<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:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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 Logo
23 PASTEUR
IRVINE, CALIFORNIA 92618
March 28, 2000
Dear Shareholder:
Your are encouraged to join us for WFS Financial Inc's ("WFS") Annual
Meeting of Shareholders to be held at 11:00 a.m. on Tuesday, May 23, 2000, at
our Corporate Headquarters here in Irvine, California. The Board of Directors
and management will be reviewing a very successful 1999 and presenting
strategies for WFS's continued success. You will have the opportunity to express
your views and ask questions.
The business items to be acted on during the meeting are listed in the
Notice of Annual Meeting and are described more fully in the Proxy Statement.
The Board of Directors has considered the proposals and recommends that you vote
FOR them.
Whether or not you plan to attend, we ask that you read the enclosed
materials and complete, sign, date and return the proxy card in the enclosed
envelope as soon as possible. Your vote, regardless of the number of shares you
own, is important. If you attend the Annual Meeting, you may vote in person if
you desire, even if you have previously mailed your proxy card.
We look forward to seeing you at the meeting. On behalf of the Board of
Directors of WFS, I want to thank you for your continued support and confidence.
Sincerely,
/s/ ERNEST S. RADY
Ernest S. Rady
Chairman of the Board
<PAGE> 3
WFS Logo
23 PASTEUR
IRVINE, CALIFORNIA 92618
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 23, 2000
To the Shareholders of WFS Financial:
The Annual Meeting of Shareholders of WFS Financial Inc, a California
corporation, will be held at the Corporate Headquarters, 23 Pasteur, Irvine,
California, on Tuesday, May 23, 2000, at 11:00 a.m., for the following purposes:
1. To elect three Directors for terms expiring in 2002.
2. To ratify the appointment of Ernst & Young LLP as the independent public
accountants for WFS for fiscal 2000.
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has selected March 27, 2000, as the Record Date (the
"Record Date") for the Annual Meeting. Those holders of record of WFS'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
Guy Du Bose
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 WFS'S PROXY MATERIALS SHOULD BE ADDRESSED TO GUY DU BOSE, ESQ., WFS
FINANCIAL INC, 23 PASTEUR, IRVINE, CALIFORNIA 92618.
<PAGE> 4
WFS Logo
23 PASTEUR
IRVINE, CALIFORNIA 92618
------------------------
PROXY STATEMENT
APPROXIMATE DATE PROXY MATERIAL FIRST SENT TO SHAREHOLDERS:
MARCH 31, 2000
This Proxy Statement constitutes the Proxy Statement of WFS Financial Inc,
a California corporation, in connection with the solicitation of proxies by the
Board of Directors of WFS for use at the Annual Meeting of Shareholders to be
held on May 23, 2000, and any adjournments thereof (the "Meeting").
MEETING DATE AND LOCATION
The Meeting to consider the business described below will be held on May
23, 2000, at 11:00 a.m., at the Corporate Headquarters, 23 Pasteur, Irvine,
California 92618.
PURPOSES
At the Meeting, the shareholders will consider and vote on proposals to (i)
elect Class II Directors of WFS to serve until 2002, and (ii) ratify the
appointment of Ernst & Young LLP as WFS's independent public accountants for
fiscal 2000.
RECORD DATE; SHAREHOLDERS ENTITLED TO VOTE
The close of business on March 27, 2000, is the Record Date for
determination of the shareholders of WFS entitled to notice of and to vote at
the Meeting. As of the Record Date there will be 28,423,338 shares of WFS's
Common Stock outstanding, no par value, subject to such additional shares as may
be exercised pursuant to stock options. No shares of any other class of stock
are 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 appointment of Ernst & Young LLP as
WFS's independent public 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 Thursday, March 23, 2000, WFS Common Stock had a market price of
$17.75 per share. The Common Stock of WFS is traded on the NASDAQ.
SOLICITATION AND REVOCATION OF PROXIES
A form of proxy is being furnished by WFS to each shareholder, and, in each
case, is solicited on behalf of the Board of Directors of WFS 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 WFS.
<PAGE> 5
Proxies duly executed and returned by shareholders and received by WFS
before the Meeting will be voted FOR the election of Class II Directors
specified herein and FOR the ratification of the appointment of Ernst & Young
LLP as WFS's independent public accountants for fiscal 2000, 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 or she, in his
or her discretion, may deem advisable. The persons named as proxy and alternate
were selected by the Board of Directors of WFS. Mr. Rady is Chairman of the
Board of Directors and Ms. Schaefer is Vice Chairman of the Board of Directors
and an officer of WFS.
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 WFS prior to
the Meeting, or (c) attendance at the Meeting and voting in person.
VOTING SECURITIES
As of the Record Date there will be 28,423,338 shares of WFS's Common Stock
outstanding, subject to such additional shares as may be issued upon exercise of
stock options. Only shareholders of record on the books of WFS 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.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, three nominees, Bernard E. Fipp, Stanley E. Foster
and Duane A. Nelles are nominated for election as Class II Directors, each
Director to serve until 2002 and until their successor is elected and qualified.
Mr. Fipp has been a Director since 1995, Mr. Foster since 1998 and Mr. Nelles
since 1995. The person named as proxy and their alternate in the accompanying
proxy have advised WFS 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 their alternate in
their discretion will vote for substitute nominees of the Board, unless
otherwise instructed.
THE BOARD OF DIRECTORS RECOMMENDS A FOR VOTE ON PROPOSAL 1.
The following information is submitted concerning the Directors of WFS,
including nominees for election, Bernard E. Fipp, Stanley E. Foster and Duane A.
Nelles.
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIRECTOR
NAME OF DIRECTOR AGE SINCE WFS FINANCIAL INC
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
James R. Dowlan*.................... 62 1995 Director
Bernard E. Fipp**................... 59 1995 Director
Stanley E. Foster**................. 72 1998 Director
Duane A. Nelles**................... 56 1995 Director
Ernest S. Rady*..................... 62 1995 Chairman of the Board of Directors
Howard C. Reese*.................... 68 1995 Director
Joy Schaefer*....................... 40 1995 Vice Chairman, Director and Chief
Executive Officer
</TABLE>
---------------------------------------------------------------------------
* Class I Director, to serve until 2001.
** Class II Director, to serve until 2002.
2
<PAGE> 6
The following information is submitted concerning each of the Directors:
JAMES R. DOWLAN has been a Director since 1995 and was Senior Executive
Vice President of the company from 1995 through January, 1999. He started as
Senior Vice President of Western Financial Bank ("Bank") in 1984 and then as
Executive Vice President of the Bank from 1989 until the Auto Finance Division
of the Bank was combined into WFS, its subsidiary, in 1995. He also served as
Chairman of the Board of Western Financial Insurance Agency, Inc., and Chairman
of Westhrift 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. 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 a graduate of the Pacific Coast Banking School, University of
Washington.
BERNARD E. FIPP has been a Director of WFS since 1995. Mr. Fipp graduated
from the University of Oregon and served five years as a carrier-based naval
aviator/officer and two years as a commercial pilot for United Airlines before
beginning his business career. Mr. Fipp has been active in commercial real
estate development, general contracting, real estate acquisition and marketing
since 1976. Investments in automobile dealerships in 1988 brought him into the
retail automobile industry where he acted as president of Ritchey-Fipp Chevrolet
for six years and served as president of the San Diego County Chevrolet Dealer's
Association and Chairman of the San Diego County New Car Dealer's Association.
Mr. Fipp is president of Fipp Investments LLC, a real estate acquisition,
management and development company.
STANLEY E. FOSTER has been President and Chief Executive Officer of Foster
Investment Corporation and its predecessor, Ratner Corporation, a real estate
and venture capital investment company headquartered in San Diego, California,
since 1954. Mr. Foster also serves as a director Postal Annex Plus, Inc.;
Accucom, Inc.; Cartronics, Inc.; Arborvita LLC; and Hot Topic, Inc. Mr. Foster
has been a director of WFS since 1998.
DUANE A. NELLES has been a Director of WFS 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.
ERNEST S. RADY is Chairman of the Board of WFS, a second tier subsidiary of
Westcorp, since 1995. He has also served as Westcorp's Chairman of the Board and
Chief Executive Officer since 1982 and its President from 1982 to 1999. He has
also Chairman of the Board, since 1992, a director since 1982, and Chief
Executive Officer from 1994 to early 1996 and again, from 1998 to present, of
Western Financial Bank, the parent of WFS. 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 beverage distribution.
HOWARD C. REESE, a Director, joined the company in 1987 as President and
Chief Executive Officer of Westcorp Financial Services, Inc. (now WFS). He
retired as President and CEO in 1996, and continues to serve 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.
JOY SCHAEFER is Chief Executive Officer and Vice Chairman of the Board of
Directors of WFS. She served first as Senior Vice President, Chief Financial
Officer and Treasurer of the Bank since
3
<PAGE> 7
March, 1992, and was elected Executive Vice President in January, 1994; and
Chief Operating Officer and Senior Executive Vice President in December, 1994.
She was elected President of WFS in February, 1996 and Chief Executive Officer
in December, 1997. 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 a manager in the financial institutions group now known as Ernst & Young
LLP, in the Long Beach, California and Springfield, Illinois offices, and with
Illinois National Bank in Springfield, Illinois. Ms. Schaefer also held various
positions with Liberty National Bank in Oklahoma City, Oklahoma, from 1985 to
1988.
COMMITTEES OF THE BOARD
WFS has a standing Audit Committee, consisting at present of Bernard E.
Fipp, Stanley E. Foster and Duane A. Nelles (Chairman). The functions of the
Audit Committee are to make recommendations to the Board with respect to the
engagement of WFS's independent public accountants; to review the effectiveness
of WFS's systems 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. The Audit Committee held
four meetings in 1999.
WFS has a standing Compensation Committee whose current members are Bernard
E. Fipp, Stanley E. Foster (Chairman) and Duane A. Nelles. The Compensation
Committee reviews and approves recommendations for annual salaries of employees
(hereinafter referred to as "associates") 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 basis for compensation. The
Compensation Committee held two meetings during 1999.
The Executive Committee has the powers of the Board of Directors except as
precluded by law and WFS's bylaws. The Executive Committee was comprised of
Messrs. Dowlan and Rady (Chairman) and Ms. Schaefer during 1999. While the
Executive Committee did not meet formally during 1999, they conducted business
by written consent on three occasions and discussed business matters on an as
needed basis by telephone throughout the year.
MEETINGS OF THE BOARD
The Board of Directors of WFS held a total of nine meetings during 1999.
All directors have attended at least 77% of the meetings of the Board of
Directors.
COMPENSATION OF DIRECTORS
Each director who is not also an officer of WFS, or any of its
subsidiaries, received $4,500 per quarterly Board meeting and $2,250 for
non-quarterly Board meetings attended, and $1,000 for each committee meeting
which is not held in conjunction with a Board meeting. Directors who are also
officers of WFS, or any of its subsidiaries, are not compensated for their
services as directors. Directors who attend a WFS and Westcorp board meeting on
the same day are compensated for only one of the two meetings.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee, the international accounting
firm of Ernst & Young LLP, certified public accountants, serves WFS as its
auditors at the direction of the Board of Directors of WFS. One or more
representatives of Ernst & Young LLP 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.
4
<PAGE> 8
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 of the appointment of Ernst & Young LLP by the affirmative
vote of a majority of the shares represented and voted at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A FOR VOTE ON PROPOSAL 2.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following information is provided with respect to the executive
officers of WFS who are not directors. Some officers providing services to WFS
are employed by related companies of WFS, and provide those services at fair
market value to WFS, while also serving as officers of WFS.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OFFICER
NAME POSITION AGE SINCE*
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Richard G. Banes............... Senior Vice President, Director of Audit Services 42 1999
Guy Du Bose.................... Senior Vice President, General Counsel and Secretary 45 1995
Donna J. Lesch................. Executive Vice President, Director of Human 40 1998
Performance
Dawn M. Martin................. Executive Vice President, Chief Information Officer 40 1997
Dennis Morris.................. Senior Vice President, Chief Credit Officer 35 1998
Cathy Mungon................... Senior Vice President, Director of Operations 49 1995
Mark Olson..................... Senior Vice President, Controller 36 1995
J. Keith Palmer................ Senior Vice President, Treasurer 39 1995
Richard W. Stephan............. Executive Vice President, Chief Technology Officer 61 1994
Lee A. Whatcott................ Senior Executive Vice President, Chief Financial 40 1992
Officer
Thomas Wolfe................... President, Chief Operating Officer 40 1998
</TABLE>
- --------------------------------------------------------------------------------
* Officer of WFS, Westcorp or the Bank.
The following is a brief account of the business experience of each
executive officer who is not a director.
RICHARD G. BANES joined WFS in May 1999 and serves as Senior Vice
President, Director of Audit Services. Mr. Banes received his B.S. degree in
Accounting from Arizona State University. He is a licensed Certified Public
Accountant in the state of California and is a member of the American Institute
of Certified Public Accountants and the Institute of Internal Auditors. Prior to
joining WFS, Mr. Banes was the Director of Management Audit from 1996 to 1999
for Avco Financial Services, a worldwide sub-prime consumer finance and auto
lending company. From 1993 to 1996 he was Audit Director for First Interstate
Bank, a major U.S. bank that was acquired in 1996 by Wells Fargo Bank. Prior to
First Interstate, Mr. Banes was a financial services audit professional at Ernst
& Young LLP.
GUY DU BOSE is Senior Vice President, General Counsel and Secretary of WFS
and the Bank; and Vice President, General Counsel and Secretary of Westcorp. He
started as Vice President and Legal Counsel of the Bank in November, 1992. Prior
to his association with the Company, Mr. Du Bose was Chief Operating Officer and
General Counsel of Guardian Federal Savings, Senior Vice President and General
Counsel of Mercury Federal Savings and Loan Association and Corporate Counsel of
Southern California Savings. He earned a B.A. from USC, a J.D. from Whittier
College and LL.M. from Cambridge University. Mr. Du Bose is an active member of
the California State Bar Association and a member of various professional
associations.
DONNA J. LESCH serves as Executive Vice President, Director of Human
Performance. The Human Performance team is responsible for payroll, compensation
and benefit programs, associate relations, career development programs, the
development and delivery of training, documentation/ forms, corporate
communications and supports associates in project management. Ms. Lesch has
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<PAGE> 9
over 20 years experience in the training, management and organizational
development arena. In 1995 she joined WFS, a subsidiary of the Bank. Previous to
joining WFS, from 1990 to 1995, she managed training functions at American
Savings Bank and before that, at Executrain. She graduated from the University
of Washington with a B.A. in Psychology/Education.
DAWN M. MARTIN is Executive Vice President and Chief Information Officer at
WFS. Ms. Martin joined WFS in April, 1997 as Senior Vice President, Manager of
Network Computing. In February, 1998 she was named Manager of Business Unit
Support. Prior to joining WFS, Ms. Martin was Senior Vice President and System
Integration Officer at American Savings Bank where she was employed from 1984 to
1997. Ms. Martin has more than 20 years of experience in Information Technology
within the financial services industry.
DENNIS MORRIS, Senior Vice President and Chief Credit Officer, has been
with WFS since January of 1998. His background includes over 10 years experience
in national indirect automotive finance and leasing with American Honda Finance
Corporation and Nissan Motor Acceptance Corporation. Among the many positions
held within these companies, Dennis was responsible for implementation of first
generation, custom developed credit scoring technology and risk based pricing in
both centralized and regionalized processing environments. He holds a B.S.
degree in Accounting from San Diego State University.
CATHY MUNGON has been Senior Vice President and Director of Operations
since 1999 after becoming Vice President of Financial Business Systems Support
and Operations for WFS in 1995. Ms. Mungon's career with the company began in
1981 when she joined the Bank as a member of the Systems/Training Department.
She was promoted to Assistant Vice President in 1985. In 1992 she was promoted
to Vice President of Systems/Training and Operations Support. Prior to joining
the company, Ms. Mungon was a training manager for Morris Plan and, previous to
Morris Plan, Nationwide Finance. Ms. Mungon has 28 years of consumer finance
experience.
MARK OLSON has served as our Controller since 1995 and was named Senior
Vice President in 1997. He also serves as Senior Vice President and Controller
of the Bank. He joined the Bank in 1991 as Accounting Systems Director. Prior to
joining the Bank, Mr. Olson was employed by what is now known as Ernst & Young
LLP. Mr. Olson is a licensed Certified Public Accountant in California and is a
member of the American Institute of Certified Public Accountants.
J. KEITH PALMER has served as Senior Vice President and Treasurer of WFS
since 1995 and of the Bank since 1993. He also serves as Vice President and
Treasurer of Westcorp. 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 15
years.
RICHARD W. STEPHAN has served as a WFS Executive Vice President since 1996
and as Chief Technology Officer since 1999, after serving as Chief Information
Officer from 1996 to 1998. He is also Senior Vice President and Chief Technology
Officer of Westcorp, and Executive Vice President and Chief Technology Officer
of the Bank. Mr. Stephan has over 25 years of experience in the information
technology field with the last 20 years in the financial institution services
industry. Prior to his association with WFS, Mr. Stephan was an Executive Vice
President of FiServ, Inc., a major provider of information services to the
banking industry and he was a partner with the company now known as Ernst and
Young LLP, where 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.
LEE A. WHATCOTT has served as Senior Executive Vice President since 1999
and Chief Financial Officer of WFS since 1994. He also serves as Senior
Executive Vice President and Chief Financial Officer of the Bank. Mr. Whatcott
joined the company in 1988 and became Vice President and Controller in 1992,
Senior Vice President in 1995 and Executive Vice President in 1996. Prior to
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<PAGE> 10
joining the company, he was employed by what is now known as Ernst & Young LLP,
an international accounting firm. He is licensed as a Certified Public
Accountant in the state of California and is a member of the American Institute
of Certified Public Accountants.
THOMAS WOLFE became President and Chief Operating Officer of WFS in March,
1999. He previously served as Executive Vice President and National Production
Manager for WFS since April of 1998. Prior to joining WFS, he held the position
of National Production Manager at Key Auto Finance, where he oversaw the
production of the indirect auto finance business which included prime,
sub-prime, leasing and commercial lending. Mr. Wolfe has been in the auto
finance and consumer credit industry since 1982. He previously held positions
with Citibank, Inc., and General Motors Acceptance Corporation. He graduated
from Oregon State University in 1981 with a degree in finance.
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received for the three fiscal
years ended December 31, 1999, by WFS's Chairman of the Board and Chief
Executive Officer, and the next four most highly compensated executive officers
in 1999.
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------
WESTCORP WFS
ANNUAL COMPENSATION(1) STOCK STOCK
------------------------------ OPTIONS OPTIONS AWARDS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) OTHER(3) (SHARES) (SHARES) (SHARES) COMPENSATION(4)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ernest S. Rady................. 1999 $275,000 $250,000 $ 77,361 30,000 0 0 $60,765(5)
Chairman of the Board of 1998 420,000 0 209,135 48,419(6) 21,198(7) 0 21,999
Directors 1997 420,000 0 0 50,000 0 0 33,875
Joy Schaefer................... 1999 315,000 225,000 20,684 25,000 0 0 46,454(8)
Chief Executive Officer and 1998 315,000 75,000 70,616 21,145(6) 16,958(7) 0 9,117
Vice Chairman of the Board 1997 268,740 80,622 152,109 15,000 35,000 0 24,540
of WFS; Chief Operating
Officer and Senior Executive
Vice President of the Bank;
President and Chief Operating
Officer of Westcorp
Thomas Wolfe................... 1999 256,727 195,000 4,256 20,000 0 0 36,207(9)
President and Chief Operating 1998 136,410 88,772 0 0 15,467(7) 0 0
Officer of WFS; Executive 1997 N/A N/A N/A N/A N/A N/A N/A
Vice President of the Bank;
Senior Vice President of
Westcorp
Lee A. Whatcott................ 1999 225,000 115,000 28,135 12,000 0 0 38,514(10)
Senior Executive Vice 1998 200,000 56,100 0 14,772(6) 5,870(7) 0 10,165
President and Chief 1997 175,000 58,275 0 11,000 11,000 0 21,586
Financial Officer of WFS and
the Bank; Executive Vice
President and Chief Financial
Officer of Westcorp
Richard W. Stephan............. 1999 189,000 46,800 95,835 0 0 0 31,575(11)
Executive Vice President and 1998 189,000 43,376 0 8,397(6) 0 0 7,312
Chief Technology Officer of 1997 180,000 36,000 0 7,000 0 0 19,462
WFS and the Bank; Senior Vice
President and Chief
Technology Officer of
Westcorp
</TABLE>
- --------------------------------------------------------------------------------
(1) The compensation of Ms. Schaefer, Messrs. Stephan, Whatcott and Wolfe was
paid by WFS. The compensation for Mr. Rady was paid by Westcorp.
Compensation for officers that are officers of more than one company are
allocated as part of a management agreement based upon time spent.
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<PAGE> 11
(2) 1997 and 1998 Bonus restated for comparison using bonus earned in the year
indicated and payable the following year.
(3) Includes the spread between market price and exercise price on WFS or
Westcorp options exercised.
(4) Includes above market preferential interest accrued on salary deferral by
executive under deferred compensation plans, plus Company contribution to
EDP4 in 1997 and 1998 (described below), 401(k) and ESOP. A contribution of
$6,974,554 was funded for 1999 to the Savings Plan (401(k) and ESOP) which
benefits other associates in addition to those named in the Table. The Plan
is described below.
(5) Includes $10,313 in accrued above-market earnings on deferred compensation,
$19,508 employer contribution to 401(k)/ESOP Plan and $30,944 partial
reimbursement of taxes incurred on the exercise of non-qualified stock
options.
(6) Stock options for shares of Westcorp, the parent company, were awarded in
1998 pursuant to a stock repricing program and exercisable in the future.
(7) Stock options for shares of WFS were awarded in 1998 pursuant to a stock
repricing program and exercisable in the future.
(8) Includes $34,224 in accrued above-market earnings on deferred compensation
plus $12,230 employer contribution to 401(k)/ESOP Plan.
(9) Includes $26,181 in accrued above-market earnings on deferred compensation
plus $10,026 employer contribution to 401(k)/ESOP Plan.
(10) Includes $25,266 in accrued above-market earnings on deferred compensation
plus $13,248 employer contribution to 401(k)/ESOP Plan.
(11) Includes $20,430 in accrued above-market earnings on deferred compensation
plus $11,145 employer contribution to 401(k)/ESOP Plan.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on Westcorp option grants to the
Named Executive Officers in fiscal 1999. There were no WFS option grants in
fiscal 1999.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
PERCENTAGE OF ANNUAL RATES OF
TOTAL OPTIONS EXERCISE OR STOCK APPRECIATION
WESTCORP GRANTED TO BASE PRICE FOR OPTION TERM
OPTIONS ASSOCIATES IN (PER SHARE) EXPIRATION ------------------
NAME GRANTED(1) FISCAL 1999 ($) DATE 5%($) 10%($)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ernest S. Rady.............. 30,000 11% 12.67 04/27/06 154,739 360,607
Joy Schaefer................ 25,000 9% 12.67 04/27/06 128,949 300,506
Richard W. Stephan.......... 0 N/A N/A N/A N/A N/A
Lee A. Whatcott............. 12,000 4% 12.67 04/27/06 61,896 144,243
Thomas Wolfe................ 20,000 7% 12.67 04/27/06 103,159 240,405
</TABLE>
- --------------------------------------------------------------------------------
(1) Options were each granted at the market price of the stock at the date of
the grant.
8
<PAGE> 12
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information on aggregated option exercises in
the last fiscal year and fiscal year-end option values in 1999 for the Named
Executive Officers.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
WESTCORP("W") IN-THE-MONEY
NUMBER OF WESTCORP OPTIONS/ WESTCORP("W")
SHARES ACQUIRED ON WFS("WF") OPTIONS/WFS("WF")
EXERCISE ("W") OPTIONS OPTIONS
NUMBER OF WFS VALUE AT 12/31/99(#) AT 12/31/99($)
SHARES ACQUIRED ON REALIZED EXERCISABLE("E")/ EXERCISABLE("E")/
NAME EXERCISE ("WF") ($)(1) UNEXERCISABLE("U") UNEXERCISABLE("U")
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ernest S. Rady 9,096(W) 77,361(W) 19,460 E(W) 36,974 E(W)
0(WF) 0(WF) 58,959 U(W) 109,922 U(W)
15,898 E(WF) 225,633 E(WF)
5,300 U(WF) 75,220 U(WF)
Joy Schaefer 2,756(W) 20,684(W) 19,203 E(W) 38,334 E(W)
0(WF) 0(WF) 35,342 U(W) 65,400 U(W)
22,056 E(WF) 313,030 E(WF)
13,580 U(WF) 192,734 U(WF)
Richard Stephan 11,025(W) 95,835(W) 9,317 E(W) 18,627 E(W)
0(WF) 0(WF) 3,280 U(W) 6,232 U(W)
0 E(WF) 0 E(WF)
0 U(WF) 0 U(WF)
Lee A. Whatcott 3,308(W) 28,135(W) 13,425 E(W) 26,432 E(W)
0(WF) 0(WF) 17,547 U(W) 32,500 U(W)
2,935 E(WF) 41,655 E(WF)
2,935 U(WF) 41,655 U(WF)
Thomas Wolfe 0(W) 0(W) 0 E(W) 0 E(W)
300(WF) 4,256(WF) 20,000 U(W) 36,600 U(W)
3,641 E(WF) 51,675 E(WF)
11,826 U(WF) 167,840 U(WF)
</TABLE>
- --------------------------------------------------------------------------------
(1) Value of exercise of options based on the closing price on the New York
Stock Exchange of Westcorp Common Stock on December 31, 1999 ($14.50) and
the closing price on NASDAQ of WFS Common Stock on December 31, 1999
($21.125).
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
Of the executive officers named in the Summary Compensation Table, only Ms.
Schaefer and Mr. Whatcott are subject to written employment agreements. Ms.
Schaefer's employment agreement is with WFS, while Mr. Whatcott's employment
agreement is with both Westcorp and WFS. Both agreements were executed as of
February 27, 1998 and are similar as to their terms and conditions. Each
agreement establishes an initial base salary subject to annual review and
provides to Ms. Schaefer and Mr. Whatcott the same basic benefits otherwise
offered to those executive officers with whom no written employment agreement
exists. Both employment agreements also provide that if, as a result of or
following a change of control, Ms. Schaefer or Mr. Whatcott are terminated other
than for cause or are required to relocate they will be entitled to two years'
compensation, based upon the average of their salary and bonus for the three
calendar years preceding the triggering event. Both employment agreements may be
terminated by the employer at any time for cause.
9
<PAGE> 13
CERTAIN BENEFITS
COMPENSATION PURSUANT TO BANK AND WESTCORP BENEFIT PLANS
During 1999, WFS'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
various Executive Deferral Plans.
Effective August 1, 1985, Westcorp established an Executive Deferral Plan
("EDP") for certain senior executives of Westcorp and its subsidiaries, as
determined by the Board of Directors. A participant in the EDP may defer a
portion of their compensation from a minimum of $2,000 a year to a maximum of
75% of their gross annual salary. The employer matches contributions up to 5% of
a participant's annual salary, excluding bonus. After the seventh year of
participation, there is a mandatory lump sum distribution to the participant of
the first four years' deferrals with interest thereon at Moody's Investors
Service Seasoned Corporate Bond Rate (the "Moody's Rate") plus 3%. Upon
retirement following not less than 10 years participation in the EDP and the
attainment of at least age 65, a participant's account will yield a compound
interest rate equal to the Moody's Rate plus 8%. A participant's account balance
is (i) the employer's contribution and (ii) deferrals for the fifth and
subsequent years of participation. Retirement benefits are paid out over a
15-year period.
Benefits owing under the EDP are paid by the employer through borrowings
against or proceeds from insurance policies on the lives of the participants
purchased by the employer.
Effective September 1, 1988, Westcorp established a second Executive
Deferral Plan ("EDP2") for certain participating executives as determined by its
Board of Directors. A participant in EDP2 may defer a portion of compensation
from a minimum of $2,000 a year to a maximum of 5% of base annual salary,
excluding bonus. The employer matches contributions up to 5% of a participant's
base annual salary, excluding bonus. Interest is credited to a participant's
account at Moody's Rate plus 5%.
Benefits provided by EDP2 are paid by the employer through borrowings
against or proceeds from insurance policies on the lives of the participants
purchased by the employer.
Effective May 1, 1992, Westcorp established a third Executive Deferral Plan
("EDP3") for certain participating executives as determined by its Board of
Directors. A participant may defer a portion of compensation from a minimum of
$2,000 a year to a maximum of 10% of base annual salary. There is no employer
match in EDP3, unlike EDP1 and EDP2. Interest is credited to a participant's
account at the Moody's Rate. Participant's first year's contribution plus
interest will be distributed beginning in the sixth year. Participant's second
year's contribution plus interest will be distributed in year seven and so on.
If a participant terminates employment, he receives all deferrals plus interest.
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 may be an employer match in EDP4 at the discretion of the Board of
Directors.
Additionally, associates required to take distribution from earlier EDP
plans, may elect, under EDP3 and EDP4, to defer an additional amount up to the
distribution they are required to take. This additional deferral is not eligible
for any employer matching provisions.
10
<PAGE> 14
All deferrals are eligible for interest payments and interest is credited
to a participant's account at the Moody's Rate. Participant's distributions are
intended to occur upon retirement following not less than 5 years of
participation in the EDP and the attainment of at least age 65, or upon
termination of employment. Participants receiving distributions can elect to
receive them paid out over five, ten or fifteen years or in a lump sum option.
The Plan was amended in 1997 to allow greater flexibility in changing retirement
elections in the year prior to planned retirement.
STOCK OPTION PLANS
1991 STOCK OPTION PLAN. The Westcorp stock option plan was adopted by the
Board of Directors of Westcorp in April, 1991, and approved by its shareholders
in May, 1991, (the "1991 Stock Option Plan"). As amended in 1999, associates and
directors of Westcorp, the Bank and WFS, and associates of its other
subsidiaries are eligible to participate under the 1991 Stock Option Plan. The
1991 Stock Option Plan is administered by the Westcorp Compensation Committee
and, in such capacity, the committee selects associates and directors to whom
options are to be granted and the number of shares to be granted based on
established criteria. No further options may be granted under the 1991 Stock
Option Plan after April 15, 2001.
Options granted under the 1991 Stock Option Plan may be either "incentive
stock options" or "non-qualified options" within the meaning of the Internal
Revenue Code ("the Code"). However, only non-qualified options may be granted to
directors who are not also associates. The term of the options may not exceed 10
years from the date of grant. However, optionees who own, prior to a grant,
directly or indirectly, 10.0% or more of the outstanding Common Stock of
Westcorp, may not be granted "incentive stock options" with a term greater than
5 years. Options may be terminated earlier, however, in the event of the death
or disability of the optionee or the optionee ceasing to perform services for
Westcorp or its subsidiaries as provided in the 1991 Stock Option Plan. The
options are also subject to all of the other terms and conditions of the written
stock option agreement between the optionee and Westcorp. In 1999, a total of
259,500 options were granted.
In the aggregate, 3,150,000 shares of Westcorp Common Stock may be the
subject of options granted under the 1991 Stock Option Plan. However, the number
of shares subject to options granted under such plan (and the exercise prices
for the options) are subject to adjustment in the event of any change in the
outstanding shares of Westcorp as a result of stock dividends, stock splits or
conversions of shares. If any option expires or terminates without having been
exercised in full, the unpurchased shares become available again for purposes of
future incentive and non-qualified stock options to be granted under the 1991
Stock Option Plan.
WFS STOCK OPTION PLAN
In 1996, WFS adopted the WFS 1996 Stock Option Plan ("WFS Plan"). In the
aggregate, 550,000 shares of Common Stock were the subject of options which may
be granted pursuant to the WFS Plan. In 1997, the WFS Plan was amended to
increase WFS shares subject to the WFS Plan to 1,100,000. Certain options
granted under the WFS Plan are intended to qualify as "incentive stock options"
within the meaning of the Code with other options to be "non-qualified" options;
options may also be granted under the WFS Plan that are not intended to qualify
as "incentive" stock options. Options may be granted under the WFS Plan to
associates and directors of WFS. Options may be granted under the WFS Plan to
any WFS optionee who, in the opinion of the Compensation Committee, is or gives
promise of becoming of exceptional importance to WFS because of experience and
ability. The Compensation Committee has the discretion to determine the amounts
and times of exercise of options. In 1999, there were no options granted.
WESTCORP EMPLOYEE STOCK OWNERSHIP AND SALARY SAVINGS PLAN
The Westcorp Employee Stock Ownership Plan (the "Original ESOP") was
adopted originally in 1975. The Original ESOP was restated in 1985, and a
determination letter was issued by the
11
<PAGE> 15
Internal Revenue Service in 1986 stating that the Original ESOP was a qualified
plan under Section 401(a) of the Code. The first amendment to the restated plan
was adopted in 1986. Westcorp's Employee Salary Savings Plan (the "Savings
Plan") was adopted originally in 1982. It subsequently was amended and restated
in 1985. The Internal Revenue Service determined that the Savings Plan was a
qualified plan under Section 401(a) of the Code and met the requirements of
Section 401(k) of the Code. The first amendment to the restated Savings Plan was
adopted in 1986. Effective January 1, 1990, the Savings Plan and the Original
ESOP were consolidated into the Westcorp Employee Stock Ownership and Salary
Savings Plan (the "Plan"). The Plan was restated in 1997 and the first amendment
to the restated Plan was in 1998. Three additional amendments were adopted in
1999. The Westcorp Salary Savings Plan allows the employee to make tax-deferred
contributions into this Plan. The Employee Stock Ownership Plan ("ESOP") is an
employer discretionary plan that makes contributions to the employee account in
the Plan based on profitability of the Company.
The Plan is administered by a Committee which is appointed by the Board of
Directors and consists of at least three members. All associates of the Bank and
its subsidiaries are eligible to participate in the Plan after satisfaction of
minimum service and age requirements. Each year Westcorp may, in its discretion,
make an ESOP contribution to the 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 Westcorp makes an ESOP contribution, it is allocated to each
participant's ESOP Contribution Account (as defined in the Plan) in the same
proportion as that participant's "units" bear to the total number of "units"
credited to all participants for that year. Eligible associates may also elect
to contribute from 1.0% to 10.0% of their earnings to a Salary Savings
Contribution Account (as defined in the Plan). Each year Westcorp makes a
matching employer contribution which is allocated to the Matching Contribution
Account (as defined in the Plan) for each participant that makes a Salary
Savings contribution for such year. When Westcorp makes a matching employer
contribution, it is allocated to the Matching Contribution Account in the same
proportion that each associate's contribution of up to 6.0% of earnings bears to
the total of all contributions of up to 6.0% of earnings. Westcorp's annual
contribution to a participant's ESOP Contribution Account and Matching Employer
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.
Westcorp's contributions 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 Employer Contribution Account. Interest, earnings,
dividends, gains and losses are allocated to each participant's ESOP
Contribution Account, Salary Savings Contribution Account and Matching Employer
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.
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 Plan years of service. A Plan
year consists of 1,000 hours of service. An additional 20.0% becomes
12
<PAGE> 16
vested each following Plan 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 Plan, whether
or not vested, upon death, permanent disability, or retirement upon attainment
of at least 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
Employer Contribution Account.
Westcorp funded a $6,974,554 ESOP Contribution and Salary Savings Matching
Contribution for 1999.
REPORT OF THE COMPENSATION COMMITTEE
WFS applies a consistent philosophy to compensation for all associates,
including senior management. This philosophy is based on the premise that the
achievements of WFS result from the coordinated efforts of all individuals
working toward common objectives. Each member of the Compensation Committee is a
non-associate director.
COMPENSATION PHILOSOPHY
Under the supervision of the Compensation Committee of the Board of
Directors, WFS has developed and implemented compensation policies, plans and
programs which seek to enhance the profitability of WFS, and thus shareholder
value, by aligning closely the financial interests of WFS'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 associates furthers that goal and fosters decision-making by
its key associates with WFS's long-term safety and soundness in mind.
The compensation plans and programs are structured to integrate pay with
WFS's annual and long-term performance goals. The plans and programs are
designed to recognize initiative and achievement and to assist WFS in attracting
and retaining qualified executives. In furtherance of these goals, annual base
salaries are generally set at competitive levels so that WFS relies to a large
degree on annual incentive compensation to attract and retain corporate officers
and other key associates 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 holding company, the stock of which is publicly
traded. 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 WFS's executives may be more or
less than the executives of WFS's competitors, depending upon WFS'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 WFS
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 WFS's major businesses.
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, return on equity, return on assets,
Community Reinvestment Act results, cost controls and productivity. The most
weight is given to profitability as it relates to established goals. Management
goals were established
13
<PAGE> 17
at the beginning of 1999 for those executives and managers who do not manage
production units with direct financial goals. These goals are tied to the
strategic goals of the organization and its overall profitability.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In determining the Chief Executive Officer's compensation for 1999, the
Compensation Committee discussed and considered all of the factors discussed
above. The Compensation Committee also considered the factors stated above in
arriving at the award of 1999 bonus compensation for Ms. Joy Schaefer as shown
in the Summary Compensation table. The bonus compensation for 1999 reflects the
achievement of management objectives, including improved financial performance,
credit quality, efficiencies and productivity.
The Committee established 2000 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, the 1991 Stock
Option Plan that made 3,150,000 shares of common stock of Westcorp available for
such purposes. The 1991 Stock Option Plan is described above. The Westcorp
Compensation Committee grants incentive stock options to associates of Westcorp
and its subsidiaries and views such grants less as compensation and more as an
incentive mechanism. (Certain grants of Westcorp stock options were made in 1999
to some executives as shown in the Summary Compensation Table, and to other key
associates, and will also be disclosed in the Westcorp 10-K and Proxy Statement
for its annual meeting to be held on May 23, 2000.)
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 WFS, 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.
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 WFS
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 WFS outweigh the cost of the possible
loss of federal income tax deductions.
COMPENSATION COMMITTEE
Stanley E. Foster, Chairman
Bernard E. Fipp
Duane A. Nelles
14
<PAGE> 18
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a line graph depicting the yearly percentage change in
the cumulative total shareholder return on the WFS'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 9, 1995, (the
date of initial registration of the Company's securities for public sale), for
WFS's stock, and July 31, 1995, for the index, and ending December 31, 1999.
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 the Company specifically
incorporated this information by reference, and shall not otherwise be deemed
filed under such Acts.
COMPARISON OF 53 MONTH CUMULATIVE TOTAL RETURN*
AMONG WFS FINANCIAL INC, THE S&P SMALLCAP 600 INDEX
AND THE NASDAQ FINANCIAL INDEX
<TABLE>
<CAPTION>
WFS FINANCIAL INC. S & P SMALLCAP 600 NASDAQ FINANCIAL
------------------ ------------------ ----------------
<S> <C> <C> <C>
8/9/95 100 100 100
12/95 107 105 117
12/96 120 128 150
12/97 68 160 229
12/98 38 165 223
12/99 128 185 220
</TABLE>
*$100 INVESTED ON 8/9/95 IN STOCK OR ON 7/31/95
IN INDEX--INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31, 1999
15
<PAGE> 19
SECURITY OWNERSHIP OF MANAGEMENT, DIRECTORS AND NOMINEES
WFS
The following table sets forth, as of December 31, 1999, 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 WFS, (c) each of the Named Executive Officers and (d) all Officers and
Directors of WFS as a group. Management knows of no person in this group who
owns more than 5% of the outstanding shares of Common Stock.
------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK OF WFS
BENEFICIALLY OWNED
AS OF PERCENT OF
NAME DECEMBER 31, 1999(1) CLASS(2)
- ---------------------------------------------------------------------------------
<S> <C> <C>
James R. Dowlan............................... 17,958(3) --(4)
Bernard E. Fipp............................... 5,733(5) --(4)
Stanley E. Foster............................. 31,000 --(4)
Duane A. Nelles............................... 8,833(6) --(4)
Ernest S. Rady................................ 31,796(7) --(4)
Howard C. Reese............................... 5,370(8) --(4)
Joy Schaefer.................................. 36,997(9) --(4)
Richard W. Stephan............................ 0 N/A
Lee A. Whatcott............................... 5,435(10) --(4)
Thomas Wolfe.................................. 21,908(11) --(4)
Directors and Officers as a Group (18
persons).................................... 169,132 --(4)
</TABLE>
- --------------------------------------------------------------------------------
(1) As of December 31, 1999, the Bank owns 86.8% of the WFS Common Stock 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, 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, 1999. All shares are Common Stock.
(3) Includes beneficial ownership of 16,958 shares which may be acquired within
60 days of December 31, 1999, pursuant to stock options awarded under stock
option plans.
(4) Less than 5%.
(5) Includes beneficial ownership of 5,533 shares which may be acquired within
60 days of December 31, 1999, pursuant to stock options awarded under stock
option plans.
(6) Includes beneficial ownership of 5,533 shares which may be acquired within
60 days of December 31, 1999, pursuant to stock options awarded under stock
option plans.
(7) Includes beneficial ownership of 15,898 shares which may be acquired within
60 days of December 31, 1999, pursuant to stock options awarded under stock
option plans.
(8) Includes beneficial ownership of 5,370 shares which may be acquired within
60 days of December 31, 1999, pursuant to stock options awarded under stock
option plans.
(9) Includes beneficial ownership of 26,297 shares which may be acquired within
60 days of December 31, 1999, pursuant to stock options awarded under stock
option plans.
(10) Includes beneficial ownership of 2,935 shares which may be acquired within
60 days of December 31, 1999, pursuant to stock options awarded under stock
option plans.
(11) Includes beneficial ownership of 3,641 shares which may be acquired within
60 days of December 31, 1999, pursuant to stock options awarded under stock
option plans.
16
<PAGE> 20
SECURITY OWNERSHIP OF MANAGEMENT, DIRECTORS AND NOMINEES
WESTCORP
The Bank, as of December 31, 1999, owned 86.8% of the shares of WFS's
Common Stock. Under California law, the Bank will, therefore, be able, acting
alone, to elect the entire Board of Directors of WFS and to control the vote on
matters submitted to a vote of WFS's stockholders, including extraordinary
corporate transactions. The Bank is wholly-owned by Westcorp and Mr. Rady
controls approximately 66% of Westcorp. The following table reflects the
ownership of Westcorp stock as of December 31, 1999, by the Named Executive
Officers and the Directors and Executive Officers as a group.
------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK OF WESTCORP
BENEFICIALLY OWNED
AS OF PERCENT OF
NAME DECEMBER 31, 1999 CLASS(1)
- ----------------------------------------------------------------------------------
<S> <C> <C>
James R. Dowlan.................................. 24,568(2) --(3)
Bernard E. Fipp.................................. 0 N/A
Stanley E. Foster................................ 186,833(4) --(3)
Duane A. Nelles.................................. 2,205 --(3)
Ernest S. Rady................................... 17,752,054(5) 66.7%
Howard C. Reese.................................. 52,596(6) --(3)
Joy Schaefer..................................... 36,156(7) --(3)
Richard W. Stephan............................... 22,596(8)
Lee A. Whatcott.................................. 28,507(9) --(3)
Thomas Wolfe..................................... 5,223 --(3)
Directors and Officers as a Group (18 persons)... 18,145,035 68.2%
</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, 1999. All shares are Common Stock.
(2) Consists of beneficial ownership of 6,619 shares which may be acquired
within 60 days of December 31, 1999, pursuant to stock options awarded under
Stock Option Plans.
(3) Less than 5%.
(4) Includes beneficial ownership of 2,007 shares which may be acquired within
60 days of December 31, 1999, pursuant to stock options awarded under Stock
Option Plans.
(5) Includes beneficial ownership of 19,460 shares which may be acquired within
60 days of December 31, 1999, pursuant to stock options awarded under Stock
Option Plans plus ESOP/401K shares as of December 31, 1999. Mr. Rady
disclaims beneficial ownership of 36,013 shares owned by the DHM Trust #2.
(6) Consists of beneficial ownership of 827 shares which may be acquired within
60 days of December 31, 1999, pursuant to stock options awarded under Stock
Option Plans plus ESOP/401K shares as of December 31, 1999.
(7) Includes beneficial ownership of 19,203 shares which may be acquired within
60 days of December 31, 1999, pursuant to stock options awarded under Stock
Option Plans plus ESOP/401K shares as of December 31, 1999.
(8) Includes beneficial ownership of 9,317 shares which may be acquired within
60 days of December 31, 1999, pursuant to stock options awarded under Stock
Option Plans plus ESOP/401K shares as of December 31, 1999.
(9) Includes beneficial ownership of 13,425 shares which may be acquired within
60 days of December 31, 1999, pursuant to stock options awarded under Stock
Option Plans plus ESOP/401K shares as of December 31, 1999.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires WFS's
executive officers and directors, and persons who own more than ten percent of a
registered class of the WFS's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. Officers, directors and greater than ten percent
shareholders are required by regulations of the Securities and Exchange
commission to furnish WFS copies of all Section 16(a) forms they file.
Based solely on WFS's review of copies of such reports furnished to WFS or
written representations that no other reports were required, WFS believes that,
during the 1999 fiscal year, all filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied with except
Director Howard Reese, Lee Whatcott, Senior Executive Vice President, and
Western Financial Bank filed late Form 4's on stock transactions during 1999.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
WHO ARE NOT MANAGEMENT
As of March 23, 2000, no person or group other than the Bank was known to
WFS to have owned beneficially more than 5% of the outstanding shares of WFS's
Common Stock.
SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Shareholders who wish to present proposals for action at the 2001 Annual
Meeting should submit their proposals in writing and in conformance with the
bylaws to the Secretary of WFS at the address 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, 2001.
ANNUAL REPORT TO SHAREHOLDERS
WFS's Annual Report to Shareholders for the year ended December 31, 1999,
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.
OTHER MATTERS
The Management of WFS 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.
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ANNUAL REPORT ON FORM 10-K
A copy of WFS'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 Guy Du Bose,
Esq., WFS Financial Inc, 23 Pasteur, 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
Guy Du Bose
Secretary
Irvine, California
March 28, 2000
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.
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REVOCABLE PROXY
WFS FINANCIAL INC
23 PASTEUR
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 MAY 23, 2000.
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 27, 2000, at the Annual Meeting of
Shareholders of WFS FINANCIAL INC, to be held May 23, 2000, 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 WFS FINANCIAL 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 AND 2.
(PROXY CONTINUED ON REVERSE)
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Please mark your votes
as indicated in this
example. [X]
WITHHOLD WITHHOLD
AUTHORITY AUTHORITY
to vote for to vote for any
all nominees individual
FOR listed below nominee
1. ELECTION OF DIRECTORS
Nominees: Bernard E. Fipp [ ] [ ] [ ]
Stanley E. Foster and
Duane A. Nelles to serve as
Class II Directors of WFS
Financial Inc
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 LLP, AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF
WFS FINANCIAL INC FOR FISCAL YEAR 2000.
3. OTHER BUSINESS. In accordance with the recommendation of WFS Financial'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.
YES NO
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.
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