anticipated
receipt of Common Stock pursuant to their employment agreements with PLC; Thomas
Vesey failed to timely file a Form 3 in connection with becoming an executive
officer of the Company in January 2002; Mr. Benjamin D. Goldman failed to timely
report on Form 4 his cashless exercise of options to acquire 400,000 shares of
Common Stock in April 2002; and Mr. Lewis Katz failed to timely report on Form 4
his exercise of options to acquire 25,000 shares of Common Stock in May 2002.
Messrs. Gancsos, Parker, Piccola, Vesey, Katz and Goldman have since filed the
appropriate Section 16(a) reports with respect to these transactions.
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Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of the close of business on
September 30, 2002, certain information with respect to the beneficial
shareholdings of each director or nominee, each of the executive officers named
in the Summary Compensation Table, and all executive officers and directors as a
group, as well as the holdings of each stockholder who was known to the Company
to be the beneficial owner, as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, of more than 5% of the Company's 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.
Number of Shares Percent of
Name of Beneficial Owner Beneficially Owned Class
- ------------------------ ------------------ ----------
Jeffrey P. Orleans, Chairman and Chief Executive Officer............... 11,314,128(1) 71.2%
Benjamin D. Goldman, Vice Chairman of the Board........................ 1,153,221(2) 9.7%
Jerome S. Goodman, Director............................................ 368,000 3.1%
Robert N. Goodman, Director............................................ 50,000(3) *
Andrew N. Heine, Director.............................................. 35,000(4) *
David Kaplan, Director................................................. 69,000(5) *
Lewis Katz, Director................................................... 489,000(6) 4.1%
Robert M. Segal, Director.............................................. 68,000 *
John W. Temple, Director............................................... 15,000 *
Michael T. Vesey, Director and President and Chief Operating Officer... 445,700(7) 3.7%
Thomas Gancsos, Division Manager....................................... - 0 -
J. Russell Parker, III, President, Parker Lancaster Corporation;
Parker & Lancaster Corporation..................................... 246,008(8) 2.0%
L. Anthony Piccola, Division Manager................................... 20,256(9)
Joseph A. Santangelo, Chief Financial Officer.......................... 102,500(10) *
Gary G. Schaal, Executive Vice President............................... 85,000(11) *
Thomas Vesey, Division Manager......................................... - 0 -
All directors and executive officers
as a group (16 persons).............................................. 14,460,813(12) 86.9%
----------------
* Less than 1% of the outstanding shares of Common Stock of the Company.
(1) The shares reflected include (a) 5,000 shares of 10,000 shares owned by
a privately-held corporation, of which Mr. Orleans is a 50%
stockholder, (b) 2,000,000 shares issuable upon conversion of the
Company's $3,000,000 Convertible Subordinated 7% Note, (c) 42,000
shares owned by a privately held partnership, of which Mr. Orleans is a
majority partner, (d) 2,000,000 shares issuable upon conversion of
100,000 shares of the Company's Series D Preferred Stock, which has a
liquidation value of $3,000,000, and (e) 40,000 shares (for which Mr.
Orleans disclaims beneficial ownership) owned by the Jeffrey P. Orleans
Charitable Foundation. The address of Mr. Orleans is c/o Orleans
Homebuilders, Inc., 3333 Street Road, Suite 101, Bensalem, Pennsylvania
19020.
(2) The shares reflected include 606,282 shares (for which Mr. Goldman
disclaims beneficial ownership) held in separate trusts for the benefit
of the children of Mr. Orleans, as to which Mr. Goldman is, in each
case, sole trustee. The address of Mr. Goldman is c/o Orleans
Homebuilders, Inc., 3333 Street Road, Suite 101, Bensalem, Pennsylvania
19020.
(3) The shares reflected consist of (a) 15,000 shares owned by Goodtab
Corporation (of which Mr. Goodman is the sole shareholder) and (b)
35,000 shares subject to options that are currently exercisable or will
become exercisable within 60 days of September 30, 2002.
(4) Consists of 35,000 shares subject to options that are currently exercisable
or will become exercisable within 60 days of September 30, 2002.
-9-
(5) The shares reflected include 35,000 shares subject to options that are
currently exercisable or will become exercisable within 60 days of
September 30, 2002.
(6) The shares reflected include 10,000 shares subject to options that are
currently exercisable or will become exercisable within 60 days of
September 30, 2002.
(7) The shares reflected include (a) 700 shares (for which Mr. Vesey
disclaims beneficial ownership) held as custodian for Mr. Vesey's minor
daughters, and (b) 315,000 shares subject to options that are currently
exercisable or will become exercisable within 60 days of September 30,
2002.
(8) The shares reflected include an aggregate of 92,253 shares Mr. Parker
is entitled to receive in three equal installments on October 12, 2002,
2003 and 2004 pursuant to his employment agreement with PLC and an
aggregate of 92,253 shares Mr. Parker is entitled to receive in three
equal installments on October 12, 2002, 2003 and 2004 pursuant to the
Company's acquisition of PLC.
(9) The shares reflected include an aggregate of 7,596 shares Mr. Piccola
is entitled to receive in three equal installments on October 12, 2002,
2003 and 2004 pursuant to his employment agreement with PLC and an
aggregate of 7,596 shares Mr. Piccola is entitled to receive in three
equal installments on October 12, 2002, 2003 and 2004 pursuant to the
Company's acquisition of PLC.
(10) The shares reflected include 70,000 shares subject to options that are
currently exercisable or will become exercisable within 60 days of
September 30, 2002 and 32,500 shares as to which Mr. Santangelo has
shared voting power.
(11) The shares reflected include 60,000 shares subject to options that are
currently exercisable or will become exercisable within 60 days of
September 30, 2002.
(12) The shares reflected consist of (a) 560,000 shares subject to options
that are currently exercisable or will become exercisable with 60 days
of September 30, 2002, (b) 2,000,000 shares issuable upon conversion of
the Company's $3,000,000 Convertible Subordinated 7% Note, (c)
2,000,000 shares issuable upon conversion of 100,000 shares of the
Company's Series D Preferred Stock, which has a liquidation value of
$3,000,000, and (d) 199,698 shares Messrs. Parker and Piccola are
entitled to receive in equal installments on October 12, 2002, 2003 and
2004.
-10-
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information as to all compensation paid
by the Company for services in each of the Company's last three fiscal years
ended June 30 to: (i) the Company's Chief Executive Officer and (ii) the four
most highly compensated officers other than the Chief Executive Officer who were
serving as executive officers at the end of Fiscal 2002 and whose total annual
salary and bonus exceeded $100,000 in Fiscal 2002 (together with the Chief
Executive Officer, the "Named Executive Officers").
Annual Compensation
-------------------
Other Annual Restricted
Compensation Stock Awards
Name and Principal Position Fiscal Year Salary Bonus (1)(2) $
- --------------------------- ----------- ------ ----- ---------------- --------
Jeffrey P. Orleans 2002 $300,000 $954,570 $3,400 $--
Chairman and CEO 2001 300,000 559,366 3,400 --
2000 300,000 400,830 3,200 --
Benjamin D. Goldman 2002 225,000 416,500 3,400 --
Vice Chairman of the Board 2001 237,500 275,000 3,400 --
2000 250,000 200,415 3,200 --
Michael T. Vesey 2002 217,500 477,285 3,400 --
President and Chief Operating Officer 2001 200,000 279,683 3,400 --
2000 200,000 200,415 3,200 --
J. Russell Parker 2002 220,000 415,300(3) 5,289 --
President 2001(4) 152,307 119,953 3,808 192,194(5)
Parker Lancaster & Orleans Corporation 2000(6) -- -- -- --
Parker & Lancaster Corporation
L. Anthony Piccola 2002 137,500 285,588(7) 4,284 --
Division Manager 2001(4) 95,193 176,637 2,856 15,800(8)
Parker Lancaster & Orleans Corporation 2000(6) -- -- -- --
Parker & Lancaster Corporation
- ---------------
(1) The amount shown is the amount contributed by the Company to a 40l(k)
(defined contribution) retirement plan.
(2) The Named Executive Officers also received various other personal
benefits, the value of which did not exceed for any fiscal year as to
such person the lesser of $50,000 or 10% of his annual salary and
bonus.
(3) Consists of incentive compensation awarded pursuant to an employment
agreement entered into by PLC and Mr. Parker, a former PLC shareholder,
in connection with the Company's acquisition of PLC in October 2000.
This employment agreement expires on October 12, 2003.
(4) Employed by the Company for approximately nine months in Fiscal 2001.
(5) Consists of the fair market value of 123,004 shares of Common Stock
that, pursuant to Mr. Parker's employment agreement with PLC entered
into on October 12, 2000, the Company is, subject to certain
conditions, required to issue to Mr. Parker in four equal annual
installments starting on October 12, 2001. The fair market value of the
shares is determined as of October 12, 2000. As of the end of Fiscal
2002, the fair market value of the shares not yet issued to Mr. Parker
was $788,763, based upon the closing price of the Common Stock on June
28, 2002.
-11-
(6) Not employed by the Company or any affiliate of the Company in fiscal year
ended June 30, 2000.
(7) Consists of incentive compensation and bonus awarded pursuant to an
employment agreement entered into by PLC and Mr. Piccola, a former PLC
shareholder, in connection with the Company's acquisition of PLC in
October 2000. This employment agreement expired on October 11, 2002.
For additional information refer to the description of Mr. Piccola's
employment agreement under the caption "Employment Contracts with Named
Executives."
(8) Consists of the fair market value of 10,128 shares of Common Stock
that, pursuant to Mr. Piccola's employment agreement with PLC entered
into on October 12, 2000, the Company is, subject to certain
conditions, required to issue to Mr. Piccola in four equal annual
installments starting on October 12, 2001. The fair market value of the
shares is determined as of October 12, 2000. At the end of Fiscal 2002,
the fair market value of the shares not yet issued to Mr. Piccola was
$64,946, based upon the closing price of the Common Stock on June 28,
2002.
-12-
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth individual exercises of stock options
during Fiscal 2002 and year-end values by the Named Executive Officers.
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options
June 30, 2002 (#) At June 30, 2002($)(1)
------------------------ ------------------------
Shares
Acquired on Value
Name Exercise(#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------------
Jeffrey P. Orleans -- -- -- -- -- --
Benjamin D. Goldman 400,000 2,220,000 -- -- -- --
Michael T. Vesey -- -- 285,000 50,000 1,961,500 352,500
J. Russell Parker, III -- -- -- -- -- --
L. Anthony Piccola -- -- -- -- -- --
- --------
(1) In-the-money options are those where the fair market value of the
underlying securities exceeds the exercise price of the option. The
closing market price of the Company's Common Stock on June 28, 2002 was
$8.55 per share.
Option/SAR Grants Table
Neither the Chief Executive Officer nor the other Named Executive
Officers were granted stock options or stock appreciation rights during Fiscal
2002.
Performance Graph
The graph set forth below compares the yearly percentage change in the
cumulative total stockholder return on the Common Stock of the Company during
the five years ended June 30, 2002 with (1) the cumulative total return on the
American Stock Exchange Index and (2) the cumulative total return on a selected
peer group index. The Company's peer group is the Standard & Poor's Homebuilding
Index. The comparison assumes $100 was invested on June 30, 1997 in the
Company's Common Stock and in each of the foregoing indices and assumes the
reinvestment of any dividends. The closing market price of the Company's Common
Stock as of June 28, 2002 was $8.55 per share.
-13-
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG ORLEANS HOMEBUILDERS, INC., THE AMEX COMPOSITE INDEX
AND THE S & P HOMEBUILDING INDEX
*$100 invested on 6/30/97 in stock or index - including reinvestment of
dividends. Fiscal year ending June 30.
Years Ending
------------
June 1997 June 1998 June 1999 June 2000 June 2001 June 2002
--------- --------- --------- --------- --------- ---------
Orleans Homebuilders, Inc. 100.00 262.08 206.91 172.48 332.16 943.50
Amex Market Value 100.00 115.86 128.17 150.33 147.42 143.44
S&P Homebuilding 100.00 168.63 141.99 104.47 183.25 270.73
-14-
Compensation Committee Interlocks and Insider Participation
During Fiscal 2002, Messrs. Kaplan and Katz served on the Compensation
Committee of the board of directors and the 1992 Incentive Stock Option
Committee. Mr. Katz is Of Counsel to Katz, Ettin, Levine, Kurzweil, Weber &
Scialaeba, P.A., which has performed legal services for the Company in the past
year. Mr. Kaplan was engaged by the Company in 1999 to provide services in
connection with the Company's acquisition of PLC. In accordance with the terms
of that agreement, the Company paid Mr. Kaplan $60,000, $50,000 and $40,000 in
the fiscal year ended June 30, 2000 ("Fiscal 2000") and in Fiscal 2001 and
Fiscal 2002, respectively. In addition, Mr. Orleans and Mr. Katz are partners in
Palm Aire Associates, LP and each owns a fifty percent equity interest in
Resorts at Palm Aire, Inc., the general partner of Palm Aire Associates, LP. Mr.
Orleans and Mr. Katz are both members of the board of directors of Resorts at
Palm Aire, Inc.
Employment Contracts with Named Executives
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 Mr. Orleans or
the Company gives notice of termination at least 180 days prior to the end of
the then current term. Pursuant to the employment agreement, Mr. Orleans is to
serve as Chairman of the board of directors and Chief Executive Officer of the
Company and is to be paid a base salary of $300,000, which may be increased from
time to time and represents an increase from Mr. Orleans's initial salary of
$200,000. In addition, Mr. Orleans is entitled to receive bonus compensation
equal to 3% of certain of the Company's pre-tax profits as defined by the
agreement. This bonus compensation is awarded in a manner consistent with the
Company's incentive compensation plan described under the caption "Compensation
Committee Report on Executive Compensation."
Mr. Orleans' employment agreement also provides that if Mr. Orleans'
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, travel and accident, long-term disability and
life insurance generally available to the Company's senior officers. The Company
also pays certain vehicle expenses for Mr. Orleans.
J. Russell Parker, III
PLC entered into an employment agreement with J. Russell Parker, III in
October 2000 for a term of three years. Pursuant to this employment agreement,
Mr. Parker is to serve as the president of PLC, is obligated to work not less
than 12 full days per month, is to be paid a base salary of $220,000 and is
eligible to receive up to 123,004 shares of Common Stock, which number of shares
may be increased if the employment by PLC of certain former PLC shareholders
terminates under certain circumstances. The Common Stock is to be issued in four
equal installments on each of the first four anniversaries of the employment
agreement and 61,502 shares have been issued to date. Except for certain limited
circumstances, Mr. Parker is entitled to receive the shares of Common Stock even
if he is not employed by PLC on the anniversary date on which shares are to be
issued. In addition, Mr. Parker has the right to require the Company to
repurchase the Common Stock he receives pursuant to the employment agreement for
$3.33 per share. This right becomes exercisable upon receipt of notice from the
Company, which the Company shall give at any time after July 31, 2005, and must
be exercised, if at all, by Mr. Parker within 30 days after receiving the
notice.
Mr. Parker is also entitled to receive certain incentive compensation
equal to approximately 61% of 25% of certain defined pre-tax profits in excess
of $1,750,000 attributable to the Company's sales of homes in Virginia, North
Carolina and South Carolina for the Company's fiscal years ended June 30, 2001,
2002 and 2003. The percentage to be received by Mr. Parker may be increased if
the employment by PLC of certain former PLC shareholders terminates under
certain circumstances. The aggregate incentive payments to Mr. Parker and
certain other former PLC shareholders under similar provisions in their
employment agreements with PLC is capped at $1,250,000. Except for certain
limited circumstances, Mr. Parker is entitled to receive this incentive
compensation even if he is not employed by PLC during the relevant fiscal year.
-15-
Mr. Parker's employment agreement also provides that, if his employment
is terminated by PLC without "cause" or he terminates his employment "for good
reason," both of which terms are defined by the agreement, then he is entitled
to certain severance compensation. If the termination occurs prior to the second
anniversary of the employment agreement, Mr. Parker is entitled to receive his
base salary for 12 months and if the termination occurs after the second
anniversary, Mr. Parker is entitled to receive his base salary until the third
anniversary.
Mr. Parker's employment agreement also provides that he is entitled to
certain fringe benefits, including health insurance, participation in the
Company's 401(k) plan, a vehicle allowance, payment of certain club dues and
life insurance.
L. Anthony Piccola
PLC entered into an employment agreement with L. Anthony Piccola in
October 2000 for a term of two years. Pursuant to this employment agreement, Mr.
Piccola served as PLC's Division Manager, Raleigh, North Carolina region and was
paid a base salary of $137,500 and is eligible to receive up to 10,128 shares of
Common Stock, which number of shares may be increased if the employment by PLC
of certain former PLC shareholders terminates under certain circumstances. The
Common Stock is to be issued in four equal installments on each of the first
four anniversaries of the employment agreement and 5,064 shares have been issued
to date. Mr. Piccola is entitled to receive the shares of Common Stock even if
he is not employed by PLC on the anniversary date on which shares are to be
issued if his employment was terminated by PLC "without cause," terminated by
him for "good reason" or terminated as a result of his "disability" (which terms
are defined by his employment agreement) or death. In addition, Mr. Piccola has
the right to require the Company to repurchase the Common Stock he receives
pursuant to the employment agreement for $3.33 per share. This right is
exercisable for ten days following the fifth anniversary of Mr. Piccola's
employment agreement.
Mr. Piccola is also entitled to receive certain incentive compensation
equal to approximately 13% of 25% of certain defined pre-tax profits in excess
of $1,750,000 attributable to the Company's sales of homes in Virginia, North
Carolina and South Carolina for the Company's fiscal years ended June 30, 2001,
2002 and 2003. The percentage to be received by Mr. Piccola may be increased if
the employment by PLC of certain former PLC shareholders terminates under
certain circumstances. The aggregate incentive payments to Mr. Piccola and
certain other former PLC shareholders under similar provisions in their
employment agreements with PLC is capped at $1,250,000. Mr. Piccola is entitled
to receive this incentive compensation even if he is not employed by PLC at the
end of the relevant fiscal year if his employment was terminated by PLC "without
cause," terminated by him for "good reason" or terminated as a result of his
"disability" or death. In addition to the incentive compensation described
above, Mr. Piccola is also entitled to receive a bonus based upon the
profitability of the Raleigh and Greensboro division as set forth in his
employment agreement. This bonus compensation is based upon a sliding scale
percentage (4-8%) of the Company's pre-tax profit attributable to its Raleigh
and Greensboro Division. The pre-tax profit used to determine this bonus is
calculated in accordance with the terms of Mr. Piccola's employment agreement.
Mr. Piccola's employment agreement also provides that, if his
employment is terminated by PLC without "cause" or he terminates his employment
"for good reason," then he is entitled to certain severance compensation. If the
termination occurs prior to the first anniversary of the employment agreement,
Mr. Piccola is entitled to receive his base salary for until the first
anniversary or for six months, whichever is longer, and if the termination
occurs after the first anniversary, Mr. Piccola is entitled to receive his base
salary until 30 months after the date the employment agreement was entered into
or for six months, whichever is shorter.
Mr. Piccola's employment agreement also provides that he is entitled to
certain fringe benefits, including health insurance, participation in the
Company's 401(k) plan, use of a vehicle and life insurance.
-16-
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Compensation Committee
The Compensation Committee consists of Messrs. Kaplan and Katz and is
chaired by Mr. Kaplan. The Compensation Committee reviews and recommends
salaries, bonuses and other forms of compensation for executive officers and
other key employees of the Company.
Overview and Philosophy
The Compensation Committee is mindful of the need to align the
interests of management with the interests of the Company's stockholders. The
Compensation Committee believes that the objectives of the stockholders will be
best achieved by having a substantial portion of executive cash compensation
tied to annual corporate earnings and by providing incentives to management
through the use of stock options. Consistent with this philosophy, compensation
for the Company's executives consists of a base salary, a bonus and, in some
cases, stock options.
Senior Executive Officers' Compensation
The compensation of the Company's three most senior executive officers,
Messrs. Orleans, Goldman and Vesey, is reviewed by the Compensation Committee
and approved by the board of directors. For Fiscal 2002, Mr. Orleans' base
salary was $300,000, which has been the same since 1994, Mr. Goldman's base
salary was $225,000, and Mr. Vesey's base salary was $217,500. Mr. Orleans'
compensation is also subject to his employment agreement with the Company
discussed above under the caption "Employment Contracts with Named Executives."
Other Executive Officers' Compensation
For Fiscal 2002, the Compensation Committee assumed the responsibility
for the cash and other compensation to be paid to Messrs. Santangelo and Schaal,
except for any compensation under the Company's incentive stock plans. The
compensation of Messrs. Thomas Gancsos, Parker and Piccola was set by their
employment agreements with PLC. The amount and nature of compensation to be
received by the Company's executive officers was determined in accordance with
the recommendations of the Chief Executive Officer.
Base Salary
The compensation to executive officers of the Company is generally in
the low range of base salary amounts paid to comparable executive officers at
similar companies. Increases in base salaries have been limited over the last
several fiscal years and are adjusted 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 base salaries for Messrs. Gancsos, Parker and Piccola
for 2002 were set by their employment agreements with PLC. The employment
agreements of Messrs. Gancsos and Piccola expired on October 12, 2002 and their
future compensation will be set in the same manner as the compensation of the
Company's other executive officers.
Incentive Compensation Programs
The Compensation Committee believes that it is important for the
Company to further align its executive officers and key employees with the
stockholders' interests by establishing a direct link between executive pay and
the Company's operating financial performance. Accordingly, on July 18, 1994,
the board of directors, upon the favorable recommendation of the Compensation
Committee, adopted an incentive compensation plan to be applied in the fiscal
year ended June 30, 1995 and thereafter. The Incentive Plan, which is a
continuation of that plan, is the subject of the Incentive Plan Proposal and is
described above under the caption "Approval of the Orleans Homebuilders, Inc.
Amended and Restated Incentive Compensation Plan."
-17-
For Fiscal 2002, the board of directors continued management
performance goals, which included continued growth in profitability, reduction
of unproductive assets, acquisition and financing of new and existing assets,
and improvements by management to reduce overhead and increase efficiency. With
respect to Fiscal 2002, pursuant to the incentive compensation plan, 3% of
pre-tax profits were awarded to Mr. Orleans, 1.3% of pre-tax profits were
awarded to Mr. Goldman and 1.5% of pre-tax profits were awarded to Mr. Vesey. An
aggregate of approximately 2.2% of pre-tax profits were awarded to the Company's
other senior officers based upon their attainment of certain performance goals,
except that Mr. Schaal was awarded 0.75% of certain pre-tax profits of northern
region operations under a separate agreement with him.
The incentive compensation plan discussed above does not apply to
Messrs. Thomas Gancsos, Parker or Piccola, the Company's executive officers or
key employees for the Company's southern region. The employment agreements of
Messrs. Gancsos and Piccola, which expired on October 12, 2002, provided that
Mr. Gancsos and Piccola were entitled to receive an annual bonus based upon a
sliding-scale percentage (4%-8%) of the pre-tax profits attributable to certain
operations in the southern region. In addition, through the fiscal year ending
June 30, 2003, Messrs. Parker and Piccola are entitled to receive certain
incentive compensation if certain pre-tax profits of the Company exceed
$1,750,000. Future incentive compensation for Messrs. Gancsos and Piccola, if
any, will be awarded at the Company's discretion.
1992 Incentive Stock Option Plan
The 1992 Plan established by the board of directors is intended to
align directly the interests of the Company's executives and the stockholders in
the enhancement of stockholder value. The ultimate value, if any, received by
holders of options, restricted stock and stock appreciation rights granted under
the 1992 Plan is directly tied to increases in the Company's stock price.
Therefore, these stock options and stock appreciation rights serve to link
closely the interests of management and stockholders by motivating executives to
make decisions that will serve to increase the long-term return to the
stockholders. Additionally, grants under the 1992 Plan generally include vesting
and termination provisions, which the board believes will encourage recipients
of grants made under the 1992 Plan to remain employees of the Company. Options
granted under the 1992 Plan generally have exercise prices equal to the fair
market value of the Company's Common Stock on the date of grant, become
exercisable in installments within a period of three years from the date of
grant, and are contingent upon the grantee's continued employment.
Other Benefits
The Company makes available health care benefits and a 401(k) plan for
executive officers on terms generally available to all Company employees.
Messrs. Gancsos, Parker and Piccola receive similar benefits pursuant to their
agreements with PLC. The board of directors believes that such benefits are
comparable to those offered by other real estate developers of similar size. The
amount of perquisites, as determined in accordance with the rules of the
Securities and Exchange Commission relating to executive compensation, did not
exceed $50,000 or 10% of the salary of any executive officer in the last fiscal
year.
The Compensation Committee
David Kaplan, Chairman
Lewis Katz
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Convertible Note
In connection with the Company's discretionary secured line of credit
in the maximum principal amount of $6.6 million entered into in April 1996, the
Company and the lending bank agreed to enter into certain arrangements with
Jeffrey P. Orleans, Chairman and Chief Executive Officer of the Company,
relating to existing borrowings by the Company from Mr. Orleans. These
arrangements included the subordination to the bank of $3 million of advances by
Mr. Orleans to the Company.
-18-
The board of directors appointed a Special Committee of non-employee
directors to review and recommend the permanent terms of the aggregate $3
million in advances by Mr. Orleans to the Company and the terms of an additional
$2 million to be advanced by Mr. Orleans to the Company. On July 9, 1996, after
receiving the report of the Special Committee and a preliminary report from
Howard, Lawson & Co., an investment banking firm, on the fairness of the
proposed terms, the board of directors unanimously approved the proposed terms
(Mr. Orleans abstaining), and delegated to the Special Committee the authority
to approve the final documentation, subject to the receipt of a written opinion
from Howard, Lawson & Co. as to the fairness of the proposed terms to the
shareholders of the Company. In August 1996, after receipt of an opinion from
Howard, Lawson & Co., to the effect that the proposed arrangements with Mr.
Orleans relating to such advances were fair to the stockholders of the Company,
other than Mr. Orleans, from a financial point of view, the Special Committee
approved the documentation under which these advances would be made by Mr.
Orleans to the Company.
The $3 million advance by Mr. Orleans to the Company referred to above
is evidenced by the Company's $3 million Convertible Subordinated 7% Note (the
"Convertible Note"), issued pursuant to a note purchase agreement dated as of
August 1, 1996, as amended and restated as of June, 1997. During Fiscal 2002,
Mr. Orleans agreed to extend the maturity date one year to January 1, 2005,
provided the terms of the original Convertible Note are not modified. The
Convertible Note, as modified by certain deferral agreements, provides for
interest payable quarterly at 7% per annum and annual principal payments of $1
million beginning January 1, 2003. The Convertible Note contains commercially
standard default and other provisions. The holder of the Convertible Note may
convert all or any portion (in integral multiples of $1 million) of the
principal amount of the Convertible Note into shares of the Company's Common
Stock at a conversion price of $1.50 per share, subject to adjustment for
splits, combinations, and other capital changes. The closing price of the
Company's Common Stock on the American Stock Exchange on July 8, 1996, the date
the board of directors approved the terms of the borrowing, was $1.125 per
share.
Series D Preferred Stock
On April 20, 1998, the board of directors approved, subject to the
receipt of a written opinion confirming the fairness of the transaction from an
investment banking firm satisfactory to the board of directors, the exchange
with Mr. Orleans of an aggregate of $3 million of indebtedness represented by a
$2 million variable rate note and two demand notes in the aggregate principal
amount of $1,000,000 for shares of the Company's Series D Preferred Stock (the
"Series D Preferred Stock"). On September 24, 1998, the board of directors
received the written opinion of Howard, Lawson & Co. to the effect that the
proposed exchange with Mr. Orleans was fair to the stockholders of the Company,
other than Mr. Orleans, from a financial point of view. The board of directors
then took final action to authorize the terms of the Series D Preferred Stock
and the execution of an Exchange Agreement with Mr. Orleans. On October 20,
1998, the Company entered into an Exchange Agreement with Mr. Orleans under
which Mr. Orleans exchanged the variable rate note and the demand notes for
100,000 shares of Series D Preferred Stock.
The Series D Preferred Stock has a liquidation value of $3,000,000, or
$30.00 per share, and requires annual dividends of 7% of the liquidation value.
The dividends are cumulative and payable quarterly. The Series D Preferred Stock
is redeemable by the Company at any time after December 31, 2003, in whole or in
part, at a cash redemption price equal to the liquidation value plus all accrued
and unpaid dividends on such shares to the date of redemption. The Series D
Preferred Stock is convertible into 2,000,000 shares of Common Stock at a
conversion price of $1.50 per share of Common Stock. The closing price of the
Company's Common Stock on the American Stock Exchange on April 20, 1998 (the
date of board of directors approval of the issuance of the Series D Preferred
Stock) was $1.19.
If Mr. Orleans were to convert the Convertible Note and the Series D
Preferred Stock in full at its initial conversion prices of $1.50 per share, his
beneficial ownership of the Company's Common Stock would increase by 4,000,000
shares and his percentage ownership of the outstanding common stock of the
Company, based on the number of shares of Common Stock outstanding on September
30, 2002, would increase from approximately 61.5% to approximately 71.2%.
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Purchase Money Mortgage
In December 1997, the Company purchased land from Mr. Orleans in
exchange for a $500,000 Purchase Money Mortgage (the "PMM"), plus a share of
one-half of the gross profit in excess of 16% on a portion of the homes built
and sold on this land. During the fiscal year ended June 30, 1998, the Company
repaid $200,000 of the PMM and began development of the land. During Fiscal
2002, 2001 and 2000, 54, 48 and 32 lots, respectively, have settled and the
Company incurred additional costs of approximately $383,000, $145,000 and
$161,000, respectively, for Mr. Orleans' share of the gross profit. As of June
30, 2002, the Company paid Mr. Orleans approximately $660,000 under this
agreement and the remaining $29,000 is included in the Company's financial
statements as an accrued expense. The PMM bears interest at 7% annually and is
due no later than 60 months from the date of issuance.
Line of Credit and Mount Laurel Homes
During the fiscal year ended June 30, 1999, the Company entered into an
agreement with Mr. Orleans for a $4,000,000 unsecured line of credit. The
agreement provides for an annual review by Mr. Orleans for a one-year extension
and currently expires June 30, 2003, with annual interest at LIBOR plus 4%,
payable monthly. There were no principal or interest balances outstanding as of
June 30, 2002. The total outstanding principal and interest was $3,619,000 at
June 30, 2001.
Relationship with Orleans Construction Corp.
Prior to October 22, 1993, the date of acquisition by the Company of
Orleans Construction Corp., a real estate company which was wholly owned by Mr.
Orleans, Orleans Construction Corp. had advanced funds to, borrowed funds from,
and paid expenses and debt obligations on behalf of Orleans Builders and
Developers, L.P., a partnership in which Mr. Orleans owns a majority interest.
During Fiscal 2002, the Company repaid the entire outstanding principal balance
and accrued interest of approximately $900,000. At June 30, 2001, amounts owed
by the Company to the partnership aggregated $869,000. These advances bore
interest at 7% annually. The interest incurred on these advances amounted to
$31,000 for Fiscal 2002.
Relationship with A.P. Orleans Insurance Agency Inc.
The Company places a majority of its corporate insurance through A.P.
Orleans Insurance Agency Inc., of which Mr. Orleans is the sole shareholder. 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 incurred an aggregate of approximately $767,000 in
Fiscal 2001 and an aggregate of approximately $1,472,000 in Fiscal 2002 for
these insurance policies. A.P. Orleans Insurance Agency, Inc. received customary
commissions from the insurance companies for serving as broker.
Relationship with Title Insurer
Mr. Goldman and Mr. Orleans each own a 33-1/3% equity interest in a
limited partnership that has a consulting agreement with a third party real
estate title insurance company (the "Title Company"). The Company purchases real
estate title insurance and related closing services from the Title Company for
various parcels of land acquired by the Company. The Company paid the Title
Company approximately $190,000, $197,000 and $141,000, for the Company's fiscal
years ended June 30, 2002, 2001 and 2000, respectively. In addition, the
Company's homebuyers may elect to utilize the Title Company for the purchase of
real estate title insurance and real estate closing services but, the homebuyers
are under no obligation to do so.
Under the terms of the consulting agreement, which expires in July
2007, the limited partnership providing the consulting services is entitled to
receive 50% of the pre-tax profits attributable to certain operations of the
Title Company, subject to certain adjustments. In addition, the limited
partnership and the principals of the limited partnership, including Mr. Goldman
and Mr. Orleans, have agreed not to engage in the real estate title insurance
business or the real estate closing business during the term of the consulting
agreement.
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Other
An entity in which Mr. Orleans owns a 67% equity interest, JPO-EAM
Associates, LP, purchased five residential units from the Company in July 2002
for an aggregate purchase price of $316,795. The purchase price was determined
by the Company in accordance with New Jersey Consumer Office of Affordable
Housing regulations. The deeds for these units, which were constructed by the
Company in 2002, contain restrictions requiring that they be rented to low and
moderate income families for not less than 20 years. The construction and sale
of these homes assists the Company in satisfying certain of its obligations to
provide low and moderate income housing.
In November 1999, the Company engaged David Kaplan, a director of the
Company, to provide services in connection with the acquisition of Parker &
Lancaster Corporation. In accordance with the terms of the arrangement, the
Company paid Mr. Kaplan $60,000 during Fiscal 2000, $50,000 in Fiscal 2001 and
$40,000 in Fiscal 2002.
On March 20, 2000, Thomas Vesey, the brother of Michael T. Vesey,
President and Chief Operating Officer of the Company, was hired to assist the
Company in evaluating and identifying opportunities for expansion into
additional market areas. Presently, Mr. Vesey is the Division Manager for
Charlotte, North Carolina. During Fiscal 2001, his salary was increased to
$150,000 on an annualized basis. In addition, he also received a $67,100 bonus
related to Fiscal 2002 performance.
Mr. Robert M. Segal, a director of the Company, is a partner in the law
firm Wolf, Block, Schorr and Solis-Cohen LLP, which serves as the Company's
general counsel.
In the opinion of the board of directors, all of the transactions
described in "Certain Relationships and Related Transactions," insofar as they
involve transactions by affiliates of the Company with the Company, are on terms
that are comparable to or not less favorable than, terms which would have been
obtainable by the Company from unaffiliated third parties.
AUDIT COMMITTEE REPORT
The Audit Committee of the board of directors consists of three
directors, all of whom are independent as defined under the American Stock
Exchange's listing standards, and operates under a written charter adopted by
the board of directors. The Audit Committee has prepared the following report on
its activities with respect to the Company's financial statements for Fiscal
2002:
o The Audit Committee has reviewed and discussed the audited financial
statements with management and PricewaterhouseCoopers LLP, independent
accountants for the Company;
o The Audit Committee has discussed with PricewaterhouseCoopers LLP the
matters required to be discussed by Statements of Auditing Standards
No. 61, which include, among other items, matters related to the
conduct of the audit of the financial statements for Fiscal 2002;
o The Audit Committee has received written disclosures and the letter
from PricewaterhouseCoopers LLP required by Independence Standards
Board Standard No. 1, and has discussed with PricewaterhouseCoopers LLP
its independence from the Company; and
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o Based on the review and discussions referred to above, the Audit
Committee has recommended to the board of directors that the audited
financial statements be included in the Company's Annual Report on Form
10-K for Fiscal 2002, for filing with the Securities and Exchange
Commission.
Audit Committee
David Kaplan, Chairman
Robert N. Goodman
Andrew N. Heine
ADDITIONAL INFORMATION REGARDING THE AUDITORS
PricewaterhouseCoopers LLP has been selected to be the independent
accountants for the Company for its 2003 Fiscal Year. 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 charged to the Company by PricewaterhouseCoopers LLP
for its audit of the Company's financial statements for Fiscal 2002 and for its
review of financial statements included in the Company's quarterly reports on
Form l0-Q for Fiscal 2002 were approximately $123,500.
Financial Information Systems Design and Implementation Fees
There were no services performed or fees charged to the Company by
PricewaterhouseCoopers LLP for information technology services for Fiscal 2002.
All Other Fees
The aggregate fees charged to the Company by PricewaterhouseCoopers LLP
for all other services, which include fees related to business acquisitions, tax
consultation, tax return preparation and accounting consultation for Fiscal 2002
were approximately $22,500.
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.
DEADLINE FOR FILING STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Proposals which stockholders desire to have included in the Company's
proxy statement for the annual meeting in 2003 pursuant to Exchange Act Rule
14a-8(e) must be received by the Company at its principal executive offices on
or before June 29, 2003.
A stockholder may wish to have a proposal presented at the 2003 annual
meeting, but not to have such proposal included in the Company's 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 17, 2003 (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
Company's 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 2003 Annual Meeting of Stockholders.
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The Company has not been notified by any stockholder of such
stockholder's intent to present a stockholder proposal from the floor at this
year's Annual Meeting. The enclosed proxy grants the proxy committee
discretionary authority to vote on any matter properly brought before this
year's Annual Meeting.
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 2002. 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
JOSEPH A. SANTANGELO, SECRETARY-TREASURER AND CHIEF FINANCIAL OFFICER, AT THE
OFFICES OF THE COMPANY SET FORTH ON PAGE ONE OF THIS PROXY STATEMENT.
October 25, 2002
By Order of the Board of Directors
JOSEPH A. SANTANGELO,
Secretary-Treasurer and Chief Financial Officer
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Appendix A
ORLEANS HOMEBUILDERS, INC.
INCENTIVE COMPENSATION PLAN
(Amended and Restated Effective July 1, 2002)
Purpose
The Orleans Homebuilders, Inc. Incentive Compensation Plan, as herein
amended and restated (the "Plan"), is an amendment and restatement of the
incentive compensation plan originally adopted by the Company on July 18, 1994,
and as previously in effect. The Plan is designed to reward those executives and
key employees of Orleans Homebuilders, Inc., a Delaware corporation (the
"Company") and its affiliates who are designated as Participants for achieving
corporate performance objectives, and to provide, in particular, a performance
incentive for these executives and key employees that is linked to the Company's
operating financial performance.
ARTICLE I - DEFINITIONS
1.1 "Board" shall mean the Board of Directors of the Company.
1.2 "Code" shall mean the Internal Revenue Code of 1986, as amended
(the "Code").
1.3 "Committee" shall mean the Compensation Committee of the Board,
or such other committee as may be designated by the Board to act as the
administrative committee with respect to the Plan.
1.4 "Covered Employee" shall mean, with respect to any fiscal year of
the Company, each officer, other than the chief executive officer, whose
compensation for such fiscal year is required to be disclosed to shareholders in
the proxy statement relating to the annual meeting of stockholders of the
Company held during the next fiscal year pursuant to the executive compensation
disclosure rules promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended.
1.5 "Net Pre-Tax Profits" shall mean the Company's consolidated
operating profits determined before taxes and without taking into account
nonrecurring items, income or loss arising from extraordinary items,
discontinued operations, debt repurchase at a discount, or any amounts paid or
accrued pursuant to the Plan. The Company shall determine the Company's Net
Pre-Tax Profits applying for these purposes generally accepted accounting
principles.
1.6 "Participant" shall mean the following persons:
(a) Jeffrey P. Orleans, Chairman of the Board and Chief Executive
Officer of the Company;
(b) Benjamin D. Goldman, Vice Chairman of the Board;
(c) Michael T. Vesey, President and Chief Operating Officer; and
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(d) Such other of the Company's officers (within the meaning of
Section 16(a) under the Securities Exchange Act of 1934, as amended) and other
key employees as may be designated as Participants in the Plan by the Committee.
1.7 "Performance Period" shall mean the Plan Year.
1.8 "Plan Year" shall mean the Company's fiscal year, beginning on
July 1 and ending on June 30.
ARTICLE II - ELIGIBILITY AND PARTICIPATION
2.1 Participation in the Plan for a Plan Year shall be open to those
employees who are designated as Participants pursuant to the Plan or by action
of the Committee from time to time.
2.2 If a Participant has not been a Participant for a full Plan Year,
such Participant's benefits payable under the Plan, if any, shall be limited to
a pro-rata portion of the benefit otherwise payable for such Plan Year based on
the portion of the Plan Year such Participant was a Participant in the Plan.
ARTICLE III - PERFORMANCE GOAL
No amount shall be payable pursuant to the Plan with respect to a Plan
Year unless the Company has Net Pre-Tax Profits for such Plan Year.
ARTICLE IV - DETERMINATION OF BONUS AWARDS
4.1 As soon as practicable following the end of a Performance Period,
the Committee shall determine whether the Company has any Net Pre-Tax Profits,
and shall, if there are such Net Pre-Tax Profits, determine the amount payable
pursuant to the Plan, as set forth below:
(a) The bonus payable to Jeffrey P. Orleans for each Plan Year
shall be equal to three percent (3%) of the Company's Net Pre-Tax Profit for
such Plan Year.
(b) The bonus payable to Michael T. Vesey for each Plan Year
shall be equal to one and one-half percent (1 1/2%) of the Company's Net Pre-Tax
Profit for such Plan Year.
(c) Subject to Section 4.2, the bonus payable to each other
Participant for each Plan Year shall be determined by the Committee; provided,
however, that in no event shall the bonus payable to any such other Participant
in any Plan Year exceed one and one-half percent (1 1/2%) of the Company's Net
Pre-Tax Profits for the Plan Year.
(d) Notwithstanding any other provisions of the Plan, the
aggregate payments to Participants under the Plan with respect to any Plan Year
shall equal eight percent (8%) of the Company's Net Pre-Tax Profits for such
Plan Year. The Committee shall take this aggregate payment amount into account
in its determination of the aggregate bonus amount awarded pursuant to Section
4.1(c).
A-2
4.2 The Committee shall have no discretion to increase the maximum
bonus payable to any Participant under the Plan, but shall have the right and
obligation to reduce the amount of or totally eliminate one or more such bonuses
(other than the bonuses payable to Messrs. Orleans and Vesey) so as to cause the
aggregate amount of bonuses payable under the Plan with respect to a Plan Year
to be equal to eight percent (8%) of the Company's Net Pre-Tax Profits for the
Plan Year).
4.3 Notwithstanding anything to the contrary in this Article IV, no
amount shall be payable under the Plan to any Participant who is not employed by
the Company or an affiliate of the Company as of the date payment is to be made
unless the Participant's termination of employment is attributable to the
Participant's death, disability, or retirement.
ARTICLE V - PAYMENT OF AWARDS
5.1 Approved bonus awards shall be payable by the Company in cash to
each Participant, or to his estate in the event of his death, in a single
payment or in installments, after the end of each Performance Period, but only
after the Committee has certified in writing that the relevant performance goal
for the Plan Year has been achieved.
5.2 If a bonus award is payable to a Participant who is no longer
employed by the Company or an affiliate of the Company by reason of such
Participant's death, disability or retirement, the amount of the bonus award
payable to such Participant shall be reduced to reflect the portion of the year
the Participant was a Participant in the Plan, as provided in Section 2.2,
above.
ARTICLE VI - OTHER TERMS AND CONDITIONS
6.1 No bonus award shall be paid under the Plan unless and until the
material terms have been disclosed to and approved by the Company's shareholders
by a majority of votes cast in a separate vote, either in person or by proxy,
including abstentions to the extent abstentions are counted as voting under
applicable state law, such requirements to be interpreted in a manner consistent
with the applicable provisions of Treasury Regulation Section 1.162-27,
promulgated pursuant to Section 162(m) of the Code.
6.2 No person shall have any legal claim to be granted an award under
the Plan and the Committee shall have no obligation to treat Participants
uniformly. Except as may be otherwise required by law, bonus awards under the
Plan shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or
levy of any kind, either voluntary or involuntary. Bonuses awarded under the
Plan shall be payable from the general assets of the Company and no Participant
shall have any claim with respect to any specific assets of the Company.
6.3 Neither the Plan nor any action taken under the Plan shall be
construed as giving any employee the right to be retained in the employ of the
Company or any subsidiary or to maintain any Participant's compensation at any
level.
6.4 The Company or any of its subsidiaries may deduct from any award
any applicable withholding taxes or any amounts owed by the employee to the
Company or any of its subsidiaries.
A-3
ARTICLE VII - ADMINISTRATION
7.1 All members of the Committee shall be persons who qualify as
"outside directors" as defined under Section 162(m) of the Code.
7.2 The Committee shall have full power and authority to administer
and interpret the provisions of the Plan and to adopt such rules, regulations,
agreements, guidelines and instruments for the administration of the Plan and
for the conduct of its business as the Committee deems necessary or advisable.
7.3 Except with respect to matters which under Section 162(m)(4)(C)
of the Code are required to be determined in the sole and absolute discretion of
the Committee, the Committee shall have full power to delegate to any officer or
employee of the Company the authority to administer and interpret the procedural
aspects of the Plan, subject to the Plan's terms, including adopting and
enforcing rules to decide procedural and administrative issues.
7.4 The Committee may rely on opinions, reports or statements of
officers or employees of the Company or any subsidiary thereof and of Company
counsel (inside or retained counsel), public accountants and other professional
or expert persons.
7.5 The Board reserves the right to amend or terminate the Plan in
whole or in part at any time. Unless otherwise prohibited by applicable law, any
amendment required to conform the Plan to the requirements of Section 162(m) of
the Code may be made by the Committee. No amendment may be made to the class of
individuals who are eligible to participate in the Plan, the performance
criteria specified in Article III or the maximum bonus payable to any
Participant as specified in Sections 4.1 and 4.2 without shareholder approval,
unless shareholder approval is not required in order for bonuses paid to Covered
Employees to constitute qualified performance-based compensation under Section
162(m) of the Code.
7.6 No member of the Committee shall be liable for any action taken
or omitted to be taken or for any determination made by him or her in good faith
with respect to the Plan, and the Company shall indemnify and hold harmless each
member of the Committee against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim with the approval of
the Committee) arising out of any act or omission in connection with the
administration or interpretation of the Plan, unless arising out of such
person's own fraud or bad faith.
7.7 The place of administration of the Plan shall be in the
Commonwealth of Pennsylvania, and the validity, construction, interpretation,
administration and effect of the Plan and of its rules and regulations, and
rights relating to the Plan, shall be determined solely in accordance with the
laws of the Commonwealth of Pennsylvania.
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/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
REVOCABLE PROXY
ORLEANS HOMEBUILDERS, INC.
ANNUAL MEETING OF STOCKHOLDERS
FRIDAY, DECEMBER 6, 2002
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 undersigned's 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 22, 2002, at the Annual Meeting of Stockholders to be held on Friday,
December 6, 2002 and at any adjournment or postponement thereof.
UNLESS OTHERWISE SPECIFIED, ALL SHARES WILL BE VOTED "FOR" THE ELECTION
OF ALL NOMINEES FOR DIRECTOR LISTED AND "FOR" THE PROPOSAL TO APPROVE THE
ORLEANS HOMEBUILDERS, INC. AMENDED AND RESTATED INCENTIVE COMPENSATION 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.
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Please be sure to sign and date Date
this Proxy in the box below.
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Stockholder sign above Co-holder (if any) sign above
For All
1. ELECTION OF DIRECTORS For Withhold Except
/ / / / / /
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.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
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2. APPROVAL OF THE ORLEANS HOMEBUILDERS, INC. AMENDED AND RESTATED INCENTIVE
COMPENSATION PLAN
For Against Abstain
/ / / / / /
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.
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| Detach above card, sign, date and mail in postage paid envelope provided. |
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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.
PLEASE ACT PROMPTLY
SIGN, DATE AND MAIL YOUR PROXY CARD TODAY
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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.
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