<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
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
PDS FINANCIAL CORPORATION
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/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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</TABLE>
<PAGE>
PDS FINANCIAL CORPORATION
6171 MCLEOD DRIVE
LAS VEGAS, NV 89120
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 2000
------------------------
TO THE SHAREHOLDERS OF PDS FINANCIAL CORPORATION:
Please take notice that the annual meeting of shareholders of PDS Financial
Corporation (the "Company") will be held, pursuant to due call by the Board of
Directors of the Company, at the Alexis Park Hotel, 375 E. Harmon Avenue, Las
Vegas, Nevada, on Friday, May 12, 2000, at 3 p.m., or at any adjournment or
adjournments thereof, for the purpose of considering and taking appropriate
action with respect to the following:
1. To elect five directors for the ensuing year.
2. To ratify the appointment of the firm of Piercy, Bowler, Taylor & Kern,
Certified Public Accountants & Business Advisors, A Professional
Corporation, as the independent accountants of the Company for the fiscal
year ending December 31, 2000.
3. To act upon any other business that may properly come before the meeting
or any adjournments thereof.
Pursuant to due action of the Board of Directors, only shareholders of
record on April 7, 2000 will be entitled to notice of and to vote at the meeting
or any adjournments thereof.
WHETHER OR NOT YOU PLAN TO COME TO THE MEETING, PLEASE SIGN, DATE AND RETURN
YOUR PROXY IN THE REPLY ENVELOPE PROVIDED. YOUR COOPERATION IN PROMPTLY SIGNING
AND RETURNING YOUR PROXY WILL HELP AVOID FURTHER SOLICITATION EXPENSE. IF YOU
LATER DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS
EXERCISED.
By order of the Board of Directors,
PDS Financial Corporation
/s/ Lona M.B. Finley
Lona M.B. Finley,
SECRETARY
April 17, 2000
<PAGE>
PROXY STATEMENT
OF
PDS FINANCIAL CORPORATION
6171 MCLEOD DRIVE
LAS VEGAS, NV 89120
------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 2000
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of PDS Financial Corporation (the "Company")
to be used at the Annual Meeting of Shareholders of the Company to be held
May 12, 2000. The approximate date upon which this Proxy Statement and the
accompanying Proxy are expected to be first sent or given to shareholders is
April 17, 2000. Each shareholder who signs and returns a Proxy in the form
enclosed with this Proxy Statement may revoke the same at any time prior to its
use by giving notice of such revocation to the Company in writing, in open
meeting or by executing and delivering a new Proxy to the Secretary of the
Company. Unless so revoked, the shares represented by each Proxy will be voted
at the meeting and at any adjournments thereof. Presence at the meeting of a
shareholder who has signed a Proxy does not alone revoke that Proxy.
Only shareholders of record at the close of business on April 7, 2000 (the
"Record Date") will be entitled to vote at the meeting or any adjournments
thereof. All shares which are entitled to vote and are represented at the Annual
Meeting by properly executed proxies received prior to or at the Meeting, and
not revoked, will be voted at the Meeting in accordance with the instructions
indicated on such proxies.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Company's only outstanding class of voting securities is Common Stock,
$0.01 par value, of which 3,711,710 shares were outstanding as of the close of
business on the Record Date. Each share of Common Stock is entitled to one vote
on all matters put to a vote of shareholders.
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of the Record Date by (i) each person
known by the Company to be the beneficial owner of more than five percent (5%)
of the outstanding Common Stock, (ii) each director, (iii) each executive
officer of the Company included in the Summary Compensation Table set forth
under the caption "Executive Compensation" below, and (iv) all executive
officers and directors as a group.
<PAGE>
Unless otherwise indicated, each of the following persons has sole voting and
investment power with respect to the shares of Common Stock set forth opposite
their respective names:
<TABLE>
<CAPTION>
NAME NUMBER(4) PERCENT OF CLASS
- ---- --------- ----------------
<S> <C> <C>
Johan P. Finley(1)(2).............................. 1,069,586 28.7%
Peter D. Cleary(1)................................. 51,809 1.4%
Lona M.B. Finley(1)(3)............................. 387,577 10.1%
Joel M. Koonce .................................... 16,500 *
16524 Gray's Bay Blvd
Wayzata, MN 55391
James M. Morrell .................................. 13,000 *
1323 Waterford Road
Woodbury, MN 55125
All officers and directors as a group 1,527,272 38.9%
(5 persons)......................................
</TABLE>
- ------------------------
* Less than 1%
(1) The address of such person is 6171 McLeod Drive, Las Vegas, NV 89120.
(2) Includes 11,200 shares held as co-trustee for minor child also claimed by
spouse as co-trustee. Mr. Finley disclaims beneficial ownership of the
shares held by Lona M.B. Finley, his spouse.
(3) Includes 21,000 shares held by Ms. Finley as custodian for her minor
children and 11,200 shares held as co-trustee for minor child also claimed
by spouse as co-trustee. Ms. Finley disclaims beneficial ownership of the
shares held by Johan P. Finley, her spouse.
(4) Includes shares of Common Stock issuable to the following persons upon
exercise of options that are currently exercisable or that will become
exercisable within 60 days of the date of this Proxy Statement: Johan P.
Finley, 15,000 shares; Peter D. Cleary, 50,000 shares; Lona M.B. Finley,
122,591 shares; Joel M. Koonce, 13,000 shares; James L. Morrell,
13,000 shares; all executive officers and directors as a group,
213,591 shares.
CERTAIN TRANSACTIONS
Johan P. Finley, the Company's Chief Executive Officer, Chairman of the
Board and controlling shareholder, received a fee in the amount of $20,000 in
1999 and $20,000 in 1998 in exchange for giving a personal guarantee of amounts
loaned to the Company under certain bank lines of credit in 1999 and 1998.
ITEM 1: ELECTION OF DIRECTORS
The number of directors currently serving on the Company's Board of
Directors is five. Each director holds office until the next Annual Meeting of
Shareholders or until his or her successor is elected and qualified. The Board
of Directors has designated the incumbent directors, Johan P. Finley, Peter D.
Cleary, Joel M. Koonce, James L. Morrell and Lona M.B. Finley as nominees for
reelection to the Board of Directors of the Company. Each of the nominees has
consented to serve as director, if elected.
Certain biographical information furnished by the Company's five incumbent
directors, and the directors' respective terms of office is presented below.
JOHAN P. FINLEY, age 38 is the founder of the Company and has been its Chief
Executive Officer and Chairman of the Board of Directors of the Company since
its inception in February 1988. From February 1988 to July 1999 he also served
as President and acting Chief Operating Officer. In addition,
2
<PAGE>
Mr. Finley was the President and Chief Executive Officer of RCM Inc. and Home
Products, Inc. from 1991 to 1994.
PETER D. CLEARY, age 42, has been a member of the Company's Board of
Directors since January 1996 and has been President and Chief Operating officer
of the Company since July 1999. He was Executive Vice President of the Company
from November 1998 to July 1999. Prior to that, Mr. Cleary served as Vice
President and Chief Financial Officer from September 1995 to November 1998. From
1980 to 1995, Mr. Cleary served in various positions with Coopers & Lybrand
L.L.P. (now PricewaterhouseCoopers LLP), most recently as Audit Manager.
JOEL M. KOONCE, age 61, has been a member of the Company's Board of
Directors since April 1994. From 1986 to 1998, he served as Chief Financial and
Administrative Officer of CENEX, Inc., a distributor of petroleum and agronomy
products and other farm supplies located in St. Paul, Minnesota. Prior to
joining CENEX, Mr. Koonce served in various management positions with Land
O'Lakes, most recently as Vice President of Administration and Planning for
Agricultural Services. Mr. Koonce served in various management positions for
General Mills from 1965 to 1981.
JAMES L. MORRELL, age 46, has been a member of the Company's Board of
Directors since March 1996. He has been an independent financial consultant
since 1996. From 1986 to 1995, Mr. Morrell was employed by Dain Bosworth
Incorporated, where he held a number of management positions, most recently
Managing Director, Corporate Finance. From July 1987 to December 1999
Mr. Morrell was also a director of MI Acquisition Corp., the parent company of
Miller & Schroeder Financial, Inc. Miller & Schroeder has provided investment
banking services to the Company.
LONA M.B. FINLEY, age 35, has been a member of Company's Board of Directors
since May 1998, Director of Compliance since January 1996, and Secretary and
Chief Administrative Officer of the Company since July 1998. Prior to becoming
Secretary, Ms. Finley served in various other positions with the Company since
1988, most recently as Treasurer from December 1993 until November 1998.
Ms. Finley is the spouse of Johan P. Finley.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee, which currently consists of
James L. Morrell and Joel M. Koonce. The Audit Committee reviews and makes
recommendations to the Board of Directors with respect to designated financial
and accounting matters. The Audit Committee held two meetings during 1999.
The Board of Directors has a Compensation Committee, which currently
consists of Johan P. Finley, James L. Morrell, and Joel M. Koonce. The
Compensation Committee determines executive compensation and administers the
provisions of the Company's 1993 Stock Option Plan. The Compensation Committee
held two meetings during 1999.
The Board of Directors has no standing nomination committee.
During 1999, the Board of Directors held four meetings. All incumbent
directors attended 100% of those meetings of the Board and committees on which
they were members that were held while they were serving on the Board or on such
committees.
COMPENSATION OF DIRECTORS
Each non-employee Board member receives an annual cash retainer of $7,500
and a fee of $1,000 for each Board meeting attended. Upon election or
appointment to the Board of Directors, each non-employee director is
automatically granted a non-qualified option to purchase 10,000 shares of the
Company's Common Stock at its fair market value on the date of grant. These
options have a term of ten years and become exercisable as to 2,500 shares on
the date of each Annual Meeting of Shareholders at
3
<PAGE>
which the director is re-elected or is serving an unexpired term. Mr. Koonce
received 10,000 such options in April 1994 which have an exercise price of $5.00
per share. Mr. Morrell received 10,000 such options in March 1996 with an
exercise price of $2.50 per share. Beginning May 14, 1998, the Company
implemented a policy to grant a non-qualified stock option to purchase 5,000
shares of the Company's Common Stock at its fair market value on the date of
grant to each non-employee director on an annual basis. In May 1998 and
May 1999, Messrs. Morrell and Koonce each received 5,000 such options, which
have an exercise price of $9.13 and $3.75 per share, respectively. These options
have a term of ten years and become exercisable as to 1,000 shares on the date
of each Annual Meeting of Shareholders at which the director is re-elected or is
serving an unexpired term. The Company reimburses officers and directors for
their authorized expenses.
PROXIES AND VOTING
The affirmative vote of the holders of the greater of (a) a majority of the
outstanding shares of Common Stock of the Company present and entitled to vote
on the election of Directors or (b) a majority of the voting power of the
minimum number of shares entitled to vote that would constitute a quorum for
transaction of business at the meeting, is required for election to the Board of
the nominees named above. A shareholder who abstains with respect to the
election of Directors is considered to be present and entitled to vote on the
election of Directors at the Meeting, and is in effect casting a negative vote;
a shareholder (including a broker) who does not attend the Meeting and who does
not give authority to a proxy to vote, or withholds authority to vote, on the
election of Directors shall not be considered present and entitled to vote on
the election of Directors.
All shares represented by proxies will be voted for the election of the
foregoing nominees unless a contrary choice is specified. If any nominee
withdraws or otherwise becomes unavailable for any reason, the proxies that
would otherwise have been voted for such nominee will be voted for such
substitute nominee as may be selected by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES.
EXECUTIVE OFFICERS
The Executive Officers of the Company are:
<TABLE>
<CAPTION>
NAME AGE TITLE
- ---- -------- -----
<S> <C> <C>
Johan P. Finley........................... 38 Chief Executive Officer and Chairman of
the Board
Peter D. Cleary........................... 42 President and Chief Operating Officer
Lona M.B. Finley.......................... 35 Chief Administrative Officer, Secretary
and Director of Compliance
</TABLE>
4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation of the Company's Chief Executive Officer and each of the two other
executive officers who received total salary and bonus in excess of $100,000 in
1999.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------- -------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Johan P. Finley......................... 1999 $325,000 -- 25,000 $ 32,980(1)
Chief Executive Officer and Chairman 1998 318,750 $96,320(4) 25,000 29,009(1)
of the Board 1997 210,000 -- -- 153,104(1)
Peter D. Cleary......................... 1999 $140,000 -- 75,000 $ 4,083(2)
President and Chief Operating 1998 136,667 $16,250(4) 15,000 $ 32,747(2)
Officer 1997 100,000 15,500 -- 3,534(2)
Steven M. Des Champs.................... 1999 $120,000(3) -- -- --
Chief Financial Officer and 1998 15,000(3) $ -- 50,000 --
Treasurer 1997 N/A N/A N/A N/A
</TABLE>
- ------------------------
(1) Consists of Company contributions to a 401(k) profit sharing plan in the
amount of $5,000, $5,000 and $4,750 in 1999, 1998 and 1997, respectively,
company paid life insurance premiums in the amount of $3,792 in 1999, an
automobile allowance of $4,188 and $1,984 in 1999 and 1997, respectively,
fees in the amount of $20,000, $20,000, and $70,000 paid for personally
guaranteeing bank lines of credit in 1999 and 1998 and 1997, respectively,
and personal use of a Company automobile and reimbursement for moving and
temporary living expenses in the amount of $4,909 and $76,370 in 1998 and
1997, respectively.
(2) Consists of Company contributions to a 401(k) profit sharing plan in the
amount of $4,083, $3,008 and $2,267 in 1999, 1998 and 1997, respectively,
and reimbursement for moving and temporary living expenses in the amount of
$29,739 and $1,267 in 1998 and 1997.
(3) Mr. Des Champs joined the Company on November 16, 1998, and resigned from
the Company effective January 28, 2000.
(4) Bonus amounts were paid in 1998 for work performed in 1997. No bonuses were
awarded to named executives for work performed in 1999 or 1998.
EMPLOYMENT AGREEMENTS
In February 1998, the Company entered into a five-year employment agreement
with Johan P. Finley as President and Chief Executive Officer. The agreement
provides for a monthly salary of $27,083 which is subject to annual increases as
recommended by the Compensation Committee and approved by the Board of
Directors. Mr. Finley also receives a grant of 25,000 stock options each year
during the term of the agreement, each of which vests over a five year period.
The agreement provides for annual bonuses in increments of $50,000 if the
Company meets certain earnings per share projections. The agreement provides
that Mr. Finley is entitled to an automobile of his selection, a life insurance
policy and certain other benefits that are generally available to salaried
employees of the Company. The agreement provides that Mr. Finley is entitled to
a payment in the amount of two times his base salary in effect upon a
termination of his employment by the Company, change in control of the Company,
or a sale of the majority of the Company's assets. The agreement also provides
that if a majority of the Company's stock is sold to a single purchaser or a
group of purchasers at a per share price equal to 130% of the average stock
5
<PAGE>
price for the previous 180 days, the Company will pay Mr. Finley a premium bonus
equal to two years of base compensation in effect at the time of sale.
In September 1995, the Company entered into an employment agreement with
Peter D. Cleary which renewed automatically for a one year term in
September 1998 and will continue to automatically renew for additional one-year
terms unless terminated by either party. In accordance with an income-based
formula, Mr. Cleary is eligible to earn an annual bonus of up to 32.5% of his
base salary. Under his employment agreement, Mr. Cleary may receive an annual
discretionary bonus of up to 15% of his base salary.
In March 1994, the Company entered into a three-year employment agreement
with Lona M.B. Finley which automatically renews for additional one-year terms.
In accordance with an income-based formula, Ms. Finley is eligible to earn a
bonus of up to 55% of her base salary. The agreement provides that Ms. Finley is
entitled to a payment in the amount of two times her base salary then in effect
upon a termination of her employment by the Company, a change in control of the
Company or a sale of a majority of the Company's assets.
Each employment agreement is subject to earlier termination for cause or
upon disability or death. In the case of disability, the Company has agreed to
continue salary payments for a six-month term. Messrs. Finley and Cleary have
agreed not to compete with the Company following termination of employment for a
period of two years.
The Company has a 401(k) profit-sharing plan and an employee stock purchase
plan for its employees and may adopt additional bonus, pension, profit-sharing,
retirement, or similar plans in the future.
STOCK OPTIONS
In the event of dissolution, liquidation, or a change in control of the
Company (as described in the Stock Option Plan), all outstanding options under
the Stock Option Plan will become exercisable in full and each optionee will
have the right to exercise his or her options or to receive a cash payment in
certain circumstances.
1999 STOCK OPTION GRANTS
The following table summarizes certain information concerning stock option
grants made in 1999 to the executive officers named in the summary compensation
table above. Shown are hypothetical gains that could be realized for the
respective options, based on assumed rates of annual compound stock price
appreciation of 5% and 10% from the date the options were granted over the
ten-year term of the options. Any amount realized upon exercise of the options
will depend upon the market price of the company's common stock at the time the
option is exercised relative to the exercise price of the option. There is no
assurance that the amounts reflected in this table will be realized.
<TABLE>
<CAPTION>
OPTION TERM POTENTIAL REALIZABLE
------------------------ VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SHARES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERMS
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED(1) 1999 ($/SHARE) DATE 5% 10%
- ---- ---------- ------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Johan P. Finley...................... 25,000 9.7% $2.63 1/31/09 $ 41,000 $105,000
Peter D. Cleary...................... 75,000 29.1% 4.37 6/30/09 206,000 522,000
Lona M.B. Finley..................... -- -- -- -- -- --
</TABLE>
- ------------------------
(1) Options become exercisable 20% per year over a five year period beginning
one year after the date of grant.
6
<PAGE>
1999 YEAR-END OPTION VALUE TABLE
The following table sets forth the number and aggregate dollar value of all
unexercised options held by the named executive officers as of the end of 1999.
At December 31, 1999, the exercise price of all options held by named executive
officers exceeded the market price of a share of common stock. There were no
options exercised by the named executive officers during 1999.
<TABLE>
<CAPTION>
NUMBER OF SHARES SUBJECT TO VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1999 DECEMBER 31, 1999
---------------------------- ----------------------------
NAME EXERCISABLE NONEXERCISABLE EXERCISABLE NONEXERCISABLE
- ---- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Johan P. Finley.............................. 5,000 45,000 $ -- $ --
Peter D. Cleary.............................. 47,000 97,000 -- --
Lona M.B. Finley............................. 119,591 12,000 -- --
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") of the Board of Directors is
responsible for establishing compensation policies for all executive officers of
the Company. The Committee establishes the total compensation for the executive
officers in light of these policies. The Committee is composed of two
non-employee directors and one employee director.
The following report describes the Company's executive compensation program
and discusses the factors considered by the Committee in determining the
compensation of the Company's Chief Executive Officer and other executive
officers for its 1999 fiscal year.
COMPENSATION PHILOSOPHY
The goals for the executive compensation program are to:
- Motivate executives to assist the Company in achieving superior levels of
financial and stock performance by closely linking executive compensation
to performance in those areas; and
- Attract, retain and motivate executives by providing compensation and
compensation opportunities that are comparable to those offered by other
companies in the financial services industry.
ELEMENTS OF THE EXECUTIVE COMPENSATION PROGRAM
The elements of the executive compensation program are designed to meet the
Company's compensation philosophy. Currently, the Executive Compensation Program
is comprised of annual cash compensation and longer-term stock compensation.
Annual cash compensation consists of base salary and performance bonuses.
For lower level employees, salaries are set to be competitive for the industry
or marketplace, as appropriate, and bonuses are designed to represent a
relatively small percentage of annual cash compensation. For higher-level
employees, base salaries are in the low to average range for the financial
services and gaming industries and potential bonuses constitute a high
percentage of annual cash compensation. The Company's executive compensation
bonus program has two components: (1) a bonus of up to a specified percentage of
base salary is based upon the Company's earnings performance for the year, and
(2) an additional bonus of up to 15% of base salary can be awarded at the
discretion of the Compensation Committee ("The Committee"). The executive
officers' compensation was established at the beginning of 1998 and ratified by
the Compensation Committee.
The structure and earnings goals for the executive performance bonus program
are reviewed and adjusted annually by the Committee. Discretionary bonus awards
for the executive officers are initially determined by the Chief Executive
Officer and are submitted to the Committee for discussion and
7
<PAGE>
approval. An executive officer's discretionary bonus is based upon the officer's
duties and responsibilities, individual performance and future potential. Many
of these assessments are subjective in nature and are made annually on a
case-by-case basis.
The Company's 1993 Stock Option Plan as amended provides for the granting of
options ("Options") to purchase up to an aggregate of 1,350,000 shares of Common
Stock to certain key employees, officers, directors and consultants of the
Company. Options granted under the Stock Option Plan may be either Options that
qualify as "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986 ("Incentive Options"), or those that do not
qualify as "incentive stock options" ("Non-Statutory Options"). The Stock Option
Plan is administered by the Board of Directors and the Committee, which
determines the persons who are to receive Options, the terms and number of
shares subject to each Option and whether the Option is an Incentive Option or a
Non-Statutory Option.
The Company currently anticipates that new executive officers would be
granted options at the time of hiring, which options would typically vest over a
number of years. The Committee believes these grants are in line with external,
competitive opportunities and provide a stronger, more direct motivation to
executive officers to increase stockholder value. The Company awarded options to
purchase a total of 258,000 shares in 1999 and options to purchase 26,000 shares
during the period from January 1, 2000 through April 7, 2000, all of which vest
over a period of five years.
As of the Record Date, options to purchase 751,000 shares of Common Stock
were outstanding, with exercise prices ranging from $1.13 per share to $10.05
per share, to 60 employees, 315,000 of which are currently exercisable. In
addition, pursuant to the Stock Option Plan, newly elected non-employee
directors of the Company each receive an automatic grant of a Non-Statutory
Option to purchase 10,000 shares of Common Stock on the date they first become a
director. As of May 14, 1998, non-employee directors also receive an annual
grant of an option to purchase 5,000 shares of Common. No other options have
been granted or are expected to be granted to directors who are not also
executive officers or other employees. Future grants of options to executive
officers and other employees under the Stock Option Plan are not determinable.
CEO COMPENSATION
In evaluating the compensation of Mr. Finley, the Committee considered both
qualitative and quantitative aspects of the Company's performance. Mr. Finley
has served as the Company's Chief Executive Officer since its inception.
Mr. Finley's base compensation was established after considering comparable data
in the industry, as well as the ongoing reliance by the Company on the
substantial sales efforts of Mr. Finley. The Committee negotiated an employment
agreement in February 1998 for Mr. Finley, which is described in "Executive
Compensation--Employment Agreements" above.
During 1999 the Company did not meet certain performance objectives spelled
out in Mr. Finley's employment agreement, and therefore no bonuses were paid to
Mr. Finley for 1999.
JOHAN P. FINLEY, JOEL M. KOONCE AND JAMES M. MORRELL
The Members of the Compensation Committee
8
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The following graph is a comparison as of December 31, 1999, of cumulative
total return on investment among the Company, the NASDAQ Composite Index ("The
NASDAQ Index") and an index of peer companies that the Company believe are
comparable to the Company in terms of their lines of business (the "Peer Group
Index"):
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG PDS FINANCIAL CORP.,
THE NASDAQ STOCK MARKET (U.S.) INDEX AND A PEER GROUP**
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PDS FINANCIAL CORP. PEER GROUP** NASDAQ STOCK MARKET (U.S.)
<S> <C> <C> <C>
12/94 $100.00 $100.00 $100.00
12/95 $25.80 $134.29 $141.34
12/96 $30.10 $95.26 $173.90
12/97 $116.12 $2,684.12 $213.07
12/98 $53.76 $2,240.84 $300.43
12/99 $29.04 $2,718.77 $555.99
</TABLE>
*$100 INVESTED ON 12/31/94 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
** PEER GROUP INDEX IS COMPRISED OF THE FOLLOWING COMPANIES:
<TABLE>
<CAPTION>
COMPANY TICKER SYMBOL
- ------- -------------
<S> <C>
Capital Associates Inc...................................... CAII
Casino Data Systems......................................... CSDS
Mikohn Gaming Corp.......................................... MIKN
Paul-son Gaming Corp........................................ PSON
PLM International Inc....................................... PLM
Shuffle Master Inc.......................................... SHFL
Sunrise International Leasing Corp.......................... SUNL
</TABLE>
ITEM 2: APPOINTMENT OF INDEPENDENT ACCOUNTANTS
At the meeting, a vote will be taken on a proposal to ratify the appointment
of Piercy, Bowler, Taylor & Kern by the Board of Directors to act as independent
accountants of the Company for the fiscal year ending December 31, 2000. Piercy,
Bowler, Taylor & Kern are independent accountants and auditors who have audited
the accounts of the Company beginning with the calendar year ended December 31,
1999.
9
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Representatives of Piercy, Bowler, Taylor & Kern will attend the shareholder
meeting. They will have the opportunity to make a statement if they desire to do
so, and will be available to answer appropriate questions that may be asked by
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPOINTMENT OF PIERCY,
BOWLER TAYLOR & KERN AS INDEPENDENT ACCOUNTANTS.
OTHER MATTERS
As of this date, the Board of Directors does not know of any business to be
brought before the meeting other than as specified above. However, if any other
matters properly come before the meeting, it is the intention of the persons
named in the enclosed proxy to vote such proxy in accordance with their judgment
on such matters.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of common stock and other equity securities of
the Company. Officers, directors and beneficial owners of more than ten percent
of the outstanding shares of Common Stock are also required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
ten-percent owners were satisfied.
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the next annual
meeting of shareholders must be received by the Secretary of the Company, PDS
Financial Corporation, 6171 McLeod Drive, Las Vegas, NV 89120, no later than
December 17, 2000, for inclusion in the Proxy Statement for such annual meeting.
Management may use discretionary authority to vote against any shareholder
proposal presented at the next annual meeting if: (1) such proposal has been
properly omitted from the Company's proxy materials under federal securities
law; or (2) notice of such proposal was not submitted to the Secretary of the
Company at the address indicated on the cover of this proxy statement by
December 17, 2000; or (3) the proponent has not solicited proxies in compliance
with federal securities law for the holders of at least the percentage of the
Company's voting shares required to carry the proposal.
SOLICITATION OF PROXIES
The Company will bear the cost of preparing, assembling and mailing the
Proxy Statement, Annual Report and other material which may be sent to the
shareholders in connection with this solicitation. Brokerage houses and other
custodians, nominees and fiduciaries may be requested to forward soliciting
material to the beneficial owners of stock, in which case they will be
reimbursed by the Company for their expenses in doing so. Proxies are being
solicited primarily by mail, but, in addition, officers and regular employees of
the Company may solicit proxies personally, by telephone, by facsimile or by
special letter.
The Board of Directors does not intend to present to the meeting any other
matter not referred to above and does not presently know of any matters that may
be presented to the meeting by others. However, if other matters come before the
meeting, it is the intent of the persons named in the enclosed Proxy to vote the
Proxy in accordance with their best judgment.
/s/ Lona M.B. Finley
Lona M.B. Finley, SECRETARY
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PDS FINANCIAL CORPORATION
6171 MCLEOD DRIVE, LAS VEGAS, NV 89120 PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Johan P. Finley and Peter D. Cleary, and each of
them, with power to act without the other and with all the right of
substitution in each, the proxies of the undersigned to vote all shares of
PDS Financial Corporation (the "Company") held by the undersigned on April 7,
2000, at the Annual Meeting of Stockholders of the Company, to be held on
Friday May 12, 2000, at 3:00 p.m., at the Alexis Park Hotel, 375 East Harmon
Avenue, Las Vegas, Nevada, and all adjournments thereof, with all powers the
undersigned would possess if present in person. All previous proxies given
with respect to the meeting are revoked.
Receipt of Notice of Annual Meeting of Stockholders and Proxy Statement is
acknowledged by your execution of this proxy. Complete, sign, date, and
return this proxy in the addressed envelope -- no postage required. Please mail
promptly to save further solicitation expenses.
SEE REVERSE SIDE FOR VOTING INSTRUCTIONS.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
1. Election of 01 Johan P. Finley 02 Peter D. Cleary 03 James L. Morrell
directors: 04 Lona M.B. Finley 05 Joel M. Koonce
/ / Vote FOR / / Vote WITHHELD
all nominees from all nominees
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)
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2. Ratification of the appointment of Piercy, Bowler, Taylor & Kern, Certified
Public Accountants & Business Advisors, A Professional Corporation, as
independent accountants for 2000.
/ / For / / Against / / Abstain
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS PROVIDED BY THE
UNDERSIGNED STOCKHOLDER, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL
NOMINEES FOR DIRECTOR NAMED IN ITEM 1 AND FOR PROPOSAL 2 LISTED HEREIN. UPON
ALL OTHER MATTERS, THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST INTERESTS
OF THE COMPANY.
Address Change? Mark Box / /
Indicate changes below:
Date
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Signature(s) in Box
PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR ON PROXY. IF HELD IN JOINT
TENANCY, ALL PERSONS MUST SIGN. TRUSTEES, ADMINISTRATORS, ETC., SHOULD
INCLUDE TITLE AND AUTHORITY. CORPORATIONS SHOULD PROVIDE FULL NAME OF
CORPORATION AND TITLE OF AUTHORIZED OFFICER SIGNING THE PROXY.
