<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:
[X] Preliminary Proxy Statement
[_] Confidential, For Use of the Commission Only (as Permitted by Rule
14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 14a-11(c) or Rule 240.14a-12
PROVIDIAN 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 14a6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
Providian Financial Corporation [LOGO OF PROVIDIAN FINANCIAL
201 Mission Street APPEARS HERE]
San Francisco, CA 94105
(415) 543-0404
March 31, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Providian Financial Corporation to be held at 10:30 a.m., Pacific time, on
Tuesday, May 11, 1999, in the Phyllis Wattis Theater, San Francisco Museum of
Modern Art, 151 Third Street, San Francisco, California. Your Board of
Directors and management look forward to personally greeting those
stockholders able to attend.
This year you are being asked to consider and vote on the election of three
directors, the approval of an amendment to the Company's Certificate of
Incorporation increasing the number of authorized shares of common stock, and
the ratification of the appointment of independent auditors. These matters are
discussed in greater detail in the accompanying Notice of Annual Meeting of
Stockholders and Proxy Statement.
Your Board of Directors unanimously believes that the three items proposed
by the Board are in the best interests of the Company and its stockholders
and, accordingly, recommends a vote FOR each of the proposals.
Regardless of the number of shares you own or whether you plan to attend, it
is important that your shares are represented and voted at the meeting. You
are requested to sign, date and mail the enclosed proxy promptly.
If you have any questions or comments about matters discussed in the Proxy
Statement, we'd be happy to hear from you. Please call our Investor Relations
Department at (415) 278-6170.
We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ SHAILESH J. MEHTA
- --------------------------------
Shailesh J. Mehta
Chairman, President and Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Holders of Common Stock
of Providian Financial Corporation:
The Annual Meeting of Stockholders of Providian Financial Corporation (the
"Company") will be held at 10:30 a.m., Pacific time, on Tuesday, May 11, 1999,
in the Phyllis Wattis Theater, San Francisco Museum of Modern Art, 151 Third
Street, San Francisco, California, for the following purposes:
(1) To elect three directors to serve until the 2002 Annual Meeting of
Stockholders or until their earlier retirement, resignation or removal;
(2) To approve an amendment to the Company's Certificate of Incorporation
increasing the number of authorized shares of the Company's common
stock;
(3) To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for 1999; and
(4) To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 12, 1999 as
the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting. The Proxy Statement and form of proxy for
the Annual Meeting are first being mailed to stockholders with and on the date
of this notice.
A list of stockholders entitled to vote at the Annual Meeting will be
available for inspection for a period of ten days prior to the meeting at the
Company's offices located at 201 Mission Street, San Francisco, California.
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1998 is enclosed. The Annual Report contains financial and other
information about the activities of the Company, but it is not to be deemed a
part of the proxy soliciting materials.
By Order of the Board of Directors
Ellen Richey
Executive Vice President, General Counsel and Secretary
Providian Financial Corporation
San Francisco, California
March 31, 1999
<PAGE>
PROVIDIAN FINANCIAL CORPORATION
201 MISSION STREET
SAN FRANCISCO, CALIFORNIA 94105
PROXY STATEMENT
General Information
The Board of Directors of Providian Financial Corporation (the "Company") is
soliciting proxies to be voted at the Annual Meeting of Stockholders (the
"Annual Meeting") to be held at 10:30 a.m., Pacific time, on Tuesday, May 11,
1999, in the Phyllis Wattis Theater, San Francisco Museum of Modern Art, 151
Third Street, San Francisco, California, and at any adjournment or
postponement thereof. The Company is first sending this Proxy Statement and
accompanying proxy to stockholders on or about March 31, 1999.
Common stock share numbers and prices included in this Proxy Statement have
been adjusted to reflect the three-for-two stock split of the Company's common
stock in the form of a stock dividend on December 15, 1998 to stockholders of
record on December 1, 1998.
Voting Rights and Proxies
The Board of Directors has fixed the close of business on March 12, 1999
(the "Record Date") as the record date for determining stockholders entitled
to receive notice of, and to vote at, the Annual Meeting. On the Record Date,
there were 141,850,031 shares of the Company's common stock, par value $.01
per share (the "Common Stock"), outstanding. For each share of Common Stock
held on the Record Date, a stockholder is entitled to one vote on each matter
to be voted on at the Annual Meeting.
Each share of Common Stock represented at the Annual Meeting by a properly
executed proxy will be voted according to the instructions indicated on the
proxy. IF NO INSTRUCTIONS ARE INDICATED, SUCH SHARES OF COMMON STOCK WILL BE
VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR, FOR THE APPROVAL OF THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION, AND FOR THE
RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS. A
stockholder may revoke a proxy by giving written notice of revocation to the
Secretary of the Company or submitting a later-dated proxy at any time before
the voting, or by voting in person at the Annual Meeting.
Quorum and Votes Required
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspector of election appointed for the Annual Meeting, who will also
determine whether or not a quorum is present. A majority of the outstanding
shares of the Common Stock present in person or by proxy will constitute a
quorum for the transaction of business at the Annual Meeting. The inspector of
election will treat abstentions and broker nonvotes as shares that are present
and entitled to vote for purposes of determining the presence of a quorum.
Broker nonvotes include any shares held in a street name for which the broker
or nominee receives no instructions from the beneficial owner, and as to which
such broker or nominee does not have discretionary voting authority under
applicable New York Stock Exchange rules.
Election of directors requires a plurality of the votes of the shares
present in person or represented by proxy at the Annual Meeting and entitled
to vote on the election of directors. Abstentions and broker nonvotes with
respect to the election of one or more nominees for director will not be
counted in determining the votes cast and will have no effect on the vote.
Approval of the proposal to amend the Company's Certificate of Incorporation
requires the affirmative vote of a majority of the outstanding shares of
Common Stock. Abstentions and broker nonvotes will have the effect of a vote
against such proposal. Approval of all other matters submitted
1
<PAGE>
to a vote of the stockholders at the Annual Meeting requires the affirmative
vote of a majority of shares present in person or by proxy at the Annual
Meeting and entitled to vote on such matters. Abstentions will have the effect
of a vote against such matters. Broker nonvotes will not be considered as
present and entitled to vote with respect to such matters, and accordingly
will have no effect with respect to such matters.
Proxy Solicitation
The Company will bear the expense of soliciting proxies. Following the
original mailing of the proxies and soliciting materials, employees of the
Company may solicit proxies by mail, telephone, facsimile or directly in
person. Company employees do not receive additional compensation for
soliciting proxies. The Company will request brokers, custodians, nominees and
other record holders to forward copies of the proxies and soliciting materials
to persons for whom they hold shares of Common Stock and to request authority
for the exercise of proxies; in such cases, the Company will reimburse such
holders for their reasonable expenses. The Company has retained Corporate
Investor Communications, Inc. to help solicit proxies on behalf of the Company
for a fee of $4,500 plus reasonable out-of-pocket costs and expenses.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table sets forth information regarding ownership of the
outstanding shares of Common Stock by any entity or person known by the
Company to be the beneficial owner of more than 5% of the outstanding shares
of Common Stock, and is based on Schedule 13G filings made by such entities or
persons reporting shares beneficially owned as of December 31, 1998:
<TABLE>
<CAPTION>
Name and Address of Beneficial Amount and Nature of Percent of
Owner Beneficial Ownership Common Stock Owned (1)
------------------------------ -------------------- ----------------------
<S> <C> <C>
FMR Corp.; Edward C. Johnson 3d;
Abigail P. Johnson; and
Fidelity Management & Research
Company(2)
82 Devonshire Street
Boston, MA 02109................. 12,135,804(3) 8.56%
Morgan Stanley Dean Witter &
Co.(4)
1585 Broadway
New York, NY 10036............... 7,687,439(5) 5.42%
</TABLE>
- --------
(1) All percentage calculations are based on the number of shares of Common
Stock issued and outstanding on March 12, 1999, which was 141,850,031.
(2) According to a Schedule 13G/A filed with the Securities and Exchange
Commission on February 16, 1999.
(3) FMR Corp. reports sole voting power with respect to 931,917 shares and
sole dispositive power with respect to 12,135,804 shares. Each of Edward
C. Johnson 3d and Abigail P. Johnson reports sole dispositive power with
respect to 12,135,804 shares. Fidelity Management & Research Company
("Fidelity"), a wholly owned subsidiary of FMR Corp. and an investment
adviser registered under Section 203 of the Investment Advisers Act of
1940, is the beneficial owner of 10,958,187 shares, or 7.73%, of the
Common Stock as a result of
(footnotes continued on next page)
2
<PAGE>
acting as an investment adviser to various investment companies registered
under Section 8 of the Investment Company Act of 1940. FMR Corp. (through
its control of Fidelity), Edward C. Johnson 3d and Fidelity Funds each has
sole power to dispose of the 10,958,187 shares owned by Fidelity Funds.
(4) According to a Schedule 13G filed with the Securities and Exchange
Commission on February 2, 1999.
(5) Morgan Stanley Dean Witter & Co. reports shared voting power with respect
to 7,661,874 shares and shared dispositive power with respect to 7,687,439
shares.
Security Ownership of Management
The number of shares of Common Stock beneficially owned by each director and
nominee and each executive officer named in the Summary Compensation Table in
this Proxy Statement, and by all directors, nominees and executive officers as
a group, as of March 12, 1999, is shown in the following table. For purposes
of this disclosure, shares are considered to be "beneficially" owned if the
person has or shares the power to vote or direct the voting of shares, the
power to dispose of or direct the disposition of the shares, or the right to
acquire beneficial ownership (as so defined) through May 11, 1999. Subject to
applicable community property laws and shared voting or investment power with
a spouse, each individual has sole investment and voting power with respect to
the shares set forth in the table that follows unless otherwise noted.
<TABLE>
<CAPTION>
Percent of
Name of Director, Nominee or Amount and Nature of Common Stock
Executive Officer Beneficial Ownership (1)(2)(3) Owned
- ---------------------------- ------------------------------ ------------
<S> <C> <C>
Shailesh J. Mehta.................. 1,997,741(4) 1.41%
Christina L. Darwall............... 6,231(5) *
James V. Elliott................... 34,450(6) *
Lyle Everingham.................... 27,143(7) *
J. David Grissom................... 123,258(8) *
F. Warren McFarlan................. 22,327(9) *
Ruth M. Owades..................... 8,931(10) *
Larry D. Thompson.................. 20,730 *
John L. Weinberg................... 90,351 *
David Alvarez...................... 164,805 *
Seth A. Barad...................... 187,975 *
Ellen Richey....................... 90,733 *
David B. Smith(11)................. 530,331 *
All directors, nominees and
executive officers as a group
(14 persons)...................... 3,420,520 2.41%
</TABLE>
- --------
* Less than 1%.
(1) Includes the following restricted shares granted under the Company's
Stock Ownership Plan: Mr. Mehta, 233,644 shares; Ms. Darwall, 310 shares;
Mr. Elliott, 2,131 shares; Mr. Everingham, 1,805 shares; Mr. Grissom,
1,817 shares; Dr. McFarlan, 1,843 shares; Ms. Owades, 310 shares; Mr.
Thompson, 1,843 shares; Mr. Weinberg, 1,805 shares; Mr. Alvarez, 32,140
shares; Mr. Barad, 40,653 shares; Ms. Richey, 19,761 shares; and Mr.
Smith, 6,097 shares.
(2) Includes the following shares subject to options granted under the
Company's 1997 Stock Option Plan which are now exercisable or are
exercisable through May 11, 1999: Mr. Mehta, 1,432,259 shares;
Ms. Darwall, 5,000 shares; Mr. Elliott, 8,750 shares; Mr. Everingham,
8,750 shares; Mr. Grissom, 8,750 shares; Dr. McFarlan, 8,750 shares; Ms.
Owades, 5,000 shares; Mr. Thompson, 8,750 shares; Mr. Weinberg,
8,750 shares; Mr. Alvarez, 116,311 shares; Mr. Barad, 136,549 shares; Ms.
Richey, 59,078 shares; and Mr. Smith, 481,745 shares.
(footnotes continued on next page)
3
<PAGE>
(3) Includes the following shares held in an account under the Company's
401(k) Plan as of December 31, 1998 (the latest Plan statement date),
over which limited investment power is held: Mr. Mehta, 1,934 shares;
Mr. Elliott, 51 shares; Mr. Alvarez, 2,598 shares; Mr. Barad, 1,313
shares; Ms. Richey, 1,469 shares; and Mr. Smith, 2,509 shares.
(4) Includes 563,548 shares held in trust, as to which Mr. Mehta shares
voting and investment power.
(5) Includes 300 shares held in trust, as to which Ms. Darwall shares voting
and investment power.
(6) Includes 294 shares held in an individual retirement account.
(7) Includes 9,981 shares held in trust.
(8) Includes 6,750 shares owned by Mr. Grissom's spouse, as to which Mr.
Grissom disclaims beneficial ownership.
(9) Includes 900 shares owned by Dr. McFarlan's spouse, as to which Dr.
McFarlan disclaims beneficial ownership.
(10) Includes 1,500 shares held in the name of Ms. Owades' spouse, as to which
Ms. Owades shares voting and investment power.
(11) Mr. Smith was an Executive Vice President of the Company until his
resignation on March 12, 1999, when he ceased to be an executive officer
of the Company. The ownership information above with respect to Mr. Smith
reflects his share ownership after giving effect to such resignation.
The Company's Human Resources Committee has established stock ownership
guidelines for the Company's directors and senior management. The guidelines
set certain stock ownership levels for directors and senior management to
further align their interests with stockholders. The stock ownership levels
provided by the guidelines are five times annual retainer for non-employee
directors; two, three or five times base salary for senior management,
depending on the office held; and ten times base salary for the Chief
Executive Officer. Restricted stock, vested stock options and stock held in
the Company's 401(k) Plan may be used to satisfy the guidelines. Directors and
senior management have a period of four years from the later of the
introduction of the guidelines in 1997 or their election or appointment to
meet the targeted stock ownership levels. Twenty-four of the 27 directors and
senior officers subject to these stock ownership guidelines (excluding senior
officers who became subject to the guidelines in December 1998 and thus have
until December 2002 to meet the guidelines) have already met the guidelines.
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for the classification
of the Board of Directors into three classes, with each class of directors
serving staggered three-year terms (or a shorter term if a director is filling
a vacancy). Three directors are to be elected at the 1999 Annual Meeting to
serve for a term of three years expiring in 2002. All nominees have consented
to be named and to serve if elected. The Company does not presently know of
any reason that would preclude any nominee from serving if elected. If any
nominee, for any reason, should become unable or unwilling to stand for
election as a director, either the shares of Common Stock represented by all
proxies authorizing votes for such nominee will be voted for the election of
such other person as the Board of Directors may recommend, or, if the Board of
Directors so determines, the number of directors to be elected at the Annual
Meeting will be reduced accordingly. Of the nominees, each of Christina L.
Darwall and Ruth M. Owades was appointed to fill a vacancy on the Board of
Directors effective April 1, 1998, and Mr. Weinberg was appointed as an
advisory member of the Board of Directors effective June 10, 1997 and became a
voting member effective October 30, 1997.
In addition to the three nominees, six directors have terms that continue
after the Annual Meeting. John M. Cranor III resigned as a director effective
July 1, 1998. The following information, which is based on information
provided to the Company by the nominees and current directors, sets forth
their age, length of service as a director of the Company, positions and
offices with the Company, principal occupations during the past five years and
other directorships of publicly held companies:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES NAMED IN THIS
PROPOSAL.
4
<PAGE>
Nominees for Election at the Annual Meeting:
Christina L. Darwall, 50
Director since 1998.
Executive Director, Harvard Business School California Research Center,
from 1997 to present. Chairman and Co-founder of ViewStar Corporation, a
software company, from 1986 to 1990, and member of the Board of Directors
and consultant to ViewStar Corporation from 1991 to 1996; member of the
Board of Directors, Harvard Business School Publishing Corporation, from
1995 to present.
Ruth M. Owades, 50
Director since 1998.
President and Chief Executive Officer, Calyx & Corolla, a fresh flower
catalog company, from 1988 to present.
Other directorships: DM Management Co.
John L. Weinberg, 74
Director since 1997.
Senior Chairman and limited partner, Goldman, Sachs & Co.,(/1/) an
investment bank and financial advisory firm, from November 1990 to present;
Senior Partner, The Goldman Sachs Group, L.P. and its principal affiliate,
Goldman, Sachs & Co., until November 1990.
Other directorships: Knight Ridder, Inc. and Tricon Global Restaurants,
Inc.
Directors Continuing in Office Whose Terms Expire in 2000 are:
Shailesh J. Mehta, 49
Director since 1988.
Chief Executive Officer of the Company from 1988 to present and Chairman of
the Board and President of the Company from June 1997 to present. President
and Chief Operating Officer of Providian Corporation, the former parent of
the Company, from 1994 to June 1997. Executive Vice President of Providian
Corporation, and Chairman and Chief Executive Officer of Providian Direct
Insurance, a division of Providian Corporation, from 1993 to 1994.
Other directorships: Hanover Direct, Inc. and MasterCard International
Incorporated, U.S. Region.
F. Warren McFarlan, D.B.A., 61
Director since 1997.
Professor of Business Administration, Harvard Business School, from 1973 to
present; Senior Associate Dean, Harvard Business School, from 1991 to
present; Director of External Affairs, Harvard Business School, from 1995
to present; member of the Harvard University faculty from 1964 to present.
Other directorships: Pioneer Hi-Bred International, Inc. and Computer
Sciences Corporation.
Larry D. Thompson, 53
Director since 1997.
Partner, King & Spalding,(/2/) a law partnership, from 1986 to present.
- --------
(/1/) Goldman, Sachs & Co. performed investment banking and financial advisory
services for the Company during 1998. In the future, Goldman, Sachs & Co.
may be called on to provide similar services to the Company.
(/2/) The Company retained King & Spalding during 1998 to perform certain legal
services. In the future, King & Spalding may be called on to provide
similar services to the Company.
5
<PAGE>
Directors Continuing in Office Whose Terms Expire in 2001 are:
James V. Elliott, 55
Director since 1995.
Executive Vice President of the Company from October 1998 to present.
Attorney at Law in private practice from 1997 to October 1998. Senior Vice
President and General Counsel of Providian Corporation from 1994 to 1997.
General Counsel of the Company from 1989 to 1994; Senior Vice President of
the Company from 1993 to 1994.
Lyle Everingham, 72
Director since 1997.
Retired Chairman and Chief Executive Officer, The Kroger Co., a food and
drug retailer and manufacturer.
J. David Grissom, 60
Director since 1997.
Chairman, Mayfair Capital, a private investment company, from 1989 to
present.
Other directorships: Churchill Downs, Incorporated and LG&E Energy Corp.
Committees of the Board
The Board has several committees which perform various functions, including
those described below.
The Audit Committee supervises and reviews the Company's risk management and
internal controls programs, makes recommendations to the Board of Directors as
to the appointment of independent auditors, and confers with independent
auditors and internal auditors regarding the scope of proposed audits and
audit findings, reports and recommendations. In addition, the Committee
reviews reports of material actual or threatened litigation, significant
changes in accounting practice, the status of tax audits and appeals and
annual or operating results which differ significantly from publicly available
forecasts. The members of the Audit Committee are currently Messrs. Thompson
(Chair) and Grissom and Ms. Darwall. The Audit Committee met four times during
1998.
The Human Resources Committee reviews and approves the compensation and
benefits policies and practices of the Company, except that approval of the
salary and bonus of the Chief Executive Officer must also be approved by the
full Board of Directors. The Human Resources Committee recommends to the Board
nominations for directors and the Chief Executive Officer of the Company and
is responsible for the appointment of other officers. The Committee also
reviews matters related to management succession. In addition, the Committee
administers certain employee benefit plans. The members of the Human Resources
Committee are currently Dr. McFarlan (Chair) and Messrs. Everingham and
Weinberg. The Human Resources Committee met six times during 1998.
The Asset Liability Committee reviews the Company's capital adequacy,
funding, investment, securitization, liquidity, and interest rate and credit
risk management strategies and policies, periodically monitors management's
activities and key measurements in these areas, and makes recommendations to
the Board of Directors concerning proposed activities and programs. The
members of the Asset Liability Committee are currently Messrs. Grissom
(Chair), Mehta and Weinberg, Dr. McFarlan and Ms. Owades. The Asset Liability
Committee met twice during 1998.
Directors' Meetings
During 1998, the Company's Board of Directors held seven meetings. Each
director attended at least 75 percent of the aggregate number of meetings of
the Board and of applicable committees of the Board held during the period
that he or she served as a member of the Board or such committees.
6
<PAGE>
Directors' Compensation
Directors who also are officers of the Company receive no additional
compensation for serving on the Company's Board of Directors. All other
directors are paid an annual retainer of $54,000 and an additional $2,000
annually for serving as a committee chair. Under the Company's Stock Ownership
Plan, directors may elect to receive 25% or more of their total annual
retainer in unrestricted Common Stock, and directors who elect to receive all
or a portion of their retainer in unrestricted Common Stock receive an
additional award in restricted Common Stock equal to 25% of their total annual
retainer. One-half of such restricted stock vests after three years, and the
balance vests after six years; however, if a director disposes of unrestricted
retainer shares before the vesting of the restricted stock awarded in
connection with such unrestricted shares, the director will forfeit all or a
portion of such restricted shares. In addition, in 1998, Ms. Darwall and Ms.
Owades each received options to purchase 15,000 shares of Common Stock, and
the other non-employee directors each received options to purchase 11,250
shares of Common Stock, which, in each case, vest in equal annual amounts over
a three-year period. The Company's directors also are reimbursed for necessary
and reasonable expenses incurred in the performance of their duties as
directors.
Executive Compensation and Other Information
The following table presents for the last three fiscal years information
with regard to compensation for services rendered in all capacities to the
Company by the Chief Executive Officer and the four other most highly
compensated executive officers of the Company (collectively, the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
-------------------------------- -------------------------------
Awards Payouts
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Compensation Award(s)($) Options Payouts Compensation
Name and Principal Position Year Salary($) Bonus($) ($)(1) (2)(3)(4)(5) (#)(6) ($)(7) ($)(8)(9)(10)
- --------------------------- ---- --------- --------- ------------ ------------ ---------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shailesh J. Mehta............. 1998 825,000 1,181,321 317,758 3,683,366 600,000 -- 565,702(11)
Chairman, President and CEO 1997 771,056 1,125,013 170,136 5,832,263 1,829,541 -- 133,164
1996 629,327 844,900 28,953 256,647 144,019 181,968 20,318
Seth A. Barad................. 1998 318,750 300,054 719 675,102 97,500 -- 10,839
Executive Vice President 1997 284,522 270,032 -- 928,176 75,000 -- 20,234
1996 245,000 200,000 -- 49,947 27,696 -- 8,085
David B. Smith................ 1998 312,500 288,037 86,661 191,963 75,000 -- 94,409(12)
Executive Vice President 1997 285,240 255,036 39,930 918,168 417,030 -- 50,066
1996 229,112 200,000 -- 71,037 36,004 84,382 7,561
David Alvarez................. 1998 256,250 270,011 27,803 179,989 82,500 -- 9,139
Executive Vice President 1997 206,840 202,550 11,303 907,719 126,189 -- 29,295
1996 159,644 125,000 -- 31,196 20,772 -- 20,005
Ellen Richey.................. 1998 240,625 216,028 3,578 143,972 63,000 -- 8,605
Executive Vice President, 1997 220,644 202,550 709 524,594 45,000 -- 26,009
General Counsel and Secretary 1996 207,760 150,000 -- 37,447 13,848 -- 22,930
</TABLE>
- --------
(1) Includes amounts reimbursed during the year for payment of taxes and
includes above-market interest on deferred compensation paid or payable
during the year but deferred at the election of the Named Executive
Officer.
(2) Represents the dollar value of restricted stock awarded under the
Company's Stock Ownership Plan (the "Providian Financial SOP") in 1998
and in 1997, after the June 1997 spin-off of the Company's common stock
to the stockholders of Providian Corporation (the "Spin-off"), and the
dollar value of restricted stock awarded under Providian Corporation's
Stock Ownership Plan (the "Providian Corporation SOP") in 1996 and in
1997, prior to the Spin-off. Under the Providian Corporation SOP, awards
were made in common stock of Providian Corporation, and under the
Providian Financial SOP, awards are made in the Company's Common Stock.
Restricted stock awarded to the Named Executive Officers under the
Providian Corporation SOP vested immediately prior to the Spin-off.
(footnotes continued on next page)
7
<PAGE>
(3) Dividends on restricted stock awards under the Providian Financial SOP
are paid, and under the Providian Corporation SOP were paid, at the same
rate as paid to all stockholders. On December 31, 1998, on which date
the closing price of the Common Stock was $75.00, the Named Executive
Officers held shares of restricted stock (excluding restricted stock
awarded in the first quarter of 1999) having a then market value as
follows: Mr. Mehta, 210,052 shares, $15,753,900; Mr. Barad, 35,275
shares, $2,645,625; Mr. Smith, 34,987 shares, $2,624,025; Mr. Alvarez,
31,540 shares, $2,365,500; and Ms. Richey, 19,540 shares, $1,465,500.
(4) Includes for 1998 the following shares of restricted stock awarded under
the Providian Financial SOP in the first quarter of 1999 as part of the
Company's annual incentive award for 1998, which vest in three equal
annual amounts beginning February 15, 2000: Mr. Mehta, 8,286 shares; Mr.
Barad, 2,104 shares; Mr. Smith, 2,020 shares; Mr. Alvarez, 1,894 shares;
and Ms. Richey, 1,515 shares. In addition, includes for 1998 restricted
stock awards of 30,000 shares to Mr. Mehta and 5,000 shares to Mr. Barad
made under the Providian Financial SOP in the first quarter of 1999,
based on the Company's performance in 1998, which vest in five equal
annual amounts beginning February 15, 2000.
(5) Shares of restricted stock awarded to the Named Executive Officers under
the Providian Financial SOP in the first quarter of 1998 as part of the
Company's annual incentive award for 1997 vest in three equal annual
amounts beginning February 15, 1999. An additional 37,500 shares of
restricted stock awarded to Mr. Mehta in the first quarter of 1998,
based on the Company's performance in 1997, vest in five equal annual
amounts beginning February 15, 1999. Shares of restricted stock awarded
to the Named Executive Officers in June 1997 under the Providian
Financial SOP vest in five equal annual amounts beginning June 11, 1998.
Mr. Alvarez's restricted stock award of 15,000 shares in August 1997
vests in five equal annual amounts beginning August 7, 1998.
(6) Represents the number of shares of Common Stock underlying options.
Options granted in 1996 to purchase Providian Corporation common stock
were replaced in connection with the Spin-off, to the extent such
options were then outstanding, by options to purchase the Company's
Common Stock in amounts reflecting the economic value of the Providian
Corporation option grants at the time of the Spin-off.
(7) The Long-Term Incentive Plan was a Providian Corporation plan which paid
awards based on the long-term performance of Providian Corporation. The
plan was not continued by the Company.
(8) Includes Providian Corporation contributions under the Providian
Corporation Thrift Savings Plan and Providian Corporation's nonqualified
defined contribution plan during 1996 and 1997 for Mr. Mehta, and also
includes the Company's contributions to each Named Executive Officer
under the Company's 401(k) Plan and nonqualified defined contribution
plan during 1997 and 1998. In 1998, Company contributions in the amount
of $5,280 were made to the Company's 401(k) Plan for each of Messrs.
Mehta, Barad, Smith and Alvarez and Ms. Richey; and the following
contributions were made to the Company's nonqualified defined
contribution plan: $21,945 for Mr. Mehta; $5,239 for Mr. Barad; $5,033
for Mr. Smith; $3,176 for Mr. Alvarez; and $2,661 for Ms. Richey.
(9) Under the retirement component of the Company's 401(k) Plan, annual
contributions are made by the Company after the end of each fiscal year
in an amount based on a percentage of the employee's compensation. The
percentage is determined each year by the Company at its discretion. The
percentage for 1998 has not yet been determined, and the amounts of such
annual contributions to the Named Executive Officers for 1998 are
therefore not included in this column. The amounts of the Company's
annual contributions for 1997, which were not available at the time of
the preparation of the Company's Proxy Statement for the 1998 Annual
Meeting, are included in this column for 1997.
(10) Includes above-market interest earned on nonqualified retirement
benefits and payable in future periods in the following amounts: $961
for Mr. Mehta; $320 for Mr. Barad; $356 for Mr. Smith; $683 for
Mr. Alvarez; and $664 for Ms. Richey.
(11) Includes $299,048 in Company contributions to Mr. Mehta's supplemental
retirement plan and $238,468 in relocation benefits.
(12) Includes $83,740 accrued under an agreement (terminated upon his
resignation) between the Company and Mr. Smith that gave Mr. Smith the
right to receive certain amounts contingent upon, and determined by
reference to, the length of his continued employment with the Company.
8
<PAGE>
Option Grants
The following table contains information concerning the grant of stock
options in 1998 under the Company's 1997 Stock Option Plan to the Named
Executive Officers. Included is information on potential realizable value(s)
to the Named Executive Officers, assuming growth of the Common Stock at the
stated rates of appreciation.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------
Potential Realizable
Value at Assumed
Number of % of Total Annual Rates of Stock
Securities Options Price Appreciation for
Underlying Granted to Exercise or Option Term (2)
Options Employees in Base Price Expiration -----------------------
Name Granted(1) Fiscal Year ($/Sh) Date 5%($) 10%($)
- ---- ---------- ------------ ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shailesh J. Mehta....... 600,000 23.59% 39.25 5/06/08 14,810,468 37,532,635
Seth A. Barad........... 97,500 3.83% 39.25 5/06/08 2,406,701 6,099,053
David B. Smith.......... 75,000 2.95% 39.25 5/06/98 1,851,309 4,691,579
David Alvarez........... 82,500 3.24% 39.25 5/06/08 2,036,439 5,160,737
Ellen Richey............ 63,000 2.48% 39.25 5/06/08 1,555,099 3,940,927
</TABLE>
- --------
(1) Options were granted to each of the Named Executive Officers on May 6,
1998. One-third of the options granted become exercisable on each of the
first, second and third anniversaries of the date of grant.
(2) The amounts shown represent certain assumed rates of appreciation only.
Actual gains on stock option exercises, if any, are dependent on the
future performance of the Common Stock and overall condition of the stock
market, as well as the option holder's continued employment through the
vesting period. The amounts reflected in this table may not necessarily be
achieved.
Option Exercises and Holdings
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during 1998 and
unexercised options held as of the end of 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at 12/31/98 (#) 12/31/98 ($)(1)
Acquired on Value ------------------------- -------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shailesh J. Mehta....... 265,041 8,378,829 1,232,259 1,687,776 66,015,747 76,011,968
Seth A. Barad........... 4,500 134,276 104,049 156,731 5,909,463 6,345,952
David B. Smith.......... -- -- 248,729 308,016 13,145,863 14,509,698
David Alvarez........... -- -- 88,811 165,018 4,804,403 6,939,111
Ellen Richey............ -- -- 38,078 97,616 2,134,427 3,904,077
</TABLE>
- --------
(1) Based on the average of the high and low price of the Common Stock on
December 31, 1998, equal to $72.594 per share.
9
<PAGE>
Executive Employment and Change in Control Agreements
The Company has entered into an employment agreement with Shailesh J. Mehta
(the "Employment Agreement"), pursuant to which Mr. Mehta has been employed as
Chairman, President and Chief Executive Officer of the Company. Mr. Mehta's
term of employment under the Employment Agreement commenced on June 11, 1997
and was scheduled to end on June 11, 2000. On each June 11, however, the term
of employment is automatically extended by one year, so that the remaining
term of employment is once again three years, unless either party gives the
other at least one year's notice that the term of employment will not be
extended. Thus, Mr. Mehta's term of employment under the Employment Agreement
is currently scheduled to end on June 11, 2001. Mr. Mehta's base salary is
$840,000 per annum and he is entitled to incentive bonus payments pursuant to
the terms of the Company's Management Incentive Plan. Mr. Mehta is also
entitled to participate in and receive benefits under all other bonus plans,
short- or long-term incentive plans, savings and retirement plans, and welfare
benefit plans, practices, policies and programs maintained or provided by the
Company for the benefit of senior executives. In the event the Company
terminates Mr. Mehta's employment without Cause (as defined in the Employment
Agreement), or Mr. Mehta terminates his employment for Good Reason (as defined
in the Employment Agreement), Mr. Mehta will receive severance benefits. If
such termination is prior to a Change in Control (as defined below) of the
Company, the benefits will include continuation of salary, bonus and other
benefits, and continued vesting of options and restricted stock, for three
years following termination. If such termination is within three years after a
Change in Control, the benefits will include a lump sum payment equal to three
times Mr. Mehta's annual salary and bonus, immediate vesting of all options
and restricted stock, and continuation of other benefits for three years
following termination. Additionally, if any payment or distribution to Mr.
Mehta would be subject to any "golden parachute payment" excise tax or similar
tax, then Mr. Mehta will be entitled to receive gross-up payments in an amount
such that, after payment of such excise tax or similar tax and all taxes
attributable to such gross-up payments, Mr. Mehta retains an amount equal to
the amount he would have retained if such excise tax or similar tax had not
applied.
In addition to the Employment Agreement with Mr. Mehta described above, the
Company has entered into change in control employment agreements with the
Named Executive Officers. In these agreements, a "Change in Control" is
defined as the acquisition by a person or group of 20% or more of the Common
Stock or other voting securities of the Company (subject to specified
exceptions), certain changes in the majority of the Company's Board of
Directors, certain mergers involving the Company, or the liquidation,
dissolution or sale of all or substantially all of the assets of the Company.
If within three years of a Change in Control the officer's employment is
terminated by the Company, other than for disability or Cause (as defined in
such agreements), or if the officer terminates his or her employment for Good
Reason (as defined in such agreements) or within a 30-day period beginning one
year after the Change in Control, the officer will be entitled to the
following benefits: base salary and a pro rata bonus through the date of
termination, a severance payment equal to three times the officer's base
salary and annual bonus, any deferred compensation not yet paid by the
Company, a special retirement benefit equal to a specified retirement
contribution percentage multiplied by three times his or her base salary and
annual bonus, a payment in an amount equal to the officer's unvested portion
of any qualified or nonqualified retirement contribution account established
for the officer (in addition to any vested amounts due the officer under any
of the Company's retirement plans), and, for a period of three years after the
date of termination, medical, welfare and other benefits under any plans,
policies and programs under which the officer is eligible to receive such
benefits. Additionally, if any payment or distribution to the officer by the
Company or any subsidiary or affiliate would be subject to any "golden
parachute payment" excise tax or similar tax, then the officer will be
entitled to receive gross-up payments in an amount such that, after payment of
such excise tax or similar tax and all taxes attributable to such gross-up
payments, the officer retains an amount equal to the amount the officer would
have retained if such excise tax or similar tax had not applied. In addition
to the change in control agreements with Named Executive Officers described in
this paragraph, the Company has entered into change in control employment
agreements with certain other officers, the specific terms of which are no
more favorable to such officers than those described in this paragraph.
Effective upon the resignation of David B. Smith from the Company on March 12,
1999, Mr. Smith's unvested stock options and restricted stock that were
scheduled to vest before January 1, 2000 became vested. The Company was also
party to an agreement with Mr. Smith, which was terminated effective upon his
10
<PAGE>
resignation, that gave Mr. Smith the right to receive certain payments
determined by reference to the value of the Common Stock and the length of his
continued employment with the Company.
Compensation Committee Interlocks and Insider Participation and Certain
Transactions
The Company's Human Resources Committee reviews and approves the
compensation and benefits policies and practices of the Company, except that
approval of the salary and bonus of the Chief Executive Officer must also be
approved by the full Board of Directors. The members of the Human Resources
Committee during 1998 were Dr. McFarlan and Messrs. Everingham and Weinberg,
none of whom has served as an officer or employee of the Company or any of its
subsidiaries. Mr. Weinberg is a Senior Chairman of Goldman, Sachs & Co., which
the Company has retained from time to time to perform investment banking and
financial advisory services for the Company. Goldman, Sachs & Co. may be
called upon to provide similar services to the Company in the future. Mr.
Thompson, a director of the Company, is a partner in King & Spalding. From
time to time, the Company has retained King & Spalding to provide legal
services to the Company and may retain King & Spalding in the future to
provide similar services to the Company.
11
<PAGE>
Human Resources Committee
Executive Compensation Report
February 17, 1999
The Company's executive compensation programs are administered by the Human
Resources Committee (the "Committee"), a committee of the Board of Directors
comprised exclusively of non-employee directors. The Committee either approves
or recommends to the Board of Directors payment amounts and awards levels for
the Company's executive officers.
Compensation Philosophy
The policies that govern executive compensation continue to align changes in
total compensation with changes in the value created for our shareholders.
These policies require that our executive compensation program:
. reflect a clear relationship between compensation and Company
performance;
. reward executives with direct ownership in the Company and align their
personal interests with shareholder interests to continually reinforce
building shareholder value; and
. attract and retain key executives critical to the Company's long-term
success.
The Company's executive compensation program has been and continues to be
based on the following elements, each of which supports our overall
compensation philosophy.
Base Salary
The Company uses a consistent methodology to determine base salaries for all
executive employees. Market reference points are determined for specific
positions and job classifications using relevant salary surveys. Individual
salaries are then established to assure competitive pay given individual
performance. The Company annually participates in executive compensation
surveys for financial services companies. Base salaries for executives are
determined based on competitive pay levels, as well as the achievement of
individual performance objectives.
In June 1997, the Committee approved an employment contract with Mr. Mehta
for the position of Chief Executive Officer. The contract provides for an
initial base salary of $800,000. This base salary was raised to $840,000 in
May 1998.
Incentive Awards
The Company provides annual incentive award opportunities for executives
based on the pretax earnings of the Company, as well as the successful
achievement of individual performance objectives for the year. Annual
incentive awards may be made in cash and/or restricted stock issued under the
Company's Stock Ownership Plan, as determined by the Committee. The earnings
plan and the incentive award formula are adopted by the Committee in
connection with the Board's approval of the Company's annual business plan at
the start of each year. In the first quarter following the completion of each
year, the Committee approves awards based on the prior year's performance
results. It has been the Company's policy to set pretax earnings targets
which, if achieved, would position total annual cash compensation above median
competitive levels. Based on Mr. Mehta's current base salary, achieving target
pretax earnings would result in Mr. Mehta's receiving an annual incentive
award consisting of cash and/or restricted stock having a total value of
$1,312,500. Pretax earnings performance above or below this target would
result in a higher or lower award based on the pre-established formula.
The Committee has approved an annual incentive award for Mr. Mehta of
$1,968,750 for 1998, consisting of $1,181,321 in cash and 8,286 shares of
restricted stock, based on the Company's achieving pretax earnings of $491
million, which was well above the earnings target established for 1998. The
Committee also approved a special grant of 30,000 shares of restricted stock
to Mr. Mehta under the Company's Stock Ownership Plan, based on the Company's
strong performance results for 1998.
12
<PAGE>
The Company also provides grants of stock options under the Company's 1997
Stock Option Plan to executives and other employees. These option grants tie
awards to the future performance of the Company's Common Stock and provide
value only when the price of the Common Stock increases above the option
exercise price (determined by the average of the high and low price of the
Common Stock on the date of grant). Options generally vest in equal amounts
over a three-year period and require that the executive remain employed by the
Company until the time of vesting. Options expire no later than ten years from
the date of grant. Stock option grants are intended to motivate executives to
improve the long-term performance of the Company's Common Stock.
In granting stock options, the Committee takes into account competitive
grant practices within the financial services industry and the executive's
level of responsibility, individual contribution and total annual
compensation. Based on these factors, in May 1998 Mr. Mehta was granted (on a
split-adjusted basis) options to purchase 600,000 shares of Common Stock at an
exercise price of $39.25 per share.
Deductibility of Compensation Expenses
Section 162(m) of the Internal Revenue Code ("Section 162(m)") limits
federal income tax deductions by the Company for compensation paid to the
chief executive officer and the four other most highly compensated officers to
$1 million per officer per year, unless it qualifies as "performance-based"
compensation. To qualify as "performance-based," compensation payments must
satisfy certain conditions, including limitations on the discretion of the
Committee in determining the amounts of such compensation. The Committee
believes that payment of compensation that is not deductible under Section
162(m) is sometimes in the best interests of the Company and may approve such
arrangements in certain circumstances.
Human Resources Committee
F. Warren McFarlan (Chair)
Lyle Everingham
John L. Weinberg
13
<PAGE>
Performance Graph
Set forth below is a line-graph presentation comparing the cumulative total
stockholder return on the Company's Common Stock on an indexed basis since
June 11, 1997, when the Common Stock first began trading on the New York Stock
Exchange, with the cumulative total stockholder return on the Standard &
Poor's 500 Stock Index and the Standard & Poor's Financial Composite Index
over the same period. The graph assumes that the value of the investment in
the Common Stock and in each index was $100 on June 11, 1997 and assumes
reinvestment of all dividends. Historical stock price is not indicative of
future stock price performance.
Total Stockholder Return
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Providian S&P
Date Financial S&P 500 Financial
---- --------- ------- ---------
<S> <C> <C> <C>
06/11/97........................................ 100 100 100
06/30/97........................................ 107 102 101
09/30/97........................................ 132 109 113
12/31/97........................................ 151 113 120
03/31/98........................................ 192 128 135
06/30/98........................................ 263 133 140
09/30/98........................................ 284 119 110
12/31/98........................................ 377 145 134
</TABLE>
14
<PAGE>
PROPOSAL 2: APPROVAL OF AN AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
It is proposed by the Board of Directors, pursuant to a resolution adopted
February 17, 1999, that Section (A) of Article FOURTH of the Company's
Certificate of Incorporation be amended to increase the number of shares of
authorized Common Stock from 400,000,000 to 800,000,000. As amended, Section
(A) of Article Fourth of the Company's Certificate of Incorporation would read
as follows:
"FOURTH. (A) The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is 850,000,000, of which
50,000,000 are to be Preferred Stock, par value $.01 per share (hereafter
called the "Preferred Stock"), and 800,000,000 are to be Common Stock, par
value $.01 per share (hereafter called the "Common Stock")."
As of March 12, 1999, the aggregate number of shares of Common Stock
outstanding (including treasury shares) was 141,850,031.
The Board of Directors believes that it is advisable for the Company to have
additional shares of Common Stock available for issuance for general corporate
purposes including, but not limited to, stock dividends, stock splits, raising
capital through the sale of Common Stock and other securities or rights
convertible into or exercisable for Common Stock, acquisitions, and
shareholder and employee plans. Although the Company has no present plans to
issue additional shares of Common Stock or other securities or rights
convertible into or exercisable for Common Stock (other than pursuant to
existing shareholder and employee plans), the authorization of such additional
shares of Common Stock will enable the Company to act promptly if
circumstances arise in which the issuance of such shares is required or
advantageous to the Company.
The authorization of additional shares of Common Stock will not, by itself,
have any effect on the rights of existing holders of Common Stock. Depending
on the circumstances, any issuance of additional shares of Common Stock could
affect existing holders of shares of Common Stock by diluting the voting power
and earnings per share of the Common Stock. The Company's stockholders do not
have preemptive rights to subscribe for, purchase or receive shares of the
authorized capital stock of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE AN
AMENDMENT TO PROVIDIAN FINANCIAL CORPORATION'S CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, adopting the recommendation of the Audit Committee,
has appointed the certified public accounting firm of Ernst & Young LLP as the
Company's independent auditors for the year ending December 31, 1999, subject
to ratification by the stockholders at the Annual Meeting. Representatives of
the firm are expected to attend the Annual Meeting to answer appropriate
questions and, if they desire, to make a statement. Ernst & Young LLP has
served as the Company's independent auditors since 1984.
If the appointment of Ernst & Young LLP is not ratified by a majority of the
votes cast at the Annual Meeting, or if Ernst & Young LLP declines or is
incapable of acting, the appointment of independent auditors will be submitted
to the Board of Directors for reconsideration.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
1999.
15
<PAGE>
OTHER PROPOSED ACTION
The Company knows of no business to come before the Annual Meeting other
than the matters described above. Should any other business properly come
before the Annual Meeting, stockholders' proxies will be voted in accordance
with the judgment of the person or persons voting the proxies.
STOCKHOLDER PROPOSALS
Any stockholder may submit a proposal for consideration at an annual
meeting. To be included in next year's Proxy Statement, stockholder proposals
for the 2000 Annual Meeting must be in writing and received no later than
December 2, 1999 by the Secretary, Providian Financial Corporation, 201
Mission Street, San Francisco, CA 94105 and must comply with the rules and
regulations of the Securities and Exchange Commission.
Stockholders also may recommend to the Company candidates to stand for
election as directors of the Company. The Human Resources Committee of the
Board of Directors, which serves as the nominating committee for the Board in
recommending nominations for directors of the Company, will consider such
recommendations for the 2000 Annual Meeting and subsequent annual meetings. To
be considered by the Human Resources Committee, recommendations for directors
to be elected in any year must be submitted in writing no later than October
31 of the prior year to the Human Resources Committee, c/o Secretary,
Providian Financial Corporation, 201 Mission Street, San Francisco, CA 94105.
The Company's By-laws impose notice requirements on a stockholder nominating
a director or submitting a proposal for consideration at an annual meeting.
Such notice requirements apply whether or not such stockholder desires to have
his or her nomination or proposal included in the Company's Proxy Statement in
accordance with the preceding paragraphs. In order for a nomination or
proposal to be considered at the 2000 Annual Meeting, notice thereof must be
submitted to the Secretary of the Company not earlier than the close of
business on January 12, 2000 nor later than the close of business on February
11, 2000. If the date of the 2000 Annual Meeting is more than 30 days before,
or more than 60 days after, May 11, 2000, notice by the stockholder to be
timely must be so delivered not earlier than the close of business on the
120th day prior to such annual meeting nor later than the close of business on
the later of the 90th day prior to such annual meeting or the 10th day
following the day on which public announcement of the date of such meeting is
first made by the Company. Such stockholder's notice must contain the
information prescribed by the By-laws, copies of which are available from the
Secretary.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than
10% of a registered class of the Company's equity securities to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of the Common Stock and other equity securities of the
Company. Executive officers, directors and greater than 10% stockholders are
required by Securities and Exchange Commission regulations to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and on written representations that no other
reports were required, except for Ruth M. Owades, who filed a late Form 4 with
respect to certain securities acquired by her spouse, all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10%
stockholders were complied with for the Company's 1998 fiscal year.
16
<PAGE>
ANNUAL REPORT ON FORM 10-K
The Company has provided a copy of its 1998 Annual Report to stockholders to
each person whose proxy is being solicited. The Company will provide, without
charge, copies of its Annual Report on Form 10-K for the year ended December
31, 1998 (including any financial statements and schedules, and a list
describing any exhibits not contained therein) on written request addressed
to:
Providian Financial Corporation
Investor Relations Department
201 Mission Street
San Francisco, CA 94105
The exhibits to the Annual Report on Form 10-K are available on written
request and payment of charges which approximate the Company's cost of
reproduction.
ATTENDANCE AT THE ANNUAL MEETING
Seating at the Annual Meeting is limited and, therefore, admission is by
ticket only. If you would like to attend the Annual Meeting, please call the
Company at (1-800) 285-0708 to request an admission ticket. Your admission
ticket will be held for you at the Registration Desk on the day of the Annual
Meeting. To claim your admission ticket, you should bring with you proof of
identification. In addition, if you hold your shares through a broker or other
nominee, you will need to provide proof of ownership by bringing a copy of the
voting instruction card provided by your broker or a brokerage statement
showing your share ownership on the Record Date.
17
<PAGE>
[LOGO OF RECYCLED PAPER APPEARS HERE]
Printed on Recycled Paper
<PAGE>
PROXY
PROVIDIAN FINANCIAL CORPORATION
201 MISSION STREET
SAN FRANCISCO, CALIFORNIA 94105
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints James V. Elliott, J. David Grissom and F. Warren
McFarlan and each of them, proxies with power of substitution to vote all shares
of Common Stock which the undersigned would be entitled to vote at the Annual
Meeting of Providian Financial Corporation (the "Company") to be held at 10:30
a.m., Pacific Time, on Tuesday, May 11, 1999 and any adjournments or
postponements thereof, on the matters set forth below and any other business
that may properly come before the meeting.
1. Election of three directors. Nominees for directors are Christina L.
Darwall, Ruth M. Owades and John L. Weinberg.
2. Approval of amendment to the Company's Certificate of Incorporation
increasing the number of authorized shares of Common Stock.
3. Ratification of the appointment of Ernst & Young LLP as the Company's
independent auditors.
SEE REVERSE SIDE
Please mark your votes as in this example. [X]
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
- -------------------------------------------------------------------------------
1. Election of Directors:
FOR [_] WITHHELD [_]
For all, except:
2. Approval of Amendment to Certificate of Incorporation Increasing the Number
of Authorized Shares of Common Stock
FOR [_] AGAINST [_] ABSTAIN [_]
3. Ratification of Appointment of Independent Auditors
FOR [_] AGAINST [_] ABSTAIN [_]
<PAGE>
Please sign exactly as your name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
- ------------------------- -------------------------
SIGNATURE(S) DATE
PLEASE DETACH HERE. COMPLETE, SIGN AND RETURN CARD.
