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] No fee required.
[ ] 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>
First Investors Financial Services Group, Inc.
675 Bering Drive, Suite 710
Houston, Texas 77057
---------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
SEPTEMBER 3, 1997
---------------------------------------------------
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, 5th Floor, Houston, Texas
77002, on Wednesday, September 3, 1997 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, 1998.
3. To transact any other business as may properly come before the annual
meeting or any adjournment thereof.
The close of business on July 30, 1997 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, 1997, accompanies
the enclosed Proxy Statement.
By Order of the Board of Directors
/s/ Bennie H. Duck
Houston, Texas Bennie H. Duck, Secretary
August 4, 1997
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.
<PAGE>
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
SEPTEMBER 3, 1997
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, 5th Floor, Houston, Texas 77002, on September 3, 1997 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, 1998. 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, 1997
will first be sent to the shareholders of the Company on or about August 4,
1997.
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 30, 1997. Each
share entitles its holder to one vote. Only shareholders of record at the close
of business on July 30, 1997, 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 June 30, 1997, 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.
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
POSITION BENEFICIAL PERCENT OF
NAME AND ADDRESS WITH COMPANY OWNERSHIP CLASS
---------------- ------------ --------- -----
<S> <C> <C> <C>
Fentress Bracewell ........... Director and Chairman of 216,666 3.9%
2900 Pennzoil Place the Board
700 Louisiana
Houston, Texas 77002
Tommy A. Moore, Jr ........... Director, President and Chief 800,000 14.4%
675 Bering, Suite 710 Executive Officer
Houston, Texas 77057
Bennie H. Duck ............... Vice President, Secretary, 2,000(1) *
675 Bering, Suite 710 Treasurer and Chief Financial
Houston, Texas 77057 Officer
Phillip K. Durham ............ Vice President and Chief 2,000(2) *
675 Bering, Suite 710 Operating Officer
Houston, Texas 77057
Bradley F. Bracewell ......... Director 399,999(3) 7.2%
3633 Rice Boulevard
Houston, Texas 77005
Walter A. Stockard, Jr ....... Director 360,000(4) 6.5%
2001 Kirby, Suite 901
Houston, Texas 77019
J. W. Smelley ................ Director 250,002 4.5%
4550 Post Oak Place
Houston, Texas 77027
Walter A. Stockard ........... Director 75,000 1.3%
2001 Kirby, Suite 901
Houston, Texas 77019
Roberto Marchesini ........... Director and Vice President - 4,000(5) *
675 Bering, Suite 710 Portfolio Risk Management
Houston, Texas 77057
Robert L. Clarke ............. Director 43,000(6) *
2900 Pennzoil Place
700 Louisiana
Houston, Texas 77002
J. Randal Roberts ............ 366,669(7) 6.6%
15 Sundown Parkway
Austin, Texas 78746
T. Rowe Price Associates, Inc. 723,265(8) 13.0%
P.O. Box 89000
Baltimore, Maryland 21289
2
<PAGE>
JAM Partners, Ltd. ........... 328,200 5.9%
One Fifth Avenue
New York, New York 10003
All executive officers and directors as a group (12 persons) 2,154,167(9) 38.7%
</TABLE>
- - --------------------
* Less than 1% of the Common Stock outstanding.
(1) Reflects the currently exercisable portion of stock options held by Mr.
Duck covering 10,000 shares in the aggregate.
(2) Represents currently exercisable portion of stock options all of which
have lapsed in view of Mr. Durham's resignation on May 2, 1997.
(3) Includes 39,999 shares held by the Elaine and Brad Bracewell Foundation as
to which Mr. Bracewell disclaims beneficial ownership.
(4) Consists entirely of shares held by Mr. Stockard as custodian for two
minor children, as to which shares he disclaims beneficial ownership.
(5) Reflects the currently exercisable portion of stock options held by Dr.
Marchesini covering 20,000 shares in the aggregate.
(6) Includes 20,000 shares that may be acquired pursuant to the exercise of a
stock option.
(7) Includes 20,000 shares held by a trust for a minor child of Mr. Roberts,
as to which shares he disclaims beneficial ownership.
(8) 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.
(9) Includes 29,000 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.
3
<PAGE>
ELECTION OF DIRECTORS
At the Annual Meeting eight Directors will be elected to hold office until
the 1998 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) ....... 75 Director and Chairman of the Board
Tommy A. Moore, Jr ........... 40 Director, President and Chief Executive
Officer
Roberto Marchesini (2) ....... 53 Director and Vice President - Portfolio
Risk Management
J. W. Smelley (1) ............ 75 Director
Walter A. Stockard ........... 85 Director
Robert L. Clarke ............. 55 Director
Bradley F. Bracewell (2) ..... 44 Director
Walter A. Stockard, Jr. (1)(2) 45 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
4
<PAGE>
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, 1997, 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 one time 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.
5
<PAGE>
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.
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
---- --- --------
Bennie H. Duck ..... 33 Vice President, Secretary, Treasurer and Chief
Financial Officer
J. Clayton Adams ... 42 Vice President - National Marketing
Rosemary J. O'Connor 36 Vice President and Controller
Michael D. Ogg ..... 31 Vice President - Credit Administration
- - --------------------
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.
Mr. Adams joined the Company in April, 1992, and serves as its Vice
President in charge of National Marketing. Prior to joining the Company, Mr.
Adams was employed for over 15 years in the retail automobile business holding
various positions including general manager, sales manager and finance and
insurance manager for several automobile dealers in the Southwest.
Ms. O'Connor joined 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.
Mr. Ogg has been employed by the Company since its inception in 1989 and
currently serves as its Vice President in charge of Credit Administration. Prior
to joining the Company, Mr. Ogg was employed for three years by a privately held
indirect finance company where he served in various positions, most recently as
Assistant Credit Manager.
6
<PAGE>
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
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
NAME AND ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS STOCKSOPTIONS COMPENSATION
------------------ ---- ------ ----- ------------- ------------
<S> <C> <C> <C> <C> <C>
Tommy A. Moore, Jr ......... 1995 $ 70,000 $ 87,785 $ -0-
President and Chief ........ 1996 $116,000 $187,700 $ -0-
Executive Officer .......... 1997 $150,000 $109,000 $ -0-
Phillip K. Durham .......... 1995 $100,000 $ -0- $16,267(1)
Vice President and ......... 1996 $107,625 $ -0- 10,000(2) $ -0-
Chief Operating Officer .... 1997 $125,000 $ -0- $ -0-
Bennie H. Duck ............. 1995 $ -0- $ -0- $ -0-
Secretary, Treasurer and ... 1996 $ -0- $ -0- $ -0-
Chief Financial Officer .... 1997 $125,000 $ -0- 10,000(3) $ -0-
</TABLE>
- - --------------------
(1) Mr. Durham joined the Company in January 1994, as a consultant and began
employment in March 1994. Mr. Durham resigned from the Company effective
May 2, 1997.
(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, all of which have lapsed in view of Mr. Durham's resignation. See
"Stock Option Plan".
(3) Consists of options under the Company's 1995 Employee Stock Option Plan
granted effective June 20, 1996 and covering 10,000 shares of Common
Stock. See "Stock Option Plan".
EMPLOYMENT AGREEMENTS
The Company had an employment agreement with Tommy A. Moore, Jr., its
President and Chief Executive Officer, that extended 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 provided for an annual incentive bonus not to exceed 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. The
employment agreement expired in March, 1997. Effective July 16, 1997, the
Company entered into a new employment agreement with Mr. Moore providing for an
annual salary of $150,000 and an annual incentive bonus payable subsequent to
fiscal year end 1998 in an amount to be determined by the Board of Directors
based on the financial performance of the Company. The agreement expires July
15, 1998.
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 $37,143 depending upon the results of operations of the
company. Mr. Duck earned no bonus under the Employment Agreement for the fiscal
year ending April 30,
7
<PAGE>
1997. 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.
As of April 30, 1997, the Compensation Committee had granted options
covering a total of 60,000 shares of Common Stock to seven officers and key
employees of the Company. In each case, the exercise price is $11.00 per share
and the options become exercisable in cumulative annual increments of 20%
beginning one year from the date of each grant.
The following table sets forth information concerning the grant of options
under the Plan to the officers named in the Summary Compensation Table above.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------- POTENTIAL REALIZABLE VALUE
AT ASSUMED
NUMBER OF PERCENTAGE ANNUAL RATE OF
SECURITIES OF TOTAL STOCK PRICE APPRECIATION FOR
UNDERLYING OPTIONS OPTION TERMS ($)(3)
OPTIONS GRANTED TO EXERCISE ----------------------------
GRANTED EMPLOYEES PRICE EXPIRATION
NAME (SHARES) IN FISCAL YEAR ($/SHARE) DATE 5% 10%
---- -------- -------------- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Phillip K. Durham 10,000 (1) 100% 11.00 10/03/05 $179,178 $285,312
Bennie H. Duck 10,000 (2) N/A 11.00 06/20/06 $179,178 $285,312
</TABLE>
- - --------------------
(1) Original option of 10,000 shares was exercisable in cumulative annual
increments of 20% beginning on October 3, 1996. 8,000 shares have lapsed
in view of Mr. Durham's resignation on May 2, 1997. 2,000
8
<PAGE>
shares were exercisable on October 3, 1996 with an expiration date of
August 2, 1997. No options were exercised on August 2, 1997.
(2) The options vest in cumulative annual increments of 20% beginning June 20,
1997.
(3) 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,
1997.
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 quarterly 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, 1997. 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.
STOCK QUARTERLY PERFORMANCE COMPARISON
FIFS vs NASDAQ and NASDAQ Financial Company Indexes
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
<TABLE>
<CAPTION>
DATE 10/04/95 10/31/95 01/31/96 04/30/96 07/31/96 10/31/96 01/31/97 04/30/97
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Nasdaq US ......... 100.00 103.62 106.00 119.57 108.78 122.29 138.94 126.57
NASDAQ FINANCE .... 100.00 100.95 108.30 112.47 111.84 128.39 143.87 145.94
FIFS Quarter End .. 100.00 87.95 79.55 104.55 90.91 93.18 81.82 63.64
</TABLE>
IPO and Quarterly
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for 1997.
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
9
<PAGE>
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, 1997, the Company
amended its employment agreement with the Chief Executive Officer. In March,
1997, this employment agreement expired. On July 16, 1997, the Company entered
into a new employment agreement with its Chief Executive Officer which expires
July 15, 1998. During fiscal year 1997, a cash bonus of $109,000 was awarded to
the Chief Executive Officer pursuant to the employment agreement. See
"Employment Agreement".
Date: July 31, 1997
1997 Compensation Committee
of the Board of Directors
Fentress Bracewell
J.W. Smelley
Walter A. Stockard, Jr.
10
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the 1997 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.
CERTAIN TRANSACTIONS
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, all of whom are directors of the
Company, 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, a director of the Company. 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, 1995, 1996 and 1997, the amounts reimbursed
were $63,527, $27,685 and $19,187, respectively.
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, 1998.
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, 1997 were
filed on a timely basis.
SHAREHOLDER PROPOSALS
Any proposals of Shareholders which are intended to be presented at the
1998 Annual Meeting of Shareholders must be received by the Secretary of the
Company by April 6, 1998 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.
11
<PAGE>
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
12
<PAGE>
FIRST INVESTORS FINANCIAL SERVICES GROUP, INC.
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS SEPTEMBER 3, 1997
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, 5TH FLOOR, HOUSTON, TEXAS ON THURSDAY, SEPTEMBER 3, 1997 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
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS - FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY TO [ ] *EXCEPTIONS [ ]
ONE YEAR TERM LISTED BELOW VOTE FOR ALL NOMINEES
LISTED BELOW
</TABLE>
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, 1998
3. IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
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:_________________________________, 1997
--------------------------------------------
Signature
--------------------------------------------
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.)
