<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (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>
POPULAR, 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)(1) 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
POPULAR, INC.
P.O. BOX 362708
SAN JUAN, PUERTO RICO 00936-2708
----------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, APRIL 25, 2000
----------------------------------
To the Stockholders of Popular, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Popular, Inc. (the "Meeting") for the year 2000 will be held at 10:30 a.m. on
Tuesday, April 25, 2000, on the third floor of the Centro Europa Building, in
Santurce, Puerto Rico, to consider and act upon the following matters:
(1) To elect four (4) directors of Popular, Inc. (the "Corporation")
for a three-year term; and
(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.
Stockholders of record at the close of business on March 6, 2000, are
entitled to notice of and to vote at the Meeting.
You are cordially invited to attend the Meeting. Whether you plan to
attend or not, please sign and return the enclosed proxy so that the Corporation
may be assured of the presence of a quorum at the Meeting. A postage-paid
envelope is enclosed for your convenience. REMEMBER THAT YOU CAN VOTE BY
TELEPHONE OR BY INTERNET; FOR FURTHER DETAILS PLEASE REFER TO THE ENCLOSED PROXY
CARD.
San Juan, Puerto Rico, March 15, 2000.
By Order of the Board of Directors,
SAMUEL T. CESPEDES
Secretary
<PAGE> 3
POPULAR, INC.
P.O. BOX 362708
SAN JUAN, PUERTO RICO 00936-2708
--------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, APRIL 25, 2000
--------------------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Popular, Inc. (the "Corporation") of proxies to be
voted at the Annual Meeting of Stockholders (the "Meeting") to be held at 10:30
a.m. on Tuesday, April 25, 2000, on the third floor of the Centro Europa
Building, in Santurce, Puerto Rico, and any adjournments thereof. Enclosed with
this Proxy Statement is the Corporation's Annual Report (the "Annual Report"),
including the financial statements for the year ended December 31, 1999, duly
certified by PricewaterhouseCoopers LLP as independent public accountants. This
Proxy Statement, the enclosed Annual Report, the Notice of Annual Meeting of
Stockholders and the form of proxy are being sent to stockholders on or about
March 15, 2000. Shareholders are entitled to vote by telephone or by Internet
following the detailed instructions included in the Proxy Card, as authorized by
the Puerto Rico Corporation Law and the Bylaws of the Corporation.
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 that
described 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 are properly presented before the
Meeting, proxies may be voted with respect thereto in accordance with the best
judgment of Proxyholders, under the discretionary power granted by stockholders
to their proxies in connection with general matters.
SOLICITATION OF PROXIES
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.
REVOCABILITY OF PROXY
Any stockholder giving a proxy has the power to revoke it before the
proxy is exercised. At the Meeting the grantor may revoke the proxy by
reclaiming the right to vote the shares of stock registered in the grantor's
name or by notice of revocation in writing to the President or Secretary of
Popular, Inc., 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 (the "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 6, 2000 (the "Record Date"), will be entitled to vote at the
Meeting and any adjournments thereof. On the Record Date there were 135,763,765
shares of common stock of Popular, Inc. issued and outstanding. The shares
covered by any such proxy that is properly executed and received by management
before 10:30 a.m. on the day of the Meeting will be voted.
2
<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 members
of the vote-counting committee for the Meeting. For purposes of determining a
quorum, the members of the vote-counting committee will treat abstentions and
brokers 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. 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 nominees
proposed by the Board, or to withhold authority to vote for one or more of the
nominees being proposed. 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 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
of beneficial of
Title 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 5,672,860
The Bank as Trustee for the Profit Sharing Plan
for the Employees of Banco Popular de Puerto
Rico 5,320,208
----------
10,993,068 (3) 8.0972
Common State Farm Mutual Automobile Insurance
Company 7,749,124 (4) 5.7078
</TABLE>
- -----------------------
(1) As of February 29, 2000.
(2) Based on 135,763,765 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 February 5, 2000 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
their holdings as of December 31, 1999. 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 7,749,124 shares of Popular, Inc. 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".
3
<PAGE> 5
SHARES BENEFICIALLY OWNED BY DIRECTORS,
NOMINEES AND EXECUTIVE OFFICERS OF THE CORPORATION AND ITS SUBSIDIARIES
Following is the information, as of February 29, 2000, as to equity
securities of the Corporation beneficially owned by all current directors,
nominees, the most highly compensated Executive Officers of the Corporation and
its subsidiaries who are not directors and the total owned by directors,
nominees and all Executive Officers of the Corporation and its subsidiaries as a
group:
COMMON STOCK
<TABLE>
<CAPTION>
Title Amount and Nature Percent of
Name of class of Beneficial Ownership class(1)
---- -------- ----------------------- ---------
<S> <C> <C> <C>
Alfonso F. Ballester ................... Common 1,395,173(3) 1.0276
Juan J. Bermudez ....................... Common 466,831(4) .3439
Francisco J. Carreras .................. Common 15,506 .0114
Richard L. Carrion ..................... Common 1,106,490(5) .8150
David Chafey Jr ........................ Common 81,687 .0602
Antonio Luis Ferre ..................... Common 2,915,695(6) 2.1476
Hector R. Gonzalez ..................... Common 614,416(7) .4526
Jorge A. Junquera ...................... Common 62,345(8) .0459
Manuel Morales Jr ...................... Common 727,330(9) .5357
Alberto M. Paracchini .................. Common 113,490(10) .0836
Francisco M. Rexach Jr ................. Common 192,916(11) .1421
J. Adalberto Roig Jr ................... Common 476,735(12) .3512
Felix J. Serralles Jr .................. Common 429,660(13) .3165
Julio E. Vizcarrondo Jr ................ Common 1,181,766(14) .8705
Maria Isabel P. de Burckhart ........... Common 65,269(15) .0481
Roberto R. Herencia .................... Common 12,687 .0093
Larry B. Kesler ........................ Common 45,106 .0332
Humberto Martin ........................ Common 75,038 .0553
Emilio E. Pinero ....................... Common 38,243 .0282
Carlos Rom Jr .......................... Common 24,388(16) .0180
Carlos J. Vazquez ...................... Common 104,186(17) .0767
Kenneth McGrath ........................ Common 3,953 .0029
Cameron E. Williams .................... Common 200 .0001
All Directors and Executive Officers
of the Corporation and its subsidiaries
as a group ........................... Common 10,149,110 7.4756
</TABLE>
PREFERRED STOCK
<TABLE>
<CAPTION>
Title Amount and Nature Percent of
Name of class of Beneficial Ownership class(2)
---- -------- ----------------------- ---------
<S> <C> <C> <C>
Alberto M. Paracchini .................. Preferred 7,000 .1750
Carlos J. Vazquez ...................... Preferred 4,568(18) .1142
All Directors and Executive Officers
of the Corporation as a group ......... Preferred 11,568 .2892
</TABLE>
4
<PAGE> 6
<TABLE>
<S> <C>
(1) Based on 135,763,765 shares of common stock outstanding.
(2) Based on 4,000,000 shares of preferred stock outstanding.
(3) Mr. Ballester owns 1,391,173 shares and has indirect investment power
over 4,000 shares owned by his wife. Excludes 1,187,988 shares owned by
his sister, as to all of which shares Mr. Ballester disclaims
beneficial ownership.
(4) Excludes 12,745 shares owned by his wife, as to which Mr. Bermudez
disclaims beneficial ownership.
(5) Mr. Carrion owns 299,740 shares and also has indirect investment power
over 24,421 shares owned by his children. Junior Investment Corporation
owns 4,372,999 shares of the Corporation. Mr. Carrion owns 17.89% of
the shares of said corporation.
(6) Mr. Ferre has direct or indirect investment and voting power as to
2,915,695 shares of the Corporation. Mr. Ferre owns 2,633 shares and
has indirect investment and voting power over 513,880 shares owned by
ALFRA Investment Corp., 3,200 shares owned by South Management, Inc.
and 400 shares owned by his wife. Mr. Ferre owns 85.12% of Ferre
Investment Fund, Inc., which owns 950,870 shares of the Corporation.
Ferre Investment Fund, Inc. and ALFRA Investment Corporation in turn
own 69.39% and 20.57%, respectively, of El Dia, Inc., which owns
1,444,712 shares of the Corporation.
(7) Mr. Gonzalez owns 585,064 shares and has voting and investment power
over 29,352 shares of the Corporation owned by TPC Financial Services,
Inc. of which he has control.
(8) Mr. Junquera owns 61,635 shares and has indirect investment power over
211 shares owned by his wife and over 499 shares owned by his children.
(9) Mr. Morales owns 319,722 shares and has voting power over 407,608
shares owned by his parents, as their attorney-in-fact.
(10) Excludes 1,264 shares owned by his wife, as to which Mr. Paracchini
disclaims beneficial ownership.
(11) Mr. Rexach owns 85,416 shares and has indirect voting power over 93,500
shares owned by his mother, as her attorney-in-fact, and over 14,000
shares held by Capital Assets, Inc. as President and shareholder.
(12) Mr. Roig owns 451,547 shares and has indirect voting power over 25,188
shares owned by his wife.
(13) Mr. Serralles owns 226,752 shares, and has indirect voting power over
10,292 shares owned by his wife. Mr. Serralles owns 100% of the shares
of each of Capitanejo, Inc. and Fao Investments, Inc., which own
117,020 and 5,596 shares, respectively, of the Corporation and has
indirect ownership of 70,000 shares owned by Destileria Serralles, Inc.
(14) Mr. Vizcarrondo owns 202,179 shares and has indirect voting power over
184,576 shares owned by his wife. Mr. Vizcarrondo's wife owns 18.18% of
the shares of Junior Investment Corporation, which owns 4,372,999
shares of the Corporation. Mr. Vizcarrondo has indirect voting and
investment power over 1,334 shares held in trust by Vicar Enterprises,
Inc. for the benefit of his children, for which he disclaims beneficial
ownership. Mr. Vizcarrondo also disclaims beneficial ownership over
131,278 shares owned by DMI Pension Trust, where he serves as trustee
and member of the investment committee.
(15) Mrs. Burckhart owns 62,274 shares and has indirect voting power over
2,995 held by her husband as custodian for her daughters.
(16) Mr. Rom owns 23,756 shares and has indirect voting power over 145
shares owned by his wife and 487 shares held by him as custodian for
various members of his family.
(17) Mr. Vazquez owns 10,526 shares and has investment authority over 93,660
shares held by various family members.
(18) Mr. Vazquez has investment authority over 4,568 preferred shares held
by various family members.
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Corporation's directors and named executive officers to file with
the Securities and Exchange Commission (SEC) reports of ownership and changes in
ownership of common stock of the Corporation. Officers and directors are
required by SEC regulation to furnish the Corporation with copies of all Section
16(a) forms they file.
Based solely on a review of the copies of such reports furnished to the
Corporation or written representations that no other reports were required, the
Corporation believes that, with respect to 1999, all filing requirements
applicable to its officers and directors were complied with except for one
report, covering one transaction, filed late by each of Messrs. Juan J. Bermudez
and Felix J. Serralles Jr., both directors of the Corporation.
5
<PAGE> 7
BOARD OF DIRECTORS AND COMMITTEES;
ELECTION OF DIRECTORS
The Certificate of Incorporation and the Bylaws 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 or until his successor has been elected and qualified.
To better balance the three classes in accordance with the Certificate of
Incorporation and Bylaws of the Corporation, one director previously assigned to
"Class 2" and two directors previously assigned to "Class 3" are nominated for
election as set forth below.
At the Meeting, four (4) directors assigned to "Class 1" are to be
elected to serve until the 2003 Annual Meeting of Stockholders or until their
respective successors shall have been elected and qualified. The remaining eight
directors of the Corporation will serve as directors, as follows: until the 2001
Annual Meeting of Stockholders of the Corporation, in the case of those three
directors assigned to "Class 2", and until the 2002 Annual Meeting of
Stockholders, in the case of those five directors assigned to "Class 3", or in
each case until their successors are elected and qualified.
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 would
attain seventy two (72) years of age. Messrs. Alfonso F. Ballester and J.
Adalberto Roig Jr. would attain seventy two (72) years of age during the term to
be served. In accordance with Board policy, Messrs. Ballester and Roig will not
be nominated for reelection as directors. Mr. Luis E. Dubon Jr, resigned from
the Board of Directors of the Corporation as of February 23, 2000. Mr. Dubon's
decision was not due to disagreement with the Corporation on any matter relating
to the Corporation's operations, policies or practices. Mr. Dubon was member of
"Class 2" of the Board of Directors.
The people 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 four
nominees named below, 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 the Board of Directors may propose. The Corporation
has no knowledge that any nominee will become unavailable for election.
Information relating to principal occupation and business experience
during the past five (5) years (including position held with the Corporation or
the Bank), age and the period during which each director has served is set forth
below.
NOMINEES FOR ELECTION AS DIRECTORS
CLASS 1 DIRECTORS
(TERMS EXPIRING IN 2003)
JUAN J. BERMUDEZ: (62 years), Director of the Corporation since 1990.
Electrical Engineer. Partner of Bermoedez and Longo, S.E., Unicenter, S.E.,
Unieast, S.E., Unigardens, S.E., Clearview, S.E., Placid Park, S.E. and PCME
Commercial, S.E. Principal Stockholder and Director of BL Management, Corp.,
Paseomar Corp., PCME Development, Inc., G.S.P. Corp., Unimanagement Corp., LBB
Properties, Inc. and Homes Unlimited Corp. Director of the Bank, Popular
Securities, Inc., Popular Leasing & Rental, Inc., Popular Finance, Inc. and
Popular Mortgage, Inc. Chairman of the Trust Committee of the Bank.
RICHARD L. CARRION: (47 years), Director of the Corporation since 1990.
Chairman, President and Chief Executive Officer ("CEO") of the Corporation and
the Bank. Chairman of Popular International Bank, Inc., Popular North America,
Inc., Banco Popular North America and Popular Cash Express, Inc. Chairman of the
Board of Trustees of Fundacion Banco Popular, Inc. Director of Equity One, Inc.,
Popular Finance, Inc., Popular Leasing & Rental, Inc., Popular Mortgage, Inc.,
Popular Securities, Inc., Banco Fiduciario, S.A. and GM Group, Inc. Member of
the International Olympic Committee. President of the Puerto Rico Olympic
Trust and Member of the Puerto Rico Olympic Committee. Member of the Board of
Directors of Bell Atlantic Corporation (a registered public company) and member
of the Benefits & Human Resources Committee of Bell Atlantic Corporation. Member
of the Board of Trustees of the Puerto Rico Committee for Economic Development.
Former Chairman and President of Puerto Rico Investors Tax-Free Fund, Inc. I,
II, III, IV, V (1994 to December 1998) and of Puerto Rico Tax-Free Target
Maturity Fund, Inc. I (1996 to December 1998) and II (1997 to December 1998).
Former Chairman and President
6
<PAGE> 8
of Puerto Rico Investors Flexible Allocation Fund (December 1998 to January
1999). Former Member of the Board of the National Museum of American History,
Smithsonian Institution (November 1997 to December 1998). Member of the Board of
Directors of Telecomunicaciones de Puerto Rico, Inc. (TELPRI). Chairman of the
Executive Committee of the Corporation.
JORGE A. JUNQUERA: (51 years), Director of the Corporation since 1990.
Chief Financial Officer ("CFO") of the Corporation and the Bank. Supervisor of
the Financial Management Group, the U.S. Operations and the Caribbean and Latin
America Expansion Group since January 1996. Supervisor of the Bank's Retail
Banking Group until December 1995. Senior Executive Vice President since October
1995. President and Director of Popular International Bank, Inc. and Popular
North America, Inc. since January 1996. Director and President of Banco Popular
North America. Director of the Bank, Equity One, Inc., Banco Fiduciario, S.A.,
ATH Dominicana, S.A. and Popular Cash Express, Inc. Director of Popular
Mortgage, Inc., Popular Finance, Inc. and Popular Leasing & Rental, Inc. until
December 1998. Chairman of the Board of Popular Securities, Inc. President of
Puerto Rico Tourism Company until February 1997 and President of Hotel
Development Co. Director of YMCA and of PRISMA: El Exploratorio, Inc.
FRANCISCO M. REXACH JR.: (62 years), Director of the Corporation since
1990. President of Ready Mix Concrete, Inc., a subsidiary of PRCC (a registered
public company) until September 1997. President of Capital Assets, Inc. and of
Rexach Consulting Group. Director of the Bank, Popular International Bank, Inc.,
Popular North America, Inc., Banco Popular North America, Banco Fiduciario,
S.A., Popular Cash Express, Inc. and Equity One, Inc. Chairman of the Human
Resources and Compensation Committees of the Bank and of Banco Fiduciario, S.A.
CLASS 3 DIRECTORS
(TERMS EXPIRING IN 2002)
FRANCISCO J. CARRERAS: (67 years), Director of the Corporation since
1990. Former professor of the University of Puerto Rico. Former President of the
Catholic University of P.R. Member of the Board of Trustees of Fundacion Banco
Popular, Inc. Executive Director of Fundacion Angel Ramos, Inc. Chairman of the
Community Reinvestment Committee of the Bank. Director of the Bank.
DAVID H. CHAFEY JR.: (46 years), Director of the Corporation since
1996. Supervisor of the Bank's Retail Banking Group since January 1996.
Supervisor of the Financial Management Group and U.S. Operations until December
1995. Senior Executive Vice President since October 1995. Chairman of Popular
Securities, Inc. until January 1996. Senior Executive Vice President of Popular
International Bank, Inc. and Popular North America, Inc. President of Popular
International Bank, Inc. and Popular North America, Inc. until December 1995.
Director of the Bank, Popular Mortgage, Inc., Popular Leasing & Rental, Inc., GM
Group, Inc. and Popular Securities, Inc. Director of Equity One, Inc. and Banco
Popular North America until December 1999. Chairman of the Board of Popular
Finance, Inc. Chairman of the Board of Puerto Rico Telephone Authority from 1993
thru 1997. Chairman and President of Puerto Rico Investors Tax-Free Fund, Inc.
I, II, III, IV, V, VI, of Puerto Rico Tax-Free Target Maturity Fund, Inc. I and
II and of Puerto Rico Investors Flexible Allocation Fund since January 1999.
Chairman of the Board of Grupo Guayacan, Inc. President of the San Jorge
Children's Research Foundation, Inc. Vice President of the Puerto Rico Bankers
Association. Director of Visa International for the Caribbean and Latin America.
ANTONIO LUIS FERRE: (66 years), Director of the Corporation since 1984.
Vice Chairman of the Board of Directors of the Corporation and 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. and of Primera Hora, newspaper publishing companies. President of
Advanced Graphic Printing, a commercial printing company. Chairman of the Board
of Virtual, Inc., and Internet company. Director of Metropolitan Life Insurance
Company (a registered company under the Investment Company Act of 1940) until
December 1995.
ALBERTO M. PARACCHINI: (67 years), Director of the Corporation since
1984. Former Chairman of the Board of Directors of the Corporation and the Bank.
Former Chairman of Popular North America, Inc., Equity One, Inc., Popular
Finance, Inc. and Popular Leasing & Rental, Inc. Member of the Board of Trustees
of Fundacion Banco Popular, Inc. Chairman of the Board of Trustees of Sacred
Heart University in San Juan, Puerto Rico. Director of Puerto Rican Cement Co.,
Inc. (a registered public company). Director of Equus Management Co., Inc. and
Managing General Partner of Equus Gaming Co., L.P. (a registered public
company). Director of Equus Entertainment Corporation, a subsidiary of Equus
Gaming Co., L.P. (registered public company) and of Venture Capital Fund, Inc.
Director of the Bank.
FELIX J. SERRALLES JR.: (65 years), Director of the Corporation since
1984. President and Chief Executive Officer of Destileria Serralles, Inc.,
manufacturers and distributors of distilled spirits, and of its affiliate
Mercedita Leasing, Inc. Director of the Bank, Popular International Bank, Inc.,
Popular North America, Inc., Banco Popular North America, Popular Cash Express,
Inc. and Equity One, Inc.
7
<PAGE> 9
CLASS 2 DIRECTORS
(TERMS EXPIRING IN 2001)
HECTOR R. GONZALEZ: (66 years), Director of the Corporation since 1984.
President and Chief Executive Officer of TPC Communications of PR, Inc., owner
and operator of cable television systems. President and Chief Executive Officer
of TPC Financial Services, Inc., TPC Cable Media, TelePonce Cable TV and
Telecell Systems. Director of Damas Foundation, Inc. and Damas Hospital, Inc.
Director of the Bank, Popular Finance, Inc., Popular Mortgage, Inc., Popular
Leasing & Rental, Inc. and Popular Securities, Inc. Member of the Board of
Trustees of Sacred Heart University in San Juan, Puerto Rico.
MANUEL MORALES JR.: (54 years), Director of the Corporation since 1990.
President of Selarom Capital Group, Inc. President of Parkview Realty, Inc., the
Atrium Office Center, Inc., HQ Business Center P.R., Inc., Executrain of Puerto
Rico and Office & Home, Inc. Honorary General Consul of Japan in San Juan,
Puerto Rico. Member of the Board of Trustees of Sacred Heart University in San
Juan, Puerto Rico, of the Caribbean Environmental Development Institute and of
Fundacion Angel Ramos, Inc. Member of the Board of Directors of the Better
Business Bureau. Member of the National Advisory Council-United States Small
Business Administration. Member of the Board of Trustees of Fundacion Banco
Popular, Inc. Dean of Consular Corps of Puerto Rico. Chairman of the Audit
Committee of the Corporation and the Bank. Director of the Bank.
JULIO E. VIZCARRONDO JR.: (65 years), Director of the Corporation since
1990. Civil Engineer. President, Partner and Chief Executive Officer of
Desarrollos Metropolitanos, S.E., VMV Enterprises Corp., Resort Builders, S.E.,
Metropolitan Builders, S.E. and 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,
Popular International Bank, Inc., Popular North America, Inc., Banco Popular
North America, Popular Cash Express, Inc. and Equity One, Inc.
The Board of Directors of the Corporation met on a monthly basis during
1999. All directors except Messrs. Antonio Luis Ferre, J. Adalberto Roig Jr.,
Felix J. Serralles Jr. and Mr. Luis E. Dubon Jr., who was on a leave of absence
from the Board from February 1999 until his resignation from the Board attended
to 75% or more to the meetings of the Board of Directors and the committees of
the Board of Directors on which such directors served.
STANDING COMMITTEES
The Corporation's Board of Directors (the "Board") has standing Audit,
Risk Management 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 but the Executive Committee charter
provides that the Executive Committee may exercise the power to nominate
directors. However, in the past the Executive Committee has not exercised such
function and nominations have been made by the Board.
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 management of the Corporation is
responsible for the preparation, presentation and integrity of the Corporation's
financial statements. Management and the internal auditing division are
responsible for maintaining appropriate accounting and financial reporting
principles and policies and internal controls and procedures designed to ensure
compliance with accounting standards and applicable laws and regulations. The
external auditors are responsible for planning and carrying out a proper audit
and reviews and other procedures. The members of the Audit Committee are not
full-time employees of the Corporation or its subsidiaries and are not
accountants or auditors by profession or experts in the fields of accounting or
auditing. As such, it is not the duty or responsibility of the Audit Committee
or its members to conduct "field work" or other types of auditing or accounting
reviews or procedures, and each member of the Audit Committee is entitled to
rely on the integrity of those persons and organizations within and outside the
Corporation from which the Audit Committee receives information and the accuracy
of the financial and other information provided to the Audit Committee by such
persons or organizations, absent actual knowledge to the contrary. The Committee
held four meetings during the fiscal year ended December 31, 1999.
8
<PAGE> 10
The Committee members during 1999 were: Juan J. Bermudez, Francisco J.
Carreras, Manuel Morales Jr., Alberto M. Paracchini, J. Adalberto Roig Jr. and
Felix J. Serralles 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, 1999.
The Committee members during 1999 were: Juan A. Albors, Salustiano
Alvarez Mendez, Francisco J. Carreras, Hector R. Gonzalez, Alberto M. Paracchini
and Francisco M. Rexach Jr. 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 a $12,000 annual retainer. The Board has a Stock Deferment
Plan, pursuant to which each outside director of the Corporation is given the
option to defer all or a portion of the $12,000 annual retainer. The deferred
portion, plus an additional amount of $0.25 for each dollar so deferred, is
applied toward the purchase in the open market of shares of the Corporation's
common stock on behalf of the director. The certificates representing such
shares are retained by the Corporation until the director's term in office as a
director of the Corporation (and the Bank) terminates. In addition, each
director has the right to vote and to receive any dividends payable on the
shares held for said director under the Plan, but no such shares may be sold,
transferred, assigned, pledged or in any other way encumbered by the director
until the certificates representing such shares are delivered to the director.
In the event that a director is duly removed from office for cause, said
director (1) shall be obliged to sell to the Corporation all of the shares
acquired with the deferred retainer amount at a price equal to the lower of (a)
the actual purchase price of said shares and (b) the market price of said shares
on the date the director was discharged, and (2) shall forfeit to the
Corporation any shares purchased with the Corporation's additional contribution.
In addition, directors receive $750 for attending each Board meeting,
$1,000 for attending each Executive Committee meeting and $500 for attending
each of the other committee meetings. Directors who are employees do not receive
fees for attending Board and committee meetings.
EXECUTIVE OFFICERS
The following information 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.
RICHARD L. CARRION: (47 years), Chairman, President and CEO of the
Corporation. Executive Officer of the Corporation since 1990. For information
about principal occupation and business experience during the past five years
please refer to the Board of Directors section.
JORGE A. JUNQUERA: (51 years), Senior Executive Vice President of the
Corporation. Executive Officer of the Corporation since 1990. For information
about principal occupation and business experience during the past five years
please refer to the Board of Directors section.
DAVID H. CHAFEY JR.: (46 years), Senior Executive Vice President of the
Corporation. Executive Officer of the Corporation since 1990. For information
about principal occupation and business experience during the past five years
please refer to the Board of Directors section.
MARIA ISABEL P. DE BURCKHART: (51 years), Executive Vice President of
the Corporation. Executive Officer of the Corporation since 1990. Supervisor of
the Administration Group. Executive Vice President of the Bank since January
1990. Executive Vice President of Popular International Bank, Inc. and Popular
North America, Inc. Member of the Board of Trustees of Fundacion Banco Popular,
Inc. Member of the Board of Directors of Fundacion Ana G. Mendez and of Puerto
Rico
9
<PAGE> 11
Community Foundation. Member of the Board of Directors of the Puerto Rico
Convention Bureau from 1993 through October 1998. Secretary of the Board of
Directors of the Bankers Club since 1998.
ROBERTO R. HERENCIA: (40 years), Executive Vice President of the
Corporation. Executive Officer of the Corporation since 1997. Head of the
Corporation's U.S. business expansion. Executive Vice President of the Bank
since January 1997. Director of Popular International Bank, Inc., Popular North
America, Inc., Popular Cash Express, Inc. and Equity One, Inc. Director and
Chief Operations Officer of Banco Popular North America. Senior Vice President
from December 1991 to December 1996.
LARRY B. KESLER: (62 years), Executive Vice President of the
Corporation. Executive Officer of the Corporation since 1990. Supervisor of the
Individual Credit Group and the Virgin Islands Region. Executive Vice President
of the Bank since January 1990. Chairman of the Board of Directors of Equity
One, Inc., Popular Leasing & Rental, Inc. and Popular Mortgage, Inc. Executive
Vice President of Popular International Bank, Inc. and Popular North America,
Inc. Director of Popular Finance, Inc.
HUMBERTO MARTIN: (54 years), Executive Vice President of the
Corporation. Executive Officer of the Corporation since 1986. Supervisor of
the Operations Group. Director of ATH Dominicana, S.A. Executive Vice President
of the Bank since November 1986. Executive Vice President of Popular
International Bank, Inc. and Popular North America, Inc. Director of GM Group,
Inc.
EMILIO E. PINERO: (51 years), Executive Vice President of the
Corporation. Executive Officer of the Corporation since 1990. Supervisor of the
Commercial Banking Group. Executive Vice President of the Bank since January
1990. Director of Popular Mortgage, Inc. and Popular Leasing & Rental, Inc.
Executive Vice President of Popular International Bank, Inc. and Popular North
America, Inc. Member of the Board of Trustees of American Red Cross, Fundacion
Luis Muaeoz Marin, Fundacion del Colegio de CPA de Puerto Rico and Jane Stern
Community Library Foundation.
CARLOS ROM JR.: (43 years), Executive Vice President of the
Corporation. Executive Officer of the Corporation since 1997. Head of the
Corporation's Caribbean and Latin America business expansion. Executive Vice
President of the Bank since January 1997. Executive Vice President of Popular
International Bank, Inc. Director of ATH Dominicana, S.A. and of Banco
Fiduciario, S.A. Vice President of the Board of Directors of ATH Costa Rica,
S.A. Senior Vice President from September 1995 to December 1996. Director of
Marchand-ICS Group, Inc. Vice President and General Manager of Pizza Hut, a
division of Pepsi Co., Inc. from July 1994 to September 1995.
CARLOS J. VAZQUEZ: (41 years), Executive Vice President of the
Corporation. Executive Officer of the Corporation since 1997. Supervisor of the
Corporation's Risk Management Group. Executive Vice President of the Bank since
March 1997. Director of Popular Securities, Inc. Vice President of J.P. Morgan &
Co. Incorporated, Morgan Guaranty Trust Co. of N.Y., J.P. Morgan Securities Ltd.
and J.P. Morgan Securities, Inc. from 1982 to 1997. President of J.P. Morgan
Venezuela, S.A. from 1995 to 1997.
SAMUEL T. CESPEDES: (63 years), Secretary of the Board of Directors.
Attorney-at-Law. Proprietary partner of the law firm McConnell Valdes. Secretary
of the Board of Directors of the Corporation and the Bank since 1991. Secretary
of the Board of Directors of Popular North America, Inc., Equity One, Inc.,
Popular Leasing & Rental, Inc. and Popular Finance, Inc.
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.
OTHER RELATIONSHIPS, TRANSACTIONS AND EVENTS
During 1999 the Bank engaged the legal services of the law firm 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 McConnell Valdes did not exceed 5% of the law firm's revenues for its last
full fiscal year.
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 people and subject to the
provisions of the Banking Act of the Commonwealth of
10
<PAGE> 12
Puerto Rico and the applicable federal laws and regulations. The extensions of
credit have not involved and do not currently 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 six non-employee directors of the Bank. The
Committee endeavors to keep abreast of competitive compensation practices with
regard to salaries, incentive compensation and supplemental programs in order to
assist the Corporation in attracting and retaining the most qualified executive
officers whose contributions and experience help the Corporation sustain growth,
thereby enhancing shareholders value.
The Human Resources Committee evaluates and recommends to the Board the
Corporation's compensation policy for the Chairman of the Board, President and
CEO and the Executive Officers. The Human Resources Committee considers, among
other factors, competitive pay practices for developing a stronger relationship
between executive compensation and the Bank's long-term performance. It is kept
apprised of such competitive pay practices by an independent consultant who
conducts a periodic 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 comparative purposes is reviewed in light of industry developments, and
significant mergers/acquisitions, in order to ensure that it remains consistent
with the Corporation's size and focus. The Peer Group currently consists of ten
regional banking organizations with a retail banking emphasis.
The executive compensation program for principal officers of the
Corporation's subsidiaries is set according to the industry and geographical
area in which each operates and is approved by the Board of Directors of each
respective subsidiary.
CHAIRMAN OF THE BOARD, PRESIDENT AND CEO, MR. RICHARD L. CARRION
On an annual basis, Mr. Carrion submits to the Corporation's Executive
Committee a plan setting forth both quantitative and qualitative goals for the
fiscal year, and objectives for the medium and long-term. In evaluating and
setting compensation the Human Resources Committee considers the Corporation's
performance with respect to the goals set forth in the plan. Therefore, the
Executive Committee evaluates Mr. Carrion's performance by taking into
consideration the growth of the organization, implementation of a
diversification strategy, achievement of financial goals, improvements to the
product and service delivery system and development of human resources. The
weight and significance accorded to these factors is subjective in nature.
Mr. Carrion participates in an annual incentive program designed to
encourage the achievement of short-term financial goals and to increase
shareholder value. The first incentive component could represent 15% of base
salary, if the net income target is met, and if the net income 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 pre-established net income target. The
second component, which is based on return on equity (ROE) and is designed to
encourage an increase in shareholder value, could range from 5% to 30% of base
salary, depending on the ROE obtained. Additionally, the bonus award may be
increased by 25% when shareholder return exceeds 20% annually for 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 or dividend reinvestment. This third and last bonus component
recognizes consistent improvement in shareholder value. The maximum total
incentive bonus that may be awarded could be 68.75% of base salary if all
components of the bonus program are achieved.
For 1999, this incentive bonus was 37.26% of Mr. Carrion's base salary.
The first objective of net income after tax was 100% of target net income. The
ROE obtained was 15.45% thereby exceeding the required minimum of 15%. Total
shareholder
11
<PAGE> 13
return, which was to exceed 20% annually for a consecutive three-year period,
was 20.27% for the three-year period ended December 31, 1999. Mr. Carrion
recommended to the Committee that it consider the bonus on a future date. This
was accepted by all the members of the Committee.
EXECUTIVE OFFICERS
The group of Executive Officers is composed of two Senior Executive
Vice Presidents of the Corporation and seven Executive Vice Presidents of the
Corporation (the "Executive Officers") all of whom participate in the Profit
Sharing, Annual Incentive and Long-Term Incentive Plans of the Bank. The
President and CEO sets the salary increases and the bonuses to be awarded to the
Executive Officers pursuant to the incentive plans.
The salary increase program allows discretionary salary increases based
on individual performance to be twice the increases of the Executive Officers as
a group. It provides the CEO the opportunity to recognize changes in individual
responsibilities and performance levels.
Each Executive Officer participates in the Annual Incentive Plan. In
1999, a bonus of 37.26% of base salary was awarded to each Executive Officer.
This bonus was based on the fact that the Corporation's net income after tax was
100% of target net income, ROE obtained was 15.45%, exceeding the required
minimum of 15%, and total shareholder return which was to exceed 20% annually
for a consecutive three-year period, was 20.27% for the three-year period ended
December 31, 1999.
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid by the
Corporation or its subsidiaries to the ten highest paid Executive Officers of
the Corporation and the two most highly compensated principal officers of the
Corporation's subsidiaries for 1999.
HUMAN RESOURCES AND COMPENSATION COMMITTEE
Juan A. Albors Hector R. Gonzalez
Salustiano Alvarez Mendez Alberto M. Paracchini
Francisco J. Carreras Francisco M Rexach Jr.
12
<PAGE> 14
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
FISCAL ANNUAL COMPENSATION ALL OTHER ANNUAL INCENTIVE PLAN
NAME AND PARTICIPANT POSITION YEAR SALARY(A) BONUS(B) COMPENSATION(C) PAYOUTS(D) TOTAL
- ----------------------------- ---- --------- -------- ---------------- -------------- -----
<S> <C> <C> <C> <C> <C> <C>
Richard L. Carrion 1999 $540,000 $72,164 $ 53,327 -0- $ 665,491
Chairman, 1998 526,667 262,552 46,134 $470,142 1,305,495
President and CEO 1997 500,000 275,942 62,181 91,195 929,318
David H. Chafey Jr. 1999 412,920 209,480 41,638 -0- 664,038
Senior Executive Vice President 1998 393,000 194,560 35,356 281,995 904,911
of the Corporation 1997 350,000 197,909 44,401 63,240 655,550
Jorge A. Junquera 1999 401,760 203,866 40,752 -0- 646,378
Senior Executive Vice President 1998 384,000 189,479 34,722 281,995 890,196
of the Corporation 1997 350,000 197,954 44,401 64,646 657,001
Carlos J. Vazquez 1999 309,742 157,075 31,418 N/A 498,235
Executive Vice President 1998 293,645 140,254 21,017 N/A 454,916
of the Corporation 1997 207,308 179,286 1,770 N/A 388,364
Larry B. Kesler 1999 271,317 137,646 27,521 -0- 436,484
Executive Vice President 1998 258,952 127,899 23,415 196,911 607,177
of the Corporation 1997 235,648 132,537 29,895 51,488 449,568
Maria Isabel P. de Burckhart 1999 255,954 129,860 25,963 -0- 411,777
Executive Vice President 1998 244,288 120,664 22,089 190,731 577,772
of the Corporation 1997 223,187 125,109 28,314 50,349 426,959
Humberto Martin 1999 255,409 129,554 25,907 -0- 410,870
Executive Vice President 1998 244,633 120,448 22,120 188,811 576,012
of the Corporation 1997 225,978 127,075 28,668 48,462 430,183
Roberto R. Herencia 1999 238,411 120,894 23,476 -0- 382,781
Executive Vice President 1998 226,600 112,292 19,824 N/A 358,716
of the Corporation 1997 201,667 112,248 25,584 N/A 339,499
Emilio E. Pinero 1999 235,275 119,449 23,865 -0- 378,589
Executive Vice President 1998 224,552 110,996 20,305 178,512 534,365
of the Corporation 1997 205,720 115,125 25,927 47,576 394,348
Carlos Rom Jr. 1999 210,077 106,546 21,309 -0- 337,932
Executive Vice President 1998 201,083 99,045 18,183 N/A 318,311
of the Corporation 1997 184,500 104,400 23,406 N/A 312,306
Kenneth McGrath 1999 180,000 224,200 75,000 N/A 479,200
President of Popular Securities, Inc. 1998 175,000 165,200 59,000 N/A 399,200
(a wholly-owned subsidiary 1997 170,833 194,410 39,750 N/A 404,993
of the Corporation)
Cameron E. Williams(e) 1999 250,000 150,000 62,000 N/A 462,000
President of Equity One, Inc.
(a wholly-owned subsidiary
of Popular North America, Inc.)
</TABLE>
- --------------------------------
(a) Salaries before deductions.
(b) The bonus amount for the Bank's Executive Officers includes a Christmas
bonus, the bonus awarded under the Annual Management Incentive
Compensation Plan, and the cash portion payable under the Profit
Sharing Plan of the Bank. For Mr. Vazquez the 1997 bonus does not
include a Profit Sharing bonus but rather a special bonus of $49,000
13
<PAGE> 15
paid with the Corporation's common stock purchased in the open market.
For Mr. McGrath, the amount includes Christmas and performance bonus.
For Mr. Williams, the amount includes the annual performance bonus.
(c) For the Bank's Executive Officers, except for Mr. Vazquez in 1997, the
amount 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 15 through 17. In the case of Mr. Vazquez, the amount for 1997
only includes the Bank's matching contribution to Stock Plan. For Mr.
McGrath, amount includes matching contribution to an 1165(e) plan and a
deferred portion of the performance bonus. For Mr. Williams, amount
represents the contribution of Equity One, Inc. pursuant to Section
401(k) matching and deferred compensation under Supplementary Executive
Retirement Plan. 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.
d) For the 1997-1999 Long-Term Incentive Plan, the performance of Popular,
Inc.'s stock during the three-year period did not equal or exceed the
three-year combined performance of the S&P 500 Index and the S&P
Financials Index. In addition, the three-year average ROE target was
not achieved, nor was the Peer Group three-year average median ROE
exceeded. Also, Popular, Inc.'s average ROE did not represent an
improvement over the base year ROE compared to the Peer Group's median
ROE. Therefore, none of the shares assigned at the beginning of the
plan were awarded.
e) Information presented for 1999, 1998 and 1997, except for Mr. Cameron
E. Williams who was appointed President of Equity One, Inc. in 1999. No
disclosure is required with respect to this officer.
LONG-TERM INCENTIVE PLAN
Since 1994, the Executive Officers participate in a Long-Term Incentive
Plan, the goal of which is to encourage long-term corporate performance and
objectives. This Plan divided the incentive payment as follows: 75% based on the
attainment of a preestablished three-year average 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 ROE for the
Corporation does not equal or exceed the Peer three-year average median ROE, the
Human Resources Committee, at its own discretion, may recommend the distribution
of 25% of the targeted bonus if the average results attained for the Plan year
represent an improvement of no less than 25% over the base year. The incentive
percentage is established depending on the participant's base salary at the
beginning of the three-year period. The resulting dollar amount is divided by
the average closing price of the Corporation's common stock.
On April 27, 1999, the Board approved an amendment to the Long-Term
Incentive Plan changing the calculation of the amount of the incentive awarded.
Thereafter, the incentive will be determined based on the market performance of
the Corporation's common stock as compared to the combined performance of the
S&P 500 Index and the S&P Financials Index during the three-year period of the
plan. Beginning in 2000 the S&P Banks Index will be also included in the
calculation of the Long-Term Incentive Plan. The range to determine the
percentage of base salaries is as follows:
<TABLE>
<CAPTION>
Range
-----
Score Incentive
----- ---------
<S> <C>
<100% 0%
100-109 15%
110-119 25%
120-129 50%
130-139 75%
140-149 100%
150 and over 110%
</TABLE>
The score represents the relationship of the performance of the
Corporation's common stock during the three-year period, compared with the
average appreciation of the S&P 500 Index and the S&P Financials Index. If the
Corporation's target is met or exceeded, the share payments corresponding to the
Corporation's and Peer Group's goals are increased up to 110% of the base salary
of the participant at the end of the Plan year.
The three-year period for the 1997-1999 and 1998-2000 Long-Term
Incentive Plans had not concluded when the amendment became effective. A
transition rule was approved for these plans to allow a proportional calculation
based on the method used at the inception of each plan and the new method.
14
<PAGE> 16
For both Plans the incentive payment shall be made in common stock of
the Corporation. All common stock to be awarded under this program is purchased
in the open market. The incentive payment could be deferred, at the option of
the participant, until his (her) retirement or it could be paid in common stock
of the Corporation. If the payment is made in common stock of the Corporation a
portion equal to the estimated tax due may be paid in cash.
The estimated maximum shares that could be awarded to the Executive
Officers under the 1999-2001 Long-Term Incentive Plan are set forth below:
LONG-TERM INCENTIVE AWARDS
<TABLE>
<CAPTION>
ESTIMATED
NUMBER PERFORMANCE
OF PERIOD
NAME SHARES (A) UNTIL PAYOUT
---- ---------- ------------
<S> <C> <C>
Richard L. Carrion 22,603.22 1/1/99-12/31/01
David H. Chafey Jr. 17,395.44 1/1/99-12/31/01
Jorge A. Junquera 16,925.29 1/1/99-12/31/01
Carlos J. Vazquez 13,048.76 1/1/99-12/31/01
Larry B. Kesler 11,430.03 1/1/99-12/31/01
Maria Isabel P. de Burckhart 10,782.78 1/1/99-12/31/01
Humberto Martin 10,759.84 1/1/99-12/31/01
Roberto R. Herencia 10,043.74 1/1/99-12/31/01
Emilio E. Pinero 9,911.60 1/1/99-12/31/01
Carlos Rom Jr. 8,850.08 1/1/99-12/31/01
</TABLE>
(a) The estimated maximum number of shares was calculated based on the
base salary of the participant at January 31, 2000 and the average closing price
of the Corporation's common stock from November 1, 1999 to February 29, 2000.
For the 1997-1999 Long-Term Incentive Plan, the performance of Popular,
Inc.'s stock during the three-year period did not equal or exceeded the
three-year combined performance of the S&P 500 Index and the S&P Financials
Index. In addition, the three-year average ROE target was not achieved, nor was
the Peer Group three-year average median ROE exceeded. Also, Popular, Inc.'s
average ROE did not represent an improvement over the base year ROE compared to
the Peer Group's median ROE. Therefore, the total shares assigned at the
beginning of the plan were not awarded.
OTHER INCENTIVE COMPENSATION PLANS OF THE BANK
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 Corporation or Bank's performance, measured by net
income and ROE. The weight assigned to the Corporation or the Bank's performance
objectives varies according to management level, but the individual performance
is a criterion for 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 nonrecurring 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 employees' productivity in specific areas.
PROFIT SHARING PLAN OF THE BANK
All officers and regular monthly salaried employees of the Bank are
active participants in the Bank's Profit Sharing Plan, as of the first day of
the calendar month following the completion of one year of service.
15
<PAGE> 17
Under this plan, the Board of Directors determines the Bank's annual
contribution based on the profits of the Bank for the year. The amount allocated
to each officer or employee is based on his or her earned salary for the year.
The total amount contributed for the year 1999 was $23,840,757. Of the total
awarded 40% is contributed to the Profit Sharing Plan, 10% to the Stock Plan and
the remainder (50%) is paid in cash. However, since 1998 each officer and
employee may elect to increase his (her) contribution to the Stock Plan up to
15%; as a result of this election 38% was contributed to the Profit Sharing Plan
and 12% to the Stock Plan.
BENEFIT RESTORATION PLAN OF THE BANK
The Internal Revenue Service (IRS) set a limit of $160,000 as the
amount of compensation that may be considered in calculating future retirement
payments from qualified pension plans. This limit applies to the Bank's
Retirement Plan, Profit Sharing and Stock Plan.
The Board of Directors has approved a "Benefit Restoration Plan" for
those officers whose annual compensation is higher than the established limit.
This non-qualified plan will provide those benefits that cannot be accrued under
the Bank's Retirement 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 noncontributory, defined benefit Retirement Plan
covering substantially all regular monthly employees. Monthly salaried employees
are eligible to participate in the Plan following the completion of one year of
service and 21 years of age. 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. 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 retirement benefit of 40% of total compensation. Benefits are
reduced only if the employee retires before age 55. 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 shown in this table are not necessarily representative of amounts
that may actually become payable under the plans. The amounts represent the
benefits upon retirement on December 31, 1999, of a participant at age 65.
16
<PAGE> 18
<TABLE>
<CAPTION>
TOTAL
COMPENSATION ESTIMATED ANNUAL BENEFITS / YEARS OF SERVICE
15 20 25 30 35
-- -- -- -- --
<S> <C> <C> <C> <C> <C>
$1,400,000 $256,000 $ 357,000 $ 459,000 $ 560,000 $560,000
1,300,000 237,000 332,000 426,000 520,000 520,000
1,200,000 219,000 306,000 393,000 480,000 480,000
1,100,000 201,000 281,000 360,000 440,000 440,000
1,000,000 183,000 255,000 328,000 400,000 400,000
900,000 164,000 230,000 295,000 360,000 360,000
800,000 146,000 204,000 262,000 320,000 320,000
700,000 128,000 179,000 229,000 280,000 280,000
600,000 110,000 153,000 197,000 240,000 240,000
500,000 91,000 128,000 164,000 200,000 200,000
400,000 73,000 102,000 131,000 160,000 160,000
300,000 55,000 77,000 98,000 120,000 120,000
</TABLE>
The 1999 total compensation and estimated years of service at age 65
for the ten highest paid key policy-making Executive Officers of the Corporation
are as follows.
<TABLE>
<CAPTION>
ESTIMATED
1999 YEARS OF
TOTAL SERVICE
COMPENSATION AT AGE 65
------------ ---------
<S> <C> <C>
Richard L. Carrion $ 665,000 41.6
David H. Chafey Jr. 664,000 39.8
Jorge A. Junquera 646,000 41.5
Carlos J. Vazquez 498,000 26.4
Larry B. Kesler 436,000 16.5
Maria Isabel P. de Burckhart 412,000 33.7
Humberto Martin 411,000 40.1
Roberto R. Herencia 383,000 31.7
Emilio E. Pinero 379,000 43.2
Carlos Rom Jr. 338,000 35.2
</TABLE>
STOCK PLAN OF THE BANK
The Bank has adopted two Stock Plans, one covering employees of the
Bank in Puerto Rico and another covering employees of the Bank in the British
and U.S. Virgin Islands. All regular monthly salaried employees of the Bank are
eligible to participate in the Stock Plans following the completion of
three-months of service (30 days of service for British and U.S. Virgin Islands'
employees).
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. 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 participant contribution of two percent (2%) (six
percent (6%) for the British and U.S. Virgin Islands' employees) of the
participant's annual base salary.
STOCK PLAN OF BANCO POPULAR NORTH AMERICA
Banco Popular North America has adopted a defined contribution plan
("401(k) Plan") covering all employees. All regular monthly salaried employees
are eligible to participate in the 401(k) Plan following the completion of 30
days of service.
17
<PAGE> 19
The 401(k) Plan also allows employees to voluntarily elect to defer a
predetermined percentage not to exceed 10% of their pre-tax base compensation up
to a maximum amount as determined by the applicable tax laws. Banco Popular
North America will match 50% (100% if the participant elect to invest his (her)
contribution in the Corporation's common stock) of the amount contributed by a
participant up a maximum of six percent (6%) of the participant's annual base
salary.
DEFERRED COMPENSATION PLAN OF POPULAR SECURITIES, INC.
Popular Securities, Inc. maintains a non-qualified deferred
compensation plan under which a selected group of highly compensated employees
of Popular Securities, Inc. are required to defer a portion of their incentive
performance bonus. The amount deferred and interest credits are paid to
participants as follows: (a) 50% on or before January 31 of the second fiscal
year following the fiscal year for which such amounts were contributed and (b)
50% on or before January 31 of the third fiscal year following the fiscal year
for which such amounts were contributed.
On October 22, 1999, Popular Securities, Inc. created a "Rabbi Trust"
(the "Trust") to invest the amounts deferred under the non-qualified deferred
compensation plan, if so elected by the participant. The Trust assets are
subject to the claims of Popular Securities, Inc.'s creditors in the event of
Popular Securities, Inc.'s insolvency until paid to non-qualified deferred
compensation plan participants at such times as specified above. The principal
balance held by the Trust and any realized and unrealized appreciation are
exclusively for the benefit of the non-qualified deferred compensation plan's
participants. The earnings on the principal of the Trust are for the exclusive
benefit of Popular Securities, Inc.
EMPLOYEE BENEFIT PLAN OF POPULAR SECURITIES, INC.
Popular Securities, Inc. maintains a contributory savings plan
(1165(e)) which is available to employees with more than one year of service.
Popular Securities, Inc.'s contributions include a matching contribution and an
additional profit sharing contribution. Employees are fully vested on these
contributions after five years of service.
DEFERRED COMPENSATION PLAN OF EQUITY ONE, INC.
Equity One, Inc. adopted a deferred compensation plan designed to
provide a post retirement benefit to several key executives. Equity One, Inc.
purchases flexible, variable life insurance policies for each participant and
names itself as beneficiary. The cash surrender values of the policies are
expected to pay benefits to the participants upon their retirement. Should the
participant terminate their employment prior to retirement, they are entitled to
their vested portion of their account.
EMPLOYEE BENEFIT PLAN OF EQUITY ONE, INC.
Equity One, Inc. sponsors a defined contribution plan (401(k)) covering
all eligible employees. Contributions to this plan are in the form of employee
salary deferrals which are subject to an employer matching contribution up to a
specified limit at the discretion of Equity One, Inc.
18
<PAGE> 20
POPULAR, INC.
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return during
the measurement period with the cumulative total return, assuming reinvestment
of dividends, of the National Association of Securities Dealers Automated
Quotation System (NASDAQ) Stock Market Index and the NASDAQ 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, 1994 plus (ii) the change in the per
share price since the measurement date, by the share price at the measurement
date.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
TOTAL RETURN AS OF DECEMBER 31
(DECEMBER 31, 1994=100)
[GRAPH]
<TABLE>
<CAPTION>
COMPANY/INDEX BASE
PERIOD 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
<S> <C> <C> <C> <C> <C> <C> <C>
POPULAR, INC. 7.03125 100.00 137.78 240.00 352.00 483.56 397.33
NASDAQ BANKS COMPOSITE 240.176 100.00 149.00 196.73 329.39 327.11 314.42
NASDAQ STOCK MARKET 244.532 100.00 141.33 173.89 213.07 300.25 542.43
</TABLE>
19
<PAGE> 21
INDEPENDENT PUBLIC ACCOUNTANTS
The Board intends to retain the services of PricewaterhouseCoopers LLP
as the independent auditors of the Corporation for the year 2000.
PricewaterhouseCoopers LLP (former Price Waterhouse) served as independent
auditors of the Bank since 1971 and of the Corporation since May 1991, when it
was appointed by the Board.
Representatives of PricewaterhouseCoopers LLP will attend the Meeting
and will be available to answer any appropriate questions that may arise; they
will also have the opportunity to make a statement if they so desire.
PROPOSALS OF SECURITY HOLDERS TO BE PRESENTED AT THE 2001
ANNUAL MEETING OF STOCKHOLDERS
Stockholders' proposals intended to be presented at the 2001 Annual
Meeting of Stockholders must be received by the Corporation's Secretary, at its
principal executive offices, Popular Center Building, San Juan, Puerto Rico,
00918, not later than November 24, 2000 for inclusion in the Corporation's
Proxy Statement and Form of Proxy relating to the 2001 Annual Meeting of
Stockholders.
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 the Proxyholders 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 or vote by
telephone or by Internet.
San Juan, Puerto Rico, March 15, 2000
RICHARD L. CARRION SAMUEL T. CESPEDES
Chairman of the Board, President Secretary
and Chief Executive Officer
YOU MAY REQUEST A COPY OF THE REPORT ON FORM 10K FILED WITH THE SEC BY CALLING
(787) 765-9800 OR WRITING TO AMILCAR JORDAN, SENIOR VICE PRESIDENT, BANCO
POPULAR DE PUERTO RICO, P.O. BOX 362708, SAN JUAN, PR 00936-2708.
20
<PAGE> 22
[POPULAR, INC. LOGO]
c/o BANCO POPULAR de PUERTO RICO
TRUST DIVISION
PO BOX 362708
SAN JUAN, PR 00936-2708
IF YOU WISH TO VOTE BY TELEPHONE, INTERNET OR MAIL,
PLEASE READ THE INSTRUCTIONS BELOW.
Popular, Inc. encourages you to take advantage of new and convenient ways to
vote your shares for matters to be covered at the 2000 Annual Meeting of
Stockholders. Please take the opportunity to use one of the three voting
methods outlined below to cast your ballot.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand
when you call. You will be prompted to enter your 12-digit Control Number,
which is located above, and then follow the simple instructions the Vote Voice
provides you.
VOTE BY INTERNET WWW.PROXYVOTE.COM
Use the Internet to vote your proxy. Have your proxy card in hand when you
access the web site. You will be prompted to enter your 12-digit Control
Number, which is located above, to obtain your records and create an electronic
ballot.
VOTE BY MAIL
Please mark, sign, date and return this card promptly using the enclosed
postage pre-paid envelope to: BANCO POPULAR de PUERTO RICO, TRUST DIVISION,
PO BOX 362708, SAN JUAN, PUERTO RICO 00936-2708. No postage is required if
mailed in the United States, Puerto Rico or the U.S. Virgin Islands.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
[POPULAR, INC. LOGO] PROXY
The Board recommends a vote for the nominees listed below:
ELECTION OF DIRECTORS -- NOMINEES:
1) JUAN J. BERMUDEZ, 2) RICHARD L. CARRION,
3) JORGE A. JUNQUERA, 4) FRANCISCO M. REXACH JR.
FOR ALL WITHHOLD ALL FOR ALL EXCEPT
[ ] [ ] [ ]
To withhold authority to vote, mark "For All Except" and write the nominee's
number on the line below.
________________________________________________________________________________
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Richard L. Carrion, Jorge A. Junquera and David
H. Chafey Jr. or any one or more of them as Proxies, each with the power to
appoint his substitute, and authorizes them to represent and to vote as
designated above all the shares of common stock of Popular, Inc. held of record
by the undersigned on March 6, 2000, at the Annual Meeting of Shareholders to be
held at the Centro Europa Building, 1492 Ponce de Leon Avenue, 3rd Floor, San
Juan, Puerto Rico, on April 25, 2000, at 10:30 a.m. or at any adjournments
thereof. The Proxies are further authorized to vote such shares upon any other
business that may properly come before the meeting or any adjournments thereof.
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" THE ELECTION OF ALL THE NOMINEES LISTED ABOVE.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
PLEASE SIGN AS YOUR NAME APPEARS ON THIS FORM. IF SHARES ARE HELD JOINTLY,
ALL OWNERS SHOULD SIGN.
(VEA AL DORSO TEXTO EN ESPANOL)
_________________________________________ _______________________________
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
