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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
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 (S) 240.14a-11(c) or (S) 240.14a-12
Medallion Financial Corp.
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
MEDALLION FINANCIAL CORP.
437 Madison Avenue, 38th Floor
New York, New York 10022
April 28, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Medallion Financial Corp. (the "Company") to be held on June 15, 2000, at 10:00
a.m., Eastern Standard Time, at the Cornell Club, 6 East 44th Street, New York,
New York. This year we are asking you to elect two Directors of the Company to
serve until the 2003 Annual Meeting of Stockholders, and to ratify the Board of
Directors' selection of independent auditors for the year ending December 31,
2000. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE TWO NOMINEES AND
THE PROPOSAL.
At the Annual Meeting, the Board of Directors will also report on the
Company's affairs and a discussion period will be provided for questions and
comments. The Board of Directors appreciates and encourages stockholder
participation.
Whether or not you plan to attend the Annual Meeting, it is important that
your shares be represented. Accordingly, we request that you complete, sign,
date and promptly return the enclosed proxy in the enclosed postage prepaid
envelope in order to make certain that your shares will be represented at the
Annual Meeting.
Thank you for your cooperation.
Sincerely,
/s/ Alvin Murstein
Alvin Murstein
Chairman of the Board of Directors and
Chief Executive Officer
<PAGE>
MEDALLION FINANCIAL CORP.
437 Madison Avenue, 38th Floor
New York, New York 10022
(212) 328-2100
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 15, 2000
----------------
The Annual Meeting of Stockholders of Medallion Financial Corp. (the
"Company") will be held at the Cornell Club, 6 East 44th Street, New York, New
York on Thursday, June 15, 2000 at 10:00 a.m., Eastern Standard Time, to
consider and act upon the following matters:
1. To elect two directors to serve until the 2003 Annual Meeting of
Stockholders.
2. To ratify and approve the selection by the Board of Directors of Arthur
Andersen LLP as independent public accountants for the Company for the
current fiscal year ending December 31, 2000.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on April 21, 2000 will be
entitled to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors,
/s/ Marie Russo
Marie Russo,
Secretary
New York, New York
April 28, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED VOTER INSTRUCTION CARD AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO
POSTAGE NEED BE AFFIXED IF THE VOTER INSTRUCTION CARD IS MAILED IN THE
UNITED STATES.
<PAGE>
MEDALLION FINANCIAL CORP.
437 Madison Avenue, 38th Floor
New York, New York 10022
(212) 328-2100
----------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 15, 2000
----------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Medallion Financial Corp. (the "Company")
for use at the Annual Meeting of Stockholders to be held on June 15, 2000 (the
"Annual Meeting") and at any adjournment of the Annual Meeting. All shares of
Common Stock will be voted in accordance with the stockholders' instructions.
Any proxy may be revoked by a stockholder at any time before its exercise by
delivery of a written revocation to American Stock Transfer & Trust Company,
40 Wall Street, 46th Floor, New York, New York 10005.
VOTING SECURITIES AND VOTES REQUIRED
On April 21, 2000, the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting, there were
outstanding and entitled to vote an aggregate of 14,029,798 shares of Common
Stock of the Company, $.01 par value per share (the "Common Stock").
Stockholders are entitled to one vote per share.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the meeting shall be
necessary to constitute a quorum for the transaction of business. Abstentions
and "broker non-votes" will be considered as present for quorum purposes but
will not be counted as votes cast. Accordingly, abstentions and "broker non-
votes" will have no effect on the voting on a matter that requires the
affirmative vote of a certain percentage or a plurality of the votes cast or
shares voting on a matter.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present or represented at the meeting is required for the election of
directors and the appointment of auditors.
1
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of April 21, 2000, regarding
the ownership of the Company's Common Stock by (i) the persons known by the
Company to own more than five percent of the outstanding shares, (ii) all
directors and nominees of the Company, (iii) each of the executive officers of
the Company named in the Summary Compensation Table (the "Named Executive
Officers") and (iv) all directors and executive officers of the Company as a
group. The number of shares beneficially owned by each director or executive
officer is determined under rules of the Securities and Exchange Commission
(the "Commission") and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which the individual has the sole or
shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days of April 21, 2000 through
the exercise of any stock option or other right. Unless otherwise indicated,
each person has sole investment and voting power (or shares such power with
his or her spouse) with respect to the shares set forth in the following
table. The inclusion herein of any shares deemed beneficially owned does not
constitute an admission of beneficial ownership of such shares.
<TABLE>
<CAPTION>
Shares of Common Percentage of Common
Stock Beneficially Stock Beneficially
Name and Address Owned Owned
- ---------------- ------------------ --------------------
<S> <C> <C>
Alvin Murstein (1)..................... 1,340,000 9.55%
Chairman, Chief Executive Officer and
Director
437 Madison Avenue, 38th Floor
New York, NY 10022
Andrew M. Murstein (2)................. 1,260,000 8.98%
President
437 Madison Avenue, 38th Floor
New York, NY 10022
Daniel F. Baker (3).................... 44,544 *
Treasurer and Chief Financial Officer
437 Madison Avenue, 38th Floor
New York, NY 10022
Michael J. Kowalsky (3)................ 45,456 *
Executive Vice President
437 Madison Avenue, 38th Floor
New York, NY 10022
Marie Russo (4)........................ 23,564 *
Senior Vice President and Secretary
437 Madison Avenue, 38th Floor
New York, NY 10022
Frederick S. Hammer, Director (3)...... 3,389 *
Inter-Atlantic Group
712 Fifth Avenue
New York, NY 10022
Mario M. Cuomo, Director (3)........... 7,370 *
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019
Stanley Kreitman, Director (4)......... 9,148 *
Manhattan Associates
375 Park Avenue, Suite 1606
New York, NY 10152
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Shares of Common Percentage of Common
Stock Beneficially Stock Beneficially
Name and Address Owned Owned
- ---------------- ------------------ --------------------
<S> <C> <C>
David L. Rudnick, Director (4)......... 16,180 *
The Century Associates Group
365 West Passaic Street
Rochelle Park, NJ 07662
Benjamin Ward, Director (3)............ 7,272 *
Brooklyn Law School
250 Joralemon Street
Brooklyn, NY 11201
All executive officers and directors as
a group
(10 persons) (5)...................... 2,756,923 19.65
Capital Guardian Trust Company......... 1,680,500 11.98
1100 Santa Monica Boulevard
Los Angeles, CA 90025 (6)
</TABLE>
- --------
* Less than 1.0%.
(1) Includes 1,250,000 shares owned by the Alvin Murstein Second Family Trust
of which Alvin Murstein is a trustee and beneficiary, and shares issuable
upon the exercise of outstanding options exercisable on or before June 20,
2000.
(2) Includes 1,250,000 shares owned by the Andrew Murstein Family Trust, of
which Andrew Murstein is a trustee and beneficiary, and shares issuable
upon the exercise of outstanding options exercisable on or before June 20,
2000.
(3) Consists of shares issuable upon the exercise of outstanding options
exercisable on or before June 20, 2000.
(4) Consists of shares owned by the reporting person and shares issuable upon
the exercise of outstanding options exercisable on or before June 20,
2000.
(5) Includes (i) 1,250,000 shares owned by the Andrew Murstein Family Trust,
(ii) 1,250,000 shares owned by the Alvin Murstein Family Trust, (iii)
90,000 shares owned by Alvin Murstein (the Alvin Murstein Family Trust and
Andrew Murstein Family Trust hereinafter referred to collectively as the
"Murstein Family Trusts").
(6) The Capital Guardian Trust Company beneficially owns shares held by
several affiliated investment management companies that beneficially own
1,680,500 shares of Common Stock.
3
<PAGE>
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation provides that the Board
of Directors is divided into three classes (Class I, Class II and Class III)
serving staggered terms of three years. The number of directors stands fixed
at seven for the coming year. Class III Directors were elected at the Annual
Meeting held on June 16, 1999 and stand for election in 2002. Class II
Directors will stand for election in 2001.
Elections for two Class I Directors will be held at the Annual Meeting. The
Board of Directors has nominated Stanley Kreitman and David L. Rudnick for
election as Class III Directors. Messrs. Kreitman and Rudnick each presently
serves as a director and has consented to being named in this Proxy Statement
and to serve if elected. THE PERSONS NAMED IN THE ENCLOSED PROXY CARD, ALVIN
MURSTEIN AND ANDREW MURSTEIN WILL VOTE TO ELECT MESSRS. STANLEY KREITMAN AND
DAVID L. RUDNICK AS DIRECTORS OF THE COMPANY UNLESS AUTHORITY TO VOTE FOR THE
ELECTION OF ANY OR ALL OF THE NOMINEES IS WITHHELD BY MARKING THE PROXY CARD
TO THAT EFFECT. If for any reason any nominee should become unavailable for
election prior to the Annual Meeting, the person acting under the proxy may
vote the proxy for the election of a substitute designated by the Board of
Directors. It is not presently expected that one or both of Messrs. Kreitman
and Rudnick will be unavailable.
Approval of the nominees requires the affirmative vote of the holders of a
plurality of the shares of Common Stock present or represented by proxy at the
Annual Meeting, and entitled to vote thereon.
NOMINEES TO SERVE AS CLASS I DIRECTORS UNTIL
THE 2003 ANNUAL MEETING OF STOCKHOLDERS
Stanley Kreitman is 68 years old and has served as a director of the Company
since February 1996. Mr. Kreitman serves as Vice Chairman of Manhattan
Associates, an investment banking company. Mr. Kreitman served as a Director
of Tri-Magna from 1991 until May 1996. Mr. Kreitman served as President of the
United States Banknote Corporation, a securities printing company, from 1975
until his retirement in 1994. Mr. Kreitman is Chairman of the Board of
Trustees of the New York Institute of Technology and serves as a member of the
Boards of Directors of Porta Systems, Inc. and CCA Industries. Mr. Kreitman
received an A.B. from New York University and an M.B.A. from New York
University Graduate School of Business.
David L. Rudnick is 59 years old and has served as a director of the Company
since February 1996. Mr. Rudnick serves as President of The Century Associates
Group, a national commercial real estate concern which he founded in 1969. He
is also President of Rudco Properties, Inc., a real estate management firm.
Mr. Rudnick is a Board Member of the IntraCoastal Hospitals. He was a director
of West Side Federal Savings & Loan Association. Mr. Rudnick received an A.B.
with honors in economics from Harvard University and an M.B.A. from Columbia
University Graduate School of Business. Mr. Rudnick is Andrew Murstein's
father-in-law.
CLASS II DIRECTORS WHOSE TERMS EXPIRE AT THE
2001 ANNUAL MEETING OF STOCKHOLDERS
Mario M. Cuomo is 67 years old and has served as a director of the Company
since February 1996. Mr. Cuomo served as Governor of the State of New York
from January 1983 through 1994. Mr. Cuomo has been a partner in the law firm
of Willkie Farr & Gallagher since February 1995. Willkie Farr & Gallagher
serves as counsel to the Company on various legal matters. Mr. Cuomo received
a B.A., summa cum laude, from St. John's University and a J.D., magna cum
laude, from St. John's University School of Law.
Frederick S. Hammer is 63 years old and has served as a director of the
Company since his appointment by the Board of Directors on October 10, 1997.
Mr. Hammer has served as Vice-Chairman and Director of Inter-Atlantic
Securities Corp., a boutique investment bank, since 1995. From 1993 to 1994,
Mr. Hammer was President and Chief Executive Officer of Mutual of America
Capital Management Corporation. Mr. Hammer is a
4
<PAGE>
graduate of Colgate University (A.B., Mathematics, magna cum laude) and
received his M.S. and Ph.D. from Carnegie-Mellon University (Economics). Mr.
Hammer is Chairman of the Board of National Media Corporation, and is a member
of the Boards of Directors of IKON Office Solutions, Inc., Provident American
Corporation, Annuity & Life Re, Ltd. and several privately held companies. Mr.
Hammer also serves as Trustee of the Madison Square Boys and Girls Club.
Andrew M. Murstein is 35 years old and has served as President of the
Company since its inception in 1995, Chief Operating Officer of the Company
from February 1996 until August 1997 and President of Media from its
inception. Mr. Murstein has served two tenures as a Director of the Company,
MFC, Edwards and TCC, from May 1996 until April 1997 and since October 10,
1997. Mr. Murstein has served as a director of Media since its inception. Mr.
Murstein served as Tri-Magna's Director of New Business Development from 1991
until the acquisition of Tri-Magna by the Company in May 1996. Mr. Murstein
received a B.A. in economics, cum laude, from Tufts University and an M.B.A.
in finance from New York University. Andrew Murstein is the son of Alvin
Murstein and the son-in-law of Mr. Rudnick, and is the third generation of his
family to be active in the taxicab industry.
CLASS III DIRECTORS WHOSE TERMS EXPIRE AT THE
2002 ANNUAL MEETING OF STOCKHOLDERS
Alvin Murstein is 65 years old and has been Chairman of the Board of
Directors of the Company since its founding and Chief Executive Officer of the
Company since February 1996. Mr. Murstein has also been Chairman of the Board
of Directors and Chief Executive Officer of Medallion Funding Corp. ("MFC"), a
wholly owned subsidiary of the Company, since its founding in 1979 and of
Medallion Media, Inc. ("Media"), a wholly owned subsidiary of the Company,
since its founding in 1994. Mr. Murstein has been Chairman of the Board of
Directors and Chief Executive Officer of Edwards Capital Corp. ("Edwards") and
Transportation Capital Corp. ("TCC"), also wholly owned subsidiaries of the
Company, since June 1996. Mr. Murstein served as Chairman of the Board of
Directors and Chief Executive Officer of Tri-Magna Corporation ("Tri-Magna")
from its founding in 1989 until its acquisition by the Company in May 1996.
Mr. Murstein served as a director of the Strober Organization, Inc., from 1988
to 1997. Mr. Murstein received a B.A. and an M.B.A. from New York University
and has been an executive in the taxicab industry for over 40 years. Alvin
Murstein is the father of Andrew Murstein.
Benjamin Ward is 73 years old and has served as a director of the Company
since February 1996. Mr. Ward served as a Director of Tri-Magna from 1992
until May 1996. Mr. Ward served as Police Commissioner of New York City from
1984 until 1989. Mr. Ward received a B.A. in sociology, magna cum laude, from
Brooklyn College and a J.D. from Brooklyn Law School.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF
MESSRS. KREITMAN AND RUDNICK.
5
<PAGE>
PROPOSAL NUMBER TWO
RATIFICATION OF APPOINTMENT OF AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors of
the Company has appointed Arthur Andersen LLP, independent accountants for the
Company. Arthur Andersen LLP will audit the Company's consolidated financial
statements for the fiscal year ending December 31, 2000, perform audit-related
services and act as consultants in connection with various accounting and
financial reporting matters. Arthur Andersen LLP provided those services to
the Company for the fiscal year ended December 31, 1999 and it is recommended
that stockholders vote for ratification of such appointment.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting. They will have the opportunity to make a statement if they
desire to do so and will also be available to respond to appropriate questions
from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
RATIFICATION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2000.
OTHER MATTERS OF BUSINESS
The Company is not aware of any business to be acted upon at the Annual
Meeting other than that which is set forth in this Proxy Statement. In the
event that any other business requiring the vote of stockholders is properly
presented at the Annual Meeting, the holders of the proxies will vote your
shares in accordance with their best judgment.
Board and Committee Meetings
The Company has a standing Audit Committee of the Board of Directors, which
reviews the results and scope of the audit and other services provided by the
Company's independent public accountants. The Audit Committee met four times
during fiscal 1999 to review (i) the effectiveness of the public accountants
during the fiscal 1999 audit, (ii) the adequacy of the fiscal 1999 financial
statement disclosures, (iii) the Company's internal control policies and
procedures, and (iv) the selection of the Company's independent public
accountants. The members of the Audit Committee are Messrs. Kreitman, Rudnick
and Ward.
The Company also has a standing Compensation Committee of the Board of
Directors, whose members made recommendations concerning compensation of the
directors and executive officers of the Company including (i) all incentive or
stock option plans or arrangements established by the Company for officers and
employees, including the grant of stock options to employees, (ii) adoption
and amendment of all employee stock option and other employee benefit plans
and (iii) arrangements and the engagement of, terms of any employment
agreements and arrangements with, and termination of, all officers of the
Company. The members of the Compensation Committee are Messrs. Kreitman, Alvin
Murstein* and Ward. See "Report of the Board of Directors as to Compensation
Matters."
The Board of Directors does not have a standing nominating committee. The
Board of Directors held four formal and two telephonic meetings during fiscal
1999. Each director attended at least 85% of the meetings of the Board of
Directors and all committees of the Board on which he served.
- --------
* Mr. Alvin Murstein is an "interested person" as such term is defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended (the
"1940 Act").
6
<PAGE>
Directors' Compensation
The eligible members of the Company's Board of Directors receive (i) $10,000
as a retainer for each year they serve, (ii) $2,000 for the first board
meeting held per quarter and $1,000 for any additional board meetings held in
such quarter, (iii) $250 for each telephonic meeting of the board, (iv) $1,000
for the first committee meeting held per quarter and for any committee
meetings held on a date when there is not also a board meeting and (v) $500
for all other committee meetings and for each telephonic meeting in which they
participate and they are reimbursed for expenses relating thereto. Eligible
Directors are entitled to participate in the Company's 1996 Non-employee Stock
Option Plan. The directors receive no other compensation for their services to
the Company.
Employee directors of the Company are eligible to participate in the
Company's 401(k) Investment Plan. More information concerning the Company's
401(k) Investment Plan can be found under "Report of the Board of Directors as
to Compensation Matters." The Company does not provide any other pension or
retirement plan with respect to its directors or employees.
Information with respect to the aggregate compensation paid to directors of
the Company, including options to purchase shares of the Company's Common
Stock under the Director Plan, appears under "Compensation of Directors and
Executive Officers."
Certain Relationships
Mario M. Cuomo is a director of the Company and a partner in the law firm of
Willkie Farr & Gallagher, which serves as counsel to the Company in connection
with various legal matters.
7
<PAGE>
Compensation of Directors and Executive Officers
Summary Compensation Table. The table below sets forth certain compensation
information for the Company's (i) Chief Executive Officer, (ii) directors and
(iii) each of the Company's four most highly compensated executive officers
other than the Company's Chief Executive Officer, for the fiscal year ended
December 31, 1999 (the "Period") (collectively, the "Compensated Persons").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Compensation for the Period Awards
---------------------------------- ---------------------
Name and Principal Other Period Securities Underlying
Position Salary($) Bonus($) Compensation(1) Options(#)
------------------ --------- -------- --------------- ---------------------
<S> <C> <C> <C> <C>
Alvin Murstein ......... 300,000 50,000 3,166 125,000
Chairman and Chief
Executive Officer
Andrew Murstein......... 271,875 100,000 N/A 125,000
President
Allen S. Greene(2)...... 265,625 100,000 3,200 10,000
Chief Operating Officer
Michael J. Kowalsky..... 172,000 100,000 3,200 25,000
Executive Vice
President
Daniel F. Baker......... 167,500 25,000 2,500 N/A
Treasurer and Chief
Financial Officer
</TABLE>
<TABLE>
<CAPTION>
Long-Term
Compensation(3)
---------------------
Securities Underlying
Director Fees($) Options(#)
---------------- ---------------------
<S> <C> <C>
Mario M. Cuomo, Director........... 23,000 0
Stanley Kreitman, Director......... 41,750 0
David L. Rudnick, Director......... 40,750 0
Benjamin Ward, Director............ 40,250 9,000
Frederick S. Hammer, Director...... 31,000 0
</TABLE>
- --------
(1) Amounts received pursuant to the matching program under the Company's
401(k) Plan.
(2) As of December 31, 1999, Mr. Greene was no longer employed by the Company.
(3) Options granted under the Non-employee Director Plan.
The following table sets forth certain information regarding options granted
during the Period by the Company to the following Named Executive Officers:
Option Grants
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Number of Annual Rates of Stock
Securities Percent of Price Appreciation
Underlying Total Options Exercise or Base for Option Term(2)
Options Granted to Price Expiration ---------------------
Name Granted(#) Employees ($/share)(1) Date 5%($) 10%($)
---- ---------- ------------- ---------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Alvin Murstein.......... 125,000 31.42% 17.25 05/06/2009 1,356,054 3,436,507
Andrew Murstein......... 125,000 31.42% 17.25 05/06/2009 1,356,054 3,436,507
Allen S. Greene......... 10,000 2.51% 17.25 05/06/2009 108,484 274,921
Michael J. Kowalsky..... 25,000 6.28% 18.75 12/16/2009 294,794 747,067
Daniel F. Baker......... N/A N/A N/A N/A N/A N/A
</TABLE>
8
<PAGE>
- --------
(1) The exercise price of these options is equal to the fair market value of
the Company's Common Stock on the date of grant, as determined by the
Company's Board of Directors.
(2) The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates set by the Commission and, therefore, are not
intended to forecast possible future appreciation, if any, in the price of
the underlying Common Stock. No gain to the optionees is possible without
an increase in price of the underlying Common Stock, which will benefit
all stockholders proportionately.
<TABLE>
<S> <C>
</TABLE>
The following table sets forth certain information concerning exercisable
and unexercisable stock options held by the following Named Executive Officers
in the Period:
Aggregated Option Exercises In the Period and
Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised Options at In-The-Money Options at
Year-End Year-End
------------------------- -------------------------
Value
Shares Acquired Realized
On Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
--------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alvin Murstein.......... N/A N/A 5,000 145,000 0 85,938(1)
Andrew M. Murstein...... N/A N/A 5,000 145,000 0 85,938(1)
Allen S. Greene......... N/A N/A 160,000 0 111,563 0(2)
Michael J. Kowalsky..... N/A N/A 45,456 25,000 315,351 0(3)
Daniel F. Baker......... N/A N/A 20,772 27,274 144,106 189,213(4)
</TABLE>
- --------
(1) Based on the difference between closing price of the underlying shares of
Common Stock on December 31, 1999 as reported by the NASDAQ National
Market ($17.9375) and the option exercise price ($29.25) with respect to
25,000 options (5000 of which are exercisable at year end) and the option
exercise price ($17.25) with respect to 125,000 options (none of which are
exercisable).
(2) Based on the difference between closing price of the underlying shares of
Common Stock on December 31, 1999 as reported by the NASDAQ National
Market ($17.9375) and the option exercise price ($13.75) with respect to
25,000 options (all of which are exercisable at year end) and the option
exercise price ($17.25) with respect to 10,000 options (all of which are
exercisable at the year end) and the option exercise price ($19.50) with
respect to 125,000 options (all of which are exercisable at year end).
(3) Based on the difference between closing price of the underlying shares of
Common Stock on December 31, 1999 as reported by the NASDAQ National
Market ($17.9375) and the option exercise price ($11.00) with respect to
45,456 options (all of which are exercisable at year end) and the option
exercise price ($18.75) with respect to 25,000 options (none of which are
exercisable at year end).
(4) Based on the difference between closing price of the underlying shares of
Common Stock on December 31, 1999 as reported by the NASDAQ National
Market ($17.9375) and the option exercise price ($11.00) with respect to
48,046 options (20,772 of which are exercisable at year end).
Employment Agreements
In May 1996, Alvin Murstein and Andrew M. Murstein entered into employment
agreements with the Company, which were subsequently amended in May 1998. The
agreements automatically renew annually for a five-year term unless either
party terminates the agreement. The agreements contain non-competition
covenants in favor of the Company. Michael J. Kowalsky entered into an
employment agreement with the Company which became effective in May 1996.
Report of the Board of Directors as to Compensation Matters
The Board of Directors of the Company has delegated the authority to
establish compensation policies with respect to the Company's executive
officers to the Compensation Committee of the Company's Board of Directors and
the Company anticipates that this program will be administered by the
Compensation Committee in the near future.
The objectives of the Company's executive compensation program are to
establish compensation levels designed to enable the Company to attract,
retain and reward executive officers who contribute to the long-term
9
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success of the Company so as to enhance stockholder value. The Board of
Directors or the Compensation Committee, as appropriate, will make decisions
each year regarding executive compensation, including annual base salaries and
bonus awards, and a special subcommittee of the Compensation Committee,
consisting of non-interested directors Messrs. Kreitman and Ward, will make
decisions each year regarding stock option grants. Option grants are key
components of the executive compensation program and are intended to provide
executives with an equity interest in the Company so as to link a meaningful
portion of the compensation of the Company's executives with the performance
of the Company's Common Stock. This report is submitted by the full Board of
Directors and addresses the compensation policies for fiscal 1999 as they
affected Alvin Murstein, in his capacity as the Chief Executive Officer of the
Company, as well as each of the Company's other officers.
Compensation Philosophy
The Company's executive compensation philosophy is based on the belief that
competitive compensation is essential to attract, motivate and retain highly
qualified and industrious employees. The Company's policy is to provide total
compensation that is competitive for comparable work and comparable corporate
performance. The compensation program includes both motivational and
retention-related compensation components. Bonuses are included to encourage
effective performance relative to current plans and objectives. Stock options
are included to help retain productive people and to more closely align their
interests with those of stockholders.
In executing its compensation policy, the Company seeks to relate
compensation with the Company's financial performance and business objectives,
reward high levels of individual performance and tie a significant portion of
total executive compensation to both the annual and long-term performance of
the Company. While compensation survey data are useful guides for comparative
purposes, the Company believes that a successful compensation program also
requires the application of judgment and subjective determinations of
individual performance, and to that extent the Board of Directors applies
judgment in reconciling the program's objectives with the realities of
retaining valued employees.
Executive Compensation Program
Annual compensation for the Company's executives consists of three principal
elements: base salary, cash bonus and stock options.
Base Salary and Cash Bonus
In setting the annual base salaries for the Company's executives, the Board
of Directors reviews the aggregate salary and bonus compensation for
individuals in comparable positions with other companies, including
competitors of the Company, and adjusts such amounts to reflect individual
performance. Many of these companies are specialty finance companies. The
Company also regularly compares the salary levels of its executive officers
with other leading companies.
Increases in annual base salary are based on a review and evaluation of the
performance of the activity for which the executive has responsibility, the
impact of that activity on the Company and the skills and experience required
for the job, coupled with a comparison of these elements with similar elements
for other executives both inside and outside the Company.
Cash bonuses are tied directly to the Company's financial performance and
the contribution of the executive to such performance.
Equity Ownership
Executive officer compensation also includes long-term incentives afforded
by options to purchase shares of Common Stock. The purposes of the Company's
stock ownership program are to (i) highlight and reinforce the mutuality of
long-term interests between employees and the stockholders and (ii) to assist
in the attraction and retention of critically important key executives,
managers and individual contributors who are essential to the Company's growth
and development.
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The Company's stock programs include long vesting periods to optimize the
retention value of these options and to orient the Company's executive
officers to longer term success. Generally, stock options vest in equal annual
installments over three to five years commencing on the first anniversary of
the date of grant, and, if employees leave the Company before these vesting
periods, they forfeit the unvested portions of these awards. The Company also
makes annual grants of options which vest in one year.
Except for executives with substantial holdings of the Company's stock, the
number of shares of Common Stock subject to option grants is generally
intended to reflect the significance of the executive's current and
anticipated contributions to the Company. The exercise price of options
granted by the Company is required under the 1940 Act to equal not less than
100% of the fair market value per share on the date of grant. Prior to
determining the 1998 option grants to the Company's executives, the Board of
Directors considered the equity compensation policies of competitors and other
companies, both privately held and publicly traded, with comparable
capitalizations. The value realizable from exercisable options is dependent
upon the extent to which the Company's performance is reflected in the price
of the Company's Common Stock at any particular point in time. However, the
decision as to whether such value will be realized through the exercise of an
option in any particular year is primarily determined by each individual
within the limits of the vesting schedule and not by the Board of Directors.
401(k) Plan
Since 1996, the Company has been a participating employer in the Medallion
Funding Corp. 401(k) Investment Plan (the "401(k) Plan") which covers all full
and part-time employees of the Company who have attained the age of 21 and
have a minimum of one year of service. Under the 401(k) Plan, an employee may
elect to defer not less than 1.0% and no more than 15.0% of the total annual
compensation that would otherwise be paid to the employee, provided, however,
that employees' contributions may not exceed certain maximum amounts
determined under Section 402(g) of the Code. Employee contributions are
invested in various mutual funds, according to the direction of the employee.
On September 1, 1998, the Company elected to match employee contributions to
the 401(k) Plan in an amount per employee up to one-third of such employee's
contribution but in no event greater than 2.0% of the portion of such
employee's annual salary eligible for 401(k) Plan benefits.
Alvin Murstein's 1999 Compensation
The Board of Directors has set Alvin Murstein's total annual compensation at
a level it believes to be competitive with the chief executive officers of
similarly capitalized specialty finance companies. Alvin Murstein, in his
capacity as Chief Executive Officer, is eligible to participate in the same
executive compensation program available to the Company's other senior
executives.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Code, enacted in 1993, generally disallows a tax
deduction to public companies for compensation over $1 million paid to its
chief executive officer and its four other most highly compensated executive
officers. However, qualifying performance-based compensation will not be
subject to the deduction limit if certain requirements are met. The Company
currently intends to structure its stock options grants to executive officers
in a manner that complies with these performance-based requirements.
BOARD OF DIRECTORS
Alvin Murstein
Andrew M. Murstein
Mario M. Cuomo
Frederick S. Hammer
Stanley Kreitman
David L. Rudnick
Benjamin Ward
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<PAGE>
COMPENSATION COMMITTEE AND INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. Alvin Murstein,
Kreitman and Ward. Mr. Alvin Murstein, Chairman and Chief Executive Officer of
the Company, is a member of the Compensation Committee and is an "interested
person" as such term is defined in Section 2(a)(19) of the 1940 Act.
STOCK PERFORMANCE GRAPH
The Commission requires the Company to present a graph comparing the
cumulative total stockholder return on its Common Stock with the cumulative
total stockholder return (a) of a broad equity market index and (b) of a
published industry index on peer group. The following graph commences as of
May 23, 1996, the date of the Company's initial public offering, and compares
the Company's Common Stock with the cumulative total return for the Nasdaq
(U.S.) Index and the Nasdaq Financial Index. Furthermore, the following graph
assumes the investment of $100 on May 23, 1996 in each of the Company's Common
Stock, the stocks comprising the Nasdaq (U.S.) Index and the Nasdaq Financial
Index and assumes dividends are reinvested.
CUMULATIVE TOTAL RETURN
Medallion Financial Corp Nasdaq (US) Index Nasdaq Financial Index
May/96 100 100 100
Jun/96 113.64 95.07 100.19
Sep/96 131.82 98.44 108.58
Dec/96 142.71 103.28 120.62
Mar/97 169.62 97.68 125.84
Jun/97 181.19 115.58 146.79
Sep/97 208.48 135.13 170.99
Dec/97 216 126.71 184.27
Mar/98 266.31 148.25 195.27
Jun/98 272.79 152.55 190.27
Sep/98 158.67 138.1 158.08
Dec/98 150.56 178.12 178.29
Mar/99 158.42 200.16 176.47
Jun/99 203.67 219.02 197.8
Sep/99 219.85 224.33 171.65
Dec/99 203.57 330.51 177.4
OTHER INFORMATION
All costs of solicitations of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and
regular employees, without additional remuneration, may solicit proxies by
telephone, telegraph and personal interviews. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the
owners of stock held in their names, and the Company will reimburse them for
their out-of-pocket expenses in this connection.
12
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act and the disclosure requirements of Item
405 of Regulation S-K require the directors and executive officers of the
Company, and any persons holding more than 10% of any class of equity
securities of the Company, to report their ownership of such equity securities
and any subsequent changes in that ownership to the Securities and Exchange
Commission, the NASDAQ National Market and the Company. Based solely on a
review of the written statements and copies of such reports furnished to the
Company, the Company believes that during fiscal 1998 all Section 16(a) filing
requirements applicable to such persons were timely satisfied.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 2001 Annual
Meeting of Stockholders must be received by the Company at its principal
office in New York, New York not later than January 3, 2001 for inclusion in
the proxy statement for that meeting. Such proposals must also meet the
requirements of Rule 14a-8 of the Commission relating to stockholder's
proposals. A stockholder proposal outside the processes of Rule 14a-8 will be
considered untimely if received by the Company after March 15, 2001.
By Order of the Board of Directors,
/s/ Marie Russo
Marie Russo,
Secretary
April 28, 2000
THE BOARD OF DIRECTORS ENCOURAGES STOCKHOLDERS TO ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY OR VOTING INSTRUCTION CARD IN THE ACCOMPANYING
ENVELOPE. PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE
MEETING AND YOUR COOPERATION WILL BE APPRECIATED.
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<PAGE>
MEDALLION FINANCIAL CORP.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 15, 2000 THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY AND SHOULD
BE RETURNED AS SOON AS POSSIBLE TO AMERICAN STOCK TRANSFER & COMPANY, 40 WALL
STREET, 46TH FLOOR, NEW YORK, NEW YORK 10005
The undersigned having received notice of the meeting and management's proxy
statement therefor, and revoking all prior proxies, hereby appoint(s) Alvin
Murstein and Andrew Murstein, and each of them, attorneys or attorney of the
undersigned (with full power of substitution in them and each of them) and for
and in the name(s) of the undersigned to attend the Annual Meeting of
Stockholders of MEDALLION FINANCIAL CORP. (the "Company") to be held at the
Cornell Club, 6 East 44th Street, New York New York on Thursday, June 15, 2000
at 10:00 a.m., Eastern Standard Time, and any adjourned session thereof, and
there to vote and act upon the following matters in respect of all shares of
stock of the Company which the undersigned will be entitled to vote or act upon,
with all the powers the undersigned would possess if personally present.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DESCRIBED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED AS DIRECTED BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN WITH RESPECT TO
ANY PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH PROPOSAL. Attendance of the
undersigned at the meeting or at any adjournment thereof will not be deemed to
revoke this proxy unless the undersigned shall revoke this proxy in writing.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO COMPLETE,
DATE, SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE.
<PAGE>
\|/ Please Detach and Mail in the Envelope Provided \|/
- --------------------------------------------------------------------------------
A [x] Please mark your
votes as in this
example.
This proxy will be voted FOR the following proposals unless otherwise indicated.
<TABLE>
FOR All
Nominees (except as AGAINST all
indicated below) nominees FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C>
1. To elect the Nominees: Stanley Kreitman 2. To ratify and approve the [ ] [ ] [ ]
following [ ] [ ] David L. Rudnick selection by the Board of
Directors Directors of Arthur Andersen LLP
(except as marked below). as independent public accountants
for the current fiscal year ending
December 31, 2000.
(Instruction: To vote against an individual 3. To transact such other business as may properly come
nominee, while the name of such nominee(s) in before the meeting of any adjournment thereof.
the space provided below)
- ---------------------------------------------
------------------ MARK HERE [ ] MARK HERE IF [ ]
------------------ FOR ADDRESS YOU PLAN TO
------------------ CHANGE AND ATTEND THE
NOTE AT LEFT MEETING
Dated: , 2000 Dated: , 2000
- ------------------------------------------ ------ -------------------------------------- --------
SIGNATURE IF HELD JOINTLY
</TABLE>
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
OWNERS BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
