<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:
/ / 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
PIONEER FINANCIAL SERVICES, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
PIONEER FINANCIAL SERVICES, INC.
--------------------------------------------------------------------------------
(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 Rule 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party: Pioneer Financial Services, Inc.
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(4) Date filed: March 31, 1995
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<PAGE> 2
PIONEER FINANCIAL SERVICES, INC.
1750 EAST GOLF ROAD
SCHAUMBURG, ILLINOIS 60173
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 1995
To the Holders of Common Stock of
Pioneer Financial Services, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Holders of Common
Stock of Pioneer Financial Services, Inc. will be held at the offices of the
Company, 1750 East Golf Road, Schaumburg, Illinois 60173, on Thursday, May 25,
1995, at 4:00 p.m., Central Daylight Time, for the purpose of considering and
acting upon the following matters:
1. To elect three Class I directors to the Board of Directors;
2. To approve an amendment to the Company's 1994 Omnibus Stock Incentive
Program; and
3. To consider and act upon such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
Stockholders of record as of the close of business on March 29, 1995, shall
be entitled to notice and to vote at the meeting. The stock transfer books of
the Company will not be closed. For ten days prior to the meeting, a list of
stockholders entitled to vote at the meeting with the address of and number of
shares held by each shall be kept on file at the offices of the Company at 1750
East Golf Road, Schaumburg, Illinois 60173, and shall be subject to inspection
by any stockholder during the meeting. Stockholders who do not expect to attend
in person are urged to execute and return the accompanying proxy in the envelope
enclosed.
By order of the Board of Directors
VAL RAJIC
Secretary
Schaumburg, Illinois
March 31, 1995
<PAGE> 3
PROXY STATEMENT
------------------------
PIONEER FINANCIAL SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 1995
GENERAL INFORMATION
This Proxy Statement is being furnished to the stockholders of Pioneer
Financial Services, Inc., a Delaware corporation (the "Company"), 1750 East Golf
Road, Schaumburg, Illinois 60173, in connection with the solicitation of proxies
by its Board of Directors for use at the annual meeting of stockholders to be
held on Thursday, May 25, 1995 and at any adjournments thereof. The approximate
date on which this Proxy Statement and the accompanying proxy are first being
sent to stockholders is March 31, 1995.
The proxy is revocable at any time before it is voted by a subsequently
dated proxy, by written notification to the persons named therein as proxies,
which may be mailed or delivered to the Company at the above address, or by
attendance at the meeting and voting in person. All shares represented by
effective proxies will be voted at the meeting and at any adjournments thereof.
If the enclosed proxy is properly executed and returned in time for voting
with a choice specified thereon, the shares represented thereby will be voted as
indicated thereon. If no specification is made, the proxy will be voted by the
proxies FOR the election as directors of the nominees named below (or
substitutes therefor, if any nominees are unable or refuse to serve), FOR the
approval of the proposed amendment to the 1994 Omnibus Stock Incentive Program,
and in their discretion upon such matters not presently known or determined
which may properly come before the meeting.
The Company has two classes of stock outstanding, Common Stock and $2.125
Cumulative Convertible Exchangeable Preferred Stock ("Convertible Preferred
Stock"). On March 29, 1995, 5,902,873 shares of Common Stock were outstanding
and entitled to one vote each on all matters considered at the meeting. On March
29, 1995, 851,200 shares of Convertible Preferred Stock were outstanding, none
of which were entitled to vote on any matters considered at the meeting. Holders
of Common Stock of record as of the close of business on March 29, 1995, are
entitled to notice of and to vote at the meeting. There are no cumulative voting
rights with respect to the election of directors.
PRINCIPAL HOLDERS OF SECURITIES
The following table shows with respect to each person who is known to be
the beneficial owner of more than 5% of the Common Stock of the Company: (i) the
total number of shares of Common Stock beneficially owned as of March 1, 1995;
and (ii) the percentage of the outstanding Common Stock so owned as of that
date:
<TABLE>
<CAPTION>
TITLE NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS(1)
-------- ----------------------------- ----------------------- -----------
<S> <C> <C> <C>
Common Peter W. Nauert 1,656,988(2) 27.54%
1750 East Golf Road
Schaumburg, Illinois 60173
Common Credit Suisse 595,742(3) 9.17%
Paradeplatz 8, 80201
Zurich, Switzerland
</TABLE>
---------------------------
(1) Unless otherwise indicated, each person has sole voting and investment power
with respect to all such shares. The percentages have been calculated by
dividing the number of shares of Common Stock shown
1
<PAGE> 4
for each person by the sum of (i) the number of shares of Common Stock
outstanding on March 1, 1995, and (ii) the number of shares which that
particular person beneficially owns pursuant to stock options, Convertible
Preferred Stock or Convertible Subordinated Debentures.
(2) Includes (i) 86,000 shares held by Mr. Nauert's children or by Mr. Nauert as
custodian or as trustee for his children and 2,000 shares held of record by
Mr. Nauert's wife, (ii) 115,000 shares which may be acquired pursuant to
presently exercisable stock options, and (iii) shares of Common Stock held
in Employee Savings and Stock Ownership Plan accounts.
(3) All of these shares are issuable upon conversion of the Company's
Convertible Subordinated Debentures and Credit Suisse will have sole voting
power and investment power over any shares so acquired. This information is
based upon a Schedule 13G dated February 3, 1995.
The following table shows with respect to each director and nominee for
director of the Company, each of the executive officers named in the Summary
Compensation Table below, and all executive officers and directors as a group:
(i) the total number of shares of Common Stock and Convertible Preferred Stock
beneficially owned as of March 1, 1995; and (ii) the percentage of the
outstanding Common Stock and Convertible Preferred Stock so owned as of that
date:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
----------------------------------------- -------------------------
COMMON CONVERTIBLE COMMON CONVERTIBLE
NAME OF BENEFICIAL OWNER STOCK PREFERRED STOCK STOCK(1) PREFERRED STOCK
------------------------------- --------- --------------- ------ ---------------
<S> <C> <C> <C> <C>
Peter W. Nauert................ 1,656,988(2)(3)(4) 0 27.54 % 0
William B. Van Vleet........... 105,165(3)(4) 0 1.5 % 0
Michael A. Cavataio............ 163,206(3)(5) 17,260(6) 2.7 % 2.0%
Richard R. Haldeman............ 13,000(3) 0 * 0
Michael K. Keefe............... 33,000(3) 0 * 0
Karl-Heinz Klaeser............. 47,500(3) 0 * 0
Robert F. Nauert............... 34,864(3)(4) 0 * 0
Charles R. Scheper............. 52,277(3)(4) 0 * 0
R. Richard Bastian, (III)...... 1,000 0 * 0
Thomas J. Brophy............... 1,640(4)(7) 400 * *
Ernest T. Giambra, Jr. ........ 12,457(3)(4) 0 * 0
Carl Hulbert................... 0 0 0 0
Anthony J. Pino................ 17,274(3)(4) 0 * 0
All directors and executive
officers as a group (21
persons)..................... 2,138,371(2)(3)(4)(5)(7) 17,660(6) 33.58 % 2.0%
</TABLE>
---------------------------
*Less than 1.0%
(1) Unless otherwise indicated, each person has sole voting and investment power
with respect to all such shares. The percentages have been calculated by
dividing the number of shares of Common Stock shown for each person by the
sum of (i) number of shares of Common Stock outstanding on March 1, 1995,
and (ii) the number of shares which that particular person beneficially owns
pursuant to stock options, Convertible Preferred Stock or Convertible
Subordinated Debentures.
(2) Includes 86,000 shares held by Mr. Nauert's children or by Mr. Nauert as
custodian or as trustee for his children and 2,000 shares held of record by
Mr. Nauert's wife.
(3) Includes shares of Common Stock which such directors and executive officers
have the right to acquire within 60 days upon the exercise of stock options
as follows: Mr. Peter Nauert, 115,000 shares; Mr. Van Vleet, 100,000 shares;
Mr. Cavataio, 51,500 shares; Mr. Haldeman, 13,000 shares; Mr. Keefe, 33,000
shares; Mr. Klaeser, 47,500 shares; Mr. Robert Nauert, 32,500 shares; Mr.
Scheper, 45,000 shares; Mr. Giambra, 5,000 shares; Mr. Pino 10,000 shares;
executive officers other than named executive officers, 2,000 shares. Share
amounts listed in this footnote with respect to Messrs. Cavataio, Haldeman,
2
<PAGE> 5
and Keefe include 8,000 shares for each of such individuals which they have
the right to acquire within 60 days upon the exercise of stock options which
were granted subject to stockholder approval of the proposed Amendment to
the Company's 1994 Omnibus Stock Incentive Program referred to below under
the caption "Proposal to Approve Amendment to the 1994 Omnibus Stock
Incentive Program."
(4) Includes shares of Common Stock held in Employee Savings and Stock Ownership
Plan accounts.
(5) Includes (i) 61,353 shares of Common Stock held directly by Mr. Cavataio,
(ii) 6,301 shares of Common Stock held of record by, or in trust for the
benefit of members of Mr. Cavataio's immediate family, (iii) 44,552 shares
of Common Stock issuable upon conversion of 15,168 shares of Convertible
Preferred Stock and $176,000 in principal amount of Convertible Subordinated
Debentures held directly by Mr. Cavataio, and (iv) 2,092 shares of
Convertible Preferred Stock and $23,000 in principal amount of Convertible
Subordinated Debentures held of record by, or in trust for the benefit of,
members of Mr. Cavataio's immediate family.
(6) Includes 2,092 shares of Convertible Preferred Stock held of record by, or
in trust for the benefit of, members of Mr. Cavataio's immediate family.
(7) Includes 640 shares of Common Stock issuable upon conversion of 400 shares
of Preferred Stock held by Mr. Brophy.
ELECTION OF DIRECTORS
At the Annual Meeting of Stockholders, three Class I directors are to be
elected to hold office for a term of three years or until their successors are
elected and qualified. It is intended that, in the absence of contrary
specifications, votes will be cast pursuant to the enclosed proxies for the
election of such nominees. Directors will be elected by a plurality of the votes
cast at the meeting by the holders of shares represented in person or by proxy.
Thus, assuming a quorum is present, the three persons receiving the greatest
number of votes will be elected, and abstentions and broker non-votes will have
no effect. For purposes of the meeting, a quorum means a majority of the
outstanding shares of Common Stock. In determining whether a quorum exists, all
shares represented in person or by proxy will be counted. Should any of the
nominees become unable or unwilling to accept nomination or election, it is
intended, in the absence of contrary specifications, that the proxies will be
voted for the balance of those named and for a substitute nominee or nominees.
However, the Company now knows of no reason to anticipate such an occurrence.
All of the nominees have consented to be named as nominees and to serve as
directors if elected. The following table sets forth the nominees and continuing
directors of the Company.
3
<PAGE> 6
NOMINEES FOR ELECTION
<TABLE>
<CAPTION>
POSITIONS WITH COMPANY, BUSINESS
NAME AGE EXPERIENCE, AND OTHER DIRECTORSHIPS
---- ---- -----------------------------------
<S> <C> <C>
CLASS I (TERM EXPIRES 1998)
Michael A. Cavataio........... 51 Director of the Company since 1986. President of
Lillians, Inc., a chain of retail clothing stores,
since 1980. Provided investment advisory services to
the Company in 1994.
William B. Van Vleet.......... 70 Executive Vice President of the Company since 1986,
General Counsel from 1982 to 1988 and since June
1991, and a Director since 1982. Director and officer
of various subsidiaries of the Company.
R. Richard Bastian, III....... 48 Director of the Company since December, 1994.
Management consultant since August, 1994. President
and Chief Executive Officer of Heritage Bank and
Trust Co. from January, 1994 through July, 1994.
Chairman, President and Chief Executive Officer of
Bank One, Rockford, IL from January, 1984 through
October, 1993. President and Chief Executive Officer
of First Community Bancorp, Rockford, IL, from
February, 1989 through May, 1993.
</TABLE>
CONTINUING DIRECTORS
<TABLE>
<CAPTION>
POSITIONS WITH COMPANY, BUSINESS
NAME AGE EXPERIENCE, AND OTHER DIRECTORSHIPS
---- ---- -----------------------------------
<S> <C> <C>
CLASS II (TERM EXPIRES 1996)
Richard R. Haldeman........... 52 Director of the Company since 1986 and Secretary from
1988 to June 1990. Partner of Haldeman & Associates,
a law firm, since June 1990. Haldeman & Associates
provided legal services to the Company during 1994.
Partner of Williams & McCarthy, P.C., a law firm,
from 1975 to May, 1990.
Karl-Heinz Klaeser............ 63 Director of the Company since 1986. Retired
President, Gerling Global Life Insurance Co.,
Toronto, Canada. Director of LSW Holding Corporation,
Insurance Investors Life Insurance Company and
Chairman of the Board of Life Insurance Company of
the Southwest since 1989. Director of Personal
Assurance Company PLC (United Kingdom) since 1991.
Charles R. Scheper............ 42 Director of the Company since 1994. President of the
Company's Life Insurance Division since March, 1995.
Senior Executive Vice President of the Company from
April, 1994 to March, 1995, and President of
Manhattan National Life Insurance Company, a
subsidiary of the Company ("MNL"), since February,
1992. President and Chief Operating Officer of MNL
from January, 1990 to February, 1992. A director and
officer of various other subsidiaries of the Company
since January, 1990. Senior Vice President and Chief
Financial Officer of MNL from May, 1987 to January,
1990.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
POSITIONS WITH COMPANY, BUSINESS
NAME AGE EXPERIENCE, AND OTHER DIRECTORSHIPS
---- ---- -----------------------------------
<S> <C> <C>
Thomas J. Brophy.............. 59 Director of the Company since March, 1995. President
of the Company's Health Insurance Division since
March, 1995. Executive Vice President of the Company
from April, 1994 to March, 1995, and Senior Vice
President of the Company from November, 1993 to
April, 1994. President of Pioneer Life Insurance
Company of Illinois ("Pioneer Life") and various
other insurance subsidiaries of the Company since
April, 1994 and director and officer of various other
subsidiaries of the Company since October, 1993.
President and a director of Southwestern Life
Insurance Company from June, 1990 to November, 1993.
Executive Vice President of I.C.H. Corporation from
1987 through October 31, 1993 and served in various
other senior executive positions with I.C.H.
Corporation's various insurance subsidiaries from
May, 1983 to September, 1993.
CLASS III (TERM EXPIRES 1997)
Peter W. Nauert............... 51 Chief Executive Officer and a Director of the Company
since its incorporation in 1982. Chairman of the
Company since 1988 and President from 1982 to 1988
and from September, 1991 to March, 1995. Executive
officer of one or more of the Company's insurance
subsidiaries since 1968. Chairman of Pioneer Life
since 1975. Director and officer of various other
subsidiaries of the Company since 1982.
Robert F. Nauert.............. 70 Director of the Company since November, 1991.
Director and officer of various subsidiaries of the
Company since 1982. Mr. Nauert is the brother of
Peter W. Nauert.
Michael K. Keefe.............. 50 Director of the Company since March, 1994. Chief
Executive Officer and Chairman of the Board of Keefe
Real Estate, Inc., a family owned real estate
brokerage operation since 1982. Chairman of the Board
of Southern Wisconsin Bankshares, Inc. since 1988.
Carl Hulbert.................. 72 Director of the Company since March, 1995 and a
director of a subsidiary of the Company since 1990.
Utah Insurance Commissioner from 1958 to 1961.
Consultant to various insurance companies and also
served as director of various banks and insurance
companies from 1961 to 1979. Since 1979 President and
Chairman to Western Life Insurance Company and
director of Continental Heritage Life Insurance
Company, Pacific Specialty Insurance Company, USAA
Federal Savings Bank, U.S. Warranty and Programmed
Marketing Insurance Company.
</TABLE>
MEETINGS OF THE BOARD OF DIRECTORS
During 1994, the Board of Directors met five times and acted by written
consent eleven times. During 1994, each director attended at least 75% of the
aggregate number of meetings of the Board and the respective committees on which
he served while a member thereof.
5
<PAGE> 8
CERTAIN FILINGS
Directors and officers of the Company file periodic reports regarding
ownership of Company securities with the Securities and Exchange Commission
pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended,
and the rules promulgated thereunder. To the Company's knowledge, based solely
on a review of the copies of such reports furnished to the Company and written
representations that no other reports were required during the fiscal year ended
December 31, 1994, all of its officers, directors and greater than ten percent
beneficial owners complied with all filing requirements applicable to them
except that Mr. Bastian, who was elected a director of the Company in 1994, was
late in filing his initial Form 3.
BOARD COMMITTEES
The Board of Directors has six standing committees, the Executive
Committee, the Audit Committee, the Compensation Committee, the Investment
Committee, the Option Committee and the Nominating Committee. The Executive
Committee met eleven times, the Audit Committee met two times, the Compensation
Committee met three times, the Investment Committee met seven times, the Option
Committee met two times and the Nominating Committee met one time in 1994.
The Executive Committee is composed of Peter W. Nauert (Chairman), William
B. Van Vleet, Michael A. Cavataio and Michael K. Keefe. Charles R. Scheper also
participates as a non-voting member. The Executive Committee is empowered to
exercise the powers of the Board of Directors in the management of the business
and affairs of the Company, except as otherwise provided in the Company's
Certificate of Incorporation or as limited by the provisions of the General
Corporation Law of Delaware or the resolutions of the Board of Directors
regarding the Executive Committee.
The Audit Committee is composed of Karl-Heinz Klaeser (Chairman), R.
Richard Bastian and Michael K. Keefe. Charles R. Scheper also participates as a
non-voting member of the Audit Committee. The duties of the Committee are to
recommend to the Board of Directors the appointment of the independent
accountants for the following year, and to review the scope of the audit, the
independent auditors' report and the auditors' comments relative to the adequacy
of the Company's system of internal controls, the results of the Company's
external audits, and accounting policies. The Committee also recommends to the
Board of Directors changes in directors' fees.
The Investment Committee is composed of Michael A. Cavataio (Chairman),
Peter W. Nauert and Charles R. Scheper. Philip J. Fiskow and Val Rajic, both of
whom are Vice Presidents of the Company, also participate as non-voting members
of the Investment Committee. The duties of the Committee are to determine the
Company's investment strategies, review the performance of investments and the
recommendations of the Company's investment managers and decide which investment
managers the Company will retain.
The Compensation Committee is composed of Karl-Heinz Klaeser (Chairman),
Michael A. Cavataio, Richard R. Haldeman and R. Richard Bastian, III. Robert F.
Nauert also participates as a non-voting member of the Compensation Committee.
The duties of the Committee are to review management compensation levels and
provide recommendations regarding salaries and other compensation for certain of
the Company's officers, including bonuses and awards, grants of stock options,
and new employee benefit or other incentive programs.
The Option Committee is composed of Michael A. Cavataio (Chairman), Richard
R. Haldeman and Michael K. Keefe. The duties of the Committee are to administer
the Company's 1994 Omnibus Stock Incentive Program.
The Nominating Committee is composed of Peter W. Nauert (Chairman), William
B. Van Vleet and Michael A. Cavataio. The duties of the Committee are to review
and recommend to the Board of Directors potential directors of the Company.
Under the Company's By-Laws, the Secretary must receive written notice of
stockholder nominations at least 20 days prior to the meeting of stockholders.
Such notice must set forth all information with respect to each such nominee as
required by the Securities and Exchange Act of 1934 and the rules thereunder.
Such notice must be accompanied by a signed statement of such nominee consenting
to be a nominee and a director, if elected, and confirming the information
contained in the notice.
6
<PAGE> 9
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW
Under the supervision of the Compensation Committee of the Board of
Directors, the Company has developed and implemented compensation policies,
plans and programs which seek to enhance the profitability of the Company, and
thus stockholder value, by aligning the financial interests of the Company's
senior executives with those of its stockholders.
In furtherance of these goals, and to attract and retain corporate officers
and other key employees of outstanding abilities and to motivate them to perform
to the full extent of their abilities, compensation for each of the officers
named below in the Summary Compensation Table (the "Named Officers"), as well as
other senior executives, consists of three major components: base salary; annual
bonus; and in some instances, longer-term incentive compensation in the form of
discretionary stock options.
In addition, to encourage the Company's senior executives to have a
substantial personal equity interest in the Company, the Company has implemented
a program (the "Stock Purchase Option Program"), described below under the
caption "Stock Purchase Options", pursuant to which, under certain
circumstances, senior executives are granted options to purchase additional
shares of the Company's Common Stock based upon their purchases of shares of the
Company's Common Stock.
The Committee takes into account available information regarding the
compensation practices and policies of other insurance and managed care
companies in determining the level and composition of compensation for the Named
Officers and other senior executives. However, the Committee does not base its
decisions on information relating to a specific defined peer group or target a
specific percentile range within such companies in determining compensation for
the Company's senior executives. The Committee applies specific quantitative
formula in making compensation decisions in connection with the establishment of
goals under the annual bonus pool. The Committee also appreciates the importance
of achievements that may be difficult to quantify, and, accordingly, recognizes
qualitative factors, such as the successful supervision of major corporate
projects, demonstrated leadership ability and contributions to industry and
community development.
BASE SALARY
Base salaries for each Named Officer and each other senior executive are
established at levels that the Committee believes appropriate in light of the
individual's level and scope of responsibility, pay levels in the insurance and
managed care industries and the ability of the Company to recruit and retain
senior executives. Salaries for senior executives are reviewed by the Committee
on an annual basis and may be increased at that time based on the individual's
contribution to the Company or changes in competitive levels of pay. However,
the Committee focuses on total annual compensation, including incentive
compensation, rather than on base salary alone, as the appropriate measure of
executive performance and contribution.
ANNUAL BONUS POOL
Commencing in 1992, the Company adopted an annual bonus pool program for
senior executives, including the Named Officers, pursuant to which the Company
each year establishes a bonus pool from which bonuses are distributed based on
the extent to which key objectives for the year are achieved.
The Committee establishes minimum, target and maximum goals for financial
and other performance measures. The size of the bonus pool is based upon the
extent to which these goals are achieved. The bonus pool is then divided among
the participating senior executives according to their salary and level of
responsibility within the Company.
Objectives for the 1994 bonus pool program included both Company and
division goals. In 1994 the program provided for approximately 60% of the pool
to be distributed based on the extent to which Company goals were achieved; the
balance was distributed based on the extent to which the individual's division
goals were achieved. Company goals were based on the Company's earnings.
Division goals varied depending on the
7
<PAGE> 10
business conducted by the division, were based primarily on the division's
earnings and included individual objectives based on criteria such as revenues,
pre-tax income, cost and expense ratios, managed care savings, investments,
sales and recruiting.
Bonuses granted for services in 1994 to the Named Officers and other
executives under the bonus pool program reflect the extent to which such goals
were achieved.
DISCRETIONARY STOCK OPTIONS
During each fiscal year, the Committee considers the desirability of
granting, or recommending that the Option Committee grant, to senior executives,
including the Named Officers, awards under the Company's Non-Qualified Stock
Option Plan or under the Company's 1994 Omnibus Stock Incentive Program (the
"Plan"), which provide avenues for granting longer-term incentives in the form
of a wide variety of stock-related compensation arrangements. The Option
Committee is responsible for administering the Plan. In 1994 the Option
Committee granted both incentive and non-qualified stock options to various
Named Officers and other executives pursuant to the Plan. Other than formula
grants to Directors under the Plan or grants to which such individuals became
entitled as the result of purchases of Company Common Stock under the Stock
Purchase Option Program, all of such grants were based on merit. In recommending
such grants to the Option Committee the Committee made a subjective evaluation
of each recipient's performance and the degree to which such grants would
further the purposes of the Company's compensation program, considering, among
other things, such executive's total compensation, the time and size of prior
awards to such executive, the executive's level of responsibility and the
executive's demonstrated and expected contributions to the Company. In granting
such options under the Plan, the Option Committee took into account the
recommendations of the Committee, but independently considered and applied the
criteria used by the Committee in making such recommendations. The Committee
believes that past grants of options have focused the Company's senior
management on building profitability and stockholder value.
STOCK PURCHASE OPTIONS
In 1993, the Company adopted a program to encourage senior executives of
the Company to become stockholders of the Company, thereby more closely aligning
the interests of such executives with those of the Company's other stockholders.
Under this program, which is currently being implemented under the Plan, the
Company has established target levels of stock ownership for the various levels
of senior executives. Under certain circumstances, upon the purchase of shares
of the Company's Common Stock, the executive will automatically receive an
option to purchase one share of Common Stock for each share purchased until he
reaches the target level of ownership. After the target level is reached, the
executive will be entitled to receive two options for each share of Common stock
so purchased.
CHIEF EXECUTIVE OFFICER
The Chief Executive Officer of the Company serves under employment
agreements with the Company and two of its subsidiaries (more fully described
under the caption "Employment and other Agreements" below) which, when taken
together, establish a minimum base salary, which can be increased at the
discretion of the Board of Directors. The Committee reviews and recommends to
the Board of Directors adjustments to the base salary of the Chief Executive
Officer of the Company, if appropriate, based upon its subjective evaluation of
competitive compensation data, his broad responsibilities as Chairman, Chief
Executive Officer and President of the Company and President and Chief Executive
Officer of such subsidiaries, its assessment of his past performance and its
expectation of the importance of his future contributions.
In 1994, the Chief Executive Officer received the minimum base salary
required under his employment agreements. The Committee retained an outside
advisor who, at the request of the Committee, conducted a study of the
compensation received by the chief executive officers of twenty-two insurance
companies and six companies providing managed care services. The group of
companies differs from the groups of companies reflected in the graph set forth
under the caption "Stock Price Performance Graph" and are, in many cases, larger
in asset size than the Company or engaged in dissimilar operations or lines of
business; however it was
8
<PAGE> 11
determined that the responsibilities of the Company's Chief Executive Officer
are at least comparable to those of the chief executive officers of the
insurance and managed care companies studied. Based upon this study and certain
assumptions, this advisor determined, among other things, that, from a
competitive pay perspective, the compensation opportunities under the Chief
Executive Officer's current compensation package (without considering the loan
provided to the Chief Executive Officer pursuant to his employment
agreements)appeared reasonable and appropriate.
Based on the study and its evaluation of the Company's performance and
prospects, as well as the responsibilities and performance of the Chief
Executive Officer, the Committee concluded that, aside from purely competitive
considerations, a number of internal considerations supported the level of
compensation received by the Chief Executive Officer, including: the critical
importance of the Chief Executive Officer to the Company's future success; the
breadth of his responsibilities; and the Company's strong stockholder returns
and generally optimistic profit potential.
For purposes of the annual bonus pool described above, the Chief Executive
Officer's personal objective was to have the Company achieve a substantial
increase in its net income per share. The Company's net income per share on a
fully diluted basis increased from $1.26 in 1993 to $1.58 in 1994. The bonus
received by the Chief Executive Officer as a participant in the pool reflects
the degree to which the Company's increase in net income per share exceeded the
minimum goal established as his personal objective.
In 1994, the Chief Executive Officer received options to purchase an
aggregate of 42,657 shares of the Company's Common Stock pursuant to the Stock
Purchase Option Program described above under the caption "Stock Purchase
Options".
MILLION DOLLAR DEDUCTION LIMITATION
Internal Revenue Code amendments adopted in 1993 impose a limit on the tax
deduction for certain executive compensation payments, beginning in 1994. Such
amendments limit the deductibility for federal income tax purposes of annual
compensation paid by the Company to its Chief Executive Officer and the four
other highest paid executives for amounts greater than $1 million unless certain
conditions are met. The Company believes that its cash salary and bonus programs
will not qualify for the exception to this limit for "performance based"
compensation. However, only one of the Company's executives is currently
receiving cash compensation above the $1 million limit.
CONSULTANTS
As it has from time to time, the Compensation Committee has retained an
outside consulting firm to work for the Committee, with the assistance and
cooperation of management, to identify opportunities to further strengthen the
effectiveness of the executive compensation program in support of stockholder
interests.
COMPENSATION COMMITTEE
KARL HEINZ-KLAESER
MICHAEL A. CAVATAIO
RICHARD R. HALDEMAN
R. RICHARD BASTIAN, III
ROBERT F. NAUERT (non-voting
member)
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Robert F. Nauert, an officer of the Company, is a non-voting member of
the Compensation Committee. Mr. Cavataio was entitled to receive $100,000 from
the Company in 1994 as compensation for investment advisory services performed
for the Company and its subsidiaries. Mr. Haldeman is a partner in the law firm
of Haldeman & Associates which received $10,947 for legal services rendered to
the Company and its subsidiaries in 1994.
9
<PAGE> 12
EXECUTIVE COMPENSATION
The table below sets forth certain information concerning compensation
received for services in all capacities to the Company or its subsidiaries for
the fiscal years ended December 31, 1994, 1993 and 1992, of those persons (the
"Named Officers"), who were, at December 31, 1994 (i) the chief executive
officer, and (ii) the other four most highly compensated executive officers of
the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
NAME AND PRINCIPAL ------------------------------ UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS(1) OPTIONS COMPENSATION(2)
------------------ ---- ---------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Peter W. Nauert, 1994 $1,000,000 $300,000 42,657 $11,372
Chairman of the Board, 1993 875,000 169,534 90,000 11,253
Chief Executive Officer 1992 878,200 419,534 -0- 6,783
and President
Charles R. Scheper, 1994 275,000 84,028 65,362 10,536
Senior Executive 1993 225,000 87,218 -0- 10,462
Vice President 1992 175,000 88,718 -0- 5,851
Thomas J. Brophy, 1994 243,750 35,100 45,737 87,331
Executive Vice President(3) 1993 37,500 48,349 -0- 300
Ernest T. Giambra, Jr. 1994 237,500 34,200 50,910 5,903
Executive Vice President(4) 1993 119,318 63,367 -0- 392
Anthony J. Pino, 1994 253,936 72,200 22,171 55,182
Executive Vice President 1993 212,500 33,463 -0- 8,471
1992 175,618 43,392 25,000 1,408
</TABLE>
---------------------------
(1) The bonus amounts are payable pursuant to the Employee Bonus Program
described above under the caption "Compensation Committee Report on
Executive Compensation".
(2) Amounts of All Other Compensation consist of (i) amounts contributed or
accrued for fiscal 1994, 1993 and 1992 under the Company's Employee Savings
and Stock Ownership Plan for Mr. Nauert ($10,077, $10,029 and $6,087), Mr.
Scheper ($10,077, $10,029 and $5,443), Mr. Pino ($10,077, $7,513 and
$1,000); and in fiscal 1994 for Mr. Giambra ($5,120); (ii) payments for
group term life insurance made by the Company in fiscal 1994, 1993 and 1992
for Mr. Nauert ($1,295, $1,224 and $696), Mr. Scheper ($459, $433 and $408),
Mr. Pino ($609, $740 and $408); and in fiscal 1994 and 1993 for Mr. Brophy
($2,025 and $300) and Mr. Giambra ($783 and $392); and (iii) relocation
expenses paid by the Company in fiscal 1994 for Mr. Brophy ($85,306) and Mr.
Pino ($44,496).
(3) Mr. Brophy joined the Company in November, 1993.
(4) Mr. Giambra joined the Company in June, 1993.
10
<PAGE> 13
The following tables summarize option grants during the fiscal year ended
December 31, 1994, to the Named Officers and the value of the options held by
such persons at the end of such fiscal year. None of the Named Officers
exercised any stock options during the fiscal year ended December 31, 1994. The
Company does not maintain any pension plans or any supplementary pension award
plans.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
----------------------------------------------------- ANNUAL RATES OF STOCK
NUMBER OF PERCENTAGE OF PRICE APPRECIATION
SECURITIES TOTAL OPTIONS FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR (PER SHARE) DATE(1) 5% 10%
---- ---------- ------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Peter W. Nauert............. 33,333 45.59% $ 9.90 11/2/99 $ 52,899 $153,165
9,312 13.85 9.00 11/2/04 52,706 133,571
12 .017 9.00 12/9/04 78 188
Charles R. Scheper.......... 15,000 22.31 11.375 5/2/04 76,770 223,305
25,000 37.19 11.375 5/2/04 127,950 372,175
5,362 7.97 9.00 11/2/04 30,140 76,382
20,000 29.75 9.00 12/9/04 119,480 302,820
Thomas J. Brophy............ 25,000 37.19 11.375 5/2/04 127,950 372,175
737 1.09 9.00 11/2/04 4,171 10,572
20,000 29.75 9.50 12/9/04 119,480 302,820
Ernest T. Giambra, Jr. ..... 25,000 37.19 8.875 5/2/04 190,750 434,675
5,910 8.79 9.00 11/2/04 33,451 84,773
20,000 29.75 9.50 12/9/04 119,480 302,820
Anthony J. Pino............. 2,171 3.23 9.00 11/2/04 12,288 31,141
20,000 29.75 9.50 12/9/97 119,480 302,820
</TABLE>
---------------------------
(1) The options terminate at the earlier of ten years from the date of grant or
one year from date of termination of employment with the Company except for
the 33,333 incentive options granted to Mr. Nauert which terminate at the
earlier of five years from the date of grant or one year from date of
termination of employment.
OPTION VALUES AT DECEMBER 31, 1994
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
DECEMBER 31, 1994 AT DECEMBER 31, 1994(1)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Peter W. Nauert............................ 115,000 42,657 $ 402,500 $ -0-
Charles R. Scheper......................... 41,000 44,362 56,000 14,000
Thomas J. Brophy........................... -0- 45,737 -0- -0-
Ernest T. Giambra, Jr. .................... 50,00 45,910 625 2,500
Anthony J. Pino............................ 10,000 37,171 17,500 26,250
</TABLE>
---------------------------
(1) Based on the closing price on the New York Stock Exchange-Composite
Transactions of the Company's Common Stock on that date ($9.00).
DIRECTORS' COMPENSATION
Directors of the Company currently receive fees of $25,000 per year.
Directors who are not employees of the Company who are chairmen of the Company's
Executive, Investment, Audit and Compensation Committees receive additional fees
of $25,000 per year. All Directors are reimbursed for travel expenses. Mr.
Cavataio also was entitled to receive $100,000 from the Company in 1994 as
compensation for investment advisory services provided to the Company and its
subsidiaries. Mr. Haldeman is a partner in the law firm of
11
<PAGE> 14
Haldeman & Associates which received $10,947 for legal services rendered to the
Company and its subsidiaries in 1994.
Pursuant to the Company's 1994 Omnibus Stock Incentive Program (the
"Plan"), each Director elected after the adoption of the Plan by the
stockholders on May 26, 1994 is entitled, upon initial election to the Board, to
receive options to purchase 25,000 shares of Common Stock of the Company at an
exercise price equal to 100% of the fair market value of such stock on the date
of grant. Since that date, Messrs. Scheper, Bastian, Brophy and Hulbert have
been granted such options. In addition, subject to approval of the proposed
Amendment to the Plan referred to below under the caption "Proposal to Approve
Amendment to the 1994 Omnibus Stock Incentive Program", each member of the
Option Committee is entitled to receive an option to purchase 8,000 shares of
Common Stock of the Company at an exercise price equal to 100% of the fair
market value of such stock on the date of grant. Subject to stockholder approval
of such Amendment, Messrs. Cavataio, Keefe and Haldeman have been granted such
options.
The Company has adopted a compensation deferral plan (the "Deferral Plan")
for members of the Board of Directors. The Deferral Plan was established in
order to encourage the attraction and retention of qualified Directors by
allowing Directors to irrevocably elect deferral of payment of a certain portion
of the compensation they receive as Directors. The Deferral Plan provides
benefits at retirement, disability or death for Directors who elect to defer
payments under the Deferral Plan. The Deferral Plan permits Directors to elect
investment options at the same time deferrals are elected. Under the Deferral
Plan, the Company makes an unsecured promise to pay deferred amounts together
with investment gains and losses, at a future time. The deferred amounts are not
funded as with a pension or profit sharing plan. However, under the Deferral
Plan a trust has been established with respect to the amounts allocated to the
Deferral Plan.
EMPLOYMENT AND OTHER AGREEMENTS
Mr. Nauert serves as Chairman and Chief Executive Officer of the Company
and its subsidiaries under an employment agreement which, unless earlier
terminated by either the Company or Mr. Nauert, will be automatically renewed on
December 31, 1996 and every three years thereafter. Under this agreement, Mr.
Nauert is paid an annual salary of $600,000, which amount may be increased at
the discretion of the Board of Directors, and an annual bonus as determined by
the Compensation Committee of the Board of Directors, based upon achieving the
Company's performance standards which are established by such Committee. In
addition, pursuant to this agreement the Company extended to Mr. Nauert a three
year term loan in the amount of $1,300,000 which accrues interest at an annual
rate of 3.71%. Up to 50% of the principal amount of this loan may be forgiven if
the following goals are achieved. If the Company has aggregate fully diluted net
income per common share of $4.50 during the period from January 1, 1994 to
December 31, 1996, then $325,000 in principal amount of the loan shall be
forgiven. If, during this same period, the Company has aggregate fully diluted
net income per common share in excess of $4.50, then, in addition to the
$325,000 previously forgiven, an amount of the loan equal to the amount by which
net income per common share exceeds $4.50, divided by $3.00 and multiplied by
$975,000 shall be forgiven, provided that in no event shall more than $650,000
of the loan be forgiven. The employment agreement is terminable by the Company
with or without cause. In the event of termination with cause, the agreement
provides that Mr. Nauert will receive his then current salary through the date
of termination. In the event of termination by the Company without cause or
termination by Mr. Nauert for good reason, Mr. Nauert will receive the present
value, discounted at an annual rate of 8%, of twenty-four months of his salary
at the level payable at the date of such termination. In the event Mr. Nauert's
employment is terminated by the Company without cause or by Mr. Nauert for good
reason within two years following a change in control of the Company, and in
lieu of the termination payments described above, the Company will pay Mr.
Nauert an amount equal to three times his annual salary at the date of such
termination. Any payment to be received by Mr. Nauert upon a change of control
of the Company or the termination of Mr. Nauert's employment will be subject to
increase if such payment is subject to Excise Tax under Section 4999 of the
Internal Revenue Code. Pursuant to the employment agreement, Mr. Nauert agreed
not to compete with the Company for a period of twelve months after the
termination of his employment unless he is terminated without cause or there has
been a change in control of the Company prior to such termination. Mr. Nauert
has agreed that during the term of his employment he will
12
<PAGE> 15
retain, directly or indirectly, ownership of not less than one million shares of
Common Stock of the Company. In addition, Mr. Nauert has agreed that until his
employment is terminated and so long as the market price of the Common Stock of
the Company is less than $12 per share, he will not sell or transfer his shares
of Common Stock (other than transfers to family members) without first offering
such shares to the Company.
Mr. Nauert also serves as Chairman and Chief Executive Officer of Design
Benefit Plans, Inc. and Chairman and President of Direct Financial Services,
Inc., two subsidiaries of the Company, and is party to three-year employment
agreements which commenced on January 1, 1991, continued until December 31, 1994
and continue for successive three year periods thereafter, until terminated by
either the Company or Mr. Nauert with each of these subsidiaries. The agreements
contain substantially the same terms as the employment agreement between Mr.
Nauert and the Company, except that Mr. Nauert's annual salaries under the
employment agreements with the Company's subsidiaries are not less than $250,000
and $150,000, respectively, and Mr. Nauert has not been extended any loans under
those agreements. Also, the employment agreements with such subsidiaries provide
that, subject to the approval of the Company's Compensation Committee, Mr.
Nauert is entitled to a bonus from each such subsidiary equal to ten percent of
such subsidiary's annual net income. However, pursuant to Mr. Nauert's
employment agreement with the Company, Mr. Nauert has waived his right to these
bonuses.
13
<PAGE> 16
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock against
the cumulative total return of the Wilshire 5000 index and the Wilshire
Insurance index for the period of five fiscal years commencing December 31, 1989
and ending December 31, 1994. This graph assumes $100 was invested on December
31, 1989 and that all dividends were reinvested.
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
FIVE YEAR CUMULATIVE
TOTAL RETURNS
<TABLE>
<CAPTION>
PIONEER FI-
MEASUREMENT PERIOD NANCIAL SER- WILSHIRE 5000 WILSHIRE IN-
(FISCAL YEAR COVERED) VICES, INC. INDEX SURANCE INDEX
<S> <C> <C> <C>
1989 100 100 100
1990 36 94 87
1991 36 126 115
1992 28 137 143
1993 81 153 151
1994 53 153 148
</TABLE>
CERTAIN TRANSACTIONS
The law firm of Haldeman & Associates performed services on behalf of the
Company during 1994. Mr. Haldeman, a Director of the Company, is a partner of
Haldeman & Associates. In 1994, the Company paid Haldeman & Associates a total
of $10,947 for legal services rendered to the Company and its subsidiaries.
Also, during 1994 Haldeman & Associates paid the Company $20,400 in connection
with a lease for office space and furniture. The Company believes that the
amounts charged by the Company in connection with the lease of office space are
on terms no less favorable to the Company than it could have obtained from
unaffiliated parties.
In 1994, the Company paid a transportation company owned by Mr. Nauert a
total of $16,333 on a per use basis, for transportation of employees and agents.
Mr. Nauert sold the transportation company in July, 1994. The Company believes
that the rates charged to the Company were the same as those charged to
unaffiliated third parties.
14
<PAGE> 17
In 1994, certain of the Company's marketing subsidiaries paid rent of
approximately $95,309 and parking fees of approximately $11,730 to a partnership
in which Mr. Nauert owns a 50% interest. The Company believes that the rates
charged to the Company's subsidiaries were the same as those charged to
unaffiliated third parties.
In 1994, Mr. Cavataio, a Director of the Company, was engaged by the
Company as an investment advisor to help manage the Company's investment
portfolio. Pursuant to this arrangement, Mr. Cavataio was entitled to receive
compensation of $100,000 in 1994.
Any future transactions between the Company and its officers, directors,
principal stockholders or the affiliates of any of them will be on negotiated
terms no less favorable to the Company than could be obtained from unaffiliated
parties.
PROPOSAL TO APPROVE AMENDMENT TO THE
1994 OMNIBUS STOCK INCENTIVE PROGRAM
The Board of Directors is proposing for stockholder approval an amendment
(the "Amendment") to the Company's 1994 Omnibus Stock Incentive Program (the
"Plan"). The Plan was adopted by the Board of Directors of the Company in 1994
and approved by the stockholders in the same year. The purpose of the Plan is to
enable the Company to offer officers and other key employees of the Company and
its subsidiaries performance-based incentives and other equity interests in the
Company, thereby attracting, retaining and rewarding such employees and
strengthening the mutuality of interests between such employees and the
Company's stockholders. The Board of Directors has now amended the Plan, subject
to stockholder approval, (a) to change the class of eligible participants to
include non-employee directors who are not members of the committee (the
"Committee") appointed to administer the Plan, and (b) to provide for the grant
to each Director who serves on the Committee, upon his initial appointment as a
member of the Committee, an immediately exercisable stock option for 8,000
shares of the Company's Common Stock with an exercise price equal to 100% of the
fair market value on the date of grant.
The Company believes that the proposed amendment will permit the Company to
keep pace with changing developments in management compensation and make the
Company competitive with those companies that offer stock incentive to attract
and keep management employees and non-employee directors.
ELIGIBILITY FOR PARTICIPATION
Prior to the proposed amendment, officers and other key employees of the
Company or any of its subsidiaries were eligible to participate in the Plan. The
proposed amendment would add non-employee Directors of the Company who are not
members of the Committee as an eligible class of participants.
GRANT OF OPTIONS TO MEMBERS OF COMMITTEE
Subject to stockholder approval of the Amendment, Messrs. Cavataio, Keefe
and Haldeman, the members of the Committee, have been granted immediately
exercisable options to purchase 8,000 shares of the Company's Common Stock with
an exercise price equal to 100% of the fair market value on the date of grant
($9 per share).
STOCK PURCHASE OPTIONS
In 1993, the Company adopted a program to encourage senior executives of
the Company to become stockholders of the Company thereby more closely aligning
the interests of such executives with those of the other Company stockholders.
Under the program, which is implemented under the Plan, the Company has
established target levels of stock ownership for the various levels of senior
officers. Until the officer reaches the target level of ownership, the Company
will grant the officer an option to purchase one share of Common Stock for each
share the officer purchases on the open market. After the target level is
reached, options for two shares of Common Stock are granted for each share which
is so purchased. If the Amendment is approved by the stockholders, non-employee
Directors who are not members of the Committee would be eligible to
15
<PAGE> 18
participate in such program. Subject to stockholder approval of the Amendment,
the Committee has established $25,000 as the target level for non-employee
Directors.
OTHER INFORMATION
The closing price of the Common Stock reported on the New York Stock
Exchange-Composite Transactions on March 29, 1995 was $10.625 per share.
The affirmative vote of the holders of a majority of the voting power of
all shares represented at the meeting is required for approval of the Plan.
Abstentions will count as a vote against the proposal, and broker non-votes will
have no effect on the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE 1994 OMNIBUS STOCK INCENTIVE PROGRAM.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company's financial statements for the year ended December 31, 1994
were audited by Ernst & Young LLP, independent auditors. Ernst & Young LLP has
been engaged as the Company's independent auditors for fiscal year 1995.
Representatives of Ernst & Young LLP are expected to attend the annual meeting
to make an appropriate statement if they desire and will be available to respond
to appropriate questions.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Stockholder proposals intended to be presented at the next annual meeting
must be received by the Company for inclusion in its proxy statement and form of
proxy relating to such meeting no later than December 1, 1995.
OTHER MATTERS
The Company is not aware of any matters, other than those referred to
herein, which will be presented at the meeting. If any other appropriate
business should properly be presented at the meeting, the proxies named in the
accompanying form of proxy will vote the proxies in accordance with their best
judgment.
EXPENSES OF SOLICITATION
All expenses incident to the solicitation of proxies by the Company will be
paid by the Company. In addition to solicitation by mail, arrangements have been
made with brokerage houses and other custodians, nominees, and fiduciaries to
send the proxy material to their principals, and the Company will reimburse them
for their reasonable out-of-pocket expenses in doing so. Proxies may also be
solicited personally or by telephone or telegraph by regular employees of the
Company.
16
<PAGE> 19
TREATMENT OF CERTAIN VOTES
Each stockholder is entitled to one vote on each proposal per share of
Common Stock held as of the record date. In determining whether a quorum exists
at the Annual Meeting for purposes of all matters to be voted on, all votes
"for" or "against," as well as all abstentions (including votes to withhold
authority to vote in certain cases), with respect to the proposal receiving the
most such votes, will be counted. If an individual has signed a proxy card but
failed to indicate a vote "for," "against" or "abstaining" from a particular
proposal, such proxy will be voted in favor of management with respect to such
proposal or in accordance with the discretion granted to the proxies.
By order of the Board of Directors
VAL RAJIC
Secretary
Schaumburg, Illinois
March 31, 1995
17
<PAGE> 20
<TABLE>
<S><C>
Please mark 6213
/X/ your votes as in
this example.
This proxy when properly executed will be voted in the manner directed herein. If no direction is made, this proxy will be voted
FOR election of directors and FOR the approval of the Amendment to the 1994 Omnibus Stock Incentive Program.
The Board of Directors recommends a vote FOR election of directors and FOR the approval of the Amendment to the 1994 Omnibus Stock
Incentive Program.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of / / / / 2. Approval of the Amendment to / / / / / /
Directors the 1994 Omnibus Stock
(see reverse) Incentive Program.
For, except vote withheld from the following nominee(s): 3. In their discretion upon such other business as may properly
__________________________________________________________ come before the meeting or any adjournment thereof.
Change of
Address/Comments / /
on Reverse Side
Please date and sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title
as such.
___________________________________________________________
1995
___________________________________________________________
SIGNATURE(S) DATE
---------------------------------------------------------------------------------------------------------------------------------
PIONEER FINANCIAL SERVICES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P ANNUAL MEETING TO BE HELD MAY 25, 1995 AT 4:00 P.M. CENTRAL TIME
R The undersigned hereby appoint(s) Peter W. Nauert and William B. Van Vleet, and each of them, proxies of the undersigned
(with full power of substitution) to attend the above Annual Meeting and all adjournments thereof (the "Meeting") and
O there to vote all shares of Common Stock of Pioneer Financial Services, Inc. (the "Company") that the undersigned
would be entitled to vote, if personally present, in regard to all matters which may come before the meeting, including:
X
Y COMMENTS: (change of address)
Election of Class I Directors, Nominees: _______________________________________________________
CLASS I (Term expires 1998)
Michael A. Cavataio _______________________________________________________
William B. Van Vleet
R. Richard Bastian, III _______________________________________________________
_______________________________________________________
(If you have written in the above space, please mark
the corresponding box on the reverse side of this card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES ON THE REVERSE SIDE. IF YOU DO NOT MARK ANY BOXES, YOUR
PROXY WILL BE VOTED IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN
AND RETURN THIS CARD.
-------------
| SEE REVERSE |
| SIDE |
-------------
</TABLE>
<PAGE> 1
EXHIBIT 99
Amendment to the
Pioneer Financial Services, Inc.
1994 Omnibus Stock Incentive Program
Adopted by the Executive Committee
as of August 24, 1994
(1) The first sentence of Section 3(a) of the Plan is hereby amended
to read in its entirety as follows:
"Participants will consist of such officers,
directors and key employees of the Company as
the Committee in its sole discretion
determines to be significantly responsible
for the success and future growth and
profitability of the Company and whom the
Committee may designate from time to time to
receive Benefits under the Plan."
(2) Section 3 of the Plan is hereby amended to be adding a new
paragraph (c) to read as follows:
(c) In addition, each Director of the Company who
serves on the Committee, upon his initial
appointment as a member of the Committee, shall
be granted an immediately exercisable stock option
for 8,000 shares of Common Stock with an exercise
price equal to 100% of the Fair market Value on
the date of grant.
