<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
CREDIT ACCEPTANCE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[CREDIT ACCEPTANCE CORPORATION LOGO]
CREDIT ACCEPTANCE CORPORATION
25505 West Twelve Mile Road
Suite 3000
Southfield, Michigan 48034-8339
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held May 22, 2000
---------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Credit Acceptance Corporation, a Michigan corporation, will be held at 25505
West Twelve Mile Road, Southfield, Michigan 48034, on Monday, May 22, 2000, at
9:00 a.m., local time, for the following purposes.
1. To elect five directors to serve until the 2001 Annual Meeting of
Shareholders;
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record on April 4, 2000 will be entitled to notice of
and to vote at this meeting. You are invited to attend the meeting. Whether or
not you plan to attend in person, you are urged to sign and return immediately
the enclosed Proxy in the envelope provided. No postage is required if the
envelope is mailed in the United States. The Proxy is revocable and will not
affect your right to vote in person if you attend the meeting.
By Order of the Board of Directors,
Donald A. Foss
Chairman and Chief Executive Officer
Southfield, Michigan
April 14, 2000
<PAGE> 3
[CREDIT ACCEPTANCE CORPORATION LOGO]
CREDIT ACCEPTANCE CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 22, 2000
---------------------------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Credit Acceptance Corporation, a
Michigan corporation (the "Company"), to be used at the Annual Meeting of
Shareholders of the Company to be held on Monday, May 22, 2000, for the purposes
set forth in the accompanying Notice of Annual Meeting of Shareholders and in
this Proxy Statement. This Proxy Statement and the enclosed form of Proxy were
first sent or given to security holders on or about April 14, 2000.
Only shareholders of record at the close of business on April 4, 2000
(the "Record Date") will be entitled to vote at the meeting or any adjournment
thereof. Each holder of the 44,835,054 issued and outstanding shares of the
Company's common stock (the "Common Stock") on the Record Date is entitled to
one vote per share. The presence, either in person or by properly executed
proxy, of the holders of a majority of the outstanding shares of Common Stock is
necessary to constitute a quorum at the Annual Meeting.
A proxy may be revoked at any time before it is exercised by giving a
written notice to the Secretary of the Company bearing a later date than the
proxy, by submitting a later-dated proxy or by voting the shares represented by
the proxy in person at the Annual Meeting. Unless revoked, the shares
represented by each duly executed, timely delivered proxy will be voted in
accordance with the specifications made. If no specifications are made, such
shares will be voted for the election of directors named in this Proxy
Statement. The Board of Directors does not intend to present any other matters
at the Annual Meeting. However, should any other matters properly come before
the Annual Meeting, it is the intention of such proxy holders to vote the proxy
in accordance with their best judgment.
The expenses of soliciting proxies will be paid by the Company. In
addition to solicitation by mail, the officers and employees of the Company, who
will receive no extra compensation therefore, may solicit proxies personally or
by telephone. The Company will reimburse brokerage houses, custodians, nominees
and fiduciaries for their expense in mailing proxy material to principals.
COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 31, 2000
concerning beneficial ownership by all directors and nominees, by each of the
executive officers named in the Summary Compensation Table, by all directors and
executive officers as a group, and by all other beneficial owners of more than
5% of the outstanding shares of Common Stock. The number of shares beneficially
owned is determined under rules of the Securities and Exchange Commission, and
the information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial ownership includes any shares as to
which the individual has sole or shared voting power or investment power and
also any shares which the individual has the right to acquire on March 31, 2000
or within 60 days thereafter through the exercise of any stock option or other
right. Unless otherwise indicated, each holder has sole investment and voting
power with respect to the shares set forth in the following table.
1
<PAGE> 4
<TABLE>
<CAPTION>
NUMBER
OF SHARES PERCENT OF
BENEFICIALLY OWNED OUTSTANDING SHARES
-------------------- ------------------
<S> <C> <C>
Donald A. Foss ......................................................... 23,937,174 (a) 53.3%
Brett A. Roberts........................................................ 342,000 (b) *
Michael W. Knoblauch.................................................... 195,933 (c) *
Thomas A. FitzSimmons .................................................. 127,650 (d) *
David S. Simmet......................................................... 100,842 (e) *
Richard G. Vanderport................................................... - *
Harry E. Craig.......................................................... 10,000 *
David T. Harrison....................................................... 4,800 *
Sam M. LaFata .......................................................... 9,000 (f) *
Thomas N. Tryforos...................................................... 4,248,268 (g) 9.5%
All Directors and Executive Officers as a Group (12 persons)............ 29,131,550 (h) 64.9%
Thomas W. Smith......................................................... 4,940,620 (g) 11.0%
Tweedy, Browne Company LLC.............................................. 2,408,878 (i) 5.4%
Dimensional Fund Advisors, Inc.......................................... 2,325,300 (j) 5.2%
</TABLE>
* Less than 1%.
(a) Shares are held of record by the Donald A. Foss Revocable Living Trust
dated January 26, 1984 as to which Mr. Foss is the trustee. Mr. Foss'
business address is 25505 West Twelve Mile Road, Suite 3000, Southfield,
Michigan 48034-8339.
(b) Includes 324,000 shares which Mr. Roberts has the right to acquire upon
exercise of employee stock options.
(c) Includes 193,333 shares which Mr. Knoblauch has the right to acquire upon
exercise of employee stock options.
(d) Includes 125,000 shares which Mr. FitzSimmons has the right to acquire upon
exercise of employee stock options.
(e) Includes 99,667 shares which Mr. Simmet has the right to acquire upon
exercise of employee stock options.
(f) Shares are held by the Sam M. LaFata Revocable Living Trust as to which Mr.
LaFata is the trustee.
(g) The number of shares is based on information contained in a Schedule 13-D
filed with the Securities and Exchange Commission by Mr. Thomas W. Smith
and Mr. Thomas N. Tryforos which reflect their beneficial ownership of
shares of Common Stock as of February 14, 2000. Mr. Thomas W. Smith
reported that he may be deemed to have sole voting power and dispositive
power over 857,250 shares and shared voting and dispositive power over
4,083,370 shares with Mr. Thomas N. Tryforos. Mr. Tryforos reported that he
has sole voting and dispositive power over 164,898 shares. Mr. Smith's and
Mr. Tryforos's business address is 323 Railroad Avenue, Greenwich,
Connecticut 06830.
(h) Includes a total of 893,733 shares which such persons have the right to
acquire upon exercise of employee stock options.
(i) The number of shares is based on information contained in a Schedule 13-D
filed with the Securities and Exchange Commission by Tweedy, Browne Company
LLC which reflects its beneficial ownership of shares of Common Stock as of
December 31, 1999. Tweedy, Browne Company LLC reported that it may be
deemed to have sole voting power over 2,327,495 shares and shared
dispositive power for 2,408,878 shares with various investment clients.
Tweedy, Browne Company's business address is 350 Park Avenue, New York, New
York 10022.
(j) The number of shares is based on information contained in a Schedule 13-G
filed with the Securities and Exchange Commission by Dimensional Fund
Advisors, Inc. which reflects its beneficial ownership of shares of Common
Stock as of December 31, 1999. Dimensional Fund Advisors, Inc. reported
that it may be deemed to have sole voting power and sole dispositive power
over 2,325,300 shares. Dimensional Fund Advisors' business address is 1299
Ocean Avenue, 11th Floor, Santa Monica, California 90401.
2
<PAGE> 5
MATTERS TO COME BEFORE THE MEETING
(1) ELECTION OF DIRECTORS
Five directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting. Each director holds office until the next annual
meeting of shareholders and until his successor has been elected and qualified.
The nominees named below have been selected by the Board of Directors of the
Company. If, due to circumstances not now foreseen, any of the nominees named
below will not be available for election, the proxies will be voted for such
other person or persons as the Board of Directors may select. Each of the
nominees is currently a director of the Company. David T. Harrison, who has been
member of the Board of Directors since June 1992, is not seeking reelection due
to time constraints from other work commitments.
The following sets forth information as to each nominee for election at
the Annual Meeting, including his age, present principal occupation, other
business experience during the last five years, directorships in other
publicly-held companies, membership on committees of the Board of Directors and
period of service as a director of the Company. The Board of Directors
recommends a vote FOR each of the nominees for election. EXECUTED PROXIES WILL
BE VOTED FOR THE ELECTION OF THE NOMINEES UNLESS SHAREHOLDERS SPECIFY OTHERWISE
IN THEIR PROXIES. The election of directors requires a plurality of the votes
cast.
DONALD A. FOSS; AGE 55; CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER OF THE COMPANY
Mr. Foss is the founder and principal shareholder of the Company, in
addition to owning and operating an affiliated company engaged in the sale of
used vehicles. He was formally named Chairman of the Board and Chief Executive
Officer of the Company in March 1992.
HARRY E. CRAIG, AGE 72; INDEPENDENT PERSONNEL CONSULTANT
Mr. Craig has been a self-employed consultant providing management
training services since 1986. Mr. Craig served in various managerial and other
capacities with Ford Motor Company for 30 years, most recently as Director,
Personnel and Organization Office of Ford Aerospace & Communications
Corporation. Mr. Craig became a director of the Company in June 1992.
THOMAS A. FITZSIMMONS; AGE 56; MANAGING DIRECTOR, CREDIT ACCEPTANCE
CORPORATION UK, LIMITED
Mr. FitzSimmons has been Managing Director of the Company's United
Kingdom operations since joining the Company in October 1997. From 1983 until
June 1997, he was a principal of William Blair & Company LLC, a full-service
investment banking/brokerage firm headquartered in Chicago and most recently
served as manager of its Financial Institutions Group for more than five years.
Mr. FitzSimmons became a director of the Company in February 1994.
SAM M. LAFATA; AGE 66; VICE PRESIDENT - SPECIAL BUSINESS DEVELOPMENT OF
MANHEIM DETROIT AUTO AUCTION
Mr. LaFata was General Manager of Manheim Metro Detroit Auto Auction
from February 1991 until January 1999, when he was named Vice President -
Special Business Development. Mr. LaFata has more than 30 years of experience in
the automotive sales industry. Mr. LaFata has served as a director of the
Company since June 1992.
THOMAS N. TRYFOROS; AGE 40; GENERAL PARTNER OF PRESCOTT INVESTORS, INC.
Since May 1991, Mr. Tryforos has been employed as a General Partner at
Prescott Investors, Inc., a private investment firm based in Connecticut. Mr.
Tryforos became a director of the Company in July 1999.
3
<PAGE> 6
OTHER EXECUTIVE OFFICERS
BRETT A. ROBERTS; AGE 33; CO-PRESIDENT
Mr. Roberts joined the Company in 1991 as Corporate Controller and was
named Assistant Treasurer in March 1992 and Vice President-Finance in April
1993. He was named Chief Financial Officer and Treasurer in August 1995. In
January 1997, he was named Executive Vice President and Chief Financial Officer
and to his present position in January 2000. Before joining the Company, he was
employed at Arthur Andersen LLP in the audit division.
MICHAEL W. KNOBLAUCH; AGE 36; CO-PRESIDENT
Mr. Knoblauch has been employed by the Company since 1992. He served as
the Company's collection manager from May 1994 to August 1995. He was named Vice
President - Collections in August 1995. He was named Chief Operating Officer in
July 1999 and to his present position in January 2000. Before joining the
Company, Mr. Knoblauch was on the financial staff of General Motors Corporation,
Service Parts Division.
DOUGLAS W. BUSK; AGE 39; TREASURER AND CHIEF FINANCIAL OFFICER
Mr. Busk joined the Company in November 1996 and was named Vice
President and Treasurer in January 1997. He was named to his present position in
January 2000. Previously, Mr. Busk was a Vice President and Loan Officer at
Comerica Bank from 1990 to 1996.
JOHN P. CAVANAUGH; AGE 34; CORPORATE CONTROLLER AND ASSISTANT SECRETARY
Mr. Cavanaugh has been the Company's corporate controller since joining
the Company in October 1993. He was named to his present position in August
1995. Prior to joining the Company, Mr. Cavanaugh was employed at KPMG Peat
Marwick LLP in the audit division.
CHARLES A. PEARCE; AGE 35; VICE PRESIDENT - GENERAL COUNSEL AND
CORPORATE SECRETARY
Mr. Pearce has been the Company's general counsel since January 1996.
He was named Vice President - General Counsel in January 1997 and to his present
position in June 1999. Mr. Pearce was employed with the law firm of Rhoades,
McKee, Boer, Goodrich and Titta from May 1990 until joining the Company in
January 1996.
DAVID S. SIMMET; AGE 35; VICE PRESIDENT - INFORMATION SYSTEMS
Mr. Simmet has been employed by the Company since 1992. He was named
Vice President Information Systems in October 1997. He served as the Company's
Director of Information Systems from April 1995 to October 1997 and as Manager
of Information Systems from August 1992 to April 1995. Before joining the
Company, Mr. Simmet was employed at Arthur Andersen LLP in its business systems
consulting practice.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held thirteen meetings during 1999. Standing
committees of the Board include the Audit Committee and the Executive
Compensation Committee. The members of the committees during 1999 were Messrs.
Craig, Harrison, LaFata and Tryforos.
The Audit Committee's principal responsibilities include: (a)
recommending the selection of the Company's independent public accountants, (b)
reviewing the scope of audits made by the independent public accountants, (c)
reviewing the audit reports submitted by the independent public accountants, and
(d) reviewing the Company's internal audit activities and matters concerning
financial reporting, accounting and audit procedures. The Audit Committee held
two meetings during 1999.
The Executive Compensation Committee's principal responsibilities
include: (a) reviewing on an annual basis
4
<PAGE> 7
the compensation of all executive officers of the Company, (b) making
recommendations to the Board regarding compensation of executive officers, (c)
reviewing all employee benefit plans pursuant to which securities (including
stock options) are granted to the Company's executive officers, and (d)
administering the Company's 1992 Stock Option Plan (the "Option Plan"). The
Executive Compensation Committee held two meetings during 1999.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY
The following table sets forth certain summary information for the
years indicated concerning the compensation awarded to, earned by, or paid to
the Chief Executive Officer, the other four most highly compensated executive
officers of the Company (based on combined salary and bonus for 1999) and one
other former executive officer (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL OMPENSATION
COMPENSATION -----------
-------------------------------------------------- AWARDS
OTHER SECURITIES
NAME AND ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(a) COMPENSATION ($)(b) OPTIONS/SARs(#) COMPENSATION ($)(C)
------------------ ---- --------- ----------- ------------------- --------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Donald A. Foss..................... 1999 $475,000 $ - $14,865 - $ 625
Chairman of the Board and 1998 475,000 - 19,678 - 625
Chief Executive Officer 1997 450,000 - 16,076 - 625
Richard G. Vanderport (e)......... 1999 $285,800 $ - $ - - $ 625
Former Vice President - Sales 1998 250,000 - - 10,000 625
1997 12,500 - - 150,000 -
Brett A. Roberts................... 1999 $279,000 $ 25,000 $ - 100,000 $ 948
Co-President 1998 255,000 - - 100,000 895
1997 225,000 - - 350,000 (d) 895
Michael W. Knoblauch............... 1999 $229,000 $ 25,000 $ - 100,000 $1,005
Co-President 1998 200,000 - - 50,000 895
1997 170,000 - - 300,000 (d) 895
Thomas A. FitzSimmons (e).......... 1999 $260,000 $ 25,000 $24,200 50,000 $ -
Managing Director 1998 260,000 - 60,924 75,000 -
Credit Acceptance Corporation 1997 58,000 - - 150,000 -
U.K. Limited
David S. Simmet.................... 1999 $164,400 $ 39,600 $ - 10,000 $ 625
Vice President - Information Systems 1998 149,100 - - 20,000 625
1997 118,500 50,000 - 150,000 (d) 625
</TABLE>
(a) Annual bonus amounts are earned and accrued during the fiscal years
indicated and paid in the following year. See "Compensation of Executive
Officers - Report of the Executive Compensation Committee."
(b) The amounts disclosed in this column for Mr. Foss consist of automobile
allowances of $10,000, $12,000 and $11,750 and related tax "gross ups" of
$6,076, $7,678 and $3,115 in 1997, 1998 and 1999, respectively. The amounts
disclosed in this column for Mr. FitzSimmons consists of overseas housing
reimbursements of $32,525 and $18,001, automobile allowances of $2,800 and
$2,185 and tax gross-ups of $25,599 and $4,014 in 1998 and 1999,
respectively.
(c) The amounts disclosed in this column for 1999 are comprised of the
Company's matching contribution for the 401(k) Profit Sharing Plan of $625
for each officer and $323 and $380 paid for split beneficiary life
insurance policies for Messrs. Roberts and Knoblauch, respectively.
(d) The amounts include new option grants, options granted in prior years
and repriced, and options granted in 1997 and repriced but does not deduct
options granted previously and subsequently cancelled pursuant to a
repricing. Options cancelled and repriced in 1997 were 100,000, 225,000 and
200,000 for Messrs. Simmet, Roberts and Knoblauch, respectively.
(e) Mr. FitzSimmons joined the Company in October 1997. Mr. Vanderport joined
the Company in December 1997 and left the Company in December 1999.
5
<PAGE> 8
OPTIONS
The following table provides information on option grants during 1999
to the Named Executive Officers. All such options were granted under the
Company's Option Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------------------ POTENTIAL REALIZABLE VALUE
PERCENT AT ASSUMED ANNUAL RATES
OF TOTAL STOCK PRICE APPRECIATION
NUMBER OF SECURITIES OPTIONS/SARs FOR OPTION TERM (C)
UNDERLYING OPTIONS/ GRANTED TO EMPLOYEES EXERCISE PRICE EXPIRATION --------------------------
NAME SARs GRANTED (#) IN FISCAL YEAR ($/SHARE) DATE 5% ($) 10%($)
---- ---------------- -------------- --------- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Donald A. Foss......... - - % $ - - $ - $ -
Richard G Vanderport... - - % - - - -
Brett A. Roberts....... 100,000 (a) 5.68% 3.625 12/31/09 227,974 577,732
Michael W. Knoblauch... 100,000 (a) 5.68% 3.625 12/31/09 227,974 577,732
Thomas A. FitzSimmons.. 50,000 (b) 2.84% 3.625 12/31/09 113,987 288,866
David S. Simmet........ 10,000 (a) 0.57% 3.625 12/31/09 22,797 57,773
</TABLE>
(a) These options granted vest only if the Company's earnings per share targets
are met, or immediately upon a change of control of the Company.
(b) The Options vest in three equal annual installments beginning December 31,
2000, or immediately upon a change of control of the Company.
(c) Represents the value of such option at the end of its 10-year term (without
discounting to present value), assuming the market price of the Common Stock
appreciates from the exercise price beginning on the grant date at an
annually compounded rate of 5% or 10%. These amounts represent assumed rates
of appreciation only. Actual gains, if any, will be dependent on overall
market conditions and on the future performance of the Common Stock. There
can be no assurance that the price appreciation reflected in this table will
be achieved.
The following table provides information with respect to the
unexercised options held as of December 31, 1999 by the Named Executive
Officers. There were no options exercised by the Named Executive Officers during
1999.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARs IN-THE-MONEY OPTIONS/SARs
AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(a)
------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Donald A. Foss........... - - $ - $ -
Richard G. Vanderport.... - - - -
Brett A. Roberts......... 310,666 268,334 78,754 -
Michael W. Knoblauch..... 186,666 213,334 - -
Thomas A. FitzSimmons.... 125,000 150,000 - -
David S. Simmet.......... 97,000 62,000 13,126 -
</TABLE>
(a) Values are based on the December 31, 1999 closing price of $3.6875 per
share on The Nasdaq Stock Market's National Market.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee, comprised of directors who are
not employees of the Company, annually reviews and makes recommendations to the
Board of Directors regarding executive compensation. It is the philosophy of the
Committee that the executive compensation program should align the financial
interests of the Company's executives with the long term interests of the
Company and its shareholders and should attract and retain qualified executives
to lead the Company toward its goals. The key elements of the Company's current
program include a base salary, a bonus linked to either the Company's financial
performance or based on that executive's performance and equity participation
through stock options.
6
<PAGE> 9
BASE SALARY. The Executive Compensation Committee's policy with respect
to salaries is to establish base compensation levels for executives which are
competitive in relation to other companies of similar size within the Company's
industry. The Executive Compensation Committee will also take into consideration
the executive's responsibilities, experience level and individual performance.
Salaries are reviewed annually and are adjusted based on the recommendation of
management.
BONUS. The performance of the individual and the performance of the
Company were considered in order to determine whether to grant bonuses to the
Company's executive officers and certain other key employees. The bonus for some
of the executives was based in part on their overall performance and in part on
their performance measured through achievement of specific personal objectives.
The bonuses awarded to other executives were based solely on their overall
performance. Each executive's performance was evaluated by the Executive
Compensation Committee based upon the report and recommendation of management.
None of the bonuses awarded in 1999 were based on Company performance.
STOCK OPTIONS. Under the Option Plan, the Executive Compensation
Committee may grant options to purchase Common Stock to employees of the
Company, including executive officers. Option grants become exercisable either
over a period of time or if the Company's earnings per share targets are met and
generally have an exercise price equal to the fair market value of the Common
Stock on the grant date, creating long term incentives to enhance the value of
the Company's Common Stock. Generally, the Executive Compensation Committee
considers the grant of options to executive officers and key managers on an
annual basis. The number of options awarded and the related vesting period are
determined based upon management's recommendation and are generally a function
of the position held by an executive and his expected contribution to the
Company's future growth and profitability. The Executive Compensation Committee
determined that certain options granted in 1999 should vest only if certain
earnings per share targets are met (or upon a change in control) in order to
more directly link the benefits of the options to corporate performance.
THE CHIEF EXECUTIVE OFFICER'S 1999 COMPENSATION. The Executive
Compensation Committee's approach to Mr. Foss' compensation was based on the
Company's performance and Mr. Foss' responsibilities. Mr. Foss receives a base
salary based upon his responsibilities and experience and which the Executive
Compensation Committee believes is comparable to the salaries of other chief
executive officers at similar companies. In determining Mr. Foss' compensation,
the Executive Compensation Committee considered the Company's financial
performance for the prior year and Mr. Foss' contribution to the short- and
long-term objectives of the Company. As a result of this evaluation, his 1999
base salary was maintained at $475,000. Mr. Foss was eligible for a bonus and
stock options but did not receive a bonus or stock options in 1999 due to the
Company's financial performance.
The Executive Compensation Committee believes that the above elements
assist the Company in meeting its short-term and long-term business objectives
and appropriately relate executive compensation to the Company's performance.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the Internal
Revenue Code of 1986, as amended, restricts the deductibility of executive
compensation paid to the Company's Chief Executive Officer and any of the four
other most highly compensated executive officers at the end of any fiscal year
to not more than $1 million in annual compensation (including gains from the
exercise of certain stock option grants). Certain performance-based compensation
is exempt from this limitation if it complies with the various conditions
described in Section 162(m). The Option Plan contains a restriction on the
number of options that may be granted which is intended to cause compensation
realized in connection with the exercise of options granted under the Option
Plan to comply with these conditions and be exempt from the Section 162(m)
restriction on deductibility.
The Executive Compensation Committee does not believe that other
components of the Company's compensation program are likely to result in
payments to any executive officer in any year which would be subject to the
restriction on deductibility and has concluded that no further action with
respect to qualifying such compensation for deductibility is necessary at this
time. The Executive Compensation Committee intends to continue to evaluate from
time to time the advisability of qualifying future executive compensation
programs for exemption from the Section 162(m) restriction on deductibility.
7
<PAGE> 10
EXECUTIVE COMPENSATION COMMITTEE:
HARRY E. CRAIG DAVID T. HARRISON SAM M. LAFATA THOMAS N. TRYFOROS
DIRECTOR COMPENSATION
For 1999, all outside Board members received $1,500 for each Board
meeting attended plus $500 for each Committee meeting attended and were
reimbursed for travel related expenses.
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative
total shareholder return on the Company's Common Stock during the period
beginning on January 1, 1995 and ending on December 31, 1999 with the cumulative
total return on the Nasdaq Market index and a peer group index based upon the
approximately 150 companies included in the Dow Jones - Diversified Financial
Services Industry Group. The comparison assumes that $100 was invested on
December 31, 1994 in the Company's Common Stock and in the foregoing indices and
assumes the reinvestment of dividends.
[LINE GRAPH]
<TABLE>
<CAPTION>
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
<S> <C> <C> <C> <C> <C> <C>
Credit Acceptance Corporation $100.00 $116.90 $132.39 $ 43.66 $ 41.20 $ 20.77
Nasdaq Market Index 100.00 129.71 161.18 197.16 278.08 490.46
Peer Group 100.00 159.66 214.60 333.30 397.20 445.40
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CERTAIN RELATIONSHIPS AND TRANSACTIONS
In the normal course of business, the Company has maintained business
relationships and engaged in certain transactions with an affiliated company
owned by the Company's Chairman (the "affiliated company") which operates
certain affiliated dealers.
8
<PAGE> 11
CONTRACT ASSIGNMENTS
The Company regularly accepts installment contracts and lease contracts
originated by the affiliated company, which aggregated approximately $9.3
million and $5.8 million, respectively, in 1999, and represented approximately
2% of gross installment contracts receivable and 13% of leased vehicles,
respectively, as of December 31, 1999. The Company accepted contracts from the
affiliated company on the same terms in all material respects as those accepted
from unaffiliated dealers.
INDEBTEDNESS
During 1999, the affiliated company was indebted to the Company for
borrowings used for working capital purposes. The largest amount of such
indebtedness outstanding during 1999, including accrued interest, was $723,000.
The indebtedness is due on demand, bears interest at prime plus 4% and is
secured by cash collections on contracts accepted from the affiliated company.
Pursuant to floor plan arrangements, as of December 31, 1999, the
affiliated company was indebted to the Company for $2.6 million. The largest
amount of such indebtedness outstanding during 1999, including accrued interest,
was $5.6 million. As of February 29, 2000, all such indebtedness has been
repaid. Such indebtedness was due as the vehicles securing such indebtedness
were sold, and bore interest at 4% above the prime rate, with a minimum of 12%.
These arrangements were secured by the related inventory and future cash
collections on installment contracts accepted from the affiliated company and
were made on the same terms and conditions as loans made to unaffiliated
dealers.
SERVICES
The Company and the affiliated company owned by the Company's Chairman
have entered into a Services Agreement (the "Services Agreement") which provides
that the Company and the affiliated company will share specified services,
including services relating to insurance management, payroll, tax return
preparation and retaining professionals. The affiliated company pays a monthly
fee to the Company for such services which is approximately equivalent to the
Company's cost of rendering such services and is calculated based on: (i) a
percentage of the monthly salary of certain Company employees; (ii) a fee for
any tax return prepared and filed by the Company on behalf of the affiliated
company (ranging from $300 to $3,000 depending on the type of return); and (iii)
an additional amount equal to the allocable share of fees for professional
services and insurance premiums and deductibles paid by the Company during the
preceding month, less the Company's share of any such fees paid by the
affiliated company during the preceding month. The Services Agreement continues
until terminated by the Company or the affiliated company upon 30 days prior
written notice. During 1999, the Company charged the affiliated company
approximately $367,000 and was charged approximately $2,000 under the Services
Agreement.
INDEPENDENT ACCOUNTANTS
On April 16, 1998, Arthur Andersen LLP informed the Company that the
client-auditor relationship between Arthur Andersen LLP and the Company had
ceased. Although the Company had not communicated such fact to Arthur Andersen
LLP, this notification followed the Company's determination to seek competitive
bids from independent accounting firms, including Arthur Andersen LLP, with
respect to the engagement of independent accountants to audit the Company's
financial statements for the year ending December 31, 1998. The Company and
Arthur Andersen LLP concur that such notification constitutes an indication by
Arthur Andersen LLP that it declines to stand for re-election within the meaning
of Item 4 (a) of Form 8-K, although the Company is not required to seek
shareholder approval or ratification of the appointment of independent
accountants. In selecting independent accountants for its fiscal year ending
December 31, 1998, the Company placed no limitations on Arthur Andersen LLP in
responding fully to inquiries of the successor accountant.
The reports of Arthur Andersen LLP on the Company's financial
statements for each of the years in the two year period ended December 31, 1997
contained no adverse opinion or disclaimer of opinion and were not qualified or
modified as to uncertainty, audit scope or accounting principle.
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<PAGE> 12
In connection with its audits for each of the two years ended December
31, 1997 and from January 1, 1998 through April 16, 1998, (i) there were no
disagreements between the Company and Arthur Andersen LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements if not resolved to the satisfaction of
Arthur Andersen LLP would have caused them to make reference thereto in their
report on the financial statements for such fiscal years and (ii) there were no
reportable events as defined in Regulation S-K Item 304 (a) (1) (v).
The Company provided Arthur Andersen LLP with a copy of the above
disclosures which the Company made in response to Item 304 (a) of Regulation
S-K. Arthur Anderson LLP furnished the Securities and Exchange Commission a
letter stating it agrees with such disclosures.
The Company engaged Deloitte & Touche LLP as its new independent
accountants as of June 24, 1998. During the two fiscal years ending December 31,
1997 and through June 24, 1998, the Company had not consulted with Deloitte &
Touche LLP regarding either (i) (A) the application of accounting principles to
a specified translation, either completed or proposed; or (B) the type of audit
opinion that might be rendered on the Company's financial statements, and either
a written report was provided to the Company or oral advice was provided that
Deloitte & Touche LLP concluded was an important factor considered by the
Company in reaching a decision as to the accounting, auditing or financial
reporting issue; or (ii) any matter that was either the subject of disagreement
(as the term is defined in Item 304 (a) (1) (iv) of Regulation S-K and the
related instructions to Item 304 of Regulation S-K) or a reportable event (as
that term is described in Item 304 (a) (1) (v) of Regulation S-K).
The Board of Directors, upon the recommendation of the Company's Audit
Committee, has appointed Deloitte & Touche LLP as the Company's independent
accountants to audit the consolidated financial statements of the Company for
the 2000 fiscal year. Representatives of Deloitte & Touche LLP will be present
at the meeting to respond to appropriate questions from the shareholders and
will be given the opportunity to make a statement should they desire to do so.
OTHER BUSINESS MATTERS
The only matters which management intends to present to the meeting are
set forth in the Notice of Annual Meeting. Management knows of no other matters
which will be brought before the meeting by any other person. However, if any
other matters are properly brought before the meeting, the persons named on the
enclosed form of proxy intend to vote on such matters in accordance with their
best judgment on such matters.
Enclosed with the Notice of Annual Meeting and this Proxy Statement is
a copy of the Company's Annual Report on Form 10-K. The Company has also
published a formal annual report which is available without charge to
shareholders upon request. Address all requests, in writing, to the Investor
Relations Department, Credit Acceptance Corporation, P.O. Box 513, Southfield,
Michigan 48037.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Proposals by shareholders which are intended to be presented at the
2001 Annual Meeting of Shareholders must be submitted to the Secretary of the
Company no later than December 15, 2000 in order to be considered for inclusion
in the Company's 2001 proxy materials. The Company expects the persons named as
proxies for the 2001 Annual Meeting of Shareholders to use their discretionary
voting authority with respect to any proposal presented at that meeting by a
shareholder who does not provide the Company with written notice of such
proposal prior to February 28, 2001.
By Order of the Board of Directors,
Donald A. Foss
Chairman and Chief Executive Officer
April 14, 2000
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<PAGE> 13
PROXY PROXY
CREDIT ACCEPTANCE CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS MAY 22, 2000
The undersigned hereby constitutes and appoints Donald A. Foss and Brett
A. Roberts, and each of them, attorneys and proxies, with the power of
substitution in each of them, to vote all of the shares of Common Stock of
Credit Acceptance Corporation that the undersigned is entitled to vote at the
Annual Meeting of Shareholders of the Corporation to be held on May 22, 2000 at
9:00 a.m., local time, and at any adjournments thereof, upon all matters
properly coming before the meeting including, without limitation, those as set
forth in the related Notice of Meeting and Proxy Statement. This Proxy, when
properly executed, will be voted in the manner directed. IF NO SPECIFICATION
IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEES NAMED ON THE OTHER SIDE. In
their discretion, to the extent permitted by law, the proxies are also
authorized to vote upon such other matters as may properly come before the
meeting, including the election of any person to the Board of Directors where a
nominee named in the Proxy Statement dated April 14, 2000 is unable to serve
or, for good cause, will not serve. The undersigned acknowledges receipt of the
Notice of Annual Meeting of Shareholders and the Proxy Statement dated April
14, 2000 and ratifies all that the proxies or either of them or their
substitutes may lawfully do or cause to be done by virtue hereof and revokes
all former proxies.
YOUR VOTE IS IMPORTANT! PLEASE MARK, SIGN, DATE THIS PROXY ON THE REVERSE SIDE
AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
(Continued and to be signed on reverse side)
- --------------------------------------------------------------------------------
<PAGE> 14
CREDIT ACCEPTANCE CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. //
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[ ]
<S><C>
For Withheld For All
ELECTION OF DIRECTORS All All (Except)
NOMINEES:01 Donald A. Foss-02 MARK HERE IF YOU PLAN TO
Harry E. Craig-03 Thomas A. FitzSimmons- // // // ATTEND THE MEETING //
04 Sam M. LaFata-05 Thomas N. Tryforos
(INSTRUCTION: To withhold authority to
vote for any individual nominee, write
that nominee's name in the space provided
below)
- ------------------------------------------
Dated: , 2000
------------------------
------------------------------------
Signature(s)
------------------------------------
Please sign exactly as name appears
on the proxy card. 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 an authorized person.
PLEASE MARK, SIGN, DATE THIS PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
</TABLE>
