<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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 ss. 240.14a-11(c) or ss. 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)(4) 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>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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, 2000
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 2000 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 Thursday, April 27, 2000, 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 three (3) directors for a term of three years and one director
for a term of two (2) 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 2000.
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, 2000, 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, 2000
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>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
FIRST BANCORP
1519 Ponce de Leon Avenue
Santurce, Puerto Rico 00908
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 2000
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 Le on Avenue, Santurce, Puerto Rico, on the
27th day of April 2000, 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, 2000.
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 you
specify in the proxy. If you do not give instructions to the contrary, 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 gives discretionary authority to the Board of
Directors of the Corporation to vote the proxy with respect to (i) the election
of any person as director if any nominee is unable to serve, or for good cause
will not serve; (ii) matters incident to the conduct of the meeting; (iii) the
approval of minutes of the previous Annual Meeting held on April 27, 1999; and
(iv) 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, the Board of Directors is not aware of any business which may properly
come before the Annual Meeting other than that 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, 2000, 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 27,310,652(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.
BENEFICIAL OWNERSHIP OF SECURITIES
The following sets forth information known to the Bank as to the persons or
entities which as of March 15, 2000, 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. All information concerning persons who may be
beneficial owners of 5% or more of the stock is derived from Schedule 13(D) or
13(G) statements filed and notified to the Bank and information submitted by
individual stockholders.
- ----------
(1) Does not include 2,301,900 shares held as treasury shares, which are not
entitled to vote
p.1
<PAGE>
BENEFICIAL OWNERS OF 5% OR MORE:
Name Number of Shares Percentage(2)
- --------------------------------------------------------------------------------
FMR Corp.
82 Devonshire Street
Boston, MA 02109 2,724,200 9.98%
Garity & Co., Capital Management
1414 Banco Popular Center
Hato Rey, Puerto Rico 00918 2,230,613 8.16%
Angel Alvarez-Perez
Chairman, President and CEO
First BanCorp.
1519 Ponce de Leon Avenue
Santurce, PR 00908 2,177,178 7.97%
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.(3)
<TABLE>
<CAPTION>
Unexercised
Name Number of Shares Stock Options Total Percentage(4)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Directors:
Angel Alvarez-Perez 2,177,178 420,000 2,597,178 9.18%
Jose Julian Alvarez-Bracero 6,500 n/a 6,500 *
Rafael Bouet-Souffront 99,000 n/a 99,000 *
Jorge L. Diaz 400 n/a 400 *
Francisco D. Fernandez 84,434 n/a 84,434 *
Armando Lopez-Ortiz 106,314 n/a 106,314 *
German E. Malaret 22,603 n/a 22,603 *
Hector M. Nevares 1,200,000 n/a 1,200,000(5) 4.24
Antonio Pavia-Villamil 68,094 n/a 68,094 *
Jose Teixidor 42,650 n/a 42,650 *
Angel L. Umpierre 655,690 n/a 655,690 2.31
Annie Astor de Carbonell, Senior EVP 402,924 121,000 523,924 1.85
Executive Officers:
Luis M. Beauchamp, Senior EVP 376,024 131,000 376,024 1.52%
Aurelio Aleman, Executive VP -0- 64,000 64,000 *
Fernando Batlle, Executive VP 500 64,000 64,000 *
Francisco Cortes, Executive VP 48,120 8,000 56,120 *
Ricardo Ramos Lui-a -0- 10,000 10,000 *
Randolfo Rivera -0- 52,000 52,000 *
Directors, Executive Officers and
Officers as a group (36 persons) 6,209,127 21.39%
(*) Represents less than 1%.
</TABLE>
- ----------
(2) As a percentage of 27,310,652 shares issued outstanding and in circulation.
(3) Information on the beneficial ownership by officers and directors is derived
from information submitted by such officers of directors.
(4) As a percentage of 28,277,152, this amount includes 27,310,652 shares in
circulation as of March 15, 2000 and 966,500 shares subject to stock options
held by officers. All outstanding options are fully exerciseable at this
time.
(5) Under applicable regulations shares are deemed to be beneficially owned by a
person if he or she directly or indirectly has the power to vote on disposal
of such shares. Mr. Hector M. Nevarez is the beneficial owner of 150,000
shares; however, Mr. Nevares has the proxy to vote on an additional
1,050,000 shares over which he disclaims ownership.
p.2
<PAGE>
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 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. The Board of Directors has fixed
the number of directors at eleven (11). 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. On August 21, 1999, the Board of Directors adopted a
retirement policy for directors of the Corporation and of the Bank. Under the
new retirement policy directors who reach 70 years of age or complete fifteen
years of service on the Board may continue to serve until the end of the term to
which they have been elected, but will not be eligible to stand for reelection.
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.
PROPOSAL #1
ELECTION OF DIRECTORS
NOMINEES FOR A THREE-YEAR TERM EXPIRING 2003
Jose Julian Alvarez-Bracero, 66(6)
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. Director since November
1996.
Hector M. Nevares, 49
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, 46
Executive Vice President and General Manager, B. Fernandez & Hnos., Inc.,
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.
NOMINEE FOR A TWO-YEAR TERM EXPIRING 2002*
Jorge L. Diaz, 45*
Executive Vice President and member of the Board of Directors of Empresas Diaz,
Inc., general contractors, and Executive Vice President and director of
Betteroads Asphalt Corporation, asphalt pavement manufacturers, Betterecycling
Corporation, recycled asphalt manufacturers, and Coco Beach Development
Corporation, a real estate development company. Member of the Chamber of
Commerce of Puerto Rico, the Association of General Contractors of Puerto Rico
and of the National Association of General Contractors of U.S. Member of the
Board of Trustees of Baldwin Schools of Puerto Rico and of Cushing Academy,
Boston, Massachusetts. Director since April 1999.
* Mr. Jorge L. Diaz has served on the Board since April 1999 and is being
recommended for a term of two (2) years in order to achieve a balance on the
Board of three classes as equal in number as possible as required by the Bylaws.
- ----------
(6) Not related to Angel Alvarez-Perez, Chairman, President and CEO.
p.3
<PAGE>
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 2001
Angel Alvarez-Perez, 52
Chairman, President & Chief Executive Officer
Elected Chairman, President & Chief Executive Officer of First BanCorp. in
November 1998. President & Chief Executive Officer of FirstBank since 1990 and
Chairman since August 21, 1999. 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
V++zquez, Vizcarrondo, Alvarez, Angelet & Gonz++lez. 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, and First Leasing & Rental Corporation(7). Director since
1989.
Antonio Pavia-Villamil, 72
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. Director of First Federal Finance Corporation and
First Leasing and Rental Corporation until August 1999. Director since 1981.
Angel L. Umpierre, 70
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.
Directors Whose Terms Expire in 2002
Francisco D. Fernandez, 72
Consulting Engineer. Founder and Chief Executive Officer of Abacus Corporation,
an information systems consulting firm, since 1970. Chairman of First Leasing &
Rental Corporation and Director of First Federal Finance Corporation until
August 1999. Director since 1981.
German E. Malaret, 71
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 from 1990 until
August 21, 1999. Director since 1976.
Annie Astor de Carbonell, 42
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. Joined
the Bank in 1983. Director since July 1995.
Rafael Bouet-Souffront, 53
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. Director since
1998.
- ----------
(7) First Federal Finance Corporation and First Leasing & Rental Corporation are
subsididiaries of First Bank.
p.4
<PAGE>
SENIOR EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following sets forth information with respect to executive officers of
the Corporation and of the Bank who are not directors.
Luis M. Beauchamp, 57
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. Director of First Leasing and Rental Corporation
and of First Federal Finance Corp. d/b/a "Money Express." Joined the Bank in
1990.
Aurelio Aleman, 41
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, FirstBankOs
leasing and rental subsidiary, and member of the Board of First Federal Finance
Corp. 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.
Fernando L. Batlle, 33
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, and director
of First Leasing & Rental Corporation. From April 1996 to October 1997, Managing
Director Neva Management Corporation, an investment management firm. From 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. Joined the Bank in October 1997
Francisco Cortes-Aguayo, 57
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. Joined the Bank in 1967.
Ricardo N. Ramos, 43
Executive Vice President
Executive Vice President in charge of the Bank's Securities Department since
August 1999. From November 1998 to July 1999 Executive Vice President for
Reliable Financial Services, Inc., a subsidiary of Wells Fargo. From August 1992
to September 1998 Senior Vice President Finance of Oriental Financial Group.
Joined the Bank in August 1999.
Randolfo Rivera, 46
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, 30
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 for Puerto Rico. From
August 1994 to August 1995, Investment Executive, Oriental Financial Services,
Inc., Puerto Rico. Financial Consultant CitiBank, NA. Joined the Bank in 1997.
p.5
<PAGE>
Aida Garcia, 48
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.
Laura Villarino-Tur, 41
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.
Joseanne Rossello, 45
Senior Vice President, Marketing and Public Relations Director
Appointed Senior Vice President in January 1997. From November 1994 to January
1997, Vice President/Marketing Director, Banco Santander de Puerto Rico. Joined
the Bank in January 1997.
Antonio R. Escriba-Oliver, 65
Secretary of the Board of Directors, attorney at law, member of the law firm
Melendez-Perez, Moran and Santiago. Secretary of the Board of Directors since
1987 and Secretary of the Corporation since 1998. From 1990 to May Secretary of
the Board of First Federal Finance Corporation and First Leasing and Rental
Corporation.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Corporation is composed of the same persons
who are the directors of FirstBank. During fiscal 1999 the Board of Directors of
First BanCorp. held a total of five regular meetings and three extraordinary
meetings and the Board of Directors of the Bank held 12 regular meetings. 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 Board committees on
which they served.
AUDIT COMMITTEE
The Audit Committee is composed of five 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. On August 21, 1999, the Board of Directors of the
Bank consolidated the functions of the Internal Loan Review Committee of the
Bank into the Audit Committee. As a result of this consolidation, the Audit
Committee also monitors the quality of the Bank's assets in order to provide for
an early identification of possible problem assets. The Committee also monitors
corrective actions taken to minimize loss potential from such loans and makes
recommendations to the Board with regard to the adequacy of reserves. Directors
Angel Umpierre, Hector M. Nevares and Rafael Bouet served on the Audit Committee
from January 1 to September 14, 1999. After that date, Committee was composed of
Angel L. Umpierre, Chairman, German E. Malaret, Jose Julian Alvarez; and Antonio
Pavia. Francisco D. Fernandez was appointed to the Committee on December 27,
1999. During fiscal 1999, the Audit Committee met a total of nine 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 1999, the Committee was composed of Angel L. Umpierre, Hector M.
Nevares and Jose Teixidor. The Compensation Committee met three times during
1999.
p.6
<PAGE>
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 do not receive compensation for service
to the Board of the Corporation; however, they receive compensation for their
service to the Bank Board and its Committees. From January through August 1999
outside directors of the Bank were entitled to a fee of $900 for each meeting of
the Board attended, with the exception of the Chairman who was entitled to
receive $1,800 for each regular meeting of the Board attended. Each outside
director also received a fee of $500 for attendance to the meetings of the
standing committee's of the Board and $400 for attendance meetings of the boards
of the Bank's subsidiaries, to which they belonged. Pursuant to the authority
granted by Article II Section twelve (12) of the Bank's Bylaws, on August 21,
1999, the Board of Directors adopted a resolution increasing the compensation of
outside directors to $1,200 for each meeting of the Bank's Board attended. On
the same date the Board revised the committee structure to eliminate and or
consolidate the functions of several committees of the Bank. At present, outside
directors receive $900 for attendance at the meetings of the Audit Committee and
$500 for attendance at the meetings of the Credit Committee and the Compensation
Committee of the Board. Effective September 1999 the Board of Directors also
reorganized the boards of directors of the subsidiaries of the Bank and at
present none of the outside directors serve on the boards of the subsidiaries.
Officers of the Corporation, the Bank and the subsidiaries do not receive fees
or other compensation for service on the boards of directors of the Corporation,
the Bank, the subsidiaries or any of their committees.
The following table sets forth fees paid to outside Directors for their
attendance to meetings of the Board of Directors of the Bank, committees and
board of directors of the subsidiaries of the Bank.
BOARD, COMMITTEES & SUBSIDIARIES MEETING 1999
<TABLE>
<CAPTION>
Board Of Information Compensation Money Internal First Leasing Total
Name Directors Audit Credit Technology & Option Express Loan Rental Corp. Fees
- ---- --------- ----- ------ ----------- ------------ ------- --------- ------------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
GERMAN MALARET $19,200.00 $ 900.00 $ 450.00 $1,500.00 N/A $1,200.00 $1,500.00 N/A $24,750.00
JOSE JULIAN ALVAREZ $12,000.00 $4,800.00 N/A N/A N/A $1,200.00 $1,500.00 N/A $19,500.00
FRANCISCO FERNANDEZ $11,100.00 N/A N/A $2,500.00 N/A $1,200.00 N/A $ 1,200.00 $16,000.00
ARMANDO LOPEZ $10,800.00 N/A $3,000.00 N/A N/A N/A N/A $ 400.00 $14,200.00
HECTOR M NEVARES $ 9,300.00 $2,500.00 $3,500.00 N/A $1,500.00 N/A N/A N/A $16,800.00
ANTONIO PAVIA $12,000.00 $900.00 N/A N/A N/A N/A $1,500.00 $1,200.00 $15,600.00
JOSE TEIXIDOR $ 9,600.00 N/A $2,500.00 $1,000.00 $1,500.00 N/A N/A N/A $14,600.00
ANGEL UMPIERRE $ 9,900.00 $5,300.00 N/A N/A $1,500.00 N/A $1,000.00 N/A $17,700.00
RAFAEL BOUET $11,100.00 $3,000.00 $4,000.00 N/A N/A $ 800.00 N/A N/A $18,900.00
JORGE DIAZ $ 8,400.00 N/A $2,500.00 N/A N/A N/A N/A N/A $10,900.00
</TABLE>
p.7
<PAGE>
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 1999 exceeded $100,000 (named executives).
Summary Compensation
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Name & Principal Position Year Salary($) Bonus($) Other Compensation($)(8)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Angel Alvarez-Perez, 1999 698,657 500,000 4,803
Chairman, President and CEO 1998 550,000 400,000 1,999
1997 475,000 300,000 5,700
- -------------------------------------------------------------------------------------------------------------
Annie Astor de Carbonell 1999 310,961 175,000 4,609
Senior Executive Vice President 1998 265,008 188,000 1,729
Chief Financial Officer 1997 265,000 80,000 5,555
- -------------------------------------------------------------------------------------------------------------
Luis M. Beauchamp 1999 337,508 200,000 4,979
Senior Executive Vice President, 1998 265,008 175,000 1,999
Chief Lending Officer 1997 265,000 80,000 5,555
- -------------------------------------------------------------------------------------------------------------
Aurelio Aleman* 1999 250,000 150,000 3,858
Executive Vice President 1998 203,849 150,000 -0-
Retail Banking, First Leasing & Rental 1997 -0- -0- -0-
- -------------------------------------------------------------------------------------------------------------
Fernando Batlle* 1999 259,625 150,000 4,762
Executive Vice President 1998 200,005 150,000 1,383
Branch Banking, Mortgage Department 1997 200,000 5,000 -0-
First Federal Finance d/b/a/ Money
Express
- -------------------------------------------------------------------------------------------------------------
Randolfo Rivera* 1999 256,538 150,000 -0-
Executive Vice President 1998 109,233 150,000 -0-
Corporate Banking Department 1997 -0-
- -------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Mr. Fernando Batlle joined the Bank in 1997 and did not commence participation
in the Bank's 165(e) Plan until 1998. Mr. Aurelio Aleman joined the Bank in
January 1998 and did not commence participation in the 165(e) plan until he
completed one year's service in January 1999. Mr. Randolfo Rivera does not
participate in the 165(e) plan.
STOCK OPTION PLAN
The Stock Option Plan is intended to encourage optionees to remain in the
employ of the Corporation, the Bank or its 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 other things, 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.
- ----------
(8) Represents Bank's pro rata contribution to the executives' participation in
the Bank's Defined Contribution Retirement Plan.
p.8
<PAGE>
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. 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 "1987 Plan") which expired on January 21, 1997. As of such expiration date,
no new options have been 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 shares were set aside. As of December 31, 1999, there were a total of
234,000 shares subject to unexercised options granted under the 1987 Plan and
732,500 under the 1997 Plan. As of December 31, 1999, the total of unexercised
options under the two plans was 966,500 shares. Except to the extent limited by
the Puerto Rico Internal Revenue Code of 1994, as amended, all outstanding
options are now exercisable.
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 1999.
<TABLE>
<CAPTION>
Shares %
Underlying Granted Exercise Value*
Options/SAR in Fiscal Base Expiration Grant Date
Name Granted 1999 1999 Price Date Present Value
- ---- ------------ --------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Angel Alvarez Perez 100,000 4.7% 19.625 11/23/2009 $ 630,000
Luis Beauchamp 18,000 8.5% 19.625 11/23/2009 113,400
Annie Astor de Carbonell 16,000 7.5% 19.625 11/23/2009 100,800
Aurelio Aleman 12,000 5.6% 19.625 11/23/2009 75,600
Fernando Batlle 12,000 5.6% 19.625 11/23/2009 75,600
Randolfo Rivera 12,000 5.6% 19.625 11/23/2009 75,600
</TABLE>
p.9
<PAGE>
*The Black/Scholes pricing model was used to value these stock options. Options
granted on August 24, 1999, were granted at $22.5625 and options granted on
November, 23, 1999, at $19.6250. All options were granted at the market price of
First BanCorp'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:
o Risk-free rate obtained from a U.S. Federal Government obligation
maturing close to expiration date of the options is (5.816% ) for the
Options granted on August 24, 1999 and (6.078% ) for the options granted
on November 23, 1999.
o 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 August 24, 1999, is (31.830%); for those granted on November 23, 1999,
it is (29.110%).
o 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 August 24, 1999 is $8.17; for options granted on November 23, 1999,
it is $6.29. These valuations do not take into account the non-transferability
or forfeiture provisions of the Stock Option Plan.
The table set forth below discloses the aggregated the options/SAR exercises
and value realized and the number of unexercised options SAR's and the value
thereof with regards to the Chief Executive Officer and the most highly paid
executives (named executives) as of December 31, 1999 under the Plans.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTIONS/SAR VALUES
<TABLE>
<CAPTION>
Aggregate
Realizable
value of
Number of Unexercised In-
Unexercised -the-Money
Shares Options at Options at
Acquired 12/31/99* 12/31/99
Name on Exercise(#) Value Realized Exercisable(#) Exercisable($)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Angel Alvarez-Perez -0- -0- 424,000 $2,485,520
Annie Astor de Carbonell -0- -0- 121,000 1,034,635
Luis M. Beauchamp -0- -0- 131,000 1,066,635
Aurelio Aleman -0- -0- 64,000 76,000
Fernando Batlle -0- -0- 64,000 147,750
Randolfo Rivera -0- -0- 52,000 14,000
</TABLE>
*On December 31, 1999, the closing price of First BanCorp's common stock was
$20.75 On December 31, 1999, 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; $26.00 for options
granted on 11/17/98; $22.56 for options granted 8/24/99 and $19.625 for options
granted on 11/23/99. As of 12/31/99, Angel Alvarez-Perez held unexercised
options for 120,000 granted on 11/28/94, 104,000 granted on 11/25/97, 100,000
granted on 11/17/98 and 100,000 granted on 11/23/99: Annie Astor de Carbonell,
held unexercised options for 57,000 granted on 11/28/94, 32,000 granted on
11/25/7, 16,000 granted on 11/17/98 and 16,000 granted on 11/23/99: Luis M.
Beauchamp, held unexercised options for 57,000 granted on 11/28/94, 38,000
granted on 11/25/97, 18,000 granted on 11/17/98 and 18,000 granted on 11/23/99.
Mr. Aurelio Alem++n held an unexercised option for 40,000 shares granted on
2/24/98, 12,000 granted on 11/17/98 and 12,000 granted on 11/23/99. Fernando
Batlle held unexercised options for 20,000 shares granted on 11/26/97, 20,000
granted on 2/24/98, 12,000 granted on 11/17/98 and 12,000 granted on 11/23/99.
Mr. Randolfo Rivera held an unexercised option for 40,000 shares granted on
5/26/98 and 12,000 granted on 11/23/99. All options were granted at an exercise
price equal to the market price of FirstBank's common stock on the date of
grant. The Bank's Stock Option Plan provides for adjustments in the number and
price of options due to changes in capitalization resulting from stock dividends
or splits. All options granted prior to May 29, 1998, have been adjusted to
reflect the 100% stock split distributed on that date.
p.10
<PAGE>
EMPLOYMENT AGREEMENTS
The following discloses information regarding the employment agreements of the
named executives with FirstBank.
<TABLE>
<CAPTION>
Name Effective Date Current Base Salary($) Term of Years
<S> <C> <C> <C> <C>
Angel Alvarez-Perez 05-14-98 $675,000 4
Annie Astor de Carbonell 04-14-98 325,000 4
Luis M. Beauchamp 05-14-98 300,000 4
Aurelio Aleman 02-24-98 250,000 4
Fernando Batlle 05-14-98 250,000 4
Randolfo Rivera 05-26-98 250,000 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.
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, 1999, pursuant to a change of control of the Bank,
was: Angel Alvarez-Perez, $4,700,000; Annie Astor de Carbonell, $1,900,000; Luis
M. Beauchamp, $2,100,000; Aurelio Aleman, $1,600,000; Fernando Batlle,
$1,600,000, Randolfo Rivera, $1,600,000.
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(9) 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. At
the end of the fiscal year, the Bank may, but is not obligated to make,
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.
- ----------
(9) Section 165(e) of the Commonwealth of Puerto Rico Internal Revenue Law is
similar to Section 401(k) of the Federal Internal Revenue Code.
p.11
<PAGE>
In fiscal 1999, the total contribution to the Plan by the Bank amounted to
$625,000, 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 1999 to the named executives of the Bank who
participate in the Plan.
Name Total Bank Contribution(10)
Angel Alvarez-Perez $4,803
Annie Astor de Carbonell 4,609
Luis M. Beauchamp 4,979
Aurelio Aleman 3,858
Fernando Batlle 4,762
REPORT OF THE COMPENSATION COMMITTEE
The Executive Compensation Program is administered by the Compensation
Committee (the "Committee"), which is composed of three (3) non-employee
directors selected by the Board of Directors. During fiscal 1999 the Committee
was composed of Messrs. Angel L. Umpierre, Chairman, Hector M. Nevares and
Jose Teixidor. None of the members of the Committee have ever been employees
of the Corporation, the Bank or of any of its subsidiaries.
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 1999, the Compensation Committee
reviewed the Bank's performance as a whole and the performance of the named
executives in relation to the performance goals that have been 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
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 23, 1999, the Committee recommended performance bonuses for
the following named executives: Luis M. Beauchamp, Senior Executive Vice
President $200,000; Annie Astor de Carbonell, Senior Executive Vice President,
$175,000; Aurelio Aleman, Executive Vice President, $150,000; Fernando Batlle,
Executive Vice President, $150,000; and Randolfo Rivera, $150,000 and Ricardo
Ramos $30,000.
- ----------
(10) Pro rata Bank contributions to the Plan of named executives are also
included in the Summary Compensation Table.
p.12
<PAGE>
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 1999 the following 10-year options were granted to the named
executives: Luis M. Beauchamp, 18,000; Annie Astor de Carbonell, 16,000; Aurelio
Aleman, 12,000; Fernando L. Batlle, 12,000; and Randolfo Rivera, 12,000. 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 and as Chairman of First Bancorp since November 1998. On
November 23, 1999 the Committee granted the President a cash bonus of $500,000
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
$19.625. 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 1999, 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.
Angel L. Umpierre
Hector M. Nevares
Jose Teixidor
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.
PERFORMANCE OF FIRSTBANK/FIRST BANCORP COMMON STOCK
<TABLE>
<CAPTION>
Total Return Analysis
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
<S> <C> <C> <C> <C> <C> <C> <C>
FirstBank $100 $105 $204 $241 $321 $576 $403
S&P 500 $100 $101 $139 $172 $228 $293 $355
S&P Regional Banks $100 $ 91 $138 $183 $268 $296 $254
</TABLE>
p.13
<PAGE>
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, 1999, with cumulative total return of the S&P 500 Market Index 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.
BUSINESS TRANSACTIONS BETWEEN FIRSTBANK OR ITS SUBSIDIARIES AND
EXECUTIVE OFFICERS OR DIRECTORS
During fiscal 1999, directors and officers and persons or entities related
to such directors and officers were customers of and had transactions with the
Bank and/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, 1999, 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 1999, Jose Julian Alvarez-Bracero and Antonio Pavia each filed a
late report. Antonio Escriba filed three late reports. 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, 2000. 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, 2000. 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, 2000. 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.
p.14
<PAGE>
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 servides 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.
ANNUAL REPORT
Stockholders will be sent a copy of the Corporation's Annual Report to
Stockholders for the fiscal year ended December 31, 1999, 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,
2000, 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, 2000
p.15
