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 Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
GOLDEN WEST FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
J. L. HELVEY, GROUP SENIOR VICE PRESIDENT
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[LOGO]
March 15, 1996
Dear Stockholder:
The Annual Meeting of Stockholders of Golden West Financial Corporation will
be held April 30, 1996, at 11:00 a.m. on the fourth floor of the Company's
headquarters located at 1901 Harrison Street, Oakland, California. The
management and directors of Golden West Financial Corporation look forward to
meeting with you at that time.
Attached to this letter is the formal notice of meeting and proxy statement.
We urge you to complete and return the enclosed proxy immediately. A prepaid
return envelope is provided for that purpose. If you attend the meeting, you may
withdraw your previously mailed proxy and vote at the meeting.
Sincerely yours,
HERBERT M. SANDLER MARION O. SANDLER
CHAIRMAN OF THE BOARD CHAIRMAN OF THE BOARD
AND AND
CHIEF EXECUTIVE OFFICER CHIEF EXECUTIVE OFFICER
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF
GOLDEN WEST FINANCIAL CORPORATION
The Annual Meeting of Stockholders of Golden West Financial Corporation (the
"Company") will be held on the fourth floor of the Company's headquarters
located at 1901 Harrison Street, Oakland, California on Tuesday, April 30, 1996,
at 11:00 a.m. for the following purposes:
(1) To elect three members of the Board of Directors to hold office for
three-year terms and until their successors are duly elected and
qualified;
(2) To approve the Amendment and Restatement of the Golden West Financial
Corporation 1996 Stock Option Plan;
(3) To ratify the selection of independent auditors; and
(4) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on March 4, 1996 has been fixed as the record date for
the determination of stockholders entitled to notice of and to vote at this
meeting or any adjournment thereof. A list of such stockholders will be
available at the time and place of the meeting and, during ten days prior to the
meeting, at the office of the Secretary of Golden West Financial Corporation,
1901 Harrison Street, Oakland, California.
By order of the Board of Directors
ROBERT C. ROWE
SENIOR VICE PRESIDENT AND SECRETARY
March 15, 1996
IMPORTANT: TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND MAIL THE ENCLOSED PROXY PROMPTLY IN THE RETURN ENVELOPE
WHICH HAS BEEN PROVIDED.
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of
Golden West Financial Corporation (the "Company") to be used at the Annual
Meeting of Stockholders on April 30, 1996 for the purposes set forth in the
foregoing notice. Any stockholder may revoke his proxy at any time prior to
exercise by filing with the Secretary of the Company a written revocation or
duly executed proxy bearing a later date, or upon request if such stockholder is
present at the meeting and chooses to vote in person.
The expense of soliciting proxies will be paid by the Company. Proxies may
be solicited by regular employees of the Company personally or by telephone or
telegraph, and the Company will upon request reimburse persons holding shares in
their names, or the name of their nominees, but not owning the shares
beneficially, for reasonable expenses of forwarding proxy materials to their
principals.
The principal executive offices of the Company are located at 1901 Harrison
Street, Oakland, California 94612. This Proxy Statement and the enclosed Proxy
are being sent or given to stockholders commencing March 15, 1996.
VOTING SECURITIES
Only stockholders of record on the books of the Company as of 5:00 p.m.,
March 4, 1996 will be entitled to vote at the Annual Meeting. As of the close of
business on March 4, 1996, there were outstanding 58,729,559 shares of Common
Stock of the Company, $.10 par value. Stockholders are entitled to one vote for
each share held except that, in the election of directors, each stockholder has
cumulative voting rights and is entitled to as many votes as equal the number of
shares held by such stockholder multiplied by the number of directors to be
elected (three), which votes may be cast for a single candidate or distributed
among any or all candidates as such stockholder sees fit. The three candidates
for director receiving the highest number of votes shall be elected. Consistent
with Delaware law, abstentions and broker non-votes will not be counted, except
that shares owned by stockholders submitting signed proxies will be counted for
the purpose of determining whether a quorum of stockholders is present at the
Annual Meeting.
ELECTION OF DIRECTORS
Pursuant to Article Seventh of the Company's Certificate of Incorporation,
the Board of Directors is divided into three classes, each of which consists of
three directors. The third class of directors is being elected at the 1996
Annual Meeting and will serve until the 1999 Annual Meeting. The first class of
directors will serve until the 1997 Annual Meeting and the second class of
directors will serve until the 1998 Annual Meeting.
Three directors are to be elected at the 1996 Annual Meeting. Louis J.
Galen, Antonia Hernandez, and Bernard A. Osher are nominees for directors. Mr.
Galen and Mr. Osher were elected directors by a vote of the stockholders at the
1993 Annual Meeting of Stockholders. Ms. Hernandez was appointed by the Board of
Directors in May 1995 to fill a vacancy in the third class of directors. Since
1985, Ms. Hernandez has been president and general counsel of the Mexican
American Legal Defense and Educational Fund, which is a non-profit organization
dedicated to promoting and protecting the civil rights of United States Latinos.
In the absence of instructions to the contrary, shares represented by the
enclosed proxy will be voted FOR the election of the above nominees to the Board
of Directors. If any of such persons are unable or unwilling to be nominated for
the office of director at the date of the Annual Meeting, or any adjournment
thereof, the proxy holders will vote for such substitute nominees as the
Company's Board of Directors may propose. The management has no reason to
believe that any of such nominees will be unable or unwilling to serve if
elected a director. Notwithstanding the foregoing, if one or more persons other
than those named above are nominated as candidates for the office of director,
the proxy holders may cumulate votes and the enclosed proxy may be voted in
favor of any one or more of the nominees named above, to the exclusion of
others, and in such order of preference as the proxy holders may determine in
their discretion.
1
Set forth below is certain information concerning the nominees and the
members of the Board of Directors who will continue in office after the 1996
Annual Meeting:
COMMON STOCK BENEFICIALLY
OWNED AS OF
SERVED FEBRUARY 29, 1996(1)
CONTINUING DIRECTORS BUSINESS EXPERIENCE AS --------------------------------
AND NOMINEES FOR DURING PAST FIVE YEARS DIRECTOR NUMBER PERCENT
DIRECTOR (CLASS) AND OTHER INFORMATION SINCE AGE OF SHARES OF CLASS
- ----------------------------- ------------------------------------ ----------- --- ------------------ ------------
Louis J. Galen (III) Retired (Since 1982) Company 1959 70 1,194,636(2) 2.0%
Officer, Private Investor; Director
of Trans World Bank
Antonia Hernandez (III) President and General Counsel of The 1995 48 -- --
Mexican American Legal Defense and
Educational Fund
Patricia A. King (II) Professor of Law, Georgetown 1994 53 100 --
University, Washington, D.C.;
Adjunct Professor, Department of
Health Policy and Management, School
of Hygiene and Public Health, Johns
Hopkins University
William D. McKee (I) Retired (Since 1988) Partner, 1970 69 97,633(3) .2%
Orrick, Herrington & Sutcliffe, Law
Firm
Bernard A. Osher (III) Chairman, Butterfield and 1970 68 3,564,650 6.1%
Butterfield, Auctioneers
Kenneth T. Rosen (I) Professor of Business 1984 47 3,000 --
Administration, Haas School of
Business; Chairman of the Center for
Real Estate and Urban Economics,
University of California, Berkeley
Paul Sack (II) Principal, The Paul Sack Properties, 1989 68 6,200 --
Real Estate Investment and Private
Management Company
Herbert M. Sandler (I)(4) Chairman of the Board and Chief 1963 64 5,231,694(5)(6) 8.8%
Executive Officer of the Company and
World Savings and Loan Association
Marion O. Sandler (II)(4) Chairman of the Board and Chief 1963 65 5,644,444(5)(7) 9.5%
Executive Officer of the Company and
World Savings and Loan Association
All directors and officers as a group (14 persons) 11,663,730(8) 19.4%
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(1) Held directly with sole voting and investment powers unless otherwise noted,
subject to community property laws where applicable.
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(2) Includes 1,156,636 shares held in trust by Mr. Galen with sole voting and
investment powers. Also includes 38,000 shares, with shared voting and
investment powers, held in a charitable trust for which Mr. Galen is
trustee.
(3) Includes 13,521 shares held jointly, with shared voting and investment
powers, by Mr. McKee and his spouse, as co-trustees. Also includes 84,112
shares held in trust for the benefit of Mr. McKee and members of his family.
(4) Member of the Executive Committee.
(5) Includes for both Herbert M. Sandler and Marion O. Sandler, husband and
wife, 4,670,394 shares, with shared voting and investment powers, held
jointly by Mr. and Mrs. Sandler, as co-trustees.
(6) Includes for Herbert M. Sandler 900 shares with voting and investment powers
in trust for the benefit of his sister-in-law, 163,208 shares with shared
voting and investment powers held in trusts for the benefit of Mr. and Mrs.
Sandler's descendents with Mr. and Mrs. Sandler as co-trustees, and 506,400
shares which Mr. Sandler may acquire upon exercise of employee stock options
exercisable on February 29, 1996, or within 60 days thereafter.
(7) Includes for Marion O. Sandler 30,060 shares with voting and investment
powers in trust for the benefit of herself and descendents, 356,580 shares
with voting and investment powers held in trusts for the benefit of Mr. and
Mrs. Sandler's descendents, 163,208 shares with shared voting and investment
powers held in trusts for the benefit of Mr. and Mrs. Sandler's descendents
with Mr. and Mrs. Sandler as co-trustees, and 587,410 shares which Mrs.
Sandler may acquire upon exercise of employee stock options exercisable on
February 29, 1996, or within 60 days thereafter.
(8) Includes 5,469,764 shares as to which officers and directors share with
others voting and/or investment powers. Also includes 1,397,720 shares which
certain officers may acquire upon the exercise of employee stock options
exercisable on February 29, 1996, or within 60 days thereafter.
The continuing directors and nominees for elections as directors have had
the principal occupations or employments set forth in the foregoing table for at
least the past five years, except for Marion O. Sandler who was President and
Chief Executive Officer of the Company and World Savings and Loan Association
until January 1993 at which time she became Chairman of the Board and Chief
Executive Officer of the Company and World Savings and Loan Association along
with Herbert M. Sandler. Paul Sack was a principal and partner in RREEF Funds, a
real estate investment management company, until he retired in 1992 at which
time Mr. Sack resumed his active participation in The Paul Sack Properties, a
real estate company which he started in 1959.
Herbert M. Sandler and Marion O. Sandler are husband and wife. Bernard A.
Osher is the brother of Mrs. Sandler. Herbert M. Sandler, Marion O. Sandler and
Bernard A. Osher may be deemed to be "control" persons of the Company, within
the meaning of the General Rules and Regulations adopted by the Securities and
Exchange Commission under the Securities Exchange Act of 1934. The business
address for Mr. and Mrs. Sandler is 1901 Harrison Street, Oakland, California
94612. The business address for Mr. Osher is 220 San Bruno Avenue, San
Francisco, California 94103.
During 1995, the Company's Board of Directors held four meetings. The Board
of Directors has standing Nominating, Audit, Compensation and Stock Option
Committees. The members of the Nominating Committee in 1995 were Kenneth T.
Rosen and Paul Sack. The Nominating Committee's principal function is to
identify and propose to the Board qualified individuals as potential candidates
for the position of Director. The Nominating Committee does not consider
recommendations from stockholders for nominations for Director. The members of
the Audit Committee in 1995 were Louis J. Galen, William D. McKee and Kenneth T.
Rosen. The principal function of the Audit Committee is to assist the Board of
Directors in reviewing the financial statements of the Company and its
subsidiaries as issued to its stockholders and others. Such Committee held four
meetings of its members during 1995. The members of the Compensation and Stock
Option Committees in 1995 were William Patrick Kruer, Kenneth T. Rosen and Paul
Sack.
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Mr. Kruer resigned from the Board of Directors in February 1995. Patricia A.
King was appointed to the Stock Option Committee at the January 1996 Board
Meeting. The report of the Compensation Committee is set forth below:
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
To the Board of Directors:
The Compensation Committee's primary function is to review and recommend,
for review by the Board of Directors, the salaries and other compensation of the
Company's senior executive officers. In addition, the members of the
Compensation Committee, along with another board member, serve as the Company's
Stock Option Committee which approves the grants of stock options pursuant to
the Company's Stock Option Plan, including grants of stock options to executive
officers of the Company. The Compensation Committee met in May of 1995 to
recommend to the Board of Directors salaries and stock options, for the period
May 2, 1995 through April 30, 1996, for the Company's chief executive officers
("Chief Executive Officers"), and its President and Senior Executive Vice
President (together with the Chief Executive Officers, the "Senior Executive
Officers"). The Committee consulted with the Company's accounting firm, Deloitte
& Touche LLP in developing the Committee's recommendation to the Board. The cash
compensation of the Company's other executive officers was determined through
normal annual reviews by their managers, who included one or more of the Chief
Executive Officers, the President, or the Senior Executive Vice President. The
compensation of each such officer was determined in those reviews with reference
to the officer's individual performance in such officer's area of responsibility
and the manager's assessment of the officer's contribution to the performance of
the Company. The Stock Option Committee also met in December 1995 and considered
grants of stock options to executive officers other than the Senior Executive
Officers.
COMPENSATION GOALS AND APPROACH
The Committee's goals were to provide compensation that: (a) reflects both
the Company's and the executives' performance; (b) compares reasonably with
compensation in the relevant market; and (c) attracts and retains high quality
executives. In its evaluation of executive compensation for the Senior Executive
Officers, the Committee considered factors relating to the Company's
performance, compared to a peer group, and the compensation of the Company's
Senior Executive Officers relative to the compensation of executives in the peer
group. The peer group included the top performing regional bank holding
companies (BANC ONE Corp., BankAmerica Corp., Boatmen's Bancshares, Corestates
Financial Corp., First Bank System, First Chicago Corp., First Union
Corporation, Mellon Bank Corp., National City Corp., NationsBank Corp., NBD
Bancorp Inc., Norwest Corp., PNC Financial Corp., Republic New York Corp.,
SunTrust Banks, Inc., U.S. Bancorp and Wachovia Corp.) and two savings and loan
holding companies (H.F. Ahmanson & Co. and Great Western Financial Corporation).
Each company in the peer group, except H.F. Ahmanson & Co. and Great Western
Financial Corporation, was included in the list of companies reflected in the
Common Stock Performance Graph in the proxy statement for the Company's 1995
Annual Meeting. H.F. Ahmanson & Co. and Great Western Financial Corporation were
added to the peer group for the purposes of the Committee's analysis because
they are the two largest savings and loan holding companies in the nation.
The Committee considered several measures of performance in evaluating the
Company's performance relative to the peer group, including: total assets;
yearend stock prices; net earnings; fully-diluted net income per share; return
on average assets; return on average equity; capital levels; the ratio of
non-performing assets ("NPAs") and troubled debt restructured ("TDRs") to
period-end loans; the ratio of net charge-offs to average loans and leases; loan
loss coverage; the ratio of general and administrative expenses ("G&A") to
interest income and other income; the ratio of non-interest expenses to pretax
earnings; and the ratio of pretax earnings to net interest income and
non-interest income. In addition, in evaluating compensation, the Committee also
considered other factors, including: the attainment of long-term plans and
budgets; the attainment of goals and objectives; the attainment of credit
ratings by nationally-recognized rating services; the attainment of regulatory
examination ratings by the Company and its principal operating subsidiary,
4
World Savings and Loan Association; the attainment of regulatory capital
standards by World Savings and Loan Association; the strategic accomplishments
of the Company; and the general assessment of the executives by peers, equity
analysts and others.
With respect to total compensation, the Committee considered annual
compensation of the Company's Senior Executive Officers relative to executives
in the peer group, for the period 1992 through 1994, including: (i) salary,
bonuses and other forms of cash compensation; and (ii) equity-based
compensation, including restricted stock and stock options. In general, the
Committee concluded that while exact comparisons could not be made, the
compensation of the Company's Senior Executive Officers for the period in
question was in accordance with compensation for the peer group.
The Committee also considered stock option awards for the Company's
executive officers. In general, each executive officer's eligibility for and the
amount of those awards were determined considering such officer's performance,
the amount of options previously granted and the Company's objectives of
encouraging strong performance in the future, providing an opportunity for
employees to acquire a proprietary interest in the Company and encouraging
employees to remain in the employ of the Company.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code limits the federal income tax
deductibility of compensation paid to the Company's two Chief Executive Officers
and to each of the other three most highly compensated executive officers. The
Company generally may deduct compensation paid to such an officer only to the
extent that the compensation does not exceed $1 million during any fiscal year
or is "performance-based" as defined in section 162(m). At present, the
Committee believes that the Company will not be affected by section 162(m)
because no Company executive currently receives cash compensation in excess of
$1 million, and any compensation paid pursuant to the Company's Stock Option
Plan qualifies for continued deductibility pursuant to transition rules
applicable under section 162(m). Also, the Board of Directors has approved
modifications, subject to stockholder approval, to the Stock Option Plan to
ensure continued deductibility of compensation paid under the plan. Such changes
are being voted on at the 1996 Annual Meeting.
1995 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICERS
In setting the salary and stock option awards for the Chief Executive
Officers, the Committee took into account the Company's performance in return on
average equity; return on average assets; ratio of Tier 1 capital to total
assets; ratio of Total Risk-Weighted capital to assets; ratio of NPAs and TDRs
to period-end loans; ratio of net charge-offs to average loans; loan loss
coverage ratio; ratio of G&A to net interest income and other income; ratio of
non-interest expense to pretax earnings; and ratio of pretax earnings to net
interest income and non-interest income.
In considering the compensation of the Chief Executive Officers, the
Committee also considered the attainment of goals and objectives and plans and
budgets in key areas of operations, including expense control, loan production,
asset quality, branch network growth and capital growth. The Committee also
considered the generally favorable results attained by the Company and its
principal operating subsidiary, World Savings and Loan Association, during
examinations by the Office of Thrift Supervision. The Committee also
acknowledged the continued recognition of the Chief Executive Officers by the
business press, equity analysts and others, with respect to the performance of
the Chief Executive Officers and their contributions to the performance of the
Company.
The Committee considered the foregoing factors as a group without assigning
relative weight to any one factor over another. Based upon its review of the
Company's performance and the performance of the Chief Executive Officers, the
Committee arrived at recommendations with respect to salaries and stock option
awards.
The Committee also evaluated the recommended compensation of the Chief
Executive Officers by comparing their compensation for the period 1992 through
1994 to that of chief executive officers of companies in the peer group over the
comparable period. The Committee recognized that the Chief Executive Officers'
compensation included only salary and stock option components, while the
components
5
of chief executive officer compensation for the peer group included not only
salary and stock options but also included other forms of cash compensation,
such as bonuses and long-term incentives, and other forms of stock-based
compensation, such as restricted stock. These differences in the form of
compensation received by the Chief Executive Officers and that received by chief
executives of companies in the peer group made exact comparisons difficult;
however, the Committee reached certain general conclusions regarding the Chief
Executive Officers' compensation.
In general, the trends in the increase in the Chief Executive Officers' cash
compensation for the period reviewed were consistent with such trends in the
peer group. Further, for a number of the chief executives of companies in the
peer group, the total amount of cash compensation received significantly
exceeded the cash compensation of the Chief Executive Officers. In addition, the
number of stock options awarded to the Chief Executive Officers had in a number
of cases been lower than awards made to chief executives of companies in the
peer group. Further, the Committee noted that the Chief Executive Officers had
not been awarded forms of stock-based compensation other than stock options,
while a number of the chief executives of companies in the peer group had
benefited from other forms of such compensation.
The Committee concluded, after reviewing this data, that the compensation of
the Chief Executive Officers for the period 1992 through 1994 was in accordance
with the compensation for executives of companies in the peer group for the
comparable period.
Based upon its review of the Company's performance and the performance of
the Chief Executive Officers, and considering the level of compensation of the
Chief Executive Officers compared to the peer group, the Committee concluded
that the recommendations it had arrived at were consistent with the Committee's
traditional approach to executive compensation and were appropriate in a
comparative context. Accordingly, the Committee determined to recommend to the
Board of Directors salaries and stock option grants, for the period May 2, 1995
through April 30, 1996, in the amounts reflected in the Summary Compensation
Table located elsewhere in this proxy statement.
COMPENSATION COMMITTEE
Paul Sack, Chairman
Kenneth T. Rosen
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC").
Based solely on the Company's review of such reports and written
representations from certain persons that certain of such reports were not
required to be filed by such persons, no officer, director or person who owns
more than ten percent of a registered class of the Company's equity securities
failed to file on a timely basis reports required by Section 16(a) of the
Securities Exchange Act of 1934 during the year ended December 31, 1995.
6
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership, as of the dates
indicated, of each stockholder other than Herbert M. Sandler, Marion O. Sandler,
and Bernard A. Osher, known to the Company to be the beneficial owner of more
than 5% of the Company's Common Stock. The table also sets forth the beneficial
ownership, as of February 29, 1996, of each of the executive officers named in
the Summary Compensation Table located elsewhere in this proxy statement who are
not also directors of the Company:
AMOUNT AND NATURE
OF BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
- ------------------------------------------------------ ---------------------- -----------------
The Capital Group Companies, Inc...................... 3,506,500(1) 6.0%
333 South Hope Street
Los Angeles, CA 90071
Dodge & Cox, Incorporated............................. 3,680,703(2) 6.3%
One Sansome Street
San Francisco, CA 94104
FMR Corp.............................................. 5,190,805(3) 8.9%
82 Devonshire Street
Boston, MA 02109
Wellington Management Company/........................ 5,857,300(4)(6) 10.0%
Thorndike, Paine & Lewis
75 State Street
Boston, MA 02109
The Windsor Funds, Inc.,.............................. 5,763,800(5)(6) 9.8%
a member of the Vanguard Group of Investment Companies
Vanguard Financial Center
Valley Forge, PA 19482
James T. Judd......................................... 95,210(7) .2%
Senior Executive Vice President
of the Company and President and
Chief Operating Officer of
World Savings and Loan Association
1901 Harrison Street
Oakland, CA 94612
Russell W. Kettell.................................... 415,832(7) .7%
President and Treasurer of the
Company and Senior Executive
Vice President of World Savings
and Loan Association
1901 Harrison Street
Oakland, CA 94612
Dirk S. Adams......................................... 23,200(7) --
Group Senior Vice President of the Company and World
Savings and Loan Association
1901 Harrison Street
Oakland, CA 94612
- ------------
(1) Includes 3,506,500 shares with sole disposition power and 1,160,000 with
sole voting power, based upon SEC Schedule 13G dated February 9, 1996.
(2) Includes 3,680,703 shares with sole disposition power and 3,680,703 with
sole voting power, based upon SEC Schedule 13G dated February 8, 1996.
7
(3) Includes 5,190,805 shares with sole disposition power and 70,451 shares with
sole voting power, based upon SEC Schedule 13G dated February 14, 1996.
(4) Includes 5,857,300 shares with shared disposition power and 85,900 with
shared voting power, based upon SEC Schedule 13G dated January 30, 1996.
(5) Includes 5,763,800 shares with shared disposition power and 5,763,800 with
sole voting power, based upon SEC Schedule 13G dated February 2, 1996.
(6) The shares reported by the Windsor Fund are also included in those reported
by Wellington Management Company.
(7) Includes 75,210, 191,500, and 18,200 shares which Messrs. Judd, Kettell, and
Adams, respectively, may acquire upon exercise of employee stock options
exercisable on February 29, 1996 or within 60 days thereafter.
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The cash compensation paid to each of the two Chief Executive Officers and
to the three most highly compensated executive officers of the Company for
services in all capacities to the Company and its subsidiaries is set forth
below:
SUMMARY COMPENSATION TABLE
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------ -------------
OTHER ANNUAL ALL OTHER
COMPENSATION OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($)(A) ($)(B) (#)(C) ($)(D)
- -------------------------------------------------- --------- -------------- ------------- ----------- -------------
HERBERT M. SANDLER 1995 $ 931,176 $ 9,427 25,000 $ 5,133
Chairman of the Board and Chief 1994 889,704 11,613 35,000 5,201
Executive Officer of the Company 1993 847,833 8,657 35,000 5,078
and World Savings and Loan Association
MARION O. SANDLER 1995 931,176 9,416 25,000 5,133
Chairman of the Board and Chief 1994 889,704 11,344 35,000 5,201
Executive Officer of the Company and 1993 847,833 8,313 35,000 5,078
World Savings and Loan Association
JAMES T. JUDD 1995 655,952(E) 7,309 15,000 5,133
Senior Executive Vice President of the 1994 631,192(E) 6,419 17,500 5,201
Company and President and Chief 1993 605,896(E) 7,136 17,500 5,078
Operating Officer of World Savings and Loan
Association
RUSSELL W. KETTELL 1995 504,772 2,659 15,000 5,133
President and Treasurer of the 1994 482,288 1,188 17,500 5,201
Company and Senior Executive 1993 459,320 2,989 17,500 5,078
Vice President of World Savings
and Loan Association
DIRK S. ADAMS 1995 297,000 2,044 2,400 5,133
Group Senior Vice President of the 1994 282,852 1,968 3,000 5,201
Company and World Savings and 1993 270,672 1,907 2,500 5,078
Loan Association
- ------------
(A) Amounts shown include cash compensation earned and received by executive
officers.
8
(B) Amounts are for cash reimbursement for income taxes incurred by individuals
on fringe benefits.
(C) Options granted are under the Company's 1987 Stock Option Plan which
provides for the issuance of both incentive stock options and nonqualified
stock options.
(D) Amounts shown in this column represent Company contributions on behalf of
each of these officers to the Company's 401(K) plan, $4,620 (1995 and 1994),
and $4,497 (1993), and payments by the Company for term life insurance for
executive officers in excess of their individual contributions, $513 (1995)
and $581 (1994 and 1993).
(E) Amounts for Mr. Judd also include $100,000 in each year, which amounts were
vested and available to be paid to Mr. Judd at his election pursuant to a
deferred compensation agreement. Such amount was received during 1995; in
1994 he elected to receive only $91,663 and in 1993 he elected to receive
only $66,667.
INDEBTEDNESS OF MANAGEMENT
During 1995, J. L. Helvey, Group Senior Vice President of the Company and
World Savings and Loan Association, was indebted to the Company for a
residential loan. The largest aggregate balance outstanding from January 1, 1995
to February 29, 1996 was $133,184. The annual interest rate charged on this
indebtedness was from 5.44% to 6.43%. The amount of indebtedness outstanding at
February 29, 1996 was $129,983.
DEFERRED COMPENSATION
The Company has entered into deferred compensation agreements with certain
of the key employees of the Company and its subsidiaries, as selected by the
Office of the Chairman, including Messrs. Judd, Kettell and Adams.
The agreements provide for benefits payable in monthly installments over ten
years upon retirement at age 65 or upon the death of the employee (paid to his
beneficiary). The agreements contain vesting schedules that provide for full
vesting by ages ranging from 58 to 63, depending upon the age of the employee at
time the agreement was executed. The vesting schedules provide that one-third of
the benefits vest during the first half of the vesting period and two-thirds
vest during the second half.
The annual installments payable upon retirement at age 65 or death to
Messrs. Judd, Kettell and Adams are $300,000, $375,000, and $100,000,
respectively. As of December 31, 1995, Messrs. Judd, Kettell, and Adams had
accumulated vested benefits of $952,000, $1,322,700, and $93,200, respectively,
pursuant to the agreements. During 1995, the following amounts under the
agreements were vested for the accounts of Messrs. Judd, Kettell, and Adams,
respectively: $142,800, $231,000 and $19,900. In addition, Mr. Judd has $441,670
in fully vested benefits remaining from a separate deferred compensation
agreement that provides for an aggregate of 120 monthly installments of $8,333
each to be paid to him at his election.
The Company carries life insurance policies on the lives of these employees
in amounts estimated to be sufficient to cover its obligations under the
agreements. If assumptions as to mortality experiences, future policy dividends
and other factors are realized, the Company will recover an amount equal to all
retirement payments under the agreements, plus the premiums on the insurance
contracts and the interest that could have been earned on the use of the
retirement and premium payments.
COMPENSATION OF DIRECTORS
An annual retainer of $15,000, paid monthly, and a fee of $2,000 for each
Board of Directors meeting attended is paid to directors who are not employees
of the Company. In addition, the Chairman of the Audit Committee receives a fee
of $1,250 per Audit Committee meeting attended and each of the other members of
the Audit Committee receives a fee of $1,000 for each Audit Committee meeting
attended.
9
STOCK OPTIONS
Information concerning individual grants of stock options made to the two
Chief Executive Officers and the three most highly compensated executive
officers of the Company during the year ended December 31, 1995 is set forth
below:
OPTION GRANTS TABLE
OPTION GRANTS FOR YEAR ENDED DECEMBER 31, 1995
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT
--------------------------------------------------------- ASSUMED ANNUAL RATES OF
% OF STOCK
TOTAL OPTIONS PRICE APPRECIATION FOR
GRANTED TO OPTION
OPTIONS EMPLOYEES EXERCISE OR TERM
GRANTED IN FISCAL BASE PRICE EXPIRATION ------------------------
NAME (#) YEAR ($/SH) DATE 5%($) 10%($)
- ---------------------------------- ----------- ----------------- ----------- ------------ ---------- ------------
Herbert M. Sandler................ 25,000 9.0% $ 46.00 06/02/2005 $ 723,000 $ 1,833,000
Marion O. Sandler................. 25,000 9.0 46.00 06/02/2005 723,000 1,833,000
James T. Judd..................... 15,000 5.4 46.00 06/02/2005 434,000 1,100,000
Russell W. Kettell................ 15,000 5.4 46.00 06/02/2005 434,000 1,100,000
Dirk S. Adams..................... 2,400 .9 53.50 01/12/2006 81,000 205,000
Information concerning exercises of stock options by the two Chief Executive
Officers and the three most highly compensated executive officers of the Company
during the year ended December 31, 1995 and certain information concerning
unexercised stock options is set forth below:
OPTION EXERCISES AND YEAREND VALUE TABLE
AGGREGATED OPTION EXERCISES FOR THE YEAR ENDED DECEMBER 31, 1995 AND
DECEMBER 31, 1995 YEAREND OPTION VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
DECEMBER 31, 1995(#) DECEMBER 31, 1995($)(B)
SHARES ACQUIRED VALUE -------------------------- ----------------------------
NAME ON EXERCISE(#) REALIZED($)(A) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- --------------- ------------- ----------- ------------- ------------- -------------
Herbert M. Sandler.............. 127,300 $ 5,537,550 491,400 95,000 $ 19,287,300 $ 1,246,250
Marion O. Sandler............... -- -- 572,410 95,000 22,903,125 1,246,250
James T. Judd................... 13,290 523,812 67,710 50,000 2,410,976 646,250
Russell W. Kettell.............. 37,000 1,254,375 184,000 50,000 7,417,938 646,250
Dirk S. Adams................... 1,000 35,250 23,200 12,900 719,237 194,888
- ------------
(A) Market value of underlying securities at exercise date less the option
price.
(B) Market value of unexercised "in-the-money" options at year end less the
option price of the "in-the-money" options.
10
COMMON STOCK PERFORMANCE GRAPH
The graph below compares the yearly change in the Company's cumulative total
stockholder return on its Common Stock for the five years ended December 31,
1995 with the cumulative total return, assuming reinvestment of dividends, of
each of the Standard & Poor's 500 Stock Index, an index of peer companies used
in prior years' proxy statements, and the S&P Regional Bank Index. The companies
included in the prior years' peer index are all regional bank holding companies
that have assets in excess of $20 billion and a primary bank operating
subsidiary rated as high as or higher than the Company's principal subsidiary,
World Savings and Loan Association (A1 or better by Moody's and A+ or better by
Standard & Poor's): namely, BANC ONE Corp.; BankAmerica Corp.; Boatmen's
Bancshares; Corestates Financial Corp.; First Bank System; First Chicago Corp.;
First Union Corporation; Mellon Bank Corp.; National City Corp.; NationsBank
Corp.; NBD Bancorp Inc.; Norwest Corp.; PNC Bancorp; Republic New York Corp.;
SunTrust Banks, Inc.; U.S. Bancorp; and Wachovia Corp. For ease in the annual
preparation of the performance graph, the Company has selected as its peer group
index for this year and future years the S&P Regional Bank Index, an index that
is similar to the peer group index used by the Company in prior years but which
is regularly published by Standard & Poor's. The S&P Regional Bank Index
includes the same companies as were included in the prior years' peer group
except for BankAmerica Corp., First Chicago Corp., and NBD Bancorp Inc., and
also includes the following additional companies: Bank of Boston, Bank of New
York, Barnett Banks, Inc., Comerica Inc., First Fidelity Bancorp, First
Interstate Bancorp, Fleet Financial Group, Key Corp., and Wells Fargo & Co. The
returns of each component company of such group have been weighted according to
the stock market capitalization of the respective company. Cumulative total
stockholder return is measured by dividing (i) the sum of (A) the cumulative
amount of dividends for the measurement period, assuming dividend reinvestment
and (B) the difference between the Company's share price at the beginning and
the end of the measurement period by (ii) the share price at the beginning of
the measurement period.
TOTAL SHAREHOLDER RETURN PERFORMANCE GRAPH
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DEC90 DEC91 DEC92 DEC93 DEC94 DEC95
GOLDEN WEST FINANCIAL CORP 100 178.12 178.09 161.15 146.80 231.85
S&P 500 INDEX 100 130.47 140.41 154.56 156.60 215.45
S&P MAJOR REGIONAL BANKS 100 178.89 227.81 241.52 228.59 359.93
PRIOR YEARS' PEER GROUP 100 169.71 211.38 214.51 198.58 310.08
Assumes $100 invested on December 31, 1990 in the stock of Golden West
Financial Corporation, S&P 500 Index, S&P Regional Banks and Prior Years' Peer
Group (weighted by market capitalization). Total return assumes reinvestment of
dividends.
11
APPROVAL OF THE AMENDED AND RESTATED 1996 STOCK OPTION PLAN
The Board of Directors has approved the adoption of an amended and restated
1996 Stock Option Plan (the "Plan"). Adoption of the amended and restated Plan
is subject to the approval of a majority of the shares of the Company's Common
Stock which are present in person or by proxy and entitled to vote at the Annual
Meeting. The Plan previously was known as the 1987 Stock Option Plan, and was
first approved by stockholders at the 1987 Annual Meeting. The Plan was again
approved by stockholders at the 1991 Annual Meeting. The Board of Directors
recommends a vote FOR adoption of the Plan.
The principal changes to the Plan are as follows: (1) the formal name of the
Plan has been changed to the 1996 Stock Option Plan, (2) the Plan now contains
an annual limit on the number of option shares that any individual may receive
during any calendar year (the Plan previously contained no such limit), (3)
options now are permitted to be granted to employees and consultants of the
Company or of any affiliate of the Company (rather than only to employees and
consultants of the Company and of its subsidiary corporations as defined under
the Internal Revenue Code), and (4) incentive stock options now may be granted
under the Plan until February 1, 2006 and options which are not incentive stock
options may be granted as long as shares remain available to be issued under the
Plan (the Plan previously was scheduled to expire on December 31, 1996). The
amended and restated Plan does not increase the number of shares available for
issuance under the Plan.
DESCRIPTION OF THE PLAN
The following paragraphs provide a summary of the principal features of the
Plan and its operation. The Plan is set forth in its entirety as Exhibit A to
this Proxy Statement. The following summary is qualified in its entirety by
reference to Exhibit A.
PURPOSE
The Plan is intended to increase incentive and encourage stock ownership on
the part of eligible participants. The Plan also is intended to encourage such
participants to increase their efforts on behalf of the Company and its
affiliates.
ELIGIBILITY TO RECEIVE OPTIONS
Key employees of the Company and its affiliates (I.E., any corporation or
other entity which is controlled by the Company), and persons who provide
significant services to the Company and its affiliates, but who are neither
employees of the Company or of its affiliates nor directors of the Company
("consultants") are eligible to be granted options under the Plan. However,
incentive stock options (see below) may be granted only to employees of the
Company or of one of the Company's subsidiary corporations (as defined under the
Internal Revenue Code). The Company and its affiliates currently have
approximately 3,800 full-time employees. The actual number of employees and
consultants who will receive options under the Plan is not determinable because
eligibility for participation in the Plan is at the discretion of the Committee
(see below).
ADMINISTRATION, AMENDMENT AND TERMINATION
The Plan is administered by the Stock Option Committee of the Board of
Directors of the Company (the "Committee"). The members of the Committee must
qualify as "disinterested persons" under Rule 16b-3 under the Securities
Exchange Act of 1934 ("Rule 16b-3"), and as "outside directors" under section
162(m) of the Internal Revenue Code (the "Code"). Subject to the terms of the
Plan, the Committee has the sole discretion to determine the key employees and
consultants who shall be granted options, the terms and conditions of such
options, and to construe and interpret the Plan and the written option
agreements. The Company's Board of Directors may amend or terminate the Plan at
any time and for any reason, but as required under Rule 16b-3, certain material
amendments to the Plan must be approved by stockholders.
NUMBER OF SHARES AVAILABLE UNDER THE PLAN
The Company has not proposed to increase the number of shares available
under the Plan. At the 1991 Annual Meeting of Stockholders, a total of 7,000,000
shares of the Company's Common Stock were
12
approved by stockholders for issuance pursuant to options granted under the
Plan. As of February 29, 1996, 2,930,745 shares are subject to options currently
outstanding under the Plan, and 2,845,700 shares remained available for any
options to be granted in the future. In general, if an option expires without
having been fully exercised, the shares covered thereby again will be available
for grant.
TYPE AND NUMBER OF OPTIONS
The Committee may grant incentive stock options (I.E., options which are
entitled to certain favorable tax treatment), nonqualified stock options (I.E.,
options which are not incentive stock options), or a combination thereof. The
number of shares covered by each option will be determined by the Committee, but
during any calendar year, no individual may be granted options for more than
300,000 shares. Also, the aggregate fair market value (as of the date of grant
of the option) of the shares with respect to which incentive stock options are
exercisable for the first time by any employee during any calendar year may not
exceed $100,000.
EXERCISE PRICE
The price of the shares of the Company's Common Stock subject to each option
is set by the Committee but cannot be less than 100% of the fair market value
(on the date of grant) of the shares covered by the option. In addition, the
exercise price of an incentive stock option must be at least 110% of the fair
market value on the date of grant if, at the time of grant, the employee owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or any of its subsidiary corporations.
EXERCISABILITY AND EXPIRATION OF OPTIONS
Options granted under the Plan are exercisable at the times and on the terms
established by the Committee. After an option is granted, the Committee may
accelerate the exercisability of the option. Options expire at the times
established by the Committee, but in no event may an option have a term of more
than 10 years from the date of its grant. The maximum term is reduced to 5 years
in the case of an incentive stock option granted to an employee who owns stock
possessing more than 10% of the total combined voting power of all classes of
the stock of the Company or any of its subsidiary corporations.
PAYMENT OF EXERCISE PRICE
The exercise price of each option must be paid in full in cash at the time
of exercise. The Committee also may permit payment by the tender of shares of
the Company's Common Stock that already are owned by the optionee or by any
other means which the Committee determines to be consistent with the Plan's
purpose and to provide legal consideration for the shares. Any taxes required to
be withheld also must be paid at the time of exercise.
OPTIONS TO BE GRANTED TO CERTAIN INDIVIDUALS AND GROUPS
As described above, the Committee has discretion to determine the number of
options (if any) to be granted to any individual under the Plan. Accordingly,
the actual number of options to be granted to any individual is not
determinable. No options have been granted under the Plan during 1996. The table
on the following page sets forth (a) the aggregate number of shares of the
Company's Common Stock subject to options granted under the Plan during 1995,
and (b) the average per share exercise price of such options.
13
AVERAGE PER SHARE EXERCISE
NAME OF INDIVIDUAL OR GROUP NUMBER OF OPTIONS GRANTED PRICE
- ------------------------------------------------------ ------------------------- -------------------------------
Herbert M. Sandler
Chairman of the Board and Chief Executive Officer 25,000 $ 46.00
Marion O. Sandler
Chairman of the Board and Chief Executive Officer 25,000 46.00
James T. Judd
Senior Executive Vice President 15,000 46.00
Russell W. Kettell
President and Treasurer 15,000 46.00
Dirk S. Adams
Group Senior Vice President 2,400 53.50
All executive officers, as a group 85,700 46.50
All directors who are not executive officers, as a
group Not eligible --
All employees who are not executive officers, as a
group 192,550 53.30
NONTRANSFERABILITY OF OPTIONS
Options granted under the Plan may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
applicable laws of descent and distribution.
TAX ASPECTS
Based on management's understanding of current federal income tax laws, the
tax consequences of the grant of options under the Plan are as follows.
A recipient of an option granted under the Plan will not have taxable income
at the time of grant.
Upon exercise of a nonqualified stock option, the optionee generally must
recognize taxable income in an amount equal to the excess of the fair market
value of the shares on the date of exercise over the exercise price. Any gain or
loss recognized upon any later sale or other disposition of the shares generally
will be capital gain or loss.
Upon exercise of an incentive stock option, the optionee generally will not
be required to recognize any taxable income on account of such exercise. Upon a
later sale or other disposition of the shares, the optionee must recognize
long-term capital gain or ordinary taxable income, depending upon whether the
optionee holds the shares for a specified period.
The Company generally will be entitled to a tax deduction in connection with
an option granted under the Plan in an amount equal to the ordinary income (if
any) realized by the optionee. In addition, Internal Revenue Code section 162(m)
contains special rules regarding the federal income tax deductibility of
compensation paid to the Company's two Chief Executive Officers and to each of
the other three most highly compensated executive officers. The general rule is
that annual compensation paid to any of these executives (including compensation
from the exercise of stock options) may be deducted only to the extent that it
(1) does not exceed $1,000,000, or (2) is "performance-based" as defined in
section 162(m). The Plan has been designed to permit the Committee to grant
options which will qualify as performance-based compensation.
14
APPROVAL OF AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP to serve as the
Company's independent auditors for the year ending December 31, 1996, subject to
stockholder approval. If the stockholders do not vote in favor of the
appointment of Deloitte & Touche LLP, the Board of Directors will consider the
selection of other auditors.
Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting of Stockholders and will be available to respond to appropriate
questions. They will be given the opportunity to make a statement, if they
desire to do so.
Deloitte & Touche LLP has served as the Company's independent auditors since
1963 and was selected by the Board of Directors to serve in 1995, which
selection was ratified and approved by the stockholders of the Company on May 2,
1995. In order to be adopted, the proposal to approve the appointment of
Deloitte & Touche LLP as auditors for the Company must be approved by the
holders of a majority of the outstanding shares of Common Stock present or
represented by proxy and entitled to vote at the meeting. The Board of Directors
recommends a vote FOR the appointment of Deloitte & Touche LLP to serve as the
Company's independent auditors for the year ending December 31, 1996.
STOCKHOLDERS' PROPOSALS FOR NEXT ANNUAL MEETING
Stockholders' proposals intended to be presented at the 1997 Annual Meeting
of Stockholders of the Company must be received by the Company not later than
November 11, 1996, for inclusion in the Company's Proxy Statement and form of
proxy relating to that meeting. Proposals should be addressed to the Company at
1901 Harrison Street, Oakland, California, 94612, Attention: Corporate
Secretary.
OTHER MATTERS
The management knows of no business other than that mentioned above to be
transacted at the Annual Meeting, but if other matters do properly come before
the meeting it is the intention of the persons named in the enclosed proxy to
vote thereon in accordance with their judgment, and discretionary authority to
do so is included in the proxy.
GOLDEN WEST FINANCIAL CORPORATION
Oakland, California
March 15, 1996
15
EXHIBIT A
GOLDEN WEST FINANCIAL CORPORATION
AMENDED AND RESTATED 1996 STOCK OPTION PLAN
(AS AMENDED AND RESTATED FEBRUARY 2, 1996)
ARTICLE I
GENERAL
1. PURPOSE.
This 1996 Stock Option Plan (the "Plan") is intended to increase incentive
and to encourage stock ownership on the part of (i) selected key employees of
Golden West Financial Corporation (the "Company") or of other corporations which
are or become subsidiaries of the Company, and (ii) certain consultants,
advisory board members, and other independent contractors who provide services
to the Company or its subsidiaries, but who are neither employees of the Company
or its subsidiaries nor directors of the Company ("consultants"). It is also the
purpose of the Plan to provide such employees and consultants with a proprietary
interest, or to increase their proprietary interest, in the Company and its
subsidiaries, and to encourage them to remain in the employ of and/or to
increase their efforts on behalf of the Company or its subsidiaries. It is
intended that certain options granted pursuant to the Plan shall constitute
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") ("incentive stock options"), and
that certain other options granted pursuant to the Plan shall not constitute
incentive stock options ("nonqualified stock options"). Prior to February 2,
1996, the Plan was known as the 1987 Stock Option Plan.
2. ADMINISTRATION.
The Plan shall be administered by the Stock Option Committee (the
"Committee") of the Board of Directors of Golden West Financial Corporation (the
"Board"). The Committee shall from time to time at its discretion make
determinations with respect to the persons to whom options shall be granted and
the amount of such options. The Committee shall consist of not fewer than two
members of the Board. The Committee shall be comprised solely of Directors who
both are (i) "outside directors" under section 162(m) of the Code and (ii)
"disinterested persons" under Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended ("Rule 16b-3").
The interpretation and construction by the Committee of any provisions of
the Plan or of any option granted under it shall be final. No member of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under it.
3. ELIGIBILITY.
Subject to Section 2 of this Article I, the persons who shall be eligible to
receive options under the Plan shall be such persons selected by the Committee
from among the officers, key employees (including directors who are also
salaried employees of the Company) and consultants of the Company, as may be
determined by the Committee in its sole discretion. Notwithstanding any contrary
provision of the Plan, consultants shall not be eligible to receive incentive
stock options.
Except where the context otherwise requires, the term "Company," as used
herein, shall include (i) Golden West Financial Corporation and (ii) [any
corporation or any other entity (including, but not limited to, partnerships and
joint ventures) controlling, controlled by, or under common control with Golden
West Financial Corporation (each a "subsidiary corporation")], and the terms
"officers, key employees and consultants of the Company," and words of similar
import, shall include officers, key employees and consultants of each such
subsidiary corporation, as well as officers, key employees and consultants of
Golden West Financial Corporation.
A-1
4. SHARES OF STOCK SUBJECT TO THE PLAN.
The shares that may be issued under the Plan shall be authorized and
unissued or reacquired shares of the Company's common stock (the "Common
Stock"). The aggregate number of shares which may be issued under the Plan shall
not exceed 7,000,000 shares of Common Stock, unless an adjustment is required in
accordance with Article III.
If an option expires or is cancelled for any reason without having been
fully exercised or vested, the number of shares subject to such option which
were not purchased or did not vest prior to such expiration or cancellation may
again be made subject to an option granted hereunder (to the same person or to a
different person).
5. AMENDMENT OF THE PLAN.
The Board, in its sole discretion, may amend or terminate the Plan, or any
part thereof, at any time and for any reason. However, if and to the extent
required to maintain the Plan's qualification under Rule 16b-3, any such
amendment shall be subject to stockholder approval. The amendment or termination
of the Plan shall not, without the consent of the option holder, alter or impair
any rights or obligations under any option theretofore granted to such
individual.
6. TERM OF PLAN.
The Plan, as amended and restated herein, shall remain in effect until
amended or terminated by the Board in accordance with Section 5 of Article I.
However, without further stockholder approval, no option which is intended to be
an incentive stock option may be granted under the Plan after February 1, 2006.
7. RESTRICTIONS.
All options granted under the Plan shall be subject to the requirement that,
if at any time the Committee shall determine, in its discretion, that the
listing, registration or qualification of the shares subject to options granted
under the Plan upon any securities exchange or under any state or federal law,
or the consent or approval of any government regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such options
or the issuance, if any, or purchase of shares in connection therewith, such
options may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
8. NONASSIGNABILITY.
No option shall be assignable or transferable by the optionee except by will
or by the laws of descent and distribution. During the lifetime of the optionee,
the option shall be exercisable only by such optionee, and no other person shall
acquire any rights therein.
9. WITHHOLDING TAXES.
Whenever shares of Common Stock are to be issued under the Plan, the Company
shall have the right to require the optionee to remit to the Company an amount
sufficient to satisfy federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for such shares.
10. DEFINITION OF "FAIR MARKET VALUE."
For the purposes of this Plan, the term "Fair Market Value," when used in
reference to the date of grant of an option or the date of surrender of Common
Stock in payment for the purchase of shares pursuant to the exercise of an
option, as the case may be, shall mean the closing sale price of the Common
Stock quoted on the Composite Tape for New York Stock Exchange -- Listed Stocks,
as published in "The Wall Street Journal," or if no sale price was quoted on
such date, then as of the next preceding date on which such a sale price was
quoted. If the Common Stock is not listed on the New York Stock Exchange, Fair
Market Value shall mean the mean between the highest and lowest sale prices on
the principal United States securities exchange registered under the Securities
Exchange Act of 1934 on which such stock is listed, as published in "The Wall
Street Journal" and determined by the Committee, or, if such stock is not listed
on any such securities exchange, the mean between the highest and lowest sale
prices or bid quotations with respect to a share of such stock on the date such
option is granted on the National Association of Securities Dealers, Inc.
A-2
Automated Quotations System or any successor system or, if no such sale prices
or quotations are available, the Fair Market Value on the date in question of a
share of such stock as determined in good faith by the Committee.
ARTICLE II
STOCK OPTIONS
1. AWARD OF STOCK OPTIONS.
Awards of stock options may be made under the Plan under all the terms and
conditions contained herein. However, the aggregate Fair Market Value
(determined as of the date of grant) of the stock with respect to which
incentive stock options are exercisable for the first time by such officer or
key employee during any calendar year (under all incentive stock option plans of
the Company and its parent and subsidiary corporations) shall not exceed
$100,000. The nature of options under the foregoing sentence shall be determined
by taking options into account in the order in which they were granted. In no
event shall an option constitute an incentive stock option if, at the time such
option is granted, the terms of the option provide that it shall not constitute
an incentive stock option. The date on which any option is granted shall be the
date of the Committee's authorization of such grant or such later date as may be
determined by the Committee at the time such grant is authorized.
2. TERM OF OPTIONS AND EFFECT OF TERMINATION.
Notwithstanding any other provision of the Plan, no option granted under the
Plan shall be exercisable after the expiration of ten (10) years from the date
of its grant. In addition, notwithstanding any other provision of the Plan, no
incentive stock option granted under the Plan to a person who, at the time such
option is granted and in accordance with Section 424(d) of the Code, owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company shall be exercisable after the expiration of five (5) years
from the date of its grant.
3. TERMS AND CONDITIONS OF OPTIONS.
Options granted pursuant to the Plan shall be evidenced by agreements in
such form as the Committee shall from time to time determine, which agreements
shall contain such terms and conditions as determined by the Committee in its
sole discretion and which also shall comply with the following terms and
conditions.
(A)OPTIONEE'S AGREEMENT.
Each optionee shall agree to remain in the employ of and/or to render to the
Company his or her services for a period of two (2) years from the date of the
option, but such agreement shall not impose upon the Company any obligation to
retain the optionee in its employee and/or service for any period.
(B)NUMBER OF SHARES AND TYPE OF OPTION.
Each option agreement shall state the number of shares to which the option
pertains and whether the option is intended to be an incentive stock option or a
nonqualified stock option. During any calendar year, no individual shall be
granted options covering more than 300,000 shares. An option which is intended
to be an incentive stock option may be granted only to an individual who on the
grant date is an employee of Golden West Financial Corporation or of a
corporation which constitutes a subsidiary corporation (within the meaning of
Section 424(f) of the Code) of Golden West Financial Corporation.
(C)OPTION PRICE.
Each option agreement shall state the option price per share (or the method
by which such price shall be computed). The option price per share shall not be
less than 100% of the Fair Market Value of a share of the Common Stock on the
date such option is granted. Notwithstanding the foregoing, the option price per
share of an incentive stock option granted to a person who, on the date of such
grant and in accordance with Section 424(d) of the Code, owns stock possessing
more than 10% of the total combined voting power of all classes of stock of the
Company shall be not less than 110% of the Fair Market Value of a share of the
Common Stock on the date that the option is granted.
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(D)MEDIUM AND TIME OF PAYMENT.
The option price shall be payable upon the exercise of an option in the
legal tender of the United States or, in the discretion of the Committee, (i) by
tendering previously acquired shares having an aggregate Fair Market Value at
the time of exercise equal to the total option price, or (ii) by any other means
which the Committee, in its sole discretion, determines to both provide legal
consideration for the shares, and to be consistent with the purposes of the
Plan. Upon receipt of payment, the Company shall deliver to the optionee (or the
person entitled to exercise the option) a certificate or certificates for the
shares of Common Stock to which the option pertains.
(E)EXERCISE OF OPTIONS.
Each option shall state the time or times when it becomes exercisable, which
shall be determined by the Committee. The Committee may, in its discretion,
waive any vesting provisions contained in an option agreement.
To the extent that an option has become vested (except as provided in
Article III), and subject to the foregoing restrictions, it may be exercised in
whole or in such lesser amount as may be authorized by the option agreement;
provided, however, that no partial exercise of an option shall be for fewer than
fifty (50) shares of Common Stock. If exercised in part, the unexercised portion
of an option shall continue to be held by the optionee and may thereafter be
exercised as herein provided.
(F)TERMINATION AND TRANSFER OF OPTIONS.
In connection with the grant of any option under the Plan, the Committee may
provide in the option agreement for the termination of all or any portion of an
option under certain circumstances, including, without limitation, termination
of the recipient's employment or service as a result of resignation, retirement,
disability or death, or for cause, and may distinguish among various causes of
termination as the Committee deems appropriate. In addition, the Committee may
provide, through an option agreement or otherwise, that in the event an
optionee's employment (or other service for the Company) is terminated, (i) such
optionee's options may be exercised (by the optionee or, if appropriate, his or
her beneficiary or personal representative) for specified periods thereafter
within the option period, or (ii) to the extent not fully exercisable or
otherwise vested on the termination date, such optionee's options may continue
to become exercisable within the option period.
ARTICLE III
RECAPITALIZATION AND REORGANIZATIONS
The number of shares of Common Stock covered by the Plan, and the number of
shares and price per share of each outstanding option shall be proportionately
adjusted for any increase or decrease in the number of issued and outstanding
shares of Common Stock resulting from a subdivision or consolidation of shares
or the payment of a stock dividend, or any other increase or decrease in the
number of issued and outstanding shares of Common Stock effected without receipt
of consideration by the Company.
If the Company shall be the surviving corporation in any merger or
consolidation, each outstanding option shall pertain to and apply to the
securities to which a holder of the same number of shares of Common Stock that
are subject to that option would have been entitled. A dissolution or
liquidation of the Company or a merger or consolidation in which the Company is
not the surviving corporation (a "Terminating Transaction") shall cause each
outstanding option to terminate, unless the agreement of merger or consolidation
shall otherwise provide; provided, however, that each optionee in the event of a
Terminating Transaction which will cause his or her option to terminate shall
have the right immediately prior to such Terminating Transaction to exercise
such option in whole or in part, subject to every limitation on the
exercisability of such option, other than any vesting provisions not required by
the Code.
To the extent that the foregoing adjustments relate to stock or securities
of the Company, such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive.
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The grant of an option pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
ARTICLE IV
MISCELLANEOUS PROVISIONS
1. RIGHTS AS A STOCKHOLDER.
An optionee or a transferee of an option shall have no rights as a
stockholder of the Company with respect to any shares covered by an option until
the date of the receipt of payment (including any amounts required by the
Company pursuant to Section 9 of Article I) by the Company. No adjustment shall
be made as to any option for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to such date, except as provided in Article III.
2. OTHER PROVISIONS.
The option agreements authorized under the Plan shall contain such other
provisions, including, without limitation, restrictions upon the exercise of the
option or restrictions required by any applicable securities laws, as the
Committee shall deem advisable.
3. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Common Stock pursuant
to the exercise of options will be used for general corporate purposes.
4. NO OBLIGATION TO EXERCISE OPTION.
The granting of an option shall impose no obligation upon the optionee or a
transferee of the option to exercise such option.
GOLDEN WEST FINANCIAL CORPORATION
Date: , 1996 By
Title:
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PROXY SOLICITED BY BOARD OF DIRECTORS
The undersigned hereby appoints HERBERT M. SANDLER, MARION O.
SANDLER, and J. L.
HELVEY, or any of them, each with power of substitution, as proxies
of the undersigned to attend the Annual Meeting of Stockholders of
Golden West Financial Corporation (the "Company"), to be held on the
fourth floor of the Company's headquarters located at 1901 Harrison
GOLDEN PROXY Street, Oakland, California, on April 30, 1996, at 11:00 a.m., and
WEST any adjournment thereof, and to vote the number of shares of Common
FINANCIAL Stock, $.10 par value, of the Company, which the undersigned would be
CORPORATION entitled to vote if personally present on the following:
(1) ELECTION OF DIRECTORS / / FOR all nominees listed below / / WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY BELOW) to vote for all nominees listed below
Louis J. Galen, Antonia Hernandez, Bernard A. Osher
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
________________________________________________________________________________
(2) APPROVE THE AMENDMENT AND RESTATEMENT OF THE COMPANY'S 1996 STOCK OPTION PLAN.
/ / FOR / / AGAINST / / ABSTAIN
(3) RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP, independent public accountants, to examine the accounts of the
Company for the current fiscal year.
/ / FOR / / AGAINST / / ABSTAIN
(4) In their discretion, upon all other matters as may properly be brought before the meeting or any adjournment thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
(CONTINUED FROM OTHER SIDE)
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH INSTRUCTIONS GIVEN. IN THE
ABSENCE OF SUCH INSTRUCTIONS, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS NOMINATED BY MANAGEMENT AND FOR PROPOSALS 2 AND 3.
Please date and sign below exactly as your name or names appear hereon. If
more than one name appears, all should sign. Joint owners should each sign
personally. Corporate proxies should be signed in full corporate name by an
authorized officer and attested. Persons signing in a fiduciary capacity should
indicate their full names in such capacity.
________________________________
(Signature of Stockholder)
________________________________
(Signature of Stockholder)
Dated ____________________, 1996
STOCKHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE.