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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
WESTCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] Fee not required.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:
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WESTCORP LOGO
23 PASTEUR ROAD
IRVINE, CALIFORNIA 92618
March 25, 1997
TO OUR SHAREHOLDERS
You are cordially invited to attend the Annual Meeting of Shareholders of
Westcorp (the "Company") to be held at 10:00 a.m. on April 29, 1997, at the
Corporate Headquarters in Irvine, California. The Board of Directors and
management hope that you will be able to attend the Annual Meeting in person.
At the Annual Meeting, holders of the Company's common stock will be asked
to vote (i) for the election of Directors, and (ii) to ratify the appointment of
Ernst & Young as the independent accountants for the Company for fiscal 1997. A
formal Notice of Annual Meeting of Shareholders, Westcorp's 1996 Annual Report,
the Company's Proxy Statement and a proxy card for the Annual Meeting accompany
this letter.
To assure that your shares will be represented, we ask that you read the
enclosed materials and complete, sign, date and return the proxy card as soon as
possible. Your vote, regardless of the number of shares you own, is important.
We urge you to indicate your approval by voting FOR the matters indicated
in the Notice and ask that you vote promptly. If you attend the Annual Meeting,
you may vote in person if you desire, even if you have previously mailed your
proxy card.
On behalf of the Board of Directors, we thank you for your cooperation and
continuing support.
Sincerely,
Ernest S. Rady
Chairman of the Board, President
and Chief Executive Officer
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WESTCORP LOGO
23 PASTEUR ROAD
IRVINE, CALIFORNIA 92618
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 29, 1997
To the Shareholders of Westcorp:
The Annual Meeting of Shareholders of Westcorp, a California corporation
("the Company") will be held at the Corporate Headquarters, 23 Pasteur Road,
Irvine, California, on Tuesday, April 29, 1997, at 10:00 a.m., for the following
purposes:
1. To elect four Directors for terms expiring in 1999.
2. To ratify the appointment of Ernst & Young as the independent
accountants for Westcorp for fiscal 1997.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
The Board of Directors has selected March 3, 1997, as the Record Date (the
"Record Date") for the Annual Meeting. Those holders of record of the Company's
Common Stock at the close of business on that date are entitled to notice of and
to vote at the Annual Meeting and any adjournment thereof.
All shareholders are requested to complete, date and sign the enclosed
proxy card promptly and return it in the accompanying postage prepaid
self-addressed envelope, whether or not they expect to attend the Annual
Meeting, in order to assure that their shares will be represented.
Since mail delays occur, it is important that the proxy card be mailed well
in advance of the Annual Meeting. Any shareholder giving a proxy has the right
to revoke it at any time before it is voted. If you receive more than one proxy
card because your shares are registered in different names or at different
addresses, each proxy card should be signed and returned to ensure that all your
shares will be properly voted.
By Order of the Board of Directors
Harriet Burns Feller
Secretary
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
FOR BANKS, BROKERAGE HOUSES AND NOMINEE HOLDERS, REQUESTS FOR ADDITIONAL
COPIES OF THE COMPANY'S PROXY MATERIALS SHOULD BE ADDRESSED TO HARRIET BURNS
FELLER, ESQ., WESTCORP, 23 PASTEUR ROAD, IRVINE, CALIFORNIA 92618.
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WESTCORP LOGO
23 PASTEUR ROAD
IRVINE, CALIFORNIA 92618
PROXY STATEMENT
APPROXIMATE DATE PROXY MATERIAL FIRST SENT TO SHAREHOLDERS: MARCH 28, 1997
This Proxy Statement constitutes the Proxy Statement of Westcorp, a
California 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 of the Company to be held on April 29, 1997, and any
adjournments thereof (the "Meeting").
MEETING DATE AND LOCATION
The Meeting to consider the business described below will be held on April
29, 1997, at 10:00 a.m., at the Corporate Headquarters, 23 Pasteur Road, Irvine,
California 92618.
PURPOSES
At the Meeting, the shareholders will consider and vote on approval of
proposals to (i) elect Class I Directors of the Company to serve until 1999, and
(ii) ratify the appointment of the Company's independent public accountants for
fiscal 1997.
RECORD DATE; SHAREHOLDERS ENTITLED TO VOTE
The close of business on March 3, 1997, is the Record Date (the "Record
Date") for determination of the shareholders of the Company entitled to notice
of and to vote at the Meeting. On that date there were approximately 25,996,618
shares of the Company's Common Stock, $1.00 par value ("Common Stock"),
outstanding and no shares of any other class of stock outstanding.
VOTE REQUIRED
Each share of the Common Stock outstanding on the Record Date will be
entitled to one vote with respect to approval of the various proposals submitted
to the shareholders. Ratification of the Company's selection of its independent
accountants is not required to be submitted for shareholder approval and
although shareholder approval is not binding, the Board of Directors has elected
to seek ratification by the affirmative vote of a majority of the shares of
Common Stock represented and voting at the Meeting.
MARKET VALUE OF STOCK
As of Monday, March 3, 1997, Westcorp Common Stock had a market price of
$17.875 per share. The Common Stock of Westcorp is traded on the New York Stock
Exchange.
SOLICITATION AND REVOCATION OF PROXIES
A form of proxy is being furnished herewith by the Company to each
shareholder, and, in each case, is solicited on behalf of the Board of Directors
of the Company for use at the Meeting for the purposes stated in the Notice of
Annual Meeting of Shareholders preceding this Proxy Statement. The entire cost
of soliciting these proxies will be borne by the Company.
Proxies duly executed and returned by shareholders and received by the
Company before the Meeting will be voted FOR the election of Class I Directors
specified herein, and FOR the ratification of the selection of Ernst & Young as
the Company's independent accountants for fiscal 1997, unless a contrary choice
is specified in the proxy. Where a specification is indicated as provided on the
proxy card, the shares represented
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by the proxy will be voted and cast in accordance with the specification made.
As to other matters, if any, to be voted upon, the person designated as proxy
will take such actions as he, in his discretion, may deem advisable. The persons
named as proxy and alternate were selected by the Board of Directors of the
Company. Mr. Rady is an Officer and Director of the Company and Ms. Schaefer is
an Officer.
Your execution of the enclosed proxy will not affect your right as a
shareholder to attend the Meeting and to vote in person. Any shareholder giving
a proxy has a right to revoke it at any time by either (a) a later dated proxy,
(b) a written revocation sent to and received by the Secretary of the Company
prior to the Meeting, or (c) attendance at the Meeting and voting in person.
VOTING SECURITIES
The Company has outstanding Common Stock, of which approximately 25,996,618
shares were outstanding as of the Record Date. Only shareholders of record on
the books of the Company at the close of business on the Record Date will be
entitled to vote at the Meeting. Each share of the Common Stock is entitled to
one vote.
ELECTION OF DIRECTORS
At the Annual Meeting, four nominees, Alan L. Milligan, William J.
Crawford, Howard C. Reese and Andrey Kosovych are nominated for election as
Class I Directors, each Director to serve until 1999 and until his successor is
elected and qualified. Nominee Milligan has been a Director since 1992, Nominee
Crawford, since 1993, and Nominee Reese, since 1996. Mr. Kosovych joined the
Company in March, 1997, and has served as the Company's investment banker since
1985. The person named as proxy, and his alternate, in the accompanying proxy
have advised the Company of their intention to vote shares covered by proxies
received in favor of the election of the nominees named above, each of whom have
consented to be named and have indicated their intent to serve if elected. If
any nominee becomes unavailable for any reason, the proxy or his alternate in
his or her discretion will vote for substitute nominees of the Board, unless
otherwise instructed.
The following information is submitted concerning the Directors of the
Company, including nominees for election, Alan L. Milligan, William J. Crawford,
Howard C. Reese and Andrey R. Kosovych.
DIRECTOR
NAME OF DIRECTOR AGE SINCE WESTCORP
----------------------------------- --- -------- -----------------------------------
Ernest S. Rady**................... 59 1974 Chairman of the Board of Directors
Alan L. Milligan*.................. 66 1992 Director
Stanley E. Foster**................ 69 1978 Director
William J. Crawford*............... 76 1993 Director
Judith M. Bardwick**............... 64 1994 Director
Howard C. Reese*................... 65 1996 Director
Andrey R. Kosovych*................ 47 -- Nominee
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* Class I Director, nominee for term expiring in 1999.
** Class II Director, to serve until 1998.
The following information is submitted concerning each of the Directors:
ERNEST S. RADY has served as Chairman of the Board, President and CEO of
Westcorp since 1982. He has also been Chairman of the Board of Western Financial
Bank (the "Bank") since 1992; a Director since 1982; and President and Chief
Executive Officer from June, 1994 to January, 1996. He also served as Chairman
of the Board of Western Thrift and Loan Association, a predecessor of the Bank,
from 1972, and Chairman of the Board and CEO of WFS Financial. Mr. Rady is a
principal shareholder, manager and consultant to a group of companies engaged in
real estate management and development; property and casualty insurance; oil and
gas exploration and development; and distributing. Mr. Rady first became
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associated with other members of the management of the Bank in 1968 while
serving on the Board of Directors of the Morris Plan Company of California.
ALAN L. MILLIGAN has been a Director of the Company since 1992 and was an
Officer of the Bank and its predecessors from 1973 until his retirement in July,
1990. He was in charge of the Bank's Dealer Centers and the Collection
Management System which handled the purchase of and collection of all consumer
loans and installment sales contracts. He served as a Director of the Bank from
1989 through March, 1992, and was elected again as a Director in 1993. Mr.
Milligan is a past director of Thrift Guaranty Corporation of California, the
guaranty fund for California Thrift and Loan Companies. Prior to his association
with the Bank, he was with the Morris Plan Company of California for 16 years.
STANLEY E. FOSTER has been President and Chief Executive Officer of Foster
Investment Corporation and its predecessor Ratner Corporation, an apparel
manufacturing and investment company headquartered in San Diego, California,
since 1954. Mr. Foster also serves as the Chairman of the Board of Directors of
Hang Ten International, and is a director of Postal Annex Plus, Accucom and Hot
Topic, Inc. Mr. Foster has been a Director of the Company since 1978.
WILLIAM J. CRAWFORD joined the Board of the Company and the Bank in 1992.
Prior to his association with the Bank, Mr. Crawford was the Savings and Loan
Commissioner for the State of California from 1985 until 1990. Mr. Crawford has
successfully operated several savings and loan associations over a period of 35
years.
JUDITH M. BARDWICK, PH.D., is President and founder of Bardwick and
Associates, a management consulting firm. In addition to her many academic
achievements, Dr. Bardwick has been an active business consultant for more than
two decades. Dr. Bardwick earned a B.S. degree from Purdue University and an
M.S. from Cornell. She received her Ph.D. from the University of Michigan and
subsequently became a Full Professor and Associate Dean of the College of
Literature Science and the Arts at that university. Dr. Bardwick has devoted
herself to consulting and business-related research and writing, concentrating
on issues relating to improving organizational efficiency and management
structure. She is currently a clinical Professor of Psychiatry at the University
of California at San Diego and has worked as a psychological therapist. Her most
recent business book, Danger in the Comfort Zone, was published in 1991. She is
the author of three other books; in addition, she has published more than 70
articles on a wide range of topics during her distinguished career. Dr. Bardwick
has been a Director of the Company since 1994.
HOWARD C. REESE joined the Company in 1987 as President and Chief Executive
Officer of its subsidiary Westcorp Financial Services, Inc. (now WFS Financial
Inc). He retired as President and CEO in 1996, and is employed in a consulting
capacity. He began his career in consumer finance with Household Finance
Corporation in 1953 where he managed several branch offices in Southern
California. In 1963, he joined Fireside Thrift Company as a manager. He
progressed through the ranks as Supervisor, Assistant Vice President and
Regional Director, and ultimately to Operations Vice President in charge of 73
branch offices within the State of California. He presently serves on the board
of directors of the American Financial Services Association (AFSA).
ANDREY R. KOSOVYCH is nominated for election to the Board of the Company as
Vice Chairman, having served as the Company's investment banker since 1985. He
is also nominated for election to the Boards of the Bank and WFS Financial as
Vice Chairman. Most recently, Mr. Kosovych was a Managing Director, Investment
Banking, and head of the Asset Finance Group at Donaldson, Lufkin & Jenrette
Securities Corporation since February, 1990. Prior to that, he founded and led
the asset backed effort at Drexel Burnham Lambert Inc., having progressed from
Vice President to Managing Director from 1984 to 1990; he also served as Vice
President, Investment Banking, at LePercq, de Neuflize & Co. Inc. from 1983 to
1984. Mr. Kosovych began his professional career as an attorney, working at
Dewey, Ballantine, Bushby, Palmer & Wood from 1974 to 1983. During his tenure as
an investment banker, Mr. Kosovych managed almost $9 billion of financings for
the Westcorp family of companies, including the Company's and WFS Financial's
initial public offerings, the Bank's subordinated debt offerings and numerous
auto loan securitizations, and acted as financial advisor on a variety of
strategic issues.
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COMMITTEES OF THE BOARD
The Company has a standing Audit Committee, consisting of Stanley E. Foster
(Chairman), Alan Milligan and Howard C. Reese. The functions of the Audit
Committee are to make recommendations to the Board with respect to the
engagement of the Company's independent public accountants; to review the
effectiveness of the Company's system of internal control; and to review, upon
the request of management, professional services to be provided to the Company
by outside auditors. The Company has contracted with its outside auditors to
perform expanded audit procedures previously performed by an internal audit
department. These expanded audit functions are overseen by The Director of
Safety and Soundness who reports to the Audit Committee. The Audit Committee
held four meetings in 1996.
The Company has a standing Compensation Committee whose current members are
Howard C. Reese (Chairman), Judith M. Bardwick, and Stanley E. Foster. The
Compensation Committee reviews and approves recommendations for annual salaries
of employees paid by the Company and reviews and sets the levels of compensation
of senior management, as well as establishing policies applicable to,
performance related to, and bases for compensation. The Compensation Committee
held 3 meetings during 1996.
The Executive Committee has the powers of the Board of Directors except as
precluded by law and the Company's bylaws. The Executive Committee is comprised
of Messrs. Rady, Reese, and Crawford. The Executive Committee met 4 times in
1996.
MEETINGS OF THE BOARD
The Board of Directors of the Company held a total of 5 meetings during
1996. All Directors have attended at least 75% of the meetings of the Board of
Directors and Committees on which they serve.
COMPENSATION OF DIRECTORS
Each Director who is not also an Officer of the Company or any of its
subsidiaries receives $3,500 per Board Meeting attended and $750 for each
committee meeting, which is not held in conjunction with a Board Meeting,
attended. Directors who are also Officers of the Company or any of its
subsidiaries are not compensated for their services as Directors.
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EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following information is provided with respect to the Executive
Officers of the Company who are not Directors. Effective January, 1997, various
administrative departments of Westcorp were transferred to the Bank and WFS
Financial Inc, as part of a restructuring plan to align more closely the
administrative functions with those operations that they assist. Some employees
providing administrative services to the Bank will remain at Westcorp, the
parent company of the Bank, and provide those services at fair market value to
the Bank, while remaining Officers of the Bank.
OFFICER
NAME POSITION AGE SINCE
- ----------------------------------- --------------------------------- --- -------
Joy Schaefer....................... Senior Executive Vice President, 37 1990
Chief Operating Officer; Vice
Chairman of the Board, President
and Chief Operating Officer of
WFS
Donald H. Kasle.................... Senior Executive Vice President 53 1996
and Chief Administrative Officer;
Director, President, CEO of the
Bank
Harriet Burns Feller............... Executive Vice President, 54 1990
Secretary and General Counsel
Lee A. Whatcott.................... Senior Vice President, Chief 37 1988
Financial Officer
Richard W. Stephan................. Senior Vice President, Chief 58 1994
Information Officer
J. Keith Palmer.................... Vice President, Treasurer 36 1993
Mark K. Olson...................... Vice President, Controller 33 1995
Anne FitzGerald.................... Vice President, Director of Human 37 1995
Resources
Richard A. Palmer.................. Vice President 41 1996
Jeffrey D. Pratt................... Vice President, Safety & 37 1996
Soundness
Robert E. Adams.................... Executive Vice President of the 46 1993
Bank
Arthur W. Alvarez.................. Executive Vice President of the 38 1996
Bank
Michael A. Johnson................. Executive Vice President of the 40 1996
Bank
Terrance P. Mungon................. Executive Vice President of the 50 1979
Bank
James E. Tecca..................... Executive Vice President of the 53 1996
Bank
Kevin Farrenkopf................... Senior Vice President of the Bank 35 1987
James R. Dowlan.................... Vice Chairman of the Board and 59 1984
Senior Executive Vice President
of WFS Financial Inc.
W. Lee Thyer....................... Senior Executive Vice President 54 1988
of WFS Financial Inc.
The following is a brief account of the business experience of each
Executive Officer who is not a Director.
JOY SCHAEFER is Senior Executive Vice President and Chief Operating Officer
of the Company and is President, Chief Operating Officer and Vice Chairman of
the Board of Directors of WFS Financial. She served first as Senior Vice
President, Chief Financial Officer and Treasurer of the Bank since March, 1992,
and was elected Executive Vice President in January, 1994 and Senior Executive
Vice President and Chief Operating Officer in December, 1994. Ms. Schaefer
joined the Bank on January 1, 1990, as Assistant Vice President and Assistant
Treasurer. Prior to her association with the Bank, she was an Audit Manager in
the financial institutions group for Ernst & Whinney in the Long Beach,
California and Springfield, Illinois offices. Ms. Schaefer also held various
positions with Liberty National Bank in Oklahoma City, Oklahoma including
Assistant Controller, Commercial Audit Manager and Vice President Loan
Administration from 1985 to 1988.
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DONALD H. KASLE is Senior Executive Vice President and Chief Administrative
Officer of the Company. He joined the Bank in January, 1996, as President and
Chief Executive Officer and is a director of the Bank. Mr. Kasle came to the
Bank with 30 years experience in commercial banking. Previously, Mr. Kasle
served as Chairman & Chief Executive Officer, and before that, President & Chief
Operating Officer, of Bank One Dayton N.A., Dayton, Ohio which he joined in
1986. Mr. Kasle was President and Chief Executive Officer of Westport Bank of
Kansas City from 1985 to 1986. He began his career with First National Bank of
Kansas City as a management trainee in 1966 and remained with First National
until 1985. Long active in banker education and development programs, Mr. Kasle
is past member of the American Bankers Association Leadership Development
Council, Founding Chairman of the ABA's Institute for Certified Bankers and past
Chairman of the Advisory Board of the Stonier Graduate School of Banking. He
also served for many years as a member of the ABA's Education Policy and
Development Council. Mr. Kasle is a Certified Lender -- Business Banking as
confirmed by the Institute of Certified Bankers.
HARRIET BURNS FELLER is Executive Vice President, Secretary and General
Counsel of the Company, the Bank and WFS. She started as Vice President and
General Counsel of the Bank in May, 1990. Ms. Feller was Executive Vice
President and General Counsel of Mercury Savings from 1986 to 1990, Vice
President and General Counsel of Ponderosa Homes from 1981 to 1986 and Vice
President, Corporate Counsel at Ticor Title Insurance, which she joined as
litigation attorney in 1975. Ms. Feller served as Southern California President
of American Corporate Counsel in 1990 and is a member of various professional
associations. Ms. Feller is an active member of the California Bar Association
and has also passed the Bar Examinations in New York and Connecticut, where she
practiced prior to 1975.
LEE A. WHATCOTT is Senior Vice President and Chief Financial Officer of the
Company; he also serves as Executive Vice President and Chief Financial Officer
of WFS and as Executive Vice President of the Bank, since 1996, after serving as
Senior Vice President and Chief Financial Officer of the Bank since 1994. Mr.
Whatcott joined the Bank in 1988 and became Vice President, Controller in 1992.
Prior to joining the Bank, he was employed by what is now known as Ernst & Young
LLP, independent auditors, and an international accounting firm. Mr. Whatcott is
licensed as a Certified Public Accountant in the state of California and is a
member of the American Institute of Certified Public Accountants.
RICHARD W. STEPHAN is Senior Vice President and Chief Information Officer
of the Company and also serves as Executive Vice President and Chief Information
Officer of the Bank and of WFS. Before joining the organization in 1994, Mr.
Stephan had over 20 years of experience in the Information Technology field with
the last 15 years in the financial institution services industry. Prior to his
association with the Bank, Mr. Stephan was an Executive President of FiServ, a
major provider of Information Services to the banking industry and he was a
partner with Ernst and Whinney. At Ernst & Whinney. At Ernst & Whinney he
managed the consulting practice for the Western Region, served as the Senior
Technology Partner for the firm for the banking industry and was a member of the
planning committee for the firm-wide banking practice. Mr. Stephan is a member
of the Chief Information Officer National Association and is a Certified Systems
Professional.
J. KEITH PALMER is Vice President and Treasurer of the Company and of the
Bank, from December, 1994, after serving as Assistant Vice President and
Treasurer of the Bank since March, 1993, and then as Vice President and
Treasurer since December, 1994. He is also Vice President and Treasurer of WFS
since 1995. Prior to joining the Bank in 1993, Mr. Palmer served as a Capital
Markets Examiner with the Office of Thrift Supervision from 1991 to 1993. From
1986 to 1991, Mr. Palmer served in various capacities with the Office of Thrift
Supervision. Mr. Palmer has worked in the banking industry for 12 years.
MARK K. OLSON is Vice President, Controller of the Company and of WFS. He
joined the Company in 1991 as Accounting Systems Director and has held various
positions since that time. Prior to joining the Company, Mr. Olson was employed
by what is now known as Ernst & Young LLP, independent auditors, an
international accounting firm. Mark is a licensed Certified Public Accountant in
the state of California and is a member of the American Institute of Certified
Public Accountants.
ANNE M. FITZGERALD serves as Vice President, Director of Human Resources
for the Company, the Bank and WFS. She joined the Bank in 1995. Ms. FitzGerald
has over 15 years experience in the Human Resources
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field, and spent the last 5 1/2 years, prior to joining Westcorp, working for
Pepsi Cola, ultimately as Director of Human Resources. Previous experience
includes various Human Resources positions working for Pier 1 Imports and Texas
Instruments. Ms. FitzGerald holds her Masters in Labor and Industrial Relations
from Michigan State University and her Masters in Business Administration from
Southern Methodist University.
RICHARD A. PALMER is Vice President of the Company and also has served as
Senior Vice President and Chief Financial Officer of the Bank since 1996. Prior
to joining the Bank, Mr. Palmer was Senior Vice President with First Interstate
Bancorp, where he served in a variety of finance and accounting related
capacities including the position of Chief Financial Officer of numerous First
Interstate subsidiaries. His background includes extensive experience in the
securities broker-dealer industry as well as in mortgage, retail and commercial
banking. He is a Certified Public Accountant in the states of California and
Arizona and a graduate of the University of Southern California holding M.B.A.
and B.S. degrees in Accounting and Finance.
ROBERT E. ADAMS has served as Executive Vice President of the Western
Financial Mortgage Division of the Bank since January, 1994. He served as Senior
Vice President since starting with the Bank in April, 1993. Mr. Adams has in
excess of twenty years mortgage banking experience in virtually every phase of
production and operations. Prior to joining the Bank, he was First Vice
President of the Retail Division for Countrywide Funding Corporation, where he
oversaw all aspects of operations for its nationwide branch system.
ARTHUR W. ALVAREZ has served as Executive Vice President of the Western
Financial Mortgage Division of the Bank's Retail Loan Production since December,
1996. Mr. Alvarez has over 15 years mortgage banking experience in all facets of
loan origination and production, all with The Hammond Company, The Mortgage
Bankers, an independently owned mortgage banking firm acquired by the Bank in
December, 1995. Mr. Alvarez's positions at The Hammond Company included Loan
Officer, Branch Manager, Regional Manager, Executive Vice President for Loan
Production and, most recently, President from April, 1994, until the company was
merged in December, 1996.
MICHAEL A. JOHNSON has served as Executive Vice President, Administration
and Marketing, of the Bank since August, 1996. Mr. Johnson joined the Bank after
17 years with First Interstate Bank of California/Wells Fargo Bank where he
served in a variety of capacities including Marketing Director, District
Manager, Corporate Lending Center Manager and Personal Banking Segment Manager.
Mr. Johnson is a graduate of the University of California at Los Angeles with a
B.A. in Psychology.
TERRANCE P. MUNGON is Executive Vice President of the Bank. He is currently
in charge of the Equity Lending Group which specializes in consumer equity
lending in the Western United States. He previously served as Executive Vice
President of the Retail Banking Division. Mr. Mungon also serves as Chairman of
the Board of Western Financial Investments, Inc. which offers annuities and
mutual funds to the Bank's retail customers. Mr. Mungon has been with the Bank
for over 18 years and has 27 years of Consumer Banking experience.
JAMES E. TECCA is Executive Vice President of the Bank since April, 1996.
Mr. Tecca is in charge of the Commercial Banking Group specializing in
relationship banking for middle market and private banking clients. Mr. Tecca
has over 30 years of banking experience in California, specializing in corporate
and retail banking. Prior to joining the Bank, he was Senior Vice President with
Bank of America for 20 years. In addition, Mr. Tecca was Chief Operating Officer
with Bay View Federal Bank in San Francisco and President and Chief Executive
Officer of Girard Savings Bank in San Diego.
KEVIN R. FARRENKOPF has served as Senior Vice President of the Retail
Banking Division of the Bank since October, 1995, after serving as Divisional
Vice President for Retail Banking since 1994. Previously, Mr. Farrenkopf served
as Regional Vice President in 1993, Vice President in 1990 and Branch Manager in
1987, which is also the year he was hired. He has 14 years experience in the
industry, the first four spent at Norwest Financial, Inc. He is a member of the
Western League of Savings Institutions, serving on the Retail Banking Committee.
JEFFREY D. PRATT serves as Vice President and Director of Safety and
Soundness for the Company, WFS and the Bank. Mr. Pratt joined the Bank in 1987
and during his tenure has managed the Internal Asset Review
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Department and served as Real Estate Analyst and appraiser for the Bank's
portfolios. Prior to joining the Bank, Mr. Pratt was the sole proprietor of a
real estate appraisal and consulting business.
JAMES R. DOWLAN has served as Vice Chairman and Senior Executive Vice
President of WFS from 1995. He served first as Senior Vice President of the Bank
from 1984 and then as Executive Vice President of the Bank from 1989 until the
Auto Finance Division of the Bank was combined into WFS in 1995. He is Chairman
of the Board of Western Financial Insurance Agency, Inc., and President of
Westhrift Life Insurance Company, subsidiaries of the Bank; and President and
CEO of WFS Financial Auto Loans, Inc., and WFS Financial Auto Loans 2, Inc.,
subsidiaries of WFS. Prior to his association with the Bank, Mr. Dowlan was Vice
President, Loan Administration of Union Bank where he held several positions
since 1973, the last position being Vice President. He served for several years
on the National Advisory Board, American Bankers Association and the Consumer
Lending Committee of the California Bankers Association. He is currently a
member of the Consumer Bankers Association.
W. LEE THYER is the Senior Executive Vice President of the WFS Branch
Division. Mr. Thyer joined WFS in 1988. Prior thereto, Mr. Thyer held various
positions at Fireside Thrift and Loan Association, where he worked for 22 years
from 1966 to 1988. In addition, Mr. Thyer serves on the Westcorp ESOP/401K
Committee and was on the board of the California Financial Services
Association/Independent Section from 1988 to 1995.
ITEM 11 -- EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Chief Executive
Officer and the next four most highly compensated Executive Officers for the
three fiscal years ended December 31, 1996.
SUMMARY COMPENSATION TABLE
Compensation described in this table is compensation paid by the Company
including its subsidiaries:
LONG-TERM COMPENSATION
----------------------------------
WESTCORP WFS
ANNUAL COMPENSATION(1) STOCK STOCK AWARDS-
---------------------------------------- OPTIONS(3) OPTIONS(4) SARS(5) ALL OTHER(6)
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER(2) (SHARES) (SHARES) (SHARES) COMPENSATION
- ------------------------------------ ---- -------- -------- ----------- ---------- ---------- ------- ------------
Ernest S. Rady...................... 1996 $400,000 $116,000 $ 551,121 20,000 55,000 0 $ 48,372(7)
Chairman of the Board of 1995 369,984 148,000 181,703 0 50,000 30,010
Directors, 0
CEO and President of the Company; 1994 330,000 132,000 16,009 44,500 0 0 22,579
Chairman of the Board of Directors
of the Bank; & Chairman of the
Board of Directors and CEO of WFS
Donald H. Kasle..................... 1996 283,077 94,265 0 57,750(12) 0 0 18,000(8)
Senior Executive Vice President
and Chief Administrative Officer
of the Company; President, Chief
Executive Officer and Director of
the Bank
Joy Schaefer........................ 1996 225,000 62,250 189,446 15,000 44,000 0 35,047(9)
Senior Executive Vice President 1995 185,000 61,605 0 8,000 0 40,000 16,611
and Chief Operating Officer 1994 150,000 50,000 0 10,000 0 0 11,532
of the Company and the Bank;
President, Chief Operating Officer
and a Vice Chairman of the Board
of Directors of WFS
James R. Dowlan..................... 1996 210,900 61,161 132,000 12,000 44,000 36,855(10)
Vice Chairman of the Board of 1995 197,100 65,634 343,217 0 0 40,000 24,328
Directors and Senior Executive 1994 175,000 58,000 8,423 9,400 0 0 17,833
Vice President of WFS
Howard C. Reese..................... 1996 201,080 58,313 154,002 1,500 51,334 0 35,448(11)
Director; Vice Chairman of the 1995 201,080 66,960 445,978 0 46,667 22,251
Board of Directors of the Bank 1994 175,000 58,275 4,883 8,300 0 0 16,263
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- ---------------
(1) The compensation of Ms. Schaefer, Mr. Dowlan and Mr. Reese was paid by WFS
Financial Inc. The compensation for Mr. Rady was paid by Westcorp. The
compensation of Mr. Kasle was paid by the Bank.
(2) Includes the spread between market price and exercise price on Westcorp
options exercised plus the ($3.00 per share) spread between market price
and exercise price of WFS SARs exercised on July 23, 1996.
(3) Stock options for shares of Westcorp awarded in the year indicated and
exercisable in the future.
(4) Stock options for shares of WFS awarded July 23, 1996, exerciseable in the
future, and contingent upon shareholder approval of the 1996 Stock Option
Plan (the "WFS Plan"). Awards were also conditioned upon the recipient's
exercise of all his/her SARs.
(5) SARs awarded by WFS pursuant to the SAR Plan for employees, employees who
are Directors and the independent Directors of WFS. The SAR Plan is
described below.
(6) Includes above market preferential interest accrued on salary deferral by
Executive under deferred compensation plans, plus Company contribution to
EDP4 (described below), 401(k) and ESOP. A contribution of $3.38 million
was funded for 1996 to the Savings Plan (401(k) and ESOP) which benefits
other employees in addition to those named in the Table. The Plan is
described below.
(7) Includes $6,609 in accrued above-market earnings on deferred compensation
plus $12,486 employer contribution to 401(k)/ESOP Plan plus $29,277
employer contribution to EDP4.
(8) Employer contribution to EDP4.
(9) Includes $150 in accrued above-market earnings on deferred compensation
plus $12,397 employer contribution to 401(k)/ESOP Plan plus $22,500
employer contribution to EDP4.
(10) Includes $3,337 in accrued above-market earnings on deferred compensation
plus $12,428 employer contribution to 401(k)/ESOP Plan plus $21,090
employer contribution to EDP4.
(11) Includes $2,933 in accrued above-market earnings on deferred compensation
plus $12,407 employer contribution to 401(k)/ESOP Plan plus $20,108
employer contribution to EDP4.
(12) 55,000 when granted; number now reflects 5% stock dividend.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on option and SAR grants in fiscal
1996 to the Named Executive Officers.
POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES OF
WESTCORP PERCENTAGE OF STOCK
OPTIONS("W") TOTAL OPTIONS/SARS EXERCISE OR APPRECIATION FOR
WFS OPTIONS GRANTED TO BASE PRICE OPTION TERM
("WF") EMPLOYEES IN (PER SHARE) EXPIRATION -------------------
NAME GRANTED(1)(2) FISCAL 1996 ($)(3) DATE 5%($) 10%($)
- ---------------------- ------------- ------------------ -------------- ------- ------- -------
Ernest S. Rady........ 20,000 (W) 4.28% $17.13 7/30/01 94,653 209,160
55,000 (WF) 5.54% 18.00 1/23/01 151,966 335,807
Donald H. Kasle....... 57,750 (W) 12.35% 18.09 1/30/01 110,479 244,130
Joy Schaefer.......... 15,000 (W) 3.21% 17.13 7/30/01 70,990 156,870
44,000 (WF) 4.43% 18.00 1/23/01 97,263 214,926
James R. Dowlan....... 12,000 (W) 2.57% 17.13 7/30/01 56,792 125,496
44,000 (WF) 4.43% 18.00 1/23/01 97,263 214,926
Howard C. Reese....... 1,500 (W) 0.32% 17.13 7/30/01 7,099 15,687
51,334 (WF) 5.17% 18.00 1/23/01 133,735 295,521
- ---------------
(1) No SARs were granted by WFS to any Named Executive Officers in 1996.
(2) Number of shares and exercise price affected by 5% Westcorp stock dividend
declared for shareholders of record as of May 20, 1996.
(3) Westcorp and WFS options were each granted at the market price of the stock
at the date of the grant.
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AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF UNEXERCISED
WESTCORP OPTIONS VALUE OF UNEXERCISED
NUMBER OF SHARES ("W")/WFS OPTIONS IN-THE-MONEY
ACQUIRED ON ("WF")/SARS AT OPTIONS/SARS AT
EXERCISE ("O")(1) VALUE 12/31/96(#) 12/31/96($)
NUMBER OF SARS REALIZED EXERCISABLE("E")/ EXERCISABLE/
NAME EXERCISED(S) ($)(3) UNEXERCISABLE("U")(4) UNEXERCISABLE(2)(4)
- ------------------------------- ----------------- -------- --------------------- --------------------
Ernest S. Rady................. 32,820(O) $386,121(O) 24,530 E(W) $238,254 E(W)
55,000(S) 165,000(S) 44,532 U(W) 247,874 U(W)
0 E(WF) 0 E(WF)
55,000 U(WF) 0 U(WF)
Donald H. Kasle................ 0(O) 0(O) 0 E(W) 0 E(W)
0(O) 0(O) 57,750 U(W) 0 U(W)
0 E(WF) 0 E(WF)
0 U(WF) 0 U(WF)
Joy Schaefer................... 5,471(O) 57,445(O) 21,454 E(W) 195,685 E(W)
44,000(S) 132,000(S) 30,654 U(W) 131,916 U(W)
0 E(WF) 0 E(WF)
44,000 U(WF) 0 U(WF)
James R. Dowlan................ 0(O) 0(O) 3,969 E(W) 37,063 E(W)
44,000(S) 132,000(S) 17,182 U(W) 51,669 U(W)
0 E(WF) 0 E(WF)
44,000 U(WF) 0 U(WF)
Howard C. Reese................ 0(O) 0(O) 3,665 E(W) 34,847 E(W)
51,334(S) 154,000(S) 6,077 U(W) 42,218 U(W)
0 E(WF) 0 E(WF)
51,334 U(WF) 0 U(WF)
- ---------------
(1) Westcorp Options.
(2) Options based on the closing price on the New York Stock Exchange of
Westcorp Common Stock on December 31, 1996 ($21.875) and the closing price
on NASDAQ of WFS Common Stock on December 31, 1996 ($19.875).
(3) Value of exercise of SARs based on the closing price on NASDAQ of WFS Common
Stock on July 23, 1996 ($18.00).
(4) Named Executive Officers each exercised all of their SARs on July 23, 1996.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
Westcorp executed Employment Contracts in 1987 with several senior
Executives of Westcorp which provisions are triggered by a change in control of
Westcorp. Under the agreements, Messrs. Dowlan and Reese are guaranteed
employment for a period of 24 months from the initiation of change of control
proceedings at the salary level in effect at initiation of the change of control
process. The Company reserves the right to terminate the agreements for cause,
which includes fraud or other misconduct of the employees.
In addition, pursuant to an employment agreement, Mr. Kasle will be paid
$300,000 if, before January 24, 2001, his employment is terminated by reason of
a change of control.
Westcorp executed letter employment agreements with Mr. Kosovych and Mr.
Jerry DeVito in March, 1997. While each employment is "at will" and subject to
certain other terms, the agreement provides for each to receive six months of
continued compensation, subject to certain terms, if his employment is
terminated before the completion of one year. The agreements also provide for
Westcorp stock option grants, pursuant to the 1991 Westcorp Stock Option Plan,
of options relating to 50,000 shares to Mr. Kosovych and 40,000 shares to Mr.
DeVito.
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CERTAIN BENEFITS
Executive Deferral Plans
Effective August 1, 1985, Westcorp established an Executive Deferral plan
("EDP") for certain senior Executives of Westcorp and its subsidiaries as
determined by the Board of Directors. A participant in the EDP may defer a
portion of his compensation from a minimum of $2,000 a year to a maximum of 75%
of his gross annual salary. The employer matches contributions up to 5% of a
participant's annual salary, excluding bonus. After the seventh year of
participation, there is a mandatory lump sum distribution to the participant of
the first four years' deferrals with interest thereon at Moody's Investors
Service Seasoned Corporate Bond Rate (the "Moody's Rate") plus 3%. Upon
retirement at the later of age 65 or 10 years of participation in the EDP, a
participant's account will yield a compound interest rate equal to the Moody's
Rate plus 8%. A participant's account balance is (i) the employer's contribution
and (ii) deferrals for the fifth and subsequent years of participation.
Retirement benefits are paid out over a 15-year period.
If a participant terminates employment for reasons other than death,
disability, or retirement prior to making four years of deferrals, he receives
all deferrals, the employer's contributions, and interest thereon. Interest is
credited at Moody's Rate through the first two years of participation in the
EDP, and increases one percent each year through the fifth year when it equals
Moody's Rate plus 3%. If a participant terminates employment after making four
years of deferrals, he receives all his deferrals, the employer's contributions,
interest credited to those amounts (i) at Moody's Rate plus 3% and (ii)
additional interest accruing on his account balance at Moody's Rate plus 8% (the
"Increased Interest"). The right to receive the Increased Interest becomes 50%
vested following five years of participation, with an additional 10% vesting
following each subsequent year, so that the participant is 100% vested after ten
years of participation.
Benefits owing under the EDP are paid by the employer through borrowings
against or proceeds from insurance policies on the lives of the participants
purchased by the employer.
Effective September 1, 1988, Westcorp established a second Executive
Deferral Plan ("EDP2") for certain participating Executives as determined by its
Board of Directors. A participant in EDP2 may defer a portion of compensation
from a minimum of $2,000 a year to a maximum of 5% of base annual salary,
excluding bonus. The employer matches contributions up to 5% of a participant's
base annual salary, excluding bonus. Interest is credited to a participant's
account at Moody's Rate plus 5%.
Participants making contributions to the Plan during or before attaining
age 54 will be paid an amount equal to the initial annual deferral amount
(participant deferral plus employer match) on each of the seventh, eighth and
ninth year anniversaries. Each participant's remaining balance will continue to
accumulate at a rate equal to Moody's Rate plus 5% until death, retirement or
other termination of employment, whichever occurs first.
Upon retirement at the later of age 65 or 10 years of participation in
EDP2, the participant will be paid an amount per month over a 15 year period
based on the amounts deferred, credited with interest, minus the payments made
on the seventh, eighth and ninth anniversaries described above.
If the participant dies before retirement, the participant's beneficiary
will receive the existing account balance in a lump sum or over a 15 year period
with the unpaid balance being credited at Moody's Rate. If the participant dies
after retirement, the participant's beneficiary will receive any unpaid
installments due with the unpaid balance being credited at Moody's Rate.
If a participant terminates employment for reasons other than death,
disability, or retirement prior to making four years of deferrals, he receives
his deferrals and interest thereon. Interest is credited at Moody's Rate through
the first two years of participation in EDP2, and increases, one percent each
year through the fourth year when it equals Moody's Rate plus 3%. The
participant will also receive a percentage (10% for each year through the tenth
year) of the employer match and interest thereon at Moody's Rate plus 3%.
A participant leaving employment after completing four years of deferrals
receives his deferrals and interest thereon credited at Moody's Rate plus 3%.
The participant will also receive a percentage (10% for each year through the
tenth year) of the employer match and interest thereon at Moody's Rate plus 3%.
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Benefits provided by EDP2 are paid by the employer through borrowings
against or proceeds from insurance policies on the lives of the participants
purchased by the employer.
Effective May 1, 1992, Westcorp established a third Executive Deferral Plan
("EDP3") for certain participating Executives as determined by its Board of
Directors. A participant may defer a portion of compensation from a minimum of
$2,000 a year to a maximum of 5% of base annual salary. There is no employer
match in EDP3, unlike EDP1 and EDP2. Interest is credited to a participant's
account at the Moody's Rate. Participant's first year's contribution plus
interest will be distributed beginning in the sixth year. Participant's second
year's contribution plus interest will be distributed in year seven and so on.
If a participant terminates employment, he receives all deferrals plus interest.
Effective September 1, 1995, Westcorp established a fourth Executive
Deferral Plan ("EDP4") for certain participating Executives as determined by the
Board of Directors. A participant in EDP4 may defer a portion of compensation
from a minimum of $2,000 per year to a maximum of 10% of base annual salary.
There is an employer match in EDP4 based upon business results and at the
discretion of the Board of Directors.
Additionally, employees required to take distribution from earlier EDP
plans, may elect to defer an additional amount up to the distribution they are
required to take. This additional deferral is not eligible for any Company
matching provisions.
All deferrals are eligible for interest payments and interest is credited
to a participant's account at the Moody's Seasoned Corporate Bond Rate.
Participant's distributions are intended to occur only at retirement age of 65,
or 5 years of participation in EDP4, whichever is later, or at termination.
Participants receiving distributions can elect to receive them paid out over
five, ten or fifteen years or in a lump sum option.
Compensation Pursuant to WFS Benefit Plans
In 1995, WFS adopted two SAR plans, the Employee Stock Appreciation Rights
Plan ("Employee SAR Plan") and the Directors Stock Appreciation Rights Plan
("Director SAR Plan") (together, the "Plans"); both Plans are separate from
benefit plans maintained by the Bank or Westcorp. The Plans are for the benefit
of certain employees (the Employee SAR Plan) and employees who are also
Directors and independent Directors (the Directors SAR Plan) and were designed
to provide a method whereby Directors, Officers and employees of WFS who are
largely responsible for the management, growth and financial success of WFS may
be offered incentives and rewards which encourage them to increase their
interest in the market performance of the Common Stock of WFS and to remain in
the employ of WFS. SARs granted under the Plans are nontransferable and do not
convey an interest in the stock of WFS. The Plans are administered by a
committee of the Board of Directors with vesting and exercise terms and
conditions similar to the Westcorp Stock Option Plans described below. Holders
of SARs under the Plans who are persons subject to the filing requirements
imposed under Section 16(a) of the Securities Exchange Act of 1934 are subject
to certain additional Plan requirements. The Plans do not permit acceleration on
a change of control or sale of WFS. The aggregate number of shares of WFS Common
Stock to which SARs granted under the Plans relate are limited to 2,300,000
shares, subject to anti-dilution provision.
In July 1996, the Company elected to discontinue its ongoing SAR Plans,
having determined that the Plans introduced at the time of the Initial Public
Offering had met their objectives. Any employee electing to voluntarily exercise
Stock Appreciation Rights at this time, was eligible for a one-time grant of WFS
Options. All current employees have voluntarily exercised their SARs. WFS
adopted an Incentive Stock Option Plan designed to replace its SAR Plans to
eliminate quarterly income volatility resulting from the accounting treatment of
SARs. The adoption of the WFS Plan, and grants thereunder, were conditioned upon
stockholder approval of the Plan. No further options of WFS have been made
available to the employees at this time.
Stock Option Plans
1982 Stock Option Plan. Westcorp's incentive stock option plan was adopted
by the Board of Directors of Westcorp and approved by its shareholders in April
1982 (the "1982 Stock Option Plan") and provides for
12
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the granting of options covering up to 945,000 shares of the Common Stock of
Westcorp. The stock options granted to employees under the 1982 Stock Option
Plan are intended to be "incentive stock options" within the meaning of the
Internal Revenue Code of 1986 (the "Code"). Consequently, all options granted
under the 1982 Stock Option Plan are exercisable at a price per share not less
than the fair market value per share of the Common Stock on the date of grant,
except that the exercise price of options may not be less than 110% of the fair
market value if the optionee owns, prior to such grant, directly or indirectly,
10.0% of the outstanding Common Stock of Westcorp. The Compensation Committee of
the Board of Directors of Westcorp, which is comprised of at least three members
designated by the Board of Directors of Westcorp, serves as the 1982 Stock
Option Plan administrator and in such capacity selects the employees to whom
options are to be granted and the number of shares to be granted based upon an
employee's length of service, the amount of his compensation, and his
responsibilities, duties, and functions. The terms of such options may not
exceed five years from the date of grant. Options may be terminated earlier,
however, in the event of the death or disability of the optionee or the optionee
ceasing to perform services for Westcorp or its subsidiaries. Optionees are
prohibited from transferring or assigning any options other than due to the
death of the optionee. The 1982 Stock Option Plan expired in April, 1992,
although options granted under such plan will remain exercisable until 1996
unless earlier terminated pursuant to the terms of such plan.
1991 Stock Option Plan. The other stock option plan of Westcorp was
adopted by the Board of Directors of Westcorp in April, 1991, and approved by
its shareholders in May, 1991, (the "1991 Stock Option Plan" and, together with
the 1982 Stock Option Plan, the "Stock Option Plans"). Employees and Directors
of the Westcorp and its subsidiaries are eligible to participate under the 1991
Stock Option Plan. Such plan is administered by the Westcorp Compensation
Committee and, in such capacity, the committee selects employees and Directors
to whom options are to be granted and the number of shares to be granted based
on the same criteria used to determine awards under the 1982 Stock Option Plan.
No further options may be granted under the 1991 Stock Option Plan after April
15, 2001.
Options granted under the 1991 Stock Option Plan may be either "incentive
stock options" or "non-qualified options" within the meaning of the Code.
However, only non-qualified options may be granted to Directors who are not also
employees. The exercise price for options granted under such plan must be
established at a level not less than the fair market value of the Common Stock
on the date of grant, except that the exercise price of incentive stock options
may not be less than 110% of the fair market value if the optionee owns, prior
to such grant, directly or indirectly, 10.0% of the outstanding Common Stock of
Westcorp. The term of such options may not exceed 10 years from the date of
grant. However, optionees who own, prior to a grant, directly or indirectly,
10.0% or more of the outstanding Common Stock of Westcorp, may not be granted
"incentive stock options" with a term greater than 5 years. Options may be
terminated earlier, however, in the event of the death or disability of the
optionee or the optionee ceasing to perform services for Westcorp or its
subsidiaries as provided in the 1991 Stock Option Plan. The options are also
subject to all of the other terms and conditions of the written stock option
agreement between the optionee and Westcorp.
In the aggregate 3,150,000 shares of Westcorp Common Stock may be the
subject of options granted under the 1991 Stock Option Plan. However, the number
of shares subject to options granted under such plan (and the exercise prices
for the options) are subject to adjustment in the event of any change in the
outstanding shares of Westcorp as a result of stock dividends, stock splits or
conversions of shares. If any option expires or terminates without having been
exercised in full, the unpurchased shares become available again for purposes of
future incentive and non-qualified stock options to be granted under the 1991
Stock Option Plan.
WFS Stock Option Plan ("WFS Plan")
WFS adopted the WFS 1996 Stock Option Plan, subject to approval by the
shareholders. In the aggregate, 550,000 shares of Common Stock may be the
subject of options granted pursuant to the WFS Plan. Certain options granted
under the WFS Plan are intended to qualify as "Incentive Stock Options" within
the meaning of Internal Revenue Code of 1986, as amended, Section 422; options
may also be granted under the WFS Plan that are not intended to qualify as
"Incentive" Stock Options. Options may be granted under the Plan to employees,
Directors, and employees who are also Directors. Options may be granted under
the
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WFS Plan to any WFS optionee who, in the option of the Compensation Committee,
is or gives promise of becoming of exceptional importance to WFS because of
experience and ability. The exercise price of shares subject to granted
Incentive Stock Options must be established at a level not less than the fair
market value of the Common Stock on the date of grant, or not less than 110% of
fair market value in the case of an option granted to an optionee who owns more
than 10% of the outstanding Common Stock of WFS. The Compensation Committee has
the discretion to determine the amounts and times of exercise of options. The
exercise of any option under the WFS Plan is also conditioned upon the
optionee's prior exercise of all Stock Appreciation Rights that the optionee may
have been granted pursuant to the WFS Stock Appreciation Rights Plan of 1995.
The WFS Plan was designed to replace the WFS SAR Plan to eliminate quarterly
income volatility resulting from the accounting treatment of SARs. In 1996, a
total of 519,569 options were granted, all subject to shareholder approval.
Consolidated Plan
Westcorp's Employee Stock Ownership and Salary Savings Plan (the "Savings
Plan") was adopted originally in 1982 and subsequently was amended and restated
in 1985 to conform to requirements of the Tax Equity and Fiscal Responsibility
Act of 1982, the Tax Reform Act of 1984 and the Retirement Equity Act of 1984. A
determination letter was issued by the Internal Revenue Service with respect to
such restatement that the Savings Plan was a qualified plan under Section 401(a)
of the Code and met the requirements of Section 401(k) of the Code. The first
amendment to the restated Savings Plan was adopted in 1986. The Westcorp
Employee Stock Ownership Plan (the "ESOP") was adopted originally in 1975 and
known as the Westcorp, Inc. Profit Sharing Plan. The ESOP was restated in 1985,
and a determination letter was issued by the Internal Revenue Service in 1986
stating that the ESOP was a qualified plan under Section 401(a) of the Code. The
first amendment to the restated plan was adopted in 1986. Effective January 1,
1990, the Savings Plan and the ESOP were consolidated in the Westcorp Employee
Stock Ownership and Salary Savings Plan (the "Consolidated Plan").
The Consolidated Plan is administered by an Administration Committee
appointed by the Board of Directors, which committee consists of at least three
members. All employees of the Company and its subsidiaries are eligible to
participate in the Consolidated Plan after satisfaction of minimum service and
age requirements. Each year the Company may, in its discretion, make an ESOP
contribution to the Consolidated Plan. Each participant is credited with one
"unit" for each $100 in earnings paid to such participant by the employer in
that year, and an additional "unit" for each full year of service to the
employer. If the Company makes an ESOP contribution, it is allocated to each
participant's ESOP Contribution Account (as such term is defined in the
Consolidated Plan) in the same proportion as such participant's "units" bear to
the total number of "units" credited to all participants for that year. Eligible
employees may also elect to contribute from 1.0% to 10.0% of their earnings to a
Salary Savings Contribution Account (as such term is defined in the Consolidated
Plan). Each year the employer may, in its discretion, make a matching employer
contribution which is allocated to the Matching Contribution Account (as such
term is defined in the Consolidated Plan) for each participant that makes a
Salary Savings contribution for such year. If the Company makes a matching
employer contribution, it is allocated to the matching contribution account in
the same proportion that each such contribution of up to 6.0% of earnings bears
to the total of all such contributions of up to 6.0% of earnings. The Company's
annual contribution to a participant's ESOP Contribution Account and Matching
Employer Contribution Account, and a participant's contribution to such
participant's Salary Savings Contribution Account, may not exceed in the
aggregate the lesser of 25.0% of such participant's annual compensation or
one-fourth of the dollar limitation established under Section 415(b)(1)(A) of
the Code.
The Company's contributions to a participant's ESOP Contribution Account
are invested in Westcorp Common Stock or approved investments at the direction
of the plan administrator. Each participant who has completed ten years of
service and has attained the age of 55 may also direct the plan administrator to
diversify the investments allocated to such participant's ESOP Contribution
Account. A participant's contributions to his or her Salary Savings Contribution
Account are invested by the plan administrator in fixed income, stock or other
permitted investment alternatives selected by the participant. The plan
administrator selects the investment alternatives for the amount contributed by
the employer to the Matching Employer
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Contribution Account. Interest, earnings, dividends, gains and losses are
allocated to each participant's ESOP Contribution Account, Salary Savings
Contribution Account and Matching Employer Contribution Account, as the case may
be, in the proportion such account bears to the total accounts of all
participants in that investment alternative. Shares of Westcorp Common Stock
allocated to any of a participant's accounts are voted in accordance with the
proxy of such participant. Each participant is also entitled to direct the plan
administrator regarding the exercise of rights, other than voting rights,
arising in connection with shares of Westcorp Common Stock allocated to such
participant's accounts.
Participants have a 100% non-forfeitable interest in the value of their
Salary Savings Contribution Account at all times. The participant's interest in
his or her ESOP Contribution Account and Employer Matching Contribution Account
becomes 20.0% vested after the completion of three calendar years of service. An
additional 20.0% becomes vested each following year, until the participant
completes 7 years of service and the participant's interests become fully
vested.
A participant is entitled to receive all benefits under the Consolidated
Plan, whether or not vested, upon death, permanent disability, or retirement at
age 65. Upon termination of employment for any other reason, participants will
receive the full amount of their Salary Savings Contribution Account and the
vested portions of their ESOP Contribution Account and Matching Employer
Contribution Account.
Westcorp funded a $3.38 million contribution to the Consolidated Plan for
1996.
REPORT OF THE COMPENSATION COMMITTEE
Westcorp applies a consistent philosophy to compensation for all employees,
including senior management. This philosophy is based on the premise that the
achievements of Westcorp result from the coordinated efforts of all individuals
working toward common objectives. Each member of the Compensation Committee is a
non-employee Director, with the exception of Howard Reese. The Compensation
Committees of the Bank and WFS operate under the same philosophy and guidelines.
COMPENSATION PHILOSOPHY
Under the supervision of the Compensation Committee of the Board of
Directors, Westcorp has developed and implemented compensation policies, plans
and programs which seek to enhance the profitability of Westcorp, and thus
shareholder value, by aligning closely the financial interests of the Westcorp's
senior managers with those of its shareholder. The Compensation Committee
endorses the belief that stock ownership by management and the granting of stock
options to senior Executives and key employees furthers that goal and fosters
decision-making by its key employees with Westcorp's long-term safety and
soundness in mind.
The compensation plans and programs are structured to integrate pay with
Westcorp's annual and long-term performance goals. The plans and programs are
designed to recognize initiative and achievement and to assist Westcorp in
attracting and retaining qualified Executives. In furtherance of these goals,
annual base salaries are generally set at or below competitive levels so that
Westcorp relies to a large degree on annual incentive compensation to attract
and retain corporate Officers and other key employees with outstanding abilities
and to motivate them to perform to the full extent of their abilities. For the
longer term, incentive stock options are awarded by the holding company, the
stock of which is publicly traded. Incentive compensation is variable and
closely tied to corporate, business unit and individual performance in a manner
that encourages a sharp and continuing focus on building profitability and
shareholder value. As a result of the increased emphasis on tying Executive
compensation to corporate performance, in any particular year the total
compensation of Westcorp's Executives may be more or less than the Executives of
Westcorp's competitors, depending upon Westcorp's or the individual business
unit's performance.
In evaluating the performance and setting the incentive compensation of the
Chief Executive Officer and other senior Executives, the Compensation Committee
takes into account their consistent commitment to long-term success of Westcorp
through conservative management of certain business units and aggressive
management of other business units as dictated by existing and anticipated
market conditions. Certainly the
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Compensation Committee expects and rewards recognition by the Chief Executive
Officer and senior Executives of both adverse and advantageous market conditions
for each of Westcorp's major businesses.
At the beginning of each year, performance goals to determine annual
incentive compensation are established for each business unit and for each
Executive. Financial goals include overall profitability, loan volume growth,
operating earnings, loan delinquency levels and return on equity and return on
assets, Community Reinvestment Act results, cost controls and productivity. The
most weight is given to profitability as it relates to established goals.
Management goals were established at the beginning of 1996 for those Executives
and managers who do not manage business units with direct financial goals. These
goals were tailored to the particular functions required to be performed. After
the close of the fiscal year, generally in early January, performance against
these goals and objectives is measured on both a predetermined arithmetic method
and, to a certain extent, on subjective evaluation, in light of market
conditions for the particular business unit. The results of these evaluations
are then considered by the Compensation Committee when determining the amounts
to be awarded (which appear as "Bonus" in the Summary Compensation Table).
Certain business units of Westcorp performed in accordance with or in
excess of budget, and the senior Executives of those businesses received full
performance bonuses, while business units which did not meet performance goals
resulted in lesser or no bonuses for their respective managers.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In determining the Chief Executive Officer's compensation for 1996, the
Compensation Committee discussed and considered all of the factors discussed
above.
In addition, target versus actual operating performance of Westcorp
overall, and various subjective performance criteria were utilized to determine
the extent to which the targeted annual bonus to the Chief Executive Officer
would be paid. The Committee analyzed his performance in comparison to specific
management objectives established at the beginning of the year. In addition, the
Compensation Committee evaluated how Westcorp as a whole performed, as measured
against its peers in California. Peer compensation information is obtained from
a variety of surveys and, in 1996, a thorough review of market information, for
the Company's size and location was undertaken. Peer information for Westcorp's
performance was compiled by Montgomery Securities. Taken into account was the
California economic environment, which put a degree of pressure on the earning
capacity of certain of Westcorp's businesses, especially in dealing with the
problem assets included in the real estate portfolio.
The Compensation Committee considered the factors stated above in arriving
at the award of 1996 bonus compensation for the Chief Executive Officer as shown
in the Summary Compensation Table. The bonus compensation for 1996 reflects the
achievement of management objectives, including the overall financial
performance; the creation of a commercial banking operation; the integration of
a retail mortgage acquisition, improved efficiencies and productivity; the
improved regulatory evaluations; and expansion of consumer lending operations
into new states. The Committee established 1997 management objectives for the
CEO.
STOCK OPTION GRANTS
Westcorp, the holding company, uses stock options as long-term incentives
and expects that it will continue to use this compensation alternative in the
future. In 1991, the Company adopted, and the shareholders approved, a new stock
option plan that made 3,150,000 shares of Common Stock of the Company available
for just such purposes and is described above. The Westcorp Compensation
Committee grants incentive stock options to employees of the Company and its
subsidiaries and views such grants less as compensation and more as an incentive
mechanism. Limited grants of Westcorp and WFS stock options were made in 1996 to
some Executives as shown in the Summary Compensation Table, and to other key
employees.
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OTHER COMPENSATION PLANS
Other compensation benefits have from time to time been established for the
benefit of senior Executives and other managers and Officers of Westcorp, each
of which are discussed in the above materials. The results of these compensation
plans on the most highly compensated Executives are reflected in the
Compensation Table.
POLICY REGARDING COMPLIANCE WITH I.R.C. SEC. 162(M)
Section 162(m) of the Internal Revenue Code, as enacted by the Omnibus
Budget Reconciliation Act of 1993, provides in general that, beginning in 1994,
compensation paid to certain Executives of publicly held corporations will not
be deductible for federal income tax purposes to the extent it exceeds
$1,000,000 per year unless certain conditions are met. It is the present policy
of the Compensation Committee that individual compensation shall not exceed the
deductibility requirements of Internal Revenue Code, Section 162(m) and the
Company intents to take the necessary steps to comply, but also reserves the
right to enter into incentive and other compensation arrangements that do not so
comply when it determines that the benefits to the Company outweigh the cost of
the possible loss of federal income tax deductions.
COMPENSATION COMMITTEE
Howard C. Reese, Chairman
Stanley E. Foster
Judith M. Bardwick
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STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph depicting the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock against
the cumulative total return of the S & P 500 Index and a compiled peer group for
the period of five fiscal years commencing December 31, 1991, and ending
December 31, 1996.
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent Westcorp specifically
incorporated this information by reference, and shall not otherwise be deemed
filed under such Acts.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
OF WESTCORP AND PEER GROUPS
MEASUREMENT PERIOD WESTCORP INC INDUSTRY
(FISCAL YEAR COVERED) CA INDEX BROAD MARKET
--------------------- ------------ -------- ------------
1991 100 100 100
1992 56.60 105.30 107.64
1993 76.21 110.42 118.50
1994 76.19 96.01 120.06
1995 158.74 158.29 165.18
1996 201.22 189.44 203.11
ASSUMES $100 INVESTED ON JANUARY 1, 1992
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 1996
CERTAIN TRANSACTIONS BETWEEN MANAGEMENT
AND THE COMPANY OR ITS SUBSIDIARIES
The Bank leases its Encino branch office space and WFS its Dealer Center
space from Insurance Company of the West ("ICW"), an affiliate of Mr. Rady,
Chairman of the Bank and Chairman of the Board and Chief Executive Officer of
Westcorp. The basic annual rent is adjusted annually and includes a portion of
direct operating expenses. The Encino lease terms expire at various times
through 1998. The Bank and WFS paid approximately $203,295 in rent to ICW in
1996. The Bank leases office space to ICW in Orange and Sacramento, California,
for which it received rent of approximately $82,009 in 1996.
The Bank leases the office space for its Del Mar offices from Carmel
Country Plaza, an affiliate of Mr. Rady. The lease terms expire in 1996 and
2001. The rent paid by the Bank for the Del Mar leases in 1996 totaled $140,525.
The Kearny Mesa Business Center is landlord to WFS's Dealer Center location in
San Diego. Kearny Mesa Business Center is an affiliate of Mr. Rady. The total
amount paid in 1996 pursuant to this lease, which expires in 2001, was
approximately $55,144.
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American Assets Inc., which is controlled by Ernest S. Rady, acts as
building managers and rental agents with respect to the properties owned by
Westcorp and provides rehabilitation and disposition services to Westcorp for
multifamily properties acquired by Westcorp through foreclosure. In 1996, the
Bank paid approximately $262,392 in fees to American Assets Inc. for such
services.
In the opinion of Westcorp these transactions have been on terms no less
favorable to Westcorp than could be obtained from unaffiliated parties. All
future transactions with persons affiliated with Westcorp will be on terms no
less favorable than those terms that could have been obtained in transactions
with unaffiliated third parties. Furthermore, any future transactions with
affiliated persons will continue to be approved by a majority of disinterested
Directors of Westcorp.
SECURITY OWNERSHIP OF MANAGEMENT, DIRECTORS AND NOMINEES
The following table sets forth, as of December 31, 1996, certain security
ownership information as to (a) the person who is beneficial owner of more than
5% of the outstanding shares of the Common Stock, (b) each Director and nominee
of the Company, (c) each of the named Executive Officers and (d) all Officers
and Directors of the Company as a group. Management knows of no person, other
than the person set forth below, who owns more than 5% of the outstanding shares
of Common Stock.
SHARES OF
COMMON STOCK
OF WESTCORP
BENEFICIALLY
OWNED AS OF
DECEMBER 31, PERCENT OF
NAME OF DIRECTOR POSITION WITH WESTCORP 1996(1) CLASS(1)
- -------------------------------- -------------------------------------- ------------ ----------
Ernest S. Rady.................. Chairman of the Board, President, 15,960,084(2) 61.39%
Chief Executive Officer and Director
Alan L. Milligan................ Director 82,604(3) 0.32%
Stanley E. Foster............... Director 164,137(4) 0.63%
William J. Crawford............. Director 4,631(5) --(12)
Judith M. Bardwick.............. Director 4,006(6) --(12)
Howard C. Reese................. Director 46,334(7) 0.18%
Andrey R. Kosovych.............. Nominee 5,000 --(12)
Joy Schaefer.................... Senior Executive Vice President, Chief 32,830(8) 0.13%
Operating Officer (Vice Chairman of
the Board of Directors, President and
Chief Operating Officer of WFS)
Donald H. Kasle................. Senior Executive Vice President, Chief 16,537(9) --(12)
Administrative Officer (President,
Chief Executive Officer and Director
of the Bank)
James R. Dowlan................. (Vice Chairman of the Board of 48,368(10) 0.19%
Directors of WFS, Senior Executive
Vice President of WFS)
Directors and Officers
as a Group (24 persons)....... 16,709,065(11) 63.4%
- ---------------
(1) The percentages are calculated on the basis of the number of shares
outstanding, plus the number of shares which such person or group has a
present right to acquire pursuant to the exercise of stock options within
60 days of December 31, 1996. All shares are Common Stock.
(2) Includes beneficial ownership of 24,530 shares which may be acquired within
60 days of December 31, 1996, pursuant to stock options awarded under Stock
Option Plans plus ESOP/401K shares as of December 31, 1996. Mr. Rady
disclaims beneficial ownership of 182,047 shares owned by the DHM Trust and
36,015 shares owned by the DHM Trust #2.
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(3) Includes beneficial ownership of 4,631 shares which may be acquired within
60 days of December 31, 1996, pursuant to stock options awarded under Stock
Option Plans.
(4) Includes beneficial ownership of 4,311 shares which may be acquired within
60 days of December 31, 1996, pursuant to stock options awarded under Stock
Option Plans.
(5) Consists of beneficial ownership of 4,631 shares which may be acquired
within 60 days of December 31, 1996, pursuant to stock options awarded
under Stock Option Plans.
(6) Includes 2,756 shares subject to options which are exercisable within 60
days of December 31, 1996.
(7) Includes beneficial ownership of 3,665 shares which may be acquired within
60 days of December 31, 1996, pursuant to stock options awarded under Stock
Option Plans plus ESOP/401K shares as of December 31, 1996.
(8) Includes beneficial ownership of 21,454 shares which may be acquired within
60 days of December 31, 1996, pursuant to stock options awarded under Stock
Option Plans plus ESOP/401K shares as of December 31, 1996.
(9) Includes of beneficial ownership of 14,437 shares which may be acquired
within 60 days of December 31, 1996, pursuant to stock options awarded
under Stock Option Plans.
(10) Includes beneficial ownership of 3,969 shares which may be acquired within
60 days of December 31, 1996, pursuant to stock options awarded under Stock
Option Plans plus ESOP/401K shares as of December 31, 1996.
(11) Includes 123,041 shares subject to options which are exercisable within 60
days of December 31, 1996.
(12) Less than 0.1%.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
WHO ARE NOT MANAGEMENT
As of March 15, 1997, no person or group other than Mr. Rady was known to
the Company to have owned beneficially more than 5% of the outstanding shares of
the Company's Common Stock. However, on January 24, 1997, a Schedule 13G was
filed on behalf of Wellington Management Company, L.L.P. ("WMC") reflecting
beneficial ownership of greater than 5% of Westcorp Common Stock for the year
ended December 31, 1996. WMC advises Westcorp that the shares, as to which said
Schedule 13G was filed, are owned by various investment advisory clients of WMC
which is deemed a beneficial owner of the shares only by virtue of the direct or
indirect investment and/or voting discretion it possesses pursuant to the
provisions of investment advisory agreements with such clients. Those clients
have the right to receive, or the power to direct the receipt of, dividends
from, or the proceeds from the sale of, such securities.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee, the international accounting
firm of Ernst & Young, certified public accountants, serves the Company as its
auditors at the direction of the Board of Directors of the Company. One or more
representatives of Ernst & Young are expected to be present at the Meeting and
will have an opportunity to make a statement if they desire to do so and to be
available to respond to appropriate questions.
This matter is not required to be submitted for shareholder approval, and
although shareholder approval is not binding, the Board of Directors has elected
to seek ratification by the affirmative vote of a majority of the shares
represented and voted at the Meeting.
SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Shareholders who wish to present proposals for action at the 1998 Annual
Meeting should submit their proposals in writing and in conformance with the
bylaws to the Secretary of the Company at the address of the Company set forth
on the first page of this Proxy Statement. Proposals must be received by the
Secretary no fewer than 30 days, nor more than 60 days, prior to the date of the
scheduled Annual Meeting for inclusion in next year's Proxy Statement and proxy
card. The scheduled date of the Annual Meeting may be obtained from the
Secretary after January 1, 1998.
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ANNUAL REPORT TO SHAREHOLDERS
The Annual Report to Shareholders of the Company for the year ended
December 31, 1996, including audited consolidated financial statements, has been
mailed to the shareholders, but such report is not incorporated in this Proxy
Statement and is not deemed to be a part of the proxy solicitation material.
OTHER MATTERS
The Management of the Company does not know of any other matters which are
to be presented for action at the Meeting. Should any other matters come before
the Meeting or any adjournment thereof, the persons named in the enclosed proxy
will have the discretionary authority to vote all proxies received with respect
to such matters in accordance with their judgments.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission (exclusive of Exhibits), is included in the
Annual Report; an additional copy will be furnished without charge to any person
from whom the accompanying proxy is solicited upon written request to Harriet
Burns Feller, Esq., Westcorp, 23 Pasteur Road, Irvine, California 92618. If
Exhibit copies are requested, a copying charge of $.20 per page will be made.
BY ORDER OF THE BOARD OF DIRECTORS
Harriet Burns Feller
Secretary
Irvine, California
March 25, 1997
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN, AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND YOUR
COOPERATION WILL BE APPRECIATED.
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REVOCABLE PROXY
WESTCORP
23 Pasteur Road
Irvine, California 92618
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF THE SHAREHOLDERS OF WESTCORP ON APRIL 29, 1997.
The undersigned appoints Ernest S. Rady (and in his absence or inability
to serve, Joy Schaefer as alternate proxy) with the power to appoint his
substitute, as proxy and hereby authorizes him and his alternate to represent
and to vote all of the shares of Common Stock held of record by and standing in
the name of the undersigned on March 3, 1997, at the Annual Meeting of
Shareholders of WESTCORP, to be held April 29, 1997, or any adjournment thereof,
in accordance with the instructions below and IN FAVOR OF ANY PROPOSAL AS TO
WHICH NO INSTRUCTION IS INDICATED.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE SECRETARY OF THE COMPANY AN
INSTRUMENT REVOKING THIS PROXY OR A DULY EXECUTED PROXY BEARING A LATER DATE,
OR BY BEING PRESENT AT THE ANNUAL MEETING AND ELECTING TO VOTE IN PERSON.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2.
(Proxy continued on reverse)
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FOLD AND DETACH HERE
26
Please mark
your vote as
indicated in
this example. [X]
WITHHOLD WITHHOLD
AUTHORITY AUTHORITY
to vote for to vote for any
all nominees INDIVIDUAL
FOR listed below nominee
1. ELECTION OF DIRECTORS
Nominees: Alan L. Milligan, William J. Crawford, [ ] [ ] [ ]
Howard C. Reese and
Andrey R. Kosovych
to serve as Class I Directors
of the Company.
WITHHOLD AUTHORITY to vote for any INDIVIDUAL
nominee. Write name of such nominee below.
----------------------------------------------
FOR AGAINST ABSTAIN
2. RATIFICATION OF THE APPOINTMENT OF ERNST [ ] [ ] [ ]
& YOUNG AS THE INDEPENDENT AUDITORS
OF THE COMPANY FOR FISCAL YEAR 1997.
3. OTHER BUSINESS. In accordance with the recommendation of the Company's
Board of Directors, the Proxy is authorized to vote upon such other business as
may properly come before the Meeting and any adjournments thereof.
I expect to attend the Meeting. [ ]
Number of Shares Owned:
-------------
Signature: Signature: Date
--------------------- --------------------- -----------
Please date this Proxy and sign your name exactly as it appears on your stock
certificate(s). When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee, or guardian, please give
the full title as such. If a corporation, please sign in full corporate name
by President or other authorized Officer. If a partnership, please sign in
partnership name by authorized person.
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FOLD AND DETACH HERE