<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:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
First Financial Caribbean Corporation
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
First Financial Caribbean Corporation
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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
FIRST FINANCIAL CARIBBEAN CORPORATION
May 2, 1994
Dear Stockholder:
You are cordially invited to attend the fifth Annual Meeting of
Stockholders of First Financial Caribbean Corporation. The meeting will be held
at the Fifth Floor of The Doral Building, 650 Munoz Rivera Avenue, San Juan,
Puerto Rico on Thursday, May 26, 1994. The meeting will begin promptly at 10:00
a.m., local time. We urge you to attend, if at all possible. We in First
Financial Caribbean Corporation's management consider the Annual Meeting an
excellent opportunity for us to discuss your corporation's progress with you in
person.
During the business part of the meeting, we will address the election of
directors and the ratification of auditors for 1994.
I look forward to talking with you about the accomplishments of First
Financial Caribbean Corporation, our progress during 1993 and our plans for the
future. As a stockholder, you will have the opportunity to ask questions during
the meeting.
We urge you to review the Proxy Statement and complete, sign and return
your proxy card in the envelope provided, even if you plan to attend the
meeting. Your vote is important, and the prompt return of your proxy card will
ensure that your vote is counted. The participation of the owners of the
business in its affairs is an essential ingredient of First Financial Caribbean
Corporation's vitality. Please note that sending us your proxy will not prevent
you from voting in person at the meeting should you so desire.
We appreciate your interest and investment in First Financial Caribbean
Corporation, and hope to see you at the Annual Meeting.
Sincerely,
/s/ Salomon Levis
-------------------------
Salomon Levis
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
FIRST FINANCIAL CARIBBEAN CORPORATION
1159 F.D. Roosevelt Avenue
San Juan, Puerto Rico 00920
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On Thursday, May 26, 1994
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of First
Financial Caribbean Corporation (the "Corporation") will be held at the Fifth
Floor of The Doral Building, 650 Munoz Rivera Avenue, San Juan, Puerto Rico on
Thursday, May 26, 1994, at 10:00 a.m., local time, to consider and act upon the
following proposals:
1. The election of eight directors of the Corporation;
2. The ratification of the selection of Price Waterhouse as the
Corporation's independent accountants for the fiscal year ending December 31,
1994; and
3. Such other business as may properly come before the meeting or any
adjournment thereof.
Only stockholders of record as of the close of business on April 11,
1994 are entitled to notice of, and to vote at, the Annual Meeting and any and
all adjournments thereof. A list of these stockholders will be available for
inspection for a period of 10 days prior to the Annual Meeting at the office of
the Corporation at 1159 F.D. Roosevelt Avenue, San Juan, Puerto Rico, and will
also be available for inspection at the meeting itself.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE SIGN AND DATE THE
ACCOMPANYING PROXY AND RETURN IT AS PROMPTLY AS POSSIBLE IN THE ENCLOSED STAMPED
ENVELOPE.
By order of the Board of Directors,
/s/ Richard F. Bonini
-------------------------------
Richard F. Bonini
Senior Executive Vice President
and Secretary
Dated: May 2, 1994
<PAGE> 4
FIRST FINANCIAL CARIBBEAN CORPORATION
1159 F.D. ROOSEVELT AVENUE
SAN JUAN, PUERTO RICO 00920
-------------------------
PROXY STATEMENT
This Proxy Statement is furnished to the holders of the Common Stock, $1.00
par value (the "Common Stock") of First Financial Caribbean Corporation, a
Puerto Rico corporation (the "Corporation") in connection with the solicitation
by and on behalf of the Board of Directors of proxies for the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on Thursday, May 26, 1994 and at
any adjournment thereof, for the purposes set forth in the accompanying notice
of meeting. It is anticipated that this Proxy Statement and the accompanying
form of proxy will be mailed to stockholders commencing on or about May 2, 1994.
GENERAL
Each holder of a share of Common Stock of the Corporation will be entitled
to one vote for each share held of record by such person as of the close of
business on April 11, 1994, which is the record date fixed by the Board of
Directors for the determination of stockholders entitled to notice of, and to
vote at, the Annual Meeting or any adjournment thereof. The presence, in person
or by proxy, of the holders of a majority of the outstanding shares of Common
Stock of the Corporation is necessary to constitute a quorum at the meeting. On
the record date, the Corporation had 6,950,264 shares of Common Stock
outstanding and eligible to vote. The shares represented by each properly
executed proxy in the accompanying form received by the Board of Directors will
be voted at the Annual Meeting or any adjournment thereof in accordance with the
instructions specified therein. If no instructions are made, such shares will,
except as otherwise provided in the next succeeding paragraph, be voted (i) for
the election of the nominees for directors named in this Proxy Statement, (ii)
for the ratification of the selection of Price Waterhouse as the independent
accountants for the Corporation for the fiscal year ending December 31, 1994,
and (iii) in their discretion on any other matters that may properly come before
the Annual Meeting. Each of the above proposals is an independent proposal and
is not contingent on the adoption of the other proposal. The Board of Directors
knows of no additional matters that will be presented for consideration at the
Annual Meeting. Execution of a proxy, however, confers on the designated
proxyholder discretionary authority to vote the shares in accordance with his or
her best judgment on such other business, if any, that may properly come before
the Annual Meeting or any adjournment thereof. Any proxy received in the
accompanying form may be revoked by the person executing it at any time before
the authority thereby granted is exercised by giving written notice of
revocation to the Secretary of the Corporation, by giving a later dated proxy at
any time before the voting or by voting in person at the Annual Meeting.
However, if you are a stockholder whose shares are not registered in your own
name, you will need appropriate documentation from your record holder to vote
personally at the Annual Meeting.
Votes cast by proxy or in person at the Annual Meeting will be counted by
the persons appointed by the Corporation to act as inspectors of election for
the meeting. For purposes of determining the presence of a quorum, the
inspectors of election will treat abstentions and shares represented by proxies
that reflect "broker non-votes" as shares that are present and entitled to vote.
A "broker non-vote" results when a broker or nominee
<PAGE> 5
2
has physically indicated on the proxy that it does not have discretionary
authority to vote on a particular matter (even though those shares are entitled
to vote for quorum purposes and may be entitled to vote on other matters).
The cost of soliciting proxies for the Annual Meeting will be borne by the
Corporation. In addition to the use of the mails, proxies may be solicited
personally or by telephone, by officers and employees of the Corporation who
will not receive any additional compensation for their services. Proxies and
proxy material will also be distributed at the expense of the Corporation by
brokers, nominees, custodians and other similar parties.
All share information included in this Proxy Statement has been adjusted to
reflect a two-for-one stock split effective December 10, 1993.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL HOLDERS
The following table sets forth as of April 11, 1994, certain information
with respect to the beneficial ownership of the Corporation's Common Stock and
10 1/2% Cumulative Convertible Preferred Stock, Series A (the "Series A
Preferred Stock") for each director, nominee for director, executive officer and
5% shareholder of the Corporation, and for all directors and executive officers
of the Corporation as a group. See "Certain Relationships and Related
Transactions."
<PAGE> 6
3
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
SERIES A
PREFERRED PERCENT COMMON PERCENT
NAME OF BENEFICIAL OWNER STOCK(2) OF CLASS STOCK OF CLASS
- - -------------------------------------------------- --------- -------- --------- --------
<S> <C> <C> <C> <C>
Management
Salomon Levis(3)(4)............................... 50,000 15.96% 533,186 7.62%
F.D. Roosevelt Avenue
San Juan, Puerto Rico 00920
Richard F. Bonini................................. -- -- 98,486 1.42%
Edgar M. Cullman, Jr.(5)(6)....................... 55,061 17.57% 1,539,540 21.98%
Park Avenue South
New York, N.Y. 10016
Frederick M. Danziger(5)(6)....................... 55,061 17.57% 1,539,540 21.98%
Maiden Lane
New York, N.Y. 10038
John L. Ernst(5)(6)............................... 55,061 17.57% 1,539,540 21.98%
641 Lexington Avenue
New York, N.Y. 10022
Zoila Levis(3).................................... 10,000 3.19% 68,100 1.00%
A. Brean Murray................................... -- -- -- --
Victor M. Pons, Jr. .............................. -- -- -- --
Mario S. Levis(3)................................. 10,000 3.19% 32,000 (7)
Luis A. Alvarado.................................. -- -- 27,900 (7)
Alfredo Zamora.................................... -- -- 25,400 (7)
All directors, nominees and executive officers as
a group, consisting of 11 persons, including
those named
above........................................... 125,061 39.91% 2,324,612 32.86%
Other Principal Holders
Edgar M. Cullman(6)(8)............................ 55,061 17.57% 1,539,540 21.98%
387 Park Avenue South
New York, N.Y. 10016
Louise B. Cullman(6)(8)........................... 55,061 17.57% 1,539,540 21.98%
387 Park Avenue South
New York, N.Y. 10016
Susan R. Cullman(6)(8)............................ 55,061 17.57% 1,539,540 21.98%
387 Park Avenue South
New York, N.Y. 10016
</TABLE>
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<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)
SERIES A
PREFERRED PERCENT COMMON PERCENT
NAME OF BENEFICIAL OWNER STOCK(2) OF CLASS STOCK OF CLASS
- - -------------------------------------------------- --------- -------- --------- --------
<S> <C> <C> <C> <C>
Lucy C. Danziger(6)(8)............................ 55,061 17.57% 1,539,540 21.98%
2 East 73rd Street
New York, N.Y. 10021
Cullman and Ernst Group(9)........................ 55,061 17.57% 1,539,540 21.98%
387 Park Avenue South
New York, N.Y. 10016
McCullough, Andrews & Cappiello, Inc.(10)......... -- -- 376,800 5.42%
101 California Street
Suite 4250
San Francisco, CA 94111
</TABLE>
- - ---------------------
(1) The information contained in the table is based on share ownership as
of April 11, 1994, plus in the case of information with respect to Common Stock,
the respective number of shares of Common Stock, which the person has the right
to acquire upon conversion of the shares of the Corporation's Series A Preferred
Stock held by such person, as indicated in this table. This information has been
obtained from filings made with the Securities and Exchange Commission (the
"Commission") and information provided by the persons named above and reflects
the definition of beneficial ownership adopted by the Commission. The Percent of
Class of Common Stock held by each person includes the number of shares of
Common Stock which such person has the right to acquire upon conversion of
shares of Series A Preferred Stock held by such person, but does not include
shares of Common Stock issuable upon conversion of shares of Series A Preferred
Stock held by any other person. Beneficial ownership and percent of class shown
is sole investment and voting power, except as reflected in other footnotes
hereto and except that shares shown for Messrs. Cullman, Jr., Danziger and Ernst
under "Management" and for Edgar M. Cullman, Louise B. Cullman, Susan R. Cullman
and Lucy C. Danziger under "Other Principal Holders" include all shares owned by
the Cullman and Ernst Group, including shares with respect to which the named
person has no investment or voting power other than the informal understanding
referred to in the final sentence under footnote (9) below. Where more than one
person shares investment and voting power in the same shares or if such shares
are owned by any member of the Cullman and Ernst Group such shares are shown
more than once. Such shares are reflected only once, however, in the total for
all directors and officers as a group.
(2) Each share of Series A Preferred Stock is currently convertible into
two shares of Common Stock at a conversion price of $5.00 per share.
(3) Salomon Levis, the current Chairman of the Board and Chief Executive
Officer of the Corporation, Zoila Levis, the President of the Corporation and
David Levis, a director emeritus of the Corporation and the former Chairman of
the Board and Chief Executive Officer of the Corporation, are siblings. Mario S.
Levis is the son of David Levis and the nephew of Salomon Levis and Zoila Levis.
Salomon Levis, Zoila Levis and Mario S. Levis each has sole voting and
investment power with respect to their respective shares of Common Stock and
each disclaims any beneficial interest in the shares of Common Stock owned by
the others.
(4) Includes 12,702 shares of Common Stock owned by Nancy Hernandez, the
wife of Salomon Levis.
(5) Included in the shares of Common Stock shown as beneficially owned by
Mr. Danziger are 103,068 shares in which he holds shared investment and/or
voting power, included in the shares of Common Stock shown as beneficially owned
by Mr. Cullman, Jr. are 613,724 shares in which he holds shared investment
and/or voting
<PAGE> 8
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power, included in the shares of Common Stock shown as beneficially owned by Mr.
Ernst are 119,112 shares in which he holds shared investment and/or voting
power. Also included in the case of Messrs. Cullman, Jr., Danziger and Ernst,
respectively, are 914,283, 1,474,991 and 1,456,245 shares of Common Stock held
by the Cullman and Ernst Group with respect to which such person holds no
investment or voting power other than the informal understanding referred to in
the final sentence under footnote (9) below. Voting and investment power over
certain of such shares is held by more than one such person. Messrs. Ernst,
Danziger and Cullman, Jr. disclaim beneficial ownership of all shares over which
there is shared investment and/or voting power and Cullman and Ernst Group
shares not owned by such person directly.
(6) Member of the Cullman and Ernst Group. Edgar M. Cullman is the father
of Edgar M. Cullman, Jr., Susan R. Cullman and Lucy C. Danziger, the husband of
Louise B. Cullman, and the uncle of John L. Ernst. Lucy C. Danziger is the wife
of Frederick M. Danziger.
(7) Represents less than 1%.
(8) Included within the shares of Common Stock shown as beneficially owned
by Mr. Edgar M. Cullman, Mrs. Louise B. Cullman, Ms. Susan R. Cullman and Mrs.
Lucy C. Danziger are respectively, 697,790, 550,218, 612,232, and 653,860 shares
in which such person holds shared voting and/or investment power. Also included
in the shares of Common Stock as to each such person, respectively, are 769,613,
940,973, 925,239 and 850,749 shares held by the Cullman and Ernst Group with
respect to which such person holds no investment or voting power other than the
informal understanding referred to in the final sentence under footnote (9)
below. Each such person disclaims beneficial ownership of all shares not owned
by such person directly.
(9) As of April 11, 1994, a group consisting of Edgar M. Cullman, his son
Edgar M. Cullman, Jr., a director of the Corporation, direct members of their
families and trusts for their benefit; Mr. John L. Ernst, also a director of the
Corporation, his sister and direct members of their families and trusts for
their benefit and partnerships in which members of the Cullman and Ernst
families hold substantial direct and indirect interests own an aggregate of
1,539,540 shares of Common Stock (including 55,061 shares issuable upon
conversion of shares of Series A Preferred Stock held by members of the group)
or approximately 21.98% of the outstanding Common Stock. Among others, Messrs.
Cullman and Cullman, Jr. and their wives, Mr. Ernst and to a lesser extent Mr.
Danziger (who is a member of the Cullman and Ernst Group and a director of the
Corporation), hold investment and voting power or shared investment and voting
power over such shares. Mr. Danziger is the brother-in-law of Mr. Edgar M.
Cullman, Jr. A Schedule 13D filed with the Commission on behalf of the Cullman
and Ernst Group states that there is no formal agreement governing the group's
holding and voting of such shares, but that there is an informal understanding
that the persons and entities included in the group will hold and vote together
the shares owned by each of them in each case subject to any applicable
fiduciary responsibilities.
(10) According to a Schedule 13G filed with the Commission on behalf of
McCullough, Andrews & Cappiello, Inc., a California corporation and registered
investment adviser ("MACI") and Robert F. McCullough, David H. Andrews and Frank
A. Cappiello, Jr., the shareholders of MACI (the "Shareholders"), the beneficial
ownership of MACI of the shares of Common Stock reported is direct as a result
of MACI's discretionary authority to buy, sell and vote such shares of Common
Stock for its investment advisory clients. The Schedule 13G further states that
the beneficial ownership of the shares of Common Stock by the Shareholders is
indirect as a result of the Shareholders' stock ownership in MACI. MACI and the
Shareholders share with each other sole power to vote and dispose all 376,800
shares of Common Stock reported.
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ELECTION OF DIRECTORS AND RELATED MATTERS
ELECTION OF DIRECTORS
On February 3, 1994 the Board of Directors voted to approve an amendment,
to become effective on the date of the Annual Meeting, to the by-laws of the
Corporation to increase the number of directors from six to eight. As a result,
at the Annual Meeting, eight directors comprising the entire Board of Directors
of the Corporation are to be elected. The Board of Directors has proposed the
nominees listed below for election as directors to serve until the 1995 Annual
Meeting or until their successors are duly elected and qualified. All nominees
except Mr. John L. Ernst, Mrs. Zoila Levis, Mr. A. Brean Murray and Mr. Victor
M. Pons, Jr. have served as directors since the Corporation became an
independent public corporation: in December, 1988. Mr. Ernst was elected to the
Board of Directors on September 12, 1989 to fill the vacancy created by the
retirement of Edgar M. Cullman. Mrs. Levis was elected to the Board of Directors
on August 12, 1991 to fill the vacancy created by the resignation of David
Levis. Messrs. Murray and Pons have been nominated by the Board of Directors of
the Corporation for election as directors to fill the two newly created
positions on the Board.
The directors must be elected by a majority of the votes cast in person or
by proxy by stockholders entitled to vote at the Annual Meeting. Therefore,
abstentions and broker non-votes will not have an effect on the election of
directors of the Corporation. Unless otherwise specified in the accompanying
form of proxy, proxies solicited hereby (other than proxies which reflect broker
non-votes) will be voted for the election of the nominees listed below, unless
for any reason not now known by the Corporation, any of such nominees should not
be able to serve, in which case the proxies shall be voted for a substitute
nominee or nominees who will be designated by the Board of Directors.
Other than Mr. Bonini's employment agreement, which requires the Board of
Directors of the Corporation to nominate him for election as a director, there
are no arrangements or understandings between the Corporation and any person
pursuant to which such person has been elected a director.
The following table sets forth as of April 11, 1994, certain information
with respect to each nominee for director:
<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION SINCE
- - ------------------------- ----------------------------------------------------------- -----
<S> <C> <C>
Salomon Levis(1) Chairman of the Board and Chief Executive Officer of the 1988
Corporation since February 1990; President and Chief
Executive Officer of the Corporation (1989-1991); Chairman
of the Board, Doral Mortgage Corporation, a wholly-owned
subsidiary of the Corporation (1988-1990); President and
Chief Operating Officer, Doral Mortgage Corporation
(1985-1988); President of RSC Corp., a wholly-owned
subsidiary of the Corporation (1979-1988). Age 51.
Richard F. Bonini Senior Executive Vice President of the Corporation since 1976
1988 and Secretary of the Corporation since December 1991;
Consultant to Culbro Corporation (1989-1990); Senior Vice
President, Culbro Corporation and Vice President of the
Corporation (1976-1988). Age 55.
</TABLE>
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<TABLE>
<CAPTION>
DIRECTOR
NAME PRINCIPAL OCCUPATION AND OTHER INFORMATION SINCE
- - ------------------------- ----------------------------------------------------------- -----
<S> <C> <C>
Edgar M. Cullman, Jr.(2) President, Culbro Corporation since 1984; Executive Vice 1988
President, Culbro Corporation (1983-1984); President,
General Cigar & Tobacco Co. (1980-1983); Director, Culbro
Corporation. Age 48.
Frederick M. Danziger(2) Member, Mudge Rose Guthrie Alexander & Ferdon (attorneys) 1988
for more than the past five years; Director, Culbro
Corporation, Monro Muffler/ Brake, Inc., Ryan Instruments,
L.P. (general partner), Bloomingdale Properties, Inc.
(investments and real estate), Affinity BioTech, Inc. and
Centaur Communications Ltd. Age 54.
John L. Ernst(2) Chairman of the Board and President of Bloomingdale 1989
Properties, Inc., since September 1984; Director, Culbro
Corporation. Age 53.
Zoila Levis(1) President of the Corporation since August 12, 1991; 1991
Executive Vice President of the Corporation from January 1,
1990 to August 11, 1991; President of Z. Levis Assoc. (real
estate development) from January 1, 1985 to December 31,
1989. Age 46.
A. Brean Murray Chairman of the Board and Chief Executive Officer of Brean --
Murray, Foster Securities Inc., an investment banking firm
for more than the past five years; Director, American Asset
Management (money management), BMI Capital Corp. (money
management), Blyth Holdings Inc. (money management) and
Search Capital Group (used car financing). Age 56.
Victor M. Pons, Jr. Attorney in private practice since 1992; Chief Justice of --
the Supreme Court, Commonwealth of Puerto Rico (1985-1992).
Age 58.
</TABLE>
- - ---------------------
(1) Zoila Levis is the sister of Salomon Levis.
(2) Edgar M. Cullman, Jr. and John L. Ernst are cousins. Frederick M.
Danziger is the brother-in-law of Edgar M. Cullman, Jr.
DIRECTORS' MEETINGS, COMMITTEES AND FEES
The Board of Directors held six meetings during the year ended December 31,
1993. Each director, other than Salomon Levis and Zoila Levis, who attended four
of the six meetings, attended at least 75% of the aggregate number of Board
meetings and meetings held by all committees on which he or she served during
such period. Members of the Board of Directors who are not employees of the
Corporation receive a fee of $10,000 per year plus $800 for each Board of
Directors and committee meeting attended. No separate fees are paid for
committee meetings attended on the same day as a Board meeting. The Corporation
has obtained directors and officers liability insurance for its directors and
officers. The Corporation has agreed to indemnify its directors and officers for
certain liabilities to the fullest extent permitted by Puerto Rico law. There
are no special provisions in the Puerto Rico Corporation law which limit the
liability of directors and officers other than the normal provisions stating
that a director is fully protected in relying in good faith on corporate books
of account or reports of officers, independent public accountants and duly
appointed appraisers.
<PAGE> 11
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The Board of Directors has standing Audit and Compensation Committees. The
Audit Committee met twice and the Compensation Committee met once during 1993.
The Board does not have a standing nominating committee or other committee
performing a similar function.
The Audit Committee reviews audit reports and the scope of the audit by
both the Corporation's staff and its independent accountants and related matters
pertaining to the preparation and examination of the Corporation's financial
statements. The committee also makes recommendations to the Board of Directors
with respect to the foregoing matters as well as with respect to the appointment
of the Corporation's independent accountants. The members of the Audit Committee
are Messrs. Cullman, Jr. and Ernst.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. Cullman, Jr.,
Danziger and Ernst, none of whom is or was during 1993 an executive officer of
the Corporation. Since January 1, 1993, none of the executive officers of the
Corporation has served as a director, executive officer or compensation
committee member of another entity which had an executive officer who served as
a compensation committee member or director of the Corporation. Frederick M.
Danziger, who is a member of the Cullman and Ernst Group and a director of the
Corporation, is a member of Mudge Rose Guthrie Alexander & Ferdon, one of a
number of firms which the Corporation engaged in the past year for various legal
services. During 1993 such firm received approximately $137,040 in fees for
services rendered to the Corporation.
Mr. A. Brean Murray, a nominee for director of the Corporation, is the
Chairman of the Board and Chief Executive Officer of Brean Murray, Foster
Securities Inc., an investment banking firm which in October 1993 acted as agent
on behalf of certain stockholders of the Corporation in a registered public
offering to selected unaffiliated investors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1993, Nancy Hernandez, the wife of Salomon Levis, was employed as
the President of Doral Mortgage Corporation, a wholly-owned subsidiary of the
Corporation, and received compensation of $384,472. This amount includes
deferred compensation as provided by contract. See "Deferred Incentive
Compensation Agreements."
During 1993, Aidiliza Levis, the daughter of David Levis, the former
Chairman of the Board and a director emeritus of the Corporation, sister of
Mario S. Levis, and the niece of Salomon Levis and Zoila Levis, was employed as
a Vice President by Doral Mortgage Corporation, and received compensation of
$283,069.
See also "Compensation Committee Interlocks and Insider Participation" for
certain relationships involving Frederick M. Danziger, a director of the
Corporation and A. Brean Murray, a nominee for director of the Corporation.
In December 1990, the Corporation sold real estate owned as a result of
foreclosure ("REO") consisting of 89 residential properties containing 104
housing units with a cost of approximately $4.7 million including previously
incurred rehabilitation costs and construction interest to Puerto Rico Island
Rental Limited Dividend Partnership, S.E., a Puerto Rico partnership (the
"Partnership") formed under a private syndication. The general
<PAGE> 12
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partner of the Partnership was a corporation that was unrelated to the
Corporation or its officers or directors. Several members of senior management
of the Corporation, including Salomon Levis, Chairman of the Board of the
Corporation, Zoila Levis, the current President of the Corporation, Luis
Alvarado, an Executive Vice President of the Corporation and Mario S. Levis,
currently a Vice President and Treasurer of the Corporation, invested as limited
partners. The Corporation also invested approximately $135,000 in the
Partnership, and owns a 15% interest in the Partnership which is included at
cost in "Other Assets" in the Corporation's Balance Sheet. The REO was sold to
the Partnership for $4.7 million which was based on an estimate of the market
value of the REO as reflected in an independent appraisal report. The appraisal
took into consideration the cost of the improvements to be made which were
reflected in the sales price to the Partnership. The Corporation believes that
the sales price of the REO was comparable to that which the Corporation could
have obtained in arm's length transactions with unaffiliated parties.
Approximately $600,000 of the purchase price was paid in cash at the closing of
the sale of the REO and the remainder was evidenced by promissory notes (the
"Notes") of the Partnership issued to the Corporation in the amount of
approximately $4.1 million. In December 1991, Salomon Levis and Zoila Levis sold
their interests in the Partnership to unrelated third parties at cost.
The Notes bear interest payable on the first day of each month commencing
on March 1, 1991, at the prime rate of Citibank, N.A. (with a maximum and
minimum rate of 13.5% and 9%, respectively) and mature on April 1, 2006. During
December 1990, February 1991 and March 1992, the Corporation sold a total of
$2.8 million principal amount of the Notes to a Puerto Rico financial
institution. Such sale was with recourse to the Corporation.
On July 31, 1992, pursuant to a mutual agreement between the Corporation
and the general partner, due to what the Corporation believed was unsatisfactory
performance, the general partner withdrew from the Partnership and a new
non-profit corporation became the general partner. The Board of Directors of the
new non-profit corporation is composed of three members of the Corporation's
senior management. In connection with such withdrawal, the Corporation agreed to
indemnify the original general partner from certain liabilities incurred during
the period it acted as general partner. The Partnership intends to sell or lease
the REO and the Corporation believes that the change in the general partner
together with existing market conditions should facilitate such process and that
the matters set forth above will not result in any material adverse affect on
the financial condition of the Corporation.
As of December 31, 1993, the principal balance of the Notes held by the
Corporation was approximately $400,000. At December 31, 1993, the Partnership
owed the Corporation $483,000, in past due interest. In addition, the
Corporation holds $54,685 of the Partnership's funds as security. At December
31, 1993, the Company also had accounts receivable due from the Partnership of
approximately $550,000, corresponding primarily to repairs and improvements made
to the rental properties that were funded by the Company.
The following table sets forth certain information with respect to mortgage
loans made to executive officers of the Corporation, Doral Mortgage Corporation,
a wholly-owned subsidiary of the Corporation, and to certain related interests
of directors and executive officers of the Corporation, including the
Partnership. Except for the loan to the Partnership, these loans were made in
the ordinary course of business on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with unaffiliated persons. Except for the loan to the Partnership,
management believes that such loans do not involve more than the normal risk of
collectibility or present other unfavorable features.
<PAGE> 13
10
<TABLE>
<CAPTION>
YEAR LOAN HIGHEST PRINCIPAL PRINCIPAL BALANCE INTEREST
NAME AND POSITION MADE AMOUNT DURING 1993 AS OF 12/31/93 RATE
- - ------------------------ --------- ------------------- ----------------- --------
<S> <C> <C> <C> <C>
Zoila Levis 1993 $ 197,605(1) $ 190,468(6) 8.500%
President 1992 196,300(1) --0-- 8.000
1992 81,700(2) --0-- 9.375
1992 91,500(2) --0-- 8.000
1992 200,000(1) --0-- 7.875
--0--
Mario S. Levis 1993 $ 180,288(1) $ 201,850 7.250%
Vice President and 1993 203,150(1) --0-- 6.875
Treasurer 1992 201,800(1) --0-- 8.000
1992 185,730(2) 8.750
Rafael Delgado 1993 $ 145,500(1) $ 145,377(6) 8.875%
First Vice President 1991 131,100(1) --0-- 8.500
of Operations
Miguel Hernandez 1993 $ 156,600(1) $ 155,909(6) 7.825%
Vice President of 1993 203,150(1) 202,478(6) 7.000
Marketing
Jossie Dickson 1993 $ 26,500(1) $ 25,100 7.375%
Vice President of Loan
Administration
Alfredo Zamora 1993 $ 97,650(1) $ 96,749(6) 7.376%
Chairman of Doral 1993 100,000(1) 98,740(6) 7.500
Mortgage Corporation 1993 203,150(1) 201,793(6) 6.735
1991 230,000(1) --0-- 11.625
Ernesto Carattini 1993 $ 139,900(1) $ 138,181(6) 6.625%
Executive Vice 1992 50,000(1) 46,632(6) 8.250
President of Doral
Mortgage Corporation
SANA, S.E.(3) 1991 $ 250,000(4) $ 250,000 11.000%
Puerto Rico Island 1990 $ 1,359,000 $ 402,579 9.000%
Rental Limited
Dividend Partnership,
S.E.(5)
</TABLE>
- - ---------------------
(1) First mortgages.
(2) Second mortgages.
(3) Special partnership in which Salomon Levis and Nancy Hernandez (his wife),
are the principal investors.
(4) First mortgage on commercial property located in San Juan, Puerto Rico.
(5) Refer to information set forth above for information regarding this
transaction.
(6) Sold to investors.
<PAGE> 14
11
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following information is supplied with respect to the executive
officers of the Corporation who do not serve on the Corporation's Board of
Directors. There are no arrangements or understandings pursuant to which any of
such executive officers was selected as an officer, and none of such executive
officers is related to any other director or executive officer of the
Corporation by blood, marriage or adoption, except that Mario S. Levis is the
nephew of Salomon Levis and Zoila Levis and Nancy Hernandez is the wife of
Salomon Levis, and the sister in law and aunt of Zoila Levis and Mario S. Levis,
respectively.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME DURING THE PAST FIVE YEARS AGE
- - ----------------- -------------------------------------------------------- ---
<S> <C> <C>
Luis A. Alvarado Executive Vice President of the Corporation since 1985; 45
President of Doral Federal Savings Bank, a wholly-owned
subsidiary of the Corporation since September 1993;
Senior Vice President and Controller of the Corporation
(1980-1985).
Mario S. Levis Vice President and Treasurer of the Corporation since 30
December 1991; Senior Executive Trader of the
Corporation since 1988. Trader, Merrill Lynch Pierce
Fenner & Smith Incorporated (1987-1988).
Alfredo Zamora President of the H.F. Mortgage Banker's Division, a 53
division of the Corporation, since January 1994;
Chairman of the Board of Doral Mortgage Corporation
(1990-1993); President of Doral Mortgage Corporation
(1988-1990).
Nancy Hernandez President of Doral Mortgage Corporation since 1990; 42
First Vice President of Doral Mortgage Corporation
(1988-1990).
</TABLE>
EXECUTIVE COMPENSATION
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Based on reports filed with the Securities and Exchange Commission and
information obtained from the officers and directors of the Corporation, the
Corporation is not aware of any failure by the executive officers or directors
of the Corporation to file on a timely basis any reports required to be filed by
Section 16(a) of the Securities Exchange Act of 1934 with respect to beneficial
ownership of shares of the Corporation except for Alfredo Zamora, who failed to
timely file one such report which involved one transaction in securities
required to be reported pursuant to Section 16(a).
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Policies. The compensation policy of the Corporation is to provide its
executive officers and management with a level of pay and benefits that will
assure the Corporation's competitiveness and continued growth, and allow the
Corporation to retain key executives critical to its long-term success and
attract and retain qualified personnel. As it operates in a financial services
business, the Corporation competes for talented executives in a
<PAGE> 15
12
market segment where successful entrepreneurial executives are highly
compensated. It also competes for executives with a background in Puerto Rican
financial services. As a result, to obtain and retain highly qualified and
motivated executives, the Compensation Committee has deemed it desirable to
structure employment arrangements which compensate highly for high profitability
and performance and to enter into written employment agreements with its senior
executive officers.
The Compensation Committee's responsibilities include overseeing the
Corporation's compensation policies, supervising compensation for management and
employee benefits and administering the Corporation's pension, stock option,
restricted stock, incentive compensation and other employee benefit plans.
The Compensation Committee also develops and negotiates employment
agreements with key executive officers. These employment agreements include base
salaries and incentive compensation arrangements designed to reward management
for achieving certain production or performance levels. The Compensation
Committee is also responsible for developing or reviewing incentive compensation
arrangements which the Corporation enters into with executive officers and key
individuals, other than those senior executives that have written employment
agreements. See "Executive Compensation -- Summary of Compensation
Plans -- Deferred Incentive Compensation Agreements." The deferred incentive
compensation agreements are designed to reward executive officers and key
employees for assisting the Corporation in achieving various income targets.
Based on the Compensation Committee's recommendations, the Corporation has also
made grants of restricted stock to senior executives as an important long-term
retention device. See "Executive Compensation -- Summary of Compensation
Plans -- 1988 Restricted Stock Plan." Such awards were made as an incentive for
continued employment and future performance as well as a reward for past
performance.
In order to determine appropriate levels of executive compensation, the
Compensation Committee reviews various factors, including individual
performance, and evaluates the progress of the Corporation towards attaining its
long-term goals. Generally, as a person's level of responsibility increases,
greater portions of total compensation are based on performance (as opposed to
base salaries and benefits). Compensation packages for senior executive officers
have been structured to attempt to compensate them to a substantial extent on a
combination of the profitability of the Corporation as a whole and the
productivity of their individual departments.
Chief Executive Officer's Compensation. In 1991, the Corporation retained
Personnel Corporation of America ("PCA"), an independent compensation consulting
firm, to advise the Compensation Committee in connection with their evaluation
of Salomon Levis' compensation package. PCA provided data and information that
compared the Corporation with a peer group of companies based upon a number of
parameters, including executive compensation, and provided advice for
establishing the Corporation's performance targets and for evaluating annual
performance.
The Compensation Committee reviewed compensation arrangements for senior
executives in companies highly successful in the mortgage banking business and
for investment banking executives to formulate a level of base compensation and
the returns on which Mr. Levis' incentive compensation might be based. Among
other things, the Compensation Committee deemed the emphasis on volume and
return on equity as being of material importance to the overall long-term growth
and profitability of the Corporation. The Compensation Committee then sought to
structure an employment agreement which set high return standards as a base
level (15% return on equity after taxes) for the payment of incentive
compensation on earnings and a high level of originations as a basis for
incentive compensation based on the level of mortgage originations. The
Compensation Committee's evaluation resulted in an employment agreement which
gives Mr. Levis the same percentage of mortgage originations and consolidated
net income as his prior contract but only to the extent mortgage originations
and
<PAGE> 16
13
consolidated net income exceed the base levels established by the Compensation
Committee. Mr. Levis' employment agreement became effective on January 1, 1992
and expires on December 31, 1994.
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
Edgar M. Cullman, Jr.
Frederick M. Danziger
John L. Ernst
The Board Compensation Committee Report on Executive Compensation shall not
be deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, except to the extent that the
Corporation specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
EMPLOYMENT AGREEMENTS AND OTHER COMPENSATION ARRANGEMENTS
The Corporation entered into an employment agreement with Salomon Levis,
which became effective January 1, 1992 and expires on December 31, 1994.
Pursuant to the terms of the agreement, Salomon Levis is entitled to receive
annual compensation equal to the sum of (i) $1,000,000; (ii) 3/8 of 1% of the
face value of mortgage loans on housing units other than new project housing
units in excess of $200 million closed by the Corporation and its subsidiaries
during the calendar year preceding the payment; (iii) 3/16 of 1% of the face
value of mortgage loans on new project housing units in excess of $90 million
closed by the Corporation and its subsidiaries during the calendar year
preceding the payment; and (iv) 25% of the Corporation's annual consolidated net
income after taxes, but before dividends on preferred stock, to the extent such
net income exceeds an amount equal to a 15% return on equity.
The Corporation entered into an employment agreement with Zoila Levis which
became effective on January 1, 1992 and expires on December 31, 1994. Pursuant
to the terms of the agreement, Zoila Levis is entitled to receive annual
compensation equal to the sum of (i) $300,000; and (ii) and the greater of
$50,000 or 3% of the Corporation's annual consolidated net income after taxes,
but before dividends on preferred stock, to the extent such net income exceeds
an amount equal to a 15% return on equity.
The Corporation entered into an employment agreement with Richard Bonini
which became effective July 1, 1992 and expires on June 30, 1995. Pursuant to
the terms of the agreement, Mr. Bonini is entitled to receive annual
compensation equal to the sum of (i) $240,000; (ii) the greater of $35,000 or 2%
of the Corporation's annual consolidated net income after taxes, but before
dividends on preferred stock, to the extent such net income exceeds an amount
equal to a 15% return on equity; and (iii) an amount sufficient to establish an
annuity contract in the amount of $30,000 per year in lieu of retirement
benefits. Under Mr. Bonini's prior employment agreement, which expired on June
30, 1992, Mr. Bonini was entitled to receive (i) an annual payment of $180,000,
(ii) 1% of the Corporation's net income per year, and (iii) a lump sum payment
of $30,000 per year in lieu of retirement benefits.
The Corporation entered into an employment agreement with Luis A. Alvarado,
Executive Vice President of the Corporation, which became effective on January
1, 1993 and expires on December 31, 1995. Pursuant to the terms of the
agreement, Mr. Alvarado is entitled to receive annual compensation equal to the
sum of
<PAGE> 17
14
(i) $150,000; and (ii) the greater of $25,000 or 2% of the Corporation's annual
consolidated net income after taxes, but before dividends on preferred stock, to
the extent such net income exceeds an amount equal to a 15% return on equity;
provided, however, that Mr. Alvarado's annual compensation may not exceed
$375,000. For the fiscal years ended December 31, 1991 and 1992, Mr. Alvarado
received annual incentive compensation equal to 2% of the Corporation's net
income arising from mortgage banking activities as part of an incentive
compensation arrangement.
Mario Samuel Levis, Vice President and the Treasurer of the Corporation,
receives a base annual salary of $35,900 plus the sum of (i) commissions of 1/8
of 1% of the principal amount of mortgage-backed securities sold by the
Corporation to investors and (ii) 25% of any net trading profits realized as a
result of trading activities other than sales of the Company's current
production in the ordinary course of business. When amounts are paid under
clause (ii) in connection with a transaction no additional amounts are payable
under clause (i) in connection with such transaction.
During the past five years, Alfredo Zamora, as Chairman of the Board of
Directors of Doral Mortgage Corporation, his received annual incentive
compensation equal to 3% of Doral's and RSC Corp.'s net income arising from
mortgage banking activities as part of an incentive compensation arrangement.
SUMMARY COMPENSATION TABLE
The following table includes information concerning the compensation of the
Chief Executive Officer and each of the five other most highly compensated
executive officers of the Corporation, for services rendered in all capacities
during the fiscal years ended December 31, 1993, 1992 and 1991.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------
AWARDS(3)
-----------------------------------------------------------------
OTHER RESTRICTED
NAME AND ANNUAL STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)(2) AWARD(S)(4) COMPENSATION(2)
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Salomon Levis 1993 $1,000,000 $6,892,930 $ --0-- $ --0-- $18,159(6)
Chairman of the 1992 1,000,000 4,116,762 --0-- --0-- 69,926(7)
Board and Chief 1991 360,000 1,910,508 --0--
Executive Officer
Zoila Levis 1993 $ 300,000 $ 481,458 $ --0-- $ --0-- $30,533(6)
President 1992 300,000 310,179 --0-- 419,100(5) 17,084(7)
1991 180,000 153,885 --0--
Richard F. Bonini 1993 $ 240,000 $ 320,837 $ --0-- $ --0-- $50,320(6)
Senior Executive 1992 210,000 174,293 --0-- --0-- 37,620(7)
Vice President and 1991 180,000 76,823 --0--
Secretary
Mario S. Levis 1993 $ 35,900 $ 961,909 $ --0-- $ --0-- $ 7,075(6)
Vice President and 1992 38,400 489,679 --0-- --0-- 1,112(6)
Treasurer 1991 38,400 362,028 --0--
Luis Alvarado 1993 $ 150,000 $ 225,000 $ --0-- $ --0-- $26,599(6)
Executive Vice 1992 60,000 319,536 --0-- --0-- 14,481(7)
President 1991 60,000 73,607 --0--
Alfredo Zamora 1993 $ 103,077 $ 431,133(8) $ --0-- $ --0-- $11,853
Chairman of the 1992 115,023 254,230(8) --0-- --0-- 4,012
Board of Directors 1991 100,500 157,622(8) --0--
of Doral Mortgage
Corporation
</TABLE>
<PAGE> 18
15
- - ---------------------
(1) Amounts shown do not include amounts expended by the Corporation
pursuant to plans (including group life and health) that do not discriminate in
scope, term or operation in favor of executive officers or directors of the
Corporation and that are generally available to all salaried employees. Amounts
shown also do not include amounts expended by the Corporation which may have a
value as a personal benefit to the named individual. The value of perquisites
and such other personal benefits did not exceed the lesser of either $50,000 or
10% of the total annual salary and bonus reported for any individual named.
(2) In accordance with the transition rules of the Commission, information
with respect to fiscal year 1991 is omitted.
(3) The Corporation has not granted any options or stock appreciation
rights under the Corporation's 1988 Stock Option Plan for Key Employees.
(4) The number of shares and value, respectively, of the restricted stock
holdings of Zoila Levis on December 31, 1993 were 38,100 shares and $638,175.
Restrictions on all other restricted stock awards previously granted to the
named individuals lapsed during 1993. For purposes of the year-end calculation,
the value of the restricted stock has been calculated by multiplying the last
sales price of the Corporation's Common Stock on the NASDAQ NMS on December 31,
1993 ($16.75) by the number of shares held by Ms. Levis on such date. Dividends
are paid on the restricted stock reported above to the extent dividends are
declared on the Corporation's Common Stock.
(5) The value stated has been calculated by multiplying the number of
shares awarded, 38,100, by the last sales price of the Corporation's Common
Stock on the NASDAQ NMS on December 31, 1992, the date of the grant. The
restrictions on one half of the shares granted will lapse on the third
anniversary of their grant and the other half on the fifth anniversary of their
grant.
(6) The amounts shown for Salomon Levis, Zoila Levis, Mario S. Levis, Luis
A. Alvarado, and Alfredo Zamora include the Corporation's contribution to the
Corporation's Target Benefit Pension Plan, a defined contribution pension plan,
in the amounts of $18,159, $15,293, $7,075, $13,971 and $11,853, respectively.
The amount shown for Mr. Bonini includes a lump sum payment in the amount of
$30,000 per year in lieu of Mr. Bonini's participation in the Corporation's
Target Benefit Pension Plan and $20,320 representing dividends earned on
restricted stock in 1993. The amounts shown for Zoila Levis include $15,240
representing dividends received on restricted stock in 1993. The amounts shown
for Mr. Alvarado, and Mr. Zamora also include $2,468 and $9,589, respectively,
representing interest accrued during 1993 on deferred incentive compensation and
$10,160 and $6,668, respectively, representing dividends earned on restricted
stock in 1993.
(7) The amounts shown for Salomon Levis, Zoila Levis, Mario S. Levis, Luis
A. Alvarado and Alfredo Zamora include the Corporation's contribution to the
Corporation's Target Benefit Pension Plan, a defined contribution pension plan,
in the amounts of $69,926, $17,084, $1,112, $3,489 and $4,012, respectively. The
amount shown for Mr. Bonini includes a lump sum payment in the amount of $30,000
per year in lieu of Mr. Bonini's participation in the Corporation's Target
Benefit Pension Plan and $7,620 representing dividends earned on restricted
stock in 1992. The amounts shown for Mr. Alvarado and Mr. Zamora also include
$7,182 and $4,923, respectively, representing interest accrued during 1992 on
deferred incentive compensation and $3,810 and $7,620, respectively,
representing dividends earned on restricted stock in 1992.
(8) The bonus shown for Mr. Zamora includes $353,450, $188,230 and $91,622
representing incentive compensation earned by Mr. Zamora during the fiscal years
ended December 31, 1993, 1992, and 1991, respectively, and deferred by him
pursuant to the terms of his deferred incentive compensation agreement with the
Corporation. See "Deferred Incentive Compensation Agreements" below.
<PAGE> 19
16
SUMMARY OF COMPENSATION PLANS
1988 Stock Option Plan. On October 26, 1988, the Corporation approved the
adoption of the Corporation's 1988 Stock Option Plan for Key Employees (the
"Option Plan"). The Option Plan is administered by the Compensation Committee
(the "Committee"), none of whose members may hold options. The Committee
determines the form of the option agreements to be used under the Option Plan,
and the terms and conditions to be included in such option agreements. Under the
Option Plan an aggregate of 300,000 shares of Common Stock have been authorized
for issuance upon exercise of options. Options will be granted under the Option
Plan at prices equal to 100% of the fair market value of Common Stock on the
date of grant.
Options granted under the Option Plan may be qualified stock options or
non-statutory options. Unless an option agreement provides otherwise, all
options granted are 50% exercisable after one year and 100% exercisable after
two years, with all such options terminating five years from the date of grant.
The Option Plan permits the delivery, with the consent of the Committee, of
previously-owned Common Stock in payment of shares purchased upon exercise of
the option. The Option Plan also contains a limitation on the dollar amount of
options which may be granted to any employee and restrictions pertaining to any
grant to a 10% shareholder.
The Option Plan permits the granting of stock appreciation rights in tandem
with the granting of stock options. Such Stock Appreciation Rights entitles the
holder to receive in cash upon exercise the difference between the option
exercise price and the market value of Common Stock in lieu of exercising the
related option. No options have been granted to date under the Option Plan.
1988 Restricted Stock Plan. The Corporation has in effect the Restricted
Stock Plan of First Financial Caribbean Corporation (the "Restricted Stock
Plan"). The Restricted Stock Plan is administered by the Compensation Committee,
none of whose members is eligible to be awarded Restricted Stock. The Restricted
Stock Plan permits the Compensation Committee to award up to a total of 250,000
shares of Common Stock to key employees, including officers of the Corporation
and its subsidiaries. The Restricted Stock Award (the "Award") is awarded at
such times and in such number of shares as the Compensation Committee
determines. The Corporation may grant a portion of the shares awarded in
installments over a period of one to five years. No monetary consideration is
paid by an employee for the Award or for the grant of the shares thereunder.
Under the Restricted Stock Plan, the shares issued are subject to restrictions
on sale and must be returned if the recipient leaves the Corporation's employ
prior to the expiration of a stated period of time. Such restrictions generally
lapse within five years from the date of the Award or earlier termination of
employment by reason of death or disability.
Retirement Plan. Prior to becoming an independent public corporation,
retirement benefits were payable to eligible employees of the Corporation under
Culbro Corporation's Employees' Retirement Plan (the "Culbro Retirement Plan")
for officers and other salaried employees of Culbro Corporation and its
participating subsidiaries. Upon the Corporation becoming an independent public
corporation in December 1988, assets and related accumulated benefits for
Corporation employees amounting to $346,000 were transferred from the Culbro
Retirement Plan to the Corporation's newly established Target Benefit Pension
Plan (the "Retirement Plan"). The Retirement Plan covers all full time employees
of the Corporation who have completed one year of service and have attained age
21. Under the Retirement Plan, the Corporation contributes annually the funding
amount which is projected to be necessary to fund the target benefit. The target
benefit is based on years of service and the employees' compensation, as defined
in the Retirement Plan. The Corporation has the right to terminate the
Retirement Plan at any time. Upon termination, all amounts credited to the
participant's accounts will become 100% vested. Contributions to the Retirement
Plan during the year ended December 31, 1993 amounted to approximately $503,000.
<PAGE> 20
17
The estimated annual benefits payable under the Retirement Plan as a life
annuity on retirement at normal retirement age, which assumes service will
continue until age 65 at 1993 base salaries, for Salomon Levis, Zoila Levis,
Mario S. Levis, Luis A. Alvarado and Alfredo Zamora were $51,804, $70,044,
$106,524, $69,792 and $27,264, respectively. Mr. Bonini does not participate in
the Retirement Plan.
Deferred Incentive Compensation Agreements. The Corporation has entered
into deferred incentive compensation arrangements with certain key employees of
the Corporation and its subsidiaries. Such employees are eligible to defer the
receipt of incentive compensation. The amount of incentive compensation is
credited annually based on a specified percentage of the net income of the
Corporation, its subsidiaries or divisions. The Corporation's obligation to make
the payments at the end of the deferral period is unfunded, and all such
payments are to be made out of the general assets of the Corporation. The
Corporation is not required to establish any special or separate fund or to make
any other segregation of assets to assure the payment of any deferral amount.
The Corporation accrued as deferred compensation $885,000 for 1993.
PERFORMANCE GRAPH
The following Performance Graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Corporation specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
The Performance Graph compares the yearly percentage change in the
Corporation's cumulative total stockholder return on its Common Stock to that of
the Center for Research in Securities Prices ("CRSP") Nasdaq Stock Market Index
(U.S. Companies) and the CRSP Index for Nasdaq Financial Stocks. The Performance
Graph assumes that $100 was invested on December 30, 1988 in each of the Company
Common Stock, the CRSP Nasdaq Stock Market Index (U.S. Companies) and the CRSP
Index for Nasdaq Financial Stocks.
<PAGE> 21
18
COMPARISON OF FIVE YEAR CUMULATIVE
TOTAL RETURN AMONG THE CORPORATION,
CRSP NASDAQ STOCK MARKET INDEX (U.S. COMPANIES) AND CRSP INDEX FOR NASDAQ
FINANCIAL STOCKS
<TABLE>
<CAPTION>
CRSP INDEX
FOR NASDAQ CRSP INDEX
MEASUREMENT PERIOD FIRST FINANCIAL STOCK MARKET FOR NASDAQ
(FISCAL YEAR COVERED) CARIBBEAN CORPORATION (US COMPANIES) FINANCIAL STOCKS
<S> <C> <C> <C>
12/30/88 100.0 100.0 100.0
12/29/89 53.8 121.2 115.0
12/31/90 39.3 103.0 88.1
12/31/91 100.9 165.2 136.4
12/31/92 202.1 192.2 194.9
12/31/93 314.4 219.4 226.6
</TABLE>
<PAGE> 22
19
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Price Waterhouse as
independent accountants to audit the financial statements of the Corporation for
the fiscal year ending December 31, 1994. This selection was recommended by the
Audit Committee of the Board of Directors. Price Waterhouse has served as the
Corporation's independent public accountants since 1977. During the year ended
December 31, 1993, Price Waterhouse received fees of approximately $414,387 for
all services rendered to the Corporation.
The submission of this proposal to a vote of shareholders is not legally
required. If selection of Price Waterhouse is not approved, the Board of
Directors will reconsider its selection. The affirmative vote of a majority of
the votes cast in person or by proxy by stockholders entitled to vote at the
Annual Meeting is required to adopt this proposal. Abstentions and broker
non-votes will not have an effect on the proposal.
A representative of Price Waterhouse is expected to be present at the
Annual Meeting and will be given an opportunity to make a statement if so
desired and to respond to appropriate questions.
VOTE RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION
OF THE SELECTION OF PRICE WATERHOUSE AS THE CORPORATION'S INDEPENDENT
ACCOUNTANTS.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the next Annual
Meeting of Stockholders to be held in April, 1995 must be received by the
Corporation at its principal executive office by the close of business on
January 2, 1995. Proposals should be directed to the attention of the Secretary.
ANNUAL REPORT
A copy of the Corporation's Annual Report to Shareholders containing the
consolidated financial statements of the Corporation for the fiscal year ended
December 31, 1993 accompanies this Proxy Statement. Such Annual Report is not
part of the proxy solicitation materials.
Upon receipt of a written or oral request, the Corporation will furnish to
any stockholder without charge, a copy of the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1993, without the accompanying
exhibits. A list of exhibits is included in the Form 10-K and exhibits are
available from the Corporation upon the payment to the Corporation of the costs
of furnishing them. Such written or oral request should be directed to:
Secretary, First Financial Caribbean Corporation, 1159 F.D. Roosevelt Avenue,
San Juan, Puerto Rico 00920, telephone number (809) 749-7100.
<PAGE> 23
20
OTHER MATTERS
Management knows of no matters which may be brought before the Annual
Meeting or any adjournment thereof other than those described in the
accompanying notice of meeting and routine matters incidental to the conduct of
the meeting. If any other matter should come before the Annual Meeting or any
adjournment thereof, it is the intention of the persons named in the
accompanying form of proxy or their substitutes to vote the proxies in
accordance with their judgment on such matters.
The above Notice of Meeting and Proxy Statement are sent by order of First
Financial Caribbean Corporation Board of Directors.
/s/ Richard F. Bonini
---------------------
Richard F. Bonini
Senior Executive Vice President
and Secretary
Dated: May 2, 1994
<PAGE> 24
FIRST FINANCIAL CARIBBEAN CORPORATION
THE DORAL BUILDING
650 MUNOZ RIVERA AVENUE
HATO REY, PUERTO RICO 00918
PROXY
SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS
The undersigned holder of Common Stock of First Financial Caribbean
Corporation (the "Corporation") hereby authorizes and appoints Salomon Levis,
Zoila Levis and Richard F. Bonini, or any one or more of them, as proxies with
full power of substitution in each, to represent the undersigned at the Annual
Meeting of Shareholders of the Corporation to be held at the offices of First
Financial Caribbean Corporation, in The Doral Building, 650 Munoz Rivera
Avenue, Hato Rey, Puerto Rico at 10:00 a.m., local time, on Thursday, May 26,
1994 and any adjournment or adjournments of said meeting and thereat to vote
and act with respect to all the shares of Common Stock of the Corporation that
the undersigned would be entitled to vote if then personally present in
accordance with the instructions listed on the reverse hereof.
Such proxies may vote in their discretion upon such other business
as may properly be brought before the meeting or any adjournment thereof.
Receipt of the Notice of Meeting and the related Proxy Statement is
hereby acknowledged.
(Continued and to be signed on other side)
<PAGE> 25
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2.
Please mark
---------------- /X/ your votes
COMMON this way
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD NO. 2 - Appointment of Price FOR AGAINST ABSTAIN
NO. 1 - Election of Directors: ALL LISTED AS TO ALL Waterhouse as Indepen- / / / / / /
Nominees are: R.F. Bonini, NOMINEES NOMINEES dent Accountants.
E.J. Cullman, Jr., F.M. / / / /
Danziger, J.L. Ernst,
Salomon Levis, Zoila Levis, To vote in accordance with the Board of
A. Brean Murray and Director's recommendation, just sign below.
Victor M. Pons, Jr. No boxes need to be checked.
(To withhold authority to vote for any
individual nominee, write that nominee's DATED:______________________________, 1994
name in the space provided below.)
SIGNATURE:_________________________________
__________________________________________
SIGNATURE:_________________________________
Please mark, date and sign as your name
appears above and return in the enclosed
envelope. If acting as executor, admini-
strator, trustee, guardian, etc. you should
so indicate when signing. If the signer
is a corporation, please sign the full
corporate name by a duly authorized
officer. If shares are held jointly, each
shareholder named should sign.
</TABLE>
