<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, SC 29223
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 6, 1999
---------------------
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 Thursday, May
6, 1999 at 9:00 a.m., E.D.T. for the following purposes:
1. To elect three directors;
2. To approve an amendment to the Stock Investment Plan of the
Company; and
3. 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 March 19, 1999,
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 9, 1999
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 9, 1999
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 Thursday, May 6,
1999, at 9:00 a.m., E.D.T., and at any adjournment thereof.
At the Annual Meeting, the shareholders of the Company will be asked to
consider and vote upon the election of three directors and to approve an
amendment to the Company's Stock Investment Plan.
This proxy statement and the form of proxy are first being mailed to the
Company's shareholders on or about April 9, 1999.
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 and "FOR" approval of the amendment to the Company's
Stock Investment Plan. 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
March 19, 1999, as the record date for the determination of shareholders
entitled to receive notice of and to vote at the Annual Meeting. As of March 19,
1999, there were a total of 22,503,599 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 581 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.
The presence in person or by proxy of the holders of a majority of the shares of
Common Stock issued and outstanding as of
1
<PAGE> 4
the record date and entitled to vote at the Annual Meeting is necessary to
constitute a quorum. Abstentions and broker non-votes will be counted for the
purposes of establishing a quorum, but will not be voted. 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 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. The approval of a majority of the total
votes cast by the holders of Common Stock present (in person or by proxy) and
entitled to vote at the Annual Meeting is required to approve the amendment to
the Stock Investment Plan. Consequently, provided a quorum is present,
abstentions and broker non-votes will have no effect on whether the amendment is
approved.
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 March 19, 1999. The
shareholdings reported are based on copies of Schedules 13G received in 1998 and
Schedules 13G/A received in 1999.
<TABLE>
<CAPTION>
SOLE SHARED SOLE SHARED
NAME AND ADDRESS VOTING VOTING DISPOSITIVE DISPOSITIVE
OF BENEFICIAL OWNER POWER POWER POWER POWER PERCENT OF CLASS
- ------------------- --------- ------ ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Amelia Family Trust Company....... 1,178,993 -- 1,178,993 -- 5.24%
as Trustee for Trust u/a/d August
22, 1969 of William B. Ziff, Jr.
577 Chestnut Ridge Road
Woodcliff Lake, New Jersey 07675
Wallace R. Weitz & Company........ 3,736,836 -- 3,736,836 -- 16.61%
One Pacific Place, Suite 600
1125 South 103 Street
Omaha, Nebraska 68124-6008
</TABLE>
2
<PAGE> 5
STOCK OWNERSHIP OF THE COMPANY'S DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth as of March 19, 1999, 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)............................................ 21,929 *
Stuart M. Cable(2).......................................... 36,347 *
John W. Currie(2)........................................... 78,802 *
Boyd M. Guttery(2).......................................... 31,512 *
David W. Johnson, Jr.(2).................................... 755,243 3.29%
Robin C. Kelton(2).......................................... 46,320 *
Edward J. Sebastian(2)(3)................................... 477,092 2.10%
John O. Wolcott(2).......................................... 24,932 *
Richard M. Duncan(2)(3)..................................... 94,691 *
Steven F. Herbert(2)........................................ 59,669 *
All directors and executive officers as a group (10
persons).................................................. 1,626,537 6.96%
</TABLE>
- ---------------
* Signifies less than one percent
(1) Assumes the exercise by such person of all options exercisable as of March
19, 1999, 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; 21,929 of
the shares of Common Stock shown as owned by each of Messrs. Cable, Currie,
Guttery and Wolcott; 2,000 of the shares of Common Stock shown as owned by
Mr. Kelton; 450,655 of the shares of Common Stock shown as owned by Mr.
Johnson; 194,820 of the shares of Common Stock shown as owned by Mr.
Sebastian; 76,782 of the shares of Common Stock shown as owned by Mr.
Duncan; and 44,960 of the shares of Common Stock shown as owned by Mr.
Herbert represent shares subject to options exercisable as of March 19,
1999, 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 and the shares of Common
Stock shown as owned by Mr. Duncan include 350 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 1998, except that Mr. Herbert filed late two reports each covering
one transaction and each of Mr. Baker, Mr. Duncan and Mr. Sebastian filed late
one report covering one transaction.
3
<PAGE> 6
CUMULATIVE SHAREHOLDER RETURN
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"). Companies included in the MBA peer group are publicly traded,
non-portfolio mortgage lenders that originate and service mortgages. This
performance graph represents the period from December 31, 1993 through December
31, 1998.
RESOURCE BANCSHARES MORTGAGE GROUP, INC. (1)(2)(3)(4)(5)(6)
VS. NASDAQ COMPOSITE
VS. MBA PEER GROUP
CUMULATIVE SHAREHOLDER RETURN SINCE DECEMBER 31, 1993
<TABLE>
<CAPTION>
MEASUREMENT PERIOD MBA PEER
(FISCAL YEAR COVERED) RBMG NASDAQ GROUP
<S> <C> <C> <C>
12/31/93 100.00 100.00 100.00
12/31/94 108.95 97.75 89.47
12/31/95 179.32 138.26 129.78
12/31/96 191.88 170.01 162.33
12/31/97 230.63 208.58 237.49
12/31/98 234.16 293.21 313.12
</TABLE>
- ---------------
(1) Total return assumes an initial investment of $100 on December 31, 1993, and
reinvestment of dividends.
(2) 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.
(3) 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 which were included in
the 1994 group 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.
(4) 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
4
<PAGE> 7
from the MBA Peer Group for 1996 which were included in the 1995 group 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.
(5) 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 which
were included in the 1996 group 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. In addition, the MBA added
two new companies to the group in 1997.
(6) The companies included in the MBA Peer Group for the year ended December 31,
1998, consist of: Countrywide Credit Industries, Doral Financial Corp.,
First Mortgage Corp., Fund American Enterprise, Headlands Mortgage Co. and
the Company. The companies excluded from the MBA Peer Group for 1998 which
were included in the 1997 group had by December 31, 1998 either ceased doing
business, been acquired by another company, ceased to be publicly held or
significantly altered the way they do business. In addition, the MBA added
one new company to the group in 1998.
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
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------------------------------- --------------------------
(A) (B) (C) (D) (E) (F) (G) (L)
SECURITIES
UNDERLYING
RESTRICTED OPTIONS/ ALL OTHER
NAME AND OTHER ANNUAL STOCK SARS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) AWARDS($)(2) (#) ($)(3)
- ------------------ ---- --------- ---------- ------------------ ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
E. J. Sebastian...... 1998 $600,000 $ 856,000 $ 9,847 $ -- 200,000 $ 38,366
Chief Executive 1997 250,008 600,000 -- -- -- 4,325
Officer 1996 250,008 500,000 -- -- 56,175 5,210
D. W. Johnson, Jr.... 1998 $430,404 $1,873,357 $218,827 $1,391,110 -- $ 68,301
Vice Chairman and 1997 414,840 878,196 295,207 324,537 -- 129,005
Managing Director 1996 386,687 877,918 200,000 341,156 -- 72,729
R.M. Duncan.......... 1998 $212,500 $ 385,000 $ 8,247 $ -- 15,000 $ 39,740
Senior Executive 1997 200,000 350,000 7,289 -- 68,250 30,373
Vice President -- 1996 175,000 350,000 19,266 -- 37,291 32,416
Production
S. F. Herbert........ 1998 $205,000 $ 200,000 $ 5,066 $ -- 15,000 $ 28,234
Senior Executive 1997 200,000 275,000 6,189 -- 36,750 26,474
Vice President and 1996 175,000 275,000 8,881 -- 25,560 20,983
Chief Financial
Officer
</TABLE>
- ---------------
(1) For 1998, 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 Messrs. Sebastian, Johnson, Duncan
and Herbert, reimbursement for tax liability related to premiums on whole
life and universal life and disability policies in the amounts of $9,847,
$18,827, $8,247 and $5,066, respectively.
5
<PAGE> 8
(2) The shares of restricted stock were awarded to Mr. Johnson on February 1,
1997, January 30, 1998 and February 1, 1999 as part of 1996, 1997 and 1998
bonuses. Mr. Johnson received 24,705 shares in 1997, 20,048 shares in 1998,
and 93,520 shares in 1999. Mr. Johnson also was awarded 6,668, 29,568 and
9,219 shares of restricted stock in January 1994, 1995 and 1996,
respectively. Had Mr. Johnson held all of such shares of restricted stock
received in 1994, 1995, 1996, 1997, 1998 and 1999 on December 31, 1998, the
shares held by him would have had a year-end value of $3,042,536, based on
the closing price of a share of Common Stock on December 31, 1998 of $16.56.
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 1998 consist of (i) for Mr. Sebastian premiums on whole
life and disability insurance policies of $32,823 and contributions to the
Company's 401(k) plan of $5,543, (ii) for Mr. Johnson, premiums on whole
life and disability insurance policies of $62,758 and contributions to the
Company's 401(k) plan of $5,543, (iii) for Mr. Duncan, premiums on whole
life and disability insurance policies of $27,491, contributions to the
Company's 401(k) plan of $5,543 and dividends on shares subject to options
of $6,706; and (iv) for Mr. Herbert, premiums on whole life and disability
insurance policies of $16,885, contributions to the Company's 401(k) plan of
$5,543 and dividends on shares subject to options of $5,806.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ---------------------------------------------------------------------------------- -----------------------
(A) (B) (C) (D) (E) (F) (G)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS
OPTIONS/ GRANTED TO EXERCISE OR
SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ---- ----------- ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
R.M. Duncan(1)............. 15,000 4.19% $16.44 04/14/08 $ 154,950 $ 393,000
S.F. Herbert(1)............ 15,000 4.19% 16.44 04/14/08 154,950 393,000
E.J. Sebastian(1).......... 200,000 55.87% 16.44 04/14/08 2,066,000 5,240,000
</TABLE>
- ---------------
(1) These options were granted on April 14, 1998, under the Company's Amended
and Restated Omnibus Plan. The options became exercisable as to 20% of the
shares on April 14, 1998 and will become exercisable with respect to an
additional 20% of the shares on April 14 of each subsequent year beginning
with April 14, 1999 until they become exercisable with respect to all the
shares.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(A) (D) (E)
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS/SARS AT FY-END(#) OPTIONS/SARS AT FY-END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---- ------------------------------------- ---------------------------------
<S> <C> <C>
E. J. Sebastian.......... 163,585/204,940 $320,279/$143,010
D. W. Johnson, Jr........ 450,655/0 $4,835,528/$0
R.M. Duncan.............. 52,674/67,866 $238,361/$236,544
S.F. Herbert............. 33,036/44,276 $125,299/$125,901
</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,
1998, $16.56, and the per share exercise price of the option.
6
<PAGE> 9
DEFINED BENEFIT PLANS
The Company sponsors a qualified Pension Plan for all employees, as well as
a Pension Restoration Plan ("Restoration Plan") and a Senior Executive
Retirement Plan ("SERP") for certain eligible employees, including officers. The
Restoration Plan and the SERP are unfunded plans which provide for benefit
payments in addition to those payable under the qualified Pension Plan. The
Restoration Plan 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 maximum benefit
limitations of the Internal Revenue Code of 1986, as amended (the "Code").
The following table illustrates the estimated annual benefits payable upon
retirement at normal retirement date under the Pension Plan and the Restoration
Plan.
1998 PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------
FINAL AVERAGE PAY 15 20 25 30 35
- ----------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000............................ $ 27,903 $ 37,203 $ 46,504 $ 55,805 $ 65,106
150,000............................ 34,090 45,453 56,817 68,180 79,543
175,000............................ 40,278 53,703 67,129 80,555 93,981
200,000............................ 46,465 61,953 77,442 92,930 108,418
225,000............................ 52,653 70,203 87,754 105,305 122,856
250,000............................ 58,840 78,453 98,067 117,680 137,293
300,000............................ 71,215 94,953 118,692 142,430 166,168
350,000............................ 83,590 111,453 139,317 167,180 195,043
400,000............................ 95,965 127,953 159,942 191,930 223,918
450,000............................ 108,340 144,453 180,567 216,680 252,793
500,000............................ 120,715 160,953 201,192 241,430 281,668
550,000............................ 133,090 177,453 221,817 266,180 310,543
600,000............................ 145,465 193,953 242,442 290,930 339,418
650,000............................ 157,840 210,453 263,067 315,680 368,293
700,000............................ 170,215 226,953 283,692 340,430 397,168
750,000............................ 182,590 243,453 304,317 365,180 426,043
800,000............................ 194,965 259,953 324,942 389,930 454,918
</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 1998, Messrs. Sebastian, Johnson, Duncan and Herbert
received base pay of $600,000, $430,404, $212,500 and $205,000, respectively,
and now have credited service under the Pension and Restoration plans of 11, 10,
5 and 4 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 1998 and are not subject to
any deduction for Social Security or other offset amounts.
The SERP provides for normal retirement upon the participant's attainment
of age 62. The SERP's normal retirement benefit upon a participant's attainment
of age 62 is 60% of the participant's final average pay (average base pay plus
cash bonuses of up to $100,000 per year for up to any five calendar years out of
the last ten calendar years) less the sum of benefits payable under the Pension
Plan, the Retirement Plan and Social Security.
Accrued benefits under the SERP as of December 31, 1998, for Messrs.
Sebastian, Johnson, Duncan and Herbert were $234,912, $231,427, $130,430 and
$139,540, respectively. These benefits are annual amounts payable for life
commencing at age 62. These amounts are based upon average compensation and
service determined as of December 31, 1998.
7
<PAGE> 10
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 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 1998 was set at $430,404. 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 July 1, 1998, Mr. Duncan's
annual salary was increased to $225,000 and Mr. Herbert's annual salary was
increased to $210,000.
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
8
<PAGE> 11
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 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.
CHANGE OF CONTROL ARRANGEMENTS
The Company's Non-Qualified Stock Option Plan, Amended and Restated Omnibus
Award Plan and SERP all contain change of control provisions. Messrs. Duncan and
Herbert hold unvested options granted under the Non-Qualified Stock Option Plan.
Messrs. Sebastian, Duncan and Herbert hold unvested options under the Amended
and Restated Omnibus Award Plan and Messrs. Sebastian, Johnson, Duncan and
Herbert participate in the SERP. In the event of a Change of Control (as defined
in the two option plans and the SERP)of the type set forth in clause (i), (ii)
or (iv) below and immediately prior to a Change of Control of the type set forth
in clause (iii) below, each outstanding option under the Non-Qualified Stock
Option Plan and the Amended and Restated Omnibus Award Plan will become
immediately exercisable. A Change of Control for purposes of the two option
plans and the SERP includes (i) the acquisition by any individual, entity or
group of 20% or more of the Common Stock, (ii) a change in the membership of the
Board in which the current members or their approved successors no longer
constitute a majority, (iii) a reorganization, merger, consolidation or sale or
other disposition of all or substantially all of the Company's assets or the
acquisition of assets of another corporation unless (a) the shareholders prior
to the transaction own at least 50% of the Common Stock following the
transaction, (b) no person owns 20% or more of the Common Stock following the
transaction who did not own such amount prior to the transaction and (c) at
least a majority of the Board after the transaction were members of the Board at
the time the Board approved the transaction and (iv) approval by the
shareholders of a complete liquidation or dissolution of the Company.
If following a Change of Control a SERP participant is terminated without
Cause (as defined in the SERP) or the acquiring company terminates the SERP or
the participant separates from service 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 the
participant will become partially or fully vested in his SERP benefits based on
his credited years of service. Under the SERP plan formula and based on current
credited years of service, Messrs. Sebastian and Johnson would become 100%
vested, Mr. Duncan would become 70% vested and Mr. Herbert would become 60%
vested.
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 $22,000 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 1998 totaled
$201,000. Directors also are reimbursed for all reasonable out of pocket
expenses related to attendance at meetings.
On September 1, 1998, each of Messrs. Baker, Cable, Currie, Guttery, Kelton
and Wolcott was awarded an option to purchase 10,000 shares of Common Stock at
an exercise price of $15.75 per share under the Company's Formula Stock Option
Plan. Each of the options became exercisable immediately as to 20% of the
9
<PAGE> 12
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, 1999 until each is exercisable with respect to all 10,000
shares.
COMPENSATION COMMITTEE REPORT
For 1998, 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 1998 salary and bonus were determined
by formulas set forth in his employment agreement. The 1998 salaries of the
Company's two other executive officers were set by Mr. Sebastian and Mr.
Johnson. In addition, as discussed below, Mr. Johnson made recommendations
concerning the amount of their 1998 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 "COMPENSATION OF OFFICERS AND
DIRECTORS -- 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, $385,000 and $200,000, 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 1998 was $600,000. 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, 1998. In 1998 the Board of Directors awarded Mr. Sebastian options
to acquire 200,000 shares of Common Stock at a per share price of $16.44. The
Board of Directors also awarded Mr. Sebastian an $856,000 bonus for 1998. The
amounts of Mr. Sebastian's 1998 option award and bonus were 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 committee's subjective evaluation of Mr. Sebastian's and
the Company's 1998 performance. Mr. Sebastian and Mr. Johnson did not
participate in the actions taken by the Board relative to Mr. Sebastian's 1998
salary, option award or 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 1998, both Mr. Sebastian and
Mr. Johnson received compensation totaling in excess of $1,000,000 and thus
potentially subject to Section 162(m). The Company does not believe the 1998
compensation of Messrs. Sebastian and Johnson are subject to the $1,000,000
limitation on deductibility because (i) the Company was not considered a
publicly held corporation for purposes of Section 162(m) during 1998 and (ii)
the compensation 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 1999 and future compensation
of executive officers, the Board of Directors reserves the right to authorize
compensation payments that 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>
10
<PAGE> 13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As described in the foregoing Compensation Committee Report at various
times during 1998 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.
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 1998, the Company's Board of Directors held a total of 10 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. 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.
The current members of the Audit Committee are Mr. Cable, Mr. Guttery and
Mr. Wolcott. The Audit Committee held three meetings during 1998. 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 13 meetings during 1998. 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 II 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 II -- TERMS EXPIRING AT THE 2002 ANNUAL MEETING.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING THE LAST FIVE
NAME, PRESENT POSITION(S) AND TERM WITH THE COMPANY AGE YEARS, DIRECTORSHIPS OF PUBLIC COMPANIES
- --------------------------------------------------- --- -------------------------------------------------------
<S> <C> <C>
John W. Currie................................. 52 Attorney, McNair Law Firm, P.A.
Director and Secretary of the Company since October
1992
Stuart M. Cable................................ 45 Attorney, Goodwin, Procter & Hoar, LLP.
Director of the Company since October 1992
John O. Wolcott................................ 55 Executive Vice President of The Olayan
Director of the Company since June 1993 America Corporation, an investment company.
</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 III -- TERMS TO EXPIRE AT THE 2000 ANNUAL MEETING.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING THE LAST FIVE
NAME, PRESENT POSITION(S) AND TERM WITH THE COMPANY AGE YEARS, DIRECTORSHIPS OF PUBLIC COMPANIES
- --------------------------------------------------- --- -------------------------------------------------------
<S> <C> <C>
John C. Baker.................................. 49 Since September 1995, President of Baker Capital
Director of the Company since May 1993 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 Data
Study, Inc., Intermedia Communications, Inc., FORE
Systems, Inc. and FWT, Inc.
Robin C. Kelton................................ 64 Since 1996, Chairman and Chief Executive Officer
Director of the Company since December 1997 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>
3. CLASS I -- TERMS TO EXPIRE AT THE 2001 ANNUAL MEETING.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DURING THE LAST FIVE
NAME, PRESENT POSITION(S) AND TERM WITH THE COMPANY AGE YEARS, DIRECTORSHIPS OF PUBLIC COMPANIES
- --------------------------------------------------- --- -------------------------------------------------------
<S> <C> <C>
Edward J. Sebastian............................ 52 Chairman of the Board and Chief Executive
Chairman of the Board and Chief Executive Officer of the Company; Chairman of the Board and Chief
Officer of the Company since September 1992 Executive Officer of RBC. Mr. Sebastian is a director
of First Sun South Corporation and Affinity
Corporation.
David W. Johnson, Jr........................... 50 Vice Chairman and Director of the Company
Vice Chairman and Director of the Company since since October 1992 and Managing Director since July
October 1992 and Managing Director since July 1993 1993.
Boyd M. Guttery................................ 71 Business consultant since September 1996;
Director of the Company since June 1993 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>
PROPOSAL NO. 2
AMENDMENT TO STOCK INVESTMENT PLAN
GENERAL
Effective January 1, 1995, the Company adopted the Resource Bancshares
Mortgage Group, Inc. Stock Investment Plan (the "Investment Plan"). The plan was
approved by the shareholders at the 1995 annual meeting. On November 30, 1998,
the Company's Board of Directors amended the plan to increase by 300,000 the
number of shares available for issuance thereunder and to make a number of other
changes. The plan as so amended is described below and is being submitted to the
shareholders for approval at the Annual Meeting in order to comply with certain
requirements of the Code. If the shareholders do not approve the amendment at
12
<PAGE> 15
the meeting, the Company will be deemed to have adopted as of May 15, 1998 a
nonqualified plan which will have the same provisions as the amended Investment
Plan described below except that it will be named the "Resource Bancshares
Mortgage Group, Inc. Nonqualified Stock Investment Plan," and the maximum number
of shares of Common Stock that may be purchased under the nonqualified plan will
be 300,000 shares.
The purpose of the plan is to provide employees of the Company and its
subsidiaries with an opportunity to acquire a proprietary interest in the
Company through the purchase of shares of Common Stock and, thus, to develop a
stronger incentive to work for the continued success of the Company. The maximum
number of shares of Common Stock that may be purchased pursuant to the plan as
amended is 425,529 plus such additional shares as may be issued pursuant to the
antidilutive adjustment provisions of the plan. The shares of Common Stock to be
purchased pursuant to the plan will be purchased by the plan's custodian either
from the Company or in open market purchases. Shares purchased from the Company
may be either treasury shares or original issue shares.
The plan is for the benefit of all eligible employees (those who have
completed 60 days of continuous service) of the Company and its subsidiaries,
both officers and non-officers. The Company currently has approximately 1,400
employees that are eligible to participate in the plan, of which 414 are
actively participating. An eligible employee may elect to have withheld from
compensation and contributed to the plan from a minimum of $10 per month to a
maximum of $1,500 per month.
Subject to the provisions of the plan, as of each purchase date, the
participant will be deemed to have been granted an option to purchase on such
purchase date as many shares (including fractional shares) as the participant
would be able to purchase at a per share purchase price equal to 85% of the fair
market value of a share of Common Stock on such purchase date with the payroll
deductions credited to his account during the applicable purchase period.
However, no participant may obtain a right to purchase more than $25,000 in fair
market value (determined as of each purchase date) during any calendar year. The
fair market value of Common Stock purchased in open market purchases will be the
price at which the custodian purchases such Common Stock. The fair market value
of Common Stock purchased from the Company will be the average of the high and
low reported sales prices of the Common Stock for the trading day most
immediately preceding the date on which the shares are purchased.
On or before the fifth working day after the end of each payroll period,
the Company remits to the plan custodian an amount equal to the total of all
payroll deductions made by participants under the plan during the payroll period
divided by .85. The custodian then applies the funds to the purchase of shares
of Common Stock. Stock purchases are to be completed within 30 days following
the remittance of funds. On each dividend payment date the Company remits to the
custodian an amount equal to the cash dividends payable on such shares divided
by .85 and the custodian applies such funds to the purchase of Common Stock
within 30 days. The Company pays the charges of the custodian (including
brokerage expenses incurred in connection with the purchase of shares) and all
costs of maintaining records and executing transfers.
Shares of Common Stock acquired for participants are held in the name of
the custodian or its nominee for the account of the plan. Currently the
custodian is First Chicago Trust Company, a division of Equiserve, but the
custodian may be changed at any time. The custodian establishes a stock purchase
account for each participant and credits to such stock purchase account the
participant's pro rata share of Common Stock purchased.
Upon written request of a participant directed to the Company, the
participant may receive a partial or total distribution of the shares of Common
Stock allocated to his stock purchase account. If a participant is to receive a
distribution, stock certificates for the number of whole shares of Common Stock,
subject to such distribution, will be issued and delivered to the participant.
If a participant is to receive a distribution of all of the participant's stock
purchase account, the participant will receive a cash distribution in lieu of
any fractional share. A participant may, at any time and effective as of the
next plan entry date, direct the Company to make no further deductions from the
participant's compensation or to adjust the amount of such deductions.
13
<PAGE> 16
The Board of Directors may amend the plan at any time but no such amendment
shall be made without shareholder approval to (i) increase the number of shares
which may be acquired under the plan, (ii) decrease the purchase price, (iii)
withdraw the administration of the plan from the Board of Directors or (iv)
change the definition of eligible employees.
PLAN BENEFITS
The following table sets forth the number of options granted under the
Investment Plan during 1998 to each person or group named and the dollar value
thereof.
<TABLE>
<CAPTION>
STOCK INVESTMENT PLAN
------------------------
DOLLAR VALUE NUMBER OF
NAME AND POSITION ($)(1) UNITS (2)
- ----------------- ------------ ---------
<S> <C> <C>
E.J. Sebastian.............................................. $ 3,362 1,313
D.W. Johnson, Jr............................................ 3,362 1,313
R.M. Duncan................................................. 3,362 1,313
S.F. Herbert................................................ 3,303 1,290
-------- ------
Executive group............................................. $ 13,389 5,229
Non-Executive Director Group................................ -- --
Non-Executive Officer Employee Group........................ $121,000 47,253
</TABLE>
- ---------------
(1) Represents the aggregate amount of the 15% discount received by such person
or group during 1998.
(2) Each Unit is an option covering one share of Common Stock
CERTAIN FEDERAL TAX CONSEQUENCES
The plan is intended to comply with the requirements governing employee
stock purchase plans set forth in Section 423 of the Code. Certain favorable tax
consequences are afforded to purchasers of stock pursuant to an employee stock
purchase plan meeting those requirements. If the requirements of Section 423 of
the Code are satisfied, the employee will not realize taxable income at the time
the employee purchases stock pursuant to the plan. If a participant acquires
stock under such a plan and holds it for a period of more than two years from
the date the option is granted and more than one year from the date the option
is exercised, the participant will realize ordinary income upon the disposition
of such stock equal to the lesser of (a) the excess of the fair market value of
such stock at the time the option was granted over its option price (which in
the plan would be the amount of the 15% reduction in price), or (b) the excess
of the fair market value of such stock at the time of disposition over the
option price. The employee will also recognize a long term capital gain or loss
in an amount equal to the difference between (a) the amount realized on the sale
of the stock, and (b) the sum of the amount the employee paid for the stock plus
the amount, if any, taxed to the employee as ordinary income (as described in
the previous sentence). If a participant disposes of stock acquired pursuant to
such an option within two years from the date the option is granted or one year
from the date the option is exercised, he must report as ordinary income the
difference between the option price and the fair market value of the stock at
the time the option was exercised. The employee will also recognize as capital
gain or loss an amount equal to the difference between (a) the amount realized
on the sale of the stock, and (b) the sum of the amount the employee paid for
the stock plus the amount taxed to the employee as ordinary income (as described
in the previous sentence).
If the amendment to the plan is not approved by the shareholders at the
Annual Meeting or for any other reason the plan fails to qualify under Section
423 of the Code, then in the year shares are purchased and allocated to a
participant's stock purchase account, the participant will recognize ordinary
income equal to the excess of the fair market value of the stock on the purchase
date over the purchase price paid by the participant for such shares (i.e., the
15% discount). The amount of ordinary income recognized by the participant upon
the purchase and allocation of the shares will increase the participant's basis
in such shares. Upon the disposition of the stock, the participant will
recognize a capital gain or loss equal to the difference between the amount
received for the sale or exchange of the stock and the participant's basis in
the stock
14
<PAGE> 17
(generally the sum of ordinary income recognized in the year the shares were
purchased and allocated to the participant's stock purchase account plus the
purchase price paid for the stock).
No federal income tax deduction is ordinarily allowed to the Company with
respect to the 15% discount provided under the plan if the plan qualifies under
Section 423; however, if the plan does not satisfy the requirements of Section
423 of the Code, the Company will be entitled to an income tax deduction
(subject to the provisions of Section 162(m) of the Code), in the year shares
are purchased and allocated to participants' stock purchase accounts, equal to
the amount of ordinary income includible in the participants' income.
Additionally, even if the plan complies with Section 423, if a participant
disposes of shares purchased under the plan within two years of their purchase
date, the Company will be entitled to an income tax deduction (subject to the
provisions of Section 162(m) of the Code), in the year of such disposition,
equal to the amount constituting ordinary income to the participant.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL OF
THE AMENDMENT TO THE INVESTMENT PLAN.
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.
RELATIONSHIPS WITH INDEPENDENT ACCOUNTANTS
Representatives of PricewaterhouseCoopers 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.
PROPOSALS FOR 2000 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 11,
1999, if such proposal is to be considered for inclusion in the proxy statement
and form of proxy relating to that meeting.
In addition, the Company's bylaws provide that shareholder proposals,
including nominations of directors, may be considered at a meeting of
shareholders only if made by a shareholder of record entitled to vote at the
meeting who gives written notice of the proposal to the Secretary of the Company
that is received at the Company's principal offices not less than 60 and not
more than 90 days prior to the meeting; provided that in the event that less
than 70 days' notice or prior public disclosure of the date of the meeting is
given, notice by the shareholder must be received no later than the close of
business on the tenth day following the day on which notice of the date of the
meeting was mailed or public disclosure thereof was made, whichever occurs
first. Any written notice of a shareholder proposal by a shareholder to the
Secretary must include (a) a brief description of the business desired to be
brought before the meeting and the reasons for conducting such business at the
meeting, (b) the name and address, as they appear on the Company's books, of the
shareholder proposing such business, (c) the class and number of shares of stock
beneficially owned by the shareholder, (d) any material interest of the
shareholder in such business and (e) in the case of nominations of directors,
such other information regarding the nominee as may be required to be disclosed
in the proxy statement, and the written consent of the proposed nominee to his
nomination and to serve as director, if elected.
15
<PAGE> 18
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 6, 1999
The undersigned hereby appoints John W. Currie and Boyd M. Guttery 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 Thursday, May 6, 1999, at 9:00 a.m., local time, at
the offices of King & Spalding, 191 Peachtree Street, Atlanta, Georgia 30303,
and at any adjournment or adjournments 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 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.
If the undersigned is a participant in the Employee Stock Ownership
Plan (the "ESOP") and/or the Stock Investment Plan, and this proxy card is
received on or prior to May 3, 1999, then this card also provides voting
instructions to the trustee of the ESOP and/or the custodian of the Stock
Investment Plan, to vote at the 1999 Annual Meeting, and adjournment or
adjournments thereof, any and all shares of Common Stock of the Company held in
the undersigned's respective plan accounts as specified upon the matters
indicated on the reverse side and in discretion of such trustee and/or such
custodian upon such matters as may properly come before the meeting.
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.
[X]
Please mark your
votes as in this
example.
This proxy will be voted as directed. If no direction is made,
this proxy will be voted FOR the election of directors and
FOR approval of the amendment to the
Company's Stock Investment Plan.
The Board of Directors recommends a vote FOR all nominees for election as
directors and a vote FOR approval of the amendment to the Company's Stock
Investment Plan.
<PAGE> 19
FOR ALL except
as indicated below WITHHELD FOR ALL
--------------- --------------------------------
1. ELECTION OF DIRECTORS: Nominees:
Stuart M. Cable
John W. Currie
John O. Wolcott
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To withhold authority to vote for any nominee(s), write the name of the
nominee(s) on the line below.
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2. To approve the amendment to the Company's Stock Investment Plan.
FOR AGAINST ABSTAIN
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3. In the discretion of the proxies, on any other matter that may properly
come before the meeting or any adjournment or adjournments thereof.
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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.
RESOURCE BANCSHARES MORTGAGE GROUP, INC.
Dear Stockholder:
We encourage you to take advantage of two new and convenient ways by which
you can vote your shares. You can vote your shares electronically by telephone
or via the Internet, which eliminates the need to return the proxy card.
Vote by Telephone: To vote your shares by telephone, use a touch-tone
telephone and call the following toll-free number: 1-800-652-8683, 24 hours a
day, 7 days a week. Insert the Control Number printed in the box above, just
below the perforation. Follow the simple recorded instructions.
Vote by Internet: To vote via the Internet, go to web site
www.vote-by-net.com. Insert the Control Number printed in the box above, just
below the perforation and then follow the simple instructions. Please be aware
that if you vote over the Internet, you may incur costs such as
telecommunication and Internet access charges for which you will be responsible.
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The Internet and telephone voting facilities will be available until midnight
on May 5, 1999, the day before the Annual Meeting.
YOUR VOTE IS IMPORTANT
THANK YOU FOR VOTING!
Do Not Return Proxy If You Are Voting By Telephone Or The Internet
