SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FINANCIAL FEDERAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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<PAGE>
FINANCIAL FEDERAL CORPORATION
733 THIRD AVENUE, 7th FLOOR
NEW YORK, NEW YORK 10017
-------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, DECEMBER 14, 1999
-------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Financial Federal Corporation, a Nevada corporation (the
"Company"), will be held at 270 Park Avenue, 11th Floor, New York, New York
on Tuesday, December 14, 1999 at 10:00 a.m. Eastern Time, for the following
purposes:
(1) Electing seven directors;
(2) Ratifying the appointment of the Company's independent
auditors for the fiscal year ending July 31, 2000; and
(3) Transacting such other business as may properly come
before the Annual Meeting.
Pursuant to the By-Laws, the Board of Directors of the Company has fixed
the close of business on October 21, 1999 as the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting. The list of stockholders entitled to vote at the Annual Meeting will
be available for inspection by any stockholder for any purpose related to the
Annual Meeting at the office of Financial Federal Corporation, 733 Third
Avenue, 7th Floor, New York, New York 10017 for the ten days prior to
December 14, 1999.
FINANCIAL FEDERAL CORPORATION
Troy H. Geisser
Secretary
October 27, 1999
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE FILL IN, SIGN
AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH
DOES NOT REQUIRE POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
FINANCIAL FEDERAL CORPORATION
733 THIRD AVENUE, 7TH FLOOR
NEW YORK, NEW YORK 10017
PROXY STATEMENT
This proxy statement and the accompanying form of proxy are solicited by
the Board of Directors (the "Board of Directors" or the "Board") of Financial
Federal Corporation, a Nevada corporation (the "Company"), to be voted at the
Annual Meeting of Stockholders to be held at 270 Park Avenue, 11th Floor, New
York, New York on December 14, 1999 and at any postponements or adjournments
thereof (the "Meeting"). Shares represented by properly executed proxies,
which are received in time and not revoked, will be voted at the Meeting in
the manner described in the proxies. A stockholder may revoke his proxy at
any time prior to its exercise by notice in writing to the Secretary of the
Company indicating that his proxy is revoked or by attending the Meeting and
voting in person.
At the Meeting, the Company's stockholders will be asked (i) to elect
the Board of Directors to serve until the next annual meeting of
stockholders; (ii) to ratify the appointment of Eisner & Lubin LLP as the
Company's independent public accountants for the fiscal year ending July 31,
2000; and (iii) to take such other action as may properly come before the
Meeting.
The approximate date on which this proxy statement and accompanying form
of proxy are first being sent or given to stockholders is October 27, 1999.
Holders of the Company's common stock, par value $.50 per share ("Common
Stock"), as of the record date, which is the close of business on October 21,
1999, are entitled to vote at the Meeting. As of October 1, 1999, the Company
had 14,861,989 shares of Common Stock outstanding and had no preferred stock,
par value $1.00 per share ("Preferred Stock") outstanding. Each share of
Common Stock entitles the holder thereof on the record date to one vote on
matters to be considered at the Meeting.
The presence, in person or by proxy, of stockholders holding a majority
of the issued and outstanding shares of Common Stock entitled to vote at the
Meeting is necessary to constitute a quorum. Abstentions and broker non-votes
are each included for purposes of determining the presence or absence of a
sufficient number of shares to constitute a quorum for the transaction of
business. With respect to the approval of any particular proposal,
abstentions are considered present at the Meeting, but since they are not
affirmative votes for the proposal, they will have the same effect as votes
against the proposal. Broker non-votes, on the other hand, are not considered
present at the Meeting for the particular proposal for which the broker
withheld authority to vote.
Unless contrary instructions are indicated on the proxy, shares
represented by each properly executed and returned proxy card (and not
revoked before they are voted) will be voted "FOR" the election of the
nominees for director named below and "FOR" the ratification of the selection
of Eisner & Lubin LLP as independent auditors for the fiscal year ending July
31, 2000. If a stockholder specifies a different choice on the proxy, such
stockholder's shares of Common Stock will be voted in accordance with the
specification so made.
The entire expense of this proxy solicitation will be borne by the
Company. Solicitation will be made primarily by mail. Proxies may also be
solicited personally and by telephone by regular employees of the Company
without any additional remuneration and at minimal cost. Management may also
request banks, brokerage houses, custodians, nominees and fiduciaries to
obtain authorization for the execution of proxies and may reimburse them for
expenses incurred by them in connection therewith. The Company has retained
Corporate Investors Communications, Inc. to assist in the solicitation of
proxies, at an estimated cost of $1,000, plus other reasonable expenses.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, to the knowledge of the Company,
information regarding the ownership of the Company's Common Stock by (i) each
person who may be deemed to be the beneficial owner of more than 5% of the
Company's outstanding Common Stock as of October 1, 1999 or such other date
as may be noted below, (ii) each director and each nominee for election as a
director, (iii) each executive officer named in the Summary Compensation
Table, and (iv) all directors and executive officers of the Company as a
group. As of October 1, 1999, the Company had 14,861,989 shares of Common
Stock outstanding.
Name and Address of
Beneficial Owner or
Number of Persons in Number of Shares Percentage of
Group 1 Beneficially Owned 2 Ownership
- -------------------- -------------------- -------------
T. Rowe Price Associates, Inc. 3 1,069,450 7.2%
100 East Pratt Street
Baltimore, MD 21202
Massachusetts Financial Services
Company 3 867,675 5.8%
500 Boylston Street
Boston, MA 02116
John Hancock Advisers, Inc. 3 761,400 5.1%
101 Huntington Avenue
Boston, MA 02199
Michael C. Palitz 4 1,772,193 11.5%
Suzanne Y. Palitz 5 1,663,981 10.8%
Bernard G. Palitz 6 1,531,973 10.2%
Clarence Y. Palitz, Jr. 7 665,556 4.4%
Paul R. Sinsheimer 8 337,124 2.2%
William C. MacMillen, Jr. 41,250 9
H.E. Timanus, Jr. 6,000 9
Lawrence B. Fisher 5,000 9
William M. Gallagher 10 137,626 9
Richard W. Radom 11 96,500 9
All directors and executive officers
as a group (14 persons) 12 4,657,221 28.7%
1 Unless otherwise indicated, the address of each person listed is c/o
Financial Federal Corporation, 733 Third Avenue, 7th Floor, New York, New
York 10017.
2 Unless otherwise noted, each person listed has the sole power to vote, or
direct the voting of, and power to dispose, or direct the disposition of,
all such shares. Beneficial ownership includes warrants and options that
are exercisable or will become exercisable within 60 days of October 1,
1999 and shares issuable upon conversion of the Company's convertible
subordinated notes.
3 Share ownership as reported in the most recently filed Schedule 13-G.
4 Includes (i) 42,435 shares of Common Stock owned by Mr. M. C. Palitz,
(ii) options and warrants to purchase 145,835 shares of Common Stock held
by Mr. M. C. Palitz, (iii) 1,245,412 shares and warrants to purchase
321,108 shares of Common Stock held by a corporation owned and controlled
by Mr. M. C. Palitz, (iv) 225 shares of Common Stock held by Mr. M. C.
Palitz's wife, as to which shares Mr. M. C. Palitz disclaims beneficial
ownership, (v) 300 shares of Common Stock owned by Mr. M. C. Palitz's
children, (vi) 298 shares of Common Stock upon conversion of convertible
subordinated notes held by Mr. M. C. Palitz, and (vii) 16,580 shares of
Common Stock upon conversion of subordinated notes held by a trust of
which Mr. M. C. Palitz is a Trustee.
5 Includes (i) 251,807 shares of Common Stock owned by Ms. S. L. Palitz,
(ii) warrants to purchase 55,674 shares of Common Stock held by Ms. S. L.
Palitz, (iii) 3,282 shares of Common Stock upon conversion of convertible
subordinated notes held by Ms. S. L. Palitz, (iv) 1,070,052 shares of
Common Stock and 236,586 warrants to purchase Common Stock held by a
corporation owned and controlled by Ms. S. L. Palitz, and (v) 16,580
shares of Common Stock upon conversion of convertible subordinated notes
held by a trust of which Ms. S. L. Palitz is a Trustee.
2
<PAGE>
6 Includes (i) 1,119,473 shares of Common Stock owned by Mr. B. G. Palitz,
(ii) warrants to purchase 225,000 shares of Common Stock held by Mr. B.
G. Palitz, (iii) 43,125 shares of Common Stock held by Mr. B. G. Palitz's
wife, as to which shares Mr. B. G. Palitz disclaims beneficial ownership,
(iv) 28,125 shares of Common Stock held by a Keogh Plan established for
Mr. B. G. Palitz's benefit and of which he is the Trustee, and (v)
116,250 shares of Common Stock owned by a charitable foundation over
which Mr. B. G. Palitz has control, as to which shares Mr. B. G. Palitz
disclaims beneficial ownership.
7 Includes (i) warrants to purchase 202,500 shares of Common Stock held by
Mr. C. Y. Palitz, Jr., (ii) 22,725 shares of Common Stock held by Mr. C.
Y. Palitz, Jr.'s wife, as to which shares Mr. C. Y. Palitz, Jr. disclaims
beneficial ownership, (iii) 284,444 shares and warrants to purchase
56,672 shares of Common Stock held by two corporations controlled by Mr.
C. Y. Palitz, Jr., (iv) 19,929 shares of Common Stock upon conversion of
convertible subordinated notes held by these corporations, (v) 46,126
shares of Common Stock upon conversion of convertible subordinated notes
held by a limited liability company of which Mr. C. Y. Palitz, Jr. is the
General Manager, and (vi) 33,160 shares of Common Stock upon conversion
of convertible subordinated notes held by trusts of which Mr. C. Y.
Palitz, Jr. is a Trustee, as to which shares Mr. C. Y. Palitz, Jr.
disclaims beneficial ownership.
8 Includes (i) 131,400 shares of Common Stock owned by Mr. Sinsheimer, and
(ii) options and warrants to purchase 205,724 shares of Common Stock held
by Mr. Sinsheimer.
9 Less than 1% of outstanding shares of Common Stock.
10 Includes (i) 109,593 shares of Common Stock owned by Mr. Gallagher, and
(ii) options and warrants to purchase 28,033 shares of Common Stock held
by Mr. Gallagher.
11 Includes (i) 89,750 shares of Common Stock owned by Mr. Radom, and (ii)
options to purchase 6,750 shares of Common Stock held by Mr. Radom.
12 Includes (i) shares of Common Stock described in notes 4, 6, 7, 8, 9, 10
and 11, and (ii) 32,780 shares of Common Stock and options to purchase
31,219 shares of Common Stock held by executive officers not named in the
table.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers to file reports of holdings and
transactions in shares of the Company's Common Stock with the Securities and
Exchange Commission (the "SEC") and the New York Stock Exchange, Inc. Based
on Company records and other information, the Company believes that all SEC
filing requirements applicable to its directors and executive officers with
respect to the Company's 1999 fiscal year were met.
ELECTION OF DIRECTORS
(Item 1 on Proxy Card)
The Board of Directors has designated the persons listed under the
section "Nominees for Election as Directors" of this proxy statement for
nomination to serve as directors of the Company until the next annual meeting
and until their respective successors are elected and qualified, or until
their earlier resignation or removal. It is intended that shares represented
by proxies solicited by the Board of Directors will, unless authority to vote
for some or all of the nominees is withheld, be voted in favor of electing as
directors the nominees listed below. The Company has no reason to believe any
of the nominees will be disqualified or unable or unwilling to serve if
elected. However, if any nominee becomes unavailable for any reason, the
shares will be voted for another person nominated by the Board, unless the
Board by resolution provides for a lesser number of directors. All the
nominees are currently directors of the Company.
The election of the seven director nominees requires an affirmative vote by a
plurality of votes cast at the meeting of stockholders by the stockholders
entitled to vote in the election. Any shares not voted (by abstention, broker
non-vote, or otherwise) have no impact on the vote. The Board of Directors
unanimously recommends that stockholders vote "FOR" each of the nominees
listed below.
Nominees for Election as Directors
----------------------------------
Lawrence B. Fisher, 61, has served as a director of the Company since 1992.
Mr. Fisher has been a partner of Orrick, Herrington & Sutcliffe LLP, a law
firm, since December 1995. He had previously been a partner of Kelley Drye &
Warren LLP, a law firm, from 1985 to December 1995. He is also a director of
National Bank of New York City, a privately owned commercial bank.
William C. MacMillen, Jr., 86, has served as a director of the Company since
1989. Mr. MacMillen served as a director of Commercial Alliance Corporation,
an equipment finance company ("CAC"), from its inception in 1963 to 1984, and
he is presently a director of Republic New York Corporation and Republic
National Bank of New York, and is the President of William C. MacMillen &
Co., Inc., an investment banking firm.
3
<PAGE>
Bernard G. Palitz, 75, has served as a director of the Company since its
inception in 1989 and as Chairman of the Board from the Company's inception
to July 31, 1996. From 1963 to 1988, Mr. Palitz served as Chairman of the
Board of CAC, which he founded with Clarence Y. Palitz, Jr. in 1963. He is
currently a director and President of Gregory Capital Corporation, an
investment firm.
Clarence Y. Palitz, Jr., 68, has served as Chief Executive Officer and a
director of the Company since its inception in 1989, as Chairman of the Board
of the Company since August 1, 1996 and as President of the Company from its
inception in 1989 to September 1998. From 1963 to 1988, Mr. Palitz served as
President and a director of CAC, which he founded with Bernard G. Palitz in
1963. Since October 1988, he has been a director of City and Suburban
Financial Corp., a privately owned savings and loan holding company.
Michael C. Palitz, 41, has served as Executive Vice President of the Company
since July 1995 and as a director of the Company since July 1996. Mr. Palitz
served as Senior Vice President of the Company from February 1992 to July
1995 and served as a Vice President of the Company from its inception in 1989
to February 1992. He has also served as Chief Financial Officer, Treasurer
and Assistant Secretary of the Company since its inception in 1989. From 1985
to 1989, Mr. Palitz was an Assistant Vice President of Bankers Trust Company
and, from 1980 to 1983, he was an Assistant Secretary of Chemical Bank.
Paul R. Sinsheimer, 52, has served as President of the Company since
September 1998, as Executive Vice President of the Company from its inception
in 1989 to September 1998 and as a director of the Company since its
inception. From 1970 to 1989, Mr. Sinsheimer was employed by CAC, where he
served successively as Credit Manager, Collections Manager, Operations
Manager, Houston Branch Manager, Division Manager and, from 1988, as
Executive Vice President.
H.E. Timanus, Jr., 54, has served as a director of the Company since May
1999. Mr. Timanus is the President and Chief Executive Officer of Commercial
Bancshares, Inc., Houston, TX where he has been employed since 1983. He is
also Chairman and Chief Executive Officer of Heritage Bank, Houston, TX and
President and Chief Executive Officer of Heritage Bancshares, Inc.,
Wilmington, DE.
Bernard G. Palitz and Clarence Y. Palitz, Jr. are brothers. Michael C.
Palitz is the son of Clarence Y. Palitz, Jr.
The Board has established an Executive Committee, comprising three
directors. The Executive Committee can exercise all of the powers of the
Board between meetings of the Board. The present members of the Executive
Committee are Messrs. MacMillen, C.Y. Palitz, Jr. and Sinsheimer.
The Board has established an Audit Committee, comprising three outside
directors. The Audit Committee is responsible for the engagement of the
Company's independent auditors and will review with them the scope and timing
of their audit services and any other services they are asked to perform,
their report on the Company's financial statements following completion of
their audit, and the Company's policies and procedures with respect to
internal accounting and financial controls. The present members of the Audit
Committee are Messrs. Fisher, MacMillen and Timanus.
The Board has established an Executive Compensation Committee,
comprising three directors. The Executive Compensation Committee is
responsible for approving appointments, promotions and fixing salaries of
executives of the Company between meetings of the full Board. All actions of
the Executive Compensation Committee must be ratified by the Board within six
months in order to remain effective. The present members of the Executive
Compensation Committee are Messrs. Fisher, M.C. Palitz and Sinsheimer.
The Board has established a Stock Option Committee, comprising three
directors. The Stock Option Committee is responsible for administering the
Company's 1989 Stock Option Plan, which expired September 1999, and the
Financial Federal Corporation 1998 Stock Option Plan, including the granting,
modification and cancellation of options to purchase the Company's Common
Stock granted thereunder. The present members of the Stock Option Committee
are Messrs. MacMillen, B.G. Palitz and C.Y. Palitz, Jr.
The Board has no standing committees other than those described above.
4
<PAGE>
During the Company's fiscal year ended July 31, 1999, the Board of
Directors met four times, the Executive Committee met once, the Audit
Committee met twice, the Executive Compensation Committee met once, and the
Stock Option Committee met once. Each member of the Board attended, either
telephonically or in person, 100% of the total number of meetings of the
Board and its committees of which they were members during such fiscal year.
Compensation Committee Interlocks and Insider Participation
Michael C. Palitz and Paul R. Sinsheimer, who are members of the
Executive Compensation Committee, are both executive officers of the Company.
Michael C. Palitz, and entities controlled and managed by him, and Paul R.
Sinsheimer, have purchased commercial paper issued by the Company (see
"Certain Transactions").
Compensation of Directors
Directors (who are not officers or employees of the Company or any of
its subsidiaries) receive stipends, as follows:
1. Annual Stipend of Five Thousand ($5,000) Dollars per year, payable
upon their election by the stockholders after the Annual Meeting of
Stockholders each year. If a director joins the Board during the
year, such stipend will be pro rated.
2. Three Hundred ($300) Dollars per Board meeting attended.
3. Two Hundred ($200) Dollars per committee meeting attended if not in
conjunction with a Board meeting.
Directors who are officers of the Company receive no additional
compensation for attending Board meetings. Directors who are not officers of
the Company may participate in the stock option plans.
COMPENSATION
Report of Executive Compensation Committee
Notwithstanding anything to the contrary set forth in the Company's
previous filings under the Securities Act of 1933, as amended, or the
Exchange Act, that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following report and the Performance
Graph below shall not be incorporated by reference into any such filings.
The Executive Compensation Committee is pleased to present its report on
executive compensation. This report to stockholders presents an overview of
the role of the Executive Compensation Committee of the Board of Directors
and of the Company's present compensation philosophy. The Executive
Compensation Committee's principal function is to review and approve the
salaries of executive officers of the Company and to approve any officer
appointments and promotions. All actions of the Executive Compensation
Committee, to remain effective, must be ratified by a majority vote of the
Board of Directors within six months of such action; and all such actions to
date have been so ratified.
It is the philosophy of the Executive Compensation Committee that a
significant portion of executive compensation be linked directly to the
Company's success in meeting profit, growth and corporate performance goals,
operating efficiencies, success in handling non-performing receivables, the
Company's overall performance regarding its return on earning assets and
average equity, as well as the quality and integrity of the Company's
receivables. The Company compensates certain employees and officers through
salary, a portion of which may be deferred by agreement between the Company
and its officers, and through stock options. The Company believes by granting
stock options, the employees' and officers' objectives are aligned with those
of the Company and its stockholders, to increase stockholders' value. More
than 60% of the Company's employees and officers with one or more years of
service as of September 30, 1999 were holders of options under the Company's
stock option plans.
5
<PAGE>
The Company offers a package of fringe benefits to its employees and
officers that may not be as extensive as those offered by other financial
services companies. The current benefits offered by the Company are a
contributory health and medical plan, a life insurance program (generally
limited to one times annual salary plus $10,000), a qualified 401(k) savings
plan (currently with no Company matching) and an employee contributed long
term disability plan. In order to attract exceptionally high caliber
employees and executives, the Company generally offers salaries believed to
be competitive with other financial services companies considering the
Company does not offer certain fringe benefits provided by the Company's
competitors. The Company evaluates compensation adjustments based upon an
employee's performance, the Company's success in meeting profit, growth and
corporate performance goals, operating efficiencies, success in handling non-
performing receivables, the Company's overall performance regarding its
return on earning assets and average equity, as well as the quality and
integrity of the Company's receivables.
The Executive Compensation Committee reviews annually the Company's
compensation programs to ensure that the salaries offered to its executives
are competitive and parallel the Company's performance. The Executive
Compensation Committee's salary evaluation procedures include reviewing
public filings of other financial services companies and performing an
informal survey as well as a comparison and review of its competitors and
other companies that are compared and contrasted in the SNL Executive
Compensation Review for Specialty Lenders (the "SNL Review") published by SNL
Securities. The SNL Review provides information on executive compensation
awarded by approximately 100 finance companies (including the Company and
competitors of the Company) obtained from public filings and surveys. The
SNL Review compares, contrasts and details the following: (1) executive
compensation; (2) Chief Executive Officer compensation; (3) Chief Operating
Officer compensation; (4) Chief Financial Officer compensation; (5) corporate
benefit plans; and (6) compensation reports. The Executive Compensation
Committee, when determining salary adjustments, also considers that the
Company does not offer certain fringe benefits that may be part of
competitors' executive compensation programs such as bonuses, commissions,
retirement benefits and profit sharing plans.
In determining salary adjustments, the Executive Compensation Committee
evaluates each executive's contribution to the Company's overall corporate
objectives, including annual profits, loan/lease originations, departmental
operating benchmarks, the Company's overall performance as measured by return
on earning assets and average equity, as well as the quality of the portfolio
of receivables managed by such executives.
Compensation of the Chief Executive Officer
The Executive Compensation Committee annually reviews and approves the
compensation of Clarence Y. Palitz, Jr., the Chief Executive Officer and
Chairman. The Executive Compensation Committee, in establishing compensation
for the Chief Executive Officer, generally uses the same criteria as it does
for other employees and officers, except the Chief Executive Officer's
compensation is not tied directly to the Company's performance. In addition
to the review of the informal survey conducted by the Executive Compensation
Committee of public and private competitors of the Company, the Executive
Compensation Committee compares and contrasts the annual executive
compensation of Chief Executive Officers of competitors of the Company in the
SNL Review. Mr. C.Y. Palitz's total compensation is relatively low compared
to his peer group especially taking into consideration Financial Federal
Corporation's performance, his individual performance, his leadership, vision
and abilities. However, Mr. C.Y. Palitz is continuing to delegate more
operational and administrative duties and responsibilities to the Chief
Operating Officer and Chief Financial Officer in an effort to increase their
responsibilities and experience. The Executive Compensation Committee
believes that based on the foregoing, Mr. C.Y. Palitz is awarded a reasonable
salary, given his limited operational and administrative duties and
responsibilities.
Submitted by the Executive Compensation Committee of the Company's Board of
Directors:
Lawrence B. Fisher Michael C. Palitz Paul R. Sinsheimer
6
<PAGE>
PERFORMANCE GRAPH
The following graph compares the percentage change in cumulative total
stockholder return on Financial Federal Corporation's Common Stock during the
five year period ending July 31, 1999 with the cumulative total return on the
S & P Financial Index and the Russell 2000 Index. The comparison assumes $100
was invested on July 31, 1994 in each of such indices. Note that historic
stock price is not indicative of future stock price performance.
Financial Federal Corporation's Common Stock listed on the New York
Stock Exchange, Inc. on June 22, 1998, and was previously listed on the
American Stock Exchange.
7/94 7/95 7/96 7/97 7/98 7/99
---- ---- ---- ---- ---- ----
Financial Federal Corporation $100 $112 $123 $214 $352 $326
S & P Financial 100 121 155 268 333 338
Russell 2000 100 125 134 178 186 198
Footnote - $100 invested on 7/31/94 in stock or index including
reinvestment of dividends. Fiscal year ending July 31.
Graph produced by Research Data Group
7
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual and
long-term compensation paid to those persons who were, at July 31, 1999, the
Chief Executive Officer ("CEO") and the other four most highly compensated
executive officers of the Company.
<TABLE>
<CAPTION>
Long-term
Annual Compensation
Compensation Awards
------------ ------
Securities
Fiscal Underlying All Other
Name and Principal Position(s) Year Salary ($) Options(#) Compensation ($)
- ------------------------------ ---- ---------- ---------- ----------------
<S> <C> <C> <C> <C>
Clarence Y. Palitz, Jr. 1999 335,000 0 0
CEO and Director 1998 289,583 0 0
1997 243,750 0 0
Paul R. Sinsheimer 1999 649,341 200,000 0
Chief Operating Officer, 1998 588,843 0 0
President and Director 1997 555,511 0 0
Michael C. Palitz 1999 270,270 0 0
Chief Financial Officer, 1998 245,270 50,000 0
Executive Vice President 1997 202,770 0 0
and Director
Richard W. Radom 1999 243,163 0 0
Senior Vice President 1998 225,628 6,000 0
1997 216,381 0 0
William M. Gallagher 1999 240,591 0 0
Senior Vice President 1998 218,010 6,000 0
1997 200,511 0 0
</TABLE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE
<CAPTION>
Shares Securities Underlying Value of Unexercised
Acquired on Value Unexercised Options Held In-The-Money Options
Name (1) Exercise (#) Realized($) At July 31, 1999 (#) At July 31, 1999(1)
- ----------------------- ------------ ----------- -------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Clarence Y. Palitz, Jr. 0 0 0 0 0 0
Paul R. Sinsheimer 24,500 337,548 12,975 227,000 209,663 1,282,997
Michael C. Palitz 20,000 270,560 50,875 77,000 804,821 451,747
Richard W. Radom 11,813 155,376 6,750 12,750 87,750 93,000
William M. Gallagher 9,281 140,635 9,282 12,750 142,983 93,000
<FN>
(1) Includes those who in fiscal 1999 were the Chief Executive Officer
and the four other most highly compensated executive officers.
(2) Only the value of unexercised, in-the-money options are reported.
Value is calculated by (i) subtracting the total exercise price per
share from the fiscal year-end value of $23.00 per share and (ii)
multiplying by the number of shares subject to the option.
</FN>
</TABLE>
8
<PAGE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants
----------------------------------------------------------------------
Number of
Shares % of Total Grant
Underlying Options Exercise Date
Options Granted to Price Expiration Present
Name (1) Granted (#) Employees Per Share ($) Date Value (2) ($)
- ----------------------- ------------ ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Clarence Y. Palitz, Jr. 0 0.00 -- -- --
Paul R. Sinsheimer 200,000 100.00 18.625 10/8/2008 1,417,000
Michael C. Palitz 0 0.00 -- -- --
Richard W. Radom 0 0.00 -- -- --
William M. Gallagher 0 0.00 -- -- --
<FN>
(1) Includes those who in fiscal 1999 were the Chief Executive Officer
and the four other most highly compensated executive officers.
(2) In accordance with SEC rules, the Black-Scholes option pricing
model was chosen to estimate the grant date present value of the
options set forth in this table. The Company's use of this model
should not be construed as an endorsement of its accuracy at
valuing options. All stock option valuation models, including the
Black-Scholes model, require a prediction about the future movement
of the stock price. The following assumptions were made for
purposes of calculating the grant date present value: expected life
of six years, volatility rate of 29% and risk free interest rate of
4.6%. The real value of the options in this table depends upon the
actual changes in the market price of the Common Shares during the
applicable period.
</FN>
</TABLE>
EMPLOYMENT CONTRACTS
The Company has not entered into any contract or arrangement with any
employee or officer requiring the Company to continue compensation or to
provide compensation upon termination of employment. Certain executive
officers have deferred compensation agreements with the Company providing for
deferral of current compensation. Compensation deferred earns interest at
rates published by the Internal Revenue Service.
No employee or officer has entered into any termination or change-in-
control arrangement with the Company other than their respective obligations
to the Company described in their stock option agreements.
CERTAIN TRANSACTIONS
Officers, directors and stockholders of the Company or their affiliates
have purchased commercial paper issued by the Company. Such commercial paper
has been issued at interest rates then prevailing in the commercial paper
markets and on terms customary in such markets. The maximum aggregate
principal amount of the Company's commercial paper purchased and held by them
during fiscal 1999 was $27.0 million. Interest expense incurred on the
Company's commercial paper purchased by them was $1.3 million in fiscal 1999.
At July 31, 1999, the aggregate face amount of the Company's outstanding
commercial paper purchased by them was $25.7 million and the aggregate amount
of accrued interest thereon was $234,000.
Lawrence B. Fisher, a director of the Company, is a partner of the law
firm of Orrick, Herrington & Sutcliffe LLP, which has been retained by the
Company in connection with certain legal matters.
9
<PAGE>
RATIFICATION OF AUDITORS
(Item 2 on Proxy Card)
The Board of Directors, on the recommendation of the Audit Committee,
has reappointed the firm of Eisner & Lubin LLP, the Company's independent
public accountants for the fiscal year ended July 31, 1999, as the Company's
independent public accountants for the fiscal year ending July 31, 2000 and
recommends that the stockholders vote "FOR" confirmation of such selection.
In the event of a negative vote on such ratification, the Board will
reconsider its selection. A representative of Eisner & Lubin LLP will be
present at the Meeting, will have the opportunity to make a statement and
will be available to respond to appropriate questions. Eisner & Lubin LLP has
been the Company's independent auditors since the Company's inception in
1989.
Ratification of the appointment of auditors requires a majority of the votes
cast thereon. Any shares not voted (by abstention, broker non-vote, or
otherwise) have no impact on the vote. The Board of Directors unanimously
recommends a vote "FOR" the ratification and approval of the appointment of
Eisner & Lubin LLP.
STOCKHOLDER PROPOSALS
All proposals of stockholders to be presented at the Company's next
Annual Meeting of Stockholders, expected to be held in December 2000, must be
directed to the Secretary of the Company at the Company's principal executive
office and, if they are to be considered for possible inclusion in the proxy
statement and form of proxy for such Annual Meeting in accordance with the
rules and regulations of the SEC, must be received on or before July 13,
2000.
OTHER BUSINESS
Neither the Company nor the Board of Directors knows of any matters,
other than those indicated above, to be presented at the Meeting. If any
additional matters are properly presented, the persons named in the proxy
will have discretion to vote the shares represented by such proxy in
accordance with their judgment.
ANNUAL REPORT
THE COMPANY'S ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED
JULY 31, 1999 WAS MAILED TOGETHER WITH THE PROXY STATEMENT AND IS AVAILABLE
ON THE INTERNET IN THE INVESTOR RELATIONS SECTION OF THE COMPANY'S WEBSITE AT
www.financialfederal.com. ADDITIONAL COPIES OF THE ANNUAL REPORT MAY BE
OBTAINED BY CALLING THE COMPANY AT (212) 599-8000. UPON RECEIPT OF A
WRITTEN REQUEST, THE COMPANY ALSO WILL FURNISH TO ANY STOCKHOLDER, WITHOUT
CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR 1999 REQUIRED
TO BE FILED WITH THE SEC UNDER THE EXCHANGE ACT. WRITTEN REQUESTS SHOULD BE
DIRECTED TO INVESTOR RELATIONS AT 733 THIRD AVENUE, NEW YORK, NY 10017.
BY ORDER OF THE BOARD OF DIRECTORS
Troy H. Geisser
Secretary
DATE: October 27, 1999
10
<PAGE>
FINANCIAL FEDERAL CORPORATION
P R O X Y
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Financial Federal Corporation (the
"Corporation") hereby appoints Clarence Y. Palitz, Jr. and Michael C. Palitz,
or either of them, with full power of substitution, as proxies for the
undersigned to attend and act for and on behalf of the undersigned at the
Annual Meeting of Stockholders of the Corporation to be held at 270 Park
Avenue, New York, New York on December 14, 1999 at 10:00 a.m., and at any
adjournment thereof, to the same extent and with the same power as if the
undersigned were present in person thereat and with authority to vote and act
in such proxyholder's discretion with respect to other matters which may
properly come before the Meeting. Such proxyholder is specifically directed
to vote or withhold from voting the shares registered in the name of the
undersigned as indicated below.
Notes:
(1) This form of proxy must be executed by the stockholder or his attorney in
writing or, if the stockholder is a corporation, under the corporate seal
or by an officer or attorney thereof duly authorized. Joint holders
should each sign. Executors, administrators, trustees, etc. should so
indicate when signing. If undated, this proxy is deemed to bear that date
it was mailed to the stockholder.
(2) the shares represented by this proxy
will, on a show of hands or any ballot FINANCIAL FEDERAL CORPORATION
that may be called for, be voted or P.O. BOX 111O2
withheld from voting in accordance with NEW YORK, N.Y. 10203-0102
the instructions given by the stockholder,
in the absence of any contrary instructions,
this proxy will be voted "FOR" the itemized
matters.
(Continued on reverse side)
1. ELECTION OF DIRECTORS
FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] *EXCEPTIONS [ ]
listed below for all nominees listed below.
Nominees: Lawrence B. Fisher, William C. MacMillen, Jr., Bernard G. Palitz,
Clarence Y. Palitz, Jr., Michael C. Palitz, Paul R. Sinsheimer,
H.E. Timanus, Jr.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and strike a line through that nominee's name.)
2. In respect of the resolution on ratifying the appointment of Eisner &
Lubin LLP as auditors of the Corporation for the fiscal year ending
July 31, 2000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Change of Address and [ ]
or Comments Mark Here
The signature on this Proxy should correspond exactly
with stockholder's name as printed to the left. In the
case of joint tenancies, co-executors, or co-trustees,
both should sign. Persons signing as Attorney,
Executor, Administrator, Trustee or Guardian should
give their full title.
Dated: , 1999
---------------------------------------
---------------------------------------------------
Signature of Stockholder
---------------------------------------------------
Signature of Stockholder-Joint Tenant
Votes must be indicated
(x) in Black or Blue Ink. [X]
Please mark, sign, date and return this proxy promptly in the envelope
provided.
