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 ss. 240.14a-11(c) or ss. 240.14a-12
First Investors Financial Services Group, 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] 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:
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 13, 2000
---------------------------------------------------
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 Bank of America Center, 700 Louisiana, 5th Floor, Houston, Texas
77002, on Wednesday, September 13, 2000 at 10:00 a.m. local time, for the
following purposes:
1. To elect five directors to serve for the ensuing year or until their
respective successors have been elected and qualified.
2. To transact any other business as may properly come before the Annual
Meeting or any adjournment thereof.
The close of business on July 31, 2000 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, 2000, accompanies
the enclosed Proxy Statement.
By Order of the Board of Directors
Houston, Texas
August 4, 2000 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.
<PAGE>
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
SEPTEMBER 13, 2000
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 Bank of America
Center, 700 Louisiana, 5th Floor, Houston, Texas 77002, on September 13, 2000 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. 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, 2000,
will first be sent to the shareholders of the Company on or about August 4,
2000.
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, 2000. Each
share entitles its holder to one vote. Only shareholders of record at the close
of business on July 31, 2000, 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.
The presence at the Annual Meeting, in person or by proxy, of holders of a
majority of the outstanding shares of Common Stock entitled to vote will
constitute a quorum for the transaction of business. The affirmative vote of the
holders of a majority of the outstanding shares represented at the Annual
Meeting is required to elect each of the nominees to the Board of Directors. If
a share of Common Stock is represented for any purpose at the Annual Meeting, it
is deemed to be present for all other matters. Abstentions and shares held of
record by a broker or nominee ("Broker Shares") that are voted on any matter are
included in determining the number of votes present. Shares with respect to
which authority is witheld, abstentions and Broker Shares that are not voted are
treated as shares as to which voting authority has been witheld by the holder of
those shares and, therefore, as shares not voting on the proposal.
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, 2000, by: (i) each
person who is known by the Company to own beneficially more than 5%
<PAGE>
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 Director (through June 216,666 3.9%
2900 Pennzoil Place 21, 2000)
700 Louisiana
Houston, Texas 77002
Tommy A. Moore, Jr Director, Chairman of 800,000 14.4%
675 Bering, Suite 710 the Board, President and
Houston, Texas 77057 Chief Executive Officer
Joseph A. Pisano Senior Vice President 4,000(1) *
675 Bering, Suite 710 And Chief Operating
Houston, Texas 77057 Officer
Bennie H. Duck Vice President, 16,000(2) *
675 Bering, Suite 710 Secretary, Treasurer
Houston, Texas 77057 and Chief Financial
Officer
Bradley F. Bracewell Director (through June 271,999(3) 4.9%
2417 Maconda 22, 2000)
Houston, Texas 77027
Walter A. Stockard, Jr Director 360,000(4) 6.5%
2001 Kirby, Suite 901
Houston, Texas 77019
J. W. Smelley Director (through June 250,002 4.5%
4550 Post Oak Place 22, 2000)
Houston, Texas 77027
Walter A. Stockard Director 75,000 1.3%
2001 Kirby, Suite 901
Houston, Texas 77019
Roberto Marchesini Director and Vice 20,000(5) *
675 Bering, Suite 710 President - Portfolio
Houston, Texas 77057 Risk Management
Robert L. Clarke Director 63,000(6) 1.1%
2900 Pennzoil Place
700 Louisiana
Houston, Texas 77002
J. Randal Roberts 366,669(7) 6.6%
15 Sundown Parkway
Austin, Texas 78746
JAM Partners, Ltd.
One Fifth Avenue
New York, New York 10003 321,700 6.5%
2
<PAGE>
George B. Harrop 359,200 6.5%
759 Carlingford Lane
Houston, Texas 77079
Dimensional Fund Advisors 476,200 8.6%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
All executive officers
and directors as a group
(10 persons) 2,076,667(8) 37.3%
--------------------------
</TABLE>
* Less than 1% of the Common Stock outstanding.
(1) Reflects the currently exercisable portion of stock options held by Mr.
Pisano covering 10,000 shares in the aggregate.
(2) Reflects the currently exercisable portion of stock options held by Mr. Duck
covering 30,000 shares in the aggregate.
(3) Includes 19,999 shares held by the Malachi Fund 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 30,000 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) Includes 60,000 shares issuable upon exercise of stock options that are
currently exercisable
ELECTION OF DIRECTORS
At the Annual Meeting five Directors will be elected to hold office until
the 2001 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. For additional information see OTHER INFORMATION
CONCERNING THE BOARD OF DIRECTORS.
NAME AGE POSITION
Tommy A. Moore, Jr. 43 Chairman of the Board, President and
Chief Executive Officer
Roberto Marchesini (2) 56 Director and Vice President - Portfolio
Risk Management
Walter A. Stockard (1) 88 Director
Robert L. Clarke (1) (2) 58 Director
Walter A. Stockard, Jr. 48 Director
(1)(2)
--------------------
(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. Moore, a co-founder of the Company in 1989, has served as its President
and Chief Executive Officer
3
<PAGE>
and a Director since that time. Mr. Moore was elected to the additional position
of Chairman of the Board in July, 2000. 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 a
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. 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. 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 five 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
In June, 2000 three members of the Board of Directors, Fentress Bracewell,
former Chairman of the Board, J.W. Smelley and Bradley F. Bracewell each of whom
had served since 1992, submitted their resignations from their positions on the
Board of Directors and certain Committees of the Board on which they served. At
a scheduled meeting of the Board of Directors on July 26, 2000, Mr. Tommy A.
Moore, Jr., President and CEO, was elected to the additional position of
Chairman of the Board. Robert L. Clarke and W.A. Stockard were elected as
members of the Compensation Committee and Robert L. Clarke was elected to the
Audit Committee. Further, in accordance with the By-laws of the Company, the
Board of Directors voted to reduce the number of Directors from eight to five
persons.
During the fiscal year ended April 30, 2000, the Board of Directors met
eleven 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
4
<PAGE>
Committee, which did not meet 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.
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
Joseph A. Pisano 54 Senior Vice President and Chief
Operating Officer
Bennie H. Duck 36 Vice President, Secretary,
Treasurer and Chief Financial
Officer
Mr. Pisano joined the Company in March 1998 as its Senior Vice President
and Chief Operating Officer. He was previously employed by Gulf States
Acceptance Company, a sub-prime auto finance company where he served for three
years as Vice President of Operations. Prior to that, he served two years as
General Manager of Nissan Motor Acceptance Corporation. In addition, he has 27
years of experience in lending and loan operations, including seven years as a
Deputy Division Manager with National Westminster Bank and 18 years in business
development positions at General Electric Credit Corporation.
Mr. Duck joined the Company in May 1996 as its Vice President, Secretary,
Treasurer and Chief Financial Officer. Mr. Duck was previously employed for ten
years by Bank of America in various capacities and most recently as a Vice
President of Corporate Finance.
SUMMARY COMPENSATION TABLE
The following table sets forth, for the past three fiscal years, the
compensation of the President, Chief Financial Officer, and Chief Operating
Officer of the Company.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
NAME AND -------------------------- ------------- ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS STOCK OPTIONS COMPENSATION
------------------ ----- -------- -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Tommy A. Moore, Jr 1998 $150,000 $ -0- $ -0-
President and Chief 1999 $150,000 $ 96,400 $ -0-
Executive Officer 2000 $150,000 $165,925 $ -0-
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Joseph A. Pisano 1998 $ 15,577 $ -0- $ -0-
Senior Vice President 1999 $150,000 $ -0- 10,000(1) $ -0-
and Chief Operating Officer 2000 $150,000 $ 15,000 $ -0-
Bennie H. Duck 1998 $125,000 $ -0- 20,000(2) $ -0-
Secretary, Treasurer and 1999 $140,000 $ -0- $ -0-
Chief Financial Officer 2000 $140,000 $ 15,000 $ -0-
</TABLE>
--------------------
(1) Consists of options under the Company's 1995 Employee Stock Option Plan
granted effective March 19, 1998 and covering 10,000 shares of Common Stock.
See "Stock Option Plan".
(2) Consists of options under the Company's 1995 Employee Stock Option Plan
granted effective July 15, 1997 and covering 20,000 shares of Common Stock.
See "Stock Option Plan".
EMPLOYMENT AGREEMENTS
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 was
for a term of two years and provided for an annual salary of $125,000. In
addition, Mr. Duck was entitled to receive a bonus each fiscal year covered
under the term of the agreement (the fiscal year ending April 30, 1997 and April
30, 1998) in an amount varying from $6,667 to $40,000 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, 1998. Effective May 1, 1998, Mr.
Duck's employment agreement was renewed, extending the maturity date to July 31,
2000, increasing the annual salary to $140,000. In addition, Mr. Duck may be
entitled to receive an annual bonus, varying from $6,667 to $40,000 depending on
the results of operations of the Company for the fiscal years ending April 30,
1999 and 2000. For the fiscal year ending April 30, 2000, Mr. Duck was awarded a
cash bonus of $15,000. The Board of Directors has approved a renewal and
extension of Mr. Duck's employment agreement for an additional two years under
substantially similar terms and conditions.
Effective March 19, 1998, the Company entered into an employment agreement
with Joseph A. Pisano in connection with Mr. Pisano's joining the Company as
Senior Vice President and Chief Operating Officer. The agreement expires July
31, 2000 and provides for an annual salary of $150,000. In addition, Mr. Pisano
may be entitled to receive an annual bonus varying from $6,667 to $40,000
depending on the results of the Company for the fiscal years ending April 30,
1999 and 2000. For the fiscal year ending April 30, 2000, Mr. Pisano was awarded
a cash bonus of $15,000. The Board of Directors has approved a renewal and
extension of Mr. Pisano's employment agreement for an additional two years under
substantially similar terms and conditions.
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
6
<PAGE>
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, 2000, the Compensation Committee had granted options
covering a total of 117,000 shares of Common Stock to nine officers and key
employees of the Company. The following table summarizes the pertinent
information covering options granted on specific dates. All options become
exercisable in cumulative annual increments of 20% beginning one year from the
date of each grant and, if not exercised, expire ten years from the date of each
grant.
NUMBER OF SHARES
UNDERLYING OPTIONS EXERCISE PRICE
GRANT DATE GRANTED ($/SHARE)
---------- ---------
7/6/95 40,000(1) 11.000
6/20/96 10,000(2) 11.000
7/15/97 57,000(3) 7.375
3/19/98 10,000(4) 6.750
6/1/98 2,500(5) 7.250
10/31/98 5,000(5) 4.750
3/31/00 2,500(5) 5.250
--------------------
(1) Granted to five officers and key employees of the Company.
(2) Granted to Bennie H. Duck in connection with his joining the Company as Vice
President, Secretary, Treasurer and Chief Financial Officer.
(3) Granted to seven officers and key employees of the Company.
(4) Granted to Joseph A. Pisano in connection with his joining the Company as
Senior Vice President and Chief Operating Officer.
(5) Granted to three officers of the Company.
The following table sets forth information concerning the grant of options
under the Plan to 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
UNDERLYING OPTIONS APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OPTION TERMS($)(4)
GRANTED EMPLOYEES PRICE EXPIRATION --------------------
NAME (SHARES) IN FISCAL YEAR ($/SHARE) DATE 5% 10%
---------------- -------- -------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Bennie H. Duck 10,000(1) 100% 11.000 06/20/06 $179,178 $285,312
20,000(2) 30% 7.375 07/15/07 $240,262 $382,577
Joseph A. Pisano 10,000(3) 15% 6.75 03/19/08 $109,950 $175,078
</TABLE>
--------------------
7
<PAGE>
(1) The options vest in cumulative annual increments of 20% beginning June 20,
1997.
(2) The options vest in cumulative annual increments of 20% beginning July 15,
1998.
(3) The options vest in cumulative annual increments of 20% beginning March 19,
1999.
(4) 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,
2000.
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, 2000. 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]
DATE NASDAQ US NASDAQ FINANCE FIFS MONTH END
-------------- -------------- -------------- --------------
10/4/95 100.00 100.00 100.00
10/31/95 81.31 81.41 87.95
1/31/96 93.01 88.18 79.55
4/30/96 104.21 100.51 104.55
7/31/96 105.48 107.84 90.91
10/31/96 110.42 112.18 93.18
1/31/97 119.42 114.82 81.82
4/30/97 123.67 124.44 63.64
7/31/97 129.78 138.44 68.18
10/31/97 122.74 144.51 72.73
1/31/98 145.23 168.16 63.64
4/30/98 169.80 196.17 70.45
7/31/98 129.78 138.44 68.18
10/31/98 186.11 224.50 42.05
1/31/99 191.22 218.66 50.00
4/30/99 172.68 180.88 48.86
7/31/99 180.14 191.96 54.55
10/31/00 198.36 198.69 54.55
1/31/00 224.09 205.58 46.03
4/30/00 256.68 205.30 42.62
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for 2000.
8
<PAGE>
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:
o Provide a competitive total compensation package that enables the
Company to attract and retain key executives.
o 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.
o 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.
Date: July 26, 2000
2000 Compensation Committee
of the Board of Directors
W.A. Stockard
Robert L. Clarke
Walter A. Stockard, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the 2000 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.
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AUDIT COMMITTEE REPORT
To the Board of Directors of First Investors Financial Services Group, Inc.
We have reviewed and discussed with management the Company's audited financial
statements as of and for the fiscal year ended April 30, 2000. We have discussed
with the independent auditors the matters required to be discussed by Statement
on Auditing Standards No. 61, Communications with the Audit Committees, as
amended, by the Auditing Standards Board of the American Institute of Certified
Public Accountants. We have also reviewed the written disclosures and the letter
from the independenet auditors required by Independent Standard No. 1,
Independent Discussions with Audit Committees, as amended, by the Independent
Standards Board, and have discussed with the auditors the auditors'
independence.
Based on the reviews and discussions referred to above, we recommend to the
Board of Directors that the financial statements referred to above be included
in the Company's Annual Report on Form 10-K for the year ended April 30, 2000.
On May 31, 2000, the Board of Directors approved an Audit Committee Charter
pursuant to the requirements of the Securities and Exchange Commission and the
National Association of Securities Dealers. A copy of the Audit Committee
Charter has been included in the proxy statement as Addendum A.
Date: July 26, 2000
2000 Audit Committee
of the Board of Directors
W.A. Stockard, Jr.
Roberto Marchesini
RELATED PARTY TRANSACTIONS
On September 20, 1999, the Company entered into an unsecured promissory
note with a Walter A. Stockard, a director and shareholder of the Company, under
which the Company borrowed $2.5 million to fund its working capital
requirements. The promissory note was issued for a term of 90 days and provided
for principal and interest due at maturity based on an interest rate of 12%. The
note was repaid in full on December 20, 1999 with the proceeds from borrowings
under a working capital facility provided to the Company by two commercial
banks. Total interest paid on the outstanding indebtedness was $74,795. The
Company believes that the terms and conditions, including the interest rate
applicable to the borrowings, were consistent with those which could reasonably
be obtained from any unaffiliated party.
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, 2001.
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
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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, 2000 were
filed on a timely basis.
SHAREHOLDER PROPOSALS
Any proposals of Shareholders which are intended to be presented at the
2001 Annual Meeting of Shareholders must be received by the Secretary of the
Company by April 5, 2001 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.
Such proposals must also have complied with Rule 14a-8 under the
Securities Exchange Act of 1934, as amended, if the proposal is to be considered
for inclusion in the Company's proxy statement for such meeting. The Company
must receive notice of any shareholder proposal to be brought before the meeting
outside the process of Rule 14a-8 at the address noted above not less than 45
days prior to the meeting; provided, if the Company gives notice or prior public
disclosure of the date of the annual meeting less than 50 days before the
meeting, such shareholder's notice must be received not later than the close of
business on the seventh day following the date on which the Company's notice of
the date of the annual meeting was mailed or public disclosure made.
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
Bennie H. Duck, Secretary
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ADDENDUM A
AUDIT COMMITTEE CHARTER
The Audit Committee ("the Audit Committee"), of the Board of Directors ("the
Board") of First Investors Financial Services Group, Inc. ("the Company"), will
have the independent oversight responsibility, authority and specific duties as
described in this Audit Committee Charter adopted by the Board effective May 31,
2000 as may be amended from time to time at the discretion of the Board.
COMPOSITION
The Committee will be comprised of three or more directors as determined by the
Board. The members of the Committee will meet the independence, experience and
financial literacy requirements of the NASDAQ National Market Exchange (NASD).
To the extent that, upon adoption of this Charter, the Committee does not meet
the membership requirements of the NASD, then the Board shall timely make the
necessary appointments of additional members such that the Committee is in
compliance within the time period promulgated by the NASD. The members of the
Committee will be elected annually by the full Board and will be listed in the
annual report to shareholders. One of the members of the Committee will be
elected Committee Chair by the Board. It is understood that the Board has
complete discretion in electing and removing members of the Committee.
RESPONSIBILITY
The Committee is a part of the Board and reports solely to the Board on all
matters regarding the scope of its responsibility. The primary responsibility of
the Committee is to assist the Board in fulfilling its oversight
responsibilities with respect to (i) the quarterly and annual financial
information to be provided to shareholders and the Securities and Exchange
Commission (SEC); (ii) the system of internal controls that management has
established; and (iii) the internal and external audit process. In addition, the
Committee provides an avenue for communication between the independent
accountants, financial management and the Board. The Committee should have a
clear understanding with the independent accountants that they must maintain an
open and transparent relationship with the Committee, and that the ultimate
accountability of the independent accountants is to the Board and the Committee.
The Committee will make regular reports to the Board concerning its activities.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. It is the
responsibility of management to assure compliance with laws and regulations and
to determine and assess the Company's business conduct guidelines.
AUTHORITY
Subject to the prior approval of the Board, the Committee is granted the
authority to investigate any matter or activity involving financial accounting
and financial reporting, as well as the internal controls of the Company. In
that regard, the Committee will have the authority to approve the retention of
external professionals to render advice and counsel in such matters. All
employees will be directed to cooperate with respect thereto as requested by
members of the Committee.
MEETINGS
The Committee will meet at least four times annually in conjunction with the
completion of the Company's quarterly and annual financial statements and as
many additional times as the Committee deems necessary. Meetings may be held
either in person or telephonically. Content of the agenda for each meeting
should be submitted and approved by the Committee Chair prior to the meeting.
The Committee may meet in separate executive sessions with the chief financial
officer and independent accountants at other times when considered appropriate.
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ATTENDANCE AND QUORUM REQUIREMENTS
Committee members will strive to be present at all meetings. As necessary or
desirable, the Committee Chair may request that members of management and
representatives of the independent accountants be present at Committee meetings.
A quorum for conducting a Committee meeting shall exist with the presence of at
least 66 2/3% of the elected members in attendance either in person or
telephonically.
VOTING
Business matters and requests presented to the Committee for consideration shall
be deemed approved with the consent of at least 66 2/3% of members present.
Matters failing to achieve a 66 2/3% consent shall be considered declined by the
Committee.
SPECIFIC DUTIES
In carrying out its oversight responsibilities, the Committee will:
1. Review and reassess the adequacy of this charter annually and recommend any
proposed changes to the Board for approval. This should be done in
compliance with applicable NASD Audit Committee Requirements.
2. Review with the Company's management and the independent accountants the
Company's accounting and financial reporting controls. Obtain annually in
writing from the independent accountants their letter as to the adequacy of
such controls.
3. Review with the Company's management and the independent accountants' all
significant accounting and reporting principles, practices and procedures
applied by the Company in preparing its financial statements. Discuss with
the independent accountants their judgements about the quality, not just
the acceptability, of the Company's accounting principles used in financial
reporting.
4. Review the scope and general extent of the independent accountants' annual
audit. The Committee's review should include an explanation from the
independent accountants of the factors considered by the accountants in
determining the audit scope, including the major risk factors. The
independent accountants should confirm to the Committee that no limitations
have been placed on the scope or nature of their audit procedures. The
Committee will review annually with management the fee arrangement with the
independent accountants.
5. Inquire as to the independence of the independent accountants and obtain
from the independent accountants, at least annually, a formal written
statement delineating all relationships and services between the
independent accountants and the Company as contemplated by Independence
Standards Board Standard No. 1, Independence Discussions with Audit
Committee.
6. Require that the independent accountants will advise management and the
Committee, through its Chair, of any matters identified through procedures
followed for interim quarterly financial statements that may adversely
affect the quality or the acceptability of the quarterly financial reports.
This notification as required under standards for communication with Audit
Committees regarding the effect on quality of significant events,
transactions, and changes in accounting estimates, is to be made prior to
the related press release or, if not practicable, prior to filing Form 10-Q
with the SEC.
7. At the completion of the annual audit, review with management and the
independent accountants the following:
- The annual financial statements and related footnotes and financial
information to be included in the Company's annual report to shareholders
and on Form 10-K.
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- Results of the audit of the financial statements and the related report
thereon and, if applicable, a report on changes during the year in
accounting principles and their application.
- Significant changes to the audit plan, if any, and any serious disputes
or difficulties with management encountered during the audit. Inquire
about the cooperation received by the independent accountants and whether
there have been any disagreements with management which if not
satisfactorily resolved, would have caused them to issue a nonstandard
report on the Company's financial statements.
- Significant developments in accounting guidelines, policies and
procedures including any changes in generally accepted accounting
principles which may impact the Company's accounting policies or
financial results.
- Other communications as required to be communicated by the independent
accountants by Statement of Auditing Standards (SAS) 61 as amended by SAS
90 relating to the conduct of the audit. Further, receive a written
communication provided by the independent accountants concerning their
judgement about the quality of the Company's accounting principles, as
outlined in SAS 61 as amended by SAS 90, and that they concur with
management's representation concerning audit adjustments.
If deemed appropriate after such review and discussion, recommend to the
Board that the financial statements be included in the Company's annual
report on Form 10-K.
8. After preparation by management and review by independent accountants,
approve the report required under SEC rules to be included in the Company's
annual proxy statement. The Audit Committee Charter is to be published as
an appendix to the proxy statement every three years.
9. Discuss with the independent accountants the quality of the Company's
financial and accounting personnel. Also elicit the comments of management
regarding the responsiveness of the independent accountants to the
Company's needs.
10. Meet with management and the independent accountants to discuss any
relevant significant recommendations that the independent accountants may
have, particularly those characterized as "material" or "serious".
Typically, such recommendations will be presented by the independent
accountants in the form of a Letter of Comments and Recommendations to the
Committee. The Committee should review responses of management to the
Letter of Comments and Recommendations from the independent accountants and
receive follow-up reports on action taken concerning the aforementioned
recommendations.
11. Recommend to the Board the selection, retention or termination of the
Company's independent accountants.
12. Review with management and the independent accountants the methods used to
establish and monitor the Company's policies with respect to unethical or
illegal activities by Company employees that may have a material impact on
the financial statements.
13. Generally as part of the review of the annual financial statements, receive
an oral report(s), at least annually, from the Company's general counsel
concerning legal and regulatory matters that may have a material impact on
the financial statements.
14. As the Committee may deem appropriate, obtain, weigh and consider expert
advice as to Audit Committee related rules of the NASD, Statements on
Auditing Standards and other accounting, legal and regulatory provisions.
15. Provide a forum for reviewing and assessing conflicts of interest and
related-party transactions.
16. Review, as deemed necessary, with the Company's legal counsel, any legal
matter that could have a significant impact on the Company's financial
statements.
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FIRST INVESTORS FINANCIAL
SERVICES GROUP, INC.
ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, SEPTEMBER 13, 2000
FIRST INVESTORS FINANCIAL SERVICES GOUP, INC. PROXY
--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS SEPTEMBER 13, 2000
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 Bank of America Center, 700 Louisiana, 5th Floor,
Houston, Texas on Wednesday, September 13, 2000 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.
(SEE REVERSE SIDE FOR VOTING INSTRUCTIONS.)
o PLEASE DETACH HERE o
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
<TABLE>
<S> <C> <C> <C> <C>
1. Election of Directors: Tommy A. Moore, Jr Robert L. Clarke [ ] Vote FOR [ ] Vote WITHHELD
Walter A. Stockard Roberto Marchesini all nominees from all nominees
Walter A. Stockard, Jr.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, --------------------------------------------------
WRITE THAT NOMINEE(S) NAME IN THE BOX PROVIDED TO THE RIGHT.) | |
--------------------------------------------------
</TABLE>
2. In their discretion the proxies are authorized to vote upon such other
matters as may come before the meeting or any adjournment thereof.
Address Change? Mark Box [ ]
Indicate changes below: Date:_________________________________
______________________________________
SIGNATURE
______________________________________
SIGNATURE
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc., should
include title and authority.
Corporations should provide full name
of corporation and title of authorized
officer signing the proxy.
