<PAGE>
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
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
GREEN TREE FINANCIAL CORPORATION
(Name of Registrant as Specified In Its Charter)
R.R. DONNELLEY FINANCIAL
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which 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:*
(4) Proposed maximum aggregate value of transaction:
- --------
*Set forth the amount on which the filing is calculated and state how it was
determined.
[_] 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:
Notes:
<PAGE>
[LOGO OF GREEN TREE FINANCIAL CORPORATION APPEARS HERE]
GREEN TREE FINANCIAL CORPORATION
1100 LANDMARK TOWERS
345 ST. PETER STREET
SAINT PAUL, MINNESOTA 55102-1639
April 15, 1994
To Our Shareholders:
You are cordially invited to attend the 1994 Annual Meeting of Shareholders
of Green Tree Financial Corporation (the "Company") which will be held at 2:00
p.m. on Wednesday, May 18, 1994, in the Saint Paul Ballroom, The Minnesota
Club, 317 North Washington Street, Saint Paul, Minnesota.
At the meeting of shareholders you will be asked to: (i) elect three
Directors, (ii) increase the Company's number of authorized shares of Common
Stock to 150 million shares, (iii) ratify the selection of the Company's
independent auditors, and (iv) transact such other business as may properly
come before the meeting or any adjournment thereof. Following these matters,
management will present a current report on the activities of the Company. You
will also have an opportunity to comment on or inquire about aspects of the
business of the Company that are of interest to you.
Please read the enclosed Notice of Annual Meeting and Proxy Statement so that
you are informed about the business to come before the meeting. Please mark,
sign and return the accompanying Proxy Card promptly in the enclosed postage-
paid envelope. We hope you will be able to attend the meeting on May 18.
WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE MARK, SIGN AND RETURN YOUR PROXY
CARD PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.
Sincerely,
/s/ Lawrence M. Coss
LAWRENCE M. COSS
Chairman, President and
Chief Executive Officer
<PAGE>
[LOGO OF GREEN TREE FINANCIAL CORPORATION APPEARS HERE]
GREEN TREE FINANCIAL CORPORATION
----------------
NOTICE OF 1994 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 18, 1994
To the Shareholders of
Green Tree Financial Corporation:
NOTICE IS HEREBY GIVEN that the 1994 Annual Meeting of Shareholders of Green
Tree Financial Corporation, a Minnesota corporation (the "Company"), has been
called to be held in the Saint Paul Ballroom, The Minnesota Club, 317 North
Washington Street, Saint Paul, Minnesota, on Wednesday, May 18, 1994, at 2:00
p.m., for the following purposes:
1. To elect three Directors of the Company to hold office until their terms
shall expire and until their successors shall have been duly elected and
qualified.
2. To increase the Company's number of authorized shares of Common Stock to
150 million shares.
3. To ratify the selection of KPMG Peat Marwick as independent auditors of
the Company for the fiscal year ending December 31, 1994.
4. To transact such other business as may properly come before the Annual
Meeting of Shareholders or at any adjournments thereof.
The Board of Directors has fixed the close of business on March 28, 1994, as
the record date for determination of shareholders entitled to notice of and to
vote at the meeting and at any adjournments thereof.
Please date, sign and mail the Proxy Card in the enclosed self-addressed
return envelope. Shareholders attending the meeting may withdraw their Proxies
at any time prior to their exercise by filing written notice with any officer
of the Company.
Dated:April 15, 1994
Saint Paul, Minnesota
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Richard G. Evans
Richard G. Evans, Secretary
<PAGE>
[LOGO OF GREEN TREE FINANCIAL CORPORATION APPEARS HERE]
GREEN TREE FINANCIAL CORPORATION
1100 LANDMARK TOWERS
345 ST. PETER STREET
SAINT PAUL, MINNESOTA 55102-1639
----------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 18, 1994
The Board of Directors of Green Tree Financial Corporation (the "Company") is
soliciting the accompanying Proxy in connection with the Annual Meeting of
Shareholders to be held on May 18, 1994, at 2:00 p.m., and any adjournments of
the meeting. This Proxy Statement and the enclosed Proxy Card are being mailed
to shareholders commencing on or about April 18, 1994.
The enclosed proxy may be revoked at any time before it is voted by: (i)
delivering to any officer of the Company a written notice of termination of the
proxy's authority, (ii) filing with an officer of the Company another proxy
bearing a later date, or (iii) appearing and voting at the meeting.
The Company will pay the costs of solicitation, including the cost of
preparing and mailing this Proxy Statement and Notice of Annual Meeting.
Solicitation will be primarily by mailing this Proxy Statement to all
shareholders entitled to vote at the meeting. Proxies may be solicited by
officers of the Company by telephone or in person, but at no compensation in
addition to their regular compensation as officers. The Company will reimburse
brokers, banks, and others holding shares for the cost of distributing proxy
materials to and obtaining proxies from third parties. The Company has retained
Beacon Hill Partners, Inc., to assist it in the solicitation of proxies, and
has agreed to pay such firm approximately $3,000 plus reasonable expenses
incurred on behalf of the Company, for its services. In addition, the Company
has retained Firstar Trust Company to tabulate and report on the votes cast by
shareholders.
Firstar Trust Company will treat abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum, but as
unvoted for purposes of determining the approval of any matter submitted to the
shareholders for a vote. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will be considered as present and entitled to vote for
purposes of determining the presence of a quorum, but will not be considered as
present and entitled to vote with respect to such matters.
Only the holders of the Company's Common Stock whose names of record appear
on the Company's books at the close of business on March 28, 1994 (the "Record
Date") will be entitled to vote at the Annual Meeting. At the close of business
on the Record Date, a total of 33,677,661 shares of Company Common Stock were
outstanding, each share being entitled to one vote.
A copy of the Company's Annual Report for the year ended December 31, 1993,
was furnished to each shareholder on or about March 31, 1994.
1
<PAGE>
ELECTION OF DIRECTOR
Pursuant to the Bylaws of the Company, the Board of Directors has established
the number of Directors at six. The Bylaws provide that the Directors are
divided into three classes, as equal in number as possible. Each class of
Directors generally serves a three-year term, unless otherwise determined by
the Board of Directors.
Three Directors are to be elected at the 1994 Annual Meeting of Shareholders.
Robert D. Potts, the Company's Executive Vice President and Chief Operating
Officer, was elected to the Board of Directors in February, 1994. The Board of
Directors has nominated W. Max McGee and Robert D. Potts for three-year terms
expiring at the 1997 Annual Meeting of Shareholders. In addition, the Board of
Directors has nominated Tania A. Modic for a two-year term expiring in 1996.
Kenneth S. Roberts retired as Executive Vice President and Chief Operating
Officer on January 1, 1994, and is not standing for reelection to the Board of
Directors. C. Thomas May, Jr. is also not standing for reelection.
The following table sets forth information, as of March 31, 1994, including
business experience during the past five years, as to the nominees for election
and as to the other Directors of the Company whose terms of office will
continue after the 1994 Annual Meeting of Shareholders.
The Board of Directors recommends that the shareholders vote FOR each
nominee. The affirmative vote of a majority of the shares of the Company's
Common Stock present at the meeting, in person or by proxy, is required to
elect each nominee.
NOMINEES FOR ELECTION AS DIRECTORS
<TABLE>
<CAPTION>
NOMINEE BUSINESS
FOR TERM EXPERIENCE DURING
NAME, POSITIONS, AND DIRECTOR EXPIRING THE PAST FIVE YEARS
OFFICES WITH COMPANY SINCE IN AGE AND OTHER DIRECTORSHIPS
- -------------------- -------- -------- --- -----------------------
<S> <C> <C> <C> <C>
W. Max McGee............ 1985 1997 61 Partner, Marno-Max Company, a real
Director estate and general investment
company, since 1981; Director of Two
Pesos, Inc.
Robert D. Potts......... 1994 1997 51 Executive Vice President and Chief
Executive Vice Operating Officer of the Company
President and Chief since December, 1993; Executive Vice
Operating Officer; President, Administration, October
Director 1993 to November 1993; Managing
Partner, Deloitte & Touche and its
predecessor, Touche Ross & Co.
Minneapolis, Minnesota, from 1989 to
May, 1993, and Partner to October,
1993.
Tania A. Modic.......... 1994 1996 44 Principal, Western Investments
Company, a private investment
company, since October, 1981; Chief
Financial and Administrative Officer
and Vice President, Finance, Millers
Outpost (May 1976 to October 1981);
Vice President, Corporate Finance,
Bank of America (June 1971 to May
1976).
</TABLE>
2
<PAGE>
CONTINUING DIRECTORS
<TABLE>
<CAPTION>
BUSINESS
TERM EXPERIENCE DURING
NAME, POSITIONS, AND DIRECTOR EXPIRES THE PAST FIVE YEARS
OFFICES WITH COMPANY SINCE IN AGE AND OTHER DIRECTORSHIPS
- -------------------- -------- ------- --- -----------------------
<S> <C> <C> <C> <C>
Lawrence M. Coss........ 1975 1996 55 Chairman of the Company since 1987;
President and Chief President and Chief Executive
Executive Officer; Officer of the Company since 1975;
Chairman of the Board Company founder.
Richard G. Evans........ 1991 1995 45 Executive Vice President and
Executive Vice Secretary of the Company since
President and December 1993; Senior Vice
Secretary; Director President, General Counsel and
Secretary from 1988 to 1993; Vice
President, General Counsel and
Secretary from 1985 to 1988.
Robert S. Nickoloff..... 1978 1995 64 Chairman of the Board, Medical
Director Innovation Capital, Inc; Director of
Minnesota Power.
</TABLE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company's Board of Directors has an Executive Committee which consisted
of Lawrence M. Coss, Robert S. Nickoloff and Kenneth S. Roberts for 1993. The
Executive Committee meets as necessary between meetings of the Board of
Directors to act on behalf of the Board or take any other action that may be
delegated to it. The Executive Committee conducted all its business between
meetings of the Board of Directors by written action during 1993. Following
the 1994 Annual Meeting, it is anticipated that Lawrence M. Coss, Robert S.
Nickoloff, and Robert D. Potts will be elected to the Executive Committee.
The Board of Directors has an Audit Committee which consisted of C. Thomas
May, Jr., W. Max McGee, and Robert S. Nickoloff for 1993. Among its duties,
the Audit Committee reviews and makes recommendations to the Board of
Directors with respect to designated financial and accounting matters. The
Audit Committee held three meetings during the year ended December 31, 1993.
Following the 1994 Annual Shareholder's Meeting, it is anticipated that Tania
A. Modic, W. Max McGee, and Robert S. Nickoloff will be elected to the Audit
Committee.
The Board of Directors has a Compensation Committee which consisted of C.
Thomas May, Jr., W. Max McGee, and Robert S. Nickoloff for 1993. Among its
duties, the Compensation Committee administers the provisions of the Company's
Key Employee Bonus Plan, 1987 Stock Option Plan and the Key Executive Stock
Bonus Plan. The Compensation Committee held one meeting during the year ended
December 31, 1993. After the 1994 Annual Shareholder's Meeting, it is
anticipated that Tania A. Modic, W. Max McGee, and Robert S. Nickoloff will be
elected to the Compensation Committee.
The Board of Directors has no standing nomination committee although the
Board of Directors plans to elect Lawrence M. Coss, W. Max McGee and Robert S.
Nickoloff to a newly-formed nomination committee shortly after the Annual
Meeting of Shareholders.
During the year ended December 31, 1993, the Board of Directors held seven
meetings. All incumbent Directors attended at least 75% of those meetings of
the Board and committees of which they were members that were held while they
were serving on the Board or on such committees.
During the year ended December 31, 1993, Directors received a fee of $2,000
per month plus travel expenses. In addition, members of the Audit Committee
received a fee of $1,250 per quarter. Outside Directors also received
compensation in the form of stock options.
3
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the executive
officers of the Company:
<TABLE>
<CAPTION>
NAME, POSITIONS, AND
OFFICES WITH THE COMPANY AGE BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
------------------------ --- ----------------------------------------------
<S> <C> <C>
Lawrence M. Coss......... 55 Chairman of the Company since 1987; President and
President and Chief Chief Executive Officer of the Company since
Executive Officer; 1975; Company founder; Director of the Company
Chairman of the Board since 1975 (term expires in 1996).
Robert D. Potts.......... 51 Executive Vice President and Chief Operating
Executive Vice President Officer of the Company since December, 1993;
and Executive Vice President, Administration, October
Chief Operating Officer; to November, 1993; Managing Partner of Deloitte &
Director Touche and its predecessor, Touche Ross & Co.,
Minneapolis, Minnesota 1989 to May 1993; Partner
of Deloitte & Touche to October 1993; Director of
the Company since 1994 (nominee for term expiring
in 1997).
Robert A. Hegstrom....... 52 Executive Vice President, Home Improvement
Executive Vice Division of the Company since December 1993;
President, Home Senior Vice President of the Company (1986 to
Improvement Division 1993); President and Chief Operating Officer of
Consolidated Casualty Company (subsidiary) since
1989; President and Chief Operating Officer of
Green Tree Life Insurance Company (subsidiary)
since 1988.
John W. Brink............ 48 Executive Vice President, Treasurer and Chief
Executive Vice Presi- Financial Officer of the Company since December
dent, Treasurer and 1993; Senior Vice President, Treasurer and Chief
Chief Financial Officer Financial Officer of the Company (1988 to 1993);
Vice President, Treasurer and Chief Financial
Officer (1986 to 1988).
Richard G. Evans......... 45 Executive Vice President and Secretary of the
Executive Vice President Company since December 1993; Senior Vice
and Secretary; Director President, General Counsel and Secretary of the
Company (1988 to 1993); Vice President, General
Counsel and Secretary (1985 to 1988); Director of
the Company since 1991 (term expires in 1995).
</TABLE>
4
<PAGE>
EXECUTIVE COMPENSATION
The annual compensation for executive officers, including salaries,
directors' fees, bonuses, and option awards for the years ended December 31,
1991, 1992, and 1993, was as follows:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------
NAME OF INDIVIDUAL
AND PRINCIPAL POSITION SALARY BONUS OPTIONS
- ---------------------- YEAR ($)(1) ($) (SHARES)
--------------------------------------
<S> <C> <C> <C> <C>
Lawrence M. Coss................... 1993 $ 433,600 $ 13,601,133(2) None
President and Chief 1992 433,600 4,684,572(3) None
Executive Officer; Chairman of the
Board 1991 435,000 4,960,318(4) 250,000(5)
Robert D. Potts.................... 1993 41,500 50,000 50,000(6)
Executive Vice President 1992 -- -- --
and Chief Operating Officer 1991 -- -- --
Kenneth S. Roberts................. 1993 397,500 600,000 None
former Executive Vice President 1992 387,364 500,000 None
and Chief Operating Officer; Di-
rector (7) 1991 362,000 425,000 60,000
Robert A. Hegstrom................. 1993 263,500 400,000 None
Executive Vice President, 1992 253,364 375,000 None
Home Improvement Division 1991 237,000 325,000 60,000
Richard G. Evans................... 1993 221,500 220,000 None
Executive Vice President 1992 212,364 180,000 None
and Secretary; Director 1991 179,000 155,000 60,000
John W. Brink...................... 1993 198,500 220,000 None
Executive Vice President, 1992 188,364 180,000 None
Treasurer and Chief Financial Of-
ficer 1991 177,000 155,000 60,000
</TABLE>
- --------
(1) Includes Director's fees, if applicable, car allowances, and employer
contributions to the Company's 401-(k) Plan.
(2) Includes $10,969,547 (221,607 shares) of Company Common Stock earned as
bonus, before stock withheld for federal and state taxes.
(3) Includes $3,255,889 (120,310 shares) of Company Common Stock earned as
bonus, before stock withheld for federal and state taxes.
(4) Includes $3,889,226 (83,192 shares) of Company Common Stock earned as
bonus, before stock withheld for federal and state taxes.
(5) Awarded pursuant to Mr. Coss's employment agreement. 50,000 options began
vesting annually on January 1, 1992, and each January 1 thereafter through
1996.
(6) Joined the Company in October, 1993. Granted 50,000 options for Common
Stock at an exercise price of $23.875 per share. Shares vest in one-third
increments in December 1996, 1997 and 1998.
(7) Retired as Executive Vice President and Chief Operating Officer on January
1, 1994. Not standing for reelection as a Director.
5
<PAGE>
In April 1991, the Company and Mr. Coss entered into an employment agreement
which extended Mr. Coss's previous employment and noncompetition agreement with
the Company from January 1, 1992, through December 31, 1996. The agreement
provides that Mr. Coss is entitled to receive 2 1/2% of the Company's pretax
income, after deductions for bonuses paid pursuant to the Key Executive Bonus
Program (described below) and certain other adjustments. The bonus will be
payable: (i) so long as the Key Executive Stock Bonus Program is in effect, 50%
in cash and 50% in Company Common Stock valued at $11.875 per share (the
closing price for the Company's Common Stock on the New York Stock Exchange on
the day the employment agreement was executed, adjusted for a 2-for-1 stock
dividend distributed on January 31, 1993); or (ii) in all other cases, 100% in
cash. In the event of a termination of employment after a Critical Event
(defined as the sale of all or substantially all of the assets of the Company
to, or the acquisition of more than 50% of the issued and outstanding voting
stock of the Company by, any person or group of persons acting in concert, or
if the Company is merged into another corporation or is consolidated with
another corporation), the Company shall pay the largest amount that does not
constitute an "excess parachute payment" within the meaning of Section 280G of
the Internal Revenue Code (the "Code"), as a termination payment, and Mr. Coss
may revoke his noncompetition agreement.
The Company has also entered into certain agreements with Messrs. Hegstrom,
Brink and Evans that provide for specified financial arrangements upon
termination of employment with the Company after a change in control.
Generally, the agreements were for an initial one-year term and thereafter are
automatically renewable for additional one-year terms unless the Company gives
notice to each officer at least 90 days prior to each December 31 that it does
not wish to extend the agreement; provided, however, that notwithstanding any
such notice by the Company not to extend, the agreements will continue for a
period of 24 months beyond their term if a change of control of the Company
occurs during such term. The agreements provide that after a change in control
of the Company, if one of the above officers leaves the Company's employ either
voluntarily or involuntarily (other than a termination for cause or due to
death or disability), he is entitled to compensation equal to three times the
sum of (i) the officer's annual base salary, and (ii) an amount equal to the
product of the officer's annual base salary multiplied by the percentage that
the discretionary bonus for the last complete fiscal year bears to the annual
base salary for the prior fiscal year. The agreements also require the payment
of all legal fees and expenses incurred by the officer in connection with such
a termination of employment.
OPTIONS GRANTED TO EXECUTIVE OFFICERS
DURING 1993
<TABLE>
<CAPTION>
POTENTIAL NET REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK APPRECIATION FOR OPTION TERM(3)
--------------------------------- -----------------------------------------
% OF TOTAL
SHARES OF COMMON OPTIONS GRANTED
STOCK UNDERLYING TO ALL EMPLOYEES EXERCISE EXPIRATION
NAME OPTIONS GRANTED IN 1993(1) PRICE DATE 5% 10%
- ---- ---------------- ---------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert D. Potts......... 50,000(2) 59% $23.875 12/14/2003 $2,715,750 $5,031,250
Executive Vice President
and Chief Operating
Officer
</TABLE>
- --------
(1) A total of 85,000 options were granted during 1993.
(2) One-third vest December 14, 1996; one-third vest December 14, 1997 and one-
third vest December 14, 1998.
(3) This is an assumed valuation and the actual value realized by the
optionholder will depend upon the value of the Common Stock over the
exercise price on the date, if any, of exercise of the Common Stock and
sale of the underlying shares.
6
<PAGE>
OPTIONS EXERCISED BY EXECUTIVE OFFICERS AND YEAR-END OPTION VALUES
AT DECEMBER 31, 1993
<TABLE>
<CAPTION>
SECURITIES NET VALUE OF SECURITIES NET VALUE OF
UNDERLYING EXERCISABLE UNDERLYING UNEXERCISABLE
SHARES NET VALUE EXERCISABLE OPTIONS AT UNEXERCISABLE OPTIONS AT
NAME ACQUIRED REALIZED (1) OPTIONS 12/31/93(2) OPTIONS 12/31/93(2)
- ---- -------- ------------ ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence M. Coss........ -- -- 100,000 $3,612,500 150,000 $5,418,750
President and Chief
Executive Officer;
Chairman of the Board
Robert D. Potts......... -- -- -- -- 50,000 $1,206,250
Executive Vice President
and Chief Operating
Officer; Director
Kenneth S. Roberts...... 30,000 $819,375 30,000 $ 890,625 -- --
former Executive Vice
President and Chief
Operating Officer;
Director (retired
January 1, 1994)
Robert A. Hegstrom...... -- -- 40,000 $1,187,500 20,000 $ 593,750
Executive Vice Presi-
dent, Home Improvement
Division
John W. Brink........... 10,000 $328,875 80,000 $2,850,000 20,000 $ 593,750
Executive Vice President,
Treasurer and Chief
Financial Officer
Richard G. Evans........ -- -- 50,000 $1,603,125 20,000 $ 593,750
Executive Vice President
and Secretary; Director
</TABLE>
- --------
(1) Based upon the sale price for Common Stock sold upon exercise or the
closing price on the New York Stock Exchange on the date of exercise for
underlying Common Stock held.
(2) Based upon closing price of the Company's Common Stock on December 31, 1993
($48) less the option exercise price.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
reviews and establishes compensation strategies and programs to ensure that the
Company attracts, retains, properly compensates, and motivates qualified
executives and other key employees. The Committee consists of the three
nonemployee Directors. It regularly meets in November or December, primarily to
review and determine bonuses for executive and other key personnel, and
otherwise meets on an as-needed basis. In 1993, the Committee met once.
The Committee believes that the Company's success depends greatly on the
efforts of its officers, regional managers, and other key personnel. The
Committee also believes the Company must compete with a number of other
financial institutions for qualified personnel. For these reasons, the Company
seeks to attract, retain, and motivate its key employees with compensation that
is competitive within the financial services industry, provided that
performance of the Company and the individual warrant such compensation.
Historically, the
7
<PAGE>
most significant component of key employee compensation has been remuneration
in the form of cash bonus and stock options pursuant to the Company's Key
Executive Bonus Program (the "Bonus Program") and its stock option plans. Base
salary levels for key Company employees are generally conservative compared to
similar positions at other financial institutions. Cash bonuses typically
represent a substantial portion of a key employee's total cash compensation.
The Committee believes that, by putting a substantial portion of a key
employee's compensation at risk, the employee is further motivated to perform
at a high level. The Committee also believes that this performance based
philosophy better aligns the employee's interests with those of the Company's
shareholders.
Under the Company's Bonus Program, cash bonuses aggregating up to 4% of the
Company's pretax earnings may be paid to executives and other key employees,
excluding the Company's Chief Executive Officer. Employees participating in the
program include Company officers, regional managers, and other key employees
designated by the Company's Chief Executive Officer and approved by the
Committee. For 1993, 87 employees participated in the Program.
The Committee meets to consider the amount of bonuses payable to Bonus
Program participants in November or December of each year, and bonuses are paid
before year end. The Committee determines bonus amounts on the basis of
recommendations of the Company's Chief Executive Officer who, in turn,
considers the written performance evaluations of the supervisors of
participating key employees. The Committee analyzes those recommendations in
light of a number of factors relating to both Company and individual
performance. Company performance factors include the level of profitability,
return on equity, volume of business and market share, comparison to prior
years' performance, actual versus budgeted performance, portfolio performance,
performance in relation to competitors, and other factors. Individual
performance factors include an assessment of contribution to business unit
performance, quality of work, individual and overall responsibilities, length
of service, and other factors.
During fiscal year 1993, the Committee considered the growth of the Company's
business and the returns it generated for its shareholders in setting annual
bonuses. In particular, the Committee considered the Company's significant
increase in manufactured home financing market share growth over 1992 levels
and the increase in the principal balance of manufactured home contracts
purchased in 1993 over 1992. Green Tree's market share of new manufactured home
shipments financed increased from approximately 20% in 1992 to approximately
27% in 1993. The principal balance of manufactured home contracts purchased
increased 102% in 1993 compared to contracts purchased in 1992. In addition,
the Company's principal balance of home improvement loan originations increased
125% during 1993 over 1992 and the Company's special products lending increased
37% during the year over 1992 levels. Strong loan originations led to record
net earnings of $116.4 million. Net earnings increased 112% during 1993, and
1993 earnings compared with 1992 earnings before extraordinary loss increased
61%. Furthermore, the Company strengthened its equity base by the sale of
2,875,000 shares of Common Stock in September, 1993. The Common Stock sale
significantly improved the Company's liquidity and capital structure as it
increased the Company's equity by 36% while only increasing outstanding shares
by 9%. Return on equity was 30% in 1993 versus 22% in 1992 (computed after the
1992 extraordinary loss, which was 30% before the extraordinary loss).
Although the Bonus Program enables the Company to pay up to 4% of pretax
profits as bonuses, the Company has not always paid out as much as was
available. For 1993, aggregate bonuses were $4,516,000 or 2.25% of pretax
earnings, and in the preceding two years aggregate bonuses under the Bonus
Program approximated 2.85% of pretax earnings. The above amounts include the
executive officers, other than the Company's Chief Executive Officer, who
received aggregate bonuses of $1,490,000 or .74% of pretax earnings,
8
<PAGE>
and, in the preceding two years, bonus compensation to this group of
individuals approximated 1.04% and 1.20% of pretax earnings, respectively.
Because a significant portion of key employee cash compensation is payable as a
bonus, the Committee believes it would continue to pay bonuses in a year for
which the level of earnings declined from the previous year, although the
amount of the bonuses paid would in all likelihood decline to reflect the
reduction in earnings.
The Committee believes that it is important for key employees to have long-
term incentives through an equity interest in the Company. Accordingly, the
Company from time to time has granted key employees stock options pursuant to
the Company's stock option plans. As of March 31, 1994, 44 of the Company's 87
total key employees (excluding the Company's Chief Executive Officer), held
options to acquire 1,178,884 shares of the Company's Common Stock. As of the
same date, the executive officers, other than the Company's Chief Executive
Officer, whose compensation is specifically disclosed herein, held stock and
options aggregating 546,523 shares of the Company's Common Stock. The Company
has no other long-term incentive plans.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The compensation of the Company's Chief Executive Officer is based entirely
on an employment agreement between Mr. Coss and the Company. The Company and
Mr. Coss entered into the current agreement in April 1991, extending similar
employment and compensation arrangements that have been in effect since 1985.
The current agreement expires on December 31, 1996, and provides that, in
addition to a base annual salary of $400,000, Mr. Coss will receive an annual
bonus as provided in his employment contract. For a description of Mr. Coss's
employment contract, see "Executive Compensation" on pages 5-6.
The Committee believes that the compensation arrangements with Mr. Coss are
consistent with the Company's overall approach to performance-related executive
compensation and serve to meet the Company's goal of retaining and motivating a
highly qualified Chief Executive Officer. The employment agreement links a
substantial portion of Mr. Coss's cash compensation to pretax earnings, with
the result that Chief Executive Officer compensation improves directly in
relation to improved Company profitability. The agreement also provides that a
significant portion of Mr. Coss's compensation is payable in Company stock. The
Committee believes that the equity position that Mr. Coss has in the Company as
a result of the employment agreement provides Mr. Coss with a long-term
incentive to remain with the Company, to contribute actively to the Company's
continued growth and development, and to manage the Company consistent with the
interests of its shareholders. As a long-term incentive, the Committee believes
Mr. Coss's equity holdings will motivate performance even if, in any particular
year, pretax earnings decline from prior years' levels.
By the Compensation Committee:
C. Thomas May, Jr.
W. Max McGee
Robert S. Nickoloff
9
<PAGE>
SHAREHOLDER RETURN COMPARISON
The graph below compares the yearly percentage change in the cumulative
total shareholder return (dividends reinvested) on the Company's Common Stock
against the S&P Composite-500 Stock Index and the S&P Financial Index for the
period of five fiscal years commencing January 1, 1989, and ending December
31, 1993. The graph presentation assumes $100 invested on January 1, 1989, in
Company Common Stock, the S&P Composite-500 Stock Index and the S&P Financial
Index, and shows such values at December 31, 1993.
[insert stock apprectiation graph]
<TABLE>
<CAPTION>
12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Green Tree Financial Corpora-
tion 100.00 147.53 115.83 424.67 530.62 1,069.88
- --------------------------------------------------------------------------------------
S&P 500 Index................. 100.00 131.68 127.58 166.47 179.20 197.26
- --------------------------------------------------------------------------------------
S&P Financial Index........... 100.00 132.65 104.22 157.10 193.81 215.32
</TABLE>
10
<PAGE>
PENSION PLAN
Employees of the Company participate in a noncontributory pension plan (the
"Pension Plan"). The Pension Plan is a defined benefit plan qualified under the
Internal Revenue Code (the "Code"). To be eligible to receive benefits under
the Pension Plan, an employee must be at least 21 years of age at the time
employment commences, have completed one full year of employment, and have
worked for the Company for a minimum of 1,000 hours in the preceding 12 months.
Normal retirement age under the Pension Plan is generally age 65 and benefits
are reduced or increased for retirement prior to or after age 65. The formula
to determine the amount of benefits payable to an employee upon normal
retirement is as follows: 1.2% of monthly average earnings up to covered
compensation plus 1.75% of monthly average earnings in excess of covered
compensation, multiplied by service up to 35 years. Monthly average earnings is
the employee's total pay during the 60 nonconsecutive months of the employee's
last 120 months of employment with the Company which give the highest average
compensation. Covered compensation is the 35-year average of the social
security wage base, varying by year of birth. The normal Pension Plan option,
upon which the funding assumptions are based, is an option that provides that
the participant will receive benefits for his or her lifetime. Section 415 of
the Code limits the annual benefit which may be paid under a qualified plan.
The annual benefit limit for an individual age 65 as of December 31, 1993, was
$115,641. The Board of Directors adopted a Restated Supplemental Pension Plan
in September 1987 pursuant to which the Company will pay any benefits lost due
to qualified plan limitations for the executive officers listed on page 5 and
certain other key officers of the Company.
On December 31, 1993, all of the individuals named in the preceding executive
compensation table were participants in the Pension Plan. Mr. Coss has accrued
23 years of service; Mr. Roberts, 15 years; Mr. Hegstrom, 14 years; Mr. Brink,
8 years; and Mr. Evans, 8 years.
The table below assumes a formula for normal retirement as described above.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION BASED ON YEARS
AVERAGE OF SERVICE AT NORMAL RETIREMENT DATE
ANNUAL EARNINGS ------------------------------------------------------
(HIGHEST 5 YEARS) 15 20 25 30 35
----------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$5,000,000............... $1,312,500 $1,750,000 $2,187,500 $2,625,000 $3,062,500
4,000,000............... 1,050,000 1,400,000 1,750,000 2,100,000 2,450,000
3,000,000............... 787,500 1,050,000 1,312,500 1,575,000 1,837,500
2,000,000............... 525,000 700,000 875,000 1,050,000 1,225,000
1,500,000............... 393,750 525,000 656,250 787,500 918,750
1,000,000............... 262,500 350,000 437,500 525,000 612,500
500,000............... 131,250 175,000 218,750 262,500 306,250
400,000............... 105,000 140,000 175,000 210,000 245,000
300,000............... 78,750 105,000 131,250 157,500 183,750
225,000............... 59,060 78,750 98,440 118,130 137,810
200,000............... 52,500 70,000 87,500 105,000 122,500
</TABLE>
PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED COMMON SHARES
TO 150 MILLION SHARES
The Company has proposed an increase in the number of authorized shares of
Common Stock from 50,000,000 authorized shares of Common Stock to 150,000,000
authorized shares. The Board of Directors recently approved such an increase,
subject to approval by shareholders. The text of the proposed amendment to the
Company's Articles of Incorporation is attached as Exhibit A.
11
<PAGE>
The Company at the present time has authorized capital stock consisting of 50
million shares of Common Stock, $0.01 par value, and 15 million shares of
preferred stock, $0.01 par value. On March 31, 1994, the Company had 33,677,661
shares of Common Stock outstanding. On December 31, 1992, the Company had
15,200,687 shares of Common Stock outstanding. Since that date, the Company has
issued a total of 18,476,974 shares of Common Stock primarily in connection
with a 2-for-1 stock split in the form of a stock dividend on January 31, 1993,
a public offering of Common Stock in September 1993 and from the issuance of
stock pursuant to the Company's various stock bonus and option plans. None of
the preferred shares have been issued and none of the Company's Junior
Preferred Stock issuable in connection with the Company's Shareholder Rights
Plan have been issued at present.
The Company has experienced continued growth in its market share and loan
purchase production in recent years due to an increase in manufactured home
shipments. Additionally its other businesses have grown and profitability has
increased. As a result, the Company's stock has increased in value, and the
Company has declared two-for-one stock splits in the form of stock dividends
twice in the past; in June 1986 and in January 1993.
In addition, the Company has in the recent past utilized the equity markets
to improve its capital structure and increase equity. This was required to
support the Company's growing market share in the manufactured housing industry
and to finance the development and growth of its home improvement and special
products divisions.
The Company is asking its shareholders to increase the number of authorized
shares of Common Stock to preserve the Company's flexibility to utilize equity
for future business growth, expand its equity base and/or declare stock splits
in the form of stock dividends in the future based upon the judgment and
experience of the Company's Board of Directors.
A vote of a majority of the shares outstanding and entitled to vote at the
Annual Meeting of Shareholders is required to pass the proposed amendment to
the Company's Articles of Incorporation. The Board of Directors recommends a
vote FOR the proposed amendment.
12
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of March 31, 1994, the Company is unaware of any owner of the Company's
Common Stock which beneficially owns more than 5% of such stock.
The following table sets forth as of March 31, 1994, information about the
ownership of the Company's Common Stock by each Director and by all Directors
and officers as a group. The shareholders listed in the table have sole voting
and investment powers with respect to the shares indicated.
<TABLE>
<CAPTION>
PERCENT OF
NAME OF BENEFICIAL OWNER OR NUMBER OF OUTSTANDING
IDENTITY OF GROUP SHARES OWNED SHARES
- --------------------------- ------------ -----------
<S> <C> <C>
Lawrence M. Coss................................. 903,699(1) 2.6%
Richard G. Evans................................. 100,000(2) *
Robert A. Hegstrom............................... 120,000(2) *
C. Thomas May, Jr................................ 108,000(2) *
Tania A. Modic................................... 50,300 *
W. Max McGee..................................... 154,000(2) *
Robert S. Nickoloff.............................. 29,000(2) *
Robert D. Potts.................................. 7,000 *
Kenneth S. Roberts............................... 127,443 *
All Directors and Officers as a group (39 per-
sons) .......................................... 2,217,783(3) 6.4%
</TABLE>
- --------
*Less than one percent.
(1) Includes 4,000 shares held by minor children, 21,800 shares held by spouse,
20,000 shares held by LVC Investment Company, Inc., and options for 150,000
shares of Common Stock exercisable on or after March 31, 1994.
(2) Includes 50,000, 40,000, 6,000, 34,000 and 15,000, shares issuable to
Messrs. Evans, Hegstrom, May, McGee and Nickoloff, respectively, relating
to stock issuable upon exercise of stock options which are exercisable
currently or within 60 days of March 31, 1994. McGee's holdings include
50,000 shares held by spouse.
(3) Includes 802,224 shares issuable upon exercise of stock options exercisable
currently or within 60 days of March 31, 1994.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Directors and executive officers of the Company are eligible to
execute notes to the Company to purchase Company Common Stock pursuant to the
exercise of stock options. These notes would be collateralized by the stock
purchased. These notes would be due on demand and carry an interest rate of the
greater of six percent or the Internal Revenue Service applicable federal rate
for officer borrowings. Such Directors and executive officers would be required
to pay interest quarterly on such notes and make certain annual principal
repayments. No amounts were borrowed or outstanding on such notes during 1993.
13
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of its Audit Committee, has
appointed KPMG Peat Marwick to audit the books and accounts of the Company and
its subsidiaries for the fiscal year ending December 31, 1994, subject to
shareholder ratification.
A representative of KPMG Peat Marwick will be present at the 1994 Annual
Meeting of Shareholders with the opportunity to make a statement if he or she
desires to do so, and is expected to be available to respond to appropriate
questions from shareholders.
PROPOSALS OF SHAREHOLDERS FOR 1995 ANNUAL MEETING
All proposals of shareholders intended to be presented at the 1995 Annual
Meeting of Shareholders of the Company must be received by the Company at its
executive offices on or before January 18, 1995.
ANNUAL REPORT ON FORM 10-K
Copies of the Company's Annual Report on Form 10-K (an annual filing with the
Securities and Exchange Commission) for the fiscal year ended December 31,
1993, may be obtained without charge by writing to Green Tree Financial
Corporation, 1100 Landmark Towers, 345 St. Peter Street, Saint Paul, Minnesota
55102-1639, Attention: John W. Brink, Executive Vice President, Treasurer and
Chief Financial Officer.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Richard G. Evans
Richard G. Evans
Secretary
Dated: April 15, 1994
14
<PAGE>
EXHIBIT A
PROPOSED AMENDMENT TO
ARTICLE THREE
OF THE
COMPANY'S ARTICLES OF INCORPORATION
ARTICLE 3. AUTHORIZED SHARES
The aggregate number of shares which this Corporation shall have authority to
issue is 165,000,000 shares, divided into 150,000,000 common shares with a par
value of $0.01 per share, which shall be known as "Common Stock", and
15,000,000 preferred shares with a par value of $0.01 per share, which shall be
known as "Preferred Stock".
(The bold items constitute changed language in the Article amended)
(The remainder of Article 3 is unchanged)
15
<PAGE>
PROXY
GREEN TREE FINANCIAL CORPORATION
1100 LANDMARK TOWERS
345 ST. PETER STREET
SAINT PAUL, MINNESOTA 55102-1639
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF GREEN TREE
FINANCIAL CORPORATION. The undersigned hereby appoints Lawrence M. Coss and
Richard G. Evans, and each of them, with power of substitution, to vote all
stock the undersigned is entitled to vote at the 1994 Annual Meeting of
Shareholders of Green Tree Financial Corporation to be held on May 18, 1994, at
2:00 p.m., and at any adjournments thereof, as specified below on the matters
referred to, and in their discretion, upon any other matters which may be
brought before the meeting.
1. ELECTION OF DIRECTORS.
___ FOR the nominees listed below.
___ WITHHOLD AUTHORITY to vote for the nominees listed here.
___ ABSTAIN
Nominee for term expiring in 1996: Tania A. Modic
Nominees for terms expiring in 1997: Robert D. Potts and W. Max McGee
2. PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK TO 150
MILLION SHARES.
___ FOR ___ AGAINST ___ ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF AUDITORS.
___ FOR ___ AGAINST ___ ABSTAIN
4. TO VOTE WITH DISCRETIONARY AUTHORITY ON ANY OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned Shareholder(s). If no direction is made, this Proxy
will be voted FOR the directors named in Item 1, FOR the proposals under Items
2 and 3, and with discretionary authority on any other business as may properly
come before the meeting.
Please sign exactly as name(s) appear below. When shares are held by joint
tenants, both shareholders must sign. When signing as attorney, executor,
administrator, trustee or guardian, please include full title. If a
corporation, please type in full corporate name and sign by the President or
other authorized officer. If a partnership, please type in partnership name and
sign by an authorized person.
<PAGE>
PROXY NO. GREEN TREE NO. OF SHARES
Individual(s), Corporation,
Partnership (or other
entity):
_____________________
Signature
_____________________
Signature (if jointly held)
Title __________
Dated: ________________, 1994
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
