<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / 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 Section 240.14a-11(c) or Section
240.14a-12
Beneficial 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)(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:
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<PAGE>
[LOGO]
April 9, 1997
Dear Stockholder:
On behalf of the Board of Directors of Beneficial Corporation, I am pleased
to invite you to attend the 1997 Annual Meeting of Stockholders of the Company
which will be held on Thursday, May 22, 1997 at One Christina Centre, 301 North
Walnut Street, Wilmington, Delaware.
The business to be transacted at the meeting is set forth in the Notice of
Meeting and is more fully described in the accompanying Proxy Statement.
It is important that your shares be represented at the meeting, regardless
of the number you hold. Whether or not you can be present in person, please
sign, date and return your proxy in the enclosed envelope as soon as possible.
If you do attend the meeting and wish to vote in person, your proxy can be
revoked at your request.
A summary report of the meeting will be mailed to all stockholders with the
financial results of the second quarter of 1997.
We look forward to seeing you at the meeting.
Best wishes.
[LOGO]
FINN M. W. CASPERSEN
CHAIRMAN OF THE BOARD
<PAGE>
BENEFICIAL CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1997
- --------------------------------------------------------------------------------
The annual meeting of stockholders of Beneficial Corporation, a Delaware
corporation, will be held on Thursday, May 22, 1997 at the office of the
Company, One Christina Centre, 301 North Walnut Street, Wilmington, Delaware
19801, at 11 A.M. Wilmington time, for the following purposes:
(1) To elect directors of the Company.
(2) To ratify the selection of the firm of Deloitte & Touche LLP, Certified
Public Accountants, as the independent auditors of the Company for 1997.
(3) To transact such other business as may properly be brought before the
meeting.
The holders of Common Stock, $4.30 Dividend Cumulative Preferred Stock and
$5.50 Dividend Cumulative Convertible Preferred Stock of record at the close of
business on March 24, 1997 are entitled to notice of and to vote at the meeting.
A list of stockholders entitled to vote will be available for inspection during
business hours at the offices of the Company for a period of ten days prior to
the meeting.
SCOTT A. SIEBELS
VICE PRESIDENT AND SECRETARY
Dated: April 9, 1997
<PAGE>
BENEFICIAL CORPORATION
ONE CHRISTINA CENTRE, 301 NORTH WALNUT STREET, WILMINGTON, DELAWARE 19801
------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1997
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Beneficial Corporation (the "Company") to
be voted at the Annual Meeting of Stockholders to be held on May 22, 1997. The
shares represented by each proxy will be voted at the meeting in accordance with
the specifications made thereon by the stockholder. A stockholder has the power
to revoke his or her proxy at any time before it has been voted by giving
written notice to Mr. Scott A. Siebels, Vice President and Secretary, One
Christina Centre, 301 North Walnut Street, Wilmington, Delaware 19801, or by
voting in person at the Annual Meeting. This Proxy Statement and the
accompanying proxy card are being mailed to stockholders on or about April 9,
1997.
All properly signed proxies will be treated as present at the meeting for
purposes of determining whether a quorum is present. Directors will be elected
by a plurality of the votes cast. Votes withheld and non-votes will have no
effect on the election of candidates. All other matters to come before the
meeting, including the proposal to ratify the selection of the auditors of the
Company, will require the approval of a majority of the shares present and
entitled to vote on such matters. Abstentions will have the same effect as a
vote against any such matter. Non-votes will be deemed not entitled to vote and
will not be counted as votes for or against any such matter. Non-votes also will
not be included in calculating the number of votes necessary for the approval of
any such matter.
Each share of Common Stock and $4.30 Dividend Cumulative Preferred Stock is
entitled to one vote, and each share of $5.50 Dividend Cumulative Convertible
Preferred Stock is entitled to nine votes. All of such classes will vote as a
single class. On March 24, 1997, the record date for the meeting, the shares
outstanding and entitled to vote were 53,661,747 shares of Common Stock, 836,585
shares of $4.30 Dividend Cumulative Preferred Stock and 17,662 shares of $5.50
Dividend Cumulative Convertible Preferred Stock. The aggregate number of votes
entitled to be cast at the Annual Meeting is 54,657,290.
1
<PAGE>
PROPOSAL 1--ELECTION OF DIRECTORS
The Board of Directors recommends a vote "FOR" the election of a Board of
Directors (herein-after "Board of Directors" or "Board") consisting of the 16
persons named below for terms of one year or until their successors are chosen
as provided in the By-Laws. All of such nominees, except Mr. Clark, are
currently directors and each has expressed willingness to serve as a director
during the coming year. The proxy may be voted for the election of other persons
as directors in the event any of those named below are unable to serve for any
reason.
Mr. Charles W. Bower, who will have reached the age of 75 years before the
date of the Annual Meeting of Stockholders and who has served on the Board for
approximately 28 years, will retire from the Board effective the date of the
Annual Meeting.
The names of the nominees for director, the committees of the Board of
Directors on which they serve and certain other information regarding them are
as follows:
ROBERT J. CALLANDER, 66 Director since 1992
Executive in Residence, Columbia University Business School; Chairman of
Compensation Committee and Member of Strategic Planning Committee. Mr. Callander
was Vice Chairman of Chemical Banking Corporation from 1987 to 1992. He is a
director of the ARAMARK Corporation; The Barnes Group, Inc.; Latin American
Dollar Income Fund; Omnicom Group, Inc.; Scudder New Asia Fund; Scudder World
Income Opportunities Fund; and the Korea Fund, Inc.
FINN M. W. CASPERSEN, 55 Director since 1975
Chairman of Board of Directors and Chief Executive Officer, Chairman of
Executive Committee and Member of Finance Committee.
ROBERT C. CLARK, 53 Nominee
Dean and Royall Professor of Law, Harvard Law School. Mr. Clark is a trustee
of the Teachers Insurance & Annuity Association--College Retirement Equities
Fund (TIAA-CREF), a director of Collins & Aikman Corporation, and a member of
the Editorial Board, Journal of Law, Economics, and Organization.
2
<PAGE>
LEONARD S. COLEMAN, JR., 48 Director since 1990
President, National League of Professional Baseball Clubs; Chairman of
Strategic Planning Committee, Member of Compensation Committee and Committee on
Corporate Policy. Mr. Coleman was Executive Director, Market Development, Major
League Baseball from 1992 to March, 1994 and Vice President of Kidder Peabody
from 1989 to 1991. He is a director of Omnicom Group, Inc., New Jersey Resources
Corp. and Owens Corning.
DAVID J. FARRIS, 61 Director since 1982
Member of the Office of the President, Chief Operating Officer and Member of
Executive and Finance Committees. Mr. Farris is President and Chief Executive
Officer of Beneficial Management Corporation, a subsidiary of the Company, and a
director of Foster Wheeler Corporation.
JAMES H. GILLIAM, JR., 51 Director since 1984
Executive Vice President, General Counsel and Member of Executive Committee.
Mr. Gilliam is Chairman of the Board of Directors of Beneficial National Bank, a
subsidiary of the Company, and was Secretary of the Company from 1985 to 1992.
He is a trustee of Howard Hughes Medical Institute and a director of Bell
Atlantic Corporation and Delmarva Power & Light Company.
ANDREW C. HALVORSEN, 50 Director since 1984
Member of the Office of the President and Chief Financial Officer, Chairman
of Finance Committee and Member of Executive Committee.
ROLAND A. HERNANDEZ, 39 Director since 1992
President, Chief Executive Officer and a director of Telemundo Group, Inc.;
President, Interspan Communications; Member of Strategic Planning and Audit
Committees. Mr. Hernandez is a director of TV Azteca, S.A. de C.V.
J. ROBERT HILLIER, 59 Director since 1982
Chairman and Chief Executive Officer of The Hillier Group, Inc., architects;
Chairman of Committee on Directors and Member of Strategic Planning Committee.
3
<PAGE>
GERALD L. HOLM, 58 Director since 1979
Former Vice Chairman of the Company; Member of Strategic Planning Committee
and Committee on Directors.
THOMAS H. KEAN, 61 Director since 1990
President of Drew University; Member of the Committee on Directors and the
Compensation Committee. Governor Kean is Chairman of the Board of Carnegie
Corporation of New York and a director of Amerada Hess Corporation; the ARAMARK
Corporation; Bell Atlantic Corporation; Fiduciary Trust Company International;
and United HealthCare Corporation.
STEVEN MULLER, 69 Director since 1983
President Emeritus, The Johns Hopkins University; Chairman of Committee on
Corporate Policy and Member of Strategic Planning and Compensation Committees.
Dr. Muller is a director of Van Kampen American Capital Closed End and Common
Sense Funds; Alex Brown, Inc.; The Law Companies Group, Inc.; Millipore, Inc.
and Organization Resource Counsellors, Inc.
SUSAN JULIA ROSS, 53 Director since 1979
Attorney-at-Law; Member of Compensation Committee and Committee on Corporate
Policy.
ROBERT A. TUCKER, 70 Director since 1959
Former Chief Financial Officer of the Company; Member of Audit Committee and
Committee on Directors.
SUSAN M. WACHTER, 53 Director since 1985
Professor of Real Estate and Finance; Chairman of the Real Estate Department
(1997-2000), The Wharton School of the University of Pennsylvania; Member of
Audit Committee and Committee on Directors.
CHARLES H. WATTS, II, 70 Director since 1959
Business and Educational Consultant; Chairman of Audit Committee and Member
of Committee on Corporate Policy.
4
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board held 5 meetings during 1996 and the committees held 38 meetings in
total. The overall attendance record of directors at Board and committee
meetings during 1996 was 98%.
AUDIT COMMITTEE. The Audit Committee met 4 times in 1996. Its duties are
(a) to recommend to the Board a firm of independent public accountants whose
selection would be submitted to the stockholders for ratification; (b) to confer
with the Company's independent auditors as to the scope of their proposed audit;
(c) to review the findings and recommendations of the independent auditors on
completion of the audit and to consider any problems encountered by them in
conducting the audit; and (d) to review the Company's internal audit controls
and to provide a liaison with the Company's internal auditors.
COMMITTEE ON CORPORATE POLICY. The Committee on Corporate Policy held 4
meetings in 1996. Its responsibilities are (a) to advise the Board and recommend
from time to time corporate policies with respect to revisions in the Restated
Certificate of Incorporation and By-Laws; (b) to advise the Board and recommend
from time to time any other appropriate action relating to the structure of the
Board, the relationship of the Board to the stockholders and action which might
be taken by the Board or the stockholders as being in the best interests of the
stockholders; and (c) to advise the Board and recommend from time to time
corporate governance policies that, among other things, enhance the quality and
training of the human resources of the Company and its subsidiaries, that assure
adequate succession for senior management of the Company and its subsidiaries,
and that assure adequate diversification of the human resources of the Company
and its subsidiaries.
COMPENSATION COMMITTEE. The Compensation Committee held 6 meetings in 1996.
Its function is to consider and determine appropriate policies regarding
compensation and benefits issues. In doing so, the Committee shall assure that
the Company's compensation and incentive programs, including those for its
officers and the executives of its management and operating subsidiaries, are
properly administered, and shall review and make recommendations regarding the
terms and administration of the Company's retirement, health and other employee
benefit programs.
EXECUTIVE COMMITTEE. In 1996 the Executive Committee held 10 meetings. This
committee may exercise substantially all the authority of the Board (other than
powers which the Board has specifically delegated to other committees) during
the intervals between Board meetings.
FINANCE COMMITTEE. The Finance Committee met 5 times in 1996. This
committee, between meetings of the Board, may exercise all powers of the Board
with respect to financing the operations of the Company.
5
<PAGE>
STRATEGIC PLANNING COMMITTEE. This Committee held 4 meetings in 1996. Its
purpose is to focus on major challenges facing the Company and its subsidiaries
and to assist management in conceptualizing and developing strategies to
maximize shareholder value.
COMMITTEE ON DIRECTORS. The Committee on Directors met 5 times in 1996. Its
purposes are to (a) make recommendations to the Board with respect to the size
and composition of the Board; (b) make recommendations to the Board with respect
to a slate of nominees for election as directors for inclusion in the Company's
annual proxy statement; (c) identify, evaluate and recommend to the Board
candidates to fill vacancies on the Board; and (d) make recommendations
regarding compensation and perquisites of the Board. Nominations for the
election of directors may be made by the Board of Directors or by any
stockholder entitled to vote for the election of directors. A notice of the
intent of a stockholder to make any such nomination must be made in writing,
delivered or mailed by first class United States mail, postage prepaid, to the
Secretary of the Company not less than 90 days in advance of the annual meeting
or, in the event of a special meeting of stockholders for the election of
directors, such notice must be delivered or mailed to the Secretary of the
Company not later than the close of the seventh day following the day on which
notice of the meeting is first mailed to stockholders. Every such notice by a
stockholder must set forth; (a) the name and residence of the stockholder who
intends to make the nomination; (b) a representation that the stockholder is a
holder of record of the Company's voting stock and intends to appear in person
or by proxy at the meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understandings among the
stockholders and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the stockholder; (d) such other information regarding each nominee
proposed by such stockholder as would have been required to be included in a
proxy statement filed pursuant to the proxy rules of the Securities and Exchange
Commission (the "Commission") had each nominee been nominated, or intended to be
nominated, by the Board of Directors of the Company; and (e) the consent of each
nominee to serve as director of the Company if so elected.
COMPENSATION OF DIRECTORS
Directors who are not also employees of the Company receive for their
services $1,500 per quarter and $7,000 for each Board meeting attended.
Directors who are employees receive $200 for each Board meeting attended. In
addition to the quarterly fee, non-employee directors who are members of the
Audit, Compensation, Committee on Directors, Corporate Policy, Strategic
Planning or any Ad Hoc committee receive $1,000 for each meeting attended or for
each day services are performed on behalf of any such committee or the Board.
Non-employee directors who are committee chairpersons receive an additional $500
for each meeting they chair or for each day services are performed on behalf of
such committee. At the option of any director, payment of meeting and service
fees may be deferred until a director either reaches the age of 70 or terminates
his or her relationship with the Company. Such deferred fees bear interest at an
annual rate equal to
6
<PAGE>
the average annual interest cost of all short- and long-term borrowings by the
Company and its consolidated subsidiaries. Non-employee directors also receive
an annual award of 4,000 options to purchase the Company's Common Stock under
the 1990 Non-Qualified Stock Option Plan, (hereinafter "Option Plan"), and they
are entitled to participate in the Company's Employees' Stock Purchase Plan, as
amended (hereinafter "ESPP" or "Employees' Stock Purchase Plan") and in a health
insurance arrangement made available by the Company.
In order to allow the Company to avail itself of the experience of retired
directors, it is the Company's policy to pay each director who (a) ceases to be
a director after having attained the age of 70 years and completed at least five
years of service or (b) has served for ten years and either resigns voluntarily
or decides not to stand for re-election, the sum of $8,500 per quarter if such
director agrees to be available to render advice to the Board, its Executive
Committee or any of its members. In addition, upon a change in control of the
Company, wherein directors and directors emeriti would cease to hold such
positions, such persons would receive quarterly payments of either $4,250 or
$8,500, depending on their years of service, for the remainder of their lives in
consideration for and subject to their continued availability to the Company or
its successor for purposes of consultation. If a change in control occurs before
Dr. Watts becomes a director emeritus, he would receive quarterly payments of
$12,500 due to prior service as a General Director for a period exceeding five
years. The Company will purchase annuities to provide for such payments in the
event of a change of control of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None
7
<PAGE>
The following table sets forth information regarding beneficial ownership of
the Company's equity securities of each director, the director nominee, the five
most highly compensated executive officers of the Company and its subsidiaries
and the directors, director nominee and executive officers of the Company as a
group, as of February 28, 1997.
<TABLE>
<CAPTION>
EQUITY SECURITIES OF THE COMPANY BENEFICIALLY OWNED(1)
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMMON UNEXERCISABLE % OF 5% PFD. % OF
NAME OF PERSON OR GROUP STOCK(10) OPTIONS(11) CLASS(12) STOCK CLASS
- ---------------------------------------------------- ---------- ------------- ----------- ----------- -----
Charles W. Bower(3)(4).............................. 3,608,723 4,000 6.67 -- --
Robert J. Callander................................. 12,531 4,000 * -- --
Finn M. W. Caspersen(2)(3)(4)(5)(6)(7)(8)........... 5,468,466 308,650 10.10 2,636 *
Robert C. Clark..................................... 0 0 * -- --
Leonard S. Coleman.................................. 14,885 4,000 * -- --
David J. Farris(2).................................. 514,472 209,100 * -- --
James H. Gilliam, Jr.(8)............................ 208,555 134,400 * -- --
Andrew C. Halvorsen................................. 211,185 134,400 * -- --
Roland A. Hernandez................................. 9,472 4,000 * -- --
J. Robert Hillier................................... 29,743 4,000 * -- --
Gerald L. Holm(4)(6)................................ 3,825,491 4,000 7.07 -- --
Thomas H. Kean...................................... 16,143 4,000 * -- --
Steven Muller....................................... 16,711 4,000 * -- --
Susan Julia Ross.................................... 22,650 4,000 * -- --
Robert A. Tucker(2)(3)(4)(7)........................ 3,774,261 4,000 6.97 679 *
Susan M. Wachter(2)................................. 26,459 4,000 * -- --
Charles H. Watts, II(2)(3).......................... 179,616 4,000 * 737 *
Michael A. Woodall.................................. 3,962 46,375 * -- --
All directors, director nominee
and officers as a group (25 persons)
(2)(3)(4)(5)(6)(7)(8)(9).......................... 6,878,449+ 1,092,450 12.54 3,373+ *
</TABLE>
In addition, as of such date, Mr. Tucker was the beneficial owner of 4,700*
shares of $4.30 Dividend Cumulative Preferred Stock.
- ------------------------
* Less than 1.0% of class.
+ Pursuant to Item 403 of Regulation S-K, this total does not reflect multiple
counting of shares reflected above.
(1) Unless otherwise indicated below in footnotes (2) through (8), each
director possesses sole voting and investment power with respect to the
shares shown opposite his or her name.
8
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(2) Includes shares of Common Stock owned by spouses or certain members of the
families of directors, as to which such directors disclaim beneficial
ownership, as follows: Caspersen 14,812 shares; Farris 138 shares; Tucker
7,628 shares; Wachter 800 shares, and Watts 20,117 shares.
(3) Includes 100,074 shares of Common Stock held by a trust as to which Messrs.
Bower, Caspersen, Tucker, Watts and others serve as trustees (sharing
voting and investment power), shown as beneficially owned by each of them.
(4) Includes shares owned by The Hodson Trust. For information concerning
shares held by this trust see Principal Stockholders on page 10.
(5) Includes 547,255 shares of Common Stock other than shares referred to in
notes (2), (3), (4), (6), (7) and (8), as to which Mr. Caspersen shares
voting and investment power with others.
(6) Includes 298,603 shares of Common Stock owned by The Hodson Scholarship
Foundation, Inc., as to which Messrs. Caspersen and Holm share voting and
investment power with others.
(7) Includes 119,222 shares of Common Stock and 679 shares of 5% Pfd. Stock
owned by the Beneficial Foundation, Inc., as to which Messrs. Caspersen,
Tucker and others share voting and investment power.
(8) Includes 15,000 shares of Common Stock owned by two charitable trusts as to
which Messrs. Caspersen and Gilliam share voting and investment power with
another.
(9) Includes shares of Common Stock which will vest in March of 1997 under the
Employees' Stock Purchase Plan.
(10) Includes the number of shares that could be acquired as of February 28,
1997 by the exercise of options granted under the Company's Option Plan as
follows: Bower (12,000), Callander (8,000), Caspersen (0), Clark (0),
Coleman (12,000), Farris (259,500), Gilliam (146,200), Halvorsen (124,400),
Hernandez (8,000), Hillier (12,000), Holm (8,000), Kean (12,000), Muller
(12,000), Ross (12,000), Tucker (12,000), Wachter (12,000), Watts (12,000),
Woodall (0), and all directors, director nominee and officers as a group
(722,000).
(11) Options to purchase Common Stock awarded under the Option Plan not
currently exercisable. This information is voluntarily disclosed and such
amounts are not included in the Common Stock beneficially owned column or
in the percentage of class column.
(12) Percentages include shares that could be acquired under the Company's
Option Plan as set forth in footnote (10) above.
9
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding each person who, to the
Company's knowledge, owns more than 5% of any class of the Company's outstanding
voting securities:
<TABLE>
<CAPTION>
$4.30 DIVIDEND
CUMULATIVE
NAME AND ADDRESS COMMON PREFERRED % OF CLASS
OF STOCKHOLDER STOCK STOCK OWNED
- ---------------------------------------------------------- ------------- -------------- -------------
<S> <C> <C> <C>
The Capital Group Companies, Inc. and Capital Research and
Management Company
333 South Hope Street
Los Angeles, CA 90071................................. 5,151,180(1) -- 9.52%
Putnam Investments Inc., Putnam Investment Management,
Inc. and The Putnam Advisory Company, Inc.
One Post Office Square
Boston, MA 02109...................................... 4,781,469(2) -- 8.83%
FMR Corp.
82 Devonshire Street
Boston, MA 02109...................................... 3,697,797(3) -- 6.83%
The Hodson Trust
100 Beneficial Center
Peapack, NJ 07977..................................... 3,485,059(4) -- 6.44%
The Life Insurance Company of Virginia
6610 West Broad Street
Richmond, VA 23230.................................... -- 75,000(5) 8.97%
</TABLE>
- ------------------------
(1) Based on information contained in a report on Schedule 13G of The Capital
Group Companies, Inc., and Capital Research and Management Company, dated
February 12, 1997 filed with the Commission under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). According to such information,
as of December 31, 1996, certain operating subsidiaries of The Capital Group
Companies, Inc., exercised investment discretion over various institutional
accounts which held 5,151,180 shares (9.52%) of the Company's Common stock.
Capital Research and Management Company, a registered investment advisor,
was the beneficial owner of 5,000,180 shares and other subsidiaries of the
Capital Group Companies beneficially owned the remaining 151,000 shares.
(2) Based on information contained in a report on Schedule 13G of Putnam
Investments Inc. ("Putnam") dated January 27, 1997 filed with the Commission
under the Exchange Act. According to such information, as of December 31,
1996, Putnam, a wholly owned subsidiary of Marsh & McLennan Companies, Inc.
and an investment advisor registered under Section 203 of the Investment
Advisers Act of 1940, is parent of two registered investment advisers,
Putnam Investment Management, Inc. ("PIM") and The Putnam Advisory Company,
Inc. ("PAC") which together beneficially own 4,781,469 shares (8.83%) of the
Company's Common Stock. Putnam shares the power to vote 30,110 of such
shares and shares the power to dispose of all 4,781,469 shares; PIM shares
the power to dispose of 4,736,829 of such shares; and PAC shares the power
to vote 30,110 of such shares and shares the power to dispose of 44,640 of
such shares.
10
<PAGE>
(3) Based on information contained in a report on Schedule 13G of FMR Corp.
("FMR"), dated February 14, 1997, filed with the Commission under the
Exchange Act. According to such report, FMR is the parent holding company of
several investment adviser or investment manager subsidiaries which together
beneficially own 3,697,797 shares (6.83%) of the Company's Common Stock. FMR
has the sole power to vote 670,297 of such shares and the sole power to
dispose of all 3,697,797 shares.
(4) As of March 1, 1997, The Hodson Trust held of record the number of shares of
Common Stock indicated in the table, 38 shares of $4.30 Dividend Cumulative
Preferred Stock (less than 1% of such class) and 8 shares of $5.50 Dividend
Cumulative Convertible Preferred Stock (less than 1% of such class). Messrs.
Bower, Caspersen, Holm, Tucker and three other persons serve as trustees of
such trust and share voting and investment power, but have no interest in
the principal or income of such trust. Such shares may be regarded as
beneficially owned by each such person under Rule 13d-3 promulgated by the
Commission under the Exchange Act.
(5) Based on information contained in a report on Schedule 13G of The Life
Insurance Company of Virginia ("Life of Virginia"), dated May 21, 1987,
filed with the Commission under the Exchange Act. According to such report,
Life of Virginia, an insurance company as defined in Section 3(a)(19) of the
Exchange Act, shares voting and dispositive power with an affiliated
investment manager which together with Life of Virginia beneficially own
75,000 shares, (8.97%) of the $4.30 Dividend Cumulative Preferred Stock.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's executive compensation program is independently administered
by the Compensation Committee of the Board of Directors ("the Committee"). The
Committee is composed of the five unaffiliated non-employee directors named on
page 15 of this Proxy Statement. Decisions of the Committee with respect to the
compensation of the Company's executive officers are reviewed and approved by
the full Board of Directors, except for decisions as to individual awards under
the Company's stock-based incentive plans. Those awards must be made solely by
the Committee in order to satisfy Rule 16b-3 under the Exchange Act.
The Company is required to provide certain information with respect to the
compensation and benefits provided to the Company's Chairman and Chief Executive
Officer and to the four other most highly compensated executive officers (the
"Executive Officers"). This report is submitted by the Committee in fulfillment
of those requirements and discusses the rationale and considerations
constituting the basis for fundamental compensation decisions affecting the
Executive Officers.
COMPENSATION PHILOSOPHY
The executive compensation policies of the Company are designed to encourage
superior corporate and individual performance, provide competitive levels of
compensation, complement the Company's strategic planning initiatives, and
assist the Company in attracting retaining and motivating qualified executives.
The Company has historically emphasized long-term, stock-based incentive
compensation, on the basis that such programs more effectively advance corporate
interests and better align the
11
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interests of its executive officers with those of its stockholders. The Company
does not maintain an annual cash bonus or cash incentive program for its U.S.
executive officers. All compensation for services rendered other than cash
compensation (and certain taxable employee benefits) is subject to vesting
requirements and forfeiture if such requirements are not met. During the vesting
period, the value of stock-based awards relates directly to the market
performance of the Company's Common Stock.
Section 162(m) of the Internal Revenue Code limits the annual amounts
deductible by the Company for compensation to certain senior executives to
$1,000,000 per executive. The provision exempts amounts payable under certain
qualifying arrangements (which includes amounts deemed to be performance-based
and amounts payable under tax-qualified pension arrangements), as well as
certain payments that the executive had a fixed contractual right to receive
from prior years. Amounts payable following retirement, relating to services
during prior years of employment, are also exempt. In the interest of its
stockholders, it is the policy of the Company, acting through the Board and the
Committee, to structure its compensation programs to preserve full deductibility
of all amounts paid to its Executive Officers, to the maximum extent possible.
The Company does not anticipate any loss of deductibility pursuant to Section
162(m) during 1996 or 1997.
RELATIONSHIP OF CORPORATE PERFORMANCE TO COMPENSATION
As discussed further in this report, both objective and subjective measures
of the Company's performance are directly relevant to executive compensation
determinations, particularly as to awards of long-term stock-based incentive
compensation. Among the criteria used are: (1) net earnings of the Company, (2)
earnings per share, (3) balance sheet soundness and income statement quality,
(4) return on assets, (5) return on equity, (6) stock market performance of the
Company's common shares, (7) growth in quality receivables, (8) net chargeoffs
and delinquencies as a percentage of average receivables, (9) growth in book
value per common share, and (10) growth in cash dividends payable. All of these
criteria are relevant both as to current and long-term performance, and are
measured in light of the industry and general economic conditions within which
the Company operates.
The Committee does not attach specific weighting to these objective factors
in its deliberations. The Committee deems each factor to be important, to be
considered by it, together with subjective criteria, in reaching an overall
determination as to appropriate levels of compensation. The Committee does not
measure each of the factors, or the factors as a whole, in relation to any set
objective target or goal. Actual performance under these factors, individually
and collectively, is subjectively reviewed in light of expectations and
prevailing economic and competitive conditions. The Committee does not attempt
to maintain a direct relationship between each specific measure of corporate
performance and any element of executive officer compensation discussed in this
report.
12
<PAGE>
COMPONENTS OF EXECUTIVE COMPENSATION
Cash compensation for the Company's executives is set at levels deemed
competitive within its industry, and appropriate to the Company's overall
long-term performance within that comparative group. It also reflects individual
levels of performance and overall responsibility with the Company. Long-term,
stock-based incentive compensation has increased significantly in recent years
as a percentage of the Company's Executive Officers' total compensation.
The Company maintains two long-term, stock-based incentive compensation
arrangements for its executives. The Beneficial Corporation Key Employees Stock
Bonus Plan ("Key Plan"), approved by stockholders in 1983, provides annual
awards to a broad group of employees (315 current participants), including
middle and senior managers and executives, from a compensation pool tied to the
Company's net after-tax consolidated earnings for the year of the award. The
percentage of such net earnings that is available for awards is determined
annually by the full Board of Directors following a recommendation by the
Committee, and cannot exceed 5%. The Committee need not distribute all funds
made available by the Board. An amount up to 4% of net earnings was approved for
awards granted in each of 1995 and 1996, with actual grants totaling 3% and
2.6%, respectively.
Individual awards are made by the Committee, in amounts which reflect
personal achievement relative to corporate goals, the importance of the
individual to the Company's future, and the Company's overall performance based
on relevant, objective and subjective financial criteria. Once Key Plan Awards
are made, they are invested in the Company's Common Stock. Awards are forfeited
if the executive terminates employment voluntarily or for cause during a five
year period which includes the year for which the award was made. During the
vesting period, dividends are reinvested and the executive is permitted to
direct the voting of the shares awarded as well as shares purchased with
reinvested dividends.
The Option Plan, approved by stockholders in 1991, allows the Committee the
discretion to make stock option awards to eligible executives on such terms as
the Committee deems appropriate within parameters established by the Option
Plan. The Option Plan has 239 current participants. The price at which the
optionee is permitted to purchase shares of Common Stock may not be less than
the fair market value on the date of grant. The vesting period for option awards
may not be less than one year, but the Committee has uniformly utilized a
four-year schedule, with 25% vesting on each of the first through fourth
anniversaries of the award. If the executive terminates employment for any
reason other than death, disability or retirement, the award is forfeited.
The Committee makes individual awards to executives based on both corporate
and individual performance measures, particularly emphasizing the perceived
importance of the individual to the future profitability and success of the
Company. Given that option awards have value only if the Common Stock increases
in value in the future, the Committee deems it appropriate to focus to a
13
<PAGE>
significant extent on anticipated future performance of each eligible executive
in setting individual awards.
As to both cash compensation and long-term incentive awards, the Committee
also considers comparative data from peer companies in determining the
appropriateness and structure of the Company's executive compensation program.
In this connection, the Committee reviews studies periodically conducted by
independent executive compensation consulting firms at its request, as well as
publicly available data. This review focuses on peer companies in the consumer
finance and financial services industry to which the Company's financial results
are commonly compared. The peer companies are chosen at the time of each review
based on attributes which are most closely comparable to the Company, and which
make the overall peer group as balanced as possible for purposes of comparison.
The Committee does not follow a policy of setting executive pay levels in a
specific relationship to the range of salaries paid by this group of peer
companies. Nor does the Committee strive to determine the overall relationship
of the Company's compensation to the high, median or low end of any comparative
group. While this comparative information is valuable to the Committee as an
indicator of competitive trends, salary levels are set based upon the measures
of Company performance discussed above, individual performance, the Company's
needs, and such other factors as the Committee considers appropriate.
The peer group of companies used for such studies is not necessarily the
same as the S&P Financial Index, which is used for comparison in the Performance
Graph included with this Proxy Statement. The S&P Financial Index is deemed by
the Company to be the published industry index most relevant to a consistent,
long-term comparison of the total shareholder return associated with the
Company's Common Stock. The peer group of companies used for comparative salary
information is adjusted periodically to include only those deemed most directly
relevant for the time period, and the specific job classifications being
studied. This peer group is generally smaller than, but overlaps significantly
with the S&P Financial Index.
The Committee recommended or approved cash compensation, Key Plan awards,
and Option Plan grants with respect to 1996 performance to the Executive
Officers at the levels shown in the Summary Compensation Table which is included
as a part of this Proxy Statement.
The Committee's recommendation with respect to Mr. Caspersen's cash
compensation was based upon its review of the criteria outlined in this report
with respect to cash compensation, including the objective measures of the
Company's performance listed above as well as subjective, individual performance
measures. While the Committee considered each of the objective performance
measures in making its determination, no single criterion was positively or
negatively determinative of its decision. A balancing of all subjective and
objective criteria resulted in the determination of Mr. Caspersen's cash
compensation for 1996.
14
<PAGE>
On November 20, 1996, the Committee approved an Option Plan award to Mr.
Caspersen, the Chief Executive Officer of the Company, potentially exercisable
for 130,000 shares of the Company's Common Stock, with an exercise price equal
to the fair market price on the date of grant which was $64.4375. The award is
subject to a four-year vesting schedule, ten year duration and is in all
respects identical to all other grants approved by the Committee under the
Option Plan. Grants to all employees during 1996, including Mr. Caspersen, are
potentially exercisable for 994,350 shares of the Company's Common Stock.
In awarding this 130,000 share grant, the Committee considered the criteria
generally relevant to Option Plan awards, including objective measures of the
Company's performance. Subjective considerations of individual performance,
including anticipated future performance, were also relevant. Mr. Caspersen
received Option Plan grants of 120,000, 117,300 and 120,000 shares for 1995,
1994 and 1993, respectively. When considering the award to Mr. Caspersen, the
Committee reviewed the Company's favorable performance to date during 1996 under
each of the ten objective performance measures listed above.
On February 17, 1997, the Committee approved a Key Plan award to Mr.
Caspersen with respect to his 1996 performance. In making this award, the
Committee considered the criteria outlined in this report with respect to Key
Plan awards, as well as subjective, individual performance measures. The
Committee determined that an award of $1,000,000 was appropriate. When
considering this Key Plan award to Mr. Caspersen, the Committee reviewed the
Company's favorable performance for 1996 under each of the ten objective
performance measures listed above. Mr. Caspersen's Key Plan awards for 1995,
1994 and 1993 were $500,000, $900,000 and $1,000,000, respectively.
------------------------
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE COMPANY'S
BOARD OF DIRECTORS
<TABLE>
<S> <C>
Robert J. Callander (Chair) Steven Muller
Leonard S. Coleman Susan Julia Ross
Thomas H. Kean
</TABLE>
15
<PAGE>
EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation paid in
1996 and the two prior fiscal years to the Company's Chief Executive Officer and
the four other most highly compensated officers of the Company and its
subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
AWARDS
ANNUAL COMPENSATION ----------------------
------------------------------------- SECURITIES PAYOUTS
OTHER RESTRICTED UNDERLYING -----------
ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND COMPEN- AWARDS SARS PAYOUTS COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION($) ($)(1)(2) (#)(3) ($) SATION($)(4)
- -------------------------- --------- --------- ----------- ------------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Finn M.W. Caspersen 1996 $1,102,150(5) -0- -- $1,471,600(6) 130,000 -- $ 52,089
Chairman and Chief 1995 $1,102,200(5) -0- -- $ 971,600(6) 120,000 -- $ 39,094
Executive Officer 1994 $1,051,300(5) -0- -- $1,350,000(6) 117,300 -- $ 33,270
David J. Farris 1996 $ 945,940(5) -0- -- $ 902,536(7) 90,000 -- $ 60,786
Chief Operating Officer 1995 $ 950,492(5) -0- -- $ 598,808(7) 80,000 -- $ 57,558
1994 $ 971,332(5) -0- -- $ 752,468(7) 78,200 -- $ 36,218
Andrew C. Halvorsen 1996 $ 635,750 -0- -- $ 375,000 60,000 -- $ 15,922
Chief Financial Officer 1995 $ 635,800 -0- -- $ 250,000 50,000 -- $ 12,258
1994 $ 606,800 -0- -- $ 300,000 48,800 -- $ 10,594
James H. Gilliam, Jr. 1996 $ 635,750 -0- -- $ 375,000 60,000 -- $ 16,320
Executive Vice President 1995 $ 635,850 -0- -- $ 250,000 50,000 -- $ 15,923
and General Counsel 1994 $ 606,800 -0- -- $ 300,000 48,800 -- $ 10,594
Michael A. Woodall
Executive Vice
President-
International, 1996 $213,987* $ 115,239* -- $ 100,000 20,000 -- $ 3,250*
Beneficial 1995 $213,987* $ 90,763* -- $ 28,000 18,500 -- $ 2,957*
Management Corporation 1994 $190,944* $ 90,763* -- $ 35,000 17,000 -- $ 1,846*
</TABLE>
- ------------------------
* Shown in U.S. dollars that have been converted from British Pounds Sterling
at the exchange rate on December 31, 1996 (1.7125).
(1) The number of shares and the aggregate value of such shares of restricted
stock held by such persons as of year-end 1996 were as follows:
Caspersen--110,211 ($6,984,622); Farris--72,235 ($4,577,893);
Halvorsen--30,404 ($1,926,853); Gilliam--33,810 ($2,142,709); and
Woodall--3,100 ($196,462). The aforementioned shares of restricted stock for
Messrs. Caspersen and Farris include 30,939 and 7,840 shares, respectively,
held in the Company's Employees' Stock Purchase Plan subject to mandatory
deferral under the terms of the ESPP and the Company's Deferred Compensation
Plan. Under the terms of the ESPP (described more fully in the Company's
1994 Proxy Statement) and the Company's Deferred Compensation Plan,
restricted shares held for Messrs. Caspersen and Farris in the Company's
ESPP will vest on (a) death,
16
<PAGE>
(b) voluntary retirement on or after age 65, (c) involuntary termination
other than for cause, (d) disability or (e) on a change of control (as
defined in the ESPP). Unvested shares are forfeited. Dividends are paid on
the deferred shares at the current dividend rate for the Company's Common
Stock and are used to purchase additional restricted shares of Common Stock.
(2) Under the Company's Key Plan, each year the Board of Directors determines
the maximum percentage, not to exceed 5%, of the Company's consolidated net
after tax income which may be contributed to the Key Plan. The Compensation
Committee then determines (a) the dollar amount of the contribution to the
Key Plan for such calendar year; (b) which employees will receive an award
for such year; and (c) the amount of each award. The Committee makes awards
to employees based on each person's performance, as well as such other
factors as the Committee deems appropriate. These awards vest on the earlier
of (i) January 1 of the fifth year after the award year; (ii) the date on
which the employee involuntarily terminates employment other than for cause;
or (iii) on a change of control (as defined in the Key Plan). If on such
date deductibility to the Company is restricted under Internal Revenue Code
Section162(m), deferral is mandatorily extended until full deductibility is
available to the Company, generally following the employee's termination of
employment. Awards which do not vest are forfeited. Awarded shares are
placed in trust while unvested, and while in trust the employee has the
right to vote the shares in his or her account. Dividends are paid on such
shares at the current dividend rate for the Company's Common Stock and used
to purchase additional shares of stock for each employee who has received an
award. Awards under the Key Plan for 1996 were made in February of 1997.
(3) The Company's Option Plan does not provide for the award of stand alone
stock appreciation rights (SARs). Limited tandem SARs may be awarded to such
persons under the Option Plan with respect to then outstanding options in
the event of a change in control of the Company.
(4) All Other Compensation includes contributions made by the Company under the
Beneficial Corporation Savings Plan (a 401k plan) on behalf of Messrs.
Caspersen, Farris, Halvorsen and Gilliam and ordinary life insurance
premiums paid on behalf of Messrs. Caspersen, Farris, Halvorsen, Gilliam and
Woodall by the Company or a subsidiary. Messrs. Caspersen, Farris,
Halvorsen, and Gilliam each received $3,750 in contributions to the Savings
Plan in each of 1994, 1995 and 1996. With respect to life insurance
premiums, Mr. Caspersen received $29,520 in 1994, $35,344 in 1995 and
$48,339 in 1996; Mr. Farris received $32,468 in 1994, $53,808 in 1995 and
$57,036 in 1996; Mr. Halvorsen received $6,844 in 1994, $8,508 in 1995 and
$12,172 in 1996; Mr. Gilliam received $6,844 in 1994, $12,173 in 1995 and
$12,570 in 1996; and Mr. Woodall received $1,846 in 1994, $2,957 in 1995,
and $3,250 in 1996. The Company does not maintain split dollar life
insurance arrangements.
(5) Subject to the Company's mandatory deferral arrangement, the Compensation
Committee approved a salary of $1,500,000 for 1994, $1,572,000 for 1995 and
$1,572,000 for 1996 for Mr. Caspersen and a salary of $1,045,000 for 1994,
$1,095,000 for 1995 and $1,095,000 for 1996 for Mr. Farris. Pursuant to the
terms of the Company's Deferred Compensation Plan, Mr. Caspersen's salary
includes $79,520 mandatorily deferred in 1994, $135,744 mandatorily deferred
in 1995 and $148,739 mandatorily deferred in 1996 on an unfunded basis.
(6) Includes awards made under the Key Plan and amounts mandatorily deferred
into the Company's ESPP under the terms of the ESPP and the Company's
Deferred Compensation Plan. Under the Key Plan, Mr.Caspersen was awarded
$1,000,000 with respect to 1996 performance, $500,000 with respect to 1995
performance and $900,000 with respect to 1994 performance. Compensation
mandatorily deferred into the ESPP during 1996 was $471,600, during 1995 was
$471,600 and during 1994 was $450,000.
(7) Includes awards made under the Key Plan and amounts mandatorily deferred
into the Company's ESPP under the terms of the ESPP and the Company's
Deferred Compensation Plan. Under the Key Plan, Mr. Farris was awarded
$750,000 with respect to 1996 performance, $450,000 with respect to 1995
performance and $675,000 with respect to 1994 performance. Compensation
mandatorily deferred into the ESPP during 1996 was $152,536, during 1995 was
$148,808 and during 1994 was $77,468.
17
<PAGE>
PERFORMANCE GRAPH
The following table sets forth a comparison of the yearly percentage change
in the Company's cumulative total shareholder return. It assumes that $100 was
invested on December 31, 1991 in the Company's Common Stock, the S&P 500 and the
S&P Financial Index. It also assumes the reinvestment of dividends. In the
interest of including the most recent available information, the following graph
includes performance information through March 31, 1997.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
BNL, S&P INDEX AND S&P FINANCIAL INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BENEFICIAL
CORPORATION S&P 500 S&P FINANCIAL INDEX
<S> <C> <C> <C>
12/31/1991 100 100 100
12/31/1992 106 108 123
12/31/1993 128 118 137
12/31/1994 136 120 132
12/31/1995 169 165 204
12/31/1996 238 203 275
3/31/1997 244 209 288
</TABLE>
18
<PAGE>
OPTION GRANTS FOR 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
- ------------------------------------------------------------------------------------- ANNUAL RATES OF STOCK
(B) (C) PRICE APPRECIATION FOR
NUMBER OF % OF TOTAL 10 YEAR OPTION TERM
SECURITIES OPTIONS (D) THROUGH 11/20/2006(3)
UNDERLYING GRANTED TO EXERCISE ---------------------------
OPTIONS EMPLOYEES OR BASE (E)
(A) GRANTED IN FISCAL PRICE EXPIRATION (F) (G)
NAME (#)(1)(2) YEAR ($/SH) DATE 5%($) 10%($)
- ---------------------------------- ----------- ----------- ---------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Finn M.W Caspersen................ 130,000 12.47% $ 64.4375 11/20/06 $ 5,268,172 $ 13,350,581
David J. Farris................... 90,000 8.63% $ 64.4375 11/20/06 $ 3,647,196 $ 9,242,710
Andrew C. Halvorsen............... 60,000 5.75% $ 64.4375 11/20/06 $ 2,431,464 $ 6,161,807
James H. Gilliam, Jr.............. 60,000 5.75% $ 64.4375 11/20/06 $ 2,431,464 $ 6,161,807
Michael A. Woodall................ 20,000 1.91% $ 64.4375 11/20/06 $ 810,488 $ 2,053,936
</TABLE>
- ------------------------
(1) 25% of the total grant vests on each of 11/20/97, 11/20/98, 11/20/99 and
11/20/00.
(2) Options were awarded on November 20, 1996 under the Company's Option Plan.
All options were granted for a ten-year term, subject to forfeiture upon
certain termination of employment events. The option price may be no lower
than the fair market value of the Company's Common Stock on the date of
grant. Unexercisable stock options become exercisable upon an optionee's
retirement when certain conditions are met and upon a change in control. The
plan permits optionees to satisfy the exercise price and tax withholding
requirements by delivery of previously owned shares of Common Stock. Under
the terms of the plan, no employee may receive options in any calendar year
with respect to more than 200,000 Common shares.
(3) The Potential Realizable Value to all common stockholders as of December 31,
1996 was $2,193,836,858 under column (f) and $5,536,826,356 under column
(g). Potential Realizable Value represents the aggregate net gain to all
common stockholders, assuming a beginning market price of $64.4375 (the fair
market value option price determined on November 20, 1996) and appreciation
at the assumed annual rates of 5% and 10% for the ten-year period from
November 20, 1996 to November 20, 2006. The assumed rates of appreciation
are set as part of the proxy rules. There can be no assurance that the
Common Stock will perform at the assumed annual rates used for purposes of
this table. The Company does not make or endorse any predictions as to
future stock performance.
19
<PAGE>
AGGREGATED OPTION EXERCISES IN 1996
AND 1996 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
(D)
NUMBER OF (E)
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
(B) UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED (C) 1996 YEAR-END 1996 YEAR-END(1)
ON VALUE (#) ($)
(A) EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------- --------- ------------ ----------------- ------------------------
<S> <C> <C> <C> <C>
Finn M.W. Caspersen.................. 310,950 $ 6,635,520 0/308,650 $ 0/$3,718,489
David J. Farris...................... -0- -0- 259,500/209,100 $ 7,747,365/$2,478,992
Andrew C. Halvorsen.................. 99,800 $ 3,265,535 124,400/134,400 $ 3,569,395/$1,548,365
James H. Gilliam, Jr................. 78,000 $ 3,224,501 146,200/134,400 $ 4,284,117/$1,548,365
Michael A. Woodall................... 8,250 $ 196,640 8,375/46,375 $ 200,089/$542,273
</TABLE>
- ------------------------
(1) Based on a value per share at December 31, 1996 of $64.25.
PENSION AND SUPPLEMENTAL PLAN TABLE
The following table illustrates the estimated annual benefits, based on the
indicated applicable average annual compensation and years of service upon
retirement, payable under the Beneficial Corporation Pension Plan (the "Pension
Plan") and the Supplemental Retirement Plan (the "Supplemental Plan") (prior to
any offset) to a participant who retires at the end of the calendar year in
which age 65 is attained.
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
REMUNERATION 15 20 25 30 35 40
- ------------- ---------- ---------- ---------- ---------- ---------- ------------
$ 150,000 $ 34,125 $ 46,125 $ 58,500 $ 71,250 $ 84,375 $ 97,875
$ 250,000 56,875 76,875 97,500 118,750 140,625 163,125
$ 450,000 102,375 138,375 175,500 213,750 253,125 293,625
$ 650,000 147,875 199,875 253,500 308,750 365,625 424,125
$ 850,000 193,375 261,375 331,500 403,750 478,125 554,625
$1,000,000 227,500 307,500 390,000 475,000 562,500 652,500
$1,250,000 284,375 384,375 487,500 593,750 703,125 815,625
$1,500,000 341,250 461,250 585,000 712,500 843,750 978,750
$1,750,000 398,125 538,125 682,500 831,250 984,375 1,141,875
</TABLE>
20
<PAGE>
The basic benefit formula under the Pension Plan (before the reduction
discussed below) provides benefits of from 1.5% to 1.8% of average annual
compensation, with the benefit accrual rate increasing with years of service.
The maximum annual retirement benefit under the Pension Plan is generally 65.25%
of an employee's highest applicable average annual compensation for three
consecutive years. Compensation under the Pension Plan is defined to include
wages paid, year-end adjustments (if any), bonuses, overtime, salary deferral
contributions to the Beneficial Corporation Savings Plan (a 401k plan), any
amounts subject to mandatory deferral under the Company's Deferred Compensation
Plan and other special earnings. Company contributions under the Employees'
Stock Purchase Plan and the Key Employees Stock Bonus Plan, income recognized
pursuant to the Option Plan, certain moving expenses, taxable group life
insurance premiums, certain commissions and incentive payments and severance pay
are excluded from the definition of compensation.
In determining benefits payable under the Pension Plan, amounts payable are
reduced by (1) one-half of an employee's annual social security benefit, (2)
benefits actuarially determined from Company contributions under the Beneficial
Corporation Savings Plan and the earnings thereon and (3) any amount vested
under the Company's prior pension plan which terminated in 1983. The actuarial
value of an employee's annual retirement benefit may, at an employee's option,
be paid in a single payment upon retirement. Benefits under the Pension Plan are
fully vested after five years of cumulative service or at age 65. The Pension
Plan also contains provisions for early retirement, disability and death
benefits and payments to a vested employee who leaves the Company prior to
retirement.
The Company also has a Supplemental Plan to restore to employees of the
Company those retirement benefits earned by such persons under the Pension Plan
but not payable because of the limitations imposed on qualified plan benefits by
the Internal Revenue Code. Payment of benefits under the Supplemental Plan may
be made at the same time and in the same manner benefits under the Pension Plan
are paid. If a participant's employment is terminated and such person is
entitled to a deferred vested benefit under the Pension Plan, such person will
be entitled to receive benefits under the Supplemental Plan upon retirement. The
Supplemental Plan also provides a lump sum death benefit to certain key
employees equal to the amounts they have accrued under the Pension Plan.
Messrs. Caspersen, Farris, Halvorsen, and Gilliam had approximately 25, 37,
19, and 17 years of service, respectively, credited under the Pension Plan and
the Supplemental Plan through 1996.
Mr. Woodall, who is employed by a subsidiary outside the United States and
who has approximately 5 years of service, currently participates in the
Beneficial Bank plc Retirement Benefits Plan, a voluntary contribution
subsidiary-sponsored plan designed to supplement the United Kingdom's State
basic pension and the United Kingdom's State Earnings Related Pension Scheme.
21
<PAGE>
OTHER INFORMATION WITH RESPECT TO OFFICERS AND DIRECTORS
EMPLOYMENT CONTRACTS.
The Company has employment contracts with approximately 261 management level
employees of the Company and its subsidiaries to assure such employees of
equitable treatment in the event of a "change in control" of the Company (as
defined below) not approved by the Company's Board of Directors. Messrs.
Caspersen, Farris, Halvorsen, Gilliam and Woodall are not covered by such
agreements but, instead, have Severance Agreements as described below. The
employment contracts are operative for a three-year period if a "change in
control" occurs. They will provide such employees (a) compensation during the
employment period at a rate equal to that existing immediately prior to the
change in control, adjusted through such period to reflect increases based upon
the Company's prior practices and (b) continued eligibility during such period
under the Company's employee benefit plans. An employee's good faith
determination that the nature and scope of his or her duties have been limited
following a "change in control" would entitle the employee to terminate
employment with the Company. In that event or in the event of a termination of
employment by the Company other than for "cause" (as defined in the contract),
most components of such compensation and benefits would continue through the
remainder of the three-year period. The contracts also provide that in the event
any payments thereunder become subject to excise tax under the Internal Revenue
Code, the Company will make an additional cash payment to the employee to offset
such tax.
For employment contract purposes, "change in control" will be deemed to have
occurred if and when: (1) a "person" acquires 20% or more of the combined voting
power of the Company's then outstanding securities; (2) a majority of the Board
ceases to consist of (a) individuals who at the beginning of such period
constitute the Board or (b) any new directors whose election by the Board on
nomination for election by the Company's stockholders was approved by a vote of
a least two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved; (3) subject to certain specified
exceptions, the Company (or a direct or indirect subsidiary of the Company) is
merged or consolidated with any other corporation; or (4) the Company sells all
or substantially all of its assets or stockholders of the Company approve a
complete liquidation or dissolution of the Company.
SEVERANCE AGREEMENTS.
The Company has severance agreements with approximately 107 key officers of
the Company and its subsidiaries. Messrs. Caspersen, Farris, Halvorsen, Gilliam
and Woodall are covered by such agreements. As amended and restated as of March
26, 1996, these agreements provide, among other things, for severance payments
in the event of termination by the Company other than for "cause" (as defined in
the agreements) or by such officer for "good reason" (as defined in the
agreements)
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following a "change in control" of the Company (as defined below). Severance
benefits under the Severance Agreements consist principally of (i) three (two,
in the case of Mr.Woodall) times the sum of the officer's (a) annual base
salary, (b) the highest of the three most recent awards under the Key Plan and
(c) the most recent annual award under any cash incentive plan (no such plan
currently exists for U.S. executives, but would be covered if one should ever be
adopted); (ii) a lump sum payment equal to (a) the aggregate nonvested share
units credited to the officer's Employees' Stock Purchase Plan and (b) the
aggregate value of the officer's account under the Key Plan; (iii) with some
restrictions, three (two, in the case of Mr. Woodall) years of continued
coverage under the Company's benefit plans; and (iv) three (two, in the case of
Mr. Woodall) years of credit for eligibility for retiree medical coverage. In
addition to the foregoing, each severance agreement for Messrs. Caspersen,
Farris, Halvorsen and Gilliam provides (i) that if he remains with the Company
for three months following a "change in control", he may terminate employment
for any reason during the fourth month and upon such termination receive the
severance benefits set forth above and (ii) for additional cash payments to
offset any federal excise tax that may be imposed by reason of payments made in
connection with a "change in control" of the Company.
For severance agreement purposes, "change in control" will be deemed to have
occurred if and when: (1) a "person" acquires 20% or more of the combined voting
power of the Company's then outstanding securities; (2) a majority of the Board
ceases to consist of (a) individuals who at the beginning of such period
constitute the Board or (b) any new directors whose election by the Board on
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved; (3) subject to certain specified
exceptions, the Company (or a direct or indirect subsidiary of the Company) is
merged or consolidated with any other corporation; or (4) the Company sells all
or substantially all of its assets or stockholders of the Company approve a
complete liquidation or dissolution of the Company.
DIRECTORS' INDEMNIFICATION AGREEMENTS.
The Company entered into indemnification agreements with each of its
directors which provide that such directors will be indemnified against
expenses, judgments, penalties, fines and amounts paid in settlement with
respect to threatened, pending or completed actions, suits or proceedings to
which any such person is, or is threatened to be made, a party, to the fullest
extent permitted by applicable law as in effect from time to time. Such
agreements also require the Company to advance all reasonable expenses incurred
by a director in any such proceeding provided that he or she undertakes to repay
the amount advanced if it is ultimately determined that he or she is not
entitled to indemnification for such expenses. The agreements provide that upon
the occurrence of a "change in control" (defined in the agreements) of the
Company, the Company has the burden of proof to establish that a director who
has requested indemnification is not entitled to it.
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LOANS.
Certain banking and mortgage company subsidiaries of the Company have made,
and will continue to make, mortgage and other loans, in the ordinary course of
business, to directors and officers of the Company. These loans have been and
will be made on substantially the same terms, including interest rate and
collateral, as those prevailing at the time for comparable transactions with
other customers and do not and will not involve more than the normal risk of
collectibility or present other unfavorable features.
TRANSACTIONS WITH MANAGEMENT AND OTHERS.
On February 5, 1997 the Company purchased 9,000 shares of Common Stock from
Finn M. W. Caspersen, Chairman of the Board of Directors, Chief Executive
Officer and a director of the Company, in a privately negotiated transaction.
The price paid was $67.8125 per share ($610,312.50), which was the average
between the highest and lowest quoted selling price per share on the New York
Stock Exchange Composite Transaction Tape on the date of sale. The Company
purchased the shares as a part of its acquisition program for shares of its
Common Stock to fund its contribution under the Key Plan for anticipated
February 1997 awards to employees for 1996 performance. Such transaction was
authorized by a majority of the members of the Executive Committee of the Board
of Directors in a meeting held February 4, 1997. The shares of Common Stock were
awarded to Mr. Caspersen in February 1993 for 1992 performance and distributed
to Mr. Caspersen in January 1997 pursuant to the terms of the Company's Key
Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors to file reports of ownership and changes in ownership
with the Commission. During 1996, the following individuals had late filings:
(a) J.C. Heywood, an Executive Vice President of Beneficial Management
Corporation, a subsidiary, filed one required Form 4 late with respect to four
transactions that occurred during May of 1996; and (b) Michael A. Woodall,
Executive Vice President-- International of Beneficial Management Corporation, a
subsidiary, filed one required Form 4 late with respect to two transactions that
occurred during June of 1996.
PROFESSIONAL ASSOCIATIONS.
The Hillier Group, an architectural firm, of which Mr. Hillier is Chairman
and Chief Executive Officer, performed architectural services for subsidiaries
of the Company in 1996.
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PROPOSAL 2--RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, which is
composed of five directors who are not officers or employees of the Company, has
selected, subject to stockholder approval, the firm of Deloitte & Touche LLP,
Certified Public Accountants, as the independent auditors of the Company for
1997, and it is intended that, unless otherwise specified on the accompanying
proxy, votes will be cast pursuant to the proxy for the ratification of such
action. As in prior years, a representative of Deloitte & Touche LLP will be
present at the meeting and available to respond to appropriate questions. The
representative also will have an opportunity to make a statement if he or she so
desires.
Audit services rendered by Deloitte & Touche LLP to the Company in 1996
included examination of the annual financial statements, review of unaudited
quarterly financial information, assistance and consultation in connection with
reports and registration statements filed with the Commission and consultation
in connection with various accounting matters. Services provided by Deloitte &
Touche LLP were approved by the Audit Committee in most but not all cases before
they were rendered.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2 TO RATIFY THE
SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR
1997.
An affirmative vote by the holders of outstanding shares of Common Stock,
$4.30 Dividend Cumulative Preferred Stock and $5.50 Dividend Cumulative
Convertible Preferred Stock together having a majority of the votes represented
at the meeting is required for approval of Proposal 2.
OTHER BUSINESS
The Board of Directors does not know of any matters to come before the
meeting other than those referred to in the Notice of Meeting. If any other
matters should come before the meeting, the accompanying proxy will be voted on
such other matters in accordance with the judgment of the person or persons
voting the proxy.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholder proposals for the 1998 Annual Meeting must be received at the
office of the Company, 301 North Walnut Street, Wilmington, Delaware 19801,
Attn. Corporate Secretary, not later than December 10, 1997 for inclusion in the
1998 proxy statement and form of proxy.
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INFORMATION INCORPORATED BY REFERENCE
The Company will promptly provide a copy of the Company's 1994 Proxy
Statement referred to on page 16 to any stockholder upon request. Such requests
should be directed to the Corporate Secretary at (800) 688-0534 or to the
address listed above.
COST OF SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. Solicitation of
proxies from some stockholders of the Company may be made by personal interview,
mail, telephone or facsimile by the directors, officers and employees of the
Company or its subsidiaries. The Company also will request brokerage houses,
custodians, nominees and fiduciaries to forward the proxy material and annual
report to stockholders to the beneficial owners of the stock held of record by
such persons and will reimburse them, upon request, for reasonable expenses
incurred in connection therewith.
By order of the Board of Directors,
SCOTT A. SIEBELS
VICE PRESIDENT AND SECRETARY
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NOTICE OF
ANNUAL MEETING
AND
PROXY STATEMENT
1997
[LOGO]
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<CAPTION>
[LOGO] PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE AND RETURN IT IN THE
Beneficial Corporation ENCLOSED ENVELOPE IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON.
Wilmington, DE 19899
The undersigned hereby appoints James H. Gilliam, Jr. and Scott A. Siebels, and each of them, proxies,
with full power of substitution, to represent and vote, as designated below, at the Annual Meeting of Stockholders
of the Company on May 22, 1997 including adjournments, the number of votes to which the undersigned would be entitled, P
if personally present.
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE ELECTION OF ALL DIRECTORS LISTED BELOW, AND FOR PROPOSAL 2.
<S> <C> <C>
1. ELECTION OF DIRECTORS: FOR all nominess listed below WITHHOLD AUTHORITY to vote for R
(except as marked to the contrary below) [ ] all nominees listed below [ ]
Robert J. Callander, Finn M. W. Caspersen, Robert C. Clark, Leonard S. Coleman, Jr., David J. Farris, James H. Gilliam, Jr.,
Andrew C. Halvorsen, Roland A. Hernandez, J. Robert Hillier, Gerald L. Holm, Thomas H. Kean, Steven Muller, Susan Julia Ross,
Robert A. Tucker, Susan M. Wachter and Charles H. Watts, II. O
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name on the space provided below.)
X
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2. RATIFICATION OF THE SELECTION OF THE FIRM OF DELOITTE & TOUCHE as the auditors of the Company for 1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Y
3. In their discretion, the proxies are authorized to vote upon any other business that may properly come before the meeting.
</TABLE>
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<CAPTION>
(continued from other side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IF NO DIRECTION IS MADE, THE PROXY
WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTORS LISTED ON THIS PROXY, AND FOR PROPOSAL 2.
<S><C>
Receipt of a copy of the Annual Report to Stockholders for 1996, Notice of said meeting and Proxy Statement relating to said P
meeting is hereby acknowledged.
R
--------------------------------------------(L.S.)
*(Signature)
O
--------------------------------------------(L.S.)
*(Signature)
X
---------------------------, 1997
*Please sign exactly as your name(s) appears on this
proxy. Joint owners should each sign. When signing
in a representative capacity, please give title. Y
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