<PAGE>
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 Rule 14a-11(c) or Rule 14a-12
DELTA FINANCIAL 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):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
<PAGE>
DELTA FINANCIAL CORPORATION
1000 WOODBURY ROAD
WOODBURY, NEW YORK 11797
Dear Stockholder:
On behalf of the Board of Directors of Delta Financial Corporation, it is
my pleasure to invite you to attend the 1997 Annual Meeting of Stockholders of
the Company, which will be held at the Huntington Hilton, at 598 Broad Hollow
Road, Melville, New York 11747, on Thursday, May 29, 1997, at nine o'clock in
the morning, local time.
The business to be transacted at the meeting is set forth in the Notice of
Meeting and is more fully described in the accompanying proxy statement.
It is important that your shares be represented at the meeting, regardless
of how many you hold. Whether or not you can be present in person, please sign,
date and return your proxy in the enclosed postage paid envelope, as soon as
possible. If you do attend the meeting and wish to vote in person, your proxy
can be revoked at your request.
We appreciate your support and look forward to seeing you at the meeting.
Sincerely yours,
/s/ Hugh Miller
Hugh Miller
President & Chief Executive Officer
<PAGE>
DELTA FINANCIAL CORPORATION
1000 WOODBURY ROAD
WOODBURY, NEW YORK 11797
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 29, 1997
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Delta
Financial Corporation (the 'Company') will be held at the Huntington Hilton at
598 Broad Hollow Road, Melville, New York 11747, on Thursday, May 29, 1997, at
nine o'clock in the morning, local time, for the following purposes:
1. To elect two Class I Directors for a term of three years and until
their successors shall have been elected and qualified ('Proposal No. 1');
2. To ratify the appointment of KPMG Peat Marwick LLP as independent
public accountants for the Company for the fiscal year ending December 31,
1997 ('Proposal No. 2'); and
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 8, 1997 will be
entitled to notice of, and to vote at, the meeting.
By Order of the Board of Directors,
/s/ Teresa Ginter
Teresa Ginter
Secretary
Woodbury, New York
April 9, 1997
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WISH YOUR SHARES TO BE
VOTED, PLEASE DATE, SIGN AND MAIL THE ACCOMPANYING FORM OF PROXY AS PROMPTLY AS
POSSIBLE IN THE ENCLOSED POSTAGE PAID ENVELOPE.
<PAGE>
DELTA FINANCIAL CORPORATION
1000 WOODBURY ROAD
WOODBURY, NEW YORK 11797
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
MEETING DATE: MAY 29, 1997
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Delta Financial Corporation, a Delaware corporation (the
'Company'), for use at the Annual Meeting of Stockholders to be held at the
Huntington Hilton at 598 Broad Hollow Road, Melville, New York 11747, on
Thursday, May 29, 1997, at nine o'clock in the morning, local time, or any
adjournments thereof. Stockholders of record at the close of business on April
8, 1997 will be entitled to vote at the meeting.
The shares represented by the accompanying proxy will be voted (or withheld
from voting) as directed (i) with respect to the election of Directors (Proposal
No.1) or, if no direction is indicated with respect to Proposal No. 1, will be
voted in favor of the election as Directors of the nominees listed below, and
(ii) with respect to ratifying the appointment of KPMG Peat Marwick LLP as
independent accountants for the Company (Proposal No. 2) or, if no direction is
indicated with respect to Proposal No. 2, will be voted in favor of passage.
Each proxy executed and returned by a stockholder may be revoked at any time
thereafter by giving written notice of such revocation to the Secretary of the
Company or by attending the Annual Meeting and electing to vote in person,
except as to any matter or matters upon which, prior to such revocation, a vote
shall have been cast pursuant to the authority conferred by such proxy.
The enclosed proxy also serves as the voting instruction card for the
trustees who hold shares of record for participants in the Delta Funding Corp.
401k Profit-Sharing Plan. Shares for which no instructions are received by the
trustees will be voted in the same proportion as the shares for which the
trustees receive instructions.
Under Delaware law, abstentions and broker non-votes are counted for
purposes of establishing a quorum, but otherwise do not count. Generally, the
approval of a specified percentage of shares voted at a stockholder meeting is
required to approve a proposal and thus abstentions and broker non-votes have no
effect on the outcome of a vote. At the Annual Meeting, a plurality of the
shares of Common Stock voted is required to elect a Director, without regard to
either broker non-votes or abstentions. Where Delaware law or the Company's
certificate of incorporation or bylaws requires that the matter voted upon be
approved by a specified percentage of the outstanding shares, then abstentions
and broker non-votes have the same effect as negative notes.
An Annual Report to Stockholders for the year ended December 31, 1996,
including financial statements, accompanies this Proxy Statement. Additional
copies of the Annual Report are available upon request. The date of this Proxy
Statement is the approximate date on which the Proxy Statement and form of proxy
were first sent or given to stockholders.
VOTING SECURITIES
The Company has set the close of business on April 8, 1997 as the record
date (the 'Record Date') for the purpose of determining stockholders entitled to
vote at the Annual Meeting. At the close of business on the Record Date, the
Company had outstanding 15,372,288 shares of Common Stock, par value $.01 per
share (the 'Common Stock'), the only class of voting securities of the Company
outstanding. Each stockholder is entitled to one vote for each share held. All
references to the number of shares and price per share information herein
reflect all stock splits effected prior to the date hereof unless otherwise
noted.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table provides information at March 5, 1996, with respect to
(i) any person known to the Company to be the beneficial owner of five percent
or more of the Common Stock, (ii) all Directors (both continuing and nominees)
of the Company, (iii) each of the five most highly compensated executive
officers of the Company, and (iv) all Directors and executive officers as a
group. Unless otherwise indicated, the beneficial ownership disclosed consists
of sole voting and investment power.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP OF CLASS
- ---------------------------------------------------------------------------------- -------------------- --------
<S> <C> <C>
Sidney A. Miller.................................................................. 6,994,801(2) 45.5%
Hugh Miller....................................................................... 5,615,003(3) 36.5%
Rona V. Miller.................................................................... 2,156,677(4) 14.0%
Richard Blass..................................................................... 1,388 *
Martin D. Payson.................................................................. 12,500(5) *
Arnold B. Pollard................................................................. 2,500(6) *
Randall F. Michaels............................................................... 2,000 *
Christopher Donnelly.............................................................. 508 *
All Directors and executive officers as a group (10 persons)...................... 10,668,501 69.4%
</TABLE>
- ------------------
* Less than one percent
(1) Unless otherwise indicated, the address of each beneficial owner is c/o
Delta Financial Corporation, 1000 Woodbury Road, Woodbury, NY 11797.
(2) Includes 1,962,774 shares of Common Stock owned by a grantor retained
annuity trust, of which Mr. Sidney A. Miller is a trustee and has shared
voting and investment power.
(3) Includes (i) 4,119,451 shares of Common Stock owned by two grantor retained
annuity trusts, of which Mr. Hugh Miller is a trustee and has shared voting
and investment power; and (ii) 2,388 shares of Common Stock of which he has
sole voting and investment power for the benefit of two family members under
the Uniform Gifts for Minor's Act.
(4) Includes 2,156,677 shares of Common Stock owned by a grantor retained
annuity trust, over which Mrs. Miller is a trustee and has shared voting and
investment power.
(5) Includes 2,500 options held by Mr. Payson which are currently exercisable.
Mr. Payson's address is 750 Lexington Avenue, New York, NY 10022.
(6) Includes 2,500 options held by Dr. Pollard which are currently exercisable.
Dr. Pollard's address is c/o Chief Executive Group, 733 Third Avenue, New
York, NY 10017.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of five members and is
divided into three Classes serving staggered terms, the term of one Class of
Directors to expire each year. At the Annual Meeting, the stockholders will
elect two Class I Directors for a term of three years expiring in 2000 and until
their respective successors shall have been elected and shall have qualified.
The term of the Class II Directors expires in 1998 and the term of the Class III
Directors expires in 1999, at which times Directors of the appropriate Class
will be elected for three year terms. All the nominees are presently serving as
Directors of the Company. If no direction to the contrary is given, all proxies
received by the Board of Directors will be voted 'FOR' the election as Directors
of Richard Blass and Arnold B. Pollard. In the event that any nominee is unable
or declines to serve, the proxy solicited herewith may be voted for the election
of another person in his stead at the discretion of the proxies. The Board of
Directors knows of no reason to anticipate that this will occur.
Biographical information follows for each person nominated and each person
whose term of office will continue after the meeting. The Company was
incorporated in August 1996 for the purpose of acquiring all the outstanding
capital stock of Delta Funding Corporation, a New York corporation. References
to the Company in
2
<PAGE>
the following biographies, and in the biographies of executive officers below,
may include references to Delta Funding Corporation prior to the Company's
incorporation.
NOMINEES
Class I Directors
Richard Blass is a Senior Vice President and Treasurer of the Company and,
in March 1997, became the Chief Financial Officer. He has served in various
capacities since joining the Company in 1992. Prior thereto, Mr. Blass was a
money market and derivatives trader at Citicorp Securities Markets Inc.
Arnold B. Pollard, Ph.D. became a Director of the Company in 1996. Dr.
Pollard has been the President and Chief Executive Officer of Chief Executive
Group, which publishes Chief Executive magazine, since 1993 and, for nearly 20
years, Dr. Pollard has been President of Decision Associates. Dr. Pollard was
also a founding member of the Strategic Decision Analysis Group of SRI and
previously served as Chairman and Chief Executive Officer of Biopool
International. Dr. Pollard also serves on the Board of Director of GKN
Securities, Inc. and The Landry Service Co., Inc. and is on the advisory board
of Simply Interactive, Inc.
CONTINUING DIRECTORS
Class II Directors
Sidney A. Miller founded the Company and has been Chairman of the Board of
Directors of the Company since its inception. He was President and Chief
Executive Officer from 1982 to 1991 and has been involved in the mortgage
banking industry since 1974. He is also a chartered life insurance underwriter.
Mr. Miller is a director of the Home Equity Lenders Leadership Organization and
the National Home Equity Mortgage Association, as well as an Associate Trustee
of North Shore University Hospital.
Martin D. Payson became a Director of the Company in 1996. Mr. Payson
formerly served as Vice Chairman of Time Warner, Inc. from 1990 to 1992, and
prior to the merger of Time Inc. and Warner Communications, Inc., Mr. Payson
held the position of Office of the President and General Counsel of Warner
Communications, Inc., of which he also was a Director for 14 years. Mr. Payson
also serves on the Board of Directors of Renaissance Communications, Corp.,
Meridian Sports Incorporated, Unapix Entertainment Inc., Latin Communications
Group Inc., Ithaca Holdings Inc., and SCUUL Ltd.
Class III Director
Hugh Miller has been the President and Chief Executive Officer of the
Company since 1991. He has been associated with the Company in various
capacities since 1985 and has been primarily responsible for the day-to-day
operations of the Company since 1985.
Board and Committee Meetings
The Company has an Executive Committee, a Compensation Committee and an
Audit Committee. The Executive Committee, currently comprised of Messrs. Sidney
A. Miller, Hugh Miller and Richard Blass, is authorized and empowered, to the
extent permitted by Delaware law, to exercise all functions of the Board of
Directors in the interval between meetings of the Board of Directors. The
functions of the Audit Committee, currently comprised of Messrs. Payson and
Pollard, include recommending to the Board of Directors the engagement of the
Company's independent certified public accountants, reviewing with such
accountants the plan for and result of their auditing engagement and the
independence of such accountants. The Compensation Committee, currently
comprised of Messrs. Payson and Pollard, reviews and makes recommendations with
respect to compensation of officers and key employees and administers the
Company's stock option plan.
During the year ended December 31, 1996, after the Company's consummation
of its initial public offering, there was one meeting of the Board of Directors,
one unanimous written consent in lieu of a meeting of the Board of Directors and
no meetings of the Executive, Audit and Compensation Committees. For the period
between its incorporation in August 1996 and the date of its initial public
offering there were eight unanimous written consents in lieu of a meeting of the
Board of Directors.
3
<PAGE>
All of the Company's compensation plans and employment contracts applicable
to the executive officers were in place, and the Company had already engaged its
independent certified public accountants, prior to the creation of the Audit and
Compensation Committees on October 31, 1996. Each Director attended not less
than 75% of the meetings of the Board and not less than 75% of the meetings held
by all committees on which he served.
Each Director who is not an officer or employee of the Company is paid an
annual fee of $20,000 in addition to a fee of $1,000.00, plus expenses, for each
Board of Directors meeting attended. Each committee member, who is not an
officer or employee of the Company, is paid a fee of $1,000, plus expenses, for
each committee meeting attended. Committee fees are paid only for meetings held
on days when no Board of Directors meeting is held. Each non-employee Director
has also received a grant of 10,000 options, one-quarter of which vested
immediately upon election with an additional one quarter vesting each year
thereafter.
MANAGEMENT
Directors and Executive Officers
The Directors and Executive Officers of the Company are as follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE POSITION HELD WITH THE COMPANY
- ------------------------------------------------ --- -------- ------------------------------------------------
<S> <C> <C> <C>
Sidney A. Miller................................ 62 1996 Chairman of the Board of Directors
Hugh Miller..................................... 33 1996 President, Chief Executive Officer and
Director
Richard Blass................................... 33 1996 Senior Vice President, Chief Financial
Officer, Treasurer and Director
Martin D. Payson................................ 61 1996 Director
Arnold B. Pollard............................... 54 1996 Director
Teresa E. Ginter................................ 58 -- Senior Vice President and Secretary
Christopher Donnelly............................ 36 -- Senior Vice President
Randall F. Michaels............................. 37 -- Senior Vice President
Franklin E. Pellegrin, Jr....................... 46 -- Senior Vice President
</TABLE>
Biographical information follows for the Executive Officers named in the
above chart who are not Directors of the Company.
Teresa E. Ginter has been a Senior Vice President of the Company since 1992
and was a Vice President of the Company from 1986 to 1992. Ms. Ginter's primary
responsibilities include supervising the internal policy and procedures of loan
originations. Ms. Ginter has been with the Company since its inception and has
served in a variety of positions.
Christopher Donnelly has been a Senior Vice President of the Company since
1995 and was a Vice President of the Company from 1992 to 1995. Mr. Donnelly is
primarily responsible for supervising all aspects of credit and underwriting,
including the Broker and Correspondent Divisions and Appraisal Review. Since
joining the Company in 1987, Mr. Donnelly has served in a variety of positions,
including Assistant Manager of Originations.
Randall F. Michaels has been a Senior Vice President of the Company since
1996 and has been the National Sales Manager since he joined the Company in 1995
as a Vice President. Mr. Michaels is primarily responsible for supervising all
aspects of sales and marketing for the Company. Prior to joining Delta, Mr.
Michaels was Regional Sales Manager of Quality Mortgage/Express Funding Inc., a
mortgage finance company, for two years and, before that, Regional Sales Manager
for American Funding Group, a mortgage finance company, for six years.
Franklin E. Pellegrin, Jr. has been a Senior Vice President of the Company
since 1996 and has been the Servicing Manager since he joined the Company in
1996 as a Vice President. Prior thereto, Mr. Pellegrin served as Senior Vice
President in charge of servicing and data processing of Mid-Coast Mortgage
Company for sixteen years.
4
<PAGE>
FAMILY RELATIONSHIPS
Hugh Miller is Sidney A. Miller's son. No other family relationship exists
among any of the Directors or executive officers of the Company. No arrangement
or understanding exists between any Director or executive officer or any other
person pursuant to which any Director or executive officer was selected as a
Director or executive officer of the Company. Subject to rights under applicable
employment agreements, each executive officer serves at the pleasure of the
Board of Directors.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee took no action with respect to compensation of
the Company's executive officers during 1996. All of the Company's compensation
plans and the employment contracts applicable to the executive officers were in
place prior to November 1, 1996, when the Compensation Committee was appointed.
STOCK OPTION PLAN
The Company adopted, and the stockholders of the Company approved, the 1996
Stock Option Plan of Delta Financial Corporation, (the '1996 Plan'), on October
4, 1996.
A total of 2,200,000 shares of Common Stock were reserved for issuance
under the 1996 Plan. As of December 31, 1996, the Company has granted options to
purchase an aggregate of 466,850 shares of Common Stock to eligible recipients
under the 1996 Plan.
The purpose of the 1996 Plan is to encourage the Company's employees and
directors to acquire a larger proprietary interest in the Company and to provide
incentives to maximize the long-term growth of the Company. The Company believes
that the opportunity for acquiring such a proprietary interest will aid the
Company in securing and retaining qualified employees.
The Compensation Committee believes that equity ownership by management
helps align management and stockholder interest and enhances stockholder value.
The Compensation Committee believes that, based on the Company's performance,
granting additional equity interest to management is warranted to reward them
for past performance and encourage their future efforts. The Compensation
Committee will continue to review option-based compensation from time to time
and reward management with compensation reflective of the Company's and
management's performance.
BASE SALARY AND BONUS
Most executive officers, including the Chief Executive Officer, are
compensated pursuant to written employment agreements providing for a base
salary and bonuses. The bonus amount depends upon the Compensation Committee's
evaluation of such officer's work performance and contribution to the Company's
success. The Compensation Committee believes that a meaningful base salary and
bonus are necessary to retain and attract qualified executive personnel.
SECTION 162(m) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal revenue Code of 1986, as amended, limits the
deductibility by a publicly-held corporation of compensation paid in a taxable
year to the Chief Executive Officer and any other executive officer whose
compensation is required to be reported in the Summary Compensation Table to $1
million per executive officer. For the 1996 taxable year, the Company did not
exceed, and therefore was not affected by, this limitation.
Compensation Committee:
Martin Payson
Arnold Pollard
5
<PAGE>
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation for the past three years of
the Company's Chief Executive Officer and each of the Company's other four most
highly compensated executive officers:
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------------- ------------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION UNDERLYING OPTIONS COMPENSATION
- ----------------------------- ---- -------- ---------- ------------- ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Sidney A. Miller............. 1996 $ 53,846 $ 350,000 -- 25,000 $5,218
Chairman of the Board 1995 -- 3,000,000 -- -- 4,672
1994 624,000 150,000 -- -- 2,669
Hugh Miller.................. 1996 408,554 350,000 -- 100,000 5,218
Chief Executive Officer 1995 419,200 275,000 -- -- 4,675
1994 520,000 50,000 -- -- 2,752
Randall F. Michaels.......... 1996 120,739 143,054 -- 25,000 --
Senior Vice President 1995 32,298 7,155 -- -- --
1994 -- -- -- -- --
Richard Blass................ 1996 108,173 50,000 $ 2,038 25,000 5,218
Chief Financial Officer 1995 68,062 6,000 -- -- 2,308
1994 61,308 2,000 1,112 -- 1,182
Christopher Donnelly......... 1996 138,462 16,000 5,288 25,000 5,218
Senior Vice President 1995 91,019 9,500 488 -- 3,148
1994 68,851 4,950 747 -- 1,368
</TABLE>
- ------------------
(1) Consists of contributions by the Company to the executive officers'
respective accounts pursuant to the Delta Funding Corporation Profit-Sharing
Plan.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows all grants of options in 1996 to the executive
officers of the Company named in the Summary Compensation Table. The options
were granted under the 1996 Plan. Pursuant to the rules of the Securities and
Exchange Commission (the 'SEC'), the table also shows the value of the options
granted at the end of the option terms (seven years) if the stock price were to
appreciate annually by 5% and 10%, respectively. There is no assurance that the
stock price will appreciate at the rates shown in the table. The table also
indicates that if the stock price does not appreciate, there will be no increase
in the potential realizable value of the options granted.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
---------------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE VALUE
TOTAL AT ASSUMED ANNUAL RATES
NO. OF OPTIONS GRANTED OF STOCK PRICE APPRECIATE
SECURITIES TO EMPLOYEES IN EXERCISE FOR OPTION TERM
UNDERLYING FISCAL YEAR PRICE EXPIRATION ---------------------------
NAME OPTIONS GRANTED 1996 ($/SH) DATE 0% 5% 10%
- ---------------------------- --------------- --------------- -------- ---------- --- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Sidney A. Miller............ 25,000 5.36% $16.50 11-01-03 $-- $167,929 $ 391,346
Hugh Miller................. 100,000 21.42% $16.50 11-01-03 -- 671,716 1,565,383
Randall F. Michaels......... 25,000 5.36% $16.50 11-01-03 -- 167,929 391,346
Richard Blass............... 25,000 5.36% $16.50 11-01-03 -- 167,929 391,346
Christopher Donnelly........ 25,000 5.36% $16.50 11-01-03 -- 167,929 391,346
</TABLE>
- ------------------
(1) No stock appreciation rights were granted to executive officers in 1996.
6
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The were no options exercised by any of the executive officers of the
Company named in the Summary Compensation Table during 1996. No stock
appreciation rights ('SARs') have ever been granted to executive officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR END(#) AT FISCAL YEAR END($)
ACQUIRED ON VALUE --------------------------------- ---------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
- --------------------------- ----------- ----------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Sidney A. Miller........... 0 $ 0 0 25,000 $0 $ 37,500
Hugh Miller................ 0 0 0 100,000 0 150,000
Randall F. Michaels........ 0 0 0 25,000 0 37,500
Richard Blass.............. 0 0 0 25,000 0 37,500
Christopher Donnelly....... 0 0 0 25,000 0 37,500
</TABLE>
EMPLOYMENT AGREEMENTS
Effective October 1, 1996, the Company entered into employment agreements
with Sidney A. Miller, Hugh Miller, Christopher Donnelly and Randall F. Michaels
and on March 4, 1997, the Company entered into an employment agreement with
Richard Blass. Sidney A. Miller's and Hugh Miller's employment agreements are
for terms of five years, and Richard Blass', Christopher Donnelly's and Randall
F. Michaels' employment agreements are for terms of three years.
Under the terms of the respective employment agreements, the Company pays
Sidney A. Miller a minimum base salary of $350,000 per year, Hugh Miller a
minimum base salary of $350,000 per year, Richard Blass a minimum base salary of
$160,000 per year, Christopher Donnelly a minimum base salary of $150,000 per
year and Randall F. Michaels a minimum base salary of $125,000 per year. Each of
these officers is entitled to participate generally in the Company's employee
benefit plans, including the 1996 Plan, and is eligible for an incentive bonus
from the Company's executive bonus pool. The cash bonuses available to
Christopher Donnelly and Randall F. Michaels are made at the discretion of the
Board of Directors and are based on subjective performance criteria. Under the
terms of their employment agreements, Sidney A. Miller, Hugh Miller and Richard
Blass are eligible for cash bonuses in any one fiscal year of up to 400% of
their annual salary for Mssrs. Miller and Miller and up to 50% of his annual
salary for Richard Blass, payable on a quarterly basis 60 days after the
relevant quarter. The amount of such quarterly cash bonus is calculated under
the agreements as follows: for each 1% increase in net earnings per share for
the relevant fiscal quarter greater than 10% as measured against the
corresponding quarter in the prior fiscal year, each of Sidney A. Miller and
Hugh Miller will receive a quarterly cash bonus of 15% of his respective current
annual salary and Richard Blass will receive a quarterly cash bonus of 1.875% of
his current annual salary.
Under the terms of their respective employment agreements, Sidney A. Miller
and Hugh Miller also are granted benefits covering life insurance (Sidney A.
Miller receives coverage up to $25,000,000, and Hugh Miller receives coverage of
up to $1,000,000), medical expenses not covered by insurance (up to $100,000 per
year) and additional allowances for business related travel and entertainment
(up to $25,000 per year).
If any of these five executive officers is terminated 'for cause,' which
definition generally includes termination by the Company due to the executive's
willful failure to perform his duties under the employment agreement, the
executive's personal dishonesty, or the executive's breach of his fiduciary
duties or the employment agreement to which he is a party, then the Company is
obligated to pay the executive so terminated only his base salary up to the date
of his termination 'for cause.' However, if either Richard Blass, Christopher
Donnelly or Randall F. Michaels is terminated without cause, the Company is
obligated to pay such executive officer certain amounts set forth in the
agreement which would be paid to Mr. Blass, Mr. Donnelly or Mr. Michaels in
equal installments over the six months following any such termination without
cause. If either Sidney A. Miller or Hugh Miller is terminated without cause,
the Company is obligated to pay such executive officer his base salary, bonus
and benefits for the remaining term of his employment agreement. If either
Sidney A. Miller or Hugh Miller resigns for 'good reason,' which generally
includes the executive officer's resignation due to a breach by the Company of
his employment agreement or a change of control in the ownership of the
7
<PAGE>
Company, the Company must pay such executive officer his salary, bonus and
benefits for the remaining term of the employment agreement.
PERFORMANCE GRAPH
Set forth below is a graph comparing the total shareholder returns
(assuming reinvestment of dividends) of the Company from November 1, 1996 (the
month in which the Company's Common Stock became registered under Section 12 of
the Securities Exchange Act of 1934, as amended) through December 31, 1996, to
the Standard & Poor's 500 Composite Stock Index ('S&P 500') and the Dow Jones
Financial Services Diversified Index ('DJ Index'). The graph assumes $100
invested on November 1, 1996 in the Company and each of the other indices.
COMPARISON OF 2 MONTH CUMULATIVE RETURN *
AMONG DELTA FINANCIAL CORPORATION, S&P 500
AND D J FINANCIAL SERVICES DIVERSIFIED
NOV. 1 1996 DEC. 31 1996
----------- ------------
Delta Financial Corporation 100 109.09
S&P 500 100 105.64
DJ Financial Services
Diversified 100 107.55
* $100 INVESTED ON 11/1/96 IN STOCK OR ON 11/1/96 IN INDEX INCLUDING
REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
RELATED PARTY TRANSACTIONS
In October 1996, the Company's subsidiary, Delta Funding Corporation,
issued certain S corporation distribution notes in the amount of $23,4000,000 to
the former shareholders of Delta Funding Corporation--Sidney A. Miller, Hugh
Miller, the Sidney A. Miller Grantor Retained Annuity Trust and the Rona V.
Miller Grantor Retained Annuity Trust. Said notes were re-paid in November 1996.
A note due from Hugh Miller in the amount of $990,000 which had an interest
rate of 7.5% per annum and a maturity date in 2001 was repaid in full in June
1996.
A note due from Sidney A. Miller in the amount of $2,000,000 which had an
interest rate of 7.8% per annum was repaid in full when it matured in December
1995.
The Company previously sub-leased its Woodbury, New York office space from
Commercial Capital Corp. of New York ('Commercial Capital'), a corporation which
is wholly-owned by Rona V. Miller (Sidney A. Miller's wife). This lease was
assigned to the Company on August 2, 1996. Prior to this assignment, the Company
always paid rent to Commercial Capital in an amount equal to that which
Commercial Capital paid the landlord.
Long Island Closing Corporation, a company wholly-owned by Rona V. Miller
is hired by title abstract companies as closing agent to clear titles on
substantially all of the Company's brokered loan closings held at the
8
<PAGE>
Company's headquarters. All fees for these services are paid by the borrowers,
which amounted to $96,213 for 1995 and $126,672 for 1996.
Miller Planning Corporation, a company which is wholly-owned by Sidney A.
Miller, acts as the Company's agent in procuring the Company's group health,
disability and life insurance policies from independent insurance carriers and
receives commissions from the insurance companies on the same; which, in 1995,
totaled $29,240 and in 1996 totaled $25,455. Miller Planning Corporation
previously offered life and disability credit insurance to the Company's
borrowers for which it received commissions.
The Company pays the annual premium on a $25 million split-dollar life
insurance policy for Sidney A. Miller. The beneficiaries on the policy are
certain members of the Miller family; however, in the event of Sidney A.
Miller's demise, the Company is first reimbursed out of the proceeds of the
policy for the lesser of the cash value or all premiums it has paid during the
term of the policy.
Certain members of the Miller family guarantied two of the Company's lines
of credit with unaffiliated financial institutions in 1996. A $1 million line
was personally guaranteed by Sidney A. Miller and a $2.5 million line was
personally guaranteed, jointly and severally, by Sidney A. Miller and Hugh
Miller. In connection with the Company's initial public offering in November
1996, these personal guaranties were released.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's officers, directors and persons who own more than 10% of
a registered class of the Company's equity securities to file reports of
ownership and changes in ownership with the SEC and the New York Stock Exchange.
Officers, directors and greater than ten-percent stockholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that during 1996 all Section 16(a) filing requirements applicable to
its officers, directors and greater than ten-percent beneficial owners were
complied with except that each of the following filed their Form 3 late: the
Sidney A. Miller Grantor Retained Annuity Trust and the Rona V. Miller Grantor
Retained Annuity Trust (each such trust a ten-percent beneficial owner) and Mr.
Martin Payson (a director of the Company). Mr. Payson was traveling on October
31, 1996, the day when, in connection with the Company's initial public
offering, its Registration Statement on Form S-1 was declared effective by the
Securities and Exchange Commission. Mr. Payson filed his Form 3 immediately upon
his return. Similarly, on October 31, 1996, the trustees for each of the two
trusts cited above timely filed individual reports on Form 3 including the
respective trust holdings, however, the initial filings on Form 3 by each trust
was filed late.
THE BOARD OF DIRECTORS HAS NOMINATED RICHARD BLASS AND ARNOLD B. POLLARD AS
CLASS I DIRECTORS AND RECOMMENDS THAT THE STOCKHOLDERS VOTE TO ELECT RICHARD
BLASS AND ARNOLD B. POLLARD.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of KPMG Peat Marwick LLP as
the Company's independent certified public accountants for the year ending
December 31, 1997. Ratification of such appointment requires the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock
represented and voting in person or by proxy at the Annual Meeting or any
adjournment thereof. In the event of a negative vote on such ratification, the
Board of Directors will reconsider its selection.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Annual Meeting, at which time they will have the opportunity to make a statement
if they desire to do so and to respond to appropriate questions.
THE BOARD OF DIRECTORS HAS APPROVED THE APPOINTMENT OF KPMG PEAT MARWICK
LLP AND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
9
<PAGE>
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS FOR THE COMPANY FOR THE YEAR ENDING DECEMBER 31,
1997.
OTHER BUSINESS
As of the date of this Proxy Statement, the only business which the Board
of Directors intends to present, and knows that others will present, at the
Annual Meeting is that set forth herein. If any other matter or matters are
properly brought before the Annual Meeting or any adjournments thereof, it is
the intention of the persons named in the accompanying form of proxy to vote the
proxy on such matters in accordance with their judgment.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's 1998
Annual Meeting of Stockholders must be received by the Company on or prior to
December 31, 1997 to be eligible for inclusion in the Company's Proxy Statement
and form of Proxy to be used in connection with the 1998 Annual Meeting.
OTHER INFORMATION
The costs of solicitation of proxies will be borne by the Company.
Directors, officers and other employees of the Company may solicit proxies in
person or by telephone, without additional compensation thereof, other than
reimbursement of out-of-pocket expenses. Arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries to forward
solicitation material to the beneficial owners of the shares held of record by
such persons, and the Company will reimburse them for the reasonable
out-of-pocket expenses incurred by them in so doing.
By Order of the Board of Directors,
/s/ Teresa Ginter
Teresa Ginter
Secretary
Woodbury, New York
April 9, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996 MAY BE OBTAINED BY STOCKHOLDERS SOLICITED HEREBY, WITHOUT
CHARGE, UPON WRITTEN REQUEST SENT TO INVESTOR RELATIONS DEPARTMENT, DELTA
FINANCIAL CORPORATION, 1000 WOODBURY ROAD, WOODBURY, NEW YORK 11797.
10
<PAGE>
DELTA FUNDING CORP. 401 (k) PROFIT SHARING PLAN
CONFIDENTIAL VOTING INSTRUCTIONS
INSTRUCTIONS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS, THURSDAY, MAY 29, 1997
The undersigned hereby instructs the Trustee of the Delta Funding Corp. 401 (k)
Profit Sharing Plan (the "Plan") to vote all shares of Common Stock of Delta
Financial Corporation allocated to the undersigned's account under the Plan at
the Annual Meeting of Stockholders of said Corporation to be held at the
Huntington Hilton, 598 Broad Hollow Road, Melville, New York 11747 on May 29,
1997, at 9:00 a.m. (local time) or any adjournment thereof, in accordance with
the following instructions on the reverse side (OR, IF NO INSTRUCTIONS ARE
GIVEN, "FOR" ALL NOMINEES IN PROPOSAL NO. 1 AND "FOR" PROPOSAL NO. 2).
(CONTINUED ON REVERSE SIDE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
PLEASE MARK YOUR VOTES AS INDICATED /X/
1. ELECTION OF DIRECTORS FOR all nominees WITHHOLD
listed below (except AUTHORITY
as withheld in the to vote for all
space provided) nominees listed below
/ / / /
NOMINEES: Richard Blass and Arnold B. Pollard
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- ------------------------------------------------------------
The Board of Directors recommends a vote "FOR" all nominees.
2. Ratification of KPMG Peat FOR AGAINST ABSTAIN
Marwick LLP as the independent / / / / / /
certified public accountants of
the corporation.
The Board of Directors recommends a
vote "FOR" ratification of KPMG Peat
Marwick LLP.
The Trustee is authorized to grant
authority to management persons to
vote upon such other business as may
properly come before the meeting.
Please sign exactly as name appears hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
Signature of Shareholder(s)
--------------------------------------------------
Date: , 1997
-----------------------------
PLEASE MARK, SIGN, DATE, AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
PROXY
DELTA FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Sidney A. Miller, Hugh Miller and Teresa
Ginter, and each of them, each with full power to act without the other, and
with full power of substitution, the attorneys and proxies of the undersigned
and hereby authorizes them to represent and to vote, all the shares of Common
Stock of Delta Financial Corporation that the undersigned would be entitled to
vote, if personally present, at the Annual Meeting of Stockholders to be held
on May 29, 1997 or any adjournment thereof, upon such business as may properly
come before the meeting, including the items set forth on the reverse side.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
DELTA FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
May 29, 1997, 9:00 a.m.
Huntington Hilton
598 Broad Hollow Road
Melville, New York 11747
<PAGE>
PLEASE MARK YOUR VOTES AS INDICATED /X/
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2.
1. ELECTION OF DIRECTORS FOR all nominees WITHHOLD
listed below (except AUTHORITY
as withheld in the to vote for all
space provided) nominees listed below
/ / / /
NOMINEES: Richard Blass and Arnold B. Pollard
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- ------------------------------------------------------------
2. Ratification of KPMG Peat FOR AGAINST ABSTAIN
Marwick LLP as the independent / / / / / /
certified public accountants of
the corporation.
3. In their discretion, the Proxies
are authorized to vote upon such
other business as may properly
come before the meeting.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, 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.
Signature of Shareholder(s)
--------------------------------------------------
Date: , 1997
-----------------------------
(PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
