<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
RESOURCE BANCSHARES MORTGAGE GROUP, 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
RESOURCE BANCSHARES MORTGAGE GROUP, INC.
7909 PARKLANE ROAD
COLUMBIA, SOUTH CAROLINA 29223
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 20, 1998
---------------------
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of Resource
Bancshares Mortgage Group, Inc. (the "Company") will be held at the offices of
King & Spalding, 191 Peachtree Street, Atlanta, Georgia 30303, on Wednesday, May
20, 1998 at 9:00 a.m., E.D.T. for the following purposes:
1. To elect three directors; and
2. To conduct such other business as properly may come before the
meeting and any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on April 4, 1998, as
the record date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting or any adjournment or adjournments thereof.
We hope that you will be able to attend the meeting. However, whether or
not you plan to attend, you are respectfully urged to sign, date and return the
enclosed proxy. The proxy may be revoked at any time prior to its exercise and,
if you attend the meeting, you may vote in person.
Edward J. Sebastian
Chairman of the Board
and Chief Executive Officer
Columbia, South Carolina
April 21, 1998
IMPORTANT NOTICE
PLEASE SIGN, DATE AND MAIL YOUR PROXY PROMPTLY
<PAGE> 3
RESOURCE BANCSHARES MORTGAGE GROUP, INC.
7909 PARKLANE ROAD
COLUMBIA, SOUTH CAROLINA 29223
---------------------
PROXY STATEMENT
---------------------
April 21, 1998
The accompanying proxy is solicited by the Board of Directors for use at
the annual meeting of shareholders (the "Annual Meeting") of Resource Bancshares
Mortgage Group, Inc. (the "Company") to be held at the offices of King &
Spalding, 191 Peachtree Street, Atlanta, Georgia 30303, on Wednesday, May 20,
1998, at 9:00 a.m., E.D.T., and at any adjournment or adjournments thereof.
At the Annual Meeting, the shareholders of the Company will be asked to
consider and vote upon the election of three directors.
This proxy statement and the form of proxy are first being mailed to the
Company's shareholders on or about April 21, 1998.
PROXIES
The accompanying form of proxy is for use at the Annual Meeting. A
shareholder may use this proxy if he is unable to attend the meeting in person
or if he wishes to have his shares voted by proxy even if he attends the
meeting. The proxy may be revoked in writing by the person giving it any time
before the proxy is exercised by giving notice to the Company's Secretary, or by
submitting a proxy having a later date, or by such person appearing at the
meeting and electing to vote in person. All shares represented by valid proxies
received pursuant to this solicitation, and not revoked prior to their exercise,
will be voted in the manner specified therein. If no specification is made in
the proxy, the proxy will be voted "FOR" the election of the nominees for
directors listed herein. The Board of Directors is not aware of any other
matters which may be presented for action at the meeting, but if other matters
do come properly before the meeting it is intended that shares represented by
proxies in the accompanying form will be voted by the persons named in the proxy
in accordance with their best judgment.
COSTS OF SOLICITATION
The Company will bear the costs of solicitation of proxies from its
shareholders. Solicitation of proxies may be made in person, by mail or by
telephone by officers, directors and regular employees of the Company who will
not be specially compensated in such regard. Nominees, fiduciaries and other
custodians will be requested to forward solicitation materials to the beneficial
owners and secure their voting instructions, if necessary, and will be
reimbursed for the reasonable expenses incurred in sending proxy materials to
the beneficial owners.
RECORD DATE AND VOTING RIGHTS
The Board of Directors of the Company has fixed the close of business on
April 4, 1998, as the record date for the determination of shareholders entitled
to receive notice of and to vote at the Annual Meeting. As of April 4, 1998,
there were a total of 23,398,557 shares of the Company's common stock, par value
$.01 per share (the "Common Stock"), outstanding and entitled to vote at the
Annual Meeting. These shares were held by approximately 430 holders of record.
Each shareholder is entitled to one vote on each matter to come before the
meeting for each share of Common Stock held of record by such shareholder.
Directors are elected by a plurality of the votes cast by the holders of shares
of Common Stock at a meeting at which a quorum is present. "Plurality" means
that the individuals who receive the largest number of votes cast are elected as
directors up to the maximum number of directors to be chosen at the meeting. A
vote indicated as withheld from a nominee will not be cast for such nominee but
will be counted in determining the presence of a
<PAGE> 4
quorum. Consequently, the withholding of a vote for a nominee will have no
impact in the election of directors except to the extent that failure to vote
for an individual results in another individual receiving a larger number of
votes.
BENEFICIAL OWNERSHIP
BENEFICIAL OWNERS OF FIVE PERCENT OR MORE OF THE COMMON STOCK
The following table sets forth the only shareholders which, to the
knowledge of management of the Company, were beneficial owners of five percent
or more of the outstanding shares of Common Stock as of April 4, 1998. The
shareholdings reported are based on copies of Schedules 13D and 13G received by
the Company in 1998.
<TABLE>
<CAPTION>
SOLE SHARED SOLE SHARED
NAME AND ADDRESS VOTING VOTING DISPOSITIVE DISPOSITIVE PERCENT OF
OF BENEFICIAL OWNERS POWER POWER POWER POWER CLASS
- -------------------- --------- ------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Amelia Family Trust Company,............... 1,178,993 -- 1,178,993 -- 5.04%
as Trustee for Trust u/a/d August 22,
1969 of William B. Ziff, Jr.
577 Chestnut Ridge Road
Woodcliff Lake, New Jersey 07675
Pioneering Management Corporation.......... 2,231,250 -- 2,231,250 -- 9.54%
60 State Street
Boston, Massachusetts 02109-1820
Wellington Management Company,
LLP(1)..................................... -- 586,129 -- 1,424,829 6.09%
75 State Street
Boston, Massachusetts 02109
</TABLE>
- ---------------
(1) This percentage reflects the number of shares of Common Stock over which
Wellington Management Company has shared dispositive power. Wellington
Management Company has shared voting power with respect to 2.5% of the
shares of Common Stock.
STOCK OWNERSHIP OF THE COMPANY'S DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth as of April 4, 1998, the number of shares of
the Company's Common Stock beneficially owned by current directors, nominees for
election as director, named executive officers and all directors and current
executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
NAME OWNERSHIP(1) CLASS(1)
---- ------------ ----------
<S> <C> <C>
John C. Baker(2)............................................ 13,335 *%
Stuart M. Cable(2).......................................... 27,753 *
John W. Currie(2)........................................... 70,208 *
Boyd M. Guttery(2).......................................... 22,619 *
David W. Johnson, Jr.(2).................................... 656,601 2.75
Robin C. Kelton............................................. 44,320 *
Edward J. Sebastian(2)(3)................................... 372,098 1.58
John O. Wolcott(2).......................................... 16,338 *
Richard M. Duncan(2)........................................ 64,771 *
Steven F. Herbert(2)........................................ 40,032 *
All directors and current executive officers as a group (10
persons).................................................. 1,328,075 5.51
</TABLE>
2
<PAGE> 5
- ---------------
* Signifies less than one percent
(1) Assumes the exercise by such person of all options exercisable as of April
4, 1998, or within 60 days thereafter. Each person exercises sole voting and
sole investment power with respect to the shares shown as owned by him
except as otherwise indicated by footnote.
(2) All of the shares of Common Stock shown as owned by Mr. Baker; 13,335 of the
shares of Common Stock shown as owned by each of Messrs. Cable, Currie,
Guttery and Wolcott; 450,655 of the shares of Common Stock shown as owned by
Mr. Johnson; 101,115 of the shares of Common Stock shown as owned by Mr.
Sebastian; 49,675 of the shares of Common Stock shown as owned by Mr.
Duncan; and 30,037 of the shares of Common Stock shown as owned by Mr.
Herbert represent shares subject to options exercisable as of April 4, 1998,
or within 60 days thereafter.
(3) The shares of Common Stock shown as owned by Mr. Sebastian include 122,844
shares owned by members of his immediate family.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16 of the Securities Exchange Act of 1934, directors
and executive officers of the Company and beneficial owners of 10% or more of
the Common Stock are required to file reports with the Securities and Exchange
Commission indicating their holdings of and transactions in the Common Stock. To
the Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, all such persons have complied with all filing requirements with
respect to 1997.
3
<PAGE> 6
TOTAL CUMULATIVE SHAREHOLDER RETURN SINCE MAY 26, 1993
The following graph compares the percentage change in the Company's total
shareholder return on the Common Stock with the cumulative total return of (i) a
broad equity market index ("NASDAQ Composite") and (ii) the MBA Stock Index, a
peer group index prepared by the Mortgage Bankers Association of America (the
"MBA Peer Group"). This performance graph represents the period from May 26,
1993, the date the Company's Common Stock became registered under the Securities
Exchange Act of 1934, through December 31, 1997.
RESOURCE BANCSHARES MORTGAGE GROUP, INC.(1)(2)(3)(4)(5)(6)
VS. NASDAQ COMPOSITE
VS. MBA PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) RBMG NASDAQ COMPOSITE MBA PEER GROUP
<S> <C> <C> <C>
5/26/93 100 100 100
12/31/93 121.43 110.50 97.43
12/31/94 132.30 108.02 87.17
12/31/95 217.75 152.76 126.45
12/31/96 232.99 187.89 158.15
12/31/97 280.05 230.56 231.38
</TABLE>
- ---------------
(1) Total return assumes an initial investment of $100 on May 26, 1993, and
reinvestment of dividends.
(2) The companies included in the MBA Peer Group for the period ended December
31, 1993, consist of: Advanced Financial, American Residential, Arbor
National Mortgage, Countrywide Credit Industries, Express America, Farragut
Mortgage, First Financial Caribbean, First Mortgage Corp., Fleet Mortgage
Group, Fund American Enterprises, Hamilton Financial, Imperial Credit
Industries, Loan America Financial, Lomas Financial Corp., Margaretten
Financial, North American Mortgage, Paragon Mortgage, Plaza Home Mortgage,
the Company and TCS Enterprises.
(3) The companies included in the MBA Peer Group for the year ended December 31,
1994, consist of: Advanced Financial, Arbor National Mortgage, Countrywide
Credit Industries, Express America, First Financial Caribbean, First
Mortgage Corp., Fleet Mortgage Group, Fund American Enterprises, Hamilton
Financial, Imperial Credit Industries, Lomas Financial Corp., North American
Mortgage, Plaza Home Mortgage, and the Company. The companies excluded from
the MBA Peer Group for 1994
4
<PAGE> 7
had by December 31, 1994 either ceased doing business, been acquired by
another company, ceased to be publicly held or significantly altered the way
they do business.
(4) The companies included in the MBA Peer Group for the year ended December 31,
1995, consist of: Advanced Financial, Countrywide Credit Industries, First
Financial Caribbean, First Mortgage Corp., Fund American Enterprises,
Imperial Credit Industries, North American Mortgage and the Company. The
companies excluded from the MBA Peer Group for 1995 had by December 31, 1995
either ceased doing business, been acquired by another company, ceased to be
publicly held or significantly altered the way they do business.
(5) The companies included in the MBA Peer Group for the year ended December 31,
1996, consist of: Advanced Financial, Countrywide Credit Industries, First
Financial Caribbean, First Mortgage Corp., Fund American Enterprises, North
American Mortgage and the Company. The companies excluded from the MBA Peer
Group for 1996 had by December 31, 1996 either ceased doing business, been
acquired by another company, ceased to be publicly held or significantly
altered the way they do business.
(6) The companies included in the MBA Peer Group for the year ended December 31,
1997, consist of: Countrywide Credit Industries, Doral Financial Corp.,
First Mortgage Corp., Fund American Enterprises, Homeside Lending Inc. and
the Company. The companies excluded from the MBA Peer Group for 1997 had by
December 31, 1997 either ceased doing business, been acquired by another
company, ceased to be publicly held or significantly altered the way they do
business.
COMPENSATION OF OFFICERS AND DIRECTORS
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation paid to each named
executive officer for services rendered to the Company during the periods
indicated. The numbers of shares and options and the exercise price of options
on the tables and footnotes in this section have been adjusted for the two five
percent stock dividends issued in 1994, two five percent stock dividends and one
ten percent stock dividend issued in 1995, one seven percent stock dividend
issued in 1996 and one five percent stock dividend issued in 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------- -------------------------
(A) (B) (C) (D) (E) (F) (G) (I)
SECURITIES
RESTRICTED UNDERLYING ALL OTHER
NAME AND OTHER ANNUAL STOCK OPTIONS/ COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) AWARDS($)(2) SARS(#) ($)(3)
------------------ ---- --------- -------- ------------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
E. J. Sebastian,....... 1997 $250,008 $600,000 $ -- $ -- -- $ 4,325
Chief Executive...... 1996 250,008 500,000 -- -- 56,175 5,210
Officer.............. 1995 250,455 250,000 -- -- 112,350 3,760
D. W. Johnson, Jr.,.... 1997 $414,840 $878,196 $295,207 $324,537 -- $129,005
Vice Chairman and.... 1996 386,687 877,918 200,000 341,156 -- 72,729
Managing Director.... 1995 378,694 693,255 253,711 127,844 -- 69,436
R. H. Duncan,.......... 1997 $200,000 $350,000 $ 7,289 $ -- 68,250 $ 30,373
Senior Executive
Vice President - 1996 175,000 350,000 19,266 -- 37,291 32,416
- Production....... 1995 205,666 216,750 -- -- -- 3,218
S. F. Herbert,......... 1997 $200,000 $275,000 $ 6,189 $ -- 36,750 $ 26,474
Senior Executive..... 1996 175,000 275,000 8,881 -- 25,560 20,983
Vice President and... 1995 113,173 100,000 8,964 -- -- 12,530
Chief Financial
Officer
</TABLE>
- ---------------
(1) For 1997, this amount represents a payment of $200,000 to Mr. Johnson by
Resource Bancshares Corporation ("RBC") as more fully described under
"Employment Contracts," below, and, for
5
<PAGE> 8
Messrs. Johnson, Duncan and Herbert, reimbursement for tax liability related
to premiums on whole life and universal life and disability policies in the
amounts of $95,207, $7,289 and $6,189, respectively.
(2) The shares of restricted stock were awarded to Mr. Johnson on January 27,
1996, February 1, 1997 and January 30, 1998, as part of 1995, 1996 and 1997
bonuses. Mr. Johnson received 9,219 shares in 1996, 24,704 shares in 1997
and 20,048 shares in 1998. Mr. Johnson also was awarded 6,668 and 29,568
shares of restricted stock in January 1994 and 1995, respectively. Had Mr.
Johnson held all of such shares of restricted stock received in 1994, 1995,
1996, 1997 and 1998 on December 31, 1997, the shares held by him would have
had a year-end value of $1,471,547, based on the closing price of a share of
Common Stock on December 31, 1997 of $16.313. The shares vest over a
five-year period, at the rate of 20% per year, and all unvested shares will
vest on December 31, 2000. Dividends are paid on the shares.
(3) Amounts shown for 1997 consist of (i) for Mr. Sebastian contributions to the
Company's 401(k) plan, (ii) for Mr. Johnson, premiums on whole life and
disability insurance policies of $124,680 and contributions to the Company's
401(k) plan of $4,325, (iii) for Mr. Duncan, premiums on whole life and
disability insurance policies of $24,296, contributions to the Company's
401(k) plan of $4,325 and dividends on shares subject to options of $1,752;
and (iv) for Mr. Herbert, premiums on whole life and disability insurance
policies of $20,632, contributions to the Company's 401(k) plan of $4,325
and dividends on shares subject to options of $1,517.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- --------------------------------------------------------------------------------------------------- ---------------------
(A) (B) (C) (D) (E) (F) (G)
NUMBER % OF TOTAL
OF OPTIONS/
SECURITIES SARS EXERCISE
UNDERLYING GRANTED TO OR MARKET
OPTIONS/ EMPLOYEES BASE PRICE
SARS IN PRICE DATE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SH) OF GRANT DATE 5%($) 10%($)
---- ---------- ------------ ----------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
R. H. Duncan(1)................. 68,250 15.50% $13.20 $13.20 01/29/07 $566,475 $1,435,980
S. F. Herbert(2)................ 36,750 8.34 13.20 13.20 01/29/07 305,025 773,220
</TABLE>
- ---------------
(1) These options were granted to Mr. Duncan on January 29, 1997, subject to
shareholder approval of the Amended and Restated Omnibus Plan which was
received at the 1997 Annual Meeting. The options became exercisable as to
13,650 shares on December 31, 1997 and 13,650 shares on January 29, 1998 and
will become exercisable with respect to an additional 13,650 shares on
January 29 of each subsequent year until they become exercisable with
respect to all 68,250 shares.
(2) These options were granted to Mr. Herbert on January 29, 1997, subject to
shareholder approval of the Amended and Restated Omnibus Plan which was
received at the 1997 Annual Meeting. The options became exercisable as to
7,350 shares on December 31, 1997 and 7,350 shares on January 29, 1998 and
will become exercisable with respect to an additional 7,350 shares on
January 29 of each subsequent year until they become exercisable with
respect to all 36,750 shares.
6
<PAGE> 9
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(A) (D)
NUMBER OF SECURITIES UNDERLYING (C)
UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT FY-END(#) OPTIONS/SARS AT FY-END($)
NAME EXERCISABLE /UNEXERCISABLE EXERCISABLE /UNEXERCISABLE(1)
---- ------------------------------------- ---------------------------------
<S> <C> <C>
E. J. Sebastian.................. 89,880/78,645 $ 205,538/$192,285
D. W. Johnson, Jr................ 360,524/90,131 $3,779,373/$944,843
R. H. Duncan..................... 28,566/76,975 $ 136,366/$310,779
S. F. Herbert.................... 17,574/44,736 $ 70,745/$163,318
</TABLE>
- ---------------
(1) The value assigned to the options in column (e) above is equal to the number
of options exercisable or unexercisable, as the case may be, times the
difference between closing price of a share of Common Stock on December 31,
1997, $16.313, and the per share exercise price of the option.
DEFINED BENEFIT PLANS
The Company sponsors a qualified Pension Plan for all employees and a
Pension Restoration Plan ("Restoration Plan") for certain eligible employees,
including officers. The Restoration Plan is an unfunded plan which provides for
benefit payments in addition to those payable under the qualified Pension Plan.
It maintains uniform application of the Pension Plan benefit formula and would
provide, among other benefits, payment of Pension Plan formula pension benefits,
if any, which exceed those payable under the Internal Revenue Code of 1986, as
amended (the "Code"), maximum benefit limitations.
The following table illustrates the estimated annual benefits payable upon
retirement at normal retirement date under the Pension Plan and the Restoration
Plan.
1997 PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------------------
FINAL AVERAGE PAY 15 20 25 30 35
- ----------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$125,000................................. $28,080 $37,440 $46,801 $56,161 $65,521
150,000................................. 34,268 45,690 57,113 68,536 79,958
175,000................................. 40,455 53,940 67,426 80,911 94,396
200,000................................. 46,643 62,190 77,738 93,286 108,833
225,000................................. 52,830 70,440 88,051 105,661 123,271
250,000................................. 59,018 78,690 98,363 118,036 137,708
300,000................................. 71,393 95,190 118,988 142,786 166,583
350,000................................. 83,768 111,690 139,613 167,536 195,458
400,000................................. 96,143 128,190 160,238 192,286 224,333
450,000................................. 108,518 144,690 180,863 217,036 253,208
500,000................................. 120,893 161,190 201,488 241,786 282,083
</TABLE>
The qualified Pension Plan recognizes W-2 earnings up to the Code limit of
$150,000 while the Restoration Plan recognizes a participant's base compensation
in excess of this limit. In 1997 Messrs. Sebastian, Johnson, Duncan and Herbert
received base pay of $250,008, $414,840, $200,000 and $200,000, respectively,
and now have credited service under the Pension and Restoration plans of 10, 9,
4 and 3 years, respectively. Benefits in the table are computed based on a
straight-life annuity. The amounts in the table assume continuation of the
Social Security taxable wage base in effect during 1997 and are not subject to
any deduction for Social Security or other offset amounts.
EMPLOYMENT CONTRACTS
Mr. Johnson has an employment agreement with the Company which will expire
on December 31, 2000 (the "Johnson Employment Agreement"). Under the Johnson
Employment Agreement, Mr. Johnson
7
<PAGE> 10
receives a base salary of $350,000, subject to upward adjustment annually by not
less than 5%, but any such increase above 5% cannot exceed the increase in the
Consumer Price Index during the prior year. Mr. Johnson's annual salary for 1997
was set at $414,840. Mr. Johnson also receives an annual bonus equal to 4% of
the Company's annual total pretax income before bonuses and incentives. The
bonus is paid each year as follows: (i) the first $325,000 may, if the employee
elects, be allocated to a deferred compensation account pursuant to a Deferred
Compensation Agreement whereby no amount will be payable to the employee before
age 55 or his earlier termination of employment, disability or death; (ii) the
amount by which $575,000 exceeds the amount deferred pursuant to clause (i)
above, but not more than $350,000, will be paid in cash; and (iii) any remaining
amount (the "Remaining Bonus") will be paid in a combination of restricted
Common Stock (the "Restricted Stock") and cash, the cash portion being equal to
the amount required to pay applicable federal and state income taxes at the
highest combined rate on the Remaining Bonus. The Restricted Stock will be
valued at market based on the average closing price of the Common Stock for the
20 trading days preceding the date of payment. The Restricted Stock will vest
with respect to 20% of the shares covered thereby each year following the grant
date from the second through the sixth year; however, all unvested shares will
vest on December 31, 2000. Mr. Johnson will forfeit all of his unvested
Restricted Stock, if any, if his employment is terminated at any time for any
reason other than death, disability or termination without cause by the Company.
Mr. Johnson also is provided with $2,000,000 whole life and disability
insurance.
Mr. Johnson, acting with the concurrence of the Compensation Committee of
the Board of Directors, has the right to assign a part of his bonus to other
employees. If the committee does not concur, no assignment of his bonus can be
made. Any part of the bonus assigned to other employees which would have been
payable to Mr. Johnson in Restricted Stock may be paid to the other employees in
Restricted Stock, cash or a combination thereof. The Johnson Employment
Agreement gives Mr. Johnson certain registration rights relative to the Common
Stock underlying his options and his vested Restricted Stock.
In connection with the Company's initial public offering, Mr. Johnson
entered into a termination agreement pursuant to which RBC agreed to pay him
$200,000 in cash upon the closing of the offering, and on each anniversary date
of the closing through the year 2000 provided he is employed by the Company on
such anniversary date.
Mr. Duncan entered into an employment agreement with the Company effective
September 25, 1995. The employment agreement provides for Mr. Duncan's
employment until December 31, 2000 with an annual salary of $175,000. Mr. Duncan
is also eligible to receive an annual bonus and is provided a $1,000,000 term
life insurance policy. Mr. Herbert entered into an employment agreement with the
Company effective June 30, 1995. The employment agreement provides for Mr.
Herbert's employment until December 31, 2000 with an annual salary of $175,000.
Mr. Herbert also is eligible to receive an annual bonus and is provided a
$1,000,000 term life insurance policy. Effective January 1, 1997, the annual
salaries of Messrs. Duncan and Herbert were increased by the Board of Directors
to $200,000.
Each of Mr. Duncan's and Mr. Herbert's employment agreements provides that
if (A) he voluntarily terminates his employment within one year following a
Change of Control (as hereinafter defined) as a result of (i) his determination
that as a result of a change in circumstances occurring following a Change in
Control significantly affecting his position, he can no longer adequately
exercise the authority, powers, functions or duties of his position or (ii) his
determination that he can no longer perform his duties by reason of a
substantial diminution in his responsibilities, status or position or (iii) the
Company requiring him to relocate to an area 100 miles outside of Columbia,
South Carolina or (B) the Company terminates his employment without Cause (as
defined in the contract) within one year following a Change in Control, all
remaining base salary under the agreement and an annual bonus of $75,000 and
life and disability insurance benefits for the remaining term of the agreement
will become due and payable to such employee. If the employee voluntarily
terminates his employment with the Company within one year following a Change in
Control for any reason other than as stated above, the employee will be entitled
to receive only his base salary for 12 months. A Change in Control for purposes
of Mr. Duncan's and Mr. Herbert's employment agreements means (i) the obtaining
by any party pursuant to a tender offer of 50% or more of the Company's voting
stock, (ii) individuals serving as directors immediately prior to a shareholder
meeting involving a director election
8
<PAGE> 11
contest failing to constitute a majority of the Company's directors following
such election contest, (iii) the Company executing an agreement concerning the
sale of all or substantially all of its assets to a purchaser that is not a
subsidiary, (iv) the Company's adoption of a plan of dissolution or liquidation
or (v) the Company executing an agreement concerning a merger or consolidation
involving the Company in which the Company is not the surviving corporation or
if less than 50% of the surviving corporation's voting stock is held by persons
who are shareholders of the Company prior to such merger or consolidation.
COMPENSATION OF DIRECTORS
Directors who are also salaried employees of the Company do not receive any
additional compensation for service as directors. Other directors receive such
compensation as is set from time to time by the Board of Directors. Directors'
fees currently are set at $18,000 a year plus $1,000 per board meeting or
committee meeting attended. Committee chairmen receive an additional annual
retainer of $3,000. Directors' and meeting fees for regular board meetings and
meetings of the compensation and audit committees paid for 1997 totaled
$195,000. Directors also are reimbursed for all reasonable out of pocket
expenses related to attendance at meetings.
In addition, for 1997, Mr. Guttery and Mr. Wolcott received additional fees
of $58,000 and $53,000, respectively, on account of serving on a special
committee in connection with the Company's acquisition of RBC.
On September 1, 1997, each of Messrs. Baker, Cable, Currie, Guttery and
Wolcott was awarded an option to purchase 10,000 (10,500, as adjusted for the 5%
dividend paid in 1997) shares of Common Stock at an exercise price of $16.71
($15.91, as adjusted for the 5% stock dividend paid in 1997) per share under the
Company's Formula Stock Option Plan. Each of the options became exercisable
immediately as to 20% of the shares and each of the options will become
exercisable with respect to an additional 20% of the shares on September 1, of
each year thereafter, beginning on September 1, 1998 until each is exercisable
with respect to all 10,500 shares.
COMPENSATION COMMITTEE REPORT
For 1997, the Company's Board of Directors set Mr. Sebastian's salary and
bonus based on recommendations made by the compensation committee (the
"Compensation Committee"). Mr. Johnson's 1997 salary and bonus were determined
by formulas set forth in his employment agreement. The 1997 salaries of the
Company's two other executive officers were set by the Board of Directors. In
addition, as discussed below, Mr. Johnson made recommendations concerning the
amount of their 1997 bonuses.
COMPENSATION OF NAMED EXECUTIVE OFFICERS
Messrs. Johnson, Duncan and Herbert have employment agreements with the
Company. Mr. Johnson's employment agreement was entered into prior to and in
connection with the Company's initial public offering. The terms of all these
employment agreements can be found under "Employment Contracts," above. In
accordance with the terms of Mr. Johnson's employment agreement, the amounts of
Mr. Duncan's and Mr. Herbert's annual bonuses, $350,000 and $275,000,
respectively, were based on Mr. Johnson's recommendations and were approved by
the Compensation Committee.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Sebastian's base annual salary for 1997 was $250,008. The amount of
this salary was recommended by the Compensation Committee based on its
subjective determination of the appropriate salary in view of Mr. Sebastian's
experience and the amount of time he would be devoting to his duties with the
Company and was approved by the Board of Directors. That salary went into effect
on January 1, 1997. The Board of Directors awarded Mr. Sebastian a $600,000
bonus for 1997. The amount of Mr. Sebastian's 1997 bonus was recommended to the
Board of Directors by the Compensation Committee based on (i) the committee's
review of a compensation assessment report prepared for the committee by Arthur
Andersen and (ii) the
9
<PAGE> 12
committee's subjective evaluation of Mr. Sebastian's and the Company's 1997
performance. Mr. Sebastian and Mr. Johnson did not participate in the actions
taken by the Board relative to Mr. Sebastian's 1997 salary or 1997 bonus.
POLICY WITH RESPECT TO $1,000,000 DEDUCTION LIMIT
Section 162(m) of the Code generally limits to $1,000,000 the corporate
deduction for compensation paid to executive officers named in the proxy
statement unless certain requirements are met. For 1997, the only executive
officer whose compensation was potentially subject to section 162(m) was Mr.
Johnson. The Company does not believe the compensation arrangements for Mr.
Johnson are subject to the $1,000,000 limitation on deductibility because (i)
the Company is not considered a publicly held corporation for purposes of
Section 162(m) since its registration of its securities under the Securities
Exchange Act of 1934 was voluntary and (ii) the arrangements were entered into
prior to the Company being considered a publicly held corporation for purposes
of Section 162(m), and the reliance period within the meaning of Treas. Reg.
1.162-27(f)(2) has not expired with respect to such arrangements. With respect
to 1998 and future compensation of executive officers, the Board of Directors
reserves the right to authorize compensation payments which may not be fully
deductible by the Company. The Board of Directors will continue to re-examine
this policy on an ongoing basis.
SUBMITTED BY:
<TABLE>
<S> <C> <C> <C>
John C. Baker John W. Currie David W. Johnson, Jr. Edward J. Sebastian
Stuart M. Cable Boyd M. Guttery Robin C. Kelton John O. Wolcott
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As described in the foregoing Compensation Committee Report at various
times during 1997 decisions regarding the compensation of the named executive
officers were made by the Board of Directors as a whole, the Compensation
Committee and Mr. Johnson. Edward J. Sebastian is the Chairman and Chief
Executive Officer of the Company. Mr. Johnson is Vice Chairman and Managing
Director of the Company. John W. Currie, the Secretary and a director of the
Company, is a member of McNair Law Firm, P.A. That law firm has represented the
Company from time to time and it is expected that such representation will
continue.
Effective as of December 31, 1997, the Company acquired RBC (then the
controlling shareholder of the Company) in a transaction in which the
shareholders of RBC received 1.13747 shares of Common Stock in exchange for each
outstanding share of RBC voting and non-voting common stock. During 1997, Mr.
Sebastian was the Chairman and Chief Executive Officer of RBC, Mr. Currie was
the Secretary and a director of RBC and Messrs. Baker and Cable were directors
of RBC. In addition, prior to the acquisition, Messrs. Cable, Currie, Herbert,
Johnson, Kelton and Sebastian were beneficial owners of RBC common stock.
The Company has from time to time purchased loans on which certain officers
and directors of the Company or members of their immediate families were
obligated. All such transactions were made in the ordinary course of business on
substantially the same terms, including interest rates and collateral, that
prevailed at the time for comparable transactions with other persons and did not
involve more than normal risk of collectability or present other unfavorable
features.
GENERAL INFORMATION AS TO THE BOARD OF DIRECTORS
During 1997, the Company's Board of Directors held a total of eleven
regular and special meetings. Each incumbent director attended at least 75% of
such meetings and the meetings of committees on which he served held during the
period for which he was a director, except Mr. Cable and Mr. Baker. The Board
has established an audit committee and a compensation committee. The Company
does not have a nominating committee, rather the Board of Directors as a whole
performs those functions.
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<PAGE> 13
The current members of the Audit Committee are Mr. Cable, Mr. Guttery and
Mr. Wolcott. The Audit Committee held two meetings during 1997. The Audit
Committee is charged with the responsibility of reviewing the Company's internal
auditing procedures and accounting controls and considers the selection and
independence of the Company's outside auditors.
The current members of the Compensation Committee are Mr. Baker and Mr.
Kelton. The Compensation Committee held ten meetings during 1997. The
Compensation Committee is responsible for matters relating to executive
compensation.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The Company's Certificate of Incorporation divides the Board of Directors
into three classes, the members of one class to be elected each year for a three
year term. The terms of the Class I directors will expire at the Annual Meeting.
All of the nominees for election as directors are currently serving as directors
of the Company.
Should any nominee for the office of director become unable to serve, which
is not anticipated, it is the intention of the persons named in the proxy,
unless otherwise specifically instructed therein, to vote for the election in
his stead of such other person as the Board of Directors may recommend.
Vacancies on the Board of Directors may be filled by the remaining
directors at any regular or special meeting thereof. Individuals selected to
fill such vacancies shall serve for the remainder of the term for which they are
appointed.
NOMINEES
The following information is furnished with respect to the Board of
Directors' nominees for election as directors. The Board of Directors recommends
a vote "FOR" all the nominees.
1. CLASS I -- TERMS TO EXPIRE AT THE 2001 ANNUAL MEETING.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT
DURING THE LAST FIVE YEARS,
NAME, PRESENT POSITION(S) AND TERM WITH THE COMPANY AGE DIRECTORSHIPS OF PUBLIC COMPANIES
- --------------------------------------------------- --- ----------------------------------
<S> <C> <C>
Edward J. Sebastian............................ 51 Chairman of the Board and Chief Executive
Chairman of the Board and Chief Executive Officer Officer of the Company; Chairman of the
of the Company since September 1992 Board and Chief Executive Officer of RBC.
Mr. Sebastian is a director of First Sun
South Corporation and Affinity Corporation.
David W. Johnson, Jr........................... 49 Vice Chairman and Director of the Company
Vice Chairman and Director of the Company since since October 1992 and Managing Director
October 1992 and Managing Director since July 1993 since July 1993.
Boyd M. Guttery................................ 70 Business consultant and private investor
since
Director of the Company since June 1993 September 1996; from February 1995 to
August 1996, Chairman of the Board of
Telecom Services Group, Inc.; from July
1992 to February 1995, Partner, Adams,
Fletcher, Guttery & Liss.
</TABLE>
11
<PAGE> 14
MEMBERS OF THE BOARD OF DIRECTORS WHOSE
TERMS WILL CONTINUE AFTER THE ANNUAL MEETING
The following information is furnished with respect to the members of the
Board of Directors whose terms will continue after the Annual Meeting.
2. CLASS II -- TERMS EXPIRING AT THE 1999 ANNUAL MEETING.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT
DURING THE LAST FIVE YEARS,
NAME, PRESENT POSITION(S) AND TERM WITH THE COMPANY AGE DIRECTORSHIPS OF PUBLIC COMPANIES
- --------------------------------------------------- --- ----------------------------------
<S> <C> <C>
John W. Currie................................. 51 Attorney, McNair Law Firm, P.A.
Director and Secretary of the Company since October
1992
Stuart M. Cable................................ 44 Attorney, Goodwin, Procter & Hoar, LLP.
Director of the Company since October 1992
John O. Wolcott................................ 54 Executive Vice President of The Olayan
America
Director of the Company since June 1993 Corporation, an investment company.
</TABLE>
CLASS III -- TERMS TO EXPIRE AT THE 2000 ANNUAL MEETING.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT
DURING THE LAST FIVE YEARS,
NAME, PRESENT POSITION(S) AND TERM WITH THE COMPANY AGE DIRECTORSHIPS OF PUBLIC COMPANIES
- --------------------------------------------------- --- ----------------------------------
<S> <C> <C>
John C. Baker.................................. 48 Since September 1995, President of Baker
Director of the Company since May 1993 Capital Corp., a private equity investment
management firm; from July 1988 to
September 1995, Senior Vice President,
Patricof & Co. Ventures, Inc., a private
equity investment firm. Mr. Baker is a
director of Intermedia Communications,
Inc., FORE Systems, Inc. and FWT, Inc.
Robin C. Kelton................................ 63 Since 1996, Chairman and Chief Executive
Director of the Company since December 1997 Officer of Kelton International Ltd.,
investment bankers. For more than three
years prior to 1996, Mr. Kelton was the
Founder, Chairman and Chief Executive
Officer of Fox-Pitt, Kelton Group, an
international investment banking group. Mr.
Kelton is also a director of Net.B@nk, Inc.
</TABLE>
RELATIONSHIPS WITH INDEPENDENT ACCOUNTANTS
Representatives of Price Waterhouse LLP, which audited the financial
statements of the Company for the most recently completed fiscal year and which
has been selected to audit such statements for the current year, are expected to
be present at the Annual Meeting with the opportunity to make a statement if
they desire to do so, and they are expected to be available to respond to
appropriate questions.
12
<PAGE> 15
PROPOSALS FOR 1999 ANNUAL MEETING OF SHAREHOLDERS
Shareholders who intend to present proposals for consideration at next
year's annual meeting are advised that any such proposal must be received by the
Secretary of the Company no later than the close of business on December 22,
1998, if such proposal is to be considered for inclusion in the proxy statement
and form of proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors is not aware of any other matter which will be
presented for action at the Annual Meeting, but if any business properly is
brought before the meeting, it is intended that the proxies received from this
solicitation will be voted by the persons named therein in accordance with their
best judgment.
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<PAGE> 16
APPENDIX A
PROXY FOR HOLDERS OF COMMON STOCK OF RESOURCE BANCSHARES
MORTGAGE GROUP, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS ON MAY 20, 1998
The undersigned hereby appoints John W. Currie and Stuart M. Cable and each of
them, proxies, with full power of substitution and resubstitution, for and in
the name of the undersigned, to vote all shares of Common Stock of Resource
Bancshares Mortgage Group, Inc. (the "Company") which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders to
be held on Wednesday, May 20, 1998, at 9:00 a.m., E.D.T., at the offices of
King & Spalding, 191 Peachtree Street, Atlanta, Georgia 30303, and at any
adjournment thereof, upon the matters described in the accompanying Notice of
Annual Meeting of Stockholders and Proxy Statement, receipt of which is hereby
acknowledged, and upon any other business that may properly come before the
meeting or any adjournment or adjournments thereof. Said proxies are directed
to vote on the matters described in the Notice of Annual Meeting of
Stockholders and Proxy Statement as follows, and otherwise in their discretion
upon such other business as may properly come before the meeting or any
adjournment or adjournments thereof.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. IF YOU
ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE
PREVIOUSLY RETURNED YOUR PROXY.
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| FOLD AND DETACH HERE |
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
This proxy when properly executed will be voted as directed, if no direction is
made, this proxy will be voted FOR the election of directors.
The Board of Directors recommends a
vote FOR all nominees for election as directors.
1. ELECTION OF DIRECTORS:
[ ] FOR, except as indicated below.
[ ] WITHHELD
Nominees:
Edward J. Sebastian
David W. Johnson, Jr.
Boyd M. Guttery
2. In the discretion of the proxies, on any other matter that may
properly come before the meeting or any adjournment or adjournments
thereof.
To withhold authority to vote for any nominee(s), write the name of the
nominee(s) on the line below.
- -------------------------------------------------------------------------------
-------------------------------------------
-------------------------------------------
SIGNATURE(S) DATE
Please sign exactly as your name or names
appear hereon. Where more than one owner
is shown above, each should sign. When
signing in a fiduciary or representative
capacity, please give full title. If this
proxy is submitted by a corporation, it
should be executed in the full corporate
name by a duly authorized officer. If a
partnership, please sign in partnership name
by authorized person.
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| FOLD AND DETACH HERE |
