def14a
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 x
Filed by a
Party other than the
Registrant o
Check the
appropriate box:
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o Preliminary
Proxy Statement
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o Confidential,
for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
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x Definitive
Proxy Statement
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o Definitive
Additional Materials
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o Soliciting
Material Pursuant to §240.14a-12
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AVATAR
HOLDINGS INC.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of
Filing Fee (Check the appropriate box):
o Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title of
each class of securities to which transaction applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per unit
price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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o
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Fee paid
previously with preliminary materials:
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o
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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.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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AVATAR
HOLDINGS
INC.
201 Alhambra Circle
Coral Gables, Florida 33134
(305) 442-7000
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On June 3, 2010
To the
Stockholders of Avatar Holdings Inc.:
The Annual Meeting of Stockholders of Avatar Holdings Inc. will
be held at the Hyatt Regency Coral Gables, 50 Alhambra Plaza,
Coral Gables, Florida, on June 3, 2010, at 10:00 a.m.
local time, for the following purposes:
1. To elect eight directors.
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2.
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To approve the appointment of Ernst & Young LLP,
independent registered public accounting firm, to act as
auditors for Avatar for the year ending December 31, 2010.
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3.
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To transact such other business as properly may come before the
meeting, or any adjournment or adjournments thereof.
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The Board of Directors has fixed the close of business on
April 5, 2010 as the record date for the determination of
stockholders entitled to receive notice of, and to vote at, the
Annual Meeting or any adjournment or adjournments thereof.
Please mark your proxy if you wish to attend the Annual Meeting
in order that adequate preparations may be made. A meeting
attendance card will be mailed promptly to you to facilitate
your attendance.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING,
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE POSTAGE-PREPAID ENVELOPE PROVIDED FOR YOUR
CONVENIENCE. YOU MAY ALSO VOTE VIA INTERNET OR BY TELEPHONE IN
ACCORDANCE WITH THE INSTRUCTIONS ON YOUR PROXY CARD.
By Order of the Board of Directors,
Juanita I. Kerrigan
Vice President and Secretary
Dated: April 29, 2010.
YOU CAN VOTE IN ONE OF FOUR WAYS:
(1) Visit the Web site noted on your proxy card to vote
via the Internet;
(2) Use the telephone number on your proxy card to vote
by telephone;
(3) Sign, date and return your proxy card in the enclosed
envelope to vote by mail; or
(4) Attend the meeting in person.
TABLE OF CONTENTS
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AVATAR
HOLDINGS INC., 201 ALHAMBRA CIRCLE, CORAL GABLES, FLORIDA 33134
(305) 442-7000
PROXY
STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held On June 3, 2010
This Proxy Statement and the enclosed form of proxy are
furnished to the stockholders of Avatar Holdings Inc., a
Delaware corporation (Avatar or the
Company), in connection with the solicitation of
proxies by and on behalf of the Board of Directors of Avatar for
use at the Annual Meeting of Stockholders to be held at the
Hyatt Regency Coral Gables, 50 Alhambra Plaza, Coral Gables,
Florida, on June 3, 2010, at 10:00 a.m. local time.
This Proxy Statement and the form of proxy enclosed herewith,
and the accompanying Annual Report of Avatar for the fiscal year
ended December 31, 2009, including financial statements,
are first being mailed on or about April 29, 2010, to
stockholders of record on the close of business on April 5,
2010.
VOTING
RIGHTS AND PROXY INFORMATION
Record Date;
Voting Rights
Pursuant to the By-Laws of Avatar, the Board of Directors has
fixed the close of business on April 5, 2010 as the
record date for the determination of stockholders entitled to
notice of and to vote at the meeting or any adjournment or
adjournments thereof.
At the close of business on April 5, 2010,
11,355,451 shares of Common Stock, $1.00 par value, of
Avatar (Common Stock), which constitutes the only
class of voting securities of Avatar, were outstanding and
entitled to vote. For each share of Common Stock held of record
on the close of business on April 5, 2010, stockholders are
entitled to one vote, except in regard to the election of
directors, for which there will be cumulative voting as
described under the heading Election of Directors.
In accordance with Avatars By-Laws, the holders of a
majority of the outstanding shares of Common Stock, present in
person or represented by proxy, will constitute a quorum for the
transaction of business at the Annual Meeting.
Proxies
When a proxy is received, properly executed, in time for the
Annual Meeting, the shares represented thereby will be voted at
the meeting as directed. If no such direction is specified, such
shares will be voted: (1) FOR the election as directors of
Avatar the eight nominees named therein (unless your shares are
held in street name by a brokerage firm, in which
case your shares cannot be voted in the election of directors if
you have not provided instructions to your brokerage firm);
(2) FOR approval of the appointment of Ernst &
Young LLP, independent registered public accounting firm, as
auditors of Avatar for the year ending December 31, 2010;
and (3) in connection with the transaction of such other
business as properly may come before the meeting in accordance
with the judgment of the person or persons voting the proxy. Any
stockholder who executes a proxy may revoke it at any time prior
to its exercise by giving written notice of such revocation to
the Secretary of Avatar. In addition, a stockholder who attends
the meeting may vote in person, thereby cancelling any proxy
previously given by such stockholder.
Nominees for director will be elected by a plurality of the
votes cast (i.e., the highest number of votes cast) at the
Annual Meeting by the holders of Common Stock present in person
or by proxy and entitled to notice of, and to vote at, the
Annual Meeting. Consequently, only shares that are voted in
favor of a particular nominee will be counted toward such
nominees achievement of a plurality. Shares present at the
meeting that are not voted for a particular nominee or shares
present by proxy where the stockholder withheld authority to
vote for such nominee(s) (including broker non-votes) will not
be counted toward such nominees achievement of a plurality.
The affirmative vote of a majority of the shares of Common Stock
present in person or by proxy and entitled to notice of, and to
vote at, the Annual Meeting is necessary to ratify the
appointment of Ernst & Young LLP as auditors for the
year ending December 31, 2010. Abstentions will have the
same effect as
1
votes against such proposal because the shares are considered
present at the meeting but are not affirmative votes, and broker
non-votes will not be counted in respect of the proposal.
If you are the beneficial owner of shares held for you by a
broker, your broker must vote those shares in accordance with
your instructions. If you do not give voting instructions to
your broker, your broker may vote your shares for you on any
discretionary items of business to be voted upon at the Annual
Meeting, such as the appointment of Ernst & Young LLP
(Item 2).
If you plan to attend the meeting, please mark the box provided
on your proxy card so that we may send you an attendance card.
Stockholders who have beneficial ownership of Common Stock that
is held by a bank or broker should bring account statements or
letters from their banks or brokers indicating that they owned
Common Stock on April 5, 2010. Stockholders also may obtain
an attendance card by submitting a written request to the
Secretary of Avatar.
PRINCIPAL
STOCKHOLDERS AND SECURITY
OWNERSHIP OF MANAGEMENT
Principal
Stockholders
The following table sets forth, as of April 5, 2010, unless
noted otherwise, information with respect to each person or
entity known by the Board of Directors to be the beneficial
owner of more than 5% of the outstanding Common Stock. Except as
otherwise indicated, all shares are owned directly.
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Amount and
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Nature of
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Beneficial
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Percent of
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Name of Beneficial Owner
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Address of Beneficial Owner
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Ownership
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Class
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ODAV LLC
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One Rockefeller Plaza
20th Floor
New York, NY 10020
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2,107,763
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(1)(2)
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18.6%
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Dimensional Fund Advisors LP
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Palisades West, Building One
6300 Bee Cave Road
Austin, TX 78746
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742,460
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(3)
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6.5%
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First Manhattan Co.
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437 Madison Avenue
New York, NY 10022
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734,219
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(4)
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6.5%
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BlackRock, Inc.
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40 East 52nd Street
New York, NY 10022
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732,169
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(5)
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6.4%
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Leon Levy Foundation
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One Rockefeller Plaza
20th Floor
New York, NY 10020
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706,426
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(6)
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6.2%
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(1) Does not include shares owned by Joshua Nash, who is
Chairman of the Board of Directors of Avatar and is sole member
of Joshua Nash II LLC, the managing member of ODAV LLC, a
Delaware limited liability company (ODAV), formed in
September 2003 to hold the Common Stock owned by Odyssey
Partners, L.P. Joshua Nash has the sole power to vote and
dispose of the shares of Common Stock beneficially owned by ODAV
and, accordingly, may be deemed to own beneficially the Common
Stock owned by ODAV. Joshua Nash has expressly disclaimed any
such beneficial ownership (within the meaning of Exchange Act
Rule 13d-3(d)(1))
which exceeds the proportionate interest in the Common Stock
which he may be deemed to own as a member of ODAV. Avatar has
been advised that no other person exercises (or may be deemed to
exercise) any voting or investment control over the Common Stock
owned by ODAV. Joshua Nashs ownership of Common Stock is
indicated in the table included in Security Ownership of
Directors, Nominees and Management.
(2) By virtue of its present Common Stock ownership, ODAV
may be deemed to be a control person of Avatar
within the meaning of that term as defined in
Rule 12b-2
under the Securities Exchange Act of 1934, as amended.
(3) Based upon information set forth in Amendment
No. 3 to Schedule 13G, filed on February 8, 2010,
Dimensional Fund Advisors LP (DFA) (a
registered investment advisor) is deemed to beneficially own
742,460 shares by virtue of its service as investment
advisor to four investment companies and investment manager to
certain other commingled group trusts and separate accounts,
none of which, to DFAs knowledge, holds 5% or more of
Common Stock. DFA has sole voting power with respect to
724,214 shares and sole dispositive power with respect to
742,460 shares, and disclaims beneficial ownership of such
shares.
2
(4) Based upon information set forth in Amendment
No. 2 to Schedule 13G, filed on February 16,
2010, First Manhattan Co. (FMC) (a registered
investment adviser) is deemed to beneficially own
734,219 shares, of which FMC has sole voting and
dispositive power with respect to 37,049 shares, shared
voting power with respect to 663,652 shares, and shared
dispositive power with respect to 697,170 shares.
(5) Based upon information set forth in Amendment to
Schedule 13G, filed on January 29, 2010, BlackRock,
Inc. (a parent holding company), by virtue of its acquisition of
Barclays Global Investors, N.A. (a bank) and substantially all
of its affiliates, including Barclays Global Fund Advisors
(a registered investment adviser) (the BGI Entities)
is deemed to beneficially own 732,169 shares. BlackRock has
sole voting and dispositive power with respect to the
732,169 shares it is deemed to beneficially own.
(6) Based upon information set forth in Schedule 13G,
filed April 26, 2007, Shelby White and Elizabeth Moynihan,
trustees of the Leon Levy Foundation, may be deemed to
beneficially own the shares owned by the foundation for purposes
of
Rule 13d-3
under the Securities Exchange Act of 1934, as amended. The
Foundation, Shelby White and Elizabeth Moynihan have shared
voting and dispositive power over the shares, and beneficial
ownership of such shares is disclaimed by Shelby White and
Elizabeth Moynihan.
Security
Ownership of Directors, Nominees and Management
The following table sets forth, as of April 5, 2010,
information with respect to the outstanding shares of Common
Stock owned beneficially by each present director, nominee for
director, each of the Named Executive Officers identified herein
under the caption Summary Compensation Table, and
all present directors and executive officers of Avatar as a
group. Except as otherwise indicated, all shares are owned
directly.
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Options Exercisable
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and RSUs, Stock
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Shares Owned
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Units and 4.50%
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Total
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Directly and
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Notes Convertible
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Beneficial
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Percent of
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Name or Group
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Indirectly(1)
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within
60 days(2)
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Ownership(3)
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Class(3)
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Paul D. Barnett
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5,615
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3,729
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9,344
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*
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Milton Dresner
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4,195
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2,525
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6,720
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*
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Roger W. Einiger
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3,875
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4,821
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8,696
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*
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Gerald D. Kelfer
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230,469
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None
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230,469
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(4)(9)
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2.0
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%
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Joshua Nash
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2,109,038
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4,214
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2,113,252
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(5)
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18.6
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%
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Kenneth T. Rosen
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2,275
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840
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3,115
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*
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Joel M. Simon
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1,275
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2,930
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4,205
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*
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Beth A. Stewart
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3,837
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840
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4,677
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(6)
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*
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Jonathan Fels
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52,616
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60,000
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112,616
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(7)
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*
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Michael Levy
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95,959
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50,000
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145,959
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(8)(9)
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1.3
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%
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Randy L. Kotler
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None
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None
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None
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*
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Patricia K. Fletcher
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11,968
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None
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11,968
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*
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All current directors and executive officers as a group
(consisting of 12 persons of whom 11 beneficially own
shares of Common Stock)
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2,474,894
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69,899
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2,544,793
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(4)(5)(6)(8)(9)
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22.3
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%
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* Represents less than one percent.
(1) The information as to securities owned by directors,
officers and nominees was furnished to Avatar by such directors,
officers and nominees.
(2) Includes for each incumbent non-management director 840
restricted stock units (RSUs) awarded as additional
compensation on May 28, 2009, which RSUs become convertible
into an equal number of shares of Common Stock upon the earlier
of the first anniversary of the date of the award or the date
immediately preceding the 2010 Annual Meeting of Stockholders.
Also includes Stock Units representing deferred directors
fees, which Stock Units become issuable as shares of Common
Stock at the earlier of a date designated by the individual
director or the date of the individuals separation from
service as a director. (See Directors
Compensation.)
(3) Calculated pursuant to
Rule 13d-3(d)
of the Exchange Act. Under
Rule 13d-3(d),
shares not outstanding which are subject to options, warrants,
rights or conversion privileges exercisable within 60 days
are deemed outstanding for the purpose of calculating the number
and percentage of shares owned by such person, but are not
deemed outstanding for the purpose of calculating the percentage
owned by each other person listed. On April 5, 2010, there
were 11,355,451 shares of Common Stock outstanding.
(4) Includes 2,000 shares owned by his children, over
which shares Mr. Kelfer shares voting and dispositive
power. Of the 228,469 shares owned directly by
Mr. Kelfer, 225,356 shares are held in a non-margin
account which may be considered security for a margin account,
and 3,113 shares are held in a margin account and may be,
or may become, pledged as security for the account.
(5) Includes 840 RSUs and 3,374 Stock Units. Also includes
2,107,763 shares owned by ODAV. Mr. Nash is the sole
member of Joshua Nash II LLC, the managing member of ODAV
and, therefore, may be deemed to own beneficially the shares of
Common Stock owned by ODAV. See Notes(1) and (2) to the
preceding table included in Principal Stockholders.
(6) Shares owned directly by Ms. Stewart are held in a
margin account and may be, or may become, pledged as security
for the account.
3
(7) Includes 60,000 shares issuable upon exercise of
options. Also includes 47,708 shares issued under
Avatars equity incentive plan which were contractually
restricted until vested pursuant to the Separation
and Release Agreement with Mr. Fels, dated
December 29, 2009 (see Employment and Other
Agreements Agreements with Jonathan Fels).
Shares owned directly by Mr. Fels are held in a margin
account and may be, or may become, pledged as security for the
account.
(8) Includes 50,000 shares issuable upon exercise of
options and 1,500 shares owned by his children, over which
shares Mr. Levy has sole voting and dispositive power. Does
not include 4,750 shares issuable upon conversion of
$250,000 principal amount of 4.50% Notes as conversion
privileges currently are not exercisable within 60 days.
Shares owned directly by Mr. Levy are held in a margin
account and may be, or may become, pledged as security for the
account.
(9) Of the shares directly owned by Messrs. Kelfer and
Levy, 57,267 and 47,708 shares, respectively, represent
contractually restricted shares of Common Stock
issued under Avatars equity incentive plan. Until such
shares vest pursuant to the terms of an agreement with Avatar
and, therefore, become unrestricted, they are
forfeitable to Avatar (together with any dividends thereon) and
may not be sold. Unvested shares may be voted.
CORPORATE
GOVERNANCE AND CODES
OF BUSINESS CONDUCT AND ETHICS
Corporate
Governance Guidelines and Principles
Avatars Board of Directors has adopted Corporate
Governance Guidelines and Principles as a component of the
flexible governance framework within which the Board, assisted
by its committees, directs Avatars affairs. The Corporate
Governance Guidelines and Principles, which define the role of
the Board of Directors, are available on Avatars website
at www.avatarholdings.com.
Director
Independence
The Board of Directors has determined that all nominees for
election or reelection meet the qualification standards set
forth in Avatars Corporate Governance Guidelines and
Principles and meet the independence criteria under the rules
and regulations of The Nasdaq Stock Market, Inc.
(Nasdaq) except for Joshua Nash and Gerald D.
Kelfer. In making such determination, the Board considered
relevant facts regarding such nominee, in particular that each
nominee determined to be independent does not have a material
relationship with Avatar, either directly (other than as a
nominee
and/or
stockholder) or as a stockholder, director, officer, partner or
affiliate of an organization that has a relationship with
Avatar. The Board has further determined that all current
members of the Audit Committee meet the more stringent
independence requirements of the U.S. Securities and
Exchange Commission (SEC) and Nasdaq for Audit
Committee membership.
Code of
Business Conduct and Ethics
The Board of Directors has adopted a Code of Business Conduct
and Ethics applicable to all directors, officers and employees
of Avatar and a Supplemental Code of Ethics for the CEO, CFO and
other Senior Financial Officers. These Codes of Business Conduct
and Ethics are available on Avatars website at
www.avatarholdings.com.
Related
Person Transaction Policy
To supplement the broader provisions of Avatars Code of
Business Conduct and Ethics, the Board of Directors has adopted
a policy and procedures for review and approval or ratification
by the Audit Committee of transactions in which the Company
participates and a related person has a material
direct or indirect interest. A related person means:
each director and executive officer of the Company; any director
nominee; any greater than five percent stockholder; any
immediate family member of any of the foregoing; and any company
or another entity that employs or is controlled by any of them,
or in which any of them have a material ownership or financial
interest.
Generally under the policy, any director, executive officer or
nominee who intends to enter into a related person transaction,
and any employee of the Company who intends to cause the Company
to enter into a related person transaction, is required to
disclose all material facts regarding the proposed transaction
to the Committee.
4
The transaction will be reviewed by the Committee and, in its
discretion, approved or ratified. In connection with approving
or ratifying a transaction, the Committee considers, in light of
the relevant facts and circumstances, whether or not the
transaction is in, or not inconsistent with, the best interests
of the Company. Thus, it may consider many factors, such as the
relationship of the related person with the Company, the
materiality or significance of the transaction to the Company
and the related person, the business purpose and reasonableness
of the transaction, whether the transaction is comparable to a
transaction that could be available to the Company on an
arms-length basis, and the impact of the transaction on
the Companys business and operations. The related person
transaction policy is available on Avatars website at
www.avatarholdings.com.
[The remainder of
this page is left blank intentionally.]
5
At the Annual meeting, eight directors are to be elected for the
ensuing year and until their respective successors are duly
elected and qualified. Stockholders have cumulative voting
rights with respect to election of directors. Under cumulative
voting, each stockholder is entitled to the same number of votes
per share as the number of directors to be elected (or, for
purposes of this election, eight votes per share). A stockholder
may cast all such votes for a single nominee or distribute them
among the nominees, as such stockholder wishes, either by so
marking his ballot at the meeting, by specific voting
instructions sent to Avatar with a signed proxy, or via Internet
or by telephone in accordance with instructions on the proxy
card. In connection with the solicitation of proxies,
discretionary authority to cumulate votes is being solicited.
Unless authority to vote for the nominees for director is
withheld, it is the intention of the persons named in the
accompanying proxy to vote the proxies in such manner as will
elect as directors the nominees named below.
All of the nominees were elected at the May 28, 2009 Annual
Meeting of Stockholders. The Board of Directors met ten times
during 2009, including the annual meeting of directors held
immediately following the 2009 Annual Meeting of Stockholders.
The Board of Directors does not contemplate that any of the
persons named below will be unable, or will decline, to serve.
However, if any of such persons is unable or declines to serve,
the persons named in the accompanying proxy may vote for another
person or persons in their discretion.
The following paragraphs set forth information with respect to
each nominee for director, including positions currently held,
prior occupation and business experience for more than the past
five years. In concluding an individual should be recommended to
serve as a director, the Nominating and Corporate Governance
Committee considers each persons business and professional
skills and experience, qualifications and attributes, as well as
personal integrity and judgment. Although it does not have a
formal diversity policy, the Committee considers, among other
attributes, diversity of gender, professional experience and
skills of the individuals to be recommended to the Board for
nomination for election to the Board. Except as otherwise
indicated, the following nominees have not been principally
employed by any subsidiary or affiliate of Avatar. There are no
family relationships between any nominee, director or executive
officer of Avatar.
Paul D. Barnett, Director since May 2007
Mr. Barnett, 49, has been Managing Director at Ulysses
Management, LLC, a private investment firm, since February 2005.
Prior thereto, he was Managing Principal at Odyssey Investment
Partners, LLC, a private investment firm, from 1997 to 2004.
From 2001 to August 2005, Mr. Barnett served as Director
and Chairman of the Audit Committee of Dresser, Inc. He
currently serves on the Board of Managers for Sentry Security
Holdings, LLC, Communications Capital Group, LLC and PresAir,
LLC, private Delaware limited liability companies.
Mr. Barnetts experience and expertise in investment
management, investment banking and the securities markets are
valuable assets for Avatar when seeking financing or raising
capital.
Milton Dresner, Director since July 1995
In 1960, Mr. Dresner, 84, became the Founding Partner of
The Highland Companies, a diversified real estate development
and management organization. He also serves as a Director of
Marco Polo Pure China Fund and Corinthian Capital; and
previously served on the boards of BioTime, Inc., Childtime
Child Care, Inc., Hudson General Corporation, and Flagship
Federal Savings Bank, among others. With nearly 50 years of
experience in all facets of the real estate industry,
Mr. Dresner contributes substantial background and
knowledge to Avatars Board regarding real estate
operations.
Roger W. Einiger, Director since May 2006
Since 2001, Mr. Einiger, 62, has been President of
Hardscrabble Advisors, LLC, a private investment firm.
Previously he spent three decades at Oppenheimer & Co.
and its successor companies, most
6
recently serving as Vice Chairman. Following the sale of
Oppenheimer in 1997, he served as Vice Chairman of CIBC
Oppenheimer Corp., an investment banking and brokerage company,
and as a consultant to Canadian Imperial Bank of Commerce until
2001. Mr. Einiger previously served as a Director of BPW
Acquisition Corp. and a Director and member of the Audit
Committee of NDS Group plc. He also serves as a director or
trustee of several philanthropic and academic organizations.
During his tenure with Oppenheimer, Mr. Einiger was
responsible for finance, operations, technology, legal and
compliance, and human resources departments. His diverse
background lends valuable insight to Avatars Board and the
Audit and Compensation Committees on which he serves.
Gerald D. Kelfer, Director since October 1996
Mr. Kelfer, 64, has served, and continues to serve, as Vice
Chairman of the Board since December 1996, as President
since February 1997, as Chief Executive Officer since July 1997,
and as Chairman of the Executive Committee since May 1999. From
July 1994 to February 1997, Mr. Kelfer was a principal in
Odyssey Partners, L.P., a private investment firm. From 1985 to
1994, he was Executive Vice President, Senior General Counsel
and Director of Olympia & York Companies. His
experience and expertise in real estate management and purchase
and sale transactions make Mr. Kelfer an asset not only to
Avatars Board but also to the management of Avatars
real estate operations.
Joshua Nash, Director since September 2004
Mr. Nash, 48, has been Chairman of the Board of Avatar
since September 2004. He is the sole member of Joshua
Nash II LLC, the managing member of ODAV LLC, a private
limited liability company, formed in September 2003 to manage
its investment in Avatar. Mr. Nash has also been General
Partner of Ulysses Partners, L.P., a private investment firm,
since 1997. He was formerly a General Partner of Odyssey
Partners, L.P., a private investment firm, from 1989 until its
liquidation in December 2007. For more than five years,
Mr. Nash has managed investments, representing assets,
including real estate, in excess of $1 billion. His more
than 20 years of experience in investment management and
his financial interest in Avatar make him uniquely qualified to
serve as Avatars Chairman.
Kenneth T. Rosen, Director since September 1994
At University of California, Berkeley, Mr. Rosen, 61, has
been Professor Emeritus, Haas School of Business, since June
2005 (formerly, Professor, from 1979 to June 2005), and Chairman
of the Fisher Center for Real Estate and Urban Economics, since
1981. He is also Chairman of Rosen Real Estate Securities, LLC,
a real estate hedge fund, and Chairman of Rosen Consulting
Group, a real estate consulting business. Mr. Rosen is also
the special real estate advisor to the Davos World Economic
Forum, a trustee of the Urban Land Institute, and a member of
the boards of directors of several non-profit and for-profit
entities that deal with real estate finance and development.
Mr. Rosens more than 30 years of experience in
academia and the real estate industry enable him to make
valuable contributions to Avatars Board and its several
Committees on which he serves.
Joel M. Simon, Director since May 2004
Mr. Simon, 64, has been Partner and Principal in XRoads
Solutions Group, LLC, a national financial advisory and
consulting firm, since June 2000. He was formerly Chief
Executive Officer and President of Starrett Corporation, from
March 1998 to December 1998; Executive Vice President, Chief
Operating Officer and Director of Olympia & York
Companies (U.S.A.), from 1985 to 1996; and Senior Partner with
Margolin, Winer & Evens, LLP, a regional accounting
firm, from 1976 to 1984. Mr. Simon also served as a
Director, Chairman of the Audit Committee and member of the
Compensation Committee of Fredericks of Hollywood Group,
Inc. Mr. Simons extensive financial and operational
expertise in many industries, including real estate, make him
not only a well-qualified member of Avatars Board but also
Chairman of, and financial expert for, its Audit Committee.
7
Beth A. Stewart, Director since May 2001
Since 1998, Ms. Stewart, 53, has been Co-managing member of
Trewstar, LLC, an investment partnership. She is also Chief
Executive Officer, since August 2001, and Co-Chairman, since
October 1999, of Storetrax.com, an Internet retail real estate
service company. Her previous experience includes 12 years
in investment banking, specializing in real estate, with Goldman
Sachs & Co. Ms. Stewart is also a Director of
General Growth Properties Inc. and CarMax, Inc. She has served
as a public company director for more than 15 years,
participated in implementation of Sarbanes-Oxley programs at
three companies, and in implementation of enterprise risk
management programs at two companies. Ms. Stewarts
varied experience in finance and investment management make her
a valued member of Avatars Board and its Audit and
Nominating and Corporate Governance Committees.
INFORMATION
REGARDING THE BOARD OF DIRECTORS
AND ITS COMMITTEES
Certain
Committees of the Board
To assist it in carrying out its duties, the Board has
established various committees. Current committees and current
members thereof are as follows:
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Nominating and Corporate
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Executive Committee
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Audit Committee
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Governance Committee
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Compensation Committee
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Gerald D.
Kelfer(1)(2)
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Joel M.
Simon(1)
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Milton
Dresner(1)
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Kenneth T.
Rosen(1)
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Joshua Nash
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Roger W. Einiger
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Paul D. Barnett
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Milton Dresner
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Roger W. Einiger
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Kenneth T. Rosen
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Kenneth T. Rosen
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Roger W. Einiger
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Beth A. Stewart
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Beth A. Stewart
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(1)
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Chairman
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(2)
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Officer of Avatar
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Executive
Committee
The Executive Committee of the Board has authority to exercise
most powers of the full Board in connection with matters which
arise during the intervals between meetings of the Board. The
Executive Committee met twice during 2009.
Audit
Committee
The Audit Committee assists the Board in fulfilling its
responsibility to oversee management regarding: (i) the
conduct and integrity of Avatars financial reporting;
(ii) Avatars systems of internal accounting and
financial and disclosure controls; (iii) the
qualifications, engagement, compensation, independence and
performance of the independent auditors, their conduct of the
annual audit and their engagement for any other services;
(iv) Avatars legal and regulatory compliance;
(v) the application of Avatars related person
transaction policy; (vi) codes of business conduct and
ethics as established by management and the Board; and
(vii) the preparation of the Audit Committee Report for
inclusion in the annual proxy statement. The Committee may also
perform such other tasks as are assigned to it from time to time
by the Board. The Committee has the authority to obtain advice
and assistance from, and receive adequate resources and funding
from Avatar for, outside counsel, independent auditors or other
advisors. The Committee met six times during the fiscal year
ended December 31, 2009. The Committee was established in
accordance with Section 3(a)(58)(A) of the Securities
Exchange Act of 1934, as amended, and is governed by a written
charter approved by the Board. The charter is available on
Avatars website at www.avatarholdings.com.
All members of the Committee have been determined to be
independent (see Director Independence). The Board
has also determined that all members of the Committee are
financially literate under
8
Nasdaqs listing standards and Joel M. Simon is the
Committees audit committee financial expert,
as defined in the rules of the SEC and for purposes of
Nasdaqs listing standards.
Audit
Committee Report
The following is the report of Avatars Audit Committee
with respect to Avatars audited financial statements for
the fiscal year ended December 31, 2009:
The Committee has reviewed and discussed Avatars audited
financial statements with management.
The Committee has discussed with Ernst & Young LLP,
Avatars independent auditors, the matters required to be
discussed by Statement on Auditing Standards No. 61, as
amended (AICPA, Professional Standards, Vol. 1, AU
Section 380), as adopted by the Public Company Accounting
Oversight Board in Rule 3200T.
The Committee has also received the written disclosures and the
letter from Ernst & Young LLP required by applicable
requirements of the Public Company Accounting Oversight Board
regarding the independent accountants communications with
the Committee concerning independence, and has discussed with
Ernst & Young LLP their independence.
Based on the review and discussions referred to above, the
Committee recommended to Avatars Board of Directors that
its audited financial statements be included in Avatars
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009 for filing with
the Securities and Exchange Commission.
March 10, 2010
AUDIT COMMITTEE
Joel M. Simon, Chairman
Roger W. Einiger
Kenneth T. Rosen
Beth A. Stewart
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee assists the
Board in: (i) identifying, screening and reviewing
individuals to serve as directors and recommending candidates
for nomination for election at the annual meeting of
stockholders or to fill Board vacancies; (ii) overseeing
Avatars policies and procedures for receipt of stockholder
suggestions regarding composition of the Board and
recommendations of candidates for nomination;
(iii) overseeing implementation of Avatars Corporate
Governance Guidelines and Principles; and (iv) reviewing
Avatars overall corporate governance and recommending
changes when necessary or desirable. The Committee may also
perform such additional tasks as assigned to it by the Board.
The Committee has the authority to obtain advice and assistance
from, and receive adequate resources and funding from Avatar
for, outside counsel, consultants and other advisors. The
Committee met twice during the fiscal year ended
December 31, 2009.
All members of the Committee have been determined to be
independent (see Director Independence). The
Committee is governed by a written charter approved by the
Board. The Charter is available on Avatars website at
www.avatarholdings.com.
The Committee assesses the appropriate size of the Board,
evaluates the membership, and identifies and reviews director
nominee candidates. The Committee considers candidates for Board
membership based upon various criteria, including their business
and professional skills and experience, personal integrity and
judgment, commitment to representing the long-term interests of
stockholders and availability to participate in Board
activities. The Committee will consider candidates suggested by
its members, other Board members, management and stockholders,
and may, if necessary or appropriate, utilize the services of a
professional search firm. In order to be considered, a
recommendation from a stockholder must include the
stockholders name and contact information, the
candidates name and contact information, a
9
brief description of the candidates background and
qualifications and a statement by the candidate that he or she
is willing and able to serve on the Board. The Committee may
also require candidates to provide such other information as it
may request.
The Committee reviews periodically and recommends to the Board
for approval any changes in the compensation of non-employee
directors. The Committee has received advice from the
Companys counsel relative to the structure and terms of
director compensation. Any equity compensation awards for
non-employee directors are administered by the Committee under
Avatars Incentive Plan.
Avatars By-Laws establish advance notice procedures with
respect to nominations for election of directors for an annual
meeting (see Stockholders Proposals and Nominations
of Board Members).
Compensation
Committee
The Compensation Committee assists the Board in overseeing
management compensation policies and practices, including the
determination and approval of (i) the compensation of the
CEO and the Companys other executive officers and
(ii) incentive compensation policies and programs and the
exercise of discretion in the administration of such programs.
It also reviews and discusses with Avatars management
proposed Compensation Discussion and Analysis disclosure and
determines whether to recommend it to the Board for inclusion in
Avatars proxy statement and
Form 10-K.
The recommendation is described in a Compensation Committee
Report included in the proxy statement. The Committee may
perform such other tasks as assigned to it by the Board. The
Committee may delegate any of its responsibilities to a
subcommittee comprised solely of one or more of its members so
long as such delegation is consistent with law and applicable
rules of the SEC and Nasdaq. The Committee has the authority to
obtain advice and assistance from the Committees outside
counsel, compensation consultants and other advisors with
funding from the Company. The Committee met eight times during
the fiscal year ended December 31, 2009.
The Company generally follows the following processes and
procedures in connection with the consideration and
determination of the compensation of the executive officers.
Ultimately, the compensation of the executive officers is
determined by the Compensation Committee. The Companys
processes and procedures are not formalized but adapt to the
particular arrangement being considered. For example, a routine
discretionary annual cash bonus for a relatively small amount is
handled differently than a multi-year employment agreement with
potentially significant performance target awards. In the case
of non-routine arrangements for executive officers, including
the CEO, the CEO may discuss the proposed arrangements with the
Companys outside counsel and with one or more directors
for their advice and other input, on a preliminary basis. After
the arrangements are further refined and term sheets prepared,
the Committee meets to discuss them with the CEO. During part of
the meeting, the CEO and any other employees, if present, are
excused so that the Committee may deliberate among themselves.
At the Committees request, the Companys outside
counsel is often asked for legal advice and other guidance. The
Committee may request financial and other data from the Company
and review strategic and business plans with the CEO. The
chairman of the Committee or the Companys outside counsel
may negotiate terms with the CEO or other executive officers
(and sometimes their respective counsel). This process varies
depending on the circumstances, but the Committee meets
periodically to be updated on progress, receive revised term
sheets and other data, engage in discussion and provide further
direction. The Committee may also consult with persons with
specialized knowledge, such as the Companys Chief
Financial Officer for accounting matters and the outside
counsels tax specialists. Ultimately, the Committee meets
to make the final determination to approve the arrangements,
usually after reviewing the related documentation substantially
in final form. During the process and at its conclusion, the
Committee also provides periodic reports of its activities to
the full Board.
After discussion with the Company executives, and further to the
CEOs recommendation, the Committee acts to approve routine
compensation arrangements, including the award of discretionary
cash bonuses.
10
Certain awards to executive officers, such as the Earnings
Participation Awards, have performance goals based on financial
measures, which require the Committee to determine whether such
goals have been achieved from time to time, usually quarterly or
annually. As part of this process, the Committee usually
receives a report of Avatars independent auditors to
confirm that the calculations prepared by the Companys
management are made in accordance with the terms of the awards.
During the past several years, compensation consultants were not
involved in determining or recommending the amount or form of
executive and director compensation. During 2006, Avatar engaged
Frederick W. Cook & Co., Inc., at the request of
management on the recommendation of the Companys outside
counsel, to analyze the impact of the golden
parachute provisions of the Internal Revenue Code (that
is, Sections 280G and 4999) on existing arrangements
with executives and under several hypothetical scenarios.
Specifically, the consultant performed calculations under
hypothetical scenarios and assumptions suggested by management
with the advice of the Companys outside counsel.
The Committee is governed by a written charter approved by the
Board. The charter sets out in greater detail the specific
responsibilities of the Committee. A current copy of the charter
is available on Avatars website at www.avatarholdings.com.
Compensation
Committee Interlocks and Insider Participation
The members of the Compensation Committee during fiscal 2009
were, and currently are Messrs. Dresner, Einiger and Rosen.
None of them has been an executive officer or employee of
Avatar, and none were party to any related person transaction
with Avatar that would require disclosure in this Proxy
Statement.
Directors
Compensation
Compensation of each non-employee director of Avatar is $52,500
per annum. Each non-employee member of the Executive Committee
of Avatar receives a retainer of $2,000 per annum. Members and
the Chairman of the Audit Committee receive additional
compensation of $12,000 and $14,000 per annum, respectively.
Members and the Chairman of the Nominating and Corporate
Governance Committee receive additional compensation of $4,000
and $7,000 per annum, respectively. Members and the Chairman of
the Compensation Committee receive additional compensation of
$4,000 and $5,000 per annum, respectively.
The Nominating and Corporate Governance Committee adopted a
deferral program applicable to non-employee directors. Under the
deferral program, non-management directors may elect to defer up
to 50% of annual retainer fees, committee fees
and/or
chairperson fees, for which the director is credited with a
number of Stock Units based upon the closing price of the Common
Stock on the due date of each payment. The Stock Units become
distributable as shares of Common Stock upon the earlier of a
date designated by the individual director or the date of the
individuals separation from service as a director.
The Nominating and Corporate Governance Committee also
determined to grant annual awards of RSUs to all non-employee
directors. On May 28, 2009, each non-employee director was
awarded 840 RSUs for service as a director for the term
beginning May 28, 2009. The RSUs will vest and be converted
into an equivalent number of shares of Common Stock upon the
earlier of the first anniversary of the date of the award and
the date immediately preceding the date of Avatars 2010
Annual Meeting of Stockholders, provided that the non-employee
director is a member of the Board on such vesting date. The RSUs
will vest immediately upon the death or disability of the
non-employee director or upon a change in control of the
Company. If the non-employee director ceases to be a member of
the Board for any other reason, the RSUs will be forfeited.
11
The following table sets forth the retainer, other cash fees and
equity compensation received during the fiscal year ended
December 31, 2009, by non-management directors.
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Fees
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Earned or
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Paid in
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Stock
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All Other
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Name
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Cash(1)
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Awards(2)(3)
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Compensation
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Total
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Paul D. Barnett
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$
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56,500
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$
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14,650
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$
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71,150
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Milton Dresner
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63,500
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14,650
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78,150
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Roger W. Einiger
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69,667
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14,650
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84,317
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Joshua Nash
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54,500
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14,650
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69,150
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Kenneth T. Rosen
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73,500
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14,650
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88,150
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Joel M. Simon
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66,500
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14,650
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81,150
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Beth A. Stewart
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68,500
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14,650
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83,150
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(1)
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Includes respective amounts of
$28,250, $-0-, $34,833, $27,250, $-0-, $-0-, and $-0- which were
deferred during 2009 and represented by Stock Units under the
deferral program adopted in June 2005.
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(2)
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Represents for each director the
aggregate grant date fair value of 840 RSUs. The grant date fair
value of these RSUs is $17.44 per share, calculated in
accordance with FASB ASC Topic 718 by using the closing price of
the Common Stock on May 28, 2009, the date of grant.
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Directors
Attendance
In fiscal year 2009, all of the incumbent directors attended 75%
or more of the aggregate of their respective Board and committee
meetings.
Directors
Attendance at Annual Meetings of Stockholders
The Board encourages each member of the Board to attend each
Annual Meeting of Stockholders, but recognizes that unavoidable
circumstances may prevent attendance. All members of the Board
who were standing for election or reelection attended the 2009
Annual Meeting of Stockholders.
Communication
with the Board of Directors
A stockholder who wishes to communicate with the Board, or
specific individual directors, may direct written communication
addressed to the Board or such director or directors in care of
the Corporate Secretary, Avatar Holdings Inc., 201 Alhambra
Circle, Coral Gables, Florida 33134.
[The remainder of
this page is left blank intentionally.]
12
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
Overview
In this section of our Proxy Statement we discuss, among other
things, the overall objectives of our executive compensation
programs and the material elements of compensation awarded to,
earned by, or paid to our Named Executive Officers
(or NEOs). We identify the Named Executive Officers
in accordance with SEC rules and include each person who in 2009
served as our principal executive officer and our principal
financial officer, as well as our three other most highly
compensated executive officers in 2009. For 2009, our Named
Executive Officers were Gerald D. Kelfer, President and CEO;
Randy L. Kotler, Executive Vice President, CFO and Treasurer;
Jonathan Fels, President of our subsidiary, Avatar Properties
Inc.; Michael Levy, Executive Vice President and COO of Avatar
Properties Inc.; and Patricia K. Fletcher, Executive Vice
President and General Counsel.
Following this Compensation Discussion and Analysis
(CD&A), we present detailed tabular and
narrative information concerning the compensation of each of the
Named Executive Officers and their employment and other
agreements. This detailed information should be read in
conjunction with the CD&A.
The compensation of our Named Executive Officers should be
understood within the context of our business. We are engaged in
the business of real estate operations in Florida and Arizona.
Our residential community development activities include the
development of active adult and primary residential communities.
We also engage in a variety of other real estate related
activities, such as the operation of amenities, the sale for
third-party development of commercial and industrial land and
the operation of a title insurance agency. Most of our
development projects take many years to conceive, permit,
develop and sell. Thus, it may take an extended period of time
before a project can be viewed as profitable or not.
Most of the compensation amounts in the Summary Compensation
Table (which follows the CD&A) relate to arrangements with
our NEOs that were established several years ago (with the
exception of arrangements with Mr. Kotler and
Ms. Fletcher, who joined the Company in 2007). In 2006,
Avatar achieved record results for both revenue and net profit,
and our stock price reached new highs. However, our industry is
highly cyclical and is affected by general economic conditions
and other factors beyond our control. Thus, in 2007, our results
reflected the continued deterioration of conditions in the
credit markets and in the Florida and Arizona housing markets.
Although our results significantly declined in 2007, we did
continue to operate at a net profit for that year, and until the
summer of 2007, our stock continued to trade at prices near or
at new highs. In 2008, the deterioration in credit and housing
markets accelerated, bringing development of our active adult
and primary residential communities to their lowest level in
several years. The prevailing adverse economic conditions
continued to affect our business throughout 2009 and contributed
to our net loss and lower stock price levels in 2009.
The compensation of all of our executive officers, including
NEOs, is overseen and determined by the Compensation Committee
of our Board of Directors. Each member of the Committee is
independent in accordance with applicable rules of The Nasdaq
Stock Market. The Committee works with the CEO to establish the
Companys executive compensation philosophy, policies and
programs. For more information about the Committees
responsibilities and processes and the involvement of the CEO,
see Information Regarding the Board of Directors and Its
Committees Compensation Committee above.
Objectives of Our
Compensation Programs and What They Are Designed To Reward
Our compensation programs are intended to attract and retain
executives, to motivate and reward them for achieving the
Companys long-term goals, and to align their interests
with those of our stockholders.
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In order to retain the services of our executives, our
compensation practices should be competitive with those of other
employers with whom we compete for talent.
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Avatar pays for performance. This means that
our compensation program is designed to recognize an
executives contribution that has led to the attainment of
corporate goals.
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Our compensation program is designed to motivate executives to
achieve results in a manner that builds long-term stockholder
value. An equity component of total compensation is included to
align the interests of the executives with the interests of our
stockholders.
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How The Various Kinds of Compensation Are Determined and
Allocated to Form A Complete Package
The objectives described above are supported by the three
primary elements of our compensation program for NEOs: base
salaries, annual cash bonuses and performance-based cash and
equity awards. The limited perquisites provided to our NEOs are
also available to many of our other employees.
While there are several elements to the compensation program,
they are evaluated as a whole by our Compensation Committee in
making its determinations. We do not have any specific policies
or parameters for allocating between cash and non-cash
compensation or with respect to the duration of compensation
arrangements. In general, the Compensation Committee has a
balanced approach, taking into account our business plan and the
responsibilities of the particular executive.
Salaries
and Bonuses
Salaries are a necessary part of any compensation program and
paying reasonable salaries is an important aspect of attracting
and retaining qualified executives. Annual cash bonuses further
the objective of rewarding individual contributions and the
achievement of corporate and project goals. In setting salaries
and bonuses, we have not established any specific target levels
based on peer group analyses or benchmarking studies. However,
we believe that our market for executive talent is competitive,
and we take this into account in the establishment of a total
compensation package.
Except for Messrs. Kelfer, Fels, Levy and Kotler, bonus
amounts are usually discretionary and determined subjectively.
Factors used in determining the amounts often vary widely from
person to person, since they principally relate to individual
performance.
The base salary and annual bonus amounts for
Messrs. Kelfer, Kotler, Fels and Levy and Ms. Fletcher
were established in connection with the negotiation of their
respective employment agreements. Each agreement specifies a
salary and a minimum annual cash bonus amount.
Mr. Kelfers salary and bonus have been unchanged
since 2000. The salaries of Messrs. Fels and Levy have been
unchanged since 2003, and their bonuses have been unchanged
since 2005, the last time their compensation arrangements were
significantly modified. The salaries of Mr. Kotler and
Ms. Fletcher, each hired in 2007, and the minimum bonus for
Mr. Kotler, were unchanged for 2008. For 2009, as part of
its ongoing program to reduce expenses, the Company reduced the
compensation of most of its employees whose annual compensation
exceeds $30,000. Reductions range from 4% to 10%, depending upon
the level of compensation, and include those employees with
written employment agreements who have agreed to such
reductions. The annual base salaries of Messrs. Kelfer,
Fels and Levy were reduced from $500,000 to $450,000 and
Mr. Kotlers base salary was reduced from $350,000 to
$315,000. In addition, the annual bonuses, payable to
Messrs. Kelfer, Fels and Levy in December 2009, of
$500,000, $400,000 and $400,000, respectively, were reduced by
10% on the amounts to be accrued from April 13 through
December 31, 2009; and bonuses of $465,400, $372,320 and
$372,320, respectively, were paid. Further with respect to
Mr. Fels, in view of the continuing adverse effects of the
economic downturn on the Companys homebuilding operations,
on December 29, 2009, the Company entered into a Separation
and Release Agreement with Mr. Fels. Mr. Fels resigned
as of December 31, 2009, at which time he received $450,000
as cash compensation equal to 50% of the amount contractually
payable to him for the calendar year 2010. For further
description of the agreements with Mr. Fels, see
Employment and Other Agreements Agreements
with Jonathan Fels below.
In establishing the NEOs respective aggregate salary and
bonus, we considered the potentially adverse effects of
Section 162(m) of the Internal Revenue Code. See Tax
and Accounting Considerations below in this CD&A.
14
Performance-based
Cash and Equity Awards
A significant component of our compensation program for most
NEOs is their opportunity to receive performance-based cash or
equity awards. We use these awards to motivate executives toward
achieving long-term corporate goals that are consistent with the
Companys business plans. We also use them both to align
the executives interests to those of our stockholders and
to retain our executives. Like salary and bonus, we have not
established any specific target levels for incentive
compensation based on peer group analyses or benchmarking
studies. However, we aim to set reasonable awards within the
framework of a total compensation package. The specific types of
awards (for example, cash or equity) and performance objectives
(for example, stock price or gross profit) and periods (for
example, annual or multi-year) are tailored for the recipient.
In determining amounts of the awards, consideration may be given
to numerous factors, including anticipated future results of
operations and the executives anticipated contributions
toward achieving such results. Amounts may also be based upon
the achievement of specified stock prices and the
executives continued employment through the vesting
period. The Compensation Committee has not established a formal
policy as to when grants are made. Awards are usually granted at
a meeting of the Committee, and the members of the Committee may
have material non-public information concerning the Company at
that time.
Kelfer, Fels and Levy. In recent years,
Messrs. Kelfer, Fels and Levy have been awarded relatively
similar performance-based awards, with Mr. Kelfer, our CEO,
generally being eligible to receive a larger amount than Messrs
Fels and Levy, consistent with his greater overall
responsibilities. These awards generally consist of earnings
participation awards and restricted stock unit (RSU)
awards. No new awards were made to Messrs. Kelfer, Fels and
Levy since 2005.
Earnings participation awards relate to the Companys
financial performance over a period of time, generally several
years. The award may pay out in cash or shares of stock
depending on its specific terms. In the recent past, the awards
generally gave the executive the opportunity to receive an
annual cash payment based on a percentage of the Companys
actual gross profit (as defined) each year over
preestablished levels. In addition, the executive may also
receive an additional amount based on a percentage of the
Companys actual cumulative gross profit over a
preestablished level during the performance period.
Messrs. Kelfer, Fels and Levy received an award in 2003
covering (after an amendment in 2005) the period
2003-2007,
and another award in 2005 covering the
2008-2010
performance period. In establishing the parameters of these
awards, including the threshold gross profit levels, the
Compensation Committee considered, among other things, the
Companys long-term business plans. A gross profit measure,
essentially the Companys net income plus taxes and certain
other adjustments, was selected because it is a fundamental
indication of corporate performance and relates to the entire
Company, in which they have a significant role. These awards
also include annual and cumulative caps that limit the amount
that can be paid to the executives. Further, in the event of a
restatement of the Companys financial statements, the
awards give us the right to recover amounts paid to the
executives in excess of that to which they were entitled (after
giving effect to the restatement). See Employment and
Other Agreements for a description of these awards to
Messrs. Kelfer, Fels and Levy, including the preestablished
gross profit levels.
An RSUs value is directly related to the price of our
Common Stock. Prior to the executive receiving any shares of
stock under an RSU award, generally two conditions must be
satisfied. A stock price hurdle must be attained, and
thereafter, the grant must vest on completion of the employment
obligations. The hurdle prices are set at significant premiums
to the then market price of our Common Stock, and the vesting
date is usually several years following the date of award. For
example, in the case of the three RSU awards made to
Messrs. Kelfer, Fels and Levy in 2005, the hurdle
prices $65.00, $72.50 and $80.00 per
share reflect an increase in Avatars stock
price of approximately 35%, 52% and 68%, respectively, over the
closing price of the Common Stock on the date the Compensation
Committee approved the terms of the RSU agreements. The awards
generally do not vest until the expiration of the
executives employment contract (in 2010 for Mr. Levy
and in 2011 for Mr. Kelfer), provided in each case he is
still employed by Avatar on that date (except under certain
limited circumstances). (See Salaries and Bonuses
above with respect to Mr. Fels.) As a result of the
performance of the Companys stock in 2006 and early 2007,
all
15
remaining hurdle price conditions were satisfied. (See
RSUs and Restricted Common Stock Outstanding at 2009
Fiscal Year-End below. )
Kotler and Fletcher. Consistent with our
compensation objectives described above, upon commencing
employment in 2007, Mr. Kotler and Ms. Fletcher were
each given an opportunity to receive performance-conditioned
RSUs. Mr. Kotler received a total of 7,500 RSUs, in three
2,500 unit tranches with the hurdle prices of $80.86,
$84.71 and $88.56 per share, respectively reflecting
an increase in Avatars stock price of approximately 5%,
10% and 15%, respectively, over the closing price of the Common
Stock on the date the Compensation Committee approved the terms
of the RSU agreements. Ms. Fletcher received 18,900 RSUs
with a hurdle price of $72.50 per share reflecting
an increase in Avatars stock price of approximately 14%
over the closing price of the Common Stock on the date the
Compensation Committee approved the terms of the RSU agreement.
Similar to the RSUs awarded in the past to Messrs. Kelfer,
Fels and Levy, the awards generally do not vest until the
expiration of the executives employment contract (in 2009
for Ms. Fletcher and in 2010 for Mr. Kotler), provided
in each case the executive is still employed by Avatar on that
date (except under certain limited circumstances). As a result
of the performance of the Companys stock in 2007, the
hurdle price condition for Ms. Fletchers RSU award
was satisfied.
Conversion
of Certain Unvested RSUs to Restricted Stock
On December 22, 2008, each NEOs outstanding unvested
RSUs for which the applicable hurdle price condition had been
satisfied were, in effect, converted into restricted shares of
Common Stock. On such date, each NEO made an Internal Revenue
Code Section 83(b) election (the Section 83(b)
election) with respect to all such shares of restricted
stock, Avatar agreed to vest a number of shares of restricted
stock having a value approximately equal to the tax withholding
amount required as a result of the Section 83(b) election,
at the minimum statutory withholding rates applicable to the
employee, and such vested shares were reacquired by Avatar in
satisfaction of the NEOs tax withholding. The terms,
conditions and restrictions of the restricted stock, including
the vesting and forfeiture provisions are otherwise
substantially the same as those that were applicable to the RSUs
prior to conversion except that each NEO, as an owner of this
restricted stock, generally has the rights of an Avatar common
stockholder, including voting and dividend rights (except that
dividends on unvested shares of restricted stock generally are
forfeited unless such shares ultimately vest). Restricted shares
of Common Stock issued to Mr. Fels and Ms. Fletcher
vested as of December 31, 2009. (See Option Exercises
and Stock Vested in 2009 below.) The conversion of RSUs to
restricted stock and the partial accelerated vesting for tax
withholding created a substantially cash neutral transaction
whereby, without requiring any current cash outlay by an NEO,
such NEO has an opportunity to receive favorable capital gains
tax treatment in the future (upon sale of restricted stock
following vesting).
Tax and Accounting
Considerations
The Company considers the tax consequences of all elements of
its compensation program on both the executives and the Company.
In particular, we consider the effects of Section 162(m) as
well as Sections 280G and 4999 of the Internal Revenue
Code. Section 162(m) of the Internal Revenue Code could
potentially limit the federal income tax deductions to be taken
by the Company for compensation paid to the CEO and to each of
the other three most highly compensated NEOs (other than the
CFO). The general rule is that annual compensation paid to any
of these executives will be deductible by Avatar only to the
extent that it does not exceed $1,000,000 (per person) or
qualifies as performance-based compensation.
Generally, we intend that compensation paid to executives will
comply with requirements of Section 162(m) so that Avatar
will receive a full federal tax deduction. For example, we have
stockholder-approved incentive plans pursuant to which the
Compensation Committee grants awards that are intended to
qualify as performance-based under Section 162(m). However,
we may decide to make non-deductible payments or awards when
circumstances warrant.
In the event of a change of control of the Company,
Section 280G could potentially limit the federal tax
deductions to be taken for certain compensation payments to an
executive who could be subject to
16
additional taxes (Section 4999). These provisions of the
tax code are sometimes referred to as the golden
parachute provisions. In general, if the total amount of
payments to an individual that are contingent upon a change of
control of Avatar (within the meaning of Section 280G),
including payments under our incentive plans that vest upon a
change in control, equals or exceeds three times the
executives base amount (generally, the
individuals average annual compensation for the five
calendar years preceding the change of control), then, subject
to certain exceptions, the portion of such payments in excess of
the base amount may be treated as parachute payments
under Section 280G. A portion of such payments would not be
deductible by Avatar, and the executive would be subject to a
20% excise tax on such portion of the payments. In 2006 we
evaluated the potential effects of the golden parachute
provisions and revised our compensation arrangements with
Messrs. Kelfer, Fels and Levy in order to reduce the
likelihood of lost deductions and the imposition of excise taxes
should a change of control transaction occur. However, there can
be no assurance that payments actually received by each of the
executives in connection with a change in control transaction,
if one were to occur, will be deductible by Avatar or will not
be subject to an excise tax. The ultimate determination would
depend on various factors at the time a change in control
transaction occurs, including transaction price, the actual base
amount and other variables that cannot presently be predicted.
The Company accounts for stock-based compensation in accordance
with the requirements of ASC Topic 718 (ASC 718),
which for example, requires stock options to be expensed. The
adoption of ASC 718 has not affected our compensation program
for NEOs.
Compensation
Committee Report
The Compensation Committee of the Board of Directors of Avatar
has reviewed and discussed the foregoing Compensation Discussion
and Analysis with Avatars management. Based on such review
and discussion, the Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this Proxy
Statement and Avatars Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009.
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April 20, 2010
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COMPENSATION COMMITTEE
Kenneth T. Rosen, Chairman
Milton Dresner
Roger W. Einiger
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[The remainder of
this page is left blank intentionally.]
17
Summary
Compensation Table
The following table presents 2009, 2008 and 2007 compensation
information regarding the Companys Chief Executive
Officer, Chief Financial Officer and each of the three other
most highly compensated executive officers on December 31,
2009 (the Named Executive Officers or
NEOs).
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Non-Equity
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Incentive
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Name and Principal
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Stock
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Option
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Plan
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All Other
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Occupation
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Year
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Salary
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Bonus
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Awards(5)
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Awards
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Compensation
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Compensation(8)
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Total
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Gerald D. Kelfer,
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2009
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$
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473,077
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(1)(2)
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$
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465,400
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(1)(2)
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$
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$
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$
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$
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4,166
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$
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942,643
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President, CEO &
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2008
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500,000
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500,000
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16,522
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1,016,522
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Chairman of Executive
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2007
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500,000
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500,000
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13,273
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1,013,273
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Committee
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Randy L. Kotler,
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2009
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331,154
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(1)(2)
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100,000
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(1)
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14,429
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445,583
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Executive Vice President,
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2008
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350,000
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100,000
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18,346
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468,346
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Treasurer and
CFO(4)
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2007
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168,269
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100,000
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512,675
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(6)
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5,574
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786,518
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(6)
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Jonathan Fels,
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2009
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723,077
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(1)(2)(3)
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572,320
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(1)(2)(3)
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2,429
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1,297,826
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(3)
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President, Avatar
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2008
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500,000
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400,000
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14,820
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914,820
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Properties Inc.
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2007
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500,000
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400,000
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13,971
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913,971
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Michael Levy,
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2009
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473,077
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(1)(2)
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372,320
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(1)(2)
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1,439
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846,836
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Executive Vice
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2008
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500,000
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400,000
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14,642
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914,642
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President and COO,
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2007
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500,000
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400,000
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13,756
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913,756
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Avatar Properties Inc.
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Patricia K. Fletcher,
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2009
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713,461
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(1)
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1,956
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715,417
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Executive Vice
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2008
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700,000
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11,450
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711,450
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President and
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2007
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700,000
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1,582,065
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(7)
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7,382
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2,289,447
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(7)
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General Counsel
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(1)
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For discussion of Avatars
employment agreements with Named Executive Officers, see
Employment and Other Agreements.
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(2)
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As part of its ongoing program to
reduce expenses, the Company reduced the compensation of most of
its employees, including those with written employment
agreements who agreed to such reductions. As of April 13,
2009, the annual base salaries of Messrs. Kelfer, Fels and
Levy were reduced by 10% to $450,000, and Mr. Kotlers
annual base salary was reduced by 10% to $315,000. In addition,
the annual bonuses payable to Messrs. Kelfer, Fels and Levy
in December 2009 of $500,000, $400,000 and $400,000,
respectively, were reduced by 10% on amounts accrued from April
13 through December 31, 2009. (See Compensation
Discussion and Analysis Salaries and Bonuses
above.)
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(3)
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Pursuant to the Separation and
Release Agreement, Mr. Fels resigned as of
December 31, 2009, and he received $450,000 as cash
compensation equal to 50% of the amount contractually payable to
him for calendar year 2010. (See Compensation Discussion
and Analysis Salaries and Bonuses above.)
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(4)
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Mr. Kotler commenced
employment on July 9, 2007 as Executive Vice President and
Chief Financial Officer and was elected Treasurer on
August 3, 2007. Prior to joining Avatar, Mr. Kotler
had been an executive officer at TOUSA, Inc., which filed a
voluntary petition for bankruptcy under Chapter 11 on
January 29, 2008.
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(5)
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Represents the aggregate grant date
fair value of RSU awards, calculated in accordance with FASB ASC
Topic 718 (but disregarding estimates of forfeitures, if any).
The valuation assumptions used in calculating these values are
discussed in Note L of Avatars financial statements
in the
Form 10-K
for the year ended December 31, 2009, as filed with the
SEC. These amounts do not represent actual amounts paid or to be
realized.
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(6)
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RSUs granted to Mr. Kotler
have not satisfied applicable hurdle price conditions and have
not vested. (See RSUs and Restricted Common Stock
Outstanding at 2009 Fiscal Year End below.)
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(7)
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The grant to Ms. Fletcher
became fully vested as of December 31, 2009. (See
Option Exercises and Stock Vested in 2009 below.)
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(8)
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Represents an amount for
(i) perquisites, (ii) for the Companys
contribution to the 401(k) Plan and (iii) premiums paid by
the Company for group term life. Perquisites represent
(i) personal use of a Company-leased automobile or a cash
allowance for a personal automobile and Company payment for the
gas of the automobile, and (ii) limited tax and/or legal
assistance. The amounts reflected in the table for perquisites
are Avatars incremental cost. For automobile-related
perquisites, the incremental cost is determined by multiplying
Avatars
out-of-pocket
cost by the percentage of personal use, as determined by
mileage. There is no incremental cost associated with tax and/or
legal assistance. (See additional table below.) Avatar also
provides group life, health, hospitalization and medical
reimbursement plans which do not discriminate in scope, terms or
operation in favor of officers and are available to all
full-time employees.
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Company
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Group Term
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Contribution
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Automobile
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Life insurance
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Name
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Year
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to 401(k) Plan
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Related
|
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Premiums
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Total
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Gerald D. Kelfer
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2009
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$
|
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$
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899
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$
|
3,267
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$
|
4,166
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2008
|
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3,450
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|
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11,488
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1,584
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16,522
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2007
|
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3,375
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|
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8,314
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|
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1,584
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13,273
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|
|
|
|
|
|
|
Randy L. Kotler
|
|
|
2009
|
|
|
|
|
|
|
|
14,055
|
|
|
|
374
|
|
|
|
14,429
|
|
|
|
|
2008
|
|
|
|
1,257
|
|
|
|
16,849
|
|
|
|
240
|
|
|
|
18,346
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
5,500
|
|
|
|
74
|
|
|
|
5,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jonathan Fels
|
|
|
2009
|
|
|
|
|
|
|
|
300
|
|
|
|
2,129
|
|
|
|
2,429
|
|
|
|
|
2008
|
|
|
|
3,450
|
|
|
|
10,338
|
|
|
|
1,032
|
|
|
|
14,820
|
|
|
|
|
2007
|
|
|
|
3,375
|
|
|
|
9,564
|
|
|
|
1,032
|
|
|
|
13,971
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Levy
|
|
|
2009
|
|
|
|
|
|
|
|
300
|
|
|
|
1,139
|
|
|
|
1,439
|
|
|
|
|
2008
|
|
|
|
3,450
|
|
|
|
10,640
|
|
|
|
552
|
|
|
|
14,642
|
|
|
|
|
2007
|
|
|
|
3,375
|
|
|
|
10,021
|
|
|
|
360
|
|
|
|
13,756
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patricia K. Fletcher
|
|
|
2009
|
|
|
|
|
|
|
|
300
|
|
|
|
1,656
|
|
|
|
1,956
|
|
|
|
|
2008
|
|
|
|
3,450
|
|
|
|
7,448
|
|
|
|
552
|
|
|
|
11,450
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
7,050
|
|
|
|
332
|
|
|
|
7,382
|
|
18
Grants of
Plan-Based Awards in 2009
No plan-based awards were granted to the Named Executive
Officers in 2009.
Outstanding
Equity Awards at 2009 Fiscal Year End
The following table provides information on the equity awards to
the Named Executive Officers, which were outstanding at
December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Units of
|
|
|
Market Value of
|
|
|
|
|
|
|
Options
|
|
|
Options
|
|
|
Exercise
|
|
|
Option
|
|
|
Stock That
|
|
|
Shares or Units of
|
|
|
|
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Stock That Have
|
|
|
|
|
Name
|
|
(#)
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
Vested
|
|
|
Not Vested
($)(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gerald Kelfer
|
|
|
None
|
|
|
|
None
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
57,267
|
(2)
|
|
$
|
974,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Randy L. Kotler
|
|
|
None
|
|
|
|
None
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
7,500
|
|
|
|
127,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jonathan Fels
|
|
|
60,000
|
(1)
|
|
|
None
|
|
|
$
|
25.00
|
|
|
|
3/13/13
|
|
|
|
None
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Levy
|
|
|
50,000
|
(1)
|
|
|
None
|
|
|
$
|
25.00
|
|
|
|
3/13/13
|
|
|
|
47,708
|
(2)
|
|
|
811,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patricia K. Fletcher
|
|
|
None
|
|
|
|
None
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Options granted to each of
Messrs. Fels and Levy vested and became exercisable on
December 31, 2007.
|
|
(2)
|
|
Represents shares of restricted
Common Stock issued on conversion of RSUs which had met the
respective hurdle prices but have not met the respective vesting
dates. (See Compensation Discussion and Analysis
above.)
|
|
(3)
|
|
Pursuant to the Separation and
Release Agreement with Mr. Fels, 47,708 shares of
restricted Common Stock vested as of December 31, 2009 and
were issued to Mr. Fels as unrestricted Common Stock;
however, Mr. Fels cannot sell, pledge, gift, transfer or
otherwise hypothecate these shares prior to December 31,
2010. (See Employment and Other Agreements
Agreements with Jonathan Fels.)
|
|
(4)
|
|
Calculated by multiplying unvested
shares by $17.01, the closing price of the Common Stock on
December 31, the last business day of 2009.
|
RSUs and
Restricted Common Stock Outstanding at 2009 Fiscal Year End
The following tables set forth the award date, number of units
awarded, hurdle price per share, date the hurdle price was
achieved and vesting date for units awarded and for shares of
restricted Common Stock issued to Named Executive Officers and
unvested as of 2009 fiscal year end.
RSU Award to
Mr. Kotler
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Award Date
|
|
# RSUs
|
|
|
Hurdle Price
|
|
|
Date Achieved
|
|
|
Vesting
Date(2)
|
|
|
|
|
7/9/2007
|
|
|
2,500
|
|
|
$
|
80.86
|
|
|
|
|
|
|
|
7/8/2010
|
|
7/9/2007
|
|
|
2,500
|
|
|
$
|
84.71
|
|
|
|
|
|
|
|
7/8/2010
|
|
7/9/2007
|
|
|
2,500
|
|
|
$
|
88.56
|
|
|
|
|
|
|
|
7/8/2010
|
|
Restricted
Common
Stock(1)
|
|
|
|
|
|
|
|
|
Name
|
|
#
Shares
|
|
|
Vesting
Date(2)
|
|
|
Gerald D. Kelfer
|
|
|
57,267
|
|
|
|
06/30/2011
|
|
Michael Levy
|
|
|
47,708
|
|
|
|
12/31/2010
|
|
Jonathan Fels
|
|
|
None
|
(3)
|
|
|
|
|
Patricia K. Fletcher
|
|
|
None
|
(3)
|
|
|
|
|
|
|
|
|
(1)
|
|
For
information regarding issuance of restricted Common Stock, see
Compensation Discussion and Analysis above.
|
|
(2)
|
|
Subject
to earlier vesting or forfeiture as described under
Employment and Other Agreements.
|
|
(3)
|
|
See
following table with respect to shares vested.
|
19
Option
Exercises and Stock Vested in 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
|
Shares
|
|
|
|
|
|
|
Acquired
|
|
Value Realized
|
|
Acquired
|
|
Value Realized
|
|
|
|
|
on Exercise
|
|
on Exercise
|
|
on Vesting
|
|
on Vesting
|
|
|
Name
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
|
|
Gerald D. Kelfer
|
|
|
None
|
|
|
$
|
|
|
|
|
None
|
|
|
$
|
|
|
|
|
Randy L. Kotler
|
|
|
None
|
|
|
|
|
|
|
|
None
|
|
|
|
|
|
|
|
Jonathan Fels
|
|
|
None
|
|
|
|
|
|
|
|
47,708
|
|
|
|
1,311,493(1
|
)
|
|
|
Michael Levy
|
|
|
None
|
|
|
|
|
|
|
|
None
|
|
|
|
|
|
|
|
Patricia K. Fletcher
|
|
|
None
|
|
|
|
|
|
|
|
11,968
|
|
|
|
329,000(1
|
)
|
|
|
|
|
|
|
(1)
|
|
Certain unvested RSUs for which
applicable hurdle price conditions had been satisfied were, in
effect, converted into restricted shares of Common Stock on
December 22, 2008. Each of Mr. Fels and
Ms. Fletcher made an Internal Revenue Code
Section 83(b) election, based on the closing price of the
Common Stock on December 22, 2008. (See Compensation
Discussion and Analysis above.) Amounts shown are based on
$27.49 per share, the closing price of the Common Stock on
December 22, 2008. Shares issued to Mr. Fels were
contractually restricted until vested pursuant to
the Separation and Release Agreement with Mr. Fels, dated
December 29, 2009 (see Employment and Other
Agreements Agreements with Jonathan Fels.);
and 11,968 shares issued to Ms. Fletcher were
contractually restricted until vested on
December 31, 2009 (see Employment and Other
Agreements Agreements with Patricia K.
Fletcher).
|
Equity
Compensation Plan Information
The following table summarizes information about the options,
warrants and rights and other equity compensation under
Avatars equity plans on December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities to
|
|
Weighted-average
|
|
Number of securities remaining
|
|
|
be issued upon
|
|
exercise
|
|
available for future issuance
|
|
|
exercise of
|
|
price of outstanding
|
|
under equity compensation
|
|
|
outstanding options,
|
|
options, warrants and
|
|
plans (excluding securities
|
|
|
warrants and rights
|
|
rights
|
|
reflected in column (a))
|
Plan Category
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Equity compensation plans approved by security holders
|
|
|
166,175(1
|
)
|
|
$
|
25.00
|
(2)
|
|
|
476,721
|
|
Equity compensation plans not approved by security holders
|
|
|
none
|
|
|
|
|
|
|
|
none
|
|
Total
|
|
|
166,175(1
|
)
|
|
$
|
25.00
|
(2)
|
|
|
476,721
|
|
|
|
|
|
(1)
|
|
Includes 44,280
performance-conditioned RSUs, and 11,895 stock units issuable to
those directors who elected to participate in Avatars
deferred compensation plan.
|
|
(2)
|
|
Not applicable to RSUs.
|
Nonqualified
Deferred Compensation for 2009
Avatar does not maintain a nonqualified deferred compensation
plan for its employees, including the Named Executive Officers.
However, Avatar permits the Named Executive Officers to defer
the receipt of payments under the Incentive Plan. There were no
deferrals of compensation by any of the Named Executive Officers
during 2009, or in any prior year.
Pension
Benefits for 2009
Avatar does not sponsor any defined benefit pension plan for its
employees, including the Named Executive Officers.
Employment
and Other Agreements
General
We employ each of the Named Executive Officers pursuant to
written employment agreements. We also have various other
compensatory agreements with our NEOs. These agreements are
discussed below in greater detail.
20
Agreements with
Gerald D. Kelfer
Amended and
Restated Employment Agreement
On April 15, 2005, Avatar entered into an Amended and
Restated Employment Agreement with Mr. Kelfer, pursuant to
which until June 30, 2011, he is to be employed as
Avatars President and Chief Executive Officer, and
continue to be nominated as a director of Avatar. The Agreement
was amended on December 26, 2006 and on December 22,
2008. Mr. Kelfer receives an annual base salary of $500,000
and an annual bonus of $500,000 pursuant to the Agreement. The
2008 amendment did not make any material changes and was
intended principally to ensure compliance with Section 409A
of the Internal Revenue Code. Effective April 13, 2009,
Mr. Kelfer agreed to reduce (i) his base salary rate
by 10%, from $500,000 to $450,000 per annum and (ii) his
annual bonus by 10%, effective April 13, from $500,000 to
$465,400 for 2009.
For information regarding the terms of the agreement relating to
potential payments to Mr. Kelfer upon termination of
employment or a change in control of the Company, see
Potential Payments Upon Termination or
Change-in-Control
below.
2008-2010
Earnings Participation Award Agreement
On April 15, 2005, Avatar entered into an Earnings
Participation Award Agreement with Mr. Kelfer, pursuant to
which he was granted an annual and cumulative cash award
relating to the achievement of performance goals during the
2008-2010
fiscal years. The annual cash award entitles Mr. Kelfer to
a cash payment with respect to each fiscal year beginning 2008
and ending 2010 equal to two and one-quarter percent of
Avatars gross profit over preestablished levels as
determined by the Compensation Committee. For purposes of the
2008-2010
Earnings Participation Award Agreement, gross profit generally
means Avatars net income, plus taxes and incentive
compensation paid to Messrs. Kelfer, Fels and Levy under
their respective
2008-2010
Earnings Participation Award Agreements with Avatar and minus
certain excluded amounts. The payments to Mr. Kelfer
pursuant to the annual cash award may not exceed $1,800,000 for
each of the first two fiscal years of the performance period and
$2,200,000 for the third fiscal year of the performance period.
However, the aggregate payments pursuant to the annual cash
award for the three years may not exceed $5,400,000.
The cumulative cash award entitles Mr. Kelfer to receive a
cash payment equal to one and one-half percent of the excess of
actual gross profit (as defined) from January 1, 2008
through December 31, 2010 over the established target gross
profit of $390,000,000. The payment pursuant to the cumulative
cash award may not exceed $1,200,000.
An amendment to the agreement on December 22, 2008, did not
make any material changes and was intended principally to ensure
compliance with Section 409A of the Internal Revenue Code.
For information regarding the terms of the agreement relating to
potential payments to Mr. Kelfer upon termination of
employment or a change in control of the Company, see
Potential Payments Upon Termination or
Change-in-Control
below.
Restricted Stock
Unit Agreements
Mr. Kelfer has been awarded over time the opportunity to
receive a total of 365,000 performance-conditioned RSUs,
consisting of 100,000 units awarded on December 7,
1998 and 50,000 units awarded on October 20, 2000,
which vested and were converted into shares of Common Stock as
of December 22, 2005; an aggregate of 125,000 units
awarded on March 27, 2003, which vested and were converted
into shares of Common Stock as of December 22, 2008; and an
aggregate of 90,000 units awarded on April 15, 2005.
Each of the RSUs awards to Mr. Kelfer is conditioned upon
(i) the closing price of the Common Stock being at least
equal to a specified hurdle price for 20 trading days out of 30
consecutive trading days during the period beginning on the
award date and ending on the vesting date and (ii) the
continued employment
21
of Mr. Kelfer at the time the foregoing condition is
satisfied. The hurdle price performance condition for all units
was satisfied. On December 22, 2008, Avatar entered into an
Amended and Restated Stock Unit Agreement with Mr. Kelfer.
In effect, the amendment converted the 90,000 RSUs awarded on
April 15, 2005 into shares of Common Stock that are subject
to restrictions (similar to those applicable to the units).
Until such shares vest pursuant to the terms of the Agreement,
they are forfeitable to Avatar (together with any dividends
thereon) and may not be sold. Generally, the shares of
restricted stock vest on June 30, 2011; provided that
Mr. Kelfer is then employed by Avatar. However, as part of
the amendment, as discussed above in Compensation
Discussion and Analysis, Avatar vested the number of
shares of restricted stock sufficient for Avatar to acquire from
Mr. Kelfer to satisfy his tax withholding obligation
(32,733 shares).
For information regarding the terms of the agreement relating to
potential payments to Mr. Kelfer upon termination of
employment or a change in control of the Company, see
Potential Payments Upon Termination or
Change-in-Control
below.
Agreements with
Jonathan Fels
Separation and
Release Agreement
On December 29, 2009, Avatars wholly-owned
subsidiary, Avatar Properties Inc. (Properties)
entered into a Separation and Release Agreement with Jonathan
Fels, a Named Executive Officer (the Agreement).
Pursuant to the Agreement: (i) Mr. Fels resigned
effective as of the close of business on December 31, 2009;
(ii) Mr. Fels received $450,000 as cash compensation
equal to 50% of the amount payable to him for the calendar year
2010 pursuant to the Amended and Restated Employment Agreement
dated December 22, 2008, between Properties and
Mr. Fels; (iii) the 47,708 shares of Avatar
Restricted Common Stock issued under the Amended and Restated
Restricted Stock Agreement between Properties and Mr. Fels
dated December 22, 2008 vested as of December 31,
2009, and were issued to Mr. Fels as unrestricted Common
Stock but cannot be sold, pledged, gifted, transferred or
hypothecated prior to December 31, 2010;
(iv) Mr. Fels is providing consulting services during
calendar year 2010 at no charge for up to 20 hours in any
calendar month and may be engaged for additional consulting
services at compensation to be negotiated; and
(v) Mr. Fels granted Properties a right of first
refusal to participate in equity or debt real estate investments
of more than ten developed or undeveloped residential units or
an investment of more than $5 million in the aggregate.
Amended and
Restated Employment Agreement
Mr. Fels was employed as President of Properties through
December 31, 2009, on the same terms and at the same
compensation as Michael Levy, whose Amended and Restated
Employment Agreement is described below.
2008-2010
Earnings Participation Award Agreement
The terms and amounts payable to Mr. Fels were the same as
those set forth in the Earnings Participation Award Agreement
with Michael Levy, described below.
Nonqualified
Stock Option Agreements
The terms and number of options granted to Mr. Fels are the
same as those set forth in the Nonqualified Stock Option
Agreements with Michael Levy, described below.
Restricted Stock
Unit Agreements
The terms and numbers of restricted stock unit awards to
Mr. Fels were the same as those awarded to Michael Levy in
the Restricted Stock Unit Agreements, described below.
22
Agreements with
Michael Levy
Amended and
Restated Employment Agreement
On April 15, 2005, Avatar entered into an Amended and
Restated Employment Agreement with Mr. Levy, pursuant to
which until December 31, 2010, he is employed as Executive
Vice President and Chief Operating Officer of Properties. The
Agreement was amended on December 26, 2006 and on
December 22, 2008. Mr. Levy receives an annual base
salary of $500,000 and an annual bonus of $400,000 pursuant to
the Agreement. The 2008 amendment did not make any material
changes and was intended principally to ensure compliance with
Section 409A of the Internal Revenue Code. Effective
April 13, 2009, Mr. Levy agreed to reduce (i) his
base salary rate by 10%, from $500,000 to
$450,000 per annum and (ii) his annual bonus by
10%, effective April 13, from $400,000 to $372,320 for 2009.
For information regarding the terms of the agreement relating to
potential payments to Mr. Levy upon termination of
employment or a change in control of the Company, see
Potential Payments Upon Termination or
Change-in-Control
below.
2008-2010
Earnings Participation Award Agreement
On April 15, 2005, Avatar entered into an Earnings
Participation Award Agreement with Mr. Levy, pursuant to
which he was granted an annual and cumulative cash award
relating to the achievement of performance goals. The annual
cash award entitles him to a cash payment with respect to each
fiscal year beginning 2008 and ending 2010 equal to two percent
of Avatars gross profit over preestablished levels as
determined by the Compensation Committee. For purposes of the
2008-2010
Earnings Participation Award Agreement, gross profit generally
means Avatars net income, plus taxes and incentive
compensation paid to Messrs. Kelfer and Levy pursuant to
their respective
2008-2010
Earnings Participation Award Agreements with Avatar and minus
certain excluded amounts. The payments to Mr. Levy pursuant
to the annual cash award may not exceed $1,600,000 for each of
the first two fiscal years of the performance period and
$2,000,000 for the third fiscal year of the performance period.
However, the aggregate payments pursuant to the annual cash
award may not exceed $4,800,000.
The cumulative cash award entitles Mr. Levy to receive a
cash payment equal to one and one-quarter percent of the excess
of actual gross profit (as defined) from January 1, 2008
through December 31, 2010 over the established target gross
profit of $390,000,000. The payment pursuant to the cumulative
cash award may not exceed $900,000.
An amendment to the Agreement on December 22, 2008, did not
make any material changes and was intended principally to ensure
compliance with Section 409A of the Internal Revenue Code.
For information regarding the terms of the agreement relating to
potential payments to Mr. Levy upon termination of
employment or a change in control of the Company, see
Potential Payments Upon Termination or
Change-in-Control
below.
Nonqualified
Stock Option Agreements
On February 19, 1999, Mr. Levy was granted options to
purchase 50,000 shares of Common Stock under the Incentive
Plan, at an exercise price of $25.00 per share. The options
granted to Mr. Levy were fully vested as of
February 19, 2002 and remained exercisable until
February 19, 2009.
On March 13, 2003, Mr. Levy was granted additional
options to purchase 60,000 shares of Common Stock under the
Incentive Plan, at an exercise price of $25.00 per share. The
options vested and became exercisable on December 31, 2007
and will remain exercisable until March 13, 2013. See
Outstanding Equity Awards at 2009 Fiscal Year-End
table above with respect to options remaining unexercised at
December 31, 2009.
23
For information regarding the terms of the agreements relating
to potential payments to Mr. Levy upon termination of
employment or a change in control of the Company, see
Potential Payments Upon Termination or
Change-in-Control
below.
Restricted Stock
Unit Agreements
On March 27, 2003, Avatar entered into a Restricted Stock
Unit Agreement with Mr. Levy, pursuant to which he was
awarded an opportunity to receive 25,000 performance-conditioned
RSUs representing 25,000 shares of Common Stock, which
vested and were converted into shares of Common Stock as of
December 20, 2007.
On April 15, 2005, Avatar entered into Restricted Stock
Unit Agreements with Mr. Levy, pursuant to which he was
awarded an opportunity to receive 75,000 performance-conditioned
RSUs representing 75,000 shares of Common Stock.
Each of the restricted stock unit awards to Mr. Levy is
conditioned upon (i) the closing price of the Common Stock
being at least a specified hurdle price per share for 20 trading
days out of 30 consecutive trading days during the period
beginning on the award date and ending on the vesting date, and
(ii) the continued employment of Mr. Levy at the time
the foregoing condition is satisfied. The hurdle price
performance condition for all units was satisfied. On
December 22, 2008, Avatar entered into an Amended and
Restated Restricted Stock Unit Agreement with Mr. Levy. In
effect, the amendment converted 75,000 RSUs awarded on
April 15, 2005 into shares of Common Stock that are subject
to restrictions (similar to those applicable to the units).
Until such shares vest pursuant to the terms of the Agreement,
they are forfeitable to Avatar (together with any dividends
thereon) and may not be sold. Generally, the shares of
restricted stock vest on December 31, 2010, provided that
Mr. Levy is then employed by Avatar. However, as part of
the amendment, as discussed above in Compensation
Discussion and Analysis, Avatar vested a number of shares
of restricted stock sufficient for Avatar to acquire from
Mr. Levy to satisfy his tax withholding obligations
(27,292 shares).
For information regarding the terms of the agreement relating to
potential payments to Mr. Levy upon termination of
employment or a change in control of the Company, see
Potential Payments Upon Termination or
Change-in-Control
below.
Agreements with
Randy L. Kotler
Employment
Agreement
On June 26, 2007, Avatar entered into an Employment
Agreement with Mr. Kotler, pursuant to which he was
employed as Executive Vice President and Chief Financial Officer
on July 9, 2007 through July 8, 2010, at a base salary
of $350,000 per annum, a signing bonus of $100,000 and an annual
bonus of no less than $100,000. The Agreement was amended and
restated on December 22, 2008. The amendment did not make
any material changes and was intended principally to ensure
compliance with Section 409A of the Internal Revenue Code.
Effective April 13, 2009, Mr. Kotlers base
salary was reduced by 10%, from $350,000 to $315,000 per annum.
For information regarding the terms of the agreement relating to
potential payments to Mr. Kotler upon termination of
employment or a change in control of the Company, see
Potential Payments Upon Termination or
Change-in-Control
below.
Restricted
Stock Unit Agreements
On June 26, 2007, Avatar entered into Restricted Stock Unit
Agreements with Mr. Kotler, pursuant to which he was
awarded on July 9, 2007 an opportunity to receive, in
increments of 2,500 units, an aggregate of up to 7,500
performance-conditioned RSUs representing 7,500 shares of
Common Stock. The Agreements were amended and restated on
December 22, 2008. The amendments did not make any material
changes and were intended principally to ensure compliance with
Section 409A of the Internal Revenue Code. Each of the
restricted stock unit awards is conditioned upon (i) the
closing price of the
24
Common Stock being at least at a specified hurdle price for 20
trading days out of 30 consecutive trading days during the
period beginning on July 9, 2007 and ending on the vesting
date of July 8, 2010, and (ii) the continued
employment of Mr. Kotler at the time the foregoing
condition is satisfied.
Agreements with
Patricia K. Fletcher
Employment
Agreement
On November 8, 2006, Avatar entered into an Employment
Agreement with Ms. Fletcher pursuant to which she was
employed as Executive Vice President and General Counsel on
January 1, 2007 through December 31, 2009, at a base
salary of $700,000 per annum. The Agreement was amended and
restated on December 22, 2008. The amendment did not make
any material changes and was intended principally to ensure
compliance with Section 409A of the Internal Revenue Code.
On October 26, 2009, the Agreement was amended to extend
the term of her employment to December 31, 2010, and to
provide that (i) Ms. Fletcher may terminate her
employment for any reason by giving at least 90 days
advance notice at any time after June 30, 2010 and
(ii) should her employment be terminated Without Cause or
should she resign for Good Reason, she would continue to be
compensated through the earlier of 90 days after the date
of termination or December 31, 2010.
For information regarding the terms of the agreement relating to
potential payments to Ms. Fletcher upon termination of
employment or a change in control of the Company, see
Potential Payments Upon Termination or
Change-in-Control
below.
Restricted Stock
Unit Agreement
On November 8, 2006, Avatar entered into a Restricted Stock
Unit Agreement with Ms. Fletcher, pursuant to which she was
awarded an opportunity to receive 18,900 performance-conditioned
RSUs representing 18,900 shares of Common Stock. The actual
grant of the units was conditioned upon (i) the closing
price of the Common Stock being at least $72.50 per share for 20
trading days out of 30 consecutive trading days beginning
January 1, 2007 and ending December 31, 2009, and
(ii) the continued employment of Ms. Fletcher at the
time the foregoing condition was satisfied. This hurdle price
performance condition was satisfied on January 31, 2007. On
December 22, 2008, Avatar entered into an Amended and
Restated Restricted Stock Unit Agreement with Ms. Fletcher.
In effect, the amendment converted the 18,900 RSUs into shares
of Common Stock that were subject to restrictions (similar to
those applicable to the units). Until such shares vested
pursuant to the terms of the Agreement, they were forfeitable to
Avatar (together with any dividends thereon) and could not be
sold. Generally, the shares of restricted stock were to vest on
December 31, 2009, provided that Ms. Fletcher was then
employed by Avatar. However, as part of the amendment, as
discussed above in Compensation Discussion and
Analysis, Avatar vested a number of shares of restricted
stock sufficient for Avatar to acquire from Ms. Fletcher to
satisfy her tax withholding obligations (6,932 shares). The
remaining shares of restricted stock (11,968) vested on
December 31, 2009, and 11,968 unrestricted shares of
Avatars Common Stock were issued to Ms. Fletcher.
Potential
Payments Upon Termination or
Change-in-Control
Under the Companys various agreements with
Messrs. Kelfer, Kotler, Fels, Levy and Ms. Fletcher,
each of them is or was entitled to certain payments and benefits
upon his or her termination of employment for specified reasons
and in the event of a change in control of the Company. The
first section below describes the arrangements that each named
executive officer has or had with respect to termination
and/or
change in control and the definitions that apply to such
arrangements. The second section quantifies certain compensation
and benefits that would be payable to these individuals under
the various arrangements if their employment had terminated on
December 31, 2009,
and/or a
change in control of the Company had occurred on that date,
given the individuals compensation on that date and, if
applicable, based on the closing market price of the
Companys Common Stock on the last trading day of 2009
($17.01). For a general description of the agreements see
Employment and Other Agreements above.
25
Gerald D.
Kelfer
The following definitions apply to all of Mr. Kelfers
agreements described below:
Disability generally means any disability or
incapacity that makes Mr. Kelfer incapable of fully
performing the services required of him for a period of 120
consecutive days or for shorter periods aggregating
120 days during any period of twelve consecutive months.
Cause generally means Mr. Kelfers:
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conviction or pleading guilty with respect to any felony that is
or may become materially harmful to the Company as determined by
the Board;
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commission of a material act of fraud against the
Company; or
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willful, repeated and demonstrable failure to perform his duties
over a period of at least 30 days (other than as a result
of incapacity due to physical or mental illness) or material
breach of any of his obligations under his agreement.
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Good Reason generally means:
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failure of the Board or the stockholders to continue to
recommend or elect Mr. Kelfer as a director;
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failure of the Board to elect Mr. Kelfer to the Executive
Committee;
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assignment to Mr. Kelfer of any material duties other than
those contemplated by his employment agreement;
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any limitation of Mr. Kelfers powers;
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reduction in the rate of compensation, or a material reduction
in fringe benefits (other than in those generally applicable to
senior executives of the Company);
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any other material failure by the Company to perform any of its
material obligations under the agreement; or
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relocation of the principal place of business to a place of a
distance further than a
75-mile
radius from (i) Coral Gables, Florida or (ii) New
York, New York.
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Change in Control generally means any of the
following events:
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any person or entity becoming the direct or indirect beneficial
owner of securities of the Company representing 90% or more of
the combined voting power of the issued and outstanding
stock; or
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approval by the Board of any merger, consolidation or similar
business combination or reorganization of the Company that would
result in a person or entity beneficially owning 90% or more of
the stock of the Company as described above, and the
consummation of such transaction.
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Amended and
Restated Employment Agreement
Death: If Mr. Kelfers employment is
terminated due to his death, he would be entitled to receive any
accrued but unpaid base salary and prorated annual bonus through
his date of termination, as well as the Severance Payments (as
defined below). In addition, his estate would be entitled to any
payments under any pension or employee benefit plans maintained
by the Company.
Disability: If Mr. Kelfers employment is
terminated due to his Disability, he would be entitled to
receive the Severance Payments (as defined below).
Generally, Severance Payments means an annual
payment following the date of termination for four years equal
to a prorated portion of $250,000 based on the number of months
of employment that elapsed between November 30, 2000 and
December 31, 2009.
26
For Cause or other than for Good Reason: If
Mr. Kelfer resigns other than for Good Reason or is
terminated for Cause, he would be entitled to receive his full
base salary and prorated annual bonus through the date of
termination.
Without Cause or for Good Reason: If Mr. Kelfer
resigns for Good Reason or is terminated not for Cause, he would
be entitled to:
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his full annual base salary, annual bonus (without interest) and
participation in all employee benefit plans and programs to the
extent applicable to other senior executives of the Company (or
an amount equal to the annual contributions, payments, credits
and allocations made by the Company) through the earlier of
(i) June 30, 2011 and (ii) the second anniversary
of the date of termination, subject to certain mitigation
provisions (as set forth below); and
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annual payments of $250,000 for four years.
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Termination on June 30, 2011: If
Mr. Kelfers employment terminates on June 30,
2011, he would be entitled beginning in the calendar year
following the date of termination to an annual payment of
$250,000 for four years.
Change in Control: If Mr. Kelfer were to
terminate his employment in the one year following a Change in
Control, he would be entitled to:
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continue to receive his base salary and annual bonus through the
earlier of (i) the first anniversary of the date of
termination or (ii) June 30, 2011; and
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the Severance Payments.
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Duty to seek other employment: Generally,
Mr. Kelfer agreed that if his employment were to be
terminated for Cause, Good Reason or due to Disability, during
the entire period of time that he is entitled to receive any of
the benefits described above, he would seek employment involving
services similar to those he performed for the Company. In the
event that he secures employment, the Company would be entitled
to deduct from the amounts stated above any salary, bonuses or
other compensation paid to him in connection with his new
employment. The Company would also be entitled to terminate his
participation (or the equivalent payment made in lieu of such
participation) in any employee benefit plans and programs that
are substantially similar to those he is receiving in his new
employment. Mr. Kelfer also agreed to repay to the Company
any of the amounts paid to him that the Company was entitled to
deduct.
Non-Competition: Generally, Mr. Kelfer agreed
that during the term of his employment with the Company and
through the first anniversary of the date of termination he
would not compete with the Company as follows:
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have an employment, consulting or financial investment
relationship with a competitor (whose main business is adult
retirement communities
and/or
active adult communities) within a
100-mile
radius of a site for which the Company is preparing to develop,
has commenced development of, or has a binding commitment or
option to purchase, real estate; or
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solicit someone who was a customer or employee of the Company
during the executives tenure to become a customer or
employee of another.
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Protection of Confidential Information: Generally,
Mr. Kelfer agreed that during the term of his employment
and for all time following the date of termination, he would not
disclose to any other person or entity any confidential
knowledge or information pertaining to the Companys
business.
Violation or threatened violation of any of his obligations with
respect to non-competition and confidential information entitles
the Company to various remedies, including injunctive relief and
damages.
Excise Tax: If Mr. Kelfer becomes entitled to
any payment, benefit or distribution by the Company, which is
subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code, or any interest or penalties are incurred
by the Company, such payments would be reduced by the Company by
no more than $250,000 until no portion of such payments would be
subject to excise tax. Mr. Kelfer can choose to
27
reduce the payment by more than $250,000 in order to avoid the
excise tax, but if he does not choose to do so he would be
responsible for the payment of the excise tax.
2008-2010
Earnings Participation Award Agreement
Death or Disability: If Mr. Kelfers
employment were to be terminated due to his death or Disability,
Mr. Kelfer or his estate would receive a prorated annual
cash award for the fiscal year in which his employment was
terminated and a prorated cumulative cash award.
For Cause or not for Good Reason: If
Mr. Kelfers employment were to be terminated for
Cause or upon resignation for other than Good Reason, rights to
future cash payments accruing on or after the date of
termination would be forfeited.
Not for Cause or for Good Reason: If
Mr. Kelfers employment were to be terminated other
than for Cause or upon resignation for Good Reason, he would
continue to receive such cash payments as would otherwise be
made under the agreement.
Change in Control: Generally, upon the occurrence of a
Change in Control between January 1, 2008 and
December 31, 2010, Mr. Kelfer would receive a prorated
annual cash award for the fiscal year in which the Change in
Control occurs and any cash payment pursuant to the cumulative
cash award.
Forfeiture upon breach of certain obligations: Generally,
if Mr. Kelfer were to breach the non-compete,
confidentiality and similar provisions in his employment
agreement or any other agreement with the Company, he would
forfeit any right to any cash payments under this agreement.
Amended and
Restated Restricted Stock Unit Agreement
Death or Disability: If Mr. Kelfers employment
were to be terminated due to his Disability or death after a
hurdle price condition is met, his unvested shares of restricted
stock would vest in an amount equal to a pro rata portion based
on the number of whole months which have elapsed from January of
the year in which Mr. Kelfer received the award to the date
of his Disability or death.
For Cause or not for Good Reason: If Mr. Kelfer were
to resign without Good Reason or be terminated for Cause, all of
his unvested shares of restricted stock would be forfeited.
Not for Cause or for Good Reason: If
Mr. Kelfers employment were to be terminated other
than for Cause or upon resignation for Good Reason all of his
unvested shares of restricted stock would vest.
Change in Control: In the event of a Change in Control,
all of Mr. Kelfers unvested shares of restricted
stock would vest.
Jonathan
Fels
Prior to the Separation and Release Agreement described above
under Employment and Other Agreements
Agreements with Jonathan Fels, agreements with
Mr. Fels, terms thereof and definitions thereunder, were
the same as the agreements with Michael Levy described below.
Michael
Levy
The following definitions apply to all of Mr. Levys
agreements described below:
Disability generally means inability to perform one
or more material functions under the agreement and which
entitles him to receive benefits under a disability plan or
other benefit plans.
Cause generally means Mr. Levys:
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conviction or pleading guilty with respect to any felony that is
or may become materially harmful to the Company as determined by
the Board;
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willful misconduct, gross negligence, fraud or dishonesty in a
manner that is or may become materially harmful to the Company
as determined by the Board; or
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violation of any material term of the Amended and Restated
Employment Agreement or any other Company policy.
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Without Cause generally means for any reason
whatsoever, or for no reason, in the sole discretion of the
Company, other than for death, Disability, for Cause, Change in
Control or the end of the term of his employment
(December 31, 2010).
Good Reason generally means:
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any assignment of material duties other than those contemplated
by the employment agreement. However, adjustment of existing
duties due to Change in Control would not constitute Good
Reason so long as the adjusted duties are comparable to
the duties prior to the Change in Control;
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material reduction in the rate of compensation, or a material
reduction in fringe benefits (other than material reduction in
fringe benefits generally applicable to senior executives of the
Company); or
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any other material failure by the Company to perform any of its
material obligations under the agreement.
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Without Good Reason generally means any reason other
than Good Reason.
Change in Control generally means:
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any person or entity or group of them becoming the direct or
indirect beneficial owner of securities of the Company
representing 90% or more of the combined voting power of the
issued and outstanding stock;
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approval by the Board of any merger, consolidation or similar
business combination or reorganization of the Company that would
result in a person or entity beneficially owning a percentage of
the stock of the Company as described above, and the
consummation of such transaction; or
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the Company ceases to be engaged, directly or indirectly, and
does not intend to be engaged at any time in the foreseeable
future, in any real estate business.
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Amended and
Restated Employment Agreement
Death or Disability: If the employment of Mr. Levy
were to be terminated due to death or Disability then he or his
estate would receive:
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his earned but unpaid base salary and vacation pay through the
date of termination;
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his annual bonus prorated to the date of termination; and
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any benefits to which he is entitled under any employee benefit
plans in which he is a participant through the date of
termination.
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If a Change in Control were to occur prior to such termination
due to death or Disability, then Mr. Levy or his estate
would receive his prorated portion of $1,800,000 (the
Retention Amount) as of the date of termination. The
remaining balance of the Retention Amount would be donated to
one or more charitable
not-for-profit
organizations designated by the Board.
For Cause or Without Good Reason: If the employment of
Mr. Levy were to be terminated for Cause or were he to
resign Without Good Reason, he would receive (subject,
generally, to any set-off, counterclaim or cause of action the
Company may have against him):
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his earned but unpaid base salary and vacation pay through the
date of termination; and
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any benefits to which he is entitled under any employee benefit
plans in which he is a participant through the date of
termination.
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29
If a Change in Control were to occur prior to such termination,
Mr. Levy would not be entitled to receive any portion of
the Retention Amount and the Retention Amount would be donated
to one or more charitable
not-for-profit
organizations designated by the Board.
Without Cause or for Good Reason: If Mr. Levy were
to resign for Good Reason or his employment terminated Without
Cause, he would be entitled to receive through the earlier of
December 31, 2010 and the second anniversary of the date of
termination:
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his base salary and annual bonus without interest, subject to
certain mitigation provisions (as set forth below); and
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all employee benefit plans and programs to the extent applicable
to other senior executives of the Company.
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If, however, a Change in Control were to occur prior to such
termination, he would be entitled to receive:
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the Retention Amount; and
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all employee benefit plans and programs to the extent applicable
to other senior executives of the Company through the earlier of
the first anniversary of the date of termination and
December 31, 2010. If he were not permitted to participate
in such benefit plans, he would be entitled to receive an amount
equal to the annual contributions, payments, credits or
allocations made by the Company to his account or on his behalf
under such plans.
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Duty to seek other employment: Generally, Mr. Levy
agrees that if his employment were to be terminated by the
Company Without Cause or he were to resign for Good Reason, he
would have a duty to seek employment similar to that of
Mr. Kelfer as described above, with the exception that he
would only be obligated to accept such employment if the
principal office where he would be employed is located within a
50-mile
radius of Coral Gables, Florida.
Change in Control: In the event of a Change in Control
prior to December 31, 2010, Mr. Levy would receive:
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all base salary, prorated annual bonus and vacation pay earned
but unpaid through the Change in Control date;
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any benefits to which he may be entitled under any employee
benefit plans in which he is a participant through the Change in
Control date; and
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for the period following a Change in Control, he would cease to
receive his base salary and annual bonus and the Company would
pay him the Retention Amount (subject to pro rata adjustment in
the event of a change in control after June 30,
2010) upon expiration of the employment term if he is
continuously employed by the Company (or its successor) through
such date.
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In the event of a Change in Control prior to December 31,
2010, the term of employment for Mr. Levy would be reduced
or extended, as applicable, depending on the date of the Change
in Control, to expire upon the earlier of June 30, 2011 and
the first anniversary of the Change in Control (the
Retention Date). If the Change in Control date were
to be after December 31, 2010, the term of employment would
be extended through the Retention Date, unless otherwise
terminated under the agreement.
Conditions to payments upon termination: Generally, all
payments and benefits under each of the scenarios described
above are subject to Mr. Levys compliance with his
non-compete and confidentiality obligations as stated below.
Non-Competition: Generally, Mr. Levy is subject to
the same non-compete provisions as described for Mr. Kelfer
above.
Protection of Confidential Information: Generally,
Mr. Levy is subject to the same confidentiality provisions
as described for Mr. Kelfer above.
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Excise Tax: Generally, Mr. Levy is subject to the
same excise tax provisions as described for Mr. Kelfer
above.
2008-2010
Earnings Participation Award Agreement
Death or Disability: If Mr. Levys termination
of employment is due to his death or Disability, he or his
estate would receive a prorated annual cash award for the fiscal
year in which his employment was terminated and a prorated
cumulative cash award. If such termination occurs after a Change
in Control has happened between January 1, 2008 and
December 31, 2010 and before the Retention Date, he would
receive a prorated portion of the Retention Amount, and the
remaining balance of the Retention Amount would be donated to
not-for-profit
organizations designated by the Board.
For Cause or Without Good Reason: If Mr. Levys
employment were to be terminated for Cause or upon resignation
Without Good Reason, rights to future cash payments accruing on
or after the date of termination would be forfeited.
Without Cause or for Good Reason: If Mr. Levys
employment were to be terminated Without Cause or upon
resignation for Good Reason, he would continue to receive such
cash payments as would otherwise be made under the agreements.
If such termination occurs after a Change in Control has
happened between January 1, 2008 and December 31, 2010
and before the Retention Date, he would receive a prorated
portion of the Retention Amount, and the remaining balance of
the Retention Amount would be donated to
not-for-profit
organizations designated by the Board.
Change in Control: Upon the occurrence of a Change in
Control between January 1, 2008 and December 31, 2010,
Mr. Levy would receive a prorated annual cash award for the
fiscal year in which the Change in Control occurs. In addition,
on the Change in Control date the Company would deposit into a
retention account any cash payment pursuant to the cumulative
cash award which would be added to the Retention Amount and
distributed to him on or promptly after the Retention Date if
his employment has not been otherwise terminated by the Company
for Cause or by him Without Good Reason and he is continuously
employed by the Company through the Retention Date.
Forfeiture upon breach of certain obligations: Generally,
if Mr. Levy were to breach the non-compete, confidentiality
and similar provisions in his employment agreement or any other
agreement with the Company, he would forfeit any right to any
cash payments under this agreement.
Amended and
Restated Restricted Stock Unit Agreement
The terms of Mr. Levys Amended and Restated
Restricted Stock Unit Agreement are generally identical to those
of Mr. Kelfers Restricted Stock Unit Agreements as
described above.
Nonqualified
Stock Option Agreements
Death and Disability: If Mr. Levys employment
were to be terminated due to death or Disability, his options,
to the extent they have not previously vested, would vest pro
rata and such options would become immediately exercisable and
expire one year following the date of termination.
For Cause or Without Good Reason: If Mr. Levy were
to resign Without Good Reason or his employment is terminated
for Cause, any unexercised options would become null and void
upon such termination.
Without Cause or for Good Reason: If Mr. Levys
employment were to be terminated Without Cause or for Good
Reason, his previously unexercised options would remain
exercisable under the terms of the agreement.
31
Randy L.
Kotler
The definitions used in Mr. Kotlers agreements are
generally the same as those used in Mr. Levys
agreements, except for Change in Control which
generally means:
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any person or entity or group of them becoming the direct or
indirect beneficial owner of securities of the Company
representing 50.1% or more of the combined voting power of the
issued and outstanding stock;
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approval by the Board of any merger, consolidation or similar
business combination or reorganization of the Company that would
result in a person or entity beneficially owning a percentage of
the stock of the Company as described above, and the
consummation of such transaction;
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the Company ceases to be engaged, directly or indirectly, and
does not intend to be engaged at any time in the foreseeable
future, in any real estate business; or
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the sale, transfer or disposal of all or substantially all of
the assets of the Company.
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Employment
Agreement
Death or Disability: If Mr. Kotlers employment
were to be terminated due to his death or Disability, he (or his
representatives) would receive:
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all base salary, annual bonus, and any vacation pay earned but
unpaid on the date of termination; and
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any benefits to which he may be entitled under any employee
benefit plans or policy.
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For Cause or resignation: If Mr. Kotlers
employment were to be terminated for Cause or he resigns he
would receive only:
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base salary and vacation pay which have been earned but unpaid
as of the date of termination; and
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any benefits to which he may be entitled under any employee
benefit plans or policy in which he is a participant up to and
including the date of termination.
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Without Cause: If Mr. Kotlers employment were
to be terminated without Cause he would:
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receive his full base salary in accordance with normal payroll
practices and without interest through July 8,
2010; and
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be entitled to participate in employee benefit plans and
programs (provided that continued participation is permissible
thereunder) or to receive an amount equal to annual
contributions, payments, credits or allocations made to his
account under such plans and programs.
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Amended and
Restated Restricted Stock Unit Agreements
Death or Disability: If Mr. Kotlers employment
were to be terminated due to his Disability or death after a
hurdle price condition is met, the greater of the following
number of units would vest and be converted into shares of
Common Stock:
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a pro rata portion based on the number of whole months which
have elapsed from July 9, 2007 to the date of
Mr. Kotlers Disability or death; or
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one-half of the units.
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For Cause or not for Good Reason: If Mr. Kotler were
to resign without Good Reason or be terminated for Cause, all of
the units would be forfeited.
32
Not for Cause or for Good Reason: If
Mr. Kotlers employment were to be terminated other
than for Cause or upon resignation for Good Reason:
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all units for which the hurdle price has been met shall vest on
the date of such termination or resignation and be converted
into shares of Common Stock; and
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any additional units that satisfy the hurdle price condition
before July 8, 2010, would vest on the date the hurdle
price is satisfied and be converted into shares of Common Stock.
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Change in Control: In the event of a Change in Control,
all of Mr. Kotlers units granted that have met the
hurdle price conditions shall be converted into shares of Common
Stock immediately prior to the consummation of the Change in
Control.
Protection of Confidential Information: Generally,
Mr. Kotler agreed that during the term of his employment
and for all time thereafter, he would not disclose or make
accessible to any other person or entity any:
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trade secrets or know-how acquired during his employment which
relate to confidential aspects of the Companys business;
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any information concerning the business and affairs of the
Company; and
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any material prepared by or for the Company based on the
information above.
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Violation or threatened violation of any of his obligations with
respect to confidential information entitles the Company to
various remedies, including injunctive relief and damages.
Patricia K.
Fletcher
The definitions used in Ms. Fletchers agreements are
generally the same as those used in Mr. Levys
agreements, except for Change in Control which are
generally the same as the definition used in
Mr. Kotlers agreements.
Employment
Agreement
Death or Disability: The death or Disability terms used
in Ms. Fletchers agreements are generally the same as
those used in Mr. Kotlers agreements.
For Cause or resignation: The for Cause termination or
without good reason resignation terms used in
Ms. Fletchers agreements are generally the same as
those used in Mr. Kotlers agreements.
Without Cause: The without Cause termination terms in
Ms. Fletchers agreements are generally the same as
those used in Mr. Kotlers agreements.
Amended and
Restated Restricted Stock Unit Agreement
The terms of Ms. Fletchers Amended and Restated
Restricted Stock Unit Agreement are generally identical to those
in the Amended and Restated Restricted Stock Unit Agreements of
Messrs. Kelfer and Levy.
Protection of Confidential Information: Generally,
Ms. Fletcher agreed to terms regarding her confidentiality
obligations to the Company that are generally the same as those
agreed to by Mr. Kotler.
33
The following tables show the estimated potential amount of
compensation payable to each Named Executive Officer under
existing contracts, plans or arrangements for various scenarios
involving a change in control of the Company, death or
disability of the executive, for cause termination, voluntary
termination, involuntary
not-for-cause
termination and termination for good reason, effective on
December 31, 2009 and using the closing price of the Common
Stock on the last business day of 2009 ($17.01). In determining
the benefits payable, the Company has assumed in all cases that
the executive has complied and continues to comply with all of
the restrictive and other covenants included in his or her
employment agreement (if he or she has one) and has not become
employed by a new employer in those cases where the employment
agreement requires mitigation by the executive. The tables
reflect incremental payments and benefits that would be owed by
the Company to the executive beyond what the Named Executive
Officer had earned as of December 31, 2009. The tables do
not reflect benefits that are provided pursuant to plans or
arrangements that do not discriminate in favor of executive
officers and are available generally to all full-time employees
such as amounts paid under the Companys 401(k) Plan and
accrued vacation pay.
The following calculations contain statements and assumptions
regarding future individual and Company performance. These
performance statements and assumptions are disclosed in the
limited context of the Companys compensation programs and
should not be understood to be statements of managements
expectations or estimates of results or other guidance. The
Company specifically cautions investors not to apply these
statements to other contexts. The actual amounts to be paid out
can only be determined at the time of the executives
separation from the Company or upon the occurrence of a change
in control and will be made subject to any applicable
requirements of Section 409A of the Internal Revenue Code.
Change in
Control
The following table shows amounts that would be payable under
existing change in control arrangements. Equity payouts
illustrated below are for unvested awards; vested equity is
disclosed in the Option Exercises and Stock Vested in
2009 table.
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Restricted
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Earnings
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Name
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Cash(1)
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Stock/RSUs
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Participation(2)
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Gerald D. Kelfer
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$
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1,950,000
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(3)
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$
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974,112
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(4)
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$
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0
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Randy L. Kotler
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0
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0
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(5)
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0
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Jonathan Fels
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0
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(6)
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0
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(6)
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0
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Michael Levy
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1,800,000
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(7)
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811,513
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(8)
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0
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Patricia K. Fletcher
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0
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0
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(9)
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0
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(1) Assuming no election by the executives to reduce
payments to avoid excise tax imposed by Section 4999 of the
Internal Revenue Code.
(2) The Companys financial results as of 12/31/09 do
not entitle Messrs. Kelfer, Fels or Levy to payment under
their respective Earnings Participation Agreements.
(3) Assuming termination by Mr. Kelfer during the one
year following a Change in Control; includes (i) one year
of base salary and annual bonus and (ii) Severance Payments
(as defined above) in four annual installments totaling
$1,000,000.
(4) Reflecting the unvested portion of 30,000 RSUs awarded
on 4/15/05 with a hurdle price of $65.00, 30,000 RSUs awarded on
4/15/05 with a hurdle price of $72.50 and 30,000 RSUs awarded on
4/15/05 with a hurdle price of $80.00, which were converted into
90,000 shares of restricted stock on 12/22/08.
(5) Not entitled to payment under RSU Agreements since
hurdle prices were not met as of December 31, 2009.
(6) Not applicable. Mr. Fels entered into a Separation
and Release Agreement with Avatar on December 29, 2009.
(7) Full Retention Amount under the Amended and Restated
Employment Agreement.
(8) Reflecting the unvested portion of 25,000 RSUs awarded
on 4/15/05 with a hurdle price of $65.00, 25,000 RSUs awarded on
4/15/05 with a hurdle price of $72.50 and 25,000 RSUs awarded on
4/15/05 with a hurdle price of $80.00, which were converted into
75,000 shares of restricted stock on 12/22/08.
(9) Not applicable. Shares of restricted Common Stock
issued to Ms. Fletcher were fully vested as of
December 31, 2009 and exchanged for shares of unrestricted
Common Stock.
34
Death and
Disability
The following table shows amounts that would be payable in case
of the executives death or his or her termination due to
disability.
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Prorated
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Restricted
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Earnings
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Severance
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Name
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Bonus(1)
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Stock/RSUs
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Participation(2)
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Payments
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Gerald D. Kelfer
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$
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0
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$
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749,317(3
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$
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0
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$
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1,000,000(4
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)
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Randy L. Kotler
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0
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0
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0
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0
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Jonathan Fels
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0
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0(5
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0
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0
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Michael Levy
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0
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676,261(6
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0
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0
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Patricia K. Fletcher
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0
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0(7
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0
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0
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(1) Prorated annual bonuses for fiscal year 2009, to which
Messrs. Kelfer, Fels and Levy are entitled under their
respective employment agreements, were paid in full prior to
12/31/09.
(2) The Companys financial results as of 12/31/09 do
not entitle Messrs. Kelfer, Fels and Levy to payment under
their respective Earnings Participation Agreements.
(3) Reflecting prorated unvested portion of the 90,000 RSUs
awarded on 4/15/05, which were converted into 90,000 shares
of restricted stock on 12/22/08.
(4) Severance Payments under Mr. Kelfers Amended
and Restated Employment Agreement payable in four annual
installments.
(5) Not applicable. Mr. Fels entered into a Separation
and Release Agreement with Avatar on December 29, 2009.
(6) Reflecting prorated unvested portion of the 75,000 RSUs
awarded on 4/15/05, which were converted into 75,000 shares
of restricted stock on 12/22/08.
(7) Not applicable. Shares of restricted Common Stock
issued to Ms. Fletcher were fully vested as of
December 31, 2009 and exchanged for shares of unrestricted
Common Stock.
For
Cause/Without Good Reason
As of December 31, 2009, none of the Named Executive
Officers would be entitled to any payments if his or her
employment were to be terminated by the Company for cause or if
he or she were to resign without good reason. While under his
Amended and Restated Employment Agreement Mr. Kelfer is
guaranteed a prorated annual bonus when terminated for Cause or
if he resigns without Good Reason, his annual bonus for fiscal
year 2009 was paid in full prior to December 31, 2009.
Without
Cause/With Good Reason
The following table shows amounts that would be payable in case
of the executives termination by the Company without cause
or his or her resignation for Good Reason.
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Base
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Restricted
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Employee
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Earnings
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Severance
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Name
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Salary(1)
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Bonus(2)
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Stock/RSUs
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Benefits(3)
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Participation(4)
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Payments
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Gerald D. Kelfer
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$
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675,000
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$
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500,000
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$
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974,112(5
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)
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$
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22,500
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$
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0
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$
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1,000,000(6
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Randy L. Kotler
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163,558
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100,000
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0
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7,500
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0
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0
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Jonathan Fels
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0
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0
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0(7
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)
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0
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0
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0
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Michael Levy
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450,000
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400,000
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811,513(7
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)
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15,000
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0
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0
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Patricia K. Fletcher
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525,000
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0
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0(8
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11,250
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0
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0
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(1) Reflecting one and one-half years of annual base salary
under Mr. Kelfers employment agreement, one-half year
of annual base salary under Mr. Kotlers employment
agreement, one year of annual base salary under
Mr. Levys employment agreement, and nine months of
annual base salary under Ms. Fletchers employment
agreement. Not applicable to Mr. Fels.
(2) Reflecting one year of annual bonus under each of
Messrs. Kelfers and Levys respective employment
agreements and one year of minimum annual bonus to
Mr. Kotler under his employment agreement.
(3) Approximate cost to the Company of continuation of
medical, disability, dental and life insurance premiums for one
and one-half years for Mr. Kelfer, one-half year for
Mr. Kotler, one year for Mr. Levy, and nine months for
Ms. Fletcher.
(4) No entitlement for payments to Messrs. Kelfer,
Fels and Levy under the
2008-2010
Earnings Participation Award Agreements would have become due,
assuming that earnings for fiscal year 2010 would be at least
equal to Avatars fiscal year 2009 results of operations
since the target gross profit for the
2008-2010
Earnings Participation Award Agreements would not be reached.
(5) Reflecting the unvested portion of 90,000 RSUs awarded
on 4/15/05, which were converted into 90,000 shares of
restricted stock on 12/22/08.
35
(6) Payable in annual installments of $250,000 for four
years under the Amended and Restated Employment Agreement.
(7) Reflecting the unvested portion of 75,000 RSUs awarded
on 4/15/05, which were converted into 75,000 shares of
restricted stock on 12/22/08.
(8) Not applicable. Shares of restricted Common Stock
issued to Ms. Fletcher were fully vested as of
December 31, 2009 and exchanged for shares of unrestricted
Common Stock.
2. APPOINTMENT
OF AUDITORS
Ernst & Young LLP, independent registered public
accounting firm, audited the financial statements of Avatar for
the fiscal year ended December 31, 2009. Such audit
services consisted of the firms examination of and report
on the annual financial statements and assistance and
consultation in connection with filings with the Securities and
Exchange Commission and other matters.
Representatives of Ernst & Young LLP are expected to
attend the Annual Meeting, will have the opportunity to make a
statement if they desire to do so and will be available to
respond to appropriate questions.
Subject to approval by the stockholders, the Audit Committee has
appointed Ernst & Young LLP, independent registered
public accounting firm, as auditors of Avatar for the fiscal
year ending December 31, 2010. Approval by the stockholders
will require the affirmative vote of a majority of the votes
present at the meeting in person or by proxy and entitled to be
cast. The Board of Directors recommends that the accompanying
proxy be voted FOR such approval and it is intended that the
proxies will be voted in such manner unless otherwise directed.
Fees For
Services Provided by the Independent Registered Public
Accounting Firm
The following table sets forth the approximate amount of fees
paid, or estimated to be paid, to Ernst & Young LLP
for professional services during the fiscal years ended
December 31, 2009 and 2008:
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2009
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2008
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Audit Fees
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$
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792,336
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$
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716,641
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Audit-related Fees
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29,569
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17,502
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Tax Fees
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189,614
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134,651
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All other services
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1,985
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2,635
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$
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1,013,504
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$
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871,429
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Audit fees principally relate to the audit of the annual
financial statements for Avatar and its consolidated
subsidiaries and review of quarterly financial statements,
services related to issuances of Common Stock during 2009, and
services related to the audit of internal controls over
financial reporting as required by the Sarbanes-Oxley Act of
2002.
Audit-related fees principally relate to advisory services
regarding potential impact of pending or enacted legislative
actions on various real estate transactions. Tax fees, which are
estimated, generally relate to disposition
and/or
acquisition of real property, tax effects of issuances of Common
Stock during 2009 and review of the consolidated tax return.
The Audit Committee adopted a policy requiring preapproval of
audit and non-audit services provided by the principal
independent accountants. The Audit Committee approved all audit
and non-audit services provided by Ernst & Young LLP
during the 2009 fiscal year.
STOCKHOLDERS
PROPOSALS AND NOMINATIONS OF BOARD MEMBERS
If a stockholder intends to present a proposal for action at the
2011 Annual Meeting and wishes to have such proposal considered
for inclusion in Avatars proxy materials in reliance on
Rule 14a-8
under the Securities Exchange Act of 1934, the proposal must be
submitted in writing and received by the Secretary of Avatar by
December 30, 2010. Such proposal must also meet the other
requirements of the rules of the Securities and Exchange
Commission relating to stockholders proposals.
36
Avatars By-Laws establish an advance notice procedure with
regard to certain matters, including stockholder proposals and
nominations of individuals for election to the Board of
Directors. In general, notice of a stockholder proposal or a
director nomination for an annual meeting must be received by
Avatar not less than 60 days nor more than 90 days
prior to the anniversary date of the preceding annual meeting of
stockholders and must contain specified information and conform
to certain requirements, as set forth in the By-Laws. If the
chairman at any stockholders meeting determines that a
stockholder proposal or director nomination was not made in
accordance with the By-Laws, Avatar may disregard such proposal
or nomination.
In addition, if a stockholder submits a proposal outside of
Rule 14a-8
for the 2010 Annual Meeting, and the proposal fails to comply
with the advance notice procedure prescribed by the By-Laws,
then Avatars proxy may confer discretionary authority on
the persons being appointed as proxies on behalf of the Board of
Directors to vote on the proposal. Proposals and nominations
should be addressed to the Secretary of Avatar, Juanita I.
Kerrigan, Avatar Holdings Inc., 201 Alhambra Circle, Coral
Gables, Florida 33134.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires Avatars officers and directors, and any persons
who own more than ten percent of Avatars Common Stock, to
file reports of initial ownership of Avatars Common Stock
and subsequent changes in that ownership with the SEC. Officers,
directors and greater than ten-percent beneficial owners are
also required to furnish Avatar with copies of all
Section 16(a) forms they file. Based solely upon a review
of the copies of the forms furnished to Avatar, or written
representations from certain reporting persons that no
Forms 5 were required, Avatar believes that there has been
compliance with all Section 16(a) filing requirements.
ACCESS TO
PROXY MATERIALS AND DIRECTIONS TO ANNUAL MEETING
Important notice regarding the Internet availability of proxy
materials for the Annual Meeting of Stockholders. This
Proxy Statement and the 2009 Annual Report to Stockholders are
available on our website at www.avatarholdings.com. For
directions to the Annual Meeting site, visit our website at
www.avatarholdings.com.
ADDITIONAL
INFORMATION
All of the expenses involved in preparing, assembling and
mailing this Proxy Statement and the accompanying material will
be paid by Avatar. In addition to the solicitation of proxies by
mail, Avatar will request brokers and securities dealers to
obtain proxies from and send proxy material to their principals.
Expenses incurred in this connection will be reimbursed by
Avatar. Proxies may be solicited personally, by telephone or
telegraph, electronic mail or by other electronic means, by the
directors and officers of Avatar without additional
compensation. The Board of Directors knows of no business to
come before the meeting other than as stated in the Notice of
Annual Meeting of Stockholders. Should any business other than
that set forth in such Notice properly come before the meeting,
or any adjournment or adjournments thereof, it is the intention
of the persons named in the accompanying proxy to vote such
proxy in accordance with their judgment on such matters.
By Order of the Board of Directors,
Juanita I. Kerrigan
Vice President and Secretary
Dated: April 29, 2010.
37
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Notice of 2010
Annual Meeting
and Proxy
Statement
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YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting.
Both are available 24 hours a day, 7 days a week.
Internet and telephone voting is available through 11:59 PM Eastern Time the day prior to annual meeting day.
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INTERNET |
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http://www.proxyvoting.com/avtr
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Avatar Holdings Inc.
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Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
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OR
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TELEPHONE |
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1-866-540-5760 |
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Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
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If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card. |
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To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
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Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. |
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WO#
73503
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This proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this proxy will be voted FOR Items 1 and 2.
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Please mark your votes as indicated in this example |
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FOR
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WITHHOLD
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ALL
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FOR ALL
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*EXCEPTIONS
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FOR
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AGAINST
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ABSTAIN |
Item 1 - ELECTION OF EIGHT |
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DIRECTORS Nominees: 01 P.D. Barnett
05 Joshua Nash 02 M. Dresner 06 K. T. Rosen
03 R.W. Einiger 07 J.M. Simon 04 G.D. Kelfer
08 B.A. Stewart
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o
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Item 2 -
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APPROVAL OF THE APPOINTMENT OF ERNST
& YOUNG, LLP, INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM, AS AUDITORS OF
AVATAR HOLDINGS INC. FOR 2010.
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Item 3 -
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In their discretion the proxies are authorized to vote upon such
other business as may properly come before the meeting.
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(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the Exceptions box
above and write that nominees name in the space provided below.) |
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PLEASE CHECK IF YOU PLAN TO ATTEND |
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*Exceptions |
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THE ANNUAL STOCKHOLDERS MEETING |
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To cumulate votes as to a particular nominee(s) as explained in the Proxy Statement, indicate the
name(s) and the number of votes to be given to such nominee(s) in the space provided below.)
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Mark Here for Address Change or Comments
SEE REVERSE
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Please sign exactly as name appears. When shares are held by joint tenants, both
should sign. When signing as attorney, executor, administrator, trustee,
or guardian, please give full title as such. If a corporation,
please sign in full corporate name by President or other authorized officer.
If a partnership, please sign in partnership name by authorized person.
Choose MLinkSM for fast, easy and secure 24/7
online access to your future proxy materials, investment plan
statements, tax documents and more. Simply log on to Investor
ServiceDirect® at
www.bnymellon.com/shareowner/isd where step-by-step
instructions will prompt you through enrollment.
Important notice regarding the Internet availability of proxy materials for the Annual Meeting of shareholders.
The Proxy Statement and the 2009 Annual Report to Stockholders are
available at: http://www.avatarholdings.com
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PROXY AVATAR HOLDINGS INC.
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201 Alhambra Circle
Coral Gables, Florida 33134
The undersigned hereby appoints Gerald D. Kelfer and Juanita I. Kerrigan as Proxies,
each with the power to appoint his or her substitute; and hereby authorizes them to
represent and vote, as designated on the reverse side, all the shares of Common Stock
of Avatar Holdings Inc. held of record by the undersigned at the close of business on
April 5, 2010 at the Annual Meeting of Stockholders to be held on June 3,
2010, or any adjournment or adjournments thereof.
If any other business may properly come before the meeting, or if cumulative voting is required,
the proxies are authorized to vote in their discretion, provided that they will not vote in the
election of directors for any nominee(s) for whom authority to vote has been withheld.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
(continued on next page)
Address Change/Comments
(Mark the corresponding box on the reverse side)
BNY MELLON SHAREOWNER SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
WO#
73503