SCHEDULE 14A INFORMATION
REVOCATION STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant {X}
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Check the appropriate box:
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Rule 14a-6(e)(2))
{_} Definitive Proxy Statement (Revocation of Consent Statement)
{X} Definitive Additional Materials
{X} Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GREAT WESTERN FINANCIAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
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Q & A
REPORT
ANSWERS TO YOUR MERGER HOTLINE QUESTIONS
[GREAT WESTERN LOGO]
VOL. 1 NUMBER 3
Tuesday, May 6, 1997
Q&A REPORT is designed to keep employees as fully
informed as possible about merger developments. We
will attempt to respond to all questions as
information becomes available to us and as soon as
we are in a position to give an answer.
1. QUESTION:
I am interested in an employee home loan with GW. Does
the program still exist, and if not, will it be
reinstated?
ANSWER:
Under the terms of the agreement signed by Great Western
and Washington Mutual, Great Western is no longer
authorized to approve home loans to employees under the
Employee Home Loan Program. However, employees may still
apply for a GW mortgage loan under the same terms
available to customers.
2. QUESTION:
I am a GWFSC employee who has applied for a home equity
line of credit at the one percent discounted employee
rate. Will it be included in the severance package?
Will I continue to benefit from the discounted employee
rate for the life of the loan?
ANSWER:
The employee home equity line of credit discount is not
part of the severance package and discontinues at
termination. This product should not be confused with
the Employee Home Loan Program, which is currently part
of the severance package.
3. QUESTION:
If an employee chooses not to take a lump sum severance
package will they still be taxed at the current rate that
they are being taxed at now?
ANSWER:
If an employee does not specifically request a lump sum
payment of their separation benefits, they will be paid
through regular paychecks and taxed at the withholding
rate reflected on their W-4.
4. QUESTION:
My question relates to a question in the first "Q&A
Report" regarding lump sum payments being taxed. Does
this mean that we will not be allowed to rollover our
ESIP or Retirement Plan funds into an IRA? I don't want
to pay taxes on that until I absolutely have to.
ANSWER:
"Lump sum payments" referred to separation pay that an
employee elects to receive in one payment, instead of
over time through salary continuance. The federal
regulation that affects an employee's federal and state
withholding amounts on lump sum payments does not apply
to 401K or retirement benefit distributions.
Information regarding ESIP and retirement plan
distribution will be sent to affected employees upon
termination.
5. QUESTION:
If you are laid off and choose the salary continuance
plan and during that time you get a new job and are
covered under your new employer's benefits plan, do you
have the option of discounting or changing your medical
or dental benefits, or do you have to wait until the open
enrollment period? Can we change our benefit options at
any time during our salary continuance period?
ANSWER:
PlusPay benefits may be changed at any time during salary
continuance, provided it is a recognized "Family Status
Change". A list of eligible status changes are provided
in the Employee Handbook. Benefits may be discontinued
if an employee is covered under a new employer's benefits
plan. Notification should be sent to the Benefits
Department within 30 days of starting a new position.
This notification should include the date that new
benefits coverage will be effective.
6. QUESTION:
If your anniversary date is May 31 and you are laid off
on April 30, does your 60-day notice pay push you past
your anniversary date of May 31, thereby entitling you to
another month's salary, or is your actual termination
date April 30?
ANSWER:
An employee's separation benefits are calculated based on
their years of service as of their "release date". If
you reach your anniversary date during you 60-day non-
working notice period, you will not receive an additional
month of separation benefits.
7. QUESTION:
If we currently work full-time, but at the time of the
merger we work part-time, what salary will our severance
package be based on?
ANSWER:
Separation benefits will be based on an employee's
employment status as of their last day worked.
8. QUESTION:
Will bonuses be offered to employees to stay during the
transition? And, if that period of time extends past a
year, would that mean they would not be eligible for the
severance package?
ANSWER:
The Change in Control Benefits Program is designed to
provide separation benefits to employees whose jobs are
eliminated. The package is also designed to recognize
the dedication and hard work that Great Western employees
continue to demonstrate during the transition process;
therefore, there are no plans to implement a "stay on"
bonus program for employees.
9. QUESTION:
If my termination date is the date that separation
benefits expire, and on that date my length of employment
is 15 years or more, would I be eligible for extended-
retirement benefits? What exactly are those benefits?
ANSWER:
Enhanced retirement benefits are provided to eligible
employees age 52 or older with 15 or more years of
service whose jobs are eliminated, as of their last day
worked, not their termination date. The enhanced
retirement benefit adds three years to an employee's age
and service at termination for the purposes of
calculating their benefit.
10. QUESTION:
If an employee is retained by the acquiring company,
exactly how long after the merger will the separation
package be in effect? What guarantee is there that an
employee won't be laid off by the acquiring company after
he/she is no longer eligible for the package? Is there a
stipulation in the CIC severance benefits that protects
an employee from this happening?
ANSWER:
The Great Western CIC benefit program provides separation
benefits to employees whose jobs are eliminated up to 12
months after the change in control date. Any separation
benefits available to employees whose jobs are eliminated
after that date will be determined by the acquiring
company.
11. QUESTION:
In the Staff Bulletin dated March 17, employees were told
they could purchase Mutual Funds without a sales charge.
How long is that offer good? Will it continue after the
merger?
ANSWER:
The employee program allowing the purchase of class "A"
shares in approved mutual funds without a sales charge is
not part of the severance package. Continuation of this
employee discount after the merger will be determined by
the acquiring company.
12. QUESTION:
If an employee is offered a comparable position after the
merger, can they choose to take the package?
ANSWER:
Separation packages are only offered to employees whose
jobs have been eliminated, and no comparable position is
available. If an employee is offered a comparable
position, they are not eligible for separation benefits.
13. QUESTION:
I will have eight weeks of vacation available to me at
the end of June. I want to take six weeks of vacation,
with my manager's permission. As far as the merger is
concerned, do I need to postpone my vacation? If I'm not
here, am I still eligible for the package? You addressed
employees on LOA and medical leave, but not those who may
be on vacation.
ANSWER:
There is no reason why you cannot take your accrued
vacation, as long as you receive approval from your
manager. Any employee eligible for separation benefits
who is on vacation when their job is eliminated will
receive their package.
14. QUESTION:
I'm a First Community Financial Services employee. How
will my company be affected by the merger? Will we
experience job eliminations here, too?
I work for Blazer Financial Services and would like
to know if there are going to be major layoffs where we
are concerned.
ANSWER:
It is still too early to anticipate which business units
and employees will be affected by job eliminations due to
the merger, however WAMU has stated that it views our
consumer finance operation as an important player in the
merged organization.
15. QUESTION:
What is going to happen to outstanding ESIP loans when
the merger takes place and our job is eliminated? Will
we be notified in advance so we can make arrangements to
pay off the loan so we don't have to claim it as income?
ANSWER:
If an employee's job is eliminated and they have an
outstanding ESIP loan, they can continue making loan
payments through their notice and separation pay periods.
If an employee has an outstanding ESIP loan balance on
their termination date, it will be paid off from the
distribution of their ESIP account, unless paid off
before the end of the month in which the termination date
falls. Employees will be taxed on the amount deducted
from the distribution to pay off their loan.
16. QUESTION:
I understand that part of the bargaining agreement with
WAMU is a future loss of some of GW's current employee
benefits. I wonder why nothing has been published or
sent out to employees to let them know that their future
benefits could be affected by this merger?
ANSWER:
We are not aware of any bargaining agreement that would
result in a loss of future benefits to GW employees.
Because employee benefit packages vary form company to
company, there is certainly a chance that certain
benefits now provided to GW employees will not exist at
the acquiring company.
However, there is an equal chance that some benefits that
are not currently offered to GW employees may be included
in the acquiring company's benefit package. As soon as
detailed information regarding benefits is made
available, it will be communicated to affected employees.
17. QUESTION:
Since the merger appears inevitable either with WAMU or
Ahmanson, I believe it would help employee morale to
permit employees to dress casually from now on.
ANSWER:
Because an employee's appearance is important in their
daily interactions with customers, and is a direct
reflection of the company image, there are no plans to
implement a permanent casual dress policy at this time.
18. QUESTION:
I would like information on American Savings Bank.
ANSWER:
o American Savings Bank first opened in Stockton,
California over 100 years ago.
o It was acquired by Washington Mutual on December 20,
1996.
o Approximately 3500 employees work for American
Savings.
o There are approximately 160 retail branches, all
located in California.
o There are over 70 resident lending centers located
in California, Arizona, Colorado and Nevada.
o American Savings is the second largest residential
mortgage lender in California, surpassed only by
Bank of America.
19. QUESTION:
Any developments regarding mortgage lending, wholesale
and retail? If we merge with WAMU, how will it affect
our product offers? Will we have a blended combination
of loan programs including the COFI and LAMA ARMs, or are
we strictly going to be offering WAMU products? Will we
operate as two separate entities for mortgage? Regarding
the wholesale division, will there be a Sierra Western
and a WAMU wholesale?
ANSWER:
Washington Mutual's approach to the residential and
wholesale lending business is to assess the markets in
which it does business and then offer competitive,
appropriate products to its customers. WAMU is currently
the number one residential mortgage lender in the
majority of the areas in which it does business, and
American Savings Bank is the number two lender in
California. Within the next several months, WAMU will
design processes to integrate and manage the merged
entity and to assess the broad-based product strategy.
We will keep you informed as information become
available.
20. QUESTION:
Has WAMU expressed any plans regarding keeping the Great
Western mortgage loan offices in the Northeast, i.e.
Delaware, Maryland, Virginia, or do they plan to close
them and just concentrate on California and Florida?
ANSWER:
It is still too early to answer this question.
Washington Mutual will be assessing the mortgage business
and evaluating the opportunities.
21. QUESTION:
Does GW/WAMU intend to wait until after the 12-month
period following the merger to then layoff the majority
of their employees so that they would not be given the
severance package?
ANSWER:
It is doubtful WAMU would intentionally wait until the
expiration of the 12 month period following a change in
control to eliminate any jobs. As you may have read,
WAMU anticipates it will be able to reduce expenses, in
part, through staffing consolidations. Although some
employees may be required to remain after the change in
control date to work on conversion or transition
projects, it is not anticipated than many employees whose
jobs are targeted for elimination will be required to
stay past 12 months following the change in control.
22. QUESTION:
We have had a recent change of directors in our division
and it is my understanding that this individual is being
allowed to continue with the structural reorganization
within his division. My question is, why would the
reorganization be allowed if the bank does not know where
we are going and this could adversely impact the careers
of several people prematurely?
ANSWER:
The company's direction remains "Business Better Than
Usual", which includes many projects and initiatives
designed to grow and/or control expenses in various
business units. These projects typically represent
efforts to significantly improve revenue or expenses and,
therefore, should be a benefit to the merged company.
In addition, due to the recent merger activity, all
projects and initiatives require a re-review and approval
by the EVP or Vice Chairman for that division.
23. QUESTION:
I have a customer who is concerned about the merger
because he also has accounts with a potential merger
partner. He has approximately $2 million with us and, as
his accounts come due, he is considering withdrawing them
because of the merger. His question is, will he have any
withdrawal options if he's renewing his CDs and the
merger takes place before they mature? He wonders if
he'll have the option to take out the account without
penalty.
ANSWER:
If Great Western merges with another financial
institution, and a customer has CD accounts with both
institutions, those CD accounts will continue to be
separately insured by the FDIC:
o For six months from the merger date for all deposits
except Certificates of Deposit.
o Until the earliest maturity date after the six-month
period for Certificates of Deposit. CDs that mature
within six months after the merger date, and are
renewed on the same terms as the original deposit,
will be insured separately until the first maturity
date after the six-month period. CDs that mature
within six months of the merger date and are renewed
on any other basis, (i.e., changing the term or
adding or withdrawing funds during the grace
period), are separately insured only until the end
of the six-month period. If the customer chooses to
close his CD accounts prior to maturity, early
withdrawal penalties would apply.
For more details on FDIC coverage, please refer to the
RBD Sales Spotlight #SS970305.1, dated March 5, 1997.
24. QUESTION:
WAMU stated that they would, most likely, keep our data
center open until 1999 and then they would consider
consolidation. I would like to know if we stay on to
help them through this and it exceeds the 12-month period
after the merger are they going to let us go without a
package or will we still be able to receive the package?
ANSWER:
No decisions regarding individual business units have
been made. Great Western cannot speculate what
separation package the acquiring company will provide
after the expiration of the current Change in Control
Benefits Program.
25. QUESTION:
If you are laid off as a result of the merger and have
over 200 hours of sick time, are you paid for those hours
or do you simply lose them?
ANSWER:
Unused sick time is not paid off at a termination under
current Great Western policy. At the end of each year,
unused sick hours are transferred to an employee's STD
plan which extends the amount of 100% salary continuance
available in the case of short term disability.
There are a small number of Great Western employees,
hired prior to 1977 or based on an agreement upon a
previous acquisition, that will be compensated for a
percent of their previously unused sick time. These
employees will be notified upon termination.
26. QUESTION:
If I am entitled to 60-days notice pay and 15 months
separation pay for a total of 17 months of pay: 1) Does
this mean that for 17 months I will be paid my full
salary? 2) What happens if I find a job at a company
other than WAMU or Home during those 17 months? Will I
still receive my full salary?
ANSWER:
1). Yes. Eligible employees will be paid their regular
salary through salary continuance (regular
paychecks) or through a lump sum payment
representing the entire amount of separation pay.
2). If an employee begins another position with an
employer other than Great Western or the acquiring
company after their release date, they will continue
to receive their full notice and/or separation pay.
27. QUESTION:
Re: Q&A Report, #2, question #16: As an MLC, I have an
existing home loan and am a participant in the deferred
compensation plan. We were told that the existing home
loan will continue as long as we are with the company as
of August 31. Will both the home loan program and the
deferred compensation plan remain in effect?
ANSWER:
If an employee is participating in Great Western's
Employee Home Loan Program, they will continue the terms
of their mortgage loan as long as they are employed by
Great Western or the acquiring company and as long as
they continue to reside in their residence. Although
MLCs are not eligible for separation pay, if an MLC's job
is eliminated, the terms of their mortgage loan will
continue as long as the employee resides in the
residence.
Employees participating in the Deferred Compensation
program can continue deferrals as long as they are
employed by Great Western. After a change in control,
employees may be eligible to participate in the acquiring
company's Deferred Compensation program, if available.
Deferred compensation is paid out upon termination.
28. QUESTION:
Are "years of service" calculated in the month you were
hired, or is it on your actual hire date?
ANSWER:
"Years of service" are calculated based on the employee's
actual "adjusted service date", not the month in which
the date falls. (The adjusted service date is the
employee's original hire date unless there has been a
lapse in employment for more than 31 days. If GW
employees have been separated from the company for more
than 31 days, they are only credited with the time they
actually worked at the company. This does not include
the time between the date they left GW and the date they
returned. Only certain employees qualify for employment
credit; eligibility is based upon the worker's former
employee status, for example, full time or part time. If
an employee qualifies for employment credit, his or her
personnel file will reflect an "adjusted service date.")
If EMPLOYEES have questions about Great Western's
merger developments, you may call the toll-free
EMPLOYEE merger telephone hotline at:
1-888-GW-MERGE
(1-888-496-3743)
This special line is set up for voice mail
Simply ask your question, which will be recorded
and watch for the answer in a future
issue of Q&A REPORT.
Great Western Financial Corporation ("Great
Western") and the persons named below may be deemed to be
participants in the solicitation of proxies in connection
with the merger of Great Western and Washington Mutual,
Inc. ("Washington Mutual") pursuant to which each
outstanding share of Great Western common stock would be
converted into 0.9 shares of Washington Mutual common
stock (the "Merger"). Participants in this solicitation
may include the directors of Great Western (J. F.
Montgomery, J. F. Maher, Dr. D. Alexander, H. F.
Christie, S. E. Frank, J. V. Giovenco, F. A. Gryp, E.
Hernandez, Jr., C. D. Miller, Dr. A. E. Siegel and W. B.
Wood, Jr.); the following executive officers of Great
Western: J. L. Erikson, C. F. Geuther, M. M. Pappas, A.
W. Schenck III, R. W. Sims and J. M. Studenmund; and the
following other members of management of Great Western:
I. D. Campbell, C. Coleman, A. D. Meadows and J. A.
Trotter (collectively, the "Great Western Participants").
Messrs. Montgomery and Maher beneficially own 680,488
shares and 611,762 shares of Great Western common stock,
respectively (including shares subject to stock options
exercisable within 60 days). The remaining Great Western
Participants do not beneficially own, individually or in
the aggregate, in excess of 1% of Great Western's equity
securities.
Great Western has retained Goldman, Sachs & Co.
("Goldman Sachs") and Merrill Lynch & Co. ("Merrill
Lynch") to act as its financial advisors in connection
with the Merger, as well as the merger proposal by H. F.
Ahmanson & Company, for which they received and may
receive substantial fees, as well as reimbursement of
reasonable out-of-pocket expenses. In addition, Great
Western 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.
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 Securities Exchange Act of 1934, as amended, in
the solicitation, or that Schedule 14A requires the
disclosure of certain information concerning Goldman
Sachs and Merrill Lynch. In connection with Goldman
Sachs's role as financial advisor to Great Western,
Goldman Sachs and the following investment banking
employees of Goldman Sachs may communicate in person, by
telephone or otherwise with a limited number of
institutions, brokers or other persons who are
stockholders of Great Western: J. Wender, J. Mahoney, A.
Gordon, T. Owens and A. Vittorelli. In connection with
Merrill Lynch's role as financial advisor to Great
Western, Merrill Lynch and the following investment
banking employees of Merrill Lynch may communicate in
person, by telephone or otherwise with a limited number
of institutions, brokers or other persons who are
stockholders of Great Western: H. Lurie, L. S. Wolfe, P.
Wetzel, F. V. McMahon, J. Esposito, C. Del-Moral Niles
and K. Gupta. 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 its own account and for the accounts of
its customers, which transactions may result 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 28, 1997, Goldman Sachs had
positions in Great Western Securities and Washington
Mutual Securities as principal as follows: (i) net
"long" 9,473 of Great Western's common shares and (ii)
net "long" $1 million of Great Western's deposit notes.
As of April 28, 1997, Merrill Lynch had positions in
Great Western Securities and Washington Mutual Securities
as principal as follows: (i) net "long" 2,526 of Great
Western's common shares and (ii) net "long" 1,526 of
Washington Mutual's common shares.
Other participants include Washington Mutual
and may include the directors of Washington Mutual (D. P.
Beighle, D. Bonderman, J. T. Crandall, R. H. Eigsti, J.
W. Ellis, D. J. Evans, A. V. Farrell, W. P. Gerberding,
K. K. Killinger, S. B. McKinney, M. K. Murphy, W. G.
Reed, Jr. and J. H. Stever); the following executive
officers of Washington Mutual: C. S. Davis, S. P.
Freimuth, L. D. Lannoye, W. A. Longbrake, D. W.
Oppenheimer, C. E. Tall and S. L. Wilson; and the
following other members of management of Washington
Mutual: K. Christensen, J. DeGrande, W. Ehrlich, J. B.
Fitzgerald, M. Kittner and D. G. Wisdorf (collectively,
the "Washington Mutual Participants"). Messrs.
Bonderman, Crandall and Killinger beneficially owned
1,894,141 shares, 6,549,755 shares and 1,044,224 shares
of Washington Mutual common stock, respectively. The
remaining Washington Mutual Participants do not
beneficially own, individually or in the aggregate, in
excess of 1% of Washington Mutual's equity securities.
The Washington Mutual Participants do not beneficially
own, individually or in the aggregate, in excess of 1% of
Great Western's equity securities.
Washington Mutual has retained Lehman Brothers
Inc. ("Lehman Brothers") to act as its financial advisor
in connection with the 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 related persons against certain liabilities,
including certain liabilities under the federal
securities laws, arising out of its engagement. 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
"participant" as defined in Schedule 14A promulgated
under the Securities Exchange Act of 1934, as amended, in
the solicitation, or that Schedule 14A requires the
disclosure of certain information concerning Lehman
Brothers. In connection with Lehman Brothers' role as
financial advisor to Washington Mutual, Lehman Brothers
and the following investment banking 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 Washington
Mutual and Great Western: S. B. Wolitzer, P. R.
Erlanger, S. Sobti, D. J. Kim, C. P. Sweeney and D. A.
Trznadel. 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 28,
1997, Lehman Brothers had positions in Washington Mutual
Securities and Great Western Securities as principal as
follows: (i) net "short" 224 of Washington Mutual's
common shares; (ii) net "long" 27,434 shares of
Washington Mutual's 9.12% preferred stock; (iii) net
"long" 124,964 shares of Washington Mutual's 7.60%
preferred stock; (iv) net "short" 1,519 of Great
Western's common shares; and (v) net "long" 160,000
shares of Great Western's 8.30% preferred stock.
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