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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement.
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14a-12
Cash America International, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
CASH AMERICA INTERNATIONAL, INC.
1600 WEST 7TH STREET
FORT WORTH, TEXAS 76102
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 2003
To Our Shareholders:
The Annual Meeting of Shareholders of Cash America International, Inc. (the
"Company") will be held at the Fort Worth Club, 12th Floor, Fort Worth Club
Building, 306 West 7th Street, Fort Worth, Texas on Wednesday, April 23, 2003 at
9:00 a.m., Central Standard Time, for the following purposes:
(1) To elect eight (8) 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 2003; 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 5, 2003 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 28, 2003
CASH AMERICA INTERNATIONAL, INC.
1600 WEST 7TH STREET
FORT WORTH, TEXAS 76102
(PRINCIPAL EXECUTIVE OFFICES)
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
APRIL 23, 2003
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 12th Floor of the Fort Worth Club Building, 306 West 7th Street,
Fort Worth, Texas on Wednesday, April 23, 2003 at 9:00 a.m., Central Standard
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 28, 2003.
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 revocation shall be effective until the notice
has been received by the Company at or before the Annual Meeting. Any revocation
will not affect a vote on any matters taken prior to receipt of the revocation.
Mere attendance at the Annual Meeting will not of itself revoke the proxy.
The expense of this proxy 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 the firm a fee of approximately $5,000 for these
services. 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. These
persons will not be additionally compensated for these efforts, but they 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, 2002 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 5, 2003
(the "Record Date"). At the close of business on March 5, 2003, there were
24,275,409 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 eight (8) 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 2003; and
(3) Such other business as may properly come before the meeting or any
adjournments thereof.
ELECTION OF DIRECTORS
Shareholders will vote for eight (8) directors 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
eight 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 the proxy intend to nominate and vote for the
election of the following nominees for the office of director. All of the
nominees are presently serving as directors. Carl P. Motheral, who served as a
director since 1983, passed away in January 2003. The Board of Directors has
chosen not to fill the position vacated by Mr. Motheral at this time.
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
(55) 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
(67) 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
(52) 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
(54) Erwin, Graves & Associates, LP, a management consulting
firm located in Dallas, Texas, 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 and head of
Equity Capital Markets at J. C. Bradford & Co., a Nashville
based securities firm (acquired by Paine Webber in 2000),
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 1984
(73) of the Board of Service Corporation International, 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 during a severe downturn in
the steel industry.
Timothy J. McKibben Mr. McKibben has served as Chairman of the Board of Ancor 1996
(54) Holdings, L.P., 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
(60) currently as Chairman of M International-Nev, Inc.,
formerly known as JMK International, Inc., a holding
company of rubber and plastics manufacturing businesses.
Clifton H. Morris, Jr. Mr. Morris has served as Executive Chairman of the Board of 1998
(67) AmeriCredit Corp., a national automobile consumer finance
company, since July 1988, and until July 2000 he also
served as its Chief Executive Officer and President. Mr.
Morris also served as a director of the Company from 1984
to 1996.
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. Dike is a director of AmeriCredit Corp. Mr.
Feehan is a director of RadioShack Corporation, AZZ incorporated and Calloway's
Nursery, Inc. Mr. Graves is a director of Hallmark Financial Services, Inc. and
Detwiler Mitchell & Co. Mr. Hunter is a director of Service Corporation
International. Mr. McKibben is a director of Calloway's Nursery, Inc. Mr.
Micallef is a director of Lone Star Technologies, Inc. Mr. Morris is a director
of AmeriCredit Corp. and Service Corporation International.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during the fiscal year ended
December 31, 2002. Standing committees of the Board include the Executive
Committee, Audit Committee, Executive Compensation Committee, and Nominating and
Corporate Governance Committee. The Executive Committee did not meet during
fiscal 2002.
The Audit Committee's principal responsibilities are described under "Audit
Committee Report" in this Proxy Statement. Its members are Messrs. Graves,
McKibben and Morris. The Audit Committee held five meetings during fiscal 2002.
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 and recommendations relating to executive
compensation are reviewed by the full Board of Directors. Its members are
Messrs. Hunter, Dike, and Micallef. The Committee held two meetings during
fiscal 2002.
3
The Nominating and Corporate Governance Committee considers and recommends
to the Board qualified candidates for inclusion on the slate of nominees for the
Board of Directors. In addition, the Committee assists in developing and
recommending corporate governance principles and practices, including
determining director independence and committee membership and periodically
evaluating the performance of the Board and the Chief Executive Officer. Its
members are Messrs. Graves, McKibben and Micallef. The Committee was formed in
2002 and did not hold its first formal meeting until January 2003.
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., Mr. Morris),
150,000 shares to each other non-employee director with at least 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 consulting
capacity. They do not receive any additional compensation under these
Agreements.
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 these owners with
the Securities and Exchange Commission.
AMOUNT OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OF
BENEFICIAL OWNER OWNERSHIP CLASS
------------------- ---------- -------
Eagle Asset Management, Inc. ............................... 1,792,211(1) 7.25%
880 Carillon Parkway
St. Petersburg, Florida 33716
Dimensional Fund Advisors Inc. ............................. 1,698,390(1)(2) 6.96%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
David L. Babson & Company Inc. ............................. 1,696,355(3) 6.95%
One Memorial Drive
Cambridge, Massachusetts 02142
---------------
(1) Based upon information contained in a Schedule 13G, filed with the Company,
which indicates that the named owner has sole voting power with regard to,
and the sole right to dispose of, all of the shares that it beneficially
owns.
(2) Dimensional Fund Advisors, Inc. is a registered investment advisor. The
shares beneficially owned by it are held by various investment companies and
other entities whose investment accounts are managed by Dimensional Fund
Advisors, Inc. It disclaims beneficial ownership of these shares.
(3) Based upon information contained in a Schedule 13G, filed with the Company,
which indicates that David L. Babson & Company Inc. has sole voting power
with regard to 1,604,447 shares, has shared voting power with regard to
91,908 shares, and has the sole right to dispose of all 1,696,355 shares.
5
The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock, as of March 5, 2003 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.............................................. 306,159 1.25%
A. R. Dike.................................................. 148,500 .61%
Daniel R. Feehan............................................ 718,972 2.90%
James H. Graves............................................. 36,061 .15%
B. D. Hunter................................................ 177,500(3) .73%
Timothy J. McKibben......................................... 20,400 *
Alfred M. Micallef.......................................... 32,500 .13%
Clifton H. Morris, Jr. ..................................... 242,000(4) .99%
James H. Kauffman........................................... 151,115 .62%
Thomas A. Bessant, Jr. ..................................... 61,827 .25%
Michael D. Gaston........................................... 39,015(5) .16%
Jerry D. Finn............................................... 26,325 .11%
All Directors and Executive Officers as a group (15 8.19%
persons).................................................. 2,102,326(6)
---------------
* 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 5, 2003, as indicated below, the
percentages indicated are based on 24,275,409 shares of Common Stock issued
and outstanding on March 5, 2003. 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 5, 2003 are as follows: Mr.
Daugherty -- 161,672 shares; Mr. Dike -- 132,500 shares; Mr.
Feehan -- 480,418 shares; Mr. Hunter -- 162,500 shares; Messrs. Graves and
McKibben -- 17,500 shares each; Mr. Micallef -- 12,500 shares; Mr.
Morris -- 240,000 shares; Mr. Kauffman -- 43,750 shares; Mr.
Bessant -- 16,850 shares; Mr. Gaston -- 26,703 shares; and Mr.
Finn -- 26,175 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 2,000 shares owned by Mr. Gaston's wife.
(6) This amount includes 1,395,418 shares that directors and executive officers
have the right to acquire within the next sixty days through the exercise of
stock options.
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, 2002 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.
6
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 -
AWARDS
--------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
-------------------- OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) SAR(#) COMPENSATION($)(1)
--------------------------- ---- --------- -------- -------------- ------------------
Daniel R. Feehan,.................. 2002 441,501 290,761 62,500 40,317
Chief Executive Officer 2001 423,469 112,468 -- 38,101
and President(2) 2000 383,438 59,058 150,000 35,637
James H. Kauffman,................. 2002 271,318 138,757 25,000 12,957
Executive Vice President -- 2001 278,415 55,871 -- 8,797
International Operations 2000 263,415 54,228 50,000 8,103
Thomas A. Bessant, Jr.,............ 2002 215,088 113,089 25,000 5,950
Executive Vice President -- 2001 203,942 43,356 -- 6,052
Chief Financial Officer 2000 178,500 21,994 50,000 5,118
Michael D. Gaston,................. 2002 203,310 106,896 25,000 7,290
Executive Vice President -- 2001 196,290 41,670 -- 6,449
Business Development 2000 187,008 29,362 50,000 5,762
Jerry D. Finn,..................... 2002 200,750 105,550 25,000 7,355
Executive Vice President -- 2001 193,308 41,045 -- 6,064
Domestic Pawn Operations 2000 182,000 7,213 50,000 5,289
---------------
(1) The amounts disclosed in this column for 2002 include:
(a) Company contributions of the following amounts under the Company's
401(k) Savings Plan on behalf of Mr. Feehan: $14,174; Mr. Kauffman:
$7,053; Mr. Bessant: $5,752; Mr. Gaston: $6,499; and Mr. Finn:
$5,394.
(b) Payment by the Company of premiums for term life insurance on behalf
of Mr. Feehan: $1,143; Mr. Kauffman: $5,904; Mr. Bessant: $198; Mr.
Gaston: $791; and Mr. Finn: $1,961.
(c) Annual premium payments under split-dollar life insurance policies on
Mr. Feehan ($25,000).
(2) Mr. Feehan assumed the position of Chief Executive Officer and President
effective February 1, 2000.
7
The following table shows all individual grants of stock options to the
named executive officers of the Company during the fiscal year ended December
31, 2002.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED (#)(1) FISCAL YEAR ($/SH) DATE $(2)
---- -------------- ------------ ----------- ---------- -------------
Daniel R. Feehan............... 62,500 14.6 7.95 01/23/12 387,500
Thomas A. Bessant, Jr. ........ 25,000 5.8 7.95 01/23/12 155,000
James H. Kauffman.............. 25,000 5.8 7.95 01/23/12 155,000
Michael D. Gaston.............. 25,000 5.8 7.95 01/23/12 155,000
Jerry D. Finn.................. 25,000 5.8 7.95 01/23/12 155,000
---------------
(1) These stock options were granted on January 23, 2002 and vest in 25%
increments on each anniversary date of the grant beginning January 23, 2003,
or in accordance with certain share price appreciation criteria as follows:
The options would vest 50% if the market price of the Company's common stock
equals or exceeds 150% of the exercise price for 20 consecutive calendar
days, and the options would vest 100% if the market price equals or exceeds
200% of the exercise price for 20 consecutive calendar days.
(2) As permitted by the Securities and Exchange Commission's rules on executive
compensation disclosure, the company used the Black-Scholes model of option
valuation to determine grant date present value. The Company does not
advocate or necessarily agree that the Black-Scholes model can properly
determine the value of an option. Calculations are based upon the following
assumptions as of the grant date: (i) dividend yield per share of .63% based
on the Company's history of dividend payments; (ii) volatility of 56.69%;
(iii) an expected option term of approximately 8 years; and (iv) a risk-free
rate of return of 5.23% (based on the then quoted yield of U.S. Treasury
Strips maturing approximately 8 years from the grant date).
The following table provides information concerning option exercises in
fiscal 2002 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...................... -- -- 464,793/278,643 959,611/98,125
James H. Kauffman..................... -- -- 37,500/112,500 -0-/39,250
Thomas A. Bessant, Jr. ............... -- -- 10,600/88,629 19,012/39,250
Michael D. Gaston..................... -- -- 20,453/95,453 -0-/39,250
Jerry D. Finn......................... 5,000 19,535 24,925/88,125 7,786/39,250
---------------
(1) Values stated are based upon the closing price of $9.52 per share of the
Company's Common Stock on the New York Stock Exchange on December 31, 2002,
the last trading day of the fiscal year.
8
The following table summarizes the Company's equity compensation plan
information as of December 31, 2002.
EQUITY COMPENSATION PLAN INFORMATION
COMMON SHARES
AVAILABLE FOR FUTURE
COMMON SHARES TO BE WEIGHTED-AVERAGE ISSUANCE UNDER EQUITY
ISSUED UPON EXERCISE OF EXERCISE PRICE OF COMPENSATION PLANS
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN(A))
------------- ----------------------- ---------------------- -----------------------
(A) (B) (C)
Equity compensation plans approved
by the Company's shareholders..... 4,373,754(1) $8.13 1,161,488(2)
Equity compensation plans not
approved by the Company's
shareholders(3)................... -- -- --
Totals.............................. 4,373,754 $8.13 1,161,488
---------------
(1) Consists of the following shares of stock to be issued upon the exercise of
outstanding stock options granted under the following plans:
(a)307,500 shares under the 1987 Stock Option Plan
(b)405,000 shares under the 1989 Key Employee Stock Option Plan
(c)1,545,000 shares under the 1989 Non-Employee Director Stock Option Plan
(d)2,116,254 shares under the 1994 Long-Term Incentive Plan
(2) Consists entirely of shares available for issuance under the 1994 Long-Term
Incentive Plan.
(3) The Company has no equity compensation plans that were not approved by the
Company's shareholders.
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
9
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
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 target bonus percentage for the Company's
Chief Executive Officer is 50%. The target bonus percentages for the other
officers vary depending upon each officer's position with the Company, and the
bonus amount increases in the event the Company's operating performance exceeds
the financial plan.
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 tied to 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. The options granted to certain of the
Company's executive officers in 2002 vest in 25% increments on each of the first
four anniversaries of 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. With these
grants, 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.
10
CEO'S COMPENSATION FOR FISCAL 2002
The fiscal 2002 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, Mr. Feehan's minimum base salary was
$433,000. At the same time in 2002 that other Company officers received merit
increases in their base salaries, the Committee approved a 3% increase in Mr.
Feehan's base salary. The Committee believes that the total cash compensation
paid to Mr. Feehan was appropriate in light of the Company's accomplishments in
2002 and the performance of the Company's core lending operations during the
year.
These 2002 accomplishments also support the Committee's belief that the
fiscal 2002 cash compensation of the Company's other executive officers was set
at appropriate levels.
EXECUTIVE COMPENSATION COMMITTEE
B.D. Hunter, Chairman
A.R. Dike
Alfred M. Micallef
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 12
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).
11
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."
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
--------------------------------------------------------------------------------------
12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
--------------------------------------------------------------------------------------
Cash America
International,
Inc. 100.00 117.81 75.99 34.33 67.14 75.64
S&P 500 100.00 128.55 155.60 141.42 124.63 96.95
Peer Group 100.00 102.04 54.99 17.16 36.60 58.87
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. During 2002, the
12
highest unpaid balance of principal and accrued interest on these notes was
$3,162,665. 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. Ace repaid the notes in full in
January 2003 and continues to operate the pawnshops under the Franchise
Agreements.
The Board of Directors of the Company adopted an officer stock loan program
in 1994, modified the program in 1996 and in 2001, and discontinued the program
in 2002 with no further principal advances to be made. The purpose of the
program was (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 could utilize loan
proceeds to acquire and hold common stock of the Company by means of option
exercises or otherwise. The stock held as a result of the loan is pledged to the
Company to secure the obligation to repay the loan. At its July 24, 2002
meeting, the Board further modified the program as follows: the interest rate on
all outstanding loans was set at a fixed rate of six percent (6%) per annum; all
outstanding loans were converted to a five-year maturity date with all principal
and interest due at maturity; and all of the prior triggering events that could
cause the loan to become a nonrecourse obligation to the borrower, except for a
"change in control" of the Company, were eliminated. As of February 28, 2003,
Messrs. Feehan, Kauffman, and Bessant had stock loans outstanding under this
program in the aggregate principal amounts of $2,674,379, $431,779, and
$364,087, respectively. These were also the highest amounts by which these
individuals were indebted under the program during 2002.
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 these statements with management. The
Audit Committee has discussed with PricewaterhouseCoopers LLP, the Company's
independent accountants during the 2002 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, 2002, and be filed
with the U.S. Securities and Exchange Commission.
AUDIT COMMITTEE
James H. Graves, Chairman
Clifton H. Morris, Jr.
Timothy J. McKibben
13
AUDIT AND NON-AUDIT FEES
For the 2002 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 Fees"
on the principal accountants' independence.
AUDIT AND RELATED FEES:
Audit of Consolidated Financial Statements.................. $190,000
SAS 70 Short-term Cash Advances Systems Audit............... 91,407
Harvey & Thompson Ltd. ("H&T") Audit........................ 88,194
10-Q Quarterly Reviews...................................... 27,632
Svensk Pantbelaning Audit................................... 27,557
Adoption of FAS 142 Review (2nd Quarter 10-Q)............... 4,124
SEC Consent Letter for innoVentry Financials (2001 10-K).... 3,000
Meeting with Audit Committee Chairman....................... 1,011
--------
Total............................................. $432,925
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION: $ -0-
ALL OTHER FEES:
Tax Services for H&T........................................ $ 19,431
401(k) Savings Plan Audit................................... 16,393
Accounting Assistance on H&T's 2001 Statutory Accounts...... 4,811
Officer's Tax Consultation and Return Preparation........... 4,770
Stock Option Accounting Research............................ 3,872
Uniform Franchise Offering Circular Filing Reviews and
Consents.................................................. 3,498
Expatriate Tax Consulting................................... 1,155
Form S-8 Consent............................................ 1,039
--------
Total............................................. $ 54,969
--------
Grand Total....................................... $487,894
========
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP of Fort Worth, Texas served as independent
public accountants for the Company for fiscal 2002 and has reported on the
Company's financial statements. The Audit Committee of 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, 2003 and recommends to the
shareholders that they ratify this selection for the ensuing fiscal year ending
December 31, 2003. 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 Audit Committee of 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
14
view towards soliciting the shareholders' opinion on the selection. This 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 2003 FISCAL YEAR.
OTHER BUSINESS
Any proposal to be presented by a shareholder at the Company's 2004 Annual
Meeting of Shareholders must be presented to the Company by no later than
November 21, 2003. Also, Shareholders may propose director candidates for
consideration by the Board's Nominating and Corporate Governance Committee. Any
such proposal must be sent in writing to the Corporate Secretary of the Company
at the Company's address set forth at the beginning of this Proxy Statement by
no later than November 21, 2003.
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 28, 2003
15
CASH AMERICA INTERNATIONAL, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING APRIL 23, 2003
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 23, 2003, and at any
adjournment thereof, all of the stock of the Company standing in my name as of
the record date of March 5, 2003 on all matters coming before said meeting.
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.
(CONTINUED AND TO BE MARKED, DATED AND SIGNED, ON REVERSE SIDE)
--------------------------------------------------------------------------------
ADDRESS CHANGE/COMMENTS (MARK THE CORRESPONDING BOX ON THE REVERSE SIDE)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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* FOLD AND DETACH HERE *
Mark Here [ ]
for Address
Change or
Comments
SEE REVERSE SIDE
ELECTION OF DIRECTORS, FOR WITHHOLD 2. Ratification of the appointment of PricewaterhouseCoopers LLP
all nominees listed AUTHORITY as independent auditors for the year 2003.
NOMINEES: (except as marked to vote for all
01 Jack R. Daugherty to the contrary) nominees listed FOR AGAINST ABSTAIN
02 A. R. Dike
03 Daniel R. Freehan [ ] [ ] [ ] [ ] [ ]
04 James H. Graves
05 B.D. Hunter
06 Timothy J. McKibben 3. In their discretion, the proxies are authorized to vote upon
07 Alfred M. Micallef such other business as may properly come before the meeting or
08 Clifton H. Morris, Jr. any adjournments thereof.
FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):
--------------------------------------------------------------------------------
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.
* FOLD AND DETACH HERE *