SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
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THE FINOVA GROUP INC.
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<PAGE>
The FINOVA Group Inc.
1850 N. Central Avenue
P.O. Box 2209
Phoenix, Arizona 85002-2209
SAMUEL L. EICHENFIELD
Chairman, President
and Chief Executive Officer
Dear Shareholders:
You are cordially invited to attend the 1997 Annual Shareholders Meeting. The
meeting will be held on Thursday, May 8, 1997, in the 12th Floor Auditorium,
Citibank Building, 399 Park Avenue, New York, N.Y. 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.
Directors and officers are expected to be available before and after the
meeting to speak with you. During the meeting, we will answer your questions
regarding our business affairs and will consider the matters explained in the
Notice and Proxy Statement that 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. Eichenfield
<PAGE>
NOTICE OF ANNUAL SHAREHOLDERS MEETING
MARCH 28, 1997
TO THE HOLDERS OF COMMON STOCK OF
THE FINOVA GROUP INC.
We will hold the Annual Shareholders Meeting of The FINOVA Group Inc., a
Delaware corporation ("FINOVA") in the 12th Floor Auditorium, Citibank Building,
399 Park Avenue, New York, NY 10043, on Thursday, May 8, 1997, at 9:00 a.m.,
Eastern Daylight Savings Time. The meeting's purpose is to:
1. Elect 2 directors;
2. Amend FINOVA's 1992 Stock Incentive Plan;
3. Ratify Deloitte & Touche LLP as FINOVA's independent auditors for 1997;
and
4. Consider any other matters which properly come before the meeting and any
adjournments.
Only shareholders of record of common stock at the opening of business on
March 10, 1997 are entitled to receive notice of and to vote at the meeting. A
list of the shareholders entitled to vote will be available for examination at
the meeting by any shareholder 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
our principal executive office, 1850 Central Avenue, P.O. Box 2209, Phoenix,
Arizona 85002-2209.
We have enclosed the 1996 Annual Report, including financial statements, and
the Proxy Statement with this Notice of Annual Meeting.
To assure your representation at the meeting, please vote, sign and mail the
enclosed proxy as soon as possible. We have enclosed a return envelope, which
requires no postage if mailed in the United States, for that purpose. Your proxy
is being solicited by the Board of Directors.
W.J. HALLINAN
Senior Vice President-
General Counsel and Secretary
PLEASE VOTE-YOUR VOTE IS IMPORTANT
<PAGE>
The FINOVA Group Inc.
1850 N. Central Avenue
P.O. Box 2209
Phoenix, Arizona 85002-2209
ANNUAL SHAREHOLDERS MEETING
PROXY STATEMENT
Annual May 8, 1997 Citibank Building
Meeting: 9:00 a.m., EDT 12th Floor Auditorium
399 Park Avenue
The meeting is in New York, NY 10043
New York, N.Y. this
year.
Record Date: 8:00 a.m., EDT, March 10, 1997. If you were a
shareholder at that time, you may vote at the
meeting. Each share is entitled to one vote. You may
not cumulate votes. On the record date, we had
27,349,071 shares of our common stock outstanding.
Agenda: 1. Elect 2 directors.
2. Approve the 1992 Stock Incentive Plan amendments.
3. Ratify the selection of Deloitte & Touche LLP as
our independent auditors for 1997.
4. Any other proper business.
Proxies: Unless you tell us on the proxy card to vote
differently, we will vote signed returned proxies
We will follow your "for" the Board's nominees and "for" agenda items 2
voting instructions. and 3. The Board or proxy holders will use their
If none, we will discretion on other matters. If a nominee cannot or
vote signed proxies will not serve as a director, the Board or proxy
for the proposals. holders will vote for a person whom they believe
will carry on our present policies.
Proxies The Board of Directors.
Solicited By:
First Mailing We anticipate first mailing this proxy statement on
Date: March 31, 1997.
Revoking You may revoke your proxy before it is voted at the
Your Proxy: meeting. To revoke:
You can change o Deliver a signed, written revocation letter, dated
your mind after later than the proxy, to W.J. Hallinan, Secretary,
sending in a proxy, at our Phoenix address listed above;
until the meeting,
by following these o Deliver a signed proxy, dated later than the first
procedures. one, to Harris Trust & Savings Bank, 311 W. Monroe
St., P.O. Box A3800, Chicago, IL 60690-9608; or
o Attend the meeting and vote in person or by proxy.
Attending the meeting alone will not revoke your
proxy.
Proxy Beacon Hill Partners, Inc. will help us solicit
Solicitation: proxies at a cost of $3,500 plus their expenses. Our
employees may also solicit proxies for no additional
compensation. We will reimburse banks, brokers,
custodians, nominees and fiduciaries for reasonable
expenses they incur in sending these proxy materials
to you if you are a beneficial holder of our shares.
Your Your comments about any aspects of our business are
Comments: welcome. You may use the space provided on the proxy
card for this purpose, if desired. Although we may
We welcome your not respond on an individual basis, your comments
comments. The help us to benefit from your suggestions and measure
proxy card has your satisfaction.
room for them.
PLEASE VOTE - YOUR VOTE IS IMPORTANT PROMPT RETURN OF YOUR
PROXY WILL HELP REDUCE THE COSTS OF RESOLICITATION.
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
<S> <C> <C>
General Information ..............................................1
*Election of Directors ............................................2
Human Resources Committee Report on Executive Compensation(1) ....5
Performance Graph(1) .............................................10
Executive Compensation and Other Information .....................10
*We expect to vote Employment Agreements ............................................15
on these items at Compensation Committee Interlocks and Insider Participation .....17
the meeting. Section 16(a) Beneficial Ownership Reporting Compliance .........18
*Amendment to 1992 Stock Incentive Plan ...........................18
*Selection of Independent Auditors ................................24
FINOVA Share Ownership ...........................................25
Voting Procedures ................................................27
Submission of Stockholder Proposals ..............................27
Other Business ...................................................28
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(1) The Human Resources Committee report and the performance graph
will not be incorporated by reference into any present or future
filings we make with the SEC, even if those reports incorporate all
or any part of this proxy statement.
</TABLE>
ELECTION OF DIRECTORS
Board Two of the current directors, L. Gene Lemon and
Structure: Robert P. Straetz, will retire at this annual
meeting. Only one position will be filled for a
The Board will succeeding term. The Board reduced the size of the
have 7 members Board to seven members starting immediately after
when Messrs. the annual meeting. The directors are divided into
Lemon and Straetz three classes. At each annual meeting, the term of
retire. one class expires. Directors in each class serve for
three year terms.
BOARD NOMINEES
Terms Expire Robert H. Clark, Jr. Chief Executive Officer since
at the 2000 1993, President since 1983
Annual and a director since 1968 of
Meeting: Case, Pomeroy & Co., Inc.
(mining, oil & gas and real
We urge you to estate). Also a director of
vote for Mr. Clark Homestake Mining Company.
and Mrs. Tancer. Board nominee. Age 56.
Shoshana B. Tancer Professor of International
Studies for more than 5 years
and Director of the North
American Free Trade Agreement
Center since 1993 of the
American Graduate School of
International Management.
Also, of-counsel to the law
firm of O'Connor, Cavanagh,
Anderson, Killingsworth &
Beshears since 1992.
Previously operated Tancer
Law Offices 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. Board member
since 1994. Age 61.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THESE NOMINEES.
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CONTINUING DIRECTORS
Samuel L. Eichenfield Chairman, President and Chief
Executive Officer of FINOVA
Terms Expire for more than five years.
at the 1998 Also, Chairman, President and
Annual Meeting: Chief Executive Officer of
FINOVA Capital Corporation,
the principal operating
subsidiary of FINOVA, for
more than five years. Board
member since 1992. Age 60.
James L. Johnson Chairman Emeritus and a
director of GTE Corporation
(a diversified
telecommunications company)
since 1993. Before that he
was its Chairman and Chief
Executive Officer. Trustee of
Mutual Life Insurance Company
of New York and a director of
Harte/Hanks Communications
Co., Inc., Cell Star
Corporation, Valero Energy
Corporation and Walter
Industries, Inc. Board member
since 1992. Age 69.
John W. Teets Chairman and Chief Executive
Officer of J.W. Teets
Enterprises, L.L.C., since
1997. Formerly, the Chairman
and Chief Executive Officer
or similar positions, and
currently a director, of Viad
Corp, formerly The Dial Corp,
for more than 5 years. Board
member since 1992. Age 63.
Terms Expire G. Robert Durham Retired Chairman and Chief
at the 1999 Executive Officer of Walter
Annual Industries, Inc. (a
Meeting: homebuilding and financing,
building materials, natural
resources and industrial
manufacturing company) active
from 1991 to 1996. Former
Chairman, President and Chief
Executive Officer of Phelps
Dodge Corporation (a mining
company). Director of
Homestake Mining Company, and
a trustee of Mutual Life
Insurance Company of New
York. Board member since
1992. Age 68.
Kenneth R. Smith Professor of Economics since
1980. Dean of the Karl Eller
Graduate School of Management
and the College of Business
and Public Administration
from 1980 to 1995 and Vice
Provost of the University of
Arizona from 1992 to 1995.
Former director of Southwest
Gas Corporation. Board member
since 1992. Age 54.
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BOARD INFORMATION
Board In 1996, the Board held a total of 8 regular
Meetings: quarterly and special meetings. Each director
attended at least 75% of his or her Board and
committee meetings.
Board THE EXECUTIVE COMMITTEE exercises all the powers of
Committees: the Board when the Board is not in session, as
permitted by law. The Executive Committee held 1
meeting and reviewed a number of transactions
without a meeting last year. Members: Mr.
Eichenfield, Chairman, and Messrs. Durham, Johnson,
Straetz and Teets.
THE AUDIT COMMITTEE recommends appointment of the
Company's independent auditors. It also approves
audit reports and plans, accounting policies,
financial statements, internal audit reports,
internal controls, Ethics Committee actions, audit
fees and certain other expenses. The Audit Committee
held 4 meetings in 1996. All members are
non-employee directors, except Mr. Eichenfield, who
does not vote on Audit Committee matters. Members:
Mr. Smith, Chairman, Mrs. Tancer, and Messrs. Lemon,
Straetz and Eichenfield (non-voting).
THE HUMAN RESOURCES COMMITTEE (formerly, the
Executive Compensation Committee) manages executive
officer compensation. It also administers our
compensation and incentive plans, including the 1992
Stock Incentive Plan. The committee delegated to Mr.
Eichenfield the authority to set compensation for
non-executive officers, subject to the committee's
supervision. The committee evaluates the
competitiveness of FINOVA's compensation and the
performance of the Chief Executive Officer. It held
5 regular and special meetings in 1996. All members
of the committee are non-employee directors.
Members: Mr. Durham, Chairman, and Messrs. Johnson,
Straetz and Teets.
The Board does not have a nominating committee. The
entire Board performs those duties.
BOARD COMPENSATION
Retainer Non-employee directors receive a $25,000 annual
and Fees: retainer. To encourage directors to own our shares,
they may elect to receive their retainer in cash,
Directors may elect restricted stock or stock options. The director
to receive their generally cannot transfer the restricted stock and
retainer in cash, the options do not vest (become exercisable) until
shares or options. the day before the next annual meeting of
shareholders. If the director stops being a Board
member before that date, the director forfeits that
stock or options, with certain exceptions. Directors
also receive $1,500 for each Board, committee or
other meeting attended. We reimburse directors for
any related expenses.
Option Non-employee directors receive options to purchase
Grants: 2,000 shares when they become directors and another
1,500 each year of their term. The exercise price of
the options is the fair market value of our shares
on the grant date. Directors, like all our
employees, may also purchase our shares at the
then-current market price without payment of
commissions, through the Employee Stock Purchase
Program.
Deferred Non-employee directors may defer all or part of
Compensation their retainer and fees under the Directors'
Plan: Deferred Compensation Plan. Deferred amounts earn
interest at a long-term medium quality industrial
bond rate in effect each quarter. The director may
generally determine when the funds are to be paid.
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Retirement Non-employee directors participate in the Directors'
Plan: Retirement Benefit Plan. If a director is at least
62 on his or her retirement date and has at least 5
years of service on the Board, the Company will pay
the director a pension equal to the retainer in
effect on the retirement date. That pension will
continue for the number of years the director served
on the Board or lives, whichever is less.
Charitable As part of our overall support for charities, and to
Awards help attract directors with outstanding experience
Program: and ability, the Board implemented the Directors'
Charitable Awards Program. It enables each director
to contribute $100,000 per year for 10 years to a
charity or foundation selected by the director upon
his or her death. To fund the program, we purchase,
at minimal cost, life insurance on each eligible
director, payable to FINOVA as beneficiary.
HUMAN RESOURCES COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The The Human Resources Committee (formerly known as the
Committee: Executive Compensation Committee) is comprised only
of independent directors. The committee exercises
the Board's powers in compensating executive
officers of FINOVA and its subsidiaries. We
administer FINOVA's incentive plans, including the
1992 Stock Incentive Plan. We ask you to approve the
amendments to that plan at this year's annual
meeting. That plan helps us to attract, retain and
motivate all of our employees and to align their
efforts with increases in shareholder value and
FINOVA's profitability. We make every effort to
assure our compensation program is consistent with
FINOVA's values and furthers its business strategy.
Overall We have developed a compensation program for
Objectives: executives and key employees designed to meet the
following goals:
* Reward performance that increases the value of
your stock.
* Attract, retain and motivate executives and key
employees with competitive compensation
opportunities.
* Emphasize "pay for performance" by placing a large
portion of pay at risk.
* Build and encourage ownership of our shares.
* Balance short-term and long-term strategic goals.
* Address the concerns of shareholders, employees,
the financial community and the general public.
To meet the objectives, we studied competitive
compensation data and implemented the base salary
and annual and long-term incentive programs
discussed below.
Executive We review executives' pay each year. Compensation
Compensation depends on many factors, including individual
Generally: performance and responsibilities, future challenges
and objectives, and how he or she might contribute
to our future success. We also look at FINOVA's
financial performance and the compensation levels at
comparable companies.
Our independent compensation consultants, Hewitt
Associates LLC, prepared competitive studies of our
executive compensation program. They compared FINOVA
to 17 similar financial services companies. The
Standard & Poor's Financial Index includes slightly
over one-third of those companies or their parent
corporations. We use that index to set our
performance criteria for our Management Incentive
Plan
5
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and performance-based restricted stock awards. We
used the 17 companies for our salary comparisons,
rather than the broader index, because we believe
the 17 more closely reflect our competitors for
executive talent.
Total In 1996, we set targeted salaries around the average
Compensation: and total compensation levels for the executives at
or above the top 25% of the compensation at the
We tie a large % of other similar companies, adjusted in light of
our pay to FINOVA's and the executive's performance. Our
performance, such primary objective is to place more compensation at
as increasing risk in the form of short-term and long-term
share price. compensation than our competitors, on average. Doing
so helps encourage performance that increases the
value of your shares. As a result, maximum
performance warrants additional rewards.
In each of the past four years, we set the target,
minimum and maximum performance levels for our
annual and long-term incentive plans substantially
above not only the prior year's target goals, but
also above the prior year's actual performance,
which exceeded those targets. Doing so motivates the
officers to encourage future growth and keeps the
goals challenging. FINOVA has repeatedly exceeded
our aggressive increases in performance objectives,
and 1996 was no exception.
Base Salary: We adjusted the base salary levels for our
executives, other than Mr. Eichenfield, to just over
the average base salary of the other companies. We
set those levels after considering the factors noted
above.
Annual Our cash bonus plan, the Management Incentive Plan
Incentives: ("MIP"), rewards key employees for meeting
challenging annual goals. We establish MIP target
awards for each participant as a percentage of
salary, generally 40-55% for the executives whose
names appear in this proxy statement's Summary
Compensation Table. We can adjust those awards based
on individual and corporate performance, resulting
in an award of between 0-200% of the target. We
retain discretion to make awards regardless of
performance.
In 1996, despite reaching maximum overall
performance, we accepted management's recommendation
to voluntarily reduce the awards under the FINOVA
and FINOVA Capital MIPs, since each company missed
one of its maximum targets, discussed below. We
authorized awards for both plans at 180% of target,
although some executives were paid at higher
individual levels based on their performance and
that of their division.
FINOVA's 1996 performance goals and their relative
importance for plan purposes were earnings per share
(30%), net income (30%), return on equity (30%) and
relative shareholder performance (10%). We
determined final awards after receiving
recommendations from the Chief Executive Officer. In
1996, FINOVA's overall performance exceeded each of
the maximum performance targets established, except
that our earnings per share were slightly below the
maximum target, due in part to more shares
outstanding.
The MIP for most of our employees is based on FINOVA
Capital's performance. Those goals for 1996 were:
net income (40%), return on equity (40%) and average
funds employed (20%). FINOVA Capital's overall
performance in 1996 exceeded each of the maximum
performance targets except for average funds
employed, which were slightly below maximum.
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Long-Term We provide long-term incentives through stock
Incentives: options, performance-based restricted stock, the
Performance Share Incentive Plans and the CEO Value
Sharing Plan, discussed below. These plans help
focus top management on specific long-term goals and
link their incentives to increases in our share
price.
Options give executives an opportunity to buy our
shares. We grant options to executives only at or
above the current market price on the grant date. As
We grant options a result, the options have value only to the extent
only at or above the share price increases. The options to employees
the current market exempt from the overtime pay laws generally vest
price of our shares. over at least 3 years from the grant date. We make
every effort to balance the dilution to shareholders
with the motivation for the employees.
We awarded multi-priced option grants to some of our
key officers in 1996. The exercise price of the
first portion is at the fair market value on the
grant date. The second portion's exercise price is
12 1/2 % over the grant date price. The final
portion's exercise price is 26 1/2 % over the grant
date price. Those premiums require management to
create increasing value for your shares before they
can realize any value from their options.
Although we could grant restricted stock to
executives that, for example, might vest with the
mere passage of time or continued employment, we
have chosen since mid-1992 to grant only
Restricted stock to performance-based restricted shares that have more
employees stringent performance goals. Those goals require
requires that we that FINOVA perform at least as well as the market
equal or before that year's portion of the award vests.
outperform the Because those grants vest over 5 years, the awards
market. help retain and motivate executives during that
period and so long as they hold those shares
afterwards. While we have discretion to waive
performance requirements, we did not do so in 1996.
The Performance Share Incentive Plans ("PSIPS")
focus management on long-term goals other than share
price appreciation. For the 1996-98 FINOVA PSIP,
those goals relate to earnings per share and return
on equity. FINOVA Capital's 1996-98 PSIP goals are
return on equity and net income. The goals are
equally weighted in both plans. PSIPs measure
performance over 3 years.
We base the number of PSIP shares awarded as a
percentage of the person's base salary. We divided
that percentage (between 30 and 60% for the officers
identified in the Summary Compensation Table) by the
December 1995 average share price when we granted
the awards. Final awards are paid at FINOVA's share
price when the PSIPs vest, creating an incentive to
seek further increases in our share price. We review
final award sizes and eligibility and can adjust
payments within specified amounts if we believe
circumstances warrant a change.
Awards to those who manage our lending divisions
depend on both the performance of FINOVA Capital
(25%) and their particular business unit (75%). In
that way, we link their incentive compensation to
overall and divisional performance. FINOVA, FINOVA
Capital and the officers named in this proxy
statement exceeded the maximum performance targets
for the 1994-96 PSIP.
We established the long-term grants noted above
after reviewing competitive data supplied by Hewitt
Associates LLC, our past practice, the terms of
employment agreements, and recommendations of senior
management.
7
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Stock To help address the overall objectives of our
Ownership compensation program, the Board adopted FINOVA stock
Guidelines: ownership guidelines for senior management and
directors. Persons subject to the guidelines are
We encourage our encouraged to assure that their ownership of our
directors and shares and options reaches and remains at or above
senior targeted levels. The levels depend on the person's
management to level of responsibility and compensation. If the
own our shares person violates the guidelines, we have discretion
through these to withhold or reduce future stock or option awards
guidelines. to the executive. We reviewed current holdings of
the executives during 1996. The officers named in
this proxy statement were each at or above their
individual targets under the plan based on their
position and length of service.
Tax Code Section 162(m) of the Internal Revenue Code
Concerns: disallows the corporate income tax deduction on
executive compensation paid to certain executives in
We urge you to excess of $1 million per year, unless that income
vote for the meets permitted exceptions. One exception is if the
amendments to the pay is based on performance, under stringent tests
1992 Stock established by that section. The proposed amendments
Incentive Plan, to to the 1992 Stock Incentive Plan are intended to
preserve certain qualify that plan under Section 162(m), but the
tax deductions. shareholders must approve those amendments at this
annual meeting if we are to rely on the exemption.
Awards under the existing plan to date have been
exempt under transitional rules that expire at this
annual shareholders meeting. Therefore, we urge you
to vote in favor of the proposed amendments, so that
we may continue to use this plan and receive a tax
deduction on its awards.
After reviewing relevant information, including
competitive data provided by Hewitt Associates LLC,
we decided to qualify our 1992 Stock Incentive Plan
for exemption under Section 162(m). We also agreed
to amend the CEO Value Sharing Plan so amounts
payable under it after 1996 could qualify for
exemption under that section. For our other
long-term performance plans established in recent
years, compliance with Section 162(m) would
eliminate our flexibility to adjust the plans if
FINOVA's business incurred a significant change. Our
experience since FINOVA became independently owned
demonstrates the advantages of having that
flexibility to continue to motivate and reward our
key personnel. Thus, FINOVA will forego the
exemption to the extent compensation paid under
those plans exceeds the threshold. We will review
our position from time to time in the future.
Stock Option FINOVA has been a leader in granting stock options
Program: to all of its employees since 1992. Each new full
time employee, including employees of acquired
All of our full time companies, receives options at the end of his or her
employees receive first quarter with FINOVA. In addition, we grant
stock options. awards from time to time to all employees. We did so
in November 1996, excluding executives and senior
level employees, in light of FINOVA's continuing
strong performance. Non-executive officer employees
received options to purchase a total of 480,650
shares in 1996. Those grants constituted about 95%
of the options granted last year. These grants help
motivate outstanding performance by all our
employees, and encourage everyone at FINOVA, not
just executives, to increase the value of FINOVA
shares.
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CEO We set Mr. Eichenfield's total compensation based on
Compensation: FINOVA's outstanding performance, his individual
performance, compensation levels at other companies,
Mr. Eichenfield's the desire to retain him and the terms of his
pay reflects the employment agreement. His salary and incentives
leadership, vision reflect the leadership, vision and focus he has
and focus he has provided since we became independently owned.
provided. FINOVA's earnings have reached new records each year
since that time. Net income increased to $117
million in 1996 from $97.6 million in 1995. Earnings
per share increased to $4.17 from $3.51 during that
time. The market value of our shares increased to
more than $2 billion from just over $435 million
when we became independently owned.
At the same time, Mr. Eichenfield has positioned
FINOVA for future success. New business from
continuing operations during 1996 resulted in a 16%
growth in our managed assets (our financing
contracts plus those we manage for others).
Non-performing assets from continuing operations
declined yet again as a percentage of managed
assets, finishing 1996 at 2.0% of managed assets. In
addition, he helped sell our Manufacturer & Dealers'
Services division on favorable terms, freeing
capital for use in more productive endeavors.
We reviewed the above factors, to the extent known
at the time of our determination, when we decided to
target Mr. Eichenfield's total compensation
substantially above the top 25% level of chief
executives of the other companies. His base salary
is at the top 25% level of his peers.
As discussed above, the majority of Mr.
Eichenfield's compensation is placed at risk,
Most of his pay is because it is tied to performance goals, including
tied to performance. our share price. His peers generally have less pay
at risk. Mr. Eichenfield received the first payment
under the CEO Value Sharing Plan contained in his
employment agreement. Under that plan, he will
receive a small portion of increases in the value of
your shares if FINOVA's share price reaches certain
hurdles. FINOVA reached the first hurdle ($55/share)
in 1996, resulting in a payment to him, discussed in
"Employment Agreements -- Mr. Eichenfield" below.
In 1996, we amended Mr. Eichenfield's employment
agreement to provide that he may elect to defer
future payments under that plan until after his
retirement. He deferred amounts payable on reaching
the second hurdle ($70/share), which was reached in
early 1997. Income on deferred amounts will be based
on the performance of specified investment funds
until he retires.
We believe Mr. Eichenfield has provided outstanding
service to FINOVA. We will work with him to assure
the executive compensation program meets our
strategic goals as well as the overall objectives
discussed above.
G. Robert Durham, Chairman
James L. Johnson
Robert P. Straetz
John W. Teets
Members, Human Resources Committee
9
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PERFORMANCE GRAPH
Comparison of Cumulative Total Return Among
FINOVA, Standard & Poors 500 Index and S&P Financial Index(1)
3/19/92 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 3/10/97
FINOVA $100.00 $108.74 $135.98 $152.24 $236.33 $319.85 $391.05
S&P FINANCIAL $100.00 $120.63 $133.94 $129.30 $198.93 $268.75 $321.83(e)
S&P 500 $100.00 $109.38 $119.65 $121.27 $166.64 $204.75 $225.91(e)
(1) Assumes $100 invested on March 19, 1992 and
dividends reinvested. Historical performance does not
necessarily predict future results. 1997 performance for
the S&P 500 and S&P Financial Indicies assumes dividends
paid at the same rate as for the fourth quarter of 1996.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of The following table summarizes the compensation we
Compensation: paid the Chairman, President and Chief Executive
Officer and each of the four other most highly
1996 pay reflects compensated executive officers, based on salary and
FINOVA's strong Management Incentive Plan bonus for 1996, as of the
performance. end of 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
- ---------------------------------------------------------------- --------------------------- ------------
PERFORMANCE- SECURITIES
OTHER BASED UNDERLYING ALL
ANNUAL RESTRICTED OPTIONS/ OTHER
NAME AND COMPEN- STOCK SARS LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY(1) BONUS(1)(2) SATION(3) AWARDS(4)(5) (#)(5) PAYOUTS SATION(6)
- ----------------------- ------- ---------- ---------- ---------- -------------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Samuel L. Eichenfield 1996 $553,500 $547,965 $178,193 $906,044 $4,355,750 $9,000
Chairman, President and 1995 519,834 557,522 340,901 697,870 1,024,290 9,000
Chief Executive Officer 1994 460,790 496,705 245,931 553,715 701,440 9,000
William J. Hallinan 1996 269,500 194,040 53,099 177,455 2,900 445,198 9,000
Senior Vice President -- 1995 254,072 190,046 87,379 85,145 378,195 9,000
General Counsel & 1994 238,850 174,513 114,347 59,278 258,560 5,544
Secretary
Gregory C. Smalis 1996 217,333 156,480 173,144 235,256 9,000
Group Vice President -- 1995 204,675 153,097 82,233 115,235 9,000
Portfolio Management 1994 168,705 123,229 59,278 12,000 3,960
FINOVA Capital Corp.
Martin G. Roth 1996 201,000 160,800 160,874 500 275,772 9,000
Group Vice President -- 1995 189,505 147,814 73,945 500 9,000
Transportation Finance/ 1994 186,878 145,328 59,278 12,000 5,218
Capital Services
FINOVA Capital Corp.
Thomas C. Parrinello 1996 222,833 104,286 136,549 306,790 9,000
Group Vice President -- 1995 210,000 105,000 58,125 9,000
Factoring Services 1994* 172,519 120,189 59,278 12,500
FINOVA Capital Corp.
</TABLE>
10
<PAGE>
* Reported compensation is for the full fiscal
year, except for Mr. Parrinello, whose 1994
income is from his engagement on February 14,
1994.
(1) Includes deferred compensation, if any.
(2) Bonus payments depend on both FINOVA's and
individual performance. No bonus is paid
unless we achieve set performance levels,
except for $15,000 of Mr. Parrinello's 1994
bonus.
(3) Includes personal benefits we paid, including
tax gross up payments in 1996 of $137,893 to
Mr. Eichenfield and $44,514 to Mr. Hallinan.
(4) The number of shares to vest depends on our
share price and dividend performance during
each of the five years after the grant date,
compared to either the S&P 500 or S&P
Financial indices. Performance-based
restricted stock ("PBRS") awards are valued in
the table at the fair market value of our
unrestricted shares at the grant date (for
initial grants) and vesting date (for shares
vesting above target). Those values have not
been reduced for any performance requirements
or transfer restrictions.
On April 1, 1992, each officer named above
other than Mr. Parrinello received 1,000
target shares of PBRS, which vest over 5
years. If we match the performance of the S&P
500 Index, the target award for that year (200
shares) will vest. If we do not, then only 100
shares vest. If we outperform that index, then
the executives will receive up to 1.7 times
that target award for the year. Thus, those
officers can receive between 500 and 1,700
shares under that award. We have achieved
maximum performance in each year through 1996.
FINOVA pays the taxes due on the vesting of
those awards for Messrs. Eichenfield and
Hallinan.
All remaining shares of PBRS granted by FINOVA
vest over 5 years. If our performance equals
the lesser of the S&P 500 or S&P Financial
indices, the target amount vests for that
year. If we do not at least match one of
those, then the person forfeits that year's
award of 20% of the shares to FINOVA.
Performance in excess of the lower index
results in vestings of up to 1.7 times that
year's target award. Mr. Eichenfield received
the following PBRS target grants in 1996, 1995
and 1994: 12,000, 15,000, and 15,000 shares.
In those years, the other officers named above
each received 2,400, 1,500, and 1,500 shares
of PBRS. FINOVA achieved maximum performance
levels under the PBRS awards reflected in the
table, due to our shares' performance, so the
maximum additional vestings occurred.
Of the 1996 PBRS awards noted above, those
grants included 2,000 "premium" PBRS shares
granted to Mr. Eichenfield and 400 to the
other officers named above as part of our
Stock Retention Incentive Program. That
program encourages executives to increase
their share ownership by not selling shares to
pay the taxes due when PBRS shares vest. If
the participant does not sell any shares to
pay the taxes, we will increase the next
year's grant to the person by 20% over the
amount we would otherwise have given. FINOVA
will also pay the taxes due on the vesting of
those premium shares.
(Footnotes continued on next page)
11
<PAGE>
(Footnotes continued from previous page)
The committee has discretion to amend the
terms of the PBRS grants to conform to changes
in the tax laws or otherwise. Holders of PBRS
receive dividends on and may vote the target
shares before they vest.
(5) The total number of target restricted shares
held by each officer named above, all of which
are PBRS, and their value based on our share
price at December 31, 1996 were: Mr.
Eichenfield - 51,200 ($3,289,600); Mr.
Hallinan - 7,700 ($494,725); Mr. Smalis -
7,440 ($478,020); Mr. Roth, 6,500 ($417,625);
and Mr. Parrinello - 5,100 ($327,675).
(6) Matching payments made by FINOVA under the
Employee Stock Ownership Plan or Savings Plan.
Stock The following table lists our grants during 1996 of
Options and stock options and tandem stock appreciation rights
Stock ("SAR'S") to the officers named in the Summary
Appreciation Compensation Table. The amounts shown as potential
Rights: realizable values rely on arbitrarily assumed rates
of share price appreciation prescribed by the SEC.
In assessing those values, please note that the
Options only have ultimate value of the options, as well as your
value if our share shares, depends on actual future share values.
price increases. Market conditions and the efforts of the directors,
the officers and others to foster the future success
of FINOVA can influence those future share values.
The potential realizable values for all shareholders
represents the corresponding increases in the value
of outstanding shares, assuming 28 million shares
were outstanding. Annual appreciation at 5% from the
grant date would increase the market value of all
outstanding shares by $919 million, and 10% annual
appreciation would increase it by more than $2.3
billion over the 10 year option term.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTION/SARS ASSUMED ANNUAL RATES OF SHARE PRICE
UNDERLYING GRANTED TO EXERCISE OR APPRECIATION FOR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------------------
NAME GRANTED(1)(2) FISCAL YEAR ($/SHARE)(2) DATE 5% 10%
- ----------------- -------------- -------------- ------------- ------------ -------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
All Shareholders' If Shares at $85.01: If at $135.36:
Share $918,960,000 $2,328,760,000
Appreciation
Mr. Roth 500 0.1% $52.1875 2/8/06 16,410 41,857
All Shareholders' If Shares at $85.92: If at $136.82:
Share $928,760,000 $2,353,960,000
Appreciation
Mr. Hallinan 986 0.2% 52.75 8/7/06 32,710 82,893
957 0.2% 59.3437 8/7/06 25,438 74,145
957 0.2% 66.7288 8/7/06 18,370 67,077
(1) The options vest 34% after 1 year and 33% after
each of years 2 and 3. Mr. Hallinan's awards
were a multi-priced grant with increasing
exercise prices for the later vestings. All
options have limited stock appreciation rights
exercisable within 60 days after a change in
control, subject to earlier expiration upon
certain events. The limited SARs entitle the
person to receive, if desired, the difference
between the then-current market value and the
exercise price. In the aggregate, the option
holders can exercise options or SARs equal to
the number of options granted.
</TABLE>
12
<PAGE>
(2) The listed options are all non-qualified
options. The holder can pay the exercise price
and tax withholding obligations with already
owned shares.
1996 Option The following table lists the number of shares
and SAR acquired and the value realized as a result of
Holdings: option exercises during 1996 for the listed
officers. It also includes the number and value of
their exercisable and non-exercisable options and
SARs as of December 31, 1996. The table contains
values for "in the money" options, meaning the
spread between the year-end share price of $64.25
and the exercise price. These values have not been,
and may never be realized. The options might never
be exercised, and the value, if any, will depend on
the share price on the exercise date.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDER- VALUE OF UNEXERCISED
LYING UNEXERCISED OPTION/ IN-THE-MONEY OPTIONS/
SHARES SARS AT FISCAL YEAR-END SARS AT FISCAL YEAR-END
ACQUIRED ON VALUE ----------------------------- -----------------------------
NAME EXERCISE (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------- ------------- ---------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Eichenfield 12,870 $414,543 217,667 70,000 $13,849,062 $4,453,750
Mr. Hallinan 2,165 97,518 40,499 11,900 2,576,749 757,138
Mr. Smalis 22,050 3,440 1,402,931 218,870
Mr. Roth 2,000 105,975 21,147 8,030 1,345,478 510,909
Mr. Parrinello 5,135 7,365 326,714 468,598
</TABLE>
Long-Term As noted above in the Human Resources committee's
Incentive report, the Performance Share Incentive Plans
Compensation: ("PSIP'S") compensate executives for helping us
achieve sustained performance goals and encourage
The long-term their continued efforts on our behalf. The 1996-98
plans encourage PSIP measures increases in earnings per share and
sustained return on equity. FINOVA Capital's 1996-98 PSIP
performance. measures return on equity and net income.
Achievement is based on 3 year average performance.
Because payouts are tied, in part, to share price,
the PSIPs also encourage participants to seek share
price appreciation.
LONG-TERM INCENTIVE PLANS -- AWARDS
IN LAST FISCAL YEAR
ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE NON-STOCK PRICE-BASED PLANS
PERIOD UNTIL ------------------------------
NUMBER OF MATURATION THRESHOLD TARGET MAXIMUM
NAME UNITS(1)(2) OR PAYOUT (#) (#) (#)
--------------- ----------- -------------- ----------- -------- ---------
Mr. Eichenfield 6,865 1998 0 6,865 13,730
Mr. Hallinan 2,236 1998 0 2,236 4,472
Mr. Smalis 1,352 1998 0 1,352 2,704
Mr. Roth 1,251 1998 0 1,251 2,502
Mr. Parrinello 1,368 1998 0 1,368 2,736
13
<PAGE>
(1) Recipients forfeit the awards unless performance
reaches a minimum level, generally 95% of the
target. They may receive up to 200% of the
target for maximum performance, generally 110%
of the target. Intermediate performance is
prorated. We based the target shares awarded on
the average share price for December 1995 of
$47.50. The award, if any, is paid in cash at
the average share prices each day of the last
month of the performance period multiplied by
the number of share units awarded.
(2) The Human Resources Committee has discretion to
adjust the target and maximum awards based on
performance factors and circumstances it
selects. The targets can be adjusted up or down
within set limits for each participant. Because
adjustments are within the committee's
discretion, the table disregards that
possibility.
Retirement The following table shows the estimated annual
Plans: retirement benefit payable to participants,
including the officers named in this proxy
statement, for the average annual earnings and years
of service indicated. It assumes retirement at age
65. We pay the retirement benefits under FINOVA's
Pension Plan (formerly the Retirement Income Plan)
and the Supplemental Executive Retirement Plan
(formerly the Supplemental Pension Plan) --
participants do not pay for those benefits. Only
certain senior employees participate in the
supplemental plan. The table includes the
supplemental benefit formula.
PENSION PLAN TABLE
ESTIMATED ANNUAL RETIREMENT BENEFITS FOR YEARS OF
SERVICE(2)(3)(4)
AVERAGE ANNUAL -------------------------------------------------
COMPENSATION(1) 15 20 25 30 35(5)
-------------- --------- --------- --------- --------- ---------
$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
1,100,000 288,750 385,000 481,250 577,500 673,750
1,200,000 315,000 420,000 525,000 630,000 735,000
14
<PAGE>
(1) Consists of the employee's average salary and
bonus during the 60 months before retirement.
Salary and bonus for 1994-96 for the officers
named in the Summary Compensation Table is
listed in that table. At year end, the current
average compensation for plan purposes was
$921,712 for Mr. Eichenfield, $369,042 for Mr.
Hallinan, $278,113 for Mr. Smalis, and $305,238
for Mr. Roth.
(2) Years of credited service: Mr. Eichenfield (24),
Mr. Hallinan (24), Mr. Smalis (19), Mr. Roth
(28) and Mr. Parrinello (3). To permit Mr.
Eichenfield to retire at age 65 with the maximum
years of service, he received 5 additional years
of credited service in 1992 and receives 3 years
of service each year thereafter. Mr. Hallinan's
employment agreement assures him retirement
benefits and health insurance equal to those he
would have received from his former employer if
he is terminated before March 1, 1998, actually
or constructively, other than for cause. Those
benefits are reduced by amounts he receives
under our retirement plans and those of the
former employer.
(3) Benefits are computed on a single-life annuity
basis. The benefits under the plan reflect a
reduction to recognize some of the Social
Security benefits expected to be received by the
employee. The plans also provide for the payment
of benefits to an employee's surviving spouse.
The table excludes adjustments for joint and
survivorship provisions, which would reduce the
amounts shown. Benefits generally vest after 5
years of service. The plans provide for reduced
early retirement benefits. Prior plan formulas
provide for different benefits. Employees
accruing benefits under the prior or the prior
and current formulas, and participants accruing
benefits under only the Pension Plan, may
receive benefits different from those listed in
the table above.
(4) Federal law limits the annual benefits which can
be paid from a tax-qualified retirement plan. As
permitted by that law, the supplemental plan
pays benefits above the permitted limits. Some
of those excess benefits are held in a trust,
the assets of which are available to FINOVA's
creditors.
(5) The Pension Plan and the normal supplemental
plan benefit formula limit the years of service
for plan purposes to a maximum of 35 years.
EMPLOYMENT AGREEMENTS
Mr. Mr. Eichenfield has been engaged as the Chairman,
Eichenfield: President and Chief Executive Officer of FINOVA and
of FINOVA Capital. His employment agreement employs
He is hired for at him to serve for a 3 year term and thereafter from
least 3 years. We year to year, unless earlier terminated. His
can terminate him agreement expires on March 16, 1999. We amended the
for cause at any agreement in December 1996 to permit deferral of
time. certain payments to him as noted below. The Board
can terminate him for cause, as defined in the
agreement, at any time. He serves as a member of the
Board, per his agreement, subject to reelection by
the shareholders as appropriate.
Mr. Eichenfield's base compensation currently is
$573,500, subject to adjustment by the Board or the
Human Resources Committee. He participates in our
incentive, retirement, health, and other fringe
benefit programs, as long as those benefits are at
least as favorable as specified minimums. His
participation in awards under the 1992 Stock
Incentive Plan is at the sole discretion of the
Human Resources Committee.
15
<PAGE>
If Mr. Eichenfield is terminated, actually or
constructively, in violation of his agreement, he
would be entitled to receive his base, incentive,
stock-based and change in control compensation and
specified benefits during the remainder of the
agreement, but not less than an amount equal to one
year of service plus the sum of the highest bonus,
stock, Performance Share Incentive Plan and other
performance related payments during the two years
before that termination. He would be entitled to
additional payments discussed below if a
change-in-control occurs. All stock option vestings
and pension plan accruals will continue during those
periods.
Mr. Eichenfield's employment agreement incorporates
a CEO Value Sharing Plan designed to serve as a
retention device and an incentive for creating
significant shareholder value. Those objectives are
supported by sharing with him a portion of the total
shareholder value created. If the average closing
share price for 20 consecutive trading days reaches
the hurdles noted below, Mr. Eichenfield is paid the
specified amounts. Those hurdles equate to the
percentage increases in FINOVA's share price over
the base price of $40/share selected by the Human
Resources Committee. That base price was greater
than the closing price of $38.75 on the date the
plan was adopted. He received the first payout under
that plan in 1996.
% INCREASE % OF TOTAL
SHARE PRICE PAYMENT OVER BASE PRICE SHAREHOLDER VALUE
HURDLES ($MILLIONS) OF FINOVA SHARES CREATED PAID TO CEO
------------- ----------- ---------------- -------------------
$55 $3.15 37.5% 0.75%
70 6.30 75.0% 1.50%
85 9.45 112.5% 2.25%
We amended Mr. Eichenfield's employment agreement to
allow him to defer, at his election, amounts paid
upon reaching the $70 and $85 thresholds noted
above. He elected to defer the $70 threshold
payment, which was earned in 1997. He has not yet
elected with respect to the final hurdle.
Mr. Mr. Hallinan has been engaged as Senior Vice
Hallinan: President -- General Counsel and Secretary. 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 described in the Pension Plan
Table above. His awards of stock, options or similar
awards will also 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 $277,500.
He participates in our incentive, retirement, health
and other fringe benefit programs, as long as the
benefits are at least as favorable as on the date of
the 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 will be paid a lump sum of three times his
highest annual salary plus the largest aggregate
annual incentive payment, pension and other benefits
which he has received during the measurement period.
16
<PAGE>
Executive All officers named in this proxy statement
Severance participate in one of the Corporation's Executive
Plans: Severance Plans (Tier I or Tier II). Those plans
entitle participants to immediate vesting and
exercisability of restricted stock,
performance-based restricted stock, and options if
the Corporation incurs a change in control. The Tier
I plan includes Messrs. Eichenfield and Hallinan. It
entitles them to receive a lump sum payment of 3
times their highest salary, bonus and Performance
Share Incentive Plan payments if they are discharged
without cause or, if specified events occur, 2 times
their salary, bonus and PSIP payments if they
voluntarily leave during a period following a change
in control. The plans provide a tax gross up feature
to cover certain taxes the officer may have to pay
resulting from the plan. Benefits paid are reduced
by other severance benefits paid by FINOVA. The
officer is also credited with enough years of
service to assure vesting under the retirement plans
or the number of years of salary paid under the
severance plan, whichever is less.
Messrs. Smalis, Roth, and Parrinello, along with
others, participate in the Tier II plan, which has
the same terms as described above, except that they
would be paid only a lump sum of 2 times their
highest annual salary, bonus and PSIP payments, and
they cannot require payment if they voluntarily
leave following a change in control. We placed funds
in a trust to pay benefits to certain officers under
the Executive Severance and other plans.
Value Sharing To recognize the significant contributions made to
Plans: FINOVA and its shareholders by executive officers
and key employees, and to reward them in the event
of a change in control, the committee adopted two
change in control Value Sharing Plans. One plan is
for the Chief Executive Officer and one for the
other executive officers and key employees. Both
plans only provide benefits if a change in control
occurs and if shareholder value is created.
Participants other than the CEO will share in a pool
equal to 2.5% of the change in control shareholder
value created. That value generally is the
difference between the acquisition value at the time
of the change in control and the market
capitalization using a base price of $40/share,
which was in excess of the closing price of $38.75
on the day the plans were adopted.
The CEO will be paid 0.75% of the change in control
stockholder value created if the change is for
$55/share or less, 1.5% if it is for $85/share or
more, and is prorated between those amounts for
change in control prices between those share prices.
Payments to Mr. Eichenfield under his employment
agreement Value Sharing Plan will be deducted from
any to be made under this change-in-control CEO
Value Sharing Plan, so that he would not be paid
twice for the same increases in shareholder value.
Payments made under both Value Sharing Plans are
grossed up for certain parachute taxes for
participants who participate in FINOVA's Executive
Severance Plans. Per share values will be adjusted
for certain events such as mergers, reorganizations,
recapitalization, stock dividends or splits.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Dial/Viad: To facilitate the spin-off of FINOVA from The Dial
Corp, we entered into certain contracts with Dial.
Those contracts, most of which are for a limited
duration, provide among other things for the orderly
separation from Dial; the provision by Dial of
certain interim services, including tax services, at
an approximate annual cost of $500,000 in 1996; a
sublease of the space currently used by FINOVA as
its principal executive office, at an approximate
annual rent for the remainder of the term until 2001
of $1.8 million including certain expenses; and the
allocation of certain tax
17
<PAGE>
liabilities and benefits. In 1996, Dial underwent
another spin-off and changed its name to Viad Corp.
Viad retained the obligations under the arrangements
noted above. Two of our directors, Messrs. Teets and
Lemon, have been executive officers and Mr. Teets is
a director of Viad.
Ventana Mr. Smith serves as a director of Ventana
Corporation: Corporation, which markets interactive computer
systems software and services. FINOVA Capital owns
200,000 shares of Ventana's common stock, purchased
before we separated from Dial. Those shares
constitute about 16% of its common stock. In
addition, FINOVA Capital has granted Ventana a
$1,000,000 line of credit, none of which was
outstanding on the Record Date. The line of credit
to Ventana was granted before we separated from
Dial. It was made in the ordinary course of business
on substantially the same terms, including interest
rate 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.
O'Connor The law firm of O'Connor, Cavanagh, Anderson,
Cavanagh: Killingsworth & Beshears has provided certain legal
services to FINOVA on a continuing basis. Mrs.
Tancer is of counsel, but is not an equity owner of,
that firm. The arrangements with that firm are
believed to be competitive with those of other law
firms serving us.
Management To assist officers and key employees in increasing
Indebtedness: their share ownership, we implemented an Executive
Officer Loan Program. Under that program, FINOVA
will loan or will guarantee a loan from an approved
bank to the officer for amounts needed to exercise
stock options and to pay taxes due on those options
or other awards under the 1992 Stock Incentive Plan.
The loans carry a variable rate of interest at the
prime rate less 3/4 of 1%. Interest is due monthly,
and the principal is due in one year, subject to
extension or acceleration at FINOVA's discretion.
Smaller loans are secured with FINOVA shares worth
at least 25% of the value of the loan. Loans above
the officer's salary and prior year's bonus must be
secured 100% with FINOVA shares. Robert M. Korte, an
executive officer of FINOVA, has borrowed $505,875
from FINOVA under this program.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on a review of reports filed by our directors,
executive officers and beneficial holders of 10% or
more of our shares, and upon representations from
those persons, all reports required to be filed by
those reporting persons during 1996 were timely
made.
AMENDMENT TO 1992 STOCK INCENTIVE PLAN
Introduction: We request that you approve the proposed amendments
to the 1992 Stock Incentive Plan discussed below. If
we are to deduct for tax purposes amounts paid under
that plan in excess of $1 million to certain key
executives, our shareholders must approve these
amendments. Loss of that deduction could result in
increased expenses to FINOVA. It could also hurt our
ability to attract and retain talented executives by
discouraging our use of the plan.
18
<PAGE>
Amending the plan Federal tax law generally limits to $1 million our
will preserve our deductions of amounts paid to the chief executive
ability to deduct officer and the four other highest paid executives
from our taxes in a year. We may not deduct amounts in excess of $1
awards under that million paid to them unless the compensation is
plan. exempt. One exemption is for "performance-based"
compensation. To qualify for that exemption, our
shareholders must approve:
* the employees or class of employees eligible
for awards,
* the number of shares authorized by the plan,
* the performance goals established for those
awards, and
* the maximum number of shares to be awarded in a
year to any one person.
Shareholders approved the first item when the
original plan was approved in 1992. The second item
was also approved at that time, except for the
proposed modification noted below. The other two
changes are new.
PROPOSED AMENDMENTS
Number of The number of shares authorized for use in the plan
Shares: has not been changed, with one exception. The
existing plan provides that if awards are forfeited,
expire or are cashed out, the underlying shares can
be regranted under the plan only if the holder did
not exercise any benefits of ownership for the
shares, including voting or receipt of dividends.
The amended plan would permit the reuse of those
shares for plan awards, regardless of any receipt by
the holder of dividends or voting rights prior to
the shares' return to FINOVA.
Performance The plan provides that all awards to executives
Conditions: subject to the SEC's short-swing trading rules must
be performance-based awards that satisfy the tax
law's requirements noted above. To help make these
awards qualify as "performance- based compensation,"
we ask you to approve the following business
criteria on which to base the performance goals for
awards to those officers:
* total shareholder return (alone or in
comparison with one or more indices)
* revenues (gross or net)
* earnings per share
* expenses
* margin (gross or net)
* changes in stock price
* funds or asset turnover
* market share
* net income (before or after taxes)
* return on assets, equity, capital, investment,
or sales (actual or pro forma)
* operating margin
* net revenue growth
* cash flow
We may decline to use any or all of these goals and
may apply them singly or in any combination. We may
also link these goals to performance of FINOVA or
any subsidiary, division, department or individual.
19
<PAGE>
Maximum 500,000 shares underlying awards to any one person
Awards to in any one year, assuming no recapitalizations or
One Person: similar changes.
The original plan was adopted by the Board and
approved by the shareholders in connection with our
spin-off from Dial. The Board believes the plan
helps FINOVA attract, retain and provide appropriate
incentives for directors, management and all
employees.
YOU ARE ASKED TO APPROVE THE FOLLOWING RESOLUTION:
We urge you to RESOLVED, that the proposed amendments to
vote for the FINOVA's 1992 Stock Incentive Plan are approved.
amendments to the
1992 Stock The amendment requires approval by a majority of the
Incentive Plan. shares voting in person or by proxy at the meetings
if a quorum exists.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE
PROPOSED AMENDMENTS TO THE 1992 STOCK INCENTIVE
PLAN.
SUMMARY OF THE PLAN
General: The following sections summarize important features
of the plan as it will exist if the amendments are
approved by the Shareholders. The actual terms of
the plan control if different from this summary.
The plan authorizes the Human Resources Committee or
other committee of the Board administering the plan
to grant options, restricted stock and stock
appreciations rights to employees and directors
selected by it. As used in this summary, "committee"
means the committee administering the plan. It may
grant in any year up to 2 1/2 % of the shares
outstanding on the first day of that year, with
certain exceptions. The participants include our
directors, officers and employees, and those of our
affiliates designated by the committee. FINOVA has 8
directors, one of whom is also an employee, and
about 900 current employees who participate in the
plan.
Administration: The plan requires that the committee consist of at
least two directors that qualify under the tax law
as "outside directors" and the Securities Exchange
Act as "disinterested persons." To help assure that
the administrators remain disinterested, all
non-employee directors are limited to automatic
grants of non-qualified stock options. Those options
entitle them to purchase 1,500 shares each year of
service, plus 2,000 shares upon their election as a
director. Directors may also elect to receive
options or restricted stock instead of their annual
retainer.
The committee generally determines the participants,
the timing and form of award, the number of shares
covered by an award, its terms, any performance
goals or conditions, adjustments to those terms,
deferrals of awards, whether awards may be settled
in cash or shares, transferability of awards and
cash outs of awards. The committee also may
establish rules and practices, interpret the terms
of the plan and any award, delegate certain
decisions to a subcommittee or officers and
otherwise supervise plan administration. Use of the
term "committee" in this summary or the plan
includes those authorized to act with delegated
authority.
20
<PAGE>
Amendment The Board may amend or discontinue the plan, and the
and committee may amend outstanding awards as it deems
Termination: advisable. We must obtain shareholder approval of
amendments if required by law. No change may impair
the rights of participants under outstanding awards
without their consent, except for changes made to
comply with applicable law including the tax laws
and the Securities Exchange Act. No change can be
made that would disqualify the plan from those
exemptions.
The plan will terminate on December 31, 2002 unless
we discontinue it earlier. Outstanding awards will
not be affected by that termination.
Options and The committee establishes the exercise price for
SARs: options and stock appreciation rights so long as it
is at or above the fair market value of the shares
on the date of grant. The closing price of each
FINOVA share, as reported on the New York Stock
Exchange composite tape on the Record Date (March
10, 1997), was $78.875.
The committee may award stock appreciation rights
("SARS") in tandem with options. SARs entitle 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 committee has discretion to award incentive
stock options ("ISOS") under Section 422 of the
Internal Revenue Code or non-qualified options or
both.
Exercisability Each option agreement specifies when its options
of Options will vest, except as otherwise provided by the plan
and SARs: or the committee. The owner generally must exercise
his or her options within the following periods
after the event or lose the right to exercise:
Death 1 year
Disability 3 years
Retirement 3 years
Termination for cause Options expire
Other termination of employment 3 months
Otherwise Within option term
Death during disability or retirement generally
extends exercisability for up to 12 months. The
committee may accelerate vesting and extend some of
those expiration dates. Options and stock
appreciation rights become fully exercisable upon a
change in control, as defined in the plan. In that
event, a participant also has 60 days to surrender
options for their cash value, if desired. In all
cases, the options may not be exercised beyond their
10 year expiration date.
Unless permitted by the committee, participants may
not transfer or encumber options or SARs other than
by will or the laws of descent or distribution or
under a domestic relations order. The holder may
only exercise options and SARs during his or her
lifetime or by a legal guardian or permitted
substitute.
Participants may use shares they already own or that
are vesting at that time to pay the exercise price
of options and the taxes resulting from their
awards, unless the committee prohibits that payment
method.
21
<PAGE>
Restricted The committee may award restricted stock containing
Stock: limitations on sale or transfer of the shares.
Subject to those restrictions and any other
conditions imposed by the committee, the participant
enjoys all of the other rights of a shareholder,
including the right to receive dividends and to vote
the shares. The committee to date has not but may
require that dividends on restricted stock be
reinvested in additional restricted stock until the
restriction period ends and the shares vest.
Upon vesting, previously restricted stock becomes
freely tradable without restriction by the plan.
Upon termination of employment, the employee
forfeits unvested restricted stock unless the plan
or committee provides otherwise. Upon a change in
control, the restrictions lapse immediately, with
full vesting of the maximum number of
performance-based or other variable awards as if
maximum performance levels were achieved.
Restrictions Officers subject to the short-swing trading rules,
on Transfer: directors and owners of 10% or more of our shares
must comply with restrictions on vesting, the number
of shares which they can buy or sell and
restrictions on trading in shares within 6 months of
certain other trades. We urge you to seek legal
guidance before entering into any transactions
involving shares if you are subject to those
restrictions.
Federal The following summary describes the U.S. federal
Income Tax income tax consequences of the plan, based on
Considerations: current statutes, regulations and interpretations.
This description is not intended to address your
specific tax consequences or special rules that may
apply to our directors and executive officers. We
urge you to seek legal and tax guidance to
understand how the tax laws affect your individual
circumstances.
Options: Holders will recognize no income and FINOVA will not
be entitled to a deduction when we grant either
non-qualified or incentive stock options.
Non-qualified options are those that do not qualify
as incentive stock options. On exercise of a
non-qualified option, the holder recognizes as
ordinary income the difference between the fair
market value of the shares on the exercise date and
the option exercise price. Subject to reporting
requirements and any deduction limitation under
Section 162(m) of the Internal Revenue Code, we will
receive a deduction for that amount. Disposition of
shares by the holder after exercise of a
non-qualified option ordinarily results in a capital
gain or loss.
On exercise of an ISO, the holder will not recognize
any income, and we will not receive a deduction,
unless the holder does not satisfy the holding
period requirements discussed in the next paragraph.
The exercise of an ISO, however, may result in an
alternative minimum tax liability to the holder.
22
<PAGE>
The disposition of shares acquired on exercise of an
ISO will ordinarily result in capital gain or loss.
If the holder, however, disposes of those shares
If holders transfer within 2 years after the date of grant or 1 year
ISO's within 2 after the date of exercise, the holder will
years from the recognize ordinary income for the excess of the fair
grant date or 1 market value of the shares on the exercise date over
year from the the option exercise price, or in certain
exercise date, they circumstances the gain on sale, if less. Any gain
will lose ISO status not treated as ordinary income generally will be
for those shares, capital gain. Subject to reporting requirements, we
generally. will receive a deduction for ordinary income
recognized by the holder, unless limited by Section
162(m).
If the holder pays for an option with previously
owned shares, that exercise generally will not be a
taxable sale of the previously owned shares. The
holder will recognize no gain or loss on the
previously owned shares on exercise of the option.
Instead, the holder retains a carryover basis in the
new shares. If the previously owned shares were
acquired on the exercise of an ISO or other
tax-qualified stock option, and the holding
requirement for those shares is not satisfied by
that time, that use will disqualify ISO status of
the shares previously owned. The holder would then
recognize ordinary income on the ISO shares
surrendered, but under proposed Treasury Regulations
not any additional capital gain, in the amount
described above.
Compensation Section 162(m) generally limits deductibility of any
Above $1 compensation above $1 million paid to a person who
Million/ would be an officer named in the Summary
Section Compensation Table during a given year, unless
162(m) certain exceptions apply. One of those exceptions is
for performance-based compensation. The shareholders
must approve the material terms of the performance
award plans, which is the prime reason why we have
placed these amendments to the 1992 Stock Incentive
Plan before you for approval at this meeting. Those
requirements include approval of the performance
objectives, but not the specific targets to be
relied upon. The plan includes performance factors
for awards of performance-based restricted stock to
officers that qualify for the Section 162(m)
requirements.
Stock The amount of cash or the fair market value of any
Appreciation shares received on the exercise of an SAR under the
Rights: plan will be includable in the holder's ordinary
income and, subject to applicable withholding
requirements and Section 162(m), deductible by us.
Restricted Under Section 83(b) of the Code, a person receiving
Stock: restricted stock 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 those shares at the time of issuance over the
amount paid, if any, by the person for the shares.
Subject to reporting and Section 162(m) limits, we
will receive a deduction for that amount. The person
making that election must file copies with the
Internal Revenue Service and send us a copy of the
election form. If the person makes a Section 83(b)
election, he or she will generally recognize capital
gain or loss when disposing of those shares.
Unless a Section 83(b) election is made, the owner
of the restricted stock generally will not recognize
taxable income 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 person will recognize
ordinary income for the excess of the fair market
value of the shares on the vesting date over the
amount paid, if any, for the shares. Subject to
reporting and Section 162(m) limits, we will receive
a deduction for that amount. Restricted stock
holders are taxed as receiving ordinary income on
receipt of any cash dividends or other distributions
paid with respect to those shares before they vest.
23
<PAGE>
PLAN BENEFITS
1992 STOCK INCENTIVE PLAN
The following table shows the awards made in 1996 to
the persons listed. The proposed amendments would
have had no effect on the number of grants made last
year. Because future grants are in the discretion of
the committee, we cannot determine the amount and
value of future awards.
1996 AWARDS
OPTIONS/SARS RESTRICTED
NAME (#) STOCK (#)(1)
--------------------------- --------------- --------------
Mr. Eichenfield 0 17,740
Mr. Hallinan 2,900 3,450
Mr. Smalis 0 3,359
Mr. Roth 500 3,100
Mr. Parrinello 0 2,610
All Executive Officers 15,100 61,587
All Non-Executive Directors 10,500 (2) 260 (2)
All Non-Executive Employees 480,650 28,530
(1) All shares are performance-based restricted
stock, except for shares awarded to non-employee
directors. The table includes PBRS awards to
employees in 1996 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
FINOVA's performance.
(2) Uses then-current levels of directors' elections
under the Directors Cash or Stock Plan.
SELECTION OF INDEPENDENT AUDITORS
We ask that you approve the following resolution on
the appointment of our independent auditors:
RESOLVED, that the shareholders ratify the
appointment of Deloitte & Touche LLP to audit the
accounts of FINOVA and its subsidiaries for the
fiscal year 1997.
Deloitte & Touche LLP has audited our accounts since
our incorporation and those of our subsidiaries for
many years. The Board appointed them as our
independent auditors for 1997, upon recommendation
of the Audit Committee. We expect a representative
of Deloitte & Touche LLP to attend the meeting,
respond to appropriate questions and be given an
opportunity to speak.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE
LLP AS FINOVA'S INDEPENDENT AUDITORS FOR 1997.
24
<PAGE>
FINOVA SHARE OWNERSHIP
The following tables list our Share ownership as of
March 8, 1997 for the persons or groups specified.
Ownership includes direct and indirect (beneficial)
ownership, as defined by SEC rules. The second table
lists the beneficial owners of at least 5% of our
shares. To our knowledge, each person, along with
his or her spouse, has sole voting and investment
power over the 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>
Robert H. Clark, Jr. Director Nominee 14,000 (1)
G. Robert Durham Director 10,245 (2) *
Samuel L. Eichenfield Chairman, President, and Chief 398,274 (3)(4) 1.46%
Executive Officer
James L. Johnson Director 8,000 (2) *
L. Gene Lemon Director 20,108 (2) *
Kenneth R. Smith Director 10,745 (2) *
Robert P. Straetz Director 10,500 (2) *
Shoshana B. Tancer Director 7,186 (2) *
John W. Teets Director 60,411 (2) *
William J. Hallinan Senior Vice President -- General 71,426 (3)(4) *
Counsel and Secretary
Martin G. Roth Group Vice President -- 36,206 (3)(4) *
Transportation Finance/Capital
Services
FINOVA Capital Corporation
Gregory C. Smalis Group Vice President -- Portfolio 37,189 (3)(4) *
Management
FINOVA Capital Corporation
Thomas C. Parrinello Group Vice President -- Factoring 11,517 (3)(4) *
Services
FINOVA Capital Corporation
Directors and 974,074 (3)(4) 3.56%
Executive
Officers, as a Group
</TABLE>
25
<PAGE>
* Less than one percent.
(1) Shares owned by Case Pomeroy & Co., Inc., of
which Mr. Clark is President and Chief Executive
Officer, a director and, with members of his
family, a controlling shareholder.
(2) Includes shares the director has a right to
acquire within 60 days through the exercise of
options: Mr. Durham - 5,245 shares, Mr Johnson -
3,000 shares, Mr. Lemon - 8,122 shares, Mr.
Smith - 8,245 shares, Mr. Straetz - 8,000
shares, Mrs. Tancer - 6,147 shares, and Mr.
Teets - 8,000 shares.
(3) Includes options to purchase shares that can be
exercised within 60 days of 252,667 shares for
Mr. Eichenfield, 44,999 shares for Mr. Hallinan,
21,482 shares for Mr. Roth, 22,050 shares for
Mr. Smalis, 5,300 shares for Mr. Parrinello, and
543,611 shares for all directors and executive
officers as a group.
(4) Includes performance-based restricted shares
owned by those persons, for which they have
voting power but do not yet have dispositive
power, in the amounts of 40,200 shares for Mr.
Eichenfield, 6,100 shares for Mr. Hallinan,
5,400 shares for Mr. Roth, 5,970 shares for Mr.
Smalis and 4,500 shares for Mr. Parrinello. The
number of shares to be awarded under the PBRS
grants may vary based on FINOVA's stock
performance. Reported amounts include all vested
awards and target awards for future vestings.
Reported amounts also include holdings in
FINOVA's Savings and Employee Stock Ownership
Plans as of February 28, 1997, according to
reports of the plan administrators.
CERTAIN BENEFICIAL OWNERS
AMOUNT AND
NATURE OF BENEFICIAL PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) OF SHARES
--------------------------------------- -------------------- ------------
Putnam Investments, Inc. and Affiliates 2,340,397 8.56%
One Post Office Square
Boston, MA 02109
Franklin Resources, Inc. and Affiliates 2,195,700 8.03%
777 Mariners Island
San Mateo, CA 94404
Iridian Asset Management LLC and 1,740,500 6.36%
Affiliates
276 Post Road West
Westport, CT 06880-4704
Loomis, Sayles & Co., L.P. 1,652,586 6.04%
One Financial Center
Boston, MA 02111-2660
(1) The information is based on reported ownership
on the date of SEC filings. The owners report
they hold the shares for themselves and their
affiliates, advisory clients and investors. The
entities may disclaim that they constitute a
"group" for purposes of owning these shares.
26
<PAGE>
VOTING PROCEDURES
To be elected, directors must receive a plurality of
the shares present and voting in person or by proxy,
provided a quorum exists. A quorum is present if at
least a majority of the outstanding shares on the
Record Date (13,674,536 shares) are present in
person or by proxy. All matters other than the
election of directors submitted to you at the
meeting will be decided by a majority of the votes
cast on the matter, provided a quorum exists, except
as otherwise provided by law or our Certificate of
Incorporation or Bylaws.
Those who fail to return a proxy or attend the
meeting will not count towards determining any
required plurality, majority or quorum. Shareholders
and brokers returning proxies or attending the
meeting who abstain from voting on a proposition
will count towards determining a quorum, plurality
or majority for that proposition.
If you are a participant in our 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,
Viad Corp or Motor Coach Industries Inc.'s 401(k)
plans, the proxy will represent the number of shares
in your plan account(s) as well as shares registered
in your name. The proxy will also serve as a voting
instruction to the trustees of those plans for the
plan shares. For our plans, if you do not vote your
shares, the trustees of those plans will not vote
them on your behalf.
The enclosed proxies will be voted in accordance
with the instructions you place on the proxy card.
Unless otherwise stated, all shares represented by
your returned, signed proxy will be voted as noted
on the first page of this proxy statement. Proxies
may be revoked as noted on that page.
SUBMISSION OF STOCKHOLDER PROPOSALS
From time to time, shareholders seek to nominate
directors or present proposals for inclusion in the
Proxy Statement and form of proxy for consideration
at the annual meeting. To be included in the proxy
statement or considered at an annual or any special
meeting, you must timely submit nominations of
directors or proposals, in addition to meeting other
legal requirements for inclusion. We must receive
proposals for the 1998 annual meeting no later than
November 21, 1997, for possible inclusion in the
proxy statement, or between February 2 and 26, 1998
for possible consideration at the meeting, which is
expected to take place on Thursday, May 7, 1998.
Direct any proposals, as well as any related
questions to the undersigned.
27
<PAGE>
OTHER BUSINESS
The Board of Directors knows of no other matters for
consideration at the meeting. If any other business
should properly arise, the persons appointed in the
enclosed proxy have discretionary authority to vote
in accordance with their best judgment.
A COPY OF FINOVA'S 1996 ANNUAL REPORT ON FORM 10-K
TO THE SECURITIES AND EXCHANGE COMMISSION AND THE
1992 STOCK INCENTIVE PLAN, AS AMENDED, MAY BE
OBTAINED BY SHAREHOLDERS, WITHOUT CHARGE, UPON
WRITTEN REQUEST TO SHAREHOLDER SERVICES, THE FINOVA
GROUP INC., 1850 NORTH CENTRAL AVENUE, P.O. BOX
2209, PHOENIX, ARIZONA 85002-2209. YOU MAY ALSO
OBTAIN OUR SEC FILINGS THROUGH THE INTERNET AT
WWW.SEC.GOV.
By order of the Board of Directors.
W.J. Hallinan
Senior Vice President -- General Counsel
and Secretary
PLEASE VOTE -- YOUR VOTE IS IMPORTANT
28
[FINOVA LOGO]
<PAGE>
PROXY/VOTING INSTRUCTION CARD
THE FINOVA GROUP INC.
c/o Harris Trust & Savings Bank, P.O. Box A3800, Chicago, IL 60690-9608
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
I (whether one or more of us) appoint Samuel L. Eichenfield, James L. Johnson,
and John W. Teets, and each of them, to be my Proxies. The Proxies may vote on
my behalf, in accordance with my instructions, all of my shares entitled to vote
at the Annual Shareholders Meeting of The FINOVA Group Inc. ("FINOVA"). The
meeting is scheduled for May 8, 1997, but this proxy includes any adjournment(s)
of that meeting. The Proxies may vote on behalf as if I was personally present
at the meeting. This card also provides voting instructions (for shares held in
my account(s), if any) to the trustees of FINOVA's Savings Plan and Employee
Stock Ownership Plan and Viad Corp, The Dial Corp and Motor Coach Industries,
Inc.'s 401(k) plans.
Comments: (Please feel free to comment on any aspects of FINOVA's business in
the following space. Your comments will be reviewed, although we may not respond
on an individual basis.)
PLEASE COMPLETE, DATE AND SIGN ON REVERSE SIDE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
<PAGE>
In their discretion, the Proxies may vote on any other business that properly
comes before the meeting. This proxy when properly executed will be voted as
instructed below by the undersigned stockholder. If no marking is made, this
proxy will be deemed to be direction to vote FOR proposals 1, 2 and 3, unless
otherwise determined by the Board of Directors or the Proxies.
FOR ALL
FOR WITHHOLD EXCEPT*
The Board of Directors recommends a vote FOR: [ ] [ ] [ ]
1. Election of directors whose terms expire in 2000:
Robert H. Clark, Jr. Shoshana B. Tancer
*
---------------------
Nominee Exception
FOR ALL
FOR WITHHOLD EXCEPT
2. Ammed the 1992 Stock Incentive Plan [ ] [ ] [ ]
FOR ALL
FOR WITHHOLD EXCEPT
3. Ratify the appointment of Deloitte & Touche LLP as [ ] [ ] [ ]
FINOVA's independent auditors for 1997.
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.
Please date the proxy.
Dated__________________________________
Signed_________________________________________________
Signed_________________________________________________
(Please mark address changes above)
[ ] MULTIPLE SHAREHOLDER PUBLICATIONS.
Please check here to stop mailing of shareholder publications
for this account, since multiple copies come to this addres.
THIS PROXY IS SOLICTED ON BEHALF OF THE BOARD OF DIRECTORS
