<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14 INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. *)
<TABLE>
<S> <C>
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 Rule 14a-11(c) or Rule
14a-12
</TABLE>
WILLIS LEASE FINANCE CORPORATION
-------------------------------------------------------------------
(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):
<TABLE>
<S> <C>
/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:
- -------------------------------------------------------------------------
</TABLE>
<PAGE>
WILLIS LEASE FINANCE CORPORATION
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 14, 1997
TO OUR SHAREHOLDERS:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders
of WILLIS LEASE FINANCE CORPORATION (the "Company"), which will be held at the
Park Hyatt Hotel, 333 Battery Street, San Francisco, California at 2:00 p.m. on
May 14, 1997 for the following purposes:
1. To elect five directors to the Board of Directors;
2. To consider and vote upon a proposal to ratify the selection of KPMG
Peat Marwick LLP as independent public accountants for the Company for
the fiscal year ending December 31, 1997; and
3. To act upon such other business as may properly come before the meeting
or any adjournment or postponement thereof.
These matters are more fully described in the Proxy Statement accompanying
this Notice.
The Board of Directors has fixed the close of business on April 4, 1997 as
the record date for determining those shareholders who will be entitled to vote
at the meeting. The stock transfer books will not be closed between the record
date and the date of the meeting.
A quorum comprising the holders of the majority of the outstanding shares of
Common Stock of the Company on the record date must be present or represented
for the transaction of business at the Annual Meeting. Accordingly, it is
important that your shares be represented at the meeting. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE. Your proxy may be revoked at any
time prior to the time it is voted.
Please read the proxy material carefully. Your vote is important and the
Company appreciates your cooperation in considering and acting on the matters
presented.
Sincerely yours,
/s/ Charles F. Willis, IV
Charles F. Willis, IV
CHAIRMAN OF THE BOARD
April 16, 1997
Sausalito, California
<PAGE>
SHAREHOLDERS SHOULD READ THE ENTIRE PROXY STATEMENT
CAREFULLY PRIOR TO RETURNING THEIR PROXIES
PROXY STATEMENT
FOR
1997 ANNUAL MEETING OF SHAREHOLDERS
OF
WILLIS LEASE FINANCE CORPORATION
TO BE HELD ON MAY 14, 1997
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of WILLIS LEASE FINANCE CORPORATION (the "Company") of
proxies to be voted at the 1997 Annual Meeting of Shareholders, which will be
held at 2:00 p.m. on May 14, 1997 at the Park Hyatt Hotel, 333 Battery Street,
San Francisco, California, or at any adjournments or postponements thereof, for
the purposes set forth in the accompanying Notice of 1997 Annual Meeting of
Shareholders. This Proxy Statement and the proxy card were first mailed to
shareholders on or about April 18, 1997. The Company's 1997 Annual Report is
being mailed to shareholders concurrently with this Proxy Statement. The 1997
Annual Report is not to be regarded as proxy soliciting material or as a
communication by means of which any solicitation of proxies is to be made.
VOTING RIGHTS AND SOLICITATION
The close of business on April 4, 1997 was the record date for shareholders
entitled to notice of and to vote at the 1997 Annual Meeting of Shareholders. As
of that date, the Company had 5,430,861 shares of Common Stock, no par value
(the "Common Stock"), issued and outstanding. All of the shares of the Company's
Common Stock outstanding on the record date, except for Treasury Stock, are
entitled to vote at the 1997 Annual Meeting of Shareholders, and shareholders of
record entitled to vote at the meeting will have one vote for each share of
Common Stock so held with regard to each matter to be voted upon.
Shares of the Company's Common Stock represented by proxies in the
accompanying form which are properly executed and returned to the Company will
be voted at the 1997 Annual Meeting of Shareholders in accordance with the
shareholders' instructions contained therein. In the absence of contrary
instructions, shares represented by such proxies will be voted FOR the election
of each of the directors as described herein under "Proposal 1 Election of
Directors" and FOR ratification of the selection of accountants as described
herein under "Proposal 2 Ratification of Selection of Independent Public
Accountants." Management does not know of any matters to be presented at this
Annual Meeting other than those set forth in this Proxy Statement and in the
Notice accompanying this Proxy Statement. If other matters should properly come
before the meeting, the proxy holders will vote on such matters in accordance
with their best judgment. Any shareholder has the right to revoke his or her
proxy at any time before it is voted at the meeting. Election of directors by
shareholders shall be determined by a plurality of the votes cast by the
shareholders entitled to vote at the election present in person or represented
by proxy. Abstentions and broker non-votes are each included in the
determination of the number of shares present for quorum purposes. Abstentions
are counted in tabulations of the votes cast on proposals presented to
shareholders, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved.
The entire cost of soliciting proxies will be borne by the Company. Proxies
will be solicited principally through the use of the mails, but, if deemed
desirable, may be solicited personally or by telephone, telegraph or special
letter by officers and regular Company employees for no additional compensation.
Arrangements may be made with brokerage houses and other custodians, nominees
and fiduciaries to send proxies and proxy material to the beneficial owners of
the Company's Common Stock, and such persons may be reimbursed for their
expenses.
1
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
A board of five directors will be elected at the 1997 Annual Meeting of
Shareholders. The nominees for the Board of Directors are set forth below. The
proxy holders intend to vote all proxies received by them in the accompanying
form for the nominees for director listed below, unless instructions to the
contrary are marked on the proxy. In the event that a nominee is unable or
declines to serve as a director at the time of the 1997 Annual Meeting of
Shareholders, the proxies will be voted for any nominee who shall be designated
by the present Board of Directors to fill the vacancy. In the event that
additional persons are nominated for election as directors, the proxy holders
intend to vote all proxies received by them for the nominees listed below. As of
the date of this Proxy Statement, the Board of Directors is not aware of any
nominee who is unable or will decline to serve as a director. The term of office
of each person elected as a director will continue until the next Annual Meeting
of Shareholders or until the director's successor has been elected.
NOMINEES TO BOARD OF DIRECTORS
<TABLE>
<CAPTION>
DIRECTOR
NAME SINCE AGE
- ------------------------- -------- ---
<S> <C> <C>
Charles F. Willis, IV.... 1985 48
William L. McElfresh..... 1996 50
Ross K. Anderson......... 1996 54
William M. LeRoy......... 1996 54
Willard H. Smith, Jr..... 1996 59
</TABLE>
CHARLES F. WILLIS, IV is the founder of the Company, has served as President
and a Director since its incorporation in 1985, and has served as Chairman of
the Board of Directors since 1996. Mr. Willis has 30 years of experience in the
aviation industry. He has provided a wide range of consulting services for the
aviation industry, including fleet planning, cost of recertification estimation,
assistance with purchase and lease documentation, appraisal of competing
equipment and evaluation of financing proposals. From 1975 to 1985, Mr. Willis
served as President of the Company's predecessor, Charles F. Willis Company,
which purchased, financed and/or sold a variety of large commercial transport
aircraft and provided consulting services to the aviation industry. During 1974,
Mr. Willis operated a small business not involved in the aviation industry. From
1972 through 1973, Mr. Willis was Assistant Vice President of Sales at Seaboard
World Airlines, a freight carrier. From 1965 through 1972, he held various
positions at Alaska Airlines, including positions in the departments of flight
operations, sales and marketing.
WILLIAM L. MCELFRESH was named Executive Vice President of Strategic
Development in February, 1997. Prior to that, he served as the Company's
Executive Vice President-Marketing since 1989 and was named a Director of the
Company in 1996. For approximately 28 years, Mr. McElfresh has been involved
with commercial jet engine sales and support. From 1987 through 1989, he was a
partner with Turbine Engine Support Co., Inc. and provided sales, brokerage,
exchange and monitoring programs for aircraft engines and parts. As Vice
President, Sales and Marketing for International Aircraft Support, Inc. from
1983 through 1987, Mr. McElfresh found and exploited new market opportunities
for commercial jet aircraft engines and spare parts. From 1977 through 1983, he
developed and managed the worldwide spares support and overall operations for
the Power Accessories Division of TRW, Inc. From 1972 to 1983, he established a
marketing program in Asia and Pacific island markets to support the growth for
the new Component Repair Group of TRW, Inc., which manufactured the major
aircraft engine components for Pratt & Whitney, General Electric and CFM
International, S.A. From 1968 to 1972, he was an Aircraft Maintenance Officer in
the United States Air Force assigned to VIP and NASA Operations Support. Mr.
McElfresh holds a B.A. from the University of Kansas and an M.B.A. from
Pepperdine University.
2
<PAGE>
ROSS K. ANDERSON has served as a Director of the Company since 1996. Since
1993, Mr. Anderson has been President and Chief Executive Officer of Astech
Manufacturing, Inc. ("Astech"), an aerospace company manufacturing proprietary
metal honeycomb products using high temperature alloys. Astech's principal
customers include Boeing, Pratt & Whitney and General Electric for commercial
aircraft engines. From 1991 to 1993, Mr. Anderson was employed at Teledyne
Aircraft Group as Group Executive. From 1987 to 1991, Mr. Anderson served as
President of Teledyne Picco. Mr. Anderson received his M.S. in Aeronautical
Engineering from California Institute of Technology, his M.B.A. from Stanford
Graduate School of Business and his B.S. from the United States Naval Academy.
WILLIAM M. LEROY has served as a Director of the Company since 1996. In
1993, Mr. LeRoy established the LeRoy Accountancy Corporation, an audit firm
specializing in the audits of employee benefit plans. From 1965 to 1993, Mr.
LeRoy served in various positions at Ernst & Young LLP, an independent
accounting firm, in the Chicago, San Jose and San Francisco offices including as
audit partner responsible for the financial institution and leasing company
practice in northern California. Mr. LeRoy received his M.B.A. from Golden Gate
University and his B.S. in Accounting from Northern Illinois University. Mr.
LeRoy was named a Director of the Company in 1996.
WILLARD H. SMITH, JR. has served as a Director of the Company since 1996.
From 1979 through 1995, Mr. Smith was employed at Merrill Lynch, Pierce Fenner &
Smith Incorporated ("Merrill Lynch") and served as Managing Director since 1983
in their Equity Capital Markets Division. From 1992 through 1995, Mr. Smith's
primary focus was the real estate investment trusts industry. His duties as
Managing Director at Merrill Lynch included evaluating companies' structure and
equity requirements, placing offerings with Merrill Lynch's retail and
institutional client base, and assessing the market's demand for potential
offerings. Mr. Smith is also a Board Member of the Cohen & Steers Realty Shares,
Cohen & Steers Realty Income Fund, the Cohen & Steers Total Return Realty Fund,
the Cohen & Steers Special Equity Fund, Inc., Essex Property Trust, Inc.,
Highwoods Properties, Inc. and Realty Income Corporation. Prior to joining
Merrill Lynch, Mr. Smith worked at F. Eberstadt & Co. from 1971 to 1979. Mr.
Smith received his B.S. in Business Administration, and B.S. in Industrial
Engineering from the University of North Dakota in 1959 and 1960, respectively.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of two (2) meetings
during the fiscal year ended December 31, 1996 (the "1996 fiscal year") after
the Company's Initial Public Offering in September, 1996. Each director attended
at least 75% of the aggregate of (i) the total number of meetings of the Board
and (ii) the total number of meetings held by all committees of the Board on
which he served.
The Company has an Audit Committee and a Compensation Committee of the Board
of Directors. There is no nominating committee or committee performing the
functions of such committee.
The Audit Committee meets with the Company's financial management and its
independent public accountants to review internal financial information, audit
plans and results, and financial reporting procedures. This Committee, which
currently consists of William M. LeRoy, Chairman, Ross K. Anderson and Willard
H. Smith, Jr., held one meeting during the 1996 fiscal year.
The Compensation Committee reviews and approves the Company's compensation
arrangements for senior management and administers the Company's 1996 Stock
Option/Stock Issuance Plan (the "1996 Plan"). This Committee, which currently
consists of Ross K. Anderson, Chairman, William M. LeRoy and Willard H. Smith,
Jr., did not hold any meetings during the 1996 fiscal year.
DIRECTOR REMUNERATION
Non-employee members of the Board are each paid an annual fee of $10,000 and
are reimbursed for all reasonable out-of-pocket costs incurred in connection
with their attendance at such meetings. They also
3
<PAGE>
receive $1,000 for each meeting of the Board attended, and $500 for each
committee meeting which they attend. Pursuant to the automatic option grant
program under the 1996 Plan, each individual who first becomes a non-employee
Board member after the effective date of the 1996 Plan is eligible to receive an
option grant for 5,000 shares of Common Stock at an exercise price per share
equal to 100% of the fair market value on the date of grant.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
ELECTION OF ALL OF THE ABOVE NOMINEES FOR ELECTION AS DIRECTORS.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of KPMG Peat Marwick LLP served as independent public accountants
for the Company for the fiscal year ended December 31, 1996. The Board of
Directors desires the firm to continue in this capacity for the current fiscal
year. Accordingly, a resolution will be presented to the meeting to ratify the
selection of KPMG Peat Marwick LLP by the Board of Directors as independent
public accountants to audit the accounts and records of the Company for the
fiscal year ending December 31, 1997, and to perform other appropriate services.
In the event that shareholders fail to ratify the selection of KPMG Peat Marwick
LLP, the Board of Directors would reconsider such selection.
A representative of KPMG Peat Marwick LLP will be present at the Annual
Meeting to respond to appropriate questions and to make a statement if such
representative desires to do so.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of March 31, 1997 by: (i) each person
who is known to the Company to own beneficially more than five percent of the
outstanding shares of the Company's Common Stock; (ii) each director; (iii) each
officer listed in the Summary Compensation Table; and (iv) all directors and
executive officers as a group.
<TABLE>
<CAPTION>
COMMON STOCK(1)
NAME AND ADDRESS OF BENEFICIAL -------------------------------
OWNER SHARES PERCENTAGE OF CLASS
- ------------------------------ ---------- -------------------
<S> <C> <C>
Charles F. Willis, IV (2)..... 3,110,657(3) 57.3%
William L. McElfresh (2)...... 39,718 *
Allan Nilsen (2).............. 7,500 *
Steven D. Oldenburg (2)....... 7,685 *
John F. Votruba (2)........... 7,500 *
Elliot Fischer (2)............ 8,530 *
Edwin F. Dibble (2)(4)........ 29,315 *
Ross K. Anderson (2).......... 5,000 *
William M. LeRoy (2).......... 5,000 *
Willard H. Smith, Jr. (2)..... 5,000 *
All directors and executive
officers as a group (10
persons)..................... 3,225,905 59.4%
</TABLE>
- ------------------------
* Less than 1%
4
<PAGE>
(1) Except as indicated in the footnotes to this table, the shareholders named
in the table are known to the Company to have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially owned
by them, subject to community property laws where applicable. The number of
shares beneficially owned includes Common Stock of which such individual has
the right to acquire beneficial ownership either currently or within 60 days
after March 31, 1997, including, but not limited to, upon the exercise of an
option.
(2) The mailing address for each individual is c/o Willis Lease Finance
Corporation, 180 Harbor Drive, Suite 200, Sausalito, CA 94965.
(3) All of the 3,110,657 shares are held by CFW Partners, L.P., a California
Limited Partnership of which Charles F. Willis, IV holds a one percent (1%)
interest as the sole general partner and of which he holds an eighty percent
(80%) interest as a limited partner. A trust for the benefit of Mr. Willis'
son holds the remaining nineteen percent (19%) interest as a limited
partner.
(4) 16,136 of the shares were received in exchange for a minority interest in
WASI, and are held by Mr. Dibble and his wife.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning the
compensation earned by (i) the Company's Chief Executive Officer and (ii) each
of the four other most highly compensated executive officers of the Company
serving as such as of the end of the last fiscal year whose total annual salary
and bonus exceeded $100,000 for the fiscal years ended December 31, 1996 and
December 31, 1995. Such individuals will be hereafter referred to as the "Named
Executive Officers."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -------------------------
----------------------------------------- SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- -------------------------------------------------- ------ -------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Charles F. Willis, IV 1996 448,488 175,000
Chief Executive Officer 1995 577,704
William L. McElfresh 1996 150,833 63,265 150,000
Executive Vice President 1995 116,000 134,892
John F. Votruba 1996 164,956 40,000 30,000
General Counsel 1995 141,908
Edwin F. Dibble 1996 100,000 264,615(1) 30,000
Vice President--WASI 1995 100,000 94,485(1)
Steven D. Oldenburg 1996 94,792 31,000 23,387(2) 30,000
Senior Vice President 1995 86,969(3) 30,000
</TABLE>
- ------------------------
(1) Mr. Dibble's bonus is determined as a percentage of after-tax profits of
WASI.
(2) Represents relocation expenses paid by the Company.
(3) Includes $73,995 in consulting fees paid by the Company to Mr. Oldenburg
before he became an employee of the Company.
5
<PAGE>
STOCK OPTIONS
The following table sets forth information concerning the stock options
granted by the Company during the 1996 fiscal year to the Named Executive
Officers. No stock appreciation rights were granted during the 1996 fiscal year
to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------
PERCENT POTENTIAL
OF TOTAL REALIZABLE VALUE
OPTIONS AT ASSUMED ANNUAL
NUMBER OF GRANTED RATES OF STOCK
SECURITIES TO EXERCISE PRICE APPRECIATION
UNDERLYING EMPLOYEES OR BASE FOR OPTION TERM(1)
OPTIONS IN FISCAL PRICE PER EXPIRATION ------------------
NAME GRANTED(2) YEAR SHARE(3) DATE 5% 10%
- -------------------------------------------------- ---------- --------- --------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Charles F. Willis, IV.............................
William L. McElfresh.............................. 150,000 $8.00 9/16/06 754,668 1,912,488
John F. Votruba................................... 30,000 $8.00 9/16/06 150,934 382,498
Edwin F. Dibble................................... 30,000 $8.00 9/16/06 150,934 382,498
Steven D. Oldenburg............................... 30,000 $8.00 9/16/06 150,934 382,498
</TABLE>
- ------------------------
(1) There is no assurance provided to the option holder or any other holder of
the Company's securities that the actual stock price appreciation over the
10-year option term will be at the 5% and 10% assumed annual rates of
compounded stock price appreciation.
(2) The options were granted under the Company's 1996 Stock Option/Stock
Issuance Plan on September 17, 1996. Each option has a maximum term of 10
years measured from the grant date, subject to earlier termination upon the
optionee's cessation of service with the Company. Each option will vest in
four (4) equal annual installments generally measured from a year prior to
the option grant date.
(3) The exercise price may be paid in cash, in shares of Common Stock valued at
fair market value on the exercise date or through a cashless exercise
procedure involving a same-day sale of the purchased shares. The Company may
also finance the option exercise by loaning the optionee sufficient funds to
pay the exercise price for the purchased shares and the Federal and state
income and employment tax liability incurred by the optionee in connection
with such exercise.
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth certain information with respect to the Named
Executive Officers concerning shares of the Company's Common Stock subject to
exercisable and unexercisable stock options which the Named Executive Officers
held at the end of the 1996 fiscal year. No options or SARs were exercised by
any Named Executive Officer during the 1996 fiscal year. Except to the extent of
any limited stock appreciation rights awarded in connection with outstanding
options, none of the Named Executive Officers held any stock appreciation rights
at the end of that fiscal year.
6
<PAGE>
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE- MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Charles F. Willis, IV.............................
William L. McElfresh.............................. 37,500 112,500 182,813 891,213
John F. Votruba................................... 7,500 22,500 36,563 109,688
Edwin F. Dibble................................... 7,500 22,500 36,563 109,688
Steven D. Oldenburg............................... 7,500 22,500 36,563 109,688
</TABLE>
- ------------------------
(1) Based on the fair market value of the shares at the end of the 1996 fiscal
year ($12.875 per share) less the option exercise price payable for those
shares.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL AGREEMENTS
The Company presently has the following employment contracts in effect with
the Chief Executive Officer and the other executive officers named in the
Summary Compensation Table:
CHARLES F. WILLIS, IV. Mr. Willis has agreed that his base salary for 1996
beginning July 1, 1996 and for 1997 will be at an annualized rate of $250,000
and that is maximum bonus for 1996 and 1997 will be $350,000.
WILLIAM L. MCELFRESH. Mr. McElfresh has signed a five-year employment
agreement with the Company. The agreement automatically renews for additional
one year terms unless either party gives notice of nonrenewal six months prior
to expiration of the current term. Mr. McElfresh's base salary is $150,000 per
year, subject to adjustment by the Company's Board of Directors. Mr. McElfresh
is entitled to receive bonuses under the Company's Incentive Compensation Plan.
STEVEN D. OLDENBURG. Under an employment agreement that Mr. Oldenburg has
signed with the Company, Mr. Oldenburg's annualized salary will be $125,000. The
employment agreement sets forth a bonus schedule based on certain performance
targets on the Company. The Company must provide Mr. Oldenburg with at least six
months' notice prior to termination of his employment.
JOHN F. VOTRUBA. Mr. Votruba provides legal services to the Company as an
independent contractor, pursuant to a Legal Services Agreement, at a rate of
$95.00 per hour. He is entitled to receive bonuses under the Company's Incentive
Compensation Plan.
In connection with an acquisition of the Company by merger or asset sale,
each outstanding option held by the Chief Executive Officer and the other
executive officers under the 1996 Plan will automatically accelerate in full and
all unvested shares of Common Stock held by such individuals subject to direct
issuances made under such plans will immediately vest in full, except to the
extent such options are to be assumed by, and the Company's repurchase rights
with respect to these shares are to be assigned to, the successor corporation.
In addition, the Compensation Committee as Plan Administrator of the 1996 Plan
will have the authority to provide for the accelerated vesting of the shares of
Common Stock subject to outstanding options held by the Chief Executive Officer
or any other executive officer or the shares of Common Stock subject to direct
issuances held by such individual, in connection with the termination of the
officer's employment following a merger or asset sale in which: (i) these
options are assumed, (ii) the Company's repurchase rights with respect to
unvested shares are assigned, or (iii) certain hostile changes in control of the
Company.
7
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the executive officers of the Company currently serves on the
compensation committee of another entity or any other committee of the board of
directors of another entity performing similar functions.
REPORT OF THE COMPENSATION COMMITTEE AND THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is currently composed
of three non-employee directors, Ross K. Anderson, Chairman, William M. LeRoy
and Willard H. Smith, Jr., and was formed during fiscal year 1996 in
anticipation of the Initial Public Offering of the Company's common stock.
For most of the 1996 fiscal year, all compensation decisions with respect to
the Company's executive officers were made by the Board of Directors. The Board
made its decisions primarily on the basis of the Board's understanding of the
compensation practices of similarly-sized companies in the industry and fixed
the compensation package of each executive officer at level which was
competitive with those practices. However, the Board did not take into account
any actual compensation surveys or other compiled comparative compensation data
for purposes of making an actual comparative analysis.
Beginning with the last quarter of the 1996 fiscal year, the Compensation
Committee administers the Company's compensation policies and programs and will
have primary responsibility for executive compensation matters, including the
establishment of the base salaries of the Company's executive officers, the
approval of individual bonuses and bonus programs for executive officers and the
administration of certain employee benefit programs. In addition, the
Compensation Committee has exclusive responsibility for administering the
Company's 1996 Stock Option/Stock Issuance Plan, under which stock option grants
and direct stock issuances may be made to executive officers and other
employees. The following is a summary of policies which the Compensation
Committee intends to apply in the 1997 and subsequent fiscal years in setting
the compensation levels for the Company's executive officers.
GENERAL COMPENSATION POLICY. The objectives of the Company's executive
compensation program are to motivate and retain current executives and to
attract future ones. The Company's executive compensation program is designed
to: (1) provide a direct and substantial link between Company performance and
executive pay, (2) consider individual performance and accomplishments and
compensate accordingly, and (3) determine the Company's position in the aircraft
engine leasing labor market and be competitive in that labor market. The
Company's intent is to position its executive pay levels at the median of
comparable U.S. companies. To this end, the Company tracks executive pay levels
against companies of similar size. The Committee also considers geographic
location and companies that may compete with the Company in recruiting executive
talent.
FACTORS. The principal factors which the Compensation Committee will
consider in establishing the components of each executive officer's compensation
package for the 1997 fiscal year are summarized below. The Compensation
Committee may, however, in its discretion apply entirely different factors in
setting executive compensation for future fiscal years.
BASE SALARY. The base salary for each officer will be set on the basis of
personal performance, the Compensation Committee's assessment of salary levels
in effect for comparable positions with the Company's principal competitors, and
internal comparability considerations. The weight given to each of these factors
may vary from individual to individual, and the Compensation Committee will not
rely upon any specific compensation surveys for comparative compensation
purposes. Instead, the Compensation Committee will make its decisions as to the
appropriate market level of base salary for each executive officer on the basis
of its understanding of the salary levels in effect for similar positions at
those
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companies with which the Company competes for executive talent. Base salaries
will be reviewed on an annual basis, and adjustments will be made in accordance
with the factors indicated above.
INCENTIVE COMPENSATION. For the 1996 fiscal year, the Board of Directors
established an incentive compensation program pursuant to which each executive
officer was eligible to earn a bonus on the basis of the achievement of certain
Company and individual goals. The bonuses earned by each of the executive
officers is set forth in the Summary Compensation Table which appears earlier in
this Proxy Statement.
LONG-TERM INCENTIVE COMPENSATION. Long-term incentives are provided through
stock option grants. The grants are designed to align the interests of the
executive officers with those of the shareholders, and to provide each officer
with a significant incentive to manage the Company from the perspective of an
owner with an equity stake in the business. The stock option plan encourages
long term retention and provides rewards to executives and other eligible
employees commensurate with growth in shareholder value. It is the Committee s
practice to grant options to purchase shares at the market price on the date of
grant with a term of up to ten years. The options granted to the Company s
executive officers during fiscal 1996 will vest in four equal annual
installments. Accordingly, the options will provide a return to the executive
officer only if he remains in the Company's employ and the market price of the
underlying shares of common stock appreciates.
The number of shares subject to each option grant is set at a level intended
to create a meaningful opportunity for stock ownership based on the officer's
current position with the Company, the base salary associated with that
position, the size of comparable awards made to individuals in similar positions
within the industry, the individual's potential for increased responsibility and
promotion over the option term, and the individual's personal performance in
recent periods. The Committee also takes into account the number of unvested
options held by the executive offer in order to maintain an appropriate level of
equity incentive for that individual. However, the Committee does not adhere to
any specific guidelines as to the relative option holdings of the Company's
executive officers.
CEO COMPENSATION. The compensation payable to Mr. Willis, the Company's
Chief Executive Officer during fiscal year 1996, was determined by the Board of
Directors. His base salary was set at a level which the Board felt would be
competitive with the base salary levels in effect for chief executive officers
at similarly-sized companies within the industry. Based upon the Board's
evaluation of the Company's performance and Mr. Willis' individual performance,
the Board awarded Mr. Willis a bonus of $175,000 for the 1996 fiscal year. For
the 1997 fiscal year, Mr. Willis' compensation package was set by the
Compensation Committee on the basis of the compensation policy summarized in
this report.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m). Section 162(m) of the
Internal Revenue Code, enacted in 1993, generally disallows a tax deduction to
publicly-held companies for compensation paid to certain executive officers, to
the extent that compensation exceeds $1 million per officer in any year. The
compensation paid to the Company's executive officers for the 1996 fiscal year
did not exceed the $1 million limit per officer, and it is not expected the
compensation to be to the Company's executive officers for the 1997 fiscal year
will exceed that limit. In addition, the Company's Stock Option Plan is
structured so that any compensation deemed paid to an executive officer in
connection with the exercise of his or her outstanding options under the Stock
Option Plan will qualify as performance-based compensation which will not be
subject to the $1 million limitation.
9
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Submitted by both the Board of Directors and the Compensation Committee of
the Company's Board of Directors:
Charles F. Willis, IV
William L. McElfresh
Ross K. Anderson
William M. LeRoy
Willard H. Smith, Jr.
PERFORMANCE GRAPH
The following performance graph shows the percentage change in cumulative
total return to a holder of the Company's Common Stock, assuming dividend
reinvestment, compared with the cumulative total return, assuming dividend
reinvestment, of the NASDAQ Stock Market-US Index and the NASDAQ Financial
Index, during the period from September 18, 1996 through December 31, 1996.
PERIOD ENDING
------------------
INDEX 9/18/96 12/31/96
- ------------------------------------------------------- ------- --------
Willis Lease Finance Corporation....................... 100 161
NASDAQ Stock Market-US................................. 100 113
NASDAQ Financial....................................... 100 116
10
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATED PARTY TRANSACTIONS. In September 1993, the Company entered into a
management agreement with T-4 Inc. ("T-4"), an entity owned by Mr. Willis, to
provide administrative and management services for the relative cost of such
services. For the years ended December 31, 1994 and 1995, the Company recognized
$120,000 and $30,000 in management fee income under this agreement. At December
31, 1995, the Company wrote off its $30,000 receivable. Effective July 1, 1996,
the Company purchased T-4 for a nominal cash amount.
LOANS TO SHAREHOLDER. During 1994 and 1995, the Company made loans
totalling $19,600 and $130,735, respectively, to Mr. Willis. Between January 1,
1996 and July 31, 1996 the Company made loans totalling $261,942 to Mr. Willis.
The outstanding balance on loans from the Company to Mr. Willis was $355,018 as
of December 31, 1993, $373,845 as of December 31, 1994, $481,789 as of December
31, 1995 and $743,731 as of July 31, 1996. Of such loans, $10,000 were
represented by a promissory note that bears interest at 8% per annum. The
remainder of such loans are non-interest bearing. Immediately prior to the
consummation of the Initial Public Offering, the Company declared a cash
dividend to Mr. Willis in the amount of approximately $952,000 in order to
facilitate the repayment in full of the loans described above and to pay related
income tax liabilities.
CONTRIBUTION OF MINORITY INTEREST IN WASI. Upon consummation of the Initial
Public Offering, Mr. and Mrs. Dibble contributed all of the shares of capital
stock owned by them in WASI to the Company in exchange for 16,136 shares of
Common Stock of the Company. The number of shares of Common Stock was determined
by dividing $129,091 by the initial price to the public in the Initial Public
Offering. The Company believes that this method of valuation was no less
favorable to the Company than would otherwise have been received in a similar
transaction with an unaffiliated third party.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Officers, directors and greater than ten percent shareholders are
required by Securities and Exchange Commission regulation to furnish the Company
with copies of all Section 16(a) reports they file.
Based solely upon review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that there was compliance for the fiscal year ended December
31, 1996 with all Section 16(a) filing requirements applicable to the Company's
officers, directors and greater than ten percent beneficial owners.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be considered at the 1998 Annual Meeting
of Shareholders must be received by the Company no later than January 5, 1998.
The proposal must be mailed to the Company's principal executive offices, 180
Harbor Drive, Suite 200, Sausalito, California 94965. Such proposals may be
included in next year's proxy statement if they comply with certain rules and
regulations promulgated by the Securities and Exchange Commission.
OTHER MATTERS
Management does not know of any matters to be presented at this Annual
Meeting other than those set forth herein and in the Notice accompanying this
Proxy Statement.
11
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It is important that your shares be represented at the meeting, regardless
of the number of shares which you hold. YOU ARE, THEREFORE, URGED TO EXECUTE
PROMPTLY AND RETURN THE ACCOMPANYING PROXY IN THE ENVELOPE WHICH HAS BEEN
ENCLOSED FOR YOUR CONVENIENCE. Shareholders who are present at the meeting may
revoke their proxies and vote in person or, if they prefer, may abstain from
voting in person and allow their proxies to be voted.
By Order of the Board of Directors,
/s/ CHARLES F. WILLIS, IV
Charles F. Willis, IV
CHAIRMAN OF THE BOARD
April 16, 1997
Sausalito, California
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WILLIS LEASE FINANCE CORPORATION
PROXY
1997 ANNUAL MEETING OF SHAREHOLDERS
May 14, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles F. Willis, IV and John F. Votruba,
as Proxies of the undersigned, with full power of substitution, and hereby
authorizes them to represent and to vote, as designated below, all of the shares
of Common Stock of WILLIS LEASE FINANCE CORPORATION held of record by the
undersigned on April 4, 1997, at the 1997 Annual Meeting of Shareholders of the
Company to be held on May 14, 1997, or at any adjournment thereof.
IMPORTANT: PLEASE DATE AND SIGN ON REVERSE SIDE
- FOLD AND DETACH HERE -
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
X Please mark your
choice like this
FOR all nominees WITHHOLD AUTHORITY
listed below (except to vote for all
as marked to the nominees listed
contrary below) below
1. ELECTION OF
DIRECTORS
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL I plan to attend the meeting.
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW)
Charles F. Willis, IV
William L. McElfresh
Ross K. Anderson
William M. LeRoy
Willard H. Smith, Jr.
2. To ratify the FOR AGAINST ABSTAIN THE BOARD OF DIRECTORS
selection of KPMG RECOMMENDS A VOTE FOR PROPOSAL
Peat Marwick LLP as NOS. 1 AND 2. THIS PROXY, WHEN
independent auditors PROPERLY EXECUTED, WILL BE
of the Company. VOTED AS SPECIFIED ABOVE. THIS
PROXY WILL BE VOTED FOR
PROPOSAL NOS. 1 AND 2 IF NO
SPECIFICATION IS MADE.
3. In their discretion, PLEASE COMPLETE, SIGN AND
the Proxies are DATE THIS PROXY AND
authorized to vote RETURN PROMPTLY IN THE
upon such other ENCLOSED ENVELOPE.
matters as may
properly come before
the meeting.
Signature(s)______________________________________________________________________Date_____________________
Please sign exactly as your name(s) is (are) shown on the share certificate to which the Proxy applies.
When shares are held by joint tenants, both should sign. When signing as an 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.
- FOLD AND DETACH HERE -
</TABLE>
