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
/ / Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statment
/ / Definitive additional materials
/ / Soliciting material pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
THE FINOVA GROUP INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) or Schedule 14A
/ / $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 transactions applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
The FINOVA Group Inc.
formerly known as
GFC Financial Corporation
-------------------------
NOTICE OF
ANNUAL MEETING
AND
PROXY STATEMENT
-------------------------
ANNUAL MEETING
OF STOCKHOLDERS
MAY 11, 1995
<PAGE>
The FINOVA Group Inc.
1850 NORTH CENTRAL AVENUE
P.O. BOX 2209
PHOENIX, ARIZONA 85002-2209
SAMUEL L. EICHENFIELD
Chairman, President and
Chief Executive Officer
Dear Stockholder:
As you can see, our Corporation has a new name -- one of which we are proud
- -- for it stands for Financial Innovators, the people who make FINOVA such a
success. The enclosed Annual Report explains our decision for creating this new
identity for the Corporation and its subsidiaries in more detail. We sincerely
hope that the name FINOVA will continue to stand for innovation, quality and
success.
You are cordially invited to attend the 1995 Annual Meeting of Stockholders.
The meeting will be held on Thursday, May 11, 1995, in the Gold Room of The
Arizona Biltmore, 24th Street and Missouri Avenue, Phoenix, Arizona. As the
meeting will begin promptly at 9:00 a.m., please plan to arrive earlier. The
formal notice of the meeting follows on the next page. No admission tickets or
other credentials will be required for attendance at the meeting. You may use
the hotel's free parking.
Directors and officers are expected to be present before and after the
meeting to speak with stockholders. During the meeting, there will be an
opportunity for stockholder questions regarding the affairs of the Corporation
and for discussion of the business to be considered at the meeting, as explained
in the notice and Proxy Statement which follow.
IT IS IMPORTANT THAT YOU VOTE, SIGN AND RETURN THE ENCLOSED PROXY AS SOON AS
POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
Sincerely,
/S/ S.L. EICHENFIELD
------------------------
<PAGE>
The FINOVA Group Inc.
formerly known as
GFC Financial Corporation
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
March 23, 1995
To the Holders of Common Stock of
The FINOVA Group Inc:
The Annual Meeting of Stockholders of The FINOVA Group Inc., a Delaware
corporation formerly known as GFC Financial Corporation (the "Corporation"),
will be held in the Gold Room of The Arizona Biltmore, 24th Street and Missouri
Avenue, Phoenix, Arizona, on Thursday, May 11, 1995, at 9:00 a.m., Mountain
Standard Time, for the purpose of considering and voting upon:
1. Election of directors of the Corporation;
2. Ratification of an amendment to the Corporation's 1992 Stock Incentive
Plan to increase the annual grant of stock options to non-employee
directors;
3. Ratification of the appointment of Deloitte & Touche LLP to audit the
accounts of the Corporation for the year 1995; and
4. Any other matters which may properly come before the meeting and any
adjournment or adjournments thereof.
Only stockholders of record of Common Stock at the close of business on
March 13, 1995, are entitled to receive notice of and to vote at the meeting. A
list of the stockholders entitled to vote will be available for examination at
the meeting by any stockholder for any purpose germane to the meeting. The list
will also be available on the same basis for ten days prior to the meeting at
the principal executive offices of the Corporation, 1850 North Central Avenue,
P.O. Box 2209, Phoenix, Arizona 85002-2209.
The Annual Report for the year 1994, including financial statements, is
enclosed with this Notice and Proxy Statement.
To assure your representation at the meeting, please vote, sign and mail the
enclosed proxy as soon as possible. A return envelope, which requires no postage
if mailed in the United States, is enclosed for that purpose. Your proxy is
being solicited on behalf of the Board of Directors.
W. J. HALLINAN
Senior Vice President --
General Counsel and Secretary
---------------------------------------
PLEASE VOTE -- YOUR VOTE IS IMPORTANT
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<PAGE>
PROXY STATEMENT
OF
The FINOVA Group Inc.
1850 NORTH CENTRAL AVENUE
P.O. BOX 2209
PHOENIX, ARIZONA 85002-2209
GENERAL INFORMATION
The enclosed proxy is solicited on behalf of the Board of Directors of The
FINOVA Group Inc, a Delaware corporation, formerly known as GFC Financial
Corporation (the "Corporation"), for use at the 1995 Annual Meeting of
Stockholders of the Corporation. The proxy, if properly executed and returned,
will be voted according to its specifications, but may be revoked at any time
before it is voted by: (a) executing and delivering to the Secretary of the
Corporation a written instrument of revocation bearing a date later than the
date of the proxy, (b) executing and delivering to the Secretary a subsequent
proxy relating to the same shares or (c) attending the meeting and voting in
person (attendance at the meeting will not in and of itself constitute
revocation of a proxy).
Only stockholders of record of Common Stock (the "Shares") as of the close
of business on the record date, March 13, 1995, (the "Record Date"), will be
eligible to vote at the meeting. The number of Shares then outstanding was
27,618,695. Each outstanding Share on the Record Date will be entitled to one
vote. Fractional Shares will not be voted. Cumulative voting is not permitted.
For those proposals for which no directions are given in the proxy, the proxy
will be voted (a) "for" the election of the director nominees set forth herein,
(b) "for" the proposal to amend the Corporation's 1992 Stock Incentive Plan and
(c) in accordance with the recommendations of the Board of Directors or, if
none, in the best judgment of the proxy holders, on other proposals. In the
event of disqualification, refusal or inability of any director or director
nominee to serve, the proxies will be voted for the election of such other
person or persons as the proxy holders believe will carry on the present
policies of the Corporation. The approximate date on which this Proxy Statement
and accompanying materials are first sent to stockholders is March 23, 1995.
If a stockholder is a participant in the Corporation's Savings Plan
(formerly known as the Capital Accumulation Plan), Employee Stock Ownership Plan
(formerly known as the Employees' Stock Ownership Plan) or The Dial Corp 401(k)
plans, the proxy will represent the number of Shares in the stockholder's plan
account(s) as well as Shares registered in the stockholder's name. The proxy
will serve as a voting instruction to the respective trustees of the above
referenced plans. For the Corporation's plans, if any such shares are not voted,
the respective trustees of those plans will not vote those shares on behalf of
the participant.
The cost of soliciting proxies will be borne by the Corporation.
Solicitation will be made primarily through the use of the mails, but employees
of the Corporation may solicit proxies personally, by telephone, telegram or
similar means, for no additional compensation. In addition, the Corporation has
retained Morrow & Co., Inc. to assist it in connection with the solicitation at
an estimated fee of $7,500 plus out-of-pocket expenses. The Corporation will
reimburse banks, brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to
beneficial owners of Shares.
BOARD OF DIRECTORS AND ITS COMMITTEES
BOARD AND COMMITTEE MEETINGS
The Corporation's Board of Directors held a total of eight regular quarterly
and special meetings during 1994. The Board has established the following
committees of certain of its members to deal with particular areas of
responsibility.
1. The Executive Committee held no meetings but reviewed and approved a
number of transactions by unanimous written consent during 1994. That committee
exercises all the powers of the Board in the management of the business and
affairs of the Corporation when the Board is not in session, to the extent
permitted by Delaware law.
2. The Audit Committee, which met four times in 1994, recommends appointment
of the Corporation's independent auditors and reviews and approves audit reports
and plans, accounting policies, financial statements, internal auditing reports,
internal controls, audit fees and certain officer expenses. All members of this
committee are nonemployee directors, except that Mr. Eichenfield is an
ex-officio member who does not vote on matters considered by the committee.
3. The Executive Compensation Committee, which met six times in 1994,
exercises all the powers of the Board in the authorization and approval of the
compensation of and agreements with executive officers and employees of the
Corporation and its subsidiaries, including compensation and incentive plans.
The committee has delegated authority to the Chairman of the Board to set
compensation for non-executive officers, subject to the committee's supervision.
In addition, the committee reviews an independent analysis, prepared by a
leading firm of compensation consultants, of the competitiveness of the
Corporation's executive officer compensation as well as competitive data
developed by the Corporation's compensation staff and consultants. The committee
also determines awards under various incentive plans, including the
Corporation's 1992 Stock Incentive Plan. All members of this committee are
nonemployee directors.
The Board does not have a nominating committee. The entire Board is
responsible for the selection of director nominees.
COMPENSATION
Directors who are not employees received an annual retainer of $25,000, plus
$1,000 for each Board, committee, or other meeting attended. Commencing January
1, 1995, the meeting fee was increased to $1,500 per Board or committee meeting
attended. Directors are reimbursed for any expenses attendant to Board
membership.
Nonemployee directors may elect to participate in the Corporation's
Directors' Deferred Compensation Plan, pursuant to which payment of part or all
of their directors' fees and retainers is deferred. The plan permits
participants to defer their compensation in the form of cash. Mr. Smith
currently participates in this Plan. Such accumulated compensation, plus
interest thereon at the Merrill Lynch Taxable Bond Index long-term medium
quality industrial bond rate of interest in effect each quarter, is payable upon
termination as a director to the director or to the director's estate or
beneficiary over such period as may be designated by the director.
The Corporation's 1992 Stock Incentive Plan provides for an initial grant to
new nonemployee directors of options to purchase 2,000 Shares and an annual
grant to nonemployee directors of options to purchase 1,000 Shares. The Board
approved an amendment to increase the annual grant of options to 1,500 Shares,
upon approval of the Stockholders. The amendment is Proposition 2, discussed
more fully below. The exercise price of such options is the fair market value of
the Shares on the date of grant.
In February 1993, the Board adopted a Directors' Retirement Benefit Plan for
nonemployee directors. That plan provides for the payment of benefits equal to
the annual retainer in effect at the retirement date. Vesting occurs upon
completion of five years of service as a director, and the director must be at
least 62 on the retirement date. Benefits are paid for the lesser of life or
years of service measured from the date of election to the Board.
In November 1994, the Board adopted a Director's Charitable Award Program
which enables the director to contribute $100,000 per year to a charity or
foundation selected by the director over a period of ten years upon the
director's death. The program is funded through the purchase of life insurance
on the life of the director, with the Corporation as beneficiary. At that
meeting, the Corporation's Employee Stock Purchase Program was also amended to
permit directors to participate in that program. Through that program, employees
and now directors may purchase Shares at the then-current market price without
payment of brokerage commissions, which are paid by the Corporation. Permitting
directors to purchase Shares without paying commissions, and granting directors
additional stock options at fair market value, are consistent with the
Corporation's goals of increasing directors' Share ownership to further align
the Board's interests with that of the Stockholders.
ELECTION OF DIRECTORS
The Board of Directors of the Corporation consists of eight persons and is
divided into three classes. At each annual meeting, the term of one class of
directors expires, and persons are elected to that class for three-year terms.
The Board of Directors has nominated Mr. Samuel L. Eichenfield, Mr. James L.
Johnson and Mr. John W. Teets for election to the Board for terms expiring at
the 1998 annual meeting or until their respective successors have been elected
and have qualified. Each currently serves as a director of the Corporation.
All directors have served in that capacity since February 1992, except Mr.
Straetz, whose election became effective in May 1992, and Ms. Tancer, who was
appointed in February 1994 to fill a vacancy. All Board members other than Ms.
Tancer were initially appointed in connection with the spin-off ("Spin-Off") of
the Corporation from The Dial Corp ("Dial") on March 18, 1992.
DIRECTOR NOMINEES
The following information regarding the director nominees has been furnished
by such nominees:
FOR TERMS EXPIRING AT THE 1998 ANNUAL MEETING:(1)
PRINCIPAL OCCUPATION,
NAME OTHER DIRECTORSHIPS AND AGE
---- ---------------------------
Samuel L. Eichenfield *x Chairman, President and Chief Execu- tive Officer
of the Corporation since 1992; also Chairman,
President, and Chief Executive Officer and a
director of FINOVA Capital Corporation, formerly
Greyhound Financial Corporation, the principal
operating subsidiary of the Corporation ("FINOVA
Capital"), for more than five years. Age 58.
James L. Johnson *+ Chairman Emeritus and director of GTE Corporation
(a diversified telecommunications company) since
1993, and prior thereto was its Chairman and Chief
Executive Officer since 1988, its President and
Chief Executive Officer-elect since 1987, and its
President and Chief Operating Officer since 1986;
also a trustee of Mutual Life Insurance Company of
New York, and a director of Contel Cellular Inc.,
British Columbia Telephone Company, Harte/Hanks
Communications Co., Inc., Cell Star Corporation,
Valero Energy Corporation and Walter Industries,
Inc. Age 67.
John W. Teets *+ Chairman, President and Chief Executive Officer and
a director of Dial for more than five years. Age
61.
- ----------
* Member of Executive Committee (Mr. Eichenfield, Chairman)
+ Member of Executive Compensation Committee (Mr. Johnson, Chairman)
x Member of Audit Committee (Mr. Lemon, Chairman; Mr. Eichenfield, Ex
Officio)
(1) or until their respective successors have been elected and have qualified.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
NOMINEES LISTED ABOVE, TO SERVE FOR THE TERM INDICATED.
DIRECTORS CONTINUING IN OFFICE
The following information regarding the directors continuing in office has
been furnished by such directors:
FOR TERMS EXPIRING AT THE 1996 ANNUAL MEETING:(1)
PRINCIPAL OCCUPATION,
NAME OTHER DIRECTORSHIPS AND AGE
---- ---------------------------
G. Robert Durham *+ President and Chief Executive Officer and a
director of Walter Industries, Inc. (a homebuilding
and financing, building materials, natural
resources and industrial manufacturing company)
since 1991. Prior thereto, for more than five
years, Mr. Durham was Chairman, President and Chief
Executive Officer and a director of Phelps Dodge
Corporation (a mining company); also a director of
Homestake Mining Company, Atlantic Gulf Communities
Corporation, MinCorp Holdings Inc., and a trustee
of Mutual Life Insurance Company of New York. Age
66.
Kenneth R. Smith x Dean of the Karl Eller Graduate School of
Management and the College of Business and Public
Administration for more than five years and Vice
Provost since 1992 of the University of Arizona;
also a former director of Southwest Gas Corporation
and its subsidiary PriMerit Bank. Age 53.
FOR TERMS EXPIRING AT THE 1997 ANNUAL MEETING:(1)
PRINCIPAL OCCUPATION,
NAME OTHER DIRECTORSHIPS AND AGE
---- ---------------------------
L. Gene Lemon x Vice President and General Counsel of Dial for more
than five years. Age 54.
Robert P. Straetz *+x Retired Chairman and Chief Executive Officer of
Textron Inc. (a diversified manufacturer of
aerospace products and provider of financial
services) for more than five years; also a director
of AFC, Inc. and a former director of Dial,
Textron, Inc., Fleet/Norstar Financial Group and
its subsidiary, Fleet Mortgage Corporation. Age 73.
Shoshana B. Tancer x Professor of International Studies for more than
five years and Director of the North American Free
Trade Agreement Center since 1993 for the American
Graduate School of International Management. Also,
of-counsel to the law firm of O'Connor, Cavanagh,
Anderson, Westover, Killingsworth & Beshears since
1992, and prior thereto, was the principal of
Tancer Law Offices, Ltd. for more than five years.
Former director of Mountain Bell (the predecessor
of U.S. West, Inc.) and three subsidiaries of
Merabank, a Federal Savings Bank. Age 59.
- ----------
* Member of Executive Committee
+ Member of Executive Compensation Committee
x Member of Audit Committee
(1) or until their respective successors have been elected and have qualified.
<PAGE>
OWNERSHIP OF THE CORPORATION'S SHARES
The following tables set forth certain information as of the Record Date
regarding the beneficial ownership (as that term is interpreted by the
Securities and Exchange Commission ("SEC")) of the Corporation's outstanding
Shares by (a) present directors and executive officers, individually and as a
group and (b) the holders of more than five percent of the Corporation's Shares.
Each person, along with his or her spouse, has sole voting and investment power
of such Shares, unless otherwise noted.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENTAGE
NAME POSITION(S) OWNERSHIP OF SHARES
- ---- ----------- --------------------- --------------
<S> <C> <C> <C>
G. Robert Durham Director 7,000 (1) *
Samuel L. Eichenfield Chairman, President, 291,507 (2)(3) 1.03%
Chief Executive Officer
and Director
James L. Johnson Director 5,000 (1) *
L. Gene Lemon Director 16,986 (1) *
Kenneth R. Smith Director 7,500 (1) *
Robert P. Straetz Director 6,500 (1) *
Shoshana B. Tancer Director 3,300 (1) *
John W. Teets Director 57,053 (1) *
William J. Hallinan Senior Vice President -- 55,908 (2)(3) *
General Counsel and
Secretary
Martin G. Roth Group Vice President -- 22,504 (2)(3) *
Transportation Finance/
Capital Services
FINOVA Capital Corporation
Thomas C. Parrinello Group Vice President -- 1,670 (2)(3) *
Factoring Services
FINOVA Capital Corporation
Gregory C. Smalis Group Vice President -- 17,740 (2)(3) *
Portfolio Management
FINOVA Capital Corporation
Directors and Executive 658,980 (2)(3)(4) 2.32%
Officers, as a Group
- ----------
(1) Includes Shares with respect to which such director has a right to acquire
ownership within 60 days through the exercise of stock options granted
pursuant to the Corporation's 1992 Stock Incentive Plan in the amount of
5,000 shares per nonemployee director, except Mr. Durham (2,000 Shares) and
Ms. Tancer (3,000 Shares).
(2) Includes options to purchase Shares which can be exercised within 60 days
pursuant to grants of stock options by the Corporation. All Shares are held
directly by such executive officers and their spouses except for Shares held
in their accounts, if any, in the Corporation's Savings Plan and Employee
Stock Ownership Plan or in Dial's dividend reinvestment plan, which are held
indirectly on their behalf.
(3) Includes Shares of restricted stock granted in connection with the Spin- off
and performance-based restricted stock granted after the Spin-off to such
persons, for which the persons have voting power but do not yet have
dispositive power, in the amounts of 42,314 Shares for Mr. Eichenfield,
7,802 Shares for Mr. Hallinan, 3,800 Shares for Mr. Roth, 1,500 Shares for
Mr. Parrinello and 5,110 Shares for Mr. Smalis. The number of Shares to be
awarded under the performance-based restricted stock program may vary based
on the performance of the Company and the stock. The reported amounts
include all vested awards and target awards for future vestings. Also
includes holdings in the Corporation's Savings (401(k)) and Employee Stock
Ownership Plans as of February 28, 1995, according to reports of the plan
administrators.
(4) Includes 375,114 Shares with respect to which all present directors and
executive officers have the right to acquire ownership within 60 calendar
days through the exercise of stock options granted pursuant to the
Corporation's stock option plans.
*The amount of Common Stock beneficially owned by such individual does not
exceed one percent.
</TABLE>
CERTAIN BENEFICIAL OWNERS
AMOUNT AND
NATURE OF BENEFICIAL PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP (1) OF SHARES
- ------------------------------------ --------------------- ----------
Heine Securities Corporation 2,816,150 10.20%
51 John F. Kennedy Parkway
Short Hills, NJ 07078-2708
Loomis, Sayles & Co., Inc. and Affiliates 1,929,900 6.99%
1 Financial Center
Boston, MA 02111-2660
Provident Investment Council 1,623,900 5.88%
300 North Lake Avenue
Pasadena, CA 91106
Arnhold & S. Bleichroeder, Inc. 1,542,000 5.58%
45 Broadway
New York, NY 10006
- ----------
(1) Pursuant to filings with the SEC, such Shares are held by the entity or its
affiliates on behalf of themselves and their respective advisory clients and
investors. The entities may disclaim that they constitute a "group" for
purposes of owning these Shares.
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Corporation and its subsidiaries during the
last three fiscal years to or on behalf of the Corporation's Chairman, President
and Chief Executive Officer, and each of the four other most highly compensated
executive officers of the Corporation (based on salary and bonus) as of the end
of 1994 (for those periods during which such persons were executive officers)
(the "Named Officers")
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
------------------------------------------
Annual Compensation Awards Payouts
- -----------------------------------------------------------------------------------------------------------------------------------
Other Performance- Securities
Annual Based Underlying All Other
Compen- Restricted Options/ Compen-
Name and Salary Bonus sation Stock SARs LTIP sation
Principal Position Year (1) (1)(2) (3) Awards(4)(5) (#) (5) Payouts (6)
- --------------------------- ------- ---------- ---------- --------- -------------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Samuel L. Eichenfield 1994 $460,790 $496,705 $245,931 $553,715 $701,440 $9,240
Chairman, President and 1993 417,602 420,252 177,010 369,838 175,000 657,738 8,994
Chief Executive Officer 1992* 312,678 378,586 89,729 318,375 25,000 (7) 6,853
William J. Hallinan 1994 238,850 174,513 114,347 59,278 258,560 5,544
Senior Vice President -- 1993 223,380 163,013 57,798 77,118 22,500 5,448
General Counsel & 1992* 168,109 151,348 81,375 6,000 5,105
Secretary
Martin G. Roth 1994 186,787 145,328 59,278 12,000 5,450
Group Vice President -- (8)
Transportation Finance/
Capital Services
FINOVA Capital Corp.
Thomas C. Parrinello 1994* 172,519 120,189 59,278 12,500
Group Vice President -- (8)
Factoring Services
FINOVA Capital Corp.
Gregory C. Smalis 1994 168,705 123,229 59,278 12,000 3,960
Group Vice President -- 1993 142,247 100,856 40,952 74,479 4,200 3,664
Portfolio Management (8)
FINOVA Capital Corp.
- ----------
* Except as otherwise noted, 1992 compensation is reported from March 18,
1992, the date of the Spin-Off, at which time the Corporation became a
publicly-held company. Mr. Hallinan's salary and other annual compensation
is reported from March 1, 1992. For all Named Officers whose 1992 income is
reported, bonuses awarded were based on performance for all of 1992
including portions thereof preceding the Spin-Off. Other reported 1992
compensation has not been annualized. 1993 and 1994 reported compensation is
for the full fiscal year, except for Mr. Parrinello, whose income is
reported from the date of his engagement on February 14, 1994.
(1) Amounts shown include cash and non-cash compensation earned and received by
the Named Officers as well as amounts earned but deferred at the election of
those officers, if any.
(2) The amount of the bonuses is dependent each year on the Corporation's and
Named Officers' respective performance. No bonuses are awarded unless the
Corporation achieves specified levels of performance. The above amounts
include a bonus paid to Mr. Parrinello of $15,000 which was paid in
connection with his commencement of employment with the Corporation and was
not dependent on his performance.
(3) Amounts listed in this column are for personal benefits paid by the
Corporation, including among other items tax gross up payments in 1994 of
$245,931 to Mr. Eichenfield and $105,215 to Mr. Hallinan.
(4) The number of Shares to be awarded and their vesting are dependent on the
Corporation's stock price and dividend performance during each of the five
years following the grant date compared to the performance of either the
Standard & Poor's 500 Index (the "S&P 500") or the Standard & Poor's
Financial Index (the "S&P FI"). The value of the performance-based
restricted stock is based on the fair market value of Shares at the grant
date (or vesting date for additional shares awarded, as discussed more fully
below) and does not account for any diminution in value due to the
performance requirements or any other restrictions on transfer.
On April 1, 1992, each Named Officer other than Mr. Parrinello was granted
1000 target Shares of performance-based restricted stock subject to
adjustment of the target number of Shares. Between 100 and 340 of such
Shares will vest and be awarded to those Named Officers each year during the
five years following the grant date, depending on the Corporation's
performance compared to the S&P 500. Thus, those Named Officers can receive
a minimum of 500 Shares and a maximum of 1,700 Shares pursuant to the April
1, 1992 grant. In 1993 and 1994, the maximum awards were achieved. Those
additional vestings, as well as others discussed below, have been added to
the above tables at the fair market value on the vesting dates.
The remaining Shares of performance-based restricted stock underlying the
1992 values noted were granted on August 25, 1992. These consist of 15,000
target Shares to Mr. Eichenfield and 3,000 target Shares to Mr. Hallinan,
subject to adjustment. Between 0 and 34% of such Shares will vest and be
awarded each year during the five years following the grant date based on
the Corporation's stock price and dividend performance compared to the
lesser of the S&P 500 or the S&P FI. Thus, the Named Officers can receive
between 0 Shares and a maximum of 25,500 Shares for Mr. Eichenfield or 5,100
Shares for Mr. Hallinan. Failure to achieve the required stock performance
level results in permanent loss of that year's respective grant. In 1993 and
1994, the maximum additional vestings were achieved.
The 1993 performance-based restricted stock was granted in August of that
year under the same terms as the August 1992 grant noted above. Mr.
Eichenfield received 10,000 target Shares and Messrs. Hallinan and Smalis
each received 2,000 target Shares. The Named Officers can receive between 0
Shares and 17,000 Shares for Mr. Eichenfield and 3,400 Shares for Messrs
Hallinan and Smalis.
The 1994 performance-based restricted stock was granted in August of that
year. All such grants were made on the same terms as outlined above for the
August 1992 and 1993 grants. Accordingly, the Named Officers can receive
between 0 Shares and 25,500 Shares for Mr.. Eichenfield, and 2,250 Shares
each for Messrs. Hallinan, Roth, Parrinello and Smalis.
The Executive Compensation Committee has retained discretion to amend the
terms of the performance-based restricted stock grants to conform to changes
in the tax laws or otherwise. The Named Officers may vote such Shares and
dividends are paid thereon to the holder prior to the satisfaction of the
vesting contingency.
(5) In 1992, the Named Officers were awarded substitute grants of restricted
stock and stock options from the Corporation in conjunction with the Spin-
Off. Such grants were equivalent to restricted stock or options granted by
Dial to the respective Named Officer prior to the Spin-Off. Those grants are
not included in the table as they related to compensation paid prior to the
Spin-Off. Those restricted stock awards aggregated 32,858 Shares for Mr.
Eichenfield and 7,675 Shares for Mr. Hallinan. The aggregate number of
restricted Shares held by each Named Officer, and their value based on the
Share price at the 1994 year end, were 42,314 Shares for Mr. Eichenfield
($1,343,470); 7,802 Shares for Mr. Hallinan ($247,714); 3,800 Shares for Mr.
Roth ($120,650); 1,500 Shares for Mr.Parrinello ($47,625); and 5,110 Shares
for Mr. Smalis ($162,243).
(6) Amounts listed in this column are for payments made by the Corporation on
behalf of the Named Officers to the Employee Stock Ownership Plan.
(7) In 1992, Mr. Eichenfield received a pro rata payout of certain incentive
compensation arrangements in effect prior to the Spin-Off, after which the
plan was amended and the Named Officer became entitled to participate in the
Corporation's special performance share incentive plan for 1992-93. The
pre-Spin-Off related payments of $436,300 are not included in the table as
they related to pre-Spin-Off compensation.
(8) Messrs. Roth and Parrinello were not executive officers prior to 1994. Mr.
Smalis was not an executive officer prior to 1993.
</TABLE>
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table contains information concerning the grant of stock
options and tandem stock appreciation rights ("SARs") to the Named Officers
pursuant to the Corporation's 1992 Stock Incentive Plan. Those grants were
intended to serve as multi-year grants in lieu of future grants to such officers
through 1997 for such Named Officers. Because Messrs. Eichenfield and Hallinan
received multi-year grants in 1993, they received no option grants in 1994. The
amounts shown for each of the Named Officers as potential realizable values are
based on arbitrarily assumed annualized rates of Share price appreciation since
the option grant dates of five and ten percent over the full ten year term of
the options, without regard to dividends paid on the Shares. The options were
granted in August 1994, other than the initial grant to Mr. Parrinello in
February 1994, following the acquisition of Ambassador Factors.
The amounts shown as potential realizable value for all stockholders
represents the corresponding increases in the market value of the 27,618,695
outstanding Shares held by all stockholders (other than the Corporation) as of
the Record Date. Appreciation at five and ten percent per year would increase
the market value of all outstanding Shares by approximately $640 million and
$1.62 billion, respectively, for the August 1994 grant.
These potential realizable values are based solely on arbitrarily assumed
rates of appreciation required by applicable SEC regulations. In assessing these
values, please note that the ultimate value will depend on actual future Share
values, and those values will depend on market conditions and the efforts of the
Named Officers and others to foster the future success of the Corporation to the
benefit of all stockholders. There can be no assurance that potential realizable
values reflected in this table will be achieved.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF SHARE PRICE
APPRECIATION FOR
NUMBER OF PERCENT OF OPTION TERM
SECURITIES TOTAL ----------------------------------
UNDERLYING OPTION/SARS IF STOCK AT IF STOCK AT
OPTIONS/SARS GRANTED TO EXERCISE OR $60.07 $95.64
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION --------------- -----------------
NAME (#) (1)(2) FISCAL YEAR ($/SHARE) (2) DATE 5% 10%
- --------------------------- ---------------- --------------- ---------------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
AUGUST 1994 GRANT
- -----------------
ALL STOCKHOLDERS'
SHARE APPRECIATION -- -- -- -- $640,491,053 $1,623,130,080
Messrs. Roth, Parrinello 4,000 0.006 % 36.88 8/10/04 92,780 235,060
and Smalis 4,000 0.006 % 41.48 8/10/04 74,360 216,640
4,000 0.006 % 46.65 8/10/04 53,680 195,960
IF STOCK AT IF STOCK AT
$50.19 $79.92
--------------- -----------------
5% 10%
--------------- -----------------
FEBRUARY 1994 GRANT
- -------------------
ALL STOCKHOLDERS'
SHARE APPRECIATION -- -- -- -- $535,189,981 $1,356,276,491
Mr. Parrinello 500 0.0008% 30.81 2/13/04 9,698 24,554
- ----------
(1) The options granted in August 1994 are exercisable starting 12 months from
the grant date, with 20% of the options covered thereby becoming exercisable
on each successive anniversary date. Mr. Parrinello's February 1994 grant of
500 options will vest 34% after 1 year and 33% each year thereafter with
full vesting on the third anniversary date. All options were granted for a
period of ten years subject to earlier termination upon events related to
termination of employment, a change in control, death or disability. No SARs
were granted in connection with these options except all options have
limited SARs that are exercisable within 60 days following a change in
control, as defined in the 1992 Stock Incentive Plan, subject to earlier
expiration upon certain events related to termination, death or disability.
The limited SARs entitle the Named Officer to elect whether to purchase the
Shares or to instead receive the difference between the market value on the
date of exercise and the exercise price. In the aggregate, the Named Officer
can exercise options or the SARs equal to the number of options granted.
(2) The listed options are all non-qualified options. The exercise price and tax
withholding obligations, if any, related to exercise may be paid by delivery
of already owned Shares or by offset of the underlying Shares.
</TABLE>
1994 OPTION AND SAR EXERCISES AND HOLDINGS
The following table shows stock option exercises, if any, by Named Officers
during 1994 including the aggregate value of gains realized on the date of
exercise. Value realized upon exercise is the difference between the market
value on the exercise date and the exercise price of the option or SAR. The
table also lists the number of Shares covered by both exercisable and
non-exercisable stock options and SARs as of December 31, 1994. The table
includes the values for "in-the-money" options, which represents the positive
spread between the exercise price of such options and the year-end price of the
Shares. These values, unlike those set forth under the "value realized upon
exercise" column, have not been, and may never be, realized. Those options might
never be exercised, and the value, if any, will depend on the market value of
Shares on the exercise date.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<CAPTION>
Number of Securities Value of
Underlying Unexercised Unexercised
Options/SARs at In-the-Money
Shares Value Fiscal Year-End Options/SARs at
Acquired on Realized (#) Fiscal Year-End
Exercise Upon ---------------------------------- ---------------------------------
Name (#) Exercise Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- ------------ --------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Eichenfield 152,287 148,250 $2,150,510 $188,562
Mr. Hallinan 34,834 16,830 460,623 42,818
Mr. Roth 15,405 14,772 240,907 14,355
Mr. Parrinello 0 12,500 0 0
Mr. Smalis 8,738 16,752 107,905 27,720
</TABLE>
LONG TERM INCENTIVE COMPENSATION
The Corporation adopted a performance share incentive plan ("PSIP") that is
designed to compensate participants if the Corporation achieves designated
performance goals over a sustained period and to encourage the participants'
continued efforts on the Corporation's behalf. The PSIP evaluates achievement by
measurements determined by the Board, currently consisting of increases in net
income and improvement in earnings per share, both from continuing operations,
and FINOVA Capital's net income and return on average common equity, as defined
in the PSIP. Achievement is measured based on three year averages of the
performance targets. Because payouts are tied, in part, to Share price, the PSIP
motivates executives to help achieve Share price increases.
LONG-TERM INCENTIVE PLANS -- AWARDS
IN LAST FISCAL YEAR
ESTIMATED PAYOUTS UNDER
PERFORMANCE NON STOCK PRICE-BASED PLANS
NUMBER OF PERIOD UNTIL -----------------------------
UNITS MATURATION OR THRESHOLD TARGET MAXIMUM
NAME (1)(2) PAYOUT (#) (#) (#)
- ------------------- ---------- -------------- ---------- ------- --------
Mr. Eichenfield 8,838 1996 0 8,838 17,676
Mr. Hallinan 3,142 1996 0 3,142 6,284
Mr. Parrinello 2,088 1996 0 2,088 4,176
Mr. Smalis 1,601 1996 0 1,601 3,202
- ----------
(1) Recipients may receive between 0 and 200% of the target awards if
performance is equal to or above a minimum or equal to or below a maximum of
the targets (generally, 95% and 110%, respectively). Intermediate
performance will be interpolated. The target number of Shares awarded is
based on the average Share price for December 1993 ($28.74). The award, if
any, will be paid as the cash equivalent of the average of the high and low
Share prices for each day during the last month of the performance period
multiplied by the number of share units awarded.
(2) The Board, or its committee administering the PSIPs, has discretion to
adjust the target and maximum awards based on performance factors and
circumstances selected by the Board or committee from time to time. The
adjusted targets can be made higher or lower by between 8% and 17% for each
of the participants, depending on the participant's grant. Because such
adjustments are within the Board's or committee's discretion, the figures in
the table do not include any such adjustment.
<PAGE>
RETIREMENT PLANS
The following table shows the estimated annual retirement benefit payable to
participating employees, including the Named Officers, assuming retirement at
age 65, for the average annual earnings and years of service classifications
indicated, pursuant to the Corporation's retirement plans which cover officers
and other salaried employees on a non-contributory basis. The retirement plans
include both the Corporation's Pension Plan (formerly the Retirement Income
Plan) and Supplemental Pension Plan ("SERP") (in which only certain employees
participate).
PENSION PLAN TABLE
Estimated Annual Retirement Benefits for Years of
Service (2)(3)(4)(5)(6)
Average Annual -------------------------------------------------------
Compensation(1) 15 20 25 30 35(7)
- --------------------- ---------- ---------- --------- --------- ---------
125,000 32,810 43,750 54,690 65,630 76,560
150,000 39,380 52,500 65,630 78,750 91,880
175,000 45,940 61,250 76,560 91,880 107,190
200,000 52,500 70,000 87,500 105,000 122,500
225,000 59,060 78,750 98,440 118,130 137,810
250,000 65,630 87,500 109,380 131,250 153,130
300,000 78,750 105,000 131,250 157,500 183,750
400,000 105,000 140,000 175,000 210,000 245,000
450,000 118,130 157,500 196,880 236,250 275,630
500,000 131,250 175,000 218,750 262,500 306,250
600,000 157,500 210,000 262,500 315,000 367,500
700,000 183,750 245,000 306,250 367,500 428,750
800,000 210,000 280,000 350,000 420,000 490,000
900,000 236,250 315,000 393,750 472,500 551,250
1,000,000 262,500 350,000 437,500 525,000 612,500
- ----------
(1) Average annual compensation is the annual average of the employee's salary
and bonus during the 60 months preceding retirement (salary only before
1989). Salary and bonus in 1994 for the Named Officers is listed under the
columns bearing those headings in the Summary Compensation Table. For each
of the Named Officers, the current average compensation covered by the plans
is at least 10% less than the aggregate salary and bonus set forth in the
Summary Compensation Table. Current average annual compensation is $688,360
for Mr. Eichenfield, $296,380 for Mr. Hallinan, $264,501 for Mr. Roth,
$187,519 for Mr. Parrinello and $184,478 for Mr. Smalis.
(2) The number of credited years of service for Messrs. Eichenfield, Hallinan,
Roth, Parrinello and Smalis are 16, 22, 26, 1 and 16, respectively. To
permit Mr. Eichenfield to retire at age 65 with the maximum years of
service, while helping to accomplish the Corporation's objective to
discourage his early retirement, Mr. Eichenfield was credited, upon
execution of his employment agreement in 1992, discussed more fully below,
with an additional five years of service for pension benefit calculations.
In addition, he is credited for two years of service for each subsequent
year of service he provides. There shall be no actuarial reduction in
retirement benefits for his early retirement after age 60.
(3) To assure no loss in retirement benefits caused by his resignation from Dial
to assume his position with the Corporation, Mr. Hallinan will receive
retirement benefits and health insurance equal to what his retirement
benefits would have been had he remained with Dial, if he is terminated
(constructively or actually) other than for cause (as defined in the
agreement) prior to March 1, 1998. Such benefits shall be reduced by any
benefits to which he is entitled pursuant to the Dial Retirement Income Plan
or the Corporation's Pension Plan.
(4) Certain provisions of the Supplemental Pension Plan become effective if
there is a change in control of the Corporation.
(5) Benefits are computed on a single-life annuity basis. Benefits reflected in
the above table are computed pursuant to the plan formulas currently in
effect. The benefits under the Pension Plan reflect a reduction to recognize
some of the Social Security benefits to be received by the employee. The
Pension Plan also provides for the payment of benefits to an employee's
surviving spouse. The amounts set forth are before any adjustment for joint
and survivorship provisions, which would reduce the amounts shown in the
table. Pension benefits vest after five years of service. The plans are
noncontributory and provide for reduced early retirement benefits except as
provided in note (2) above. Prior plan formulas provide for different
benefits. Employees accruing benefits pursuant to the prior or the prior and
current formulas, and participants accruing benefits under only the Pension
Plan, would receive benefits different from those listed in the table above.
(6) The Internal Revenue Code of 1986, as amended (the "Code"), and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), limit the
annual benefits which may be paid from a tax-qualified retirement plan. As
permitted by the Code and ERISA, the Corporation has supplemental plans
which authorize the payment out of general funds of the Corporation of any
benefits calculated under provisions of the applicable retirement plan which
may be above the limits permitted under the Code and ERISA for those
officers entitled to participate in the supplemental plans. Excess benefits
to be paid to Mr. Eichenfield are to be held in a Rabbi trust.
(7) The Corporation's Pension Plan now limits the years of service credited for
purposes of calculating benefits to a maximum of 35 years.
EMPLOYMENT AGREEMENTS
Three of the Named Officers, Messrs. Eichenfield, Hallinan and Parrinello
are parties to written employment agreements with the Corporation. In
addition, the Corporation has an Executive Severance Plan.
MR. EICHENFIELD
Mr. Eichenfield has been engaged as the Chairman, President and Chief
Executive Officer of the Corporation and as the Chairman, President and Chief
Executive Officer of FINOVA Capital. He was engaged to serve for a three year
term and thereafter from year to year, unless earlier terminated pursuant to the
agreement. Mr. Eichenfield's agreement automatically renewed for an additional
year and currently expires on March 17, 1996. He can be terminated for cause (as
defined in the agreement) at any time. Also pursuant to the terms of the
agreement, he serves as a member of the Corporation's Board of Directors,
subject to reelection by the stockholders upon expiration of his term.
Mr. Eichenfield's base compensation currently is $508,001, subject to
adjustment by the Board of Directors or Executive Compensation Committee. He is
entitled to participate in the Corporation's incentive, retirement, health and
welfare, and other fringe benefit programs in accordance with Corporation
policy, provided that the programs and benefits awarded to him are not less
favorable than those in existence upon the date of his agreement. Many of those
benefits are described or noted in the tables above.
If Mr. Eichenfield is terminated (actually or constructively) in violation
of his agreement, he would be entitled to receive bonus, stock option and
performance-related payments at least equal to the highest of such awards during
the three years preceding such termination. All stock option vestings and
pension plan accruals shall continue during such three year period.
MR. HALLINAN
Mr. Hallinan has been engaged as Senior Vice President -- General Counsel
and Secretary of the Corporation. His employment is subject to termination at
any time, but if terminated other than for cause (as defined in the agreement),
he is entitled to retirement and insurance benefits as noted in part in the
Pension Plan Table above. In addition, his awards of stock, options or similar
awards shall vest and be paid to him should he be terminated other than for
cause prior to March 1, 1998. His base annual salary currently is $248,358 plus
his participation in the Corporation's incentive, retirement, health and welfare
and other fringe benefit programs in accordance with Corporation policy,
provided that the programs and benefits awarded him are not less favorable than
those in existence upon the date of the agreement. Many of those benefits are
described or noted in the tables above.
MR. PARRINELLO
Mr. Parrinello has been engaged as Group Vice President -- Factoring
Services of FINOVA Capital for a three year term expiring in February 1997,
subject to earlier termination for cause (as defined in the agreement). His base
annual salary currently is $205,250. He is also entitled to participate in the
Corporation's retirement, health and welfare, other fringe benefit programs,
incentive awards, options and similar plans in accordance with Corporation
policy.
EXECUTIVE SEVERANCE PLAN
All Named Officers participate in the Corporation's Executive Severance
Plan. That plan entitles participants to immediate vesting and exercisability of
restricted stock, performance based restricted stock, options and performance
based compensation if the Corporation incurs a change in control. The plan also
provides for Messrs. Eichenfield and Hallinan a lump sum payment of three times
the officer's highest salary, bonus and PSIP payments if the officer is
discharged without cause or, if specified events occur, or two times such
salary, bonus and PSIP payments if the employee voluntarily leaves during a
specified period following a change in control. The plans provide a tax gross up
feature to cover the taxes the officer must pay on payments made pursuant to the
plan. Benefits paid are reduced by other severance benefits paid by the
Corporation. The officer is also to be credited with years of service equal to
the greater of the number needed to assure vesting under the retirement plans or
the number of year's salary paid under the severance plan. Messrs. Roth,
Parrinello and Smalis also participate in the executive severance plan with the
same terms as described above, except that they shall be paid only a lump sum of
two times their highest annual salary, bonus and PSIP payments.
Pursuant to his employment agreement, Mr. Hallinan is also entitled to
severance benefits if Mr. Eichenfield ceases to be the Chairman and Chief
Executive Officer of the Corporation and, as a result, Mr. Hallinan is
terminated (constructively or actually) from his current duties. In that event,
he is entitled to receive a lump sum of three times the sum of his highest
annual salary plus the largest aggregate annual incentive payments, pension and
other benefits which he has received during that measurement period.
Notwithstanding anything to the contrary set forth in any of the
Corporation's previous or future filings under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, that might
incorporate filings, including this Proxy Statement, in whole or in part, the
following report and the Performance Graph shall not be incorporated by
reference into any such filings.
EXECUTIVE COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Executive Compensation Committee (the "Compensation Committee"),
comprised entirely of independent directors, exercises all of the powers of the
Board in the authorization and approval of the compensation of executive
officers of the Corporation and its subsidiaries including awards to those
officers under various incentive plans. In connection with those duties, the
Compensation Committee administers and approves awards under the Corporation's
1992 Stock Incentive Plan. The Compensation Committee makes every effort to
assure that the compensation program is consistent with the Corporation's values
and furthers its business strategy.
OVERALL OBJECTIVES
The Compensation Committee has developed an executive compensation program
to meet the following objectives:
* Rewarding performance that adds stockholder value.
* Attracting, retaining and motivating key employees with competitive
compensation opportunities.
* Emphasizing "pay for performance" by placing a substantial portion of
compensation at risk.
* Building and encouraging ownership of Corporation stock by key
executives.
* Balancing short-term and long-term strategic goals.
* Addressing the concerns of stockholders, employees, the financial
community and the general public.
The following discussion describes how the various components of the
Corporation's executive compensation program meet these objectives.
EXECUTIVE COMPENSATION GENERALLY
The Compensation Committee reviews executive officers' salaries each year.
Salary increases depend upon individual performance, responsibilities, the
Corporation's financial performance and median salary levels at comparator
companies, as discussed below. In August 1994, the Corporation's independent
compensation consultant prepared competitive studies of the Corporation's
executive compensation program, comparing the Corporation to 17 similar
financial services companies. Approximately two-thirds of those companies are
included in the Standard & Poor's Financial Index. The Corporation uses that
index to set its performance criteria for its Management Incentive Plan ("MIP")
and performance-based restricted stock awards. Because the Compensation
Committee believes the selected comparators more closely reflect the
Corporation's competitors for executive talent than do those companies appearing
in the broader index, it uses the comparator group in evaluating compensation
levels.
TOTAL COMPENSATION
In August 1994, the Compensation Committee set targeted total compensation
levels for the executive officers at approximately the 75th percentile of the
compensation of the comparator corporations, adjusted for size in light of the
Corporation's and executives' respective performance. The Corporation's
executive officers generally receive a larger percentage of their compensation
"at risk" and in the form of long-term compensation than their counterparts at
the comparator companies. This helps reward performance that adds stockholder
value.
BASE SALARY
In August of 1994, the Compensation Committee adjusted the base salary
levels for the Corporation's executive officers to approximately the 50th
percentile of the comparator group for executive officers, after adjusting for
size differences among the companies. Those adjustments accounted for both
annual salary adjustments and job scope adjustments. Annual salary adjustments
were based on the factors listed above. Job scope adjustments were based on
changes in responsibilities as a consequence of integrating acquisitions.
ANNUAL INCENTIVES
The Corporation's cash bonus plan (MIP) rewards key employees for meeting
annual goals. The Compensation Committee carefully reviews and approves
performance targets under the plan to make certain they are both challenging and
consistent with stockholder-value improvement. For the Corporation, these
targets currently relate to net income from continuing operations available for
common and preferred stock dividends (30%), earnings per share from continuing
operations (60%) and total stockholder return (10%). The Compensation Committee
determines final awards after receiving recommendations from the Chief Executive
Officer. In 1994, the Corporation's performance exceeded the maximum performance
goals established.
For executive officers whose MIP awards are based in whole or in part on the
performance of FINOVA Capital, its 1994 targets were changed in 1994 to focus
attention more specifically on FINOVA Capital's net income, portfolio quality
and asset growth. Targets relate to after tax net income from continuing
operations available for common and preferred stock dividends (50%), the level
of non-earning assets (25%) and ending funds employed (25%). FINOVA Capital's
performance in 1994 exceeded the maximum performance goals established.
LONG-TERM INCENTIVES
The Corporation provides long-term incentives using stock options,
performance-based restricted stock and cash compensation awarded pursuant to
performance share incentive plans ("PSIPs"). Through these vehicles, the Company
has maximum flexibility for both focusing top management on specific long-term
goals and building executive stock ownership.
Stock options give executives an opportunity to buy an equity interest in
the Corporation. Moreover, because the options' value depends directly on the
appreciation of the Shares' value, the executives and stockholders benefit
similarly from any appreciation, and their interests are aligned. The
Compensation Committee has the authority to grant options to key executives and
makes every effort to balance the dilution and motivational effects. All options
have been issued with the exercise price at the fair market value of the
Corporation's stock on the date of grant or for a higher exercise price, as
discussed more fully below.
The Compensation Committee may also grant restricted shares to key
executives and has chosen to grant only performance-based restricted shares
since the Spin-Off. Like stock option grants, these grants build management
ownership and align the interests of executives with those of stockholders. In
addition, performance-based restricted shares serve as a retention device, since
the shares do not completely vest until after five years. Furthermore, annual
vesting has been directly linked to the Corporation's stock performance as
compared to market performance; e.g., if the stock underperforms the market, no
vesting occurs for that year's portion of all such grants made since August 25,
1992.
Finally, PSIPs focus management on other important long-term goals in
addition to share price appreciation. For the Corporation's 1994-1996 plan,
these goals related to earnings per share (50%) and net income (50%), both from
continuing operations. For executive officers whose PSIP awards are based in
whole or in part on the performance of FINOVA Capital, its 1994-96 plan goals
related to net income (50%) and return on average equity (50%). The performance
period for PSIPs is three years. Final award sizes and eligibility are reviewed
by the Compensation Committee which has discretion to adjust the awards within
preestablished parameters if circumstances so warrant.
Option, performance-based restricted stock and PSIP grants in 1994 were made
after reviewing competitive data prepared by an outside consultant, past
practice with respect to the levels of compensation for those executives,
including with prior employers as appropriate, and recommendations of senior
management. In August 1994, the Compensation Committee awarded multi-year stock
option grants to key executive officers in an effort to further align the
executives' interests with those of the Stockholders for a long-term increase in
Share price. Grants were not made to those executives who received multi-year
awards in 1993. The multi-year awards were intended to be in lieu of future
option awards anticipated for those officers during those years. The exercise
price was at the fair market value of the stock at the grant date for the first
year's grant (1994), with a premium of 12.5% share price increase each year
thereafter. The premium requires that management create increasing value for all
shareholders for the options to have value.
With regard to the possible disallowance of federal income tax deductions on
executive compensation amounts in excess of $1 million per year, the
Compensation Committee believes that under the transition regulations proposed
by the Internal Revenue Service no compensation was paid in 1994 or will be paid
in 1995 which would be non-deductible as a result of those changes in the
federal income tax laws. The Compensation Committee determined, after
consultation with its independent compensation consultants, that to the extent
that long term performance plans created in 1995 might impact the deductibility
of compensation paid in future years, the Corporation would be better served by
maintaining flexibility in its ability to adjust those plans, rather than
attempt to conform them to the exemption's requirements. Thus, the Compensation
Committee decided to forego the exemption with respect to cash compensation
plans adopted in 1995. The Compensation Committee, however, further determined
to review its position with respect to this exemption each year.
To help address the first four overall objectives noted above, the
Compensation Committee recommended to the Board, which subsequently approved,
stock ownership guidelines for senior management and directors of the
Corporation. Persons subject to the guidelines are encouraged to assure that
over a period of four years and thereafter their ownership of the Corporation's
stock and options reaches targeted levels based on the person's level of
responsibilities and compensation. The failure to achieve such ownership levels
could, in the Board's discretion, preclude the executive from receipt of future
awards under the 1992 Stock Incentive Plan.
CEO COMPENSATION
The Compensation Committee determines Mr. Eichenfield's total compensation
as noted above, based on the Corporation's performance, his individual
performance, median compensation levels, the desire to retain him and the terms
of his employment agreement. Mr. Eichenfield's salary and the short-term and
long-term incentives granted to him reflect the leadership he has provided since
the Corporation's Spin-Off. The Corporation reported record earnings in 1992 and
1993 and almost doubled them again in 1994, increasing income from continuing
operations in 1994 to $74.3 million from $37.3 in 1993, and earnings per share
from $1.77 to $2.94. Shareholder return outpaced both the Standard & Poor's 500
Index and its Financial Index in 1994. The Corporation achieved a 13.9% return,
while the S&P 500 increased only 0.49% and the Financial Index fell by 3.63%.
At the same time, Mr. Eichenfield has positioned the Corporation for
continued success. In 1994, the Corporation successfully concluded the two
strategic acquisitions of Ambassador Factors and TriCon Capital. Outstanding
Shares were increased approximately 40% as a result of a successful equity
offering. Non-accruing assets declined as a percentage of funds employed each
year, finishing 1994 at 2.9% of ending funds employed and securitizations. With
the acquisitions noted above, other changes implemented in 1993 and the
continued winding down of European operations, the Corporation is more
effectively deploying its funds in the long-term interests of the Corporation
and its stockholders. Those factors known in August 1994 were subjectively
evaluated in determining to target Mr. Eichenfield's total compensation near the
75th percentile of total compensation as paid to chief executives of comparator
companies, adjusted for size. Approximately two-thirds of Mr. Eichenfield's
targeted total compensation is placed "at risk," by tying it to performance
goals or the Corporation's Share price. In contrast, the comparator companies'
chief executives had on average less than half of their compensation at risk.
The Compensation Committee believes Mr. Eichenfield will continue providing
outstanding leadership to the Corporation. It will work with him to assure that
the executive compensation program meets the strategic goals of the Corporation
as well as the overall objectives discussed above.
James L. Johnson, Chairman
G. Robert Durham
Robert P. Straetz
John W. Teets
Members, Executive
Compensation Committee
<PAGE>
(The following descriptive data is supplied in accordance with Rule 304(d)
of Regulation S-T)
<TABLE>
PERFORMANCE GRAPH
Comparison of Cumulative Total
Return Among the Corporation, Standard & Poor's ("S&P") 500 Index
and S&P Financial Index(1)(2)
<CAPTION>
3/19/92 6/30/92 9/30/92 12/31/93 3/31/93 6/30/93 9/30/93 12/31/93 3/31/94 6/30/94 9/30/94
------- ------- ------- -------- ------- ------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Corporation 99.44 93.89 96.22 108.73 129.58 139.54 137.48 135.98 149.72 158.24 169.76
S&P 500 98.47 100.38 103.55 109.38 113.47 114.01 116.95 119.55 115.15 115.64 121.58
S&P Financial 98.51 103.93 105.59 120.63 132.73 134.87 144.13 133.94 128.10 135.66 133.45
12/31/94 1/31/95
-------- -------
Corporation 152.24 158.56
S&P 500 121.27 124.51
S&P Financial 129.30 137.55
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
In conjunction with the Spin-Off, certain contractual arrangements were
created between Dial and the Corporation and its subsidiaries. Those
arrangements, most of which are for a limited duration, provide among other
things for (i) the orderly separation of the Corporation from Dial; (ii) the
provision by Dial of certain interim services, including tax services, to the
Corporation (at an approximate annual cost of $930,000 in 1994); (iii) a
sublease of the space currently used by the Corporation as its principal
executive office (at an approximate annual rent of $1,616,000 until 1996 and
$1,806,000 for five years thereafter); and (iv) the allocation of certain tax
liabilities and benefits. Two of the Corporation's directors, Messrs. Teets and
Lemon, are executive officers of Dial and Mr. Teets is also a director of that
company.
Mr. Straetz served as a director of Fleet Mortgage Corporation. In 1994,
the Corporation acquired Ambassador Factors Corporation, also known as Fleet
Factors Corp., from an affiliate of Fleet Mortgage Corp.
Messrs. Eichenfield and Smith serve as directors of Ventana Corporation
("Ventana"), which markets interactive computer systems software and services.
Prior to the Spin-Off, FINOVA Capital purchased 100,000 shares of Ventana's
preferred stock for $1,000,000, which constitutes all of the outstanding
preferred stock of Ventana. Such shares are convertible into common stock of
Ventana, and would constitute 14.5% of the outstanding common shares. In
addition, FINOVA Capital has granted Ventana a $1,000,000 principal amount line
of credit, none of which was outstanding on the Record Date. The line of credit
to Ventana was granted prior to the Spin-Off. It was 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
other persons. The line of credit does not appear to involve more than the
normal risk of collectibility or present other unfavorable features.
The law firm of O'Connor, Cavanagh, Anderson, Westover, Killingsworth &
Beshears has provided certain legal services to the Corporation on a continuing
basis. Ms. Tancer is of counsel to that firm, but is not an equity- owner
thereof. The arrangements with that firm are believed to be competitive with the
terms charged by other law firms providing services to the Corporation and its
subsidiaries.
AMENDMENT OF 1992
STOCK INCENTIVE PLAN
INTRODUCTION
The Board of Directors, all but one of whom are non-employee directors, has
helped to successfully guide the Corporation to record levels of earnings and
strength during its first three years as a public company. Service as a director
for the Corporation requires significant demands on a director's time due to the
complexity and breadth of the Corporation's operations. In addition, the Board
of Directors desires to continually align its interests with those of the
stockholders. After receiving a report by the Corporation's compensation
consultants regarding competetive levels of director compensation, the Board
voted to recommend to the stockholders that they approve an increase in the
annual grant to non-employee directors of stock options from 1,000 shares to
1,500 shares. This increase would enable those directors to purchase, at the
fair market value of the Shares on the date of the option grant, an additional
500 Shares per year, as discussed more fully below.
The proposed resolution is as follows:
RESOLVED, that the officers of this Corporation shall submit to the
Stockholders for approval at the next Annual Meeting of Stockholders of this
Corporation a proposal to amend the first sentence of Section 13(a) of the
Corporation's 1992 Stock Incentive Plan (the "1992 Plan") to read as follows
[changed language appears in boldfaced type]:
(a) Each director of the Company who is not otherwise an employee of the
Company or any Affiliate from and after February 28, 1992 shall, on the
third Thursday of August during such director's term, automatically be
granted Non-Qualified Stock Options to purchase 1,000 shares of Common Stock
having an exercise price per share equal to 100% of the Fair Market Value of
the Common Stock at the date of grant of such Non-Qualified Stock Option;
EFFECTIVE IN 1995 AND THEREAFTER, SUCH ANNUAL GRANTS OF NON- QUALIFIED STOCK
OPTIONS SHALL PERMIT EACH SUCH DIRECTOR TO PURCHASE 1,500 SHARES OF COMMON
STOCK ON THE SAME TERMS AS NOTED IN THIS SECTION.
DESCRIPTION OF THE 1992 PLAN
The 1992 Plan was adopted by the Board and approved and ratified by the
Stockholders in connection with the Spin-Off. The Board believes the 1992 Plan
helps the Corporation attract, retain and provide appropriate incentives for
directors, management and all employees. The description of the 1992 Plan set
forth herein is qualified in its entirety by reference to the text of the 1992
Plan, which is available at no charge upon request at the address set forth
above.
GENERAL.
The 1992 Plan authorizes the granting of stock options, restricted stock and
SAR's to participants selected by the Compensation Committee, which administers
the 1992 Plan. The total number of Shares available for grant in each year of
the 1992 Plan shall generally be 21/2% of the total number of outstanding Shares
on the first day of the year for which the plan is in effect, with certain
exceptions stated in the plan. The participants include directors, officers and
employees of the Corporation and its subsidiaries and affiliates designated by
the Compensation Committee. Non-employee directors of the Corporation only
participate pursuant to automatic grants under a specified formula discussed
above plus a similar automatic grant of options to purchase 2,000 Shares upon
first becoming elected as a director. The proposed amendment will increase that
automatic annual grant to enable the non-employee director to purchase an
additional 500 shares per year at the fair market value on the grant date. The
Corporation currently has 8 directors (one of whom is also an executive), and
approximately 950 employees.
ADMINISTRATION.
The 1992 Plan requires that the Compensation Committee consist of at least
two directors who are "disinterested persons," as such term is used in SEC Rule
16b-3. One way to help assure that the administrators remain "disinterested" is
to provide that the only way for them to participate in the 1992 Plan is
pursuant to an automatic grant, such as the one under consideration with this
amendment.
Subject to the limitations of the 1992 Plan, the Compensation Committee is
authorized to (i) select participants in the 1992 Plan, (ii) determine whether
and to what extent awards are to be made, (iii) determine the number of Shares
to be covered by each award, (iv) determine the terms of any award, (v) adjust
the terms of any award, (vi) determine the extent to which payments may be
deferred and (vii) determine whether awards may be settled in cash or shares.
The Compensation Committee also has authority to adopt, alter and repeal
administrative rules, guidelines and practices and to interpret the terms of the
1992 Plan and any award issued thereunder, to delegate certain decisions to
officers and to otherwise supervise the administration of the 1992 Plan.
AMENDMENT AND TERMINATION.
The Board or Compensation Committee may amend or discontinue the 1992 Plan
and may amend outstanding awards as they deem advisable, but no such change may
be made without Stockholder approval to the extent such approval is required by
law or agreement. No such change may impair the rights of participants under
outstanding awards without consent of the affected participants (except for
changes made to comply with SEC Rule 16b-3) and no such change can be made that
would disqualify the plan from that exemption.
The 1992 Plan will terminate on December 31, 2002 unless earlier
discontinued by the Corporation. Outstanding awards on the date of termination
shall not be impaired by that termination.
OPTIONS AND SARS.
The exercise price of options and SARs shall be set by the Compensation
Committee, which price shall not be less than the fair market value of the
Shares on the date of grant, except for awards granted in connection with the
Spin-Off, which were converted to preserve the then-current market values
existing in those awards. The fair market value of the Shares at the closing of
the New York Stock Exchange on the Record Date was $32.375.
SARs may be awarded, in the Compensation Committee's discretion, in tandem
with options. An SAR entitles the holder to a cash payment of the difference
between the current market value of Shares on the date of exercise and the
exercise price of the tandem options, multiplied by the number of SARs
exercised.
The Compensation Committee has discretion to award incentive stock options
pursuant to Section 422 of the Internal Revenue Code. No action or
interpretation of the 1992 Plan or any incentive stock option award shall be
permitted if it would disqualify the awards under that section.
EXERCISABILITY OF OPTIONS AND SARS.
Options and SARs become fully exercisable upon a change in control, as
defined in the 1992 Plan (generally upon the acquisition by a person or
affiliated group of at least 20% of the Corporation's shares or other voting
power, with certain exceptions specified in the 1992 Plan). In that event, a
participant also has a 60 day period in which to surrender options for their
cash value. If a participant's employment is terminated for cause, the option or
SAR generally terminates at that time. If employment terminates other than for
cause, death, disability or retirement, the options or SARs generally must be
exercised within three months of the termination date. For termination due to
retirement or disability, a participant generally will have three years to
exercise the options or SARs. Death generally extends exercisability for 12
months. In all cases, these exercisability periods run no longer than the
scheduled expiration of the option or SAR, or the stated period, whichever is
shorter. The Compensation Committee has discretion generally to accelerate
vesting and to extend such expiration dates.
Participants generally may not transfer or encumber options or SARs other
than (i) by will or the laws of descent or distribution or (ii) pursuant to a
qualified domestic relations order. Options and SARs are exercisable only by the
participant during his or her lifetime or by a legal guardian or permitted
transferee.
RESTRICTED STOCK
The Compensation Committee shall determine the appropriate period
restricting the participant's right to sell, assign or otherwise encumber Shares
of restricted stock. Subject to those restrictions on transfer and any other
conditions imposed by the Compensation Committee, the participant enjoys all of
the other rights of a Stockholder, including the right to receive dividends and
to vote the Shares. The Compensation Committee has the authority to require that
dividends on those Shares be reinvested in additional Shares until the
restricted period lapses and the Shares vest. At that time, the Shares become
freely tradable without restriction. Upon termination of employment, unvested
restricted stock generally is forfeited unless the Compensation Committee
determines otherwise. Upon a change in control, as noted above, the restrictions
lapse immediately.
RESTRICTIONS ON TRANSFER
Restrictions are imposed on participants subject to Section 16 of the
Securities Exchange Act of 1934 and SEC Rule 144. These restrictions include
limitations on vesting periods, the number of Shares which can be sold and
restrictions on trading in Shares within six months of certain purchases or
sales of Shares. Persons subject to such rules are urged to seek appropriate
legal guidance on compliance with such rules prior to entering into any
transactions involving Shares.
FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes the U.S. federal income tax consequences of
the 1992 Plan, based on current statutes, regulations and interpretations. This
description is not intended to address specific tax consequences applicable to
individual participants who receive plan benefits or special rules that may
apply to directors and executive officers of the Corporation.
Stock Options. No income will be recognized by the holder and the
Corporation will not be entitled to a deduction at the time of grant of either
non-qualified or incentive stock options.
On exercise of a non-qualified stock option, the amount by which the fair
market value of the shares on the date of exercise exceeds the option exercise
price will be taxable to the holder as ordinary income and, subject to
satisfying applicable withholding requirements and any deduction limitation
under Section 162(m) of the Internal Revenue Code, deductible by the
Corporation. The subsequent disposition of shares acquired upon exercise of a
non-qualified stock option will ordinarily result in a capital gain or loss.
On exercise of an incentive stock option, the holder will not recognize any
income and the Corporation will not be entitled to a deduction. However, for
purposes of the alternative minimum tax, the exercise of an incentive stock
option may result in an alternative minimum tax liability.
The disposition of shares acquired on exercise of an incentive stock option
will ordinarily result in capital gain or loss. However, if the holder disposes
of those shares within two years after the date of grant or one year after the
date of exercise (a "disqualifying disposition"), the holder will recognize
ordinary income in the amount of the excess of the fair market value of the
shares on the exercise date over the option exercise price (or in certain
circumstances the gain on sale, if less). Any gain not treated as ordinary
income in the manner described in the preceding sentence will generally be
capital gain. Subject to any deduction limitation under Section 162(m) of the
Internal Revenue Code, the Corporation will be entitled to a deduction equal to
the amount of ordinary income recognized by a holder.
If an option is exercised through the use of shares previously owned by the
holder, that exercise generally will not be considered a taxable disposition of
the previously owned Shares, and thus no gain or loss will be recognized with
respect to those shares upon exercise. Instead, there is a carryover basis in
the new shares. Also, if the option is an incentive stock option, and the
previously owned shares were acquired on the exercise of an incentive stock
option or other tax-qualified stock option, and the holding requirement for
those shares is not satisfied by that time, such use will constitute a
disqualifying disposition of the previously owned shares, resulting in the
recognition of ordinary income (but under proposed Treasury Regulations not any
additional capital gain) in the amount described above.
Stock Appreciation Rights. The amount of cash (or the fair market value of
any Shares) received on the exercise of an SAR under the 1992 Plan will be
includable in the employee's ordinary income and, subject to applicable
withholding requirements and Section 162(m), noted above, deductible by the
Corporation.
Restricted Stock. Under Section 83(b) of the Internal Revenue Code, an
employee may elect to include in ordinary income, as compensation at the time
restricted stock is first issued, the excess of the fair market value of such
shares at the time of issuance over the amount paid, if any, by the employee for
such shares. The employee making such an election must send a copy of the
Section 83(b) election form to the employer. Unless a section 83(b) election is
made, no taxable income will generally be recognized by the recipient of
restricted stock until the shares are no longer subject to the restrictions or
the risk of forfeiture. When either the restrictions or the risk of forfeiture
lapses, the employee will recognize ordinary income and, subject to the
applicable withholding limits and Section 162(m) limits, the Corporation will be
entitled to a deduction in the amount equal to the excess of the fair market
value of the shares on the date of lapse over the amount paid, if any, by the
employee for the shares. Absent a Section 83(b) election, any cash dividends or
other distributions paid with respect to the restricted stock prior to the lapse
of any restrictions or risk of forfeiture will be included in the employee's
ordinary income as compensation at the time of receipt.
Effect on Earnings. Currently, neither the grant nor the exercise of an
option or SAR will result in any charge to pretax earnings. Grants of restricted
stock result in a charge to pretax earnings over the restriction period for the
fair market value of the stock at the date of issuance. On June 30, 1993, the
Financial Accounting Standards Board ("FASB") issued an exposure draft of a
proposed Statement of Financial Accounting Standards, "Accounting for
Stock-Based Compensation." Under the proposed statement, compensation cost would
be recognized for virtually all stock-based compensation arrangements and would
be measured on the date of grant. The FASB is currently redeliberating its
decisions proposed in the 1993 exposure draft, and has indicated that issuers
probably will be permitted to choose either to expense the option grants
immediately or to disclose in a footnote what that expense would have been. It
is not known when further pronouncements, if any, will be made by the FASB.
PLAN BENEFITS
1992 STOCK INCENTIVE PLAN
The following table shows the awards made in 1994 to the persons listed,
assuming that the amendment would have been in place at the beginning of that
year. The actual awards of stock options to the non-executive directors was
1,000, rather than 1,500, Shares each.
PERFORMANCE-BASED
OPTIONS/SARS RESTRICTED STOCK(1)
NAME (#) (#)
---- --------------- ----------------------
Mr. Eichenfield 0 27,055
Mr. Hallinan 0 4,654
Mr. Roth 12,000 1,840
Mr. Parrinello 12,500 1,500
Mr. Smalis 12,000 1,840
All Executive Officers 108,546 58,198
All Non-Executive Directors 10,500 0
All Employees, Excluding 530,420 43,962
Executive Officers
- ----------
(1) Represents amounts awarded to such individuals in 1994 at target levels of
performance plus additional vestings from prior years above target levels.
As noted in footnote 4 to the Summary Compensation Table, the actual amounts
of shares to be awarded can vary from 0 to 170% of the target level,
depending on the Corporation's performance.
The affirmative vote of a majority of the Shares voting in person or by
proxy at the meeting is required to approve the proposed amendment, provided a
quorum exists.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSED AMENDMENT
TO THE CORPORATION'S 1992 STOCK INCENTIVE PLAN.
SELECTION OF INDEPENDENT AUDITORS
The following resolution concerning the appointment of independent auditors
is expected to be offered at the meeting:
RESOLVED, that the appointment of Deloitte & Touche LLP to audit the
accounts of the Corporation and its subsidiaries for the fiscal year 1995 is
hereby ratified.
Deloitte & Touche LLP has audited the accounts of the Corporation since its
organization and of its subsidiaries for many years. That firm has been
appointed by the Board of Directors of the Corporation, upon recommendation of
the Corporation's Audit Committee, as the Corporation's independent auditors for
1995. It is expected that a representative of Deloitte & Touche LLP will attend
the meeting, respond to appropriate questions and be afforded the opportunity to
make a statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE CORPORATION'S INDEPENDENT
AUDITORS FOR 1995.
VOTING PROCEDURES
The election of directors will be effective upon receiving approval of a
plurality of the Shares present and voting in person or by proxy in the
respective matter, provided a quorum exists. As noted above, approval of the
amendment to the 1992 Plan will be effective upon approval of a majority of the
Shares present and voting in person or by proxy at the meeting, provided a
quorum exists. A quorum is present if at least a majority of the outstanding
shares on the Record Date (13,809,348 Shares) are present in person or by proxy.
All matters other than the election of directors submitted to stockholders at
the meeting shall be decided by a majority of the votes cast with respect
thereto provided a quorum exists, except as otherwise provided by law or the
Corporation's Certificate of Incorporation or Bylaws. Failures to vote and
broker non-votes will not count towards determining any required plurality or
majority or the presence of a quorum. Stockholders and brokers returning proxies
but affirmatively abstaining from voting on a proposition, and stockholders
attending the meeting but who do not vote on a proposition, will count towards
the presence of a quorum and will be counted towards determining the required
plurality or majority for approval of that proposition.
The enclosed proxies will be voted in accordance with the instructions
thereon. Unless otherwise stated, all shares represented by such proxy will be
voted as noted in this proxy statement. Proxies may be revoked as noted in
"General Information" above.
CORPORATE NAME CHANGE
As noted above and in the Corporation's annual report, the Corporation's
name was changed to The FINOVA Group Inc. on February 1, 1995. The Corporation's
Shares continue to be listed on the New York Stock Exchange and are now traded
under the symbol "FNV." The Corporation's Share price and trading information
can be found in stock reports typically under the heading "FinovaGp". Similarly,
the name of the Corporation's principal operating subsidiary, Greyhound
Financial Corporation, was changed on that date to FINOVA Capital Corporation.
Its debt listed on the New York Stock Exchange trades under the symbol "FNVA
02."
NO CHANGE TO OUTSTANDING STOCK CERTIFICATES
Even though the Corporation's name has changed, each outstanding share
certificate of the Corporation's common stock will continue to represent the
same number of shares of The Finova Group Inc. The Corporation will continue to
honor such certificates, even though they bear the name "GFC Financial
Corporation." Accordingly, IT WILL NOT BE NECESSARY FOR STOCKHOLDERS TO EXCHANGE
THEIR EXISTING STOCK CERTIFICATES FOR ONES WITH THE NEW CORPORATE NAME. Transfer
instructions in either name will be honored.
SUBMISSION OF STOCKHOLDER PROPOSALS
From time to time, stockholders seek to present proposals which may be
proper subjects for inclusion in the Proxy Statement and form of proxy for
consideration at the Annual Meeting of Stockholders. To be included in the proxy
statement or considered at an annual or any special meeting, proposals must be
submitted on a timely basis in addition to meeting other legal requirements for
inclusion. Proposals for the 1996 Annual Meeting of Stockholders must be
received by the Corporation no later than November 25, 1995, for possible
inclusion in the proxy statement, or between February 10, 1996 and March 1,
1996, for possible consideration at the meeting, which is expected to take place
on Thursday, May 9, 1996. Any such proposals, as well as any questions related
thereto, should be directed to the Secretary of the Corporation.
A COPY OF THE CORPORATION'S 1994 ANNUAL REPORT ON FORM 10-K TO THE
SECURITIES AND EXCHANGE COMMISSION MAY BE OBTAINED BY STOCKHOLDERS, WITHOUT
CHARGE, UPON WRITTEN REQUEST TO SHAREHOLDER SERVICES, THE FINOVA GROUP INC.,
1850 NORTH CENTRAL AVENUE, P.O. BOX 2209, PHOENIX, ARIZONA 85002-2209.
OTHER BUSINESS
The Board of Directors knows of no other matters to be brought before the
meeting. If any other business should properly come before the meeting, the
persons appointed in the enclosed proxy have discretionary authority to vote in
accordance with their best judgment.
By order of the Board of Directors.
W. J. HALLINAN
Senior Vice President --
General Counsel and Secretary
-------------------------------------------------------------
PLEASE VOTE -- YOUR VOTE IS IMPORTANT
-------------------------------------------------------------
The FINOVA Group Inc.
<PAGE>
PROXY/VOTING INSTRUCTION CARD
THE FINOVA GROUP INC.
c/o Harris Trust & Savings Bank, P.O. Box 830, Chicago, IL 60690
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints G. Robert Durham, L. Gene Lemon, and
Kenneth R. Smith, and each of them, to have all the powers hereunder, including
full power of substitution, as Proxies for the undersigned to vote, as indicated
below, at the Annual Meeting of Stockholders of The FINOVA Group Inc. (the
"Corporation") to be held on Thursday, May 11, 1995, and at any adjournment or
adjournments thereof, all shares of stock which the undersigned is entitled to
vote, with all voting rights the undersigned would have if personally present.
This card also provides voting instructions (for shares held for the account of
the undersigned, if any) to the respective trustees of the Corporation's Savings
Plan and Employee Stock Ownership Plan and The Dial Corp 401(k) plans.
PLEASE COMPLETE, DATE AND SIGN ON REVERSE SIDE AND
RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE
PLEASE MARK VOTE IN OVAL
IN THE FOLLOWING MANNER USING DARK INK ONLY.
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no marking is made, this proxy will be
deemed to be a direction to vote FOR proposals 1, 2 and 3, unless otherwise
determined by the Board of Directors or the Proxies.
The Board of Directors recommends a vote FOR:
1. Election of directors whose terms expire in 1998:
Samuel L. Eichenfield, James L. Johnson, John W. Teets.
FOR ALL
FOR WITHHOLD EXCEPT
/ / / / / /
- ----------------------------------------
Nominee Exception
2. Amendment of the Corporation's 1992 Stock Incentive Plan to
increase the annual grant of options to non-employee directors
to 1,500 shares.
FOR AGAINST ABSTAIN
/ / / / / /
3. Ratification of the appointment of Deloitte & Touche LLP as
the independent auditors of the Corporation for 1995.
FOR AGAINST ABSTAIN
/ / / / / /
Please sign exactly as name appears at
left. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, please
sign in full corporate name by president
or other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
Dated , 1995
----------------------------
Signature
-------------------------------------------------------
Signature
-------------------------------------------------------
(Please mark address changes above.)
/ / MULTIPLE STOCKHOLDER PUBLICATIONS. Please check here to stop
mailings of stockholder publications for this account, since
multiple copies come to this address.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
