<PAGE>
- -----------------------------------------------------------------
PAYCO AMERICAN CORPORATION
THE RECEIVABLE MANAGEMENT COMPANY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 2, 1995
The Annual Meeting of the Shareholders of Payco American Corporation
will be held on Tuesday, May 2, 1995, at 3:00 p.m. at 180 North Executive
Drive, Brookfield, Wisconsin 53005, for the following purposes:
1. To elect four directors to serve for the terms as described in the
attached Proxy Statement.
2. To consider and act upon the ratification of the selection of Arthur
Andersen LLP, certified public accountants, as auditors for the
Company for the fiscal year ending December 31, 1995.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on March 10, 1995,
are entitled to notice of and to vote at the meeting or any adjournment or
adjournments thereof.
By Order of the Board of Directors
SUSAN MATHISON, Secretary
Brookfield, Wisconsin
March 31, 1995
IF YOU CANNOT ATTEND THIS MEETING,
PLEASE SIGN AND RETURN THE ENCLOSED
PROXY IN THE ENVELOPE PROVIDED.
- -----------------------------------------------------------------------------
<PAGE>
- ----------------------------------------------------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 2,1995
This Proxy Statement is furnished in connection with a solicitation
of proxies made by and on behalf of the Board of Directors of Payco
American Corporation, a Wisconsin corporation (the "Company") to be used at
the annual meeting of the shareholders to be held at its headquarters located
at 180 North Executive Drive, Brookfield, Wisconsin 53005 (Tel. No. 414/784-
9035), on Tuesday, May 2, 1995, at 3:00 P.M. for the purposes set forth in
the accompanying notice of said meeting. The solicitation is made to
shareholders of the Company as of March 10, 1995, the record date for the
meeting, primarily by this statement with its enclosures which is first being
mailed to shareholders on approximately March 31, 1995. If it is necessary to
assure adequate attendance at said meeting, the Board of Directors shall, if
it deems advisable, make a further solicitation by mail, telephone, telegraph
and/or personal interview for proxies. Such solicitation will be made by
the officers of the Company as part of their regular corporate duties,
without additional compensation, and will be limited in extent. The total
expense will be borne by the Company.
Shareholders are asked to fill in, sign and return the enclosed proxy.
The proxy may be revoked at any time before it is voted, provided, that the
Secretary of the Company receives written notice of such revocation or such
revocation is made in open meeting prior to the time the proxy is voted.
As of March 10, 1995, the record date for the meeting, 10,133,478 shares
of the common stock of the Company were outstanding. A Schedule 13G showing
beneficial ownership at December 31, 1994 of 1,259,100 shares of the Company's
common stock or approximately 12.4% of the outstanding shares as of such date,
has been filed with the Securities and Exchange Commission by J.P. Morgan &
Co. This Schedule 13G discloses that J.P. Morgan & Co., has sole voting power
with respect to 1,003,800 shares and sole dispositive power with respect to
1,259,100 shares, and further discloses that such shares are held for the
benefit of accounts, virtually all of which involve outside persons who have
the right to receive or direct the receipt of dividends from or the proceeds
from the sale of, the Company's common stock in such accounts, but that no
such persons' rights relate to more than 5% of the class.
A Schedule 13G showing beneficial ownership, including sole voting and
sole dispositive power, at December 31, 1994, of 957,000 shares of the Compan-
y's common stock or approximately 9.4% of the outstanding shares as of such
date, has been filed with the Securities and Exchange Commission by
the State of Wisconsin Investment Board.
A Schedule 13G showing beneficial ownership at December 31, 1994, of
685,500 shares of the Company's common stock or approximately 6.8% of the
outstanding shares has been filed with the Securities and Exchange Commission
by T. Rowe Price Associates, Inc. This Schedule 13G discloses that these
securities are owned by various individual and institutional investors which
<PAGE>
T. Rowe Price Associates, Inc. serves as investment adviser and that T. Rowe
Price Associates, Inc. has neither sole nor shared voting power as to any of
the shares and sole dispositive power as to all of the 685,500 shares. In
such Schedule 13G, T. Rowe Price Associates, Inc. declares that such filing
shall not be construed as an admission that it is the beneficial owner of such
securities and expressly denies that it is the beneficial owner thereof.
The only other person known to the Company to beneficially own as much as
5% of the Company's issued and outstanding shares is Dennis G. Punches, the
Company's Chairman of the Board who beneficially owned 1,617,280 shares as of
December 31, 1994 or 16.0% of the outstanding shares.
ELECTION OF DIRECTORS
The Board of Directors is presently comprised of twelve director
positions divided into three classes, each of which serve for staggered three
year terms. The terms of four current directors, James R. Bohmann, William
A.Inglehart, Dennis G. Punches and Dennis Shea, expire at the upcoming annual
meeting and these four directors are being nominated by the Board of Directors
for re-election for three year terms expiring at the annual meeting in 1998.
All of these nominees were elected as directors by the shareholders at a prior
annual meeting of the shareholders.
While it reserves the right to do so in its discretion, the Board of
Directors has no plans to exercise its authority to further increase its
number and to fill the vacancies thus created. In no event, may the persons
named in the enclosed proxy vote the proxy for more than four members of the
Board.
NOMINEES FOR ELECTION
- ---------------------
The persons named in the accompanying proxy intend to vote for the
election of the nominees named below as directors of the Company, namely,
James R. Bohmann, William A. Inglehart, Dennis G. Punches and Dennis Shea.
All are current directors of the Company whose terms expire at this annual
meeting. All four of the nominees have indicated they are willing and able to
serve as directors if elected. In the event a nominee withdraws his name,
which is not anticipated, the persons named as proxies reserve full discretion
to vote for such other person or persons as may be nominated. The following
table provides information regarding the nominees for election as directors
and the table immediately thereafter provides the same information as to the
incumbent directors whose terms of office continue beyond the 1995 annual
meeting.
<PAGE>
<TABLE>
<CAPTION>
NOMINEES FOR NEW TERMS AS DIRECTORS
Class I - To serve until the Annual Meeting of Shareholders in
1998 and until their successors are elected.
PRINCIPAL NOMINEE HAS SERVED
NAME OCCUPATION AGE AS DIRECTOR SINCE
- ---- ---------- --- ------------------
<S> <C> <C> <C>
James R. Bohmann Senior Vice 48 May, 1991
President -
Corporate
Development and
Treasurer of the
Company
William A. Inglehart Advisor to 63 October, 1988
the Company
Dennis G. Punches(1) Chairman of the 59 August, 1969
Board of the
Company
Dennis Shea Managing 56 January, 1992
Associate
Auriemma
Consulting Group
<FN>
_______
(1) Mr. Punches also serves as director of Analysis & Technology, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DIRECTORS WHOSE TERMS CONTINUE
BEYOND THE ANNUAL MEETING
Class III - To serve until the Annual Meeting of Shareholders in 1996 and
until their successors are elected.
PRINCIPAL NOMINEE HAS SERVED
NAME OCCUPATION AGE AS DIRECTOR SINCE
- ---- ---------- --- ------------------
<S> <C> <C> <C>
Patrick E. Carroll Senior Vice 52 May, 1991
President of
Sales of the
Company
Raymond J. Larkin(1) Consultant 68 June, 1992
Richard G. Miles Retired 72 May, 1988
Neal R. Sparby President and 58 May, 1979
Chief Executive
Officer of the
Company
</TABLE>
<TABLE>
<CAPTION>
Class II - To serve until the Annual Meeting of Shareholders in 1997 and until
their successors are elected.
PRINCIPAL NOMINEE HAS SERVED
NAME OCCUPATION AGE AS DIRECTOR SINCE
- ---- ---------- --- ------------------
<S> <C> <C> <C>
Bo S. Goranson Chairman-Intrum 57 May, 1994
Justitia NV
William W. Kagel Senior Vice 58 August, 1969
President-
Production of
the Company
Alvin W. Keeley Senior Vice 57 May, 1979
President-
Marketing
of the Company
David S. Patterson Executive Vice 54 May, 1991
President and
Chief Operating
Officer of the
Company
<FN>
_______
(1) Mr. Larkin also serves as director of CytoRad Corporation.
</TABLE>
<PAGE>
Mr. Bohmann has been an employee of the Company for more than the past
five years. He has served as Senior Vice President-Corporate Development
since January 1, 1993 with responsibility for internal development of new
services as well as acquisitions. He served as Senior Vice President -Finance
and Treasurer from May, 1991 through December, 1992, Vice President-Finance
and Treasurer from May 1988 to May 1991 and as Controller for more than five
years prior thereto. Mr. Bohmann continues to serve as Treasurer of the
Company.
Mr. Inglehart served as President and Chief Executive Officer of the
Company from January 8, 1990 until his resignation as an executive officer of
the Company effective October 21, 1991 and as Co-Chairman of the Board from
October 25, 1988 until January 8, 1990. For more than five years prior to
joining the Company in October 1988, Mr. Inglehart was President and Chief
Operating Officer of GC Services Corp., headquartered in Houston, Texas, which
is engaged in the collection business. Mr. Inglehart remains an employee with
general administrative and advisor duties.
Mr. Punches served as President and Chief Executive Officer of the
Company since its incorporation in 1969 until January 8, 1990. He served as
Chairman of the Board from May 3, 1988 until October 25, 1988, and as Co-
Chairman of the Board from October 25, 1988 until January 8, 1990. He was
reelected to the position of Chairman of the Board on January 8, 1990 and
continues to serve in such position.
Since January 1, 1994, Mr. Shea has served as Managing Associate with
Auriemma Consulting Group, Westbury, NY, which specializes in consulting to
the credit industry. From May 1, 1993 through December 31, 1993, Mr. Shea was
employed by the Company in the capacity of a Consultant. From July, 1990 to
November, 1993, Mr. Shea was Senior Vice President & Chief Financial Officer
of Plymouth Lamston Stores Corporation in Saddlebrook, New Jersey. From
December, 1971 through June, 1990, Mr. Shea was with Federated Department
Stores, Inc. in various capacities including Senior Vice President of the
Northeast Region, Senior Vice President & Chief Financial Officer of
Bloomingdale's and Abraham & Straus, Vice President & Controller of Abraham &
Straus and Operating Vice President, Credit Operations of Abraham & Straus.
Mr. Carroll has been an employee of the Company for more than the past
five years, serving as Senior Vice President of Sales since January 1, 1993,
as Senior Vice President-Marketing from May, 1991 through December, 1992,
Vice President of Marketing from January 1989 to May 1991, and for more than
five years prior thereto as a Regional Vice President-Marketing.
Mr. Larkin is presently a consultant with American Express Co. and R. &
J. S. Larkin Consultants. From 1966 to 1991, Mr. Larkin held various senior
management positions with American Express, including Executive Vice President
of Travel Related Services Co., Senior Vice President-Operations, Senior
Vice President-U.S. Sales, Senior Vice President-U.S. Canada Card Division
and Executive Vice President-Risk Control and Quality Assurance.
Mr. Miles was a Vice President and Account Officer at First Fidelity
Bank, Newark, New Jersey from 1981 until 1988. For four years prior to 1981
he was Vice President-Credit Operations at Macy's Department Store in New
York City.
<PAGE>
Mr. Sparby has been a full-time employee of the Company for more than the
past five years serving as President and Chief Executive Officer since October
21, 1991, as Executive Vice President, Secretary and Chief Operating Officer
since January 1, 1988, as Secretary since August 1, 1987 and prior thereto as
Senior Vice President-Operations in charge of staff operations.
Mr. Goranson has served as either Chairman of the Board or Chief
Executive Officer of Intrum Justitia NV or its affiliates for more than the
past five years. Intrum Justitia NV is an accounts receivable management
company headquartered in the Netherlands which does business in Europe through
its affiliates.
Mr. Kagel has, for more than the past five years, been a full-time
employee of the Company serving as Senior Vice President-Production,
responsible for all production activities.
Mr. Keeley has, for more than the past five years, been a full-time
employee of the Company, serving as Senior Vice President-Marketing with
general marketing responsibility until December 31, 1992 and since such date
with responsibility for marketing and operations of the Company's Medicaid
billing and Student Loan billing services as well as marketing the Company's
services to the government sector.
Mr. Patterson served as an Executive and Senior Vice President of First
Bank, N.A. for more than five years prior to his resignation in January 1991.
Mr. Patterson joined the Company as a full-time employee and Senior Vice
President effective April 1, 1991, with general administrative duties, and
held such position until October 21, 1991 when he became Executive Vice
President and Chief Operating Officer.
BOARD MEETINGS AND COMMITTEES
- -----------------------------
The Directors of the Company are provided with written reports containing
detailed financial and operating information on a monthly basis and converse
frequently regarding the business and affairs of the Company. The Board of
Directors takes most required action by written consent resolution rather than
at formal meetings. The Directors had two formal meetings during the past
fiscal year. All of the Directors were present at these meetings.
The Board of Directors has established an audit committee which is
responsible for approving the services performed by the Company's independent
public accountants and reviewing and evaluating the Company's accounting
principles, reporting practices and systems of internal controls. The current
members of the committee are Messrs. Miles and Shea. The committee held two
formal meetings during the past year. All members were present at both
meetings.
The Board of Directors also has a Compensation and Stock Option
Committee. The members for 1994 were Messrs. Miles (Chairman) and Larkin.
This committee, which had two formal meetings during 1994, has the
responsibility for determining compensation of executive officers of the
Company and for administering the Company's 1988 Stock Option Plan and 1992
Stock Option Plan. Both members were present at each meeting.
The Board of Directors does not have a nominating committee.
<PAGE>
SECURITIES OWNERSHIP OF MANAGEMENT
- ----------------------------------
The following table sets forth the beneficial ownership of the Company's
common stock as of March 10, 1995 by each nominee and director, and by all
directors and officers as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME OWNED (1)(2) CLASS
- ------------ ---------------- ----------
<S> <C> <C>
James R. Bohmann 69,471(3) (4)
Patrick E. Carroll 77,890(3) (4)
Bo S. Goranson -- --
William A. Inglehart 15,624 (4)
William W. Kagel 167,239(3) 1.6%
Alvin W. Keeley 145,869(3) 1.4%
Raymond J. Larkin 600 (4)
Richard G. Miles -- --
David S. Patterson 35,583(3) (4)
Dennis G. Punches 1,616,780 16.0%
Dennis Shea 100 (4)
Neal R. Sparby 125,116(3) 1.2%
Directors and executive
officers as a group 2,343,432(3)(5) 22.4%
<FN>
____________
(1) Includes shares, if any, owned by spouse and minor children of each
director and officer. As to all material amounts of shares listed, the
indicated person possesses the sole voting and investment power unless
otherwise noted.
(2) Includes shares allocated to the account of each director and officer
in the Payco American Retirement Plan and Trust.
(3) Includes the following numbers of shares of common stock which such
individual or group has the right to acquire within 60 days of March 10, 1995
through the exercise of stock options: Mr. Bohmann - 34,225 shares;
Mr.Carroll - 49,404 shares; Mr. Kagel - 53,146 shares; Mr. Keeley - 53,146
shares; Mr. Patterson - 35,000 shares; and Mr. Sparby - 39,377 shares;
and all directors and executive officers as a group 336,277 shares. For
purposes of calculating the percentage of outstanding shares beneficially
owned by such individual or group, the shares which such individual or group
had the right to acquire within such period through the exercise of stock
options are deemed to be outstanding.
(4) Less than 1%.
(5) Does not include 88,187 shares owned by the Payco American Retirement
Plan and Trust and not allocated to the individual accounts of executive
officers or directors. If participants do not direct voting of shares
allocated to their accounts, the Trustee, who is selected by the Company, may
vote the shares as directed by the Company.
</TABLE>
<PAGE>
Mr. Punches may be deemed to be a "control" person of the
Company based on the number of shares of its common stock which he owns.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
- -------------------------------------------------
The following table sets forth the beneficial ownership of the Company's
common stock as of December 31, 1994, by those persons known to the Company to
own more than 5% of the Company's common stock. As of December 31, 1994,
there were 10,128,503 shares of the common stock of the Company outstanding.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
- ------------------ ----------------------- ----------
<S> <C> <C>
Dennis G. Punches 1,617,280 shares 16.0%
180 N. Executive Dr.
Brookfield, WI 53005
J.P. Morgan & Co. 1,259,100 shares 12.4%
60 Wall Street
New York, NY 10260
State of Wisconsin 957,000 shares 9.4%
Investment Board
P.O. Box 7842
Madison, WI 53707
T. Rowe Price Associates, Inc. 685,500 shares(1) 6.8%(1)
100 E. Pratt Street
Baltimore, MD 21202
<FN>
_______________
(1) Beneficial ownership expressly denied.
- ---------------------------------------------------------------
</TABLE>
<PAGE>
EXECUTIVE COMPENSATION
- ----------------------
The following Summary Compensation Table sets forth as to the Company's
Chief Executive Officer and four most highly compensated executive officers,
in addition to the Chief Executive Officer, all compensation awarded to,
earned by, or paid to said individuals (the "Named Executive Officers") for
all services rendered in all capacities to the Company and its subsidiaries
for 1992, 1993 and 1994, except as may otherwise be specifically noted.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation
----------------------------------- ------------
Other Stock All Other
Annual Option Comp-
Name and Principal Year Salary Bonus Compensation(1) Awards(2) sation(3)
Position ($) ($) ($) (#) ($)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Neal R. Sparby, 1994 $168,000 $78,413 - - $1,795
President and Chief 1993 168,000 87,125 - - 1,878
Executive Officer 1992 168,000 41,000 - 45,000 1,221
Dennis G. Punches, 1994 180,000 105,525 - - 1,694
Chairman of the Board 1993 180,000 117,250 - - 2,096
1992 180,000 50,000 - - 1,221
David S. Patterson, 1994 144,000 63,900 - - 1,795
Executive Vice President 1993 144,000 71,000 - - 1,878
and Chief Operating Officer 1992 144,000 56,000 - 45,000 357
William W. Kagel, 1994 144,000 80,370 - - 1,795
Senior Vice President- 1993 144,000 89,300 - - 1,815
Production 1992 144,000 59,000 - 36,000 1,132
Alvin W. Keeley 1994 144,000 67,455 - - 1,799
Senior Vice President- 1993 144,000 74,950 - - 1,773
Marketing 1992 144,000 55,000 - 36,000 1,108
- -----
<FN>
(1) Does not include the value of perquisites or other personal benefits consisting
of personal use of automobiles and club dues not exceeding, with respect to each
of the Named Executive Officers, the lesser of $50,000 or ten percent of his total
annual salary and bonus.
(2) The Company's stock option plans do permit the grant of stock appreciation
rights but none were granted.
(3) Represents amounts allocated to the accounts of the Named Executive
Officers under the Company's Profit sharing/401K Savings and Employee Stock
Ownership Plans. For 1994, 1993 and 1992 the percentage of each stated amount
allocated under the Profit Sharing Plan was 100%, 100%, and 55.6%, respec-
tively, with the balance representing amounts allocated under the Company's
Employee Stock Ownership Plans.
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
STOCK OPTIONS
- -------------
No stock options were granted to the Named Executive Officers during 1994
and no stock appreciation rights have been granted since the inception of the
Company's stock option plans. The following table sets forth information
regarding all stock options exercised during 1994 or held at December 31, 1994
by the Named Executive Officers.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1994
AND 1994 YEAR END OPTION VALUES
- ------------------------------------------------------------------------------------------------------
VALUE OF
UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS
OPTIONS AT DECEMBER 31, 1994
SHARES VALUE (#) ($)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE(#) ($) EXCERCISABLE UNEXERCISABLE EXCERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Neal R. Sparby - - 34,377 15,000 $10,395 -
Dennis G. Punches - - - - - -
David S. Patterson - - 30,000 15,000 - -
William W. Kagel 30,000 71,250 49,146 12,000 59,722 -
Alvin W. Keeley 30,000 148,125 49,146 12,000 59,722 -
</TABLE>
The Company has in effect a Common Share Equivalent Plan pursuant to
which awards are made to certain key employees of the Company. Under the Plan
certain management employees were granted, at the discretion of the Board of
Directors, Units that are valued at the market price of the Company's common
stock. In consideration of the participants agreeing to cap the value of the
Units awarded to them under the Plan from $12.625 to $7.50, on May 20, 1993
the Compensation Committee repriced options held by the participants for the
equivalent number of shares of common stock from an exercise price of $12.625
to a new exercise price of $7.50. While executive officers of the Company are
not eligible for awards under the Common Share Equivalent Plan, several
executive officers of the Company are participants under the Plan based on
awards of Units made to them prior to becoming executive officers. These
executive officers participated in the May 20, 1993 agreement to cap the value
of their Units under the Plan and, thus, received on such date an offsetting
benefit of having stock options for an equivalent number of shares repriced as
described above. The following table sets forth information regarding
repricing of options held by executive officers during the past ten years.
<PAGE>
<TABLE>
<CAPTION>
TEN-YEAR OPTION/SAR REPRICING
- -----------------------------------------------------------------------------------------------------
Number of Length of
Securities Market Price Exercise Original
Underlying of Stock at Price at Time Option Term
Options/ Time of of Repricing New Remaining
SARS Repricing or or Exercise at Date of
Repriced or Amendment Amendment Price Repricing or
Date Amended(#) ($) ($) ($) Amendment
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James R. Bohmann May 20,1993 4,960 $7.50 $12.625 $7.50 9 years
Senior Vice President
Corporate Development
and Treasurer
Susan Mathison May 20,1993 1,320 7.50 12.625 7.50 9 years
VicePresident-
Administration and
Corporate Secretary
Philip C. Colin May 20,1993 9,090 7.50 12.625 7.50 9 years
Vice President-
Information Services
John P. Stetzenbach May 20,1993 5,112 7.50 12.625 7.50 9 years
Vice President-
Finance and
Controller
Patrick E. Carroll May 20,1993 6,960 7.50 12.625 7.50 9 years
Senior Vice President-
Sales
</TABLE>
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- -----------------------------------------------------------
The members of the Compensation Committee of the Board of Directors
during 1994 were Messrs. Richard G. Miles and Raymond J. Larkin, while both
are non-employee members of the Board of Directors, Mr. Larkin became a paid
consultant to the Company commencing October 1, 1994. Mr. Larkin was replaced
as a member of the Compensation Committee by Mr. Bo S. Goranson effective
January 1, 1995. Mr. Goranson is Chairman of Intrum Justitia, N.V. Mr.
Dennis Punches, Chairman of the Board of the Company, serves as a director
of Intrum Justitia, N.V. The remuneration of executive officers of Intrum
Justitia, N.V. is determined by a remuneration committee of its directors, of
which Mr. Punches is not a member.
(IN ITALICS) Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or
the Exchange Act that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following report and the Performance Graph
on page 17 shall not be incorporated by reference into any such filing.
(END ITALICS)
BOARD COMPENSATION COMMITTEE REPORT
- -----------------------------------
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation.
Under the supervision of the Compensation Committee of the Board of
Directors, the Company has developed and implemented compensation policies,
plans and programs. These are designed to enhance the long-term profitability
of the Company, and thus shareholders' value by aligning the financial
interests of the Company's Named Executive Officers with those of the
shareholders. As part of these policies, annual base salaries are fixed below
competitive levels as compared to other large publicly held receivable
management companies, including FCA International Ltd., so that the Company
relies to a large degree on annual cash bonuses to motivate the Named
Executive Officers to achieve annual corporate and individual goals. Longer
term incentive compensation, in the form of stock options, helps to attract
and retain corporate officers of outstanding abilities and to encourage them
to perform over time to the full extent oftheir capabilities. In evaluating
the performance and determining the incentive compensation of the Chief
Executive Officer and the other Named Executive Officers, the Committee has
taken particular note of the success of management in maintaining long-term
profitability by recording 91 consecutive profitable quarters. In addition,
the Company in recent years has successfully added new product lines to
enhance revenue growth. The Committee has taken into account the ability of
management in a highly competitive environment to increase or maintain market
share of its key clients as well as many other clients through better
customer service, improved results, and an ongoing commitment to enhance the
relationships with the Company's clients and customers.
<PAGE>
In its review of management performance and compensation, the
Committee has also taken into account the firm commitment of management to the
long-term profitability of the Company through its successful acquisition
program. On February 1, 1994 the Company purchased certain assets of Indiana
Mutual Credit Association, Inc. (IMC), a firm serving primarily the medical
market with revenues of approximately $3 million. Discussions initiated in
1994 also resulted in two acquisitions in early 1995. Acquisition activities
continue with prospects being reviewed on a regular basis. Finally, the
Committee recognizes the efforts of the Named Executive Officers in
establishing, communicating and implementing corporate strategies which should
improve profits and enhance shareholder value as well as developing the
Company's Vision and Values Statement.
The Committee believes that the Named Executive Officers are dedicated
to achieving significant improvements in long-term financial performance and
that the compensation policies, plans and programs the Committee has
implemented and administered have contributed to achieving this management
focus.
Compensation for 1994 for each of the Named Executive Officers,
consisted of a base salary and annual cash bonus. The base salaries were
fixed at levels below the competitive amounts paid to other senior officers
with comparable qualifications, experience and responsibilities at other large
companies engaged in the same or similar businesses as the Company.
In addition to the base salary, the Committee established the total
compensation for 1994 (salary and annual bonus) of each of the Named Executive
Officers which could be paid assuming certain financial and other objectives
were achieved.
After the end of the 1994 fiscal year and completion of the audit of
the Company's financial statements, the Committee determined the amount to be
added to each of the Named Executive Officers compensation package in the form
of a cash bonus. The cash bonus is comprised of a deferred portion which is
paid (except in highly adverse and unusual circumstances) and a performance
portion which is paid based upon an evaluation of annual corporate and
personal performance.
A review of the Summary Compensation Table indicates a decrease of 10%
from 1993 bonus levels for all the Named Executive Officers. The following
factors were subjectively weighed by members of the Committee when determining
the performance portion of said bonus amounts.
- Overall corporate profitability
- Revenue compared to prior year
- Corporate strategies success
- Increased market share
- 1994 acquisition program
In determining the annual cash bonus for the Chief Executive Officer for
1994 the Committee used the same evaluation factors listed above to arrive at
a 10% reduction in the performance portion of said bonus amount.
RESPECTFULLY SUBMITTED,
COMPENSATION COMMITTEE
Richard G. Miles (Committee Chair)
Bo S. Goranson
<PAGE>
PERFORMANCE GRAPH
- -----------------
The following line graph shows the cumulative total return
for the five year period ended December 31, 1994 of an investment in the
Company's common stock, the Standard & Poor's 500 Stock Index and an
investment in the common stock of FCA International Ltd., a Canadian
company listed on the Toronto Stock Exchange. The Company has chosen FCA
International Ltd. alone as a peer comparison because in the Company's
opinion, it is the only other public company which is substantially similar
to the Company in size and nature of its operations. Total return is
computed in each case, where applicable, on a dividend reinvested basis and
assumes a common starting point of 100. With respect to FCA International
Ltd., its price and dividend were converted to United States dollars at the
exchange rate in effect on the relevant dates.
The Performance Graph plotting points are herewith presented in
table form for purposes of electronic submission.
<TABLE>
<CAPTION>
TOTAL STOCKHOLDERS' RETURN
Reinvested Dividends
December 1989 to December 1994
PAYCO FCA
Measurement Period AMERICAN INTERNATIONAL S & P 500
(Fiscal Year Covered) CORPORATION LTD. COMP-LTD
- --------------------- ----------- ------------- ----------
<S> <C> <C> <C>
Measurement Pt-12/31/89 $100 $100 $100
FYE 12/31/90 $111.83 $ 72.92 $ 96.89
FYE 12/31/91 $109.68 $ 54.01 $126.42
FYE 12/31/92 $ 91.40 $ 27.01 $136.05
FYE 12/31/93 $ 90.32 $ 35.29 $149.76
FYE 12/31/94 $ 59.14 $ 39.28 $151.74
</TABLE>
<PAGE>
DIRECTOR COMPENSATION
- ---------------------
Directors who are employees of the Company receive no fees for such
service other than their regular compensation. Directors who are not
employees are paid a fixed fee for their Board and Committee participation
which for 1994 and 1995 does not exceed $10,000 for any director. In addition
to his fees as a director, Mr. Larkin was paid $15,000 in consulting fees for
1994. Mr. Larkin has been engaged as a special consultant to the Company
management for 1995 and will receive fees of $60,000 which includes his fee
fee for services as a director.
CERTAIN TRANSACTIONS
- --------------------
In March 1980, the Company moved its headquarters to a new, three-story
office building in Brookfield, Wisconsin, which was constructed to the
Company's specifications. The Company's lease, as amended, is for a period of
20 years commencing April 1, 1980. The Company occupies the entire 66,000
square feet of the Brookfield building, except for 5,300 square feet which are
sublet. The rental for the entire building was $709,791 for 1994. The monthly
rental of $59,862 is subject to an annual cost of living increase, not to
exceed 5%.
On June 1, 1987, the Company moved its Dublin, Ohio operations to a two-
story building constructed to the Company's specifications. The lease is for
a term of 20 years commencing on June 1, 1987. The Company occupies the
entire 43,000 square feet of the new Dublin, Ohio building. The rental for
the entire building for 1994 was $581,363. The monthly rental of $48,900 is
subject to a cost of living increase not to exceed 5%.
On August 5, 1983 the Company entered into a lease agreement for a one-
story building located in New Berlin, Wisconsin designed to house its data
processing operations. In 1987 the Company signed an agreement with the
lessor requiring the lessor to provide a 17,500 square foot addition to the
New Berlin building to support the growth of its data processing operation.
The Company's lease for the building, including the addition, is for a term of
20 years terminable by the Company on April 30, 2004, upon payment of a
termination fee equal to one year's rent. The Company occupies the entire
36,722 square foot building. The annual rental for the entire building for
1994 was $272,455. The monthly rental of $22,921 is subject to an annual cost
of living increase not to exceed 5% after the third year.
In February, 1985, the Company moved its Los Angeles, California
operations to a new two-story building in Westlake, California, which was
constructed to the Company's specifications. The Company leased the building
for a period of 20 years commencing March 1, 1985. The Company occupies the
entire Westlake, California building. The rental for the entire building,
approximately 19,376 square feet, was $270,038 for 1994. The monthly rental
of $22,641 is subject to annual cost of living adjustments not to exceed 5% of
the prior year's rent.
<PAGE>
On November 1, 1987, the Company moved its Oakland, California operations
to a new two-story building in Pleasanton, California which was constructed to
the Company's specifications. The Company has signed a lease on this building
for a term of 20 years commencing on November 1, 1987. The Company occupies
the entire building, approximately 19,400 square feet. The total annual rent
in 1994 was $343,440. The monthly rent of $29,025 is subject to annual cost
of living adjustments not to exceed 5%.
The owner and lessor of the buildings in Brookfield, Wisconsin; Dublin,
Ohio; New Berlin, Wisconsin; Westlake, California; and Pleasanton, California
are Brookfield Investment Company, Dublin Investment Company, Percom
Investment Company, Westlake Investment Company and Hacienda Investment
Company, respectively. All lessors are partnerships.
Each of the following individuals, unless otherwise noted, was a
partner in each partnership listed in the preceding paragraphs during 1994:
Dennis G.Punches, Chairman of the Board of the Company; Neal R. Sparby, a
Director, President and Chief Executive Officer of the Company; William W.
Kagel, a Director and Senior Vice President-Production of the Company; Alvin
W.Keeley, a Director and Senior Vice President-Marketing of the Company; and
James R. Bohmann, Senior Vice President - Corporate Development of the
Company (except as to Brookfield Investment Company). James R. Bohmann and
Dennis G.Punches are nominees for election as director. Neal R. Sparby,
William W.Kagel and Alvin W. Keeley are current directors. The Board of
Directors believes that the terms of such leases are at least as favorable to
the Company as could have been obtained in arms-length negotiations with
an unaffiliated lessor. The partnerships may provide certain tax benefits
for the partners.
<PAGE>
RATIFICATION OF SELECTION OF INDEPENDENT
PUBLIC ACCOUNTANTS
The audit committee of the Board of Directors of the Company has selected
the public accounting firm of Arthur Andersen LLP to report on the Company's
financial statements for the current year and the shareholders are being asked
to ratify this selection. Arthur Andersen LLP has been the public accounting
firm retained by the Company since 1969. Arthur Andersen LLP has indicated
that a representative of that firm will be present at the shareholders'
meeting. Such representative shall be given an opportunity to make a
statement, if such representative so desires, and it is expected that such
representative will be available to respond to appropriate questions presented
at the meeting.
<PAGE>
OTHER BUSINESS
The Board of Directors knows of no other business to come before the
meeting. In the event that any other business not known or determined at this
time does come before the meeting, the persons named in the enclosed proxy
intend to vote in accordance with their best judgment.
VOTING OF PROXIES
Proxies which are signed and returned will be voted FOR the nominees
named herein unless authority to vote upon the election of directors or with
respect to a specific nominee is withheld. Proxies will be voted as specified
by the shareholder with respect to the ratification of the selection of
auditors, or if no specification is given with respect to such matter, proxies
will be voted FOR such ratification.
SHAREHOLDER PROPOSALS
FOR 1996 ANNUAL MEETING
Proposals of shareholders intended to be presented at the Company's 1996
annual meeting must be received by the Company at 180 North Executive Drive,
Brookfield, Wisconsin 53005, no later than December 5, 1995 in order to be
eligible for inclusion in the proxy statement and form of proxy relating to
that meeting. A shareholder who desires to submit any such proposal should
refer to the applicable rules and regulations of the Securities and Exchange
Commission, Washington, D.C. 20549.
By Order of the Board of Directors
SUSAN MATHISON, Secretary
Brookfield, Wisconsin
March 31, 1995
PLEASE SIGN AND DATE THE ENCLOSED PROXY
AND MAIL PROMPTLY IN THE ACCOMPANYING ENVELOPE
<PAGE>
PAYCO AMERICAN CORPORATION
PROXY FOR ANNUAL MEETING MAY 2, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Dennis G. Punches, Neal
R. Sparby and Susan Mathison, and each or any of them, proxies with full power
of substitution, to vote all stock of Payco American Corporation, a Wisconsin
corporation, which the undersigned is entitled to vote at the Annual Meeting
of the Company to be held at its offices located at 180 North Executive Drive,
Brookfield, Wisconsin 53005, on Tuesday, May 2, 1995, at 3:00 p.m. and at any
adjournment thereof:
1. ELECTION OF DIRECTORS
FOR all nominees listed WITHHOLD AUTHORITY
---- below (except as marked ----(To vote for all
to the contrary below) nominees listed below)
JAMES R. BOHMANN, WILLIAM A. INGLEHART,
DENNIS G. PUNCHES, DENNIS SHEA
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name on the line provided below.)
-----------------------------------------------------------------
2. RATIFICATION OF SELECTION OF ARTHUR ANDERSEN LLP AS
AUDITORS FOR THE COMPANY FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1995.
FOR AGAINST ABSTAIN
---- ---- ----
IF YOU SIGN AND RETURN THIS PROXY, THE SHARES REPRESENTED
HEREON WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS
MADE HEREON. IF NOT OTHERWISE SPECIFIED, THE PROXY WILL
BE VOTED FOR THE ELECTION OF DIRECTORS AS NOMINATED AND FOR
THE RATIFICATION OF THE SELECTION OF AUDITORS.
THE PROXIES WILL VOTE IN ACCORDANCE WITH THEIR BEST
JUDGMENT ON ANY OTHER MATTERS WHICH MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
<PAGE>
The undersigned hereby acknowledges receipt of the Annual
Report of the Company for its fiscal year ended December 31, 1994, and
Notice of Annual Meeting of Shareholders and Proxy Statement dated
March 31, 1995.
Date Signed:________________________
____________________________________
Signature
____________________________________
Signature
Please sign exactly as name appears hereon.
If stock is held jointly, each holder
should sign. When signing as attorney,
executor, administrator, trustee, guardian,
corporate officer or in any other capacity,
please state in full title as such.
PLEASE SIGN, DATE AND PROMPTLY RETURN THIS PROXY
