<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Heller Financial, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
-------------------------------------------------------------------------
Notes:
<PAGE>
[HELLER FINANCIAL LOGO]
HELLER FINANCIAL, INC.
ANNUAL MEETING OF STOCKHOLDERS
April 23, 1999
----------------
NOTICE AND PROXY STATEMENT
<PAGE>
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Phone: 312 441 7000
NOTICE OF ANNUAL MEETING
Dear Heller Financial Stockholder:
The Annual Meeting of Stockholders of Heller Financial, Inc. will be held
on Friday, April 23, 1999 at the Hyatt Regency O'Hare Hotel at 9300 West Bryn
Mawr Road, Rosemont, Illinois. The meeting will begin at 11:00 a.m.
At the meeting, we will vote on:
1. The election of 12 individuals to serve on Heller's Board of
Directors;
2. Ratifying the Board's selection of Arthur Andersen LLP as Heller's
independent auditors for 1999; and
3. Any other matters properly brought before the meeting or any
adjournment.
Your proxy is being requested by the Board. Only stockholders who owned
common stock at the close of business on March 1, 1999 may vote at the meeting
or any adjournment.
Your Board recommends that you vote in favor of the two proposals made in
the enclosed proxy statement.
At the meeting, members of Heller's senior management will report on
Heller's 1998 results. We have enclosed the proxy statement, Heller's Form 10-
K/A, which includes our 1998 financial statements, and a summary Annual Report.
You may vote in person or by proxy. In order to make sure your vote is
counted at the meeting, please sign and date the enclosed proxy card and send
it back in the enclosed return envelope, which requires no postage if mailed in
the United States.
Sincerely,
Richard J. Almeida
Chairman of the Board of Directors and
Chief Executive Officer
Chicago, Illinois
March 15, 1999
<PAGE>
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
APRIL 23, 1999
QUESTIONS AND ANSWERS
Q:Who is soliciting my proxy?
A: The Board of Directors of Heller Financial, Inc. (Heller, which may also be
referred to as we, us or our) is sending you this proxy statement in
connection with the solicitation of proxies for use at Heller's 1999 Annual
Meeting of Stockholders.
The approximate date of the mailing of this proxy statement and the
related proxy card is March 15, 1999.
Q:What am I being asked to vote on?
A: (1) Electing nominees to serve on the Heller Board of Directors;
and
(2) Ratifying the Board's selection of Arthur Andersen LLP as Heller's
independent auditors for 1999.
Q:How does the Board recommend that I vote on the proposals?
A: The Board recommends a vote FOR each of the nominees and FOR the selection
of Arthur Andersen LLP as independent auditors for 1999.
Q:Who can vote?
A: Holders of record of Class A Common Stock and holders of record of Class B
Common Stock at the close of business on March 1, 1999, the Record Date,
may vote at the Annual Meeting.
On the Record Date, 39,009,606 shares of Class A Common Stock (including
494,125 shares of restricted Class A Common Stock issued to certain
Company employees) and 51,050,000 shares of Class B Common Stock were
outstanding and entitled to vote at the Annual Meeting. Each stockholder
is entitled to one vote for each share of Class A Common Stock and three
votes for each share of Class B Common Stock held on the Record Date.
Holders of Class A Common Stock and Class B Common Stock will vote
together as a single class on the matters that will come before the Annual
Meeting.
Q:Who owns the Class A and Class B Common Stock?
A: All of Heller's Common Stock was previously owned by Fuji America Holdings,
Inc., which is owned by The Fuji Bank, Limited. On May 6, 1998, Heller
1
<PAGE>
completed an initial public offering of its Class A Common Stock, which
began trading on the New York Stock Exchange on May 1, 1998. Fuji America
Holdings owns all of the Class B Common Stock. The publicly held Class A
Common Stock represents about 43% of the combined economic interest and 21%
of the combined voting power of all of Heller's outstanding common stock.
The Class B Common Stock owned by Fuji America Holdings represents the
remaining 57% of the combined economic interest and 79% of the combined
voting power. While held by Fuji America Holdings, the outstanding shares
of Class B Common Stock may never represent more than 79% of the combined
voting power of all outstanding shares of voting stock.
We are not aware of any stockholder other than Fuji America Holdings that
owns more than 5% of the outstanding Class A and Class B Common Stock on a
combined basis. As of March 15, 1999, the only stockholders of which we
are aware that own more than 5% of the Class A Common Stock are:
(1) Wellington Management Company, LLP, which has informed Heller that
it owns 5,402,094 shares, or 13.9%, of Class A Common Stock; and
(2) State Street Research & Management Company, which has informed
Heller that it owns 2,042,700 shares, or 5.2%, of Class A Common Stock.
Q:How do I vote?
A: You may vote your shares either in person at the Annual Meeting or by
proxy. To vote by proxy, please mark, date, sign and mail the enclosed
proxy card in the prepaid envelope. Giving a proxy will not affect your
right to change your vote if you attend the meeting and want to vote in
person. You also may revoke your proxy at any time before the meeting by
giving Heller's Corporate Secretary written notice of your revocation or by
submitting a later-dated proxy. If you return your proxy but do not mark
how you wish to vote, your shares will be voted FOR the two proposals.
Q:What constitutes a quorum?
A: A "quorum" means the majority of the outstanding common shares, which may
be present at the meeting in person or represented by proxy. There must be
a quorum for the meeting to be valid. If you submit an executed proxy card,
then you will be considered part of the quorum (even if you abstain from
voting). Broker non-votes, which occur when a broker does not vote on some
matters on the proxy card because it does not have authority to do so, are
also counted as present for purposes of establishing a quorum.
Q:What vote is necessary to take action?
A: Directors are elected by a plurality of shares voted, which means that the
twelve nominees receiving the highest number of votes will be elected. The
affirmative vote of more than 50% of the shares voting in person or by
proxy is necessary to ratify Arthur Andersen LLP as Heller's independent
auditors for 1999. Abstentions and broker non-
2
<PAGE>
votes will have no effect on the votes for directors. Abstentions and
broker non-votes have the same effect as a vote "against" ratifying Arthur
Andersen LLP as Heller's independent auditors for 1999.
Since it holds 79% of the combined voting power of our Common Stock, Fuji
America Holdings has the unilateral power to elect all of our directors
and to ratify the appointment of Arthur Andersen LLP. Fuji America
Holdings has indicated its intention to vote FOR each of the nominees for
director and FOR the ratification of the appointment of Arthur Andersen
LLP.
Q:What happens if I withhold my vote for an individual director?
A: Withheld votes are counted as "no" votes for the individual director.
Q:What does it mean if I get more than one proxy card?
A: If your shares are registered differently or are held in more than one
account, you will receive more than one proxy card. In that case, please
sign and return all different proxy cards to make sure that all of your
shares are voted. Our employees will receive one combined proxy card
covering all shares they hold in the Heller Savings and Profit Sharing
(401(k)) Plan, the Employee Stock Purchase Plan, the Executive Deferred
Compensation Plan and as restricted stock under the Stock Incentive Plan.
Q:How will voting on any other business be conducted?
A: We are not aware of any business to be considered at the meeting other
than the proposals described above. But if any other business is presented
at the meeting, your signed proxy gives authority to Richard J. Almeida,
Chairman of the Board and Chief Executive Officer of Heller, and Debra H.
Snider, Executive Vice President, General Counsel and Secretary of Heller,
to vote on such matters in their discretion.
If unforeseen circumstances (for example, death or disability) make it
necessary for the Board to substitute another person for any of the
nominees for directors, your shares will be voted for that other person,
unless you have revoked your proxy.
Q:Who can attend the Annual Meeting?
A: All stockholders may attend the meeting.
Q:Who is paying for soliciting this proxy?
A: Heller will pay for soliciting the proxies being sent with this proxy
statement. We do not expect to pay any fees for the solicitation of
proxies, but we may reimburse brokers, nominees, fiduciaries and other
custodians their reasonable fees and expenses for sending proxy materials
to beneficial owners and obtaining their instructions. In addition to mail
solicitation, proxies may be solicited in person or by telephone,
facsimile or other electronic communication, by Heller directors, officers
and other employees.
3
<PAGE>
Q:When are stockholders proposals for the 2000 Annual Meeting due?
A: Stockholder proposals submitted under Rule 14a-8 of the Securities Exchange
Act, including nominations for directors, to be included in our proxy
statement for the 2000 annual meeting of stockholders must be received by
Heller's Corporate Secretary on or before November 12, 1999. Such a
proposal must contain the information required by Heller's By-Laws, a copy
of which may be obtained from Heller's Corporate Secretary. There are
additional Securities and Exchange Commission rules that must be complied
with in order to have a proposal included in the proxy statement.
To be considered at the 2000 annual meeting of stockholders, stockholder
proposals must be received by Heller's Corporate Secretary on or before
December 12, 1999.
4
<PAGE>
PROPOSALS YOU MAY VOTE ON
1. Election of Directors
The entire Board of Directors, consisting of twelve members, will be elected
at the Annual Meeting. Each director will serve until the next annual meeting
of the stockholders or until he or she is succeeded by another qualified
director who has been elected. Detailed information about each nominee is
provided below.
The Board has no reason to believe that any nominee will be unable to serve
as a director. If for any reason a nominee becomes unable to serve, the shares
represented by valid proxies will be voted for the election of such other
person as the Board may recommend, or the Board may reduce the number of
directors to eliminate the vacancy.
Your Board recommends a vote FOR each of the nominees.
2. Ratification of the Appointment of Arthur Andersen LLP as Independent
Auditors
The Board has approved the appointment of Arthur Andersen LLP as Heller's
independent auditors for 1999. Arthur Andersen has served as Heller's
independent auditors for many years. They have unrestricted access to the Audit
Committee to discuss audit findings and other financial matters. During 1998,
Arthur Andersen also provided non-audit services to Heller. We expect a
representative of Arthur Andersen to attend the Annual Meeting and to answer
appropriate questions.
Your Board recommends a vote FOR the ratification of Arthur Andersen LLP as
Heller's independent auditors for 1999.
5
<PAGE>
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
Richard J. Almeida Mr. Almeida, age 56, has served as Chairman of the
Board and Chief Executive Officer of Heller and
Heller International Group, Inc. (International
Group), a wholly-owned subsidiary through which
Heller conducts its international business, since
November 1995, and as a Director of Heller and
International Group since November 1987. He
previously served as Executive Vice President and
Chief Financial Officer of Heller and International
Group from November 1987 to November 1995. He has
served as Director of Fuji America Holdings, Inc., a
subsidiary of The Fuji Bank, Limited, and the
majority stockholder of Heller, since January 1998.
He is also on the Board of Directors of The Fuji Bank
and Trust Company, a subsidiary of Fuji Bank. Prior
to joining Heller in 1987, Mr. Almeida served in a
number of operating positions, both in corporate
banking and investment banking, for Citicorp.
Michael A. Conway Mr. Conway, age 52, joined Heller's Board of
Directors in September 1998. Mr. Conway is Senior
Vice President and Senior Investment Officer of Aon
Corporation (an insurance brokerage and underwriting
company) and is President of Aon Advisors, Inc., a
subsidiary of Aon providing investment management
services. Prior to joining Aon, he served as
President and Chief Executive Officer of Manhattan
National Corporation, an insurance holding company.
He has also served as Director of St. Joseph Light &
Power Company.
Tsutomu Hayano Mr. Hayano, age 52, has served as a Director of
Heller and International Group since May 1996 and a
Director of Fuji Bank since July 1997. Since May
1996, he has held the position of General Manager of
the New York Branch of Fuji Bank and Chairman of The
Fuji Bank and Trust Company. He previously served as
General Manager at the Hamamatsucho Branch of Fuji
Bank from May 1994 to 1996, and President of Fuji
Bank, Nederland N.V. from February 1990 to 1994.
Soichi Hirabayashi Mr. Hirabayashi, age 56, has served as a Director of
Heller and as Chairman of the Executive Committee of
Heller's Board since July 1998. He was appointed
Managing Director of Fuji Bank overseeing the
Americas Division in May 1998, having previously been
responsible for its Overseas Business Group and
Investment Banking Products and Treasury Trading
Group in Tokyo. Mr. Hirabayashi has served as a
Director of Fuji America Holdings since July 1998. He
was elected to the Board of Directors of Fuji Bank in
June 1995, having served as General Manager, Treasury
Division, in Tokyo since May 1995 and General
Manager, International Division, Tokyo, since 1993.
6
<PAGE>
Mark Kessel Mr. Kessel, age 57, has served as a Director of
Heller since July 1992. Mr. Kessel has been a Partner
of Shearman & Sterling, a law firm, since December
1977.
Tetsuo Kumon Mr. Kumon, age 39, has served as a Director of Heller
since July 1998. He is Senior Vice President and
Deputy General Manager of the Americas Division of
Fuji Bank. He has previously served as Senior Vice
President and Senior Manager, Americas Division; Vice
President and Manager, Americas Division; and Manager
of the Financial Engineering Division. Mr. Kumon has
served as a Director of Fuji America Holdings since
July 1998.
Dennis P. Lockhart Mr. Lockhart, age 52, has served as a Director of
Heller and International Group and as President of
International Group since January 1988. In his
current position, he has principal responsibility for
Heller's international operations. Mr. Lockhart has
also served as a Director of Tri Valley Corporation
since April 1981. Prior to joining Heller in 1988,
Mr. Lockhart was employed by Citicorp for 16 years,
holding a number of positions in
corporate/institutional banking domestically and
abroad, including assignments in Lebanon, Saudi
Arabia, Greece, Iran, New York and Atlanta, with
regional experience encompassing Europe, the Middle
East, Africa and Latin America.
Frank S. Ptak Mr. Ptak, age 55, joined Heller as a Director in
September 1998. Mr. Ptak is the Vice Chairman of ITW
Inc., a diversified manufacturing company, and has
been with ITW since 1975. He has also served as a
member of the Board of Directors of Hon Industries,
Inc., a furniture and fireplace manufacturer, since
May 1998. Before joining ITW, Mr. Ptak was employed
by Sara Lee Corporation from 1970 to 1975.
Masahiro Sawada Mr. Sawada, age 45, has served as Senior Vice
President of Heller since January 1998 and as a
Director of Heller and International Group since
December 1995. He previously served as Senior Vice
President of Heller International Corporation from
May 1995 to January 1998, and Joint General Manager
of Fuji Bank, Paris Branch, from May 1992 to 1995.
Kenichiro Tanaka Mr. Tanaka, age 50, has served as Executive Vice
President of Heller since January 1998, a Director of
Heller and International Group since February 1997,
and a Director and President and Chief Executive
Officer of Fuji America Holdings, Inc. since January
1998. Mr. Tanaka previously served as Executive Vice
President of Heller International Corporation from
February 1997 to January 1998, President
7
<PAGE>
and Chief Executive Officer of Fuji Bank, Canada,
from November 1994 to January 1997, and Deputy
General Manager of Fuji Bank, Head Office Credit
Division, from May 1991 to November 1994.
Frederick E. Wolfert Mr. Wolfert, age 44, has served as a Director of
Heller since July 1998 and as President and Chief
Operating Officer of Heller since January 1998. In
this capacity, he has principal responsibility for
all of Heller's domestic businesses. He served as
Chairman of Key Global Finance Ltd. from April 1996
to December 1997, Chairman, President and Chief
Executive Officer of KeyCorp Leasing, Ltd. from June
1993 to December 1997, Chairman, President and Chief
Executive Officer of KeyBank USA N.A. from June 1993
to December 1996, President and Chief Operating
Officer of KeyCorp Leasing, Ltd. from December 1991
to June 1993, and Executive Vice President of KeyBank
USA N.A. from December 1991 to June 1993. Mr. Wolfert
also served for nine years in management positions
with U.S. Leasing Corporation in its San Francisco
headquarters.
Terumasa Yamasaki Mr. Yamasaki, age 49, has served as a Director of
Heller since January 1999. He currently also holds
the position of Executive Vice President and General
Manager, Credit Division for the Americas for Fuji
Bank and Director of Fuji America Holdings. He was
appointed General Manager of Fuji Bank's Atlanta
Agency in May 1994 having served as General Manager
of a branch office of Fuji Bank since January 1994.
INFORMATION ABOUT THE BOARD
Attendance at Board and Committee Meetings
The Board of Directors held 6 regularly scheduled and special meetings
during 1998. Each nominee for director attended at least 75% of his Board and
committee meetings.
Committees of the Board of Directors
It is primarily the Board's responsibility to oversee the management of
Heller's business. To assist in carrying out this responsibility, the Board has
established the standing committees listed below. Heller does not have a
standing nominating committee.
8
<PAGE>
Executive Committee
The Executive Committee exercises all of the powers of the Board in the
management of Heller's business when the Board is not in session, to the extent
permitted by law. The Executive Committee met 7 times during 1998. The current
members of the Executive Committee are Messrs. Almeida, Hirabayashi (Chairman),
Kumon, Lockhart, Sawada, Tanaka, Wolfert and Yamasaki.
Audit Committee
The Audit Committee (1) reviews management's recommendation for selection of
Heller's independent auditors, (2) examines accounting processes and reporting
systems, (3) assesses the adequacy of internal controls and risk management,
(4) reviews and approves Heller's financial disclosures and (5) reviews other
similar matters. The Audit Committee, which consists solely of outside
directors as required by the exchanges on which our Common Stock trades, met 2
times during 1998, both times after our initial public offering. The current
members of the Audit Committee, each of whom joined the Committee after our
initial public offering, are Messrs. Conway, Kessel (Chairman) and Ptak.
Compensation Committee
The Compensation Committee oversees the determination of all matters
relating to employee compensation and benefits and specifically reviews and
approves salaries, bonuses and stock-based compensation for the executive
officers named in this proxy statement. The Compensation Committee met 1 time
during 1998, after our initial public offering. The current members of the
Compensation Committee are Messrs. Conway, Hirabayashi (Chairman) and Kumon.
International Acquisition and Divestiture Committee
The International Acquisition and Divestiture Committee meets as necessary
when the Board is not in session to consider significant potential
international acquisitions and divestitures. The International Acquisition and
Divestiture Committee did not meet during 1998. The current members of the
International Acquisition and Divestiture Committee are Messrs. Almeida
(Chairman), Lockhart and Wolfert.
Special Financing Committee
The Special Financing Committee meets as necessary in order to establish the
final pricing and terms for certain of Heller's debt and equity securities
offerings. The Special Financing Committee met 1 time during 1998. The current
members of the Special Financing Committee are Messrs. Almeida, Hirabayashi
(Chairman) and Tanaka.
9
<PAGE>
STOCK OWNERSHIP
Security Ownership in Heller of Certain Beneficial Owners
and of
Directors and Executive Officers
The following tables show, as of March 1, 1999: (1) the beneficial owners of
more than 5% of the Class A and Class B Common Stock and the number of shares
beneficially owned; and (2) the number of shares of Class A Common Stock
beneficially owned by each Director, each executive officer named in the
Summary Compensation Table in this proxy statement and all Directors and
executive officers of Heller as a group, as reported by each person. Except as
noted, each person has sole voting and investment power over the shares shown
in this table.
Certain Beneficial Owners
<TABLE>
<CAPTION>
Title of Amount and Nature of Percent
Class Name of Beneficial Owner Beneficial Ownership of Class
- -------- ------------------------ -------------------- --------
<S> <C> <C> <C>
Class A Wellington Management Company, LLP 5,402,094(1) 13.9%
Common 75 State Street
Stock Boston, Massachusetts 02109
State Street Research & 2,042,700(1) 5.2%
Management Company
One Financial Center, 30th Floor
Boston, Massachusetts 02111
Class B The Fuji Bank, Limited 51,050,000 100%
Common Two World Trade Center
Stock New York, NY 10048
</TABLE>
- --------
(1) Information based on reported ownership on the date of SEC filings. The
owners report that they hold the shares for their clients.
10
<PAGE>
Directors and Other Named Executive Officers
<TABLE>
<CAPTION>
Amount and Nature of Percent
Title of Class Name of Beneficial Owner Beneficial Ownership of Class
-------------- ------------------------- -------------------- --------
<C> <S> <C> <C>
Class A Common Stock
Richard J. Almeida....... 149,837(1) *
Michael A. Conway........ 2,632(1) *
Tsutomu Hayano........... 100 *
Soichi Hirabayashi....... 0 --
Mark Kessel.............. 2,741(1) *
Tetsuo Kumon............. 0 --
Michael J. Litwin........ 37,647(1) *
Dennis P. Lockhart....... 54,983(1) *
Lauralee E. Martin....... 34,148(1) *
Frank S. Ptak............ 1,137(1) *
Masahiro Sawada.......... 400 *
Kenichiro Tanaka......... 500 *
Frederick E. Wolfert..... 73,197(1) *
Terumasa Yamasaki........ 0 --
======= ===
All directors and
executive officers as a
group (16 persons)..... 394,335 1.0
</TABLE>
- --------
* Less than one percent
(1) Includes unvested performance-based restricted shares issued under Heller's
Stock Incentive Plan for which the individual has voting power but does not
yet have power to dispose, in the amount of 87,385 shares for Mr. Almeida,
1,137 shares for Mr. Conway, 835 shares for Mr. Kessel, 22,451 shares for
Ms. Martin, 16,623 shares for Mr. Litwin, 16,623 shares for Mr. Lockhart,
1,137 shares for Mr. Ptak and 49,934 shares for Mr. Wolfert. Reported
amounts also include holdings in the Company's Executive Deferred
Compensation Plan, Savings and Profit Sharing (401(k)) Plan and Employee
Stock Purchase Plan.
11
<PAGE>
Stock Ownership in Fuji Bank of
Directors and Executive Officers
The following table sets forth, as of December 31, 1998, certain information
with respect to the beneficial ownership of common stock of Fuji Bank, Heller's
ultimate parent, by (1) each Director of Heller, (2) each executive officer
named in the Summary Compensation Table in this proxy statement and (3) all
directors and executive officers of Heller as a group.
<TABLE>
<CAPTION>
Number of Shares
Name of Beneficial Owner Beneficially Owned
------------------------ ------------------
<S> <C>
Richard J. Almeida.................................... 0
Michael A. Conway..................................... 0
Tsutomu Hayano........................................ 12,315
Soichi Hirabayashi.................................... 20,872
Mark Kessel........................................... 0
Tetsuo Kumon.......................................... 0
Michael J. Litwin..................................... 0
Dennis P. Lockhart.................................... 0
Lauralee E. Martin.................................... 0
Frank S. Ptak......................................... 0
Masahiro Sawada....................................... 2,205
Kenichiro Tanaka...................................... 4,174
Frederick E. Wolfert.................................. 0
Terumasa Yamasaki..................................... 0
======
All directors and executive officers as a group
(16 persons)......................................... 39,566
</TABLE>
In addition, Messrs. Hayano, Hirabayashi, Kumon, Sawada, Tanaka and Yamasaki
participate in a Fuji Bank employee stock purchase plan and, as of December 31,
1998, beneficially owned an aggregate of approximately 23,209 shares of Fuji
Bank common stock through this plan.
The number of shares of Fuji Bank common stock that are beneficially owned
by (1) each of Heller's directors, (2) each of the named executive officers or
(3) Heller's directors and executive officers as a group, including those
shares held in the Fuji Bank employee stock purchase plan, does not exceed 1%
of the outstanding shares of such stock.
Section 16(a) Beneficial Ownership Reporting Compliance
Under U.S. securities laws, directors, certain executive officers and
persons holding more than 10% of Heller's Common Stock must report their
initial ownership of the Common Stock and any changes in that ownership to the
Securities and Exchange Commission. The Commission has designated specific due
dates for these reports and Heller must identify in this proxy statement those
persons for whom these reports were not filed
12
<PAGE>
when due. We believe, based on a review of copies of such reports and written
representations that no other reports were required, that during 1998 all
Section 16 filing requirements applicable to Heller's directors, executive
officers and greater than 10% beneficial owners were complied with, except that
(1) a report on Form 4 regarding a disposition of shares by Mr. Almeida which
occurred due to a reallocation of his Executive Deferred Compensation Plan and
(2) a report on Form 3 regarding Nina B. Eidell's election as an executive
officer were inadvertently not made in a timely manner. Each of these matters
was subsequently reported as required.
COMPENSATION OF DIRECTORS AND THE NAMED EXECUTIVE OFFICERS
Compensation of Directors
Directors who are not employees of Heller, Fuji Bank or any of their
subsidiaries receive the following compensation:
(1) an annual cash retainer of $50,000;
(2) an annual grant of options to purchase Heller's Class A Common
Stock at an exercise price equal to the fair market value of the Stock at
the time of the grant, the total number of which options has a present
value of $25,000 using the assumptions applicable to grants made to
Heller's employees generally. One third of those options vest on each of
the first three anniversary dates of the grant and all of them must be
exercised within the earlier of ten years from the date of the grant and
one year after completion of service as a member of the Board; and
(3) a one-time grant at the time of first election of restricted shares
of Heller's Class A Common Stock valued at $25,000 based on the fair
market value at the time of the grant. Of the total number of restricted
shares now held by our independent directors, 75% vest on January 1, 2001
if Heller's three-year average net income growth has been at least 13.5%
and 100% vest on January 1, 2001 if Heller's average net income growth has
been at least 16.5%. In any event, they all vest on January 1, 2004,
provided that in each case the director has been continuously a member of
the Board from the date of the original grant.
Non-employee directors may defer all or part of their cash retainers under
Heller's Executive Deferred Compensation Plan. No additional fees are paid to
directors for attending Board or Committee meetings.
13
<PAGE>
Compensation of the Named Executive Officers
The following table sets forth information with respect to all compensation
awarded to, earned by or paid to the Chief Executive Officer of Heller and the
four next most highly compensated executive officers of Heller (as determined
at December 31, 1998 based on combined salary and bonus) (sometimes called the
named executive officers) for services rendered in all capacities to Heller
during the years ended December 31, 1998, 1997 and 1996.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------
Annual
Compensation(1) Awards Payouts
--------------------- ----------------------- -------
Restricted Securities
Name and Stock Underlying LTIP All Other
Principal Awards Options/SARs Payouts Compensation
Position Year Salary($) Bonus($)(2) ($)(3) (#)(4) ($)(5) ($)(6)
--------- ---- --------- ----------- ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard J.
Almeida 1998 760,417 551,000 2,359,395 280,000 593,775 8,950
(Chairman and 1997 637,500 450,000 0 0 0 8,950
Chief
Executive
Officer) 1996 475,000 313,500 0 0 548,871 7,918
Frederick E.
Wolfert 1998 401,539 325,000 1,348,218 160,000 187,200 448,304
(President
and Chief
Operating
Officer)(7)
Lauralee E.
Martin 1998 295,833 225,000 606,177 50,000 184,860 5,873
(Chief
Financial 1997 286,354 225,000 0 0 0 5,810
Officer) 1996 270,000 160,000 0 0 313,448 6,023
Michael J. 1998 296,250 200,000 448,821 40,000 174,915 7,096
Litwin
(Chief Credit 1997 282,083 200,000 0 0 0 6,938
Officer)
1996 255,000 160,000 0 0 296,647 6,300
Dennis P.
Lockhart 1998 290,833 160,000 448,821 40,000 184,275 7,043
(President, 1997 280,833 100,000 0 0 0 6,938
International 1996 270,000 140,000 0 313,279 6,079
Group) 0
</TABLE>
- -------
(1) Heller has a non-qualified deferred compensation plan known as the
Executive Deferred Compensation Plan under which certain employees of
Heller, including the named executive officers, may elect to defer a
portion of their annual compensation on a pre-tax basis. The amount of
deferred compensation remains an asset of Heller and may be invested in any
of certain mutual funds at the participant's discretion. Heller has amended
the Plan to permit the investment of deferred compensation in Heller's
Class A Common Stock.
(2) Bonuses earned in respect of one year are paid during the next year. For
example, the bonuses indicated as earned in respect of 1998 were paid in
February, 1999.
Perquisites and other personal benefit amounts for each of the named
executive officers fall below the minimum level for disclosure and therefore
have been excluded.
(3) In May, 1998, at the time of our initial public offering, the named
executive officers received restricted shares of our Class A Common Stock.
The compensation reported in the above table is based on the value on the
date of issuance
14
<PAGE>
of the Stock ($27.00). The number of shares of restricted stock and their
value on December 31, 1998 based on the closing market price of $29.125 per
share for each of the named executive officers are as follows:
<TABLE>
<CAPTION>
Name Number of Shares Value
---- ---------------- ----------
<S> <C> <C>
Mr. Almeida................................... 87,385 $2,545,088
Mr. Wolfert................................... 49,934 1,454,327
Ms. Martin.................................... 22,451 653,885
Mr. Litwin.................................... 16,623 484,144
Mr. Lockhart.................................. 16,623 484,144
</TABLE>
Of the total number of restricted shares shown for each person above, 75%
vest on January 1, 2001 if Heller's three-year average net income growth has
been at least 13.5%, and 100% vest on January 1, 2001 if Heller's average
net income growth has been at least 16.5%. In any event, they all vest on
January 1, 2004, provided that in each case the individual has been
continuously an officer of Heller from the date of the original grant.
Dividends on restricted stock are paid in cash.
The restricted stock and stock option awards made to the named executive
officers are the only restricted stock and stock option awards such officers
will be eligible to receive until 2001.
(4) In May 1998, at the time of our initial public offering, the named
executive officers received options to purchase our Class A Common Stock.
All options vest 100% on January 1, 2001 (or, if earlier, upon the holder's
death or disability). The exercise price for each option is $27 per share,
the initial public offering price of the Stock.
(5) Under the terms of each of Heller's Long Term Incentive Plans (LTIPs),
payouts of all accruals are made after the end of the LTIP performance
period to officers who are active employees of Heller and participants in
the LTIP through its termination date. In 1997, cash payments were made to
the indicated named executive officers under an LTIP for the performance
period that began January 1, 1994 and ended December 31, 1996. These
payments are shown in the above table as being applicable to 1996 (having
been shown last year as being applicable to 1997). In 1999, cash payments
were made to the indicated named executive officers under an LTIP for the
performance period that began January 1, 1996 and ended December 31, 1998.
These payments are shown in the above table as being applicable to 1998.
(6) Amounts reflect both (i) Heller's contribution made in the form of a match
on amounts deferred by the named executive officers in Heller's 401(k)
Savings and Profit Sharing Plan and (ii) insurance premiums paid for term
life insurance, as follows in the case of 1998:
<TABLE>
<CAPTION>
401(k) Matching Amounts Term Life Insurance Premium
----------------------- ---------------------------
<S> <C> <C>
Mr. Almeida.......... $4,000 $4,950
Mr. Wolfert.......... 4,000 1,122
Ms. Martin........... 4,000 1,873
Mr. Litwin........... 4,000 3,096
Mr. Lockhart......... 4,000 3,043
</TABLE>
The 401(k) Savings Plan is available to all employees who work at least 900
hours per year. Heller makes matching contributions equal to 50% of the
employee's contribution, except that Heller's contribution will not exceed
2.5% of the employee's base salary or $4,000, whichever is less. Heller
amended the Plan in 1998 to permit the investment of contributions in
Heller's Class A Common Stock and so that Heller's matching contributions
starting on July 1, 1998 would be in the form of shares of Class A Common
Stock.
We also pay the premium for term life insurance for all regular, full-time
employees. The insurance amount is two times each employee's annual base
salary, with a maximum benefit of $600,000.
In connection with our hiring Mr. Wolfert, we paid him a sign-on bonus of
$175,000 and relocation expense reimbursement of $268,182, both of which
amounts are included in the above table as Other Compensation.
(7) Mr. Wolfert began his employment at Heller as of December 31, 1997 and
therefore received no compensation from Heller prior to 1998.
15
<PAGE>
Long Term Incentive Plan
Heller currently maintains one LTIP covering the named executive officers as
well as certain other employees of Heller. Under our 1997-1999 LTIP,
performance shares were granted for a three year performance and award period
beginning January 1, 1997 and ending December 31, 1999. The performance shares
will be earned out over the three-year performance and award period based on a
targeted average return on equity goal. Any payments under this LTIP will be
made in 2000 to employees with performance shares who continue to be employed
by Heller on December 31, 1999. In the event an employee ceases to be an active
employee prior to the end of the performance period, no incentive compensation
will be deemed to be earned under the LTIP. With the closing of our initial
public offering in 1998, Heller established the Stock Incentive Plan, under
which the stock options and restricted stock mentioned above were granted. The
Stock Incentive Plan effectively replaces the need for the LTIP. Therefore, no
additional performance shares were issued under the LTIP in 1998 and we do not
intend to award any performance shares in 1999.
The following table sets forth certain information about awards that were
granted for 1997 to the named executive officers under the 1997-1999 LTIP and
are currently outstanding:
Long Term Incentive Plan--Outstanding Awards for
1997-1999 LTIP
<TABLE>
<CAPTION>
Estimated Future Payouts
Under Non-Stock Price-Based Plans
------------------------------------
Number of Performance
Shares, or Other
Units or Period Until
Other Maturation or Threshold Maximum
Name Rights Payout ($) Target ($) ($)
- ---- --------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Richard J. Almeida...... 4,375 3 Years 328,125 437,500 743,750
Frederick E. Wolfert.... 5,400 3 Years 405,000 540,000 918,000
Lauralee E. Martin...... 1,500 3 Years 112,500 150,000 255,000
Michael J. Litwin....... 1,500 3 Years 112,500 150,000 255,000
Dennis P. Lockhart...... 1,500 3 Years 112,500 150,000 255,000
</TABLE>
16
<PAGE>
Heller has awarded stock options under its Stock Incentive Plan to the named
executive officers as follows:
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants(1)
--------------------------------------------------
Number of % of Total
Securities Options/SARs Grant
Underlying Granted to Exercise of Date
Options/SARs Employees in Base Price Expiration Present
Name Granted Fiscal Year $/Sh Date Value (2)
- ---- ------------ ------------ ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Richard J. Almeida...... 280,000 22% 27.00 June 2, 2008 2,615,760
Frederick E. Wolfert.... 160,000 12% 27.00 June 2, 2008 1,494,720
Lauralee E. Martin...... 50,000 4% 27.00 June 2, 2008 467,100
Michael J. Litwin....... 40,000 3% 27.00 June 2, 2008 373,680
Dennis P. Lockhart...... 40,000 3% 27.00 June 2, 2008 373,680
</TABLE>
- --------
(1) The option awards made to the named executive officers are the only option
awards such officers will be eligible to receive until 2001. All of the
options shown in the above table vest on January 1, 2001 (or, if earlier,
upon the holder's death or disability).
(2) The estimated grant date present value reflected in the above table is
determined using the Black-Scholes model, which is a mathematical formula
used to value options on stock exchanges. All of the above grants were made
in connection with our initial public offering. The model assumed: (i) an
option term of ten years, (ii) an interest rate of 5.67%, (iii) volatility
of 19.44% based on industry peers' volatility and (iv) a dividend yield of
1.6% based on the grant price of the options and projected annual
dividends.
The following table lists the number of shares acquired and the value
realized as a result of option exercises during 1998 for the named executive
officers. It also includes the number and value of their exercisable and non-
exercisable options as of December 31, 1998. The table contains values for "in
the money" options, meaning a positive spread between the year-end per share
price of $29.125 and the exercise price. These values have not been, and may
never be, realized. The options might never be exercised and their value, if
any, will depend on the share price on the exercise date.
Aggregated Option/SAR Exercises in Last Fiscal Year
And Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of securities
underlying Value of unexercised
unexercised in-the-money
options/SARs at options/SARs
fiscal year end (#) at fiscal year end
-------------------- --------------------
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
---- --------------- ------------------ -------------------- --------------------
<S> <C> <C> <C> <C>
Richard J. Almeida...... 0 0 0/280,000 $0/$595,000
Frederick E. Wolfert.... 0 0 0/160,000 $0/$340,000
Lauralee E. Martin...... 0 0 0/50,000 $0/$106,250
Michael J. Litwin....... 0 0 0/40,000 $0/$85,000
Dennis P. Lockhart...... 0 0 0/40,000 $0/$85,000
</TABLE>
17
<PAGE>
The options reported are non-qualified stock options to purchase shares of
Class A Common Stock awarded under the Stock Incentive Plan. The exercise price
of the options is $27.00 per share and the closing trading price on the New
York Stock Exchange of Class A Common Stock at December 31, 1998 was $29.125
per share.
Other Employee Benefit Plans
Retirement and Other Defined Benefit Plans
Heller has a defined benefit retirement income plan for the benefit of its
employees that we intend to be a qualified plan under Section 401 of the
Internal Revenue Code. Substantially all domestic employees of Heller who have
one year of service, including the named executive officers, participate in the
retirement plan. Directors who are not Heller employees are not eligible for
retirement benefits. Under a defined benefit plan such as ours, contributions
are not specifically allocated to individual participants.
Heller has adopted a Supplemental Executive Retirement Plan which provides a
benefit to all employees whose full benefit under the above retirement plan is
reduced by participation in Heller's Executive Deferred Compensation Plan and
by limitations imposed by the Internal Revenue Code.
The following table shows estimated annual retirement benefits under the
qualified retirement plan and the Supplemental Executive Retirement Plan for
the named executive officers in specified remuneration and service
classifications:
Estimated Annual Retirement Benefits
<TABLE>
<CAPTION>
Years of Credited Service
----------------------------------------------
Final Average Pay 5 10 15 20 25 and over
- ----------------- ------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
$200,000......................... $18,790 $ 37,580 $ 56,370 $ 75,160 $ 93,950
225,000......................... 21,350 42,700 64,050 85,400 106,750
250,000......................... 23,920 47,840 71,760 95,680 119,600
275,000......................... 26,480 52,960 79,440 105,920 132,400
300,000......................... 29,040 58,080 87,120 116,160 145,200
400,000......................... 39,290 78,580 117,870 157,160 196,450
450,000......................... 44,420 88,840 133,260 177,680 222,100
500,000......................... 49,540 99,080 148,620 198,160 247,700
600,000......................... 59,790 119,580 179,370 239,160 298,950
</TABLE>
In general, remuneration covered by the retirement plan consists of the
annual base salary determined before any salary reduction contributions to
Heller's 401(k) Savings and Profit Sharing Plan, but is limited to a dollar
value no higher than $160,000. The monthly accrued benefit under the retirement
plan is calculated as a percentage of average monthly compensation over the
sixty consecutive months during the employee's last 120 months of employment
that yield the highest average, plus a certain percentage of the employee's
monthly compensation above the Social Security wage base for the past 25 years.
The
18
<PAGE>
figures shown in the table above include benefits payable under the retirement
plan and the supplemental retirement plan. Under the supplemental plan,
compensation is not limited to $160,000 per year. The estimates assume that
benefits commence at age 65 under a straight life annuity form.
As of December 31, 1998, the number of years of credited service for the
named executive officers and the actual average remuneration for their
respective years of credited service with Heller were as follows: Mr. Almeida,
11 years, 5 months, $431,622; Mr. Wolfert, 1 year, $401,539; Ms. Martin, 12
years, 5 months, $259,491; Mr. Litwin, 27 years, 2 months, $235,535; and Mr.
Lockhart, 11 years, $252,662.
Employment Contracts and Termination of Employment andChange of Control
Arrangements
Mr. Almeida, Heller's Chairman and Chief Executive Officer, is party to an
employment contract with Heller that became effective as of December 31, 1997
and expires on December 31, 1999. The contract will be automatically extended
to December 31, 2000, unless either Mr. Almeida or Heller gives the other
written notice to the contrary on or before June 30, 1999. The contract
provides for the payment to Mr. Almeida of an annual base salary of not less
than the amount Mr. Almeida received during 1998. Mr. Almeida's base salary and
performance bonus are to be reviewed by Heller during the term of the contract
pursuant to Heller's normal practices. The contract provides for Mr. Almeida's
participation in all of Heller's executive bonus and incentive compensation
plans. The contract further provides that if Mr. Almeida's employment is
terminated by Heller without cause, or if he resigns with cause, he will be
entitled to receive full salary through the date 24 months from the date of
termination. In the event of a termination under either of the situations
described above, Mr. Almeida is also entitled to receive his incentive plan
bonus payment at the applicable target bonus level for the full year in which
such termination occurs, as well as certain minimum payments under each LTIP in
which he was previously granted awards, and he will continue to be covered
under certain benefit plans through the date 24 months from the date of
termination. In connection with the initial public offering, Mr. Almeida's
contract was amended to permit him to select, in the event of a termination
following a change in control, the benefits described above or the benefits set
forth in the change in control agreements described below.
Mr. Wolfert, Heller's President and Chief Operating Officer, is party to an
employment contract with Heller that became effective as of December 31, 1997,
the date on which he was elected to his office, and expires on December 31,
1999. The contract provides for the payment to Mr. Wolfert of an annual base
salary of not less than the amount Mr. Wolfert received during 1998. Mr.
Wolfert's base salary and performance bonus are to be reviewed by Heller during
the term of the contract pursuant to Heller's normal practices. The contract
provides for Mr. Wolfert's participation in all of Heller's executive bonus and
incentive compensation plans. The contract further provides that if Mr.
Wolfert's employment is terminated by Heller without cause, or if he resigns
with cause, he will be entitled to receive full salary through the later of
December 31, 2000 or the date 18 months from the date of termination. In the
event of a termination, Mr. Wolfert is also entitled to receive his
19
<PAGE>
incentive plan bonus payment at the applicable target bonus level for the full
year in which such termination occurs, as well as payments under each LTIP in
which he was previously granted awards through the year in which the
termination occurs, and he will continue to be covered under certain benefit
plans through the later of December 31, 2000 or the date 18 months from the
date of termination. In connection with the initial public offering, Mr.
Wolfert's contract was amended to permit him to select, in the event of a
termination following a change in control, the benefits described above or the
benefits set forth in the change in control agreements described below.
Each of Ms. Martin, Heller's Chief Financial Officer, Mr. Litwin, Heller's
Chief Credit Officer, and Mr. Lockhart, President of Heller International
Group, is a party to a change in control agreement. Each change in control
agreement provides protection to the officer in the event of certain changes in
control of Heller within three years after the initial public offering. If the
officer's employment is either actually or constructively terminated after a
change in control other than for cause, Heller will pay to the officer the
present value of the additional benefits the officer would have accrued under
Heller's qualified and non-qualified retirement plans from the date of
termination through the last day of the 24 month period following termination
of employment. In addition, the officer will: (1) become fully vested in all
options and restricted stock granted under the Stock Incentive Plan and any
benefits under non-qualified retirement plans; (2) be entitled to receive all
payments under each Long-Term Incentive Plan in which he or she was previously
granted awards through the year in which termination occurs; (3) become fully
vested in the annual cash incentive plan at not less than the target bonus
level for the year in which the change in control occurred; (4) be entitled to
continuation of base salary and certain benefits and perquisites for 24 months;
and (5) be credited with 24 months of age and years of service for purposes of
Heller's retiree medical benefit plan.
Certain Other Relationships
Mr. Kessel, a director of Heller, is a partner of the law firm of Shearman &
Sterling, which from time to time acts as counsel in certain matters for Fuji
Bank and Heller.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy and Strategy
Heller has adopted a total compensation and benefits philosophy for its
executive officers that is designed to advance Heller's business strategy by
recognizing and reinforcing those behaviors that are critical to Heller's
success. As such, its programs seek to link executives' compensation and
benefits to both Heller's performance and the interests of its stockholders. In
particular, the goals of Heller's executive compensation program are to:
. Align compensation with Heller's business strategies and objectives.
. Attract, motivate and retain key contributors by providing a competitive
mix of compensation and benefits.
. Shift the compensation weighting mix from fixed to performance-based
variable pay.
20
<PAGE>
. Enhance the alignment of short-term and long-term incentive vehicles with
Heller's success.
. Support a vibrant culture by providing an overall compensation and
benefits package that meets the needs of a diverse workforce.
. Provide an opportunity and an incentive for all members of senior
management to become significant owners of Heller's stock.
. Link the interests of the members of senior management to the interests
of stockholders by requiring those executives to own significant levels
of Heller's stock.
Based on the above philosophy, Heller's strategy with respect to its
executive compensation and benefits program contains the following principal
elements:
. Ownership. Use equity ownership opportunities where feasible as a key
payout vehicle.
. Pay for Performance. Focus and reward executives on the key measures of
Heller's success, including revenue growth, quality and quantity of
managed assets, net income, return on equity, return on investment,
productivity, enterprise-wide collaboration and the development and
demonstration of individual job competencies.
. Pay Mix. Deliver a significant portion of total compensation through
performance based incentive programs.
. Pay Level. Offer market competitive short-term and long-term incentive
opportunities which, when combined with base pay, result in total
compensation for exceptional performers at the 75th percentile of peer
group companies. Reflect in pay levels the financial industry's best
practices and design, with particular emphasis on the use of equity
ownership opportunities within the industry.
. Retention. Use compensation design to maintain or increase the personal
"cost of exit" for key executives.
. Investor Expectations. Incorporate elements that significantly align the
interests of Heller's executives with the interests and expectations of
public stockholders.
Compensation Methodology
Heller's Compensation Committee reviews compensation on an annual basis.
Specific compensation decisions are based on many factors, including individual
performance and responsibilities, future objectives and challenges, past
performance and likely future contributions to Heller's success. Based on
survey information provided to us by independent compensation consultants, we
also look at compensation levels at peer group companies.
Compensation of Executives (Other than the Chief Executive Officer)
Base Salaries. Base salary is designed to compensate executives for their
level of responsibility and sustained individual performance. At the time of
our initial public offering in 1998, executive base salaries were determined to
be, in the aggregate, at or above the 75th percentile of base salaries at peer
group companies.
21
<PAGE>
Annual Bonuses. Annual cash bonuses reward executives for meeting
challenging annual goals. We establish bonus target awards for each executive
as a percentage of salary, generally 40-55% for the executives named in this
proxy statement. We then adjust those awards based on individual, business
division and corporate performance, resulting in actual awards of between 0%
and 200% of the target. Performance criteria differ across different business
divisions as appropriate, but typically include measures based on net income,
operating leverage, non-performing assets and certain non-financial, strategic
goals. In 1998, Heller, as a whole, exceeded its stated performance targets.
Long-term Incentives. Prior to Heller's initial public offering of stock in
1998, Heller's long-term incentive program granted awards to executives in the
form of performance shares. The value of the performance shares was related to
attainment of return on equity goals over a three-year period. The value of the
performance shares would be paid in cash payments in the year following the
performance period to those executives who continued to be employed by Heller
at the end of the performance period. No payments were made in 1998 for any
long-term plans. Payments have been made in 1999 in respect of a long-term plan
covering the 1996 through 1998 performance period. Additional payments are due
to be made in 2000 in respect of performance shares awarded in 1997 in respect
of a long-term plan covering the 1997 through 1999 performance period.
In anticipation of the closing of Heller's initial public offering in 1998,
no additional performance shares were awarded to executives in 1998 or will be
awarded in 1999. Heller has replaced the performance share approach to long-
term incentives with a stock-based incentive plan, the 1998 Stock Incentive
Plan, covering employees and non-employee directors. The Stock Incentive Plan
is administered by the Compensation Committee. Grants of restricted stock and
options to acquire stock were made in connection with the initial public
offering to align the interests of Heller's executives with stockholder
interests. The level and terms of the grants were determined with the
assistance of an independent compensation consultant in order to provide
competitive initial grants. The restricted stock is subject to a performance
based vesting schedule. Performance is defined in terms of the level of
Heller's growth in its annual net income. The named executive officers are not
eligible for another grant under the Stock Incentive Plan until 2001.
Ownership Guidelines. Heller believes that its senior executives should
closely align their interests with those of its stockholders. Accordingly,
Heller has established minimum stock ownership guidelines for its senior
executives, each of whom is required to have acquired stock with a value no
less than his or her base salary within three years after Heller's initial
public offering. The President and Chief Operating Officer is required to have
stock with a value no less than three times his base salary.
Compensation of the Chief Executive Officer
Mr. Almeida's total compensation for 1998, which was intended to place him
within the 75th percentile of chief executive officers at other peer group
companies, was based on Heller's excellent performance, Mr. Almeida's
individual performance, Heller's desire to retain him and the terms of his
employment agreement. Since he became Chairman at the
22
<PAGE>
end of 1995, Heller's net income has increased from $115 million in 1995 to
$172 million in 1998, its lending volume has grown at a 25% compound annual
growth rate and the credit quality of its lending assets has improved
significantly. He has also positioned Heller for future success, having guided
it through the initial public offering process, as well as a significant
initiative focused on improving operational efficiency and enhancing the
company's revenue base.
The majority of Mr. Almeida's compensation has been placed at risk since it
is tied to performance goals and to Heller's stock price. Additionally, under
the company's stock ownership guidelines, he is required by the third year
after the initial public offering to have beneficial ownership of stock with a
value at least equal to three times his base salary, a requirement he has
already exceeded by having beneficial ownership of over 149,000 shares.
Compliance with Section 162(m)
The Compensation Committee currently intends for all compensation paid to
Heller executives to be tax deductible to Heller under Section 162(m) of the
Internal Revenue Code of 1986. Section 162(m) provides that compensation paid
to executives in excess of $1,000,000 cannot be deducted by Heller for Federal
income tax purposes unless, in general, such compensation is performance-based,
is established by a committee of outside directors and is objective and the
plan or agreement providing for such performance-based compensation has been
approved in advance by the stockholders. Consistent with this intention,
Heller's Stock Incentive Plan was approved by Heller's sole stockholder prior
to the initial public offering, and since such approval, the Compensation
Committee has approved all awards under the Stock Incentive Plan.
The Compensation Committee
Soichi Hirabayashi (Chairman)
Michael A. Conway
Tetsuo Kumon
23
<PAGE>
PERFORMANCE GRAPH
Securities and Exchange Commission rules require proxy statements to contain
a performance graph that compares the performance of the Class A Common Stock
against an equity market index that includes companies whose equity securities
are traded on the same exchange or are of comparable market capitalization, and
a published industry or line of business index or group of "peer issuers",
covering a five-year period. Heller selected the S&P 500 Stock Index and the
S&P Financials Index as the appropriate business indexes for purposes of this
comparison. Because the Class A Common Stock did not begin trading on the NYSE
until May 1, 1998, the graph compares performance from May 1, 1998 through
December 31, 1998. The graph assumes an investment of $100 at the beginning of
the period at the offering price of $27.00 per share of Class A Common Stock.
The closing price of the Stock on December 31, 1998 was $29.125 per share. We
paid our first quarterly dividend of $0.09 per share on the Stock on November
15, 1998.
Comparison of Cumulative Total Return Among
Heller, Standard & Poor's 500 Index and S&P Financials Index*
May 1, 1998 through December 31, 1998
<TABLE>
<CAPTION>
5/1/98 12/31/98
------ --------
<S> <C> <C>
Heller Financial.......................................... $100 $108.28
S&P 500 Index............................................. $100 $111.71
S&P Financials Index...................................... $100 $ 97.57
</TABLE>
24
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Relationship with Fuji Bank
Fuji Bank, headquartered in Tokyo, Japan, and one of the world's largest
banks, is currently the beneficial owner of all of the Class B Common Stock of
Heller through its wholly-owned U.S. subsidiary, Fuji America Holdings. For as
long as Fuji Bank continues to beneficially own shares of Common Stock
representing more than 50% of the voting power of the Common Stock, Fuji Bank
will be able to direct the election of all of the members of Heller's Board of
Directors and therefore exercise a controlling influence over the business and
affairs of Heller, including any determinations with respect to:
(1) mergers or other business combinations involving Heller;
(2) the acquisition or disposition of assets by Heller;
(3) the incurrence of indebtedness by Heller;
(4) the issuance of any additional Common Stock or other equity securities;
and
(5) the payment of dividends with respect to the Common Stock.
Similarly, Fuji Bank will have the power to:
(1) determine matters submitted to a vote of Heller's stockholders without
the consent of Heller's other stockholders;
(2) prevent or cause a change in control of Heller; and
(3) take other actions that might be favorable to Fuji Bank.
In these situations or otherwise, various conflicts of interest between Heller
and Fuji Bank could arise.
From time to time Heller and Fuji Bank have entered into, and can be
expected to continue to enter into, certain agreements and business
transactions in the ordinary course of their respective businesses.
Keep Well Agreement
Heller first entered into its Keep Well Agreement with Fuji Bank on April
23, 1983. The Keep Well Agreement was amended and supplemented on January 26,
1984, in connection with the consummation of the purchase of Heller by Fuji
Bank and has been amended since that date from time to time. Under the Keep
Well Agreement, as currently in effect, Heller or Fuji Bank or any of its
affiliates may sell or dispose of Common Stock to any person or entity,
provided that after any such sale or disposition, Fuji Bank (directly or
indirectly, through one or more subsidiaries) continues to hold greater than
50% of the combined voting power of the outstanding Common Stock. This
provision may be subject to further revision by Heller and Fuji Bank without
the approval of any of Heller's securityholders.
25
<PAGE>
The Keep Well Agreement may not be terminated prior to the date that is the
earlier of (1) December 31, 2007 and (2) the date on which Heller has received
written certifications from Moody's Investors Service, Inc. and Standard &
Poor's Rating Services that, upon termination of the Keep Well Agreement, the
ratings on Heller's senior unsecured indebtedness without the support provided
by the Keep Well Agreement will be no lower than such ratings with the support
of the Keep Well Agreement, but in no event may the termination date occur
before December 31, 2002. In addition, the Keep Well Agreement includes certain
restrictions on termination relating to Heller's Series A Preferred Stock and
Series C Preferred Stock that are discussed below.
The Keep Well Agreement provides that Fuji Bank will maintain Heller's
stockholders' equity in an amount equal to $500 million. Accordingly, if Heller
determines, at the close of any month, that its net worth is less than $500
million, then Fuji Bank will purchase, or cause one of its subsidiaries to
purchase, shares of Heller's NW Preferred Stock, Class B, in an amount
necessary to increase Heller's stockholders' equity to $500 million.
The NW Preferred Stock is a series of junior preferred stock and, if and
when issued, will rank junior to the Series A Preferred Stock and the Series C
Preferred Stock and senior to the Common Stock as to payment of dividends, and
in all other respects. If and when the NW Preferred Stock is issued, dividends
will be noncumulative and will be payable (if declared) quarterly at a rate per
annum equal to 1% over the three-month LIBOR. Such dividends will not be paid
during a default in the payment of principal or interest on any of the
outstanding indebtedness for money borrowed by Heller. Subject to certain
conditions, the NW Preferred Stock will be redeemable, at the option of the
holder, within a specified period of time after the end of a calendar quarter
in an aggregate amount not greater than the excess of the stockholders' equity
of Heller as of the end of such calendar quarter over $500 million.
The Keep Well Agreement further provides that if Heller lacks sufficient
cash, other liquid assets or credit facilities to meet its payment obligations
on its commercial paper, then Fuji Bank will lend Heller up to $500 million,
payable on demand, which Heller may use only for the purpose of meeting such
payment obligations. Any such liquidity advance by Fuji Bank to Heller will
bear interest at a fluctuating interest rate per annum equal to the announced
prime commercial lending rate of Morgan Guaranty Trust Company of New York plus
0.25% per annum. Each liquidity advance will be repayable on demand at any time
after the business day following the 29th day after such liquidity advance was
made. No repayment of the liquidity advance will be made during a period of
default in the payment of Heller's senior indebtedness for borrowed money.
No liquidity advances or purchases of NW Preferred Stock have been made by
Fuji Bank under the Keep Well Agreement; other infusions of capital in Heller
have been made by Fuji Bank, the last one of which occurred in 1992.
Under the Keep Well Agreement, Heller has agreed to maintain, and Fuji Bank
has undertaken to assure that Heller will maintain, unused short-term lines of
credit, asset sales facilities and committed credit facilities in an amount
approximately equal to 75% of the amount of its commercial paper obligations
from time to time outstanding.
26
<PAGE>
Neither Fuji Bank nor Heller is permitted to terminate the Keep Well
Agreement for any reason prior to the termination date. After the termination
date, either Fuji Bank or Heller may terminate the Keep Well Agreement upon 30
business days' prior written notice, except as set forth below.
So long as the Series A Preferred Stock is outstanding and held by third
parties other than Fuji Bank, the Keep Well Agreement may not be terminated by
either party unless Heller has received written certifications from Moody's and
S&P that upon such termination the Series A Preferred Stock will be rated by
them no lower than "a3" and "A-", respectively. Additionally, so long as the
Series C Preferred Stock is outstanding and held by third parties other than
Fuji Bank, the Keep Well Agreement may not be terminated by either party unless
Heller has received written certifications from Moody's and S&P that upon such
termination the Series C Preferred Stock will be rated no lower than "baa1" and
"BBB" by Moody's and S&P, respectively.
For these purposes, the Series A Preferred Stock and the Series C Preferred
Stock will no longer be deemed outstanding at such time as an effective notice
of redemption of all of the Series A Preferred Stock and the Series C Preferred
Stock shall have been given by Heller and funds sufficient to effectuate such
redemption shall have been deposited with the party designated for such purpose
in the notice. So long as the Series A Preferred Stock is outstanding, if both
Moody's and S&P shall discontinue rating the Series A Preferred Stock, then
Goldman, Sachs & Co., or its successor, shall, within 30 days, select a
nationally recognized substitute rating agency and identify the comparable
ratings from such agency. So long as the Series A Preferred Stock is no longer
outstanding but the Series C Preferred Stock is outstanding, if both Moody's
and S&P shall discontinue rating the Series C Preferred Stock, then Lehman
Brothers Inc., or its successor, shall, within 30 days, select a nationally
recognized substitute rating agency and identify the comparable ratings from
such agency.
Any termination of the Keep Well Agreement by Heller must be consented to by
Fuji Bank. Any such termination will not relieve Heller of its obligations in
respect of any NW Preferred Stock outstanding on the date of termination or the
dividends thereon, any amounts owed in respect of liquidity advances on the
date of termination or the unpaid principal or interest on those liquidity
advances or Fuji Bank's fee relating to the liquidity commitment. Any such
termination will not adversely affect Heller's commercial paper obligations
outstanding on the date of termination. The Keep Well Agreement can be modified
or amended by a written agreement of Fuji Bank and Heller. However, no such
modification or amendment may change the prohibition against termination before
the termination date or the other restrictions on termination or adversely
affect Heller's then-outstanding commercial paper obligations.
Under the Keep Well Agreement, Heller's commercial paper obligations and any
other debt instruments are solely the obligations of Heller. The Keep Well
Agreement is not a guarantee by Fuji Bank of the payment of Heller's commercial
paper obligations, indebtedness, liabilities or obligations of any kind.
During 1998, Heller paid to Fuji Bank a commitment fee of approximately
$313,000, related to the Keep Well Agreement.
27
<PAGE>
Registration Rights Agreement
In connection with its initial public offering, Heller and Fuji Bank entered
into a registration rights agreement providing that, upon the request of any of
Fuji Bank, its subsidiaries or certain transferees of Common Stock from Fuji
Bank or its subsidiaries, Heller will use its best efforts to effect the
registration under the applicable federal and state securities laws of any of
the shares of Class A Common Stock that it may hold or that are issued or
issuable upon conversion of any other security that it may hold (including the
shares of Class B Common Stock) and of any other securities issued or issuable
in respect of the Class A Common Stock, in each case for sale in accordance
with the intended method of disposition of the holders making such demand for
registration, and will take such other actions as may be necessary to permit
the sale thereof in other jurisdictions, subject to certain specified
limitations. Fuji Bank or any other qualified transferee will also have the
right, which it may exercise at any time and from time to time, subject to
certain limitations, to include any such shares and other securities in other
registrations of equity securities of Heller initiated by Heller on its own
behalf or on behalf of other securityholders of Heller.
Heller will agree to pay all costs and expenses in connection with each such
registration which Fuji Bank or any other qualified transferee initiates or in
which any of them participates. The registration rights agreement contains
indemnification and contribution provisions (1) by Fuji Bank and its permitted
assigns for the benefit of Heller and (2) by Heller for the benefit of Fuji
Bank and other persons entitled to effect registrations of Class A Common Stock
pursuant to its terms, and related persons.
Purchase of Interest in International Group from Fuji Bank
At the time of the initial public offering, Heller purchased Fuji Bank's
interest in International Group for total cash consideration of approximately
$83 million, $54 million of which was for the International Group common stock
owned by Fuji Bank, valued at book value, and $29 million of which was for the
International Group preferred stock owned by Fuji Bank, valued at a modest
premium over book value. The shares of common and preferred stock of
International Group owned by Fuji Bank represented 21% of the outstanding
shares of capital stock of International Group. Heller financed this
acquisition through the issuance of senior debt bearing interest at a market
rate.
Certain Other Transactions with Fuji Bank and Its Subsidiaries
Several financial, administrative or other service arrangements exist or
have existed between Heller and Fuji Bank, Fuji America Holdings or related
affiliates. In management's opinion, the terms of these arrangements are
similar to those Heller would have been able to obtain in like agreements with
unaffiliated entities in arms-length transactions.
28
<PAGE>
Tax Allocation Agreement
Under the terms of a tax allocation agreement between Heller and Fuji
America Holdings for the period from January 2, 1998 through the date of the
consummation of the initial public offering, Heller will file consolidated U.S.
federal income tax returns with Fuji America Holdings. Heller will report
income tax expense as if it were a separate company and will record future tax
benefits as soon as it is more likely than not that such benefits will be
realized. Pursuant to the tax allocation agreement, each company covered by the
agreement will calculate its current and deferred income taxes based on its
separate company taxable income or loss, utilizing separate company net
operating losses, tax credits, capital losses and deferred tax assets or
liabilities. In accordance with the tax allocation agreement, net payments of
$6 million were made to Fuji America Holdings by Heller for the indicated
period.
Services Agreements
Certain employees of Fuji Bank performed managerial, administrative and
other related functions for Heller during 1998. Heller performed certain
managerial, administrative, accounting and other related functions for Fuji
America Holdings during 1998. Each party compensated the other for the use of
the services of individuals performing the indicated functions at a rate which
reflects current costs to the providing party. The aggregate amount paid to
Fuji Bank for these services in 1998 was $1 million. The amount paid to Heller
by Fuji America Holdings in 1998 for such services was less than $1 million.
Additionally, certain subsidiaries of Fuji Bank periodically serve as managers
for various offerings of Heller's debt securities and may act as registrar and
paying agent for certain debt issuances by Heller.
Certain Other Transactions and Financial Instruments
Fuji Bank and one of its subsidiaries provided uncommitted lines of credit
to international subsidiaries of Heller totalling approximately $27 million at
December 31, 1998. Borrowings under these facilities totalled $2 million at
December 31, 1998. In addition, Fuji Bank provides lines of credit to certain
international joint ventures of Heller.
From January to June of 1998, Heller was a party to a $200 million notional
amount interest rate swap agreement with Fuji America Holdings. The purpose of
this agreement was to manage Heller's exposure to interest rate fluctuations.
Under this agreement, Heller paid interest to Fuji America Holdings at a
variable rate based on the commercial paper rate published by the Board of
Governors of the Federal Reserve and Fuji America Holdings paid interest to
Heller at a fixed rate of 5.57%. This agreement increased Heller's interest
expense by $58,000 in 1998. When this Agreement was terminated in June of 1998,
Heller paid Fuji America Holdings a termination fee of approximately $1
million.
The trust department of Fuji Bank may purchase commercial paper of Heller
for its clients. Interest expense paid by Heller related to such commercial
paper borrowings was $272,000 in 1998.
29
<PAGE>
Certain of Heller's obligations to Fuji America Holdings arising out of the
interest rate swap agreement described above and in respect of the other
amounts payable to Fuji America Holdings as described above are represented by
interest bearing demand notes. The notes bear interest at rates which
approximate the average rates on Heller's commercial paper obligations or
short-term bank borrowing rates outstanding during the period. During 1998,
Heller paid interest of $1.7 million to Fuji America Holdings related to these
notes.
In the ordinary course of its business, Heller participates in joint
financings with Fuji Bank or certain affiliates.
Heller has an accounts receivable sale facility which allows Heller to sell
an undivided interest of up to $550 million in a designated pool of its
factored accounts receivable to five bank-supported conduits. Heller sold
approximately $475 million of receivables under this facility as of December
31, 1998. The underlying liquidity support for the conduit is provided by
unaffiliated entities. One of the conduits has an operating agreement with Fuji
Bank. Heller paid fees of $346,000 to Fuji Bank during 1998 for services
provided under this agreement.
By Order of the Board of Directors
Richard J. Almeida
Chairman of the Board of Directors and
Chief Executive Officer
30
<PAGE>
Heller Financial, Inc.
500 West Monroe Street
Chicago, Illinois 60661
Dear Heller Financial Stockholder:
The 1999 Annual Meeting of Stockholders of Heller Financial, Inc. will be
held at 11:00 a.m. on Friday, April 23, 1999 at the Hyatt Regency O'Hare Hotel,
9300 W. Bryn Mawr Ave., Rosemont, Illinois. Stockholders of record at the close
of business on March 1, 1999 will be entitled to vote at the meeting and any
adjournments.
Your vote is important. In order to have your vote counted at the meeting,
please mark the boxes on the proxy card to indicate how your shares should be
voted. Sign and return your proxy as soon as possible in the enclosed postpaid
envelope. To vote in accordance with the Board of Directors' recommendations,
just sign and date the proxy card where indicated - no boxes need be checked.
Sincerely,
/s/ Richard J. Almeida
- ----------------------
Richard J. Almeida
Chairman of the Board of Directors and
Chief Executive Officer
Please Detach Proxy Card Here
- --------------------------------------------------------------------------------
PLEASE DETACH HERE
You Must Detach This Portion of the Proxy Card Before
. Returning It in the Enclosed Envelope .
[ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
1. Election of Directors FOR all nominees listed below [ ]
WITHHOLD AUTHORITY to vote for all nominees listed below [ ]
*EXCEPTIONS [ ]
The Board of Directors recommends a vote "FOR" the nominees listed below:
Richard J. Almeida, Michael A. Conway, Tsutomu Hayano, Soichi Hirabayashi, Mark
Kessel, Tetsuo Kumon, Dennis P. Lockhart, Frank S. Ptak, Masahiro Sawada,
Kenichiro Tanaka, Frederick E. Wolfert, Terumasa Yamasaki
INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the
"Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions________________________________________________________________
2. Ratification of Arthur Andersen LLP as Independent Auditors
FOR [_] AGAINST [_] ABSTAIN [_]
Address Change and/or Comments Mark Here
[_]
I plan to attend the Annual Meeting
[_]
Please sign exactly as name or names appears on this proxy. If signing in a
representative capacity, please give full title.
Dated: _____________, 1999
- -------------------------
SIGNATURE
- -------------------------
SIGNATURE
Votes MUST be indicated (X) in black or blue ink.
[X}
(Please sign, date and return this proxy card in the enclosed envelope.)
- --------------------------------------------------------------------------------
<PAGE>
________________________________________________________________________________
HELLER FINANCIAL, INC.
Proxy for the Annual Meeting of Stockholders
To Be Held April 23, 1999
Solicited on Behalf of the Board of Directors
The undersigned appoints Richard J. Almeida and Debra H. Snider, and each
of them individually, as proxy of the undersigned, each with power to appoint
his or her substitute, and authorizes each of them to vote all shares of Heller
Financial, Inc. which the undersigned could vote if personally present at the
1999 Annual Meeting of Stockholders of Heller to be held on April 23, 1999 and
at any adjournment, as indicated on the reverse side of this proxy. The
undersigned hereby confers discretionary authority upon each such proxy to vote
upon any other matter properly brought before the 1999 Annual Meeting. If no
designation is made, this proxy will be voted FOR proposals 1 and 2.
SEE REVERSE SIDE
COMMENTS: ______________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
If you have written in the above space, please mark the comments notification
box on the reverse side.
HELLER FINANCIAL, INC.
P.O. BOX 11069
NEW YORK, N.Y. 10203-0069
________________________________________________________________________________
