<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ /Preliminary Proxy Statement / /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
Advanta Corp.
________________________________________________________________________________
(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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
___________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
___________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________________
/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
___________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
(3) Filing Party:
___________________________________________________________________________
(4) Date Filed:
___________________________________________________________________________
<PAGE> 2
Advanta Logo
WELSH AND MCKEAN ROADS
P.O. BOX 844
SPRING HOUSE, PENNSYLVANIA 19477-0844
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 1997
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Advanta
Corp. (the "Company") will be held at the Company's headquarters, Welsh and
McKean Roads, Spring House, Pennsylvania, on May 8, at 1:00 p.m. (the "Meeting")
for the following purposes:
1. To elect three directors to hold office until the expiration of
their term of office and until their successors are duly elected and
qualified.
2. To transact such other business as may properly come before the
Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on Friday, March 21,
1997 as the record date for the Meeting. Only holders of record of the Company's
Class A Common Stock and Class A Preferred Stock at that time are entitled to
notice of, and to vote at, the Meeting and any adjournment or postponement
thereof.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the attached proxy statement for further information with
respect to the business to be transacted at the Meeting. The Board of Directors
urges you to date, sign and return the enclosed proxy promptly. A reply envelope
is enclosed for your convenience. You are cordially invited to attend the
Meeting in person. The return of the enclosed proxy will not affect your right
to vote if you attend the Meeting in person.
GENE S. SCHNEYER
Secretary
Dated: April 10, 1997
<PAGE> 3
Advanta Logo
WELSH AND MCKEAN ROADS
P.O. BOX 844
SPRING HOUSE, PENNSYLVANIA 19477-0844
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS TO
BE HELD ON THURSDAY, MAY 8, 1997
------------------------
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Advanta Corp. (the "Company") to be used at
the Annual Meeting of Stockholders, and any adjournment or postponement thereof
(the "Meeting"), to be held on the date, at the time and place, and for the
purposes set forth in the foregoing notice. This proxy statement, the foregoing
notice and the enclosed proxy are first being mailed to holders of the Company's
Class A Common Stock and Class A Preferred Stock on or about April 10, 1997.
The Board of Directors does not intend to bring any matter before the
Meeting except as specifically indicated in the notice, nor does the Board of
Directors know of any matters which anyone else proposes to present for action
at the Meeting. If any other matters properly come before the Meeting, however,
the persons named in the enclosed proxy, or their duly constituted substitutes
acting at the Meeting, will be authorized to vote or otherwise act thereon in
accordance with their judgment on such matters.
Shares represented by proxies received by the Company, where the
stockholder has specified a choice with respect to the election of directors
will be voted in accordance with the specification(s) so made. In the absence of
such specification(s), the shares will be voted "For" the election of all three
nominees for the Board of Directors.
Any proxy may be revoked at any time prior to its exercise by notifying the
Secretary of the Company in writing, by delivering a duly executed proxy bearing
a later date or by attending the Meeting and voting in person.
The accompanying form of proxy is being solicited on behalf of the Board of
Directors of the Company. The expenses of solicitation of proxies for the
Meeting will be paid by the Company. In addition to the mailing of the proxy
material, such solicitation may be made in person or by telephone by directors,
officers and employees of the Company, who will receive no additional
compensation therefor. In addition, the Company has retained D.F. King & Co.
Inc. to assist in the search for, and distribution of proxies to, beneficial
owners of the Company's Class A Common Stock held in street name or by other
nominees, and will pay such firm a fee of $2,000, plus reimbursement of direct
out-of-pocket expenses incurred by such firm in such activity. Upon request, the
Company will reimburse brokers, dealers, banks and trustees, or their nominees,
for reasonable expenses incurred by them in forwarding material to beneficial
owners of shares of Class A Common Stock of the Company. Beneficial owners of
shares of Class B Common Stock, which will not be voting at the Meeting, also
will receive all proxy material (other than the proxy card itself), together
with the Company's Annual Report for the fiscal year ended December 31, 1996.
The expenses of such additional mailing will be borne by the Company.
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<PAGE> 4
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
OUTSTANDING SHARES AND VOTING RIGHTS
Only holders of record of the Company's Class A Common Stock and Class A
Preferred Stock at the close of business on March 21, 1997 are entitled to
notice of, and to vote at, the Meeting. On that date the Company had outstanding
18,157,322 shares of Class A Common Stock, par value $.01 per share, and 1,010
shares of Class A Preferred Stock, par value $1,000 per share. On all matters
voted upon at the Meeting and any adjournment or postponement thereof, the
holders of the Class A Common Stock and the Class A Preferred Stock vote
together as a single class, with each record holder of Class A Common Stock
entitled to one vote per share, and each record holder of Class A Preferred
Stock entitled to one-half vote per share.
The presence, in person or by proxy, of stockholders entitled to cast a
majority of the votes which all stockholders are entitled to cast will
constitute a quorum for the conduct of business at the Meeting. With regard to
the election of directors, votes may be cast in favor of or withheld from each
nominee. Under applicable Delaware law, votes that are withheld and broker
non-votes will be excluded entirely from the vote and will not affect the
outcome of the election of directors, as directors are elected by a plurality of
votes cast. In the election of directors, stockholders do not have cumulative
voting rights.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The information set forth on the following table is furnished as of March
14, 1997, with respect to any person (including any "group" as that term is used
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) who is known to the Company to be the beneficial owner of more
than 5% of any class of the Company's voting securities.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS
- --------------- -------------------------------------------- ---------- ----------
<S> <C> <C> <C>
Class A The Estate of J. R. Alter(1)................ 1,010 100.00%
Preferred
Class A Dennis Alter(1)............................. 4,868,856 (2)(3)(4) 26.81%
Common
Pioneering Management Corporation(5)........ 1,365,000 7.52%
</TABLE>
- ---------------
(1) The address for the Estate of J. R. Alter and Dennis Alter is c/o Advanta
Corp., Welsh and McKean Roads, P.O. Box 844, Spring House, Pennsylvania,
19477-0844.
(2) Includes 999,462 shares owned by a trust, the beneficiary of which is Linda
Alter, the sister of Dennis Alter, and pursuant to which Dennis Alter is
sole trustee. Mr. Alter disclaims beneficial ownership of these shares.
(3) Includes 150,000 shares owned by Dennis Alter's wife and 168,824 shares
owned by several trusts established by Mr. Alter for the benefit of his
minor children, for which trusts Mrs. Alter serves as a trustee. Also
includes an aggregate of 75,000 shares held by a charitable foundation
established by Mr. Alter, as to which Mr. Alter shares voting and investment
powers, and 75,000 shares held by a trust established by Mr. Alter, through
which he has made certain charitable gifts of shares and as to which Mr.
Alter has sole voting and investment powers. Mr. Alter disclaims beneficial
ownership of all such shares.
(4) Does not include 1,010 shares of the Company's Class A Preferred Stock and
499,465 shares of Class A Common Stock owned by the Estate of J. R. Alter,
the father of Dennis Alter, and 75,000 shares of Class A Common Stock owned
by Helen Alter, the mother of Dennis Alter, as to which Dennis Alter
disclaims beneficial ownership.
(5) Information as to shares held by Pioneering Management Corporation, a
registered investment advisor ("Pioneering"), is as of December 31, 1996, as
set forth in a Schedule 13G filed with the Securities and Exchange
Commission ("SEC"). The address of Pioneering is 60 State Street, Boston, MA
02109.
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<PAGE> 5
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the Class A
Common Stock and Class B Common Stock beneficially owned by each director and
nominee for director of the Company, by the Company's Chief Executive Officer,
by each of the Company's four other most highly compensated executive officers
whose compensation exceeded $100,000 during 1996, and by all directors and
officers as a group, as of March 14, 1997. Shares issuable pursuant to the
exercise of stock options are included in the table below if such options are
currently exercisable or will become exercisable by May 13, 1997. None of the
Company's executive officers or directors beneficially owns any shares of the
Class A Preferred Stock or the 6 3/4% Convertible Class B Preferred Stock,
Series 1995 (Stock Appreciation Income Linked Securities (SAILS)).
<TABLE>
<CAPTION>
CLASS A COMMON CLASS B COMMON
------------------------------- -------------------------------
AMOUNT AND NATURE AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF OF BENEFICIAL PERCENT OF
NAME OWNERSHIP CLASS OWNERSHIP CLASS
- -------------------------------- ----------------- ---------- ----------------- ----------
<S> <C> <C> <C> <C>
OFFICER/DIRECTORS
Dennis Alter(1)(2)(3)(4)........ 4,868,856 26.81% 2,630,143 9.94%
Alex W. Hart(5)................. 0 * 514,003 1.95%
Richard A. Greenawalt(6)(7)..... 497,482 2.74% 534,537 2.05%
William A. Rosoff(8)(9)......... 0 * 166,794 *
OFFICERS
Robert A. Marshall(10).......... 585 * 86,119 *
DIRECTORS
Arthur P. Bellis(11)............ 60,478 * 141,978 *
Max Botel(12)................... 8,712 * 49,512 *
Richard J. Braemer(13)(14)...... 64,940 * 88,940 *
William C. Dunkelberg(15)....... 4,500 * 30,500 *
Dana Becker Dunn(16)............ 0 * 3,750 *
Robert C. Hall(17).............. 0 * 15,250 *
James E. Ksansnak(18)........... 0 * 6,300 *
Ronald Lubner................... 0 * 0 *
Ronald J. Naples(19)............ 750 * 38,250 *
Philip A. Turberg(20)(21)....... 43,886 * 78,386 *
All officers and directors as a
group (27 persons)(1)(2)(4)
(9)(14)(15)(21)(22)........... 5,102,821 27.98% 4,723,776 17.25%
</TABLE>
- ---------------
* Represents less than 1% of the indicated class of the Company's Common
Stock outstanding as of March 14, 1997.
(1) Ownership includes 999,462 shares of the Company's Class A Common Stock
owned by a trust, the beneficiary of which is Linda Alter, the sister of
Dennis Alter, and pursuant to which Mr. Alter is sole trustee. Mr. Alter
disclaims beneficial ownership of these shares.
(2) Ownership includes 150,000 shares of Class A Common Stock and 75,000 shares
of Class B Common Stock held by Mr. Alter's wife, as well as 168,824 shares
of Class A Common Stock and 175,194 shares of Class B Common Stock held by
several trusts established by Mr. Alter for the benefit of his minor
children, for which trusts Mrs. Alter serves as a trustee. Also includes
75,000 shares of the Company's Class A Common Stock and 75,000 shares of
the Company's Class B Common Stock held by a charitable foundation
established by Mr. Alter, as to which Mr. Alter shares voting and
investment powers, and 75,000 shares of the Company's Class A Common Stock
held by a trust established by Mr. Alter, through which he has made certain
3
<PAGE> 6
charitable gifts of shares and as to which Mr. Alter has sole voting and
investment powers. Mr. Alter disclaims beneficial ownership of all such
shares.
(3) Ownership includes options to purchase 337,500 shares of the Company's
Class B Common Stock pursuant to the Company's Stock Option Plans.
(4) Ownership does not include 1,010 shares of the Company's Class A Preferred
Stock, 499,465 shares of the Company's Class A Common Stock and 393,065
shares of Class B Common Stock owned by the estate of J. R. Alter, the
father of Dennis Alter, and 75,000 shares of both the Company's Class A
Common Stock and Class B Common Stock owned by Helen Alter, the mother of
Dennis Alter, as to all of which shares Dennis Alter disclaims beneficial
ownership.
(5) Ownership includes options to purchase 200,000 shares of the Company's
Class B Common Stock pursuant to the Company's Stock Option Plans.
(6) Ownership includes options to purchase 9,375 shares of the Company's Class
B Common Stock pursuant to the Company's Stock Option Plans.
(7) Ownership includes 63,475 shares of the Company's Class A Common Stock and
49,450 shares of the Company's Class B Common Stock owned by Mr.
Greenawalt's wife and 41,442 shares of Class A Common Stock and 470 shares
of Class B Common Stock held by Mr. Greenawalt as custodian for his
children. Mr. Greenawalt disclaims beneficial ownership of all such shares.
(8) Ownership includes options to purchase 12,500 shares of the Company's Class
B Common Stock pursuant to the Company's Stock Option Plans.
(9) Ownership does not include 150,000 shares of each of the Company's Class A
and Class B Common Stock held by a trust established by Mr. Alter for the
benefit of his minor children, as to which shares Mr. Rosoff shares voting
and investment powers as a co-trustee of the trust. Such share ownership is
reflected in the ownership table under Mr. Alter's name.
(10) Ownership includes options to purchase 41,250 shares of the Company's Class
B Common Stock pursuant to the Company's Stock Option Plans.
(11) Ownership includes options to purchase 12,900 shares of the Company's Class
A Common Stock and 44,400 shares of the Company's Class B Common Stock
pursuant to the Company's Stock Option Plans and otherwise.
(12) Ownership includes options to purchase 5,000 shares of the Company's Class
A Common Stock and 36,500 shares of the Company's Class B Common Stock
pursuant to the Company's Stock Option Plans and otherwise.
(13) Ownership includes options to purchase 31,170 shares of the Company's Class
A Common Stock and 62,670 shares of the Company's Class B Common Stock
pursuant to the Company's Stock Option Plans and otherwise.
(14) Ownership does not include 75,000 shares of the Company's Class A Common
Stock and 75,000 shares of the Company's Class B Common Stock held by a
charitable foundation established by Mr. Alter, as to which shares Mr.
Braemer shares voting and investment powers as a trustee of the foundation.
Such share ownership is reflected in the ownership table under Mr. Alter's
name.
(15) Ownership includes options to purchase 3,000 shares of the Company's Class
A Common Stock and 30,500 shares of the Company's Class B Common Stock
pursuant to the Company's Stock Option Plans.
(16) Ownership includes options to purchase 3,750 shares of the Company's Class
B Common Stock pursuant to the Company's Stock Options Plans.
(17) Ownership includes options to purchase 14,250 shares of the Company's Class
B Common Stock pursuant to the Company's Stock Option Plans.
(18) Ownership includes options to purchase 6,000 shares of the Company's Class
B Common Stock pursuant to the Company's Stock Option Plans.
4
<PAGE> 7
(19) Ownership includes options to purchase 37,500 shares of the Company's Class
B Common Stock pursuant to the Company's Stock Option Plans.
(20) Ownership includes options to purchase 7,500 shares of the Company's Class
A Common Stock and 39,000 shares of the Company's Class B Common Stock
pursuant to the Company's Stock Option Plans.
(21) Ownership includes 1,500 shares of both the Company's Class A Common Stock
and Class B Common Stock held by Mr. Turberg's wife, as to all of which
shares Mr. Turberg disclaims beneficial ownership.
(22) Ownership includes options to purchase 81,570 shares of the Company's Class
A Common Stock and 1,271,145 shares of the Company's Class B Common Stock
pursuant to the Company's Stock Option Plans. Ownership does not include
any amounts in respect of either Mr. Greenawalt or Mr. Marshall, as neither
was serving as a director or officer of the Company as of March 14, 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors and persons who own more than ten percent of a registered class of the
Company's equity securities (collectively, the "Reporting Persons") to file
reports of ownership and changes in ownership with the SEC and to furnish the
Company with copies of these reports. Based on the Company's review of the
copies of those reports which it has received, and written representations from
Reporting Persons, the Company believes that all filings required to be made by
the Reporting Persons from January 1, 1996 through December 31, 1996 were made
on a timely basis except as noted below. With respect to one transaction,
Jeffrey Beck failed to timely file a Form 4; with respect to one transaction,
William Dunkelberg failed to timely file a Form 4; with respect to three
transactions, Charles Podowski failed to timely file a Form 4; with respect to
one transaction, Alex W. Hart failed to timely file a Form 4; and with respect
to seven transactions, James Allhusen failed to timely file a Form 5. Each of
these transactions was subsequently reported on a Form 4 or Form 5. In addition,
each of Ronald Lubner, Christopher Derganc and William Razzouk failed to timely
file their respective Forms 3.
5
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the Company's last three fiscal years,
the cash compensation paid by the Company, as well as certain other compensation
paid or accrued for those years, to the Company's Chief Executive Officer and to
each of the Company's other four most highly compensated executive officers
whose compensation exceeded $100,000 in 1996.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-----------------------
AWARDS
-----------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
--------------------------------------------- STOCK UNDERLYING ALL OTHER
OTHER ANNUAL AWARD(S) OPTIONS COMPENSATION($)
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) ($)(2) (#) (3)(4)(5)(6)
- -------------------------------- ---- --------- -------- ------------------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dennis Alter(7)................. 1996 $595,000 $ 0 $ 25,715 $1,340,850 0 $ 261,372
Chairman of the Board 1995 $495,000 $222,754 $ 15,732 $ 668,250 0 $ 200,000
1994 $495,000 $222,763 $ 87,382(8) $ 0 0 $ 165,844
Alex W. Hart.................... 1996 $695,000 $ 0 $ 0 $1,790,792 0 $ 95,928
Chief Executive Officer 1995 $495,000 $222,757 $429,194(9) $ 668,250 300,000 $ 59,949
1994 $371,481 $710,600 $ 0 $6,626,573 150,000 $ 9,494
William A. Rosoff............... 1996 $475,000 $275,000 $ 0 $5,537,500 50,000 $ 9,209
Vice Chairman
Richard A. Greenawalt........... 1996 $495,000 $ 0 $ 9,137 $1,160,874 0 $ 118,588
President and Chief 1995 $395,000 $177,755 $ 3,662 $ 533,250 0 $ 93,337
Operating Officer 1994 $395,000 $177,765 $ 10,251 $ 0 0 $ 73,810
Robert A. Marshall.............. 1996 $395,000 $ 0 $ 9,516 $ 722,978 0 $ 12,494
Executive Vice President 1995 $325,000 $151,003 $ 2,959 $ 341,250 60,000 $ 11,099
and Group Executive, 1994 $325,000 $150,512 $ 6,075 $ 0 25,000 $ 14,724
Advanta Personal Payment
Services
</TABLE>
- ---------------
(1) Includes above-market interest earned on deferred compensation pursuant to
the Company's Executive Deferral Plan (which plan first became effective in
1993), in the amounts listed with respect to each year. For 1996: Mr. Alter,
$25,715; Mr. Greenawalt, $9,137; and Mr. Marshall, $9,516. For 1995: Mr.
Alter, $15,732; Mr. Greenawalt, $3,662; and Mr. Marshall, $2,959. For 1994:
Mr. Alter, $27,066; Mr. Greenawalt, $10,251; and Mr. Marshall, $6,075.
(2) The Advanta Management Incentive Plan With Stock Election II ("AMIP II") was
instituted in 1991 with respect to performance years 1993 through 1995. The
Advanta Management Incentive Plan With Stock Election III ("AMIP III") was
instituted in 1993 for performance years 1996 through 1998. The Advanta
Management Incentive Plan With Stock Election IV ("AMIP IV") was instituted
in 1995 for performance years 1999 through 2001 (AMIP II, AMIP III and AMIP
IV are collectively referred to as the "AMIP Plans"). Pursuant to each of
the AMIP Plans, shares of restricted Common Stock were issued to
participants eligible to participate in each AMIP Plan upon the plan's
commencement or such participant's later employment with the Company (with a
prorated share issuance awarded for any partial year participation). The
number of restricted shares issued to each named executive officer pursuant
to the AMIP Plans is an amount equal to the participant's "target bonus" for
each performance year covered by the applicable AMIP Plan divided by the
applicable grant date price. Shares vest under each of the AMIP Plans 10
years after the date of grant, but are subject to accelerated vesting on the
basis of individual and corporate (or applicable business unit) performance
for each applicable performance year. To the extent that individual and
corporate (or applicable business unit) performance for a given performance
year achieves targeted levels in that year, up to a maximum of one-third of
the total shares granted under the applicable AMIP Plan (or appropriate
proration for participants entering such AMIP Plan after the beginning of
the first performance year thereunder) will become vested.
6
<PAGE> 9
1995 figures reflect restricted stock granted pursuant to AMIP IV. In 1995,
Messrs. Alter, Hart, Greenawalt and Marshall received grants, upon the
commencement of AMIP IV, of 26,730, 26,730, 21,330 and 13,650 shares of
restricted Class B Common Stock, respectively. Mr. Hart joined the Company
in March 1994, at which time he received 13,951 AMIP II and 22,830 AMIP III
shares of restricted Class B Common Stock in respect of his "target"
bonuses for performance years 1994 through 1998. In addition to his AMIP II
and AMIP III shares, pursuant to his employment agreement which is
described under "Other Matters" on page 18 of this Proxy Statement, Mr.
Hart was granted 200,000 shares of restricted Class B Common Stock in
January 1994, of which 50,000 shares vest in January of each year from 1995
to 1998 (subject to earlier vesting in the event of Mr. Hart's death,
disability or retirement, a change of control of the Company, or certain
other circumstances).
1996 figures reflect additional shares of restricted Class B Common Stock
granted pursuant to each of AMIP III and AMIP IV with respect to increases
in the "target" bonuses under such plans, as approved by the Company's
stockholders. The total number of additional shares granted to each named
executive officer (except for Mr. Rosoff whose target bonus was set when he
joined the Company at a level comparable to the new target levels of the
other named executive officers) pursuant to the increases in target bonuses
was: Mr. Alter, 17,031 AMIP III shares and 17,031 AMIP IV shares; Mr. Hart,
22,746 AMIP III shares and 22,746 AMIP IV shares; Mr. Greenawalt, 14,745
AMIP III shares and 14,745 AMIP IV shares; and Mr. Marshall, 9,138 AMIP III
shares and 6,831 AMIP IV shares. Mr. Rosoff joined the Company in January
1996 and consequently his 1996 figure includes 27,147 shares of restricted
Class B Common Stock pursuant to AMIP III and 27,147 shares granted
pursuant to AMIP IV in respect of his "target" bonuses for performance
years 1996 through 1998. In addition to his AMIP III and AMIP IV shares,
pursuant to his employment agreement which is described under "Other
Matters" on page 18 of this Proxy Statement, Mr. Rosoff was granted 100,000
shares of restricted Class B Common Stock in January 1996, of which 25,000
shares vest in January of each year from 1997 to 2000 (subject to earlier
vesting in the event of Mr. Rosoff's death, disability or retirement, a
change of control of the Company, or certain other circumstances). For
purposes of this table, the 100,000 shares of restricted Class B Common
Stock granted to Mr. Rosoff pursuant to his employment agreement are valued
at their market value on the date of grant.
In each of March 1995 and March 1996, a full one-third of the shares issued
under AMIP II vested with respect to each named executive officer (except
Mr. Rosoff who was not then employed by the Company) for performance years
1994 and 1995, respectively. In March 1997, ninety percent (90%) of
one-third of the shares (including the additional shares described above)
issued under AMIP III vested with respect to each of Messrs. Alter, Hart,
Greenawalt and Rosoff, and a full one-third of the shares issued under
AMIP III (including the additional shares described above) vested with
respect to Mr. Marshall, for performance year 1996. The number of
restricted shares of Class B Common Stock held by each executive under
AMIP III and AMIP IV and by Mr. Hart and Mr. Rosoff under the contractual
arrangements described above, and the market value (rounded to the nearest
dollar) of such restricted shares at December 31, 1996, were as follows:
Mr. Alter, 100,100 shares, $4,088,000; Mr. Hart, 195,052 shares,
$7,973,726; Mr. Rosoff, 154,294 shares, $6,307,539; Mr. Greenawalt,
82,185 shares, $3,359,723; and Mr. Marshall, 42,800 shares, $1,749,664.
Non-preferential dividends are paid on these restricted shares. Any
restricted shares not vested with respect to Messrs. Greenawalt and
Marshall as of March 1997 were forfeited as a result of their departures
from the Company.
(3) Includes matching contributions of $7,500 paid by the Company to the
accounts of each of Messrs. Alter, Hart, Greenawalt and Marshall, under the
Employee Savings Plan (a 401(k) plan), in respect of their 1996
participation in such plan.
(4) Includes the value of (i) Company paid term life insurance provided to all
salaried employees in an amount equal to two times annual salary (capped at
$500,000), and (ii) whole life insurance policies on the lives of each of
Messrs. Alter, Greenawalt and Marshall, which policies are paid for by the
Company and as to which the named executive has the right to designate
7
<PAGE> 10
the beneficiary. If an insured executive terminates his employment with the
Company, he may keep the whole life policy, but must pay the Company the
full cash value of the policy. Consequently, the value of the whole life
policy to the employee is the term life insurance benefit. The value of
these benefits to the named individuals is included in the figures for 1996
in the following amounts: Mr. Alter, $9,357; Mr. Hart, $4,049; Mr. Rosoff,
$2,292; Mr. Greenawalt, $5,561; and Mr. Marshall, $4,994.
(5) Includes interest paid in 1996 by the Company on behalf of Messrs.
Greenawalt and Hart pursuant to an executive loan program adopted by the
Company's Board of Directors in 1992, which interest accrued on the named
executives' respective stock margin accounts in connection with margin loans
against shares vested under AMIP II and a predecessor stock bonus plan (and
for Mr. Hart, shares vested under his employment agreement as described in
note (2) above), in the following amounts: Mr. Hart, $65,462; and Mr.
Greenawalt, $23,079.
(6) Includes the value of split-dollar life insurance policies purchased in 1993
separately insuring the life of Dennis Alter, the joint lives of Dennis
Alter and his spouse, and the joint lives of Richard Greenawalt and his
spouse, a policy purchased in 1994 insuring the life of Alex W. Hart, and a
policy purchased in 1996 insuring the life of William A. Rosoff, the
proceeds of which policies are payable to beneficiaries designated by the
respective executives. The value of the term life insurance premiums paid by
or on behalf of the Company under such policies for the named individuals is
included in the figures for 1996 in the following amounts: Mr. Alter,
$21,590; Mr. Hart, $7,050; Mr. Rosoff, $1,862; and Mr. Greenawalt, $2,575.
Premiums paid by the Company will be refunded to the Company on termination
of the respective policies, and any cash surrender value in excess of such
premiums may be paid to the executive's beneficiary. The value of the
benefits to the executives of the remainder of the premiums paid by the
Company are included in the amounts listed with respect to each year. For
1996: Mr. Alter, $222,925; Mr. Hart, $11,867; Mr. Rosoff, $5,055; and Mr.
Greenawalt, $79,873.
(7) Mr. Alter also served as Chief Executive Officer of the Company in 1994 and
from January through July of 1995.
(8) Includes $60,316 representing the value of automobiles made available to Mr.
Alter during 1994.
(9) Represents the value of relocation benefits provided to Mr. Hart in 1995, to
cover the costs of moving from New York after joining the Company in 1994,
including $236,228 to cover relocation costs and $192,966 to reimburse Mr.
Hart for the taxes payable with respect to such benefits.
STOCK OPTION GRANTS
The following table contains information concerning the grant of stock
options under the Company's 1992 Stock Option Plan to the Company's Chief
Executive Officer and to each of the Company's other four most highly
compensated executive officers whose compensation exceeded $100,000 in 1996. All
options granted in 1996 are options to purchase shares of Class B Common Stock.
The Company does not currently have (and has not previously had) any plan
pursuant to which any stock appreciation rights ("SARs") may be granted.
OPTION GRANTS IN LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE VALUE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE GRANT DATE PRESENT VALUE(2)
- ------------------------------- ---------- ------------ ----------- ---------- ---------------------------
<S> <C> <C> <C> <C> <C>
William A. Rosoff.............. 50,000 8.65% $ 34.00 01/15/06 $ 876,500
</TABLE>
- ---------------
(1) Options granted in 1996 become exercisable on the anniversary of the date of
grant at the rate of 25% per year for four years. The options expire 10
years from the date of grant.
8
<PAGE> 11
(2) The fair value of the options granted is estimated on the date of grant
using the Black Scholes option pricing model with the following assumptions:
risk-free interest rate of 5.781%; expected dividend yields of 1.27%;
expected life of ten years; and expected volatility of 39.49%.
STOCK OPTION EXERCISES AND HOLDINGS
The following table sets forth information related to options exercised
during 1996 by the Company's Chief Executive Officer and by each of the
Company's other four most highly compensated executive officers whose
compensation exceeded $100,000 in 1996, and the number and value of options held
on December 31, 1996 by such individuals. The Company does not have any
outstanding SARs.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES AGGREGATE OPTIONS AT FY-END (#) FY-END ($)
ACQUIRED ON VALUE --------------------------- --------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- ----------- ----------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dennis Alter.......... 0 $ 0 328,125 9,375 $ 9,123,599 $ 187,100
Alex W. Hart.......... 0 $ 0 150,000 300,000 $ 1,434,375 $ 2,290,625
William A. Rossoff.... 0 $ 0 0 50,000 $ 0 $ 342,750
Richard A.
Greenawalt.......... 490,000 $20,616,706 501,271 9,375 $17,955,184 $ 187,100(1)
Robert A. Marshall.... 306,250 $11,395,994 27,500 57,500 $ 254,063 $ 452,813(1)
</TABLE>
- ---------------
(1) Messrs. Greenawalt and Marshall terminated their employment with the Company
on January 24, 1997 and January 17, 1997, respectively. In connection with
such terminations, Mr. Greenawalt was extended the rights, as of his
termination date, to exercise options to purchase 9,375 shares of Class B
Common Stock which otherwise would not have become exercisable until
February 10, 1997, and to exercise all vested options within six months of
January 24, 1997, and Mr. Marshall was extended the rights to exercise
options to purchase 13,750 shares of Class B Common Stock as they vest
through March 31, 1997, and to exercise all vested options within two years
of his January 17, 1997 retirement date.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation programs for the Company's leaders are intended to further the
earnings of the Company and secure, retain and motivate management employees of
high caliber and potential. The programs described herein cover those employees
whose decision-making and leadership drive the achievement of the Company's
business strategies. There are three major components of executive compensation
at the Company: base salary, annual incentive awards, and long-term incentive
awards.
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for establishing the Company's overall compensation philosophy and
strategy, and monitoring the implementation thereof. However, the Committee's
determinations regarding compensation of members of the Office of the Chairman
are reviewed and approved by the full Board of Directors (excluding the
management directors).
9
<PAGE> 12
The executive compensation program includes base salary, performance-based
annual and long-term incentives and stock options. Target levels of overall
compensation are intended to be consistent with a selected peer group of
companies (the "peer group"). While some of these companies are in the Dow Jones
Diversified Financial Services Index and some are not, they were generally
selected for the peer group because they were considered comparable to the
Company either in terms of market capitalization, or because they compete with,
or are in lines of business related to, the Company's businesses. For several
years total compensation packages have emphasized programs contingent upon the
Company's short and long-term performance as measured by the appreciation in the
value of the Company's publicly traded shares. Due to the emphasis on corporate
performance and stockholder value when computing total executive compensation,
each year the Company's executives could be paid more or less than the peer
group's executives, depending upon how the Company has performed and the changes
in value of its shares.
BASE SALARIES
The Committee establishes base salaries based upon a comparison of the
prior year's salaries at companies in the peer group. The Company's philosophy
is to limit fixed costs in its executives' compensation by emphasizing the
variable components of total compensation, i.e., annual and long-term
incentives. Base salaries are intended to approximate the median base salaries
of the comparator companies. Based on disclosures of 1995 salaries in the proxy
statements of the comparator companies published in 1996, the 1996 base salaries
of the group were at or slightly above the median salaries of the peer group
companies.
In March 1997, the Committee approved a severance program which would
provide benefits in the event of a change of control of the Company if, within
one year of the date of the change of control, there has been either an actual
or constructive termination of the executive. Under the new program, the named
executives would be entitled to receive no less than 24 months of base salary as
severance in such an event.
ANNUAL INCENTIVES
Each executive officer has an annual "target" bonus, specified as a
percentage (determined by the executive's position in the Company) of his
January 1 base salary. For 1996, the named executives' target bonuses ranged
from 50% (for Mr. Marshall) to 75% (for the other four named executives) of base
salary. The aforementioned targets were increased from their 1995 levels. The
actual award, if any, for a given year's performance is determined by a
"subcommittee" of the Committee (the "Subcommittee"), comprised of Messrs.
Turberg and Botel, both of whom are "disinterested persons" (as defined in
applicable SEC rules). Such determination is then ratified by the full Board of
Directors with respect to members of the Office of the Chairman (for 1996,
Messrs. Alter, Hart, Greenawalt and Rosoff).
The criteria for 1996 performance year annual incentives were financially
focused, including return on equity, earnings per share and investment of 10% of
all fiscal year 1996 spending in the development of new products and markets. No
specific weights were attached to these measures. Overall performance of the
Company was not perceived as having achieved expectations, and the Subcommittee
approved awards for Messrs. Alter, Hart, Greenawalt and Rosoff to be at 90% of
target. Mr. Marshall, who retired from the Company in January, 1997, received a
payment at 100% of target as a result of an understanding agreed to in light of
his retirement from the Company.
Rather than receiving their annual incentives for 1996 performance in the
form of cash, the named executives received the amounts less than or equal to
"target" in the form of restricted stock, which is accelerated in its vesting
according to the AMIP III Plan. Shares not awarded for 1996 performance were
"frozen", and remain restricted until such time as the Subcommittee recommends
their future release, or ten years from their initial grant date, whichever
comes first.
10
<PAGE> 13
Because of the long-term incentive nature of the shares associated with the
AMIP Plans, more detail is given in the following section. The AMIP Plans and
the annual incentive plan are interlinked, and can be considered components of a
single plan.
The Committee has approved a shift for 1997 in the performance measurement
under the AMIP Plans, which will affect the determination of incentive awards
for all participants in the plan, including the named executives. Under the new
approach, progress against financial goals will account for approximately
two-thirds of the performance equation. The remaining portion will hinge upon
the achievement of goals related to improving the Company's (or strategic
business unit's, as applicable) knowledge and servicing of customer needs and
upon development of leadership within our employee population. Additionally,
while the Committee believes corporate performance will remain a vital
consideration in the awards of the members of the Office of the Chairman,
performance assessment of executives in the individual strategic business units
will be based upon the performance of those units.
LONG-TERM INCENTIVES
The Company offers its senior executives two forms of long-term incentive:
restricted stock (primarily delivered through the AMIP Plans) and stock options.
The Committee believes that share ownership aligns the interests of
participating officers and executives with the interests of the Company's
stockholders and ties a significant portion of senior officer compensation to
stockholder returns.
Messrs. Alter, Greenawalt and Marshall entered the AMIP III restricted
stock program upon its introduction in 1993, and their future target bonuses for
the years 1996, 1997 and 1998 were provided for in the form of restricted stock
priced at the then-market price of $17.00 per share. Upon joining the Company,
Messrs. Hart and Rosoff entered the plan, and their 1996, 1997 and 1998 bonuses
were provided for in the form of restricted stock issuances as well, but at
higher prices. While the stock will ultimately "cliff-vest" ten years after it
has been issued, the intent is for each executive to "earn" accelerated vesting
by enabling the Company to achieve performance goals in the performance years
which the plan is intended to cover.
Similarly, each of the named executives remaining with the Company has been
issued restricted stock under AMIP IV in respect of his target bonus awards for
performance in 1999, 2000, and 2001. If, upon accelerated vesting of shares in
respect of performance for a given performance year, the share price is higher
than the valuation price at which the shares were originally issued, the
executive in effect receives a long-term incentive in the form of the stock's
appreciation in value.
Increases to both base salary and target bonus percentage were approved by
the Committee and the Board of Directors in March of 1996, and resulted in an
incremental number of shares under both AMIP III and AMIP IV being issued for
all the named executives, with the exception of Mr. Rosoff who joined the
Company at a target level comparable to the new target levels of the other
members of the Office of the Chairman. The higher target bonus percentages were
approved by the stockholders at the 1996 Annual Meeting.
STOCK OPTIONS
The Stock Option Plan rewards long-term accomplishment, based upon
increases in stockholder value. In December of 1995, the Subcommittee granted
stock options which, in past years, would have been granted in the spring of
1996. The options were granted at that point in time because the Company's stock
price was low relative to its value and the Subcommittee therefore decided that
granting the stock options in December was advantageous to the Company and the
executives. At the request of Messrs. Alter and Greenawalt, the Subcommittee did
not grant any options to either of them. No additional stock options were
granted to executive officers in the first quarter of 1996,
11
<PAGE> 14
with the exception of Mr. Rosoff who was granted options upon his entry into the
Company's employ.
IMPACT OF IRS PAY CAP REGULATION
Section 162(m) of the Internal Revenue Code limits the types of annual
compensation in excess of $1,000,000 that may be deducted for federal income tax
purposes for payments to a company's Chief Executive Officer and its four other
most highly compensated Executive Officers. The Committee believes that payment
of compensation that is not deductible under Section 162(m) is sometimes in the
best interests of the Company, and the Committee and the Board of Directors have
accordingly approved such arrangements in certain circumstances.
THE CHIEF EXECUTIVE OFFICER'S 1996 COMPENSATION
Mr. Hart assumed the CEO position in mid-1995, and in his new role was
given a salary increase effective January 1, 1996 to the current salary level.
Also effective January 1, 1996, Mr. Hart received an upward change in his target
bonus, expressed as a percentage of his base salary. The basis for the amount of
both increases was market information, which indicated that his prior level of
compensation was significantly less than the market median for his new position
as CEO. The Subcommittee has established a total compensation opportunity for
Mr. Hart competitive within the Company's peer group of companies.
For the 1996 performance year, Mr. Hart's target annual incentive was set
at 75% of base salary. Based on an assessment of the performance of the Company,
the Subcommittee awarded Mr. Hart an award equal to 90% of the targeted amount,
which was paid in the form of stock, unrestricted according to the terms and
design of AMIP III. Therefore, Mr. Hart's actual compensation for 1996 will be
slightly below the market median.
As CEO, Mr. Hart is eligible to participate in the stock option program, as
are the other named executives. No stock options were awarded in 1996 to Mr.
Hart, given the December 1995 award for an option to purchase 200,000 shares of
Class B Common Stock, which was intended to serve such purpose.
In addition to the above, in January 1994, upon signing his employment
agreement, Mr. Hart received 200,000 shares of restricted stock and an option to
purchase 100,000 shares of Class B Common Stock at $27.75 per share. The
restricted shares, which as of the January 1994 date of grant had a market value
of $5.6 million, vest at the rate of 25% per annum for four years, and the
options will become exercisable at the same rate. If Mr. Hart leaves the
Company's employ before four years have passed, these benefits will vest upon
his departure except in certain limited circumstances. In addition, these
benefits will vest upon a change of control of the Company.
COMPENSATION COMMITTEE
Philip A. Turberg, Chairman Max Botel Arthur P. Bellis*
* Mr. Bellis is involved in designing the compensation plans but does not vote
on incentive compensation for the five highest paid executives.
12
<PAGE> 15
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Company's Class A Common Stock during the five
years ended December 31, 1996 with the cumulative total return on the Standard &
Poor's 500 index and the Dow Jones-Diversified Financial Services Companies
index. The comparison assumes that $100 was invested on January 1, 1992 in the
Class A Common Stock (then described simply as "Common Stock") and in the
foregoing indices and assumes the reinvestment of dividends. The price and
performance of the Class A Common Stock has been adjusted to reflect (i) the
effective two-for-one stock split as a result of the May 5, 1992 dividend of one
share of Class B Common Stock for each outstanding share of Class A Common
Stock, and (ii) the three-for-two stock split effected by means of a 50% stock
dividend in October 1993, as if such dividends had already occurred at January
1, 1992.
<TABLE>
<CAPTION>
Diversified
Measurement Period Financial
(Fiscal Year Covered) Advanta Services S&P 500
<S> <C> <C> <C>
1/1/92 100.0 100.0 100.0
Dec-92 188.6 113.3 107.6
Dec-93 291.5 127.3 118.5
Dec-94 232.5 121.5 120.0
Dec-95 339.4 191.9 165.1
Dec-96 381.8 255.8 203.0
</TABLE>
13
<PAGE> 16
ELECTION OF DIRECTORS
The Board of Directors has nominated three candidates to be elected at the
Meeting for a three-year term ending in 2000. Each nominee is currently serving
as a director of the Company. Ten other directors are currently serving terms
which will expire in 1998 or 1999.
Each nominee has consented to being named in the proxy statement and to
serve if elected. Candidates for director will be elected by a plurality of the
votes of the shares present in person or represented by proxy at the Meeting and
entitled to vote on the election of directors, assuming a quorum is present at
the Meeting. If prior to the Meeting any nominee should become unavailable to
serve, the shares represented by a properly executed and returned proxy will be
voted for such additional person as shall be designated by the Board of
Directors, unless the Board should determine to reduce the number of directors
pursuant to the By-Laws.
Certain information regarding each nominee and each director continuing in
office is set forth below, including such individual's age and principal
occupation, a brief account of business experience during at least the last five
years and other directorships currently held at other publicly held companies.
Messrs. Alter, Bellis, Botel and Braemer have been directors of the Company
since its incorporation in 1974. Mr. Turberg was elected as a director by the
stockholders in 1986. Messrs. Dunkelberg, Naples, Hart, Hall, Ksansnak, Rosoff,
Lubner and Ms. Becker Dunn were first elected by the Board in June 1990,
November 1992, February 1994, September 1994, August 1995, February 1996,
December 1996 and March 1996, respectively.
NOMINEES FOR ELECTION FOR A TERM EXPIRING IN 2000
<TABLE>
<S> <C>
Alex W. Hart Ronald J. Naples
William A. Rosoff
</TABLE>
Mr. Hart, age 56, joined the Company in March 1994 as a Director and
Executive Vice Chairman. In August 1995 he became Chief Executive Officer. For
the five years prior to joining the Company he had been President and Chief
Executive Officer of MasterCard International, Inc., a worldwide association of
over 29,000 member financial institutions. Prior to joining MasterCard in
November 1988, Mr. Hart was Executive Vice President of First Interstate
Bancorp, Los Angeles, California. (For a description of Mr. Hart's employment
agreement with the Company, see "Other Matters" on page 18 of this proxy
statement.)
Mr. Rosoff, age 53, joined the Company in January 1996 as a Director and
Vice Chairman. Prior to joining the Company, Mr. Rosoff was a long time partner
of the law firm of Wolf, Block, Schorr and Solis-Cohen, the Company's outside
counsel, where he advised the Company for over 20 years. While at Wolf, Block,
Schorr and Solis-Cohen he served as Chairman of its Executive Committee and,
immediately before joining the Company, as a member of its Executive Committee
and Chairman of its Tax Department. Mr. Rosoff is a Trustee of Atlantic Realty
Trust, a publicly held real estate investment trust, and Chairman of the Board
of RMH Teleservices, a publicly held company that is a leading provider of
telemarketing services on an outsourced basis to Fortune 500 companies. (For a
description of Mr. Rosoff's employment agreement with the Company, see "Other
Matters" on page 18 of this proxy statement.)
Mr. Naples, age 51, has been a director and President and Chief Executive
Officer of Quaker Chemical Corporation, a manufacturer of chemical specialties,
since October 1995. Mr. Naples was Chief Executive Officer of Hunt Manufacturing
Co., a manufacturer and distributor of office and art/craft products, from 1981
to 1995, and Chairman of the Board of Hunt from 1987 to 1995. He is a former
White House Fellow, and served on the White House Staff during the Ford
Administration as Assistant to the Counsellor to the President for Economic
Affairs, and as a Special Assistant to the head of the Federal Energy
Administration.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE ELECTION OF ALL THREE
NOMINEES FOR ELECTION.
14
<PAGE> 17
INCUMBENT DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 1998
<TABLE>
<S> <C>
Dennis Alter Dana Becker Dunn
Arthur P. Bellis Robert C. Hall
William C. Dunkelberg
</TABLE>
Mr. Alter, age 54, became Executive Vice President and a director of the
Company's predecessor organization in 1967. He was elected President and Chief
Executive Officer in 1972, and Chairman of the Board of Directors of the Company
in August 1985. In February 1986, he relinquished the title of President, and in
August 1995 he relinquished the title of Chief Executive Officer. Mr. Alter
remains Chairman of the Board of Directors.
Mr. Bellis, age 53, has been a private investor since January 1993. Prior
to that time, from March 1986 he was Chairman and, until June 1991, Chief
Executive Officer of Boca Bank, Boca Raton, Florida. He was also Chairman and
Chief Executive officer of Boca Bancorp, Inc., the bank's holding company, from
its formation in December 1986. Mr. Bellis has served on the Board of United Way
International since December 1993 and is currently Vice Chairman of that Board.
Dr. Dunkelberg, age 54, is Professor of Economics and Director at the
School of Business and Management at Temple University. He served as Dean of the
School of Business and Management at Temple from 1987 through 1994. Prior to
that, Dr. Dunkelberg was a professor of economics and management at Purdue and
Stanford Universities. As an authority on consumer credit and small business, he
is a member of the U.S. Census Advisory Committee and the Board of the National
Bureau of Economic Research, as well as Chief Economist of the National
Federation of Independent Business.
Mr. Hall, age 65, is Vice President of The Thomson Corporation, with
responsibilities for technology and global expansion. Until January 1995, Mr.
Hall was Chief Executive Officer of the Thomson Information/Publishing Group, a
worldwide operation with $3.0 billion in sales, 140 companies, and 22,000
employees, and a member of The Thomson Corporation Board of Directors. From 1984
to 1992 Mr. Hall was Vice Chairman, then Chairman, of WICAT Systems, a
developing education system company.
Ms. Becker Dunn, age 45, is Vice President, Marketing and Strategic
Business Planning, of Lucent Technologies Business Communications Services
("BCS"), formerly AT&T Global Business Communications, which she joined in
December 1994. BCS develops, manufactures, markets and services advanced
communications and multimedia systems for business and government customers in
more than 90 countries worldwide. In 1992 she became Vice President and Chief
Technical Officer for AT&T's Call Servicing (Long Distance) Organization, after
which she was Vice President of Strategic Planning and New Business Development
for Consumer Communications Services. From 1984 to 1992, Ms. Dunn served AT&T in
a variety of capacities, including Product Marketing Director in 1984, Director
of Information Systems in 1986 and Operator Services-Eastern Region Vice
President in 1988.
15
<PAGE> 18
INCUMBENT DIRECTORS CONTINUING IN OFFICE FOR A TERM EXPIRING IN 1999
<TABLE>
<S> <C>
Max Botel Ronald Lubner
Richard J. Braemer Philip A. Turberg
James E. Ksansnak
</TABLE>
Mr. Botel, age 57, retired from the law firm of Botel, Binder & Weiss in
July 1996, where he had been a partner for more than five years. From February
1985 he also served as Vice President of Penn Center Investments, Inc., a
securities brokerage firm, of which firm he became President in January 1995.
Mr. Braemer, age 56, has been a partner in the law firm of Ballard Spahr
Andrews & Ingersoll since January 1994. Prior to that, he was a partner in the
law firm of Hangley Connolly Epstein Chicco Foxman & Ewing from May 1992. Prior
to that time he was, for more than five years, a shareholder and director of
Braemer Abelson & Hitchner, a professional corporation engaged in the practice
of law, and a partner in the predecessor law partnership of Braemer Abelson &
Hitchner (formerly, Braemer and Abelson). Mr. Braemer is a director of Toll
Brothers, Inc.
Mr. Ksansnak, age 56, is Executive Vice President and Chief Financial
Officer for ARAMARK Corporation. He has been with ARAMARK since May 1986 and is
responsible for financial matters, planning and development, tax, internal audit
and information technology across all business units. Before joining ARAMARK he
had been a partner of Arthur Andersen & Co. since 1971. In 1974, he became
Partner-in-Charge of the Audit Practice in Philadelphia, and was Managing
Partner of the Philadelphia office from 1979 to 1986. Mr. Ksansnak sits on the
boards of CSS Industries, Inc. and Roy F. Weston, Inc.
Mr. Lubner, age 63, is Chairman and Chief Executive Officer of Plate Glass
and Shatterprufe Industries, a company quoted on the Johannesburg, South Africa
Stock Exchange. Mr. Lubner is a 40-year old veteran of the Plate Glass Group,
which has annual sales of $1.5 billion. Headquartered in Johannesburg, the
company manufactures and distributes the complete range of glass and board
products for the building, automotive and furniture industries, and is the
undisputed world leader in the field of automotive glass repair and replacement.
Mr. Turberg, age 68, has been an independent management consultant
affiliated with Firemark Group, Inc. in Parsippany, New Jersey, a firm
specializing in research for insurance companies, since September 1993. Prior to
that he was affiliated with the accounting firm of KPMG Peat Marwick in New York
City from February 1989. Prior to that he had been, for more than five years,
President of Huggins Financial Services, Inc., a management consulting firm.
COMMITTEES, MEETINGS AND COMPENSATION OF THE BOARD OF DIRECTORS
The Board of Directors held nine meetings during the last fiscal year. All
directors attended at least 75% of the aggregate number of meetings of the Board
and committees of the Board on which they served.
The Board of Directors has an Audit Committee currently composed of Messrs.
Braemer, Dunkelberg and Ksansnak. The Audit Committee reviews and evaluates the
Company's internal accounting and auditing procedures; recommends to the Board
of Directors the firm to be appointed as independent accountants to audit the
Company's financial statements; reviews with management and the independent
accountants the Company's year-end operating results; reviews the scope and
results of the audit with the independent accountants; reviews with management
the Company's interim operating results; and reviews the non-audit services to
be performed by the firm of independent accountants and considers the effect of
such performance on the accountants' independence. The Audit Committee met five
times in 1996.
16
<PAGE> 19
The Board of Directors has appointed a Compensation Committee currently
composed of Messrs. Bellis, Botel, and Turberg. The Compensation Committee
reviews and approves Company-wide benefit programs and executive compensation
programs, and, where appropriate, reviews and approves individual arrangements
for persons designated as "officers" for the purposes of Section 16 of the
Exchange Act ("Section 16 Officers"). The Committee also recommends and approves
compensation arrangements for outside Directors and serves in an advisory
capacity to the full Board regarding compensation matters. The Compensation
Committee met four times in 1996.
The Board of Directors has established a committee (the "Plan
Administration Committee") to administer the Company's Stock Option and AMIP
Plans (the "Plans"). The Plan Administration Committee acted by consent
forty-six times during 1996. In December 1995, the Plan Administration Committee
was divided into two subcommittees. One subcommittee, currently composed of
Messrs. Turberg and Botel (each of whom is a "disinterested person" under
applicable SEC rules), administers the Plans with respect to Section 16 Officers
and non-employee Directors. The other subcommittee, currently composed of
Messrs. Alter, Hart and Rosoff, administers the Plans with respect to
non-Section 16 Officers. The Plan Administration Committee also has authority to
designate whether options granted are intended to qualify as incentive stock
options or are to be non-qualified stock options.
The Board of Directors has a Nominating Committee to identify and recommend
to the Board of Directors individuals to serve on the Board, which individuals
are to be selected, according to the Board resolution establishing the
Nominating Committee, on the basis of their integrity, leadership ability,
financial sophistication and capacity to help guide the Company successfully
into the 21st century. The current members of the Nominating Committee are
Messrs. Bellis, Braemer and Naples. The Nominating Committee met once in 1996.
The Nominating Committee will consider nominees recommended by stockholders; any
such nominations must comply with the requirements of the Company's By-Laws,
including timely delivery to the Company of a written request from a stockholder
of record that an individual's name be placed in nomination. Such written notice
must set forth certain information with respect to the nomination, including:
the name and address of the nominating stockholder; the name and address of the
beneficial owner, if different than the nominating stockholder, of the shares
owned of record by the nominating stockholder; the number and class of shares
owned by such nominating stockholder and beneficial owner; a description of all
arrangements and understandings between the nominating stockholder, any
beneficial owner and any persons nominated; the name and address of any persons
nominated; a representation that the nominating stockholder is a holder of
record of the Company's shares entitled to vote at the meeting and intends to
appear in person or by proxy at the meeting to nominate such persons; such other
information regarding each nominee as would have been required to be included in
a proxy statement filed pursuant to the proxy disclosure rules of the SEC had
the nominee been nominated by the Board of Directors of the Company; and the
written consent of each nominee to serve as a director. To be timely, such
notice must, in the case of an annual meeting that is called for a date that is
within 30 days before or after the anniversary date of the immediately preceding
annual meeting, be delivered not less than 60 nor more than 90 days prior to
such anniversary date, or, in the case of any other annual meeting or any
special meeting, not later than the close of business on the fifth day following
the earlier of the day on which notice of the date of meeting was mailed or
publicly disclosed. Notwithstanding the foregoing, with respect to this Meeting,
notice will be deemed timely if it is received by the Company on or before April
16, 1997.
In June 1995, the Board of Directors established a Corporate Governance
Committee to identify, analyze and propose approaches and solutions to issues of
importance relating to the long-term effectiveness of the Board of Directors and
senior management of the Company, including for example, issues relating to
succession planning, retirement policies and performance measurement. The
current members of the Corporate Governance Committee are Messrs. Hall, Bellis,
Braemer and Naples. The Corporate Governance Committee met twice in 1996.
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Members of the Board of Directors who are not officers or employees of the
Company receive an annual retainer of $25,000 for service on the Board, $10,000
as an annual retainer for service on a Board Committee (other than as a
Committee chairperson, for whom the annual retainer is $15,000), and are paid
$1,000 per day for each Board or Board Committee meeting attended (chairmen are
paid $1,500 per day for each Committee meeting they chair). However, Messrs.
Turberg and Botel are not compensated separately for serving on the Plan
Administration Committee, as such service is considered ancillary to their
service on the Compensation Committee. The chairmen of the Audit Committee, the
Compensation Committee, the Nominating Committee and the Corporate Governance
Committee are Messrs. Braemer, Turberg, Bellis and Hall, respectively. In
addition, for each non-employee Director, the Company pays the premiums on a
$500,000 term life insurance policy on which there is no build-up in cash value,
but as to which the non-employee Director has the right to designate the
beneficiary under the applicable policy. Under the Company's 1992 Stock Option
Plan each non-employee Director currently receives an annual grant, on the
fourth Wednesday in January, of an option to purchase 7,500 shares of Class B
Common Stock, at an exercise price equal to the fair market value of such stock
on the grant date. Each such option becomes exercisable on the anniversary of
the grant date at the rate of 25% per year for four years, and expires ten years
from the grant date. Directors are reimbursed for expenses incurred in attending
meetings of the Board of Directors and committees thereof.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
In 1995, the Company engaged Mr. Bellis as a consultant to assist in the
evaluation of certain new business opportunities. During 1996, the Company paid
Mr. Bellis for his services at the rate of $14,000 per month plus reimbursement
of expenses. The consulting fees paid to Mr. Bellis in 1996 totaled $168,000,
plus $26,857 of expense reimbursement.
CHANGE IN CONTROL ARRANGEMENTS
In March 1997, the Company's Compensation Committee of the Board of
Directors approved the Advanta Senior Management Change of Control Severance
Plan (the "Severance Plan") which would provide benefits to the named executive
officers (other than Messrs. Greenawalt and Marshall who are no longer employed
by the Company) in the event of a Change of Control of the Company (as defined
in the Severance Plan) if, within one year of the date of the Change of Control,
there has been either an actual or constructive termination of the named
executive officers. Under the Severance Plan, the named executive officers would
be entitled to receive no less than 24 months of base salary as severance in
such an event.
OTHER MATTERS
In January 1994, Mr. Hart and the Company entered into an agreement
pursuant to which Mr. Hart's base salary was set at not less than $495,000. In
addition, he received 200,000 restricted shares of Class B Common Stock and an
option to purchase 100,000 shares of Class B Common Stock at $27.75 per share.
The restricted shares, which as of the January 1994 date of grant had a market
value of $5.6 million, will vest at the rate of 25% per annum for four years,
with the first installment having vested in January 1995, and the options become
exercisable at the same rate. Should Mr. Hart leave the Company's employ before
four years have passed, these benefits will vest upon the departure except in
certain limited circumstances. In addition, these benefits will vest upon a
change of control of the Company (as defined in the agreement). Mr. Hart also
received, in January 1995, a guaranteed one-time bonus of $525,000 (which is
included in the 1994 bonus shown in the Summary Compensation Table on page 6 of
this proxy statement), and he is eligible to receive annual bonuses under AMIP
III and AMIP IV.
In January 1996, Mr. Rosoff and the Company entered into an agreement under
which Mr. Rosoff's annual base salary is a minimum of $475,000. He is entitled
to receive a guaranteed cash
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bonus which, together with his base salary, will bring his annual cash
compensation to not less than $750,000. He is also entitled to participate in
AMIP III and AMIP IV (with a target bonus of at least 75% of his base salary)
and is guaranteed that his total annual compensation from base salary,
guaranteed cash bonus and AMIP award will be at least $1 million. In
anticipation of his execution of the agreement, the Company paid him a one time
signing bonus of $950,000 in December 1995. In addition, pursuant to this
agreement he received 100,000 restricted shares of Class B Common Stock and an
option to purchase 50,000 shares of Class B Common Stock at $34.00 per share,
the fair market value of the shares on the date of grant. The restricted shares,
which as of the January 1996 date of grant had a market value of $34.00 per
share, vest at the rate of 25% per annum over four years, with the first
installment having vested on January 15, 1997, and the options become
exercisable in the same installments one day later. Should Mr. Rosoff leave the
Company's employ before four years have passed, these benefits will vest upon
the departure except in certain limited circumstances. In addition, these
benefits will vest upon a change of control of the Company (as defined in the
agreement). The Company has agreed that the 100,000 shares of restricted Class B
Common Stock will have a fair market value sufficient to allow Mr. Rosoff to
realize $40 per share net after applicable taxes resulting from an assumed sale
of such shares on January 15, 2000, and it will make non-interest bearing loans
to him in the interim sufficient to pay his taxes arising from his receipt of
the shares. If the net after tax proceeds of such assumed sale are less than
$40, loans will be canceled and a payment will be made in cash and/or Class B
Common Stock to Mr. Rosoff to make up the shortfall.
The Company may periodically utilize the legal services of the law firm of
Ballard Spahr Andrews & Ingersoll ("Ballard"), of which firm Mr. Braemer has
been a partner since January 1994. The Company expects that the dollar amount of
legal services which will be provided to it by Ballard attorneys will be
immaterial both to the Company and to Ballard. In addition, Ballard has agreed
that Mr. Braemer will receive no direct or indirect benefit, as a partner of
Ballard, as the result of any legal services Ballard may provide to the Company,
nor will he participate in, or be apprised of, any such legal services.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has been selected by the Board of Directors as the
independent public accountants for the Company's current fiscal year. A
representative of Arthur Andersen LLP is expected to be present at the Meeting
and will have the opportunity to make a statement if he desires to do so and
will be available to respond to appropriate questions of stockholders.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders in 1998 must be received by December 12, 1997, in order to be
considered for inclusion in the Company's proxy materials relating to that
meeting. Stockholder proposals should be directed to Gene S. Schneyer,
Secretary, at the address of the Company set forth on the first page of this
proxy statement.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS
PROXY STATEMENT, ON THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES
THERETO, AS FILED WITH THE SEC FOR ITS MOST RECENT FISCAL YEAR. SUCH WRITTEN
REQUEST SHOULD BE DIRECTED TO INVESTOR RELATIONS, AT THE ADDRESS OF THE COMPANY
APPEARING ON THE FIRST PAGE OF THIS PROXY STATEMENT.
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(LOGO)
This proxy statement has been printed entirely on recycled paper.
<PAGE> 23
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ADVANTA CORP.
The undersigned, a stockholder of Advanta Corp. (the "Company"), hereby
constitutes and appoints Dennis Alter, Alex W. Hart, William A. Rosoff and Gene
S. Schneyer, and each of them acting individually as the attorney and special
proxy of the undersigned, with full power of substitution, for and in the name
and stead of the undersigned to attend the Annual Meeting of Stockholders of
Advanta Corp. to be held on Thursday, May 8, 1997, at 1:00 p.m. at the
Company's headquarters, Welsh and McKean Roads, Spring House, Pennsylvania, and
any adjournment or postponement thereof, and thereat to vote all shares which
the undersigned would be entitled to cast if personally present as follows:
(CONTINUED, AND TO BE SIGNED ON THE REVERSE SIDE)
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Please mark
[X] your votes
as this
1. ELECTION OF DIRECTORS
FOR WITHHOLD AUTHORITY
all three nominees for to vote for all three nominees
director listed below for director listed below
[ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below.
NOMINEES: Alex W. Hart, William A. Rosoff and Ronald J. Naples.
2. To transact such other business as may properly come before the meeting.
IF NOT OTHERWISE SPECIFIED, THE SHARES WILL BE VOTED FOR THE ELECTION OF ALL
THREE NOMINEES FOR DIRECTOR. This proxy delegates authority to vote with
respect to all other matters upon which the undersigned is entitled to vote and
which may come before the meeting or any adjournment or postponement thereof.
The undersigned hereby revokes all previous proxies for such meeting and hereby
acknowledges receipt of the notice of the meeting and the proxy statement of
Advanta Corp. furnished herewith.
PLEASE SIGN AND MAIL PROMPTLY.
Stockholder's Signature(s) Date 1997
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NOTE: If shares are registered in more than one name, all owners should sign.
If signing in a fiduciary or representative capacity, please give full
title and attach evidence of authority. If a corporation, please sign with full
corporate name by a duly authorized officer and affix the corporate seal.
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