SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
FIRST BANCORP PUERTO RICO
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(Name of Registrant as Specified in Its Charter)
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/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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FIRST BANCORP
1519 Ponce de Leon Avenue
San Juan, Puerto Rico 00908
(787) 729-8200
NOTICE OF MEETING AND PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 30, 2002
To the Stockholders of First BanCorp Puerto Rico:
NOTICE IS HEREBY GIVEN that pursuant to a resolution of the Board of Directors
and Section 2 of the Corporation Bylaws, the Annual Meeting of
Stockholders of First BanCorp will be held at its principal offices located at
1519 Ponce de Leon Avenue, Santurce, San Juan, Puerto Rico, on Tuesday, April
30, 2002, at 2:00 p.m., for the purpose of considering and taking action on the
following matters, all of which are more completely set forth in the
accompanying Proxy Statement.
1. To elect three (3) directors for a term of three years or until their
successors have been elected and qualified.
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
Corporation's independent accountants for fiscal year 2002.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The stockholders or their representatives should register their credentials or
proxies with the Corporation's Secretary on or before 2:00 p.m. of the day of
the meeting.
The Board of Directors has set March 21, 2002, as the record date for the
determination of stockholders entitled to notice of, and to vote at, the
meeting.
San Juan, Puerto Rico
March 28, 2002
By order of the Board of Directors
Antonio R. Escriba-Oliver, Esq. Angel Alvarez-Perez, Esq.
Secretary Chairman, President & CEO
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT AT THE MEETING, YOU ARE URGED TO COMPLETE, SIGN, DATE AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING,
YOU MAY VOTE EITHER IN PERSON OR BY PROXY. YOU MAY REVOKE ANY PROXY THAT YOU
GIVE IN WRITING OR IN PERSON AT ANY TIME PRIOR TO ITS EXERCISE.
[THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
FIRST BANCORP
1519 Ponce de Leon Avenue
Santurce, Puerto Rico 00908
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 30, 2002
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of First BanCorp ("the Corporation")
for use at the Annual Meeting of Stockholders to be held at the Corporation's
main offices located at 1519 Ponce de Leon Avenue, Santurce, Puerto Rico, on
April 30, 2002, at 2:00 p.m., and at any adjournment thereof. This Proxy
Statement is expected to be mailed to stockholders of record on or about March
28, 2002.
SOLICITATION AND REVOCATION
Proxies in the form enclosed are solicited by and on behalf of the Board of
Directors. The persons named in the proxy form have been designated as proxies
by the Board of Directors. Shares represented by properly executed proxies
received will be voted at the Meeting in accordance with the instructions you
specify in the proxy. If you do not give instructions to the contrary, each
proxy received will be voted for the matters described below. Any proxy given as
a result of this solicitation may be revoked by the stockholder at any time
before it is exercised in the following manner: (i) submitting a written
notification to the Secretary of First BanCorp, (ii) submitting a duly executed
proxy bearing a later date, or (iii) appearing at the Annual Meeting and giving
proper notice to the Secretary of his or her intention to vote in person. The
proxies that are being solicited may be exercised only at the Annual Meeting of
First BanCorp or at any adjournment of the Meeting.
Each proxy solicited hereby gives discretionary authority to the Board of
Directors of the Corporation to vote the proxy with respect to (i) the election
of any person as director if any nominee is unable to serve, or for good cause
will not serve; (ii) matters incident to the conduct of the meeting; (iii) the
approval of minutes of the previous Annual Meeting held on April 26, 2001; and
(iv) such other matters as may properly come before the Annual Meeting. Except
with respect to procedural matters incident to the conduct of the Annual
Meeting, the Board of Directors is not aware of any business which may properly
come before the Annual Meeting other than that described in this Proxy
Statement. However, if any other matters come before the Annual Meeting, it is
intended that proxies solicited hereby will be voted with respect to those other
matters in accordance with the judgment of the person voting those proxies.
VOTING SECURITIES
The Board of Directors has fixed the close of business on March 21, 2002, as
the record date for the determination of stockholders entitled to receive notice
of, and to vote at, the Annual Meeting of Stockholders. At the close of business
on the record date there were 26,571,952 shares of the issued and outstanding
common stock of the Corporation in circulation, each of which is entitled to one
vote at the Annual Meeting.
The presence, either in person or by proxy, of at least a majority of the
Corporation's issued and outstanding shares of common stock in circulation is
necessary to constitute a quorum. For purposes of determining quorum,
abstentions and broker non-votes will be treated as shares that are present and
entitled to vote. A broker non-vote results when a broker or nominee has
expressly indicated that it does not have discretionary authority to vote on a
particular matter. Action with respect to Proposal 1: Election of Directors, and
Proposal 2: Ratification of Appointment of Independent Accountants, shall be
taken by a majority of the total votes present in person or by proxy and
entitled to vote. Therefore, as to such prospect, abstentions and broker
non-votes will have the same effect as a vote against the proposals. Each share
of common stock is entitled to one vote for the proposals to be considered.
BENEFICIAL OWNERSHIP OF SECURITIES
The following sets forth information known to the Corporation as to the
persons or entities which as of March 15, 2002, by themselves or as a group, as
the term is defined by section 13(d)(3) of the Securities Exchange Act of 1934,
are the beneficial owners of 5% or more of the issued and outstanding common
stock of the Corporation in circulation. All information concerning persons who
may be beneficial owners of 5% or more of the stock is derived from Schedule
13(D) or 13(G) statements filed and notified to the Corporation and information
submitted by individual stockholders.
1
Beneficial Owners of 5% Or More:
Name Number of Shares Percentage(1)
------------------------------------- ------------------------ -----------------
FMR Corp 2,637,000 9.94%
82 Devonshire Street
Boston, MA 02109
Angel Alvarez-Perez
Chairman, President and CEO
First BanCorp
1519 Ponce de Leon Avenue
Santurce, PR 00908 1,952,306 7.347%
Garity & Co., Capital Management
1414 Banco Popular Center
Hato Rey, Puerto Rico 00918 1,816,912 6.837%
BENEFICIAL OWNERSHIP BY DIRECTORS OR NOMINEES:
The following table sets forth information with regard to the total number
of shares of the Corporation's Common Stock beneficially owned by each member of
the Board of Directors and each Executive Officer and by all Directors and
Executive Officers and Officers as a group. (2)
Name Number of Shares Percentage
---------------------------------------- ---------------------- ----------------
Directors
Angel Alvarez-Perez,
Chairman, President and CEO 1,952,306 7.3472%
Juan Acosta-Reboyras 400 *
Jose Julian Alvarez-Bracero 6,500 *
Annie Astor-Carbonell, Senior EVP 459,924 1.73%
Rafael Bouet-Souffront 106,000 *
Jorge L. Diaz 5,800 *
Jose L. Ferrer-Canals -0- *
Francisco D. Fernandez 84,434 *
German E. Malaret 23,166 *
Hector M. Nevares (3) 1,300,000 4.89%
Jose Teixidor 43,580 *
Executive Officers:
Luis M. Beauchamp, Senior EVP 302,024 1.366%
Aurelio Aleman, Executive VP -0-
Fernando L. Batlle, Executive VP 630
Ricardo Ramos-Luina, Executive VP -0-
Randolfo Rivera, Executive VP -0-
Directors, Executive Officers and
other Officers as a group
(41 persons) 4,378,518 16.48%
* Represents less than 1%
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1 As a percentage of 26,571,952 shares issued, outstanding and in circulation
as of the record date of March 21, 2002.
2 Information regarding the beneficial ownership by officers and directors
is derived from information submitted by such officers and directors.
3 Under applicable regulations, shares are deemed to be beneficially owned
by a person if she or he directly or indirectly has the power to vote or
dispose of such shares. Mr. Hector M. Nevares is the direct beneficial
owner of 150,000 shares; however, he has the proxy to vote on an
additional 1,150,000 shares over which he disclaims ownership.
2
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTORS OF
FIRST BANCORP, DIRECTORS WHOSE TERMS CONTINUE AND
EXECUTIVE OFFICERS OF THE CORPORATION
The Bylaws of the Corporation provide that the Board of Directors shall
consist of a number of members fixed from time to time by resolution of an
absolute majority of the Board of Directors, provided that the number of
directors shall always be an odd number and not less than five nor more than
fifteen. The Board of Directors shall be divided into three classes as nearly
equal in number as possible. The members of each class are to be elected for a
term of three years and until their successors are elected and qualified. One
class is elected each year on a rotating basis. The members of the Board of
Directors of First BanCorp are also the members of the Board of FirstBank Puerto
Rico (the "Bank"). On August 21, 1999, the Board of Directors adopted a
retirement policy for directors of the Corporation and of the Bank. Under this
retirement policy directors who reach 70 years of age or complete fifteen years
of service on the Board may continue to serve until the end of the term to which
they have been elected, but will not be eligible to stand for reelection.
Pursuant to this retirement policy, directors Francisco D. Fernandez and German
E. Malaret, whose three-year terms expire on April 30, 2002, will be retiring
from the Board and will not seek further terms. Pursuant to resolution adopted
on August 21, 1999 the Board of Directors fixed the number of directors at nine
(9) effective April 30, 2002.
The information presented below regarding the time of service on the Board
of Directors includes terms served on the Board of the Bank.
Unless otherwise directed, each proxy executed and returned by a stockholder
will be voted for the election of the nominees listed below. If any nominee
should be unable or unwilling to stand for election at the time of the Annual
Meeting, the proxies will nominate and vote for the replacement nominee or
nominees recommended by the Board of Directors. At this time, the Board of
Directors of First BanCorp knows of no reason why any of the persons listed
below may not be able to serve as a director if elected.
PROPOSAL #1
ELECTION OF DIRECTORS
NOMINEES FOR A THREE-YEAR TERM EXPIRING 2005
Annie Astor-Carbonell, 44
Senior Executive Vice President - Chief Financial Officer
Certified Public Accountant. Senior Executive Vice President & Chief Financial
Officer of FirstBank since March 1997. From 1987 to 1997, Executive Vice
President and Chief Financial Officer. From 1984 to 1987, Senior Vice President
and Comptroller. Prior to joining the Bank, Senior Auditor at Peat Marwick
Mitchell & Co. Director of First Puerto Rico Growth and Income Fund, Inc. since
1998. Director of Puerto Rico Telephone Company from January 1993 to March 1999,
serving as Chairperson from 1997 to March 1999. Member of the Board of Trustees
of Sacred Heart University from 1991 to 1995, serving as Chairperson from 1993
to 1995. Director of First Federal Finance Corporation, First Leasing and Rental
Corporation and First Bank Insurance Agency, Inc.(4) Joined the Bank in 1983.
Director since 1995.
Rafael Bouet-Souffront, 55
Industrial Engineer. From 1987 to present, President of Bouet & Rodriguez, Inc.,
a company engaged in the installation and construction of industrial,
residential and institutional electrical projects. From 1980 to 1987, President
of North Caribbean Electrical Corp., electrical contractors. Director since
1998.
Jorge L. Diaz, 48
Executive Vice President and member of the Board of Directors of Empresas Diaz,
Inc., general contractors, and Executive Vice President and Director of
Betteroads Asphalt Corporation, asphalt pavement manufacturers, Betterecycling
Corporation, recycled asphalt manufacturers, and Coco Beach Development
Corporation, a real estate development company. Member of the Chamber of
Commerce of Puerto Rico, the Association of General Contractors of Puerto Rico
and of the U. S. National Association of General Contractors. Member of the
Board of Trustees of Baldwin School of Puerto Rico and of Cushing Academy,
Boston, Massachusetts. Director since 1999.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE ABOVE NOMINEES BE ELECTED AS
DIRECTORS. THE VOTE OF THE HOLDERS OF THE MAJORITY OF THE TOTAL VOTES ELIGIBLE
TO BE CAST AT THE ANNUAL MEETING IS REQUIRED FOR THE ELECTION OF THE NOMINEES.
------------------------
4 First Federal Finance Corporation and First Leasing and Rental
Corporation are wholly owned subsidiaries of FirstBank Puerto Rico; and
First Bank Insurance Agency, Inc. is a wholly owned subsidiary of First
BanCorp Puerto Rico.
3
MEMBERS OF THE BOARD CONTINUING IN OFFICE
Directors Whose Terms Expire in 2003
Jose Julian Alvarez-Bracero, 68(5)
January 1, 1999 to present, Executive Director of "Fundacion Cruz Azul de Puerto
Rico, Inc." From 1995 until retirement on December 31, 1998 was President and
CEO of La Cruz Azul de Puerto Rico, a medical insurance provider. From 1981 to
December 1994, Executive Director, La Cruz Azul de Puerto Rico. Member of the
Puerto Rico Chamber of Commerce, serving as President from 1990 to 1991. Past
member of the Board of Directors of Banco Central Corporation, from April 1987
to January 1996. Director since November 1996.
Hector M. Nevares, 51
Private Investor. Vice Chairman, Suiza Foods Corp. from 1996 to present. Partner
in Suiza Realty, S.E. Member of the Board of Directors of the Government
Development Bank for Puerto Rico from 1989 to 1993. Director since June 1993.
Jose Teixidor, 48
Executive Vice President and General Manager, B. Fernandez & Hnos., Inc.,
Chairman of the Board, Pan Pepin Inc. Chairman of the Board, Baguettes, Inc.
President, Eagle Investment Fund, Inc. Member of the Board of Directors of El
Nuevo Dia, Inc. Director since January 1994.
Directors Whose term Expire In 2004
Angel Alvarez-Perez, 54
Chairman, President & Chief Executive Officer
Chairman, President & Chief Executive Officer of First BanCorp since November
1998. President & Chief Executive Officer of FirstBank since 1990, and Chairman
since August 1999. From March 1990 to August 1990, Executive Vice President.
Prior to joining the Bank, attorney at law specializing in corporate and
commercial law. From 1987 to February 1990, partner with the law firm of
Vazquez, Vizcarrondo, Alvarez, Angelet & Gonzalez. Director of the Federal Home
Loan Bank of New York from December 1993 to January 1995. Member of the Board of
Directors of Visa International. Chairman and CEO of First Federal Finance
Corporation, First Leasing & Rental Corporation and First Bank Insurance Agency,
Inc. Director since 1989.
Juan Acosta-Reboyras, 46
Certified Public Accountant since 1977 and attorney at law since 1985. Partner
in law firm of Acosta & Ramirez, LLP, specializing in tax and corporate law,
individual tax planning, estate planning and general matters of tax and
corporate law. Admitted to the Puerto Rico Bar and the U.S. Court of Appeals for
the First Circuit in 1985. Former partner, accounting firm of KPGM, and former
partner at law firms of Goldman Antonetti & Cordova and McConnell Valdes. Member
of Puerto Rico Society of Certified Public Accountants, serving as President
from 1994 to1995. Member of American Bar Association and the American Institute
of Certified Public Accountants (Member of Council, 1994 to 1995) and State
Legislative Committee. Former member of the Puerto Rico Chamber of Commerce
Executive Committee. Director since 2001.
Jose Luis Ferrer-Canals, 42
Doctor of Medicine in private urology practice. Commissioned Captain in the
United States Air Force in March 1991 and appointed Chief of Aeromedical Service
of the 482nd Medical Squadron, December 1992. Member American Association of
Clinical Urologists, Alpha Omega Alpha Medical Honor Society since 1986. From
1995 to present, member Hospital Pavia Peer Group Review Committee, Hospital
Pavia, San Juan P.R., Medical Faculty Representative to Hospital Pavia from 1996
to 1998. Professor of Flight Physiology and Aerospace Medicine, InterAmerican
University of Puerto Rico. Member of Board of Directors of American Cancer
Society, Puerto Rico Chapter 1999 to present. Director since 2001.
SENIOR EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following sets forth information with respect to executive officers of
the Corporation and of the Bank who are not directors.
Luis M. Beauchamp, 59
Senior Executive Vice President and Chief Lending Officer
From March 1997 to present, Senior Executive Vice President and Chief Lending
Officer of FirstBank. From 1990 to March 1997, Executive Vice President, Chief
Lending Officer. From 1988 to 1990, General Manager for New York banking
operations for Banco de Ponce. Director of First Leasing and Rental Corporation,
First Federal Finance Corp. d/b/a "Money Express." and of FirstBank Insurance
Agency, Inc. Joined the Bank in 1990.
------------------------
5 Not related to Chairman Angel Alvarez-Perez
4
Aurelio Aleman, 43
Executive Vice President
Executive Vice President, Retail Banking of FirstBank. From 1996 to 1998, Vice
President, CitiBank, N.A., responsible for wholesale and retail automobile
financing and retail mortgage business. From 1994 to 1996, Vice President, Chase
Manhattan Bank, N.A., Banking Operations and Technology for Corporate Capital
Markets. President of First Leasing & Rental Corporation, First Federal Finance
Corporation d/b/a "Money Express" and of FirstBank Insurance Agency Inc. Joined
the Bank in 1998.
Fernando L. Batlle, 35
Executive Vice President
Executive Vice President - Sales and Distribution and Mortgage Banking Group of
FirstBank. From April 1996 to October 1997, Managing Director Neva Management
Corporation, an investment management firm. From 1994 to April 1996, Senior VP -
Investments Department and Treasurer of FirstBank, and from June 1994 to
December 1994, Vice President, Secondary Market at FirstBank, Puerto Rico. From
September 1992 to June 1994, Harvard Business School, obtaining MBA in June
1994. From 1989 to August 1992, Assistant VP, Puerto Rico Home Mortgage.
Director of First Leasing & Rental Corporation, First Federal Finance
Corporation d/b/a "Money Express" and of FirstBank Insurance Agency, Inc. Joined
the Bank in October 1997.
Ricardo N. Ramos-Luina, 45
Executive Vice President
Executive Vice President in charge of the Bank's Securities Department since
August 1999. From November 1998 to July 1999, Executive Vice President for
Reliable Financial Services, Inc., a subsidiary of Wells Fargo. From August 1992
to September 1998, Senior Vice President Finance of Oriental Financial Group.
Joined the Bank in August 1999.
Randolfo Rivera, 49
Executive Vice President
Executive Vice President in charge of Corporate Banking of FirstBank since May
1998. From April 1990 to December 1996, Vice President and Component Executive
for local companies, public sector and institutional markets for Chase Manhattan
Bank, N.A. in Puerto Rico. From January 1997 to May 1998, Corporate Finance
Executive in charge of the Caribbean and Central American Region for Chase
Manhattan Bank in Puerto Rico. Joined the Bank in May 1998.
OTHER OFFICERS OF THE CORPORATION
Luis Cabrera-Marin, 32
Senior Vice President - Treasury and Investments
Senior Vice President of the Investment and Treasury Department since May 1997.
From August 1995 to May 1997, Director of Asset Management, Government
Development Bank for Puerto Rico. From August 1994 to August 1995, Investment
Executive, Oriental Financial Services, Inc., Puerto Rico. Joined the Bank in
1997.
Aida Garcia, 50
Senior Vice President - Human Resources
Director of Human Resources since May 1990. From 1988 to 1990, Second Vice
President, Human Resources. Prior to joining the Bank, Director of Human
Resources at Dr. Federico Trilla Hospital in Carolina. Joined the Bank in 1988.
Josianne Rossello, 47
Senior Vice President, Marketing and Public Relations Director
Appointed Senior Vice President in January 1997. From November 1994 to January
1997, Vice President - Marketing Director, Banco Santander de Puerto Rico.
Joined the Bank in January 1997.
Carmen Gabriella Szendrey-Ramos, 34
Senior Vice President - Legal Counsel - Assistant Secretary
Attorney at Law. Appointed Vice President and Legal Counsel in October 2000.
Appointed Assistant Secretary of First Bancorp on February 26, 2002 and Senior
Vice President on March 1, 2002. Prior to joining the Bank, from 1997 to
September 2000, Auxiliary Vice President of the Legal Division of Banco Popular
de Puerto Rico. From 1995 to 1997, private law practice and Special Projects
Analyst with law firm Fiddler Gonzalez & Rodriguez. Secretary of FirstBank
Insurance Agency, Inc. Joined the Bank in 2000.
5
Laura Villarino-Tur, 43
Senior Vice President - Comptroller
Certified Public Accountant. Appointed Senior Vice President - Comptroller of
FirstBank in 1987. Vice President, Assistant Comptroller from 1984 to 1987.
Prior to joining the Bank, Staff Auditor with Peat Marwick Mitchell & Co. Joined
the Bank in 1984.
Antonio R. Escriba-Oliver, 67
Secretary of the Board of Directors, attorney at law, member of the law firm
Melendez-Perez, Moran and Santiago. Secretary of the Board of Directors since
1987, and Secretary of the Corporation since 1998. From 1987 to present,
Secretary of the Board of First Federal Finance Corporation and First Leasing
and Rental Corporation.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Corporation is composed of the same persons
who are the directors of FirstBank. During fiscal 2001, the Board of Directors
of First BanCorp held a total of five regular meetings and five extraordinary
meetings and the Board of Directors of the Bank held 12 regular meetings. Each
of the incumbent directors attended in excess of 75% of the aggregate of the
total meetings of the Board of Directors and meetings of the Board committees on
which they served.
AUDIT COMMITTEE
The Audit Committee is composed of five outside directors who are not and
have never been involved in the day-to-day management of the Corporation or of
the Bank. The functions of the Audit Committee include review of the reports of
examination from regulatory agencies as well as review of examinations and
comments from the independent accountants. The Committee also monitors the
quality of the Bank's assets in order to provide for an early identification of
possible problem assets. For further description of the duties and
responsibilities of the composition of the Audit Committee please refer to the
Audit Committee's Report in this proxy statement. The Audit Committee Charter is
also included as Exhibit I to this proxy statement. During fiscal 2001, the
Audit Committee met a total of eight times.
COMPENSATION COMMITTEE
The Compensation Committee is responsible for administering the executive
compensation program, including the stock option plans, and for evaluating the
performance of key executives, including that of the President and CEO. During
fiscal 2001, the Committee was composed by Messrs. Hector M. Nevares, Jose
Teixidor and Rafael Bouet. The Compensation Committee met once during 2001.
NOMINATING COMMITTEE
Pursuant to Article I, Section 14, of the Bylaws of the Corporation, the
Board of Directors acts as the Nominating Committee for selecting the nominees
for the election of directors at the next succeeding Annual Meeting of
Stockholders. No nominations for directors except those made by the Board shall
be voted upon at the Annual Meeting unless other nominations by stockholders are
made in writing and delivered to the Secretary of the Bank at least thirty (30)
days prior to the date of the Annual Meeting. Ballots bearing the names of the
persons nominated by the Nominating Committee and by stockholders, if any, will
be provided for use at the Annual Meeting.
COMPENSATION OF DIRECTORS
Outside directors of the Corporation do not receive compensation for service
to the Board of the Corporation; however, they receive compensation for their
service to the Board of FirstBank Puerto Rico and its committees. Outside
directors receive $1,200 for each meeting of the Board of the Bank attended.
Outside directors also receive $900 for attendance at the meetings of the Audit
Committee and $500 for attendance at the meetings of the Credit Committee and
the Compensation Committee of the Board.
Officers of the Corporation, the Bank or the subsidiaries do not receive
fees or other compensation for service on the boards of directors of the
Corporation, the Bank, the subsidiaries or any of their committees.
The following table sets forth fees paid to outside Directors for their
attendance at meetings of the Board of Directors of the Bank and committees
during fiscal 2001.
6
Board & Committee Meetings in 2001
Board of Audit Credit Compensation Total
Name Directors Committee Committee Committee Fees
------------------------------- --------------- ---------------- ---------------- --------------------- ---------------
Juan Acosta Reboyras $10,800 $4,500 N/A N/A $15,300
Jose Julian Alvarez $13,200 $7,200 $500 N/A $20,900
Rafael Bouet $13,200 N/A $5,000 $500 $18,700
Jorge Diaz $10,800 N/A $3,500 N/A $14,300
Francisco Fernandez $13,200 $6,300 $500 N/A $20,000
Jose L. Ferrer Canals $9,600 $4,500 N/A N/A $14,100
German Malaret $12,000 $5,400 N/A N/A $17,400
Hector M. Nevares $10,800 N/A $4,000 $500 $15,300
Antonio Pavia Villamil* $2,400 $2,700 $500 N/A $5,600
Jose Teixidor $13,200 N/A $4,000 $500 $17,700
Angel Umpierre* $2,400 $2,700 $500 N/A $5,600
TOTAL $111,600 $33,300 $18,500 $1,500 $164,900
* Directors Antonio Pavia Villamil and Angel Umpierre served until April 2001.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Board of Directors is composed of five directors who
are not now and have never been employees of the Bank or of the Corporation. All
members of the Committee meet the independence and experience requirements set
forth under the rules of the New York Stock Exchange. The Committee operates
under a written charter adopted by the Board of Directors, the adequacy of which
is reviewed and assessed on an annual basis. The composition of the Audit
Committee, the attributes of its members and the responsibilities of the
Committee, as reflected in its charter, are intended to be in accordance with
applicable requirements for corporate audit committees. A copy of the Audit
Committee's Charter, as approved by the Board of Directors, is attached as
Exhibit I to this proxy statement.
The Audit Committee reviews the Corporation's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process, including the systems of
internal controls. In this context, the Committee has met and held discussions
with management and the independent accountants. Management represented to the
Committee that the Company's consolidated financial statements were prepared in
accordance with generally accepted accounting principles. The Committee has
reviewed and discussed the consolidated financial statements with management and
with the independent accountants.
In addition the Committee discussed with the independent accountants,
PricewaterhouseCoopers LLP, their independence from the Corporation, the Bank
and management. To the extent necessary, the Committee also reviewed all
relationships and services that might bear on the auditors' objectivity as
independent accountants. The Committee has received written affirmation from the
independent accountants as required by the Independence Standards Board Standard
No. 1, Independence Standards with Audit Committees, assuring their
independence.
In reliance with the reviews and discussions referred to above, the committee
has recommended to the Board of Directors that the Audited Financial Statements
be included in the Corporation's Annual Report on Form 10K for fiscal year 2001
to be submitted to the Securities Exchange Commission. The Committee and the
Board of Directors have also recommended, subject to stockholder approval, the
re-appointment of PricewaterhouseCoopers LLP as the independent accountants for
the Corporation for fiscal year 2002.
By the Audit Committee of the Board of Directors:
Juan Acosta-Reboyras
Jose Julian Alvarez
Francisco D. Fernandez
Jose Luis Ferrer-Canals
German E. Malaret
7
COMPENSATION OF EXECUTIVE OFFICERS
The summary compensation table set forth below discloses compensation for
the Chief Executive Officer and the most highly paid executive officers of the
Corporation, FirstBank or its subsidiaries who worked with the Corporation, the
Bank or such subsidiaries during any period of such fiscal year and whose total
cash compensation for fiscal 2001 exceeded $100,000 (named executives). The
table includes Bonus payments granted in February 2002 were meant as
compensation for performance of "Named Executives" during fiscal 2001.
Summary Compensation
Name & Position Year Salary ($) Bonus ($) Other ($)(6)
------------------------------------ ------------ -------------- -------------- ------------------
2001 825,000 600,000 * 5,120
Angel Alvarez-Perez 2000 675,000 500,000 4,803
Chairman, President & CEO 1999 675,000 500,000 4,803
------------------------------------ ------------ -------------- -------------- ------------------
Annie Astor-Carbonell 2001 400,000 200,000 * 4,773
Senior Executive Vice President 2000 300,000 175,000 4,710
Chief Financial Officer 1999 300,000 175,000 4,609
------------------------------------ ------------ -------------- -------------- ------------------
Luis M. Beauchamp 2001 450,000 250,000 * 5,135
Senior Executive Vice President 2000 325,000 200,000 5,303
Chief Lending Officer 1999 325,000 200,000 4,979
------------------------------------ ------------ -------------- -------------- ------------------
Aurelio Aleman 2001 350,000 200,000 * 4,817
Executive Vice President 2000 250,000 175,000 4,779
Consumer Lending Group 1999 250,000 150,000 3,858
------------------------------------ ------------ -------------- -------------- ------------------
Fernando Batlle 2001 350,000 200,000 * 5,100
Branch Banking & 2000 250,000 175,000 5,252
Mortgage Lending Department 1999 250,000 150,000 4,762
------------------------------------ ------------ -------------- -------------- ------------------
Randolfo Rivera 2001 350,000 150,000 * 5,095
Executive Vice President 2000 250,000 175,000 -0-
Corporate Financing Group 1999 250,000 150,000 -0-
------------------------------------ ------------ -------------- -------------- ------------------
Ricardo Ramos-Luina 2001 200,000 40,000 * 4,889
Executive Vice President 2000 200,000 40,000 3,816
Securities Department 1999 53,078** -0- -0-
------------------------------------ ------------ -------------- -------------- ------------------
* Bonuses corresponding to 2001 performance were granted in February 2002.
** Represents compensation from August 1999 to December 1, 1999.
STOCK OPTION PLAN
The Stock Option Plan is intended to encourage optionees to remain in the
employ of the Corporation, the Bank or its subsidiaries and to assist the Board
of Directors and Management in its efforts to attract and to recruit qualified
officers to serve the Corporation, the Bank or its subsidiaries. The stock
subject to such stock options shall be authorized but unissued shares of the
Corporation's $1.00 par value common stock.
The Plan is administered by the Compensation Committee (the "Committee"),
whose members are all outside directors appointed by the Board of Directors. All
members of the Committee meet the criteria of "disinterested persons" within the
meaning of Rule 16b-3 of the Securities Exchange Act of 1934 (the "Act"). The
Committee has discretion to select which eligible persons will be granted stock
options, the number of shares of common stock that may be subject to such
options, whether stock appreciation rights will be granted for such options and,
generally, to determine the terms and conditions in accordance with the Plan.
The Plan also provides for proportionate adjustments in the event of changes in
capitalization resulting from, among other things, merger, consolidation,
reorganization, recapitalization, reclassification, and stock dividends or
splits. All options must be granted within ten years of the effective dates of
the Plan. All options granted expire on the date specified in each individual
option agreement, which date will not be later than the tenth anniversary of the
date the option was granted. An eligible person may hold more than one option at
a time. The purchase price of options granted shall not be less than the fair
market value of the Corporation's common stock at the date of the grant.
------------------------
6 Represents the Bank's pro rata contribution to the executive's participation
in the Defined Contribution Retirement Plan.
8
The Plan may be amended at any time by the Board of Directors, subject to
any applicable regulatory limitation or regulatory approval requirement.
However, shareholder approval is required if an amendment increases the number
of shares of common stock that may be subject to options, materially changes the
eligibility criteria, changes the minimum purchase price or increases the
maximum term of the options.
The Plan also provides that no person shall be eligible for a stock option
grant if at the date of such grant such person beneficially owns more than ten
percent (10%) of the outstanding common stock of the Corporation. In addition,
pursuant to the change of control provisions contained in Section 12 of the
Banking Law of Puerto Rico, as amended (7 L.P.R.A. 39), to the extent that by
the exercise of an option a person would acquire the beneficial ownership of
five percent (5%) or more of the issued and outstanding common stock of the
Corporation, such person must obtain the approval of the Commissioner of
Financial Institutions prior to the exercise of such option. Options granted
under the Plans are not transferable other than by will or the laws of descent
and distribution. During the life of the optionee, the options may be exercised
only by such optionee. In the event of the death or disability of an optionee,
options may be exercised whether or not exercisable at the time of such death or
disability within one year after the date of such death or disability, but not
later than the date the option would otherwise have expired.
If the employment of an employee is terminated by retirement in accordance
with the Corporation's normal retirement policies or is voluntarily or
involuntarily terminated within one year after the date of a change in control,
the option may be exercised within three months of such occurrence whether or
not the option is exercisable at such time, but not later than the date that the
option would otherwise have expired.
Options may be exercised by payment of the fair market price per share
established in the Option Agreement, as adjusted for any changes in
capitalization, if applicable. Payment may be in cash or at the election of the
optionee, common stock of the Corporation having an aggregate fair market value
equal to or less than the total option price (i.e. purchase price multiplied by
the number of shares bought), plus cash. At the discretion of the Committee, the
optionee could be granted stock appreciation rights with respect to an option.
In April 1987, the Stockholders ratified the Bank's first Stock Option Plan
(the "1987 Plan"), which expired on January 21, 1997. As of such expiration
date, no new options have been granted under the expired 1987 Plan. On April 19,
1997, the Stockholders ratified a new Stock Option Plan (the "1997 Plan"), for
which 2,898,704 shares were set aside. As of December 31, 2001, there were a
total of 1,035,000 shares subject to unexercised options granted under the 1997
Plan. Except to the extent limited by the Puerto Rico Internal Revenue Code of
1994, as amended, all outstanding options are now exercisable.
OPTION/GRANTS IN LAST FISCAL YEAR
No options were granted during fiscal 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The table set forth below discloses the aggregated options/SAR exercises and
value realized and the number of unexercised options and the value thereof with
regards to the Chief Executive Officer and the most highly paid executives
(named executives) as of December 31, 2001, under the Plan. All presently
unexercised options are exercisable at this time.
Value of
Number of Unexercised
Shares Unexercised In-the-Money
Acquired Value Options Options at
Name on Exercise Realized at 12/31/00 12/31/00*
-------------------------- ------------------- --------------- ----------------- ----------------
Angel Alvarez-Perez 120,000 $2,137,020 454,000 $3,404,625
Annie Astor-Carbonell 57,000 1,015,085 91,000 761,062
Luis M. Beauchamp 57,000 995,135 104,000 879,625
Aurelio Aleman -0- -0- 90,000 669,875
Fernando Batlle -0- -0- 88,000 728,750
Randolfo Rivera -0- -0- 78,000 323,625
Ricardo Ramos-Luina -0- -0- 15,000 90,313
* The value of unexercised in-the-money options in the table above represents
the difference between the grant price of the option and the market price as of
December 31, 2001, multiplied by the number of in-the-money options outstanding
as of that date. At the close of business on December 31, 2001, the closing
price of First BanCorp's common stock was $28.50. The average price at which the
named executives could have exercised their outstanding options as of such date
was $15.625 for options granted on 11/25/97; $19.1875 for options granted on
2/24/98; $27.094 for options granted on 5/26/98; $26.00 for options granted on
11/17/98; $22.56 for options granted 8/24/99; $19.625 for options granted on
11/23/99; and 22.3125 for options granted on 12/13/00. As of 12/31/01, the named
executives held unexercised options to purchase shares as follows: Angel
Alvarez-Perez, 104,000 granted on 11/25/97, 100,000 granted on 11/17/98, 100,000
granted on 11/23/99 and 150,000 granted on 12/13/00. Annie Astor-Carbonell,
32,000 granted on 11/25/97, 16,000 granted on 11/17/98, 16,000 granted on
11/23/99 and 27,000 granted on 12/13/00. Luis M. Beauchamp, 38,000 granted on
11/25/97, 18,000 granted on 11/17/98, 18,000 granted on 11/23/99 and 30,000
granted on 12/13/00. Mr. Aurelio Aleman, 40,000 granted on 2/24/98, 12,000
granted on 11/17/98; 12,000 granted on 11/23/99 and 26,000 granted on 12/13/00.
Fernando Batlle 20,000 granted on 11/26/97, 20,000 granted on 2/24/98, 12,000
granted on 11/17/98; 12,000 granted on 11/23/99 and 24,000 granted on 12/13/00.
Mr. Randolfo Rivera, 40,000 granted on 5/26/98; 12,000 granted on 11/23/99 and
26,000 granted on 12/13/00. Ricardo Ramos-Luina, 10,000 granted on 8/24/99 and
5,000 granted on 12/13/00. All options were granted at an exercise price equal
to the market price of First BanCorp's common stock on the date of grant. The
Stock Option Plan provides for automatic adjustments in the number and price of
options due to changes in capitalization resulting from stock dividends or
splits. All options granted prior to May 29, 1998, have been adjusted to reflect
the 100% stock split distributed on that date. No stock options were granted in
fiscal 2001.
9
EMPLOYMENT AGREEMENTS
The following table discloses information regarding the employment
agreements of the named executives with FirstBank.
Current
Name Effective Date Base Salary Term of Years
------------------------ ---------------- ------------------ -------------------
Angel Alvarez-Perez 05-14-98 $825,000 4
Annie Astor-Carbonell 04-14-98 400,000 4
Luis M. Beauchamp 05-14-98 450,000 4
Aurelio Aleman 02-24-98 350,000 4
Fernando Batlle 05-14-98 350,000 4
Randolfo Rivera 05-26-98 350,000 4
The agreements provide that on each anniversary of the date of commencement
of each agreement the term of such agreement shall be automatically extended for
an additional one (1) year period beyond the then-effective expiration date,
unless either party receives written notice that the agreement shall not be
further extended. Notwithstanding such contract, the Board of Directors may
terminate the contracting officer at any time; however, unless such termination
is for cause, the contracting officer will continue to be entitled to the
compensation provided in the contract for the remaining term thereof. "Cause" is
defined to include personal dishonesty, incompetence, willful misconduct, breach
of fiduciary duty, intentional failure to perform stated duties, willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease and desist order or any material breach of any
provision of the Employment Agreement.
In the event of a "change in control" of the Corporation during the term of
the employment agreements, the executive shall be entitled to receive a lump sum
severance payment equal to his or her then current base annual salary plus the
highest cash performance bonus received by the executive in any of the four (4)
fiscal years prior to the date of the change in control, multiplied by the term
of years for which such contracting officer's employment agreement was to be
effective on the date into which it was entered. The severance payment that each
of the contracting officers would have received if his or her agreement had been
terminated as of December 31, 2001, pursuant to a change of control was: Angel
Alvarez-Perez, $5,300,000 Annie Astor-Carbonell, $2,300,000; Luis M. Beauchamp,
$2,600,000; Aurelio Aleman, $2,100,000; Fernando Batlle, $2,100,000, Randolfo
Rivera, $2,100,000.
Pursuant to the employment agreements, a "change in control" shall be deemed
to have taken place if a third person, including a group as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner of
shares of the Corporation having 25% or more of the total number of votes which
may be cast for the election of directors of the Bank, or which, by cumulative
voting, if permitted by the Corporation's Charter or Bylaws, would enable such
third person to elect 25% or more of the directors of the Corporation; or if, as
a result of, or in connection with, any cash tender or exchange offer, merger or
other business combination, sales of assets or contested election, or any
combination of the foregoing transactions, the persons who were directors of the
Corporation before such transactions shall cease to constitute a majority of the
Board of the Corporation or any successor institution.
10
DEFINED CONTRIBUTION RETIREMENT PLAN
The Bank has a Defined Contribution Retirement Plan under Section 165(e) of
Puerto Rico's Internal Revenue Act(7) which provides participating employees
with retirement, death, disability and termination of employment benefits in
accordance with their participation. The Plan complies with the "Employee
Retirement Income Security Act of 1974 (ERISA)" and the "Retirement Equity Act
of 1984 (ERA)." The Bank's employees are eligible to participate in the Plan
after completing one year of service and there is no age requirement. An
individual account is maintained for each participant and benefits are paid
based solely on the amount of each participant's account.
Participating employees may defer from 1% to 10% of their annual salary, up
to a maximum of $8,000, into the Plan on a pre-tax basis as employee salary
savings contributions. Each year the Bank will make a contribution equal to 25%
of each participating employee's salary savings contribution; however, no match
is provided for salary savings contributions in excess of 4% of compensation. At
the end of the fiscal year, the Bank may, but is not obligated to make,
additional contributions in an amount determined by the Board of Directors;
however, the maximum of any additional contribution in any year may not exceed
15% of the total compensation of all eligible employees participating in the
Plan and no basic monthly or additional annual matches need be made on years
during which the Bank incurs a loss.
In fiscal 2001, the total contribution to the Plan by the Bank amounted to
$813,472, which funds were distributed on a pro rata basis among all
participating employees. The table below sets forth the total of the Bank's
contribution during fiscal 2001 to the named executives who participate in the
Plan.
Angel Alvarez Perez $5,120
Annie Astor-Carbonell 4,773
Luis M. Beauchamp 5,135
Aurelio Aleman 4,817
Fernando Batlle 5,100
Ricardo Ramos-Luina 4,889
REPORT OF THE COMPENSATION COMMITTEE
The Executive Compensation Program is administered by the Compensation
Committee (the "Committee"), which is composed of three (3) non-employee
directors selected by the Board of Directors. During fiscal 2001 the Committee
was composed of Messrs. Hector M. Nevares, Rafael Bouet and Jose Teixidor. None
of the members of the Committee are or have been employees of the Corporation,
the Bank or of any of its subsidiaries.
Executive Compensation Policy
The Bank operates in a highly competitive industry where the quality,
creativity and professionalism of its executives are of utmost importance to the
success, profitability and growth of the institution. The underlying philosophy
of any effective compensation program must be to retain and recruit top
executives who will make significant contributions to the promotion and
achievement of the institutional goals, which will ultimately result in enhanced
shareholder value. Accordingly, FirstBank has put in place a compensation policy
that is designed to recruit, retain and reward key executives who demonstrate
the capacity to lead the Bank in achieving its business objectives.
Objectives
o Stimulate behavior that will lead to the attainment of the Bank's
goals.
o Provide additional short-term and long-term variable compensation to
enable implementation of a pay-for-performance package.
In making their determinations for fiscal 2001, the Compensation Committee
reviewed the Bank's performance as a whole and the performance of the named
executives in relation to the performance goals that have been set forth. The
Committee also took into consideration the performance of the Bank in comparison
with the performance of other banks in the community as well as the performance
of the Bank in relation to other institutions of similar size and complexity of
loan portfolio and other assets. On the basis of their review, the Committee
took the following actions with regard to the named executives.
Performance Bonus
The Executive Compensation Program provides for a performance bonus plan
whose purpose is to maximize the efficiency and effectiveness of the operation
of the Bank. The Committee has designated the CEO and the Executive Vice
Presidents of the Bank as plan participants. The performance bonus is linked to
the performance of the Bank as a whole as well as the achievement of individual
goals by each of the named executives. Based on the Bank's performance and the
performance of each of the named executives in fiscal 2001, the Committee
recommended, and on February 26, 2002 the Board granted, the following
performance bonuses to the following named executives: Luis M. Beauchamp, Senior
Executive Vice President, $250,000; Annie Astor-Carbonell, Senior Executive Vice
President, $200,000; Aurelio Aleman, Executive Vice President, $200,000;
Fernando Batlle, Executive Vice President, $200,000; Randolfo Rivera, Executive
Vice President, $150,000 and Ricardo Ramos-Luina, Executive Vice President,
$40,000.
------------------------
7 Section 165 of Puerto Rico's Internal Revenue Act is similar to
Section 401(k) of the Federal Internal Revenue Code.
11
Long-Term Compensation
The Executive Compensation Plan also contemplates long-term incentive
compensation in the form of stock options under the Bank's Employee Stock Option
Plan (the "SOP"). The Compensation Committee has discretion to select which of
the eligible persons will be granted stock options, whether stock appreciation
rights will be granted with such options, and generally to determine the terms
and conditions of such options in accordance with the provisions of the SOP.
During fiscal 2001 no options were granted.
Compensation of Chief Executive Officer
Mr. Angel Alvarez-Perez has served as President and Chief Executive Officer
of FirstBank since September 1990 and as Chairman, President and CEO of First
Bancorp since November 1998. On August 28, 2001, the Compensation Committee
recommended, and the Board of Directors approved, adjusting the annual salary of
Mr. Angel Alvarez-Perez to $825,000. On February 26, 2002, the Committee granted
the President a cash bonus of $600,000 corresponding to performance in fiscal
2001. The compensation granted was determined in accordance with the Bank's
compensation policy described above. In making such determination, the Committee
took into consideration the Bank's performance during 2001, including a
significant increases in First BanCorp's earnings, continued control of
operating expenses, and the achievement of goals that are geared to ensure the
Bank's continued trend of earnings growth that has produced excellent value for
First BanCorp's stockholders.
Hector M. Nevares
Rafael Bouet
Jose Teixidor
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Compensation Committee has served as an officer
or employee of the Corporation, the Bank or of a subsidiary of the Corporation
or of the Bank.
PERFORMANCE OF FIRST BANCORP COMMON STOCK
[LINE GRAPH]
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
------------------------------ ---------- ------------ ----------- ---------- ----------- ---------- -------------
FirstBank $100 $118 $158 $283 $198 $230 $284
S&P 500 $100 $124 $164 $211 $255 $234 $206
S&P Regional Banks $100 $135 $194 $215 $184 $256 S&P Disc
S&P Supercom Banks Index $100 $135 $198 $204 $171 $199 $196
12
The stock performance graph set forth above compares the cumulative total
shareholder return of the Bank's common stock from December 31, 1995, to
December 31, 2001, with cumulative total return of the S&P 500 Market Index and
the S&P Regional Bank's Index. The S&P 500 Market Index is a broad index that
includes a wide variety of issuers and industries representative of a cross
section of the market. The S&P Regional Bank Index includes financial
institutions comparable to the Bank. In December 2001, the S&P discontinued its
Regional Bank Index. The S&P Supercomposite Banks Index, a capitalization-
weighted index that is composed of 87 members has been added.
OTHER EMPLOYMENT BENEFITS
The Bank's executive officers are provided life, hospitalization and medical
insurance under group plans on generally the same basis as other full-time
employees of the Bank. The Bank offers to all of its employees' life insurance
coverage of 250% of the employees' annual salaries up to a maximum coverage of
$500,000. In the event of accidental death, the coverage is twice that amount.
In addition, the Bank offers all of its employees a contributory medical and
hospitalization plan and non-contributory long-term disability coverage, which
will pay 60% at such employees' salaries up to a maximum of $6,000 per month
until age 65. The plans are provided through Servicios de Seguros de Salud, Inc.
(SSS) a Blue Cross and Blue Shield Association of Puerto Rico.
BUSINESS TRANSACTIONS BETWEEN FIRSTBANK OR ITS SUBSIDIARIES
AND EXECUTIVE OFFICERS OR DIRECTORS
During fiscal 2001, directors and officers and persons or entities related
to such directors and officers were customers of and had transactions with the
Bank and/or its subsidiaries. All such transactions were made in the ordinary
course of business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time they were made for comparable
transactions with other persons who are not insiders, and did not either involve
more than the normal risk of uncollectibility or present other unfavorable
features.
SECTION 16(a) COMPLIANCE
Based upon a review of Section 16(a) filings with the Securities Exchange
Commission by directors and officers of the Corporation, Director Juan Acosta
Reboyras and Jose Julian Alvarez each filed one late report. Mr. Jorge Diaz
filed six late reports corresponding to purchases of preferred stock. Dr. German
Malaret filed four late reports corresponding to shares acquired through the
Dividend Reinvestment Plan. All transactions were subsequently reported on SEC
Form 5.
AUDIT FEES
Total fees paid to PricewaterhouseCoopers LLP for professional services
rendered for the annual audit of the Corporation's financial statements for
fiscal 2001 were $194,700. There were no fees paid for financial information
systems design or implementation services. Other fees paid to
PricewaterhouseCoopers in fiscal 2001 were for comfort letters in connection
with preferred stock offerings and an employee benefit plan audit. Such other
fees totaled $43,500.
PROPOSAL #2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP has been selected as the independent
Certified Public Accountants of the Corporation for the fiscal year ending
December 31, 2002. The firm will be represented at the Annual Meeting and
representatives will have the opportunity to make a statement, if they so
desire, and also will be available to respond to appropriate questions. The
affirmative vote of a majority of the total votes eligible to be cast at the
Annual Meeting is required for approval of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS OF THE
CORPORATION FOR THE FISCAL YEAR ENDING DECEMBER 31, 2002. THE VOTE OF THE
HOLDERS OF THE MAJORITY OF THE TOTAL VOTES ELIGIBLE TO BE CAST AT THE ANNUAL
MEETING IS REQUIRED FOR THE APPROVAL OF THIS PROPOSAL.
STOCKHOLDER PROPOSAL
Any proposal that a stockholder wishes to have presented at the next Annual
Meeting of the Corporation must be received at the main offices of First BanCorp
not later than December 20, 2002. If such proposal is in compliance with all of
the requirements of Rule 14a-8 of the Securities Exchange Act of 1934 (the
"Act"), it will be included in the Proxy Statement and set forth in the form of
proxy issued for the next Annual Meeting of Stockholders. All such proposals
should be sent by certified mail, return receipt requested, to the attention of
the Secretary.
13
OTHER MATTERS
Management of the Corporation does not know of any business to be brought
before the Annual Meeting other than that specified herein. However, if any
other matters are properly brought before the Meeting, it is intended that the
proxies solicited hereby will be voted with respect to those other matters in
accordance with the judgment of the person voting the proxies.
The cost of solicitation of proxies will be borne by the Corporation. First
BanCorp has retained the services of Morrow & Co., a professional proxy
solicitation firm, to assist in the solicitation of proxies. The fee arranged
with Morrow & Co. is in the amount of $3,500 plus reimbursement for
out-of-pocket expenses. The Corporation will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
sending proxy materials to the beneficial owners of First BanCorp's common
stock. In addition to solicitation by mail, directors, officers and employees of
the Corporation may solicit proxies personally or by telephone without
additional compensation.
ANNUAL REPORT
Stockholders will be sent a copy of the Corporation's Annual Report to
Stockholders for the fiscal year ended December 31, 2001, prior to or
accompanying the Proxy Statement. Such Annual Report is not part of the proxy
solicitation material. Upon receipt of a written request, the Corporation will
furnish to any stockholder, without charge, a copy of the Corporation's Annual
Report on Form 10-K under Section 13 of the Securities Exchange Act of 1934 and
the list of exhibits thereto required to be filed with the Securities Exchange
Commission under applicable law. Such written request must set forth a good
faith representation that the person making the request is, as of March 21,
2002, the owner of record of shares of common stock entitled to vote at the
Annual Meeting and should be directed to Antonio R. Escriba-Oliver, Secretary,
First BanCorp, 1519 Ponce de Leon Avenue, Santurce, Puerto Rico 00908.
BY ORDER of the Board of Directors
March 28, 2002
14
EXHIBIT I
FIRST BANCORP
AUDIT COMMITTEE CHARTER
I. Purpose
The Audit Committee is appointed by the Board to assist in monitoring
(1) the integrity of the financial statements of the Corporation, (2)
the compliance by the Corporation with legal and regulatory
requirements and (3) the independence and performance of the
Corporation's internal and external auditors.
II. Composition
The Audit committee shall be composed of a minimum of three Directors,
as determined by the Board.
The members of the Audit committee shall meet the independence and
experience requirements of the Securities and Exchange Commission and
the New York Stock Exchange. The members of the Audit Committee shall
be appointed by the full Board of Directors.
The Audit committee shall have the authority to retain special legal,
accounting or other consultants to advise the Committee. The Audit
Committee may request any officer or employee of the Corporation or the
Corporation's outside counsel or independent auditor to attend a
meeting of the Committee or to meet with any members of, or consultants
to, the Committee.
The Audit Committee shall make regular reports to the Board.
I. Responsibilities
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
2. Review the annual audited financial statements with management,
including major issues regarding accounting and auditing principles and
practices as well as the adequacy of internal controls that could
significantly affect the Corporation's financial statements.
3. Review analysis prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection
with the preparation of the Corporation's financial statements.
4. Review with management and the independent auditor the Corporation's
quarterly financial statements prior to the release of quarterly
earnings.
5. Meet periodically with management to review the Corporation's major
financial risk exposures and the steps management has taken to monitor
and control such exposures.
6. Review major changes to the Corporation's auditing and accounting
principles and practices as suggested by the independent auditor,
internal auditors or management.
7. Recommend to the Board the appointment of the independent auditor,
which firm is ultimately accountable to the Audit Committee and the
Board.
8. Approve the fees to be paid to the independent auditor.
9. Receive periodic reports from the independent auditor regarding the
auditor's independence, discuss such reports with the auditor, and if
so determined by the Audit Committee, recommend that the Board take
appropriate action to satisfy itself of the independence of the
auditor.
10. Evaluate together with the Board the performance of the independent
Auditor and, if so determined by the Audit Committee, recommend that
the Board replaces the independent auditor.
15
11. Recommend to the Board the appointment and replacement of the senior
internal auditing executive.
12. Review the significant reports to management prepared by the internal
auditing department and management's responses.
13. Meet with the independent auditor prior to the audit to review the
planning and staffing of the audit.
14. Obtain from the independent auditor assurance that Section 10A of the
Private Securities Litigation Reform Act of 1995 has not been
implicated.
15. Obtain reports from management, the Corporation's senior internal
auditing executive and the independent auditor that the Corporation's
subsidiary/foreign affiliated entities are in conformity with
applicable legal requirements and the Corporation's Code of Conduct.
16. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit.
17. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Corporation's response to that letter. Such review
should include:
(a) Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
required information.
(b) Any changes required in the planned scope of the internal audit.
(c) The internal audit department responsibilities, budget and
staffing.
18. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Corporation's annual proxy statement.
19. Advise the Board with respect to the Corporation's policies and
procedures regarding compliance with applicable laws and regulations
and with the Corporation's Code of Conduct.
20. Review with the Corporation's General Counsel legal matters that may
have a material impact on the financial statements, the Corporation's
compliance policies and any material reports or inquiries received from
regulators or governmental agencies.
21. Meet at least annually with the chief financial officer, the senior
internal auditing executive and the independent auditor in separate
executive sessions.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Corporation's financial statements are complete
and accurate and are in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
auditor. Nor is it the duty of the Audit Committee to conduct investigations, to
resolve disagreements, if any, between management and the independent auditor or
to assure compliance with laws and regulations and the Corporation's Code of
Conduct.
16