-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D8cEyOP7kPDoZudNROqbYbmTKSIpE1cz8VIzezXO4uBgliw/fLVCJs7f5zeoVsdv nEnq0nLtWYDySeKXi+e9dA== 0000950149-99-000404.txt : 19990316 0000950149-99-000404.hdr.sgml : 19990316 ACCESSION NUMBER: 0000950149-99-000404 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990427 FILED AS OF DATE: 19990315 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOLDEN WEST FINANCIAL CORP /DE/ CENTRAL INDEX KEY: 0000042293 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 952080059 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-04629 FILM NUMBER: 99564885 BUSINESS ADDRESS: STREET 1: 1901 HARRISON STREET CITY: OAKLAND STATE: CA ZIP: 94612 BUSINESS PHONE: 5104663420 MAIL ADDRESS: STREET 2: 1901 HARRISON STREET CITY: OAKLAND STATE: CA ZIP: 94612 FORMER COMPANY: FORMER CONFORMED NAME: TRANS WORLD FINANCIAL CORP DATE OF NAME CHANGE: 19760806 FORMER COMPANY: FORMER CONFORMED NAME: TRANS WORLD FINANCIAL CO DATE OF NAME CHANGE: 19751124 DEF 14A 1 DEFINITIVE PROXY STATEMENT DATED 3/15/1999. 1 LOGO 1901 HARRISON STREET, OAKLAND, CALIFORNIA 94612 March 15, 1999 Dear Stockholder: The Annual Meeting of Stockholders of Golden West Financial Corporation will be held April 27, 1999, commencing at 11:00 a.m. on the fourth floor of the Company's headquarters located at 1901 Harrison Street, Oakland, California. The management and directors of Golden West Financial Corporation look forward to meeting with you at that time. Attached to this letter is the formal notice of meeting and proxy statement. We urge you to complete and return the enclosed proxy immediately. A prepaid return envelope is provided for that purpose. If you attend the meeting, you may withdraw your previously mailed proxy and vote at the meeting. Sincerely yours, LOGO LOGO HERBERT M. SANDLER MARION O. SANDLER Chairman of the Board and Chairman of the Board and Chief Executive Officer Chief Executive Officer
2 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF GOLDEN WEST FINANCIAL CORPORATION The Annual Meeting of Stockholders of Golden West Financial Corporation (the "Company") will be held on the fourth floor of the Company's headquarters located at 1901 Harrison Street, Oakland, California on Tuesday, April 27, 1999, commencing at 11:00 a.m. for the following purposes: (1) To elect three members of the Board of Directors to hold office for three-year terms and until their successors are duly elected and qualified; (2) To ratify the selection of independent auditors; and (3) To transact such other business as may properly come before the meeting or any adjournment thereof. The close of business on March 8, 1999 has been fixed as the record date for the determination of stockholders entitled to notice of and to vote at this meeting or any adjournment thereof. A list of such stockholders will be available at the time and place of the meeting and, during ten days prior to the meeting, at the office of the Secretary of Golden West Financial Corporation, 1901 Harrison Street, Oakland, California. By order of the Board of Directors [SIG] ROBERT C. ROWE Senior Vice President and Secretary March 15, 1999 IMPORTANT: TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE, DATE, SIGN AND MAIL THE ENCLOSED PROXY PROMPTLY IN THE RETURN ENVELOPE WHICH HAS BEEN PROVIDED. 3 PROXY STATEMENT The enclosed proxy is solicited on behalf of the Board of Directors of Golden West Financial Corporation (the "Company") to be used at the Annual Meeting of Stockholders on April 27, 1999 ("Annual Meeting") for the purposes set forth in the foregoing notice. Any stockholder may revoke his proxy at any time prior to exercise by filing with the Secretary of the Company a written revocation or duly executed proxy bearing a later date, or upon request if such stockholder is present at the meeting and chooses to vote in person. The expense of soliciting proxies will be paid by the Company. Proxies may be solicited by regular employees of the Company either in person or by telephone or other electronic media, and the Company will upon request reimburse persons holding shares in their names, or the name of their nominees, but not owning the shares beneficially, for reasonable expenses of forwarding proxy materials to their principals. The principal executive offices of the Company are located at 1901 Harrison Street, Oakland, California 94612. This Proxy Statement and the enclosed Proxy are being sent or given to stockholders commencing March 15, 1999. VOTING SECURITIES Only stockholders of record on the books of the Company at the close of business on March 8, 1999 ("Record Date") will be entitled to vote at the Annual Meeting. On the Record Date there were outstanding 56,582,074 shares of Common Stock of the Company, $.10 par value. Stockholders are entitled to one vote for each share held except that, in the election of directors, each stockholder has cumulative voting rights and is entitled to as many votes as equal the number of shares held by such stockholder multiplied by the number of directors to be elected (three), which votes may be cast for a single candidate or distributed among any or all candidates as such stockholder sees fit. The three candidates for director receiving the highest number of votes shall be elected. Consistent with Delaware law, abstentions and broker non-votes will not be counted, except that shares owned by stockholders submitting signed proxies will be counted for the purpose of determining whether a quorum of stockholders is present at the Annual Meeting. ELECTION OF DIRECTORS Pursuant to Article Seventh of the Company's Certificate of Incorporation, the Board of Directors is divided into three classes. Each class of directors consists of three directors. The third class of directors is being elected at the 1999 Annual Meeting and will serve until the 2002 Annual Meeting. The first class of directors will serve until the 2000 Annual Meeting and the second class of directors will serve until the 2001 Annual Meeting. Three directors are to be elected at the 1999 Annual Meeting. Louis J. Galen, Antonia Hernandez and Bernard A. Osher are nominees for directors. All three nominees were elected directors by a vote of the stockholders at the 1996 Annual Meeting of Stockholders. In the absence of instructions to the contrary, shares represented by the enclosed proxy will be voted FOR the election of the above nominees to the Board of Directors. If any of such persons are unable or unwilling to be nominated for the office of director at the date of the Annual Meeting, or any adjournment thereof, the proxy holders will vote for such substitute nominees as the Company's Board of Directors may propose. The management of the Company has no reason to believe that any of such nominees will be unable or unwilling to serve if elected a director. Notwithstanding the foregoing, if one or more persons other than those named above are nominated as candidates for the office of director, the proxy holders may cumulate votes and the enclosed proxy may be voted in favor of any one or more of the nominees named above, to the exclusion of others, and in such order of preference as the proxy holders may determine in their discretion. 1 4 Set forth below is certain information concerning the nominees and the members of the Board of Directors who will continue in office after the 1999 Annual Meeting:
COMMON STOCK BENEFICIALLY OWNED AS OF FEBRUARY 28, 1999(1) CONTINUING DIRECTORS BUSINESS EXPERIENCE SERVED AS ------------------------- AND NOMINEES FOR DURING PAST FIVE YEARS DIRECTOR NUMBER OF PERCENT DIRECTOR (CLASS) AND OTHER INFORMATION SINCE AGE SHARES OF CLASS -------------------- ---------------------- --------- --- ----------- --------- Maryellen B. Cattani(I) Attorney-at-Law(2) 1996 55 2,000 -- Louis J. Galen(III) Retired (Since 1982) Company 1959 73 1,163,698(3) 2.0% Officer, Private Investor Antonia Hernandez(III) President and General Counsel of 1995 51 1,120 -- The Mexican American Legal Defense and Educational Fund Patricia A. King(II) Professor of Law, Georgetown 1994 56 100 -- University, Washington, DC; Adjunct Professor, Department of Health Policy and Management, School of Hygiene and Public Health, Johns Hopkins University Bernard A. Osher(III) Chairman, Butterfield and 1970 71 3,089,150 5.4% Butterfield, Auctioneers Kenneth T. Rosen(I) Professor of Business 1984 50 3,000 -- Administration, Haas School of Business; Chairman of the Fisher Center for Real Estate and Urban Economics, University of California, Berkeley Herbert M. Sandler(I)(4) Chairman of the Board and Chief 1963 67 5,180,020(5)(6) 9.0% Executive Officer of the Company, World Savings Bank, FSB, World Savings and Loan Association and World Savings Bank, SSB Marion O. Sandler(II)(4) Chairman of the Board and Chief 1963 68 5,617,250(5)(7) 9.8% Executive Officer of the Company, World Savings Bank, FSB, World Savings and Loan Association and World Savings Bank, SSB Leslie Tang Schilling(II) President of L.T.D.D., Inc. and 1996 44 1,000 -- Golden Bay Investments, Inc.(8) All directors and officers as a group (16 persons) 10,815,693(9) 18.9%
- --------------- (1) Held directly with sole voting and investment powers unless otherwise noted, subject to community property laws where applicable. (2) Ms. Cattani is a member of the Board of Directors of ABM Industries Incorporated. (3) Includes 1,059,998 shares held in trust by Mr. Galen with sole voting and investment powers. Also includes 33,000 shares, with shared voting and investment powers, held in a charitable trust for which Mr. Galen is trustee. (4) Member of the Executive Committee. (5) Includes for both Herbert M. Sandler and Marion O. Sandler, husband and wife, 4,801,500 shares, with shared voting and investment powers, held jointly by Mr. and Mrs. Sandler, as co-trustees. (6) Includes for Herbert M. Sandler 900 shares with voting and investment powers in trust for the benefit of his sister-in-law, 163,208 shares with shared voting and investment powers held in trusts for the benefit of Mr. and Mrs. Sandler's descendants with Mr. and Mrs. Sandler as co-trustees, and 300,000 shares which Mr. Sandler may acquire upon exercise of employee stock options exercisable on February 28, 1999, or within 60 days thereafter. 2 5 (7) Includes for Marion O. Sandler 30,060 shares with voting and investment powers in trust for the benefit of herself and descendants, 356,580 shares with voting and investment powers held in trusts for the benefit of Mr. and Mrs. Sandler's descendants, 163,208 shares with shared voting and investment powers held in trusts for the benefit of Mr. and Mrs. Sandler's descendants with Mr. and Mrs. Sandler as co-trustees, and 300,000 shares which Mrs. Sandler may acquire upon exercise of employee stock options exercisable on February 28, 1999, or within 60 days thereafter. (8) Leslie Tang Schilling is a member of the Board of Directors of Tristate Holdings, Ltd. (9) Includes 5,602,705 shares as to which officers and directors share with others voting and/or investment powers. Also includes 836,150 shares which certain officers may acquire upon the exercise of employee stock options exercisable on February 28, 1999, or within 60 days thereafter. The continuing directors and nominees for elections as directors have had the principal occupations or employments set forth in the foregoing table for at least the past five years, except for Maryellen B. Cattani who was Executive Vice President, General Counsel and Secretary of APL, Ltd. until December 1997. Herbert M. Sandler and Marion O. Sandler are husband and wife. Bernard A. Osher is the brother of Mrs. Sandler. Herbert M. Sandler, Marion O. Sandler and Bernard A. Osher may be deemed to be "control" persons of the Company, within the meaning of the General Rules and Regulations adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934. The business address for Mr. and Mrs. Sandler is 1901 Harrison Street, Oakland, California 94612. The business address for Mr. Osher is 220 San Bruno Avenue, San Francisco, California 94103. During 1998, the Company's Board of Directors held four meetings. The Board of Directors has standing Nominating, Audit, Compensation and Stock Option Committees. The members of the Nominating Committee in 1998 were Maryellen B. Cattani, Louis J. Galen and Antonia Hernandez. The Nominating Committee's principal function is to identify and propose to the Board qualified individuals as potential candidates for the position of Director. The Nominating Committee does not consider recommendations from stockholders for nominations for Director. The Nominating Committee met once during 1998. The members of the Audit Committee in 1998 were Maryellen B. Cattani, Louis J. Galen and Kenneth T. Rosen. The principal function of the Audit Committee is to assist the Board of Directors in reviewing the financial statements of the Company and its subsidiaries as issued to its stockholders and others. The Audit Committee held four meetings of its members during 1998. The members of the Compensation and Stock Option Committees in 1998 were Patricia A. King, Kenneth T. Rosen and Leslie Tang Schilling. The Compensation Committee met three times during 1998. The report of the Compensation Committee is set forth below: COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION To the Board of Directors: The Compensation Committee's primary function is to review and recommend, for review by the Board of Directors, the salaries and other compensation of the Company's senior executive officers and to administer the Company's Annual Incentive Bonus Plan (the "Incentive Plan"), which was approved by the Company's stockholders at the 1997 Annual Meeting and became effective as of January 1, 1997. In addition, the members of the Compensation Committee serve as the Company's Stock Option Committee which approves the grants of stock options pursuant to the Company's Stock Option Plan, including grants of stock options to executive officers of the Company. The Compensation Committee met in February 1998 to (a) review and recommend to the Board of Directors the salaries for 1998 of the Company's chief executive officers ("Chief Executive Officers") who had voluntarily taken a reduction in annual salary in order to preserve the deductibility to the Company of their total compensation (see Tax Deductibility of Executive Compensation below) and (b) determine the incentive awards payable to the Chief Executive Officers under the terms of the Incentive Plan for the Company's 1997 performance. The Committee met again in March 1998 to confirm the performance standards and set the target levels of performance under the Incentive Plan for 1998. In February 1999, the Committee met to certify the Company's 1998 performance under the Incentive Plan and to determine the amount of the awards payable to the Chief Executive Officers for 1998. In May of 1998, the Committee met to recommend to the Board of Directors salaries, for the period May 1, 1998 through 3 6 April 30, 1999, for the Company's President and Senior Executive Vice President (together with the Chief Executive Officers, the "Senior Executive Officers"). The cash compensation of the Company's other executive officers was determined through normal annual reviews by their managers, who included one or more of the Chief Executive Officers, the President or the Senior Executive Vice President. The compensation of each such officer was determined in those reviews with reference to the officer's individual performance in such officer's area of responsibility and the manager's assessment of the officer's contribution to the performance of the Company. COMPENSATION GOALS AND APPROACH The Committee's goals were to provide compensation that: (a) reflects both the Company's and the executives' performance; (b) compares reasonably with compensation in the relevant market; and (c) attracts and retains high quality executives. In addition, concerning the incentive awards payable under the Incentive Plan, the amounts paid are directly tied to the Company's performance. In its evaluation of executive compensation for the Senior Executive Officers, the Committee considered factors relating to the Company's performance, compared to a peer group, and the compensation of the Company's Senior Executive Officers relative to the compensation of executives in the peer group. As determined by the Committee, the peer group consisted of the top performing regional bank holding companies that had between $30 billion and $50 billion in assets as of December 31, 1997 and a primary bank operating subsidiary with a rating from Moody's of A1 or better and from Standard and Poor's of A+ or better (Corestates Financial Corp., Mellon Bank Corp., National City Corp., Republic New York Corp., Sun Trust Banks, Inc. and Wachovia Corp.) and, at the time, the two largest savings and loan holding companies in the nation (H.F. Ahmanson & Co. and Washington Mutual). The Committee considered several measures of performance in evaluating the Company's performance relative to the peer group, including: total assets; yearend stock prices; net earnings; fully-diluted net income per share; return on average assets; return on average equity; capital levels; the ratio of non-performing assets ("NPAs") and troubled debt restructured ("TDRs") to period-end loans; the ratio of net charge-offs to average loans and leases; loan loss coverage; the ratio of general and administrative expenses ("G&A") to interest income and other income; the ratio of non-interest expenses to pretax earnings; and the ratio of pretax earnings to net interest income and non-interest income. In addition, in evaluating compensation, the Committee also considered other factors, including: the attainment of long-term plans and budgets; the attainment of goals and objectives; the attainment of credit ratings by nationally-recognized rating services; the attainment of regulatory examination ratings by the Company and its operating subsidiaries, World Savings Bank, FSB, World Savings and Loan Association and World Savings Bank, SSB; the attainment of regulatory capital standards by the operating subsidiaries; the strategic accomplishments of the Company; and the general assessment of the executives by peers, equity analysts and others. With respect to total compensation, the Committee considered annual compensation of the Company's Senior Executive Officers relative to executives in the peer group, for the period 1995 through 1997, including: (i) salary, bonuses and other forms of cash compensation; and (ii) equity-based compensation, including restricted stock and stock options. In general, the Committee concluded that while exact comparisons could not be made, the compensation of the Company's Senior Executive Officers for the period in question was in accordance with compensation for the peer group. TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION Section 162(m) of the Internal Revenue Code limits the federal income tax deductibility of compensation paid to the Company's two Chief Executive Officers and to each of the other three most highly compensated executive officers. The Company generally may deduct compensation paid to such an officer only to the extent that the compensation does not exceed $1 million during any fiscal year or is "performance-based" as defined in Section 162(m). The Incentive Plan, which is designed to preserve the deductibility of certain cash compensation by qualifying it as "performance-based," was approved at the 1997 Annual Meeting. In addition, non-qualified stock options granted under the Company's Stock Option Plan qualify as 4 7 "performance-based" under Section 162(m). Incentive stock options granted under the Company's Stock Option Plan generally do not entitle the Company to a tax deduction without regard to Section 162(m). 1998 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICERS Effective as of January 1, 1997, the Chief Executive Officers' salaries were reduced, voluntarily, from their previous levels. This was done in order to ensure the continued deductibility to the Company of the Chief Executive Officers' compensation. Such reduction was accompanied by the adoption of the Incentive Plan, which provides for the potential award of incentive-based compensation which will be fully deductible to the Company. The Committee met in March 1998 to review and establish performance standards and targets for 1998. The performance standards upon which the targets were based included Return on Average Assets, Return on Average Equity, Diluted Earnings Per Share, General and Administrative Expenses to Average Assets and Non-Performing Assets to Total Assets. In February 1999, the Committee met to certify the Company's 1998 performance under the Incentive Plan and to determine the amount of awards payable to the Chief Executive Officers for 1998. At that time, the Compensation Committee also reviewed the salaries of the Company's Chief Executive Officers and determined that the current salaries were appropriate in light of the Company's performance and the existence of the Incentive Plan. With respect to the Incentive Plan, during the year ended December 31, 1998 (the "1998 Plan Year") , the Company met or exceeded the performance targets established by the Committee at the beginning of the 1998 Plan Year. As a result of the Company's performance during the 1998 Plan Year, the Committee confirmed an award under the Incentive Plan to each Chief Executive Officer in the amount of $124,864. This amount was determined based on an indicated award under the Incentive Plan of $163,000, which was reduced pursuant to the Committee's discretionary authority so that the total salary and incentive award did not exceed a 5.2 percent increase over each Chief Executive Officer's total salary and incentive award for 1997. COMPENSATION COMMITTEE Patricia A. King, Chairman Kenneth T. Rosen Leslie Tang Schilling SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Company's officers and directors, and persons who own more than ten percent of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the "SEC"). Based solely on the Company's review of such reports and written representations from certain persons that certain of such reports were not required to be filed by such persons, no officer, director or person who owns more than ten percent of a registered class of the Company's equity securities failed to file on a timely basis reports required by Section 16(a) of the Securities Exchange Act of 1934 during the year ended December 31, 1998, except that, with respect to Director Hernandez, neither a Form 4 nor a Form 5 were filed in a timely manner for certain stock purchases by Ms. Hernandez for the benefit of her minor children and by her husband for his retirement account. 5 8 SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth the beneficial ownership, as of the dates indicated, of each stockholder other than Herbert M. Sandler, Marion O. Sandler and Bernard A. Osher, known to the Company to be the beneficial owner of more than 5% of the Company's Common Stock. The table also sets forth the beneficial ownership, as of February 28, 1999, of each of the executive officers named in the Summary Compensation Table located elsewhere in this proxy statement who are not also directors of the Company:
AMOUNT AND NATURE OF PERCENT OF NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS ------------------------------------ -------------------- ---------- Dodge & Cox, Incorporated...................... 4,295,776(1) 7.5% One Sansome Street San Francisco, CA 94104 Wellington Management Company.................. 5,221,450(2)(4) 9.2% Thorndike, Paine & Lewis 75 State Street Boston, MA 02109 The Windsor Funds, Inc.,....................... 5,221,100(3)(4) 9.2% a member of the Vanguard Group of Investment Companies Vanguard Financial Center Valley Forge, PA 19482 James T. Judd.................................. 105,710(5) .2% Senior Executive Vice President of the Company and President and Chief Operating Officer of World Savings Bank, FSB, World Savings and Loan Association and World Savings Bank, SSB 1901 Harrison Street Oakland, CA 94612 Russell W. Kettell............................. 403,370(5) .7% President and Treasurer of the Company and Senior Executive Vice President of World Savings Bank, FSB, World Savings and Loan Association and World Savings Bank, SSB 1901 Harrison Street Oakland, CA 94612 Dirk S. Adams.................................. 11,100(5) -- Executive Vice President of the Company, World Savings Bank, FSB, World Savings and Loan Association and World Savings Bank, SSB 1901 Harrison Street Oakland, CA 94612
- --------------- (1) Includes 4,295,776 shares with sole disposition power and 3,799,126 with sole voting power, based upon SEC Schedule 13G dated February 10, 1999. (2) Includes 5,221,450 shares with shared disposition power and 350 shares with shared voting power, based upon SEC Schedule 13G dated February 10, 1999. (3) Includes 5,221,100 shares with shared disposition power based upon SEC Schedule 13G dated February 10, 1999. (4) The shares reported by the Windsor Fund are also included in those reported by Wellington Management Company. (5) Includes 90,000, 117,500 and 2,900 shares which Messrs. Judd, Kettell and Adams, respectively, may acquire upon exercise of employee stock options exercisable on February 28, 1999 or within 60 days thereafter. 6 9 EXECUTIVE COMPENSATION COMPENSATION OF EXECUTIVE OFFICERS The compensation paid to each of the two Chief Executive Officers and to the three most highly compensated executive officers of the Company for services in all capacities to the Company and its subsidiaries is set forth below: SUMMARY COMPENSATION TABLE FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
LONG TERM ANNUAL COMPENSATION COMPENSATION ----------------------------------- ----------------------- OTHER ANNUAL ALL OTHER COMPENSATION OPTIONS COMPENSATION NAME AND PRINCIPAL POSITION YEAR SALARY(A) BONUS(B) (C) (#)(E) (F) --------------------------- ---- --------- -------- ------------ -------- ------------ HERBERT M. SANDLER 1998 $950,004 $124,864 $10,954 12,500 $ 5,000 Chairman of the Board and 1997 950,004 71,734 9,319 0 4,795 Chief Executive Officer 1996 973,080 -- 8,014 35,000 5,650 of the Company, World Savings Bank, FSB, World Savings and Loan Association and World Savings Bank, SSB MARION O. SANDLER 1998 950,004 $124,864 13,408 12,500 5,000 Chairman of the Board and 1997 950,004 71,734 14,760 0 4,795 Chief Executive Officer of the 1996 973,080 -- 8,112 35,000 5,650 Company, World Savings Bank, FSB, World Savings and Loan Association and World Savings Bank, SSB JAMES T. JUDD 1998 636,484 -- 76,531(D) 10,000 5,284 Senior Executive Vice President 1997 607,108 -- 13,376 0 5,020 of the Company and President 1996 580,968 -- 9,146 17,500 47,317(G) and Chief Operating Officer of World Savings Bank, FSB, World Savings and Loan Association and World Savings Bank, SSB RUSSELL W. KETTELL 1998 577,908 -- 12,002 10,000 6,336 President and Treasurer of the 1997 551,232 -- 7,273 0 5,020 Company and Senior Executive 1996 527,492 -- 8,676 17,500 5,650 Vice President of World Savings Bank, FSB, World Savings and Loan Association and World Savings Bank, SSB DIRK S. ADAMS 1998 367,500 -- 7,632 6,000 5,766 Executive Vice President of the 1997 350,004 -- 1,522 0 5,020 Company, World Savings Bank, 1996 319,804 -- 2,158 0 5,650 FSB, World Savings and Loan Association and World Savings Bank, SSB
- --------------- (A) Amounts shown include cash compensation earned by executive officers. (B) Amounts shown include cash compensation earned under the Company's Incentive Plan. (C) Amounts are for cash reimbursement for income taxes on account of certain fringe benefits provided to such individuals. (D) Includes $62,000 for cash reimbursement for moving expenses incurred during 1998. (E) Options granted are under the Company's 1996 Stock Option Plan. 7 10 (F) Amounts shown in this column represent, primarily, except for Mr. Judd in 1996, Company contributions on behalf of each of these officers to the Company's 401(K) plan, $5,000 (1998) and $4,750 (1997 and 1996). (G) Includes $41,667 in 1996, representing the portion of previously vested and available amounts which Mr. Judd elected to receive in such year pursuant to a deferred compensation agreement. INDEBTEDNESS OF MANAGEMENT The following table sets forth information relating to all loans made to each individual who was a director or officer of the Company during 1998:
HIGHEST UNPAID RANGE OF INDEBTEDNESS BALANCE INTEREST RATES SINCE AS OF FROM JANUARY 1, DECEMBER 31, FEBRUARY 28, 1998 TO NAME 1997 1999 FEBRUARY 28, 1999 ---- ------------ ------------ ----------------- J. L. Helvey.................... $125,405 $ 0 6.131% to 6.237% Carl M. Andersen................ 289,454 283,440 5.955 to 6.287 186,486 181,996 7.105 to 7.437 William C. Nunan................ 296,280 286,966 5.655 to 5.987
All of the above loans are secured by first trust deeds on single family residences. J. L. Helvey is an Executive Vice President of the Company and Carl M. Andersen and William C. Nunan are Senior Vice Presidents of the Company. All three officers hold their same titles with World Savings and Loan Association, World Savings Bank, FSB and World Savings Bank, SSB. DEFERRED AND RETIREMENT COMPENSATION The Company has entered into deferred compensation agreements with certain of the key employees of the Company and its subsidiaries, as selected by the Office of the Chairman, including Messrs. Judd, Kettell and Adams. The agreements provide for benefits payable in monthly installments over ten years upon retirement at age 65 or upon the death of the employee (paid to his beneficiary). The agreements contain vesting schedules that provide for full vesting by ages ranging from 58 to 63, depending upon the age of the employee at the time the agreement was executed. The vesting schedules provide that one-third of the benefits vest during the first half of the vesting period and two-thirds vest during the second half. The annual installments payable upon retirement at age 65 or death to Messrs. Judd, Kettell and Adams are $300,000, $375,000 and $200,000, respectively. As of December 31, 1998, Messrs. Judd, Kettell and Adams had accumulated vested benefits which would entitle them to annual installments payable, as described above, of $188,840, $273,103 and $30,550, respectively. During 1998, the following amounts under the agreements were vested for the accounts of Messrs. Judd, Kettell and Adams, respectively: $333,300, $555,530 and $96,100. In addition, Mr. Judd has $400,000 in fully vested benefits remaining from a separate deferred compensation agreement that originally provided for an aggregate of 120 monthly installments of $8,333 each, to be paid to him at his election. The Company carries life insurance policies on the lives of these employees in amounts estimated to be sufficient to cover its obligations under the agreements. If assumptions as to mortality experiences, future policy dividends and other factors are realized, the Company will recover an amount equal to all retirement payments under the agreements, plus the premiums on the insurance contracts and the interest that could have been earned on the use of the retirement and premium payments. COMPENSATION OF DIRECTORS An annual retainer of $20,000, paid monthly, and a fee of $3,000 for each Board of Directors meeting attended is paid to directors who are not employees of the Company. In addition, the Chairman of the Audit 8 11 Committee receives a fee of $1,500 per Audit Committee meeting attended and each of the other members of the Audit Committee receives a fee of $1,250 for each Audit Committee meeting attended. STOCK OPTIONS Information concerning individual grants of stock options made to the two Chief Executive Officers and to the three most highly compensated executive officers of the Company during the year ended December 31, 1998 is set forth below: OPTION GRANTS TABLE OPTION GRANTS FOR YEAR ENDED DECEMBER 31, 1998
INDIVIDUAL GRANTS(A) ----------------------------------------------- POTENTIAL REALIZABLE VALUE % OF TOTAL EXERCISE AT ASSUMED ANNUAL RATES OF OPTIONS OR STOCK PRICE APPRECIATION OPTIONS GRANTED TO BASE FOR OPTION TERM GRANTED EMPLOYEES IN PRICE EXPIRATION -------------------------- NAME (#) FISCAL YEAR ($/SHARE) DATE 5% 10% ---- ------- ------------ --------- ---------- --------- ----------- Herbert M. Sandler.......... 12,500 4.3% $82.81 1/23/2008 $651,000 $1,650,000 Marion O. Sandler........... 12,500 4.3 82.81 1/23/2008 651,000 1,650,000 James T. Judd............... 10,000 3.5 82.81 1/23/2008 521,000 1,320,000 Russell W. Kettell.......... 10,000 3.5 82.81 1/23/2008 521,000 1,320,000 Dirk S. Adams............... 6,000 2.1 82.81 1/23/2008 312,000 792,000
- --------------- (A) All options were granted with a per share exercise price equal to the fair market value of a share of Company Common Stock on the date of grant. The options become exercisable on the second anniversary of the grant date. The Company did not grant any stock appreciation rights. Information concerning exercises of stock options by these individuals during the year ended December 31, 1998, and certain information concerning unexercised stock options is set forth below: OPTION EXERCISES AND YEAREND VALUE TABLE AGGREGATED OPTION EXERCISES FOR THE YEAR ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1998 YEAREND OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS ACQUIRED AT DECEMBER 31, 1998(#) AT DECEMBER 31, 1998(B) ON EXERCISE VALUE --------------------------- --------------------------- NAME (#) REALIZED(A) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---- ----------- ----------- ----------- ------------- ----------- ------------- Herbert M. Sandler....... 203,420 $16,164,854 300,000 12,500 $17,775,781 $110,938 Marion O. Sandler........ 211,710 16,717,342 300,000 12,500 17,775,781 110,938 James T. Judd............ 17,500 1,206,406 90,000 10,000 4,948,000 88,750 Russell W. Kettell....... 44,240 3,596,123 117,500 10,000 6,565,156 88,750 Dirk S. Adams............ 13,000 964,063 9,900 6,000 513,545 53,250
- --------------- (A) Market value of underlying securities at exercise date less the option price. (B) Market value of unexercised "in-the-money" options at year end less the option price of such options. 9 12 COMMON STOCK PERFORMANCE GRAPH The graph below compares the yearly change in the Company's cumulative total stockholder return on its Common Stock for the five years ended December 31, 1998 with the cumulative total return, assuming reinvestment of dividends, of each of the Standard & Poor's 500 Stock Index and the Standard & Poor's Major Regional Bank Index. The returns of each component company of each index have been weighted according to the stock market capitalization of the respective company. Cumulative total stockholder return is measured by dividing (i) the sum of (A) the cumulative amount of dividends for the measurement period, assuming dividend reinvestment and (B) the difference between the Company's share price at the beginning and the end of the measurement period by (ii) the share price at the beginning of the measurement period. TOTAL SHAREHOLDER RETURN PERFORMANCE GRAPH [PERFORMANCE GRAPH] Assumes $100 invested on December 31, 1993 in the stock of Golden West Financial Corporation, S&P 500 Index and the S&P Major Regional Banks (weighted by market capitalization). Total return assumes reinvestment of dividends. 10 13 APPROVAL OF AUDITORS The Board of Directors has appointed Deloitte & Touche LLP to serve as the Company's independent auditors for the year ending December 31, 1999, subject to stockholder approval. If the stockholders do not vote in favor of the appointment of Deloitte & Touche LLP, the Board of Directors will consider the selection of other auditors. Representatives of Deloitte & Touche LLP will be present at the Annual Meeting of Stockholders and will be available to respond to appropriate questions. They will be given the opportunity to make a statement, if they desire to do so. Deloitte & Touche LLP has served as the Company's independent auditors since 1963 and was selected by the Board of Directors to serve in 1998, which selection was ratified and approved by the stockholders of the Company on May 5, 1998. In order to be adopted, the proposal to approve the appointment of Deloitte & Touche LLP as auditors for the Company must be approved by the holders of a majority of the outstanding shares of Common Stock present or represented by proxy and entitled to vote at the meeting. The Board of Directors recommends a vote FOR the appointment of Deloitte & Touche LLP to serve as the Company's independent auditors for the year ending December 31, 1999. STOCKHOLDERS' PROPOSALS FOR NEXT ANNUAL MEETING Stockholders' proposals intended to be presented at the 2000 Annual Meeting of Stockholders of the Company must be received by the Company not later than November 16, 1999, for inclusion in the Company's Proxy Statement and form of proxy relating to that meeting. Proposals should be addressed to the Company at 1901 Harrison Street, Oakland, California, 94612, Attention: Corporate Secretary. The attached proxy card grants the proxy holders discretionary authority to vote on any matter raised at the Annual Meeting. If a stockholder intends to submit a proposal at the 2000 Annual Meeting of Stockholders of the Company, which proposal is not intended to be included in the Company's proxy statement and form of proxy relating to such meeting, the stockholder should give appropriate notice no later than January 31, 2000. If a stockholder fails to submit the proposal by such date, the Company will not be required to provide any information about the nature of the proposal in its proxy statement, and the proxy holders will be allowed to use their discretionary voting authority if the proposal is raised at the 2000 Annual Meeting of Stockholders of the Company. OTHER MATTERS The management knows of no business other than that mentioned above to be transacted at the Annual Meeting, but if other matters do properly come before the meeting it is the intention of the persons named in the enclosed proxy to vote thereon in accordance with their judgment, and discretionary authority to do so is included in the proxy. GOLDEN WEST FINANCIAL CORPORATION Oakland, California March 15, 1999 11 14 GOLDEN PROXY WEST FINANCIAL CORPORATION PROXY SOLICITED BY BOARD OF DIRECTORS The undersigned hereby appoints Herbert M. Sandler, Marion O. Sandler and J. L. Helvey, or any of them, each with power of substitution, as proxies of the undersigned to attend the Annual Meeting of Stockholders of Golden West Financial Corporation (the "Company"), to be held on the fourth floor of the Company's headquarters located at 1901 Harrison Street, Oakland, California on April 27, 1999, commencing at 11:00 a.m., and any adjournment thereof, and to vote the number of shares of Common Stock, $.10 par value, of the Company, which the undersigned would be entitled to vote if personally present on the following: (1) ELECTION OF DIRECTORS [ ] FOR all nominees listed below (except [ ] WITHHOLD AUTHORITY to vote for all as marked to the contrary below) nominees listed below
Louis J. Galen, Antonia Hernandez, Bernard A. Osher (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL, WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.) - -------------------------------------------------------------------------------- (2) RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP, to serve as the Company's independent auditors for the year ended December 31, 1999. [ ] FOR [ ] AGAINST [ ] ABSTAIN (3) In their discretion, upon all other matters as may properly be brought before the meeting or any adjournment thereof. (Continued and to be signed on reverse side) - ------------------------------------------------------------------------ - FOLD AND DETACH HERE - NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF GOLDEN WEST FINANCIAL CORPORATION The Annual Meeting of Stockholders of Golden West Financial Corporation (the "Company") will be held on the fourth floor of the Company's headquarters located at 1901 Harrison Street, Oakland, California on Tuesday, April 27, 1999, commencing at 11:00 a.m. for the following purposes: (1) To elect three members of the Board of Directors to hold office for three-year terms and until their successors are duly elected and qualified; (2) To ratify the selection of independent auditors; and (3) To transact such other business as may properly come before the meeting or any adjournment thereof. The close of business on March 8, 1999 has been fixed as the record date for the determination of stockholders entitled to notice of and to vote at this meeting or any adjournment thereof. A list of such stockholders will be available at the time and place of the meeting and, during ten days prior to the meeting, at the office of the Secretary of Golden West Financial Corporation, 1901 Harrison Street, Oakland, California. By order of the Board of Directors LOGO ROBERT C. ROWE Senior Vice President and Secretary March 15, 1999 IMPORTANT: TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE DETACH, COMPLETE, DATE, SIGN AND MAIL THE ATTACHED PROXY PROMPTLY IN THE RETURN ENVELOPE WHICH HAS BEEN PROVIDED. 15 (Continued from other side) THIS PROXY WILL BE VOTED IN ACCORDANCE WITH INSTRUCTIONS GIVEN. IN THE ABSENCE OF SUCH INSTRUCTIONS, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS NOMINATED BY MANAGEMENT AND FOR PROPOSAL 2. Please date and sign below exactly as your name or names appear hereon. If more than one name appears, all should sign. Joint owners should each sign personally. Corporate proxies should be signed in full corporate name by an authorized officer and attested. Persons signing in a fiduciary capacity should indicate their full names in such capacity. -------------------------------- (Signature of Stockholder) -------------------------------- (Signature of Stockholder) Dated , 1999 STOCKHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. - ------------------------------------------------------------------------ - FOLD AND DETACH HERE - -----END PRIVACY-ENHANCED MESSAGE-----