SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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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.
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(Name of Registrant as Specified in its Charter)
------------------------------------------------------------------------
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Dear Stockholder:
We cordially invite you to attend our 2000 Annual Meeting, which will
be held on Wednesday, June 27, 2001, 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 June 27.
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 June 27, 2001
_______________
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 Wednesday, June 27, 2001, for the following purposes:
1. To elect one Director;
2. To ratify the selection of Deloitte & Touche LLP as independent
auditors of the Company for the year ending December 31, 2001;
3. To transact such other business as may properly come before the
meeting.
Common stockholders of record at the close of business on May 28, 2001
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 4, 2001 President, Chief Financial Officer,
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 Wednesday,
June 27, 2001, 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 4, 2001.
The close of business on May 28, 2001 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 8,666,687 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. 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 and entitled to vote at the
Annual Meeting is required for the approval of Item 2 as set forth in the
accompanying Notice. Stockholders may not cumulate their votes in the
election of directors. Abstentions are treated as votes against a proposal
and broker non-votes 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 ONE DIRECTOR; (ii) TO
RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS OF THE
COMPANY FOR THE YEAR ENDING DECEMBER 31, 2001; AND (iii) 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, 2000, 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, Chief
Financial Officer, 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 ONE DIRECTOR
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. Any director elected to fill a vacancy shall hold office for a
term that shall coincide with the term of the class to which such director
shall have been elected. The stockholders will elect one director for the
coming year; such nominee does not presently serve as a director of the
Company and will be appointed for terms of three years.
Unless otherwise instructed or unless authority to vote is withheld,
the enclosed proxy will be voted for the election of the nominee 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 four 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: 2001 - Mr. Powell; and 2002 - Messrs. Wessel, Burke and Love. All
officers serve at the discretion of the Board of Directors. No family
relationships exist between any director and executive officer. The
Director standing for election at the 2000 annual meeting is as follows:
Tara Schuchmann, age 43, is the founder and managing general partner
of Tara Capital Management LP, an investment management and advisory firm.
Ms. Schuchmann has 20 years experience in the financial services industry.
Ms. Schuchmann holds an MBA from the Harvard University Graduate School of
Business Administration.
Director Not Standing For Election
Phillip E. Powell, has served as director 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 business for over 25 years.
Rick L. Wessel has been associated with the Company since February
1992, has served as chief financial officer, secretary and treasurer of the
Company since May 1992, has served as president since May 1998, and has
served as a director since November 1992. Prior to February 1992, Mr.
Wessel was employed by Price Waterhouse LLP for approximately nine years.
Mr. Wessel is a certified public accountant licensed in Texas.
Richard T. Burke, age 57, has served as a director of the Company since
December 1993. Mr. Burke is the founder and former chief executive officer
and chairman of United HealthCare Corporation. Mr. Burke remains a director
of United HealthCare Corporation, a company engaged in the managed health
care industry, and a number of other private, nonprofit and charitable
boards. From 1977 to 1987, Mr. Burke also served as chief executive officer
of Physicians Health Plan of Minnesota (now MEDICA), the largest client
of United HealthCare Corporation. The securities of United HealthCare
Corporation are registered pursuant to the Exchange Act. Mr. Burke is owner
and chief executive officer of the Phoenix Coyotes, a professional sports
franchise of the National Hockey League.
Joe R. Love, age 62, 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. Since July 1989, Mr. Love has served
on the board of directors of Phymed, Inc., a public company operating
radiology centers. Mr. Love has served as a director of Atomic Burrito,
Inc., a public company involved in the entertainment industry, since October
1996.
Board of Directors, Committees and Meetings
The Board of Directors held three meetings during the year ending
December 31, 2000. Each director attended 100% of the Board meetings during
the year ending December 31, 2000. The Audit and Compensation Committees
consist of Richard T. Burke and Joe R. Love. The Audit Committee held two
meetings during the year ending December 31, 2000 and the Compensation
Committee held two meetings during the year ending December 31, 2000.
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 ending December 31, 2000, the outside directors received
no compensation for attending meetings of the Board of Directors or any
committee thereof. 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, 2000.
Board Committees; Compensation Committee Interlocks and Insider
Participation
The Board of Directors has two standing committees. The Compensation
Committee reviews compensation paid to management and recommends to the
Board of Directors appropriate executive compensation. The Audit Committee
reviews internal controls, recommends to the Board of Directors engagement
of the Company's independent certified public accountants, reviews with such
accountants the plan for and results of their examination of the
consolidated financial statements, and determines the independence of such
accountants. Messrs. Burke and Love serve as members of each of these
committees.
THE BOARD HAS NOMINATED THE ABOVE-REFERENCED DIRECTOR FOR ELECTION BY
THE STOCKHOLDERS AND RECOMMENDS A VOTE FOR SUCH ELECTION. THE ELECTION OF
THIS DIRECTOR REQUIRES A PLURALITY OF THE VOTES OF THE SHARES OF COMMON
STOCK PRESENT IN PERSON OR REPRESENTED BY PROXY AT THE ANNUAL MEETING AND
ENTITLED TO VOTE ON THE ELECTION OF DIRECTORS.
ITEM 2
RATIFY THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS OF THE
COMPANY FOR THE YEAR ENDING DECEMBER 31, 2001
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, 2001 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, 2001. 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, 2000
and for the reviews of the financial statements included in the Company's
Quarterly Reports on Form 10-Q for the fiscal year were $91,500.
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, 2000.
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, 2000 were $30,500. The Company's Audit Committee has considered whether
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, 2001,
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, 2001, it is contemplated that the
appointment for the year ending December 31, 2001 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 AND ENTITLED TO VOTE AT THE ANNUAL MEETING.
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 50 Chairman of the Board and
Chief Executive Officer
Rick L. Wessel 42 President, Chief Financial Officer,
Secretary, Treasurer and Director
J. Alan Barron 40 President - Pawn Operations
Blake A. Miraglia 33 President - Check Cashing Operations
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 has served as the president - pawn operations
since May 1998. 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.
Blake A. Miraglia joined the Company in June 1998 as the president of
check cashing operations. Prior to joining the Company, Mr. Miraglia was
the president of Miraglia, Inc. from 1992 to May 1998. The Company acquired
Miraglia, Inc. in June 1998.
Biographical information with respect to Messrs. Powell and 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 28, 2001. On that date, there were 8,666,687
shares of voting Common Stock issued and outstanding.
Shares Beneficially
Officers, Directors Owned (2)
and 5% Stockholders (1) Number Percent
------------------------------- --------- -----
Richard T. Burke (3) 1,553,000 17.61%
Phillip E. Powell (4) 1,180,855 12.43
Wasatch Advisors, Inc. 1,072,435 12.37
Dimensional Fund Advisors, Inc. 595,800 6.87
Rick L. Wessel (5) 543,323 6.08
First Wilshire Securities
Management, Inc. 471,000 5.43
Joe R. Love (6) 381,500 4.24
J. Alan Barron (7) 294,453 3.35
Blake A. Miraglia (8) 274,944 3.15
Tara Schuchmann (9) 65,100 0.75
All officers and directors
as a group (7 persons) 4,293,175 41.06
(1) The addresses of the persons shown in the table above who are directors
or 5% stockholders are as follows: (i) Wasatch Advisors, Inc., 68 South
Main, Salt Lake City, UT 84101; (ii) Dimensional Fund Advisors, Inc., 1299
Ocean Avenue, 11th Floor, Santa Monica, CA 90401-1038; (iii) First Wilshire
Securities Management, Inc., 600 South Lake Street, Suite 100, Pasadena, CA
91106-3955; and (iv) 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 28, 2001, 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 2003 and a stock option to purchase 50,000
shares at a price of $2.00 per share to expire in December 2010. 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 2003, a warrant to purchase 225,000 shares at a
price of $4.625 per share to expire in January 2011, 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 200,000 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 2003, 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 2003, a warrant to purchase 125,000 shares at a
price of $4.625 per share to expire in January 2011, 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 50,000 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 56,500 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 2003, 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, and a stock option to purchase 25,000 shares at a price of $4.00 per
share to expire in February 2011.
(8) Includes 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, and a stock option
to purchase 25,000 shares at a price of $4.00 per share to expire in
February 2011.
(9) Includes a stock option to purchase 25,000 shares at a price of $2.00
per share to expire in December 2010 and 40,100 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, 2000 in excess
of $100,000. Also included in the following table is compensation for the
year ended December 31, 1999, five-month period ended December 31, 1998 and
the year ended July 31, 1998:
Summary Compensation Table
--------------------------
Long-Term
Annual compensation Compensation - Awards
------------------- ---------------------
Securities
Name and Principal Underlying All Other
Position Period Salary Bonus Options/Warrants (1) Compensation (2)
-------- ------ -------- ------- -------------------- ----------------
Phillip E. Powell Dec. 2000 $ 314,340 $ 60,000 200,000 -
Chairman of the Dec. 1999 300,000 - 125,000 -
Board and Chief Dec. 1998 114,483 - 100,000 -
Executive Officer July 1998 235,000 75,000 60,000 -
Rick L. Wessel
President, Dec. 2000 $ 223,750 $ 30,000 100,000 -
Chief Financial Dec. 1999 173,750 - 50,000 -
Officer, Secretary Dec. 1998 66,667 - 40,000 -
and Treasurer July 1998 135,000 50,000 50,000 -
J. Alan Barron Dec. 2000 $ 191,250 $ - 25,000 -
President - Pawn Dec. 1999 158,750 - 25,000 -
Operations Dec. 1998 62,500 - 25,000 -
July 1998 130,000 40,000 40,000 -
Blake A. Miraglia Dec. 2000 $ 185,000 $ - 25,000 -
President - Check Dec. 1999 158,750 - 25,000 -
Cashing Operations Dec. 1998 62,500 - 25,000 -
July 1998 21,700 - - -
(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 10% of such
executive officer's annual compensation.
Employment Agreements
Mr. Powell has entered into an employment agreement with the Company
through December 31, 2005 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
beginning January 1, 2002. The agreement provides for: (i) a base salary of
$375,000 with annual 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) 7% loans
to exercise certain stock options to purchase common stock of the Company
and tax loans to pay the taxes which result from such exercises; (vi) a
lump-sum severance payment of $1.875 million, which shall be reduced 20%
each year this agreement is extended pursuant to the above annual
extensions; and (vii) reimbursement of business related expenses. In the
event that Mr. Powell's employment is terminated other than his voluntary
termination or termination for good cause, the Company shall cancel his
obligations pursuant to a promissory note dated December 31, 2000 in the
principal amount of $2 million and any additional loans or advances and
shall return all property securing such loans to Mr. Powell or his
designated beneficiary. In addition, Mr. Powell has agreed not to compete
with the Company, not to solicite employees of the Company, and not to
solicite 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, 2005 to serve as the President and Chief Financial
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 beginning January 1, 2002. The agreement provides for: (i) a
base salary of $250,000 with annual 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) 7% loans
to exercise certain stock options to purchase common stock of the Company
and tax loans to pay the taxes which result from such exercises; and (vi)
reimbursement of business related expenses. In the event that Mr. Wessel's
employment is terminated other than his voluntary termination or termination
for good cause, the Company shall cancel his obligations pursuant to a
promissory note dated December 31, 2000 in the principal amount of $1.53
million and any additional loans or advances and shall return all property
securing such loans to Mr. Wessel or his designated beneficiary. In
addition, Mr. Wessel has agreed not to compete with the Company, not to
solicite 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, 2000:
Individual Grants of Stock Option and Warrant Grants Made During the Year Ended December 31, 2000
-------------------------------------------------------------------------------------------------
Potential Realizable
Percentage Percentage Value at
of Total of Total Assumed Annual
Options Warrants Rates of Stock
Option s Granted to Warrants Granted to Exercise Price Appreciation
Granted Employees in Granted Employees in Price Expiration for Option and
Name (Shares) Each Period (Shares) Each Period (Per Share) Date Warrant Terms (1)
----------------- ------- ----------- -------- ----------- ----------- ------------- -------- --------
5% 10%
---- ----
Phillip E. Powell 200,000 42.1% - - $2.00 December 2010 $252,000 $638,000
Rick L. Wessel 100,000 21.0 - - 2.00 December 2010 126,000 319,000
J. Alan Barron 25,000 5.3 - - 2.00 December 2010 31,500 79,750
Blake Miraglia 25,000 5.3 - - 2.00 December 2010 31,500 79,750
(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 will be at or near the present value.
December 31, 2000 Stock Option and Warrant Values
-------------------------------------------------
Number of Unexercised Value of Unexercised
Stock Options and Warrants In-The-Money
Shares at December 31, 2000 Stock Options and Warrants
Acquired on Value (Shares) December 31, 2000 (l)
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
Phillip E. Powell - - 810,000 (2) - $ 50,000 -
Rick L. Wessel - - 240,000 (3) - 25,000 -
J. Alan Barron - - 115,000 (4) - 6,000 -
Blake Miraglia - - 75,000 (5) - 6,000 -
(1) Computed based upon the differences between aggregate fair market value
and aggregate exercise price.
(2) Includes warrants to purchase 385,000 shares at prices ranging from
$4.625 to $12.00 per share and options to purchase 425,000 shares at prices
ranging from $2.00 to $10.00 per share.
(3) Includes warrants to purchase 90,000 shares at prices ranging from
$8.00 to $12.00 per share and options to purchase 150,000 shares at prices
ranging from $2.00 to $10.00 per share.
(4) Includes warrants to purchase 65,000 shares at prices ranging from
$8.00 to $12.00 per share and options to purchase 50,000 shares at prices
ranging from $2.00 to $10.00 per share.
(5) Includes warrants to purchase 25,000 shares at $12.00 per share and
options to purchase 50,000 shares at prices ranging from $2.00 to $10.00 per
share.
Warrants held by other directors: On May 28, 2001, other directors held
warrants to purchase 325,000 shares at prices ranging from $4.625 to $12.00
per share, expiring between February 2003 and January 2011 and options to
purchase 175,000 shares at prices ranging from $2.00 to $10.00 per share,
expiring between April 2009 and February 2011.
Warrants and options held by other employees and third parties: On May
28, 2001, other employees and third parties own warrants and options to
purchase an aggregate of 576,750 shares at prices ranging from $4.00 to
$12.00 per share, expiring between February 2003 and August 2011.
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
In June 1998, in conjunction with the purchase of Miraglia, Inc., the
Company entered into lease agreements for one of its check cashing
locations, as well as for certain office space located in Concorde,
California. These properties were partially owned by Mr. Blake Miraglia,
president of check cashing operations. Total lease payments made pursuant
to these leases were $239,000 and $130,000 during the years ended December
31, 1999 and 2000, respectively, which approximated market rates. In
addition, the Company has an outstanding, unsecured note payable due July 5,
2003, bearing interest at 7%, to Mr. Miraglia, which amounted to $1,281,000
as of December 31, 2000 including accrued interest.
During the year ended December 31, 2000, Mr. Joe R. Love was issued a
option to purchase 50,000 shares of common stock at an exercise price of
$2.00 per share expiring in December 2010, Mr. Richard T. Burke was issued a
option to purchase 50,000 shares of common stock at an exercise price of
$2.00 per share expiring in December 2010, and Ms. Tara Schuchmann was
issued a option to purchase 25,000 shares of common stock at an exercise
price of $2.00 per share expiring in December 2010.
At December 31, 2000 and 1999, the Company had notes receivable
outstanding from certain of its officers totaling $5,826,000 and $2,592,000,
respectively. These notes are secured by a total of 784,000 shares of
common stock of the Company owned by these individuals, term life insurance
policies, and bear interest at 7%. These notes are due upon the sale of the
underlying shares of common stock.
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 two directors who are independent,
as defined in Rule 4200(a)(15) of the National Association of Securities
Dealers' listing standards. 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, 2000 filed with the
Securities and Exchange Commission.
The Audit Committee: Richard T. Burke and Joe R. Love
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.
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 $275,000 to $375,000 on
October 1, 2000. Mr. Powell received a bonus in the amount of $60,000
during the year ended December 31, 2000. Mr. Powell received common stock
option grants based upon the overall performance of the Company during the
year ended December 31, 2000.
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 and Joe R. Love
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, 1995 through December 31, 2000, 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 CASH
FINANCIAL SERVICES, INC. PEER GROUP NASDAQ COMPOSITE
------------------------ ---------- ----------------
July 31, 1995 100.00 100.00 100.00
July 31, 1996 135.71 114.16 108.96
July 31, 1997 171.43 175.07 160.78
July 31, 1998 389.29 271.06 189.23
December 31, 1998 408.94 271.60 224.51
December 31, 1999 235.71 212.30 417.23
December 31, 2000 64.29 97.73 251.04
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 the 2001 Annual
Meeting of Stockholders must be received by the Company for inclusion in the
Company's proxy statement and form of proxy relating to that meeting no
later than February 4, 2002. 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 2001 Annual Meeting of
Stockholders, such stockholder must provide written notice of such proposal
to the Secretary of the Company at the principal executive offices of the
Company by April 19, 2002. 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 4, 2001 President, Chief Financial
Officer, Secretary and Treasurer
Appendix A
Audit Committee Charter
This Audit Committee Charter (the "Charter") has been adopted by the
Board of Directors (the "Board") of First Cash Financial Services, Inc. (the
"Company"). The Audit Committee of the Board (the "Committee") shall review
and reassess this charter annually and recommend any proposed changes to the
Board of approval.
Role and Independence: Organization
The Committee assists the Board in fulfilling its responsibility for
oversight of the quality and integrity of the accounting, auditing, internal
control and financial reporting practices of the Company. It may also have
such other duties as may from time to time be assigned to it by the board.
The membership of the Committee shall consist of at least three directors,
who are each free of any relationship that, in the opinion of the Board, may
interfere with such member's individual exercise of independent judgment.
Each Committee member shall also meet the independence and financial
literacy requirements for serving on audit committees, and at least one
member shall have an accounting or related financial management expertise,
all as set forth in the applicable rules of the New York Stock Exchange.
The Committee shall maintain free and open communication with the
independent auditors, the internal auditors and Company management. In
discharging its oversight role, the Committee is empowered to investigate
any matter relating to the Company's accounting, auditing, internal control
or financial reporting practices brought to its attention, with full access
to all Company books, records, facilities and personnel. The Committee may
retain outside counsel, auditors or other advisors.
One member of the Committee shall be appointed as chair. The chair
shall be responsible for leadership of the Committee, including scheduling
and presiding over meetings, preparing agendas, and making regular reports
to the Board. The chair will also maintain regular liaison with the Chief
Executive Officer, Chief Financial Officer, the lead independent audit
partner and the director of internal audit.
The Committee shall meet at least four times a year, or more
frequently as the Committee considers necessary. At least once each year
the Committee shall have separate private meetings with the independent
auditors, management and the internal auditors.
Responsibilities
Although the Committee may wish to consider other duties from time to
time, the general recurring activities of the Committee in carrying out its
oversight role are described below. The Committee shall be responsible for:
* Recommending to the Board the independent auditors to be retained (or
nominated for shareholder approval) to audit the financial statements
of the Company. Such auditors are ultimately accountable to the Board
and the Committee, as representatives of the shareholders.
* Evaluating, together with the Board and management, the performance of
the independent auditors and, where appropriate, replacing such
auditors.
* Obtaining annually from the independent auditors a formal written
statement describing all relationships between the auditors and the
Company, consistent with Independence Standards Board Standard Number
1. The Committee shall actively engage in a dialogue with the
independent auditors with respect to any relationships that may impact
the objectivity and independence of the auditors and shall take, or
recommend that the Board take, appropriate actions to oversee and
satisfy itself as to the auditors' independence.
* Reviewing the audited financial statements and discussing them with
management and the independent auditors. These discussions shall
include the matters required to be discussed under Statement of
Auditing Standards No. 61 and consideration of the quality of the
Company's accounting principles as applied in its financial reporting,
including a review of particularly sensitive accounting estimates,
reserves and accruals, judgmental areas, audit adjustments (whether or
not recorded), and other such inquiries as the Committee or the
independent auditors shall deem appropriate. Based on such review, the
Committee shall make its recommendation to the Board as to the
inclusion of the Company's audited financial statements in the
Company's Annual Report on Form 10-K.
* Issuing annually a report to be included in the Company's proxy
statement as required by the rules of the Securities and Exchange
Commission.
* Overseeing the relationship with the independent auditors, including
discussing with the auditors the nature and rigor of the audit process,
receiving and reviewing audit reports, and providing the auditors full
access to the Committee (and the Board) to report on any and all
appropriate matters.
* Discussing with a representative of management and the independent
auditors: (1) the interim financial information contained in the
Company's Quarterly Report on Form 10-Q prior to its filing, (2) the
earnings announcement prior to its release (if practicable), and (3)
the results of the review of such information by the independent
auditors. (These discussions may be held with the Committee as a whole
or the Committee chair in person or by telephone.)
* Overseeing internal audit activities, including discussing with
management and the internal auditors the internal audit function's
organization, objectivity, responsibilities, plans, results, budget and
staffing.
* Discussing with management, the internal auditors and the independent
auditors the quality and adequacy of and compliance with the Company's
internal controls.
* Discussing with management and/or the Company's general counsel any
legal matters (including the status of pending litigation) that may
have a material impact on the Company's financial statements, and any
material reports or inquiries from regulatory or governmental agencies.
The Committee's job is one of oversight. Management is responsible
for the preparation of the Company's financial statements and the
independent auditors are responsible for auditing those financial
statements. The Committee and the Board recognize that management
(including the internal audit staff) and the independent auditors have more
resources and time, and more detailed knowledge and information regarding
the Company's accounting, auditing, internal control and financial reporting
practices than the Committee does; accordingly, the Committee's oversight
role does not provide any expert or special assurance as to the financial
statements and other financial information provided by the Company to its
shareholders and others.
REVOCABLE PROXY
FIRST CASH FINANCIAL SERVICES, INC.
ANNUAL MEETING OF STOCKHOLDERS
JUNE 27, 2001
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 Wednesday, June 27, 2001 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:
For Against Abstain
1. Election of Ms. Schuchmann as director
(the Board of Directors recommends a vote FOR) [ ] [ ] [ ]
2. Ratification of the selection of Deloitte &
Touche LLP as independent auditors of the
Company for the year ending December 31, 2001
(the Board of Directors recommends a vote FOR) [ ] [ ] [ ]
3. 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 4, 2001 as well as the Annual Report for the fiscal year ended
December 31, 2000.
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.
