¨
|
Preliminary Proxy
Statement
|
¨
|
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|
x
|
Definitive Proxy
Statement
|
¨
|
Definitive Additional
Materials
|
¨
|
Soliciting Material Pursuant to
§240.14a-12
|
x
|
No fee
required.
|
¨
|
Fee computed on table below per
Exchange Act Rules 14a-6(i)(4) and
0-11.
|
1)
|
Title of each class of securities
to which transaction applies:
|
|
2)
|
Aggregate number of securities to
which transaction applies:
|
|
3)
|
Per unit price or other
underlying value of transaction computed pursuant to Exchange Act Rule
0-11 (set forth the amount on which the filing fee is calculated and state
how it was determined):
|
|
4)
|
Proposed maximum aggregate value
of transaction:
|
|
5)
|
Total fee
paid:
|
|
¨
|
Fee paid previously with
preliminary materials.
|
¨
|
Check box if any part of the fee
is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule
and the date of its filing.
|
1)
|
Amount Previously
Paid:
|
|
2)
|
Form, Schedule or Registration
Statement No.:
|
|
3)
|
Filing
Party:
|
|
4)
|
Date
Filed:
|
|
1.
|
To
elect, by vote of the holders of the Company’s common stock,
par value $0.01 per share (the “Common Stock”), and holders of NovaStar
Financial’s 9.00% Series D1 Mandatory Convertible Preferred Stock, par
value $0.01 per share (the “Series D1 Preferred Stock”), two Class I
directors to serve until the annual meeting of stockholders to be held in
2012 and until their successors are elected and
qualify;
|
2.
|
To
elect, by vote of the holders of the 8.90% Series C Cumulative Redeemable
Preferred Stock, par value $0.01 per share, two directors to serve until
such time that all dividends accumulated and due on such stock have been
paid fully paid;
|
3.
|
To
ratify, by vote of the holders of Common Stock and holders the Series D1
Preferred Stock, the selection of Deloitte & Touche LLP as the
Company’s independent registered public accounting firm for the fiscal
year ending December 31, 2009;
and
|
4.
|
To
transact such other business as may properly come before the annual
meeting and any postponement or adjournment
thereof.
|
By
Order of the Board of Directors
|
|
/s/
W. Lance Anderson
|
|
W.
Lance Anderson
Chairman
of the Board and
Chief
Executive Officer
|
|
Page
|
|
GENERAL
INFORMATION
|
|
1
|
PROPOSAL 1 – ELECTION OF CLASS I
DIRECTORS BY HOLDERS
OF COMMON STOCK AND SERIES D1 PREFERRED STOCK
|
|
3
|
PROPOSAL 2 – ELECTION OF SERIES C
DIRECTORS BY HOLDERS OF SERIES C
PREFERRED STOCK
|
4
|
|
CORPORATE GOVERNANCE AND OTHER
MATTERS
|
5
|
|
AUDIT COMMITTEE
REPORT
|
|
8
|
EXECUTIVE OFFICERS
|
9
|
|
EXECUTIVE
COMPENSATION
|
|
9
|
SECURITIES
OWNERSHIP
|
|
14
|
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
|
|
16
|
REVIEW AND APPROVAL OF
TRANSACTIONS WITH RELATED PARTIES; RELATED PARTY
TRANSACTIONS
|
|
16
|
PROPOSAL 3 – RATIFICATION OF THE
SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
|
|
17
|
OTHER
BUSINESS
|
|
18
|
STOCKHOLDER PROPOSALS OR
NOMINATIONS – 2010 ANNUAL MEETING
|
|
19
|
•
|
shares
will be voted FOR
the election of the nominees named in this proxy statement as Class I
directors;
|
•
|
shares
will be voted FOR
the ratification of the selection of Deloitte & Touche LLP as the
independent registered public accounting firm for the fiscal year ending
December 31, 2009.
|
Name
|
Position
with NovaStar Financial, Inc.
|
|
Art
N. Burtscher
|
Class
I Director
|
|
Edward
W. Mehrer
|
Class
I Director
|
•
|
Audit
Committee. The Audit Committee of the Board of Directors consists
of four directors, all of whom are independent under the Director
Independence Standards and other SEC rules and regulations applicable to
audit committees. The following directors are currently members of the
Audit Committee: Gregory T. Barmore, Donald M. Berman, Art N. Burtscher
and Edward M. Mehrer, who serves as the chairman. The Board of
Directors has determined that Edward W. Mehrer qualifies as an audit
committee financial expert, as such term is defined by
Item 407(d)(5)(ii) of Regulation S-K of the Exchange Act. During
2008, the Audit Committee met 6
times.
|
•
|
Nominating
and Corporate Governance Committee. The Nominating and
Corporate Governance Committee of the Board of Directors consists of four
directors, all of whom are independent under the Director Independence
Standards. The following directors are currently members of the Nominating
and Corporate Governance Committee: Gregory T. Barmore, Donald
T. Berman, Art N. Burtscher and Edward M. Mehrer, with
Mr. Burtscher serving as the chairman. During 2008, the Nominating
and Corporate Governance Committee met 1
time.
|
•
|
Compensation
Committee . The Compensation
Committee of the Board of Directors consists of four directors, all of
whom are independent under the Director Independence Standards and SEC
rules and regulations applicable to compensation committees. The following
directors are currently members of the Compensation Committee: Gregory T.
Barmore, Donald T. Berman, Art N. Burtscher and Edward M. Mehrer, with
Mr. Barmore serving as the chairman. The Committee is scheduled to
meet quarterly, and more frequently as circumstances dictate. During 2008,
the Compensation Committee met 1 time.
|
Name
|
Fees Earned
or Paid in
Cash
($)
|
Option Awards ($)(1)
|
Total
($)
|
|||||||||
Gregory
T. Barmore
|
$ | 56,500 | $ | 12,865 | $ | 69,365 | ||||||
Art
N. Burtscher
|
56,500 | 12,865 | 69,365 | |||||||||
Edward
W. Mehrer
|
61,500 | 12,865 | 74,365 | |||||||||
Donald
M. Berman
|
50,000 | 26,722 | 76,722 |
1.
|
Represents
the dollar amount recognized for financial reporting purposes for the
fiscal year ended December 31, 2008, in accordance with SFAS 123(R)
(disregarding estimates of forfeitures), and includes amounts from stock
option awards granted in 2003 through 2008. See Note 19 to the
Consolidated Financial Statements included in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2008 for a discussion of
the relevant assumptions used in calculating these amounts. The grant date
fair value of the 2008 option awards for each director was $1,754. The
aggregate number of option awards outstanding at December 31, 2008
for each director was 10,000 for Mr. Barmore; 13,750 for
Mr. Burtscher; 14,062 for Mr. Mehrer; and 5,224 for
Mr. Berman.
|
Audit
Committee
|
Edward
W. Mehrer, Chair
|
Gregory
T. Barmore
|
Art
N. Burtscher
|
Donald
M. Berman
|
Name
|
|
Position
With NovaStar Financial
|
|
Age
|
W.
Lance Anderson
|
|
Chairman of the Board and Chief Executive Officer
|
|
48
|
Rodney
E. Schwatken
|
|
Senior
Vice President and Chief Financial Officer
|
|
45
|
Name
|
|
Title
|
W.
Lance Anderson (A)
|
|
Chairman
of the Board and Chief Executive Officer
|
Rodney
R. Schwatken (B)
|
Chief
Financial Officer
|
|
Scott
F. Hartman (C)
|
|
Chairman
of the Board and Chief Executive Officer
|
Michael
L. Bamburg (D)
|
Senior
Vice President and Chief Investment Officer
|
|
Todd
M. Phillips (E)
|
|
Vice
President, Treasurer and Controller (Chief Accounting
Officer)
|
(A)
|
Effective
January 3, 2008, Mr. Anderson was appointed Chairman of the Board and
Chief Executive Officer.
|
(B)
|
Effective
January 3, 2008, Mr. Schwatken was appointed Chief Financial
Officer
|
(C)
|
Mr. Hartman’s
employment was terminated and he resigned from the Board of Directors,
effective January 3, 2008.
|
(D)
|
Mr.
Bamburg resigned as Senior Vice President and Chief Investment Officer,
effective December 31, 2008.
|
(E)
|
Mr.
Phillips resigned as Vice President, Treasurer and Controller (Chief
Accounting Officer), effective September 30,
2008.
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Option
Awards
($)(4)
|
Stock
Awards
($)(4)
|
Severance
($)(5)
|
All
Other
Compensation
($)(6)
|
Total
($)
|
|||||||||||||||||
W.
Lance Anderson
|
2008
|
665,784
|
—
|
201,791
|
157,456
|
—
|
31,033
|
1,056,064
|
|||||||||||||||||
Chief
Executive Officer
|
2007
|
663,204
|
—
|
188,401
|
231,487
|
—
|
31,573
|
1,115,025
|
|||||||||||||||||
Rodney
E. Schwatken
|
2008
|
165,000
|
100,000
|
(1)
|
6,120
|
5,277
|
—
|
—
|
276,397
|
||||||||||||||||
Chief
Financial Officer
|
2007
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
|||||||||||||||||
Scott
F. Hartman
|
2008
|
—
|
—
|
33,632
|
7,737
|
301,835
|
(
|
5)
|
106,828
|
450,032
|
|||||||||||||||
Chief
Executive Officer
|
2007
|
663,204
|
—
|
188,401
|
231,847
|
—
|
31,573
|
1,115,025
|
|||||||||||||||||
Michael
L. Bamburg
|
2008
|
459,028
|
—
|
19,038
|
3,868
|
—
|
—
|
481,934
|
|||||||||||||||||
Chief
Investment Officer
|
2007
|
412,738
|
—
|
105,895
|
126,895
|
—
|
2,547
|
648,075
|
|||||||||||||||||
Todd
M. Phillips
|
2008
|
120,461
|
36,250
|
(2)
|
2,632
|
290
|
—
|
—
|
159,363
|
||||||||||||||||
Chief
Accounting Officer
|
2007
|
136,554
|
166,800
|
(3)
|
13,093
|
9,961
|
—
|
111
|
326,519
|
1.
|
Represents
quarterly retention bonuses of $25,000 paid for the first, second and
third quarters, plus a retention bonus of $25,000 fully earned and vested
as of December 31, 2008.
|
2.
|
Represents
quarterly retention bonuses of $18,125 paid for both the second and third
quarters.
|
3.
|
Represents
a discretionary cash bonus paid in connection with the sale of the
Company’s mortgage servicing rights on November 1, 2007 of $30,000; a
discretionary bonus for 2007 performance of $68,400; and a retention bonus
of $68,400 fully earned and vested on December 31,
2007.
|
4.
|
Represents
the dollar amount recognized for financial reporting purposes for the
fiscal year ended December 31, 2008, in accordance with SFAS 123(R)
(disregarding estimates of forfeitures). The stock awards column includes
amounts for restricted stock granted in 2004, 2005, 2006 and 2007. The
option awards column includes amounts for stock option awards granted in
2005, 2006 and 2007. See Note 19 to the Consolidated Financial Statements
included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2008 for a discussion of the assumptions used in
calculating these amounts.
|
5.
|
For
further information on severance see the section “Summary of Termination
Payments and Obligations to Mr. Hartman.”
|
6.
|
All
Other Compensation for the named executives is set forth in the following
table.
|
Name
|
|
Year
|
|
Forgiveness of
Founders’ Notes
($)(A)
|
|
Continuation
of
Benefits ($)(B)
|
|
Insurance
Premiums and Tax
Gross-Ups
($)(C)
|
|
Total All Other
Compensation
($)(D)
|
||||
W.
Lance Anderson
|
|
2008
|
|
31,033
|
—
|
—
|
31,033
|
|||||||
|
2007
|
|
30,583
|
|
—
|
|
990
|
|
31,573
|
|||||
Rodney
E. Schwatken
|
2008
|
|
—
|
—
|
—
|
—
|
||||||||
2007
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
||||||
Scott
F. Hartman
|
|
2008
|
|
93,100
|
13,728
|
—
|
106,828
|
|||||||
|
2007
|
|
30,583
|
|
—
|
|
990
|
|
31,573
|
|||||
Michael
L. Bamburg
|
|
2008
|
|
—
|
—
|
—
|
—
|
|||||||
|
2007
|
|
—
|
|
—
|
|
2,547
|
|
2,547
|
|||||
Todd
M. Phillips
|
|
2008
|
|
—
|
—
|
—
|
—
|
|||||||
|
2007
|
|
—
|
|
—
|
|
111
|
|
111
|
(A)
|
Represents
forgiveness of principal under founders’ notes receivable. Based on the
Mr. Hartman’s termination the remaining balance of the founder notes were
forgiven during 2008. This amount does not include the
forgiveness of capitalized interest as that amount is not reportable
compensation for the named executive. See “Review and Approval of
Transactions with Related Persons; Related Party Transactions” for
additional information.
|
(B)
|
Represents
certain benefits after Mr. Hartman’s termination which include term
life, disability, medical and dental insurance premiums that will be paid
by the Company until the earlier of (1) Mr. Hartman’s finding
full-time employment or (ii) the expiration of one year. The cost of
these premium payments are capped so that the cost to the Company does not
exceed 200% of the cost of providing similar benefits to other members of
senior management.
|
(C)
|
Represents
the dollar value of the insurance premiums paid by the Company with
respect to term life insurance for the benefit of the named executive. Tax
gross-ups for Messrs. Hartman and Anderson were paid on the forgiveness of
founders’ notes receivable and a financial planning allowance received
during fiscal year 2007. Tax gross-ups for Mr. Bamburg were paid on a
financial planning allowance received during fiscal year
2007.
|
(D)
|
The
total value of all perquisites and other personal benefits did not exceed
$10,000 for any named executive officer for fiscal year 2007 so the
amounts have been excluded from the Summary Compensation
Table.
|
|
OPTION
AWARDS
|
|
STOCK
AWARDS
|
|||||||||||||
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number of
Shares
or
Units
of
Stock That
Have
Not
Vested
(#)(7)
|
|
Market
Value
of
Shares or
Units
of
Stock That
Have
Not
Vested ($)(8)
|
||||||
W.
Lance Anderson
|
|
9,375
|
(4)
|
—
|
48.88
|
|
12/18/2012
|
|
—
|
|
—
|
|||||
|
3,465
|
—
|
168.52
|
|
2/7/2015
|
|
—
|
|
—
|
|||||||
|
4,575
|
1,526
|
(5)
|
124.84
|
|
2/8/2016
|
|
—
|
|
—
|
||||||
|
16,463
|
16,464
|
(6)
|
16.72
|
|
3/14/2017
|
|
—
|
|
—
|
||||||
|
—
|
—
|
—
|
|
—
|
|
22,999
|
|
5,980
|
|||||||
Rodney
E. Schwatken
|
125
|
—
|
168.52
|
2/7/2015
|
—
|
—
|
||||||||||
175
|
59
|
(5)
|
124.84
|
2/8/2016
|
—
|
—
|
||||||||||
321
|
322
|
(6)
|
16.72
|
3/14/2017
|
—
|
—
|
||||||||||
—
|
—
|
—
|
—
|
523
|
136
|
|||||||||||
Scott
F. Hartman (1)
|
|
—
|
—
|
—
|
|
—
|
|
—
|
|
—
|
||||||
Michael
L. Bamburg (2)
|
|
1,139
|
—
|
168.52
|
|
3/31/2009
|
|
—
|
|
—
|
||||||
|
1,779
|
—
|
124.84
|
|
3/31/2009
|
|
—
|
|
—
|
|||||||
|
5,123
|
—
|
16.72
|
|
3/31/2009
|
|
—
|
|
—
|
|||||||
|
—
|
—
|
—
|
|
—
|
|
—
|
—
|
||||||||
Todd
M. Phillips (3)
|
|
—
|
—
|
—
|
|
—
|
|
—
|
|
—
|
||||||
1.
|
Mr.
Hartman’s employment terminated effective March 3, 2008 and all
stock-based awards had been forfeited as of December 31,
2008.
|
2.
|
Mr.
Bamburg’s employment terminated effective December 31, 2008 and all
unvested stock-based awards had been forfeited as of December 31,
2008. All vested unexercised options remain exercisable for 90
days after the effective termination date.
|
3.
|
Mr.
Phillip’s employment terminated effective September 30, 2008 and all
stock-based awards had been forfeited as of December 31,
2008.
|
4.
|
For
options that vested prior to January 1, 2005, a recipient is entitled
to receive additional shares of Company common stock upon the exercise of
the options as a result of dividend equivalent rights (“DERs”) that accrue
at a rate equal to the number of shares underlying the option outstanding
multiplied by 60% of the dividends paid on each share of common stock. The
DERs convert to shares by dividing the dollar value of the DERs by the
closing price of the Company’s common stock on the dividend payment date.
At December 31, 2008, Mr. Anderson each were entitled to receive an
additional 1,755 shares of stock upon exercise of their options with an
expiration date of December 19, 2011 and an additional 1,757 shares
of stock upon exercise of their options with an expiration date of
December 18, 2012.
|
5.
|
Options
will vest in 50% increments on February 8 of the years
2009-2010.
|
6.
|
Options
will vest in 1/3 increments on March 14 of the years
2009-2011.
|
7.
|
The
vesting dates of the shares of restricted stock held at fiscal-year end
2008 are as follows:
|
Name
|
|
Grant
Date
|
|
Shares
Outstanding
|
|
Vesting
Schedule
|
W.
Lance Anderson
|
|
2/7/2005
|
|
1,100
|
|
100%
on 2/7/2015
|
|
2/8/2006
|
|
2,678
|
|
100%
on 2/8/2011
|
|
|
3/14/2007
|
|
19,221
|
|
100%
on 3/14/2012
|
|
Rodney
E. Schwatken
|
2/7/2005
|
44
|
100%
on 2/7/2015
|
|||
2/8/2006
|
103
|
100%
on 2/8/2011
|
||||
3/14/2007
|
376
|
100%
on 3/14/2012
|
||||
Scott
F. Hartman
|
|
2/7/2005
|
|
1,100
|
|
Forfeited
upon termination
|
|
2/8/2006
|
|
2,678
|
|
Forfeited
upon termination
|
|
|
3/14/2007
|
|
19,221
|
|
Forfeited
upon termination
|
|
Michael
L. Bamburg
|
|
2/7/2005
|
|
481
|
|
Forfeited
upon termination
|
|
2/8/2006
|
|
1,562
|
|
Forfeited
upon termination
|
|
|
3/14/2007
|
|
11,962
|
|
Forfeited
upon termination
|
|
Todd
M. Phillips
|
|
2/7/2005
|
|
38
|
|
Forfeited
upon termination
|
|
2/8/2006
|
|
102
|
|
Forfeited
upon termination
|
|
|
3/14/2007
|
|
1,184
|
|
Forfeited
upon termination
|
8.
|
The
closing market price of the Company’s common stock on December 31,
2008 (the last trading day of 2008) was
$0.26.
|
•
|
breach
of any of the terms of the employment agreement;
|
||
•
|
failure
to perform material duties in accordance with the standards from time to
time established by the Company;
|
||
•
|
neglect
in performance of failure to attend to the performance of material
duties;
|
||
•
|
insubordination
or willful breach of policies and procedures of the
Company;
|
||
•
|
breach
of fiduciary duties; or
|
||
•
|
Conduct
that the Company determines in good faith may impair or tend to impair the
integrity of the Company, including but not limited to commission of a
felony, theft, misappropriation, embezzlement, dishonesty, or criminal
misconduct.
|
•
|
a
material reduction in compensation of the executive or a decrease in the
responsibilities of the executive to a level that, on the whole, is
materially inconsistent with the position for which the executive is
employed, except in connection with the Company’s termination of the
executive’s employment for “cause” or as otherwise expressly contemplated
in the employment agreement;
|
||
•
|
the
Company requires that the executive relocate more than 50 miles from the
location at which the executive is employed by the Company as of the date
of the employment agreement; or
|
||
•
|
the
Company’s material breach of any of the provisions of the employment
agreement.
|
•
|
any
“person” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the “Exchange Act”) (other than the
Company; any trustee or other fiduciary holding securities under an
executive benefit plan of the Company; or any company owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of the stock of the Company), is or becomes
the “beneficial owner” (as defined by Rule 13d-3 under the Exchange Act),
directly or indirectly, of the securities of the Company (not including
securities beneficially owned by such person, any securities acquired
directly from the Company or from a transferor in a transaction expressly
approved or consented to by the Board of Directors) representing more than
25% of the combined voting power of the Company’s then outstanding
securities;
|
||
•
|
during
any period of two consecutive years (not including any period prior to the
execution of the employment agreement), individuals who at the beginning
of such period constitute the Board of Directors and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in three
immediately preceding bulleted paragraphs), (i) whose election by the
Board of Directors or nomination for election by the Company’s
stockholders was approved by a vote of at least (2/3) of the
directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously
so approved or (ii) whose election is to replace a person who ceases
to be a director due to death, disability or age, cease for any reason to
constitute a majority thereof;
|
||
•
|
the
stockholders of the Company approve a merger or consolidation of the
Company with another corporation, other than (i) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an executive benefit plan of the
Company, at least 75% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or (ii) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no person acquires more than 50% of the combined
voting power of the Company’s then outstanding securities;
or
|
||
•
|
the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all
or substantially all the Company’s
assets.
|
Name
|
|
Cash
Severance
|
Forgiveness
of Founders’
Notes
|
Accelerated
Vesting
of
Options
&
Restricted
Stock
|
Continuation
of
Benefits
|
Total
|
||||||||||
Scott
F. Hartman
|
|
$
|
301,835
|
(1)
|
$
|
208,981
|
(2)
|
$
|
—
|
$13,728
|
(3)
|
$
|
524,544
|
1.
|
The
Company had a negative book value as of December 31, 2007, therefore,
Mr. Hartman’s severance payment was capped at the lesser of $120,000
or one times his 2007 base salary and 2006 annual incentive compensation.
The payment was paid in a single lump sum in January 2008. In addition,
Mr. Hartman was paid two months of his base salary in fulfillment of
the Company’s obligations under the federal Worker Adjustment and
Retraining Notification Act and he was paid his accrued
vacation.
|
2.
|
Represents
the total outstanding balance of the founders’ notes forgiven for Mr.
Hartman during 2008. See “Review and Approval of Transactions with Related
Parties; Related Party Transactions” for additional
information.
|
3.
|
Represents
certain benefits after Mr. Hartman’s termination which include term
life, disability, medical and dental insurance premiums that were paid by
the Company for one year. The cost of these premium payments were capped
so that the cost to the Company will not exceed 200% of the cost of
providing similar benefits to other members of senior
management.
|
|
Beneficial Ownership of
Common
Stock
|
Beneficial Ownership of
Series
D1
Preferred
Stock
|
Voting
Power (3)
|
||||||||||||
Name
and Address of
Beneficial
Owner (1)
|
|
Shares
|
|
Percent(2)
|
Shares
|
|
Percent
|
Votes
|
|
Percent
|
|||||
Scott
F. Hartman (4)
|
|
294,753
|
|
3.15
|
%
|
—
|
|
—
|
294,753
|
|
2.62
|
%
|
|||
W.
Lance Anderson (5)
|
|
240,758
|
|
2.57
|
%
|
—
|
|
—
|
240,758
|
|
2.14
|
%
|
|||
Michael
L. Bamburg (6)
|
|
121,643
|
|
1.30
|
%
|
—
|
|
—
|
121,643
|
|
1.08
|
%
|
|||
Edward
W. Mehrer (7)
|
|
39,663
|
|
*
|
—
|
|
—
|
38,101
|
|
*
|
|||||
Gregory
T. Barmore (8)
|
|
24,232
|
|
*
|
—
|
|
—
|
22,673
|
|
*
|
|||||
Art
N. Burtscher (9)
|
|
20,940
|
|
*
|
—
|
|
—
|
14,875
|
|
*
|
|||||
Rodney
E. Schwatken (10)
|
|
11,355
|
|
*
|
—
|
|
—
|
11,308
|
|
*
|
|||||
Donald
M. Berman (11)
|
|
5,224
|
|
*
|
—
|
|
—
|
5,716
|
|
*
|
|||||
Todd
M. Phillips (12)
|
|
2,818
|
|
*
|
—
|
|
—
|
2,799
|
|
*
|
|||||
All
current directors and
executive
officers as a group
(6
persons)(13)
|
|
342,172
|
|
3.65
|
%
|
—
|
|
—
|
342,172
|
|
3.04
|
%
|
|||
Citadel
Limited Partnership (14)
103
S. Dearborn Street, 32nd Floor
Chicago,
IL 60603
|
469,172
|
5.01
|
%
|
—
|
|
—
|
469,172
|
5.01
|
%
|
||||||
Massachusetts
Mutual Life Insurance Company (15)
1295
State Street
Springfield,
MA 01111
|
|
192,950
|
|
2.06
|
%
|
1,050,000
|
|
50.00
|
%
|
1,130,450
|
|
9.95
|
%
|
||
Jefferies
Capital Partners IV LLC (16)
520
Madison Avenue, 12 th
Floor
New
York, NY 10022
|
|
—
|
|
—
|
1,050,000
|
|
50.00
|
%
|
937,500
|
|
8.25
|
%
|
|||
*
Less than 1%
|
(1)
|
The
mailing address of each beneficial owner is 2114 Central Street, Suite
600, Kansas City, Missouri 64108, unless otherwise
shown.
|
(2)
|
Based
on outstanding shares of common stock of 9,368,053 as of May 8,
2009.
|
(3)
|
The
holders of the Series D1 Preferred Stock are entitled to one vote for each
share of common stock into which the Series D1 Preferred Stock held as of
the record date is convertible, on each matter on which the holders of the
common stock have a right to vote. Consequently, total votes include one
vote for each share of the Company’s common stock outstanding, and one
vote for each share of common stock into which outstanding shares of the
Company’s Series D1 Preferred Stock may be converted. As of May 8, 2009,
the amounts were 9,368,053 and 1,875,000, respectively, for total
outstanding votes of 11,243,053.
|
(4)
|
Consists
of 282,632 shares of common stock held directly, 481 shares of common
stock owned by his children; and 11,640 shares of common stock held in the
NovaStar Financial 401(k) Plan.
|
(5)
|
Consists
of 61,771 shares of common stock held directly; 115,850 shares of stock
owned jointly with his spouse; 2,748 shares of common stock held in the
NovaStar Financial 401(k) Plan; and 33,878 shares of common stock issuable
pursuant to options exercisable within 60 days of March 12, 2008. As
of March 31, 2009, Mr. Anderson had pledged 36,111 shares of
common stock as security.
|
(6)
|
Consists
of 98,722 shares of common stock owned directly; 876 shares of common
stock owned by his spouse; and 8,041 shares of common stock issuable
pursuant to options exercisable within 60 days of May 8,
2009.
|
(7)
|
Consists
of 17,018 shares of common stock held directly; 1,000 shares of common
stock owned by his spouse; and 20,083 shares of common
stock issuable pursuant to options exercisable within 60 days of May 8,
2009.
|
(8)
|
Consists
of 12,673 shares of common stock held directly; and 10,000 shares of
common stock issuable pursuant to options exercisable within 60 days of
May 8, 2009.
|
(9)
|
Consists
of 1,125 shares of common stock held directly and 13,750 shares of common
stock issuable pursuant to options exercisable within 60 days of May 8,
2009.
|
(10)
|
Consists
of 2,184 shares of common stock held directly; 5,088 shares of stock owned
by the Rodney E. Schwatken Trust; 3,141 shares of common stock held in the
NovaStar Financial 401(k) Plan; and 372 shares of common stock issuable
pursuant to options exercisable within 60 days of May 8,
2009.
|
(11)
|
Consists
entirely of shares of common stock issuable pursuant to options
exercisable within 60 days of May 8, 2009.
|
(12)
|
Consists
of 75 shares of common stock owned directly; 402 shares of common stock
held in the NovaStar Financial, Inc. 401(k) Plan; and 998 shares of common
stock issuable pursuant to options exercisable within 60 days of May 8,
2009.
|
(13)
|
Includes
87,998 shares of common stock issuable pursuant to options exercisable
within 60 days of May 8, 2009.
|
(14)
|
Based
on a Schedule 13G filed on February 13, 2008, the following entities
report shared voting power: Citadel Limited Partnership; Citadel
Investment Group, L.L.C., Kenneth Griffin; Citadel Equity Fund Ltd.; and
Citadel Derivatives Group LLC.
|
(15)
|
Based
on an amended Schedule 13D filed on October 9, 2007. The amended
Schedule 13D indicates that Massachusetts Mutual Life Insurance Company
has shared voting and dispositive power with Babson Capital Management
LLC, in its capacity as investment advisor.
|
(16)
|
Based
on an amended Schedule 13D dated October 9, 2007. The amended
Schedule 13D indicates that Jefferies Capital Partners IV LLC (the
“Manager”) is the manager of, and may be deemed the beneficial owner of
shares held by, Jefferies Capital Partners IV LP (holds 911,659 shares of
Series D1 Preferred Stock currently convertible into 813,981 shares of
common stock (7.2%)), Jefferies Employee Partners IV LLC (holds 105,002
shares of Series D1 Preferred Stock currently convertible into 93,752
shares of common stock (0.8%)), and JCP Partners IV LLC (holds 33,339
shares of Series D1 Preferred Stock currently convertible into 29,767
shares of common stock (0.3%)) (together, “Jefferies Capital Partners”),
which collectively hold the indicated shares of Series D1 Preferred Stock.
The amended Schedule 13D indicates further that the Manager has shared
voting and dispositive power with Jefferies Capital Partners and with
Brian P. Friedman and James L. Luikart, managing members of the Manager,
who also may be deemed beneficial owners of these
shares.
|
Beneficial Ownership of
Series
C Preferred Stock
|
||||
Name
and Address of
Beneficial
Owner (1)
|
Shares
|
Percent(2)
|
||
Barry
Igdaloff(3)
|
307,774
|
10.30%
|
||
Howard
Amster(4)
|
218,766
|
7.32%
|
||
Glenn
S. Gardipee(5)
|
13,158
|
*
|
||
Paul
J. Floto(6)
|
6,500
|
*
|
||
Frankie
Adamo
|
400
|
*
|
||
Bridget
B. Bruch
|
400
|
*
|
||
Philip
F. Sidotti
|
0
|
*
|
||
*
Less than 1%
|
(1)
|
The
mailing address of each Series C Director nominee is 2114 Central Street,
Suite 600, Kansas City, Missouri 64108.
|
(2)
|
Based
on outstanding shares of Series C Preferred Stock of 2,990,000 as of May
8, 2009.
|
(3)
|
Based
on information provided to the Company by Mr. Igdaloff, includes 100,125
shares for which Mr. Igdaloff serves as investment
advisor.
|
(4)
|
Based
on information provided to the Company by Mr. Amster, includes 44,600
shares held by Amster Trading Co Charitable Remainder Unitrust (“Amster
Trading”) and 1,800 shares held by the Samuel J. Heller Irrevocable Trust
(the “Heller Trust”) over which Mr. Amster has shared voting
power. Mr. Amster disclaims beneficial ownership of the shares
held by Amster Trading and the Heller Trust.
|
(5)
|
Based
on information provided to the Company by Mr. Gardipee, Northern Systems
Capital Partners (“Northern Systems”) holds the shares of Series C
Preferred Stock. Mr. Gardipee is the general partner of
Northern Systems. Northern Systems is the beneficial owner of
15,845 shares of common stock of the Company and Mr. Gardipee is the
beneficial owner of 1,800 shares of common stock of the
Company.
|
(6)
|
Based
on information provided to the Company by Mr. Floto, Mr. Floto also
beneficially owns 351 shares of common stock of the
Company.
|
•
|
Any
executive officer, or any director or nominee for election as a
director;
|
•
|
Any
person who owns more than 5% of the Company’s voting
securities;
|
•
|
Any
immediate family member of any of the foregoing;
or
|
•
|
Any
entity in which any of the foregoing persons is employed or is a partner
or principal or in a similar position or in which such person has a 10%
beneficial ownership interest.
|
For
the Fiscal Year Ended
December 31,
|
||||||||
2008
|
2007
|
|||||||
Audit
fees (1)
|
$ | 1,515,863 | $ | 3,494,243 | ||||
Audit-related
fees (2)
|
46,978 | 244,181 | ||||||
Total
audit and audit-related fees
|
1,562,841 | 3,738,424 | ||||||
Tax
fees (3)
|
494,613 | 401,284 | ||||||
All
other fees (4)
|
— | — | ||||||
Total
|
$ | 2,057,454 | $ | 4,139,708 |
(1)
|
Audit
fees consist principally of fees for the annual and quarterly reviews of
the consolidated financial statements, the issuance of stand-alone
financial statements of consolidated subsidiaries, compliance reporting
and assistance with and review of documents filed with the SEC (including
the issuance of consents and comfort letters).
|
(2)
|
Audit-related
fees consist principally of fees for assistance in securitization
transactions, employee benefit plan audits and research and consulting
related to financial accounting and reporting matters.
|
(3)
|
Tax
fees principally include assistance with statutory filing and income tax
consultations and planning.
|
(4)
|
The
Company generally does not engage Deloitte & Touche LLP for
“other” services.
|
BY
ORDER OF THE BOARD OF DIRECTORS
|
|
/s/
W. Lance Anderson
|
|
W.
Lance Anderson
|
|
Chairman
of the Board
|