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Hovnanian Enterprises Inc · DEF 14A · For 2/7/05

Filed On 2/7/05 5:00pm ET · SEC File 1-08551 · Accession Number 1206774-5-107

  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 2/07/05  Hovnanian Enterprises Inc         DEF 14A     2/07/05    1:48                                     1206774

Definitive Proxy Solicitation Material · Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Definitive Proxy Solicitation Material              HTML    272K

This is an EDGAR HTML document rendered as filed. [ Alternative Formats ]

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	UNITED STATES	OMB APPROVAL
	SECURITIES AND EXCHANGE COMMISSION	OMB Number: 3235-00595
	Washington, D.C. 20549	Expires: February 28, 2006
	SCHEDULE 14A	Estimated average burden hours per response......... 12.75

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:

o	Preliminary Proxy Statement
o	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x	Definitive Proxy Statement
o	Definitive Additional Materials
o	Soliciting Material Pursuant to Rule §240.14a-12

HOVNANIAN ENTERPRISES, 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):

x	No fee required.

o	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

	1.	Title of each class of securities to which transaction applies:



	2.	Aggregate number of securities to which transaction applies:



	3.	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):



	4.	Proposed maximum aggregate value of transaction:



	5.	Total fee paid:




o	Fee paid previously with preliminary materials.

o	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

	1.	Amount Previously Paid:



	2.	Form, Schedule or Registration Statement No.:



	3.	Filing Party:



	4.	Date Filed:

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HOVNANIAN ENTERPRISES, INC.
10 Highway 35, P.O. Box 500, Red Bank, N.J. 07701 (732) 747-7800

February 7, 2005

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders which will be held on Tuesday, March 8, 2005, at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017. The meeting will start promptly at 5:00 p.m.

It is important that your shares be represented and voted at the meeting. Therefore, we urge you to complete, sign, date and return the enclosed proxy card in the envelope provided for this purpose or, if applicable, register your vote via the Internet or by telephone according to the instructions on the proxy card. Of course, if you attend the meeting, you may still choose to vote your shares personally even though you have previously designated a proxy.

Important items to be acted upon at the meeting include the election of directors and the ratification of the selection of an independent registered public accounting firm.

We sincerely hope you will be able to attend and participate in the Company’s 2005 Annual Meeting. We welcome the opportunity to meet with many of you and give you a firsthand report on the progress of your Company.

Sincerely yours,

Kevork S. Hovnanian
Chairman of the Board

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HOVNANIAN ENTERPRISES, INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 7, 2005

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Hovnanian Enterprises, Inc. will be held on Tuesday, March 8, 2005, at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017 at 5:00 p.m. for the following purposes:

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

The ratification of the selection of Ernst & Young LLP, an independent registered public accounting firm, to examine the financial statements of the Company for the year ended October 31, 2005; and

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

Only shareholders of record at the close of business on January 14, 2005 are entitled to notice of, and to vote at, the meeting. Accompanying this Notice of Annual Meeting of Shareholders is a proxy statement, proxy card(s) and the Company’s Annual Report for the year ended October 31, 2004.

Shareholders of record of both Class A Common Stock and Class B Common Stock, except for shareholders of Class B Common Stock held in nominee name, may appoint proxies to vote their shares in one of three ways:

Via the Internet pursuant to the instructions on the enclosed proxy card;

Calling the toll-free number on the enclosed proxy card; or

Signing, dating and returning the enclosed proxy card in the envelope provided.

Shareholders of record of Class B Common Stock held in nominee name may appoint proxies to vote their shares by signing, dating and returning the enclosed proxy card in the envelope provided.

All shareholders are urged to attend the meeting in person or by proxy. Shareholders who do not expect to attend the meeting are requested to complete, sign and date the enclosed proxy card and return it promptly in the self-addressed envelope provided, or, if applicable, to register their vote via the Internet or by telephone according to the instructions on the proxy card.

By order of the Board of Directors,
PETER S. REINHART
Secretary

February 7, 2005

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If you are a shareholder of record and you plan to attend the Annual Meeting, please mark the appropriate box on your proxy card or, if applicable, so indicate when designating a proxy via the Internet or by telephone. If your shares are held by a bank, broker or other intermediary and you plan to attend, please send written notice to Hovnanian Enterprises, Inc., 10 Highway 35, P.O. Box 500, Red Bank, New Jersey 07701, Attention: Peter S. Reinhart, Secretary, and enclose evidence of your ownership (such as a letter from the bank, broker or other intermediary confirming your ownership or a bank or brokerage firm account statement). The names of all those planning to attend will be placed on an admission list held at the registration desk at the entrance to the meeting. If you do not plan to attend the Annual Meeting, please designate a proxy by mail or, if applicable, via the Internet or by telephone. If you choose to vote by mail, please sign the proxy card and return it in the envelope provided so that your shares will be voted. The envelope requires no postage if mailed in the United States.

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

PROXY STATEMENT

GENERAL

The accompanying proxy is solicited on behalf of the Board of Directors of Hovnanian Enterprises, Inc. (the “Company”, “we”, “us”, or “our”) for use at the Annual Meeting of Shareholders referred to in the foregoing notice and at any adjournment thereof. It is expected that this Proxy Statement and the accompanying proxy will be mailed on or about February 7, 2005 to each shareholder entitled to vote. A proxy card(s) and the Company’s Annual Report for the year ended October 31, 2004 accompany this Proxy Statement.

Shares represented by properly executed proxies, if such proxies are received in time and not revoked, will be voted in accordance with the specifications thereon. If no specifications are made, the persons named in the accompanying proxy will vote the shares represented by such proxy for the Board of Directors’ slate of directors, for the ratification of Ernst & Young LLP, the selected independent registered public accounting firm, and as recommended by the Board of Directors, unless contrary instructions are given. Any person may revoke a previously designated proxy at any time before it is exercised by delivering written notice of revocation to Peter S. Reinhart, the Secretary of the Company, or by voting in person at the meeting. Please note that attendance at the meeting will not by itself revoke a proxy.

All share and per share amounts in this Proxy Statement have been retroactively adjusted to reflect the Company’s 2-for-1 stock split in the form of a 100% stock dividend of Class A Common Stock and Class B Common Stock which occurred in March 2004.

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VOTING RIGHTS AND SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The record date for the determination of shareholders entitled to vote at the meeting was the close of business on January 14, 2005. On January 14, 2005, the outstanding voting securities of the Company consisted of 46,575,088 shares of Class A Common Stock, each share entitling the holder thereof to one vote, and 14,683,480 of Class B Common Stock, each share entitling the holder thereof to ten votes. Other than as set forth in the table below, there are no persons known to the Company to be the beneficial owner of shares representing more than 5% of either the Company’s Class A Common Stock or Class B Common Stock.

The following table sets forth as of January 14, 2005 the Class A Common Stock and Class B Common Stock of the Company beneficially owned by each director, each nominee for director, each executive officer named in the tables set forth under “Executive Compensation” below, all directors and executive officers as a group and holders of more than 5% of either the Class A Common Stock or the Class B Common Stock of the Company:

	Class A Common Stock			Class B Common Stock
	Amount and Nature of Beneficial Ownership(1)	Percent of Class (2)		Amount and Nature of Beneficial Ownership(1)	Percent of Class (2)
Directors, Nominees for Directors, Certain Executive Officers, Directors and Executive Officers as a Group and Holders of More Than 5%
Kevork S. Hovnanian(3)(4)	7,620,424	16.4	%	11,687,674	79.6	%
Ara K. Hovnanian(5)	4,412,200	9.2	%	1,856,684	12.6	%
Geaton A. DeCesaris, Jr.(6)	1,000,248	2.1	%	—	—
Arthur M. Greenbaum	23,736	.1	%	3,000	—
Kevin C. Hake	7,980	—		—	—
Edward A. Kangas	28,734	.1	%	—	—
Desmond P. McDonald	31,734	.1	%	—	—
Robyn T. Mingle	—	—		—	—
John J. Robbins	27,334	.1	%	—	—
J. Larry Sorsby	229,302	.5	%	—	—
Stephen D. Weinroth	69,234	.1	%	4,500	—
Earnest Partners, L.L.C. (7)	4,788,184	10.3	%	—	—
All directors and executive officers as a group (13 persons)	13,874,002	28.1	%	13,802,028	92.2	%

Notes:

⁽¹⁾

The figures in the table in respect of Class A Common Stock do not include the shares of Class B Common Stock beneficially owned by the specified persons, which shares of Class B Common Stock are convertible at any time on a share for share basis to Class A Common Stock. The figures in the table represent beneficial ownership (including ownership of options to purchase 1,834,000 shares of Class A Common Stock currently exercisable or exercisable within 60 days) with sole voting power and sole investment power except as noted in notes (3), (4), (5) and (6) below.

⁽²⁾

Based upon the number of shares outstanding plus options currently exercisable within 60 days held by each such director, nominee, executive officer or holder.

⁽³⁾

Includes 190,000 shares of Class A Common Stock and 529,124 shares of Class B Common Stock as to which Kevork S. Hovnanian has shared voting power and shared investment power. Kevork S. Hovnanian’s address is 10 Hwy 35, P.O. Box 500, Red Bank, New Jersey 07701.

⁽⁴⁾

Includes 5,658,826 shares of Class B Common Stock held by the Kevork S. Hovnanian Family Limited Partnership, a Connecticut limited partnership (the “Limited Partnership”), beneficial ownership of which is disclaimed by Kevork S. Hovnanian. Kevork S. Hovnanian’s wife, Sirwart Hovnanian, as trustee of the Sirwart Hovnanian 1994 Marital Trust, is the managing general partner of the Limited Partnership and as such has the sole power to vote and dispose of the shares of Class B Common Stock held by the Limited Partnership. Also includes 529,124 shares of Class B Common Stock held in trust for Mr. Hovnanian’s daughter over which Sirwart Hovnanian, as trustee, shares with her daughter the power to dispose

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of and vote. In addition, includes 190,000 shares of Class A Common Stock held in the name of Sirwart Hovnanian over which she has sole power to dispose of and vote. Mr. Hovnanian disclaims beneficial ownership of the shares described in the preceding two sentences.

⁽⁵⁾

Includes 2,000,000 shares of Class A Common Stock held in a grantor retained annuity trust for Kevork S. Hovnanian (the “GRAT”) for which Ara K. Hovnanian is trustee and has a potential remainder interest, and 70,434 shares of Class A Common Stock and 192,534 shares of Class B Common Stock held in family related accounts as to which Ara K. Hovnanian has shared voting power and shared investment power. Ara K. Hovnanian disclaims beneficial ownership of such shares, except to the extent of his potential pecuniary interest in the GRAT. Ara K. Hovnanian’s address is 10 Hwy 35, P.O. Box 500, Red Bank, New Jersey 07701.

⁽⁶⁾

Includes 367,198 shares of Class A Common Stock as to which Geaton A. DeCesaris, Jr. has shared voting power and shared investment power.

⁽⁷⁾

Based solely upon information contained in a statement on Schedule 13G filed with the Securities and Exchange Commission on September 13, 2004. Address: 75 Fourteenth Street, Suite 2300, Atlanta, GA 30309.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s executive officers, directors, persons who own more than 10% of a registered class of the Company’s equity securities and certain entities associated with the foregoing (“Reporting Persons”) to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission (the “SEC”) and the New York Stock Exchange (the “NYSE”). These Reporting Persons are required by SEC rules to furnish the Company with copies of all Forms 3, 4 and 5, and amendments thereto, that they file with the SEC and the NYSE.

Based solely on the Company’s review of the copies of such forms and amendments thereto it has received, the Company believes that with respect to the fiscal year ended October 31, 2004, all the Reporting Persons complied with all applicable filing requirements, except as follows: (1) each of Kevork S. Hovnanian, his spouse Sirwart Hovnanian, and Ara K. Hovnanian reported on Form 4 transfers of shares by Kevork Hovnanian and Ara Hovnanian to annuity trusts in which they were the principal beneficiary, but such reports were not filed in a timely manner and (2) Peter S. Reinhart amended a previously filed Form 4 to report late that the shares timely reported as sold in the original filing were received upon the exercise of an employee stock option.

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(1) ELECTION OF DIRECTORS

The Company’s restated By-laws provide that the Board of Directors shall consist of up to eleven directors who shall be elected annually by the shareholders. The Company’s amended Certificate of Incorporation requires that at any time when any shares of Class B Common Stock are outstanding, one-third of the directors shall be independent, as defined therein.

Under the rules of the NYSE, listed companies, like us, who have a controlling shareholder are not required to have a majority of independent directors, as defined by NYSE rules. Because Mr. K. Hovnanian and members of his immediate family hold more than 50% of the voting power of the Company, the Company is a controlled company within the meaning of the rules of the NYSE.

The Board of Directors has determined that a Board of Directors consisting of the nine nominees listed below is the best composition in order to satisfy both the independence requirements of the Company’s amended Certificate of Incorporation as well as the NYSE rules.

The following nominees are proposed as directors of the Company to hold office until the next Annual Meeting of Shareholders and until their respective successors have been duly elected and qualified. In the event that any of the nominees for directors should become unavailable, it is intended that the shares represented by proxies will be voted for such substitute nominees as may be nominated by the Board of Directors, unless the number of directors constituting a full Board of Directors is reduced. The Company has no reason to believe, however, that any of the nominees is, or will be, unavailable to serve as a director. Proxies cannot be voted for a greater number of persons than the number of nominees named below.

Board of Directors

Name	Age	Company Affiliation	Year First Became a Director
Kevork S. Hovnanian	81	Chairman of the Board & Director	1967
Ara K. Hovnanian	47	President, Chief Executive Officer & Director	1981
Geaton A. DeCesaris, Jr.	49	President of the Hovnanian Land Investment Group & Director	2001
Arthur M. Greenbaum	79	Director	1992
Edward A. Kangas	60	Director	2002
Desmond P. McDonald	77	Director	1982
John J. Robbins	65	Director	2001
J. Larry Sorsby	49	Executive Vice President, Chief Financial Officer & Director	1998
Stephen D. Weinroth	66	Director	1982

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Board of Directors – Directors’ Biographies

		Mr. K. Hovnanian is the founder of the Company and has served as Chairman of the Board since its original incorporation in 1967. He served as Chief Executive Officer from 1967 through July 1997. In 1996, the New Jersey Institute of Technology awarded Mr. Hovnanian a President’s Medal for “Distinguished Achievement to an Outstanding Entrepreneur”. In 1992, Mr. Hovnanian was granted one of five nationwide Harvard Dively Awards for Leadership in Corporate Public Initiatives.
		Mr. A. Hovnanian has been Chief Executive Officer since 1997 after being appointed President in 1988 and Executive Vice President in 1983. Mr. A. Hovnanian joined the Company in 1979 and has been a Director of the Company since 1981. In 1985, Governor Kean appointed Mr. Hovnanian to The Council on Affordable Housing and he was reappointed to the Council in 1990 by Governor Florio. In 1994, Governor Whitman appointed him as member of the Governor’s Economic Master Plan Commission. Mr. Hovnanian serves as Member of the Advisory Council of PNC Bank and the Monmouth Real Estate Investment Corporation, and he is on the Boards of a variety of charitable organizations. Mr. A. Hovnanian is the son of Mr. K. Hovnanian.
		Mr. DeCesaris, Jr. has served as President of the Hovnanian Land Investment Group since July 2003. Prior to this position, Mr. Decesaris, Jr. was President of Homebuilding Operations and Chief Operating Officer since January 2001. Prior to joining the Company in 2001, Mr. DeCesaris, Jr. served as Chairman, President, and Chief Executive Officer of Washington Homes, Inc. Mr. DeCesaris, Jr. was honored as the Washington, D.C. area’s Entrepreneur of the Year in the real estate category in 1994, sponsored by Inc. magazine and Ernst and Young. Mr. DeCesaris was elected as a Director of the Company in January 2001.
		Mr. Greenbaum has been a Senior Partner of Greenbaum, Rowe, Smith & Davis LLP, a legal firm, since 1950. Mr. Greenbaum has been a Director since 1992.
		Mr. Kangas was Chairman and Chief Executive Officer of Deloitte Touche Tohmatsu from December 1989 to May 2000, when he retired. He also serves on the Boards of Electronic Data Systems, Inc. (NYSE), Eclipsys, Inc. (NASDAQ), and Tenet Healthcare Corporation, Inc. (NYSE) and is Chairman of the Board of the National Multiple Sclerosis Society. Mr. Kangas was elected as a Director of the Company in September 2002 and is a member of the Company’s Audit Committee and Compensation Committee.

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		Mr. McDonald was a Director of Midlantic Bank, N.A. from 1976 to December 1995, Executive Committee Chairman of Midlantic Bank, N.A. from August 1992 to December 1995 and President of Midlantic Bank, N.A. from 1976 to June 1992. He was also a Director of Midlantic Corporation to December 1995 and Vice Chairman from June 1990 to July 1992. Mr. McDonald has been a Director of the Company since 1982 and is Chairman of the Company’s Audit Committee.
		Mr. Robbins was a managing partner of the New York Office of Kenneth Leventhal & Company and executive committee partner, retiring from the firm in 1992. He was made a partner of Kenneth Leventhal & Company in 1973. Mr. Robbins has been a Trustee of Keene Creditors Trust since 1996. He has also been a Director and the Chairman of the Audit Committee of Raytech Corporation (NYSE) since May 2003. Mr. Robbins was elected as a Director of the Company in January 2001 and is a member of the Company’s Audit Committee.
		Mr. Sorsby has been Chief Financial Officer of the Company since 1996 and Executive Vice President since November 2000. From March 1991 to November 2000, he was Senior Vice President, and from March 1991 to July 2000, he was Treasurer. Mr. Sorsby was elected as a Director of the Company in 1997.
		Mr. Weinroth is a Managing Partner of Hudson Capital Advisors, LLC, a merchant banking firm, and is a Managing Director and Board Member of Kline Hawkes & Co., a manager of private equity funds. He is Chairman of the Board Emeritus of Core Laboratories, N.V., (NYSE), a global oil field service company where he was Chairman of the Board. He is Vice Chair of the Central Asian American Enterprise Fund. Mr. Weinroth has been a Director of the Company since 1982, is Chairman of the Company’s Compensation Committee and a member of the Company’s Audit Committee.

MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS

During the year ended October 31, 2004, the Board of Directors held four regularly scheduled meetings and one telephonic meeting. In addition, directors considered Company matters and had frequent communications with the Chairman of the Board of Directors and others apart from the formal meetings. Directors are expected to attend the Annual Meeting of Shareholders, but the Company does not have a formal policy with respect to attendance. Eight members of the Board of Directors attended the Annual Meeting of Shareholders held on March 5, 2004.

Audit Committee

During the year ended October 31, 2004, the members of the Audit Committee of the Board of Directors were Messrs. Kangas, McDonald, Robbins and Weinroth. The Audit Committee is chaired by Mr. McDonald and is responsible for reviewing and approving the scope of the annual audit undertaken by the Company’s independent registered public accounting firm and meeting with them to review the results of their work as well as their recommendations. The Audit Committee appoints the Company’s independent registered public accounting firm and also approves and reviews their fees.

The Vice President of Internal Audit for the Company reports directly to the Audit Committee on, among other things, the Company’s compliance with certain Company procedures which are designed to enhance

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management’s understanding of operating issues and the results of the Audit Department’s approximately twenty-five audits annually of the various aspects of the Company’s business. The Audit Committee authorizes staffing and compensation of the internal audit department. The Company’s Chief Accounting Officer reports directly to the Audit Committee on significant accounting issues. During the year ended October 31, 2004, the Audit Committee met on four occasions and had eight telephonic meetings. For additional information related to the Audit Committee, see “Report of the Audit Committee” below.

Compensation Committee

During the year ended October 31, 2004, the members of the Compensation Committee of the Board of Directors were Messrs. Weinroth and Kangas. The Compensation Committee is chaired by Mr. Weinroth and is active in reviewing salaries, bonuses, and other forms of compensation for the Company’s executive officers, key management employees, and non-employee directors, and in establishing salaries and in other compensation and personnel areas as the Board of Directors from time to time may request. For a discussion of the criteria used and factors considered by the Compensation Committee in reviewing and establishing executive compensation, see “Report of the Compensation Committee” below. During the year ended October 31, 2004, the Compensation Committee met on one occasion and had four telephonic meetings.

Nominating Committee

The Company does not have a Nominating Committee. Under the rules of the NYSE, listed companies, like us, who have a controlling shareholder are not required to have a nominating committee. Because the Company does not have a Nominating Committee, the Company does not have a specific policy regarding shareholder nominations of potential directors to the Board of Directors, other than through the process described under “Shareholder Proposals for the 2006 Annual Meeting” below. Possible nominees to the Board of Directors may be suggested by any director and given to the Chairman of the Board. The Company’s restated By-laws provide that directors need not be shareholders. The Chairman of the Board of Directors, who is also the controlling shareholder, each year recommends a slate of directors to be nominated for election at the annual shareholders’ meeting. The Board of Directors approves the slate of nominees. Vacancies on the Board of Directors, other than those resulting from removal by shareholders, may be filled by action of the Board of Directors after recommendation by the Chairman of the Board.

As of the 120^th calendar day prior to February 9, 2005, the Board of Directors had not received any recommendation for the nomination of a candidate to the Board of Directors by any shareholder or group of shareholders that at such time held more than 5% of the Company’s voting stock for at least one year.

The Company’s Corporate Governance Guidelines (“Guidelines”) require that the Board of Directors conduct a self-evaluation at least annually, and as circumstances otherwise dictate. In conjunction with the self-evaluation, the Board of Directors reviews the qualifications and effectiveness of the existing Board of Directors and allows for each board member to make comments or recommendations regarding the qualifications and effectiveness of the existing Board of Directors or additional qualifications that may be required when selecting new board members. Among other factors, the Board of Directors generally considers the size of the Board of Directors best suited to fulfill its responsibilities, the Board of Directors’ overall membership composition to ensure the Board of Directors has the requisite expertise and consists of persons with sufficiently diverse backgrounds, the independence of outside directors and other possible conflicts of interest of existing and potential members of the Board of Directors. The Company does not pay fees to any third party to identify or evaluate or assist in the identification or evaluation of potential director nominees.

DIRECTOR COMPENSATION

In fiscal year 2004, each non-employee director was paid an annual retainer of $40,000, 50% in cash and 50% in shares of Class A Common Stock (approximately 472 shares of Class A Common Stock). In addition, the non-employee directors received a fee of $3,000 for each board meeting held in person and $2,000 for each telephonic board meeting. Members of the Audit Committee and Compensation Committee received $5,000 for each meeting held in person and $2,500 for each telephonic meeting. In accordance with the above, for fiscal year 2004, Mr. McDonald received $94,000, Mr. Greenbaum received $54,000, Mr. Robbins received

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$94,000, Mr. Weinroth received $109,000, and Mr. Kangas received $109,000. From time to time, non-employee directors were also granted stock options, and in January of 2004, non-employee directors received an award of 15,000 options to purchase Class A Common Stock. In addition, all directors were reimbursed for expenses related to their attendance at meetings of the Board of Directors and committee meetings.

For information on non-employee director compensation for fiscal year 2005, see “Non-Employee Director Compensation Amendments” below.

VOTE REQUIRED

The election of the nominees to the Company’s Board of Directors for the ensuing year, to serve until the next Annual Meeting of Shareholders of the Company, and until their respective successors may be elected and qualified, requires the affirmative vote of the holders of a majority in voting power of all outstanding common stock, voting together.

Mr. K. Hovnanian and certain members of his family have informed the Company that they intend to vote in favor of the nominees named in this proposal. Because of the voting power of Mr. K. Hovnanian and such members of his family, this proposal is assured passage.

Our Board of Directors recommends that shareholders vote FOR the election of the nominees named in this proposal to the Company’s Board of Directors.

(2) RATIFICATION OF THE SELECTION OF AN INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

The selection of an independent registered public accounting firm to examine financial statements of the Company made available or transmitted to shareholders and filed with the SEC for the year ended October 31, 2005 is submitted to this Annual Meeting of Shareholders for ratification. Ernst & Young LLP has been selected by the Audit Committee of the Company to examine such financial statements.

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

VOTE REQUIRED

Ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm to examine financial statements of the Company for the year ended October 31, 2005, requires the affirmative vote of the holders of a majority in voting power of all outstanding common stock, voting together.

Mr. K. Hovnanian and certain members of his family have informed the Company that they intend to vote in favor of this proposal. Because of the voting power of Mr. K. Hovnanian and such members of his family, this proposal is assured passage.

Our Board of Directors recommends that shareholders vote FOR ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm.

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EXECUTIVE COMPENSATION

Summary Compensation Table

The following table summarizes for the fiscal years ended October 31, 2004, 2003 and 2002, the compensation paid or accrued by the Company for the chief executive officer and for the other four most highly compensated executive officers for fiscal year 2004.

		Annual Compensation					Long-Term Compensation
							Awards		Payouts
Name & Principal Position	Year or Period	Salary		Bonus⁽¹⁾		Other Annual Compen- sation⁽²⁾	Restricted Stock Awards⁽³⁾	Number of Securities Underlying Options/ SARs⁽⁴⁾	LTIP Payouts	All Other Compen- sation⁽⁵⁾
Kevork S. Hovnanian	2004	$	1,129,999	$	5,566,000	—	—	—	N/A	$ 16,633
Chairman of the Board	2003	$	1,101,782	$	6,128,000	—	—	—	N/A	$ 16,414
of Directors	2002	$	970,041	$	4,354,000	—	—	—	N/A	$ 15,664

Ara K. Hovnanian	2004	$	1,111,022	$	7,696,808	$68,893	$3,958,358	600,000	N/A	$572,260
President and Chief Executive	2003	$	1,034,029	$	6,989,600	$89,571	$2,566,080	600,000	N/A	$484,139
Officer	2002	$	909,408	$	3,747,800	—	$1,927,440	500,000	N/A	$181,047

J. Larry Sorsby	2004	$	296,472	$	998,130	—	$ 513,324	50,000	N/A	$119,958
Executive Vice President	2003	$	321,283	$	1,052,245	—	$ 541,154	50,000	N/A	$102,759
and Chief Financial Officer	2002	$	271,266	$	731,003	—	$ 375,944	50,000	N/A	$ 45,017

Kevin C. Hake	2004	$	221,188	$	181,411	—	$ 93,297	5,000	N/A	$ 17,284
Senior Vice President/	2003	$	207,733	$	171,283	—	$ 88,088	—	N/A	$ 14,639
Finance & Treasurer	2002	$	181,730	$	130,550	—	$ 67,140	—	N/A	$ 8,101

Robyn T. Mingle⁽⁶⁾	2004	$	238,766	$	155,750	—	$ 80,100	—	N/A	$ 3,784
Senior Vice President/	2003	$	8,846	$	100,000	—	—	—	N/A	—
Human Resources	2002		N/A		N/A	N/A	N/A	N/A	N/A	N/A

Notes:

⁽¹⁾

Includes cash awards not paid until after year end. In fiscal year 2003, for A. Hovnanian, also includes 27,326 shares of Class B Common Stock with an approximate dollar value of $2,000,000, which was not received until after year end.

⁽²⁾

Includes perquisites and other personal benefits unless the aggregate amount is less than the lesser of $50,000 or 10% of the total of annual salary and bonus reported for the named executive officer. Perquisites for A. Hovnanian in fiscal years 2004 and 2003 include $50,321 and $78,571, respectively, relating to personal use of the Company’s corporate aircraft.

⁽³⁾

Represents the right to receive Class A Common Stock after vesting 25% a year for four years. Any executive with 20 years of service or who reaches the age of 58 becomes immediately 100% vested. Awards of restricted stock during the years ended October 31, 2004, 2003, and 2002 amounted to 108,717 shares, 108,102 shares, and 148,562 shares, respectively, for A. Hovnanian; 14,099 shares, 22,798 shares, and 28,978 shares, respectively, for J. Sorsby; and 2,563 shares, 3,712 shares, and 5,176 shares, respectively, for K. Hake. Awards of restricted stock for R. Mingle amounted to 2,200 shares during the year ended October 31, 2004. Such awards of restricted stock are presented based upon the closing price of the Class A Common Stock on the New York Stock Exchange on the date of grant. The aggregate number of shares of restricted stock held as of October 31, 2004, and the value thereof as of such date based upon the closing price of the Class A Common Stock on October 29, 2004, which was the last trading day of October 2004, on the New York Stock Exchange of $37.54, were as follows: A. Hovnanian: 624,401 shares ($23,440,014); J. Sorsby: 138,501 shares ($5,199,328); R. Mingle 2,200 shares ($82,588); and K. Hake: 14,011 shares ($525,973).

⁽⁴⁾

Hovnanian Enterprises Inc · DEF 14A · For 2/7/05

Filed On 2/7/05 5:00pm ET · SEC File 1-08551 · Accession Number 1206774-5-107

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