SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
AMRESCO, 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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(l), 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:
AMRESCO, INC.
1845 WOODALL RODGERS FREEWAY
DALLAS, TEXAS 75201
-----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 29, 1996
-----------
TO THE STOCKHOLDERS OF AMRESCO, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of AMRESCO,
INC. (the "Company") will be held at the Dallas Museum of Art, 1717 North
Harwood, Dallas, Texas, on Wednesday, May 29, 1996, at 10:00 a.m., Central Time,
for the following purposes:
1. To elect three (3) directors for a three-year term; and
2. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on April 10, 1996 will
be entitled to notice of and to vote at the Annual Meeting.
A proxy card is enclosed in the pocket on the front of the envelope in
which these materials were mailed to you. Please fill in, date and sign the
proxy card and return it promptly in the enclosed postage-paid return envelope.
If you attend the meeting, you may, if you wish, withdraw your proxy and vote in
person.
A copy of the Annual Report to Stockholders for the fiscal year ended
December 31, 1995 is enclosed.
By Order of the Board of Directors
L. Keith Blackwell
Vice President, General Counsel and
Secretary
Dallas, Texas
April 22, 1996
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY SO THAT YOUR VOTE MAY BE RECORDED
AT THE ANNUAL MEETING IF YOU DO NOT ATTEND PERSONALLY.
AMRESCO, INC.
PROXY STATEMENT
-----------
INTRODUCTION
This Proxy Statement is furnished to stockholders of AMRESCO, INC., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Company's Board of Directors for use at the Annual Meeting of
Stockholders to be held at 10:00 a.m., Central Time, on May 29, 1996, at the
Dallas Museum of Art, 1717 North Harwood, Dallas, Texas (the "Annual Meeting"),
and at any adjournment thereof. The Annual Meeting is being held for the
following purposes:
(1) To elect three (3) directors for a three-year term; and
(2) To transact such other business as may properly come before the
meeting.
The date of this Proxy Statement is April 22, 1996. This Proxy Statement is
first being mailed to the Company's stockholders on or about such date.
The Company's principal offices are located at 1845 Woodall Rodgers
Freeway, Dallas, Texas 75201. Its telephone number is (214) 953-7700.
VOTING AT THE MEETING
Only holders of record of the Company's common stock, par value $.05 per
share (the "Common Stock"), outstanding at the close of business on April 10,
1996 (the "record date") are entitled to notice of and to vote at the Annual
Meeting and at any adjournment thereof. As of the close of business on the
record date, 26,840,082 shares of Common Stock were outstanding and entitled to
vote at the Annual Meeting. Unless otherwise indicated, all references herein to
percentages of outstanding shares of Common Stock are based on 26,840,082 shares
outstanding. Each share of Common Stock is entitled to one (1) vote.
The presence, in person or by proxy, of holders of a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Annual Meeting. Abstentions and broker non-votes will be counted
in determining whether a quorum is present. The affirmative vote of a plurality
of the holders of the shares of Common Stock present, in person or represented
by proxy, at the Annual Meeting will be necessary to elect the nominees for
director listed herein. The affirmative vote of a majority of the shares of
Common Stock represented in person or by proxy and entitled to vote at the
Annual Meeting will be required to approve any other proposals that properly
come before the Annual Meeting. Abstentions and broker non-votes will have no
effect (other than for quorum purposes) on the election of the nominees for
director or the approval of any other proposals. An automated system
administered by the Company's transfer agent will tabulate the votes cast.
All shares of Common Stock represented by properly executed and unrevoked
proxies will be voted at the Annual Meeting in accordance with the direction on
the proxies. IF NO DIRECTION IS INDICATED, THE SHARES WILL BE VOTED "FOR" THE
ELECTION OF THE NOMINEES LISTED HEREIN. The Company does not know of any
matters, other than those described in the Notice of Annual Meeting, which will
come before the Annual Meeting. If any other matters are properly presented for
action at the Annual Meeting, the persons named in the proxies and acting
thereunder will have discretion to vote on such matters in accordance with their
best judgment.
Certain stockholders of the Company (Gerald E. Eickhoff, James P. Cotton,
Jr., CGW Southeast Partners I, L.P. ("CGW I") and CGW Southeast Partners II,
L.P. ("CGW II," and collectively with CGW I, "CGW")) are parties to a voting
agreement pursuant to which they have agreed to vote in favor of the nominees
for director named in this proxy statement. See OWNERSHIP OF SECURITIES. As of
the record date, such stockholders collectively held approximately 27.2% of the
Common Stock outstanding.
1
A stockholder of the Company who executes and returns a proxy has the power
to revoke it at any time before it is voted. A stockholder who wishes to revoke
a proxy can do so by either executing a later dated proxy relating to the same
shares and by delivering it to the Secretary of the Company prior to the vote at
the Annual Meeting, by giving written notice of the revocation to the Secretary
of the Company prior to the vote at the Annual Meeting or by appearing in person
at the Annual Meeting and voting in person the shares to which the proxy
relates. All written notices of revocation and other communications relating to
the revocation of proxies should be addressed as follows: AMRESCO, INC., 1845
Woodall Rodgers Freeway, Dallas, Texas 75201, Attention: Secretary.
PROXY SOLICITATION EXPENSES
The Company will bear the cost of soliciting its proxies, including the
expenses of distributing its proxy materials. In addition to the use of the
mail, proxies may be solicited by personal interview, telephone or telegram by
directors, officers, employees and agents of the Company who will receive no
additional compensation for doing so. The Company will reimburse brokers,
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred by them in forwarding proxy materials to the beneficial owners of the
Common Stock held by them as stockholders of record.
OWNERSHIP OF SECURITIES
The following table sets forth certain information regarding the Common
Stock owned on the record date by: (i) each person who is known by management to
be the beneficial owner of more than 5% of the Common Stock as of such date;
(ii) each of the Company's directors; (iii) the individuals named in the Summary
Compensation Table; and (iv) all directors and executive officers of the Company
as a group.
Except as otherwise indicated, all shares shown in the table below are held
with sole voting and investment power. The Percent of Total Shares Owned column
represents the percentage that the named person or group would beneficially own
if such person or group, and only such person or group, exercised all options
held by him, her or it, which were exercisable within sixty (60) days.
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL TOTAL SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OWNED
- --------------------------------- ---------- ------
CGW Southeast Partners I, L.P. (1)(2) 4,370,248 17.0%
12 Piedmont Center, Suite 210
Atlanta, Georgia 30305
CGW Southeast Partners II, L.P. (1)(2) 2,415,918 9.4
12 Piedmont Center, Suite 210
Atlanta, Georgia 30305
James P. Cotton, Jr. (1) 482,636(3) 1.8
Two Concourse Parkway, Suite 650
Atlanta, Georgia 30328
Gerald E. Eickhoff (1) 28,000 *
125 Clairmont Road, Suite 500
Decatur, Georgia 30030
Robert L. Adair III 389,457(4) 1.4
Richard L. Cravey (2) *
William S. Green (2) *
Amy J. Jorgensen 2,000 *
Robert H. Lutz, Jr. 257,567(5) *
John J. McDonough 5,000 *
2
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL TOTAL SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OWNED
- --------------------------------- ---------- ------
Bruce W. Schnitzer 143,000(6) *
Barry L. Edwards 88,536(7) *
Michael N. Maberry 122,000(8) *
Douglas R. Urquhart 214,218(9) *
All executive officers and directors
as a group (a total of 17 persons) 8,862,531(10) 31.8%
- -----------
* Less than 1%
(1) CGW and Messrs. Eickhoff and Cotton entered into a Voting Agreement dated
December 30, 1993 pursuant to which each of them agreed to vote for the
nominees for directors designated by CGW and by Messrs. Eickhoff and
Cotton, respectively. As a result of such agreement, each may be deemed to
beneficially own all of the 7,296,802 shares subject to such agreement. The
figures in the table reflect direct ownership of shares only.
(2) Each of Messrs. Cravey and Green, as well as Edwin A. Wahlen, Jr., may also
be deemed to beneficially own the 4,370,248 shares and 2,415,918 shares
held of record by CGWI and CGWII, respectively, because they are managing
directors of the corporate general partner of each such limited partnership
and, therefore, share voting and investment power with respect to the
shares owned of record by each such limited partnership. In addition, each
such limited partnership may be deemed to beneficially own the shares owned
by the other as a result of such common control. Each of Messrs. Cravey,
Green and Wahlen disclaim beneficial ownership of such shares.
(3) Includes 156,803 shares held in Mr. Cotton's IRA.
(4) Includes options which were exercisable within sixty (60) days to purchase
280,576 shares and 24,246 restricted shares with respect to which he has
voting rights.
(5) Includes options which were exercisable within sixty (60) days to purchase
208,142 shares and 41,383 restricted shares with respect to which he has
voting rights.
(6) Includes options which were exercisable within sixty (60) days to purchase
110,000 shares.
(7) Includes options which were exercisable within sixty (60) days to purchase
58,031 shares and 16,566 restricted shares with respect to which he has
voting rights.
(8) Includes options which were exercisable within sixty (60) days to purchase
109,600 shares and 10,800 restricted shares with respect to which he has
voting rights.
(9) Includes options which were exercisable within sixty (60) days to purchase
128,400 shares and 9,475 restricted shares with respect to which he has
voting rights.
(10) Includes options which were exercisable within sixty (60) days to purchase
987,255 shares and 124,500 restricted shares with respect to which they
have voting rights.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10% of the Common Stock, to file with the Securities
and Exchange Commission certain reports of beneficial ownership of the Common
Stock. Based solely on copies of such reports furnished to the Company and
written representations that no other reports were required, the Company
believes that all applicable Section 16(a) filing requirements were complied
with by its directors, officers and 10% stockholders during the last fiscal
year, except that Messrs. Eickhoff and Cotton and CGW filed reports late.
3
ELECTION OF DIRECTORS
INFORMATION CONCERNING DIRECTORS
At the Annual Meeting, stockholders will be asked to elect three (3) Class
III directors to serve as members of the Company's Board of Directors for terms
of three (3) years or until their successors are duly elected and qualified. The
Board of Directors recommends that the three (3) nominees named as Class III
Directors below (Messrs. Cravey, Eickhoff and Lutz) be elected to serve as Class
III directors. Each of the Class III nominees will serve as a director for a
three (3) year term ending at the 1999 annual meeting of stockholders, or until
his successor has been duly elected and qualified. The persons named in the
proxy intend to vote the proxies for the election of the Class III nominees
named below. If any nominee refuses or becomes unable to serve as a director
(which is not now anticipated), the persons named as proxies reserve full
discretion to vote for such other person as may be nominated.
The following table sets forth certain information, as of March 31, 1996,
concerning each nominee for election as a Class III director and each other
director. All positions and offices with the Company and principal positions
with the Company's subsidiaries held by each such person are also indicated.
There are no family relationships between any of the directors, nor between any
of them and any executive officers of the Company. For information concerning
the directors' ownership of Common Stock, see OWNERSHIP OF SECURITIES.
The Class I and Class II directors are not being elected at this time.
Their terms will expire at the annual meeting of stockholders held in the year
indicated below.
<TABLE>
<CAPTION>
YEAR
POSITIONS WITH THE COMPANY AND PRINCIPAL OCCUPATION DIRECTOR TERM
NAME (AGE) DURING THE PAST FIVE (5) YEARS SINCE EXPIRES
---------- ------------------------------ ----- -------
CLASS III DIRECTORS
<S> <C> <C> <C>
@*Richard L. Cravey Chairman of the Board and Chief Executive 1993 1996
(51) Officer of the Company (December 1993 to
May 1994); Chairman of the Board of
AMRESCO Holdings, Inc., which was acquired
by the Company in December 1993 (1992 to
December 1993); Founder and Managing
Director of Cravey, Green & Wahlen
Incorporated, a private risk capital
investment firm (since 1985), its
investment management affiliate, CGW
Southeast Management Company (since 1991),
and its affiliates, CGW Southeast I, Inc.
(the general partner of CGW I) and CGW
Southeast II, Inc. (the general partner of
CGW II) (since 1991); Director of
Commercial Bancorp of Georgia (since
1988); Director of Commercial Bancorp of
Gwinnett (since 1990); Director of Cameron
Ashley, Inc., a national distributor of
home building products (since 1994).
@*Gerald E. Eickhoff Private investor (since December 1993); 1993 1996
(49) President and Chief Executive Officer of
the Company (1986 to December 1993).
*Robert H. Lutz, Jr. Chairman of the Board and Chief Executive 1993 1996
(49) Officer of the Company (since May 1994);
President of Allegiance Realty, a real
estate management company (November 1991
to May 1994); Executive Vice President of
Cousins Properties (February 1990 to
October 1991); Director of Bristol Hotel
Company (since 1995).
4
YEAR
POSITIONS WITH THE COMPANY AND PRINCIPAL OCCUPATION DIRECTOR TERM
NAME (AGE) DURING THE PAST FIVE (5) YEARS SINCE EXPIRES
---------- ------------------------------ ----- -------
CLASS I DIRECTORS
Robert L. Adair III President and Chief Operating Officer 1990 1997
(52) (since December 1993) and Executive Vice
President (1989 to December 1993) of the
Company.
@John J. McDonough President and Chief Executive Officer of 1993 1997
(59) McDonough Capital Company LLC, a company
through which Mr. McDonough conducts
personal and family investments (since
February 1995); Chairman of the Board of
SoftNet Systems, Inc., a company that
develops, markets, installs and services
information and document management systems
(since June 1995); Vice Chairman and Chief
Executive Officer (1993 to February 1995)
of DENTSPLY International, Inc., a
manufacturer of dental supplies, dental
equipment and medical x-ray products;
Chairman of the Board (1992 to 1993),
Director (1983 to 1992), Chief Executive
Officer (1983 to 1993) and President (1983
to 1991) of GENDEX Corporation, a
manufacturer of dental equipment and
medical x-ray products, which merged with
DENTSPLY in June 1993; Director (since
1992) of Newell Co., a New York Stock
Exchange-listed manufacturer of products
for the do-it-yourself hardware and
housewares market; Director of AmNet
Systems, Inc., a company that develops,
markets and installs electronic information
and document management for the health care
industry (since 1995).
+Bruce W. Schnitzer Vice Chairman of the Board of the Company 1986 1997
(51) (1986 to December 1993); Chairman of Wand
Partners Inc., a private investment firm
(since 1987); Director of Life Partners
Group, Inc. (since 1990); Director of
PennCorp Financial Group, Inc. (since
1990); Director of Chartwell Re Corporation
(since 1992); Director of Nestor, Inc.
(since 1994); Director of New London
Capital PLC (since 1993).
CLASS II DIRECTORS
+*James P. Cotton, Jr. Chairman of the Board and Chairman of the 1986 1998
(56) Executive Committee of USBA Holdings, Ltd.,
a provider of products and services to
financial institutions (since 1990);
Chairman of the Board of the Company (1986
to December 1993).
@*William S. Green Managing Director of Cravey, Green & Wahlen 1993 1998
(53) Incorporated, a private risk capital
investment firm (since 1985), its
investment management affiliate, CGW
Southeast Management Company (since 1991)
and its affiliates, CGW Southeast I, Inc.
(the general partner of CGW I) and CGW
Southeast II, Inc. (the general partner of
CGW II) (since 1991);
5
YEAR
POSITIONS WITH THE COMPANY AND PRINCIPAL OCCUPATION DIRECTOR TERM
NAME (AGE) DURING THE PAST FIVE (5) YEARS SINCE EXPIRES
---------- ------------------------------ ----- -------
Director of DENTSPLY International, Inc., a
manufacturer of dental supplies, dental
equipment and medical x-ray products (since
1987); Director of Cameron Ashley, Inc., a
national distributor of home building
products (since 1994).
+Amy J. Jorgensen Managing Director of Greenbriar Associates 1994 1998
(42) LLC, which provides advice and executes
transactions relating to real estate assets
and companies (since 1995); President of
The Jorgensen Company, a consultant for
real estate strategy and finance (April
1992 to September 1995); Managing Director
in the Real Estate Department of Morgan
Stanley & Co. Incorporated (1986 to
February 1992).
</TABLE>
- -----------
* Member of Executive Committee
+ Member of Audit Committee
@ Member of Compensation Committee
BOARD OF DIRECTORS AND STANDING COMMITTEES
The Board of Directors held four (4) meetings during 1995. All directors
attended at least 75% of the total number of meetings of the Board and
committees on which they served. The Board of Directors has an Executive
Committee, an Audit Committee and a Compensation Committee. The Company has no
standing nominating committee or other standing committee performing similar
functions. Members of these committees generally are elected annually at the
regular meeting of the Board of Directors immediately following the Annual
Meeting. The Company's Bylaws provide that the Executive Committee and the
Compensation Committee will be composed of at least two (2) directors nominated
by Messrs. Cotton and Eickhoff and at least two (2) directors nominated by CGW.
The Executive Committee consists of Messrs. Cotton, Cravey (Chairman),
Eickhoff, Green and Lutz. Subject to certain limitations specified by the
Company's Bylaws and the Delaware General Corporation Law, the Executive
Committee is authorized to exercise the powers of the Board of Directors when
the Board is not in session. The Executive Committee held one (1) meeting during
1995.
The Audit Committee consists of Messrs. Cotton and Schnitzer (Chairman) and
Ms. Jorgensen. The Audit Committee held one (1) meeting during 1995. The
functions of the Audit Committee include recommending to the Board of Directors
which firm of independent public accountants should be engaged by the Company to
perform the annual audit, consulting with the Company's independent public
accountants with regard to the audit plan, reviewing the presentation of the
Company's financial statements, reviewing and considering the observations of
the independent public accountants concerning internal control and accounting
matters during their annual audit, approving certain other types of professional
services rendered by the independent public accountants and considering the
possible effects of such services on the independence of such public
accountants.
The Compensation Committee consists of Messrs. Cravey, Eickhoff, Green and
McDonough (Chairman). This committee held three (3) meetings during 1995. The
functions of the Compensation Committee include making recommendations to the
Board regarding compensation for executive officers of the Company and its
subsidiaries.
6
MANAGEMENT AND REMUNERATION
EXECUTIVE OFFICERS
Set forth below are the names and ages of all executive officers of the
Company as of March 31, 1996. All positions and offices with the Company and
principal positions with the Company's subsidiaries held by each such person are
also indicated. There are no family relationships between any such officers or
between any such officers and any directors. Officers generally are elected
annually for one (1) year terms or until their successors are elected and
qualified. All executive officers are United States citizens.
POSITION WITH THE COMPANY AND PRINCIPAL
NAME (AGE) OCCUPATION DURING THE PAST FIVE (5) YEARS
Robert H. Lutz, Jr.* Chairman of the Board and Chief Executive Officer
(46) of the Company.
Robert L. Adair III* President and Chief Operating Officer of the Company.
(52)
Barry L. Edwards Executive Vice President and Chief Financial Officer of
(48) the Company (since November 1994); Vice President and
Treasurer of Liberty Corporation, an insurance holding
company (1979 to November 1994).
L. Keith Blackwell Vice President (since February 1996), General Counsel
(55) and Secretary (since January 1994) of the Company;
General Counsel and Secretary of AMRESCO Holdings, Inc.
(December 1993); Investments and Consulting (May 1992 to
December 1993); Executive Vice President, General
Counsel and Secretary of First Gibraltar Bank, FSB, a
federal savings bank (December 1988 to May 1992).
Randolph E. Brown Senior Vice President - Portfolio Acquisitions or
(35) Commercial Group of the Company (since June 1995);
Director - Business Development and Acquisitions of the
Company (1993 to June 1995); Director, Department
Manager of NationsBank of Texas, N.A. (1991 to 1993).
Harold E. Holliday, Jr. President - Commercial Mortgage Banking of the Company
(48) (since February 1996); Chairman of the Board and Chief
Executive Officer of Holliday Fenoglio, Inc., a
subsidiary of the Company (August 1994 to February
1996); President of Holliday, Fenoglio, Dockerty &
Gibson, Inc., a mortgage banking company (for more than
five (5) years prior to August 1994).
Ronald B. Kirkland Vice President (since January 1994) and Chief Accounting
(51) Officer of the Company (since January 1995); Comptroller
of the Company (December 1993 to January 1995) and of
AMRESCO Holdings, Inc. (December 1992 to December 1993);
Senior Vice President and Controller of the Special
Asset Division of NationsBank of Texas, N.A. (August
1988 to December 1992).
Michael N. Maberry President of AMRESCO Capital Corporation (since April
(52) 1994); Shareholder of the law firm of Winstead, Sechrest
& Minick P.C. (April 1989 to April 1994).
Scott J. Reading President of AMRESCO Residential Credit Corporation
(52) (since August 1995); Managing Director of Household
Financial Services, Inc., a division of Household
International, Inc., a diversified financial services
company (June 1991 to August 1995); Senior Vice
President - Human Resources of Household Finance
Corporation, a subsidiary of Household International,
Inc. (for more than one (1) year prior thereto).
Douglas R. Urquhart Senior Vice President - Asset Management, Real Estate
(50) Group, Business Development or Portfolio Acquisitions of
the Company (since January 1994); President of BEI Real
Estate Services, Inc. and BEI Management, Inc.,
subsidiaries of the Company (December 1992 to January
1994); President of BEI Asset Managers, Inc., a
subsidiary of the Company (January 1989 to January
1994).
- -----------
* Messrs. Lutz and Adair are directors of the Company. For additional
information concerning those individuals, see ELECTION OF DIRECTORS -
Information Concerning Directors.
7
EXECUTIVE COMPENSATION SUMMARY
The following table provides certain summary information concerning
compensation paid by the Company and its subsidiaries with respect to each of
the last three (3) fiscal years of the Company to or on behalf of Mr. Lutz, the
Company's Chief Executive Officer, and each of the four (4) other most highly
compensated executive officers of the Company:
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
-----------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
NAME AND PRINCIPAL ------------------- STOCK UNDERLYING
POSITION YEAR SALARY BONUS AWARD(S)(1) OPTIONS(#)
-------- ---- ------ ------ ---------- ----------
Robert H. Lutz, Jr. 1995 $650,016 $700,000 $403,849 119,105
Chairman of the Board 1994 379,176 275,000 -0- 230,000
and Chief Executive 1993 -- -- -- --
Officer (2)
Robert L. Adair III 1995 387,505 450,000 238,041 68,940
President and Chief 1994 350,000 275,000 -0- -0-
Operating Officer 1993 240,000 393,799 -0- 130,000
Barry L. Edwards 1995 255,642 300,000 161,471 99,245
Executive Vice 1994 41,688 53,300 -0- -0-
President and Chief 1993 -- -- -- --
Financial Officer (3)
Douglas R. Urquhart 1995 191,525 113,799 92,203 28,500
Senior Vice President- 1994 185,000 160,000 -0- -0-
Asset Management 1993 165,000 167,598 -0- 70,000
Michael N. Maberry 1995 220,000 80,000 105,050 32,000
President AMRESCO 1994 162,602 125,000 -0- 100,000
Capital 1993 -- -- -- --
Corporation (4)
- -----------
(1) Amounts shown in the table represent the fair market value of the
restricted stock on the date of grant. At December 31, 1995, Messrs. Lutz,
Adair, Edwards, Urquhart and Maberry had 47,395, 27,640, 18,990, 10,875 and
12,400 shares of restricted stock, respectively, and, based upon the then
stock price of $12.75 per share, such shares of restricted stock had a
value of $604,286, $352,410, $242,123, $138,656 and $158,100, respectively.
All such shares of restricted stock were granted during 1995 and twenty
percent (20%) of such shares vest, provided such individuals are then
employed by the Company, on the first, second, third, fourth and fifth
anniversary of the date of grant. In the event that dividends are paid on
the Common Stock, such dividends would be payable on such shares of
restricted stock.
(2) Mr. Lutz became Chief Executive Officer of the Company in May 1994.
(3) Mr. Edwards became Executive Vice President and Chief Financial Officer of
the Company in November 1994.
(4) Mr. Maberry became President of AMRESCO Capital Corporation in April 1994.
8
OPTION GRANTS
The following table sets forth certain information with respect to grants
of stock options under the Company's stock option plans during the last fiscal
year to the Company's Chief Executive Officer and the other executive officers
named in the Summary Compensation Table. In addition, the hypothetical gains or
"option spreads" that would exist for the respective options, based on assumed
rates of annual compound stock appreciation of 5% and 10% from the date the
options were granted over the full option term, are also reflected:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL RATES
NUMBER OF OPTIONS OF STOCK PRICE
SECURITIES GRANTED TO APPRECIATION OR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM (2)
DATE OF OPTIONS IN FISCAL PRICE EXPIRATION ------------------
NAME GRANT GRANTED 1995 PER SHARE DATE(1) 5%($) 10%($)
---- ----- ------- ---- --------- ------- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert H. Lutz, Jr. 2/27/95 59,105 7.2% $ 6.875 2/27/05 $255,552 $ 647,613
10/25/95 60,000 7.4 11.375 10/25/05 29,220 1,087,773
Robert L. Adair III 2/27/95 33,940 4.2 6.875 2/27/05 146,246 371,880
10/25/95 35,000 4.3 11.375 10/25/05 250,380 634,508
Barry L. Edwards 2/27/95 24,245 3.0 6.875 2/27/05 104,828 265,652
10/25/95 75,000 9.2 11.375 10/25/05 536,528 1,359,660
Douglas R. Urquhart 2/27/95 13,500 1.7 6.875 2/27/05 58,370 147,920
10/25/95 15,000 1.8 11.375 10/25/05 107,306 271,932
Michael N. Maberry 2/27/95 16,000 2.0 6.875 2/27/05 69,179 115,312
10/25/95 16,000 2.0 11.375 10/25/05 114,459 290,061
</TABLE>
- -----------
(1) The options are subject to earlier termination upon the retirement, death
or disability of the holder or the termination of the holder's employment
with the Company. Twenty percent (20%) of such options become exercisable
on the date of grant and on the first, second, third and fourth anniversary
thereof.
(2) These amounts represent assumed rates of appreciation only. Actual gains,
if any, on stock option exercises and holdings of Common Stock are
dependent upon the future performance of the Common Stock and overall
market conditions. There can be no assurance that the amounts reflected in
this table will be achieved.
9
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table shows for the Company's Chief Executive Officer and the
other executive officers named in the Summary Compensation Table the number of
shares acquired upon the exercise of options during 1995, the amount realized
upon such exercise, the number of shares covered by both exercisable and
non-exercisable stock options as of December 31, 1995 and the values for
"in-the-money" options, based on the positive spread between the exercise price
of any such existing stock options and the year-end price of the Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON DECEMBER 31, 1995 DECEMBER 31, 1995 (2)
EXERCISE OF VALUE ------------------------- --------------------------
NAME OPTIONS REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----- ------ ---------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert H. Lutz, Jr. -0- $ -0- 138,821 210,284 $ 689,698 $947,543
Robert L. Adair III 40,000 200,000 273,788 55,152 2,377,004 198,018
Barry L. Edwards -0- -0- 53,182 146,063 182,445 463,049
Douglas R. Urquhart -0- -0- 125,700 22,800 1,094,987 79,950
Michael N. Maberry -0- -0- 106,400 25,600 548,200 92,800
</TABLE>
- -----------
(1) Represents the difference between the aggregate exercise price and the
aggregate value, based upon the stock price of $7.50 per share on the date
of exercise.
(2) Aggregate market value (based on December 31, 1995 stock price of $12.75
per share) of the shares covered by the options, less aggregate exercise
price.
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
The Board of Directors appointed Mr. Lutz as the Chief Executive Officer of
the Company, effective May 31, 1994, pursuant to a three (3) year employment
agreement. The agreement provides that Mr. Lutz will receive an annual salary of
at least $650,000 and be eligible to participate in the Company's bonus plans in
effect from time to time. If the Company terminates Mr. Lutz's employment
without cause, or if he terminates his employment because of a breach by the
Company, he will be entitled to continue to receive his base salary for the
remainder of the term of the agreement. Mr. Lutz has the right to terminate his
employment for any reason upon thirty (30) days notice to the Company. The
Company may terminate Mr. Lutz's employment for cause, as defined in the
agreement, with no further obligations. Mr. Lutz will be subject to certain
restrictions on his ability to compete with or solicit clients from the Company
for one (1) year from the date of termination of his employment by the Company
for cause or if he terminates his employment for any reason other than a breach
by the Company. In connection with his employment agreement, Mr. Lutz was
granted an option to purchase 230,000 shares of Common Stock exercisable at
$7.00 per share (the per share market price as of the date of the grant).
The Board of Directors appointed Mr. Adair as the President and Chief
Operating Officer of the Company, effective December 31, 1993, pursuant to a
three (3) year employment agreement. The agreement provides that Mr. Adair will
receive an annual salary of at least $350,000 and be eligible to participate in
the Company's bonus plans in effect from time to time. Pursuant to his
agreement, Mr. Adair was granted an option to purchase 130,000 shares of Common
Stock, exercisable at $3.50 per share (the per share market price on the date of
grant was $6.625). If the Company terminates Mr. Adair's employment without
cause, or if he terminates his employment because of a breach by the Company, he
will be entitled
10
to receive severance pay equal to two (2) years base salary. Mr. Adair may
terminate his employment if he and the chief executive officer of the Company
have irreconcilable differences over fundamental management policies or
philosophy, and upon such termination, he will be entitled to continue to
receive his base salary for one (1) year. Mr. Adair may also terminate his
employment in order to become the chief executive officer of an unaffiliated
company. Mr. Adair is subject to certain restrictions on his ability to compete
with or solicit clients from the Company for one (1) year from the date of
termination of his employment if the Company terminates his employment for cause
or if he terminates his employment for any reason other than because of a breach
by the Company or irreconcilable differences with the Company's chief executive
officer or to become the chief executive officer of an unaffiliated company. Mr.
Adair also participates in a bonus plan adopted in 1993 pursuant to which he
will receive twenty-five percent (25%) of the total base salary (exclusive of
bonuses) paid to him between December 30, 1993 and December 30, 1996 if he is
continuously employed by the Company through December 30, 1996. Mr. Urquhart
also participates in this bonus plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executive officers generally are
made by the Compensation Committee of the Board of Directors. During 1995, Bruce
W. Schnitzer (until May 1995), John J. McDonough (since May 1995), Richard L.
Cravey, Gerald E. Eickhoff and William S. Green served on the Compensation
Committee. No member of the Compensation Committee was employed by the Company
during 1995. All decisions by the Compensation Committee relating to the
compensation of the Company's executive officers are reviewed by the full Board,
except for decisions about awards under the Company's stock option and award
plans which are made solely by the Compensation Committee.
The following addresses the Company's executive officer compensation
policies for 1995.
GENERAL. The Company's compensation program is designed to enable the
Company to attract, motivate and retain high quality senior management by
providing a competitive total compensation opportunity based on performance. To
this end, the Company provides for competitive base salaries, annual variable
performance incentives payable in cash for the achievement of financial
performance goals and long-term stock-based incentives which strengthen the
mutuality of interests between senior management and the Company's stockholders.
It is the Company's general intention that the compensation paid to its
executive officers not exceed the current $1,000,000 maximum deductible amount
set forth in Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"). To this end, the Company's stock option and award and incentive
compensation plans are intended to qualify as "performance based" compensation
under Section 162(m) of the Code, which compensation is not subject to the
$1,000,000 cap. Nevertheless, not all compensation that will be received by
executive officers of the Company will qualify as "performance based"
compensation. For example, base salary is never performance based. In addition,
the grants of restricted stock made to certain executive officers of the Company
in February and October 1995 will not constitute "performance based"
compensation because such awards will be vested based on the passage of time
rather than on any performance measure. As a result, it is possible that the
value of salary, such restricted stock awards and other non-qualifying
compensation, could cause an executive officer's compensation to exceed the
$1,000,000 cap on deductibility in any particular year.
SALARIES. Mr. Lutz's salary through May 1997 is provided for in an
employment agreement that was negotiated on an arms-length basis between the
Company and him prior to his employment. The Company utilized the services of a
nationally-recognized executive recruiting firm to assist in the identification
and engagement of Mr. Lutz. The compensation package provided for in Mr. Lutz's
employment agreement reflects the advice of such recruiting firm with respect to
the compensation package required to secure the services of an individual with
the background and experience of Mr. Lutz, as well as the compensation paid to
top executives of other public companies. Mr. Adair's salary is also set
pursuant to the terms of an employment agreement. The material terms of Mr.
Lutz's and Mr. Adair's employment agreements, including the base salaries of
such officers, are described in Employment Agreements with Executive Officers.
Salaries of other executive officers of the Company were determined based
upon the level of responsibility, time with the Company, contribution and
performance of the particular executive
11
officer. Evaluation of these factors was subjective and no fixed, relative
weights were assigned to the factors considered.
BONUS COMPENSATION. Through the use of annual bonuses, the Company seeks to
effectively tie executive compensation to Company performance. The Compensation
Committee determined during 1995 that bonuses would be paid to Messrs. Robert H.
Lutz, Jr., Robert L. Adair, III and Barry L. Edwards, based on the following
three (3) factors: (i) the market price of the Common Stock reaching $8.00 per
share at year end; (ii) the attainment of the Company's annual earnings goals
for 1995; and (iii) the discretion of the Compensation Committee, provided that
any such bonus could not exceed four percent (4%) of the Company's pre-tax net
income. The Compensation Committee based the discretionary element of such
bonuses on the financial performance of the Company and the level of
responsibility, contribution and performance of the particular executive
officer. The amounts of the bonuses actually paid to Messrs. Lutz, Adair and
Edwards are reflected in the Summary Compensation Table.
For the remainder of the Company's executive officers, annual bonuses were
determined during 1995 in accordance with the Company's 1994 Incentive Program,
which was adopted in May 1994. Pursuant to this program, all exempt employees,
including executive officers, were eligible to participate in a bonus pool which
was funded only if the Company met certain earnings targets. Each participant's
individual bonus depended on the Company's evaluation of the individual's
performance. All of the executive officers listed in the Summary Compensation
Table received a bonus pursuant to this program with respect to services
rendered during 1995.
OPTION AND RESTRICTED STOCK GRANTS. The Company uses grants of stock
options and restricted stock to its key employees and executive officers to
closely align the interests of such employees and officers with the interests of
its stockholders. The Company's stock option and award plans are administered by
the Compensation Committee, which determines the persons eligible, the number of
shares subject to each grant, the exercise price of options thereof and the
other terms and conditions of the option or restricted stock.
Options granted under the stock option and award plans generally have an
exercise price equal to at least 100% of the market price of the Common Stock on
the date that the option is granted, and the term of any option granted cannot
exceed ten (10) years. Option grants typically vest over a one (1) to five (5)
year period, subject to continued employment. Restricted stock which has been
granted vests over a period of five (5) years, provided the grantee is an
employee on the date of vesting. Generally only key employees (including
executive officers) of the Company and its subsidiaries are eligible to receive
grants of option or restricted stock under the stock option award plans. Options
granted to the executive officers listed in the Summary Compensation Table are
reflected in the Option Grants in Last Fiscal Year Table and restricted stock
granted to such executive officers is reflected in the Summary Compensation
Table.
THE COMPENSATION COMMITTEE
JOHN M. MCDONOUGH, CHAIRMAN
RICHARD L. CRAVEY
GERALD E. EICKHOFF
WILLIAM S. GREEN
DIRECTOR COMPENSATION
During 1995, each of the directors who was not an employee of the Company
or affiliated with CGW received $10,000 for each full year of service as a
director and $1,000 for each Board meeting attended. Such directors who served
on a Board committee received $1,000 for each committee meeting actually
attended and $500 for each committee meeting participated in by telephone.
12
FIVE-YEAR STOCKHOLDER RETURN COMPARISON
Set forth below is a line graph comparing, for the five-year period ending
December 31, 1995, the yearly percentage change in the cumulative total
stockholder return on the Common Stock with that of (i) all U.S. companies
quoted on NASDAQ, (ii) financial companies quoted on NASDAQ and (iii) the
Standard and Poors Financial Miscellaneous. The stock price performance shown on
the graph below is not necessarily indicative of future price performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG AMRESCO, INC., THE NASDAQ STOCK MARKET-US INDEX
THE S&P FINANCIAL MISCELLANEOUS INDEX AND THE NASDAQ FINANCIAL INDEX
[GRAPH]
12/90 12/91 12/92 12/93 12/94 12/95
AMRESCO, INC. $100 128 168 313 299 575
NASDAQ STOCK MARKET-US INDEX 100 161 187 215 210 296
S&P FINANCIAL MISCELLANEOUS 100 159 187 223 215 345
NASDAQ FINANCIAL 100 155 221 257 258 376
* $100 INVESTED ON 12/31/90 IN STOCK OR INDEX INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Company loaned approximately $259,000 to Mr. Eickhoff on October 31,
1990 in connection with the termination of the BEI Wealth-Op Plan, a deferred
compensation arrangement formerly maintained by the Company for the benefit of
Mr. Eickhoff and another officer. In connection with the termination of such
arrangement, the life insurance policies maintained by the Company in order to
fund its obligations under such plan were surrendered, and the cash value
thereof was paid to the Company. Such cash amounts were then loaned by the
Company to Mr. Eickhoff for a five (5) year term at an interest rate of 8.5% per
annum. During 1991, an additional $25,000 was loaned to Mr. Eickhoff on the same
terms.
The Company assists Mr. Eickhoff in obtaining and maintaining a split
dollar life insurance policy. This policy provides aggregate death benefits of
approximately $10,000,000 to Mr. Eickhoff's beneficiaries.
13
In addition, the policy provides death benefits payable to the Company of
approximately $639,000 in the event of Mr. Eickhoff's death during 1996. The
Company has agreed to pay the entire premium for Mr. Eickhoff's policy through
the premium due for December 2007, regardless of his employment status with the
Company. The premiums during 1995 for Mr. Eickhoff's policy were $162,000. A
portion of each such premium payment is treated as compensation to Mr. Eickhoff
and the remainder is treated as a loan. The cash surrender value of the policy
(as of December 31, 1995, approximately $464,000) has been assigned to the
Company to secure the repayment of such loan. The outstanding principal balance
of the loan as of March 31, 1996 (after deduction of the cash surrender value)
was approximately $175,000. In addition, any payment of the death benefits
described above would be applied to the repayment of such loan.
Pursuant to the terms of certain agreements for consulting services between
the Company and CGW, CGW has been engaged to render certain advisory and
consulting services to the Company in connection with corporate finance matters
through December 31, 1996. The agreements provide for base payments of $30,000
per month to CGW, with additional payments of up to $30,000 per month being
allowed in the discretion of the Compensation Committee. Such discretionary
payments totaled $360,000 for 1995. Messrs. Cravey and Green are each Managing
Directors of the corporate general partner of CGW.
On April 17, 1995, an option, which had been granted to Mr. Schnitzer in
1990, to purchase 110,000 shares of Common Stock at an exercise price of $2.75
per share was extended for a five (5) year term.
Mr. Adair, a Director and the President and Chief Operating Officer of the
Company, and Mr. Urquhart, Senior Vice President - Asset Management of the
Company, invested their personal funds along with the Company in purchases of
two (2) distressed asset portfolios in late 1992 and 1993. Messrs. Adair and
Urquhart invested a total of $135,000 and $65,000, respectively, and the Company
invested approximately $925,000 in such portfolios. Messrs. Adair and Urquhart
received $50,515 and $26,244, respectively, in cash distributions from such
portfolios in 1995.
The Company assists Mr. Cotton in obtaining and maintaining a split dollar
life insurance policy. This policy provides aggregate death benefits of
approximately $10,000,000 to Mr. Cotton's beneficiaries. In addition, the policy
provides death benefits payable to the Company of approximately $1,209,000 in
the event of Mr. Cotton's death during 1996. The Company has agreed to pay the
entire premium for Mr. Cotton's policy through the premium due for October 2006,
regardless of his employment status with the Company. The premiums during 1995
for Mr. Cotton's policy were $253,000. A portion of each such premium payment is
treated as compensation to Mr. Cotton and the remainder is treated as a loan.
The cash surrender value of the policy (as of December 31, 1995, approximately
$1,061,000) has been assigned to the Company to secure the repayment of such
loan. The outstanding principal balance of the loan as of December 31, 1995
(after deduction of the cash surrender value) was approximately $148,000. In
addition, any payment of the death benefits described above would be applied to
the repayment of such loan.
INDEPENDENT AUDITORS
The firm of Deloitte & Touche LLP, certified public accountants, was the
Company's independent auditors for the year 1995. The Board of Directors has not
yet appointed independent auditors for the year 1996; however, it is
contemplated that Deloitte & Touche LLP will be appointed by the Board of
Directors to be the Company's independent auditors for the year 1996.
Deloitte & Touche LLP has served as the Company's independent auditors
since March 15, 1994. Ernst & Young served as principal accountants for the
Company prior to December 31, 1993, the date on which AMRESCO Holdings, Inc. was
merged (the "Merger") with and into a subsidiary of BEI Holdings, Ltd. In May
1994, BEI Holdings, Ltd. changed its name to AMRESCO, INC.
The Merger was accounted for as a "reverse acquisition" whereby AMRESCO
Holdings, Inc. was deemed to have acquired the Company for financial reporting
purposes. However, the Company remains the continuing legal entity and
registrant for Securities and Exchange Commission filing purposes.
The report of Ernst & Young on the financial statements of the Company for
1991 and 1992 did not contain an adverse opinion or disclaimer of opinion, nor
was it qualified or modified as to uncertainty, audit scope or accounting
principles. During the period commencing on January 1, 1992 and ending on March
15, 1994, there were no disagreements with Ernst & Young on any matter of
accounting principles
14
or practices, financial statement disclosure or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of Ernst & Young, would
have caused Ernst & Young to make reference to the subject matter thereof in
connection with its report.
A representative of Deloitte & Touche LLP is expected to be present at the
Annual Meeting. Such representative will be given the opportunity to make a
statement if he or she so desires, and will be available to respond to
appropriate questions.
DATE FOR RECEIPT OF STOCKHOLDER'S PROPOSAL
Any proposal which a stockholder may wish to have included in the Company's
Proxy Statement for the Annual Meeting of Stockholders to be held in 1997, in
accordance with Rule 14a-8 of the proxy rules of the Securities and Exchange
Commission, must be received by the Company by December 24, 1996.
OTHER BUSINESS
Management does not presently know of any matters which may be presented
for action at the Annual Meeting other than those set forth herein. However, if
any other matters properly come before the Annual Meeting, it is the intention
of the persons named in the proxies solicited by management to exercise their
discretionary authority to vote the shares represented by all effective proxies
on such matters in accordance with their best judgment.
If you do not expect to be personally present at the Annual Meeting, please
fill in, date and sign the enclosed proxy card and return it promptly in the
enclosed return envelope which requires no additional postage if mailed in the
United States.
By Order of the Board of Directors
L. Keith Blackwell
Vice President, General Counsel and
Secretary
April 22, 1996
15
- --------------------------------------------------------------------------------
COMMON STOCK
AMRESCO, INC
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE 1996 ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Richard L. Cravey and John J. McDonough or
either of them with power of substitution to each, the proxies of the
undersigned to vote the Common Stock of the undersigned at the Annual Meeting of
Stockholders of AMRESCO, INC. to be held on May 29, 1996 and any adjournment
thereof.
Please mark your
votes as indicated [X]
in this example
BOARD OF DIRECTORS FAVORS A VOTE WITHHELD
"FOR" FOR THE FOLLOWING PROPOSALS FOR FOR ALL
AND NOMINEES FOR DIRECTOR. [ ] [ ]
Item 1 - Election of Directors
Nominees:
RICHARD L. CRAVEY
GERALD E. EICKHOFF
ROBERT H. LUTZ, JR.
WITHHELD FOR: (Write that nominee's name on the
space provided below.)
- -----------------------------------------------
Item 2 - In accordance with their FOR AGAINST ABSTAIN
best judgment with respect [ ] [ ] [ ]
to any other matters that
may properly come before
the meeting.
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" THE ELECTION OF THE PERSONS DESCRIBED
IN THE PROXY STATEMENT AND, UNLESS INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN
THE SPACE PROVIDED, THIS PROXY WILL BE SO VOTED.
SIGNATURE(S) ___________________________________________ DATE _________________
NOTE: PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH.
* FOLD AND DETACH HERE *
