<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
STUDENT LOAN CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[LOGO] STUDENT LOAN CORPORATION (SM)
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Date:Thursday, May 13, 1999
Time:11:00 a.m., Central Time
Place: Citibank
701 East 60th Street North
Building # 3 Dakota Room
Sioux Falls, South Dakota 57117
At the Annual Meeting, the following proposals are on the agenda for action
by the stockholders:
[ ] To elect two directors to hold office until the annual meeting in
2002, and until the election and qualification of their successors;
[ ] To ratify the selection of KPMG LLP as independent auditors;
[ ] To act upon a stockholder proposal; and
[ ] To transact such other business as may properly come before the meet-
ing.
Please complete the proxy card and return it promptly in the enclosed enve-
lope. If you do decide to attend the meeting, you can withdraw your proxy and
vote in person at that time. Voting is by secret ballot. Stockholders of rec-
ord at the close of business (5:00 P.M., Eastern Time) on March 31, 1999 are
entitled to one vote for each share held. A list of these stockholders will be
available for inspection for 10 days preceding the meeting at 425 Park Avenue,
2nd Floor, New York, New York 10022, and also will be available for inspection
at the meeting itself.
By order of the Board of Directors,
/s/ Bill Beckmann
Bill Beckmann
President and
Chief Executive Officer
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of The Student Loan
Corporation (the "Corporation"). These proxies will be voted at the Annual
Meeting of Stockholders of the Corporation on May 13, 1999. Stockholders of
record at the close of business (5:00 P.M., Eastern Time) on March 31, 1999
are entitled to one vote for each share held. On that date there were 20
million shares of the Corporation's common stock outstanding and eligible to
vote. This Proxy Statement and Form of Proxy are first being sent to
stockholders on or about April 12, 1999.
I. DIRECTORS AND NOMINEES FOR ELECTION AS DIRECTOR
The Corporation has six directors. The term of office of two of the six
directors will expire at the Annual Meeting and, accordingly, two nominees
have been proposed for election as directors of the Corporation. The
affirmative vote of a plurality of the votes cast at the Annual Meeting by
stockholders entitled to vote is required for the election of each nominee as
a director of the Corporation.
The following information with respect to each director is set forth below:
name, age, positions and offices held, principal occupation, certain other of
the director's activities and term of office as director. Messrs. Gallant and
Levinson and Ms. Williamson are officers of Citigroup Inc. ("Citigroup") or
its subsidiaries, Citibank, N.A. or Citicorp Mortgage, Inc. Citigroup owns
indirectly 80% of the outstanding common stock of the Corporation.
Bill Beckmann, 38. Mr. Beckmann has been the President of the Corporation
since October 1997 and its Chief Executive Officer since May 1998. Before
joining the Corporation, from 1984 to 1994, he held a number of jobs with
Citicorp subsidiaries, including managing strategic planning for the Citicorp
Card Products Group, managing planning for Citicorp's private label credit
card program and managing asset dispositions for a provider of real-time
financial information. From 1994 to 1997, Mr. Beckmann was a Vice President of
International Business Machines, most recently with responsibility for
developing IBM's Internet business.
Mr. Beckmann was elected a director of the Corporation in October 1997. His
current term as director expires at the annual meeting in 2000.
Peter M. Gallant, 55. Mr. Gallant joined Citibank in 1974 after 10 years in
the paper and printing business. His first six years at Citicorp were with the
World Corporation Group; 1980 to 1984 were with Treasury London, setting up
the Customer Dealing business and then building the second version of Trestel,
the dealer trading system. 1984-1985 was spent at Midland Bank.
In 1985, Mr. Gallant rejoined Citibank in New York in the Treasury Unit and
held a number of jobs, including managing Treasury Marketing, the financial
engineering piece of New York's treasury, and the funding books for North
America, Latin America and Citicorp. From 1987 to 1990 he was in the
Investment Bank in London, initially in charge of distribution in the
Eurosecurities businesses, then as Chief of Staff to the head of the
Investment Bank. Between 1991 and 1993 Mr. Gallant was responsible for the
Global Finance Europe balance sheet, as Regional Treasurer and then as Asset
Manager for Europe. Mr. Gallant was appointed Treasurer of Citicorp/Citibank,
N.A. in September 1993 and Treasurer of Citigroup in October 1998.
Mr. Gallant has been a director of the Corporation since January 1996. His
current term as director expires at the Annual Meeting. Mr. Gallant is a
nominee for election as director for a term that expires at the annual meeting
in 2002.
Glenda B. Glover, 46. Dr. Glover has been the Dean of the School of Business
of Jackson State University since 1994. From 1990 to 1994, she was the
Chairperson of the Department of Accounting and an Assistant Professor at
Howard University. Prior to joining Howard University, from 1985 to 1990, Dr.
Glover was the Chief Financial Officer and a Senior Vice President of Metters
Industries, Inc. From 1979 to 1984, she was the Project Manager for Tax
Administration and Coordinator of Investor Relations at Potomac Electric Power
Co.
1
<PAGE>
Dr. Glover founded the National Center for Enterprise Zone Research in 1987
and is currently the President of this non-profit economic development
corporation.
Dr. Glover has been a director of the Corporation since May 1998. Her current
term as director expires at the annual meeting in 2001.
Evelyn E. Handler, 65. Dr. Handler retired in 1998 from her position as
Executive Director of the California Academy of Sciences, a position she had
held since 1994. From 1991 to 1993, she was an Associate in Education at
Harvard University. Dr. Handler was a Senior Fellow of the Carnegie Foundation
for the Advancement of Teaching from 1990 to 1993. She served as President of
Brandeis University from 1983 to 1991 and President of the University of New
Hampshire from 1980 to 1983. Prior to joining the University of New Hampshire,
she was Dean of Sciences and Mathematics at Hunter College of the City
University of New York. Dr. Handler is also a director of The New England
Mutual Life Insurance Company.
Dr. Handler has been a director of the Corporation since April 1993. Her
current term as director expires at the annual meeting in 2000.
Carl E. Levinson, 52. Mr. Levinson is Division Executive of Citicorp's
Consumer Assets Division and has been Chairman of Citicorp Mortgage, Inc.
since August 1992. Mr. Levinson joined Citicorp in 1973 as a manager of Funds
Transfer in the New York Operating Group. In 1975 he became head of Finance,
Administration and Operations for Citicorp Remittance Services and in 1979 was
appointed Business Manager for Citicorp Remittance Services, a global check
processing and cash management business. From 1982 to 1984, Mr. Levinson was
the Global Product Manager for Citicorp Travelers Checks. In June 1984, Mr.
Levinson moved into Citicorp Retail Services as Director of Business
Development and Commercial Credit. In September 1986 he was appointed
President and General Manager of Citicorp Retail Services, which offers
private label credit card programs to leading retailers. He was appointed
General Manager of Card Services in 1991 and spearheaded a corporate expense
task force during the first half of 1992.
Mr. Levinson has been a director of the Corporation since October 1994. From
October 1997 to May 1998 he also served as the Corporation's Chief Executive
Officer. His current term as director expires at the annual meeting in 2000.
Laura D. Williamson, 45. Ms. Williamson joined Citicorp in 1982 and has served
in a number of senior corporate finance and capital markets positions, serving
for four years as head of Citicorp's corporate finance staff responsible for
evaluation and execution of strategic acquisitions and divestitures. She is
currently head of Global Strategic Marketing and head of Institutional Sales
for the U.S./Canada region of SSB Citi Asset Management.
Ms. Williamson has been a director of the Corporation since November 1992. Her
current term as director expires at the Annual Meeting. Ms. Williamson is a
nominee for election as director for a term that expires at the annual meeting
in 2002.
2
<PAGE>
Share Ownership of Directors and Named Executives
The following directors, nominees and named executives and all current
directors and executive officers as a group own, as of February 28, 1999, the
number of shares of the Corporation's and Citigroup's common stock set forth
below. All owners have sole voting power and investment power with respect to
such shares. The current directors and executive officers of the Corporation
as a group beneficially own less than 1% of the total shares outstanding of
the Corporation and Citigroup.
<TABLE>
<CAPTION>
Corporation Citigroup
Name Shares Shares (1)
---- ----------- ----------
<S> <C> <C>
Bill Beckmann........................................ 2,000 1,511
Gerald J. Bystrak.................................... None 2,095
John R. Coffin....................................... None 1,177
Peter M. Gallant..................................... None 10,777
Glenda B. Glover..................................... None None
Evelyn E. Handler.................................... None None
Carl E. Levinson..................................... None 92,704
Laura D. Williamson.................................. 1,500 10,863
Yiannis Zographakis.................................. 200 2,051
All directors and executive officers as a group (10
persons)............................................ 4,100 121,178
</TABLE>
(1) Includes the following shares of Citigroup common stock which the
directors and named executives have the right to acquire within 60 days
of February 28, 1999 pursuant to Citigroup employee benefit plans: Mr.
Bystrak--229 shares; Mr. Coffin--660 shares; Mr. Gallant--1,102 shares;
Mr. Levinson--1,147 shares; and all current directors and executive
officers as a group--3,930 shares. Also includes shares of common stock
held by certain directors and executive officers under the Citicorp
Savings Incentive Plan.
Certain Other Share Owners
Citibank (New York State), 99 Garnsey Road, Pittsford, New York 14534, a
wholly-owned subsidiary of Citigroup, is the only person known by the
Corporation to own beneficially more than 5% of the Corporation's outstanding
common stock. Citibank (New York State) is the owner of 16 million shares,
comprising 80% of the Corporation's outstanding common stock.
Section 16(a) Beneficial Ownership Reporting Compliance
Based on its review of the reports furnished to the Corporation for 1998
pursuant to Section 16 of the Securities Exchange Act of 1934 (the "Exchange
Act"), the Corporation believes that all of the reports required to be filed
under Section 16 were filed on a timely basis.
Classification of the Board
The Corporation's Certificate of Incorporation provides that the directors
are divided into three classes. The directors of each class serve for a term
of three years, and therefore the stockholders of the Corporation generally
will elect one-third of the directors at each annual meeting. Of the current
members, Mr. Gallant and Ms. Williamson serve for a term expiring at the 1999
Annual Meeting, Dr. Handler and Mr. Levinson serve for a term expiring at the
2000 annual meeting, and Mr. Beckmann and Dr. Glover serve for a term expiring
at the 2001 annual meeting. Mr. Gallant and Ms. Williamson are nominated for
election at the 1999 Annual Meeting as members of the class which will hold
office until the third annual meeting following such election and until the
election and qualification of their successors. If any nominee is unable to
serve out his or her term, the Board may appoint a successor to fill the
unexpired portion.
3
<PAGE>
Board Meeting Data
There were six meetings of the Board during 1998. All directors attended 75%
or more of the total Board and committee meetings held.
Board Committees
The Board has constituted an Audit Committee and a Compensation Committee.
The Board does not have a standing nominating committee; the entire Board
considers candidates for election to the Board and makes nominations. The
Audit Committee, which includes Dr. Glover, Dr. Handler and Ms. Williamson,
had five meetings during 1998. The Compensation Committee, which includes Dr.
Glover, Dr. Handler and Ms. Williamson, had four meetings during 1998.
The principal functions of the Audit Committee include recommending
independent auditors to be employed by the Corporation and conferring with
those auditors; considering the adequacy of internal financial controls and
the results of fiscal policies and financial management of the Corporation;
and recommending to the Board policies and procedures for dealing with
potential conflicts of interest. The principal functions of the Compensation
Committee are reviewing and recommending compensation for all executive
officers of the Corporation, evaluating annually individual and corporate
performance and evaluating information concerning such matters as competitive
compensation levels and employee benefit programs.
Board Compensation
In 1998 directors who were not employees of the Corporation or affiliated
companies received an annual fee of $20,000 for service on the Board, an
annual fee of $5,000 for service as Chairman of the Audit Committee or the
Compensation Committee and a fee of $1,000 for attendance at each Board or
committee meeting. Directors who are employees of the Corporation or
affiliated companies do not receive any fees or additional compensation for
services as members of the Board or any committee. All directors are
reimbursed for travel and other related expenses.
EXECUTIVE OFFICERS
The executive officers of the Corporation as of March 31, 1999 are set forth
below. Officers serve at the pleasure of the Board.
<TABLE>
<CAPTION>
Name Age Position and Office Held
- ---- --- ------------------------
<S> <C> <C>
Bill Beckmann 38 President and Chief Executive Officer
John R. Coffin 50 Vice President and General Counsel
Sallyann Colonna 39 Vice President and Director of Marketing
Sue Fowler Roberts 48 Senior Vice President and Director of Sales
Yiannis Zographakis 36 Vice President, Chief Financial Officer and Treasurer
</TABLE>
Mr. Coffin joined the Corporation in 1994. Mr. Coffin joined Citicorp in
1983 and, prior to joining the Corporation, held various positions with
Citibank (South Dakota), N.A. and Citibank (New York State), including General
Counsel and Commercial Risk Manager.
Ms. Colonna joined the Corporation in August 1998. From 1995 until she
joined the Corporation, she was General Manager of Credit Card Services at
Ameritech Corp. From 1985 to 1995 she held various marketing and product
management services with American Express Travel Related Services, which she
left as Vice President of Platinum and Card Services Marketing.
Ms. Roberts joined the Corporation in November 1998. Prior to joining the
Corporation, she was President and CEO of Education First Marketing, LLC, a
joint venture between Sallie Mae and Chase Manhattan Bank.
4
<PAGE>
From 1991 to March 1998, Ms. Roberts was a Vice President of Sallie Mae, most
recently with responsibility for Sales, East Region.
Mr. Zographakis joined the Corporation in March 1998. Prior to joining the
Corporation, Mr. Zographakis held various positions with Citibank, N.A.,
including Director of Finance for the Consumer Assets Division of Citibank and
Financial Controller for Citibank Consumer Finance. Mr. Zographakis joined
Citibank in 1990.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Corporation has engaged and expects to continue to engage in a variety
of business arrangements with Citigroup and its affiliates. Management
believes that these agreements and transactions are on terms no less favorable
to the Corporation than those that could be obtained from unaffiliated third
parties.
Citibank (New York State) has made available to the Corporation credit
facilities pursuant to which the Corporation may borrow up to $10 billion for
specified terms and at specified variable interest rates. At December 31,
1998, the Corporation's outstanding borrowings under these facilities were
approximately $8.2 billion. During 1998, the Corporation incurred
approximately $454.7 million in interest and fees to Citibank (New York State)
and its affiliates pursuant to these credit facilities.
Citicorp (a subsidiary of Citigroup which owns all of the stock of Citibank
(New York State), Citibank, N.A. and other banking corporations) has agreed
that neither Citicorp nor any of its majority-owned subsidiaries (other than
the Corporation) will engage in the business of originating guaranteed student
loans under the federal guaranteed student loan program or successor
legislation "Guaranteed Student Loans") or certain "alternative" student loans
until December 22, 1999. The agreement will not prevent Citicorp or its
subsidiaries from acquiring any institution that is in the business of
originating Guaranteed Student Loans or alternative student loans, provided
that Citicorp or its subsidiaries must cease or dispose of the business within
a specified period. The agreement does not restrict Citicorp and its
affiliates from acquiring, holding or servicing Guaranteed Student Loans or
alternative student loans. Currently, Citicorp and its subsidiaries (other
than the Corporation) do not hold or service any material amount of Guaranteed
Student Loans or alternative student loans, and have no plans to engage in
such business to any significant extent. In addition, the agreement contains
no restrictions on any lending activity, other than originating Guaranteed
Student Loans or alternative student loans, by Citicorp and its affiliates.
Citibank (New York State) and other bank subsidiaries of Citicorp are in the
business of making personal loans, including loans specifically for the
purpose of funding education costs and loans the proceeds of which may be used
for those purposes.
The agreement also restricts the Corporation from engaging in certain
business activities that would compete with other affiliates of Citicorp. The
Corporation does not believe that the agreement imposes any material
restrictions on its current or planned operations. The Corporation and
Citigroup are currently discussing a possible extension of this Agreement. No
assurance can be given as to whether or on what terms the agreement will be
extended.
Citigroup and its subsidiaries have licensed to the Corporation, for as long
as the Corporation remains a direct or indirect majority-owned subsidiary of
Citigroup, certain trade names and trademarks for use in the Corporation's
business. In addition, Citibank (New York State) and certain of its bank
affiliates currently allow the use of their mailing lists and provide other
marketing arrangements to the Corporation, and the Corporation allows the use
of its customer list by those affiliates during that period.
The Corporation and Citibank (New York State) have agreed that Citibank (New
York State) or its affiliates will perform certain other functions and
services for the Corporation. These services include data processing,
financial and regulatory reporting, financial systems, payroll and benefits
administration, telecommunications, audit, payment processing, legal affairs
and support staff. The Corporation incurred approximately $8.3 million for the
cost of those services provided by Citibank (New York State) and its
affiliates in 1998. In addition, under a restructuring plan announced in
December 1997, the Corporation is in the process of outsourcing a substantial
5
<PAGE>
portion of its operations to affiliates. The Corporation paid approximately
$6.4 million pursuant to these outsourcing arrangements in 1998.
Citibank (New York State) provides the Corporation's office facility and
furniture in Pittsford under a one-year lease agreement that, during 1998,
provided for annual payments of approximately $3.3 million, which included the
Corporation's allocable share of utilities, security and cafeteria expenses.
The agreement expires in December 1999, with an option to renew for an
additional one-year term.
In order to comply with applicable banking laws, loans made under the
Corporation's CitiAssist program are originated by Citibank (New York State)
and serviced by the Corporation. Expenses incurred by the Corporation in
underwriting, disbursing and servicing CitiAssist loans for Citibank (New York
State) are reflected in a service fee charged to Citibank (New York State)
pursuant to an intercompany agreement. During 1998, Citibank (New York State)
paid the Corporation approximately $1.2 million in fees in connection with the
agreement. CitiAssist loans are purchased by the Corporation at a premium
shortly after the final disbursement is made. As of December 31, 1998, the
Corporation's CitiAssist loan portfolio totaled $44.6 million.
The Corporation is included in various income tax or franchise tax returns
of groups including Citibank (New York State) and other affiliated companies.
The Corporation and Citibank (New York State) have entered into an agreement
providing for allocations of various tax payments. The agreement also provides
that the Corporation will pay to Citibank (New York State) one-half of the tax
benefit derived by the Corporation as a result of specified transactions
related to the establishment of the Corporation in 1992. During 1998, the
Corporation paid approximately $47.2 million to Citibank (New York State)
pursuant to this agreement.
COMPENSATION
Employees of the Corporation participate in the compensation plans of
Citigroup and its affiliates. Generally, compensation for the Corporation's
executive officers consists of salary and an annual cash incentive award (both
of which are paid directly by the Corporation), as well as a retirement plan,
a savings incentive plan, a stock purchase plan, a medical plan and other
benefit plans available to employees of Citigroup affiliates generally, in
which executive officers also participate. The Corporation reimburses
Citigroup for all costs incurred in connection with its employees'
participation in Citigroup benefit plans. Certain officers and other employees
of the Corporation have also received options to purchase Citigroup stock.
The tables on pages 8 through 10 show, among other things, salaries and
bonuses paid during the last three years, options granted in 1998 and
aggregate option exercises in 1998 for the named executive officers.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
-------------------------------------------------
Number of
Securities
Underlying Options All Other
Name and Principal Position Year Salary Bonus(/1/) Granted(/2/) Compensation(/3/)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Carl E. Levinson, 1998 $354,167 $426,000 100,000 $23,405
Chairman and Chief
Executive Officer(/4/) 1997 337,500 350,000 42,500 20,250
1996 322,833 315,625 27,500 19,370
Bill Beckmann, 1998 252,604 250,000 7,000 15,078
President and Chief
Executive Officer(/5/) 1997 41,667 200,000 25,000 1,250
Gerald J. Bystrak, 1998 161,000 93,300 4,000 15,258
Vice President and
Director of 1997 155,167 80,000 -0- 9,310
Operations(/6/) 1996 142,633 60,000 3,750 8,558
John R. Coffin 1998 124,667 18,000 -0- 8,560
Vice President and
General 1997 122,167 15,000 -0- 8,230
Counsel 1996 117,116 22,000 -0- 7,030
Yiannis Zographakis 1998 107,556 85,000 3,000 -0-
Vice President,
Treasurer and 1997 94,002 60,000 5,000 -0-
Chief Financial
Officer(/7/) 1996 80,833 25,000 2,500 -0-
Thomas R. Quinn, Jr., 1998 127,344 -0- -0- 7,640
Vice President and
Director of Sales(/8/) 1997 114,776 45,000 -0- 6,375
1996 150,659 -0- -0- 4,800
</TABLE>
(1) Bonus awards were made in 1999 based on 1998 performance.
(2) Options for 1998 were granted in November 1998, options for 1997 were
granted in January 1998, and options for 1996 were granted in January
1997. All options indicated in the table above are options to purchase
the common stock of Citigroup.
(3) Cash compensation earned pursuant to the Citicorp Savings Incentive Plan.
Any amounts in excess of contribution limits established by the Internal
Revenue Service are paid in cash to the named executive officer.
(4) Mr. Levinson served as Chief Executive Officer of the Corporation from
October 1997 to May 1998. Mr. Levinson is employed by a wholly owned
subsidiary of Citigroup. All of Mr. Levinson's compensation indicated in
the table above was paid by his employer.
(5) Mr. Beckmann's employment with the Corporation commenced in October 1997;
he was appointed Chief Executive Officer in May 1998. Mr. Beckmann's
annual salary rate for 1997 was $250,000. Mr. Beckmann received a sign-on
bonus for 1997 of $200,000.
(6) Mr. Bystrak was Vice President and Director of Operations of the
Corporation from its inception until January 1999.
(7) Mr. Zographakis's employment with the Corporation commenced in March
1998. Before March 1998, Mr. Zographakis was employed by an affiliate of
the Corporation and his compensation was paid by that affiliate. Mr.
Zographakis also receives equalization income due to his resident non-
citizen status not deemed material for Proxy purposes.
(8) Mr. Quinn was employed by the Corporation from April 1997 to December
1998. Prior to April 1997, Mr. Quinn worked for an affiliate of the
Corporation and his compensation was paid by that affiliate. The
Corporation awarded Mr. Quinn for 1997 a sign-on bonus of $15,000 and a
bonus of $30,000 based on 1997 performance.
7
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
- -----------------------------------------------------------------------------------
<CAPTION>
Percent of
Number of Total Options
Securities Granted to
Underlying Corporation Exercise
Options employees in Price Expiration Grant Date
Name Granted(/1/) Fiscal Year(/2/) ($/share) Date Present Value(/4/)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Carl E.
Levinson 100,000 (3) $47 11/02/08 $967,439
Bill
Beckmann 7,000 9% $47 11/02/08 $90,295
Gerald J.
Bystrak 4,000 5% $47 11/02/08 $51,598
John R.
Coffin -0- N/A N/A N/A N/A
Thomas R.
Quinn, Jr. -0- N/A N/A N/A N/A
Yiannis
Zographakis 3,000 4% $47 11/02/08 $38,697
- -----------------------------------------------------------------------------------
</TABLE>
(1) The 1998 options are options to purchase the common stock of Citigroup.
The options have a term of ten years vesting 20% per year beginning on
the first anniversary of the date of grant.
(2) No individual listed above had more than 0.32% of the total options
granted to all employees of Citigroup and its subsidiaries. The Student
Loan Corporation employees received 80,600 option grants for 1998.
(3) Mr. Levinson is not an employee of the Corporation.
(4) The "Grant Date Present Value" numbers set forth in the table above were
derived by application of a variation of the Black-Scholes option pricing
model. The following assumptions were used in employing such model:
. stock price volatility was calculated by using the weekly closing price
of the Citigroup's Common Stock on the NYSE Composite Transactions Tape
for the one-year period prior to the grant date of each option;
. the risk-free interest rate for each option grant was the interpolated
market yield on the date of grant on a Treasury bill with a term
identical to the subject estimated option life, as reported by the
Federal Reserve;
. the dividend yield (based upon the actual annual dividend rate during
1998) was assumed to be constant over the life of the option;
. exercise of the option was deemed to occur approximately three and one-
half years after the date of grant; and
. with respect to Mr. Levinson, the value arrived at through the use of
the Black-Scholes model was discounted by 25% to reflect the reduction
in value (as measured by the estimated cost of protection) of the
options due to the holding requirements of a stock ownership commitment
applicable to senior management of Citigroup businesses, as more fully
described in Citigroup's 1999 Proxy Statement. For purposes of
calculating the discount, a five year holding period was assumed.
The potential value of options granted depends entirely upon a long-term
increase in the market price of Citigroup's common stock; if the stock price
does not increase, the options would be worthless.
AGGREGATED CITIGROUP OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUE
<TABLE>
- -----------------------------------------------------------------------------------
<CAPTION>
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Options at Fiscal Year- In-The-Money Options
On Value End(/1/) at Fiscal Year-End(/1/)
--------------------------------------------------
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Carl E.
Levinson -0- -0- 86,250 197,500 $2,510,453 $1,291,219
Bill
Beckmann -0- -0- -0- 32,000 -0- $ 82,750
Gerald J.
Bystrak -0- -0- -0- 11,501 -0- $ 128,350
John R.
Coffin -0- -0- -0- -0- -0- -0-
Thomas R.
Quinn, Jr. -0- -0- -0- -0- -0- -0-
Yiannis
Zographakis -0- -0- -0- 10,500 -0- $ 38,156
- -----------------------------------------------------------------------------------
</TABLE>
(1) Shares and options to purchase shares of Citicorp were automatically
converted into shares and options to purchase shares, respectively, of
Citigroup on October 8, 1998, at the ratio of 2.5 Citigroup shares for
each Citicorp share. The value of those options reflected in the table is
the market value of common stock on December 31, 1998 minus the related
exercise price. The market value of Citigroup's common stock on the New
York Stock Exchange composite tape as of December 31, 1998 was $49.6875
per share.
8
<PAGE>
The Corporation also provides compensation to its employees in the form of a
benefit under the Citicorp Retirement Plan, in which employees of other
affiliated corporations also participate. The following table sets forth the
estimated annual retirement benefits as of December 31, 1998, as provided by
the Retirement Plan and supplemental non-qualified pension plans, payable upon
retirement to employees in specified remuneration and years-of-service
classifications. Amounts include estimated Social Security benefits that would
be deducted in calculating benefits payable under the Retirement Plan. The
estimated amounts are based on the assumption that payments under the
Retirement Plan will commence upon retirement at age 65.
PENSION PLAN TABLE(/1/)
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
Years of Service
------------------------------------------
Remuneration 15 20 25 30 35
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$100,000........................... $ 30,000 $ 40,000 $ 50,000 $ 60,000 $ 63,750
130,000........................... 39,000 52,000 65,000 78,000 82,875
160,000........................... 48,000 64,000 80,000 96,000 102,000
190,000........................... 57,000 76,000 95,000 114,000 121,125
220,000........................... 66,000 88,000 110,000 132,000 140,250
250,000........................... 75,000 100,000 125,000 150,000 159,375
300,000........................... 90,000 120,000 150,000 180,000 191,250
350,000........................... 105,000 140,000 175,000 210,000 223,125
400,000........................... 120,000 160,000 200,000 240,000 255,000
- --------------------------------------------------------------------------------
</TABLE>
(1) This table reflects a straight life annuity benefit.
The years of credited service under the Retirement Plan as of December 31,
1998 for Messrs. Levinson, Beckmann, Bystrak, Coffin and Zographakis were
approximately 26, 12, 25, 16, and 9 years, respectively. Covered compensation
under the Retirement Plan and the supplemental non-qualified pension plans is
the participant's base salary and, with respect to the individuals named in
the Summary Compensation Table, does not differ substantially (by more than
10%) from the salary compensation set forth therein. The benefit payable at
retirement is based on a specified percentage of the average of covered
compensation for the five highest-paid years of the last ten years of
employment. Messrs. Levinson, Beckmann, Bystrak, Coffin and Zographakis will
be credited with 35, 35, 35, 31, and 35 years of service, respectively, upon
normal retirement at age 65. Mr. Bystrak resigned his position with the
Corporation in January 1999, but continued to be employed by a company that
participates in the Retirement Plan. Mr. Quinn resigned from the Corporation
in December 1998.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Corporation's Board of Directors is
responsible for reviewing and recommending compensation for all executive
officers of the Corporation. The Committee, which met four times during 1998,
consists of three directors who are not employees of the Corporation. The
Committee annually evaluates individual and corporate performance.
The Corporation is 80% owned by Citibank (New York State), a subsidiary of
Citigroup. Accordingly, Citigroup management plays an important role in
determining not only compensation for the Chief Executive Officer in
particular and all other employees generally but also financial and other
business goals of the Corporation. The Corporation's relationship with
Citigroup is an integral component of the Committee's determination of
compensation levels.
During 1998, two individuals acted as Chief Executive Officer of the
Corporation. Mr. Levinson was the Chief Executive Officer until May 1998, when
Mr. Beckmann was named to that position. Mr. Levinson is employed and
compensated by a subsidiary of Citigroup. His compensation is determined by
the senior management of Citigroup, based on the performance of the
Corporation, as well as on the performance of other Citigroup businesses for
which Mr. Levinson is responsible.
9
<PAGE>
Mr. Beckmann's compensation for 1998 was initially recommended by the
Citigroup executive responsible for Citigroup's investment in the Corporation.
The Committee then reviewed the performance of Mr. Beckmann and the level of
compensation recommended by Citigroup management and determined the
appropriate compensation for approval by the Board. Compensation for executive
officers other than Mr. Beckmann was determined by the Committee based on
input from, and recommendations made by, Mr. Beckmann and Mr. Levinson.
Compensation for the Corporation's executive officers consists of salaries
and annual cash incentive awards. In addition, all employees of the
Corporation are eligible to participate in certain of the compensation plans
of Citigroup and its affiliates, including a savings incentive plan, a stock
purchase plan and a retirement plan. The Corporation reimburses Citigroup for
the cost of its employees' participation in Citigroup's plans.
Total annual compensation of executive officers is based on individual and
corporate performance. While corporate performance measures are considered in
setting compensation levels, no specific quantitative formula is used in
making compensation decisions or recommendations.
Salaries for Mr. Beckmann and other executive officers are established at
levels considered appropriate in light of the duties and scope of
responsibilities of each officer's position. Salaries are reviewed
periodically and adjusted as warranted to reflect competitive pay levels.
Annual cash incentive awards for the executive officers are based on an
assessment of individual performance and corporate results in attaining or
exceeding a set of targets agreed on by the management of the Corporation and
Citigroup and approved by the Committee.
Incentive awards, including stock option grants, vary based on assessments
of each executive officer's individual contributions as well as corporate
performance. The Committee reviews options granted to executive officers of
the Corporation to purchase shares of Citigroup stock when determining whether
to grant options to purchase the Corporation's stock. Certain executive
officers of the Corporation received Citigroup stock options for 1998. In
light of these grants, after consultation with management of the Corporation
and with the other members of the Corporation's Board of Directors, the
Committee determined not to recommend the grant of any options to purchase the
Corporation's stock for 1998.
By the Compensation Committee
Glenda B. Glover, Chairman
Evelyn E. Handler
Laura D. Williamson
10
<PAGE>
STOCK PRICE PERFORMANCE
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
THE STUDENT LOAN CORPORATION, THE S&P 500 AND
SLM HOLDING
1994 1995 1996 1997 1998
The Student Loan Corporation $ 100 $ 188 $ 208 $ 279 $ 257
S & P 500 $ 100 $ 138 $ 170 $ 226 $ 291
SLM Holdings $ 100 $ 207 $ 297 $ 450 $ 551
PERFORMANCE GRAPH
II. STOCKHOLDER APPROVAL OF SELECTION OF INDEPENDENT AUDITORS
The Board believes it appropriate to submit for action by the stockholders
its selection of KPMG LLP ("KPMG"), certified public accountants, as auditors
of the Corporation for the year 1999. The appointment of this firm is proposed
by the Board based, in part, on KPMG's review of and familiarity with the
Corporation's business as part of its audit of Citigroup. KPMG has served as
the independent auditor for the Corporation since it commenced operations in
1992, for Citibank, N.A. since 1964, for Citicorp since it commenced
operations in 1968 and for Travelers Group Inc. (which in 1998 merged with
Citicorp to form Citigroup) and its predecessors since 1969.
Representatives of KPMG are expected to be present at the Annual Meeting
with the opportunity to make a statement and to be available to respond to
questions regarding these or any other appropriate matters. Adoption of this
proposal requires the affirmative vote of the holders of a majority of the
votes cast at the meeting by the stockholders entitled to vote thereon.
The Board of Directors recommends a vote FOR this proposal.
III. STOCKHOLDER PROPOSAL
Lincluden Management Limited, 1275 North Service Road W., Oakville, Ontario
L6M 3G4, Canada, which has represented that it owns 844,570 shares of the
Corporation's common stock on behalf of clients, has notified the Corporation
that it intends to present the following proposal at the Annual Meeting.
Proposal:
Resolved, that the shareholders of The Student Loan Corporation recommend
that the board of directors engage the services of a nationally recognized
investment banking firm, with which it or its parent Citigroup has minimal
current investment banking involvement, to explore all alternatives to enhance
the value of the Company, including, but not limited to the possible sale or
merger of the Company, or premium tender offer share repurchases of the stock
of the Company, and to present to the shareholders within three months of the
scheduled 1999 Annual Meeting a plan for maximizing shareholder value.
11
<PAGE>
Supporting Statement:
In December 1992, Citicorp spun off 20% of the Company at a time when
Citicorp greatly needed capital and the environment for federal student
lending programs was highly uncertain. The Company was taken public with an
equity to assets ratio of 3.1%, a level that presumably was appropriate to
support its existing loan portfolio as well as future growth.
The Company's shareholders have experienced a trend of reduced returns on
equity, inefficient capital allocation with the buildup in the equity to
assets ratio, and repeated failure to meet stated return objectives.
1) Declining Earnings Growth Rates (Year over year change--earnings exclude
floor income and extraordinary items)
92 44.0%
93 12.2
94 18.3
95 25.9
96 6.3
97 -2.2
98 7.3 % (three quarters)
2) Reduced Returns on Equity (Return on Average Equity)
92 Infinite--No equity recognized as a wholly owned subsidiary of Citicorp
93 24.0%
94 21.4
95 21.4
96 19.5
97 16.2
98 15.8 % (three quarters)
3) Increasing Equity to Assets Ratio
92 2.9%
93 4.5
94 4.6
95 4.7
96 5.1
97 5.1
98 5.2 % (end of third quarter)
4) Failure to Meet Return on Equity Targets
In October 1996, the company declared a return on equity objective of 18 to
20% that it has since failed to achieve. Its major public competitor SLM
Holdings has a ROE exceeding 70%. We believe that the target of 18-20% is
well below industry norms.
A company with public shareholders should be responsive to them and seek to
meet its declared profitability objectives. These objectives should meet or
exceed industry standards.
IF YOU AGREE, please mark your proxy FOR this resolution.
Management Comment
The Board of Directors believes that management has set reasonable targets
for growth, earnings, and return on equity. The Corporation has been
profitable from inception, and 1998 earnings of $69 million represent an
12
<PAGE>
11.3% cumulative annual growth rate over the past five years, despite
government interest rate reductions on student loans. In addition,
shareholders have seen the dividend more than triple in the same period. The
Corporation has also implemented strategic programs to accelerate growth and
efficiency, including product diversification (e.g. CitiAssist), outsourcing
of operations, and changes in the senior management team.
While such programs take time to have a full impact, in 1998 the
Corporation's total disbursements grew at a rate three times as great as the
market, while assets, revenue and earnings hit record levels. The Corporation
acknowledged the impact of higher leverage ratios, along with continued
government interest rate reductions, when it changed the targeted return on
equity levels at year-end. After reviewing the financial results of the
Corporation, including the figures above, the Board of Directors believes that
management is employing appropriate strategies and taking the proper actions
to maximize the long-term value of the Corporation.
Recommendation
The Board of Directors recommends that stockholders vote AGAINST the
foregoing proposal. Proxies solicited by the Board of Directors will be so
voted unless the stockholder giving the proxy specifies otherwise. The
affirmative vote of a majority of the votes cast at the Annual Meeting would
be required to adopt this stockholder proposal; however, because Citibank (New
York State), the holder of 80% of the Corporation's common stock, has advised
the Corporation that it intends to vote against the proposal, the proposal
will not be adopted.
OTHER MATTERS
The cost of solicitation of proxies will be borne by the Corporation.
Proxies may be solicited by mail, personal interview or telephone. Directors,
officers and regular employees of the Corporation may solicit proxies by such
methods without additional compensation. Banks, brokerage houses and other
institutions, nominees and fiduciaries will be requested to forward the
soliciting material to their principals and to obtain authorizations for the
execution of proxy cards and will, upon request, be reimbursed for reasonable
expenses incurred. Employees of Georgeson & Co. Inc. will also solicit proxies
at a fee of approximately $5,000 plus out-of-pocket expenses.
As of the date of this Proxy Statement, the Corporation does not intend to
present and has not been informed that any other person intends to present any
business not specified in this Proxy Statement for action at the meeting. If
any other matters come before the meeting, proxies will be voted on such
matters in accordance with the judgment of the person or persons authorized to
vote the proxies.
Only stockholders of record at the close of business (5:00 P.M., Eastern
Time) on March 31, 1999 will be entitled to notice of and to vote at the
meeting. Stockholders are urged to sign the enclosed proxy card, solicited on
behalf of the Corporation's Board, and to return it promptly in the enclosed
envelope. Proxies will be voted in accordance with stockholders' directions.
Signing the proxy card does not affect a stockholder's right to vote in person
at the meeting, and the proxy may be revoked prior to its exercise by
appropriate notice to the undersigned. If no directions are given, proxies
will be voted for the election of directors and for the approval of the
selection of independent auditors. On any of these matters, abstentions and
broker non-votes are not considered votes cast.
Citibank (New York State), a wholly-owned subsidiary of Citigroup, which
exercises sole voting power over a majority of the outstanding shares of
common stock, has advised the Corporation that it intends to vote all such
shares in favor of the election of the nominees named herein, for the
ratification of the Corporation's independent auditors, and against the
stockholder proposal. Because of the voting power of Citibank (New York
State), the nominees are assured election and the ratification of independent
auditors is assured passage, and it is assured that the stockholder proposal
will not be adopted.
13
<PAGE>
Copies of the Corporation's Annual Report to Stockholders and Form 10-K may
be obtained without charge by writing to the Corporation at 750 Washington
Boulevard, Stamford, Connecticut 06901, Attention: Investor Relations, or by
telephone request to (203) 975-6292.
SUBMISSION OF STOCKHOLDER PROPOSALS FOR INCLUSION IN THE STUDENT LOAN
CORPORATION'S 2000 PROXY STATEMENT
In accordance with Rule 14a-8 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, the Corporation will
accept proposals of stockholders for possible inclusion in the Corporation's
2000 Proxy Statement through the close of business on December 3, 1999.
By order of the Board of Directors,
/s/ Stephen E. Dietz
Stephen E. Dietz
Secretary
14
<PAGE>
1999 PROXY THE STUDENT LOAN CORPORATION
Annual Meeting of Stockholders--May 13, 1999, 11:00 A.M. (Central Time),
701 East 60th Street North, Building #3- Dakota Room
Sioux Falls, South Dakota
INSTRUCTIONS--To withhold authority to vote for any individual nominee,
write that nominee's name on the line provided below.
Peter M. Gallant, Laura D. Williamson
Stock is NOT to be voted for the following nominee(s) for director:
-------------------------------------------------------------------
The undersigned appoints Bill Beckmann, Carl E. Levinson and Yiannis
Zographakis, or any of them, proxies, each having power to substitute another
person to vote all the stock of The Student Loan Corporation held of record by
the undersigned on March 31, 1999 at the Annual Meeting of Stockholders of The
Student Loan Corporation to be held on May 13, 1999 and at any adjournment
thereof. The proxies have authority to vote such stock, as indicated on the
reverse side hereof, (1) to elect directors and (2) to ratify the selection of
Independent Auditors. The proxies are further authorized to vote such stock upon
any other business that may properly come before the meeting or any adjournment
thereof.
Please indicate on the reverse side of this card how your stock is to be voted.
Unless you otherwise indicate, this proxy will be voted "FOR" the election of
directors, "FOR" the proposal on Independent Auditors and "AGAINST" the
stockholder proposal.
Please date and sign this proxy on the reverse side and
return it promptly whether or not you expect to attend the meeting. You may,
nevertheless, vote in person if you do attend.
This Proxy is Solicited on Behalf of the Board of Directors
<PAGE>
PROPOSALS OF THE BOARD OF DIRECTORS
The Directors Recommend a Vote FOR
I. Election of Directors FOR WITHHOLD* ABSTAIN
[_] [_] [_]
II. Ratification of Independent Auditors FOR AGAINST ABSTAIN
[_] [_] [_]
III. Stockholder Proposal FOR AGAINST ABSTAIN
[_] [_] [_]
*To withhold authority to vote for any individual mark this box AND write that
nominee's name on the line provided on the reverse side of this card.
Unless you otherwise indicate, this proxy will be voted "FOR" the election of
directors, "FOR" the proposal on Independent Auditors and "AGAINST" the
stockholder proposal.
This Proxy is Solicited on Behalf of the Board of Directors
Please Sign Here exactly as your name(s) appear(s) to the left.
-------------------------------------------------------
-------------------------------------------------------
Dated:
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When signing as attorney, executor, administrator, trustee or guardian, please
give full title.
