[GRAPHIC OMITTED]
[BLUEGREEN COMPANY LOGO]
4960 Conference Way North, Suite 100
Boca Raton, Florida 33431
Tel: (561) 912-8000 Fax: (561) 912-8100
July 3, 2001
To our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Bluegreen Corporation (the "Company") which will be held at the Boca Raton
Marriott, 5150 Town Center Circle, Boca Raton, Florida, on Thursday, August 2,
2001, at 10:00 a.m., local time.
The accompanying Notice of the Annual Meeting and Proxy Statement describe
the formal business to be transacted at the meeting and contain certain
information about the Company and its officers and Directors. Following the
meeting we will also report on the operations of the Company. Directors and
executive officers of the Company will be present to respond to any questions
that you may have.
Please sign, date and return the enclosed proxy card promptly. If you
attend the meeting, and we sincerely hope you will, you may vote in person even
if you have previously mailed a proxy card.
Thank you for your attention and continued interest in our Company. We look
forward to seeing you at the meeting.
Very truly yours,
George F. Donovan
President and Chief Executive Officer
BLUEGREEN CORPORATION
4960 Conference Way North, Suite 100
Boca Raton, Florida 33431
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 2, 2001
The Annual Meeting of the Shareholders of Bluegreen Corporation will be
held at the Boca Raton Marriott, 5150 Town Center Circle, Boca Raton, Florida,
on Thursday, August 2, 2001, at 10:00 a.m., local time, to consider and act on
the following matters:
(1) To elect three Directors;
(2) To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending March 31, 2002; and
(3) To transact such other business as may properly come before the
meeting or any adjournments thereof.
The close of business on July 2, 2001, has been fixed as the record date
for determining the shareholders entitled to notice of, and to vote at, the
annual meeting.
THE PRESENCE OF A QUORUM IS IMPORTANT. THEREFORE, YOU ARE URGED TO SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY BY MAIL WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING. THIS WILL NOT PREVENT YOU FROM VOTING IN PERSON, BUT WILL
ENSURE THAT YOUR VOTE IS COUNTED IF YOU ARE UNABLE TO ATTEND THE MEETING.
By order of the Board of Directors,
Patrick E. Rondeau
Clerk
July 3, 2001
BLUEGREEN CORPORATION
4960 Conference Way North, Suite 100
Boca Raton, Florida 33431
(561) 912-8000
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Annual Meeting of Shareholders
August 2, 2001
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PROXY STATEMENT
----------------------------
Information Concerning Solicitation
This Proxy Statement is furnished to the holders of common stock, par value
$.01 (the "Common Stock"), of Bluegreen Corporation (the "Company") in
connection with the solicitation of proxies by the Board of Directors of the
Company for use at the Annual Meeting of Shareholders (the "Annual Meeting") to
be held at Boca Raton Marriott, 5150 Town Center Circle, Boca Raton, Florida, on
Thursday, August 2, 2001, at 10:00 a.m., local time, and at any adjournment or
postponement thereof. If the enclosed proxy is signed and returned and is not
revoked, it will be voted at the Annual Meeting in accordance with the
instructions of the shareholder(s) who execute it. If no instructions are given,
the proxy will be voted FOR the election of the nominees for Director and FOR
the other proposal set forth in the Notice of Annual Meeting described herein.
The proxy of any shareholder may be revoked by such shareholder in writing
addressed to Patrick E. Rondeau, the Clerk of the Company, at the above address
or in person at any time before it is voted. Submission of a later dated proxy
will revoke an earlier dated proxy.
All costs of solicitation will be borne by the Company. The solicitation is
to be principally conducted by mail and may be supplemented by telephone and
personal contacts by Directors, executive officers and regular employees of the
Company, without additional remuneration. Arrangements will be made with
brokerage houses, banks and custodians, nominees and other fiduciaries to
forward solicitation materials to the beneficial owners of shares held of
record. The Company will reimburse such persons for their reasonable
out-of-pocket expenses incurred in connection with the distribution of proxy
materials.
It is anticipated that this Proxy Statement and the enclosed proxy,
together with the Company's annual report to shareholders, will first be mailed
to shareholders on or about July 6, 2001.
Outstanding Voting Securities
The Board of Directors has fixed the close of business on July 2, 2001 (the
"Record Date") as the date for determining the shareholders entitled to receive
notice of, and to vote at, the Annual Meeting. The number of shares of Common
Stock outstanding and entitled to vote on that date was 24,190,136, with each
share being entitled to one vote. A majority of the issued and outstanding
shares as of the Record Date will constitute a quorum for the transaction of
business at the Annual Meeting.
The affirmative vote of the holders of a plurality of the votes cast at the
Annual Meeting is required for the election of Directors. Approval of other
matters that are before the meeting will require the affirmative vote of holders
of a majority of the Common Stock present or represented at the Annual Meeting.
Each holder of record of the Common Stock on the Record Date is entitled to
cast one vote per share in person or by proxy at the Annual Meeting. Shares as
to which a nominee (such as a broker holding shares in street name
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for a beneficial owner) has no voting authority in respect of matters before the
Annual Meeting will be deemed represented for quorum purposes but will not be
deemed to be voting on such matters and, therefore, will not be counted as
negative votes as to such matters. Votes will be tabulated by the Company's
transfer agent subject to the supervision of persons designated by the Board of
Directors as inspectors.
Shareholder Proposals for Next Annual Meeting
Proposals of shareholders of the Company intended to be presented at the
2002 Annual Meeting of Shareholders must be received by the Company not later
than March 8, 2002, to be included in the Company's proxy materials relating to
the 2002 Annual Meeting and on or before May 22, 2002 for matters to be
considered timely such that, pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Company may not
exercise its discretionary authority to vote on such matters at that meeting.
Any such proposals should be sent to the Company at its principal office
addressed to Patrick E. Rondeau, Clerk of the Company. Other requirements for
inclusion are set forth under Rule 14a-8 under the Exchange Act.
Proposal 1 - Election of Nominees for Director
There are currently nine members of the Board of Directors. The By-Laws of
the Company provide that the Directors are classified, with respect to the time
for which they hold office, into three classes, as nearly as equal in number as
possible, with terms expiring at the 2001, 2002 and 2003 annual meetings of the
shareholders and until their successors are duly elected. At each annual
meeting, the successors to the class of Directors whose term expires at that
meeting shall be elected to hold office for a term continuing until the annual
meeting held in the third year following the year of their elections. The Board
has fixed the number of Directors for the ensuing year at nine and has nominated
George F. Donovan, Michael J. Franco and Bradford T. Whitmore for election to
the class, the term of which expires at the annual meeting in 2004.
The Securities Purchase Agreement dated as of August 14, 1998 (as more
fully described below under "Certain Relationships and Other Transactions")
between the Company and certain real estate funds affiliated with Morgan Stanley
Dean Witter and Co., Inc. (the "Funds") requires that, as long as the Funds or
their Permitted Transferees (as defined in the Purchase Agreement) own at least
70% of the aggregate number of shares of Common Stock issued to the Funds (or
their Permitted Transferees) under the Purchase Agreement (the "Required
Interest"), the Funds will have the right to designate two directors on the
management slate of nominees to the Company's Board of Directors (the "Funds'
Designees"). If the Funds (and their Permitted Transferees) own less than the
Required Interest but own, in the aggregate, at least 50% of the aggregate
number shares of Common Stock issued to the Funds (or their Permitted
Transferees) under the Purchase Agreement (the "Minimum Interest"), the Funds
will have the right to designate one director on the management slate of
nominees to the Company's Board of Directors. The Funds' Designees have the
right to serve on any standing committee of the Board to the extent their
participation on such committee would not exceed their proportionate
representation of the full Board. Michael J. Franco, whose term expires at the
2001 Annual Meeting and Joseph M. Zuber, whose term expires at the 2002 Annual
Meeting, currently serve on the Board of Directors as the Funds' Designees under
the Purchase Agreement. In addition, the Board of Directors has unanimously
appointed John P. Buza to the Board of Directors for a term that expires at the
2003 Annual Meeting. Mr. Buza is a Vice President and Senior Asset Manager for
the Morgan Stanley Real Estate Funds.
The Funds have agreed to vote, and to cause any Permitted Transferees to
vote, all of their shares of Common Stock for the election of the management
slate of nominees (other than the Funds' Designees) to the Company's Board of
Directors for so long as the Funds (and their Permitted Transferees) own, in the
aggregate, at least the Minimum Interest and the Funds' Designees are serving on
the Company's Board of Directors. Accordingly, the Funds will vote in favor of
the elections of Messrs. Donovan and Whitmore at the Annual Meeting.
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Unless contrary instructions are received, the enclosed proxy will be voted
for the election of the three nominees listed herein. Messrs. Donovan, Franco
and Whitmore are currently serving as Directors of the Company, respectively.
The shareholders elected Messrs. Donovan and Whitmore at the 1998 Annual
Meeting. Messrs. Donovan, Franco and Whitmore have consented to serve, if
elected, for the term described herein. Although the Board of Directors does not
contemplate that any of the nominees will be unavailable for election, in the
event that vacancies occur unexpectedly, the enclosed proxy, unless authority
has been withheld as to such nominee, will be voted for such substituted
nominees, if any, as may be designated by the Board. If elected, the nominees
listed below will serve until the 2004 Annual Meeting (or special meeting in
lieu thereof) and until their successors are duly elected and qualified.
The principal occupations and business experience of the nominees for
Director and each Director whose term will continue following the meeting for
the preceding five years along with any directorships of other publicly-owned or
registered investment companies are as follows:
Nominees for Election for a Term of Three Years Expiring at the 2004 Annual
Meeting
George F. Donovan joined the Company as a Director in 1991 and was
appointed President and Chief Operating Officer in October 1993. He became Chief
Executive Officer in December 1993. Mr. Donovan has served as an officer of a
number of other recreational real estate corporations, including Leisure
Management International, of which he was President from 1991 to 1993, and
Fairfield Communities, Inc., of which he was President from April 1979 to
December 1985.
Michael J. Franco has been a Director of the Company since August 1998.
Since December 1997, Mr. Franco has been the Vice President and Director of U.S.
Acquisitions for the Morgan Stanley Real Estate Funds. Mr. Franco was an
Associate with Morgan Stanley Dean Witter and Co., Inc. ("Morgan Stanley") from
July 1990 to December 1997.
Bradford T. Whitmore has been a Director of the Company since 1990. Mr.
Whitmore has been a general partner of Grace Brothers, Ltd., an investment
partnership and securities broker-dealer, since 1986.
Directors Whose Term Expires at the 2002 Annual Meeting
Ralph A. Foote has been a Director of the Company since 1987. Since 1955,
he has been a senior partner of Conley & Foote, a Middlebury, Vermont law firm
which serves as legal counsel to the Company with respect to various matters
from time to time. Mr. Foote has been a Director of the Cooperative Insurance
Companies since 1965.
John Laguardia became a Director of the Company in 2000, as a
Board-appointed replacement for Joseph C. Abeles, who resigned from the
Company's Board of Directors in 2000. Since 1999, he has been the President and
Chief Operating Officer of ALH II, Inc., a holding company involved in the
roll-up of regional homebuilders located in the southeastern United States. From
1997 through 1999, Mr. Laguardia served as the Executive Vice President and
Chief Operating Officer of Atlantic Gulf Communities Corporation, a
publicly-traded real estate development company. Mr. Laguardia was the President
and Chief Executive Officer for American Heritage Homes from 1994 to 1997.
Joseph M. Zuber became a Director of the Company in 1999. Mr. Zuber is
currently a Director and has been a Vice President of Morgan Stanley since
December 1998. From July 1996 to December 1998, Mr. Zuber was a Senior Associate
with Morgan Stanley and was responsible for the principal investing activities
of the Morgan Stanley Real Estate Funds. Prior to July 1996, Mr. Zuber was an
Associate with Merrill Lynch.
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Directors Whose Term Expires at the 2003 Annual Meeting
John P. Buza became a Director of the Company in 2001, as a Board-appointed
replacement for Frederick M. Myers, who resigned from the Company's Board of
Directors in 2000. Since April 1999, Mr. Buza has served as Vice President and
Senior Asset Manager for the Morgan Stanley Real Estate Funds. From 1998 to
1999, Mr. Buza was Senior Vice President of Asset Management for MeriStar
Hospitality Corporation, a hotel real estate investment trust where he was
responsible for asset management and dispositions. From 1986 to 1998, Mr. Buza
held the position of Director at Salomon Brothers Inc., where he was responsible
for that firm's investments. Mr. Buza has also served on the Board of Directors
of Hudson Hotels Corporation, a publicly-traded hospitality company, from
November 1996 to April 1999.
Richard M. Kelleher became a Director of the Company in 2000, as a
Board-appointed replacement for Stuart A. Shikiar, who resigned from the
Company's Board of Directors in 2000. Since March 1999, Mr. Kelleher has served
as Principal of Pyramid Advisors, LLC, a hotel management and advisory firm
founded by Mr. Kelleher. From 1997 to 1999, Mr. Kelleher was the President and
Chief Operating Officer of Promus Hotel Corporation, the successor company to
the Doubletree and Guest Quarters hotel/timeshare operating entities. From 1992
through 1997, Mr. Kelleher was the President and Chief Executive Officer of
Doubletree Hotel Corporation.
J. Larry Rutherford was elected to the Board of Directors in April 1997.
Since September 1999, Mr. Rutherford has been the President and Chief Executive
Officer of Southstar Development Partners, Inc., a real estate developer. From
1990 to 1999, he served as the President and Chief Executive Officer of Atlantic
Gulf Communities, a publicly-traded real estate development company. In 1992,
Mr. Rutherford was named as a defendant in a three-count Information filed by
the State Attorney for Broward County, Florida. The charges in the Information,
which include a charge of vehicular homicide, relate to an April 1991 traffic
accident in which a passenger was killed. Following review of the circumstances
surrounding this accident and the charges, the Board determined that the
pendency of this proceeding likely will not adversely affect Mr. Rutherford's
ability to perform his duties as a Director of the Company.
Director Emeritus
Joseph C. Abeles, a private investor, served as a Director of the Company
from 1987 through 2000. Mr. Abeles currently holds the honorary title of
Director Emeritus and has no voting power on the Company's Board of Directors.
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of May 1, 2001, by (a) each Director,
(b) each nominee for Director, (c) each of the executive officers listed in the
Summary Compensation Table below, (d) all current Directors and executive
officers as a group and (e) all persons known to be the beneficial owners of
more than five percent of the Company's outstanding Common Stock. A nominal
amount of Common Stock held by certain executive officers under the Company's
401(k) profit sharing plan has been excluded from the table. Unless otherwise
noted, each shareholder has sole voting and investment power with respect to the
shares of Common Stock listed.
4
Shares of
Common Stock
Issuable Upon
Options Conversion Total Shares Percent
Common Exercisable Of Debentures Beneficially Of Shares
Name Age Stock Within 60 Days and Notes (1) Owned Outstanding (2)
---- --- ----- -------------- ------------- ------------ ---------------
John P. Buza(3) 40 -- -- -- -- --
John F. Chiste 45 -- 76,328 -- 76,328 *
George F. Donovan 62 89,974 568,752 -- 658,726 2.7%
Ralph A. Foote(4) 78 20,756 130,261 -- 151,017 *
Michael J. Franco(3) 32 -- 5,000 -- 5,000 *
Richard M. Kelleher 51 -- -- -- -- --
Daniel C. Koscher 43 12,781 233,466 -- 246,247 1.0%
John Laguardia 62 -- -- -- -- --
David D. Philp 39 -- 20,000 -- 20,000 *
Patrick E. Rondeau 54 11,339 198,581 -- 209,920 *
J. Larry Rutherford 55 -- 30,000 -- 30,000 *
Mark T. Ryall 41 -- -- -- -- --
Bradford T. Whitmore(5) 43 758,146 130,261 -- 888,407 3.7%
Joseph M. Zuber(3) 38 -- 5,000 -- 5,000 *
All Directors and named
executive officers as a
group (14 persons) -- 892,996 1,397,649 -- 2,290,645 9.0%
Morgan Stanley Dean
Witter & Co, Inc.
1221 Avenue of the Americas
New York, NY 10020(6)(7) -- 5,882,353 -- -- 5,882,353 24.3%
Grace Brothers, Ltd.
1560 Sherman Avenue
Suite 900
Evanston, IL 60201(5) -- 1,676,826 -- 1,782,184 3,459,010 13.3%
---------------------
* Less than 1%.
(1) The conversion prices of $8.24 per share and $3.92 per share (the
conversion prices on May 1, 2001) are used to determine the shares of
Common Stock into which the Company's 8.25% convertible subordinated
debentures due 2012 (the "Debentures") and the Company's 8.00% convertible
subordinated notes payable due 2002 (the "Convertible Notes") are
convertible, respectively.
(2) In accordance with the rules of the Securities and Exchange Commission, the
denominator used to calculate the percent of shares outstanding includes
shares issuable upon conversion of any Debentures and Notes held by the
applicable stockholder or group and upon exercise of any options that are
exercisable within 60 days and held by the applicable stockholder or group,
plus 24,190,136 shares outstanding on May 1, 2001.
(3) Pursuant to agreements among Messrs. Buza, Franco, Zuber and the Funds,
Messrs. Buza, Franco and Zuber have acknowledged and agreed that they hold
their Company stock options for the benefit of, and the economic interest
with respect to the stock options belong to, the Funds.
(4) Includes 6,924 shares of Common Stock held by Mr. Foote's wife.
(5) Mr. Whitmore is a general partner of Grace Brothers, Ltd. Mr. Whitmore
exercises shared voting and investment power with respect to shares held by
Grace Brothers, Ltd. and disclaims beneficial ownership of such shares
except to the extent of his proportionate interest therein.
(6) Reflects the aggregate investment by the following affiliates of Morgan
Stanley Dean Witter & Co., Inc., Morgan Stanley Real Estate Fund ("MSREF")
III, L.P., Morgan Stanley Real Estate Investors III, L.P., MSP Real Estate
Fund, L.P. and MSREF III Special Fund, L.P.
(7) Based on the most recent (as of May 1, 2000) Form 13G or 13D (as
applicable) filed with the Securities and Exchange Commission.
Board of Directors and its Committees
The Board of Directors of the Company held six meetings during the fiscal
year ended April 1, 2001. Each Director attended at least 75% of the meetings of
the Board of Directors and meetings of the Committees of the Board on which he
served.
Directors of the Company who are employees of the Company do not receive
fees or retainers for serving as Directors. For fiscal 2001, each non-employee
Director, other than the three Directors currently employed by
5
Morgan Stanley, received an annual retainer of $17,500 (paid in monthly
increments of $1,458.33 for each month that the non-employee served as a
Director), an $800 fee for each Board meeting attended and reimbursement of
reasonable out-of-pocket travel expenses to attend Board of Director meetings.
In addition, all of the Company's non-employee Directors are entitled to receive
a stock option covering 15,000 shares of Common Stock under the Company's 1998
Non-Employee Directors Stock Option Plan on the first trading day after each
annual meeting of the Company's shareholders or any special meeting held in lieu
thereof. The exercise price is equal to the closing market price of the
Company's Common Stock on the New York Stock Exchange on the date of grant.
These options vest over a three-year period.
Audit Committee
The Audit Committee consists of Messrs. Foote (Chairman), Laguardia and
Rutherford. The Board of Directors has determined that Mr. Foote is independent
to the Company despite the legal services provided to the Company from time to
time by the law firm to which Mr. Foote is a partner. The Audit Committee is
governed by a written charter approved by the Board of Directors. A copy of this
charter is included in Appendix A.
Report of the Audit Committee
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the Committee
reviewed the audited financial statements in the Annual Report with management
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments and the
clarity of disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with accounting principles generally accepted in the United States,
their judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Committee under auditing standards generally accepted in the United
States. In addition, the Committee has discussed with the independent auditors
the auditors' independence from management and the Company including the matters
in the written disclosures required by the Independence Standards Board and
considered the compatibility of nonaudit services with the auditors'
independence.
The Committee discussed with the Company's independent auditors the scope
and plans for their audit. The Committee meets with the independent auditors,
with and without management present, to discuss the results of their
examinations, their evaluations of the Company's internal controls and the
overall quality of the Company's financial reporting. The Committee met three
times during fiscal year 2001.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended April 1, 2001 for filing with the Securities and Exchange
Commission. The Committee and the Board have also recommended, subject to
shareholder approval, the selection of the Company's independent auditors.
Audit Committee
Ralph A. Foote, Chairman
John Laguardia
J. Larry Rutherford
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Nominating Committee
The Nominating Committee, which met twice during fiscal 2001, consists of
Messrs. Rutherford (Chairman), Donovan and Zuber. The Nominating Committee is
responsible for the selection of potential candidates for membership on the
Board of Directors and the periodic review of compensation of Directors. The
Nominating Committee will consider nominees recommended by shareholders.
Recommendations should be submitted in writing to: Nominating Committee,
Bluegreen Corporation, 4960 Conference Way North, Suite 100, Boca Raton, Florida
33431.
Strategic Planning Committee
The Strategic Planning Committee, which met twice during fiscal 2001,
consists of Messrs. Whitmore (Chairman), Donovan, Kelleher and Zuber. The
Strategic Planning Committee is responsible for developing and investigating
strategic alternatives for the Company's growth and profitability.
Compensation Committee
During fiscal 2001, Messrs. Kelleher (Chairman), Franco and Whitmore served
as members of the Compensation Committee of the Board of Directors. The
Compensation Committee met twice during fiscal 2001. The Committee: (a) monitors
compensation arrangements for management employees for consistency with
corporate objectives and shareholders' interests, (b) approves incentive
distributions and grants of stock options to officers, employees and independent
contractors of the Company and its subsidiaries and (c) advises management on
matters pertaining to management development and corporate organizational
planning.
Compensation Committee Interlocks and Insider Participation
Mr. Whitmore is a general partner of Grace Brothers, Ltd., an investment
partnership and broker-dealer. In September, 1997, the Company borrowed
$5,000,000 from Grace Brothers, Ltd. pursuant to a Note Purchase Agreement,
which amount was used to fund a portion of the purchase price in connection with
the Company's acquisition of Resort Development International Group, Inc. and
Resort Title Agency, Inc. (collectively, "RDI"). Pursuant to the Note Agreement,
the Company executed convertible notes payable to Grace Brothers, Ltd. in the
aggregate principal amount of $5,000,000 (the "Convertible Notes"). The
Convertible Notes have a maturity date of September 11, 2002, and the
outstanding balances of the Convertible Notes are convertible into the Company's
Common Stock. The Convertible Notes bear interest at 8% per annum. The
Convertible Notes are subordinated to the Company's 10 1/2% Senior Secured notes
due 2008 (the "Senior Notes") in the aggregate principal amount of $110 million,
to the same extent the Company's Debentures are subordinated to the Senior
Notes; the Convertible Notes are not contractually subordinated to any other
indebtedness of the Company. See "Certain Relationships and Other Transactions".
Mr. Franco is a Vice President of and Director of U.S. Acquisitions for the
Morgan Stanley Real Estate Funds, which beneficially own 24.3% of the Company's
Common Stock as of May 1, 2001.
Compensation Committee Report on Executive Compensation
General
The Compensation Committee of the Board of Directors is composed of
non-employee Directors of the Company and, as indicated above, the Compensation
Committee's duties include reviewing and making recommendations to the Board
generally with respect to the compensation of the Company's executive officers.
The Board of Directors reviews these recommendations and approves all executive
compensation action.
7
Compensation Principles
The Company's executive compensation program is designed to align
compensation with the Company's business strategy, values and management
initiatives. The program:
o Integrates compensation programs with the Company's annual and
long-term strategic planning and measurement processes.
o Reinforces strategic performance objectives through the use of
incentive compensation programs.
o Rewards executives for long-term strategic management and the
enhancement of shareholder value by delivering appropriate ownership
interest in the Company.
o Seeks to attract and retain quality talent, which is critical to both
the short-term and long-term success of the Company.
In March 1998, the Company entered into employment agreements with each of
its senior executive officers except for David D. Philp, who entered into an
employment agreement with the Company when he was employed on August 30, 1999
and Mark T. Ryall, who does not have an employment agreement with the Company.
See "Employment Agreements" below for further details.
The three components of the Company's current compensation program for
executive officers are: (i) base compensation, (ii) annual bonus plan and (iii)
incentive stock options.
Base Compensation
The Compensation Committee has evaluated and determined appropriate ranges
of pay for all categories of management to facilitate a Company-wide systematic
salary structure with appropriate internal alignment. In determining appropriate
pay ranges, the Committee annually examines market compensation levels for
executives who are currently employed in similar positions in public companies
with comparable revenues, net income and market capitalization. This market
information is used as a frame of reference for annual salary adjustments and
starting salaries. The Compensation Committee determined to grant base salary
increases ranging from 20.0% to 42.9% for the executive officers named in the
"Summary Compensation Table" during fiscal 2001. This decision reflects the
Committee's consideration of the Company's performance during fiscal 2001 as
well as the Committee's assessment that the executive officers' base salaries
after the current year increases, if applicable, were comparable to companies
involved in similar operations and of similar size.
Annual Bonus Plan
The objectives of the annual bonus plan are to motivate and reward the
accomplishment of corporate annual objectives, reinforce strong performance with
differentiation in individual awards based on contributions to business results
and to provide a fully competitive compensation package with the objective of
attracting, rewarding and retaining individuals of the highest quality. As a
pay-for-performance plan, year-end cash bonus awards are paid upon the
achievement of performance goals established for the fiscal year. Participants
are measured on two performance components: (1) corporate financial performance
(specific measurements are defined each year and threshold, target and maximum
performance levels are established to reflect the Company's objectives) and/or
(2) key individual performance which contributes to critical results for the
management position. A weighting is established for each component taking into
account the relative importance of each based on each executive officer's
position. Appropriate performance objectives are established by the Compensation
Committee for each fiscal year in support of the Company's strategic plan.
Incentive Stock Options
Stock options align the interests of employees and shareholders by
providing value to the employee when the stock price increases. All options are
granted at an exercise price of at least 100% of the fair market value of the
Common Stock on the date of grant except incentive options issued to employees
who own more than 10% of the
8
Company's Common Stock, in which case the option price may not be less than 110%
of the market value of the Common Stock on the date of grant. Incentive stock
options were granted to Mark T. Ryall upon his employment with the Company
during fiscal 2001. See "Option Grants in Last Fiscal Year".
Section 162(m) of the Interval Revenue Code of 1986, as amended (the
"Code"), limits an employer's income tax deduction for compensation paid to
certain key executives of a public company to $1,000,000 per executive per year.
The Company has no executives whose salaries currently approach this level and,
accordingly, has not addressed what approach it will take with respect to
section 162(m), except to the extent the 1995 Stock Incentive Plan contains
standard limits and provisions on awards which are extended to enable such
awards to be exempt from the section 162(m) deduction limits.
Compensation of Chief Executive Officer
During fiscal 2001, the base salary of George F. Donovan, President and
Chief Executive Officer, was $450,000, reflecting a 20.0% increase from fiscal
2000. As detailed below in the "Summary Compensation Table", Mr. Donovan was
awarded no annual bonus or stock options during fiscal 2001. Additionally, the
Company purchased term life insurance for Mr. Donovan's benefit, at a premium
cost during fiscal 2001 of $56,808. This compares to the award of an annual
bonus of $100,000 and no stock options for fiscal 2000. The decrease in Mr.
Donovan's annual bonus was due to certain pre-determined strategic goals and
financial performance objectives not being achieved during fiscal 2001. The
Committee concluded that Mr. Donovan's total fiscal 2001 compensation was
competitive and aligned in the mid-range of total compensation for other chief
executives of publicly-held companies in similar businesses and of similar size.
Furthermore, the Committee believes that total fiscal 2001 compensation reflects
its confidence in Mr. Donovan's ability to lead the Company to execute the
Company's strategic plans, including the continued development and expansion of
the Resorts Division. The Committee's knowledge of Mr. Donovan's successful
background, including his prior service as the chief executive officer of
another publicly-held real estate company, together with its observations of Mr.
Donovan's performance during his tenure with the Company, served equally to
assure the Committee of his ability to lead the Company as its chief executive.
Compensation Committee
Richard M. Kelleher, Chairman
Michael J. Franco
Bradford T. Whitmore
Executive Compensation
Summary Compensation Table
The following table sets forth compensation for the past three fiscal years
for the Company's Chief Executive Officer and the other five most highly
compensated executive officers (the "Named Executive Officers").
9
Long-Term
Compensation
Annual Compensation Awards
------------------- ------
Securities All Other
Fiscal Salary Bonus Underlying Compensation
Name and Principal Position Year ($) ($)(1) Options(#)(2) ($)(3)
--------------------------- ---- ------ ------ ------------- ------
George F. Donovan 2001 $450,000 $ -- -- $82,808
President and Chief Executive Officer 2000 $375,000 $100,000 -- $84,975
1999 $375,000 $300,000 256,793 $84,704
John F. Chiste 2001 $225,000 $ 50,000 -- $ 9,917
Senior Vice President, 2000 $175,000 $ 40,000 -- $ 9,917
Treasurer and Chief Financial Officer 1999 $175,000 $125,000 101,778 $ 8,234
Daniel C. Koscher 2001 $250,000 $200,000 -- $ 5,994
Senior Vice President, 2000 $175,000 $ 75,000 -- $ 5,994
President - Land & Golf Division 1999 $175,000 $175,000 153,449 $ 9,293
David D. Philp(4) 2001 $175,000 $155,000 -- $ --
Senior Vice President and 2000 $ 83,462 $215,000 100,000 $24,063
Chief Investment Officer 1999 $ -- $ -- -- $ --
Patrick E. Rondeau 2001 $225,000 $ 25,000 -- $14,898
Senior Vice President, Director 2000 $175,000 $ 40,000 -- $14,898
of Corporate Legal Affairs and Clerk 1999 $175,000 $110,000 101,778 $18,197
Mark T. Ryall(4) 2001 $ 76,154 $ -- 50,000 $ 7,981
Senior Vice President and 2000 $ -- $ -- -- $ --
Chief Information Officer 1999 $ -- $ -- -- $ --
---------------------
(1) Amounts represent bonuses earned for each fiscal year and paid during the
subsequent fiscal year.
(2) Figures represent stock options granted under the Company's 1995 Stock
Incentive Plan.
(3) Other compensation for fiscal 2001 consists of dollar amounts of premiums
paid on life insurance policies for the benefit of the Named Executive
Officer (Mr. Donovan - $56,808; Mr. Rondeau - $14,898; Mr. Koscher - $5,994
and Mr. Chiste - $9,917), forgiveness of debt to the Company (Mr. Donovan -
$26,000) and reimbursement of relocation expenses (Mr. Ryall - $7,981).
(4) Mr. Philp became the Company's Chief Investment Officer in August 1999. Mr.
Ryall became the Company's Chief Information Officer in October 2000.
Option Grants in Last Fiscal Year
The following table sets forth certain information concerning stock options
granted to the Named Executive Officers during fiscal 2001.
Potential Realizable Value
Number of Percent of at Assumed Annual Rates of
Securities Total Options Exercise Stock Price Appreciation for
Underlying Granted to Price Option Term (2)
Options Employees ($ Per Expiration ---------------
Granted(#)(1) in Fiscal Year Share) Date 5% 10%
------------ -------------- ------- ---- --- ----
George F. Donovan -- --% $ -- -- $ -- $ --
John F. Chiste -- --% $ -- -- $ -- $ --
Daniel C. Koscher -- --% $ -- -- $ -- $ --
David D. Philp -- --% $ -- -- $ -- $ --
Patrick E. Rondeau -- --% $ -- -- $ -- $ --
Mark T. Ryall 50,000 83.3% $2.26 2/22/11 $71,077 $180,122
(1) These options become exercisable in five equal annual installments
commencing one year from the date of grant.
(2) As required by the rules promulgated by the Securities and Exchange
Commission, potential realizable values are based on the prescribed
assumption that the Company's Common Stock will appreciate in value from
the date of grant to the end of the option term at rates (compounded
annually) of 5% and 10%, respectively, and therefore are not intended to
forecast possible future appreciation, if any, in the price of the
Company's Common Stock.
10
Fiscal Year End Option Values
The following table sets forth information regarding the number and
unrealized value of unexercised options, adjusted to give effect to any Common
Stock dividends, and held by each of the Named Executive Officers as of April 1,
2001. Unrealized values are computed by multiplying the number of shares by the
amount by which the closing market price of the Company's Common Stock on the
New York Stock Exchange as of March 30, 2001, exceeds the exercise price. None
of the Named Executive Officers exercised stock options during fiscal 2001.
Number of
Securities Underlying
Unexercised Value of Unexercised
Options at In-the-Money Options
Year End (#) at Fiscal Year End ($)
------------ -------------------
Exerciseable (E) vs. Exerciseable (E) vs.
Name Unexerciseable (U) Unexerciseable (U)
---- ----------------- -----------------
George F. Donovan 562,752 E $ -- E
218,786 U $ -- U
John F. Chiste 76,328 E $ -- E
84,812 U $ -- U
Daniel C. Koscher 230,466 E $10,017 E
124,469 U $ -- U
David D. Philp 20,000 E $ -- E
80,000 U $ -- U
Patrick E. Rondeau 195,581 E $ 8,412 E
87,812 U $ -- U
Mark T. Ryall -- E $ -- E
50,000 U $ -- U
Employment Agreements
In March 1998, the Company entered into employment agreements with each of
George F. Donovan, John F. Chiste, Daniel C. Koscher and Patrick E. Rondeau. In
August 1999, the Company entered into an employment agreement with David D.
Philp. Each employment agreement was for an initial three year period (six years
in the case of Mr. Donovan) (subject to automatic one-year extensions unless
terminated by either the employee or the Company with 90 days notice) and
provides that the employee will receive a base salary (as of April 2, 2001,
$450,000 for Mr. Donovan; $275,000 for Mr. Koscher; $255,000 for Mr. Chiste;
$225,000 for Mr. Rondeau and $175,000 for Mr. Philp) and certain other benefits
and will be eligible to receive a cash bonus as determined by the Board of
Directors. Mr. Philp is guaranteed an annual bonus of at least $125,000 during
the term of his employment agreement. Under the employment agreements, if the
Company terminates any employee without cause, the Company will pay the employee
his base salary (and in the case of Mr. Philp a minimum bonus of $125,000) for
the 12 months (24 months in the case of Mr. Donovan) following such termination
(which, in the case of all of the Named Executive Officers except Mr. Philp,
shall be reduced by the amount of any compensation the employee receives from
subsequent employment during such period). A termination of the employee without
cause shall be deemed to occur upon, among other things, a significant decrease
of the employee's position, duties or responsibilities, the failure by the
Company to obtain the assumption of the employment agreement by any successor to
the Company's business, or the sale of all or substantially all of the business
or assets of the Company or the Company's liquidation. Upon any termination by
the Company for cause (as defined in the employment agreements) or by the
employee, the employee shall be entitled only to amounts then due to him. In the
event the employee is disabled, the employee's employment shall be terminated
and the employee shall be entitled to receive his base salary for 12 months (24
months in the case of Mr. Donovan) following such termination. Pursuant to his
employment agreement, each employee agreed, for 12 months (24 months in the case
of Mr. Donovan and 6 months in the case of Mr. Philp) following his termination,
not to compete with the Company, disclose confidential information about the
Company, or solicit the Company's current or former employees. In
11
addition, Mr. Donovan's employment agreement provides that $130,000 of
indebtedness owing by Mr. Donovan to the Company will be forgiven on a pro rata
basis (20% per year) over the five year period commencing on April 1, 1998.
Performance Graph
The following graph assumes an investment of $100 on April 1, 1996, and
thereafter compares the yearly percentage change in cumulative total return to
shareholders of the Company with an industry peer group (consisting of Avatar
Holdings, Fairfield Communities, ILX Resorts, Sunterra Corporation, and
Silverleaf Resorts) and a broad market index (the S&P 500). The graph shows
performance on a total return (dividend reinvestment) basis. The graph lines
connect fiscal year-end dates and do not reflect fluctuations between those
dates.
[THE FOLLOWING PLOT POINTS WERE REPRESENTED BY A LINE CHART IN THE PRINTED
MATERIAL.]
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
Bluegreen Corp Return % (29.41) 187.50 (43.48) (37.18) (50.04)
Cum $ $100.00 $ 70.59 $202.94 $114.71 $ 72.06 $ 36.00
S & P 500 Return % 19.83 48.00 18.46 17.94 (21.68)
Cum $ $100.00 $119.83 $177.34 $210.08 $247.77 $194.06
Peer Group Only Return % 25.62 50.32 (54.82) (34.90) 41.76
Cum $ $100.00 $125.62 $188.83 $ 85.31 $ 55.54 $ 78.73
Peer Group + BXG Return % 19.97 56.70 (54.00) (35.13) 32.06
Cum $ $100.00 $119.97 $188.00 $ 86.48 $ 56.09 $ 74.08
The Report of the Audit Committee, the Compensation Committee Report on
Executive Compensation and the Performance Graph above shall not be deemed
"soliciting material" or incorporated by reference into any of the Company's
filings with the Securities and Exchange Commission by implication or by any
reference in any such filing to this Proxy Statement.
Certain Relationships and Other Transactions
In connection with George F. Donovan's appointment as the Company's Chief
Executive Officer and his relocation, on November 15, 1993, the Board of
Directors authorized a $130,000 loan which accrued interest at the prime lending
rate through June 1, 1996. The loan has been interest-free from June 2, 1996 to
date. As indicated above, Mr. Donovan's March 1998 employment agreement provides
that the $130,000 loan will be forgiven on a pro rata basis (20% per year) over
a five-year period commencing April 1, 1998. In addition, during fiscal 2000,
the Company advanced an $180,000 home equity loan to Mr. Donovan, which bears
interest at the prime lending rate (which was 8.0% per annum at April 1, 2001).
The outstanding balance on this loan as of April 1, 2001, was approximately
$108,000, and the loan is due in three annual installments, including accrued
interest, commencing on April 30, 2002.
12
On September 11, 1997, the Company borrowed $5,000,000 from Grace Brothers,
Ltd., an entity with a 13.3% beneficial ownership interest in the Company as of
May 1, 2001 and an affiliate of Bradford T. Whitmore, a Director of the Company,
and issued the Convertible Notes. The proceeds from the issuance were used to
fund a portion of the purchase price of RDI. The Convertible Notes are
convertible into shares of the Company's Common Stock at a conversion price of
$3.92 per share, subject to adjustment in certain circumstances. In March 1998,
the holders of the Convertible Notes agreed to subordinate such notes to the
Company's obligations under the Senior Notes.
Any existing loans to the Company's officers and employees other than in
the ordinary course of business have been approved, and any such future loans
will be approved, by a majority of disinterested, non-management Directors. It
is also the Company's policy that any transaction with an employee, officer,
Director or principal shareholder, or affiliate of any of them, involving in
excess of $10,000 (other than in the ordinary course of the Company's business)
shall be approved by a majority vote of disinterested Directors, and any such
transaction will be on terms no less favorable to the Company than those which
could reasonably be obtained from an independent third party.
On August 14, 1998, the Company entered into a Securities Purchase
Agreement (the "Purchase Agreement") by and among the Company, Morgan Stanley
Real Estate Investors III, L.P., Morgan Stanley Real Estate Fund III, L.P., MSP
Real Estate Fund, L.P., and MSREF III Special Fund, L.P. (collectively, the
"Funds"), pursuant to which the Funds purchased an aggregate of 5,882,353 shares
of the Company's Common Stock for $50 million during fiscal 1999 and 2000.
See "Proposal 1 - Election of Nominees for Director" for discussion of the
Funds' right to designate up to two Directors (depending on the number of shares
of Common Stock held by the Funds) on the management slate of nominees to the
Company's Board of Directors or certain other matters relating to the Board of
Directors.
For so long as the Funds own at least the Required Interest, certain
material actions by the Company or its subsidiaries, including: the
consolidation or merger of the Company; the sale of substantially all the assets
of the Company; the sale of assets of the Company (or certain Company
subsidiaries) or the purchase of the business, assets or securities of another
person where the aggregate consideration exceeds $50 million; the issuance of
certain securities of the Company senior or, in certain circumstances, on par
with the Common Stock; the issuance of stock of the Company's subsidiaries
(other than pursuant to certain employee option plans); the occurrence of
indebtedness having a material effect on the total market capitalization ratio
of the Company; the declaration or payment of dividends (other than stock
dividends) on the Common Stock; any amendment to the charter or bylaws of the
Company that would conflict with the Purchase Agreement; entry into a material
line of business materially different from the timeshare/residential land
business and the entry into transactions with certain affiliates (other than
Company subsidiaries) will require the affirmative vote of one of the Funds'
Designees or if the Funds do not have a representative on the Board of Directors
as a result of the failure of the Company to nominate the Funds' Designees or
failure of the shareholders of the Company to elect the Funds' Designees, then
such action shall require the approval of the Funds and Permitted Transferees
holding a majority of the shares on Common Stock issued pursuant to the Purchase
Agreement. Moreover, for so long as the Funds own at least the Required
Interest, Morgan Stanley Dean Witter & Co. or an affiliate thereof shall have
the exclusive right to act as advisor or underwriter to the Company in
connection with certain material transactions for which the Company elects to
use the services of an investment or financial advisor.
Each of the Funds (and their Permitted Transferees) have the right to
purchase their proportionate share of any issuance (subject to certain
exceptions) by the Company for cash of (i) any of its capital stock, (ii) any
rights, options or warrants to purchase any such capital stock or any securities
that are or may become convertible or exercisable into Common Stock and (iii)
any securities that are or may become convertible or exercisable into Common
Stock.
13
Pursuant to the Voting and Cooperation Agreement (the "Voting Agreement"),
dated as of August 14, 1998, among the Funds and certain directors, officers and
certain related parties of the Company in their capacities as shareholders of
the Company (collectively, the "Stockholders"), each Stockholder agreed (i) to
vote or cause to be voted all shares of Common Stock which such Stockholder has
the power to vote or in respect of which such Stockholder has the power to
direct the vote in favor of the Funds' Designees, (ii) not to take any direct or
indirect action to remove either of the Funds' Designees from the Company's
Board of Directors without cause and (iii) to vote all of the shares of Common
Stock which such Stockholder has the power to vote or in respect of which such
Stockholder has the power to direct the vote in a manner such that the Company's
Restated Articles of Organization and Amended and Restated Bylaws do not, at any
time, conflict with the provisions of the Voting Agreement or the Purchase
Agreement.
The shares of Common Stock issued to the Funds under the Purchase Agreement
have not been registered under the Securities Act of 1933 and may not be offered
or sold in the United States absent registration or an applicable exemption from
registration requirements. Pursuant to the Registration Rights Agreement, dated
as of August 14, 1998, among the Funds and the Company, after a specified period
or upon certain other events, the Company is required to effect a shelf
registration of shares of Common Stock held by the Funds, any of their Permitted
Transferees and certain of their assignees (collectively the "Registration
Persons"). In addition, subject to certain conditions and limitations, the
Registration Persons have the right (i) to require the Company to register
shares of Common Stock held by such Registration Persons and (ii) when the
Company proposes to register Common Stock, to include shares of Common Stock
held by such Registration Persons in such registration of Common Stock. Each of
the agreements and instruments described above has been previously filed by the
Company with the Securities and Exchange Commission and is qualified in its
entirety by reference thereto.
Proposal 2 - Ratification of the Appointment of Ernst &Young LLP as Independent
Auditors of the Company
The Board of Directors has appointed the firm of Ernst & Young LLP ("E&Y")
as auditors for fiscal 2002, subject to final approval by the Audit Committee of
the scope of, and E&Y's fees for, performing the audit for such fiscal year. E&Y
and its predecessor, Arthur Young & Co., have served as the Company's auditors
since 1984. The Company has been informed that E&Y has no direct or indirect
financial interest in the Company and has no other connection with the Company
other than as independent auditors. Fees for last fiscal year were: annual audit
- $268,586; audit related services - $22,915 and all other fees - $54,840.
Representatives of E&Y are expected to be present at the Annual Meeting and will
have the opportunity to make a statement if they so desire and will be available
to respond to appropriate questions.
In the event that ratification of the appointment of E&Y as the auditors
for the Company is not obtained at the upcoming Annual Meeting of Stockholders,
the Board of Directors will reconsider its selection.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE RATIFICATION OF THE
SELECTION OF AUDITORS AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR
THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers and
directors and persons who own more than ten percent of its Common Stock to file
reports with the Securities and Exchange Commission disclosing their ownership
of stock in the Company and changes in such ownership. Copies of such reports
are also required to be furnished to the Company. Based solely on a review of
the copies of such reports received by it, the Company believes that, during
fiscal 2001, all such filing requirements were complied with, except for a
report on Form 4 filed late by each of Messrs. Franco and Zuber.
Other Matters
As of the date of this Proxy Statement, the Board of Directors knows of no
business to come before the meeting except as set forth above. If any other
matters should properly come before the meeting, it is expected that the
14
enclosed proxy will be voted on such matters in accordance with the best
judgment of the proxies. Discretionary authority with respect to any such
matters is conferred by the proxy.
By the order of the Board of Directors,
Patrick E. Rondeau, Clerk
July 3, 2001
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED APRIL
1, 2001, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE PROVIDED WITHOUT CHARGE UPON
WRITTEN REQUEST TO INVESTOR RELATIONS, BLUEGREEN CORPORATION, 4960 CONFERENCE
WAY NORTH, SUITE 100, BOCA RATON, FLORIDA 33431.
15
APPENDIX A
BLUEGREEN CORPORATION
AUDIT COMMITTEE CHARTER
I. COMMITTEE ROLE
The primary function of the Audit Committee is to assist the Board of Directors
in fulfilling its oversight responsibilities by reviewing: the major financial
reports and other financial information provided by the Corporation to any
governmental body or the public; the Corporation's systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Board have established; and the Corporation's auditing, accounting and
financial reporting processes generally. Consistent with this function, the
Audit Committee should encourage continuous improvement of, and should foster
adherence to, the Corporation's policies, procedures and practices at all
levels. The Audit Committee's primary duties and responsibilities are to:
Serve as an independent and objective party to monitor, review and assess
the Corporation's financial reporting process, internal control system and
business risk management process.
Review and appraise the audit efforts of the Corporation's independent
accountants and internal auditing department.
Provide an open avenue of communication among the independent accountants,
financial and senior management, the internal auditing department, and the
Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by carrying
out the activities enumerated in Section IV of this Charter.
II. COMMITTEE MEMBERSHIP AND COMPOSITION
The Audit Committee shall be comprised of at least three and no more than six
directors as determined by the Board, each of whom shall be independent board
members, and free from any relationship to the Corporation that, in the opinion
of the Board, may interfere with the exercise of his or her independent judgment
from management and the Corporation.
Each member of the Audit Committee shall be financially literate (as such
qualification interpreted by the Board of Directors in its business judgment),
or must become financially literate within a reasonable time after his or her
appointment to the Audit Committee. At least one member of the Audit Committee
(preferably the Chair) must have accounting or related financial management
expertise, as the Board of Directors interprets such qualification in its
business judgment. Committee members may enhance their familiarity with finance
and accounting by participating in educational programs conducted by the
Corporation or an outside consultant. Notwithstanding anything in this Charter
to the contrary, it is the intent of the Corporation and its Board of Directors
that the composition of the Audit Committee shall be in accordance with the
applicable rules of the New York Stock Exchange (including without limitation
any "grandfather" provisions) and composition of the Audit Committee in
accordance with such rules shall be also deemed in compliance with this Charter.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board and shall serve until the next annual
meeting or until their successors shall be duly elected and qualified. Unless a
Chair is elected by the full Board, the members of the Committee may designate a
Chair by majority vote of the full Committee membership.
The Audit Committee shall have access to its own counsel and other advisors at
the Committee's sole discretion.
16
III. MEETINGS
The Committee shall meet at least four times annually, or more frequently as
circumstances dictate. As part of its job to learn of relevant current and
prospective business issues and to foster open communication, the Committee
should meet at least annually (and throughout the year as appropriate) with
management, the director of the internal auditing department and the independent
accountants in separate executive sessions to discuss any matters that the
Committee or each of these groups believe should be discussed privately. In
addition, the Committee or at least its Chair should meet with the independent
accountants and management quarterly to review the Corporation's financial
statements consistent with Section IV below. The Audit Committee, with
management, shall develop and participate in a process for review of important
financial and operating topics that present potential significant risk to the
Corporation.
Committee meeting agendas shall be the responsibility of the committee Chair,
with input from committee members. It is expected that the Chair would also ask
for management and key committee advisors, and perhaps others, to participate in
this process where appropriate.
The Committee shall communicate committee expectations and the nature, timing,
and extent of committee information needs to management, internal audit, and
external parties, including external auditors. Wherever possible, written
materials shall be received from management, auditors, and others at least one
week in advance of meeting dates.
The Committee, through the Committee Chair, shall report periodically, as deemed
necessary, but at least semi-annually, to the full Board.
The Committee shall review, discuss, and assess its own performance as well as
the Committee role and responsibilities, seeking input from senior management,
the full Board, and others. Changes in role and/or responsibilities, if any,
shall be recommended to the full Board for approval.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
Review and reassess the adequacy of this Charter on an annual basis.
Review the organization's annual financial statements and any material reports
or other financial information submitted to any governmental body, or the
public, including any certification, report, opinion, or review rendered by the
independent accountants.
Review the regular internal reports to management prepared by the internal
auditing department and management's response.
Review with financial management and the independent accountants each quarterly
report on Form 10-Q prior to its filing or prior to the release of earnings. The
Chair of the Committee may represent the entire Committee for purposes of this
review.
With input from management and other key committee advisors, develop an annual
plan responsive to the responsibilities and duties detailed in this Charter. The
annual plan shall be reviewed and approved by the full Board.
Independent Accountants
Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the fees and
other compensation to be paid to the independent accountants.
17
The Audit Committee shall be responsible for ensuring that the outside auditor
submits on a periodic basis to the Audit Committee a formal written statement
delineating all relationships between the auditor and the Corporation. The Audit
Committee is responsible for actively engaging in a dialogue with the outside
auditors with respect to any disclosed relationships or services that may impact
the objectivity and independence of the outside auditor and for recommending
that the Board of Directors take appropriate action in response to the outside
auditors' report to satisfy itself of the outside auditors' independence.
The outside auditor for the Corporation shall be ultimately accountable to the
Board of Directors and the Audit Committee. The Audit Committee and the Board of
Directors shall have the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the outside auditor (or to nominate the
outside auditor to be proposed for shareholders approval in any proxy
statement).
Periodically consult with the independent accountants out of the presence of
management about internal controls and the fullness and accuracy of the
organization's financial statements.
Financial Reporting Processes
In consultation with the independent accountants and the internal auditors,
review the integrity of the organization's financial reporting processes, both
internal and external.
Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in its
financial reporting.
Consider and approve, if appropriate, major changes to the Corporation's
auditing and accounting principles and practices as suggested by the independent
accountants, management, or the internal auditing department.
Process Improvement
Establish regular and separate systems of reporting to the Audit Committee by
each of management, the independent accountants and the internal auditors
regarding any significant judgments made in management's preparation of the
financial statements and the view of each as to appropriateness of such
judgments.
Following completion of the annual audit, review separately with each of
management, the independent accountants and the internal auditing department any
significant difficulties encountered during the course of the audit, including
any restrictions on the scope of work or access to required information.
Review any significant disagreement among management and the independent
accountants or the internal auditing department in connection with the
preparation of the financial statements.
Review with the independent accountants, the internal auditing department and
management the extent to which changes or improvements in financial or
accounting practices, as approved by the Audit Committee, have been implemented.
(This review should be conducted at an appropriate time subsequent to
implementation of changes or improvements, as decided by the Committee.)
Ethical and Legal Compliance
Establish, review and update periodically a Code of Ethical Conduct and ensure
that management has established a system to enforce this Code.
Review management's monitoring of the Corporation's compliance with the
organization's Ethical Code, and ensure that management has an appropriate
review system in place to ensure that Corporation's financial statements,
reports and other financial information disseminated to governmental
organizations, and the public satisfy legal requirements.
Review activities, organizational structure, and qualifications of the internal
audit department.
18
Review, with the organization's counsel, any legal matter that could have a
significant impact on the organization's financial statements.
Review and assess any SEC inquiries and the results of any examinations by
regulatory authorities in terms of important findings, recommendations and
management's response.
Perform any other activities consistent with this Charter, the Corporation's
Articles of Organization and By-laws, and governing law, as the Committee or the
Board of Directors deems necessary or appropriate.
Approval and Amendments
This Charter was adopted and approved by the Corporation's Board of Directors on
April 13, 2000 and may be amended from time to time with the approval of the
Board of Directors.
19
BLUEGREEN CORPORATION
4960 CONFERENCE WAY NORTH, SUITE 100
BOCA RATON, FLORIDA 33431
The undersigned shareholder of BLUEGREEN CORPORATION, a Massachusetts
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated July 3, 2001, and hereby appoints
Patrick E. Rondeau and Anthony M. Puleo, and both of them, proxies and
attorneys-in-fact with full power of substitution, on behalf and in the name of
the undersigned, to represent the undersigned at the 2001 Annual Meeting of
Shareholders of BLUEGREEN CORPORATION to be held on Thursday, August 2, 2001 at
10:00 a.m., local time at the Boca Raton Marriott at 5150 Town Center Circle,
Boca Raton, Florida, and at any adjournment(s) thereof and to vote all shares of
Common Stock which the undersigned would be entitled to vote if then and there
personally present, on the matters set forth below. Such attorneys or
substitutes shall have and may exercise all of the powers of said
attorneys-in-fact thereunder.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder, or IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2 AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER
MATTERS AS MAY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT(S) THEREOF.
--------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
(INSTRUCTION: To withhold authority to vote for any
individual nominee, strike a line through the nominee's name
in the list below)
1. ELECT DIRECTORS
George F. Donovan, Michael J. Franco, Bradford T. Whitmore
FOR all nominees WITHHOLD
Listed (except as AUTHORITY
Marked to the to vote for all
Contrary) nominees listed
[ ] [ ]
2. RATIFY ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
OF THE COMPANY
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before this meeting
and any adjournment(s) thereof.
Please sign exactly as your name appears on this proxy. When
shares are held by joint tenants or as community property,
both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title
as such. If a corporation, please sign the full corporate
name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized
person.
DATED:_______________________________________, 2001
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Signature
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Signature
PLEASE VOTE, SIGN, DATE AND RETURN USING THE ENCLOSED
ENVELOPE.
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FOLD AND DETACH HERE