SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant[ ]
Check the 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
WASHINGTON HOMES, INC.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6 (i)(3).
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:1
(5) Total fee paid:
[x] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[LOGO]
October 10, 1996
Dear Fellow Shareholders:
You are cordially invited to attend the 1996 Annual Meeting of Shareholders
of Washington Homes, Inc. to be held on Wednesday, November 13, 1996, beginning
at 10:00 a.m., local time, at the Greenbelt Marriott Hotel, Greenbelt, Maryland.
I look forward to meeting as many of you as can attend the meeting.
Holders of Washington Homes Common Stock are being asked to vote on the
matters listed in the enclosed Notice of Annual Meeting of Shareholders. The
Board of Directors recommends a vote "FOR" the proposals listed as items 1 and 2
in the Notice.
Whether or not you plan to attend the Meeting in person, it is important
that your shares of Washington Homes Common Stock be represented and voted at
the Meeting. Accordingly, after reading the enclosed Notice of Annual Meeting
and Proxy Statement, please sign, date and mail the enclosed proxy card in the
envelope provided.
Sincerely,
Geaton A. DeCesaris, Jr.
President and
Chief Executive Officer
WASHINGTON HOMES, INC.
CORPORATE OFFICE
SIXTH FLOOR
1802 BRIGHTSEAT ROAD
LANDOVER, MARYLAND 20785-4235
(301) 772-8900
FAX: (301) 772-1380
[LOGO]
1802 Brightseat Road
Landover, MD 20785-4235
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 13, 1996
To the Shareholders of
Washington Homes, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders (the "Annual
Meeting") of Washington Homes, Inc., a Maryland corporation (the "Company"),
will be held on November 13, 1996, at the Greenbelt Marriott Hotel, 6400 Ivy
Lane, Greenbelt, Maryland, commencing at 10:00 a.m., local time, for the
following purposes:
1. To elect directors;
2. To ratify the appointment of Deloitte & Touche LLP as independent
auditors of the Company for fiscal year 1997; and
3. To transact such other business as may properly come before the
Meeting.
Only holders of the Company's voting common stock of record at the close of
business on October 4, 1996, the record date, are entitled to receive notice of
and to vote at the Annual Meeting and all adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Laurence R. Jaffe
October 10, 1996 Secretary and General Counsel
- --------------------------------------------------------------------------------
HOLDERS OF VOTING COMMON STOCK ARE URGED TO MARK, SIGN AND DATE THE ENCLOSED
PROXY AND RETURN IT IN THE ENCLOSED PRE-ADDRESSED REPLY ENVELOPE, WHETHER OR NOT
THEY PLAN TO ATTEND THE MEETING.
- --------------------------------------------------------------------------------
WASHINGTON HOMES, INC.
1802 Brightseat Road
Landover, MD 20785-4235
PROXY STATEMENT
This Proxy Statement is being furnished to holders of the voting common
stock, par value $.01 per share (the "Common Stock"), of Washington Homes, Inc.,
a Maryland corporation (the "Company"), in connection with the solicitation of
proxies by its Board of Directors for use at the Annual Meeting of the Company's
shareholders (the "Annual Meeting") to be held on Wednesday, November 13, 1996,
at the Greenbelt Marriott Hotel, 6400 Ivy Lane, Greenbelt, Maryland, commencing
at 10:00 a.m., local time, and at any adjournment or postponement thereof.
This Proxy Statement and accompanying form of Proxy and Notice of Annual
Meeting are first being mailed to holders of Common Stock on or about October
10, 1996. A copy of the Company's Annual Report to Shareholders for the fiscal
year ended July 31, 1996, including financial statements, has been sent
simultaneously with this Proxy Statement or has been previously provided to all
shareholders entitled to vote at the Annual Meeting.
SHAREHOLDERS ENTITLED TO VOTE
Only holders of Common Stock of record at the close of business on October
4, 1996, the record date, are entitled to notice of and to vote at the Annual
Meeting and adjournments thereof. As of October 4, 1996, there were 7,000,000
shares of Common Stock outstanding and entitled to be voted at the Annual
Meeting. In addition, the Company had 942,763 shares of non-voting common stock
outstanding which are convertible into voting common stock on a share-for-share
basis.
Each holder who is entitled to vote may cast one vote per share held on all
matters properly submitted for the vote of shareholders at the Annual Meeting.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. A plurality of the votes duly cast is required
for the election of directors. The affirmative vote of a majority of the votes
duly cast is required to approve the other matter to be acted upon at the Annual
Meeting.
PROXIES
All shares entitled to vote and represented by properly executed proxies
received prior to the Annual Meeting, and not revoked, will be voted at the
Annual Meeting in accordance with the instructions indicated on those proxies.
If no instructions are indicated on a properly executed proxy, the shares
represented by such proxy will be voted as recommended by the Board of
Directors. The Board of Directors recommends a vote FOR the election of the
nominees for election as directors; and FOR ratification of the appointment of
Deloitte & Touche LLP as independent auditors for the 1997 fiscal year.
If any other matters are properly presented at the Annual Meeting for
consideration, including, among other things, consideration of a motion to
adjourn the Annual Meeting to another time or place (including, without
limitation, for the purpose of soliciting additional proxies), the persons named
in the enclosed form of proxy will vote on those matters in accordance with
their best judgment to the same extent as the person signing the proxy would be
entitled to vote. It is not currently anticipated that any other matters will be
raised at the Annual Meeting.
1
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. A proxy may be revoked (i) by filing
with the Secretary of the Company, at or before the taking of the vote at the
Annual Meeting, a written notice of revocation or a duly executed proxy, in
either case later dated than the prior proxy relating to the same shares, or
(ii) by attending the Annual Meeting and voting in person (although attendance
at the Annual Meeting will not itself revoke a proxy).
1. ELECTION OF DIRECTORS
Seven directors are proposed to be elected at the Annual Meeting to serve
until the next annual meeting of shareholders and until their successors are
duly elected and qualified. Properly executed proxies returned in a timely
fashion will be voted in the election of each of the nominees named below,
unless the shareholder indicates on the proxy that the vote should be withheld
from any or all of such nominees.
The Board of Directors has proposed the persons listed below as nominees
for election as directors at the Annual Meeting. All nominees are currently
serving as directors of the Company. The Company expects each nominee for
election as a director at the Annual Meeting will stand for election and be able
to serve as a director. If any nominee is unable to stand for election and
serve, proxies will be voted in favor of the remainder of those nominated and
may be voted for substitute nominees.
Following is a listing of the nominees along with a brief summary of their
business experience:
Geaton A. DeCesaris, Sr., 65, has served as Chairman of the Board of the
Company since August 1988. From June 1985 to August 1988, he served as Senior
General Partner of Sonny DeCesaris and Sons Development Group, a real estate
development and construction firm. Prior thereto from 1973 to June 1985, he was
founder and President of Sonny DeCesaris and Sons Builders, Inc., and from 1960
to 1973, President of Procopio and DeCesaris Construction Company. Mr. DeCesaris
is the father of Geaton A. DeCesaris, Jr. and the father-in-law of Paul C.
Sukalo.
Geaton A. DeCesaris, Jr., 41, has served as President, Chief Executive
Officer and a Director of the Company since August 1988. Prior thereto from June
1985 to August 1988, Mr. DeCesaris was Managing General Partner of Sonny
DeCesaris and Sons Development Group and, from 1973 to June 1985, Vice President
of Sonny DeCesaris and Sons Builders, Inc. Mr. DeCesaris is the son of Geaton A.
DeCesaris, Sr.
Thomas Connelly, 47, has served as Senior Vice President of the Company
since August 1988 and a Director since September 1992. From September 1994 to
September 1996 he served as the Company's Chief Financial Officer. From January
1987 to August 1988, he was Financial Manager of Sonny DeCesaris and Sons
Development Group. Mr. Connelly has over 21 years experience in finance and real
estate development.
Paul C. Sukalo, 45, has served as Senior Vice President and a Director of
the Company since August 1988. Prior thereto from June 1985 to August 1988, he
was a general partner of Sonny DeCesaris and Sons Development Group. He has over
17 years of related construction experience, principally in residential
construction and related services. Mr. Sukalo is the son-in-law of Geaton A.
DeCesaris, Sr.
Ronald M. Shapiro, 53, has been a Director of the Company since April 1993.
Mr. Shapiro, an attorney, is President of Shapiro, Robinson & Associates, Inc.,
a professional sports management and contract negotiations firm which he founded
in 1976. Since January 1992 he has served as Counsel To The Firm of Shapiro and
Olander, Baltimore, Maryland, a law firm he founded in 1972.
Richard B. Talkin, 59, has been a Director of the Company since April
1993. Mr. Talkin is an attorney specializing in real estate related matters
and has practiced law in Columbia, Maryland for over 25 years.
Richard S. Frary, 49, has been a Director of the Company since December
1995. Mr. Frary is a partner and managing director of Tallwood Associates,
Inc., a merchant banking firm located in New York, which specializes
2
in corporate restructurings and real estate and has held that position since
1990. He is also a director of Value Property Trust, a real estate investment
trust.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors has designated several committees of the Board,
including a Compensation Committee, an Audit Committee and an Executive
Committee, the functions and membership of which are described below.
The Compensation Committee is responsible for approving recommendations to
the Board of Directors regarding salaries, incentive bonuses and other
compensation arrangements with executive officers of the Company and for the
administration of the Washington Homes Employee Stock Option Plan. The Audit
Committee's functions include making recommendations to the Board of Directors
on the selection of the Company's auditors, reviewing the arrangements for and
scope of the independent auditors' examination, meeting with the independent
auditors to review the adequacy of internal controls and reporting and
performing any other duties or functions deemed appropriate by the Board. The
Executive Committee may, with certain limitations, act for the Board of
Directors between meetings of the Board.
The members of both the Compensation and Audit Committees during fiscal
1996 were Messrs. Frary, Shapiro and Talkin. Mr. Shapiro was Chairman of the
Compensation Committee and Mr. Frary was Chairman of the Audit Committee. The
Executive Committee consists of Geaton A. DeCesaris, Sr., Geaton A. DeCesaris,
Jr. and Thomas Connelly.
During fiscal 1996, the Board of Directors met four times, the Executive
Committee acted by unanimous consent three times, the Compensation Committee met
once and acted by unanimous consent twice and the Audit Committee met once.
DIRECTOR COMPENSATION
During fiscal 1996, the Company paid each non-employee director $6,000 per
year plus $2,500 for each Board meeting and $1,000 for each committee meeting
not held in conjunction with a Board meeting which they attended and reimbursed
such directors for all out-of-pocket expenses incurred in connection with their
activities as directors. During fiscal 1996 each non-employee director received
an option under the Company's Non-Employee Directors' Stock Option plan to
purchase 2,000 shares of Common Stock at a price of $6.00 per share (the market
price at the date of grant). During the fiscal year ended July 1, 1996, the
Company engaged Mr. Talkin as counsel to provide legal services to the Company.
3
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of July 31, 1996 with
respect to the beneficial ownership of the Company's voting common stock by each
person known by the Company to be the beneficial owner of more than five percent
of its outstanding voting common stock:
SHARES OF VOTING COMMON
STOCK BENEFICIALLY OWNED
NAME AND ADDRESS ------------------------
OF BENEFICIAL OWNERS(1) NUMBER PERCENT(2)
----------------------- ------ ----------
Geaton A. DeCesaris, Sr. (3)(4)(5).................. 809,869 10.2%
Geaton A. DeCesaris, Jr. (3)(4)(5).................. 1,090,880 13.7
Marco A. DeCesaris (4)(5)........................... 522,246 6.6
A. Hugo DeCesaris (3)(4)(5)......................... 446,000 5.6
Joseph A. DeCesaris (3)(4)(5)....................... 482,442 6.1
First Chicago Investment Corporation (6)............ 714,980(7) 9.0
Three First National Plaza
Chicago, IL 60602
Dimensional Fund Advisors, Inc. (8)................. 406,900 5.1
1299 Ocean Avenue
Santa Monica, CA 90401
- ----------
<FN>
(1) The address for DeCesaris family members is 1802 Brightseat Road, Landover,
Maryland 20785-4235.
(2) Based on 7,942,763 shares outstanding which includes 942,763 shares of
non-voting common stock which are convertible into shares of voting common
stock on a share-for-share basis.
(3) Includes shares held by spouse and jointly with spouse. Each person listed
has joint voting and investment power with that person's spouse with respect
to the shares jointly owned. Also includes shares held in that person's
retirement plan accounts.
(4) Geaton A. DeCesaris, Jr., Marco A. DeCesaris, A. Hugo DeCesaris and Joseph
A. DeCesaris are the sons and Paul C. Sukalo is the son-in-law of Geaton A.
DeCesaris, Sr. While these persons have acted together in various
businesses, principally in real estate and are referred to in this Proxy
Statement collectively as members of the SDS Group, there is no agreement
among them to vote their shares together or to otherwise act in concert
concerning the affairs of the Company. Each of the individuals disclaims
beneficial ownership of any shares other than as listed opposite such
person's name in the table above or the table on the next page.
(5) In addition to shares listed above, various DeCesaris family trusts hold
340,000 shares of Common Stock for the benefit of family members, portions
of which may be deemed indirectly beneficially owned as follows: 100,000
shares by Geaton A. DeCesaris, Jr., 40,000 shares by Marco A. DeCesaris,
40,000 by A. Hugo DeCesaris and 80,000 by Joseph A. DeCesaris. The
co-trustees of these trusts have shared voting and investment power with
respect to shares held.
(6) Has sole voting and dispositive power with respect to shares listed.
(7) Represents shares of non-voting common stock which are convertible into
shares of voting common stock on a share-for-share basis.
(8) Beneficial ownership is as of June 30, 1996. Dimensional Fund Advisors,
Inc. has informed the Company that it has sole power to vote 281,300
shares and sole dispositive power with respect to all shares held.
</FN>
4
SECURITIES OWNERSHIP OF MANAGEMENT
The following table sets forth information as of July 31, 1996 regarding
beneficial ownership of the Company's common stock (both voting and non-voting
shares) by each Director, each nominee to become a Director, each of the
Company's five most highly compensated executive officers and the Directors and
executive officers of the Company as a group:
NUMBER OF SHARES PERCENTAGE OF
NAME BENEFICIALLY OWNED OUTSTANDING SHARES
---- ------------------ ------------------
Geaton A. DeCesaris, Jr................ 1,090,880(1)(2)(3) 13.7%
Geaton A. DeCesaris, Sr................ 809,869(1) 10.2
Cameron Ross........................... --(3) *
Paul C. Sukalo......................... 278,716(1)(3)(4) 3.5
Thomas Connelly........................ 39,164(1)(3) *
Ronald M. Shapiro...................... 2,225(3) *
Richard B. Talkin...................... 7,000(1)(3) *
Richard S. Frary....................... 58,130(1)(3)(5) *
All Directors and executive officers
as a group (12 persons).............. 2,304,372(1)(2)(3)(4)(5) 29.0%
- ----------
<FN>
* Less than 1% of issued and outstanding shares of common stock (both voting and
non-voting).
(1) Includes shares held jointly with spouse, shares held for benefit of minor
children and/or shares held in retirement plan accounts.
(2) Does not include 100,000 shares held in the DeCesaris family trusts which
may be deemed indirectly beneficially owned by Geaton A. DeCesaris, Jr.
(3) Does not include shares which such person has a right to acquire through
the exercise of options as follows: Mr. DeCesaris 25,000; Mr. Sukalo
12,000; Mr. Connelly 34,000; Mr. Ross 12,000; Mr. Shapiro 4,000; Mr.
Talkin 4,000; and Mr. Frary 2,000.
(4) Does not include 60,000 shares held in the DeCesaris family trusts which
may be deemed indirectly beneficially owned by Paul C. Sukalo.
(5) Includes 28,330 shares of non-voting common stock.
</FN>
5
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation paid to the
Company's chief executive officer and its four other most highly compensated
executive officers serving at July 31, 1996 for services rendered during the
last three fiscal years:
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
-----------------
ANNUAL COMPENSATION NUMBER OF
------------------------------- SHARES UNDERLYING
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS OTHER(1)(2) OPTIONS GRANTED
--------------------------- ----------- ------ ----- ----------- -----------------
Geaton A. DeCesaris, Jr............................ 1996 $350,000 -- $1,000 12,500
President and Chief Executive Officer 1995 350,000 $ 50,000 1,000 12,500
1994 260,000 100,000 1,000 --
Geaton A. DeCesaris, Sr............................ 1996 260,000 -- 1,000 --
Chairman of the Board 1995 260,000 -- 1,000 --
1994 260,000 -- 1,000 --
Cameron Ross....................................... 1996 150,082 121,963 1,000 6,000
President, Westminster Homes, Inc. 1995 145,082 31,433 1,000 6,000
1994 16,740 -- -- --
Paul C. Sukalo..................................... 1996 135,300 48,430 1,000 6,000
Senior Vice President 1995 135,300 41,333 1,000 6,000
1994 135,300 17,000 1,000 --
Thomas Connelly.................................... 1996 145,000 -- 1,000 7,000
Senior Vice President 1995 125,000 20,000 1,000 7,000
1994 90,000 30,000 1,000 --
- ----------
<FN>
(1) Includes the matching amounts paid by the Company to the Profit Sharing Plan
under which employee contributions are matched up to $1,000.
(2) Excludes perquisites and other personal benefits since the aggregate amount
of such compensation is the lesser of $50,000 or 10% of salary and bonus
combined.
</FN>
The Company does not have employment agreements with any of its executive
officers.
During fiscal 1996, the Company employed Marco A. DeCesaris and A. Hugo
DeCesaris who are not executive officers of the Company, but each of whom holds
in excess of five percent of the Company's Common Stock. In the aggregate, these
individuals received compensation of $313,754 for fiscal 1996.
EMPLOYEE STOCK OPTION PLAN
During the fiscal year ended July 31, 1996, options to purchase 173,000
shares of Common Stock of the Company were granted under the Employee Stock
Option Plan and options to purchase 6,000 shares of Common Stock were granted
under the Non-Employee Directors Stock Option Plan.
The following tables set forth certain information concerning the granting
and exercise of stock options during the fiscal year ended July 31, 1996, by the
persons named in the Summary Compensation Table and the value of all unexercised
options at the end of the fiscal year:
6
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
VALUE OF
UNEXERCISED UNEXERCISED
SHARES ACQUIRED VALUE OPTIONS AT IN THE
NAME ON EXERCISE REALIZED 7/31/96 MONEY OPTIONS
---- --------------- -------- ----------- -------------
Geaton A. DeCesaris, Jr.... -- -- 25,000 --
Geaton A. DeCesaris, Sr.... -- -- -- --
Cameron Ross............... -- -- 12,000 --
Paul C. Sukalo............. -- -- 12,000 --
Thomas Connelly............ -- -- 34,000 --
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSMUED
ANNUAL RATES
% OF TOTAL OF STOCK PRICE
NUMBER OPTIONS APPRECIATION FOR
OF SHARES GRANTED TO EXERCISE OPTION TERM
UNDERLYING EMPLOYEES IN PRICE EXPIRATION -------------------
NAME OPTIONS GRANTED FISCAL YEAR PER SHARE(1) DATE 5% 10%
---- --------------- ------------ ------------ ---------- -- ---
Geaton A. DeCesaris, Jr.............. 12,500 7.23% $5.36 09/14/05 $ 32,363 $ 91,218
Geaton A. DeCesaris, Sr.............. None --
Cameron Ross......................... 6,000 3.47% 4.88 09/14/05 18,414 46,665
Paul C. Sukalo....................... 6,000 3.47% 4.88 09/14/05 18,414 46,665
Thomas Connelly...................... 7,000 4.05% 4.88 09/14/05 21,483 54,442
All executive officers as a group.... 75,500 43.64% 5.07 09/14/05- 217,365 572,853
10/31/05
All directors who are not executive
officers as a group................ 6,000 3.47% 6.00 12/14/05 22,640 57,375
All employees (excluding executive
officers) as a group............... 97,500 56.35% 4.93 09/14/05- 294,353 753,428
12/28/05
- ----------
<FN>
(1) Options are exercisable as follows: 25% beginning 1 year after grant; 50%
beginning 2 years after grant; 75% beginning 3 years after grant; and fully
exercisable beginning 4 years after grant.
</FN>
REPORT OF COMPENSATION COMMITTEE
REGARDING EXECUTIVE COMPENSATION
The Board of Directors has determined that the Company's executive
compensation program will be administered by the Compensation Committee (the
"Committee") which consists of three non-employee independent directors. The
Committee was established in April 1993, following completion of the Company's
initial public offering.
For fiscal 1996, executive compensation consisted generally of base salary,
bonuses and grants of stock options under the Company's Employee Stock Option
Plan. The Committee annually reviews the Company's executive compensation
program and policies and approves compensation for executive personnel.
The overall policy objective of the Company's executive compensation
program is to provide base compensation levels and compensation incentives (in
the form of bonuses and stock options) that attract and
7
retain the highest quality individuals for key executive positions with the
Company. The executive compensation program is intended to recognize individual
contribution to corporate performance and to recognize the overall performance
of the Company relative to the performance of other corporations in the
homebuilding industry.
BASE COMPENSATION
The Committee annually reviews base compensation levels of executive
personnel to determine that such compensation is competitive, both individually
and in the aggregate, with other homebuilding industry companies of comparable
size and profitability. Comparisons with other companies are obtained through
public information and surveys of homebuilding industry compensation available
from outside compensation advisors. Individual base compensation levels are set
based upon these competitive factors, but also are varied based upon
performance, experience and the scope of each particular position.
BONUSES
The Company awards annual and periodic cash bonuses to its executive
personnel. These bonuses tie a portion of compensation directly to results
achieved during each fiscal year. Individual amounts are determined by an
evaluation of individual performance, division performance and Company
performance. As with base compensation, the Committee reviews bonuses and the
bonus structure annually in an effort to set a program which promotes behavior
which is intended to enhance shareholder value and is competitive, both as to
the bonus and when combined with base salary, with other homebuilders of
comparable size and profitability.
For fiscal 1996, bonuses for executive personnel in each of the Company's
operating divisions were tied, in large measure, to the ability of each division
to meet or exceed the business plan objectives established at the beginning of
the fiscal year as calculated by various measurements of financial and operating
performance.
Bonuses for executive personnel whose activities are not directly a part of
the operating divisions were based in part upon the ability of the Company to
meet or exceed pre-set performance goals, in part on the achievement of specific
objectives in programs of a broader nature and in part were set at levels to
bring total cash compensation in line with other homebuilders. A bonus for the
chief executive officer was to be based on achieving after tax financial results
by the Company and its subsidiaries in relation to its business plan and on the
achievement of specific objectives in programs of a broader nature.
STOCK OPTIONS
Stock options are granted as a means of aligning the economic interests of
key personnel with those of the shareholders of the Company. For fiscal 1996,
stock options were granted for 173,000 shares of the Company's Common Stock.
In the past, options were granted to all executive and other key personnel
at time of the Company's initial public offering who were not then stockholders
of the Company. Other options also have been granted at the time of hire of
executive and management personnel. Beginning in fiscal 1995 the Committee
established a program for grants of additional awards over a two year period
based on individual performance. The second part of that program was completed
in fiscal 1996. In addition, at the time of hire, options were granted in fiscal
1996 based on the potential for future contribution to the success of the
Company.
8
CEO COMPENSATION
The criteria previously enumerated are those that have been applied to the
Company's Chief Executive Officer, Geaton A. DeCesaris, Jr. During fiscal 1996,
Mr. DeCesaris received base compensation of $350,000, which was unchanged from
fiscal 1995. Mr. DeCesaris declined a bonus for fiscal 1996 even though the
Company did meet certain financial objectives for the granting of bonuses. This
was a decrease of $50,000 from the 1995 level. In determining Mr. DeCesaris'
compensation the Committee recognized that the Company did not fully achieve its
financial goals for the year, despite progress made in several areas including
geographical expansion, integration of expanded operations and management of the
Company's land position. During the year, Mr. DeCesaris received options to
purchase 12,500 shares of common stock.
Ronald M. Shapiro
Richard B. Talkin
Richard S. Frary
Members of the Compensation
Committee
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONS
Mr. Talkin, a member of the Compensation Committee, performs legal
services for the Company.
CERTAIN TRANSACTIONS
From time to time, the Company has engaged in transactions with related
parties for acquisition and, on a limited basis, the sale of building lots.
Sales and purchases were undertaken as if on an arms length basis with prices
and terms determined by management to be fair and comparable to those of
transactions with parties unrelated to the Company. During the fiscal year ended
July 31,1996, the Company paid $2,596,000 to acquire building lots from related
parties. The details of the significant transactions are as follows:
In March 1993, the Company entered into a land option agreement with
Triangle Homes ("Triangle") to purchase 85 townhome lots in the Sutler
subdivision of Prince George's County, Maryland, for $27,500 per lot. During
fiscal 1996, the Company purchased the last 40 of these lots for $1,156,000
including closing costs. Triangle is owned by a daughter and sons-in-law of
Geaton A. DeCesaris, Sr.
In July 1992, the Company entered into an agreement to purchase 246 planned
condominium building lots in Largo, Maryland from a partnership owned by members
of the SDS Group which was later reduced to 180 lots. These 180 lots were
purchased during fiscal 1996 for $1,440,000.
The Company currently leases over 24,000 square feet of office space in the
Ingle West Office building in Landover, Maryland from Citadel Land, Inc., a
corporation owned by members of the SDS Group, pursuant to a lease expiring in
October 2000 at a base annual rental of $392,000. The rental is subject to
adjustment for increased operating expenses and changes in the Consumer Price
Index. In fiscal 1996, the Company paid Citadel $440,219 in rentals.
9
CUMULATIVE TOTAL RETURN
The following graph compares the total return of the Company's Common Stock
during the period from February 26, 1993 to July 31, 1996 with the Standard and
Poor's 500 Stock Index and the Dow Jones Home Construction Index:
[INSERT GRAPH]
7/93 7/94 7/95 7/96
---- ---- ---- ----
WASHINGTON HOMES INC.................. 95 68 54 45
S & P 500............................. 102 107 136 158
DOW JONES HOME CONSTRUCTION........... 108 90 104 112
* $100 invested on February 26, 1993 in stock or index including reinvestment of
dividends. Fiscal year ending July 31.
10
2. APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP to serve as
independent auditors for the Company and its subsidiaries for the fiscal year
ended July 31, 1997. The appointment was made subject to ratification by
shareholders. Deloitte & Touche LLP and its predecessors have served as
independent auditors for the Company since 1967.
Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting. They will have an opportunity to make a statement if they desire
to do so and will be available to respond to questions from shareholders.
The affirmative vote of a majority of the shares represented at the meeting
is required for ratification.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors, and persons who are holders of more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and to furnish the Company with copies of all forms filed. The Company believes
that during fiscal 1996, its officers, directors and greater than ten-percent
beneficial holders complied with all applicable Section 16(a) filing
requirements.
EXPENSES OF SOLICITATION
All expenses of this solicitation, including the cost of preparing and
mailing this Proxy Statement, will be borne by the Company. In addition to
solicitation by use of the mails, proxies may be solicited by directors,
officers and other employees of the Company in person or by telephone, telegram
or other means of communication. Such directors, officers and other employees
will not be additionally compensated, but may be reimbursed for out-of-pocket
expenses in connection with such solicitation. Arrangements will be made with
custodians, nominees and fiduciaries for forwarding proxy solicitation materials
to beneficial owners of shares held of record by such custodians, nominees and
fiduciaries, and the Company will reimburse such custodians, nominees and
fiduciaries for reasonable expenses incurred in connection therewith.
PROCEDURE FOR SUBMITTING SHAREHOLDER PROPOSALS
Shareholders may present proper proposals for inclusion in the Company's
proxy statement for consideration at the next annual meeting of its shareholders
by submitting proposals to the Company in a timely manner. In order to be so
included for the 1997 Annual Meeting, shareholder proposals must be received by
the Company no later than July 1, 1997, and must otherwise comply with the
requirements of Rule 14a-8 under the Securities Exchange Act of 1934.
11
OTHER MATTERS
The only matters expected to come before the Annual Meeting are those set
forth in this Proxy Statement. The Board of Directors does not know of any other
matters to be presented at the Annual Meeting. If any additional matters are
properly presented at the meeting or any adjournment thereof, the persons named
in the Proxy will have discretion to vote in accordance with their best judgment
on such matters.
BY ORDER OF THE BOARD OF DIRECTORS,
Laurence R. Jaffe
Secretary and General Counsel
12
WASHINGTON HOMES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Geaton A. DeCesaris, Jr. and Thomas
Connelly, or either one, each with power of substitution as proxies for the
undersigned to vote all shares of Common Stock of Washington Homes, Inc., a
Maryland corporation, which the undersigned is entitled to vote at the Annual
Meeting of Shareholders to be held on November 13, 1996, and any adjournments or
postponements thereof, as hereinafter specified and, in their discretion, upon
such other matters as may properly come before the meeting and any adjournments
or postponements thereof. The undersigned hereby revokes all proxies heretofore
given.
(Continued on reverse side)
1. Election of Directors (mark only one)
Vote FOR all nominees Vote
listed and recommended by WITHHELD
the Board of Directors (except from all
as directed to the contrary) nominees
[ ] [ ]
Geaton A. DeCesaris, Sr. Thomas Connelly, Richard S. Frary, Richard B. Talkin
Geaton A. DeCesaris, Jr. Paul Sukalo, Ronald M. Shapiro,
INSTRUCTION: To withhold authority to vote for any individual nominee, line
through or otherwise strike out that nominee's name above.
- ---------------------------------------------------------------------------
2. Proposal to ratify appointment of independent
auditors
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PLEASE SIGN, DATE AND RETURN THIS PROXY,
USING THE ENCLOSED POSTAGE PREPAID
ENVELOPE.
----------------------------------------
Signature
Dated: --------------------------, 1996.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If the
signer is a corporation, sign the full
corporate name by duly authorized officer.