SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
LENOX BANCORP, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) 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:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
LENOX BANCORP, INC.
5255 BEECH STREET
ST. BERNARD, OHIO 45217
(513) 242-6900
March 9, 1998
Fellow Stockholders:
You are cordially invited to attend the annual meeting of stockholders
(the "Annual Meeting") of Lenox Bancorp, Inc. (the "Company"), the holding
company for Lenox Savings Bank (the "Bank"), which will be held on April 8,
1998, at 3:00 p.m., Eastern Time, at the Bank's office, 5255 Beech Street, St.
Bernard, Ohio.
The attached Notice of the Annual Meeting and the Proxy Statement
describe the formal business to be transacted at the Annual Meeting. Directors
and officers of the Company, as well as a representative of Clark, Schaefer,
Hackett & Co., the Company's independent auditors, will be present at the Annual
Meeting to respond to any questions that our stockholders may have regarding the
business to be transacted.
The Board of Directors of the Company has determined that the matters
to be considered at the Annual Meeting are in the best interests of the Company
and its stockholders. FOR THE REASONS SET FORTH IN THE PROXY STATEMENT, THE
BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE NOMINEES FOR
DIRECTOR AS SPECIFIED UNDER PROPOSAL 1 AND "FOR" PROPOSAL 2.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOUR
COOPERATION IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK MUST BE
REPRESENTED, EITHER IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE
CONDUCT OF BUSINESS.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, we thank you for your continued interest and support.
Sincerely yours,
/s/ Virginia M. Porowski
___________________________________
Virginia M. Porowski
President, Chief Executive Officer
and Director
<PAGE>
LENOX BANCORP, INC.
5255 BEECH STREET
ST. BERNARD, OHIO 45217
(513) 242-6900
----------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 8, 1998
----------------------------------
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the
"Annual Meeting") of Lenox Bancorp, Inc. (the "Company") will be held on April
8, 1998, at 3:00 p.m., Eastern Time, at the Bank's office, 5255 Beech Street,
St. Bernard, Ohio.
The purpose of the Annual Meeting is to consider and vote upon the
following matters:
1. The election of two directors for terms of three years each or
until their successors are elected and qualified;
2. The ratification of the appointment of Clark, Schaefer,
Hackett & Co. as independent auditors of the Company for the
fiscal year ending December 31, 1998; and
3. Such other matters as may properly come before the meeting and
at any adjournments thereof, including whether or not to
adjourn the meeting.
The Board of Directors has established March 2, 1998, as the record
date for the determination of stockholders entitled to receive notice of and to
vote at the Annual Meeting and at any adjournments thereof. Only recordholders
of the Common Stock of the Company as of the close of business on such record
date will be entitled to vote at the Annual Meeting or any adjournments thereof.
In the event there are not sufficient votes for a quorum or to approve or ratify
any of the foregoing proposals at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit further solicitation of proxies by
the Company. A list of stockholders entitled to vote at the Annual Meeting will
be available at the Company, 5255 Beech Street, St. Bernard, Ohio 45217, for a
period of ten days prior to the Annual Meeting and will also be available at the
Annual Meeting itself.
By Order of the Board of Directors
/s/ Diane P. Irwin
___________________________________
Diane P. Irwin
Secretary
St. Bernard, Ohio
March 9, 1998
<PAGE>
LENOX BANCORP, INC.
-----------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 8, 1998
-----------------------
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is being furnished to stockholders of Lenox
Bancorp, Inc. (the "Company") in connection with the solicitation by the Board
of Directors ("Board of Directors" or "Board") of proxies to be used at the
annual meeting of stockholders (the "Annual Meeting"), to be held on April 8,
1998 at 3:00 p.m., Eastern Time, at the Bank's office, 5255 Beech Street, St.
Bernard, Ohio and at any adjournments thereof. The 1997 Annual Report to
Stockholders, including consolidated financial statements for the fiscal year
ended December 31, 1997, accompanies this Proxy Statement, which is first being
mailed to recordholders on or about March 2, 1998.
Regardless of the number of shares of Common Stock owned, it is
important that recordholders of a majority of the shares be represented by proxy
or present in person at the Annual Meeting. Stockholders are requested to vote
by completing the enclosed proxy card and returning it signed and dated in the
enclosed postage-paid envelope. Stockholders are urged to indicate their vote in
the spaces provided on the proxy card. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS GIVEN
THEREIN. WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED PROXY CARDS WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED IN THIS PROXY STATEMENT AND
FOR THE RATIFICATION OF CLARK, SCHAEFER, HACKETT & CO. AS INDEPENDENT AUDITORS
OF THE COMPANY FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.
Other than the matters set forth on the attached Notice of Annual
Meeting of Stockholders, the Board of Directors knows of no additional matters
that will be presented for consideration at the Annual Meeting. EXECUTION OF A
PROXY, HOWEVER, CONFERS ON THE DESIGNATED PROXY HOLDERS DISCRETIONARY AUTHORITY
TO VOTE THE SHARES IN ACCORDANCE WITH THEIR BEST JUDGMENT ON SUCH OTHER
BUSINESS, IF ANY, THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND AT ANY
ADJOURNMENTS THEREOF, INCLUDING WHETHER OR NOT TO ADJOURN THE ANNUAL MEETING.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Secretary of the Company, by delivering to
the Company a duly executed proxy bearing a later date, or by attending the
Annual Meeting and voting in person. However, if you are a stockholder whose
shares are not registered in your own name, you will need appropriate
documentation from your recordholder to vote personally at the Annual Meeting.
1
<PAGE>
The cost of solicitation of proxies on behalf of management will be
borne by the Company. Proxies may be solicited personally or by telephone by
directors, officers and other employees of the Company and its subsidiary, Lenox
Savings Bank (the "Bank"), without additional compensation therefor. The Company
will also request persons, firms and corporations holding shares in their names,
or in the name of their nominees, which are beneficially owned by others, to
send proxy material to and obtain proxies from such beneficial owners, and will
reimburse such holders for their reasonable expenses in doing so.
VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of
shares of common stock of the Company ("Common Stock"), with each share
entitling its owner to one vote on all matters to be voted on at the Annual
Meeting, except as described below. There is no cumulative voting for the
election of directors.
The close of business on March 2, 1998 has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 404,413 shares.
As provided in the Company's Articles of Incorporation, until the
expiration of five years from the date of acquisition by the Company of the
stock of the Bank, recordholders of Common Stock who beneficially own in excess
of 10% of the outstanding shares of Common Stock (the "Limit") are not entitled
to any vote in respect of the shares held in excess of the Limit. A person or
entity is deemed to beneficially own shares owned by an affiliate of, as well
as, by persons acting in concert with, such person or entity.
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of Common Stock entitled to vote (after
subtracting any shares in excess of the Limit pursuant to the Company's Articles
of Incorporation) is necessary to constitute a quorum at the Annual Meeting. In
the event there are not sufficient votes for a quorum or to approve or ratify
any proposal at the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit the further solicitation of proxies.
As to the election of directors set forth in Proposal 1, the proxy card
being provided by the Board of Directors enables a stockholder to vote "FOR" the
election of the nominees proposed by the Board of Directors, or to "WITHHOLD"
authority to vote for one or more of the nominees being proposed. Under Ohio law
and the Company's Code of Regulations, directors are elected by a plurality of
votes cast, without regard to either (i) broker non-votes, or (ii) proxies as to
which authority to vote for one or more of the nominees being proposed is
withheld.
2
<PAGE>
As to the ratification of Clark, Schaefer, Hackett & Co. as independent
auditors of the Company set forth in Proposal 2, and all other matters that may
properly come before the Annual Meeting, by checking the appropriate box, you
may: (i) vote "FOR" the item; (ii) vote "AGAINST" the item; or (iii) "ABSTAIN"
with respect to the item. Under the Company's Code of Regulations, unless
otherwise required by law, all such matters shall be determined by a majority of
the votes cast, without regard to broker non-votes. Proxies marked "ABSTAIN" as
to that matter will have the same effect as votes against the proposal.
Proxies solicited hereby will be returned to the Company's transfer
agent, Fifth Third Bank, and will be tabulated by inspectors of election
designated by the Board of Directors, who will not be employed by, or be a
director of, the Company or any of its affiliates. After the final adjournment
of the Annual Meeting, the proxies will be returned to the Company for
safekeeping.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to those persons believed
by management to be beneficial owners of more than 5% of the Company's
outstanding shares of Common Stock on the Record Date or as disclosed in certain
reports regarding such ownership filed by such persons with the Company and with
the Securities and Exchange Commission ("SEC"), in accordance with Sections
13(d) and 13(g) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"). Other than those persons listed below, the Company is not aware of any
person, as such term is defined in the Exchange Act, that owns more than 5% of
the Company's Common Stock as of the Record Date.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------------------- ---------------------------------------- ------------------------------ ----------------
<S> <C>
Common Stock Lenox Savings Bank Employee 34,054(1) 8.42%
Stock Ownership Plan ("ESOP")
5255 Beech Street
St. Bernard, Ohio 45217
</TABLE>
(1) Shares of Common Stock were acquired by the ESOP in the Bank's
Conversion. The ESOP Committee of the Board of Directors administers
the ESOP and has appointed an ESOP Trustee. The ESOP Trustee, subject
to its fiduciary duty, must vote all allocated shares held in the ESOP
in accordance with the instructions of the participants. At March 2,
1998, 5,960 shares have been allocated under the ESOP and 28,094 shares
remain unallocated. The ESOP Trustee will vote the unallocated shares
in a manner calculated to most accurately reflect the instructions
received from participants so long as the Trustee determines such vote
is in accordance with the provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
3
<PAGE>
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
All persons standing for election as director were unanimously
nominated by the Nominating Committee of the Board of Directors. No person being
nominated as a director is being proposed for election pursuant to any agreement
or understanding between any such person and the Company.
PROPOSALS TO BE VOTED ON AT THE MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of eight (8)
directors and is divided into three classes. Each of the eight members of the
Board of Directors of the Company also presently serves as a director of the
Bank. Directors are elected for staggered terms of three years each, with the
term of office of only one of the three classes of directors expiring each year.
Directors serve until their successors are elected and qualified.
The two nominees proposed for election at this Annual Meeting are
William P. Riekert, Jr. and Henry E. Brown.
In the event that any such nominee is unable to serve or declines to
serve for any reason, it is intended that the proxies will be voted for the
election of such other person as may be designated by the present Board of
Directors. The Board of Directors has no reason to believe that any of the
persons named will be unable or unwilling to serve. UNLESS AUTHORITY TO VOTE FOR
THE NOMINEE IS WITHHELD, IT IS INTENDED THAT THE SHARES REPRESENTED BY THE
ENCLOSED PROXY CARD, IF EXECUTED AND RETURNED, WILL BE VOTED FOR THE ELECTION OF
THE NOMINEES PROPOSED BY THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF
THE NOMINEES NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO THE NOMINEES AND CONTINUING DIRECTORS
The following table sets forth, as of the Record Date, the names of the
nominees, continuing directors and Named Executive Officer (as defined herein)
as well as their ages, a brief description of their recent business experience,
including present occupations and employment, certain directorships held by
each, the year in which each director became a director of the Bank, the year in
which their terms (or in the case of the nominees, their proposed terms) as
director of the Company expire. The table also sets forth the amount of Common
Stock and the percent thereof beneficially owned by each director and Named
Executive Officer and all directors and executive officers as a group as of the
Record Date.
4
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
NAME AND PRINCIPAL EXPIRATION COMMON STOCK
OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIALLY PERCENT OF
AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNED(2)(3)(4) CLASS(5)
- ------------------------ --- -------- ---------- -------------- ----------
<S> <C>
NOMINEES
William P. Riekert, Jr....................... 61 1991 2001 3,026 *
Mr. Riekert retired from Procter & Gamble in
December 1991 after working 30 years in the
Package Soap and Detergent Division. He
has extensive real estate sales and
management experience and serves as a
director at the Vine Street Hill Cemetery
Association.
Henry E. Brown............................... 52 1995 2001 1,739 *
Mr. Brown has a B.S. degree in Civil
Engineering from the University of Missouri-
Rolla. He has been employed with Procter &
Gamble's Central Engineering Division for
28 years and holds the position of Director-
Product Supply-Engineering. Mr. Brown is
a Trustee of Seven Hills Neighborhood
Association and a Director of the Greater
Cincinnati Metropolitan YMCA.
CONTINUING DIRECTORS
Virginia M. Porowski......................... 40 1996 1999 4,613 *
Ms. Porowski joined the Bank in 1986 and
has served as President and Chief Executive
Officer since 1994 and Executive Managing
Officer since 1989. Ms. Porowski has over
17 years experience in the banking industry.
Gail R. Behymer.............................. 58 1993 1999 3,321 *
Mr. Behymer holds a B.S. in Industrial
Management and an MBA from the
University of Cincinnati. He worked at
Procter & Gamble for 34 years with a
background in construction and facilities
management. He held the position of
Operations Manager prior to his retirement.
Reba St. Clair............................... 38 1995 1999 1,276 *
Ms. St. Clair holds a B.A. in Political Science
from Knox College. She is currently a PS
Finance Manager, Worldwide Strategic
Planning, at Procter & Gamble. Ms. St. Clair
is a board member for Leadership Cincinnati,
The Wellness Community, Hamilton County
Youth Conference, Lighthouse Youth
Services, Playhouse in the Park, and the
Cincinnati Ballet.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
NAME AND PRINCIPAL EXPIRATION COMMON STOCK
OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIALLY PERCENT OF
AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNED(2)(3)(4) CLASS(5)
- ----------------------- --- -------- -------- -------------- --------
<S> <C>
Richard C. Harmeyer.......................... 58 1993 2000 1,811 *
Mr. Harmeyer has a B.S. in Industrial
Management from the University of
Cincinnati. He worked at Procter & Gamble
for over 35 years in various line management
and human resource management positions.
Prior to his retirement he was the Ivorydale
Area Resource Manager. Mr. Harmeyer
previously served over 20 years as a Director
for the St. James Parish Credit Union holding
the offices of President, Vice President and
Secretary.
Robert R. Keller............................. 56 1987 2000 2,926 *
Mr. Keller retired from Procter & Gamble
after 36 years of service. He was the
Manager of Railroad Services. Mr. Keller is
also a board member of the Twin Tower
Retirement Community Auxiliary.
Curtis L. Jackson............................ 34 1995 2000 526 *
Mr. Jackson holds a B.S. degree in
Accounting from Northern Kentucky
University. He has worked at Procter &
Gamble for over 10 years and holds the
position of Group Manager Regional Cost
Accounting. Mr. Jackson also served as a
Board of Trustee and Treasurer for the
Hamiltion County Christian Center.
Stock Ownership of all Directors - - - 25,433 6.3%
and Executive Officers as a Group
(10 persons)
</TABLE>
- ----------
* Does not exceed 1.0% of the Company's voting securities.
(1) Includes years of service as a director of the Bank.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family member) voting or dispositive power as to shares reported
herein (except as noted).
(3) Includes 426 stock awards granted to each outside director and 511 and
2,554 stock awards granted to Mr. Harmeyer and Ms. Porowski, respectively,
under the Lenox Bancorp, Inc. 1997 Incentive Plan (the "Incentive Plan").
The stock awards granted under the Incentive Plan begin vesting in five
equal annual installments commencing on July 21, 1998, the first
anniversary of the effective date of the stock award.
(4) Does not include 1,277 shares subject to options granted to each outside
director and 1,703 and 8,513 shares subject to options granted to Mr.
Harmeyer and Ms. Porowski under the Incentive Plan, which have not vested.
All options granted under the Incentive Plan begin vesting in five equal
annual installments commencing on July 21, 1998, the first anniversary of
the effective date of the grant.
(5) As of the Record Date, there were 404,413 shares of Common Stock
outstanding.
6
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers (as
defined in regulations promulgated by the SEC thereunder) and directors, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in ownership with
the SEC. Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on a review of copies of such reports of
ownership furnished to the Company, or written representations that no forms
were necessary, the Company believes that during the past fiscal year all filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS OF
THE COMPANY
The Board of Directors of the Company conducts its business through
meetings of the Board of Directors and through activities of its committees. The
Board of Directors of the Company meets once a month and may have additional
meetings as needed. During the year ended December 31, 1997, the Board of
Directors of the Company held 18 meetings. All of the directors of the Company
attended at least 75% of the total number of the Company's Board meetings held
and committee meetings on which such directors served during 1997. The Board of
Directors of the Company maintains committees, the nature and composition of
which are described below:
AUDIT COMMITTEE. The Audit and Compliance Committee of the Company and
the Bank consists of Gail R. Behymer (Chair), Robert R. Keller, Curtis L.
Jackson and William P. Riekert. The purpose of this committee is to provide
assurance that financial disclosures made by management portray the Bank's
financial condition and results of operations. The Committee also maintains a
liaison with outside auditors and reviews the adequacy of internal controls.
The Audit Committee of the Company met 5 times during 1997. The Audit Committee
of the Bank met 5 times in 1997.
NOMINATING COMMITTEE. The Company's Nominating Committee for the 1998
Annual Meeting consists of Virginia M. Porowski, Gail R. Behymer, Richard C.
Harmeyer and Henry Brown. The Committee considers and recommends the nominees
for director to stand for election at the Company's annual meeting of
shareholders. The Company's Articles of Incorporation and Code of Regulations
provide for stockholder nominations of directors. These provisions require such
nominations to be made pursuant to timely notice in writing to the Secretary of
the Company. The stockholder's notice of nomination must contain all information
relating to the nominee which is required to be disclosed by the Company's Code
of Regulations and by the Exchange Act. The Nominating Committee met on January
21, 1998.
7
<PAGE>
DIRECTORS' COMPENSATION
FEE ARRANGEMENTS. Members of the Company's Board of Directors do not
receive Board fees from the Company. Currently, directors of the Bank who have
served as directors of the Bank for one year or more receive a retainer of
$1,200 per year, plus $370 per meeting attended. The Bank maintains a Director
Emeritus Program whereby retired members of the Board of Directors may serve as
Director Emeritus.
INCENTIVE PLAN. On July 21, 1997, the Company implemented the Lenox
Bancorp, Inc. 1997 Incentive Plan, under which all directors who are not also
employees of the Company are eligible to receive stock awards and options to
purchase Common Stock. Under the Incentive Plan, each outside director was
granted non-statutory options to purchase 1,277 shares of Common Stock, with the
exception of Mr. Harmeyer, who was granted options to purchase 1,703 shares, all
at an exercise price of $14.75, which was the fair market value of shares on the
effective date of the grant. In addition, each outside director was awarded 426
shares of Company Common Stock ("Awards"), except for the Chairman who was
awarded 511 Awards. Options and Awards become exercisable in five (5) equal
annual installments commencing one year from the effective date of the grant or
award, as applicable.
8
<PAGE>
SUMMARY COMPENSATION TABLE. The following table shows, for the years
ended December 31, 1997, 1996 and 1995, the cash compensation paid by the
Company or the Bank, as well as certain other compensation paid or accrued for
those years, to the Chief Executive Officer ("Named Executive Officer"). No
executive officers of the Company or the Bank received compensation in excess of
$100,000.
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------------
Annual Compensation(1) Awards Payouts
-------------------------------------------------------------------------------
Other Restricted Securities All
Annual Stock Underlying LTIP Other
Name and Principal Position Salary Bonus ($) Compensation Awards Options/SARs Payouts Compensation
Year ($) ($)(2) ($)(3) (#)(4) ($)(5) ($)(6)
- ----------------------------- ----------------------------- -------------------------------------------------------- --------------
<S> <C>
Virginia M. Porowski, 1997 $68,000 $ - - $37,672 8,513 - $26,665
President, Chief Executive 1996 62,500 1,365 - - - - 9,886
Officer and Director 1995 60,891 236 - - - - 1,962
</TABLE>
- -----------
(1) Under Annual Compensation, the column titled "Salary" does not include
directors' fees.
(2) There were no (a) perquisites over the lesser of $50,000 or 10% of the
individual's total salary and bonus for the last year, (b) payments of
above-market preferential earnings on deferred compensation, (c) payments
of earnings with respect to long-term incentive plans prior to settlement
or maturation, (d) tax payment reimbursements, or (e) preferential
discounts on stock.
(3) Pursuant to the Incentive Plan, Ms. Porowski was awarded 2,554 shares of
Common Stock in fiscal 1997 which had a market value on July 21, 1997,
the date of grant, of $37,672. Stock Awards granted under the Incentive
Plan begin vesting in five equal annual installments commencing on July
21, 1998, the first anniversary of the effective date of the stock award.
As of December 31, 1997, the market value of the 2,554 shares was
$42,460.
(4) Shares subject to options granted to Ms. Porowski under the Incentive
Plan. All options granted under the Incentive Plan become exerciseable in
five equal annual installments commencing on July 21, 1998, the first
anniversary of the effective date of the grant.
(5) For 1997, 1996 and 1995, there were no payouts or awards under any
long-term incentive plan.
(6) Reflects 401(k) contributions from the Bank of $686, $2,702, and $1,962
for 1997, 1996 and 1995, respectively, and ESOP allocations with a market
value as of December 31, 1997 of $25,979 and $7,184 for 1997 and 1996,
respectively.
9
<PAGE>
EMPLOYMENT AGREEMENTS
The Bank and the Company have entered into employment agreements with
Ms. Porowski (the "Executive"). The employment agreements are intended to ensure
that the Bank and the Company will be able to maintain a stable and competent
management base. The continued success of the Bank and the Company depends to a
significant degree on the skills and competence of the Executive.
The employment agreements provide for a three-year term for the
Executive. The Bank employment agreement provides that, commencing on the first
anniversary date and continuing each anniversary date thereafter, the Board of
Directors of the Bank may extend the agreement for an additional year so that
the remaining term shall be three years, unless written notice of non-renewal is
given by the Board of Directors of the Bank after conducting a performance
evaluation of the Executive. The term of the Company employment agreement shall
be extended on a daily basis unless written notice of non-renewal is given by
the Board of Directors of the Company. The agreements provide that the
Executive's base salary will be reviewed annually. The current base salary for
Ms. Porowski is $74,250. In addition to the base salary, the agreements provide
for, among other things, participation in stock benefit plans and other fringe
benefits applicable to executive personnel.
The agreements provide for termination by the Bank or the Company for
cause as defined in the agreements, at any time. In the event the Bank or the
Company chooses to terminate the Executive's employment for reasons other than
for cause, or in the event of the Executive's resignation from the Bank and the
Company upon: (i) failure to re-elect the Executive to her current office(s);
(ii) a material change in the Executive's functions, duties or responsibilities,
such that Executive's position becomes one of lesser responsibility, importance
or scope; (iii) a relocation of the Executive's principal place of employment by
more than 25 miles; (iv) a material reduction in the benefits or perquisites to
Executive; (v) liquidation or dissolution of the Bank or the Company; or (vi) a
breach of the agreement by the Bank or the Company, the Executive or, in the
event of the Executive's subsequent death, her beneficiary, would be entitled to
receive an amount equal to the remaining base salary payments due to the
Executive and the contributions that would have been made on the Executive's
behalf to any employee benefit plans of the Bank or the Company during the
remaining term of the agreement; PROVIDED, HOWEVER, that in the case of the
Bank's agreement, the payment shall not, in the aggregate, exceed three times
the average of the Executive's five preceding taxable years' annual
compensation. The Bank and the Company would also continue and pay for the
Executive's life, health and disability coverage for the remaining term of the
agreement.
Under the agreements, if voluntary (upon the trigger of one of the
factors set forth above) or involuntary termination follows a change in control
of the Bank or the Company (as defined in the Employment Agreement), the
Executive or, in the event of the Executive's death, her beneficiary, would be
entitled to a severance payment equal to the greater of: (i) the payments due
for the remaining term of the agreement; or (ii) three times the average of the
five preceding taxable years' annual compensation. The Bank and the Company
would also continue the Executive's life, health, and disability coverage for
thirty-six months. Notwithstanding that both agreements provide for a
10
<PAGE>
severance payment in the event of a change in control, the Executive would only
be entitled to receive a severance payment under one agreement. In the event of
a change in control, based upon three times 1997 salary and annual bonus as
reported in the Summary Compensation Table, Ms. Porowski would receive
approximately $204,000 in severance payments, in addition to other cash and
noncash benefits.
Payments under the agreements in the event of a change in control may
constitute some portion of an excess parachute payment under Section 280G of the
Internal Revenue Code (the "Code") for executive officers, resulting in the
imposition of an excise tax on the recipient and denial of the deduction for
such excess amounts to the Company and the Bank.
Payments to the Executive under the Bank's agreement will be guaranteed
by the Company in the event that payments or benefits are not paid by the Bank.
Payment under the Company's agreement would be made by the Company. All
reasonable costs and legal fees paid or incurred by the Executive pursuant to
any dispute or question of interpretation relating to the Agreements shall be
paid by the Bank or Company, respectively, if the Executive is successful on the
merits pursuant to a legal judgment, arbitration or settlement. The employment
agreements also provide that the Bank and Company shall indemnify the Executive
to the fullest extent allowable under Ohio law.
INCENTIVE PLAN. On July 21, 1997, the Company adopted the Incentive
Plan under which all employees of the Company are eligible to receive awards.
The Company maintains the Incentive Plan which provides discretionary awards to
officers and key employees as determined by a committee of non-employee
directors. The following table lists all grants of options under the Incentive
Plan to the Named Executive Officer for fiscal 1997 and contains certain
information about potential value of those options based upon certain
assumptions as to the appreciation of the Company's stock over the life of the
option.
11
<PAGE>
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTION/SARS
OPTIONS/ GRANTED TO EXERCISE OR
SARS GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#)(1)(2)(3) FISCAL YEAR PER SHARE DATE(4)
- --------------------------------- --------------------- ------------------- ------------------ ------------------
<S> <C>
Virginia M. Porowski 8,513 38% $14.75 7/21/07
</TABLE>
- ----------
(1) Options granted pursuant to the Incentive Plan become exercisable in
equal installments at an annual rate of 20% beginning July 21, 1998.
(2) The purchase price may be paid in cash or in Common Stock.
(3) To the extent possible, options will be treated as incentive options.
(4) The option term is ten years.
The following table provides certain information with respect to the
number of shares of Common Stock represented by outstanding options held by the
Named Executive Officer as of December 31, 1997. Also reported are the values
for "in-the-money" options which represent the positive spread between the
exercise price of any such existing stock options and the year end price of the
Common Stock.
<TABLE>
<CAPTION>
FISCAL YEAR-END OPTION/SAR VALUES
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR END(#) FISCAL YEAR END($)
------------------------------------- -------------------------------------------
NAME EXERCISABLE/UNEXERCISABLE(1) EXERCISABLE/UNEXERCISABLE(2)
- ----------------------------- ------------------------------------- -------------------------------------------
<S> <C>
Virginia M. Porowski......... --/8,513 $--/$15,962
</TABLE>
- ----------
(1) The options in this table have an exercise price of $14.75 and become
exercisable at an annual rate of 20% beginning July 21, 1998. The
options will expire ten (10) years from the date of grant.
(2) Based on market value of the underlying stock at the fiscal year end,
minus the exercise price. The market price on December 31, 1997 was
$16.625.
12
<PAGE>
401(K) PLAN. In 1992, the Bank adopted the 401(k) Plan which is
designed to be qualified under Section 401(k) of the Code. An employee is
eligible to participate in the 401(k) Plan following attainment of the age of 21
and the completion of one (1) year of service with the Bank (1,000 hours within
a twelve-month period). Under the 401(k) Plan, subject to the limitations
imposed under Section 401(k) and Section 415 of the Code, a participant is able
to elect to defer not more than 15% of his or her contribution by directing the
Bank to contribute such amount to the 401(k) Plan on such employee's behalf. The
Bank may elect to make matching contributions applicable to its 401(k) Plan
equal to a portion of the participating employee's contribution, subject to a
maximum matching contribution of no more than 6% of the participant's salary.
Under the 401(k) Plan, a separate account is established for each
employee. Participants are 100% vested in the contributions and in the earnings
thereon and in the employer's contributions. The 401(k) Plan also provides for
in-service hardship distributions of elective deferrals and of employer
contributions if a participant has been a participant in the 401(k) Plan for at
least five years and the employer contributions have been invested in the 401(k)
Plan for at least two years. Distributions from the 401(k) Plan may be made upon
termination of service, disability or death in a lump sum or in annual
installments.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
It is the policy of the Bank to make loans to executive officers and
directors on their principal residences. The Bank's policy provides that all
loans made by the Bank, including lines of credit, to its directors be made in
the ordinary course of business, on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons and may not involve more than the normal risk of
collectibility or present other unfavorable features. The Bank currently does
offer loans to executive officers on terms not available to the public, but
available to other full-time employees, in accordance with recently modified
federal regulations. All such loans, however, did not involve more than the
normal risk of collectibility or present other unfavorable features. Any loan
made to an executive officer or director must be approved by the Board of
Directors prior to its being committed. As of December 31, 1997, 6 of the Bank's
executive officers or directors had a total of 11 loans outstanding totaling
approximately $829,676 in the aggregate.
13
<PAGE>
PROPOSAL 2. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended December
31, 1997 were Clark, Schaefer, Hackett & Co. The Company's Board of Directors
has reappointed Clark, Schaefer, Hackett & Co. to continue as independent
auditors for the Bank and the Company for the year ending December 31, 1998,
subject to ratification of such appointment by the shareholders.
Representatives of Clark, Schaefer, Hackett & Co. will be present at
the Annual Meeting. They will be given an opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions
from stockholders present at the Annual Meeting.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED
PROXY CARD WILL BE VOTED FOR RATIFICATION OF THE APPOINTMENT OF CLARK, SCHAEFER,
HACKETT & CO. AS THE INDEPENDENT AUDITORS OF THE COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE
APPOINTMENT OF CLARK, SCHAEFER, HACKETT & CO., INC. AS THE INDEPENDENT AUDITORS
OF THE COMPANY.
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement and
form of proxy relating to the 1999 Annual Meeting of Stockholders, a stockholder
proposal must be received by the Secretary of the Company at the address set
forth on the Notice of Annual Meeting of Stockholders not later than November
21, 1998. If such annual meeting is held on a date more than 30 calendar days
from April 1, 1999, a stockholder proposal must be received by a reasonable time
before the proxy solicitation for such annual meeting is made. Any such proposal
will be subject to 17 C.F.R. ss. 240.14a-8 of the Rules and Regulations under
the Exchange Act.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
14
<PAGE>
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are then present at the Annual
Meeting and wish to vote your shares in person, your original proxy may be
revoked by voting at the Annual Meeting. However, if you are a stockholder whose
shares are not registered in your own name, you will need appropriate
documentation from your recordholder to vote personally at the Annual Meeting.
By Order of the Board of Directors
/s/ Diane P. Irwin
___________________________________
Diane P. Irwin
Corporate Secretary
St. Bernard, Ohio
March 9, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND PROMPTLY
RETURN THE ACCOMPANYING PROXY CARD IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
15
<PAGE>
[LENOX BANCORP LOGO]
REVOCABLE PROXY
LENOX BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
April 8, 1998
3:00 p.m. Eastern Time
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the official proxy committee of the Board
of Directors of Lenox Bancorp, Inc. (the "Company"), each with full power of
substitution, to act as proxies for the undersigned, and to vote all shares of
Common Stock of the Company which the undersigned is entitled to vote only at
the Annual Meeting of Stockholders, to be held on April 8, 1998, at 3:00 p.m.
Eastern Time, at the Company's administrative office, 5255 Beech Street, St.
Bernard, Ohio, and at any and all adjournments thereof, as follows:
1. The election as directors of all nominees listed (except as marked to
the contrary below).
William P, Riekert, Jr. and Henry E. Brown [ ] FOR [ ] VOTE WITHHELD
INSTRUCTION: To withhold your vote for any individual nominee, write that
nominees's name on the line provided below.
-------------------------------------------------------------------------
2. The ratification of the appointment of Clark, Schaefer, Hackett & Co.
as independent auditors of Lenox Bancorp, Inc. for the fiscal year
ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
<PAGE>
LENOX BANCORP, INC.
c/o Corporate Trust Services
Mail Drop 1090FS
[LENOX BANCORP LOGO] 38 Fountain Square Plaza
Cincinnati, OH 45263
fold and detach here
................................................................................
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS
LISTED. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, INCLUDING
WHETHER OR NOT TO ADJOURN THE MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED
IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Shareholders and of a
Proxy Statement dated March 9, 1998 and of the Annual Report to Shareholders.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
Dated: ________________________
_______________________________
SIGNATURE OF SHAREHOLDER
_______________________________
SIGNATURE OF SHAREHOLDER
PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY MAIL THIS PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
