<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
FIRST BANCORP
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
FIRST BANCORP
1519 Ponce de Leon Avenue
San Juan, Puerto Rico 00908
(787) 729-8200
NOTICE OF MEETING
AND
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 1999
To the Stockholders of First BanCorp Puerto Rico:
NOTICE IS HEREBY GIVEN that pursuant to a resolution of the Board of
Directors and Section 2 of the Corporation Bylaws, the 1999 Annual Meeting of
Stockholders of First BanCorp will be held at its principal offices located at
1519 Ponce de Leon Avenue, Santurce, San Juan, Puerto Rico, on Tuesday, April
27, 1999, at 2:00 p.m., for the purpose of considering and taking action on the
following matters, all of which are more completely set forth in the
accompanying Proxy Statement.
1. To elect four (4) directors for a term of three years or until their
successors have been elected and qualified.
2. To ratify the appointment of PricewaterhouseCoopers LLP as the Bank's
independent auditors for fiscal year 1999.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The stockholders or their representatives should register their credentials
or proxies with the Corporation's Secretary on or before 2:00 p.m. of the day of
the meeting.
The Board of Directors has set March 15, 1999, as the record date for the
determination of stockholders entitled to notice of, and to vote at, the
meeting.
San Juan, Puerto Rico
March 27, 1999
By order of the Board of Directors
Antonio R. Escriba-Oliver, Esq. Angel Alvarez Perez, Esq.
Secretary Chairman, President & CEO
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT AT THE MEETING, YOU ARE URGED TO COMPLETE SIGN, DATE AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING,
YOU MAY VOTE EITHER IN PERSON OR BY PROXY. YOU MAY REVOKE ANY PROXY THAT YOU
GIVE IN WRITING OR IN PERSON AT ANY TIME PRIOR TO ITS EXERCISE.
<PAGE>
FIRST BANCORP
1519 Ponce de Leon Avenue
Santurce, Puerto Rico 00908
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of First BanCorp ("the Corporation")
for use at the Annual Meeting of Stockholders to be held at the Corporation's
main offices located at 1519 Ponce de Leon Avenue, Santurce, Puerto Rico on the
27th day of April 1999, at 2:00 p.m., and at any adjournment thereof. This Proxy
Statement is expected to be mailed to stockholders of record on or about March
27, 1999.
SOLICITATION AND REVOCATION
Proxies in the form enclosed are solicited by and on behalf of the Board of
Directors. The persons named in the proxy form have been designated as proxies
by the Board of Directors. Shares represented by properly executed proxies
received will be voted at the Meeting in accordance with the instructions
specified therein. If no contrary instructions are given, each proxy received
will be voted for the matters described below. Any proxy given as a result of
this solicitation may be revoked by the stockholder at any time before it is
exercised in the following manner: (i) submitting a written notification to the
Secretary of First BanCorp., (ii) submitting a duly executed proxy bearing a
later date, or (iii) appearing at the Annual Meeting and giving proper notice to
the Secretary of his or her intention to vote in person. The proxies that are
being solicited may be exercised only at the Annual Meeting of First BanCorp or
at any adjournment of the Meeting.
Each proxy solicited hereby also confers discretionary authority on the
Board of Directors of the Corporation to vote the proxy with respect to the
election of any person as director if any nominee is unable to serve or for good
cause will not serve; matters incident to the conduct of the meeting; the
approval of minutes of the previous Annual Meeting held on May 26, 1998; and
upon such other matters as may properly come before the Annual Meeting. Except
with respect to procedural matters incident to the conduct of the Annual
Meeting, management is not aware of any business which may properly come before
the Annual Meeting other than those described in this Proxy Statement. However,
if any other matters come before the Annual Meeting, it is intended that proxies
solicited hereby will be voted with respect to those other matters in accordance
with the judgment of the person voting those proxies.
VOTING SECURITIES
The Board of Directors has fixed the close of business on March 15, 1999, as
the record date for the determination of stockholders entitled to receive notice
of, and to vote at, the Annual Meeting of Stockholders. At the close of business
on the record date there were 29,145,552(1) shares of the issued and outstanding
common stock of the Corporation in circulation, each of which is entitled to one
vote at the Annual Meeting.
The presence, either in person or by proxy, of at least a majority of the
Corporation's issued and outstanding shares of common stock in circulation is
necessary to constitute a quorum. For purposes of determining quorum,
abstentions and broker non-votes will be treated as shares that are present and
entitled to vote. A broker non-vote results when a broker or nominee has
expressly indicated that it does not have discretionary authority to vote on a
particular matter. Action with respect to Proposal 1: Election of Directors, and
Proposal 2: Ratification of Appointment of Independent Accountants, shall be
taken by a majority of the total votes present in person or by proxy and
entitled to vote. Therefore, as to such prospect, abstentions and broker
non-votes will have the same effect as a vote against the proposals. Each share
of common stock is entitled to one vote for the proposals to be considered.
- ------------------
1 Does not include 467,000 shares held as treasury shares, which are not
entitled to vote.
p. 1
<PAGE>
BENEFICIAL OWNERSHIP OF SECURITIES
The following sets forth information known to the Bank as to any persons or
entities which as of March 15, 1998, by themselves or as a group, as the term is
defined by section 13(d)(3) of the Securities Exchange Act of 1934, are the
beneficial owners of 5% or more of the issued and outstanding common stock of
the Corporation in circulation.
BENEFICIAL OWNERS OF 5% OR MORE:
<TABLE>
<CAPTION>
Name Number of Shares Percentage(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FMR Corp.
82 Devonshire Street
Boston, MA 02109 2,868,600 9.84%
Thomas Garity
d/b/a Garity & Co., Capital Management
1414 Banco Popular Center
Hato Rey, Puerto Rico 00918 2,199,202 7.55%
Angel Alvarez-Perez
Chairman, President and CEO
First BanCorp.
1519 Ponce de Leon Avenue
Santurce, PR 00908 2,187,602(3) 7.51%
</TABLE>
BENEFICIAL OWNERSHIP BY DIRECTORS OR NOMINEES:
The following table sets forth information with regard to the total number
of shares beneficially owned by each member of the Board of Directors and each
Executive Officer and by all Directors and Executive Officers and Officers as a
group.(4)
<TABLE>
<CAPTION>
Name Number of Shares Percentage(5)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Directors:
Angel Alvarez-Perez 2,511,602(6) 8.40%
Jose Julian Alvarez-Bracero 4,000 *
Rafael Bouet-Souffront 82,000 *
Francisco D. Fernandez 84,434 *
Armando Lopez-Ortiz 103,714 *
German E. Malaret 22,603 *
Hector M. Nevares 1,200,000(7) 4.01%
</TABLE>
- -----------------------
(2) As a percentage of 29,145,552 shares issued, outstanding and in circulation
as of 03/15/99.
(3) Does not include 324,000 shares subject to outstanding stock options. All
such options are fully exercisable at this time.
(4) Information as to beneficial ownership by officers and directors is derived
from information submitted by such officers or directors.
(5) As a percentage of 29,900,052 shares. This amount includes 29,145,552
shares issued, outstanding and in circulation as of March 15, 1999, and
754,500 shares subject to stock options held by officers. All outstanding
stock options are fully exercisable at this time.
(6) This amount includes 324,000 shares subject to outstanding stock options.
All such stock options are exercisable at this time.
(7) Under applicable regulations, shares are deemed to be beneficially owned by
a person if he or she directly or indirectly has or shares the power to
vote or dispose of the shares. Mr. Hector M. Nevares is the beneficial
owner of 150,000 shares; however, Mr. Nevares shares voting power on an
additional 1,050,000 shares over which he disclaims ownership.
p. 2
<PAGE>
Antonio Pavia-Villamil 66,981 *
Jose Teixidor 33,880 *
Angel L. Umpierre 649,490(8) 2.17%
Annie Astor de Carbonell, Senior EVP 507,924(9) 1.70%
Executive Officers:
Luis M. Beauchamp, Senior EVP 358,024(10) 1.20%
Aurelio Aleman, Executive VP 52,000(11) *
Fernando Batlle, Executive VP 52,500(12) *
Francisco Cortes, Executive VP 56,120(13) *
Randolfo Rivera 40,000(14)
Directors, Executive Officers and
Officers as a group
(20 persons) 5,887,963 19.70%
(*) Represents less than 1%.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTORS OF
FIRST BANCORP, DIRECTORS WHOSE TERMS CONTINUE AND EXECUTIVE
OFFICERS OF THE CORPORATION
The Bylaws of the Corporation provide that the Board of Directors shall
consist of a number of members fixed from time to time by resolution of an
absolute majority of the Board of Directors, provided that the number of
directors shall always be an odd number and not less than five nor more than
fifteen. The number of directors as established by resolution of the Board of
Directors is presently eleven. The Board of Directors shall be divided into
three classes as nearly equal in number as possible. The members of each class
are to be elected for a term of three years and until their successors are
elected and qualified. One class is elected each year on a rotating basis. On
October 1, 1998, the consummation of the reorganization of FirstBank into a
holding company structure was completed. Effective that date all of the Board of
Directors of the Bank became members of the Board of First BanCorp. The
information presented below regarding the time of service on the Board of
Directors includes terms served on the Board of FirstBank.
Unless otherwise directed, each proxy executed and returned by a stockholder
will be voted for the election of the nominees listed below. If any nominee
should be unable or unwilling to stand for election at the time of the Annual
Meeting, the proxies will nominate and vote for the replacement nominee or
nominees recommended by the Board of Directors. At this time, the Board of
Directors First BanCorp knows of no reason why any of the persons listed below
may not be able to serve as a director if elected.
- -------------------------
(8) This amount includes 575,790 shares beneficially owned by Mr. Umpierre and
73,000 beneficially owned by his wife.
(9) This amount includes 44,500 shares, subject to outstanding stock options.
All such stock options are exercisable at this time.
(10) This amount includes 47,500 shares, subject to outstanding stock options.
All such stock options are exercisable at this time.
(11) This amount represents 40,000 shares subject to outstanding stock options.
All such stock options are exercisable at this time.
(12) This amount includes 40,000 shares subject to outstanding stock options.
All such stock options are exercisable at this time.
(13) This amount includes 8,000 shares subject to outstanding stock options. All
such stock options are exercisable at this time.
(14) This amount includes 40,000 shares subject to outstanding stock options.
All such stock options are exercisable at this time.
p. 3
<PAGE>
PROPOSAL #1
ELECTION OF DIRECTORS
NOMINEES FOR A THREE-YEAR TERM EXPIRING 2002
Name
- ----
Francisco D. Fernandez, 71
Consulting Engineer. Founder and Chief Executive Officer of Abacus
Corporation, an information systems consulting firm, since 1970. Member of the
Consulting Board of Pavia Hospital, Santurce, Puerto Rico, until June 1996.
Chairman of First Leasing & Rental Corporation and Director of First Federal
Finance Corporation.(15) Director since 1981.
German E. Malaret, 70
Doctor of Medicine. Medical Director of the Puerto Rico and Caribbean
Cardiovascular Center. Former State Surgeon for the Puerto Rico National Guard.
Past Governor for the District of Puerto Rico of the American College of
Physicians and of the American College of Cardiology, and Associate Professor of
Medicine of the University of Puerto Rico. Chairman of FirstBank since 1990.
Director since 1976.
Annie Astor de Carbonell, 41
Senior Executive Vice President - Chief Financial Officer
Certified Public Accountant. Senior Executive Vice President & Chief
Financial Officer of FirstBank since March 1997. From 1987 to 1998, Executive
Vice President and Chief Financial Officer. From 1984 to 1987, Senior Vice
President and Comptroller. Prior to joining the Bank, Senior Auditor at Peat
Marwick Mitchell & Co. Director of First Puerto Rico Growth and Income Fund,
Inc. since 1998. Director of Puerto Rico Telephone Company from January 1993 to
March 1999 and Chairperson from 1997 to March 1999. Member of the Board of
Trustees of Sacred Heart University from 1991 to 1995, Chairperson from 1993 to
1995. Director of First Leasing & Rental Corporation and of First Federal
Finance Corporation.(15) Joined the Bank in 1983. Director since July 1995.
Rafael Bouet-Souffront, 52
Industrial Engineer. From 1987 to present, President of Bouet & Rodriguez,
Inc., a company engaged in the installation and construction of industrial,
residential and institutional electrical projects. From 1980 to 1987, President
of North Caribbean Electrical Corp., electrical contractors. Member of the Board
of Directors of First Federal Finance Corp.(15) Appointed to the Board of
Directors in April 1998.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE ABOVE NOMINEES BE ELECTED AS
DIRECTORS. THE VOTE OF THE HOLDERS OF THE MAJORITY OF THE TOTAL VOTES ELIGIBLE
TO BE CAST AT THE ANNUAL MEETING IS REQUIRED FOR THE ELECTION OF THE NOMINEES.
MEMBERS OF THE BOARD CONTINUING IN OFFICE
Directors Whose Terms Expire in 2000
Name
- ----
Jose Julian Alvarez-Bracero, 65(16)
January 1, 1999 to present, Executive Director of "Fundacion Cruz Azul de
Puerto Rico, Inc.". From 1995 until retirement on December 31, 1998, President
and CEO, La Cruz Azul de Puerto Rico. From 1981 to December 1994, Executive
Director, La Cruz Azul de Puerto Rico. Member of the Puerto Rico Chamber of
Commerce and former President (1990 to 1991). Past member of the Board of
Directors of Banco Central Corporation, from April 1987 to January 1996. Member
of the Board of First Federal Finance Corporation.(15) Director since November
1996.
Armando Lopez-Ortiz, 69
Consulting Engineer. President of Blythe Industries until retirement in
1981. Member of the Board of Ready Mix Concrete, Inc., until 1995. Director of
First Federal Finance Corporation and First Leasing & Rental Corporation.(15)
Director since 1986.
- ---------------
(15) First Federal Finance Corporation (d/b/a) Money Express- "La Financiera")
and First Leasing & Rental Corporation are subsidiaries of FirstBank.
(16) Not related to the Chairman, President and CEO Angel Alvarez-Perez.
p. 4
<PAGE>
Hector M. Nevares, 48
Private Investor. Vice Chairman Suiza Foods Corp. from 1996 to present.
Partner in Suiza Realty, S.E. Member of the Board of Directors of the Government
Development Bank of Puerto Rico from 1989 to 1993. Director since June 1993.
Jose Teixidor, 45
Executive Vice President and General Manager, B. Fernandez & Hnos., Inc.,
importers and distributors of grocery products, beer, wines and liquors.
Chairman of the Board, Pan Pepin Inc. Chairman of the Board, Baguettes, Inc.
President, Eagle Investment Fund, Inc. Member of the Board of Directors of El
Nuevo Dia, Inc. Director since January 1994.
Directors Whose Term Expire In 2002
Angel Alvarez-Perez, 51
Chairman, President & Chief Executive Officer
Elected Chairman, President & Chief Executive Officer of First BanCorp. in
November 1998. President and Chief Executive Officer of FirstBank since
September 1990. From August 10, 1990 to September 1990, Acting President. March
1, 1990 to August 1990, Executive Vice President. Prior to joining the Bank,
practicing Attorney at Law specializing in corporate and commercial law. From
1987 to February 1990, partner with the law firm of Vazquez, Vizcarrondo,
Alvarez, Angelet & Gonzalez. Director of the Federal Home Loan Bank of New York
from December 1993 to January 1995. Member of the Board of Directors of Visa
International. Chairman and CEO of First Federal Finance Corporation, CEO and
Director of First Leasing & Rental Corporation(17). Director since 1989.
Antonio Pavia-Villamil, 71
Doctor of Medicine in private practice. Member of the medical staff of
Pavia Hospital in Santurce, Puerto Rico, since 1959. Medical Director and
Chairman of Pavia Hospital Advisory Board. Member of the Board of First Federal
Finance Corporation and First Leasing & Rental Corporation(17). Director since
1981.
Angel L. Umpierre, 69
Private Investor. Certified Public Accountant. President of Desarrollos Sur
Oeste, Inc. Partner Umpierre & Rodriguez, S.E. From 1974 until retirement in
1998, Executive Vice President, director and major stockholder of Pan Pepin,
Inc. Mr. Umpierre previously served as a director of First Federal Savings Bank
from 1988 until 1990. Director since 1994.
SENIOR EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following sets forth information with respect to executive officers of
FirstBank who are not directors. Effective October 1998, the following Officers
of the Bank were appointed Executive Officers of the Corporation.
Luis M. Beauchamp, 56
Senior Executive Vice President and Chief Lending Officer
From March 1997 to present, Senior Executive Vice President and Chief
lending Officer of FirstBank. From 1990 to March 1997, Executive Vice President,
Chief Lending Officer. From 1988 to 1990, General Manager for New York banking
operations for Banco de Ponce. From 1968 to 1988, The Chase Manhattan Bank,
N.A.: Regional Manager for Ecuador and Colombia operations and corporate finance
for Central American operations, 1988; Country Manager for Mexico from 1986 to
1988; Manager of wholesale banking in Puerto Rico from 1984 to 1986. Member of
the Board of Directors of First Leasing & Rental Corporation and of First
Federal Finance Corp. d/b/a "Money Express." Joined the Bank in 1990.
Aurelio Aleman, 40
Executive Vice President
President First Leasing & Rental Corporation
From February 1998 to present Executive Vice President, Retail Banking for
FirstBank, and President of First Leasing and Rental Corporation, FirstBank's
leasing and rental subsidiary From 1996 to 1998, Vice President CitiBank, N.A.,
responsible for wholesale and retail automobile financing and retail mortgage
business. From 1994 to 1996, Vice President Chase Manhattan Bank, N.A., Banking
Operations and Technology for Corporate Capital Markets. Joined the Bank in
1998.
- ----------------
(17) First Federal Finance Corporation (d/b/a) Money Express-"La Financiera")
and First Leasing & Rental Corporation are subsidiaries of FirstBank.
p. 5
<PAGE>
Fernando L. Batlle, 32
Executive Vice President
President of First Federal Finance Corporation
Executive Vice President - Branch Banking and Mortgage Banking of FirstBank
and President of First Federal Finance Corporation d/b/a "Money Express",
FirstBank's wholly owned small loan subsidiary, since October 1997. From April
1996 to October 1997, Managing Director Neva Management Corporation, an
investment management firm. From December 1994 to April 1996, Senior
VP/Investments Department and Treasurer of FirstBank, and from June 1994 to
December 1994, Vice President Secondary Market at FirstBank, Puerto Rico. From
September 1992 to June 1994, MBA Program, Harvard Business School, obtaining MBA
in June 1994. From 1989 to August 1992, Assistant VP, Puerto Rico Home Mortgage.
Francisco Cortes-Aguayo, 56
Executive Vice President
Appointed Executive Vice President of FirstBank in charge of Banking
Operations in May 1998. From December 1990 to December 1997, Executive Vice
President in charge of the Real Estate Mortgage Division. Senior Vice
President/Group Executive of Bank Facilities of from 1989 to 1990. Senior Vice
President of Operations from 1983 to 1989. Joined the Bank in 1967.
Randolfo Rivera, 45
Executive Vice President
Executive Vice President in charge of Corporate Banking of FirstBank since
May 1998. From April 1990 to December 1996, Vice President and Component
Executive for Local Companies, Public Sector and Institutional Markets for Chase
Manhattan Bank, N.A. in Puerto Rico. From January 1997 to May 1998, Corporate
Finance Executive in charge of the Caribbean and Central American Region for
Chase Manhattan Bank in Puerto Rico. Joined the Bank in May 1998.
OTHER MANAGEMENT OFFICERS
Luis Cabrera-Marin, 29
Senior Vice President - Treasury and Investments
Appointed Senior Vice President of the Investment and Treasury Department
in May 1997. Executive Trust Officer since January 1998. From August 1995 to May
1997, Director of Asset Management, Government Development Bank of Puerto Rico.
From August 1994 to August 1995, Investment Executive, Oriental Financial
Services, Inc., Puerto Rico. From April 1994 to August 1994, Financial
Consultant CitiBank, NA. Joined the Bank in 1997.
Aida Garcia, 47
Senior Vice President - Human Resources
Director of Human Resources since May 1990, From 1988 until 1990, Second
Vice president, Human Resources. Prior to joining the Bank, Director of Human
Resources at Dr. Federico Trilla Hospital in Carolina. Joined the Bank in 1988.
Antonio R. Escriba-Oliver, 64
Senior Vice President - Secretary
Secretary of the Board of Directors since 1987. Legal Counsel, 1985 to
1987. Prior to joining the Bank, Attorney at Law in private practice. Secretary
of the boards of directors of First Leasing & Rental Corporation and First
Federal Finance Corporation. Joined the Bank in 1985.
Laura Villarino-Tur, 40
Senior Vice President - Comptroller
Certified Public Accountant. Appointed Senior Vice President - Comptroller
of FirstBank in 1987. Vice President, Assistant Comptroller from 1984 to 1987.
Prior to joining the Bank, Staff Auditor with Peat Marwick Mitchell & Co. Joined
the Bank in 1984.
p. 6
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Corporation comprises the same persons who
are the directors of FirstBank. During 1998 the Board of Directors of First
BanCorp held one regular meeting. The Board of Directors of the Bank held 12
regular meetings and one special meeting during fiscal 1998. Each of the
incumbent directors attended in excess of 75% of the aggregate of the total
meetings of the Board of Directors and meetings of the committees of the Board
on which they served.
AUDIT COMMITTEE
The Audit Committee is composed of four outside directors who are not and
have never been involved in the day-to-day management of the Corporation or of
the Bank. The functions of the Audit Committee include review of the reports of
examination from regulatory agencies as well as examinations and comments from
the independent accountants, Internal Auditor and Compliance Officer regarding
internal controls and audit procedures and actions taken by management with
regard to such matters. The Committee has the power at its discretion to order
interim and surprise audits. The Directors who served on the Audit Committee
during fiscal 1998 were German E. Malaret, Chairman; Francisco D. Fernandez;
Jose Julian Alvarez; Armando Lopez Ortiz; and Angel L. Umpierre.(18) During
fiscal 1998, the Audit Committee met a total of 11 times.
COMPENSATION COMMITTEE
The Compensation Committee is responsible for administering the executive
compensation program, including the stock option plans, and for evaluating the
performance of key executives, including that of the President and CEO. During
fiscal 1998, the Committee was composed of German E. Malaret, Francisco D.
Fernandez and Antonio Pavia-Villamil. The Compensation Committee met once during
1998.
NOMINATING COMMITTEE
Pursuant to Article I, Section 14, of the Bylaws of the Corporation, the
Board of Directors acts as the Nominating Committee for selecting the nominees
for the election of directors at the next succeeding Annual Meeting of
Stockholders. No nominations for directors except those made by the Board shall
be voted upon at the Annual Meeting unless other nominations by stockholders are
made in writing and delivered to the Secretary of the Bank at least thirty (30)
days prior to the date of the annual meeting. Ballots bearing the names of the
persons nominated by the Nominating Committee and by stockholders, if any, will
be provided for use at the Annual Meeting.
COMPENSATION OF DIRECTORS
Outside Directors of the Corporation did not receive compensation during
fiscal 1998. Outside Directors of FirstBank were entitled to a fee of $900 per
each regular meeting of the Board of the Bank attended, with the exception of
the Chairman, who receives $1,800 for each regular Bank Board meeting attended.
Each outside Director of the Bank, including the Chairman, receives $500 per
each special or extraordinary meeting of the Board attended as well as for
attendance to any standing committee of the Board, and $400 for meetings of the
boards of any subsidiary to which they belong. Officers of the Corporation, the
Bank or of any subsidiary do not receive fees for service on the boards of the
Corporation, the Bank, or the subsidiaries, nor for participation in any
committee.
The following table sets forth fees paid to outside Directors of the
Corporation for meetings held by the Board of Directors, committees, and
subsidiaries.
- --------------
(18) On September 22, 1998 Armando Lopez Ortiz resigned for personal reasons. He
was replaced by Angel L. Umpierre.
p. 7
<PAGE>
BOARD, COMMITTEES & SUBSIDIARIES MEETING 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
BOARD INFORMATION INTERNAL COMPENSATION MONEY EXPRESS FIRST LEASING TOTAL
OF EXPANDED AUDIT CREDIT LOAN & OPTION FFCORP. & RENTAL FEES
DIRECTOR TECHNOLOGY
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GERMAN E. MALARET
CHAIRMAN 18,100.00 5,500.00 5,000.00 500.00 29,100.00
- ------------------------------------------------------------------------------------------------------------------------------------
JOSE JULIAN
ALVAREZ
DIRECTOR 9,000.00 5,500.00 4,500.00 19,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
FRANCISCO D.
FERNANDEZ
DIRECTOR 10,400.00 5,000.00 5,000.00 5,000.00 2,000.00 500.00 1,200.00 1,600.00 30,700.00
- ------------------------------------------------------------------------------------------------------------------------------------
ARMANDO LOPEZ
RTIZ, DIRECTOR 10,400.00 4,500.00 5,000.00 1,200.00 1,600.00 22,700.00
- ------------------------------------------------------------------------------------------------------------------------------------
HECTOR M. NEVAREZ
DIRECTOR 8,600.00 3,500.00 12,100.00
- ------------------------------------------------------------------------------------------------------------------------------------
ANTONIO PAVIA
DIRECTOR 9,500.00 5,000.00 2,000.00 500.00 1,200.00 1,600.00 19,800.00
- ------------------------------------------------------------------------------------------------------------------------------------
JOSE TEIXIDOR
DIRECTOR 9,500.00 3,500.00 5,000.00 3,000.00 21,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
ANGEL UMPIERRE
DIRECTOR 8,600.00 500.00 1,500.00 10,600.00
- ------------------------------------------------------------------------------------------------------------------------------------
RAFAEL BOUET
DIRECTOR 4,500.00 3,000.00 400.00 7,900.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
MR. BOUET WAS APPOINTED TO FIRST FEDERAL FINANCE CORPORATION EFFECTIVE 10/22/98
MR. BOUET WAS APPOINTED TO THE BOARD OF DIRECTORS EFFECTIVE 5/25/98
MR. ANGEL UMPIERRE WAS APPOINTED TO THE AUDIT COMMITTEE EFFECTIVE 9/22/98
COMPENSATION OF EXECUTIVE OFFICERS
The summary compensation table set forth below discloses compensation for
the Chief Executive Officer and the most highly paid executive officers of the
Corporation, FirstBank or its subsidiaries who worked with the Corporation, the
Bank or such subsidiaries during any period of such fiscal year and whose total
cash compensation for fiscal 1998 exceeded $100,000 (named executives).
<PAGE>
Summary Compensation
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Name & Principal Position Year Salary($) Bonus($) Other Compensation($)(19)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Angel Alvarez-Perez 1998 557,597 400,000 1,999
President and CEO 1997 550,007 300,000 5,700
1996 475,000 175,000 3,780
- ------------------------------------------------------------------------------------------------------------------------------------
Annie Astor de Carbonell 1998 265,008 188,000 1,729
Senior Executive Vice President 1997 265,000 80,000 5,555
Chief Financial Officer 1996 261,661 75,000 3,780
- ------------------------------------------------------------------------------------------------------------------------------------
Luis M. Beauchamp
Senior Executive Vice President 1998 265,008 175,000 1,999
and Chief Lending Officer 1997 265,000 80,000 5,555
1996 261,661 75,000 3,780
- ------------------------------------------------------------------------------------------------------------------------------------
Aurelio Aleman* 1998 203,849 150,000 -0-
Executive Vice President 1997 -0- -0- -0-
Retail Banking, First Leasing and 1996 -0- -0- -0-
Rental Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
Fernando Batlle* 1998 200,005 150,000 1,383
Executive Vice President 1997 200,000 5,000 -0-
Branch Banking, Mortgage and 1996 -0- -0- -0-
Money Express
- ------------------------------------------------------------------------------------------------------------------------------------
Randolfo Rivera* 1998 109,233 150,000 -0-
Executive Vice President
Corporate Banking
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Mr. Fernando Batlle joined the Bank in 1997 and commenced participation in
the 165(e) Plan in 1998; Messrs. Aurelio Aleman and Randolfo Rivera joined the
Bank in January and May 1998, respectively. Pursuant to the Bank's 165(e) Plan,
employees may not participate until completion of one year of service.
- --------------
(19) Represents the Bank's pro rata contribution to the executive's
participation in the Bank's Defined Contribution Retirement Plan.
p. 8
<PAGE>
STOCK OPTION PLAN
The Stock Option Plan is intended to encourage optionees to remain in the
employ of the Corporation, the Bank or subsidiaries and to assist the Board of
Directors and management in its efforts to attract and to recruit qualified
officers to serve the Corporation, the Bank or its subsidiaries. The stock
subject to such stock options shall be authorized but unissued shares of the
Corporation's $1.00 par value common stock.
The Plan is administered by the Compensation Committee (the "Committee"),
whose members are all outside directors appointed by the Board of Directors. All
members of the Committee meet the criteria of "disinterested persons" within the
meaning of Rule 16b-3 of the Securities Exchange Act of 1934 (the "Act"). The
Committee has discretion to select which eligible persons will be granted stock
options, the number of shares of common stock that may be subject to such
options, whether stock appreciation rights will be granted for such options and,
generally, to determine the terms and conditions in accordance with the Plan.
The Plan also provides for proportionate adjustments in the event of changes in
capitalization resulting, among others, from merger, consolidation,
reorganization, recapitalization, reclassification, stock dividends or splits.
All options must be granted within ten years of the effective dates of the Plan.
All options granted expire on the date specified in each individual option
agreement which date will not be later than the tenth anniversary of the date
the option was granted. An eligible person may hold more than one option at a
time. The purchase price of options granted shall not be less than the fair
market value of the Corporation's common stock at the date of the grant.
The Plan may be amended at any time by the Board of Directors, subject to
any applicable regulatory limitation or regulatory approval requirement.
However, shareholder approval is required if an amendment increases the number
of shares of common stock that may be subject to options, materially changes the
eligibility criteria, changes the minimum purchase price or increases the
maximum term of the options.
The Plan also provides that no person shall be eligible for a stock option
grant if at the date of such grant such person beneficially owns more than ten
percent (10%) of the outstanding common stock of the Corporation. In addition,
pursuant to the change of control provisions contained in Section 12 of the
Banking Law of Puerto Rico as amended (7 L.P.R.A.ss.39), to the extent that by
the exercise of an option a person would acquire the beneficial ownership of
five percent (5%) or more of the issued and outstanding common stock of the
Corporation, such person must obtain the approval of the Commissioner of
Financial Institutions prior to the exercise of such option. Options granted
under the Plans are not transferable other than by will or the laws of descent
and distribution. During the life of the optionee, the options may be exercised
only by such optionee. In the event of the death or disability of an optionee,
options may be exercised whether or not exercisable at the time of such death or
disability within one year after the date of such death or disability, but not
later than the date the option would otherwise have expired.
If the employment of an employee is terminated by retirement in accordance
with the Corporation's normal retirement policies or is voluntarily or
involuntarily terminated within one year after the date of a change in control,
the option may be exercised within three months of such occurrence whether or
not the option is exercisable at such time, but not later than the date that the
option would otherwise have expired.
Options may be exercised by payment of the fair market price per share
established in the Option Agreement, as adjusted for any changes in
capitalization, if applicable. Payment may be in cash or at the election of the
optionee, common stock of the Corporation having an aggregate fair market value
equal to or less than the total option price (i.e. purchase price multiplied by
the number of shares bought), plus cash. At the discretion of the Committee, the
optionee could be granted stock appreciation rights with respect to an option.
In April 1987, the Stockholders ratified the Bank's first Stock Option Plan
(the "1989 Plan") which expired on January 21, 1997. As of such expiration date,
no new options may be granted under the expired 1987 Plan. On April 19, 1997,
the Stockholders ratified a new Stock Option Plan (the "1997 Plan"), for which
2,898,704(20) shares were set aside. As of December 31, 1998, there were a total
of 234,000 shares subject to unexercised options granted under the 1987 Plan and
520,500 under the 1997 Plan. As of December 31, 1998, the total of unexercised
options under the two Plans was 754,500 shares. Except to the extent limited by
the Puerto Rico Internal Revenue Code of 1994, as amended, all outstanding
options are now exercisable.
- ---------------------
(20) Adjusted to reflect 100% stock split distributed on May 29, 1998.
p. 9
<PAGE>
OPTION/GRANTS IN LAST FISCAL YEAR
The table set forth below discloses the information regarding the stock
options granted to the Bank's Chief Executive Officer and the most highly paid
executives during 1998.
<TABLE>
<CAPTION>
Shares %
Underlying Granted Exercise Value(1)
Options/SAR in Fiscal Base Expiration Grant Date
Name Granted 1998 Price Date Present Value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Angel Alvarez Perez 100,000 34% 26.00 11/23/2008 $1,299,000
Luis Beauchamp 18,000 7% 26.00 11/23/2008 233,820
Annie Astor de Carbonell 16,000 6% 26.00 11/23/2008 207,840
Aurelio Aleman 40,000 13% 19.19 02/24/2008 218,800
12,000 4% 26.00 11/23/2008 155,880
Fernando Batlle 20,000 7% 19.19 02/24/2008 109,400
12,000 4% 26.00 11/23/2008 155,880
Randolfo Rivera 40,000 13% 27.09 05/26/2008 416,120
Total 88%
</TABLE>
(1)The Black/Scholes pricing model was used to value these stock options.
Options granted on February 24, 1998 were granted at $19.19 and options granted
on May 26, 1998 at $27.09. Prices shown for options of February 24, 1998 and May
26, 1998 have been adjusted to reflect the 100% stock split distributed on May
29, 1998. Options granted on November 17, 1998 were granted at $26.00. All
options were granted at the market price of FirstBank's Common Stock on the date
of grant. Options were granted for a term of ten years and, except to the extent
limited by law, are exercisable at any time during the term of the option.
In calculating the value of such options, the following assumptions were made:
* Risk-free rate obtained from a U.S. Federal Government obligation
maturing close to expiration date of the options is (5.31%) for the
Options granted on February 24, 1998. It is (5.569%) for the options
granted on May 26, 1998, and (4.872%) for the options granted on
November 17, 1998.
* Volatility assumption is the historical price volatility of the
Corporation's closing stock price as measured by standard deviation of
day-to-day logarithmic price changes. The Volatility for options
granted on February 24, 1998 is (29.578%); for those granted on May
26, 1998 it is (27.310%); and for those granted on November 17, 1998,
it is (41.020%).
* The historical growth rates of dividends were used to project future
dividends.
Based on the above assumptions, the theoretical value of the stock options
granted on February 24, 1998 is $5.47; for options granted on May 26, 1998, it
is $10.40; and for the options granted on November 17, 1998 it is $12.99. These
valuations do not take into account the non-transferability or forfeiture
provisions of the Stock Option Plan.
The table set forth below discloses the aggregated the options/SAR exercises
and value realized and the number of unexercised options SAR's and the value
thereof with regards to FirstBank's Chief Executive Officer and the most highly
paid executives (named executives) as of December 31, 1998 under the Plans.
p. 10
<PAGE>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS/SAR VALUES
<TABLE>
<CAPTION>
Aggregate
Realizable
value of
Number of Unexercised In-
Unexercised -the-Money
Shares Options at Options at
Acquired 12/31/98(1) 12/31/98
Name on Exercise(#) Value Realized Exercisable(#) Exercisable($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Angel Alvarez-Perez -0- -0- 324,000 $4,860,750
Annie Astor de Carbonell -0- -0- 105,000 1,923,572
Luis M. Beauchamp -0- -0- 113,000 2,019,322
Aurelio Aleman -0- -0- 52,000 490,250
Fernando Batlle -0- -0- 52,000 561,500
Randolfo Rivera -0- -0- 40,000 123,740
</TABLE>
(1) On December 31, 1998, the closing price of First BanCorp's common stock
was $30.1875. On December 31, 1998 the average price at which the named
executives could have exercised their outstanding options was $5.7915 for
options granted on 11/28/94, $15.625 for options granted on 11/13/97, $19.1875
for options granted on 2/24/98, $27.094 for options granted on 5/26/98 and
$26.00 for options granted on 11/17/98. As of 12/31/98 Angel Alvarez-Perez held
unexercised options for 120,000 granted on 11/28/94, 104,000 granted on
11/25/97, and 100,000 granted on 11/17/98: Annie Astor de Carbonell, held
unexercised options for 57,000 granted on 11/28/94, 32,000 granted on 11/25/97
and 16,000 granted on 11/17/98: Luis M. Beauchamp, held unexercised options for
57,000 granted on 11/28/94, 38,000 granted on 11/25/97 and 18,000 granted on
11/17/98. Mr. Aurelio Aleman held an unexercised option for 40,000 shares
granted on 2/24/98 and 12,000 granted on 11/17/98: Fernando Batlle holds
unexercised option for 20,000 shares granted on 11/26/97, 20,000 granted on
2/24/98 and 12,000 granted on 11/17/98. Mr. Randolfo Rivera held an unexercised
option for 40,000 shares granted on 5/26/98. All options were granted at an
exercise price equal to the market price of FirstBank's common stock on the date
of grant. The Bank's Stock Option Plan provides for adjustments in the number
and price of options due to changes in capitalization resulting from stock
dividends or splits. All options granted prior May 29, 1998 have been adjusted
to reflect the 100% stock split distributed in May 29, 1998.
EMPLOYMENT AGREEMENTS
The following discloses information regarding the employment agreements of
the named executives with FirstBank.
<TABLE>
<CAPTION>
Name Effective Date Current Base Salary($) Term of Years
---- -------------- ---------------------- -------------
<S> <C> <C> <C>
Angel Alvarez-Perez 05-14-98 $550,000 4
Annie Astor de Carbonell 04-14-98 265,000 4
Luis M. Beauchamp 05-14-98 265,000 4
Aurelio Aleman 02-24-98 200,000 4
Fernando Batlle 05-14-98 200,000 4
Randolfo Rivera 05-26-98 200,000 4
</TABLE>
The agreements provide that on each anniversary of the date of commencement
of each agreement the term of such agreement shall be automatically extended for
an additional one (1) year period beyond the then effective expiration date,
unless either party receives written notice that the agreement shall not be
further extended. Notwithstanding such contract, the Board of Directors may
terminate the contracting officer at any time; however, unless such termination
is for cause, the contracting officer will continue to be entitled to the
compensation provided in the contract for the remaining term thereof. "Cause" is
defined to include personal dishonesty, incompetence, willful misconduct, breach
of fiduciary duty, intentional failure to perform stated duties, willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease and desist order or any material breach of any
provision of the Employment Agreement.
p. 11
<PAGE>
In the event of a "change in control" of the Bank during the term of the
employment agreements, the executive shall be entitled to receive a lump sum
severance payment equal to his or her then current base annual salary plus the
highest cash performance bonus received by the executive in any of the four (4)
fiscal years prior to the date of the change in control, multiplied by the term
of years for which such contracting officer's employment agreement was to be
effective on the date into which it was entered. The severance payment that each
of the contracting officers would have received if his or her agreement had been
terminated as of December 31, 1998, pursuant to a change of control of the Bank,
was: Angel Alvarez-Perez, $3,800,000; Annie Astor de Carbonell, $1,700,000; Luis
M. Beauchamp, $1,760,000; Aurelio Aleman, $1,400,000; Fernando Batlle,
$1,400,000, Randolfo Rivera, $1,400,000.
Pursuant to the employment agreements, a "change in control" shall be deemed
to have taken place if: a third person, including a group as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner of
shares of the Bank having 25% or more of the total number of votes which may be
cast for the election of directors of the Bank or which, by cumulative voting,
if permitted by the Bank's Charter or Bylaws, would enable such third person to
elect 25% or more of the directors of the Bank; or if, as a result of, or in
connection with, any cash tender or exchange offer, merger or other business
combination, sales of assets or contested election, or any combination of the
foregoing transactions, the persons who were directors of the Bank before such
transactions shall cease to constitute a majority of the Board of the Bank or
any successor institution.
DEFINED CONTRIBUTION RETIREMENT PLAN
The Bank has a Defined Contribution Retirement Plan under Section 165(e) of
Puerto Rico's Internal Revenue Law(21) which provides participating employees
with retirement, death, disability and termination of employment benefits in
accordance with their participation. The Plan complies with the "Employee
Retirement Income Security Act of 1974 (ERISA)" and the "Retirement Equity Act
of 1984 (ERA)." The Bank's employees are eligible to participate in the Plan
after completing one year of service and there is no age requirement. An
individual account is maintained for each participant and benefits are paid
based solely on the amount of each participant's account.
Participating employees may defer from 1% to 10% of their annual salary, up
to a maximum of $8,000 into the Plan on a pre-tax basis as employee salary
savings contributions. Each year the Bank will make a contribution equal to 25%
of each participating employee's salary savings contribution; however, no match
is provided for salary savings contributions in excess of 4% of compensation. In
addition, at the end of the fiscal year, the Bank may make, but is not obligated
to do so, additional contributions in an amount determined by the Board of
Directors; however, the maximum of any additional contribution in any year may
not exceed 15% of the total compensation of all eligible employees participating
in the Plan and no basic monthly or additional annual matches need be made on
years during which the Bank incurs a loss.
In fiscal 1998 the total contribution to the Plan by the Bank amounted to
$330,000, which funds were distributed on a pro rata basis among all
participating employees. The table below sets forth the total of the Bank's
contribution during fiscal 1998 to the named executives of the Bank who
participate in the Plan.
Name Total Bank Contribution(22)
---- -------------------------
Angel Alvarez-Perez $1,999
Annie Astor de Carbonell $1,729
Luis M. Beauchamp $1,999
Fernando Batlle $1,383
REPORT OF THE COMPENSATION COMMITTEE
The Bank's Executive Compensation Program is administered by the
Compensation Committee, which in fiscal 1998 was composed of Messrs. German E.
Malaret, Antonio Pavia-Villamil and Francisco D. Fernandez, none of whom is, or
has ever been an employee of the Corporation or of the Bank.
- ----------------------
(21) Section 165(e) of the Commonwealth of Puerto Rico Internal Revenue Law is
similar to Section 401(k) of the Federal Internal Revenue Code.
(22) Pro rata Bank contributions to the Plan of named executives are also
included in the Summary Compensation Table.
p. 12
<PAGE>
Executive Compensation Policy
The Bank operates in a highly competitive industry where the quality,
creativity and professionalism of its executives is of utmost importance to the
success, profitability and growth of the institution. The underlying philosophy
of any effective compensation program must be to retain and recruit top
executives who will make significant contributions to the promotion and
achievement of the institutional goals which will ultimately result in enhanced
shareholder value. Accordingly, FirstBank has put in place a compensation policy
which is designed to recruit, retain and reward key executives who demonstrate
the capacity to lead the Bank in achieving its business objectives.
Objectives
o Stimulate behavior that will lead to the attainment of the Bank's goals.
o Provide additional short-term and long-term variable compensation to enable
implementation of a pay-for-performance package.
In making their determinations for fiscal 1998, the Compensation Committee
reviewed the Bank's performance as a whole and the performance of the named
executives in relation to the performance goals previously set forth. The
Committee also took into consideration the performance of the Bank in comparison
with the performance of other banks in the community as well as the performance
of the Bank in relation to other institutions of similar size and complexity of
loan portfolio and other assets. On the basis of their review, the Committee
took the following actions with regard to the Named Executives.
Incentive Bonus
- ---------------
Director of First Puerto Rico Growth and Income Fund, Inc. since 1998. The
Executive Compensation Program provides for an incentive bonus plan whose
purpose is to maximize the efficiency and effectiveness of the operation of the
Bank. The Committee has designated the CEO and the Executive Vice Presidents of
the Bank as plan participants. The incentive bonus is linked to the performance
of the Bank as a whole as well as the achievement of individual goals. On
November 17, 1998, the Committee recommended performance bonuses for the
following named executives: Luis M. Beauchamp, Senior Executive Vice President
$175,000; Annie Astor de Carbonell, Senior Executive Vice President, $160,000;
Aurelio Aleman, Executive Vice President, $150,000; Fernando Batlle, Executive
Vice President, $150,000; and Randolfo Rivera, $150,000.
Long-Term Compensation
- ----------------------
The Executive Compensation Plan also contemplates long-term incentive
compensation in the form of stock options under the Bank's Employee Stock Option
Plan (the "SOP"). The Compensations Committee has discretion to select which of
the eligible persons will be granted stock options, whether stock appreciation
rights will be granted with such options and generally to determine the terms
and conditions of such options in accordance with the provisions of the SOP.
During fiscal 1998 the following 10-year options were granted to the named
executives: Luis M. Beauchamp, 18,000; Annie Astor de Carbonell, 16,000; Aurelio
Aleman, 52,000; Fernando L. Batlle, 32,000; and Randolfo Rivera, 40,000. As
previously set forth, all options were granted at an exercise price equal to the
price of the Stock as of the close of business on the date the options were
granted.
Compensation of Chief Executive Officer
Mr. Angel Alvarez-Perez has served as President and Chief Executive Officer
since September 1990. On November 17, 1998 the Committee granted the President a
cash bonus of $400,000 as well as a long-term compensation in the form of a
10-year option to purchase 100,000 shares of FirstBank common stock. The price
per share of such grant was $26.00. The compensation granted was determined in
accordance with the Bank's compensation policy described above. In making such
determination the Committee took into consideration the Bank's performance
during 1998, including a significant increase in First BanCorp's earnings,
continued control of operating expenses and the achievement of goals which are
geared to ensure the Bank's continued trend of earnings growth that has produced
excellent value for First BanCorp's stockholder.
German E. Malaret
Francisco D. Fernandez
Antonio Pavia-Villamil
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee has served as an officer
or employee of the Corporation, the Bank or of a subsidiary of the Bank.
p. 13
<PAGE>
PERFORMANCE OF FIRSTBANK/FIRST BANCORP COMMON STOCK
Total Return Analysis
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
FirstBank $100 $105 $204 $241 $321 $576
S&P 500 $100 $101 $139 $172 $228 $293
S&P Regional
Banks $100 $ 91 $138 $183 $268 $296
The stock performance graph set forth above compares the cumulative total
shareholder return of the Bank's common stock from December 31, 1993 to December
31, 1998, with cumulative total return of the S&P 500 Markets Index(23) and the
S&P Regional Bank's Index. The S&P 500 Market Index is a broad index which
includes a wide variety of issuers and industries representative of a cross
section of the Market. The S&P Regional Bank Index includes financial
institutions comparable to the Bank.
OTHER EMPLOYMENT BENEFITS
The Bank's executive officers are provided life, hospitalization and medical
insurance under group plans on generally the same basis as other full-time
employees of the Bank. The Bank offers to all of its employees life insurance
coverage of 250% of the employees' annual salaries up to a maximum coverage of
$500,000. In the event of accidental death, the coverage is twice that amount.
In addition, the Bank offers all of its employees a contributory medical and
hospitalization plan. The plans are provided through Servicios de Seguros de
Salud, Inc. (SSS) a Blue Cross and Blue Shield Association of Puerto Rico.
- ----------------------
(23) FirstBank's common stock was traded on the New York Stock Exchange until
the consumation of reorganization of FirstBank into a bank holding company
structure. Immediately thereafter, FirstBank's common stock ceased to be
traded and the Corporation's common stock commenced to be traded in the
NYSE under the same symbol, FBP, previously used by FirstBank.
p. 14
<PAGE>
BUSINESS TRANSACTIONS BETWEEN FIRSTBANK
OR ITS SUBSIDIARIES AND EXECUTIVE OFFICERS OR DIRECTORS
During fiscal 1998, directors and officers and persons or entities related
to such directors and officers were customers of and had transactions with the
Bank or its subsidiaries. All such transactions were made in the ordinary course
of business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time they were made for comparable
transactions with other persons who are not insiders, and did not involve more
than the normal risk of uncollectibility or present other unfavorable features.
SECTION 16(a) COMPLIANCE
On November 23, 1998, the Compensation Committee granted stock options to
the following officers: Angel Alvarez-Perez, Luis M. Beauchamp, Annie Astor de
Carbonell, Aurelio Aleman, Fernando Batlle, Francisco Cortes, Luis M. Cabrera,
Aida Garcia and Laura Villarino. By an involuntary omission the Statement of
Beneficial Ownership on SEC Form 4 was not filed on time for these grants. Also
during fiscal l998, Mr. Jose Julian Alvarez-Bracero, Angel Umpierre and Antonio
Pavia each filed one report late. All such transaction have been subsequently
reported as provided by the Regulation.
PROPOSAL #2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP has been selected as the independent
Certified Public Accountants of the Corporation for the fiscal year ending
December 31, 1999. The firm will be represented at the Annual Meeting and
representatives will have the opportunity to make a statement, if they so
desire, and also will be available to respond to appropriate questions. The
affirmative vote of a majority of the total votes eligible to be cast at the
Annual Meeting is required for approval of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS OF THE CORPORATION FOR
THE FISCAL YEAR ENDING DECEMBER 31, 1999. THE VOTE OF THE HOLDERS OF THE
MAJORITY OF THE TOTAL VOTES ELIGIBLE TO BE CAST AT THE ANNUAL MEETING IS
REQUIRED FOR THE APPROVAL OF THIS PROPOSAL.
STOCKHOLDER PROPOSAL
Any proposal that a stockholder wishes to have presented at the next Annual
Meeting of the Corporation must be received at the main offices of First BanCorp
not later than December 20, 1999. If such proposal is in compliance with all of
the requirements of Rule 14a-8 of the Securities Exchange Act of 1934 (the
"Act"), it will be included in the Proxy Statement and set forth in the form of
proxy issued for the next Annual Meeting of Stockholders. All such proposals
should be sent by certified mail, return receipt requested, to the attention of
the Secretary.
OTHER MATTERS
Management of the Corporation does not know of any business to be brought
before the Annual Meeting other than that specified herein. However, if any
other matters are properly brought before the Meeting, it is intended that the
proxies solicited hereby will be voted with respect to those other matters in
accordance with the judgment of the person voting the proxies.
The cost of solicitation of proxies will be borne by the Corporation. First
BanCorp has retained the services of Morrow & Co., a professional proxy
solicitation firm, to assist in the solicitation of proxies. The fee arranged
with Morrow & Co. is in the amount of $3,500 plus reimbursement for
out-of-pocket expenses. The Corporation will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
sending proxy materials to the beneficial owners of First BanCorp's common
stock. In addition to solicitation by mail, directors, officers and employees of
the Corporation may solicit proxies personally or by telephone without
additional compensation.
p. 15
<PAGE>
ANNUAL REPORT
Stockholders will be sent a copy of the Corporation's Annual Report to
Stockholders for the fiscal year ended December 31, 1998, prior to or
accompanying the Proxy Statement. Such Annual Report is not part of the proxy
solicitation material. Upon receipt of a written request, the Corporation will
furnish to any stockholder, without charge, a copy of the Corporation's Annual
Report on Form 10-K under Section 13 of the Securities Exchange Act of 1934 and
the list of exhibits thereto required to be filed with the Securities Exchange
Commission under applicable law. Such written request must set forth a good
faith representation that the person making the request is, as of March 15,
1999, the owner of record of shares of common stock entitled to vote at the
Annual Meeting and should be directed to Antonio R. Escriba-Oliver, Secretary,
First BanCorp, 1519 Ponce de Leon Avenue, Santurce, Puerto Rico 00908.
BY ORDER of the Board of Directors
March 27, 1999
p. 16
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
[ ]
(1) ELECTION OF DIRECTORS FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS [ ]
listed below [ ] for all nominees listed below [ ]
Nominees: Francisco D. Fernandez, German E. Malaret, Annie Astor De Carbonell and Rafael Bouet-Souffront
(INSTRUCTIONS: To withhold authority to vote for any individual nominee mark the "Exceptions" box and
write that nominee's name in the space provided below.)
*Exceptions______________________________________________________________________________________________
(2) Proposal to ratify the appointment of Price Waterhouse as (3) To transact such other business as may properly come
as the Corporation's independent certified public accountants before the meeting.
for fiscal year 1999.
</TABLE>
FOR [ ] AGAINST [ ] ABSTAIN [ ]
<TABLE>
<CAPTION>
<S> <C>
Address Change
and/or Comments [ ]
Please sign exactly as name appears hereon. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please sign in full corporate
name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Dated: _____________________________________________________, 1999
__________________________________________________________________
Signature
__________________________________________________________________
Signature if held jointly
Votes MUST be indicated (x) in Black or Blue ink. [X]
Sign, Date and Return the Proxy Card Promptly in the Enclosed Envelope.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Revocable Proxy
FIRST BANCORP
1519 Ponce De Leon Avenue
San Juan, Puerto Rico
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Angel Alvarez-Perez, Antonio
Pavia-Villamil and Angel Umpierre as Proxies, each with the power to appoint a
substitute, and hereby authorizes them to vote as designated on the reverse, all
shares of common stock of First BanCorp held of record by the undersigned on
March 15, 1999 at the Annual Meeting of Stockholders to be held on April 27,
1999 or any adjournment thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR the Proposals 1 and 2.
(Continued, and to be dated and signed on the reverse side)
FIRST BANCORP
P.O. BOX 11089
NEW YORK, N.Y. 10203-0089
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