<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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
W HOLDING COMPANY, 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:
------------------------------------------------------------------------
<PAGE> 2
W HOLDING COMPANY, INC.
19 WEST MCKINLEY STREET
MAYAGUEZ, PUERTO RICO 00680
(787) 834-8000
---------------------
NOTICE OF ANNUAL MEETING
---------------------
TO BE HELD ON MAY 18, 2000
To the Stockholders of W Holding Company, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of W Holding
Company, Inc. (the "Company") will be held at Best Western Mayaguez Resort &
Casino, located at Road 104, Km. 0.3, Mayaguez, Puerto Rico, on May 18, 2000, at
1:30 p.m. for the following purposes, completely set forth in the accompanying
Proxy Statement:
(1) To elect two directors for a term of three years or until the
successors have been elected and qualified;
(2) To ratify the appointment of Deloitte & Touche LLP as the
Company's independent auditors for 2000; and,
(3) To transact any other business as may properly come before the
meeting or at any adjournment thereof. Other than with respect to
procedural matters incident to the conduct of the meeting, the Board is not
aware of any other business which may come before the meeting.
Stockholders of record at the close of business on April 6, 2000, are
entitled to notice of and to vote at the Annual Meeting and at any adjournment
thereof.
By Order of the Board of Directors
/s/ ANGEL LUIS ROSAS
Angel Luis Rosas
Secretary
Mayaguez, Puerto Rico
April 21, 2000
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU
PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THIS MEETING YOU
MAY VOTE EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN MAY BE REVOKED BY
YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
<PAGE> 3
W HOLDING COMPANY, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished to the holders of common stock of W
Holding Company, Inc. (the "Company") in connection with the solicitation of
proxies on behalf of the Board of Directors, to be used at the Annual Meeting of
Stockholders to be held at Best Western Mayaguez Resort & Casino, located at
Road 104, Km. 0.3, Mayaguez, Puerto Rico on May 18, 2000, at 1:30 p.m. and at
any adjournment thereof for the purposes set forth in the Notice of the Annual
Meeting. Enclosed with this Proxy Statement is the Annual Report, which includes
financial statements for the year ended December 31, 1999, duly certified by
Deloitte & Touche LLP as independent public accountants. This Proxy Statement,
the enclosed Annual Report, the Notice of Annual Meeting of Stockholders and the
form of proxy are being sent to stockholders on or about April 21, 2000.
The proxies solicited hereby, if properly signed and returned to the
Company and not revoked prior to their use, will be voted in accordance with the
instructions contained therein. If not otherwise marked, each proxy received
will be voted for the slate of directors described herein and ratification of
the selection of independent auditors. Any stockholder giving a proxy has the
power to revoke it at any time before it is exercised by (i) filing with the
Secretary of the Company (Mr. Angel Luis Rosas, Secretary, W Holding Company,
Inc., PO Box 1180, Mayaguez, Puerto Rico 00681) written notice thereof, (ii)
submitting a duly executed proxy bearing a later date, or (iii) appearing at the
Annual Meeting and giving the Secretary notice of his or her intention to vote
in person. Proxies solicited hereby may be exercised only at the Annual Meeting
and any adjournment thereof and will not be used for any other meeting.
VOTING SECURITIES AND BENEFICIAL OWNERSHIP THEREOF
The only outstanding voting securities of the Company are its shares of
common stock, each share of which entitles the holder thereof to one vote. Only
stockholders of record at the close of business on April 6, 2000 ("Voting Record
Date") will be entitled to vote at the Annual Meeting. On the Voting Record
Date, there were 41,562,500 issued shares of common stock, $1.00 par value. The
presence, in person or by proxy, of at least a majority of the total number of
shares of Common Stock entitled to vote is necessary to constitute a quorum at
the Annual Meeting. Shares that are subject to abstentions and broker non-votes
are counted as present for purposes of determining the presence of a quorum.
Neither abstentions nor broker non-votes are included in tabulations for voting
for directors. Abstentions will be included in tabulations of the votes cast for
purposes of determining whether a proposal other than election of directors has
been approved. Broker non-votes will not be counted for purposes of determining
the number of votes cast for a proposal other than election of directors. In the
event there are not sufficient votes for a quorum, the annual meeting may be
adjourned or postponed in order to permit further solicitation of proxies.
Proxies solicited hereby will be returned to the proxy solicitors or the
Company's transfer agent, and will be tabulated by inspectors of election
designated by the Board, who will not be employed by, or a director of, the
Company. After the final adjournment of the Annual Meeting, the proxies will be
returned to the Board for safekeeping.
As to the election of directors, the Proxy Card being provided by the Board
of Directors enables a shareholder to vote for the election of the nominees
proposed by the Board, or to withhold authority to vote for one or more of the
nominees being proposed. Under the laws of the Commonwealth of Puerto Rico and
the Company's Certificate of Incorporation and Bylaws directors are elected by a
majority of shares voted.
Concerning the ratification of independent auditors, a shareholder may: (i)
vote "FOR" ratification; (ii) vote "AGAINST" ratification; or (iii) "ABSTAIN"
with respect to ratification by checking the appropriate box. Under the
Company's Certificate of Incorporation and Bylaws the ratification of
independent auditors shall be determined by a majority of the votes cast.
See notes at the end.
<PAGE> 4
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding each person
known to the Company to be the beneficial owner of more than 5% of the
outstanding shares of the Company's Common Stock as of March 1, 2000.
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY
OWNED AS OF MARCH 1, 2000
-------------------------
NAME ADDRESS AMOUNT(1) PERCENTAGE
---- ------- --------- ----------
<S> <C> <C> <C>
Ileana G. Carr, W Holding Company, Inc. 5,698,176(2) 13.59%
Honorary Directress 19 W. McKinley Street
Mayaguez, Puerto Rico 00680
Fredeswinda G. Frontera W Holding Company, Inc. 4,830,116(3) 11.52%
Directress 19 W. McKinley Street
Mayaguez, Puerto Rico 00680
Frank C. Stipes, Esq. W Holding Company, Inc. 2,370,425(4) 2.65%**
Chairman of the Board, 19 W. McKinley Street
President and Chief Mayaguez, Puerto Rico 00680
Executive Officer
Directors and Officers W Holding Company, Inc. 16,162,811 33.50%**
19 W. Mckinley Street
Mayaguez, Puerto Rico 00680
</TABLE>
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTORS AND
DIRECTORS WHOSE TERMS CONTINUE
ELECTION OF DIRECTORS
The bylaws of the Company presently provide for seven directors, with the
Board of Directors divided into three slates as nearly equal in number as
possible. The members of each slate are to be elected for a term of three years
or until their successors are elected and qualified. One slate of Directors is
to be elected annually.
THE NOMINEES
UNLESS OTHERWISE DIRECTED, EACH PROXY EXECUTED AND RETURNED BY A
STOCKHOLDER WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES LISTED BELOW. If any
person named as nominee should be unable or unwilling to stand for election at
the time of the Annual Meeting, the proxies will nominate and vote for the
replacement nominee or nominees recommended by the Board of Directors. At this
time, the Board of Directors knows of no reason why any of the persons listed
below may not be able to serve as a Director if elected.
See notes at the end.
2
<PAGE> 5
NOMINEES FOR TERMS EXPIRING IN 2003
(PROPOSAL 1)
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
PRINCIPAL OWNED AS OF
OCCUPATION MARCH 1, 2000(5)
DURING THE DIRECTOR ------------------------
NAME AGE PAST FIVE YEARS SINCE AMOUNT PERCENTAGE
---- --- --------------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
Frank C. Stipes, Esq....... 44 Chairman of the Board, 1990 2,370,425(4) 2.65%**
Chief Executive Officer and
President, since 1992. From
1998 to 1992, Executive
Vice President. From 1981
to 1988, General Legal
Counsel of the Bank. Also,
he is the Chairman of the
Board of Directors of Wes-
ternbank Puerto Rico.
Angel Luis Rosas, CPA...... 65 Certified Public 1990 29,700 *
Accountant, Private
Investor, Former Presi-
dent of Puerto Rico Housing
Bank and Finance Authority,
Developer, Former Commis-
sioner of Financial
Institutions; Professor and
Former Dean of Business
Administration at the
University of Puerto Rico.
Also, director of
Westernbank Puerto Rico.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
THE ELECTION OF THE ABOVE NOMINEES AS DIRECTORS.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE IN 2002
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
PRINCIPAL OWNED AS OF
OCCUPATION MARCH 1, 2000(5)
DURING THE DIRECTOR ------------------------
NAME AGE PAST FIVE YEARS SINCE AMOUNT PERCENTAGE
---- --- --------------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
Cesar A. Ruiz.............. 65 Retired Banker. Also, 1972 17,300 *
director of Westernbank
Puerto Rico.
Fredeswinda G. Frontera.... 67 Retired Psychologist. Also, 1981 4,830,116(3) 11.52%
director of Westernbank
Puerto Rico.
Cornelius Tamboer.......... 56 Industrial Contractor/Prota 1989 1,633,874(6) 3.90%
Construction, S.E. Also,
director of Westernbank
Puerto Rico.
</TABLE>
See notes at the end.
3
<PAGE> 6
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
WHOSE TERMS EXPIRE IN 2001
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
PRINCIPAL OWNED AS OF
OCCUPATION MARCH 1, 2000(5)
DURING THE DIRECTOR ------------------------
NAME AGE PAST FIVE YEARS SINCE AMOUNT PERCENTAGE
---- --- --------------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
Pedro R. Dominguez......... 55 First Vice President for 1992 360,000(7) *
the Southern Area. Also,
director of Westernbank
Puerto Rico.
</TABLE>
COMPENSATION COMMITTEE AND INTERLOCKING AND INSIDER PARTICIPATION
The Company's executive compensation program is administered by the Board
of Directors composed of the non-employee directors, along with Mr. Frank C.
Stipes who recused himself from participating in the decision process relative
to his own compensation. None of these non-employee directors nor Mr. Frank C.
Stipes have any interlocking or other relationship that would call into question
his or her independence. The executive compensation is aligned and administered
to support the Company's position in the community.
REPORT ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE
Under rules established by the Securities and Exchange Commission (the
"SEC"), public corporations are required to provide certain data and information
in regard to the compensation and benefits provided to the Company's Chairman
and Chief Executive Officer and the four other most highly compensated executive
officers (compensation of $100,000 and over). The disclosure requirements for
these five individuals (the "named executive officers") include the use of
tables and a report explaining the rationale and considerations that led to
fundamental executive compensation decisions affecting those individuals.
At present, the executive compensation program is comprised of salary, one
month's salary as a Christmas bonus and other employee benefits typically
offered to executives. The Company also grants a special performance bonus to
certain executive officers, including the Chief Executive Officer. Such bonus is
granted after an assessment of the Company's performance and growth is made for
the year, both individually and compared to its peer group, which includes among
other factors, return on average assets, return on average equity, stock price
behavior and the Company's regulatory classification and asset quality. With
regard to compensation affecting the Chief Executive Officer, the non-employee
members of the Board of Directors act as the approving body, with the Chief
Executive Officer not participating in the decision process. The Chief Executive
Officer's salary is revisable periodically based on market average for such
responsibilities and the Company's net income, delinquency ratio, stability and
soundness of operations. For this purpose, the Board reviews applicable
information for comparable positions in bank holding companies of similar size
and operating conditions in Puerto Rico. Presently, salary revisions for all
executive officers and employees, excluding that of the Chief Executive Officer,
are made every eighteen months. The Executive Compensation Committee is composed
of the following directors:
<TABLE>
<S> <C> <C>
CESAR A. RUIZ
Director
FRANK C. STIPES, ESQ. FREDESWINDA G. FRONTERA
Chairman of the Board, Chief Directress
Executive Officer and President
CORNELIUS TAMBOER ANGEL LUIS ROSAS
Director Director
</TABLE>
See notes at the end.
4
<PAGE> 7
EXECUTIVE OFFICERS -- AGE, POSITION AND HISTORY AND STATEMENT ABOUT EXECUTIVE
COMPENSATION
The following information is supplied with respect to the executive
officers of the Company who do not serve on the Company's Board of Directors.
There are no arrangements or understandings pursuant to which any of these
executive officers were selected as an officer. None of the executive officers
shown below is related to any other director or executive officer of the Company
by blood, marriage or adoption.
Freddy Maldonado (age 49) -- Mr. Maldonado has been the Vice President of
Finance and Investment and Chief Financial Officer of the Company since its
formation on November 30, 1999; he joined Westernbank Puerto Rico in March 1992.
Formerly Executive Vice President of Finance and Investment and Chief Financial
Officer at Ponce Federal Bank, F.S.B. from 1978 to 1992. Prior to that, served
as supervisory senior accountant at KPMG Peat Marwick LLP.
Alfredo Padilla (age 51) -- Mr. Padilla has been the Vice President of
Administration of the Company since its formation on November 30, 1999; he
joined Westernbank Puerto Rico in March 1996. Formerly Senior Vice President of
Administration at Banco Central Hispano from 1990 to March 1996. Prior to that,
served as Vice President of Finance, General Auditor and other positions with
the same bank since 1971.
Mike E. Romeu (age 58) -- Mr. Romeu has been the Vice President and Chief
Retail Banking Officer of the Company since its formation on November 30, 1999;
he joined Westernbank Puerto Rico on February 1998. Prior to joining the Company
he served as Senior Executive Vice President at First Bank Puerto Rico from 1989
to 1997.
Ricardo Hernandez (age 41) -- Mr. Hernandez joined the Company on March
1st, 2000 as Vice President Controller. He previously served as President and
CEO of Hospital Dr. Pila from 1992 to 2000. Prior thereto, he served as Senior
Manager at Deloitte & Touche LLP.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER
ANNUAL ALL OTHER
NAME AND NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(9) COMPENSATION COMPENSATION(13)
------------------------------------ ---- -------- -------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Frank C. Stipes, Esq., 1999 $241,500(8) $722,500 -- $27,508
Chairman of the Board, Chief 1998 178,500(8) 616,667 -- 23,275
Executive Officer and President 1997 180,000(8) 516,667 -- 8,243
Freddy Maldonado, 1999 189,192(8) 258,833 -- 13,751
Chief Financial Officer, 1998 135,000(8) 252,500 -- 22,107
Vice President of 1997 135,000(8) 212,500 -- 8,498
Finance and Investment
Pedro R. Dominguez, 1999 117,769(8) 220,583 65,169(10) 13,779
First Vice President -- 1998 89,000(8) 220,417 42,494(10) 18,381
Southern Region 1997 89,000(8) 185,417 42,494(10) 5,760
Alfredo Padilla, 1999 119,884(8) 29,500 31,466(11) 9,322
Vice President of 1998 114,000(8) 29,500 23,752(11) 18,401
Administration 1997 114,000(8) 24,500 23,693(11) 1,110
Miguel E. Romeu, 1999 137,076(8) 31,000 6,759(12) 533
Vice President Chief 1998 116,769(8) 31,000 -- --
Retail Banking Officer
</TABLE>
STOCK OPTION GRANTS
The Company had no outstanding stock options as of December 31, 1999. No
stock options were granted during 1999. All of the Company's outstanding stock
option grants were exercised during the year ended December 31, 1996 or before.
W HOLDING COMPANY, INC. BOARD MEETINGS, COMMITTEES AND COMPENSATION
The Board of Directors of the Company meets once each year; while the
Bank's Board of Directors meets on a monthly basis. In addition, the Board has
several committees, including those described below. No
See notes at the end.
5
<PAGE> 8
Director attended less than 75% of the aggregate of the total number of Board
meetings held during calendar year 1999, and the total number of meetings held
by committees on which he or she served during this year. The fees of the Board
of Directors, except for directors who are also officers of the Company or who
receive benefits from any retirement plan, amounted to $24,000 in 1999 payable
in monthly installments of $2,000.
Mr. Cesar Ruiz, Director, receives a $560 fee per Board of Directors
meeting attended. During 1999, he received Board of Directors fees amounting to
$6,720, corresponding to 12 Board of Directors meetings attended.
Mr. Angel Luis Rosas, Director, in addition to the director fee, receives
$1,000 per month as a consultant and advisor and $500 per month for car
allowance. During 1999, Mr. Rosas received $18,000 corresponding to those
services.
In addition to fees for attendance at Board and committee meetings,
directors who are not employees of the Company, are eligible for health and
insurance benefits.
The Board has no formal nominating committee. The full Board of Directors
performs the functions normally corresponding to such a committee.
The Executive Committee is authorized to exercise all the authority of the
Board of Directors in the management of the Company between Board meetings. The
members of the Executive Committee are Messrs. Frank C. Stipes, Cesar A. Ruiz,
Cornelius Tamboer and Angel Luis Rosas. The Executive Committee holds meetings
as required and met 4 times during 1999.
The functions of the Audit Committee include reviewing the accounting
principles and practices employed by the Company and reviewing compliance with
applicable laws and regulations. The Committee meets with the Company's
independent external auditors to discuss their audit procedures, the report on
their examination of the Company's financial statements, and their comments on
the system of internal controls. Also, the Committee oversees the internal audit
function and reviews the reports prepared by the Internal Audit Department on
their examinations of the operating and business units and for any other special
examinations that may be required. The Committee members are Mrs. Fredeswinda G.
Frontera and Messrs. Angel Luis Rosas and Cornelius Tamboer. The Audit Committee
met 12 times in 1999.
The Mortgage Credit Committee approves all residential and commercial
mortgage loans originated by the Company up to $1,000,000. All of such loans in
excess of $1,000,000 are reviewed by the full Board of Directors. The members of
the Mortgage Credit Committee are Mrs. Mayra Neris Vega, and Mr. Frank C.
Stipes. Such committee met 12 times in 1999.
The Investment Committee is responsible for the Company's asset/liability
oversight. Through policies designed to manage the flow of funds and the use and
pricing of such funds, the Investment Committee supervises the Department's
responsibility of maintaining an acceptable interest rate spread, while assuring
that the Company complies with all applicable investment and liquidity
requirements. The Investment Committee is composed of the entire Board of
Directors and the Chief Financial Officer, Mr. Freddy Maldonado. The Investment
Committee met 12 times in 1999.
The Commercial Credit Committee is responsible for the Company's commercial
lending policies and procedures. It also approves loans from $250,000 to
$1,000,000. Loans in excess of $1,000,000 are reviewed by the full Board of
Directors. The members of the Commercial Credit Committee are Messrs. Frank C.
Stipes, Angel Luis Rosas, Cornelius Tamboer, Pedro R. Dominguez, Jose E. Rivera,
Alfredo Pagan, Christian Jetter and Ricardo Cortina. The Commercial Credit
Committee met 12 times in 1999.
The Compliance Committee oversees federal, as well as, local regulatory
compliance for the Company and the Company. The members of the Compliance
Committee are Mr. Frank C. Stipes, Alfredo Padilla, Mike Romeu, Jesus Seguinot,
George Seda, Roberto Caro and Alfredo Perez. The Compliance Committee met 4
times in 1999.
See notes at the end.
6
<PAGE> 9
The Steering Committee is responsible of overseeing the development of
systems infrastructure projects, assignation of human resources and
establishment of the projects' budgets. The members of the Steering Committee
are Mr. Frank C. Stipes, Jesus Seguinot, Hector Vazquez, Hiram Ruiz, Alfredo
Padilla, Freddy Maldonado, Letty Alameda, Mike Romeu. The Steering Committee met
4 times in 1999.
SEVERANCE PAYMENT AGREEMENTS
On June 28, 1996, the Company entered into two year severance payment
agreements with Messrs. Alfredo Padilla, Alfredo Pagan, Freddy Maldonado and
Pedro R. Dominguez (the "Executives"). On March 1st 2000, the Company also
entered into a similar contract with Mr. Ricardo Hernandez. On each anniversary
of the date of commencement of the agreements, the term of employment of each of
the Executives shall automatically be extended for one-year unless written
notice from the Company is received not less than 60 days prior to the
anniversary date advising the other party that the agreement shall not be
further extended.
The Executives' agreements provide for severance payments in connection
with an involuntary termination after a change in control or a voluntary
termination of employment where for good reason, subsequent to a change in
control of the Company, any of the Executives is assigned duties inconsistent
with his position, duties, responsibilities and status.
For purposes of the agreements, "good reason" shall include a material
reduction in the position, status, authority, duties, responsibilities,
compensation, perquisites, conditions of employment, or location of employment
of the employee from those that existed before the change in control. Unless the
Company, within ten working days of the date of such notice of resignation,
rejects the employee statement that the "good reason" exists, the employee shall
be conclusively deemed to have voluntarily resigned with "good reason." If the
Company rejects the employee's statement that "good reason" exists, the dispute
shall be resolved by arbitration under the Commercial Arbitration Rules of the
American Arbitration Association, and the Company shall have the burden of
proving that such rejection of the employee's statement was proper.
For the purposes of the agreements, a change in control shall be deemed to
have occurred if:
(i) 33% or more of ownership control, power to vote or beneficial
ownership of any class of voting securities of the Company is acquired by
any person, either directly or indirectly or acting through one or more
other persons;
(ii) any person (other than any person named as a proxy in connection
with any solicitation on behalf of the Board) holds revocable or
irrevocable proxies as to election or removal to three or more Directors of
the Company, for 33% or more of the total voting shares of the Company;
(iii) any person has received all applicable regulatory approvals to
acquire control of the Company;
(iv) any person has commenced a cash tender or exchange offer, or
entered into an agreement or received an option to acquire beneficial
ownership of 33% or more of the total number of voting shares of the
Company, whether or not any requisite regulatory approval for such
acquisition has been received, provided that a change in control will not
be deemed to have occurred under this clause unless the Board has made a
determination that such action constitutes or will constitute a change in
control; or
(v) as a result of or in connection with, any cash tender or exchange
offer, merger or any other business combination, sale of assets or
contested election or any combination of the foregoing transactions, (a)
the persons who were Directors of the Company before such transaction shall
cease to constitute at least a majority of the Board of its successor or
(b) the persons who were stockholders of the Company immediately before
such transaction do not own more than 50% of the outstanding voting stock
of the Company or its successor immediately after such transaction.
If employment were terminated under such circumstances following a change
in control, or for "good reason" (as defined above), the following amounts would
be payable to Messrs. Maldonado, Padilla,
See notes at the end.
7
<PAGE> 10
Dominguez, Pagan and Hernandez, respectively: $500,000; $427,570; $500,000;
$244,881 and $500,000. The special compensation to be received for termination
of employment in connection with a change in control pursuant to this agreement
shall not in any event exceed $500,000 for each executive.
AMENDED RETIREMENT PLAN FOR DIRECTORS
In January 1988, the Company established a Retirement Plan for Directors
who were not Executive Officers. This plan was substantially amended in February
24, 1989, to limit the pension benefits to Directors who were founders of the
Company who at that time had attained the age of 50 years and had served for
twenty five consecutive years on the Board. As of the date of the amendment only
the following three founder Directors (since 1958) qualified for retirement
benefits under the Amended Plan: Mr. Luis A. Rechani Agrait, 86 years of age,
Mr. Juan E. Vilella, 88 years of age, and Mr. Jesus M. Guzman, 71 years of age.
By approving the amendment, the other Directors who were not executive officers
waived and renounced their pension benefits under the plan.
Pursuant to the Amended Retirement Plan, 30 days after his or her
resignation or termination as a Director, a participating Director is entitled
to a monthly pension benefit for the remainder of his or her life, and if he or
she should die prior to the end of his or her tenth year of retirement, his or
her heirs shall continue to receive fifty percent of the pension benefit which
otherwise would have been payable until the end of the tenth year following the
Director's retirement. In July 1989, Messrs. Jesus Guzman and Luis A. Rechani
Agrait retired from the Board of Directors and began to receive retirement
benefits under the plan. In June 1992, Mr. Juan E. Vilella retired from the
Board of Directors and began to receive retirement benefits under the Plan.
Messrs. Luis A. Rechani Agrait and Juan E. Vilella died during 1994. Mr.
Vilella's heirs will continue to receive benefits until 2002. The plan was
unfunded as of December 31, 1999.
PROFIT SHARING/1165(E) PLAN FOR EMPLOYEES OF W HOLDING COMPANY, INC.
The Company maintains a non-contributory profit sharing plan ("Profit
Sharing Plan") which covers substantially all employees and which provides for
retirement and disability benefits. The Profit Sharing Plan is self-administered
with the retention of professional administrative services. All the
contributions to the Profit Sharing Plan, which are held in trust, are
commingled and invested on a pooled basis. The trustees of the Profit Sharing
Plan are Messrs. Frank C. Stipes, President and Chief Executive Officer, Freddy
Maldonado, Chief Financial Officer and Vice President of Finance and Investment
and Pedro R. Dominguez, First Vice President-Southern Region. The shares of
common stock of the Company held by Mr. Frank C. Stipes are set forth above
under the caption "Nominees for Term Expiring in 2003." Mr. Freddy Maldonado
owns 471,227 shares of the Company's common stock in his personal capacity and
630,000 of stock options granted in 2000; and Mr. Pedro R. Dominguez owns
150,000 shares of the Company's common stock in his personal capacity and
210,000 of stock options granted in January 2000.
Participants in the Profit Sharing Plan will be vested upon completing five
years of service with the Company, with no vesting prior to such time. The
Profit Sharing Plan complies with amendments to the Age Discrimination in
Employment Act of 1987 that mandate the elimination of provisions that require
the retirement of employees at any age. Provisions in the Profit Sharing Plan
allow withdrawals after five years, provided certain substantial conditions or
restrictions are met.
The Company shall contribute each fiscal year to the Plan out of its
current or accumulated after-tax net profit such amount as shall be determined
by the Board of Directors of the Company. Notwithstanding the foregoing,
however, the Company's contribution for any fiscal year shall not exceed the
maximum amount allowable as a deduction to the Company under the provisions of
Section 23(p)-2 of the Puerto Rico Income Tax Act of 1954, as amended, or as
replaced from time to time. All contributions by the Company shall be made in
cash or in such property as is acceptable to the Trustee.
See notes at the end.
8
<PAGE> 11
As of each Anniversary Date, the Profit Sharing Contribution and any
previously unallocated forfeitures of Employer Profit Sharing Contributions
shall be allocated to the account of each Participant who is eligible to share
in the same ratio that such Participant's credited points for the calendar year
bear to the total credited points of all such Participants for such year. On
each Anniversary Date, the credited points for each Participant shall be
determined on the basis of the following schedule:
<TABLE>
<CAPTION>
FOR EACH FOR EACH FULL AND FRACTIONAL
COMPLETE $100 OF TOTAL COMPENSATION
YEARS OF YEAR PAID TO THE PARTICIPANT
SERVICE OF SERVICE IN THE CALENDAR YEAR
- -------- ---------- ----------------------------
<S> <C> <C>
0-5 2 1
6 or more 3 1
</TABLE>
For purposes of eligibility, a Year of Service means a 12-month period,
beginning on the date of hire, during which employees are paid, or entitled to
payment, for 1,000 or more hours of employment. If they do not meet the 1,000
hours requirement in the first 12 months after their date of hire, they will be
credited with a Year of Service for any Plan Year which begins after their date
of hire during which they are credited with 1,000 or more hours.
A year of Service, for purposes of vesting, means a Plan Year during which
employees were credited for 1,000 or more hours.
A total of $354,435 was distributed to certain participants in the Profit
Sharing Plan in 1999. The Company contributed $742,483 to the Plan in 1999.
Effective January 1, 1995, the Company added to its Profit Sharing Plan a
defined contribution plan under Section 1165(e) of the Puerto Rico Treasury
Department Internal Revenue Code, covering all full-time employees of the
Company who have one year of service and are twenty-one years of age or older.
The Company shall give each prospective eligible employee written notice of his
eligibility to participate in the Plan in sufficient time to enable such
prospective eligible employee to submit an application for participation in the
Plan prior to the quarter in which he or she first become an eligible employee.
Under the provisions of this Plan, participants may contribute each year from 2%
to 10% of their compensation after deducting social security, up to a specific
maximum established by law. The Company contributes 50 percent of the first 6
percent of base compensation that a participant contributes to the Plan.
Participants are immediately vested in their contributions plus actual earnings
thereon. The Company's contributions plus actual earnings thereon are 100
percent vested after five years of credited service. In case of death and
disability, a participant will be 100 percent vested regardless of the number of
years of credited service. W Holding's contribution for the year ended December
31, 1999 was $217,484.
INDEBTEDNESS OF MANAGEMENT
The Federal Deposit Insurance Corporation requires that any credit extended
by the Company to its executive officers, directors and to the extent otherwise
permitted, principal stockholders, or any related interest of the foregoing,
must be (i) on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions by the
Company with non-affiliated parties and (ii) not involve more than the normal
risk of repayment or present other unfavorable features.
The Company's conflict of interest policy is consistent with this
legislation, and states that only a first mortgage is permitted to be executed
by the Company members over their primary residence. Home equity second
mortgages will not be permitted. No officer, director or employee may have with
the Company any other type of loan or indebtedness, except for a credit card,
unless such loan or indebtedness is fully cash collateralized. As of December
31, 1999, the Company was in compliance with these requirements.
See notes at the end.
9
<PAGE> 12
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 2)
The Board of Directors of W Holding Company, Inc. has appointed Deloitte &
Touche LLP as independent auditors of the Company for the year ending December
31, 2000, and has further directed that the selection of auditors be submitted
for ratification by the stockholders at the Annual Meeting. The Company has been
advised by Deloitte & Touche LLP that neither that firm nor any of its
associates has any relationship with the Company other than the usual
relationship that exists between independent certified public accountants and
clients. Deloitte & Touche LLP will have representatives at the Annual Meeting
who will have an opportunity to make a statement, if they so desire, and who
will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR 2000.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires that
Company's directors and executive officers, and persons who own more than
ten-percent of a registered class of the Company's equity securities, file with
the SEC; initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than ten-percent shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
The table below shows the officers and directors who during 1999
inadvertently filed overdue Section 16(a) reports covering the following number
of transactions in the Company's securities:
<TABLE>
<CAPTION>
NAME LATE REPORTS TRANSACTIONS
---- ------------ ------------
<S> <C> <C>
Angel Luis Rosas............................................ 2 4
Frank C. Stipes............................................. 1 2
Cornelius Tamboer........................................... 3 9
Freddy Maldonado............................................ 1 1
Miguel E. Romeu............................................. 2 22
</TABLE>
See notes at the end.
10
<PAGE> 13
PERFORMANCE OF W HOLDING COMPANY, INC. COMMON STOCK
The following graph compares the total cumulative returns (including
reinvestment of dividends) of $100 invested on December 31, 1994 in (a) common
stock of W Holding Company, Inc. (b) Nasdaq Stock Market (US Companies) and (c)
Nasdaq Bank Stocks.
(Chart)
<TABLE>
<CAPTION>
PERIOD ENDED
---------------------------------------------------------------
INDEX 12/31/94 12/29/95 12/29/96 12/31/97 12/31/98 12/31/99
----- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
W Holding Company, Inc................... 100.0 201.4 443.0 971.1 1303.2 866.9
Nasdaq Stock Market (US Companies)....... 100.0 141.3 173.9 213.1 300.3 542.4
Nasdaq Bank Stocks....................... 100.0 149.0 196.7 329.4 327.1 314.4
SIC 6020-6029, 6710-6719 US & Foreign....
</TABLE>
- ---------------
NOTES:
A) The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B) The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C) If the monthly interval, based on the fiscal year-end, is not a trading day,
the preceding trading day is used.
D) The index level for all series was set to $100.00 on 12/31/94.
STOCKHOLDERS' PROPOSALS
Stockholders' proposals intended to be presented at the 2001 Annual Meeting
of Stockholders of the Company, must be received by the Corporate Secretary, at
the Company's principal executive offices, Box 1180 Mayaguez, Puerto Rico 00681,
no later than January 21, 2001, for inclusion in the Company's Proxy Statement
and to be set forth on the form of proxy to be issued for the 2001 Annual
Meeting of Stockholders.
See notes at the end.
11
<PAGE> 14
ANNUAL REPORT
A copy of W Holding Company, Inc. Annual Report to Stockholders for the
year ended December 31, 1999, accompanies this proxy statement. The Annual
Report is not part of the proxy solicitation materials.
IF WE RECEIVE A REQUEST, WE WILL FURNISH TO ANY STOCKHOLDER, WITHOUT
CHARGE, A COPY OF W HOLDING COMPANY, INC. ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 1999, AND W HOLDING COMPANY, INC. QUARTERLY REPORT ON
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000, AND THE LIST OF EXHIBITS TO
THOSE REPORTS THAT ARE REQUIRED TO BE FILED WITH THE SEC UNDER THE SECURITIES
EXCHANGE ACT OF 1934. To request a copy of the Form 10-K, call or write to Mr.
Angel Luis Rosas, Secretary, W Holding Company, Inc., Box 1180, Mayaguez, Puerto
Rico 00681, telephone (787) 834-8000. The Form 10-K and the Form 10-Q are
incorporated by reference into the proxy solicitation materials.
OTHER MATTERS
Management is not aware of any business to come before the Annual Meeting
other than those matters described above in this Proxy Statement. However, if
any other matters should properly come before the Annual Meeting, it is intended
that the proxies solicited hereby will be voted with respect to those other
matters in accordance with the judgment of the persons voting the proxies.
The meeting will be presided over by Mr. Frank C. Stipes, Esq., Chairman of
the Board, Chief Executive Officer and President, who will conduct the
proceedings in accordance with Robert's Rules of Order as required by the
Company's by-laws.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy material
to the beneficial owners of the Company's Common Stock. In addition to
solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
By Order of the Board of Directors
/s/ ANGEL LUIS ROSAS
Angel Luis Rosas
Secretary
Date: April 21, 2000
See notes at the end.
12
<PAGE> 15
END NOTES:
- ---------------
* Represents less than 1% of the outstanding common stock.
** Percentage of common stock beneficially owned excludes the effect of
options granted to three executive officers during 2000, which will
became fully exercisable after five years following the date of the
grant.
(1) Based upon information provided by the respective beneficial owners and
filings with the Securities and Exchange Commission made pursuant to the
Securities Exchange Act of 1934, as amended. Beneficial ownership is
direct except as otherwise indicated by footnote. In accordance with
Rule 13d-3 of the Exchange Act, a person is deemed to be the beneficial
owner of a security if he or she has or shares voting power or
investment power with respect to such security or has the right to
acquire such ownership within 60 days.
(2) Includes 85,200 shares owned by Mrs. Carr's husband.
(3) Includes 228,515 shares owned by Mrs. Frontera's spouse and children.
(4) Includes 10,425 shares of common stock owned by Mr. Stipes' daughter and
1,260,000 stock options granted in January 2000.
(5) The number of shares beneficially owned by each Director and nominee is
based upon information provided by such persons. All Directors and
nominees have sole voting and investment powers as to shares reported,
unless otherwise indicated.
(6) This amount includes 707,480 shares of common stock owned by Prota
Construction, S.E. of which Mr. Tamboer is the holder of 100% interest
and has full voting power, and 17,844 shares of common stock owned by
Tamrio, Inc., of which Mr. Tamboer is the holder of 50% interest and has
shared voting power.
(7) Includes 210,000 stock options granted in January 2000.
(8) Includes amounts deferred by the individual pursuant to the Company's
1165(e) Plan.
(9) Includes a special performance bonus granted at year end and the
Christmas Bonus that is granted under Puerto Rico legislation. The
Company has normally granted one month of salary as Christmas Bonus.
(10) Includes a $20,500, $12,000 and $12,000 allowance attributable to
business relationships and representation expenses, and a $24,000 living
allowance for the years 1999, 1998 and 1997, respectively. In addition,
for the year 1999 the amount includes certain expenses attributable to
the use of an automobile owned by the Company.
(11) Includes a $19,500, $18,000 and $18,000 allowance attributable to
business relationships and representation expenses in 1999, 1998 and
1997, respectively. In addition, for the year 1999 the amount includes
certain expenses attributable to the use of an automobile owned by the
Company.
(12) Amount corresponds to car allowance and representation expenses
amounting to $200. In addition, it includes certain expenses
attributable to the use of an automobile owned by the Company.
(13) Represents employer contribution corresponding to the named person for
the profit sharing/1165(e) plan; which covers substantially all
employees and provides for retirement and disability benefits.
13
<PAGE> 16
W HOLDING COMPANY, INC
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING TO BE HELD ON MAY 18, 2000
The undersigned, being a stockholder of W Holding Company, Inc (the
"Company"), hereby appoints Frank C. Stipes and Freddy Maldonado, or either of
them, with full power of substitution in each, as proxies and hereby authorizes
such proxies, or either of them, to represent the undersigned at the Annual
Meeting of Stockholders of the Company to be held at 1:30 p.m. on May 18, 2000
at Best Western Mayaguez Resort & Casino, located at Road 104, Km 0.3,
Mayaguez, Puerto Rico, and at any adjournment of said meeting, and thereat to
act with respect to all votes that the undersigned would be entitled to cast,
if then personally present, in accordance with the following instructions. The
undersigned stockholder hereby revokes any proxy or proxies heretofore given.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE
BOX, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT
VOTE YOUR PREFERENCES UNLESS YOU SIGN AND RETURN THIS CARD.
W HOLDING COMPANY, INC.
P.O. BOX 11049
NEW YORK, N.Y. 10203-0049
(Continued, and to be signed on reverse side.)
<PAGE> 17
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE STOCKHOLDER. IF NO DIRECTION IS OTHERWISE MADE, THIS PROXY WILL BE VOTED
FOR THE NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSAL 2, and in the discretion of
the named proxies to any other matters properly presented at the meeting. This
proxy may be revoked at any time before it is voted by delivery to the Secretary
of the Company of either a written revocation of the proxy or a duly executed
proxy bearing a later date, or by appearing at the annual meeting and voting in
person.
<TABLE>
<CAPTION>
<S> <C>
1. To elect the following nominees to serve for three-year 2. To ratify the appointment of Deloitte & Touche LLP, as
terms on the Board of Directors. independent auditors of the Company for the fiscal year
Nominees: Frank C. Stipes and Angel Luis Rosas. ending December 31, 2000.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
FOR ALL [X] WITHHOLD [X] TO VOTE FOR [X] FOR [X] AGAINST [X] ABSTAIN [X]
NOMINEES AUTHORITY ALL NOMINEES
TO VOTE EXCEPT AS
FOR ALL INDICATED ON
NOMINEES THE LINE
BELOW
</TABLE>
<TABLE>
<S> <C>
MARK HERE FOR ADDRESS [X]
CHANGE AND NOTE AT LEFT
THIS IS YOUR PROXY. YOUR VOTE IS IMPORTANT.
Please sign exactly as your name appears hereon.
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee, or
guardian, please give full title as such.
Dated:_____________________________________, 2000
_________________________________________________
Signature
_________________________________________________
Signature
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS, VOTES MUST BE INDICATED [X]
PLEASE EXECUTE YOUR PROXY PROMPTLY AND RETURN IT IN THE ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK.
</TABLE>
