<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))
/ / Definitive Proxy Statement
/X/ 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 1999 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 Wednesday, May 12, 1999, 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 shares 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
may 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 12, 1999
------------------------
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 Wednesday, May 12, 1999, at
nine o'clock in the morning, local time, for the following purposes:
1. To elect one Class III Director for a term of three years and until
his successor shall have been elected and qualified ("Proposal No. 1");
2. To ratify the appointment of KPMG LLP as independent public
accountants for the Company for the fiscal year ending December 31, 1999
("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 March 24, 1999 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
March 30, 1999
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 12, 1999
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
Wednesday, May 12, 1999, at nine o'clock in the morning, local time, or any
adjournments thereof. Stockholders of record at the close of business on March
24, 1999 will be entitled to vote at the meeting.
The shares represented by the accompanying proxy will be voted (or withheld
from voting) as directed (1) with respect to the election of a Director
(Proposal No.1) or, if no direction is indicated with respect to Proposal
No. 1, will be voted in favor of the election as Director of the nominee listed
below, and (2) with respect to ratifying the appointment of KPMG 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 such
ratification. 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 voting 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.
401(k) 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.
An Annual Report to Stockholders for the year ended December 31, 1998,
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 March 24, 1999 as the record
date (the "Record Date") for purposes of determining stockholders entitled to
vote at the Annual Meeting. At the close of business on the Record Date, the
Company had outstanding 15,358,749 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 of Common
Stock held.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table provides information at March 1, 1999, with respect to
(1) any person known to the Company to be the beneficial owner of five percent
or more of the Common Stock, (2) all Directors (both continuing and nominees) of
the Company, (iii) each of the five most highly compensated executive officers
of
1
<PAGE>
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 (2).............................................................. 4,855,391 31.6%
Hugh Miller (3)................................................................... 5,557,808 36.2%
Marc E. Miller (4)................................................................ 4,028,603 26.2%
Lee L. Miller (5)................................................................. 4,019,789 26.2%
Richard Blass (6)................................................................. 21,912 0.1%
Martin D. Payson (7).............................................................. 42,500 0.3%
Arnold B. Pollard (8)............................................................. 7,500 *
Randall F. Michaels (9)........................................................... 27,425 0.2%
Christopher Donnelly (10)......................................................... 10,510 0.1%
T. Rowe Price Associates, Inc. (11)............................................... 988,300 9.2%
Wellington Management Company, LLP (12)........................................... 834,900 5.4%
All Directors and executive officers as a group (11 persons) (13)................. 10,575,236 68.9%
</TABLE>
- ------------------
* Less than one-tenth of 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 10,000 shares of Common Stock subject to currently exercisable
options or options exercisable within 60 days.
(3) Includes (1) 4,003,451 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, (2) 12,676 shares of Common Stock over which he has
sole voting and investment power for the benefit of two family members
under the Uniform Gifts for Minor's Act, and (3) 40,000 shares of Common
Stock subject to currently exercisable options or options exercisable
within 60 days.
(4) Includes (1) 4,003,451 shares of Common Stock owned by two grantor retained
annuity trusts, of which Mr. Marc Miller is a trustee and has shared voting
and investment power; (2) 8,814 shares of Common Stock over which he has
sole voting and investment power for the benefit of two family members
under the Uniform Gifts for Minor's Act, and (3) 10,000 shares of Common
Stock subject to currently exercisable options or options exercisable
within 60 days.
(5) Includes (1) 4,003,451 shares of Common Stock owned by two grantor retained
annuity trusts, of which Mr. Lee Miller is a trustee and has shared voting
and investment power and (2) 10,000 shares of Common Stock subject to
currently exercisable options or options exercisable within 60 days.
(6) Includes 20,000 shares of Common Stock subject to currently exercisable
options or options exercisable within 60 days.
(7) Includes 7,500 shares of Common Stock subject to currently exercisable
options or options exercisable within 60 days. Mr. Payson's address is 750
Lexington Avenue, New York, NY 10022.
(8) Includes 7,500 shares of Common Stock subject to currently exercisable
options or options exercisable within 60 days. Dr. Pollard's address is c/o
Chief Executive Group, 733 Third Avenue, New York, NY 10017.
(9) Includes 20,000 shares of Common Stock subject to currently exercisable
options or options exercisable within 60 days.
(10) Includes 10,000 shares of Common Stock subject to currently exercisable
options or options exercisable within 60 days.
(11) Based upon Schedule 13G filings. These securities are owned by various
individual and institutional investors which T. Rowe Price Associates, Inc.
("Price Associates") serves as investment adviser with
(Footnotes continued on next page)
2
<PAGE>
(Footnotes continued from previous page)
power to direct investments and/or sole power to vote the securities. For
purposes of the reporting requirements of the Securities Exchange Act of
1934, Price Associates is deemed to be a beneficial owner of such
securities; however, Price Associates expressly disclaims that it is, in
fact, the beneficial owner of such securities. Price Associate's address is
100 E. Pratt Street, Baltimore, MD 21202.
(12) Based upon Schedule 13G filings. For purposes of the reporting requirements
of the Securities Exchange Act of 1934, Wellington Management Company
("WMC"), in its capacity as investment advisor, may be deemed to
beneficially own these 834,900 shares, which are held of record by clients
of WMC. According to its Schedule 13G filing, WMC has shared power to
dispose or to direct the disposition of all 834,900 shares, and has shared
power to vote or direct the vote of 486,800 shares. WMC's address is 75
State Street, Boston, MA 02109.
(13) Includes 144,000 shares of Common Stock subject to currently exercisable
options or options exercisable within 60 days.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of five members divided
into three classes serving staggered terms, with the term of one class of
Directors to expire each year. At the Annual Meeting, the stockholders will
elect one Class III Director for a term of three years, expiring in 2001 and
until his successor shall have been elected and qualified. The term of the Class
I Directors expires in 2000 and the term of the Class II Directors expires in
2001, at which times Directors of such classes will be elected for three-year
terms. The nominee is presently serving as a Director 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 Director of Hugh Miller. 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 Annual Meeting. The Company was
incorporated in August 1996 to acquire all the outstanding capital stock of
Delta Funding Corporation, a New York corporation. References to the Company in
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 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.
CONTINUING DIRECTORS
Class I Directors
Richard Blass is a Senior Vice President, Chief Financial Officer and
Treasurer of the Company since 1997. He has served in various capacities since
joining the Company in 1992, including Vice President, Securitizations. 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
over 20 years, Dr. Pollard has been President of Decision Associates, a
management consulting firm specializing in organizational strategy and
structure. Dr. Pollard was also a founding member of the Strategic Decision
Analysis Group of SRI. Dr. Pollard also serves on the Board of Directors of GKN
Securities, Inc., Sonic
3
<PAGE>
Foundry, the International Management Education Foundation, and The Committee
for Economic Development, and is on the advisory board of Sequel Technology.
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 Meridian Sports Incorporated,
Panavision Inc. and Global Decisions Group, LLC. He is the Chairman of the Board
for Latin Communications Group Inc.
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 approves the compensation
of executive officers and key employees and administers the Company's stock
option plan.
During the year ended December 31, 1998, there were five meetings of the
Board of Directors, ten unanimous written consents in lieu of a meeting of the
Board of Directors, one meeting each of each of the Audit and Compensation
Committees and no meetings of the Executive Committee.
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, 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, upon their appointment to the Board, a grant of 10,000
options, one-quarter of which vested immediately upon election with an
additional one quarter vesting each year thereafter.
4
<PAGE>
MANAGEMENT
Directors and Executive Officers
The Directors and Executive Officers of the Company as of December 31, 1998
are as follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE POSITION HELD WITH THE COMPANY
- ------------------------------------------------ --- -------- ------------------------------------------------
<S> <C> <C> <C>
Sidney A. Miller................................ 64 1996 Chairman of the Board of Directors
Hugh Miller..................................... 35 1996 President, Chief Executive Officer and Director
Richard Blass................................... 35 1996 Senior Vice President, Chief Financial Officer,
Treasurer and Director
Martin D. Payson................................ 63 1996 Director
Arnold B. Pollard............................... 56 1996 Director
Teresa E. Ginter................................ 60 -- Senior Vice President and Secretary
Christopher Donnelly............................ 38 -- Senior Vice President
Randall F. Michaels............................. 39 -- Senior Vice President
Franklin E. Pellegrin, Jr....................... 48 -- Senior Vice President
Marc E Miller................................... 32 -- Senior Vice President
Lee Miller...................................... 29 -- 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, Retail 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.
Marc E. Miller has been a Senior Vice President and General Counsel of the
Company since 1998. Mr. Miller joined the Company in 1993 as an Assistant Vice
President, primarily overseeing aspects of default management and handling
certain in-house legal responsibilities. Prior to joining the Company, from 1991
to 1993, Mr. Miller was an Associate at the law firm of Winick & Rich, P.C.,
where he specialized in commercial litigation.
Lee Miller, CFA, has been a Senior Vice President of the Company since
1998, primarily responsible for Risk Management. Mr. Miller joined the Company
in 1994 as an Assistant Vice President, and his responsibilities have included
analyzing securitization structures, product development pricing and secondary
marketing. Prior to joining the Company, Mr. Miller worked at J.P. Morgan
Institutional Management trading money market securities and analyzing relative
value.
5
<PAGE>
FAMILY RELATIONSHIPS
Hugh Miller, Marc E. Miller and Lee Miller are Sidney A. Miller's sons. No
other family relationship exists among any of the Directors or executive
officers of the Company as of December 31, 1998. 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
The following report submitted by the Compensation Committee of the Board
of Directors (the "Compensation Committee"), provides information regarding
policies and practices concerning compensation of the Chief Executive Officer
and other executive officers.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Compensation Committee is responsible for setting the
compensation paid to the Chief Executive Officer and for final approval of the
compensation paid to other executive officers of the Company, approving or
disapproving the recommendations of the Chief Executive Officer as to such
compensation. The Compensation Committee, which is comprised of the two
non-employee Directors of the Company, is responsible for approving the overall
compensation plans which govern the compensation of the key executive officers,
including the Company's Chief Executive Officer. Most executive officers,
including the Chief Executive Officer, are compensated pursuant to the terms of
written employment agreements. (See "Employment Agreements"). All of the
Company's compensation plans and the employment contracts for the executive
officers were in place prior to 1998 and were not amended during 1998.
Executives are provided with a combination of one or more of the following types
of compensation: salary and annual bonus.
SALARY: All executive officers are provided with a fixed annual salary
that is reviewed on an annual basis by the Compensation Committee and the Chief
Executive Officer. Salary and increases are determined partially by comparison
to salaries for similar positions at comparable companies, the executive's
annual performance review, the value of the contributions made by the executive
and the executive's and the Company's performance in relation to goals
established at the beginning of the period. In addition to considering the above
factors when approving compensation increases, the Compensation Committee also
considers the overall financial health of the Company.
ANNUAL BONUS: The Company also attempts to motivate its executives by
providing them the opportunity to earn an annual bonus. These bonuses, if paid,
can represent a significant portion of the executive's total compensation. The
bonus amount depends upon the Compensation Committee's evaluation of such
executive's work performance and contribution to the Company's success and/or is
based upon satisfaction of certain prescribed conditions set forth in each
officer's respective employment agreement.
The Compensation Committee believes that a meaningful base salary and bonus
are necessary to retain and attract qualified executive personnel. The
Compensation Committee further believes that the compensation paid to the
Company's Chief Executive Officer and other executive officers in 1998 was fair
and appropriate.
STOCK OPTION PLAN
As of December 31, 1998, the Company has granted options to purchase an
aggregate of 795,060 shares of Common Stock to eligible recipients under the
1996 Stock Option Plan of Delta Financial Corporation (the "1996 Plan"). A total
of 2,200,000 shares of Common Stock are reserved for issuance 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
the opportunity to acquire 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
6
<PAGE>
option-based compensation from time to time and reward management with
compensation reflecting the Company's, and management's, performance.
SECTION 162(M) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), 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 1998 taxable
year, Delta did not exceed, and therefore was not affected by, this limitation.
Compensation Committee:
Martin D. Payson
Arnold B. Pollard
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(1)
- ----------------------------- ---- -------- ---------- ------------- ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Sidney A. Miller............. 1998 $356,731 $ 350,000 -- -- $4,800
Chairman of the Board...... 1997 350,000 1,265,250 -- -- --
1996 53,846 350,000 -- 25,000 5,218
Hugh Miller.................. 1998 356,731 350,000 -- -- 4,800
Chief Executive Officer 1997 350,000 1,265,250 -- -- 4,750
1996 408,554 350,000 -- 100,000 5,218
Randall F. Michaels (2)...... 1998 140,866 600,685 $ 7,933 -- $4,800
Senior Vice President 1997 125,000 426,099 7,955 25,000 4,750
1996 120,739 143,054 -- 25,000 --
Richard Blass................ 1998 216,827 130,000 8,844 -- $4,800
Chief Financial Officer 1997 173,077 141,015 6,064 25,000 4,750
1996 108,173 50,000 2,038 25,000 5,218
Christopher Donnelly......... 1998 178,365 85,000 8,173 -- $4,800
Senior Vice President...... 1997 163,462 44,537 6,735 -- 4,750
1996 138,462 16,000 5,288 25,000 5,218
</TABLE>
- ------------------
(1) Consists of matching contributions by the Company to the executive officers'
respective accounts pursuant to the Delta Funding Corporation
401(k) Profit-Sharing Plan.
(2) "Bonus" consists of commissions paid to Mr. Michaels throughout the year
based upon the Company's loan production each year.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
There were no grants of options or stock appreciation rights in 1998 to the
executive officers of the Company named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
There were no options exercised by any of the executive officers of the
Company named in the Summary Compensation Table during 1998. No stock
appreciation rights ("SARs") have ever been granted by the Company to executive
officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR END(#) AT FISCAL YEAR END($)
ACQUIRED ON VALUE --------------------------------- ---------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
- --------------------------- ----------- ----------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Sidney A. Miller........... 0 $ 0 10,000 15,000 $0 $0
Hugh Miller................ 0 0 40,000 60,000 0 0
Randall F. Michaels........ 0 0 15,000 35,000 0 0
Richard Blass.............. 0 0 15,000 35,000 0 0
Christopher Donnelly....... 0 0 10,000 15,000 0 0
</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. 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
$200,000 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 respective 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 Mr. Blass, payable on a quarterly basis within 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 of 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 terms of the employment agreement to which he is a party, then the
Company is obligated to pay the terminated executive only his base salary up to
the date of his "for cause" termination. 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
8
<PAGE>
benefits for the remaining term of his employment agreement. If either Sidney A.
Miller or Hugh Miller resigns for "good reason," which generally includes
resignation due to a breach by the Company of his employment agreement or the
occurrence of a change of control in the Company's ownership, the Company must
pay such executive officer his salary, bonus and benefits for the remaining term
of the employment agreement. However, if any of 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
respective agreements payable in equal installments over the six months
following such termination without cause.
PERFORMANCE GRAPH
Set forth below is a graph comparing the total stockholder 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, 1998, to
the Standard & Poor's 500 Composite Stock Index ("S&P 500") and certain peer
group/comparable companies ("Peer Group Companies").** The graph assumes $100
invested on November 1, 1996 in the Company, the S&P 500 Index and the Peer
Group Companies.
COMPARISON OF TWENTY SIX-MONTH CUMULATIVE RETURN *
AMONG DELTA FINANCIAL CORPORATION, S&P 500
AND PEER GROUP COMPANIES
[LINE CHART]
Company Name / Index 11/1/96 12/31/96 12/31/97 12/31/98
- -------------------- ------- -------- -------- --------
Delta Financial Corporation 100 109.09 81.06 35.99
S&P 500 Index 100 105.44 140.61 180.80
Peer Group 100 99.20 69.25 21.42
* $100 INVESTED ON 11/1/96 IN STOCK OR ON 11/1/96 IN INDEX OR PEER GROUP
COMPANIES INCLUDING REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
- ------------------
** Peer Group Companies, which were selected based primarily upon SIC number,
market value and type of business, include the following comparable
companies: Aames Financial Corp., BNC Mortgage, Inc., ContiFinancial Corp.,
First Alliance Corp., HomeGold Financial, Inc., IMC Mortgage Company, Long
Beach Financial Corp, Mego Mortgage Corp., New Century Financial Corp., Rock
Financial Corp. and Westmark Group Holdings.
9
<PAGE>
RELATED PARTY TRANSACTIONS
In October 1996, the Company's subsidiary, Delta Funding Corporation,
issued certain S corporation distribution notes in the amount of $23,400,000 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. These notes were re-paid in November
1996.
A note due to the Company 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.
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, spouse of Sidney A. Miller. This lease was
assigned to the Company on August 2, 1996. Prior to such assignment, the Company
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,
was hired by title abstract companies as closing agent to clear titles on
substantially all of the Company's brokered loan closings held at the Company's
headquarters until approximately August 1997. All fees for these services were
paid by the borrowers, which totaled approximately $84,000 in 1997 and $127,000
in 1996. All such borrowers received an Affiliated Business Arrangement
Disclosure in accordance with the provisions of the Real Estate Settlement and
Procedures Act ("RESPA"), in which they were informed of the relationship
between Long Island Closing Corporation and the Company. In or about August
1997, Long Island Closing ceased acting as closing agent for abstract companies
on the Company's brokered loan closings.
Miller Planning Corporation, a company wholly-owned by Sidney A. Miller,
acts as the Company's agent in procuring certain of the Company's group health,
disability and life insurance policies from independent insurance carriers for
which it receives commissions from the insurance companies. These commissions
totaled approximately $3,000 in 1998 and $13,000 in 1997. Miller Planning
Corporation previously offered and received commissions on life and disability
credit insurance sold to the Company's borrowers.
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, before any other payments are made 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 personally guaranteed 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 guarantees were released.
COMPLIANCE WITH SEC REPORTING REQUIREMENTS
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 1998 all Section 16(a) filing requirements applicable to
its officers, directors and greater than ten-percent beneficial owners were
complied with, except that Martin D. Payson (a director) filed one Form 4
approximately five days late, due to a clerical error.
THE BOARD OF DIRECTORS HAS NOMINATED HUGH MILLER AS CLASS III DIRECTOR AND
RECOMMENDS THAT THE STOCKHOLDERS VOTE TO ELECT HUGH MILLER.
10
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected the firm of KPMG LLP as the Company's
independent certified public accountants for the year ending December 31, 1999.
KPMG LLP has served as the Company's independent certified public accountants
since 1989. 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 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 LLP AND
RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
KPMG LLP AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE COMPANY FOR THE
YEAR ENDING DECEMBER 31, 1999.
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 1999
Annual Meeting of Stockholders must be received by the Company on or prior to
December 31, 1999 to be eligible for inclusion in the Company's Proxy Statement
and form of Proxy to be used in connection with the 2000 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,
Teresa Ginter
Secretary
Woodbury, New York
March 30, 1999
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 1998 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.
11
<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, WEDNESDAY, MAY 12, 1999
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 12,
1999, 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" THE NOMINEE IN PROPOSAL NO. 1 AND "FOR" PROPOSAL NO. 2).
(Continued on reverse side)
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
If you plan to attend Delta Financial Corporation's annual stockholder
meeting, kindly detach the bottom portion of this proxy card, and bring it with
you to the meeting. Please note that only those stockholders who bring this
proxy card with them will be admitted to the meeting.
DELTA FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
May 12, 1999, 9:00 a.m.
Huntington Hilton
598 Broad Hollow Road
Melville, New York 11747
<PAGE>
Please mark
your votes as /X/
indicated in
this example
1. ELECTION OF DIRECTORS
FOR the
nominee
listed
below WITHHOLD
(except AUTHORITY
as to vote
withheld for the
in the nominee
space listed
provided) below
/ / / /
NOMINEE: HUGH MILLER
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEE.
2. Ratification of KPMG LLP as the independent certified public accountants of
the corporation The Board of Directors recommends a vote "FOR" ratification of
KPMG LLP.
FOR AGAINST ABSTAIN
/ / / / / /
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.
Dated: , 1998
------------------------
------------------------------------
Signature(s)
------------------------------------
Signature(s)
PLEASE MARK, SIGN, DATE AND RETURN
THIS CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
[graphic] VOTE BY TELEPHONE [graphic]
QUICK * * * EASY * * * IMMEDIATE
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you marked, signed and returned your proxy card.
o You will be asked to enter a Control Number which is located in the box in the
lower right hand corner of this form.
- --------------------------------------------------------------------------------
OPTION #1: TO VOTE AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL PROPOSALS:
PRESS1.
- --------------------------------------------------------------------------------
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
- --------------------------------------------------------------------------------
OPTION #2: IF YOU CHOOSE TO VOTE ON EACH PROPOSAL SEPARATELY, PRESS 0. YOU WILL
HEAR THESE INSTRUCTIONS:
- --------------------------------------------------------------------------------
Proposal 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees,
press 9.
To withhold FOR AN INDIVIDUAL nominee, press 0 and listen to the
instructions.
Proposal 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
The instructions are the same for all remaining proposals.
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
- --------------------------------------------------------------------------------
PLEASE DO NOT RETURN THE ABOVE PROXY CARD IF VOTED BY PHONE.
- --------------------------------------------------------------------------------
CALL * * TOLL FREE * * ON A TOUCH TONE TELEPHONE
1-800-840-1208 - ANYTIME
There is NO CHARGE to you for this call.
<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 12, 1999 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 ^
If you plan to attend Delta Financial Corporation's annual stockholder
meeting, kindly detach the bottom portion of this proxy card, and bring it with
you to the meeting. Please note that only those stockholders who bring this
proxy card with them will be admitted to the meeting.
DELTA FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
May 12, 1999, 9:00 a.m.
Huntington Hilton
598 Broad Hollow Road
Melville, New York 11747
<PAGE>
Please mark
your votes as /X/
indicated in
this example
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 the
nominee
listed
below WITHHOLD
(except AUTHORITY
as to vote
withheld for the
in the nominee
space listed
provided) below
/ / / /
NOMINEE: HUGH MILLER
2. Ratification of KPMG LLP as the independent certified public accountants for
the corporation.
FOR AGAINST ABSTAIN
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 signing as attorney,
executor, administrator, trustee
or guardian, please give full title
as such.
Dated: , 1998
------------------------
------------------------------------
Signature(s)
------------------------------------
Signature(s)
PLEASE MARK, SIGN, DATE AND RETURN
THIS CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
[graphic] VOTE BY TELEPHONE [graphic]
QUICK * * * EASY * * * IMMEDIATE
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you marked, signed and returned your proxy card.
o You will be asked to enter a Control Number which is located in the box in the
lower right hand corner of this form.
- --------------------------------------------------------------------------------
OPTION #1: TO VOTE AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL PROPOSALS: PRESS
1.
- --------------------------------------------------------------------------------
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
- --------------------------------------------------------------------------------
OPTION #2: IF YOU CHOOSE TO VOTE ON EACH PROPOSAL SEPARATELY, PRESS 0. YOU WILL
HEAR THESE INSTRUCTIONS:
- --------------------------------------------------------------------------------
Proposal 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees,
press 9.
To withhold FOR AN INDIVIDUAL nominee, press 0 and listen to the
instructions.
Proposal 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
The instructions are the same for all remaining proposals.
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
- --------------------------------------------------------------------------------
PLEASE DO NOT RETURN THE ABOVE PROXY CARD IF VOTED BY PHONE.
- --------------------------------------------------------------------------------
CALL * * TOLL FREE * * ON A TOUCH TONE TELEPHONE
1-800-840-1208 - ANYTIME
There is NO CHARGE to you for this call.
