<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 under Rule 14a-12
AMERICAN NATIONAL FINANCIAL, INC.
- --------------------------------------------------------------------------------
(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:
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<PAGE> 2
AMERICAN NATIONAL FINANCIAL, INC.
17911 VON KARMAN AVENUE, SUITE 200
IRVINE, CALIFORNIA 92614
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 27, 2000
To the Shareholders:
The Annual Meeting of Shareholders of American National Financial, Inc., a
California corporation, will be held on Tuesday, June 27, 2000, at 10:00 a.m.,
local time, at The Irvine Marriott Hotel, 18000 Von Karman Avenue, Irvine,
California 92612 for the following purposes:
(1) to elect eight directors to serve for the next year or until their
successors are duly elected and qualified or until their earlier death,
resignation or removal;
(2) to transact such other business as may properly come before the
Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only shareholders of record at the close of
business on May 15, 2000, are entitled to notice of and to vote at the Meeting.
All shareholders are cordially invited to attend the Meeting in person.
Sincerely,
/s/ MICHAEL C. LOWTHER
MICHAEL C. LOWTHER
Chief Executive Officer
Irvine, California
May 18, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE TO ASSURE
REPRESENTATION OF YOUR SHARES. ANY SHAREHOLDER GIVING A PROXY MAY REVOKE IT
PRIOR TO THE TIME IT IS VOTED BY FILING WITH THE SECRETARY, M'LISS JONES KANE, A
WRITTEN NOTICE OF REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE, OR
BY VOTING IN PERSON AT THE MEETING. NO POSTAGE NEED BE AFFIXED TO THE PROXY IF
IT IS MAILED IN THE UNITED STATES.
<PAGE> 3
AMERICAN NATIONAL FINANCIAL, INC.
17911 VON KARMAN AVENUE, SUITE 200
IRVINE, CALIFORNIA 92614
------------------------
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited by the Board of Directors of American
National Financial, Inc. (the "Company") for use at the Annual Meeting of
Shareholders (the "Meeting") to be held Tuesday, June 27, 2000, at 10:00 a.m.,
local time, or at any adjournment thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting of Shareholders. The Meeting will
be held at The Irvine Marriott Hotel, 18000 Von Karman Avenue, Irvine, CA 92612.
It is anticipated that such proxy, together with this Proxy Statement, will
be first mailed on or about May 22, 2000, to all shareholders entitled to vote
at the Meeting.
The Company's principal executive offices are located at 17911 Von Karman
Avenue, Suite 200, Irvine, California 92614 and its telephone number at that
address is (949) 622-4700.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company's Secretary a
written notice of revocation or a duly executed proxy bearing a later date or by
attending the Meeting and voting in person.
VOTING AND SOLICITATION
You are entitled to one vote for each share held as of the record date for
the Meeting, except that in the election of directors you may cumulate your
votes and give any one nominee a number of votes equal to the number of directs
to be elected multiplied by the number of shares which you are entitled to vote
at the Meeting, or to distribute the votes on the same principle among as many
candidates as you choose, if (i) the name of the candidate for whom such votes
are cast has been properly placed in nomination prior to the voting, and (ii)
any shareholder has given notice at the Meeting prior to voting of such
shareholder's intention to cumulate votes in the election of directors. The cost
of this solicitation will be borne by the Company. In addition, the Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation materials to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone or telegram.
Votes cast by proxy or in person at the Meeting will be counted by the
persons appointed by the Company to act as election inspectors for the Meeting.
The election inspectors will treat shares represented by properly signed and
returned proxies that reflect abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum on all
matters.
The election inspectors will treat shares referred to as "broker non-votes"
(i.e., shares held by brokers or nominees as to which instructions have not been
received from the beneficial owners or persons entitled to vote that the broker
or nominee does not have discretionary power to vote on a particular matter) as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum.
Abstentions and "broker non-votes" will not affect the outcome of the
director elections. Abstentions will have the same effect as a negative vote and
a "broker non-vote" will have no effect on the vote.
<PAGE> 4
RECORD DATE AND STOCK OWNERSHIP
Shareholders of record at the close of business on May 15, 2000, are
entitled to notice of and to vote at the Meeting. As of May 15, 2000, 7,281,658
shares of the Company's Common Stock (the "Common Stock"), no par value, were
issued and outstanding. On that date, there were 36 shareholders of record.
As of March 31, 2000, the following table sets forth the beneficial
ownership of the Common Stock of the Company by each director who owns shares,
by the director nominees, all executive officers named in the Summary
Compensation Table, all directors and executive officers as a group and by all
persons known by the Company to be the beneficial owners of more than 5% of the
Company's Common Stock. The information as to beneficial stock ownership is
based on data furnished by the persons concerning whom such information is
given.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
--------------------------------------
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF TOTAL
- ---------------- ---------------- ----------------
<S> <C> <C>
William P. Foley, II........................................ 2,587,091(1)(2) 35.2%
17911 Von Karman Avenue, #300
Irvine, California 92614
Fidelity National Financial, Inc............................ 2,099,996 28.8%
17911 Von Karman, #300
Irvine, CA 92614
Michael C. Lowther.......................................... 1,063,350(2) 14.4%
17911 Von Karman Avenue, #200
Irvine, California 92614
Wayne D. Diaz............................................... 1,063,350(2) 14.4%
17911 Von Karman Avenue, #200
Irvine, California 92614
Carl A. Strunk.............................................. 147,326(2) 2.0%
17911 Von Karman Avenue, #200
Irvine, California 92614
Dennis R. Duffy............................................. 193,120(2) 2.6%
17911 Von Karman Avenue, #200
Irvine, California 92614
Barbara A. Ferguson......................................... 243,649(2) 3.3%
17911 Von Karman Avenue, #200
Irvine, California 92614
Bruce Elieff................................................ 6,667(2) (3)
17911 Von Karman Avenue, #200
Irvine, California 92614
Matthew K. Fong............................................. 23,338(2) (3)
17911 Von Karman Avenue, #200
Irvine, California 92614
All officers and directors as a group (9 persons)........... 3,247,798(4) 44.3%
</TABLE>
- ---------------
(1) Included in this amount are 2,099,996 shares held by Fidelity National
Financial, Inc., of which Mr. Foley is Chairman of the Board and Chief
Executive Officer; Mr. Foley is a "controlling person" of the Company.
(2) Includes currently exercisable stock options for Mr. Foley of 75,000 shares
under the 1998 Stock Option Plan; Mr. Lowther of 80,094 shares under the
1998 Stock Option Plan; currently exercisable stock options for Mr. Diaz of
80,094 shares under the 1998 Stock Option Plan; currently exercisable stock
options for Mr. Strunk of 36,665 shares under the 1998 Stock Option Plan;
currently exercisable stock options for Mr. Duffy of 48,334 shares under the
1998 Stock Option Plan; currently exercisable stock options for Ms. Ferguson
of 48,334 shares under the 1998 Stock Option Plan; currently exercisable
stock options for Mr. Elieff of 6,667 shares under the 1998 Stock Option
Plan; and currently exercisable stock options for Mr. Fong of 6,667 shares
under the 1998 Stock Option Plan.
2
<PAGE> 5
(3) Less than one 1 percent.
(4) Does not include shares held by Fidelity National Financial, Inc. and
includes 401,855 currently exercisable stock options held by officers and
directors.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented by such
stockholders at the Company's 2001 Annual Meeting must be received by the
Company no later than January 13, 2001, in order that they may be considered for
inclusion in the Company's Proxy Statement and form of proxy relating to that
meeting. The Board of Directors of the Company will determine whether any such
proposal will be included in its 2001 proxy solicitation materials. An eligible
stockholder is one who is the record or beneficial holder of at least 1% or
$1,000 in market value of securities entitled to be vested at the 2001 Annual
Meeting and has held such securities for at least one year, and who shall
continue to own such securities through the date on which the meeting is held.
Any stockholder who intends to present a proposal at the next Annual
Meeting of the Company's stockholders without requesting the Company to include
such proposal in the Company's proxy statement must deliver or mail a notice to
the Company's Secretary, together with a brief description of the business
desired to be brought before the meeting. To be timely, such notice must be
received at the Company's principal executive offices not less than 60 days nor
more than 90 days prior to the meeting, if at least 70 days notice or prior
public disclosure of the date of the meeting is given or made to the Company's
stockholders. If such prior notice or disclosure shall not have been given or
made, the stockholder's notice will be timely if received not later than the
close of business on the tenth day following the date on which notice of the
date of the next annual meeting is mailed or such public disclosure was made. If
the stockholder's notice is not timely made, the Company may exercise
discretionary voting with respect to such stockholder proposal pursuant to
authority conferred by proxies to be solicited by the Company's Board of
Directors and delivered to the Company in connection with such meeting.
3
<PAGE> 6
ELECTION OF DIRECTORS
NOMINEES
Under the Bylaws, the Company may have not less than five and not more than
nine directors. The Board of Directors currently consists of eight members, all
of whom are standing for re-election:
<TABLE>
<S> <C>
William P. Foley, II Dennis R. Duffy
Michael C. Lowther Barbara A. Ferguson
Wayne D. Diaz Bruce Elieff
Carl A. Strunk Matthew K. Fong
</TABLE>
Candidates receiving the highest number of votes of the shares entitled to
vote for them, up to the number of directors to be elected, will be elected at
the Meeting. The director nominees (other than the non-employee directors) are
eligible to participate in the Company's 1999 Stock Option Plan and 1999
Employee Stock Purchase Plan. The names of the director nominees, all directors,
and all executive officers, and certain information about them, are set forth
below:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ---- --- -------------------- --------
<S> <C> <C> <C>
Michael C. Lowther..................... 58 Chairman of the Board and Chief Executive 1996
Officer
William P. Foley, II................... 55 Director 1997
Wayne D. Diaz.......................... 52 President and Director 1996
Carl A. Strunk......................... 62 Executive Vice President, Chief Financial 1999
Officer and Director
Dennis R. Duffy........................ 57 Executive Vice President and Director 1996
Barbara A. Ferguson.................... 43 Executive Vice President and Director 1997
Bruce Elieff........................... 43 Director 1998
Matthew K. Fong........................ 46 Director 1998
M'Liss Jones Kane...................... 47 Executive Vice President, General Counsel and N/A
Secretary
</TABLE>
WILLIAM P. FOLEY, II
Mr. Foley is a director of the Company. He joined the Company as its
Chairman of the Board in June 1997 and served in that capacity through March
2000. He has been Chairman of the Board of American Title Company from 1996. Mr.
Foley is the Chairman of the Board and Chief Executive Officer of Fidelity
National Financial, Inc. and has been since its formation in 1984. Mr. Foley was
President of Fidelity National Financial, Inc. from its formation in 1984 until
December 31, 1994. Mr. Foley is currently serving as Chairman of the Board of
CKE Restaurants, Inc., Checkers Drive-In Restaurants, Inc. and Santa Barbara
Restaurant Group, Inc. He is Co-Chairman of Micro General Corporation.
Additionally, he is a member of the Board of Directors of Fresh Foods, Inc. and
Miravant Medical Technologies, Inc.
MICHAEL C. LOWTHER
Mr. Lowther is Chairman of the Board of the Company and has been since
March 2000. He has been Chief Executive Officer and a director of the Company
since 1995. For approximately 15 years prior to joining American Title Company,
Mr. Lowther served as Chairman of the Board and Chief Executive Officer of World
Title Company which he co-founded in 1980. Mr. Lowther has 35 years of
experience in the title industry.
4
<PAGE> 7
WAYNE D. DIAZ
Mr. Diaz has been President and a director of the Company since its
formation. During the five years prior to joining the Company, Mr. Diaz held the
position of Executive Vice President of Fidelity National Title Insurance
Company. Mr. Diaz has 19 years of experience in the title industry.
CARL A. STRUNK
Mr. Strunk joined the Company as its Executive Vice President and Chief
Financial Officer in August 1998 and was elected a director in 1999. Mr. Strunk
has been Executive Vice President and Chief Financial Officer of CKE
Restaurants, Inc. since February 1997. Mr. Strunk is Executive Vice President,
Finance for Fidelity National Financial, Inc., Santa Barbara Restaurant Group,
Inc. and has been with Fidelity National Financial, Inc. since 1992 and Santa
Barbara Restaurant Group, Inc. since December 1997. Mr. Strunk is a Certified
Public Accountant and is also a member of the Board of Directors of Micro
General Corporation.
DENNIS R. DUFFY
Mr. Duffy has held his position of Executive Vice President and director of
the Company since 1996, and has over 30 years of experience in the title
industry. From 1995 to 1996, he was Regional Vice President -- Operations of
Gateway Title Company. Mr. Duffy was the owner of Duffy's Pacific Enterprises, a
property management company, from 1993 to 1995. From 1985 to 1993, Mr. Duffy was
affiliated with a wholly-owned subsidiary of SAFECO, initially as President, and
subsequently as a consultant. Prior to that time, he worked in various
management positions with both Title Insurance and Trust Company (TICOR) and
SAFECO.
BARBARA A. FERGUSON
Ms. Ferguson joined the Company in August 1997 as Executive Vice President
and a director. From 1988 to 1997, Ms. Ferguson held various positions with
Fidelity National Title Insurance Company, including Trust Accounting Manager,
Banking Administrator, and Senior Vice President and Manager of two separate
divisions.
BRUCE ELIEFF
Mr. Elieff was elected to the Company's Board of Directors in August 1998.
Mr. Elieff is a principal of Sun Cal Companies, a real estate development firm
located in Southern California. He has held this position since 1977.
MATTHEW K. FONG
Mr. Fong was elected to the Company's Board of Directors in November 1998.
In January 1999, Mr. Fong joined the law firm of Sheppard, Mullin, Richter &
Hampton LLP. From 1995 to 1998, Mr. Fong served as the State Treasurer of the
State of California. From 1991 to 1995, Mr. Fong served as Vice Chairman of the
California State Board of Equalization.
M'LISS JONES KANE
Ms. Kane was appointed Executive Vice President, General Counsel and
Secretary of the Company in August 1998 and has served as Senior Vice President,
General Counsel and Secretary of American Title Company since July 1998. Ms.
Kane has held various positions with Fidelity National Financial, Inc. since
March 1995. She has been Senior Vice President since March 1995 and Corporate
Secretary since April 1995. Ms. Kane also is the Corporate Counsel of Fidelity
National Financial, Inc. From March 1990 to March 1995, Ms. Kane served as the
Vice President and General Counsel of SPI Pharmaceuticals, Inc. and ICN
Biomedicals, Inc., affiliates of ICN Pharmaceuticals, Inc. From February 1988 to
March 1990, Ms. Kane was the Senior Vice President, Corporate Counsel and
Secretary for Countrywide Credit Industries, Inc.
5
<PAGE> 8
BOARD MEETINGS AND COMMITTEES
The Board of Directors held three formal meetings during the year ended
December 31, 1999.
The Board presently has an Audit Committee and a Compensation Committee but
does not have a Nominating Committee nor an Executive Committee. The Audit
Committee, which consists of Messrs. Fong and Elieff, was formed in March 1999.
The Audit Committee will meet independently with the internal audit staff,
representatives of the Company's independent auditors and representatives of
senior management. The Audit Committee has met one time and discussed the
general scope of the Company's annual audit, the fee charged by the independent
auditors and other matters relating to internal control systems. In addition,
the Audit Committee is responsible for reviewing and monitoring the performance
of non-audit services by the Company's auditors. The Committee is responsible
for recommending the engagement or discharge of the Company's independent
auditors. The Audit Committee has been very satisfied with its independent
auditors, KPMG Peat Marwick, LLP.
The Compensation Committee was formed in March 1999 and currently consists
of Messrs. Elieff and Fong. The Compensation Committee reviews and reports to
the Board the salary, fee and benefit programs designed for senior management,
officers and directors with a view to ensure that the Company is attracting and
retaining highly-qualified individuals through competitive salary, fee and
benefit programs and encouraging continued extraordinary effort through
incentive rewards.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following Summary Compensation Table shows compensation paid by the
Company for services rendered during fiscal years 1999, 1998 and 1997 for the
Company's Chief Executive Officer and the three most highly compensated current
executive officers whose salary and bonus exceeded $100,000 in 1999.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
OTHER AWARDS -- ALL OTHER
BONUS ANNUAL OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) ($)(1) COMPENSATION (#)(2) ($)
- --------------------------- ---- --------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michael C. Lowther.............. 1999 $260,004 $185,000 $ 9,000 $92,500 $6,831
Chairman of the Board and 1998 246,667 275,000 9,675 -- --
Chief Executive Officer 1997 200,568 150,000 8,150 -- --
Wayne D. Diaz................... 1999 $260,004 $185,000 $ 9,000 $92,500 $3,319
President 1998 246,667 275,000 16,200 -- --
1997 195,000 150,000 15,711 -- --
Dennis R. Duffy................. 1999 $160,000 $125,000 $ 9,000 $62,500 $2,405
Executive Vice President 1998 151,333 160,000 7,720 -- --
1997 124,133 100,000 6,578 -- --
Barbara Ferguson................ 1999 $160,000 $125,000 $ 9,000 $62,500 $ 121
Executive Vice President 1998 149,333 160,000 12,823 -- --
1997 54,092 100,000 3,926 -- --
</TABLE>
- ---------------
(1) Excludes perquisites and other personal benefits, securities and properties
otherwise categorized as salary or bonuses which in the aggregate, for each
of the named persons did not exceed the lesser of either $50,000 or 10% of
the total annual salary reported for such person.
(2) The number of options granted in 2000 for the fiscal year 1999 to the named
individuals was as follows: (i) Mr. Lowther -- 50,000 shares; (ii) Mr.
Diaz -- 50,000 shares; (iii) Mr. Duffy -- 50,000; and (iv) Ms.
Ferguson -- 50,000 shares. The number of shares granted in 1999 to the named
individuals under the 1998 Plan was as follows: (i) Mr. Lowther -- 27,640;
(ii) Mr. Diaz -- 27,640; (iii) Mr. Duffy -- 10,000; and (iv) Ms.
Ferguson -- 10,000.
(3) The number of options granted under the 1999 Deferred Stock Option Plan to
the named individuals in 2000 for the fiscal year 1999 was as follows: (i)
Mr. Lowther -- 61,667; (ii) Mr. Diaz -- 61,667; (iii) Mr. Duffy -- 41,667;
and (iv) Ms. Ferguson -- 41,667.
OFFICER AND DIRECTOR LOANS
The board of directors adopted an Employee and a Director Stock Purchase
Loan Program. The Employee Plan authorized an aggregate amount of $1.7 million
be authorized to make loans to key employees to purchase shares of the Company's
Common Stock through the open market or in privately negotiated transactions.
The Director Plan authorized an aggregate amount of $300,000 be authorized to
make loans to outside directors to purchase shares of the Company's Common Stock
through the open market or in privately negotiated transactions.
The loans are at a 6 1/4% interest rate for a term of 5 years immediately
callable upon termination of employment or resignation as a director, as the
case may be. At December 31, 1999 the following named executives who are also
directors participated in the Employee Program:
Michael C. Lowther $173,994 -- 43,995 shares; Wayne D. Diaz
$173,994 -- 43,995 shares; Dennis R. Duffy $173,994 -- 43,995 shares; Barbara A.
Ferguson $173,994 -- 43,995 shares. Additionally certain non-
7
<PAGE> 10
employee directors of the company participated in the Director Plan as follows:
William P. Foley $313,189 -- 9,191 shares; Matthew Fong $69,598 -- 17,598
shares.
OPTION GRANTS
The following table provides information as to options granted to the named
individuals during 1999 pursuant to the Company's 1998 Stock Option Plan.
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF
SECURITIES STOCK PRICE
UNDERLYING APPRECIATION FOR
OPTIONS MARKET PRICE OPTION TERM
GRANTED AT DATE OF EXPIRATION ------------------
NAME (#) GRANT EXERCISE PRICE DATE 5% ($) 10% ($)
- ---- ---------- ------------ -------------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Michael Lowther........ 27,640 $6.50 $6.50 2/11/09 126,807 300,151
Wayne Diaz............. 27,640 6.50 6.50 2/11/09 126,807 300,151
Dennis Duffy........... 10,000 6.50 6.50 2/11/09 45,878 108,593
Barbara Ferguson....... 10,000 6.50 6.50 2/11/09 45,878 108,593
</TABLE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
There were no stock option exercises by the named individuals in 1999. The
Company did not reprice any existing options during the last completed fiscal
year.
EMPLOYMENT AGREEMENTS
In August 1998, the Company entered into an employment agreement with each
of Michael C. Lowther, Wayne D. Diaz, Dennis R. Duffy, and Barbara A. Ferguson.
Each employment agreement provides for a three year term and a possible merit
bonus granted at the sole discretion of the Board. The minimum base salary of
Messrs. Lowther, Diaz and Duffy under their respective employment agreements is
$260,000, $260,000 and $160,000, respectively. The minimum base salary for Ms.
Ferguson under her employment agreement is $160,000.
In the event of the termination of the employee by the Company without
"cause," each employment agreement provides that the Company shall pay to the
employee an amount equal to the product of the employee's minimum base salary in
effect upon termination plus the total bonus paid or payable to the employee for
the most recently ended calendar year multiplied by the greater of either the
number of years remaining thereunder or two years.
Upon termination of employment either by the employee or by the Company (in
breach of the employment agreement or without cause) following a "change in
control" of the Company, the employee would be entitled to receive (i) his or
her full salary through the date of termination; and (ii) an amount equal to the
product of the employee's minimum base salary in effect upon termination plus
the total bonus paid or payable to the employee for the most recently ended
calendar year multiplied by the greater of ether the number of years remaining
hereunder or two years. In addition, upon termination, due to a "change in
control," the employee is entitled to continue to participate in all employee
benefit plans and programs in which such employee was entitled to participate
prior to the date of termination provided that such continuation is possible
under the terms of the plan or program for a period equal to either (i) the
greater of the number of years remaining in the term of employment or (ii) two
years. If, however, any payment required to be made by the Company to an
employee upon termination due to a "change in control," constitutes a "parachute
payment" (as defined in Section 280(g) of the Internal Revenue Code), such
payment shall be limited to the highest amount of such payment which can be paid
without constituting a "parachute payment." The employee may only elect to
terminate the employment agreement due to a "change in control" of the Company
during the period commencing 60 days and expiring 365 days after such "change in
control."
8
<PAGE> 11
Following the expiration of the initial term, the employment agreements
will automatically renew for successive one-year terms unless the employee or
the Company notifies the other of his or its intent not to renew the agreement.
However, the Company may only decline to renew the agreement if the Company or
any of its subsidiaries does not meet the budgeted expectations for such
entities as determined by the Company's Board of Directors in the exercise of
reasonable discretion.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive a $2,000 per Board
of Directors meeting attended (and $1,000 per committee meeting attended), plus
reimbursement of reasonable expenses. Directors who are employees of the Company
do not receive any compensation for acting as directors, except for
reimbursement of reasonable expenses, if any, for Board meeting attendance.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee was formed in 1999 and currently consists of
Bruce Elieff and Matthew Fong.
There are no Compensation Committee interlocks or insider participation.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The following report of the Board of Directors shall not be deemed to be
incorporated by reference into any previous filing by the Company under either
the Securities Act of 1933 ("Securities Act") or the Securities Exchange Act of
1934 ("Exchange Act") that incorporates future Securities Act or Exchange Act
filings in whole or in part by reference.
Compensation Philosophy
The Company's executive compensation programs are designed to (i) provide
levels of compensation that integrate pay and incentive plans with the Company's
strategic goals, so as to align the interests of executive management with the
long-term interests of the stockholders; (ii) motivate Company executives to
achieve the strategic business goals of the Company and to recognize their
individual contributions; and (iii) provide compensation opportunities which are
competitive to those offered by other national title insurance companies and
other middle-market corporations similar in size and performance. Although the
exact identity of the corporations surveyed varies, these generally include
title companies and other corporations equal to or larger than the Company. Most
of the title companies surveyed are included in the Peer Group Index utilized in
the "Performance Graph" set forth below.
Therefore, the Compensation Committee believes that the components of
executive compensation should include base salary, annual cash bonus, stock
option grants and other benefits and should be linked to individual and Company
performance. With regard to the Company's performance, the measures used for
determining appropriate levels of compensation for executive officers include
the Company's national market share, net margin, quality of service, meeting
strategic goals within the current economic climate and industry environment,
scope of responsibilities, expansion by acquisition or otherwise, profit
retention and profitability, all of which combine to enhance stockholder value.
Base Salary
In determining base salaries for executives for 1999, the full board
considered the Company's earnings, outside surveys of salary levels of other
title agents, individual performance and achievement, areas of responsibility,
position tenure and internal comparability.
9
<PAGE> 12
Annual Cash Bonuses
Executive officers of the Company are eligible for annual bonuses which may
be paid in the form of cash. Given the Company's performance in 1999, the Board
of Directors approved 1999 bonuses for the executives which were paid in 2000.
Stock Option Grants
As indicated above, an important element of the Company's compensation
philosophy is the desire to align the interests of the executive officers with
the long-term interests of the Company's stockholders. In order to meet this
desire, the Board of Directors and the Company's shareholders adopted a
performance-based stock option plan in 1999 for executive officers, key
employees and branch managers of the Company that allows participants to defer a
portion of their bonus income in order to reduce their option exercise price.
Additionally, the Company's Board of Directors and stockholders had previously
approved the adoption of the Company's 1998 Stock Option Plan, pursuant to which
the Company may grant stock options to certain key employees and non-employee
directors or officers. The purpose of all the stock option plans is to attract,
retain and award executive officers and directors and to furnish incentives to
these persons to improve operations, increase profits and positively impact the
Company's long-term performance. Consistent with these objectives, the
Compensation Committee granted options in 2000 for their performance in 1999 to
executive officers as follows: (i) under the 1999 Stock Option Plan as follows:
Mr. Lowther, options to purchase 50,000 shares; Mr. Diaz, options to purchase
50,000 shares; Mr. Duffy, options to purchase 50,000 shares; Ms. Ferguson,
options to purchase 50,000 shares.
Corporate Deduction for Compensation. Section 162(m) of the Internal
Revenue Code generally limits to $1.0 million the corporate deduction for
compensation paid to certain executive officers, unless certain requirements are
met. At this time, the Company deduction for officer compensation is not limited
by the provisions of Section 162(m). The Committee intends to monitor
regulations issued pursuant to Section 162(m) and to take such actions with
respect to the executive compensation program as are reasonably necessary to
preserve the corporate tax deduction for executive compensation paid.
Compensation Committee
Bruce Elieff
Matthew Fong
March 31, 2000
10
<PAGE> 13
PERFORMANCE GRAPH
Set forth below is a graph comparing cumulative total stockholder return on
the Company's common stock against the cumulative total return on the S & P 500
Index and against the cumulative total return of a peer group index comprised of
certain companies for the industry in which the Company competes (SIC code
6361 -- Title Insurance) for the two month period beginning on February 12,
1999, the date the Company went public, and ending March 31, 1999. This peer
group consists of the following companies: Capital Title Group, Inc., First
American Financial, LandAmerica Financial Group, Inc. and Stewart Information
Services Corp. The peer group comparison has been weighted based on the
Company's stock market capitalization. The graph assumes an initial investment
of $100.00 on February 12, 1999, with any dividends reinvested over the periods
indicated.
COMPARISON OF TWO MONTH CUMULATIVE TOTAL RETURN
PERFORMANCE GRAPH OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
<TABLE>
<CAPTION>
AMERICAN NATIONAL
FINANCIAL S&P 500 INDEX PEER GROUP
----------------- ------------- ----------
<S> <C> <C> <C>
2/12/99 100.00 100.00 100.00
12/99 52.86 120.71 49.79
</TABLE>
ASSUMES $100 INVESTED ON FEBRUARY 12, 1999
ASSUMES DIVIDEND REINVESTED MONTHLY
11
<PAGE> 14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has a relationship with Fidelity National Financial, Inc.
("FNFI"), resulting from FNFI's involvement in the organization and growth of
the Company, FNFI's equity ownership position in the Company and existing
business and contractual relationships between the two companies. The Company's
principal subsidiary, American Title Company ("ATC"), was a wholly owned
subsidiary of FNFI until July 1, 1997, when the Company acquired 60% of ATC's
outstanding common stock.
Operationally, the Company and Fidelity National Title Insurance Company
("FNTIC"), a subsidiary of FNFI, continue to have a close working relationship.
FNTIC and ATC have entered into an Issuing Agency Agreement pursuant to which
ATC has agreed that until June 30, 2007 it will act exclusively as an agent for
FNTIC with respect to the procurement of title insurance policies in 14 selected
counties in California and Arizona, subject to certain exceptions. This
exclusive arrangement does not apply to other counties into which the Company
may expand in the future. Under the Issuing Agency Agreement, in addition to
furnishing title insurance products and services, FNTIC provides a wide variety
of administrative services for ATC, including accounting, legal and human
resources services. ATC pays FNTIC a management fee of 1% of gross premiums for
these services. This administrative services arrangement is terminable by ATC
upon 90 days notice to FNTIC.
ATC purchased all of the outstanding capital stock of National Title
Insurance of New York Inc. ("National") from a subsidiary of FNFI for a purchase
price of $3.25 million paid in cash. National is a title insurance underwriter,
licensed to issue title insurance in the State of New York and 34 other states
and the U.S. Virgin Islands. National did not underwrite any significant number
of title insurance policies through direct operations or agency relationships
and the Company will be required to commit resources to establish direct
operations and agency relationships in order to realize the benefits of this
acquisition.
On January 28, 1998, ATC and FNTIC entered into a sublease pursuant to
which ATC subleases the Company's principal executive office from FNTIC. Such
lease provides for monthly rental payments to FNTIC of $37,000 and expires on
July 11, 2000. The aggregate payments under the lease in 1999 were $434,000.
The Company acquired Pacific Printers, a printing company, from the son of
Dennis Duffy for $125,000 on January 4, 1999.
INVESTMENTS IN PARTNERSHIPS
None.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
None.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Rules adopted by the Securities and Exchange Commission ("SEC") under
Section 16(a) of the Exchange Act require the Company's officers and directors,
and persons who own more than 10% of the issued and outstanding shares of the
Company's common stock, to file reports of their ownership, and changes in
ownership, of such securities with the SEC on SEC Forms 3, 4 or 5, as
appropriate. Officers, directors and greater-than-ten-percent shareholders are
required by the SEC's regulations to furnish the Company with copies of all
forms they file pursuant to Section 16(a).
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company during its most recent fiscal year end, and any written
representations provided to it, the Company is advised that all filings were
timely and correctly made.
12
<PAGE> 15
INDEPENDENT AUDITORS
KPMG LLP is the Company's auditors of record and has audited the Company's
financial statements for the year ended December 31, 1999. The Audit Committee
of the Board of Directors has not made a recommendation with respect to
retention of auditors by the Company for year ending December 31, 2000.
Representatives of KPMG LLP are expected to be present at the Meeting with the
opportunity to make a statement, if they desire to do so, and are expected to be
available to respond to appropriate questions.
OTHER MATTERS
The Company knows of no other matters to be submitted at the Meeting. If
any other matters properly come before the Meeting, the enclosed proxy card
confers discretionary authority on the persons named in the enclosed proxy card
to vote as they deem appropriate on such matters. It is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board of Directors may recommend.
AVAILABLE INFORMATION
The Company files Annual Reports on Form 10-K with the Securities and
Exchange Commission. A copy of the Annual Report on Form 10-K for the fiscal
year ended December 31, 1999 (except for certain exhibits thereto), may be
obtained, free of charge, upon written request by any shareholder to American
National Financial, Inc., 17911 Von Karman Avenue, Suite 200, Irvine, California
92614, Attention: Corporate Secretary. Copies of all exhibits to the Annual
Report on Form 10-K are available upon a similar request, subject to payment of
a $.15 per page charge to reimburse the Company for its expenses in supplying
any exhibit.
By Order of the Board of Directors
/s/ M'LISS JONES KANE
M'Liss Jones Kane
Corporate Secretary
Dated: May 18, 2000
13
<PAGE> 16
PROXY
AMERICAN NATIONAL FINANCIAL, INC.
17911 VON KARMAN AVENUE, SUITE 200, IRVINE, CALIFORNIA 92614
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael C. Lowther and Wayne D. Diaz as
proxies, each with the power to appoint his substitute, and hereby authorizes
each of them to represent and to vote, as designated below, all shares of common
stock of American National Financial, Inc. held of record by the undersigned on
May 15, 2000 at the Annual Meeting of Stockholders to be held on June 27, 2000,
or any adjournment thereof.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS [ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to vote for
(except as marked to the contrary the nominees listed below
below).
</TABLE>
(INSTRUCTION: to withhold authority to vote for an individual nominee, strike a
line through the nominee's name below)
William P. Foley, II, Michael C. Lowther, Wayne D. Diaz, Carl A. Strunk,
Dennis R. Duffy, Barbara A. Ferguson, Bruce Elieff, Matthew K. Fong
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
<PAGE> 17
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE COMPANY NOMINEES
AND FOR ALL PROPOSALS.
Dated: 2000
-----------,
-------------------------
(Signature)
-------------------------
(Signature)
Please sign exactly as
name(s) appears below.
When shares are held by
more than one owner, all
should sign. When signing
as attorney, executor,
administrator, trustee,
or guardian, please give
full title as such. If a
corporation, please sign
in full corporate name by
President or authorized
officer. If a
partnership, please sign
in partnership name by
authorized person.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER.
