SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE DEF 14A INFORMATION
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:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
World Acceptance Corporation
--------------------------------------------------------------------------------
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(X) No fee required
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[LOGO] World Acceptance Corporation
July 2, 2001
To the Shareholders of
World Acceptance Corporation:
In connection with the Annual Meeting of Shareholders of your Company to be
held on August 1, 2001, we enclose a Notice of the Meeting, a Proxy Statement
containing information about the matters to be considered at the Meeting and a
form of proxy relating to those matters.
In addition, we enclose our 2001 Annual Report, which provides information
relating to the Company's activities and operating performance during the most
recent fiscal year.
You are cordially invited to attend the Annual Meeting of Shareholders. We
would appreciate your signing and returning the form of proxy in the enclosed
postage-paid return envelope so that your shares can be voted in the event that
you are unable to attend the Meeting. Your proxy will, of course, be returned to
you if you are present at the Meeting and elect to vote in person. It may also
be revoked in the manner set forth in the Proxy Statement. We look forward to
seeing you at the Annual Meeting.
Sincerely yours,
/s/ Charles D. Walters
Charles D. Walters
Chairman of the Board and
Chief Executive Officer
WORLD ACCEPTANCE CORPORATION
108 Frederick Street
Greenville, South Carolina 29607
_________________________________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
_________________________________________________________
To Our Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of
World Acceptance Corporation will be held at the Company's main office at 108
Frederick Street, Greenville, South Carolina, on Wednesday, August 1, 2001, at
11:00 a.m., local time, for the following purposes:
1. To elect seven (7) directors to hold office until the next annual
meeting of shareholders or until their successors have been duly
elected and qualified;
2. To consider and act upon a proposal to ratify the action of the Board
of Directors in selecting KPMG LLP as independent public accountants
to audit the books of the Company and its subsidiaries for the current
fiscal year; and
3. To transact such other business as may properly come before the
Meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on June 18, 2001, as
the record date for determination of shareholders entitled to notice of and to
vote at the Annual Meeting or any adjournment or adjournments thereof.
The Board of Directors of the Company would appreciate your signing and
returning the accompanying form of proxy promptly, so that if you are unable to
attend, your shares can nevertheless be voted at the Annual Meeting.
/s/ Charles D. Walters
Charles D. Walters
Chairman of the Board and
Chief Executive Officer
July 2, 2001
IMPORTANT NOTICE
Please Sign and Mail Your Proxy Promptly
WORLD ACCEPTANCE CORPORATION
108 Frederick Street
Greenville, South Carolina 29607
________________________
PROXY STATEMENT
========================
The following statement, first mailed on or about July 2, 2001, is
furnished in connection with the solicitation by the Board of Directors (the
"Board") of World Acceptance Corporation (the "Company") of proxies to be used
at the Annual Meeting of Shareholders of the Company (the "Meeting") to be held
on August 1, 2001, at 11:00 a.m., local time, at the Company's main office at
108 Frederick Street, Greenville, South Carolina, and at any adjournment or
adjournments thereof.
The accompanying form of proxy is for use at the Meeting if a shareholder
will be unable to attend in person. The proxy may be revoked by the shareholder
at any time before it is exercised by submitting to the Secretary of the Company
written notice of revocation, or a properly executed proxy of a later date, or
by attending the Meeting and electing to vote in person. All shares represented
by valid proxies received pursuant to this solicitation, and not revoked before
they are exercised, will be voted in the manner specified therein. If no
specification is made, the proxies will be voted in favor of:
1. The election to the Board of the seven (7) nominees named in this
Proxy Statement; and
2. The ratification of the Board's selection of KPMG LLP as independent
public accountants to audit the books of the Company and its
subsidiaries for the current fiscal year.
The entire cost of soliciting these proxies will be borne by the Company.
In addition to the solicitation of the proxies by mail, the Company will request
banks, brokers, and other record holders to send proxies and proxy materials to
the beneficial owners of the Company's common stock, no par value (the "Common
Stock"), and secure their voting instructions, if necessary. The Company will
reimburse them for their reasonable expenses in so doing. If necessary, the
Company may use several of its regular employees, who will not be specially
compensated, to solicit proxies from shareholders, either personally or by
telephone, telegram, or special letter.
Pursuant to the provisions of the South Carolina Business Corporation Act,
the Board of Directors has fixed June 18, 2001, as the record date for the
determination of shareholders entitled to notice of and to vote at the Meeting
and, accordingly, only holders of record at the close of business on that date
of outstanding shares (the "Shares") of the Common Stock will be entitled to
notice of and to vote at the Meeting.
The number of outstanding Shares entitled to vote as of the record date was
18,815,542. Each Share is entitled to one vote. In accordance with South
Carolina law and the Company's bylaws, a majority of the outstanding Shares
entitled to vote, represented in person or by proxy, will constitute a quorum
for the election of directors and the ratification of the selection of auditors.
Abstentions and broker non-votes (if any) will be counted for purposes of
determining the presence or absence of a quorum.
With regard to the election of directors, votes may either be cast in favor
of or withheld, and directors will be elected by a plurality of the votes cast.
Votes that are withheld will be excluded entirely from the vote and will have no
effect on the outcome of the election of directors. The ratification of the
selection of the auditors will be approved if more votes are cast in favor of
such proposal than are cast against it. Accordingly, abstentions will have no
effect on the outcome of the vote of such proposal. Broker non-votes (if any),
will not be counted as votes cast and will have no effect on the outcome of the
vote on any proposals. Cumulative voting is not permitted under the Company's
articles of incorporation.
On June 18, 2001, the only class of voting securities the Company had
issued and outstanding was its Common Stock. The following table sets forth the
names and addresses of, and the numbers and percentages of Shares beneficially
owned by, persons known to the Company to beneficially own five percent or more
of the outstanding Shares. Except as noted otherwise, each shareholder listed
below possesses sole voting and investment power with respect to the Shares
listed opposite his name.
2
Ownership of Shares by Certain
Beneficial Owners as of June 18, 2001
Amount and Nature Percent
Name and Address of Beneficial Owner of Beneficial Ownership of Class
------------------------------------ ----------------------- --------
Mills Value Advisor, Inc. (1) 3,025,000 16.1%
Charles A. Mills, III
Bradley A. Brown
James T. Martin
Juniper Trading Services, Inc.
707 East Main Street
Richmond, Virginia 23219
Liberty Wanger Asset Management L.P. (2) 2,996,200 16.0%
WAM Acquisition GP, Inc.
Liberty Acorn Trust
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
Charles D. Walters (3) 2,220,466 11.5%
108 Frederick Street
Greenville, South Carolina 29607
Thomas W. Smith (4) 2,034,400 10.8%
Thomas N. Tryforos
323 Railroad Avenue
Greenwich, Connecticut 06830
Strong Capital Management, Inc. (5) 1,516,900 8.1%
Richard S. Strong
100 Heritage Reserve
Menomonee Falls, Wisconsin 53051
Wasatch Advisors, Inc. (6) 1,273,526 6.8%
150 Social Hall Avenue
Salt Lake City, Utah 84111
_____________________________
(1) Based on the following: an amended Schedule 13D filed on or about September
29, 2000 for Mills Value Adviser, Inc. ("MVA"), Charles A. Mills, III
("Mills") and Bradley A. Brown ("Brown"); an amended Schedule 13D filed on
or about September 29,. 2000 for James T. Martin ("Martin"); and a Schedule
13D filed on or about September 29, 2000 for Juniper Trading Services, Inc.
("Juniper"). The address listed above is the address for MVA, Mills and
Brown. Martin's address is Tuppeny House, Tuckerstown, Bermuda. Juniper's
address is Compass Point Building, 9 Bermudiana Road, Bermuda. MVA, which
is an investment advisor to, among others, Martin and Juniper, and Mills
and Brown, as officers of MVA, report sole dispositive power over 3,025,000
Shares. Martin and Juniper report beneficial ownership of 2,888,100 Shares
and sole voting power over 2,650,000 Shares.
(2) Based on an amended Schedule 13G dated February 11, 2001. Liberty Wanger
Asset Management, Ltd. and WAM Acquisition GP, Inc. report shared
dispositive power over all Shares listed, and Liberty Acorn Trust reports
shared voting and dispositive power over 2,410,000 of the Shares listed.
(3) Includes 574,866 Shares subject to options exercisable within 60 days of
June 18, 2001, and 39,000 Shares held in trust for the benefit of Mr.
Walters' grandchildren and nephew. Mr. Walters disclaims beneficial
ownership of the 39,000 Shares held in trust. Also includes 190,857 Shares
held by a family limited partnership of which Mr. Walters is the general
partner.
(4) Based on an amended Schedule 13G dated February 14, 2001. Each of Mr. Smith
and Mr. Tryforos reports shared voting and disposition power over 1,933,600
Shares. Mr. Smith reports sole voting and dispositive power over 100,800
Shares.
(5) Based on a Schedule 13G dated January 31, 2001. Each of Strong Capital
Management, Inc. and Mr. Strong report sole voting power over 1,303,700
Shares and sole dispositive power over 1,516,900 Shares.
(6) Based on amended Schedule 13G dated February 14, 2001. Wasatch Advisors,
Inc. reports sole voting and dispositive power over all Shares listed.
3
ELECTION OF DIRECTORS
The Company's bylaws provide for seven directors. Only six directors were
elected to the Board at the Annual Meeting held on August 2, 2000. On May 15,
2001, the Board of Directors elected Mr. Douglas R. Jones, the Company's
President and Chief Operating Officer, to the Board to fill this vacancy. The
Board of Directors makes nominations for director candidates. It is intended
that the persons named in the accompanying proxy will vote only for the seven
nominees for director named on the following pages, except to the extent
authority to so vote is withheld with respect to one or more nominees. Each
director will be elected to serve until the next annual meeting of Shareholders
or until a successor is elected and qualified. Directors will be elected by a
plurality of the votes cast.
Although the Board does not expect that any of the nominees named will be
unavailable for election, in the event of a vacancy in the slate of nominees
occasioned by death or any other unexpected occurrence, it is intended that
Shares represented by proxies in the accompanying form will be voted for the
election of a substitute nominee selected by the persons named in the proxy.
During the most recent fiscal year, the Board of Directors held four
regularly scheduled meetings. Each director attended all meetings of the Board
of Directors and of each committee on which he served.
Each director who is not an employee of the Company currently is paid a
$3,000 quarterly retainer, plus $500 for each meeting of the Board of Directors
attended and $200 for each meeting of a committee on which he serves. All
directors are reimbursed for ordinary and necessary out-of-pocket expenses
incurred in attending meetings of the Board of Directors and its committees. In
addition, each outside director receives options to purchase 6,000 Shares on
April 30 of each year pursuant to the terms of the Company's 1992 and 1994 Stock
Option Plans. The exercise price for these options is the fair market value of
the Shares on the date of grant, and each option is exercisable for 10 years
from the date of grant.
The Board of Directors maintains an Audit Committee on which Messrs.
Bramlett, Hummers and Way served during fiscal 2001. The Audit Committee reviews
the results and scope of each audit, the service provided by the Company's
independent accountants and all related-party transactions. The Audit Committee
met once during the most recent fiscal year and conducted quarterly conference
calls with management and the Company's independent auditors to review interim
financial information prior to its public release. Additional information
regarding the Audit Committee is set forth below under "Appointment of
Independent Public Accountants."
The Board of Directors also maintains a Stock Option Committee on which
Messrs. Bramlett, Gilreath, Hummers and Way serve. This Stock Option Committee
administers the Company's 1992 and 1994 Stock Option Plans. The Stock Option
Committee met two times during the most recent fiscal year.
4
The Board also maintains a Compensation Committee on which Messrs.
Bramlett, Gilreath, Hummers and Way serve. The Compensation Committee
establishes and reviews the compensation criteria and policies of the Company,
reviews the performance of the officers of the Company and recommends
appropriate compensation levels to the Board of Directors. The Compensation
Committee met twice during the most recent fiscal year.
The following is a list of nominees for election to the Board of Directors.
Each nominee's name, age, current principal occupation (which has continued for
at least five years unless otherwise indicated), and the name and principal
business of the organization in which that occupation is carried on, the year
each incumbent was first elected to the Board, all positions and offices
presently held with the Company, and directorships in other public companies are
set forth below. Each of the nominees except Mr. Jones (who was appointed in May
2001 to fill a vacancy) served on the Board of Directors during the Company's
last fiscal year. None of the following nominees or current directors is related
(as first cousin or closer) by blood, marriage, or adoption to any other
nominee, director, or person who may be deemed to be an executive officer of the
Company.
CHARLES D. WALTERS (62), Chairman and Chief Executive Officer, World
Acceptance Corporation. Mr. Walters has served as Chairman of the Board of
Directors and chief executive officer since July 1991 and as a director since
April 1989. Mr. Walters served as president from 1986 to 1996, executive vice
president from 1984 to 1986, and as regional vice president responsible for
operations in Texas and Oklahoma from 1976 to 1984. Mr. Walters joined a
predecessor of the Company in 1972.
DOUGLAS R. JONES (49), President and Chief Operating Officer, World
Acceptance Corporation. Mr. Jones has served as president and chief operating
officer since August 1999 and as a director since May 2001. Prior to August
1999, Mr. Jones was a regional operations director for Associates Financial
Services, Inc. Mr. Jones was employed by Associates Financial Services, Inc. in
various positions from August 1977 until June 1999.
A. ALEXANDER McLEAN, III (50), Executive Vice President and Chief Financial
Officer, World Acceptance Corporation. Mr. McLean has served as executive vice
president since August 1996, senior vice president since 1992, and as vice
president and chief financial officer and a director since June 1989. Mr. McLean
is a certified public accountant in South Carolina.
JAMES R. GILREATH (59), Attorney, James R. Gilreath, P. A., Greenville,
South Carolina, a law firm. Mr. Gilreath has served as a director of the Company
since April 1989.
WILLIAM S. HUMMERS, III (55), Executive Vice President, The South Financial
Group, Inc., Greenville, South Carolina, a bank holding company. Mr. Hummers has
served in his present capacities with The South Financial Group, Inc., formerly
Carolina First Corporation, since 1988. Mr. Hummers currently serves as a
director of The South Financial Group, Inc.. Mr. Hummers has served as a
director of the Company since April 1989.
CHARLES D. WAY (48), Chairman, President, and Chief Executive Officer,
Ryan's Family Steak Houses, Inc., Greer, South Carolina, a restaurant company.
Mr. Way has served as president of Ryan's Family Steak Houses, Inc. since 1988,
as its chief executive officer since
5
1989, and as its chairman since October 1992. From 1986 until 1988, Mr. Way
served as executive vice president, treasurer and secretary of Ryan's Family
Steak Houses, Inc. Mr. Way currently serves as a director of Ryan's Family Steak
Houses, Inc. Mr. Way has served as a director of the Company since September
1991.
KEN R. BRAMLETT, JR. (41), Senior Vice President, and General Counsel,
Personnel Group of America, Inc., Charlotte, North Carolina, an information
technology and personnel staffing services company. Mr. Bramlett has served as
senior vice president and general counsel of Personnel Group of America, Inc.
since October 1996, as chief financial officer from October 1999 to January
2001, and as a director of that company from August 1997 to January 2001. Prior
to October 1996, Mr. Bramlett was an attorney with Robinson, Bradshaw & Hinson,
P.A., a Charlotte, North Carolina, law firm, for 12 years. Mr. Bramlett has
served as a director of the Company since October 1993.
The following table sets forth the sole (unless otherwise indicated)
beneficial ownership, as defined by Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, of Shares as of June 18, 2001, for each director, nominee,
or executive officer identified in the Summary Compensation Table and all
directors and executive officers as a group.
OWNERSHIP OF COMMON STOCK OF MANAGEMENT AS OF JUNE 18, 2001
Shares Beneficially Owned
--------------------------------
Name of Individual or Number in Group Amount/(1)/ Percent of Class
--------------------------------------- -------------- ----------------
Charles D. Walters......................... 2,220,466/(2)/ 11.5%
A. Alexander McLean, III................... 495,751/(3)/ 2.6%
James R. Gilreath.......................... 160,500/(4)/ *
Charles D. Way............................. 65,800 *
William S. Hummers, III.................... 60,280 *
Ken R. Bramlett, Jr........................ 53,800 *
Mark C. Roland............................. 46,000 *
Charles F. Gardner, Jr..................... 31,600 *
Douglas R. Jones........................... 25,000 *
Director and all executive
officers as a group (11 persons).......... 3,159,197 15.7%
_________________________
*Less than 1%.
/(1)/ Includes the following Shares subject to options exercisable within 60
days of June 18, 2001: Mr. Walters - 574,866; Mr. McLean - 417,351; Mr.
Gilreath- 60,000; Mr. Way - 55,800; Mr. Hummers - 54,000; Mr. Bramlett -
48,000; Mr. Roland - 46,000; Mr. Gardner - 31,600; Mr. Jones - 20,000;
Directors and Executive Officers as a group - 1,307,617.
/(2)/ Includes 39,000 Shares held in trust for the benefit of Mr. Walters'
grandchildren and nephew. Mr. Walters disclaims beneficial ownership of
these Shares. Also includes 190,857 Shares held by a family limited
partnership of which Mr. Walters is the general partner.
/(3)/ Includes 51,000 Shares in a self-directed retirement account maintained
for the benefit of Mr. McLean.
/(4)/ Includes 7,500 Shares held in a profit-sharing trust for which Mr.
Gilreath serves as trustee. Also includes 90,000 Shares in a limited
partnership in which Mr. Gilreath is a partner.
6
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10 percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Executive
officers, directors, and greater-than-10-percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, all of the Company's executive officers, directors, and
greater-than-10-percent beneficial owners have complied with such reporting
requirements during the fiscal year ended March 31, 2001.
SHAREHOLDER RETURN
Performance Graph. The following chart provides a graphic comparison of the
cumulative shareholder return on the Company's Shares to (a) the cumulative
total return of the NASDAQ Composite Index and (b) the cumulative total return
of the NASDAQ Financial Index. All cumulative returns assume the investment of
$100.00 in each of the Company's Shares, the NASDAQ Composite Index and the
NASDAQ Financial Index on March 31, 1996.
Comparison of Cumulative Total Return Between World
Acceptance Corporation, NASDAQ Composite Index and
NASDAQ Financial Index
3/31/96 3/31/97 3/31/98 3/31/99 3/31/00 3/31/01
------- ------- ------- ------- ------- -------
World Acceptance Corporation 100.00 50.56 59.55 48.32 45.51 60.14
Nasdaq Composite Index 100.00 111.15 168.47 227.62 423.37 169.46
Nasdaq Financial Index 100.00 128.79 200.11 180.33 170.90 189.05
7
EXECUTIVE COMPENSATION
Joint Report of the Compensation Committee and the Stock Option Committee
Compensation Committee
The Compensation Committee is responsible for establishing compensation and
benefits (other than stock option grants) for the members of senior management
of the Company. The Compensation Committee annually evaluates the Company's
performance and compensation paid to the Company's executive officers and other
senior management.
Stock Option Committee
The Stock Option Committee is responsible for administering the Company's
1992 and 1994 Stock Option Plans and granting stock options and restricted stock
awards under these plans. The Stock Option Committee meets periodically to
consider option grants to newly hired, promoted, and existing members of
management.
Objectives and Policies
The Compensation Committee and the Stock Option Committee seek to establish
compensation policies, plans, and programs to accomplish two objectives: (i) to
attract and retain highly capable and well-qualified executives and (ii) to
focus executives' efforts on increasing shareholder value. To achieve these
objectives, the committees have established a compensation package consisting of
base salary, short-term incentive compensation in the form of annual cash
bonuses based on the performance of the Company during the prior fiscal year,
and long-term incentive compensation primarily in the form of discretionary
stock options and restricted stock awards that vest over a period of time.
The following executive officers have been compensated pursuant to the
objectives described above in accordance with employment agreements and
incentive compensation plans described: Messrs. Walters and McLean since the
beginning of fiscal 1995, and Mr. Jones since August 1999. The Compensation
Committee believes that it is desirable to tie a significant percentage of each
executive's overall compensation to the achievement of goals designed to
maximize shareholder value. Accordingly, the employment agreements provide for
minimum base salary levels subject to adjustment at the discretion of the
Compensation Committee, potentially significant annual cash bonus awards based
on the achievement of objective annual Company performance goals, and
potentially significant awards of stock options and restricted stock based on
the achievement of objective long-term Company performance goals.
For fiscal 2001 Messrs. Walters, Jones, and McLean were paid the minimum
base salaries established under their employment agreements. The amount of cash
bonuses awarded to Messrs. Walters, Jones, and McLean for fiscal 2001 were
determined in accordance with the Company's Executive Incentive Plan (the
"Executive Incentive Plan") and based on the Company's achievement of pre-
established annual goals related to (1) increases in earnings per share, (2)
growth in loans receivable, and (3) expense control. The Compensation Committee
selected these goals to motivate and reward the maximization of shareholder
value based on its
8
belief that earnings per share is the most direct measure of shareholder value
and that growth in loans receivable and expense control are the two most
significant determinants of earnings per share. The relative weights assigned to
each of these goals in determining the amount of cash bonus compensation for
Messrs. Walters, Jones, and McLean in fiscal 2001 were as follows: earnings per
share--40%; growth in loans receivable--30%; and expense control--30%. Possible
bonuses ranging from 25% to 150% of base salary for Mr. Walters, from 22.5% to
135% of base salary for Mr. Jones, and from 20% to 120% of base salary for Mr.
McLean were available for fiscal 2001 depending upon whether the Company reached
the pre-established minimum, threshold, target, or maximum levels of achievement
with respect to a particular goal. During fiscal 2001, the Company achieved
maximum performance levels with respect to its goals for growth in loans
receivable and expense control and target level with respect to earnings per
share and as a result, the cash bonuses payable under the Executive Incentive
Plan amounted to 130.0%, 117.0% and 104.0% of base salary for Messrs. Walters,
Jones, and McLean, respectively.
The compensation of the Company's other two executive officers, Mr. Roland
and Mr. Gardner, provide for bonuses which are based 50% on the achievement of
business unit performance goals and 50% on the same company performance goals
that determine the compensation of Messrs. Walters, Jones, and McLean.
Historically, the long-term incentive components of the Company's executive
compensation have been stock options and restricted stock awards under the 1992
and 1994 Stock Option Plans. Options may have a term of up to 10 years, but
expire earlier upon an executive's termination of employment. Options granted
under the 1992 and 1994 Stock Option Plans are exercisable at the fair market
value of the Shares at the date of grant. Restricted stock awards may contain
such transfer restrictions and vesting and other terms as determined by the
Stock Option Committee.
Section 162(m) of the Internal Revenue Code prohibits publicly held
corporations from deducting as an expense for tax purposes the amount by which
compensation paid to certain executives exceeds $1,000,000. Certain types of
incentive compensation are excepted from this prohibition. While the current
compensation levels of the Company's executives are well below this limit, the
committees intend to consider the effects of Section 162(m) in determining
whether any of the committees' policies, or any of the Company's compensation
plans, should be changed to avoid payment of nondeductible compensation.
Compensation of Chief Executive Officer
Mr. Walters' compensation for fiscal 2001 was determined in the manner and
in accordance with the policies described above.
During fiscal 2001, the Company continued to experience dramatic
improvement in its operating performance. For the 12 months ended March 31,
2001, the Company earned $15.6 million, representing a 10.1% increase over the
prior year, an 8.8% return on average assets and a 21.1% return on average
equity. During the last three fiscal years ended March 31, 1999, 2000, and 2001,
Mr. Walters has overseen increases in the Company's office network of 19, 31,
and 10
9
net new offices, respectively; and in gross loans receivable, the Company's
primary earning assets, of 15%, 16%, and 22%, respectively. Additionally, the
Compensation Committee has compared Mr. Walters compensation package to those of
chief executive officers of similar companies. Based on these factors, the
committees continue to believe that Mr. Walters' compensation as Chief Executive
Officer appropriately reflects the Company's short-term and long-term
performance.
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
Ken R. Bramlett, Jr. Ken R. Bramlett, Jr.
James R. Gilreath James R. Gilreath
William S. Hummers, III William S. Hummers, III
Charles D. Way Charles D. Way
Compensation Committee Interlocks and Insider Participation
During fiscal 2001, Messrs. Bramlett, Gilreath, Hummers, and Way served as
members of the Compensation Committee and the Stock Option Committee. Mr.
Gilreath is a member of the law firm of James R. Gilreath, P.A., which since
1989 has served and will continue to serve as counsel to the Company.
Summary Compensation Table. The following table sets forth certain
information with respect to compensation paid or accrued by the Company during
the fiscal years ended March 31, 2001, 2000 and 1999 with respect to the chief
executive officer of the Company and, except as otherwise noted, the four other
executive officers of the Company whose salary and bonus exceeded $100,000 in
the fiscal year ended March 31, 2001. Mr. Jones became an executive officer
during fiscal 2000 and Mr. Gardner became an executive officer during fiscal
2001.
Summary Compensation Table
Long-Term
Annual Compensation Compensation Award
------------------------------------------- ---------------------
Other Annual Securities Underlying All Other
Name and Principal Position Year Salary($) Bonus($) Compensation($) Options (#) Compensation($)
--------------------------- ---- --------- -------- --------------- ----------- ---------------
Charles D. Walters 2001 258,791 358,000 /(1)/ - 22,550/(2)/
Chairman and Chief 2000 248,918 399,121 /(1)/ 50,000 29,764/(3)/
Executive Officer 1999 228,480 295,724 /(1)/ 29,840 34,268/(4)/
Douglas R. Jones 2001 183,750 217,035 /(1)/ 20,000 1,394/(5)/
President and Chief 2000 123,958 236,250 /(1)/ 50,000 -
Operating Officer 1999 - - /(1)/ - -
A. Alexander McLean, III 2001 178,817 200,533 /(1)/ - 5,303/(5)/
Executive Vice President 2000 170,132 220,818 /(1)/ 50,000 5,125/(5)/
and Chief Financial Officer 1999 155,255 150,026 /(1)/ 20,182 2,436/(5)/
Mark C. Roland 2001 129,368 107,661 /(1)/ 10,000 5,306/(5)/
Senior Vice President 2000 122,231 105,000 /(1)/ 10,000 3,572/(5)/
Eastern Division 1999 115,894 87,500 /(1)/ 15,000 3,488/(5)/
Charles F. Gardner, Jr. 2001 86,558 82,335 /(1)/ 10,000 3,213/(5)/
Senior Vice President 2000 71,931 20,000 /(1)/ 3,000 2,612/(5)/
Western Division 1999 67,962 15,000 /(1)/ 5,000 2,342/(5)/
____________________________________
10
/(1)/ Certain amounts may have been expended by the Company which may have had
value as a personal benefit to the named officer. However, the total value
of such benefits did not exceed the lesser of $50,000 or 10% of the annual
salary and bonus of such named officer for the fiscal year reported.
/(2)/ Includes $5,304 in company-matching contributions under the Company's
401(k) plan and $17,246 representing the assumed present value of the non-
term portion of premium payments made on behalf of Mr. Walters by the
Company to purchase split-dollar insurance covering Mr. Walters's life,
assuming repayment of such amount by Mr. Walters upon retirement at age 65
at an interest rate of 8% per annum.
/(3)/ Includes $5,173 in company-matching contributions under the Company's
401(k) plan and $24,591 representing the assumed present value of the non-
term portion of premium payments made on behalf of Mr. Walters by the
Company to purchase split-dollar insurance covering Mr. Walters' life,
assuming repayment of such amount by Mr. Walters upon retirement at age 65
at an interest rate of 8% per annum.
/(4)/ Includes $2,419 in company-matching contributions under the Company's
401(k) plan and $31,849 representing the assumed present value of the non-
term portion of premium payments made on behalf of Mr. Walters by the
Company to purchase split-dollar insurance covering Mr. Walters's life,
assuming repayment of such amount by Mr. Walters upon retirement at age 65
at an interest rate of 8% per annum.
/(5)/ Amount represents company-matching contributions under the Company's
401(k) plan.
Option Grants Table. The following table sets forth information with
respect to options granted during the fiscal year ended March 31, 2001, to the
named officers. Messrs. Walters and McLean received no option grants during the
last fiscal year.
Option Grants in Last Fiscal Year /(1)/
Individual Grants
------------------------
% of Total Potential Realized
Number of Options Value at Assumed
Securities Granted to Annual Rates of Stock
Underlying Employees Exercise or Price Appreciation for
Options in Fiscal Base Price Expiration Option Term/(2)/
Name Granted (#) Year (%) ($/Sh)/(1)/ Date 5% ($) 10% ($)
---- ---------- ---------- ----------- ---------- ------- -------
Douglas R. Jones........... 20,000 7.21 5.032 10/26/10 63,292 160,394
Mark C. Roland............. 10,000 3.60 5.032 10/26/10 31,646 80,197
Charles F. Gardner, Jr..... 10,000 3.60 5.032 10/26/10 31,646 80,197
___________________________
/(1)/ All Options shown in this table were granted under the Company's 1992
Stock Option Plan and 1994 Stock Option Plan at the fair market value of
the Shares on the date of grant (defined as the average of the high and
low sale prices of the Shares as quoted on the NASDAQ National Market
System).
/(2)/ These amounts represent only certain assumed rates of appreciation. Actual
gains, if any, on stock option exercises and Common Stock holdings cannot
be predicted, and there can be no assurance that the gains set forth in
the table can be achieved. No gains to the option holders are possible
without increases in the price of the Shares, which will benefit all
shareholders.
11
Option Year-End Value Table. The following table sets forth information with
respect to unexercised options held as of March 31, 2001.
Fiscal Year-End Option Values
Number of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options at FY-End (#) Options at FY-End ($)/(1)/
--------------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Charles D. Walters........................... 574,866 - 397,278 -
Douglas R. Jones............................. 20,000 50,000 18,180 60,430
A. Alexander McLean, III..................... 417,351 - 269,974 -
Mark C. Roland............................... 46,000 36,000 27,660 48,540
Charles F. Gardner, Jr....................... 31,600 18,900 20,563 27,650
__________________________________
(1) The fair market value used for computations in this column was $6.69, which
was the last sales price of the shares on March 30, 2001.
Employment and Severance Agreements. The Company maintains employment
agreements with Messrs. Walters, Jones and McLean. These agreements expire on
April 1, 2003, for Messrs. Walters and McLean and on August 16, 2002, for Mr.
Jones. The terms of these agreements are three years and provide for current
annual base salaries of not less than $268,000, $198,000 and $189,000, for
Messrs. Walters, Jones and McLean, respectively, as determined by the
Compensation Committee. These salaries are subject to annual increases as
determined by the Compensation Committee. In addition, the agreements provide
for the payment of annual cash incentive payments in accordance with the terms
of the Company's Executive Incentive Plan, based on the Company's achievements
of certain pre-established performance criteria. For fiscal 2001, the
performance criteria related to achievement of a certain level of earnings per
common share, a certain amount of growth in loans receivable, and the control of
general and administrative expenses within certain limits.
Under the agreements with Messrs. Walters, Jones and McLean, the Company has
agreed to provide each with long-term disability insurance benefits equal to 60%
of such executive's base salary at the time of disability, and Mr. Walters'
agreement requires the Company to provide at least $2,000,000 in life insurance
coverage payable to Mr. Walters' designated beneficiary in the event of his
death. These agreements also provide for severance payments and the continuation
of certain benefits if the executive is terminated without cause or
constructively discharged (as defined in the agreements). In the event of such
termination without cause or constructive discharge, including any such
termination or discharge that occurs within one year after a change of control
of the Company, the executive is entitled to receive (i) severance pay equal to
100% of such executive's base salary at the time of termination or change of
control, as the case may be, for the longer of 24 months or the remaining term
of the employment agreement, (ii) the continuation of all other perquisites and
benefits available under the agreement for a period of 24 months from the date
of termination, and (iii) annual incentive compensation payments prorated to the
date of termination.
Messrs. Walters, Jones and McLean have agreed not to compete with the Company
during the term of their employment and for two years thereafter.
12
Supplemental Executive Retirement Plan
The Company has instituted a Supplemental Executive Retirement Plan ("SERP"),
which is a non-qualified executive benefit plan in which the Company agrees to
pay the executive additional benefits in the future, usually at retirement, in
return for continued satisfactory performance by the executive. The Company
selects the key executives who participate in the SERP. The SERP is an unfunded
plan, which means there are no specific assets set aside by the Company in
connection with the establishment of the plan. The executive has no rights
under the agreement beyond those of a general creditor of the Company. The
Company has currently entered into SERP contracts with approximately eight
senior level managers, five of which are Named Executive Officers. The SERP
contracts provide for a retirement benefit of 45% of the executive's final base
salary, multiplied by a "Days of Service Fraction" should the executive elect
early retirement. No executive will be granted early retirement until he has
reached age 57 and has been a participant of the plan for at least eight years.
The expected benefits associated with such persons, assuming retirement at age
65, are as follows:
Year of Retirement Annual Retirement Duration of
Name Birth Age Benefit Retirement Benefits
Charles D. Walters 1939 65 $133,615 15 years
Douglas R. Jones 1951 65 141,331 15 years
A. Alexander McLean III 1951 65 139,638 15 years
Mark C. Roland 1956 65 122,316 15 years
Charles F. Gardner, Jr. 1961 65 94,659 15 years
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Report of the Audit Committee of the Board of Directors
The Audit Committee Reviews the Company's financial reporting process on
behalf of the Board of Directors. The Audit Committee is composed of three
directors, each of whom is independent as defined by the National Association of
Securities Dealers' listing standards. The Audit Committee operates under a
written charter approved by the Board of Directors. A copy of the charter is
attached to this Proxy Statement as Appendix A.
Management is responsible for the Company's internal controls and financial
reporting process. The independent accountants are responsible for performing
an independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon.
In this context, the Audit Committee met with management and the independent
accountants to review and discuss the March 31, 2001 audited consolidated
financial statements. The Audit Committee also discussed with the independent
accountants the matters required by Statement on Auditing Standards No. 61
(Communication with Audit Committees). The Audit Committee also received
written disclosures and letter from the independent accountants required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), and the Audit Committee discussed with the independent accountants
that firm's independence. In particular, the Audit Committee considered whether
the provision of the services set forth below in "All Other Fees" is compatible
with maintaining the independence of the auditors.
13
Based upon the Audit Committee's discussions with management and the
independent accountants, and the Audit Committee's review of the representations
of management and the independent accountants, the Audit Committee recommended
that the Board of Directors include the audited consolidated financial
statements in the Company's Annual Report on Form 10-K for the year ended March
31, 2001, for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Charles D. Way, Chairman
Ken R. Bramlett, Jr.
William S. Hummers, III
Audit Fees
For fiscal year 2001, KPMG LLP billed the Company an aggregate of $84,500 for
professional services rendered for the audit of the Company's annual financial
statements for the year ended March 31, 2001 and reviews of the financial
statements included in the Company's Forms 10-Q for that year.
All Other Fees
For fiscal year 2001, KPMG LLP billed the Company an aggregate of $69,500 for
other fees. These fees included services primarily for income tax return
preparation and other miscellaneous items.
The Board, upon the recommendation of the Audit Committee, has approved the
selection of the firm KPMG LLP as independent public accountants to examine the
books of the Company and its subsidiaries for the current fiscal year, to report
on the consolidated balance sheet and related statement of operations of the
Company and its subsidiaries, and to perform such other appropriate accounting
services as may be required by the Board. The Board recommends that the
shareholders vote in favor of ratifying and approving the selection of KPMG LLP
for the purposes set forth above. The Company has been advised by KPMG LLP that
the firm did not have any direct financial interest or any material indirect
financial interest in the Company and its subsidiaries during the Company's most
recent fiscal year.
Representatives of KPMG LLP are expected to be present at the Meeting with
the opportunity to make a statement if they so desire, and they are expected to
be available to respond to appropriate questions.
Approval of the proposal requires the affirmative vote of a majority of the
Shares voted on the proposal. Should the shareholders vote negatively, the
Board of Directors will consider a change in auditors for the next year.
The Board unanimously recommends a vote FOR ratifying the selection of KPMG
---
LLP as independent public accountants to audit the books of the Company and its
subsidiaries for the current year.
14
PROPOSALS FOR 2002 ANNUAL MEETING OF SHAREHOLDERS
Shareholders who intend to present proposals for consideration at next year's
annual meeting are advised that any such proposal must be received by the
Secretary of the Company by no later than the close of business on March 4,
2002, if such proposal is to be considered for inclusion in the proxy statement
and proxy appointment form relating to that meeting. Only persons who have held
beneficially or of record at least $2,000 in market value, or 1% of the
outstanding Common Stock, for at least one year on the date the proposal is
submitted and who continue in such capacity through the meeting date are
eligible to submit proposals to be considered for inclusion in the Company's
proxy statement. In addition, under SEC rules, proxies of the Board of Directors
may exercise their discretionary voting authority to vote against any
shareholder proposal raised at next year's annual meeting if notice of such
proposal is received by the Secretary of the Company later than the close of
business on May 20, 2002.
OTHER MATTERS
The Board and the Company's officers are not aware of any other matters that
may be presented for action at the Meeting, but if other matters do properly
come before the Meeting, it is intended that Shares represented by proxies in
the accompanying form will be voted by the persons named in the proxy in
accordance with their best judgement.
You are cordially invited to attend this year's Meeting. However, whether
you plan to attend the Meeting or not, you are respectfully urged to sign and
return the enclosed proxy, which will, of course, be returned to you at the
Meeting if you are present and so request.
/s/ Charles D. Walters
CHARLES D WALTERS
Chairman of the Board and
Chief Executive Officer
July 2, 2001
15
Appendix A
WORLD ACCEPTANCE CORPORATION
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I. AUDIT COMMITTEE PURPOSE
The Audit Committee is appointed by the Board of Directors to assist the Board
in fulfilling its oversight responsibilities. The Audit Committee's primary
duties and responsibilities are to:
. Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting, and legal
compliance.
. Monitor the independence and performance of the Company's independent
auditors and internal auditing department.
. Provide an avenue of communication among the independent auditors,
management, the internal auditing department, and the Board of Directors.
The Audit Committee has the authority to conduct any investigation appropriate
to fulfilling its responsibilities and it has direct access to the independent
auditors as well as anyone in the organization. The Audit Committee has the
ability to retain, at the Company's expense, special legal, accounting, or other
consultants or experts it deems necessary in the performance of its duties.
In fulfilling their responsibilities hereunder, it is recognized that members of
the Audit Committee are not, and do not represent themselves to be, accountants
or auditors by profession or experts in the fields of accounting or auditing,
including the evaluation of auditor independence.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit Committee members shall meet the requirements of the NASD Exchange. The
Audit Committee shall be comprised of three or more directors as determined by
the Board, each of whom shall be independent nonexecutive directors, free from
any relationship that would interfere with the exercise of his or her
independent judgment. All members of the Committee shall have a basic
understanding of finance and accounting and be able to read and understand
fundamental financial statements, and at least one member of the Committee shall
have accounting or related financial management expertise.
Audit Committee members shall be appointed by the Board. If an Audit Committee
Chair is not designated or present, the members of the Committee may designate a
Chair by majority vote of the Committee membership.
The Committee shall meet or confer at least four times annually, at least one of
which events shall be a meeting, or more frequently as circumstances dictate.
The Audit Committee Chair shall prepare or approve an agenda in advance of each
meeting. The Committee should meet privately in executive session at least
annually with management, the director of the internal auditing department, the
independent auditors and as a committee to discuss any matters that the
Committee or each of these groups believe should be discussed. In addition, the
Committee or at least its Chair should communicate with management and the
independent auditors quarterly to review the Company's financial statements and
significant findings based upon the auditors' limited review procedures.
A-1
III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
Review Procedures
-----------------
1. Review and reassess the adequacy of this Charter at least annually. Submit
the Charter to the Board of Directors for approval and have the document
published at least every three years in accordance with SEC regulations.
2. Review the Company's annual audited financial statements prior to filing or
distribution. Review should include discussion with management and
independent auditors of significant issues regarding accounting principles,
practices and judgments.
3. In consultation with the management, the independent auditors and the
internal auditors (as deemed necessary by the Committee), consider the
integrity of the Company's financial reporting processes and controls.
Discuss significant financial risk exposures and the steps management has
taken to monitor, control and report such exposures. Review significant
findings prepared by the independent auditors or the internal auditing
department together with management's responses.
4. Review with financial management and the independent auditors the Company's
quarterly financial results prior to the release of earnings and the
Company's quarterly financial statements prior to filing or distribution.
Discuss any significant changes to the Company's accounting principles and
any items required to be communicated by the independent auditors in
accordance with SAS 61 (see item 9). The Chair of the Committee may represent
the entire Audit Committee for purposes of this review.
Independent Auditors
--------------------
5. The independent auditors are ultimately accountable to the Audit Committee
and the Board of Directors. The Audit Committee shall review the independence
and performance of the auditors and shall annually recommend to the Board of
Directors the appointment of the independent auditors or approve any
discharge of auditors when circumstances warrant.
6. Approve the fees and other significant compensation to be paid to the
independent auditors.
7. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with the Company
that could impair the auditors' independence. In addition, the Company should
review the provision of any non-audit services, including information
technology consulting services relating to financial information systems
design and implementation and other non-audit services that have been
provided by the auditors and the fees for such services, and consider the
effect of providing such services on the independence of the auditors (it
being understood that the Committee will rely on the accuracy of the
information provided by the auditors as to the services provided and the fees
paid and will rely on the representations of management in connection with
such consideration).
8. Review the independent auditors audit plan.
A-2
9. Prior to releasing the year-end earnings, discuss the results of the audit
with the independent auditors and discuss certain matters required to be
communicated to audit committees in accordance with AICPA SAS 61.
10. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
11. Review the appointment, performance and replacement of the senior internal
audit executive.
12. Review significant reports prepared by the internal audit department
together with management's response and follow-up to these reports.
13. On at least an annual basis, review with the Company's counsel, any legal
matters that could have a significant impact on the organization's financial
statements, the Company's compliance with applicable laws and regulations,
inquiries received from regulators or governmental agencies.
Other Audit Committee Responsibilities
--------------------------------------
14. Annually prepare a report to shareholders and any other disclosures as
required by the Securities and Exchange Commission. The report and other
disclosures should be included in the Company's annual proxy statement.
15. Perform any other activities consistent with this Charter, the Company's By-
laws and governing law, as the Committee or the Board deems necessary or
appropriate.
16. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
A-3
[LOGO]World Acceptance Corporation
Notice of Annual Meeting
and
Proxy Statement
Annual Meeting
of Shareholders
to be held on
August 1, 2001
FRONT
--------------------------------------------------------------------------------
WORLD ACCEPTANCE CORPORATION
Revocable Proxy ANNUAL MEETING OF SHAREHOLDERS
to be held on August 1, 2001
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints A. Alexander McLean, III and Jeffrey W. Ohly as
Proxies, each with the power to appoint his substitute, and hereby authorizes
each of them to represent and to vote, as designated below, all the shares of
common stock of World Acceptance Corporation (the "Company") held of record by
the undersigned on June 18, 2001 at the annual meeting of shareholders to be
held on August 1, 2001 or any adjournment thereof.
1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below.)
Charles D. Walters; Douglas R. Jones; A. Alexander McLean, III; James R.
Gilreath; William S. Hummers, III; Charles D. Way; and Ken R. Bramlett, Jr.
2. PROPOSAL TO RATIFY THE BOARD OF DIRECTORS' SELECTION OF KPMG LLP as the
Company's independent public accountants
FOR AGAINST ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign and date on the reverse side and return in the enclosed postage-
prepaid envelope.
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BACK
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH PROPOSAL AND THE ELECTION OF
THE DIRECTOR NOMINEES NAMED HEREIN, AND THIS PROXY WILL BE VOTED FOR EACH
PROPOSAL AND FOR THE ELECTION OF THE DIRECTOR NOMINEES NAMED HEREIN UNLESS THE
SHAREHOLDER DIRECTS OTHERWISE, IN WHICH CASE IT WILL BE VOTED AS DIRECTED.
The undersigned acknowledges receipt of the accompanying Notice of Annual
Meeting and Proxy Statement and revokes all proxies heretofore given by the
undersigned.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership please sign in partnership name by authorized person.
DATED: ___________________________________________, 2001
___________________________________________________
Signature
___________________________________________________
Signature if held jointly
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PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED POSTAGE-PREPAID ENVELOPE
-------------------------------------------------------
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