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
[X] Definitive Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
H. F. AHMANSON & COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] 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:
[LOGO OF H. F. AHMANSON & COMPANY]
4900 RIVERGRADE ROAD
IRWINDALE, CALIFORNIA 91706
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 28, 1998
----------------
The Annual Meeting of Stockholders of H. F. Ahmanson & Company ("Ahmanson")
will be held at The Ritz-Carlton Huntington Hotel, 1401 South Oak Knoll
Avenue, Pasadena, California, on August 28, 1998, at 11:00 a.m., for the
following purposes:
1. To elect sixteen directors to serve until the next Annual Meeting of
Stockholders and until their successors are elected and qualified.
2. To consider and act upon such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on July 16, 1998, as
the record date for determining stockholders of Ahmanson entitled to notice of
and to vote at the meeting.
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. TO AID IN
MAINTAINING SECURITY AT THE MEETING, THE ENCLOSED ADMISSION CARD TO THE
MEETING WILL BE REQUIRED. TO INSURE YOUR REPRESENTATION AT THE MEETING, PLEASE
COMPLETE AND PROMPTLY MAIL YOUR PROXY IN THE RETURN POSTAGE PREPAID ENVELOPE
PROVIDED. THIS WILL NOT PREVENT YOU FROM VOTING IN PERSON SHOULD YOU SO
DESIRE.
By Order of the Board of Directors,
/s/ Madeleine A. Kleiner
Madeleine A. Kleiner
Secretary
July 31, 1998
[LOGO OF H. F. AHMANSON & COMPANY]
4900 RIVERGRADE ROAD
IRWINDALE, CALIFORNIA 91706
July 31, 1998
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 28, 1998
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of H. F. Ahmanson & Company, a Delaware
corporation ("Ahmanson"), for use at the Annual Meeting of Stockholders to be
held August 28, 1998, and all adjournments and postponements thereof. This
Proxy Statement and the accompanying form of proxy were first mailed to
stockholders on or about July 31, 1998.
Ahmanson will pay the cost of preparing, assembling and mailing the Notice
of Annual Meeting of Stockholders, Proxy Statement and form of proxy and the
solicitation of proxies. Proxies may be solicited by personnel of Ahmanson and
others who will not receive any additional compensation for such solicitation.
Proxies may be solicited in person or by telephone, telegraph or facsimile.
Ahmanson will pay brokers or other persons holding stock in their names or the
names of their nominees for the expenses of forwarding soliciting material to
their principals. In addition, Ahmanson has engaged MacKenzie Partners, Inc.,
a proxy solicitation firm, to assist in soliciting proxies for a fee not to
exceed $10,000 plus reimbursement of reasonable out-of-pocket expenses.
Any stockholder who owns shares of Ahmanson's Common Stock, $.01 par value
(the "Ahmanson Common Stock"), as a participant in the Ahmanson Advantage
Account (the "Plan") will receive a single form of proxy covering shares
credited to such participant in the Plan as well as any shares owned of record
that are registered in the identical name. If the shares are not registered in
the identical name, a participant may receive separate forms of proxy for
record and Plan holdings and should vote all proxies. Proxies executed by
participants in the Plan will serve as voting instructions to its trustee, the
Northern Trust Bank of California N.A.
VOTING
Ahmanson has fixed the close of business on July 16, 1998 as the record date
for the determination of stockholders entitled to notice of and to vote at the
meeting. On that date there were outstanding 112,759,099 shares of Ahmanson
Common Stock and 466,176 Depositary Shares, each representing a one-tenth
interest in a share of Ahmanson's 6% Cumulative Convertible Preferred Stock,
Series D (the "Preferred Stock")(which shares are not entitled to vote at the
meeting).
A majority of the shares entitled to vote, present in person or represented
by proxy, will constitute a quorum at the meeting. Each share of Ahmanson
Common Stock is entitled to one vote on any matter that may be presented for
consideration and action by the stockholders at the meeting. In all matters
other than the election of directors, the affirmative vote of the majority of
shares of Ahmanson Common Stock present in person or represented by proxy at
the meeting and entitled to vote on the subject matter will be the act of the
stockholders. Directors will be elected by a plurality of the votes of the
shares of Ahmanson Common Stock present in person or represented by proxy and
entitled to vote on the election of directors.
Proxies will be voted for management's nominees for election as directors,
unless the stockholder otherwise directs in his or her proxy. Where the
stockholder has appropriately directed how the proxy is to be voted, it will
be voted according to his or her direction. Proxies will be voted on any other
business that may properly come before the meeting as the persons named in the
proxy or their substitutes determine in their discretion. At the time of the
preparation of this Proxy Statement, the Board of Directors of Ahmanson was
not aware of any other matters to be presented at the meeting.
Any stockholder has the power to revoke his or her proxy at any time before
it is voted at the meeting by submitting written notice of revocation to the
Secretary of Ahmanson or by filing a duly executed proxy bearing a later date.
A proxy will not be voted if the stockholder who executed it is present at the
meeting and elects to vote the shares represented by the proxy in person.
Attendance at the meeting will not by itself revoke a previously granted
proxy.
2
ELECTION OF DIRECTORS
The directors of Ahmanson are elected annually. The term of office of all
present directors expires on the date of the Annual Meeting of Stockholders of
Ahmanson upon election and qualification of their successors. At the meeting
sixteen directors are to be elected to serve for the ensuing year and until
their successors are elected and qualified. The nominees recommended by the
Nominating Committee of the Board of Directors for election as directors (all
of whom are presently directors) are set forth below along with certain
information regarding these nominees. Should any nominee become unavailable to
serve as a director or should any vacancy occur before the election (which
events are not anticipated), the proxies may be voted for a substitute nominee
selected by the Board of Directors or the authorized number of directors may
be reduced. If for any reason the authorized number of directors is reduced,
the proxies will be voted, in the absence of instructions to the contrary, for
the election of the remaining nominees named in this Proxy Statement. To the
best of Ahmanson's knowledge, all nominees are and will be available to serve.
AGE (AS OF PRINCIPAL OCCUPATION AND OTHER DIRECTOR
NAME JUNE 30, 1998) DIRECTORSHIPS SINCE
---- -------------- ---------------------------------------------------- --------
Byron Allumbaugh 66 Retired Chairman of the Board of Ralphs Grocery 1987
Company, a Los Angeles-based supermarket company;
director of El Paso Energy Company, Ultramar
Diamond Shamrock, Inc., CKE Restaurants, Inc. and
Automobile Club of Southern California
Harold A. Black 52 James F. Smith Professor of Financial Institutions 1995
at the College of Business Administration at the
University of Tennessee, Knoxville
Richard M. Bressler 67 Retired Chairman of the Board of Plum Creek 1987
Management Company, a manufacturer of lumber and
wood products, and retired Chairman of the Board of
El Paso Natural Gas Company (now known as El Paso
Energy Company), a natural resources company;
director of General Mills, Inc. and Rockwell
International Corporation
John E. Bryson 54 Chairman and Chief Executive Officer of Edison 1997
International Company, the parent company of
subsidiaries providing energy-related products and
services, and Southern California Edison Company, an
electric utility; director of The Boeing Company and
The Times Mirror Company
David R. Carpenter 59 Chairman and Chief Executive Officer, Paradigm 1995
Partners International, a financial services
management firm; Chairman and Chief Executive
Officer of UniHealth, a California non-profit health
care organization; director of PacifiCare Health
Systems; Chairman, The Fielding Institute, a non-
profit regionally accredited graduate school
designed to serve mid-career professionals; retired
Chairman and Chief Executive Officer of Transamerica
Occidental Life Insurance Company and Executive Vice
President of Transamerica Corporation
Raymond R. Martin 62 Retired Chairman and Chief Executive Officer of 1998
Coast Savings Financial, Inc.; Litigation Trustee
for Coast Federal Litigation Contingent Payment
Rights Trust
Phillip D. Matthews 59 Chairman of the Executive Committee of the Board 1995
of Wolverine World Wide, Inc., a NYSE footwear
company; director of Bell Sports, Inc. and SIZZLER
International, Inc.
3
AGE (AS OF DIRECTOR
NAME JUNE 30, 1998) PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS SINCE
---- -------------- ---------------------------------------------------- --------
Richard L. Nolan 58 William Barclay Harding Professor of Management of 1995
Technology at the Graduate School of Business
Administration, Harvard University; director of
Xcellenet Inc.
Delia M. Reyes 56 President and Chief Executive Officer of Reyes 1992
Consulting Group, a market research and consulting
firm
Charles R. Rinehart* 51 Chairman of the Board and Chief Executive Officer of 1990
Ahmanson; Chairman of the Board and Chief Executive
Officer of Home Savings of America, FSB; director of
Kaufman & Broad Home Corporation
Frank M. Sanchez 54 Licensee of McDonald's Corporation 1995
Elizabeth A. Sanders 52 Business consultant; director of Advantica 1990
Restaurant Group, Wal-Mart Stores, Inc., Wellpoint
Health Networks, Inc. and Wolverine World Wide, Inc.
Arthur W. Schmutz 76 Retired partner of Gibson, Dunn & Crutcher, a law 1993
firm; director of Ducommum Incorporated
William D. Schulte 65 Retired Vice Chairman of KPMG Peat Marwick LLP, a 1991
firm of independent certified public accountants;
director of Vastar Resources, Inc.
Kevin M. Twomey* 51 Vice Chairman and Chief Financial Officer of 1997
Ahmanson; Vice Chairman and Chief Financial Officer
of Home Savings of America, FSB
Bruce G. Willison* 49 President and Chief Operating Officer of Ahmanson; 1996
President and Chief Operating Officer of Home
Savings of America, FSB; director of Enron Corp. and
Nordstrom, Inc.
- --------
* Executive officers.
Mr. Rinehart and Mr. Twomey have served as officers of Ahmanson and/or one
or more of its subsidiaries for more than five years. Mr. Willison joined
Ahmanson in April 1996 and became President and Chief Operating Officer in May
1996. From 1979 until joining Ahmanson, Mr. Willison was with First Interstate
Bancorp and/or one or more of its subsidiaries. For more than five years prior
to joining Ahmanson, he was Chairman, President and Chief Executive Officer of
First Interstate Bank of California and, since January 1995, he was also Vice
Chairman of First Interstate Bancorp. Messrs. Allumbaugh, Black, Rinehart,
Sanchez, Schulte, Schmutz, Twomey and Willison and Ms. Sanders also serve as
directors of Home Savings of America, FSB ("Home Savings").
Ahmanson's mandatory retirement policy. The policy provides that the Board
of Directors will not elect or nominate for election by the stockholders as a
director any person who is, or will be prior to the scheduled date of the
election, 70 or more years of age. Arthur W. Schmutz, age 76 and a director
since 1993, has been granted a special exemption to the mandatory retirement
policy until the 1999 Annual Meeting of Stockholders.
Ahmanson's executive officers not listed above are Madeleine A. Kleiner, age
47, Chief Administrative Officer and Senior Executive Vice President of
Ahmanson and Home Savings since February 1997, General Counsel and Secretary
of Ahmanson and General Counsel of Home Savings since May 1995 and Executive
Vice President of Ahmanson and Home Savings from May 1995 to February 1997;
Anne-Drue M. Anderson, age 37, Executive Vice President since March 1995,
Treasurer from September 1993 to August 1997, and First Vice President from
September 1993 to March 1995 of Ahmanson and Home Savings; Jan R. Cloyde, age
47, Executive Vice President of Ahmanson since May 1997 and Home Savings since
September 1996; Carl W. Forsythe, age 40, Executive Vice President of Ahmanson
since May 1997 and Home Savings since November 1995; E. Nancy Markle, age 56,
Executive Vice President of Ahmanson and Home Savings since
4
July 1995, and First Vice President of Home Savings from July 1994 to July
1995; Robert McAuslan, age 49, Executive Vice President of Ahmanson and Home
Savings since August 1997 and First Vice President of Ahmanson and Home
Savings from January 1997 to August 1997; Jaynie Studenmund, age 43, Executive
Vice President of Ahmanson and Home Savings since September 1997; and George
Miranda, age 50, First Vice President and Principal Accounting Officer of
Ahmanson and Home Savings. From 1977 until joining Ahmanson in May 1995, Ms.
Kleiner was with the law firm of Gibson, Dunn and Crutcher, where she was a
partner since 1983. From April 1993 until joining Ahmanson, Ms. Anderson was
Bank and Thrift Strategist at First Boston Corporation. From September 1989 to
February 1993, she was Senior Vice President and Treasurer at First Gibraltar
Bank. Prior to joining Ahmanson, Ms. Cloyde was Executive Vice President for
Cash Management at First Interstate Bancorp from June 1994 to April 1996. From
December 1992 to June 1994, she was Executive Vice President and Manager of
Cash Management and Corporate Services at First Interstate Bank of California.
Mr. Forsythe was Senior Vice President and Chief Retail Officer at Banc One
Ohio Corporation from August 1993 to October 1995, and Chief Operating Officer
of First Madison Bank from January 1993 to August 1993. Prior to joining Home
Savings in July 1994, Ms. Markle served as president of Information Technology
Consultants since 1988. Mr. McAuslan was President of CitiBank Arizona from
October 1993 to December 1996 and Senior Vice President from October 1986 to
October 1993. Prior to joining Ahmanson, Ms. Studenmund was director of retail
banking for Great Western Financial Corporation from April 1996 to September
1997. She was with First Interstate Bank of California from 1985 to April
1996, and served as an Executive Vice President from May 1991 to April 1996 in
various retail banking management positions, including director of retail
banking. Mr. Miranda has served as an officer of Ahmanson and/or one of its
subsidiaries for more than five years.
The Board of Directors has an Executive Committee, an Audit Committee, a
Compensation Committee and a Nominating Committee. The Executive Committee is
composed of Byron Allumbaugh, Richard M. Bressler, Charles R. Rinehart
(Chairperson), Arthur W. Schmutz and Bruce G. Willison and held no meetings
during 1997. The Audit Committee is composed of Harold A. Black, John E.
Bryson, David R. Carpenter, Richard L. Nolan, Frank M. Sanchez, Arthur W.
Schmutz and William D. Schulte (Chairperson). The Compensation Committee is
composed of Byron Allumbaugh, Richard M. Bressler (Chairperson), Phillip D.
Matthews, Delia M. Reyes and Elizabeth A. Sanders. The Nominating Committee is
composed of Byron Allumbaugh (Chairperson), Richard M. Bressler, Richard L.
Nolan, Delia M. Reyes, Charles R. Rinehart, Frank M. Sanchez and Bruce G.
Willison.
The Audit Committee held five meetings in 1997. The function of the Audit
Committee is to provide oversight to the audit plan and the internal audit
activities of Ahmanson, to review and evaluate the audit plan and the scope of
audit procedures employed by Ahmanson's independent auditors, to review and
evaluate audit reports rendered by both Ahmanson's independent auditors and
its internal staff and to approve the audit fee charged by the independent
auditors. The Audit Committee reports to the Board of Directors with respect
to such matters and recommends the selection of independent auditors.
The Compensation Committee held five meetings in 1997. The primary function
of the Compensation Committee is to determine the compensation of officers of
Ahmanson and the executive officers of its subsidiaries, to administer and
grant awards under Ahmanson's 1993 Stock Incentive Plan and to administer
Ahmanson's 1984 Stock Incentive Plan.
The Nominating Committee held two meetings in 1997. The function of the
Nominating Committee is to seek, evaluate and recommend to the Board of
Directors qualified individuals for election to the Board of Directors by the
stockholders, or by the Board of Directors to fill vacancies on the Board
whenever vacancies occur or whenever the Nominating Committee or the Board of
Directors considers it advisable to add or change directors. The Nominating
Committee also advises the Board of Directors on matters pertaining to the
size and composition of the Board of Directors. The Nominating Committee will
consider nominees for director whose names are timely submitted by holders of
Ahmanson Common Stock in writing addressed to the Chairperson of the
Nominating Committee accompanied by such information regarding the nominee as
would be required under the rules of the Securities and Exchange Commission
were the stockholder soliciting proxies with regard to the election of such
nominee.
5
In 1997 the Board of Directors held nine meetings. All directors attended at
least 75 percent of the meetings held during 1997 by the Board of Directors
and the committees on which they served.
Arthur W. Schmutz, a director of Ahmanson and Home Savings and a member of
Ahmanson's Executive and Audit Committees, is a retired partner of the law
firm of Gibson, Dunn & Crutcher, which has represented Ahmanson and its
subsidiaries for more than the past year and continues to do so.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following information sets forth the number of shares of Ahmanson Common
Stock beneficially owned as of June 30, 1998 by each of the present directors
and nominees of the Nominating Committee of the Board of Directors, each of
the individuals included in the "Summary Compensation Table" below and all
directors, nominees and executive officers as a group. No director or
executive officer owns Depositary Shares representing interests in Ahmanson's
Preferred Stock. Ahmanson knows of no beneficial owners of more than five
percent of the outstanding shares of Ahmanson Common Stock as of June 30,
1998.
NAME OR NUMBER OF NUMBER OF VOTING PERCENT OF
PERSONS IN GROUP SHARES OWNED OPTIONS(1) POWER ONLY TOTAL CLASS(2)
----------------- ------------ ---------- ---------- --------- ----------
Byron Allumbaugh........ 12,500 9,000 -- 21,500 --
Anne-Drue M. Anderson... 5,589 56,869 -- 62,458 --
Harold A. Black......... -- -- -- -- --
Richard M. Bressler..... 22,000 17,000 -- 39,000 --
John E. Bryson.......... -- -- -- -- --
David R. Carpenter...... 290 8,665 -- 8,955 --
Madeleine A. Kleiner.... 4,468 13,220 -- 17,688 --
Raymond R. Martin....... 67,000 -- -- 67,000 --
Phillip D. Matthews..... 1,000 1,364 -- 2,364 --
Richard L. Nolan........ 1,000 -- -- 1,000 --
Delia M. Reyes.......... -- 128 -- 128 --
Charles R. Rinehart..... 80,848 163,614 837,454(3) 1,081,916 --
Frank M. Sanchez........ 2,000 4,849 -- 6,849 --
Elizabeth A. Sanders.... 7,000 -- -- 7,000 --
Arthur W. Schmutz....... 5,000 9,000 -- 14,000 --
William D. Schulte...... 2,500 13,000 -- 15,500 --
Kevin M. Twomey......... 12,010 193,450 -- 205,460 --
Bruce G. Willison....... 30,000 82,071 -- 112,071 --
All directors and
executive officers as a
group (24 persons)..... 279,097 714,614 837,454 1,831,165 1.62%
- --------
(1) Represents shares subject to options which are presently exercisable or
exercisable within 60 days of June 30, 1998.
(2) Percentage information is omitted for those individuals whose beneficially
owned shares represent less than one percent of the outstanding shares of
Ahmanson Common Stock.
(3) Mr. Rinehart has disclaimed beneficial ownership of such shares because
his interest in such shares is limited to an irrevocable proxy from Wells
Fargo Bank, as trustee. The trust instruments covering such shares provide
that the trustee shall grant to the Chairman of the Board of Ahmanson upon
request a proxy to vote such shares, and the trustee has granted an
irrevocable proxy for a term of seven years, expiring in January 2001, to
Mr. Rinehart as Chairman of the Board and his successors as Chairman of
the Board.
6
EXECUTIVE COMPENSATION
The following table sets forth the compensation for services rendered in all
capacities to Ahmanson and its subsidiaries earned during the years indicated
by each of Ahmanson's Chief Executive Officer and the four most highly
compensated executive officers of Ahmanson (other than the Chief Executive
Officer) who were employed by Ahmanson as of December 31, 1997 (collectively
referred to as the "named executive officers").
SUMMARY COMPENSATION TABLE(1)
ANNUAL COMPENSATION LONG-TERM COMPENSATION(2)
-------------------------------- ---------------------------------
AWARDS PAYOUTS
---------------------- ----------
OTHER ANNUAL RESTRICTED SECURITIES
COMPENSATION STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS AWARDS AWARDS OPTIONS/ PAYOUTS COMPENSATION
POSITION YEAR ($) ($)(3) ($)(4) ($)(5) SARS(#)(6) ($)(7) ($)(8)
------------------ ---- -------- ---------- ------------ ---------- ----------- ---------- ------------
Charles R. Rinehart..... 1997 $842,501 $1,900,000 $ -- $ -- 42,692 $1,161,278 $228,549
Chairman of the 1996 760,000 891,763 -- -- 136,759 778,058 214,476
Board and Chief 1995 760,008 851,200 -- 370,427 208,613 795,150 178,647
Executive Officer
Bruce G. Willison(9).... 1997 600,000 936,000 -- -- 22,602 614,790 --
President and Chief 1996 322,602 308,007 -- 584,375 159,469 273,000 --
Operating Officer 1995 -- -- -- -- -- -- --
Kevin M. Twomey......... 1997 465,417 733,200 -- -- 17,705 577,903 120,626
Vice Chairman and 1996 415,008 438,258 -- -- 71,570 424,864 98,782
Chief Financial Officer 1995 381,254 327,600 -- 213,842 90,234 340,031 74,566
Madeleine A.
Kleiner(10)............ 1997 347,917 477,750 368,268 -- 13,184 412,423 --
Senior Executive Vice 1996 325,008 321,765 80,026 -- 55,669 324,409 --
President, Chief 1995 210,517 225,225 -- 108,908 55,175 113,344 --
Administrative Officer,
General Counsel and
Secretary
Anne-Drue M.
Anderson(11)........... 1997 322,917 436,800 -- -- 21,426 350,350 28,929
Executive Vice 1996 300,000 297,007 -- -- 51,278 322,481 22,302
President 1995 273,758 246,960 -- 131,357 63,052 244,125 15,078
- --------
(1) Includes bonuses and long-term compensation payouts earned in the
performance measurement period ending on December 31 of such year although
the payout was not authorized by the Compensation Committee until the
following year.
(2) Stockholdings of Messrs. Rinehart, Willison and Twomey and Mmes. Kleiner
and Anderson of 15,197, 25,000, 8,773, 4,468 and 5,389 shares,
respectively, were subject to vesting restrictions, and had a net market
value at December 31, 1997 of $1,017,249, $1,673,438, $587,243, $299,077
and $360,726, respectively, not accounting for the effect of the vesting
restrictions. Except for Mr. Willison, who received a restricted stock
award upon joining Ahmanson in 1996, all such stock represents shares
issued as payouts under Ahmanson's 1993 Stock Incentive Plan and was
reflected in the table under the heading "Restricted Stock Awards" for the
year granted.
(3) Portions of the awards granted pursuant to the Executive Short-Term
Incentive Plan and Executive Long-Term Incentive Plan were not tax
qualified but all were tax deductible for Ahmanson.
(4) Excludes compensation in the form of other personal benefits, which, for
each of the named executive officers, other than Ms. Kleiner in 1996 and
1997, did not exceed the lesser of $50,000 or 10 percent of the total of
annual salary and bonus reported for each year. Other Annual Compensation
for Ms. Kleiner includes $358,049 and $70,518 in 1997 and 1996,
respectively, for reimbursement of relocation expenses and payment of
taxes related to relocation assistance.
(5) The 33,827 restricted stock award shares granted to Messrs. Rinehart and
Twomey and Mmes. Kleiner and Anderson for 1995 were granted in February
1996. The 25,000 restricted stock award shares granted to
7
Mr. Willison for 1996 were granted in April 1996. Restricted stock award
shares granted for 1995 and 1996 vest in three equal annual installments
beginning three years after the grant. Dividends are paid on restricted
stock award shares prior to the lapse of restrictions to the same extent
that dividends are paid on all other shares of Ahmanson Common Stock. All
restricted stock award shares which are unvested will vest immediately upon
a change in control of Ahmanson.
(6) In 1994 Ahmanson adopted an amendment of its Executive Long-Term Incentive
Plan which, among other things, changed the timing of grants of options
from the end to the beginning of the performance measurement period.
Therefore, for 1995 includes option grants made as awards under the
Executive Long-Term Incentive Plan for the 39-month performance period
ended December 31, 1995, option grants under the plan, as amended, for the
three-year performance periods beginning January 1, 1996, and an additional
option grant made to Ms. Kleiner in connection with her joining Ahmanson.
In 1996 Ahmanson adopted an amendment which deleted the provision for stock
option awards at the beginning of the performance measurement period and
adopted Stock Option Award Guidelines. Therefore, for 1996 includes option
grants made as awards under the Plan for the 39-month performance period
ended December 31, 1996, options granted under the Stock Option Award
Guidelines and an additional option grant made to Mr. Willison in
connection with his joining Ahmanson. For 1995 and 1996 includes options
granted in lieu of cash contributions under the 1989 Contingent Deferred
Compensation Plan. For 1997 includes option grants made pursuant to the
Stock Option Award Guidelines and includes an additional option grant made
to Ms. Anderson in October 1997 as a special award in recognition of her
new responsibilities as the director of residential lending.
(7) For 1995, 1996 and 1997, represents the cash component of payouts pursuant
to Ahmanson's Executive Long-Term Incentive Plan for the 39-month
performance period ended December 31, 1995, the 39-month performance period
ended December 31, 1996, and the 36-month performance period ended December
31, 1997, respectively. Ahmanson's Executive Long-Term Incentive Plan
provides for mandatory deferral of that portion of a cash payout for which
Ahmanson would not be allowed a tax deduction pursuant to Section 162(m) of
the Internal Revenue Code. Pursuant to this provision, $573,000 of Mr.
Rinehart's payout for 1995 was deferred. No deferrals were made in 1996 or
1997.
(8) Includes for 1997 the value to the participant of premiums paid by
Ahmanson under the Senior Executive Life Insurance Plan.
(9) Mr. Willison became an executive officer of Ahmanson in May 1996.
(10) Ms. Kleiner became an executive officer of Ahmanson in May 1995.
(11) Ms. Anderson became an executive officer of Ahmanson in March 1995.
8
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to stock
options granted to the named executive officers during 1997.
INDIVIDUAL GRANTS
---------------------------------------------------------------------------
PERCENTAGE OF
NUMBER OF SHARES TOTAL OPTIONS
UNDERLYING GRANTED TO GRANT DATE(1)
NAME OPTIONS GRANTED EMPLOYEES EXERCISE PRICE EXPIRATION DATE PRESENT VALUE
---- ---------------- ------------- -------------- --------------- -------------
Charles R. Rinehart..... 42,692 4.00% $61.1875 12/06/07 $1,031,439
Bruce G. Willison....... 22,602 2.11 61.1875 12/06/07 546,064
Kevin M. Twomey......... 17,705 1.65 61.1875 12/06/07 427,753
Madeleine A. Kleiner.... 13,184 1.23 61.1875 12/06/07 318,525
Anne-Drue M. Anderson... 10,000 0.93 58.3750 11/06/07 232,900
11,426 1.07 61.1875 12/06/07 276,052
- --------
(1) Options which expire on November 6, 2007 and December 6, 2007 were granted
on October 6, 1997 and November 6, 1997, respectively. Present values were
calculated using the Black-Scholes option valuation model with the
following assumptions:
OCTOBER 6, 1997 NOVEMBER 6, 1997
GRANT GRANT
--------------- ----------------
Term........................................ 10 years 10 Years
Exercise price.............................. $58.38 $61.19
Volatility.................................. 28% 27.1%
Dividend yield.............................. 1.51% 1.44%
Risk-free interest rate..................... 6.14% 6.03%
Discount for forfeiture risk................ 5.9% 5.9%
The actual value, if any, which a named executive officer may realize
will be based upon the difference between the market price of Ahmanson
Common Stock on the date of exercise and the exercise price. The dividend
yield assumption is based upon the dividend rate on the respective grant
dates. There is no assurance that the assumed dividend rate will be
maintained or that the actual realized value will be at or near the value
estimated by the Black-Scholes model.
The October 6, 1997 grant to Ms. Anderson was a special award in recognition
of her new responsibilities as the director of residential lending. The
November 6, 1997 grants were issued under the 1993 Stock Incentive Plan and
were made pursuant to the Stock Option Award Guidelines, which provide for
annual awards based on a percent of base salary ranging from 25% to 100% using
a Black-Scholes valuation model.
The options become exercisable six months after grant (except for the
options granted to Ms. Anderson on October 6, 1997, which become exercisable
with respect to one-third of their underlying shares on each of the first,
second and third anniversaries of their grant) or, if earlier, in full upon
the employee's death, disability or normal retirement or a change in control
of Ahmanson. The options expire three months after termination of employment
other than as a result of death, disability or retirement or, in the event of
a change in control of Ahmanson, ten years and one month after the date of the
employee's option agreement. Payment of tax withholding obligations may be
satisfied by withholding shares otherwise issuable upon exercise.
9
AGGREGATED OPTION/SAR EXERCISES AND YEAR-END OPTION/SAR VALUES
The following table sets forth certain information with respect to exercises
by the named executive officers of stock options and stock appreciation rights
("SARs") during 1997 and the value of all unexercised employee stock options
and SARs as of December 31, 1997 held by the named executive officers.
NUMBER OF SHARES VALUE OF UNEXERCISED IN-
SHARES UNDERLYING UNEXERCISED THE-MONEY OPTIONS/SARS AT
ACQUIRED OPTIONS/SARS FISCAL YEAR-END(1)
ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- ---------- ----------- ------------- ----------- -------------
Charles R. Rinehart..... 36,423 $1,572,045 587,846 42,692 $25,660,536 $256,152
Bruce G. Willison....... 20,000 728,750 139,469 22,602 5,445,563 135,612
Kevin M. Twomey......... 40,500 1,416,278 236,001 17,705 9,938,775 106,230
Madeleine A. Kleiner.... 20,000 487,500 90,844 13,184 3,327,642 79,104
Anne-Drue M. Anderson... 75,903 2,550,747 82,010 21,426 2,976,722 156,681
- --------
(1) The actual amount realized from unexercised options is dependent upon the
price of Ahmanson Common Stock at the time shares obtained upon exercise
of such options are sold and, as to unexercisable options, whether
restrictions upon exercise of such options lapse.
LONG-TERM INCENTIVE PLAN
Under Ahmanson's Executive Long-Term Incentive Plan, senior executives of
Ahmanson and its subsidiaries who are designated by the Compensation Committee
are assigned a cash target award opportunity expressed as a percentage of base
annual salary in the last year of the three-year performance measurement
period.
The Plan also has provided for the grant of nonqualified stock options
relating to Ahmanson Common Stock which are granted at the beginning of the
performance measurement period (provided, however, that for performance
measurement periods commencing before January 1, 1994, any grants of options
were made at the end of the performance measurement period). In November 1996
this plan was amended to delete the provision for stock option awards at the
beginning of each performance cycle.
The following table sets forth certain information as to target cash award
opportunities under the Executive Long-Term Incentive Plan. Actual payout
amounts will be based upon total stockholder return. Notwithstanding the
satisfaction of such criteria, the Compensation Committee may, in its
discretion, reduce the cash amount paid based upon an assessment of the
executive's performance during the last 12 months of the performance
measurement period and/or the performance of the business unit or
organizational area of Ahmanson and its subsidiaries that directly employs the
participant, if the performance of Ahmanson and its subsidiaries is not
adequately reflected in the objective measures previously determined by the
Compensation Committee and/or if Home Savings' core capital is below the level
mandated by law. Estimated future payout amounts indicated are calculated
using the named executive officers' current salaries.
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE PAYOUTS
PERFORMANCE UNDER
OR OTHER PERIOD NON-STOCK PRICE-BASED PLANS
UNTIL MATURATION -----------------------------
NAME OF PAYOUT THRESHOLD TARGET MAXIMUM
---- ---------------- --------- -------- ----------
Charles R. Rinehart........... 3 years $425,000 $850,000 $1,275,000
Bruce Willison................ 3 years 236,250 472,500 708,750
Kevin M. Twomey............... 3 years 236,250 472,500 708,750
Madeleine A. Kleiner.......... 3 years 140,625 281,250 421,875
Anne-Drue M. Anderson......... 3 years 121,875 243,750 365,625
10
RETIREMENT PLANS
Retirement Plan. Ahmanson's Retirement Plan is a qualified, noncontributory,
defined benefit retirement plan governed by the Employee Retirement Income
Security Act of 1974. The Retirement Plan is administered by a committee
appointed by the Board of Directors. With some exceptions, all employees of
Ahmanson and its participating subsidiaries (including officers) are eligible
to participate provided they meet certain age and service requirements.
The following table illustrates the estimated annual retirement benefits
payable under the Retirement Plan to participants in the following specific
average annual earnings and years of service classifications. Benefits under
the Retirement Plan are reduced in part to the extent a participant receives
Social Security benefits. Benefits paid to a participant in the Retirement
plan who is also a participant in Ahmanson's Supplemental Executive Retirement
Plan ("SERP") or Senior Supplemental Executive Retirement Plan reduce any
benefit payable to such participant under the SERP or Senior Supplemental
Executive Retirement Plan by 100 percent of the amount of the benefit under
the Retirement Plan.
YEARS OF CREDITED SERVICE
-----------------------------------------------------
FINAL AVERAGE
EARNINGS 15 20 25 30 35 40
------------- -------- -------- -------- -------- -------- --------
$125,000 $ 37,338 $ 49,785 $ 65,355 $ 80,926 $ 87,177 $ 93,426
150,000 45,463 60,618 79,522 98,426 105,926 113,426
175,000 53,588 71,451 93,688 115,926 124,676 130,000
200,000 61,713 82,285 107,855 130,000 130,000 130,000
225,000 69,838 93,118 122,022 130,000 130,000 130,000
250,000 77,963 103,951 130,000 130,000 130,000 130,000
300,000 94,213 125,618 130,000 130,000 130,000 130,000
350,000 110,463 130,000 130,000 130,000 130,000 130,000
400,000 126,713 130,000 130,000 130,000 130,000 130,000
450,000 130,000 130,000 130,000 130,000 130,000 130,000
500,000 (and above) 130,000 130,000 130,000 130,000 130,000 130,000
Benefits are paid to or on behalf of each participant upon retirement,
normally at age 65, and under certain circumstances upon death or disability.
The Retirement Plan provides for an annual benefit equal to 65 percent of
final average annual earnings reduced by 40 percent of the participant's
Social Security benefits. "Final average annual earnings" is the annual
average compensation paid to a participant during the final 120 months of
employment, consisting of salary and cash bonuses, subject to certain
adjustments and a cap as to the amount of compensation which may be included
for each year, currently $160,000. If the participant has fewer than 30 years
of credited service in the Retirement Plan, the participant's final average
earnings are proportionately reduced. Benefits shown in the table above are
stated in the form of a single life annuity benefit payment option and assume
commencement of benefits at normal retirement age (age 65). Participants with
more than 20 years of credited service receive an additional benefit amount
equal to 1/2 of 1 percent of final average earnings for each year of credited
service in excess of 20. Participants with more than 30 years of credited
service receive an additional 1/2 of 1 percent of final average annual
earnings for each year of credited service in excess of 30. However, in no
event may a participant's benefits exceed the maximum amount permitted under
the Internal Revenue Code, which for 1997 was $130,000. Retirement benefits
generally vest after five years or upon the participant's 65th birthday while
employed by Ahmanson or a participating subsidiary. The benefits payable under
the Retirement Plan are actuarially adjusted to reflect the form of payment
elected by the participant and are subject to limitations on maximum benefits
imposed by applicable law. As of June 30, 1998 the full years of credited
service for Messrs. Rinehart, Willison and Twomey and Mmes. Kleiner and
Anderson were 8, 1, 4, 2 and 4, respectively.
Supplemental Executive Retirement Plan. Ahmanson's SERP is a noncontributory
defined benefit, nonqualified plan under which Ahmanson pays benefits to
certain officers of Ahmanson and its subsidiaries designated by the
Compensation Committee of the Board of Directors in an amount equal to a
specified
11
percentage of the participant's average annual earnings for the 36 consecutive
months during the final ten years of the participant's employment which
produce the highest average annual earnings.
The following table illustrates the estimated annual retirement benefits
payable under the SERP to participants in the following specific average
annual earnings and years of service classifications. Benefits under the SERP
are reduced to the extent a participant receives benefits from primary Social
Security or Ahmanson's Retirement Plan.
YEARS OF CUMULATIVE SERVICE
----------------------------
THREE YEAR
AVERAGE
ANNUAL 15 AND
EARNINGS 5 10 OVER
---------- -------- -------- ----------
$ 250,000 $ 50,000 $100,000 $ 150,000
500,000 100,000 200,000 300,000
750,000 150,000 300,000 450,000
1,000,000 200,000 400,000 600,000
1,250,000 250,000 500,000 750,000
1,500,000 300,000 600,000 900,000
1,750,000 350,000 700,000 1,050,000
The participant's average annual earnings include salary, annual bonuses
under the Ahmanson Executive Short-Term Incentive Plan and the cash value of
any stock option awards made in lieu of contingent deferred compensation
grants. The compensation for purposes of the SERP of each of the named
executive officers is substantially equivalent to the respective amounts set
forth in the Summary Compensation Table under the headings "Salary" and
"Bonuses".
The annual benefit payable to a participant under the SERP is equal to four
percent of the participant's average annual earnings multiplied by the
participant's years of cumulative service, subject to a maximum of 15 years of
cumulative service except for determination of whether a participant is
entitled to benefits upon early retirement. Service must generally continue to
at least the participant's normal retirement date for a participant to receive
full benefits under the SERP. However, a participant may retire early and
receive reduced benefits upon early retirement if the sum of the participant's
age and years of service equals at least 75 and the participant is at least
55. The SERP provides for accelerated accrual and vesting of participants'
interests in the event of a change in control of Ahmanson. Benefits generally
commence under the SERP upon the participant's retirement and are paid on a
modified joint and survivor basis, which provides for a lesser annual benefit
to the participant's designated beneficiary upon the death of the participant.
The SERP provides for a pre-retirement survivor benefit equal to the survivor
benefits a participant's spouse would have received if the participant had
elected early retirement, offset by executive life insurance. The SERP permits
participants to elect to receive a lump sum benefit, equal to 90 percent of
the present value of the participant's accrued benefits at any time after
retirement or 100 percent of the present value of the participant's accrued
benefits upon retirement if the election is made in a timely manner before
retirement. Mr. Rinehart was granted additional years of service for purposes
of the Supplemental Executive Retirement Plan and has more than the maximum 15
full years of cumulative service. Mr. Willison was granted seven years of
service for purposes of the Supplemental Executive Retirement Plan in
connection with his joining Ahmanson. As of June 30, 1998 the full years of
cumulative service for Messrs. Willison and Twomey and Mmes. Kleiner and
Anderson were 9, 5, 3 and 4, respectively. Mr. Twomey and Mmes. Kleiner and
Anderson were granted 5, 4 and 2 additional years of service, respectively,
for purposes of the Supplemental Executive Retirement Plan, which vest upon
the earlier of 3 years or termination of employment other than for cause.
Senior Supplemental Executive Retirement Plan. Certain officers of Ahmanson
and its subsidiaries, as designated by the Compensation Committee, participate
in an auxiliary version of the SERP, the Senior Supplemental Executive
Retirement Plan, under which a portion of the amount otherwise payable to the
participant under the SERP is offset by the participant's interest in the cash
value of split-dollar life insurance
12
policies purchased under Ahmanson's Senior Executive Life Insurance Plan. The
post-retirement survivor benefit payable to the participant's designated
beneficiary is equal to the amount which would have been payable under
Ahmanson's SERP reduced by the additional post-retirement death benefit
payable under Ahmanson's Senior Executive Life Insurance Plan. The pre-
retirement survivor benefit payable to the participant's designated
beneficiary is equal to the amount which would have been payable under
Ahmanson's SERP reduced by the death benefit payable under Ahmanson's Senior
Executive Life Insurance Plan.
EMPLOYMENT AGREEMENTS
Ahmanson has entered into employment agreements with each of its executive
officers. Such agreements generally provide for continually renewed terms of
employment and for minimum annual salaries, payable regardless of the
disability of the employee and under certain circumstances payable for a
period of time after the termination of the officer's actual employment. The
agreements with Messrs. Rinehart, Willison and Twomey and Mmes. Kleiner and
Anderson provide for minimum annual salaries of $850,000, $630,000, $630,000,
$375,000 and $325,000, respectively.
The employment agreements with Messrs. Rinehart, Willison and Twomey and
Mmes. Kleiner and Anderson also provide that the employee may terminate the
agreement at any time with or without cause. Cause includes, among other
things, Ahmanson's failure to perform its obligations under the employment
agreement. Upon termination by the employee with cause or termination by
Ahmanson without cause, as defined in the employment agreements, Ahmanson is
obligated to pay or provide the employee, for a specified period of time after
the date of termination, his or her current salary, his or her current medical
and other insurance type benefits, continuation of vesting of all unvested
restricted stock, stock options, SARs and certain deferred compensation awards
and continuation of accrual and vesting of SERP and Senior Supplemental
Executive Retirement Plan benefits. Such benefits will be paid or provided to
each of the named executive officers for a period of three years. Special
provisions apply in the event of the employee's death or receipt of any
salary, cash bonus or other benefits from another employer during the
specified period unless such termination occurs after a change in control.
The employment agreements with the named executive officers provide for a
30-day period one year after a change in control during which a voluntary
termination of employment will trigger severance benefits and include the
annual bonuses as part of the compensation afforded severance protection.
Severance benefits are also triggered if the officer's employment is
terminated without cause or in the event the officer terminates employment for
good reason, as defined in the agreement. Upon a change in control, the
agreements add service and vesting credits under Ahmanson's SERP equal to the
remaining term of the agreement. In addition, all restricted stock, stock
options, SARs, contingent deferred compensation and similar grants which are
unvested immediately vest upon a change in control. The agreements contain a
gross-up provision for federal excise taxes on excess parachute payments after
a change in control.
COMPENSATION OF DIRECTORS
Directors who are also employees of Ahmanson or any of its subsidiaries
receive no additional compensation for their services as directors, including
service on committees of the Board of Directors. Each other director receives
an annual fee of $24,000 for serving on the Board of Directors and $1,500 for
each meeting of the Board of Directors attended. Each member of the Executive
Committee receives an annual fee of $3,000 and each member of the Audit,
Compensation, Nominating and Technology Committees receives an annual fee of
$2,400 for each such committee on which the director serves. Each Chairperson
of the Audit, Compensation, Nominating and Technology Committees receives an
additional fee of $9,900. Each director receives an additional payment of $600
for each committee meeting attended. Directors, and in limited circumstances,
their spouses, are reimbursed for travel and other expenses related to
attendance at Board of Directors and committee meetings.
13
Directors of Ahmanson who are not employees of Home Savings or any of its
subsidiaries receive additional fees for attending meetings of the Board of
Directors of Home Savings that are not held jointly with meetings of the
Ahmanson Board of Directors. The Board of Directors of Home Savings held seven
meetings during 1997 separately from the Ahmanson Board of Directors.
Ahmanson's Outside Director Retirement Plan is a nonqualified retirement
plan for directors of Ahmanson who are not also employees of Ahmanson or any
of its subsidiaries. Under the Plan a participating director receives an
annual retirement benefit equal to the director's annual fee during the 12
month period immediately preceding the participant's retirement from the
Board. Benefits under this Plan generally are payable for a period equal to
the participant's aggregate years and months of service on the Board of
Directors plus time spent in certain governmental service, with a lifetime
benefit payable to participants with 15 or more years of service. Benefit
payments commence when the participant ceases being a director. Upon the death
of the participant, the participant's designated beneficiary is entitled to 50
percent of the benefits otherwise payable to the participant. Such death
benefits commence one month after the participant's death and continue for the
payment period applicable to the participant or, if the participant had
already begun receiving benefits under the Plan, for the participant's
remaining payment period with a maximum of 15 years of payment. The Plan
permits participants to elect to receive a lump sum benefit equal to 90
percent of the present value of the participant's accrued benefits at any time
after retirement or 100 percent of the present value of the participant's
accrued benefits upon retirement if the election is made in a timely manner
before retirement.
Ahmanson's 1996 Nonemployee Directors' Stock Incentive Plan (the "1996
Plan") provides for the grant of stock options to any director of Ahmanson who
is not an employee of Ahmanson or any of its present or future parent or
subsidiary corporations (a "Nonemployee Director"). Whenever any person
becomes a Nonemployee Director, such person is granted automatically options,
the date of grant of which is the date such person becomes a Nonemployee
Director, to purchase 2,000 shares of Ahmanson Common Stock. In addition, on
the first business day of each calendar year during the term of the 1996 Plan,
each Nonemployee Director then in office is automatically granted options to
purchase 2,000 shares of Ahmanson Common Stock. However, no Nonemployee
Director may receive in any calendar year under the foregoing provisions of
the 1996 Plan options to purchase more than 2,000 shares of Ahmanson Common
Stock.
Additional options will be granted automatically on the first business day
of each calendar year to any Nonemployee Director who files with Ahmanson an
irrevocable election to receive options in lieu of all or part of annual
directors' fees to be earned in each succeeding calendar year.
Options granted under the 1996 Plan may be exercisable for a term no longer
than ten years and one month. The options become exercisable one year after
grant (six months for options granted in lieu of directors' fees) as to half
of the shares subject to the options and two years (one year for options
granted in lieu of directors' fees) after grant as to the balance of the
shares or, if earlier, in full upon the director's death, disability or normal
retirement or a change in control of Ahmanson, and expire three months after
termination of directorship other than as a result of death, disability or
normal retirement or, in the event of a change in control of Ahmanson,
ten years and one month after the date of the director's option agreement.
Ahmanson's 1996 Nonemployee Directors' Stock Incentive Plan replaced the
1988 Plan pursuant to which directors had received options with substantially
similar terms.
In March 1997, the Board of Directors adopted stock ownership guidelines for
Ahmanson's directors providing for ownership of Ahmanson Common Stock by the
end of a five-year period. The guidelines for directors provide for the
ownership of Ahmanson Common Stock by each director in an amount equal to five
times their annual retainer.
Ahmanson also provides at no charge to its nonemployee directors health and
dental benefits substantially comparable to those afforded to its employees
under Ahmanson's group insurance plans and provides retiree health benefits at
no charge.
14
CERTAIN TRANSACTIONS
For many years Home Savings had a home loan program under which directors,
officers and employees of Home Savings, Ahmanson and certain affiliated
companies could obtain loans, secured by a first deed of trust on the
borrower's principal residence, at a fixed rate at least one percent above
Home Savings' cost of funds for the first six months and adjusted thereafter
based upon changes in the monthly weighted average cost of funds of savings
institutions headquartered in the Eleventh District of the Federal Home Loan
Bank System as long as the borrower remained, or retired as, a director,
officer or employee of Home Savings, Ahmanson or certain affiliated companies.
The current program prohibits directors, executive officers and certain other
senior officers from obtaining loans at a discounted rate.
The following table sets forth as to each present executive officer of
Ahmanson who had a home loan from Home Savings under this home loan program
(i) the largest aggregate indebtedness outstanding from January 1, 1997 to
June 30, 1998, (ii) the amount of such indebtedness outstanding on June 30,
1998 and (iii) the rate of interest on such indebtedness on June 30, 1998. No
present director of Ahmanson had a home loan from Home Savings under this home
loan program.
HIGHEST UNPAID BALANCE INTEREST RATE ON
INDEBTEDNESS SINCE ON JUNE 30, JUNE 30,
NAME DECEMBER 31, 1996 1998 1998
---- ------------------ -------------- ----------------
George Miranda............ $194,967 $186,429 5.903%
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during 1997 were Byron Allumbaugh,
Richard M. Bressler, Phillip D. Matthews, Delia M. Reyes and Elizabeth A.
Sanders.
Certain directors, including two members of the Compensation Committee,
officers and stockholders of Ahmanson and their associates were depositors,
borrowers and customers of and engaged in transactions with Home Savings and
certain other subsidiaries of Ahmanson in the ordinary course of business
during 1997. Similar transactions are expected to occur in the future. All
such loans and transactions with members of the Compensation Committee were
made on substantially the same terms, including interest rates, fees and
security, as those prevailing at the time for comparable loans and
transactions with other persons and did not involve more than the normal risk
of collectibility or present any other unfavorable features.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, which is comprised
exclusively of nonemployee directors, is responsible for developing Ahmanson's
executive compensation policies, administering Ahmanson's various management
incentive programs, and making recommendations to the Board with respect to
those policies and programs. In addition, the Committee determines the
compensation paid to the Chief Executive Officer and to each of the other
senior officers of Ahmanson.
EXECUTIVE COMPENSATION POLICY
The policy of the Committee is to closely link the compensation of
Ahmanson's executive officers to Ahmanson's financial performance and the
total returns (price appreciation and dividends) generated for Ahmanson's
stockholders. To this end, it is the Committee's policy to generally position
executive officer salaries at median competitive levels and to rely on
variable, performance-based incentives to play a significant role in
determining total compensation. Based on this policy, Ahmanson's financial and
stockholder return performance generally must exceed the median performance of
other comparable financial institutions before executive total compensation
exceeds median competitive practice.
15
In March 1997, the Compensation Committee adopted in principle stock
ownership guidelines for Ahmanson's executive and certain other senior
officers providing for the ownership of Ahmanson Common Stock by the end of a
five-year period. The guidelines were finalized in January 1998. The
guidelines provide for the ownership of Ahmanson Common Stock in an amount
equal to five times salary by the chief executive officer, the chief operating
officer, the chief financial officer and the chief administrative officer,
three times salary for the executive vice presidents, and one times salary for
certain other senior officers.
The key components of Ahmanson's executive compensation program include base
salary, an annual incentive plan tied to the annual performance of Ahmanson
and the individual participant, and a long-term incentive program consisting
of annual stock option grants and a cash award opportunity with payment based
on Ahmanson's total stockholder return performance over a three-year period.
Earned awards for 1997 were payable partly in stock and partly in cash. The
November 1997 awards reflected above under the caption "Option Grants In Last
Fiscal Year" were made pursuant to the Stock Option Award Guidelines. In
keeping with the Committee's policy of linking executive officer pay closely
to performance, approximately 72 percent of the target total compensation of
Ahmanson's senior executive officer group consists of variable, performance-
based compensation delivered through the annual bonus and long-term incentive
plans.
As described earlier in this Proxy Statement, each of Ahmanson's executive
officers is covered by an employment agreement which, among other things,
specifies a minimum annual base salary for each officer. See "Employment
Agreements" above. The Committee may, in its discretion, increase base
salaries above the minimum level specified in the agreements, but, in the
absence of cause, may not thereafter decrease salaries below those levels.
Based on external compensation information provided by Towers Perrin,
Ahmanson's benefits advisor, the current base salaries of Ahmanson's senior
executive officer group as a whole fell within approximately 10 percent of the
median base salaries of other comparable organizations. The target total
compensation (the sum of base salary, the target annual incentive opportunity
and the target value of long-term incentives) of the group also falls near the
market median.
Under the 1993 Omnibus Budget Reconciliation Act ("OBRA"), income tax
deductions of publicly-traded companies may be limited to the extent that
total compensation (including base salary, annual and longer-term incentives,
gains from stock option exercises and certain benefits) for certain executive
officers exceeds $1 million. Under OBRA, the deduction limit does not apply to
payments which qualify as "performance-based." To qualify as "performance-
based," compensation payments must be based solely upon the achievement of
objective performance goals under a plan that is administered by a committee
of outside directors. In addition, the material terms of the plan must be
disclosed to and approved by stockholders, and the compensation committee must
certify that the performance goals were achieved before payments can be made.
It is the intent of the Committee to structure Ahmanson's compensation
programs to conform with the OBRA legislation and related regulations so that
total compensation paid to any employee will not exceed $1 million in any one
year, except for compensation payments which qualify as "performance-based" or
are exempt for other reasons. However, Ahmanson may in limited circumstances
pay compensation which is not deductible if the Committee determines it is
justified in doing so.
EXECUTIVE SHORT-TERM INCENTIVE PLAN
Ahmanson's Executive Short-Term Incentive Plan provides for an annual cash
award opportunity based on actual company performance compared to budget,
subject to reduction of actual awards at the discretion of the Compensation
Committee. Performance measures for 1997 were Ahmanson's earnings per share
and return on equity adjusted based on changes in the Cost of Funds Index of
the 11th District of the Federal Home Loan Bank.
Target annual incentive awards are established for each participant ranging
from 100 percent of base salary for the chief executive officer and from 10
percent to 80 percent of base salary for other eligible employees.
16
Actual payments may vary from zero percent to 200 percent of the target award
based on the level of company performance achieved, subject to reduction at
the discretion of the Compensation Committee. For 1997 threshold awards equal
to 40 percent of the target award were available for achievement equal to 60
percent of budgeted earnings per share and 60 percent of budgeted return on
equity. Awards equal to 100 percent of the target award were available for
achieving 100 percent of budgeted earnings per share and 100 percent of
budgeted return on equity.
For 1997 Ahmanson's earnings per share performance was 132 percent of budget
and return on equity was 127 percent of budget, resulting in a formula payout
to executives of 195 percent of target, subject to reduction at the discretion
of the Compensation Committee.
EXECUTIVE LONG-TERM INCENTIVE PLAN
Ahmanson's Executive Long-Term Incentive Plan for the three-year performance
cycle ended December 31, 1997 provided its executives an award opportunity
payable one-half in cash and one-half in stock options granted prior to the
beginning of the period. The actual cash awards are based on Ahmanson's
relative performance in total stockholder return ("TSR") over the three-year
period compared to companies comprising the S&P 500 Index and the companies
comprising the S&P Banks Composite Index.
Similar to the annual incentive plan, cash target awards for each
performance measurement period are established for each plan participant and
range from 100 percent of base salary for the Chief Executive Officer and from
25 percent to 80 percent of base salary for other eligible senior officers.
Except for certain awards that may be adjusted downward only, actual payments
under the plan may vary from zero percent to 150 percent of the target award.
A threshold payment equal to 50 percent of the target award is available for
achieving 40th percentile relative performance, while target awards are
available for achieving 50th percentile TSR performance.
For the three year performance cycle ended December 31, 1997, Ahmanson's
relative TSR performance equaled approximately the 67th percentile of the
group. This performance resulted in a formula payout equal to 137 percent of
the target opportunity, subject to reduction at the discretion of the
Compensation Committee.
In February 1998, target cash awards were established under the Executive
Long-Term Incentive Plan for the performance measurement period beginning
January 1, 1998. In November 1997, stock options were granted pursuant to the
Stock Option Award Guidelines. The Guidelines provide for annual awards based
on a percent of base salary ranging from 15% to 100% using a Black-Scholes
valuation model. The table captioned "Options Granted in Last Fiscal Year"
reflects the November 1997 grants under the Stock Option Award Guidelines.
CEO COMPENSATION
Mr. Rinehart's salary was not increased in 1998 and was last increased in
February 1997. Based on the competitive data for comparable positions provided
by Towers Perrin, Mr. Rinehart's base salary fell within the range of median
competitive practice for other comparative organizations.
For the year ending on December 31, 1997, Mr. Rinehart was awarded 100
percent of his target opportunity under Ahmanson's annual incentive plan in
the form of a cash payment of $1,900,000. Eighty-eight percent of the
aggregate award was formula-based and the remainder was a discretionary non-
tax qualified award. In determining to pay Mr. Rinehart an annual incentive
award in addition to the formula-based amount, the Committee took into
consideration his significant contributions to Ahmanson's success during 1997
and the implementation of financial and strategic actions.
For the three-year performance measurement period ended on December 31,
1997, Mr. Rinehart received a cash award under Ahmanson's long-term incentive
plan of $1,161,278 (100 percent of the target award) representing the amount
generated by the plan formula based on Ahmanson's relative TSR performance
over the period.
17
The foregoing report has been approved by the following members of the
Committee:
Byron Allumbaugh
Richard M. Bressler
Phillip D. Matthews
Delia M. Reyes
Elizabeth A. Sanders
The report of the Compensation Committee 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 that Ahmanson
specifically incorporates this information by reference and shall not otherwise
be deemed filed under such Acts.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires directors
and certain officers of Ahmanson and persons who own more than 10% of the
registered class of Ahmanson's equity securities to file with the Securities
and Exchange Commission and any national securities exchange on which
Ahmanson's equity securities are registered, initial reports of ownership and
reports of changes in ownership of Ahmanson Common Stock and other equity
securities of Ahmanson. Officers, directors and beneficial owners of more than
10% of Ahmanson's equity securities are required by regulations of the
Securities and Exchange Commission to furnish Ahmanson with copies of all
Section 16(a) forms they file.
To Ahmanson's knowledge, based solely upon a review of the copies of such
forms furnished to Ahmanson and written representations that no other reports
were required, during the 1997 fiscal year ended December 31, 1997, all Section
16(a) filing requirements applicable to its officers, directors and beneficial
owners of more than 10% of Ahmanson's equity securities were met in a timely
manner.
18
STOCKHOLDER RETURN PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG H.F. AHMANSON & COMPANY, S&P 500 INDEX AND PEER GROUP
[PERFORMANCE GRAPH APPEARS HERE]
S&P
Measurement Period H.F. Ahmanson S&P Banks Composite
(Fiscal Year Covered) & Company 500 Index Index
- ------------------- ---------- --------- ----------
Measurement Pt-12/31/1992 $100 $100 $100
FYE 12/31/1993 $107 $110 $107
FYE 12/31/1994 $ 92 $111 $102
FYE 12/31/1995 $157 $153 $161
FYE 12/31/1996 $197 $187 $227
FYE 12/31/1996 $412 $249 $327
The above stock performance graph illustrates Ahmanson's performance in total
stockholder return over the period December 31, 1992 through December 31, 1997
relative to the Standard & Poors 500 Index and the Standard & Poors Banks
Composite Index.
Each line on the stock performance graph assumes that $100 was invested in
Ahmanson Common Stock and the respective indices on December 31, 1992. The
graph then tracks the value of these investments, assuming reinvestment of the
dividends, through December 31, 1997. The cumulative total return shown on the
performance graph indicates historical results only and is not necessarily
indicative of future results.
The stock performance graph 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 that Ahmanson specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
19
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP ("Peat Marwick"), the independent certified public
accountants for Ahmanson and its subsidiaries in 1997, have been selected by
the Board of Directors to continue to serve Ahmanson in that capacity for
1998. Representatives of Peat Marwick are expected to be present at the Annual
Meeting of Stockholders to make a statement should they desire to do so and
will be available to respond to appropriate questions which may be asked by
stockholders.
Peat Marwick performs both audit and non-audit professional services for and
on behalf of Ahmanson and its subsidiaries. During 1997 the audit services
included examination of the consolidated financial statements of Ahmanson,
examination of the financial statements of subsidiaries of Ahmanson and a
review of certain filings with the Securities and Exchange Commission and
other regulatory agencies.
STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS
If a change in control of Ahmanson does not occur and a 1999 Annual Meeting
of Stockholders of Ahmanson is held, any eligible stockholder of Ahmanson
wishing to have a proposal considered for inclusion in Ahmanson's 1999 proxy
solicitation materials must set forth such proposal in writing and file it
with the Secretary of Ahmanson on or before April 2, 1999 and satisfy the
other requirements of Rule 14a-8 under the Securities Exchange Act of 1934.
The Board of Directors of Ahmanson will review new proposals received by that
date from eligible stockholders and will determine whether such proposals will
be included in its 1999 proxy solicitation materials. Generally a stockholder
is eligible to present proposals if such stockholder has been for at least one
year the record or beneficial owner of at least one percent or $2,000 in
market value of securities entitled to be voted on the proposal at the 1999
Annual Meeting of Stockholders and such stockholder continues to own such
securities through the date on which the meeting is held. Notice of any
proposals submitted by a stockholder outside the procedures of Rule 14a-8
under the Securities Exchange Act of 1934 must be received by the Secretary of
Ahmanson not less than 60 days nor more than 120 days prior to the date of the
1999 Annual Meeting; however, if the first public disclosure of the date of
the 1999 Annual Meeting is made less than 65 days prior to the date of such
meeting, notice of a proposal will be timely if received by the Secretary of
Ahmanson not later than the close of business on the 10th day following the
day on which such public disclosure is first made. To be considered at the
1999 Annual Meeting of Stockholders, a stockholder proposal must comply with
the requirements of Ahmanson's Bylaws.
20
H. F. AHMANSON & COMPANY
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
P The undersigned acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement, each dated July 31, 1998, and hereby appoints Byron
R Allumbaugh, Richard M. Bressler, Charles R. Rinehart, Arthur W. Schmutz
and Bruce G. Willison and each of them, acting by a majority or by one of
O them if only one is acting, with power of substitution, the agent and
proxy of the undersigned to vote the shares of common stock of H. F.
X Ahmanson & Company, a Delaware corporation ("Ahmanson"), standing in the
name of the undersigned at the Annual Meeting of Stockholders to be held
Y on August 28, 1998, and at any adjournment or postponement thereof, with
respect to the following:
1. Election of directors: (change of address/comments)
Nominees--Byron Allumbaugh, Harold A. Black, -------------------------------------------
Richard M. Bressler, John E. Bryson, David R. Carpenter, -------------------------------------------
Raymond R. Martin, Phillip D. Matthews, Richard L. Nolan, -------------------------------------------
Delia M. Reyes, Charles R. Rinehart, Frank M. Sanchez, -------------------------------------------
Elizabeth A. Sanders, Arthur W. Schmutz, William D. Schulte, -------------------------------------------
Kevin M. Twomey and Bruce G. Willison. -------------------------------------------
(If you have written in the above space, please mark the
corresponding box on the reverse side of this card.)
This card provides voting instructions, as applicable, to (1) the
appointed proxies for shares held of record by the undersigned and (2)
Northern Trust Bank of California NA, as Trustee, for shares held for the
undersigned in the Ahmanson Advantage Account. If registrations are not
identical, you may receive more than one set of proxy materials. Please
sign, date and return all cards you receive.
THIS PROXY WILL BE VOTED AS DIRECTED ON THE REVERSE SIDE. IN THE ABSENCE
OF ANY DIRECTION, THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR DIRECTORS
---
NAMED ABOVE. [SEE REVERSE SIDE]
- --------------------------------------------------------------------------------
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS.
FOR WITHHELD
1. Election of [_] [_]
Directors.
(see reverse)
For, except vote withheld from the following nominee(s):
- ---------------------------------------------------------
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before such meeting or any adjournment thereof.
Please check this box if you plan [_]
to attend the annual meeting
Change [_]
of
Address/
Comments
SIGNATURE(S) DATE
----------------------------------------------- ------------
NOTE: Please sign exactly as name appears above. Joint owners should each sign.
Fiduciaries should add their full title to their signature. Corporations
should sign in full corporate name by an authorized officer. Partnerships
should sign in partnership name by an authorized person.
- --------------------------------------------------------------------------------
-- DETACH & RETURN PROXY CARD; RETAIN ADMISSION CARD --
ADMISSION CARD
1998 Annual Meeting of Stockholders
11:00 A.M.
The Ritz-Carlton Huntington Hotel
1401 South Oak Knoll Avenue
Pasadena, California 91106
Presentation of this card is required
for admission to the Annual Meeting
Please present this card to the Ahmanson representative
at the entrance to the Annual Meeting
H. F. AHMANSON & COMPANY
Name:
---------------------------------
Address:
-----------------------------