SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(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. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
HOVNANIAN ENTERPRISES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] 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:
________________________________________________________________________________
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:
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5) Total fee paid:
[_] Fee paid previously with preliminary materials:
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[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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4) Date Filed:
(SC14A-07/98)
[LOGO]
HOVNANIAN ENTERPRISES, INC.
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10 HIGHWAY 35, P.O. BOX 500, RED BANK, NEW JERSEY 07701 |_| (732) 747-7800
January 15, 1999
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
which will be held on Friday, March 5, 1999, 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 ratification of the selection of
independent accountants.
We sincerely hope you will be able to attend and participate in the
Company's 1999 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
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KEVORK S. HOVNANIAN
Chairman of the Board
HOVNANIAN ENTERPRISES, INC.
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Notice of Annual Meeting of Shareholders
January 15, 1999
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Hovnanian
Enterprises, Inc. will be held on Friday, March 5, 1999, in the Boardroom 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 as
independent accountants to examine financial statements for the Company for
the year ended October 31, 1999.
3. The approval of the Company's Stock Incentive Plan.
4. 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 January 7, 1999 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, 1998.
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,
PETER S. REINHART
Secretary
January 15, 1999
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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.
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HOVNANIAN ENTERPRISES, INC.
10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
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PROXY STATEMENT
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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 January 15, 1999 to each shareholder entitled to vote. The
Company's Annual Report for the year ended October 31, 1998 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, for
approval of the Stock Incentive Plan, 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 January 7, 1999. On January 7, 1999, the
voting securities of the Company outstanding consisted of 13,830,820 shares of
Class A Common Stock, each share entitling the holder thereof to one vote and
7,688,600 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.
1
The following table sets forth as of January 7, 1999 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) ........... 5,492,887 39.7% 5,843,837 76.0%
Ara K. Hovnanian(4) ................. 1,429,661 10.0% 1,234,096 15.6%
Paul W. Buchanan .................... 43,520 .3% 21,480 .3%
Arthur M. Greenbaum ................. 6,833 .1% 1,500 --
Desmond P. McDonald ................. 7,083 .1% 3,750 .1%
Peter S. Reinhart ................... 43,897 .3% 16,950 .2%
J. Larry Sorsby ..................... 75,493 .5% 21,840 .3%
Stephen D. Weinroth ................. 21,083 .2% 2,250 --
All Directors and officers as a group
(10 persons) .................. 7,120,457 49.4% 7,145,703 89.8%
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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 576,739 Class
A Common Stock Options and 268,260 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 167,812 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 35,217 shares of Class A Common Stock and 68,667 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 129,562 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 and includes
20,000 shares of Class A Common Stock held in the name of Sirwart Hovnanian
over which she has sole power to dispose of and vote. Mr. Hovnanian
disclaims beneficial ownership of the shares described in the preceding
three sentences.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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
2
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 Company knows of no failure to file.
ELECTION OF DIRECTORS
The Company's By-laws provide that the Board of Directors shall consist of
eight 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......... 75 Chairman of the Board, and 1967
Director of the Company.
Ara K. Hovnanian............ 41 President, Chief Executive 1981
Officer and Director
of the Company.
Paul W. Buchanan............ 48 Senior Vice President- 1982
Corporate Controller and
Director of the Company.
Arthur M. Greenbaum......... 73 Director of the Company. 1992
Desmond P. McDonald......... 71 Director of the Company. 1982
Peter S. Reinhart........... 48 Senior Vice President and 1981
General Counsel/Secretary
and Director of the Company.
J. Larry Sorsby............. 43 Senior Vice President, 1998
Treasurer and Chief
Financial Officer and Director
of the Company.
Stephen D. Weinroth......... 60 Director of the Company. 1982
Mr. K. Hovnanian founded the predecessor of the Company in 1959 and has
served as Chairman of the Board since its initial incorporation in 1967. Mr. K.
Hovnanian was also Chief Executive Officer of the Company from 1967 to July
1997.
3
Mr. A. Hovnanian was appointed President in April 1988, after serving as
Executive Vice President from March 1983. He has also served as Chief Executive
Officer since July 1997. 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 & Himmel, a law firm since 1950. Mr. Greenbaum qualifies as an independent
Director as defined in the Company's Certificate of Incorporation.
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. He was elected Secretary of the Company in February 1997.
Mr. Sorsby was appointed Senior Vice President, Treasurer and Chief
Financial Officer of the Company in February, 1996 after serving as Senior Vice
President-Finance/Treasurer of the Company since March 1991.
Mr. Weinroth is Chairman of the Board of Core Laboratories N.V., a New York
Stock Exchange listed 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. From November 1993 until December 1995, he was Co-Chairman and
Co-Chief Executive Officer of VETTA Sports, Inc., a supplier of bicycle parts
and accessories. From 1989 to the present, Mr. Weinroth has been Co-Chairman of
the Board of Directors and Chairman of the Investment Committee of First
Brittania N.V., an international buyout firm. 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 are Messrs.
McDonald, Weinroth and Reinhart. 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
4
Accounting Officer reports directly to the Audit Committee on significant
accounting issues. During the year ended October 31, 1998 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, 1998 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, 1998 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 attended, $1,000 for each committee meeting
attended, $2,000 for special meetings attended and a bonus. All directors are
reimbursed for expenses related to their attendance at Board of Directors and
committee meetings. During the year ended October 31, 1998, Mr. McDonald
received $28,000, Mr. Greenbaum received $25,000 and Mr. Weinroth received
$28,000 including a bonus paid in January 1999.
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, 1999 is to be
submitted to the meeting for ratification. Ernst & Young LLP 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.
5
APPROVAL OF STOCK INCENTIVE PLAN
General Information
The purpose of the Plan is to aid the Company and its affiliates in
recruiting and retaining key employees and to motivate these employees to make
their best efforts on behalf of the Company and its affiliates by giving
incentives through the granting of Awards. The Plan will benefit the Company
because the employees will have an interest in the welfare of the Company due to
their ownership of Shares.
The Plan is not subject to the Employee Retirement Income Security Act of
1974 ("ERISA").
The total number of Shares which may be issued under the Plan is 1,500,000.
The maximum number of Shares for which Options or Stock Appreciation Rights may
be granted during a calendar year to any Participant shall be 300,000. The
Shares may consist, in whole or in part, of unissued Shares or treasury Shares.
Shares which are subject to Awards which terminate or lapse may be granted again
under the Plan.
The principal features of the Plan are summarized below, but the summary is
only an overview and you should refer to the Plan itself.
Administration
The Plan will be administered and interpreted by a Committee of the
Company's Board of Directors. Currently this is the Compensation Committee. The
Committee may delegate its duties and powers to any subcommittee consisting
solely of at least two individuals who are each "non-employee directors" within
the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
(the "Act") and "outside directors" within the meaning of Section 162(m) of the
Internal Revenue Code (the "Code").
The Committee has the authority to interpret the Plan. The Committee may
also adopt, amend or rescind any rules and regulations it considers to be
helpful or necessary to carry out the purpose of the Plan. Any interpretation of
the Plan or any Award by the Committee is final. The Committee will require
payment if, under federal, state or local tax laws, you owe any taxes due to the
exercise or settlement of an Award.
If the chief executive officer of the Company is a member of the Board, the
Board by specific resolution may constitute such chief executive officer as a
committee of one which shall have the authority to grant Awards of up to an
aggregate of 300,000 Shares in each calendar year to Participants who are (i)
not subject to the rules promulgated under Section 16 of the Act (or any
successor section thereto) or (ii) covered employees (or anticipated to become
covered employees) as such term is defined in Section 162(m) of the Code;
provided however, that such chief executive officer shall notify the Committee
of any such grants made pursuant to this Section 4.
Eligibility
Employees, directors or consultants selected by the Committee are eligible
to participate in the Plan ("Participants"). The Committee will determine the
number of Shares that are covered by the Awards granted to an employee. No Award
may be granted under
6
the Plan anytime after the tenth anniversary of the effective date of the Plan.
The effective date is March 5, 1999, the date of the 1999 annual meeting of
stockholders.
Terms of Options
The Committee has the responsibility to determine the terms and conditions
of each option granted under the Plan. The options may be non-qualified,
incentive or other stock options and their terms and conditions are set forth in
the related Award agreements. Stock options granted under the Plan are subject
to the terms and conditions herein and in the Plan, and to any other terms and
conditions that the Committee may determine.
1. The exercise price of each option will be determined by the Committee.
The minimum exercise price will be the fair market value of the Shares
subject to the option on the date that the option is granted.
2. Options granted under the Plan will be exercisable as determined by
the Committee. However, an option may not be exercised more than ten
years after it was granted.
3. An option may be exercised for all or, from time-to-time, any part of
the Shares to which it relates. The exercise date of an option is the
later of the date the notice of exercise of an option is received by
the Company and, if applicable, the date payment is received by the
Company pursuant to clause (i), (ii), (iii) or (iv) in the following
sentence. The purchase price for the Shares purchased upon exercise of
an option is to be paid in full to the Company at the time of
exercise. Payment may be made (i) in cash;(ii) in Shares; (iii) partly
in cash and partly in Shares or (iv) by instructing a stockbroker to
deliver to the Company an amount equal to the option price.
The Committee may grant incentive stock options ("ISOs") which comply with
Section 422 of the Code. Participants who own more than ten percent of the total
voting power of all classes of stock of the Company or any affiliate may not be
granted ISOs unless the option price for such ISO is at least 110% of the ISOs
fair market value and such ISO shall terminate no later than the day preceding
the fifth anniversary of the day on which such ISO was granted. If a Participant
disposes of shares acquired upon the exercise of an ISO within two years after
the grant of such ISO or within one year after such shares were transferred to
the Participant, such Participant shall notify the Company of the disposition
and of the amount realized upon disposition.
Terms of Stock Appreciation Rights
Grants. The Committee may grant a stock appreciation right (an "SAR")
independent of an option or in connection with an option or portion of an
option. If an SAR is granted in connection with an option, the SAR
1. may be granted when the related option is granted, or at any time
prior to the exercise or cancellation of the option;
2. will cover the same number of Shares as covered by the option (or a
lesser number if the Committee so decides); and
3. are subject to the same terms and conditions as the option, except as
set forth in the Plan.
7
Terms. The exercise price per share of an SAR will be determined by the
Committee. The exercise price will not be less than the greater of
1. the fair market value of a Share on the date that the SAR is granted,
or, for an SAR granted in conjunction with an option, the option price
of the related option, and
2. an amount permitted by applicable laws, rules, by-laws or policies of
regulators or stock exchanges.
Upon exercise of an SAR that is granted independent of an option, the
Participant will be entitled to an amount equal to the excess of the fair market
value of one Share on the exercise date over the exercise price per Share,
multiplied by the number of Shares covered by the SAR.
An SAR granted in conjunction with an option entitles the Participant to
surrender to the Company the unexercised option and to receive in return an
amount equal to the excess of the fair market value of one share on the exercise
date over the option price per share multiplied by the number of Shares covered
by the option surrendered.
The exercise date is the date a notice of exercise is received by the
Company. Payment must be made in cash, in Shares, or partly in cash and partly
in Shares. No fractional Shares will be issued in payment of SARs.
Limitations. The Committee may impose conditions on the exercise or
transfer of SARs.
Limited SARs. The Committee may grant limited SARs that may be exercised
only upon the occurrence of specified events.
Other Stock-Based Awards
Generally. The Committee has sole discretion to grant any of the following
awards:
1. Shares;
2. restricted Shares; and
3. awards valued in reference to the fair market value of Shares.
The Committee determines the terms and conditions of all stock-based awards
which include, but are not limited to:
1. the form of the award;
2. the right and manner in which a Participant can receive an award;
3. the timing of the award;
4. to whom an award will be granted; and
5. the amount of an award.
Performance-Based Awards. These stock-based awards may be granted in a
manner which is deductible by the Company under Section 162(m) of the Internal
Revenue Code. A "Performance-Based Award" is based on the Participant's reaching
certain written performance goals set forth by the Committee. The performance
goals are based on certain
8
financial criteria, such as net income, stock price and return on stockholders'
equity, as described in the Plan. These criteria may relate to the Company, its
affiliates, divisions or units, or any combination thereof, as determined by the
Committee. The maximum amount of a Performance-Based Award will be $2,000,000
annually for any Participant. The Committee will determine whether particular
performance goals have been met and will certify the amount of the
performance-based award. No performance-based award will be paid without the
certification of the Committee. At the discretion of the Committee, the amount
paid may be less than the amount determined by the performance goal formula. The
amount of the performance-based award will be paid at a time determined by the
Committee; however, to the extent permitted by the Committee and consistent with
Section 162(m) of the Internal Revenue Code, a Participant may choose to defer
payment of a performance-based award.
Adjustments
If, after the effective date of the Plan, there is any change in the
outstanding shares of the Company's common stock due to any share dividend or
split, reorganization, recapitalization, merger, consolidation, spin-off,
combination or exchange of shares, other corporate exchange, any distribution to
stockholders of shares other than regular cash dividends or any similar event,
the Committee, in its sole discretion and without liability to any person, may
adjust
1. the number or kind of shares or other securities issued or reserved
for issuance pursuant to the Plan or pursuant to outstanding Awards;
2. the option price; or
3. any other affected terms of such Awards.
Change in Control. If there is a "Change in Control" (as defined below) of
the Company, the Committee has sole discretion to take such actions, if any, as
it deems necessary or desirable with respect to any Award, such as (i) the
acceleration of an Award, (ii) the payment of cash in exchange for the
cancellation of an Award and/or (iii) requiring the issuance of substitute
Awards to substantially preserve the value of any affected Award, as of the date
of the Change in Control.
A "Change in Control" of the Company generally is deemed to occur if:
1. any person (with certain exceptions, including the Company's current
controling shareholders and affiliates) becomes the owner of 50% of
the voting power of the Company's voting securities;
2. during any twenty-four month period the majority of the membership of
the Board of Directors changes without approval of two-thirds of the
directors who either were directors at the beginning of the period or
whose election was previously so approved;
3. the Company's stockholders approve a merger or consolidation with
another company where the Company's voting securities outstanding
prior to the transaction do not represent more than 65% of voting
power of the Company or the surviving entity; or
9
4. the Company undergoes a complete liquidation or sale or disposition of
all or substantially all of the Company's assets.
No Right to Continued Employment
Receiving grants of Awards under the Plan does not give a Participant any
right to continued employment with the Company or with any of its subsidiaries.
Also, receiving grants of Awards under the Plan does not limit the right of the
Company or any of its affiliates to terminate the employment of a Participant
with the Company or with any of its affiliates.
Nontransferability of Awards
Unless otherwise determined by the Committee, Awards may be transferred
only by the laws of descent and distribution. During a Participant's lifetime,
the Participant is the only person who may exercise an Award. In certain
circumstances, this section may be waived by the Committee.
Amendments
The Board may amend, alter or discontinue the Plan from time-to-time as it
sees fit, except that
1. shareholder approval is required if such action increases the maximum
number of shares which may be issued under the Plan;
2. without the consent of a Participant, no amendment will be allowed if
it has a material effect on rights under an Award; and
3. the Committee may amend the Plan in any way it sees fit in order for
the Awards to comply with the Code or other applicable law.
The Committee may not amend the terms of the Plan relating to Changes in
Control (Section 9(b) of the Plan) after there has been a Change in Control.
Certain Federal Income Tax Consequences
The following is a summary of certain United States federal income tax
rules with respect to the Plan and the Awards granted thereunder. This summary
is not intended to be a complete description of all possible tax consequences of
the Plan and the Awards, and Participants will be urged to consult their own tax
advisor concerning the federal, state, local and other tax implications of the
Plan and of the Awards granted thereunder.
Incentive Stock Options ("ISOs"). Under present law, Participants will not
realize taxable income upon either the grant or the exercise of an ISO, and the
Company will not receive an income tax deduction at either time, if Participants
do not sell the Shares acquired by exercising an ISO within either:
10
1. two years after the date of grant of an ISO, or
2. one year after the date of exercise of an ISO,
a subsequent sale will be taxed as mid-term or long-term capital gain or loss.
If, within either of the above periods, a Participant disposes of the shares
acquired by exercising an ISO, a Participant will, generally, realize as
ordinary income an amount equal to the lesser of:
1. the gain realized on such disposition, or
2. the excess of the fair market value of the shares on the date of
exercise over the exercise price.
In this instance, the Company generally would be entitled to an income tax
deduction equal to the amount recognized as ordinary income, subject to
compliance with Section 162(m) of the Code. Any gain in excess of such amount
that a Participant realizes as ordinary income will be taxed as a short-term,
mid- term or long-term capital gain (depending on the holding period).
Nonqualified Stock Options ("NQSOs"). Under present law, a Participant will
not realize taxable income upon the grant of a NQSO and the Company will not
receive an income tax deduction at such time. Upon exercise of a NQSO, a
Participant will generally realize ordinary income in an amount equal to the
excess of the fair market value of the shares on the date of exercise over the
exercise price. Upon sale of the shares, a Participant will recognize
short-term, mid-term or long-term capital gain depending upon how long the
Participant held the shares. The Company is generally allowed an income tax
deduction equal to the amount recognized as ordinary income, subject, where
applicable, to compliance with Section 162(m) of the Code.
SARs. Amounts received upon exercise of an SAR are taxed as ordinary income
received. The Company is generally allowed an income tax deduction equal to the
amount recognized as ordinary income.
Other Awards. Amounts received upon the grant of Other Awards are
ordinarily taxed at ordinary rates when received. However, if the Other Awards
consist of property subject to a substantial risk of forfeiture the amounts
generally will not be taxed until the substantial risk of forfeiture lapses or
until an election is made under Section 83(b) of the Code. Under Section 162(m)
of the Code, the Company is generally allowed an income tax deduction equal to
the amount recognized as ordinary income.
Compliance with Section 162(m). The Plan should allow certain ISOs, NQSOs,
SARs and Performance-Based Awards granted under the Plan to be treated as
qualified performance-based compensation under Section 162(m) of the Code.
However, the Committee may, from time-to-time, award compensation that is not
deductible under Section 162(m) of the Code.
11
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 years ended October 31, 1998, 1997 and 1996.
Long-Term Compensation
----------------------------------- -------------------------------
Annual Compensation Awards
----------------------------------- -------------------------------
Number of
Other Securities All
Year Annual Restricted Underlying Other
or Compen- Stock Options/ LTIP Compen-
Name and Principal Position Period Salary Bonus(1) sation(2) Awards SARs(3) Payouts sation(4)
------------------------------ ------- ---------- ---------- --------- ---------- ---------- ------- ---------
Kevork S. Hovnanian................. 1998 $800,232 $668,800 -- $ 0 0 N/A $ 9,973
Chairman of the Board, 1997 $778,485 $ 0 -- $ 0 0 N/A $ 10,621
and Director of the Company 1996 $786,067 $200,000 -- $ 0 0 N/A $ 10,115
Ara K. Hovnanian.................... 1998 $756,107 $668,800 -- $ 0 75,000 N/A $ 10,345
President, Chief Executive 1997 $713,419 $ 0 -- $ 0 75,000 N/A $ 10,992
Officer and Director 1996 $678,610 $200,000 -- $ 0 0 N/A $ 10,481
of the Company
J. Larry Sorsby..................... 1998 $232,277 $179,113 -- $ 0 20,000 N/A $ 17,601
Senior Vice President, 1997 $221,539 $ 0 -- $ 0 20,000 N/A $ 14,500
Treasurer and Chief 1996 $198,836 $ 69,997 -- $ 0 0 N/A $ 14,349
Financial Officer and
Director of the Company
Peter S. Reinhart................... 1998 $176,738 $ 86,240 -- $ 0 10,000 N/A $ 13,965
Senior Vice President/ 1997 $159,484 $ 0 -- $ 0 10,000 N/A $ 14,991
General Counsel and 1996 $156,804 $ 46,500 -- $ 0 0 N/A $ 12,822
Director of the Company
John D. Roberts(5).................. 1998 $138,462 $122,000 -- $ 0 0 N/A $ 71,345
Vice President 1997 $ 0 $ 0 -- $ 0 0 N/A $ 0
Process Redesign 1996 $ 0 $ 0 -- $ 0 0 N/A $ 0
- ----------
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, 1998 as follows:
Retirement Deferred Term
Plan Plan Insurance Total
---------- -------- --------- -------
K. Hovnanian........ $ 9,600 $ 0 $ 373 $ 9,973
A. Hovnanian........ $ 9,600 $ 0 $ 745 $10,345
Sorsby.............. $ 9,600 $ 7,470 $ 531 $17,601
Reinhart............ $ 9,600 $ 3,955 $ 410 $13,965
Roberts............. $ 751 $ 0 $ 224 $ 975
(5) In addition to the compensation listed under note (4) above, Mr. Roberts'
Other Compensation includes $70,370 in relocation compensation.
12
Option Grants in Last Fiscal Year
The following table provides information on option grants in fiscal 1998 to
the named executive officers.
Individual Grants Potential
------------------------------------------------ Realized Value at
% of Total Assumed Annual
Number of Options Exercise Rates of Stock Price
Securities Granted to or Base Appreciation
Underlying Employees Price for Option Term(1)
Options in Fiscal Per Expiration --------------------------
Name Granted 1998 Share Date 5% 10%
---------- ----------- ---------- -------- ---------- ---------- ----------
Kevork S. Hovnanian......... 0 N/A N/A N/A N/A N/A
Ara K. Hovnanian............ 75,000 25.7% $ 8.69 5/14/08 $ 409,764 $1,038,423
J. Larry Sorsby............. 20,000 6.9% $ 8.69 5/14/08 $ 109,270 $ 276,913
Peter S. Reinhart........... 10,000 3.4% $ 8.69 5/14/08 $ 54,635 $ 138,456
John D. Roberts............. 0 N/A N/A N/A N/A N/A
- ----------
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, 1998 and Option Values at October 31, 1998
The following table provides information on option exercises during the
year ended October 31, 1998 by the named executive officers and the value of
such officers' unexercised options at October 31, 1998.
Securities Underlying
Number of Unexercised Value of Unexercised
Shares Options at In-the-Money Options at
Acquired October 31, 1998(1) October 31, 1998(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 $0 595,000 125,000 $800,898 $100,000
J. Larry Sorsby............. 0 $0 82,667 33,333 $137,959 $ 26,666
Peter S. Reinhart........... 0 $0 57,333 16,667 $127,979 $ 13,334
John D. Roberts............. 0 $0 None None N/A N/A
- ----------
Note:
(1) The closing price of the Class A Common Stock on the last trading day of
October, 1998 on the American Stock Exchange was $8.50.
Ten-Year Option Repricings
For the year ended October 31, 1998, 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
13
Company's executives during the year ended October 31, 1998 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, 1998 generally were believed to be necessary to retain their
services.
Base salaries, including that of Mr. K. Hovnanian, the Company's Chairman
of the Board, 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. A. Hovnanian set the year ended October
31, 1998 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.
The bonus program for Mr. K. Hovnanian, Chairman of the Board and Mr. A.
Hovnanian, President and Chief Executive Officer pays a fixed amount bonus based
on the Company's Return on Equity ("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. In accordance with section 162(m) of the Code, the bonus plan for
executives receiving compensation in excess of $1,000,000 was approved by
shareholders at the April 15, 1996 Annual Meeting of Shareholders and reflects
the Compensation Committee's policies of maximizing corporate tax deductions,
wherever feasible.
14
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 Mr. Greenbaum's business relationship with the Company.
Performance Graph
The following graph compares on a cumulative basis the yearly percentage
change over the one and five year periods ending October 31, 1998 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 Index and with (iii) the total
shareholder return on the peer group of eighteen 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, 1993 and 1997 for the preparation of the graphs.
Note: The stock price performance shown on the following graph is not
necessarily indicative of future price performance.
15
Comparison of One-Year Cumulative Total Return of Hovnanian Enterprises, Inc.,
the S&P 500 Index and a Peer Group Index (October 31)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
10/97 10/98
----- -----
Hovnanian Enterprises 100.00 114.286
Peer Group Index 100.00 116.967
S&P 500 Index 100.00 121.989
Comparison of Five-Year Cumulative Total Return of Hovnanian Enterprises, Inc.,
the S&P 500 Index and a Peer Group Index (October 31)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
1933 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
Hovnanian Enterprises 100.00 33.80 40.14 33.80 41.90 47.89
Peer Group Index 100.00 61.39 77.80 69.38 112.63 131.79
S&P 500 Index 100.00 103.87 131.33 162.98 215.32 262.66
16
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 $3,000,000 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, 1998, there was one loan under this
policy to Mr. A. Hovnanian, President, Chief Executive Officer and a Director of
the Company for personal matters which amounted to $2,117,000 at an interest
rate equal to the six month U.S. Treasury Bill.
The Company provides property management services to various limited
partnerships including one partnership in which Mr. A. Hovnanian is general
partner, and members of his family and certain officers and directors of the
Company are limited partners. At October 31, 1998, no amounts were due the
Company by these partnerships.
Mr. Arthur Greenbaum is a senior partner of Greenbaum, Rowe, Smith, Ravin,
Davis & Himmel, a law firm retained by the Company during the year ended October
31, 1998.
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
17
owner proxy card or the nominee proxy card relating to such shares is properly
completed and received by Boston EquiServe, the Company's transfer agent, not
less than 3 nor more than 20 business days prior to March 5, 1999. Completed
proxy cards should be sent to P.O. Box 9379, Boston, Massachusetts 02205-9956,
Attention: Proxy 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
2000 ANNUAL MEETING
Shareholder proposals for inclusion in the proxy materials related to the
2000 Annual Meeting of Shareholders must be received by the Company no later
than November 30, 1999.
By Order of the Board of Directors
HOVNANIAN ENTERPRISES, INC.
Red Bank, New Jersey
January 15, 1999
18
1999 HOVNANIAN ENTERPRISES, INC.
STOCK INCENTIVE PLAN
1. Purpose of the Plan
The purpose of the Plan is to aid the Company and its Affiliates in
recruiting and retaining key employees, directors or consultants of outstanding
ability and to motivate such employees, directors or consultants to exert their
best efforts on behalf of the Company and its Affiliates by providing incentives
through the granting of Awards. The Company expects that it will benefit from
the added interest which such key employees, directors or consultants will have
in the welfare of the Company as a result of their proprietary interest in the
Company's success.
2. Definitions
The following capitalized terms used in the Plan have the respective
meanings set forth in this Section:
(a) Act: The Securities Exchange Act of 1934, as amended, or any successor
thereto.
(b) Affiliate: With respect to the Company, any entity directly or
indirectly controlling, controlled by, or under common control with,
the Company or any other entity designated by the Board in which the
Company or an Affiliate has an interest.
(c) Award: An Option, Stock Appreciation Right or Other Stock-Based Award
granted pursuant to the Plan.
(d) Beneficial Owner: A "beneficial owner", as such term is defined in
Rule 13d-3 under the Act (or any successor rule thereto).
(e) Board: The Board of Directors of the Company.
(f) Change in Control:
The occurrence of any of the following events:
(i) any Person (other than a Person holding securities representing
10% or more of the combined voting power of the Company's outstanding
securities as of the Effective Date, or any Family Member of such a
Person, the Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or any company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the
Company), becomes the Beneficial Owner, directly or indirectly, of
securities of the Company, representing 50% or more of the combined
voting power of the Company's then-outstanding securities;
(ii) during any period of twenty-four consecutive months (not
including any period prior to the Effective Date), individuals who at
the beginning of such period constitute the Board, and any new
director (other than (A) a director nominated by a Person who has
entered into an agreement with the
A-1
Company to effect a transaction described in Sections 2(f)(i), (iii)
or (iv) of the Plan or (B) a director nominated by any Person
(including the Company) who publicly announces an intention to take or
to consider taking actions (including, but not limited to, an actual
or threatened proxy contest) which if consummated would constitute a
Change in Control) whose election by the Board or nomination for
election by the Company's shareholders was approved in advance by a
vote of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period or
whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(iii) the consummation of any transaction or series of transactions
under which the Company is merged or consolidated with any other
company, other than a merger or consolidation which would result in
the shareholders of the Company immediately prior thereto continuing
to own (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 65% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or
(iv) the Company undergoes a complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a liquidation of
the Company into a wholly-owned subsidiary.
(g) Code: The Internal Revenue Code of 1986, as amended, or any successor
thereto.
(h) Committee: The Compensation Committee of the Board.
(i) Company: Hovnanian Enterprises, Inc., a Delaware corporation.
(j) Disability: Inability of a Participant to perform in all material
respects his duties and responsibilities to the Company, or any
Subsidiary of the Company, by reason of a physical or mental
disability or infirmity which inability is reasonably expected to be
permanent and has continued (i) for a period of six consecutive months
or (ii) such shorter period as the Board may reasonably determine in
good faith. The Disability determination shall be in the sole
discretion of the Board and a Participant (or his representative)
shall furnish the Board with medical evidence documenting the
Participant's disability or infirmity which is satisfactory to the
Board.
(k) Effective Date: March 5,1999
(l) Fair Market Value: On a given date, the arithmetic mean of the high
and low prices of the Shares as reported on such date on the Composite
Tape of the principal national securities exchange on which such
Shares are listed or admitted to trading, or, if no Composite Tape
exists for such national securities exchange on such date, then on the
principal national securities exchange on which such Shares are listed
or admitted to trading, or, if the
A-2
Shares are not listed or admitted on a national securities exchange,
the arithmetic mean of the per Share closing bid price and per Share
closing asked price on such date as quoted on the National Association
of Securities Dealers Automated Quotation System (or such market in
which such prices are regularly quoted), or, if there is no market on
which the Shares are regularly quoted, the Fair Market Value shall be
the value established by the Committee in good faith. If no sale of
Shares shall have been reported on such Composite Tape or such
national securities exchange on such date or quoted on the National
Association of Securities Dealer Automated Quotation System on such
date, then the immediately preceding date on which sales of the Shares
have been so reported or quoted shall be used.
(m) Family Member:
(i) any Person holding securities representing 10% or more of the
combined voting power of the Company's outstanding securities as of
the Effective Date;
(ii) any spouse of such a person;
(iii) any descendant of such a person;
(iv) any spouse of any descendant of such a person; or
(v) any trust for the benefit of any of the aforementioned persons.
(n) ISO: An Option that is also an incentive stock option granted pursuant
to Section 6(d) of the Plan.
(o) LSAR: A limited stock appreciation right granted pursuant to Section
7(d) of the Plan.
(p) Other Stock-Based Awards: Awards granted pursuant to Section 8 of the
Plan.
(q) Option: A stock option granted pursuant to Section 6 of the Plan.
(r) Option Price: The purchase price per Share of an Option, as determined
pursuant to Section 6(a) of the Plan.
(s) Participant: An employee, director or consultant who is selected by
the Committee to participate in the Plan.
(t) Performance-Based Awards: Certain Other Stock-Based Awards granted
pursuant to Section 8(b) of the Plan.
(u) Person: A "person", as such term is used for purposes of Section 13(d)
or 14(d) of the Act (or any successor section thereto).
(v) Plan: The 1999 Hovnanian Enterprises, Inc. Stock Incentive Plan.
(w) Shares: Shares of common stock of the Company.
(x) Stock Appreciation Right: A stock appreciation right granted pursuant
to Section 7 of the Plan.
(y) Subsidiary: A subsidiary corporation, as defined in Section 424(f) of
the Code (or any successor section thereto).
A-3
3. Shares Subject to the Plan
The total number of Shares which may be issued under the Plan is 1,500,000.
The maximum number of Shares for which Options or Stock Appreciation Rights may
be granted during a calendar year to any Participant shall be 300,000. The
Shares may consist, in whole or in part, of unissued Shares or treasury Shares.
The issuance of Shares or the payment of cash upon the exercise of an Award
shall reduce the total number of Shares available under the Plan, as applicable.
Shares which are subject to Awards which terminate or lapse may be granted again
under the Plan.
4. Administration
The Plan shall be administered by the Committee, which may delegate its
duties and powers in whole or in part to any subcommittee thereof consisting
solely of at least two individuals who are each "non-employee directors" within
the meaning of Rule 16b-3 under the Act (or any successor rule thereto) and
"outside directors" within the meaning of Section 162(m) of the Code (or any
successor section thereto); provided, however, that any action permitted to be
taken by the Committee may be taken by the Board, in its discretion. The
Committee is authorized to interpret the Plan, to establish, amend and rescind
any rules and regulations relating to the Plan, and to make any other
determinations that it deems necessary or desirable for the administration of
the Plan. The Committee may correct any defect or omission or reconcile any
inconsistency in the Plan in the manner and to the extent the Committee deems
necessary or desirable. Any decision of the Committee in the interpretation and
administrations of the Plan, as described herein, shall lie within its sole and
absolute discretion and shall be final, conclusive and binding on all parties
concerned (including, but not limited to Participants and their beneficiaries or
successors. Determinations made by the Committee under the Plan need not be
uniform and may be made selectively among Participants, whether or not such
Participants are similarly situated. The Committee shall require payment of any
amount it may determine to be necessary to withhold for federal, state, local or
other, taxes as a result of the exercise of an Award. Unless the Committee
specifies otherwise, the Participant may elect to pay a portion or all of such
withholding taxes by (a) delivery in Shares or (b) having Shares withheld by the
Company from any Shares that would have otherwise been received by the
Participant. The number of Shares so delivered or withheld shall have an
aggregate Fair Market Value sufficient to satisfy the applicable withholding
taxes. If the chief executive officer of the Company is a member of the Board,
the Board by specific resolution may constitute such chief executive officer as
a committee of one which shall have the authority to grant Awards of up to an
aggregate of 300,000 Shares in each calendar year to Participants who are (i)
not subject to the rules promulgated under Section 16 of the Act (or any
successor section thereto) or (ii) covered employees (or anticipated to become
covered employees) as such term is defined in Section 162(m) of the Code;
provided, however, that such chief executive officer shall notify the Committee
of any such grants made pursuant to this Section 4.
5. Limitations
No Award may be granted under the Plan after the tenth anniversary of the
Effective Date, but Awards theretofore granted may extend beyond that date.
A-4
6. Terms and Conditions of Options
Options granted under the Plan shall be, as determined by the Committee,
non-qualified or incentive stock options for federal income tax purposes, as
evidenced by the related Award agreements, and shall be subject to the foregoing
and the following terms and conditions and to such other terms and conditions,
not inconsistent therewith, as the Committee shall determine:
(a) Option Price. The Option Price per Share shall be determined by the
Committee, but shall not be less than 100% of the Fair Market Value of the
Shares on the date an Option is granted.
(b) Exercisability. Options granted under the Plan shall be exercisable at
such time and upon such terms and conditions as may be determined by the
Committee, but in no event shall an Option be exercisable more than ten years
after the date it is granted.
(c) Exercise of Options. Except as otherwise provided in the Plan or in an
Award agreement, an Option may be exercised for all, or from time to time any
part, of the Shares for which it is then exercisable. For purposes of Section 6
of the Plan, the exercise date of an Option shall be the later of the date a
notice of exercise is received by the Company and, if applicable, the date
payment is received by the Company pursuant to clauses (i), (ii), (iii) or (iv)
in the following sentence. The purchase price for the Shares as to which an
Option is exercised shall be paid to the Company in full at the time of exercise
at the election of the Participant (i) in cash, (ii) in Shares having a Fair
Market Value equal to the aggregate Option Price for the Shares being purchased
and satisfying such other requirements as may be imposed by the Committee;
provided, that such Shares have been held by the Participant for no less than
six months, (iii) partly in cash and partly in such Shares or (iv) through the
delivery of irrevocable instruments to a broker to deliver promptly to the
Company an amount equal to the aggregate option price for the shares being
purchased. No Participant shall have any rights to dividends or other rights of
a stockholder with respect to Shares subject to an Option until the Participant
has given written notice of exercise of the Option, paid in full for such Shares
and, if applicable, has satisfied any other conditions imposed by the Committee
pursuant to the Plan.
(d) ISOs. The Committee may grant Options under the Plan that are intended
to be ISOs. Such ISOs shall comply with the requirements of Section 422 of the
Code (or any successor section thereto). No ISO may be granted to any
Participant who at the time of such grant, owns more than ten percent of the
total combined voting power of all classes of stock of the Company or of any
Subsidiary, unless (i) the Option Price for such ISO is at least 110% of the
Fair Market Value of a Share on the date the ISO is granted and (ii) the date on
which such ISO terminates is a date not later than the day preceding the fifth
anniversary of the date on which the ISO is granted. Any Participant who
disposes of Shares acquired upon the exercise of an ISO either (i) within two
years after the date of grant of such ISO or (ii) within one year after the
transfer of such Shares to the Participant, shall notify the Company of such
disposition and of the amount realized upon such disposition.
A-5
7. Terms and Conditions of Stock Appreciation Rights
(a) Grants. The Committee also may grant (i) a Stock Appreciation Right
independent of an Option or (ii) a Stock Appreciation Right in connection with
an Option, or a portion thereof. A Stock Appreciation Right granted pursuant to
clause (ii) of the preceding sentence (A) may be granted at the time the related
Option is granted or at any time prior to the exercise or cancellation of the
related Option, (B) shall cover the same Shares covered by an Option (or such
lesser number of Shares as the Committee may determine) and (C) shall be subject
to the same terms and conditions as such Option except for such additional
limitations as are contemplated by this Section 8 (or such additional
limitations as may be included in an Award agreement).
(b) Terms. The exercise price per Share of a Stock Appreciation Right shall
be an amount determined by the Committee but in no event shall such amount be
less than the greater of (i) the Fair Market Value of a Share on the date the
Stock Appreciation Right is granted or, in the case of a Stock Appreciation
Right granted in conjunction with an Option, or a portion thereof, the Option
Price of the related Option and (ii) an amount permitted by applicable laws,
rules, by-laws or policies of regulatory authorities or stock exchanges. Each
Stock Appreciation Right granted independent of an Option shall entitle a
Participant upon exercise to an amount equal to (i) the excess of (A) the Fair
Market Value on the exercise date of one Share over (B) the exercise price per
Share, times (ii) the number of Shares covered by the Stock Appreciation Right.
Each Stock Appreciation Right granted in conjunction with an Option, or a
portion thereof, shall entitle a Participant to surrender to the Company the
unexercised Option, or any portion thereof, and to receive from the Company in
exchange therefor an amount equal to (i) the excess of (A) the Fair Market Value
on the exercise date of one Share over (B) the Option Price per Share, times
(ii) the number of Shares covered by the Option, or portion thereof, which is
surrendered. The date a notice of exercise is received by the Company shall be
the exercise date. Payment shall be made in Shares or in cash, or partly in
Shares and partly in cash (any such Shares valued at such Fair Market Value),
all as shall be determined by the Committee. Stock Appreciation Rights may be
exercised from time to time upon actual receipt by the Company of written notice
of exercise stating the number of Shares with respect to which the Stock
Appreciation Right is being exercised. No fractional Shares will be issued in
payment for Stock Appreciation Rights, but instead cash will be paid for a
fraction or, if the Committee should so determine, the number of Shares will be
rounded downward to the next whole Share.
(c) Limitations. The Committee may impose, in its discretion, such
conditions upon the exercisability or transferability of Stock Appreciation
Rights as it may deem fit.
(d) Limited Stock Appreciation Rights. The Committee may grant LSARs that
are exercisable upon the occurrence of specified contingent events. Such LSARs
may provide for a different method of determining appreciation, may specify that
payment will be made only in cash and may provide that any related Awards are
not exercisable while such LSARs are exercisable. Unless the context otherwise
requires, whenever the term "Stock Appreciation Right" is used in the Plan, such
term shall include LSARs.
A-6
8. Other Stock-Based Awards
(a) Generally. The Committee, in its sole discretion, may grant Awards of
Shares, Awards of restricted Shares and Awards that are valued in whole or in
part by reference to, or are otherwise based on the Fair Market Value of, Shares
("Other Stock-Based Awards"). Such Other Stock-Based Awards shall be in such
form, and dependent on such conditions, as the Committee shall determine,
including, without limitation, the right to receive one or more Shares (or the
equivalent cash value of such Shares) upon the completion of a specified period
of service, the occurrence of an event and/or the attainment of performance
objectives. Other Stock-Based Awards may be granted alone or in addition to any
other Awards granted under the Plan. Subject to the provisions of the Plan, the
Committee shall determine to whom and when Other Stock-Based Awards will be
made, the number of Shares to be awarded under (or otherwise related to) such
Other Stock-Based Awards; whether such Other Stock-Based Awards shall be settled
in cash, Shares or a combination of cash and Shares; and all other terms and
conditions of such Awards (including, without limitation, the vesting provisions
thereof and provisions ensuring that all Shares so awarded and issued shall be
fully paid and non-assessable).
(b) Performance-Based Awards. Notwithstanding anything to the contrary
herein, certain Other Stock-Based Awards granted under this Section 8 may be
granted in a manner which is deductible by the Company under Section 162(m) of
the Code (or any successor section thereto) ("Performance-Based Awards"). A
Participant's Performance-Based Award shall be determined based on the
attainment of written performance goals approved by the Committee for a
performance period established by the Committee (i) while the outcome for that
performance period is substantially uncertain and (ii) no more than 90 days
after the commencement of the performance period to which the performance goal
relates or, if less, the number of days which is equal to 25 percent of the
relevant performance period. The performance goals, which must be objective,
shall be based upon one or more of the following criteria: (i) consolidated
earnings before or after taxes (including earnings before interest, taxes,
depreciation and amortization); (ii) net income; (iii) operating income; (iv)
earnings per Share; (v) book value per Share; (vi) return on shareholders'
equity; (vii) expense management; (viii) return on investment; (ix) improvements
in capital structure; (x) profitability of an identifiable business unit or
product; (xi) maintenance or improvement of profit margins; (xii) stock price;
(xiii) market share; (xiv) revenues or sales; (xv) costs; (xvi) cash flow;
(xvii) working capital and (xviii) return on assets. The foregoing criteria may
relate to the Company, one or more of its Subsidiaries or one or more of its
divisions or units, or any combination of the foregoing, and may be applied on
an absolute basis and/or be relative to one or more peer group companies or
indices, or any combination thereof, all as the Committee shall determine. In
addition, to the degree consistent with Section 162(m) of the Code (or any
successor section thereto), the performance goals may be calculated without
regard to extraordinary items. The maximum amount of a Performance-Based Award
during a calendar year to any Participant shall be $2,000,000. The Committee
shall determine whether, with respect to a performance period, the applicable
performance goals have been met with respect to a given Participant and, if they
have, to so certify and ascertain the amount of the applicable Performance-Based
Award. No Performance-Based Awards will be paid for such performance period
until such certification is made by the Committee. The amount of the
Performance-Based Award
A-7
actually paid to a given Participant may be less than the amount determined by
the applicable performance goal formula, at the discretion of the Committee. The
amount of the Performance-Based Award determined by the Committee for a
performance period shall be paid to the Participant at such time as determined
by the Committee in its sole discretion after the end of such performance
period; provided, however, that a Participant may, if and to the extent
permitted by the Committee and consistent with the provisions of Section 162(m)
of the Code, elect to defer payment of a Performance-Based Award.
9. Adjustments Upon Certain Events
Notwithstanding any other provisions in the Plan to the contrary, the
following provisions shall apply to all Awards granted under the Plan:
(a) Generally. In the event of any change in the outstanding Shares after
the Effective Date by reason of any Share dividend or split, reorganization,
recapitalization, merger, consolidation, spin-off, combination or exchange of
Shares or other corporate exchange, any distribution to shareholders of Shares
other than regular cash dividends or any similar event, the Committee in its
sole discretion and without liability to any person may make such substitution
or adjustment, if any, as it deems to be equitable, as to (i) the number or kind
of Shares or other securities issued or reserved for issuance pursuant to the
Plan or pursuant to outstanding Awards, (ii) the Option Price and/or (iii) any
other affected terms of such Awards.
(b) Change in Control. Except as otherwise provided in an Award agreement,
in the event of a Change in Control, the Committee in its sole discretion and
without liability to any person may take such actions, if any, as it deems
necessary or desirable with respect to any Award (including, without limitation,
(i) the acceleration of an Award, (ii) the payment of a cash amount in exchange
for the cancellation of an Award and/or (iii) the requiring of the issuance of
substitute Awards that will substantially preserve the value, rights and
benefits of any affected Awards previously granted hereunder) as of the date of
the consummation of the Change in Control.
10. No Right to Employment
The granting of an Award under the Plan shall impose no obligation on the
Company or any Subsidiary to continue the employment of a Participant and shall
not lessen or affect the Company's or Subsidiary's right to terminate the
employment of such Participant.
11. Successors and Assigns
The Plan shall be binding on all successors and assigns of the Company and
a Participant, including without limitation, the estate of such Participant and
the executor, administrator or trustee of such estate, or any receiver or
trustee in bankruptcy or representative of the Participant's creditors.
A-8
12. Nontransferability of Awards
Unless otherwise determined by the Committee, an Award shall not be
transferable or assignable by the Participant otherwise than by will or by the
laws of descent and distribution. An Award exercisable after the death of a
Participant may be exercised by the legatees, personal representatives or
distributees of the Participant.
13. Amendments or Termination
The Board may amend, alter or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which, (a) without the approval of
the shareholders of the Company, would (except as is provided in Section 10 of
the Plan), increase the total number of Shares reserved for the purposes of the
Plan or change the maximum number of Shares for which Awards may be granted to
any Participant or (b) without the consent of a Participant, would impair any of
the rights or obligations under any Award theretofore granted to such
Participant under the Plan; provided, however, that the Committee may amend the
Plan in such manner as it deems necessary to permit the granting of Awards
meeting the requirements of the Code or other applicable laws. Notwithstanding
anything to the contrary herein, the Board may not amend, alter or discontinue
the provisions relating to Section 9(b) of the Plan after the occurrence of a
Change in Control.
14. International Participants
With respect to Participants who reside or work outside the United States
of America and who are not (and who are not expected to be) "covered employees"
within the meaning of Section 162(m) of the Code, the Committee may, in its sole
discretion, amend the terms of the Plan or Awards with respect to such
Participants in order to conform such terms with the requirements of local law.
15. Choice of Law
The Plan shall be governed by and construed in accordance with the laws of
the State of Delaware.
16. Effectiveness of the Plan
The Plan shall be effective as of the Effective Date. If the Plan is not
approved by the shareholders of the Company prior to the first anniversary of
the Effective Date, no Awards may be granted thereafter.
HV263B DETACH HERE
PROXY
HOVNANIAN ENTERPRISES, INC.
Nominee Holder of Class B Common Stock
This Proxy is Solicited on Behalf of the Board of Directors
The undesigned 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 March 5, 1999, and at any
adjournments thereof, upon the matters set forth in the notice of meeting and
Proxy Statement dated January 15, 1999 and upon all other matters properly
coming before said meeting.
- ----------- -----------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ----------- -----------
HV263A DETACH HERE
|X| Please mark
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; (3) for the approval of the
Company's Stock Incentive Plan; and (4) 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), (3) and (4).
1. Election of Directors.
Nominees: K. Hovnanian, A. Hovnanian, P. Buchanan, A. Greenbaum,
D. McDonald, P. Reinhart, J. Sorsby, S. Weinroth
FOR WITHHELD
|_| |_|
|_| ______________________________________
For all nominees except as noted above
2. Ratification of the selection of FOR AGAINST ABSTAIN
Ernst & Young LLP as independent |_| |_| |_|
accountants for the year ended
October 31, 1999.
3. Approval of the Company's Stock FOR AGAINST ABSTAIN
Incentive Plan. |_| |_| |_|
4. In their discretion, upon other
matters as may properly come before
the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT |_|
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.
Signature:__________________Date:______ Signature:__________________Date:_______
HV364B DETACH HERE
PROXY
HOVNANIAN ENTERPRISES, INC.
Class B Common Stock
This Proxy is Solicited on Behalf of the Board of Directors
The undesigned 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 March 5, 1999, and at any
adjournments thereof, upon the matters set forth in the notice of meeting and
Proxy Statement dated January 15, 1999 and upon all other matters properly
coming before said meeting.
- ----------- -----------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ----------- -----------
HV364A DETACH HERE
|X| Please mark
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; (3) for the approval of the
Company's Stock Incentive Plan; and (4) 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), (3) and (4).
1. Election of Directors.
Nominees: K. Hovnanian, A. Hovnanian, P. Buchanan, A. Greenbaum,
D. McDonald, P. Reinhart, J. Sorsby, S. Weinroth
FOR WITHHELD
|_| |_|
|_| ______________________________________
For all nominees except as noted above
2. Ratification of the selection of FOR AGAINST ABSTAIN
Ernst & Young LLP as independent |_| |_| |_|
accountants for the year ended
October 31, 1999.
3. Approval of the Company's Stock FOR AGAINST ABSTAIN
Incentive Plan. |_| |_| |_|
4. In their discretion, upon other
matters as may properly come before
the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT |_|
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.
Signature:__________________Date:______ Signature:__________________Date:_______
HVN62B DETACH HERE
PROXY
HOVNANIAN ENTERPRISES, INC.
Class A Common Stock
This Proxy is Solicited on Behalf of the Board of Directors
The undesigned 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 March 5, 1999, and at any
adjournments thereof, upon the matters set forth in the notice of meeting and
Proxy Statement dated January 15, 1999 and upon all other matters properly
coming before said meeting.
- ----------- -----------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ----------- -----------
HVN62A DETACH HERE
|X| Please mark
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; (3) for the approval of the
Company's Stock Incentive Plan; and (4) 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), (3) and (4).
1. Election of Directors.
Nominees: K. Hovnanian, A. Hovnanian, P. Buchanan, A. Greenbaum,
D. McDonald, P. Reinhart, J. Sorsby, S. Weinroth
FOR WITHHELD
|_| |_|
|_| ______________________________________
For all nominees except as noted above
2. Ratification of the selection of FOR AGAINST ABSTAIN
Ernst & Young LLP as independent |_| |_| |_|
accountants for the year ended
October 31, 1999.
3. Approval of the Company's Stock FOR AGAINST ABSTAIN
Incentive Plan. |_| |_| |_|
4. In their discretion, upon other
matters as may properly come before
the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT |_|
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.
Signature:__________________Date:______ Signature:__________________Date:_______
HV465B DETACH HERE
PROXY
HOVNANIAN ENTERPRISES, INC.
Beneficial Owner of Class B Common Stock
This Proxy is Solicited on Behalf of the Board of Directors
The undesigned 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 March 5, 1999, and at any
adjournments thereof, upon the matters set forth in the notice of meeting and
Proxy Statement dated January 15, 1999 and upon all other matters properly
coming before said meeting.
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 benefit or account of the same beneficial
owner of such share or any Permitted Transferee.
- ----------- -----------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ----------- -----------
HV465A DETACH HERE
|X| Please mark
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; (3) for the approval of the
Company's Stock Incentive Plan; and (4) 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), (3) and (4).
1. Election of Directors.
Nominees: K. Hovnanian, A. Hovnanian, P. Buchanan, A. Greenbaum,
D. McDonald, P. Reinhart, J. Sorsby, S. Weinroth
FOR WITHHELD
|_| |_|
|_| ______________________________________
For all nominees except as noted above
2. Ratification of the selection of FOR AGAINST ABSTAIN
Ernst & Young LLP as independent |_| |_| |_|
accountants for the year ended
October 31, 1999.
3. Approval of the Company's Stock FOR AGAINST ABSTAIN
Incentive Plan. |_| |_| |_|
4. In their discretion, upon other
matters as may properly come before
the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT |_|
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.
Signature:__________________Date:______ Signature:__________________Date:_______