<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
UNITED PANAM FINANCIAL CORP.
- --------------------------------------------------------------------------------
(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:
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(4) Date Filed:
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<PAGE>
UNITED PANAM FINANCIAL CORP.
_______________________
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
AND
PROXY STATEMENT
_______________________
DATE: Tuesday, June 20, 2000
TIME: 9:30 a.m.
PLACE: United PanAm Financial Corp.
1300 S. El Camino Real, Suite 320
San Mateo, CA 94402
<PAGE>
[UPFC Letterhead]
May 19, 2000
Dear Shareholder:
It is my pleasure to invite you to United PanAm Financial Corp.'s ("UPFC")
2000 Annual Meeting of Shareholders.
We will hold the meeting on Tuesday, June 20, 2000 at 9:30 a.m., at our
corporate headquarters, 1300 S. El Camino Real, Suite 320, San Mateo, CA 94402.
In addition to the formal items of business, I will review the major
developments of 1999 and answer your questions.
This booklet includes the Notice of Annual Meeting and the Proxy Statement.
The Proxy Statement describes the business that we will conduct at the meeting
and provides information about UPFC.
Your vote is important. Whether or not you plan to attend the meeting,
please complete, date, sign and return the enclosed proxy card promptly. If you
receive more than one proxy card because you own shares registered in different
names or at different addresses, please be sure to separately complete and
return each proxy card. If you attend the meeting and prefer to vote in person,
you may do so.
We look forward to seeing you at the meeting.
Sincerely,
Guillermo Bron
Chairman of the Board
<PAGE>
UNITED PANAM FINANCIAL CORP.
_______________________
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
_______________________
Date: Tuesday, June 20, 2000
Time: 9:30 a.m.
Place: United PanAm Financial Corp.
1300 S. El Camino Real, Suite 320
San Mateo, CA 94402
Dear Shareholders:
At our 2000 Annual Meeting, we will ask you to:
. Elect four (4) directors to serve terms of one year;
. Ratify the selection of KPMG LLP as our independent accountants for
2000; and
. Transact any other business that may properly be presented at the
Annual Meeting.
If you were a shareholder of record at the close of business on April 21,
2000, you may vote at the Annual Meeting.
IT IS IMPORTANT THAT ALL SHAREHOLDERS VOTE. WE URGE YOU TO SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, REGARDLESS OF WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING IN PERSON. IF YOU DO ATTEND THE MEETING, YOU MAY THEN
WITHDRAW YOUR PROXY AND VOTE IN PERSON. IN ORDER TO FACILITATE THE PROVIDING OF
ADEQUATE ACCOMMODATIONS, PLEASE INDICATE ON THE PROXY CARD WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING.
By Order of the Board of Directors
Lawrence J. Grill
President, Chief Executive
Officer and Secretary
San Mateo, California
Dated: May 19, 2000
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING 1
Why Did You Send Me this Proxy Statement? 1
Who is Entitled to Vote? 1
What Constitutes a Quorum? 1
How Many Votes Do I Have? 1
How Do I Vote By Proxy? 1
May I Change My Vote After I Return My Proxy? 2
How Do I Vote in Person? 2
What Vote is Required to Approve Each Proposal? 3
Proposal 1: Elect Four Directors 3
Proposal 2: Ratify Selection of Independent Public Accountants 3
The Effect of Broker Non-Votes 3
What are the Costs of Soliciting these Proxies? 3
How Do I Obtain an Annual Report on Form 10-K? 3
INFORMATION ABOUT UPFC STOCK OWNERSHIP 4
Which Shareholders Own 5% or More of UPFC's Common Stock? 4
How Much of UPFC's Common Stock is Owned by Directors and
Executive Officers? 5
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS 7
The Board of Directors 7
The Committees of the Board 7
Compensation Committee Interlocks and Insider Participation 8
Section 16(a) Beneficial Ownership Reporting Compliance by Directors
and Executive Officers 8
How We Compensate Directors 8
Certain Relationships and Related Transactions 8
Board of Directors 10
Executive Officers and Key Employees 12
How We Compensate Executive Officers 14
Employment Contracts, Termination of Employment and Change of Control
Arrangements 16
Compensation Committee's Report on Executive Compensation 20
The Report 20
Performance Graph 22
DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD 24
Proposal 1: Elect Four Directors 24
Proposal 2: Ratify Selection of Independent Public Accountants for 1999 24
OTHER BUSINESS 25
INFORMATION ABOUT SHAREHOLDER PROPOSALS 25
</TABLE>
<PAGE>
PROXY STATEMENT FOR UNITED PANAM FINANCIAL CORP.
2000 ANNUAL MEETING OF SHAREHOLDERS
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Why Did You Send Me this Proxy Statement?
We sent you this Proxy Statement and the enclosed proxy card because our
Board of Directors is soliciting your proxy to vote at the 2000 Annual Meeting
of Shareholders. This Proxy Statement summarizes the information you need to
know to cast an informed vote at the Annual Meeting. However, you do not need to
attend the Annual Meeting to vote your shares. Instead, you may simply complete,
sign, date and return the enclosed proxy card.
Along with this Proxy Statement, we are also sending you the United PanAm
Financial Corp. ("UPFC") 1999 Annual Report, which includes our financial
statements.
Who is Entitled to Vote?
We will begin sending this Proxy Statement, the attached Notice of Annual
Meeting and the enclosed proxy card on May 19, 2000 to all shareholders entitled
to vote. Shareholders who owned UPFC common stock at the close of business on
April 21, 2000 are entitled to vote. On this record date, there were 16,622,350
shares of UPFC common stock outstanding. UPFC common stock is our only class of
voting stock. We are also authorized to issue up to 2,000,000 shares of non-
voting preferred stock, but have not yet chosen to do so.
What Constitutes a Quorum?
A majority of our shareholders entitled to vote at the meeting must be
present, in person or by proxy, in order to constitute a quorum. We can only
conduct the business of the meeting if a quorum has been established. We will
include proxies marked as abstentions and broker non-votes in determining the
number of shares present at the meeting.
How Many Votes Do I Have?
Each share of UPFC common stock that you owned at the close of business on
April 21, 2000 entitles you to one vote. The proxy card indicates the number of
votes that you have.
How Do I Vote By Proxy?
Whether or not you plan to attend the Annual Meeting, we urge you to
complete, sign and date the enclosed proxy card and to return it promptly in the
envelope provided. Returning the proxy card will not affect your right to attend
the Annual Meeting and vote.
1
<PAGE>
If you properly fill in your proxy card and send it to us in time to vote,
your "proxy" (one of the individuals named on your proxy card) will vote your
shares as you have directed. If you sign the proxy card but do not make specific
choices, your proxy will vote your shares as recommended by the Board of
Directors as follows:
. "FOR" the election of all four (4) nominees for director (see page
24),
. "FOR" ratification of the selection of KPMG LLP as independent
accountants for 2000 (see page 24).
If any other matter is presented, your proxy will vote in accordance with
the recommendation of the Board of Directors, or, if no recommendation is given,
in accordance with their best judgment. At the time this Proxy Statement went to
press, we knew of no matters which needed to be acted on at the Annual Meeting,
other than those discussed in this Proxy Statement.
If you hold your shares of UPFC common stock in "street name" (that is,
through a broker or other nominee) and you fail to instruct your broker or
nominee as to how to vote such shares of common stock, your broker or nominee
may, in its discretion, vote your shares "FOR" the election of the nominees for
director set forth herein and "FOR" ratification of the appointment of KPMG LLP
as our independent public accountants for the year ending December 31, 2000.
May I Change My Vote After I Return My Proxy?
Yes. If you fill out and return the enclosed proxy card, you may change
your vote at any time before the vote is conducted at the Annual Meeting. You
may change your vote in any one of three ways:
. You may send to UPFC's Secretary another completed proxy card with a
later date.
. You may notify UPFC's Secretary in writing before the Annual Meeting
that you have revoked your proxy.
. You may attend the Annual Meeting and vote in person.
How Do I Vote in Person?
If you plan to attend the Annual Meeting and vote in person, we will give
you a ballot form when you arrive. However, if your shares are held in the name
of your broker, bank or other nominee, you must bring an account statement or
letter from the nominee indicating that you were the beneficial owner of the
shares on April 21, 2000, the record date for voting.
2
<PAGE>
What Vote is Required to Approve Each Proposal?
<TABLE>
<S> <C>
Proposal 1: The four nominees for director who receive the most votes
Elect Four (4) Directors will be elected. So, if you do not vote for a particular
nominee, or you indicate "WITHHOLD AUTHORITY" to vote for a
particular nominee on your proxy card, your vote will not
count either "for" or "against" the nominee. Our Articles
of Incorporation do not permit cumulative voting.
Proposal 2: The affirmative vote of a majority of the votes cast at the
Ratify Selection of Independent Public Annual Meeting on this proposal is required to ratify the
Accountants selection of independent public accountants. So, if you
"ABSTAIN" from voting, it has the same effect as if you
voted "against" this proposal.
The Effect of Broker Non-Votes If your broker holds your shares in its name, the broker
will be entitled to vote your shares on Proposals 1 and 2
even if it does not receive instructions from you.
If your broker does not vote your shares on Proposal 1, it
will have no effect on the outcome of the proposal.
If your broker does not vote your shares on Proposal 2 it
will have the same effect as a vote "against" this proposal.
</TABLE>
What are the Costs of Soliciting these Proxies?
We will pay all the costs of soliciting these proxies. In addition to
mailing proxy soliciting material, our directors, officers and employees also
may solicit proxies in person, by telephone or by other electronic means of
communication for which they will receive no compensation. We will ask banks,
brokers and other institutions, nominees and fiduciaries to forward the proxy
materials to their principals and to obtain authority to execute proxies. We
will then reimburse them for their reasonable expenses. In addition, we may pay
for and use the services of individuals or companies specializing in the
solicitation of proxies in connection with the solicitation of proxies, if the
Board of Directors determines this is advisable.
How Do I Obtain an Annual Report on Form 10-K?
If you would like a copy of our Annual Report on Form 10-K for the year
ended December 31, 1999 that we filed with the Securities and Exchange
Commission, we will send you one without charge. Please write to:
United PanAm Financial Corp.
1300 South El Camino Real, Suite 320
San Mateo, California 94402
Attention: Carol M. Bucci, Chief Financial Officer
3
<PAGE>
INFORMATION ABOUT UPFC STOCK OWNERSHIP
Which Shareholders Own 5% or More of UPFC's Common Stock?
The following table shows, as of April 21, 2000, all persons or entities we
know to be "beneficial owners"/(1) /of more than five percent (5%) of our common
stock. This information is based on Schedule 13G reports filed with the
Securities and Exchange Commission (SEC) by each of the entities listed in the
table below. If you wish, you may obtain these reports from the SEC.
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned (1)
--------------------------------------------
Number of Percent of
Shares(2) Class
------------------- -------------------
<S> <C> <C>
Name and Address of Beneficial Owners
- -------------------------------------
Pan American Financial, L.P. (3) 8,681,250 52.2%
1999 Avenue of the Stars, Suite 2960
Los Angeles, California 90067
Wallace R. Weitz & Company (4) 1,494,000 9.0%
One Pacific Place, Suite 600
1125 South 103/rd/ Street
Omaha, Nebraska 68124-6008
BVG West Corp. (5) 1,368,750 8.2%
1999 Avenue of the Stars, Suite 2960
Los Angeles, California 90067
</TABLE>
- ----------------------------
(1) "Beneficial ownership" is a technical term broadly defined by the SEC to
mean more than ownership in the usual sense. For example, a person has
beneficial ownership of a share not only if they own it in the usual sense,
but also if they have the power to vote, sell or otherwise dispose of the
share. Beneficial ownership also includes that number of shares which a
person has the right to acquire within 60 days of April 21, 2000.
(2) Except as otherwise noted below, each entity has sole voting and investment
power over the shares of common stock shown as beneficially owned subject
to community property laws where applicable.
(3) Pan American Financial, L.P. ("PAFLP") is a Delaware limited partnership,
the sole general partner of which is BVG West Corp. BVG West Corp. is
wholly-owned by Guillermo Bron, one of our directors, and his immediate
family. Mr. Bron and members of his family hold 58.9% of the Class A
Limited Partnership Units and 52.2% of the Class B Limited Partnership
Units of PAFLP, which entitle the holders to receive 5,005,375 shares of
the common stock held by PAFLP. Mr. Bron and BVG West Corp. each disclaims
beneficial ownership of the shares of common stock held by PAFLP.
(4) Based on a Schedule 13G (Amendment No. 1) filed with the SEC on February 4,
2000. Wallace R. Weitz & Company is a registered investment advisor.
(5) BVG West Corp. is the sole general partner of PAFLP and is wholly owned by
Mr. Bron and his immediate family. Mr. Bron disclaims beneficial ownership
of the shares of common stock held by BVG West Corp.
4
<PAGE>
How Much of UPFC's Common Stock is Owned by Directors and Executive Officers?
The following table shows, as of April 21, 2000, beneficial ownership of
UPFC common stock by each of our directors, nominees for director and executive
officers, and for our directors and executive officers as a group.
<TABLE>
<CAPTION>
Common Stock Owned (1)
--------------------------------------------
Number of Percentage of
Name of Beneficial Owner Shares Class(2)
--------------------------------------------------- ------------------ -------------------
<S> <C> <C>
Guillermo Bron 163,333/(3)/ 1.0%
Lawrence J. Grill 624,500/(4)/ 3.8%
Ray C. Thousand 25,000 *
Carol M. Bucci 81,250/(5)/ *
Ron R. Duncanson 27,250/(6)/ *
John T. French 191,250/(7)/ 1.2%
Edmund M. Kaufman 18,750/(8)/ *
Luis Maizel 27,100/(9)/ *
Daniel L. Villanueva 31,875/(10)/ *
All directors and executive officers as a group (9 1,190,308/(11)/ 7.2%
persons)
</TABLE>
_____________
* Less than one percent.
(1) Inc1udes shares issuable upon the exercise of stock options which a person
has the right to acquire within 60 days after April 21, 2000. Except as
otherwise noted below, each person has sole voting and investment power
over the shares of common stock as beneficially owned subject to community
property laws where applicable.
(2) Shares of common stock issuable upon exercise of stock options exercisable
within 60 days after April 21, 2000 are deemed outstanding for computing
the percentage of the person holding such securities but are not deemed
outstanding for computing the percentage of any other person.
(3) Consists of shares issuable upon the exercise of stock options granted
pursuant to the Stock Incentive Plan, which options are exercisable within
60 days after April 21, 2000. Excludes (i) 1,368,750 shares held by BVG
West Corp., a corporation owned by Mr. Bron, (ii) 8,681,250 shares held by
PAFLP the sole general partner of which is BVG West Corp., and (iii)
296,667 shares issuable upon the exercise of stock options granted pursuant
to the Stock Incentive Plan, which options are not exercisable within 60
days after April 21, 2000.
(4) Includes 30,000 shares issuable upon the exercise of stock options granted
pursuant to the Stock Incentive Plan, which options are exercisable within
60 days after April 21, 2000. Excludes (i) 34,750 shares held by Mr.
Grill's adult children and 2,375 shares held by Mr. Grill's father-in-law,
as to which shares he disclaims beneficial ownership and (ii) 30,000 shares
issuable upon the exercise of stock options granted pursuant to the Stock
Incentive Plan, which options are not exercisable within 60 days after
April 21, 2000. Mr. Grill holds 10.2% of the Class B Limited Partnership
Units of PAFLP which entitle Mr. Grill to receive 168,465 shares of common
stock held by PAFLP. Mr. Grill disclaims beneficial ownership of the
shares of common stock held by PAFLP.
(5) Includes 66,250 shares issuable upon the exercise of stock options granted
pursuant to the Stock Incentive Plan, which options are exercisable within
60 days after April 21, 2000. Excludes 35,000 shares issuable upon the
exercise of stock options granted pursuant to the Stock Incentive Plan,
which options are not exercisable within 60 days after April 21, 2000.
5
<PAGE>
(6) Includes 23,750 shares issuable upon the exercise of stock options granted
pursuant to the Stock Incentive Plan, which options are exercisable within
60 days after April 21, 2000. Excludes 15,000 shares issuable upon the
exercise of stock options granted pursuant to the Stock Incentive Plan,
which options are not exercisable within 60 days after April 21, 2000.
(7) Consists of shares issuable upon the exercise of stock options granted
pursuant to the Stock Incentive Plan. Mr. French holds 12.4% of the Class B
Limited Partnership Units of PAFLP, which entitle Mr. French to receive
204,890 shares of the common stock held by PAFLP. Mr. French disclaims
beneficial ownership of the shares of common stock held by PAFLP.
(8) Consists of shares issuable upon the exercise of stock options granted
pursuant to the Stock Incentive Plan. Mr. Kaufman holds 1.8% of the Class B
Limited Partnership Units of PAFLP, which entitle Mr. Kaufman to receive
30,354 shares of the common stock held by PAFLP. Mr. Kaufman disclaims
beneficial ownership of the shares of common stock held by PAFLP.
(9) Includes 12,500 shares issuable upon the exercise of stock options granted
pursuant to the Stock Incentive Plan, which options are exercisable within
60 days after April 21, 2000. Excludes 17,500 shares issuable upon the
exercise of stock options granted pursuant to the Stock Incentive Plan,
which options are not exercisable within 60 days after April 21, 2000. Mr.
Maizel hold 1.1% of the Class A Limited Partnership Units and 1.8% of the
Class B Limited Partnership Units of PAFLP which entitle Mr. Maizel to
receive 106,239 shares of common stock held by PAFLP. Mr. Maizel disclaims
beneficial ownership of the shares of common stock held by PAFLP.
(10) Includes 18,750 shares issuable upon the exercise of stock options granted
pursuant to the Stock Incentive Plan. Excludes 150,000 shares and warrants
to purchase an additional 75,000 shares held by Villanueva Management Inc.,
an investment company owned by Daniel D. Villanueva. Daniel L. Villanueva
holds 2.7% of the Class B Limited Partnership Units by PAFLP, which entitle
Mr. Villanueva to receive 45,531 shares of the common stock held by PAFLP.
Mr. Villanueva disclaims beneficial ownership of the shares of common stock
held by Villanueva Management Inc. or PAFLP.
(11) Includes 524,583 shares issuable upon the exercise of stock options granted
pursuant to the Stock Incentive Plan, which options are exercisable within
60 days after April 21, 2000. Excludes (i) 394,167 shares issuable upon
the exercise of stock options granted pursuant to the Stock Incentive Plan,
which options are not exercisable within 60 days after April 21, 2000.
6
<PAGE>
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
The Board of Directors
The Board of Directors oversees our business and monitors the performance
of management. In accordance with corporate governance principles, the Board
does not involve itself in day-to-day operations. The directors keep themselves
informed through, among other things, discussions with the Chairman and Chief
Executive Officer, other key executives and our principal external advisers
(legal counsel, outside auditors, investment bankers and other consultants), by
reading reports and other materials that we send them and by participating in
Board and committee meetings.
Our Bylaws currently permit the number of Board members to range from five
(5) to nine (9), leaving the Board authority to fix the exact number of
directors within that range. The Board has fixed the exact number of directors
at seven (7).
Biographical information about the directors is provided on pages 10 and
11. The Board met nine (9) times during 1999. Each incumbent director attended
at least 75% of the total number of Board meetings plus meetings of the standing
committees on which that particular director served.
The Committees of the Board
The Board may delegate portions of its responsibilities to committees of
its members. These "standing committees" of the Board meet at regular intervals
to attend to their particular areas of responsibility. Our Board has two
standing committees: an Audit Committee and a Compensation Committee.
The Audit Committee directs our external auditors to insure that they
satisfy the legal and technical requirements necessary for the protection of our
shareholders, employees and directors. The Audit Committee annually recommends a
firm of public accountants to serve as external auditors to the Board. It also
makes certain that the external auditors have the independence necessary to
freely examine all of our books and records. The Audit Committee held four (4)
meetings during 1999. Prior to March 1999, Mr. Kaufman was acting chair of the
Audit Committee. Effective March 1, 1999, Mr. Duncanson chairs the Audit
Committee and Messrs. Kaufman, Maizel and Villanueva are also members.
Our Compensation Committee reviews and recommends to the Board of Directors
the salaries, bonuses and perquisites of our executive officers, determines the
individuals to whom, and the terms upon which, awards under our Stock Incentive
Plan, management incentive plans and 401(k) plan are granted, makes periodic
reports to the Board of Directors as to the status of such plans and reviews and
recommends to the Board of Directors additional compensation plans. The
Compensation Committee held three meetings during 1999. Mr. Kaufman chairs the
Compensation Committee and Messrs. Maizel and Villanueva are also members.
7
<PAGE>
Compensation Committee Interlocks and Insider Participation
All decisions involving executive officer compensation are made by our
Compensation Committee, consisting of Messrs. Kaufman, Maizel and Villanueva.
None of the members of the Compensation Committee is or has been an officer or
employee of UPFC or any of its subsidiaries. None of our executive officers
currently serves as a director or member of the compensation committee of
another entity or of any other committee of the board of directors of another
entity performing similar functions.
Section 16(a) Beneficial Ownership Reporting Compliance by Directors and
Executive Officers
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors and executive officers to file reports with the Securities and
Exchange Commission and The Nasdaq Stock Market on changes in their beneficial
ownership of UPFC common stock, and to provide us with copies of the reports.
Based on our review of these reports or of certifications provided to us
that no report was required to be filed, we believe that all of our directors
and executive officers complied with all Section 16(a) filing requirements
applicable to them except for Guillermo Bron, Carol M. Bucci and Daniel L.
Villanueva, who each filed one late report involving their statement of
beneficial ownership of UPFC common stock on Form 5. No director or executive
officer of UPFC sold shares of common stock during 1999.
How We Compensate Directors
During 1999, we paid each director who was not employed by us, $500 for
each meeting of the Board of Directors attended and $500 for each meeting of a
committee of the Board of Directors attended (other than a telephonic meeting).
In addition, each Committee Chairperson received a $2,000 quarterly fee. We
reimburse directors for all reasonable and documented expenses incurred as a
director. Directors who are also our employees, including Messrs. Bron, Grill
and French, are not compensated for their services as directors.
In addition, directors are eligible to participate in our Stock Incentive
Plan and all directors have been granted options in accordance with such plan.
All stock options granted to non-employee directors vest in equal annual
installments over four-year periods beginning on the date of grant, subject to
continued service on the Board of Directors. Directors are also entitled to the
protection of certain indemnification provisions in our Articles of
Incorporation and Bylaws.
Certain Relationships and Related Transactions
UPFC, through its wholly owned subsidiary, Pan American Bank, FSB, (the
"Bank") has had and expects in the future to have deposit transactions in the
ordinary course of business with our directors and officers or associates of our
directors and officers. We may also have banking
8
<PAGE>
transactions with corporations or other entities of which our directors or
officers may own a controlling interest, or also serve as directors or officers.
Such transactions have taken place and will take place on substantially the same
terms, including interest, as those prevailing for comparable transactions with
others. In accordance with policies adopted by the Board of Directors, the Bank
does not make loans to directors, officers or employees.
On October 15, 1997, we loaned $225,000 to Lawrence J. Grill to finance his
exercise of an option to purchase 281,250 shares of common stock. This loan is
secured by a portion of the shares purchased, bears interest at an annual rate
of 5.81% payable on December 31, 2001.
On March 12, 1999, we loaned $75,000 to Lawrence J. Grill to finance his
exercise of an option to purchase 93,750 shares of common stock. This loan is
secured by a portion of the shares purchased, bears interest at an annual rate
of 5.81% payable on December 31, 2001.
United Auto Credit Corporation ("UACC"), a wholly-owned subsidiary of the
Bank, has granted to certain of its key employees the right to purchase up to
15.0% ownership interest in that company. These options generally vest over a
five-year period beginning with the date of employment and are exercisable at
prices, which increase for each subsequent installment. In addition, the options
held by senior management, representing 11.5% of the 15.0% ownership interest,
generally may only be exercised if UACC has achieved a 30% cumulative annual
return on equity from inception through the date of vesting.
9
<PAGE>
Board of Directors
Set forth below, are the names and biographies of UPFC's board of
directors.
Name and Age Principal Occupation and Business Experience
- -------------------- ----------------------------------------------------
Class I Directors
- -----------------
(directors to be
elected at the 2000
annual meeting)
Ron R. Duncanson (39) Mr. Duncanson has served as a director of the Bank
since 1994 and as a director of UPFC since May 1999.
Mr. Duncanson is a management consultant to Vintaco,
Inc., where he currently oversees a startup software
company targeting the air cargo industry. Other
responsibilities include the general oversight of an
active mid-size commercial real estate portfolio.
Prior to joining Vintaco in 1992, Mr. Duncanson
served six (6) years with the Treasury Department,
Office of Thrift Supervision where he was a senior
analyst in mergers and acquisitions. Mr. Duncanson
was an auditor for Wells Fargo Bank from 1984 to
1986.
John T. French (68) Mr. French has served as a director of the Bank
since October 1996 and as a director of UPFC and
Chairman of the Board and Chief Executive Officer of
United PanAm Mortgage Corporation since October
1997. Effective February 1, 2000, Mr. French
resigned his position of Chairman of the Board and
Chief Executive Officer of United PanAm Mortgage
Corporation. From 1986 through March 1995, he served
as Chief Executive Officer of Plaza Home Mortgage,
and also founded and was Chairman of Option One
Mortgage Corporation. From 1977 through 1985, Mr.
French served as President of the General Loan
Brokerage division of Western Real Estate Financial,
a general loan brokerage company. Mr. French has
over 39 years experience in the mortgage industry.
Edmund M. Kaufman (70) Mr. Kaufman has served as a director of the Bank
since August 1996 and of UPFC since October 1997.
Mr. Kaufman also serves as Chairman of the
Compensation Committee. Mr. Kaufman is a partner in
the Los Angeles law firm of Irell & Manella LLP,
where he has specialized for 40 years in mergers and
acquisitions and corporate finance.
10
<PAGE>
Daniel L. Villanueva (41) Mr. Villanueva has served as a director of the Bank
since August 1994 and of UPFC since October 1997.
Mr. Villanueva previously served as President of the
Los Angeles Galaxy Soccer Team and was a co-founder
of Moya, Villanueva & Associates, a marketing and
public relations firm which is now part of Manning,
Selvage & Lee, where he worked from 1986 until 1996.
Class II Directors
- ------------------
(directors serving
until the 2001 annual
meeting)
Guillermo Bron (48) Mr. Bron has served as Chairman of the Board and a
director of UPFC and the Bank since April 1994. Mr.
Bron is President of BVG West Corp., the sole
general partner of Pan American Financial, L.P. Mr.
Bron founded UPFC and organized an Hispanic investor
group that acquired certain assets and assumed
certain liabilities of the Bank's predecessor from
the RTC in April 1994. Since July 1994, Mr. Bron has
been an officer, director and principal stockholder
of a general partner of Bastion Capital Fund, L.P.,
a private equity investment fund. Previously, Mr.
Bron was a Managing Director of Corporate Finance
and Mergers and Acquisitions at Drexel Burnham
Lambert. Mr. Bron is a director of Telemundo
Holdings, Inc.
Lawrence J. Grill (63) Mr. Grill has served as the President, Chief
Executive Officer, Secretary and a director of UPFC
and the Bank since April 1994. From 1984 through
1994, Mr. Grill was President of Lawrence J. Grill &
Associates, a consulting firm specializing in
business strategy and operations improvement for
financial institutions. He has also served as a
director, officer and consultant to various thrifts
and banks. Previously, Mr. Grill held senior
executive positions with Kaufman and Broad, Wickes
Companies and AM International and practiced
corporate law in California and Illinois. Mr. Grill
is a CPA in Illinois and is licensed to practice law
in California and Illinois.
Luis Maizel (49) Mr. Maizel has served as a director of UPFC since
October 1997. Mr. Maizel has been President of LM
Capital Management since 1988 and LM Advisors Inc.
since 1984. Both such companies are pension funds
management and financial consulting firms of which
he is the principal stockholder. From 1980 to 1984,
he was President of Industrias Kuick, S.A. and
Blount Agroindustras, S.A., manufacturers of
agribusiness equipment.
11
<PAGE>
Executive Officers and Key Employees
Set forth below are the names and biographies of UPFC's executive officers
and key employees, except for Messrs. Bron, our Chairman of the Board and Grill,
our President, Chief Executive Officer and Secretary, whose biographies are
included at page 11 under "Board of Directors".
Name and Age Principal Occupation and Business Experience
- ------------------- ------------------------------------------------
Executive Officers
- ------------------
Ray C. Thousand, (42) Mr. Thousand has served as President, Chief
Executive Officer and a director of United Auto
Credit Corporation since February 1996.
Previously, Mr. Thousand held positions in
consumer and commercial lending with Norwest
Financial (from 1979 to 1985), and executive
positions with Bank of America/Security Pacific
Credit (from 1985 to 1993), TransAmerica
Business Credit (1994) and Fidelity Funding
Financial Group (from 1994 to 1995) with
emphasis on lending to consumer finance
companies engaged in indirect automobile
lending.
Carol M. Bucci, (42) Ms. Bucci has served as Senior Vice President
and Controller of the Bank since January 1997
and as Senior Vice President and Chief Financial
Officer of UPFC since October 1997. She served
as Vice President and Controller of the Bank
from December 1995 to December 1996. From
February 1995 to December 1995, she served as
Vice President and Controller of Home Federal
Savings and Loan in San Francisco, California.
She served as Vice President and Chief Financial
Officer of American Liberty Mortgage Corp. from
April 1992 through December 1994, as First Vice
President and Assistant Controller of First
Nationwide Bank from January 1990 to April 1992
and as Executive Vice President and Chief
Financial Officer of Cal America Savings and
Loan from May 1987 to April 1989. Ms. Bucci is a
CPA in California.
Key Employees
- -------------
Stephen W. Haley, (46) Mr. Haley has served as Senior Vice President -
Compliance and Risk Management of the Bank and
UPFC since August 1997. From November 1996 to
August 1997, he was a management consultant with
Coopers & Lybrand LLP. From April 1991 to
November 1996, Mr. Haley was a self-employed
management consultant specializing in financial
services and from July 1981 to April 1991, he
was a management consultant with KPMG LLP's
financial services group, where he was a partner
for the last four years.
12
<PAGE>
Sharon A. Macchiarella, (50) Ms. Macchiarella has served as Vice President of
the Bank since February 1997, Vice President-
Administrator Corporate Risk Management of the
Bank since April 1997 and IPF Administrator of
UPFC since November 1995. Ms. Macchiarella also
served as an insurance premium finance
consultant with the Bank from March 1995 to
November 1995 and Rancho Vista National Bank
from January 1995 to December 1995. Previously,
Ms. Macchiarella held executive positions in
insurance premium finance with World Trade Bank,
N.A. (from March 1988 to July 1992); First
National Bank of Marin (from September 1992 to
September 1994) and First Deposit National
Corporation (from July 1992 to September 1992).
13
<PAGE>
How We Compensate Executive Officers
The following table summarizes information about compensation paid to or
earned by our executive officers during 1999, 1998 and 1997.
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
--------------------------------- ------------------------- -------
Securities
Other Annual Underlying All Other
Salary Bonus Compensation Restricted Options/ LTIP Compensation
Name and Principal Position Year ($) ($) ($) Stock Awards SARs Payouts ($)
- --------------------------- ---- ------- ----- ------------ ------------ ---------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lawrence J. Grill 1999 190,000 42,850 12,671 (1) -- -- -- --
President and Chief 1998 190,000 47,500 10,525 (1) -- 60,000 (2) -- --
Executive Officer 1997 176,667 75,000 4,725 (3) -- -- -- --
Guillermo Bron 1999 150,000 67,500 13,000 (3) -- 400,000 (2) -- --
Chairman of the Board 1998 150,000 50,000 -- -- 60,000 (2) -- --
1997 137,500 -- -- -- -- -- --
John T. French 1999 126,667 50,000 -- -- -- -- --
Chairman of the Board and 1998 200,000 50,000 -- -- 131,250 (2) -- --
Chief Executive Officer of 1997 95,000 100,000 -- -- 60,000 (2) -- --
United PanAm Mortgage
Corporation (4)
Ray C. Thousand 1999 170,417 137,500 2,400 (3) -- 15 (5) -- --
President and Chief 1998 139,817 68,750 2,400 (3) -- 15 (5) -- --
Executive Officer of United 1997 137,283 33,750 2,200 (3) -- 15 (5) -- --
Auto Credit Corporation
Carol M. Bucci 1999 132,000 18,100 -- -- -- -- --
Senior Vice President, 1998 120,000 36,000 -- -- 50,000 (2) -- 18,000 (6)
Treasurer and Chief 1997 104,600 18,000 -- -- 10,000 (2) -- --
Financial Officer
</TABLE>
___________________
(1) Consists of an automobile allowance and reimbursement for interest paid on
a personal loan related to the exercise of the UPFC stock options.
(2) Consists of shares issuable pursuant to options granted under the 1997
Stock Incentive Plan.
(3) Consists primarily of an automobile allowance.
(4) Effective February 1, 2000, Mr. French resigned his position as Chairman of
the Board and Chief Executive Officer of United PanAm Mortgage Corporation
and is now solely acting as a director of UPFC and the Bank.
(5) Consists of shares issuable pursuant to options granted under the United
Auto Credit Corporation Stock Plan. Mr. Thousand has been granted the right
to purchase a 7.5% ownership in United Auto Credit Corporation through
options to purchase 15 shares of common stock per year up to a maximum of
75 shares.
(6) Consists of a cash payment in lieu of receiving an additional grant of
options under the Stock Incentive Plan.
14
<PAGE>
The following table sets forth information concerning stock options granted
during 1999 to the executive officers.
<TABLE>
<CAPTION>
Option Grants in 1999
Individual Grants
-------------------------------------------------------------------- ---------------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Application for
Option Term(1)
---------------------------
Percent of
Total
Shares of Options
Common Stock Granted to
Underlying Employees Exercise
Options in Fiscal Price Per Expiration
Name Granted Year Share(3) Date 5% ($) 10% ($)
- ------------------------- ------------- ----------- -------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Guillermo Bron 120,000 (2) 30% $2.50 9/13/04 $ 83,000 $ 183,000
100,000 (2) 25% $3.25 9/13/09 $204,000 $ 518,000
180,000 (2) 45% $4.25 9/13/09 $481,000 $1,219,000
</TABLE>
_______________
(1) The Potential Realizable Value is the product of (a) the difference between
(i) the product of the market price per share at the date of grant and the
sum of (A) 1 plus (B) the assumed rate of appreciation of the common stock
compounded annually over the term of the option and (ii) the per share
exercise price of the option and (b) the number of shares of common stock
underlying the option at December 31, 1999. These amounts represent certain
assumed rates of appreciation only. Actual gains, if any, on stock option
exercises are dependent on a variety of factors, including market
conditions and the price performance of the common stock. There can be no
assurance that the rate of appreciation presented in this table can be
achieved.
(2) The option vests in three equal annual installments commencing on September
13, 1999.
(3) UPFC believes that the exercise price is equal to or greater than the fair
market value of the common stock on the date of grant based on the closing
sale prices of the common stock as reported on the Nasdaq National Market
on the respective dates of grant.
15
<PAGE>
The following table sets forth the specified information concerning
exercises of options to purchase UPFC common stock in 1999, and unexercised
options held as of December 31, 1999, by the executive officers.
Aggregated Option Exercises in Fiscal Year 1999
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Shares of Common
Stock Underlying Unexercised Value of Unexercised
Options at Year-End In-the-Money Options at
-------------------------------- ----------------------------
Name Shares
Acquired on Value Realized
Exercise (#) ($) (2) Exercisable Unexercisable Exercisable Unexercisable
------------------------ ---------------- ------------------ -------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence J. Grill 93,750 264,844 15,000 45,000 -- --
Guillermo Bron -- -- 148,333 311,667 -- --
John T. French -- -- 191,250 -- $149,625 --
Ray C. Thousand -- -- -- -- -- --
Carol M. Bucci 15,000 17,100 58,750 42,500 $ 47,025 --
</TABLE>
______________
(1) The value of unexercised "in-the-money" options is the difference between
the closing market price ($1.94 per share) of common stock on December 31,
1999 as reported on the Nasdaq National Market and the exercise price of
the option, multiplied by the number of shares subject to the option.
(2) The value realized is the difference between the fair market value of the
underlying stock at the time of exercise and the exercise price.
Employment Contracts, Termination of Employment and Change of Control
Arrangements
We have entered into employment agreements with Messrs. Bron, Grill, French
and Thousand. All other executive officers are employed on an "at will" basis.
We have entered into an employment agreement with Guillermo Bron under
which Mr. Bron has been employed as the Chairman of the Board of UPFC and the
Bank for the term commencing on October 1, 1997 and ending on December 31, 2000,
unless extended by UPFC to December 31, 2001. Under this agreement, Mr. Bron is
entitled to:
. an annual base salary of $150,000,
. an annual cash bonus of up to 100% of his base salary, in an amount
determined by the Board of Directors,
. $500,000 of term life insurance above the amount normally provided to
employees under our group term life insurance,
. a monthly car allowance of $500, and
. the premium cost under our plan for family medical, dental, vision,
basic long-term disability and basic accidental death and
dismemberment insurance.
16
<PAGE>
In the event UPFC terminates his employment without cause, or Mr. Bron
terminates his employment as the result of a reduction in authority, including
after a change of control of UPFC and the Bank, Mr. Bron shall be entitled to
receive:
. a lump sum payment equal to his base salary from the date of
termination to the next to occur of December 31, 2000 or 2001,
but in no event less than six months salary,
. a lump sum payment equal to the bonus received by him in the prior
year prorated for that portion of the current year for which Mr. Bron
was employed by UPFC, and
. any additional benefits accrued through the date of termination.
In the event UPFC terminates Mr. Bron's employment with cause, UPFC is obligated
to pay the compensation required by the agreement only through the date of
termination.
The Bank has entered into a salary continuation agreement with Mr. Bron
pursuant to which Mr. Bron is entitled to receive an annual benefit of up to
$100,000 payable over a period of 15 years upon either:
. the termination of his employment by the Bank for any reason other
than termination for cause after attaining 65 years of age, or
. his death if he is actively employed by the Bank at such time.
Upon the termination of his employment for any of the following reasons, Mr.
Bron is entitled to receive reduced annual benefits before 2003 which increase
to $100,000 if such termination occurs in or after 2003:
. the termination of his employment by the Bank without cause or after
the occurrence of a change of control of the Bank or UPFC,
. the termination of his employment due to disability,
. the termination of his employment as the result of a reduction in
authority, or
. the voluntary termination of his employment prior to attaining 65
years of age.
The Bank purchased insurance on the life of Mr. Bron to fund payments to Mr.
Bron under this agreement. This insurance policy is an asset of the Bank in
which Mr. Bron has no rights. The Bank is not required to make any payments
under this agreement if Mr. Bron is terminated for cause.
We have entered into an employment agreement with Lawrence J. Grill under
which Mr. Grill has been employed as the President, Chief Executive Officer and
Secretary of UPFC and the Bank for the term commencing on October 1, 1997 and
ending on December 31, 2000, unless extended by UPFC to December 31, 2001. Under
this agreement, Mr. Grill is entitled to:
. an annual base salary of $190,000,
17
<PAGE>
. an annual cash bonus of up to 50% of his base salary based upon the
satisfaction of performance goals relating to pre-tax net income,
return on shareholders' equity and such other factors as may be
established by the Board of Directors,
. $500,000 of term life insurance above the amount normally provided to
employees under our group term life insurance,
. a monthly automobile allowance of $500, and
. the premium cost under our plan for family medical, dental, vision,
basic long-term disability and basic accidental death and
dismemberment insurance.
In the event UPFC terminates his employment without cause, or Mr. Grill
terminates his employment as the result of reduction in authority, including
after a change of control of UPFC or the Bank, Mr. Grill shall be entitled to
receive:
. a lump sum payment equal to his base salary from the date of
termination to the next to occur December 31, 2000 or 2001, but
in no event less than six months salary,
. a lump sum payment equal to the bonus received by him in the prior
year prorated for that portion of the current year for which Mr. Grill
was employed by UPFC,
. any additional benefits through the date of termination, and
. continuation of group medical, disability and life insurance coverage
for up to the balance of the stated term.
In the event UPFC terminates Mr. Grill's employment with cause, UPFC is
obligated to pay the compensation required by the agreement only through the
date of termination.
The Bank has entered into a salary continuation agreement with Mr. Grill
pursuant to which Mr. Grill is entitled to receive an annual benefit of up to
$100,000 payable over a period of 15 years upon either:
. the termination of his employment by the Bank for any reason other
than termination for cause after attaining 67 years of age, or
. his death if he is actively employed by UPFC at such time.
Upon the termination of his employment for any of the following reasons, Mr.
Grill is entitled to receive reduced annual benefits before 2003 which increase
to $100,000 if such termination occurs in or after 2003:
. the termination of his employment by the Bank without cause or after
the occurrence of a change of control of the Bank or UPFC,
. the termination of his employment due to disability,
. the termination of his employment as the result of a reduction in
authority, or
. the voluntary termination of his employment prior to attaining 67
years of age.
18
<PAGE>
The Bank purchased insurance on the life of Mr. Grill to fund payments to Mr.
Grill under this agreement. This insurance policy is an asset of the Bank in
which Mr. Grill has no rights. The Bank is not required to make any payments
under this agreement if Mr. Grill is terminated for cause.
United PanAm Mortgage Corporation entered into an employment agreement with
John T. French under which Mr. French was employed as Chairman of the Board,
President and Chief Executive Officer of United PanAm Mortgage Corporation
through August 10, 1998 and through January 31, 1999 as Chairman and Chief
Executive Officer. Effective February 1, 1999, Mr. French continued in his role
as Chairman and Chief Executive Officer on a less than full time basis until
February 1, 2000. With the expiration of Mr. French's employment contract, he is
now acting solely as a director of UPFC and the Bank. As Chairman and Chief
Executive Officer of United PanAm Mortgage Corporation through January 31, 1999,
Mr. French was entitled to:
. a monthly base salary of $16,667,
. an annual cash bonus in an amount determined by the Board of
Directors, but in no event less than $10,000 if Mr. French reasonably
performed his obligations under the agreement,
. participate in all benefits made generally available by UPFC to its
executives.
Effective February 1, 1999, Mr. French received a monthly base salary of $10,000
and continued to participate in all benefits generally made available by UPFC to
its executives. Mr. French has been granted a ten-year option to purchase 60,000
shares of common stock at an exercise price of $10.50 per share, which options
vest in four equal annual installments commencing on October 15, 1997. These
options fully vested on September 30, 1999.
We have entered into an employment agreement with Ray C. Thousand under
which Mr. Thousand will continue to be employed as President of United Auto
Credit Corporation for the three years through December 8, 2001. Under this
agreement, Mr. Thousand is entitled to:
. an annual base salary of $170,000 in 1999, $175,000 in 2000 and
$180,000 in 2001,
. an annual cash bonus of up to 100% of his base salary based upon the
satisfaction of specified performance goals relating to loan volume,
pre-tax profit, delinquencies and charge-offs, and
. a monthly automobile allowance of $200.
In addition, Mr. Thousand has been granted an option to purchase up to a 7.5%
ownership interest in United Auto Credit Corporation. The options vest over a
five-year period and are exercisable at a predetermined price, which increases
each year. Eighty percent of Mr. Thousand's options are vested. In the event
UPFC terminates his employment before the end of the stated term without cause,
Mr. Thousand shall be entitled to receive his base salary and prorated bonus
through the end of his contract term, not to exceed twelve months of his base
salary and prorated bonus.
19
<PAGE>
Compensation Committee's Report on Executive Compensation
Set forth below is a report of our Compensation Committee addressing the
compensation policies for 1999 applicable to our executive officers.
The Report of the Compensation Committee of the Board of Directors shall
not be deemed incorporated by reference by any general statement incorporating
by reference this Proxy Statement into any filing under the Securities Act of
1933 or under the Securities Exchange Act of 1934, except to the extent that we
specifically incorporate the information contained in the report by reference,
and shall not otherwise be deemed filed under such acts.
The Report
The Compensation Committee establishes our overall compensation and
employee benefits and approves specific compensation levels for executive
officers. It is a goal of the Compensation Committee to implement executive
officer compensation programs that further our business objectives and that
attract, retain and motivate the best qualified executive officers. Currently,
the members of the Compensation Committee are Edmund M. Kaufman, Luis Maizel,
and Daniel L. Villanueva. Each member of the Compensation Committee is a non-
employee director.
Our executive compensation policies and specific executive compensation
programs are adopted and administered in accordance with the principal goal of
maximizing return on shareholders' equity. The Compensation Committee believes
that this performance goal, and the long-term interests of our shareholders
generally, are best achieved by attracting and retaining management of high
quality, and that such management will require commensurate compensation. The
Compensation Committee believes that our executive officer compensation policies
are consistent with this policy.
In addition, the Compensation Committee believes that while our
compensation programs should reflect the philosophy that executive compensation
levels be linked to UPFC's performance, such compensation programs should also
be competitive and consistent with those provided to others holding positions of
similar responsibility in the banking and financial services industry. Our
compensation plans are designed to assist us in attracting and retaining
qualified employees critical to our long-term success, while enhancing
employees' incentives to perform to their fullest abilities, to increase
profitability and to maximize shareholder value.
Certain of our executive officers, including the Chief Executive Officer,
have written employment agreements with us (See "Employment Contracts,
Termination of Employment and Change of Control Arrangements" on page 16 through
19, above). The Compensation Committee determines the levels of compensation
that we grant in such employment agreements, and the levels of compensation that
we grant to other executive officers from time to time, based on factors that it
deems appropriate.
20
<PAGE>
Annual compensation levels for executive officers and compensation levels
to be implemented from time to time in written employment agreements with
executive officers are determined by the Compensation Committee based primarily
on its review and analysis of the following factors: the responsibilities of the
position, the performance of the individual and his or her general experience
and qualifications, our overall financial performance (including return on
equity, levels of general and administrative expense and budget variances) for
the previous year and the contributions to such performance measures by the
individual or his or her department, the officer's total compensation during the
previous year, compensation levels paid by comparable companies in similar
industries, the officer's length of service with us, and the officer's
effectiveness in dealing with external and internal audiences. The Compensation
Committee believes that the base compensation of the executive officers is
competitive with companies of similar size and with comparable operating results
in similar industries.
The base salary of our Chief Executive Officer was determined primarily on
the terms of his employment agreement effective as of October 1, 1997. The
agreement set Mr. Grill's base salary at $190,000, and provides for a
discretionary annual bonus of up to 50% of his base salary based upon the
satisfaction of certain performance goals. These criteria included results in
meeting our strategic business plan and leadership abilities. Based on the
foregoing, in 1999 Mr. Grill received a base salary of $190,000 and a bonus of
$42,850. Mr. Grill's bonus, which was received in early 1999, was based on 1998
performance criteria.
While the Compensation Committee establishes salary and bonus levels based
on the above described criteria, the Compensation Committee also believes that
encouraging equity ownership by executive officers further aligns the interests
of the officers with the performance objectives of our shareholders and enhances
our ability to attract and retain highly qualified personnel on a basis
competitive with industry practices. Stock options granted by UPFC pursuant to
the 1997 Stock Incentive Plan help achieve this objective, and provide
additional compensation to the officers to the extent that the price of the
common stock increases over fair market value on the date of grant. Stock
options have been granted to the executive officers and to other officers or key
employees of UPFC. Through the 1997 Stock Incentive Plan, there will be an
additional direct relationship between our performance and benefits to plan
participants.
Eligible employees are also able to participate in our 401(k) Plan. The
401(k) Plan permits participants to make 401(k) contributions on a pretax basis.
All employees of UPFC and its subsidiaries who are at least age 21 are eligible
to participate in the 401(k) Plan on the first day of the month following the
completion of six months of service. Participants can contribute up to 15% of
their pretax compensation to the 401(k) Plan annually, subject to certain legal
limitations. The 401(k) Plan also provides that UPFC and its subsidiaries will
make a matching contribution on behalf of each eligible participant equal to 50%
of the 401(k) contributions made by such participants, up to 6% of their
individual compensation.
Through these various compensation programs, the Compensation Committee
believes that we further our objectives of attracting, retaining and motivating
the best qualified executive officers and employees, and ultimately will serve
to increase our profitability and maximize shareholder value.
21
<PAGE>
Dated: May 19, 2000 COMPENSATION COMMITTEE
Edmund M. Kaufman, Chairman
Luis Maizel
Daniel L. Villanueva
Performance Graph
The following graph compares, for the period from April 24, 1998 (the date
of our initial public offering) through December 31, 1999, the yearly percentage
change in our cumulative total return on our common stock with the cumulative
total return of the NASDAQ - Total US, an index consisting of Nasdaq-listed
U.S.-based companies; the Nasdaq Financial Index, an index consisting of Nasdaq-
listed financial services companies; and the SNL Subprime Lenders Index, an
index consisting of a survey of subprime lenders in the United States. We have
included the SNL Subprime Lender Index because we believe it provides a more
representative composite peer group performance comparison than the Nasdaq
Financial Index. We believe that the business of the companies that make up the
SNL Subprime Lenders Index is more representative of our specialized finance
focus. This graph assumes an initial investment of $100 and reinvestment of
dividends. This graph is not necessarily indicative of future stock performance.
22
<PAGE>
The graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934, as
amended, except to the extent that we specifically incorporate this information
by reference, and shall not otherwise be deemed filed under such acts.
- --------------------------------------------------------------------------------
United PanAm Financial Corp.
- --------------------------------------------------------------------------------
COMPARISON OF CUMULATIVE TOTAL RETURN
Period Ending
---------------------------------------------
Index 4/24/98 6/30/98 12/31/98 6/30/99 12/31/99
------- ------- -------- ------- --------
United PanAm Financial Corp. 100.00 73.54 30.04 23.32 13.90
NASDAQ-Total US 100.00 101.08 118.43 144.97 215.28
NASDAQ Financial Index 100.00 95.11 89.41 98.55 88.22
SNL Subprime Lenders Index 100.00 91.80 40.84 46.49 45.03
__________
Source: SNL Securities
23
<PAGE>
DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD
Proposal 1: Elect Four Directors
The Board has nominated four (4) persons for election as Class I Directors
at the Annual Meeting. If you elect them, the Class I Directors will hold
office until the Annual Meeting in 2001, or until the election of their
successors, or until they resign. Refer to director biographies set forth
above.
We know of no reason why any nominee may be unable to serve as a director.
If any nominee is unable to serve, your proxy may vote for another nominee
proposed by the Board. If for any reason these nominees prove unable or
unwilling to stand for election, the Board will nominate alternates. The Board
has no reason to believe that its nominees would prove unable to serve if
elected.
The following sets forth the names of the four (4) persons nominated by the
Board to serve as Class I Directors:
Ron R. Duncanson Edmund M. Kaufman
John T. French Daniel L. Villanueva
The Board recommends that you vote "FOR" the election of all four Class I
Nominees for director.
Proposal 2: Ratify Selection of Independent Public Accountants for 2000
The Board of Directors has appointed KPMG LLP ("KPMG") as our independent
public accountants for the year ending December 31, 2000, and shareholders are
being asked to ratify the appointment. The appointment was recommended by the
Audit Committee. KPMG, our accountants for the year ended December 31, 1999,
performed audit services for 1999 which included the examination of the
consolidated financial statements and services related to filings with the SEC.
All professional services rendered by KPMG during 1999 were furnished at
customary rates and terms. Representatives of KPMG will be present at the
Annual Meeting and will be available to respond to appropriate questions from
shareholders.
The Board recommends that you vote "FOR" ratification of the selection of KPMG
L.L.P. as Independent Public Accountants for 2000.
24
<PAGE>
OTHER BUSINESS
We know of no other business which will be presented for consideration at
the Annual Meeting other than as stated in the Notice of Meeting. If, however,
other matters are properly brought before the meeting, it is the intention of
the persons named as proxies in the enclosed proxy card to vote the shares
represented thereby in accordance with their best judgment and in their
discretion, and authority to do so is included in the proxy.
INFORMATION ABOUT SHAREHOLDER PROPOSALS
Under certain circumstances, shareholders are entitled to present proposals
at shareholder meetings. If you wish to submit a proposal to be included in our
2001 proxy statement, we must receive it, in a form which complies with the
applicable securities laws, on or before December 1, 2000. In addition, in the
event a shareholder proposal is not submitted to us prior to February 12, 2001,
the proxy to be solicited by the Board of Directors for the 2001 Annual Meeting
will confer authority on the holders of the proxy to vote the shares in
accordance with their best judgement and discretion if the proposal is presented
at the 2001 Annual Meeting without any discussion of the proposal in the proxy
statement for such meeting. Please address your proposals to: United PanAm
Financial Corp., 1300 South El Camino Real, Suite 320, San Mateo, California
94402, Attention: Corporate Secretary
By order of the Board of Directors,
Lawrence J. Grill
President, Chief
Executive Officer and Secretary
May 19, 2000
25
<PAGE>
(Side 1 of Card)
UNITED PANAM FINANCIAL CORP.
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 20, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Guillermo Bron and Lawrence J. Grill,
and each of them, the attorneys, agents and proxies of the undersigned, with
full powers of substitution to each, to attend and act as proxy or proxies of
the undersigned at the Annual Meeting of Shareholders of United PanAm Financial
Corp. to be held at United PanAm Financial Corp. on Tuesday, June 20, 2000 at
9:30 a.m., and at any and all adjournments thereof, and to vote as specified
herein the number of shares which the undersigned, if personally present, would
be entitled to vote.
1. ELECTION OF DIRECTORS.
[_] FOR all nominees listed below (except as indicated to the
contrary below).
[_] WITHHOLD AUTHORITY to vote for all nominees listed below.
Director nominees: Ron Duncanson, John T. French, Edmund M. Kaufman and
Daniel L. Villanueva
INSTRUCTION: TO WITHHOLD AUTHORITY to vote for any individual
nominee, write that nominee's name in the space below.
________________________________________________
2. RATIFICATION OF APPOINTMENT OF KPMG L.L.P. as independent public
accountants of UPFC for the year ending December 31, 2000.
[_] FOR
[_] AGAINST
[_] ABSTAIN
________________________________________________
3. OTHER BUSINESS. In their discretion, the proxies are authorized
to vote upon such other business as may properly come before the meeting and at
any and all adjournments thereof. The Board of Directors at present knows of no
other business to be presented by or on behalf of UPFC or the Board of Directors
at the meeting.
PLEASE SIGN AND DATE ON REVERSE SIDE
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(Side 2 of Card)
PLEASE SIGN AND DATE BELOW
The undersigned hereby ratifies and confirms all that the attorneys and
proxies, or any of them, or their substitutes, shall lawfully do or cause to be
done by virtue hereof, and hereby revokes any and all proxies heretofore given
by the undersigned to vote at the meeting. The undersigned acknowledges receipt
of the Notice of Annual Meeting and the Proxy Statement accompanying such
notice.
Dated: _________________, 2000
Signed: _______________________________
Signed: ______________________________
Please date this proxy card and sign above exactly as your name appears on
this card. Joint owners should each sign personally. Corporate proxies should
be signed by an authorized officer. Executors, administrators, trustees, etc.,
should give their full titles.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS
NOMINATED BY THE BOARD OF DIRECTORS AND "FOR" RATIFICATION OF THE APPOINTMENT OF
KPMG LLP. THE PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS MADE, IT WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS NOMINATED BY
THE BOARD OF DIRECTORS AND "FOR" RATIFICATION OF THE APPOINTMENT OF KPMG LLP.
I (WE) WILL ____ WILL NOT ____ ATTEND THE MEETING IN PERSON.
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