<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
WFS FINANCIAL INC
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] Fee not required.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
WFS FINANCIAL INC LOGO
23 PASTEUR ROAD
IRVINE, CALIFORNIA 92618
March 25, 1997
TO OUR SHAREHOLDERS
You are cordially invited to attend the Annual Meeting of Shareholders of
WFS Financial Inc (the "Company") to be held at 10:00 a.m. on April 28, 1997, at
the Corporate Headquarters in Irvine, California. The Board of Directors and
management hope that you will be able to attend the Annual Meeting in person.
At the Annual Meeting, holders of the Company's Common Stock will be asked
to vote (i) for the election of Directors, (ii) to ratify the appointment of
Ernst & Young as the independent accountants for the Company for fiscal 1997 and
(iii) to approve the adoption of the 1996 Stock Option Plan. A formal Notice of
Annual Meeting of Shareholders, WFS' 1996 Annual Report, the Company's Proxy
Statement and a proxy card for the Annual Meeting accompany this letter.
To assure that your shares will be represented, we ask that you read the
enclosed materials and complete, sign, date and return the proxy card as soon as
possible. Your vote, regardless of the number of shares you own, is important.
We urge you to indicate your approval by voting FOR the matters indicated
in the Notice and ask that you vote promptly. If you attend the Annual Meeting,
you may vote in person if you desire, even if you have previously mailed your
proxy card.
On behalf of the Board of Directors, we thank you for your cooperation and
continuing support.
Sincerely,
Ernest S. Rady
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
WFS FINANCIAL INC LOGO
23 PASTEUR ROAD
IRVINE, CALIFORNIA 92618
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 1997
To the Shareholders of WFS Financial Inc:
The Annual Meeting of Shareholders of WFS Financial Inc, a California
corporation ("the Company") will be held at the Corporate Headquarters, 23
Pasteur Road, Irvine, California, on Monday, April 28, 1997, at 10:00 a.m., for
the following purposes:
1. To elect five Directors for terms expiring in 1999.
2. To ratify the appointment of Ernst & Young as the independent
accountants for the Company for fiscal 1997.
3. To approve the adoption of the WFS 1996 Stock Option Plan.
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
The Board of Directors has selected March 3, 1997, as the record date (the
"Record Date") for the Annual Meeting. Those holders of record of the Company's
Common Stock at the close of business on that date are entitled to notice of and
to vote at the Annual Meeting and any adjournment thereof.
All shareholders are requested to complete, date and sign the enclosed
proxy card promptly and return it in the accompanying postage prepaid
self-addressed envelope, whether or not they expect to attend the Annual
Meeting, in order to assure that their shares will be represented.
Since mail delays occur, it is important that the proxy card be mailed well
in advance of the Annual Meeting. Any shareholder giving a proxy has the right
to revoke it at any time before it is voted. If you receive more than one proxy
card because your shares are registered in different names or at different
addresses, each proxy card should be signed and returned to ensure that all your
shares will be properly voted.
By Order of the Board of Directors
Harriet Burns Feller
Secretary
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
FOR BANKS, BROKERAGE HOUSES AND NOMINEE HOLDERS, REQUESTS FOR ADDITIONAL
COPIES OF THE COMPANY'S PROXY MATERIALS SHOULD BE ADDRESSED TO HARRIET BURNS
FELLER, ESQ., WESTCORP, 23 PASTEUR ROAD, IRVINE, CALIFORNIA 92618.
<PAGE> 4
WFS FINANCIAL INC LOGO
23 PASTEUR ROAD
IRVINE, CALIFORNIA 92618
PROXY STATEMENT
APPROXIMATE DATE PROXY MATERIAL FIRST SENT TO SHAREHOLDERS: MARCH 28, 1997
This Proxy Statement constitutes the Proxy Statement of WFS Financial Inc,
a California corporation (the "Company" or "WFS"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Shareholders of the Company to be held on April 28, 1997, and
any adjournments thereof (the "Meeting").
MEETING DATE AND LOCATION
The Meeting to consider the business described below will be held on April
28, 1997, at 10:00 a.m., at the Corporate Headquarters, 23 Pasteur Road, Irvine,
California 92618.
PURPOSES
At the Meeting, the shareholders will consider and vote on approval of
proposals to (i) elect Class I Directors of the Company to serve until 1999,
(ii) ratify the appointment of the Company's independent public accountants for
fiscal 1997, and (iii) to approve the adoption of the WFS 1996 Stock Option
Plan.
RECORD DATE; SHAREHOLDERS ENTITLED TO VOTE
The close of business on March 3, 1997, is the Record Date (the "Record
Date") for determination of the shareholders of the Company entitled to notice
of and to vote at the Meeting. On that date there were approximately 25,684,168
shares of the Company's Common Stock, no par value ("Common Stock"), outstanding
and no shares of any other class of stock outstanding.
VOTE REQUIRED
Each share of the Common Stock outstanding on the Record Date will be
entitled to one vote with respect to approval of the various proposals submitted
to the shareholders. Ratification of the Company's selection of its independent
accountants is not required to be submitted for shareholder approval and
although shareholder approval is not binding, the Board of Directors has elected
to seek ratification by the affirmative vote of a majority of the shares of
Common Stock represented and voting at the Meeting.
MARKET VALUE OF STOCK
As of Monday, March 3, 1997, WFS Financial Inc Common Stock had a market
price of $14.625 per share. The Common Stock of WFS Financial Inc is traded on
NASDAQ.
SOLICITATION AND REVOCATION OF PROXIES
A form of proxy is being furnished herewith by the Company to each
shareholder, and, in each case, is solicited on behalf of the Board of Directors
of the Company for use at the Meeting for the purposes stated in the Notice of
Annual Meeting of Shareholders preceding this Proxy Statement. The entire cost
of soliciting these proxies will be borne by the Company.
Proxies duly executed and returned by shareholders and received by the
Company before the Meeting will be voted FOR the election of Class I Directors
specified herein; FOR the approval of the adoption of the WFS 1996 Stock Option
Plan and FOR the ratification of the selection of Ernst & Young as the Company's
<PAGE> 5
independent accountants for fiscal 1997, unless a contrary choice is specified
in the proxy. Where a specification is indicated as provided on the proxy card,
the shares represented by the proxy will be voted and cast in accordance with
the specification made. As to other matters, if any, to be voted upon, the
person designated as proxy will take such actions as he, in his discretion, may
deem advisable. The persons named as proxy and alternate were selected by the
Board of Directors of the Company. They are Officers and Directors of the
Company.
Your execution of the enclosed proxy will not affect your right as a
shareholder to attend the Meeting and to vote in person. Any shareholder giving
a proxy has a right to revoke it at any time by either (a) a later dated proxy,
(b) a written revocation sent to and received by the Secretary of the Company
prior to the Meeting, or (c) attendance at the Meeting and voting in person.
VOTING SECURITIES
The Company has outstanding Common Stock, of which approximately 25,684,168
shares were outstanding as of the Record Date. Only shareholders of record on
the books of the Company at the close of business on the Record Date will be
entitled to vote at the Meeting. Each share of the Common Stock is entitled to
one vote.
WFS 1996 STOCK OPTION PLAN PROPOSAL
The following discussion summarizes certain aspects of the proposed WFS
1996 Stock Option Plan (the "WFS Plan").
GENERAL
The WFS Plan was preliminarily reviewed and approved for placement as an
agenda item for the 1997 Annual Shareholders Meeting at a regular meeting of the
WFS Board of Directors held on February 4, 1996. The Board unanimously approved
and adopted the WFS Plan by action taken without a meeting by written consent on
June 28, 1996, pursuant to California Corporations Code Section 307(a). The
Board of Directors believes that the best interests of the Company and its
shareholders will be served by the adoption of the WFS Plan in that it will
enhance the ability of the Company and its subsidiaries to attract qualified
employees and Directors upon whose judgment, initiative and efforts the Company
is largely dependent for the successful conduct of its businesses. It is
anticipated that the acquisition of proprietary interests in the Company will
provide Optionees with a further incentive for continuing employment with the
Company and increasing their efforts on its behalf.
TERMS OF THE PLAN
The Company's Stock Appreciation Rights Plan (the "SAR Plan") was adopted
in 1995. It has granted approximately 509,336 SARs. The SAR Plan was
discontinued in July, 1996, after the Company adopted the WFS Plan on June 28,
1996, subject to shareholder approval. It is proposed that the Company make
effective the WFS Plan immediately upon its adoption by shareholders subject
only to necessary regulatory filings. The proposed WFS Plan will provide in the
aggregate, 550,000 shares of WFS Common Stock during the life of the Plan. The
expiration date of the WFS Plan will be in June, 2006. Thus far, 519,569 options
to purchase shares available under the WFS Plan have been granted, with vesting
subject to shareholder approval.
The WFS Plan will provide "incentive stock options" as defined by Internal
Revenue Code Section 422 to eligible employees of the Company. Options may be
granted under the WFS Plan to Directors who are not also employees of the
Company but they are not "incentive stock options," but rather "non-qualified
options." These "non-qualified options" may be granted to employees as well.
This feature of the WFS Plan gives the Company maximum flexibility to deal with
individual circumstances, where, for a number of reasons, an employee may prefer
to be granted "non-qualified options."
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The exercise of any option is conditioned upon the Optionee's prior
exercise of all SARs, if any, that the Optionee may have been granted pursuant
to the SAR Plan described herein.
Termination of Options
The WFS Plan provides the following termination provisions relative to
options. Options which remain unexercised under the Plan terminate on the date
fixed for termination. If prior to the termination date, an Optionee ceases
employment with WFS for any reason, the Options previously granted to that
Optionee terminate. However, there are certain exceptions. In the event
employment is terminated for any reason other than for violation of duty, the
Optionee may, at any time within a period of three (3) months after ceasing to
be employed with WFS, exercise the option to the extent that option was
exercisable on the date of employment termination. There are various other
provisions relating to termination of options granted under the WFS Plan
relative to death and disability. These provisions allow for exercise of vested
options for a period up to one year after death or disability.
10% Shareholders
The WFS Plan provides that incentive stock options that are granted to
employees who are holders of 10% or more of the shares of the Company may only
be granted for up to five (5) years from the date of grant and the exercise
price for such options must be at least 110% of the fair market value of a share
of the Company on the date of grant, as required by the Internal Revenue Code.
Acceleration of Exercise Under Special Circumstances
The WFS Plan provides the Compensation Committee of the Board of Directors
the authority, upon the occurrence of special circumstances, to accelerate the
exercisability of the options under the WFS Plan. The WFS Plan also contains a
provision that entitles an option holder to purchase, in whole or in part, the
full number of shares under the option in the event of an acquisition of more
than 50% of the issued and outstanding shares of the Company or other
substantial sale of assets or change of control of the Company.
ELECTION OF DIRECTORS
At the Annual Meeting, five nominees, Ernest S. Rady, Howard C. Reese, Joy
Schaefer, James R. Dowlan and Andrey R. Kosovych are nominated for election as
Class I Directors, each Director to serve until 1999 and until his or her
successor is elected and qualified. Nominees Rady, Reese, Schaefer and Dowlan
have been Directors since 1995. Mr. Rady is Chairman of the Board and CEO; Mr.
Reese is Vice Chairman of the Board and the retired President and CEO; Ms.
Schaefer is Vice Chairman of the Board and President; and Mr. Dowlan is Vice
Chairman and Senior Executive Vice President of WFS. Mr. Kosovych joined the
Company in March, 1997, having served as Westcorp's investment banker since 1985
and the Company's since its inception. The person named as proxy, and his
alternate, in the accompanying proxy have advised the Company of their intention
to vote shares covered by proxies received in favor of the election of the
nominees named above, each of whom have consented to be named and have indicated
their intent to serve if elected. If any nominee becomes unavailable for any
reason, the proxy or his alternate in his or her discretion will vote for
substitute nominees of the Board, unless otherwise instructed.
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The following information is submitted concerning the Directors of the
Company, including nominees for election, Ernest S. Rady, Howard C. Reese, Joy
Schaefer, James R. Dowlan and Andrey R. Kosovych.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF DIRECTOR AGE SINCE POSITION
- ------------------------------ ---- -------- ------------------------------------
<S> <C> <C> <C>
Ernest S. Rady*............... 59 1995 Chairman of the Board, Director and
Chief Executive Officer
Howard C. Reese*.............. 65 1995 Vice Chairman, Director
Joy Schaefer*................. 37 1995 Vice Chairman, Director, President
James R. Dowlan*.............. 59 1995 Vice Chairman, Director, Senior
Executive Vice President
Andrey R. Kosovych*........... 47 -- Nominee
Bernard E. Fipp**............. 56 1995 Director
Duane A. Nelles**............. 53 1995 Director
Robert S. Waligore**.......... 74 1995 Director
W. Lee Thyer**................ 54 1996 Director
</TABLE>
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* Class I Director, nominee for term expiring in 1999.
** Class II Director, to serve until 1998.
The following information is submitted concerning each of the Directors:
ERNEST S. RADY is Chairman of the Board and CEO of WFS Financial. He has
also served as Chairman of the Board of Western Financial Bank (the "Bank")
since 1992; as a Director since 1982; and as President and Chief Executive
Officer from June, 1994 to January, 1996. He also served as Chairman of the
Board of Western Thrift and Loan Association, a predecessor of the Bank, from
1972. He is also Chairman of the Board, President and CEO of Westcorp, the
parent company of the Bank. Mr. Rady is a principal shareholder, manager and
consultant to a group of companies engaged in real estate management and
development; property and casualty insurance; oil and gas exploration and
development; and distributing. Mr. Rady first became associated with other
members of the management of the Bank in 1968 while serving on the board of
directors of the Morris Plan Company of California.
HOWARD C. REESE, a Director, joined WFS in 1987 as President and Chief
Executive Officer of Westcorp Financial Services, Inc. (now WFS Financial Inc).
He retired as President and CEO in 1996, and is employed by WFS in a consulting
capacity. He began his career in consumer finance with Household Finance
Corporation in 1953 where he managed several branch offices in Southern
California. In 1963, he joined Fireside Thrift Company as a manager. He
progressed through the ranks as Supervisor, Assistant Vice President and
Regional Director, and ultimately to Operations Vice President in charge of 73
branch offices within the State of California. He presently serves on the board
of directors of the American Financial Services Association (AFSA).
JOY SCHAEFER serves as President, Chief Operating Officer and Vice Chairman
of the Board of Directors of WFS Financial. She served first as Senior Vice
President, Chief Financial Officer and Treasurer of the Bank since March, 1992,
and was elected Executive Vice President in January, 1994 and Senior Executive
Vice President and Chief Operating Officer in December, 1994. Ms. Schaefer
joined the Bank on January 1, 1990, as Assistant Vice President and Assistant
Treasurer. Prior to her association with the Bank, she was an Audit Manager in
the financial institutions group for Ernst & Whinney in the Long Beach,
California and Springfield, Illinois offices. Ms. Schaefer also held various
positions with Liberty National Bank in Oklahoma City, Oklahoma including
Assistant Controller, Commercial Audit Manager and Vice President Loan
Administration from 1985 to 1988.
JAMES R. DOWLAN has served as Vice Chairman and Senior Executive Vice
President-Dealer Center Division of WFS from 1995. He started as Senior Vice
President of the Bank from 1984 and then as Executive Vice President of the Bank
from 1989 until the Auto Finance Division of the Bank was combined into WFS in
1995. He is Chairman of the Board of Western Financial Insurance Agency, Inc.,
and President of Westhrift
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<PAGE> 8
Life Insurance Company, subsidiaries of the Bank; and President and CEO of WFS
Financial Auto Loans, Inc., and WFS Financial Auto Loans 2, Inc., subsidiaries
of WFS. Prior to his association with the Bank, Mr. Dowlan was Vice President,
Loan Administration of Union Bank where he held several positions since 1973,
the last position being Vice President. He served for several years on the
National Advisory Board, American Bankers Association and the Consumer Lending
Committee of the California Bankers Association. He is currently a member of the
Consumer Bankers Association.
BERNARD E. FIPP has been a Director of the Company since 1995. Mr. Fipp
graduated from the University of Oregon and served five years as a carrier-based
naval aviator and two years as a commercial pilot for United Airlines before
beginning his business career. Mr. Fipp spent 18 years in commercial real estate
development, general contracting, real estate acquisition and marketing.
Investments in automobile dealerships in 1988 brought him to his current
position, which he has held since 1991, as Dealer/Operator of Ritchey-Fipp
Chevrolet Geo in Poway, California. He is past president of the San Diego County
Chevrolet Dealer's Association and Chairman of the San Diego County New Car
Dealer's Association. Mr. Fipp has agreed that while he is serving as a Director
of the Company, Ritchey/Fipp Chevrolet Geo will not sell contracts to WFS.
DUANE A. NELLES has been a Director of the Company since 1995. Mr. Nelles
has been in the private, personal investment business since 1987. Prior to 1987,
Mr. Nelles was a partner in the international accounting firm which is now known
as Coopers & Lybrand L.L.P., which he joined in 1968 after receiving his M.B.A.
degree from the University of Michigan. Since 1988, Mr. Nelles has been a member
of the board of directors of QUALCOMM, Inc., a world leader in digital wireless
communications.
ROBERT S. WALIGORE has been a Director of the Company since 1995, and prior
thereto was a Director of Western Financial Auto Loans and of Western Financial
Auto Loans 2 from 1993 to 1995. He served as Senior Vice President and Chief
Financial Officer of the Bank from 1981 to 1990, when he retired. Mr. Waligore
served as President of the Thrift Guaranty Corporation of California from 1974
to 1981 and also served as Senior Vice President and a director of Fireside
Thrift Company from 1974 to 1981. He is a past President of the California
Association of Thrift and Loan Companies and is a past director of Commonwealth
National Bank, the American Industrial Bankers Association and the Board of
Trustees, Heald Colleges, San Francisco, 1965 to date.
W. LEE THYER is the Senior Executive Vice President of the Company in
charge of its Branch Division. Mr. Thyer joined WFS in 1988. Prior thereto Mr.
Thyer held various positions at Fireside Thrift and Loan Association, where he
worked for 22 years from 1966 to 1988. In addition, Mr. Thyer serves on the
Westcorp ESOP/401K Committee and was on the board of the California Financial
Services Association/Independent Section from 1988 to 1995.
ANDREY R. KOSOVYCH is nominated for election to the Board of the Company as
Vice Chairman, having served as the Company's and Westcorp's investment banker
since 1985. He will also be nominated for election to the Boards of the Bank and
Westcorp as Vice Chairman. Most recently, Mr. Kosovych was a Managing Director,
Investment Banking, and head of the Asset Finance Group at Donaldson, Lufkin &
Jenrette Securities Corporation since February, 1990. Prior to that, he founded
and led the asset backed effort at Drexel Burnham Lambert Inc., having
progressed from Vice President to Managing Director from 1984 to 1990; he also
served as Vice President, Investment Banking, at LePercq, de Neuflize & Co. Inc.
from 1983 to 1984. Mr. Kosovych began his professional career as an attorney,
working at Dewey, Ballantine, Bushby, Palmer & Wood from 1974 to 1983. During
his tenure as an investment banker, Mr. Kosovych managed almost $9 billion of
financings for the Westcorp family of companies, including the Company's and
Westcorp's initial public offerings, the Bank's subordinated debt offerings and
numerous auto loan securitizations, and acted as financial advisor on a variety
of strategic issues.
BOARD COMMITTEES
Audit Committee
WFS has a standing Audit Committee, consisting at present of Mr. Nelles
(Chairman), Mr. Waligore and Mr. Reese. The functions of the Audit Committee are
to make recommendations to the Board with
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respect to the engagement of the independent public accountants of WFS, to
review the effectiveness of WFS' system of internal controls, and to review,
upon the request of management, professional services to be provided to WFS by
outside auditors. WFS has contracted with its outside auditors to perform
expanded audit procedures previously performed by an internal audit department.
These expanded audit functions are overseen by The Director of Safety and
Soundness. The Director of Safety and Soundness reports to the Audit Committee.
The Audit Committee of WFS was formed in 1995 and met four times in 1996.
Compensation Committee
WFS has a standing Compensation Committee whose current members are Mr.
Reese (Chairman), Mr. Nelles and Mr. Fipp. The Compensation Committee reviews
and approves recommendations for annual salaries and other compensation of
employees paid by WFS and reviews and sets the levels of compensation of senior
management, as well as establishing policies applicable to, performance related
to, and bases for compensation. The Compensation Committee of WFS was formed in
1995 and held four meetings in 1996.
Executive Committee
WFS has a standing Executive Committee which has the powers of the Board of
Directors, except as precluded by law and the bylaws of WFS. The Executive
Committee is comprised of Messrs. Rady, Reese, Thyer and Dowlan and Ms.
Schaefer. The Executive Committee of WFS was formed in 1995 and met 31 times in
1996.
MEETINGS OF THE BOARD
The Board of Directors of WFS had a total of 4 meetings during 1996. All
Directors have attended at least 75% of the meetings of the Board of Directors
and committees on which they serve.
COMPENSATION OF DIRECTORS
Each Director who is not also an employee of WFS or any of its subsidiaries
receives $2,500 per Board Meeting attended and $750 for each committee meeting,
which is not held in conjunction with a Board Meeting, attended. Directors who
are also employees of WFS or any of its parent or subsidiary companies are not
compensated for their services as Directors.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following information is provided with respect to the Executive
Officers of WFS who are not Directors. Effective January, 1997, various
administrative departments of Westcorp were transferred to WFS, as part of a
restructuring plan to align more closely the administrative functions with those
operations that they assist. Some employees providing administrative services to
WFS will remain at Westcorp, the ultimate parent of WFS, and provide those
services at fair market value to WFS, while remaining Officers of WFS.
<TABLE>
<CAPTION>
OFFICER
NAME POSITION AGE SINCE
---------------------------------- ------------------------------------- --- -------
<S> <C> <C> <C>
Lee A. Whatcott................... Executive Vice President and 37 1992
Chief Financial Officer
Richard Stephan................... Executive Vice President and Chief 58 1994
Information Officer
Harriet Burns Feller.............. Executive Vice President, Secretary 54 1991
and General Counsel
Jerry DeVito...................... Executive Vice President 33 1997
Anne FitzGerald................... V.P., Director of Human Resources 37 1995
Mark Olson........................ V.P., Controller 33 1995
J. Keith Palmer................... V.P., Treasurer 36 1995
Jeffrey D. Pratt.................. V.P., Director of Safety and 37 1996
Soundness
</TABLE>
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<PAGE> 10
LEE A. WHATCOTT has served as Executive Vice President since 1996, after
serving as Senior Vice President and Chief Financial Officer since 1995. Mr.
Whatcott joined the Bank in 1988 and became Vice President, Controller in 1992.
Prior to joining the Bank, he was employed by what is now known as Ernst & Young
LLP, independent auditors, and an international accounting firm. Mr. Whatcott is
licensed as a Certified Public Accountant in the state of California and is a
member of the American Institute of Certified Public Accountants.
RICHARD W. STEPHAN has served as Executive Vice President and Chief
Information Officer of WFS since 1996 and of the Bank since 1994. He has served
as the Chief Information Officer of the Bank since joining the organization in
1994. Mr. Stephan has over 20 years of experience in the Information Technology
field with the last 15 years in the financial institution services industry.
Prior to his association with the Bank, Mr. Stephan was an Executive President
of FiServ, a major provider of Information Services to the banking industry and
he was a partner with Ernst and Whinney. At Ernst & Whinney he managed the
consulting practice for the Western Region, served as the Senior Technology
Partner for the firm for the banking industry and was a member of the planning
committee for the firm-wide banking practice. Mr. Stephan is a member of the
Chief Information Officer National Association and is a Certified Systems
Professional.
HARRIET BURNS FELLER is Executive Vice President, Secretary and General
Counsel. She started as Vice President and General Counsel of the Bank in May,
1990, and was elected General Counsel and Secretary of WFS in 1991. Ms. Feller
was Executive Vice President and General Counsel of Mercury Savings from 1986 to
1990, Vice President and General Counsel of Ponderosa Homes from 1981 to 1986
and Vice President, Corporate Counsel at Ticor Title Insurance, which she joined
as litigation attorney in 1975. Ms. Feller served as Southern California
President of American Corporate Counsel in 1990 and is a member of various
professional associations. Ms. Feller is an active member of the California Bar
Association and has also passed the Bar Examinations in New York and
Connecticut, where she practiced prior to 1975.
JERRY DEVITO is joining the Company as Executive Vice President. He will
also be joining Westcorp as Senior Vice President. Prior to joining the Company,
Mr. DeVito was Senior Vice President, Investment Banking, at Donaldson, Lufkin &
Jenrette Securities Corporation since February, 1990, when he joined as an
Associate. Prior to that, he was employed by Drexel Burnham Lambert Incorporated
from 1987 to February, 1990, most recently as an Associate in the Corporate
Finance Department. As an investment banker, Mr. DeVito has had extensive
experience in asset securitization and specialty finance business including
public and private capital markets offerings, arranging credit facilities,
financial and strategic advisory work and merchant banking.
ANNE M. FITZGERALD serves as Vice President, Director of Human Resources.
She joined the Bank in 1995 as Vice President, Director of Human Resources and
was elected Vice President of the Company in January, 1996. Ms. FitzGerald has
over 15 years experience in the Human Resources field, and spent the last 5 1/2
years, prior to joining Westcorp, working for Pepsi Cola, ultimately as Director
of Human Resources. Previous experience includes various Human Resources
positions working for Pier 1 Imports and Texas Instruments. Ms. FitzGerald holds
her Masters in Labor and Industrial Relations from Michigan State University and
her Masters in Business Administration from Southern Methodist University.
MARK K. OLSON has been Vice President, Controller of the Company since
December, 1995. He joined the Bank in 1991 as Accounting Systems Director and
has held various positions since that time. Prior to joining the Bank, Mr. Olson
was employed by what is now known as Ernst & Young LLP, independent auditors, an
international accounting firm. Mark is a licensed Certified Public Accountant in
the state of California and is a member of the American Institute of Certified
Public Accountants.
J. KEITH PALMER is Vice President, Treasurer of WFS since 1995, after
serving as Assistant Vice President and Treasurer of the Bank since March, 1993,
and then as Vice President and Treasurer since December, 1994. Prior to joining
the Bank in 1993, Mr. Palmer served as a Capital Markets Examiner with the
Office of Thrift Supervision from 1991 to 1993. From 1986 to 1991, Mr. Palmer
served in various capacities with the Office of Thrift Supervision. Mr. Palmer
has worked in the banking industry for 12 years.
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<PAGE> 11
JEFFREY D. PRATT serves as Vice President and Director of Safety and
Soundness for the Company, the Bank and Westcorp. Mr. Pratt joined the Bank in
1987 and during his tenure has managed the Internal Asset Review Department and
served as Real Estate Analyst and appraiser for the Bank's portfolios. Prior to
joining the Bank, Mr. Pratt was the sole proprietor of a real estate appraisal
and consulting business.
EXECUTIVE COMPENSATION
The following table sets forth the names of the persons who were, at
December 31, 1996, the chief Executive Officer of WFS and four most highly
compensated Executive Officers of WFS other than the Chief Executive Officer
(collectively, the "Named Executive Officers"). The Named Executive Officers
received their compensation shown in the following table from WFS or a related
company as noted.
SUMMARY COMPENSATION TABLE
Compensation described in this table is compensation paid by WFS unless
otherwise noted:
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------
WESTCORP WFS
ANNUAL COMPENSATION(1) STOCK STOCK AWARDS-
NAME AND PRINCIPAL ------------------------------------- OPTIONS(3) OPTIONS(4) SARS(5) ALL OTHER(6)
POSITION YEAR SALARY BONUS OTHER(2) (SHARES) (SHARES) (SHARES) COMPENSATION
- ------------------------ ---- -------- -------- -------- ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ernest S. Rady.......... 1996 $400,000 $116,000 $551,121 20,000 55,000 0 $ 48,372(7)
Chairman of the Board 1995 369,984 148,000 181,703 0 0 50,000 30,010
of Directors and Chief 1994 330,000 132,000 16,009 44,500 0 0 22,579
Executive Officer
Joy Schaefer............ 1996 225,000 62,250 189,446 15,000 44,000 0 35,047(8)
President, Chief 1995 185,000 61,605 0 8,000 0 40,000 16,611
Operating Officer and 1994 150,000 50,000 0 10,000 0 0 11,532
a Vice Chairman of the
Board of Directors
James R. Dowlan......... 1996 210,900 61,161 132,000 12,000 44,000 0 36,855(9)
Vice Chairman of the 1995 197,100 65,634 343,217 0 0 40,000 24,328
Board of Directors and 1994 175,000 58,000 8,423 9,400 0 0 17,833
Senior Executive Vice
President, Dealer
Center Division
Howard C. Reese......... 1996 201,080 58,313 154,002 1,500 51,334 0 35,448(10)
Vice Chairman of the 1995 201,080 66,960 445,978 0 0 46,667 22,251
Board of Directors 1994 175,000 58,275 4,883 8,300 0 0 16,263
W. Lee Thyer............ 1996 197,683 57,329 117,666 0 29,334 0 33,888(11)
Director, Senior 1995 138,336 46,066 0 0 0 26,667 18,939
Executive Vice 1994 124,000 27,000 0 6,300 0 0 16,318
President-Branch
Division
</TABLE>
- ---------------
(1) The compensation for Mr. Rady was paid by Westcorp.
(2) Includes the spread between market price and exercise price on Westcorp
options exercised plus the ($3.00 per share) spread between market price
and exercise price of WFS SARs exercised on July 23, 1996.
(3) Stock options for shares of Westcorp, the parent company, awarded in the
year indicated and exercisable in the future.
(4) Stock options for shares of WFS awarded July 23, 1996, exerciseable in the
future, and contingent upon shareholder approval of the WFS Plan. Awards
were also conditioned upon the recipient's exercise of all his/her SARs.
(5) SARs awarded by WFS pursuant to the SAR Plan for employees, employees who
are Directors and the independent Directors. The SAR Plan is described
below.
(6) Includes above market preferential interest accrued on salary deferral by
Executive under deferred compensation plans, plus Company contribution to
EDP4 (described below), 401(k) and ESOP. A contribution of $3.38 million
was funded for 1996 to the Savings Plan (401(k) and ESOP) which benefits
other employees in addition to those named in the Table. The Plan is
described below.
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<PAGE> 12
(7) Includes $6,609 in accrued above-market earnings on deferred compensation
plus $12,486 employer contribution to 401(k)/ESOP Plan plus $29,277
employer contribution to EDP4.
(8) Includes $150 in accrued above-market earnings on deferred compensation
plus $12,397 employer contribution to 401(k)/ESOP Plan plus $22,500
employer contribution to EDP4.
(9) Includes $3,337 in accrued above-market earnings on deferred compensation
plus $12,428 employer contribution to 401(k)/ESOP Plan plus $21,090
employer contribution to EDP4.
(10) Includes $2,933 in accrued above-market earnings on deferred compensation
plus $12,407 employer contribution to 401(k)/ESOP Plan plus $20,108
employer contribution to EDP4.
(11) Includes $1,723 in accrued above-market earnings on deferred compensation
plus $12,407 employer contribution to 401(k)/ESOP Plan plus $19,758
employer contribution to EDP4.
CERTAIN BENEFITS
In 1995, WFS established the SAR Plan, with respect to the Common Stock;
this SAR Plan was discontinued in July, 1996, after the Company adopted the WFS
1996 Stock Option Plan on June 28, 1996, subject to stockholder approval. These
Plans benefit employees and Directors in addition to those included in the
Summary Compensation Table. WFS employees are also participants in the benefit
plans provided by the Company's ultimate parent, Westcorp, whose Common Stock is
listed for trading on the New York Stock Exchange under the trading symbol
"WES". The description of various benefit plans which follows under the caption
"Compensation Pursuant to Bank and Westcorp Plans" relate to such Westcorp
plans.
Option Grants
The following table shows grants of stock options by Westcorp and by WFS to
the Named Executive Officers during 1996 in respect of shares of Westcorp's and
WFS' Common Stock, respectively. No Stock Appreciation Rights were granted in
1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on option and SAR grants in fiscal
1996 to the Named Executive Officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZED
PERCENTAGE VALUE AT ASSUMED
OF ANNUAL RATES OF
WESTCORP TOTAL STOCK
OPTIONS ("W") OPTIONS/SARS EXERCISE OR APPRECIATION FOR
WFS OPTIONS GRANTED TO BASE PRICE OPTION TERM
("WF") EMPLOYEES IN (PER SHARE) EXPIRATION -------------------
NAME GRANTED(1)(2) FISCAL 1996 (2)($) DATE 5%($) 10%($)
- --------------------------- -------------- ------------ ------------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Ernest S. Rady............. 20,000(W) 4.28% $17.13 7/30/01 94,653 209,160
55,000(WF) 5.54% 18.00 1/23/01 151,966 335,807
Joy Schaefer............... 15,000(W) 3.21% 17.13 7/30/01 70,990 156,870
44,000(WF) 4.43% 18.00 1/23/01 97,263 214,926
James R. Dowlan............ 12,000(W) 2.57% 17.13 7/30/01 56,792 125,496
44,000(WF) 4.43% 18.00 1/23/01 97,263 214,926
Howard C. Reese............ 1,500(W) 0.32% 17.13 7/30/01 7,099 15,687
51,334(WF) 5.17% 18.00 1/23/01 133,735 295,521
W. Lee Thyer............... 10,000(W) 2.57% 17.13 7/30/01 56,792 125,496
29,334(WF) 2.95% 18.00 1/23/01 24,328 53,759
</TABLE>
- ---------------
(1) No SARs were granted by WFS to any Named Executive Officers in 1996.
(2) Westcorp and WFS options were each granted at the market price of the stock
at the date of the grant.
9
<PAGE> 13
Option Exercises and Fiscal Year-End Values
The following table summarizes pertinent information concerning the
exercise of Westcorp stock options and WFS SARs during 1996 by each of the Named
Executive Officers and the fiscal year-end value of unexercised options in
respect of Westcorp's and WFS's Common Stock. Named Executive Officers each
exercised all of their SARs on July 23, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SHARES NUMBER OF UNEXERCISED
ACQUIRED ON WESTCORP OPTIONS VALUE OF UNEXERCISED
EXERCISE ("W")/WFS OPTIONS IN-THE-MONEY
("O")(1) ("WF")/SARS AT OPTIONS/SARS
NUMBER OF VALUE 12/31/96(#) AT 12/31/96($)
SARS REALIZED EXERCISABLE("E")/ EXERCISABLE/
NAME EXERCISED(S) ($)(3) UNEXERCISABLE("U")(4) UNEXERCISABLE(2)(4)
- ------------------------------ ------------ -------- --------------------- --------------------
<S> <C> <C> <C> <C>
Ernest S. Rady................ 32,820(O) $386,121(O) 24,530E (W) $238,254E (W)
55,000(S) 165,000(S) 44,532U (W) 247,874U (W)
0E (WF) 0E (WF)
55,000U (WF) 0U (WF)
Joy Schaefer.................. 5,471(O) 57,445(O) 21,454E (W) 195,685E (W)
44,000(S) 132,000(S) 30,654U (W) 131,916U (W)
0E (WF) 0E (WF)
44,000U (WF) 0U (WF)
James R. Dowlan............... 0(O) 0(O) 3,969E (W) 37,063E (W)
44,000(S) 132,000(S) 17,182U (W) 51,669U (W)
0E (WF) 0E (WF)
44,000U (WF) 0U (WF)
Howard C. Reese............... 0(O) 0(O) 3,665E (W) 34,847E (W)
51,334(S) 154,000(S) 6,077U (W) 42,218U (W)
0E (WF) 0E (WF)
51,334U (WF) 0U (WF)
W. Lee Thyer.................. 13,137E (W) 120,881E (W)
3,040(O) 29,664(O) 18,354U (W) 66,419U (W)
44,000(S) 132,000(S) 0E (WF) 0E (WF)
29,334U (WF) 0U (WF)
</TABLE>
- ---------------
(1) Westcorp Options.
(2) Options based on the closing price on the New York Stock Exchange of
Westcorp Common Stock on December 31, 1996 ($21.875) and the closing price
on NASDAQ of WFS Common Stock on December 31, 1996 ($19.875).
(3) Value of exercise of SARs based on the closing price on NASDAQ of WFS Common
Stock on July 23, 1996 ($18.00).
(4) Named Executive Officers each exercised all of their SARs on July 23, 1996.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
Westcorp executed employment contracts in 1987 with Mr. Dowlan and Mr.
Reese, who are currently Named Executive Officers of the Company, certain
provisions of which are triggered by a change in control of Westcorp, but not of
WFS. Under the agreements, Messrs. Dowlan and Reese are guaranteed employment
for a period of 24 months from the initiation of change of control proceedings
at the salary level in effect at initiation of the change of control process.
Should Messrs. Dowlan or Reese be terminated other than for cause within 24
months following a change of control of Westcorp, the obligations to them under
the employment contracts will be obligations of Westcorp, not of WFS. The actual
amount due to either would depend upon when a change of control of Westcorp
occurs, and how long thereafter either were terminated. If
10
<PAGE> 14
a change of control and termination occurred as of the date hereof, the maximum
amounts due from Westcorp would be approximately $500,000 for each of Mr. Dowlan
and Mr. Reese. Westcorp reserves the right to terminate the agreements for
cause, which includes fraud or other misconduct of the employees. The term of
the agreements commenced on September 5, 1987 and continues until Mr. Dowlan or
Mr. Reese, as the case may be, is terminated with or without cause. If either
Mr. Dowlan or Mr. Reese are terminated for cause, all benefits under the
agreement are forfeited.
Westcorp executed letter employment agreements with Mr. Kosovych and Mr.
Jerry DeVito in March, 1997. While each employment is "at will" and subject to
certain other terms, the agreement provides for each to receive six months of
continued compensation, subject to certain terms, if his employment is
terminated before the completion of one year. The agreements also provide for
Westcorp stock option grants, pursuant to the 1991 Westcorp Stock Option Plan,
of options relating to 50,000 shares to Mr. Kosovych and 40,000 shares to Mr.
DeVito.
Compensation Pursuant to SAR Plans
In 1995, WFS adopted two SAR plans, the Employee Stock Appreciation Rights
Plan ("Employee SAR Plan") and the Directors Stock Appreciation Rights Plan
("Director SAR Plan") (together the "Plans") whereby WFS Stock Appreciation
Rights ("SARS") may be granted to Officers, Directors and key employees as
determined by the Board of Directors of WFS; both Plans are separate from
benefit plans maintained by the Bank or Westcorp. The Plans are for the benefit
of certain WFS employees (the Employee SAR Plan) and employees who are also
Directors and independent Directors (the Directors SAR Plan) and were designed
to provide a method whereby Directors, Officers and employees of WFS who are
largely responsible for the management, growth and financial success of WFS may
be offered incentives and rewards which encourage them to increase their
interest in the market performance of the Common Stock of WFS and to remain in
the employ of WFS. During 1995, 509,336 SARs were granted. No SARs were granted
in 1996.
In July 1996, the Company elected to discontinue its ongoing SAR plan,
having determined that the Plan introduced at the time of the Initial Public
Offering had met its objectives. Any employee electing to voluntarily exercise
Stock Appreciation Rights at this time, was eligible for a one-time grant of WFS
Options. All current employees have voluntarily exercised their SARs. WFS
adopted the WFS Plan designed to replace its SAR Plan to eliminate quarterly
income volatility resulting from the accounting treatment of SARs. The adoption
of the WFS Plan, and grants thereunder, were conditioned upon stockholder
approval of the Plan.
Compensation Pursuant to Bank and Westcorp Benefit Plans
During 1996, the Company's Executive Officers participated in various
benefit plans maintained by the Bank and Westcorp, as described in further
detail below. WFS does not currently maintain any benefit plans independent of
those discussed below as maintained by the Bank and Westcorp, except for the WFS
Plan.
Executive Deferral Plans
Certain senior Executives of WFS are eligible to participate in Westcorp's
1985 Executive Deferral Plan (the "1985 EDP"). A participant in the 1985 EDP may
defer up to 75% of his or her gross annual salary and the participant's employer
will match contributions up to 5% of the gross annual salary. After the seventh
year of participation, the participant receives a lump sum distribution in the
amount of the first four years' deferrals plus interest thereon. Through the
lump sum distribution in year 7, interest on the deferred compensation and
matching contributions in the 1985 EDP accrues at the Moody's Investor Service
Seasoned Corporate Bond Rate ("Moody's Rate") plus 3%. Upon ten years
participation in the 1985 EDP or retirement at the age of 65 or later, a
participant's account yields a higher compound interest rate. Upon retirement at
the later of reaching age 65 or 10 years in the 1985 EDP, interest accrues at
the Moody's Rate plus 8%. The 1985 EDP also stipulates that benefits of the 1985
EDP may become 100% vested for all participants at the option of management if
there is a hostile takeover or non-negotiated takeover, or acquisition of
Westcorp by another company.
11
<PAGE> 15
Certain senior Executives of WFS are also eligible to participate in
Westcorp's 1988 Executive Deferral Plan (the "1988 EDP"). A participant in the
1988 EDP may defer up to 5% of his or her base annual salary and the
participant's employer will match contributions up to 5% of the base annual
salary. Upon ten years participation in the 1988 EDP or retirement at the age of
65 or later, the participant is paid a monthly amount based on amounts deferred
less certain amounts paid by the employer prior to such the tenth year of
participation. Interest on deferred amounts and matching contributions accrues
at the Moody's Rate plus 3%. The 1988 EDP also stipulates that benefits may
become 100% vested for all participants at the option of management if there is
a hostile takeover or non-negotiated takeover or acquisition of Westcorp by
another Company.
Certain senior Executives of WFS are also eligible to participate in
Westcorp's 1992 Executive Deferral Plan (the "1992 EDP"). The 1992 EDP is
similar to the 1985 and 1988 EDPs, except that participants can defer between 5%
and 10% of his or her base annual salary but the employer makes no contributions
in the 1992 EDP. Distributions to participants in the 1992 EDP upon termination,
retirement and change in control of Westcorp differ from the terms of the 1985
and 1988 EDPs as follows: Upon termination of a participant's employment, his or
her termination benefits are paid in a lump sum within 90 days. The amount of
termination benefits depends on the number of years that the participant has
participated in the 1992 EDP. If less than 2 years, the participant receives his
or her account balance plus interest at the applicable interest rate minus 1%.
If such participation is more than 2 years and less than 4 years, the
participant receives his or her account balance plus interest at the applicable
interest rate. If such participation is more than 4 years, then the participant
receives his or her account balance plus interest at the applicable interest
rate plus 1%.
If a participant retires, the participant can elect to receive a lump sum
of their account balance or equal monthly payments over a 5, 10 or 15 year
period.
In the event of a change in control a participant receives his or her
distributions as if there was a termination. Change in control is defined as any
person becoming the beneficial owner of 50% or more of Westcorp's voting stock;
or during any 2 consecutive year period, individuals who at the beginning of
such period constitute the Westcorp Board of Directors cease for any reason to
constitute at least a majority thereof, unless the election or the nomination
for election by Westcorp's shareholders of each new Director was approved by a
vote of at least three-quarters of the Directors still in office who were
Directors at the beginning of the period; or Westcorp is liquidated or
consummates a merger or consolidation in which it is not the survivor; or
substantially all of Westcorp's and its subsidiaries' assets, in the aggregate,
are sold or otherwise transferred to parties which are not within the control
group in which Westcorp is a member.
The applicable interest rate payable on deferred compensation is the
Moody's Rate.
Effective September 1, 1995, Westcorp established a fourth Executive
Deferral Plan ("EDP4") for certain participating Executives as determined by the
Board of Directors. A participant in EDP4 may defer a portion of compensation
from a minimum of $2,000 per year to a maximum of 10% of base annual salary.
There is an employer match in EDP4 based upon business results and at the
discretion of the Board of Directors.
Additionally, employees required to take distribution from earlier EDP
plans, may elect to defer an additional amount up to the distribution they are
required to take. This additional deferral is not eligible for any Company
matching provisions. All deferrals are eligible for interest payments and
interest is credited to a participant's account at the Moody's Seasoned
Corporate Bond Rate. Participant's distributions are intended to occur only at
retirement age of 65, or 5 years of participation in EDP4, whichever is later,
or at termination. Participants receiving distributions can elect to receive
them paid out over five, ten or fifteen years or in a lump sum option.
Westcorp Stock Option Plans
1982 Stock Option Plan. Westcorp's incentive Stock Option Plan (the "1982
Stock Option Plan") covers 900,000 shares of Westcorp's Common Stock. Options
granted under the 1982 Stock Option Plan are intended to be "incentive stock
options" within the meaning of the Internal Revenue Code of 1986, as
12
<PAGE> 16
amended (the "Code") and, therefore, may not have an exercise price less than
the fair market value of the Common Stock at the date of grant, subject to
adjustment for a change in the character or amount of Westcorp's shares, except
that options granted to holders of more than 10% of Westcorp Common Stock,
including Mr. Rady, may not have exercise prices less than 110% of the fair
market value of the Common Stock on the date of grant. The 1982 Stock Option
Plan is administered by the Compensation Committee of the Board of Directors of
Westcorp. Such Compensation Committee determined the employees, including WFS
employees, who participated in the plan. Although the 1982 Stock Option Plan
expired in 1992, there are outstanding options under such plan which may be
exercisable until 1996, unless sooner terminated.
1991 Stock Option Plan. The 1991 Stock Option Plan covers 3,150,000 shares
of Westcorp Common Stock. Options granted under the 1991 Stock Option Plan may
be either "incentive" or "non-qualified" options. Employees of Westcorp, as well
as employees of WFS, and Directors of Westcorp, some of whom are also Directors
of WFS, may participate in the 1991 Stock Option Plan. Options granted under the
1991 Stock Option Plan have five year terms, unless sooner terminated by reason
of cessation of employment or permanent or total disability.
Consolidated Plan
In 1990, Westcorp consolidated its Employee Stock Ownership and Salary
Savings Plan and its Employee Stock Ownership Plan into the Westcorp Employee
Stock Ownership and Salary Savings Plan (the "Consolidated Plan"). The
Consolidated Plan is administered by an Administration Committee appointed by
the board of Directors of Westcorp. All employees of WFS and its subsidiaries,
other than employees covered under certain collective bargaining agreements, are
eligible to participate in the Consolidated Plan after satisfaction of minimum
service and age requirements. Each year the Bank may, in its discretion, make an
ESOP contribution to the Consolidated Plan. Each participant is credited with
one "unit" for each $100 in earnings paid to such participant by the employer in
that year, and an additional "unit" for each full year of service to the
employer. If the Bank makes an ESOP contribution, it is allocated to each
participant's ESOP account maintained under the Consolidated Plan (the "ESOP
Contribution Account") in the same proportion as such participant's "units" bear
to the total number of "units" credited to all participants for that year.
Eligible employees may also elect to contribute from 1.0% to 10.0% of their
earnings to an account (the "Salary Savings Contribution Account"). Each year
the employer may, in its discretion, make a matching employer contribution which
is allocated to an account (the "Matching Contribution Account") for each
participant that makes a salary savings contribution for such year. If the Bank
makes a matching employer contribution, it is allocated to the matching
contribution account in the same proportion that each such contribution of up to
6.0% of a participant's earnings bears to the total of all such contributions of
up to 6.0% of participants' earnings. The Bank's annual contribution to a
participant's ESOP Contribution Account and Matching Contribution Account, and a
participant's contribution to such participant's Salary Savings Contribution
Account, may not exceed in the aggregate the lesser of 25.0% of such
participant's annual compensation or one-fourth of the dollar limitation
established under Section 415(b)(1)(A) of the Code.
The contributions of WFS or the Bank to a participant's ESOP Contribution
Account are invested in Westcorp Common Stock or approved investments at the
direction of the plan administrator. Each participant who has completed ten
years of service and has attained the age of 55 may also direct the plan
administrator to diversify the investments allocated to such participant's ESOP
Contribution Account. A participant's contributions to his or her Salary Savings
Contribution Account are invested by the plan administrator in fixed income,
stock or other permitted investment alternatives selected by the participant.
The plan administrator selects the investment alternatives for the amount
contributed by the employer to the Matching Contribution Account. Interest,
earnings, dividends, gains and losses are allocated to each participant's ESOP
Contribution Account, Salary Savings Contribution Account and Matching
Contribution Account, as the case may be, in the proportion such account bears
to the total accounts of all participants in that investment alternative. Shares
of Westcorp Common Stock allocated to any of a participant's accounts are voted
in accordance with the proxy of such participant. Each participant is also
entitled to direct the plan administrator regarding the exercise of rights,
other than voting rights, arising in connection with shares of Westcorp Common
Stock allocated to such participant's accounts.
13
<PAGE> 17
Participants have a 100% non-forfeitable interest in the value of their
Salary Savings Contribution Account at all times. The participant's interest in
his or her ESOP Contribution Account and Employer Matching Contribution Account
becomes 20.0% vested after the completion of three calendar years of service. An
additional 20.0% becomes vested each following year, until the participant
completes 7 years of service and the participant's interests become fully
vested. A participant is entitled to receive all benefits under the Consolidated
Plan, whether or not vested, upon death, permanent disability, or retirement at
age 65. Upon termination of employment for any other reason, participants will
receive the full amount of their Salary Savings Contribution Account and the
vested portions of their ESOP Contribution Account and Matching Contribution
Account.
In 1996, Westcorp made a $3.38 million contribution to the Consolidated
Plan.
REPORT OF THE COMPENSATION COMMITTEE
The Company applies a consistent philosophy to compensation for all
employees, including senior management. This philosophy is based on the premise
that the achievements of the Company result from the coordinated efforts of all
individuals working toward common objectives.
COMPENSATION PHILOSOPHY
Under the supervision of the Compensation Committee of the Board of
Directors, the Company has developed and implemented compensation policies,
plans and programs which seek to enhance the profitability of the Company, and
thus shareholder value, by aligning closely the financial interests of the
Company's senior managers with those of its shareholder. The Compensation
Committee endorses the belief that stock ownership by management and the
granting of stock options to senior Executives and key employees furthers that
goal and fosters decision-making by its key employees with the Company's
long-term safety and soundness in mind.
The compensation plans and programs are structured to integrate pay with
the Company's annual and long-term performance goals. The plans and programs are
designed to recognize initiative and achievement and to assist the Company in
attracting and retaining qualified Executives. In furtherance of these goals,
annual base salaries are generally set at or below competitive levels so that
the Company relies to a large degree on annual incentive compensation to attract
and retain corporate Officers and other key employees with outstanding abilities
and to motivate them to perform to the full extent of their abilities. For the
longer term, incentive stock options are awarded by the Company's ultimate
parent, Westcorp, the stock of which is traded on the New York Stock Exchange
and pursuant to the WFS Plan. Incentive compensation is variable and closely
tied to corporate, business unit and individual performance in a manner that
encourages a sharp and continuing focus on building profitability and
shareholder value. As a result of the increased emphasis on tying Executive
compensation to corporate performance, in any particular year the total
compensation of the Company's Executives may be more or less than the Executives
of the Company's competitors, depending upon the Company's or the individual
business unit's performance.
In evaluating the performance and setting the incentive compensation of the
Chief Executive Officer and other senior Executives, the Compensation Committee
takes into account their consistent commitment to long-term success of the
Company through conservative management of certain business units and aggressive
management of other business units as dictated by existing and anticipated
market conditions. Certainly the Compensation Committee expects and rewards
recognition by the Chief Executive Officer and senior Executives of both adverse
and advantageous market conditions for each of the Company's major divisions.
At the beginning of each year, performance goals to determine annual
incentive compensation are established for each business unit and for each
Executive. Financial goals include overall profitability, loan volume growth,
operating earnings, loan delinquency levels and return on equity and return on
assets, cost controls and productivity. The most weight is given to
profitability as it relates to established goals. Management goals were
established at the beginning of 1996 for those Executives and managers who do
not manage business units with direct financial goals. These goals were tailored
to the particular functions required
14
<PAGE> 18
to be performed. After the close of each fiscal year, generally in January,
performance against these goals and objectives is measured on both a
predetermined arithmetic method and, to a certain extent, on subjective
evaluation, in light of market conditions for the particular business unit. The
results of these evaluations are then considered by the Compensation Committee
when determining the amounts to be awarded (which appear as "Bonus" in the
Summary Compensation Table).
Certain business units of the Company performed in accordance with or in
excess of budget, and the senior Executives of those businesses received full
performance bonuses, while business units which did not meet performance goals
resulted in lesser or no bonuses for their respective managers.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In determining the Chief Executive Officer's compensation for 1996, the
Compensation Committee discussed and considered all of the factors discussed
above. In addition, target versus actual operating performance of the Company
overall, and various subjective performance criteria were utilized to determine
the extent to which the targeted annual bonus to the Chief Executive Officer
would be paid. The Committee analyzed his performance in comparison to specific
management objectives established at the beginning of the year. In addition, the
Compensation Committee evaluated how the Company as a whole performed, as
measured against its peers in California. Peer compensation information is
obtained from a variety of surveys and in 1996 a thorough review of market
information for the Company's size and location was undertaken. Peer information
for the Company's performance was compiled by Montgomery Securities. Taken into
account were various local economic environments, which put a degree of pressure
on the earning capacity of certain of the Company's business units.
The Compensation Committee considered the factors stated above in arriving
at the award of 1996 bonus compensation for the Chief Executive Officer as shown
in the Summary Compensation Table. The bonus compensation for 1996 reflects the
achievement of management objectives, including overall financial performance;
improved efficiencies and productivity; and expansion of the Company's
operations into new states. The Committee established 1997 management objectives
for the CEO.
STOCK OPTION GRANTS
Westcorp, the holding company, uses stock options as long-term incentives
and expects that it will continue to use this compensation alternative in the
future. In 1991, Westcorp adopted, and the shareholders approved, a new stock
option plan that made 3,150,000 shares of Common Stock of Westcorp available for
just such purposes and is described above. The Westcorp Compensation Committee
grants incentive stock options to employees of the Company and its subsidiaries
and views such grants less as compensation and more as an incentive mechanism.
Limited grants were made in 1996 to some Executives as shown in the Summary
Compensation Table, and to other key employees, which are in the appropriate
tables.
WFS established a similar stock option plan in 1996. It is described above
under the caption "WFS 1996 Stock Option Plan Proposal."
OTHER COMPENSATION PLANS
Other compensation benefits have from time to time been established for the
benefit of senior Executives and other managers and Officers of the Company,
each of which are discussed in the above materials. The results of these
compensation plans on the most highly compensated Executives are reflected in
the Compensation Table.
15
<PAGE> 19
POLICY REGARDING COMPLIANCE WITH I.R.C. SEC. 162(M)
Section 162(m) of the Internal Revenue Code, as enacted by the Omnibus
Budget Reconciliation Act of 1993, provides in general that, beginning in 1994,
compensation paid to certain Executives of publicly held corporations will not
be deductible for federal income tax purposes to the extent it exceeds
$1,000,000 per year unless certain conditions are met. It is the present policy
of the Compensation Committee that individual compensation shall not exceed the
deductibility requirements of Internal Revenue Code, Section 162 (m) and the
Company intends to take the necessary steps to comply, but also reserves the
right to enter into incentive and other compensation arrangements that do not so
comply when it determines that the benefits to the Company outweigh the cost of
the possible loss of federal income tax deductions.
COMPENSATION COMMITTEE
Howard C. Reese, Chairman
Bernard E. Fipp
Duane A. Nelles
16
<PAGE> 20
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph depicting the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock against
the cumulative total return of the S & P Small Cap 600 Index and a compiled peer
group (NASDAQ Financial Index) for the period commencing August 8, 1995, (the
date of initial registration of the Company's securities for public sale), for
the Company's stock, and July 31, 1995, for the index, and ending December 31,
1996.
The Stock Price Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent Westcorp specifically
incorporated this information by reference, and shall not otherwise be deemed
filed under such Acts.
COMPARISON OF 17 MONTH CUMULATIVE TOTAL RETURN*
AMONG WFS FINANCIAL INC, THE S & P SMALL CAP 600 INDEX
AND THE NASDAQ FINANCIAL INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD WFS S & P NASDAQ
(FISCAL YEAR COVERED) FINANCIAL INC SMALL-CAP 600 FINANCIAL
--------------------- ------------- ------------- ---------
<S> <C> <C> <C>
8/09/95 100 100 100
12/95 118 105 117
12/96 120 128 150
</TABLE>
* $100 invested on 8/09/95 in stock or on 7/31/95 in index -- including
reinvestment of dividends. Fiscal year ending December 31.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH THE BANK
Senior Note
The principal amount due under the Senior Note is $125 million. The Senior
Note provides for principal payments of $25 million per year, commencing on
April 30, 1999 and continuing through its final maturity, April 30, 2003.
Interest payments on the Senior Note are due quarterly, in arrears, calculated
at the rate of 7.25% per annum. The Senior Note is not secured. Pursuant to the
terms of the Senior Note, WFS agreed that until the Senior Note is paid in full,
WFS will not incur any other indebtedness which is senior to the obligations
evidenced by the Senior Note except for (i) indebtedness collateralized or
secured under the Line of Credit and (ii) indebtedness for similar types of
warehouse lines of credit.
17
<PAGE> 21
Line of Credit
The Line of Credit permits WFS to draw up to $400 million as needed to be
used in its operations. WFS does not pay a commitment fee for the Line of
Credit. The term of the Line of Credit commenced on May 1, 1995 and terminates
on December 31, 1999 except that such term may be extended by WFS for additional
periods up to 56 months under certain conditions. When secured, the Line of
Credit carries an interest rate equal to the Federal composite commercial paper
rate plus 10 basis points, with the margin increasing to 50 basis points to the
extent the obligation is not secured. Interest on the amount outstanding under
the Line of Credit is paid monthly, in arrears, and is calculated on the average
amount outstanding that month. The Bank has the right under the Line of Credit
to refuse to permit additional amounts to be drawn on the Line of Credit if, in
the Bank's discretion, the amount sought to be drawn will not be used to finance
the Company's purchase of contracts or other working capital requirements. At
December 31, 1996, no amounts were outstanding on the Line of Credit.
Short-Term Investments-Parent
WFS also invests its excess cash at the Bank under an Investment Agreement.
The Bank pays WFS an interest rate equal to the Federal composite commercial
paper rate on this excess cash. The weighted average interest rate was 5.53% and
5.80% for 1996 and 1995, respectively. The average balance of the excess cash
was $14.5 million and $4.0 million, and the interest income earned was $0.8
million and $0.2 million during 1996 and 1995, respectively. At December 31,
1996, WFS held $102 million of excess cash with the Bank under the Investment
Agreement.
WFS Reinvestment Contract
The Bank has entered into the WFS Reinvestment Contract ("RIC") pursuant to
which WFS receives all of the cash flows from the trusts of the securitization
transactions undertaken by WFS and the cash in each spread account for such
transactions to further invest as WFS determines, including to use in its
business activities. Under the terms of the RIC, the Company is obligated to pay
to the Bank all sums due from the Bank, when due by the Bank, under the terms of
the various reinvestment contracts to which the Bank is a party as to each
securitization transaction. The Bank is obligated pursuant to an agreement
between the Bank and Financial Security Assurance Inc. to provide collateral as
a condition of the various reinvestment contracts of the Bank being deemed
eligible investments for the trusts' cash flows and the spread account funds. As
consideration to the Bank for providing that collateral, WFS pays to the Bank a
fee equal to 12.5 basis points of the amount of collateral pledged by the Bank.
During 1996 WFS paid to the Bank $0.5 million for its use of collateral. Unless
earlier terminated, the term of the RIC is perpetual for so long as the RIC
constitutes an eligible investment as defined in any pooling and servicing
agreement or similar agreement related to the securitization trusts. During 1996
the average amount outstanding on the RIC was $393 million.
Tax Sharing Agreement
WFS and its subsidiaries (WFAL and WFAL2 and WFS Investment, Inc.) are
parties to a tax sharing agreement with Westcorp, the Bank and other
subsidiaries of Westcorp pursuant to which a consolidated federal tax return is
filed for all of the parties to the agreement. Under the agreement, the tax due
by the group is allocated to each member based upon the relative percentage of
each members taxable income to that of all members. Each member pays to Westcorp
its estimated share of that tax liability when otherwise due, but in no event
may the amount paid exceed the amount of tax which would have been due if a
member were to file a separate return. A similar process is used with respect to
California state income taxes, although California does not permit the filing of
a consolidated tax return. The term of the tax sharing agreement commenced on
the first day of the consolidated return year beginning January 1, 1994 and
continues in effect until the parties to the tax sharing agreement agree in
writing to terminate it.
18
<PAGE> 22
Management Agreements
WFS has entered into certain management agreements with the Bank and
Westcorp pursuant to which WFS pays its allocated portion of certain costs and
expenses incurred by the Bank and Westcorp with respect to services or
facilities of the Bank and Westcorp used by WFS or its subsidiaries, including
their principal office facilities, the dealer centers and branch offices of WFS
and overhead and employee benefits pertaining to Bank and Westcorp employees who
also provide services to WFS or its subsidiaries. The management agreements may
be terminated by any party upon 5 day's prior written notice without cause, or
immediately in the event of the other party's breach of any covenant,
obligation, or duty contained in the applicable management agreement or for
violation of law, ordinance, statute, rule or regulation governing either party
to the applicable management agreement.
WFS has entered into an agreement with Westran Services Corp ("Westran"),
which is a subsidiary of Westcorp, to receive travel related services. WFS
believes that the services rendered by Westran are reasonable and representative
of what such costs would have been had WFS used an unaffiliated entity.
TRANSACTIONS WITH MANAGEMENT
The Company leases its office space for its Encino, California dealer
center from Insurance Company of the West ("ICW"), an affiliate of Mr. Rady,
Chairman of WFS, the Bank and Westcorp. The basic annual rent is adjusted
annually and includes a portion of direct operating expenses. The Encino lease
expires in 1999. The Company paid approximately $104,345 in rent to ICW in 1996.
The Kearny Mesa Business Center is landlord to the Company's dealer center
location in San Diego. Kearny Mesa Business Center is an affiliate of Mr. Rady.
The total amount paid in 1996 pursuant to this lease, which expires in 2001, was
approximately $55,144.
RELATIONSHIP WITH THE BANK AND ITS AFFILIATES
In the opinion of the Company, the transactions described herein under the
caption "Transactions with the Bank" and "Transactions with Management" have
been on terms no less favorable to WFS than could be obtained from unaffiliated
parties, notwithstanding that the transactions were not negotiated at arm's
length. However, the transactions were approved by the entire Boards of
Directors of WFS, the Bank and Westcorp, including all of their respective
independent Directors. Furthermore, any future transactions with the Bank or
affiliated persons will continue to be approved by a majority of disinterested
Directors of the Company.
19
<PAGE> 23
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -- WFS
The following table sets forth, as of December 31, 1996, certain security
ownership information as to (a) the person who is beneficial owner of more than
5% of the outstanding shares of the Common Stock, (b) each Director and nominee
of the Company, (c) each of the named Executive Officers and (d) all Officers
and Directors of the Company as a group. Management knows of no person, other
than the person set forth below, who owns more than 5% of the outstanding shares
of Common Stock.
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK
OF WFS
BENEFICIALLY
OWNED AS OF
DECEMBER 31, PERCENT OF
NAME OF BENEFICIAL OWNER POSITION WITH WFS 1996(1) CLASS
- ---------------------------- ------------------------------- ----------------- ----------
<S> <C> <C> <C>
Ernest S. Rady.............. Chairman of the Board, Chief
Executive Officer and Director 11,000 --(2)
Joy Schaefer................ Vice Chairman of the Board of
Directors, President and Chief
Operating Officer 0 --(2)
James R. Dowlan............. Vice Chairman of the Board of
Directors, Senior Executive
Vice President 0 --(2)
Howard C. Reese............. Vice Chairman of the Board of
Directors 0 --(2)
W. Lee Thyer................ Senior Executive Vice
President, Director 2,200 --(2)
Andrey R. Kosovych.......... Nominee 20,000 --(2)
Directors and Executive
Officers as a Group
(16 persons).............. 40,150 --(2)
</TABLE>
- ---------------
(1) As of December 31, 1996, the Bank owns 81% of the Common Stock of the
Company and Westcorp owned 100% of the Common Stock of the Bank; therefore,
such indirect ownership of Management, Directors and nominees through their
ownership of Westcorp Common Stock is set forth separately in the chart
below.
(2) The percentages are calculated on the basis of the number of shares
outstanding. No person or group has a present right to acquire shares
pursuant to the exercise of stock options within 60 days of December 31,
1996. All shares are Common Stock. The Directors and Officers, as a group,
own less than 0.08%.
20
<PAGE> 24
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT -- WESTCORP
The Bank currently owns 81% of the shares of WFS' Common Stock. Under
California law, the Bank will, therefore, be able, acting alone, to elect the
entire Board of Directors of the Company and to control the vote on matters
submitted to a vote of the Company's stockholders, including extraordinary
corporate transactions. The Bank is wholly-owned by Westcorp and Mr. Rady
controls approximately 62% of Westcorp. The following table reflects the
ownership of Westcorp Common Stock as of December 31, 1996, by the Named
Executive Officers and the Directors and Executive Officers of WFS as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
OF
NAME OF BENEFICIAL PERCENT
BENEFICIAL OWNER POSITION WITH WFS OWNERSHIP OF CLASS(1)
- ---------------------------- -------------------------------- ---------- -----------
<S> <C> <C> <C>
Ernest S. Rady.............. Chairman of the Board, Chief
Executive Officer and Director 15,960,084(2) 61.39%
Joy Schaefer................ Vice Chairman of the Board,
President, Chief Operating
Officer and Director 32,830(3) 0.13
James R. Dowlan............. Vice Chairman of the Board,
Senior Executive Vice President
in charge of the Dealer Center
Division and Director 48,368(4) 0.19
Howard C. Reese............. Vice Chairman of the Board,
Director (President, Chief
Operating Officer through 1995) 46,334(5) 0.18
W. Lee Thyer................ Senior Executive Vice President
in charge of the Branch Division
and Director 28,519(6) 0.10
Andrey R. Kosovych.......... Nominee 5,000 --(7)
All Directors and Executive
Officers as a group
(16 persons).............. 16,432,262 62.35%
</TABLE>
- ---------------
(1) The percentages are calculated on the basis of the number of shares
outstanding, plus the number of shares which such person or group has a
present right to acquire pursuant to the exercise of stock options within 60
days of December 31, 1996. All shares are Common Stock.
(2) Includes beneficial ownership of 24,530 shares which may be acquired within
60 days of December 31, 1996, pursuant to stock options awarded under stock
option plans plus vested ESOP shares as of December 31, 1996. Mr. Rady
disclaims beneficial ownership of 182,047 shares owned by the DHM Trust and
36,015 shares owned by the DHM Trust #2.
(3) Includes beneficial ownership of 21,454 shares which may be acquired within
60 days of December 31, 1996, pursuant to stock options awarded under stock
option plans plus vested ESOP shares as of December 31, 1996.
(4) Includes beneficial ownership of 3,969 shares which may be acquired within
60 days of December 31, 1996, pursuant to stock options awarded under stock
option plans plus vested ESOP shares as of December 31, 1996.
(5) Includes beneficial ownership of 3,665 shares which may be acquired within
60 days of December 31, 1996, pursuant to stock options awarded under stock
option plans plus vested ESOP shares as of December 31, 1996.
(6) Includes beneficial ownership of 13,137 shares which may be acquired within
60 days of December 31, 1996, pursuant to stock options awarded under stock
option plans plus vested ESOP shares as of December 31, 1996.
(7) Less than 0.02%.
21
<PAGE> 25
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's Directors and Executive Officers, and persons who own more than 10% of
a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission reports of ownership and changes in ownership
of Common Stock and other equity securities of the Company. Officers, Directors
and greater than 10% shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on review of the copies of such reports furnished to the
Company or written representations that no other reports were required, the
Company believes that, during the 1996 fiscal year, all filing requirements
applicable to its Officers, Directors and greater than 10% beneficial owners
were complied with except that a Form 3, a Form 4 and Form 5 reports, covering
two transactions, were filed late by the Bank and its owners filing as a group
with respect to their greater than 10% beneficial ownerships.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
WHO ARE NOT MANAGEMENT
As of March 15, 1997, no person or group other than the Bank, and,
indirectly, Mr. Rady was known to the Company to have owned beneficially more
than 5% of the outstanding shares of the Company's Common Stock.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee, the international accounting
firm of Ernst & Young, certified public accountants, serves the Company as its
auditors at the direction of the Board of Directors of the Company. One or more
representatives of Ernst & Young are expected to be present at the Meeting and
will have an opportunity to make a statement if they desire to do so and to be
available to respond to appropriate questions.
This matter is not required to be submitted for shareholder approval, and
although shareholder approval is not binding, the Board of Directors has elected
to seek ratification by the affirmative vote of a majority of the shares
represented and voted at the Meeting.
SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Shareholders who wish to present proposals for action at the 1998 Annual
Meeting should submit their proposals in writing and in conformance with the
bylaws to the Secretary of the Company at the address of the Company set forth
on the first page of this Proxy Statement. Proposals must be received by the
Secretary no fewer than 30 days, nor more than 60 days, prior to the date of the
scheduled annual meeting for inclusion in next year's Proxy Statement and proxy
card. The scheduled date of the Annual Meeting may be obtained from the
Secretary after January 1, 1998.
ANNUAL REPORT TO SHAREHOLDERS
The Annual Report to Shareholders of the Company for the year ended
December 31, 1996, including audited consolidated financial statements, has been
mailed to the shareholders, but such report is not incorporated in this Proxy
Statement and is not deemed to be a part of the proxy solicitation material.
22
<PAGE> 26
OTHER MATTERS
The Management of the Company does not know of any other matters which are
to be presented for action at the Meeting. Should any other matters come before
the Meeting or any adjournment thereof, the persons named in the enclosed proxy
will have the discretionary authority to vote all proxies received with respect
to such matters in accordance with their judgments.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission (exclusive of Exhibits), is included in the
Annual Report. An additional copy will be furnished without charge to any person
from whom the accompanying proxy is solicited upon written request to Harriet
Burns Feller, Esq., WFS Financial Inc, 23 Pasteur Road, Irvine, California
92618. If Exhibit copies are requested, a copying charge of $.20 per page will
be made.
BY ORDER OF THE BOARD OF DIRECTORS
Harriet Burns Feller
Secretary
Irvine, California
March 25, 1997
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN, AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND YOUR
COOPERATION WILL BE APPRECIATED.
23
<PAGE> 27
REVOCABLE PROXY
WFS FINANCIAL INC
23 Pasteur Road
Irvine, California 92618
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF THE SHAREHOLDERS OF WFS FINANCIAL INC ON APRIL 28, 1997
The undersigned appoints Ernest S. Rady (and in his absence or
inability to serve, Joy Schaefer as alternate proxy) with the power to appoint
his substitute, as proxy and hereby authorizes him and his alternate to
represent and to vote all of the shares of Common Stock held of record by and
standing in the name of the undersigned on March 3, 1997, at the Annual Meeting
of Shareholders of WFS FINANCIAL INC to be held April 28, 1997, or any
adjournment thereof, in accordance with the instructions below and IN FAVOR OF
ANY PROPOSAL AS TO WHICH NO INSTRUCTION IS INDICATED.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE BY FILING WITH THE SECRETARY OF THE COMPANY AN
INSTRUMENT REVOKING THIS PROXY OR A DULY EXECUTED PROXY BEARING A LATER DATE,
OR BY BEING PRESENT AT THE ANNUAL MEETING AND ELECTING TO VOTE IN PERSON.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3.
(PROXY CONTINUED ON REVERSE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 28
Please mark
your votes as
indicated in
this example. [X]
<TABLE>
<CAPTION>
WITHHOLD WITHHOLD
AUTHORITY AUTHORITY
to vote for to vote for any
all nominees INDIVIDUAL
FOR listed below nominee
<S> <C> <C> <C>
1. ELECTION OF DIRECTORS
Nominees: Ernest S. Rady, Howard C. Reese, [ ] [ ] [ ]
Joy Schaefer, James R. Dowlan
and Andrey R. Kosovych to serve as
Class I Directors of the Company.
WITHHOLD AUTHORITY to vote for any INDIVIDUAL
nominee. Write name of such nominee below.)
----------------------------------------------
FOR AGAINST ABSTAIN
2. RATIFICATION OF THE APPOINTMENT OF ERNST [ ] [ ] [ ]
& YOUNG AS THE INDEPENDENT AUDITORS
OF THE COMPANY FOR FISCAL YEAR 1997.
FOR AGAINST ABSTAIN
3. Approve the adoption of the WFS 1996 Stock [ ] [ ] [ ]
Option Plan.
4. OTHER BUSINESS. In accordance with the recommendation of the Company's
Board of Directors, the Proxy is authorized to vote upon such other business as may
properly come before the Meeting and any adjournments thereof.
</TABLE>
I expect to attend the Meeting. [ ]
Number of Shares Owned:
-------------
Signature(s) Date
---------------------------------------------------- ------------
Please date this Proxy and sign your name exactly as it appears on your stock
certificate(s). When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee, or guardian, please give
the full title as such. If a corporation, please sign in full corporate name
by President or other authorized Officer. If a partnership, please sign in
partnership name by authorized person.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
