<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
PROVIDIAN CORPORATION
- --------------------------------------------------------------------------------
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] 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:
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Notes:
<PAGE>
[PROVIDAN LOGO]
March 28, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Providian Corporation to be held on Wednesday, May 1, 1996, in the lobby of One
Commonwealth Place, 680 Fourth Avenue, Louisville, Kentucky, beginning at 11:00
a.m., Eastern Daylight Time. Your Board of Directors and management look
forward to personally greeting those stockholders able to attend.
This year you are being asked to consider and vote upon the election of four
directors and ratification of independent auditors. These matters are discussed
in greater detail in the accompanying proxy statement.
Your Board of Directors recommends a vote FOR the election of directors and FOR
approval of independent auditors.
Regardless of the number of shares you own or whether you plan to attend, it is
important that your shares are represented and voted at the meeting. You are
requested to sign, date and mail the enclosed proxy promptly.
If you have any questions or comments about matters discussed in the proxy
statement or the operation of your company, we'd be happy to hear from you.
Please call our Shareholder Relations Department, collect, at (502) 560-2391.
We look forward to seeing you at the Annual Meeting in Louisville.
Sincerely,
LOGO
Irving W. Bailey II
Chairman and Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Providian Corporation (the "Company")
will be held at 11:00 a.m. Eastern Daylight Time on Wednesday, May 1, 1996, in
the lobby of One Commonwealth Place, 680 Fourth Avenue, Louisville, Kentucky.
The purposes of the meeting will be to:
(1) Elect four directors;
(2) Consider and act upon a proposal to ratify the appointment of independent
auditors; and
(3) Transact any other business that may properly come before the meeting.
While only stockholders of record who own Providian common stock at the close
of business on March 8, 1996, will be entitled to vote at the meeting, all
stockholders are invited to attend.
By Order of the Board of Directors
ROBERT MICHAEL SLAVEN
Secretary
PROVIDIAN CORPORATION
Louisville, Kentucky
March 28, 1996
<PAGE>
PROVIDIAN CORPORATION
400 WEST MARKET STREET
LOUISVILLE, KENTUCKY 40202
PROXY STATEMENT
PROXY SOLICITATION AND VOTING RIGHTS
The Board of Directors of Providian Corporation (the "Company") is soliciting
proxies to be voted at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 11:00 a.m. on Wednesday, May 1, 1996, in the lobby of
One Commonwealth Place, 680 Fourth Avenue, Louisville, Kentucky, and at any
adjournment thereof. The Company is first sending this proxy statement and
accompanying proxy to stockholders on or about March 28, 1996.
VOTING RIGHTS
The Board of Directors has fixed the close of business on March 8, 1996, as the
record date for determining stockholders entitled to receive notice of, and to
vote at, the Annual Meeting ("Record Date"). On the Record Date, there were
93,844,698 shares of the Company's common stock, par value $1 per share, (the
"Common Stock") outstanding. For each share of Common Stock held on the Record
Date, a stockholder is entitled to one vote on each matter to be voted upon at
the Annual Meeting. A majority of such shares of Common Stock present in person
or by proxy will constitute a quorum for the transaction of business at the
Annual Meeting.
Each share of Common Stock represented at the Annual Meeting by a properly
executed proxy will be voted according to the instructions indicated on the
proxy. IF NO INSTRUCTIONS ARE INDICATED, SUCH SHARES OF COMMON STOCK WILL BE
VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR AND FOR THE PROPOSAL
CONTAINED IN THIS PROXY STATEMENT. A stockholder may revoke a proxy by voting
at the meeting, giving written notice of revocation to the Secretary of the
Company, or submitting a later-dated proxy at any time before the voting.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by the
inspectors of election appointed for the meeting, who also will determine
whether or not a quorum is present. The inspectors of election will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum, but as unvoted for purposes of
determining the approval of any matter submitted to the stockholders for a
vote. If a broker indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter, those shares
will not be considered as present and entitled to vote with respect to that
matter.
The Company will bear the expense of soliciting proxies. In addition to the use
of the mails, proxies may be solicited personally, by telephone or other means
of communication. The Company has retained Corporate Investor Communications,
Inc. to help solicit proxies for an estimated fee of $4,500 plus out-of-pocket
costs and expenses.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
J.P. Morgan & Co. Incorporated ("J.P. Morgan") has filed a Schedule 13G with
the Securities and Exchange Commission stating that it owned, as of December
31, 1995, 9.6 percent (9,081,353 shares) of the Company's Common Stock. J.P.
Morgan indicated that it had sole power to vote or direct the voting of
5,424,718 shares and shared power to vote with respect to 13,165 shares.
<TABLE>
<CAPTION>
Name and Address of Number of Shares of Percent of Common
Beneficial Owner Common Stock Owned Stock Owned
- ---------------------------------------------------------------------------------
<S> <C> <C>
J.P. Morgan & Co. Incorporated 9,081,353 9.6
60 Wall Street
New York, New York 10260
- ---------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The number of shares of Common Stock owned by each director and executive
officer named in the Summary Compensation Table in this Proxy Statement, and
directors and executive officers as a group, as of March 8, 1996, is shown in
the following table.
<TABLE>
<CAPTION>
Number
Name of Director or Executive Officer of Shares Percent of Class
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Irving W. Bailey II 625,105(1) *
John L. Clendenin 1,763 *
John M. Cranor 5,574 *
Joseph F. Decosimo 12,900 *
Lyle Everingham 8,500 *
Raymond V. Gilmartin 1,220 *
J. David Grissom 27,204 *
Watts Hill, Jr. 52,736 *
Frederick C. Kessell 112,955(2) *
Ned C. Lautenbach 466 *
F. Warren McFarlan 6,051 *
Shailesh J. Mehta 204,494(3) *
Julie A. Montanari 88,507(4) *
Martha R. Seger 1,851 *
Larry D. Thompson 2,407 *
Robert L. Walker 89,029(5) *
Directors and Executive Officers as a group (25 persons) 1,608,799(6) 1.7
- ---------------------------------------------------------------------------------------
</TABLE>
(*) Less than 1%.
(1) Includes 123,357 shares held directly by Mr. Bailey; 6,780 shares held in
Mr. Bailey's account under the Company's Thrift Savings Plan over which Mr.
Bailey holds limited investment power; 23,698 shares held in Mr. Bailey's
account under the Company's Stock Ownership Plan subject to the vesting
requirements set forth in footnote 3 to the Summary Compensation Table; and
471,270 shares which Mr. Bailey has the right to acquire pursuant to stock
options exercisable within 60 days of the Record Date.
(2) Includes 16,820 shares held directly by Mr. Kessell; 2,762 shares held in
Mr. Kessell's account under the Company's Thrift Savings Plan over which
Mr. Kessell holds limited investment power; 7,956 shares held in Mr.
Kessell's account under the Company's Stock Ownership Plan subject to the
vesting requirements set forth in footnote 3 to the Summary Compensation
Table; and 85,417 shares which Mr. Kessell has the right to acquire
pursuant to stock options exercisable within 60 days of the Record Date.
(3) Includes 40,452 shares held directly by Mr. Mehta; 1,000 shares held in Mr.
Mehta's Individual Retirement Account; 594 shares held in Mr. Mehta's
account under the Providian Bancorp 401(k) Plan over which Mr. Mehta holds
limited investment power; 535 shares held in Mr. Mehta's account under the
Company's Thrift Savings Plan over which Mr. Mehta holds limited investment
power; 15,704 shares held in Mr. Mehta's account under the Company's Stock
Ownership Plan subject to vesting requirements set forth in footnote 3 to
the Summary Compensation Table; and 146,209 shares which Mr. Mehta has the
right to acquire pursuant to stock options exercisable within 60 days of
the Record Date.
(4) Includes 11,067 shares held directly by Ms. Montanari; 800 shares held in
Ms. Montanari's account under the Providian Bancorp 401(k) Plan over which
Ms. Montanari holds limited investment power; 6,106 shares held in Ms.
Montanari's account under the Company's Stock Ownership Plan subject to
vesting requirements set forth in footnote 3 to the Summary Compensation
Table; and 70,534 shares which Ms. Montanari has the right to acquire
pursuant to stock options exercisable within 60 days of the Record Date.
(5) Includes 8,019 shares held directly by Mr. Walker; 1,086 shares held in Mr.
Walker's account under the Company's Thrift Savings Plan over which Mr.
Walker holds limited investment power; 4,424 shares held in Mr. Walker's
account under the Company's Stock Ownership Plan subject to vesting
requirements set forth in footnote 3 to the Summary Compensation Table; and
75,500 shares which Mr. Walker has the right to acquire pursuant to stock
options exercisable within 60 days of the Record Date.
(6) Includes 1,488,127 shares beneficially owned by all executive officers, of
which 19,495 shares are held in such officers' accounts under certain tax-
qualified defined contribution plans over which they hold limited
investment power; and of which 81,121 shares are held in such officers'
accounts under the Company's Stock Ownership Plan subject to the vesting
requirements set forth in footnote 3 to the Summary Compensation Table; and
includes 1,159,108 shares that the same group of officers has the right to
acquire pursuant to stock options exercisable within 60 days of the Record
Date.
2
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for the classification of
the Board of Directors into three classes with each class of directors serving
staggered three-year terms. Four directors are to be elected at the 1996 Annual
Meeting to serve for a term of three years expiring in 1999.
Directors will be elected by a plurality of the votes cast at the Annual
Meeting. All nominees have consented to be named and to serve if elected. The
Company does not presently know of any reason that would preclude any nominee
from serving if elected. If any nominee, for any reason, should become unable
or unwilling to stand for election as a director, either the shares of Common
Stock represented by all proxies authorizing votes for such nominee will be
voted for the election of such other person as the Board of Directors may
recommend, or the number of directors to be elected at the Annual Meeting will
be reduced accordingly. All of the nominees are current directors of the
Company.
Mr. Joseph Decosimo will retire as a director following the Annual Meeting in
accordance with the mandatory retirement provisions of the Company's By-laws.
For each of the four nominees, as well as the eight directors whose terms
continue after the Annual Meeting, information follows as to age, length of
service as a director of the Company, positions and offices with the Company,
principal occupations during the past five years and other directorships of
publicly-held companies.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING:
IRVING W. BAILEY II, 54
Director since 1987.
Chairman and Chief Executive Officer, Providian Corporation,
1988 to present; President, 1988 to 1994.
Other directorships: Computer Sciences Corporation and
BellSouth Telecommunications, Inc.
[PHOTO]
JOHN L. CLENDENIN, 61
Director since 1984.
Chairman and Chief Executive Officer, BellSouth Corporation,
1984 to present.
Other directorships: BellSouth Corporation; Springs
Industries, Inc.; Equifax Inc.; Kroger Co.; Coca-Cola
Enterprises, Inc.; Wachovia Corporation; and RJR Nabisco,
Inc.
[PHOTO]
RAYMOND V. GILMARTIN, 55
Director since 1993.
Chairman, President and Chief Executive Officer, Merck & Co.,
Inc., 1994 to present; Chairman, President and Chief
Executive Officer, Becton Dickinson & Co., 1989 to 1994.
Other directorships: Merck & Co., Inc. and Public Service
Enterprise Group, Inc.
[PHOTO]
3
<PAGE>
SHAILESH J. MEHTA, 46
Director since 1994.
President and Chief Operating Officer, Providian Corporation,
1994 to present; Executive Vice President, 1993 to 1994;
Chairman and Chief Executive Officer, Providian Direct
Insurance, 1993 to 1994; Chairman, President and Chief
Executive Officer, Providian Bancorp, 1988 to 1994.
Other directorship: MasterCard International Incorporated.
[PHOTO]
DIRECTORS CONTINUING IN OFFICE WHOSE TERMS EXPIRE IN 1997 ARE:
LYLE EVERINGHAM, 69
Director since 1980.
Retired Chairman and Chief Executive Officer, Kroger Co., and
officer of that corporation or one of its divisions since
1963; Chairman of the Executive Committee through May, 1991.
Other directorships: Kroger Co.; Cincinnati Milacron, Inc.;
and Federated Department Stores, Inc.
[PHOTO]
WATTS HILL, JR., 69
Director since 1974.
Business and Financial Consultant, Watts Hill, Jr. &
Associates, 1973 to present.
[PHOTO]
NED C. LAUTENBACH, 52
Director since 1995.
Senior Vice President and Group Executive Worldwide Sales and
Services, IBM Corporation, 1995 to present; Mr. Lautenbach
has been with IBM Corporation since 1968.
[PHOTO]
LARRY D. THOMPSON, 50
Director since 1994.
Partner, King & Spalding (a law firm); he has been a partner
with the firm since 1986.(1)
[PHOTO]
- ---------------------
(1) The Company retained King & Spalding during 1995 to perform certain legal
services.
4
<PAGE>
DIRECTORS CONTINUING IN OFFICE WHOSE TERMS EXPIRE IN 1998 ARE:
JOHN M. CRANOR III, 49
Director since 1991.
President and Chief Executive Officer, Long John Silver's
Restaurants, Inc., 1996 to present; President and Chief
Executive Officer of KFC Corporation, 1989 to 1994.
[PHOTO]
J. DAVID GRISSOM, 57
Director since 1978.
Chairman, Mayfair Capital, 1989 to present.
Other directorships: Columbia/HCA Healthcare Corporation;
Churchill Downs, Incorporated; LG&E Energy Corp.; and Regal
Cinemas, Inc.
[PHOTO]
F. WARREN MCFARLAN, PH.D., 58
Director since 1986.
Senior Associate Dean and Professor of Business
Administration, Harvard Business School, 1973 to present; a
member of the Harvard faculty since 1964.
Other directorships: Pioneer Hi-Bred International, Inc.; and
Computer Sciences Corporation.
[PHOTO]
MARTHA R. SEGER, PH.D., 64
Director since 1991.
Distinguished Visiting Professor of Finance, Central Michigan
University, 1993-present; John M. Olin Distinguished Fellow,
University of Arizona, 1991 to 1993; Member, Board of
Governors of the Federal Reserve System, 1984 to 1991.
Other directorships: Amerisure Companies; Xerox Corp.; Kroger
Co.; Johnson Controls, Inc.; Amoco Co.; Fluor Corp.; and
Tucson Electric Power Co.
[PHOTO]
5
<PAGE>
COMMITTEES OF THE BOARD
The Board has several committees which perform various functions, including
those described below.
The AUDIT COMMITTEE makes recommendations to the Board of Directors with
respect to engagement of the Company's independent auditors, reviews with the
independent auditors the plan and results of the auditing engagement, and
reviews the Company's system of internal controls and accounting practices. The
members of the Audit Committee are Messrs. Thompson (Chair), Clendenin,
Decosimo and Grissom and Dr. Seger. The Audit Committee met five times during
1995.
The HUMAN RESOURCES COMMITTEE reviews and approves the compensation and
benefits policies and practices of the Company except that approval of the
salaries and bonuses of the Chairman of the Board, Chief Executive Officer and
President are reserved to the full Board of Directors. The committee also
recommends to the Board nominations for directors of the Company. In addition,
the committee administers the Company's stock option plans and Stock Ownership
Plan. The Human Resources Committee is comprised of Messrs. McFarlan (Chair),
Cranor, Everingham, Gilmartin, Hill and Lautenbach. The Human Resources
Committee met five times during 1995.
DIRECTORS' MEETINGS
The Company's Board of Directors held six regular meetings and one special
meeting in 1995. Each director attended at least 75 percent of all Board and
committee meetings held in 1995 during the period when he or she was a director
and committee member.
DIRECTORS' COMPENSATION
Directors who also are officers of the Company receive no additional
compensation for serving on the Company's Board of Directors. All other
directors are paid an annual retainer of $30,000, and may elect to receive all
or a portion of this amount in shares of Common Stock. Directors who elect to
receive all or a portion of their retainer in Common Stock will receive an
award equal to 25 percent of their retainer in shares of restricted stock under
the Company's Stock Ownership Plan. Such restricted stock vests one-half after
three years, and the balance after six years, if the director does not dispose
of the related shares of unrestricted Common Stock during such vesting periods.
Non-employee directors are paid an additional $1,000 for attending the Annual
Meeting and each Board and committee meeting. Committee chairs receive an
additional $300 for each meeting they conduct. The Company's directors also are
reimbursed for necessary and reasonable expenses incurred in the performance of
their duties as directors. In addition to this compensation, the Company has
purchased for each director (other than officers of the Company) from
Commonwealth Life Insurance Company, UniversaLife insurance policies, which
provide a death benefit of $100,000 to a beneficiary designated by the
director. To the extent that these policies create additional taxable income
for these directors, the Company also reimburses each director as necessary to
compensate for any additional taxes.
6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table shows information for the last three fiscal years with
regard to compensation for services rendered in all capacities to the Company
by the Chief Executive Officer and the other four most highly compensated
executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term Compensation
Compensation Awards Payouts
- ----------------------------------------------------------------------------------------------------------------------------
Other Restricted Securities
Annual Stock Underlying LTIP All Other
Name and Salary Bonus Compensation Award(s) Options/ Payouts Compensation
Principal Position Year ($)(1) ($) ($)(2) ($)(3)(4) SAR (#) ($) ($)(5)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Irving W. Bailey II 1995 744,615 518,500 26,241 214,784 60,000 340,752 21,717
Chairman and CEO 1994 708,077 462,860 18,979 400,635 210,850 1,139,815 23,366
1993 666,154 457,400 20,749 114,347 60,000 19,959
Shailesh J. Mehta 1995 528,755 362,900 26,184 156,851 45,000 264,603 16,808
President and COO 1994 430,993 363,670 19,289 213,428 156,725(/7/) 406,635 17,301
1993 369,266 336,000 0 805,240(/6/) 24,200(/7/) 8,356(/8/) 12,186
Frederick C. Kessell 1995 291,923 200,000 0 73,590 15,500 94,409 9,183
CIO 1994 273,308 50,000 0 126,463 70,300 455,948 8,631
1993 262,462 180,000 492 44,987 7,100 7,679
Julie A. Montanari 1995 274,214 185,000 0 77,629 19,600 125,728 9,014
President-- 1994 225,919 164,990 0 90,196 71,800(/7/) 149,413 7,425
Emerging Businesses 1993 190,000 125,000 0 250,410(/6/) 5,900(/7/) 2,323(/8/) 4,947
Robert L. Walker 1995 243,462 150,000 0 59,943 11,800 89,830 7,584
Senior Vice President-- 1994 217,377 107,100 0 67,827 63,500 164,274 6,521
CFO 1993 180,335 76,000 0 18,986 9,000 5,191
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents amounts received as salary during the year. Such amounts may
vary in any given year as a result of the number of pay periods during such
year.
(2) Represents amounts reimbursed during the fiscal year for the payment of
taxes.
(3) Represents the dollar value of restricted stock awarded under the Company's
Stock Ownership Plan ("SOP"). Nonrestricted stock awards under the SOP are
matched with a like number of shares of restricted stock and are intended
to replace a portion of cash amounts previously paid under the Company's
other incentive plans. One half of such restricted stock will vest if all
nonrestricted shares are held for three years or in the event of death,
disability, or retirement during such three year period. The other half
will vest if such nonresticted stock is held for six years or in the event
of death, disability or retirement during the final three year vesting
period, except in the event of a change in control of the Company, in which
case such shares vest immediately.
(4) Dividends are paid on restricted stock awards under the SOP at the same
rate as paid to all stockholders. On December 29, 1995, with a stock
closing price of $40.75, Irving W. Bailey II held 22,709 restricted shares
having a then market value of $925,392, Shailesh J. Mehta held 14,442
restricted shares having a then market value of $588,512, Frederick C.
Kessell held 7,428 restricted shares having a then market value of
$302,691, Julie A. Montanari held 5,447 restricted shares having a then
market value of $221,965, and Robert L. Walker, held 3,788 restricted
shares having a then market value of $154,361.
(5) Represents Company contributions or liabilities under the Company's defined
contribution plans, which include a qualified and a nonqualified plan.
Under the qualified plan, the following contributions were made: Mr. Bailey
received $4,950, Mr. Mehta received $4,500, Mr. Kessell received $4,500,
Ms. Montanari received $4,950 and Mr. Walker received $4,500. Under the
nonqualified plan, the increases in the Company's liabilities were as
follows: $16,767 for Mr. Bailey, $12,308 for Mr. Mehta, $4,683 for Mr.
Kessell, $4,064 for Ms. Montanari, and $3,084 for Mr. Walker. With respect
to Mr. Mehta, contributions for 1993 were made under the 401(k) Plan of
Providian Bancorp ("Bancorp"), a wholly owned subsidiary of the Company.
With respect to Ms. Montanari, contributions for 1993, 1994, and 1995 were
made under the 401(k) Plan of Bancorp.
(6) Includes the market value of 20,000 restricted shares awarded to Mr. Mehta
and 7,000 restricted shares awarded to Ms. Montanari under the SOP subject
to performance and time based restrictions, which restrictions have been
terminated, and the shares were released, effective January 3, 1995.
(7) Represents options granted under the Company's 1989 and 1995 Stock Option
Plans and Equity Units granted under the Bancorp Equity Unit Plan.
(8) Represents interim payout to Mr. Mehta and Ms. Montanari based on the 1991-
1993 three year performance cycle, under the Long Term Incentive Plan, with
payment of 45 percent of such amount in 1992, 5 percent in 1993 and the
balance of the amount in May 1994.
7
<PAGE>
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS (SARS)
The following table contains information concerning the grant of stock options
in 1995 under the Company's 1995 Stock Option Plan to the named executive
officers of the Company. Included is information on potential realizable
value(s) to the named executive officers, all optionees as a group, and all of
the Company's stockholders, assuming growth of the Common Stock at the stated
rates of appreciation.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value at Assumed
Annual Rates of Stock Price Appreciation
Individual Grants for Option Term(1)
- -------------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options/
Underlying SARs
Options/ Granted to Exercise
SARs Employees or Base
Granted in Fiscal Price Expiration
Name (#)(2) Year ($/Sh)(3) Date 0%($) 5%($) 10%($)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Irving W. Bailey II 60,000 6.19% 36.25 08/09/2005 0 1,367,846 3,466,390
Shailesh J. Mehta 45,000 4.64% 36.25 08/09/2005 0 1,025,884 2,599,792
Frederick C. Kessell 15,500 1.60% 36.25 08/09/2005 0 353,360 895,484
Julie A. Montanari 19,600 2.02% 36.25 08/09/2005 0 446,830 1,132,354
Robert L. Walker 11,800 1.22% 36.25 08/09/2005 0 269,010 681,723
All Optionees
(Includes above
individuals)(4) 968,800 100.00% 36.25 08/09/2005 0 22,086,150 55,970,641
All Stockholders N/A N/A N/A N/A 0(5)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The amounts shown represent certain assumed rates of appreciation only.
Actual gains on stock option exercises, if any, are dependent on the future
performance of the Company's Common Stock and overall condition of the
stock market, as well as the optionholder's continued employment through
the vesting period. The amounts reflected in this table may not necessarily
be achieved.
(2) Denotes options granted under the 1995 Stock Option Plan.
(3) The exercise price of options granted under the 1995 Stock Option Plan is
equal to the average of the Company's high and low price of the Common
Stock on the date of grant. With respect to the options granted, options
vest one-third per year and are fully vested after three years and vest
immediately upon the event of death or disability of the optionee or change
in control of the Company. Options will expire 10 years from the date of
grant.
(4) Optionees will realize benefit only upon an increase in the price of the
Company's Common Stock, which will benefit all stockholders commensurately.
A zero percentage gain in the stock price appreciation will result in zero
dollars for the optionee.
(5) Although all other stockholders would not realize any increase in the value
of their stock without stock price appreciation, the zero amount does not
reflect the value of dividends that stockholders may receive over the ten-
year option term. Based on the number of shares of Common Stock outstanding
as of the close of business on March 8, 1996, and assuming the Company's
current dividend rate remains in effect, total dividends received by all
stockholders during the ten year period would be $938,446,980. There is no
guarantee that dividends, in fact, will be paid throughout such period or,
if paid, that the dividend rate will not change. Optionees will not receive
dividends until such time as they exercise the options.
8
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the named executives
concerning the exercise of options during 1995, and unexercised options and
SARs held as of the end of 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-the-Money Options
12-31-95 (#) at 12-31-95 ($)(1)
- ----------------------------------------------------------------------------------------
Shares
Acquired on Value
Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Irving W.
Bailey II 27,880 602,702 481,270 109,900 4,835,281 473,619
Shailesh J.
Mehta 0 0 146,209 75,316 148,543 396,764
Equity
Units
(2) 0 0 113,594 4,233 11,337,268 263,658
Frederick C.
Kessell 7,954 181,578 105,217 22,199 611,238 102,393
Julie A.
Montanari 0 0 70,534 25,466 37,902 122,261
Equity
Units
(2) 0 0 33,567 1,433 3,281,102 90,720
Robert L.
Walker 0 0 79,100 20,800 243,918 94,050
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Based on the average of the high and low price of the Common Stock on
December 29, 1995 of $40.375 per share.
(2) Represents estimated fair market value of $120.87 per Equity Unit
outstanding under the Providian Bancorp Equity Unit Plan as of December 31,
1995.
PENSION PLANS
The following table shows the estimated annual pension benefits payable to a
covered participant upon retirement at age 65 under the Company's qualified
defined benefit pension plan, as well as the nonqualified supplemental pension
plan that provides benefits that would otherwise be denied participants by
reason of certain Internal Revenue Code limitations on qualified plan benefits.
Estimated pension benefits are based on remuneration covered under the plans
and years of service with the Company and its subsidiaries.
PROVIDIAN CORPORATION RETIREMENT PLAN ESTIMATED BENEFIT TABLE
<TABLE>
<CAPTION>
5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
Remuneration of Service of Service of Service of Service of Service of Service
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 400,000 $ 34,546 $ 69,093 $103,639 $138,186 $ 172,732 $ 207,278
500,000 43,296 86,593 129,889 173,186 216,482 259,778
600,000 52,046 104,093 156,139 208,186 260,232 312,278
700,000 60,796 121,593 182,389 243,186 303,982 364,778
800,000 69,546 139,093 208,639 278,186 347,732 417,278
900,000 78,296 156,593 234,889 313,186 391,482 469,778
1,000,000 87,046 174,093 261,139 348,186 435,232 522,278
1,100,000 95,796 191,593 287,389 383,186 478,982 574,778
1,200,000 104,546 209,093 313,639 418,186 522,732 627,278
1,300,000 113,296 226,593 339,889 453,186 566,482 679,778
1,400,000 122,046 244,093 366,139 488,186 610,232 732,278
1,500,000 130,796 261,593 392,389 523,186 653,982 784,778
1,600,000 139,546 279,093 418,639 558,186 697,732 837,278
1,700,000 148,296 296,593 444,889 593,186 741,482 889,778
1,800,000 157,046 314,093 471,139 628,186 785,232 942,278
1,900,000 165,796 331,593 497,389 663,186 828,982 994,778
2,000,000 174,546 349,093 523,639 698,186 872,732 1,047,278
2,100,000 183,296 366,593 549,889 733,186 916,482 1,099,778
2,200,000 192,046 384,093 576,139 768,186 960,232 1,152,278
2,300,000 200,796 401,593 602,389 803,186 1,003,982 1,204,778
2,400,000 209,546 419,093 628,639 838,186 1,047,732 1,257,278
- -------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
The compensation covered by the plans includes all compensation in the form of
salary and bonuses as shown in the Summary Compensation Table, plus deferrals
under the Company's Thrift Savings Plan and the Providian Bancorp 401(k) Plan
and certain pre-tax contributions to the Company's flexible benefits plans. The
benefits are computed on a straight-life annuity basis and are subject to
deduction for Social Security offset amounts. For purposes of computing this
offset, the table assumes a participant is normal retirement age (65) as of
December 31, 1995. Credited years of service under the plans and other
arrangements as of December 31, 1995 for the named executive officers were as
follows: Mr. Bailey, 15; Mr. Mehta, 8; Mr. Kessell, 11; Ms. Montanari, 4; Mr.
Walker, 8.
HUMAN RESOURCES COMMITTEE EXECUTIVE COMPENSATION REPORT
The Company's executive compensation programs are administered by the Human
Resources Committee (the "Committee"), a committee of the Board of Directors
composed exclusively of non-employee directors. The Committee either approves
or recommends to the Board of Directors payment amounts and award levels for
the Company's executive officers. None of the non-employee directors has any
interlocking or other relationship with the Company that would call into
question his or her independence as a Committee member.
COMPENSATION PHILOSOPHY
The policies which govern executive compensation continue to align changes in
total compensation with changes in the value created for our shareholders.
These policies require that our executive compensation program:
. reflect a clear risk-based pay-for-performance relationship;
. integrate executive compensation with the Company's annual business planning
and measurement process;
. reward executives with direct ownership in the Company and align their
personal interests with shareholder interests to continually reinforce
building shareholder value; and
. attract and retain key executives critical to the Company's long-term
success.
The Company's executive compensation program has been and continues to be
based on the following three components, each of which supports our overall
compensation philosophy.
BASE SALARY
The Company uses a consistent methodology to determine base salaries for all
employees. Market reference points, e.g. 50th percentile, are determined for
specific positions and job families using relevant salary surveys. Individual
salaries are then established to assure competitive pay given individual
performance. For executive positions, the Company annually participates in
surveys of diversified insurance companies. In addition, an independent
consulting firm provides an assessment of our competitive position as compared
to a 19-company peer group. This peer group is subject to periodic review and
is modified as competitors merge or are acquired or as new competitors emerge
with sufficient market capitalization. This 19-company peer group is consistent
with the peer group depicted in the Performance Graph in this Proxy Statement.
Base salaries for executives are reviewed by the Committee relative to
competitive pay levels, as well as against individual performance objectives,
with the goal of positioning base salaries near the 50th percentile of our
relevant competitive markets.
Relevant insurance company surveys of 1994 base salaries among CEO's indicated
that Mr. Bailey's salary was above the median for predominately mutual
companies but below the median for stock companies particularly those of
comparable asset size and market capitalization. Further, salary increases were
projected to be about 4.5% in 1995. In February 1995, the Committee recommended
a 1995 increase of $35,000 or 4.9%, which provided a new base salary of
$750,000 for Mr. Bailey. This decision reflected the Committee's desire to
maintain a competitive base salary for Mr. Bailey.
10
<PAGE>
ANNUAL INCENTIVES
The Company provides annual incentive award opportunities for executives based
upon the operating earnings of the Company and the Company's various business
units, as well as the successful achievement of individual performance
objectives, which are established annually. The earnings plan is set for the
upcoming year as part of the Company's annual business planning process and is
approved by the Committee before the annual performance cycle commences. The
Committee reviews and approves award payouts in the February following the
annual performance cycle, based upon the prior year's performance results. A
portion of annual incentive awards may be paid to participants in stock, under
the provisions of the Stock Ownership Plan. It has been the Company's policy to
set challenging earnings targets which, if achieved, would position total
annual cash compensation above median competitive levels. Achieving target
earnings per share (EPS) performance would position Mr. Bailey's total annual
cash compensation above the median (at approximately the 60th percentile) for
chief executive officers of the 19-company peer group as well as a broader
group of diversified financial services companies. Earnings performance above
or below this target results in a formula-driven award by the Committee.
Mr. Bailey's annual incentive award for 1995 was based on the degree to which
target EPS for the Company were achieved. We recommended that he receive an
award of $518,500, based upon the Company's achieving EPS of $4.09 which was
slightly below the EPS target established for 1995.
LONG TERM INCENTIVES
The Company has provided executives both cash and equity-based long term
incentive opportunities. Under the Company's Long Term Incentive Plan (LTIP),
cash incentive awards are based upon the Company's relative earnings growth and
return on equity (ROE) over three-year performance cycles, as measured against
the 19-company peer group depicted in the Performance Graph in this Proxy
Statement. For participants in business units, awards are, in part, based on
such measures as expense ratio, return on capital and return on assets relative
to predetermined performance levels. Three-year LTIP performance cycles for
1991-93, 1992-94, and 1993-95 are complete. These performance cycles resulted
in payment to executives in May 1994 and in May 1995 and may result in payments
in May 1996, if predetermined corporate and business unit performance
objectives are met. Each participant has an award opportunity determined as a
percent of salary in the last year of the performance cycle. An individual
opportunity is based on position, function and responsibilities and typically
would position total compensation at the 60th percentile of our relevant
competitive markets.
In May, Mr. Bailey received a Long-Term Incentive Award for the 1992-94
performance cycle of $340,752. This award was based on the Company achieving an
average ROE of 15.3% for the cycle, ranking fifth among the peer companies and
an average earnings growth rate of 7.1%, ranking ninth among the peer group.
These performance levels placed Providian above the target rank of seventh on a
combined basis and Mr. Bailey's award was calculated commensurate with this
performance.
Through the Company's Stock Ownership Plan (SOP), a portion (25%) of all
executive incentive awards is paid in Common Stock, based on this Committee's
administration of the Plan. The amount of SOP awards granted to executives is
based on identical performance measures employed by the Committee to determine
annual and long term incentive awards, as described above. Stock awarded to
participants under the SOP is deposited into an account in the participant's
name and matched with an equal number of shares of restricted stock.
Participants are free to withdraw the awarded shares of Common Stock at any
time, but will forfeit all shares of matching restricted stock if the
withdrawal occurs prior to the end of the applicable restriction period.
In May, we approved an SOP grant equal to 25 percent of Mr. Bailey's 1992-94
LTIP incentive plan award, or 2,524 shares at $33.75 per share (the average of
the high and low price of the Common Stock on the award date), matched by an
equal number of restricted shares, which will fully vest if Mr. Bailey holds
the awarded shares for a six year period. In February 1996, we approved an SOP
grant equal to 25% of Mr. Bailey's annual incentive award for 1995 or 2,872
shares at a $45.125 price.
11
<PAGE>
The Company also provides grants of stock options under the 1995 Stock Option
Plan to executives and other employees. These option grants tie rewards to the
future performance of the Company's Common Stock and provide value only when
the price of the Common Stock increases above the option grant price
(determined by the average of the high and low price of the Common Stock on the
date of grant). Options vest in equal amounts over three years and require the
executive to be employed by the Company at the time of vesting. Options expire
ten years from the date of grant. Through these grants, we intend to motivate
executives to improve long-term stock performance.
In granting stock options, the Committee takes into account competitive grant
practices within the diversified insurance industry, the executive's level of
responsibility, individual contribution and total annualized compensation. The
market value of grant at the time of award reflects a percentage of current
base salary for recipients. These percentages, on average, compare to median
values for grant value within the industry. Mr. Bailey was awarded a grant of
60,000 stock options at an exercise price of $36.25 per share on August 9,
1995.
SUMMARY OF CEO COMPENSATION
Overall, we have attempted to ensure that Mr. Bailey's base salary remains
competitive, but continue to place the greater percentage of his total
compensation at risk and related to Company performance. For Mr. Bailey, 53
percent of target annualized cash compensation is explicitly linked to
achieving targeted earnings and longer-term (three-year) earnings growth and
ROE performance levels. The annual and multi-year cash incentives require
sustained financial performance and the restricted stock and stock options
require increased shareholder value.
OMNIBUS BUDGET RECONCILIATION ACT OF 1993
The Omnibus Budget Reconciliation Act (OBRA) of 1993 established several new
criteria for continued tax deductibility of executive compensation in excess of
$1 million. We believe that all executive compensation paid in 1995 meets the
requirements of OBRA and is fully deductible by the Company.
HUMAN RESOURCES COMMITTEE
F. Warren McFarlan (Chair)
John M. Cranor III
Lyle Everingham
Raymond V. Gilmartin
Watts Hill, Jr.
Ned C. Lautenbach
12
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line-graph presentation comparing cumulative, five-year
stockholder returns for the Company's Common Stock on an indexed basis with the
Standard & Poor's 500 Stock Index and an index of peer issuers selected by the
Company. The Human Resources Committee of the Board of Directors has approved a
group of 19 publicly-traded life insurance companies as its index of peer
issuers.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG PROVIDIAN, S&P 500 INDEX AND PEER GROUP
<CAPTION>
Measurement Period S&P
(Fiscal Year Covered) PROVIDIAN 500 INDEX PEER GROUP
- ------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-
12/31/90 $100.00 $100.00 $100.00
FYE 12/31/91 $166.55 $130.34 $143.45
FYE 12/31/92 $193.23 $140.25 $192.20
FYE 12/31/93 $202.37 $154.31 $199.93
FYE 12/31/94 $172.66 $156.41 $185.76
FYE 12/31/95 $233.26 $214.99 $263.25
</TABLE>
*Assumes that the value of the investment in Company Common Stock and each
index was $100 on December 31, 1990 and that all dividends were reinvested.
The 19 companies used for purposes of peer comparison are: AFLAC Inc.;
American General Corp.; American National Insurance Co.; AON Corp.; Conseco,
Inc.; Equitable of Iowa Companies; First Colony Corp.; Home Beneficial Corp.;
Independent Insurance Group, Inc.; Jefferson-Pilot Corp.; The Liberty Corp.;
Lincoln National Corp.; ReliaStar Financial Corp.; Provident Cos. Inc.
(formerly Provident Life & Accident Insurance Co. of America); Torchmark
Corp.; Transamerica Corp.; Unitrin; UNUM Corp.; and USLIFE Corp.
EXECUTIVE EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
Since 1988, Mr. Bailey has served as Chairman and Chief Executive Officer of
the Company pursuant to a five-year employment agreement. Beginning in February
1993, the agreement became automatically renewable for one-year periods unless
terminated by either party pursuant to the terms of the agreement. The
agreement provides for an initial base salary of $475,000, subject to annual
review, and entitles Mr. Bailey to participate in the Company's management
incentive compensation plans. The agreement entitles Mr. Bailey to a
supplemental pension to be paid at age sixty equal to 50 percent of the average
of his total cash compensation (base salary, annual incentives and long term
incentives) for the five highest consecutive years of his employment with the
Company in the ten years preceding the date of his retirement, subject to
offset by pension amounts and certain Social Security benefits otherwise
received by Mr. Bailey. If Mr. Bailey's employment is terminated without cause,
he will be entitled to salary and bonus payments and participation in the
Company's employee benefit plans for 24 months following such termination, as
well as a payout with respect to stock options then held by Mr. Bailey. In the
event of such termination within three years following a change in control of
the Company (as defined in the agreement and described below, or in the event
Mr. Bailey leaves the Company for any reason during a 30-day window period
following the first anniversary of a change in control, Mr. Bailey will be
entitled to a lump sum payment equal to three times his annual base salary plus
highest annual bonus, and continuation of employee benefits for three years
following termination of employment. The agreement also provides for
indemnification by the Company of Mr. Bailey for any excise taxes in the event
that benefits paid pursuant to a change in control trigger adverse tax
consequences to him.
13
<PAGE>
Under the agreement, a change in control occurs when (a) any person (except the
Company, any Company sponsored or maintained employee benefit plan and any
corporation with an identity of beneficial ownership) becomes the beneficial
owner of 20 percent or more of the outstanding Common Stock or the Company's
outstanding Voting Securities (hereafter defined); (b) the individuals who were
directors on August 9, 1989, including subsequent directors who are approved by
a majority of the incumbent directors cease to represent a majority of the
Board of Directors; (c) the Company is reorganized, merged or consolidated such
that all or substantially all of the persons beneficially owning the Company's
outstanding Common Stock and outstanding Voting Securities before the
reorganization, merger or consolidation will not beneficially own less than 60
percent of the outstanding common stock and Voting Securities of the
corporation resulting from the reorganization, merger or consolidation; or (d)
the Company is liquidated, dissolved or sells all or substantially all of its
assets, except to a corporation with an identity of beneficial ownership. A
corporation has an identity of beneficial ownership if more than 60 percent of
its outstanding shares of common stock and its outstanding Voting Securities
will be beneficially owned, after acquiring the threshold 20 percent of the
Company's outstanding Common Stock or outstanding Voting Securities or all or
substantially all of the Company's assets, by all or substantially all of the
persons beneficially owning the Company's outstanding Common Stock and
outstanding Voting Securities before the acquisition in substantially the same
proportion. "Voting Securities," as used herein, means the combined voting
power of outstanding voting securities entitled to vote generally in an
election of directors.
The Company has entered into agreements with Messrs. Kessell, Mehta, Walker,
Ms. Montanari and 11 other officers of the Company, seven of whom are executive
officers, providing certain benefits upon termination of employment following a
change in control of the Company (as defined in the agreements and described
below). Pursuant to the agreements, if a covered executive's employment is
terminated within three years after the date of a change in control for any
reason other than death, disability, or for cause or if the executive leaves
the Company for any reason during a 30-day window period following the first
anniversary of a change in control, the executive is entitled to severance pay
and certain other benefits. The severance payments are based on the executive's
annual base salary and bonus, multiplied by a factor of two or three, depending
on the executive. Under the agreements, a change in control is defined to
include the events described in Mr. Bailey's agreement except that the date of
the Board of Directors for purposes of subsection (b) varies depending on the
date of the particular agreement. The agreements also provide for
indemnification by the Company of the executive for any excise taxes in the
event that benefits paid pursuant to a change in control trigger adverse tax
consequences to the executive.
In April 1986, Mr. Mehta joined Bancorp as Executive Vice President and Chief
Operating Officer in accordance with the terms of a written offer of employment
(the "Offer"). Under the terms of the Offer, Bancorp established a deferred
compensation account for Mr. Mehta and agreed to make contributions to it in an
amount equal to 20 percent of Mr. Mehta's base salary less the cost of any
Bancorp employee benefits elected by Mr. Mehta. Amounts held in the deferred
compensation account are to be paid to Mr. Mehta upon termination of
employment. The Offer was amended August 5, 1992, to discontinue the obligation
to contribute to the deferred compensation account effective July 31, 1992. In
lieu thereof, Mr. Mehta became entitled to participate in the Company's
qualified defined benefit pension plan and nonqualified supplemental pension
plan, with his employment commencement date deemed to be January 1, 1988 for
purposes of the nonqualified supplemental pension plan as reflected in the
Providian Corporation Retirement Plan Estimated Benefit Table. In the event of
Mr. Mehta's termination of employment, amounts payable under these pension
plans will be comparable to the continuation of his original agreement, with
any shortfall to be paid to Mr. Mehta in the form of a nonqualified annuity.
PROPOSAL 2: TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, adopting the recommendation of the Audit Committee, has
appointed the certified public accounting firm of Ernst & Young LLP as the
Company's independent auditors for 1996, subject to ratification by the
stockholders at the Annual Meeting. Representatives of the firm are expected to
attend the Annual Meeting to answer appropriate questions and, if they desire,
to make a statement. Ernst & Young LLP has served as the Company's independent
auditors since 1969.
14
<PAGE>
If the appointment of Ernst & Young LLP is not ratified by a majority of the
votes cast at the meeting, or if Ernst & Young LLP declines or is incapable of
acting, the appointment of independent auditors will be submitted to the Board
of Directors for reconsideration.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
OTHER PROPOSED ACTION
The Company knows of no business to come before the Annual Meeting other than
the matters described above. Should any other business properly come before the
meeting, stockholders' proxies will be voted in accordance with the judgment of
the person or persons voting the proxies.
STOCKHOLDER PROPOSALS
Any stockholder may submit a proposal for consideration at the Annual Meeting.
To be included in next year's proxy statement, stockholder proposals for the
1997 Annual Meeting must be received in writing by December 1, 1996, by the
Secretary, Providian Corporation, Post Office Box 32830, Louisville, Kentucky
40232. The Board of Directors will decide, subject to the rules of the
Securities and Exchange Commission, whether such proposals are to be included
in the proxy and proxy statement.
Stockholders also may recommend candidates for directors. The Human Resources
Committee of the Board of Directors, which serves as the nominating committee
for the Board in recommending nominations for directors of the Company, will
consider such recommendations for the 1997 Annual Meeting and subsequent annual
meetings. Recommendations should be submitted in writing no later than October
31 of each year to the Human Resources Committee, c/o Secretary, Providian
Corporation, Post Office Box 32830, Louisville, Kentucky 40232.
In addition to these requirements, the Company's By-laws impose notice
requirements on a stockholder nominating a director or submitting a proposal to
an annual meeting. Such notice shall be submitted to the Secretary of the
Company no earlier than 90, nor later than 60, days before an annual meeting,
and shall contain the information prescribed by the By-laws, copies of which
are available from the Secretary. These requirements apply even if the
stockholder does not desire to have his or her nomination or proposal included
in the Company's proxy statement.
PROVIDIAN CORPORATION
By: ROBERT MICHAEL SLAVEN
Secretary
Louisville, Kentucky
March 28, 1996
15
<PAGE>
P R O X Y
PROVIDIAN CORPORATION
P.O. BOX 32830
LOUISVILLE, KENTUCKY 40232
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Irving W. Bailey II, J. David Grissom and John
M. Cranor III, and each of them, proxies with power of substitution to vote all
shares of Common Stock which the undersigned would be entitled to vote at the
Annual Meeting of Providian Corporation (the "Company") on May 1, 1996 at 11:00
a.m., E.D.T., and any adjournments thereof, upon the matters set forth below
and any other business that may properly come before the meeting.
1. Election of four Directors. Nominees for directors are Irving W. Bailey II,
John L. Clendenin, Raymond V. Gilmartin and Shailesh J. Mehta.
2. Ratification of the Appointment of Ernst & Young LLP as Independent
Auditors.
SEE REVERSE
SIDE
<PAGE>
Please mark your votes as in this example. [X] 9863
----
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
- --------------------------------------------------------------------------------
1. Election of Directors
FOR [_] WITHHELD [_]
For, except vote withheld from the following nominee(s):
--------------------------------------------------------
2. Ratification of appointment of Auditors
FOR [_] AGAINST [_] ABSTAIN [_]
Please sign exactly as
name appears hereon.
Joint owners should
each sign. When signing
as attorney, executor,
administrator, trustee
or guardian, please
give full title as
such.
-------------------------
-------------------------
SIGNATURE(S) DATE
PLEASE DETACH HERE. COMPLETE, SIGN AND RETURN CARD.
[LOGO OF PROVIDIAN CORPORATION]
PROVIDIAN CORPORATION
Annual Meeting of Stockholders
May 1, 1996
11:00 a.m.
Lobby of One Commonwealth Place
680 Fourth Avenue
Louisville, Kentucky
