<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 2000 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 Tuesday, May 16, 2000, 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 16, 2000
------------------------
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 Tuesday, May 16, 2000, 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 LLP as independent auditors for
the Company for the fiscal year ending December 31, 2000 ("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 27, 2000 will be
entitled to notice of, and to vote at, the meeting.
By Order of the Board of Directors,
/s/ Marc E. Miller
Marc E. Miller
Secretary
Woodbury, New York
April 14, 2000
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 16, 2000
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
Tuesday, May 16, 2000, at nine o'clock in the morning, local time, or any
adjournments thereof. Stockholders of record at the close of business on
March 27, 2000 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 two 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 (2) with respect to ratifying the appointment of KPMG LLP as
independent auditors 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, 1999,
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 27, 2000 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 15,883,749 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 April 10, 2000, 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).............................................................. 4,982,471 31.4%
Hugh Miller (3)................................................................... 5,321,543 33.5%
Marc E. Miller (4)................................................................ 3,777,383 23.8%
Lee Miller (5).................................................................... 3,768,569 23.7%
Richard Blass (6)................................................................. 52,553 0.3%
Martin D. Payson (7).............................................................. 45,000 0.3%
Arnold B. Pollard (8)............................................................. 10,000 0.1%
Margaret Williams (9)............................................................. 2,500 *
Randall F. Michaels (10).......................................................... 58,073 0.4%
T. Rowe Price Associates, Inc. (11)............................................... 1,026,200 6.5%
Wellington Management Company, LLP (12)........................................... 1,053,500 6.6%
All Directors and executive officers as a group (11 persons) (13)................. 10,555,838 66.5%
</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 15,000 shares of Common Stock subject to currently exercisable
options or options exercisable within 60 days.
(3) Includes (1) 3,747,231 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) 60,000 shares of Common
Stock subject to currently exercisable options or options exercisable
within 60 days.
(4) Includes (1) 3,747,231 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) 15,000 shares of Common
Stock subject to currently exercisable options or options exercisable
within 60 days.
(5) Includes (1) 3,747,231 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) 15,000 shares of Common Stock subject to
currently exercisable options or options exercisable within 60 days.
(6) Includes 50,000 shares of Common Stock subject to currently exercisable
options or options exercisable within 60 days.
(7) Includes 10,000 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 10,000 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 2,500 shares of Common Stock subject to currently exercisable
options or options exercisable within 60 days.
(10) Includes 50,000 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 1,053,500 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 1,053,500 shares, and has
shared power to vote or direct the vote of 861,500 shares. WMC's address is
75 State Street, Boston, MA 02109.
(13) Includes 258,500 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 six 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 two Class I Directors for a term of three years, expiring in 2003 and
until their successors shall have been elected and qualified. The term of the
Class II Directors expires in 2001, and the term of the Class III Directors
expires in 2002, at which times Directors of such classes will be elected for
three-year terms. 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 Annual Meeting. The Company was
incorporated in August 1996 to acquire all of 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 I Directors
Richard Blass is an Executive Vice President of the Company and has been
the Chief Financial Officer and Treasurer since 1997, and a Director since 1996.
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
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 Foundry, the International Management Education
Foundation, and The Committee for Economic Development, and is on the advisory
board of Sequel Technology.
3
<PAGE>
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 National Home Equity Mortgage Association and 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 Panavision Inc., Global Decisions
Group, LLC and Classic Communications, Inc. He is the Chairman of the Board for
Latin Communications Group Inc.
Class III Directors
Hugh Miller has been the President and Chief Executive Officer of the
Company since 1991, and a Director since inception. 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.
Margaret Williams became a Director of the Company in April 2000. Ms.
Williams has been a communications consultant since 1997. She served as one of
seventeen assistants to the President of the United States of America, Bill
Clinton and as Chief of Staff to First Lady Hillary Rodham Clinton from 1993 to
1997. Ms. Williams was the Director of Communications for the Children's Defense
Fund, a national non-profit organization, from 1985-1990 and the Deputy Director
of Media Relations for the Center on Budget and Policy from 1983-1985.
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 auditors, reviewing with such independent auditors the
plan for and result of their auditing engagement and the independence of such
auditors. 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, 1999, there were eight meetings of the
Board of Directors, three 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 two 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, 1999
are as follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE POSITION HELD WITH THE COMPANY
- ------------------------------------------------ --- -------- ------------------------------------------------
<S> <C> <C> <C>
Sidney A. Miller................................ 65 1996 Chairman of the Board of Directors
Hugh Miller..................................... 36 1996 President, Chief Executive Officer and Director
Richard Blass................................... 36 1996 Executive Vice President, Chief Financial
Officer, Treasurer and Director
Martin D. Payson................................ 64 1996 Director
Arnold B. Pollard............................... 57 1996 Director
Margaret Williams............................... 45 2000 Director
Christopher Donnelly............................ 39 -- Executive Vice President
Randall F. Michaels............................. 40 -- Executive Vice President
Franklin E. Pellegrin, Jr....................... 49 -- Executive Vice President
Marc E Miller................................... 33 -- Senior Vice President, General Counsel and
Secretary
Lee Miller...................................... 30 -- Senior Vice President
</TABLE>
Biographical information follows for the Executive Officers named in the
above chart who are not Directors of the Company.
Christopher Donnelly is an Executive Vice President of the Company in
charge of Originations Operations and Policy. 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 Senior Vice President of Underwriting and Assistant Manager of
Originations.
Randall F. Michaels is an Executive Vice President of the Company in charge
of Sales and Marketing. Mr. Michaels has been the National Sales Manager since
he joined the Company in 1995 and remains 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. is an Executive Vice President of the Company in
charge of Servicing Operations. Mr. Pellegrin has been the Servicing Manager
since he joined the Company in 1996 and is primarily responsible for supervising
all aspects of the Company's servicing operations. Prior to joining Delta,
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, 1999. 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 three
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"). In 1999, new
employment agreements were entered into with Richard Blass, Randall F. Michaels,
Christopher Donnelly and Franklin E. Pellegrin, Jr. 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 1999 was fair
and appropriate.
STOCK OPTION PLAN
As of December 31, 1999, the Company has granted options to purchase an
aggregate of 1,162,350 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 option-
6
<PAGE>
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 1999 taxable
year, Delta did not exceed, and therefore was not affected by, this limitation.
Compensation Committee:
Martin D. Payson
Arnold B. Pollard
Margaret Williams
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 NO. OF STOCK RESTRICTED ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS STOCK COMPENSATION(1)
- ----------------------------- ---- -------- ---------- ------------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sidney A. Miller............. 1999 $350,000 $ 350,101 -- -- -- $ --
Chairman of the Board 1998 356,731 350,000 -- -- -- 4,800
1997 350,000 1,265,250 -- -- -- --
Hugh Miller.................. 1999 350,000 350,101 -- -- -- $ 4,800
Chief Executive Officer 1998 356,731 350,000 -- -- -- 4,800
1997 350,000 1,265,250 -- -- -- 4,750
Randall F. Michaels (2)...... 1999 175,000 325,524 $ 9,568 100,000 $100,000 $ 4,800
Executive Vice President 1998 140,866 600,685 7,933 -- -- 4,800
1997 125,000 426,099 7,955 25,000 -- 4,750
Richard Blass................ 1999 225,827 437,601 13,091 100,000 -- $ 4,800
Chief Financial Officer 1998 216,827 130,000 8,844 -- -- 4,800
1997 173,077 141,015 6,064 25,000 -- 4,750
Marc E. Miller............... 1999 220,468 45,101 -- -- -- $ 4,800
Senior Vice President 1998 192,308 50,015 -- -- -- 4,800
1997 154,231 50,000 -- -- -- 4,750
</TABLE>
- ------------------
(1) Consists of matching contributions by the Company to the 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
The following table shows all grants of options in 1999 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) POTENTIAL
---------------------------------------------------------- REALIZABLE VALUE
PERCENT OF AT ASSUMED ANNUAL
TOTAL OPTIONS RATES OF STOCK
NUMBER OF GRANTED TO PRICE APPRECIATION
SECURITIES EMPLOYEES IN EXERCISE FOR OPTION TERM
UNDERLYING FISCAL YEAR PRICE EXPIRATION ------------------
NAME OPTIONS GRANTED 1999 ($/SH) DATE 5% 10%
- ------------------------------------- --------------- ------------- -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Randall F. Michaels.................. 100,000 20.2% $5.875 1/1/06 $29,375 $58,750
Richard Blass........................ 100,000 20.2% 5.875 1/1/06 29,375 58,750
</TABLE>
- ------------------
(1) No stock appreciation rights were granted to executive officers in 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
There were no options exercised by any of the executive officers of the
Company named in the Summary Compensation Table during 1999. No stock
appreciation rights ("SARs") have ever been granted by the Company to executive
officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR END(#) AT FISCAL YEAR END($)
ACQUIRED ON VALUE --------------------------------- ---------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
- --------------------------- ----------- ----------- -------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Sidney A. Miller........... 0 $ 0 15,000 15,000 $0 $0
Hugh Miller................ 0 0 60,000 60,000 0 0
Randall F. Michaels........ 0 0 50,000 35,000 0 0
Richard Blass.............. 0 0 50,000 35,000 0 0
Marc E. Miller............. 0 0 15,000 15,000 0 0
</TABLE>
EMPLOYMENT AGREEMENTS
Each of the Chairman of the Board of Directors, the Chief Executive Officer
and all Executive Vice Presidents have employment Agreements with the Company,
as follows:
<TABLE>
<CAPTION>
NAME POSITION DATE OF AGREEMENT TERM
- ---------------------------------------- -------------------------------- ------------------- -------
<S> <C> <C> <C>
Sidney A. Miller........................ Chairman of the Board October 1, 1996 5 years
Hugh Miller............................. President and CEO October 1, 1996 5 years
Richard Blass........................... Executive VP, CFO and Treasurer July 1, 1999 5 years
Randall F. Michaels..................... Executive VP July 15, 1999 5 years
Christopher Donnelly.................... Executive VP July 9, 1999 5 years
Franklin E. Pellegrin, Jr............... Executive VP July 23, 1999 3 years
</TABLE>
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
$250,000 per year, Christopher Donnelly a minimum base salary of $200,000 per
year, Randall F. Michaels a minimum base salary of $175,000 per year and
Franklin E. Pellegrin, Jr. a minimum base salary of $175,000 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 to receive an incentive
bonus from the Company's
8
<PAGE>
executive bonus pool. The cash bonuses available to Christopher Donnelly,
Randall F. Michaels and Franklin E. Pellegrin, Jr. 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. Mr. Blass is also entitled to a minimum annual bonus
for each fiscal year ending December 31, 1999 and 2000 in the amount of $300,000
per year.
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 six 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 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.
Each of Mr. Blass, Mr. Michaels, Mr. Donnelly and Mr. Pellegrin received
"sign-up" bonuses in consideration for entering into employment agreements as
follows: Mr. Blass received a cash bonus of $400,000, Mr. Michaels received
restricted stock totaling $100,000, Mr. Donnelly received a cash bonus of
$25,000 and restricted stock totaling $50,000, and Mr. Pellegrin received a cash
bonus of $15,000 and restricted Company stock totaling $50,000.
9
<PAGE>
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, 1999, 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 THIRTY EIGHT-MONTH CUMULATIVE RETURN*
AMONG DELTA FINANCIAL CORPORATION, S&P 500
AND PEER GROUP COMPANIES
[LINE CHART APPEARS HERE]
<TABLE>
Company Name / Index 11/1/96 12/31/96 12/31/97 12/31/98 12/31/99
- -------------------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Delta Financial Corporation 100 109.09 81.06 35.99 25
S&P 500 Index 100 105.44 140.61 180.8 218.84
Peer Group 100 101.21 70.53 22.05 10.28
</TABLE>
* $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., Altiva Financial Corp., BNC Mortgage, Inc.,
ContiFinancial Corp., First Alliance Corp., HomeGold Financial, Inc., New
Century Financial Corp. and Westmark Group Holdings.
RELATED PARTY TRANSACTIONS
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.
10
<PAGE>
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.
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 AUDITORS
The Board of Directors has selected the firm of KPMG LLP as the Company's
independent auditors for the year ending December 31, 2000. KPMG LLP has served
as the Company's independent auditors 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 AUDITORS FOR THE COMPANY FOR THE YEAR ENDING
DECEMBER 31, 2000.
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 2000
Annual Meeting of Stockholders must be received by the Company on or prior to
December 31, 2000 to be eligible for inclusion in the Company's Proxy Statement
and form of Proxy to be used in connection with the 2001 Annual Meeting.
11
<PAGE>
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,
Marc E. Miller
Secretary
Woodbury, New York
April 14 , 2000
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1999 MAY BE OBTAINED BY STOCKHOLDERS SOLICITED HEREBY, WITHOUT
CHARGE, UPON WRITTEN REQUEST SENT TO THE INVESTOR RELATIONS DEPARTMENT, DELTA
FINANCIAL CORPORATION, 1000 WOODBURY ROAD, WOODBURY, NEW YORK 11797.
12
<PAGE>
Please mark
your votes as /X/
indicated in
this example
1. ELECTION OF DIRECTORS. FOR the nominees WITHHOLD
listed below (except as AUTHORITY
withheld in the space to vote for the nominees
provided) listed below
/ / / /
NOMINEES: 01 Richard Blass, 02 Arnold B. Pollard
The Board of Directors recommends a vote "FOR" the nominees.
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE HIS NAME ON THIS LINE:
- ------------------------------------------------------------------------------
2. Ratification of KPMG LLP as the independent auditors of the corporation
The Board of Directors recommends a vote "FOR" ratification of KPMG LLP
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 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.
Dated:________________________, 2000
- ---------------------------------
Signature(s)
- ---------------------------------
Signature(s)
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
[telephone YOUR VOTE IS IMPORTANT! [computer
graphic] graphic]
YOU CAN VOTE IN ONE OF THREE WAYS:
------------------------------------------------------------------------
VOTE BY INTERNET
24 hours a day, 7 days a week
Follow the instructions at our Internet Address: http://www.eproxy.com/DFC
------------------------------------------------------------------------
or
------------------------------------------------------------------------
VOTE BY PHONE
HAVE YOUR PROXY CARD IN HAND.
Call toll-free 1-800-840-1208 on a touch tone telephone
24 hours a day, 7 days a week.
There is NO CHARGE to you for this call.
You will be asked to enter your 11-digit Control Number, which is located in
the box in the lower right hand corner of this
form. Follow the recorded instructions.
------------------------------------------------------------------------
or
------------------------------------------------------------------------
VOTE BY PROXY CARD
Mark, sign and date your proxy card and return promptly
in the enclosed envelope.
------------------------------------------------------------------------
------------------------------------------------------------------------
If you wish to access future Annual Reports and Proxy Statements
electronically via the Internet and no longer
receive the printed materials, please provide your consent with your proxy vote.
------------------------------------------------------------------------
NOTE: If you voted by Internet or telephone, THERE IS NO NEED
TO MAIL BACK your proxy card.
THANK YOU FOR VOTING.
<PAGE>
PROXY
DELTA FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Sidney A. Miller and Hugh Miller, 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 16, 2000 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 and sign, on the other side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
If you plan to attend Delta Financial Corporation's annual stockholder
meeting, kindly detach the bottom of this 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 16, 2000, 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 nominees WITHHOLD
listed below (except as AUTHORITY
withheld in the space to vote for the nominees
provided) listed below
/ / / /
NOMINEES: 01 Richard Blass, 02 Arnold B. Pollard
The Board of Directors recommends a vote "FOR" the nominees.
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE HIS NAME ON THIS LINE:
- ------------------------------------------------------------------------------
2. Ratification of KPMG LLP as the independent auditors of the corporation
The Board of Directors recommends a vote "FOR" ratification of KPMG LLP
FOR AGAINST ABSTAIN
/ / / / / /
3. 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 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.
Dated:________________________, 2000
- ---------------------------------
Signature(s)
- ---------------------------------
Signature(s)
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
[telephone YOUR VOTE IS IMPORTANT! [computer
graphic] graphic]
YOU CAN VOTE IN ONE OF THREE WAYS:
------------------------------------------------------------------------
VOTE BY INTERNET
24 hours a day, 7 days a week
Follow the instructions at our Internet Address: http://www.eproxy.com/DFC
------------------------------------------------------------------------
or
------------------------------------------------------------------------
VOTE BY PHONE
HAVE YOUR PROXY CARD IN HAND.
Call toll-free 1-800-840-1208 on a touch tone telephone
24 hours a day, 7 days a week.
There is NO CHARGE to you for this call.
You will be asked to enter your 11-digit Control Number, which is located in
the box in the lower right hand corner of this
form. Follow the recorded instructions.
------------------------------------------------------------------------
or
------------------------------------------------------------------------
VOTE BY PROXY CARD
Mark, sign and date your proxy card and return promptly
in the enclosed envelope.
------------------------------------------------------------------------
------------------------------------------------------------------------
If you wish to access future Annual Reports and Proxy Statements
electronically via the Internet and no longer
receive the printed materials, please provide your consent with your proxy vote.
------------------------------------------------------------------------
NOTE: If you voted by Internet or telephone, THERE IS NO NEED
TO MAIL BACK your proxy card.
THANK YOU FOR VOTING.
<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, Tuesday, May 16, 2000
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 16,
2000, 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 nominees 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 of this 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 16, 2000, 9:00 a.m.
Huntington Hilton
598 Broad Hollow Road
Melville, New York 11747
