<PAGE>
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PAYCO [registered trademark and logo]
AMERICAN CORPORATION
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 7, 1996
The Annual Meeting of the Shareholders of Payco American
Corporation will be held on Tuesday, May 7, 1996, 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, 1996.
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 12,
1996, 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 29, 1996
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 7, 1996
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 7, 1996, 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 12, 1996, the record date for the meeting,
primarily by this statement with its enclosures which is first being mailed to
shareholders on approximately March 29, 1996. 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 12, 1996, the record date for the meeting, 10,155,085 shares
of the common stock of the Company were outstanding.
A Schedule 13G showing beneficial ownership at December 31, 1995, of
1,922,800 shares of the Company's common stock or approximately 18.9% of the
outstanding shares has been filed with the Securities and Exchange Commission
by Heartland Advisors, Inc. This Schedule 13G discloses that: (i) Heartland
Advisors, Inc. has sole dispositive power with respect to all of such shares
and sole voting power with respect to 1,563,300 of such shares; (ii) all of
such shares relate to investment advisory accounts of Heartland Advisors,
Inc., and as a result various person have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
securities; and (iii) the interests of one advisory account, Heartland Value
Fund, a series of Heartland Group, Inc., a registered investment company,
relates to more than 5% of the Company's common stock.
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<PAGE>
A Schedule 13G showing beneficial ownership at December 31, 1995 of
716,350 shares of the Company's common stock or approximately 7.0% 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 504,200 shares and
sole dispositive power with respect to 716,350 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, 1995, of 975,000 shares of the
Company'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.
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 1,602,681 shares as of
December 31, 1995, or 15.8% 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, Patrick E. Carroll, Raymond
J. Larkin, Richard G. Miles and Neal R. Sparby, 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 1999.
All of these nominees were elected as directors by the shareholders at prior
annual meetings 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.
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<PAGE>
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
Patrick E. Carroll, Raymond J. Larkin, Richard G. Miles and Neal R. Sparby.
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 1996 annual meeting.
NOMINEES FOR NEW TERMS AS DIRECTORS
Class III - To serve until the Annual Meeting of Shareholders in 1999 and
until their successors are elected.
PRINCIPAL NOMINEE HAS SERVED
NAME OCCUPATION AGE AS DIRECTOR SINCE
- ------------------ ----------- --- ------------------
Patrick E. Carroll Senior Vice 53 May 1991
President of
Sales of the
Company
Raymond J. Larkin Consultant 69 June 1992
Richard G. Miles Retired 73 May 1988
Neal R. Sparby President and 59 May 1979
Chief Executive
Officer of the
Company
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<PAGE>
DIRECTORS WHOSE TERMS CONTINUE
BEYOND THE ANNUAL MEETING
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
- -------------- ---------------- --- ------------------
Bo S. Goranson Chairman-Intrum 58 May 1994
Justitia NV
William W. Kagel Senior Vice 59 August 1969
President-
Production of
the Company
Alvin W. Keeley Senior Vice 58 May 1979
President-
Marketing
of the Company
David S. Patterson Executive Vice 55 May 1991
President and
Chief Operating
Officer of the
Company
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
- ------ ------------- ---- -----------------
James R. Bohmann Senior Vice 49 May 1991
President -
Corporate
Development and
Treasurer of the
Company
William A. Inglehart Advisor to 64 October 1988
the Company
Dennis G. Punches(1) Chairman of the 60 August 1969
Board of the
Company
Dennis Shea Managing 57 January 1992
Associate
Auriemma
Consulting Group
_______
(1) Mr. Punches also serves as director of Analysis & Technology, Inc.
-5-
<PAGE>
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.
Mr. Sparby has, for more than the past five years, been a full-time
employee of the Company 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 Health care
division, commercial collection division, 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.
-6-
<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, N.Y., 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.
-7-
<PAGE>
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. Both members were present at these
meetings.
The Board of Directors also has a Compensation and Stock Option
Committee. The members for 1995 were Messrs. Miles (Chairman) and Goranson.
This committee, which had two formal meetings during 1995, 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.
-8-
<PAGE>
SECURITIES OWNERSHIP OF MANAGEMENT
- ----------------------------------
The following table sets forth the beneficial ownership of the Company's
common stock as of March 12, 1996 by each nominee and director, and by all
directors and officers as a group:
NUMBER OF SHARES PERCENT OF
NAME OWNED (1)(2) CLASS
- ----------------- ---------------- --------------
James R. Bohmann 76,070(3) (4)
Patrick E. Carroll 75,747(3) (4)
Bo S. Goranson -- --
William A. Inglehart 15,596 (4)
William W. Kagel 154,208(3) 1.5%
Alvin W. Keeley 139,106(3) 1.3%
Raymond J. Larkin 600 (4)
Richard G. Miles -- --
David S. Patterson 45,585(3) (4)
Dennis G. Punches 1,602,681 15.3%
Dennis Shea 100 (4)
Neal R. Sparby 135,032(3) 1.3%
Directors and executive
officers as a group 2,353,899(3) 22.4%
____________
(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 12, 1996
through the exercise of stock options: Mr. Bohmann - 43,878 shares; Mr.
Carroll - 42,960 shares; Mr. Kagel - 36,000 shares; Mr. Keeley - 40,377
shares; Mr. Patterson - 45,000 shares; and Mr. Sparby - 49,377 shares; and all
directors and executive officers as a group 344,964 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%.
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.
-9-
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
- -------------------------------------------------
The following table sets forth the beneficial ownership of the Company's
common stock as of December 31, 1995 by those persons known to the Company to
own more than 5% of the Company's common stock. As of December 31, 1995 there
were 10,155,085 shares of the common stock of the Company outstanding.
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS
- --------------------- ----------------------- -----------
Dennis G. Punches 1,602,681 shares 15.8%
180 N. Executive Dr.
Brookfield, WI 53005
J.P. Morgan & Co. 716,350 shares 7.0%
60 Wall Street
New York, NY 10260
State of Wisconsin 957,000 shares 9.4%
Investment Board
P.O. Box 7842
Madison, WI 53707
Heartland Advisors, Inc. 1,922,800 shares 18.9%
790 North Milwaukee Street
Milwaukee, WI 53202
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 1993, 1994 and 1995, except as may otherwise be specifically noted.
-10- <PAGE>
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
------------------------------------ ------------
All
Other Stock Other
Annual Option Compen-
Name and Principal Year Salary Bonus Compensation(1) Awards(2) sation(3)
Position ($) ($) ($) (#) ($)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Neal R. Sparby, 1995 $168,000 $115,374 - - $1,702
President and Chief 1994 168,000 78,413 - - 1,200
Executive Officer 1993 168,000 87,125 - - 1,878
Dennis G. Punches, 1995 180,000 134,078 - - 1,702
Chairman of the Board 1994 180,000 105,525 - - 1,200
1993 180,000 117,250 - - 2,096
David S. Patterson, 1995 144,000 95,085 - - 1,702
Executive Vice President 1994 144,000 63,900 - - 1,200
and Chief Operating Officer 1993 144,000 71,000 - - 1,878
William W. Kagel, 1995 144,000 102,807 - - 1,702
Senior Vice President- 1994 144,000 80,370 - - 1,200
Production 1993 144,000 89,300 - - 1,815
Alvin W. Keeley, 1995 144,000 94,944 - - 1,702
Senior Vice President- 1994 144,000 67,455 - - 1,200
Marketing 1993 144,000 74,950 - - 1,773
<FN>
- ----------------------------
(1) Does not include the value of perquisites or other person benefits
consisting of personal use of automobiles and club dues not exceeding, with
respect to each of the Named Executive Officers, the lesser of
$50,000 or ten percent of his total annual salary and bonus.
(2) The Company's stock option plans permit the grant of
stock appreciation rights but none were granted.
(3) Represents amount allocated to the accounts of the Named Executive
Officers under the Company's Profit Sharing/401K Savings.
</TABLE>
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<PAGE>
STOCK OPTIONS
- -------------
No stock options were granted to the Named Executive Officers during
1995 and no stock appreciation rights have been granted since the inception of
the Company's stock option plans. The following table sets forth information
regarding all stock options exercised during 1995 or held at December 31, 1995
by the Named Executive Officers.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1995
AND 1995 YEAR END OPTION VALUES
- ----------------------------------------------------------------------------------------------------
Value of
Unexercised
Number of in-the-Money
Shares Value Unexercised Options
Acquired on Realized Options at December 31, 1995
Name Exercise (#) ($) (#) ($)
- ---------------------------------------------------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Neal R. Sparby - $ - 49,377 - $55,944 -
Dennis G. Punches - - - - - -
David S. Patterson - - 45,000 - 35,700 -
William W. Kagel 25,146 110,014 36,000 - 28.560 -
Alvin W. Keeley 20,769 90,864 40,377 - 48,804 -
</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 $7.50. While executive officers of the Company are
not eligible for awards under the Common Share Equivalent Plan, several
executive officers of the Company are participants under the Plan based on
awards of Units made to them prior to becoming executive officers. These
executive officers participated in the May 20, 1993 agreement to cap the value
of their Units under the Plan and, thus, received on such date an offsetting
benefit of having stock options for an equivalent number of shares repriced as
described above. The following table sets forth information regarding
repricing of options held by executive officers during the past ten years.
-12-
<PAGE>
<TABLE>
<CAPTION>
TEN-YEAR OPTION/SAR REPRICING
- ------------------------------------------------------------------------------------------------------
Number of Length of
Securities Market Price Exercise Original
underlying of Stock at Price at Time Option Term
Options/ Time of of Repricing New Remaining
SARS Repricing or or Exercise at Date of
Repriced or Amendment Amendment Price Repricing or
Date Amended (#) ($) ($) ($) 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
Vice President -
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 Chief
Financial Officer
Patrick E. Carroll May 20, 1993 6,960 7.50 12.625 7.50 9 years
Senior Vice President-
Sales
</TABLE>
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
- -----------------------------------------------------------
The members of the Compensation and Stock Option Committee of the Board
of Directors during 1995 were Messrs. Richard G. Miles and Bo S. Goranson.
Mr. Goranson is Chairman of Intrum Justitia, N.V. Mr. Dennis G. 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 and Stock Option Committee of the Board of Directors
has furnished the following report on executive compensation.
Upon supervision of the Compensation and Stock Option 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 of their 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 95 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
-14-
<PAGE>
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.
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.
Effective January 1, 1995 the Company acquired the assets that comprise the
collection business of Furst and Furst a leading provider of collection
services to commercial credit grantors throughout the country. Effective
February 1, 1995 the Company acquired the assets that comprise the collection
business of Continental Credit Adjustors (CCA), an agency located in Houston,
Texas serving medical and retail markets in the State of Texas. Effective May
1, 1995 the Company acquired the assets that comprise the collection business
of Grable, Greiner & Wolff, (GGW). GGW, located in Beachwood, Ohio is a
leading provider of collection services to commercial credit grantors. This
acquisition, along with Furst and Furst, significantly increases the Company's
presence in the commercial collection industry. Acquisition activities
continue with prospects being reviewed on a regular basis. 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.
The Committee believes that the Named Executive Officers are dedicated
to achieving significant improvements in long-term financial performance and
that the compensation polices, plans and programs the Committee has
implemented and administered have contributed to achieving this management
focus.
Compensation for 1995 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 at the Company.
In addition to the base salary, the Committee established the total
compensation for 1995 (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 1995 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 Officer's compensation package in the
form of a cash bonus. The cash bonus is comprised of a deferred portion which
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<PAGE>
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 10-15% increase
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
- 1995 acquisition program
- Compliance
In determining the annual cash bonus for the Chief Executive Officer for
1995, the Committee used the same evaluation factors listed above to arrive at
a 15% increase total compensation.
RESPECTIVELY SUBMITTED,
COMPENSATION COMMITTEE
Richard G. Miles (Committee Chair)
Bo S. Goranson
-16-
<PAGE>
PERFORMANCE GRAPH
- -----------------
The following line graph shows the cumulative total return for the five
year period ended December 31, 1995 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.
<PAGE>
The Performance Graph plotting points are herewith presented in
table form for purposes of electronic submission.
<TABLE>
<CAPTION>
TOTAL STOCKHOLDERS' RETURN
Reinvested Dividends
December 1990-1995
PAYCO FCA
Measurement Period AMERICAN INTERNATIONAL S&P 500
(Fiscal Year Covered) CORPORATION LTD. INDEX
- --------------------- ----------- ------------- --------
<S> <C> <C> <C>
Measurement Pt-12/31/90 $100 $100 $100
FYE 12/31/91 98.08 74.07 130.47
FYE 12/31/92 81.73 37.03 140.41
FYE 12/31/93 80.77 48.40 154.56
FYE 12/31/94 52.88 53.87 156.60
FYE 12/31/95 69.23 41.67 215.45
-17-
<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 1995 did not exceed $10,000 for any director. Mr. Larkin has been
engaged by the Company management as a consultant and was paid $60,000 in 1995
in addition to his directors fees. Mr. Larkin will also receive consulting
fees of $60,000 in 1996.
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 $745,280 for 1995. The monthly
rental of $62,855 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 1995 was $597,825. The monthly
rental of $50,745 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 1995 was $280,697. The monthly rental
of $23,262 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 $277,456 for 1995. The monthly rental of
$23,281 is subject to annual cost of living adjustments not to exceed 5% of
the prior year's rent.
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<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 1995 was $304,013. The monthly rent of $22,508 is subject to
annual cost of living adjustments not to exceed 5%.
The owners and lessors 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 1995: 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, a Director and Senior Vice President - Corporate Development
of the Company (except as to Brookfield Investment Company). Neal R. Sparby, a
current Director, is a nominee for re-election. Dennis G. Punches, William W.
Kagel, Alvin W. Keeley and James R. Bohmann 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.
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
-19-
<PAGE>
such representative will be available to respond to appropriate questions
presented at the meeting.
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 1997 ANNUAL MEETING
Proposals of shareholders intended to be presented at the
Company's 1997 annual meeting must be received by the Company at 180 North
Executive Drive, Brookfield, Wisconsin 53005 no later than December 6, 1996 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 29, 1996
PLEASE SIGN AND DATE THE ENCLOSED PROXY
AND MAIL PROMPTLY IN THE ACCOMPANYING ENVELOPE
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<PAGE>
PAYCO AMERICAN CORPORATION
PROXY FOR ANNUAL MEETING MAY 7, 1996
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 7, 1996, at 3:00 p.m. and at any
adjournment thereof:
1. ELECTION OF DIRECTORS
____ FOR all nominees listed below (except as marked
to the contrary below)
____ WITHHOLD AUTHORITY (to vote for all nominees
listed below)
PATRICK E. CARROLL, RAYMOND J. LARKIN, RICHARD G. MILES,
NEAL R. SPARBY
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
--------------------------------------------------------------------
2. RATIFICATION OF SELECTION OF ARTHUR ANDERSEN LLP AS AUDITORS
FOR THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1996.
____ 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.
The undersigned hereby acknowledges receipt of the Annual Report of the
Company for its fiscal year ended December 31, 1995, and Notice of Annual
Meeting of Shareholders and Proxy Statement dated March 29, 1996.
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
<PAGE>
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 Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
____Preliminary Proxy Statement
___Confidential, for Use of the
Commission (as permitted by Rule
14a-6(e)(2))
X Definitive Proxy Statement
- ----
- ---- Definitive Additional Materials
Payco American Corporation
- -----------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- -----------------------------------------------------------------------
Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X $125 Per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2)
- --- or Item 22(a) (2) of Schedule 14A.
___ $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
___ Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------
(2)Aggregate number of securities to which transaction applies:
- ---------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- ----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ----------------------------------------------------------------------------
(5) Total fee paid:
- ----------------------------------------------------------------------------
___ Fee paid previously with preliminary materials.
- ----------------------------------------------------------------------------
___ Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for whicH the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
- ----------------------------------------------------------------------------
(1) Amount Previously Paid:
- ----------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- ----------------------------------------------------------------------------
(3) Filing Party:
- ----------------------------------------------------------------------------
(4) Date Filed:
- ----------------------------------------------------------------------------
</TABLE>
