SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only
(as permitted by Rule 14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FIRST INVESTORS FINANCIAL SERVICES GROUP, INC.
(Name of Registrant as Specified in its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-(6)(i)(2), or
Item 22(a)(2) of Schedule 14A.
[ ] $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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date
Filed:
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First Investors Financial Services Group, Inc.
675 Bering Drive, Suite 710
Houston, Texas 77057
---------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
SEPTEMBER 5, 1996
---------------------------------------------------
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of First
Investors Financial Services Group, Inc., a Texas corporation (the "Company"),
will be held at NationsBank Center, 700 Louisiana, 4th Floor, Houston, Texas
77002, on Thursday, September
5, 1996 at 10:00 a.m. local time, for the following purposes:
1. To elect eight directors to serve for the ensuing year or until
their respective successors have been elected and qualified.
2. To consider and act upon a proposal to ratify the appointment of
Arthur Andersen LLP as the Company's independent accountants for the fiscal year
ending April 30, 1997.
3. To transact any other business as may properly come before the
annual meeting or any adjournment thereof.
The close of business on July 31, 1996 has been fixed as the record date
for the determination of shareholders entitled to notice of, and to vote at, the
annual meeting.
The Company's Annual Report to Shareholders, including the Company's
Annual Report on Form 10-K for the fiscal year ended April 30, 1996, accompanies
the enclosed Proxy Statement.
By Order of the Board of Directors
Houston, Texas /S/ BENNIE H. DUCK
August 5, 1996 Bennie H. Duck, Secretary
IMPORTANT: PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
SELF-ADDRESSED RETURN ENVELOPE FURNISHED FOR THAT PURPOSE AS PROMPTLY AS
POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. IF YOU LATER
DESIRE TO REVOKE YOUR PROXY FOR ANY REASON, YOU MAY DO SO IN THE MANNER
DESCRIBED IN THE ATTACHED PROXY STATEMENT.
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
SEPTEMBER 5, 1996
INTRODUCTION
The accompanying proxy is solicited by the Board of Directors of First
Investors Financial Services Group, Inc. (the "Company") to be voted at the
Annual Meeting of Shareholders of the Company to be held at NationsBank Center,
700 Louisiana, 4th Floor, Houston, Texas 77002, on September 5, 1996 at 10:00
a.m. local time and at any adjournments thereof, and this Proxy Statement is
furnished in connection therewith. When such proxy is properly executed and
returned, the shares of the Company's Common Stock, par value $.001 per share
("Common Stock"), it represents will be voted at the Annual Meeting as directed.
If no specification is indicated, the shares will be voted "FOR" the election of
the nominees to serve as Directors for the term designated and "FOR"
ratification of the appointment of Arthur Andersen LLP as the Company's
independent accountants for the fiscal year ending April 30, 1997. The Board of
Directors knows of no other matters to be brought before the Annual Meeting;
however, should any other matters be properly raised at the Annual Meeting, it
is the intention of each of the persons named in the proxy to vote in accordance
with his judgment. A proxy may be revoked at any time prior to its exercise by
giving written notice of revocation to the Secretary of the Company at or before
the Annual Meeting, by duly executing a subsequent proxy relating to the same
number of shares or by attending the Annual Meeting and voting in person.
It is anticipated that this proxy statement and accompanying notice, proxy
card and the Company's Annual Report to Shareholders, which includes the
Company's Annual Report on Form 10-K for the fiscal year ended April 30, 1996,
will first be sent to the shareholders of the Company on or about August 5,
1996.
The address of the Company's principal executive offices is 675 Bering
Drive, Suite 710, Houston, Texas 77057, and the telephone number is (713)
977-2600.
VOTING SECURITIES
The Company has only one class of voting securities outstanding, its Common
Stock, of which 5,566,669 shares were outstanding as of July 31, 1996. Each
share entitles its holder to one vote. Only shareholders of record at the close
of business on July 31, 1996, which has been fixed as the record date for the
Annual Meeting, will be entitled to vote at the Annual Meeting or any
adjournments thereof.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock, as of July 15, 1996, by: (i) each
person who is known by the Company to own beneficially more than 5% of the
issued and outstanding shares of Common Stock, (ii) each director, and (iii)
each executive officer named in the Summary Compensation Table elsewhere herein.
Unless otherwise indicated, each of the persons has sole voting and dispositive
power over the shares of Common Stock shown as beneficially owned by such
person.
<TABLE>
<CAPTION>
Amount and
Nature of
Position Beneficial Percent of
Name and Address with Company Ownership Class
---------------- ------------ --------- -----
<S> <C> <C> <C>
Fentress Bracewell
2900 Pennzoil Place
700 Louisiana Director and Chairman of the
Houston, Texas 77002 Board 216,666 3.9%
Tommy A. Moore, Jr.
675 Bering, Suite 710 Director, President and
Houston, Texas 77057 Chief Executive Officer 800,000 14.4%
Phillip K. Durham
675 Bering, Suite 710 Vice President and Chief
Houston, Texas 77057 Operating Officer 2,000(1) *
Bradley F. Bracewell
3633 Rice Boulevard
Houston, Texas 77005 Director 399,999 7.2%
Walter A. Stockard, Jr.
2001 Kirby, Suite 901
Houston, Texas 77019 Director 360,000(2) 6.5%
J. W. Smelley
4550 Post Oak Place
Houston, Texas 77027 Director 250,002 4.5%
Walter A. Stockard
2001 Kirby, Suite 901
Houston, Texas 77019 Director 75,000 1.3%
Roberto Marchesini
675 Bering, Suite 710 Director and Vice President
Houston, Texas 77057 - Portfolio Risk Management 4,000(3) *
Robert L. Clarke
2900 Pennzoil Place
700 Louisiana
Houston, Texas 77002 Director 23,000(4) *
J. Randal Roberts
15 Sundown Parkway
Austin, Texas 78746 366,669(5) 6.6%
T. Rowe Price Associates, Inc.
P.O. Box 89000
Baltimore, Maryland 21289 553,600(6) 9.9%
All executive officers and
directors as a group (10
persons) 2,132,167(7) 38.3%
</TABLE>
- - - --------------------
* Less than 1% of the Common Stock outstanding.
(1) Reflects the currently exercisable portion of stock options held by Mr.
Durham covering 10,000 shares in the aggregate.
(2) Consists entirely of shares held by Mr. Stockard as custodian for two
minor children, as to which shares he disclaims beneficial ownership.
(3) Reflects the currently exercisable portion of stock options held by Dr.
Marchesini covering 20,000 shares in the aggregate.
(4) Includes 20,000 shares that may be acquired pursuant to the exercise of a
stock option.
(5) Includes 20,000 shares held by a trust for a minor child of Mr. Roberts,
as to which shares he disclaims beneficial ownership.
(6) Owned by various individual and institutional investors (including T. Rowe
Price New Horizons Fund, Inc., which owns 400,000 shares, or 7.2% of the
shares outstanding) which T. Rowe Price Associates, Inc. (Price
Associates) serves as an investment adviser with power to direct
investments and/or sole power to vote. For purposes of the Securities
Exchange Act of 1934, Price Associates is deemed to be a beneficial owner
of such shares; however, Price Associates expressly disclaims that it is,
in fact, the beneficial owner of such shares.
(7) Includes 27,000 shares issuable upon exercise of stock options that are
currently exercisable. Does not include an aggregate of 1,053,333 shares
(constituting 18.9% of the outstanding Common Stock) that are owned beneficially
by various adult members of the families of Walter A. Stockard, Walter A.
Stockard, Jr., Fentress Bracewell, Bradley F. Bracewell and J. W. Smelley.
Accordingly, the current Directors of the Company and such respective family
members, taken together, beneficially own approximately 55% of the Common Stock
outstanding. This enables such persons, acting together, to determine the
outcome of all matters submitted to a majority vote of shareholders, including
the election of all Directors.
ELECTION OF DIRECTORS
At the Annual Meeting eight Directors will be elected to hold office until
the 1997 annual meeting of shareholders or until their respective successors are
duly elected and qualified. Each of the nominees is presently a member of the
Board of Directors, has consented to being named in this Proxy Statement and has
notified the Company that he intends to serve, if elected. The following table
sets forth certain information concerning the persons who have been nominated
for election as Directors.
Name Age Position
---- --- --------
Fentress Bracewell (1) 74 Director and Chairman of the Board
Tommy A. Moore, Jr. 39 Director, President and
Chief Executive Officer
Roberto Marchesini (2) 52 Director and Vice President
- Portfolio Risk Management
J. W. Smelley (1) 74 Director
Walter A. Stockard 84 Director
Robert L. Clarke 54 Director
Bradley F. Bracewell (2) 43 Director
Walter A. Stockard, Jr. (2) 44 Director
- - - --------------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
A description of the business experience of each of the nominees is as
follows:
Mr. Fentress Bracewell, a Director of the Company since 1992 and the
Chairman of the Board since 1994, is one of the founders and a former managing
partner of the law firm of Bracewell & Patterson, Houston, Texas, where he
practiced law as a senior partner from 1945 until 1988 and is presently Senior
Counsel. Mr. Bracewell previously served as a director of the following
publicly-held companies: Southdown, Inc., Frontier Airlines, Inc., First
Continental Life Group, Inc., American Funeral Services, Inc. (Chairman of the
Board) and The Mischer Corporation. He was formerly a member of the Board of
Trustees, and is presently an honorary trustee, of the Institute of
International Education (New York) and served as Chairman of the Port of Houston
Authority from 1970 to 1985.
Mr. Moore, a co-founder of the Company in 1989, has served as its
President and Chief Executive Officer and a Director since that time. Prior to
organizing the Company, Mr. Moore was employed in commercial banking in Houston,
Texas where his responsibilities included retail and commercial lending, and
also served for a time as manager of finance and leasing for a Houston auto
dealership.
Dr. Marchesini, who became a Director in June 1995, served as the
Treasurer, Secretary and Chief Financial Officer of the Company from its
inception in 1989 until May 1, 1996, when his duties were reduced to enable him
to resume his teaching pursuits. He remains a Director and also continues to
serve the Company as its Vice President - Portfolio Risk Management. Prior to
June 1995 and subsequent to May 1, 1996, he has also been employed as an
Associate Professor of Finance at the University of Houston, Clear Lake, where
he has taught in the areas of finance, economics and accounting since 1974 and
has served as the Associate Director of the University's Center for Economic
Development and Research. Dr. Marchesini holds a Ph.D. degree in economics
conferred by the University of Texas in 1974 and a degree in accounting received
from the Technical Institute of Rome in 1963.
Mr. Smelley, a Director of the Company since 1992, is the founder of First
Continental Life Group, Inc., a publicly-held life insurance holding company,
and First Continental Life and Accident Insurance Company, its life, health and
accident insurance subsidiary. Mr. Smelley was the President and Chief Executive
Officer of those companies from 1955 until his retirement when they were sold in
1987. He was also a founder and former director of First Continental Mortgage
Company and National Acceptance Corporation. Mr. Smelley is a past president and
director of the Texas Legal Reserve Association and the National Association of
Life Companies.
Mr. Stockard, a certified public accountant, co-founded the Company with
Mr. Moore in 1989 and has been a Director since that time. Mr. Stockard is an
independent oil operator and an investor in oil and gas properties. He founded
Alamo Barge Lines, Inc. in 1947 and was a substantial shareholder of that
company until its sale in 1980. Mr. Stockard was also a founder of Big Six
Drilling Company in 1945 and served as its vice president until 1992.
Mr. Clarke, who became a Director in June 1995, is a senior partner of the
law firm of Bracewell & Patterson, Houston, Texas. From 1985 to 1992, he served
as the Comptroller of the Currency of the United States. Mr. Clarke also serves
as a director of Centex Construction Products, Inc., a publicly-held company.
Mr. Bradley Bracewell has been a Director of the Company since 1992. He is
a commercial banker and since 1989 has served as Chairman of the Board and
President of First University Corporation, a bank holding company, and Chairman
of the Board and Chief Executive Officer of West University Bank, N.A., its
banking subsidiary. He served as a director of the Texas Bankers Association
from 1990 to 1993 and has previously been a director of First Continental Life
Group, Inc., a publicly-held life insurance holding company, and First National
Bank of Missouri City. Mr. Bracewell is an attorney and, prior to practicing
with his own firm from 1983 to 1989, was associated with the Houston law firm of
Vinson & Elkins L.L.P.
Mr. Walter Stockard, Jr. has been a director of the Company since 1989 and
has been an investor in oil and gas properties and real estate for more than the
past five years.
Shareholders may not cumulate their votes in the election of directors.
The eight nominees receiving the highest number of affirmative votes will be
elected to the Board. Shareholders entitled to vote for the election of
directors may withhold authority to vote for any or all nominees for directors.
If any nominee becomes unavailable for election for any reason, then the shares
represented by the proxy will be voted for the remainder of the listed nominees
and for such other nominees as may be designated by the Board as replacements
for those who become unavailable. Discretionary authority to do so is included
in the proxy.
OTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
During the fiscal year ended April 30, 1996, the Board of Directors met 11
times. All Directors attended 75 percent or more of the meetings of the Board of
Directors and of the Committees of the Board on which they served during the
past fiscal year.
The Board of Directors has two committees: the Audit Committee and the
Executive Compensation Committee. The Audit Committee, which met one time during
the past fiscal year, acts as a direct liaison between the Board and the
Company's independent auditors, and its functions include recommending the
engagement of auditors, reviewing the scope and results of the annual audit and
reviewing, as appropriate, the Company's accounting policies, internal controls
and financial reporting practices. The Executive Compensation Committee, which
met four times during the past fiscal year, is responsible for formulating
recommendations to the Board concerning salaries, bonuses and other compensation
arrangements for senior management and key employees. The Board of Directors has
no nominating committee.
The Company pays a monthly fee in the amount of $500 to each Director who
is not an officer or employee of the Company, and reimburses their out-of-pocket
expenses incurred in connection with their services as such, including travel
expenses.
In August 1995, when Robert L. Clarke joined the Board of Directors, he
was granted a non-transferable option to purchase up to 20,000 shares of Common
Stock, in recognition of the fact that he was the only member of the Board who
was neither an executive officer nor a substantial shareholder of the Company.
The option is exercisable in whole at any time or in part from time to time at
an exercise price of $11.00 per share. The option will terminate one year after
Mr. Clarke ceases to be a member of the Board of Directors, except that in the
event of Mr. Clarke's death while serving as a Director the option would be
exercisable by his heirs or representatives of his estate for a period of two
years after the date of death.
Bradley F. Bracewell is the son of Fentress Bracewell and Walter A.
Stockard, Jr. is the son of Walter A. Stockard. A former Director of the
Company, William J. Cato, who served from 1989 until his resignation on October
17, 1995, is the son-in-law of Walter A. Stockard and the brother-in-law of
Walter A. Stockard, Jr.
OTHER EXECUTIVE OFFICERS
Other executive officers of the Company, each of whom serves at the
pleasure of the Board of Directors, are as follows:
Name Age Position
---- --- ---------
Phillip K. Durham 46 Vice President and
Chief Operating Officer
Bennie H. Duck 32 Vice President, Secretary, Treasurer
and Chief Financial Officer
Rosemary J. O'Connor 35 Vice President and Controller
Mr. Durham joined the Company in January 1994 as its Vice President and
Chief Operating Officer. Mr. Durham was previously employed for 23 years by
General Electric Capital Corporation in various capacities including automobile
financial services, commercial and industrial finance, consumer sales financing
and corporate audit staff functions. During his last four years at General
Electric Capital Corporation, Mr. Durham served as Manager - New Business
Development in the Auto Financial Services Division.
Mr. Duck joined the Company in May 1996 as its Vice President, Secretary,
Treasurer and Chief Financial Officer. Mr. Duck was previously employed for the
past ten years by NationsBank in various capacities and most recently as a Vice
President of Corporate Finance.
Ms. O'Connor was employed by the Company in September 1993 and serves as
its Controller. Ms. O'Connor is a certified public accountant and, prior to
joining the Company, had served for five years as Manager of Financial Reporting
for First City Bancorporation of Texas. Prior to that time she had been employed
for one year as an internal auditor for a bank holding company and for two years
in financial services auditing functions for Arthur Andersen LLP.
SUMMARY COMPENSATION TABLE
The following table sets forth, for the past three fiscal years, the
compensation of the President and Chief Executive Officer of the Company and the
other two of the Company's executive officers whose salary and bonus exceed
$100,000.
<TABLE>
<CAPTION>
Long Term
Name and Annual Compensation Compensation All Other
Principal Position Year Salary Bonus Stock Options Compensation
------------------ ---- ------ ----- ------------- ------------
<S> <C> <C> <C> <C>
Tommy A. Moore, Jr. 1994 $ 70,000 $ 20,526 $ -0-
President and Chief 1995 $ 70,000 $ 87,785 $ -0-
Executive Officer 1996 $ 116,000 $ 187,700 $ -0-
Phillip K. Durham 1994 (1) $ 12,500 $ -0- $ 16,267 (1)
Vice President and Chief 1995 $ 100,000 $ -0- $ -0-
Operating Officer 1996 $ 107,625 $ -0- 10,000 (2) $ -0-
Roberto Marchesini
Secretary, Treasurer and 1994 $ -0- $ -0- $ 47,549 (4)
Chief Financial Officer 1995 $ -0- $ -0- $ 52,725 (4)
(3) 1996 $ 71,875 $ -0- 20,000 (5) $ 56,042 (4)
</TABLE>
--------------------
(1) Mr. Durham joined the Company in January, 1994, as a consultant and began
employment in March 1994.
(2) Consists of options under the Company's 1995 Employee Stock Option Plan
granted effective October 3, 1995 and covering 10,000 shares of Common
Stock. See "Stock Option Plan".
(3) Dr. Marchesini resigned from the offices of Secretary, Treasurer and Chief
Financial Office effective May 1, 1996 and currently serves the Company as
its Vice President Portfolio Risk Management. Since Dr. Marchesini has
resumed his teaching responsibilities at the University of Houston, he is
no longer a salaried employee of the Company and is compensated
approximately $5,000 a month for consulting services.
(4) Consists of hourly fees paid to Dr. Marchesini for consulting services
prior to his becoming a full-time employee of the Company in October 1995.
(5) Consists of options under the Company's 1995 Employee Stock Option Plan
granted effective October 1995 and covering 20,000 shares of Common Stock.
See "Stock Option Plan".
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Tommy A. Moore, Jr., its
President and Chief Executive Officer, that extends until March 1997. This
agreement provided for an annual salary of $70,000 until it was amended,
effective October 1995, to increase the annual salary to $150,000. The agreement
also provides for an annual incentive bonus equal to 5% of the consolidated
pre-tax net income of the Company subject to deferral for a reasonable period of
time at the discretion of the Board of Directors depending on the liquidity
position and cash requirements of the Company at the time of payment.
Effective May 1, 1996, the Company entered into an employment agreement
with Bennie H. Duck in connection with Mr. Duck's joining the Company as Vice
President, Secretary, Treasurer and Chief Financial Officer. This agreement is
for a term of two years and provides for an annual salary of $125,000. In
addition, Mr. Duck may be entitled to receive a bonus for the first year of the
term of the agreement (the fiscal year ending April 30, 1997) in an amount
varying from $6,667 to $40,000 depending upon the results of operations of the
Company. Any bonus payable with respect to the second year of the term is solely
at the discretion of the Board of Directors.
STOCK OPTION PLAN
In June 1995, the Board of Directors adopted the Company's 1995 Employee
Stock Option Plan (the "Plan"), which was thereafter approved by the
shareholders of the Company. The Plan is administered by the Compensation
Committee of the Board of Directors and provides that options may be granted to
officers and other key employees for the purchase of up to 300,000 shares of
Common Stock, subject to adjustment in the event of certain changes in
capitalization. Options may be granted either as incentive stock options (which
are intended to qualify for certain favorable tax treatment) or as non-qualified
stock options.
The Compensation Committee selects the persons to receive options and
determines the exercise price, the duration, any conditions on exercise and
other terms of the options. In the case of options intended to be incentive
stock options, the exercise price may not be less than 100% of the fair market
value per share of Common Stock on the date of grant. With respect to
non-qualified stock options, the exercise price may be fixed as low at 50% of
the fair market value per share at the time of grant. In no event may the
duration of an option exceed 10 years and no option may be granted after the
expiration of 10 years from the adoption of the Plan.
The exercise price of the option is payable in full upon exercise and
payment may be in cash, by delivery of shares of Common Stock (valued at their
fair market value at the time of exercise), or by a combination of cash and
shares. At the discretion of the Compensation Committee, options may be issued
in tandem with stock appreciation rights entitling the option holder to receive
an amount in cash or in shares of Common Stock, or a combination thereof, equal
in value to any increase since the date of grant in the fair market value of the
Common Stock covered by the option.
On July 6, 1995, the Compensation Committee granted options covering a
total of 50,000 shares of Common Stock to six officers and key employees of the
Company. These persons include Roberto Marchesini (then the Secretary, Treasurer
and Chief Financial Officer), who received an option covering 20,000 shares,
Phillip K. Durham (Vice President and Chief Operating Officer), who received an
option covering 10,000 shares, and Rosemary J. O'Connor (Vice President and
Controller), who received an option covering 5,000 shares. In each case, the
exercise price is $11.00 per share and the options become exercisable in
cumulative annual increments of 20% beginning October 3, 1996. Effective June
20, 1996, subsequent to the end of the last fiscal year, the Compensation
Committee granted an option under the Plan to Bennie H. Duck covering 10,000
shares of Common Stock in connection with his joining the Company as Vice
President, Secretary, Treasurer and Chief Financial Officer. The exercise price
of this option is $11.00 (the fair market value of the Common Stock on the date
of grant) and the option is exercisable in cumulative annual increments of 20%
beginning June 20, 1997.
The following table sets forth information concerning the grant of options
under the Plan to the officers named in the Summary Compensation Table above.
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
----------------- Value
at Assumed
Annual Rate of
Number of Percentage Stock Price
Securities of Total Appreciation for
Underlying Options Option Terms ($) (2)
Options Granted to Exercise ----------------
Granted Employees Price Expiration
Name (Shares) (1) in fiscal year ($/Share) Date 5% 10%
---- --------- -------------- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Roberto Marchesini 20,000 40% 11.00 10/03/05 138,400 350,600
Phillip K. Durham 10,000 20% 11.00 10/03/05 69,200 175,300
</TABLE>
- - - --------------------
(1) The options vest in cumulative annual increments of 20% beginning October
3, 1996.
(2) These amounts represent certain assumed rates of appreciation based on
actual option term and annual compounding from the date of grant. Actual
gains, if any, on stock option exercises and Common Stock holdings are
dependent on the future performance of the Common Stock and overall stock
market conditions. There can be no assurance that the stock appreciation
amounts reflected in this table will be achieved.
No stock options were exercised during the fiscal year ended April 30,
1996.
The Company has also granted a non-qualified stock option, covering 20,000
shares of Common Stock, to a Director who is neither an officer nor an employee.
The terms of this option, which was not issued under the Plan, are described
above under "Other Information Concerning the Board of Directors."
PERFORMANCE GRAPH
Set forth below is a line graph comparing the monthly percentage change in
the cumulative total shareholder return on the Company's (FIFS) Common Stock,
since the Company's initial public offering on October 4, 1995, against the
cumulative total return indices of the Nasdaq Stock (U.S.) Index and the Nasdaq
Financial Index for the period between October 4, 1995 and April 30, 1996. The
historical stock price performance for the Company's stock shown on the graph
below is not necessarily indicative of future stock performance. The Company
will not make nor endorse any predictions of future stock performance.
[GRAPHIC OMITTED]
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for 1996.
Under the supervision of the Committee, the Company has developed and
implemented compensation policies, plans and programs designed to enhance the
profitability of the Company, and therefore shareholder value, by aligning
closely the financial interests of the Company's senior executives with those of
its shareholders. The Committee has adopted the following objectives as
guidelines for making its compensation decisions:
Provide a competitive total compensation package that enables the
Company to attract and retain key executives.
Integrate all compensation programs with the Company's annual and
long-term business objectives and strategy and focus executive behavior
on the fulfillment of those objectives.
Provide variable compensation opportunities that are directly linked to
the performance of the Company and that align executive remuneration
with the interests of shareholders.
Executive base compensation for senior executives is intended to be
competitive with that paid in comparably situated industries and to provide a
reasonable degree of financial security and flexibility to those individuals
whom the Board of Directors regards as adequately performing the duties
associated with the various senior executive positions. In furtherance of this
objective, the Committee periodically, though not necessarily annually, reviews
the salary levels of a sampling of companies that are regarded by the Committee
as having sufficiently similar financial and operational characteristics to
provide a reasonable basis for comparison. Although the Committee does not
attempt to specifically tie executive base pay to that offered by any particular
sampling of companies, the review provides a useful gauge in administering the
Company's base compensation policy. In general, however, the Committee considers
the credentials, length of service, experience, and consistent performance of
each individual senior executive when setting compensation levels.
To ensure retention of qualified management, the Company has entered into
employment agreements with key management personnel. The employment agreements
establish annual base salary amounts that the Committee may increase based on
the foregoing criteria, as well as performance based incentive bonuses. See
"Employment Agreements".
The 1995 Employee Stock Option Plan is intended to provide key employees,
including the Chief Executive Officer and other executive officers of the
Company and its subsidiaries, with a continuing proprietary interest in the
Company, with a view to increasing the interest in the Company's welfare of
those personnel who share the primary responsibility for the management and
growth of the Company.
In addition, during the fiscal year ended April 30, 1996, the Company
amended its employment agreement with the Chief Executive Officer. See
"Employment Agreements". During fiscal year 1996, a cash bonus of $187,700 was
awarded to the Chief Executive Officer pursuant to the employment agreement.
Date: July 31, 1996
1996 Compensation Committee
of the Board of Directors
Fentress Bracewell
J.W. Smelley
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the 1996 fiscal year, no executive officer of the Company served as
(i) a member of the compensation committee (or other board committee performing
equivalent functions) of another entity, one of whose executive officers served
on the Compensation Committee, (ii) a director of another entity, one of whose
executive officers served on the Compensation Committee, or (iii) a member of
the Compensation Committee (or other board committee performing equivalent
functions) of another entity, one of whose executive officers served as a
director of the Company.
One of the members of the Compensation Committee, Fentress Bracewell, is
the Chairman of the Board of the Company, but is not an employee. Prior to the
completion of the Company's initial public offering of Common Stock in October
1995, the Company owed certain indebtedness to Mr. Bracewell and members of his
family, which indebtedness was retired upon completion of the offering of Common
Stock. See "Certain Transactions".
CERTAIN TRANSACTIONS
In April 1995, the Company issued an aggregate of $5,000,000 of promissory
notes to ten individuals, including persons who are directors and principal
shareholders of the Company (and in certain instances members of their family).
The notes were payable in aggregate principal installments of $600,000 on each
of July 31, 1996, October 31, 1996 and January 31, 1997, with the balance of
$3,200,000 payable on April 30, 1997. The notes bore interest, payable
quarterly, at the rate of 15% per annum and were ratably secured by the pledge
of all of the outstanding common stock of the Company's wholly-owned subsidiary,
First Investors Financial Services, Inc. Of the $5,000,000 proceeds, $3,250,000
was applied to retire a working capital loan owed by the Company to a commercial
bank and the balance was utilized for working capital purposes. The notes were
prepayable at any time without penalty and the Company prepaid all of the notes
in full on October 11, 1995, with a portion of the proceeds of a public offering
of Common Stock completed that month. The holders of the notes described above,
and the original principal amount thereof in each case, were: (i) Fentress
Bracewell ($800,000); (ii) Bradley F. Bracewell ($800,000); (iii) Sue S.
Schaefer, who is the daughter of Walter A. Stockard and the sister of Walter A.
Stockard, Jr. ($790,000); (iv) Jan S. Cato, who is the daughter of Walter A.
Stockard, the sister of Walter A. Stockard, Jr. and the wife of William J. Cato
($790,000); (v) Walter A. Stockard, Jr., as custodian for two of his children
($790,000); (vi) John William Smelley, who is the son of J. W. Smelley
($400,000); (vii) Dana Carey, who is the daughter of J. W. Smelley ($400,000);
and (viii) J. Randal Roberts, a co-founder and principal shareholder of the
Company ($200,000). Messrs. Fentress Bracewell, Bradley F. Bracewell, Walter A.
Stockard, Walter A. Stockard, Jr. and J. W. Smelley are Directors of the Company
and William J. Cato was, at the time of these transactions, a Director of the
Company.
In April 1993, the Company purchased a portfolio of receivables from a
financial institution for a discounted purchase price of $4,249,641. A portion
of these receivables, representing $1,676,003 of the aggregate purchase price,
had delinquency histories or other characteristics rendering them ineligible to
be financed under the Company's credit facilities. These receivables were sold
on a non-recourse basis to an investment partnership, in which Messrs. Walter A.
Stockard, Fentress Bracewell and J. W. Smelley each own a one-third interest,
for $1,773,748, an amount equal to the Company's cost plus a proportionate share
of the related acquisition expenses. A one-third interest in Mr. Fentress
Bracewell's interest in this partnership is owned beneficially by Mr. Bradley F.
Bracewell. These receivables are serviced by General Electric Capital
Corporation under the Company's servicing arrangements and the investment
partnership reimburses the Company for servicing fees and related expenses
attributable to the receivables. For the fiscal years ended April 30, 1994, 1995
and 1996, the amounts reimbursed were $85,280, $63,527 and $27,685,
respectively.
Prior to the completion of the Company's initial public offering of Common
Stock in October 1995, the Company had authorized and outstanding a class of
800,000 shares of Non-Voting Cumulative Preferred Stock, $1.00 par value per
share (the "1993 Preferred Stock"), which paid cumulative cash dividends to the
holders thereof at the annual rate of $.14 per share. The entire issue of 1993
Preferred Stock was held by Walter A. Stockard (48.1%), J. W. Smelley (16.7%),
Fentress Bracewell (16.6%), Bradley F. Bracewell (16.6%) and another individual
(1.9%). The Company had the right to redeem the 1993 Preferred Stock at the
redemption price of $1.00 per share (which was the original cost of the shares
to the holders thereof) if the redemption was approved by the holders of at
least 65% of the 1993 Preferred Stock outstanding. In June 1995, the Company and
the holders of all of the 1993 Preferred Stock agreed to the redemption of such
shares at the stated redemption price together with dividends accruing thereon
through the date of redemption and a 20% premium in consideration of the
holders' approval of the redemption. On October 11, 1995, the entire issue of
1993 Preferred Stock was redeemed (from a portion on the proceeds of the
Company's initial public offering of Common Stock completed that month) for
$1,000,699, consisting of the $800,000 stated redemption price, the $160,000
agreed redemption premium, and $40,699 of accrued dividends through the
redemption date. The class of 1993 Preferred Stock has been canceled in its
entirety and the Company is not authorized to reissue any such shares.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors has selected the accounting firm of Arthur Andersen
LLP to be the Company's independent accountants to audit the books and records
of the Company and its subsidiaries for the fiscal year ending April 30, 1997.
This firm has served as the Company's independent auditors for each fiscal year
since 1992.
A representative of Arthur Andersen LLP is expected to be present at the
Annual Meeting and will have the opportunity to make a statement if he or she
desires to do so and is expected to be available to respond to appropriate
questions.
COMPLIANCE WITH FILING REQUIREMENTS
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as
amended, Directors, executive officers and beneficial owners of more than ten
percent of the outstanding Common Stock are required to file reports with the
Securities and Exchange Commission reporting their beneficial ownership of the
Common Stock at the time they become subject to the reporting requirements and
at the time of any changes in beneficial ownership occurring thereafter. Based
upon a review of reports submitted to the Company and representations of persons
known by the Company to be subject to these reporting requirements, the Company
believes that all such reports due in the fiscal year ended April 30, 1996 were
filed on a timely basis except as set forth below.
Robert L. Clarke, a Director of the Company, did not file a Form 4 report
with respect to the purchase of 3,000 shares of Common Stock in connection with
the Company's initial public offering of Common Stock completed in October 1995.
This transaction has subsequently been reported on Form 5.
SHAREHOLDER PROPOSALS
Any proposals of Shareholders which are intended to be presented at the
1997 Annual Meeting of Shareholders must be received by the Secretary of the
Company by April 5, 1997 for consideration for inclusion in the proxy statement
and form of proxy for that meeting. Any such proposals should be submitted to
the Secretary of the Company at 675 Bering Drive, Suite 710, Houston, Texas
77057.
EXPENSES OF SOLICITATION
The cost of solicitation of proxies will be borne by the Company.
Solicitation will be made initially by mail. The Directors, officers and other
regular employees of the Company may, without compensation other than their
regular compensation, solicit proxies by mail, telephone or other form of direct
communication. The Company will also reimburse brokerage firms and other
custodians, nominees and fiduciaries for their reasonable expenses incurred in
forwarding solicitation material to beneficial owners.
By Order of the Board of Directors
/s/ BENNIE H. DUCK
Bennie H. Duck, Secretary
FIRST INVESTORS FINANCIAL SERVICES GROUP, INC.
PROXY
This Proxy is solicited by the Board of Directors
For the Annual Meeting of Shareholders September 5, 1996
Fentress Bracewell, Tommy A. Moore, Jr., and Roberto Marchesini, and
each or any of them, with full power of substitution and revocation in each, are
hereby appointed as Proxies authorized to represent the undersigned, with all
powers which the undersigned would possess if personally present, to vote the
Common Stock of the undersigned at the Annual Meeting of Shareholders of FIRST
INVESTORS FINANCIAL SERVICES GROUP, INC. to be held at the NationsBank Center,
700 Louisiana, 4th Floor, Houston, Texas on Thursday, September 5, 1996 at 10:00
a.m., and at any postponements or adjournments of that meeting, as set forth
below, and in their discretion upon any other business that may properly come
before the meeting.
This Proxy will be voted as specified or, if no choice is specified,
will be voted FOR the election of the nominees named and FOR each of the other
proposals specified herein.
(Continued and to be dated and signed on the reverse side.)
FIRST INVESTORS
P.O. BOX 11342
NEW YORK, NY 10203-0342
[ ]
1. Election of Directors - FOR all nominees [ ] WITHHOLD AUTHORITY to [ ]
One Year Term listed below vote for all nominees
listed below
*EXCEPTIONS [ ]
Nominees: Fentress Bracewell, Tommy A. Moore, Jr., Bradley F. Bracewell, Walter
A. Stockard, Jr., J.W. Smelley, Walter A. Stockard, Robert L. Clarke,
and Roberto Marchesini.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exception" box and write that nominee's name in the space provided below.)
*Exceptions ___________________________________________________________________
2. Ratification of the appointment of Arthur Andersen, LLP as independent
accountants of the Company and its subsidiaries for the fiscal year ending
April 30, 1997
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion the proxies are authorized to vote upon such other
matters as may come before the meeting or any adjournment thereof.
Change of Address and or Comments Mark Here [ ]
Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
Dated:_________________________________, 1996
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Signature
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Signature (if held jointly)
Votes must be indicated (X) in Black or Blue Ink.
(Please sign, date and return this proxy in the enclosed postage prepaid
envelope.)
