UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Cash America International, Inc.
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(Name of Registrant as Specified In Its Charter)
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CASH AMERICA INTERNATIONAL, INC.
1600 WEST 7TH STREET
FORT WORTH, TEXAS 76102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 2002
To Our Shareholders:
The Annual Meeting of Shareholders of Cash America International, Inc. (the
"Company") will be held at the Fort Worth Club, 11th Floor, Fort Worth Club
Building, 306 West 7th Street, Fort Worth, Texas on Wednesday, April 24, 2002 at
9:00 a.m., Fort Worth Time, for the following purposes:
(1) To elect nine (9) persons to serve as directors of the Company to
hold office until the next annual meeting of shareholders or until their
successors are duly elected and qualified;
(2) To consider and act upon a proposal to ratify the appointment of
PricewaterhouseCoopers LLP as independent auditors of the Company for the
year 2002; and
(3) To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only holders of record of the Common Stock of the Company at the close of
business on March 6, 2002 are entitled to notice of and to vote at the Annual
Meeting. The presence, in person or by proxy, of the holders of a majority of
the issued and outstanding Common Stock entitled to vote at the meeting is
required for a quorum to transact business. The stock transfer books will not be
closed.
Management sincerely desires your presence at the meeting. However, so that
we may be sure that your shares are represented and voted in accordance with
your wishes, please sign and date the enclosed proxy and return it promptly in
the enclosed stamped envelope. If you attend the meeting, you may revoke your
proxy and vote in person.
By Order of the Board of Directors,
Hugh A. Simpson
Secretary
Fort Worth, Texas
March 27, 2002
CASH AMERICA INTERNATIONAL, INC.
1600 WEST 7TH STREET
FORT WORTH, TEXAS 76102
(PRINCIPAL EXECUTIVE OFFICES)
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 2002
SOLICITATION OF PROXIES
The proxy statement and accompanying proxy are furnished in connection with
the solicitation by the Board of Directors of Cash America International, Inc.,
a Texas corporation (the "Company"), of proxies to be voted at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held at the Fort Worth Club
located on the 11th Floor of the Fort Worth Club Building, 306 West 7th Street,
Fort Worth, Texas on Wednesday, April 24, 2002 at 9:00 a.m., Fort Worth Time and
at any recess or adjournment thereof. The solicitation will be by mail, and this
Proxy Statement and the accompanying form of proxy will be mailed to
shareholders on or about March 27, 2002.
The enclosed proxy, even though executed and returned, may be revoked at
any time prior to the voting of the proxy by giving written notice of revocation
to the Secretary of the Company at its principal executive offices or by
executing and delivering a later-dated proxy or by attending the Annual Meeting
and voting in person. However, no such revocation shall be effective until such
notice has been received by the Company at or before the Annual Meeting. Such
revocation will not affect a vote on any matters taken prior to receipt of such
revocation. Mere attendance at the Annual Meeting will not of itself revoke the
proxy.
The expense of such solicitation will be borne by the Company and will
include reimbursement paid to brokerage firms and other custodians, nominees and
fiduciaries for their expenses in forwarding solicitation material regarding the
meeting to beneficial owners. The Company has retained Georgeson Shareholder
Communications, Inc. to assist in the solicitation of proxies from shareholders,
and will pay such firm a fee for its services of approximately $5,000.00.
Further solicitation of proxies may be made by telephone or other electronic
communication following the original solicitation by directors, officers and
regular employees of the Company or by its transfer agent who will not be
additionally compensated therefor, but will be reimbursed by the Company for
out-of-pocket expenses.
A copy of the Annual Report to Shareholders of the Company for its fiscal
year ended December 31, 2001 is being mailed with this Proxy Statement to all
shareholders entitled to vote, but it does not form any part of the information
for solicitation of proxies.
VOTING SECURITIES OUTSTANDING; QUORUM
The record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting was the close of business on March 6, 2002
(the "Record Date"). At the close of business on March 6, 2002, there were
24,557,234 shares of Common Stock, par value $.10 per share, issued and
outstanding, each of which is entitled to one vote on all matters properly
brought before the meeting. There are no cumulative voting rights. The presence
in person or by proxy of the holders of a majority of the issued and outstanding
shares of Common Stock on the Record Date is necessary to constitute a quorum at
the Annual Meeting. Assuming the presence of a quorum, the affirmative vote of a
majority of the shares of Common Stock present, or represented by proxy, and
entitled to vote at the Annual Meeting is necessary for the election of
directors and for ratification of the appointment of independent auditors.
Shares voted for a proposal and shares represented by returned proxies that do
not contain instructions to vote against a proposal
or to abstain from voting will be counted as shares cast for the proposal.
Shares will be counted as cast against the proposal if the shares are voted
either against the proposal or to abstain from voting. Broker non-votes will not
change the number of votes for or against the proposal and will not be treated
as shares entitled to vote, but such shares will be counted for purposes of
determining the presence of a quorum.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the shareholders of the Company will consider and
vote on the following matters:
(1) Election of nine (9) persons to serve as directors of the Company
to hold office until the next annual meeting of shareholders or until their
successors are duly elected and qualified;
(2) Ratification of the appointment of PricewaterhouseCoopers LLP as
independent auditors of the Company for the year 2002; and
(3) Such other business as may properly come before the meeting or any
adjournments thereof.
ELECTION OF DIRECTORS
The Company's Board of Directors for the ensuing year will consist of nine
(9) members who are to be elected for a term expiring at the next annual meeting
of shareholders or until their successors shall be elected and shall have
qualified. The following slate of nine nominees has been chosen by the Board of
Directors and the Board recommends that each be elected. Unless otherwise
indicated in the enclosed form of Proxy, the persons named in such proxy intend
to nominate and vote for the election of the following nominees for the office
of director. Samuel W. Rizzo has chosen not to stand for re-election, and as a
result is not a nominee. All of the nominees are presently serving as directors.
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION DURING PAST FIVE YEARS SINCE
------------ ------------------------------------------- --------
Jack Daugherty Mr. Daugherty has served as Chairman of the Board and Chief 1983
(54) Executive Officer of the Company from its inception until
February 2000, when he retired from the position of Chief
Executive Officer. Mr. Daugherty has owned and operated
pawnshops since 1971.
A. R. Dike Mr. Dike has owned and served as Chairman of the Board and 1988
(66) Chief Executive Officer of The Dike Co., Inc. (a private
insurance agency) for over twenty years. He served as
Chairman of Willis Corroon Life, Inc. of Texas from 1991
through June 1999.
Daniel R. Feehan Mr. Feehan assumed the position of Chief Executive Officer 1984
(51) and President of the Company in February 2000, and prior to
that served as President and Chief Operating Officer since
January 1990.
James H. Graves Mr. Graves has served as Managing Director and Partner of 1996
(53) Erwin, Graves & Associates, LP, a management consulting
firm, since January 2002. From November 2000 until January
2002 he served as Managing Director -- Investment Banking
for UBS Warburg, and prior to that he served as Chief
Operating Officer of J. C. Bradford & Co., a Nashville based
securities firm, where he worked for more than five years.
2
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION DURING PAST FIVE YEARS SINCE
------------ ------------------------------------------- --------
B. D. Hunter Mr. Hunter has served since January 2000 as Vice Chairman of 1984
(72) the Board of Service Corporation International ("SCI"), a
publicly held company that owns and operates funeral homes
and related businesses. For more than five years, Mr. Hunter
has served as Chairman of the Board of Huntco, Inc.
("Huntco"), an intermediate steel processing company. He
served as Chief Executive Officer of Huntco until May 2000.
In February 2002, Huntco filed for protection under Chapter
11 of the U.S. Bankruptcy Code.
Timothy J. McKibben Mr. McKibben has served as Chairman of the Board of Ancor 1996
(53) Holdings, a private investment firm, since 1993, and prior
to that he served as Chairman of the Board and President of
Anago Incorporated, a medical products manufacturing company
he co-founded in 1978.
Alfred M. Micallef Mr. Micallef has served as President since 1974, and 1996
(59) currently as Chief Executive Officer, of JMK International,
Inc., a holding company of rubber and plastics manufacturing
businesses.
Clifton H. Morris, Mr. Morris has served as Executive Chairman of the Board of 1998
Jr. AmeriCredit Corp., a national automobile consumer finance
(66) company, since July 1988. (Mr. Morris served as a director
of the Company from 1984 to 1996.)
Carl P. Motheral Mr. Motheral is Chairman of the Board of Motheral Printing 1983
(75) Company (a commercial printing company), where he has served
in various executive capacities for over thirty-five years.
Each nominee for election as a director has consented to serve if elected. The
Board of Directors does not contemplate that any of the above-named nominees for
director will be unable to accept election as a director of the Company. Should
any of them become unavailable for election as a director of the Company then
the persons named in the enclosed form of proxy intend to vote such shares
represented in such proxy for the election of such other person or persons as
may be nominated or designated by the Board of Directors.
Certain nominees for director of the Company hold directorships in
companies with a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934. Mr. Feehan is a director of KBK Capital
Corporation, AZZ incorporated, and Calloway's Nursery, Inc. Mr. Graves is a
director of Hallmark Financial Services, Inc. Mr. Hunter is a director of Huntco
and SCI. Mr. McKibben is a director of Calloway's Nursery, Inc. Mr. Morris is a
director of AmeriCredit Corp. and SCI.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during the fiscal year ended
December 31, 2001. Standing committees of the Board include the Executive
Committee, Audit Committee, Executive Compensation Committee, Nominating
Committee, and Stock Option Committee. The Executive Committee did not meet
during fiscal 2001.
The Audit Committee's principal responsibilities are described under "Audit
Committee Report" in this Proxy Statement. Its members are Messrs. Rizzo,
McKibben and Morris. The Audit Committee held three meetings during fiscal 2001.
The Executive Compensation Committee oversees and administers the Company's
executive compensation program and administers the Company's 1994 Long-Term
Incentive Plan. Its decisions relating to executive compensation are reviewed by
the full Board of Directors. Its members are Messrs. Hunter, Dike, and Graves.
The Committee held one meeting during fiscal 2001.
3
The Nominating Committee serves to consider and recommend to the Board
qualified candidates for inclusion on the slate of nominees for the Board of
Directors. Its members are Messrs. Graves, McKibben and Micallef. The Committee
was formed in 2002 and therefore did not meet in 2001.
The Stock Option Committee has the general duty to administer the Company's
1987 Stock Option Plan (with Stock Appreciation Rights) and the 1989 Key
Employee Plan. Its members are Messrs. Dike, McKibben, Micallef and Motheral.
The Stock Option Committee held no meetings during fiscal 2001.
All directors attended 75% or more of the total number of meetings of the
Board and of committees on which they serve.
DIRECTORS' COMPENSATION
Directors each receive a retainer of $2,500 per quarter. In addition, Board
members receive $3,000 per Board meeting attended, Executive Committee members
receive meeting fees for each Executive Committee meeting attended ($1,875 for
the chair of the committee and $1,500 for other members), and all other
committee members receive meeting fees for each committee meeting attended
($1,250 for the committee chairs and $1,000 for the other members).
Effective October 25, 1989, options to purchase shares of the Company's
common stock were granted under the 1989 Non-Employee Director Stock Option Plan
(the "Non-Employee Director Plan") in the following amounts (after adjustment
for stock splits in 1990 and 1992): 225,000 shares to each non-employee director
serving on the Executive Committee of the Board of Directors (i.e., Messrs.
Rizzo, Motheral and Morris), 150,000 shares to each other non-employee director
with at least each two years of service on the Board of Directors as of the date
of grant (i.e., Mr. Hunter) and 120,000 shares to each other non-employee
director (i.e., Mr. Dike). The exercise price for all shares underlying such
options is $6.33 (after adjustment for stock splits in 1990 and 1992). The
options expire October 25, 2004. As a condition to participation in the
Non-Employee Director Plan, each director named above in this paragraph entered
into a Consultation Agreement with the Company dated as of April 25, 1990. Under
these Agreements, the non-employee directors have agreed to serve the Company in
an advisory and consultive capacity. They do not receive any additional
compensation under these Agreements, however.
The Company's 1994 Long-Term Incentive Plan also provides for the grant of
stock options to non-employee directors. Under this Plan, non-employee directors
receive options to purchase 5,000 shares of the Company's common stock upon
joining the Board of Directors. Those directors continuing their service receive
options for 2,500 shares at the time of each annual meeting of shareholders. In
each case, the exercise price of the options is the closing price of the
Company's common stock on the New York Stock Exchange on the day preceding the
grant date. The options issued under this Plan vest one year after the grant
date and expire upon the earlier of five (5) years after the director's
retirement date or ten (10) years after the grant date.
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company has only one outstanding class of equity securities, its Common
Stock, par value $.10 per share.
The following table sets forth certain information, as of the Record Date,
with respect to each person or entity who is known to the Company to be the
beneficial owner of more than five percent (5%) of the Company's Common Stock.
The information below was derived solely from filings made by such owners with
the Securities and Exchange Commission.
AMOUNT OF PERCENT
BENEFICIAL OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS
------------------------------------ ------------ -------
Kern Capital Management, LLC................................ 2,916,200(1) 11.8%
114 West 47th Street, Suite 1926
New York, New York 10036
Eagle Asset Management, Inc. ............................... 2,045,744(2) 8.27%
880 Carillon Parkway
St. Petersburg, Florida 33716
Dimensional Fund Advisors, Inc. ............................ 1,846,590(3) 7.49%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
David L. Babson & Co., Inc. ................................ 1,772,605(4) 7.19%
One Memorial Drive
Cambridge, Massachusetts 02142
---------------
(1) Based upon information contained in a Schedule 13G, filed with the Company,
which indicates that Kern Capital Management, LLC has sole voting power with
regard to all 2,916,200 shares and the sole right to dispose of all
2,916,200 shares, except to the extent that such power may be deemed to be
shared with Robert E. Kern, Jr. and David G. Kern, who are the controlling
members of Kern Capital Management, LLC.
(2) Based upon information contained in a Schedule 13G, filed with the Company,
which indicates that Eagle Asset Management, Inc. has sole voting power with
regard to all 2,045,744 shares and the sole right to dispose of all
2,045,744 shares.
(3) Based upon information contained in a Schedule 13G, filed with the Company,
which indicates that Dimensional Fund Advisors, Inc. has sole voting power
with regard to all 1,846,590 shares and the sole right to dispose of all
1,846,590 shares.
(4) Based upon information contained in a Schedule 13G, filed with the Company,
which indicates that David L. Babson & Co., Inc. has sole voting power with
regard to all 1,772,605 shares and the sole right to dispose of all
1,772,605 shares.
5
The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock, as of March 6, 2002 by its directors,
nominees for election as directors, named executive officers, and all directors
and executive officers as a group.
AMOUNT AND NATURE OF PERCENT
NAME BENEFICIAL OWNERSHIP(1)(2) OF CLASS
---- -------------------------- --------
Jack Daugherty.............................................. 303,637 1.23%
A. R. Dike.................................................. 146,000 .59%
Daniel R. Feehan............................................ 703,341 2.81%
James H. Graves............................................. 30,346 .12%
B. D. Hunter................................................ 175,000(3) .71%
Timothy J. McKibben......................................... 17,900 *
Alfred M. Micallef.......................................... 30,000 .12%
Clifton H. Morris, Jr. ..................................... 239,500(4) .97%
Carl P. Motheral............................................ 454,065(5) 1.83%
Samuel W. Rizzo............................................. 304,958(6) 1.23%
James H. Kauffman........................................... 144,641 .59%
Thomas A. Bessant, Jr....................................... 53,798 .22%
Michael D. Gaston........................................... 31,765(7) .13%
Jerry D. Finn............................................... 25,075 .10%
All Directors and Executive Officers as a group (17
persons).................................................. 2,782,410(8) 10.56%
---------------
* Indicates ownership of less than .1% of the Company's Common Stock.
(1) Beneficial ownership as reported in the above table has been determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended. Unless otherwise indicated, each of the persons named has sole
voting and investment power with respect to the shares reported.
(2) Except for the percentages of certain parties that are based on options
exercisable within sixty days of March 6, 2002, as indicated below, the
percentages indicated are based on 24,557,234 shares of Common Stock issued
and outstanding on March 6, 2002. In the case of parties holding options,
the percentage ownership is calculated on the assumption that the shares
presently purchasable or purchasable within the next sixty days underlying
such options are outstanding. The shares subject to options that are
exercisable within sixty days of March 6, 2002 are as follows: Mr.
Daugherty -- 159,172 shares; Mr. Dike -- 130,000 shares; Mr.
Feehan -- 464,793 shares; Mr. Hunter -- 160,000 shares; Messrs. Graves and
McKibben -- 15,000 shares each; Mr. Micallef -- 10,000 shares; Mr.
Morris -- 237,500 shares; Messrs. Motheral and Rizzo -- 235,000 shares each;
Mr. Kauffman -- 37,500 shares; Mr. Bessant -- 10,600 shares; Mr.
Gaston -- 20,453 shares; and Mr. Finn -- 24,925 shares.
(3) This amount includes 15,000 shares held by a corporation that Mr. Hunter
indirectly controls. Mr. Hunter disclaims beneficial ownership of such
shares.
(4) This amount includes 2,000 shares owned by Mr. Morris' wife.
(5) This amount includes 206,250 shares held by a limited partnership that Mr.
Motheral indirectly controls. Mr. Motheral disclaims beneficial ownership of
such shares.
(6) This amount includes 10,500 shares owned by trusts of which Mr. Rizzo is
trustee and 4,000 shares owned by Mr. Rizzo's wife.
(7) This amount includes 2,000 shares owned by Mr. Gaston's wife.
(8) This amount includes 1,793,543 shares that directors and executive officers
have the right to acquire within the next sixty days through the exercise of
stock options.
6
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company's executive officers and directors are required to file under
Section 16(a) of the Securities Exchange Act of 1934 reports of ownership and
changes of ownership with the Securities and Exchange Commission. Based solely
upon its review of the copies of such reports received by it, and written
representations from individual directors and executive officers, the Company
believes that during the fiscal year ended December 31, 2001 all filing
requirements applicable to executive officers and directors have been complied
with, except that William R. Horne, Executive Vice President -- Information
Technology, filed a late Form 4.
EXECUTIVE COMPENSATION
The following sets forth information for each of the Company's last three
fiscal years concerning the compensation of the Company's Chief Executive
Officer and each of the other four most highly compensated executive officers
who were serving as executive officers at the end of the last fiscal year.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION -
ANNUAL COMPENSATION AWARDS
-------------------- --------------
SECURITIES
UNDERLYING
OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) SARS(#) COMPENSATION($)(1)
--------------------------- ---- --------- -------- -------------- ------------------
Daniel R. Feehan,.................. 2001 423,469 112,468 -- 38,101
Chief Executive Officer and 2000 383,438 59,058 150,000 35,637
President(2) 1999 385,826 -- -- 36,022
James H. Kauffman,................. 2001 278,415 55,871 -- 8,797
EVP -- Foreign Operations; 2000 263,415 54,228 50,000 8,103
CEO -- Rent-A-Tire, Inc. 1999 262,422 21,770 -- 8,630
Thomas A. Bessant, Jr.,............ 2001 203,942 43,356 -- 6,052
Executive Vice President -- 2000 178,500 21,994 50,000 5,118
Chief Financial Officer 1999 177,827 -- -- 5,115
Michael D. Gaston,................. 2001 196,290 41,670 -- 6,449
Executive Vice President -- 2000 187,008 29,362 50,000 5,762
Business Development 1999 185,625 -- -- 6,063
Jerry D. Finn,..................... 2001 193,308 41,045 -- 6,064
Executive Vice President -- 2000 182,000 7,213 50,000 5,289
Domestic Pawn Operations 1999 180,654 -- -- 5,517
---------------
(1) The amounts disclosed in this column for 2001 include:
(a) Company contributions of the following amounts under the Company's
401(k) Savings Plan on behalf of Mr. Feehan: $12,108; Mr. Kauffman:
$7,692; Mr. Bessant: $5,873; Mr. Gaston: $5,700; and Mr. Finn: $5,348.
(b) Payment by the Company of premiums for term life insurance on behalf of
Mr. Feehan: $993; Mr. Kauffman: $1,105; Mr. Bessant: $179; Mr. Gaston:
$749; and Mr. Finn: $716.
(c) Annual premium payments under split-dollar life insurance policies on
Mr. Feehan ($25,000).
(2) Mr. Feehan served as Chairman and Co-Chief Executive Officer of Mr. Payroll
Corporation from February 1998 to February 1999 before returning to the
position of President and Chief Operating Officer of the Company. He assumed
the position of Chief Executive Officer and President effective February 1,
2000.
7
The following table provides information concerning option exercises in
fiscal 2001 and the value of unexercised options held by each of the named
executive officers at the end of the Company's last fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#) FY-END ($)(1)
--------------- ---------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ------------ --------------- ---------------
Daniel R. Feehan................. -- -- 464,793/216,143 495,720/-0-
James H. Kauffman................ 6,250 -0- 37,500/87,500 -0-/-0-
Thomas A. Bessant, Jr. .......... -- -- 10,600/63,629 6,813/-0-
Michael D. Gaston................ -- -- 20,453/70,453 -0-/-0-
Jerry D. Finn.................... -- -- 24,925/63,125 13,625/-0-
---------------
(1) Values stated are based upon the closing price of $8.50 per share of the
Company's Common Stock on the New York Stock Exchange on December 31, 2001,
the last trading day of the fiscal year.
COMPENSATION COMMITTEE REPORT
OVERALL EXECUTIVE COMPENSATION POLICIES
The basic philosophy of the Company's executive compensation program is to
link the compensation of its executive officers to their contribution toward the
enhancement of shareholder value. Consistent with that philosophy, the program
is designed to meet the following policy objectives:
- Attracting and retaining qualified executives critical to the long-term
success of the Company.
- Tying executive compensation to the Company's general performance and
specific attainment of long-term strategic goals.
- Rewarding executives for contributions to strategic management designed
to enhance long-term shareholder value.
- Providing incentives that align the executives' interests with those of
the Company's shareholders.
ELEMENTS OF EXECUTIVE COMPENSATION
The Company's executive compensation program consists of the following
elements designed to meet the policy objectives set out above:
Base Salary
The Committee sets the annual salary of the Company's Chief Executive
Officer and reviews the annual salaries of the Company's other executive
officers. In setting appropriate annual salaries, the Committee takes into
consideration the minimum salaries set forth in certain executives' employment
contracts (described elsewhere in this Proxy Statement), the level and scope of
responsibility, experience, and performance of the executive, the internal
fairness and equity of the Company's overall compensation structure, and the
relative compensation of executives in similar positions in the marketplace. The
Committee relies on information supplied by an outside compensation consulting
firm pertaining to competitive compensation. The Company's executive
compensation program is designed to position base salary at the 50th percentile
of the competitive market and total cash compensation, including annual
performance incentives, at the 75th percentile of the competitive market. The
Committee believes that very few of the companies in the peer groups described
8
below under "Performance Graph" are included in the surveys used for
compensation comparisons. Those surveys represent a much broader collection of
U.S. companies.
Annual Incentive Compensation
The Company's executive compensation program consists of both short-term
and long-term incentive components.
a. Short-Term Component
Under this component, the Company's executive officers are eligible to
receive annual incentive cash bonuses depending on the extent to which the
Company's operating performance for the year exceeds that of the previous year.
In the event the Company's operating performance hits a specified target under
the financial plan, then the officers' bonuses are equal to certain percentages
of their annual base salaries. The bonus percentage varies depending upon the
officer's position with the Company.
b. Long-Term Component
Under this component, the Company's executive officers are eligible to
receive long-term incentive grants in the form of restricted stock and/or stock
options, with the number of shares of stock and/or options to equal certain
percentages of the officers' annual base salaries. The applicable percentage
varies depending upon the officer's position with the Company. The allocation
between restricted stock and stock options is determined by the Committee at its
discretion. The Company's 1994 Long-Term Incentive Plan (the "1994 Plan") allows
for these forms of stock-based long-term incentive compensation awards. This
long-term incentive component is designed to further the objective of fostering
and promoting improvement in long-term financial results and increases in
shareholder value. The Company has granted options to its executive officers in
recent years at an exercise price equal to the closing price of the Company's
common stock on the New York Stock Exchange on the day preceding the date of
grant. This arrangement rewards effective management that results in long-term
increases in the Company's stock price. No options were granted in 2001.
However, options granted to certain of the Company's executive officers in 2000
vest five years after the date of grant. However, vesting accelerates if the
Company's stock price hits certain target levels: the options vest 50% if the
stock price equals or exceeds 150% of the exercise price for twenty consecutive
calendar days, and the options vest 100% if the stock price equals or exceeds
200% of the exercise price for twenty consecutive calendar days. This option
grant provided that these executive officers would be eligible to receive a
comparable grant of options three years after the grant date or upon 100%
vesting of the options, whichever comes first. With the 2000 grant, the Company
further strengthened the link between its senior management's interests and
those of the Company's shareholders.
Deductibility Cap on Executive Compensation
A federal tax law enacted in 1994 disallows corporate deductibility for
certain compensation paid in excess of $1,000,000 to the Chief Executive Officer
and the four other most highly paid executive officers. "Performance-based
compensation," as defined in the tax law, is not subject to the deductibility
limitation, provided certain shareholder approval and other requirements are
met. Although the cash compensation paid to the Company's Chief Executive
Officer and the four other most highly paid executive officers is well below the
$1,000,000 level in each case, the Committee determined that the Company should
seek to ensure that future stock option and performance award compensation under
the 1994 Plan qualifies as "performance-based compensation." Accordingly, the
1994 Plan is intended to meet the requirements of this tax law and thereby
preserve full deductibility of both stock option and stock-based performance
award compensation expense.
CEO'S COMPENSATION FOR FISCAL 2001
The fiscal 2001 salary of Mr. Daniel R. Feehan, Chief Executive Officer of
the Company, was based primarily on his rights under his employment agreement
with the Company. Under that agreement,
9
Mr. Feehan's minimum base salary was $433,000. The Committee believes that the
total cash compensation paid to Mr. Feehan was appropriate in light of the
Company's accomplishments in 2001, most notably the improvement in the
performance of the Company's core lending operations during the year.
These 2001 accomplishments also support the Committee's belief that the
fiscal 2001 cash compensation of the Company's other executive officers was set
at appropriate levels.
EXECUTIVE COMPENSATION COMMITTEE
B. D. Hunter, Chairman
A. R. Dike
James H. Graves
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate future filings, including this Proxy Statement,
in whole or in part, the preceding report and the Performance Graph on Page 11
shall not be incorporated by reference into any such filings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Executive Compensation Committee of the
Company's Board of Directors is an officer, former officer, or employee of the
Company or any subsidiary of the Company.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
As a condition to receiving grants of options under the 1989 Key Employee
Stock Option Plan for Cash America International, Inc., Messrs. Daugherty and
Feehan entered into employment agreements with the Company dated April 25, 1990.
Effective August 1, 1997, Messrs. Daugherty and Feehan entered into amended and
restated employment agreements with the Company. In conjunction with his
retirement from the position of Chief Executive Officer of the Company, Mr.
Daugherty entered into an amended and restated employment agreement with the
Company effective February 1, 2000. Mr. Feehan's employment agreement was
amended effective April 29, 2001.
The initial term of Mr. Feehan's agreement expires April 30, 2006. Under
his agreement, compensation is determined annually by the Company's Board of
Directors, subject to minimum annual compensation of $433,000. Included in the
agreement is Mr. Feehan's covenant not to compete with the Company during the
term of his employment and for a period of three years thereafter. The
employment agreement also provides that if he is terminated by the Company other
than for cause, the Company will pay to Mr. Feehan the remainder of his current
year's salary plus an amount equal to his salary, at the then current rate, for
a period equal to the greater of three years or the remainder of the term of the
agreement, with that amount payable in thirty-six equal monthly installments. In
the event he resigns or is terminated other than for cause within twelve months
after a "change in control" of the Company (as that term is defined in the
employment agreement), he will be entitled to earned and vested bonuses at the
date of termination plus the remainder of his current year's salary
(undiscounted) plus the present value (employing an interest rate of 8%) of five
additional years' salary (for which purpose "salary" includes the annual rate of
compensation immediately prior to the "change in control" plus the average
annual cash bonus for the immediately preceding three year period).
The term of Mr. Daugherty's agreement expires January 31, 2005, with no
provision for renewal or extension. His annual compensation under the agreement
is $200,000. Included in the agreement is Mr. Daugherty's covenant not to
compete with the Company during the term of his employment and for a period of
three years thereafter. The agreement also provides that if Mr. Daugherty is
terminated by the Company other than for cause, the Company will pay him the
remainder of his current year's salary plus an amount equal to his salary, at
the then current rate, for a period equal to the greater of three years or the
remainder of the term of the agreement, with that amount payable in thirty-six
equal monthly installments. However, the agreement does not provide for any
separation payment following a "change in control."
10
PERFORMANCE GRAPH
The following Performance Graph shows the changes over the past five year
period in the value of $100 invested in: (1) the Company's Common Stock, (2) the
Standard & Poor's 500 Index, and (3) the common stock of a peer group of
companies whose returns are weighted according to their respective market
capitalizations. The values of each investment as of the beginning of each year
are based on share price appreciation and the reinvestment of dividends. The
peer group consists of the other companies in the pawnbroking industry with
publicly traded common stock.
TOTAL RETURN PERFORMANCE
[PERFORMANCE GRAPH]
Period Ending
-----------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
----------------------------------------------------------------------------------------------------------------
Cash America International, Inc. 100.00 152.96 180.21 116.23 52.51 102.70
S&P 500 100.00 133.37 171.44 207.52 188.62 166.22
Peer Group 100.00 169.47 172.93 93.20 29.08 62.05
TRANSACTIONS WITH MANAGEMENT
In December 1999, the Company sold the assets of three of its pawnshop
units, along with certain real estate, to Ace Pawn, Inc. ("Ace"), a corporation
controlled by the Company's then Chairman of the Board and Chief Executive
Officer Jack R. Daugherty. The sales price of $4,520,000 for these assets was
determined by the independent appraisal of a nationally recognized consulting
firm, which was engaged at the direction of the Executive Compensation Committee
of the Board of Directors. The Company financed Ace's purchase of the assets,
receiving promissory notes secured by a security interest in all of Ace's
assets. Mr. Daugherty also provided his personal guaranty of all of Ace's
indebtedness under the notes. The notes bear interest at the rate of 10% per
annum and require quarterly payments of principal and interest, with a final
balloon payment in December 2002. During 2001, the highest unpaid balance of
principal and accrued interest on these notes was $3,223,155, and the unpaid
balance at February 28, 2002 was $3,162,665. The Company has a right of first
refusal in the event of a proposed resale of these assets to a third party. The
Company had owned these assets for more than two years at the time of the sale
to Ace. Simultaneously with the purchase of the three pawnshops, Ace entered
into standard form Franchise Agreements with the Company to operate the
pawnshops as franchised "Cash America" units. The Board of Directors of the
Company reviewed the
11
proposed transaction and, prior to the completion of the transaction, adopted
the recommendation of the Executive Compensation Committee that the transaction
be approved.
The Board of Directors of the Company adopted an officer stock loan program
in 1994 and modified the program in 1996 and again in 2001. The purpose of the
program is (i) to facilitate and encourage the ownership of Company common stock
by the officers of the Company and (ii) to establish the terms for stock loan
transactions with officers. Participants in the program can utilize loan
proceeds to acquire and hold common stock of the Company by means of option
exercises or otherwise. The stock to be held as a result of the loan must be
pledged to the Company to secure the obligation to repay the loan. Under the
terms of the loan, interest accrues at the "applicable Federal rate" for loans
of this type, as published by the Internal Revenue Service from time to time.
Interest is payable annually and may be paid with additional loan proceeds. Each
loan has a one year maturity and is renewable thereafter for successive one year
terms, except that the Committee could notify the borrower during any renewal
term that the loan would not renew again after the next succeeding renewal term.
The obligation becomes nonrecourse to the borrower upon the occurrence of any
one of the following events: (i) a "change in control" of the Company, (ii) the
borrower's involuntary termination of employment without cause, (iii) the
borrower's death or long term disability while employed by the Company, or (iv)
the borrower's retirement at age 60 or older. The aggregate principal balance of
all outstanding loans under the program may not exceed $10,000,000 at any time.
As of February 28, 2002, Messrs. Feehan, Kauffman, and Bessant had stock loans
outstanding under this program in the aggregate principal amounts of $2,560,530,
$413,398, and $348,588, respectively. These were also the highest amounts by
which these individuals were indebted under the program during 2001.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors of Cash America
International, Inc. (the "Company") reviews the financial reporting process, the
system of internal controls, the audit process and the process for monitoring
compliance with laws and regulations. Each of the Audit Committee members
satisfies the definition of independent director as established in the New York
Stock Exchange Listing Standards. The Board of Directors has adopted a written
charter for the Audit Committee, a copy of which was attached to the proxy
statement for the Company's 2001 annual meeting of shareholders. The information
contained in this report shall not be deemed to be "soliciting material" or to
be "filed with the SEC," nor shall such information be incorporated by reference
into any future filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates it by reference in such filing.
The Audit Committee has reviewed the audited consolidated financial
statements of the Company and discussed such statements with management. The
Audit Committee has discussed with PricewaterhouseCoopers LLP, the Company's
independent accountants during the 2001 fiscal year, the matters required to be
discussed by Statement of Auditing Standards No. 61 (Communication with Audit
and Finance Committee, as amended).
The Audit Committee received from PricewaterhouseCoopers LLP the written
disclosures required by Independence Standards Board Standard No. 1 and
discussed with them their independence. Based on the review and discussions
noted above, the Audit Committee recommended to the Board that the Company's
audited consolidated financial statements be included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2001, and be filed
with the U.S. Securities and Exchange Commission.
AUDIT COMMITTEE
Samuel W. Rizzo, Chairman
Clifton H. Morris, Jr.
Timothy J. McKibben
12
AUDIT AND NON-AUDIT FEES
For the 2001 fiscal year, the Company's principal accountants,
PricewaterhouseCoopers LLP, billed the Company for the categories of services
set forth below. The Audit Committee considered the effect of the fees shown for
"Financial Information Systems Design and Implementation" and "All Other" on the
principal accountants' independence.
Audit and Related Fees:.................................. $290,219
Financial Information Systems Design and
Implementation:........................................ $224,747
All Other:............................................... $ 49,669
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP of Fort Worth, Texas served as independent
public accountants for the Company for fiscal 2001 and has reported on the
Company's financial statements. Based on the recommendation of the Audit
Committee, the Board of Directors of the Company has selected
PricewaterhouseCoopers LLP to audit the accounts of the Company for the fiscal
year ending December 31, 2002 and recommends to the shareholders that they
ratify this selection for the ensuing fiscal year ending December 31, 2002. The
affirmative vote of a majority of the outstanding shares of Common Stock present
at the Annual Meeting in person or by proxy is necessary for the ratification of
the appointment of PricewaterhouseCoopers LLP as independent public accountants.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the Annual Meeting and will be afforded an opportunity to make a statement and
will be available to respond to appropriate questions at such meeting.
While shareholder ratification is not required for the selection of
PricewaterhouseCoopers LLP since the Board of Directors has the responsibility
for the selection of the Company's independent public accountants, the selection
is being submitted for ratification at the Annual Meeting with a view towards
soliciting the shareholders' opinion thereon, which opinion will be taken into
consideration in future deliberations.
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR
THE 2002 FISCAL YEAR.
OTHER BUSINESS
Any proposal to be presented by a shareholder at the Company's 2003 Annual
Meeting of Shareholders must be presented to the Company by no later than
November 22, 2002.
It is important that proxies be returned promptly to avoid unnecessary
expense. Therefore, shareholders are urged, regardless of the number of shares
of stock owned, to date, sign and return the enclosed proxy in the enclosed
reply envelope.
By Order of the Board of Directors
Hugh A. Simpson
Secretary
March 27, 2002
13
Please mark
your votes as
indicated in [X]
this example
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of Directors, Nominees: 2. Ratification of the appointment of [ ] [ ] [ ]
01 Jack R. Daugherty, 02 A.R. Dike, [ ] [ ] PricewaterhouseCoopers LLP as
03 Daniel R. Feehan, 04 James H. Graves, independent auditors for the year
05 B.D. Hunter, 06 Timothy J. McKibben, 2002.
07 Alfred M. Micallef, 08 Clifton H.
Morris, Jr., 09 Carl P. Motheral
3. In their discretion the proxies are authorized to vote
For, except vote withheld from the following nominee(s): upon such other matters as may come before the meeting
or any adjournments thereof.
----------------------------------------------------------
Change
of [ ]
Address
Signature Signature Date
------------------------------------------- ------------------------------------------- -----------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
o FOLD AND DETACH HERE o
CASH AMERICA INTERNATIONAL, INC.
Proxy Solicited on Behalf of the Board of Directors of
the Company for Annual Meeting April 24, 2002
The undersigned hereby constitutes and appoints Jack R. Daugherty, Daniel R.
Feehan and Hugh A. Simpson, and each of them, my true and lawful attorneys and
proxies, with power of substitution, to represent the undersigned and vote at
the annual meeting of shareholders of Cash America International, Inc. (the
"Company") to be held in Fort Worth, Texas on April 24, 2002, and at any
adjournment thereof, all of the stock of the Company standing in my name as of
the record date of March 6, 2002 on all matters coming before said meeting.
(Change of Address)
-------------------------------------------
-------------------------------------------
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card).
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR
SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
o FOLD AND DETACH HERE o