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
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
PROVIDENT FINANCIAL HOLDINGS, INC.
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(Name of Registrant as Specified in Its Charter)
PROVIDENT FINANCIAL HOLDINGS, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transactions applies:
N/A
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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[ ] 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:
N/A
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(2) Form, schedule or registration statement no.:
N/A
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(3) Filing party:
N/A
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(4) Date filed:
N/A
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September 25, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Provident Financial Holdings, Inc. to be held at the Riverside Art Museum at
3425 Mission Inn Avenue, Riverside, California, on Tuesday, October 27, 1998,
at 11:00 a.m., local time.
The Notice of Annual Meeting of Shareholders and Proxy Statement
appearing on the following pages describe the formal business to be transacted
at the meeting. During the meeting, we will also report on the operations of
the Company. Directors and officers of the Company, as well as a
representative of PricewaterhouseCoopers LLP, the Company's independent
auditors, will be present to respond to appropriate questions of shareholders.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person and regardless of the number of shares
you own. To make sure your shares are represented, we urge you to complete
and mail the enclosed proxy card. If you attend the meeting, you may vote in
person even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Craig G. Blunden
Craig G. Blunden
President and Chief Executive Officer
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PROVIDENT FINANCIAL HOLDINGS, INC.
3576 Central Avenue
Riverside, California 92506
(909) 686-6060
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On October 27, 1998
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Provident Financial Holdings, Inc. ("Company") will be held at the Riverside
Art Museum at 3425 Mission Inn Avenue, Riverside, California, on Tuesday,
October 27, 1998, at 11:00 a.m., local time, for the following purposes:
(1) To elect two directors to serve for a term of three years; and
(2) To consider and act upon such other matters as may properly come
before the meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Any action may be taken on the foregoing proposals at the meeting on the
date specified above or on any date or dates to which, by original or later
adjournment, the meeting may be adjourned. Shareholders of record at the
close of business on September 8, 1998 are entitled to notice of and to vote
at the meeting and any adjournments or postponements thereof.
Please complete and sign the enclosed form of proxy, which is solicited
by the Board of Directors, and mail it promptly in the enclosed envelope. The
proxy will not be used if you attend the meeting and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert G. Schrader
ROBERT G. SCHRADER
Secretary
Riverside, California
September 25, 1998
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IMPORTANT: The prompt return of proxies will save the Company the expense of
further requests for proxies in order to ensure a quorum. A self-addressed
envelope is enclosed for your convenience. No postage is required if mailed
in the United States.
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<PAGE>
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PROXY STATEMENT
OF
PROVIDENT FINANCIAL HOLDINGS, INC.
3576 Central Avenue
Riverside, California 92506
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ANNUAL MEETING OF SHAREHOLDERS
October 27, 1998
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Provident Financial Holdings, Inc.
("Company") to be used at the Annual Meeting of Shareholders of the Company.
The Company is the holding company for Provident Savings Bank, F.S.B. (the
"Savings Bank"). The Annual Meeting will be held at the Riverside Art Museum
at 3425 Mission Inn Avenue, Riverside, California on Tuesday, October 27,
1998, at 11:00 a.m., local time. This Proxy Statement and the enclosed proxy
card are being first mailed to shareholders on or about September 25, 1998.
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VOTING AND PROXY PROCEDURE
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Shareholders Entitled to Vote. Shareholders of record as of the close of
business on September 8, 1998 are entitled to one vote for each share of
common stock ("Common Stock") of the Company then held. As of September 8,
1998, the Company had 4,625,414 shares of Common Stock issued and outstanding.
Quorum. The presence, in person or by proxy, of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum at the Annual Meeting. Abstentions will be
counted as shares present and entitled to vote at the Annual Meeting for
purposes of determining the existence of a quorum. Broker non-votes will be
considered shares present and will be included in determining whether a quorum
is present.
Voting. The Board of Directors solicits proxies so that each shareholder
has the opportunity to vote on the proposals to be considered at the Annual
Meeting. When a proxy card is returned properly signed and dated, the shares
represented thereby will be voted in accordance with the instructions on the
proxy card. Where no instructions are indicated, proxies will be voted in
accordance with the recommendation of the Board of Directors. If a
shareholder of record attends the Annual Meeting, he or she may vote by
ballot. The Board recommends a vote FOR the election of the nominees for
director.
The two directors to be elected at the Annual Meeting will be elected by
a plurality of the votes cast by shareholders present in person or by proxy
and entitled to vote. Shareholders are not permitted to cumulate their votes
for the election of directors. Votes may be cast for or withheld from each
nominee. Votes that are withheld and broker non-votes will have no effect on
the outcome of the election because the nominees receiving the greatest number
of votes will be elected.
Revocation of a Proxy. Shareholders who execute proxies retain the right
to revoke them at any time before they are voted. Proxies may be revoked by
written notice delivered in person or mailed to the Secretary of the Company
or by filing a later proxy prior to a vote being taken on a particular
proposal at the Annual Meeting. Attendance at the Annual Meeting will not
automatically revoke a proxy, but a shareholder of record in attendance may
request a ballot and vote in person, thereby revoking a prior granted proxy.
Participants in the Provident Savings Bank ESOP. If a shareholder is a
participant in the Provident Savings Bank, F.S.B. Employee Stock Ownership
Plan (the "ESOP"), the proxy card represents a voting instruction to the
trustees of the ESOP as to the number of shares in the participant's plan
account. Each participant in the ESOP may
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direct the trustees as to the manner in which shares of Common Stock allocated
to the participant's plan account are to be voted. Unallocated shares of
Common Stock held by the ESOP and allocated shares for which no voting
instructions are received will be voted by the trustees in the same proportion
as shares for which the trustees have received voting instructions.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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Persons and groups who beneficially own in excess of 5% of the Company's
Common Stock are required to file certain reports disclosing such ownership
pursuant to the Securities Exchange Act of 1934, as amended ("Exchange Act").
Based on such reports, the following table sets forth, as of September 8,
1998, certain information as to those persons who were beneficial owners of
more than 5% of the outstanding shares of Common Stock. Management knows of
no persons other than those set forth below who beneficially owned more than
5% of the outstanding shares of Common Stock at September 8, 1998.
The following table also sets forth, as of September 8, 1998, information
as to the shares of Common Stock beneficially owned by (a) each current
director of the Company and each of management's nominees for director, (b)
each of the executive officers named in the Summary Compensation Table found
below ("named executive officers") and (c) all executive officers and
directors of the Company as a group.
Number of Shares Percent of Shares
Name Beneficially Owned (1) Outstanding
- ---- ---------------------- ------------------
Beneficial Owners of More Than 5%
Provident Savings Bank, F.S.B. 410,017 8.9%
Employee Stock Ownership Plan Trust
Thomson Horstmann & Bryant, Inc. 446,700(2) 9.7
Park 80 West
Plaza Two
Saddle Brook, New Jersey 07663
Wellington Management Company, LLP 418,200(3) 9.0
75 State Street
Boston, Massachusetts 02109
Brandes Investment Partners, L.P. 306,005(4) 6.6
12750 High Bluff Drive
San Diego, California 92130
First Financial Fund, Inc. 294,000(5) 6.4
Gateway Center Three
100 Mulberry Street, 9th Floor
Newark, New Jersey 07102
Janus Capital Corporation 260,450(6) 5.6
Thomas H. Bailey
100 Fillmore Street
Denver, Colorado 80206
2
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<PAGE>
Number of Shares Percent of Shares
Name Beneficially Owned (1) Outstanding
- ---- ---------------------- ------------------
Directors
Bruce W. Bennett 8,431(7) *
Debbi H. Guthrie 9,101(8) *
Roy H. Taylor 29,101 *
William E. Thomas 1,450(9) *
Named Executive Officers
Craig G. Blunden** 257,496(10)(11) 5.6%
Robert G. Schrader** 239,564(11) 5.2
Donald L. Blanchard 8,818 *
Richard L. Gale 6,433 *
Brian M. Riley 0 *
All Executive Officers and 357,010(11) 7.7
Directors as a Group
(10 persons)
- -------------------
* Less than 1 percent of shares outstanding.
** Mr. Blunden and Mr. Schrader are also directors of the Company.
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed
to be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he or she has voting or investment power with respect to
such security. The table includes shares owned by spouses, other
immediate family members in trust, shares held in retirement accounts or
funds for the benefit of the named individuals, and other forms of
ownership, over which shares the persons named in the table may possess
voting and/or investment power. Shares held in accounts under the Savings
Bank's ESOP which the holders have voting power but not investment power,
are included as follows: Mr. Blunden, 1,533 shares; Mr. Schrader, 1,113
shares; Mr. Blanchard, 801 shares; Mr. Gale, 932 shares; Mr. Riley, 0
shares; all executive officers and directors as a group, 4,945 shares.
The amounts shown also include the following number of shares which the
indicated individuals have the right to acquire within 60 days of
September 8, 1998 through the exercise of stock options granted pursuant
to the Company's 1996 Stock Option Plan: Mr. Bennett, 4,100 shares; Ms.
Guthrie, 4,100 shares; Mr. Taylor, 4,100 shares; Mr. Thomas, 0 shares; Mr.
Blunden, 20,500 shares; Mr. Schrader, 12,300 shares; Mr. Blanchard, 6,000
shares; Mr. Gale, 4,000 shares; Mr. Riley, 0 shares; all executive
officers and directors as a group, 56,100 shares.
(2) Information concerning the shares owned by Thomson Horstmann and Bryant,
Inc. as of December 31, 1997 was obtained from an amended Schedule 13G.
According to this filing, Thomson Horstmann and Bryant, Inc., an
investment advisor registered under the Investment Advisers Act of 1940,
has sole voting power with respect to 289,600 shares and sole dispositive
power with respect to 446,700 shares.
(3) Information concerning the shares owned by Wellington Management Company,
LLP as of December 31, 1997 was obtained from a Schedule 13G. According to
this filing, Wellington Management Company, LLP, an investment advisor
registered under the Investment Advisers Act of 1940, has shared voting
power with respect to 103,000 shares and shared dispositive power with
respect to 418,200 shares. Included in these shares are the shares owned
by First Financial Fund, Inc., which is a client of Wellington Management
Company, LLP.
(4) Information concerning the shares owned by Brandes Investment Partners,
L.P. as of December 31, 1997 was obtained from an amended Schedule 13G.
According to this filing, Brandes Investment Partners, L.P., an
3
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<PAGE>
investment advisor registered under the Investment Advisers Act of 1940,
has sole voting and dispositive power with respect to these shares.
(5) Information concerning the shares owned by First Financial Fund, Inc. as
of December 31, 1997 was obtained from an amended Schedule 13G, According
to this filing, First Financial Fund, Inc., an investment company
registered under the Investment Company Act, has sole voting power and
shared dispositive power with respect to 294,000 shares.
(6) Information concerning the shares owned by Janus Capital Corporation and
Thomas H. Bailey as of December 31, 1997 was obtained from a Schedule 13G.
According to this filing, Janus Capital Corporation, an investment advisor
registered under the Investment Advisers Act of 1940, has shared voting
and dispositive power with respect to these shares. Mr. Bailey owns 12.2%
of Janus Capital Corporation and serves as its President and Chairman of
the Board and, accordingly, may be deemed to exercise control over Janus
Capital Corporation.
(7) Includes 880 shares owned by Mr. Bennett's spouse.
(8) Includes 5,000 shares owned by a company controlled by Ms. Guthrie.
(9) Includes 950 shares owned by Mr. Thomas's daughter.
(10) Includes 2,560 shares owned by Mr. Blunden's spouse.
(11) Includes 205,000 shares of unvested restricted stock awarded to employees
and directors of the Company and the Savings Bank pursuant to the
Company's 1996 Management Recognition Plan which are held in a trust for
participants and which will be voted by Mr. Blunden and Mr. Schrader as
trustees of such trust.
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Company's Board of Directors consists of six members. The Board of
Directors is divided into three classes with three-year staggered terms, with
one third of the directors elected each year. Two directors will be elected
at the Annual Meeting to serve for a three year period, or until their
respective successors have been elected and qualified. The nominees for
election this year are Bruce W. Bennett and Debbi H. Guthrie.
It is intended that the proxies solicited by the Board of Directors will
be voted for the election of the above named nominees. If any nominee is
unable to serve, the shares represented by all valid proxies will be voted for
the election of such substitute as the Board of Directors may recommend or the
Board of Directors may adopt a resolution to amend the Bylaws and reduce the
size of the Board. At this time the Board of Directors knows of no reason why
any nominee might be unavailable to serve.
The Board of Directors recommends a vote "FOR" the election of Mr. Bennett and
Ms. Guthrie.
4
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<PAGE>
The following table sets forth certain information regarding the nominees
for election at the Annual Meeting, as well as information regarding those
directors continuing in office after the Annual Meeting.
Year First
Elected Term to
Name Age (1) Director (2) Expire
- ---- ------- ------------ --------
BOARD NOMINEES
Bruce W. Bennett 49 1993 2001(3)
Debbi H. Guthrie 47 1994 2001(3)
DIRECTORS CONTINUING IN OFFICE
Craig G. Blunden 50 1975 1999
Roy H. Taylor 48 1990 1999
Robert G. Schrader 59 1995 2000
William E. Thomas 49 1997 2000
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(1) As of June 30, 1998.
(2) Includes prior service on the Board of Directors of the Savings Bank.
(3) Assuming the individual is re-elected.
The present principal occupation and other business experience during the
last five years of each nominee for election and each director continuing in
office is set forth below:
Bruce W. Bennett is the President and owner of Community Care and
Rehabilitation Center, a skilled nursing facility, with which he has been
associated since 1973. He also serves as a director of Riverside Community
Hospital. Mr. Bennett currently serves as Chairman of the Audit Committee.
Debbi H. Guthrie is the President and owner of Roy O. Huffman Roof
Company, with which she has been affiliated since 1971. Ms. Guthrie currently
serves on the Company's Audit Committee. Ms. Guthrie also serves as State
Director for the ATHENA FOUNDATION and is the immediate Past Chairman of the
Board of the Greater Riverside Chamber of Commerce.
Craig G. Blunden has been associated with the Savings Bank since 1974 and
has served as President and Chief Executive Officer of the Savings Bank since
1991 and as President and Chief Executive Officer of the Company since its
formation in 1996. Mr. Blunden also serves on the Foundation Board of
Trustees for the University of California, Riverside, the Western League of
Savings Institutions Board of Directors and America's Community Bankers
Mortgage Finance Committee.
Roy H. Taylor is the President of Talbot, Goldware & Taylor Insurance
services, an insurance brokerage firm, with which he has been associated since
1972. Mr. Taylor currently serves as chairman of the Personnel/Compensation
Committee.
Robert G. Schrader has been associated with the Savings Bank since 1963
and has served as Executive Vice President of the Savings Bank since January
1995. From 1990 through 1994, Mr. Schrader served as Senior Vice President of
the Savings Bank. Mr. Schrader has served as Corporate Secretary of the
Company since its formation in 1996.
5
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William E. Thomas is a partner of the law firm of Burke, Williams &
Sorensen, LLP, Riverside, California. He currently serves on the Company's
Personnel/Compensation Committee.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Boards of Directors of the Company and the Savings Bank conduct their
business through meetings of the Boards and through their committees. During
the fiscal year ended June 30, 1998, the Board of Directors of the Company
held 12 meetings and the Board of Directors of the Savings Bank held 12
meetings. No director of the Company or the Savings Bank attended fewer than
75% of the total meetings of the Boards and committees on which such person
served during this period.
The Board of Directors of the Company has an Audit Committee, currently
consisting of Directors Bennett (Chairman), and Guthrie, which is responsible
for reviewing the adequacy of the Savings Bank's system of internal accounting
controls, approving the services provided by the Company's outside auditor and
meeting with the Company's outside auditor to discuss the results of the
annual audit and any related matters. The Audit Committee met four times
during the fiscal year ended June 30, 1998
The Personnel/Compensation Committee, currently consisting of Directors
Taylor (Chairman) and Thomas, is responsible for reviewing the Savings Bank's
employee benefit programs and wage and salary administration program, making
recommendations to the full Board of Directors on annual salary increases and
bonuses and addressing other personnel issues as they arise. The
Personnel/Compensation Committee met four times during the fiscal year ended
June 30, 1998.
The Board of Directors of the Company acts as a nominating committee for
selecting the nominees for election as directors. The Board of Directors met
once in its capacity as nominating committee to select nominees for election
at the Annual Meeting.
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DIRECTORS' COMPENSATION
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Non-employee Directors of the Savings Bank currently receive a monthly
retainer of $1,750. Non-employee Directors also receive a fee of $300 for
each committee meeting attended. The committee chairman receives a fee of
$400. In addition, Directors are covered under the Savings Bank's policies
for medical, dental and vision care. Dependent coverage is available at the
Directors' own expense. Following retirement from the Board of Directors,
Directors continue to receive such coverage. No separate fees are paid for
service on the Board of Directors of the Company.
During the fiscal year ended June 30, 1997, each non-employee director
received options to acquire 20,500 shares of the Company's Common Stock under
the Company's 1996 Stock Option Plan. During the fiscal year ended June 30,
1998, Mr. Thomas, who was elected to the Board at the 1997 Annual Meeting,
received options to acquire 20,500 shares of the Company's Common Stock. The
stock options vest ratably over a five-year period.
6
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EXECUTIVE COMPENSATION
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Summary Compensation Table
The following table shows the compensation during the last three fiscal
years paid to the Company's Chief Executive Officer and four highest paid
executive officers based on compensation paid during the fiscal year ended
June 30, 1998.
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<TABLE>
Long-Term Compensation
-----------------------
Annual Compensation Awards
-------------------------------------- -----------------------
Other
Annual
Name and Compen- Restricted Securities
Position sation Stock Underlying All Other
Compensation($)(3) Year Salary($) Bonus($) ($)(1) Award($)(2) Options(#)
- -------- ---- --------- -------- ------ -------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Craig G. Blunden 1998 $223,750 $60,900 -- $1,025,000 -- $33,842
Chief Executive 1997 210,000 -- -- -- 102,500 28,320
Officer and 1996 208,999 44,100 -- -- -- 16,187
President
Robert G. Schrader 1998 122,975 23,280 656,000 -- 13,755
Executive Vice 1997 116,400 -- -- -- 61,500 12,264
President and Chief 1996 112,641 13,132 -- -- -- 10,105
Operating Officer
Donald L. Blanchard 1998 96,090 18,300 -- 328,000 -- 10,894
Senior Vice President- 1997 90,415 -- -- -- 30,000 9,506
Retail Banking 1996 85,583 8,900 -- -- -- --
Richard L. Gale 1998 100,999 325,000 -- 328,000 -- 9,789
Senior Vice President- 1997 96,000 -- -- 20,000 7,655
Mortgage Banking 1996 96,000 -- -- -- -- --
Brian M. Riley 1998 107,000 19,200 -- 328,000 30,000 --
Senior Vice President 1997 4,369 -- -- -- -- --
and Chief Financial
Officer(4)
</TABLE>
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(1) Does not include perquisites which did not exceed the lesser of $50,000 or
10% of salary and bonus.
(2) Represents the total value of the award of shares of restricted Common
Stock on October 20, 1997 in the following amounts: Mr. Blunden, 51,250
shares; Mr. Schrader, 32,800 shares; Mr. Blanchard, 16,400 shares; Mr.
Gale, 16,400 shares and Mr. Riley, 16,400 shares. Such awards will vest
ratably over a five-year period. At June 30, 1998, the value of the
unvested restricted stock awards were: Mr. Blunden, $1,063,438; Mr.
Schrader, $680,600; Mr. Blanchard, $340,300; Mr. Gale, $340,000; and Mr.
Riley, $340,300. Dividends, if any, paid on the restricted Common Stock
are accrued and held in arrears until the restricted Common Stock becomes
vested.
(3) Amounts for 1998 reflect: for Mr. Blunden, supplemental life insurance of
$12,657, employer contribution to 401(k) Plan of $4,585 and employer
contribution to ESOP of $16,600; for Mr. Schrader, employer contribution
to 401(k) Plan of $2,881 and employer contribution to ESOP of $10,874; for
Mr. Blanchard, employer contribution to 401(k) Plan of $2,785 and employer
contribution to ESOP of $8,109; and for Mr. Gale, employer contribution to
ESOP of $9,789.
(4) Mr. Riley jointed the Company on May 29, 1997.
7
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Option Grants in Last Fiscal Year.
The following table sets forth information concerning the grant of stock
options to the named executive officers during the fiscal year ended June 30,
1998.
<PAGE>
<TABLE>
Individual Grants
--------------------------------------------------
Percent Potential Realizable Value at
Number of of Total Assumed Annual Rates of Stock
Securities Options Price Appreciation for Option
Underlying Granted to Exercise Term (2)
Options Employees in Price Expiration ------------------------------
Name Granted(1) Fiscal Year ($/sh) Date 5%($) 10%($)
- ---------------- ---------- ----------- ------ ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Brian M. Riley 30,000 66.7% $20.59 1/20/08 $388,500 $984,600
</TABLE>
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__________
(1) Options granted vest at the rate of 20 percent per annum. Options will
become immediately exercisable in the event of a change in control of the
Company. Option was granted under the Company's 1996 Stock Option Plan
and has an exercise price equal to the fair market value of the Common
Stock on the date of grant. The indicated options were granted on January
20, 1998.
(2) The dollar gains under these columns result from calculations required by
the Securities and Exchange Commission's rules and are not intended to
forecast future price appreciation of the Common Stock of the Company. It
is important to note that options have value to the listed executive only
if the stock price increases above the exercise price shown in the table
during the effective option period. In order for the listed executive to
realize the potential values set forth in the 5% and 10% columns in the
table, the price per share of the Company's Common Stock would be
approximately $33.54 and $53.41, respectively, as of the expiration date
of the options.
Option Exercise/Value Table.
The following information with respect to options exercised during the
fiscal year ended June 30, 1998, and remaining unexercised at the end of the
fiscal year, is presented for the named executive officers.
<PAGE>
<TABLE>
Value of Unexercised
Number of Securities In-the-Money Options
Shares Unexercised Options at Fiscal Year End($)(1)
Acquired on Value --------------------------- ------------------------
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Craig G. Blunden -- -- 20,500 82,000 $112,750 $451,000
Robert G. Schrader -- -- 12,300 49,200 67,650 270,600
Donald L. Blanchard -- -- 6,000 24,000 33,000 132,000
Richard L. Gale -- -- 4,000 16,000 22,000 88,000
Brian M. Riley -- -- -- 30,000 -- 4,800
</TABLE>
<PAGE>
- -------------
(1) Value of unexercised in-the-money options equals market value of shares
covered by in-the-money options on June 30, 1998 less the option exercise
price. Options are in-the-money if the market value of the shares covered
by the options is greater than the option exercise price.
Employment Agreements
The Savings Bank has entered into an employment agreement with Mr.
Blunden. The agreement has a term of three years and may be renewed by the
Board for an additional year each year unless Mr. Blunden has attained age 62
or the Board or Mr. Blunden have given advance notice of their intention not
to extend the term of the agreement.
8
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The agreement further provides for a base salary which may not be reduced
except as part of a general salary reduction policy for senior executives of
the Savings Bank and, at any time, below the initial base salary of the
agreement. Mr. Blunden's base salary is subject to annual review by the
Board. Mr. Blunden's current base salary under the agreement is $220,000. In
the event of a "change of control" of the Savings Bank (as defined below), Mr.
Blunden's base salary is fixed as the sum of his then current base salary and
any bonuses paid during the 12-month period preceding the change in control.
Under the agreement, Mr. Blunden is eligible to participate in all fringe
benefit programs available to employees of the Savings Bank as well as any
program made available to senior executives of the Savings Bank, including the
use of an employer-provided automobile. The agreement also provides for the
reimbursement of expenses incurred by Mr. Blunden in the course of his
employment.
In the event of Mr. Blunden's termination without cause by the Savings
Bank, the agreement provides for (i) a lump sum payment equal to the
discounted present value of the aggregate future base salary payments Mr.
Blunden would have received over the then remaining term of the agreement and
(ii) the continuation of life and medical insurance at the Savings Bank's
expense for Mr. Blunden and his dependents. If Mr. Blunden's employment
terminates by reason of his death or disability, the Savings Bank is also
obligated to continue life and medical insurance benefits for Mr. Blunden and
his dependents, as applicable.
In the event of Mr. Blunden's termination without cause following a
change in control of the Savings Bank, Mr. Blunden is entitled to an
additional payment equal to three times the sum of his base salary and bonuses
during the 12 months preceding his termination of employment reduced by the
value of any other payments made by the Savings Bank by reason of Mr.
Blunden's termination without cause. In the event that a change of control of
the Savings Bank had occurred on June 30, 1998, based solely on the cash
compensation paid to Mr. Blunden during 1998 and excluding the value of any
other employee benefits which may be payable, Mr. Blunden would have received
a payment of approximately $854,000. For purposes of the agreement, "change
in control" is defined to mean (i) a change in control of the Savings Bank as
determined under applicable regulations of the Office of Thrift Supervision
and (ii) a change in the composition of the Board following a merger,
consolidation or other business combination involving the Savings Bank such
that a majority of the directors of the resulting entity consists of persons
who were not directors immediately prior to such transaction.
Post-Retirement Compensation Agreement
The Savings Bank has entered into a separate post-retirement compensation
agreement with Mr. Blunden. The agreement provides that, if Mr. Blunden
terminates employment with the Savings Bank after attaining age 60, the
Savings Bank will provide Mr. Blunden with a monthly benefit for life equal to
50% of his final average monthly salary. For purpose of the agreement, "final
average monthly salary" is defined as the average of Mr. Blunden's highest
paid 36 consecutive months of employment with the Savings Bank determined by
reference to the gross amount of Mr. Blunden's monthly salary excluding bonus
and incentive awards, director's fees and accelerated payments of future
salary. Assuming that Mr. Blunden's current compensation level were
equivalent to his "final average monthly salary," the normal monthly benefit
payable under the agreement would be $9,323. Under the agreement, Mr. Blunden
may elect to receive the actuarially determined lump sum equivalent of the
normal monthly benefit or a joint-and-survivor benefit. Mr. Blunden may also
elect to receive an early retirement benefit under the agreement which is
reduced proportionately to reflect the number of months then remaining to Mr.
Blunden's 60th birthday. However, in the event of Mr. Blunden's termination
of employment prior to age 60 by reason of his death or disability, the
agreement provides for payment of the normal monthly benefit to Mr. Blunden or
his beneficiary. At June 30, 1998, the accrued liability of the Savings Bank
with respect to its obligations under the agreement was $626,794.
Severance Agreements
The Company and the Savings Bank have entered into severance agreements
with Mr. Schrader, Mr. Blanchard, Mr. Gale and Mr. Riley. The agreements have
a term of one year, which may be extended for an additional year on the
anniversary of the effective date of the agreement by the Board of Directors.
The agreements provide that in the event
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of an involuntary termination of the officer following a change in control of
the Company or the Savings Bank, he will be entitled to receive two times his
then current base salary. A severance payment also will be provided on a
similar basis in connection with a voluntary termination of employment where,
subsequent to a change in control, the officer is assigned duties inconsistent
with his position, duties, responsibilities and status immediately prior to
such change in control. The Savings Bank or its successor would also be
obligated to continue the officer's other employee benefits for a one-year
period following termination of employment.
The term "change in control" is defined in the agreements as having
occurred when, among other things, (a) a person other than the Company
purchases shares of the Company's common stock pursuant to a tender or
exchange offer for such shares, (b) any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the beneficial
owner, directly or indirectly, of securities of the Company representing 25%
or more of the combined voting power of the Company's then outstanding
securities, (c) the membership of the Board of Directors changes as the result
of a contested election, or (d) shareholders of the Company approve a merger,
consolidation, sale or disposition of all or substantially all of the
Company's assets, or a plan of partial or complete liquidation. If a change
in control of the Company or the Savings Bank occurred during the fiscal year
ending June 30, 1998, based solely on the officer's current salary level and
excluding the value of any other employee benefits which may be payable, the
officers would receive payment as follows: Mr. Schrader, $246,600; Mr.
Blanchard, $189,600; Mr. Gale, $200,000; and Mr. Riley, $220,000.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or
the Exchange Act that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following Report of the Compensation
Committee and Performance Graph shall not be incorporated by reference into
any such filings.
Report of the Personnel/Compensation Committee.
Under rules established by the Securities and Exchange Commission, the
Company is required to provide certain data and information in regard to the
compensation and benefits provided to the Company's Chief Executive Officer
and other executive officers of the Savings Bank. The disclosure requirements
for the Chief Executive Officer and other executive officers include the use
of tables and a report explaining the rationale and considerations that led to
the fundamental executive compensation decisions affecting those individuals.
Insofar as no separate compensation is currently payable by the Company, the
Personnel/Compensation Committee of the Savings Bank (the "Committee"), at the
direction of the Board of Directors of the Company, has prepared the following
report for inclusion in this proxy statement.
The Personnel/Compensation Committee of the Board of Directors is
responsible for establishing and implementing all compensation policies of the
Savings Bank and its subsidiaries. The Committee is also responsible for
evaluating the performance of the Chief Executive Officer of the Savings Bank
and approving an appropriate compensation level. The Chief Executive Officer
evaluates the performance of the Executive Vice President and certain Senior
Vice Presidents of the Savings Bank and recommends to the Committee individual
compensation levels for approval by the Committee.
The Committee believes that a compensation plan for executive officers
should take into account management skills, long-term performance results and
shareholder returns. The principals underlying compensation policies are: (1)
to attract and retain key executives who are highly qualified and are vital to
the long-term success of the Savings Bank and its subsidiaries; (2) to provide
levels of compensation competitive with those offered throughout the banking
industry; (3) to motivate executives to enhance long-term shareholder value by
helping them build their own ownership in the Company; and (4) to integrate
the compensation program with the Savings Bank's long-term strategic planning
and management process.
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The Savings Bank's current compensation plan involves a combination of
salary and bonuses to reward short- term performance, and, in the future, will
include grants of stock options to encourage long-term performance. The
salary levels of executive officers are designed to be competitive within the
banking and financial services industries. The Committee annually reviews the
Western League of Savings Institutions Survey of salaries to determine
competitive salary levels. Individual annual performance is reviewed to
determine appropriate salary adjustments.
The Annual Incentive Plan is based on annual performance of the Savings
Bank compared to budget and individual performance assessments. The Plan is
designed to provide for bonuses up to 30% of salary for the Chief Executive
Officer, up to 25% of salary for Senior Officers, up to 15% of salary for
certain managers, and up to 10% of salary for remaining department managers.
The Stock Option Plan is designed to attract and retain qualified
personnel and nonemployee directors, to provide such officers, key employees
and nonemployee directors with a proprietary interest in the Company as an
incentive to contribute to the success of the Company and the Savings Bank and
to reward officers and key employees for outstanding performance. Stock
options have been granted to key employees of the Company and its
subsidiaries, including the Savings Bank. The Stock Option plan will be
administered and interpreted by a committee of the Board of Directors. Under
the Stock Option Plan, such committee will determine which officers and key
employees will be granted options, the number of shares subject to each
option, and the exercisability of such options. The per share exercise price
of an option will equal at least 100% of the fair market value of a share of
Common Stock on the date the option is granted.
During the fiscal year ended June 30, 1998, the base salary of Craig G.
Blunden, President and Chief Executive Officer of the Savings Bank, was
$223,750 along with an incentive bonus of $60,900. The Committee believes the
current compensation is appropriate based on competitive salary surveys and
the performance of the Savings Bank.
The Committee also recommends to the Board of Directors the amount of
fees paid for service on the Board. The Committee did not recommend a change
in Board fees during the fiscal year ended June 30, 1998.
Personnel/Compensation Committee
Roy H. Taylor
William E. Thomas
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Performance Graph
Performance Graph. The following graph compares the cumulative total
shareholder return on the Company's Common Stock with the cumulative total
return on the Nasdaq (U.S. Stock) Index and a peer group of the Nasdaq Bank
Index. Total return assumes the reinvestment of all dividends.
6/28/96 12/31/96 6/30/97 12/31/97 6/30/98
------- -------- ------- -------- -------
Provident
Financial
Holdings, Inc. $100 $128 $152 $199 $189
Nasdaq
(U.S. Stock)
Index 100 109 122 133 160
Nasdaq Bank Index 100 125 156 209 217
* Assumes that the value of the investment in the Company's Common Stock and
each index was $100 on June 28, 1996, the date on which the Company's Common
Stock began trading on the Nasdaq National Market, and that all dividends were
reinvested.
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COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
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Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than 10% of any registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Executive
officers, directors and greater than 10% shareholders are required by
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms it has received
and written representations provided to the Company by the above referenced
persons, the Company believes that, during the fiscal year ended June 30,
1998, all filing requirements applicable to its reporting officers, directors
and greater than 10% shareholders were properly and timely complied with.
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TRANSACTIONS WITH MANAGEMENT
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As required by federal regulations, all loans or extensions of credit to
executive officers and directors are made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons (except for loans made pursuant to
programs generally available to all employees) and do not involve more than
the normal risk of repayment or present other unfavorable features. In
addition, loans made by the Savings Bank to a director or executive officer in
an amount that, when aggregated with the amount of all other loans by the
Savings Bank to such person and his or her related interests, are in excess of
the greater of $25,000 or 5% of the Savings Bank's capital and surplus (up to
a maximum of $500,000) are subject to approval in advance by a majority of the
disinterested members of the Board of Directors.
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AUDITORS
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PricewaterhouseCoopers LLP, independent public accountants, served as the
Company's auditors for the fiscal year ending June 30, 1998. A representative
of PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting
to respond to appropriate questions from shareholders and will have the
opportunity to make a statement if he or she so desires. The Board of
Directors has not appointed an auditor for the fiscal year ending June 30,
1999.
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OTHER MATTERS
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The Board of Directors is not aware of any business to come before the
Annual Meeting other than those matters described above in this Proxy
Statement. However, if any other matters should properly come before the
Annual Meeting, it is intended that proxies in the accompanying form will be
voted in respect thereof in accordance with the judgment of the person or
persons voting the proxies.
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MISCELLANEOUS
- ------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy
materials to the beneficial owners of the Common Stock. In addition to
solicitations by mail, directors, officers and regular employees of the
Company may solicit proxies personally or by telecopier or telephone without
additional compensation.
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The Company's 1998 Annual Report to Shareholders, including financial
statements, has been mailed to all shareholders of record as of the close of
business on September 8, 1998. Any shareholder who has not received a copy of
such annual report may obtain a copy by writing to the Company. The Annual
Report is not to be treated as part of the proxy solicitation material or
having been incorporated herein by reference.
A copy of the Company's Form 10-K for the fiscal year ended June 30,
1998, as filed with the Securities and Exchange Commission, will be furnished
without charge to shareholders of record as of September 8, 1998 upon written
request to Robert G. Schrader, Corporate Secretary, Provident Financial
Holdings, Inc., 3576 Central Avenue, Riverside, California 92506.
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SHAREHOLDER PROPOSALS
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Proposals of shareholders intended to be presented at the Company's
annual meeting to be held in October 1999 must be received by the Company no
later than May 25, 1999 to be considered for inclusion in the proxy materials
and form of proxy relating to such meeting. Any such proposals shall be
subject to the requirements of the proxy rules adopted under the Exchange Act.
The Company's Certificate of Incorporation provides that in order for a
shareholder to make nominations for the election of directors or proposals for
business to be brought before the Annual Meeting, a shareholder must deliver
notice of such nominations and/or proposals to the Secretary not less than 30
nor more than 60 days prior to the date of the Annual Meeting; provided that
if less than 31 days' notice of the Annual Meeting is given to shareholders,
such notice must be delivered not later than the close of the tenth day
following the day on which notice of the Annual Meeting was mailed to
shareholders. Based on the date of the 1998 Annual Meeting, the Company
anticipates that, in order to be timely, shareholder nominations or proposals
intended to be made at the 1999 Annual Meeting must be made by September 27,
1999. As specified in the Certificate of Incorporation, the notice with
respect to nominations for election of directors must set forth certain
information regarding each nominee for election as a director, including such
person's written consent to being named in the proxy statement as a nominee
and to serving as a director, if elected, and certain information regarding
the shareholder giving such notice. The notice with respect to business
proposals to be brought before the Annual Meeting must state the shareholder's
name, address and number of shares of Common Stock held, and briefly discuss
the business to be brought before the Annual Meeting, the reasons for
conducting such business at the Annual Meeting and any interest of the
shareholder in the proposal.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert G. Schrader
ROBERT G. SCHRADER
Secretary
Riverside, California
September 25, 1998
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REVOCABLE PROXY
PROVIDENT FINANCIAL HOLDINGS, INC.
ANNUAL MEETING OF SHAREHOLDERS
October 27, 1998
The undersigned hereby appoints the Board of Directors of Provident
Financial Holdings, Inc. (the "Company") with full powers of substitution to
act as attorneys and proxies for the undersigned, to vote all shares of Common
Stock of the Company which the undersigned is entitled to vote at the Annual
Meeting of Shareholders, to be held at the Riverside Art Museum at 3425
Mission Inn Avenue, Riverside, California, on Tuesday, October 27, 1998, at
11:00 a.m., local time, and at any and all adjournments thereof, as follows:
VOTE
FOR WITHHELD
1. The election as director of the nominees --- --------
listed below (except as marked to the [ ] [ ]
contrary below).
Bruce W. Bennett
Debbi H. Guthrie
INSTRUCTIONS: To withhold your vote
for any individual nominee, write the
nominee's name on the line below.
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2. In their discretion, upon such other matters
as may properly come before the meeting.
The Board of Directors recommends a vote "FOR" the listed propositions.
This proxy also provides voting instructions to the Trustees of the
Provident Savings Bank, F.S.B. Employee Ownership Plan for participants with
shares allocated to their accounts.
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This proxy will be voted as directed, but if no instructions are specified his
proxy will be voted for the propositions stated. If any other business is
presented at such meeting, this proxy will be voted by the Board of Directors
in its best judgment. At the present time, the Board of Directors knows of no
other business to be presented at the Annual Meeting. This proxy also confers
discretionary authority on the Board of Directors to vote with respect to the
election of any person as director where the nominees are unable to serve or
for good cause will not serve and matters incident to the conduct of the
Annual Meeting.
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Annual Meeting
or at any adjournment thereof and after notification to the Secretary of the
Company at the Annual Meeting of the shareholder's decision to terminate this
proxy, then the power of said attorneys and proxies shall be deemed terminated
and of no further force and effect.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of the Notice of Annual Meeting of Shareholders, a
Proxy Statement dated September 25, 1998 and the 1998 Annual Report to
Shareholders.
Dated: , 1998
---------------------
- ------------------------- -------------------------
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
- ------------------------- -------------------------
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
Please sign exactly as your name appears on the enclosed card. When signing
as attorney, executor, administrator, trustee or guardian, please give your
full title. If shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
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