<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GREAT WESTERN FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
PRELIMINARY COPY -- SUBJECT TO COMPLETION, DATED APRIL 15, 1997
GREAT WESTERN LOGO
, 1997
Dear Great Western Stockholder:
As you undoubtedly know, it has been a very eventful past few months for
Great Western Financial Corporation. Fortunately, it appears that we are moving
towards a rapid conclusion, with Great Western's Annual Meeting of Stockholders
scheduled for June 13, 1997 and a vote on the strategic merger with Washington
Mutual, Inc. scheduled to be held at a separate Special Meeting of Stockholders
on , 1997. The accompanying proxy statement relates only to
the Annual Meeting; stockholders are being provided separately with detailed
information concerning the pending merger with Washington Mutual.
H. F. Ahmanson & Company is sending you proxy solicitation materials in an
effort to place three of its designees on your Board of Directors. Ahmanson also
is soliciting in support of six separate proposals it has introduced, including
five separate amendments to your By-laws. All of this is clearly part of
Ahmanson's effort to pursue its inferior, unsolicited merger proposal and impede
Great Western's strategic merger with Washington Mutual.
Your vote at this year's Annual Meeting is especially important. As we move
forward towards completion of the Washington Mutual merger, it is important to
keep in place your independent Board of Directors -- a Board that has
consistently demonstrated its commitment to acting in your best interests. By
entering into a merger agreement with Washington Mutual in early March, your
Board helped create literally hundreds of millions of dollars of additional
value for all Great Western stockholders.
Despite Ahmanson's protestations to the contrary, we think it is fairly
obvious that Ahmanson's nominees, if elected, would serve with one goal in
mind -- furthering Ahmanson's interests and not yours. Ahmanson, for example,
has agreed to indemnify each of its nominees to the "fullest extent permitted by
applicable law" if they breach their fiduciary duties to you.
Ahmanson's Chief Executive Officer, Charles R. Rinehart, recently was
quoted as describing his hostile pursuit of Great Western as follows: "To me,
it's a lot like World War I." It's time to let Mr. Rinehart know that his "war"
is over. He should go back and tend to the business of his own company. We
should move forward with the completion of our superior merger with Washington
Mutual.
<PAGE> 3
You can help reject Ahmanson's attempts to impede the Washington Mutual
merger by signing, dating and returning the enclosed GOLD proxy card today.
We thank you for your continued trust and support.
Sincerely,
<TABLE>
<S> <C>
/s/ John F. Maher /s/ James F. Montgomery
----------------------- -----------------------
John F. Maher James F. Montgomery
President and Chief Chairman of the Board
Executive Officer
</TABLE>
If you have any questions, please call our proxy solicitor:
Georgeson & Company Inc. Logo
CALL TOLL FREE: 800-223-2064
Banks and Brokers call collect: 212-440-9800
<PAGE> 4
PRELIMINARY COPY -- SUBJECT TO COMPLETION, DATED APRIL 15, 1997
GREAT WESTERN LOGO
------------------
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 13, 1997
------------------
The annual meeting of stockholders (the "Annual Meeting") of Great Western
Financial Corporation (the "Company") will be held at
, on June 13, 1997, at .m., local time, to vote on the
following:
1. The election of four members to the Board of Directors for a term of
three years;
2. A non-binding advisory resolution proposed by H. F. Ahmanson &
Company ("Ahmanson") relating to the consideration of merger
proposals;
3. A By-law amendment proposed by Ahmanson relating to the calling of
special meetings of stockholders;
4. A By-law amendment proposed by Ahmanson relating to the filling of
vacancies on the Board of Directors;
5. A By-law amendment proposed by Ahmanson relating to the membership of
any executive or comparable committee of the Board of Directors;
6. A By-law amendment proposed by Ahmanson relating to a requirement
that certain information be included in notices of meetings of the
Board of Directors;
7. A By-law amendment proposed by Ahmanson relating to the subsequent
amendment of any By-law amendments adopted at the Annual Meeting;
8. A non-binding advisory stockholder resolution; and
9. Such other matters as may properly come before the Annual Meeting.
Enclosed is the Company's Proxy Statement describing the matters to be
voted upon at the Annual Meeting. Reference is made to the Proxy Statement for
the complete text of each of the advisory resolutions and proposed By-law
amendments (Proposals 2 through 8) identified above.
Stockholders of record at the close of business on May 9, 1997 are entitled
to notice of and to vote at the Annual Meeting.
<PAGE> 5
Your vote is important. Whether or not you plan to attend, we urge you to
SIGN, DATE AND RETURN THE ENCLOSED GOLD PROXY CARD IN THE ENVELOPE PROVIDED, in
order that as many shares as possible will be represented at the Annual Meeting.
If you attend the Annual Meeting and prefer to vote in person, you will be able
to do so and your vote at the Annual Meeting will revoke any proxy you may
submit.
J. Lance Erikson,
Secretary
, 1997
If you have any questions about voting your shares or require
assistance, please call Georgeson & Company Inc., the firm
assisting the Company in the solicitation of proxies for the
Annual Meeting, at the phone numbers shown below:
Georgeson & Company Inc. Logo
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
CALL TOLL FREE: (800) 223-2064
BANKS AND BROKERS CALL COLLECT: (212) 440-9800
<PAGE> 6
PRELIMINARY COPY -- SUBJECT TO COMPLETION, DATED APRIL 15, 1997
GREAT WESTERN LOGO
------------------
PROXY STATEMENT
FOR THE
1997 ANNUAL MEETING
OF STOCKHOLDERS
------------------
INTRODUCTION
This Proxy Statement is furnished by the Board of Directors (the "Board")
of Great Western Financial Corporation, a Delaware corporation ("Great Western"
or the "Company"), to the holders of outstanding shares ("Common Shares") of the
Company's common stock, par value $1.00 per share, in connection with the
solicitation of proxies by the Board for use at the Annual Meeting of
Stockholders, and at any adjournments, postponements or reschedulings thereof
(the "Annual Meeting"). The Annual Meeting is scheduled to be held at
, on June 13, 1997, at .m., local time. At the Annual
Meeting, the Company's stockholders will be asked to (i) elect four Class II
directors to the Board, (ii) vote on one non-binding advisory resolution and
five separate amendments to Great Western's By-laws (collectively, the "Ahmanson
Proposals"), all of which have been proposed by H. F. Ahmanson & Company
("Ahmanson"), (iii) vote on a non-binding advisory stockholder resolution (the
"Stockholder Resolution") relating to the sale of uninsured investment products
by Great Western's bank, and (iv) transact such other business as may properly
come before the Annual Meeting. This Proxy Statement and the accompanying GOLD
proxy card are first being sent or given to holders of Common Shares on or about
, 1997.
In February 1997, Ahmanson (i) proposed a merger between Great Western and
Ahmanson pursuant to which the Common Shares would be converted into the right
to receive 1.05 common shares of Ahmanson (the "Original Ahmanson Merger
Proposal"), (ii) commenced a consent solicitation in support of certain
proposals (the "Ahmanson Consent Solicitation"), and (iii) announced its
intention to solicit proxies in connection with the Annual Meeting in support of
the election of three nominees selected by Ahmanson (the "Ahmanson Nominees") to
Great Western's Board and in support of certain proposals.
Great Western thereafter entered into a strategic merger agreement (the
"Merger Agreement") with Washington Mutual, Inc. ("Washington Mutual"), dated as
of March 5, 1997, pursuant to which Great Western would be merged with and into
a subsidiary of Washington Mutual and the Common Shares would be converted into
the right to receive 0.9 common shares of Washington Mutual (the "Washington
Mutual Merger"). The Washington Mutual Merger represents a unique strategic fit
between two financially sound institutions with similar business strategies,
cultures and operating goals. The Board believes that the Washington Mutual
Merger will result in the creation of a premier regional financial services
company with the financial and managerial resources to compete effectively in
the rapidly changing market for banking and financial services. Based on pro
forma total assets and total deposits as of December 31, 1996, the combined
company is expected to rank as the third largest banking organization in the
western United States and the twelfth largest in the United States, with over
1,500 retail and business banking, consumer lending and mortgage lending offices
located in 36 states and serving an estimated 4.1 million households. The Board
further believes that the combined company will create stockholder value with
low integration risks. By approving the Washington Mutual Merger, the Board
helped create literally hundreds of millions of dollars of additional value for
Great Western stockholders.
<PAGE> 7
On March 17, 1997, Ahmanson revised the Original Ahmanson Merger Proposal
to provide that Common Shares would be converted into the right to receive not
less than 1.1 nor more than 1.2 common shares of Ahmanson (as so revised, the
"Ahmanson Merger Proposal"). On March 26, 1997, Great Western announced that
after careful consideration of Ahmanson's request that Great Western provide
information to and engage in negotiations or discussions with Ahmanson, the
Board had unanimously determined not to authorize such actions. The Board also
stated its belief that a combination of Great Western and Washington Mutual will
provide Great Western stockholders with a superior value opportunity and
reiterated its commitment to the Washington Mutual Merger as being in the best
interests of Great Western's stockholders. GREAT WESTERN STOCKHOLDERS ARE NOT
BEING ASKED TO VOTE UPON THE WASHINGTON MUTUAL MERGER AT THE ANNUAL MEETING. A
SPECIAL MEETING OF GREAT WESTERN STOCKHOLDERS TO CONSIDER AND VOTE UPON THE
WASHINGTON MUTUAL MERGER IS SCHEDULED TO BE HELD ON , 1997 AND,
IN CONNECTION THEREWITH, GREAT WESTERN STOCKHOLDERS WILL BE PROVIDED WITH A
JOINT PROXY STATEMENT/PROSPECTUS OF GREAT WESTERN AND WASHINGTON MUTUAL
CONTAINING DETAILED INFORMATION CONCERNING THE WASHINGTON MUTUAL MERGER.
On March 3, 1997, Ahmanson commenced the Ahmanson Consent Solicitation and
sought consents from Great Western stockholders to approve five proposals. That
same day, pursuant to Great Western's By-laws, the Board fixed March 13, 1997 as
the record date for these five proposals. On March 17, 1997, Ahmanson withdrew
two of the five proposals and commenced a solicitation of consents for two new
proposals (the "New Ahmanson Consent Proposals"). To date, Great Western has not
received a request from Ahmanson to fix a record date with respect to the New
Ahmanson Consent Proposals and, accordingly, no such record date has been so
fixed. See "LITIGATION." On April 9, 1997, Ahmanson presented to the Company
consents which Ahmanson claims represent consents from a majority of the
outstanding Common Shares for adoption of three of the five Ahmanson proposals.
The consents presented by Ahmanson and the revocations of consent received by
Great Western have been turned over to independent inspectors of election who
are in the process of reviewing the consents and the revocations. The tabulation
and certification of the results of the Ahmanson Consent Solicitation have not
yet been reported by the independent inspectors of election. One of the
proposals for which Ahmanson claims to have presented the requisite number of
consents would amend the Company's By-laws to require that the Company's annual
meeting of stockholders be held on the fourth Tuesday in April or within two
weeks thereof (the "Annual Meeting By-law"). This year, the fourth Tuesday in
April is April 22, 1997 and the fourteen days thereafter is May 6, 1997. On
April 11, 1997, Ahmanson presented to the Company consents which Ahmanson claims
represent consents from a majority of the outstanding Common Shares for adoption
of one of the two New Ahmanson Consent Proposals. The independent inspectors of
election are in the process of reviewing the consents and revocations with
respect to such New Ahmanson Consent Proposal. However, because Ahmanson never
requested that the Board fix a record date for the two New Ahmanson Consent
Proposals as required by the Company's By-laws, Great Western believes that the
New Ahmanson Consent Proposals cannot at this time be adopted.
Even if the inspectors of election certify that consents from a majority of
the outstanding Common Shares have been presented to the Company with respect to
the Annual Meeting By-law, Rule 14a-13 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), requires the Company to disseminate
broker search cards at least 20 business days prior to the record date for the
Annual Meeting and New York Stock Exchange rules recommend that a listed
company, such as Great Western, allow a minimum of 30 days from the record date
to the stockholder meeting date for the solicitation of proxies. Therefore, in
light of the relevant timing constraints, rules and regulations governing the
Company and practical considerations, on April 10, 1997 the Board scheduled the
Annual Meeting for June 13, 1997 and fixed May 9, 1997 as the record date for
holders of Common Shares entitled to receive notice of and to vote at the Annual
Meeting (the "Record Date"). On April 9, 1997, Ahmanson filed a Complaint in the
Court of Chancery of the State of Delaware seeking an order compelling Great
Western to hold the Annual Meeting on or before May 6, 1997. See "LITIGATION."
The Board strongly urges Great Western stockholders to vote FOR the Board's
nominees on the enclosed GOLD proxy card. The Board also strongly recommends
that Great Western stockholders reject the Ahmanson Nominees. Great Western
believes, despite Ahmanson's protestations to the contrary, that the Ahmanson
Nominees, selected solely by Ahmanson, can be expected to serve Ahmanson's
interests only and seek to impede the consummation of the Washington Mutual
Merger. The Board believes that the Ahmanson
2
<PAGE> 8
Nominees are not committed to independent representation of all Great Western
stockholders. Ahmanson has agreed to make a cash contribution of $30,000 on
behalf of each Ahmanson Nominee to a charitable organization designated by such
nominee in connection with his agreement to serve as an Ahmanson Nominee.
Ahmanson has also agreed to pay each Ahmanson Nominee's out-of-pocket expenses
in connection with its solicitation. Further, Ahmanson has agreed to indemnify
and hold harmless each Ahmanson Nominee to the fullest extent permitted by law
for any liabilities or expenses incurred by such nominee in connection with
being a nominee for election to the Board and in connection with being a
director of Great Western if elected. Further, only one of the Ahmanson Nominees
(who owns 332 Common Shares) is a stockholder of the Company. In its preliminary
proxy statement, Ahmanson states that the Ahmanson Nominees, if elected, have
committed to seek to convince the other Great Western directors to consider the
Ahmanson Merger Proposal. In light of these factors, and notwithstanding
Ahmanson's protestations to the contrary, we believe the Ahmanson Nominees will
look after Ahmanson's interests and not the interests of Great Western's
stockholders. AT THIS CRITICAL TIME, IT IS VITAL THAT THE COMPANY CONTINUE TO
HAVE IN PLACE AN INDEPENDENT BOARD OF DIRECTORS -- ONE THAT WILL CONTINUE TO ACT
IN THE BEST INTEREST OF ALL THE COMPANY'S STOCKHOLDERS AND NOT BE INFLUENCED BY
THE GOALS BEING PURSUED BY AHMANSON.
Your Board has nominated as Class II directors, Bradford M. Freeman, Firmin
A. Gryp, James F. Montgomery and Alberta E. Siegel (the "Board Nominees"). Each
of the Board Nominees, except Bradford M. Freeman, is presently a Director and
has served continuously since first elected. YOUR BOARD UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THE BOARD NOMINEES AND AGAINST THE AHMANSON PROPOSALS BY
SIGNING, DATING AND RETURNING THE ENCLOSED GOLD PROXY CARD. THE ENCLOSED GOLD
PROXY CARD, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE MANNER
DIRECTED THEREIN. IF NO DIRECTION IS MADE, THE GOLD PROXY WILL BE VOTED (I)
"FOR" THE BOARD NOMINEES, (II) "AGAINST" EACH OF THE AHMANSON PROPOSALS, (III)
"AGAINST" THE STOCKHOLDER RESOLUTION, AND (IV) IN THE DISCRETION OF PROXY
HOLDERS NAMED ON THE PROXY CARD WITH RESPECT TO ANY OTHER MATTERS WHICH MAY
PROPERLY COME BEFORE THE ANNUAL MEETING.
3
<PAGE> 9
IMPORTANT
WHETHER OR NOT YOU HAVE ALREADY RETURNED A PROXY CARD, PLEASE SIGN, DATE
AND RETURN THE ENCLOSED GOLD PROXY CARD IN THE ENCLOSED PRE-PAID ENVELOPE TODAY.
BE SURE TO VOTE ONLY ON THE GOLD PROXY CARD. WE URGE YOU NOT TO SIGN ANY PROXY
CARD YOU RECEIVE FROM AHMANSON, EVEN AS A PROTEST VOTE AGAINST AHMANSON.
IF YOUR SHARES ARE HELD IN "STREET NAME," ONLY YOUR BROKER OR BANKER CAN
VOTE YOUR COMMON SHARES. PLEASE CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT
AND INSTRUCT HIM OR HER TO VOTE A GOLD PROXY CARD ON YOUR BEHALF TODAY IN
ACCORDANCE WITH YOUR BOARD'S RECOMMENDATIONS.
IF YOU HAVE ALREADY SENT A PROXY CARD TO AHMANSON, YOU MAY REVOKE THAT
PROXY AND VOTE FOR THE BOARD'S NOMINEES BY SIGNING, DATING AND RETURNING THE
ENCLOSED GOLD PROXY CARD PROMPTLY. IT IS THE LATEST DATED PROXY WHICH COUNTS.
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE IN VOTING YOUR SHARES, PLEASE
CALL GEORGESON & COMPANY INC., THE FIRM ASSISTING GREAT WESTERN IN THIS
SOLICITATION, AT THE PHONE NUMBERS SHOWN BELOW:
GEORGESON & COMPANY INC. LOGO
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
CALL TOLL FREE: (800) 223-2064
BANKS & BROKERS CALL COLLECT: (212) 440-9800
4
<PAGE> 10
INFORMATION CONCERNING THE ANNUAL MEETING
RECORD DATE; VOTE REQUIRED
Record Date. The Board has fixed May 9, 1997, at the close of business, as
the Record Date for determination of stockholders entitled to notice of and to
vote at the Annual Meeting. Only holders of record of Common Shares at the close
of business on that date are entitled to vote. The stock transfer books will not
be closed.
Shares Entitled to Vote. The Common Shares are the only class of
securities of the Company authorized to vote at the Annual Meeting. As of the
close of business on May 9, 1997, there were Common Shares
outstanding. Each Common Share is entitled to one vote. Under the Company's
Certificate of Incorporation and applicable law, a stockholder is not entitled
to cumulate his or her votes in the election of directors.
Quorum; Vote Required for Election of Directors. Under the Company's
By-laws, the holders of a majority of the outstanding Common Shares present in
person or by proxy constitute a quorum. The Company's By-laws provide that the
holders of a majority of the Common Shares present and entitled to vote at the
Annual Meeting shall have the power to act. Accordingly, each director must be
elected by the affirmative vote of the holders of a majority of the Common
Shares present and entitled to vote at the Annual Meeting. Under applicable
Delaware law, in tabulating the vote, broker non-votes will be disregarded and
will have no effect on the outcome of the vote. Abstentions or votes to withhold
authority will be counted as Common Shares present at the Annual Meeting and
will have the same effect as a vote against the Board Nominees.
Vote Required for Ahmanson Proposals and the Stockholder Resolution.
Assuming a quorum is present, approval of each of the Ahmanson Proposals and
the Stockholder Resolution requires the affirmative vote of the holders of a
majority of the Common Shares present and entitled to vote at the Annual
Meeting. Under applicable Delaware law, in tabulating the vote, broker
non-votes will be disregarded and will have no effect on the outcome of each of
the Ahmanson Proposals and the Stockholder Resolution. Abstentions will be
counted as Common Shares present at the Annual Meeting and will have the same
effect as a vote against each such proposal.
PROXIES
The GOLD proxy card, solicited by the Board, is enclosed for your use in
connection with the Annual Meeting. Common Shares represented by properly
executed proxies received at or prior to the Annual Meeting will be voted in
accordance with the instructions thereon. Executed proxies solicited by the
Board with no instructions thereon will be voted (i) "FOR" the Board Nominees,
(ii) "AGAINST" each of the Ahmanson Proposals, and (iii) "AGAINST" the
Stockholder Resolution. It is not anticipated that any other matters will be
brought before the Annual Meeting. However, the enclosed GOLD proxy card gives
discretionary authority to the proxy holders named thereon should any other
matters be presented to the Annual Meeting, and it is the intention of such
proxy holders to take such action in connection therewith as shall be in
accordance with their best judgment.
Execution of a proxy will not prevent a stockholder from attending the
Annual Meeting and voting in person. Any stockholder giving a proxy may revoke
it at any time before it is voted by delivering to the Secretary of the Company
written notice of revocation bearing a later date than the proxy, by delivering
a duly executed proxy bearing a later date or by voting in person at the Annual
Meeting.
The cost of the solicitation of proxies will be borne by the Company. The
Company estimates that the total expenditures in connection with such
solicitation (including the fees and expenses of the Company's attorneys, public
relations advisers and proxy solicitors, and advertising, printing, mailing,
travel and other costs, but excluding salaries and wages of officers and
employees), will be approximately $ , of which $ has been
spent to date. Directors, officers and other employees of the Company may,
without additional compensation, solicit proxies by mail, in person, by
telecommunication or by other electronic means.
5
<PAGE> 11
The Company has retained Georgeson & Company Inc. ("Georgeson"), at an
estimated fee of $ , plus reasonable out-of-pocket expenses, to assist
in the solicitation of proxies, as well as to assist the Company with its
communications with its stockholders with respect to, and to provide other
services to the Company in connection with, the Company's response to the
Ahmanson Merger Proposal. Approximately 100 persons will be utilized by
Georgeson in its efforts. The Company will reimburse brokerage houses, banks,
custodians and other nominees and fiduciaries for out-of-pocket expenses
incurred in forwarding the Company's proxy materials to, and obtaining
instructions relating to such materials from, beneficial owners of Common
Shares. The Company has agreed to indemnify Georgeson against certain
liabilities and expenses in connection with its engagement, including certain
liabilities under the federal securities laws.
The Company has retained Goldman, Sachs & Co. ("Goldman Sachs") and Merrill
Lynch & Co. ("Merrill Lynch") to act as its financial advisors in connection
with the Washington Mutual Merger, as well as the Ahmanson Merger Proposal, for
which they received and may receive substantial fees, as well as reimbursement
of reasonable out-of-pocket expenses. In addition, the Company has agreed to
indemnify Goldman Sachs and Merrill Lynch and certain related persons against
certain liabilities, including certain liabilities under the federal securities
laws, arising out of their engagement. The Company anticipates that certain
employees of each of Goldman Sachs and Merrill Lynch may communicate in person,
by telephone or otherwise with a limited number of institutions, brokers or
other persons who are stockholders of the Company for the purpose of assisting
in the solicitation of proxies. Neither Goldman Sachs nor Merrill Lynch will
receive any additional fee in connection with such soliciting activities by
their respective employees, apart from the fees and expenses each of them is
otherwise entitled to receive as described above. Each of Goldman Sachs and
Merrill Lynch is an investment banking firm that provides a full range of
financial services for institutional and individual clients. Neither Goldman
Sachs nor Merrill Lynch admits that it or any of its directors, officers or
employees is a "participant" as defined in Schedule 14A promulgated under the
Exchange Act, in the solicitation, or that Schedule 14A requires the disclosure
of certain information concerning Goldman Sachs and Merrill Lynch. In the normal
course of their respective businesses, Goldman Sachs and Merrill Lynch regularly
buy and sell securities issued by Great Western and its affiliates ("Great
Western Securities") and Washington Mutual and its affiliates ("Washington
Mutual Securities") for their own accounts and for the accounts of their
customers, which transactions may result from time to time in Goldman Sachs and
its associates and Merrill Lynch and its associates having a net "long" or net
"short" position in Great Western Securities, Washington Mutual Securities, or
option contracts with other derivatives in or relating to Great Western
Securities or Washington Mutual Securities. As of April 7, 1997, Goldman Sachs
had positions in Great Western Securities and Washington Mutual Securities as
principal as follows: (i) net "long" of 8,973 Common Shares; (ii) net "long" of
$1 million in Great Western's deposit notes; and (iii) net "long" of 1,098 of
Washington Mutual's common shares. As of April 7, 1997, Merrill Lynch had
positions in Great Western Securities and Washington Mutual Securities as
principal as follows: (i) net "long" of 7,125 Common Shares; and (ii) net "long"
of 1,526 of Washington Mutual's common shares.
The Company also anticipates that certain employees of Washington Mutual
may communicate in person, by telephone or otherwise with stockholders of the
Company for the purpose of assisting in the solicitation of proxies. These
efforts would be in furtherance of Washington Mutual's effort to consummate the
Washington Mutual Merger. Neither Washington Mutual nor Washington Mutual's
employees will be compensated by the Company in connection with such
solicitation activities. Washington Mutual has retained Lehman Brothers Inc.
("Lehman Brothers") to act as its financial advisor in connection with the
Washington Mutual Merger for which it received and may receive substantial fees,
as well as reimbursement of reasonable out-of-pocket expenses. In addition,
Washington Mutual has agreed to indemnify Lehman Brothers and certain persons
related to it against certain liabilities, including certain liabilities under
the federal securities laws, arising out of its engagement. The Company
anticipates that certain employees of Lehman Brothers may communicate in person,
by telephone or otherwise with a limited number of institutions, brokers or
other persons who are stockholders of the Company for the purpose of assisting
in the solicitation of the proxies. Lehman Brothers will not receive any
additional fee in connection with such soliciting activities by its employees,
apart from the fees and expenses it is otherwise entitled to receive as
described above. Lehman Brothers is an investment banking firm that provides a
full range of financial services for institutional and individual clients.
Lehman Brothers does not admit that it or any of its directors, officers or
employees is a
6
<PAGE> 12
"participant" as defined in Schedule 14A promulgated under the Exchange Act, in
the solicitation, or that Schedule 14A requires the disclosure of certain
information concerning Lehman Brothers. In the normal course of its business,
Lehman Brothers regularly buys and sells Washington Mutual Securities and Great
Western Securities for its own account and for the accounts of its customers,
which transactions may result from time to time in Lehman Brothers and its
associates having a net "long" or net "short" position in Washington Mutual
Securities, Great Western Securities or option contracts with other derivatives
in or relating to Washington Mutual Securities or Great Western Securities. As
of April 7, 1997, Lehman Brothers had positions in Washington Mutual Securities
and Great Western Securities as principal as follows: (i) net "short" of 224 of
Washington Mutual's common shares; (ii) net "long" of 27,434 shares of
Washington Mutual's 9.12% preferred stock; (iii) net "long" of 124,964 shares of
Washington Mutual's 7.60% preferred stock; (iv) net "short" of 3,509 Common
Shares; and (v) net "long" of 160,000 shares of Great Western's 8.30% preferred
stock.
Additional information concerning the participants in the solicitation of
proxies is listed in Schedules A and B annexed hereto.
7
<PAGE> 13
ELECTION OF DIRECTORS
The Board is divided into three classes: Class I, Class II and Class III.
Generally, each Director (other than those elected to fill vacancies on the
Board) serves until the date of the third annual meeting following his or her
election and until his or her successor is elected and qualified. The term of
office for each of the Class III and Class I Directors ends on the date of the
annual meetings in 1998 and 1999, respectively, and the election and
qualification of their respective successors occurs on the same dates.
Four (4) Directors of Class II will be elected at the Annual Meeting, each
to hold office until the annual meeting in 2000, and until his or her respective
successors are elected and qualified. Each of the Board Nominees, except
Bradford M. Freeman, is presently a Director and has served continuously since
first elected. Proxies cannot be voted for a greater number of persons than the
number of nominees named. If any of the Board Nominees named below is unable or
unwilling to 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. Proxies
solicited by the Board will be voted for each of the Board Nominees listed below
unless the stockholder specifies otherwise in the proxy.
<TABLE>
<CAPTION>
SHARES OWNED
FIRST YEAR BENEFICIALLY AT
NAME AGE PRINCIPAL OCCUPATION CLASS ELECTED MARCH 31, 1997(1)
- ----------------------- --- ---------------------------------------------- ------ ----------- -----------------
<S> <C> <C> <C> <C> <C>
DIRECTORS TO BE ELECTED
AT THE
1997 ANNUAL MEETING
Bradford M. Freeman.... 55 Partner, Freeman Spogli & Co., a privately II 20,000
owned investment firm
Firmin A. Gryp......... 69 Retired, formerly Executive Vice President, II 1982 103,644(2)
Great Western
James F. Montgomery.... 62 Chairman and former Chief Executive Officer, II 1975 680,488(3)
Great Western
Alberta E. Siegel...... 66 Professor Emeritus of Psychology, Stanford II 1976 25,000(4)
University School of Medicine
OTHER DIRECTORS OF THE
COMPANY
David Alexander........ 64 President Emeritus and Trustees' Professor, I 1973 22,675(4)
Pomona College
H. Frederick Christie.. 63 Consultant I 1984 26,250(4)
Stephen E. Frank....... 55 President and Chief Operating Officer, Edison III 1993 10,750(5)
International, a public utility company
Enrique Hernandez, Jr.. 41 President, Inter-Con Security Systems, Inc., a III 1993 9,250(5)
worldwide provider of security and facility
support services
John F. Maher.......... 53 President and Chief Executive Officer, Great III 1976 611,762(6)
Western
Charles D. Miller...... 69 Chairman and Chief Executive Officer, Avery I 1981 30,460(7)
Dennison Corporation, a manufacturer of
self-adhesive materials and office products
Willis B. Wood, Jr..... 62 Chairman and Chief Executive Officer, Pacific III 1990 16,750(8)
Enterprises, the holding company of Southern
California Gas Company
</TABLE>
- ---------------
(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 Common Shares.
(2) Includes 21,250 shares subject to options granted to this Director under the
1988 Stock Option and Incentive Plan which are exercisable within 60 days of
the Record Date and 112 shares held by the trustee under the Employee
Savings Incentive Plan.
(3) Includes 570,600 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.
(4) Includes 21,250 shares subject to options granted to this Director under the
1988 Stock Option and Incentive Plan which are exercisable within 60 days of
the Record Date.
8
<PAGE> 14
(5) Includes 8,750 shares subject to options granted to this Director under the
1988 Stock Option and Incentive Plan which are exercisable within 60 days of
the Record Date.
(6) Includes 396,137 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.
(7) Includes 18,750 shares subject to options granted to this Director under the
1988 Stock Option and Incentive Plan which are exercisable within 60 days of
the Record Date.
(8) Includes 16,250 shares subject to options granted to this Director under the
1988 Stock Option and Incentive Plan which are exercisable within 60 days of
the Record Date.
Mr. Freeman is a founding partner of Freeman Spogli & Co., a privately
owned investment firm with offices in Los Angeles and New York, which was
founded in 1983. He began his investment banking career in 1966 with Dean Witter
Reynolds Inc. From 1975 to 1976 he directed the firm's international operations
from London and returned to Los Angeles in 1976 to become the managing director
of Dean Witter's southern division corporate department and to serve on its
Board of Directors. Mr. Freeman is a member of the Board of Trustees of Stanford
University and St. John's Hospital in Santa Monica and a Director of RDO
Equipment Co., Koll Real Estate Services and Freeman Spogli & Co. He is a
graduate of Stanford University and the Harvard Business School.
Mr. Gryp retired from his position as Executive Vice President of Great
Western 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 as a Director of the Western League of
Savings Institutions. He is Vice President and Director of the Community
Foundation of Monterey County and President of Public Recreation Unlimited.
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 Great Western. Before
rejoining Great Western, he was a Director and President of United Financial
Corporation and its subsidiary, Citizens Savings and Loan Association, having
served those companies from 1964 to 1975. A graduate of the University of
California at Los Angeles, he is a former Chairman of America's Community
Bankers and a Director of the Federal Home Loan Mortgage Corporation, the Local
Initiatives Support Corporation and UCLA's Chancellor's Associates and a former
director of the Federal Home Loan Bank of San Francisco. 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.
Dr. Siegel was Professor of Psychology, Stanford University School of
Medicine, where she served on the faculty from 1963 until 1997. A graduate of
Stanford University, she is past President of the Stanford Faculty Club and of
the Board of the Stanford Historical Society and past Governor of Stanford
Associates. She has held numerous consulting and advisory positions with federal
agencies in the fields of science and health and is past Editor of the Journal
Child Development, published by the Society for Research in Child Development,
and co-Editor of its book Child Development Research and Social Policy. She is
also past President of the Division on Developmental Psychology of the American
Psychological Association and past President of the Board of the Senior
Coordinating Council of Palo Alto. Dr. Siegel serves on the Professional
Advisory Committees of the Peninsula Children's Center and the Children's Health
Council, both of Palo Alto, and is a Trustee of the Menninger Foundation,
Topeka, Kansas and a member of its Board of Directors for the Menninger Clinic.
She is also Director of the Board of the Children's Television Resource and
Education Center, San Francisco.
9
<PAGE> 15
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, and 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. He also served as a Director of the Los Angeles Area Chamber of
Commerce and as a Director of KCET, Community Television of Southern California.
A graduate of Rhodes College, he served as its President from 1965 to 1969. Dr.
Alexander received his doctorate from Oxford University.
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
Diamond Shamrock Corporation, Southwest Water Company and Ducommun Incorporated.
He is Chairman and Trustee 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
(formerly, Southern California Edison). Prior to joining Edison International,
Mr. Frank was 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. and Vice President, Treasurer and Controller of GTE Corporation. A
graduate of Dartmouth College and the University of Michigan Business School,
Mr. Frank is a Director of Edison International, SCEcorp and the Business and
Industry Political Action Committee and a former Director of FPL Group.
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 as Vice President and
Assistant General Counsel. He is also a co-founder and principal partner of
Interspan Communications. Mr. Hernandez is Vice Chairman and Director of the
Children's Hospital of Los Angeles, Director of McDonald's Corporation, founding
Director and interim Chief Executive Officer of California Healthcare
Foundation, Trustee of Pomona College and former President of the Los Angeles
Police Commission. Mr. Hernandez is a graduate of Harvard University and the
Harvard Law School.
Mr. Maher is the President and Chief Executive Officer of Great Western and
GWB and the Chairman of the Board of GWB. He served as President and Chief
Operating Officer of the Company from 1986 until his promotion to Chief
Executive Officer on December 27, 1995. Before returning to the Company in 1986,
he was a Managing Director of Lehman Brothers Kuhn Loeb Incorporated, an
investment banking firm, and its successor, having joined that firm in 1979. Mr.
Maher served as Executive Vice President, Finance of Great Western from 1973
until 1976, when he resigned to renew his association with Blyth Eastman Dillon
& Co. Inc., an investment banking firm, where he served as Executive Vice
President, Director and member of the Executive Committee 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 Board of Trustees of Trout Unlimited, a Trustee of the
Cate School, 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.
- ---------------
(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.
10
<PAGE> 16
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 Chairman of the Board of United Way of
Greater Los Angeles, and as a Director of Edison International, Pacific Mutual
Life Insurance Company, and Nationwide Health Properties, Inc. Mr. Miller is a
Trustee of Johns Hopkins University and Occidental College and a member of the
Amateur Athletic Foundation of Los Angeles and the Korn/Ferry International
advisory board. He has also served as the chairman of the Los Angeles Area
Chamber of Commerce.
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 and a Trustee of the University of
Southern California and the Southwest Museum. Mr. Wood is also a Director of the
California Medical Center Foundation, the Automobile Club of Southern
California, the Los Angeles World Affairs Council, the National Association of
Manufacturers, and the California Chamber of Commerce, as well as a member of
the California Business Roundtable and the RAND Graduate School Committee of
Visitors.
Mr. John V. Giovenco, a Director since 1985, advised the Company in late
1996 that he would not stand for reelection to the Board of Directors.
BOARD COMMITTEES
The Company has standing Audit and Finance, Compensation, Director Affairs
and Public Policy Committees of the Board of Directors. Except for Mr. Maher,
who serves on the Director Affairs Committee, the Directors serving on these
committees are not executive officers or employees 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 recommends to the Board of Directors
levels of compensation for Executive Officers and 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 Stock Incentive
Plans. The committee also reviews and approves investment policy for the
Company's retirement plans and savings incentive plans.
The Director Affairs Committee evaluates, 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 stockholders. While the Director Affairs Committee normally is
able to identify from its own resources an ample number of qualified candidates,
it will consider stockholder suggestions of persons to be considered as nominees
to fill future vacancies on the Board. Such suggestions must be sent in writing
to the Secretary at the Company's address and must be accompanied by detailed
biographical and occupational data on the prospective nominee, along with a
written consent of the prospective nominee to consideration of his or her name
by the committee. The committee will consider the age of the prospective nominee
and whether he or she possesses integrity and moral responsibility, sound
business
11
<PAGE> 17
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
stockholders rather than the special interests of a particular group, and other
qualities which facilitate an independent, consultive and deliberative Board and
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. The Company's By-laws include additional requirements regarding
nominations at a stockholders' 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 changes in
Board compensation and makes recommendations regarding the assignment of Board
members to various committees. It reviews annually with the Board the skills and
characteristics of current Board members and its assessment of the Board's
performance. It also monitors the Board's independence 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 for 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 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.
The Board of Directors met eleven times in 1996 and the aggregate number of
meetings of the Board and of the Audit and Finance, Compensation, Director
Affairs and Public Policy Committees totaled 26. The members of these committees
and the number of meetings held during 1996 were:
<TABLE>
<CAPTION>
AUDIT AND FINANCE COMMITTEE COMPENSATION COMMITTEE DIRECTOR AFFAIRS COMMITTEE PUBLIC POLICY COMMITTEE
(6 meetings) (6 meetings) (1 meeting) (2 meetings)
<S> <C> <C> <C>
Stephen E. Frank, Chairman Willis B. Wood, Jr., Chairman Alberta E. Siegel, Chairman David Alexander, Chairman
David Alexander, Secretary H. Frederick Christie Firmin A. Gryp, Vice Chairman Firmin A. Gryp
H. Frederick Christie Stephen E. Frank David Alexander Enrique Hernandez, Jr.
John V. Giovenco John V. Giovenco Stephen E. Frank Alberta E. Siegel
Firmin A. Gryp Enrique Hernandez, Jr. John F. Maher
Enrique Hernandez, Jr. Charles D. Miller James F. Montgomery
Charles D. Miller Willis B. Wood, Jr.
Alberta E. Siegel
Willis B. Wood, Jr.
</TABLE>
12
<PAGE> 18
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following table shows for each member of the Compensation Committee:
(i) the largest aggregate amount of indebtedness to the Company in excess of
$60,000 outstanding from January 1, 1996 to March 31, 1997; (ii) the nature of
the indebtedness; (iii) the outstanding balance of the indebtedness on March 31,
1997; and (iv) the annual rate of interest charged on the indebtedness.
<TABLE>
<CAPTION>
NAME OF
COMPENSATION LARGEST NATURE INDEBTEDNESS
COMMITTEE AGGREGATE OF OUTSTANDING AT
MEMBER INDEBTEDNESS ($) INDEBTEDNESS(1) MARCH 31, 1997($) INTEREST RATE (%)(2)
- ------------------------------- ---------------- ---------------- ------------------ --------------------
<S> <C> <C> <C> <C>
H. Frederick Christie.......... 769,068.70 Residential 741,808 4.71
285,190.10 Residential 278,473 4.71
Stephen E. Frank............... 1,390,895.85 Residential 1,362,415 4.81
1,063,300.00 Residential 1,052,602 4.81
John V. Giovenco............... 533,642.54 Residential 520,222 4.71
Enrique Hernandez, Jr.......... 918,988.05 Residential 903,101 4.81
1,400,000.00 Residential 1,384,214 4.81
Charles D. Miller.............. 1,072,418.58 Residential 1,049,981 4.81
Willis B. Wood, Jr............. 714,366.89 Residential 698,764 4.71
396,966.62 Residential 389,192 4.81
</TABLE>
- ---------------
(1) Loans secured by the same residence are aggregated.
(2) Interest on these loans is generally at monthly adjustable rates equal to
the Company's cost of funds plus .25%. This rate was approximately 2.22% to
2.42% below that on similar loans to the public during 1996.
The residential loans described above were made pursuant to the Company's Home
Loan Program described on pages 29 and 30 and are secured by trust deeds or
mortgages on the respective residences of the members of the Compensation
Committee.
13
<PAGE> 19
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 the
Company and GWB, and the number of Common Shares beneficially owned, directly or
indirectly, by each of them on March 31, 1997. 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 Great Western.
<TABLE>
<CAPTION>
SHARES OWNED
BENEFICIALLY
OFFICER AT MARCH 31,
NAME AGE POSITION SINCE 1997(1)
- -------------------------- --- ---------------------------------------- ------- ------------
<S> <C> <C> <C> <C>
John F. Maher............. 53 President and Chief Executive Officer 1986 611,762(2)
Carl F. Geuther........... 51 Vice Chairman and Chief Financial 1986 220,350(3)
Officer
Michael M. Pappas......... 64 Vice Chairman and President, Consumer 1986 249,525(4)
Finance Division
A. William Schenck III.... 53 Vice Chairman 1995 68,288(5)
J. Lance Erikson.......... 54 Executive Vice President, Secretary and 1982 119,959(6)
General Counsel
Ray W. Sims............... 42 Executive Vice President 1997 --
Jaynie M. Studenmund...... 42 Executive Vice President 1996 23,100(7)
</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 Common
Shares.
(2) Includes 396,137 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 179,845 shares subject to options exercisable within 60 days of the
Record Date.
(4) Includes 172,500 shares subject to options exercisable within 60 days of the
Record Date.
(5) Includes 49,762 shares subject to options exercisable within 60 days of the
Record Date.
(6) Includes 99,010 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.
(7) Includes 12,500 shares subject to options exercisable within 60 days of the
Record Date.
As of March 31, 1997, all directors and executive officers as a group
beneficially owned 2,238,251 Common Shares, or approximately 1.62% of the
class.(1)
Biographical information concerning Mr. Maher is given under the caption
"ELECTION OF DIRECTORS."
Mr. Erikson has been Executive Vice President, General Counsel and
Secretary since 1986 and has been with Great Western and its predecessors for 28
years. He is in charge of the Company's Legal Division.
Mr. Geuther became Vice Chairman in 1996 and has been Chief Financial
Officer since 1986. He previously was the Chief Financial Officer of the
Company's subsidiary, Aristar, Inc. ("Aristar") and has been with Great Western
and Aristar for 22 years.
Mr. Pappas became Vice Chairman in 1996 and 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 Great Western and Aristar for 42 years.
Mr. Schenck became Vice Chairman in 1996, after joining Great Western on
August 1, 1995. Mr. Schenck is in charge of the Retail Banking, Real Estate
Services and Great Western Financial Securities Corporation. Prior to joining
the Company, he served as Executive Vice President of Consumer Banking at
- ---------------
(1)Includes options to purchase 2,013,991 shares under employee stock
options which are exercisable on or within 60 days of the record date, and
1,219 shares held in trust under the Employee Savings Incentive Plan with
respect to which such persons have the right to direct the vote.
14
<PAGE> 20
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.
Ms. Studenmund joined Great Western and GWB on April 15, 1996, as an
Executive Vice President and director of GWB Retail Banking Division. Her
responsibilities include all branch operations in California and Florida,
business banking, consumer lending, direct banking, branch administration
services and marketing. Prior to joining the Company, Ms. Studenmund served as
Executive Vice President and retail banking group manager at First Interstate
Bank of California, a position she held since 1995. Her career with First
Interstate Bank spanned 11 years and included various line and staff positions.
Mr. Sims joined Great Western and GWB on January 6, 1997, as Executive Vice
President of the Real Estate Services Division. Prior to joining the Company,
Mr. Sims served as President and Chief Executive Officer of Knutson Mortgage
Corporation in Minneapolis, a position he held since 1995, and as President of
the Residential Express Division of GE Capital Mortgage Services, Inc., in
Cherry Hill, New Jersey from 1992 until 1995. Before joining GE Capital, Mr.
Sims served as President of First Prime Mortgage Corporation, a New England
mortgage banking firm.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS FEES
Mr. Maher is the only Director who is an employee of Great Western. See
"-- Employment Agreements" 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 Great Western and GWB and combined attendance
fees totalling $1,800 for each Great Western 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, described below. The amounts referred to above do not include
the economic benefit of preferential loans under the Company's Home Loan Program
described on pages 29 and 30.
CONSULTING AGREEMENT WITH MR. MONTGOMERY
Mr. Montgomery's consulting agreement with Great Western (the "Consulting
Agreement"), effective December 29, 1995 for an initial term of five years (the
"Consulting Period"), contemplates that Mr. Montgomery serve as Chairman of the
Board of Great Western through December 31, 1997, and thereafter upon election
by the Board (but he shall continue in any case to serve as a Director of Great
Western and GWB during the Consulting Period). Pursuant to the terms of the
Consulting Agreement, during the Consulting Period, Mr. Montgomery will devote
substantial time and attention as required, but no less than half time (if and
to the extent requested), to promoting the business affairs and interests of
Great Western and its affiliates. In addition to his compensation as a Director
(including non-employee Director stock options under the Company's stock
incentive plans, and benefits under the Director's Retirement Plan described
below), Mr. Montgomery receives an annual consulting fee of $485,000. He is not
entitled to receive awards under any bonus plan or incentive plan for employees
of Great Western during the Consulting Period. The Consulting Agreement extends
Mr. Montgomery's outstanding $500,000 personal, unsecured loan maturity to
December 31, 1999 or, under certain circumstances, to the end of the Consulting
Period.
In connection with his retirement as Chief Executive of Great Western and
GWB, the Company granted to Mr. Montgomery a stock option (the "Special Option")
to purchase 300,000 Common Shares, which will generally become exercisable at
the rate of 25% per year commencing April 26, 1996, and, once exercisable, the
Special Option may be exercised at any time thereafter until the first to occur
of (i) April 24, 2005, (ii) termination for cause (as defined in the Consulting
Agreement), (iii) termination of the Consulting
15
<PAGE> 21
Agreement, or if it is 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 will 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 will be 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)). During the term of the Consulting
Agreement, awards of restricted stock granted to Mr. Montgomery while he was an
employee of Great Western and GWB will 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
Great Western in accordance with the terms of the Consulting Agreement.
Mr. Montgomery's payments under the Company's Supplemental Executive
Retirement Plan commenced on January 1, 1996, without any offset for benefits
payable under the Retirement Plan, which generally will not be payable until he
ceases to perform services for Great Western and GWB. The Consulting Agreement
provides that, in the event of his death, Mr. Montgomery's beneficiaries would
be entitled to a payment equal to 250% of Mr. Montgomery's then current annual
consulting fee, reduced by the amount of Company-provided life insurance
proceeds. Mr. Montgomery's beneficiaries would also be entitled to receive
continued payment of 50% of his then current annual consulting fee for a period
of 10 years, also reduced by life insurance proceeds. In addition, Mr.
Montgomery's family would be entitled to continuation of certain insurance
benefits for two years. Upon termination of the Consulting Agreement due to
disability, Mr. Montgomery would continue to receive, until the disability ends,
but no later than age 65, 50% 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 will 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 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 in Control (as defined in the Consulting Agreement), all restricted
shares and that portion of the Special Option which is then unvested shall
immediately vest. In no event will payments to Mr. Montgomery which are
contingent upon a Change in Control under applicable tax rules ("parachute
payments") exceed limits specified by the Internal Revenue Code of 1986, as
amended (the "Code"), 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 Section 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 Section 280G
Limit. A Change in Control occurs under the Consulting Agreement when anyone
acquires ownership of 25% or more of the Company's outstanding voting stock and
the Directors of the Company immediately before such acquisition cease to
constitute five-sixths of the Board of Directors of the Company or any
successor. Under the terms of the Merger Agreement, consummation of the
Washington Mutual Merger will constitute a Change in Control for purposes of the
Consulting Agreement.
DIRECTORS' RETIREMENT PLAN
The Great Western Directors' Retirement Plan, as amended to date
("Directors' Retirement Plan"), provides retirement benefits to Directors. Upon
termination of service on the Board, each eligible Director is entitled to an
annual retirement benefit equal to the sum of the annual retainer paid to
members of the Board plus twelve times the monthly 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. Such benefits will be provided to the surviving spouse or other
designated beneficiary following the death of an eligible Director.
16
<PAGE> 22
DIRECTOR STOCK OPTION PROGRAM
Upon adoption of the 1988 Stock Option and Incentive Plan, as amended to
date (the "1988 Stock Plan"), each non-employee director was granted
automatically, subject to stockholder approval of such Plan, a nonqualified
option under the 1988 Stock Plan's Non-Employee Director Program to purchase
2,500 Common Shares 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 (an "Annual Option") to purchase 2,500 Common
Shares. No non-employee Director may receive options to purchase more than 2,500
shares in any calendar year. The purchase price per Common Share covered by each
Annual Option, payable in cash and/or shares, is the fair market value of the
Common Shares on the date the option is granted. Annual 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 1995, 1996 and 1997
were $16.00, $26.125, and $28.75, respectively.
If a non-employee Director's services as a Board member are terminated as a
result of death, disability or retirement after age 72, Annual Options will
become immediately exercisable in full and will remain exercisable for a period
of two years or until the expiration of the stated term of the option, whichever
period is shorter. If a non-employee Director's services are terminated for any
other reason, any then exercisable portion of an Annual Option will be
exercisable for a period of three months or the balance of the option's term,
whichever period is shorter.
The 1988 Stock Plan provides for full vesting and exercisability of the
Annual Options in the event of a Change in Control of the Company. The term
"Change in Control" is defined in the 1988 Stock Plan as it is defined in Mr.
Maher's employment agreement (described on pages 19 and 20 of this Proxy
Statement). Under the terms of the Merger Agreement, consummation of the
Washington Mutual Merger will constitute a Change in Control for purposes of the
1988 Stock Plan.
EXECUTIVE OFFICERS
The following table and accompanying notes show for John F. Maher, Chief
Executive Officer, and the four next highest paid Executive Officers of the
Company as of December 31, 1996 (the "named Executive Officers"), the aggregate
indicated compensation paid by the Company and its subsidiaries to such persons
during the three fiscal years then ending.
17
<PAGE> 23
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------------------- ------------------------------
AWARDS PAYOUTS
------------ -------------
(a) (b) (c) (d) (e) (f) (g) (h)
OTHER
ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION UNDERLYING LTIP COMPENSATION
POSITION YEAR ($)(1) ($)(1) ($)(2) OPTIONS/SARS PAYOUTS($)(3) ($)(4)
- ------------------------------- ----- ------- ------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John F. Maher.................. 1996 780,000 369,720 196,380 375,000 3,396,094 33,594
President and Chief 1995 650,000 303,225 165,505 0 -- 27,780
Executive 1994 650,000 295,750 239,966 150,000 -- 27,638
Michael M. Pappas.............. 1996 437,500 157,500 63,072 120,000 1,455,469 17,500
Vice Chairman and President, 1995 420,000 163,850 -- 0 -- 16,800
Consumer Finance Division 1994 410,000 176,988 832 70,000 -- 16,400
A. William Schenck III......... 1996 416,000 131,456 61,950 150,000 423,475 14,800
Vice Chairman 1995 399,996 153,500 45,178 0 -- 0
Carl F. Geuther................ 1996 385,000 121,660 89,022 130,000 1,164,375 15,400
Vice Chairman and Chief 1995 372,000 129,018 70,035 0 -- 14,900
Financial Officer 1994 360,000 131,040 81,316 70,000 -- 14,400
J. Lance Erikson............... 1996 300,000 94,800 42,301 90,000 582,188 12,000
Executive Vice President, 1995 285,000 106,362 50,835 0 -- 11,400
Secretary and General Counsel 1994 275,000 100,100 55,464 40,000 -- 11,000
</TABLE>
- ---------------
(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.
(2) Amounts shown include, when applicable, that portion of interest earned on
deferred compensation accounts above 120% of the applicable federal rate,
country club dues, personal use of corporate aircraft, the estimated
economic benefit of preferential loans made under the Home Loan Program
shown in the table on page 24 and described further at pages 29 and 30, 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 1996
include the following: Mr. Maher: economic benefit of personal use of
aircraft -- $46,665; Mr. Pappas: economic benefit of company
automobiles -- $17,931, excess medical and dental coverage -- $19,189,
economic benefit of preferential loans -- $25,952; Mr. Schenck: economic
benefit of preferential loans -- $42,888; Mr. Geuther: economic benefit of
excess medical and dental coverage -- $28,661, economic benefit of
preferential loans -- $35,044; Mr. Erikson: economic benefit of preferential
loans -- $23,726.
(3) Mr. Schenck was awarded a total of 21,544 shares of performance-based
restricted stock in 1995. Such restricted shares generally vest in three to
ten years; vesting may be accelerated upon the occurrence of certain events,
including the achievement of performance goals, and all such restricted
shares vest immediately upon the occurrence of a Change in Control (as
described under the caption "EMPLOYEE BENEFIT PLANS -- Restricted Stock").
On January 23, 1996, shares of restricted stock held by the named Executive
Officers, valued at the then current market value of $23.375 per share,
vested as follows: Mr. Maher, 87,500 shares, valued at $2,045,313; Mr.
Pappas, 37,500 shares, valued at $876,563; Mr. Geuther, 30,000 shares,
valued at $701,250; and Mr. Erikson, 15,000 shares, valued at $350,625. On
February 1, 1996, 10,772 shares of restricted stock held by Mr. Schenck
vested, valued at $257,182 (based on the then current market value of
$23.875 per share). On December 9, 1996, shares of restricted stock held by
the named Executive Officers, valued at the then current market value of
$30.875 per share, vested as follows: Mr. Maher, 43,750 shares, valued at
$1,350,781; Mr. Pappas, 18,750 shares, valued at $578,906; Mr. Schenck,
5,386 shares, valued at $166,293; Mr. Geuther, 15,000 shares, valued at
$463,125; and Mr. Erikson, 7,500 shares, valued at $231,563. At year-end
1996, the named Executive Officers held shares of restricted stock, valued
at the then current market value of $29.00 per share, as follows: Mr. Maher,
43,750 shares, valued at $1,268,750; Mr. Pappas, 18,750 shares, valued at
$543,750; Mr. Schenck, 5,386 shares, valued at $156,194; Mr. Geuther, 15,000
shares, valued at $435,000; and
18
<PAGE> 24
Mr. Erikson, 7,500 shares, valued at $217,500. Dividends are paid on
restricted stock at the same rate payable to common stockholders and are not
reflected in the amount reported.
(4) The amounts shown in this column for 1996 consist of the following
respective amounts: (a) Mr. Maher: Employee Savings Incentive Plan and
related supplemental matches -- $31,200; Split Dollar Term Insurance
Premium -- $2,394; (b) Mr. Pappas: Employee Savings Incentive Plan and
related supplemental matches -- $17,500; (c) Mr. Schenck: Employee Savings
Incentive Plan and related supplemental matches -- $14,800; (d) Mr. Geuther:
Employee Savings Incentive Plan and related supplemental matches -- $14,476;
deferred compensation plan matches and makeups -- $924; (e) Mr. Erikson:
Employee Savings Incentive Plan and related supplemental matches -- $12,000.
EMPLOYMENT AGREEMENTS
Mr. Maher's employment agreement with Great Western, as amended to date,
provides for a rolling three-year term and provides for various benefits,
including a current annual salary of $860,000 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" (as defined in the agreement),
including a death benefit payment to his beneficiaries equal to 250% of his then
current salary, reduced by the amount of company-provided life insurance
proceeds. Mr. Maher's beneficiaries would also be entitled to receive continued
payment of 50% 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, as well as continuation
of certain insurance benefits for two years. Upon termination due to disability,
Mr. Maher would continue to receive, until death or his 65th birthday, whichever
occurs first, 50% of the sum of his current salary plus his average bonus over
the prior three years, less benefits payable under the Company's long-term
disability plan, and 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, without offset for subsequent employment. 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. In the event of a qualifying
termination following a Change in Control (or during the pendency of a Potential
Change in Control or during the 6-month period thereafter), Mr. Maher is
entitled to a lump-sum severance payment equal to three times the sum of his
salary and target bonus; payment of a pro-rata target bonus to the date of
termination (if termination occurs in the same year in which a Change in Control
occurs, such payment will be offset by amounts received under the Annual
Incentive Compensation Plan for Executive Officers in connection with such
Change in Control); continuation of welfare-type benefits for three years;
immediate vesting of restricted shares and stock options (where such qualifying
termination occurs during the pendency of a Potential Change in Control or
during the 6-month period thereafter); and credit for years of service and years
of age equal to the remaining term of his agreement for purposes of calculating
his benefits under the Supplemental Executive Retirement Plan. For purposes of
Mr. Maher's employment agreement: (i) a "Change in Control" is defined generally
as (a) a change in the majority of the Board, subject to certain exceptions; (b)
any Person (as defined in the agreement) becoming the beneficial owner of 25% or
more of either the outstanding Common Shares or the combined voting power of the
Company's then outstanding securities; (c) consummation of the sale of all or
substantially all of the assets of the Company; (d) consummation of a merger or
consolidation of the Company other than one immediately following which the
Company's stockholders continue to hold at least 75% of the combined voting
power of the voting securities of the Company or the surviving corporation or
any parent thereof (provided, that if a February 20, 1997 amendment to Mr.
Maher's agreement which raised the threshold percentage to 75% would prevent a
transaction intended to qualify as a "pooling of interests" from so qualifying,
such threshold percentage will be 60%); or (e) stockholder approval of the
liquidation or dissolution of the Company; and (ii) a "Potential Change in
Control" generally occurs upon (a) any Person becoming the beneficial owner of
15% or more of either the outstanding Common Shares or the combined voting power
of the Company's then outstanding securities; (b) the execution by the Company
of an agreement, or the public announcement by the Company or any Person of an
intention to take (or to consider taking) actions the consummation of which
would result in a Change in Control; (c) the filing with the FDIC or the Office
of Thrift Supervision of an application for Change in Control; or (d) the
Board's adoption of a resolution to the effect that a Potential Change in
Control
19
<PAGE> 25
has occurred. Mr. Maher's agreement provides that he may elect to terminate his
employment, without a material breach by the Company, and receive the benefits
described above during the period commencing no earlier than eighteen months
following a Change in Control and ending no later than the second anniversary of
such Change in Control; provided, that the eighteen-month minimum period will
not apply if, at any time during the first year following such Change in
Control, more than 50% of the non-employee members of the Board as of the date
immediately preceding the Change in Control are no longer members of the Board;
and provided further, that, if Mr. Maher elects to so terminate his agreement,
cash benefits which would become payable will be reduced by 25%. In addition,
the Company will pay any additional amount necessary to make Mr. Maher whole
with respect to any excise tax that may be assessed under Section 4999 of the
Code, in respect of payments made to Mr. Maher under his employment agreement
and any other Great Western plan, agreement or arrangement in which Mr. Maher
participates. If all of the payments and benefits to which Mr. Maher may become
entitled in connection with a Change in Control are in the aggregate less than
the maximum amount he is entitled to receive without incurring a liability under
Section 4999 of the Code for any reason (including that some or all of such
entitlements do not constitute parachute payments), then he will be entitled to
receive such maximum amount. In the event of a good-faith dispute regarding
interpretation of the terms or enforcement of the provisions of his employment
agreement, Mr. Maher is entitled to recover reasonable attorney's fees. Under
the terms of the Merger Agreement, consummation of the Washington Mutual Merger
will constitute a Change in Control for purposes of Mr. Maher's employment
agreement.
Great Western has employment agreements with the other named Executive
Officers (and with Jaynie M. Studenmund and Ray W. Sims, the other executive
officers of Great Western that are not named 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, Erikson and Sims and Ms. Studenmund under
their employment agreements are $450,000, $450,000, $400,000, $315,000, $340,000
and $350,000, respectively, subject to periodic review and increase, but not
subject to decrease unless done in conjunction with a pro-rata salary reduction
applicable to all Great Western officers.
The employment agreements, as amended to date, provide for various benefits
to each other executive officer or such officer's beneficiaries in the event of
death, disability, or termination without "Cause" (as defined in the agreements)
and in the event of a qualifying termination following a Change in Control or
during the pendency of a Potential Change in Control (or during the 6-month
period thereafter). In the event of the Executive Officer's death, his or her
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 receive 50% of the sum of his or her
current salary plus average bonus over the prior three years, less benefits
under the Company's long term disability plan, until the disability ends, but
not later than age 65 or for a period greater than ten years. In all other
respects, the terms of these agreements are substantially similar to those
contained in Mr. Maher's employment agreement, except that the agreements do not
provide the right to terminate the agreements without a material breach by the
Company during the period commencing eighteen months following a Change in
Control and ending twenty-four months following such Change in Control. Under
the terms of the Merger Agreement, consummation of the Washington Mutual Merger
will constitute a Change in Control for purposes of these employment agreements.
20
<PAGE> 26
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 Compensation Committee (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 of the Executive
Officers have employment agreements with the Company as described on pages 19
and 20.
It is the Company's policy to place an increasingly significant percentage
of total executive compensation "at risk," principally through the award of
annual cash bonuses based on performance. Consistent with this policy, annual
salary increases are limited, resulting in total compensation for executive
officers as a group, excluding bonuses, at approximately the 50th percentile for
companies included in the compensation analysis. The Executive Officers have an
opportunity to significantly increase their compensation through bonuses and
stock option awards if performance targets set by the Committee are achieved.
Under the terms of the Great Western Financial Corporation Annual Incentive
Compensation Plan for Executive Officers (the "Annual Plan") approved by
stockholders in 1994, a substantial part of an executive's cash compensation is
contingent upon the achievement of the Company's performance goals set by the
Compensation Committee. The performance goal for the Executive Officers, other
than the President of the Consumer Finance Division, is a targeted earnings per
share as established on an annual basis by the Compensation Committee. For the
President of the Consumer Finance Division, the performance goal is based upon
the attainment of an earnings before taxes goal for the Consumer Finance
Division established annually by the Committee and the attainment of the
earnings per share target applicable to the other Executive Officers. The target
goals are established annually by the Compensation Committee on or before the
applicable deadline under the federal income tax rules. In fiscal year 1996,
targeted levels of incentive compensation were 40% of adjusted base salary for
the Company's Vice Chairmen, Executive Vice Presidents and the President of the
Consumer Finance Division, and 60% of adjusted base salary for the Chief
Executive. Depending upon the degree of attainment of the performance goals, the
executive's compensation is supplemented by fiscal year-end cash bonus payments
equal to as little as 0% or as much as 200% of the Executive Officer's
respective targeted level of incentive compensation. For 1996, the Committee
approved an earnings per share goal and, based on the Company's reported
earnings per share of $2.09, after adjustment in accordance with the Plan
provisions to account for non-recurring events, the Executive Officers, other
than the President of the Consumer Finance Division, were entitled to receive
79% of their respective targeted levels of incentive compensation. The 1996
earnings before taxes goal for the Consumer Finance Division was $102.2 million,
and $98.7 million was reported. Based upon the Company's reported earnings per
share and the reported earnings before taxes of the Consumer Finance Division,
the President of the Consumer Finance Division received 90% of his targeted
level of incentive compensation. 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 1996 for the Executive
Officers as a group was at approximately the 40th percentile for companies
included in the compensation analysis.
21
<PAGE> 27
In 1996, the Compensation Committee adopted stock ownership guidelines for
the Company's executive and senior officers requiring certain levels of
ownership of the Common Shares by the end of a five year period, except for
recently hired officers, for whom the period is seven years. The guidelines
provide for ownership of the Company's Common Shares by the Chief Executive in
an amount equal to five times his salary, ownership by the Vice Chairmen and
Executive Vice Presidents 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 Stock Plan for the
Company's senior and executive officers to provide long-term incentive awards in
amounts comparable to those awarded to executives of the companies included in
the SCA compensation analysis. Shares awarded under the program are subject to
forfeiture in certain circumstances and do not vest for ten years unless vesting
is accelerated by the Company's exceeding the median total stockholder return of
other major financial institutions over rolling three year performance cycles.
See the description of the restricted stock on pages 26 and 27. In 1996, 75% of
the original awards vested based on the Company's stockholder return.
In addition, the Committee approved year-end stock option grants for the
named Executive Officers under the 1988 Stock Plan. In deciding the number of
Common Shares to award each Executive Officer, the Committee considered the
officer's performance during 1996, and their individual contribution toward
reaching the Company's goals, their overall level of compensation in comparison
to their peers, both within the Company and among the companies included in the
SCA compensation analysis. The options awarded during the last fiscal year to
each named Executive Officer are set forth in the table on page 25.
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 Code. In doing so, the Committee may utilize
alternatives (such as deferring compensation) to qualify executive compensation
for deductibility and may rely on grandfathering provisions with respect to
existing contractual commitments.
Compensation Committee of the Board
of Directors, Great Western
Financial Corporation
Willis B. Wood, Jr., Chairman
H. Frederick Christie
Stephen E. Frank
John V. Giovenco
Enrique Hernandez, Jr.
Charles D. Miller
22
<PAGE> 28
GREAT WESTERN STOCK PRICE PERFORMANCE
The following graph compares the Company's cumulative stockholder return on
its Common Shares, including the reinvestment of dividends, with the return of
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,
S&P 500 INDEX AND S&P FINANCIAL INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P FINANCIAL
(FISCAL YEAR COVERED) GREAT WESTERN INDEX S&P 500 INDEX
<S> <C> <C> <C>
1991 100 100 100
1992 103 123 108
1993 124 137 118
1994 104 132 120
1995 172 204 165
1996 204 275 203
</TABLE>
Assumes $100 invested on December 31, 1991 in the stock of Great Western,
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.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
LOAN TRANSACTIONS
The following table shows as to certain of the Company's Executive Officers
and Directors: (i) the largest aggregate amount of indebtedness to the Company
in excess of $60,000 outstanding from January 1, 1996 to March 31, 1997; (ii)
the nature of the indebtedness; (iii) the outstanding balance of the
indebtedness on March 31, 1997; and (iv) the annual rate of interest charged on
the indebtedness. Information concerning the indebtedness to the Company by
members of the Compensation Committee of the Board of Directors is given
23
<PAGE> 29
under the caption "ELECTION OF DIRECTORS -- Compensation Committee Interlocks
and Insider Participation" on page 13.
<TABLE>
<CAPTION>
LARGEST INDEBTEDNESS
NAME OF EXECUTIVE AGGREGATE NATURE OF OUTSTANDING AT INTEREST
OFFICER OR DIRECTOR INDEBTEDNESS($) INDEBTEDNESS(1) MARCH 31, 1997($) RATE(%)(2)
- -------------------------------------- --------------- ---------------- ----------------- ----------
<S> <C> <C> <C> <C>
David Alexander....................... 249,485 Residential 240,829 4.71
J. Lance Erikson...................... 787,500 Residential 782,598 4.81
222,098 Residential 215,340 4.71
Carl F. Geuther....................... 156,154 Residential 150,763 4.71
1,335,074 Residential 1,304,735 4.71
John F. Maher......................... 417,003 Residential 403,012 4.71
751,391 Residential 726,200 4.71
James F. Montgomery................... 958,390 Residential 0
1,498,197 Residential 1,467,615 4.81
690,000 Residential 683,058 4.81
500,000 Unsecured 500,000 8.50
Michael M. Pappas..................... 900,000 Residential 893,330 4.81
204,347 Residential 198,323 4.71
A. William Schenck III................ 613,000 Residential 600,502 4.81
1,212,000 Residential 1,188,638 4.81
</TABLE>
- ---------------
(1) Loans secured by the same residence are aggregated.
(2) Interest on these loans, except for Mr. Montgomery's prime rate unsecured
loan, is generally at monthly adjustable rates equal to the Company's cost
of funds plus .25%. This rate was approximately 2.22% to 2.42% below that on
similar loans to the public during 1996.
The residential loans described above were made pursuant to the Company's
Home Loan Program described on pages 29 and 30 and are secured by trust deeds or
mortgages on the respective residences of the named Directors and Executive
Officers.
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 Great
Western or GWB to be affiliated or associated may obtain "margin" loans from a
subsidiary of Great Western, obtain secured and unsecured 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 Great Western'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 do not involve more than the normal risk of collectibility or
present other unfavorable features.
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
in Control benefits to the named Executive Officers, other than group life and
accident insurance, group hospitalization and similar group payments and
benefits.
24
<PAGE> 30
STOCK BENEFIT PLANS
The 1988 Stock Plan provides for various types of stock incentives,
including stock options, restricted shares, bonus stock and performance shares.
The only awards granted to date under the 1988 Stock Plan have been stock
options and restricted stock (with performance vesting features). With respect
to options granted under the 1988 Stock Plan, the Administrator may, with the
consent of a holder, substitute awards or modify the terms and conditions of any
outstanding award to extend the exercisability and term (subject to the maximum
term limits), reduce the price, accelerate exercisability or vesting or preserve
benefits of the award. The 1988 Stock Plan provides for automatic acceleration
of the exercisability of awards and accelerated vesting of awards upon a Change
in Control or upon a qualifying termination of employment during the pendency of
a Potential Change in Control (or during the six-month period thereafter). Under
the 1988 Stock Plan, the terms "Change in Control" and "Potential Change in
Control" are defined as they are in Mr. Maher's employment agreement. Under the
terms of the Merger Agreement, consummation of the Washington Mutual Merger will
constitute a Change in Control for purposes of the 1988 Stock Plan.
OPTIONS
There were no grants of SARs to the named Executive Officers in 1996 and
the following market priced stock options were granted to the named Executive
Officers in 1996 based in part on performance in 1995 and 1996 (the first number
in each column represents the award for 1995 performance and the second number
represents the award for 1996 performance):
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F)
- ----------------------------- --------------- ------------- -------------- --------------- -----------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING GRANTED TO GRANT DATE
OPTIONS GRANTED EMPLOYEES IN EXERCISE PRICE PRESENT
NAME (#)(1) FISCAL YEAR ($/SHARE)(2) EXPIRATION DATE VALUE($)(3)
- ----------------------------- --------------- ------------- -------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
John F. Maher................ 175,000 4.58 23.375 01/23/06 $ 971,250
200,000 5.23 30.875 12/09/06 $ 1,334,000
Michael M. Pappas............ 70,000 1.83 23.375 01/23/06 $ 388,500
50,000 1.31 30.875 12/09/06 $ 333,500
A. William Schenck III....... 70,000 1.83 23.375 01/23/06 $ 388,500
80,000 2.09 30.875 12/09/06 $ 533,600
Carl F. Geuther.............. 60,000 1.57 23.375 01/23/06 $ 333,000
70,000 1.83 30.875 12/09/06 $ 466,900
J. Lance Erikson............. 40,000 1.05 23.375 01/23/06 $ 222,000
50,000 1.31 30.875 12/09/06 $ 333,500
</TABLE>
- ---------------
(1) These options vest and become exercisable in 25% installments on each of the
first four anniversaries of their grant, subject to acceleration in certain
circumstances such as a Change in Control. The options have a 10-year term,
subject to earlier termination in certain circumstances related to
termination of employment. The instrument setting forth the terms of the
option may provide that the exercise price of the option may be satisfied by
delivery of previously owned shares or by the withholding of shares having a
fair market value at the date of exercise equal to such exercise price. At
the election of the optionee, the Company's tax withholding obligation with
respect to the exercise of the option may also be satisfied by the
withholding of shares having a fair market value at the date of exercise
equal to such obligation.
(2) All stock options were granted at the fair market value on the date of
grant.
(3) The shares were valued based on the Black-Scholes option pricing model
adapted for use in valuing executive stock options using the following
assumptions for the January 23, 1996 grant: the 52 week average stock price
of $19.82, three year historical average stock price volatility of .2288, a
three year historical average dividend yield of 3.63%, a risk-free rate
equal to the 52 week average of ten-year Treasury Bonds of 6.60% and an
option term of 10 years. The shares granted on December 9, 1996, were valued
based on the Black-Scholes option pricing model adapted for use valuing
executive stock options
25
<PAGE> 31
using the following assumptions: the 52 week average stock price of $24.37,
three year historical average stock price volatility of .2319, a three year
historical average dividend yield of 3.69%, a risk free rate equal to the 52
week average of ten year Treasury Bonds of 6.53% and an option term of 10
years. The valuation method is hypothetical.
The following table shows for each of the named Executive Officers the
shares acquired on exercise of options during 1996, the difference between the
exercise price and the market value of the underlying shares on the date of
exercise, and (as to outstanding options at December 31, 1996) 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 VALUE OF
SHARES UNDERLYING UNEXERCISED
ACQUIRED UNEXERCISED IN-THE-MONEY
ON OPTIONS AT FY-END OPTIONS AT FY-END
EXERCISE VALUE (#) EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED UNEXERCISABLE(1) UNEXERCISABLE(2)
- ---------------------------------- ------ -------- --------------------- ---------------------
<S> <C> <C> <C> <C>
John F. Maher..................... 62,500 $433,241 358,542/450,000 $4,967,373/1,912,500
Michael M. Pappas................. 50,000 $485,688 155,000/155,000 2,149,375/826,875
A. William Schenck III............ 0 0 32,262/246,786 245,998/1,131,743
Carl F. Geuther................... 35,000 $252,125 171,000/165,000 2,381,625/770,625
J. Lance Erikson.................. 25,000 $139,767 89,010/110,000 122,604/472,500
</TABLE>
- ---------------
(1) The numbers shown in column (d) include all unexercised options held by the
named Executive Officers, 1,482,600 of which were "in the money." None of
the named Executive Officers holds any outstanding SARs.
(2) All values are based solely on the market value of the Common Shares at the
end of 1996, minus the exercise price of "in the money" options.
RESTRICTED STOCK
In January 1992, the Administrator first authorized awards of
performance-based restricted stock under the 1988 Stock Plan and established the
specific vesting provisions for such awards as described below. If the recipient
remained with the Company, the shares would vest completely 10 years after the
award date. Prior to that, they were subject to both accelerated vesting and
risk of forfeiture to the Company, in whole or in part, upon certain events. The
vesting was and is accelerated if and to the extent that the Company's common
stock performance, as measured by appreciation, dividends and other
distributions ("stockholder return"), over three-year performance cycles,
representing the three-year period ending December 31, 1995 and periodically
thereafter, exceeded and exceeds by specified amounts the stockholder 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. Seventy-five percent of the original awards vested in 1996,
based on the Company's stockholder return. The remainder will continue to vest
under the terms of the related agreement and a portion of the remaining award
will vest in the event of death or disability of the holder, at the rate of 20%
per year. Vesting of these awards may be accelerated in certain other
circumstances, including upon a Change in Control, or in the case of a
qualifying termination of employment during the pendency of a Potential Change
in Control (or during the six-month period thereafter) or upon retirement.
Except as noted above, the unvested performance-based restricted shares
generally will be forfeited upon a termination of employment (or, in Mr.
Montgomery's case, termination of service as a consultant and a Director). 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.
26
<PAGE> 32
Under the terms of the Merger Agreement, consummation of the Washington Mutual
Merger will constitute a Change in Control for purposes of the 1988 Stock Plan.
No awards of performance-based restricted stock or other long-term
incentive awards were granted to the named Executive Officers in 1996.
DEFERRED COMPENSATION PLANS
Under the Great Western deferred compensation plans, as amended to date,
participants are entitled to defer compensation until retirement, death, other
termination of employment or service, 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% of the fixed rate yield will be payable in the event of death, under
certain circumstances upon retirement after age 55, and upon termination of
employment after plan participation for a specified number of years. The plans
also provide for Company matching contributions on deferred compensation similar
to that provided under the Employee Savings Incentive Plan described below. The
Senior Officers' Deferred Compensation Plan supplements benefits payable to
Executive Officers participating in the Employee Savings Incentive Plan (the
"Savings Plan") to the extent that Savings Plan benefits are reduced under
applicable Code limitations. The deferred compensation plans provide for full
vesting of employer matching contributions upon a Change in Control or upon a
qualifying termination of employment during the pendency of a Potential Change
in Control (or during the six-month period thereafter). (Under the deferred
compensation plans, the terms "Change in Control" and "Potential Change in
Control" are defined as they are in Mr. Maher's employment agreement.) The plans
also 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 in
Control, and to elect within two years after a Change in Control to withdraw
their account balance in a lump sum with a 5% penalty; if a participant's
employment or service has terminated because of Retirement (as defined in the
plans) at the time of such election, such participant is entitled to the
enhanced yield on his or her account. During the pendency of a Potential Change
in Control, and for six months thereafter, and for a period of two years
following a Change in Control, the plans may not be terminated, nor may they be
adversely amended without the consent of two-thirds of the participants. 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 in Control. The plans also provide for pension benefits
based on deferred compensation similar to those provided under the Company's
Retirement Plan (described below). Under the terms of the Merger Agreement,
consummation of the Washington Mutual Merger will constitute a Change in Control
for purposes of the deferred compensation plans.
EMPLOYEE SAVINGS INCENTIVE PLAN
Under the Savings Plan, eligible employees may authorize payroll deductions
for contributions which, at the participant's direction, may be invested in
money market, equity, debt, balanced and Company stock funds. Under the Savings
Plan, employee contributions are matched by the 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. 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.
RETIREMENT PLAN
The Retirement Plan is a non-contributory group pension plan providing for
monthly benefits in the event of retirement or, at the election of the
participant, a cash balance at retirement or termination of employment. On
January 1, 1997, the Company converted the Retirement Plan to a cash balance
plan based upon the results of extensive research regarding employee
demographics and competitive practices among the Company's peers. 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
27
<PAGE> 33
amount to obtain the maximum federal income tax deduction. Accrued benefits vest
fully after five years of participation and employees may elect to take the
value of their account as a lump sum payment if they terminate their employment
with the Company. Forfeitures of non-vested benefits are applied to reduce the
Company's contributions.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Supplemental Executive Retirement Plan, as amended to date (the
"SERP"), provides a target retirement benefit at the participant's Normal
Retirement Date (defined under the SERP as following the later to occur of the
attainment of age 60 or 20 years of service for Mr. Maher and the later to occur
of the attainment of age 62 or 25 years of service for the other named Executive
Officers) equal to a percentage of average salary and bonus (65% for Mr. Maher
and 60% for the other named Executive Officers). The SERP provides that Mr.
Schenck will be credited for service with a previous employer. Under the terms
of the SERP, upon a qualifying termination of employment within the two-year
period following a Change in Control (or during the pendency of a Potential
Change in Control or during the six-month period thereafter), the named
Executive Officers will become entitled to receive retirement benefits with no
reduction for early retirement. (Under the SERP, the terms "Change in Control"
and "Potential Change in Control" are defined as they are in Mr. Maher's
employment agreement.) In addition, the SERP provides that during the pendency
of a Potential Change in Control, and for six months thereafter, and for a
period of two years following a Change in Control, the SERP may not be
terminated, nor may it be adversely amended without the approval of two-thirds
of SERP participants. The SERP also provides the participants with retirement
benefits that would otherwise exceed the annual limit on such benefits imposed
by the Code. Under the terms of the Merger Agreement, consummation of the
Washington Mutual Merger will constitute a Change in Control for purposes of the
SERP.
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 under the
SERP, both of which are defined benefit plans, since the amount of the accruals
thereunder were not determined on an individual basis by the actuaries for
either of the plans during 1996. The following table illustrates the total
annual retirement benefits which would be provided under the benefit formula
described in the Retirement Plan and SERP to the named Executive Officers (other
than Mr. Maher) in various earnings classifications upon normal retirement in
1996. The benefit formula presently in both plans provides for an offset of
certain Social Security benefits, and Mr. Schenck's benefits under the SERP will
be offset by benefits payable under retirement plans of a previous employer. The
amounts shown in the following table do not reflect these offsets.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
-------------------------------
25
AVERAGE PAY FOR 15 YEARS
RETIREMENT PLAN PURPOSES YEARS 20 YEARS OR MORE
- --------------------------------------------------------------- ------- --------- -------
<S> <C> <C> <C>
$350,000....................................................... 126,000 168,000 210,000
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. The table below does 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.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
AVERAGE PAY FOR -------------------------------
RETIREMENT PLAN PURPOSES 20 YEARS OR MORE
- --------------------------------------------------------------- -------------------------------
<S> <C> <C> <C>
$1,400,000..................................................... 910,000
1,600,000..................................................... 1,040,000
1,800,000..................................................... 1,170,000
</TABLE>
28
<PAGE> 34
Except as noted in the immediately succeeding sentence, 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 page 18. Mr. Maher's employment agreement provides that, for purposes
of calculating his benefits under the SERP, the following levels of compensation
will be assumed: on any date in 1997, SERP benefits will be based on annual
compensation of $1,462,000; on any date in 1998, SERP benefits will be based on
actual compensation for 1997; on any date in 1999, SERP benefits will be based
on the average actual compensation for 1997 and 1998; and for any date after
1999, SERP benefits will be based on the definition of "average monthly
compensation" set forth in the SERP. The named Executive Officers have the
following number of years of credited service: Mr. Maher, 23 years; Mr. Pappas,
42 years; Mr. Schenck, 28 years; Mr. Geuther, 22 years; and Mr. Erikson, 28
years.
UMBRELLA TRUSTS
The Board has authorized the establishment of two separate Umbrella Trusts
(the "Trusts") as a security arrangement for some or all of the participants in
the Company's SERP, Retirement Restoration Plan, Director's Retirement Plan,
supplemental retirement benefit for Mr. Gryp, the employment agreements with the
Executive Officers, the consulting agreement with Mr. Montgomery and the
deferred compensation plans (collectively, the "Plans").
The Trusts, as amended to date, provide for the full funding of benefits
provided through the Trusts upon a Potential Change in Control, subject to
return following the expiration of the Potential Change in Control Period
(generally defined in the Trusts as six months following the date on which such
Potential Change in Control ceases to exist, if no Change in Control has
occurred during such period). (Under the Trusts, the terms "Change in Control"
and "Potential Change in Control" are defined as they are in Mr. Maher's
employment agreement.) In addition, the Trusts provide that within 30 days
following the end of each year following a Change in Control, the Company shall
be required to contribute to the Trusts the amount, when added to the assets in
the Trusts, needed to provide the benefits under the Plans. Following a Change
in Control or during the pendency of a Potential Change in Control (and for 6
months thereafter), the amended Trusts may not be adversely amended without the
consent of two-thirds of the participants in the Plans.
Under the terms of the Trusts, the Trustee shall hold the trust assets for
the benefit of the participants in the Plans unless the Company is unable to pay
its debts as they become due or the Company is the subject of a pending
proceeding as a debtor under the federal Bankruptcy Code. If either of those
events occurs, the Trustee shall hold the trust assets for the benefit of the
general creditors of the Company, which may include participants in the Plans.
For purposes of the Trusts, a Potential Change in Control has occurred.
HOME LOAN PROGRAM
The Company has a Home Loan Program (the "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 employee participant'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 Great Western 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 "ELECTION OF
DIRECTORS -- 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. Program participants
are disqualified from further participation after certain terminations of
employment or service, however, the Program, as amended to date, provides all
participants with protection from adverse amendments to the terms of existing
loans or suspension of the Program following a Change in Control, protection
against disqualification from participation following a termination without
cause or a reduction in hours to less than 20 1/2 per week following a Change in
Control, and protection against disqualification from participation following a
termination during the pendency of a
29
<PAGE> 35
Potential Change in Control (or during the six-month period thereafter). Under
the Program, the terms "Change in Control" and "Potential Change in Control" are
defined as they are in Mr. Maher's employment agreement. Under the terms of the
Merger Agreement, consummation of the Washington Mutual Merger will constitute a
Change in Control for purposes of the Program.
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of March 31, 1997 with
respect to the only persons known by the Company to own beneficially more than
5% of the outstanding Common Shares, based upon reports filed with the
Securities and Exchange Commission (the "SEC"). 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 Common Shares 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 Common Shares 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
TITLE OF CLASS NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ----------------------------- ------------------------------ -------------------- ----------------
<S> <C> <C> <C>
Common Stock................. Wellington Management Company 8,771,730(1) 6.37%
75 State Street
Boston, Massachusetts 02109
Common Stock................. Vanguard/Windsor Fund, Inc. 8,236,786(2) 5.98%
100 Vanguard Boulevard
P. O. Box 2600
Malvern, Pennsylvania 19355
</TABLE>
- ---------------
(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 53,902 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.
THE AHMANSON PROPOSALS
In addition to its solicitation of proxies in support of the Ahmanson
Nominees, Ahmanson is soliciting proxies in favor of approval of the Ahmanson
Proposals, which consist of one non-binding advisory resolution and five
separate amendments to Great Western's By-laws. The full text of each of the
Ahmanson Proposals is set forth below. Great Western believes that the Ahmanson
Proposals, coupled with Ahmanson's attempt to elect the Ahmanson Nominees to
your Board, are a part of Ahmanson's scheme to prevent consummation of the
Washington Mutual Merger and to reduce the flexibility of the Board to act at
all times in the best interests of Great Western and its stockholders. As such,
Great Western believes that these proposals are designed to benefit Ahmanson and
advance the Ahmanson Merger Proposal at the expense of Great Western and its
stockholders. THE BOARD STRONGLY RECOMMENDS THAT GREAT WESTERN STOCKHOLDERS VOTE
AGAINST EACH OF THE AHMANSON PROPOSALS.
The Board does not believe that Ahmanson is interested in promoting
corporate governance provisions that benefit Great Western stockholders;
Ahmanson's only interest is to benefit itself. For example, the Board believes
that Proposal No. 3, which would amend Great Western's By-laws to provide that
holders of 10% of the Common Shares can call a special meeting of stockholders,
is intended to benefit Ahmanson, which would
30
<PAGE> 36
then be in a position to align itself with the holders of a small minority of
Common Shares and repeatedly compel the holding of special meetings of
stockholders at which Ahmanson could present even more resolutions and proposed
By-law amendments. In this connection, the Board notes that Ahmanson's own By-
laws do not even allow its stockholders to call a special meeting even if all
stockholders wanted to do so. Further, with respect to Proposal No. 7, the Board
notes that Ahmanson's own By-laws specifically provide that any By-law provision
(including those adopted at meetings of stockholders) may be amended or repealed
by Ahmanson's Board of Directors. IN FACT, NOT A SINGLE BY-LAW PROVISION BEING
PROPOSED BY AHMANSON APPEARS IN AHMANSON'S OWN BY-LAWS. IF AHMANSON TRULY
BELIEVED THAT ITS FIVE PROPOSED BY-LAW AMENDMENTS MAKE GOOD GOVERNANCE SENSE, IT
WOULD CERTAINLY HAVE THE SAME PROVISIONS IN ITS OWN BY-LAWS.
As previously noted in this Proxy Statement, each Ahmanson Nominee is
entitled to a $30,000 benefit from Ahmanson. Ahmanson has also agreed to
indemnify the Ahmanson Nominees and pay their out-of-pocket expenses.
Accordingly, despite Ahmanson's protestations to the contrary, the Board
believes that the Ahmanson Nominees can hardly be "independent" of Ahmanson.
Further, the Board believes that the Ahmanson Proposals, which follow the five
proposals made by Ahmanson in the Ahmanson Consent Solicitation, are part and
parcel of Ahmanson's scheme to continually harass the Company in an effort to
prevent consummation of the Washington Mutual Merger. ACCORDINGLY, THE BOARD
STRONGLY RECOMMENDS THAT YOU VOTE AGAINST EACH OF THE AHMANSON PROPOSALS.
The full text of each of the Ahmanson Proposals is set forth below. The
Ahmanson Proposals, as numbered below, correspond to the numbered proposals in
the Notice of Annual Meeting as well as to the enclosed GOLD proxy card.
PROPOSAL NO. 2:
"RESOLVED, that the stockholders of Great Western Financial Corporation
("Great Western") urge the Great Western Board of Directors (the "Great
Western Board"), if requested by H. F. Ahmanson & Company ("Ahmanson") or
any other person making a bona fide and concrete merger proposal, to
provide all nonpublic information given to Washington Mutual, Inc. to
Ahmanson or such other person and to participate in discussions and
negotiations with, and consider each and every bona fide and concrete
merger proposal made by, Ahmanson or such other person and otherwise to
facilitate any effort or attempt by Ahmanson or such other person to make
or implement a merger proposal in order to maximize stockholder value.
Furthermore, in evaluating any merger proposal, the Great Western Board
shall take into account the potential that the Great Western Stockholders
will receive a substantial portion of the value of the cost savings
resulting from a merger with Ahmanson or, if applicable, such other
person."
PROPOSAL NO. 3:
Amend Section 3 of the By-laws of [Great Western] by adding to the end
thereof the following paragraph:
"In addition, a special meeting of the stockholders of the Corporation
shall be called by the Secretary upon the written request, stating the
purpose of the meeting and the meeting date, of stockholders who
together own of record 10% or more of the stock of the Corporation
having voting power. The notice shall be mailed by the Secretary within
20 days following receipt of such request. If the Secretary fails to
call the special meeting and mail the notice as required by the
preceding sentence, a person designated by the stockholders requesting
the meeting shall have the power to call the special meeting and mail
such notice. At a special meeting called at the request of stockholders,
the meeting shall be presided over by a person designated by the
stockholders calling the meeting."
PROPOSAL NO. 4:
Amend Section 12 of the By-laws of [Great Western] by adding to the end
thereof (or, if Amendment 3 [Proposal No. 5] described below is adopted, by
adding as the penultimate paragraph) the following paragraph:
"No person may be chosen by the directors of the Corporation to fill any
vacancy on the board of directors, whether arising through death,
resignation or removal of a director, or through an increase
31
<PAGE> 37
in the number of directors of any class, if such person was previously
nominated as a director and lost in an election by the stockholders of
the Corporation."
PROPOSAL NO. 5:
Amend Section 12 of the By-laws of [Great Western] by adding to the end
thereof the following paragraph:
"Any slate of directors elected in opposition to the recommendation of
the incumbent board of directors shall be represented on an executive
committee of the board of directors of the Corporation, if one is
created, or on any other committee of the board that exercises powers
that are currently or would normally be exercised by such a committee or
only by the full board, including the power to review any merger
proposal."
PROPOSAL NO. 6:
Amend Section 13 of the By-laws of [Great Western] by inserting immediately
after the second sentence thereof the following two sentences:
"Notwithstanding the foregoing sentence, if any of the following actions
are to be considered by the board of directors at a meeting, notice must
be given which notice must specify that such actions are to be
considered and set forth appropriate details with respect thereto: any
"Acquisition Transaction" as hereinafter defined, amendment of the
Rights Agreement referred to in Section 24, adoption of any similar
rights agreement, amendment of the By-laws, or any other action that
would preclude or make more expensive or more difficult a merger with or
acquisition of the Corporation by any person that has made a bona fide
proposal to merge with or acquire the Corporation or that would favor
one potential acquiror of the Corporation over another acquiror.
"Acquisition Transaction" means any merger, consolidation or similar
transaction involving, or any purchase of all of or any substantial
portion of the assets, deposits or any equity securities of, the
Corporation or any of its subsidiaries."
PROPOSAL NO. 7:
Amend the By-laws of [Great Western] by adding a new Section 25 thereto
which reads in its entirety as follows:
"Section 25. Neither this Section 25 nor any of the By-law provisions
added or changed by vote of stockholders at the 1997 annual meeting of
stockholders of this Corporation may be amended or repealed without the
affirmative vote of the holders of a majority of the stock of the
Corporation having voting power."
THE BOARD STRONGLY RECOMMENDS THAT YOU VOTE AGAINST EACH OF THE AHMANSON
PROPOSALS BY SIGNING, DATING AND RETURNING THE GOLD PROXY CARD TODAY.
NON-BINDING STOCKHOLDER RESOLUTION
Ms. Joan Adler, 3511 Stonehill Place, Shearman Oaks, California 91423,
holder of 100 Common Shares, has submitted the Stockholder Resolution set forth
below for consideration by the stockholders at the Annual Meeting. AS DISCUSSED
BELOW, THE BOARD OPPOSES THE STOCKHOLDER RESOLUTION AND RECOMMENDS THAT GREAT
WESTERN STOCKHOLDERS VOTE AGAINST IT.
PROPONENT'S SUPPORTING STATEMENT
Whereas: There appears to be widespread confusion by Great Western bank
customers over the uninsured nature of mutual funds and other uninsured
investment products sold by Great Western's investment subsidiary, Great Western
Financial Securities Corporation. It also appears that much of the confusion is
caused by the fact that these non-FDIC insured products are sold by commissioned
salespeople on the bank floors, side-by-side with bank employees. Evidence of
this confusion includes the following:
- - The FDIC shield on each bank door misleads some bank customers into believing
that all transactions within the bank are FDIC insured against losses.
32
<PAGE> 38
- - In 1994 Prophet Market Research conducted a national survey of fifty banks
regarding their sales of mutual funds. According to a Los Angeles Times
article dated September 15, 1994, Great Western "ranked among the worst" in
failing to disclose that their investments were not government insured.
- - On May 14, 1996, the Los Angeles Times reported the results of a much
anticipated survey released by the FDIC. It found that in 28% of all
face-to-face meetings with surveyors posing as investors, bank representatives
failed to disclose that the products they were selling were not federally
insured.
- - Great Western has conducted their own survey on this issue finding significant
confusion.
- - Senior citizens make up a large share of Great Western's customers and seniors
are often most risk-averse given the inability of many to return to the
workplace. Furthermore, numerous consumer organizations, including AARP and
Consumers Union, have criticized the way that banks market mutual funds.
- - The salespeople who work for Great Western Financial Securities Corporation
work on a partial commission structure which creates a significant incentive
to close a sale.
- - These salespeople work side-by-side with other bank personnel, and given the
depth of confusion which still exists, no amount of signage can adequately
differentiate them from the other bank personnel.
- - There are two certified federal class actions, one state class action, one
multi-plaintiff state action, many arbitrations, and hundreds of complaints
alleging that Great Western and/or its subsidiaries have engaged in fraudulent
activity in relation to its sale of mutual funds.
- - The SEC is just concluding a year-long investigation into allegations that
Great Western and/or its subsidiaries have engaged in fraudulent activity in
relation to its sale of mutual funds.
Whereas, there are numerous strategies to more effectively deal with this
problem of crisis proportions, including a requirement that all sales of
uninsured investment products be conducted off the bank floor, either in a
separate office connected to the bank floor or at a wholly separate location.
Another approach would include a divestiture of its broker-dealer subsidiary.
"Resolved: Stockholders request that the Board perform a full policy review
of the customer confusion between Great Western's investment products and
the FDIC-insured products and accounts. Stockholders further request that
the Board then investigate all options available to best protect Great
Western Bank's hard-earned reputation, including divesting itself of its
broker dealer subsidiary."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE STOCKHOLDER RESOLUTION FOR
THE FOLLOWING REASONS:
Following receipt of the proposal by the Company, Mr. Maher, the Company's
Chairman and Chief Executive Officer, instructed Mr. Schenck, the Company's
Vice-Chairman, and Mr. Overholt, President of Great Western Financial Securities
Corporation ("GWFSC"), to prepare and present to the Board of Directors a
comprehensive report on GWFSC and its business activities. Such report was
presented to and considered by the Board at a meeting held on March 25, 1997,
and specifically addressed the particular issues raised in the proposal
(including the sale of investment products by GWFSC and the possible divestiture
of the broker-dealer subsidiary) as well as other matters affecting or relating
to GWFSC. After the presentation, the Board concluded that the operations of
GWFSC were being conducted consistent with adequate consumer safeguards and
regulatory standards. Further, the Board determined that these operations were
an important complement to the Company's retail banking activities. The contents
of the report and the Board's response thereto will be addressed at the Annual
Meeting.
The Board believes that the actions taken by the Company fully implement
the proposal, and to repeat such actions would be an inefficient and imprudent
use of the Company's time and resources. ACCORDINGLY, THE BOARD RECOMMENDS THAT
STOCKHOLDERS VOTE AGAINST THE STOCKHOLDER RESOLUTION.
LITIGATION
On February 18, 1997, Ahmanson filed a Verified Complaint for Declaratory
and Injunctive Relief against Great Western and its directors (the "Ahmanson
Complaint") in the Court of Chancery of the State of Delaware. The Ahmanson
Complaint alleges, among other things, that: (i) the defendants have breached
33
<PAGE> 39
their fiduciary duties with respect to the Company's Stockholders Rights Plan
(the "Rights Plan"); (ii) the adoption of any defensive measure by the
defendants which has the effect of impeding, thwarting, frustrating or
interfering with the Ahmanson Merger Proposal would constitute a breach of the
defendants' fiduciary duties; and (iii) the individual directors of Great
Western have breached their fiduciary duties with respect to Section 203 (the
"Delaware Business Combination Statute") of the Delaware General Corporation Law
("DGCL").
Ahmanson seeks declaratory and injunctive relief as follows: (i) an order
enjoining the defendants from adopting any defensive measure which has the
effect of impeding, thwarting, frustrating or interfering with the Ahmanson
Merger Proposal; (ii) an order compelling the defendants to redeem the rights
associated with the Rights Plan or to amend the Rights Plan so as to make it
inapplicable to the Ahmanson Merger Proposal; (iii) an order enjoining the
defendants from taking any action pursuant to the Rights Plan that would dilute
or interfere with Ahmanson's voting rights or otherwise discriminate against
Ahmanson; (iv) an order compelling the defendants to approve the Ahmanson Merger
Proposal for the purposes of the Delaware Business Combination Statute; (v) an
order enjoining the defendants from taking any action to enforce or apply the
Delaware Business Combination Statute that would impede, thwart, frustrate or
interfere with the Ahmanson Merger Proposal; and (vi) an order awarding Ahmanson
its costs and expenses in the action.
On February 26, 1997, Great Western and the individual defendants filed
their Answer, and Affirmative Defenses to the Ahmanson Complaint and Great
Western filed its Counterclaims to the Ahmanson Complaint. In the Answer, Great
Western denied all of the material allegations raised by the Ahmanson Complaint
and asserted affirmative defenses, including that: (i) the Ahmanson Complaint
fails to state a claim on which relief can be granted; and (ii) Ahmanson is
acting in its own self interest at the expense of Great Western and its
stockholders and thus comes to Court with unclean hands. In its Counterclaims to
the Ahmanson Complaint, Great Western seeks, among other things, declaratory and
injunctive relief, including dismissal of the Ahmanson Complaint with prejudice
and denial of the relief requested by Ahmanson. Ahmanson and Great Western have
commenced discovery. Great Western and Ahmanson are currently in the process of
responding to reciprocal requests for documents.
Between February 18, 1997 and February 26,1997, six complaints (the
"Complaints") were filed against Great Western and its directors in the Court of
Chancery of the State of Delaware by Fred T. Isquith, Harry Lewis, Bernard
Bildstein, Charles Uttenreither, Melvyn Zupnick and Emil Schachter. Each action
was brought on behalf of the plaintiff, individually, and as a purported class
action on behalf of all stockholders of Great Western. The Complaints allege,
among other things, that the defendants are violating their fiduciary duties
owed to the stockholders of Great Western with respect to the Ahmanson Merger
Proposal. The plaintiffs generally seek: (i) an order declaring that the action
may be maintained as a class action; (ii) an order preliminarily and permanently
enjoining the defendants to consider and negotiate with respect to all bona fide
offers or proposals for Great Western or its assets, in the best interests of
Great Western stockholders; and (iii) compensatory damages, the costs and
disbursements of the action and such other and further relief as may be just and
proper. In addition, certain plaintiffs seek judgments ordering Great Western's
directors, individually, to announce their intention with respect to certain
matters relating to the Ahmanson Merger Proposal. Great Western and its
directors deny the operative allegations of the Complaints and will file
responses thereto as appropriate.
On March 7, 1997, Ahmanson filed a Motion for Leave to File an Amended and
Supplemental Complaint against Great Western and its directors (the "Ahmanson
Supplemental Complaint") in the Court of Chancery of the State of Delaware. In
addition to the allegations made in the Ahmanson Complaint, the Ahmanson
Supplemental Complaint further alleges, among other things, that: (i) the
defendants have failed to create a level playing field by discriminatorily
favoring other potential bidders to the exclusion of Ahmanson and by entering
into its Merger Agreement with Washington Mutual; (ii) the defendants have
actively and unlawfully sought to thwart its stockholders from exercising
certain of their rights for the purpose of entrenchment; (iii) the defendants
have failed to find the best value reasonably available; and (iv) the defendants
have irreparably harmed Ahmanson by depriving it of the unique opportunity to
acquire Great Western. Consequently, Ahmanson seeks additional declaratory and
injunctive relief enjoining Great Western and the individual defendants from,
among other things, discriminating against Ahmanson, delaying Great
34
<PAGE> 40
Western's annual meeting of stockholders, or taking steps to consummate the
Washington Mutual Merger or other transactions with Washington Mutual.
On March 14, 1997, a complaint (an "Additional Complaint") was filed
against Great Western and its directors in the Court of Chancery of the State of
Delaware by Marcel Ullman and Joseph Sonnenberg. The Additional Complaint was
brought on behalf of the plaintiffs, individually, and as a purported class
action on behalf of all stockholders of Great Western. The Additional Complaint
alleges, among other things, that the defendants are violating their fiduciary
duties owed to the stockholders of Great Western by failing to hold an open and
fair auction of Great Western, failing to negotiate the acquisition of Great
Western with all interested parties, and failing to provide a level playing
field through the use of a termination fee in the Merger Agreement and
employment of a "poison pill." The plaintiffs generally seek: (i) an order
declaring that the action may be maintained as a class action; (ii) an order
that the defendants carry out their fiduciary duties and requiring them to
respond in good faith to all bona fide potential acquirors of Great Western;
(iii) an order preliminarily and permanently enjoining implementation of Great
Western's poison pill; (iv) an order rescinding the severance agreements to be
paid to the defendants and the termination fee to be made to Washington Mutual;
and (v) the costs and disbursements of the action and such other and further
relief as may be just and proper. Great Western and its directors deny the
operative allegations of the Additional Complaint; however, an answer has not
yet been filed and discovery has not yet commenced.
On March 18, 1997, Fred T. Isquith, Harry Lewis, Bernd Bildstein, Charles
Uttenreither, and Emil Schachter filed an Amended Class Action Complaint against
Great Western and its directors in the Court of Chancery of the State of
Delaware (the "Amended Class Action Complaint"). The Amended Class Action
Complaint alleges, among other things, that: (i) the individual defendants are
violating their fiduciary duties owed to plaintiffs and other members of the
class with respect to the Ahmanson Merger Proposal; (ii) the individual
defendants have violated their fiduciary duties with respect to certain actions
taken in connection with the proposed merger between Great Western and
Washington Mutual; and (iii) the individual defendants are acting to entrench
themselves by favoring Washington Mutual at the expense and to the detriment of
the public stockholders of Great Western. The plaintiffs seek judgments: (i)
declaring that the action is a proper class action and certifying plaintiffs as
class representatives; (ii) ordering the individual defendants to announce their
intention with respect to certain matters relating to, among other things, the
maximization of stockholders value and the employment of the Rights Plan; (iii)
enjoining any transaction between Great Western and Washington Mutual which does
not maximize stockholder value; (iv) declaring the approval of the fee to be
paid to Washington Mutual in the event that the Merger Agreement is terminated
to be a breach of fiduciary duty and rescinding it; (v) ordering the individual
defendants, jointly and severally, to account to plaintiffs and the class for
all damages suffered as a result of the acts and transactions alleged in the
Amended Class Action Complaint; and (vi) awarding plaintiffs the costs and
disbursements of the action and granting such other and further relief as may be
just and proper. Great Western and its directors deny the operative allegations
of the Amended Class Action Complaint; however, an answer has not yet been filed
and discovery has not yet commenced.
On March 21, 1997, Ahmanson filed a second Motion for Leave to File Amended
and Supplemental Complaint against Great Western and its directors (the
"Ahmanson Second Supplemental Complaint") in the Court of Chancery of the State
of Delaware and on April 14, 1997, pursuant to a stipulation among the parties,
Ahmanson filed the Ahmanson Second Supplemental Complaint. In addition to the
allegations made in the Ahmanson Complaint and the Ahmanson Supplemental
Complaint, the Ahmanson Second Supplemental Complaint further alleges, among
other things, that: (i) Great Western is attempting to impede Ahmanson's
solicitation of consents by not recognizing March 13, 1997 as the record date
for Ahmanson's solicitation of consents for the New Ahmanson Proposals; and (ii)
Great Western has failed to make full disclosure of matters relating to the
availability of the pooling of interests method of accounting for the Washington
Mutual Merger. Consequently, Ahmanson seeks additional declaratory and
injunctive relief compelling Great Western and the individual defendants to,
among other things, (a) recognize March 13, 1997 as the record date for
Ahmanson's solicitation of consents for the New Ahmanson Proposals and (b)
disclose certain information that Ahmanson alleges relates to the availability
of pooling of interests accounting for the Washington Mutual Merger.
35
<PAGE> 41
On April 9, 1997, Ahmanson filed a Complaint against Great Western pursuant
to Section 225 of the DGCL (the "225 Complaint") in the Court of Chancery of the
State of Delaware. The 225 Complaint alleges, among other things, that written
consents executed by the record holders of a majority of the Common Shares
outstanding on March 13, 1997 were delivered to Great Western on April 9, 1997
that were effective at the time of delivery to adopt the Annual Meeting By-law.
Ahmanson seeks an order (i) declaring that the Annual Meeting By-law was duly
and validly adopted on April 9, 1997; and (ii) compelling Great Western to hold
its Annual Meeting on or before May 6, 1997.
On April 11, 1997, Ahmanson filed an Amended Complaint against Great
Western and, additionally, its directors (the "Amended 225 Complaint") in the
Court of Chancery of the State of Delaware. In addition to the allegations made
in the 225 Complaint, the Amended 225 Complaint alleges, among other things,
that: (i) the Annual Meeting By-law was effective at the time the consents were
delivered; and (ii) by their actions in announcing a May 9, 1997 record date and
setting a meeting for election of directors for June 13, 1997, Great Western's
directors violated the Annual Meeting By-law and the provision of Great
Western's By-laws regarding special meetings, thereby breaching their fiduciary
duties. In addition to the relief sought in the 225 Complaint, Ahmanson seeks an
order enjoining Great Western from scheduling or holding any vote on any
proposed transaction, including but not limited to the Washington Mutual Merger,
prior to two weeks following the certification of the election of directors.
Great Western and its directors intend to vigorously defend the claims in
the Ahmanson Complaint, the Ahmanson Supplemental Complaint, the Complaints and
the Additional Complaint, the Amended Class Action Complaint, the Ahmanson
Second Supplemental Complaint, the 225 Complaint and the Amended 225 Complaint.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP was selected as the Company's independent accountants
for 1996 and for the current year, having served in that capacity since 1964.
It is expected that a representative of Price Waterhouse LLP will be
present at the Annual Meeting and 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.
STOCKHOLDER PROPOSALS
If the Washington Mutual Merger is consummated, the Company will not hold a
1998 annual meeting of stockholders. In the event a 1998 annual meeting of
stockholders is held, stockholder proposals, if any, which may be considered for
inclusion in the Company's proxy materials for such meeting must be received by
the Company at its headquarters office not later than November 21, 1997 and must
satisfy the conditions established by the SEC for stockholder proposals to be
included in the Company's proxy materials for that meeting.
ANNUAL MEETING ADVANCE NOTICE REQUIREMENTS
The Company's By-laws presently provide that stockholder nominations of
directors may be made at, and other business may be brought before, an annual
meeting by stockholders only in compliance with certain advance notice and
informational requirements and any other applicable requirements. The By-laws
currently provide that the annual meeting of stockholders of the Company shall
be held on the fourth Tuesday in April each year or on such other date as the
Board may designate. If the Annual Meeting By-law is adopted, this requirement
would be amended to provide that the annual meeting of stockholders of the
Company shall be held on the fourth Tuesday of April of each year, or within
fourteen (14) days thereof. In order to be timely, a stockholder'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
stockholders or public disclosure of the date of the meeting is made, whichever
first occurs.
36
<PAGE> 42
A stockholder's notice of director nominations or of business to be brought
before the annual meeting also must contain certain information required by the
By-laws of the Company. Copies of the Company's By-laws 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 SEC for stockholder proposals to be included in
the Company's proxy materials for a meeting of stockholders.
OTHER MATTERS
The Board of Directors has no present intention to present to the Annual
Meeting any matters other than those described above and matters incident to the
conduct of the meeting. If any other business comes before the Annual Meeting or
any postponement, adjournment or rescheduling thereof (including but not limited
to matters of which the Board is currently unaware) for which specific authority
has not been solicited from the stockholders, then to the extent permitted by
law, including the rules of the SEC, 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 ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1996 WILL BE PROVIDED WITHOUT CHARGE TO ANY STOCKHOLDER UPON
WRITTEN REQUEST ADDRESSED TO GEORGESON & COMPANY INC., WALL STREET PLAZA, NEW
YORK, NEW YORK 10005; CALL TOLL FREE: (800) 223-2064; BANKS & BROKERS CALL
COLLECT: (212) 440-9800.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED GOLD PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED THEREFOR.
J. LANCE ERIKSON,
Secretary
Dated: , 1997
37
<PAGE> 43
If you have any questions, please call our solicitor:
GEORGESON & COMPANY INC. LOGO
CALL TOLL FREE: 800-223-2064
Banks and Brokers call collect: 212-440-9800
38
<PAGE> 44
SCHEDULE A
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF
GREAT WESTERN AND CERTAIN EMPLOYEES AND OTHER REPRESENTATIVES OF
GREAT WESTERN AND THE DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN
EMPLOYEES AND OTHER REPRESENTATIVES OF WASHINGTON MUTUAL
WHO MAY ALSO SOLICIT PROXIES
The following table sets forth the name, principal business address and the
present office or other principal occupation or employment, and the name,
principal business and address of any corporation or other organization in which
such employment is carried on, of the directors and executive officers of Great
Western and certain employees and other representatives of Great Western, and
the directors, executive officers and certain employees and other
representatives of Washington Mutual who may also solicit proxies from
stockholders of Great Western.
GREAT WESTERN FINANCIAL CORPORATION
Unless otherwise indicated, the principal occupation refers to such
person's position with Great Western and the business address is Great Western
Financial Corporation, 9200 Oakdale Avenue, Chatsworth, California 91311.
DIRECTORS
<TABLE>
<CAPTION>
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ------------------------- ----------------------------------- -----------------------------
<S> <C> <C>
James F. Montgomery...... Chairman and former Chief
Executive Officer
John F. Maher............ President and Chief Executive
Officer
Dr. David Alexander...... 807 North College Avenue President Emeritus and
Claremont, CA 91711 Trustees' Professor, Pomona
College
H. Frederick Christie.... Post Office Box 144 Consultant
548 Paseo Del Mar
Palos Verdes Estates, CA 90274
Stephen E. Frank......... Southern California Edison Company President and Chief Operating
Post Office Box 800 Officer, Edison
Rosemead, CA 91770 International, a public
utility company
John V. Giovenco......... 175 Phillip Road Consultant and former
Woodside, CA 94062 President and director of
Hilton Hotels Corporation
Firmin A. Gryp........... Great Western Bank Retired, former Executive
425 Main Street Vice President
Salinas, CA 93901
Enrique Hernandez, Jr.... Inter-Con Security Systems, Inc. President, Inter-Con Security
900 South Garfield Avenue Systems, Inc.
Alhambra, CA 91801-4441
Charles D. Miller........ Avery Dennison Corporation Chairman and Chief Executive
150 North Orange Grove Blvd. Officer, Avery Dennison
Pasedena, CA 91103 Corporation
Dr. Alberta E. Siegel.... 1850 Sand Hill Road, #49 Retired, former Professor of
Palo Alto, CA 94304 Psychology, Stanford
University School of Medicine
</TABLE>
A-1
<PAGE> 45
<TABLE>
<CAPTION>
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ------------------------- ----------------------------------- -----------------------------
<S> <C> <C>
Willis B. Wood, Jr....... Pacific Enterprises Chairman and Chief Executive
Post Office Box 60043 Officer, Pacific Enterprises,
Los Angeles, CA 90060-0043 the holding company of
Southern California Gas
Company
</TABLE>
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ------------------------- ----------------------------------- -----------------------------
<S> <C> <C>
J. Lance Erikson......... Executive Vice President,
Secretary and General Counsel
Carl F. Geuther.......... Vice Chairman and Chief
Financial Officer
Michael M. Pappas........ Great Western Consumer Vice Chairman and President,
Finance Group Consumer Finance Division
8900 Grand Oak Circle
Tampa, FL 33637-1050
A. William Schenck III... Vice Chairman
Ray W. Sims.............. Executive Vice President
Jaynie M. Studenmund..... Executive Vice President
</TABLE>
MANAGEMENT
<TABLE>
<CAPTION>
OWNERSHIP OF
GREAT WESTERN
NAME COMMON STOCK PRINCIPAL OCCUPATION
- ------------------------- ---------------------------------- -----------------------------
<S> <C> <C>
Ian D. Campbell.......... 23,792 Senior Vice President
Charles Coleman.......... 0 Vice President, Great Western
Bank
Allen D. Meadows......... 20,850 Senior Vice President, Great
Western Bank
John A. Trotter.......... 27,016 First Vice President, Great
Western Bank
</TABLE>
A-2
<PAGE> 46
REPRESENTATIVES OF GREAT WESTERN
<TABLE>
<S> <C>
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
John Mahoney........................................... Vice President
Todd Owens............................................. Associate
Andrea Vittorelli...................................... Associate
Goldman, Sachs & Co.
333 South Grand Avenue
Los Angeles, California 90071
Joe Wender............................................. Managing Director
Andy Gordon............................................ Vice President
Merrill Lynch & Co.
250 Vesey Street
World Financial Center
North Tower -- 25th Floor
New York, New York 10281
Herb Lurie............................................. Managing Director
Louis S. Wolfe......................................... Managing Director
Paul Wetzel............................................ Managing Director
John Esposito.......................................... Vice President
Kavita Gupta........................................... Associate
Merrill Lynch & Co.
10900 Wilshire Boulevard, Suite 900
Los Angeles, California 90024
Frank V. McMahon....................................... Director
Alex Sun............................................... Vice President
Christopher Del-Moral Niles............................ Associate
</TABLE>
A-3
<PAGE> 47
WASHINGTON MUTUAL, INC.
Unless otherwise indicated, the principal occupation refers to such
person's position with Washington Mutual and the business address is Washington
Mutual, Inc., 1201 Third Avenue, Suite 1501, Seattle, Washington 98101. None of
the directors, executive officers, or other employees of Washington Mutual who
may solicit proxies own any Common Shares. The Washington Mutual participants do
not beneficially own, individually or in the aggregate, in excess of 1% of Great
Western's equity securities.
DIRECTORS
<TABLE>
<CAPTION>
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ------------------------- ----------------------------------- -----------------------------
<S> <C> <C>
Douglas P. Beighle....... 7755 E. Marginal Way Senior Vice President, The
Seattle, WA 98104 Boeing Company
David Bonderman.......... 201 Main Street A principal and general
Suite 2420 partner of TPG, L.P., an
Fort Worth, Texas 76102 investment entity
Herbert M. Bridge........ 2901 Third Avenue Retired
Seattle, WA 98121
J. Taylor Crandall....... 2460 Sand Hill Road Chief Financial Officer and
Suite 300 Vice President, Keystone,
Menlo Park, CA 94025 Inc.
Roger H. Eigsti.......... SAFECO Plaza T22 Chairman and Chief Executive
4333 Brooklyn Avenue NE, Officer, SAFECO Corporation
22nd Floor
Seattle, WA 98185
John W. Ellis............ 411-108th Avenue, NE Chairman and Chief Executive
OBC-15 Officer, Baseball Club of
Bellevue, WA 98009 Seattle, Inc.
Daniel J. Evans.......... 1111 Third Avenue Chairman of Daniel J. Evans
Suite 3400 Associates, an environmental
Seattle, WA 98101 consulting firm
Anne V. Farrell.......... 425 Pike Street President and Chief Executive
Suite 510 Officer, The Seattle
Seattle, WA 98101 Foundation
William P. Gerberding.... Box 351380 Retired, former President of
Seattle, WA 98195-1380 the University of Washington
Kerry K. Killinger....... Chairman, President and Chief
Executive Officer
Samuel B. McKinney....... 1634-19th Avenue Senior Pastor, Mount Zion
Seattle, WA 98122 Baptist Church
Michael K. Murphy........ E 511 Broadway Chairman, President and Chief
Spokane, WA 99212 Executive Officer, CPM
Development Corporation
Louis H. Pepper.......... Retired
</TABLE>
A-4
<PAGE> 48
<TABLE>
<CAPTION>
NAME BUSINESS ADDRESS PRINCIPAL OCCUPATION
- ------------------------- ----------------------------------- -----------------------------
<S> <C> <C>
William G. Reed, Jr...... 1201 Third Avenue Chairman, Simpson Investment
49th Floor Company
Seattle, WA 98101-3009
James H. Stever.......... 1600 Seventh Avenue Retired, former Executive
Room 1801 Vice President -- Public
Seattle, WA 98191 Policy, US West, Inc.
</TABLE>
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
- ------------------------- -----------------------------------------------------------------
<S> <C>
Craig S. Davis........... Executive Vice President
Steven P. Freimuth....... Executive Vice President
Lee D. Lannoye........... Executive Vice President
William A. Longbrake..... Executive Vice President
and Chief Financial Officer
Deanna W. Oppenheimer.... Executive Vice President
Craig E. Tall............ Executive Vice President
S. Liane Wilson.......... Executive Vice President
</TABLE>
MANAGEMENT
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
- ------------------------- -----------------------------------------------------------------
<S> <C>
Karen Christensen........ Senior Vice President
JoAnn DeGrande........... Vice President
William W. Ehrlich....... Vice President
James B. Fitzgerald...... Senior Vice President
Marc R. Kittner.......... Senior Vice President
Douglas G. Wisdorf....... Deputy Chief Financial Officer
Senior Vice President and Controller
</TABLE>
REPRESENTATIVES OF WASHINGTON MUTUAL
<TABLE>
<S> <C>
Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Steven B. Wolitzer........................................... Managing Director
Sanjiv Sobti................................................. Senior Vice President
Craig P. Sweeney............................................. Associate
Lehman Brothers Inc.
601 South Figueroa Street, Suite 4425
Los Angeles, California 90017
Philip R. Erlanger........................................... Managing Director
David J. Kim................................................. Vice President
Daniel A. Trznadel........................................... Associate
</TABLE>
A-5
<PAGE> 49
SCHEDULE B
STOCK TRANSACTIONS WITHIN THE PAST TWO YEARS
The following table sets forth all purchases and sales of Great Western's
equity securities by the participants listed below during the past two years.
Unless otherwise indicated, all transactions are in the public market.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
OF CAPITAL
STOCK
PURCHASED
NAME (OR SOLD) DATE
- ------------------------------------------------------ ------------- --------
<S> <C> <C> <C>
James F. Montgomery................................... (10,000) (1) 4/05/95
43,500 (4) 5/23/95
(17,700) (4) 5/23/95
(25,800) (4) 5/23/95
(6,500) 5/23/95
(2,300) (3) 12/15/95
(25,000) 1/19/96
(36,079) (7) 1/23/96
(51,421) 1/26/96
(10,000) (1) 5/14/96
113,500 (4) 10/18/96
(113,500) 10/18/96
(21,875) (7) 12/09/96
(3,100) (3) 12/16/96
(50,000) 1/24/97
60,900 (2) 2/14/97
(60,900) 2/14/97
John F. Maher......................................... (41,854) (7) 1/23/96
62,500 (2) 5/21/96
(50,671) 5/22/96
(21,875) (7) 12/09/96
6,155 (4) 2/14/97
(6,155) 2/14/97
Dr. David Alexander................................... 0 N/A
H. Frederick Christie................................. 0 N/A
Stephen E. Frank...................................... 0 N/A
John V. Giovenco...................................... 0 N/A
Firmin A. Gryp........................................ 0 N/A
Enrique Hernandez, Jr................................. 0 N/A
Charles D. Miller..................................... 2,500 (2) 12/13/96
460 2/18/97
Dr. Alberta E. Siegel................................. 0 N/A
Willis B. Wood, Jr.................................... 0 N/A
</TABLE>
B-1
<PAGE> 50
<TABLE>
<CAPTION>
NUMBER OF
SHARES
OF CAPITAL
STOCK
PURCHASED
NAME (OR SOLD) DATE
- ------------------------------------------------------ ------------- --------
<S> <C> <C> <C>
J. Lance Erikson...................................... 250 (2) 11/06/95
(250) 11/06/95
(187) 11/29/95
(7,578) (7) 1/23/96
25,000 (2) 7/31/96
(4,000) 7/31/96
(19,135) 8/01/96
(3,750) (7) 12/09/96
3.581 (5) 2/28/96
3.1752 (5) 9/31/95
(187) (5) 11/29/95
2.7653 (5) 11/30/95
(101.9615) (5) 2/28/95
7.162 (5) 2/28/95
6.176 (5) 5/31/95
6.3504 (5) 8/31/96
5.506 (5) 11/30/96
553.212 (5) 1/01/96
Carl F. Geuther....................................... (14,995) (7) 1/23/96
35,000 (2) 3/07/96
(32,000) 3/07/96
(7,500) (7) 12/09/96
6,155 (4) 2/14/97
(6,155) 2/14/97
Michael M. Pappas..................................... 25,000 (4) 9/13/95
(25,000) 9/13/95
(11,204) (7) 1/23/96
12,500 (4) 8/19/96
(12,500) 8/19/96
37,500 (2) 12/06/96
(18,750) 12/06/96
(5,521) (7) 12/09/96
A. William Schenck III................................ 21,544 7/31/95
(5,326) (7) 2/01/96
5,000 2/28/96
(2,692) (7) 12/09/96
Ray W. Sims........................................... 0 N/A
Jaynie M. Studenmund.................................. 6,000 7/24/96
4,600 2/07/97
Ian D. Campbell....................................... (6,250) (4) 8/02/95
(3,067) (7) 12/9/96
(1,500) (7) 1/23/97
(750) 1/23/97
(1,466) 2/08/96
Charles Coleman....................................... 0 N/A
</TABLE>
B-2
<PAGE> 51
<TABLE>
<CAPTION>
NUMBER OF
SHARES
OF CAPITAL
STOCK
PURCHASED
NAME (OR SOLD) DATE
- ------------------------------------------------------ ------------- --------
<S> <C> <C> <C>
Allen D. Meadows...................................... (2,500) (4) 8/31/95
(4,000) (4) 8/31/95
(2,500) (4) 8/02/96
(13,500) (4) 2/14/97
John A. Trotter....................................... (2,000) (4) 5/05/95
(4,000) (4) 10/25/96
3,214 (6) 1/03/97
</TABLE>
- ---------------
(1) Disposition pursuant to a divorce decree.
(2) Acquisition pursuant to the exercise of stock options.
(3) Disposition pursuant to a bona fide gift.
(4) Cashless exercise of stock options.
(5) Transactions of Mr. Erikson's children.
(6) The securities were purchased through a 401k - plan.
(7) Shares withheld for tax purposes in connection with the vesting of
restricted stock.
B-3
<PAGE> 52
GREAT WESTERN FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF GREAT WESTERN FINANCIAL CORPORATION
The undersigned, a holder of shares ("Common Shares") of common stock, par
value $1.00 per share, of Great Western Financial Corporation ("Great Western"),
acting with respect to all Common Shares held by the undersigned, hereby
appoints John F. Maher and James F. Montgomery, and each of them, as proxies of
the undersigned, with full power of substitution, to represent and to vote such
Common Shares, with like effect as if the undersigned were personally present
and voting at the Annual Meeting of Stockholders of Great Western to be held on
June 13, 1997, and at any adjournments, postponements, or reschedulings thereof.
THE COMMON SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. UNLESS OTHERWISE DIRECTED, SUCH SHARES WILL BE VOTED "FOR" THE
ELECTION OF DIRECTORS IDENTIFIED IN PROPOSAL 1 AND "AGAINST" EACH OF PROPOSALS 2
THOUGH 8.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
DIRECTORS.
1. ELECTION OF DIRECTORS (Terms of Office Expire in 2000)
[ ] For all Nominees listed below [ ] WITHHOLD AUTHORITY to vote for all
Nominees
(except as indicated to the contrary)
Nominees: Bradford M. Freeman, Firmin A. Gryp, James F. Montgomery and Alberta
E. Siegel.
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
his or her name on the line below.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "AGAINST" EACH OF PROPOSALS
2 THROUGH 8. The complete text of each of Proposals 2 through 8 is set forth in
Great Western's Proxy Statement.
2. A non-binding advisory resolution proposed by H. F. Ahmanson & Company
("Ahmanson") relating to the consideration of merger proposals.
[ ] AGAINST [ ] FOR [ ] ABSTAIN
3. A By-law amendment proposed by Ahmanson relating to the calling of special
meetings of stockholders.
[ ] AGAINST [ ] FOR [ ] ABSTAIN
(continued on other side)
4. A By-law amendment proposed by Ahmanson relating to the filling of vacancies
on the Board of Directors.
[ ] AGAINST [ ] FOR [ ] ABSTAIN
5. A By-law amendment proposed by Ahmanson relating to the membership of any
executive or comparable committee of the Board of Directors.
[ ] AGAINST [ ] FOR [ ] ABSTAIN
6. A By-law amendment proposed by Ahmanson relating to a requirement that
certain information be included in notices of meetings of the Board of
Directors.
[ ] AGAINST [ ] FOR [ ] ABSTAIN
7. A By-law amendment proposed by Ahmanson relating to the subsequent amendment
of any By-law amendments adopted at the Annual Meeting.
[ ] AGAINST [ ] FOR [ ] ABSTAIN
8. A non-binding advisory stockholder resolution.
[ ] AGAINST [ ] FOR [ ] ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS,
POSTPONEMENTS OR RESCHEDULINGS THEREOF.
Please sign your name below exactly
as it appears hereon. 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.
Date: , 1997
-------------------------------------
Signature:
-------------------------------------
Title:
-------------------------------------
Signature (if held jointly):
-------------------------------------
Title:
-------------------------------------
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY.
