<PAGE>
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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:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CONSUMER PORTFOLIO SERVICES, INC.
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
PRELIMINARY COPIES
- ------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF
CONSUMER PORTFOLIO SERVICES, INC.
2 Ada, Irvine, California 92618
Phone: 714-753-6800
-----------
The annual meeting of the shareholders of Consumer Portfolio Services, Inc. (the
"Company") will be held at 10:00 a.m., local time, on Thursday, July 10, 1997 at
the Company's offices, 2 Ada, Irvine, California for the following purposes:
1. To elect the Company's entire Board of Directors for a one-year term.
2. To consider an amendment to the Company's bylaws that would increase the
number of authorized directors from a fixed number of five to a variable
range of from five to nine, and set the authorized number within that range
at six.
3. To consider the proposed CPS 1997 Long-Term Incentive Plan.
4. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997.
5. To transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on June 5, 1997 are
entitled to notice of and to vote at the meeting.
Whether or not you expect to attend the meeting in person, please complete,
date, and sign the enclosed proxy exactly as your name appears thereon and
promptly return it in the envelope provided, which requires no postage if mailed
in the United States. Proxies may be revoked at any time and, if you attend the
meeting in person, your executed proxy will be returned to you upon request.
By Order of the Board of Directors
Jeffrey P. Fritz, Secretary
Dated: June 10, 1997
<PAGE>
PRELIMINARY COPIES
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CONSUMER PORTFOLIO SERVICES, INC.
2 Ada
Irvine, California 92618
714-753-6800
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 10, 1997
-----------
INTRODUCTION
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Consumer Portfolio Services, Inc. (the
"Company" or "CPS") for use at the annual meeting of the shareholders to be held
at 10:00 a.m., local time, on Thursday, July 10, 1997 at the Company's offices,
2 Ada, Irvine, California 92618, and at any adjournment thereof (the "Annual
Meeting").
All shares represented by properly executed proxies received in time will be
voted at the Annual Meeting and, where the manner of voting is specified on the
proxy, will be voted in accordance with such specifications. Shares represented
by properly executed proxies on which no specification has been made will be
voted any shareholder who executes and returns a proxy may revoke it at any time
prior to the voting of the proxy by giving written notice to the Secretary of
the Company, by executing a later-dated proxy, or by attending the meeting and
giving oral notice of revocation to the Secretary of the Company.
The Board of Directors of the Company has fixed the close of business on June
5, 1997 as the record date for determining the holders of outstanding shares of
the Company's Common Stock, without par value ("CPS Common Stock") entitled to
notice of, and to vote at the Annual Meeting. On that date, there were
14,____,____ shares of CPS Common Stock issued and outstanding. Each such share
of CPS Common Stock is entitled to one vote on all matters to be voted upon at
the meeting, except that holders of CPS Common Stock have the right to
cumulative voting in the election of directors, as described herein under the
heading "Voting of Shares."
The notice of the Annual Meeting, this proxy statement and the form of proxy
are first being mailed to shareholders of the Company on or about June 10, 1997.
Expenses incurred in connection with the solicitation of proxies will be paid by
the Company. The proxies are being solicited principally by mail. In addition,
directors, officers and regular employees of the Company may solicit proxies
personally or by telephone, for which they will receive no consideration other
than their regular compensation. The Company will also request brokerage
houses, nominees, custodians and fiduciaries to forward soliciting material to
the beneficial owners of Common Stock of the Company and will reimburse such
persons for their expenses so incurred.
2
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Nominations
Each of the of the Company's six current directors have been nominated for
election as directors at the Annual Meeting, and each has agreed to serve as a
director if elected. Directors of the Company are elected annually to serve
until the next annual meeting of shareholders and until their successors are
duly elected and qualified.
The names of the nominees, their principal occupations, and certain other
information regarding them set forth below is based upon information furnished
to the Company by them.
<TABLE>
<CAPTION>
Name Age Position(s) with the Company
- ---- --- ----------------------------
<S> <C> <C>
Charles E. Bradley, Sr. 67 Chairman of the Board of Directors
Charles E. Bradley, Jr. 37 President, Chief Executive Officer, and
Director
William B. Roberts 60 Director
John G. Poole 54 Vice Chairman of the Board of Directors
Robert A. Simms 58 Director
Thomas L. Chrystie 64 Director
</TABLE>
Charles E. Bradley, Sr. has been the Chairman of the Board of the Company
since its formation in March 1991. Mr. Bradley is one of the founders of
Stanwich Partners, Inc. ("Stanwich"), a Connecticut investment firm which
acquires controlling interests in companies in conjunction with the existing
operating management of such companies, and has been President, a director and a
shareholder of that company since its formation in 1982. He is also President
and director of Reunion Industries, Inc., a publicly held company which
manufactures precision plastic products and provides engineered plastics
services. Mr. Bradley also served as President and a director of CPS Holdings,
Inc., the Company's former parent corporation, from August 1989 until its merger
into the Company in December 1995. He currently is a director of DeVlieg-
Bullard, Inc., Chatwins Group, Inc., Texon Energy Corp., General Housewares
Corp., NAB Asset Corporation (38% of whose outstanding shares of voting stock
are held by the Company), Zydeco Exploration, Inc., Sanitas, Inc. and Audits and
Surveys Worldwide, all of which are publicly-held corporations or are required
to file periodic reports under Section 13 or 15(d) of the Securities Exchange
Act of 1934. Mr. Bradley is the father of Charles E. Bradley, Jr.
Charles E. Bradley, Jr. has been the President and a director of the Company
since its formation in March 1991. In January 1992, Mr. Bradley was appointed
Chief Executive Officer of the Company. From March 1991 until December 1995 he
served as Vice President and a director of CPS Holdings, Inc. From April 1989
to November 1990, he served as Chief Operating Officer of Barnard and Company, a
private investment firm. From September 1987 to March 1989, Mr. Bradley, Jr.
was an associate of The Harding Group, a private investment banking firm. Mr.
Bradley, Jr. is currently serving as a director of NAB Asset Corporation,
Chatwins Group, Inc., Texon Energy Corporation, Thomas Nix Distributor, Inc.,
and CARS USA. Charles E. Bradley, Sr. is his father.
William B. Roberts has been a director of the Company since its formation in
March 1991. Since 1981, he has been the President of Monmouth Capital Corp., an
investment firm which specializes in management buyouts. Mr. Roberts serves on
the board of directors of Atlantic City Racing Association, a publicly-held
corporation, which owns and operates a race track.
John G. Poole has been a director of the Company since November 1993 and its
Vice Chairman since January 1996. He was a co-founder of Stanwich in 1982 and
has been a director, vice president and shareholder of that company since its
formation. Mr. Poole is a director of Reunion Industries, Inc., Sanitas, Inc.,
Chatwins Group, Inc., and DeVlieg-Bullard, Inc. Mr. Poole served as a director
and Vice President of CPS Holdings, Inc. from 1993 to 1995.
3
<PAGE>
Robert A. Simms has been a director of the Company since April 1995. He has
been the Chairman and Chief Executive Officer of Simms Capital Management, Inc.
since 1984. He is also a director of New York Bancorp, Arrhythmia Research
Technology, Inc. and the National Football Foundation and Hall of Fame. Mr.
Simms also serves on the Board of Overseers of Rutgers University and was
formerly a partner in Bear Stearns & Co.
Thomas L. Chrystie has been a director of the Company since April 1995. He
has been self-employed as an investor since 1988. His previous experience
includes 33 years at Merrill Lynch & Co. in various capacities including heading
Merrill Lynch's investment banking, capital markets and merchant banking
activities. In addition, he served as Merrill Lynch & Co.'s Chief Financial
Officer. He is also a director of Titanium Industries, Eonyx Corporation and
Wyoming Properties.
The Board of Directors has established an Audit Committee and Compensation and
Stock Option Committee. The members of the Audit Committee are Robert A. Simms,
Thomas L. Chrystie and William B. Roberts. The Audit Committee is empowered by
the Board of Directors to review the financial books and records of the Company
in consultation with the Company's accounting and auditing staff and its
independent auditors and to review with the accounting staff and independent
auditors any questions raised with respect to accounting and auditing policy and
procedure.
The members of the Compensation and Stock Option Committee are Robert A.
Simms, Thomas L. Chrystie and William B. Roberts. This Committee makes
recommendations to the Board of Directors as to general levels of compensation
for all employees of the Company, the annual salary of each of the executive
officers of the Company, authorizes the grants of options to employees under the
Company's 1991 Stock Option Plan, and reviews and approves compensation and
benefit plans of the Company.
The Company does not have a Nominating Committee. Shareholders who wish to
suggest individuals for possible future consideration for board positions should
direct recommendations to the Board of Directors at the Company's principal
offices.
The Board of Directors held four meetings and six times acted by written
consent during the year ended December 31, 1996. The Audit Committee met once
during the year ended December 31, 1996. The Compensation and Stock Option
Committee met once and twice acted by written consent during that same period.
Each director attended 75% or more of the meetings of the Board and of the
committees on which he served during such period.
The Company pays Messrs. Simms, Chrystie and Roberts a director's fee of
$1,000 per month plus $500 for each meeting attended. Since January 1, 1996,
the Company has paid salaries to Mr. Bradley, Sr. and to Mr. Poole at the annual
rates of $125,000 and $75,000, respectively, for serving as Chairman and Vice
Chairman, respectively, of the Board of Directors.
Assuming approval of Proposal No. 2, the six nominees for election as
directors at the Annual Meeting who receive the highest number of votes cast for
election will be duly elected directors upon completion of the vote tabulation
at the meeting, provided a majority of the outstanding shares of CPS Common
Stock as of the record date are present in person or by proxy at the meeting.
As discussed below, there is some ambiguity as to the number of directors
authorized to be elected to the Company's board of directors. Proposal No. 2,
if adopted, will confirm that such number is six. If Proposal No. 2 is not
adopted, then the Company plans to submit the question of the number of
authorized directors to a court for definitive determination. Proposal No. 2
will be presented at the Annual Meeting as the first order of business. It is
given the number "two" in this Proxy Statement and on the accompanying proxy
card to conform with standard practice of the securities industry, which assumes
that the first proposal at any regular meeting is the election of directors.
4
<PAGE>
PROPOSAL NO. 2
INCREASE IN NUMBER OF AUTHORIZED DIRECTORS
The number of authorized directors of the Company is set by its Bylaws. The
Board of Directors recommends that the Bylaws be amended to provide that the
number of authorized directors may vary within a range of from five to nine,
with the exact number initially to be six. The number of authorized directors
could thereafter be changed within that range by a bylaw or bylaw amendment
adopted by either the Board of Directors or by the shareholders. A change in
the limits of the authorized range could be effected only by a bylaw or bylaw
amendment adopted by the shareholders. The extent to which the Bylaws may give
authority to the Board of Directors to determine the number of authorized
directors is limited by the California General Corporation Law, which requires
that when the number of directors is specified as a range, then the maximum of
the range may be no more than twice the minimum, less one.
Prior to April 1995, the Company's bylaws provided that the number of
authorized directors would be not less than three nor more than five, with the
exact number to be fixed by resolution of the Board of Directors. The
authorized number of directors was then four. In April 1995 the Board of
Directors had the opportunity to add two distinguished individuals, Thomas L.
Chrystie and Robert A. Simms, as directors. To accomplish that end, the Board
of Directors approved resolutions to change the authorized range to not less
than three nor more than nine, to fix the exact number of authorized directors
within that range at six, and to elect Messrs. Chrystie and Simms to the
vacancies thereby created.
Because the resolutions fixed the number of authorized directors at six, which
exceeded the previously fixed maximum of five, and because a range of from three
to nine exceeds the limits of California law, the validity of these resolutions
is doubtful. Counsel has advised the Company that the election of six directors
by the shareholders at subsequent annual meetings (held in September 1995 and
July 1996) may be considered an implicit amendment of the Company's bylaws to
set the number of authorized directors at six, or may be considered to be an
election of six de facto directors (whose term in office might be subject to
challenge in a California state court proceeding), or may be considered an
election of whichever five of such individuals received the most shareholder
votes. As all six nominees received the exact same number of votes at the last
annual meeting, there is at present no basis for distinguishing five among them
from the sixth. The Company therefore believes that all six of the individuals
nominated at the last meeting of shareholders (who are the six individuals named
as nominees in this Proxy Statement) should be considered directors of the
Company.
A review of actions taken by the Board of Directors and its committees since
April 1995 has shown that no such action taken by a vote close enough that a
different interpretation of which individuals were duly elected members of the
board of directors would affect the outcome.
To avoid any doubt in the future as to the composition of the Company's Board
of Directors, and to allow some flexibility in the future as to the number of
individuals who may be elected to the Board of Directors, a resolution will be
introduced at the Annual Meeting to amend Section 2 of Article III of the
Company's Bylaws to read as follows:
"The authorized number of directors of this corporation shall be not less
than five nor more than nine. The exact number of authorized Directors
shall be six until changed, within the limits specified above, by a bylaw
amending this Section 3, duly adopted by the Board of Directors or by the
Shareholders."
The affirmative vote of a majority of the shares entitled to vote at the
Annual Meeting is required to approve the amendment described above. The Board
recommends a vote FOR the approval of the above amendment to the Company's
Bylaws. All proxies will be voted to approve the amendment to the Bylaws unless
otherwise directed on the enclosed proxy card.
5
<PAGE>
PROPOSAL NO. 3
APPROVAL OF CONSUMER PORTFOLIO SERVICES 1997
LONG-TERM INCENTIVE PLAN
The Company seeks shareholder approval of the 1997 Long-Term Incentive Plan
(the "1997 Plan") which has been approved by the Board of Directors to
supplement the 1991 Stock Option Plan (the "Existing Plan"). If approved by the
shareholders, the 1997 Plan will be effective as of May 1, 1997 and will expire
on April 30, 2007. The 1997 Plan authorizes the Compensation Committee, or such
other committee as is appointed by the Board to administer the 1997 Plan (the
"Committee"), to grant awards to employees of the Company or entities in which
the Company has a controlling or significant equity interest. Directors of the
Company are also eligible to participate, whether or not they are employees. As
of May 28, 1997, there were approximately 446 persons eligible to participate in
the 1997 Plan.
The principal reason for proposing adoption of the 1997 Plan is that the
Company has made grants under the existing Plan with respect to nearly all of
the shares authorized for issuance under the Existing Plan. The other major
reason for proposing adoption of the 1997 Plan is to increase flexibility as to
the forms that long-term incentive awards may take: the Existing Plan
authorizes grants only of stock options, while the 1997 Plan would also permit
the grant of stock appreciation rights and of restricted stock.
The Existing Plan was adopted in December 1991, and amended in November 1993
and September 1995 to increase the number of shares that may be made subject to
options granted thereunder. As amended, the Existing Plan authorizes issuance
of options with respect to an aggregate maximum of up to 2,700,000 shares. As
of May 1, 1997, there were options outstanding under the Existing Plan with
respect to 2,660,000 shares, or 98.5% of the total.
The Board of Directors has determined that the Company's ability to retain and
attract qualified personnel would be best served by authorizing the issuance of
additional long-term incentives, including stock options, and has therefore
adopted the 1997 Plan and directed that the 1997 Plan be submitted to the
shareholders for approval.
The purposes of the 1997 Plan are to align employees' long-term financial
interests with those of shareholders, reinforce a performance-oriented culture
and strategy, reward employees for increasing the Company's stock price over
time and to attract, retain and motivate employees. Outside directors are also
eligible to receive awards under the 1997 Plan. Such awards, if any, would be
expected to have the effect at aligning the directors' interests with those of
the shareholders.
The 1997 Plan authorizes the Committee to grant any of the following awards to
eligible employees: options to purchase common stock; stock appreciation rights;
other stock awards; and stock payments, any of which may be granted singly, in
tandem or in combination as the Committee may determine. Shares of stock
subject to awards are shares of common stock, no par value, of the Company.
<PAGE>
A stock option represents the right to purchase a specified number of shares
at a stated exercise price for a specified time. The 1997 Plan permits the grant
of options to purchase shares at not less than 100% of the fair market value of
the shares on the date of grant. The 1997 Plan permits the grant of stock
options in the form of nonqualified stock options as well as incentive stock
options as described in Section 422 of the Code.
The exercise period for any stock option granted will be determined by the
Committee at the time of grant, but will not be longer than 10 years from the
date of grant. Upon exercise, the option exercise price may be paid in cash, by
tendering shares of the Company stock owned by the optionee, by authorizing the
Company or its affiliates to sell the shares subject to the option and assigning
to the Company a sufficient amount of the sale proceeds to pay the option price,
or any combination of such methods. A stock appreciation right (an "SAR")
represents a right to receive a payment in cash, shares or a combination of both
equal to the excess of the fair market value of a specified number of shares on
the date the SAR is exercised over an amount which is no less than the fair
market value of the shares on the date of grant, unless such award is granted
retroactively in substitution for an existing stock option.
Stock awards (including restricted stock) and stock payments may also be
granted pursuant to the 1997 Plan. Stock awards may be made in shares of common
stock or denominated in units equivalent in value to shares or may otherwise be
based on or related to shares of common stock. All or part of any stock award
may be subject to conditions and restrictions established by the Committee,
which may include continuous service and/or achievement of performance goals.
The performance criteria that may be used by the Committee in granting awards
contingent on performance goals for officers to which Section 162(m) of the Code
is applicable consist of stock price, earnings level and return on equity. The
Committee may select one criterion or multiple criteria for measuring
performance and the measurement may be based on the performance of the Company
and/or on comparative performance with other companies. The Committee may grant
awards under the 1997 Plan which are not based on the performance criteria
specified above, in which case the compensation paid under such awards to
officers to which Section 162(m) of the Code is applicable may not be
deductible. In all cases, the minimum vesting requirement for all or a portion
of any stock award will be one year. Stock payments may be made pursuant to the
1997 Plan to compensate individuals for amounts otherwise payable in cash, in
which case the shares used for such payment will not be applied to the share
limitations of the 1997 Plan and no minimum vesting period will apply.
Neither the grant of stock options under the 1997 Plan nor the exercise of an
incentive stock option results in taxable income to the grantee under the Code.
The exercise of a nonqualified stock option results in taxable income to the
grantee equal to the excess, if any, of (i) the fair market value of the stock
on the date it is purchased over (ii) the price at which it is purchased, at
such time as the stock is purchased. The Company may claim an income tax
deduction equal to the amount on which the grantee of a nonqualified stock
option is taxed as described in the preceding sentence.
<PAGE>
Stock options, stock appreciation rights, other stock awards and stock
payments may be granted to employees of other companies who become employees of
the Company or an affiliate as a result of a merger, consolidation or
acquisition in substitution for stock options or other stock denominated awards
held by such employees in such other companies.
The 1997 Plan provides that an aggregate maximum of up to 1,500,000 shares of
the Company's common shares may be subject to awards under the 1997 Plan. No
more than 600,000 shares represented by awards may be granted to any single
individual over the life of the 1997 Plan. 1,500,000 shares of common stock
will be reserved for issuance under the 1997 Plan. All shares of common stock
subject to the 1997 Plan and covered by outstanding awards will be
proportionately adjusted, subject to the Committee's discretion, for any future
stock splits or consolidations or other corporate transactions.
The provisions governing the disposition of specific awards granted under the
1997 Plan in the event of the retirement, disability, death or other termination
of employment of the participant will be determined by the Committee at the time
such awards are granted. Awards granted under the 1997 Plan will not be
transferable or assignable other than by will or the laws of descent and
distribution.
Prior to a change of control of the Company, the Committee may alter, amend,
suspend or discontinue the 1997 Plan or any agreements granted thereunder to the
extent permitted by law. However, approval of a majority of the shareholders is
necessary to increase materially the number of shares available for awards or to
cancel any outstanding stock options or stock appreciation rights for the
purpose of replacing or regranting such awards with an exercise price that is
less than the original exercise price.
In the event of a change of control of the Company or an affiliate, the
Committee may take action to accelerate the time period for exercising or
realizing awards, to provide for the purchase of awards for an amount equal to
the amount that could have been obtained upon the exercise or realization of
rights had the awards been currently exercisable or payable, to make adjustments
to the awards to reflect the change of control, or to cause outstanding awards
to be assumed, or new rights substituted therefore, by the corporation surviving
such change.
A copy of the complete text of the 1997 Plan may be obtained by writing to the
Office of the Secretary, Consumer Portfolio Services, Inc., 2 Ada, Irvine, CA
92618.
Approval of the 1997 Plan requires the affirmative vote of a majority of the
votes cast at the meeting by the shareholders entitled to vote thereon.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
<PAGE>
PROPOSAL NO. 4
RATIFICATION OF
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the accounting firm of KPMG Peat Marwick
to be its independent auditors for the year ending December 31, 1997.
A proposal to ratify that appointment will be presented to shareholders at the
Annual Meeting. If the shareholders do not ratify the selection of KPMG Peat
Marwick another firm of independent public accountants will be selected by the
Board of Directors at the Annual Meeting. Representatives of KPMG Peat Marwick
will be present at the Annual Meeting. Such representatives will have an
opportunity to make a statement if they desire to do so, and will be available
to respond to appropriate questions from shareholders in attendance. The Board
recommends that you vote FOR this proposal.
9
<PAGE>
INFORMATION REGARDING THE COMPANY
Executive Compensation
The following pages set forth information in tabular form regarding
compensation of Company's compensation policies and practices.
Summary of Compensation
The following table sets forth all cash compensation earned during (i) the
fiscal year ended December 31, 1996, (ii) the nine-month period ended December
31, 1995, and (iii) the fiscal year ended March 30, 1995, by the Company's Chief
Executive Officer and by its four most highly compensated other executive
officers (the "named executive officers") who were serving as executive officers
at December 31, 1996. Information is presented for those specified periods,
rather than for three full years, because the Company in 1995 changed the end of
its fiscal year from March 31 to December 31.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation for Compensation
period shown Awards
- -----------------------------------------------------------------------------------------------
Name and Principal Position Period Ended Salary Bonus(1) Options/SARs(2)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles E. Bradley, Jr. December 1996 381,250 372,500 200,000
Chief Executive Officer December 1995 237,500 217,500 8,400
March 1995 250,000 225,000 150,000
- -----------------------------------------------------------------------------------------------
Nicholas P. Brockman December 1996 117,039 59,500 12,600
Senior Vice President, Asset Recovery December 1995 80,372 33,750 0
March 1995 99,226 46,636 32,000
- -----------------------------------------------------------------------------------------------
William L. Brummund, Jr. December 1996 117,039 55,500 5,000
Senior Vice President, Systems December 1995 80,372 33,750 7,600
March 1995 99,226 49,612 32,000
- -----------------------------------------------------------------------------------------------
Jeffrey P. Fritz December 1996 154,938 78,250 5,000
Senior Vice President, Finance December 1995 91,903 48,750 7,600
March 1995 104,834 52,416 32,000
- -----------------------------------------------------------------------------------------------
Curtis K. Powell December 1996 124,500 51,000 75,000
Senior Vice President, Marketing December 1995 81,000 41,250 47,600
March 1995 51,080 10,000 50,000
===============================================================================================
</TABLE>
(1) Bonus for each period is the bonus paid to date with respect to that
period. Bonus compensation paid in May 1996 was awarded based on
performance in the twelve-month period ended March 1996, and is therefore
allocated 25% to the year ended December 1996 and 75% to the nine-month
period ended December 1995. Bonus compensation paid in May 1997 was based
on performance in the year ended December 1996, and is therefore allocated
entirely to that period.
(2) Number of shares that may be purchased upon exercise of options that were
granted in the period shown.
Option and SAR Grants
The following table sets forth all options granted by the Company to the named
executive officers during the year ended December 31, 1996. All such options
were granted under the 1991 Stock Option Plan. No stock appreciation rights
(SARs) were granted by the Company during the year ended December 31, 1996. All
options were for the purchase of shares of the Common Stock.
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR - INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
Name Options % of Total Exercise or Expiration Potential Realizable Value at
Granted Options Granted Base Price Date Assumed Annual Rates of Stock
(No. of to Employees in ($/Share) Price Appreciation for Option
Shares) Year Ended Term
December 31,
1996 5% 10%
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charles E. Bradley, Jr. 200,000 39.0% $8.875 March 31, 2006 $1,109,340 $2,807,304
- --------------------------------------------------------------------------------------------------------------------------------
Nicholas P. Brockman 12,600 2.5% 8.875 March 31, 2006 69,888 176,860
- --------------------------------------------------------------------------------------------------------------------------------
William L. Brummund, Jr. 5,000 1.0% 8.875 March 31, 2006 27,733 70,183
- --------------------------------------------------------------------------------------------------------------------------------
Jeffrey P. Fritz 5,000 1.0% 8.875 March 31, 2006 27,733 70,183
- --------------------------------------------------------------------------------------------------------------------------------
Curtis K. Powell 75,000 14.6% 8.875 March 31, 2006 416,002 1,052,739
================================================================================================================================
</TABLE>
Aggregated Option Exercises and Fiscal Year End Option Value Table
The following table sets forth, as of December 31, 1996, the number of
unexercised options held by each executive officer named in the preceding table,
the number of shares subject to then exercisable and unexercisable options held
by such persons and the December 31, 1996 value of all unexercised options held
by such persons. Each option referred to in the table was granted under the
Company's 1991 Stock Option Plan at an option price per share equal to the fair
market value per share on the date of grant.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Shares Number of Unexercised In-the-Money
Name Acquired on Value Options at Options at December 31, 1996(1)
Exercise Realized December 31, 1996 Exercisable/Unexercisable
Exercisable/Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Charles E. Bradley, Jr. 70,000 $677,950 249,040/131,200 $821,805/$755,050
- ------------------------------------------------------------------------------------------------------------------------------------
Nicholas P. Brockman 54,000 467,500 18,200/81,400 159,250/533,025
- ------------------------------------------------------------------------------------------------------------------------------------
William L. Brummund, Jr. 40,000 265,000 31,200/81,400 273,000/516,875
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey P. Fritz 20,000 140,000 52,200/81,400 455,000/516,875
- ------------------------------------------------------------------------------------------------------------------------------------
Curtis K. Powell 20,000 110,250 9,300/143,300 37,200/470,075
====================================================================================================================================
</TABLE>
(1) Valuation is based on the last sales price on December 31, 1996 of $11.25
per share, as reported by Nasdaq.
Bonus Plan
The named executive officers and other officers participate in a management
bonus plan, pursuant to which such employees are entitled to earn cash bonuses,
if the Company achieves certain net income levels or goals established by the
Board of Directors. The amount of bonus payable to each officer is determined by
the Board of Directors in its discretion.
11
<PAGE>
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
The Compensation Committee of the Board of Directors during the fiscal year
ended December 31, 1996 comprised Thomas L. Chrystie, William B. Roberts and
Robert A. Simms. None of the members of the Compensation Committee are present
or former employees of the Company.
Director Compensation
During the year ended December 31, 1996, the Company paid director
compensation of $125,000 to Mr. Bradley, Sr., for his service as Chairman of the
Board of Directors, and $75,000 to Mr. Poole for his service as Vice-Chairman of
the Board of Directors. Mr. Bradley, Jr., President of the Company, received no
additional compensation for his service as a director. The remaining directors,
Messrs. Chrystie, Roberts and Simms, received a retainer of $1,000 per month and
an additional fee of $500 per meeting.
Performance Graph
The following graph compares the yearly change in the Company's cumulative
total shareholder return on its common stock from October 22, 1992 (the date of
its initial public offering) through December 31, 1996, with (i) the cumulative
total return of the Center for Research in Security Prices ("CRSP") Index for
the Nasdaq Stock Market (U.S. Companies), and (ii) the cumulative total return
of the CRSP Index for Nasdaq Bank Stocks. The graph assumes $100 was invested
on October 22, 1992 in the Company's common stock, and in each of the two
indices shown, and that all dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG CONSUMER PORTFOLIO SERVICES, INC.,
NASDAQ STOCK MARKET (U.S. COMPANIES) AND NASDAQ BANK STOCKS.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
12/91 10/92 12/92 12/93 12/94 12/95 12/96
- ------------------------------------------------------------------------------
CPSS.................. -- 100.0 126.2 171.4 271.4 347.6 428.6
- ------------------------------------------------------------------------------
Nasdaq Stock Market... 100 -- 116.4 133.6 130.6 184.7 227.2
- ------------------------------------------------------------------------------
Nasdaq Bank Stocks.... 100 -- 145.6 166.0 165.4 246.3 325.6
- ------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number and percentage of shares of CPS
Common Stock (its only class of voting securities) owned beneficially as of
April 30, 1997 (i) by each person known to the Company to own beneficially more
than 5% of the outstanding Common Stock, (ii) by each director and named
executive officer of the Company, and (iii) by all directors and executive
officers of the Company as a group. Except as otherwise indicated, and subject
to applicable community property and similar laws, each of the persons named has
sole voting and investment power with respect to the shares shown as
beneficially owned by such persons. The address of Messrs. Bradley, Jr.,
Brockman, Fritz, Brummund and Powell is c/o Consumer Portfolio Services, Inc., 2
Ada, Irvine, CA 92618.
<TABLE>
<CAPTION>
Name & Address of Amount & Nature of Percent of
Beneficial Owner Beneficial Ownership (1) Class
----------------- ------------------------ ----------
<S> <C> <C>
Charles E. Bradley, Sr.................. 2,895,137(2) 19.5%
Stanwich Partners, Inc., 62
Southfield Avenue,
Stamford, CT 06902
William B. Roberts...................... 1,233,982 8.5%
Monmouth Capital Corp., 126 East
56th Street, 12th Floor
New York, NY 10022
John G. Poole........................... 276,360(3) 2.0%
Stanwich Partners, Inc., 62
Southfield Avenue,
Stamford, CT 06902
Thomas L. Chrystie...................... 100,000(4) *
P.O. Box 640
Wilson, WY 83014
Robert A. Simms......................... 227,144(5) 1.6%
55 Railroad Ave., Plaza Suite
Greenwich, CT 06830
Charles E. Bradley, Jr.................. 1,572,920(6) 10.8%
Nicholas P. Brockman.................... 90,600 *
William L. Brummund, Jr................. 89,600 *
Jeffrey P. Fritz........................ 90,600 *
Curtis K. Powell........................ 19,300 *
All officers and directors as a group
(sixteen persons)..................... 6,128,969(7) 39.1%
Sun Life Insurance Company of America(8) 1,013,332 7.1%
One Sun America Center, Los Angeles, CA
90067
Robert T. Gilhuly and Kimball J.
Bradley, Trustees...................... 1,058,818(9) 7.4%
c/o Cummings & Lockwood
Two Greenwich Plaza, Box 2505,
Greenwich, CT 06830
</TABLE>
- ------------------
* Less than 1%
(1) Includes the following shares which are not currently outstanding but which
the named individuals have the right to acquire currently or within 60 days
of April 30, 1997 upon exercise of options: Charles E. Bradley, Sr. -
600,000 shares; William B. Roberts - 200,000 shares; Thomas L. Chrystie -
30,000 shares; Robert A. Simms - 30,000 shares; Charles E. Bradley, Jr. -
267,640 shares; Jeffrey P. Fritz - 50,600 shares; William L. Brummund, Jr.
- 49,600 shares; Nicholas P. Brockman - 36,600 shares; Curtis K. Powell -
19,300 shares; and all directors and officers as a group (16 persons) -
1,406,666 shares. The shares described in this note are deemed to be
outstanding for the purpose of
13
<PAGE>
computing the percentage of outstanding Common Stock owned by such persons
individually and by the group, but are not deemed to be outstanding for the
purpose of computing the percentage of ownership of any other person.
(2) Includes 207,490 shares owned by the named person's spouse as to which he
has no voting or investment power; and 600,000 shares that Mr. Bradley,
Jr., has the presently exercisable right to acquire from Mr. Bradley, Sr.
(3) Includes 2,000 shares held by Mr. Poole as custodian for his children.
(4) Includes 70,000 shares held by the Thomas L. Chrystie Living Trust.
(5) Includes 16,944 shares owned by Mr. Simms' spouse as to which he has no
voting or investment power.
(6) Includes 211,738 shares held by a trust of which Mr. Bradley is the
beneficiary, as to which he has no voting or investment power. Also
includes, in addition to the 267,640 shares referred to in footnote 1,
600,000 shares that Mr. Bradley, Jr. has the presently exercisable right to
acquire from Mr. Bradley, Sr.
(7) Includes an aggregate of 1,406,666 shares which are not currently
outstanding, but which may be acquired by officers and directors of the
company within 60 days of April 30, 1997.
(8) Information included herein in reliance solely upon a report on Schedule
13G filed by the named person on March 7, 1996.
(9) These shares are held in trusts of which the beneficiaries are Charles E.
Bradley, Sr.'s adult children, including, among others, Charles E. Bradley,
Jr., (as to 211,738 shares) and Kimball J. Bradley (as to 211,802 shares).
Compliance with Section 16 (a) of the Securities Exchange Act of 1934
The Company's directors, certain officers, and persons holding more than ten
percent of the Company's common stock are required to report, within certain
periods, their initial ownership of and any subsequent transactions in any of
the Company's equity securities. Based solely upon reports furnished to the
Company and written representations and information provided to the Company by
the persons required to make such filings, all such individuals have satisfied
such filing requirements in full, except that Robert Simms, a director, in
October 1996 filed late two reports (each relating to one transaction); Eugene
Warner, then an officer and Richard Trotter, an officer, each filed late one
report (each report relating to one transaction); and Mark Creatura and James
Stock, officers, each filed late their initial reports. All transactions and
holdings of which the Company has knowledge have now been reported.
Certain Transactions
From January 1, 1992 through December 31, 1995 the Company retained Stanwich
(a corporation of which Charles E. Bradley, Sr. and John G. Poole are principal
shareholders) to provide consulting services for compensation at the rate of
$350,000 per year. Effective January 1, 1996, upon expiration of the prior
agreement, the Company and Stanwich agreed to continue the consulting
arrangement for an additional three-year period, at a reduced rate of
compensation of $75,000 per year. The current rate was arrived at by
negotiation between Stanwich and the independent directors of the Company. Such
negotiations took into account the prior rate of compensation, the services
performed by Stanwich in the past, and the expectation that a reduced level of
consulting service would be required as the Company matured. Under both the
current and prior agreements, Stanwich agreed to provide such level of
consulting services relating to strategic business and tax planning and
investment analysis as the Company reasonably may request. No fixed, minimum or
maximum number of hours of service is or was specified.
In January 1997, the Company acquired 80% of the outstanding shares of the
capital stock of Stanwich Leasing, Inc. ("SLI") for an aggregate purchase price
of $100,000. SLI's selling shareholders included Charles E. Bradley, Sr. and
John G. Poole, each of whom is an officer, director and shareholder of the
Company and who received, respectively, $45,000 and $15,000 of the purchase
price. Messrs. Bradley, Sr. and Poole, the founders of SLI, purchased their SLI
shares in 1996 for $450 and $150, respectively. SLI and its 80% owned
subsidiary, PIC Leasing Corp. ("PIC"), are in the business of leasing equipment
and containers to others. At December 31, 1996, SLI and PIC together had
approximately $2.0 million of assets under lease, and a book value of $37,000.
Approximately 6% of the assets under lease were leased to corporate lessees with
which Messrs. Bradley, Sr. and
14
<PAGE>
Poole are affiliated. SLI is indebted in the amount of $500,000 to a company of
which Messrs. Bradley, Sr. and Poole are the indirect majority owners. This debt
constitutes the purchase price for SLI's acquisition of PIC in 1996. The
purchase price for SLI was determined by negotiation between the Company and
SLI's selling shareholders. The transaction was approved by the Company's
disinterested directors, consisting of Messrs. Chrystie, Roberts and Simms. The
remaining 20% of SLI not acquired by the Company is held by Charles E. Bradley,
Jr., who is the President and a director of the Company.
The agreements and arrangements described above were not entered into between
parties negotiating or dealing on an arm's length basis, but were entered into
by the Company with the parties who personally benefited from such transactions
and who had a control or fiduciary relationship with the Company.
VOTING OF SHARES
The Board of Directors recommends that an affirmative vote be cast on favor of
each of the proposals listed on the proxy card.
The Board of Directors knows of no other matters that may be brought before
the meeting which require submission to a vote of the shareholders. If any
other matters are properly brought before the meeting, however, the persons
named in the enclosed proxy or their substitutes will vote in accordance with
their best judgment on such matters.
Holders of CPS Common Stock are entitled to one vote per share on each matter
other than election of directors. As to election of directors, each holder of
CPS Common Stock may cumulate such holder's votes and give any nominee an
aggregate number of votes equal to the number of directors to be elected
multiplied by the number of shares of CPS Common Stock held of record by such
holder as of the record date, or distribute such aggregate number of votes among
as many nominees as the holder thinks fit. However, no such holder shall be
entitled to cumulate votes for any nominee unless such nominee's name has been
placed in nomination prior to the voting and the holder has given notice AT THE
ANNUAL MEETING prior to the voting of the holder's intention to cumulate votes.
If any one holder has given such notice, all holders may cumulate their votes
for nominees.
Votes cast in person or by proxy at the Annual Meeting will be tabulated by
the Inspector of Elections with the assistance of the Company's transfer agent.
The Inspector of Elections will also determine whether or not a quorum is
present. The affirmative vote of a majority of shares entitled to vote, whether
or not present at the meeting, is required for approval of Proposal No. 2
(amendment of the Bylaws), and the affirmative vote of a majority of the shares
represented and voting at a duly held meeting at which a quorum is present is
required for approval of Proposal No. 3 (1997 Long-Term Incentive Plan) and
Proposal No. 4 (Selection of Independent Auditors). In general, California law
also provides that a quorum consists of a majority of the shares entitled to
vote, represented either in person or by proxy. The Inspector of elections will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum but as not voting for purposes of
determining the approval of any matter submitted to the shareholders for a vote.
Any proxy which is returned using the form of proxy enclosed and which is not
marked as to a particular item will be voted FOR the election of nominees for
director named herein; FOR an increase in the number of authorized directors
from five to a range of from five to nine; FOR the approval of the CPS 1997
Long-Term Incentive Plan; and FOR the ratification of the appointment of KPMG
Peat Marwick as the Company's independent auditors for the year ending December
31, 1997; and will be deemed to grant discretionary authority to vote upon any
other matters properly coming before the meeting. If a broker indicates on the
enclosed proxy or its substitute that it does not have discretionary authority
as to certain shares to vote on a particular matter ("broker non-votes"), those
shares will not be considered as voting with respect to that matter. While
there is no definitive specific statutory or case law authority in California
concerning the proper treatment of abstentions and broker non-votes, the Company
believes that the tabulation procedures to be followed by the Inspector of
Elections are consistent with the general statutory requirements in California
concerning voting of shares and determination of a quorum.
15
<PAGE>
SHAREHOLDER PROPOSALS
The Company expects to hold its 1998 Annual Meeting of Shareholders in June
1998. In order to be considered for inclusion in the Company's Proxy statement
and form of proxy for the 1998 Annual Meeting, any proposals by shareholders
intended to be presented at such meeting must be received by the Secretary of
the Company at 2 Ada, Irvine, California 92618 by no later than April 1, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
Jeffrey P. Fritz
Secretary
Dated: June 10, 1997
Irvine, California 92618
16
<PAGE>
PRELIMINARY COPIES
- ------------------
FORM OF PROXY
CONSUMER PORTFOLIO SERVICES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JULY 10, 1997
The undersigned shareholder of CONSUMER PORTFOLIO SERVICES, INC., a California
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement with respect to the Annual Meeting of
Shareholders of Consumer Portfolio Services, Inc. to be held at the 2 Ada,
Irvine, California 92618 on Thursday, July 10, 1997 at 10:00 a.m., and hereby
appoints Charles E. Bradley, Jr. and Jeffrey P. Fritz, and each of them, proxies
and attorneys-in-fact, each with power of substitution and revocation, and each
with all powers that the undersigned would possess if personally present, to
vote the Consumer Portfolio Services, Inc. Common Stock of the undersigned at
such meeting and any postponements or adjournments of such meeting, as set forth
below, and in their discretion upon any other business that may properly come
before the meeting (and any such postponements or adjournments).
THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED, FOR THE
ELECTION OF THE NOMINEES, FOR PROPOSALS 2, 3 AND 4, AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY
POSTPONEMENTS OR ADJOURNMENTS THEREOF.
(IMPORTANT - TO BE SIGNED AND DATED ON REVERSE SIDE)
/SEE REVERSE SIDE/
<PAGE>
<TABLE>
/x/ Please mark
votes as in
this example PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THIS CARD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C>
1. Election of Directors Nominees: 2. To approve an amendment to the / / / / / /
Charles E. Bradley, Sr., Charles E. Bradley, Jr., Company's Bylaws to increase the
John G. Poole, Robert A. Simms, William B. Roberts number of authorized directors from
and Thomas L. Chrystie a fixed number of five to a variable
range of from five to nine, and to
FOR ALL WITHHELD set the authorized number within
NOMINEES FROM ALL that range at six.
NOMINEES
/ / / / MARK HERE FOR / / 3. To approve the 1997 CPS Long-Term / / / / / /
ADDRESS CHANGE Incentive Plan, as described in
AND NOTE BELOW the Proxy Statement.
/ /---------------------------------- 4. To ratify the appointment of KPMG / / / / / /
For all nominees except as noted above Peat Marwick LLP as independent
auditors of the Company for the
year ending December 31, 1997.
5. To transact such other business as
may properly come before the meeting
or any adjournment(s) thereof.
This proxy should be signed by the
shareholder(s) exactly as his or her
name(s) appear(s) hereon, dated and
returned promptly in the enclosed
envelope. Persons signing in a
fiduciary capacity should so
indicate. If shares are held by
joint tenants or as community
property, both persons should sign.
Signature:_____________________________ Date:_________________ Signature:_____________________________ Date:________________
</TABLE>
2
