SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
World Acceptance Corporation
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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>
July 2, 1997
To the Shareholders of
World Acceptance Corporation:
In connection with the Annual Meeting of Shareholders of your Company to be
held on August 6, 1997, we enclose a Notice of the Meeting, a Proxy Statement
containing information about the matters to be considered at the Meeting, and a
form of proxy relating to those matters.
In addition, we enclose our 1997 Annual Report, which provides information
relating to the Company's activities and operating performance during the most
recent fiscal year.
You are cordially invited to attend the Annual Meeting of Shareholders. We
would appreciate your signing and returning the form of proxy in the enclosed
postage-paid return envelope so that your shares can be voted in the event that
you are unable to attend the Meeting. Your proxy will, of course, be returned to
you if you are present at the Meeting and elect to vote in person. It may also
be revoked in the manner set forth in the Proxy Statement. We look forward to
seeing you at the Annual Meeting.
Sincerely yours,
/s/ Charles D. Walters
----------------------------
Charles D. Walters
Chairman of the Board and
Chief Executive Officer
<PAGE>
WORLD ACCEPTANCE CORPORATION
108 Frederick Street
Greenville, South Carolina 29607
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
- --------------------------------------------------------------------------------
To Our Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of World
Acceptance Corporation will be held at the Airport Marriott in the city of
Greenville, South Carolina, on Wednesday, August 6, 1997, at 11:00 a.m., local
time, for the following purposes:
1. To elect seven (7) directors to hold office until the next annual
meeting of shareholders or until their successors have been duly
elected and qualified;
2. To consider and act upon a proposal to ratify the action of the Board
of Directors in selecting KPMG Peat Marwick LLP as independent public
accountants to audit the books of the Company and it's subsidiaries
for the current year; and
3 To transact such other business as may properly come before the
Meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on June 20, 1997, as
the record date for determination of shareholders entitled to notice of and to
vote at the Annual Meeting or any adjournment or adjournments thereof.
The Board of Directors of the Company would appreciate your signing and
returning the accompanying form of proxy promptly, so that if you are unable to
attend, your shares can nevertheless be voted at the Meeting.
/s/ Charles D. Walters
----------------------------
Charles D. Walters
Chairman of the Board and
Chief Executive Officer
July 2, 1997
IMPORTANT NOTICE
Please Sign and Mail Your Proxy Promptly
<PAGE>
WORLD ACCEPTANCE CORPORATION
108 Frederick Street
Greenville, South Carolina 29607
----------
PROXY STATEMENT
----------
The following statement, first mailed on July 2, 1997, is furnished in
connection with the solicitation by the Board of Directors (the "Board") of
World Acceptance Corporation (the "Company") of proxies to be used at the Annual
Meeting of Shareholders of the Company (the "Meeting") to be held on August 6,
1997, at 11:00 a.m., local time, at the Airport Marriott in the city of
Greenville, South Carolina, and at any adjournment or adjournments thereof.
The accompanying form of proxy is for use at the Meeting if a shareholder
will be unable to attend in person. The proxy may be revoked by the shareholder
at any time before it is exercised by submitting to the Secretary of the
Corporation written notice of revocation, or a properly executed proxy of a
later date, or by attending the Meeting and electing to vote in person. All
shares represented by valid proxies received pursuant to this solicitation, and
not revoked before they are exercised, will be noted in the manner specified
therein. If no specification is made, the proxies will be voted in favor of:
1. The election to the Board of Directors of the seven (7) nominees named
in this Proxy Statement; and
2. The ratification of the Board of Directors' selection of KPMG Peat
Marwick LLP as independent public accountants to audit the books of
the Company and its subsidiaries for the current year.
The entire cost of soliciting these proxies will be borne by the Company.
In addition to the solicitation of the proxies by mail, the Company will request
banks, brokers, and other record holders to send proxies and proxy material to
the beneficial owners of Common Stock and secure their voting instructions, if
necessary. The Company will reimburse them for their reasonable expenses in so
doing. If necessary, the Company may use several of its regular employees, who
will not be specially compensated, to solicit proxies from shareholders, either
personally or by telephone, telegram, or special letter.
Pursuant to the provisions of the South Carolina Business Corporation Act,
the Board of Directors has fixed June 20, 1997, as the record date for the
determination of shareholders entitled to notice of and to vote at the Meeting
and, accordingly, only holders of record at the close of business on that date
of shares (the "Shares") of the Company's common stock, no par value (the
"Common Stock"), will be entitled to notice of and to vote at the Meeting.
<PAGE>
The number of outstanding Shares entitled to vote as of that record date
was 18,946,573. Each Share is entitled to one vote. In accordance with South
Carolina law and the Company's bylaws, a majority of the outstanding Shares
entitled to vote, represented in person or by proxy, will constitute a quorum
for the election of directors and the ratification of the selection of
accountants. Abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of a quorum.
With regard to the election of directors, votes may either be cast in favor
of or withheld and directors will be elected by a plurality of the votes cast.
Votes that are withheld will be excluded entirely from the vote and will have no
effect on the outcome of the election of directors. The ratification of the
selection of the auditors will be approved if more votes are cast in favor of
such proposal than are cast against it. Accordingly, abstentions will have no
effect on the outcome of the vote of such proposal. Broker non-votes, which will
not be counted as votes cast, will have no effect on the election of directors
or the approval of accountants. Cumulative voting is not permitted under the
Company's Articles of Incorporation.
On June 20, 1997, the only class of voting securities the Company had
issued and outstanding was its Common Stock. The following table sets forth the
names and addresses of, and the numbers and percentages of Shares beneficially
owned by, persons known to the Company to beneficially own five percent or more
of the outstanding Shares. Each shareholder listed below possesses sole voting
and investment power with respect to the Shares listed opposite his name, unless
noted otherwise.
2
<PAGE>
Ownership of Shares by Certain
Beneficial Owners as of June 20, 1997
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial Ownership of Class
- ------------------- ----------------------- --------
<S> <C> <C>
Denver Investment Advisors LLC (1) 2,113,084 10.9%
1225 17th Street
26th Floor
Denver, Colorado 80202
Charles D. Walters (2) 2,051,750 10.6%
108 Frederick Street
Greenville, South Carolina 29607
Thomas W. Smith et al. (3) 2,028,600 10.5%
323 Railroad Avenue
Greenwich, Connecticut 06830
Wanger Asset Management, Ltd. (4) 1,364,200 7.1%
Ralph Wanger
227 West Monroe Street
Suite 3000
Chicago, Illinois 60606
Acorn Investment Trust (5) 1,190,000 6.2%
Series Designated Acorn Fund
227 West Monroe Street
Suite 3000
Chicago, Illinois 60606
</TABLE>
- ----------
(1) Based on an amended Schedule 13G filed with the Company on February 10,
1997. Includes 720,600 Shares over which Denver Investment Advisors LLC
disclaims voting power.
(2) Includes 361,150 Shares subject to options exercisable within 60 days of
June 20, 1997, and 15,000 Shares held in trust for the benefit of Mr.
Walters' grandchildren and nephew. Mr. Walters disclaims beneficial
ownership of the 15,000 Shares held in trust. Also includes 243,925 Shares
held by a family limited partnership of which Mr. Walters is the general
partner.
(3) Based on a Schedule 13D filed with the Company on January 14, 1993.
Includes 1,938,600 Shares held by three private investment limited
partnerships, of which each of Mr. Smith and Thomas N. Tryforos (each of
the same business address as Mr. Smith) is a general partner, and an
employee profit-sharing plan of a corporation of which Mr. Smith and Mr.
Tryforos are trustees.
3
<PAGE>
(4) Based on a Schedule 13G dated February 14, 1997.
(5) Based on a Schedule 13G dated February 14, 1997.
ELECTION OF DIRECTORS
It is intended that the persons named in the accompanying proxy will vote
only for the seven nominees for director named on the following pages, except to
the extent authority to so vote is withheld with respect to one or more
nominees. The number of directors and nominees has been set by the Board. Each
director will be elected to serve until the next annual meeting of Shareholders
or until a successor is elected and qualifies. Directors will be elected by a
plurality of the votes cast.
Although the Board does not expect that any of the nominees named will be
unavailable for election, in the event of a vacancy in the slate of nominees
occasioned by death or any other unexpected occurrence, it is intended that
Shares represented by proxies in the accompanying form will be voted for the
election of a substitute nominee selected by the persons named in the proxy.
During the most recent fiscal year, the Board of Directors held four
regularly scheduled quarterly meetings. Each director attended all meetings of
the Board of Directors and of each committee on which he served, except Mr.
Hummers was unable to attend the 1996 Annual Meeting of Shareholders and
following Board of Directors meeting.
At June 20, 1997, compensation paid to each director who is not an employee
of the Company was $1,500 for each meeting of the Board of Directors and $200
for each meeting of a committee on which he serves. All directors are reimbursed
for ordinary and necessary out-of-pocket expenses incurred in attending meetings
of the Board of Directors. In addition, each outside director receives options
to purchase 6,000 Shares on April 30 of each year pursuant to the terms of the
Company's 1992 and 1994 Stock Option Plans. The exercise price for these options
is the fair market value of the Shares on the date of grant, and each option is
exercisable for 10 years from the date of grant.
The Board of Directors maintains an Audit Committee on which Messrs.
Hummers, McLean, and Way serve. The Audit Committee reviews the results and
scope of each audit, the service provided by the Company's independent
accountants and all related-party transactions. The Audit Committee met once
during the most recent fiscal year.
The Board of Directors also maintains a Stock Option Committee on which
Messrs. Gilreath, Hummers, and Way serve. This Stock Option Committee
administers the Company's 1992 and 1994 Stock Option Plans. The Stock Option
Committee met two times during the most recent fiscal year.
4
<PAGE>
The Board also maintains a Compensation Committee on which Messrs.
Gilreath, Hummers, and Way serve. The Compensation Committee establishes and
reviews the compensation criteria and policies of the Company and reviews the
performance of the officers of the Company and recommends appropriate
compensation levels to the Board of Directors. The Compensation Committee met
two times during the most recent fiscal year.
The following is a list of nominees for election to the Board of Directors.
Each nominee's name, age, current principal occupation (which has continued for
at least five years unless otherwise indicated), and the name and principal
business of the organization in which that occupation is carried on, the year
each incumbent was first elected to the Board, all positions and offices
presently held with the Company, and directorships in other publicly-held
companies are set forth below. Each of the nominees served on the Board of
Directors during the Company's last fiscal year. None of the following nominees
or current directors is related (as first cousin or closer) by blood, marriage,
or adoption to any other nominee, director, or person who may be deemed to be an
executive officer of the Company.
CHARLES D. WALTERS (58), Chairman and Chief Executive Officer, World
Acceptance Corporation. Mr. Walters has served as Chairman of the Board of
Directors and Chief Executive Officer since July 1991 and as a director since
April 1989. Mr. Walters served as President from 1986 to 1996, Executive Vice
President from 1984 to 1986, and as Regional Vice President responsible for
operations in Texas and Oklahoma from 1976 to 1984. Mr. Walters joined a
predecessor of the Company in 1972.
R. HAROLD OWENS (49), President and Chief Operating Officer, World
Acceptance Corporation. Mr. Owens has served as President since August 1996, as
Executive Vice President and Chief Operating Officer since June 1995, and as a
director since August 1995. From March 1995 to June 1995, Mr. Owens served as
president and chief executive officer of Key Corp. Finance, Inc., a consumer
finance company based in Cleveland, Ohio. From October 1992 to June 1994, Mr.
Owens served as president and chief operating officer of Fleet Finance, Inc., a
consumer finance company headquartered in Atlanta, Georgia. From June 1978 to
October 1992, Mr. Owens was employed by Security Pacific Financial Services,
Inc., a consumer finance company based in San Diego, California, where he served
in various management positions, including president and chief executive officer
from June 1989 to June 1992.
A. ALEXANDER McLEAN, III (46), Executive Vice President and Chief Financial
Officer, World Acceptance Corporation. Mr. McLean has served as Executive Vice
President since August 1996, Senior Vice President since 1992, and as Vice
President and Chief Financial Officer and a director since June 1989. Mr. McLean
is a certified public accountant in South Carolina.
JAMES R GILREATH (55), Attorney, James R. Gilreath, P. A., Greenville,
South Carolina, a law firm. Mr. Gilreath has served as a director of the Company
since April 1989.
5
<PAGE>
WILLIAM S. HUMMERS, III (51), Executive Vice President and Chief Financial
Officer, Carolina First Corporation, Greenville, South Carolina, a bank holding
company. Mr. Hummers has served in his present capacities with Carolina First
Corporation since 1988. From 1987 to 1988, Mr. Hummers served as a vice
president of management reporting of First Union Corporation, a bank holding
company headquartered in Charlotte, North Carolina. Mr. Hummers currently serves
as a director of Carolina First Corporation. Mr. Hummers has served as a
director of the Company since April 1989.
CHARLES D. WAY (44), President, Chief Executive Officer and Chairman,
Ryan's Family Steak Houses, Inc., Greer, South Carolina, a restaurant company.
Mr. Way has served as president of Ryan's Family Steak Houses, Inc. since 1988,
as its chief executive officer since 1989, and as its chairman since October
1992. From 1986 until 1988, Mr. Way served as executive vice president,
treasurer and secretary of Ryan's Family Steak Houses, Inc. Mr. Way currently
serves as a director of Ryan's Family Steak Houses, Inc. and of Moovies, Inc.
Mr. Way has served as a director of the Company since September 1991.
KEN R BRAMLETT, JR. (37), Senior Vice President and General Counsel,
Personnel Group of America, Inc., Charlotte, North Carolina, an information
technology and personnel staffing services company. Mr. Bramlett has served as
senior vice president and general counsel of Personnel Group of America, Inc.
since October 1996. Prior to this, Mr. Bramlett was an attorney with Robinson,
Bradshaw & Hinson, P.A. a Charlotte, North Carolina, law firm. Mr. Bramlett has
served as a director of the Company since October 1993.
The following table sets forth the sole (unless otherwise indicated)
beneficial ownership, as defined by Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, of Shares as of June 20, 1997, for each director, nominee,
or executive officer identified below in the Summary Compensation Table and all
directors and executive officers as a group.
6
<PAGE>
OWNERSHIP OF COMMON STOCK OF MANAGEMENT AS OF JUNE 20, 1997
Shares Beneficially Owned
-------------------------
Name of Individual or Percent
Number in Group Amount (1) of Class
--------------- ---------- --------
Charles D. Walters .............................. 2,051,750(2) 10.6%
R. Harold Owens ................................. 92,530 *
A. Alexander McLean, III ........................ 327,017(3) 1.7%
Duane D. Moore .................................. 45,300(4) *
Mark C. Roland .................................. 5,000 *
James R. Gilreath ............................... 136,500(5) *
William S. Hummers, III ......................... 62,000 *
Charles D. Way .................................. 68,000(6) *
Ken R. Bramlett, Jr ............................. 25,500 *
Director and all executive
officers as a group (9 persons) (4) .......... 2,813,597 14.2%
- ----------
* Less than 1%.
(1) Includes the following Shares subject to options exercisable within 60 days
of June 20, 1997: Mr. Walters - 361,150; Mr. Owens - 92,530; Mr. McLean -
243,617; Mr. Moore - 45,000; Mr. Roland - 5,000; Mr. Gilreath - 36,000; Mr.
Hummers - 36,000; Mr. Way - 36,000; Mr. Bramlett - 24,000.
(2) Includes 15,000 Shares held in trust for the benefit of Mr. Walters'
grandchildren and nephew. Mr. Walters disclaims beneficial ownership of
these Shares. Also includes 243,925 Shares held by a family limited
partnership of which Mr. Walters is the general partner.
(3) Includes 51,000 Shares in a self-directed retirement account maintained for
the benefit of Mr. McLean.
(4) Mr. Moore terminated his employment with the Company on May 20, 1997.
(5) Includes 7,500 Shares held in a profit-sharing trust for which Mr. Gilreath
serves as trustee.
(6) Includes 12,000 Shares held of record by Mr. Way's wife, as custodian for
Mr. Way's children. Mr. Way disclaims beneficial ownership of these Shares.
7
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10 percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Executive
officers, directors, and greater-than-10-percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all of the Company's executive officers, directors, and
greater-than-10-percent beneficial owners have complied with such reporting
requirements during the fiscal year ended March 31, 1997.
SHAREHOLDER RETURN
Performance Graph. The following chart provides a graphic comparison of the
cumulative shareholder return on the Company's Shares to (a) the cumulative
total return of the NASDAQ Composite Index and (b) the cumulative total return
of the NASDAQ Financial Index. All cumulative returns assume the investment of
$100.00 in each of the Company's Shares, the NASDAQ Composite Index and the
NASDAQ Financial Index on March 31, 1992.
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
Comparison of Cumulative Total Return Between World
Acceptance Corporation, NASDAQ Composite Index and
NASDAQ Financial Index
[PLOT POINTS TO COME]
8
<PAGE>
EXECUTIVE COMPENSATION
Joint Report of the Compensation Committee and the Stock Option Committee.
Compensation Committee
The Compensation Committee is responsible for establishing compensation and
benefits (other than stock option grants) for the members of senior management
of the Company. The Compensation Committee annually evaluates the Company's
performance and compensation paid to the Company's executive officers and other
senior management.
Stock Option Committee
The Stock Option Committee is responsible for administering the Company's
1992 and 1994 Stock Option Plans and granting stock options and restricted stock
awards under these plans. The Stock Option Committee meets periodically to
consider option grants to newly-hired, promoted, and existing members of
management.
Objectives and Policies
The Compensation Committee and the Stock Option Committee seek to establish
compensation policies, plans, and programs to accomplish two objectives: (i) to
attract and retain highly-capable and well-qualified executives and (ii) to
focus executives' efforts on increasing shareholder value. To achieve these
objectives, the committees have established a compensation package consisting of
base salary, short-term incentive compensation in the form of annual cash
bonuses based on the performance of the Company during the prior fiscal year,
and long-term incentive compensation primarily in the form of stock options and
restricted stock awards that vest over a period of time.
Since the beginning of fiscal 1995, Messrs. Walters, and McLean (and since
June 1995, Mr. Owens) have been compensated pursuant to the compensation package
described above in accordance with employment agreements and incentive
compensation plans described herein and developed with the assistance of an
independent executive compensation consultant after a comparative assessment of
the Company's existing compensation system. This assessment revealed that, by
comparison to other similar companies, the Company has historically paid
relatively modest base salaries to its executives and has made incentive
compensation a significant component of its overall executive compensation
packages. The Compensation Committee concluded that the continuation of this
policy was desirable to enable the Company to tie a significant percentage of
each executive's overall compensation to the achievement of goals designed to
maximize shareholder value. Accordingly, the employment agreements provide for
minimum base salary levels subject to adjustment at the discretion of the
Compensation Committee, potentially significant annual cash bonus awards based
on the achievement of objective annual Company performance goals, and
potentially significant awards of stock options and restricted stock based on
the achievement of objective long-term Company performance goals.
9
<PAGE>
For fiscal 1997, Messrs. Walters, Owens, and McLean were paid the minimum
base salaries established under their employment agreements. The amount of cash
bonuses awarded to Messrs. Walters, Owens, and McLean for fiscal 1997 were
determined in accordance with the Company's Executive Incentive Plan (the
"Executive Incentive Plan") based on the Company's achievement of
pre-established annual goals related to (1) increases in earnings per share, (2)
growth in loans receivable, and (3) expense control. The Compensation Committee
selected these goals to motivate and reward the maximization of shareholder
value based on its belief that earnings per share is the most direct measure of
shareholder value and that growth in loans receivable and expense control are
the two most significant determinants of earnings per share. The relative
weights assigned to each of these goals in determining the amount of cash bonus
compensation for Messrs. Walters, Owens, and McLean in fiscal 1997 were as
follows: earnings per share--40%; growth in loans receivable--30%; and expense
control--30%. Possible bonuses ranging from 25% to 150% of base salary for Mr.
Walters, from 25% to 135% of base salary for Mr. Owens, and from 20% to 120% of
base salary for Mr. McLean were available for fiscal 1997 depending upon whether
the Company reached the pre-established minimum, threshold, target, or maximum
level of achievement with respect to a particular goal. During fiscal 1997, the
Company did not achieve maximum targeted performance levels with respect to its
goals for earnings per share, growth in loans receivable, and expense control,
and as a result the cash bonuses payable under the Executive Incentive Plan
amounted to 32.5%, 29.5% and 26.0% of base salary for Messrs. Walters, Owens,
and McLean, respectively.
The long-term incentive components of the Company's executive compensation
are stock options and restricted stock to be awarded under the 1992 and 1994
Stock Option Plans in accordance with the Company's Executive Strategic
Incentive Plan (the "Strategic Incentive Plan"). Options may have a term of up
to 10 years, but expire earlier upon an executive's termination of employment.
Options granted under the 1992 and 1994 Stock Option Plans are exercisable
generally at the fair market value of the Shares at the date of grant.
Restricted Stock awards may contain such transfer restrictions and vesting and
other terms as determined by the Stock Option Committee.
At the beginning of each fiscal year, Messrs. Walters, Owens, and McLean
received long-term incentive compensation based upon the achievement of
objective Company performance goals embodied in the Strategic Incentive Plan for
the previous fiscal year. This plan, adopted during fiscal 1995, is similar in
structure to the Executive Incentive Plan, but is designed to reward performance
over a three-year period. The performance goals on which long-term incentive
compensation are based relate to (1) increases in earnings per share, (2) growth
in loans receivable, and (3) return on average equity, and the relative weights
assigned to those goals as a percentage of the executive's total award
opportunity are as follows: earnings per share--40%; growth in loans
receivable--20%; and return on average equity--40%. During fiscal 1997, the
Company achieved below target performance with respect to earnings per share and
return on equity, and above target performance with respect to growth in loans
receivable. Accordingly, under the Strategic Incentive Plan, Messrs. Walters,
Owens, and McLean were awarded on April 1, 1997, options to purchase 32,776,
24,582, and 21,304 shares, respectively, representing in value approximately
25.3% of the base salary. One-third of the options granted on April 1, 1997,
vested immediately and the remaining two-thirds vest in equal increments over
the next two years.
10
<PAGE>
These options are for a term of 10 years and are exercisable at $5.41 per share,
the average of the high and low sales price of the Company's Common Stock on the
date of grant. The options will terminate upon the executive's termination of
employment, except in the event of death, disability, and certain involuntary
termination, in which case the options continue to be exercisable for a certain
period after termination of employment. Accordingly, the extent to which these
options appreciate in value depends upon the executive's continued employment
with the Company and the Company's continued performance.
In addition to the above, Messrs. Owens, and McLean were awarded options to
purchase 7,800 and 6,800 shares, respectively, in July 1996 as special grants in
connection with their promotions to President and Executive Vice President.
These options were also for a term of 10 years, are exercisable at a price of
$6.75 per share, and vested 100% immediately. Mr. Owens was also awarded an
option to purchase 6,000 shares in January 1997. This option is also for a term
of 10 years and is exercisable at a price of $5.94. It vests at a rate of 20%
per year over a five-year period. All of the above options terminate upon the
termination of the individual officer's employment, except under certain
circumstances as described above. The compensation for the Company's other
executive officers, Mr. Duane Moore, and Mr. Mark Roland, is based 50% on the
achievement of business unit performance goals and 50% on the same Company
performance goals that determine the compensation of Messrs. Walters, Owens, and
McLean.
The Revenue Reconciliation Act of 1993 included a new provision that
prohibits publicly-held corporations from deducting as an expense for tax
purposes the amount by which compensation paid to certain executives exceeds
$1,000,000. Certain types of incentive compensation are excepted from this
prohibition. While the current compensation levels of the Company's executives
are well below this limit, the committees intend to examine the application of
the provision and determine whether any of the committee's policies, or any of
the Company's compensation plans, should be changed to avoid payment of
nondeductible compensation.
Compensation of Chief Executive Officer
Mr. Walters' compensation for fiscal 1997 was determined in the manner and
in accordance with the policies described above. As a result, Mr. Walters'
compensation continued to decline in fiscal 1997, reflecting the decline in the
Company's financial results during this period. During fiscal 1997, the Company,
and other companies in the consumer financial services industry, were affected
by increased industry competition and higher loan losses. These factors led to a
23% reduction in net income from the previous fiscal year. Notwithstanding this
decrease, however, the Company performed very well in a difficult lending
environment. During fiscal 1997, the Company earned $8.1 million, representing
an 8.2% return on average assets and a 20.4% return on average equity. During
the last three fiscal years ended March 31, 1995, 1996, and 1997, Mr. Walters
has overseen increases in the Company's office network of 27, 38, and 54 net new
offices, respectively; and in gross loans receivable, the Company's primary
earning assets, of 23%, 12%, and 14%, respectively. Despite this growth, the
Company has generally maintained control over its operating expenses, as total
general and administrative expenses as a
11
<PAGE>
percentage of revenues has declined form 66% in fiscal 1994 to 62% in fiscal
1997. Based on these factors, the committees continue to believe that Mr.
Walters' compensation as Chief Executive Officer appropriately reflects the
Company's short-term and long-term performance.
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
James R. Gilreath James R. Gilreath
William S. Hummers, III William S. Hummers, III
Charles D. Way Charles D. Way
Compensation Committee Interlocks and Insider Participation
During fiscal 1997, Messrs. Gilreath, Hummers, and Way served as members of
the Compensation Committee and the Stock Option Committee. Mr. Gilreath is a
member of the law firm of James R. Gilreath, P.A., which, since 1989, has served
and will continue to serve as counsel to the Company.
Summary Compensation Table. The following table sets forth certain
information with respect to compensation paid or accrued by the Company during
the fiscal years ended March 31, 1997, 1996 and 1995 with respect to the chief
executive officer of the Company and the four other executive officers of the
Company whose salary and bonus exceeded $100,000 in the fiscal year ended March
31, 1997. Mr. Owens and Mr. Roland became executive officers of the Company
during fiscal 1996, and Mr. Moore became an executive officer during fiscal
1995.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Annual Compensation Compensation Award
--------------------------------------- ---------------------
Other Annual Securities Underlying All Other
Name and Principal Position Year Salary($) Bonus($) Compensation($) Options (#) (1) (2) Compensation($)
- --------------------------- ---- --------- -------- --------------- ------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Charles D. Walters 1997 210,000 68,250 (3) 84,076 50,362(4)
Chairman and Chief 1996 210,000 120,750 (3) 130,674 34,423(5)
Executive Officer 1995 200,000 300,000 (3) 90,000 74,878(6)
R. Harold Owens 1997 157,500 46,463 (3) 73,854 85,535(7)
President and Chief 1996 114,808 71,250 (3) 75,000 50,000(8)
Operating Officer 1995 -- -- -- -- --
A. Alexander McLean, III 1997 136,500 35,490 (3) 58,847 5,124(9)
Executive Vice President 1996 130,000 59,800 (3) 81,018 2,540(9)
and Chief Financial Officer 1995 124,000 148,800 (3) 75,000 3,405(9)
Duane D. Moore 1997 115,550 21,128 (3) 15,000 2,222(9)
Senior Vice President 1996 110,000 14,300 (3) 15,000 1,923(9)
Western Division 1995 92,867 35,000 (3) 45,000 2,255(9)
Mark C. Roland 1997 102,083 22,038 (3) 15,000 --
Senior Vice President 1996 24,680 5,000 (3) 15,000 12,000(10)
Eastern Division 1995 -- -- -- -- --
</TABLE>
- ----------
(1) Amounts do not include options with respect to 32,776, 24,582, and 21,304
Shares that were granted on April 1, 1997 to Messrs. Walters, Owens, and
McLean, respectively, for fiscal 1997.
12
<PAGE>
(2) All option amounts have been adjusted to reflect the three-for-one stock
split that was made on August 31, 1995.
(3) Certain amounts may have been expended by the Company which may have had
value as a personal benefit to the named officer. However, the total value
of such benefits did not exceed the lesser of $50,000 or 10% of the annual
salary and bonus of such named officer for the fiscal year reported.
(4) Includes $5,275 in Company matching contributions under the Company's
401(k) plan and $45,087 representing the assumed present value of the
non-term portion of premium payments made on behalf of Mr. Walters by the
Company to purchase split-dollar insurance covering Mr. Walters' life,
assuming repayment of such amount by Mr. Walters upon retirement at age 65
at an interest rate of 8% per annum.
(5) Includes $2,841 in Company matching contributions under the Company's
401(k) plan and $31,582 representing the assumed present value of the
non-term portion of premium payments made on behalf of Mr. Walters by the
Company to purchase split-dollar insurance covering Mr. Walters's life,
assuming repayment of such amount by Mr. Walters upon retirement at age 65
at an interest rate of 8% per annum.
(6) Includes $3,815 in Company matching contributions under the Company's
401(k) plan and $71,063 representing the assumed present value of the
non-term portion of premium payments made on behalf of Mr. Walters by the
Company to purchase split-dollar insurance covering Mr. Walters's life,
assuming repayment of such amount by Mr. Walters upon retirement at age 65
at an interest rate of 8% per annum.
(7) Includes $3,605 in Company matching contributions under the Company's
401(k) plan and $81,930 in relocation related special bonuses
(8) Amount represents special bonus paid to Mr. Owens in connection with his
employment by the Company in June 1995.
(9) Amount represents Company matching contributions under the company's 401(k)
plan.
(10) Amount represents special bonus paid to Mr. Roland in connection with his
employment by the Company in January 1996.
Option Grants Table. The following table sets forth information with
respect to options granted during the fiscal year ended March 31, 1997, to the
named officers.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year (1)
Individual Grants
-------------------------
% of Total Potential Realized
Number of Options Value at Assumed
Securities Granted to Annual Rates of Stock
Underlying Employees Exercise or Price Appreciation for
Options in Fiscal Base Price Expiration Option Term (2)
Name Granted (#) Year (%) ($/Sh)(1) Date 5% ($) 10% ($)
- ---- ----------- --------- --------- ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Charles D. Walters ............ 84,076 16.4 10.75 4/1/06 568,406 1,440,452
R. Harold Owens ............... 60,054 11.7 10.75 4/1/06 406,002 1,028,889
7,800 1.5 6.75 7/18/06 33,111 83,911
6,000 1.2 5.94 1/27/07 22,414 56,801
------ ---- ----- ------ ------- ---------
73,854 14.4 461,527 1,169,601
A. Alexander McLean, III ...... 52,047 10.2 10.75 4/1/06 351,870 891,707
6,800 1.3 6.75 7/18/06 28,866 73,153
------ ---- ----- ------ ------- ---------
58,847 11.5 380,736 964,860
Duane D. Moore ................ 15,000 2.9 6.69 10/25/06 63,110 159,932
Mark C. Roland ................. 15,000 2.9 6.69 10/25/06 63,110 159,932
</TABLE>
- ----------
(1) All Options shown in this table were granted under the Company's 1992 Stock
Option Plan and 1994 Stock Option Plan at the fair market value of the
Shares on the date of grant (defined as the average of the high and low
sale prices of the Shares as quoted on the NASDAQ National Market System).
As of June 20, 1997, the Company has granted options covering 1,410,500
shares under the 1992 Stock Option Plan and 1,441,731 shares under the 1994
Stock Option Plan to approximately 237 employees, including the named
officers, and to its outside directors.
13
<PAGE>
(2) These amounts represent only certain assumed rates of appreciation. Actual
gains, if any, on stock option exercises and common stock holding cannot be
predicted, and there can be no assurance that the gains set forth in the
table can be achieved. No gains to the option holders are possible without
increases in the price of the Shares, which will benefit all shareholders.
Option Exercise and Fiscal Year-End Option Value Table. The following table
sets forth information with respect to the exercise of stock options by the
named officers during the fiscal year ended March 31, 1997, and unexercised
options held as of March 31, 1997.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at FY-End (#) In-the-Money Options
--------------------------------- at FY-End ($) (1)
--------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Charles D. Walters ............. 256,141 198,609 158,700 39,675
R. Harold Owens ................ 42,818 106,036 -- --
A. Alexander McLean, III ....... 180,161 139,704 95,976 23,994
Duane D. Moore ................. 45,000 60,000 13,968 3,492
Mark C. Roland ................. 3,000 27,000 -- --
</TABLE>
- ----------
(1) The fair market value used for computations in this column was $5.625,
which was the last sales price of the Common Stock on March 31, 1997.
Employment Agreements. The Company maintains employment agreements with
Messrs. Walters, Owens, and McLean. With respect to Walters, and McLean, these
agreements expire on April 1, 2001, and Mr. Owens on June 26, 1998. The terms of
these agreements are three years and provide for current annual base salaries of
not less than $210,000, $157,500, and $136,500, for Messrs. Walters, Owens, and
McLean, respectively, as determined by the Compensation Committee. These
salaries are subject to annual increases as determined by the Compensation
Committee. In addition, the agreements provide for the payment of annual cash
incentive payments in accordance with the terms of the Company's Executive
Incentive Plan, based on the Company's achievements of certain pre-established
performance criteria. For fiscal 1997, the performance criteria related to
achievement of a certain level of earnings per common share, a certain amount of
growth in loans receivable, and the control of general and administrative
expenses within certain limits.
The agreements also provide for the payment of long-term incentive awards
in accordance with the Company's Strategic Incentive Plan. Long-term incentive
compensation is awarded under this plan based on the Company's achievement of
certain performance goals over a three-year period. At the beginning of each
three-year performance period, the Compensation Committee will establish
appropriate criteria for making such payments following the end of such
three-year performance period. Long-term incentive awards, at the discretion of
the Compensation Committee and subject to the approval of the Stock Option
Committee, may be
14
<PAGE>
paid in the form of restricted stock or stock options granted under the
Company's stock option plans. The intent of such long-term incentive
compensation awards is to motivate the achievement of longer range and strategic
goals. The current performance criteria for the long-term incentive awards
relate to earnings per share, growth in loans receivable, and return on average
equity.
Under the agreements with Messrs. Walters, and McLean, the Company has
agreed to provide each with long-term disability insurance benefits equal to 60%
of such executive's base salary at the time of disability, and Mr. Walters'
agreement requires the Company to provide at least $2,000,000 in life insurance
coverage payable to Mr. Walters' designated beneficiary in the event of his
death. These agreements also provide for severance payments and the continuation
of certain benefits if either executive is terminated without cause or
constructively discharged (as defined in the agreements). In the event of such
termination without cause or constructive discharge, including any such
termination of discharge that occurs within one year after a change of control
of the Company, the executive is entitled to receive (i) severance pay equal to
100% of such executive's base salary at the time of termination or change of
control, as the case may be, for the longer of 24 months or the remaining term
of the employment agreement, (ii) the continuation of all other prerequisites
and benefits available under the agreement for a period of 24 months from the
date of termination, and (iii) annual incentive compensation payments prorated
to the date of termination.
Messrs. Walters, Owens, and McLean have agreed not to compete with the
Company during the term of their employment and for two years thereafter.
CERTAIN TRANSACTIONS
The law firm of Robinson, Bradshaw & Hinson, P.A., of which Mr. Ken R.
Bramlett, Jr., a director of the Company, was a shareholder for the period March
1, 1990, through October 6, 1996, was retained to perform legal services for the
Company and its subsidiaries during the last fiscal year. It is anticipated that
the firm will continue to provide legal services to the Company and its
subsidiaries during the current fiscal year.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board, upon the recommendation of the Audit Committee, has approved the
selection of the firm KPMG Peat Marwick LLP as independent public accountants to
examine the books of the Company and its subsidiaries for the current year, to
report on the consolidated balance sheet and related statement of operations of
the Company and its subsidiaries, and to perform such other appropriate
accounting services as may be required by the Board. The Board recommends that
the shareholders vote in favor of ratifying and approving the selection of KPMG
Peat Marwick LLP for the purposes set forth above. The Company has been advised
by KPMG Peat Marwick LLP that the firm did not have any direct financial
interest or any material indirect financial interest in the Company and its
subsidiaries during the Company's most recent fiscal year.
15
<PAGE>
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Meeting with the opportunity to make a statement if they so desire, and they are
expected to be available to respond to appropriate questions.
Approval of the proposal requires the affirmative vote of a majority of the
Shares voted on the proposal. Should the shareholders vote negatively, the Board
of Directors will consider a change in auditors for the next year.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFYING THE SELECTION OF KPMG
PEAT MARWICK LLP AS INDEPENDENT PUBLIC ACCOUNTANTS TO AUDIT THE BOOKS OF THE
COMPANY AND ITS SUBSIDIARIES FOR THE CURRENT YEAR.
PROPOSALS FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
Shareholders who intend to present proposals for consideration at next
year's annual meeting are advised that any such proposal must be received by the
Secretary of the Company no later than the close of business on March 4, 1998,
if such proposal is to be considered for inclusions in the proxy statement and
form of proxy relating to that meeting.
OTHER MATTERS
The Board and officers are not aware of any other matters that may be
presented for action at the Meeting, but if other matters do properly come
before the Meeting, it is intended that Shares represented by proxies in the
accompanying form will be voted by the persons named in the proxy in accordance
with their best judgement.
You are cordially invited to attend this year's Meeting. However, whether
you plan to attend the Meeting or not, you are respectfully urged to sign and
return the enclosed proxy, which will, of course, be returned to you at the
Meeting if you are present and so request.
/s/ Charles D. Walters
---------------------------------
CHARLES D WALTERS,
Chairman of the Board and
Chief Executive Officer
July 2, 1997
16
<PAGE>
Notice of Annual Meeting
and
Proxy Statement
Annual Meeting
of Stockholders
to be held on
August 6, 1997
*******************************************************************************
APPENDIX
<PAGE>
WORLD ACCEPTANCE CORPORATION
REVOCABLE ANNUAL MEETING OF SHAREHOLDERS
PROXY to be held on August 6, 1997
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints A. Alexander McLean, III and Jeffrey W. Ohly
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 the shares of
common stock of WORLD ACCEPTANCE CORPORATION (the "Company") held of record by
the undersigned on June 20, 1997 at the annual meeting of shareholders to be
held on August 6, 1997 (the "1997 Annual Meeting") or any adjournment thereof.
<TABLE>
<CAPTION>
<S> <C> <C>
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Charles D. Walters; R. Harold Owens; A. Alexander McLean, III; James R.
Gilreath; William S. Hummers, III;
Charles D. Way; and Ken R. Bramlett, Jr.
2. PROPOSAL TO RATIFY THE BOARD OF DIRECTORS' SELECTION OF KPMG PEAT MARWICK LLP
as the Company's independent public accountants
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND RETURN IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
<PAGE>
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
EACH PROPOSAL AND THE ELECTION OF THE DIRECTOR
NOMINEES NAMED HEREIN, AND THIS PROXY WILL BE
VOTED FOR EACH PROPOSAL AND FOR THE ELECTION OF
THE DIRECTOR NOMINEES NAMED HEREIN UNLESS THE
SHAREHOLDER DIRECTS OTHERWISE, IN WHICH CASE IT
WILL BE VOTED AS DIRECTED.
The undersigned acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement dated July 2, 1997, and revokes all proxies heretofore given by
the undersigned.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership please sign in partnership name by authorized person.
DATED: , 1997
Signature
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
