<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
RESOURCE AMERICA, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
_____________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________
5) Total fee paid:
_____________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if 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>
RESOURCE AMERICA, INC.
1521 Locust Street Philadelphia, PA 19102
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
March 3, 1998
To the Stockholders of RESOURCE AMERICA, INC.:
Notice is hereby given that the annual meeting of stockholders of
RESOURCE AMERICA, INC., a Delaware corporation (the "Company"), will be held at
1521 Locust Street, Philadelphia, Pennsylvania, on Tuesday, March 3, 1998, at
9:00 A.M., Philadelphia time, for the following purposes:
1. To elect two directors to serve until the annual meeting of
stockholders in 2001.
2. To consider and vote on a proposal to amend the Company's
Certificate of Incorporation to increase the aggregate number of
authorized shares of the Company's Common Stock to forty-nine
million (49,000,000) shares.
3. To transact such other business as may properly be brought before
the meeting and any adjournments thereof.
Only stockholders of record on the books of the Company at the close of
business on January 23, 1998, will be entitled to notice of and to vote at the
meeting or any adjournments thereof. A list of stockholders entitled to vote at
the meeting will be available for inspection at the offices of the Company, at
1521 Locust Street, Philadelphia, Pennsylvania 19102. The stock transfer books
will not be closed.
STOCKHOLDERS CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP
LETTERS TO ASSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. THE
ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE AND YOU MAY REVOKE YOUR PROXY AT
ANY TIME PRIOR TO ITS USE.
By order of the Board of Directors
Michael L. Staines, Secretary
January 30, 1998
<PAGE>
RESOURCE AMERICA, INC.
1521 Locust Street Philadelphia, PA 19102
--------------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
--------------------------------------------
GENERAL
Introduction
The annual meeting of stockholders of Resource America, Inc. (the
"Company") will be held on Tuesday, March 3, 1998, at 9:00 A.M., Philadelphia
time, at 1521 Locust Street, Philadelphia, Pennsylvania, 19102 for the purposes
set forth in the accompanying notice. Only stockholders of record at the close
of business on January 23, 1998, will be entitled to notice of and to vote at
such meeting.
This statement is furnished in connection with the solicitation by the
Board of Directors of the Company of proxies from holders of its Common Stock to
be used at such meeting, and at any and all adjournments thereof. Proxies in the
accompanying form, properly executed and duly returned to the Company, and not
revoked, will be voted at the meeting and any and all adjournments thereof.
This proxy statement and the accompanying form of proxy are being sent
on or about January 30, 1998, to stockholders of record as of January 23, 1998.
Revocation of Proxy
If a proxy in the accompanying form is executed and returned, it may
nevertheless be revoked at any time prior to its exercise by giving written
notice of revocation to the Secretary of the Company at its Philadelphia address
stated herein by submitting a later dated proxy or by attending the meeting and
voting in person.
Expenses and Manner of Solicitation
The cost of soliciting proxies, which is not expected to exceed
$20,000, will be borne by the Company. Proxies may be solicited by directors,
officers, and regular employees of the Company either personally, by letter, or
by telephone. Such directors, officers, and employees will not be specifically
compensated for soliciting such proxies. The Company expects to reimburse banks,
brokers, and other persons for their reasonable out-of-pocket expenses in
handling proxy materials for beneficial owners of the Company's Common Stock.
<PAGE>
VOTING AT THE MEETING
As of the close of business on December 31, 1997, the Company had an
authorized capitalization of 9,000,000 shares, consisting of 8,000,000 shares of
common stock, par value $.01 per share ("Common Stock") and 1,000,000 shares of
preferred stock, par value $1.00 per share ("Preferred Stock"). Of such
authorized capitalization, 4,939,768 shares of Common Stock were outstanding as
of the date of this proxy statement. At the annual meeting, the holders of
Common Stock will be entitled to one vote per share on each matter of business
properly brought before the meeting.
The presence in person or by proxy of holders of the Company's
outstanding Common Stock representing not less than a majority of the
outstanding shares of Common Stock will constitute a quorum. The affirmative
vote of a plurality of the shares represented at the meeting, in person or by
proxy, will be necessary for the election of directors. Approval of the proposed
amendment to the Company's Certificate of Incorporation and approval of all
other business properly brought before the meeting will require a favorable vote
of a majority of the outstanding shares of Common Stock.
Abstentions may be specified on the election of each of the nominated
directors, on the proposed amendment to the Company's Certificate of
Incorporation, and on any other properly presented business and will be
considered present for purposes of determining the presence of a quorum.
Abstentions, including broker non-votes, with respect to shares present at the
meeting, in person or by proxy, will have no effect on the election of
directors. As to the proposed amendment to the Company's Certificate of
Incorporation and any other business properly brought before the meeting,
abstentions, including broker non-votes, with respect to shares present at the
meeting in person or by proxy will have the same effect as a vote "against" the
proposal. Any proxy not specifying to the contrary will be voted FOR the
election of the specified directors and FOR approval of the proposal to amend
the Company's Certificate of Incorporation.
Brokers that are member firms of the New York Stock Exchange and who
hold shares in street name for customers have the discretion to vote those
shares with respect to certain matters if they have not received instructions
from the beneficial owners. Brokers will not have such discretionary authority
with respect to the proposal to amend the Company's Certificate of
Incorporation. A failure by brokers to vote shares held by them in nominee name
will mean that such shares will not be counted for the purposes of establishing
a quorum and will not be voted. Accordingly, such broker non-votes will have the
same effect as a vote "against" the proposal to amend the Company's Certificate
of Incorporation.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of
Common Stock owned, as of December 31, 1997, by (a) each person who, to the
knowledge of the Company,
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<PAGE>
is the beneficial owner of 5% or more of the outstanding shares of Common Stock,
(b) each of the Company's present directors, (c) each of the Company's executive
officers, and (d) all of the Company's present executive officers and directors
as a group. This information is reported in accordance with the beneficial
ownership rules of the Securities and Exchange Commission under which a person
is deemed to be the beneficial owner of a security if that person has or shares
voting power or investment power with respect to such security or has the right
to acquire such ownership within 60 days. Shares of Common Stock issuable
pursuant to options or warrants are deemed to be outstanding for purposes of
computing the percentage of the person or group holding such options or warrants
but are not deemed to be outstanding for purposes of computing the percentage of
any other person. See note (2) below, for information concerning outstanding
options.
<TABLE>
<CAPTION>
Common Stock
-------------------------------------------------
Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
---------------- -------------------- -----
<S> <C> <C>
Directors(1)
Carlos C. Campbell 160 *
Daniel G. Cohen 6,180 (2)(4) *
Edward E. Cohen 426,250 (2)(3)(4)(6) 8.90%
Andrew M. Lubin 280 *
Scott F. Schaeffer 100,183 (2)(3)(4)(5) 2.11%
Alan D. Schreiber, M.D. 5,370 *
Michael L. Staines 44,210 (2)(3)(4) *
John S. White 0 *
Executive Officers(1)
Steven J. Kessler 0 *
Freddie M. Kotek 26,355 (2)(3)(4) *
Nancy J. McGurk 24,878 (2)(3)(4) *
All present officers 579,133 (2)(3)(4)(5)(6) 11.97%
and directors as a group
(11 persons)
Other owners of 5% or
More of Outstanding Shares(7)
Friedman, Billings, Ramsey Investment
Management, Inc. 314,005 6.35%
Keefe Managers, Inc. 450,000 9.11%
Kramer Spellman L.P. 536,800 11.33%
Wellington Management Company, LLP. 497,000 10.49%
</TABLE>
- ----------
* Less than 1%
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<PAGE>
(1) The address for each director and executive officer is 1521 Locust Street,
Fourth Floor, Philadelphia, Pennsylvania 19102.
(2) Includes shares issuable on exercise of options granted in 1993 and 1995
under the 1989 Key Employee Stock Option Plan in the amounts of: Mr. E.
Cohen - 47,753 shares; Mr. Schaeffer - 5,618 shares; Mr. Staines - 22,472
shares; Mr. Kotek - 9,832 shares; Ms. McGurk - 5,618 shares; and Mr. D.
Cohen - 5,618 shares.
(3) Includes shares allocated under the 1989 Employee Stock Ownership Plan in
the amounts of: Mr. E. Cohen - 20,089 shares; Mr. Staines - 13,624 shares;
Mr. Schaeffer - 7,047 shares; Mr. Kotek - 5,170 shares; and Ms. McGurk -
8,960 shares, as to which each has voting power.
(4) Includes shares allocated under the Resource America, Inc. Employee Savings
Plan (the Company's 401(k) plan) in the amounts of: Mr. E. Cohen - 2,792
shares; Mr. Kotek - 1,522 shares; Ms. McGurk - 4,682 shares; Mr. Schaeffer
- 688 shares; Mr. Staines - 378 shares; and Mr. D. Cohen - 562 shares, as
to which each has voting power.
(5) Includes 60,815 shares held by a limited partnership, of which Mr.
Schaeffer is the general partner and in which he has a 10% interest.
(6) Includes Mr. Cohen's proportionate interest (aggregating 54,733 shares) in
shares held by a limited partnership in which Mr. Cohen is the limited
partner.
(7) Includes shares held by entities managed by the named persons. The address
for Friedman, Billings, Ramsey Investment Management, Inc. is 1001 19th
Street North, 18th Floor, Arlington, Virginia 22209; the address for Keefe
Managers, Inc. is 375 Park Avenue, Suite 3108, New York, New York 10152;
the address for Kramer Spellman L.P. is 2050 Center Avenue, Suite 300, Fort
Lee, New Jersey 07024; and the address for Wellington Management Company,
LLP. is 75 State Street, Boston, Massachusetts 02109.
PROPOSAL 1. ELECTION OF DIRECTORS
Directors
The By-Laws of the Company provide that the number of Directors shall
be fixed by resolution of the Board of Directors, provided that there shall be a
minimum of five and a maximum of fifteen directors. During fiscal 1997, the
Board of Directors set the number of directors at eight. The Board of Directors
is divided into three classes with directors in each class serving three-year
terms. The terms of directors in the Class of 1998 expire at the annual meeting
of stockholders to which this proxy statement relates. The Nominating Committee
of the Board of Directors has nominated Andrew M. Lubin and Alan D. Schreiber,
M.D. for re-election as directors in the Class of 2001.
It is the intention of the persons named in the enclosed proxy, in the
absence of a contrary direction, to vote for Messrs. Lubin and Schreiber as
directors of the Company in the Class of 2001, for three-year terms expiring at
the 2001 annual meeting of stockholders, or until their successors are elected
or appointed. Should either nominee become unable or refuse to accept nomination
or election as a director in the Class of 2001, it is intended that the persons
named as proxies will vote for the election of such other person as the
Nominating Committee of the
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<PAGE>
Board of Directors may recommend. The Board of Directors knows of no reason why
any of the nominees might be unable or refuse to accept nomination or election.
Information is set forth below regarding the principal occupation of
each nominee and each of the other directors of the Company. There are no family
relationships among the nominees and directors of the Company except that Mr.
Daniel G. Cohen, a director and Executive Vice President of the Company, is the
son of Mr. Edward E. Cohen, Chairman of the Board of Directors, Chief Executive
Officer and President of the Company.
<TABLE>
<CAPTION>
Year in Which
Names of Directors, Principal Service as Term to expire
Occupation, and Other Information Director Began at Annual Meeting
- --------------------------------- -------------- -----------------
<S> <C> <C>
Nominees whose terms will expire in 2001 are:
Andrew M. Lubin, 50, President, Delaware
Financial Group, Inc. (a private investment
firm) since 1984. 1994 1998
Alan D. Schreiber, M.D., 55, Professor of
Medicine and Assistant Dean for Research and
Research Training at the University of
Pennsylvania School of Medicine since 1973.
Chairman, Scientific Advisory Board, Inkine
Pharmaceutical Co., Inc. since 1997. Founder
and Chief Scientific Officer of CorBec
Pharmaceuticals, Inc. from 1993 to 1997. 1994 1998
Persons other than current nominees who serve
for the terms indicated:
Carlos C. Campbell, 59, President of C.C.
Campbell and Company (a management consulting
firm). Vice Chairman of the Board of Directors
of Computer Dynamics, Inc. (a computer
services corporation) since 1992. Director of
Sensys, Inc. (a telecommunication/asset
management corporation) since 1994. 1990 1999
</TABLE>
-5-
<PAGE>
<TABLE>
<CAPTION>
Year in Which
Names of Directors, Principal Service as Term to expire
Occupation, and Other Information Director Began at Annual Meeting
- --------------------------------- -------------- -----------------
<S> <C> <C>
Daniel G. Cohen, 28, Executive Vice President
of the Company. Chairman and Chief Executive
Officer of Fidelity Mortgage Funding, Inc.
("Fidelity Mortgage") (a wholly owned
subsidiary of the Company) since 1997. Prior
to joining the Company in November 1995,
Mr. Cohen was principally engaged in
graduate studies. Mr. Cohen is the son
of Edward E. Cohen. 1997 2000
Edward E. Cohen, 58, Chairman of the Board
since 1990, Chief Executive Officer since
1988 and President since 1995, of the
Company. Director and Chairman of the Executive
Committee of JeffBanks, Inc. (a bank holding
company). Member (1991-1994), and of counsel
(1995-April 1996), of Ledgewood Law Firm, P.C.
Mr. Cohen is the father of Daniel G. Cohen. 1988 1999
Scott F. Schaeffer, 35, Executive Vice President
of the Company since 1995. Vice President - Real
Estate of the Company and President of Resource
Properties, Inc. ("Resource Properties") (a wholly
owned subsidiary of the Company) since 1992. Vice
President of the Dover Group, Ltd. (a real estate
investment company) from 1985 to 1992. 1997 1999
Michael L. Staines, 48, Senior Vice
President and Secretary of the Company
since 1989 and President, Chief Executive
Officer and director of Resource Energy, Inc.
("Resource Energy") (a wholly owned subsidiary
of the Company) since 1997. 1989 2000
John S. White, 57, Chairman of the Board and
Chief Executive Officer of DCC Securities
Corporation (a securities brokerage firm)
since 1990. 1993 2000
</TABLE>
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<PAGE>
Non-Director Executive Officers
Steven J. Kessler, 54, has been Senior Vice President and Chief
Financial Officer of the Company since August 1997. Prior thereto, Mr. Kessler
was Vice President (Finance and Acquisitions) at Kravco Company (a national
shopping center developer and operator) from March 1994 until joining the
Company. From 1983 through March of 1994, Mr. Kessler was Chief Financial
Officer and Chief Operating Officer at Strouse Greenberg & Co., Inc., a regional
full service real estate company, and Vice President (Finance) and Chief
Accounting Officer at its successor, The Rubin Organization. Prior thereto, he
was a partner at the international accounting and consulting firm of Touche Ross
& Co. (now Deloitte & Touche LLP).
Freddie M. Kotek, 41, Senior Vice President of the Company since 1995.
President of Resource Leasing, Inc. (a wholly owned subsidiary of the Company)
since 1995. Executive Vice President of Resource Properties, Inc. (a wholly
owned subsidiary of the Company) since 1993. First Vice President of Royal
Alliance Associates (a securities brokerage firm) from 1991 to 1993.
Nancy J. McGurk, 42, Vice President of the Company since 1992.
Treasurer and Chief Accounting Officer of the Company since 1989. Vice President
- - Finance of Resource Energy since 1995.
The Board of Directors appoints officers each year and from time to
time as necessary.
Other Significant Employees
The following sets forth certain information regarding other
significant employees of the Company:
Abraham Bernstein, 64, Chairman, Chief Executive Officer and President
of Fidelity Leasing, Inc. ("Fidelity Leasing") (a subsidiary of the Company)
since 1996. From 1982 to 1993, he was the President and Chief Executive Officer
of Tokai Financial Services, Inc., the equipment leasing subsidiary of Tokai
Bank of Japan. From 1993 to 1995, the contractual period during which Mr.
Bernstein's restrictive covenant with Tokai was in effect, Mr. Bernstein was a
Managing Director of the Rittenhouse Consulting Group (a financial consulting
company).
Crit DeMent, 44, Executive Vice President and director of Fidelity
Leasing since 1996. From 1983 to March 1996 he was Vice President - Marketing
and Leasing Associate - Senior Account Representative for Tokai Financial
Services, Inc.
Joseph T. Ellis, Jr., 36, Director of Vendor Services of Fidelity
Leasing since 1996. From 1985 through February 1996, he held various marketing
and sales positions with Tokai Financial Services, Inc., ending as the Director
of Program Management and Strategic Market Development.
-7-
<PAGE>
Frank L. Pellegrini, 50, Chairman, Chief Executive Officer and
President of Tri-Star Financial Services, Inc. (a wholly-owned residential
mortgage lending subsidiary of the Company) since April 1993. From 1992 to April
1993, Mr. Pellegrini was Senior Vice President of Home American Financial
Services, Inc. (now known as Upland Mortgage Corporation), a residential
mortgage lender. From 1975 to 1992, Mr. Pellegrini was President of the
Moneyline Mortgage division of First Jersey Financial Services, Inc.
Kathy B. Schauer, 46, President, Chief Operating Officer and a director
of Fidelity Mortgage since 1997. Prior thereto, she was the Director of Business
and Product Development at Standard & Poors Rating Services and served in
executive capacities for Smith Barney, Meridian Bancorp and J.P. Morgan. From
1985 to 1993 she was a Vice President of CS First Boston.
Bruce R. Schmidt, 40, Senior Vice President of Fidelity Mortgage since
1997. From 1993 to 1997, he was Director of Marketing for Advanta Corp. and,
from 1988 to 1993, he was Vice President, Marketing for Nutri/System, Inc.
Jeffrey C. Simmons, 39, Executive Vice President, Chief Operating
Officer and director of Resource Energy since 1997. From 1994 to 1997, he was
Vice President - Exploration of the Company and, from 1988 to 1994, he was
Director of Well Services of the Company.
Director Compensation
Each non-employee director of the Company was paid a retainer of $500
per month during fiscal 1997 through January 31, 1997. Effective on February 1,
1997 each non-employee director was paid a retainer of $1000 per month. Each
non-employee director who is a chairman of a committee of the Board of Directors
is paid an additional retainer of $500 per month. Each non-employee director who
is a member of a committee of the Board of Directors, but not its chairman, was
paid $500 per meeting attended in person and $250 per meeting attended
telephonically. A total of $76,000 was paid to five directors during fiscal 1997
for attendance at Board and committee meetings. In addition, $500 was paid to
one director of the Company during fiscal 1997 for attendance at board and
committee meetings of a wholly-owned subsidiary of the Company in his role as a
director of such subsidiary.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors, and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and to
furnish the Company with copies of all such reports.
Based solely on its review of the reports received by it, or written
representations from certain reporting persons that no filings were required for
those persons, the Company believes that, during fiscal 1997, its officers,
directors and greater than ten percent shareholders complied
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<PAGE>
with all applicable filing requirements except that one report on Form 4 was
filed late by each of Mr. Kotek (with respect to an option exercise) and Mr.
Hart (with respect to the sale in July 1997 of shares acquired upon warrant
exercise by Physicians Insurance Company of Ohio, of which he is an officer and
director). Mr. Hart was a director of the Company from May 1994 until his
resignation in July 1997. See "Certain Relationships and Related Party
Transactions."
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors, consisting of
Messrs. Campbell, Schreiber, and White, makes determinations regarding the
compensation of the Company's executive officers. None of such persons is an
employee, or former employee, of the Company. No executive officer of the
Company is a director or executive officer of any entity of which any member of
the Compensation Committee is a director or executive officer.
Information Concerning the Board of Directors and Certain Committees
The Board of Directors held a total of five meetings during fiscal
1997. Each of the directors attended all meetings of the Board and all meetings
of committees on which they served during fiscal 1997. The Board of Directors
currently numbers eight (8) directors: the Classes of 1998 (the Class of 2001
following this Meeting), 1999 and 2000 consisting of two, three, and three
directors, respectively.
Standing committees of the Board of Directors are the Audit Committee,
Compensation Committee, Investment Committee, and Nominating Committee.
The Audit Committee reviews the scope and effectiveness of audits by
the independent accountants and the Company's internal auditor, selects and
recommends to the Board of Directors the engagement of independent accountants,
and reviews the adequacy of the Company's internal controls. The Committee held
three meetings during fiscal 1997. Members of the Committee are Messrs. Lubin
and Schreiber.
The Compensation Committee establishes and monitors compensation levels
for officers of the Company, and administers the Company's 1989 Key Employee
Stock Option Plan. The Committee held six meetings during fiscal 1997. Members
of the Committee are Messrs. Campbell, Schreiber, and White.
The Investment Committee reviews all current management investment
practices and evaluates and monitors all existing and proposed Company
investments. The Committee held twelve meetings during fiscal 1997. Members of
the Committee are Messrs. White and Campbell. Mr. Hart was a member of the
Investment Committee until his resignation as a director in July 1997. See
"Certain Relationships and Related Party Transactions."
The Nominating Committee recommends persons for nomination as directors
of the Company. The Committee held two meetings during fiscal 1997. The
Committee will consider
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<PAGE>
nominees recommended by security holders for the 1999 annual meeting if
submitted in writing to the Secretary of the Company prior to November 3, 1998.
Members of the Committee are Messrs. Lubin, E. Cohen, and Staines.
Executive Officer Compensation
Summary Compensation of Named Executives
The following tables set forth certain information concerning the
compensation paid or accrued during each of the last three fiscal years by the
Company and its subsidiaries to the Company's Chief Executive Officer and each
of the Company's four other most highly compensated executive officers whose
aggregate salary and bonus (including amounts of salary and bonus foregone to
receive non-cash compensation) exceeded $100,000.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation
--------------------------------------- -------------------------------------------
Awards Payouts
----------------------- -------------------
Restricted Securities
Stock Underlying LTIP All
Name and Principal Position Year Salary Bonus Other Awards(1) Options(2) Payouts(3) Other(4)
- --------------------------- ---- ------ ----- ----- --------- ---------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward E. Cohen 1997 $325,000 $250,000 0 $ 0 0 $ 0 $250,095
Chairman, President & 1996 250,000 135,000 0 31,990 95,506 0 9,607
Chief Executive Officer 1995 210,000 130,000 0 19,824 0 0 0
Daniel G. Cohen 1997 225,625 50,000 0 0 0 0 11,083
Executive Vice President
Scott F. Schaeffer 1997 178,750 60,000 0 0 0 0 10,066
Executive Vice President 1996 145,000 50,000 0 31,990 22,472 0 3,963
1995 145,000 45,000 0 19,824 0 0 3,058
Freddie M. Kotek 1997 148,750 40,000 0 0 0 0 9,199
Senior Vice President 1996 145,000 30,000 0 31,990 39,326 0 5,600
1995 145,000 45,000 0 19,824 0 0 3,760
Michael L. Staines 1997 123,750 15,000 0 0 0 0 6,804
Senior Vice President & 1996 120,000 12,500 0 28,420 11,236 0 0
Secretary 1995 112,500 7,500 0 16,023 0 0 0
</TABLE>
(1) Reflects shares awarded under the Company's 1989 Employee Stock Ownership
Plan, valued at the closing price of the Company's Common Stock at
September 30 of each year ($51.50, $12.75 and $8.40 per share for fiscal
years 1997, 1996, and 1995, respectively). For purposes of this table, all
shares are assumed to be fully vested. Messrs. E. Cohen and Staines were
100% vested as of September 30, 1997. Shares awarded to Messrs. Schaeffer
and Kotek were vested 60% and 40%, respectively, as of such date and will
vest an additional 20% on each future September 30 until fully vested on
September 30, 1999 and 2000, respectively. At September 30, 1997, the
number of restricted shares awarded and the value of such awarded
restricted shares (in the aggregate, and valued at the closing market price
of the Company's Common Stock on the dates of the respective grants) are:
Mr. E. Cohen, 20,089 shares ($119,333); Mr. Kotek, 5,170 shares ($51,814);
Mr. Schaeffer, 7,047 shares ($60,665); Mr. Staines, 13,624 shares
($83,989).
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<PAGE>
Cash dividends, as and when authorized by the Company's Board of Directors,
have been and will continue to be paid to the Plan on the restricted
shares.
(2) At September 30, 1997, Messrs. E. Cohen, D. Cohen, Kotek, Schaeffer and
Staines had been awarded options to purchase 179,776 shares, 11,236 shares,
39,326 shares, 50,562 shares and 39,326 shares, respectively, of the
Company's Common Stock, and subsequent to exercise of a portion of those
options during fiscal 1997, held options to purchase 95,506 shares, 11,236
shares, 29,495 shares, 16,854 shares and 28,090 shares, respectively.
(3) Except for the Company's Employee Stock Ownership Plan, the stock option
plans and the 401(k) plan, reported elsewhere in this table, the Company
does not have long-term incentive plans or pension or profit-sharing plans.
(4) All such amounts are matching payments made by the Company under the
Company's 401(k) plan except that $240,000 of the amount set forth for
Edward E. Cohen represents the amount accrued in connection with the
Company's obligations under a Supplemental Employment Retirement Plan
established by the Company in connection with the employment agreement
between Mr. Cohen and the Company. See "Executive Officer Compensation -
Employment Agreements."
Option Grants and Exercises in Last Fiscal Year and Year-End Option Values
The Company granted no new options to the executive officers listed in
the Summary Compensation Table during fiscal 1997, and has issued no stock
appreciation rights. The following table sets forth the aggregated option
exercises during fiscal 1997 and the number of unexercised options, and the
value thereof on September 30, 1997, held by the executive officers listed in
the Summary Compensation Table.
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<PAGE>
Aggregated Option Exercises In Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised in-the-Money
Options at Options at
Shares FY-End FY-End
Acquired Value Exercisable/ Exercisable/
Name and Principal Position on Exercise Realized (1) Unexercisable Unexercisable(2)
- --------------------------- ----------- ------------ ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Edward E. Cohen 84,270 $2,946,360 23,876/71,630 $1,014,590/$3,043,769
Chairman & Chief
Executive Officer
Daniel G. Cohen 0 0 2,809/8,427 121,664/364,991
Senior Vice President
Scott F. Schaeffer 33,708 1,157,404 0/16,854 0/729,981
Senior Vice President
Freddie M. Kotek 9,831 312,744 0/29,495 0/1,277,467
Senior Vice President
Michael L. Staines 11,236 213,383 19,663/8,427 943,145/364,991
Senior Vice President &
Secretary
</TABLE>
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(1) Value is calculated by subtracting the total exercise price from the fair
market value of the securities underlying the options at the date of
exercise.
(2) Value is calculated by subtracting the total exercise price from the fair
market value of the securities underlying the options at September 30,
1997.
Employment Agreements
The Company
The Company has entered into an employment agreement with Edward E.
Cohen, effective as of January 1, 1997, pursuant to which Mr. Cohen serves as
the Chairman of the Board of Directors, Chief Executive Officer and (until such
time, if ever, as the Board of Directors shall fill the office) President. The
agreement requires Mr. Cohen to devote as much of his business time to the
Company as is necessary to the fulfillment of his duties, although it permits
him to have outside business interests. Under the agreement, Mr. Cohen will
receive base compensation of $350,000 per year, which may be increased by the
Compensation Committee of the Board based upon its evaluation of Mr. Cohen's
performance. Mr. Cohen is eligible to receive incentive bonuses and stock option
grants in amounts to be determined by the Board and to participate in all
employee benefit plans in effect during his period of employment. The Company is
required to establish a Supplemental Employment Retirement Plan ("SERP") for Mr.
Cohen's benefit
-12-
<PAGE>
which will pay to Mr. Cohen, upon retirement after he has reached Retirement Age
(defined by the agreement as age 62), a monthly retirement benefit equal to 75%
of his Average Compensation (defined as the average of the salary plus bonus
received by Mr. Cohen in the three most highly compensated years during the
previous nine years of employment), less any amounts paid under any other
retirement plan of the Company in which Mr. Cohen participates. For certain
information regarding Mr. Cohen's compensation during the three fiscal years
ended September 30, 1997, see "Executive Officer Compensation - Summary
Compensation of Named Executives."
The agreement has a term of five years and, until notice to the
contrary, the term is automatically extended so that, on any day on which the
agreement is in effect, it shall have a then-current five year term. The
agreement may be sooner terminated in the event of Mr. Cohen's disability
extending for more than 240 days, death or retirement. Mr. Cohen also has the
right to terminate the agreement upon a change in control or potential change in
control of the Company, and for cause. Otherwise, Mr. Cohen may terminate the
agreement upon 180 days' notice.
The agreement provides the following termination benefits: (i) upon
termination due to death, Mr. Cohen's estate will receive an amount equal to (a)
five times Average Compensation (payable over 36 months), plus (b) to the extent
Mr. Cohen has not received 120 months of SERP benefits, the balance thereof;
(ii) upon termination due to disability, Mr. Cohen will receive a monthly
benefit equal to one-twelfth of the product of (a) Average Compensation and (b)
75%, which will terminate upon the commencement of retirement benefits; (iii)
upon termination by Mr. Cohen for cause, or upon a change in control or
potential change in control, an amount equal to five times Average Compensation
plus continuation of life, health, accident and disability insurance benefits
for a period of 36 months or until Mr. Cohen reaches age 70; and (iv) upon
termination by Mr. Cohen without cause, an amount equal to 25% of the amount
referred to in item (i), above. In the event that any amounts payable to Mr.
Cohen pursuant to items (i) through (iv), above ("Total Benefits"), become
subject to any excise tax imposed under Section 4999 of the Internal Revenue
Code of 1986 (the "Code"), the Company is required to pay Mr. Cohen an
additional sum such that the net amounts retained by Mr. Cohen, after payment of
excise, income and withholding taxes, shall equal Total Benefits.
Fidelity Leasing
In March 1996, Fidelity Leasing entered into an employment agreement
with Abraham Bernstein. Under terms of the agreement, Mr. Bernstein serves as
Chairman, Chief Executive Officer and President of Fidelity Leasing for a
three-year term and is responsible for developing the Company's small ticket
leasing business. Mr. Bernstein receives a base salary and is entitled to
incentive compensation (including eligibility for bonuses and profit-sharing
payments) equal to 2.75% of the after-tax earnings of Fidelity Leasing (to a
maximum of up to 2% of pre-tax earnings). In the fiscal year ended September 30,
1997, Mr. Bernstein received $208,000 in aggregate compensation. Mr. Bernstein
may terminate the agreement for "good reason" (generally, a change in his duties
inconsistent with the agreement, breach of the agreement by
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<PAGE>
Fidelity Leasing, or Mr. E. Cohen being neither an officer nor a 5% stockholder,
directly or indirectly, of the Company). Upon such termination, Mr. Bernstein
will receive a lump sum payment equal to one year's compensation (including the
incentive compensation which would have been earned had termination not
occurred).
In addition, Mr. Bernstein received options to purchase 10% of the
common stock of Fidelity Leasing (1 million shares) at an aggregate price of
$220,000 and, should Fidelity Leasing declare a dividend, will receive payments
on the options in an amount equal to the dividends that would have been paid on
the shares subject to the options had they been issued. In the event that, prior
to Fidelity Leasing becoming a public company, Fidelity Leasing issues stock to
anyone other than the Company or Mr. Bernstein (except for issuances to Fidelity
Leasing employees pursuant to exercise of options under an existing Fidelity
Leasing option plan), Mr. Bernstein is entitled to receive such additional
options as will allow him to maintain his 10% equity position in Fidelity
Leasing at an exercise price equal to the price paid or value received in the
additional issuance. The options issued to Mr. Bernstein vest 25% per year
beginning in March 1997 (becoming fully invested in March 2000), and terminate
in March 2005. The options become fully vested and immediately exercisable in
the event of a change in control of the Company. Mr. Bernstein has certain
rights, commencing after March 5, 2000, to require Fidelity Leasing to register
his option shares under federal securities laws. In the event Fidelity Leasing
does not become a public company by March 5, 2001, Mr. Bernstein may require
that Fidelity Leasing thereafter buy over the next four years Fidelity Leasing
shares subject to Mr. Bernstein's options at a price equal to ten times Fidelity
Leasing's after-tax earnings per share for the fiscal year ended immediately
prior to the giving of notice by Mr. Bernstein of his exercise of this right.
Obligations of Fidelity Leasing to repurchase shares in any year in excess of
$500,000 (including amounts deferred in prior years) may be deferred to the
following year.
Fidelity Mortgage
In April 1997, Fidelity Mortgage entered into an employment agreement
with Daniel G. Cohen pursuant to which Mr. Cohen serves as the Chairman, Chief
Executive Officer and President of Fidelity Mortgage for a three-year term and
is responsible for developing the Company's residential mortgage origination
business. Mr. Cohen receives a base salary and is entitled to incentive
compensation equal to 2.75% of the annual after-tax earnings of Fidelity
Mortgage (to a maximum of 2% of pre-tax earnings). Mr. Cohen's compensation
under the agreement is included within the compensation set forth in the Summary
Compensation Table. Mr. Cohen may terminate the agreement for "good reason"
(generally, a change in his duties inconsistent with the agreement, breach of
the agreement by Fidelity Mortgage or a change in control or potential change in
control of Fidelity Mortgage or the Company). Upon such termination, Mr. Cohen
would receive a lump sum payment equal to three years compensation (including
the incentive compensation which would have been earned had termination not
occurred). In the event that any termination payment becomes subject to the
Internal Revenue Code Section 4999 excise tax, Fidelity Mortgage will be
required to pay Mr. Cohen an additional sum such that the net amount retained by
Mr. Cohen, after payment of excise, income and
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<PAGE>
withholding taxes, will equal the stated amount of termination payments. The
Company has guaranteed Fidelity Mortgage's performance under the agreement.
Mr. Cohen has received options to purchase 10% of the common stock of
Fidelity Mortgage (2 million shares) at an aggregate price of $235,294 and,
should Fidelity Mortgage declare a dividend, will receive payments on the
options in an amount equal to the dividends that would have been paid on the
shares subject to the options had they been issued. Fidelity Mortgage paid no
such dividends during the fiscal year ended September 30, 1997. The options
generally will have the same terms as those relating to Mr. Bernstein's options
with respect to Fidelity Leasing common stock, except that (i) the option term
and vesting period commenced in April 1997, (ii) the period during which Mr.
Cohen may sell Fidelity Mortgage shares to Fidelity Mortgage will commence in
April 2002, and (iii) deferred repurchase obligations of Fidelity Mortgage to
Mr. Cohen will bear interest at the rate of 10% per year. The options become
fully vested and immediately exercisable in the event of a change in control or
potential change in control of Fidelity Mortgage or the Company.
Certain Relationships and Related Party Transactions
The Company holds commercial real estate loans of borrowers whose
underlying properties are managed by Brandywine Construction & Management Inc.
("BCMI"), a firm of which Edward E. Cohen is Chairman of the Board of Directors
and a minority shareholder (approximately 8%). The Company has advanced funds to
certain of these borrowers for improvements on their properties, which have been
performed by BCMI. The President of BCMI (or an entity affiliated with him) has
also acted as the general partner or trustee of ten of the borrowers; an entity
affiliated with him is the general partner of the sole limited partner of an
eleventh borrower. BCMI has agreed to subordinate its management fees to receipt
by the Company of minimum required debt service payments under the obligations
held by the Company.
The Company also maintains normal banking and borrowing relationships
with Jefferson Bank, a subsidiary of JeffBanks, Inc. Edward E. Cohen and his
spouse are officers and directors of JeffBanks, Inc. (and his spouse is Chairman
and Chief Executive Officer of Jefferson Bank and JeffBanks, Inc.), and are
principal shareholders thereof. Daniel G. Cohen is a director of Jefferson Bank.
The Company anticipates that it may effect borrowings in the future from
Jefferson Bank; it anticipates that any such borrowings will be on terms similar
to those which could be obtained by an unrelated borrower. Jefferson Bank is
also a tenant at two properties which secure loans held by the Company. The
Company believes that the terms of the leases with Jefferson Bank are typical of
similar leases for similar space.
The Company has sponsored the formation and public offering of common
shares of beneficial interest (the "RAIT Offering") of Resource Asset Investment
Trust ("RAIT") a real estate investment trust. The offering was completed on
January 14, 1998. Edward E. Cohen's spouse, Betsy Z. Cohen, is Chairman and
Chief Executive Officer of RAIT. The principal business activity of RAIT is to
provide mortgage or other debt financing in situations that do not
-15-
<PAGE>
conform to the underwriting standards of institutional lenders or sources that
provide financing through securitization. The Company currently owns 15% of the
common stock of RAIT (subject to reduction in the event the underwriters
exercise their overallotment option). The Company has the right to nominate one
person for election to RAIT's Board of Trustees until such time as its ownership
of RAIT's outstanding common stock is less than 5%. One of RAIT's current
trustees, Jonathan Z. Cohen, is serving as the Company's nominee. Jonathan Z.
Cohen is the son of Edward E. Cohen, the Chairman, Chief Executive Officer and
President of the Company. Jonathan Z. Cohen is also the brother of Daniel G.
Cohen, an executive officer and director of the Company. The Company had
advanced funds to RAIT for legal, accounting and filing fees and expenses,
salaries of RAIT's executive officers, rent and other organizational expenses
and for the expenses incurred by the Company in sponsoring RAIT including an
allocation of compensation of Company employees. These advances were without
interest and were repaid from the proceeds of the RAIT Offering.
In connection with the RAIT offering, the Company, through its
subsidiaries, sold ten loans and participation interests in two additional loans
to RAIT ("RAIT's Initial Investments") at an aggregate purchase price of $20.1
million (including $2.0 million attributable to senior lien interests acquired
by the Company in connection with the sales to RAIT). Two of RAIT's Initial
Investments were originated by RAIT; one was sold to RAIT at cost and RAIT
purchased a participation interest in the other at cost. The Company realized a
gain on the sale of RAIT's Initial Investments of $3.0 million.
The Company anticipates that, subject to the limitations referred to in
the next two paragraphs, it will sell additional investments to RAIT. RAIT may
also from time to time (but is not obligated to) retain the Company to perform
due diligence investigations on properties underlying proposed investments
(excluding investments being acquired from the Company).
RAIT has instituted certain procedures to mitigate the effects of any
potential conflicts of interest between RAIT and the Company, including, among
other procedures (i) requiring that a majority of its trustees be persons who,
within the past two years, have not (a) been affiliates of the Company, BCMI or
their affiliates, (b) been officers of RAIT, or (c) had any material business or
professional relationship with RAIT, the Company, BCMI or their affiliates
("Independent Trustees"), (ii) requiring that the acquisition price of any
investment acquired from the Company (including RAIT's Initial Investments) be
determined based upon independent appraisal of the underlying property, (iii)
limiting the investments which may be acquired from the Company to a maximum of
30% of RAIT's investments (excluding RAIT's Initial Investments), based upon
RAIT's investment cost (the amount of the investment plus legal, filing and
other related fees and expenses), (iv) requiring that any fees for services
performed by the Company or its affiliates be no greater than prevailing fees in
the area for similar services provided by unrelated third parties, (v) requiring
that any service arrangements with the Company or its affiliates provide that
services will be rendered only as and to the extent requested by RAIT from time
to time and that, in any event, the arrangements be cancelable by RAIT, without
penalty, on no more than 30 days' notice, and (vi) requiring that any investment
acquisition (including RAIT's Initial Investments) or services arrangement, and
every transaction with the
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<PAGE>
Company or its affiliates, or relating to any property in which any such person
has an interest, receive the prior approval of a majority of the Independent
Trustees (who, in giving such approval, may rely upon information provided by
the Company, BCMI or their affiliates). RAIT will not, however, be required to
obtain the approval of the Independent Trustees to retain the Company to perform
a due diligence investigation of a property where the amount of the fee for such
services will not exceed the lesser of 1% of the property's appraised value or
$10,000.
To further limit conflicts between RAIT and the Company, RAIT and the
Company have agreed that, for two years following the completion of the RAIT
Offering, (i) the Company will not sponsor another real estate investment trust
with investment objectives and policies which are the same as, or substantially
similar to, those of RAIT; (ii) if the Company originates a proposal to provide
wraparound or other junior lien or subordinated financing (as opposed to
acquiring existing financing) with respect to multifamily, office or other
commercial properties to a borrower (other than to a borrower with an existing
loan from the Company), the Company must first offer the opportunity to RAIT;
and (iii) if the Company desires to sell any loan it has acquired that conforms
to RAIT's investment objectives and policies with respect to acquired loans, it
must first offer to sell it to RAIT. The Company has also agreed that if, after
the expiration of the two year period, the Company sponsors a real estate
investment trust with investment objectives similar to those of RAIT, the
Company's representative on RAIT's Board of Trustees (should the Company have a
representative on the Board at that time) will recuse himself from considering
or voting upon matters relating to financings which may be deemed to be within
the lending guidelines of both RAIT and the real estate investment trust then
being sponsored by the Company.
In August 1997, the Company, through a subsidiary, acquired a loan with
a face amount of $2,321,627 from Jefferson Bank at a cost of $1,582,088. The
loan is secured by a property owned by a partnership in which Mr. Schaeffer is
the general partner and Edward E. Cohen, together with his spouse, are limited
partners. The Company leases its headquarters space at such property. The lease
provides for rents of $49,600 per year through May 2000. Ledgewood Law Firm,
P.C., a law firm which provides legal services to the Company, and BCMI are also
tenants at such property.
In June 1997, the Company acquired a loan with a face amount of
$6,962,930 from a partnership in which Mr. Schaeffer and Edward E. Cohen,
together with his wife, are limited partners. Mr. Schaeffer was previously the
general partner of such partnership. The Company acquired such loan at a cost of
$2,978,752.
In December 1996, the Company, through a subsidiary, acquired a loan
with a face amount of $52,660,393 from ALI, Inc., an affiliate of Lehman Bros.,
at a cost of $19,318,526. The property securing such loan is owned by two
partnerships: 1845 Associates (the Building Partnership"), which owns the office
building and Mutual Associates (the "Garage Partnership"), which owns the
parking garage. Pursuant to a loan restructuring agreement entered into in 1993,
prior to the Company having any interest in the loan, an affiliate of the holder
of the loan is required to hold, as additional security for the loan, general
partnership interests in both the
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<PAGE>
Building Partnership and the Garage Partnership. The partnership interest in the
Building Partnership was assigned to a limited partnership of which another
subsidiary of the Company is general partner and Resource Properties Partnership
is limited partner. The partnership interest in the Garage Partnership was
assigned to a limited partnership of which a third subsidiary of the Company is
general partner and Resource Properties Partnership is limited partner. Resource
Properties Partnership is a limited partnership in which officers of the
Company, including the Chairman, are limited partners. Although the Company does
not anticipate any economic benefit to Resource Properties Partnership, any
which may be received will be assigned and transferred to the Company.
In December 1994, the Company acquired a loan with a face amount of
$3,000,000 from California Federal Bank, FSB at a cost of $1,671,695. The loan
is secured by a property owned by a borrower whose general partner is the
President of BCMI. Edward E. Cohen, together with his wife, is a limited partner
in such partnership. The borrower refinanced the Company's loan in September
1995, applying $1,975,000 of the proceeds to the repayment of the Company's
loan. As a result, the Company obtained a gain on its investment of $303,305,
while maintaining a continuing interest in the loan of approximately $1 million.
In August 1994, the Company acquired from third parties a loan, in the
original principal amount of $3,350,000 (and with a then-outstanding balance of
$4,388,644), for an investment of $1,612,674. The borrower is a limited
partnership of which Mr. Lubin, a director of the Company, is currently the
general partner. Mr. Lubin assumed such position after the Company's acquisition
of the loan. Previously, the general partner had been the President of BCMI. The
borrower subsequently refinanced the loan with another third party and repaid
the Company $934,000, leaving the Company with a net investment of $419,039.
In June 1996, the Company acquired from third parties a loan, in the
original principal amount of $3.25 million (and with a then-outstanding balance
of $3.29 million), for an investment of $2.41 million. The Company sold a junior
lien interest in the loan for $875,000, leaving the Company with a net
investment of $1.54 million, to a limited partnership in which Messrs. Edward E.
Cohen and Scott F. Schaeffer own a 21.3% limited partnership interest.
From November 1996 to June 1997 the Company acquired from third parties a
series of loans relating to one property in the aggregate original principal
amount of $5.8 million (and with aggregate outstanding balances at the
respective times of purchase of $6.9 million) for an investment of $2.47
million. The Company sold a senior lien interest in the loan for $2.25 million
(of which one-half was in cash and one-half by note), leaving the Company with a
net investment of $3.55 million, to a limited partnership in which Edward E.
Cohen and Scott F. Schaeffer own an 18.3% limited partnership interest.
The Company has in the past obtained material amounts of financing from
Physicians Insurance Company of Ohio ("PICO") by the sale to PICO, in May 1994,
of an $8 million principal amount 9.5% Senior Note, together with warrants to
purchase 983,150 shares of the Company's common stock, and by the sale to PICO,
in fiscal years 1995 and 1996, of $12
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<PAGE>
million of participations in the Company's portfolio loans. In July 1997, the
Company repaid the Senior Note in full and PICO exercised, and subsequently
sold, the common shares underlying the warrants to institutional investors in
private transactions. Following such transactions, John R. Hart, an executive
officer and director of PICO, resigned from the Board of Directors of the
Company.
From 1991 through 1994, Edward E. Cohen was a member of, and from 1995
through April 1996 he was of counsel to, Ledgewood Law Firm, P.C., which acts as
counsel to the Company. Mr. Cohen receives certain debt service payments from
the firm in connection with his withdrawal from the firm and its redemption of
his interest.
Performance Graph
The following graph compares the cumulative total stockholder return on
the Company's Common Stock with the cumulative total return of two other stock
market indices: the Nasdaq United States Composite (National Market System only)
and the Nasdaq Financial.
Cumulative of five year cumulative total return*
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| ^o* o* |
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1992 1993 1994 1995 1996 1997
fiscal year ended September 30
* Nasdaq U.S. composite o Nasdaq Financial ^ Resource America, Inc.
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
Nasdaq U.S. composite 100.0 131.0 132.1 182.4 216.4 296.9
Nasdaq Financial 100.0 137.1 144.5 182.8 226.3 356.5
Resource America, Inc. 100.0 106.1 160.6 257.3 455.6 1872.0
* Total return for each of the last five fiscal years ending September 30.
Assumes $100 was invested on October 1, 1992 in the Company's Common Stock or in
the indicated index and that cash dividends were reinvested as received.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the "Committee")
is responsible for setting and administering compensation programs for the
Company's executives, including the following:
o setting policies with respect to compensation for executives;
o setting pay levels for all named executive officers;
o administering the Company's Key Employee Stock Option plans and
making appropriate awards of options; and
o monitoring and determining such other compensation matters as may
be assigned to the Committee by the Board of Directors.
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<PAGE>
The Committee is comprised of three non-employee directors; Messrs.
Campbell, Schreiber and White.
The Company's compensation philosophy and objectives are driven by the
desire to:
o compensate and reward executives for their contribution to the
historical success of the Company; and
o provide suitable compensation packages to attract, motivate and
retain talented executives in a very competitive environment.
The executive compensation program is designed to reward performance
that is directly relevant to the Company's short-term and long-term success and
goals and as such is structured in three components: base salary, annual
bonuses, and long term incentives.
Base Salary
Base salaries for executive officers are determined in part by pay
practices in unaffiliated companies and the Committee's assessment of individual
performance relative to responsibilities and objectives for each executive. Base
salaries are not intended to compensate individuals for extraordinary
performance or for above average Company performance.
Bonus Plan
Executives are eligible to receive annual bonuses, which are generally
based on the overall Company performance during the preceding year and the
individual's specific contribution to that performance. The Company does not
have a defined bonus pool; however, during the past two years the Company's
practice has been to limit the pool to no more than ten percent (10%) of the
reported net income of the Company for the preceding year. Allocation of the
amount available for annual bonus payments is at the discretion of the
Committee. No formula performance measures were utilized in establishing the
amount of the bonus awards; however, the Committee considers individual
contribution to the overall performance of the Company and performance relative
to expectations.
Long Term Incentives
General. Long term incentives are designed to focus executives on the
long term goals and performance of the Company and to provide a reward directly
tied to stockholder return: the performance of the Company's Common Stock. The
particular plans are intended to encourage the participants to strive to achieve
the long term success of the Company and to remain with the Company in order to
fully benefit from the plans.
Stock Options. Stock options are issued periodically to key employees
at an exercise price of no less than the then current market price of the
Company's Common Stock, have a ten
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<PAGE>
(10) year life and vest to the executive at twenty-five percent (25%) of the
amount awarded on each anniversary of their issuance. Options awarded to Edward
E. Cohen, as a result of his then greater than ten percent (10%) effective
interest in the Company, were issued with an exercise price of one-hundred ten
percent (110%) of market price and with a five (5) year life. Allocation of
available options is again at the discretion of the Committee and is determined
by potential contribution to, or impact upon, the overall performance of the
Company by the executive.
Employee Stock Ownership Plan. In 1989 the Company established the
Resource America, Inc. Employee Stock Ownership Plan for the benefit of all
qualified employees. All employees, including executive officers, are allocated
shares from an available pool each year in proportion to their relative
compensation. While the allocations from this plan are determined solely by a
predetermined and required formula in accordance with ERISA, the intent was, and
remains, to reward all employees, including executives, based on the long term
success of the Company as measured by the stockholder return.
Savings Plan. The Resource America, Inc. Savings Investment Plan, under
Internal Revenue Code Section 401(k), offers eligible employees the opportunity
to make long-term investments on a regular basis through salary contributions,
which are supplemented by matching Company contributions in the form of cash or
Company Common Stock. During fiscal 1997, the Company matched employee
contributions 50% in cash or 100% in Company Common Stock. While participation
in this plan is at the discretion of the qualified employee, the intent again
was, and remains, to reward all employees, including executives, based on the
long term success of the Company as measured by the return to stockholders.
Chief Executive Officer Compensation
In evaluating the performance and setting the total compensation
package for Edward E. Cohen the Committee meets without that individual present.
For fiscal 1997 the Committee took particular note of the continued growth in
the Company's revenues ($17.0 million in fiscal 1996 compared to $11.6 million
in fiscal 1995) and profitability ($7.3 million in fiscal 1996 compared to $3.3
million in fiscal 1995). The effectiveness of the leadership provided by Mr.
Cohen has allowed the Company to change its focus from its historic energy
activities to niche finance opportunities, specifically in real estate asset
finance and equipment leasing, where the Company can take advantage of its
specialized skills to generate attractive returns, which ultimately are measured
in the appreciation of the Company's Common Stock. To secure the continued
services of Mr. Cohen, the Committee entered into negotiations with Mr. Cohen
during fiscal 1997 to formalize his employment through contractual arrangements.
these negotiations resulted in the employment of Mr. Cohen pursuant to the
agreement described in "Employment Agreements - The Company" contained elsewhere
in the proxy statement of which this report is a part. In addition, the
Committee awarded Mr. Cohen a bonus of $250,000.
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<PAGE>
This report has been provided by the Compensation Committee of the
Board of Directors of Resource America, Inc.
Carlos C. Campbell, Chairman
Alan D. Schreiber, M.D.
John S. White
PROPOSAL 2. APPROVAL OF THE AMENDMENT TO
THE COMPANY'S CERTIFICATE OF INCORPORATION
General
The Board of Directors of the Company, on December 15, 1997,
unanimously adopted a resolution that approves, and submits to the stockholders
for their approval, a proposal that would amend the Certificate of Incorporation
of the Company to increase the number of authorized shares of the Company's
Common Stock to 49,000,000 shares.
As of the close of business on January 15, 1998 (the record date), and
as of the date hereof, the Company had an authorized capitalization of 9,000,000
shares, consisting of 8,000,000 shares of Common Stock and 1,000,000 shares of
Preferred Stock. Of such capitalization, 4,939,768 shares of Common Stock are
outstanding as of the date of this proxy statement. There are no outstanding
shares of Preferred Stock. The Company has outstanding employee options with
respect to 262,431 shares of Common Stock, of which options with respect to
94,102 shares are currently vested. An additional 207,795 shares are issuable
upon grants of options under existing employee option plans.
Purposes of the Proposed Amendment
The proposed amendment to the Company's Certificate of Incorporation
has two principal purposes: (i) to provide a sufficient number of authorized
shares of Common Stock to enable the Company to issue a stock dividend (the
"Stock Dividend") of two shares of Common Stock for each one share of Common
Stock held by each stockholder and (ii) to give the Company flexibility in its
financial affairs in the future by making approximately 32.77 million shares of
Common Stock available after the Stock Dividend for issuance by the Company
without further vote of the stockholders (unless such approval is thereafter
required by law or the rules of any applicable exchange).
As set forth in "General," above, the Company currently has 4,939,768
shares of Common Stock outstanding and has reserved 470,226 additional shares
for issuance pursuant to option exercises, leaving 2,590,006 shares unissued.
The number of unissued shares is not sufficient to allow the Company to issue
the Stock Dividend. The Company believes that the Stock Dividend is in the
interest of the Company and its stockholders because it is anticipated that it
will have the effect of reducing the per share price of the Company's Common
Stock. The Company believes that a per share price reduction will make
investments in the Company's
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<PAGE>
Common Stock more attractive to a broader range of investors than is currently
the case and may increase trading volume in the Company's Common Stock. The
Company anticipates, therefore, that the Stock Dividend may have the effect of
broadening market interest in, and increasing the liquidity of, the Company's
Common Stock.
The Company also anticipates that it may file a registration statement
for the offer and sale to the public of up to 2 million shares of Common Stock
in the second quarter of fiscal 1998. The proposed increase in the number of
authorized shares of Common Stock will enable the Company to proceed with such
an offering. Notwithstanding the foregoing, there can be no assurance that the
Company will conduct a public offering of its Common Stock or the size of such
an offering if conducted. This proxy statement does not constitute an offer to
sell any securities, including the shares of Common Stock that may be issued in
connection with the proposed offering. The offering will be made only by means
of a prospectus.
Authorized but unissued and unreserved Common Stock not reserved for
options, and not issued in connection with the Stock Dividend would be available
for issuance in such transactions and at such times as the Company's Board of
Directors determines, including the proposed offering described above. The Board
of Directors considers it advisable to have the additional shares available for
possible future issuance in connection with future offerings, stock dividends,
stock splits or for other corporate purposes. Because stockholders do not have
preemptive rights under the Company's Certificate of Incorporation, to the
extent such additional shares are issued for cash or property having a net
tangible book value less than the net tangible book value of the Common Stock on
the date of issuance, stockholders will realize an immediate dilution in the net
tangible book value of their Common Stock.
Except as set forth above, the Company has no plans, options, warrants,
contractual commitments or other arrangements, and is considering no proposals,
for the issuance of shares of Common Stock. There can be no assurance that the
Company will not develop such plans or proposals in the future.
The Board of Directors recommends a vote FOR approval of the proposed
amendment.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors does not
intend to present and has not been informed that any other person intends to
present any other matters for action at the annual meeting. However, if other
matters do properly come before the meeting, it is the intention of the persons
named as proxies to vote upon them in accordance with their best judgment.
Except as hereinabove stated, all shares represented by valid proxies
received will be voted in accordance with the provisions of the proxy.
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<PAGE>
Upon the recommendation of the Audit Committee, approved by the Board
of Directors, Grant Thornton LLP served as the Company's independent auditors
during fiscal 1997. It is not anticipated that a representative of Grant
Thornton LLP will be present at the annual meeting. The Board of Directors
anticipates that Grant Thornton LLP will be re-appointed as the Company's
independent auditors for fiscal 1998 during the June 1998 regular meeting of the
Board of Directors.
ANNUAL REPORT AND REPORT ON FORM 10-K
The Company's 1997 Annual Report to Stockholders including the
financial statements and management's discussion and analysis of financial
condition and results of operations for the year ended September 30, 1997, is
being sent to stockholders of record as of January 23, 1998 with this proxy
statement. Stockholders of record as of January 23, 1998, and beneficial owners
of the Company's Common Stock on that date, may obtain from the Company, without
charge, a copy of the Company's most recent Annual Report on Form 10-K filed
with the Securities and Exchange Commission, exclusive of the exhibits thereto,
by a request therefor in writing. Such requests should be directed to the
Company, at its Philadelphia address stated herein, and to the attention of the
Secretary. Beneficial owners shall include in their written requests a good
faith representation that they were beneficial owners of the Company's Common
Stock on January 23, 1998.
STOCKHOLDER PROPOSALS
Under rules promulgated by the Securities and Exchange Commission,
holders of Common Stock who desire to submit proposals for inclusion in the
proxy statement of the Company to be utilized in connection with the 1999 annual
meeting of stockholders, subject to compliance with the eligibility standards
specified in such rules, must submit such proposals to the Secretary of the
Company no later than November 3, 1998.
By order of the Board of Directors
Michael L. Staines, Secretary
January 30, 1998
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<PAGE>
EXHIBIT A
PROPOSED AMENDMENT TO
CERTIFICATE OF INCORPORATION
On December 15, 1997, the Board of Directors of Resource America, Inc.
(the "Company") unanimously adopted a resolution recommending the submission of
the following resolutions to the stockholders of the Company for their approval:
RESOLVED, that the first paragraph of Article IV of the Company's
Certificate of Incorporation, as heretofore amended, be further amended
to read in its entirety as follows:
"The total number of shares of capital stock which the
Corporation shall have authority to issues is fifty million
(50,000,000), of which forty-nine million (49,000,000) shall
be shares of Common Stock (hereinafter called "Common Stock"),
with a par value of one cent ($.01) per share, and one million
(1,000,000) shall be shares of Preferred Stock (hereinafter
called "Preferred Stock"), with a par value of one dollar
($1.00) per share."
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<PAGE>
RESOURCE AMERICA, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF RESOURCE AMERICA, INC.
The undersigned hereby constitutes and appoints Edward E. Cohen and
Michael L. Staines, or either of them, as and for his proxies, each with the
power to appoint such proxy's substitute, and hereby authorizes them, or either
of them, to vote all of the shares of Common Stock of Resource America, Inc.
held of record by the undersigned on January 23, 1998, at the Annual Meeting of
Shareholders of Resource America, Inc. to be held Tuesday, March 3, 1998 and at
any and all adjournments thereof as follows:
I plan to attend
the meeting
[ ]
1. ELECTION OF DIRECTORS.
The nominees for election are Andrew M. Lubin and Alan D.
Schreiber.
FOR all nominees Withhold Authority To withhold
listed above to vote for all authority to vote
(except as marked nominees listed for any individual
to the contrary at above nominee, write that
the right) nominee's name in
the space provided
below.
[ ] [ ] ____________________
2. PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY BE BROUGHT BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
This proxy, when properly executed, will be voted in the manner
described herein by the undersigned. If no direction is made, this proxy will be
voted FOR all nominees listed and FOR the Proposal to amend the Certificate of
Incorporation. Please sign exactly as your name appears on this proxy card. When
shares are held by joint tenants, both should sign. When signing as an attorney,
executor, administrator, trustee, or guardian, please give full title as such.
If a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated:_____________________, 1998
_________________________________
Signature of shareholder
_________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
