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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 1-1177
Beneficial Corporation
(Exact name of registrant as specified in its charter)
Delaware 51-0003820
(State of incorporation) (I.R.S. Employer Identification No.)
301 North Walnut Street,
Wilmington, Delaware 19801
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (302)425-2500
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:
Name of each exchange
Title of each class on which registered
---------------------------
Common Stock, $1 Par Value New York Stock Exchange
5% Cumulative Preferred Stock, $50 Par Value New York Stock Exchange
$5.50 Dividend Cumulative Convertible Preferred Stock,
No Par Value $20 Stated Value (convertible into
nine shares of Common Stock) New York Stock Exchange
$4.50 Dividend Cumulative Preferred Stock,
$100 Par Value New York Stock Exchange
$4.30 Dividend Cumulative Preferred Stock,
No Par Value, $100 Stated Value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
8% Debentures Maturing at Holder's Option Annually on June 15,
Commencing in 1983 and Due June 15, 2001 New York Stock Exchange
8.40% Debentures Maturing at Holder's Option Annually on
December 15, Commencing in 1986 and Due May 15, 2008 New York Stock Exchange
12 7/8% Debentures, Due August 1, 2013 New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
At February 27, 1998, there were 54,365,830 shares outstanding of the
registrant's common stock. The aggregate market value of the voting stock of
the registrant held by non-affiliates of the registrant was approximately
$5.8 billion.
DOCUMENTS INCORPORATED BY REFERENCE
NONE.
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The purpose of this amendment is to revise the aggregate market value of
the voting stock shown on the facing sheet and Items 10, 11, 12 and 13 to the
Company's Form 10-K for the year ended December 31, 1997.
The undersigned registrant hereby amends Items 10, 11, 12 and 13 of Part III
of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 to read as follows:
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Directors of the Registrant
Term of Office, Committee Assignments,
Name Age Directorships and Business Experience
Robert J. Callander...................67 Director (1992 to present),
Executive in Residence, Columbia
University Business School;
Chairman of Compensation Committee
and Member of Strategic Planning
and Ad Hoc Committees. 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.; Omnicom Group,
Inc.; Scudder New Asia Fund;
Scudder Global High Income Fund;
Spectrum Health Services, Inc.;
and the Korea Fund, Inc.
Finn M. W. Caspersen..................56 Director (1975 to present),
Chairman of Board of Directors and
Chief Executive Officer, Chairman
of Executive and Ad Hoc
Committees and Member of Finance
Committee.
Robert C. Clark.......................54 Director (1997 to present), Dean
and Royall Professor of Law,
Harvard Law School; Member of
Committee on Directors, Committee
on Corporate Policy and Ad Hoc
Committee. Mr. Clark is a trustee
of the Teachers Insurance &
Annuity Association - College
Retirement Equities Fund (TIAA-CREF)
and a director of Collins &
Aikman Corporation and American
Lawyer Media Inc.
Leonard S. Coleman, Jr................49 Director (1990 to present),
President, National League of
Professional Baseball Clubs;
Chairman of Strategic Planning
Committee, Member of Compensation
and Ad Hoc Committees and
Committee on Corporate Policy.
Mr. Coleman was Executive
Director, Market Development, Major
League Baseball from 1992 to
March 1994. He is a director of
Omnicom Group, Inc.; New Jersey
Resources Corp.; Cendant Corp.;
Avis; Owens Corning; The Jackie
Robinson Foundation; The National
Urban League; Advisory Board
of the Martin Luther King, Jr.
Center for Non-Violent Social
Change; Seton Hall University; and
the Metropolitan Opera.
David J. Farris.......................62 Director (1982 to present),
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..................52 Director (1984 to present),
Executive Vice President, General
Counsel and Member of Executive
and Ad Hoc Committees. Mr.Gilliam
is Chairman of the Board of
Directors of Beneficial
National Bank, a subsidiary of the
Company. He is a trustee of
Howard Hughes Medical Institute
and a director of Bell Atlantic
Corporation.
Andrew C. Halvorsen...................51 Director (1984 to present),
Member of the Office of the
President, First Vice President
and Chief Financial Officer,
Chairman of Finance Committee and
Member of Executive and Ad Hoc
Committees.
Roland A. Hernandez...................40 Director (1992 to present),
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
nominee for election to the Board
of Directors of Wal-Mart Stores, Inc.
J. Robert Hillier.....................60 Director (1982 to present), Chairman
and Chief Executive Officer
of The Hillier Group, Inc.,
architects; Chairman of Committee on
Directors and Member of Strategic
Planning Committee.
Gerald L. Holm........................59 Director (1979 to present), Former
Vice Chairman of the Company;
Member of Strategic Planning, Audit
and Ad Hoc Committees.
Thomas H. Kean........................62 Director (1990 to present), 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; a member of President
Clinton's Race Relations Board
and a director of Amerada Hess
Corporation; the ARAMARK
Corporation; Bell Atlantic
Corporation; Fiduciary Trust Company
International; and United HealthCare
Corporation.
Steven Muller.........................70 Director (1983 to present), President
Emeritus, The Johns Hopkins
University; Chairman of Committee on
Corporate Policy and Member
of Strategic Planning, Compensation
and Ad Hoc Committees. Dr.Muller is
a director of Van Kampen American
Capital Closed End Fund; The Law
Companies Group, Inc.; and
Organization Resource
Counselors, Inc.
Susan Julia Ross......................54 Director (1979 to present), Of
Counsel, Brown & Bain, P.A.;
Partner, Natelson & Ross, Attorneys
at Law (1976-1996); Member of
Compensation Committee and Committee
on Corporate Policy.
Robert A. Tucker......................71 Director (1959 to present), Former
Member of the Office of the
President and Chief Financial
Officer of the Company; Member of
Audit Committee and Committee on
Directors.
Susan M. Wachter......................54 Director (1985 to present),
Chairman of the Real Estate
Department (1997-2000), Professor
of Real Estate and Finance, The
Wharton School of the University of
Pennsylvania; Member of Audit
Committee and Committee on Directors.
Charles H. Watts, II..................71 Director (1959 to present), Business
and Educational Consultant;
Chairman of Audit Committee and
Member of Committee on Corporate
Policy.
Executive Officers of the Registrant
Name Age Position and Offices and Held as of
March 2, 1998
Finn M. W. Caspersen..................56 Director (1975 to present),
Chairman of Board of Directors,
Chief Executive Officer and
Chairman of Executive Committee
(1976 to present), Member of the
Executive Committee (1975 to
present), Member of Finance
Committee (1975 to present) and
Chairman of the Ad Hoc Committee
(1998 to present) of the Company.
David J. Farris.......................62 Director (1982 to present), Member
of the Office of the President
(1984 to present), Chief Operating
Officer (1987 to present), and
Member of Executive Committee
(1983 to present) and Member of the
Finance Committee (1988 to present)
of the Company; President and
Chief Executive Officer (1982
to present) of Beneficial
Management Corporation, a
subsidiary of the Company
James H. Gilliam, Jr..................52 Director (1984 to present),
Executive Vice President (1989 to
present), General Counsel (1986 to
present), Secretary (1987 to
1992), Member of Executive
Committee (1987 to present) and
Member of the Ad Hoc Committee
(1998 to present) of the Company.
Chairman (1987 to present) of
Beneficial National Bank, a
subsidiary of the Company.
Andrew C. Halvorsen...................51 Director (1984 to present),
Member of the Office of the
President, First Vice President
and Chief Financial Officer (1986
to present), Member of Executive
and Finance Committees (1984 to
present) and Member of the Ad Hoc
Committee (1998 to present) of
the Company.
Patti Prairie.........................46 Chief Information Officer (1997
to present) of the Company;
Executive Vice President
(1997 to present) of Beneficial
Management Corporation and
President (1997 to present) of
Beneficial Technology Corporation,
subsidiaries of the Company;
Senior Vice President of Global
Corporate Systems (1995 to 1997)
and Senior Vice President of
Corporate Business Systems (1994
to 1995) of American Express
Company; Vice President of
Financial Services of International
Business Machines Consulting
Group (1992 to 1994).
Jonathan Macey........................41 Senior Vice President, Controller
and Chief Accounting Officer
(1997 to present) of the Company;
Vice President - Financial
Controls of Beneficial Management
Corporation, a subsidiary of
the Company (1992 to 1997).
Scott A. Siebels......................43 Senior Vice President (1998 to
present), Vice President (1995 to
1997), Secretary (1995 to
present), Assistant General Counsel
(1998 to present) and Associate
Counsel (1990 to 1997), Assistant
Vice President (1993 to 1995);
and Assistant Secretary (1991 to
1995) of the Company.
Officers of the Company hold office until the next Annual Meeting of the
Directors or until their successors are otherwise elected as provided in the
By-Laws.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file initial reports of ownership and
reports of changes in ownership of the Company's Common and Preferred
Stocks with the Securities and Exchange Commission ("SEC") and the New York
Stock Exchange. Executive officers and directors are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on a review of the files maintained by the Company and
written representation from the Company's executive officers and directors,
the Company believes that none of its executive officers and directors
failed to comply with Section 16(a) reporting requirements in 1997.
Item 11. EXECUTIVE COMPENSATION
The following tables and narrative text discuss the compensation paid in
1997 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
Long Term
Compensation
Annual Compensation Awards
Securities
Other Restricted Underlying
Annual Stock Options/
Name and Compen- Awards SAR's
Principal Position Year Salary($) Bonus($) sation($) ($)(1)(2) (#)(3)
_______________ ____ _______ _______ _______ __________ ________
<TABLE>
<S> <C> <C> <C> <C> <C>
Finn M. W. Caspersen 1997 $1,156,250(5) -0- - $ 941,263(6) 150,000
Chairman and Chief 1996 $1,102,150(5) -0- - $1,471,600(6) 130,000
Executive Officer 1995 $1,102,200(5) -0- - $ 971,600(6) 120,000
David J. Farris 1997 $ 960,272(5) -0- - $ 299,015(7) 90,000
Chief Operating
Officer 1996 $ 945,940(5) -0- - $ 902,536(7) 90,000
1995 $ 950,492(5) -0- - $ 598,808(7) 80,000
Andrew C. Halvorsen 1997 $ 666,250 -0- - $ 250,000 65,000
Chief Financial
Officer 1996 $ 635,750 -0- - $ 375,000 60,000
1995 $ 635,800 -0- - $ 250,000 50,000
James H. Gilliam, Jr. 1997 $ 667,500 -0- - $ 300,000 65,000
Executive Vice
President 1996 $ 635,750 -0- - $ 375,000 60,000
and General Counsel 1995 $ 635,850 -0- - $ 250,000 50,000
Patti Prairie 1997 $ 323,577(8) $250,000 - $ 800,000 30,000
Chief Information
Officer
(Cont'd)
Payouts
LTIP All Other
Payouts Compen-
_($)____ sation
_($)(4)___
- $40,900
- $52,089
- $39,094
- $45,891
- $60,786
- $57,558
- $12,795
- $15,922
- $12,258
- $13,133
- $16,320
- $15,923
- $ 605
</TABLE>
(1) The number of shares and the aggregate value of such shares of
restricted stock held by such persons as of year-end 1997 were as
follows: Caspersen - 128,536 ($10,684,555); Farris - 76,442
($6,354,241); Halvorsen - 29,300 ($ 2,435,563); Gilliam - 29,300
($ 2,435,563); and Prairie - 9,073 ($754,193). The aforementioned shares
of restricted stock for Messrs. Caspersen and Farris include 45,117 and
12,199 shares, respectively, held in the Company's Employees' Stock
Purchase Plan as amended (hereinafter "ESPP" or "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, (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) that has not been approved by the Board of Directors of the
Company. 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 Employees' Stock Bonus Plan ("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
death or disability of the participant, (iii) for awards under certain
special circumstances, a date determined by the Compensation Committee,
provided that the resulting vesting period is no shorter than normal
vesting; (iv) the date on which the employee involuntarily terminates
employment other than for cause or (v) certain termination following a
change of control (as defined in the Key Plan). If on such date
deductibility to the Company is restricted under Internal Revenue Code
162(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 1997 were made in
February of 1998. On May 21, 1997, the Compensation Committee approved
an initial award under the Key Plan to Ms. Prairie effective as of
June 15, 1997 of $600,000 to vest over a four-year period ending
June 14, 2001.
(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), ordinary life
insurance premiums paid by the Company. Messrs. Caspersen, Farris,
Halvorsen, and Gilliam each received $3,750 in contributions to the
Savings Plan in 1995 and 1996 and $4,000 in 1997. With respect to life
insurance premiums, Mr. Caspersen received $35,344 in 1995, $48,339 in
1996 and $36,900 in 1997; Mr. Farris received $53,808 in 1995, $57,036 in
1996 and $41,891 in 1997; Mr. Halvorsen received $8,508 in 1995, $12,172
in 1996 and $8,795 in 1997; Mr. Gilliam received $12,173 in 1995,
$12,570 in 1996 and $9,133 in 1997; and Ms. Prairie received $605 in 1997.
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 $1,572,000 for 1995,
$1,572,000 for 1996 and $1,650,000 for 1997 for Mr. Caspersen and a
salary of $1,095,000 for 1995 and $1,095,000 for 1996 and $1,150,000 for
1997 for Mr. Farris. Pursuant to the terms of the Company's Deferred
Compensation Plan, Mr. Caspersen's salary includes $135,744 mandatorily
deferred in 1995, $148,739 mandatorily deferred in 1996 and $209,238
mandatorily deferred in 1997 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 and $500,000 with
respect to 1995 performance. Mr. Caspersen did not receive an award
under the Key Plan with respect to 1997 performance. Compensation
mandatorily deferred into the ESPP during 1997 was $495,000, during 1996
was $471,600 and during 1995 was $471,600. In addition,
under the terms of the ESPP and the Deferred Compensation Plan,
restricted stock valued at $446,263 vested during 1997.
(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, and $450,000 with respect to
1995 performance. Mr. Farris did not receive an award under the Key Plan
with respect to 1997 performance. Compensation mandatorily deferred
into the ESPP during 1997 was $214,187, during 1996 was $152,536, and
during 1995 was $148,808. In addition, under the terms of the ESPP and
the Deferred Compensation Plan, restricted stock valued at $84,828 vested
during 1997.
(8) Reflects compensation after June 16, 1997, the date Ms. Prairie commenced
employment with the Company.
OPTION GRANTS FOR 1997
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
10 Year Option Term
Individual Through 11/19/2007(3)
Grants
(a) (b) (c) (d) (e) (f) (g)
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees or Base
Granted in Fiscal Price Expiration
Name (#)(1)(2) Year $/Sh) Date 5%($) 10%($)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Finn M. W. Caspersen 150,000 13.63% $77.0625 11/19/07 $7,269,629 $18,422,667
David J. Farris 90,000 8.17% $77.0625 11/19/07 $4,361,777 $11,053,600
Andrew C. Halvorsen 65,000 5.90% $77.0625 11/19/07 $3,150,172 $ 7,983,156
James H. Gilliam, Jr. 65,000 5.90% $77.0625 11/19/07 $3,150,172 $ 7,983,156
Patti Prairie 30,000 2.72% $77.0625 11/19/07 $1,453,926 $ 3,684,533
</TABLE>
_______________
(1) 25% of the total grant vests on each of 11/19/98, 11/19/99, 11/19/00 and
11/19/01.
(2) Options were awarded on November 19, 1997 under the Company's 1990
Non-Qualified Stock Option Plan ("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 of 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, 1997 was $2,587,225,760 under column (f) and $6,529,665,014
under column (g). Potential Realizable Value represents the aggregate net
gain to all common stockholders, assuming a beginning market price of
$77.0625 (the fair market value option price determined on
November 19, 1997) and appreciation at the assumed annual rates of 5%
and 10% for the ten-year period from November 19, 1997 to
November 19, 2007. The assumed rates of appreciation are set as part
of the proxy rules. There can be no assurance that the Common Stock will
perform at the assumed annual rates used for purposes of this table. The
Company does not make or endorse any predictions as to future stock
performance.
AGGREGATED OPTION EXERCISES IN 1997
AND 1997 YEAR-END OPTION VALUES
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Shares Options at Options at
Acquired 1997 Year-End 1997 Year-End(1)
on Value (#) ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
_______________________________________________________________________________
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Finn M. W. Caspersen .59,325 $2,477,145 62,500/336,825 $ 1,586,406/5,896,926
David J. Farris ...... 0 0 341,550/217,050 $ 15,328,742/3,922,065
Andrew C. Halvorsen... 0 0 176,600/147,200 $ 7,634,222/2,548,825
James H. Gilliam, Jr..33,000 $1,352,897 165,400/147,200 $ 6,997,897/2,548,825
Patti Prairie......... 0 0 0/30,000 $ 0/163,125
</TABLE>
_______________
(1) Based on a value per share at December 31, 1997 of $82.50.
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.
Years of Service
Remuneration 15 20 25 30 35 40
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
$ 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>
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 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.
Under the Company's Pension Plan and Supplemental Plan, covered earnings
include salary and amounts mandatorily deferred into the Company's ESPP as set
forth in the Summary Compensation Table, but not long-term incentive payouts
or any other incentive awards.
Messrs. Caspersen, Farris, Halvorsen and Gilliam and Ms. Prairie had
approximately 26, 38, 20, and 18 years and 5 months of service, respectively,
credited under the Pension Plan and the Supplemental Plan through 1997.
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 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 Option Plan, and they
are entitled to participate in the Company's
Employees' Stock Purchase Plan and in a health insurance arrangement made
available by the Company. On December 1, 1997, each non-employee director was
issued a non-recurring option to purchase 2,000 shares of the Company's Common
Stock under the Option Plan.
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 non-employee directors and
directors emeriti would cease to hold such positions, such persons would receive
quarterly payments ranging from $4,250 to $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.
Employment Contracts and Terminations of Employment and Change-in-Control
Arrangements.
The Company has employment contracts with approximately 260 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 and Gilliam and Ms. Prairie 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, without the approval of the Company's Board of
Directors, (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 114 key officers of
the Company and its subsidiaries with severance benefits that vary,
depending on the individual's position. Messrs. Caspersen, Farris,
Halvorsen and Gilliam and Ms. Prairie are covered by such agreements. As
amended and restated as of March 26, 1996, the agreements for Messrs. Caspersen,
Farris, Halvorsen, and Gilliam and Ms. Prairie 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) following a "change in control" of the Company
(as defined below). Severance benefits under the Severance Agreements
consist principally of (i) three 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 years of continued coverage
under the Company's benefit plans; (iv) three years of credit for eligibility
for retiree medical coverage; (v) that if he or she remains with the
Company for three months following a "change in control", he or she may
terminate employment for any reason during the fourth month and upon such
termination receive the severance benefits set forth above; and (vi) 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 all 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. The transactions
contemplated by the Agreement and Plan of Merger, dated as of April 7, 1998,
among Household International, Inc. ("Household"), Household Acquisition
Corporation II, a wholly owned subsidiary of Household ("Merger Sub") and the
Company, pursuant to which, among other things, Merger Sub will be merged
with and into the Company with the Company surviving as a wholly owned
subsidiary of Household, will constitute a "change in control" under all
severance agreements.
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.
Compensation Committee Interlocks and Insider Participation.
None.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Security Ownership of Certain Beneficial Owners.
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:
$4.30 Dividend
Common Cumulative % of Class
Name and Address of Stockholder Stock Preferred Stock Owned
FMR Corp.
82 Devonshire Street
Boston, MA 02109......................... 5,306,405(1) - 9.82%
The Capital Group Companies, Inc. and Capital
Research and Management Company
333 South Hope Street
Los Angeles, CA 90071 . . . . . . . . . . 4,047,000(2) - 7.49%
The Hodson Trust
100 Beneficial Center
Peapack, NJ 07977........................ 3,476,667(3) - 6.43%
The Life Insurance Company of Virginia
6610 West Broad Street
Richmond, VA 23230....................... - 75,000(4) 8.97%
_______________
(1) Based on information contained in a report on Schedule 13G of FMR Corp.
("FMR"), dated February 14, 1998, filed with the Commission under the
Securities Exchange Act of 1934, as amended (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 5,306,405 shares (9.82%) of the Company's Common Stock.
FMR has the sole power to vote 609,575 of such shares and the sole power
to dispose of all 5,306,405 shares.
(2) Based on information contained in a report on Schedule 13G of The
Capital Group Companies, Inc., and Capital Research and Management
Company, dated February 10, 1998 filed with the Commission under the
Exchange Act. According to such information, as of December 31, 1997,
Capital Research and Management Company, an investment advisor
registered under Section 203 of the Investment Advisor's Act of 1940 and
wholly owned subsidiary of the Capital Group Companies, is the beneficial
owner of 4,047,000 shares (7.49%) of the Company's Common Stock.
(3) As of March 23, 1998, The Hodson Trust held of record the number of
shares of Common Stock indicated in the table, 40 shares of $4.30
Dividend Cumulative Preferred Stock (less than 1% of such class) and
73 shares of $5.50 Dividend Cumulative Convertible Preferred Stock (less
than 1% of such class). Messrs. Caspersen, Holm, Tucker and four 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.
(4) 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.
Security Ownership of Management.
The following table sets forth information regarding beneficial ownership of
the Company's equity securities of each director, the five most highly
compensated executive officers of the Company and its subsidiaries and the
directors and executive officers of the Company as a group, as of
February 28, 1998.
Equity Securities of the Company Beneficially Owned (1)
Common Unexercisable % of 5% Pfd. % of
Name of Person or Group Stock(10) Options (11) Class (12) Stock Class
<TABLE>
<S> <C> <C> <C> <C> <C>
Robert J. Callander... 16,727 6,000 * - -
Finn M. W. Caspersen(2)(3)
(4)(5)(6)(7)(8)....... 5,525,300 336,825 10.21% 2,636 *
Robert C. Clark.......... 153 6,000 * - -
Leonard S. Coleman....... 19,173 6,000 * - -
David J. Farris(2)....... 552,158 217,050 * - -
James H. Gilliam, Jr.(7)(8) 232,486 147,200 * - -
Andrew C. Halvorsen(2)..... 267,468 147,200 * - -
Roland A. Hernandez........ 13,651 6,000 * - -
J. Robert Hillier.......... 34,126 6,000 * - -
Gerald L. Holm(4)(6)... 3,895,404 6,000 7.21% - -
Thomas H. Kean............ 20,529 6,000 * - -
Steven Muller............. 20,988 6,000 * - -
Patti Prairie............. 11,661 30,000 * - -
Susan Julia Ross.......... 26,851 6,000 * - -
Robert A. Tucker(2)(3)(4)(7) 3,765,369 6,000 6.97% 679 *
Susan M. Wachter(2).......... 30,649 6,000 * - -
Charles H. Watts, II(2)(3)... 183,157 6,000 * 737 *
All directors and executive officers
as a group (19 persons)
(2)(3)(4)(5)(6)(7)(8)(9) .. 6,975,407t 976,700 12.69% 3,373t *
</TABLE>
In addition, as of such date, Mr. Tucker was the beneficial owner of 4,700*
shares of $4.30 Dividend Cumulative Preferred Stock and 29* shares of $4.50
Dividend Cumulative Preferred Stock.
_______________
*Less than 1.0% of class.
tPursuant 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.
(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 347,512 shares; Farris 138 shares;
Halvorsen 14,986 shares; Tucker 7,628 shares; Wachter 800 shares, and
Watts 22,817 shares.
(3) Includes 100,074 shares of Common Stock held by a trust as to which
Messrs. 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 Security Ownership of Certain Beneficial
Owners on page 11.
(5) Includes 625,190 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 372,320 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. On April 7, 1998,
Mr. Gilliam was elected a Member and Director of the Beneficial
Foundation, Inc. The Equity Securities beneficially owned by Mr. Gilliam
do not include shares held by Beneficial Foundation, Inc.
(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 1998 under the
Employees' Stock Purchase Plan.
(10) Includes the number of shares that could be acquired as of
February 28, 1998 by the exercise of options granted under the Company's
Option Plan as follows: Callander (12,000), Caspersen (62,500), Clark (0),
Coleman (16,000), Farris (341,550),Gilliam (165,400), Halvorsen (176,600),
Hernandez (12,000), Hillier (16,000), Holm (12,000), Kean (16,000), Muller
(16,000), Prairie (0), Ross (16,000), Tucker (12,000), Wachter (16,000),
Watts (16,000), and all directors and officers as a group 919,325.
(11) Options to purchase Common Stock awarded under the Company's 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.
For a brief discussion of the merger of a wholly owned subsidiary of
Household with and into the Company with the Company surviving as a wholly
owned subsidiary of Household, see "Item 11.
EXECUTIVE COMPENSATION-Employment Contracts and Termination of Employment
and Change-in-Control Arrangements-Severance Agreements".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
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.
Professional Associations.
The Hillier Group, an architectural firm, of which Mr. Hillier is Chairman
and Chief Executive Officer, performed architectural and land planning
services for a subsidiary of the Company in 1997.
SIGNATURES
Pursuant to the Requirements of the Securities Act of 1934, the Registrant
has duly caused this Amendment No. 1 to be signed on its behalf by the
undersigned, thereunto duly authorized.
BENEFICIAL CORPORATION
By /s/ Scott A. Siebels
Scott A. Siebels
Senior Vice President
Corporate Secretary and
Assistant General Counsel
Date: April 28, 1998
