<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
</TABLE>
FIDELITY NATIONAL FINANCIAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] Fee not required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
<PAGE> 2
FIDELITY NATIONAL FINANCIAL, INC.
17911 VON KARMAN AVENUE, SUITE 300
IRVINE, CALIFORNIA 92614
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 14, 1999
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Fidelity National Financial, Inc., a
Delaware corporation, will be held on Monday, June 14, 1999, at 10:00 a.m.,
local time, at The Irvine Marriot Hotel, 18000 Von Karman Avenue, Irvine,
California 92612 for the following purposes:
(1) to elect two directors to serve for the next three years or until their
successors are duly elected and qualified or until their earlier death,
resignation or removal; and
(2) to transact such other business as may properly come before the Meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice. Only stockholders of record at the close of business
on May 3, 1999, are entitled to notice of and to vote at the Meeting. All
stockholders are cordially invited to attend the Meeting in person.
Sincerely,
/s/ WILLIAM P. FOLEY, II
--------------------------------------
William P. Foley, II
Chairman of the Board
Irvine, California
May 10, 1999
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE TO ASSURE
REPRESENTATION OF YOUR SHARES. ANY STOCKHOLDER GIVING A PROXY MAY REVOKE IT
PRIOR TO THE TIME IT IS VOTED BY FILING WITH THE SECRETARY, M'LISS JONES KANE, A
WRITTEN NOTICE OF REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE, OR
BY VOTING IN PERSON AT THE MEETING. NO POSTAGE NEED BE AFFIXED TO THE PROXY IF
IT IS MAILED IN THE UNITED STATES.
<PAGE> 3
FIDELITY NATIONAL FINANCIAL, INC.
17911 VON KARMAN AVENUE, SUITE 300
IRVINE, CALIFORNIA 92614
------------------------
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited by the Board of Directors of Fidelity
National Financial, Inc. (the "Company") for use at the Annual Meeting of
Stockholders (the "Meeting") to be held Monday, June 14, 1999, at 10:00 a.m.,
local time, or at any adjournment thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting of Stockholders. The Meeting will
be held at The Irvine Marriott Hotel, 18000 Von Karman Avenue, Irvine, CA 92612.
It is anticipated that such proxy, together with this Proxy Statement, will
be first mailed on or about May 10, 1999, to all stockholders entitled to vote
at the Meeting.
The Company's principal executive offices are located at 17911 Von Karman
Avenue, Suite 300, Irvine, California 92614 and its telephone number at that
address is (949) 622-5000.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company's Secretary a
written notice of revocation or a duly executed proxy bearing a later date or by
attending the Meeting and voting in person.
VOTING AND SOLICITATION
Each share has one vote on each matter properly submitted for a vote at the
Meeting. The cost of this solicitation will be borne by the Company. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation materials to such beneficial owners. Proxies may also be solicited
by certain of the Company's directors, officers and regular employees, without
additional compensation, personally or by telephone or telegram.
Votes cast by proxy or in person at the Meeting will be counted by the
persons appointed by the Company to act as election inspectors for the Meeting.
The election inspectors will treat shares represented by properly signed and
returned proxies that reflect abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum on all
matters.
The election inspectors will treat shares referred to as "broker non-votes"
(i.e., shares held by brokers or nominees as to which instructions have not been
received from the beneficial owners or persons entitled to vote that the broker
or nominee does not have discretionary power to vote on a particular matter) as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum.
Abstentions and "broker non-votes" will not affect the outcome of the
director elections.
RECORD DATE AND STOCK OWNERSHIP
Stockholders of record at the close of business on May 3, 1999, are
entitled to notice of and to vote at the Meeting. As of May 3, 1999, 31,582,137
shares of the Company's Common Stock (the "Common Stock"), $.0001 par value,
were issued and outstanding, and 8,756,002 shares were held by the Company in
treasury. On that date, there were 926 stockholders of record. All information
in this Proxy Statement has been adjusted for stock splits and dividends.
<PAGE> 4
As of March 31, 1999, the following table sets forth the beneficial
ownership of the Common Stock of the Company by each director who owns shares,
by the director nominees, all executive officers named in the Summary
Compensation Table, all directors and executive officers as a group and by all
persons known by the Company to be the beneficial owners of more than 5% of the
Company's Common Stock. The information as to beneficial stock ownership is
based on data furnished by the persons concerning whom such information is
given.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
--------------------------------------
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF TOTAL
---------------- ---------------- ----------------
<S> <C> <C>
William P. Foley, II........................ 5,024,137(1)(2) 15.7%
17911 Von Karman Ave., #300
Irvine, CA 92614
Richard H. Pickup........................... 1,756,700 5.7%
c/o Wedbush Morgan Securities, Inc.
500 Newport Center Drive
Suite 550 Newport Beach, CA 92660
Frank P. Willey............................. 989,985(2) 3.2%
17911 Von Karman Ave., #300
Irvine, CA 92614
William A. Imparato......................... 38,558(2) *
1515 East Missouri Ave., Bldg. A
Phoenix, AZ 85014
Donald M. Koll.............................. 27,486(2) *
4343 Von Karman Ave
Newport Beach, CA 92660
Daniel D. (Ron) Lane........................ 115,331(2) *
14 Corporate Plaza, Suite 150
Newport Beach, CA 92660
J. Thomas Talbot............................ 46,187(2) *
24 Corporate Plaza, Suite 100
Newport Beach, CA 92660...................
Cary H. Thompson............................ 13,377(2) *
3731 Wilshire Blvd., 10th Floor
Los Angeles, CA 90010
General William Lyon........................ 2,750(2) *
4490 Von Karman Avenue
Newport Beach, CA 92660
Patrick F. Stone............................ 166,929(2) *
17911 Von Karman Ave., #300
Irvine, CA 92614
Alan L. Stinson............................. 49,004(2) *
17911 Von Karman Ave., #300
Irvine, CA 92614
Raymond R. Quirk............................ 216,486(2) *
17911 Von Karman Avenue, #300
Irvine, CA 92614
All directors and officers as a group (16
persons).................................. 6,979,752(3) 21.1%
</TABLE>
- ---------------
* Represents less than 1%.
(1) Included in this amount are 1,704,949 shares held by Folco Development
Corporation, of which Mr. Foley and his spouse are the sole stockholders,
and 192,049 shares held by Foley Family Charitable Foundation; Mr. Foley is
a "controlling person" of the Company.
(2) Includes currently exercisable stock options for Mr. Foley of 165,000 shares
under the 1993 Stock Option Plan, 231,064 shares under the 1991 Stock Option
Plan and 1,039,995 shares under the 1987 Stock Option Plan; currently
exercisable stock options for Mr. Willey of 33,000 shares under the 1993
Stock
2
<PAGE> 5
Option Plan, 62,070 shares under the 1991 Stock Option Plan and 222,428
shares under the 1987 Stock Option Plan; includes currently exercisable
stock options for Mr. Imparato of 10,980 shares under the 1993 Stock Option
Plan and 20,167 shares under the 1987 Stock Option Plan; includes currently
exercisable stock options for Mr. Koll of 7,320 shares under the 1993 Stock
Option Plan and 20,166 shares under the 1987 Stock Option Plan; includes
currently exercisable stock options for Mr. Lane of 14,640 shares under the
1993 Stock Option Plan and 20,166 shares under the 1987 Stock Option Plan;
includes currently exercisable stock options for General Lyon of 2,750
shares under the 1998 Stock Option Plan; includes currently exercisable
stock options for Mr. Talbot for 14,640 shares under the 1993 Stock Option
Plan and 20,167 shares under the 1987 Stock Option Plan; currently
exercisable stock options for Mr. Thompson of 10,084 shares under the 1987
Stock Option Plan; includes currently exercisable stock options for Mr.
Stone of 44,000 shares under the 1993 Stock Option Plan, 67,734 shares under
the 1991 Stock Option Plan and 36,300 shares under the 1987 Stock Option
Plan; includes currently exercisable stock options for Mr. Stinson of 27,711
shares under the 1998 Stock Option Plan; and currently exercisable stock
options for Mr. Quirk of 49,461 shares under the 1993 Stock Option Plan,
38,489 shares under the 1991 Stock Option Plan and 28,132 shares under the
1987 Stock Option Plan.
(3) This number includes 2,370,787 currently exercisable stock options for all
directors and officers of the Company.
DEADLINES FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented by such
stockholders at the Company's 2000 Annual Meeting must be received by the
Company no later than January 6, 2000, in order that they may be considered for
inclusion in the Company's Proxy Statement and form of proxy relating to that
meeting.
Any stockholder who intends to present a proposal at the next Annual
Meeting of the Company's stockholders without requesting the Company to include
such proposal in the Company's proxy statement must deliver or mail a notice to
the Company's Secretary, together with a brief description of the business
desired to be brought before the meeting. To be timely, such notice must be
received at the Company's principal executive offices not less than 60 days nor
more than 90 days prior to the meeting, if at least 70 days notice or prior
public disclosure of the date of the meeting is given or made to the Company's
stockholders. If such prior notice or disclosure shall not have been given or
made, the stockholder's notice will be timely if received not later than the
close of business on the tenth day following the date on which notice of the
date of the next annual meeting is mailed or such public disclosure was made. If
the stockholder's notice is not timely made, the Company may exercise
discretionary voting with respect to such stockholder proposal pursuant to
authority conferred by proxies to be solicited by the Company's Board of
Directors and delivered to the Company in connection with such meeting.
ELECTION OF DIRECTORS
Under the Bylaws, the Company may have up to ten directors. The Board of
Directors currently consists of eight members. Vacancies in the classes of
directors whose terms expire in 1999 and 2000 were created by the resignation of
William W. Wehner and the death of Stephen C. Mahood, respectively. Terms of the
members of the Board of Directors are for three-year periods and expire as
follows:
<TABLE>
<CAPTION>
EXPIRATION
----------
<S> <C>
William P. Foley, II........................................ 1999
Frank P. Willey............................................. 1999
Daniel D. (Ron) Lane........................................ 2000
J. Thomas Talbot............................................ 2000
William A. Imparato......................................... 2001
Donald M. Koll.............................................. 2001
Cary H. Thompson............................................ 2001
General William Lyon........................................ 2001
</TABLE>
3
<PAGE> 6
NOMINEES
Directors will be elected by a plurality of the votes of the shares of
Common Stock present in person or represented by proxy at the Meeting and
entitled to vote on the election of directors. Two directors, Messrs. Foley and
Willey, are proposed to be elected at the Meeting for three-year terms expiring
in 2002 or until their successors have been elected and qualified or until their
earlier death, resignation or removal. Messrs. Foley and Willey are up for
reelection to the Board of Directors. Unless otherwise instructed, the proxy
holders will vote the proxies received by them for Messrs. Foley and Willey, the
Company's nominees. In the event that a nominee of the Company is unable or
declines to serve as a director at the time of the Meeting, proxies will be
voted for any nominee who shall be designated by the present Board of Directors
to fill the vacancy. It is not expected any nominee will be unable or will
decline to serve as a director.
Any stockholder entitled to vote for the election of directors at a meeting
may nominate persons for election as directors only if written notice of the
stockholder's intent to make such nomination is given, either by personal
delivery or by United States mail, postage prepaid and addressed to: Secretary,
Fidelity National Financial, Inc., 17911 Von Karman Avenue, Suite 300, Irvine,
California 92614, not later than: (i) with respect to any election to be held at
an Annual Meeting of Stockholders, 90 days in advance of such Meeting, and (ii)
with respect to any election to be held at a Special Meeting of Stockholders for
the election of directors, the close of business on the 10th day following the
date on which notice of such meeting is first given to stockholders. Each such
notice must set forth: (a) the name and address of the stockholder who intends
to make the nomination and of the person or persons to be nominated; (b) a
representation that such stockholder is a holder of record of stock of the
Company entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to nominate the person or persons specified in the notice;
(c) a description of all arrangements or understandings between such stockholder
and each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by such
stockholder; (d) such other information regarding each nominee proposed by such
stockholder as would have been required to be included in a Proxy Statement
filed pursuant to the proxy rules of the Securities and Exchange Commission if
such nominee had been nominated or intended to be nominated by the Board of
Directors; and (e) the consent of each nominee to serve as a director of the
Company, if elected. The Chairman of a stockholders' meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
4
<PAGE> 7
The names of the director nominees, all directors, and all executive
officers, and certain information about them, are set forth below:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
---- --- -------------------- --------
<S> <C> <C> <C>
William P. Foley, II........... 54 Chairman of the Board and Chief 1986
Executive Officer
Patrick F. Stone............... 51 Chief Operating Officer N/A
Frank P. Willey................ 45 Director and President 1986
William A. Imparato............ 52 Director 1986
Donald M. Koll................. 66 Director 1995
Daniel D. (Ron) Lane........... 64 Director 1989
General William Lyon........... 76 Director 1998
J. Thomas Talbot............... 63 Director 1990
Cary H. Thompson............... 42 Director 1992
Alan L. Stinson................ 53 Executive Vice President -- N/A
Financial Operations
Allen D. Meadows............... 45 Executive Vice President, Chief N/A
Financial Officer and
Treasurer
Peter T. Sadowski.............. 44 Executive Vice President, N/A
General Counsel
Brent B. Bickett............... 34 Senior Vice President, N/A
Financial Operations
M'Liss Jones Kane.............. 46 Senior Vice President, N/A
Corporate Counsel and Corporate
Secretary
Raymond R. Quirk............... 52 Vice President N/A
Ronald R. Maudsley............. 47 Vice President N/A
Ernest D. Smith................ 48 Vice President N/A
Gary R. Nelson................. 51 Vice President N/A
</TABLE>
WILLIAM P. FOLEY, II
Mr. Foley is the Chairman of the Board and Chief Executive Officer of the
Company and has been since its formation in 1984. Mr. Foley was President of the
Company from its formation in 1984 until December 31, 1994. Mr. Foley is also
currently serving as Chairman of the Board and Chief Executive Officer of CKE
Restaurants, Inc., as Chairman of the Board of American National Financial,
Inc., Rally's Hamburgers, Inc., Checkers Drive-In Restaurants, Inc. and Santa
Barbara Restaurant Group, Inc. Additionally, he is a member of the Board of
Directors of Micro General Corporation, Fresh Foods, Inc. and Miravant Medical
Technologies, Inc.
PATRICK F. STONE
Mr. Stone was elected Chief Operating Officer of the Company on March 25,
1997. From May 1995 through March 1997 he was an Executive Vice President of the
Company and President of Fidelity National Title Insurance Company and the five
other underwriters of the Company. From February 1989 to May 1995 he was
President of Fidelity National Title Company of Oregon. He is Chairman of the
Board of Micro General Corporation.
FRANK P. WILLEY
Mr. Willey is President and a director of the Company. He served as an
Executive Vice President and General Counsel of the Company from its formation
until December 31, 1994. He has served in various capacities with subsidiaries
and affiliates of the Company since joining it in 1984. Mr. Willey is also a
director
5
<PAGE> 8
of CKE Restaurants, Inc., Santa Barbara Restaurant Group, Inc., Southern Pacific
Funding Corporation and Ugly Duckling Holding, Inc.
WILLIAM A. IMPARATO
Mr. Imparato has been a director of the Company since December 1986. From
June 1990 to December 1993, Mr. Imparato was President of the Company's
wholly-owned real estate subsidiary Manchester Development Corporation
("Manchester"). Since July 1980, he has been a partner in Park West Development
Company, a real estate development firm headquartered in Phoenix, Arizona.
DONALD M. KOLL
Mr. Koll has been a director of the Company since March 28, 1995. Mr. Koll
is Chairman of the Board and Chief Executive Officer of The Koll Company and has
been since its formation on March 26, 1962. Mr. Koll is also a director of Koll
Real Estate Group, Inc.
DANIEL D. (RON) LANE
Mr. Lane has been a director of the Company since September 1989. Since
February 1983, he has been a principal, Chairman and Chief Executive Officer of
Lane/Kuhn Pacific, Inc., a corporation that consists of several community
development and home-building partnerships, all of which are headquartered in
Newport Beach, California. Mr. Lane is Vice Chairman of the Board of Directors
of CKE Restaurants, Inc.
GENERAL WILLIAM LYON
General Lyon is the Chairman of the Board, President and Chief Executive
Officer of William Lyon Homes, Inc. and affiliated companies which are
headquartered in Newport Beach, California. In 1989, General Lyon formed
Air/Lyon, Inc. which includes Elsinore Service Corp. and Martin Aviation located
at John Wayne Airport. He has been Chairman of the Board of The William Lyon
Company since June, 1985.
J. THOMAS TALBOT
Mr. Talbot has been a director of the Company since December 1990. He was
formerly Chairman of the Board and Chief Executive Officer of HAL, Inc. and its
subsidiaries Hawaiian Airlines and West Maui Airport, and served in various
executive capacities with those companies until June 1991. Between August 1992
and March 1994, Mr. Talbot was Chairman and Chief Executive Officer of Alliance
Bancorp, which was being liquidated. Mr. Talbot has been a general partner of
Shaw & Talbot, a real estate investment and development company, since 1975. He
was Chairman of Jet America Airlines from 1981 to 1987, when it merged with
Alaska Air Group. Mr. Talbot is currently serving as a director of the Hallwood
Group, Showbiz Pizza Time, Inc., Koll Real Estate Group, Hemmeter Enterprises,
Inc. and the Baldwin Company.
CARY H. THOMPSON
Mr. Thompson has been a director of the Company since July 1992. Mr.
Thompson is currently Chief Operating Officer and a director of Aames Financial
Corporation. Mr. Thompson was a managing director of Nat West Markets from May
of 1994 through March of 1995. Mr. Thompson was Senior Vice President and
managed the West Coast Financial Institutions Group for Oppenheimer & Co., Inc.,
an investment banking firm from 1989 to May 1994. Prior to that time, he was a
partner with the law firm of Manatt, Phelps, Rothenberg and Phillips.
ALAN L. STINSON
Mr. Stinson joined the Company in October, 1998 as Executive Vice
President -- Financial Operations of the Company. Prior to his employment with
the Company, Mr. Stinson was Executive Vice President and Chief Financial
Officer of Alamo Title Holding Company. From 1968 to 1994, Mr. Stinson was
employed by Deloitte & Touche, LLP. He was a partner with Deloitte & Touche, LLP
from 1980 to 1994.
6
<PAGE> 9
ALLEN D. MEADOWS
Mr. Meadows joined the Company in September, 1997 as an Executive Vice
President and Chief Financial Officer of the Company. Prior to his employment
with the Company, Mr. Meadows was Senior Vice President -- Corporate Development
of Great Western Bank from 1984 to 1997.
PETER T. SADOWSKI
Mr. Sadowski joined the Company on January 4, 1999 as Executive Vice
President and General Counsel. Prior to joining the Company, Mr. Sadowski was a
partner with Goldberg, Katz, Sadowski & Stansen, PC, a law firm located in St.
Louis, Missouri. Before joining the above firm in 1996, Mr. Sadowski was a
partner with the Stolar Partnership, a law firm located in St. Louis, Missouri.
BRENT B. BICKETT
Mr. Bickett was appointed Senior Vice President, Corporate Finance of the
Company in January 1999. He also serves as the Senior Vice President, Corporate
Finance for Santa Barbara Restaurant Group, Inc. From August 1990 until January
1999, Mr. Bickett was a member of the Investment Banking Division of Bear,
Stearns & Co., Inc., a leading national investment banking firm, serving since
1997 as a Managing Director of the Firm's real estate, gaming, lodging and
leisure group.
M'LISS JONES KANE
Ms. Kane joined the Company in March, 1995 as a Senior Vice President and
Corporate Counsel of the Company and became Corporate Secretary in April 1995
serving in these capacities until September 15, 1997. From September 15, 1997 to
March 17, 1999 she was Senior Vice President, General Counsel and Corporate
Secretary of the Company. Since March 17, 1999 she has been Senior Vice
President, Corporate Counsel and Corporate Secretary. Prior to that she was with
the ICN Pharmaceuticals, Inc. group of companies from March of 1990 as Vice
President, General Counsel and Secretary of ICN Biomedicals, Inc. and
subsequently became Vice President, General Counsel and Secretary of SPI
Pharmaceuticals, Inc.
RAYMOND R. QUIRK
Mr. Quirk has been a Vice President of the Company since June 1993, and has
been an Executive Vice President and a Regional Manager of Fidelity National
Title Insurance Company since August 1991. Mr. Quirk has been employed by
Fidelity National Title Insurance Company in other management positions since
November 1987.
RONALD R. MAUDSLEY
Mr. Maudsley is a Vice President of the Company and has been since June 17,
1998. Mr. Maudsley serves as Regional Manager for all agency operations
nationwide. Mr. Maudsley joined Fidelity National Title Insurance Company in
1988 as an Executive Vice President.
ERNEST D. SMITH
Mr. Smith is a Vice President of the Company and has been since June 17,
1998. He is currently responsible for the seven divisions encompassing FlexNet
(bundled services): Fidelity National Lender Division; Fidelity National Credit
Services; Fidelity National Flood, Inc.; Fidelity National Tax Services;
Nationwide Document and Recording; Fidelity National Foreclosure Services
(Trustee Sales Guarantee, Agency Sales and Posting); and Fidelity National
Appraisal. Mr. Smith serves as Regional Manager for all Title and Escrow
Operations in Southern California. Mr. Smith joined Fidelity National Title
Insurance Company in 1987 as President of its San Francisco Division.
7
<PAGE> 10
GARY R. NELSON
Mr. Nelson has been a Vice President of the Company since September 26,
1994. From August 1993 to September 1994 he was Chief Financial Officer of World
Title Company. From May 1991 to July 1993 Mr. Nelson was Senior Vice President
of Mergers and Acquisitions of the Company. From January 1988 to May 1991 he was
a Vice President, Chief Financial Officer and Treasurer of the Company. Mr.
Nelson is a certified public accountant.
8
<PAGE> 11
EXECUTIVE COMPENSATION
The following Summary Compensation Table shows compensation paid by the
Company for services rendered during fiscal years 1998, 1997 and 1996 for the
Company's Chief Executive Officer and the four most highly compensated current
executive officers whose salary and bonus exceeded $100,000 in 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------
LONG TERM
COMPENSATION
OTHER ------------
ANNUAL AWARDS- ALL OTHER
NAME AND PRINCIPAL BONUS COMPENSATION OPTIONS(#) COMPENSATION
POSITION YEAR SALARY($) ($)(1) (2) (1)(3)(4) ($)(5)
------------------ ---- --------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
William P. Foley, II.......... 1998 $600,000 $1,954,281 $119,827 195,376 $13,682
Chairman of the Board 1997 600,000 1,380,754 88,215 187,000 35,986
and Chief Executive Officer 1996 600,000 1,061,125 122,596 188,100 28,859
Patrick F. Stone,............. 1998 $325,000 $ 586,284 $ -- 53,113 $ --
Chief Operating Officer 1997 318,750 408,226 -- 40,004 22,500
1996 300,000 313,338 -- 38,316 12,250
Frank P. Willey,.............. 1998 $250,000 $ 586,284 $ -- 60,339 $28,180
President 1997 250,000 414,226 -- 44,000 16,563
1996 250,000 318,338 -- 52,800 14,250
Alan L. Stinson,.............. 1998 $162,750 $ 802,943 $ -- 47,711 $15,600
Executive Vice President -- 1997 -- -- -- -- --
Financial Operations 1996 -- -- -- -- --
Raymond R. Quirk,............. 1998 $212,500 $ 293,142 $ -- 120,762 $15,250
Vice President 1997 190,000 195,675 -- -- 15,000
1996 180,000 125,000 -- -- 14,550
</TABLE>
- ---------------
(1) Consists of cash bonuses in the years paid or deferred to reduce the
exercise price of stock options granted to the above-noted key employees to
less than fair market value of the common stock at the date of grant,
pursuant to the Company's 1991 Stock Option Plan. Bonuses were awarded
during the year following the fiscal year to which the bonuses relate, based
on an evaluation by the Compensation Committee of the Board of Directors.
The amount of deferred bonuses included in this column for 1998, 1997 and
1996, the most recent three years for which the options were granted, are as
follows: (i) Mr. Foley: $195,428 -- 1998 bonus; $138,075 -- 1997 bonus and
$100,000 -- 1996 bonus; (ii) Mr. Stone: $58,628 -- 1998 bonus; $41,423 --
1997 bonus and $31,834 -- 1996 bonus; (iii) Mr. Willey: no bonus
deferred -- 1998; $124,268 -- 1997 bonus; no bonus deferred -- 1996; (iv)
Mr. Stinson: no bonus deferred -- 1998; (v) Mr. Quirk: no bonus
deferred -- 1998; $48,919 -- 1997 bonus and no bonus deferred -- 1996. Mr.
Stinson's bonus includes a $640,000 retention payment resulting from the
Alamo Title merger.
(2) Certain incidental perquisites or other personal benefits for executive
officers of the Company (not otherwise disclosed in this Proxy Statement)
may result from expenses incurred by the Company or its subsidiaries in the
interest of attracting and retaining qualified personnel. The incremental
cost to the Company and its subsidiaries of providing such incidental
perquisites or other personal benefits for executive officers named in the
Summary Compensation Table, did not exceed the lesser of $50,000 or 10% of
the total annual salary and bonus reported in fiscal 1998 for the named
executive officer. Other Annual Compensation for Mr. Foley included the cost
of (i) a Company provided automobile -- $9,000 in 1998, $9,000 in 1997 and
$9,000 in 1996 and (ii) tax and financial planning advice provided by third
parties to Mr. Foley and Folco Development Corporation and personal use of
Company assets by Mr. Foley and Folco Development Corporation -- $110,826.95
in 1998, $79,215 in 1997, and $113,596 in 1996.
(3) The number of options granted per year in this column for 1998, 1997 and
1996, the three-year period in which the options were granted, are as
follows: (i) Mr. Foley: 1998 grant -- 165,000 options granted under the 1993
stock option plan and 30,376 options granted under the 1991 stock option
plan; 1997 grant -- 165,000 options granted under the 1987 Stock Option Plan
and 22,000 options granted under the 1991 Stock Option Plan; and 1996
grant -- 165,000 options granted under the 1987 Stock Option Plan
9
<PAGE> 12
and 23,100 stock options granted under the 1991 Stock Option Plan; (ii) Mr.
Stone: 1998 grant -- 44,000 options granted under the 1993 Stock Option Plan
and 9,113 options granted under the 1991 Stock Option Plan; 1997
grant -- 33,000 options granted under the 1987 Stock Option Plan and 7,004
options granted under the 1991 Stock Option Plan, and 1996 grant -- 33,000
options granted under the 1987 Stock Option Plan and 5,316 stock options
granted under the 1991 Stock Option Plan; (iii) Mr. Willey: 1998
grant -- 33,000 options granted under the 1993 Stock Option Plan and 27,339
options granted under the 1991 Stock Option Plan; 1997 grant -- 44,000
options granted under the 1987 Stock Option Plan, and 1996 grant -- 44,000
options granted under the 1987 Stock Option Plan and 8,800 stock options
granted under the 1991 Stock Option plan; (iv) Alan L. Stinson: 1998
grant -- 47,771 options granted under the 1998 Stock Option Plan; and (v)
Raymond R. Quirk: 1998 grant -- 110,000 options granted under the 1993
Stock Option Plan and 10,762 options granted under the 1991 Stock Option
Plan; 1997 grant -- 18,150 options granted under the 1987 Stock Option Plan
and 1996 grant -- 9,982 options granted under the 1987 Stock Option Plan;
(4) The Company does not have any long-term incentive plans or compensation
plans pursuant to which stock appreciation rights or restricted stock is
awarded to officers or directors. The number of options granted in 1999 for
fiscal year 1998 to the named executives, not included in the table, are as
follows: under the 1991 Stock Option Plan (i) Mr. Foley -- 39,086 shares;
and (ii) Mr. Stone -- 11,726 shares; and under the 1998 Stock Option Plan
(i) Mr. Foley -- 150,000 shares; (ii) Mr. Stone -- 60,000 shares; (iii) Mr.
Willey -- 30,000 shares; (iv) Mr. Stinson -- 47,711 shares, and (v) Mr.
Quirk -- 10,000 shares.
(5) Includes Company cash contributions to the Employee Stock Purchase Plan on
behalf of the individuals named in the Summary Compensation Table. All Other
Compensation for Mr. Foley also includes imputed income of $1,466 for 1998;
$1,157 for 1997, and $1,081 for 1996 respectively, from a joint life split
dollar insurance policy.
10
<PAGE> 13
OPTION GRANTS
The following table provides information as to options to purchase common
stock granted to the named individuals during 1998 pursuant to the Company's
1998, 1993, and 1991 Stock Option Plans. The Company does not currently grant
stock appreciation rights to officers or directors.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF
SECURITIES GRANTED TO MARKET STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES PRICE AT EXERCISE OR FOR OPTION TERM
OPTIONS IN FISCAL DATE OF BASE PRICE(1) EXPIRATION -------------------------
NAME GRANTED(#) YEAR GRANT ($/SH) DATE 5%($) 10%($)
---- ---------- ---------- -------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 STOCK OPTION PLAN
Alan L. Stinson........ 7,871 0.5% $32.0455 $14.4873 04/24/01 $ 173,235 $ 211,162
Alan L. Stinson........ 9,840 0.6% 32.0455 14.4869 04/25/04 273,294 398,838
Alan L. Stinson........ 30,000 1.7% 28.6364 28.6364 10/01/08 540,278 1,369,171
1993 STOCK OPTION PLAN
William P. Foley, II... 165,000 9.5% $24.2618 $24.2618 01/12/08 2,517,589 6,380,065
Patrick F. Stone....... 44,000 2.5% 24.2618 24.2618 01/12/08 671,357 1,702,350
Frank P. Willey........ 33,000 1.9% 24.2618 24.2618 01/12/08 503,517 1,276,013
Raymond R. Quirk....... 110,000 6.4% 24.2618 24.2618 01/12/08 1,678,392 4,253,376
1991 STOCK OPTION PLAN
William P. Foley, II... 30,376 1.8% $24.2618 $19.3981 01/12/10 734,267 1,723,711
Patrick F. Stone....... 9,113 2.5% 24.2618 19.3981 01/12/10 220,284 517,124
Frank P. Willey........ 27,339 1.6% 24.2618 19.3981 01/12/10 660,854 1,551,374
Raymond R. Quirk....... 10,762 0.6% 24.2618 19.3981 01/12/10 260,145 610,698
TOTAL -- 1998, 1993 AND 1991 STOCK OPTION PLANS
William P. Foley, II... 195,376 11% $24.2618 $19.3981- 01/12/08- 3,251,856 8,103,776
24.2618 01/12/10
Patrick F. Stone....... 53,113 3.0% 24.2618 $19.3981- 01/12/08- 891,642 2,218,475
24.2618 01/12/10
Frank P. Willey........ 60,339 3.5% 24.2618 $19.3981- 01/12/08- 1,164,372 2,827,387
24.2618 01/12/10
Alan L. Stinson........ 47,711 2.8% $28.6364- $14.4869- 04/24/01- 986,807 1,979,171
32.0455 28.6364 10/01/08
Raymond R. Quirk....... 120,762 7.0% $24.2618 $19.3981- 01/12/08- 1,938,538 4,864,075
24.2618 01/12/10
</TABLE>
- ---------------
(1) The options granted in 1998 under the 1991 Stock Option Plan were granted at
an exercise price of $24.2618 to key employees of the Company who applied
deferred bonuses expensed in 1997 (see (1) of Summary Compensation Table) to
the exercise price, thereby reducing such price to $19.3981 per share if
exercised within the first year of grant. The exercise price of these
options decreases approximately 5% per year through January 12, 2002 and
$0.30 per share from January 12, 2002 through January 12, 2009 at which time
the exercise price will be $15.3619. The options granted in 1998 under the
1998 Stock Option Plan were granted at an exercise price of $14.4873 and
$14.4869 (pursuant to the Company's merger with Alamo Title Holding Company)
and $28.6364, the market price at the date of grant and these options became
exercisable on August 24, 1998 (the $14.4873 and $14.489 grants) and 10,000
shares became exercisable on October 1, 1998, 10,000 shares will become
exercisable on October 1, 1999 and 10,000 shares will become exercisable on
October 1, 2000 (the $28.6364 grant). The options granted in 1998 under the
1993 Stock Option Plan were granted at an exercise price of $24.2618 per
share, the market price at the date of grant and these options became
exercisable on January 12, 1999.
11
<PAGE> 14
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table summarizes information regarding exercises of stock
options by the named individuals during 1998 and unexercised options held by
them as of December 31, 1998. The Company did not reprice any existing options
during the last completed fiscal year.
AGGREGATED STOCK OPTION EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
FY-END OPTIONS AT FY-END
SHARES ACQUIRED VALUE REALIZED (#) EXERCISABLE ($) EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE(1)(2) UNEXERCISABLE(1)(2)
---- --------------- -------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
William P. Foley, II........ 131,769 $3,890,058 1,271,059/165,000 $27,557,527/1,029,303
Patrick F. Stone............ 32,643 919,531 104,035/ 44,000 2,262,569/ 274,480
Frank P. Willey............. 61,326 1,793,043 284,498/ 33,000 5,903,527/ 205,860
Raymond R. Quirk............ -- -- 88,582/110,000 1,922,382/ 686,202
Alan L. Stinson............. -- -- 27,711/ 20,000 302,240/ 37,272
</TABLE>
- ---------------
(1) Number of exercisable shares and corresponding values relate to options
granted under the 1998, 1993, 1991 and 1987 Stock Option Plans. The exercise
price varies based upon the exercise price at the time of grant and the
amount of deferred bonus applied by the officer to reduce the exercise
price. See Summary Compensation Table above. The value of unexercised
options at year-end is calculated as the difference between the market value
of the underlying security, $30.50 per share, and the exercise price of the
option at year-end, less the bonus deferral. The exercise prices of the
options at year-end were as follows: (i) Mr. Foley -- options to purchase
165,000 shares at $24.2618 per share under the 1993 plan; options to
purchase 27,951 shares at $5.1091 per share, options to purchase 8,784
shares at $2.8682 per share, options to purchase 30,746 shares at $5.3100
per share, options to purchase 46,119 shares at $6.4882 per share, options
to purchase 62,888 shares at $2.5073 per share, options to purchase 30,376
shares at $19.3981 per share and options to purchase 24,200 shares at
$5.7231 per share under the 1991 plan; and options to purchase 219,615
shares at $6.9155 per share, options to purchase 219,615 shares at $9.4773
per share, and options to purchase 219,615 shares at $10.4164 per share,
options to purchase 199,650 shares at $9.579 per share and options to
purchase 181,500 shares at $10.4336 per share under the 1987 plan; (ii) Mr.
Stone -- options to purchase 44,000 shares at $24.2618 per share under the
1993 Plan; options to purchase 6,432 shares at $5.1091 per share, options to
purchase 2,928 shares at $2.8682 per share, options to purchase 41,557
shares at $6.4882 per share, options to purchase 9,113 shares at $19.3981
per share, options to purchase 7,704 shares at $5.7231 per share under the
1991 Plan; and options to purchase 36,300 shares at $10.4336 per share under
the 1987 Plan; (iii) Mr. Willey -- options to purchase 33,000 shares at
$24.2618 per share under the 1993 Plan; options to purchase 10,648 shares at
$5.1091 per share, options to purchase 10,248 shares at $5.3100 per share,
options to purchase 13,835 shares at $6.4882 per share, and options to
purchase 27,339 shares at $19.3981 per share under the 1991 Plan; and
options to purchase 58,564 shares at $6.9155 per share, options to purchase
24,889 shares at $9.4773 per share, options to purchase 37,335 at $10.4164
per share, options to purchase 53,240 shares at $9.5791 per share and
options to purchase 48,400 shares at $10.4336 per share under the 1987 Plan;
(iv) Mr. Quirk -- options to purchase 110,000 shares at $24.2618 per share
and options to purchase 21,961 shares at $6.9155 per share under the 1993
Plan; options to purchase 9,427 shares at $2.5073 per share, options to
purchase 7,320 shares at $5.3100 per share, options to purchase 10,980
shares at $6.4882 per share and options to purchase 10,762 shares at
$19.3981 per share under the 1991 Plan; and options to purchase 9,982 shares
at $9.5791 per share and options to purchase 18,150 shares at $10.4336 per
share under the 1987 Plan; (v) Mr. Stinson -- options to purchase 9,840
shares at $14.4869 per share, options to purchase 7,871 shares at $14.4873
per share and options to purchase 30,000 shares at $28.6364 per share under
the 1998 Plan.
12
<PAGE> 15
(2) Number of unexercisable shares and corresponding value relate to options
granted under the Company's 1998, 1993 and 1991 Stock Option Plans. The
value of these unexercisable options represents the difference between the
year-end market value of the underlying security of $31.125 per share and
the 1991 options at year-end of $5.1091 per share and the 1987 options at
year-end of $9.5791 per share. These options became exercisable on April 17,
1997, May 14, 1997 and April 11, 1997 respectively.
EMPLOYMENT AGREEMENTS
The Company entered into a five-year employment agreement (the "Agreement")
with its Chairman and Chief Executive Officer, Mr. Foley, effective April 1,
1991 and amended the agreement on April 1, 1996 and January 1, 1997,
(collectively the "Amendment" to the employment agreement effective on April 1,
1996) for an additional five year period through March 31, 2001. The first
amendment adjusted his minimum annual base salary to $600,000. The Agreement and
Amendment include other compensation and executive fringe benefits, including an
annual merit bonus calculated based on the Company's return on equity before
extraordinary items, a $1,000,000 insurance policy payable to the beneficiary of
his choice and a joint life split dollar insurance arrangement under which the
Company advances the premiums and retains the full cash value of the policy.
There is a change in control provision in the Amendment enabling Mr. Foley to
terminate this agreement due to a change in control during the period commencing
60 days before and expiring 365 days after such change in control. In the event
of termination of the agreement for Good Reason (as defined in the agreement as
a change in control) or if Mr. Foley's employment is terminated following a
change of control due to a breach of this Agreement then he shall receive (i)
his salary through the date of termination, (ii) severance pay in an amount
equal to his annual salary in effect as of the date of termination plus the
total bonus paid or payable to him for the most recent calendar year multiplied
by the greater number of years remaining in the term of employment, including
partial years, or 3 years; such payment to be made in a lump sum on or before
the fifth day following the date of termination, (iii) maintenance of all
benefit plans and programs for Mr. Foley for the greater number of 3 years or
the number of years (including partial years) remaining in the Amendment. The
Company obtained a covenant from Mr. Foley that he will not compete with the
Company or disclose its trade secrets both during employment or in the event the
agreement ends or Mr. Foley's employment is terminated. The Agreement allows the
Company to terminate Mr. Foley upon written notice without cause with terms
specified in the Amendment. Upon Mr. Foley's death, his estate will receive a
payment in the amount of two years' base salary. Upon incapacity or disability
for a continuous period of nine months, the Company may terminate the employment
contract with Mr. Foley upon payment of an amount equal to two years' base
salary.
The Company entered into a one year employment agreement with Patrick F.
Stone effective January 1, 1996, which was subsequently amended effective
January 1, 1997, extending the term for a period of 3 years ending December 31,
1999. The amendment also provides for a minimum base salary of $325,000 which
may be increased at the discretion of the Chief Executive Officer and/or the
Board of Directors. Other compensation and executive fringe benefits include an
annual bonus calculated based on the Company's return on equity before
extraordinary items. There is a change in control provision in the first
amendment enabling Mr. Stone to terminate this Agreement due to a change in
control during the period commencing 60 days before and expiring 365 days after
such change in control. In the event of termination of the agreement for Good
Reason (defined in the agreement as a change in control) or if Mr. Stone's
employment is terminated following a change in control due to a breach of this
agreement then he shall receive (i) his salary through the date of termination,
(ii) severance pay in an amount equal to his annual salary in effect as of the
date of termination plus the total bonus paid or payable to him for the most
recent calendar year multiplied by the greater of the number of years (including
partial years) remaining in the agreement or the number 2, such payment to be
made in a lump sum on or before the fifth day following the date of termination,
(iii) maintenance of all benefit plans and programs for Mr. Stone for the number
of 2 years or the number of years (including partial years) remaining in the
Agreement.
The Company entered into a one year employment agreement with Frank P.
Willey effective January 1, 1996, which was subsequently amended effective
January 1, 1997, extending the term for a period of 3 years ending December 31,
1999. The agreement provided for a minimum base salary of $250,000 which may be
13
<PAGE> 16
increased at the discretion of the Chief Executive Officer and/or the Board of
Directors. Other compensation and executive fringe benefits include an annual
bonus calculated based on the Company's return on equity before extraordinary
items. There is a change in control provision in the first amendment enabling
Mr. Willey to terminate this Agreement due to a change in control during the
period commencing 60 days and expiring 365 days after such change in control. In
the event of termination of the agreement for Good Reason (defined in the
Agreement as a change in control) or if Mr. Willey's employment is terminated
following a change in control due to a breach of this agreement then he shall
receive (i) his salary through the date of termination, (ii) severance pay in an
amount equal to his annual salary in effect as of the date of termination plus
the total bonus paid or payable to him for the most recent calendar year
multiplied by the greater of the number of years (including partial years)
remaining in the agreement or the number 2, such payment to be made in a lump
sum on or before the fifth day following the date of termination, (iii)
maintenance of all benefit plans and programs for Mr. Willey for the number of 2
years or the number of years (including partial years) remaining in the
Agreement.
Mr. Alan L. Stinson entered into an employment agreement with the Company
effective October 1, 1998, for a term of 3 years which provides for a minimum
annual base salary of $225,000 which may be increased at the discretion of the
Chief Executive Officer and/or the Compensation Committee of the Board of
Directors. Other compensation and fringe benefits include an annual bonus
calculated based on the Company's return on equity before extraordinary items.
There is a change in control provision enabling Mr. Stinson to terminate this
Agreement due to a change in control during the period commencing 60 days and
expiring 365 days after such change in control. In the event of termination of
the agreement for Good Reason (defined in the agreement as a change in control)
or if Mr. Stinson's employment is terminated following a change in control due
to a breach of this agreement then he shall receive (i) his salary through the
date of termination, (ii) severance pay in an amount equal to his annual salary
in effect as of the date of termination plus the total bonus paid or payable to
him for the most recent calendar year multiplied by the greater of the number of
years (including partial years) remaining in the agreement or the number 2, such
payment to be made in a lump sum on or before the fifth day following the date
of termination, (iii) maintenance of all benefit plans and programs for Mr.
Stinson for the number of 2 years or the number of years (including partial
years) remaining in the agreement. Other than as provided in the agreement,
employee will not engage in any business competitive with the Company.
Mr. Allen D. Meadows entered into an employment agreement with the Company
effective September 15, 1997, for a term of 3 years which provides for a minimum
annual base salary of $200,000 which may be increased at the direction of the
Chief Executive Officer and/or the Compensation Committee of the Board of
Directors. Other compensation and fringe benefits include an annual bonus
calculated based on the Company's return on equity before extraordinary items.
There is a change in control provision enabling Mr. Meadows to terminate this
Agreement due to a change in control during the period commencing 60 days and
expiring 365 days after such change in control In the event of termination of
the agreement for Good reason (defined in the agreement as a change in control)
or if Mr. Meadows' employment is terminated following a change in control due to
a breach of this agreement then he shall receive (i) his salary through the date
of termination, (ii) severance pay in an amount equal to his annual salary in
effect as of the date of termination plus the total bonus paid or payable to him
for the most recent calendar year multiplied by the greater of the number of
years (including partial years) remaining in the Agreement or the number 2, such
payment to be made in a lump sum on programs for Mr. Meadows for the number of 2
years or the number of years (including partial years) remaining in the
agreement. Other than provided in the agreement, employee will not engage in any
business competitive with the Company.
Mr. Peter T. Sadowski entered into an employment agreement with the Company
effective January 4, 1999, for a term of 2 years which provides for a minimum
annual base salary of $220,000 which may be increased at the discretion of the
Chief Executive Officer and/or the Compensation Committee of the Board of
Directors. Other compensation and fringe benefits include an annual bonus
calculated based on the Company's return on equity before extraordinary items.
There is a change in control provision enabling Mr. Sadowski to terminate this
Agreement due to a change in control during the period commencing 60 days and
expiring 365 days after such change in control. In the event of termination of
the agreement for Good
14
<PAGE> 17
Reason (defined in the agreement as a change in control) or if Mr. Sadowski's
employment is terminated following a change in control due to a breach of this
agreement then he shall receive (i) his salary through the date of termination,
(ii) severance pay in an amount equal to his annual salary in effect as of the
date of termination plus the total bonus paid or payable to him for the most
recent calendar year multiplied by the greater of the number of years (including
partial years) remaining in the agreement or the number 2, such payment to be
made in a lump sum on or before the fifth day following the date of termination,
(iii) maintenance of all benefit plans and programs for Mr. Sadowski for the
number of 2 years or the number of years (including partial years) remaining in
the agreement. Other than as provided in the agreement, employee will not engage
in any business competitive with the Company.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive a $2,500 per quarter
retainer and $2,500 per Board of Directors meeting attended (or $1,250 per
committee meeting attended), plus reimbursement of reasonable expenses.
Directors who are employees of the Company do not receive any compensation for
acting as directors, except for reimbursement of reasonable expenses, if any,
for Board meeting attendance.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, Messrs. Thompson, Talbot and Lane served as members of the
Compensation Committee. The Compensation Committee is currently composed of
three independent directors. No member of the Compensation Committee is a former
or current officer or employee of the Company or any of its subsidiaries.
Frank P. Willey, an executive officer of the Company, served during 1998 on
the compensation committee of CKE Restaurants, Inc. William P. Foley, II is an
executive officer of CKE Restaurants, Inc. and a director of the Company. Mr.
Willey also served on the compensation committee of Santa Barbara Restaurant
Group, Inc., of which Mr. Foley is an executive officer.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The following report of the Compensation Committee to the Board of
Directors shall not be deemed to be incorporated by reference into any previous
filing by the Company under either the Securities Act of 1933 ("Securities Act")
or the Securities Exchange Act of 1934 ("Exchange Act") that incorporates future
Securities Act or Exchange Act filings in whole or in part by reference.
To the Board of Directors:
GENERAL
The Compensation Committee of the Board of Directors is responsible for
establishing and administering the policies that govern executive compensation
and benefit practices. The Compensation Committee evaluates the performance of
the executive officers and determines their compensation levels, in terms of
salary, annual bonus and related benefits, all subject to Board approval. The
Compensation Committee has access to independent compensation data for use in
assessing levels of compensation for officers of the Company.
COMPENSATION PHILOSOPHY
The Company's executive compensation programs are designed to (i) provide
levels of compensation that integrate pay and incentive plans with the Company's
strategic goals, so as to align the interests of executive management with the
long-term interests of the stockholders; (ii) motivate Company executives to
achieve the strategic business goals of the Company and to recognize their
individual contributions; and (iii) provide compensation opportunities which are
competitive to those offered by other national title insurance companies and
other middle-market corporations similar in size and performance. Although the
exact identity of the corporations surveyed varies, these generally include
title companies and other corporations equal to or larger
15
<PAGE> 18
than the Company. Most of the title companies surveyed are included in the Peer
Group Index utilized in the "Performance Graph" set forth below.
Therefore, the Compensation Committee believes that the components of
executive compensation should include base salary, annual cash bonus, stock
option grants and other benefits and should be linked to individual and Company
performance. With regard to the Company's performance, the measures used for
determining appropriate levels of compensation for executive officers include
the Company's national market share, net margin, quality of service, meeting
strategic goals within the current economic climate and industry environment,
scope of responsibilities, expansion by acquisition or otherwise, profit
retention and profitability, all of which combine to enhance stockholder value.
BASE SALARY
The Committee considers Company management proposals concerning salary
adjustments, with the exception of Mr. Foley, its Chairman and Chief Executive
Officer, whose compensation was established under the terms of an employment
agreement entered into in 1991 and amended in 1996 and 1997 with the approval of
the Board of Directors and five key employees including Mr. Stone, Mr. Willey,
Mr. Stinson, Mr. Meadows and Mr. Sadowski. The Compensation Committee then makes
recommendations to the entire Board of Directors for their approval.
In determining base salaries for executives for 1998, the Compensation
Committee considered the Company's earnings, outside surveys of salary levels of
other title insurance companies and other similar corporations, individual
performance and achievement, areas of responsibility, position tenure and
internal comparability.
ANNUAL CASH BONUSES
Executive officers of the Company are eligible for annual bonuses which may
be paid in the form of cash or as deferred compensation. Given the Company's
performance in 1998, the Compensation Committee approved 1998 bonuses for the
executives which were paid in 1999.
STOCK OPTION GRANTS
As indicated above, an important element of the Company's compensation
philosophy is the desire to align the interests of the executive officers with
the long-term interests of the Company's stockholders. In order to meet this
desire, the Board of Directors adopted a performance-based stock option plan in
1991 for executive officers, key employees and branch managers of the Company
that allows participants to defer a portion of their bonus income in order to
reduce their option exercise price. Additionally, the Company's Board of
Directors and stockholders had previously approved the adoption of the Company's
1987 Stock Option Plan, pursuant to which the Company may grant stock options to
certain key employees and non-employee directors or officers, and in 1994 the
Board of Directors and stockholders approved the 1993 Stock Plan pursuant to
which the Company could grant stock options to certain key employees and
nonemployee directors and officers. In 1998 the Board of Directors and
stockholders approved the 1998 Stock Option Plan to replace the 1987 Stock
Option Plan, which expired December 1997. The purpose of all the stock option
plans is to attract, retain and award executive officers and directors and to
furnish incentives to these persons to improve operations, increase profits and
positively impact the Company's long-term performance. Consistent with these
objectives, the Compensation Committee granted options in 1999 for their
performance in 1998 to executive officers as follows: (i) under the 1998 Stock
Option Plan as follows: Mr. Foley, options to purchase 150,000 shares; Mr.
Stone, options to purchase 60,000 shares; Mr. Willey, options to purchase 30,000
shares; Mr. Quirk, options to purchase 10,000 shares. Certain officers have
elected to defer a portion of their bonus in stock options under the 1991 Stock
Option Plan as follows: Mr. Foley, options to purchase 39,086 shares; Mr. Stone,
options to purchase 11,726 shares.
16
<PAGE> 19
Corporate Deduction for Compensation. Section 162(m) of the Internal
Revenue Code generally limits to $1.0 million the corporate deduction for
compensation paid to certain executive officers, unless certain requirements are
met. The Company's policy with respect to the deductibility limit of Section
162(m) generally is to preserve the federal income tax deductibility of
compensation paid to executive officers. However, while the tax impact of any
compensation arrangement is an important factor to be considered, the impact is
evaluated in light of the Company's overall compensation philosophy.
Accordingly, the Company has and will continue to authorize the payment of
non-deductible compensation if it deems that it is consistent with its
compensation philosophy and in the best interests of the Company and its
stockholders.
April 23, 1999 Compensation Committee
Daniel D. (Ron) Lane
J. Thomas Talbot
Cary H. Thompson
17
<PAGE> 20
PERFORMANCE GRAPH
Set forth below is a graph comparing cumulative total stockholder return on
the Company's common stock against the cumulative total return on the S & P 500
Index and against the cumulative total return of a peer group index comprised of
certain companies for the industry in which the Company competes (SIC code
6361 -- Title Insurance) for the five-year period ending December 31, 1998. This
peer group consists of the following companies: Chicago Title Corporation,
Capital Guaranty Corporation, First American Financial Corporation, LandAmerica
Financial Group, Inc. and Stewart Information Services Corp. The peer group
comparison has been weighted based on the Company's stock market capitalization.
The graph assumes an initial investment of $100.00 on January 1, 1994, with
dividends reinvested over the periods indicated.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
<TABLE>
<CAPTION>
FIDELITY NATIONAL
FINANCIALS, INC. S&P 500 INDEX PEER GROUP
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<S> <C> <C> <C>
'Dec 93' 100.00 100.00 100.00
'Dec 94' 41.04 101.32 85.80
'Dec 95' 71.88 139.40 121.67
'Dec 96' 71.93 171.40 140.75
'Dec 97' 165.74 228.59 208.51
'Dec 98' 180.17 293.91 290.72
</TABLE>
ASSUMES $100 INVESTED ON JANUARY 1, 1994
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 1998
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BOARD MEETINGS AND COMMITTEES
The Board of Directors held a total of five formal meetings during the year
ended December 31, 1998. No director attended fewer than 80% of the aggregate of
all meetings of the Board of Directors or any committee in 1998.
The Board presently has an Audit Committee, a Compensation Committee and an
Executive Committee, but does not have a Nominating Committee. The Audit
Committee, which consists of Messrs. Lane and Talbot, met one time during 1998.
The Audit Committee meets independently with internal audit staff,
representatives of the Company's independent auditors and representatives of
senior management. The Audit Committee reviews the general scope of the
Company's annual audit, the fee charged by the independent auditors and other
matters relating to internal control systems. In addition, the Audit Committee
will be responsible for reviewing and monitoring the performance of non-audit
services by the Company's auditors. The Committee will be responsible for
recommending the engagement or discharge of the Company's independent auditors.
The Compensation Committee currently consists of Messrs. Lane, Talbot and
Thompson. The Compensation Committee, either alone or in conjunction with other
Board committees, reviews and reports to the Board the salary, fee and benefit
programs designed for senior management, officers and directors with a view to
ensure that the Company is attracting and retaining highly-qualified individuals
through competitive salary, fee and benefit programs and encouraging continued
extraordinary effort through incentive rewards. The Compensation Committee did
not meet during 1998.
The Company also has an Executive Committee consisting of Messrs. Foley,
Willey and Talbot. The Executive Committee may invoke all of the power and
authority of the Board of Directors in the management of the business and the
affairs of the Company, except those powers which, by law, cannot be delegated
by the Board of Directors. The Executive Committee did not meet during 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company previously made investments in real property for investment or
operating purposes, most of which, as described below, were in partnerships
which included one or more officers of the Company. All such transactions were
approved by a majority of the non-interested directors of the Company. The
Company believes these transactions were for terms and at rates no less
favorable to the Company than those which could have been obtained from
unrelated parties. As previously announced, the Company intends to reduce and
divest itself of real estate investments as market conditions permit.
The Company currently leases one of its facilities from partnerships or
other entities in which Manchester, or one or more of its officers have an
interest. These transactions are discussed below with respect to "Investments in
Partnerships" and "Transactions with Management and Others," respectively. The
Company believes that all such leases were on terms no less favorable than those
that could have then been obtained from unrelated parties.
Manchester has interests in, or acts as property manager for, certain real
estate partnerships in which one or more officers of the Company have an
interest. Certain officers of the Company have made contributions to these
partnerships in exchange for partnership interests that cannot be valued until
the dissolution of each individual partnership. Fidelity National Title Company
of California is a tenant in one of the properties owned by the partnerships
discussed below.
INVESTMENTS IN PARTNERSHIPS
Folco Mission Valley Partners Limited Partnership ("Folco Mission Valley")
was formed in 1991 by Folco Development Corporation ("Folco"), a corporation of
which Mr. Foley and his spouse are the sole stockholders, as a 78% general
partner, and Fidelity National Title Insurance Company, as a 22% limited
partner, for the purpose of acquiring from the Resolution Trust Corporation an
office building in San Diego County where Fidelity National Title Insurance
Company was the sole tenant and conducted its San Diego County, California title
operations. Folco's 78% general partnership interest was assigned to Sussex
Holdings,
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Ltd. ("Sussex"), an affiliate of Folco, in June 1992 and Fidelity National Title
Insurance Company's 22% limited partnership interest was assigned to Manchester
in January 1992. Fidelity National Title Company continued to lease the building
from Folco for $28,272 per month, plus taxes, insurance and other operating
costs until the sale of the building in December 1998. This annual rental rate
was at a 30% discount based on its lease with Folco Mission Valley.
Goodyear Investors II General Partnership ("Goodyear II") was formed in
1986 by Manchester as a 50% partner, Folco as a 32.5% partner, Mr. Willey as a
2% partner, and others, to purchase, for investment, unimproved real property
located in Maricopa County, Arizona. Manchester's interest in Goodyear II was
transferred to the Company in June, 1993. As of March 31, 1999, Manchester,
Kensington Development Corporation ("Kensington"), which is 90% owned by
Manchester and 10% by Fidelity National Title Insurance Company of California
and the Company have contributed $1,025,000 to Goodyear II. Kensington held this
interest from 1988 to March 1996. The Company may be required to make annual
contributions of its pro rata share of property taxes and insurance costs. All
general partners have made their required pro rata capital contributions. The
Company and the other general partners received pro rata capital distributions
in March 1995. It is not anticipated that additional capital contributions will
be required of the Company.
Prospect Office Partners Limited Partnership ("Prospect Office Partners")
was formed in 1988 by Manchester as a combined 29.7% general and limited
partner, Mr. Foley as a 30.4% general partner, Mr. Willey as a 6.1% general
partner, and others, to develop an office building in Tustin, California.
Currently Manchester is a 41.62% general partner and a 28.38% limited partner
due to assignments of interests by other general and limited partners. Mr. Foley
and Mr. Willey no longer have any partnership interests in Prospect.
Approximately one-half of the building is leased by Fidelity National Title
Company for its Orange County title operations. Manchester advanced to the
partnership, at an interest rate of 12% per annum, amounts necessary to fund
operating deficits. These advances were assigned to the Company in June 1993.
The lease provides for a monthly rent payment of $30,124. In May 1996, Fidelity
National Title Insurance Company purchased from the FDIC, as receiver of
Guardian Bank, a note secured by a deed of trust with an unpaid principal
balance of $3,413,560 and a first lien deed of trust encumbering the Tustin
office building. Fidelity National Title Insurance Company purchased and
continues to hold the note under which Prospect Office Partners was the maker
for a discounted price of $3,072,204.
Tustin Retail Limited Partnership ("Tustin Retail") was formed in 1988 by
Manchester as a combined 30% general and limited partner, Mr. Foley as a 30.7%
general partner, Mr. Willey as a 4.3% general partner, and others, to develop a
retail center in Tustin, California. Manchester advanced to the partnership, at
an interest rate of 12% per annum, plus amounts necessary to fund operating
deficits. The outstanding balance of these advances at December 31, 1995, and
March 31, 1996, was $736,184. In addition, Tustin Retail is indebted to
Manchester in the amount of $303,500 which is evidenced by a promissory note
which provides for interest at 12% per annum and is secured by a second trust
deed on the property. These advances and loans were assigned to the Company in
June 1993. In August 1994, Commerce Bank filed a lawsuit (the "Lawsuit") against
Tustin Retail (a real estate partnership), Manchester (a general partner in
Tustin Retail) and Messrs. Foley and Willey (as general partners). The Lawsuit
is essentially a judicial foreclosure under a deed of trust securing a
$4,350,000 note dated February 18, 1992, to Commerce Bank from Tustin Retail
(the "Note"). In December 1995, the Federal Deposit Insurance Corporation, which
took control of Commerce Bank, submitted a bid at the property foreclosure
auction and acquired the property for $2.9 million. The lease for this space
provides for a monthly lease payment of $20,100. On July 3, 1996, following a
fair value hearing, the court determined that the value of the property as of
the foreclosure sale was $4,580,680. Subsequently, the court entered a
deficiency judgment against Tustin Retail and the general partners in the amount
of $480,545. In consideration of Fidelity National Title Insurance Company's
payment of the deficiency amount, Tustin Retail assigned its statutory
redemption right to Fidelity National Title Insurance Company. On November 21,
1996, Fidelity National Title Insurance Company redeemed the property for the
amount of $2,792,470 and assumed control of the operation of the property from
the receiver. Such property was sold on May 13, 1998.
West Woodland Business Associates Limited Partnership ("West Woodland") was
formed in 1989 by Manchester as a 10% general partner, Mr. Foley as a 21.3%
general partner, Folco as a combined 20% general
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and limited partner, Mr. Willey as a 2.5% general partner, and others, to
develop an office building in Woodland, California. In September 1991,
Manchester sold its interest in the partnership to Folco. See "Transactions with
Management and Others" below. Folco's interest was subsequently assigned to
Sussex. Approximately one-half of the building is leased by Fidelity California
for its Yolo County title operations. The lease provides for a monthly lease
payment of $11,032. In March 1994, the lender on this project agreed to a
modification of the credit agreement substituting Sussex for Manchester and
releasing Manchester from these obligations. As of December 31, 1998, Manchester
had not been released from its general partnership obligation under the West
Woodland Credit Agreement. West Woodland remains indebted under a $940,000 first
lien loan encumbering the office building and a $250,000 unsecured loan. West
Woodland refinanced both loans with a new lender, thereby lowering the loans'
interest accrual rates and extending the terms of both loans for five (5) years.
Wilmac III Limited Partnership ("Wilmac III") was formed in 1987 to acquire
for investment unimproved real property in Maricopa County, Arizona. In December
1987, Manchester acquired a 24% limited partnership interest in Wilmac III, 30%
of the limited partnership units. Mr. Willey has a 8.2% combined general and
limited partnership interest and Mr. Strunk has a 1.6% limited partnership
interest. The partnership agreement requires all the limited partners to make
pro rata capital contributions to service the debt on the property. Manchester
has invested $696,000 in the partnership. Manchester's interest was assigned to
the Company in June 1993. It is not anticipated that additional capital
contributions will be required of the Company.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
In March 1999, the Company adopted an Employee Stock Purchase Loan Plan and
a Director Stock Purchase Loan Program (the "Loan Plans") and made loans to
certain directors and selected key employees, the proceeds of which were used to
make open market purchases of the Company's Common Stock. The loans were made on
a full recourse, unsecured basis, with five-year terms. Each loan bears interest
at the rate of five percent per annum, and interest is payable at maturity. The
maturity date of each participating employee's loan is subject to change in the
event of a termination of his or her employment with the Company. If a
participant sells or otherwise disposes of shares purchased with the proceeds of
the loan, interest becomes payable monthly at an increased rate. Certain
information concerning the directors and executive officers of the Company
participating in the Loan Plan and the principal amounts of their respective
loans (the initial principal amount of each of which remains outstanding as of
the date of this Proxy Statement) is set forth below:
<TABLE>
<CAPTION>
NAME OF DIRECTOR PRINCIPAL AMOUNT OF LOAN
---------------- ------------------------
<S> <C>
J. Thomas Talbot....................................... $ 150,000
Donald M. Koll......................................... $ 150,000
William Imparato....................................... $ 150,000
Daniel D. Lane......................................... $ 150,000
General William Lyon................................... $ 150,000
</TABLE>
<TABLE>
<CAPTION>
NAME OF EXECUTIVE OFFICER
-------------------------
<S> <C>
William P. Foley, II................................... $3,000,000
Frank P. Willey........................................ $ 350,000
Alan L. Stinson........................................ $ 200,000
Peter T. Sadowski...................................... $ 50,000
Ronald R. Maudsley..................................... $ 350,000
Ernest D. Smith........................................ $ 350,000
Brent B. Bickett....................................... $ 100,000
Gary R. Nelson......................................... $ 100,000
M'Liss Jones Kane...................................... $ 100,000
</TABLE>
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Certain executive officers received loans from subsidiaries of the Company
in amounts in excess of $60,000 after January 1, 1998, as follows: Patrick F.
Stone, loan amount $150,000 at an interest rate of prime per annum, largest
aggregate amount outstanding at any time during the period $112,500, as of March
31, 1999.
In July 1990, Lake Mortgage Corporation, a wholly-owned subsidiary of the
Company, made a $300,000 secured loan to a relative of Mr. Willey. The loan was
assigned to Fidelity National Title Insurance Company in July 1990. This loan
has been purchased by Mr. Willey for full consideration.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Rules adopted by the Securities and Exchange Commission ("SEC") under
Section 16(a) of the Exchange Act require the Company's officers and directors,
and persons who own more than 10% of the issued and outstanding shares of the
Company's common stock, to file reports of their ownership, and changes in
ownership, of such securities with the SEC on SEC Forms 3, 4 or 5, as
appropriate. Officers, directors and greater-than-ten-percent stockholders are
required by the SEC's regulations to furnish the Company with copies of all
forms they file pursuant to Section 16(a).
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company during its most recent fiscal year end, and any written
representations provided to it, the Company is advised that all filings were
timely and correctly made.
INDEPENDENT AUDITORS
KPMG LLP is the Company's auditor of record and has audited the Company's
financial statements annually from 1988 through December 31, 1998. The Audit
Committee of the Board of Directors has not made a recommendation with respect
to retention of auditors by the Company for year ending December 31, 1999.
Representatives of KPMG LLP are expected to be present at the Meeting, will have
the opportunity to make a statement, if they desire to do so, and are expected
to be available to respond to appropriate questions.
OTHER MATTERS
The Company knows of no other matters to be submitted at the Meeting. If
any other matters properly come before the Meeting, the enclosed proxy card
confers discretionary authority on the persons named in the enclosed proxy card
to vote as they deem appropriate on such matters. It is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board of Directors may recommend.
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AVAILABLE INFORMATION
The Company files Annual Reports on Form 10-K with the Securities and
Exchange Commission. A copy of the Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 (except for certain exhibits thereto), may be
obtained, free of charge, upon written request by any stockholder to Fidelity
National Financial, Inc., 17911 Von Karman Avenue, Suite 300, California 92614,
Attention: Investor Relations. Copies of all exhibits to the Annual Report on
Form 10-K are available upon a similar request, subject to payment of a $.15 per
page charge to reimburse the Company for its expenses in supplying any exhibit.
By Order of the Board of Directors
/s/ M'LISS JONES KANE
--------------------------------------
M'Liss Jones Kane
Corporate Secretary
Dated: May 10, 1999
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PROXY
FIDELITY NATIONAL FINANCIAL, INC.
17911 VON KARMAN AVENUE, IRVINE, CALIFORNIA 92614
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William P. Foley, II and Frank P. Willey as
proxies, each with the power to appoint his substitute, and hereby authorizes
each of them to represent and to vote, as designated below, all shares of common
stock of Fidelity National Financial, Inc. held of record by the undersigned on
May 3, 1999 at the Annual Meeting of Stockholders to be held on June 14, 1999,
or any adjournment thereof.
<TABLE>
<S> <C> <C>
1. ELECTION OF [ ] FOR the nominees listed below (except [ ] WITHHOLD AUTHORITY to vote for the
DIRECTORS: as marked to the contrary below) nominees listed below
</TABLE>
(INSTRUCTION: to withhold authority to vote for an individual nominee, strike a
line through the nominee's name below)
William P. Foley, II and Frank P. Willey
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting thereof.
<PAGE> 27
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE COMPANY NOMINEES AND
FOR ALL PROPOSALS.
DATED:_________________________
_________________________, 1999
(Signature)
_______________________________
(Signature)
Please sign exaction as
name(s) appear below. When
shares are held by more than
one owner, all should sign.
When signing as attorney,
executor, administrator,
trustee, or guardian, please
give full title as such. If a
corporation, please sign in
full corporate name by
President or authorized
officer. If a partnership,
please sign in partnership name
by authorized person.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER.
