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 240.14a-12
First Cash Financial Services, Inc.
-----------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------------------------------
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[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) and 0-11.
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computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
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[ ] 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.
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4) Date Filed: _____________________________________________________
Dear Stockholder:
We cordially invite you to attend our Annual Meeting, which will be
held on Thursday, July 10, 2003, at 10:00 a.m. at the First Cash Financial
Services, Inc. corporate offices located at 690 East Lamar Boulevard, Suite
400, Arlington, Texas, 76011. At this meeting you will be asked to act upon
the proposals as contained herein.
Your board of directors recommends that you vote in favor of each of
these proposals. You should read with care the attached Proxy Statement,
which contains detailed information about these proposals.
Your vote is important, and accordingly, we urge you to complete, sign,
date and return your Proxy card promptly in the enclosed postage-paid
envelope. The fact that you have returned your Proxy in advance will in no
way affect your right to vote in person should you attend the meeting.
However, by signing and returning the Proxy, you have assured representation
of your shares.
We hope that you will be able to join us on July 10.
Very truly yours,
/s/ Rick Powell
-------------------------
Rick Powell
Chairman of the Board and
Chief Executive Officer
First Cash Financial Services, Inc.
690 East Lamar Boulevard, Suite 400
Arlington, Texas 76011
_______________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held July 10, 2003
_______________
Notice is hereby given that the Annual Meeting of Stockholders of First
Cash Financial Services, Inc. (the "Company") will be held at the First Cash
Financial Services, Inc. corporate offices located at 690 East Lamar
Boulevard, Suite 400, Arlington, Texas 76011 at 10:00 a.m., Dallas/Fort
Worth time, on Thursday, July 10, 2003, for the following purposes:
1. To elect three Directors;
2. To ratify the selection of Deloitte & Touche LLP as independent
auditors of the Company for the year ending December 31, 2003;
3. To approve the adoption of the First Cash Financial Services, Inc.
Executive Performance Incentive Plan; and
4. To transact such other business as may properly come before the
meeting.
Common stockholders of record at the close of business on May 22, 2003
will be entitled to notice of and to vote at the meeting.
By Order of the Board of Directors,
/s/ Rick L. Wessel
----------------------------------
Arlington, Texas Rick L. Wessel
June 3, 2003 President, Secretary
and Treasurer
First Cash Financial Services, Inc.
690 East Lamar Boulevard, Suite 400
Arlington, Texas 76011
_______________
PROXY STATEMENT
Annual Meeting of Stockholders
_______________
This Proxy Statement is being furnished to stockholders in connection
with the solicitation of proxies by the board of directors of First Cash
Financial Services, Inc., a Delaware corporation (the "Company"), for use at
the Annual Meeting of Stockholders of the Company to be held at the First
Cash Financial Services, Inc. corporate offices located at 690 East Lamar
Boulevard, Suite 400, Arlington, Texas 76011 at 10:00 a.m., on Thursday,
July 10, 2003, and at any adjournments thereof for the purpose of
considering and voting upon the matters set forth in the accompanying
Notice of Annual Meeting of Stockholders. This Proxy Statement and the
accompanying form of proxy are first being mailed to stockholders on or
about June 3, 2003.
The close of business on May 22, 2003 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting and any adjournment thereof. As of the record date,
there were 8,887,187 shares of the Company's common stock, par value $.01
per share ("Common Stock"), issued and outstanding. The presence, in person
or by proxy, of a majority of the outstanding shares of Common Stock on the
record date is necessary to constitute a quorum at the Annual Meeting.
Abstentions and broker non-votes will be counted as present for the purposes
of determining the presence of a quorum. Each share of Common Stock is
entitled to one vote on all questions requiring a stockholder vote at the
Annual Meeting. A plurality of the votes of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting is required
for the approval of Item 1 as set forth in the accompanying Notice. The
affirmative vote of a majority of the shares of Common Stock present or
represented by proxy at the Annual Meeting is required for the approval of
Items 2 and 3 as set forth in the accompanying Notice. Stockholders may not
cumulate their votes in the election of directors. Abstentions and broker
non-votes will not be counted as having been voted on the proposal and will
have no effect on the vote.
All shares represented by properly executed proxies, unless such
proxies previously have been revoked, will be voted at the Annual Meeting in
accordance with the directions on the proxies. If no direction is
indicated, the shares will be voted (i) TO ELECT THREE DIRECTORS; (ii) TO
RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS OF THE
COMPANY FOR THE YEAR ENDING DECEMBER 31, 2003; (iii) TO APPROVE THE ADOPTION
OF THE FIRST CASH FINANCIAL SERVICES, INC. EXECUTIVE PERFORMANCE INCENTIVE
PLAN; AND (iv) TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE MEETING. The enclosed proxy, even though executed and returned, may be
revoked at any time prior to the voting of the proxy (a) by the execution
and submission of a revised proxy, (b) by written notice to the Secretary of
the Company or (c) by voting in person at the Annual Meeting.
ANNUAL REPORT
The Annual Report to Stockholders, covering the fiscal year of the
Company, dated December 31, 2002, including audited financial statements, is
enclosed herewith. The Annual Report to Stockholders does not form any part
of the material for solicitation of proxies.
The Company will provide, without charge, a copy of its Annual Report
on Form 10-K upon written request to Rick L. Wessel, the President,
Secretary and Treasurer at 690 East Lamar Boulevard, Suite 400, Arlington,
Texas 76011. The Company will provide exhibits to its Annual Report on Form
10-K, upon payment of the reasonable expenses incurred by the Company in
furnishing such exhibits.
ITEM 1
TO ELECT THREE DIRECTORS
The Bylaws of the Company provide that the board of directors will
determine the number of directors, but shall consist of at least one
director and no more than 15 directors. The stockholders of the Company
elect the directors. At each annual meeting of stockholders of the Company
successors of the class of directors whose term expires at the annual
meeting will be elected for a three-year term. Any director elected to fill
a vacancy or newly created directorship resulting from an increase in the
authorized number of directors shall hold office for a term that shall
coincide with the remaining term of that class. In no case will a decrease
in the number of directors shorten the term of any incumbent director. Any
vacancy on the board howsoever resulting may be filled by a majority of the
directors then in office, even if less than a quorum, or by a sole remaining
director. The stockholders will elect three directors for the coming year;
each nominee presently serves as a director of the Company and will be
appointed for a term of three years.
Unless otherwise instructed or unless authority to vote is withheld,
the enclosed proxy will be voted for the election of the nominees listed
herein. Although the board of directors of the Company does not contemplate
that the nominee will be unable to serve, if such a situation arises prior
to the Annual Meeting, the person named in the enclosed proxy will vote for
the election of such other person as may be nominated by the board of
directors.
The board of directors of the Company consists of five directors
divided into three classes. At each annual meeting of stockholders, one
class is elected to hold office for a term of three years. Directors
serving until the earlier of (i) resignation or (ii) expiration of their
terms at the annual meeting of stockholders in the years indicated are as
follows: 2003 - Messrs. Wessel, Burke and Love; 2004 - Ms. Schuchmann; and
2005 - Mr. Powell. All officers serve at the discretion of the board of
directors. No family relationships exist between any director and executive
officer, except that Mr. John C. Powell, vice president of information
technology, is the brother of Mr. Phillip E. Powell, the chairman of the
board and chief executive officer of the Company. The Directors standing
for election at the Annual Meeting of Stockholders are as follows:
Rick L. Wessel, age 44, has served as secretary and treasurer of the
Company since May 1992, as president since May 1998, as a director since
November 1992 and as chief financial officer from May 1992 to December 2002.
Prior to February 1992, Price Waterhouse LLP employed Mr. Wessel for
approximately nine years. Mr. Wessel is a certified public accountant
licensed in Texas.
Richard T. Burke, age 59, has served as a director of the Company since
December 1993. Mr. Burke is the founder and former chief executive officer
and chairman of UnitedHealth Group. Mr. Burke remains a director of
UnitedHealth Group, a company engaged in the managed health care industry,
and is a board member of several private, nonprofit and charitable
organizations. From 1977 to 1987, Mr. Burke also served as chief executive
officer of Physicians Health Plan of Minnesota (now MEDICA), the largest
client of UnitedHealth Group. The securities of UnitedHealth Group are
registered pursuant to the Exchange Act. Mr. Burke was the former owner and
chief executive officer of the Phoenix Coyotes, a professional sports
franchise of the National Hockey League.
Joe R. Love, age 64, has served as a director of the Company since
December 1991. Mr. Love has served as chairman of CCDC, Inc., a real estate
development firm, since October 1976. Mr. Love is the owner of Surrey, LLC,
a golf and residential community in Oklahoma City, Oklahoma.
Directors Not Standing For Election
Tara Schuchmann, age 45, has served as a director of the Company since
June 2001. Ms. Schuchmann is the founder and managing general partner of
Tara Capital Management LP, an investment management and advisory firm. Ms.
Schuchmann has 23 years experience in the financial services industry. Ms.
Schuchmann holds an MBA from the Harvard University Graduate School of
Business Administration.
Phillip E. Powell, age 52, has served as a director of the Company
since March 1990, served as president from March 1990 until May 1992, and
has served as chief executive officer since May 1992. Mr. Powell has been
engaged in the financial services industry for over 27 years.
Board of Directors, Committees and Meetings
The board of directors held two meetings during the year ended December
31, 2002. Each director attended, either telephonically or in person, 100%
of the board meetings during the year ended December 31, 2002. The Audit
and Compensation Committees consist of Richard T. Burke, Joe R. Love and
Tara Schuchmann. The Audit Committee held four meetings during the year
ended December 31, 2002 and the Compensation Committee held two meetings
during the year ended December 31, 2002. Each member attended at least 75%
of the committee meetings, either in person or telephonically.
Audit Committee. The Audit Committee is responsible for making
recommendations to the board of directors concerning the selection and
engagement of the Company's independent auditors and reviews the scope of
the annual audit, audit fees and results of the audit. The Audit Committee
also reviews and discusses with management and the board of directors such
matters as accounting policies, internal accounting controls, procedures for
preparation of financial statements, scope of the audit, the audit plan and
the independence of such accountants.
Compensation Committee. The Compensation Committee approves the
standards for salary ranges for executive, managerial and technical
personnel of the Company and establishes, subject to existing employment
contracts, the specific compensation and bonus plan of all corporate
officers. In addition, the Compensation Committee oversees the Company's
stock option plans.
The Company has no nominating committee or any committee serving a
similar function.
Directors' Fees
For the year ended December 31, 2002, Messrs. Burke and Love each
received $25,000 for the fiscal year ended December 31, 2002 as compensation
for attending in person the 2002 meetings of the board of directors or any
committee meetings thereof. Ms. Schuchmann received no director fees for
fiscal 2002. In addition, the directors are reimbursed for their reasonable
expenses incurred for each board and committee meeting attended. See
"Compensation - Stock Options and Warrants" for a discussion of options and
warrants issued to directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on the reports furnished pursuant to Section 16a-3(e) of
the Exchange Act, all reports as required under Section 16(a) of the
Exchange Act were filed on a timely basis during the year ending December
31, 2002.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
Our Compensation Committee reviews compensation paid to management and
recommends to the board of directors appropriate executive compensation.
Ms. Schuchmann and Messrs. Burke and Love serve as members of the
Compensation Committee and are not employed by the Company.
THE BOARD HAS NOMINATED THE ABOVE-REFERENCED DIRECTORS FOR ELECTION BY
THE STOCKHOLDERS AND RECOMMENDS A VOTE FOR SUCH ELECTION. THE ELECTION OF
THESE DIRECTORS REQUIRES A PLURALITY OF THE VOTES OF THE SHARES OF COMMON
STOCK PRESENT IN PERSON OR REPRESENTED BY PROXY AT THE ANNUAL MEETING.
ITEM 2
RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS OF THE
COMPANY FOR THE YEAR ENDING DECEMBER 31, 2003
The board of directors and the Audit Committee of the board have
approved engagement of Deloitte & Touche LLP as independent auditors for the
year ending December 31, 2003 consolidated financial statements. The board
of directors wishes to obtain from the stockholders a ratification of the
board's action in appointing Deloitte & Touche LLP as independent auditors
of the Company for the year ending December 31, 2003. Both the Audit
Committee of the board of directors and the board itself has approved the
engagement of Deloitte & Touche LLP for audit services.
Audit Fees
The aggregate fees billed by Deloitte & Touche LLP, the member firms of
Deloitte Touche Tohmatsu, and their respective affiliates (collectively
"Deloitte") for professional services rendered for the audit of the
Company's annual financial statements for the year ended December 31, 2002
and for the reviews of the financial statements included in the Company's
Quarterly Reports on Form 10-Q for the fiscal year were $135,000.
Financial Information Systems Design and Implementation Fees
Deloitte rendered no professional services to the Company for
information technology services relating to financial information systems
design and implementation for the fiscal year ended December 31, 2002.
All Other Fees
The aggregate fees billed by Deloitte for other professional services,
primarily tax and accounting related consultations, rendered to the Company,
other than the services described above, for the fiscal year ended December
31, 2002 were $8,800. The Company's Audit Committee has considered that the
provision of the services described in the preceding sentence is compatible
with maintaining the principal accountant's independence.
In the event the stockholders do not ratify the appointment of Deloitte
& Touche LLP as independent auditors for the year ending December 31, 2003,
the adverse vote will be considered as a direction to the board of directors
to select other auditors for the following year. However, because of the
difficulty in making any substitution of auditors so long after the
beginning of the year ending December 31, 2003, it is contemplated that the
appointment for the year ending December 31, 2003 will be permitted to stand
unless the board finds other good reason for making a change.
Representatives of Deloitte & Touche LLP are expected to be present at
the meeting, with the opportunity to make a statement if desired to do so.
Such representatives are also expected to be available to respond to
appropriate questions.
THE BOARD HAS RECOMMENDED THE RATIFICATION OF DELOITTE & TOUCHE LLP AS
INDEPENDENT AUDITORS. SUCH RATIFICATION REQUIRES THE AFFIRMATIVE VOTE OF
THE MAJORITY OF OUTSTANDING SHARES OF COMMON STOCK PRESENT OR REPRESENTED BY
PROXY AT THE ANNUAL MEETING.
ITEM 3
ADOPTION OF THE FIRST CASH FINANCIAL SERVICES, INC.
EXECUTIVE PERFORMANCE INCENTIVE PLAN
On January 29, 2003, the board of directors adopted the First Cash
Financial Services, Inc. Executive Performance Incentive Plan ("Incentive
Plan"), subject to approval of the shareholders. The Incentive Plan provides
for the payment of annual incentive compensation to participants based upon
the achievement of performance goals established annually by the
Compensation Committee based on one or more specified performance criteria.
If the shareholders at the Annual Meeting approve the Incentive Plan,
it will become effective as of January 1, 2003 and will continue from year
to year until terminated by the board of directors. If the shareholders at
the Annual Meeting do not approve the Incentive Plan, certain payments of
annual incentive compensation to the Company's executive officers may not be
fully deductible by the Company as a compensation expense under Code Section
162(m), as discussed further below.
Summary of the Incentive Plan
The following summary of the Incentive Plan is qualified in its
entirety by the full text of the Incentive Plan, a copy of which is attached
hereto as Exhibit A. You are encouraged to read the full text of the
Incentive Plan if you need more information.
Consistent with the information regarding Code Section 162(m) presented
in the Compensation Committee Report herein, this Incentive Plan is
presented for approval by the shareholders in order to preserve the
Company's deduction under Code Section 162(m) for certain performance-based
compensation that may be paid to its executive officers. Another purpose of
the Incentive Plan is to further the Company's ability to attract and retain
qualified executives by providing performance-based compensation as an
incentive for their efforts to achieve financial and strategic objectives.
The Incentive Plan authorizes the payment of annual incentive
compensation to eligible employees of the Company. Participation in the
Incentive Plan is limited to the executive officers of the Company and any
other employees of the Company or its subsidiaries which the Compensation
Committee, at the time it sets performance goals for a particular year,
reasonably believes may be deemed to be covered employees for such year
under Code Section 162(m), as the same may be amended from time to time.
Under Code Section 162(m), a covered employee currently is defined as any
individual who, on the last day of the taxable year, is the Chief Executive
Officer of the Company or acting in that capacity, or one of the four
highest compensated officers of the Company (other than the Chief Executive
Officer) determined pursuant to the executive compensation rules under the
Exchange Act.
The Incentive Plan will be administered by a committee of the board of
directors consisting solely of two or more outside directors, as defined in
the regulations under Code Section 162(m). Until specified otherwise, the
Compensation Committee will administer the Incentive Plan.
At the beginning of each fiscal year, the Compensation Committee will
select the participants in the Incentive Plan for that year. An employee
hired or promoted during the year may subsequently be named as a
participant. No later than 90 days after the beginning of the year, the
Compensation Committee will specify in writing the performance goals and
annual performance incentive payments that are to apply for that year.
Performance incentive payments may vary among participants and from year to
year, but the maximum incentive payment to any participant in a year is
$5,000,000.
The performance goals established by the Compensation Committee will be
stated in terms of objective standards or formulae and must be based upon
one or more of the following factors: (i) earnings before interest expense,
taxes, depreciation and amortization, or "EBITDA;" (ii) earnings before
interest expense and taxes "EBIT;" (iii) net earnings; (iv) net income; (v)
operating income; (vi) earnings per share; (vii) book value per share;
(viii) return on shareholders' equity; (ix) capital expenditures; (x)
expenses and expense ratio management; (xi) return on investment; (xii)
improvements in capital structure; (xiii) profitability of an identifiable
business unit or product; (xiv) maintenance or improvement of profit
margins; (xv) stock price; (xvi) market share; (xvii) revenues or sales;
(xviii) costs; (xix) cash flow; (xx) working capital; (xxi) return on
assets; (xxii) economic value added; (xxiii) expansion of the store base;
and (xxiv) gross or net profit. The foregoing criteria may relate to the
company as a whole, one or more of our subsidiaries, one or more of our
divisions or units, or any combination of the foregoing, and may be applied
on an absolute basis or be relative to one or more peer group companies or
indices, or any combination thereof, all as the Compensation Committee
determines. At the time the performance goals are determined, or at any
time prior to the final determination of annual performance incentive
compensation, the Compensation Committee may, to the extent permitted under
Section 162(m) of the Code and the regulations promulgated thereunder,
adjust the performance goals to reflect the impact of specified corporate
transactions (such as a stock-split or stock dividend), special charges,
foreign currency effects, accounting or tax law changes and other
extraordinary or nonrecurring events. In addition, the Compensation
Committee retains the sole discretion to decrease, but not increase, the
amount of any Performance Award that would otherwise be payable pursuant to
the terms of the Plan.
As soon as possible after the end of each year, the Compensation
Committee will certify for each participant whether the performance goals
for that year have been met. If such goals have been met, the Compensation
Committee may authorize payment of the annual performance incentive
compensation to the participant. The Compensation Committee has discretion
to reduce, but not to increase, the previously established annual
performance incentive compensation if the performance goals have been met.
Annual performance incentive compensation awards will be paid in cash (or as
otherwise determined by the Compensation Committee) as soon as practicable
following the close of the performance year. However, such payment may be
subject to deferral pursuant to the provisions of any applicable deferred
compensation Incentive Plan maintained by the Company or its subsidiaries.
If a participant's employment is terminated for cause during a
performance year, he or she will not receive any annual performance
incentive compensation for that year. To the extent not governed by an
applicable contractual arrangement between the Company and the participant,
upon a change in control (as defined in the Incentive Plan) the Company will
pay to each individual who was a participant in the Plan immediately prior
to the change in control a pro-rated performance award based on performance
results achieved through the date of the change in control.
The board of directors may amend or terminate the Incentive Plan at any
time, but no such amendment or termination will affect the payment of annual
performance incentive compensation for a year already ended, and no such
amendment may, without the approval of the shareholders, change the material
terms of a performance goal or effect any other change that would cause the
loss of a tax deduction to the Company under Code Section 162(m) absent
shareholder approval.
Federal Income Tax Consequences.
A participant will recognize ordinary income, and the Company will be
allowed a tax deduction, at the time annual performance incentive
compensation is paid or payable. Code Section 162(m) provides that no
federal income tax deduction is allowed for compensation paid to a covered
employee in any taxable year to the extent that such compensation exceeds
$1,000,000. This deduction limitation does not apply to compensation that is
performance-based compensation within the meaning of the Code Section 162(m)
regulations. The Incentive Plan is intended to preserve the Company's
federal income tax deduction for annual performance incentive compensation
payments under the Incentive Plan by meeting the requirements for
performance-based compensation under Code Section 162(m).
Benefits to Named Executive Officers and Others
Only the executive officers are currently eligible to participate in
the Incentive Plan. It is not possible at this time to determine with
respect to the named executive officers or the executive officers as a group
the benefits or amounts that will be received by such persons under the
Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
EXECUTIVE PERFORMANCE INCENTIVE PLAN. SUCH RATIFICATION REQUIRES THE
AFFIRMATIVE VOTE OF THE MAJORITY OF OUTSTANDING SHARES OF COMMON STOCK
PRESENT OR REPRESENTED BY PROXY AT THE ANNUAL MEETING.
Equity Compensation Plan Information
The following table gives information about the Company's common stock
that may be issued upon the exercise of options under its 1990 Stock Option
Plan (approved by the shareholders) and 1999 Stock Option Plan (approved by
the shareholders), together, the "Option Plans", as of December 31, 2002.
Additionally, the Company issues warrants to purchase shares of common stock
to certain key members of management, members of the board of directors that
are not employees or officers, and to other third parties. The issuance of
warrants is not approved by shareholders, and each issuance is generally
negotiated between the Company and such recipients.
Number of Weighted Number of
securities to average securities remaining
be issued upon exercise available for
exercise of price of future issuance
outstanding outstanding under equity
options and options and compensation
warrants warrants plans
-------- -------- ---------
Plan Category
-------------
Equity compensation plans
approved by security holders 1,110,750 $5.24 1,639,250
Equity compensation plans not
approved by security holders 1,389,661 $6.92 -
--------- ---------
Total 2,500,411 $6.18 1,639,250
________________
From time to time, the board of directors will issue warrants to
purchase shares of common stock in the Company at a predetermined price per
share and a scheduled expiration date. During the year ended December 31,
2002, the board of directors approved the issuance of warrants to purchase
522,000 shares of common stock in the Company, with a weighted average
exercise price of $8.00.
EXECUTIVE OFFICERS
The following table lists the executive officers of the Company as of
the date hereof and the capacities in which they serve.
Name Age Position
----------------- --- ----------------------------------
Phillip E. Powell 52 Chairman of the Board and
Chief Executive Officer
Rick L. Wessel 44 President, Secretary, Treasurer
and Director
J. Alan Barron 42 Chief Operating Officer
R. Douglas Orr 42 Chief Financial Officer
John C. Powell 48 Vice President of Information
Technology
J. Alan Barron joined the Company in January 1994 as its chief
operating officer. Mr. Barron served as the chief operating officer from
January 1994 to May 1998 and from January 2003 to the present. For the
period from May 1998 to January 2003 Mr. Barron served as the president -
pawn operations. Prior to joining the Company, Mr. Barron spent two years
as chief financial officer for a nine-store privately held pawnshop chain.
Prior to his employment as chief financial officer of this privately held
pawnshop chain, Mr. Barron spent five years in the Fort Worth office of
Price Waterhouse LLP.
R. Douglas Orr joined the Company in July 2002 as the vice president of
finance. In January 2003, Mr. Orr was promoted to chief financial officer.
Prior to joining the Company, Mr. Orr spent 14 years at Ray & Berndtson, a
global executive search firm, where he served in a variety of management and
financial roles including vice president of financial planning and analysis,
vice president and controller and vice president of knowledge. Prior to his
employment at Ray & Berndtson, Mr. Orr spent four years in the Fort Worth
office of Price Waterhouse LLP.
John C. Powell served as a systems consultant to the Company from
February 2002 through July 2002 and joined the Company on a full-time basis
in August 2002. In January 2003, Mr. Powell was promoted to vice president
of information technology. Prior to joining the Company, Mr. Powell spent
18 years with AMR/American Airlines as a senior system engineer and software
architect and an additional two years in the same capacity with Sabre/EDS
after its spin-off from AMR in March of 2000.
Biographical information with respect to Messrs. Phillip E. Powell and
Rick L. Wessel was previously provided under Item 1.
STOCK OWNERSHIP
The table below sets forth information to the best of the Company's
knowledge with respect to the total number of shares of the Company's Common
Stock beneficially owned by each person known to the Company to beneficially
own more than 5% of its Common Stock, each director, each named executive
officer, and the total number of shares of the Company's Common Stock
beneficially owned by all directors and officers as a group, as reported by
each such person, as of May 22, 2003. On that date, there were 8,887,187
shares of voting Common Stock issued and outstanding.
Shares Beneficially
Officers, Directors Owned (2)
and 5% Stockholders (1) Number Percent
------------------------------- --------- -----
Richard T. Burke (3) 1,588,000 17.50%
Phillip E. Powell (4) 1,187,537 11.97
Delta Partners LLC 903,480 10.17
Dimensional Fund Advisors, Inc. 584,200 6.57
Rick L. Wessel (5) 605,378 6.54
Joe R. Love (6) 441,500 4.80
J. Alan Barron (7) 333,886 3.69
Tara Schuchmann (8) 101,000 1.13
R. Douglas Orr - -
John C. Powell - -
All officers and directors
as a group (8 persons) 4,257,301 38.68
--------------------
(1) The addresses of the persons shown in the table above who are directors
or 5% stockholders are as follows: (i) Dimensional Fund Advisors, Inc., 1299
Ocean Avenue, 11th Floor, Santa Monica, CA 90401-1038; (ii) Delta Partner
LLC, One Financial Center, Suite 1600, Boston, MA 02111; and (iii) all other
persons and/or entities listed, 690 East Lamar Boulevard, Suite 400,
Arlington, Texas 76011.
(2) Unless otherwise noted, each person has sole voting and investment
power over the shares listed opposite his name, subject to community
property laws where applicable. Beneficial ownership includes both
outstanding shares of Common Stock and shares of Common Stock such person
has the right to acquire within 60 days of May 22, 2003, upon exercise of
outstanding warrants and options.
(3) Includes a warrant to purchase 100,000 shares at a price of $8.00 per
share to expire in February 2013, a warrant to purchase 25,000 shares at a
price of $8.00 per share to expire in April 2012, a stock option to purchase
50,000 shares at a price of $2.00 per share to expire in December 2010, and
a stock option to purchase 10,000 shares at a price of $10.00 per share to
expire in January 2013. Excludes 10,000 shares of Common Stock owned by Mr.
Burke's wife, which Mr. Burke disclaims beneficial ownership.
(4) Includes a warrant to purchase 60,000 shares at a price of $8.00 per
share to expire in February 2013, a warrant to purchase 225,000 shares at a
price of $4.625 per share to expire in January 2011, a warrant to purchase
150,000 shares at a price of $8.00 per share to expire in April 2012, a
warrant to purchase 100,000 shares at a price of $10.10 per share to expire
in April 2013, a stock option to purchase 125,000 shares at a price of
$10.00 per share to expire in April 2009, a stock option to purchase 150,000
shares at a price of $2.00 per share to expire in December 2010, a stock
option to purchase 125,000 shares at a price of $4.00 per share to expire in
February 2011, and a stock option to purchase 100,000 shares at a price of
$4.625 per share to expire in January 2011.
(5) Includes a warrant to purchase 50,000 shares at a price of $8.00 per
share to expire in February 2013, a warrant to purchase 100,000 shares at a
price of $8.00 per share to expire in April 2012, a stock option to purchase
50,000 shares at a price of $10.00 per share to expire in April 2009, a
stock option to purchase 100,000 shares at a price of $2.00 per share to
expire in December 2010, and a stock option to purchase 65,000 shares at a
price of $4.00 per share to expire in February 2011.
(6) Includes a warrant to purchase 100,000 shares at a price of $8.00 per
share to expire in February 2013, a warrant to purchase 125,000 shares at a
price of $4.625 per share to expire in January 2011, a warrant to purchase
50,000 shares at a price of $8.00 per share to expire in April 2012, a stock
option to purchase 25,000 shares at a price of $10.00 per share to expire in
April 2009, a stock option to purchase 10,000 shares at a price of $10.00
per share to expire in January 2013, and 131,500 shares of common stock all
of which are beneficially owned by an affiliate of Mr. Love.
(7) Includes a warrant to purchase 40,000 shares at a price of $8.00 per
share to expire in February 2013, a warrant to purchase 25,000 shares at a
price of $8.00 per share to expire in April 2012, a stock option to purchase
25,000 shares at a price of $10.00 per share to expire in April 2009, a
stock option to purchase 25,000 shares at a price of $2.00 per share to
expire in December 2010, a stock option to purchase 25,000 shares at a price
of $4.00 per share to expire in February 2011, and a stock option to
purchase 25,000 shares at a price of $8.00 per share to expire in October
2012.
(8) Includes a warrant to purchase 25,000 shares at a price of $8.00 per
share to expire in April 2012, a stock option to purchase 25,000 shares at a
price of $2.00 per share to expire in December 2010, a stock option to
purchase 10,000 shares at a price of $10.00 per share to expire in January
2013, and 41,000 shares of common stock all of which are beneficially owned
by an affiliate of Ms. Schuchmann.
COMPENSATION
Executive Compensation
The following table sets forth compensation with respect to the chief
executive officer and other executive officers of the Company who received
total annual salary and bonus for the year ended December 31, 2002 in excess
of $100,000. Also included in the following table is compensation for the
year ended December 31, 2002, 2001 and 2000:
Summary Compensation Table
--------------------------
Long-Term
Compensation
Annual Compensation - Awards
------------------- -----------
Securities
Underlying
Name & Principal Fiscal Options/ All Other
Position Year Salary Bonus Warrants (1) Compensation (2)
-------- ---- ------ ----- ------------ ------------
Phillip E. Powell 2002 $ 500,000 $ 500,000 150,000 -
Chairman of the 2001 385,234 300,000 125,000 -
Board and Chief 2000 314,340 60,000 200,000 -
Executive Officer
Rick L. Wessel 2002 $ 350,000 $ 387,500 100,000 -
President, 2001 259,890 150,000 65,000 -
Secretary 2000 223,750 30,000 100,000 -
and Treasurer
J. Alan Barron 2002 $285,000 $ 250,000 50,000 -
Chief Operating 2001 219,781 50,000 25,000 -
Officer 2000 191,250 - 25,000 -
R. Douglas Orr 2002 $ 65,591 $ 25,000 10,000 -
Chief Financial 2001 - - - -
Officer 2000 - - - -
John C. Powell 2002 $ 95,010 $ 10,000 10,000 -
Vice President of 2001 - - - -
Information 2000 - - - -
Technology
--------------------
(1) See "- Employment Agreements" and "- Stock Options and Warrants"
for a discussion of the terms of long-term compensation awards.
(2) The aggregate amount of other compensation is less than the lesser of
$50,000 or 10% of the sum of such executive officer's annual salary
and bonus.
Employment Agreements
Mr. Powell has entered into an employment agreement with the Company
through December 31, 2007 to serve as the chief executive officer of the
Company; at the discretion of the board this agreement may be extended for
additional successive periods of one year each on each January 1
anniversary. The agreement provides for: (i) a 2003 base salary of $600,000
with annual minimum increases of 10% or higher increases at the discretion
of the Compensation Committee; (ii) an annual bonus at the discretion of the
Compensation Committee; (iii) certain stock incentives at the discretion of
the Compensation Committee; (iv) certain fringe benefits including club
membership, car, vacation, a term life insurance policy with a beneficiary
designated by Mr. Powell in the amount of $4 million dollars; (v)
continuation of existing loans from the Company which bear interest at 3%
and are secured by shares of common stock of the Company owned by Mr.
Powell; (vi) a lump-sum severance payment of $1,125,000; and (vii)
reimbursement of business related expenses. Mr. Powell has agreed not to
compete with the Company, not to solicit employees of the Company, and not
to solicit customers of the Company for a period of two years following his
termination.
Mr. Wessel has entered into an employment agreement with the Company
through December 31, 2007 to serve as the president of the Company; at the
discretion of the board this agreement may be extended for additional
successive periods of one year each on each January 1 anniversary. The
agreement provides for: (i) a 2003 base salary of $450,000 with annual
minimum increases of 10% or higher increases at the discretion of the
Compensation Committee; (ii) an annual bonus at the discretion of the
Compensation Committee; (iii) certain stock incentives at the discretion of
the Compensation Committee; (iv) certain fringe benefits including club
membership, car, vacation, a term life insurance policy with a beneficiary
designated by Mr. Wessel in the amount of $2 million dollars; (v)
continuation of existing loans from the company which bear interest at 3%
and are secured by shares of common stock of the Company owned by Mr.
Wessel; and (vi) reimbursement of business related expenses. Mr. Wessel has
agreed not to compete with the Company, not to solicit employees of the
Company, and not to solicit customers of the Company for a period of two
years following his termination.
Mr. Barron has entered into an employment agreement with the Company
through December 31, 2005 to serve as the chief operating officer of the
Company; at the discretion of the board this agreement may be extended for
additional successive periods of one year each on each January 1
anniversary. The agreement provides for: (i) a 2003 base salary of $350,000
with annual minimum increases of 10% or higher increases at the discretion
of the Compensation Committee; (ii) an annual bonus at the discretion of the
Compensation Committee; (iii) certain stock incentives at the discretion of
the Compensation Committee; (iv) certain fringe benefits including club
membership, car, vacation; (v) continuation of existing loans from the
company which bear interest at 3% and are secured by shares of common stock
of the Company owned by Mr. Barron; and (vi) reimbursement of business
related expenses. Mr. Barron has agreed not to compete with the Company,
not to solicit employees of the Company, and not to solicit customers of the
Company for a period of two years following his termination.
Stock Options and Warrants
The following table shows stock option and warrant grants made to named
executive officers during the year ended December 31, 2002:
Individual Grants of Stock Option/Warrant Grants
Made During the Year Ended December 31, 2002
--------------------------------------------
Percentage Potential Realizable
of Total Value at
Options/ Assumed Annual
Options/ Warrants Rates of Stock
Warrants Granted to Exercise Price Appreciation
Granted Employees in Price Expiration for Option and
Name (Shares) Each Period (Per Share) Date Warrant Terms (1)
----------------- -------- ------------ ----------- ------------- ---------------------
5% 10%
--------- ---------
Phillip E. Powell 150,000 23.0% $8.00 April 2012 $ 754,700 $1,912,500
Rick L. Wessel 100,000 15.3 8.00 April 2012 503,100 1,275,000
J. Alan Barron 50,000 7.7 8.00 April 2012 251,600 637,500
R. Douglas Orr 10,000 1.5 8.00 September 2012 50,300 127,500
John C. Powell 10,000 1.5 8.00 April 2012 50,300 127,500
-----------------
(1) The actual value, if any, will depend upon the excess of the stock
price over the exercise price on the date of exercise, so that there is no
assurance the value realized would be at or near the present value.
December 31, 2002 Stock Option and Warrant Values
-------------------------------------------------
Number of Unexercised Value of Unexercised
Stock Options and Warrants In-The-Money
Shares at December 31, 2002 Stock Options and Warrants
Acquired on Value (Shares) December 31, 2002 (l)
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
----------------- -------- -------- ----------- ------------- ----------- -------------
Phillip E. Powell 50,000 $411,000 935,000 (2) - $ 4,313,000 -
Rick L. Wessel - - 365,000 (3) - 1,567,000 -
J. Alan Barron - - 165,000 (4) - 565,000 -
R. Douglas Orr - - - 10,000 (5) - $ 22,000
John C. Powell - - - 10,000 (5) - 22,000
-----------------
(1) Computed based upon the differences between aggregate fair market value
and aggregate exercise price.
(2) Includes warrants to purchase 435,000 shares at prices ranging from
$4.625 to $8.00 per share and options to purchase 500,000 shares at
prices ranging from $2.00 to $10.00 per share.
(3) Includes warrants to purchase 150,000 shares at a price of $8.00 per
share and options to purchase 215,000 shares at prices ranging from
$2.00 to $10.00 per share.
(4) Includes warrants to purchase 65,000 shares at a price of $8.00 per
share and options to purchase 100,000 shares at prices ranging from
$2.00 to $10.00 per share.
(5) Includes options to purchase 10,000 shares at a price of $8.00 per
share.
Warrants and options held by other directors: On May 22, 2003, other
directors held warrants to purchase 425,000 shares at prices ranging from
$4.625 to $8.00 per share, expiring between January 2011 and February 2013
and options to purchase 130,000 shares at prices ranging from $2.00 to
$10.00 per share, expiring between April 2009 and January 2013.
Warrants and options held by other employees and third parties: On May
22, 2003, other employees and third parties held warrants to purchase
304,661 shares at prices ranging from $2.00 to $12.00 per share, expiring
between April 2005 and February 2013 and options to purchase 169,750 shares
at prices ranging from $2.00 to $10.00 per share, expiring between April
2005 and April 2012.
Warrants and options issued to named executive officers in 2003:
During 2003, the Company has issued to a named executive officer warrants to
purchase 100,000 shares at a price of $10.10 per share, expiring April 2013
and has issued to named executive officers and directors options to purchase
50,000 shares at a price of $10.00 per share, expiring January 2013.
The Company has not established, nor does it provide for, long-term
incentive plans or defined benefit or actuarial plans. The Company does not
grant any stock appreciation rights.
Certain Transactions
As of December 31, 2002 and 2001, the Company had notes receivable
outstanding from certain of its officers totaling $4,228,000 and $5,051,000,
respectively. These notes are secured by a total of 554,000 shares of
common stock of the Company owned by these individuals, term life insurance
policies, and bear interest at three percent. These notes are due upon the
sale of the underlying shares of common stock. During the fiscal years
ended December 31, 2002 and 2001, the outstanding notes receivable from
officers had repayments of $823,000 and $775,000, respectively.
In April 2002, Mr. Joe R. Love was issued a warrant to purchase 50,000
shares of common stock at an exercise price of $8.00 per share expiring in
April 2012. In April 2002, Mr. Richard T. Burke was issued a warrant to
purchase 25,000 shares of common stock at an exercise price of $8.00 per
share expiring in April 2012. In April 2002, Ms. Tara Schuchmann was issued
a warrant to purchase 25,000 shares of common stock at an exercise price of
$8.00 per share expiring in April 2012.
In April 1991, the Company adopted a policy prohibiting transactions
with its officers, directors or affiliates, unless approved by a majority of
the disinterested directors and on terms no less favorable to the Company
than could be obtained from an independent third party. The Company
believes that all prior related party transactions were on terms as
favorable as could be obtained from independent third parties.
Report of the Audit Committee
The Audit Committee is composed of three directors who are independent,
as defined in Rule 4200(a)(15) of the National Association of Securities
Dealers' listing standards. In accordance with its written charter adopted
by the board, the committee reviews the Company's financial reporting
process on behalf of the board of directors and is responsible for ensuring
the integrity of the financial information reported by the Company.
Management has the primary responsibility for the financial statements and
the reporting process, including the system of internal controls.
In this context, the committee has met and held discussions with
management and Deloitte & Touche LLP ("Deloitte"), the Company's independent
public accountants. Management represented to the committee that the
Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles, and the committee has reviewed and
discussed the consolidated financial statements with management and
Deloitte. The committee discussed with Deloitte the matters required to be
discussed by Statement of Auditing Standard No. 61, under which Deloitte
must provide us with additional information regarding the scope and results
of its audit of the Company's financial statements.
In addition, the committee has discussed with Deloitte its independence
from the Company and its management, including matters in the written
disclosures required by the Independence Standards Board Standard No. 1,
(Independence Discussions with Audit Committees).
The committee discussed with the Company's independent public
accountants the overall scope and plans for their respective audits. The
committee meets with Deloitte, with and without management present, to
discuss the results of its examinations, the evaluations of the Company's
internal controls, and the overall quality of the Company's financial
reporting.
In reliance on the reviews and discussions referred to above, the
committee recommended to the board of directors, and the board has approved,
that the audited financial statements be included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2002 filed with the
Securities and Exchange Commission.
The Audit Committee: Richard T. Burke, Joe R. Love and Tara Schuchmann
Report of the Compensation Committee
Overview
The Compensation Committee of the board of directors supervises the
Company's executive compensation. The Company seeks to provide executive
compensation that will support the achievement of the Company's financial
goals while attracting and retaining talented executives and rewarding
superior performance. In performing this function, the Compensation
Committee reviews executive compensation surveys and other available
information and may from time to time consult with independent compensation
consultants.
The Company seeks to provide an overall level of compensation to the
Company's executives that are competitive within the pawnshop industry and
other companies of comparable size and complexity. Compensation in any
particular case may vary from any industry average on the basis of annual
and long-term Company performance as well as individual performance. The
Compensation Committee will exercise its discretion to set compensation
where in its judgment external, internal or individual circumstances warrant
it. In general, the Company compensates its executive officers through a
combination of base salary, annual incentive compensation in the form of
cash bonuses and long-term incentive compensation in the form of stock
options and warrants.
Base Salary
Base salary levels for the Company's executive officers are set
generally to be competitive in relation to the salary levels of executive
officers in other companies within the pawn shop industry or other companies
of comparable size, taking into consideration the position's complexity,
responsibility and need for special expertise. In reviewing salaries in
individual cases the Compensation Committee also takes into account
individual experience and performance.
Annual Incentive Compensation
The Compensation Committee has historically structured employment
arrangements with incentive compensation. Payment of bonuses has generally
depended upon the Company's achievement of pre-tax income targets
established at the beginning of each fiscal year or other significant
corporate objectives. Individual performance is also considered in
determining bonuses. In addition to incentive bonus compensation, the
Company has adopted, subject to shareholder approval, an executive
performance incentive plan that provides for the payment of annual incentive
compensation to participants based upon the achievement of performance goals
established annually by the Compensation Committee based on one or more
specified performance criteria. If approved, the plan will administered by
the Compensation Committee.
Long-Term Incentive Compensation
The Company provides long-term incentive compensation through its stock
option plan and the issuance of warrants, which is described elsewhere in
this proxy statement. The number of shares covered by any grant is
generally determined by the then current stock price, subject in certain
circumstances, to vesting requirements. In special cases, however, grants
may be made to reflect increased responsibilities or reward extraordinary
performance.
Chief Executive Officer Compensation
Mr. Powell was elected to the position of chief executive officer in
May 1992. Mr. Powell's salary was increased from $500,000 to $600,000
effective January 1, 2003. Mr. Powell received a bonus in the amount of
$500,000 during the year ended December 31, 2002. Mr. Powell received
common stock option grants based upon the overall performance of the Company
during the year ended December 31, 2002.
The overall goal of the Compensation Committee is to insure that
compensation policies are established that are consistent with the Company's
strategic business objectives and that provide incentives for the attainment
of those objectives. This is affected in the context of a compensation
program that includes base pay, annual incentive compensation and stock
ownership.
The Compensation Committee: Richard T. Burke, Joe R. Love and Tara
Schuchmann
Stock Price Performance Graph
The Stock Price Performance Graph set forth below compares the
cumulative total stockholder return on the Common Stock of the Company for
the period from July 31, 1997 through December 31, 2002, with the cumulative
total return on the Nasdaq Composite Index and a peer group index over the
same period (assuming the investment of $100 in the Company's Common Stock,
the Nasdaq Composite Index and the peer group). The peer group selected by
the Company includes the Company, Cash America International, Inc., EZCORP,
Inc., and ACE Cash Express, Inc.
[ PERFORMANCE GRAPH APPEARS HERE ]
First Peer Nasdaq
Date Cash Group Composite
-------- ------ ------- ---------
7/31/97 100.00 100.00 100.00
7/31/98 227.08 153.86 117.69
12/31/98 238.55 154.15 139.62
12/31/99 137.50 116.52 258.94
12/31/00 37.50 52.43 155.88
12/31/01 113.33 77.20 123.67
12/31/02 170.18 96.92 85.49
OTHER MATTERS
Management is not aware of any other matters to be presented for action
at the meeting. However, if any other matter is properly presented, it is
the intention of the persons named in the enclosed form of proxy to vote in
accordance with their best judgment on such matter.
COST OF SOLICITATION
The Company will bear the costs of the solicitation of proxies from its
stockholders. In addition to the use of mail, directors, officers and
regular employees of the Company in person or may solicit proxies by
telephone or other means of communication. The directors, officers and
employees of the Company will not be compensated additionally for the
solicitation but may be reimbursed for out-of-pocket expenses in connection
with the solicitation. Arrangements are also being made with brokerage
houses and any other custodians, nominees and fiduciaries of the forwarding
of solicitation material to the beneficial owners of the Company, and the
Company will reimburse the brokers, custodians, nominees and fiduciaries for
their reasonable out-of-pocket expenses.
STOCKHOLDER PROPOSALS
Proposals by stockholders intended to be presented at this Annual
Meeting of Stockholders must have been received by the Company for inclusion
in the Company's proxy statement and form of proxy relating to that meeting
no later than March 30, 2003. Moreover, with respect to any proposal by a
shareholder not seeking to have the proposal included in the proxy statement
but seeking to have the proposal considered at the Annual Meeting of
Stockholders to be held in 2004, such stockholder must provide written
notice of such proposal to the Secretary of the Company at the principal
executive offices of the Company by February 3, 2004. In addition,
stockholders must comply in all respects with the rules and regulations of
the Securities and Exchange Commission then in effect and the procedural
requirements of the Company's Bylaws.
By Order of the Board of Directors,
/s/ Rick L. Wessel
--------------------------------
Arlington, Texas Rick L. Wessel
June 3, 2003 President,
Secretary and Treasurer
Exhibit A
FIRST CASH FINANCIAL SERVICES, INC.
EXECUTIVE PERFORMANCE INCENTIVE PLAN
Section 1. Purpose and Scope.
The purpose of the First Cash Financial Services, Inc. Executive
Performance Incentive Plan (the "Plan") is as follows: (i) to attract and
retain qualified executives by providing performance-based compensation as
an incentive for their efforts to achieve First Cash Financial Services
Inc.'s (the "Company") financial and strategic objectives; and (ii) to
qualify compensation paid under the Plan as "performance-based compensation"
within the meaning of Section 162(m) of the Code, in order to preserve the
Company's tax deduction for compensation paid under the Plan to Eligible
Employees.
Section 2. Definitions.
The following words and phrases as used in this Plan shall have the meanings
set forth in this Section unless a different meaning is clearly required by
the context.
2.1 "Board" means the board of directors of the Company.
2.2 "Change in Control" means that:
(a) any "person" as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934 (the "Exchange Act"), and as used in Section 13(d) and
14(d) thereof, including a "group" as defined in Section 13(d) of the
Exchange Act but excluding the Company and any subsidiary and any employee
benefit plan sponsored or maintained by the Company or any subsidiary
(including any trustee of such plan acting as trustee), directly or
indirectly, becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), of securities of the Company representing 40% or more of
the combined voting power of the Company's then outstanding securities
(unless the event causing the 40% threshold to be crossed is an acquisition
of securities directly from the Company); or
(b) the shareholders of the Company approve any merger or other
business combination of the Company, sale of 50% or more of the Company's
assets or combination of the foregoing transactions (the "Transactions")
other than a Transaction immediately following which the shareholders of the
Company and any trustee or fiduciary of any Company employee benefit plan
immediately prior to the Transaction owns at least 80% of the voting power,
directly or indirectly, of (i) the surviving corporation in any such merger
or other business combination; (ii) the purchaser of the Company's assets;
(iii) both the surviving corporation and the purchaser in the event of any
combination of Transactions; or (iv) the parent company owning 100% of such
surviving corporation; purchaser or both the surviving corporation,
purchaser or both the surviving corporation and the purchaser, as the case
may be; or
(c) within any twenty-four month period, the persons who were
directors immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at
least a majority of the Board or the board of directors of a successor to
the Company. For this purpose, any director who was not a director at the
beginning of such period shall be deemed to be an Incumbent Director if such
director was elected to the Board by, or on the recommendation of or with
the approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors (so long as such director was not nominated by a person
who has entered into an agreement to effect a Change in Control or expressed
an interest to cause such a Change in Control).
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
2.4 "Committee" means the committee appointed by the Board to administer the
Plan pursuant to Section 9.2.
2.5 "Company" means First Cash Financial Services, Inc.
2.6 "Eligible Employee" means the Chief Executive Officer of the Company and
any other employee of the Company (or of any Subsidiary) who, in the
opinion of the Committee, (i) will have compensation for the Plan Year
sufficient to result in the employee being listed in the Summary
Compensation Table appearing in the Company's proxy statement
distributed to shareholders in the calendar year following the Plan
Year, as required by Item 402(a)(3) of Regulation S-K under the
Securities Act of 1933, as amended; or (ii) otherwise qualifies as a
key executive of the Company or a senior executive officer of a
Subsidiary.
2.7 "Maximum Performance Award" means an amount not greater than $5 million
with respect to an award of a bonus.
2.8 "Outside Directors" means members of the Board who qualify as outside
directors, as that term is defined in Section 162(m) of the Code and
the regulations proposed or adopted thereunder.
2.9 "Participant" means an Eligible Employee designated by the Committee
under Section 3 to participate in the Plan.
2.10 "Performance Award" means the bonus awarded to a Participant under the
terms of the Plan.
2.11 "Performance Measures" means the specified objectives and measurements
established by the Committee which, if satisfied, will result in a
Performance Award.
2.12 "Plan" means this First Cash Financial Services, Inc. Executive
Performance Incentive Plan, as amended from time to time.
2.13 "Plan Year" means the twelve-month period which is the same as the
Company's fiscal year.
2.14 "Subsidiary" means any corporation, joint venture or partnership in
which the Company owns directly or indirectly (i) with respect to a
corporation, stock possessing at least ten percent (10%) of the total
combined voting power of all classes of stock in the corporation, or
(ii) in the case of a joint venture or partnership, a ten percent (10%)
or more interest in the capital or profits of such joint venture or
partnership.
Section 3. Participation.
As soon as possible following the commencement of each Plan Year, the
Committee shall specify by name or position the Participants. The Committee
shall retain discretion to name as a Participant an employee hired or
promoted after the commencement of the Plan Year.
Section 4. Establishment of Performance Measures and Performance Awards.
4.1 Time of Establishment. No later than ninety (90) days after the
commencement of the Plan Year, the Committee shall specify in writing
the Performance Measures and Performance Awards which are to apply for
that Plan Year, subject to the provisions of Sections 4.2 and 4.3.
4.2 Performance Awards. Performance Awards may vary among Participants and
from Plan Year to Plan Year; however, no Performance Award shall exceed
the Maximum Performance Award.
4.3 Performance Measures. Performance Measures will be stated in terms of
objective standards or formulae and may include the following: (i)
earnings before interest expense, taxes, depreciation and amortization
("EBITDA"); (ii) earnings before interest expense and taxes ("EBIT");
(iii) net earnings; (iv) net income; (v) operating income; (vi)
earnings per share; (vii) book value per share; (viii) return on
shareholders' equity; (ix) capital expenditures; (x) expenses and
expense ratio management; (xi) return on investment; (xii) improvements
in capital structure; (xiii) profitability of an identifiable business
unit or product; (xiv) maintenance or improvement of profit margins;
(xv) stock price; (xvi) market share; (xvii) revenues or sales; (xviii)
costs; (xix) cash flow; (xx) working capital; (xxi) return on assets;
(xxii) economic value added; (xxiii) expansion of the store base; and
(xxiv) gross or net profit. Performance measures may relate to the
Company and/or one or more of its subsidiaries, one or more of its
divisions or units or any combination of the foregoing, on a
consolidated or nonconsolidated basis, and may be applied on an
absolute basis or be relative to one or more peer group companies or
indices, or any combination thereof, all as the Committee determines.
These factors will not be altered or replaced by any other criteria
without ratification by the shareholders of the Company if failure to
obtain such approval would result in jeopardizing the tax deductibility
of Performance Awards to Participants.
4.4 Permissible Adjustments. At the time the Performance Measures are
determined for a Plan Year, or at any time prior to the final
determination of Performance Awards in respect of that Plan Year, the
Committee may, to the extent permitted under Section 162(m) of the Code
and the regulations promulgated thereunder, adjust the Performance
Measures to reflect the impact of specified corporate transactions
(such as a stock-split or stock dividend), special charges, foreign
currency effects, accounting or tax law changes and other extraordinary
or nonrecurring events. In addition, the Committee retains the sole
discretion to decrease, but not increase, the amount of any Performance
Award that would otherwise be payable pursuant to the terms of the
Plan.
Section 5. Determination of Amount of Performance Awards.
5.1 Committee Certification Regarding Performance Measures. As soon as
possible following the end of each Plan Year, the Committee shall
certify for each Participant whether the Performance Measures for that
Plan Year have been met. If such Measures have been met, the Committee
will award such Participant the Performance Award established under
Section 4 hereof, subject to the discretion reserved in Section 5.3 to
reduce such awards, but with no discretion to increase the Performance
Award.
5.2 Maximum Award. No Performance Award to a Participant for a Plan Year
may exceed the Maximum Performance Award.
5.3 Reduction of Award Amount. The Committee in its sole discretion may
award to a Participant less than the Performance Award regardless of
the fact that the Performance Measures for the Plan Year have been met.
However, the Committee's decision to award a lesser Performance Award
to an individual Participant cannot result in an increase to a
Performance Award otherwise earned by any other Participant.
Section 6. Payment of Awards.
Performance Awards for a given Plan Year shall be paid in cash (or as
otherwise determined by the Committee) as soon as practicable following the
close of that Plan Year. However, such payment may be subject to deferral
pursuant to the provisions of any applicable deferred compensation plan
maintained by the Company or a Subsidiary.
Section 7. Termination of Employment.
Except as provided in Section 8 of the Plan or as otherwise provided in a
Participant's employment agreement if applicable, if a Participant's
employment with the Company (and its Subsidiaries, if applicable) terminates
prior to the end of a Plan Year for Cause, such Participant shall not
receive any Performance Award for such Plan Year. Unless otherwise provided
by the Committee, if a Participant's employment is terminated as result of
death, disability or retirement with the consent of the Company prior to the
end of the Plan Year, such Participant shall receive a pro rata portion of
his or her Performance Award that he or she would have received with respect
to the applicable Plan Year, which shall be payable at such time that
Performance Awards are payable to other Participants.
Section 8. Change in Control.
Upon the occurrence of a Change in Control, (i) the effect of such Change in
Control on any Participant's Performance Award for the Plan Year shall first
be determined by any applicable contractual arrangements, including but
not limited to any continuity agreement, between the Company and the
Participant; and (ii) to the extent not governed by any applicable
contractual arrangements between the Company and the Participant, the
Company shall, within 10 days thereafter, pay to each individual who was
a Participant in the Plan immediately prior to the Change in Control
(regardless of whether the Participant remains employed after the Change in
Control) a pro-rated Performance Award (based on the number of days that
have elapsed during the Plan Year though the date of the Change in Control)
which is calculated based on the Performance Measures achieved through the
date of the Change in Control, and interpolated over the entire Plan Year,
provided, however, that in no event shall such Performance Award be less
than the amount that would have been paid had the Performance Measures
achieved the "target level" as such term is defined in the applicable Plan
Year.
Section 9. Plan Administration.
9.1 Administration by Committee. The Plan shall be administered by the
Committee, which shall have the authority in its sole discretion,
subject to the provisions of the Plan, to administer the Plan and to
exercise all the powers either specifically granted to it under the
Plan or necessary or advisable in the administration of the Plan.
9.2 Appointment of Committee. The Board shall appoint the Committee from
among its members to serve at the pleasure of the Board. The Board
from time to time may remove members from, or add members to, the
Committee and shall fill all vacancies thereon. The Committee shall at
all times consist solely of two or more Outside Directors and initially
shall be the Compensation Committee.
9.3 Interpretation of Plan Provisions. The Committee shall have complete
discretion to construe and interpret the Plan and may adopt rules and
regulations governing administration of the Plan. The Committee may
consult with the management of the Company but shall retain
responsibility for administration of the Plan. The Committee's
decisions, actions and interpretations regarding the Plan shall be
final and binding upon all Participants.
Section 10. Compliance with Section 162(m) of the Code.
The Company intends that Performance Awards under this Plan satisfy the
applicable requirements of Section 162(m) of the Code so that such Code
section does not deny the Company a tax deduction for such Performance
Awards. It is intended that the Plan shall be operated and interpreted such
that Performance Awards remain tax deductible by the Company, except to the
extent set forth in Section 11.
Section 11. Nonassignability.
No Performance Award granted to a Participant under the Plan shall be
assignable or transferable, except by will or by the laws of descent and
distribution.
Section 12. Effective Date and Term of Plan.
The Plan shall be effective as of January 1, 2003, subject to approval by
the shareholders of the Company. The Plan shall continue from year to year
until terminated by the Board. The Company is under no obligation to
continue the Plan.
Section 13. Amendment of the Plan.
The Board may amend, modify or terminate the Plan at any time and from time
to time. Notwithstanding the foregoing, no such amendment, modification or
termination shall affect the payment of a Performance Award for a Plan Year
already ended. In addition, any material amendment or modification of the
Plan shall be subject to shareholder approval if necessary for purposes of
qualifying compensation paid under the Plan as "performance-based
compensation" under Code section 162(m).
Section 14. General Provisions.
14.1 Unfunded Plan. The Plan shall be an unfunded incentive compensation
arrangement for a select group of key management employees of
the Company and its participating Subsidiaries. Nothing contained
in the Plan, and no action taken pursuant to the Plan, shall create or
be construed to create a trust of any kind. A Participant's right to
receive a Performance Award shall be no greater than the right of an
unsecured general creditor of the Company. All Performance Awards
shall be paid from the general funds of the Company, and no segregation
of assets shall be made to ensure payment of Performance Awards.
14.2 Governing Law. The Plan shall be interpreted, construed and
administered in accordance with the laws of the State of Delaware,
without giving effect to principles of conflicts of law.
14.3 Section Headings. The section headings contained in the Plan are for
purposes of convenience only and are not intended to define or limit
the contents of the Plan's sections.
14.4 Effect on Employment. Nothing contained in the Plan shall affect or be
construed as affecting the terms of employment of any Eligible Employee
except as expressly provided in the Plan. Nothing in the Plan shall
affect or be construed as affecting the right of the Company or a
Subsidiary to terminate the employment of an Eligible Employee at any
time for any reason, with or without cause.
14.5 Successors. All obligations of the Company with respect to Performance
Awards granted under the Plan shall be binding upon any successor to
the Company, whether such successor is the result of an acquisition of
stock or assets of the Company, a merger, a consolidation or otherwise.
14.6 Withholding of Taxes. The Company shall deduct from each Performance
Award the amount of any taxes required to be withheld by any
governmental authority.
IN WITNESS WHEREOF, First Cash Financial Services, Inc. has caused this
Plan to be executed the twenty-ninth day of January 2003.
FIRST CASH FINANCIAL SERVICES, INC.
By:
------------------
Rick L. Wessel
President
REVOCABLE PROXY
FIRST CASH FINANCIAL SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
JULY 10, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST CASH
FINANCIAL SERVICES, INC. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
IN ACCORDANCE WITH THE CHOICES SPECIFIED BELOW.
The undersigned stockholder of First Cash Financial Services, Inc. (the
"Company") hereby appoints Rick Powell and Rick L. Wessel the true and
lawful attorneys, agents and proxies of the undersigned with full power of
substitution for and in the name of the undersigned, to vote all the shares
of Common Stock of First Cash Financial Services, Inc. which the undersigned
may be entitled to vote at the Annual Meeting of Stockholders of First Cash
Financial Services, Inc. to be held at the First Cash Financial Services,
Inc. corporate offices located at 690 East Lamar Blvd., Suite 400,
Arlington, Texas on Thursday, July 10, 2003 at 10:00 a.m., and any and all
adjournments thereof, with all of the powers which the undersigned would
posses if personally present, for the following purposes. Please indicate
for, withhold, against, or abstain with respect to each of the following
matters:
1. Election of Messrs. Wessel, Burke and Love as
directors (the Board of Directors recommends For Withhold
a vote FOR) [ ] [ ]
2. Ratification of the selection of Deloitte &
Touche LLP as independent auditors of the
Company for the year ending December 31, 2003 For Against Abstain
(the Board of Directors recommends a vote FOR) [ ] [ ] [ ]
3. Approve the adoption of the First Cash Financial
Services, Inc. Executive Performance Incentive
Plan (the Board of Directors recommends a For Against Abstain
vote FOR) [ ] [ ] [ ]
4. Other Matters:
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
This proxy will be voted for the choice specified. The undersigned hereby
acknowledges receipt of the Notice of Annual Meeting and Proxy Statement
dated June 3, 2003 as well as the Annual Report for the fiscal year ended
December 31, 2002.
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
DATED:________________ ___________________________________________________
(Signature)
___________________________________________________
(Signature if jointly held)
___________________________________________________
(Printed Name)
Please sign exactly as name appears on stock
certificate(s). Joint owners should each sign.
Trustees and others acting in a representative
capacity should indicate the capacity in which they
sign.
