<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
[X] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Metropolitan Financial Corp.
----------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------
(Name Of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
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the offsetting fee was paid previously. Identify the previous
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and the date of its filing.
(1) Amount previously paid:____________________________________________
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(4) Date Filed:________________________________________________________
<PAGE> 2
[METROPOLITAN FINANCIAL CORP. LOGO]
METROPOLITAN FINANCIAL CORP.
6001 Landerhaven Drive
Mayfield Heights, Ohio 44124
March 24, 2000
Dear Shareholder:
On behalf of the Board of Directors, I cordially invite you to attend
the 2000 Annual Meeting of Shareholders of Metropolitan Financial Corp., which
will be held at our executive offices, 6001 Landerhaven Drive, Mayfield Heights,
Ohio, at 9:00 a.m., local time, on Tuesday, April 25, 2000.
All holders of record of shares of Common Stock of Metropolitan
Financial Corp. as of March 10, 2000, are entitled to notice of and to vote at
the 2000 Annual Meeting.
As described in the accompanying Notice and Proxy Statement, you will be
asked to vote on four proposals: 1) election of four directors to serve for
three-year terms expiring in 2003; 2) approval of an amendment to the 1997
Metropolitan Financial Corp. Stock Option Plan; 3) approval of an amendment to
Metropolitan Financial Corp.'s Code of Regulations; and 4) ratification of the
appointment of independent auditors for 2000.
The accompanying Notice and Proxy Statement and the Annual Report for
the year ended December 31, 1999, are being mailed to shareholders on or about
March 24, 2000.
Your vote is very important, regardless of the number of shares you own.
I urge you to complete, sign, and date each proxy card you receive and return it
as soon as possible in the postage-paid envelope provided, even if you currently
plan to attend the 2000 Annual Meeting. This will not prevent you from voting in
person, but will assure that your vote is counted if you are unable to attend
the meeting. Thank you for your consideration of these matters and please vote
today.
Sincerely,
ROBERT M. KAYE
Chairman of the Board
<PAGE> 3
[METROPOLITAN FINANCIAL CORP. LOGO]
METROPOLITAN FINANCIAL CORP.
6001 Landerhaven Drive
Mayfield Heights, Ohio 44124
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
APRIL 25, 2000
The Annual Meeting of Shareholders of Metropolitan Financial Corp. will
be held at 6001 Landerhaven Drive, Mayfield Heights, Ohio, on Tuesday, April 25,
2000, at 9:00 a.m., local time, for the following purposes:
1. To elect four directors to serve for three-year terms expiring
in 2003.
2. To approve the First Amendment to the 1997 Metropolitan
Financial Corp. Stock Option Plan increasing the number of
shares that can be issued under that plan by 200,000.
3. To approve an amendment to the Metropolitan Financial Corp.
Code of Regulations to provide that the annual meeting of
shareholders will be held on the date each year as determined
by the Board of Directors or, if not so determined, then on
the fourth Tuesday of April.
4. To ratify the appointment of Crowe, Chizek and Company LLP as
Metropolitan Financial Corp.'s independent auditors for the
fiscal year ending December 31, 2000.
5. To transact such other business as may properly come before
the 2000 Annual Meeting or any postponement or adjournment
thereof.
The Board of Directors has selected March 10, 2000, as the record date
for the Annual Meeting. Only those shareholders of record at the close of
business on that date will be entitled to notice of and to vote at the 2000
Annual Meeting or any postponement or adjournment thereof.
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
By Order of the Board of Directors
MALVIN E. BANK
Secretary
March 24, 2000
<PAGE> 4
TABLE OF CONTENTS
VOTING INFORMATION FOR THE ANNUAL MEETING................................... 1
PROPOSAL I ELECTION OF DIRECTORS....................................... __
Nominees for Terms that Expire at the 2002 Annual Meeting... __
Continuing Directors........................................ __
BOARD'S RECOMMENDATION...................................... __
Board Information........................................... __
Compensation Committee Interlocks and Insider Participation. __
Certain Transactions........................................ __
Compensation Committee Report on Executive Compensation..... __
Performance Graph........................................... _
Executive Compensation and Other Information................ __
Summary Compensation Table.................................. __
Option / SAR Grants in Last Fiscal Year Table............... __
Section 16(a) Beneficial Ownership Reporting Compliance..... __
Metropolitan Share Ownership................................ __
Certain Beneficial Owners................................... __
Change in Control........................................... __
PROPOSAL II APPROVAL OF THE FIRST AMENDMENT TO THE 1997 METROPOLITAN
FINANCIAL CORP. STOCK OPTION PLAN........................... __
Summary..................................................... __
Number of Shares Authorized................................. __
Types of Options............................................ __
Participants................................................ __
Option Terms................................................ __
Amendment and Term of the Option Plan....................... __
Federal Income Tax Consequences of Options.................. __
BOARD'S RECOMMENDATION...................................... __
PROPOSAL III ADOPTION OF AMENDED ARTICLE I, SECTION 2, OF THE REGULATIONS
OF METROPOLITAN FINANCIAL CORP.............................. __
Annual Meeting Date......................................... __
BOARD'S RECOMMENDATION...................................... __
PROPOSAL IV RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS......... __
BOARD'S RECOMMENDATION...................................... __
GENERAL 2000 Shareholder Proposals.................................. __
Voting Procedures........................................... __
General Information......................................... __
Voting Your Proxy Card...................................... __
Revoking Your Proxy......................................... __
i
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[METROPOLITAN FINANCIAL CORP. LOGO]
METROPOLITAN FINANCIAL CORP.
6001 Landerhaven Drive
Mayfield Heights, Ohio 44124
---------------------------
PROXY STATEMENT
---------------------------
VOTING INFORMATION FOR THE ANNUAL MEETING
ANNUAL MEETING April 25, 2000 Corporate Headquarters
DATE, TIME 9:00 a.m., EDT, 6001 Landerhaven Drive
AND PLACE: and at any postponement Mayfield Heights, OH 44124
or adjournment thereof
RECORD DATE: The close of business on March 10, 2000. If you were a
shareholder at that time, you may vote at the meeting.
Each share is entitled to one vote. You may not cumulate
votes. On the record date, we had _________ shares of
our common stock outstanding.
PROPOSALS: 1. To elect four directors to serve for three-year
terms expiring in 2003;
2. To approve an amendment to increase, by 200,000,
the number of shares that can be issued under the
1997 Metropolitan Financial Corp. Stock Option
Plan;
3. To approve an amendment to our Code of Regulations
to provide that the annual meeting will be held
each year on the date determined by the Board of
Directors or, if not determined, then on the
fourth Tuesday of April;
4. To ratify the selection of Crowe, Chizek and
Company LLP as our independent auditors for the
fiscal year ending December 31, 2000; and
5. To transact any other proper business.
PROXIES: The proxy card authorizes Robert M. Kaye, Kenneth T.
Koehler and Malvin E. Bank, and each of them, with
full power of substitution, as proxies to vote at
the annual meeting as you designate on the proxy
card. Unless you tell us on the proxy card to vote
differently, we will vote signed returned proxies
"For" the Board's nominees and "For" each of
proposals 2, 3 and 4. The Board or proxy holders
will use their discretion on other matters. If a
nominee cannot or will not serve as a director, the
Board or proxy holders will vote for a person whom
they believe will act in the best interests of
Metropolitan.
PROXIES SOLICITED BY: The Board of Directors
MAILING DATE: Approximately March 24, 2000
REVOKING YOUR PROXY: You may revoke your proxy before it is
voted at the 2000 Annual meeting by following the
procedures listed on page ___ under "Voting
Procedures/Revoking Your Proxy."
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
1
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PROPOSAL I
ELECTION OF DIRECTORS
BOARD STRUCTURE: The Board has 11 directors. The directors are divided
into three classes. At each annual meeting, the term of
one class expires. Directors in each class serve for
three-year terms. Each director of Metropolitan
Financial Corp. ("Metropolitan") also serves as a
director of its largest subsidiary, Metropolitan Bank
and Trust Company ("Bank").
BOARD NOMINEES: Each of the Board's nominees for terms expiring in 2003
currently serves as a director. Each nominee has agreed
to serve if reelected.
NOMINEES FOR TERMS THAT EXPIRE AT THE 2003 ANNUAL MEETING:
LOIS K. Ms. Goodman has served as a Director of Metropolitan
GOODMAN and the Bank since 1994. Since 1990, she has been
President of the Work & Family Consulting Group,
Director Since 1994 Inc., a consulting service for employers on managing
working families. Ms. Goodman is also a member of
the Board of Trustees for the Cleveland Opera, the
Jewish Community Federation, Starting Point,
Eldred Theater and The Montefiore Home (including
serving as its immediate Past President). Age 66.
MARGUERITE B. Ms. Humphrey has served as a Director of
HUMPHREY Metropolitan and the Bank since 1994. Ms. Humphrey
developed and implemented workshops for trustee
Director Since 1994 education for the Cultural Arts Trustee Forum at the
Cleveland Mandel Center from 1992 to 1995. She is a
trustee for the American Symphony Orchestra League,
the Cleveland Institute of Music, the Musical Arts
Association, Rainbow Babies and Children's Hospital
and the Cleveland Zoological Society. Age 58.
KENNETH T. Mr. Koehler joined Metropolitan in January 1999 as
KOEHLER Executive Vice President. He has served as President
and Chief Operating Officer since October 1999.
Director Since 1999 Prior to that, Mr. Koehler served as President and
Chief Executive Officer of United Heritage Bank,
Edison, NJ, a de-novo $40 million community bank,
from February 1998 to January 1999 where he was
responsible for all areas of operations.
From 1994 to February 1998, Mr. Koehler served as
President of Golden City Commercial Bank, New York,
NY, an $80 million community bank, where he was
responsible for all areas of operations. Mr.
Koehler's previous experience also includes serving
as President and Chief Executive Officer of Dollar
Dry Dock Bank, a $5 billion financial institution
headquartered in White Plains, NY, and as Executive
Vice President, RI Hospital Trust National Bank, a
$4.0 billion subsidiary of Bank of Boston,
Providence, RI. He has also served as a director of
Cumberland Farms/Gulf Oil Company and as a trustee
of Providence Performing Arts Association and
Catholic Charities Annual Appeal, Diocese of RI. Age
54.
ALFONSE M. Mr. Mattia has served as a consultant to the Bank
MATTIA since 1987 and as a Director of Metropolitan and the
Bank since 1996. Mr. Mattia is a CPA and a founding
Director Since 1996 partner of Amper, Politziner & Mattia, a New
Jersey-based accounting and consulting firm. Mr.
Mattia serves as Co-Chairman of the Rutgers
University Family Business Forum and is a member of
"The Group of 100," a national group formed by the
AICPA to protect the public interest and position
the accounting profession for the future. Age 58.
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CONTINUING DIRECTORS
DIRECTORS WHOSE TERMS EXPIRE AT THE 2001 ANNUAL MEETING
ROBERT R. BROADBENT Mr. Broadbent has served as a Director of
Metropolitan and the Bank since 1992. From 1984 to
Director Since 1992 1989, Mr. Broadbent served as Chairman and Chief
Executive Officer of The Higbee Company, a
Cleveland-based clothing and housewares retailer.
Mr. Broadbent served as the Chairman of the Rock and
Roll Hall of Fame Museum, Inc. until May 1994 and is
now on the advisory board. Mr. Broadbent also serves
as a director of PICO Holdings, Inc., as well as a
trustee of the Murphy Foundation. Age 78.
MARJORIE M. CARLSON Ms. Carlson has served as a Director of
Metropolitan and the Bank since 1994. She is the
Director Since 1994 retired Director of Development for The Cleveland
Foundation. Ms. Carlson is a member of the Board of
Trustees of the College of Wooster, the Musical Arts
Association, Playhouse Square Foundation, The Gund
Foundation and Exuma Foundation. Age 59.
JAMES A. Mr. Karman has served as a Director of
KARMAN Metropolitan and the Bank since 1992. Mr. Karman
has been affiliated with RPM, Inc., a
Director Since 1992 manufacturer of protective coatings, sealants and
specialty chemicals, since 1963. In 1978 he became
President and in 1999 was elected Vice Chairman of
RPM, Inc.,. Mr. Karman serves as a member of the
Board of Directors of RPM, Inc., A. Schulman, Inc.
and Shiloh Industries, Inc. In addition, Mr. Karman
serves as a member of the Board of Trustees of the
Boys & Girls Club of Cleveland, Boys Hope and The
Western Reserve Historical Society, and is a member
of the Corporate Council and Finance Committee of
the Cleveland Museum of Art. Age 62.
RALPH D. Mr. Ketchum has served as a Director of
KETCHUM Metropolitan and the Bank since 1991. Since 1987,
Mr. Ketchum has been President of RDK Capital
Director Since 1991 Inc., a general partner in a partnership formed for
the purposes of acquiring and managing companies
serving the aircraft industry. Before joining RDK
Capital Inc., he was a Senior Vice President and
Group Executive for the General Electric Company,
Lighting Group. Mr. Ketchum is also a member of the
Board of Directors of Lithium Technologies, Inc. Age
74.
DIRECTORS WHOSE TERMS EXPIRE AT THE 2002 ANNUAL MEETING
MALVIN E. Mr. Bank has served as a Director and as Secretary
BANK of Metropolitan and as Secretary of the Bank since
1991 Mr. Bank also serves as Assistant Treasurer
Director since 1991 of Metropolitan. Mr. Bank is General Counsel of The
Cleveland Foundation. Previously, Mr. Bank was a
senior partner with the Cleveland law firm of
Thompson Hine & Flory LLP for more than five years.
Mr. Bank also serves as a director of Oglebay Norton
Company and as a trustee of Case Western Reserve
University, The Holden Arboretum, Chagrin River Land
Conservancy, Cleveland Center for Research in Child
Development, Hanna Perkins School, and numerous
other civic and charitable organizations and
foundations. Age 69.
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<PAGE> 8
ROBERT M. Mr. Kaye has served as Chairman and Chief Executive
KAYE Officer of Metropolitan and the Bank since 1987.
He has also served as President of Planned
Director since 1987 Residential Communities, Inc. since 1960. Planned
Residential Communities, Inc. is actively engaged in
every aspect of multifamily housing from new
construction and rehabilitation to acquisition and
management. Mr. Kaye serves as a member of the Board
of Directors of Community Bank of New Jersey. He has
also been a member of the Corporate Council of the
Cleveland Museum of Art since its inception in 1993
and has been a member of the Board of Trustees of
the College of New Jersey since 1980 and of The
Peddie School since 1988. Age 63.
DAVID P. Mr. Miller has served as a Director of
MILLER Metropolitan and the Bank since 1992. Mr. Miller
also serves as Treasurer and Assistant Secretary of
Director Since 1992 Metropolitan. Since 1986, Mr. Miller has been the
Chairman and Chief Executive Officer of Columbia
National Group, Inc., a Cleveland-based scrap and
waste materials wholesaler and steel manufacturer.
He is currently commissioner of the Ohio Lottery.
Age 67.
BOARD'S THE BOARD UNANIMOUSLY RECOMMENDS ELECTION OF THE
RECOMMENDATION ABOVE NOMINEES FOR DIRECTORS WHOSE TERMS EXPIRE AT
THE 2003 ANNUAL MEETING.
BOARD INFORMATION
BOARD In 1999, the Metropolitan Board held four regular
MEETINGS: quarterly meetings. Each director attended at least
75% of his or her Metropolitan Board and committee
meetings.
Each Metropolitan director also serves as a director
of the Bank. The Bank's Board held 12 regular
monthly and two special meetings in 1999. The Bank's
Board has also established several committees,
including an Audit Committee and a Compensation and
Organization Committee. Each director attended at
least 75% of his or her Bank Board and committee
meetings.
BOARD COMMITTEES: The Audit Committee recommends appointment of
Metropolitan's independent auditors. It also
receives and approves reports and plans, accounting
policies and financial statements. The committee
oversees Metropolitan's internal audit function and
reviews our internal control and audit systems with
management and the independent auditors. The Audit
Committee held four meetings in 1999. Members:
Messrs. Miller (Chair), Bank, Broadbent, Karman,
Mattia and Ms. Humphrey.
The Compensation and Organization Committee reviews
and recommends compensation with respect to
Metropolitan's Chairman of the Board and its
President and, commencing in 2000, also the Bank's
Executive Vice Presidents. The committee held _____
meetings during 1999. Members: Messrs. Ketchum
(Chair), Bank, Karman and Kaye.
The Board does not have a standing Nominating
Committee. The entire Board performs that function.
The required procedures to be nominated as a
director are found in Metropolitan's Amended and
Restated Code of Regulations (the "Regulations").
Only those persons nominated according to the
Regulations are eligible to be elected. All
nominations must be in writing and given to our
Corporate Secretary between 60 and 90 days before
the annual shareholders meeting. However, if we give
less than 75 days prior notice (either to our
shareholders or by public disclosure) of the annual
shareholders
4
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meeting, then you have 15 days from the date we gave
the prior notice to make your nomination. The prior
notice is given when mailed.
All nominations must include the following
information about the proposed nominee: the
nominee's (a) name, age, business, and residence
address; (b) principal occupation or employment for
the last five years; (c) beneficial ownership, by
class and number, of Metropolitan common shares and
other Metropolitan securities; (d) other positions
held as a director, officer, partner, employee or
controlling shareholder of any corporation or other
business entity; (e) prior position as a director,
officer or employee of a depository institution or
any company controlling a depository institution, if
any; (f) certain information which would be required
to be disclosed in a proxy statement; and (g)
written consent to serve if nominated or elected.
The nomination must also contain information about
the shareholder making the nomination, including:
(a) the shareholder's name and record address; (b) a
statement that the shareholder is a record holder
entitled to vote at the annual meeting; (c) a
description of any arrangement or understandings
between the shareholder and the nominee and any
other person(s) must be described (including naming
such person(s)); and (d) the shareholder's
beneficial ownership, by class and number of shares,
of Metropolitan common shares.
BOARD COMPENSATION Directors of the Bank who are neither employees of
Metropolitan or of the Bank receive a monthly
retainer of $1,000, plus a $500 attendance fee for
each Bank Board meeting attended. Effective January
2000, the Chairman of the Bank's Executive Committee
received, in addition to the fees noted above, a
monthly retainer of $4,167. This amount was
increased to $9,167 per month in March 2000.
Otherwise, directors receive no fees or other
retainers for serving on Metropolitan's Board, or on
any of the Board committees of Metropolitan or the
Bank.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
PLANNED RESIDENTIAL Planned Residential Communities, Inc. ("PRC")
COMMUNITIES provides Metropolitan with consulting services on
employee benefits and multifamily property matters
for an annual retainer of $96,000. Mr. Kaye,
Chairman of the Board, is the sole shareholder of
PRC.
THOMPSON HINE The law firm of Thompson Hine & Flory LLP provided
& FLORY LLP legal services to Metropolitan in 1999 at costs
negotiated in arms-length transactions. Malvin E.
Bank was a partner in that firm during 1999.
OTHER Mr. Kaye exercised an option to purchase an
TRANSACTIONS insurance policy owned by Metropolitan on his life
("Policy") in which Metropolitan was the cash
beneficiary. The option to purchase was part of the
transaction in which the insurance policy was
originally acquired by Metropolitan. Mr. Kaye paid
Metropolitan $442,782, which was $25,082 more than
the cash surrender value of the Policy. After the
sale, Mr. Kaye received shares of stock of the
insurer as part of the process of converting its
organizational structure from a mutual to a stock
company.
CERTAIN TRANSACTIONS
AMPER, POLITZINER & MATTIA The accounting firm of Amper, Politziner & Mattia
provided tax services to Metropolitan in 1999 and
during the current year at costs negotiated in
arms-length transactions. Alfonse M. Mattia is a
partner in that firm.
5
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BANKING The Bank has had banking transactions, including
TRANSACTIONS loans, with Metropolitan's and the Bank's directors,
officers, shareholders and associates, and expects
these transactions to continue into the future. The
transactions are in the ordinary course of the
business of the Bank and are on substantially the
same terms, including interest rates and collateral
on loans, prevailing at the time for comparable
transactions with other persons. The transactions do
not involve more than the normal risk of
collectability or present other terms unfavorable to
the Bank.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
THE The Compensation and Organization Committee (the
COMMITTEE "Committee") of the Bank's Board of Directors
reviews all issues pertaining to the compensation
of the Bank's Chief Executive Officer and President
and, commencing in 2000, the Bank's Executive Vice
Presidents. The Committee submits its
recommendations concerning compensation to the full
Board of Directors of the Bank for approval.
OVERALL The overriding objectives of the Committee are to
OBJECTIVES: motivate employees to accomplish goals desired by
Metropolitan and the Bank. Those goals include:
- Rewarding performance that increases the
value of your stock.
- Attracting, retaining and motivating
executives and key employees with competitive
compensation opportunities.
- Balancing short-term and long-term
strategic goals.
- Addressing the concerns of shareholders,
employees, the financial community and the
general public.
COMPETITIVE As an overall evaluation tool used in setting the
MARKET compensation for the Chief Executive Officer and
REVIEW President, the Committee reviews a bank compensation
survey prepared annually by the accounting firm of
Crowe, Chizek and Company LLP. By studying this
report, the Committee is able to review compensation
levels and structures for banks with characteristics
similar to the Bank. The Committee gives particular
weight to banks with similar geographic location and
similar asset size. The companies listed in the
selected peer group used in developing the following
performance graph include companies included in the
bank compensation survey prepared by Crowe, Chizek
and Company LLP.
BANK'S PERFORMANCE The base salary and bonus of the Chief Executive
AFFECTS Officer and President (and, commencing in 2000, the
EXECUTIVE Executive Vice Presidents) are reviewed annually. In
COMPENSATION making its determinations concerning salary and
bonuses, the Committee evaluates the executive's
level of responsibility and performance. In the past,
the Committee has also taken the performance of the
Bank into account by measuring the Bank's financial
performance for the previous year in light of the
internal projections and forecasts prepared by
management for the period.
MR. KAYE Before 1996, Mr. Kaye received only base salary. His
salary has traditionally been set by the Committee at
a level competitive with salaries of chief executive
officers of banks of similar geographic location and
asset size. Mr. Kaye's base salary for 1999 was
$461,330. This increase in salary from 1998 was based
in part on Mr. Kaye's leadership in growing the Bank
to over $1.6 billion in assets, his business planning
and entrepreneurial skills, his vision, judgment and
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<PAGE> 11
leadership as well as his attention to detail. The
Committee also recognized the performance of Mr. Kaye
in continuing to attract several new key officers and
retain outstanding present officers, and his overall
management of those officers.
MR. KOEHLER Mr. Koehler joined the Bank as its Executive Vice
President in January 1999, and was promoted to
President and Chief Operating Officer of Metropolitan
and the Bank in October of that year. Upon Mr.
Koehler's promotion to President and Chief Operating
Officer, the Bank's Board, upon the recommendation of
the Committee, raised his annual salary to $260,000
in recognition of the additional responsibilities he
had assumed and his superior performance as Executive
Vice President for the Bank. The Committee also
determined that Mr. Koehler was entitled to a bonus
of $60,000 for his efforts during 1999. Although Mr.
Koehler's bonus is also based in part on a
recommendation by Mr. Kaye, the determination of the
bonus amount is completely within the discretion of
the Committee.
MR. LODGE Before becoming Vice Chairman of the Bank's Board of
Directors in October 1999, Mr. Lodge was President of
Metropolitan and the Bank. As President, Mr. Lodge's
salary was based in part upon the recommendation of
Mr. Kaye and was set by the Committee at a level
competitive with salaries of chief operating officers
of banks similar geographic location and asset size.
Determination of Mr. Lodge's bonus, if any, although
based in part on the recommendation of Mr. Kaye, was
entirely within the discretion of the Committee.
During 1999, Mr. Lodge received a base salary of
$320,000 and did not receive a bonus. Mr. Lodge's
compensation as Vice Chairman of the Bank's Board of
Directors was fixed at $320,000 per year with no
eligibility for a bonus pursuant to an October 1999
employment agreement (the "October Agreement"). The
October Agreement provided that Mr. Lodge would serve
as Vice Chairman of the Bank's Board of Directors
through June 30, 2001 and for the continuation of
medical insurance coverage to Mr. Lodge, subject to
certain provisos, through age 65. The October
Agreement was later modified as discussed later in
the proxy statement under the caption "Employment
Agreement."
OTHER During 1999, the salary portion of compensation
NAMED earned by the other named executive officers was
EXECUTIVE determined by the President, after consultation with
OFFICERS the Chief Executive Officer. Commencing in 2000, the
Committee will determine the salary portion of the
compensation of the executive vice presidents, after
consultation with the Chief Executive Officer and the
President. The other named executive officers'
salaries are set at a level competitive with the
salaries of officers fulfilling the same
responsibilities for banks of similar geographic
location and asset size. In addition to salary, Mr.
Bevack earned his bonus in 1999 pursuant to the
Mortgage Banking Incentive Plan. Business generation
and profits earned for the Bank primarily determine
bonuses earned under Mr. Bevack's program. By the end
of 1999, the Mortgage Banking Incentive Program was
held in abeyance and has not been replaced with a
successor program. The Committee, after consulting
with the Chief Executive Officer, did not award a
bonus to Mr. Bell for 1999.
STOCK The Committee believes that the Chief Executive
OPTION Officer, the other executive officers and certain
INCENTIVES other officers and key employees of Metropolitan and
the Bank will be motivated, and their financial
interests will be more closely aligned with those of
Metropolitan's shareholders, with an award of stock
options. A
7
<PAGE> 12
committee, consisting entirely of directors of the
Committee and one other director who qualifies as
both an outside director as defined by Section 162m
of the Internal Revenue Code and a non-employee
director as defined by Rule 16b-3 of the Securities
Exchange Act of 1934, determines Metropolitan's
stock option policies and makes a recommendation to
the entire Board. The Board then determines the
actual grants of options. Towards that end, on
August 24, 1999, Metropolitan's Board of Directors
approved the First Amendment to the 1997
Metropolitan Financial Corp. Stock Option Plan
("First Amendment") to increase, by 200,000, the
number of shares that can be granted under the 1997
Metropolitan Financial Corp. Stock Option Plan
("Plan"), and further directed that the First
Amendment be put before Metropolitan's shareholders
for approval at the 2000 Annual Meeting of
Shareholders. Actual grants were made in January
1999 pursuant to the terms of the Plan, and
additional grants were made in November 1999
(contingent upon approval of the First Amendment by
Shareholders). All grants are based on the grantee's
historical and/or anticipated contributions to the
long-term financial and operational results of
Metropolitan. The aggregate number of shares
underlying the options, option price, and vesting
terms may vary based on the Committee's judgment as
to the best form of long-term motivation under the
particular circumstances.
THE COMPENSATION AND
ORGANIZATION
COMMITTEE
Ralph D. Ketchum, Chair
Malvin E. Bank
James A. Karman
Robert M. Kaye
PERFORMANCE GRAPH
HOW The chart on the following page compares
METROPOLITAN'S Metropolitan's common shares with (a) the Nasdaq
SHARES HAVE Market Index and (b) a selected peer group published
PERFORMED AGAINST by Media General Financial Services, Richmond,
THE MARKET AND Virginia ("MG Peer Group"), which includes
ITS PEERS 339 publicly held savings and loan associations
located in the United States. The chart assumes an
investment of $100 on October 29, 1996, the day on
which Metropolitan's common shares became publicly
held, in the common shares of Metropolitan, the
Nasdaq Market Index and the stocks in the selected
peer group. The overall performance assumes dividend
reinvestment throughout the period.
8
<PAGE> 13
COMPARE CUMULATIVE TOTAL RETURN
AMONG METROPOLITAN FINANCIAL CORP.,
NASDAQ MARKET INDEX AND MG GROUP INDEX
Measurement Period Metropolitan MG Peer NASDAQ Market
(Fiscal Year Covered) Financial Group Index
- --------------------- --------- ----- -----
10/29/96 100.00 100.00 100.00
12/31/96 103.23 106.20 105.97
12/31/97 290.91 178.56 129.63
12/31/98 216.79 156.53 182.83
12/31/99 92.91 125.83 322.47
9
<PAGE> 14
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
SUMMARY OF The following table sets forth certain information
COMPENSATION with respect to compensation provided by
Metropolitan and its subsidiaries during the years
ended December 31, 1999, 1998 and 1997, to its chief
executive officer and Metropolitan's other executive
officers whose annual salary and bonus exceed
$100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
FISCAL YEAR
NAME AND ENDED ALL OTHER
PRINCIPAL POSITION DECEMBER 31 SALARY BONUS COMPENSATION (5)
------------------ ----------- ------ ------ ----------------
<S> <C> <C> <C> <C>
Robert M. Kaye 1999 $461,330 - $6,368
Chairman of the 1998 394,465 75,000 (3) 6,043
Board and Chief 1997 351,000 75,000 (3) 5,648
Executive Officer
David G. Lodge* 1999 320,531 - 5,924
Vice Chairman 1998 269,696 75,000 (3) 5,713
of the Bank's 1997 242,654 75,000 (3) 5,370
Board of Directors
Kenneth T. Koehler 1999 (1) 219,917 60,000 (3) 41,318
President, Chief 1998 - - -
Operating Officer and 1997 - - -
Assistant Secretary
Patrick W. Bevack 1999 142,766 314,060 5,412
Executive Vice 1998 142,525 277,185 5,378
President of the Bank 1997 146,042 39,553 (4) 5,128
Lloyd W. W. Bell, Jr. 1999 150,497 - 4,165
Senior Vice President 1998 125,654 139,871 4,129
and Chief Lending 1997 (2) 23,077 - 317
Officer of the Bank
<FN>
- -------------------------------------------------------------------------------------------------------------------
(1) Mr. Koehler did not join the Bank until January 18, 1999.
(2) Mr. Bell did not join the Bank until October 20, 1997.
(3) Paid in January of the following year.
(4) Mr. Bevack's 1997 bonus was not paid until after the Registrant's 1998 Proxy Statement was filed.
(5) Includes the following amounts paid for 1999 for term life insurance and the Bank's contributions to the
Metropolitan Bank and Trust Company 401(k) Plan: Kaye ($1,368 and $5,000); Lodge ($924 and $5,000);
Koehler ($749 and $0); Bevack ($412 and $5,000); and Bell ($432 and $3,733). Mr. Koehler was not
eligible to participate in the 401(k) plan for 1999. The total for Mr. Koehler also includes a one-time
reimbursement of $40,569 for moving and relocation expenses.
* Mr. Lodge resigned from Metropolitan and the Bank on February 22, 2000.
</TABLE>
10
<PAGE> 15
OPTION GRANTS
STOCK OPTIONS The following table provides information regarding
grants of options made during the year ended December 31,
1999, to each of the executive officers named in the
Summary Compensation Table.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR
TEN YEAR
INDIVIDUAL GRANTS OPTION TERM
------------------------------------------------------------------ ------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#)(1) FISCAL YEAR ($/SHARE) DATE 5% 10%
- -------------------------- ----------------- -------------- ------------- ----------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Kaye 80,000 41.24% $11.00 01/19/2009 $553,600 $1,402,400
8,000 (2) 4.12 12.10 01/19/2009 46,543 131,440
David G. Lodge 20,000 10.31 11.00 01/19/2009 138,400 350,600
6,000 (2) 3.09 11.00 01/19/2009 41,520 105,180
Kenneth T. Koehler 5,000 (2) 2.58 11.00 01/19/2009 34,600 87,650
5,000 (2) 2.58 5.38 11/23/2009 16,900 42,850
25,000 (2) 12.89 6.18 11/23/2009 64,250 194,000
Patrick W. Bevack 5,000 (2) 2.58 11.00 01/19/2009 34,600 87,650
Lloyd W.W. Bell, Jr. 5,000 (2) 2.58 11.00 01/19/2009 34,600 87,650
- ------------------------------------------------------------------------------------------------------------------------------
INCREASE IN VALUE TO ALL COMMON SHAREHOLDERS (3) $55,801,108 $141,357,432
<FN>
- -----------------
(1) These options vest 50% on the third anniversary, 25% on the fourth anniversary and 25% on the fifth
anniversary from the date of grant.
(2) Represents grants of incentive stock options.
(3) Calculated for the total number of shares outstanding on December 31, 1999
(8,063,744), at a per share price for the $11.00 base price options of
$17.92 for 5% annual 10-year price appreciation, and at a per share price
of $28.53 for 10% annual 10-year price appreciation.
</TABLE>
EMPLOYMENT On February 22, 2000, David G. Lodge, Metropolitan
AGREEMENT and the Bank entered into an understanding pursuant
to which Mr. Lodge (a) resigned from his director
positions with Metropolitan and the Bank and his
position as Vice Chairman of the Bank, a position he
had assumed on October 2, 1999; (b) received a lump
sum payment of $285,000; (c) received his current
company car; and (d) will receive medical coverage
through February 28, 2001.
11
<PAGE> 16
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United
States, Metropolitan's directors and certain
officers are required to report their
ownership and changes in ownership of Common
Shares to the Securities and Exchange
Commission (the "SEC") and NASDAQ. The SEC has
established certain due dates for these
reports. Based on a review of the copies of
such forms furnished to Metropolitan in
accordance with SEC regulations, and certain
representations received by it, Metropolitan
believes that there were no late filings
during 1999.
METROPOLITAN SHARE OWNERSHIP
DIRECTORS AND EXECUTIVE The following tables list, as of ___________, 2000,
information about Metropolitan's common OFFICERS
shares beneficially owned by current directors of
and nominees for director of Metropolitan, executive
officers included in the Summary Compensation Table,
and all directors, nominees for director and
executive officers of Metropolitan and the Bank as a
group. Except as otherwise noted, each beneficial
owner listed has sole investment and voting power
with respect to the common shares indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
NAME OF INDIVIDUAL OR PERSONS IN GROUP OWNERSHIP (1) PERCENT OF CLASS
-------------------------------------- ------------- ----------------
<S> <C> <C>
Robert M. Kaye _______ _____%
Kenneth T. Koehler __________ *
Malvin E. Bank __________ *
David P. Miller ________ *
Ralph D. Ketchum ________ *
James A. Karman ________ *
Robert R. Broadbent __________ *
Marjorie M. Carlson _________ *
Lois K. Goodman __________ *
Marguerite B. Humphrey _________ *
Alfonse M. Mattia _________ *
Patrick W. Bevack ________ *
Lloyd W.W. Bell, Jr. ________ *
All directors and executive officers as a group (___
persons) ___________ _____%
-------------------------------------------------------
* Represents less than 1% of Metropolitan's outstanding common shares.
</TABLE>
12
<PAGE> 17
CERTAIN BENEFICIAL Except as set forth below, no person is known to
OWNERS Metropolitan at February 25, 2000 to own
beneficially within the meaning of the regulations
of the Securities and Exchange Commission, more than
5% of Metropolitan's outstanding common shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------- ------------------------ ----------------
<S> <C> <C>
Robert M. Kaye _____________ _______%
6001 Landerhaven Drive
Mayfield Heights, Ohio 44124
- ---------------------------
</TABLE>
CHANGE IN CONTROL Metropolitan has a revolving credit agreement with a
commercial bank (the "Commercial Bank Agreement").
The Commercial Bank Agreement is a revolving line of
credit that matures on May 30, 2000, but can be
renewed annually upon agreement of both parties. The
maximum permitted borrowing amount is $12.0 million.
As collateral for the Commercial Bank Agreement, Mr.
Kaye pledged a portion of his common shares in an
amount at least equal in value to 200% of any
outstanding balance. At March 1, 2000, the
outstanding balance under the Commercial Bank
Agreement was $6.0 million.
PROPOSAL II
APPROVAL OF THE FIRST AMENDMENT TO THE 1997
METROPOLITAN FINANCIAL CORP. STOCK OPTION PLAN
SUMMARY On August 24, 1999, the Metropolitan Board of
Directors adopted, subject to shareholder approval,
the First Amendment to the Metropolitan Financial
Corp. 1997 Stock Option Plan (the "First
Amendment"). The 1997 Metropolitan Financial Corp.
Stock Option Plan (the "Plan") was originally
adopted by Metropolitan's Board of Directors on
October 28, 1997, and approved by shareholders on
April 28, 1998. THE ONLY CHANGE TO THE PLAN EFFECTED
BY THE FIRST AMENDMENT IS TO INCREASE, BY 200,000,
THE NUMBER OF SHARES OF COMMON STOCK THAT MAY BE
ISSUED UNDER THE PLAN. Prior to the First Amendment,
up to 715,000 shares of Common Stock could be issued
under the Plan. With shareholder approval of the
First Amendment, the maximum number of shares of
Common Stock that can be issued under the Plan will
be 915,000. The following is a summary of the
material provisions of the Plan, as amended by the
First Amendment.
The Plan is intended to encourage ownership of
Metropolitan's Common Stock by officers and other
key employees of Metropolitan, to encourage their
continued employment with Metropolitan and to
provide them with additional incentives to promote
the development and financial success of
Metropolitan. As of March 2, 2000, four executive
officers and 10 other key employees were
participants in the Plan.
13
<PAGE> 18
The complete text of the First Amendment is attached
as Exhibit A to this Proxy Statement. The following
summary of the Plan, as amended by the First
Amendment, does not purport to be complete and is
qualified in its entirety by reference to the Plan,
as amended.
NUMBER OF The maximum number of shares of Common Stock that
SHARES may be issued under the Plan, as amended by the
AUTHORIZED First Amendment, is 915,000, subject to adjustments
upon the occurrence of certain changes with respect
to the Common Stock. On December 10, 1997,
Metropolitan completed a two-for-one stock split in
the form of a stock dividend to shareholders of, and
the Committee for purposes of the Plan, which
consisted of members of the Board who qualify as
outside directors as defined by Section 162m of the
Internal Revenue Code and non-employee directors as
defined by Rule 16b-3 of the Securities Exchange Act
of 1934 (the "Committee") accordingly adjusted the
maximum number of Shares of Common Stock that may be
issued under the Plan from 325,000 to 650,000. On
December 15, 1998, Metropolitan issued a 10% stock
dividend to shareholders, and the Committee
accordingly adjusted the maximum number of Shares of
Common Stock that may be issued under the Plan from
650,000 to 715,000.
TYPES OF The Plan provides for the grant of options (which
OPTIONS may be "incentive stock options" within the meaning
of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), or nonqualified options)
(collectively, "Options"). The number of shares of
Common Stock remaining available for grants of
additional Options under the Plan at any particular
time will be reduced, upon the granting of any
Option, by the full number of shares subject to that
Option. If any Option for any reason expires or is
terminated, in whole or in part, without the receipt
by an employee of shares (or the equivalent thereof
in cash or other property), the shares subject to
that part of the Option that has so expired or
terminated will again be available for the future
grant of Options under the Plan.
PARTICIPANTS Grants of Options will be made by the Compensation
and Organization Committee of the Board of
Directors. Options may be granted to key employees
of Metropolitan and its subsidiaries selected by the
Compensation and Organization Committee, including
executive officers named in the Summary Compensation
Table. Pursuant to the First Amendment, on November
23, 1999 and January 18, 2000, the Committee
authorized the incentive stock option grants shown
in the new plan benefits table set forth below
("First Amendment Option Grants"). All of the First
Amendment Option Grants are subject to shareholder
approval of the adoption of the First Amendment.
14
<PAGE> 19
<TABLE>
<CAPTION>
NEW PLAN BENEFITS TABLE
-----------------------
NUMBER OF SHARES
----------------
NAME AND POSITION NON-QUALIFIED STOCK OPTIONS INCENTIVE STOCK OPTIONS
----------------- --------------------------- -----------------------
<S> <C> <C>
Robert M. Kaye, Chairman of the
Board and Chief Executive Officer -0- -0-
David G. Lodge, Vice Chairman,
Assistant Treasurer and Assistant
Secretary * -0- -0-
Kenneth T. Koehler, President,
Chief Operating Officer and
Assistant Secretary -0- 30,000
Patrick W. Bevack, Executive Vice
President and Assistant Secretary
of the Bank -0- -0-
Lloyd W.W. Bell, Jr., Senior Vice
President/Chief Lending Officer of
the Bank -0- -0-
Executive Group -0- 10,000
Non-Executive Director Group Not Applicable Not Applicable
Non-Executive Officer Employee
Group -0- 25,000
<FN>
-----------------------------------
* Mr. Lodge resigned from Metropolitan and the Bank on February 22, 2000.
</TABLE>
OPTION TERMS Options granted under the Plan will be subject to
the following terms and conditions:
Exercise Price of Options. The exercise price under
an Option, whether an incentive stock option or a
nonqualified option, will be not less than the fair
market value of the shares of Common Stock, as
reported on the National Association of Securities
Dealers Automated Quotation System (NASDAQ) National
Market (or as determined by the Compensation and
Organization Committee, if the shares of Common
Stock are not or cease to be traded on a national
securities exchange or on the NASDAQ National
Market), on the date of grant. The closing sales
price of Metropolitan Shares of Common Stock as
reported on the NASDAQ National Market on March 1,
2000 was $4.188 per share.
15
<PAGE> 20
The exercise price may be paid in such form as the
Compensation and Organization Committee determines
may be accepted, including, without limitation, cash,
securities, other property, including surrender of a
part of an Option in connection with the exercise of
that Option, any combination thereof, or delivery of
irrevocable instructions to a broker promptly to
deliver to Metropolitan the amount of sale or loan
proceeds from the shares subject to the Option to pay
the exercise price. The Compensation and Organization
Committee, in its sole discretion, may grant the
right to transfer shares acquired upon the exercise
of a part of an Option in payment of the exercise
price payable upon immediate exercise of a further
part of the Option.
Exercise and Term of Options. An Option may be
exercised in one or more installments at the time or
times provided in the option instrument. Generally,
Options granted to employees will become exercisable
with respect to one-half of the shares covered by the
Option on the third anniversary, and with respect to
an additional one-fourth of the shares covered by the
Option on the fourth and fifth anniversaries, of the
date on which the Option was granted. Options granted
under the Plan will expire at the time set forth in
the grant, which can be no later than ten years after
grant in the case of an incentive stock option and
ten years and one month after grant in the case of a
nonqualified option. In general, an Option may be
exercised only while the optionee is an employee of
Metropolitan or a subsidiary of Metropolitan. An
Option may be exercised during the three months
following termination of an optionee's service for
any reason other than disability, death, or
termination for cause. If an optionee's service is
terminated due to disability, an Option may be
exercised during the one-year period following such
termination of service. Upon the death of the holder
of an Option during service or during the period
following termination of service when such Option may
be exercised, the optionee's executor or
administrator or a permitted transferee of the Option
may exercise the Option within a period of one year
after the optionee's death.
Transferability of Options. Unless otherwise
determined by the Compensation and Organization
Committee, no Option may be transferred other than by
will or by the laws of descent and distribution or,
solely in the case of a nonqualified option, pursuant
to a qualified domestic relations order (a "QDRO") as
defined in Section 414(p)(1)(B) of the Code. During
an optionee's lifetime, only the optionee (or, in the
case of incapacity of an optionee, the optionee's
attorney in fact or legal guardian, or, in the case
of a nonqualified option transferred pursuant to a
QDRO, the optionee's assignee) may exercise any
Option.
Effect of Change of Control. Unless otherwise
specified in the option instrument, Options
outstanding on the date of a change of control will
be accelerated so that all outstanding Options will
become immediately exercisable in full.
AMENDMENT AND TERM The Board of Directors or a duly authorized committee
OF THE OPTION PLAN thereof may amend the Plan, but no amendment may be
made without shareholder approval if shareholder
approval (a) is required by any applicable securities
law or tax law, or (b) is required by the rules of
the registered national securities association
through whose inter-dealer quotation system the
Shares of Common Stock are quoted. Notwithstanding
the foregoing, without shareholder approval, no
amendment may increase the aggregate number of shares
that may be issued under incentive stock options
under the Plan.
16
<PAGE> 21
The Plan became effective on the date on which it was
adopted by the Board of Directors and will remain in
effect thereafter through October 28, 2007, unless
earlier terminated by action of the Board of
Directors.
FEDERAL INCOME TAX The following is a brief general discussion of the
CONSEQUENCES OF anticipated income tax treatment of the grant and
OPTIONS exercise of Options to optionees and to Metropolitan
under current provisions of the Code.
Incentive Stock Options. The grant of an incentive
stock option to an employee will have no immediate
tax consequences to Metropolitan or the optionee. If
the optionee has remained an employee of Metropolitan
or a subsidiary from the date of grant until at least
the day three months before the date of exercise (one
year before the date of exercise in the case of an
employee who is disabled), the optionee will
recognize no taxable income and Metropolitan will not
be entitled to any tax deduction at the time of
exercise of an incentive stock option. However, the
amount by which the fair market value of the acquired
shares at the time of exercise exceeds the exercise
price will be an adjustment to an optionee's
alternative minimum taxable income for purposes of
the alternative minimum tax. If an optionee exercises
an incentive stock option more than three months
after terminating employment (one year in the case of
an employee who is disabled), the exercise of the
Option will be treated in the same manner as the
exercise of a nonqualified option.
If an optionee holds the shares received upon
exercise of an incentive stock option for at least
two years after the date of grant and for at least
one year from the date of exercise, gain or loss on a
subsequent sale of the shares will be a capital gain
or loss, measured from the date of exercise. If an
optionee disposes of shares acquired upon exercise of
an incentive stock option before these holding
periods are satisfied, the optionee generally will
recognize compensation income equal to the lesser of
(a) the excess of the fair market value of the stock
on the exercise date over the exercise price, or (b)
the excess of the amount realized on disposition over
the exercise price. The amount received in excess of
the fair market value on the exercise date will be
taxable as a capital gain, and any loss will be
treated as a capital loss, measured from the date of
exercise. Upon any such premature disposition by an
employee, Metropolitan will be entitled to a
deduction in the amount of compensation income
realized by the employee. For purposes of calculating
the alternative minimum tax for the year of the
disposition of a share acquired upon exercise of an
incentive stock option, any adjustment to alternative
minimum taxable income reported upon exercise of the
incentive stock option will be included in the basis
of the share.
Nonqualified Options. The grant of a nonqualified
option will have no immediate tax consequences to
Metropolitan or the optionee. An optionee will
recognize compensation income at the time of exercise
of a nonqualified option in an amount equal to the
difference between the exercise price and the fair
market value on the exercise date of the acquired
shares. Metropolitan will be entitled to a deduction
in the same taxable year and in the same amount as an
optionee recognizes compensation income as a result
of the exercise of a nonqualified option, and the
compensation income will be subject to applicable
withholding requirements.
17
<PAGE> 22
The favorable vote of the holders of a majority of
the Metropolitan shares of Common Stock present in
person or by proxy at the meeting is required to
approve the First Amendment.
BOARD'S THE BOARD UNANIMOUSLY RECOMMENDS APPROVAL OF THE
RECOMMENDATION FIRST AMENDMENT TO THE METROPOLITAN FINANCIAL CORP.
1997 STOCK OPTION PLAN.
PROPOSAL III
ADOPTION OF AN AMENDMENT TO THE
REGULATIONS OF METROPOLITAN FINANCIAL CORP.
ANNUAL MEETING This proposal would amend Metropolitan's Regulations
DATE to provide that the Annual Meeting of Shareholders
will be held on the date each year determined by the
Board of Directors, Chairman or President or, if not
so determined, then on the fourth Tuesday of April.
A copy of the proposed amendment to Article I,
Section 2 is attached as Exhibit B to this Proxy
Statement. Article I, Section 2 of the Regulations
presently states:
"The annual meeting of the
shareholders of the Corporation for
the election of directors, the
consideration of reports to be laid
before such meeting, and the
transaction of such other business as
may properly come before the meeting
shall be held on the second Tuesday of
May in each year, if not a legal
holiday under the laws of the place
where the meeting is to be held, and,
if a legal holiday, then on the next
succeeding day not a legal holiday
under the laws of such place, or on
such other date and at such hour as
may from time to time be determined by
the Board of Directors, the Chairman
of the Board, or the President and
specified in the notice of such
meeting."
Both the proposed amendment to, and the present
version of, Article I, Section 2, and the proposed
amendment, provide for the annual meeting of
shareholders to be held on the date determined by
the Board of Directors, Chairman or President. The
difference in the proposed amendment as compared to
the present version of Article I, Section 2, is the
default date in the event that the Board of
Directors, Chairman or President do not determine a
date for Metropolitan's annual meeting of
shareholders. Under those circumstances, the
proposed amendment provides that the annual meeting
would be held on the fourth Tuesday of April, as
compared to the second Tuesday of May under the
present version of Article I, Section 2 of the
Regulations. The proposed amendment would conform
the Regulations to the present practice of
Metropolitan's Board of Directors, which has been to
set the annual meeting of shareholders for the
fourth Tuesday of each April.
BOARD'S THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
RECOMMENDATION THE APPROVAL OF THE AMENDMENT TO ARTICLE I,
SECTION 2 OF METROPOLITAN'S REGULATIONS.
18
<PAGE> 23
PROPOSAL IV
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
RATIFICATION Upon the recommendation of its Audit Committee, the
OF THE BOARD'S Board has selected Crowe, Chizek and Company LLP as
SELECTION Metropolitan's independent auditors for the fiscal
year ending December 31, 2000, to audit the books
and accounts of Metropolitan for that year,
subject to ratification of the selection by the
shareholders at the 2000 Annual Meeting. Crowe,
Chizek and Company LLP has been the independent
auditors of Metropolitan since 1991.
Representatives of Crowe, Chizek and Company LLP
are expected to be present at the 2000 Annual
Meeting and to be available to respond to
appropriate questions. Their representatives will
also be provided an opportunity to make a
statement, if they desire to do so.
Although shareholder approval of this appointment
is not required by law or binding on the Board, the
Board believes that shareholders should be given
the opportunity to express their views. If the
shareholders do not ratify the appointment of
Crowe, Chizek and Company LLP as Metropolitan's
independent auditors, the Board will consider this
vote in determining whether to continue the
engagement of Crowe, Chizek and Company LLP.
BOARD'S THE BOARD UNANIMOUSLY RECOMMENDS RATIFICATION OF
RECOMMENDATION THE SELECTION OF CROWE, CHIZEK AND COMPANY LLP
AS INDEPENDENT AUDITORS FOR METROPOLITAN FINANCIAL
CORP. FOR THE FISCAL YEAR ENDING DECEMBER 31, 2000.
GENERAL
2001 SHAREHOLDER PROPOSALS
PROPOSALS Any shareholder of Metropolitan wishing to have a
MUST BE proposal considered for inclusion in Metropolitan's
TIMELY 2001 proxy solicitation materials must set forth
SUBMITTED ACCORDING such proposal in writing and file it with the
TO METROPOLITAN'S Secretary of Metropolitan on or before November 26,
REGULATIONS 2000. Shareholder proposals submitted after that
date are considered untimely and not eligible to
be submitted to shareholders for their approval or
adoption according to Metropolitan's Regulations.
VOTING PROCEDURES / REVOKING YOUR PROXY
GENERAL In order for action to be taken at the 2000 Annual
INFORMATION Meeting, a quorum must exist. A quorum will exist
if at least a majority of the total shares
outstanding and entitled to vote is either present
or represented by proxy at the Annual Meeting.
Regarding Issue I, Election of Directors to the
Class of 2003, directors will be elected if they
receive a plurality (i.e., the greatest number) of
the votes cast by shares present and voting in
person or by proxy. Passage of Issue II, Approval
of the First Amendment to the 1997
19
<PAGE> 24
Metropolitan Financial Corp. Stock Option Plan;
Issue III, Approval of the Amendment to Article I,
Section 2 of Metropolitan's Regulations; and Issue
IV, Ratification of Metropolitan's Independent
Auditors for 1999, will occur with at least a
majority vote. Unless a broker's authority to vote
on a particular matter is limited, abstentions and
broker non-votes are counted in determining the
votes present at a meeting. Consequently, an
abstention or a broker non-vote has the same
effect as a vote against a proposal, as each
abstention or broker non-vote would be one less
vote in favor of a proposal.
VOTING Your shares of Common Stock will be voted in
YOUR accordance with the instructions you place on the
PROXY proxy card. If no instructions are given on
CARD the proxy card, your shares will be voted for the
election as directors of the nominees named in
this Proxy Statement and in favor of approving the
First Amendment to the 1997 Metropolitan Financial
Corp. Stock Option Plan, approving the Amendment
to Article I, Section 2 of Metropolitan's
Regulations, and ratifying the appointment of
Crowe, Chizek and Company LLP as independent
auditors for the fiscal year ending December 31,
2000. The Board of Directors knows of no other
matters which will be presented at the 2000 Annual
Meeting. However, if other matters properly come
before the 2000 Annual Meeting or any adjournment,
the person or persons named in the proxy cards
will vote on those matters in accordance with
their best judgment.
Proxies may be revoked at any time before it is
voted if you:
- Deliver a signed, written revocation letter,
REVOKING dated later than the proxy, to Malvin E. Bank,
YOUR Secretary, Metropolitan Financial Corp., 6001
PROXY Landerhaven Drive, Mayfield Heights, OH 44124;
or
- By delivering a signed proxy, dated later
than the first one, to Fifth-Third Bancorp,
Mail Drop No. 1090D2, 38 Fountain Square
Plaza, Cincinnati, OH 45263; or
- By attending the Annual Meeting and giving
notice of your revocation in open meeting.
Shareholders may only nominate a person for
election as a director of Metropolitan at a
meeting of shareholders if the nominating
shareholder has strictly complied with the
applicable notice and procedural requirements set
forth in the Regulations, including, without
limitation, timely providing to the Secretary of
Metropolitan the requisite notice of the proposed
nominee(s) containing all the information
specified by the Regulations. Metropolitan will
provide to any shareholder, without charge, a copy
of the applicable procedures governing nomination
of directors set forth in the Regulations upon
request made to the Secretary of Metropolitan.
Metropolitan will bear the expense of preparing,
printing and mailing this Proxy Statement. In
addition to solicitation by mail, personnel of
Metropolitan and its subsidiaries may solicit the
return of proxies in person, by telephone or
through other forms of communication. Metropolitan
personnel who participate in this solicitation
will not receive any additional compensation for
such solicitation. Metropolitan will request
brokers, banks and other custodians, nominees and
fiduciaries to send proxy material to beneficial
owners and will, upon request, reimburse them for
their expense in so doing.
By Order of the Board of Directors
MALVIN E. BANK
Secretary
March 24, 2000
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<PAGE> 25
Exhibit "A"
FIRST AMENDMENT TO THE
METROPOLITAN FINANCIAL CORP.
1997 STOCK OPTION PLAN
THIS FIRST AMENDMENT TO THE METROPOLITAN FINANCIAL CORP. 1997 STOCK
OPTION PLAN ("First Amendment") is entered into as of November 1, 1999.
WHEREAS, the Metropolitan Financial Corp. 1997 Stock Option Plan (the
"Original Plan") was approved by the Board of Directors of Metropolitan
Financial Corp. (the "Corporation") on October 28, 1997 and the shareholders of
the Corporation ("Shareholders") on April 28, 1998; and,
WHEREAS, under the Original Plan, a maximum of 325,000 options to
acquire shares of the Corporation's stock, could be granted, which number was
subject to adjustment as set forth in Section 10 of the Original Plan; and,
WHEREAS, on November 24, 1997, the Corporation issued a 2:1 stock
split, effected through a 100% stock dividend and, on December 15, 1998, further
issued a 10% stock dividend which, in the aggregate, resulted in an adjustment
to the maximum number of options pursuant to Section 10 that could be granted
under the Original Plan, both per participant and in the aggregate, from 325,000
to 715,000; and,
WHEREAS, the Board of Directors of the Corporation determined on August
24, 1999, that the Original Plan should be amended by increasing the maximum
number of options to be granted under the Original Plan by 200,000, provided,
however, that such amendment be submitted to the Corporation's Shareholders at
the Corporation's 2000 Annual Meeting of Shareholders for their approval;
NOW, THEREFORE, the Original Plan is amended as follows:
1. MAXIMUM NUMBER OF OPTIONS. Subject to Section 2 of the First Amendment
below, the maximum number of options that can be granted, both per participant
and in the aggregate, shall be increased by 200,000 options in each instance
from 715,000 options (after adjustment of the original 325,000 options set
forth in the Original Plan for the November 24, 1997 stock split and the
December 15, 1998 10% stock dividend) to 915,000 options. To effectuate this
amendment, sections 4.1 and 4.2 of the Original Plan are hereby amended by
deleting the number "325,000" in each place that it appears, and replacing it
with the phrase "915,000 (calculated as of August 24, 1999)."
2. SUBMISSION FOR APPROVAL OF SHAREHOLDERS. This First Amendment shall
submitted for consideration and approval by the Shareholders of the Corporation
at the Corporation's 2000 Annual Meeting of Shareholders. This First Amendment
shall be deemed void ab initio should it not be so approved by the Shareholders
of the Corporation.
IN WITNESS WHEREOF, this First Amendment was executed as of the 1st
day of November, 1999.
METROPOLITAN FINANCIAL CORP.
By: /S/ Kenneth T. Koehler
----------------------------
Its: President
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<PAGE> 26
Exhibit "B"
TEXT OF THE PROPOSED AMENDMENT TO
ARTICLE I, SECTION 2, OF METROPOLITAN FINANCIAL CORP.'S
AMENDED AND RESTATED CODE OF REGULATIONS
"SECTION 2. ANNUAL MEETING. The annual meeting of the
shareholders of the Corporation for the election of directors,
the consideration of reports to be laid before such meeting,
and the transaction of such other business as may properly
come before the meeting shall be held on the date from time to
time determined by the Board of Directors of the Corporation
that is not a legal holiday under the laws of the place where
the meeting is to be held, and, if a legal holiday, then on
the next succeeding day not a legal holiday under the laws of
such place, or such other date, and at such hour as may from
time to time be determined by the Chairman of the Board, or
the President and specified in the notice of such meeting. If
no determination is made as to the date of the annual meeting
of shareholders by the Board of Directors, the Chairman of the
Board of the President, then the annual meeting of the
Corporation's shareholders shall be held on the fourth Tuesday
of April, unless such date is a legal holiday under the laws
of the place where the meeting is to be held, in which case,
the meeting shall be held on the next succeeding day that is
not a legal holiday."
22
<PAGE> 27
[METROPOLITAN FINANCIAL CORP. LOGO]
23
<PAGE> 28
METROPOLTIAN FINANCIAL CORP.
6001 LANDERHAVEN DRIVE
MAYFIELD HEIGHTS, OHIO 44124
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert M. Kaye, Kenneth T. Koehler and
Malvin E. Bank and each of them, with FULL power of substitution, as proxies to
vote, as designated below, FOR and in the name of the undersigned all shares of
common stock of Metropolitan Financial Corp. which the undersigned is entitled
to vote at the Annual Meeting of the Shareholders of said CORPORATION scheduled
to be held Tuesday, April 25, 2000 at 9:00 a.m. at the offices of said
CORPORATION, 6001 Landerhaven Drive, Mayfield Heights, Ohio, or at any
postponement or adjournment thereof.
The Board of Directors recommends a FOR vote on the election of
Directors, the proposal to approve an amendment to the 1997 Metropolitan
Financial Corp. Stock Option Plan, the proposal to approve an amendment to the
Code of Regulations of the Corporation, and the proposal to ratify the
appointment of Crowe, Chizek and Company LLP. Please mark an X in one box under
each item.
1. ELECTION of four directors to Class of 2003:
[ ] FOR all nominees listed below. [ ] WITHHOLD AUTHORITY to vote for
all nominees listed below.
CLASS OF 2003 DIRECTORS: LOIS K. GOODMAN, MARGUERITE B. HUMPHREY,
KENNETH T. KOEHLER AND ALPHONSE M. MATTIA
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THE
NOMINEE'S NAME IN THE SPACE BELOW:
- ------------------------------------------------------------------------------
2. Proposal to approve the First Amendment to the 1997 Metropolitan
Financial Corp. Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve the amendment to the Code of Regulations of the
Corporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 29
4. Proposal to approve the appointment of Crowe, Chizek and Company LLP
as independent auditors of the Corporation for the fiscal year ending
December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the PROXIES authorized to vote upon such other business as
may properly come before the meeting.
This PROXY when executed will be voted in the he manner directed hereon by the
undersigned SHAREHOLDER(S).
If no direction is made, this PROXY will be voted FOR Proposals 1, 2, 3
and 4.
ALL FORMER PROXIES ARE HEREBY REVOKED.
Dated: ______________________, 2000
----------------------------------
(Signature of Shareholder)
----------------------------------
(Signature of Shareholder)
(Please sign exactly as your names
appear opposite. All joint owners
should sign. When signing in a
fiduciary capacity or as a corporate
officer, please give your full title
as such.)
<PAGE> 30
METROPOLITAN FINANCIAL CORP.
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 25, 2000
THIS VOTING INSTRUCTION IS SOLICITED BY METROPOLITAN BANK AND TRUST COMPANY
AS TRUSTEE OF METROPOLITAN FINANCIAL CORP. STOCK PURCHASE PLAN
(THE "TRUSTEE").
At the Annual Meeting of Shareholders of the Corporation to be held April 25,
2000, and at any adjournment, Robert M. Kaye, Kenneth T. Koehler, and Malvin E.
Bank, and each of them, with full power of substitution in each, shall vote on
the following in accordance with my directions to the Trustee, as shown below.
The Board of Directors recommends a FOR vote on the election of Directors, the
proposal to approve an amendment to the 1997 Metropolitan Financial Corp. Stock
Option Plan, the proposal to approve an amendment to the Code of Regulations of
the Corporation, and the proposal to ratify the appointment of Crowe, Chizek and
Company LLP. Please mark an X in one box under each item.
1. ELECTION of four directors to Class of 2003:
FOR all nominees listed below. WITHHOLD AUTHORITY to vote for
all nominees listed below.
CLASS OF 2003 DIRECTORS: LOIS K. GOODMAN, MARGUERITE B. HUMPHREY,
KENNETH T. KOEHLER AND ALPHONSE M. MATTIA
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THE NOMINEE'S NAME IN THE SPACE BELOW:
- -----------------------------------------------------------------------
2. Proposal to approve the First Amendment to the 1997 Metropolitan Financial
Corp. Stock Option Plan.
FOR AGAINST ABSTAIN
3. Proposal to approve the amendment to the Code of Regulations of the
Corporation.
FOR AGAINST ABSTAIN
4. Proposal to approve the appointment of Crowe, Chizek and Company LLP as
independent auditors of the Corporation for the fiscal year ending
December 31, 2000.
FOR AGAINST ABSTAIN
In its discretion, the Trustee is authorized to vote upon such other business as
may properly come before the meeting.
If no direction is made, the Trustee will vote the shares specified below FOR
Proposals 1, 2, 3 and 4.
To Metropolitan Bank and Trust Company, Trustee of Metropolitan Financial
Corp. Stock Purchase Plan: As a participant in the Plan, I hereby direct
the Trustee to vote in person or by proxy as shown below:
Instruction: Check one or both boxes:
[ ] I direct the Trustee to vote the shares allocated to my account as of the
record date in accordance with this voting instruction card.
[ ] I direct the Trustee to vote the proportionate number of "non-directed"
shares (shares allocated to other participants in the Plan for which the
Trustee does not receive voting instructions) for which I may give voting
instructions under the terms of the Plan in accordance with this voting
instruction card.
If you do not complete and return this card, your shares will be voted, as
provided in the Plan, proportionately in accordance with directions received
from other participants in the Plan. If you wish to vote the non-directed shares
differently from the shares allocated to your account, you may do so by
requesting a separate voting instruction card from the Trustee at 6001
Landerhaven Dr., Mayfield Heights, OH 44124.
Please sign this voting instruction card exactly as your name appears on the
mailing label.
Please check this box if you plan to attend the Annual Meeting of
Shareholders. [ ]
Signed the ___ day of ________, 2000.
-------------------------------------
