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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, For Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
SS.240.14a-11(c) or SS.240.14a-12
R&G FINANCIAL CORPORATION
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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)(4) and
0-11.
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was 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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R&G FINANCIAL CORPORATION
R-G PLAZA
280 JESUS T. PINERO AVENUE
HATO REY, SAN JUAN, PUERTO RICO 00918
(787) 758-2424
_________ ___, 2004
Dear Stockholder,
You are cordially invited to attend the Annual Meeting of Stockholders
(the "Annual Meeting") of R&G Financial Corporation. The Annual Meeting will be
held at The Ritz-Carlton, San Juan Hotel, Spa & Casino, 6961 Los Gobernadores
Avenue, Carolina, San Juan, Puerto Rico 00979 on Friday, April 23, 2004 at 10:00
a.m., local time. The matters to be considered by stockholders at the Annual
Meeting are described in the accompanying materials.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend the
Annual Meeting in person. We urge you to mark, sign, and date your proxy card
today and return it in the envelope provided, even if you plan to attend the
Annual Meeting. If you hold your shares in street name through a brokerage firm,
you may be able to use a toll-free telephone number or the Internet to vote
(instructions would be supplied to you by your broker). Taking action to vote by
proxy will not prevent you from voting in person, but will ensure that your vote
is counted if you are unable to attend.
Your continued support of, and interest in, R&G Financial Corporation
are sincerely appreciated.
Very truly yours,
Victor J. Galan
Chairman of the Board and
Chief Executive Officer
R&G FINANCIAL CORPORATION
R-G PLAZA
280 JESUS T. PINERO AVENUE
HATO REY, SAN JUAN, PUERTO RICO 00918
(787) 758-2424
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 23, 2004
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of R&G Financial Corporation (the "Company") will be held at
The Ritz-Carlton, San Juan Hotel, Spa & Casino, 6961 Los Gobernadores Avenue,
Carolina, San Juan, Puerto Rico 00979 on Friday, April 23, 2004 at 10:00 a.m.,
local time, for the following purposes, all of which are more completely set
forth in the accompanying Proxy Statement:
(1) To elect three (3) directors for a three (3) year term or
until their successors are elected and qualified;
(2) To approve an amendment to the Amended and Restated
Certificate of Incorporation of the Company to increase the
authorized common stock of the Company from One Hundred
Million (100,000,000) to Two Hundred Million (200,000,000);
(3) To approve the R&G Financial Corporation 2004 Stock Option
Plan;
(4) To ratify the appointment by the Board of Directors of
PricewaterhouseCoopers LLP as the Company's independent
auditors for the fiscal year ending December 31, 2004; and
(5) To transact such other business as may properly come before
the Annual Meeting or any adjournment thereof. Management is
not aware of any other such business that may properly come
before the Annual Meeting.
The Board of Directors has fixed March 26, 2004 as the voting record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting. Only those stockholders of record as of the close of
business on that date will be entitled to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Victor J. Galan
Chairman of the Board and
Chief Executive Officer
San Juan, Puerto Rico
, 2004
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YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU HOLD YOUR SHARES IN STREET NAME
THROUGH A BROKERAGE FIRM, YOU MAY BE ABLE TO USE A TOLL-FREE TELEPHONE NUMBER OR
THE INTERNET TO VOTE (INSTRUCTIONS WOULD BE SUPPLIED TO YOU BY YOUR BROKER). IF
YOU ATTEND THE MEETING, YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY
GIVEN MAY BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE
EXERCISE THEREOF.
R&G FINANCIAL CORPORATION
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
April 23, 2004
This Proxy Statement is furnished to the holder of Class A common
stock, $0.01 par value per share (the "Class A Shares"), and holders of Class B
common stock, $0.01 par value per share (the "Class B Shares") (collectively,
the "Common Stock"), of R&G Financial Corporation (the "Company"). Proxies are
being solicited on behalf of the Board of Directors of the Company to be used at
the Annual Meeting of Stockholders ("Annual Meeting") to be held at The
Ritz-Carlton, San Juan Hotel, Spa & Casino, 6961 Los Gobernadores Avenue,
Carolina, San Juan, Puerto Rico 00979 on Friday, April 23, 2004 at 10:00 a.m.,
local time, for the purposes set forth in the Notice of Annual Meeting of
Stockholders. This Proxy Statement is first being mailed to stockholders on or
about _______ __, 2004.
Your vote is important. Because many stockholders cannot attend the
Annual Meeting in person, it is necessary that a large number be represented by
proxy. Stockholders may vote by completing the enclosed proxy card and mailing
it in the postage-paid envelope provided. If you hold your shares in street name
through a brokerage firm, you may be able to use a toll-free telephone number or
the Internet to vote (instructions would be supplied to you by your broker). The
telephone and Internet voting procedures, if provided by your broker, are
designed to authenticate stockholders by use of a control number and to allow
stockholders to confirm that their instructions have been properly recorded.
The method by which you vote will in no way limit your right to vote at
the Annual Meeting if you later decide to attend in person. If your shares are
held in the name of a broker or other holder of record, you must obtain a proxy,
executed in your favor, from the holder of record to be able to vote at the
Annual Meeting.
The proxy card included herein, if properly signed and returned to the
Company and not revoked prior to its use, will be voted in accordance with its
instructions. If no contrary instructions are given, each proxy card received
will be voted (i) FOR the nominees for director described herein; (ii) FOR
approval of the amendment to the Amended and Restated Certificate of
Incorporation of the Company increasing the authorized Common Stock of the
Company, (iii FOR approval of the R&G Financial Corporation 2004 Stock Option
Plan, (iv) FOR ratification of the appointment of PricewaterhouseCoopers LLP as
the Company's independent auditors for fiscal 2004; and (v) upon the transaction
of such other business as may properly come before the Annual Meeting, in
accordance with the best judgment of the persons appointed as proxies.
Any stockholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Secretary of the Company written
notice thereof (mailed to the attention of Secretary, R&G Financial Corporation,
R-G Plaza, 280 Jesus T. Pinero Avenue, Hato Rey, San Juan, Puerto Rico 00918;
(ii) filing a later dated proxy (using a proxy card or the telephone or Internet
voting procedures possibly made available by your brokerage firm); or (iii)
appearing at the Annual Meeting and giving the
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Secretary notice of his or her intention to vote in person. Proxies solicited
hereby may be exercised only at the Annual Meeting and any adjournment thereof
and will not be used for any other meeting.
VOTING
Only stockholders of record at the close of business on March 26, 2004
("Voting Record Date") will be entitled to vote at the Annual Meeting. On the
Voting Record Date, there were 21,559,584 Class A Shares outstanding and
29,539,115 Class B Shares outstanding. The Company has no other class of Common
Stock or other voting securities outstanding. The holder of Class A Shares, the
Chairman and Chief Executive Officer of the Company, is entitled to two votes
per share and the holders of Class B Shares are entitled to one vote per share
at the Annual Meeting on all matters properly presented at the Annual Meeting.
The Chairman of the Board and Chief Executive Officer, who through his
holdings of Class A Shares controls 59.35% of the outstanding Common Stock on
the Voting Record Date, has indicated his intention to vote his shares "FOR" the
nominees for directors, "FOR" ratification of the appointment of
PricewaterhouseCoopers LLP as the Company's independent auditors for 2004, "FOR"
approval of the amendment to the Amended and Restated Certificate of
Incorporation of the Company increasing the authorized Common Stock of the
Company and "FOR" approval of the R&G Financial Corporation 2004 Stock Option
Plan. Accordingly, the proposals presented for consideration by the stockholders
at this Annual Meeting of stockholders are expected to be approved as presented.
Directors are elected by a plurality of the votes cast with a quorum
present. The three persons who receive the greatest number of votes of the
holders of Common Stock represented in person or by proxy at the Annual Meeting
will be elected directors of the Company. Abstentions and broker "non-votes" are
considered in determining the presence of a quorum, but will not affect the vote
required for the election of directors.
The affirmative vote of the holders of a majority of the total votes
present in person or by proxy is required to ratify the appointment of the
independent auditors. The affirmative vote of the holders of a majority of the
shares of the Company's common stock outstanding and entitled to vote is
necessary to approve the amendment to the Company's Amended and Restated
Certificate of Incorporation to increase the authorized common stock. Therefore,
the failure to vote, either by proxy or in person, will have the same effect as
a vote against this proposal. The affirmative vote of the holders of a majority
of the shares of the Company's common stock present in person or by proxy at the
Annual Meeting and entitled to vote is required to approve the R&G Financial
Corporation 2004 Stock Option Plan. Abstentions will have the same affect as a
vote against each of the proposals. Under rules applicable to broker-dealers,
the proposal to approve the R&G Financial Corporation 2004 Stock Option Plan is
considered a "non-discretionary" item upon which brokerage firms may not vote in
their discretion on behalf of their clients if such clients have not furnished
voting instructions. However, broker "non-votes" will not be treated as entitled
to vote at the Annual Meeting. Consequently, broker "non-votes" will not affect
the vote to approve the R&G Financial Corporation 2004 Stock Option Plan.
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INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTORS,
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, each of which
contains approximately one-third of the Board. The directors are elected by the
stockholders of the Company for staggered three year terms or until their
successors are elected and qualified. Stockholders of the Company are not
permitted to cumulate their votes for the election of directors.
No director or executive officer of the Company is related to any other
director or executive officer of the Company by blood, marriage or adoption
except for Victor J. Galan, the Chairman of the Board and Chief Executive
Officer of the Company, who is the father of Victor L. Galan, another director
of the Company. Each of the nominees currently serves as a director of the
Company.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominees for director listed
below. If the person or persons named as nominee should be unable or unwilling
to stand for election at the time of the Annual Meeting, the proxies will
nominate and vote for one or more replacement nominee(s) recommended by the
Board of Directors. At this time, the Board of Directors knows of no reason why
the nominees listed below may not be able to serve as directors if elected.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTORS AND CONTINUING DIRECTORS
The following tables present information concerning the nominees for
director of the Company and each director whose term continues.
NOMINEES FOR DIRECTORS FOR THREE-YEAR TERMS EXPIRING IN 2007
Name Age(1) Director Since(2)
------------------- ------------------------------------ ---------------------
Victor L. Galan 40 1995
Rafael Nin 59 2003
Benigno Fernandez 63 1996
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE FOR THE ELECTION OF THE ABOVE
NOMINEES FOR DIRECTOR.
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DIRECTORS WHOSE TERMS EXPIRE IN 2006
Name Age(1) Director Since(2)
------------------- ------------------------------------ ---------------------
Gilberto Rivera-Arreaga 54 1996
Laureno Carus Abarca 74 1983
Ileana M. Colon-Carlo 55 1998
Roberto Gorbea 62 1998
DIRECTORS WHOSE TERMS EXPIRE IN 2005
Name Age(1) Director Since(2)
------------------- ------------------------------------ ---------------------
Victor J. Galan 70 1990
Ramon Prats 54 1990
Enrique Umpierre-Suarez 62 1996
Eduardo McCormack 75 1990
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(1) As of February 29, 2004.
(2) Includes service as a director of R-G Premier Bank of Puerto Rico
("Premier Bank") or its predecessor.
Information concerning the principal occupation of each nominee for
director of the Company and other members of the present Board, during the past
five years is set forth below.
Victor J. Galan. Mr. Galan is Chairman of the Board and Chief Executive
Officer of the Company, positions he has held since the Company's incorporation
in March 1996. Mr. Galan also served as the Company's President from its
incorporation until January 2001. Mr. Galan is the founder and Chairman of the
Board of R&G Mortgage Corp. ("R&G Mortgage"), a Company subsidiary, a position
he has held since 1972. Mr. Galan is also the Chairman of the Board and Chief
Executive Officer of R-G Premier Bank of Puerto Rico ("Premier Bank"), a Company
subsidiary, a position he has held since Premier Bank was first acquired by R&G
Mortgage in February 1990, Chairman of the Board of The Mortgage Store of Puerto
Rico, Inc. a subsidiary of R&G Mortgage since the inception of its predecessor
in October 1997 (The Mortgage Store of Puerto Rico, Inc. and its predecessor,
"The Mortgage Store"), Chairman of the Board and Chief Executive Officer of R-G
Crown Bank (formerly Crown Bank, a Federal Savings Bank) ("Crown Bank") since
the Company's acquisition of Crown Bank in June 2002, and Chairman of the Board
of Continental Capital Corp. ("CCC"), an operating subsidiary of Crown Bank,
since the initial acquisition of CCC by Premier Bank in October 1999. Mr. Galan
served
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as President of Premier Bank from February 1990 until January 2001. Mr. Galan is
also Chairman of the Board of R-G Investments Corporation ("R-G Investments"), a
subsidiary of the Company and a broker-dealer registered with the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the Puerto Rico Commissioner of Financial
Institutions under the Puerto Rico Uniform Securities Act.
Ramon Prats. Mr. Prats has been the Vice Chairman of the Board of
Directors of the Company since April 1996 and served as its Executive Vice
President from such date until January 2001. In January 2001, Mr. Prats became
President of the Company, R&G Mortgage and Premier Bank. Mr. Prats has served as
a director of R&G Mortgage since April 1985 and has been Executive Vice
President of R&G Mortgage and The Mortgage Store since February 1980 and October
1997, respectively. Mr. Prats also currently serves as Vice Chairman of the
Board of Directors of Premier Bank, a position he has held since February 1990,
and as a director of CCC since October 1999. Mr. Prats is also a director of R-G
Investments and Crown Bank.
Enrique Umpierre-Suarez. Mr. Umpierre-Suarez has been a director of the
Company and its Secretary since April 1996, a director of Premier Bank since
January 1996 and a director of The Mortgage Store since October 1997. Mr.
Umpierre-Suarez has also served as Secretary of Premier Bank since April 1996,
of The Mortgage Store since October 1997, of R-G Investments since 2001 and of
R&G Mortgage since 2003. Mr. Umpierre-Suarez is also a director of R-G
Investments. Mr. Umpierre-Suarez is an attorney in private practice in Hato Rey,
Puerto Rico and is also engaged in the private practice of engineering in Hato
Rey, Puerto Rico.
Victor L. Galan. Mr. Galan has been a director of the Company since
April 1996, a director of R&G Mortgage since June 1996, a director of Premier
Bank since 1995 and a director of The Mortgage Store since October 1997. In
January 2001, Mr. Galan became the Vice President of Loan Production Marketing
and Business Development of R&G Mortgage. Mr. Galan was the Vice President of
The Mortgage Store from October 1998 until January 2001. Previously, Mr. Galan
was the Vice President of Branch Administration of R&G Mortgage from June 1997
to October 1998, and prior thereto was the Marketing Manager and Vice President
of R&G Mortgage from February 1996 to June 1997. Mr. Galan, the son of Victor J.
Galan, the Chairman of the Board and Chief Executive Officer of the Company, has
been associated with R&G Mortgage since 1982, having served as Branch Manager at
various locations since 1992.
Rafael Nin. Mr. Nin has been a director of the Company and Premier Bank
since August 2003. Mr. Nin was President and Chief Executive Officer of Pepsi
Cola Puerto Rico Bottling Company from 1996 to 1999. Prior thereto, Mr. Nin was
a real estate land developer for residential and commercial properties in the
State of Florida.
Laureno Carus Abarca. Mr. Carus has been a director of the Company
since April 1996, a director of R&G Mortgage since June 1996 and a director of
Premier Bank (and its predecessor) since 1983. Mr. Carus has been the Chairman
of the Board of Alonso and Carus Iron Works, Inc., in Catano, Puerto Rico, which
is engaged in the production and fabrication of metal products and in the
construction of commercial buildings, since September 1977 and he has been with
the firm since 1960. Mr. Carus has also been President of Petroleum Chemical
Corp., a petroleum processing corporation in Catano, Puerto Rico, since April
1994.
Eduardo McCormack. Mr. McCormack has been a director of the Company
since April 1996, a director of R&G Mortgage since June 1996 and a director of
Premier Bank since 1990. Mr. McCormack is presently the President of EMP Omega
Corporation, in San Juan, Puerto Rico, a fructose importer and distributor, a
position he has held since June 1999. During 1994 and 1995, he served as a
consultant to
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Bacardi Corporation, a rum manufacturer based in Catano, Puerto Rico. Prior
thereto, Mr. McCormack was a Vice President of Bacardi Corporation from 1981 to
1993.
Gilberto Rivera-Arreaga. Mr. Rivera-Arreaga has been a director of the
Company since April 1996 and a director of R&G Mortgage and Premier Bank since
June 1996. Mr. Rivera-Arreaga is also a director of R-G Investments and Crown
Bank. Mr. Rivera-Arreaga has been Executive Vice President of the National
College of Business & Technology, Inc., a post-secondary institution with
campuses in Bayamon and Arecibo, Puerto Rico, since 1993. Prior thereto, Mr.
Rivera-Arreaga engaged in the private practice of law in Bayamon, Puerto Rico.
Mr. Rivera-Arreaga is also a member of the Audit Committee of each of the
Company, Premier Bank, Crown Bank and R&G Mortgage. Mr. Rivera-Arreaga is also a
certified public accountant.
Benigno R. Fernandez. Mr. Fernandez has been a director and the
Chairman of the Company's Audit Committee since April 1996 and a director of R&G
Mortgage and Premier Bank since June 1996. Mr. Fernandez is also the Chairman of
the Audit Committee of each of Premier Bank, Crown Bank and R&G Mortgage. Mr.
Fernandez is Senior Partner of Fernandez, Perez Villarini & Co., a certified
public accounting firm in Hato Rey, Puerto Rico. Mr. Fernandez has been a
certified public accountant since 1969.
Ileana M. Colon-Carlo. Ms. Colon-Carlo has been a director of the
Company since July 1998. Ms. Colon-Carlo has been a member of the Board of
Trustees of Central University of Bayamon, Puerto Rico and an Accounting
Professor in the Graduate School of Business Administration since January 1998.
Prior thereto, Ms. Colon-Carlo served as Comptroller of the Commonwealth of
Puerto Rico from 1987 to 1997. Ms. Colon-Carlo is a past President of the Puerto
Rico Certified Public Accountants State Society and past member of the
Commonwealth of Puerto Rico Board of Accountancy. Additionally, Ms. Colon-Carlo
is a past member of the board of directors of the Puerto Rico Chamber of
Commerce. Ms. Colon is also a member of the Audit Committee of each of the
Company, Premier Bank and R&G Mortgage.
Roberto Gorbea. Mr. Gorbea has been a director of the Company since
July 1998. Mr. Gorbea has been President, Chief Executive Officer and member of
the board of directors of Lord Electric Company of Puerto Rico, Inc., San Juan,
Puerto Rico, which constructs industrial, electrical, and mechanical systems,
since 1984.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Set forth below is information concerning executive officers of the
Company and its principal operating subsidiaries: R&G Mortgage, Premier Bank and
Crown Bank, who do not serve on the Board of Directors of the Company. Each
executive officer is elected by the board of directors of the entity for which
he or she serves, and serves until his or her successor is elected and
qualified. No executive officer set forth below is related to any director or
other executive officer of the Company, R&G Mortgage, Premier Bank or Crown Bank
by blood, marriage or adoption, and there are no arrangements or understandings
between a director of the Company, R&G Mortgage, Premier Bank or Crown and any
other person pursuant to which such person was elected an executive officer.
Joseph R. Sandoval, age 40, has been an Executive Vice President of the
Company since December 2002. He has been the Company's Chief Financial Officer
since January 1997 (and also served as its Senior Vice President from January
1997 until his December 2002 promotion), and a director of CCC and its Secretary
since October 1999. Prior thereto, Mr. Sandoval was an accountant with
Pricewaterhouse LLP (a predecessor firm to PricewaterhouseCoopers LLP) in San
Juan, Puerto Rico from August 1987 to January 1997 and had attained the position
of Senior Manager with such firm. Mr.
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Sandoval is also a director of R&G Acquisition Holdings Corporation, the holding
company of Crown Bank.
Mario Ruiz, age 41, has been the Executive Vice President of Premier
Bank since January 2001 and a director of The Mortgage Store since October 1997.
Mr. Ruiz served as Senior Vice President - Secondary Market of R&G Mortgage from
December 1996 to January 2001 and Senior Vice President of The Mortgage Store
from October 1997 to January 2001. Mr. Ruiz served as Vice President - Secondary
Market of R&G Mortgage from 1990 to December 1996. Mr. Ruiz is also a director
of R-G Investments.
Steven Velez, age 46, has been Executive Vice President of R&G Mortgage
since January 2001. Mr. Velez served as the Senior Vice President - Underwriting
and Technology of R&G Mortgage from June 1997 until January 2001. Previously,
Mr. Velez served as Vice President of Underwriting and Technology of R&G
Mortgage. Mr. Velez has been with R&G Mortgage since October 1989.
Victor M. Irizarry, age 55, has been Senior Vice President - Corporate
and Construction Lending since joining Premier Bank in May 1999. Prior to that,
Mr. Irizarry was Senior Vice President - Commercial Banking at another financial
institution from September 1992 to April 1999. In January 2001, Mr. Irizarry
became the Chief Lending Officer of Premier Bank.
Jose L. Ortiz, age 48, has been Senior Vice President - Finance of
Premier Bank since January 2004. Prior thereto, Mr. Ortiz was Vice President -
Finance of Premier Bank from September 1990 to January 2004. Mr. Ortiz
previously was Vice President - Accounting at another financial institution from
May 1985 to September 1990.
John A. Koegel, age 57, has been President and a director of Crown Bank
since its acquisition by the Company in June 2002. Prior to its acquisition by
the Company, Mr. Koegel had been President, Chief Executive Officer and a
director of Crown Bank since its inception in 1985.
BOARD OF DIRECTORS MEETINGS
Regular meetings and special meetings of the Board of Directors of the
Company are held as necessary to adequately conduct the Company's business.
During the year ended December 31, 2003, the Board of Directors met 15 times. No
director attended fewer than 75% of the total number of Board meetings or
committee meetings on which he or she served in 2003. Directors are encouraged
to attend the Annual Meeting. ___ directors attended the previous annual meeting
of stockholders.
DIRECTOR COMPENSATION
Members of the Board of Directors of the Company who are not also
executive officers of the Company receive fees of $900 per Board meeting
attended and $700 per committee meeting attended. Executive officers of the
Company who also serve on the Board of Directors are not compensated for serving
on the Board of Directors or committees thereof.
During fiscal 2003, members of the boards of directors of R&G Mortgage,
Premier Bank and Crown Bank received fees of $900, $900 and $1,000,
respectively, per meeting attended. Executive officers of R&G Mortgage, Premier
Bank and Crown Bank who also serve on their respective boards of directors are
not compensated for their services on such boards of directors or committees
thereof. Non-officer members of the boards of directors of R&G Mortgage, Premier
Bank and Crown Bank serving on committees received additional compensation in
the amount of $700, $700 and $500, respectively, per committee meeting attended
in fiscal 2003, except for members of the Trust Committee of Premier Bank,
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who each received $500 per committee meeting attended in fiscal 2003, and
members of the Compensation Committee, who each received $500 per committee
meeting attended in fiscal 2003.
COMMITTEES OF THE BOARD OF DIRECTORS
General. The Company's Board of Directors has an Audit Committee and a
Compensation Committee, each of which is described below.
Audit Committee. The Company's Audit Committee is, and will continue to
be, comprised entirely of independent directors as defined by the listing
standards of the New York Stock Exchange (the "NYSE"), the Sarbanes-Oxley Act of
2002 and the SEC. The members of the Company's Audit Committee are Messrs.
Benigno R. Fernandez, Gilberto Rivera-Arreaga and Ileana M. Colon-Carlo. In
addition, the Board of Directors has determined that each of the members of its
Audit Committee would qualify as an "audit committee financial expert" as
defined in regulations issued by the SEC. The Audit Committee met 11 times in
2003.
The Audit Committee oversees the Company's auditing, accounting,
financial reporting and internal control functions and selects, engages and
compensates the Company's independent accountants. In addition, the Audit
Committee monitors the quality of the Company's critical accounting principles
and financial reporting. The Audit Committee also evaluates the independence of
the Company's independent accountants and approves in advance any permissible
non-audit services provided to the Company by the independent accountants. In
discharging its duties, the Audit Committee:
- meets independently with the Company's compliance staff,
contracted internal auditors, the Company's independent
accountants and the Company's senior management;
- reviews the general scope of the Company's accounting,
financial reporting, annual audit and internal audit program,
matters relating to internal control systems as well as the
results of the annual audit;
- receives, retains and evaluates complaints by the Company's
employees with respect to any Company accounting, internal
accounting controls and auditing matters; and
- resolves any disagreements between the Company's management
and the Company's independent accountants.
The Audit Committee operates under a written charter adopted by the
Company's Board of Directors. A copy of the charter was attached as Appendix A
to the Company's 2003 annual meeting proxy statement, which was filed with the
SEC on March 31, 2003.
Compensation Committee. The Company's Compensation Committee
determines, approves and reports to the Board of Directors on all elements of
compensation for the Company's elected officers, including targeted total cash
compensation and long-term equity based incentives. During fiscal 2003, the
members of the Compensation Committee were Messrs. McCormack (Chairman), Nin,
Fernandez, Carus Abarca and Gorbea. The Report of the Compensation Committee on
Executive Compensation is set forth elsewhere in this Proxy Statement. See
"Report of the Compensation Committee on Executive Compensation."
DIRECTOR NOMINATIONS
The Board of Directors acts as a whole when nominating individuals to
serve on the Board of Directors. The Board of Directors believes that the
selection and nomination of qualified individuals to
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be a director of the Company should be a function of the entire Board rather
than delegated to a committee. The participation by all directors in the
nominating process enable each director to contribute to and vote upon the
selection and nomination of directors.
The Board of Directors considers candidates for director suggested by
its members and other directors of the Company, as well as management and
stockholders. The Board of Directors also may solicit prospective nominees
identified by it. The Board of Directors has authority to retain a third-party
search firm to identify or evaluate, or assist in identifying and evaluating,
potential nominees if it so desires, although it has not done so to date.
As part of the nominating process, the Board of Directors considers
such other relevant factors as it deems appropriate, including the current
composition of the Board, the need for Audit Committee expertise and the
evaluations of other prospective nominees. In connection with this evaluation,
the Board of Directors determines whether to interview the prospective nominee,
and if warranted, one or more members of the Board, in concert with the
Company's Chief Executive Officer, interviews prospective nominees. After
completing this evaluation and interview, the Board of Directors convenes to
discuss and vote upon the nominee.
STOCKHOLDER NOMINATIONS
Section 4.15 of the Company's Bylaws governs nominations for election
to the Board of Directors and requires all such nominations, other than those
made by the Board or a committee thereof, to be made at a meeting of
stockholders called for the election of directors, and only by a stockholder who
has complied with the notice provisions in that section. Stockholder nominations
must be made pursuant to timely notice in writing to the Secretary of the
Company. To be timely, a stockholder's notice must be delivered to, or mailed
and received at, the principal executive offices of the Company not later than
90 days prior to the anniversary date of the mailing of proxy materials by the
Company in connection with the immediately preceding annual meeting of
stockholders of the Company. Each written notice of a stockholder nomination is
required to set forth certain information specified in the Bylaws. No
stockholder nominations were received with respect to this Annual Meeting.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD
Stockholders may communicate with the Board of Directors by sending a
letter to the Company's Board of Directors, c/o Corporate Secretary, R&G
Financial Corporation, R-G Plaza, 280 Jesus T. Pinero Avenue, Hato Rey, San
Juan, Puerto Rico 00918. The Corporate Secretary has the authority to disregard
any inappropriate communications or to take other appropriate actions with
respect to any such inappropriate communications. If deemed an appropriate
communication, the Corporate Secretary will submit stockholder correspondence to
the Chairman of the Board or to any specific director to whom the correspondence
is directed.
9
REPORT OF THE AUDIT COMMITTEE
The following "Report of the Audit Committee" shall not be deemed
incorporated by reference by any general statement incorporating this Proxy
Statement into any filing under the Securities Act of 1933, as amended (the
"Securities Act"), or under the Exchange Act, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under the Securities Act or the Exchange Act.
March 15, 2004
To the Board of Directors of R&G Financial Corporation:
We have reviewed and discussed with management the Company's audited financial
statements as of and for the year ended December 31, 2003.
We have discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter from the
independent auditors required by Independence Standard No. 1, Independence
Discussions with Audit Committee, as amended, by the Independence Standards
Board, and have discussed with the auditors the auditors' independence.
Based on the reviews and discussions referred to above, we recommend to the
Board of Directors that the financial statements referred to above be included
in the Company's Annual Report on Form 10-K for the year ended December 31,
2003.
Benigno R. Fernandez (Chairman)
Gilberto Rivera-Arreaga
Ileana M. Colon-Carlo
10
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 29, 2004, certain
information as to the Common Stock beneficially owned by (i) each person or
entity, including any "group" as that term is used in Section 13(d)(3) of the
Exchange Act, who or which was known to the Company to be the beneficial owner
of more than 5% of the issued and outstanding Common Stock, (ii) certain
directors and executive officers of the Company and its major subsidiaries and
(iii) all directors and executive officers of the Company and its major
subsidiaries, as a group.
Amount and Nature
of Beneficial
Name of Beneficial Ownership as of Percent of
Owner or Number of February 29, Common
Persons in Group 2004(1)(2) Stock (3)
--------------------------------------------- -------------------- --------------
Garity & Co. Capital Management 2,926,689(4) 5.73%
1414 Banco Popular Center
San Juan, Puerto Rico 00918
The Company's Directors and Officers(5):
Victor J. Galan 21,559,584(6) 42.19
Ramon Prats 1,203,681 2.36(10)
Victor L. Galan 6,834 *
Enrique Umpierre-Suarez *
Rafael Nin
Laureno Carus Abarca 94,411 *
Eduardo McCormack 81,957(7) *
Gilberto Rivera-Arreaga 9,084 *
Benigno R. Fernandez 8,322 *
Ileana M. Colon-Carlo 3,000 *
Roberto Gorbea 2,400 *
Joseph R. Sandoval 78,354(8) *
Additional R&G Mortgage Officer:
Steven Velez 50,400(8) *
Additional Premier Bank Officers:
Mario Ruiz 57,900(8) *
Victor M. Irizarry 12,000 *
Jose L. Ortiz 44,067 *
Additional Crown Bank Officer:
John A. Koegel -- --
All Directors and Officers of the
Company, R&G Mortgage and
Premier Bank as a group (17 persons) 23,321,994(9) 45.64%
-------------
* Represents less than 1% of the outstanding Class B Shares.
11
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. Under regulations promulgated
pursuant to the Exchange Act, shares are deemed to be beneficially
owned by a person if he or she directly or indirectly has or shares (i)
voting power, which includes the power to vote or to direct the voting
of the shares, or (ii) investment power, which includes the power to
dispose or to direct the disposition of the shares. Unless otherwise
indicated, the named beneficial owner has sole voting and dispositive
power with respect to the shares.
(2) All shares reflected in these footnotes give effect to the Company's
three-for-two stock split effected in January 2004.
(3) Based on the total number of Class A Shares and Class B Shares
outstanding. As of February 29, 2004, there were 29,539,115 Class B
Shares and 21,559,584 Class A Shares of the Company issued and
outstanding. All of the Class A Shares are owned by Victor J. Galan,
the Chairman of the Board and Chief Executive Officer of the Company.
The Class B Shares are registered under the Exchange Act and are traded
on the NYSE. The Class A Shares have not been registered under the
Exchange Act but are exchangeable into an equal number of Class B
Shares.
(4) Information obtained from Amendment No. 3 to a Schedule 13G dated
February 19, 2002. Garity & Co. Capital Management ("GCCM") is a
registered investment adviser. GCCM indicates that it is the beneficial
owner and has shared voting and dispositive power over the Class B
Shares shown.
(5) Except as otherwise indicated, the address of each person listed in the
table is c/o R&G Financial Corporation, 280 Jesus T. Pinero Avenue,
Hato Rey, San Juan, Puerto Rico 00918.
(6) Represents Class A Shares, the holder of the Class A Shares, Mr. Victor
J. Galan, is entitled to two votes per share and the holders of the
Class B Shares are entitled to one vote per share at the Annual Meeting
on all matters properly presented at the Annual Meeting. As a result of
such voting entitlement, Mr. Galan holds 59.35% of the voting power of
the aggregate issued and outstanding shares of the Company's Common
Stock as of February 29, 2004.
(7) Includes 71,526 Class B Shares held jointly with Mr. McCormack's wife.
(8) Includes the following number of shares which may be acquired upon the
exercise of stock options exercisable within 60 days of the Voting
Record Date under the Company's Stock Option Plan:
Joseph R. Sandoval 28,950
Mario Ruiz 29,400
Steven Velez 23,400
(9) Includes 21,559,584 Class A Shares owned by Victor J. Galan. All other
shares are Class B Shares.
(10) Represents 4.07% of the outstanding Class B Shares.
12
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers,
directors and persons who own more than 10% of the Company's capital stock to
file reports of ownership and changes in ownership with the SEC. Officers,
directors and greater than 10% stockholders are required by regulation to
furnish the Company with copies of all forms they file pursuant to Section 16(a)
of the Exchange Act. The Company knows of no person who owns 10% or more of the
Company's capital stock, other than Victor J. Galan, the Company's Chairman of
the Board and Chief Executive Officer. See "Beneficial Ownership of Common Stock
by Certain Beneficial Owners and Management."
Based solely on review of the copies of such forms furnished to the
Company, or written representations from its officers and directors, the Company
believes that during, and with respect to, fiscal 2003, the Company's officers
and directors complied in all respects with the reporting requirements
promulgated under Section 16(a) of the Exchange Act, except that Steven Velez,
an executive officer, failed to timely file a Form 4 upon the exercise of stock
options and Joseph R. Sandoval, an executive officer, failed to timely file a
Form 4 upon a stock option grant.
13
MANAGEMENT COMPENSATION
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table includes individual
compensation information with respect to the Chairman of the Board and Chief
Executive Officer of the Company and the five other most highly compensated
executive officers of the Company and its subsidiaries whose total compensation
exceeded $100,000 for services rendered in all capacities during the fiscal year
ended December 31, 2003.
Annual Compensation Long-Term Compensation
----------------------------- -------------------------
Securities
Restricted Underlying All Other
Name and Stock Options/SARs Compensation(3)
Principal Position Year Salary(1) Bonus Awards (2) (3)
---------------------------------- ------ ------------ ---------- ------------ -------------- -------------
Victor J. Galan ................... 2003 $ 341,759 $ 200,200 -- -- $
Chairman of the Board .......... 2002 341,759 200,000 -- -- 3,693
and Chief Executive Officer .... 2001 341,759 200,000 -- -- 3,320
of the Company
Ramon Prats ....................... 2003 675,000 1,750,000
Vice Chairman of the Board and . 2002 600,000 1,500,000 -- -- 3,961
President of the Company ....... 2001 400,000 1,450,000 -- -- 3,640
Joseph R. Sandoval ................ 2003 185,000 350,000 -- 12,500
Executive Vice President and ... 2002 165,000 225,000 -- -- 755
Chief
Financial Officer of the Company 2001 150,000 150,000 -- -- 744
Mario Ruiz ........................ 2003 233,123 400,000 -- --
Executive Vice President of .... 2002 220,000 350,000 -- -- 2,066
Premier Bank ................... 2001 200,000 250,000 -- 25,000 977
Steven Velez ...................... 2003 212,400 380,000 -- --
Executive Vice President of R&G 2002 200,400 325,000 -- -- 2,748
Mortgage ....................... 2001 175,000 200,000 -- 25,000 2,474
Victor M. Irizarry ................ 2003 220,000 200,000 -- --
Senior Vice President and Chief 2002 210,000 180,000 -- -- 806
Lending Officer of Premier ..... 2001 200,000 160,000 -- -- 669
Bank
------------
(1) Does not include amounts attributable to miscellaneous benefits
received by the named officers. The costs to the Company of providing
such benefits to the named officers during the years ended December 31,
2003, 2002 and 2001 did not exceed the lesser of $50,000 or 10% of the
total of annual salary and bonus reported.
(2) Share amounts reflect the Company's three-for-two stock split effected
in January 2004.
(3) Represents the employers' contribution on behalf of the employee to the
Profit Sharing Plan. See "- Profit Sharing Plan."
BENEFITS
Stock Option Plan. The Company maintains a Stock Option Plan. The Stock
Option Plan is designed to attract and retain qualified personnel in key
positions, provide officers and key employees with a proprietary interest in the
Company as an incentive to contribute to the success of the Company and reward
key employees for outstanding performance and the attainment of targeted goals.
An amount of Common Stock equal to 10% of the aggregate number of Class B Shares
sold in the Company's initial
14
public offering (1,304,100 shares, as adjusted for the Company's stock dividends
and splits) was authorized under the Stock Option Plan, which may be filled by
authorized but unissued shares, treasury shares or shares purchased by the
Company on the open market or from private sources. The Stock Option Plan
provides for the grant of stock options and stock appreciation rights
(collectively "Awards"). Awards are available for grant to key employees of the
Company and any subsidiaries.
Profit Sharing Plan. R&G Mortgage and Premier Bank have adopted a
Profit Sharing Plan (the "Plan"), which is intended to comply with the Internal
Revenue Code of 1986, as amended, the Employee Retirement Income Security Act of
1974, and the Puerto Rico Income Tax Act of 1954. All employees of R&G Mortgage
and Premier Bank are eligible to participate in the Plan except, among others,
those employees who are non-resident aliens. Eligible employees may enter the
Plan on January 1, April 1, July 1, and October 1 following attaining age 21 and
completing one year of service. Under the Plan, a separate account is
established for each participating employee, and R&G Mortgage and Premier Bank
may make discretionary contributions to the Plan which are allocated to
employees' accounts. Employees may also contribute to the Plan by making salary
reductions up to 10% of annual compensation for the year. Such contributions
defer the employee's earnings up to a maximum of $8,000 in each plan year. In
2003, R&G Mortgage and Premier Bank each matched an employee's contribution to
the Plan up to 62.5% of the first 5% of an employee's compensation as follows:
12.5% when an employee had 0 to 5 years of service, 25% when an employee had 6
to 10 years of service, 39.5% when an employee had 11 to 15 years of service,
50% when an employee had 16 to 20 years of service, and 62.5% when an employee
had 21 or more years of service.
Employees' contributions to the Plan are immediately vested, and
employees become 100% vested in employer contributions upon the completion of 5
years of service. All funds contributed to the Plan are held in a trust fund.
R&G Mortgage and Premier Bank direct the investment of matching and
discretionary contributions, and employees direct the investment of elective
contributions and rollover contributions. Contributions may be directed into
eight separate funds. Distributions from the Plan are made upon termination of
service, death, or disability in a lump sum or installment payments. The normal
retirement age under the Plan is age 65.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth required information with respect to
individual grants of stock options (split adjusted) made during the year ended
December 31, 2003 to each of the named executive officers of the Company.
Individual Grants
---------------------------------------------------------------------------------
Number Percent of Potential realizable value
of Total at assumed annual rates of
Securities Options stock price appreciation for
Underlying Granted to Exercise of option term
Option Employees Base Price Expiration ----------------------------
Name Granted (1) ($/SH) Date 5% ($) 10% ($)
------------------------ ----------- ---------- ----------- ----------- ----------- ------------
Victor J. Galan -- -- -- -- -- --
Ramon Prats -- -- -- -- -- --
Joseph R. Sandoval 18,750 100% 14.57 3/26/2013 171,806 435,391
Mario Ruiz -- -- -- -- -- --
Steven Velez -- -- -- -- -- --
Victor M. Irizarry -- -- -- -- -- --
--------------
(1) Percentage of options granted to all employees and directors during
fiscal 2003.
15
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth, with respect to the executive officers
named in the Summary Compensation Table, information with respect to the
aggregate amount of options exercised during the last fiscal year, any value
realized thereon, the number of unexercised options at the end of the fiscal
year 2003 (exercisable and unexercisable) and the value with respect thereto.
Number of Securities Value of Unexercised
Underlying Options at In-The-Money Options at
Shares Fiscal Year End(1) Fiscal Year End(2)
Acquired on Value --------------------------- ----------------------------
Name Exercise(1) Realized(2) Exercisable Unexercisable Exercisable Unexercisable
------------------- ----------- ----------- ----------- ------------- ----------- -------------
Victor J. Galan -- -- -- -- -- --
Ramon Prats -- -- -- -- -- --
Joseph R. Sandoval -- -- 28,950 18,600 510,215 236,320
Mario Ruiz -- -- 29,400 26,100 475,280 428,820
Steven Velez 27,000 643,810 23,400 24,600 380,580 405,145
Victor M. Irizarry -- -- 12,000 3,000 197,400 49,350
---------
(1) Share amounts have been adjusted for the Company's stock dividends and
stock splits.
(2) Based upon a closing market price for the Class B Shares as of
December 31, 2003 of $26.53, as adjusted for the Company's
three-for-two stock split effected in January 2004.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 2003, VIG Leasing, S.E., a Puerto
Rico real estate partnership which is 95.8% owned by the family of Victor J.
Galan, the Company's Chairman of the Board and Chief Executive Officer,
received lease payments from the Company of $3.4 million on properties owned.
The Company believes that the lease terms are on terms substantially the same
as they would have negotiated with a non-affiliated party.
Under applicable federal law, loans or extensions of credit to
executive officers and directors must be made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with the general public and must not involve more than
the normal risk of repayment or present other unfavorable features.
Premier Bank and Crown Bank have policies that provide that all loans
made by either bank to directors and officers are made in the ordinary course
of business, on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons. These policies provide that such loans may not involve more than
the normal risk of collectability or present other unfavorable features. As of
December 31, 2003, mortgage and consumer loans to directors and executive
officers of the Company in excess of $60,000 aggregated approximately
$6,226,000 or 0.83% of the Company's consolidated stockholders' equity as of
such date. All such loans were made in accordance with the aforementioned
policies.
During the year ended December 31, 2003, Enrique Umpierre-Suarez, a
director and Secretary of each of the Company and Premier Bank, provided legal
services to borrowers of Premier Bank and R&G Mortgage in connection with the
closing of consumer and commercial loans. During the year ended December 31,
2003, Mr. Umpierre-Suarez received $881,000 in fees for such legal services,
all of which were paid for by customers of Premier Bank and R&G Mortgage in
connection with loan closings.
R&G Mortgage originates first mortgage loans secured by single-family
residential properties which are either insured by the Federal Housing
Administration ("FHA") or guaranteed by the Veterans'
16
Administration ("VA"). R&G Mortgage pools such FHA/VA loans into
mortgage-backed securities which are guaranteed by the Government National
Mortgage Association ("Ginnie Mae"), which securities are sold to securities
broker dealers and other investors. During the year ended December 31, 2003,
R&G Mortgage sold approximately $2.5 million of such Ginnie Mae securities to
Mr. Victor J. Galan, the Chairman of the Board and Chief Executive Officer of
the Company, approximately $800,000 to Mr. Ramon Prats, the President of the
Company, approximately $50,000 to Mr. Enrique Umpierre-Suarez, a director and
the Secretary of the Company, approximately $500,000 to Mr. Joseph R. Sandoval,
the Executive Vice President and Chief Financial Officer of the Company,
approximately $25,000 to Mr. Victor L. Galan, a director of the Company, and
approximately $200,000 to Mr. Jose L. Ortiz, the Senior Vice President -
Finance of Premier Bank. In purchasing these securities, such persons receive a
benefit on the purchase price equal to 20% of either the premium quoted above
par or the discount quoted below par.
COMPENSATION INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors reviews
the compensation and benefits for the Company's employees and recommends to the
Board adjustments in such compensation. During fiscal 2003, the members of the
Compensation Committee were Messrs. McCormack (Chairman), Nin, Fernandez, Carus
Abarca and Gorbea, each of whom are independent directors. During the year
ended December 31, 2003, no member of the Board of Directors or of its
Compensation Committee served as a member of the board of directors or
compensation committee of an unaffiliated entity that had one or more executive
officers serving as members of the Company's Board of Directors or its
Compensation Committee.
The NYSE corporate governance rules (the "Rules"), which will be
applicable to the Company starting with this year's Annual Meeting, require
companies listed with the NYSE to have, among other things, certain corporate
governance activities be addressed solely by independent directors, including
matters pertaining to director nominations and compensation of executive
officers. The Rules contain an exception for "controlled companies," which are
that small percentage of NYSE listed companies for whom more than 50% of the
voting power is held by an individual or group. Victor J. Galan, the Chairman
of the Board and Chief Executive Officer of the Company, and the sole holder of
Class A Shares, has 59.35% of the voting power of the Company as of the Voting
Record Date; therefore, the Company qualifies as a "controlled company." The
effect of this qualification is that pursuant to the Rules, the Company need
not have a nominating/corporate governance committee or a compensation
committee composed solely of independent directors. Nonetheless, as stated
above, the Company has a Compensation Committee that is composed solely of
independent directors.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The following "Report of the Compensation Committee on Executive
Compensation" shall not be deemed incorporated by reference by any general
statement incorporating this Proxy Statement into any filing under the
Securities Act or under the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under the Securities Act or the Exchange Act.
The purpose of this Committee is to, among other things, compensate
qualified, competent management; motivate executives to achieve a range of
performance goals consistent with a business plan approved by the Board of
Directors of the Company; and ensure that the financial costs of current or
proposed compensation and benefit programs are reasonable and consistent with
industry standards, management performance and stockholders' interest.
17
The Compensation Committee considered the following criteria in
recommending to the Board the compensation of the Chief Executive Officer as
well as the approval of compensation of other executive officers of the Company
and its subsidiaries:
1. The overall financial, market and competitive performance of
the Company and its subsidiaries during the fiscal year under
consideration after adjusting for economic conditions
occurring during the year.
2. The level of and/or increases in return on assets and return
on equity without encouraging short-term profitability
through unreasonable risk-taking or a deterioration of
long-term asset quality.
3. Consideration of individual as well as combined measures of
progress of the Company and its subsidiaries including the
quality of the loan portfolio, the level of the changes in
capital ratios, the overall growth of the Company and its
subsidiaries, the improvement in market share, the
improvement in book value per share, the improvement in
earnings per share, the level of non-performing loans and
real estate owned, efficiency ratio levels as compared to
peer groups and other objectives as may be established by the
Board of Directors of the Company.
4. The individual commitment of the executive officers relative
to overall management efficiency, inspirational leadership,
professional involvement, civic activities and the
maintenance of corporate stature enhancing the image of the
Company and it subsidiaries in their market place.
5. The compensation and benefit levels of comparable positions
to peer group institutions within the financial services
industry, and similar asset and operating characteristics
with a concentration on those institutions operating in the
Company's market areas.
The compensation arrangements and recommendations of the Compensation
Committee include a base salary and a bonus component if the executive's
performance is judged to warrant such a bonus.
The base compensation of Victor J. Galan, Chief Executive Officer of
the Company, Premier Bank and Crown Bank, was established at $341,759 on
January 1, 2003. Mr. Galan's compensation level, determined consistent with the
before mentioned criteria, was based on an examination of 6 peer group
comparisons relative to salary and bonus compensation for Chief Executive
Officers. Mr. Galan's performance is measured by the profit, capital position,
asset quality and the low ratio of operating expenses of the Company, R&G
Mortgage Premier Bank and Crown Bank as well as other measures of executive
compensation so noted in determining his specific compensation. Mr. Galan was
given a bonus of $200,200 for his service during 2003 based on his overall
performance as well as other activities that ensued during the course of the
year.
With respect to the other executive officers of the Company and its
subsidiaries, the Committee also considered salary and bonus recommendations
prepared by the Chief Executive Officer to establish 2003 compensation. The
salary adjustment recommendation and bonus was based on the Company's overall
performance in the past year as well as an analysis of competitive compensation
levels necessary to maintain and attract quality personnel.
Following extensive review and approval by the Compensation Committee,
all issues pertaining to executive compensation were submitted to the full
Board of Directors for their approval. Mr. Victor Galan does not participate in
the review of his compensation.
18
COMPENSATION COMMITTEE
Eduardo McCormack, Chairman
Rafael Nin
Benigno R. Fernandez
Laureno Carus Abarca
Roberto Gorbea
19
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the shares
of Common Stock from December 31, 1998 through December 31, 2003 with (i) the
cumulative total return on the stocks included in the National Association of
Securities Dealers, Inc. Automated Quotation ("Nasdaq") Total Return Index (for
United States companies), (ii) the cumulative total return on the stocks
included in the Nasdaq Total Return Index for Financial Stocks (for United
States and foreign companies) and (iii) the cumulative total return on the
stocks included in the NYSE Market Index. All of these cumulative returns are
computed assuming the reinvestment of dividends at the frequency with which
dividends were paid during the period.
COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
------------------------ FISCAL YEAR ENDING ---------------------
COMPANY/INDEX/MARKET 12/31/1998 6/30/1999 12/31/1999 6/30/2000 12/29/2000 6/29/2001
R&G FINANCIAL CORPORATION B 100.00 81.28 55.28 38.58 70.07 79.51
NASDAQ US ONLY 100.00 122.39 187.01 186.34 114.47 100.49
NASDAQ FINANCIAL 100.00 106.36 95.83 83.61 103.00 111.82
NYSE MARKET INDEX 100.00 109.49 110.30 109.63 112.40 107.73
------------------------ FISCAL YEAR ENDING ---------------------
COMPANY/INDEX/MARKET 12/31/2001 6/28/2002 12/31/2002 6/30/2003 12/31/2003
R&G FINANCIAL CORPORATION B 85.21 118.27 116.92 150.57 203.24
NASDAQ US ONLY 90.07 69.84 63.15 76.55 96.01
NASDAQ FINANCIAL 113.14 123.31 111.62 125.09 150.05
NYSE MARKET INDEX 102.83 94.35 85.38 95.57 110.54
The above graph represents $100 invested in the Company's Common Stock
on December 31, 1998 (as adjusted for the three-for-two stock split effected in
January 2004). The table further assumes dividends were reinvested. The Class B
Shares commenced trading on the Nasdaq Stock Market on August 22, 1996, were
delisted from the Nasdaq on July 11, 2002 and were listed on the NYSE on July
12, 2002.
20
PROPOSAL TO AMEND THE AMENDED AND
RESTATED CERTIFICATE OF INCORPORATION OF THE
COMPANY TO INCREASE THE AUTHORIZED COMMON STOCK
The Board of Directors of the Company believes that it is in the best
interest of the Company to increase its authorized common stock. The Amended
and Restated Certificate of Incorporation of the Company presently authorizes
the Company to issue One Hundred Twenty Million (120,000,000) shares,
consisting of Forty Million (40,000,000) shares of Class A Common Stock, Sixty
Million (60,000,000) shares of Class B Common Stock, and Twenty Million
(20,000,000) shares of Preferred Stock, par value $.01 per share. The Board of
Directors of the Company at a duly constituted meeting held in March 2004 has
authorized an amendment to the Amended and Restated Certificate of
Incorporation to increase the authorized capital stock of the Company to Two
Hundred Twenty Million shares (220,000,000), through an increase of the Class A
common stock to Eighty Million shares (80,000,000) and an increase of the Class
B Common Stock to One Hundred Twenty Million shares (120,000,000). The number
of shares of authorized Preferred Stock shall remain the same. A copy of the
proposed amendment to the Company's Amended and Restated Certificate of
Incorporation is included as Appendix A hereto.
As of March 26, 2003, there were 21,559,584 shares of Class A Common
Stock owned by Mr. Victor J. Galan, Chairman of the Board and Chief Executive
Officer of the Company, and 26,539,115 shares of Class B Common Stock held by
members of the general public. Mr. Galan is the sole holder of Class A Common
Stock of the Company, which is not registered. The Class B Common Stock is
registered under the Exchange Act, and trades on the New York Stock Exchange
under the symbol "RGF."
The Company is seeking stockholder approval to amend its amended and
Restated Certificate of Incorporation for a number of reasons. To begin with,
the increased capitalization will provide the Company with sufficient
additional capitalization to effectuate stock dividends or stock splits in the
future and to use shares of Class B Common Stock as a form of currency, in
whole or in part, in effectuating acquisitions. The Company most recently
effectuated a 3:2 stock split in January 2004. The Company has no present plans
to declare a stock dividend or stock split and has no present plans,
arrangements or understandings with respect to a possible acquisition. In
addition, the Company is required to keep in reserve a number of shares of
Class B Common Stock into which the Class A Common Stock may be converted. Each
share of Class A Common Stock is convertible into shares of Class B Common
Stock at the rate of one share of Class B Common Stock for each share of Class
A Common Stock so converted, at the discretion of the holder of Class A Common
Stock. The Amended and Restated Certificate of Incorporation of the Company
requires the Company to at all times reserve and keep available out of its
authorized but unissued shares of Class B Common Stock, solely for the purpose
of issuance upon the conversion of Class A Common Stock, such number of shares
of Class B Common Stock as shall then be issuable upon the conversion of all
outstanding shares of Class B Common Stock.
Pursuant to Article X of the Amended and Restated Certificate of
Incorporation of the Company, amendments to the Amended and Restated
Certificate of Incorporation shall be made first by approval of the Board of
Directors of the Company pursuant to a resolution adopted by the affirmative
vote of a majority of the directors then in office, and then, to the extent
required by applicable law, by the holders of a majority of shares of the
Company entitled to vote generally in an election of directors, voting together
as a single class, as well as such additional vote of the Preferred Stock as
may be required by the provisions of any series thereof. The holders of each of
the series of the Company's Preferred Stock have no right to vote or dissent
with respect to the proposal to amend the Amended and Restated Certificate of
Incorporation of the Company.
21
Holders of Class A Common Stock and Class B Common Stock generally
vote as a single class on all matters submitted to a vote of the stockholders.
Each record holder of Class A Common Stock is entitled two votes per share and
holders of Class B Common Stock are entitled to one vote per share. Thus, Mr.
Galan is entitled to cast 43,119,168 votes by virtue of his ownership of
21,559,584 shares of Class A Common Stock and all other stockholders of the
Company, as a group, are entitled to cast 29,539,115 votes by virtue of their
collective ownership of 29,539,115 shares of Class B Common Stock. By voting in
favor of the proposal to amend the Amended and Restated Certificate of
Incorporation to increase the number of authorized Common Stock, Mr. Galan will
provide the requisite majority stockholder approval of the proposal to amend
the Amended and Restated Certificate of Incorporation.
22
PROPOSAL TO APPROVE THE R&G FINANCIAL CORPORATION
2004 STOCK OPTION PLAN
GENERAL
The board of directors has adopted the R&G Financial Corporation 2004
Stock Option Plan ("Stock Option Plan") which is designed to promote the
interests of the Company and its stockholders by (a) encouraging officers,
employees, directors and individuals performing services for the Company as
consultants or independent contractors to focus on critical long-range
objectives, (b) encouraging the attraction and retention of officers,
employees, directors, consultants and independent contractors with exceptional
qualifications, and (c) linking officers, employees, directors, consultants and
independent contractors directly to shareholder interests through ownership of
the Company.
The Stock Option Plan provides for the grant of incentive stock
options intended to comply with the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") and Section 1046 of the Puerto
Rico Internal Revenue Code of 1994 as amended (the "PRC"), and nonqualified
stock options (collectively "Awards"). Awards will be available for grant to
certain eligible persons which, in the case of incentive stock options, are
employees of the Company or its subsidiaries, and in the case of all other
types of Awards, include any consultant or other independent contractor and
non-employee directors who provide services to the Company and its subsidiaries
(collectively, "Participants.")
DESCRIPTION OF THE STOCK OPTION PLAN
The following description of the Stock Option Plan is a summary of its
terms and is qualified in its entirety by reference to the Stock Option Plan, a
copy of which is attached hereto as Appendix B. Unless otherwise expressed, all
capitalized terms shall be defined as set forth in the Stock Option Plan.
Administration. The Stock Option Plan will be administered and
interpreted by the Compensation Committee of the board of directors.
Stock Options. Under the Stock Option Plan, the board will determine
which Participants will be granted options, whether such options will be
designated as incentive stock options or nonqualified stock options, the number
of shares subject to each option, the exercise price of such options, and when
such options become exercisable. The per share exercise price of an Incentive
Stock Option shall be not less than the fair market value of a share of common
stock on the date the option is granted (and in the case of employees owning
more than 10% of the total combined voting power of all classes of stock of the
Company, at least 110% of the fair market value of a share of common stock on
the date the option is granted.) Options granted under the Stock Option Plan
shall become vested and exercisable in the manner specified by the board of
directors in an award agreement that will be issued to the Optionee.
Each stock option or portion thereof shall be exercisable at any time
on or after it vests and in accordance with the terms of the award agreement
under which it was granted and is exercisable until the earlier of (x) ten
years after its date of grant or (y) the date that is six months (ninety days
in the case of incentive stock options) following the last day on which the
Participant is employed or renders services for the benefit of the Company and
its subsidiaries. In the event a Participant dies while in the employ of the
Company or any of its subsidiaries or terminates employment with the Company or
any of its subsidiaries as a result of disability or retirement, any option(s)
granted to such Participant under the Stock Option Plan not yet vested on such
date shall become 100% vested as of such date and be
23
exercisable either by the Participant or the Participant's representative. If
an optionee dies while in the employ of the Company or its subsidiaries or
otherwise terminates employment with the Company or its subsidiaries as a
result of disability or retirement without having fully exercised his options,
the Participant or his executors, administrators, legatees or distributees of
his or her estate shall have the right, during the 12 month period following
the earlier of his death, disability or retirement, to exercise such options to
the extent vested on such date of death, disability or retirement, provided no
option will be exercisable more than ten years from the date it was granted.
No optionee shall have any voting or dividend or other rights of a
stockholder in respect of any shares of common stock owned by an optionee prior
to the time the optionee becomes the record holder of such shares. Stock
options are non-transferable except by will or the laws of descent and
distribution, except that in the case of nonqualified stock options, a grantee
who holds non-qualified stock options may transfer such options to his or her
spouse, lineal ascendants, lineal descendants, or to a duly established trust
for the benefit of one or more of these individuals.
Payment for shares of common stock purchased upon the exercise of
options may be made either in cash or check, or if permitted by the board, by
delivering shares of common stock equal in fair market value on the date of
exercise to the purchase price of the shares to be acquired pursuant to the
option, by a combination of cash and common stock, or by such other method as
is acceptable to the board. The optionee shall pay to the Company the full
amount of any and all applicable income and employment tax amounts required to
be withheld in connection with the exercise, payable under the methods
described above, or as may be approved by the board.
It is the intention of the board that options designated as incentive
stock options in an award agreement shall be subject to such additional terms
and conditions not inconsistent with the Stock Option Plan, which together with
the terms of the Stock Option Plan shall cause such incentive stock options to
qualify as such under the Code and the PRC. Such terms shall include
limitations on incentive stock options granted to ten percent owners of the
Company. An award agreement for an Incentive Stock Option may provide that such
option shall be treated as a nonqualified stock option to the extent that
certain requirements applicable to incentive stock options under the Code have
not been satisfied.
Number of Shares Covered by the Stock Option Plan. A total of
1,000,000 shares of common stock is reserved for future issuance pursuant to
the Stock Option Plan. If any recapitalization, reclassification, stock
dividend, stock split, reverse stock split, or other distribution with respect
to the common stock or other change in corporate structure affecting the common
stock occurs, the board may, in the manner and to the extent it deems
appropriate and equitable and consistent with the terms of the Stock Option
Plan, cause an adjustment to be made in: (1) the maximum number of shares
available under the Stock Option Plan; (2) the number of shares of common stock
of other rights subject to outstanding Awards; (3) the price for each share or
other right subject to an outstanding Award; or (4) any other terms of an Award
affected by the event.
Amendment and Termination of the Stock Option Plan. The board may at
any time and in any respect amend or modify the Stock Option Plan. No amendment
or modification, however, will adversely affect any Award without the consent
of the Participant, or a permitted transferee of the Award. Unless sooner
terminated, the Stock Option Plan shall continue in effect for a period of ten
years from the effective date of the Stock Option Plan. Termination of the
Stock Option Plan shall not affect any previously granted Awards.
Change of Control. The board may provide in any award agreement for
certain effects upon a "Sale Event," including: (1) acceleration or extension
of time periods for vesting, exercise realizing any gain from an Award; (2) the
elimination or modification of conditions related to the payment or other
24
rights under an Award; (3) provision for the cash settlement of an Award for an
equivalent cash value, as determined by the board; or (4) any other
modification or adjustment to an Award as the board deems appropriate to
maintain and protect the rights of participants upon or following a Change in
Control. A "Sale Event" is defined in Section 2.18 of the Incentive Stock Plan
that is attached hereto as Appendix B.
Federal Income Tax Consequences. Under current provisions of the Code,
the federal income tax treatment of incentive stock options and non-qualified
stock options is different. With regard to incentive stock options, an optionee
who meets certain holding period requirements will not recognize taxable income
at the time the option is granted or at the time the option is exercised
(although the exercise is an adjustment item for alternative minimum tax
purposes and may subject the optionee to alternative minimum tax), and a
federal income tax deduction generally will not be available to the Company as
a result of such grant or exercise. With respect to nonqualified stock options,
the difference between the fair market value on the date of exercise and the
option exercise price generally will be treated as taxable compensation income
to the optionee upon exercise, and the Company will be entitled to a deduction
in the amount of such taxable income recognized by the optionee.
The above description of tax consequences under federal law of the
Code and Puerto Rico law under the PRC is necessarily general in nature and
does not purport to be complete. Moreover, statutory provisions are subject to
change, as are their interpretations, and their application may vary in
individual circumstances.
Accounting Treatment. Stock appreciation rights will, in most cases,
require a charge against the earnings of the Company each year representing
appreciation in the value of such rights over periods in which they become
exercisable. Such charge is based on the difference between the exercise price
specified in the related award agreement and the current market price of the
common stock. In the event of a decline in the market price of the common stock
subsequent to a charge against earnings related to the estimated costs of stock
appreciation rights, a reversal of prior charges is made in the amount of such
decline (but not to exceed aggregate prior charges). Compensation expense for a
restricted stock grant will be valued based on the fair market value of the
stock on the date of grant, multiplied by the number of shares granted. This
amount will be recorded as a contra equity account until the award vests. As
the restricted stock grant vests over time, the corresponding percentage of the
total compensation expense is charged against earnings in that period. Neither
the grant nor the exercise of an Incentive Stock Option or a nonqualified stock
option under the Stock Option Plan currently requires any charge against
earnings under generally accepted accounting principles.
Stockholder Approval. No incentive stock options granted under the
Stock Option Plan will be exercisable unless the Stock Option Plan is approved
by stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL
OF THE STOCK OPTION PLAN.
25
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed
PricewaterhouseCoopers LLP, independent certified public accountants, to
perform the audit of the Company's financial statements for the year ending
December 31, 2004, and further directed that the selection of auditors be
submitted for ratification by the stockholders at the Annual Meeting.
The Company has been advised by PricewaterhouseCoopers LLP that
neither that firm nor any of its associates has any relationship with the
Company or its subsidiaries other than the usual relationship that exists
between independent certified public accountants and clients.
PricewaterhouseCoopers LLP will have one or more representatives at the Annual
Meeting who will have an opportunity to make a statement, if they so desire,
and who will be available to respond to appropriate questions.
Fees Paid to PricewaterhouseCoopers LLP. During the fiscal years ended
December 31, 2003 and 2002, the Company retained and paid
PricewaterhouseCoopers LLP for the indicated services as follows:
2003 2002
-------- --------
Audit Fees..................................................................... $594,000 $565,800
Audit-Related Fees............................................................. 75,000 85,000
Tax Fees....................................................................... 80,000 92,000
All Other Fees................................................................. -- --
Audit fees. Audit fees for the years ended December 31, 2003 and 2002,
were $594,000 and $565,800, respectively, for the annual audit and quarterly
reviews of the consolidated financial statements.
Audit-Related Fees. Audit related fees were $75,000 and $85,000 during
the years ended December 31, 2003 and 2002, respectively, and related to
"comfort" letters delivered in connection with public financing transactions
during the year.
Tax fees. Tax fees relate primarily to assistance with tax return
compliance.
Audit Committee Pre-Approval Policies and Procedures. The
Sarbanes-Oxley Act of 2002 required the Company to implement a pre-approval
process for all engagements with its external auditor. In response to the
Sarbanes-Oxley requirements pertaining to auditor independence, the Company's
audit committee adopted pre-approval procedures for the appointment of the
external auditor and any non-audit services, including tax services, to be
performed by the external auditor unless such pre-approval is not required
under the Sarbanes-Oxley Act. These procedures require that the annual audit
services engagement terms and fees be pre-approved by the Company's audit
committee. The audit committee may delegate to one or more members of the
committee the authority to grant pre-approvals for auditing and allowable
non-auditing services, which decision shall be presented to the full committee
at its next scheduled meeting for ratification.
All internal auditing is performed under the direct control of the
internal auditor, who is accountable to the Company's audit committee.
The Board of Directors recommends that you vote "FOR" the ratification
of the appointment of PricewaterhouseCoopers LLP as independent auditors for
the fiscal year ending December 31, 2004.
26
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which currently is scheduled to be held in April 2005, must be
received at the principal executive offices of the Company, R-G Plaza, 280
Jesus T. Pinero Avenue, Hato Rey, San Juan, Puerto Rico 00918, Attention:
Company Secretary, no later than _______ __, 2004.
Stockholder proposals that are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the Exchange Act may be
brought before an annual meeting pursuant to Article II, Section 2.14. of the
Company's Bylaws, which provides that business at an annual meeting of
stockholders must be (a) properly brought before the meeting by or at the
direction of the Board of Directors, or (b) otherwise properly brought before
the meeting by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the Company. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
principal executive offices of the Company not later than 90 days prior to the
anniversary date of the mailing of the proxy materials by the Company in
connection with the immediately preceding annual meeting of stockholders of the
Company. No such proposals were received. Such stockholder's notice is required
to set forth certain information specified in the Company's Bylaws. To be
timely with respect to the next annual meeting to be held in April 2005, a
stockholder's notice must be received by the Secretary of the Company no later
than ________ __, 2004.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year
ended December 31, 2003 accompanies this Proxy Statement. Such Annual Report is
not part of the proxy solicitation materials.
Upon receipt of a written request, the Company will furnish to any
stockholder without charge a copy of the Company's Annual Report on Form 10-K
for fiscal 2003 required to be filed under the Exchange Act. Such written
requests should be directed to Secretary, R&G Financial Corporation, R-G Plaza,
280 Jesus T. Pinero Avenue, Hato Rey, San Juan, Puerto Rico 00918. The Annual
Report on Form 10-K is not part of the proxy solicitation materials.
27
OTHER MATTERS
Management is not aware of any business to come before the Annual
Meeting other than the matters described above in this Proxy Statement.
However, if any matters should properly come before the meeting other than
those which are described in this Proxy Statement, it is intended that the
proxies solicited hereby will be voted with respect to those other matters in
accordance with the judgment of the persons voting the proxies.
The cost of the solicitation of proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending the proxy
materials to the beneficial owners of the Company's Common Stock. In addition
to solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
By Order of the Board of Directors
Victor J. Galan
Chairman of the Board and
Chief Executive Officer
28
APPENDIX A
PROPOSED AMENDMENT TO
THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
R&G FINANCIAL CORPORATION
The first sentence of Article Four of the Amended and Restated Certificate of
Incorporation of R&G Financial Corporation (the "Corporation") shall be
amended, if approved, to read as follows:
The total number of shares of all classes which the Corporation shall
have the authority to issue is TWO HUNDRED TWENTY MILLION
(220,000,000) shares, consisting of EIGHTY MILLION (80,000,000) shares
of Class A Common Stock, par value $.01 per share (hereinafter called
the "Class A Common Stock"), ONE HUNDRED TWENTY MILLION (120,000,000)
shares of Class B Common Stock, par value $.01 per share (hereinafter
called the "Class B Common Stock") and TWENTY MILLION (20,000,000)
shares of Preferred Stock, par value $.01 per share (hereinafter
called the "Preferred Stock").
APPENDIX B
R & G FINANCIAL CORPORATION
2004 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
R & G Financial Corporation (the "Company") hereby establishes the R &
G Financial Corporation 2004 Stock Option Plan (the "Plan") upon the terms and
conditions hereinafter stated. The purpose of the Plan is to promote the
long-term success of the Company and the creation of shareholder value by (a)
encouraging officers, employees, directors and individuals performing services
for the Company or its subsidiaries as consultants or independent contractors to
focus on critical long-range objectives, (b) encouraging the attraction and
retention of officers, employees, directors, consultants and independent
contractors with exceptional qualifications, and (c) linking officers,
employees, directors, consultants and independent contractors directly to
shareholder interests through ownership of the Company. The Plan seeks to
achieve this purpose by providing for Awards in the form of options to purchase
shares of the Company, restricted stock or stock appreciation rights.
ARTICLE II
DEFINITIONS
2.01 "Award" means any stock option granted to a Participant under
the Plan.
2.02 "Board" means the Board of Directors of the Company.
2.03 "Code" means the Internal Revenue Code of 1986, as amended.
2.04 "Common Stock" means shares of the common stock, $0.01 par
value per share, of the Company.
2.05 "Disability" means any physical or mental impairment which
qualifies an Employee for disability benefits under any applicable long-term
disability plan maintained by the Company or, if no such plan applies, which
would qualify such Employee for disability benefits under the Federal Social
Security System.
2.06 "Effective Date" means the date upon which the Board approves
this Plan.
2.07 "Employee" means any person who is employed by the Company or
a subsidiary thereof. The Company classification as to who is an Employee shall
be determinative for purposes of an individual's eligibility under the Plan.
2.08 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.09 "Fair Market Value" of a share of the Company's Common Stock
for all purposes under the Plan on a particular date shall be the most recent
valuation adopted by the Board in good faith of the fair market value of each
share of the Company's Common Stock; provided that, as long as the Common Stock
is registered under Section 12 or Section 15 of the Exchange Act, the Fair
Market Value of the Company' Common Stock shall be the closing price per share
of Common Stock on such date, or in case no such sale takes place on such date,
the last date on
which a sale occurred, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on a national securities exchange or included for quotation on The
Nasdaq Market, or if the Common Stock is not listed or admitted for trading or
included for quotation, in the over-the-counter market, as reported by the NASD
Automatic Quotation System or, if such system is no longer in use, the principal
other automated quotations system that may then be in use or, if the Common
Stock is not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in the
Common Stock, or such other method of valuation as may be selected by the Board
in good faith.
If the relevant date is not a trading day, the determination shall be
made as of the next preceding trading day. As used herein, the term "trading
day" means a day on which public trading of securities occurs and as reported in
the principal consolidated reporting system referred to above, or if the Common
Stock is not listed or admitted to trading on a national securities exchange or
included for quotation on the Nasdaq National Market, any business day.
2.10 "Grantee" refers to any Participant in the Plan who receives
an Award.
2.11 "Incentive Stock Option" means any Award granted under this
Plan which the Board intends (at the time it is granted) to be an incentive
stock option within the meaning of Section 422 of the Code and Section 1046 of
the PRC, as applicable. All Incentive Stock Options issued under this Plan are
intended to comply with the requirements of Section 422 of the Code and Section
1046 of the PRC, as applicable, and the regulations thereunder, and all
provisions hereunder shall be read, interpreted and applied with that purpose in
mind.
2.12 "Non-Qualified Stock Option" means any Award granted under
this Plan which is a stock option but is not an Incentive Stock Option.
2.13 "Officer" means any Employee of the Company or any of its
subsidiaries who is designated by the Board as a corporate officer.
2.14 "Option" means an award of an Incentive Stock Option or a
Non-Qualified Stock Option granted under Section 7.01 hereof.
2.15 "Participant" means any Employee, Officer, director,
consultant or independent contractor who is designated by the Board pursuant to
Article VI to participate in the Plan.
2.16 "PRC" means the Puerto Rico Internal Revenue Code of 1994, as
amended.
2.17 "Retirement" means a termination of employment which
constitutes a "retirement" under any applicable qualified pension benefit plan
maintained by the Company or its subsidiaries, as that term is defined by the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or if no
such plan is maintained by the Company, a termination of employment anytime
following attainment of age 65.
2.18 "Sale Event" means the consummation of (i) a dissolution or
liquidation of the Company, (ii) the sale of all or substantially all of the
assets of the Company to an unrelated person or entity, (iii) a merger,
reorganization or consolidation in which the holders of the
2
Company's outstanding voting power immediately prior to such transaction do not
own a majority of the outstanding voting power of the surviving or resulting
entity immediately upon completion of such transaction, or (iv) any other
transaction in which the owners of the Company's outstanding voting power prior
to such transaction do not own at least a majority of the outstanding voting
power of the relevant entity after the transaction, in each case, regardless of
the form thereof.
2.19 "Securities Act" means the Securities Act of 1933, as amended.
2.20 "Stock Award Agreement" means the written agreement pursuant
to Article VI hereof that sets forth the terms, conditions, restrictions and
privileges for an Award and that incorporates the terms of the Plan.
ARTICLE III
ADMINISTRATION OF THE PLAN AND MISCELLANEOUS
3.01 PLAN ADMINISTRATION. The Plan shall be administered by the
Compensation Committee (the "Committee"). The Committee shall be responsible to
the Board for the overall administration and operation of the Plan, although the
Committee may, in its discretion, delegate to one or more officers
responsibility for the day-to-day operation of the Plan. The Board shall make
all determinations with respect to participation in the Plan by Employees,
Officers, directors, consultants or independent contractors of the Company or
any of its subsidiaries, and with respect to the extent of that participation.
The interpretation and construction of any provision of the Plan by the Board or
the Committee shall be final. No member of the Board shall be liable for any
action or determination made by him or her in good faith
3.02 REVOCATION FOR MISCONDUCT. Any Award, or portion thereof,
under this Plan, whether or not vested, made to a Participant who is discharged
from the employ of the Company or any of its subsidiaries (or whose personal
services contract is terminated in the case of a consultant or independent
contractor) shall automatically terminate, be rescinded and be revoked.
3.03 LIMITATION ON LIABILITY. No Board or Committee member shall be
liable for any action or determination made in good faith with respect to the
Plan. To the maximum extent allowed by law and the Company's amended and
restated Certificate of Incorporation and Bylaws, the Board and the Committee
shall be indemnified by the Company in respect of all their activities under the
Plan.
3.04 COMPLIANCE WITH LAW AND REGULATIONS. All Awards granted
hereunder shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any government or regulatory agency as may
be required. The Company shall not be required to issue or deliver any
certificates for shares of Common Stock prior to the completion of any
registration or qualification of, or obtaining of consents or approvals with
respect to, such shares under any Federal or state law or any rule or regulation
of any government body, which the Company shall, in its sole discretion,
determine to be necessary or advisable.
3.05 RESTRICTIONS ON TRANSFER. The Company shall place a legend
upon any certificate representing shares acquired pursuant to an Award granted
hereunder noting that the transfer of such may be restricted as permitted by
applicable laws and regulations.
3
3.06 MARKET STAND-OFF. In connection with any underwritten public
offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act, Participants shall not
directly or indirectly sell, make any short sale of, loan, hypothecate, pledge,
offer, or grant any option or other contract for the purchase of, purchase any
option or other contract for the sale of, or otherwise dispose of or transfer,
or agree to engage in any of the foregoing transactions with respect to, any
Common Stock received pursuant to the Plan without the prior written consent of
the Company. Such restriction (the "Market Stand-Off") shall be in effect for a
period of time following the date of the final prospectus for the offering as
may be requested by the Company or its underwriters. In the event of the
declaration of a stock dividend, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities which are by reason of such transaction
distributed with respect to any Common Stock subject to the Market Stand-Off, or
into which such Common Stock thereby becomes convertible, shall immediately be
subject to the Market Stand-Off. In order to enforce the Market Stand-Off, the
Company may impose stop-transfer instructions with respect to Common Stock
received pursuant to the Plan until the end of the applicable market Stand-Off
period.
ARTICLE IV
ELIGIBILITY
Awards may be granted to such Employees, Officers, directors,
consultants or independent contractors as may be designated from time to time by
the Board, pursuant to guidelines, if any, which may be adopted by the Committee
from time to time.
ARTICLE V
COMMON STOCK AVAILABLE FOR THE PLAN
The aggregate number of shares of Common Stock which may be issued
pursuant to this Plan shall be one million (1,000,000). If and to the extent
that the number of issued shares of Common Stock shall be increased or reduced
by change in par value, split up, reclassification, distribution of a dividend
payable in Common Stock, merger, consolidation, reorganization,
recapitalization, reincorporation, or the like, the Board may make appropriate
adjustment in the number of shares of Common Stock authorized by the Plan and in
the number and exercise price of shares covered by outstanding Awards under the
Plan. In the event of any adjustment in the number of shares covered by any
Award, any fractional shares resulting from such adjustment shall be disregarded
and each such Award shall cover only the number of full shares resulting from
such adjustment. The Board may make such adjustments, and its determination
shall be final, binding and conclusive.
The Board also may adjust the number of shares subject to outstanding
Awards and the exercise price and the terms of outstanding Awards to take into
consideration material changes in accounting practices or principles,
extraordinary dividends, acquisitions or dispositions of stock or property or
any other event if it is determined by the Board that such adjustment is
appropriate in order to prevent dilution or expansion of the rights of
Participants, provided that no such adjustment shall be made in the case of an
Incentive Stock Option, without the consent of the Participant, if such
adjustment would constitute a modification, extension or renewal of the Option
within the meaning of Section 424(h) of the Code or the applicable provision of
the PRC.
4
No shares shall be the subject of more than one Award at any time, but
if an Award as to any shares is surrendered before exercise, or expires or
terminates for any reason without having been exercised in full, or for any
other reason ceases to be exercisable, the number of shares covered thereby
shall again become available for grant under the Plan as if no Awards had been
previously granted with respect to such shares.
ARTICLE VI
PARTICIPATION; STOCK AWARD AGREEMENT
The Board shall, in its discretion, determine from time to time which
Employees, Officers, directors, consultants or independent contractors will
participate in the Plan and receive Awards under the Plan. In making all such
determinations, there shall be taken into account the duties, responsibilities
and performance of each respective Employee, Officer, director, consultant or
independent contractor, his or her present and potential contributions to the
growth and success of the Company and its subsidiaries, his or her cash
compensation and such other factors as the Board shall deem relevant to
accomplishing the purposes of the Plan.
Awards may be granted individually or in tandem with other Awards. All
Awards are subject to the terms, conditions, restrictions and privileges of the
Plan in addition to the terms, conditions, restrictions and privileges for an
Award contained in the Stock Award Agreement. No Award under this Plan shall be
effective unless memorialized in writing by the Committee in a Stock Award
Agreement delivered to and signed by the Participant.
ARTICLE VII
AWARDS
The Board may from time to time grant to eligible Participants Awards
of Incentive Stock Options or Non-Qualified Stock Options; provided however that
Awards of Incentive Stock Options shall be limited to Employees of the Company
or any of its subsidiaries. Options intended to qualify as Incentive Stock
Options must have an exercise price at least equal to the Fair Market Value of a
share of Common Stock at the time of grant, except as provided in Section 8.05.
Non-Qualified Stock Options may have an exercise price that is equal to, below,
or above the Fair Market Value of a share of Common Stock at the time of grant.
The exercise price applicable to a particular Award shall be set forth in each
individual Stock Award Agreement.
ARTICLE VIII
OPTION AWARDS
8.01 VESTING OF OPTIONS.
(a) GENERAL RULES. The Board, in its sole discretion, shall
prescribe the time or times at which, or the conditions upon which, an Option
shall become vested and exercisable, and may accelerate the exercisability of
any Option at any time. Notwithstanding the foregoing, no vesting shall occur on
or after the date that an Employee's employment or personal services contract
with the Company or any of its subsidiaries terminates for any reason other than
his death, Disability or Retirement.
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(b) ACCELERATION OF VESTING UPON DEATH, DISABILITY OR RETIREMENT.
In the event a Participant dies while in the employ of the Company or any of its
subsidiaries or terminates employment with the Company or any of its
subsidiaries as a result of Disability, any Option(s) granted to such
Participant under this Plan not yet vested on such date shall become 100% vested
as of such date and be exercisable either by the Participant or the
Participant's representative, subject to Section 8.03. In the event of a
Participant's Retirement, any Option(s) granted to such Participant under this
Plan not yet vested on such date shall become 100% vested as of such date and
become exercisable.
8.02 DURATION OF OPTIONS.
(a) GENERAL RULE. Except as provided in Section 8.05, each Option
granted to a Participant shall be exercisable at any time on or after it vests
until the earlier of (i) ten (10) years after its date of grant or (ii) the date
that is six (6) months (ninety (90) days in the case of Incentive Stock Options
granted to Employees) following the last day on which the Participant is
employed or renders services for the benefit of the Company or its subsidiaries.
(b) EXCEPTION FOR TERMINATION DUE TO DEATH, DISABILITY OR
RETIREMENT. If a Participant dies while in the employ of the Company or any of
its subsidiaries or terminates employment with the Company or any of its
subsidiaries as a result of death, Disability or Retirement without having fully
exercised his Options, the Participant or his legal representative or guardian,
or the executors, administrators, legatees or distributes of his estate shall
have the right, during the twelve (12) month period following the earlier of his
death, Disability or Retirement, to exercise such Options to the extent vested
on the date of such death, Disability or Retirement. In no event, however, shall
any Option be exercisable more than ten (10) years from the date it was granted.
(c) NOTICE OF DISPOSITION; WITHHOLDING; ESCROW. A Grantee shall
immediately notify the Company in writing of any sale, transfer, assignment or
other disposition (or action constituting a disqualifying disposition within the
meaning of Section 421 of the Code or the applicable provision of the PRC) of
any shares of Common Stock acquired through exercise of an Incentive Stock
Option, within two (2) years after the grant of such Incentive Stock Option or
within one (1) year after the acquisition of such shares, setting forth the date
and manner of disposition, the number of shares disposed of and the price at
which such shares were disposed. The Company shall be entitled to withhold from
any compensation or other payments then or thereafter due to the Grantee such
amounts as may be necessary to satisfy any withholding requirements of federal
or state law or regulation and, further, to collect from the Grantee any
additional amounts which may be required for such purpose. The Board may, in its
discretion, require shares of Common Stock acquired by a Grantee upon exercise
of an Incentive Stock Option to be held in an escrow arrangement for the purpose
of enabling compliance with the provisions of this Section 8.02(c).
8.03 NONASSIGNABILITY. Options shall not be transferable by a
Grantee except by will or the laws of descent or distribution, and during a
Grantee's lifetime shall be exercisable only by such Grantee or the Grantee's
guardian or legal representative. Notwithstanding the foregoing, or any other
provision of this Plan, a Grantee who holds Non-Qualified Stock Options may
transfer such Options to his or her spouse, lineal ascendants, lineal
descendants, or to a duly established trust for the benefit of one or more of
these individuals. Options so transferred may
6
thereafter be transferred only to the Grantee who originally received the grant
or to an individual or trust to whom the Grantee would have initially
transferred the Option pursuant to this Section 8.03. Awards which are
transferred pursuant to this Section 8.03 shall be exercisable by the transferee
according to the same terms and conditions as applied to the Grantee.
8.04 MANNER OF EXERCISE. To the extent vested and exercisable,
Options may be exercised in part or in whole from time to time by execution of a
written notice directed to the Company, at the Company' principal place of
business, accompanied by cash or a check in payment of the exercise price for
the number of shares specified and paid for. The Board may, in its discretion,
permit a Grantee to exercise vested and exercisable options awarded under this
Plan by surrendering an amount of Common Stock already owned by the Grantee
equal to the Options' exercise price, but only in instances where the shares to
be surrendered have been held by the Grantee for a period of at least six (6)
months. Subject to the limitations set forth in the Stock Award Agreement, for
so long as the Common Stock is listed or admitted to trading on a national
securities exchange or included for quotation on the Nasdaq market, the Board
may, in its discretion, allow the Grantee may make payment by arranging with a
third party broker to sell a number of shares otherwise deliverable to the
Grantee and attributable to the exercise of the Option in order to pay the
exercise price of the Option.
8.05 $100,000 LIMITATION. Notwithstanding any contrary provisions
contained elsewhere in this Plan and as long as required by Section 422 of the
Code and/or Section 1046 of the PRC, the aggregate Fair Market Value, determined
as of the time an Incentive Stock Option is granted, of the Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by
the Grantee during any calendar year under this Plan and stock options that
satisfy the requirements of Section 422 of the Code and/or Section 1046 of the
PRC under any other stock option plan or plans maintained by the Company, shall
not exceed $100,000. To the extent that the aggregate value of shares of Common
Stock to be received by the Grantee for the first time in any one year pursuant
to the exercise of an Incentive Stock Option ("ISO Stock") exceeds $100,000
based on the fair market value of the Common Stock as of the date of the
Incentive Stock Option's grant, such excess shall be treated as Common Stock
received pursuant to the exercise of a Nonqualified Stock Option ("NQSO Stock").
The Company shall designate which shares of Common Stock to be received by the
Grantee will be treated as ISO Stock and which shares of Common Stock, if any,
will be treated as NQSO Stock by issuing separate share certificates identifying
in the Company's share transfer records which shares are ISO Stock.
8.06 LIMITATION ON TEN PERCENT STOCKHOLDERS. The price at which
shares of Common Stock may be purchased upon exercise of an Incentive Stock
Option granted to an individual who, at the time such Incentive Stock Option is
granted, owns, directly or indirectly, more than ten percent (10%) of the total
combined voting power of all classes of stock issued to stockholders of the
Company, shall be no less than one hundred and ten percent (110%) of the Fair
Market Value of a share of the Common Stock of the Company at the time of grant,
and such Incentive Stock Option shall by its terms not be exercisable after the
expiration of five (5) years from the date such Incentive Stock Option is
granted.
7
ARTICLE IX
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time terminate or amend the Plan
with respect to any shares of Common Stock or Awards which have not been
granted, but no such action shall adversely affect the rights under any
outstanding Award without the holder's consent. If and to the extent necessary
to ensure that Incentive Stock Options granted under the Plan remain qualified
under Section 422 of the Code and/or Section 1046 of the PRC, Plan amendments
shall be subject to approval by the Company's stockholders who are eligible to
vote at a meeting of stockholders.
ARTICLE X
EMPLOYMENT RIGHTS
Neither the Plan nor any Award hereunder shall create any right on the
part of any Employee of the Company or any of its subsidiaries to continue in
such capacity.
ARTICLE XI
WITHHOLDING
The Company may withhold from any cash payment made under this Plan
sufficient amounts to cover any applicable withholding and employment taxes, and
if the amount of such cash payment is insufficient, the Company may require the
Grantee to pay to the Company the amount required to be withheld as a condition
to delivering the shares acquired pursuant to an Award. The Company also may
withhold or collect amounts with respect to a disqualifying disposition of
shares of Common Stock acquired pursuant to exercise of an Incentive Stock
Option, as provided in Section 8.02(c).
The Board is authorized to adopt rules, regulations or procedures which
provide for the satisfaction of a Participant's tax withholding obligation by
the retention of shares of Common Stock to which he otherwise would be entitled
pursuant to an Award or by the Participant's delivery of previously-owned shares
of Common Stock or other property. However, if the Company adopts rules,
regulations or procedures which permit withholding obligations to be met by the
retention of Common Stock to which a Grantee otherwise would be entitled
pursuant to an Award, the fair market value of the Common Stock retained for
such purpose shall not exceed the minimum required Federal, state and local tax
withholding due upon exercise of the Award.
ARTICLE XII
EFFECTIVE DATE OF THE PLAN; TERM
12.01 EFFECTIVE DATE OF THE PLAN. This Plan shall become effective
on the Effective Date, and Awards may be granted hereunder as of or after the
Effective Date and prior to the termination of the Plan, provided that no
Incentive Stock Option issued pursuant to this Plan shall qualify as such unless
this Plan is approved by the requisite vote of the holders of the outstanding
voting shares of the Company at a meeting of stockholders of the Company held
within twelve (12) months before or after the Effective Date.
8
12.02 TERM OF PLAN. Unless sooner terminated, this Plan shall remain
in effect for a period of ten (10) years ending on the tenth anniversary of the
Effective Date. Termination of the Plan shall not affect any Awards previously
granted and such Awards shall remain valid and in effect until they have been
fully exercised or earned, are surrendered or by their terms expire or are
forfeited.
ARTICLE XIII
GOVERNING LAW
To the extent not governed by federal law, this Plan shall be construed
under the laws of Puerto Rico.
9
IN WITNESS WHEREOF, the Company has caused a duly authorized officer to
execute this R & G Financial Corporation 2004 Stock Option Plan, and to apply
the Corporate seal hereto as of the ___ day of March, 2004.
R & G FINANCIAL CORPORATION
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
10
REVOCABLE PROXY
R&G FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF R&G
Financial Corporation ("COMPANY"), FOR USE AT THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON APRIL 23, 2004 AND AT ANY ADJOURNMENT THEREOF.
The undersigned being a stockholder of the Company as of March 26,
2004, hereby authorizes the Board of Directors of the Company or any successors
thereto as proxies, to represent the undersigned at the Annual Meeting of
Stockholders of the Company to be held at The Ritz-Carlton, San Juan Hotel, Spa
& Casino, 6961 Los Gobernadores Avenue, Carolina, San Juan, Puerto Rico 00979
on Friday, April 23, 2004 at 10:00 a.m., local time, and at any adjournments of
said meeting, and thereat to act with respect to all votes that the undersigned
would be entitled to cast, if then personally present.
(Continued and to be signed on reverse side.)
Please Detach and Mail in the Envelope Provided
[X] Please mark your
votes as in this
example
FOR WITHHOLD
AUTHORITY
1. ELECTION OF [ ] [ ] Nominees: For a three year term:
DIRECTORS Victor L. Galan
Rafael Nin
Benigno Fernandez
NOTE: To withhold authority to vote for an individual
nominee, strike a line through that nominee's name. Unless
authority to vote for all of the foregoing nominees is
withheld, this Proxy will be deemed to confer authority to
vote for each nominee whose name is not struck.
FOR AGAINST ABSTAIN
2. Proposal to approve an amendment to the Amended and [ ] [ ] [ ]
Restated Certificate of Incorporation of the Company to
increase the authorized common stock of the Company from
One Hundred Million (100,000,000) to Two Hundred
Million (200,000,000).
FOR AGAINST ABSTAIN
3. Proposal to approve the R&G Financial Corporation 2004 [ ] [ ] [ ]
Stock Option Plan.
FOR AGAINST ABSTAIN
4. Proposal to ratify the appointment by the Board of [ ] [ ] [ ]
Directors of PricewaterhouseCoopers LLP as the Company's
independent auditors for the fiscal year ending
December 31, 2004.
5. In their discretion, the proxies are authorized to
vote upon such other business as may properly come
before the meeting.
SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF
RETURNED BUT NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF THE BOARD OF DIRECTORS' NOMINEES TO THE BOARD OF DIRECTORS , FOR THE OTHER
PROPOSALS STATED AND OTHERWISE AT THE DISCRETION OF THE PROXIES. YOU MAY REVOKE
THIS PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED AT THE ANNUAL MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Signature of Shareholder Signature of Shareholder Dated
------------------------ ------------------------ -----
NOTE: Please sign the exactly as your name(s) appear(s) on this proxy. When
signing in a representative capacity, please give full title. When
shares are held jointly, only one holder need sign.