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
Filed by the Registrant [ ]
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Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Express America Holdings Corporation
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- - - - --------------------------------------------------------------------------------
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<PAGE>
EXPRESS AMERICA HOLDINGS CORPORATION
Two Renaissance Square
40 North Central Avenue, Suite 1200
Phoenix, Arizona 85004
(602) 417-8100
--------------------------------------------------
NOTICE AND PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 26, 1997
----------------------------------------------------
To the Holders of Our Common Stock:
The 1997 Annual Meeting of Stockholders of Express America Holdings
Corporation (the "Company") will be held at the Company's headquarters in
Phoenix, Arizona on February 26, 1997, at 10:00 a.m., local time, to elect two
directors to the Company's Board of Directors and to consider such other
business as may properly come before the Annual Meeting. Management is presently
aware of no other business to come before the Annual Meeting.
The Board of Directors has fixed the close of business on January 10,
1997 as the record date for the determination of stockholders entitled to
receive notice of and to vote at the Annual Meeting or any adjournment thereof.
Shares of Common Stock can be voted at the Annual Meeting only if the holder is
present at the Annual Meeting in person or represented by valid proxy. A copy of
the Company's 1996 Annual Report to Stockholders, which includes certified
consolidated financial statements, was mailed with this Notice and Proxy
Statement on or about January 15, 1997 to all stockholders of record on the
record date for the Annual Meeting. The officers and directors of the Company
cordially invite you to attend the Annual Meeting.
Your attention is directed to the attached Proxy Statement.
By Order of the Board of Directors
Robert W. Stallings
Chairman of the Board
Phoenix, Arizona
January 15, 1997
IMPORTANT
Stockholders are requested to SIGN, DATE and MAIL the enclosed proxy. A
postage-paid envelope is provided for mailing in the United States.
<PAGE>
EXPRESS AMERICA HOLDINGS CORPORATION
Two Renaissance Square
40 North Central Avenue, Suite 1200
Phoenix, AZ 85004
(602) 417-8100
----------------------------------
PROXY STATEMENT
-----------------------------------
This Proxy Statement is furnished by the Board of Directors of EXPRESS
AMERICA HOLDINGS CORPORATION, a Delaware corporation (the "Company"), in
connection with the Company's Annual Meeting of Stockholders (the "Annual
Meeting") to be held on February 26, 1997. The proxy materials were mailed on or
about January 15, 1997 to the Company's common stockholders (the "Stockholders")
of record at the close of business on January 10, 1997 (the "Record Date"). As
of the Record Date, there were 3,860,130 shares of the Company's common stock,
$.01 par value per share (the "Common Stock"), issued and outstanding. Only
holders of Common Stock will be entitled to vote at the Annual Meeting. Each
holder of shares of Common Stock issued and outstanding on the Record Date is
entitled to one vote for each share held on each matter of business to be
considered at the Annual Meeting. The holders of a majority of the voting power
of the issued and outstanding Common Stock entitled to vote, present in person
or represented by proxy, shall constitute a quorum at the Annual Meeting.
The enclosed proxy is solicited by the Board of Directors of the
Company. A person giving the enclosed proxy has the power to revoke it at any
time before it is exercised by (i) attending the Annual Meeting and voting in
person, (ii) duly executing and delivering a proxy bearing a later date, or
(iii) sending written notice of revocation to the Company's Secretary at Two
Renaissance Square, 40 North Central, Suite 1200, Phoenix, Arizona 85004. The
Company will bear the cost of the solicitation of proxies, including the charges
and expenses of brokerage firms and others who forward solicitation material to
beneficial owners of Common Stock. In addition to the use of the mails, proxies
may be solicited by personal interview, telephone or other means deemed
appropriate by the Board of Directors.
If the enclosed proxy is properly executed and returned to the Company
in time to be voted at the Annual Meeting, it will be voted as specified on the
proxy, unless it is properly revoked prior thereto. If no specification is made
on the proxy as to any one or more of the proposals, the shares represented by
the proxy will be voted for the election of the nominees for directors named
below and, with respect to any other matters that may come before the Annual
Meeting, at the discretion of the proxy holders.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the inspectors of election appointed for the meeting and will
determine whether or not a quorum is present. The inspectors of election will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum, but as unvoted for purposes of
determining the approval of any matter submitted to the Stockholders for a vote.
If a broker indicates on the proxy that it does not have discretionary authority
as to certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
The information included herein should be reviewed in connection with
the consolidated financial statements, notes to consolidated financial
statements and independent auditors' report included in the Company's 1996
Annual Report to Stockholders.
1
<PAGE>
ELECTION OF DIRECTORS
The Company's Board of Directors is comprised of six members classified
in three groups, members of each group serving a three-year term. At the Annual
Meeting, two directors will be elected to the class of directors whose terms
expire at the close of the 2000 Annual Meeting of Stockholders. The shares
represented by the enclosed proxy will be voted for the election as directors of
the two nominees named below, unless a vote is withheld from any or all of the
individual nominees. If any nominee becomes unavailable for any reason or if a
vacancy should occur before election (which events are not anticipated), the
shares represented by the enclosed proxy may be voted for such other person as
may be determined by the holders of the proxy. The two nominees receiving the
highest number of votes cast at the meeting will be elected.
Information Concerning Directors And Nominees
The present terms of Messrs. Roy A. Herberger, Jr., and Stephen A
McConnell expire upon the close of the 1997 Annual Meeting of Stockholders. Both
individuals have been unanimously proposed as nominees for election as directors
in the election to be held at the meeting.
Information concerning the names, ages, terms, positions with the
Company and the Board, and business experience of the nominees and the directors
whose present terms continue after the Annual Meeting is set forth below. Each
director has served continuously with the Company since his first election as
indicated below.
<TABLE>
<CAPTION>
Name Age Position (1) Director Term
Since Expires (1)
<S> <C> <C> <C> <C>
Robert W. Stallings(2)(5) 47 Chairman of the Board, 1990 1999
President, Chief Executive
Officer and Director
John C. Cotton(2)(3)(5) 58 Director 1991 1998
Roy A. Herberger, Jr.(2)(4) 54 Director 1992 1997
John M. Holliman, III(2)(4)(5) 43 Director 1991 1999
Stephen A McConnell(4) 44 Director 1991 1997
Paul J. Renze(3) 40 Director 1991 1998
- - - - ----------------------
</TABLE>
(1) The Company's directors are classified into three groups, each elected
on a staggered basis for three-year terms.
(2) Member of Executive Committee.
(3) Member of Audit Committee.
(4) Member of Compensation Committee.
(5) Member of Nominating Committee.
2
<PAGE>
Robert W. Stallings has served as the Company's Chairman and Chief
Executive Officer since August 1990 and its President since December 1993.
John C. Cotton has served as a director of the Company since May 1991
and as President of the Maricopa Partnerships, Inc., a Phoenix-based merchant
and investment banking organization, since 1982.
Roy A. Herberger, Jr. has served as a director of the Company since
March 1992 and has served as President of the Thunderbird American Graduate
School of International Management, Phoenix, Arizona, since April, 1989. He
served as Dean of the Edwin L. Cox School of Business at Southern Methodist
University from 1982 to July 1989. Mr. Herberger is a director of Pinnacle West
Capital Corp. and Bank of America, Arizona.
John M. Holliman, III has served as a director of the Company since May
1991 and as a General Partner of AGP Management, L.P., the General Partner of
Valley Ventures, L.P., formerly Arizona Growth Partners, L.P., a Phoenix-based
venture investment partnership since February 1993. Mr. Holliman served in
various capacities, lastly as Senior Managing Director, of Valley National
Investors, Inc., the venture investment subsidiary of Valley National Bank of
Arizona, from February 1985 to February 1993. Mr. Holliman is a director of
Ortho Logic Corporation, Voxel, and DenAmerica Corporation.
Stephen A McConnell has served as a director of the Company since May
1991 and as the President of Solano Ventures, a Phoenix-based investment firm,
and Chairman of Mallco Lumber & Building Materials, Inc., a Phoenix based
wholesale distributor of lumber and doors, since September 1991. He served as
President of Belt Perry Associates, Inc., a Phoenix-based property tax
consulting firm, from 1991 until September 1995. He is currently a director of
Consolidated Carma Corporation and Vodavi Technology, Inc., and served as a
director of Glenayre Technologies Inc. until 1993.
Paul J. Renze has served as a director of the Company since May 1991,
and as General Partner of Apex Investment Fund L.P., a Chicago-based venture
capital fund management company, since July 1988. Mr. Renze is also the
President of Chartwell Holdings Inc., Barrington, Illinois and Chief Executive
Officer of Schiavi Leasing Corporation, Oxford, Maine.
Board and Committee Meetings
The Audit Committee makes recommendations to the Board concerning the
selection of outside auditors, reviews the financial statements of the Company
and considers such other matters in relation to the internal and external audit
of the financial affairs of the Company as may be necessary or appropriate to
facilitate accurate and timely financial reporting. The Audit Committee met
three times during the fiscal year ended September 30, 1996.
The Compensation Committee of the Board of Directors administers the
Company's Stock Option Plan and the Company's Performance Share Plan, reviews
all aspects of compensation of the Company's officers and makes recommendations
on such matters to the full Board of Directors. The Compensation Committee met
twice times during the fiscal year ended September 30, 1996. The Compensation
Committee Report on Executive Compensation is set forth elsewhere herein.
The Nominating Committee of the Board of Directors makes
recommendations to the Board concerning the selection of nominees to stand for
election to the Board of Directors. The Nominating Committee met once during the
fiscal year ended September 30, 1996.
During the fiscal year ended September 30, 1996, the Board of Directors
of the Company met on ten occasions. Each director attended 88% or more of the
meetings of the Board and of the Board committees on which he served.
3
<PAGE>
PRINCIPAL STOCKHOLDERS
AND STOCKHOLDINGS OF MANAGEMENT
The following table sets forth information, as of December 31, 1996,
concerning the capital stock of the Company beneficially owned by each director
and nominee of the Company, by the Company's Chief Executive Officer and its
other four most highly compensated executive officers during the fiscal year
ended September 30, 1996 and all executive officers and directors as a group,
and by each Stockholder known by the Company to be the beneficial owner of more
than 5% of the outstanding Common Stock.
Name(1) Common Shares Beneficially Owned (2)
- - - - ---- --------------------------------
Shares Percent
------ -------
Robert W. Stallings 154,390(3) 3.97%
John C. Cotton 181,043(4) 4.69%
Roy A. Herberger, Jr. 9,000 0.23%
John M. Holliman, III 308,778(5) 8.00%
Stephen A McConnell 40,021 1.04%
Paul J. Renze 209,475(6) 5.43%
James R. Reis 74,672 1.93%
James M. Hennessy 13,888 0.36%
Robert J. Boulware 50,200 1.30%
Cramer Rosenthal McGlynn, Inc.(7) 537,569 13.93%
All directors and executive officers
as a group (11 persons) 1,041,467 26.56%
- - - - --------------------------
(1) Except as otherwise noted below, the persons named in the table have sole
voting and investment power with respect to all shares of the Company's
capital stock shown as beneficially owned by him, subject to applicable
community property law. Except as otherwise noted, the addresses for the
persons named in the table is Two Renaissance Square, 40 North Central
Avenue, Suite 1200, Phoenix, Arizona 85004.
(2) Includes shares of Common Stock subject to options which were presently
exercisable or which may become exercisable within 60 days of December
31, 1996. All exercisable options were "in the money" as of December 30,
1996.
(3) Includes 14,230 shares owned by his wife.
(4) Includes 58,643 shares beneficially owned by Cotton Family Limited
partnership, a limited partnership of which Mr. Cotton is a general
partner, and 5,800 shares owned by his wife.
4
<PAGE>
(5) Owned by Valley Ventures, L.P., formerly named Arizona Growth Partners, L.
P. Mr. Holliman is a general partner of AGP Management L.P., which, in
turn, is the general partner of Valley Ventures, L.P.
(6) Includes 195,475 shares of Common Stock owned by Apex Investment Fund, L.P.
Mr. Renze is a managing partner of Apex Management Partnership, which, in
turn, is the general partner of Apex Investment Fund. Mr. Renze disclaims
beneficial ownership of all Apex-owned shares of Common Stock except to the
extent of his proportionate interest therein.
(7) Information with respect to Cramer Rosenthal McGlynn, Inc. ("CRM") is
provided in reliance upon information included in a Schedule 13G dated May
1, 1996 filed by such stockholder. CRM is a registered investment adviser,
and states in such Schedule 13G that none of its investment advisory
clients is known to own more than five percent of the Common Stock. CRM's
address is 707 Westchester Avenue, White Plains, New York 10604. (See
"Certain Transactions and Relationships").
EXECUTIVE COMPENSATION
The following information sets forth the aggregate compensation paid by
the Company for services rendered during the fiscal year ended September 30,
1996 to the Company's (i) Chief Executive Officer and (ii) the four other most
highly compensated executive officers whose total salary and bonus exceeded
$100,000 (see footnote 8 below).
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
--------------------------- --------------------
Name and Stock All Other
Principal Position Year Salary Bonus Options/SARs(#) Compensation(1)
- - - - ----------------------------- -------- ------------ ----------- -------------------- ------------------------
<S> <C> <C> <C> <C> <C>
Robert W. Stallings 1996 $350,000 $ -- 157,000 (2) $ 9,500
Chairman of the 1995 320,337 -- 200,000 4,014
Board, President and 1994 325,000 50,000 -- 2,594
Chief Executive
Officer
James R. Reis 1996 200,000 -- 63,000 (2) 17,333(3)
Vice Chairman and 1995 200,000 25,000 75,000 19,398(3)
Chief Financial Officer 1994 200,000 -- -- 2,594
James M. Hennessy 1996 150,000 -- 15,000/30,000 (4) 15,750(3)
Senior Vice President 1995 141,712 15,000 30,000 54,375(5)
1994 134,625 -- -- 9,169(5)
Robert J. Boulware 1996 92,708 18,983 25,000 (2) 61,312(6)
President, Pilgrim 1995 60,769 2,166 -- 11,591(6)
America Securities, Inc. 1994 81,048 -- -- 1,103
Stanley D. Vyner 1996 108,333 -- -- 33,500(7)
President, Pilgrim 1995 -- -- -- --
America Investments, 1994 -- -- -- --
Inc.
- - - - ------------------------
</TABLE>
5
<PAGE>
(1) Except as otherwise indicated in the footnotes below, all amounts represent
401(K) matching contributions made under a tax deferred savings plan under
Section 401(K) of the Internal Revenue Code. The Company's 401(K) savings
plan was established in July 1991. Through 1994 the Company had discretion
to match participants contributions. Prior to 1994 the Company made
matching contributions out of accumulated profits of 50% of the first 4% of
the compensation contributed by the participant. No match was made in 1994
although all participants became 100% vested in their employer match
accounts as a result of the wind down of the Company's mortgage business.
Beginning May 1995, the Company elected to match all future participant
contributions up to 7% of compensation contributed by each participant.
(2) The Compensation Committee of the Board of Directors granted 157,000,
63,000 and 25,000 stock options with an exercise price of $5.75 and three
year vesting, 33% each year, to Messrs. Robert W. Stallings, James R. Reis,
and Robert Boulware, respectively, upon the cancellation of an equivalent
number of stock options previously granted which had exercised prices
ranging from $7.00 to $12.75.
(3) Includes payment for unused vacation of $8,333 and $15,866 to Mr. Reis in
1996 and 1995, respectively, and $6,250 to Mr. Hennessy in 1996.
(4) During 1996 the Compensation Committee of the Board of Directors granted
Mr. Hennessy 15,000 stock options and 30,000 performance shares under the
Company's Stock Option Plan and the Company's Performance Share Plan,
respectively.
(5) Mr. Hennessy served as an officer of the Company from June 8, 1992 until
August 24, 1994 and thereafter as a consultant until February 1995, at
which time he rejoined the Company as Senior Vice President. Compensation
includes amounts received as severance during this period. Mr. Hennessy's
other compensation for 1995 includes consulting fees of $50,000 received in
connection with services performed related to the Company's acquisition of
certain investment management assets in April 1995. Other compensation in
1994 includes automobile allowances of $7,312.
(6) Other Compensation includes sales commissions paid to Mr. Boulware of
$54,534 and $9,994 paid in 1996 and 1995 respectively.
(7) Until June 24, 1996, Mr. Vyner served as a consultant to the Company. Other
Compensation includes $30,000 for consulting fees paid to him prior to his
hire date.
(8) R. Jeffries Etheredge is not included in the table but he served as
President of Pilgrim America Securities, Inc., the Company's wholly owned
distributor, until September 1996. Mr. Etheredge received $300,000 in
severance upon termination of his employment. During fiscal 1996, he also
received $83,621 of Other Compensation which consisted of $76,698 of sales
commissions and $6,923 for unused vacation. The 50,000 stock options that
had been granted to Mr. Etheredge during 1995 were cancelled following his
termination.
Director Compensation
Directors who are not employees of the Company are each paid an annual
retainer of $12,000 plus $500 per meeting of the Board of Directors or a
committee thereof attended by the director. On April 15, 1992, each of the then
eight non-employee directors of the Company then serving were granted options to
purchase up to 10,000 shares of Common Stock at an exercise price of $12.75 per
share. The stockholders approved the option grants at the Company's 1993 Annual
Meeting of Stockholders. The options granted in 1992 to the Company's five
current non-employee directors were cancelled in August 1996 and reissued with
an exercise price to $5.75, an eight year term and three year vesting, 33% each
year.
6
<PAGE>
Employment Agreements
During August 1995, at the direction of the Board of Directors, the
Company entered into employment agreements with each of Robert W. Stallings,
James R. Reis and James M. Hennessy. The employment agreements with Messrs.
Stallings and Reis were renewed for two years until December 31, 1998, while the
employment agreement of Mr. Hennessy expired in August 1996.
The employment agreements provide that the Company shall pay an annual
base salary of at least $325,000 to Mr. Stallings and $200,000 to Mr. Reis. Each
employment agreement may be terminated by the Board of Directors at any time and
by the employee with 90 day's advance notice. If the employee is terminated by
the Board of Directors other than for just cause (defined in the agreement), the
employee will be entitled to a lump sum payment in the amount not less than
$487,494 in the case of Mr. Stallings and $300,000 in the case of Mr. Reis.
Executive officers of the Company and officers of the Company's
operating subsidiaries, and certain middle management personnel, who are not
compensated on an incentive commission basis, are eligible to be paid a
discretionary performance bonus annually. Such bonuses are recommended annually
by the Compensation Committee and are subject to approval by the Company's Board
of Directors.
Employment Severance Agreements
The Company has agreements with certain senior employees which provide
that if the employee is terminated, he will receive a lump sum payment equal to
between three and twelve months of the employee's base compensation.
Stock Options and Performance Shares
Pursuant to the Company's Stock Option Plan (the "Option Plan"), the
Company may grant to employees and officers of the Company (including directors
of the Company who are also employees) both incentive stock options and
nonstatutory stock options to purchase an aggregate of up to 537,786 shares of
the Company's common stock. The Option Plan is administered by the Compensation
Committee of the Board of Directors which determines the terms of options
granted, including the exercise price, the number of shares subject to each
option, and the exercisability of each option. Stock options were granted by the
Company under the Option Plan during both the fiscal year ended September 30,
1995 and the fiscal year ended September 30, 1996.
On August 30, 1996, the Company adopted the 1996 Performance Share Plan
(the "Plan"), approved and administered by the Company's Board of Directors, in
which certain officers and employees were granted interests ("Performance
Shares") that entitle them to compensation amounts directly related to the
market price of the Company's common stock. These amounts may be paid at the
Company's election, in cash or in shares of Common Stock.
The Performance Shares vest over a five-year period. The maximum
aggregate number of Performance Shares that may be issued under the plan is
250,000. Cancelled and forfeited shares may be reissued under the Plan. As of
September 30, 1996, 182,500 Performance Shares were outstanding, each with an
assigned value of $5.75 and five year vesting, 20% each year, beginning on April
7, 1995 or the employee's hire date, if later.
7
<PAGE>
The table below contains certain information concerning exercises of
stock options and Performance Shares (identified as "SARs" in the table) during
the fiscal year ended September 30, 1996 by each of the Company's executive
officers and the fiscal year end value of unexercised options and Performance
Shares held by the executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
OPTION VALUE AS OF SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Fiscal Options/SARs at
Year End Fiscal Year End (1)
Shares Acquired Value
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Robert W. Stallings 0 0 33,333 / 223,667(Options) $2,083 / $16,979
0 / 0(SARs) $0 / $0
James R. Reis 0 0 16,667 / 96,333 1,042 / 6,021
0 / 0 0 / 0
James M. Hennessy 0 0 10,000 / 35,000 625 / 2,188
6,000 / 24,000 375 / 1,500
Robert J. Boulware 0 0 0 / 25,000 0 / 1,563
0 / 0 0 / 0
Stanley D. Vyner 0 0 0 / 0 0 / 0
0 / 0 0 / 0
</TABLE>
(1) All of the exercisable options and SARs are exercisable at a price of
$5.75 per shares. The last reported sale price of the Common Stock was
$5.8125 per share as reported on September 30, 1996 by the NASDAQ National
Market System.
BOARD OF DIRECTORS REPORT ON OPTION REPRICINGS
The Company's Board of Directors met on August 20, 1996 to review the
pricing of options that were previously granted to certain executive officers
and other employees under the Company's Stock Option Plan and options granted to
members of the Board of Directors under the Non-Employee Director Stock Option
Plan. Based upon its review, the Board determined that the previously granted
options were substantially out of the money and were not providing the incentive
the Board intended when the options were originally granted. The options granted
to each director under the Non-Employee Director Stock Option Plan were
exercisable at $12.75 per share and had a remaining term of three years seven
months out of an original eight year term. 261,000 of the options previously
granted under the Stock Option Plan were out of the money. Of these 261,000
options, 125,000 had an original exercise price of $7.00 and a remaining term of
six years ten months and 136,000 had an original exercise price of $12.75 and a
remaining term of three years seven months. On August 30, 1996, when the
repriced options were granted, the closing price of the Company's common stock
on the NASDAQ National Market was $4.75.
The Board of Directors determined that it was in the best interest of
the Company and its shareholders to offer to cancel all out of the money options
and grant to the optionees who accepted the
8
<PAGE>
offer, new options in order to provide the incentive envisioned by the Board
when it adopted both the Stock Option Plan and the Non-Employee Director Stock
Option Plan. The Board cancelled all such options and reissued new options with
an exercise price of $5.75, three year vesting, 33% per year, and an eight year
term. The following table provides details regarding these repriced options.
Board of Directors
Robert W. Stallings Roy A. Herberger, Jr. John M. Holliman, III
John C. Cotton Stephen A McConnell Paul J. Renze
TEN YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
Length of
Original
Market Option
Number of Price of Term
Securities Stock At Exercise Remaining
Underlying Time Of Price At At Date Of
Options Repricing Time Of New Repricing
Repriced or Or Repricing Or Exercise Or
Name Date Amended Amendment Amendment Price Amendment
-------------- ---------- ---------- ----------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Stallings August 30, 157,000 $4.75 57,000 / $12,75 $5.75 3 yrs 7 mos
Chairman of the 1996 100,000 / $7.00 6 yrs 10 mos
Board, President and
Chief Executive Officer
James R. Reis August 30, 63,000 $4.75 38,000 / $12.75 $5.75 3 yrs 7 mos
Vice Chairman and Chief 1996 25,000 / $7.00 6 yrs 10 mos
Financial Officer
Robert J. Boulware August 30, 25,000 $4.75 $12.75 $5.75 3 yrs 7 mos
President, Pilgrim 1996
America Securities, Inc.
John C. Cotton August 30, 10,000 $4.75 $12.75 $5.75 3 yrs 7 mos
Director 1996
Roy A. Herberger, Jr. August 30, 10,000 $4.75 $12.75 $5.75 3 yrs 7 mos
Director 1996
John M. Holliman, III August 30, 10,000 $4.75 $12.75 $5.75 3 yrs 7 mos
Director 1996
Stephen A McConnell August 30, 10,000 $4.75 $12.75 $5.75 3 yrs 7 mos
Director 1996
Paul J. Renze August 30, 10,000 $4.75 $12.75 $5.75 3 yrs 7 mos
Director 1996
</TABLE>
9
<PAGE>
Shareholder Return Performance Presentation
The graph below compares the change in the Company's cumulative total
shareholder return on its Common Stock with the comulative total return on
equity securities traded on NASDAQ and the relevant comparative benchmark
during the period. The total return assumes dividend reinvestments. For the
period from March 17, 1992 (the date of the Company's initial public
offering) through March 31, 1995 (the quarter in which the Company
announced the discontinuance of its mortgage operations), the relevant
comparative benchmark was comprised of a peer group of public companies
engaged in the mortgage banking industry as described in (1) below.
Subsequent to March 31, 1995, the S&P Financials Index is used as the
comparative benchmark due to the change in the Company's business from
mortgage banking to investment management services.
[ Performance Graph ]
<TABLE>
<CAPTION>
3/17/92 9/30/92 9/30/93 9/30/94 3/31/95 9/30/95 9/30/96
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Express America Holdings 100.00 111.36 79.55 54.55 37.50 53.41 52.84
NASDAQ Composite 100.00 93.78 122.83 123.83 133.45 171.03 202.96
Comparative Benchmark (1) 100.00 109.85 137.79 111.37 115.81 150.44 188.37
</TABLE>
(1) From March 17, 1992 to March 31, 1995, the comparative benchmark is
represented by a peer group of public companies engaged in the mortgage
banking industry. The peer group includes: Countrywide Credit Industries,
Inc.; Fleet Mortgage Group, Inc.; Imperial Credit Industries, Inc.; North
American Mortgage Company; and Plaza Home Mortgage Company. For the period
March 31, 1995 through September 30, 1996, the comparative benchmark used
is the S&P Financials Index. This index is used to better correspond to the
Company's investment management services business which began on April 7,
1995, concurrent with its purchase of certain investment management assets
at that date.
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Compensation Committee Report on Executive Compensation
The Company's Compensation Committee (the "Committee") is composed
entirely of independent outside members of the Board of Directors. The Committee
reviews and approves each of the elements of the executive compensation program
of the Company and its subsidiaries, and periodically assesses the effectiveness
and competitiveness of the program. The Committee met twice during the fiscal
year ended September 30, 1996.
Compensation Philosophy. The goals of the Company's executive
compensation program are to support and further the Company's financial
performance and its business plan and to enable the Company to attract and
retain the quality of executive personnel which the Company believes are
necessary to meet the Company's commitment to maximize shareholder value. The
philosophy of the Company is to provide compensation programs designed to reward
achievement of the Company's goals and to provide compensation opportunities
that are commensurate with those of companies engaged in similar businesses
which are of a size and type similar to the Company.
Elements of the Executive Compensation Program. The Company's salary
levels for executive officers are set at a rate consistent with competitive
practices as compared to other investment management services companies of a
size and engaged in business comparable to that of the Company. Salary increases
are generally designed to reflect performance of the executive. These elements
will usually be subjective in nature, as the Company does not have a practice of
establishing specific quantitative target goals for individual compensation
levels.
Executive compensation levels for the fiscal year ended September 30,
1996 and for the fiscal year ending in 1997 were determined against the
background of (i) the Company's disposition of its former mortgage banking
business, (ii) the commencement in April 1995 of its investment management
business, (iii) the initial development of the Company's advisory and
distribution systems, and (iv) the desire to improve profitability for
shareholders. Accordingly, the base compensation levels for all executives were
not increased over prior year levels. In establishing compensation levels for
newly appointed executives, the Committee considered the compensation levels
prevalent in the investment management industry generally.
In August 1995, the Board approved new employment agreements for the
Company's chief executive officer and certain of its other executive officers.
The employment agreements for the Company's Chief Executive Officer and Chief
Financial Officer were automatically renewed in 1996 for an additional two year
term ending on December 31, 1998. One other executive employee agreement expired
in August 1996. As noted above, the base annual salary levels under agreements
which were renewed were not increased over the prior years' levels. Other
provisions of the renewed agreements, including provisions relating to payments
upon termination of employment at the election of the Company, were essentially
identical to provisions in prior employment agreements.
Recently enacted provisions of the Internal Revenue Code limit to
$1,000,000 the amount of cash compensation that a company may pay each executive
officer and claim a tax deduction in a like amount, with amounts over $1,000,000
generally being a non-deductible expense. Because the Company has never paid
individual compensation amounts approaching the $1,000,000 threshold, the
Committee has not formulated a policy relating to compensation in excess of the
threshold.
Bonus Payments and Other Incentive Payments. Executive officers are
eligible to be paid performance bonuses. Bonus amounts are discretionary, are
recommended by the Committee and are subject to approval by the Board of
Directors. Bonuses are entirely discretionary, and neither the Board nor the
Committee sets performance levels or pre-established formulas for determining
whether bonuses will be paid or the amount of bonus paid. Accordingly, bonus
amounts are based on a subjective assessment of employee performance.
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Historically, the Company has awarded stock options to executives.
During the fiscal year ended September 30, 1996, the Company issued new stock
options to certain executives who agreed to cancel previously granted options in
exchange for the new options which had a lower exercise price with three year
vesting to begin on the new grant date. The new options were granted to reflect
both the change in the Company's business and the change in the Company's stock
price. The Committee determined that the old options with exercise prices of up
to double the market price of the Company's common stock, did not provide the
employee incentives intended under the Company's Stock Option Plan. Also, stock
options and Performance Shares were granted to one additional executive to
reflect enhanced responsibilities.
During August 1996, the Committee approved a Performance Share Plan
which provides compensation to executives and other employees based upon
increases in the Company's common stock market price. The Committee designed
this Plan to reward executives and other employees for the financial performance
by the Company which results in increased stockholder value.
CEO Compensation. The key performance measure the Committee used in
determining the CEO's compensation for 1996 was the Committee's assessment of
his vision and leadership in development and expansion of the Company's money
management advisory and distribution businesses. The CEO's base salary through
December 31, 1997 was set at $350,000 per annum in connection with an employment
agreement entered into by the Company and the CEO in August 1995 and renewed for
two years to December 31, 1998. The Committee believes this base salary is
competitive with amounts paid other experienced CEO's in similarly sized
investment management companies.
Compensation Committee
Roy A. Herberger, Jr., Chairman
John M. Holliman, III
Stephen A McConnell
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
The Compensation Committee of the Board of Directors of the Company
consists of Messrs. Herberger, Holliman and McConnell. No Compensation Committee
interlocks exist and no insiders participated in compensation decisions. The
members of the Compensation Committee have at no time been officers or employees
of the Company or any of its subsidiaries, nor do they serve on the board of
directors of any mutual fund for which the Company serves as investment advisor.
John M. Holliman, III, a member of the Company's Compensation Committee, is also
a general partner of AGP Management L.P., which is the general partner of
Arizona Growth Partners L.P. In connection with the Company's mandatory
redemption of 3,384.08 of its shares of Series A Preferred Stock during the
fiscal year ended September 30, 1996, Arizona Growth Partners received a
redemption payment of $84,219 on 842.19 shares. See "Certain Transactions and
Relationships."
CERTAIN TRANSACTIONS AND RELATIONSHIPS
In connection with the initial capitalization of the Company, the
Company and each subscriber to its capital stock ("Investor") entered into a
stock purchase agreement on May 16, 1991. Pursuant to the agreement, the Company
sold and the Investors purchased an aggregate of 54,145 shares of Series A
Preferred Stock (the "Preferred Stock") at a price of $100 per share. When
originally issued, each share of Preferred Stock had an annual non-cumulative
dividend of 6%, with a liquidation preference of $100 per share plus accrued but
unpaid dividends.
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In December 1991, the Board of Director and the stockholders of the
Company approved a recapitalization ("Restructuring") of the Company including
amending the terms of the Preferred Stock.
In connection with the Restructuring, the 6% annual dividend on the
Preferred Stock was eliminated and the Company redeemed 50 percent of the
outstanding shares of Preferred Stock with a portion of the net proceeds from
its initial public offering at a cost of approximately $2.7 million, or $100 per
share. Thereafter, the Company was obligated to redeem one-eight of the
remaining 27,072 shares of Preferred Stock every six months at $100 per share.
The last redemption was made on March 30, 1996 and the following Investors
received over $60,000: Arizona Growth Partners, L.P. ($84,219) and Apex
Investment Fund L.P. ($61,250). John M. Holliman, III, a director of the
Company, is a general partner of AGP Management L.P., which is the general
partner of Arizona Growth Partners; and Paul J. Renze, a director of the
Company, is a general partner of Apex Investment Fund.
Gerald B. Cramer resigned as a director of the Company in April 1995.
Mr. Cramer is a principal owner and officer of CRM Advisors, LLC which became
the subadvisor to the Pilgrim America Masters MidCap Value Fund when it
commenced operations in September 1995. CRM receives a fee for subadvising this
Fund which is managed and advised by Pilgrim America Investments, Inc., a
subsidiary of the Company. CRM also is an affiliate of Cramer Rosenthal and
McGlynn, Inc. which is the beneficial owner of 13.93% of the Company's common
stock. See "Principal Stockholders and Stockholdings of Management."
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
beneficially own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and change in ownership with the
Securities and Exchange Commission (the "SEC") and the National Association of
Securities Dealers Automated Quotation System. Such reports are filed on Form 3,
Form 4, and Form 5 under the Exchange Act. Officers, directors and greater than
ten-percent shareholders are required by Exchange Act regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5 were
required for those persons. The Company believes that, during fiscal year ended
September 30, 1996 all officers, directors, and greater than ten-percent
beneficial owners complied with the applicable Section 16(a) filing requirements
except for the following: Mr. Stallings filed a Form 4 reporting purchases made
in June, 1996 subsequent to the required date. Messrs. Herberger, Holliman,
Norman, and Renze filed a Form 4, reporting the grant of options on August 30,
1996 to acquire shares of the Company's common stock, subsequent to the required
date.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The principal independent public accounting firm utilized by the
Company during fiscal years ended September 30, 1995 and September 30, 1996 was
KPMG Peat Marwick, independent certified public accountants (the "Auditors"). It
is presently contemplated that the auditors will be retained as the principal
accounting firm to be utilized by the Company throughout the fiscal year ending
September 30, 1997. The Company anticipates that a representative of the
Auditors will attend the Annual Meeting for the purpose of responding to
appropriate questions. At the Annual Meeting, a representative of the Auditors
will be afforded an opportunity to make a statement if the Auditors so desire.
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PROPOSALS BY STOCKHOLDERS
Any Stockholder proposal which is intended to be presented at the
Company's 1998 Annual Meeting of Stockholders must be received at the Company's
principal executive offices by no later than September 19, 1997, if such
proposal is to be considered for inclusion in the Company's proxy statement and
form of proxy relating to such meeting.
OTHER BUSINESS
The Annual Meeting is being held for the purposes set forth in the
Notice which accompanies this Proxy Statement. The Board of Directors is not
presently aware of business to be transacted at the Annual Meeting other than as
set forth in the Notice.
By Order of the Board of Directors
Robert W. Stallings
Chairman of the Board
Phoenix, Arizona
January 15, 1997
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PROXY
EXPRESS AMERICA HOLDINGS CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints ROBERT W. STALLINGS,
JAMES R. REIS and JAMES M. HENNESSY, or any of them acting in the absence of the
others, with full power of substitution, the true and lawful attorneys and
proxies of the undersigned, to attend the Annual Meeting of the Stockholders of
EXPRESS AMERICA HOLDINGS CORPORATION the (the "Company") to be held at the
Company's Corporate Headquarters, Two Renaissance Square, 40 North Central Ave.,
Suite 1200, Phoenix, AZ 85004, on February 26, 1997, at 10:00 a.m., local time,
and any adjournments thereof, and to vote the shares of Common Stock of the
Company standing in the name of the undersigned, as directed below, with all the
powers the undersigned would possess if personally present at the meeting.
This proxy will be voted in accordance with the directions indicated herein. If
no specific directions are given, this proxy will be voted for approval of all
nominees listed herein, for approval of the proposals listed herein and, with
respect to any other business as may properly come before the meeting, in
accordance with the discretion of the proxies.
(Continued and to be signed on reverse side.)
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<S> <C> <C> <C>
Withheld For All
1. Election of Directors - Nominees: For All Except those whose names are written on the line provided below (if apply)
Roy A. Harberger, Jr. ( ) ( ) ( )_______________________________________________________________________
and Stephen A. McConnell
Dated:_______________________, 1997
________________________________________
(Signature)
________________________________________
(Signature)
When signing as executor,
administrator, attorney, trustee
or guardian, please give full
title as such, if a corporation,
please sign in full corporate name
by president or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person. If a joint
beneficiary, please have both
joint beneficiary sign.
^ FOLD AND DETACH HERE ^
YOUR VOTE IS IMPORTANT.
PLEASE PROMTLY SIGN AND RETURN IN THE ENCLOSED ENVELOPE
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