<PAGE> 1
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1999
------------------
TO THE STOCKHOLDERS OF AMRESCO, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of AMRESCO, INC. (the "Company") will be held on the 17th
floor of the North Tower of the Plaza of the Americas, 700 North Pearl Street,
Dallas, Texas, on Wednesday, May 19, 1999, at 9:00 a.m., Central Time, for
considering and acting upon:
1. The election of three (3) directors for a three-year term;
2. The appointment of Deloitte & Touche LLP as the Company's independent
public accountants for the year 1999; and
3. To transact such other business as may properly come before the
Annual Meeting.
Only stockholders of record at the close of business on April 2, 1999 will
be entitled to notice of and to vote at the Annual Meeting or any
adjournment(s) thereof. For a period of at least ten (10) days prior to the
Annual Meeting, a complete list of stockholders entitled to vote at the Annual
Meeting will be open to examination by any stockholder during ordinary business
hours at the offices of the Company, 700 North Pearl Street, Suite 2400,
Dallas, Texas 75201.
Information concerning the matters to be acted upon at the Annual Meeting
is set forth in the accompanying Proxy Statement.
A proxy card is enclosed in 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 Annual
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, 1998 is enclosed.
By Order of the Board of Directors
/s/ L. KEITH BLACKWELL
------------------------------------------
L. Keith Blackwell
Senior Vice President, General Counsel and
Secretary
Dallas, Texas
April 14, 1999
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY SO THAT YOUR VOTE MAY BE RECORDED
AT THE ANNUAL MEETING IF YOU DO NOT ATTEND PERSONALLY.
<PAGE> 3
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 9:00 a.m., Central Time, on May 19, 1999, on the
17th floor of the North Tower of the Plaza of the Americas, 700 North Pearl
Street, Dallas, Texas (the "Annual Meeting"), and at any adjournment(s)
thereof. The Annual Meeting is being held for the purpose of considering and
acting upon:
(1) The election of three (3) directors for a three-year term;
(2) The appointment of Deloitte & Touche LLP as the Company's independent
public accountants for the year 1999; and
(3) To transact such other business as may properly come before the
Annual Meeting.
The date of this Proxy Statement is April 14, 1999. 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 700 North Pearl Street,
Suite 2400, 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 2,
1999 (the "Record Date") are entitled to notice of and to vote at the Annual
Meeting and at any adjournment(s) thereof. As of the close of business on the
Record Date, 48,772,585 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 such number
of 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 three (3) nominees for director listed herein will be elected by a
plurality of the votes of the shares of Common Stock present, in person or
represented by proxy, at the Annual Meeting. Votes may be cast in favor or
withheld with respect to such proposal. 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 the appointment of
Deloitte & Touche LLP as the Company's independent public accountants for the
year 1999 and 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. Abstentions on any
other proposal will have the same effect as a vote against such proposal;
however, a broker non-vote with respect to any such proposal will have no
effect. 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" (i)
the election of the three (3) persons named under "Election of Directors" as
the Class III directors of the
<PAGE> 4
Company; (ii) the appointment of Deloitte & Touche LLP as the Company's
independent public accountants for the year 1999; and (iii) at the discretion
of the proxy holders with regard to any other matter that may properly come
before the Annual Meeting. The Company does not know of any matters, other than
those described in the Notice of Annual Meeting of Stockholders, which will
come before the Annual Meeting.
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 (i) 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, (ii) giving written notice of the revocation to the
Secretary of the Company prior to the vote at the Annual Meeting or (iii)
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., 700 North Pearl Street, Suite 2400, 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.
PROPOSAL I - 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 annual meeting of stockholders for
2002, 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 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, 1999,
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.
-2-
<PAGE> 5
<TABLE>
<CAPTION>
YEAR
POSITIONS WITH THE COMPANY AND PRINCIPAL DIRECTOR TERM BOARD
NAME (AGE) OCCUPATION DURING THE PAST FIVE (5) YEARS SINCE EXPIRES COMM.
---------- ----------------------------------------- ----- ------- -----
<S> <C> <C> <C> <C>
CLASS III DIRECTORS
Richard L. Cravey Mr. Cravey serves as a director of the Company. 1993 1999 (1)(3)
(54) Mr. Cravey previously served as Chairman of the
Board and Chief Executive Officer of the Company
(December 1993 to May 1994). Mr. Cravey also
holds the following positions: 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 Southeast
Partners I, L.P.) and CGW Southeast II, Inc. (the
general partner of CGW Southeast Partners II,
L.P.) (since 1991); and Director of Cameron
Ashley Building Products, Inc., a national
distributor of home building products (since
1994).
Gerald E. Eickhoff Mr. Eickhoff serves as a director of the Company. 1993 1999 (1)(3)
(52) Mr. Eickhoff also is a private investor (since
December 1993). Mr. Eickhoff currently serves
as Chairman and Chief Executive Officer of Third
Millennium Communications, Inc. (since August,
1996).
Robert H. Lutz, Jr. Mr. Lutz serves as Chairman of the Board and 1994 1999 (1)
(49) Chief Executive Officer of the Company (since
May 1994). Mr. Lutz previously served as
President of Allegiance Realty, a real estate
management company (November 1991 to May 1994)
and a director of Bristol Hotel Company (1995 to
July 1998) until it merged into FelCor Lodging
Trust for whom he presently serves as a director.
</TABLE>
-3-
<PAGE> 6
<TABLE>
<CAPTION>
YEAR
POSITIONS WITH THE COMPANY AND PRINCIPAL DIRECTOR TERM BOARD
NAME (AGE) OCCUPATION DURING THE PAST FIVE (5) YEARS SINCE EXPIRES COMM.
---------- ----------------------------------------- ----- ------- -----
<S> <C> <C> <C> <C>
CLASS III DIRECTORS
Robert L. Adair III Mr. Adair serves as a director, President and 1993 2000
(55) Chief Operating Officer (since December 1993) of
the Company. Mr. Adair has served as Chief
Executive Officer of AMRESCO Capital Trust
since November 3, 1998 and has served as
Chairman of its Board of Trust Managers since the
inception of AMRESCO Capital Trust in 1998.
AMRESCO Capital Trust is a publicly-held real
estate investment trust managed by an affiliate of
the Company. Mr. Adair also serves as a director
of Stratus Properties, Inc., a publicly-held
company (since August 1998).
Sidney E. Harris Mr. Harris serves as a director of the Company. 1998 2000 (3)(4)
(49) Mr. Harris is Dean, College of Business
Administration, at Georgia State University (since
July 1997). Mr. Harris previously served as Dean
of the Drucker Center (September 1991 to June
1996) and Professor of Management (July 1987 to
June 1997) at the Drucker Center. Mr. Harris
also holds the following positions: Director of The
ServiceMaster Company (since December 1994);
Director of Transamerica Investors, Inc., a
subsidiary of Transamerica Corporation (since
August 1995); Member of the Board of Governors
of the Peter F. Drucker Foundation for Nonprofit
Management (since May 1991); and Member of
the Board of Trustees of Menlo College in
Atherton, California (since July 1994).
Bruce W. Schnitzer Mr. Schnitzer serves as a director of the 1993 2000 (2)
(54) Company. Mr. Schnitzer also serves as Chairman
of Wand Partners Inc., an investment advisory
company (since 1987); Director of Penncorp
Financial Group, Inc. (since 1990); and Director
of Nestor, Inc. (since 1994).
CLASS II DIRECTORS
James P. Cotton, Jr. Mr. Cotton serves as a director of the Company. 1993 2001 (2)(3)
(60) Mr. Cotton also serves as Chairman of the Board
of USBA Holdings, Ltd., a provider of products
and services to financial institutions (since
1990).
</TABLE>
-4-
<PAGE> 7
<TABLE>
<CAPTION>
YEAR
POSITIONS WITH THE COMPANY AND PRINCIPAL DIRECTOR TERM BOARD
NAME (AGE) OCCUPATION DURING THE PAST FIVE (5) YEARS SINCE EXPIRES COMM.
---------- ----------------------------------------- ----- ------- -----
<S> <C> <C> <C> <C>
Amy J. Jorgensen Ms. Jorgensen serves as a director of the 1995 2001 (2)(4)
(45) Company. Ms. Jorgensen also serves as Managing
Director of Greenbriar Associates LLC, which
provides advice and executes transactions
relating to real estate assets and companies
(since 1995); Ms. Jorgensen previously served as
President of the Jorgensen Company, a consultant
for real estate strategy and finance (April 1992
to September 1995).
</TABLE>
- - ------------
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
(4) Member of the Stock Option and Bonus Committee
BOARD OF DIRECTORS AND STANDING COMMITTEES
The business of the Company is managed under the direction of the Board of
Directors. The Board of Directors meets on a regularly scheduled basis during
its fiscal year to review significant developments affecting the Company and to
act upon matters requiring Board approval. It holds special meetings when an
important matter requires Board action between scheduled meetings. The Board of
Directors held twelve (12) meetings during 1998. 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, a
Compensation Committee and a Stock Option and Bonus Committee. Members of these
committees generally are elected annually at the regular meeting of the Board
of Directors immediately following the Annual Meeting.
The Executive Committee consists of Messrs. Cravey (Chairman), Eickhoff
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 did not meet during 1998.
The Audit Committee consists of Ms. Jorgensen and Messrs. Cotton and
Schnitzer (Chairman). The Audit Committee held two (2) meetings during 1998.
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. Cotton, Cravey, Eickhoff
and Harris. This committee held one meeting during 1998. The functions of the
Compensation Committee include making recommendations to the Board regarding
compensation for executive officers of the Company and its subsidiaries.
-5-
<PAGE> 8
The Stock Option and Bonus Committee consists of Ms. Jorgensen
(Chairperson) and Mr. Schnitzer. This committee held six (6) meetings during
1998. The function of the Stock Option and Bonus Committee is to determine,
subject to the restrictions set forth in the stock option and award plans, the
individuals to whom awards and options will be granted and the terms of such
awards and options.
The Company does not have a nominating or other standing committee. The
functions customarily attributable to a nominating committee are performed by
the Board of Directors as a whole.
OWNERSHIP OF SECURITIES
The following table sets forth certain information as of March 31, 1999
regarding the Common Stock owned 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) the Company's directors; (iii) the Company's Chief Executive Officer and
each of the Company's four (4) other most highly compensated executive officers
for fiscal 1998; 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.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP CLASS
- - -------------------------------------------------------------------------- ------------------ ----------------
<S> <C> <C>
Dresdner Bank AG (1)
Jurgen-Ponto-Platz
60301 Frankfurt, Germany............................................... 3,051,675(1) 6.4
Robert L. Adair III....................................................... 413,267(2) *
James P. Cotton, Jr....................................................... 327,255(3) *
Richard L. Cravey......................................................... 293,252(4) *
Gerald E. Eickhoff........................................................ 13,572(5) *
Sidney E. Harris.......................................................... 3,737(6) *
Amy J. Jorgensen.......................................................... 13,572(7) *
Robert H. Lutz, Jr........................................................ 458,561(8) *
Bruce W. Schnitzer........................................................ 129,572(9) *
Barry L. Edwards.......................................................... 274,507(10) *
Harold E. Holliday, Jr.................................................... 79,120(11) *
Douglas R. Urquhart....................................................... 176,270(12) *
All executive officers and directors as a group 7.9
(a total of 14 persons).................................................. 3,865,446(13)
</TABLE>
- - ---------------
* Less than 1%
(1) Certain of the shares may be beneficially owned by Dresdner RCM Global
Investors LLC ("Dresdner RCM"), an adviser and a wholly owned subsidiary
of Dresdner RCM US Holdings LLC ("DRCM Holdings"). DRCM Holdings is a
wholly-owned subsidiary of Dresdner Bank AG. Information included herein
is based solely on information obtained from securities ownership reports
prepared and filed with the Securities and Exchange Commission.
(2) Includes options which were exercisable within sixty (60) days to purchase
69,054 shares and 36,331 restricted shares with respect to which he has
voting rights.
(3) Includes options which were exercisable within sixty (60) days to purchase
6,572 shares, 3,000 restricted shares with respect to which he has voting
rights and 126,803 shares held in Mr. Cotton's IRA.
-6-
<PAGE> 9
(4) Includes options which were exercisable within sixty (60) days to purchase
6,572 shares, 3,000 restricted shares with respect to which he has voting
rights and 283,680 shares owned by CGW Southeast I, Inc. and CGW Southeast
II, Inc. as to which Mr. Cravey serves as an officer. Mr. Cravey disclaims
ownership of a further 412,504 shares owned by such corporations.
(5) Includes options which were exercisable within sixty (60) days to purchase
6,572 shares, 3,000 restricted shares with respect to which he has voting
rights and excludes 16,000 shares held by a charitable foundation of which
Mr. Eickhoff is an officer.
(6) Includes options which were exercisable within sixty (60) days to purchase
3,737 shares.
(7) Includes options which were exercisable within sixty (60) days to purchase
6,572 shares and 3,000 restricted shares with respect to which she has
voting rights.
(8) Includes options which were exercisable within sixty (60) days to purchase
334,492 shares and 52,748 restricted shares with respect to which he has
voting rights.
(9) Includes options which were exercisable within sixty (60) days to purchase
116,572 shares and 3,000 restricted shares with respect to which he has
voting rights.
(10) Includes options which were exercisable within sixty (60) days to purchase
209,357 shares and 33,042 restricted shares with respect to which he has
voting rights.
(11) Includes options which were exercisable within sixty (60) days to purchase
54,769 shares and 15,644 restricted shares with respect to which he has
voting rights.
(12) Includes options which were exercisable within sixty (60) days to purchase
19,937 shares and 36,444 restricted shares with respect to which he has
voting rights and 1,050 shares held in Mr. Urquhart's IRA.
(13) Includes options which were exercisable within sixty (60) days to purchase
968,394 shares and 274,889 restricted shares with respect to which they
have voting rights.
-7-
<PAGE> 10
MANAGEMENT AND REMUNERATION
EXECUTIVE OFFICERS
Set forth below are the names and ages of all executive officers of the
Company as of March 31, 1999. 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.
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND PRINCIPAL
NAME (AGE) OCCUPATION DURING THE PAST FIVE (5) YEARS
---------- --------------------------------------------
<S> <C>
Robert H. Lutz, Jr.* Chairman of the Board and Chief Executive
(49) Officer of the Company.
Robert L. Adair III* President and Chief Operating Officer of the
(55) Company.
Barry L. Edwards Mr. Edwards serves as Executive Vice
(51) President and Chief Financial Officer of the
Company (since November 1994). Mr. Edwards
previously served as Vice President and
Treasurer of Liberty Corporation, an
insurance holding company (1979 to November
1994).
L. Keith Blackwell Mr. Blackwell serves as Senior Vice President
(58) (since February 1998), General Counsel and
Secretary (since January 1994) of the
Company and previously served as Vice
President of the Company (February 1996 to
February 1998) and General Counsel and
Secretary of AMRESCO Holdings, Inc.
(December 1993).
Harold E. Holliday, Jr. Mr. Holliday serves as President - Commercial
(51) Mortgage Banking of the Company (since
February 1996). He previously served as
Chairman of the Board and Chief Executive
Officer of Holliday Fenoglio Fowler, L.P.
(from August 1994 to February 1996). Mr.
Holliday previously served as President of
Holliday, Fenoglio, Dockerty & Gibson, Inc.,
a mortgage banking company.
Randolph E. Brown Mr. Brown serves as President - Commercial
(38) Finance Group of the Company (since February
1998) and previously served as a Senior Vice
President or a Vice President of the Company
(April 1995 to February 1998) and as the
Director or Business Development Coordinator
- Portfolio Acquisitions (March 1993 to
April 1995).
William Edwards Mr. Edwards serves as President - Residential
(54) Mortgage Banking of the Company (since August
1998) and as Chairman of the Board and Chief
Executive Officer of Mortgage Investors
Corporation (since July 1994). Mr. Edwards
previously served in a management capacity
for First American Mortgage Associates, Inc.
(January 1993 to June 1994).
Douglas R. Urquhart Mr. Urquhart serves as President - Asset
(53) Management (since February 1998) and
previously served as Senior Vice President -
Asset Management (January 1994 to February
1998).
</TABLE>
- - -------------
* Messrs. Lutz and Adair are directors of the Company. For additional
information concerning those individuals, see "ELECTION OF DIRECTORS -
Information Concerning Directors."
-8-
<PAGE> 11
EXECUTIVE COMPENSATION SUMMARY
The following table provides certain summary information concerning
compensation paid by the Company and its subsidiaries during 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
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
NAME AND PRINCIPAL -------------------------- STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS AWARD(S)(1) OPTIONS (#) COMPENSATION
------------------ ---- -------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert H. Lutz, Jr. 1998 $650,016 $ -- $694,324 267,386 $ 23,250(2)
Chairman of the Board 1997 650,016 1,200,000 441,722 131,445 84,693(2)
and Chief Executive 1996 650,016 1,000,000 -- 51,900 110,173(2)
Officer
Robert L. Adair III 1998 426,504 -- 543,384 200,540 16,545(3)
President and Chief 1997 415,992 600,000 282,722 87,630 56,045(3)
Operating Officer 1996 412,000 837,376(4) -- 12,110 68,668(3)
Barry L. Edwards 1998 301,242 -- 543,384 133,693 9,757(5)
Executive Vice 1997 284,448 550,000 182,055 73,025 39,336(5)
President and Chief 1996 265,233 500,000 -- 64,875 43,921(5)
Financial Officer
Harold E. Holliday, Jr. 1998 311,250 -- 301,880 133,693 9,338(7)
President - Commercial 1997 293,748 315,000 140,218 91,281 37,275(7)
Mortgage Banking (6) 1996 271,870 299,531 -- -- 24,631(7)
Douglas R. Urquhart 1998 253,756 --(8) 487,406(8) 116,982 7,613(9)
President - Asset 1997 218,619 250,615 107,027 18,694 24,913(9)
Management 1996 210,691 113,799 -- 7,785 27,909(9)
</TABLE>
- - ----------------
(1) Amounts shown in the table represent the fair market value of the
restricted stock on the date of grant. At December 31, 1998, Messrs. Lutz,
Adair, Edwards, Holliday and Urquhart had 59,738, 40,436, 32,924, 15,644
and 18,658 shares of restricted stock, respectively, and, based upon the
then stock price of $8.75 per share, such shares of restricted stock had a
value of $522,707, $353,815, $288,085, $136,885 and $163,257,
respectively. Except for 19,488 restricted shares granted to Mr. Urquhart
as described in footnote 8 below, all restricted stock granted in respect
of 1998 will vest on February 24, 2001. All restricted stock granted prior
to 1998 vests twenty percent (20%) on the first, second, third, fourth and
fifth anniversary of the date of grant provided such individuals are then
employed by the Company. In the event that dividends are paid on the
Common Stock, such dividends would be payable on such shares of restricted
stock.
(2) For 1998, consists of $3,750 paid by the Company in connection with the
employees purchase of shares of Common Stock under the AMRESCO, INC.
Employee Stock Purchase Plan (the "Stock Purchase Plan") and $19,500
contributed by the Company to the employees 401(k) and retirement savings
programs under the AMRESCO, INC. Retirement Savings and Profit Sharing
Plan and Trust (the "Retirement Savings Plan"). For 1997, consists of
$4,412 paid by the Company in connection with the employees purchase of
shares of Common Stock under the Stock Purchase Plan and $80,281
contributed by the Company to the employees 401(k) and retirement savings
programs under the Retirement Savings Plan. For 1996, consists of $4,507
under the Stock Purchase Plan and $105,666 under the Retirement Savings
Plan.
-9-
<PAGE> 12
(3) For 1998, consists of $3,750 under the Stock Purchase Plan and $12,795
under the Retirement Savings Plan. For 1997, consists of $4,013 under the
Stock Purchase Plan and $52,032 under the Retirement Savings Plan. For
1996, consists of $2,181 under the Stock Purchase Plan and $66,487 under
the Retirement Savings Plan.
(4) Includes a $287,376 one-time payment received by Mr. Adair pursuant to the
Retention Bonus Plan adopted in connection with the merger of AMRESCO
Holdings, Inc. and the Company which was effective December 31, 1993, to
secure the continued performance of certain executives through December
31, 1996.
(5) For 1998, consists of $720 under the Stock Purchase Plan and $9,037 under
the Retirement Savings Plan. For 1997, consists of $3,183 under the Stock
Purchase Plan and $36,153 under the Retirement Savings Plan. For 1996,
consists of $1,077 under the Stock Purchase Plan and $42,844 under the
Retirement Savings Plan.
(6) Mr. Holliday became President of Commercial Mortgage Banking in February
1996.
(7) Consists of amounts contributed or paid under the Retirement Savings Plan
for the years 1998, 1997 and 1996, respectively.
(8) Mr. Urquhart was granted 19,488 shares of restricted stock in lieu of a
cash bonus for 1998. Although granted in 1999, the fair market value of
such shares of restricted stock of the date of grant ($185,526) is
included in this table for 1998.
(9) Consists of amounts contributed or paid under the Retirement Savings Plan
for the years 1998, 1997 and 1996, respectively.
OPTION GRANTS DURING 1998 FISCAL YEAR
The following table provides information related to options granted to
the named executive officers during fiscal 1998.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR OPTION
INDIVIDUAL GRANTS TERM (1)
- - ------------------------------------------------------------------------------------------------------- ------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE-PRICE
NAME GRANTED (#) (2) FISCAL YEAR ($/SH) (3) EXPIRATION DATE 5% ($) 10% ($)
---- --------------- ----------- ---------- --------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert H. Lutz, Jr...... 267,386 (4) 12.4 $7.44 July 28, 2008 1,251,093 3,908,774
Robert L. Adair III..... 200,540 (4) 9.3 7.44 July 28, 2008 938,322 2,931,588
Barry L. Edwards........ 133,693 (4) 6.2 7.44 July 28, 2008 625,546 1,954,387
Harold E. Holliday, Jr.. 133,693 (4) 6.2 7.44 July 28, 2008 625,546 1,954,387
Douglas R. Urquhart..... 116,982 (4) 5.4 7.44 July 28, 2008 547,356 1,710,097
</TABLE>
(1) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately
prior to the expiration of their term, assuming the specified compounded
rates of appreciation on the Common Stock over the term of the options.
These numbers do not take into account provisions of certain options
providing for termination of the option following termination of
employment, nontransferability or vesting over periods of up to five
years.
(2) Reflects options to acquire shares of Common Stock. The Company did not
grant stock appreciation rights.
(3) The options reflected in the table were repriced on October 27, 1998. The
option exercise price may be paid in shares of Common Stock owned by the
executive officer, in cash, or in any other form of valid consideration or
a combination of any of the foregoing, as determined by the Stock Option
and Bonus Committee in its discretion.
-10-
<PAGE> 13
(4) Options become exercisable with respect to 20% of the shares covered
thereby on each of July 28, 1999, 2000, 2001, 2002 and 2003. In the event
of a Change of Control of the Company, however, any unexercisable portion
of the options will become immediately exercisable.
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 1998, the amount
realized upon such exercise, the number of shares covered by both exercisable
and non-exercisable stock options as of December 31, 1998 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
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
ACQUIRED ON OPTIONS-AT-DECEMBER 31, 1998 OPTIONS AT DECEMBER 31, 1998 (2)
EXERCISE-OF VALUE ----------------------------- ---------------------------------
NAME OPTIONS REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------- ------------ ----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert H. Lutz, Jr. -- $ -- 296,382 368,454 $ 483,176 $ 489,354
Robert L. Adair III 27,576 588,483 50,170 256,898 68,791 337,303
Barry L. Edwards -- -- 189,903 195,332 259,732 258,625
Harold E. Holliday, Jr. -- -- 36,512 188,462 47,831 246,885
Douglas R. Urquhart -- -- 18,026 130,835 26,054 172,005
</TABLE>
- - ------------
(1) Represents the difference between the aggregate exercise price and the
aggregate value, based upon the stock price on the date of exercise.
(2) Aggregate market value (based on December 31, 1998 stock price of $8.75
per share) of the shares covered by the options, less aggregate exercise
price.
TEN-YEAR OPTIONS/SAR REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
NO. OF SECURITIES OPTION TERM
UNDERLYING MARKET PRICE OF EXERCISE PRICE REMAINING
OPTIONS/SARS STOCK AT TIME AT TIME OF NEW AT DATE OF
REPRICED OR OF REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME DATE AMENDED AMENDMENT (1) AMENDMENT PRICE AMENDMENT
---- ---- --------- ------------- --------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert H. Lutz, Jr. 10/27/98 450,731 $ 7.44 (2) $ 7.44 (2)
Robert L. Adair III 10/27/98 300,280 7.44 (3) 7.44 (3)
Barry L. Edwards 10/27/98 271,593 7.44 (4) 7.44 (4)
Harold E. Holliday 10/27/98 224,974 7.44 (5) 7.44 (5)
Douglas R. Urquhart 10/27/98 143,461 7.44 (6) 7.44 (6)
</TABLE>
(1) Determined by reference to the average of the closing sales price of a
share of Common Stock for the five (5) trading days through October 26,
1998.
-11-
<PAGE> 14
(2) 51,900 options at $11.375 per share expiring October 25, 2005, 131,445
options at $19.875 per share expiring February 25, 2007 and 267,386
options at $29.969 per share expiring July 28, 2008.
(3) 12,110 options at $11.375 per share expiring October 25, 2005, 87,630
options at $19.875 per share expiring February 25, 2007 and 200,540
options at $29.969 per share expiring July 28, 2008.
(4) 89,397 options at $8.75 per share expiring October 31, 2004, 64,875
options at $11.375 per share expiring October 25, 2005, 73,025 options at
$19.875 per share expiring February 25, 2007 and 133,693 options at
$29.969 per share expiring July 28, 2008.
(5) 91,281 options at $19.875 per share expiring February 25, 2007 and 133,693
options at $29.969 per share expiring July 28, 2008.
(6) 7,785 options at $11.375 per share expiring October 27, 2005, 18,694
options at $19.875 per share expiring February 25, 2007 and 116,982
options at $29.969 per share expiring July 28, 2008.
EMPLOYMENT AGREEMENT WITH CHIEF EXECUTIVE OFFICER
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. At its meeting held on May 28, 1997, the Board of Directors extended
Mr. Lutz's employment agreement for an additional 3 year period. 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' employment for "cause" with no further obligations. "Cause" is
defined in the employment agreement as (i) gross neglect of duties thereunder,
(ii) willful misconduct or purposeful actions which directly result in material
injury to the Company or (iii) indictment for a felony. 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. No stock options or other stock
awards were awarded to Mr. Lutz in connection with the extension of his
employment agreement.
CHANGE OF CONTROL ARRANGEMENTS
On May 29, 1996, the Company entered into agreements with Robert H. Lutz,
Jr., Robert L. Adair III, Barry L. Edwards and certain other officers of the
Company (each such agreement being sometimes referred to herein as a "Severance
Compensation Agreement"), which agreements provide for compensation
arrangements relating to the occurrence of a change of control of the Company.
The term of each Severance Compensation Agreement expires April 30, 2001,
subject to automatic extension from year to year unless (i) there has been no
change of control and (ii) no fewer than thirty (30) days prior to April 30,
2001 or the appropriate April 30 thereafter, the Company has given a notice
that it does not wish to extend the Severance Compensation Agreement. The
Severance Compensation Agreement requires the Company to pay to the officer, if
his employment is terminated within a two (2) year period following a change of
control (other than by reason of disability, retirement, voluntary resignation
or by the Company for cause), a sum equal to three (3) times the officer's
annual compensation for the calendar year immediately preceding the calendar
year in which the termination of employment occurs, or such officer's total
compensation for the three (3) calendar years ended immediately preceding the
calendar year in which the termination occurs, whichever is greater. The
Severance Compensation Agreement also provides that (i) all stock options then
held by the officer will immediately become exercisable and the officer will
become 100% vested in all shares of restricted stock held by or for benefit of
the officer notwithstanding any provision to the contrary in any stock option
agreement or restricted stock agreement, (ii) the officer's right to exercise
any previously unexercised options under any stock option agreement will not
terminate until the latest date on which the option granted under such
agreement would expire under the terms of such agreement but for the officer's
termination of employment and (iii) the Company will continue to provide the
officer with medical/dental and related benefits and long-term disability
benefits equal to the benefits in effect for the officer at the time of the
change of control, at the same cost to the officer as the cost, if any, charged
to the officer for those benefits prior to the termination of employment. The
Company is required to provide such medical/dental and
-12-
<PAGE> 15
related benefits for the period from the officer's termination of employment
until the earlier of three (3) years from the date of termination of employment
or the date the officer obtains employment which provides him with comparable
medical/dental and related benefits and/or long term disability benefits.
On March 20, 1997, the Company entered into a letter agreement with Harold
E. Holliday, Jr. in which it agreed that in the event it becomes imminent that
there will be a change of control of the Company, such person would be granted
a three (3) year employment agreement providing for a base salary equal to such
person's then base salary, employee benefits comparable to those being provided
to other senior management, a yearly bonus determined in accordance with the
formula and guidelines then applicable to such person and participation in then
existing stock option and restricted stock plans then being provided for other
senior management. Further, such letter agreement provides that in the event
such person's employment is terminated after a change of control of the
Company, such person will receive a lump sum payment equal to the sum of the
base salary payable through the remaining term of the agreement and the
aggregate amount of yearly cash bonuses payable through the remaining term of
the agreement, assuming the yearly cash bonus would be equal to the most recent
yearly cash bonus paid to such person.
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 1998,
Messrs. James P. Cotton, Jr., Richard L. Cravey, Gerald E. Eickhoff and Sidney
E. Harris served on the Compensation Committee. John J. McDonough and Edwin A.
Wahlen, Jr. also served on the Compensation Committee for a part of 1998 but
resigned their positions on this committee in connection with their respective
resignations from the Board of Directors. No member of the Compensation
Committee was employed by the Company during 1998. All decisions by the
Compensation Committee relating to the compensation of the Company's executive
officers are reviewed by the full Board of Directors, except for decisions
about awards under the Company's stock option and award plans which are made
solely by the Stock Option and Bonus Committee.
The following addresses the Company's executive officer compensation
policies for 1998.
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.
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. 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 2000 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. The executive recruiting firm
that assisted in the hiring of Mr. Lutz did not identify in its report the
public companies used in its analysis. The material terms of Mr. Lutz's
employment agreement are described above under the caption "Employment
Agreement with Chief Executive Officer."
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 officer. Evaluation of these factors
was subjective, and no fixed or relative weights were assigned to the factors
considered.
-13-
<PAGE> 16
Typically, the Compensation Committee authorizes the payment of bonuses to
the Company's executive officers and other management personnel based on
various factors related to the achievement of earnings goals, the market price
of the Common Stock at the end of the year and individual performance.
Extraordinary circumstances in 1998 necessitated a practical reassessment of
the compensation methodology for the year. Specifically, unprecedented
conditions in the US capital markets in the second half of 1998 resulted in
significant losses for the year. Due to such losses, the Board of Directors
adopted a plan for 1998 which provides no cash bonuses to the Company's
executive officers and other management personnel for 1998. In lieu of cash
bonuses, the plan provided for a grant of restricted shares to certain of the
Company's executive officers (Messrs. Adair, Edwards, Holliday and Lutz did not
receive any restricted shares) and other management personnel at levels that
equate to an approximate 50% reduction in year end bonus compensation from that
which would have been paid in 1998 under normal circumstances. The restricted
shares granted vest 25% every six months after March 15, 1999, the date of
grant. The number of shares granted to recipients was determined by reference
to the average of the closing sales prices of the Common Stock over the period
from March 5 to March 11, 1999 ($9.52). The Board of Directors determined that
the plan adopted for 1998, including the grant of restricted shares at the
levels indicated, was appropriate and advisable for the following reasons:
- The losses experienced in 1998 were in significant part driven by market
factors beyond the Company's control, and, with the exception of certain
mortgage conduit operations, the Company's businesses performed well.
- The grant of restricted shares will help to reduce instances of key
management personnel being hired away by competitors and others by providing a
financial incentive to remain with the Company.
- The grant of restricted shares further aligns the interests of
management with the stockholders and will act as an incentive for future
performance.
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 Stock Option and Bonus 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 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 four (4) year
period, subject to continued employment; provided that options granted in July
of 1998 to key management personnel, including the executive officers named in
the Summary Compensation Table, will vest over a five (5) year period from the
date of grant. Restricted stock which has been granted generally 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.
Repricing of Stock Options. As noted above, unprecedented conditions in
the United States capital markets during the second half of 1998 resulted in
the Company experiencing significant losses for the year. The turmoil in the
capital markets also had long term implications for companies that have relied
on securitizations and warehouse financings to finance their operations and
growth. The outlook for some of these companies deteriorated as the prospects
for financing their continued operations and growth became less certain and
stock market valuations for the sector demonstrated a sustained and dramatic
decline. Although the Company promptly discontinued the mortgage conduit
operations most seriously affected by these developments and benefitted from
being a more diversified financial services concern than many companies in its
peer group, the market valuation for the Company's Common Stock declined from
$29.969 per share on July 28, 1998 (the date of the last option grant preceding
repricing) to a low of $2.0312 on October 7, 1998.
Due to the significant decline in the market valuation for the Common
Stock, the stock options granted since 1995 were out of the money, many of them
from $12.44 to $22.53 below the exercise price provided for in the stock option
agreement at the time of repricing. The magnitude of the decline in the stock
price suggested that there was no foreseeable prospect of the Company's stock
market valuation recovering sufficiently to create any meaningful value in many
of the stock options previously granted. Recognizing the necessity of retaining
and motivating key employees, the Compensation
-14-
<PAGE> 17
Committee retained a compensation consultant to assist the Company in
evaluating the best manner of maintaining the effectiveness of the stock option
program and better aligning the interests of the employees and the
stockholders.
After carefully studying various methods for repricing outstanding stock
options, the Company offered to exchange stock options with an exercise price
in excess of $7.44 (the average closing sales price of the Common Stock during
the five trading days immediately preceding October 27, 1998) for stock options
having an equal value as determined by reference to the Black-Scholes Model.
The stock options repriced have an exercise price of $7.44 per share and the
same vesting terms as the original options.
The Compensation Committee
James P. Cotton, Jr.
Richard L. Cravey
Gerald E. Eickhoff
Sidney E. Harris
DIRECTOR COMPENSATION
Under the AMRESCO, INC. 1997 Stock Option and Award Plan (the "1997 Stock
Plan"), each non-employee director will receive an automatic grant of
nonqualified stock options to purchase 15,000 shares of Common Stock every
three (3) years. Stock options previously granted to non-employee directors
were repriced on October 27, 1998 using the same methodology as used for the
repricing of employee stock options as described above in the Compensation
Committee Report. Stock options granted to directors vest thirty-three percent
(33%) each year beginning on the date of grant. During 1998, Sidney E. Harris
received a grant of 15,000 shares of Common Stock effective as of his
appointment to the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1998, the Compensation Committee consisted of James P.
Cotton, Jr., Richard L. Cravey, Gerald E. Eickhoff, Sidney E. Harris, John J.
McDonough and Edwin A. Wahlen, Jr. Messrs. McDonough and Wahlen resigned on
March 4, 1998 and August 3, 1998, respectively. Mr. Cravey served as Chairman
of the Board and Chief Executive Officer of the Company from December 1993 to
May 1994. Mr. Eickhoff served as President and Chief Executive Officer of BEI
Holdings, Ltd., a predecessor to the Company.
The Company loaned $259,312 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 ($259,312) 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. Prior to maturity, the loan was renewed and extended on a
year-to-year basis. 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 $11,700,000 to Mr. Eickhoff's beneficiaries.
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 1998 for Mr. Eickhoff's policy were
$164,128. A portion of each such premium payment is treated as taxable income
to Mr. Eickhoff and the remainder is treated as a loan. The outstanding balance
of the loan as of March 31, 1999 (after deduction of the cash surrender value)
was approximately $284,312. In addition, any payment of the death benefits
described above would be applied to the repayment of such loan.
The Company loaned $213,941 to Mr. Cotton 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
-15-
<PAGE> 18
Mr. Cotton and another officer. In connection with the termination of such
agreement, the life insurance policies maintained by the Company in order to
fund its obligations under such plan were surrendered, and the cash value
thereof ($213,941) was paid to the Company. Such cash amounts were then loaned
by the Company to Mr. Cotton for a five (5) year term at an interest rate of
8.54%. Prior to maturity, the loan was renewed and extended on a year-to-year
basis.
The Company assists Mr. Cotton in obtaining and maintaining a split dollar
life insurance policy. This policy provides aggregate death benefits of
approximately $12,700,000 to Mr. Cotton's beneficiaries. 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 1998 for Mr. Cotton's policy were $294,884. A portion of each
such premium payment is treated as taxable income to Mr. Cotton and the
remainder is treated as a loan. The outstanding balance of the loan as of March
31, 1999 (after deduction of the cash surrender value) was approximately
$240,941. In addition, any payment of the death benefits described above would
be applied to the repayment of such loan.
-16-
<PAGE> 19
FIVE-YEAR STOCKHOLDER RETURN COMPARISON
Set forth below is a line graph comparing, for the five (5)-year period
ending December 31, 1998, 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 and (ii) financial companies quoted on NASDAQ. 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 (U.S.) INDEX
AND THE NASDAQ FINANCIAL INDEX
<TABLE>
<CAPTION>
12/93 12/94 12/95 12/96 12/97 12/98
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
AMRESCO, INC. $100 $ 96 $184 $386 $436 $126
NASDAQ STOCK MARKET (U.S.) $100 $ 98 $138 $170 $209 $293
NASDAQ FINANCIAL $100 $100 $146 $187 $286 $277
</TABLE>
$100 INVESTED ON 12/31/93 IN STOCK OR INDEX
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
-17-
<PAGE> 20
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
See "Compensation Committee Interlocks and Insider Participation" for a
description of certain matters involving Messrs. Cotton and Eickhoff.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange Commission. Such
persons are required by SEC regulation to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it with
respect to fiscal 1998, or written representations from certain reporting
persons, the Company believes that all filing requirements applicable to its
directors, officers and persons owning more than 10% of the Company's equity
securities have been complied with, except that James P. Cotton, Jr., a
director of the Company, filed one late report.
PROPOSAL II--APPOINTMENT OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has
approved the appointment of Deloitte & Touche LLP, as independent auditors for
the year ending December 31, 1999. Deloitte & Touche LLP has served as the
Company's independent auditors since March 15, 1994. Approval of the
appointment by the stockholders will require the affirmative vote of a majority
of shares present in person or by proxy at the Annual Meeting.
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.
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.
-18-
<PAGE> 21
DATE FOR RECEIPT OF STOCKHOLDERS 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
2000, in accordance with Rule 14a-8 of the proxy rules of the Securities and
Exchange Commission, must be received by the Company by December 17, 1999.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING, FINANCIAL
STATEMENTS AND SCHEDULES, BUT NOT INCLUDING EXHIBITS, WILL BE FURNISHED AT NO
CHARGE TO EACH PERSON TO WHOM A PROXY STATEMENT IS DELIVERED UPON RECEIPT OF A
WRITTEN OR ORAL REQUEST OF SUCH PERSON ADDRESSED TO AMRESCO, INC., ATTN: TOM
ANDRUS, SENIOR VICE PRESIDENT, 700 NORTH PEARL STREET, SUITE 2400, DALLAS,
TEXAS 75201 (TELEPHONE: (214) 953-7700).
By Order of the Board of Directors
/s/ L. KEITH BLACKWELL
------------------------------------------
L. Keith Blackwell
Senior Vice President, General Counsel and
Secretary
April 14, 1999
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<PAGE> 22
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- - --------------------------------------------------------------------------------------------------------------------
1. Election of Directors FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] * EXCEPTIONS [ ]
listed below for all nominees listed below
Nominees: Richard L. Cravey, Gerald E. Elokhoff and Robert H. Lutz, Jr.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX AND WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
* Exceptions
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2. Proposal to ratify the appointment of Deloitte & Touche The Proxies are authorized to vote, in their
LLP as the independent auditors of the Company to audit discretion, upon such other business as may
the accounts of the Company for the fiscal year ended properly come before the meeting.
December 31, 1999.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Change of Address and
or Comments Mark Here [ ]
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW.
WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH
SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH. IF A CORPORATION, PLEASE
SIGN FULL CORPORATE NAME BY THE PRESIDENT OR
OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY AN
AUTHORIZED PERSON.
DATED: , 1998
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Signature
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Signature if held jointly
(PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED POSTAGE VOTES MUST BE INDICATED
PREPAID ENVELOPE.) (X) IN BLACK OR BLUE INK. [X]
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</TABLE>
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AMRESCO, INC.
700 NORTH PEARL STREET, SUITE 2400
DALLAS, TEXAS 75201
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Robert H. Lutz, Jr., Robert L. Adair III
and L. Keith Blackwell as Proxies, each with the power to appoint his or her
substitute, and hereby authorizes them to represent and to vote, as designated
below, all the shares of common stock of AMRESCO, INC. held of record by the
undersigned on April 2, 1999 at the annual meeting of stockholders to be held on
May 19, 1999 or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR EACH OF
THE PROPOSALS. PLEASE REVIEW CAREFULLY THE PROXY STATEMENT DELIVERED WITH THIS
PROXY.
(Continued and to be dated and signed on the reverse side.)
AMRESCO, INC.
P.O. BOX 11298
NEW YORK, N.Y. 10203-0298
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