SEC Filing | Hovnanian Enterprises, Inc.

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [_]

Filed by a Party other than the Registrant [x]

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 Section 240.14a-11(c) or Section 240.14a-12

Hovnanian Enterprises, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

Hovnanian Enterprises, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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 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:

(5) Total fee paid:

[_] 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:

Notes:

[LETTERHEAD OF HOVNANIAN ENTERPRISES, INC.]

March 8, 1996

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders which
will be held on Wednesday, April 17, 1996, in the Boardroom of the American
Stock Exchange, 13th Floor, 86 Trinity Place, New York, New York. The meeting
will start promptly at 10:30 a.m.

It is important that your shares be represented and voted at the meeting.
Therefore, we urge you to complete, sign, date and return the enclosed proxy
card in the envelope provided for this purpose. Of course, if you attend the
meeting, you may still choose to vote your shares personally, even though you
have already returned a signed proxy. Important items to be acted upon at the
meeting include the election of directors and the ratification of the selection
of independent accountants.

We sincerely hope you will be able to attend and participate in the Company's
1996 Annual Meeting. We welcome the opportunity to meet with many of you and
give you a firsthand report on the progress of your Company.

Sincerely yours,

/s/ Kevork S. Hovnanian

Kevork S. Hovnanian
Chairman of the Board
and
Chief Executive Officer

HOVNANIAN ENTERPRISES, INC.

----------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 8, 1996

----------------

Notice is Hereby Given that the Annual Meeting of Shareholders of Hovnanian
Enterprises, Inc. will be held on Wednesday, April 17, 1996, in the Board Room
of the American Stock Exchange, 13th Floor, 86 Trinity Place, New York, New
York at 10:30 a.m. for the following purposes:

1. The election of Directors of the Company for the ensuing year, to
serve until the next Annual Meeting of Shareholders of the Company and
until their respective successors may be elected and qualified.

2. The ratification of the selection of Ernst & Young LLP (successor by
merger to Kenneth Leventhal & Company) as independent accountants to
examine financial statements for the Company for the year ended October 31,
1996.

3. The transaction of such other business as may properly come before the
meeting and any adjournment thereof.

Only shareholders of record at the close of business on February 20, 1996 are
entitled to notice of and to vote at the meeting.

Accompanying this Notice of Annual Meeting of Shareholders is a proxy
statement, a form of proxy and the Company's Annual Report for the year ended
October 31, 1996.

All shareholders are urged to attend the meeting in person or by proxy.
Shareholders who do not expect to attend the meeting are requested to complete,
sign and date the enclosed proxy and return it promptly in the self-addressed
envelope provided.

By order of the Board of Directors,
Timothy P. Mason
Secretary

March 8, 1996

PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD,
DATE AND SIGN IT, AND RETURN IT IN THE ENVELOPE PROVIDED. NO POSTAGE IS
NECESSARY IF MAILED IN THE UNITED STATES.

HOVNANIAN ENTERPRISES, INC.
10 HIGHWAY 35
P.O. BOX 500
RED BANK, NEW JERSEY 07701

----------------

PROXY STATEMENT

----------------

GENERAL

The accompanying proxy is solicited on behalf of the Board of Directors of
Hovnanian Enterprises, Inc. (the "Company") for use at the Annual Meeting of
Shareholders referred to in the foregoing notice and at any adjournment
thereof. It is expected that this Proxy Statement and the accompanying proxy
will be mailed commencing March 8, 1996 to each shareholder entitled to vote.
The Company's Annual Report for the year ended October 31, 1995 accompanies
this Proxy Statement.

Shares represented by properly executed proxies, if such proxies are received
in time and not revoked, will be voted in accordance with the specifications
thereon. If no specifications are made, the persons named in the accompanying
proxy will vote such proxy for the Board of Directors' slate of Directors, for
the ratification of selected independent accountants and as recommended by the
Board of Directors unless contrary instructions are given. Any person executing
a proxy may revoke it at any time before it is exercised by delivering written
notice of revocation to the Secretary of the Company or by voting in person at
the meeting.

VOTING RIGHTS AND SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The record date for the determination of shareholders entitled to vote at the
meeting is the close of business on February 20, 1996. On February 20, 1996,
the voting securities of the Company outstanding consisted of 15,090,170 shares
of Class A Common Stock, each share entitling the holder thereof to one vote
and 7,946,883 shares of Class B Common Stock, each share entitling the holder
thereof to ten votes.

Other than as set forth in the table below, there are no persons known to the
Company to own beneficially shares representing more than 5% of the Company's
Class A Common Stock or Class B Common Stock.

The following table sets forth as of February 20, 1996 the Class A Common
Stock and Class B Common Stock of the Company beneficially owned by each
Director and nominee for Director, by all Directors and officers of the
Company as a group (including the named individuals) and holders of more than
5%:

CLASS A COMMON STOCK CLASS B COMMON STOCK
-------------------- --------------------
AMOUNT AND AMOUNT AND
NATURE OF NATURE OF
DIRECTORS, NOMINEES AND BENEFICIAL PERCENT BENEFICIAL PERCENT
HOLDERS OF MORE THAN 5% OWNERSHIP(1) OF CLASS(2) OWNERSHIP(1) OF CLASS(2)
----------------------- ------------ ----------- ------------ -----------

Kevork S. Hovnanian(3)(5).. 5,634,337 37.3% 5,843,837 73.5%
Ara K. Hovnanian(4)........ 1,409,561 9.2% 1,234,096 15.1%
Paul W. Buchanan........... 28,520 .2% 21,480 .3%
Arthur M. Greenbaum........ 1,500 -- 1,500 --
Timothy P. Mason........... 23,157 .2% 15,337 .2%
Desmond P. McDonald........ 3,750 -- 3,750 --
Peter S. Reinhart.......... 22,235 .2% 16,955 .2%
John J. Schimpf............ 101,192 .7% 53,052 .7%
Stephen D. Weinroth........ 2,250 -- 2,250 --
All Directors and officers
as a group
(10 persons).............. 7,263,662 46.6% 7,214,097 87.1%

- --------
Notes:
(1) The figures in the table in respect of Class A Common Stock do not include
the shares of Class B Common Stock beneficially owned by the specified
persons, which shares of Class B Common Stock are convertible at any time
on a share for share basis to Class A Common Stock. The figures in the
table represent beneficial ownership (including ownership of 492,820 Class
A Common Stock Options and 336,180 Class B Common Stock Options, currently
exercisable or exercisable within 60 days) and sole voting power and sole
investment power except as noted in notes (3), (4) and (5) below.
(2) Based upon the number of shares outstanding plus options for such
director, nominee or holder.
(3) Includes 297,812 shares of Class A Common Stock and 320,012 shares of
Class B Common Stock as to which Kevork S. Hovnanian has shared voting
power and shared investment power. Kevork S. Hovnanian's address is 10 Hwy
35, P.O. Box 500, Red Bank, New Jersey 07701.
(4) Includes 8,350 shares of Class A Common Stock and 10,150 shares of Class B
Common Stock as to which Ara K. Hovnanian has shared voting power and
shared investment power. Ara K. Hovnanian's address is 10 Hwy 35, P.O. Box
500, Red Bank, New Jersey 07701.
(5) Includes 2,829,413 shares of Class B Common Stock held by the Kevork S.
Hovnanian Family Limited Partnership, a Connecticut limited partnership
(the "Limited Partnership"), beneficial ownership of which is disclaimed
by Kevork S. Hovnanian. Kevork S. Hovnanian's wife, Sirwart Hovnanian, as
trustee of the Sirwart Hovnanian 1994 Marital Trust, is the Managing
General Partner of the Limited Partnership and as such has the sole power
to vote and dispose of the shares of Class B Common Stock held by the
Limited Partnership. Also includes 279,562 shares of Class A Common Stock
and 264,562 shares of Class B Common Stock held in trust for Mr.
Hovnanian's daughter over which Sirwart Hovnanian, as trustee, shares with
her daughter the power to dispose of and vote. In addition, includes
18,250 shares of Class A Common Stock and 55,450 shares of Class B Common
Stock held in trust for Mr. Hovnanian's grandchildren, over which Sirwart
Hovnanian, as trustee, has sole power to dispose of and vote. Mr.
Hovnanian disclaims beneficial ownership of the shares described in the
preceding two sentences.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors, persons who own more than ten
percent of a registered class of the Company's equity securities and certain
entities associated with the foregoing ("Reporting Persons") to file reports
of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities
and Exchange Commission (the "SEC") and the American Stock Exchange (the
"ASE"). These Reporting Persons are required by SEC regulation to furnish the
Company with copies of all Forms 3, 4 and 5 they file with the SEC and the
ASE.

Based solely on the Company's review of the copies of such forms it has
received, the following Reporting Persons each inadvertently filed one late
Form 3 in connection with the formation of the Kevork S. Hovnanian Family
Limited Partnership: the Kevork S. Hovnanian Family Limited Partnership; the
Kevork S. Hovnanian 1991 Annual Exclusion Trust; Sirwart Hovnanian; the
Sirwart Hovnanian 1994 Marital Trust; the Ara K. Hovnanian Family 1994 Long-
Term Trust; the Sossie K. Najarian Family 1994 Long-Term Trust; the Esther K.
Barry Family 1994 Long-Term Trust; the Lucy K. Kalian Family 1994 Long-Term
Trust; the Nadia K. Rodriguez 1994 Long-Term Trust and the Nadia Hovnanian
Conditionally Revocable Trust.

ELECTION OF DIRECTORS

The Company's By-laws provide that the Board of Directors shall consist of
nine Directors who shall be elected annually by the shareholders. The Company's
Certificate of Incorporation requires that, at any time when any shares of
Class B Common Stock are outstanding, one-third of the Directors shall be
independent. The following persons are proposed as Directors of the Company to
hold office until the next Annual Meeting of Shareholders and until their
respective successors have been duly elected and qualified. In the event that
any of the nominees for Directors should become unavailable, it is intended
that the shares represented by the proxies will be voted for such substitute
nominees as may be nominated by the Board of Directors, unless the number of
Directors constituting a full Board of Directors is reduced. The Company has no
reason to believe, however, that any of the nominees is, or will be,
unavailable to serve as a Director.

YEAR FIRST
BECAME A
NAME AGE COMPANY AFFILIATION DIRECTOR
---- --- -------------------- ----------

Kevork S. Hovnanian............. 72 Chairman of the Board, Chief 1967
Executive Officer and
Director of the Company.
Ara K. Hovnanian................ 38 President and Director of the 1981
Company.
Paul W. Buchanan................ 45 Senior Vice President-- 1982
Corporate Controller and
Director of the Company.
Arthur M. Greenbaum............. 70 Director of the Company. 1992
Timothy P. Mason................ 55 Senior Vice President-- 1980
Administration/Secretary and
Director of the Company.
Desmond P. McDonald............. 68 Director of the Company. 1982
Peter S. Reinhart............... 45 Senior Vice President and 1981
General Counsel and Director
of the Company.
John J. Schimpf................. 46 Executive Vice President and 1986
Director of the Company.
Stephen D. Weinroth............. 57 Director of the Company. 1982

- --------

Mr. K. Hovnanian founded the predecessor of the Company in 1959 and has
served as Chairman of the Board and Chief Executive Officer of the Company
since its initial incorporation in 1967. Mr. K. Hovnanian was also President of
the Company from 1967 to April 1988.

Mr. A. Hovnanian was appointed President in April 1988, after serving as
Executive Vice President from March 1983. Mr. A. Hovnanian is the son of Mr. K.
Hovnanian.

Mr. Buchanan has been Senior Vice President--Corporate Controller since May
1990.

Mr. Greenbaum has been a senior partner of Greenbaum, Rowe, Smith, Ravin &
Davis, a law firm since 1953. Mr. Greenbaum qualifies as an independent
Director as defined in the Company's Certificate of Incorporation.

Mr. Mason was appointed Senior Vice President of Administration/Secretary in
March 1991 after serving as Vice President--Administration and
Secretary/Treasurer from March 1982.

Mr. McDonald was a Director of Midlantic Bank N.A. from 1976 to December,
1995, Executive Committee Chairman of Midlantic Bank N.A. from August 1992 to
December, 1995 and was President of Midlantic Bank N.A. from 1976 to June 1992.
He was also a Director of Midlantic Corporation to December, 1995 and was Vice
Chairman of Midlantic Corporation from June 1990 to July 1992. Mr. McDonald
qualifies as an independent Director as defined in the Company's Certificate of
Incorporation.

Mr. Reinhart has been Senior Vice President and General Counsel since April
1985.

Mr. Schimpf has been Executive Vice President of the Company since April
1988.

Mr. Weinroth is Chairman of the Board of Core Laboratories N.V., a publicly-
owned worldwide oil field services and manufacturing company. He is also a
senior partner in Andersen, Weinroth & Co., L.P. a merchant banking firm. He
has held such positions since 1994 and the beginning of 1996, respectively.
Since November 1993, he has also served as Co-chairman and Chief Executive
Officer of VETTA Sports, Inc., a supplier of bicycle parts and accessories.
From July 1989 to April 1992 he was Chairman of the Board and Chief Executive
Officer of Integrated Resources, Inc. He is a director of Core Laboratories
N.V.; First Britannia Mezzanine, an international buyout firm; SCS
Communications, Inc., a media company with magazine and music industry
interests; and VETTA Sports, Inc. In February 1990. Integrated Resources, Inc.
filed for protection under Chapter 11 of the Federal Bankruptcy Code. Mr.
Weinroth qualifies as an independent Director as defined in the Company's
Certificate of Incorporation.

MEETINGS OF BOARD OF DIRECTORS

The members of the Audit Committee of the Board of Directors currently are
Messrs. McDonald, Weinroth and Mason. The Audit Committee is chaired by Mr.
McDonald and is responsible for reviewing and approving the scope of the annual
audit undertaken by the Company's independent accountants and meeting with them
to review the results of their work as well as their recommendations. The Audit
Committee has direct access to the Company's independent accountants and also
reviews the fees of independent accountants and recommends to the Board of
Directors the appointment of independent accountants.

The Internal Audit Manager for the Company reports directly to the Audit
Committee on, among other things, the Company's compliance with certain Company
procedures which are designed to enhance management's consideration of all
aspects of major transactions involving the Company. The Audit Committee has
direct control over staffing, including compensation, of the internal audit
department. The Company's Chief Accounting Officer reports directly to the
Audit Committee on significant accounting issues. During the year ended October
31, 1995 the Audit Committee met twice.

The Compensation Committee consists of Messrs. McDonald and Weinroth. The
Compensation Committee is currently chaired by Mr. Weinroth and is active in
reviewing salaries, bonuses and other forms of compensation for officers and
key employees of the Company, in establishing salaries and in other
compensation and personnel areas as the Board of Directors from time to time
may request. For a discussion of the criteria utilized and factors considered
by the Compensation Committee in reviewing and establishing executive
compensation, see "Report of the Compensation Committee" below. During the year
ended October 31, 1995 the Compensation Committee met once.

The Company has no executive or nominating committees. Procedures for
nominating persons for election to the Board of Directors are contained in the
Company's Bylaws.

During the year ended October 31, 1995 the Board of Directors held four
regularly scheduled meetings. In addition, the directors considered Company
matters and had numerous communications with the Chairman of the Board of
Directors and others wholly apart from the formal meetings.

DIRECTOR COMPENSATION

Each director who is not an officer of the Company is paid $2,000 per
regularly scheduled meeting, $1,000 for each committee meeting attended, $2,000
for special meetings attended and a bonus. All directors are reimbursed for
expenses related to his attendance at Board of Directors and committee
meetings. During the year ended October 31, 1995, including an accrued bonus
paid on February 2, 1996, Mr. McDonald received $18,000, Mr. Greenbaum received
$18,000 and Mr. Weinroth received $20,000.

RATIFICATION OF THE SELECTION OF AND
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS

The selection of independent accountants to examine financial statements of
the Company made available or transmitted to shareholders and filed with the
Securities and Exchange Commission for the year ended October 31, 1996 is to be
submitted to the meeting for ratification. Ernst & Young LLP (successor by
merger to Kenneth Leventhal & Company) has been selected by the Board of
Directors of the Company to examine such financial statements.

The Company has been advised that a representative of Ernst & Young LLP will
attend the Annual Meeting to respond to appropriate questions and will be
afforded the opportunity to make a statement if the representative so desires.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table summarizes the compensation paid or accrued by the
Company for the chief executive officer and the other four most highly
compensated executives during the year ended October 31, 1995, the eight month
transition period ended October 31, 1994 and the year ended February 28, 1994
and 1993.

LONG-TERM COMPENSATION
-----------------------------
ANNUAL COMPENSATION AWARDS
--------------------------- -----------------------------
NUMBER OF
OTHER SECURITIES
YEAR ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL OR COMPEN- STOCK OPTIONS/ LTIP COMPEN-
POSITION PERIOD SALARY BONUS(1) SATION(2) AWARDS SARS(3) PAYOUTS SATION(4)
------------------ ------ -------- -------- --------- ---------- ---------- ------- ---------

Kevork S. Hovnanian..... 1995 $739,335 $200,000 $0 $0 0 N/A $ 9,885
Chairman of the Board
of 10/94 $506,160 $133,334 $0 $0 0 N/A $ 7,811
Directors, Chief Execu-
tive 1994 $720,352 $300,000 $0 $0 0 N/A $11,038
Officer, and Director
of 1993 $681,178 $150,000 $0 $0 0 N/A $ 9,744
the Company
Ara K. Hovnanian........ 1995 $678,182 $200,000 $0 $0 50,000 N/A $10,270
President and Director 10/94 $487,794 $133,334 $0 $0 0 N/A $ 6,932
of the Company 1994 $632,600 $300,000 $0 $0 0 N/A $16,143
1993 $619,381 $200,000 $0 $0 295,000 N/A $ 947
John J. Schimpf......... 1995 $213,638 $ 74,139 $0 $0 25,000 N/A $19,937
Executive Vice Presi-
dent 10/94 $144,086 $ 48,251 $0 $0 0 N/A $18,443
and Director of the 1994 $200,277 $100,000 $0 $0 0 N/A $15,304
Company 1993 $186,599 $ 80,000 $0 $0 70,000 N/A $11,463
J. Larry Sorsby......... 1995 $185,202 $ 63,000 $0 $0 20,000 N/A $16,158
Senior Vice President/ 10/94 $121,403 $ 50,833 $0 $0 0 N/A $11,085
Finance and Treasurer
of 1994 $169,371 $ 82,500 $0 $0 0 N/A $ 7,953
the Company 1993 $157,223 $ 60,000 $0 $0 35,000 N/A $ 5,264
Peter S. Reinhart....... 1995 $152,481 $ 45,119 $0 $0 15,000 N/A $13,998
Senior Vice President/ 10/94 $102,879 $ 29,394 $0 $0 0 N/A $13,748
General Counsel and 1994 $152,022 $ 56,800 $0 $0 0 N/A $12,141
Director of the Company 1993 $137,945 $ 50,000 $0 $0 15,000 N/A $10,445

- --------
Notes:
(1) Includes awards not paid until after year end.
(2) Includes perquisites and other personal benefits unless the aggregate
amount is lesser than either $50,000 or 10% of the total of annual salary and
bonus reported for the named executive officer.
(3) The Company does not have a stock appreciation right ("SAR") program.
(4) Includes accruals under the Company's savings and investment retirement
plan (the "Retirement Plan"), deferred compensation plan (the "Deferred
Plan") and term life insurance premiums for each of the named executive
officers for the year ended October 31, 1995 as follows:

RETIREMENT DEFERRED TERM
PLAN PLAN INSURANCE TOTAL
---------- -------- --------- -------

K. Hovnanian........................ $9,500 $ 0 $385 $ 9,885
A. Hovnanian........................ $9,500 $ 0 $770 $10,270
Schimpf............................. $9,500 $9,898 $539 $19,937
Sorsby.............................. $9,500 $6,201 $457 $16,158
Reinhart............................ $9,500 $4,113 $385 $13,998

OPTION GRANTS IN LAST FISCAL YEAR

The following table provides information on option grants in fiscal 1995 to
the named executive officers.

POTENTIAL
REALIZED VALUE AT
ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
----------------------------------------- --------------------
% OF TOTAL
NUMBER OF OPTIONS EXERCISE
SECURITIES GRANTED TO OR BASE
UNDERLYING EMPLOYEES PRICE
OPTIONS IN FISCAL PER EXPIRATION
NAME GRANTED 1993 SHARE DATE 5% 10%
- ------------------------ ---------- ---------- -------- ---------- --------- ----------

Kevork S. Hovnanian..... 0 N/A N/A N/A N/A N/A
Ara K. Hovnanian........ 46,875 17.4% $ 6.40 5/4/00 $44,253 $130,408
Ara K. Hovnanian........ 3,125 1.1% $5.8125 5/4/00 $ 4,786 $ 10,530
John J. Schimpf......... 25,000 9.3% $5.8125 5/4/00 $38,289 $ 84,238
J. Larry Sorsby......... 20,000 7.4% $5.8125 5/4/00 $30,631 $ 67,391
Peter S. Reinhart....... 15,000 5.6% $5.8125 5/4/00 $ 22,973 $ 50,543

- --------
Note:
(1) The potential realizable value is reported net of the option exercise
price, but before income taxes associated with exercise. These amounts
represent assumed annual compounded rates of appreciation of 5% and 10%
only from the date of grant to the end of the option. Actual gains, if any,
on stock option exercises are dependent on the future performance of the
Company's Class A Common Stock, overall stock market conditions, and the
optionee's continued employment through the vesting period. The amounts
reflected in this table may not necessarily be achieved.

AGGREGATED OPTION EXERCISES DURING THE YEAR ENDED OCTOBER 31, 1995 AND OPTION
VALUES AT OCTOBER 31, 1995

The following table provides information on option exercises during the year
ended October 31, 1995 by the named executive officers and the value of such
officers' unexercised options at October 31, 1995.

SECURITIES UNDERLYING
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED OCTOBER 31, 1995(1) OCTOBER 31, 1995(1)
ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ -------- -------- ----------- ------------- ----------- -------------

Kevork S. Hovnanian..... 0 $ 0 None None N/A N/A
Ara K. Hovnanian........ 0 $ 0 421,667 148,333 $278,438 $25,586
John J. Schimpf......... 0 $ 0 106,667 48,333 $105,000 $26,563
J. Larry Sorsby......... 0 $ 0 44,333 31,667 $ 36,750 $21,250
Peter S. Reinhart....... 0 $ 0 34,000 20,000 $ 42,000 $15,938

- --------
Notes:
(1) The closing price of the Class A Common Stock on the last trading day of
October, 1995 on the American Stock Exchange was $6.875.

TEN-YEAR OPTION REPRICINGS

For the year ended October 31, 1995, there was no adjustment or amendment to
the exercise price of the stock options previously awarded.

REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee is charged with the responsibility of determining
the cash and other incentive compensation, if any, to be paid to the Company's
executive officers and key employees. The amount and nature of the compensation
received by the Company's executives during the year ended October 31, 1995 was
determined in accordance with the compensation program and policies described
below.

The executive compensation program is designed to attract, retain and reward
highly qualified executives while maintaining a strong and direct link between
executive pay, the Company's financial performance and total shareholder
return. The executive compensation program contains three major components:
base salaries, annual bonuses and stock options.

Base Salary

The Compensation Committee believes that, due to the Company's success in its
principal markets, other companies seeking proven executives may view members
of the Company's highly experienced executive team as potential targets. The
base salaries paid to the Company's executive officers during the year ended
October 31, 1995 generally were believed to be necessary to retain their
services.

Base salaries, including that of Mr. K. Hovnanian, the Company's Chief
Executive Officer, are reviewed annually and are adjusted based on the
performance of the executive, any increased responsibilities assumed by the
executive, average salary increases or decreases in the industry and the going
rate for similar positions at comparable companies. Mr. K. Hovnanian set the
year ended October 31, 1995 base salaries of the Company's executive officers.
Each executive officer's base salary, including the base salary of Mr. K.
Hovnanian, was reviewed in accordance with the above criteria by the members of
the Compensation Committee and thereafter approved.

Annual Bonus Program

The Company maintains an annual bonus program under which executive officers
and other key management employees have the opportunity to earn cash bonuses.
The annual bonus program is intended to motivate and reward executives for the
achievement of individual performance objectives and for the attainment by the
Company of strategic and financial performance goals, including levels of
return on equity.

For the year ended October 31, 1995, the Company's executives received a
bonus based on the Company's overall Return on Equity ("ROE"). Mr. K.
Hovnanian, Chairman of the Board and Chief Executive Officer and Mr. A.
Hovnanian, President and Chief Operating Officer received a fixed amount bonus
based on the Company's ROE. All other executive officers participate in a plan
based on ROE but instead of receiving a fixed amount, they receive a percentage
of their base salary. As the Company's ROE reaches higher targeted levels, the
bonus percentage of salary increases.

The Company's annual bonus program is designed to be cost and tax effective.
Accordingly, in light of recent federal tax law changes under the Omnibus
Budget Reconciliation Act of 1993, the bonus plan for executives receiving
compensation in excess of $1,000,000 was approved by shareholders at the July
13, 1994 Annual Meeting of Shareholders and reflects the Compensation
Committee's policies of maximizing corporate tax deductions, wherever feasible.

Stock Option Plan

The Option Plan established by the Board of Directors is intended to align
the interests of the Company's executives and shareholders in the enhancement
of shareholder value. The ultimate value received by option holders is directly
tied to increases in the Company's stock price and, therefore, stock options
serve to closely link the interests of management and shareholders and motivate
executives to make decisions that will serve to increase the long-term total
return to shareholders. Additionally, grants under the Option Plan include
vesting and termination provisions which the Compensation Committee believes
will encourage option holders to remain employees of the Company.

The Option Plan is administered by the Compensation Committee. See "Option
Grants in Last Fiscal Year" above. No member of the Compensation Committee,
while a member, is eligible to participate in the Option Plan.

COMPENSATION COMMITTEE

Stephen D. Weinroth
Desmond P. McDonald

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Mr. Weinroth is Chairman of the Compensation Committee which also includes
Mr. McDonald. Both Messrs. McDonald and Weinroth are non-employee directors and
were never officers or employees of the Company. See "CERTAIN TRANSACTIONS" for
information concerning Messrs. McDonald's and Greenbaum's business relationship
with the Company.

PERFORMANCE GRAPH

The following graph compares on a cumulative basis the yearly percentage
change over the five year period ending October 31, 1995 in (i) the total
shareholder return on the Class A Common Stock of the Company with (ii) the
total return on the Standard & Poor's 500 Composite Stock Price Index and with
(iii) the total shareholder return on the common stocks of a peer group of
twelve companies. Such yearly percentage change has been measured by dividing
(i) the sum of (a) the amount of dividends for the measurement period, assuming
dividend reinvestment, and (b) the price per share at the end of the
measurement period less the price per share at the beginning of the measurement
period, by (ii) the price per share at the beginning of the measurement period.
The price of each unit has been set at $100 on October 31, 1990 for the
preparation of the graph. The peer group index is composed of the following
peer companies: Hovnanian Enterprises, Inc., Centex Corporation, PHM
Corporation, U.S. Home Corporation, Standard Pacific Corp., The Ryland Group,
Inc., MDC Holdings, Inc., NVR L.P., Toll Brothers, Inc., Kaufman and Broad Home
Corporation, Lennar Corporation and UDC-Universal Development L.P.

Note: The stock price performance shown on the following graph is not
necessarily indicative of future price performance.

[GRAPH APPEARS HERE]

Comparison of Five-Year Cumulative Total Return of Hovnanian Enterprise, Inc.,
the S&P 500 Index and a Peer Group Index
(October 31)

COMPANY 1990 1991 1992 1993 1994 1995

HOVNANIAN 100 207.69 292.31 546.15 184.62 219.23
PEER GROUP 100 216.89 313.30 450.17 269.42 371.45
BROAD MARKET 100 133.51 146.83 168.78 175.31 221.67

CERTAIN TRANSACTIONS

The Company's Board of Directors has adopted a general policy providing that
it will not make loans to officers or directors of the Company or their
relatives at an interest rate less than the interest rate at the date of the
loan on six month U.S. Treasury Bills, that the aggregate of such loans will
not exceed $2,000,000 at any one time, and that such loans will be made only
with the approval of the members of the Company's Board of Directors who have
no interest in the transaction. At October 31, 1995, loans under this policy
amounted to $1,954,000. Notwithstanding the policy stated above, the Board of
Directors of the Company concluded that the following transactions were in the
best interests of the Company.

On March 1, 1990, the Company sold all of the assets and liabilities of its
wholly owned engineering subsidiary Najarian & Associates, Inc. ("N & A") for
$3,600,000 to Najarian & Associates L.P., a partnership consisting of the
employees of N & A. One of these employees and former President of N & A was
Tavit O. Najarian, the son-in-law of Mr. K. Hovnanian, Chairman of the Board of
the Company. At the closing, the Company received a cash payment of $720,000
and a $2,880,000 note. The sale was approved by disinterested members of the
Company's Board of Directors. Originally the note carried an annual interest
rate of 10% and was to amortize over ten years. As long as any portion of the
note is outstanding, the Company receives 25% of the net cash flow of Najarian
& Associates, L.P. During the year ended February 29, 1992, Najarian &
Associates, L.P. began to experience a significant decrease in business
activity. As a result, the note was modified to change the interest rate to
prime, to add accrued interest from September 1, 1991 to September 1, 1992 to
principal and to reschedule principal payments over the balance of the term of
the note. As a result of continued financial difficulties, a committee
consisting of independent directors of the Board of Directors of the Company
(the "Committee") engaged an outside consultant to determine the fair market
value of the above note. Based on the consultant's findings, the Committee
recommended a reduction in the note including accrued interest from $2,983,000
to $1,100,000 at February 28, 1994. This reduction of the note was charged to
operations during the year ended February 28, 1994. In addition, the Committee
recommended a new term of ten years with annual interest on the note of 5% for
the first two years adjusting to prime thereafter. Amortization would begin in
year three with an annual minimum amount of 5%, ranging up to 30% in year 10,
or 85% of cash flow after interest, whichever is greater. The Committee also
recommended a $300,000 discount if the loan was paid in full during the first
two years.

The Company provides property management services to various limited
partnerships including two partnerships in which Mr. A. Hovnanian, President
and a Director of the Company, is general partner, and members of his family
and certain officers and directors of the Company are limited partners. At
October 31, 1995, no amounts were due the Company by these partnerships.

On May 10, 1994, the Board of Directors approved the acquisition of the 10%
minority interest in certain Florida subsidiaries owned by Paul W. Asfahl,
President of the Company's Florida Division. For his 10% interest, the Company
issued 45,000 shares of Class A Common Stock to Mr. Asfahl.

On August 2, 1994, the Board of Directors approved the acquisition of the 15%
minority interest in the New Fortis Corporation owned primarily by Marvin D.
Gentry, President of the New Fortis Corporation. For the 15% interest, the
Company issued 135,000 shares of Class A Common Stock to Mr. Gentry and the
other owners.

Mr. Desmond McDonald, a Director of the Company, was the President of
Midlantic Bank N.A. ("Midlantic") until July 1992. At October 31, 1995 Mr.
McDonald owned 9,844 shares of common stock of Midlantic. In January, 1996
Midlantic's parent corporation merged with PNC Bank, National Association "PNC"
at which time Mr. McDonald received PNC common stock in exchange for his
Midlantic stock. From time to time the Company obtains services and financing
from Midlantic and PNC. The Company has a Revolving Credit Agreement with a
group of banks, including Midlantic and PNC. At October 31, 1995 the Company
and its subsidiaries owed $51,255,000 to Midlantic and $7,025,000 to PNC
pursuant to a Revolving Credit Agreement and other financing arrangements.

Mr. Arthur Greenbaum is a senior partner of Greenbaum, Rowe, Smith, Ravin &
Davis, a law firm retained by the Company during the year ended October 31,
1995.

GENERAL

The expense of this solicitation is to be borne by the Company. The Company
may also reimburse persons holding shares in their names or in the names of
their nominees for their expenses in sending proxies and proxy material to
their principals.

Unless otherwise directed, the persons named in the accompanying form of
proxy intend to vote all proxies received by them in favor of the election of
nominees to the Board of Directors of the Company named herein and in favor of
the ratification of selected independent accountants. All proxies will be voted
as specified.

Each share of Class A Common Stock entitles the holder thereof to one vote
and each share of Class B Common Stock entitles the holder thereof to ten
votes. Votes of Class A Common Stock and Class B Common Stock will be counted
together without regard to class and will be certified by the Inspectors of
Election, who are employees of the Company. Notwithstanding the foregoing, the
Company's Certificate of Incorporation provides that each share of Class B
Common Stock held, to the extent of the Company's knowledge, in nominee name by
a stockbroker, bank or otherwise will be entitled to only one vote per share
unless the Company is satisfied that such shares have been held, since the date
of issuance, for the benefit or account of the same beneficial owner of such
shares or any permitted transferee. Beneficial owners of shares of Class B
Common Stock held in nominee name wishing to cast ten votes for each share of
such stock must (i) obtain from their nominee a proxy card designed for
beneficial owners of Class B Common Stock, (ii) complete the certification on
such card and (iii) execute the card and return it to their nominee. The
Company has also supplied nominee holders of Class B Common Stock with
specially designed proxy cards to accommodate the voting of the Class B Common
Stock. In accordance with the Company's Certificate of Incorporation, shares of
Class B Common Stock held in nominee name will be entitled to ten votes per
share only if the beneficial owner proxy card or the nominee proxy card
relating to such shares is properly completed and received by Midlantic Bank
N.A., the Company's transfer agent, not less than 3 nor more than 20 business
days prior to April 17, 1996. Completed proxy cards should be sent to Post
Office Box 600, Edison, New Jersey 08818, Attention: Corporate Trust
Department.

All items to be acted upon at this Annual Meeting of Shareholders will be
determined by a majority of the votes cast. Mr. K. Hovnanian and certain
members of his family have informed the Company that they intend to vote in
favor of all proposals submitted on behalf of the Company. Because of the
voting power of Mr. K. Hovnanian and such members of his family, all of the
foregoing proposals are assured passage.

Management does not intend to present any business at the meeting other than
that set forth in the accompanying Notice of Annual Meeting of Shareholders,
and it has no information that others will do so. If other matters requiring
the vote of the shareholders properly come before the meeting and any
adjournments thereof, it is the intention of the persons named in the
accompanying form of proxy to vote the proxies held by them in accordance with
their judgment on such matters.

SHAREHOLDER PROPOSALS FOR THE
1997 ANNUAL MEETING

Shareholder proposals for inclusion in the proxy materials related to the
1997 Annual Meeting of Shareholders must be received by the Company no later
than November 8, 1996.

By Order of the Board of Directors

Hovnanian Enterprises, Inc.

Red Bank, New Jersey
March 8, 1996

HOVNANIAN ENTERPRISES, INC.

P
R CLASS A COMMON STOCK
O
X
Y THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby constitutes and appoints Kevork S. Hovnanian, Ara
K. Hovnanian and Desmond P. McDonald, and each of them, his true and
lawful agents and proxies with full power of substitution in each, to
represent the undersigned at the Annual Meeting of Shareholders of
HOVNANIAN ENTERPRISES, INC. to be held in the Boardroom of the American
Stock Exchange, 13th Floor, 86 Trinity Place, New York, New York, at 10:30
A.M. on April 17, 1996, and at any adjournments thereof, upon the matters
set forth in the notice of meeting and Proxy Statement dated March 8, 1996
and upon all other matters properly coming before said meeting.

SEE REVERSE SIDE

[X] PLEASE MARK YOUR 0000
VOTES AS IN THIS
EXAMPLE.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED (1) FOR THE ELECTION OF THE
NOMINEES OF THE BOARD OF DIRECTORS; (2) FOR THE RATIFICATION OF THE SELECTION
OF ERNST & YOUNG LLP AS INDEPENDENT ACCOUNTANTS; AND (3) ON ANY OTHER MATTERS
IN ACCORDANCE WITH THE DISCRETION OF THE NAMED ATTORNEYS AND AGENTS, IF NO
INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN ITEMS (1), (2) AND (3).

FOR WITHHELD
1. Election of Directors, Nominees: [_] [_]
K. Hovnanian, A. Hovnanian, P. Buchanan,
A. Greenbaum, T. Mason, D. McDonald, P.
Reinhart, J. Schimpf, S. Weinroth

FOR AGAINST ABSTAIN
2. Ratification of the selection of Ernst & [_] [_] [_]
Young LLP as independent accountants for
the year ended October 31, 1996.

3. In their discretion, upon other matters as
may properly come before the meeting.

For, except vote withheld from the following nominee(s):

- --------------------------------------------------------

Please mark, sign, date and return the proxy card promptly using the enclosed
envelope. This Proxy must be signed exactly as name appears hereon. Executors,
administrators, trustees, etc., should give full title as such. If the signer
is a corporation, please sign full corporate name by duly authorized officer.

- --------------------------------------------------------------------------------

1996
- --------------------------------------------------------------------------------
SIGNATURE(S) DATE

Class A Common Stock

HOVNANIAN ENTERPRISES, INC.

P
R CLASS B COMMON STOCK
O
X
Y THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

SEE REVERSE SIDE

[X] PLEASE MARK YOUR 0000
VOTES AS IN THIS --
EXAMPLE.

FOR WITHHELD
1. Election of Directors, Nominees: [_] [_]
K. Hovnanian, A. Hovnanian, P. Buchanan,
A. Greenbaum, T. Mason, D. McDonald, P.
Reinhart, J. Schimpf, S. Weinroth

FOR AGAINST ABSTAIN
2. Ratification of the selection of Ernst & [_] [_] [_]
Young LLP as independent accountants for
the year ended October 31, 1996.

3. In their discretion, upon other matters
as may properly come before the meeting.

For, except vote withheld from the following nominee(s):

- --------------------------------------------------------

- --------------------------------------------------------------------------------

1996
- --------------------------------------------------------------------------------
SIGNATURE(S) DATE

Class B Common Stock

HOVNANIAN ENTERPRISES, INC.

P
R BENEFICIAL OWNER OF CLASS B COMMON STOCK
O
X
Y THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

By signing on the reverse hereof, the undersigned certifies that (A) with
respect to of the shares represented by this proxy, the undersigned
has been the beneficial owner of such shares since the date of their
issuance or is a Permitted Transferee (as defined in paragraph 4(A) of
Article FOURTH of the Company's Certificate of Incorporation) of any such
beneficial owner and (B) with respect to the remaining shares
represented by this proxy, the undersigned has not been the beneficial
owner of such shares since the date of their issuance nor is the
undersigned a Permitted Transferee of any such beneficial owner.

If no certification is made, it will be deemed that all shares of Class B
Common Stock represented by this proxy have not been held, since the date
of issuance, for the benefit or account of the same beneficial owner of
such shares or any Permitted Transferee.

SEE REVERSE SIDE

[X] PLEASE MARK YOUR 0000
VOTES AS IN THIS
EXAMPLE.

FOR WITHHELD
1. Election of Directors, Nominees: [_] [_]
K. Hovnanian, A. Hovnanian, P. Buchanan,
A. Greenbaum, T. Mason, D. McDonald, P.
Reinhart, J. Schimpf, S. Weinroth

FOR AGAINST ABSTAIN
2. Ratification of the selection of Ernst & [_] [_] [_]
Young LLP as independent accountants for
the year ended October 31, 1996.

3. In their discretion, upon other matters
as may properly come before the meeting.

For, except vote withheld from the following nominee(s):

- --------------------------------------------------------

- --------------------------------------------------------------------------------

1996
- --------------------------------------------------------------------------------
SIGNATURE(S) DATE

Class B Common Stock

HOVNANIAN ENTERPRISES, INC.

P
R NOMINEE HOLDER OF CLASS B COMMON STOCK
O
X
Y THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby constitutes and appoints Kevork S. Hovnanian, Ara
K. Hovnanian and Desmond P. McDonald, and each of them, his true and
lawful agents and proxies with full power of substitution in each, to
represent the undersigned at the Annual Meeting of Shareholders of
HOVNANIAN ENTERPRISES, INC. to be held in the Boardroom of the American
Stock Exchange, 13th Floor, 86 Trinity Place, New York, New York, at 10:30
A.M. on April 17, 1996 and at any adjournments thereof, upon the matters
set forth in the notice of meeting and Proxy Statement dated March 8, 1996
and upon all other matters properly coming before said meeting.

SEE REVERSE SIDE

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED (1) FOR THE ELECTION OF THE
NOMINEES OF THE BOARD OF DIRECTORS; (2) FOR THE RATIFICATION OF THE SELECTION
OF ERNST & YOUNG LLP AS INDEPENDENT ACCOUNTANTS FOR THE YEAR ENDED OCTOBER 31
1996; AND (3) ON ANY OTHER MATTERS IN ACCORDANCE WITH THE DISCRETION OF THE
NAMED ATTORNEYS AND AGENTS, IF NO INSTRUCTIONS TO THE CONTRARY ARE INDICATED
IN ITEMS (1), (2) AND (3).

CLASS B COMMON STOCK SHARES CLASS B COMMON STOCK SHARES NOT
OWNED BY SAME BENEFICIAL OWNER OWNED BY SAME BENEFICIAL OWNER
OR PERMITTED TRANSFEREE SINCE OR PERMITTED TRANSFEREE SINCE
ISSUANCE ISSUANCE
------------------------------ -------------------------------
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
--------- --------- --------- --------- --------- ---------
(POST NUMBER OF SHARES NOT (POST NUMBER OF SHARES NOT
NUMBER OF VOTES) NUMBER OF VOTES)

1. Directors:
K. Hovnanian ____ shs. ____ shs. ____ shs. ____ shs. ____ shs. ____ shs.
A. Hovnanian ____ shs. ____ shs. ____ shs. ____ shs. ____ shs. ____ shs.
P. Buchanan ____ shs. ____ shs. ____ shs. ____ shs. ____ shs. ____ shs.
A. Greenbaum ____ shs. ____ shs. ____ shs. ____ shs. ____ shs. ____ shs.
T. Mason ____ shs. ____ shs. ____ shs. ____ shs. ____ shs. ____ shs.
D. McDonald ____ shs. ____ shs. ____ shs. ____ shs. ____ shs. ____ shs.
P. Reinhart ____ shs. ____ shs. ____ shs. ____ shs. ____ shs. ____ shs.
J. Schimpf ____ shs. ____ shs. ____ shs. ____ shs. ____ shs. ____ shs.
S. Weinroth ____ shs. ____ shs. ____ shs. ____ shs. ____ shs. ____ shs.
2. Ratification of
independent accountants ____ shs. ____ shs. ____ shs. ____ shs. ____ shs. ____ shs.

3. In their discretion, upon other matters as may properly come before the
meeting.

Please mark, sign, date and return the proxy card promptly using the enclosed
envelope. This proxy must be signed exactly as name appears hereon. Executors,
administrators, trustees, etc., should give full title as such. If the signer
is a corporation, please sign full corporate name by duly authorized officer.

------------------------------------------------
1996
------------------------------------------------
Class B Common Stock SIGNATURE(S) DATE

VOTING PROCEDURES-- BENEFICIAL OWNERS
CLASS B COMMON STOCK OF HOVNANIAN ENTERPRISES, INC.

TO ALL BANKS, BROKERS AND NOMINEES:

In accordance with the Certificate of Incorporation of Hovnanian Enterprises,
Inc. (the "Company"), each share of Class B Common Stock entitles the holder
thereof to ten votes; provided, however, that each share of Class B Common
Stock held, to the extent of the Company's knowledge, in nominee name by a
stockbroker, bank or otherwise will be entitled to only one vote per share
unless it is established to the Company's satisfaction that such shares have
been held, since the date of issuance, for the benefit or account of the same
beneficial owner of such shares or any Permitted Transferee (as defined in the
Certificate of Incorporation).

To enable the Company to tabulate the voting by beneficial owners of Class B
Common Stock held in your name, a special proxy card has been devised in
accordance with suggestions made by representatives of brokerage houses and
banks. On this card, the beneficial owner will certify the number of ten-vote
shares and one-vote shares, respectively, he or she is entitled to vote, and
will by the same signature give instructions as to the voting of those shares.
ALL UNCERTIFIED SHARES, WHETHER INSTRUCTED OR NOT, ARE TO BE LISTED AS ONE-VOTE
SHARES. THIS IS NOT TO BE REGARDED AS A NON-ROUTINE VOTE MERELY BECAUSE OF THE
NATURE OF THE VOTING RIGHTS OF THE CLASS B COMMON STOCK. The beneficial owner
proxy card certification is as follows:

The nominee's proxy card has also been designed to accommodate the voting of
the Class B Common Stock.

Please note, you do not have to tabulate, only record the numbers shown on
the certification. Please note also that you do not certify if you are a
nominee, the beneficial owner certifies.

Shares of Class B Common Stock held in nominee name will be entitled to ten
votes per share only if the beneficial owner proxy card or the nominee proxy
card relating to such shares is properly completed and received by Midlantic
National Bank, the Company's transfer agent, not less than 3 nor more than 20
business days prior to April 17, 1996. Completed proxy cards should be sent to
Post Office Box 600, Edison, New Jersey 08818, Attention: Corporate Trust
Department.

By order of the Board of Directors,

Timothy P. Mason
Secretary