<PAGE> 1
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:
<TABLE>
<S> <C>
/ / 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
BanPonce Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
BANPONCE CORPORATION
P.O. BOX 362708
SAN JUAN, PUERTO RICO 00936-2708
---------------------
NOTICE OF MEETING AND PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, APRIL 26, 1996
---------------------
To the Stockholders of BanPonce Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of BanPonce
Corporation (the "Meeting") for the year 1996 will be held at 2:00 p.m. on
Friday, April 26, 1996, on the third floor of the Centro Europa Building, in
Santurce, Puerto Rico.
NOTICE IS ALSO GIVEN that the Meeting to be held on the date above set
forth will consider and act upon:
(1) The election of seven (7) directors to hold office until the 1999
annual meeting of stockholders or until their respective successors shall
have been elected and qualified.
(2) To transact any and all other business as may be properly brought
before the Meeting or any adjournments thereof. Management at present knows
of no other business to be brought before the Meeting.
The Board of Directors has set March 7, 1996, as the record date to
determine the stockholders entitled to notice of, and vote at, the Meeting.
Enclosed is the Form of Proxy and the Proxy Statement.
San Juan, Puerto Rico, March 19, 1996.
SAMUEL T. CESPEDES
Secretary
<PAGE> 3
BANPONCE CORPORATION
P.O. BOX 362708
SAN JUAN, PUERTO RICO 00936-2708
---------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, APRIL 26, 1996
---------------------
This Proxy statement is furnished in connection with the solicitation by
the Board of Directors of BanPonce Corporation (the "Corporation") of Proxies to
be used at the Annual Meeting of Stockholders (the "Meeting") to be held at 2:00
p.m. on Friday, April 26, 1996, on the third floor of the Centro Europa
Building, in Santurce, Puerto Rico, and any adjournments thereof.
Properly executed proxies received by the Secretary of the Corporation will
be voted at the Meeting in accordance with the instructions which appear therein
and for the purposes indicated on the Notice of Meeting. The Board of Directors
does not intend to present any business at the Meeting other than those included
in the Notice of Meeting. The Board of Directors at this time knows of no other
matters which may come before the Meeting. However, if any new matters requiring
the vote of the stockholders properly come before the Meeting, proxies may be
voted with respect thereto in accordance with the best judgement of
Proxyholders, under the discretionary power granted by stockholders to their
proxies in connection with general matters.
MAILING DATE
Enclosed with this Proxy Statement is the Annual Report, including Form
10-K and the financial statements for the year ended December 31, 1995, duly
certified by Price Waterhouse as independent public accountants. This Proxy
Statement, the enclosed Annual Report and Form 10-K, the Notice of Annual
Meeting of Stockholders and the form of proxy are being sent to stockholders on
or about March 19, 1996.
SOLICITATION OF PROXIES
The enclosed Proxy is solicited by and on behalf of the Board of Directors
of the Corporation. In addition to solicitation by mail, management may
participate in the solicitation of Proxies by telephone, personal interviews or
otherwise. The Board of Directors has engaged the firm of Georgeson & Company
Inc. to aid in the solicitation of Proxies. The cost of solicitation will be
borne by the Corporation and is estimated at $6,500.00.
REVOCABILITY OF PROXY
Any stockholder giving a proxy has the power to revoke it before the proxy
is exercised. The grantor may revoke the proxy by claiming at the Meeting the
right to vote by himself the shares of stock registered in his name or by notice
of revocation in writing to the President or Secretary of BanPonce Corporation,
P.O. Box 362708, San Juan, Puerto Rico 00936-2708, delivered before the proxy is
exercised.
VOTING SECURITIES
The only outstanding voting securities of the Corporation are its shares of
common stock, each share of which entitles the holder thereof to one vote. Only
common stockholders of record at the close of business on March 7, 1996 (the
"Record Date"), will be entitled to vote at the Meeting and any adjournments
thereof. On the Record Date there were 32,974,936 shares of common stock of
BanPonce Corporation outstanding. The shares covered by any such proxy that are
properly executed and received by management before 2:00 p.m. on the day of the
Meeting will be voted.
<PAGE> 4
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of common stock of the Corporation is necessary to constitute
a quorum at the Meeting. Votes cast by proxy or in person at the Meeting will be
counted by the persons appointed by the Corporation as election judges for the
Meeting. As to the election of Directors, the proxy card being provided by the
Board of Directors enables a stockholder to vote for the election of the nominee
proposed by the Board, or to withhold authority to vote for one of the nominees
being proposed. For purposes of determining quorum, the election judges will
treat "broker non-votes" as shares that are present and entitled to vote. A
"broker non-vote" results when a broker or nominee has expressly indicated in
the proxy that it does not have discretionary authority to vote on a particular
matter. Directors will be elected by a majority of the votes cast. Therefore,
abstentions and broker non-votes will not have an effect on the election of
directors of the Corporation.
PRINCIPAL STOCKHOLDERS
Following is the information, to the extent known by the persons on whose
behalf this solicitation is made, with respect to any person (including any
"group" as that term is used in Section 13(d)(3) of the Securities and Exchange
Act of 1934, as amended) who is known to the Corporation to be the beneficial
owner of more than five percent (5%) of the Corporation's voting securities.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
TITLE OF OF BENEFICIAL OF
CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
- --------- ----------------------------------------------------- ----------------- --------
<S> <C> <C> <C>
Common... Banco Popular de Puerto Rico (the "Bank") As Trustee
for Banco Popular de Puerto Rico Retirement Plan 1,418,215
The Bank as Trustee for the Profit Sharing Plan for
the Employees of Banco Popular de Puerto Rico 1,330,348
-----------------
2,748,563(3) 8.3353
Common... State Farm Mutual Automobile Insurance Company 2,415,531(4) 7.3254
</TABLE>
- ---------------
(1) As of February 29, 1996.
(2) Based on 32,974,936 shares of common stock outstanding.
(3) The Bank, as Trustee, administers both Plans through their Administrative
Committees, with sole voting and investment power.
(4) On January 23, 1996, State Farm Mutual Automobile Insurance Company ("State
Farm") and affiliated entities filed a joint statement on Schedule 13-G with
the Securities and Exchange Commission reflecting its holdings as of
December 31, 1995. According to said statement, State Farm and its
affiliates might be deemed to constitute a "group" within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934. State Farm and its
affiliates could also be deemed to be the beneficial owners of 2,415,531
shares of BanPonce Corporation. However, State Farm and each such affiliate
disclaim beneficial ownership as to all shares as to which each such person
has no right to receive the proceeds of sale of the shares, and also
disclaim that they constitute a "group".
2
<PAGE> 5
SHARES BENEFICIALLY OWNED BY DIRECTORS,
NOMINEES AND EXECUTIVE OFFICERS OF THE CORPORATION
Following is the information, as of February 29, 1996, as to equity
securities of the Corporation beneficially owned by all current directors,
nominees, the seven most highly compensated Executive Officers of the
Corporation and the total owned by directors, nominees and all Executive
Officers of the Corporation as a group:
COMMON STOCK
<TABLE>
<CAPTION>
TITLE
OF AMOUNT AND NATURE PERCENT OF
NAME CLASS OF BENEFICIAL OWNERSHIP CLASS(1)
---------------------------------------------- ------- ----------------------- ----------
<S> <C> <C> <C>
Alfonso F. Ballester.......................... Common 344,360(3) 1.0443
Juan J. Bermudez.............................. Common 53,955(4) .1636
Francisco J. Carreras......................... Common 2,022 .0061
Richard L. Carrion............................ Common 255,436(5) .7746
Waldemar Del Valle............................ Common 14,208(6) .0431
Luis E. Dubon, Jr............................. Common 442,400(7) 1.3416
Antonio Luis Ferre............................ Common 681,511(8) 2.0668
Hector R. Gonzalez............................ Common 108,169 .3280
Jorge A. Junquera............................. Common 8,821 .0268
Franklin A. Mathias........................... Common 23,132(9) .0702
Manuel Morales, Jr............................ Common 170,049(10) .5157
Alberto M. Paracchini......................... Common 27,714(11) .0840
Francisco Perez, Jr........................... Common 236 .0007
Francisco M. Rexach, Jr....................... Common 27,409(12) .0831
Felix J. Serralles, Jr........................ Common 88,915(13) .2696
Emilio Jose Venegas........................... Common 90,814(14) .2754
Julio E. Vizcarrondo, Jr...................... Common 280,458(15) .8505
Maria Isabel P. de Burckhart.................. Common 11,024 .0334
David H. Chafey, Jr........................... Common 14,140 .0429
Larry B. Kesler............................... Common 8,426 .0256
Humberto Martin............................... Common 13,844 .0420
Emilio E. Pinero.............................. Common 6,428 .0195
All Directors and Executive Officers of the
Corporation as a group...................... Common 2,676,842(16) 8.1178
</TABLE>
PREFERRED STOCK
<TABLE>
<CAPTION>
TITLE
OF AMOUNT AND NATURE PERCENT OF
NAME CLASS OF BENEFICIAL OWNERSHIP CLASS(2)
---------------------------------------------- ------- ----------------------- ----------
<S> <C> <C> <C>
Luis E. Dubon, Jr............................. Preferred 7,375(17) .1844
Franklin A. Mathias........................... Preferred 2,000 .0500
Alberto M. Paracchini......................... Preferred 7,000 .1750
All Directors and Executive Officers of the
Corporation as a group...................... Preferred 19,175 .4794
</TABLE>
- ---------------
(1) Based on 32,974,936 shares of common stock outstanding.
(2) Based on 4,000,000 shares of preferred stock outstanding.
(3) Mr. Ballester owns 343,360 shares and has indirect investment power over
1,000 shares owned by his wife. Excludes 300,482 shares owned by his sister
Mrs. Griselda Ballester, as to all of which Mr. Ballester disclaims
indirect voting power.
(4) Excludes 2,184 shares owned by his wife, as to which Mr. Bermudez disclaims
indirect voting power.
3
<PAGE> 6
(5) Mr. Carrion owns 68,228 shares and also has indirect investment power over
5,936 shares owned by his children. Junior Investment Corporation owns
1,040,000 shares of the Corporation, and Mr. Carrion owns 17.43% of the
shares of said corporation.
(6) Excludes 401 shares owned by his daughter, Maria M. Del Valle, as to which
Mr. Del Valle disclaims beneficial ownership.
(7) Mr. Dubon owns 45,441 shares and has a power of attorney over 28,804 shares
owned by his wife Mrs. Myrta A. Dubon, over 16,436 shares held in trust for
his children and 351,719 shares owned by various corporations and members
of his family in which Mr. Dubon has direct or indirect ownership.
(8) Mr. Ferre has indirect investment and voting power and claims beneficial
ownership of 681,511 shares of the Corporation. Mr. Ferre has indirect
investment and voting power over 120,300 shares owned by Alfra Investment
Corp. and 433 shares owned by his wife and children. Mr. Ferre owns 85.12%
of Ferre Investment Fund, Inc. which owns 222,300 shares of the
Corporation. Mr. Ferre also owns 64.39% of the shares of El Dia, Inc. and
has indirect voting power over Alfra Investment Corp., which owns 19.10% of
El Dia, Inc., which owns in turn 338,478 shares of the Corporation.
(9) Mr. Mathias filed late four reports which disclosed one transaction each
required to be filed pursuant to Section 16(a) of the Securities Exchange
Act of 1934 with respect to his beneficial ownership of shares during the
last fiscal year.
(10) Mr. Morales owns 79,272 shares and has voting power over 90,777 shares
owned by his parents.
(11) Excludes 316 shares owned by his wife, as to which Mr. Paracchini disclaims
beneficial ownership.
(12) Mr. Rexach owns 17,409 shares and has voting power over 10,000 shares owned
by his mother, as her attorney-in-fact.
(13) Mr. Serralles owns 56,688 shares, and has indirect voting power over 1,573
shares owned by his wife. Mr. Serralles owns 100% of the shares of each of
Capitanejo, Inc. and Fao Investments, Inc., which own 29,255 and 1,399
shares, respectively, of the Corporation.
(14) Mr. Venegas owns 6,000 shares and also has indirect investment power over
6,000 shares owned by his wife. Mr. Venegas also has indirect voting and
investment power over the 25,000 shares of the Corporation owned by Venegas
Construction Corporation, of which he is stockholder and secretary, and
over the 50,814 shares of the Corporation owned by Sanson Corporation, of
which he is President and stockholder and over 3,000 shares of the
Corporation owned by Fundacion E.J.V. Mr. Venegas filed late one report
which disclosed one transaction required to be filed pursuant to Section
16(a) of the Securities Exchange Act of 1934 with respect to his beneficial
ownership of shares during the last fiscal year.
(15) Mr. Vizcarrondo owns 49,528 shares and has indirect voting power over
46,746 shares owned by his wife and children. Mr. Vizcarrondo's wife owns
17.71% of the shares of Junior Investment Corporation, which owns 1,040,000
shares of the Corporation. Mr. Vizcarrondo disclaims beneficial ownership
over 30,605 shares owned by DMI Pension Trust, where he serves as trustee
and member of the investment committee. Excluded also are 6,847 shares
owned by Mr. Vizcarrondo as trustee of the Suarez Toro Trust, which owns
said shares of the Corporation, of which he disclaims beneficial ownership.
(16) Mr. Amilcar L. Jordan filed late one report which disclosed one transaction
required to be filed pursuant to Section 16(a) of the Securities Exchange
Act of 1934 with respect to his beneficial ownership of shares during the
last fiscal year.
(17) Mr. Dubon owns 1,000 preferred shares, and has indirect voting power over
5,875 preferred shares held in trust by Mr. Luis E. Dubon, Jr. for several
persons. Mr. Dubon also has indirect ownership over 500 preferred shares
owned by Fundacion Gogui, Inc.
4
<PAGE> 7
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Corporation met on a monthly basis during
1995. All directors, except Mr. Waldemar Del Valle attended 75% or more of the
meetings of the Board of Directors and the committees of the Board of Directors
on which such director served. The following table indicates the business
experience of the current Board of Directors of the Corporation and nominees:
<TABLE>
<CAPTION>
DIRECTOR OF
PRINCIPAL OCCUPATION AND BUSINESS THE CORPORATION
NAME AGE EXPERIENCE DURING THE PAST FIVE YEARS SINCE
- ------------------------ --- -------------------------------------------------------------- ---------------
<S> <C> <C> <C>
Alfonso F. Ballester.... 66 Vice Chairman of the Board of Directors of the Corporation and 1990
the Bank. President of Ballester Hermanos, Inc. (Wholesale of
provisions and liquors). Director of Popular International
Bank, Inc., BanPonce Financial Corp, Equity One, Inc.,
Vehicle Equipment Leasing Company, Inc. and Popular Leasing
& Rental, Inc. Director of the Bank since 1975.
Juan J. Bermudez........ 58 Electrical Engineer. Partner of Bermudez and Longo, S.E., 1990
Ornamental Poles, S.E., Decemcor, S.E., Decemcor, S.E.,
Unisouth, S.E., Unicenter, S.E., Unicourts, S.E., Unieast,
S.E., Unigardens, S.E., Uninorth, S.E., and PCME Commercial,
S.E. Principal Stockholder and Director of BL Management,
Corp., Paseomar Corp., PCME Development, Inc. and Power
Poles, Inc. Director of the Bank since 1985.
Francisco J. Carreras... 63 Member of the Board of Trustees of Fundacion Banco Popular, 1990
Inc. Executive Director of the Board of Directors of Fundacion
Angel Ramos, Inc. Director of the Bank since 1979.
Richard L. Carrion...... 43 Chairman of the Board, President and Chief Executive Officer 1990
("CEO") of the Corporation and the Bank. Chairman of the Board
of Popular International Bank, Inc., and BanPonce Financial
Corp, Chairman of the Board and President of Banco Popular,
FSB. Chairman of the Board of Trustees of Fundacion Banco
Popular, Inc. Director of Equity One, Inc., Popular Consumer
Services, Inc., Popular Leasing & Rental, Inc., Vehicle
Equipment Leasing Company, Inc., Pioneer Bancorp, Inc.
Popular Mortgage, Inc. and BP Capital Markets, Inc. Member
of the Board of Trustees of the American Management
Association. Member of Puerto Rico's Commission's for the
2004 Olympiad. Member of the International Olympic
Committee. Member of the Board of Directors and Compensation
Committee of Pueblo Xtra International, Inc. until March 31,
1995. Chairman of the Board and President of Puerto Rico
Investors Tax Free Funds I, II and III, Inc. Member of the
Board of Directors of the Company for the Development of the
Cantera Peninsula and the Board of Trustees of the Puerto
Rico Committee for Economic Development. Director of NYNEX
Corporation (registered public company). Director of the
Bank since 1982.
David H. Chafey, Jr..... 42 Supervisor of Bank's Retail Banking Group since January 1996. Nominee
Supervisor of the Finance Group and U.S. Operations until
December 1995. Senior Executive Vice President since
October, 1995. Executive Vice President of the Bank since
January, 1990. Chairman of the Board of BP Capital Markets,
Inc. until January 1996. Executive Vice President and
Director of Popular International Bank, Inc. and BanPonce
Financial Corp. President of Popular International Bank,
Inc. and BanPonce Financial Corp until December 1995.
Director of Vehicle Equipment Leasing Co., Inc., Equity One,
Inc., Popular Consumer Services, Inc., Popular Leasing &
Rental, Inc., BP Capital Markets, Inc., and Banco Popular,
FSB. Chairman of the Board of the Puerto Rico Telephone
Authority since 1993. Executive Vice President of Puerto
Rico Investors Tax Free Fund I, II and III, Inc. Director of
the Bank since 1994.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
DIRECTOR OF
PRINCIPAL OCCUPATION AND BUSINESS THE CORPORATION
NAME AGE EXPERIENCE DURING THE PAST FIVE YEARS SINCE
- ------------------------ --- -------------------------------------------------------------- ---------------
<S> <C> <C> <C>
Luis E. Dubon, Jr....... 61 Attorney at Law and Investor. Partner of the law firm Dubon & 1984
Dubon. Director, American Investment Corp., Fundacion Gogui,
Inc. and San Jose Development, Inc. Director of Banco de
Ponce from 1973 to 1990. Director of the Bank since 1990.
Antonio Luis Ferre...... 62 Vice Chairman of the Board of Directors of the Corporation and 1984
the Bank. Chairman of the Board of Puerto Rican Cement Co.,
Inc. (a registered public company), manufacturers of cement
and allied products. President and Editor of El Dia, Inc., a
newspaper publishing company. Director of Metropolitan Life
Insurance Company (a registered company under the Investment
Company Act of 1940) until December, 1995. Member of the
Director's Committee of Metropolitan Life Insurance Company
since January 1, 1996. Director of Pueblo Xtra
International, Inc. until March, 1995. Director of Banco de
Ponce from 1959 to 1990. Director of the Bank since 1990.
Hector R. Gonzalez...... 62 President and Chief Executive Officer of TPC Communications of 1984
PR, Inc. and TelePonce Cable TV, Inc., owners and operators of
cable television systems. Director of Damas Foundation, Inc.
Director of Popular Consumer Services, Inc. and Popular
Mortgage, Inc. Director of Banco de Ponce from 1973 to 1990.
Director of the Bank since 1995.
Jorge A. Junquera....... 47 Supervisor of the Finance Group and U.S. Operations since 1990
January, 1996, Supervisor of the Bank's Retail Banking Group
until December,1995. Senior Executive Vice President since
October 1995. Executive Vice President of the Bank since
1980. President and Director of Popular International Bank,
Inc. and BanPonce Financial Corp since January 1996.
Director of Equity One, Inc., Popular Consumer Services,
Inc., Vehicle Equipment Leasing Company, Inc., Popular
Mortgage Inc., Pioneer Bancorp. Inc. and Popular Leasing &
Rental, Inc. Chairman of the Board of BP Capital Markets,
Inc. since January 1996, and of Puerto Rico Tourism Company
and Hotel Development Co. since 1993. Director of YMCA since
1988. Director of the Bank since 1990.
Manuel Morales, Jr...... 50 President of Selarom Capital Group, Inc. President of Parkview 1990
Realty, Inc. Trustee of Universidad Sagrado Corazon and
Caribbean Environmental Development Institute. Member of the
Board of Trustees of Fundacion Banco Popular, Inc. Director
of the Bank since 1978.
Alberto M. Paracchini... 63 Former Chairman of the Board of Directors of the Corporation 1984
and the Bank. Former Chairman of the Board of Vehicle
Equipment Leasing Company, Inc., BanPonce Financial Corp,
Equity One, Inc., Popular Consumer Services, Inc. and
Popular Leasing & Rental, Inc. Member of the Board of
Trustees of Fundacion Banco Popular, Inc. Director of Puerto
Rican Cement Co., Inc. (a registered public company).
Director of HDA Management Corp. since 1993. Director of
Equus Management Co. and Venture Capital Fund, Inc.
Executive Officer of the Corporation from 1984 to April
1993. Director of Banco de Ponce from 1959 to 1990. Director
of the Bank since 1990.
Francisco Perez, Jr..... 59 Chairman of the Board and President of Sucrs. Jose Lema and 1984
Co., Inc. (La Favorita), shoe store chain. President of 201
Realty Corporation, engaged in the real estate business.
Director of Banco de Ponce from 1976 to 1990.
Francisco M. Rexach, 58 President of Ready Mix Concrete, Inc. President of Capital 1990
Jr.................... Assets, Inc. since November, 1995. Director of Vehicle
Equipment Leasing Company, Inc. and Popular Leasing &
Rental, Inc. Director of the Bank since 1984.
Felix J. Serralles, 61 President and Chief Executive Officer of Empresas Serralles, 1984
Jr.................... Inc. and of its subsidiary Destileria Serralles, Inc.,
manufacturers and distributors of distilled spirits, and of
its affiliate Mercedita Leasing, Inc. Director of Banco de
Ponce from 1966 to 1990. Director of the Bank since 1990.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
DIRECTOR OF
PRINCIPAL OCCUPATION AND BUSINESS THE CORPORATION
NAME AGE EXPERIENCE DURING THE PAST FIVE YEARS SINCE
- ------------------------ --- -------------------------------------------------------------- ---------------
<S> <C> <C> <C>
Emilio Jose Venegas..... 68 President of Sanson Corporation. Secretary of Venegas 1984
Construction Corp. Director of Puerto Rican Cement Co., Inc.
(a registered public company). Director of Damas Foundation,
Inc. Director of Banco de Ponce from 1973 to 1990.
Julio E. Vizcarrondo, 61 Civil Engineer. President/Partner and Chief Executive Officer 1990
Jr.................... of Desarrollos Metropolitanos, S.E., VMV Enterprises Corp.,
Resort Builders S.E., Metropolitan Builders, S.E.,
Institutional Builders, S.E., corporations engaged in the
development and construction of residential, commercial,
industrial and institutional projects in Puerto Rico.
Director of the Bank since 1984.
</TABLE>
In 1994 the Securities and Exchange Commissions issued an order for Mr.
Luis E. Dubon, Jr. to cease and desist from committing or causing any violation
of Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and
Rules 16a-2 and 16a-3 promulgated thereunder. Section 16(a) of the Exchange Act
requires the Corporation's directors and executive officers to report their
ownership of and transaction in the Corporation's common stock to the Securities
and Exchange Commission. Mr. Dubon consented to the entering of the order
without admitting or denying the matters set forth in the order.
The Corporation's Board of Directors has standing Audit and Executive
Committees. The Board of Directors of the Bank, the principal subsidiary of the
Corporation, has a standing Human Resources and Compensation Committee that may
review compensation matters for the Corporation. There is no standing Nominating
Committee. Information regarding the Audit and Human Resources Committees
follows:
AUDIT COMMITTEE
The functions of the Audit Committee include reviewing the accounting
principles and practices employed by the Corporation, and compliance with
applicable laws and regulations. The Committee meets with the Corporation's
independent external auditors to review their audit procedures, the report on
their examination of the Corporation's financial statements, and their comments
on the system of internal controls. Also, the Committee oversees the internal
audit function and reviews the reports prepared by the Auditing Division on
their examinations of the operating and business units and for any other special
examinations that may be required. The Committee held four meetings during the
fiscal year ended December 31, 1995.
The Committee members during 1995 were: Alfonso F. Ballester, Francisco J.
Carreras, Luis E. Dubon, Jr., Hector R. Gonzalez, Franklin A. Mathias and Manuel
Morales, Jr.
HUMAN RESOURCES AND COMPENSATION COMMITTEE
The functions of the Human Resources and Compensation Committee include
reviewing the compensation and benefits of management and employees, reviewing
the policies related to the performance and compensation of management and
employees, and reviewing the long-range planning for executive development and
succession. The Committee held two meetings during the fiscal year ended
December 31, 1995.
7
<PAGE> 10
The Committee members during 1995 were: Salustiano Alvarez Mendez, Juan J.
Bermudez, Esteban D. Bird, Hector R. Gonzalez and Francisco M. Rexach, Jr.
Messrs. Bermudez, Gonzalez and Rexach are also directors of the Corporation.
None of the members of the Committee are officers or employees of the
Corporation or any of its subsidiaries.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Corporation and its subsidiaries
were entitled to be reimbursed for certain expenses up to $10,000.00 annually.
In addition directors receive $500.00 for attending each directors' and
committee meeting. Directors who are employees do not receive fees for attending
directors' and committee meetings.
ELECTION OF DIRECTORS
The Certificate of Incorporation and the By-laws of the Corporation
establish a classified Board of Directors pursuant to which the Board of
Directors is divided into three classes as nearly equal in number as possible,
with each class having at least three members and with the term of office of one
class expiring each year. Each director serves for a term ending on the date of
the third annual meeting of stockholders following the annual meeting at which
such director was elected.
The policy of the Board of Directors, as set forth in a resolution adopted
on January 8, 1991, provides that no person shall be nominated for election or
reelection as director of the Board if at the date of the Annual Meeting of
Stockholders or during the term to be served such person attains seventy two
(72) years of age. Mr. Franklin A. Mathias would attain seventy two (72) years
of age during the term to be served. In accordance with Board policy, Mr.
Mathias will not be nominated for reelection as director.
Mr. Waldemar Del Valle resigned as director of the Corporation effective
April 26, 1996. Mr. Del Valle's resignation is for personal reasons and is not
due to a disagreement with the Corporation or with any matter relating to the
Corporation's operations. The vacancy in "Class 1" arising for Mr. Del Valle's
resignation will be filled by Mr. Jose E. Rossi who presently is a director of
the Bank. Mr. David H. Chafey, Jr. Senior Executive Vice President of the
Corporation and the Bank and presently a director of the Bank, has been
nominated to fill the vacancy in "Class 3" arising from Mr. Mathias'
ineligibility to be nominated for director.
At the Meeting, seven (7) directors assigned to "Class 3" are to be elected
until the 1999 Annual Meeting of Stockholders or until their respective
successors shall have been elected and qualified. The remaining 10 directors of
the Corporation will serve as directors, as follows: until the 1997 Annual
Meeting of Stockholders of the Corporation, in the case of those five directors
assigned to "Class 1", and until the 1998 Annual Meeting of Stockholders, in the
case of those five directors assigned to "Class 2", or in each case until their
successors are duly elected and qualified.
The persons named as proxies in the accompanying Form of Proxy have advised
the Corporation that, unless otherwise instructed, they intend to vote at the
meeting the shares covered by the proxies FOR the election of the seven nominees
named in the following table, and that if any one or more of such nominees
should become unavailable for election they intend to vote such shares FOR the
election of such substitute nominees as management may propose. The Corporation
has no knowledge that any nominee will become unavailable for election.
8
<PAGE> 11
NOMINEES FOR ELECTION AS DIRECTORS
The following table sets forth the name of the persons nominated by the
Board of Directors of the Corporation for election as a director, including
their age, principal occupation and business experience during the past five (5)
years (including positions held with the Corporation or the Bank), and the
period during which each nominee has served as a director of the Corporation.
All directors nominated will serve for three (3) years until the 1999 Annual
Meeting of Stockholders or until their respective successors shall have been
elected and qualified.
<TABLE>
<CAPTION>
DIRECTOR OF
PRINCIPAL OCCUPATION AND BUSINESS THE CORPORATION
NAME AGE EXPERIENCE DURING THE PAST FIVE YEARS SINCE
- ------------------------------------------- --- ------------------------------------- ---------------
<S> <C> <C> <C>
Juan J. Bermudez........................... 58 See under "Board of Directors" 1990
Francisco J. Carreras...................... 63 See under "Board of Directors" 1990
Richard L. Carrion......................... 43 See under "Board of Directors" 1990
David H. Chafey, Jr........................ 42 See under "Board of Directors" New nominee
Antonio Luis Ferre......................... 62 See under "Board of Directors" 1984
Alberto M. Paracchini...................... 63 See under "Board of Directors" 1984
Felix J. Serralles, Jr..................... 61 See under "Board of Directors" 1984
</TABLE>
EXECUTIVE OFFICERS
The following table sets forth the names of the executive officers (the
"Executive Officers") of the Corporation including their age, business
experience during the past five (5) years and the period during which each such
person has served as an Executive Officer of the Corporation or the Bank.
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
OF THE
PRINCIPAL OCCUPATION AND BUSINESS CORPORATION
NAME TITLE AGE EXPERIENCE DURING THE PAST FIVE YEARS SINCE
- ------------------------------- ----------------------- --- ------------------------------------------- -----------
<S> <C> <C> <C> <C>
Richard L. Carrion............. President, Chairman of 43 See under "Board of Directors" 1990
the Board and CEO
Jorge A. Junquera.............. Senior Executive Vice 47 See under "Board of Directors" 1990
President
David H. Chafey, Jr............ Senior Executive Vice 42 See under "Board of Directors" 1990
President
Maria Isabel P. de Burckhart... Executive Vice 46 Supervisor of the Administration Group. 1990
President Executive Vice President of the Bank
since January, 1990. Senior Vice
President of the Bank from August, 1986
until January, 1990. Executive Vice
President of BanPonce Financial Corp.
Member of the Board of Trustees of
Fundacion Banco Popular, Inc. Member of
the Board of Directors of Fundacion Ana
G. Mendez since 1992. Member of the Board
of Directors of Puerto Rico Community
Foundation since 1993. Member of the
Board of Directors of Puerto Rico
Convention Bureau since 1993.
Larry B. Kesler................ Executive Vice 58 Supervisor of Individual Credit and of the 1990
President Virgin Islands Region. Executive Vice
President of the Bank since January,
1990. Executive Vice President of
BanPonce Financial Corp. Chairman of the
Board of Directors of Equity One, Inc.,
Popular Consumer Services, Inc. and
Popular Mortgage, Inc.
</TABLE>
9
<PAGE> 12
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER
OF THE
PRINCIPAL OCCUPATION AND BUSINESS CORPORATION
NAME TITLE AGE EXPERIENCE DURING THE PAST FIVE YEARS SINCE
- ------------------------------- ----------------------- --- ------------------------------------------- -----------
<S> <C> <C> <C> <C>
Humberto Martin................ Executive Vice 50 Supervisor of the Operations Group. 1986
President Executive Vice President of the Bank since
November, 1986. Executive Vice President
of BanPonce Financial Corp.
Emilio E. Pinero............... Executive Vice 47 Supervisor of the Commercial Banking Group. 1990
President Executive Vice President of the Bank
since January, 1990. Chairman of the
Board of Vehicle Equipment Leasing
Company, Inc. and Popular Leasing &
Rental, Inc. since 1995. Director of
Popular Mortgage, Inc. since January,
1995. Executive Vice President of
BanPonce Financial Corp.
Amilcar L. Jordan.............. Senior Vice President 34 Senior Vice President and Comptroller of 1995
and Comptroller the Bank since January, 1995. Vice
President of the Bank from December, 1990
to December, 1994. Assistant Comptroller
of the Bank from July 1989 to January,
1995. Senior Vice President and Treasurer
of the Corporation, Popular International
Bank, Inc., BanPonce Financial Corp and
Equity One, Inc.
Samuel T. Cespedes............. Secretary of the Board 59 Attorney at Law. Proprietary partner of the 1991
of Directors law firm McConnell, Valdes. Secretary of
the Board of Directors of the Bank since
1991. Secretary of the Board of Directors
of Vehicle Equipment Leasing Company,
Inc., BanPonce Financial Corp, Equity
One, Inc., Popular Leasing & Rental, Inc.
and Popular Consumer Services, Inc.
</TABLE>
10
<PAGE> 13
FAMILY RELATIONSHIPS
Mr. Richard L. Carrion, Chairman of the Board, President and CEO of the
Corporation and the Bank, is brother-in-law of Mr. Julio E. Vizcarrondo, Jr.,
Director. Mr. Alfonso F. Ballester, Director, is brother-in-law of Mr. Hector R.
Gonzalez, Director.
OTHER RELATIONSHIPS AND TRANSACTIONS
During 1995 the Bank engaged the legal services of the law firm of Dubon &
Dubon of which director Luis E. Dubon, Jr. is a partner and of McConnell, Valdes
of which Mr. Samuel T. Cespedes, Secretary of the Board of Directors of the
Corporation and the Bank is a partner. The amount of fees paid to Dubon & Dubon
and to McConnell, Valdes did not exceed 5% of the respective law firm's
revenues.
The Bank has had loan transactions with the Corporation's directors and
officers, and with their associates, and proposes to continue such transactions
in the ordinary course of its business, on substantially the same terms as those
prevailing for comparable loan transactions with other persons and subject to
the provisions of the Banking Act of the Commonwealth of Puerto Rico and the
applicable federal laws and regulations. The extensions of credit have not
involved nor presently involve more than normal risks of collectibility or other
unfavorable features.
EXECUTIVE COMPENSATION PROGRAM
REPORT OF THE BANK'S HUMAN RESOURCES AND COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION
OVERVIEW
The Bank's Human Resources and Compensation Committee ("The Human Resources
Committee") consists of five non-employee directors. The Committee endeavors to
keep abreast of competitive compensation practices, in regard to salaries,
incentive compensation, and supplemental programs that will retain top quality
executive officers who will enhance shareholder value through sustained growth.
The Human Resources Committee evaluates and recommends to the Board of
Directors the Corporation's compensation policy for the Chairman of the Board,
President and CEO, and Senior Executive Officers. The Human Resources Committee
considers among other factors, competitive pay practices. It is kept appraised
of competitive pay practices by an independent consultant which conducts a
periodical analysis of executive compensation of a peer group of financial
institutions similar in size, scope and business orientation (the "Peer Group").
On an annual basis the banking peer group used by the committee for comparison
purposes is reviewed in light of industry developments, and significant
mergers/acquisitions, to ensure that it is consistent with the Corporation's
size and focus. The Peer Group currently consists of eleven regional banking
organizations with a retail banking emphasis. The Peer Group used for this
purpose has no intentional relation to the companies included in the S&P 500
Index or the S&P Bank Composite Index against which the Corporation's
shareholder return is compared in the Corporation's performance graph included
on page 18.
In 1995 the CEO's compensation was based on a revised compensation program
including revisions of base salary and participation in the Annual Incentive
Plan and in the Long-Term Incentive Plan approved by the Board in 1994.
Executive Officer's compensation for 1995 was based on a policy which
established that salary increases were based 50% on individual performance in
accordance with pre-established targets and 50% on team performance and the
Corporation's financial results. The individual component was evaluated by the
CEO. The percentage of salary increases for each level of performance was
established according to the Corporation's performance measured by net income.
Annual incentive bonuses were also based on the Corporation's performance based
on a pre-established target measured by net income. A bonus of 10% of the CEO's
and the Executive Officers base salary was set for achieving a financial target
established at the beginning of each year. The bonus could reach 20% if the
results exceeded the target.
During 1995 the CEO and the Executive Officers participated in the
Corporation's "Long-Term Incentive Plan" described on pages 15 and 16 of this
Proxy Statement.
11
<PAGE> 14
CHANGES IN THE CORPORATION'S POLICY FOR 1996
An analysis prepared by an independent, nationally recognized, consulting
firm at the request of the Human Resources Committee, concluded that the CEO's
and Executive Officers overall compensation significantly lagged that of the
Peer Group. Based on the recommendations contained in the independent
consultant's report, the Human Resources Committee decided to revise all
components of compensation for the CEO and the six Executive Officers which
report directly to the CEO. The Committee recommended a number of changes to
overall compensation policy in order to better achieve the following objectives:
- Base salaries should be aligned with the average base salary of
institutions in the corresponding performance quartile of the Peer Group
and the opportunity to receive total compensation in excess of base salary
target should be conditioned on performance-based incentive compensation.
- A significant portion of the total compensation package should be "at
risk", that is, it should be linked to the achievement of short-term and
long-term financial goals.
The main changes in the Corporation's overall compensation policy, as
recommended by the Human Resources Committee can be summarized as follows:
- A new base salary policy for Senior Executive Vice Presidents and
Executive Vice Presidents was adopted in February 1996 which is intended
to result in base salary revisions aligned to the average base salary of
institutions in the corresponding performance quartile of the Peer Group.
The 1996 base salary revision resulted in base salaries in the bottom half
of the Peer Group's base compensation. Prospectively, the salary increase
program was revised so that discretionary salary increases based on
individual performance may be given twice the weight than the portion
based on team performance. This revision is intended to give greater
discretion to the CEO to recognize changes in individual responsibilities
and performance levels. The range of discretionary increases both for
individual and team performance are tied quantitatively to the achievement
by the Corporation of a pre-determined, objective, financial goal.
- Adoption of a new incentive program which has the following three
components (i) A component designed to enhance achievement of short-term
financial goals. The Committee recommended increasing the amounts which
may be distributed under the Annual Incentive Bonus Program if pre-
determined quantitative financial goals are met or exceeded. This bonus
component could represent 15% of base salary if target levels are met and
if target is exceeded it could reach 25%. Although the threshold continues
to be 100% of target, the Human Resources Committee may recommend a
discretionary bonus if results obtained are at least 95% of the
preestablished financial target; (ii) A second component designed to
enhance an increase in shareholder value was also recommended. This
component would distribute annual bonuses based on the achievement of
certain pre-determined quantitative targets based on return on equity
(ROE). This bonus component could range from 5% to 30% of base salary,
depending on the ROE obtained; (iii) A third component permits bonus
awards to be increased in any given year by 25% when shareholder return
exceeds 20% annually on a consecutive three year period. Total shareholder
return is calculated by taking into account the compounded annual yield of
the stock, considering the market appreciation, dividends received and
dividend reinvestment. This bonus component recognizes consistent
improvement in shareholder value.
- The maximum bonus which may be awarded could be 68.75% of basic salary if
all components of the bonus program are achieved. Recommendations approved
by the Human Resources Committee revising the overall compensation policy
were submitted for the consideration and recommendation of the Executive
Committee and were unanimously approved by the Board of Directors in
February 1996. Changes in the Corporation's compensation policy were made
effective as of March 1, 1996. The Board also approved new goals for the
Corporation's Long-Term Incentive Plan for 1995-1997, more specifically
described under the caption "Long-Term Incentive Plan" on pages 15 and 16
of this Proxy Statement, in which the Chairman, President and CEO and the
Executive Officers participate. The CEO and the Executive Officers take
part in the Profit Sharing Plan described under the caption "Profit
Sharing Plan of the Bank" on page 16 of this Proxy Statement.
12
<PAGE> 15
The Executive Compensation Program for the principal officers of the
Corporation's subsidiaries is set according to the industry and geographical
area in which they operate, and is approved by the Board of Directors of each
entity.
CHAIRMAN OF THE BOARD, PRESIDENT AND CEO, MR. RICHARD L. CARRION
In 1993 the Board approved a three-year salary adjustment to the CEO's base
salary to bring his base salary to the base salary levels of CEO's in the
lower-end of the Peer Group. Such adjustment resulted in an increase, effective
March 1994, in the Chief Executive Officer's salary from $230,000 to $350,000.
The scheduled salary increase for 1995 was voluntarily declined by the CEO since
the financial target for that year was not achieved.
The Corporation's Executive Committee evaluated Mr. Carrion's performance
for the 5-year period from 1990-1995. Consideration was given among other
factors, to the growth of the organization, implementation of a diversification
strategy, achievement of financial goals, changes to the product and service
delivery system and development of human resources. The weight and significance
accorded to these factors is subjective in nature and the weight assigned to
each factor in determining compensation adjustments cannot be quantified. The
Executive Committee considered the recommendation of the Human Resources
Committee that the CEO's base salary be increased and accepted the Human
Resources Committee's recommendations for Mr. Carrion's compensation. Effective
March 1, 1996, his base salary was increased to $500,000 in order to align base
compensation to Peer Group's levels, more specifically, to the corresponding
performance quartile within the Peer Group. Commencing in 1996 and prospectively
thereafter, Mr. Carrion will submit to the Executive Committee a plan setting
forth both quantitative and intangible goals applicable to each year.
Evaluations will be based on the goals set forth in the yearly plan. The
recommendations to adjust Mr. Carrion's base salary made by the Executive
Committee and the Human Resources Committee were unanimously approved by the
full Board at its February 8, 1996 meeting.
In 1995, the pre-established financial target set under the Annual
Incentive Plan was achieved and a bonus of 10.79% of the CEO's base salary was
awarded by the Board in January 1996.
EXECUTIVE OFFICERS
The group of Executive Officers is composed of two Senior Executive Vice
Presidents and four Executive Vice Presidents, all of whom participate in the
Profit Sharing, Annual Incentive and Long-Term Incentive Plans. The President
and CEO recommends to the Board of Directors of the Bank, for their approval,
the salary increases and the bonuses to be awarded to the Executive Officers
pursuant to the incentive plans.
Salary increases for 1995 were based 50% on individual performance in
accordance with pre-established targets and 50% on team performance based on the
Corporation's achievement of pre-established financial goals.
In 1995 the pre-determined financial target was achieved and a bonus of
10.79% of base salary was awarded under the Annual Incentive Program.
Effective March 1, 1996, the Executive Officers base salary was revised to
bring them more in line with the average base salary of the corresponding
quartile of the Peer Group.
HUMAN RESOURCES AND COMPENSATION COMMITTEE
Salustiano Alvarez Mendez Hector R. Gonzalez
Juan J. Bermudez Francisco M. Rexach, Jr.
Esteban D. Bird
13
<PAGE> 16
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid by the
Corporation or its subsidiaries to the seven highest paid Executive Officers of
the Corporation and the principal officers of the Corporation's or the Bank's
subsidiaries for 1995
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------
FISCAL ALL OTHER
YEAR SALARY(A) BONUS(B) OTHER(C) COMPENSATION(D) TOTAL
------ --------- -------- -------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard L. Carrion..................................... 1995 $ 350,000 $ 75,107 -0- $36,744 $ 461,851
Chairman of the Board, 1994 330,000 39,712 -0- 37,556 407,268
President and CEO 1993 230,000 36,814 -0- 26,343 293,157
Jorge A. Junquera...................................... 1995 245,042 53,096 -0- 25,690 323,828
Senior Executive Vice President 1994 227,222 26,927 -0- 25,859 280,008
of the Corporation 1993 210,582 63,667 -0- 24,119 298,368
David H. Chafey, Jr.................................... 1995 239,713 51,897 -0- 25,680 317,290
Senior Executive Vice President 1994 222,118 26,287 -0- 25,278 273,683
of the Corporation 1993 205,044 61,950 -0- 23,485 290,479
Larry B. Kesler........................................ 1995 195,168 42,238 -0- 20,909 258,315
Executive Vice President of the Corporation 1994 180,975 21,396 -0- 20,596 222,967
1993 167,500 50,638 -0- 19,185 237,323
Maria Isabel P. de Burckhart........................... 1995 190,848 41,309 -0- 20,446 252,603
Executive Vice President of the Corporation 1994 177,100 20,938 -0- 20,155 218,193
1993 165,000 49,789 -0- 18,989 233,687
Humberto Martin........................................ 1995 183,695 39,732 -0- 19,679 243,106
Executive Vice President of the Corporation 1994 170,337 20,114 -0- 19,385 209,836
1993 158,290 47,687 -0- 18,130 224,107
Emilio E. Pinero....................................... 1995 180,337 39,118 -0- 18,733 238,188
Executive Vice President of the Corporation 1994 167,471 20,159 -0- 19,059 206,689
1993 157,080 47,379 -0- 17,983 222,442
Thomas J. Fitzpatrick.................................. 1995 260,000 690,048 153,700 54,934 1,158,682
President of Equity One, Inc. (a wholly-owned 1994 236,250 150,000 -0- 15,708 401,958
subsidiary of Banco Popular, FSB) 1993 236,250 141,750 -0- 13,491 391,491
Michael Polanski(e).................................... 1995 144,610 53,625 -0- 10,123 208,358
President of Pioneer Bancorp, Inc. 1994 145,000 10,109 -0- 7,000 162,109
(a wholly-owned subsidiary of BanPonce Financial
Corp)
Andres F. Morrell...................................... 1995 130,998 5,300 -0- 12,638 148,936
President of Popular Leasing & Rental, Inc. (a 1994 120,116 25,680 -0- -0- 145,796
wholly-owned subsidiary of the Bank) 1993 120,000 38,640 -0- -0- 158,640
Edgardo Novoa.......................................... 1995 118,000 22,736 -0- 1,975 142,711
President of Popular Consumer Services, Inc. (a 1994 110,000 19,460 -0- -0- 129,460
wholly-owned subsidiary of the Bank) 1993 90,924 11,458 -0- -0- 102,382
Churchill Carey(e)..................................... 1995 112,500 2,885 -0- 3,375 118,760
President of Popular Mortgage, Inc. (a wholly-owned
subsidiary of the Bank)
Kenneth McGrath(e)..................................... 1995 100,000 128,940 -0- 8,750 237,690
President of BP Capital Markets, Inc. (a wholly-owned
subsidiary of the Corporation)
</TABLE>
- ---------------
(a) Salaries before deductions.
(b) Includes Christmas bonus, the bonus awarded under the Incentive Compensation
Plan and bonuses payable to Messrs. Fitzpatrick, Carey and Polanski under
their employment agreement with the respective subsidiaries, the cash
portion payable under the Profit Sharing Plan of the Bank which is described
on page 16 and for 1993 a special bonus for the bank's 100th Anniversary.
14
<PAGE> 17
(c) Does not include the value of perquisites and other personal benefits
because the aggregate amount of such benefits does not exceed the lesser of
$50,000 or 10% of total amount of annual salary and bonus of any named
individual. In the case of Mr. Fitzpatrick includes amounts payable to
compensate him for certain taxes payable by him with respect to the bonus
received under his employment agreement.
(d) Includes deferred portion awarded under the Profit Sharing Plan of the Bank,
amounts accrued under the Benefit Restoration Plan, the amount from the
Profit Sharing deferred and allocated to Stock Plan and the Bank's matching
contribution to Stock Plan, which are described on pages 16 through 18. It
also includes the employer matching contribution under the section 1165(e)
of Puerto Rico Internal Revenue Act of 1994. For Mr. Thomas J. Fitzpatrick,
these amounts represent the contribution of Equity One, Inc. pursuant to
Section 401(k) of the Internal Revenue Code and deferred compensation under
Supplementary Executive Retirement Plan. For Mr. Michael Polanski these
amounts represent the contribution of Pioneer Bancorp, Inc. pursuant to
Section 401(k) of the Internal Revenue Code, Profit Sharing Plan's deferred
portion and Director fees received prior to the acquisition of Pioneer
Bancorp, Inc. by BanPonce Financial Corp in 1994.
(e) Information presented for 1995 and 1994 except for Mr. Churchill Carey and
Kenneth McGrath who were appointed President of Popular Mortgage, Inc. and
BP Capital Markets, Inc., respectively during 1995. No disclosure is
required with respect to these officers.
LONG-TERM INCENTIVE PLAN
The Board of Directors approved in 1994 a three-year incentive plan to
encourage long-term corporate performance and objectives.
A set percentage of base salary is used in determining the Incentive
Payment at the beginning of each Plan Year. In March 1995 the Committee approved
the second Plan Year target and used 25% of base salary for establishing the
Incentive Payment. The target used is based on an average return on equity
(ROE). The incentive payment shall be made in common stock of BanPonce
Corporation. All common stock to be awarded under this program will be purchased
in the open market.
In 1995 and 1994, awards of performance shares under the Long-Term
Incentive Plan were established to the Executives Officers as set forth below:
LONG TERM INCENTIVE AWARDS
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
NON-STOCK-PRICE BASED PLANS
-------------------------------
NUMBER PERFORMANCE NUMBER OF SHARES
OF PERIOD -------------------------------
NAME YEAR SHARES UNTIL PAYOUT THRESHOLD TARGET MAXIMUM
- --------------------------------- ---- -------- --------------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Richard L. Carrion............... 1995 2,993.02 1/1/95-12/31/97 -- 2,993.02 5,985.98
1994 2,815.49 1/1/94-12/31/96 -- 2,815.49 5,630.98
Jorge A. Junquera................ 1995 2,121.66 1/1/95-12/31/97 -- 2,121.66 4,243.29
1994 1,847.98 1/1/94-12/31/96 -- 1,847.98 3,695.96
David H. Chafey, Jr.............. 1995 2,075.52 1/1/95-12/31/97 -- 2,075.52 4,151.00
1994 1,807.79 1/1/94-12/31/96 -- 1,807.79 3,615.58
Larry B. Kesler.................. 1995 1,689.84 1/1/95-12/31/97 -- 1,689.84 3,379.65
1994 1,471.86 1/1/94-12/31/96 -- 1,471.86 2,943.72
Maria Isabel P. de Burckhart..... 1995 1,652.44 1/1/95-12/31/97 -- 1,652.44 3,304.84
1994 1,439.28 1/1/94-12/31/96 -- 1,439.28 2,878.56
Humberto Martin.................. 1995 1,590.50 1/1/95-12/31/97 -- 1,590.50 3,180.96
1994 1,385.33 1/1/94-12/31/96 -- 1,385.33 2,770.66
Emilio E. Pinero................. 1995 1,561.42 1/1/95-12/31/97 -- 1,561.42 3,122.82
1994 1,360.01 1/1/94-12/31/96 -- 1,360.01 2,720.02
</TABLE>
The share awards shown above are payable at the end of the three-year
performance period. The amount of the share payout is determined by multiplying
the participant's target shares by participant's level of
15
<PAGE> 18
attainment expressed as a percentage, which can range from 0% to 150%. This
Long-Term Incentive Plan defines the incentive payment as follows: 75% based on
the attainment of a pre-established three-year ROE objective for the performance
period and 25% based on the achievement of an average ROE greater than the Peer
Group's three-year average median ROE.
If the Corporation's target is met or exceeded, the shares payments
corresponding to the Corporation's and Peer Group's goals, are increased
separately by a leverage factor that cannot exceed two times the target share
amounts. At the option of the participant, a portion equal to the estimated tax
due with respect to the incentive payments of the awards may be made in cash.
As approved in April, 1995 by the Board of Directors, if the ROE for the
Corporation does not equal or exceed the three-year average median ROE of the
Peer Group, the Human Resources Committee at its own discretion may recommend
the distribution of the targeted bonus if the results attained for the Plan Year
average represent an improvement of no less than 25% over the base year.
OTHER INCENTIVE COMPENSATION PLANS
The Bank has an Annual Management Incentive Plan for different management
levels. Under this Plan, incentive bonuses are based on individual performance
as well as the Bank's performance, measured by net income. The weight assigned
to the Bank's performance objectives varies according to management level, but
the weight of individual performance applies equally to all managers
participating.
The Bank also has an Excellence in Performance Program in which all
employees participate. This program rewards employees for extraordinary personal
contributions that are non-recurring in nature, typically not recognizable
through merit or promotional salary action, and clearly recognized as such by
management and peers alike.
Additionally, the Bank has several functional incentive programs that
reward employee's productivity in specific areas.
PROFIT SHARING PLAN OF THE BANK
All officers and regular monthly salaried employees of the Bank as of
January 1, 1976, or hired after that date, are active participants in the Bank's
operating earnings under the yearly Profit Sharing Plan, as of the first day of
the calendar month following completion of one year of service.
The Bank's contribution for each year is determined by the Board of
Directors based on the profits of the Bank for the year. The amount allocated to
each officer or employee is based on his or her basic compensation for the year.
The total amount contributed for the year 1995 was $19,642,356, of which 50% was
distributed to the Profit Sharing Plan, 10% to the Stock Plan and the remainder
was paid in cash.
BENEFIT RESTORATION PLAN OF THE BANK
Effective January 1, 1994 the Internal Revenue Service (IRS) set a limit of
$150,000 as the amount of compensation that may be considered in calculating
future retirement payments from qualified pension plans. This tax law applies to
both the Bank's Retirement Plan and Profit Sharing Plan.
The Board of Directors has approved a "Benefit Restoration Plan" for those
officers with an applicable annual compensation of more than $150,000. This
non-qualified plan will provide those benefits that cannot be accrued under the
Bank's Retirement Plan and Profit Sharing Plan, which are qualified plans.
Benefits under the Benefit Restoration Plan shall be equal to the account
balance that would be provided under the Profit Sharing Plan and equal to the
benefits that would have been accrued under the Retirement Plan. The Plan is
unfunded.
RETIREMENT PLAN OF THE BANK
The Bank has a non-contributory, defined benefit Retirement Plan covering
substantially all regular monthly employees. Monthly salaried employees are
eligible to participate in the Plan following the
16
<PAGE> 19
completion of one year of service. Pension costs are funded in accordance with
the minimum funding standards under the Employee Retirement Income Security Act
("ERISA").
The basis for the Retirement Plan formula is Total Compensation, which
includes, Christmas Bonus, incentives, overtime, differentials, Profit Sharing
cash bonuses and any other compensation received by the employees. Benefits are
paid on the basis of a straight life annuity plus supplemental death benefits
and are not reduced for social security or other payments received by
participants.
Normal retirement age at the Bank is a combination of years of age and
completed years of service totalling 75, meanwhile early retirement is at 55
years of age with 10 years of service. Employees with 30 years of service or
more are provided with a pension of 40% of Total Compensation. Benefits are
reduced only if the employee retires before age 55 which is the early retirement
age. Benefits are subject to the U.S. Internal Revenue Code limits on
compensation and benefits.
The following table sets forth the estimated annual benefits that would
become payable under the Retirement Plan and the Benefit Restoration Plan based
upon certain assumptions as to total compensation levels and years of service.
The amounts payable in this table are not necessarily representative of amounts
that may actually become payable under the plans. The amounts represent the
benefits payable upon retirement on December 31, 1995, of a participant at age
65:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS / YEARS OF SERVICE
TOTAL ---------------------------------------------------
COMPENSATION 15 20 25 30 35
------------ ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$400,000.............................. $73,000 $102,000 $131,000 $160,000 $160,000
300,000.............................. 55,000 77,000 98,000 120,000 120,000
200,000.............................. 37,000 51,000 66,000 80,000 80,000
100,000.............................. 18,000 26,000 33,000 40,000 40,000
</TABLE>
The 1995 total compensation and estimated years of service at age 65 for
the five highest paid key policy-making Executive Officers are as follows:
<TABLE>
<CAPTION>
1995 ESTIMATED YEARS
TOTAL OF SERVICE AT
COMPENSATION AGE 65
------------ ---------------
<S> <C> <C>
Richard L. Carrion......................................... $462,000 41.5
Jorge A. Junquera.......................................... 324,000 42.3
David H. Chafey, Jr. ...................................... 317,000 38.5
Larry B. Kesler............................................ 258,000 16.5
Maria Isabel P. de Burckhart............................... 253,000 35.3
</TABLE>
STOCK PLAN OF THE BANK
Effective January 1, 1995, the Bank adopted two Stock Plans, one covering
employees of the Bank in Puerto Rico and another covering employees of the Bank
in the U.S., and the British and U.S. Virgin Islands. All regular monthly
salaried employees are eligible to participate in the Stock Plans following the
completion of three-months of service.
The Bank may contribute a discretionary amount based on the profits of the
Bank for the year, which is allocated to each officer or employee based on his
or her basic salary for the year, as determined by the Board of Directors. The
Stock Plans also allow employees to voluntarily elect to defer a predetermined
percentage not to exceed 10% of their pre-tax base compensation (after tax in
the British Virgin Islands) up to a maximum amount as determined by the
applicable tax laws. The Bank will match 50% of the amount contributed by a
participant up to a maximum of 2% of the participant's annual base salary.
17
<PAGE> 20
All contributions to the Stock Plan are invested in shares of common stock
of BanPonce Corporation, which are purchased in the open market.
BANPONCE CORPORATION
PERFORMANCE GRAPH
The following Performance Graph compares the cumulative total shareholder
return during the measurement period with the cumulative total return, assuming
reinvestment of dividends, of the S&P 500 Index and the S&P Bank Composite
Index. The cumulative total shareholder return was obtained by dividing (i) the
cumulative amount of dividends per share, assuming dividend reinvestment, since
the measurement point, December 31, 1990 plus (ii) the change in the per share
price since the measurement point, by the share price at the measurement point.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
TOTAL RETURN AS OF DECEMBER 31
(DECEMBER 31, 1990 = 100)
[GRAPH]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD BANPONCE S&P 500 BANKS
(FISCAL YEAR COVERED) CORP. INDEX COMPOSITE
<S> <C> <C> <C>
1990 100 100 100
1991 125.84 130.47 163.34
1992 203.79 140.41 215.39
1993 215.37 154.56 237.45
1994 201.80 156.60 225.27
1995 287.00 215.45 358.98
</TABLE>
18
<PAGE> 21
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors intends to retain the services of Price Waterhouse
as the independent auditors of the Corporation for the year 1996. This firm of
international public accountants has served as independent auditors of the Bank
since 1971 and of the Corporation since May 1991, when it was appointed by the
Board of Directors.
Representatives of Price Waterhouse will attend the Stockholders Meeting
and will be available to answer any questions that may arise; they will also
have the opportunity to make a statement if they so desire.
NOMINATIONS OTHER THAN BY THE BOARD OF DIRECTORS
Nominations for Directors, other than those made by or on behalf of the
existing Board of Directors of the Corporation, shall be made in writing and
shall be delivered or mailed to the President or the Secretary of the
Corporation not less than fifteen (15) days prior to April 26,1996. The notice
of such nominations shall contain the following information to the extent known
to the notifying stockholder: (a) name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of common stock of the Corporation that will be voted for each proposed
nominee; (d) the name and residence address of the notifying stockholder; and
(e) the number of shares of common stock of the Corporation owned by the
notifying stockholder. Nominations not made in accordance with the above may, in
his discretion, be disregarded by the Chairman of the Meeting and, upon his
instructions, the judges of the election may disregard all votes cast for each
such nominee.
PROPOSALS OF SECURITY HOLDERS TO BE PRESENTED AT THE 1997
ANNUAL MEETING OF STOCKHOLDERS
Stockholders' proposals intended to be presented at the 1997 Annual Meeting
of Stockholders must be received by the Corporate Secretary, at its principal
executive offices, Popular Center Building, San Juan, Puerto Rico, 00918, not
later than November 25, 1996 for inclusion in the Corporation's Proxy Statement
and Form of Proxy relating to the 1997 Annual Meeting of Stockholders, if the
meeting is held on April 25, 1997.
OTHER MATTERS
Management does not know of any other matters to be brought before the
Meeting other than those described previously. Proxies in the accompanying form
will confer discretionary authority to Management with respect to any such other
matters presented at the meeting.
To avoid delays in ballot taking and counting, and in order to assure that
your Proxy is voted in accordance with your wishes, compliance with the
following instructions is respectfully requested: upon signing a Proxy as
attorney, executor, administrator, trustee, guardian, authorized officer of a
corporation, or on behalf of a minor, please give full title. If shares are in
the name of more than one recordholder, all should sign.
Whether or not you plan to attend the Meeting, it is very important that
your shares be represented and voted in the Meeting. Accordingly, you are urged
to properly complete, sign, date and return your Proxy Card in the enclosed
self-addressed envelope which needs no postage.
San Juan, Puerto Rico, March 19, 1996.
RICHARD L. CARRION SAMUEL T. CESPEDES
Chairman of the Board, President Secretary
and Chief Executive Officer
19
<PAGE> 22
APPENDIX A
<TABLE>
<S> <C> <C>
PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
BANPONCE
CORPORATION The undersigned hereby appoints Richard L. Carrion, Jorge A. Junquera and David
H. Chafey Jr. as Proxies, each with the power to appoint his substitute,
P.O. BOX 362708 and authorizes them to represent and to vote as designated below all the shares
San Juan, Puerto Rico of common stock of BanPonce Corporation held on record by the undersigned on
00936-2708 March 7, 1996, at the Annual Meeting of Shareholders to be held at the Centro
Europa Building, 3rd Floor, San Juan, Puerto Rico, on April 26, 1996, at 2:00
p.m. or at any adjournments thereof, as follows:
1. ELECTION OF DIRECTORS
Nominees:
Juan J. Bermudez Richard L. Carrion Antonio Luis Ferre Felix J. Seralles Jr.
Francisco J. Carreras David H. Chafey Jr. Alberto M. Paracchini
[ ] VOTE GRANTED FOR all nominees [ ] VOTE WITHHELD FOR all nominees
[ ] Vote granted, except for the following nominee(s) (insert in the space provided below the names of those nominees
for whom you do not wish to vote)
2. AT THEIR DISCRETION, the Proxies are authorized to vote upon such other business as may properly come before the Meeting. THIS
PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED "FOR" ITEM 1. Please refer to instructions below.
--------------------------------------------------------
Signature
--------------------------------------------------------
Signature
--------------------
DATE
(VEA AL DORSO TEXTO EN ESPANOL)
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
No Postage is required if mailed in the United States, Puerto Rico or the U.S. Virgin Islands.
- -----------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
INSTRUCTIONS:
- ----------------------- Please sign exactly as your name appears above. When shares are held by joint
ANNUAL MEETING tenants or by tenants in common, each holder should sign. When signing as
of attorney, executor, administrator, trustee or guardian, please give full title
BANPONCE as such. If a corporation, the President or other authorized officer should sign
CORPORATION under the full corporate name and the position of such authorized officer should
- ----------------------- appear below the signature. If a partnership, please sign in partnership name
by authorized person.
Friday, April 26, 1996
2:00 p.m.
Centro Europa Building
San Juan, Puerto Rico [MAP]
</TABLE>
