<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:
[ ] 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 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
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.:______________________
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(4) Date Filed:________________________________________________________
<PAGE> 2
[LOGO]
METROPOLITAN FINANCIAL CORP.
6001 Landerhaven Drive
Mayfield Heights, Ohio 44124
March 27, 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 27, 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,
/s/ Robert M. Kaye
ROBERT M. KAYE
Chairman of the Board
<PAGE> 3
[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
/s/ Malvin E. Bank
MALVIN E. BANK
Secretary
March 27, 2000
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
VOTING INFORMATION FOR THE ANNUAL MEETING........................................................ 1
PROPOSAL I ELECTION OF DIRECTORS ........................................................... 2
Nominees for Terms that Expire at the 2003 Annual Meeting........................ 2
Continuing Directors............................................................. 3
BOARD'S RECOMMENDATION........................................................... 4
Board Information................................................................ 4
Compensation Committee Interlocks and Insider Participation...................... 5
Certain Transactions............................................................. 5
Compensation Committee Report on Executive Compensation.......................... 6
Performance Graph................................................................ 8
Executive Compensation and Other Information .................................... 10
Summary Compensation Table....................................................... 10
Option / SAR Grants in Last Fiscal Year Table.................................... 11
Employment Agreement............................................................. 11
Section 16(a) Beneficial Ownership Reporting Compliance.......................... 12
Metropolitan Share Ownership..................................................... 12
Certain Beneficial Owners........................................................ 13
Change in Control................................................................ 13
PROPOSAL II APPROVAL OF THE FIRST AMENDMENT TO THE 1997 METROPOLITAN
FINANCIAL CORP. STOCK OPTION PLAN................................................ 13
Summary.......................................................................... 13
Number of Shares Authorized...................................................... 14
Types of Options................................................................. 14
New Plan Benefits Table.......................................................... 15
Participants..................................................................... 15
Option Terms..................................................................... 15
Amendment and Term of the Option Plan............................................ 16
Federal Income Tax Consequences of Options....................................... 17
BOARD'S RECOMMENDATION........................................................... 18
PROPOSAL III ADOPTION OF AMENDED ARTICLE I, SECTION 2, OF THE REGULATIONS
OF METROPOLITAN FINANCIAL CORP. ................................................. 18
Annual Meeting Date ............................................................. 18
BOARD'S RECOMMENDATION .......................................................... 18
PROPOSAL IV RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS.............................. 19
BOARD'S RECOMMENDATION........................................................... 19
GENERAL 2001 Shareholder Proposals ...................................................... 19
Voting Procedures ............................................................... 19
General Information ............................................................. 19
Voting Your Proxy Card........................................................... 20
Revoking Your Proxy.............................................................. 20
EXHIBIT "A" First Amendment to the Metropolitan Financial Corp. 1997 Stock Option Plan ...... 21
EXHIBIT "B" Text of Proposed Amendment to Article I, Section 2 of Metropolitan Financial
Corp.'s Amended and Restated Code of Regulations ................................ 22
</TABLE>
i
<PAGE> 5
[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 8,072,777 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 27, 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
20 under "Voting Procedures/Revoking Your Proxy."
YOUR VOTE IS IMPORTANT
Please sign, date and return your Proxy Card in the enclosed envelope.
1
<PAGE> 6
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 elected.
NOMINEES FOR TERMS THAT EXPIRE AT THE 2003 ANNUAL MEETING:
LOIS K. Ms. Goodman has served as a Director of Metropolitan and
GOODMAN the Bank since 1994. Since 1990, she has been President of
the Work & Family Consulting Group, Inc., a consulting
Director Since 1994 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 Metropolitan and
HUMPHREY the Bank since 1994. Ms. Humphrey developed and
implemented workshops for trustee education for the
Director Since 1994 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. Prior to that,
Director Since 1999 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 since
MATTIA 1987 and as a Director of Metropolitan and the Bank since
1996. Mr. Mattia is a CPA and a founding partner of Amper,
Director Since 1996 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. Mr. Broadbent has served as a Director of Metropolitan and
BROADBENT the Bank since 1992. From 1984 to 1989, Mr. Broadbent
served as Chairman and Chief Executive Officer of The
Director Since 1992 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. Ms. Carlson has served as a Director of Metropolitan and
CARLSON the Bank since 1994. She is the retired Director of
Development for The Cleveland Foundation. Ms. Carlson is a
Director Since 1994 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 Metropolitan and the
KARMAN Bank since 1992. Mr. Karman has been affiliated with RPM,
Inc., a manufacturer of protective coatings, sealants and
Director Since 1992 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 Metropolitan and
KETCHUM the Bank since 1991. Since 1987, Mr. Ketchum has been
President of RDK Capital Inc., a general partner in a
Director Since 1991 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 of
BANK Metropolitan and as Secretary of the Bank since 1991 Mr.
Bank also serves as Assistant Treasurer of Metropolitan.
Director since 1991 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.
3
<PAGE> 8
ROBERT M. Mr. Kaye has served as Chairman and Chief Executive Officer
KAYE of Metropolitan and the Bank since 1987. He has also
served as President of Planned Residential Communities,
Director since 1987 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 Metropolitan and the
MILLER Bank since 1992. Mr. Miller also serves as Treasurer and
Assistant Secretary of Metropolitan. Since 1986, Mr.
Director Since 1992 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 ABOVE
RECOMMENDATION 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 The Audit Committee recommends appointment of
COMMITTEES 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 seven 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
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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 Directors of the Bank who are neither employees of
COMPENSATION Metropolitan nor 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 Planned Residential Communities, Inc. ("PRC") provides
RESIDENTIAL Metropolitan with consulting services on employee benefits
COMMUNITIES 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 legal
& FLORY LLP 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 insurance
TRANSACTIONS 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 The accounting firm of Amper, Politziner & Mattia provided
& MATTIA 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
<PAGE> 10
BANKING The Bank has had banking transactions, including loans,
TRANSACTIONS 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 motivate
OBJECTIVES 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 President,
REVIEW 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 Officer
AFFECTS and President (and, commencing in 2000, the Executive Vice
EXECUTIVE Presidents) are reviewed annually. In making its
COMPENSATION 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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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 in
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 earned by
NAMED the other named executive officers was determined by the
EXECUTIVE President, after consultation with the Chief Executive
OFFICERS 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. Patrick W.
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. Lloyd W. W. Bell, Jr.
for 1999.
STOCK The Committee believes that the Chief Executive Officer,
OPTION the other executive officers and certain other officers and
INCENTIVES 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
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<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 Market Index and (b) a
SHARES HAVE selected peer group published by Media General Financial
PERFORMED Services, Richmond, Virginia ("MG Peer Group"), which
AGAINST includes 339 publicly held savings and loan associations
THE MARKET AND located in the United States. The chart assumes an
ITS PEERS 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
<TABLE>
<CAPTION>
Measurement Period Metropolitan MG Peer NASDAQ Market
(Fiscal Year Covered) Financial Group Index
<S> <C> <C> <C>
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
</TABLE>
ASSUMES $100 INVESTED ON OCT. 29, 1996
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1999
9
<PAGE> 14
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
SUMMARY OF The following table sets forth certain information with
COMPENSATION 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.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
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
</TABLE>
(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 $40,569
for moving and relocation expenses.
* Mr. Lodge resigned from Metropolitan and the Bank on February 25, 2000.
10
<PAGE> 15
OPTION GRANTS
STOCK The following table provides information regarding grants
OPTIONS of options made during the year ended December 31, 1999, to
each of the executive officers named in the Summary
Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS TEN YEAR OPTION TERM
-------------------------------------------------------- ------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
NAME GRANTED IN FISCAL PRICE EXPIRATION
(#)(1) YEAR ($/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
</TABLE>
(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.
EMPLOYMENT On February 22, 2000, David G. Lodge, Metropolitan and the
AGREEMENT 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, except as noted below, there
were no late filings during 1999. Due to a late receipt of
information concerning a September 1999 trade on his behalf
under the Metropolitan Financial Corp. Stock Purchase Plan,
Mr. Kaye filed a late Form 4 for that trade.
METROPOLITAN SHARE OWNERSHIP
DIRECTORS AND The following tables list, as of March 10, 2000,
EXECUTIVE OFFICERS information about Metropolitan's common 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 PERCENT OF CLASS
- -------------------------------------- ------------------------------- ----------------
<S> <C> <C>
Robert M. Kaye 6,062,839.45(1) 75.1%
Malvin E. Bank 36,137.96(2) *
Robert R. Broadbent 41,013.90(3) *
Marjorie M. Carlson 27,200.00 *
Lois K. Goodman 18,700.00(4) *
Marguerite B. Humphrey 11,000.00 *
James A. Karman 7,700.00 *
Ralph D. Ketchum 33,000.00(5) *
Kenneth T. Koehler 1,538.15(6) *
Alfonse M. Mattia 87,188.90(7) 1.1%
David P. Miller 50,095.54(8) *
Patrick W. Bevack 8,350.00 *
Donald F. Smith 1,000.00 *
All directors and executive officers as a group 6,385,763.90 79.1%
(13 persons)
</TABLE>
- -------------------------------------------------------
(1) Total includes 6,600 common shares held by Mr. Kaye as trustee with sole
investment and voting power and 27,387.40 and 1,455.05 held indirectly
under the Metropolitan Bank and Trust Company 401(k) Plan ("401(k) Plan")
and the Metropolitan Financial Corp. Stock Purchase Plan ("Stock Purchase
Plan"), respectively.
(2) Total includes 5,000 shares held by Mr. Bank as trustee with sole
investment and voting power and 637.96 shares held indirectly under the
Stock Purchase Plan.
(3) Total includes 6,050 common shares held by the Broadbent Family
Foundation, of which Mr. Broadbent is Chairman and 1,013.90 shares held
indirectly by him under the Stock Purchase Plan.
12
<PAGE> 17
(4) Total includes 11,000 common shares held by Ms. Goodman's spouse, as to
which Ms. Goodman disclaims beneficial ownership.
(5) Total includes 7,700 common shares held by Mr. Ketchum's spouse, as to
which Mr. Ketchum disclaims beneficial ownership.
(6) Includes 538.15 shares held indirectly by Mr. Koehler under the Stock
Purchase Plan.
(7) Total includes 45,510 common shares held by Mr. Mattia as trustee; 2,540
common shares held by Mr. Mattia's spouse, as to which Mr. Mattia
disclaims beneficial ownership; and 1,013.90 shares held indirectly under
the Stock Purchase Plan.
(8) Total includes 1,089.54 shares held indirectly by Mr. Miller under the
Stock Purchase Plan.
* Represents less than 1% of Metropolitan's outstanding common shares.
CERTAIN BENEFICIAL Except as set forth below, no person was known to
OWNERS Metropolitan on March 10, 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 6,062,839.45 75.1%
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
13
<PAGE> 18
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.
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 may be
SHARES issued under the Plan, as amended by the First Amendment,
AUTHORIZED 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 OPTIONS The Plan provides for the grant of options (which 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
NEW PLAN BENEFITS TABLE
<TABLE>
<CAPTION>
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
</TABLE>
- -----------------------------------
* Mr. Lodge resigned from Metropolitan and the Bank on February 25, 2000.
OPTION Options granted under the Plan will be subject to the
TERMS 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 exercise
OPTIONS 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 FIRST
RECOMMENDATION 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 to
DATE 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 THE APPROVAL
RECOMMENDATION 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 Board
OF THE BOARD'S 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 THE
RECOMMENDATION 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 proposal
MUST BE considered for inclusion in Metropolitan's 2001 proxy
TIMELY solicitation materials must set forth such proposal in
SUBMITTED writing and file it with the Secretary of Metropolitan on
ACCORDING or before November 26, 2000. Shareholder proposals
TO METROPOLITAN'S submitted after that date are considered untimely and not
REGULATIONS 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 Meeting,
INFORMATION a quorum must exist. A quorum exists 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 Proposal 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
Proposal II, Approval of the First Amendment to the 1997
Metropolitan Financial Corp. Stock Option Plan; Proposal
III, Approval of the
19
<PAGE> 24
Amendment to Article I, Section 2 of Metropolitan's
Regulations; and Proposal 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 accordance
YOUR with the instructions you place on the proxy card. If no
PROXY instructions are given on the proxy card, your shares will
CARD 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.
REVOKING Proxies may be revoked at any time before it is voted if
YOUR you:
PROXY
- Deliver a signed, written revocation letter, dated
later than the proxy, to Malvin E. Bank, Secretary,
Metropolitan Financial Corp., 6001 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.
MD10AT60, 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
/s/ Malvin E. Bank
MALVIN E. BANK
Secretary
March 27, 2000
20
<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 be
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
21
<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 or 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
[LOGO]
<PAGE> 28
METROPOLITAN 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 ALFONSE 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 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 AND THE
METROPOLITAN BANK AND TRUST COMPANY 401(K) 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 ALFONSE 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
<PAGE> 31
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 and the Metropolitan Bank and Trust Company 401(k) Plan
(collectively, the "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.
-------------------------------------
