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DOLLAR FINANCIAL CORP.
1436 LANCASTER AVENUE, SUITE 310
BERWYN, PA, 19312
(610) 296-3400

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on November 13, 2008

 

Dear Stockholder:

 

You are cordially invited to attend the annual meeting of stockholders of Dollar Financial Corp., a Delaware corporation, to be held at The Boca Raton Bridge Hotel located at 999 East Camino Real, Boca Raton, Florida, 33432 on Thursday, November 13, 2008, at 8:30 a.m., local time. The purpose of the meeting is to consider and take action on the proposals listed below:

 

1. To elect two persons to serve as Class A directors on our board of directors for a three-year term and until their successors are duly elected and qualified;

 

2. To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending June 30, 2009; and

 

3. To transact such other business as may properly come before the meeting and any adjournments or postponements of the meeting.

 

The board of directors has fixed the close of business on September 26, 2008 as the record date for determination of the stockholders entitled to notice of, and to vote at, the meeting and any adjournments or postponements of the meeting. Only holders of record of common stock at the close of business on the record date will be entitled to receive notice of and to vote at the meeting and at any adjournments or postponements of the meeting. At the annual meeting, such stockholders will be asked to consider and take action on the proposals discussed in the accompanying proxy statement and any other matter that properly comes before the annual meeting or any adjournment or postponement thereof.

 

Sincerely,

 

Roy Hibberd, Senior Vice President,

General Counsel and Secretary

 

October 7, 2008

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON NOVEMBER 13, 2008: The Notice of Annual Meeting, Proxy Statement and fiscal 2008 Annual Report to Stockholders are available on our website at http://www.dfg.com/ir.

 

WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE ACT PROMPTLY TO VOTE YOUR SHARES. YOU MAY VOTE YOUR SHARES BY MARKING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE POSTAGE PAID ENVELOPE PROVIDED. YOU MAY ALSO VOTE YOUR SHARES BY TELEPHONE OR THROUGH THE INTERNET BY FOLLOWING THE INSTRUCTIONS SET FORTH ON THE PROXY CARD. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON, EVEN IF YOU HAVE PREVIOUSLY SUBMITTED A PROXY IN WRITING, BY TELEPHONE OR THROUGH THE INTERNET.

DOLLAR FINANCIAL CORP.
1436 LANCASTER AVENUE, SUITE 310
BERWYN, PA, 19312
(610) 296-3400

 

PROXY STATEMENT

 

DATED OCTOBER 7, 2008

 

FOR THE ANNUAL MEETING OF STOCKHOLDERS
To be held on November 13, 2008

 

Introduction

 

The enclosed proxy is solicited by and on behalf of the board of directors, which we refer to in this proxy statement as our board, of Dollar Financial Corp., a Delaware corporation, which we refer to in this proxy statement as the company, we, or us, for use at the annual meeting of stockholders to be held on Thursday, November 13, 2008 at 8:30 a.m., local time, and at any postponement or adjournment thereof, which we refer to in this proxy statement as the annual meeting. This proxy statement and the enclosed form of proxy are first being mailed to stockholders on or about October 7, 2008.

 

Only stockholders of record at the close of business on September 26, 2008, which we refer to in this proxy statement as the record date, will be entitled to notice of and to vote at the annual meeting and any adjournments thereof. At the annual meeting, such stockholders will be asked to consider and take action on the proposals discussed in this proxy statement and any other matter that properly comes before the annual meeting or any adjournment or postponement thereof.

 

An Annual Report to Stockholders containing financial statements for the fiscal year ended June 30, 2008, which we refer to in this proxy statement as fiscal 2008, is being mailed together with this proxy statement to all stockholders entitled to vote.

TABLE OF CONTENTS

 

 

At our annual meeting, stockholders will act upon the matters outlined in the notice of annual meeting above, including the election of two Class A directors and the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ended June 30, 2009, which we refer to in this proxy statement as fiscal 2009.

 

The record date for the determination of stockholders entitled to notice of and to vote at the annual meeting is the close of business on September 26, 2008. Each holder of shares of our common stock, par value $0.001 per share, which we refer to in this proxy statement as our common stock, as of the record date is entitled to vote. On the record date, there were 24,361,750 shares of our common stock issued and outstanding. Each share of our common stock outstanding on the record date is entitled to one vote on each matter to be voted on at the annual meeting. Stockholders have no cumulative voting rights.

 

You are not required to attend the annual meeting in order to be able to vote. While you may attend the annual meeting and vote your shares in person, you also may choose to submit your proxies by any of the following methods:

 

 

Registered Holders.   If you are a registered holder, your shares will be voted in the manner that you indicate in your proxy. The proxy card provides a space for you to vote “for,” or to “withhold” your authority to vote your shares for, each nominee for election to our board. The proxy card also provides spaces for you to vote “for” or “against” or “abstain” from voting in connection with our proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2009. IF YOU RETURN A SIGNED PROXY CARD BUT DO NOT INDICATE HOW YOU WISH TO VOTE YOUR SHARES, YOUR SHARES WILL BE VOTED BY THE MANAGEMENT PROXIES SET FORTH ON THE PROXY CARD IN THE MANNER RECOMMENDED BY THE BOARD IN THIS PROXY STATEMENT.

 

Shares Held in “Street Name.”  If you are a stockholder whose shares are held in “street name” (i.e., in the name of a broker, bank or other record holder) you must either direct the record holder of your shares how to vote your shares or obtain a proxy, executed in your favor, from the record holder to be able to vote at the annual meeting.

 

The recommendation of our board is set forth below together with the description of each item in this proxy statement. In summary, our board recommends a vote:

 

 

With respect to any other matter that properly comes before the annual meeting, the proxy holders will vote as recommended by our board or, if no recommendation is given, in their own discretion.

 

IF YOU SIGN AND RETURN YOUR PROXY CARD BUT DO NOT SPECIFY HOW YOU WANT TO VOTE YOUR SHARES, THE PERSONS NAMED AS PROXY HOLDERS ON THE PROXY CARD WILL VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD.

 

You may revoke your proxy at any time before it is voted at the annual meeting by any of the following methods:

 

 

Dollar Financial Corp.
1436 Lancaster Avenue, Suite 310
Berwyn, PA 19312
Attention: Roy Hibberd, Senior Vice President, General Counsel and Secretary

 

 

Our bylaws provide that at any meeting of stockholders, the holders of a majority of the issued and outstanding shares of common stock entitled to vote at the annual meeting, present in person or by proxy, constitute a quorum for the transaction of business. Both abstentions and broker non-votes are counted as present for purposes of determining the presence of a quorum. The election of directors will be decided by a plurality of the votes cast, in person or by proxy, at the annual meeting. Accordingly, abstentions and broker non-votes will not affect the outcome of the election of directors. A broker non-vote occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that proposal and has not received voting instructions from the beneficial owner. On all other matters being submitted to stockholders, the affirmative vote of a majority of the votes cast on the matter is required for approval. Accordingly, abstentions and broker non-votes will not affect the outcome with respect to such proposals.

 

The persons named as proxies and attorneys-in-fact are our officers. All properly executed proxies returned in time to be counted at the annual meeting will be voted. In addition to the election of directors, the stockholders will also consider and vote upon a proposal to ratify the selection of auditors, as further described in this proxy statement. Where a choice has been specified on the proxy with respect to the foregoing matters, the shares represented by the proxy will be voted in accordance with the specifications, and will be voted FOR the proposal if no specification is indicated. IN THE ABSENCE OF SPECIFIC DIRECTION, SHARES REPRESENTED BY A PROXY WILL BE VOTED “FOR” THE ELECTION OF ALL DIRECTORS AND “FOR” THE RATIFICATION OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2009.

 

We currently have seven directors. Our bylaws provide for a classified board, consisting of three classes of directors (Class A, Class B and Class C), with each class serving staggered three-year terms. As a result, only a portion of our board is elected each year. The two director nominees identified below are to be elected by our stockholders at our upcoming annual meeting as Class A directors, each to hold office for a three-year term expiring in 2011 or until his successor is duly elected and qualified. The directors have no reason to believe that any of the nominees will be unable or unwilling to be a candidate for election at the time of the annual meeting. If any nominee is unable or unwilling to serve, the persons named in the proxy will use their best judgment in selecting and voting for a substitute candidate or our board may reduce the number of directors.

 

Each individual elected as a director at the annual meeting will serve until the annual meeting of stockholders to be held in 2011 or until his successor is duly elected and qualified.

 

The following table sets forth information with respect to the directors nominated for re-election as Class A directors at the annual meeting.

 

 

The nominees for election as Class A directors were recommended for nomination to our board by its corporate governance and nominating committee. The board unanimously recommends that stockholders vote FOR the election of each of the above nominees as Class A directors.

 

The following are biographical summaries of the directors identified above:

 

Jeffrey A. Weiss has served as our Chairman and Chief Executive Officer since an affiliate of Bear Stearns & Co. Inc. acquired us in May 1990. Until June 1992, Mr. Weiss was also a Managing Director at Bear Stearns with primary responsibility for the firm’s investments in small to mid-sized companies, in addition to serving as Chairman and Chief Executive Officer for several of these companies.

 

Ronald McLaughlin has served as a director and as a member of the audit committee and corporate governance and nominating committee of our board since January 30, 2008. Mr. McLaughlin founded Chapman Inc. in 2000 and since that time has worked with a variety of clients, directly and through Chapman Inc. or a partnership with McLaughlin-Moses on a diverse array of mandates, including raising investment capital, strategic government relations and developing strategic alternatives for businesses that would benefit from effective partnering with the Canadian government. From 1997 to 2000, Mr. McLaughlin was the Chief of Staff for the Premier of the Province of Ontario.

 

Directors are elected by a plurality of votes cast at the annual meeting.

 

The board unanimously recommends that stockholders vote “FOR” Proposal 1 to elect each of the nominated directors.

 

The following table sets forth information with respect to the remaining members of our board:

 

 

The following are biographical summaries of the remaining members of our board:

 

David Jessick has served as a director and the chairman of the audit committee since January 2005 and as a member of the corporate governance and nominating committee of our board since April 2005. Mr. Jessick also served on the human resources and compensation committee of our board from April 2005 until his resignation on April 30, 2007. He served as a consultant to the Chief Executive and Senior Financial staff at Rite Aid Corporation from July 2002 to February 2005. Mr. Jessick served as Rite Aid’s Senior Executive Vice President and Chief Administrative Officer from December 1999 to June 2002. Prior to that, from February 1997 to June 1999, Mr. Jessick was the Chief Financial Officer and Executive Vice President of Finance and Investor Relations for Fred Meyer, Inc. From 1979 to 1996, he held various roles of increasing responsibility at Thrifty Payless Holdings, Inc., including Executive Vice President and Chief Financial Officer from 1993 to 1996. Mr. Jessick began his career as a Certified Public Accountant for Peat, Marwick, Mitchell & Co. He is currently a director of WKI Holding Company, Inc. (chairman of the audit and the compensation committees), Source Interlink, Inc. (audit and nominating and corporate governance committee member), and Big 5 Sporting Goods Corporation (audit committee chair and nominating committee member).

 

Kenneth Schwenke has served as a director and as a member of the corporate governance and nominating committee of our board and as the chairman of the human resources and compensation committee of our board since September 2006. Mr. Schwenke served as a member of our audit committee of our board from September 2006 until April 30, 2007. Since May 2008, Mr. Schwenke has served as the Managing Director of Gravitas LLC, an executive search and management consulting firm. From September 2001 until July 1, 2007, Mr. Schwenke was the CEO and Founder of Off-Campus Dining Network, LLC. From 1996 through 2001, Mr. Schwenke served as the Senior Vice President of Human Resources for Aramark, Inc. Prior to obtaining that position, Mr. Schwenke served as the Vice President of Human Resources for the global division of Aramark, Inc., from 1995 through 1996. From 1994 through 1995 Mr. Schwenke served as an area director in the department of Human Resources for Honeywell, Inc., formerly known as AlliedSignal, Inc. From 1992 through 1994 Mr. Schwenke served as the director of Human Resources for Honeywell, Inc.

 

Michael Kooper has served as a director and as a member of the human resources and compensation committee of our board since January 30, 2008. Since November 2004, Mr. Kooper has been the Area Chairman of Gallagher Benefit Services, Inc., a benefits consulting firm. From December 1998 until November 2004, Mr. Kooper was the President of The Kooper Group, a benefits consulting firm. Mr. Kooper is a director of BioScrip, Inc., a provider of comprehensive specialty pharmaceutical and pharmacy benefit management services.

 

Clive Kahn has served as a director and as a member of the audit committee and corporate governance and nominating committee of our board since April 30, 2007. Mr. Kahn, a chartered accountant, has served since August 2007 as the Chief Executive Officer of Cardsave Ltd., a provider of point of sale terminals and credit card processing facilities. Prior to that, Mr. Kahn was the Chief Executive Officer of Travelex Limited. Prior to becoming Chief Executive Officer, Mr. Kahn was the Chief Financial Officer of Travelex Limited. Mr. Kahn was employed by Travelex for twenty-one years. Prior to his employment with Travelex, Mr. Kahn practiced as a chartered accountant with the firm of BDO Stoy Hawyard.

 

John Gavin has served as a director and a member of the human resources and compensation committee of our board since April 30, 2007. Mr. Gavin also served as a member of the audit committee of our board from

April 30, 2007 until his resignation on January 30, 2008. He also became the chairman of the corporate governance and nominating committee of our board on September 6, 2007. Mr. Gavin is currently serving as Vice Chairman, and was the Chief Executive Officer and President of DBM (Drake, Beam, Morin), an international career management and transitions management firm. Before joining DBM in 2006, Mr. Gavin was President and Chief Operating Officer of Right Management Consultants, a global provider of integrated consulting solutions across the employment lifecycle. Mr. Gavin originally joined Right Management as Executive Vice President of Business Development in 1996. Prior to joining Right Management, Mr. Gavin worked for Andersen Worldwide.

 

The following table sets forth compensation paid to our non-employee directors during the year ended June 30, 2008:

 

 

 

 

Our independent directors receive annual compensation as follows:

 

 

 

In addition, at the first board meeting after each annual stockholders’ meeting, the then current non-employee members of the board are entitled to receive a grant of restricted stock units as well as options to purchase shares of our common stock. The awards will vest on the earliest of (a) the date of the next annual stockholders’ meeting, (b) the first anniversary of the grant, (c) the death of the recipient or (d) upon our change in control. The aggregate award to each non-employee board member shall be in an amount, calculated in accordance with generally accepted accounting principles, equal to two-times the average annual cash compensation for the non-employee members who served on the board for the entire prior fiscal year, with one-half of such value represented as an option grant to purchase shares of our common stock and one-half of such value represented as a restricted stock unit. If a board member joins the board after a grant date, such director will receive a prorated award on the date of joining the board.

 

The shares purchased on exercise of the options issued under the plan cannot be sold until the earlier of (a) our change in control or (b) the 91^st day after the recipient ceases to serve on the board, except to the extent necessary to generate funds to pay taxes incurred on exercise. Shares underlying restricted stock units will be delivered upon the first to occur of (a) our change in control or (b) the earlier of (i) the 91^st day after the recipient ceases to serve on the board or (ii) the 15^th day of the third month following the calendar year in which the recipient ceases to serve on the board, except to the extent (subject to compliance with Section 409A of the Internal Revenue Code) necessary to generate funds to pay taxes incurred with regard to the units.

 

At the election of a non-employee member of the board, such member’s board retainers and meeting fees will be paid in vested restricted stock units (subject to the delivery rules set forth in the paragraph above) rather than in cash. The election to receive his board retainers and meeting fees must be made by the non-employee member prior to December 31st of the calendar year preceding the fiscal year in which such fees are earned.

 

In addition, Messrs. Jessick, Gavin, Kooper and Schwenke participate in our health benefit program with the full cost paid by us.

 

The board has standing audit, corporate governance and nominating and human resources and compensation committees which are described below.

 

Audit Committee.  The audit committee assists our board in overseeing: (i) the integrity of our financial statements; (ii) our compliance with legal and regulatory requirements; (iii) the independence and qualifications of our independent registered public accounting firm; and (iv) the performance of our internal audit function and independent registered public accounting firm. The audit committee’s charter was adopted by the full board in February 2005 and amended most recently in April 2005. A current copy of the audit committee charter is attached to this proxy statement as Exhibit A.

 

Our Code of Business Conduct and Ethics includes information regarding procedures established by the audit committee for the submission of complaints about our accounting or auditing matters. The Code is applicable to our executives, employees and directors. The Code reflects and reinforces our commitment to integrity in the conduct of our business. Amendments to the Code and any grant of a waiver from a provision of the Code requiring disclosure under applicable Securities and Exchange Commission rules will be disclosed on our website (www.dfg.com). A copy of the Code is available on our website (www.dfg.com/ethics.asp). A copy of the Code may also be obtained upon request from our Secretary at the following address: Dollar Financial Corp., 1436 Lancaster Avenue, Suite 310, Berwyn, PA 19312.

 

The audit committee met five times during fiscal 2008. In addition, the audit committee has met two times thus far during fiscal 2009, including with Ernst & Young LLP, our independent registered public accounting firm, to discuss the fiscal 2008 audit and our internal control over financial reporting.

 

The audit committee currently consists of Messrs. Jessick (Chairman), Kahn and McLaughlin, each of whom is independent within the meaning of the Securities and Exchange Commission regulations and the listing requirements of Rule 4200(a)(15) of the Nasdaq Stock Market, which we refer to in this proxy statement as Nasdaq. John Gavin served on the audit committee from April 30, 2007 until his resignation from the audit committee on January 30, 2008. Effective January 30, 2008, Mr. McLaughlin was appointed to the audit committee to fill the vacancy created by the resignation of Mr. Gavin.

 

Each member of the audit committee is financially literate, knowledgeable and qualified to review financial statements. Mr. Jessick is qualified as an “audit committee financial expert” within the meaning of Securities and Exchange Commission regulations. The board reached its conclusion as to the qualifications of Mr. Jessick based on his education and experience in analyzing financial statements of a variety of companies, most notably as the Chief Financial Officer and Executive Vice President of Finance and Investor Relations for Fred Meyer, Inc. from February 1997 to June 1999 and as Executive Vice President and Chief Financial Officer at Thrifty Payless Holdings, Inc. from 1993 to 1996. He is currently a director of WKI Holding Company, Inc. (chairman of the audit and the compensation committees), Source Interlink, Inc. (audit committee and nominating and corporate governance committee member), and Big 5 Sporting Goods Corporation (audit committee chair and nominating committee member). Consistent with Nasdaq listing requirements, our board determined that his concurrent service on these committees does not impair his ability to effectively serve on the audit committee.

 

Corporate Governance and Nominating Committee.  The corporate governance and nominating committee is responsible for: (i) identifying individuals qualified to become board members and recommending to our board the nominees for election to our board; (ii) leading our board in its annual review of our board’s performance, and making recommendations to our board regarding board organization, membership, function and effectiveness, as well as committee structure, membership, function and effectiveness; (iii) recommending to our board nominees for each committee of our board; (iv) reviewing our efforts to promote diversity among directors, officers, employees and contractors; and (v) arranging for an orientation for all directors.

 

The corporate governance and nominating committee amended its charter on September 24, 2008. A current copy of the amended and restated corporate governance and nominating committee charter is attached to this

proxy statement as Exhibit B. The corporate governance and nominating committee met four times during fiscal 2008 and has met one time thus far during fiscal 2009.

 

The corporate governance and nominating committee currently consists of Messrs. Gavin (Chairman), Jessick, McLaughlin, Schwenke and Kahn. Effective January 30, 2008, Mr. McLaughlin was appointed to the corporate governance and nominating committee. Effective September 6, 2007, Mr. Gavin was appointed to the corporate governance and nominating committee, as its Chairman. Mr. Golub was the Chairman of the corporate governance and nominating committee from January 2005 until his resignation on September 6, 2007.

 

All of the members of the corporate governance and nominating committee are independent within the meaning of Nasdaq listing requirements and the charter of the corporate governance and nominating committee.

 

Human Resources and Compensation Committee.  The human resources and compensation committee is authorized to determine compensation for our senior executives and non-employee directors. The human resources and compensation committee met twenty two times during fiscal 2008 and has met one time thus far during fiscal 2009. The human resources and compensation committee amended its charter on April 29, 2008. A current copy of the amended and restated human resources and compensation committee charter is attached to this proxy statement as Exhibit C.

 

The human resources and compensation committee currently consists of Messrs. Schwenke (Chairman), Kooper and Gavin. Effective January 30, 2008, Mr. Kooper was appointed to the human resources and compensation committee.

 

All of the members of the human resources and compensation committee are independent within the meaning of Nasdaq listing requirements.

 

The human resources and compensation committee seeks to compensate our executives at levels that are competitive with peer companies in order to attract, retain and motivate superior quality and highly experienced executives. Accordingly, its executive compensation programs emphasize variable pay in the form of annual and long-term incentive programs which tie a significant portion of an executive’s compensation to our success in achieving key strategic and financial goals. The human resources and compensation committee does not delegate its authority to establish executive and director compensation to any other entity or person.

 

The board met thirteen times during fiscal 2008 and has met twice thus far during fiscal 2009. Each incumbent director attended at least 75% of the aggregate meetings of our board during fiscal 2008 that were held following his election and of the meetings held by all committees on which he served. The non-management members of our board meet at least twice per fiscal year in executive session after regularly scheduled board meetings.

 

It is our policy that all of our board members attend annual meetings of stockholders except where the failure to attend is due to unavoidable circumstances or conflicts. All of our directors attended our 2008 annual meeting of stockholders.

 

No director is deemed to be independent unless our board affirmatively determines that the director has no material relationship with us, directly or as an officer, stockholder or partner of an organization that has a material relationship with us and in doing so, our board considers information regarding the relationships between each director and his family, on the one hand, and us, on the other. In assessing director independence, our board considers all commercial, charitable or other business relationships that any director may have with us and our affiliates, including those reported under “Certain Relationships and Related Transactions” below. The Nasdaq independence definition includes a series of objective tests, such as that the director is not an employee of ours and has not engaged in various types of business dealings with us. In addition, as further required by the Nasdaq listing requirements, our board has made a subjective determination with respect to each independent director that no relationships exist which, in the opinion of our board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, the directors reviewed and discussed information provided by the directors

and us with regard to each director’s business and personal activities as they may relate to us and our management. As a result of its review, our board affirmatively determined that all directors (other than Mr. Weiss) are independent of us and our management under the Nasdaq independence definition and that the audit committee, corporate governance and nominating committee and human resources and compensation committee are comprised exclusively of independent directors under the Nasdaq rules. Mr. Weiss is not considered independent because of his employment as one of our executives. The board also determined that the directors who serve as members of the audit committee are also “independent” for purposes of Section 10(A)(3) of the Exchange Act.

 

In making its recommendations as to nominees for election to our board, the corporate governance and nominating committee may consider, in its sole judgment, recommendations of our Chief Executive Officer, other directors, senior executives, stockholders and third parties. The corporate governance and nominating committee may also retain third-party search firms to identify potential nominees.

 

Stockholders desiring to recommend nominees should submit their recommendations in writing to Roy Hibberd, Senior Vice President, General Counsel and Secretary, Dollar Financial Corp., 1436 Lancaster Avenue, Suite 310, Berwyn, PA 19312. Recommendations from stockholders should include pertinent information concerning the proposed nominee’s background and experience. The corporate governance and nominating committee may consider, as one of the factors in its evaluation of stockholder recommended nominees, the size and duration of the interest of the recommending stockholder or stockholder group in our capital stock. The corporate governance and nominating committee may also consider the extent to which the recommending stockholder intends to continue holding its interest in our capital stock, including, in the case of nominees recommended for election at an annual meeting of stockholders, whether the recommending stockholder intends to continue holding its interest at least through the time of such annual meeting.

 

Based on the information provided to the corporate governance and nominating committee, it will make an initial determination whether to conduct a full evaluation of a candidate. As part of the full evaluation process, the corporate governance and nominating committee may conduct interviews, obtain additional background information and conduct reference checks of potential nominees. The corporate governance and nominating committee may also ask potential nominees to meet with management and other members of our board. After completing this evaluation process, the corporate governance and nominating committee makes a recommendation to the full board, which makes the final determination whether to nominate the candidate as a director.

 

In evaluating a candidate, our board, with the assistance of the corporate governance and nominating committee, takes into account a variety of factors as it deems appropriate, including the following:

 

 

The corporate governance and nominating committee also considers such other factors as it deems appropriate, including a nominee’s integrity, experience, achievements, judgment, intelligence, personal character and capacity to make independent analytical inquiries, ability and willingness to devote adequate time to board duties, and the likelihood that he or she will be able to serve on our board for a sustained period. Due consideration is given to our board’s overall balance of diversity of perspectives, backgrounds and experiences. The corporate governance and nominating committee will also consider factors such as global experience, experience as a director of a public company and knowledge of relevant industries.

 

We encourage employees to raise possible ethical issues. We maintain an ethics hotline that is available 24 hours a day, seven days a week, and which is centrally answered by an independent, third-party service. Callers may remain anonymous and, to further protect the caller’s anonymity, the telephone compliance hotline staff does not identify the gender of the caller, tape record the call or use “caller ID” or other methods to identify the telephone number of the caller. We prohibit retaliatory action against any individual for raising possible ethical issues, and employees at all levels are prohibited from retribution against anyone for reporting or supplying information about an ethical concern.

 

The board recommends that stockholders deliver any communications with our board in writing by sending them in care of our Secretary. Stockholders may send such communications by email to Roy Hibberd, our Senior Vice President, General Counsel and Secretary at Roy.Hibberd@dfg.com, or by mail to Roy Hibberd, Senior Vice President, General Counsel and Secretary, Dollar Financial Corp., 1436 Lancaster Avenue, Suite 310, Berwyn, PA 19312. The name(s) of any specific intended board recipient(s) should be noted in the communication.

 

The following table sets forth information as of September 26, 2008 regarding the beneficial ownership of common stock by each director, by each executive officer named in the Summary Compensation Table appearing elsewhere in this proxy statement, by all directors and executive officers as a group, and by each person known to us to be the beneficial owner of more than 5% of our outstanding common stock. Except as indicated below, to our knowledge, all of such common stock are owned directly, and the indicated person has sole voting and investment power.

 

We have calculated beneficial ownership in accordance with the rules of the Securities and Exchange Commission. Shares of our common stock subject to options currently exercisable or exercisable within 60 days of September 26, 2008 are deemed to be outstanding for calculating the percentage of outstanding shares of the person holding those options, but are not deemed outstanding for calculating the percentage of any other person. As of September 26, 2008, there were a total of 24,361,750 shares of our common stock issued and outstanding. Unless otherwise indicated below in the footnotes to the table, the address of each officer and director is c/o Dollar Financial Corp., 1436 Lancaster Avenue, Suite 310, Berwyn, Pennsylvania 19312.

 

 

 

 

 

Our executive officers, as of October 1, 2008, including their respective ages and positions, are set forth below:

 

 

The following are biographical summaries of our executive officers. The summary for Mr. Weiss appears in the section of this proxy statement entitled “Proposal 1 — Election of Directors.”

 

Randy Underwood has served as our Executive Vice President, Chief Financial Officer and Assistant Secretary since June 2004. Previously, Mr. Underwood served for three years as Senior Vice President, Global Finance and Administration and Chief Financial Officer for The Coleman Company, Inc. Prior to his tenure at The Coleman Company, Mr. Underwood held senior executive positions with Strategic Development Partners, Inc. from 1999 through 2000 and with Thorn Americas, Inc., the parent company of Rent-A-Center, Inc., including Senior Vice President and Chief Financial Officer and Division President, from 1988 through 1998. Earlier in his career, he practiced as a Certified Public Accountant with the firm of Peat, Marwick, Mitchell and Co.

 

Norman Miller has served as our Executive Vice President and Chief Operating Officer since April 2007. Previously, Mr. Miller was employed by Aramark, Inc., as Group President Sports & Entertainment from 2002 to 2006 and as President Correctional Services from 1998 to 2001.

 

Sydney Franchuk, our Executive Vice President and Chairman-National Money Mart has served in this capacity since January 2007. Mr. Franchuk served as President of our North America operations from November 1997 until January 2007. Previously, Mr. Franchuk held the position of Vice President of Finance and Administration for National Money Mart Co. and Check Mart, an affiliated company in the United States. Prior to joining us in 1985, Mr. Franchuk was a public accountant with Woods & Company and Ernst & Young LLP Chartered Accountants and is a Certified Management Accountant.

 

Silvio Piccini, our Senior Vice President and Managing Director — United Kingdom Operations, has served in this capacity since February 2008. From January 2007 until December 2007, Mr. Piccini served as a Principal of Strategic Retail Management, a retail consulting firm. Prior to that, Mr. Piccini served for one year as the Executive Vice President and Chief Merchandising Officer for Movie Gallery, Inc., a retail store video chain which acquired his employer of nine years, Hollywood Entertainment, in 2005. During Mr. Piccini’s collective 10 years of employment in the video store industry, he held several positions including VP of Operations, SVP of Planning and Allocation, SVP of Merchandising, SVP of Marketing, and finally, EVP and Chief Merchandising Officer of the combined organization. Prior to that, Mr. Piccini worked for Taco Bell Corporation, then a subsidiary of Pepsico Inc., in increasing roles of responsibility for seven years.

 

Roy W. Hibberd has served as our Senior Vice President, General Counsel since July 2005 and as our Secretary since June 2008. Prior to joining us, Mr. Hibberd served as a Managing Director of Smooth Engine, Inc., a consulting company and as a Managing Director of Millennium Services, a franchise and business consulting firm, from July 2002 to July 2005. From 2000 until 2002, he served as the General Counsel and Managing Director (US) for the United States operations of Virtual Internet, plc, a London based public company providing internet services and from 1996 to 1999 as the Vice President and General Manager, The Americas, of the American Express Company.

Peter Sokolowski has served as our Senior Vice President of Finance and Corporate Treasurer since January 2008. Mr. Sokolowski previously was our Senior Vice President of Finance and Chief Credit Officer and he served as our Vice President Finance from 1991 to 2002. Prior to joining us in 1991, Mr. Sokolowski worked in various financial positions in the commercial banking industry.

 

William Athas has served as our Senior Vice President of Finance and Corporate Controller since January 2007. Previously, he was our Vice President, Finance and Corporate Controller. Prior to joining us in 2000, he was the divisional controller of Timet, a titanium metals company from December 1998 until January 2000. Mr. Athas worked at Asarco, Inc., a non-ferrous metals company, from 1987 to 1998, where he was the assistant corporate controller. He attained his CPA certification in 1989.

 

Melissa Soper has served as our Senior Vice President of Corporate Administration since July 2007. Previously, Ms. Soper served as our Vice President and General Manager, We the People Division from July 2005 until July 2007 and previously served from October 1996 through July 2005 as Vice President, Corporate Human Resources with overall responsibility for development of our global human resources department and for compliance with state and federal labor laws.

 

As a global provider of financial products and services to the under-banked community, the value we deliver to customers and shareholders depends in large part upon the quality and capabilities of our people. Our business model is based on our ability to both attract new customers and maintain relationships with existing customers and, to maintain our strong mission, customer focus, and entrepreneurial spirit. As with all of our employees, the recruitment, retention and motivation of our executive officers are critical factors to our business success. We believe that the senior leadership provided by our Chairman and Chief Executive Officer as well as the other individuals included in the “— Summary Compensation Table” below, whom we refer to in this proxy statement as our named executive officers, is the cornerstone to successfully implementing and achieving our strategic plans. Through the following questions and answers we will explain all material elements of our executive compensation programs:

 

What are the objectives of our executive compensation programs?

 

Our compensation philosophy is to provide a strong focus on overall company financial performance, business development and creation of shareholder value. As a growth-oriented and entrepreneurial company, our executive compensation programs are designed to strongly align compensation with corporate performance and the creation of shareholder value. We also seek to compensate our executives at levels that are competitive with peer companies in order to attract, retain and motivate superior quality and highly experienced executives. Accordingly, our executive compensation programs emphasize variable pay in the form of annual and long-term incentive programs which tie a significant portion of an executive’s compensation to our success in achieving key strategic and financial goals.

 

For our fiscal 2008 executive compensation programs, our human resources and compensation committee retained an independent consultant, Radford Surveys and Consulting, which we refer to as Radford, to gather data regarding the types and amount of compensation that our industry peer companies (which we identify below) and other international retail and consumer companies from which we recruit pay their executives and other key employees. Radford assisted our human resources and compensation committee in the review of relevant data and determination of appropriate executive compensation levels, which we refer to as the Executive Compensation Review. This review provides us with valuable data regarding the compensation level and practices of our peer and other targeted companies, which, in turn, assists us in setting compensation levels at competitive levels. Radford provided a similar Executive Compensation Review for fiscal 2009 as well.

 

For fiscal 2009, we largely maintained our group of peer companies selected for fiscal 2008 that include both financial services and broader consumer/retail services peers. Our human resources and compensation committee felt that given our retail focus, international operations and growth strategy, we have more sophisticated management needs than our financial services peers. Therefore, our human resources and compensation committee concluded that a broader consumer/retail services peer group is more representative of the caliber of executive talent needed to manage a high growth, multi-location and multi-national business.

 

We set annual compensation for fiscal 2008 and 2009 based, in part, on a detailed report from Radford that we received in June 2007 and June 2008, respectively. In this report, Radford:

 

 

Our Chairman and Chief Executive Officer and our Chief Financial Officer, and our Chairman and Chief Executive Officer with regard to our Chief Financial Officer, provided our human resources and compensation committee with:

 

 

Our human resources and compensation committee considered this information in each instance, and discussed the data and recommendations referenced above with our Chairman and Chief Executive Officer and our Chief Financial Officer, for recommendations for named executive officers other than himself, and representatives from Radford with respect to senior executives’ base pay increases and our annual cash bonus and long-term incentive programs. Our human resources and compensation committee considered all of the inputs described above, as well as additional factors such as retention issues, our short and long-term performance goals and our overall compensation philosophy, and presented its recommendations to our board for each element of compensation then being considered. Based on the empirical compensation data gathered during the Executive Compensation Review and the compensation philosophy and objectives communicated by our human resources and compensation committee, our board discussed, considered and approved these recommendations.

 

With respect to the compensation of our Chairman and Chief Executive Officer, our human resources and compensation committee is responsible for reviewing and approving the goals and objectives relating to our Chairman and Chief Executive Officer’s compensation, evaluating the performance of our Chairman and Chief Executive Officer in light of such goals and objectives, and setting our Chairman and Chief Executive Officer’s compensation level, perquisites and other benefits based on this evaluation.

 

What are the principal components of our executive compensation programs?

 

Our executive compensation programs consist of three key elements: (i) base salary; (ii) performance-based annual bonus, payable in cash; and (iii) long-term incentive compensation, which for fiscal 2008 included grants of restricted stock units, long-term cash incentives and non-elective deferred compensation, and, which for fiscal 2009 included grants of restricted stock units, options to purchase our common stock and long-term cash incentives. Generally, as an executive’s responsibilities increase, our human resources and compensation committee allocates a greater portion of his or her total compensation potential from fixed components such as base salary to variable components such as annual bonus and long-term incentive compensation. We believe this allocation approach reflects our pay-for-performance compensation philosophy because of the greater influence that most of our senior executives have on our annual and long-term business results. Each of these principal components is described in more detail below.

 

Base Salary:  We use base salary as a significant retention tool that provides executives with a base level of income. Prior to fiscal 2008, base salary determinations for our named executive officers took into account many factors, including:

 

 

In addition to the factors described above, the human resources and compensation committee also considered the findings of the Executive Compensation Review in making its base salary determinations for fiscal 2008 and fiscal 2009. Consistent with our compensation objectives of attracting and retaining top executive talent, we believe that the base salaries of our named executive officers should be set at levels which, while not always leading our peer

group, are strongly competitive with our peer group. As such, our human resources and compensation committee, Chairman and Chief Executive Officer and our Chief Financial Officer determined that the appropriate base salary target for our named executive officers should be the 50th percentile of all selected peers, with the ability to move to approximately the 60th percentile based on the depth and breadth of the business experience of the individual executive and the importance of the position within our organization. Given our international business model, we seek executive talent with large, international public company experience, and prefer executive talent with substantial consumer retail experience. Therefore, we consider benchmarking against the consumer/retail services industries to be more relevant than specialized financial services companies. We have found that benchmarking our executive pay to this broader industry group has enabled us to attract and retain the highest caliber executives from that group.

 

Based upon the peer group review, for fiscal 2008, it was determined that the base salary of Mr. Underwood was significantly below the targeted percentile, and, after taking into account his respective role and level of responsibility within our organization as well as his expected contributions to our long-term business strategies and objectives, our human resources and compensation committee determined that an increase in Mr. Underwood’s base salary with respect to fiscal 2008 was needed to narrow the gap between his current base salary at the time of the increase and the base salary at the targeted percentile of our peer group. We also increased the base salary of Mr. Hibberd for fiscal 2008 to maintain his salary with the targeted percentile of our peer group, after taking into account his role and level of responsibility within our organization as well as his expected contributions to our long-term business strategies and objectives. For fiscal 2009, we increased the base salaries for each of Messrs. Underwood, Miller and Hibberd, respectively, to maintain the executive’s salary with the targeted percentile of our peer group, after taking into account each of their respective roles and levels of responsibility within our organization as well as each of their expected contributions to our long-term business strategies and objectives. In fiscal 2008, we entered into a new employment agreement with Mr. Weiss. Mr. Weiss’ new employment agreement provided for an increase in base salary in fiscal 2008 as discussed in more detail below under the heading “— Employment Agreement with our Chairman and Chief Executive Officer.”

 

We did not increase Mr. Franchuk’s base salary for fiscal 2008 or 2009. Mr. Franchuk was promoted to the position of Executive Vice President and Chairman-National Money Mart Company effective January 1, 2007 and his base salary was increased at that time to C$400,000 to reflect the expanded responsibilities of his new position as well as past performance and market conditions.

 

Mr. Gayhardt resigned his employment with us as our President, Secretary and as a member of our board, effective May 31, 2008. In connection with his resignation, our board and human resources and compensation committee approved the extension of the expiration date to November 30, 2008 of certain stock options granted to Mr. Gayhardt pursuant to our 1999 Stock Incentive Plan and our 2005 Stock Incentive Plan. On June 1, 2008, we entered into a consulting agreement with Mr. Gayhardt as explained below under “— Narrative Disclosure Relating to Summary Compensation Table and Grants of Plan-Based Awards Table — Donald Gayhardt.”

 

Based on the factors described above, our human resources and compensation committee approved the following changes to the annual base salary of our named executive officers for fiscal 2008 and fiscal 2009:

 

 

 

 

Annual Bonus:  Our annual cash bonus program for our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer is referred to as our Executive Management Bonus Program. Our annual cash bonus program for our other key management employees is referred to as our Key Management Bonus Program. Each of our named executive officers is eligible to receive a target annual cash incentive award, expressed as a percentage of his base salary, under the applicable program. In general, participants in the Key Management Bonus Program fall within grade levels depending on position title, level of responsibility and scope of duties. Generally, an executive’s target bonus opportunity increases as they progress in grade level. However, for each of our named executive officers other than our Chairman — National Money Mart, the target awards are dictated by their respective employment agreements.

 

Each named executive officer’s annual bonus, other than Mr. Franchuk’s, is determined solely based on the extent to which we achieve our consolidated targeted annual earnings before income taxes, depreciation, amortization and other items, which we refer to as EBITDA. Mr. Franchuk’s annual bonus is determined in part based on the extent to which our Canadian retail operations achieves its EBITDA target and in part based on the extent to which we achieve our targeted consolidated EBITDA target. The annual bonus program is designed to be linked to the achievement of targeted EBITDA to motivate our named executive officers to improve our overall profitability.

 

The tables below summarize the annual cash bonuses for our named executive officers for fiscal 2008 as approved by our human resources and compensation committee:

 

Fiscal 2008 Annual Bonuses for Named Executive Officers

 

Bonus Opportunity:

 

 

 

 

Bonus Achieved:

 

 

 

 

Other than as described above, the annual EBITDA targets are based on certain internal financial goals set by our human resources and compensation committee in connection with the consideration and approval of our annual operating plan. These internal financial goals involve confidential strategic, commercial and financial information which, if disclosed, may result in competitive harm to us. However, we have found that the internal financial goals, although not guaranteed, were capable of being achieved if our named executive officers met or exceeded their individual objectives, if we performed according to our annual operating plan and if the assumptions in our annual operating plan proved correct.

 

Final bonus payments are determined and paid after the completion of our fiscal year audit. On August 28, 2008, the board approved the payment of fiscal 2008 bonuses in accordance with the previously approved plan for our named executive officers. These amounts are set forth in the table above and in the “Summary Compensation Table” below.

 

On June 26, 2008, our human resources and compensation committee approved a cash bonus plan for fiscal 2009 for certain members of our executive management team and key personnel to be based upon EBITDA operating targets. The target bonus award and maximum bonus opportunity for each of our named executive officers are as follows: Mr. Weiss, 100% and 150%, respectively, Mr. Underwood, 80% and 160%, respectively, Mr. Miller, 80% and 160%, respectively, Mr. Franchuk, 60% and 120%, respectively, and Mr. Hibberd, 45% and 90%, respectively.

 

Special Retention Bonus:  In July 2007, the human resources and compensation committee and the board authorized the grant of special retention cash bonus awards to certain members of management, including an award to Randy Underwood in an amount equal to $200,000, which we refer to as the special bonus award. These individuals, including Mr. Underwood, possess industry expertise and company knowledge that the committee believes is critical to our success and these awards are intended to enhance the likelihood that we retain the services of these management personnel. One-third of the special bonus award was vested and paid upon issuance, one-third was vested and paid on June 30, 2008, and the remaining one-third will vest as of, and be paid on or about, June 30, 2009, subject to Mr. Underwood’s continued employment by us through the applicable payment date and satisfactory performance of his job duties and responsibilities.

 

Long-Term Incentive Compensation:  Historically, our equity-based awards to executives have taken the form of restricted common shares or options to purchase our common stock under our 1999 Equity Incentive Plan and our 2005 Equity Incentive Plan. In November 2007, we began to grant awards under our 2007 Equity Incentive Plan. Awards were recommended by our Chairman and Chief Executive Officer and human resources and compensation committee and based on discretionary factors including but not limited to an executive’s position, level and breadth of responsibility, and significant contributions to us.

At the end of each of June 2007 and 2008, our human resources and compensation committee approved the adoption of a long-term incentive program for fiscal 2008 and fiscal 2009, respectively, which we refer to as the LTIP. The LTIP is intended to achieve the following objectives:

 

 

A number of alternatives were considered for the LTIP and after evaluating the various alternatives in light of our long-term incentive compensation objectives, our human resources and compensation committee determined that including restricted stock units, non-qualified options to purchase shares of our common stock, and long-term cash incentives in our LTIP for fiscal 2009 and restricted stock units, long-term cash incentives and non-elective deferred compensation contributions in our LTIP for fiscal 2008 allowed us the opportunity to achieve the largest number of these objectives. For fiscal 2008, availability was limited under our then existing equity award plan to include non-qualified options to purchase shares of our common stock in our LTIP and deferred compensation contributions were utilized instead. In November 2007, our 2007 Equity Incentive Plan was approved by our shareholders allowing us to utilize stock options in our LTIP for fiscal 2009.

 

All of our named executive officers participate in the LTIP, except for Mr. Weiss who is granted awards pursuant to the terms of his employment agreement.

 

The program parameters for each of the components are as follows:

 

Restricted Stock Units and Non-Qualified Stock Options:  Restricted stock unit awards for each of fiscal 2008 and 2009 and option awards for 2009 were granted by our human resources and compensation committee on June 28, 2007 and June 26, 2008, respectively, and vest ratably on a quarterly basis over a three-year period beginning with the quarter ending September 30 after grant, thereby achieving a desired balance between short-term and long-term retention objectives for our key management and executives. For fiscal 2008, we did not grant any awards of options to purchase shares of our common stock pursuant to the LTIP.

 

Long-Term Cash Incentives:  Awards for fiscal 2008 were granted by our human resources and compensation committee on June 28, 2007 and vest ratably on an annual basis over a three-year period, provided that we meet our annual strategic objectives as determined by our board for the applicable fiscal year. Awards for fiscal 2009 were granted by our human resources and compensation committee on June 26, 2008 and vest ratably on an annual basis over a three-year period, provided that we meet certain EBITDA targets (which are the same as with the annual bonus program discussed above) and/or other strategic objectives as set by our board for fiscal 2009 and the named executive officer remains employed with us on each respective payment date over the three year period.

 

Non-Elective Deferred Compensation:  For fiscal 2008, contributions were effective July 1 and vest ratably on an annual basis over a three-year period, provided that we meet our strategic objectives as determined by our board for the fiscal year preceding each June 30 vesting date in the three year cycle. For fiscal 2009, we did not grant any deferred compensation pursuant to the LTIP.

 

The human resources and compensation committee intends to review the LTIP program each fiscal year to determine whether, and to what extent, awards under the LTIP will be granted in subsequent fiscal years.

For fiscal 2008, long-term incentives were provided to our named executive officers in the form of restricted stock units, long term cash and contributions to the executive’s deferred compensation account as follows:

 

 

 

 

On June 26, 2008, our human resources and compensation committee determined that we met our strategic objectives for fiscal 2008 pursuant to our LTIP.

 

For fiscal 2009, our named executive officers received the following LTIP awards:

 

 

 

 

Deferred Compensation Plan

 

Certain of our key executives, including our named executive officers, are eligible to participate in our executive Deferred Compensation Plan, which is referred to in this proxy as the Deferred Compensation Plan. The Deferred Compensation Plan provides participants with the opportunity to save and accumulate additional income on a pre-tax basis which otherwise would be lost under our tax qualified 401(k) plan on account of Internal Revenue Code provisions which limit the compensation that may be taken into account, and the benefits that may be accrued under, a qualified plan.

 

Similar to a qualified 401(k) plan, the Deferred Compensation Plan enables participants to defer a percentage of their base salary and or bonus compensation and to choose how such deferred amounts are invested. Furthermore, as with our 401(k) plan, the Deferred Compensation Plan allows participants to earn a rate of return, based on the

participant’s investment elections, on their account balance on a tax-deferred basis. In addition, the Deferred Compensation Plan offers the flexibility of saving for retirement or for a shorter period of time. From time-to-time, we may make discretionary contributions to the Deferred Compensation Plan on the executive’s behalf. These contributions are subject to vesting conditions as established by our board.

 

Employment Agreement with our Chairman and Chief Executive Officer

 

Following the completion of fiscal 2007, we entered into discussions with Mr. Weiss, our Chairman and Chief Executive Officer, regarding the renewal of his employment agreement, the term of which was to expire in December 2007. In contemplation of these discussions, the human resources and compensation committee of the board engaged Frederic W. Cook & Co., Inc., which we refer to as Cook, a nationally recognized independent executive compensation consultant, to conduct an assessment of the competitiveness of the total compensation package for our Chairman and Chief Executive Officer. Cook provided our human resources and compensation committee with relevant market data based on our selected peer group, guidance to determine which compensation alternatives were available to us and assistance with the negotiation of Mr. Weiss’ new employment agreement. On October 5, 2007, we concluded our discussions with Mr. Weiss and entered into a new employment agreement with him.

 

The human resources and compensation committee reviewed information provided by Cook, and considered its recommendations to determine the appropriate level and mix of fixed cash and incentive compensation for our Chairman and Chief Executive Officer. Based upon the overall compensation paid to chief executive officers of our peers, Mr. Weiss’ role and responsibilities, our success in meeting our financial goals during the period of time that Mr. Weiss has been our Chairman and Chief Executive Officer, including the appreciation of our common stock during such time, the board’s and the human resources and compensation committee’s assessment of Mr. Weiss’ individual performance, the length of Mr. Weiss’ employment by us, and Mr. Weiss’ prior compensation levels, our human resources and compensation committee determined that it would be appropriate to pay Mr. Weiss a targeted total annual compensation opportunity (based in part on our performance) at the 62nd percentile compared to the chief executive officers of our selected peer group.

 

Under the terms of his employment agreement, Mr. Weiss will receive an annual base salary of $850,000 and an annual target bonus opportunity based on the achievement of certain metrics as determined by our human resources and compensation committee, equal to 100% of his base salary (with the ability to receive a maximum bonus of 150% of his base salary). In November of each year, Mr. Weiss will also be entitled to receive an annual equity award in the form of either options to purchase shares of our common stock or restricted shares of our common stock, as determined by our human resources and compensation committee in its discretion, in an amount equal to 100% of the annual bonus earned for the immediately preceding fiscal year. The number of options or restricted shares subject to this annual equity award will be determined by dividing the target dollar value to be granted by the fair value of the award, as determined in accordance with generally accepted accounting principles. The annual equity award will vest in equal annual installments over three years, subject to acceleration in the event Mr. Weiss’ employment is terminated without Cause, for Good Reason or as a result of his death, Disability or Retirement (all as further defined in his employment agreement). Mr. Weiss received his fiscal 2008 equity award on November 15, 2007. The number of shares of our common stock subject to this award was determined in the manner described above, with reference to the annual bonus he earned for fiscal 2007, or $612,003.

 

In making its compensation decisions, our human resources and compensation committee compared the total target compensation opportunity against our selected peer group. In addition, our human resources and compensation committee believes that the mix between fixed cash compensation and variable performance-based compensation provided for in Mr. Weiss’ employment agreement is consistent with our compensation objectives, namely, to align pay with corporate performance and the creation of stockholder value and to retain and motivate superior performance by compensating our Chairman and Chief Executive Officer at a level competitive with our selected peer group.

 

In addition, in recognition of Mr. Weiss’ service on our board, including his service as Chairman, and in recognition of Mr. Weiss’ prior and future service to us, Mr. Weiss will be entitled pursuant to the terms of his

employment agreement to receive a supplemental retirement benefit (which we refer to as the Capstone Award) of $300,000 per year, less applicable tax withholding, during his lifetime. Upon Mr. Weiss’ death, his spouse will be entitled to receive $150,000 per year, less applicable tax withholding, for her lifetime. The Capstone Award will become payable to Mr. Weiss (and/or his spouse) in the event his employment with us (i) terminates due to his Retirement (as further defined in his employment agreement), or (ii) is terminated without Cause, for Good Reason or as a result of his death or Disability. If a Change in Control occurs and the Capstone Award has already commenced, any unpaid Capstone Award shall be paid in the form of an actuarially equivalent lump sum within 60 days of such Change in Control. If upon a Change in Control the Capstone Award has not yet commenced, the Capstone Award will be paid in the form of an actuarially equivalent lump sum within 60 days of the date such benefit would have otherwise become payable. If prior to the occurrence of a Change in Control, Mr. Weiss terminates his employment with us without Good Reason (provided that such termination is not by reason of his Retirement) or we terminate his employment for Cause, neither Mr. Weiss nor his spouse will be entitled to receive any Capstone Award. Based on Cook’s assessment of the competitiveness of the total compensation package offered to Mr. Weiss compared to that of the chief executive officers of our selected peer group, our human resources and compensation committee believed that it was important to provide Mr. Weiss with this supplemental retirement benefit.

 

Under Mr. Weiss’ employment agreement, we will continue to provide him with health, welfare and tax qualified retirement benefits generally available to our other senior management employees and, in addition: (i) a monthly auto allowance, (ii) reimbursement of up to $100,000 annually for the payment of premiums for a life insurance policy on Mr. Weiss of which his designees are the beneficiaries, (iii) reimbursement of tax and financial planning costs, not to exceed $10,000 annually, (iv) uninsured medical and dental costs, not to exceed $15,000 annually, and (v) five weeks paid vacation.

 

In addition to the changes described above, Mr. Weiss’ employment agreement provides for certain payments upon a termination of employment and a change in control, as discussed in more detail below under the heading “Potential Payments upon Termination or Change in Control.”

 

Employment Agreement with our Chief Financial Officer

 

On May 15, 2008, we entered into an amended and restated employment agreement with Mr. Underwood pursuant to which Mr. Underwood’s annual salary and target cash bonus amount were increased to be consistent with that which was currently in effect, and we agreed to provide Mr. Underwood a retention bonus and retiree medical coverage. For a description of Mr. Underwood’s employment agreement see below under “— Narrative Disclosure Relating to Summary Compensation Table and Grants of Plan-Based Awards Table — Randy Underwood.”

 

 

We believe that our compensation programs, collectively, should enable us to attract, retain and motivate high quality executives with international and public company experience. We provide annual bonus awards primarily to motivate key employees to meet business unit and corporate annual performance targets that take into account and enhance our performance. We evaluate our performance by reference to our annual performance targets as compared to our annual internal EBITDA goals. We design long-term incentive awards primarily to retain as well as to motivate and reward key employees over longer periods, generally ranging up to three years. Through vesting and forfeiture provisions that we include in annual awards of stock options, restricted stock units, and long-term cash incentives, we provide an additional incentive to executives to act in furtherance of our long-term and our shareholder’s interests.

 

 

We have selected programs that we have found are commonly used by international public companies, both within and outside of our industry, because we have found commonly used programs are well understood by our shareholders, our executives, executives we seek to hire, and analysts and credit rating agencies. Moreover, we

selected each program only after we first confirmed, with the assistance of outside professional advisors, that the program comports with settled legal and tax rules.

 

 

Our human resources and compensation committee exercises judgment and discretion in setting compensation for our senior executives only after it has first reviewed industry data and peer company practices, addressed targeted compensation with an independent compensation consultant, evaluated the recommendations of our Chairman and Chief Executive Officer and Chief Financial Officer, and evaluated our corporate performance. Our human resources and compensation committee has generally attempted to set our executive compensation as a whole within the middle range of comparative pay at peer group companies as described in more detail below under the heading “To what extent do we benchmark total compensation and material elements of compensation and what are the benchmarks that we use?”

 

We are currently parties to an employment agreement with each of our named executive officers which provides that their salary and target annual bonus percentage is at a fixed rate agreed between the parties, and therefore, this component cannot be reduced at the discretion of our human resources and compensation committee.

 

 

Historically, achievement of our targeted EBITDA at the consolidated and business unit levels have been the primary incentive targets under our annual bonus and long-term incentive compensation programs. For purposes of determining whether annual EBITDA targets have been achieved, our human resources and compensation committee may make adjustments to our EBITDA results in any objective manner it deems appropriate in its discretion to take into account the impact of extraordinary or non-recurring events such as a significant investment, disposition or acquisition.

 

Additionally, under our 2008 fiscal LTIP, we make payments for the long-term cash and deferred compensation components only if we meet certain strategic objectives for fiscal 2008, fiscal 2009 and fiscal 2010 as determined by our board. Under our 2009 fiscal LTIP, we make payments for the long-term cash compensation component if we meet certain EBITDA targets and/or other strategic objectives as set by our board and the named executive officer remains employed with us on each respective payment date, June 30, 2009, June 30, 2010 and June 30, 2011.

 

 

As stated above under the heading “How do we determine the amount of each principal component of compensation to our executives,” we have contractual commitments with each of the named executive officers to pay a rate of base salary and annual target bonus mutually agreed upon as a result of the arms length negotiation of each named executive officer’s employment agreement with us, thereby limiting our ability to decrease those components of their compensation during the respective terms of their employment agreements. The factors that we consider in decisions to increase compensation include the individual performance of the executive, our corporate performance, and the annual benchmarking initiatives as discussed throughout this Compensation Discussion and Analysis.

 

 

Prior to implementation of a compensation program and awards under the program, we evaluate the cost of the program and awards in light of our current performance and anticipated budgeted performance. We also review the design of compensation programs to assure that the recognition of expense for financial reporting purposes is consistent with our financial modeling. We designed our fiscal 2008 and fiscal 2009 programs so that overall costs fell within a budgeted dollar amount and, that the awards under those programs would be accounted for under

standards governing equity-based arrangements and, more specifically, so that they would be afforded fixed treatment under those standards.

 

 

Prior to our implementation of a compensation program and awards under the program, we evaluate the Federal and international income tax consequences, both to us and to our executives, of the contemplated program and awards. Before approving a program, our human resources and compensation committee receives an explanation from our outside professionals as to the tax treatment of the program and awards under the program, and assurances from our outside professionals that the tax treatment should be respected by taxing authorities.

 

Section 162(m) of the Internal Revenue Code limits our tax deduction each year for compensation to each of our Chairman and Chief Executive Officer and our three other highest paid executive officers (not including our Chief Financial Officer) to $1 million unless, in general, the compensation is paid under a plan that is performance-related, non-discretionary and has been approved by our shareholders. Our human resources and compensation committee monitors, and will continue to monitor, the effect of Section 162(m) on our compensation programs; however, given our significant net operating losses, we have not attempted to structure compensation to be fully deductible under Section 162(m).

 

We adopted our Deferred Compensation Plan primarily for our U.S. executives to provide them with an opportunity to save for the future without paying a current tax on the deferred amounts.

 

 

We have found it is in our best interest to have agreements with our named executive officers to assure that we will have the continued dedication and objectivity of those individuals, notwithstanding the possibility, threat or occurrence of a change in control. The agreements with our Chairman and Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, General Counsel, and Chairman of National Money Mart Company provide for post-employment payments following a change in control as described in the “— Payments upon Termination of Employment and Change in Control” section below.

 

 

As discussed previously, in setting compensation for our named executive officers for fiscal 2008 and 2009, our human resources and compensation committee compared the elements of total compensation to compensation provided by peer groups of industry, financial services and broader consumer/retail services peers, preferably with international operations. Our human resources and compensation committee used peer group data primarily as a frame of reference to set executive compensation as a whole within the middle range of comparative pay at the peer group companies. As described above, for fiscal 2008 and 2009, our human resources and compensation committee selected industry, financial services and broader consumer/retail services peers as we have found that such companies are frequently more reflective of the companies with which we compete for executive talent than our industry peers. These peer companies are listed in alphabetical order below:

 

 

 

 

We have not adopted a policy that provides for recovery of an award if a performance measure used to calculate the award is subsequently adjusted in a manner that would reduce the size of the award. Although we have not previously experienced any such restatements or adjustments, if we were to experience such an adjustment, our human resources and compensation committee would assess the circumstances relating to the adjustment and take such actions as it believes to be appropriate.

 

 

Our human resources and compensation committee meets periodically with our Chairman and Chief Executive Officer and our Chief Financial Officer to address executive compensation, including the rationale for our compensation programs and the efficacy of the programs in achieving our compensation objectives. Our human resources and compensation committee invites representatives of an independent compensation consulting firm (Radford) to join pertinent meetings and occasionally requests one or more other members of senior management to participate in certain meetings. Through these meetings our human resources and compensation committee directs senior management and the compensation consultant to provide industry data, including levels and forms of compensation provided at peer companies, and legal, tax and financial analyses and counsel. Our human resources and compensation committee also relies on senior management to evaluate compensation programs to assure that they are designed and implemented in compliance with laws and regulations, including SEC reporting requirements. Our human resources and compensation committee principally relies on the recommendations of our Chairman and Chief Executive Officer regarding the performance of his direct reports. At meetings held in June 2007 and 2008, our human resources and compensation committee received recommendations from our Chairman and Chief Executive Officer regarding salary adjustments and long-term incentive awards for our executive officers other than himself. Our human resources and compensation committee accepted these recommendations after concluding that the recommendations comported with our human resources and compensation committee’s objectives and philosophy and it’s evaluation of our performance, and industry and other supporting data.

 

Our human resources and compensation committee has reviewed and discussed the Compensation Discussion and Analysis with our management and, based on the review and discussion, recommended to our board that the Compensation Discussion and Analysis be included in this proxy statement and thereby incorporated by reference into our Annual Report on Form 10-K. The board accepted the human resources and compensation committee’s recommendation. This report is made by the undersigned members of the human resources and compensation committee:

 

Kenneth Schwenke (Chair)
John Gavin
Michael Kooper

 

Notwithstanding anything to the contrary set forth in any of our previous or future filings under the Securities Act or the Exchange Act that might incorporate this proxy statement or future filings with the SEC, in whole or in part, the above report shall not be deemed to be “soliciting material” or “filed” with the SEC and shall not be deemed to be incorporated by reference into any such filing.

 

Our human resources and compensation committee’s charter has been approved by our board upon the recommendation of our corporate governance and nominating committee. Our human resources and compensation

committee and corporate governance and nominating committee review the charter no less frequently than annually. Under its charter, our human resources and compensation committee’s responsibilities include:

 

 

 

 

In the questions and answers set forth above under the caption “Compensation Discussion and Analysis” we have addressed the role of executive officers in the executive compensation process. See the question “What is the role of our executive officers in the compensation process?” With respect to compensation of directors, the role of our executive officers is limited to furnishing such industry data, summaries and legal and financial analyses as the human resources and compensation committee requests from time to time.

 

Our human resources and compensation committee has engaged Radford to provide it with peer group and industry compensation data and advice on compensation best practices. The instructions given by our human

resources and compensation committee to Radford will vary yearly but typically will include a request: (i) that the firm prepare an executive compensation peer group analysis that covers our senior executives, (ii) that the firm compile current data with regard to industry compensation trends and practices and (iii) for a recommendation as to ranges for base salary, annual incentives and long-term incentives for executives officers and directors. Pursuant to the terms of its engagement by our human resources and compensation committee, Radford is directed to recommend programs that are fair, reasonable and balanced and designed to attract, retain, motivate and reward executives for performance, while closely aligning the interests of executives with those of shareholders.

 

The following table sets forth summary information concerning compensation of our principal executive officer and principal financial officer, each of the next three most highly compensated current executive officers, and one additional executive officer who would have otherwise qualified as one of our three most highly compensated executive officers but for the fact that he was not serving as an executive officer as of June 30, 2008, whose total compensation (excluding any compensation as a result of a change in pension value and non-qualified deferred compensation earnings) exceeded $100,000 during fiscal 2008. We refer to these persons in this proxy statement as our named executive officers.

 

 

 

 

 

 

 

 

 

 

 

The following table sets forth information regarding grants of plan based awards to our named executive officers for fiscal 2008 and, with respect to non-equity incentive plan awards, represents the threshold, target and maximum payouts designated under our annual bonus plans discussed above under “— Compensation Discussion and Analysis.”

 

 

 

 

 

As required by SEC disclosure rules, the “— Summary Compensation Table” and the “— Grants of Plans-Based Awards Table” above both reflect not only compensation earned and paid in the respective fiscal year, but also amounts representing the opportunity to earn future compensation under performance-driven compensation incentives that may be forfeited based on future performance and/or time vesting. As a result of mixing compensation earned/paid and contingent compensation, the “total” shown in the “— Summary Compensation Table” includes amounts that the named executives may never receive.

 

We have current employment agreements with each of our named executive officers. The material terms of each employment agreement are summarized below, except that termination payments provided under each agreement are summarized below under the heading “— Potential Payments Upon Termination or Change of Control.” In addition, pursuant to each employment agreement, each named executive is eligible to receive annual cash incentive awards if performance objectives established by our board and/or human resources and compensation committee are met and to receive future equity grants under such long-term incentive programs as we may maintain from time to time.

 

Jeffrey A. Weiss

 

As discussed more fully above in the section titled “— Compensation Discussion and Analysis,” following the completion of fiscal 2007, we entered into a new employment agreement with Mr. Weiss, our Chairman and Chief Executive Officer. Mr. Weiss’ prior employment agreement, which was entered into on December 19, 2003, was set to expire on December 19, 2007. The initial term of Mr. Weiss’ new employment agreement expires on June 30, 2010 after which time it will renew for successive one-year periods unless either party provides a notice of nonrenewal. The material terms of Mr. Weiss’ new employment agreement are discussed in detail above in the section titled “— Compensation Discussion and Analysis” under the heading “— Employment Agreement with our Chairman and Chief Executive Officer.”

Randy Underwood

 

We entered into a new employment agreement with Mr. Underwood on May 15, 2008, which amends and restates the employment agreement entered into with Mr. Underwood on April 9, 2007. Pursuant to the terms of his amended and restated employment agreement, Mr. Underwood will continue to serve as our Executive Vice President and Chief Financial Officer. The amended and restated employment agreement increases Mr. Underwood’s annual salary to a minimum of $420,000 (which was increased by the human resources and compensation committee to $445,000 for fiscal 2009) and an annual target bonus of not less than 80% of his base salary for the applicable fiscal year, if specified business unit and corporate performance goals, as determined by our board or human resources and compensation committee, are met for that year, and a retention bonus and retiree medical coverage. The retention bonus will be paid at the rate of $150,000 per year, and is payable until Mr. Underwood’s death. If he has remained married to his spouse through the date of his death, his spouse will thereafter be entitled to receive $75,000 per year for her lifetime. The retention bonus and rights to retiree medical coverage will become vested upon the occurrence of the following: (a) Mr. Underwood terminates employment for any reason on or after June 30, 2011, (b) Mr. Underwood’s employment is terminated by us without cause, by Mr. Underwood with good reason or by reason of Mr. Underwood’s death or disability, or (c) our change in control.

 

Prior to entering into an amended and restated employment agreement, Mr. Underwood’s prior employment agreement provided for an annual base salary of at least $311,000, subject to annual increases at the discretion of our board, and an annual target bonus of up to 120% of his base salary for the applicable fiscal year, if specified business unit and corporate performance goals, as determined by our board or human resources and compensation committee, are met for that year.

 

Sydney Franchuk

 

On April 9, 2007, Mr. Franchuk and National Money Mart Company, one of our wholly-owned subsidiaries (which we refer to as National Money Mart), entered into an employment agreement. Mr. Franchuk’s agreement provides that he will serve as the Chairman of National Money Mart and as one of our Executive Vice-Presidents. Prior to this agreement, Mr. Franchuk served as a President of National Money Mart and as one of our Senior Vice-Presidents. The initial term of Mr. Franchuk’s agreement expires on June 30, 2009, after which time it will renew for successive one-year periods unless either party provides a notice of nonrenewal. Under his agreement, Mr. Franchuk will receive an annual base salary of $400,000 Canadian dollars and an annual target bonus of no less than 60% of his base salary for the applicable fiscal year, if specified business unit and corporate performance goals, as determined by our board or human resources and compensation committee, are met for that year. In addition, under his agreement, Mr. Franchuk received a one-time cash bonus of $125,000 Canadian dollars and was issued 10,000 restricted shares of our common stock, which vest ratably over the 30 month period commencing January 1, 2007.

 

Norman Miller

 

On May 14, 2008, we entered into an amended and restated employment agreement with Norman Miller pursuant to which Mr. Miller will continue to serve as our Executive Vice President and Chief Operating Officer. Mr. Miller’s employment agreement provides that he will receive an annual base salary of not less than $425,000 (which was increased by the human resources and compensation committee to $450,000 for fiscal 2009) and will be entitled to an annual target cash bonus, as determined by the board or the human resources and compensation committee, of not less than 80% of Mr. Miller’s then current salary, if specified corporate performance goals are met for that year.

 

Roy Hibberd

 

On May 14, 2008, we entered into an amended and restated employment agreement with Roy Hibberd pursuant to which Mr. Hibberd will continue to serve as our Senior Vice President and General Counsel. Mr. Hibberd’s employment agreement provides that he will receive an annual base salary of not less than $245,000 (which was increased by the human resources and compensation committee to $262,500 for fiscal 2009) and will be entitled to an annual target cash bonus, as determined by the board or the human resources and compensation committee, of not less than 45% of Mr. Hibberd’s then current salary, if specified performance goals are met for that year.

Donald Gayhardt

 

Mr. Gayhardt resigned his employment as our President and Secretary and as a member of our board on May 31, 2008. Pursuant to Mr. Gayhardt’s employment agreement with us, dated December 19, 2004 as amended April 9, 2007, Mr. Gayhardt is entitled to receive (i) the continuation of his base salary as in effect at the time of termination for a period of 1 year, (ii) contribution by us to the cost of health care continuation coverage under our group health plan for a period of one year and (iii) the continuation of his monthly auto allowance for a period of 1 year.

 

On June 1, 2008, we entered into a Consulting Agreement with Mr. Gayhardt pursuant to which Mr. Gayhardt will perform certain consulting services for us on an hourly or per diem basis. Mr. Gayhardt will receive a payment of $312.50 per hour, or $2,500.00 per day, for such consulting services. The Consulting Agreement may be terminated by either party at will and without prior written notice to the other party. In addition, in connection with his resignation, our board and the human resources and compensation committee approved and ratified the extension to November 30, 2008 of the expiration date of certain stock options granted to Mr. Gayhardt.

 

The following table sets forth unexercised stock options, stock that has not yet vested and equity incentive plan awards outstanding as of June 30, 2008 for each of our named executive officers.