<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
GREAT WESTERN FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
GREAT WESTERN FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(j)(2).
/ / $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 transactions applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
/ / 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:
------------------------------------------------------------------------
- ------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE>
[LOGO] 9200 Oakdale Avenue
Chatsworth, California
91311
JAMES F. MONTGOMERY
Chairman and Chief Executive
March 17, 1995
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders which
will be held on Tuesday, April 25, 1995, at 11:00 a.m. in Chatsworth,
California.
The enclosed notice and proxy statement contain details concerning the
business to come before the Meeting. You will note that the Board of Directors
of the Company recommends a vote "FOR" the election of four directors. Please
complete, sign and return your proxy card in the enclosed envelope at your
earliest convenience to assure that your shares will be represented and voted at
the Meeting even if you cannot attend.
[SIG]
James F. Montgomery
<PAGE>
[LOGO]
9200 Oakdale Avenue, Chatsworth, California 91311
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 25, 1995
---------------------
The annual meeting of shareholders of Great Western Financial Corporation
(the "Company" or "GWFC") will be held in the Company's Employee Center at 19809
Prairie Street, Chatsworth, California 91311, on Tuesday, April 25, 1995, at
11:00 a.m., to consider and vote on the following matters described in this
Notice and Proxy Statement:
(1) The election of four members to the Board of Directors for a term of
three years; and
(2) Such other matters as may properly come before the meeting or any
adjournment or adjournments thereof.
Enclosed is a Proxy Statement describing the matters to be voted upon at the
annual meeting. Please read it carefully and then sign, complete and return your
Proxy as promptly as possible. If you receive more than one Proxy because your
shares are registered in different names or addresses, each such Proxy should be
signed and returned to assure that all your shares will be voted.
J. LANCE ERIKSON,
SECRETARY
March 17, 1995
YOU ARE URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT
PROMPTLY. THANK YOU.
REQUESTS FOR ADDITIONAL COPIES OF THE PROXY MATERIAL SHOULD BE ADDRESSED TO
GEORGESON & COMPANY INC., WALL STREET PLAZA, NEW YORK, NEW YORK 10005. TELEPHONE
(800) 223-2064.
<PAGE>
[LOGO]
9200 Oakdale Avenue, Chatsworth, California 91311
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING APRIL 25, 1995
------------------------
GENERAL INFORMATION
The Board of Directors has fixed Monday, February 27, 1995, at the close of
business, as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting. Only holders of record of shares of common
stock at the close of business on that date are entitled to vote. The stock
transfer books will not be closed.
THE ENCLOSED PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY IN CONNECTION WITH THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
APRIL 25, 1995. THE PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN
THE MANNER DIRECTED THEREIN. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED
FOR THE NOMINEES OF THE BOARD. Anyone giving a Proxy may revoke it at any time
before it is exercised by delivering written notice of such revocation to the
Secretary of the Company before the annual meeting or by voting by ballot at the
annual meeting. The cost of soliciting proxies will be borne by the Company.
Solicitation will be made primarily by mail, but regular employees of the
Company, without additional remuneration, may solicit proxies by telephone,
telegram and personal interviews. In addition, Georgeson & Company Inc. has been
engaged by the Company to assist in the solicitation of proxies. The expected
fee of such proxy solicitor is $10,000 plus expenses. The proxy materials are
being mailed to shareholders of record beginning on or about March 17, 1995.
The Annual Report of the Company, including certified consolidated
statements of financial condition of the Company for the years ended December
31, 1994 and 1993 and certified consolidated statements of operations and cash
flows for each of the three years in the period ended December 31, 1994,
accompanies this Proxy Statement.
The common stock currently constitutes the only class of securities of the
Company authorized to vote. As of the close of business on February 27, 1995,
there were 134,323,492 shares of common stock outstanding. Each share is
entitled to one vote. Under the Company's Certificate of Incorporation and
applicable law, a shareholder is not entitled to cumulate his or her votes in
the election of directors.
Votes cast by proxy or in person at the annual meeting will be counted by
the persons appointed by the Company to act as election inspectors for the
meeting. The election inspectors will treat shares represented by proxies that
reflect abstentions or "withhold authority to vote" as shares that are present
and entitled to vote for purposes of determining the presence of a quorum, the
election of directors or the outcome of certain other matters. Abstentions,
however, do not constitute a vote "for" or "against" any matter and thus will be
disregarded in the calculation of "votes cast" on any matter.
The election inspectors will treat shares referred to as "broker non-votes"
as shares that are present and entitled to vote for purposes of determining the
presence of a quorum. However, as to any matter as to which the broker has
physically indicated on the proxy that the broker does not have discretionary
authority to vote the shares, those shares will be treated as not present and
not entitled to vote with respect to that matter (even though those shares are
considered entitled to vote for quorum purposes and may be entitled to vote on
other matters).
1
<PAGE>
Any unmarked proxies, including those submitted by brokers or nominees, will
be voted as indicated in the accompanying proxy card and as summarized elsewhere
in this Proxy Statement.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, Class I, Class II and
Class III. Generally, each director (other than those directors elected to fill
vacancies on the Board) serves until the date of the third annual meeting
following the annual meeting at which such director is elected and until his or
her successor is elected and qualified. The term of office for each of the Class
I and Class II directors ends on the date of the annual meetings in 1996 and
1997 and the election and qualification of their respective successors occurs on
the same dates.
Four (4) directors of Class III are to be elected at the 1995 annual
meeting, each to hold office until the annual meeting in 1998, and until their
respective successors are elected and qualified. Proxies cannot be voted for a
greater number of persons than the number of nominees named. If any of the
nominees below is unable to serve or for good cause will not serve, it is
expected that the proxies will be voted for such other person or persons as the
Nominating Committee of the Board of Directors may recommend, and the proxy
confers discretionary authority to do so.
Election of each of the nominees will require the affirmative vote of a
majority (assuming the presence of a quorum) of the shares of the Company's
common stock entitled to vote and present in person or represented by proxy at
the meeting. Proxies solicited by the Board will be voted for each of the
nominees listed below unless the shareholder otherwise specifies in the proxy.
2
<PAGE>
The following table sets forth certain information concerning the directors
of the Company and the nominees for election as director, each of whom is
presently a director and has served continuously since first elected; the class
in which each director or nominee serves or will serve; and the number of shares
of the Company's common stock beneficially owned, directly or indirectly, by
each director at February 27, 1995.
<TABLE>
<CAPTION>
SHARES
OWNED
YEAR BENEFICIALLY
FIRST AT FEB. 27,
NAME AGE PRINCIPAL OCCUPATION CLASS ELECTED 1995(1)
- -------------------------------- --- ------------------------------------------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
DIRECTORS TO BE ELECTED AT THE
1995 ANNUAL MEETING
Stephen E. Frank 53 Formerly President and Chief Operating III 1993 4,500(2)
Officer, Florida Power & Light Company
Enrique Hernandez, Jr. 39 President, Inter-Con Security Systems, Inc. III 1993 3,000(2)
(a worldwide provider of security and
facility support services)
John F. Maher 51 President and Chief Operating Officer, GWFC III 1976 589,567(3)
Willis B. Wood, Jr. 60 Chairman and Chief Executive Officer, III 1990 11,750(4)
Pacific Enterprises (the holding company of
Southern California Gas Company)
OTHER DIRECTORS OF THE COMPANY
David Alexander 62 President Emeritus and Trustees' Professor, I 1973 17,675(5)
Pomona College
H. Frederick Christie 61 Consultant I 1984 21,250(5)
John V. Giovenco 58 Consultant II 1985 36,250(5)
Firmin A. Gryp 67 Retired, formerly Executive Vice President, II 1982 98,644(5)(6)
GWFC
Charles D. Miller 67 Chairman and Chief Executive Officer, Avery I 1981 25,000(5)
Dennison Corporation (a manufacturer of
self-adhesive materials and office
products)
James F. Montgomery 60 Chairman and Chief Executive, GWFC II 1975 776,913(7)
Alberta E. Siegel 64 Professor of Psychology, Stanford II 1976 20,000(5)
University School of Medicine
<FN>
- ---------
(1) Certain directors share with their spouses voting and investment powers
with respect to these shares. The percentage of shares beneficially owned
by any director does not exceed one percent of the Company's common stock.
(2) Includes 2500 shares subject to options granted to this Director under the
1988 Stock Option and Incentive Plan (the "1988 Incentive Plan") which are
exercisable within 60 days of the record date.
(3) Includes 322,042 shares subject to options exercisable within 60 days of
the record date and 25 shares held by the Trustee under the Employee
Savings Incentive Plan.
(4) Includes 11,250 shares subject to options granted to this Director under
the 1988 Incentive Plan which are exercisable within 60 days of the record
date.
(5) Includes 16,250 shares subject to options granted to this Director under
the 1988 Stock Option and Incentive Plan (the "1988 Incentive Plan") which
are exercisable within 60 days of the record date.
(6) Includes 112 shares held by the trustee under the Employee Savings
Incentive Plan.
(7) Includes 450,750 shares subject to options exercisable within 60 days of
the record date and 945 shares held by the Trustee under the Employee
Savings Incentive Plan.
</TABLE>
3
<PAGE>
Dr. Alexander is President Emeritus and Trustees' Professor of Pomona
College and served as President of Pomona College from 1969 to 1991. He is also
American Secretary of the Rhodes Scholarship Trust, a trustee of the Teachers
Insurance and Annuity Association, a trustee of the Seaver Institute, a trustee
for the Woodrow Wilson National Fellowship Foundation, Overseer of the
Huntington Library, Art Collections and Gardens and director of the Children's
Hospital Los Angeles. A graduate of Rhodes College, he served as its President
from 1965 to 1969. Dr. Alexander received his doctorate from Oxford University.
Dr. Alexander also served as a Director of the Los Angeles Area Chamber of
Commerce and as a Director of KCET, Community Television of Southern California.
Mr. Christie is a consultant specializing in strategic and financial
planning. He retired in 1990 as President and Chief Executive Officer of The
Mission Group, the non-utility subsidiaries of SCEcorp. Prior to that he served
as President of Southern California Edison Company, having joined that company
as a financial analyst in 1957. A graduate and post-graduate of the University
of Southern California, Mr. Christie is a director or trustee of eighteen mutual
funds(1) advised by the Capital Research and Management Company and a director
of AECOM Technology Corporation, International House of Pancakes, Inc., Ultramar
Corporation and Ducommun Incorporated. He is a member of the Board of Trustees
of Occidental College, President of the Board of Trustees of the Natural History
Museum of Los Angeles County, and a member of the Board of Councilors for the
School of Public Administration at the University of Southern California.
Mr. Frank is the former President and Chief Operating Officer of Florida
Power & Light Company, the principal subsidiary of the FPL Group from which he
resigned in 1995. He was formerly Executive Vice President and Chief Financial
Officer of TRW, Inc. Mr. Frank was also Vice President and Controller of GTE
Corporation. He is a former director of FPL Group and is a director of the
Arkwright Mutual Insurance Company and the Business and Industry Political
Action Committee and a trustee of the University of Miami. Mr. Frank is a
graduate of Dartmouth College and the University of Michigan Business School.
Mr. Giovenco is a consultant and former President and director of ITT
Sheraton Corporation which he joined in 1993. Previously he was an officer and
director of Hilton Hotels Corporation serving in various capacities since 1972,
including serving as the President of the Hilton Gaming Division from 1986 to
1993. He was formerly a partner at Pannel Kerr Forster, Certified Public
Accountants. Mr. Giovenco is a graduate of Loyola University in Chicago,
Illinois. He serves on the Board of Trustees of the University of Nevada, Las
Vegas Foundation and is the former Chairman of the Nevada Resort Association.
Mr. Gryp retired from his position as Executive Vice President of GWFC and
its principal subsidiary, Great Western Bank, a Federal Savings Bank ("GWB"), in
1987. He began his savings and loan career at Salinas Valley Savings-Loan
Association in 1950. He was named Executive Vice President and Managing Officer
of that association in 1952, a position he held until the association merged
with Palo Alto Savings and Loan Association (later known as Northern California
Savings, a Federal Savings and Loan Association ("NCS")) in 1969. Mr. Gryp was
President, Managing Officer and a Director of NCS after that merger. He has
served as President and a Director of the California League of Savings
Institutions. He is a member of the Board of Governors of The Salinas Valley
Memorial Hospital Foundation, Vice President and Director of the Community
Foundation of Monterey County and Treasurer and Chief Financial Officer of the
Hartnell College Foundation.
- ---------
(1) American Funds Tax-Exempt Series, American Funds Income Series, American
High Income Municipal Bond Fund, American High-Income Trust, American Mutual
Fund, Inc., American Variable Insurance Series, Bond Fund of America, Inc.,
Capital Income Builder, Inc., Capital World Bond Fund, Inc., Capital World
Growth and Income Fund, Inc., Cash Management Trust of America, Intermediate
Bond Fund of America, Limited Term Tax-Exempt Bond Fund of America, New
Economy Fund, Tax-Exempt Bond Fund of America, Small Cap World Fund, Inc.,
Tax-Exempt Money Fund of America, and U.S. Treasury Money Fund of America.
4
<PAGE>
Mr. Hernandez has been President of Inter-Con Security Systems, Inc., a
worldwide provider of security and facility support services, since 1986, having
previously served as Executive Vice President and Vice President and Assistant
General Counsel. He is also a co-founder and principal partner of Interspan
Communications. Mr. Hernandez is President of the Los Angeles Police Commission,
Vice Chairman and Director of the Childrens Hospital of Los Angeles and trustee
of Pomona College. He is a former Director of the Los Angeles Philharmonic
Association and Overseer of the Huntington Library, Art Collections and Gardens.
He is a graduate of Harvard University and the Harvard Law School.
Mr. Maher was elected President and Chief Operating Officer of GWFC and GWB
in 1986. Previously, he was a Managing Director of Lehman Brothers Kuhn Loeb
Incorporated, an investment banking firm, and its successor, having joined that
firm in 1979. He served as Executive Vice President, Finance of GWFC from 1973
until 1976. In 1976, he resigned to renew his association with Blyth Eastman
Dillon & Co. Inc., an investment banking firm, serving as an Executive Vice
President, Director and member of the Executive Committee of that firm until
1979. Mr. Maher is a director of Baker Hughes Incorporated, a diversified
provider of products and services to the petroleum and continuous process
industries. A graduate of Menlo College and the Wharton School of Finance and
Commerce, University of Pennsylvania, he is a director and past president of Big
Brothers of Greater Los Angeles, a member of the California Business Roundtable,
a member of the National Board of Trustees of the Boys and Girls Clubs of
America and Overseer of the Huntington Library, Art Collections and Gardens.
Mr. Charles D. Miller is Chairman and Chief Executive Officer of Avery
Dennison Corporation, a manufacturer of self-adhesive materials, tapes and
office products. He has served in that capacity since 1983, having joined that
firm in 1964 and served as its Chief Operating Officer from 1975 to 1977 and as
President and Chief Executive Officer from 1977 to 1983. A graduate of Johns
Hopkins University, he also serves as a director of SCEcorp, Pacific Mutual Life
Insurance Company, Nationwide Health Properties, Inc. and Avery Dennison
Corporation. He is a trustee of Occidental College and Johns Hopkins University
and a member of the Amateur Athletic Foundation of Los Angeles and the
Korn/Ferry international advisory boards.
Mr. Montgomery was elected a director and President of the Company in 1975,
Chief Executive Officer in 1979 and Chairman of the Board of Directors in 1981.
He was the Chief Operating Officer from 1975 to 1979. Mr. Montgomery presently
serves as the Chairman of the Board and Chief Executive of the Company. He
commenced his savings and loan career in 1960 with GWFC. Before rejoining GWFC,
he was a Director and President of United Financial Corporation and its
subsidiary, Citizens Savings and Loan Association, having served those companies
from 1964 to 1975. A graduate of the University of California at Los Angeles, he
is a past director of the California League of Savings Institutions, and is
currently a director of the Federal Home Loan Bank of San Francisco and the
Federal Home Loan Mortgage Corporation. He is also Vice Chairman of America's
Community Bankers, a director of the Local Initiatives Support Corporation, and
a trustee of the Neighborhood Housing Services of America.
Dr. Siegel is Professor of Psychology, Stanford University School of
Medicine, where she has served on the faculty since 1963. A graduate of Stanford
University, she is past President of the Stanford Faculty Club. She has held
numerous consulting and advisory positions with federal agencies in the fields
of science and health. She is past Editor of the Journal CHILD DEVELOPMENT,
published by the Society for Research in Child Development, and is co-Editor of
its book CHILD DEVELOPMENT RESEARCH AND SOCIAL POLICY. She is past President of
the Division on Developmental Psychology of the American Psychological
Association. She is also past President of the Board of the Senior Coordinating
Council of Palo Alto, and serves on the Professional Advisory Committees of the
Peninsula Children's Center and the Children's Health Council, both of Palo
Alto. She is a trustee of the Menninger Foundation, Topeka, Kansas, and also a
member of its Board of Directors for the Menninger Clinic. She is a past
Governor of Stanford Associates, and is a director of the Board of the
Children's Television Resource and Education Center, San Francisco, and
President of the Board of the Stanford Historical Society.
Mr. Wood is Chairman, Chief Executive Officer and a Director of Pacific
Enterprises, the holding company of Southern California Gas Company of which he
is also a Director. Mr. Wood served in various operating and staff positions,
including as an executive officer, of Pacific Enterprises subsidiaries since
1960
5
<PAGE>
and was named President of Pacific Enterprises in 1989, Chief Executive Officer
in 1991 and Chairman in 1992. A graduate of the University of Tulsa, he is a
trustee and Vice Chairman of Harvey Mudd College, and trustee and past President
of the Southwest Museum, director and past Chairman of the Business Council for
a Sustainable Energy Future, Vice Chairman of the California Hospital Medical
Foundation, a director of the California Chamber of Commerce, the Automobile
Club of Southern California, the Los Angeles World Affairs Council and the
National Association of Manufacturers, and a member of the California Business
Roundtable.
BOARD COMMITTEES
The Company has standing Audit, Compensation, Finance and Nominating
Committees of the Board of Directors. Except for James F. Montgomery and John F.
Maher, who serve on the Finance and Nominating Committees, the directors serving
on these committees are not executive officers or employees of the Company.
The Audit Committee reviews the Company's financial statements and evaluates
the effectiveness of the audit process and the systems of internal controls
established by management and the Board of Directors. It assists in selecting
the independent accountants and maintaining effective communications among the
internal auditors, independent accountants, and the Board of Directors.
The Compensation Committee reviews and makes recommendations to the Board of
Directors on the levels of compensation of the directors and senior management,
the provisions of employment contracts, and the adoption of, or major amendments
to, basic employment benefit and executive compensation plans. The Compensation
Committee also has complete administrative authority under the Company's stock
option and stock incentive plans (including the power to grant and determine the
terms of share awards under the 1988 Stock Option and Incentive Plan) and the
Great Western Financial Corporation Annual Incentive Compensation Plan for
Executive Officers.
The Finance Committee reviews the asset and liability structure of the
Company and considers its funding and capital needs. It receives reports on the
progress of investment activities, including the investment of assets under the
Savings and Retirement Plans described below, and reviews strategies that have
been developed to meet changing economic and market conditions. The Finance
Committee also considers and makes recommendations to the Board of Directors
with respect to the payment of dividends.
The Nominating Committee recommends to the Board of Directors nominees for
election or reelection as directors at the annual meeting of shareholders. While
the Nominating Committee normally is able to identify from its own resources an
ample number of qualified candidates, it will consider shareholder suggestions
of persons to be considered as nominees to fill future vacancies on the Board.
Such suggestions must be sent in writing to the Secretary at the Company's
address and must be accompanied by detailed biographical and occupational data
on the prospective nominee, along with a written consent of the prospective
nominee to consideration of his or her name by the Committee. The Committee will
consider the age of the prospective nominee and whether he or she possesses
integrity and moral responsibility, sound business judgment, good health, a
breadth of business or other experience, leadership in the nominee's field of
endeavor, an appreciation of the role of a publicly held corporation in society,
a willingness to represent the interests of all shareholders rather than the
special interests of a particular group, and qualities which facilitate an
independent, consultive and deliberative Board. Also, there must be no legal
impediment to the nominee serving as a director. However, the selection of
nominees of the Board is solely within the discretion of the Board of Directors.
The Company's By-laws include additional requirements regarding nominations of
persons at a shareholders' meeting other than by the Board of Directors. See
"Annual Meeting Advance Notice Requirements."
6
<PAGE>
The Board of Directors met 10 times in 1994 and the aggregate number of
meetings of the Board and of the Audit, Compensation, Finance and Nominating
Committees totaled 21. The members of these committees and the number of
meetings held during 1994 were:
<TABLE>
<S> <C> <C> <C>
AUDIT COMMITTEE COMPENSATION COMMITTEE FINANCE COMMITTEE NOMINATING COMMITTEE
(4 meetings) (4 meetings) (2 meetings) (1 meeting)
John V. Giovenco, Charles D. Miller, H. Frederick Christie James F. Montgomery,
Chairman Chairman Chairman Chairman
David Alexander, H. Frederick Christie John V. Giovenco Alberta E. Siegel,
Vice Chairman John V. Giovenco Firmin A. Gryp Vice Chairperson
and Secretary Firmin A. Gryp John F. Maher David Alexander
H. Frederick Christie Willis B. Wood, Jr. Charles D. Miller H. Frederick Christie
Stephen E. Frank James F. Montgomery John V. Giovenco
Firmin A. Gryp Willis B. Wood, Jr. John F. Maher
Enrique Hernandez, Jr. Charles D. Miller
Charles D. Miller
Alberta E. Siegel
Willis B. Wood, Jr.
</TABLE>
Due to an extended period of recuperation from surgery, Mr. Miller attended
fewer than 75 percent of the aggregate number of meetings of the Board of
Directors and its committees on which he served during 1994.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Firmin A. Gryp, a member of the Compensation Committee during 1994, was
formerly an officer of the Company and its subsidiaries. Mr. Gryp retired from
those positions in 1987. Mr. Gryp receives annual benefits of $160,000 under the
Company's Retirement Plan and under a supplemental retirement arrangement.
The following tabulation shows as to the members of the Compensation
Committee (i) the largest aggregate amount of indebtedness to the Company in
excess of $60,000 outstanding from January 1, 1994 to February 27, 1995, (ii)
the nature of the indebtedness, (iii) the amount of such indebtedness
outstanding at February 27, 1995, and (iv) the annual rate of interest charged
on such indebtedness
<TABLE>
<CAPTION>
INDEBTEDNESS
LARGEST OUTSTANDING AT
NAME OF COMPENSATION AGGREGATE NATURE OF FEBRUARY 27, INTEREST
COMMITTEE MEMBER INDEBTEDNESS INDEBTEDNESS(1) 1995 RATE(2)
- ---------------------------- ------------ -------------- ---------------- -----------
<S> <C> <C> <C> <C>
H. Frederick Christie $ 820,144 Residential $ 788,392 4.59%
295,701 Residential 289,095 4.59
John V. Giovenco 663,002 Residential 652,922 7.00
558,792 Residential 541,743 4.59
153,900 Residential 151,732 4.59
Charles D. Miller 1,000,000 Residential 1,082,048 4.59
Willis B. Wood, Jr. 740,567 Residential 723,390 4.59
<FN>
- ---------
(1) Loans secured by the same residence are aggregated.
(2) Interest on these loans are generally at monthly adjustable rates equal to
the Company's cost of funds plus .25%. This rate was approximately 2.22% to
2.47% below that on similar loans to the public during 1994.
</TABLE>
The residential loans described above were made pursuant to the Company's
Employee Home Loan Programs and such loans are secured by trust deeds or
mortgages on the respective residences of the members of the Compensation
Committee. See "Employee Benefit Plans."
7
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth the names, ages and positions of the
executive officers of the Company, the date each became an officer of either the
Company or GWB, and the number of shares of the Company's common stock
beneficially owned, directly or indirectly, by each of them at February 27,
1995. Executive officers are elected annually, have employment agreements as
described below and, except for Mr. Pappas, hold the same positions with GWB as
they hold with GWFC.
<TABLE>
<CAPTION>
SHARES
OWNED
BENEFICIALLY
AT
OFFICER FEBRUARY 27,
NAME AGE POSITION SINCE 1995(1)
- -------------------------- --- ------------------------------------------------------ ----------- --------------
<S> <C> <C> <C> <C>
James F. Montgomery 60 Chairman of the Board and Chief Executive 1975 776,913(2)
John F. Maher 51 President and Chief Operating Officer 1986 589,567(3)
Eugene A. Crane 57 Executive Vice President 1962 244,346(4)
Curtis J. Crivelli 52 Executive Vice President 1987 192,250(5)
J. Lance Erikson 51 Executive Vice President, Secretary and General
Counsel 1982 120,201(6)
Carl F. Geuther 49 Executive Vice President and Chief Financial Officer 1986 222,000(7)
Michael M. Pappas 62 President, Consumer Finance Division 1986 258,000(8)
<FN>
- ---------
(1) Certain executive officers share with their spouses voting and investment
powers with respect to these shares. The percentages of shares beneficially
owned by any executive officer does not exceed one percent of the Company's
common stock so owned.
(2) Includes 450,750 shares subject to options exercisable within 60 days of
the record date and 945 shares held by the Trustee under the Employee
Savings Incentive Plan.
(3) Includes 322,042 shares subject to options exercisable within 60 days of
the record date and 25 shares held by the Trustee under the Employee
Savings Incentive Plan.
(4) Includes 152,833 shares subject to options exercisable within 60 days of
the record date and 938 shares held by the Trustee under the Employee
Savings Incentive Plan.
(5) Includes 129,750 shares subject to options exercisable within 60 days of
the record date.
(6) Includes 89,260 shares subject to options exercisable within 60 days of the
record date and 112 shares held by the Trustee under the Employee Savings
Incentive Plan.
(7) Includes 162,000 shares subject to options exercisable within 60 days of
the record date.
(8) Includes 183,000 shares subject to options exercisable within 60 days of
the record date.
</TABLE>
Biographical information concerning Messrs. Montgomery and Maher is given
under the caption "Election of Directors."
Mr. Crane has been with GWFC or GWB for 33 years. He is in charge of the
Real Estate Services Division.
Mr. Crivelli has been with GWFC or GWB for a total of 18 years and
consecutively for the last 7 years prior to his announced retirement in 1995. He
has been in charge of the Retail Banking Division.
Mr. Erikson has been with GWFC and NCS, which was acquired by the Company in
1982, for 26 years. He is in charge of the Company's Legal Division.
Mr. Geuther is Chief Financial Officer. He previously was the chief
financial officer of the Company's subsidiary, Aristar, Inc. ("Aristar") and has
been with GWFC and Aristar for 20 years.
Mr. Pappas is President of the Consumer Finance Division which was acquired
as part of the Aristar acquisition in 1983. Mr. Pappas was made President of the
consumer finance division of Aristar in 1976 and he has been with GWFC and
Aristar for 40 years.
8
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS FEES
Mr. Montgomery and Mr. Maher are the only Directors who are employees of
GWFC. See "Executive Officers" below for a description of their employment
contracts. Directors, other than Messrs. Montgomery and Maher, are paid an
annual retainer of $25,000 for Board service to GWFC and to GWB and a combined
attendance fee of $1,800 for each GWFC and GWB Board meeting attended. Directors
attending any committee meeting, whether or not they are members of such
committee, receive an attendance fee of $1,000 for each meeting attended;
chairpersons of committees, however, receive an attendance fee of $1,500 for
presiding over their committee meetings. Additionally, each chairperson of a
committee receives an annual fee of $3,000 and the Secretary of the Audit
Committee receives an annual fee of $2,000. Directors are also offered insurance
coverage similar to that provided under the Company's health and dental plans
and are provided with travel and accident insurance coverage for travel to and
from Board and committee meetings at no cost to them. Messrs. Montgomery and
Maher are not paid any fees or additional remuneration for services as members
of the Board or any committee, but they are eligible to receive benefits under
the Directors Retirement Plan which is discussed below. The amounts referred to
above do not include the economic benefit of preferential loans under the
Company's Home Loan Program shown at pages 7 and 17 and incorporated herein by
this reference.
DIRECTORS' RETIREMENT PLAN
The Great Western Directors' Retirement Plan ("Directors' Retirement Plan")
provides retirement benefits to directors. Each eligible director is entitled to
an annual retirement benefit upon termination of service on the Board of
Directors equal to the sum of the annual retainer paid to members of the Board
of Directors plus twelve times the meeting fee, both as in effect at the time of
the director's termination. Benefits are payable for a period equal to the
number of years that the eligible director served as a director. Benefits are
also provided to the surviving spouses of eligible directors or other designated
beneficiaries upon the deaths of the directors prior to the receipt of the above
benefits.
DIRECTOR STOCK OPTION PROGRAM
Upon adoption of the 1988 Incentive Plan, each non-employee director was
granted automatically, subject to shareholder approval of the Plan, a
nonqualified option under the Non-Employee Director Program to purchase 2,500
shares of the Company's common stock at the then fair market value of such
shares. Each non-employee who thereafter becomes a director is also
automatically granted such an option upon becoming a director. Annually, each
non-employee director automatically is granted an option to purchase 2,500
shares of the Company's common stock. No non-employee director may receive such
options to purchase more than 2,500 shares in any calendar year. The purchase
price per share of common stock covered by each such option, payable in cash
and/or shares, is the fair market value of the Common Stock on the date the
option is granted. The options become exercisable in 50% installments on the
first and second anniversary of their grant, and, unless earlier terminated,
terminate ten years after they are granted. The exercise prices of annual
options granted in 1993, 1994, and 1995 were $16.375, $20.25, and $16.00,
respectively.
In the event a non-employee director's services as a Board member are
terminated as a result of death, disability or retirement after age 72, options
will become immediately exercisable in full for a period of two years or until
the expiration of the stated term of the option, whichever period is shorter. In
the event a non-employee director's services are terminated for any other
reason, any then exercisable portion of an option will be exercisable for a
period of three months or the balance of the option's term, whichever period is
shorter.
The Plan provides for full vesting and acceleration of exercise dates of the
options in the event of a change of control of the Company. A change of control
occurs under the Plan when 50% or more of the common stock of the Company is
acquired by any entity or group, or if there is a dissolution or liquidation of
the Company or reorganization, merger or consolidation as a result of which the
Company is not the surviving corporation, or if there is a sale of substantially
all of the assets of the Company as an entirety to another entity.
9
<PAGE>
To date, the Board of Directors has not taken action to place into effect
another feature of the Plan which would permit non-employee directors to elect
to receive nonqualified stock options in lieu of fixed annual retainer (but not
meeting) fees. This feature would permit a non-employee director to defer
compensation by converting the fixed annual retainer into stock options the
exercise price of which is discounted to reflect an equal value at the time of
grant.
EXECUTIVE OFFICERS
The following table and accompanying notes show for the Chief Executive
Officer and the five next highest paid Executive Officers of the Company as of
December 31, 1994, the aggregate indicated compensation paid by the Company and
its subsidiaries to such persons during the three fiscal years then ending.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------------------
ANNUAL COMPENSATION AWARDS
----------------------------------- --------------------------- PAYOUTS
(E) (G) ---------------
OTHER (F) SECURITIES
(A) (C) (D) ANNUAL RESTRICTED UNDERLYING (H)
NAME AND (B) SALARY BONUS COMPENSATION STOCK AWARD(S) OPTIONS/ LTIP
PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($)(2) ($)(3) SARS(#) PAYOUTS($)
- ---------------------------- --------- --------- --------- ------------- -------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
James F. Montgomery 1994 950,000 518,700 205,355 -- 150,000 --
Chairman and 1993 950,000 142,500 184,880 -- 23,750 --
Chief Executive 1992 950,000 427,500 183,778 3,259,375 -- --
John F. Maher 1994 650,000 295,750 239,966 -- 150,000 --
President and 1993 650,000 81,250 218,169 -- 13,542 --
Chief Operating Officer 1992 650,000 260,000 196,346 3,259,375 -- --
Michael M. Pappas 1994 410,000 176,988 832 -- 70,000 --
President, Consumer 1993 410,000 164,000 278 -- -- --
Finance Division 1992 375,000 150,000 -- 1,396,875 -- --
Eugene A. Crane 1994 380,000 138,320 52,183 -- 70,000 --
Executive Vice President 1993 380,000 38,000 38,559 -- 6,333 --
1992 355,000 120,700 26,685 1,117,500 -- --
Curtis J. Crivelli 1994 360,000 131,040 10,786 -- 70,000 --
Executive Vice President 1993 360,000 36,000 55,897 -- 6,000 --
1992 340,000 115,600 65,999 1,117,500 -- --
Carl F. Geuther 1994 360,000 131,040 81,316 -- 70,000 --
Executive Vice President 1993 360,000 36,000 86,954 -- 6,000 --
and Chief Financial Officer 1992 340,000 115,600 93,327 1,117,500 -- --
<CAPTION>
(I)
(A) ALL OTHER
NAME AND COMPENSATION
PRINCIPAL POSITION ($)(4)
- ---------------------------- ---------------
<S> <C>
James F. Montgomery 38,000
Chairman and 31,286
Chief Executive 49,675
John F. Maher 26,000
President and 21,406
Chief Operating Officer 33,989
Michael M. Pappas 16,400
President, Consumer 13,502
Finance Division 19,608
Eugene A. Crane 15,200
Executive Vice President 12,515
18,563
Curtis J. Crivelli 14,400
Executive Vice President 11,856
17,779
Carl F. Geuther 14,400
Executive Vice President 11,856
and Chief Financial Officer 17,779
<FN>
- -------------
(1) Amounts shown include cash compensation earned and received by executive
officers as well as amounts earned but deferred at the election of those
officers, but do not include the value of options granted in lieu of cash
bonuses.
(2) Amounts shown include, when applicable, that portion of interest earned on
deferred compensation accounts above 120% of the applicable federal rate,
country club dues, personal use of corporate aircraft, the estimated
economic benefit of the preferential loans made generally under the Home
Loan Program shown at page 17, and the incremental cost to the Company of
(a) Company provided automobiles; (b) tax and financial planning advice by
third parties; and (c) insurance which provides reimbursement for health
and dental costs in excess of the amount payable under the Company's group
health and dental plans. Perquisites in excess of 25% of the total
perquisites reported in column (e) for 1994 include the following: Mr.
Montgomery: economic benefit of preferential loans--$59,162; and Mr.
Geuther: economic benefit of preferential loans--$36,410. The amounts
included in column (e) for Messrs. Pappas, Crane and Crivelli include only
that portion of interest earned on deferred compensation accounts above
120% of the applicable federal rate and do not include the value of certain
perquisites which in the aggregate did not exceed the lower of $50,000 or
10% of their aggregate 1994 salary and bonus compensation.
(3) A total of 605,000 shares of performance based restricted stock were
awarded to the named executive officers in 1992 with vesting occurring in
three to ten years as described at page 20. At year-end 1994,
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
these shares were worth $9,680,000 at the then current market value of $16
per share (including $2,800,000 or 175,000 shares each for Messrs.
Montgomery and Maher, $1,200,000 or 75,000 shares for Mr. Pappas, and
$960,000 or 60,000 shares each for Messrs. Crane, Crivelli and Geuther)
without giving effect to the diminution of value attributable to the
restrictions on such stock. Dividends are paid on the restricted stock at
the same rate payable to common stockholders and are not reflected in the
amounts reported.
(4) The amounts shown in this column for 1994 consist of the following
respective amounts: (a) Mr. Montgomery: Employee Savings Incentive Plan
matches and forfeitures--$6,000; Supplemental Incentive Plan--$32,000;
deferred compensation plan matches, makeups and forfeitures--$0; (b) Mr.
Maher: Employee Savings Incentive Plan matches and forfeitures--$6,000;
Supplemental Incentive Plan--$20,000; deferred compensation plan matches,
makeups and forfeitures--$0; (c) Mr. Pappas: Employee Savings Incentive
Plan matches and forfeitures--$6,000; Supplemental Incentive Plan--$10,400;
deferred compensation plan matches, makeups and forfeitures--$0; (d) Mr.
Crane: Employee Savings Incentive Plan matches and forfeitures--$6,000;
Supplemental Incentive Plan--$9,200; deferred compensation plan matches,
makeups and forfeitures--$0; (e) Mr. Crivelli: Employee Savings Incentive
Plan matches and forfeitures--$6,000; Supplemental Incentive Plan--$7,536;
deferred compensation plan matches, makeups and forfeitures--$864; (f) Mr.
Geuther: Employee Savings Incentive Plan matches and forfeitures--$6,000;
Supplemental Incentive Plan--$7,536; deferred compensation plan matches,
makeups and forfeitures--$864.
</TABLE>
EMPLOYMENT AGREEMENTS AND RETIREMENT ARRANGEMENT
Mr. Montgomery has an employment agreement with GWFC which expires on
December 31,1997, unless earlier terminated in accordance with its terms. The
agreement provides for various benefits including a current annual salary of
$950,000 which is subject to periodic review and increase, but not decrease. The
agreement provides for various payments to Mr. Montgomery or his beneficiaries
in the event of his death, disability, or termination without cause and in the
event of a change of control of GWFC. In the event of his death, Mr.
Montgomery's beneficiaries would be entitled to a payment equal to 250 percent
of Mr. Montgomery's then current salary reduced by the proceeds of
company-provided life insurance. Mr. Montgomery's beneficiaries would also be
entitled to receive continued payment of 50 percent of his then current salary
until the time when he would have been 65 but in no event for a period less than
10 years. In addition, Mr. Montgomery's family would be entitled to continuation
of certain insurance benefits for two years. Upon termination due to disability,
Mr. Montgomery would continue to receive, until the disability ends, but no
later than age 65, 50 percent of the sum of his current salary plus his average
bonus over the prior three years, less benefits payable under the Company's long
term disability plan. He would also be entitled to continuation of certain other
benefits. In the event of a termination without cause, Mr. Montgomery would
receive his current salary for the remaining term of the agreement and a full or
partial bonus payment for the year of termination. He would also be entitled to
continuation of certain other benefits for the same period, an indemnification
for additional taxes payable, and a pro rata payment of long term incentive
benefits. The agreement provides for certain offsets in the event he becomes
employed during the remaining term of the agreement. In the event of a voluntary
termination of Mr. Montgomery's employment or material breach by the Company
after a change of control, all restricted shares and stock options of his which
are then unvested may immediately vest. If Mr. Montgomery voluntarily terminates
employment within six months after a change of control, he is entitled to
payments as described above for a termination without cause, with no offset.
However, in no event would payments which are contingent upon a change of
control under applicable tax rules ("parachute payments") exceed or be less than
specified Internal Revenue Code limits that currently approximate three times
the average of his compensation for the prior five years (the "Section 280G
Limits"). In the event of a material breach by the Company after a change of
control, Mr. Montgomery is entitled to terminate his employment and receive
payments as described above for a termination without cause, with varying
offsets in the event of subsequent employment; any such parachute payments will
be subject to but not less than the maximum permitted by limitations prescribed
by the Internal Revenue Code with respect to payments received by terminating
employees which are contingent upon a change of control. A change of control
occurs under the agreement when anyone
11
<PAGE>
acquires ownership of 25 percent or more of the Company's outstanding voting
stock and, in that connection, the persons who were directors of the Company
immediately before such acquisition shall cease to constitute five-sixths of the
Board of Directors of the Company or any successor thereafter.
Mr. Maher has an employment agreement with GWFC, effective December 19,
1989, which had an initial term of five years and which provides for a rolling
three year term at the end of the second contract year and each point thereafter
unless earlier terminated. The agreement provides for various benefits including
a current annual salary of $650,000 which is subject to periodic review and
increase, but not decrease. The agreement provides for various payments to Mr.
Maher or his beneficiaries in the event of his death, disability, or termination
without cause, all in a manner similar to that described above for Mr.
Montgomery. In the event of a termination of Mr. Maher's employment without
cause or material breach by the Company after a change of control, all
restricted shares and stock options of his which are then unvested may
immediately vest. In the event of a material breach by the Company after a
change of control, Mr. Maher is entitled to terminate his employment and receive
various payments similar to those described above for Mr. Montgomery. Mr. Maher
also is entitled to parachute payments (but not less than the maximum permitted
by the 280G Limits contingent upon a change of control) in the event he
voluntarily terminates employment after a change of control, but he must remain
in office for a requisite period of time and give notice of his intended
departure. Change of control is defined as in Mr. Montgomery's agreement except
that the percentage of ownership required is more than 50 percent rather than 25
percent, unless the Chairman and Chief Executive Officer of the Company fails to
acquiesce in a breach by the Company or decision by the Company to terminate Mr.
Maher's employment without cause following a change of control, in which case
the threshold is 25%.
GWFC has employment agreements with the other executive officers, which have
initial terms of three years and provide for rolling two year terms at the end
of the first contract year unless earlier terminated. The base annual salaries
for Messrs. Pappas, Crane, Crivelli, Geuther and Erikson under their employment
agreements are their current salaries, i.e. $420,000, $380,000, $372,500,
$372,500, and $285,000, respectively, subject to periodic review and increase,
but not decrease unless done in conjunction with a pro rata salary reduction
applicable to all of GWFC's officers.
These employment agreements provide for various benefits to each executive
officer or his beneficiaries in the event of his death, disability, or
termination without cause and in the event of termination without cause
following a change of control of GWFC. In the event of the executive officer's
death, his beneficiaries would be entitled to payment of the executive officer's
salary and continuation of certain insurance benefits for one year. Upon
termination due to disability, the executive officer would continue to receive
until the disability ends, but not later than age 65 or for a period greater
than ten years, 50 percent of the sum of his current salary plus his average
bonus over the prior three years, less benefits under the Company's long term
disability plan. He would also be entitled to continuation of certain other
health and welfare benefits. In the event of a termination without cause, the
executive officer would receive his current salary for the remaining term of the
agreement and a full or partial bonus for the year of termination. He would also
be entitled to a continuation of other benefits for the same period. The
agreements provide for certain offsets in the event such terminated executive
officer becomes employed during the remaining term of the agreement. In the
event of a material breach by the Company after a change of control, each
executive officer is entitled to terminate his employment and receive payments,
as described above for a termination without cause, for a period of three years,
with an offset in the event of subsequent employment. The executive officer may
also be entitled to full vesting of restricted shares or stock options and is
entitled to a pro rata payment of long term incentive benefits on the assumption
that performance is "on plan." These agreements, like those for Messrs.
Montgomery and Maher, provide that to the extent that any such payments
constitute parachute payments, they will be subject to the the 280G Limits and,
to the extent they do not reach such limitations, the executive officers will be
entitled to an amount equal to the maximum amount payable without incurring a
liability for payments in excess of those limits. A change of control is defined
as in Mr. Maher's agreement. The parachute payments are in addition to other
payments under the agreements that do not constitute parachute payments.
12
<PAGE>
Mr. Crivelli elected to take early retirement from the Company. Under an
agreement between Mr. Crivelli and the Company, his employment contract will be
terminated, but he will receive his current annual salary and bonus until
September 30, 1997, subject to an offset if he otherwise becomes employed during
the severance period. Mr. Crivelli will also be entitled to professional
assistance and entitled to participate in the other benefit plans of the Company
described herein for executive officers and employees during the severance
period and will then participate in the Company's plans for retired executive
officers. With regard to the Company's Supplemental Executive Retirement Plan,
Mr. Crivelli will be credited with an additional three years of age and service
credit at the conclusion of the severance period.
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE AND THE PERFORMANCE
GRAPHS INCLUDED IN THIS PROXY STATEMENT SHALL NOT BE DEEMED TO BE INCORPORATED
BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY
STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THE COMPANY SPECIFICALLY INCORPORATES
THIS REPORT OR THE PERFORMANCE GRAPHS BY REFERENCE THEREIN, AND SHALL NOT BE
DEEMED SOLICITING MATERIAL OR OTHERWISE DEEMED FILED UNDER EITHER OF SUCH ACTS.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee administers the Company's various incentive
plans, including its stock option and performance based restricted stock plans
described on pages 18 to 20 of this proxy statement. In addition, the Committee
reviews and recommends to the Board of Directors compensation levels for members
of executive management, evaluates executive management performance, and
considers executive management succession and related matters.
Since 1989, the Company has retained the services of Strategic Compensation
Associates ("SCA"), a nationally known consulting firm specializing in executive
compensation issues, to assist the Committee in connection with the performance
of its various responsibilities. SCA advises the Committee with respect to the
reasonableness and appropriateness of compensation for the Company's executive
officers. In doing so, the firm prepares and reviews with the Compensation
Committee various materials reflecting the compensation practices of a peer
group consisting primarily of major regional commercial banks and other factors
which SCA and the Compensation Committee consider relevant. The companies
included in the competitive compensation analysis are generally not the same as
those included in the peer group in the second performance graph on page 16.
In determining the compensation recommendations for all executive officers
which the Compensation Committee makes to the Board of Directors, it has been
the policy and practice of the Committee to consider the advice of SCA, the
contributions of individual executive officers, the performance and prospects of
the Company over time, and the desirability of attracting and retaining a highly
capable and experienced executive management group. All the executive officers
have employment contracts with the Company as described on pages 11 to 13.
In recent years, it has been the Company's policy to place a greater
percentage of total executive compensation "at risk," principally through the
award of annual cash bonuses. In 1994, the Great Western Financial Corporation
Annual Incentive Compensation Plan for Executive Officers (the "Annual Plan")
was approved by shareholders. A substantial part of an executive's cash
compensation is contingent upon the Company's attaining the goals set by the
Compensation Committee in accordance with the Plan. Each year in which these
goals are reached, the compensation of the executive officers is supplemented by
fiscal year-end cash bonus payments under the Plan. The performance goal for the
executive officers, other than the President of the Consumer Finance Division,
is a targeted earnings per share as established on an annual basis by the
Compensation Committee. For the President of the Consumer Finance Division, the
performance goal is based upon the attainment of an earnings before taxes goal
for the Consumer Finance Division established annually by the Committee and the
attainment of the earnings per share target applicable to the other executive
officers. The target goals are established annually by the Compensation
Committee on or before the deadline established under the applicable federal
income tax rules. Targeted levels of incentive compensation are 40% of adjusted
base salary paid to the Company's executive vice presidents and the
13
<PAGE>
President of the Consumer Finance Division, 50% of adjusted base salary paid to
the chief operating officer, and 60% of adjusted base salary paid to the chief
executive officer. (The current base salaries for the executive officers are
shown under "Employment Agreements" on pages 11 and 12.)
Under the Annual Plan, participants may receive a percentage of their
respective targeted level of incentive compensation ranging from 0% to 200%
depending upon the degree of attainment of the targeted earnings for each
respective Plan year. The maximum payable under the Plan for exceeding the
targeted goals is 200% (175% in 1994) of such targeted levels of incentive
compensation. In 1994, the executive officers, other than the President of the
Consumer Finance Division received 91% of their targeted level of incentive
compensation based upon the degree of attainment of the targeted earnings as
adjusted in accordance with Plan provisions by the Committee to account for
non-recurring events. The President of the Consumer Finance Division received
108% of his targeted level of incentive compensation based upon the attainment
of the applicable earnings per share and earnings before taxes goal for the
Consumer Finance Division. Based on the competitive compensation analysis
provided by SCA, the Company believes that the level of the Company's aggregate
salary and bonus compensation in 1994 for executive officers ranked above the
median for the companies included in the compensation analysis and above the
median for the Company's primary savings association competitors included in the
peer group in the second performance graph on page 16. The second performance
graph is included in this proxy statement to show the Company's stock
performance in relation to its nine largest publicly traded California savings
association competitors at the beginning of the five year period shown.
The Compensation Committee awarded the executive officers market priced
stock options valued in accordance with a Black-Scholes option pricing model as
explained in the footnotes to the table on page 18 to provide the executive
officers total compensation above the median for the companies included in the
SCA compensation analysis. The Committee believed that awarding stock options in
this manner would more closely align the interests of the executive officers
with those of the Company's shareholders with respect to the value to be derived
from the attainment of the primary corporate objectives. With respect to
salaries, no increases were granted to the Chairman and Chief Executive or to
the President and Chief Operating Officer for 1993, 1994 or 1995 and no salary
increases were given to the other executive officers for 1994. Salary increases
for 1995 for any one of the other executive officers did not exceed 3.6 percent
to maintain their target annual cash compensation at approximately the 60th
percentile of the companies included in the competitive compensation analysis.
Mr. Montgomery's compensation and related benefits are based principally on
his rights under his employment agreement with the Company, described on pages
11 and 12 of the proxy statement. His base salary has not been increased since
1990, consistent with the Company's objective of placing a greater percentage of
total compensation "at risk."
In 1992, following a comprehensive study of long term incentive programs and
recommendations made by SCA, the Compensation Committee approved new performance
based restricted stock awards under the Company's 1988 Incentive Plan for the
Company's senior and executive officers to provide long-term incentive awards in
amounts comparable to those awarded to executives of the companies included in
the SCA compensation analysis. Shares awarded under the program are subject to
forfeiture in certain circumstances and do not vest for ten years unless vesting
is accelerated by the Company's exceeding the median total shareholder return of
other major financial institutions over rolling three year performance cycles.
See the description of the restricted stock on page 20. No shares have yet
vested under the program.
14
<PAGE>
To the extent readily determinable and as one of the factors in its
consideration of compensation matters, the Compensation Committee considers the
anticipated tax treatment to the Company and to the executives of various
compensation. Some types of compensation and their deductibility depend upon the
timing of an executive's vesting or exercise of previously granted rights.
Further, interpretations of and changes in the tax laws also affect the
deductibility of compensation. To the extent reasonably practicable and to the
extent it is within the Committee's control, the Compensation Committee intends
to limit executive compensation in ordinary circumstances to that deductible
under Section 162(m) of the Internal Revenue Code of 1986. In doing so, the
Committee may utilize alternatives (such as deferring compensation) for
qualifying executive compensation for deductibility and may rely on
grandfathering provisions with respect to existing contractual commitments.
Compensation Committee of the Board
of Directors, Great Western
Financial Corporation
Charles D. Miller, Chairman
H. Frederick Christie
John V. Giovenco
Firmin A. Gryp
Willis B. Wood, Jr.
15
<PAGE>
GREAT WESTERN STOCK PRICE PERFORMANCE
The following graph compares the Company's cumulative shareholder return on
its common stock, including the reinvestment of dividends, with the return on
the Standard & Poor's 500 Stock Index and a peer group of the Standard & Poor's
Financial Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN (1)
AMONG GREAT WESTERN FINANCIAL,
S&P 500 INDEX AND S&P FINANCIAL INDEX
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
GWF $100 $ 74 $115 $118 $142 $119
S&P 500 $100 $ 97 $126 $136 $150 $152
S&P Financial $100 $ 79 $118 $146 $162 $156
</TABLE>
Assumes $100 invested on December 31, 1989 in the Stock of Great Western
Financial, S&P 500 Index and S&P
Financial Index
Notes: (1) Total Return assumes reinvestment of dividends
(2) The stock price performance shown in this graph is not
necessarily indicative of future stock price performance.
The next graph compares the Company's cumulative shareholder return on its
common stock, including the reinvestment of dividends, with the return of a peer
group consisting of the ten largest publicly traded savings institutions in
California as of December 31, 1989,(1) on a weighted and unweighted basis. The
weighted index is weighted according to each issuer's market capitalization
while the unweighted index is not.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN (2)
AMONG GREAT WESTERN FINANCIAL,
CALIFORNIA S&L GROUP, WEIGHTED AND NOT WEIGHTED (3)
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
GWF $100 $ 74 $115 $118 $142 $119
CA S&L Grp - Wtd $100 $ 65 $117 $132 $137 $116
CA S&L Grp - Not Wtd $100 $ 35 $49 $ 53 $ 56 $ 51
</TABLE>
Assumes $100 invested on December 31, 1989 in the Stock of Great Western
Financial,
California S&L Group (Weighted by market Capitalization) and California S&L
Group (Not Weighted)
Notes: (1) H.F. Ahmanson & Company, Great Western Financial Corporation,
CalFed Inc., Glen Fed, Inc., Gibraltar Financial Corporation,
Home Fed Corporation, Golden West Financial Corporation, Coast
Savings Financial, Inc., Columbia Savings and Loan Association,
and Great American Bank, FSB. The CA S&L Group includes the
primary thrift competitors of the Company at the beginning of
the five year period.
(2) Total Return assumes reinvestment of dividends
(3) Weighted by market capitalization
(4) The stock price performance shown in this graph is not
necessarily indicative of future stock price performance.
16
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The following tabulation shows as to the Company's executive officers and
certain of its directors (i) the largest aggregate amount of indebtedness to the
Company in excess of $60,000 outstanding from January 1, 1994 to February 27,
1995, (ii) the nature of the indebtedness, (iii) the amount of such indebtedness
outstanding at February 27, 1995, and (iv) the annual rate of interest charged
on such indebtedness. Information concerning the indebtedness to the Company by
members of the Compensation Committee of the Board of Directors is given under
the caption "Compensation Committee Interlocks and Insider Participation" on
page 7.
<TABLE>
<CAPTION>
LARGEST INDEBTEDNESS
NAME OF EXECUTIVE AGGREGATE NATURE OF OUTSTANDING AT INTEREST
OFFICER OR DIRECTOR INDEBTEDNESS INDEBTEDNESS(1) FEBRUARY 27, 1995 RATE(2)
- ------------------------------ ------------ --------------- ----------------- --------
<S> <C> <C> <C> <C>
James F. Montgomery $1,250,000 Residential $1,223,232 4.59%
1,066,301 Residential 1,017,251 4.59
500,000 Unsecured 500,000 8.50
John F. Maher 799,731 Residential 772,091 4.59
443,982 Residential 428,515 4.59
Eugene A. Crane 347,328 Residential 315,335 4.59
16,237 Residential 14,081 7.00
Curtis J. Crivelli 861,519 Residential 833,464 4.59
540,664 Residential 526,263 4.59
J. Lance Erikson 724,225 Residential 701,982 4.59
239,403 Residential 228,469 4.59
Carl F. Geuther 1,387,507 Residential 1,354,193 4.59
169,319 Residential 161,176 4.59
Michael M. Pappas 596,431 Residential 583,629 4.59
220,011 Residential 209,863 4.59
David Alexander 269,183 Residential 257,345 4.59
Enrique Hernandez, Jr. 934,000 Residential 924,842 4.59
<FN>
- ---------
(1) Loans secured by the same residence are aggregated.
(2) Interest on these loans, except for Mr. Montgomery's prime rate unsecured
loan, are generally at monthly adjustable rates equal to the Company's cost
of funds plus .25%. This rate was approximately 2.22% to 2.47% below that
on similar loans to the public during 1994.
</TABLE>
The residential loans described above were made pursuant to the Company's
Employee Home Loan Programs and such loans are secured by trust deeds or
mortgages on the respective residences of the named directors and officers. See
"Employee Benefit Plans."
Interest on Mr. Montgomery's unsecured, personal loan is payable annually
and the entire principal amount is payable on the earlier of May 23, 1998 or
twelve months following termination of Mr. Montgomery's employment as an officer
of GWFC.
From time to time, directors, executive officers, members of their immediate
families and entities with which such persons are known by GWFC or GWB to be
affiliated or associated may obtain "margin" loans from a subsidiary of GWFC,
obtain secured loans from GWB, place interest bearing deposits with GWB,
maintain checking accounts with GWB and avail themselves of check guarantee and
overdraft features allowed on these accounts, all in accordance with applicable
law. The transactions described in this paragraph are all in the ordinary course
of GWFC's or GWB's business and are made on terms substantially the same,
including interest rate and collateral, as those prevailing at the time for
comparable transactions with other persons and, with respect to such loans to
such persons, do not involve more than the normal risk of collectibility or
present other unfavorable features.
17
<PAGE>
EMPLOYEE BENEFIT PLANS
The material which follows in this section describes certain provisions made
by the Company and its subsidiaries pursuant to certain stock option, restricted
stock, deferred compensation, employee savings, pension or other incentive
plans, now in effect, that provide for severance, termination or change of
control benefits to the named executive officers, other than group life and
accident insurance, group hospitalization and similar group payments and
benefits.
STOCK BENEFIT PLANS
The Company's 1988 Stock Option and Incentive Plan (the "1988 Incentive
Plan") provides for various types of stock incentives, including stock options,
restricted shares, bonus stock and performance shares. The only awards to date
have been stock options and restricted stock (with performance vesting
features). The 1988 Incentive Plan provides for acceleration of the
exercisability of awards and accelerated vesting of awards, unless the
Compensation Committee of the Board of Directors (the "Administrator") otherwise
provides, if 50% or more of the common stock of the Company is acquired by any
entity or group, or if there is a reorganization, merger or consolidation of the
Company as a result of which the Company is not the surviving corporation, or if
there is a sale of substantially all of the assets of the Company to another
entity or in certain other circumstances, including an individual's termination
of employment, as the Administrator may determine. All outstanding options
granted under the predecessor 1979 Incentive and Nonstatutory Stock Option and
Appreciation Plan (the "1979 Option Plan") are now fully vested and exercisable.
OPTIONS
There were no grants of SARs to Messrs. Montgomery, Maher, Pappas, Crane,
Crivelli or Geuther (the "named executive officers") in 1994 and the following
market priced stock options were granted to these individuals in 1994 for
services rendered in 1994:
OPTION GRANTS IN LAST FISCAL YEAR (2)
<TABLE>
<CAPTION>
(B)
NUMBER OF (C)
SECURITIES % OF TOTAL (F)
UNDERLYING GRANTED TO (D) (E) GRANT DATE
(A) OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION PRESENT
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE)(2) DATE VALUE($)(3)
- ------------------------------ ------------- -------------- -------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
James F. Montgomery 150,000 6.5% $16.625 12-12-04 $559,500
John F. Maher 150,000 6.5% $16.625 12-12-04 $559,500
Michael M. Pappas 70,000 3.1% 16.625 12-12-04 $261,000
Eugene A. Crane 70,000 3.1% 16.625 12-12-04 $261,000
Curtis J. Crivelli 70,000 3.1% 16.625 12-12-04 $261,000
Carl F. Geuther 70,000 3.1% 16.625 12-12-04 $261,000
<FN>
- ---------
(1) These options vest and become exercisable in 25% installments on each of
the first four anniversaries of their grant subject to possible
acceleration in certain circumstances such as a change in control. The
options were granted for a period of 10 years, subject to earlier
termination in certain events related to termination of employment.
(2) All stock options were granted at the fair market value on the date of
grant. The exercise price and tax withholding obligations related to
exercise may be paid by delivery of already owned shares, subject to
certain conditions or, to the extent authorized by the Committee, by share
offsets.
(3) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options using the following assumptions: the $16.625 market
price as of December 12, 1994, three year historical average stock price
volatility of .2750, a three year historical average dividend yield of
5.2%, a risk free rate equal to the 52 week average of ten year Treasury
Bonds of 6.9% and an option term of ten years. This valuation method is
hypothetical.
</TABLE>
18
<PAGE>
The following table shows for each of the named executive officers the
shares acquired on exercise of options during 1994, the difference between the
exercise price and the market value of the underlying shares on date of such
exercise, and (as to outstanding options at December 31, 1994) the number of
unexercised options and the aggregate unrealized appreciation on "in-the-money,"
unexercised options held at such date:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
(D)
NUMBER OF SECURITIES (E)
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FY-END (#) AT FY-END ($)(3)
(B) -------------------- --------------------
(A) SHARES ACQUIRED (C) EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE(1)(2) UNEXERCISABLE
- ------------------------------ --------------- ------------------ -------------------- --------------------
<S> <C> <C> <C> <C>
James F. Montgomery -- -- 427,250/210,000 $377,325/84,875
John F. Maher -- -- 306,042/190,000 $342,000/53,000
Michael M. Pappas -- -- 175,000/90,000 $177,250/26,500
Eugene A. Crane -- -- 146,833/86,000 $176,550/25,500
Curtis J. Crivelli -- -- 123,750/86,000 $163,719/25,500
Carl F. Geuther -- -- 157,000/84,000 $175,000/25,000
<FN>
- ---------
(1) Each of the outstanding options was granted with an exercise price of 100%
of fair market value on the date of grant, for a term (subject to earlier
termination following a termination of employment) of ten years, and is
generally exercisable no earlier than the first anniversary of the date of
grant. The options outstanding as of December 31, 1994 under the 1988
Incentive Plan typically vest in equal installments over a term of four or
five years from their respective dates of grant although immediately
exercisable options for a limited amount of shares were granted in 1994 for
services performed in 1993 in lieu of cash bonuses for the named executive
officers other than Mr. Pappas. The options were granted under the
Company's 1988 Incentive Plan or the 1979 Option Plan which includes
similar provisions.
(2) The numbers shown in column (d) include all unexercised options held by the
named officers, of which the following amounts were not in-the-money: Mr.
Montgomery--311,250; Mr. Maher--276,042; Mr. Pappas--150,000; Mr.
Crane--125,083; Mr. Crivelli--106,000; and Mr. Geuther--141,000. None of
the named executive officers holds any outstanding SARs.
(3) Based solely on the market value of the Company's common stock at the end
of 1994 minus the exercise price of "in the money" options.
</TABLE>
The 1988 Incentive Plan permits the payment of the option or award price and
tax withholding at the Administrator's discretion in cash or with shares of the
Company's common stock, valued at their then fair market value, or a combination
of shares and cash. The Board may, without shareholder approval, suspend or
amend the 1988 Incentive Plan at any time, and the Administrator may, with the
consent of a holder, substitute awards or modify the terms and conditions of an
outstanding award, to, among other changes, extend the exercisability and term
(subject to the maximum term limits), reduce the price, accelerate
exercisability or vesting or preserve benefits of the award. But without
shareholder approval, the Board may not materially increase the maximum number
of shares which may be delivered pursuant to awards granted under the 1988
Incentive Plan, materially increase the benefits accruing to participants under
the 1988 Incentive Plan or materially change the requirements as to the
eligibility to participate in the 1988 Incentive Plan.
19
<PAGE>
RESTRICTED STOCK
In January 1992, the Administrator first authorized awards of performance
based restricted stock under the 1988 Incentive Plan and established the
specific vesting provisions for such awards as described below. If the recipient
remains with the Company, the shares will vest completely 10 years after the
award date. Prior to such time, they are subject to both accelerated vesting and
risk of forfeiture to the Company, in whole or in part, upon certain events. The
vesting will be accelerated if and to the extent that the Company's common stock
performance, as measured by appreciation, dividends and other distributions
("shareholder return"), over three-year performance cycles, representing the
three-year period ending December 31, 1994 and periodically thereafter, exceeds
by specified amounts the shareholder return (subject to certain adjustments) on
common stocks of other designated banks, savings associations or related holding
companies (the "peer group"). If the Company's percentile ranking relative to
the peer group for the applicable three-year period equals or exceeds the 50th
percentile, the remaining performance based restricted shares vest in amounts
ranging from 25% to 100% of the original award. A portion of the award also will
vest in event of the death or disability of the holder following the first
anniversary of the award, at the rate of 20% per year. Vesting of these awards
may be accelerated in certain other circumstances, including a change of control
(subject to certain tax limitations) or retirement. Except as noted above and
except in the case of a discharge without cause following a change of control,
the unvested performance based restricted shares generally will be forfeited
upon a termination of employment, subject to any entitlements under then
effective employment agreements. The performance based restricted shares are
registered to the recipient subject to transfer and forfeiture restrictions, but
are held by the Company until such restrictions lapse. The recipients are
entitled to dividends and have voting rights on these performance based
restricted shares prior to the time the restrictions lapse.
No awards of performance based restricted stock or other long-term incentive
awards were granted to the named executive officers in 1994.
DEFERRED COMPENSATION PLANS
Under the Company's deferred compensation plans, directors and executive
officers are entitled to defer compensation until retirement, death, other
termination of employment, or until specified dates. Participants receive a
fixed rate yield based on the average annual interest rate of ten-year United
States Treasury Notes for the previous ten years. An enhanced yield of up to 125
percent of the fixed rate yield will be payable in the event of death,
retirement after age 55 under certain circumstances, and termination of
employment after plan participation for a specified number of years. The plans
permit participants to make an advance irrevocable election to receive a cash
lump sum payment of their account balance within 45 days after a change of
control. In addition, the plans permit directors and executive officers to elect
within two years after a change of control to withdraw their account balance in
a lump sum with a five percent penalty. If a participant is involuntarily or
constructively terminated as a result of a change of control, the participant
will be entitled to the enhanced yield, subject to limitations prescribed by the
Internal Revenue Code with respect to payments received by terminating employees
following a change of control. A change of control occurs under the plan when
anyone acquires ownership of more than 50 percent of the Company's outstanding
voting stock and, in that connection, the persons who were directors of the
Company immediately before such acquisition cease to constitute five-sixths of
the board of directors of the Company or any successor thereafter. Messrs.
Montgomery's and Maher's employment agreements, however, provide for the
preservation of previously elected deferrals and payment options in the event of
a change of control. The plans provide for Company matching contributions on
deferred compensation similar to those provided under the Employee Savings
Incentive Plan (described below). The plans also provide for pension benefits
based on deferred compensation similar to those provided under the Company's
Retirement Plan (described below).
EMPLOYEE SAVINGS INCENTIVE PLAN
Under the Employee Savings Incentive Plan (the "Savings Plan"), eligible
employees may authorize payroll deductions for contributions which are invested
in fixed income, stock, bond, or balanced funds at the participant's direction.
Employee contributions are matched by the employer company in an amount equal to
50% of such contribution up to a maximum contribution of 6% of the employee's
base salary, including overtime. The Board of Directors may authorize annually
an additional contribution in an amount not to
20
<PAGE>
exceed the Company's mandatory contribution. The aggregate contribution for the
named executive officers is included in the summary compensation table at pages
10 and 11. Matching contributions vest at the rate of 30% for each of the first
two years of participation in the Savings Plan and the remaining 40% vests in
the third year of participation. Certain participant borrowings against vested
benefits are permitted under the Savings Plan.
SUPPLEMENTAL INCENTIVE PLAN
The Supplemental Incentive Plan (the "Supplemental Plan") supplements
benefits payable to certain officers and employees covered by the Savings Plan
whose benefits would otherwise be reduced under the Savings Plan because of
applicable Internal Revenue Code limitations. Participants in the Savings Plan
participate automatically in the Supplemental Plan to the extent that
contributions and forfeitures to which they would be entitled under the Savings
Plan are reduced under present Internal Revenue Code restrictions. The aggregate
allocation for the named executive officers is included in the compensation
table at pages 10 and 11.
RETIREMENT PLAN
The Retirement Plan is a non-contributory group pension plan providing for
fixed monthly benefits in the event of retirement at a specified age. Benefits
under the Retirement Plan depend on factors such as length of service, average
monthly wage base and certain Social Security benefits. Employees over age 21
are eligible to participate after one year of service. Contributions to the plan
trust are made by the Company on an actuarial basis and in an amount to obtain
the maximum federal income tax deduction. Accrued benefits vest fully after five
years of participation. Forfeitures of non-vested benefits are applied to reduce
the Company's contributions.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Supplemental Executive Retirement Plan provides a target retirement
benefit at normal retirement (age 60 for Messrs. Montgomery and Maher and age 62
for the other executives) equal to a percentage of average salary and bonus for
certain executives who have completed specified years of service. The
percentages and years of service specified under the plan are 65 percent and 20
years for Messrs. Montgomery and Maher and 60 percent and 25 years for the other
named executive officers. The amounts payable under this plan are reduced by
Social Security benefits and benefits payable under the Company's Retirement
Plan. If a participant is involuntarily or constructively terminated as a result
of a change of control, the participant, if age 55 or older, will be entitled to
full normal retirement benefits with no reduction for early retirement, subject
to limitations prescribed by the Internal Revenue Code with respect to payments
received by terminating employees following a change of control. If the
terminated participant is under age 55, the retirement benefits payable will be
reduced depending on actual years of service and will be payable beginning at
age 55 with no further reduction, subject to limitations prescribed by the
Internal Revenue Code with respect to payments received by terminating employees
following a change of control. A change of control occurs under the plan when
anyone acquires ownership of more than 50 percent of the Company's outstanding
voting stock and, in that connection, the persons who were directors of the
Company immediately before such acquisition cease to constitute five-sixths of
the board of directors of the Company or any successor. The plan will also
provide the participants with retirement benefits that would otherwise exceed
the annual limit on such benefits imposed by the Internal Revenue Code.
PENSION TABLES
The amounts shown in the summary compensation table do not include any
amounts expensed by the Company under the Company's Retirement Plan or the
Supplemental Executive Retirement Plan, both of which are defined benefit plans,
since the amount of the accruals thereunder are not determined on an individual
basis by the actuaries for the plans. The following table illustrates the total
annual retirement benefits which would be provided under the benefit formula
described in the Retirement Plan and Supplemental Executive Retirement Plan to
the named individuals referred to in the compensation table (other
21
<PAGE>
than Messrs. Montgomery and Maher) in various earnings classifications upon
normal retirement in 1994. The benefit formula presently in both plans provides
for an offset of certain Social Security benefits. The amounts shown in the
following table do not reflect this offset.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
AVERAGE PAY FOR -------------------------
RETIREMENT PLAN 25 YRS.
PURPOSES 15 YRS. 20 YRS. OR MORE
- ------------------------------ ------- ------- -------
<S> <C> <C> <C>
$500,000...................... 180,000 240,000 300,000
600,000...................... 216,000 288,000 360,000
700,000...................... 252,000 336,000 420,000
800,000...................... 288,000 384,000 480,000
</TABLE>
The following table illustrates the total annual retirement benefits which
would be provided under both plans to Messrs. Montgomery and Maher.
<TABLE>
<CAPTION>
YEARS OF CREDITED
SERVICE
AVERAGE PAY FOR ------------------
RETIREMENT PLAN 20 YRS.
PURPOSES 15 YRS. OR MORE
- ------------------------------ ------- ---------
<S> <C> <C>
$ 900,000..................... 438,750 585,000
1,000,000.................... 487,500 650,000
1,200,000.................... 585,000 780,000
1,400,000.................... 682,500 910,000
1,600,000.................... 780,000 1,040,000
1,800,000.................... 877,500 1,170,000
</TABLE>
The compensation covered by the benefit formula under the combined
retirement plans is salary and bonus compensation (reduced by Social Security
benefits), which is reported for the past three fiscal years in columns (c) and
(d) in the summary compensation table on pages 10 and 11. For 1993, the named
executives received half of their bonus in cash and half in the form of
immediately exercisable market priced stock options. Accordingly, the bonus
compensation covered by the benefit formula under the combined retirement plans
for 1993 is that shown in column (d) of the summary compensation table
multiplied by two.
The following table sets forth certain retirement and benefit information
for certain of the Company's executive officers. The tables above and the table
below do not include the amount of the annual benefit ($46,600 based on present
directors' fees) that will be payable to Messrs. Montgomery and Maher under the
Directors' Retirement Plan.
<TABLE>
<CAPTION>
CURRENT ANNUAL YEARS OF ESTIMATED ANNUAL
RATE OF CREDITED BENEFITS UPON
NAME REMUNERATION SERVICE RETIREMENT (1)
- ------------------------------ --------------- --------- ----------------
<S> <C> <C> <C>
James F. Montgomery........... $1,468,700 23 $954,655
John F. Maher................. 945,750 21 614,738
Michael M. Pappas............. 596,988 40 358,193
Eugene A. Crane............... 518,320 33 310,992
Curtis J. Crivelli............ 503,540 18 302,124
Carl F. Geuther............... 503,540 20 302,124
<FN>
- ---------
(1) The estimated annual benefits assume (i) the Retirement Plan and the
Supplemental Executive Retirement Plan will continue in their present
forms, (ii) the individuals affected will continue in the employ of GWFC
until the applicable retirement date, and (iii) such individuals will
continue to receive salaries and bonuses at the current rate until normal
retirement age.
</TABLE>
UMBRELLA TRUSTS
The Board of Directors of the Company has authorized the establishment of
two separate Umbrella Trusts (the "Trusts") as a security device for some or all
of the participants in the Company's Supplemental
22
<PAGE>
Executive Retirement Plan, Directors' Retirement Plan, supplemental retirement
benefit for Mr. Gryp, Supplemental Incentive Plan, and Directors and Senior
Officers Deferred Compensation Plans (collectively, the "Plans").
The Trusts provide that upon the occurrence of certain events, the Company
shall contribute to the Trusts various amounts, including the amount by which
the present value of all benefits under the Plans exceeds the value of all trust
assets. These events include: (i) the delivery to the Company by any person of a
statement pursuant to the federal securities laws that such person has acquired
beneficial ownership of more than 20 percent of any class of equity security of
the Company entitled to vote as a class in the election or removal from office
of directors or beneficial ownership of more than 20 percent of the voting power
of any group of classes of equity securities of the Company entitled to vote as
a single class in the election or removal from office of directors; (ii) the
filing of a statement with the Securities and Exchange Commission pursuant to
certain rules under the Securities and Exchange Act of 1934 (the "Exchange Act")
relating to a proposed change of control of the Company; (iii) the delivery to
the Company pursuant to rules under the Exchange Act of a tender offer statement
relating to the equity securities of the Company; (iv) the filing with the
Office of Thrift Supervision of an application for the change of control of the
Company; (v) the termination of any of the Plans or any amendment of the Plans
which would reduce the benefits currently provided for under such Plans; and
(vi) failure by the Company to contribute, under certain circumstances, the full
amount of any insufficiency in trust assets necessary to pay benefits. The
contributions may be returned to the Company if there is no change of control
(which is defined in the same manner as under the Supplemental Executive
Retirement Plan) within one year after the contribution is made. It is
contemplated, however, that the Company will contribute, on a current basis,
sufficient assets to the Trusts to equal the value of benefits which may be
available under the Plans upon a change of control as defined therein.
Under the terms of the Trusts, the Trustee shall hold the trust assets for
the benefit of the participants in the Plans unless the Company is unable to pay
its debts as they become due or the Company is the subject of a pending
proceeding as a debtor under the federal Bankruptcy Code. If either of those
events occurs, the Trustee shall hold the trust assets for the benefit of the
general creditors of the Company, which may include participants in the Plans.
HOME LOAN PROGRAM
The Company has a Home Loan Program permitting secured loans to employees,
officers and directors at adjustable rates beginning at .25% over the Company's
cost of funds. Loans under the Program may be made to finance the borrower's
principal residence and generally must be secured by a first trust deed or
mortgage on such residence. Executive officers and directors may obtain loans
from GWFC in amounts up to ninety percent (one hundred percent prior to July
1992) of the appraised value of their primary and secondary residences. Loans
granted under the Program to executive officers and directors are reviewed and
approved by the Board of Directors. See "Compensation Committee Interlocks and
Insider Participation" and "Certain Relationships and Related Party
Transactions" for information regarding loans to directors and executive
officers of the Company. Executive officers and directors become disqualified
from participation in the Program after certain terminations of employment or
service except those resulting from a change of control (as defined above for
the Supplemental Executive Retirement Plan) or retirement. The Company may
suspend or modify the provisions of this Program, but no suspension or
modification after a change of control may detract from the benefit then
available or increase the otherwise applicable interest rate under existing
loans covered by the Program to directors and executive officers.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of December 31, 1994 with
respect to the only persons known by the Company to own beneficially more than
5% of the outstanding shares of its Common Stock, based upon reports filed with
the Securities and Exchange Commission, and, as of February 27, 1995, the number
of shares of the Company's Common Stock beneficially owned by its executive
officers and directors as a group. Each of the persons listed below which has
reported that it may be considered a beneficial owner of more than 5% of the
Company's outstanding shares of Common Stock has certified that, to the best of
its knowledge and belief, the shares were acquired in the ordinary course of
business and were not acquired for
23
<PAGE>
the purpose of and do not have the effect of changing or influencing the control
of the Company and were not acquired in connection with or as a participant in
any transaction having such purpose or effect. The number of shares of the
Company's Common Stock beneficially owned by each nominee and director is set
forth in "Election of Directors" and by each executive officer is set forth in
"Executive Officers."
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
TITLE OF CLASS NAME OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------------------------------------------------ ------------- --------
<S> <C> <C> <C>
Common Stock Wellington Management Company 14,049,453(1) 10.50%
75 State Street
Boston, Massachusetts 02109
Common Stock Vanguard/Windsor Funds, Inc. 13,256,751(2) 9.91%
Vanguard Financial Center
Valley Forge, Pennsylvania
19482
Common Stock Sanford C. Bernstein & Co., 11,158,682(3) 8.40%
Inc.
One State Street Plaza
New York, New York 10004
Common Stock All Directors and Executive 2,641,346(4) 1.96%
Officers as a Group (16)
<FN>
- ---------
(1) Wellington Management Company ("WMC") has reported that it is an investment
adviser and, as such, is considered beneficial owner in the aggregate of
the shares listed in the table. WMC has declared that it has shared power
to vote 4,902 of the shares and shared dispositive power over all of the
shares shown in the table. The shares shown in the table for the
Vanguard/Windsor Funds, Inc. are also included in the total amount reported
in the table for WMC.
(2) The Vanguard/Windsor Funds, Inc. ("Vanguard/Windsor") has reported that it
is an investment company and, as such, is considered the beneficial owner
in the aggregate of the shares listed in the table. Vanguard/Windsor has
declared that it has sole power to vote or direct the vote and shared power
to dispose or to direct the disposition of the shares shown in the table.
(3) Sanford C. Bernstein & Co., Inc. ("Bernstein") has reported that it is a
broker dealer and investment adviser and, as such, is considered beneficial
owner in the aggregate of the shares listed in the table. Bernstein has
declared that it has sole power to vote 5,953,773 of the shares and sole
dispositive power over all of the shares shown in the table.
(4) The amount in the table includes options to purchase 1,603,385 shares under
employee stock options which are exercisable on or within 60 days after the
record date, and 2,131 shares held in trust under the Savings Plan with
respect to which such persons have the right to direct the vote.
</TABLE>
INDEPENDENT ACCOUNTANTS
Price Waterhouse was selected as the Company's independent accountants for
1994 and for the current year, having served in that capacity since 1964.
It is expected that a representative of Price Waterhouse will be present at
the annual meeting. Such representative will have the opportunity to make a
statement if he or she desires to do so and will be available to respond to
appropriate questions.
SHAREHOLDER PROPOSALS
Shareholders proposals, if any, which may be considered for inclusion in the
Company's proxy materials for the 1996 Annual Meeting must be received by the
Company at its headquarters office not later than November 18, 1995 and must
satisfy the conditions established by the Securities and Exchange Commission for
shareholder proposals to be included in the Company's proxy materials for that
meeting.
24
<PAGE>
ANNUAL MEETING ADVANCE NOTICE REQUIREMENTS
The Company's bylaws presently provide that shareholder nominations of
directors may be made and other business may be brought before the annual
meeting by shareholders only in compliance with certain advance notice and
informational requirements and any other applicable requirements.
The bylaws provide that the annual meeting of shareholders of the Company
shall be held on the fourth Tuesday in April in each year. In order to be
timely, a shareholder's notice of director nominations or of business to be
brought before the annual meeting must be delivered to or mailed and received by
the Secretary of the Company at 9200 Oakdale Avenue, Chatsworth, California
91311 not less than 60 or more than 90 days prior to the meeting.
If the annual meeting is called for a date other than that specified in the
bylaws and less than 75 days prior public disclosure of the date of the meeting
is given, notice by the stockholder to be timely must be delivered to or
received by the Secretary of the Company at the above address not later than the
close of business on the 15th day following the day on which public disclosure
of the date of the meeting is made.
A shareholder's notice of director nominations or of business to be brought
before the annual meeting also must contain certain information required by the
bylaws of the Company. Copies of the Company's bylaws are available upon request
to the Secretary of the Company at the above address.
The present requirements described above do not supersede the requirements
or conditions established by the Securities and Exchange Commission for
shareholder proposals to be included in the Company's proxy materials for a
meeting of shareholders.
OTHER MATTERS
The Board of Directors has no present intention to present to the meeting
for action any matters other than those described above and matters incident to
the conduct of the meeting. If any other business comes before the meeting or
any adjournment thereof (including but not limited to matters of which the Board
of Directors is currently unaware) for which specific authority has not been
solicited from the shareholders, then to the extent permitted by law, including
the rules of the Securities and Exchange Commission, the Proxy grants to the
persons named therein the discretionary authority to vote thereon in accordance
with their best judgment.
A COPY OF THE COMPANY'S FORM 10-K ANNUAL REPORT FOR 1994 TO THE SECURITIES
AND EXCHANGE COMMISSION WILL BE PROVIDED WHEN AVAILABLE WITHOUT CHARGE TO ANY
SHAREHOLDER UPON WRITTEN REQUEST ADDRESSED TO THE COMPANY, ATTENTION: INVESTOR
RELATIONS, 9200 OAKDALE AVENUE, CHATSWORTH, CALIFORNIA 91311.
ALL SHAREHOLDERS ARE URGED TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY.
J. LANCE ERIKSON,
SECRETARY
March 17, 1995
25
<PAGE>
GREAT WESTERN FINANCIAL CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING APRIL 25, 1995
The undersigned hereby constitutes and appoints JAMES F. MONTGOMERY and
JOHN F. MAHER, each with the power to act without the other, attorneys and
proxies of the undersigned, each with the power of substitution, to attend,
act for and vote all shares of common stock of Great Western Financial
Corporation to which the undersigned may be entitled to vote and with all
powers which the undersigned would possess if present at the annual meeting
of shareholders of Great Western Financial Corporation, a Delaware
Corporation, to be held in the Company's Employee Center at 19809 Prairie
Street, Chatsworth, California 91311, on Tuesday, April 25, 1995 at
11:00 A.M., and at any adjournments thereof, with respect to the election
of directors in the manner indicated.
In their discretion, the proxies are authorized to vote upon such other
business as properly may come before the meeting.
(CONTINUED ON REVERSE SIDE)
PLEASE SIGN DATE ON REVERSE SIDE AND RETURN IN
THE ACCOMPANYING ENVELOPE.
FOLD AND DETACH HERE
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE NOMINEES LISTED BELOW.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED BELOW
ELECTION OF DIRECTORS
<TABLE>
<C> <C> <S>
WITHHOLD NOMINEES: Stephen E. Frank, Enrique Hernandez, Jr., John F. Maher, Willis B. Wood, Jr.
FOR AUTHORITY
All nominees listed To vote for all (INSTRUCTIONS: To withhold authority to vote for any individual nominee, write that
to the right (except as nominees listed nominee's name in the space provided below)
marked to the contrary) to the right
__________________________________________________________________________________
/ / / /
</TABLE>
Please sign exactly as name appears hereon. 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 in full
corporate name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
Dated: ______________________________________, 1995
___________________________________________________
(Signature)
___________________________________________________
(Signature if held jointly)
-------------------------------------------------
/ PLEASE MARK INSIDE BLUE BOXES SO THAT DATA /
/ PROCESSING EQUIPMENT WILL RECORD YOUR VOTES /
-------------------------------------------------
FOLD AND DETACH HERE
ADMISSION TICKET
ANNUAL MEETING
OF
GREAT WESTERN FINANCIAL CORPORATION SHAREHOLDERS
TUESDAY APRIL 25, 1995
11:00 A.M.
EMPLOYEE CENTER
19809 PRAIRIE STREET
CHATSWORTH, CA 91311
