<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 [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
GREAT WESTERN FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LETTERHEAD OF GREAT WESTERN FINANCIAL CORPORATION]
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders which
will be held on Tuesday, April 23, 1996, 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 three 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.
Sincerely,
/s/ John F. Maher /s/ James F. Montgomery
John F. Maher James F. Montgomery
President and Chief Executive Chairman of the Board
<PAGE>
[LOGO OF GREAT WESTERN FINANCIAL CORPORATION]
9200 Oakdale Avenue, Chatsworth, California 91311
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 1996
---------------------
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 23,
1996, at 11:00 a.m., to consider and vote on the following matters described
in this Notice and Proxy Statement:
(1) The election of three 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 21, 1996
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 OF GREAT WESTERN FINANCIAL CORPORATION]
9200 Oakdale Avenue, Chatsworth, California 91311
---------------------
PROXY STATEMENT
FOR ANNUAL MEETING APRIL 23, 1996
---------------------
GENERAL INFORMATION
The Board of Directors has fixed Thursday, February 29, 1996, 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 23, 1996. 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 21, 1996.
The Annual Report of the Company, including certified consolidated
statements of financial condition of the Company for the years ended December
31, 1995 and 1994 and certified consolidated statements of operations and cash
flows for each of the three years in the period ended December 31, 1995,
accompanies this Proxy Statement.
The common stock currently constitutes the only class of securities of the
Company authorized to vote at the meeting. As of the close of business on
February 29, 1996, there were 137,351,287 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
"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.
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).
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.
1
<PAGE>
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 II and Class III directors ends on the date of the annual meetings in
1997 and 1998, respectively, and the election and qualification of their
respective successors occurs on the same dates.
Three (3) directors of Class I are to be elected at the 1996 annual meeting,
each to hold office until the annual meeting in 1999, 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 Director Affairs 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.
<TABLE>
<CAPTION>
SHARES OWNED
FIRST BENEFICIALLY
YEAR AT FEB. 29,
NAME AGE PRINCIPAL OCCUPATION CLASS ELECTED 1996(1)
---- --- -------------------- ----- ------- ------------
<C> <C> <S> <C> <C> <C>
DIRECTORS TO BE ELECTED AT THE
1996 ANNUAL MEETING
David Alexander 63 President Emeritus and Trustees' I 1973 20,175(2)
Professor, Pomona College
H. Frederick Christie 62 Consultant I 1984 23,750(2)
Charles D. Miller 68 Chairman and Chief Executive I 1981 27,500(2)
Officer, Avery Dennison
Corporation (a manufacturer of
self-adhesive materials and
office products)
OTHER DIRECTORS OF THE COMPANY
Stephen E. Frank 54 President and Chief Operating III 1993 8,250(3)
Officer, Edison International (a
public utility company)
John V. Giovenco 59 Consultant II 1985 38,750(2)
Firmin A. Gryp 68 Retired, formerly Executive Vice II 1982 101,144(2)(4)
President, GWFC
Enrique Hernandez, Jr. 40 President, Inter-Con Security III 1993 6,750(3)
Systems, Inc. (a worldwide
provider of security and facility
support services)
John F. Maher 52 President and Chief Executive III 1976 609,213(5)
Officer, GWFC
James F. Montgomery 61 Chairman, GWFC II 1975 788,613(6)
Alberta E. Siegel 65 Professor of Psychology, Stanford II 1976 22,500(2)
University School of Medicine
Willis B. Wood, Jr. 61 Chairman and Chief Executive III 1990 14,250(7)
Officer, Pacific Enterprises (the
holding company of Southern
California Gas Company)
</TABLE>
2
<PAGE>
- --------
(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 18,750 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 6,250 shares subject to options granted to this Director under
the 1988 Incentive Plan which are exercisable within 60 days of the record
date.
(4) Includes 112 shares held by the trustee under the Employee Savings
Incentive Plan.
(5) Includes 383,542 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.
(6) Includes 593,750 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.
(7) Includes 13,750 shares subject to options granted to this Director under
the 1988 Incentive Plan which are exercisable within 60 days of the record
date.
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, the Seaver Institute, the Woodrow
Wilson National Fellowship Foundation and the Wenner Gren Foundation for
Anthropological Research (New York). Dr. Alexander is 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, Southwest Water Company 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 President and Chief Operating Officer of Edison International
and serves on its Board. Prior to that he served as 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. 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
- --------
(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.
3
<PAGE>
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 American Institute of Certified Public Accountants 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 also a director of the Community Foundation of
Monterey County.
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, Vice Chairman and Director of the Children's
Hospital of Los Angeles, and trustee of Pomona College and the California
Health Care Foundation. He is a former President of the Los Angeles Police
Commission and a former director of the Los Angeles Philharmonic Association.
He is a graduate of Harvard University and the Harvard Law School.
Mr. Maher is the President and, since December 27, 1995, the Chief Executive
Officer of GWFC and GWB. He served as President and Chief Operating Officer
since 1986. Before joining the Company again in 1986, Mr. Maher 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. Miller is Chairman, Chief Executive Officer and Director 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 SCE Corp., Pacific
Mutual Life Insurance Company, Nationwide Health Properties, Inc., and
Davidson & Associates. He is a trustee of Occidental College and Johns Hopkins
University. He is also a member of the Amateur Athletic Foundation of Los
Angeles and the Korn/Ferry International advisory board. Mr. Miller also
served as the chairman of the Los Angeles Area Chamber of Commerce.
Mr. Montgomery is Chairman of the Board of Directors of the Company, a
position he has held since 1981. He served as Chief Executive Officer of the
Company from 1979 until his retirement on December 28, 1995. Prior to becoming
Chief Executive Officer, he served as a Director and President of the Company
beginning in 1975, and as Chief Operating Officer from 1975-1979. Mr.
Montgomery 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 Chairman of America's Community Bankers and a
director of the Federal Home Loan Bank of San Francisco, the Federal Home Loan
Mortgage Corporation and the Local Initiatives Support Corporation and UCLA's
Chancellor's Associates. He is a trustee of the Neighborhood Housing Services
of America and the Founding Director of the Hollywood Presbyterian Medical
Center. He is also a member of the Los Angeles Sports Council and the UCLA
Board of Visitors.
4
<PAGE>
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 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 Vice Chairman of Harvey Mudd College, a trustee and
past President of the Southwest Museum, Chairman of the California Medical
Center 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, trustee of the University of
Southern California, and a member of the California Business Roundtable and
the RAND Graduate School Committee of Visitors.
BOARD COMMITTEES
The Company has standing Audit and Finance, Compensation, Director Affairs
and Public Policy Committees of the Board of Directors(1). Except for John F.
Maher, who serves on the Director Affairs Committee, the directors serving on
these committees are not executive officers or employees of the Company(2).
Mr. Montgomery is no longer an officer or employee of the Company.
The Audit and Finance Committee makes recommendations to the Board of
Directors regarding the selection of independent accountants, as well as the
services to be performed and fees to be paid, and maintains effective
communication with the accountants. The committee also reviews the scope and
results of internal and external audits, and the status and effectiveness of
internal controls, as well as financial statements to be included in the
Company's annual reports. It reviews and concurs in the appointment or
replacement of the director of internal audit and reviews and approves the
Company's liquidity investment policies and asset/liability management
policies. It also authorizes debt and equity financing and recommends dividend
policy and action to the Board of Directors.
The Compensation Committee reviews and approves levels of compensation for
executive officers and recommends to the Board of Directors the material terms
of employment agreements for executive officers, as well as the adoption of,
or major amendments to, executive and employee benefit plans. The committee
also administers the Company's benefit programs for directors and executive
officers, authorizes bonus awards and payments under the Company's Annual
Incentive Compensation Plan for Executive Officers, and authorizes the grants
of stock options, restricted stock and similar awards under the Company's 1988
Stock Option and Incentive Plan. It also reviews and approves investment
policy for the Company's retirement plans and savings incentive plans.
- --------
(1) On June 27, 1995, the existing Audit, Compensation, Finance and Nominating
Committees were reconstituted into the Audit and Finance, Compensation and
Director Affairs Committees, and the Public Policy Committee was created.
(2) Prior to June 27, 1995, Messrs. Maher and Montgomery served on the Finance
and Nominating Committees.
5
<PAGE>
The Director Affairs Committee screens, in consultation with the Chairman of
the Board and Chief Executive Officer, qualifications of prospective Board
members and recommends nominees for election or reelection as directors at the
annual meeting of shareholders. While the Director Affairs 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 concerning 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
the integrity and moral responsibility, sound business judgment, good health,
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 other 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 remains solely within the discretion of the
Board of Directors. The Company's By-laws include additional requirements
regarding nominations at a shareholder's meeting of persons other than
nominees of the Board of Directors. See "Annual Meeting Advance Notice
Requirements". In addition to the foregoing, the committee recommends to the
Board of Directors changes in Board compensation and makes recommendations
regarding the assignment of Board members to various committees.
The Director Affairs Committee also monitors independence of the Board and
reviews annually with the Board of Directors the skills and characteristics of
current Board members. It reviews annually with the Board of Directors an
assessment of the Board's performance and reviews every three years, in
consultation with the Chairman and Chief Executive Officer, each director's
continued membership on the Board. The committee also assesses the
appropriateness of continued Board membership of directors who change their
existing job responsibilities.
The Public Policy Committee reviews the Company's compliance with the
Community Reinvestment Act ("CRA") and related fair housing and fair lending
laws. It also reviews and recommends to the Board of Directors corporate
policy regarding community and government relations, codes of conduct
(including the Company's ethics and conflicts of interest policies), equal
opportunity matters, charitable contributions and other broad social,
political and public issues.
6
<PAGE>
The Board of Directors met nine times in 1995 and the aggregate number of
meetings of the Board and of the Audit and Finance, Compensation, Director
Affairs and Public Policy Committees totaled 27. The members of these
committees and the number of meetings held during 1995 were:
<TABLE>
AUDIT AND FINANCE COMPENSATION DIRECTOR AFFAIRS PUBLIC POLICY
COMMITTEE COMMITTEE COMMITTEE COMMITTEE
<S> <C> <C> <C>
(6 meetings)(1) (8 meetings) (1 meeting)(2) (3 meetings)
John V. Giovenco, Charles D. Miller, Alberta E. Siegel, Willis B. Wood,
Chairman Chairman Chairperson Chairman
Stephen E. Frank, Willis B. Wood, Jr., Firmin A. Gryp, David Alexander,
Vice Chairman Vice Chairman Vice Chairman Vice Chairman
David Alexander, Secretary H. Frederick Christie David Alexander Enrique Hernandez, Jr.
H. Frederick Christie Stephen E. Frank Stephen E. Frank Alberta E. Siegel
Firmin A. Gryp John V. Giovenco John V. Giovenco
Enrique Hernandez, Jr. Firmin A. Gryp John F. Maher
Charles D. Miller
James F. Montgomery
Willis B. Wood, Jr.
</TABLE>
- --------
(1) Includes meetings of the Audit and Finance Committees prior to June 27,
1995.
(2) Includes meetings of the Nominating Committee prior to June 27, 1995.
Due to illness, Mr. Gryp attended fewer than 75 percent of the aggregate
number of meetings of the Board of Directors and its committees on which he
served during 1995.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Firmin A. Gryp, a member of the Compensation Committee during 1995, 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.
After the annual meeting, Mr. Gryp will resign from the Compensation Committee.
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, 1995 to February 29, 1996, (ii)
the nature of the indebtedness, (iii) the amount of such indebtedness
outstanding at February 29, 1996, and (iv) the annual rate of interest charged
on such indebtedness:
<TABLE>
<CAPTION>
NAME OF LARGEST INDEBTEDNESS
COMPENSATION AGGREGATE NATURE OF OUTSTANDING AT INTEREST
COMMITTEE MEMBER INDEBTEDNESS INDEBTEDNESS(1) FEBRUARY 29, 1996 RATE(2)
---------------- ------------ -------------- ----------------- --------
<S> <C> <C> <C> <C>
Frederick Christie $ 791,777 Residential $ 765,775 4.96%
289,818 Residential 284,570 4.96
Stephen E. Frank 1,396,000 Residential 1,387,391 5.05
John V. Giovenco 542,429 Residential 532,364 4.96
151,889 Residential 150,259 5.05
Charles D. Miller 1,084,557 Residential 1,070,506 5.05
Willis B. Wood, Jr. 725,392 Residential 712,613 4.96
400,000 Residential 396,067 5.05
</TABLE>
- --------
(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 2.31% to
2.41% below that on similar loans to the public during 1995.
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 29,
1996. 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 29,
NAME AGE POSITION SINCE 1996(1)
---- --- -------- ------- ---------------
<S> <C> <C> <C> <C>
John F. Maher 52 President and Chief Executive Officer 1986 609,213(2)
Eugene A. Crane 58 Executive Vice President 1962 256,601(3)
J. Lance Erikson 52 Executive Vice President, Secretary and General Counsel 1982 127,122(4)
Carl F. Geuther 50 Executive Vice President and Chief Financial Officer 1986 233,505(5)
Michael M. Pappas 63 President, Consumer Finance Division 1986 251,296(6)
A. William Schenck, III 52 Executive Vice President 1995 21,218
</TABLE>
- --------
(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 383,542 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.
(3) Includes 180,083 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.
(4) Includes 104,010 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.
(5) Includes 188,500 shares subject to options exercisable within 60 days of
the record date.
(6) Includes 187,500 shares subject to options exercisable within 60 days of
the record date.
Biographical information concerning Mr. Maher is given under the caption
"Election of Directors."
Mr. Crane has been with GWFC or GWB for 34 years. He is in charge of the
Real Estate Services Division.
Mr. Erikson has been with GWFC and its predecessors for 27 years. He is in
charge of the Company's Legal Division.
Mr. Geuther has been the Chief Financial Officer since 1986. He previously
was the Chief Financial Officer of the Company's subsidiary, Aristar, Inc.
("Aristar") and has been with GWFC and Aristar for 21 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 41 years.
Mr. Schenck joined GWFC on August 1, 1995. He is in charge of the Retail
Banking Division. Prior to joining the Company, Mr. Schenck served as
Executive Vice President of Consumer Banking at PNC Bank Corp., a position he
held since 1991. Mr. Schenck's career with PNC Bank, Corp. and its
predecessor, Pittsburgh National Bank, spanned 26 years.
8
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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS FEES
In view of Mr. Montgomery's retirement as Chief Executive Officer as of
December 28, 1995, Mr. Maher is currently the only Director who is an employee
of GWFC. See "Executive Officers" below for a description of Mr. Maher's
employment contract. Directors, other than Mr. Maher, are paid an annual
retainer of $25,000 for Board service to both GWFC and GWB and combined
attendance fees totalling $1,800 for each GWFC and GWB Board meeting attended.
Chairpersons of committees receive an attendance fee of $1,500 for presiding
over their committee meetings, vice chairs receive an attendance fee of $1,250
and committee members receive an attendance fee of $1,000. Additionally, each
chairperson of a committee receives an annual fee of $3,000, vice chairs
receive an annual fee of $1,500 and the Secretary of the Audit and Finance
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. Mr. Maher
is not paid any fees or additional remuneration for his service as a member of
the Board or any committee, but he is eligible to receive benefits under the
Directors' Retirement Plan which is discussed below. Mr. Montgomery was not
paid any fees or remuneration for his service as a member of the Board or any
committee during 1995, but he became eligible to receive benefits under the
Directors' Retirement Plan as well as other director benefits and fees on
January 1, 1996. 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.
CONSULTING AGREEMENT WITH MR. MONTGOMERY
In anticipation of his retirement from the position of Chief Executive
Officer of GWFC and GWB, GWFC entered into an agreement with Mr. Montgomery,
dated as of April 25, 1995 (the "Consulting Agreement"), pursuant to which Mr.
Montgomery has agreed to provide consulting services to GWFC and GWB for a
term commencing on December 29, 1995, and expiring, unless earlier terminated,
on December 31, 2000 (the "Consulting Period"). The Consulting Agreement
contemplates that Mr. Montgomery serve as Chairman of the Board of GWFC
through December 31, 1997, and may thereafter serve as Chairman of the Board
of GWFC upon his election by the Board (but shall continue in any case to
serve as a director of GWFC and GWB). Mr. Montgomery has agreed to devote
substantial time and attention as may be required, but no less than half time
(if and to the extent requested), during the Consulting Period, to the
business, affairs and interests of GWFC and affiliates and to use his best
efforts and abilities to promote GWFC's interests. In addition to his
compensation as a director (including non-employee director stock options
under the 1988 Incentive Plan and benefits under the Directors' Retirement
Plan described below), Mr. Montgomery receives an annual consulting fee of
$485,000. He is not entitled to receive any new awards under any bonus plan or
incentive plan for employees of GWFC during the term of the Consulting
Agreement (other than the bonus earned for 1995 and paid in 1996 under GWFC's
Annual Incentive Compensation Plan). The Consulting Agreement also extended
Mr. Montgomery's outstanding $500,000 personal, unsecured loan maturity to
December 31, 1999 or, under certain circumstances, at the end of this
Consulting Period.
On April 25, 1995, Mr. Montgomery's employment agreement also was amended in
certain respects to provide, among other things, that the term of the
agreement would expire on December 28, 1995, upon Mr. Montgomery's retirement
as Chief Executive Officer of GWFC and GWB, and that on April 25, 1995, he
would receive a special stock option grant (the "Special Option") in respect
of 300,000 shares of the Company's common stock. (This grant is reflected in
the stock Option Grant Table on page 18). The Special Option becomes
exercisable at the rate of 25% per year commencing April 26, 1996, and once
exercisable, may be exercised at any time thereafter until the first to occur
of (i) April 24, 2005, (ii) a termination for cause (as defined in the
Consulting Agreement), (iii) if the Consulting Agreement is terminated or
deemed terminated in accordance with its terms, two years after the Consulting
Agreement would have otherwise terminated (until the assumed date of
termination, the Special Option shall continue to vest as provided therein),
or (iv) two years after a termination of all services (including services as a
director) for any other reason (except that the Special Option shall be
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<PAGE>
exercisable only to the extent exercisable on the date of a termination by
reason of death or disability (as defined in the Consulting Agreement) or a
termination of such services by Mr. Montgomery (other than a termination to
which clause (iii) applies)). Mr. Montgomery's employment agreement was
further amended to provide that payments under the Company's Supplemental
Executive Retirement Plan ("SERP") would commence as of January 1, 1996, and
that the amount of such SERP benefits would be determined without the offset
for benefits payable under the Retirement Plan, which Retirement Plan benefits
generally will not become payable until Mr. Montgomery ceases to perform
consulting services for GWFC and GWB. In addition, during the term of the
Consulting Agreement, awards of restricted stock previously granted to Mr.
Montgomery shall continue to vest in accordance with the terms of the related
restricted stock award agreement and generally will vest in full on December
31, 2000, if Mr. Montgomery has continued to provide services to GWFC in
accordance with the terms of the Consulting Agreement until that date. 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 annual
consulting fee 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 annual consulting fee for a period of
10 years, also reduced by such insurance benefits. 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 his then current annual consulting fee, 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, or if Mr. Montgomery voluntarily terminates the
Consulting Agreement following a material breach by the Company, he would
receive his consulting fees at the current rate for what would have been the
remainder of the term of the Consulting Agreement absent such termination, and
the Special Option (referred to above) and awards of restricted stock
previously granted to Mr. Montgomery would continue to vest during the same
period. In the event of a voluntary termination of Mr. Montgomery's service
following a material breach by the Company after a change of control, all
restricted shares and that portion of the Special Option which is then
unvested will immediately vest. In no event will payments to Mr. Montgomery
which are contingent upon a change of control under applicable tax rules
("parachute payments") exceed specified internal Revenue Code limits that
currently approximate three times the average of his compensation for the
prior five years (the "Section 280G Limit"). Notwithstanding the foregoing, if
the value of such aggregate entitlement constituting parachute payments is
less than the 280G Limit for any reason (including that some or all of such
entitlement does not constitute a parachute payment), Mr. Montgomery is
entitled to receive the 280G Limit. A change of control occurs under the
Consulting Agreement when anyone 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 cease to
constitute five-sixths of the Board of Directors of the Company or any
successor.
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
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<PAGE>
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 1994, 1995, and 1996 were $20.25, $16.00, and $26.125,
respectively.
If 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. If 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.
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 James F. Montgomery, who
was Chief Executive Officer until his retirement on December 28, 1995, John F.
Maher, who became Chief Executive Officer upon Mr. Montgomery's retirement,
and the four next highest paid Executive Officers of the Company as of
December 31, 1995, 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
---------------------------- ------------------------- ----------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION STOCK AWARD(S) OPTIONS/ LTIP COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($)(2) ($)(3) SARS(#) PAYOUTS($) ($)(4)
------------------ ---- ------- ------- ------------ -------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James F. Montgomery 1995 950,000 531,812 177,587 -- 300,000 -- 43,348(5)
Chairman and 1994 950,000 518,700 205,355 -- 150,000 -- 42,952
Former Chief Executive 1993 950,000 142,500 184,880 -- 23,750 -- 35,936
John Maher 1995 650,000 303,225 165,505 -- 0 -- 27,780
President and 1994 650,000 295,750 239,966 -- 150,000 -- 27,638
Chief Executive Officer 1993 650,000 81,250 218,169 -- 13,542 -- 22,918
Michael M. Pappas 1995 420,000 163,850 -- -- 0 -- 16,800
President, Consumer 1994 410,000 176,988 832 -- 70,000 -- 16,400
Finance Division 1993 410,000 164,000 278 -- -- -- 13,502
Eugene A. Crane 1995 380,000 130,620 16,910 -- 0 -- 13,882
Executive Vice President 1994 380,000 138,320 52,183 -- 70,000 -- 15,200
1993 380,000 38,000 38,559 -- 6,333 -- 12,515
Carl F. Geuther
Executive Vice President 1995 372,500 139,018 70,035 -- 0 -- 14,900
and Chief Financial 1994 360,000 131,040 81,316 -- 70,000 -- 14,400
Officer 1993 360,000 36,000 86,954 -- 6,000 -- 11,856
J. Lance Erikson
Executive Vice
President, 1995 285,000 106,362 50,835 -- 0 -- 11,400
Secretary and General 1994 275,000 100,100 55,464 -- 40,000 -- 11,000
Counsel 1993 275,000 24,063 51,086 -- 4,010 -- 9,057
</TABLE>
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- --------
(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) The 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 1995 include
the following: Mr. Montgomery: economic benefit of preferential loans--
$64,553; Mr. Geuther: economic benefit of preferential loans--$35,866; and
Mr. Erikson: economic benefit of preferential loans--$22,041. The amount
included in column (e) for Mr. Crane includes only that portion of
interest earned on deferred compensation accounts above 120% of the
applicable federal rate and the amounts included in column (e) forMessrs.
Pappas and Crane 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 1995 salary and bonus compensation.
(3) A total of 575,000 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 1995, these shares
were worth $14,590,625 at the then current market value of $25.3750 per
share (including $4,440,625 or 175,000 shares each for Messrs. Montgomery
and Maher, $1,903,125 or 75,000 shares for Mr. Pappas, $1,522,500 or
60,000 each for Messrs. Crane and Geuther and $761,250 or 30,000 shares
for Mr. Erikson), 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. On January 23, 1996, 50% of the
restricted stock held by these individuals vested based on the performance
of the stock during the three year period ended December 31, 1995.
(4) The amounts shown in this column for 1995 consist of the following
respective amounts: (a) Mr. Montgomery: Employee Savings Incentive Plan
matches--$6,000; Supplemental Incentive Plan--$32,000; Split Dollar Term
Insurance Premium--$5,348; (b) Mr. Maher: Employee Savings Incentive Plan
matches--$6,000; Supplemental Incentive Plan--$20,000; Split Dollar Term
Insurance Premium--$1,780; (c) Mr. Pappas: Employee Savings Incentive Plan
matches--$6,000; Supplemental Incentive Plan--$10,800; (d) Mr. Crane:
Employee Savings Incentive Plan matches--$4,682; Supplemental Incentive
Plan--$9,200; (e) Mr. Geuther: Employee Savings Incentive Plan matches--
$6,000; Supplemental Incentive Plan--$8,006; deferred compensation plan
matches and makeups--$894; and (f) Mr. Erikson: Employee Savings Incentive
Plan matches--$6,000; Supplemental Incentive Plan--$5,400.
(5) Arrangements entered into in connection with Mr. Montgomery's retirement
as an executive officer are summarized at pages 9 and 10 above.
EMPLOYMENT AGREEMENTS
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 $780,000 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. In the event of his death, Mr.
Maher's beneficiaries would be entitled to a payment equal to 250 percent of
Mr. Maher's then current salary, reduced by the proceeds of company-provided
life insurance. Mr. Maher'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 age 65 but in no event for a period less than ten years. In
addition, Mr. Maher's family would be entitled to continuation of certain
insurance benefits for two years. Upon termination due to disability, Mr.
Maher 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,
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<PAGE>
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. Maher 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, 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
termination of Mr. Maher's employment without cause or 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 payments as described above
for a termination without cause with varying offsets in the event of
subsequent employment, and all restricted shares and stock options which are
then unvested may immediately vest. 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 the acquisition of ownership of 50 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 on any
successor thereafter. Notwithstanding the foregoing, if the Chairman 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, the threshold is 25 percent.
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, Schenck, Geuther, Crane, and Erikson under their
employment agreements are their current salaries, i.e. $437,500, $416,000,
$385,000, $380,000, and $300,000, 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 Mr. Maher's, provide that to the extent that any such
payments constitute parachute payments, they will be subject to 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 substantially 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.
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<PAGE>
The following Report of the Compensation Committee and the Performance Graph
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 Graph by reference therein, and
shall not be deemed soliciting material or otherwise deemed filed under either
of such acts.
REPORT OF THE COMPENSATION COMMITTEE
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.
In determining the compensation levels for all executive officers, 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 12 to 13.
It has been the Company's policy to place an increasingly significant
percentage of total executive compensation "at risk," principally through the
award of annual cash bonuses and limiting annual increases in salaries.
Consistent with this policy, no salary increases were granted to Mr.
Montgomery or Mr. Maher from 1990 to 1995.
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 both 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
have been 40% of adjusted base salary paid to the Company's executive vice
presidents and the 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 12 and
13.) For 1996, the targeted level of incentive compensation for Mr. Maher, now
that he is the Chief Executive Officer, will be 60%.
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% of such targeted levels of incentive compensation. For
1995, the executive officers, other than the President of the Consumer Finance
Division, received up to 93.3% of their targeted level of incentive
compensation based upon the degree of attainment of the targeted earnings. The
President of the Consumer Finance Division received 97.5% 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 and total compensation in 1995 for executive officers as a group
was at approximately the 60th percentile for the companies included in the
compensation analysis.
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<PAGE>
The Compensation Committee also recently adopted stock ownership guidelines
for the Company's executive and senior officers providing for the ownership of
the Company's common stock by the end of a five year period, except for
recently hired officers, for whom the period will be seven years. The
guidelines provide for the ownership of the Company's common stock by the
chief executive officer in an amount equal to five times his salary, ownership
by the other executive officers in amounts equal to three times their
salaries, and ownership by senior officers in amounts equal to one or two
times their salaries. Recent stock option grants for the Company's executive
and senior officers also provide that so long as may be necessary to comply
with stock ownership guidelines, the officers will retain upon exercise of
stock options at least one-half of the net number of shares received on
exercise.
In 1992, following a comprehensive study of long term incentive programs and
recommendations made by SCA, the Compensation Committee approved 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. Restricted 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. Fifty percent of the original awards vested in early 1996 based on
the Company's shareholder return for the three year period ended December 31,
1995.
During his service as Chief Executive, Mr. Montgomery's compensation and
related benefits were based principally on his rights under an employment
agreement with the Company. During his employment with GWFC, his base salary
did not increase between 1990 and 1995, consistent with the Company's
objective of placing a greater percentage of total compensation "at risk." In
anticipation of Mr. Montgomery's retirement, in April 1995 the Committee
approved an amendment to Mr. Montgomery's employment agreement, amended the
terms governing some of his outstanding stock option grants and restricted
stock awards and approved a consulting agreement which provides for Mr.
Montgomery's continued association with the Company following his retirement.
The consulting agreement contemplates that Mr. Montgomery will focus his
efforts on major national policy issues critically important to the Company's
future and, along with the amended employment agreement, provides for
compensation commensurate with his new responsibilities, his qualifications
and experience and the anticipated benefits that will be realized and
contributions that will be made by Mr. Montgomery in his capacity as a
consultant.
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 certain existing contractual
commitments.
Compensation Committee of the Board of
Directors, Great Western Financial
Corporation
Charles D. Miller, Chairman
Willis B. Wood, Jr., Vice Chairman
H. Frederick Christie
Stephen E. Frank
John V. Giovenco
Firmin A. Gryp
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
AMONG GREAT WESTERN FINANCIAL,
S&P 500 INDEX AND S&P FINANCIAL
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
GREAT
Measurement Period WESTERN S&P S&P
(Fiscal Year Covered) FINANCIAL 500 INDEX FINANCIAL
- -------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt- 12/31/1990 $100 $100 $100
FYE 12/31/1991 $151 $130 $155
FYE 12/31/1992 $159 $140 $186
FYE 12/31/1993 $191 $154 $206
FYE 12/31/1994 $161 $156 $199
FYE 12/31/1995 $266 $215 $306
</TABLE>
Assumes $100 invested on December 31, 1990 in the Stock of Great Western
Financial Corporation, S&P 500 Index and S&P Financial Index. The stock
price performance shown in this graph is not necessarily indicative of
future stock price performance. Total Return assumes reinvestment of
dividends.
16
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
LOAN 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, 1995 to February
29, 1996, (ii) the nature of the indebtedness, (iii) the amount of such
indebtedness outstanding at February 29, 1996, 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 29, 1996 RATE%(2)
- ------------------- ------------ --------------- ----------------- --------
<S> <C> <C> <C> <C>
James F. Montgomery $1,023,434 Residential $ 953,913 4.96
1,500,000 Residential 1,494,554 5.05
500,000 Unsecured 500,000 8.50
John F. Maher 430,380 Residential 415,235 4.96
775,432 Residential 748,225 4.96
David Alexander 258,869 Residential 248,397 4.96
Eugene A. Crane 317,854 Residential 301,026 4.96
14,241 Residential 12,087 7.00
J. Lance Erikson 704,206 Residential 686,791 4.96
229,747 Residential 221,253 4.96
Carl F. Geuther 1,357,627 Residential 1,332,114 4.96
162,114 Residential 155,491 4.96
Enrique Hernandez, Jr. 927,074 Residential 917,583 5.05
Michael M. Pappas 211,159 Residential 203,460 4.96
584,972 Residential -0-
A. William Schenck 1,212,000 Residential 1,210,555 5.05
613,000 Residential 611,540 5.05
</TABLE>
- --------
(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 2.31% to 2.41% below
that on similar loans to the public during 1995.
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 December 31, 1999, or, under
certain circumstances, at the end of the Consulting Period on December 31,
2000.
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>
OTHER TRANSACTIONS
During the fiscal year which ended December 31, 1995, the Company paid the
Telemundo Group ("Telemundo"), which is a national Spanish language
broadcasting network, $92,285 for advertising services. Mr. Hernandez is the
record owner of approximately a five percent equity interest in Telemundo,
with certain rights and options which may materially increase his interest.
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,
Geuther or Erikson (the "named executive officers") in 1995 and the following
market priced stock option was granted to Mr. Montgomery in 1995 in connection
with the retirement arrangements described above:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F)
NUMBER OF
SECURITIES % OF TOTAL GRANT
UNDERLYING GRANTED TO DATE
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION PRESENT
NAME(1) GRANTED(#)(2) FISCAL YEAR ($/SHARE)(3) DATE VALUE($)(4)
------- ------------- ------------ -------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
James F. Montgomery 300,000 70 $20.250 4-25-05 $1,275,750
</TABLE>
- --------
(1) Although stock options were granted to each of the other named executive
officers based in part on performance in 1995, the option awards were not
approved until January 1996. The details of the option grants will be
disclosed in next year's Proxy Statement.
(2) 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. See the description of other material terms
of this option at pages 9 to 10.
(3) The 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.
(4) Mr. Montgomery's options are based on the Black-Scholes option pricing
model adapted for use in valuing executive stock options using the
following assumptions: the $20.2500 market price as of April 25, 1995,
three year historical average stock price volatility of .2397, 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 7.42% and an option term
of ten years. This valuation method is hypothetical.
18
<PAGE>
The following table shows for each of the named executive officers the
shares acquired on exercise of options during 1995, 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, 1995) 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>
(A) (B) (C) (D) (E)
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
SHARES AT FY-END (#) AT FY-END (3)
ACQUIRED ------------------ --------------------
ON EXERCISABLE/
EXERCISE VALUE UNEXERCISABLE EXERCISABLE/
NAME (#) REALIZED (1)(2) UNEXERCISABLE
---- -------- -------- ------------------ --------------------
<S> <C> <C> <C> <C>
James F. Montgomery.. 43,500 $251,175 593,750(4)/300,000 $5,679,563/1,537,500
John F. Maher........ 0 367,542/128,500 3,733,971/1,138,375
Michael M. Pappas.... 25,000 231,900 179,500/60,500 1,698,000/536,375
Eugene A. Crane...... 250 2,206 174,083/58,500 1,755,154/517,125
Carl F. Geuther...... 0 183,500/57,500 1,821,375/507,500
J. Lance Erikson..... 250 2,206 101,010/33,000 954,693/291,375
</TABLE>
- --------
(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 specified periods after termination of employment or
service) 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, 1995, under the 1988 Incentive Plan typically vest in equal
installments over a term of four or five years from their respective dates
of grant and are exercisable for up to two years after a termination of
service or (in certain cases) for extended periods based on the terms of
specific agreements with the Company. 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, all of which were in-the-money. 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 1995 minus the exercise price of "in-the-money" options.
(4) The exercisability of options to purchase 136,000 shares was accelerated
and the post-termination exercise period for options to purchase 150,000
shares was extended pursuant to the 1995 amendments to Mr. Montgomery's
employment agreement.
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; Mr.
Montgomery's award was modified pursuant to the 1995 amendments to Mr.
Montgomery's employment agreement. If the recipient remains with the Company,
the shares will vest completely 10 years after the award date (9 years under
Mr. Montgomery's revised award). 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 is 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,
1995 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. Fifty percent of the original awards vested in
early 1996 based on the Company's shareholder return for the three year period
ended December 31, 1995. 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 (or, in the case of Mr. Montgomery's termination
of service as a consultant and as a director), 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 1995.
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. Mr. Montgomery's consulting agreement and Mr. Maher's
employment agreement, 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).
20
<PAGE>
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 exceed the
Company's mandatory contribution. The aggregate contribution for the named
executive officers is included in the summary compensation table at pages 11
and 12. 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 executive officers 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 11 and 12. The Supplemental Plan will be merged
into the Company's Deferred Compensation Plan applicable to executive
officers.
RETIREMENT PLAN
The Retirement Plan is a non-contributory group pension plan that provides
for alternative fixed monthly benefits based on age at retirement. 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 Mr. 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 Mr.
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
21
<PAGE>
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 than
Messrs. Montgomery and Maher) in various earnings classifications upon normal
retirement in 1995. 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 SERVICES
AVERAGE PAY ----------------------------
FOR RETIREMENT 25 YRS.
PLAN PURPOSES 15 YRS. 20 YRS. OR MORE
-------------- -------- -------- --------
<S> <C> <C> <C>
$400,000.................................... 144,000 192,000 240,000
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 Mr. Maher.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
AVERAGE PAY FOR -------------------------
RETIREMENT PLAN 20 YRS. OR
PURPOSES 15 YRS. 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>
Based on the amendments to his employment agreement, Mr. Montgomery's
average pay for retirement plan purposes is $1,502,900 and based on 20 years
and 4 months of credited service, he is entitled to annual retirement benefits
of $965,295 as of December 31, 1995.
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 11 and 12. 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 Mr. Maher under the
Directors' Retirement Plan upon his retirement as a director.
<TABLE>
<CAPTION>
CURRENT ANNUAL YEARS OF ESTIMATED ANNUAL
RATE OF CREDITED BENEFITS UPON
NAME REMUNERATION SERVICE RETIREMENT (1)
---- -------------- -------- ----------------
<S> <C> <C> <C>
John F. Maher.................... $1,075,750 22 $699,238
Michael M. Pappas................ 614,488 41 368,693
Eugene A. Crane.................. 518,320 34 310,992
Carl F. Geuther.................. 516,040 21 309,624
J. Lance Erikson................. 400,100 27 240,060
</TABLE>
- --------
(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.
22
<PAGE>
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 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
will 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 will 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 will 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 for a primary residence in amounts up to 90% of the
first $1,000,000 of appraised value and 80% of the excess appraised value.
Executive officers and directors may also obtain loans for secondary
residences in amounts up to 90% of the first $500,000 in appraised value, 80%
of the next $500,000 in appraised value and 70% of the excess appraised value.
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.
23
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of December 31, 1995, 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 29, 1996, 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 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 PERCENT OF
TITLE OF CLASS NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
-------------- ------------------------ -------------------- ----------
<C> <S> <C> <C>
Common Stock Wellington Management Company 10,858,257(1) 7.95%
75 State Street
Boston, Massachusetts 02109
Common Stock Vanguard/Windsor Funds, Inc. 10,242,693(2) 7.50%
Vanguard Financial Center
Valley Forge, Pennsylvania
19482
Common Stock All Directors and Executive 2,550,636(3) 1.86%
Officers as a Group (16)
</TABLE>
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(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) The amount in the table includes options to purchase 1,676,135 shares
under employee stock options which are exercisable on or within 60 days
after the record date, and 2,132 shares held in trust under the Savings
Plan with respect to which such persons have the right to direct the vote.
INDEPENDENT ACCOUNTANTS
Price Waterhouse was selected as the Company's independent accountants for
1995 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 1997 Annual Meeting must be received by the
Company at its headquarters office not later than November 21, 1996, 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 at, 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 or on such other
date as the Board of Directors may designate. 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 anniversary date of the
immediately preceding annual meeting of stockholders.
If the annual meeting is called for a date that is not within the 30 days
before or after such anniversary date, 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 notice of the date of the annual meeting is mailed to shareholders or
public disclosure of the date of the meeting is made, whichever first occurs.
Any scheduled meeting of the shareholders may be postponed or canceled by the
Board of Directors by giving public notice prior to the scheduled meeting.
The 1996 annual meeting of shareholders will be held on April 23, 1996.
Accordingly, unless the 1997 annual meeting is called for a date before March
24, 1997, or after May 23, 1997, a shareholder's notice of director
nominations or of business to be brought before the 1997 annual meeting must
be delivered to or mailed and received by the Secretary of the Company between
January 23, 1997, and February 22, 1997.
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 1995 TO THE SECURITIES
AND EXCHANGE COMMISSION WILL BE PROVIDED WHEN AVAILABLE WITHOUT CHARGE TO ANY
SHAREHOLDER UPON WRITTEN REQUEST ADDRESSED TO THE COMPANY, MAIL STOPN 11 35,
9200 OAKDALE AVENUE, CHATSWORTH, CALIFORNIA 91311-6519, ATTENTION: MARKETING
SERVICES, TELEPHONE 1-800-GWF-8668.
ALL SHAREHOLDERS ARE URGED TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY.
J. LANCE ERIKSON
Secretary
March 21, 1996
25
<PAGE>
PROXY PROXY
GREAT WESTERN FINANCIAL CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING APRIL 23, 1996
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 23, 1996 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.
PLEASE SIGN, DATE ON REVERSE SIDE AND RETURN IN THE ACCOMPANYING ENVELOPE.
(continued on reverse side)
<PAGE>
GREAT WESTERN FINANCIAL CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. Election of Directors
Nominees: David Alexander, H. Frederick Christie, Charles D. Miller.
FOR WITHHOLD AUTHORITY
all nominees listed to the left to vote for all nominees
(except as marked to the contrary) listed to the right
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below:)
- ------------------------------------------------------------------------------
Nominee Exception
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED ABOVE.
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 ABOVE LEFT.
Dated: __________________________________ , 1996
Signature(s)____________________________________
________________________________________________
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.
-- FOLD AND DETACH HERE --
--------------------
ADMISSION TICKET
--------------------
ANNUAL MEETING
OF
GREAT WESTERN FINANCIAL CORPORATION SHAREHOLDERS
Tuesday, April 23, 1996
11:00 a.m.
Employee Center
19809 Prairie Street
Chatsworth, CA 91311
