-----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, Fb9yKEhIFG73Zyf72KjNLaKACFhFlXSsdgDC31Dg74LwlMuceN0k18Y6iNEw4jQ3 WophA2rKHPYmZdN4M5HLgQ== 0000892569-00-000377.txt : 20000501 0000892569-00-000377.hdr.sgml : 20000501 ACCESSION NUMBER: 0000892569-00-000377 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000428 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDELITY NATIONAL FINANCIAL INC /DE/ CENTRAL INDEX KEY: 0000809398 STANDARD INDUSTRIAL CLASSIFICATION: TITLE INSURANCE [6361] IRS NUMBER: 860498599 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-09396 FILM NUMBER: 614043 BUSINESS ADDRESS: STREET 1: 17911 VON KARMAN AVE STREET 2: STE 300 CITY: IRVINE STATE: CA ZIP: 92614 BUSINESS PHONE: 9496225000 MAIL ADDRESS: STREET 1: MLISS JONES KANE STREET 2: 17911 VON KARMAN AVE STE 300 CITY: IRVINE STATE: CA ZIP: 92614 10-K/A 1 FORM 10-K/A 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) COMMISSION FILE NO. 1-9396 FIDELITY NATIONAL FINANCIAL, INC. (Exact name of registrant as specified in its charter)
DELAWARE 86-0498599 STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 17911 VON KARMAN AVENUE, SUITE 300 92614 (949) 622-4333 IRVINE, CALIFORNIA (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED Common Stock, $.0001 par value New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K. As of April 10, 2000, 66,934,696 shares of Common Stock ($.0001 par value) were outstanding, and the aggregate market value of the shares of the Common Stock held by non-affiliates of the registrant was $897,638,000. The aggregate market value was computed with reference to the closing price on the New York Stock Exchange on such date. ================================================================================ 2 PART III ITEM 10. DIRECTORS AND THE EXECUTIVE OFFICERS OF THE REGISTRANT The names of the director nominees, all directors, and all executive officers, and certain information about them, are set forth below:
DIRECTOR NAME AGE PRINCIPAL OCCUPATION SINCE ---- --- -------------------- -------- William P. Foley, II 55 Chairman of the Board and Chief Executive Officer 1984 Frank P. Willey 46 Vice Chairman of the Board 1986 John J. Burns, Jr. 68 Director 2000 John F. Farrell, Jr. 62 Director 2000 Philip G. Heasley 50 Director 2000 William A. Imparato 53 Director 1986 Donald M. Koll 67 Director 1995 Daniel D. (Ron) Lane 65 Director 1989 General William Lyon 77 Director 1998 J. Thomas Talbot 64 Director 1990 Cary H. Thompson 43 Director 1992 Richard P. Toft 63 Director 2000 Patrick F. Stone 52 President and Chief Operating Officer N/A Alan L. Stinson 54 Executive Vice President, Chief Financial Officer N/A Andrew F. Puzder 49 Executive Vice President, Legal N/A Peter T. Sadowski 45 Executive Vice President, General Counsel N/A Raymond R. Quirk 53 Executive Vice President N/A Ronald R. Maudsley 48 Executive Vice President N/A Ernest D. Smith 49 Executive Vice President N/A William Massey 54 Executive Vice President N/A
2 3
DIRECTOR NAME AGE PRINCIPAL OCCUPATION SINCE ---- --- -------------------- -------- Christopher Abbinante 49 Executive Vice President N/A Brent B. Bickett 35 Senior Vice President, Financial Operations N/A Edward J. Dewey 54 Senior Vice President N/A M'Liss Jones Kane 47 Senior Vice President, Corporate Counsel N/A and Corporate Secretary Gary R. Nelson 52 Senior Vice President N/A H. Lee Kolodny 32 Senior Vice President, Corporate Counsel N/A Hon Chan 40 Senior Vice President, Assistant General Counsel N/A Patrick Farrenga 32 Vice President, Treasurer N/A
WILLIAM P. FOLEY, II Mr. Foley is the Chairman of the Board and Chief Executive Officer of the Company and has been since its formation in 1984. Mr. Foley was President of the Company from its formation in 1984 until December 31, 1994. Mr. Foley is also currently serving as Chairman of the Board of CKE Restaurants, Inc., American National Financial, Inc., Rally's Hamburgers, Inc., Checkers Drive-In Restaurants, Inc. and Santa Barbara Restaurant Group, Inc. Additionally, he is Co-Chairman of the Board of Directors of Micro General Corporation, and a director of Fresh Foods, Inc. and Miravant Medical Technologies, Inc. FRANK P. WILLEY Mr. Willey is Vice Chairman of the Company. He served as President and a director of the Company from January 1, 1995 through March 20, 2000. He served as an Executive Vice President and General Counsel of the Company from its formation until December 31, 1994. He has served in various capacities with subsidiaries and affiliates of the Company since joining it in 1984. Mr. Willey is also a director of CKE Restaurants, Inc., Santa Barbara Restaurant Group, Inc., and Ugly Duckling Holding, Inc. JOHN JOSEPH BURNS, JR. Mr. Burns is the Chief Executive Officer and a Director of Alleghany Corporation and has been since 1992. From 1977 to 1992, he was President and a Director of Alleghany Corporation. He is a director of World Minerals, Inc., Underwriters Reinsurance Co. and Burlington Northern Santa Fe Corporation.. JOHN F. FARRELL, JR. Mr Farrell is Chairman of Automatic Service Company and has been since 1997. From 1985 through 1994 he was Chairman and Chief Executive Officer of North American Mortgage Company. Mr. Farrell was Chairman of Integrated Acquisition Corporation from 1984 through 1989. He was a partner with Oppenheimer and Company from 1972 through 1984. PHILIP G. HEASLEY Mr. Heasley is President and Chief Operating Officer of U.S. Bancorp and has been since July 1999. From 1994 to 1990 he served as Vice Chairman of U.S. Bancorp. From 1990 to 1994 he was Executive Vice President of U.S. Bancorp (formerly First Bank). From 1978 to 1990 he was Senior Vice President of U.S. Bancorp (formerly First Bank). From 1978 through 1987 he held various positions at Citicorp including President and Chief Operating Officer. 3 4 WILLIAM A. IMPARATO Mr. Imparato has been a director of the Company since December 1986. From June 1990 to December 1993, Mr. Imparato was President of the Company's wholly-owned real estate subsidiary Manchester Development Corporation ("Manchester"). Since July 1980, he has been a partner in Park West Development Company, a real estate development firm headquartered in Phoenix, Arizona. DONALD M. KOLL Mr. Koll has been a director of the Company since March 28, 1995. Mr. Koll is Chairman of the Board and Chief Executive Officer of The Koll Company and has been since its formation on March 26, 1962. Mr. Koll is also a director of Koll Real Estate Group, Inc. DANIEL D. (RON) LANE Mr. Lane has been a director of the Company since September 1989. Since February 1983 he has been a principal, Chairman and Chief Executive Officer of Lane/Kuhn Pacific, Inc., a corporation that consists of several community development and home-building partnerships, all of which are headquartered in Newport Beach, California. Mr. Lane has also served as a director of Hawaiian Airlines, Inc. since January 1990, as a director of Resort Income Investors, Inc. since September 1990 and as Chairman of the Board and Chief Executive Officer of Pro Shot Golf, Inc. since August 1994. He is Vice Chairman of the Board of Directors of CKE Restaurants, Inc. GENERAL WILLIAM LYON General Lyon is Chairman of the Board, President and Chief Executive Officer of William Lyon Homes, Inc. and affiliated companies which are headquartered in Newport Beach, California. In 1989, General Lyon formed Air/Lyon, Inc. which included Elsinore Service Corp. and Martin Aviation located at John Wayne Airport. He has been Chairman of the Board of The William Lyon Company since June, 1985. J. THOMAS TALBOT Mr. Talbot has been a director of the Company since December 1990. He was formerly Chairman of the Board and Chief Executive Officer of HAL, Inc. and its subsidiaries Hawaiian Airlines Inc. and West Maui Airport, and served in various executive capacities with those companies until June 1991. Between August 1992 and March 1994, Mr. Talbot was Chairman and Chief Executive Officer of Alliance Bancorp, which was being liquidated. Mr. Talbot has been a general partner of Shaw & Talbot, a real estate investment and development company, since 1975. He was Chairman of Jet America Airlines from 1981 to 1987, when it merged with Alaska Air Group. Mr. Talbot is currently serving as a director of the Hallwood Group, Showbiz Pizza Time, Inc., Koll Real Estate Group, Hemmeter Enterprises, Inc. and the Baldwin Company. CARY H. THOMPSON Mr. Thompson has been a director of the Company since July 1992. Mr. Thompson is currently a Senior Managing Director with Bear Stearns & Co., Inc., Chief Operating Officer an da director of Aames Financial Corporation. Mr. Thompson was a managing director of Nat West Markets from May of 1994 through March of 1995. Mr. Thompson was Senior Vice President and managed the West Coast Financial Institutions Group for Oppenheimer & Co., Inc. from 1989 to May 1994. Prior to that time, he was a partner with the law firm of Manatt, Phelps, Rothenberg and Phillips. RICHARD PAUL TOFT Mr. Toft is currently the Non-Executive Chairman of Alleghany Asset Management, Inc. and has been since April 1, 2000. He was Chairman and Chief Executive Officer of Alleghany Asset Management, Inc. from October of 1995 through April 1, 2000. He served as a Senior Vice President of Alleghany Corporation from March 30, 1990 through October 1995 and in various capacities at Chicago Title Corporation from February 1981 through March 20, 2000, most recently serving as Chairman of the Board. From 1972 through May of 1981 he served as Vice President and Treasurer of Lincoln National Corporation. Mr. Toft is also a director of Peoples Energy Corporation of Chicago. 4 5 PATRICK F. STONE Mr. Stone was elected President of the Company effective March 20, 2000. He was elected Chief Operating Officer of the Company on March 25, 1997. From May 1995 through March 1997 he was an Executive Vice President of the Company and President of Fidelity National Title Insurance Company and four other underwriters of the Company. From February 1989 to May 1995 he was President of Fidelity National Title Company of Oregon. He is Co-Chairman of the Board of Micro General Corporation. ALAN L. STINSON Mr. Stinson joined the Company in October, 1998 as Executive Vice President, Financial Operations of the Company. Prior to his employment with the Company, Mr. Stinson was Executive Vice President and Chief Financial Officer of Alamo Title Holding Company. From 1968 to 1994, Mr. Stinson was employed by Deloitte & Touche, LLP. He was a partner with Deloitte & Touche, LLP from 1980 to 1994. ANDREW F. PUZDER Mr. Puzder is Executive Vice President, Legal of the Company and has been since March, 2000, and has served in various capacitites including Executive Vice President and General Counsel since 1995. He has been Executive Vice President, General Counsel and Secretary of CKE Restaurants, Inc. since February 1997. Mr. Puzder also serves as Chief Executive Officer of SBRG, where he has been since August 1997. From March 1994 to December 1994, he was a partner with the law firm of Stradling , Yocca, Carlson & Rauth. Prior to that, he was a partner with the law firm of Lewis, D=Amato, Brisbois & Bisgard, from September 1991 through March 1994, and he was a partner of the Stolar Partnership from February 1984 through September 1991. Mr. Puzder is a member of the Board of Directors of SBRG, Pierre Foods, Aspeon, Inc. and Checkers. PETER T. SADOWSKI Mr. Sadowski joined the Company on January 4, 1999 as Executive Vice President and General Counsel. Prior to joining the Company, Mr. Sadowski was a partner with Goldberg, Katz, Sadowski & Stansen, PC, a law firm located in St. Louis, Missouri. Before joining the above firm in 1996, Mr. Sadowski was a partner with the Stolar Partnership, a law firm located in St. Louis, Missouri. RAYMOND R. QUIRK Mr. Quirk has been an Executive Vice President of the Company since March 20, 2000. He has been a Vice President of the Company since June 1993, and has been an Executive Vice President and a Regional Manager of Fidelity National Title Insurance Company since August 1991. Mr. Quirk has been employed by Fidelity National Title Insurance Company in other management positions since November 1987. RONALD R. MAUDSLEY Mr. Maudsley has been an Executive Vice President of the Company since March 20, 2000. He was a Vice President of the Company from June 17, 1998 to March 20, 2000. Mr. Maudsley serves as Regional Manager for all agency operations nationwide. Mr. Maudsley joined Fidelity National Title Insurance Company in 1988 as an Executive Vice President. ERNEST D. SMITH Mr. Smith has been an Executive Vice President of the Company since March 20, 2000. He was a Vice President of the Company from June 17, 1998 to March 20, 2000. He is currently responsible for the seven divisions encompassing FlexNet (bundled services): Fidelity National Lender Division; Fidelity National Credit Services; Fidelity National Flood, Inc.; Fidelity National Tax Services; Nationwide Document and Recording; Fidelity National Foreclosure Services (Trustee Sales Guarantee, Agency Sales and Posting); and Fidelity National Appraisal. Mr. Smith serves as Regional Manager for all Title and Escrow Operations in Southern California. Mr. Smith joined Fidelity National Title Insurance Company in 1987 as President of its San Francisco Division. 5 6 BRENT B. BICKETT Mr. Bickett was appointed Senior Vice President, Corporate Finance of the Company in January 1999. He also serves as the Senior Vice President, Corporate Finance for Santa Barbara Restaurant Group, Inc. From August 1990 until January 1999, Mr. Bickett was a member of the Investment Banking Division of Bear, Stearns & Co., Inc., serving since 1997 as a Managing Director of the Firm's real estate, gaming, lodging and leisure group. WILLIAM MASSEY Mr. Massey has been Executive Vice President of the company since March 20, 2000. He has held various positions at the Trust and Underwriters Subsidiary level since April 12, 1989. CHRISTOPHER ABBINANTE Mr. Abbinante has been Executive Vice President of the Company since March 20, 2000. He was the Senior Vice President of the Company since March 20, 2000. He was the Senior Vice President and Manager of the Eastern Division of Chicago Title from April 25, 1989 to March 20, 2000, and has held various executive positions at Chicago=s Trust and Underwriter Subsidiaries since July 1, 1991. EDWARD DEWEY Mr. Dewey is Senior Vice President of the Company and has been since March 20, 2000. He has served in various capacities and Fidelity National Title Insurance Company including Banking Administration and Executive Officer to the Chairman of the Board from May 1993 to March 20, 2000. M'LISS JONES KANE Ms. Kane has been Senior Vice President, Corporate Counsel and Corporate Secretary since March 17, 1999. From September 15, 1997 to March 17, 1999 she was Senior Vice President, General Counsel and Corporate Secretary of the Company. She joined the Company in March, 1995 as a Senior Vice President and Corporate Counsel of the Company and became Corporate Secretary in April 1995 serving in these capacities until September 15, 1997. Prior to that she was with the ICN Pharmaceuticals, Inc. group of companies from March of 1990 as Vice President, General Counsel and Secretary of ICN Biomedicals, Inc. and subsequently became Vice President, General Counsel and Secretary of SPI Pharmaceuticals, Inc. GARY R. NELSON Mr. Nelson has been a Senior Vice President of the Company since March 20, 2000. He was a Vice President of the Company from September 26, 1994 to March 20, 2000. From August 1993 to September 1994 he was Chief Financial Officer of World Title Company. From May 1991 to July 1993 Mr. Nelson was Senior Vice President of Mergers and Acquisitions of the Company. From January 1988 to May 1991 he was a Vice President, Chief Financial Officer and Treasurer of the Company. Mr. Nelson is a certified public accountant. HON CHAN Mr. Chan has been Senior Vice President, Regulatory Counsel of the Company since April 1, 2000. He has been a staff attorney at the California Department of Insurance for the past 15 years. He was Senior Staff Counsel in the Corporatate affairs Bureau from January 1992 to January 1999 when he became Senior Staff Counsel in the Conservation and Liquidation Bureau of the Legal Division. H. LEE KOLODNY Mr. Kolodny has been Senior Vice President, Corporate Counsel since February 2000. From October 1994 to February 2000, Mr. Kolodny was an associate with Stradling, Yocca, Carlson & Rauth. 6 7 PATRICK FARENGA Mr. Farenga has been Vice President, Treasurer of the Company since April 26, 2000. He has held various positions at Chicago Title from July 1996 to April 25, 2000, including Manager, Treasury Analysis, and Assistant Vice President and business Unit Controller, Real Estate Services. Mr. Farenga is a Certified Public Accountant. COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Rules adopted by the Securities and Exchange Commission ("SEC") under Section 16(a) of the Exchange Act require the Company's officers and directors, and persons who own more than 10% of the issued and outstanding shares of the Company's common stock, to file reports of their ownership, and changes in ownership, of such securities with the SEC on SEC Forms 3, 4 or 5, as appropriate. Officers, directors and greater-than-ten-percent stockholders are required by the SEC's regulations to furnish the Company with copies of all forms they file pursuant to Section 16(a). Based solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to the Company during its most recent fiscal year end, and any written representations provided to it, the Company is advised that all filings were timely and correctly made. ITEM 11. EXECUTIVE COMPENSATION The following Summary Compensation Table shows compensation paid by the Company for services rendered during fiscal years 1999, 1998 and 1997 for the Company's Chief Executive Officer and the four most highly compensated current executive officers whose salary and bonus exceeded $100,000 in 1999. SUMMARY COMPENSATION TABLE ANNUAL COMPENSATION
LONG TERM OTHER COMPENSATION ANNUAL AWARDS- ALL OTHER NAME AND PRINCIPAL BONUS COMPENSATION OPTIONS($) COMPENSATION POSITION YEAR SALARY($) ($)(1) (2) (1)(3)(4) ($)(5) - ------------------ ---- --------- ------ ------------ ------------- ------------ William P. Foley, II 1999 $600,000 $ 392,940 $187,139 $ 98,235 $46,870 Chairman of the Board 1998 600,000 1,954,281 119,827 195,376 13,682 and Chief Executive Officer 1997 600,000 1,380,754 88,215 187,000 35,986 Patrick F. Stone, 1999 390,629 187,470 -- 19,647 24,375 President and Chief Operating 1998 325,000 586,284 -- 53,113 -- Officer 1997 318,750 408,226 -- 40,004 22,500 Raymond R. Quirk 1999 268,750 197,176 6,000 49,294 10,000 Executive Vice President 1998 -- -- -- -- -- 1997 -- -- -- -- -- Ronald R. Maudsley, 1999 268,750 193,176 6,000 177,458 15,000 Executive Vice President 1998 212,500 286,142 6,000 263,828 13,875 1997 190,000 193,675 6,000 193,675 -- Ernest D. Smith, 1999 268,750 192,176 6,000 118,306 15,000 Executive Vice President 1998 212,500 293,142 6,000 116,571 11,250 1997 212,500 195,675 6,000 119,675 13,875
(1) Consists of cash bonuses in the years paid or deferred to reduce the exercise price of stock options granted to the above-noted key employees to less than fair market value of the common stock at the date of grant, pursuant to the Company's 1991 Stock Option Plan. Bonuses were awarded during the year following the fiscal year to which the bonuses relate, based on an evaluation by the Compensation Committee of the Board of Directors. The amount of deferred bonuses included in this column for 1999, 1998 and 7 8 1997, the most recent three years for which the options were granted, are as follows: (i) Mr. Foley: $98,235 - 1999 bonus; $195,428 - 1998 bonus and $138,075 - 1997 bonus; (ii) Mr. Stone: $19,647 - 1999 bonus; $58,628 - 1998 bonus and $41,423 - 1997 bonus; (iii) Mr. Quirk: $19,647 - 1999 bonus; no bonus deferred 1998 and $48,919 - 1997; (iv) Mr. Maudsley: $177,458 - 1999 bonus; $263,828 - 1998 bonus; and $193,675 - 1997 bonus; (v) Mr. Smith: $118,306 - 1999 bonus; $116,571 - 1998 bonus and $195,675 - 1997 bonus. (2) Certain incidental perquisites or other personal benefits for executive officers of the Company (not otherwise disclosed in this Proxy Statement) may result from expenses incurred by the Company or its subsidiaries in the interest of attracting and retaining qualified personnel. Except for Mr. Foley, the incremental cost to the Company and its subsidiaries of providing such incidental perquisites or other personal benefits for executive officers named in the Summary Compensation Table, did not exceed the lesser of $50,000 or 10% of the total annual salary and bonus reported in fiscal 1998 for the named executive officer. Other Annual Compensation for Mr. Foley included the cost of (i) a Company provided automobile -- $9,000 in 1999; $9,000 in 1998 and $9,000 in 1997 and (ii) tax and financial planning advice provided by third parties to Mr. Foley and Folco Development Corporation and personal use of Company assets by Mr. Foley and Folco Development Corporation -- $ 87,139 in 1999, $110,826.95 in 1998 and $79,215 in 1997. (3) The number of options granted per year in this column for 1999, 1998 and 1997, the three-year period in which the options were granted, are as follows: (i) Mr. Foley: 1999 grant - 150,000 options granted under the 1998 Stock Option Plan and 39,086 options granted under the 1991 Stock Option Plan; 1998 grant - 165,000 options granted under the 1993 stock option plan and 30,376 options granted under the 1991 stock option plan; and 1997 grant - 165,000 options granted under the 1987 Stock Option Plan and 22,000 options granted under the 1991 Stock Option Plan; (ii) Mr. Stone: 1999 grant - 60,000 options granted under the 1998 Stock Option Plan and 11,726 options granted under the 1991 Stock Option Plan; 1998 grant - 44,000 options granted under the 1993 Stock Option Plan and 9,113 options granted under the 1991 Stock Option Plan; and 1997 grant - 33,000 options granted under the 1987 Stock Option Plan and 7,004 options granted under the 1991 Stock Option Plan; (iii) Mr. Quirk: 1999 grant - 10,000 options granted under the 1998 Stock Option Plan; 1998 grant - 110,000 options granted under the 1993 Stock Option Plan and 10,762 options granted under the 1991 Stock Option Plan; and 1997 grant - 18,150 options granted under the 1987 Stock Option Plan; (iv) Mr. Maudsley: 1999 grant - 10,000 options granted under the 1998 Stock Option Plan and 52, 766 options granted under the 1991 Stock Option Plan; 1998 grant - 110,000 options granted under the 1993 Stock Option Plan and 43,608 options granted under the 1991 Stock Option Plan; and 1997 grant - 18,150 options granted under the 1987 Stock Option Plan and 15,125 options granted under the 1991 Stock Option Plan; (v) Mr. Smith: 1999 grant - 10,000 options granted under the 1998 Stock Option Plan and 23,314 options granted under the 1991 Stock Option Plan; 1998 grant - 110,000 options granted under the 1993 Stock Option Plan and 43,048 options granted under the 1991 Stock Option Plan; and 1997 grant - 18,150 options granted under the 1991 Stock Option Plan. (4) The Company does not have any long-term incentive plans or compensation plans pursuant to which stock appreciation rights or restricted stock is awarded to officers or directors. The number of options granted in 2000 for fiscal year 1999 to the named executives, which are not included in the table, are as follows: under the 1991 Stock Option Plan (i) Mr. Foley -- 19,647 shares; (ii) Mr. Stone -- 3,929 shares; (iii) Mr. Quirk B 9,859 shares; (iv) Mr. Maudsley B 35,492 shares; and (v) Mr. Smith B 23,661 shares; and under the 1998 Stock Option Plan (i) Mr. Foley -- 150,000 shares; (ii) Mr. Stone -- 75,000 shares; (iii) Mr. Quirk -- 30,000 shares; (iv) Mr. Maudsley -- 30,000 shares, and (v) Mr. Smith -- 30,000 shares. (5) Includes Company cash contributions to the Employee Stock Purchase Plan on behalf of the individuals named in the Summary Compensation Table. All Other Compensation for Mr. Foley also includes imputed income of $1,687 for 1999; $1,466 for 1998; and $1,157 for 1997 respectively, from a joint life split dollar insurance policy. OFFICER AND DIRECTOR LOANS The Board of Directors adopted an Employee and a Director Stock Purchase Loan Program. The Employee Plan authorized an aggregate amount of $7,900,000 be authorized to make loans to key employees to purchase shares of the Company's Common Stock through open market purchases or in privately negotiated transactions. The Director Plan authorized an aggregate amount of $750,000 to make loans to outside directors to purchase shares of the Company=s Common Stock through open market purchases or in privately negotiated transactions. The loans are at an interest rate of 5% for a term of five years immediately callable in the event of termination of employment or resignations a director, as the case may be. At December 31, 1999, the following named executives who participated in the Employee Plan had the following outstanding balances: William P. Foley, II -$3,000,000; Alan L. Stinson - $200,000; Frank P. Willey - $350,000; Patrick F. Stone- $500,000; Andrew F. Puzder - $250,000; Randall Quirk - $ 300,889; Peter Sadowski - $50,000; Ronald R. Maudsley - $ 350,000; and Ernest D. Smith - $350,000. At December 31, 1999, the following directors who participated in the Director Plan had the following outstanding balances: William A. Imparato - $ 150,000; Donald M. Koll - $ 150,000; Ronald Lane - $ 150,000; General William Lyon - $ 150,000; and J. Thomas Talbot - $ 150,000. 8 9 OPTION GRANTS The following table provides information as to options to purchase common stock granted to the named individuals during 1999 pursuant to the Company's 1998 and 1991 Stock Option Plans. The Company does not currently grant stock appreciation rights to officers or directors. STOCK OPTION GRANTS IN LAST FISCAL YEAR
PERCENT POTENTIAL OF TOTAL REALIZABLE VALUE NUMBER OF OPTIONS AT ASSUMED SECURITIES GRANTED TO MARKET ANNUAL RATES OF UNDERLYING EMPLOYEES PRICE AT EXERCISE OR STOCK PRICE OPTIONS IN FISCAL DATE OF BASE PRICE(1) EXPIRATION APPRECIATION FOR NAME GRANTED(#) YEAR GRANT ($/SH) DATE OPTION TERM ---- ---------- ---------- -------- ------------ ---------- ----------------------- 5%($) 10%($) ----- ------ 1998 STOCK OPTION PLAN William P. Foley, II 150,000 8.6% $14.625 $14.625 03/22/09 $1,379,637 $3,496,272 Patrick F. Stone 60,000 3.45% 14.625 14.625 03/22/09 551,855 1,398,509 Raymond R. Quirk 10,000 0.58% 14.625 14.625 03/22/09 91,975 223,084 Ronald R. Maudsley 10,000 (2) 14.625 14.625 03/22/09 91,975 223,084 Ernest D. Smith 10,000 (2) 14.625 14.625 03/22/09 91,975 223,084 1991 STOCK OPTION PLAN William P. Foley, II 39,086 2.3% $14.625 $9.275 03/22/11 $615,163 $1,268,412 Patrick F. Stone 11,726 (2) 14.625 9.275 03/22/11 184,552 380,530 Ronald R. Maudsley 52,766 3.04% 14.625 9.275 03/22/11 Ernest D. Smith 23,314 1.34% 14.625 9.275 03/22/11 366,932 756,582 TOTAL -- 1998 AND 1991 STOCK OPTION PLANS William P. Foley, II 189,086 10.9% $14.625 $9.275- 03/22/09- $1,994,800 $4,764,684 14.625 03/22/11 4.1% 736,407 1,779,039 Patrick F. Stone 71,726 14.625 9.275- 03/22/09- 14.625 03/22/11 91,975 223,084 Raymond R. Quirk 10,000 (2) 14.625 14.625 03/22/11 548,170 1,460,055 Ronald R. Maudsley 62,766 3.63% 14.625 9.275- 03/22/99- 640,146 1,663,140 14.625 03/22/11 Ernest D. Smith 33,314 1.9% 14.625 9.275- 03/22/99- 458,908 989,666 14.625 03/22/11
(2) Represents less than 1% (1) The options granted in 1999 under the 1991 Stock Option Plan were granted at an exercise price of $14.625 to key employees of the Company who applied deferred bonuses expensed in 1998 (see (1) of Summary Compensation Table) to the exercise price, thereby reducing such price to $9.275 per share if exercised within the first year of grant. The exercise price of these options decreases approximately $0.35 per year through March 22, 2004, and $0.22 per share from March 23, 2005, through March 23, 2010, at which time the exercise price will be $6.525. The options granted in 1999 under the 1998 Stock Option Plan were granted at an exercise price of $14.625. 9 10 OPTION EXERCISES AND FISCAL YEAR-END VALUES The following table summarizes information regarding exercises of stock options by the named individuals during 1999 and unexercised options held by them as of December 31, 1999. The Company did not reprice any existing options during the last completed fiscal year. AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED UNEXERCISED OPTIONS AT IN-THE-MONEY FY-END OPTIONS AT FY-END SHARES ACQUIRED VALUE REALIZED (#) EXERCISABLE ($) EXERCISABLE/ NAME EXERCISE (#) ($) UNEXERCISABLE(1)(2) UNEXERCISABLE(1)(2) ---- --------------- -------------- ------------------- ------------------- William P. Foley, II 0 $ -- 1,475,145/150,000 $7,420,619/0 Patrick F. Stone 34,188 119,658 159,760/25,812 692,799/0 Raymond R. Quirk 0 -- 116,082/92,500 548,056/0 Ronald R. Maudsley 0 -- 80,266/82,500 13,191/0 Ernest D. Smith 0 -- 93,832/92,500 118,901/0
- ---------- (1) Number of exercisable shares and corresponding values relate to options granted under the 1998, 1993, 1991 and 1987 Stock Option Plans. The exercise price varies based upon the exercise price at the time of grant and the amount of deferred bonus applied by the officer to reduce the exercise price. See Summary Compensation Table above. The value of unexercised options at year-end is calculated as the difference between the market value of the underlying security, $14.375 per share, and the exercise price of the option at year-end, less the bonus deferral. The exercise prices of the options at year-end were as follows: (i) Mr. Foley - options to purchase 150,000 shares at $14.625 per share under the 1998 Plan; 165,000 shares at $24.2618 per share under the 1993 plan; options to purchase 39,086 shares at $9.275 per share, options to purchase 8,784 shares at $2.6296 per share, options to purchase 30,746 shares at $5.1226 per share, options to purchase 46,119 shares at $6.4203 per share, options to purchase 62,888 shares at $2.5073 per share, options to purchase 30,376 shares at $19.3981 per share and options to purchase 24,200 shares at $5.7231 per share under the 1991 plan; and options to purchase 219,615 shares at $6.9155 per share, options to purchase 219,615 shares at $9.4773 per share, and 10 11 options to purchase 219,615 shares at $10.4164 per share, options to purchase 199,650 shares at $9.579 per share and options to purchase 181,500 shares at $10.4336 per share under the 1987 plan; (ii) Mr. Stone - options to purchase 60,000 shares at $14.625; options to purchase 44,000 shares at $24.2618 per share under the 1993 Stock Option Plan; options to purchase 11,726 shares at $9.275 per share, 3,929 shares at $6.75 per share, and 6,432 shares at $5.1091 per share, options to purchase 2,928 shares at $2.6296 per share, options to purchase 41,557 shares at $6.4203 per share, options to purchase 9,113 shares at $19.3981 per share, options to purchase 7,704 shares at $5.4339 per share under the 1991 Stock Option Plan; and options to purchase 36,300 shares at $10.4336 per share under the 1987 Stock Option Plan; (iii) Mr. Quirk - options to purchase 10,000 shares at $14.625 per share under the 1998 Stock Option Plan, 110,000 shares at $24.2618 per share and options to purchase 21,961 shares at $6.9155 per share under the 1993 Stock Option Plan; options to purchase 9,427 shares at $2.5073 per share, options to purchase 7,320 shares at $5.1226 per share, options to purchase 10,980 shares at $6.4203 per share and options to purchase 10,762 shares at $19.3981 per share under the 1991 Stock Option Plan; and options to purchase 9,982 shares at $9.5791 per share and options to purchase 18,150 shares at $10.4336 per share under the 1987 Stock Option Plan; (iv) Mr. Maudsley - options to purchase 10,000 shares at $14.625 per share under the 1998 Stock Option Plan; options to purchase 110,000 options at $24.2618 under the 1993 Stock Option Plan; options to purchase 42,608 options at $19.3981 and options to purchase 52,766 shares at $9.275 per share under the 1991 Stock option plan; and (v) Mr. Smith - options to purchase 10,000 options at $14.625 under the 1998 Stock Option Plan; options to purchase 110,000 options at $24.2618 under the 1993 Stock Option Plan; options to purchase 43,048 options at $19.3981, options to purchase 23,314 shares at $9.275 per share under the 1991 Stock Option Plan. (2) Number of unexercisable shares and corresponding value relate to options granted under the Company's 1998, 1993 and 1991 Stock Option Plans. The value of these unexercisable options represents the difference between the year-end market value of the underlying security of $14.375 per share and the option grant price. EMPLOYMENT AGREEMENTS The Company entered into a five-year employment agreement (the "Agreement") with its Chairman and Chief Executive Officer, Mr. Foley, effective March 20, 2000, replacing an agreement due to expire March 31, 2001. His minimum annual base salary is $950,000. The Agreement includes other compensation and executive fringe benefits, including an annual merit bonus calculated based on the Company's return on equity before extraordinary items. There is a change in control provision enabling Mr. Foley to terminate this agreement due to a change in control during the period commencing 60 days and expiring 365 days after such change in control. In the event of termination of the agreement for Good Reason (as defined in the agreement as a change in control) or if Mr. Foley's employment is terminated following a change of control due to a breach of this Agreement then he shall receive (i) his salary through the date of termination, (ii) severance pay in an amount equal to his annual salary in effect as of the date of termination plus the total bonus paid or payable to him for the most recent calendar year multiplied by the greater number of years remaining in the term of employment, including partial years, or 3 years, (iii) immediate vesting of all options not vested at the date of termination, (iv) maintenance of all benefit plans and programs for Mr. Foley for the greater of 3 years or the number of years (including partial years) remaining in the Agreement. The Company obtained a covenant from Mr. Foley that he will not compete with the Company or disclose its trade secrets both during employment or in the event the agreement ends or Mr. Foley's employment is terminated. The Agreement allows the Company to terminate Mr. Foley upon written notice without cause with terms specified in the Agreement. Upon Mr. Foley's death, his estate will receive a payment in the amount of the minimum annual base salary for the remainder of the Agreement. Upon incapacity or disability for a continuous period of nine months, the Company may terminate the employment contract with Mr. Foley upon payment of an amount equal to his minimum annual base salary, without offset for the remainder of the Agreement. The Company entered into a three year employment agreement with Patrick F. Stone effective March 20, 2000. The Agreement provides for a minimum base salary of $750,000 which may be increased at the discretion of the Compensation Committee of the Board of Directors. Other compensation and executive fringe benefits include an annual bonus calculated based on the Company's return on equity before extraordinary items. There is a change in control provision enabling Mr. Stone to terminate this Agreement due to a change in control during the period commencing 60 days and expiring 365 days after such change in control. In the event of termination of the agreement for Good Reason (defined in the agreement as a change in control) or if Mr. Stone's employment is terminated following a change in control due to a breach of this Agreement then he shall receive (i) his minimum annual base salary through the date of termination, (ii) severance pay in an amount equal to his annual salary in effect as of the date of termination plus the total bonus paid or payable to him for the most recent calendar year multiplied by the greater of the number of years (including partial years) remaining in the agreement or the number 2, (iii) maintenance of all benefit plans and programs for Mr. Stone for the number of 2 years or the number of years (including partial years) remaining in the Agreement. The Company entered into a three-year employment agreement with Frank P. Willey effective March 20, 2000. The agreement provided for a minimum base salary of $300,000 which may be increased at the discretion of the Compensation Committee of the Board 11 12 of Directors. Other compensation and executive fringe benefits include an annual bonus calculated based on the Company's return on equity before extraordinary items. There is a change in control provision enabling Mr. Willey to terminate this Agreement due to a change in control during the period commencing 60 days and expiring 365 days after such change in control. In the event of termination of the agreement for Good Reason (defined in the Agreement as a change in control) or if Mr. Willey's employment is terminated following a change in control due to a breach of this Agreement then he shall receive (i) his minimum annual base salary through the date of termination, (ii) severance pay in an amount equal to his annual salary in effect as of the date of termination plus the total bonus paid or payable to him for the most recent calendar year multiplied by the greater of the number of years (including partial years) remaining in the agreement or the number 2, (iii) maintenance of all benefit plans and programs for Mr. Willey for the number of 2 years or the number of years (including partial years) remaining in the Agreement. The Company entered into a three-year employment agreement with Andrew F. Puzder effective March 20, 2000. The agreement provided for a minimum base salary of $425,000 which may be increased at the discretion of the Compensation Committee of the Board of Directors. Other compensation and executive fringe benefits include an annual bonus calculated based on the Company's return on equity before extraordinary items. There is a change in control provision enabling Mr. Puzder to terminate this Agreement due to a change in control during the period commencing 60 days and expiring 365 days after such change in control. In the event of termination of the agreement for Good Reason (defined in the Agreement as a change in control) or if Mr. Puzder=s employment is terminated following a change in control due to a breach of this Agreement then he shall receive (i) his minimum annual base salary through the date of termination, (ii) severance pay in an amount equal to his annual salary in effect as of the date of termination plus the total bonus paid or payable to him for the most recent calendar year multiplied by the greater of the number of years (including partial years) remaining in the agreement or the number 2, (iii) maintenance of all benefit plans and programs for Mr. Puzder for the number of 2 years or the number of years (including partial years) remaining in the Agreement. The Company entered into a three-year employment agreement with Raymond R Quirk effective March 20, 2000. The agreement provided for a minimum base salary of $400,000 which may be increased at the discretion of the Compensation Committee of the Board of Directors. Other compensation and executive fringe benefits include an annual bonus calculated based on the Company's return on equity before extraordinary items. There is a change in control provision enabling Mr. Quirk to terminate this Agreement due to a change in control during the period commencing 60 days and expiring 365 days after such change in control. In the event of termination of the agreement for Good Reason (defined in the Agreement as a change in control) or if Mr. Quirk's employment is terminated following a change in control due to a breach of this Agreement then he shall receive (i) his minimum annual base salary through the date of termination, (ii) severance pay in an amount equal to his annual salary in effect as of the date of termination plus the total bonus paid or payable to him for the most recent calendar year multiplied by the greater of the number of years (including partial years) remaining in the agreement or the number 2, (iii) maintenance of all benefit plans and programs for Mr. Quirk for the number of 2 years or the number of years (including partial years) remaining in the Agreement. The Company entered into a three-year employment agreement with Ernest D. Smith effective March 20, 2000. The agreement provided for a minimum base salary of $400,000 which may be increased at the discretion of the Compensation Committee of the Board of Directors. Other compensation and executive fringe benefits include an annual bonus calculated based on the Company's return on equity before extraordinary items. There is a change in control provision enabling Mr. Smith to terminate this Agreement due to a change in control during the period commencing 60 days and expiring 365 days after such change in control. In the event of termination of the agreement for Good Reason (defined in the Agreement as a change in control) or if Mr. Smith's employment is terminated following a change in control due to a breach of this Agreement then he shall receive (i) his minimum annual base salary through the date of termination, (ii) severance pay in an amount equal to his annual salary in effect as of the date of termination plus the total bonus paid or payable to him for the most recent calendar year multiplied by the greater of the number of years (including partial years) remaining in the agreement or the number 2, (iii) maintenance of all benefit plans and programs for Mr. Smith for the number of 2 years or the number of years (including partial years) remaining in the Agreement. The Company entered into a three-year employment agreement with Alan L. Stinson effective March 20, 2000. The agreement provided for a minimum base salary of $350,000 which may be increased at the discretion of the Compensation Committee of the Board of Directors. Other compensation and executive fringe benefits include an annual bonus calculated based on the Company's return on equity before extraordinary items. There is a change in control provision enabling Mr. Stinson to terminate this Agreement due to a change in control during the period commencing 60 days and expiring 365 days after such change in control. In the event of termination of the agreement for Good Reason (defined in the Agreement as a change in control) or if Mr. Stinson's employment is terminated following a change in control due to a breach of this Agreement then he shall receive (i) his minimum annual base salary through the date of termination, (ii) severance pay in an amount equal to his annual salary in effect as of the date of termination plus the total bonus paid or payable to him for the most recent calendar year multiplied by the greater of the number of years (including partial years) remaining in 12 13 the agreement or the number 2, (iii) maintenance of all benefit plans and programs for Mr. Stinson for the number of 2 years or the number of years (including partial years) remaining in the Agreement. The Company entered into a two-year employment agreement with Peter T. Sadowski effective March 20, 2000. The agreement provided for a minimum base salary of $300,000 which may be increased at the discretion of the Compensation Committee of the Board of Directors. Other compensation and executive fringe benefits include an annual bonus calculated based on the Company's return on equity before extraordinary items. There is a change in control provision enabling Mr. Sadowski to terminate this Agreement due to a change in control during the period commencing 60 days and expiring 365 days after such change in control. In the event of termination of the agreement for Good Reason (defined in the Agreement as a change in control) or if Mr. Sadowski's employment is terminated following a change in control due to a breach of this Agreement then he shall receive (i) his minimum annual base salary through the date of termination, (ii) severance pay in an amount equal to his annual salary in effect as of the date of termination plus the total bonus paid or payable to him for the most recent calendar year multiplied by the greater of the number of years (including partial years) remaining in the agreement or the number 1, (iii) maintenance of all benefit plans and programs for Mr. Sadowski for the number of 1 years or the number of years (including partial years) remaining in the Agreement. The Company entered into a two-year employment agreement with Michael Murphy effective March 20, 2000. The agreement provided for a minimum base salary of $300,000 which may be increased at the discretion of the Compensation Committee of the Board of Directors. Other compensation and executive fringe benefits include an annual bonus calculated based on the Company's return on equity before extraordinary items. There is a change in control provision in the first amendment enabling Mr. Murphy to terminate this Agreement due to a change in control during the period commencing 60 days and expiring 365 days after such change in control. In the event of termination of the agreement for Good Reason (defined in the Agreement as a change in control) or if Mr. Murphy's employment is terminated following a change in control due to a breach of this agreement then he shall receive (i) his minimum annual base salary through the date of termination, (ii) severance pay in an amount equal to his annual salary in effect as of the date of termination plus the total bonus paid or payable to him for the most recent calendar year multiplied by the greater of the number of years (including partial years) remaining in the agreement or the number 1, (iii) maintenance of all benefit plans and programs for Mr. Murphy for the number of 1 years or the number of years (including partial years) remaining in the Agreement. The Company entered into a one-year employment agreement with Ed Dewey effective March 20, 2000. The agreement provided for a minimum base salary of $180,000 which may be increased at the discretion of the Compensation Committee of the Board of Directors. Other compensation and executive fringe benefits include an annual bonus calculated based on the Company's return on equity before extraordinary items. There is a change in control provision enabling Mr .Dewey to terminate this Agreement due to a change in control during the period commencing 60 days and expiring 365 days after such change in control. In the event of termination of the agreement for Good Reason (defined in the Agreement as a change in control) or if Mr. Dewey's employment is terminated following a change in control due to a breach of this Agreement then he shall receive (i) $150,000 on or before the fifth day following termination. DIRECTOR COMPENSATION Directors who are not employees of the Company receive an annual retainer of $30,000 and $2,500 per Board of Directors meeting attended, plus reimbursement of reasonable expenses. There is an annual Committee Fee of $5,000 and $1,500 for Committee Meetings attended. The Committee Chairman receives an annual fee of $7,500. Directors who are employees of the Company do not receive any compensation for acting as directors, except for reimbursement of reasonable expenses, if any, for Board meeting attendance. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During 1999, Messrs. Thompson, Talbot and Lane served as members of the Compensation Committee. The Compensation Committee is currently composed of four independent directors. No member of the Compensation Committee is a former or current officer or employee of the Company or any of its subsidiaries, and there are no interlocking directorships. REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION The following report of the Compensation Committee to the Board of Directors shall not be deemed to be incorporated by reference into any previous filing by the Company under either the Securities Act of 1933 ("Securities Act") or the Securities Exchange Act of 1934 ("Exchange Act") that incorporates future Securities Act or Exchange Act filings in whole or in part by reference. 13 14 To the Board of Directors: GENERAL The Compensation Committee of the Board of Directors is responsible for establishing and administering the policies that govern executive compensation and benefit practices. The Compensation Committee evaluates the performance of the executive officers and determines their compensation levels, in terms of salary, annual bonus and related benefits, all subject to Board approval. The Compensation Committee has access to independent compensation data for use in assessing levels of compensation for officers of the Company. COMPENSATION PHILOSOPHY The Company's executive compensation programs are designed to (i) provide levels of compensation that integrate pay and incentive plans with the Company's strategic goals, so as to align the interests of executive management with the long-term interests of the stockholders; (ii) motivate Company executives to achieve the strategic business goals of the Company and to recognize their individual contributions; and (iii) provide compensation opportunities which are competitive to those offered by other national title insurance companies and other middle-market corporations similar in size and performance. Although the exact identity of the corporations surveyed varies, these generally include title companies and other corporations equal to or larger than the Company. Most of the title companies surveyed are included in the Peer Group Index utilized in the "Performance Graph" set forth below. Therefore, the Compensation Committee believes that the components of executive compensation should include base salary, annual cash bonus, stock option grants and other benefits and should be linked to individual and Company performance. With regard to the Company's performance, the measures used for determining appropriate levels of compensation for executive officers include the Company's national market share, net margin, quality of service, meeting strategic goals within the current economic climate and industry environment, scope of responsibilities, expansion by acquisition or otherwise, profit retention and profitability, all of which combine to enhance stockholder value. BASE SALARY The Committee considers Company management proposals concerning salary for key employees including Mr. Foley, Mr. Stone, Mr. Willey, Mr. Puzder, Mr. Stinson, Mr. Sadowski, Mr. Maudsley, Mr. Smith, and Mr. Dewey, among others. The Compensation Committee then makes recommendations to the entire Board of Directors for their approval. In determining base salaries for executives for 1999, the Compensation Committee considered the Company's earnings, outside surveys of salary levels of other title insurance companies and other similar corporations, individual performance and achievement, areas of responsibility, position tenure and internal comparability. ANNUAL CASH BONUSES Executive officers of the Company are eligible for annual bonuses which may be paid in the form of cash or as deferred compensation. Given the Company's performance in 1999, the Compensation Committee approved 1999 bonuses for the executives which were paid in 2000. STOCK OPTION GRANTS As indicated above, an important element of the Company's compensation philosophy is the desire to align the interests of the executive officers with the long-term interests of the Company's stockholders. In order to meet this desire, the Board of Directors adopted a performance-based stock option plan in 1991 for executive officers, key employees and branch managers of the Company that allows participants to defer a portion of their bonus income in order to reduce their option exercise price. Additionally, the Company's Board of Directors and stockholders had previously approved the adoption of the Company's 1987 Stock Option Plan, pursuant to which the Company may grant stock options to certain key employees and non-employee directors or officers, and in 1994 the Board of Directors and stockholders approved the 1993 Stock Plan pursuant to which the Company could grant stock options to certain key employees and nonemployee directors and officers. In 1998 the Board of Directors and stockholders approved the 1998 Stock Option Plan to replace the 1987 Stock Option Plan, which expired December 1997. The purpose of all the stock option plans is to attract, retain and award executive officers and directors and to furnish incentives to these persons to improve operations, increase profits and positively impact the Company's long-term performance. Consistent with these objectives, the Compensation Committee granted options in 2000 for their performance in 1999 to executive officers as follows: (i) under the 1998 Stock Option Plan as follows: Mr. Foley, options to purchase 150,000 shares; Mr. Stone, options to purchase 75,000 shares; Mr. Quirk, options to purchase 30,000 shares; Mr. Maudsley , options to purchase 30,000 shares; and Mr. Smith, options to purchase 30,000 shares. Certain officers have elected to defer a portion of their bonus in stock options 14 15 under the 1991 Stock Option Plan as follows: Mr. Foley, options to purchase 19,647 shares; Mr. Stone, options to purchase 3,929 shares; Mr. Quirk, options to purchase 9,859 shares; Mr. Maudsley, options to purchase 35,492 shares; and Mr. Smith options to purchase 23,661 shares. Corporate Deduction for Compensation. Section 162(m) of the Internal Revenue Code generally limits to $1.0 million the corporate deduction for compensation paid to certain executive officers, unless certain requirements are met. The Company's policy with respect to the deductibility limit of Section 162(m) generally is to preserve the federal income tax deductibility of compensation paid to executive officers. However, while the tax impact of any compensation arrangement is an important factor to be considered, the impact is evaluated in light of the Company's overall compensation philosophy. Accordingly, the Company has and will continue to authorize the payment of non-deductible compensation if it deems that it is consistent with its compensation philosophy and in the best interests of the Company and its stockholders. April 11, 2000 Compensation Committee Daniel D. (Ron) Lane J. Thomas Talbot Cary H. Thompson 15 16 PERFORMANCE GRAPH Set forth below is a graph comparing cumulative total stockholder return on the Company's common stock against the cumulative total return on the S & P 500 Index and against the cumulative total return of a peer group index comprised of certain companies for the industry in which the Company competes (SIC code 6361 -- Title Insurance) for the five-year period ending December 31, 1999. This peer group consists of the following companies: Capital Guarantee Group, Chicago Title Corporation, First American Financial Corporation, LandAmerica Financial Group, Inc. and Stewart Information Services Corp. The peer group comparison has been weighted based on the Company's stock market capitalization. The graph assumes an initial investment of $100.00 on January 1, 1995, with dividends reinvested over the periods indicated. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN OF COMPANY, INDUSTRY INDEX AND BROAD MARKET DEC 94 DEC 95 DEC 96 DEC 97 DEC 98 DEC 99 ------ ------ ------ ------ ------ ------ Fidelity National Financial, 100.00 175.13 175.25 403.80 438.96 211.46 Inc. S&P 500 Index 100.00 137.58 169.17 225.60 290.08 351.12 Peer Group 100.00 160.64 206.97 352.86 683.98 389.60 ASSUMES $100 INVESTED ON JANUARY 1, 1995 ASSUMES DIVIDEND REINVESTED FISCAL YEAR ENDING DECEMBER 31, 1999 16 17 BOARD MEETINGS AND COMMITTEES The Board of Directors held a total of five formal meetings during the year ended December 31, 1999. No director attended fewer than 100% of the aggregate of all meetings of the Board of Directors or any committee in 1999. The Board presently has an Audit Committee, a Compensation Committee and an Executive Committee, but does not have a Nominating Committee. The Audit Committee, which consisted of Messrs. Lane, Talbot, and Thompson in 1999, met two times during 1999. The Audit Committee meets independently with internal audit staff, representatives of the Company's independent auditors and representatives of senior management. The Audit Committee reviews the general scope of the Company's annual audit, the fee charged by the independent auditors and other matters relating to internal control systems. In addition, the Audit Committee will be responsible for reviewing and monitoring the performance of non-audit services by the Company's auditors. The Committee will be responsible for recommending the engagement or discharge of the Company's independent auditors. The Compensation Committee currently consists of Messrs. Lane, Talbot and Thompson. The Compensation Committee, either alone or in conjunction with other Board committees, reviews and reports to the Board the salary, fee and benefit programs designed for senior management, officers and directors with a view to ensure that the Company is attracting and retaining highly-qualified individuals through competitive salary, fee and benefit programs and encouraging continued extraordinary effort through incentive rewards. The Compensation Committee did not meet during 1999. The Company also has an Executive Committee consisting of Messrs. Foley, Willey and Talbot. The Executive Committee may invoke all of the power and authority of the Board of Directors in the management of the business and the affairs of the Company, except those powers which, by law, cannot be delegated by the Board of Directors. The Executive Committee did not meet during 1999. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of April 12, 2000, the following table sets forth the beneficial ownership of the Common Stock of the Company by each director who owns shares, by the director nominees, all executive officers named in the Summary Compensation Table, all directors and executive officers as a group and by all persons known by the Company to be the beneficial owners of more than 5% of the Company's Common Stock. The information as to beneficial stock ownership is based on data furnished by the persons concerning whom such information is given. NAME AND ADDRESS NUMBER OF SHARES PERCENT OF TOTAL - ---------------- ---------------- ---------------- William P. Foley, II 3916 State Street, Suite 300 Santa Barbara, CA 93105 5,074,330(1)(2) 7.4% Frank P. Willey 3916 State Street, Suite 300 Santa Barbara, Ca 93105 1,025,996(2) 1.5% Leucadia National Corporation 315 Park Avenue South New York, NY 10010 6,522,124(3) 9.7% John Joseph Burns, Jr. 375 Park Avenue, Suite 3201 New York, NY 10152 54,338(2) * John F. Farrell, Jr. 445 Park Avenue, 10th Floor New York, NY 10022 3,740(2) * Philip G. Heasley 601 Second Avenue South Minneapolis, MN 55391 7,480(2) * 17 18 William A. Imparato 2901 N. Central Avenue, Suite 1610 Phoenix, AZ 85012 58,708(2) * Donald M. Koll 4343 Von Karman Ave. Newport Beach, CA 92660 52,637(2) * Daniel D. (Ron) Lane 14 Corporate Plaza, Suite 150 Newport Beach, CA 92660 140,482(2) * General William Lyon 4490 Von Karman Avenue Newport Beach, CA 92660 20,067(2) * J. Thomas Talbot 24 Corporate Plaza, Suite 100 Newport Beach, CA 92660 72,057(2) * Cary H. Thompson 3731 Wilshire Blvd., 10th Flr. Los Angeles, CA 90010 25,168(2) * Patrick F. Stone 17911 Von Karman Ave., #300 Irvine, CA 92614 211,875(2) * Raymond R. Quirk 3938 State Street, 2nd Floor Santa Barbara, CA 93015 236,568(2) * Ronald R. Maudsley 3938 State Street, 2nd Floor Santa Barbara, CA 93105 149,647(2) * Ernest D. Smith 3938 State Street, 2nd Floor Santa Barbara, CA 93105 151,012(2) * Richard Paul Toft 171 North Clark Street 40,832(2) * Chicago, IL 60601 All directors and officers (25 7,586,729(4) 10.9% persons) - ------------ * Represents less than 1%. (1) Included in this amount are 1,704,949 shares held by Folco Development Corporation, of which Mr. Foley and his spouse are the sole stockholders and 224,646 shares held by Foley Family Charitable Foundation; Mr. Foley is a "controlling person" of the Company. (2) Includes currently exercisable stock options for Mr. Foley of 150,000 shares under the 1998 Stock Option Plan, 165,000 shares under the 1993 Stock Option Plan, 289,797 shares under the 1991 Stock Option Plan and 1,039,995 shares under the 1987 Stock Option Plan; 18 19 currently exercisable stock options for Mr. Willey of 30,000 shares under the 1998 Stock Option Plan, 33,000 shares under the 1993 Stock Option Plan, 64,828 shares under the 1991 Stock Option Plan and 222,428 shares under the 1987 Stock Option Plan; includes 1,623 converted Chicago options for Mr. Burns at $13.1771 per share, 3,740 converted Chicago options at $12.59 and 3,740 converted Chicago options at $10.54; includes 3,740 converted Chicago options at $10.54 for Mr. Farrell; includes for Mr. Heasley 3,740 converted Chicago options at $12.59 and 3,740 converted Chicago options at $10.54 for Mr. Heasley; includes currently exercisable stock options for Mr. Imparato of 5,000 shares under the 1998 Stock Option Plan, 10,980 shares under the 1993 Stock Option Plan and 30,250 shares under the 1987 Stock Option Plan; includes currently exercisable stock options for Mr. Koll of 5,000 shares under the 1998 Stock Option Plan, 7,320 shares under the 1993 Stock Option Plan and 30,250 shares under the 1987 Stock Option Plan; includes currently exercisable stock options for Mr. Lane of 5,000 shares under the 1998 Stock Option Plan, 14,640 shares under the 1993 Stock Option Plan and 30,250 shares under the 1987 Stock Option Plan; includes currently exercisable stock options for General Lyon of 10,500 shares under the 1998 Stock Option Plan; includes currently exercisable stock options for Mr. Talbot for 5,000 shares under the 1998 Stock Option Plan, 14,640 shares under the 1993 Stock Option Plan and 30,250 shares under the 1987 Stock Option Plan; currently exercisable stock options for Mr. Thompson of 5,000 under the 1998 Stock Option Plan, and 20,160 shares under the 1987 Stock Option Plan; includes currently exercisable stock options for Mr. Stone of 44,000 shares under the 1993 Stock Option Plan, 83,389 shares under the 1991 Stock Option Plan and 36,300 shares under the 1987 Stock Option Plan; includes currently exercisable stock options for Mr. Quirk of 76,961shares under the 1993 Stock Option Plan, 48,348 shares under the 1991 Stock Option Plan and 28,132 shares under the 1987 Stock Option Plan; includes currently exercisable stock options for Mr. Maudsley of 10,000 shares under the 1998 Stock Option Plan, 55,000 shares under the 1993 Stock Option Plan, and 88,258 shares under the 1991 Stock Option Plan; includes currently exercisable stock options for Mr. Smith of 10,000 shares under the 1998 Stock Option Plan, 55,000 shares under the 1993 Stock Option Plan, and 89,723 shares under the 1991 Stock Option Plan; includes 3,740 converted chicago options at $12.59 and 3,740 converted Chicago options at $10.54 for Mr. Toft. (3) Based on a Schedule 13 D Amendment No. 2 filed by Leucadia National Corporation. (4) This number includes 2,754,844 currently exercisable stock options for all directors and officers of the Company. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company previously made investments in real property for investment or operating purposes, most of which, as described below, were in partnerships which included one or more officers of the Company. All such transactions were approved by a majority of the non-interested directors of the Company. The Company believes these transactions were for terms and at rates no less favorable to the Company than those which could have been obtained from unrelated parties. Manchester has interests in, or acts as property manager for, certain real estate partnerships in which one or more officers of the Company have an interest. Certain officers of the Company have made contributions to these partnerships in exchange for partnership interests that cannot be valued until the dissolution of each individual partnership. Fidelity National Title Company of California is a tenant in one of the properties owned by the partnerships discussed below. INVESTMENTS IN PARTNERSHIPS Wilmac III Limited Partnership ("Wilmac III") was formed in 1987 to acquire for investment unimproved real property in Maricopa County, Arizona. In December 1987, Manchester acquired a 24% limited partnership interest in Wilmac III, 30% of the limited partnership units. Mr. Willey has a 8.2% combined general and limited partnership interest and Mr. Strunk has a 1.6% limited partnership interest. The partnership agreement requires all the limited partners to make pro rata capital contributions to service the debt on the property. Manchester has invested $696,000 in the partnership. Manchester's interest was assigned to the Company in June 1993. It is not anticipated that additional capital contributions will be required of the Company. 19 20 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. FIDELITY NATIONAL FINANCIAL, INC. By: /s/ WILLIAM P. FOLEY, II --------------------------------------- WILLIAM P. FOLEY, II CHIEF EXECUTIVE OFFICER Date: April 28, 2000 PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE - ---------- ----- ---- /s/ WILLIAM P. FOLEY, II Chairman of the Board and Chief Executive Officer April 28, 2000 - --------------------------------------- (Principal Executive Officer) WILLIAM P. FOLEY, II /s/ FRANK P. WILLEY Vice Chairman of the Board April 28, 2000 - ------------------------------------ FRANK P. WILLEY /s/ PATRICK F. STONE President and Chief Operating Officer April 28, 2000 - ------------------------------------ PATRICK F. STONE /s/ ALAN L. STINSON Executive Vice President, Chief Financial Officer April 28, 2000 - ----------------------------------- and Treasurer (Principal Financial and Accounting ALAN L. STINSON Officer) /s/ JOHN JOSEPH BURNS, JR. Director April 28, 2000 - --------------------------------------- JOHN JOSEPH BURNS, JR. /s/ JOHN F. FARRELL, JR. Director April 28, 2000 - ------------------------------------- JOHN F. FARRELL, JR. /s/ PHILIP G. HEASLEY Director April 28, 2000 - ------------------------------------- PHILIP G. HEASLEY /s/ WILLIAM A. IMPARATO Director April 28, 2000 - --------------------------------------- WILLIAM A. IMPARATO /s/ DONALD M. KOLL Director April 28, 2000 - ------------------------------------ DONALD M. KOLL /s/ DANIEL D. (RON) LANE Director April 28, 2000 - ----------------------------------------- DANIEL D. (RON) LANE
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SIGNATURES TITLE DATE - ---------- ----- ---- /s/ GENERAL WILLIAM LYON Director April 28, 2000 - ---------------------------------------- GENERAL WILLIAM LYON /s/ J. THOMAS TALBOT Director April 28, 2000 - -------------------------------------- J. THOMAS TALBOT /s/ CARY H. THOMPSON Director April 28, 2000 - --------------------------------------- CARY H. THOMPSON /s/ RICHARD PAUL TOFT Director April 28, 2000 - --------------------------------------- RICHARD PAUL TOFT
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