<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.14a-11(C) or section
240.14a-12
WESTWOOD HOMESTEAD FINANCIAL CORPORATION
----------------------------------------
(Name of Registrant as Specified in its Charter)
WESTWOOD HOMESTEAD FINANCIAL CORPORATION
----------------------------------------
(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)(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:
---------------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
---------------------------------------------------------------
2. Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
3. Filing Party:
---------------------------------------------------------------
4. Date Filed:
---------------------------------------------------------------
<PAGE> 2
- --------------------------------------------------------------------------------
WESTWOOD HOMESTEAD FINANCIAL CORPORATION
3002 HARRISON AVENUE
CINCINNATI, OHIO 45211-5789
(513) 661-5735
- --------------------------------------------------------------------------------
March 10, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Westwood Homestead Financial Corporation to be held at the main office of The
Westwood Homestead Savings Bank, 3002 Harrison Avenue, Cincinnati, Ohio on
Monday, April 12, 1999 at 9:00 a.m., local time. Your Board of Directors and
Management look forward to personally greeting those stockholders able to
attend.
The attached Notice of Annual Meeting and Proxy Statement 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 KPMG Peat Marwick LLP, the Company's
independent auditors, will be present to respond to any questions the
stockholders may have.
WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS
POSSIBLE EVEN IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING. Your vote is
important, regardless of the number of shares you own. 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. On behalf of your Board of Directors, thank you
for your interest and support.
Sincerely,
Michael P. Brennan
President and Chief Executive Officer
<PAGE> 3
- --------------------------------------------------------------------------------
WESTWOOD HOMESTEAD FINANCIAL CORPORATION
3002 HARRISON AVENUE
CINCINNATI, OHIO 45211-5789
(513) 661-5735
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 12, 1999
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Westwood Homestead Financial Corporation (the "Company"), will be
held at the main office of The Westwood Homestead Savings Bank, 3002 Harrison
Avenue, Cincinnati, Ohio at 9:00 a.m. on Monday, April 12, 1999.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon the
election of two directors of the Company, and the transaction of such other
matters as may properly come before the Meeting or any adjournments thereof.
The Board of Directors is not aware of any other business to come
before the Meeting.
Any action may be taken on the foregoing proposal 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. Stockholders of record at the close
of busi ness on March 2, 1999 are the stockholders entitled to notice of and to
vote at the Meeting and any adjournments thereof.
You are requested to fill in and sign the enclosed form of proxy which
is solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the Meeting in
person.
BY ORDER OF THE BOARD OF DIRECTORS
MARY ANN JACOBS
SECRETARY
Cincinnati, Ohio
March 10, 1999
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE YOUR 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. PLEASE ACT PROMPTLY.
- --------------------------------------------------------------------------------
<PAGE> 4
- --------------------------------------------------------------------------------
PROXY STATEMENT
OF
WESTWOOD HOMESTEAD FINANCIAL CORPORATION
3002 HARRISON AVENUE
CINCINNATI, OHIO 45211-5789
ANNUAL MEETING OF STOCKHOLDERS
APRIL 12, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
General
- --------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Westwood Homestead Financial Corporation
(the "Company") to be used at the Annual Meeting of Stockholders of the Company
(the "Meeting") which will be held at the main office of The Westwood Homestead
Savings Bank, 3002 Harrison Avenue, Cincinnati, Ohio on Monday, April 12, 1999,
at 9:00 a.m., local time. The accompanying notice of meeting and this Proxy
Statement are being first mailed to stockholders on or about March 10, 1999.
- --------------------------------------------------------------------------------
VOTING AND REVOCABILITY OF PROXIES
- --------------------------------------------------------------------------------
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Company, at the address shown above, by filing of
a later dated proxy prior to a vote being taken on a particular proposal at the
Meeting or by attending the Meeting and voting in person. Proxies solicited by
the Board of Directors of the Company will be voted in accordance with the
directions given therein. WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE
VOTED FOR THE NOMINEES FOR DIRECTOR SET FORTH BELOW IN THIS PROXY STATEMENT TO
BE CONSIDERED AT THE MEETING. The proxy confers discretionary authority on the
persons named therein to vote with respect to the election of any person as a
director where the nominee is unable to serve or for good cause will not serve,
and matters incident to the conduct of the Meeting. Proxies marked as
abstentions, and shares held in street name which have been designated by
brokers on proxies as not voted, will not be counted as votes cast. Proxies
marked as abstentions or as broker non-votes will, however, be treated as shares
present for purposes of determining whether a quorum is present.
- --------------------------------------------------------------------------------
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
- --------------------------------------------------------------------------------
The securities entitled to notice of and to vote at the Meeting consist
of the Company's common stock, par value $.01 per share (the "Common Stock").
Stockholders of record as of the close of business on March 2, 1999 (the "Record
Date"), are entitled to one vote for each share of Common Stock then held. As of
the Record Date, there were 2,288,818 shares of Common Stock issued and
outstanding. The presence, in person or by proxy, of at least a majority of the
total number of shares of Common Stock outstanding and entitled to vote will be
necessary to constitute a quorum at the Meeting.
Persons and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934 with the Company and the Securities and Exchange
Commission ("SEC"). Based on such reports, management knows of no persons other
than those set forth below who owned more than 5% of the outstanding shares of
Common Stock as of the Record Date. The following table sets forth, as of the
Record Date, certain information as to those persons who were the beneficial
owners of more than five percent (5%) of the Company's outstanding shares of
Common Stock, the shares beneficially owned by the Company's Chief Executive
Officer and the shares of Common Stock beneficially owned by all executive
officers and directors of the Company as a group.
<PAGE> 5
<TABLE>
<CAPTION>
Percent of Shares
Name and Address Amount and Nature of of Common Stock
of Beneficial Owner Beneficial Ownership(1) Outstanding
- ------------------- ----------------------- -----------
<S> <C> <C>
Westwood Homestead Financial Corporation 274,820 (2) 12.01%
Employee Stock Ownership Plan ("ESOP")
3002 Harrison Avenue
Cincinnati, Ohio 45211-5789
Michael P. Brennan 106,204 (3) 4.64%
President and Chief Executive Officer
The Westwood Homestead Savings Bank
3002 Harrison Avenue
Cincinnati, Ohio 45211-5785
All Executive Officers and Directors 344,775 (4) 15.06%
as a Group (10 persons)
</TABLE>
- ------------------
(1) Includes stock held in joint tenancy; stock owned as tenants in common;
stock owned or held by a spouse or other member of the individual's
household; and stock in which the individual either has or shares
voting and/or investment power. Each person or relative of such person
whose shares are included herein exercises sole (or shared with a
spouse or other relative) voting and dispositive power as to the shares
reported.
(2) These shares are currently held in a suspense account for future
allocation and distribution among participants as the loan used to
purchase the shares is repaid. The ESOP trustees vote all allocated
shares in accordance with the instructions of the participating
employees. Allocated shares (60,494) and unallocated shares (214,326)
for which no instructions have been received are voted by the trustees
in the same proportion as participants vote allocated stock; provided
that, in the absence of any voting directions as to allocated stock,
([iota]) the Company's Board of Directors shall direct the trustees as
to the voting of all shares of unallocated stock, and ([iota][iota]) in
the absence of such direction from the Company's Board of Directors,
the ESOP trustees shall have sole discretion as to the voting of such
shares.
(3) Includes 36,032 shares underlying currently exercisable stock options
granted under the Company's 1997 Stock Option Plan (the "Option Plan"),
11,373 shares awarded through the Company's Management Recognition Plan
("MRP"), 10,520 shares of Common Stock allocated through the Company's
Employee Stock Ownership Plan ("ESOP"), 30,783 shares beneficially
owned in his capacity as trustee of the trust for the Company's
Directors' Retirement Plan, 17,000 shares over which Mr. Brennan has
direct ownership, and 496 vested shares held by Mr. Brennan's 401k
Plan. His 401k has 124 unvested shares. See "Executive Compensation"
and "Director Compensation."
(4) Includes 81,070 shares which the directors and officers own
individually, 26,471 shares allocated to officers under the ESOP,
94,454 shares underlying currently exercisable stock options granted to
directors and executive officers under the Option Plan, 28,711 shares
awarded to the directors and executive officers under the MRP, and
83,286 shares with respect to which Directors Bennet, Bockhorst,
Heimerdinger, Higley and Jacobs have voting power by virtue of their
positions as trustees of a trust formed to hold assets of the MRP. Also
includes 30,783 shares which Mr. Brennan and one other officer have the
authority to vote in their capacity as trustees of the trust for the
Company's Directors' Retirement Plan. Does not include shares with
respect to which Directors Bennet, Bockhorst, Heimerdinger, Higley and
Jacobs have voting power by virtue of their positions as trustees of
the trust holding 274,820 shares of the ESOP. See "Directors'
Compensation."
2
<PAGE> 6
- --------------------------------------------------------------------------------
PROPOSAL I -- ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
The Company's Board of Directors is composed of eight members. The
Company's Articles of Incorporation require that directors be divided into three
classes, as nearly equal in number as possible, each class to serve for a three
year period, with approximately one-third of the directors elected each year.
The Board of Directors has nominated Robert H. Bockhorst and Raymond J.
Brinkman, each of whom is currently a member of the Board, to serve as directors
for a three-year period.
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 size of the Board may be reduced to eliminate the
vacancy. At this time, the Board knows of no reason why any nominee might be
unavailable to serve.
Under the Company's Bylaws, directors shall be elected by a plurality
of the votes of the shares present in person or by proxy at the Meeting. Votes
which are not cast at the Meeting, either because of abstentions or broker
non-votes, are not considered in determining the number of votes which have been
cast for or against the election of a nominee.
Unless otherwise specified on the proxy, it is intended that the
persons named in the proxies solicited by the Board will vote for the election
of the named nominees.
The following table sets forth the names of the Board's nominees for
election as directors of the Company and of those directors who will continue to
serve as such after the Meeting. Also set forth is certain other information
with respect to each person's age, the year he or she first became a director of
the Company's wholly owned subsidiary, The Westwood Homestead Savings Bank (the
"Bank"), the expiration of his or her term as a director, and the number of
shares of the Common Stock beneficially owned. None of the directors' share
ownership exceeded 1% of the Common Stock outstanding as of the Record Date
except for Messrs. Brennan and Heimerdinger. All of the individuals were
initially appointed as director of the Company in 1996 in connection with the
Company's incorporation.
<TABLE>
<CAPTION>
Shares of
Year First Common Stock
Elected as Beneficially
Age at Director Current Term Owned at the
Name December 31, 1998 of the Bank to Expire Record Date (1)
---- ----------------- ----------- --------- ---------------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2002
<S> <C> <C> <C> <C>
Robert H. Bockhorst 60 1984 1999 19,194 (3) (4)
Raymond J. Brinkman 74 1990 1999 19,772 (4)
DIRECTORS CONTINUING IN OFFICE
John B. Bennet, Sr. 66 1982 2000 16,739 (3) (4)
Mary Ann Jacobs 41 1987 2000 22,388 (3) (4)
James D. Kemp 45 1989 2000 20,739 (4)
Michael P. Brennan 56 1995 2001 106,204 (2)
Carl H. Heimerdinger 84 1947 2001 26,678 (3) (4)
Roger M. Higley 60 1990 2001 21,507 (3) (4)
</TABLE>
3
<PAGE> 7
- -------------
(1) Includes stock held in joint tenancy; stock owned as tenants in common;
stock owned or held by a spouse or other member of the individual's
household; and stock in which the individual either has or shares
voting and/or investment power. Each person or relative of such person
whose shares are included herein exercises sole (or shared with a
spouse or other relative) voting and dispositive power as to the shares
reported.
(2) Includes 36,032 shares underlying currently exercisable
stock options granted under the Option Plan, 11,373 shares awarded
through the MRP, 10,520 shares of Common Stock allocated through the
Company's ESOP, 30,783 shares beneficially owned in his capacity as
trustee of the trust for the Company's Directors' Retirement Plan,
17,000 shares over which Mr. Brennan has direct ownership, and 496
vested shares held by Mr. Brennan's 401k Plan. See "Executive
Compensation" and "Director Compensation."
(3) Does not include shares with respect to which the director has
voting power by virtue of his or her position as trustee of the trust
holding 274,820 shares of the ESOP.
(4) Includes 6,538, 6,538, 6,538, 6,538, 6,538, 6,538 and 6,538
shares underlying currently exercisable stock options which are
beneficially owned respectively by Directors Heimerdinger, Higley,
Bockhorst, Brinkman, Bennet, Jacobs and Kemp.
Presented below is certain information concerning the directors of the
Company and the Bank. Unless otherwise stated, all directors have held the
positions for at least the past five years.
ROBERT H. BOCKHORST has served as a Director of the Bank since 1984.
Mr. Bockhorst has been a self-employed real estate investor since 1966. He has
retired from real estate appraising. Mr. Bockhorst is currently a member of the
Western Hills Exchange Club and the Cheviot-Westwood Kiwanis Club.
RAYMOND J. BRINKMAN, CPA retired from Deloitte & Touche LLP in 1989 as
Senior Manager. He has served as a Director of the Bank since 1990. He is a
member of the Saint Aloysius Orphan Society, the American Association of Retired
Persons and the Green Township Senior Citizens. Mr. Brinkman is also active in
St. Aloysius Gonzaga Parish.
JOHN B. BENNET, SR. is Vice-Chairman of the Board of Directors of the
Bank. Dr. Bennet was elected to the Board of Directors in 1982 and has served as
Vice-Chairman since February 1985. Dr. Bennet was a self-employed dentist from
1958 until his retirement in December 1995.
MARY ANN JACOBS has served as Secretary and a Director of the Bank
since 1987. Ms. Jacobs is a Partner of the law firm Ritter and Randolph. Her
current civic activities include serving as a member of the Llanfair Retirement
Community Board, the Wesley Hall Community Board, the Cincinnati Housing
Partners Board, and the Cincinnati Law Library Board of Trustees. She is also an
Elder of the Westminster Presbyterian Church and a member of the CheviotWestwood
Kiwanis.
JAMES D. KEMP has served as a Director of the Bank since 1989. He is
Branch Manager of the Cincinnati Office of the investment firm of Hilliard
Lyons. Mr. Kemp has been a stockbroker with Hilliard Lyons since 1983. Mr. Kemp
was employed by Westwood Homestead from 1976 to 1983, and served in various
capacities including assistant manager, staff appraiser and Treasurer.
MICHAEL P. BRENNAN has been President, Chief Executive Officer, and a
member of the Board of Directors of Westwood Homestead since February, 1995.
Prior to joining the Bank, Mr. Brennan was President and Chief Executive Officer
and Director of Deer Park Federal Savings and Loan Association, Cincinnati,
Ohio. He is currently on America's Community Bankers' National Technology
Committee. His past civic activities include serving on the Board of Directors
of the Exchange Club of Fairfield, as Community Advisor for Deer Park Schools,
as Chairman and member of the Tri-State League of Financial Institutions, and as
Director of the Greater Cincinnati Mortgage Counseling Service. Mr. Brennan is
an active runner who participates in local road races. He founded "The Great
Bearcat Run" for the benefit of the University of Cincinnati, his alma mater.
CARL H. HEIMERDINGER completed 51 years as a member of the Westwood
Homestead Board of Directors, he served as President from 1981 to February 1995,
and he has served as Chairman of the Board since February 1995. He was Treasurer
of the Cincinnati Public Schools from 1964 until his retirement in 1980. His
past professional activities
4
<PAGE> 8
incluede: State President in 1972 and charter member of the Ohio Association of
School Business Officials; 1973-74 President of Ohio Council for Education; and
1980-85 Treasurer of Cincinnati School Foundation. Mr. Heimerdinger's current
and past civic activities include serving as past president and member of the
Exchange Club of Cincinnati since 1972 and Treasurer of the Salem Presbyterian
Church since 1984.
ROGER M. HIGLEY has served as a Director of the Bank since 1990. Dr.
Higley also serves as President of Gray's History of Wireless Museum Inc. at
WCET. Dr. Higley has been a self-employed dentist since 1969. He also serves on
the Board of Directors of the Greater Cincinnati Amateur Radio Society Inc.
- --------------------------------------------------------------------------------
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
The Board of Directors of the Company meets periodically as needed.
During the year ended December 31, 1998, the Board held 24 meetings. No director
attended fewer than 75% of the total number of Board meetings held during the
year ended December 31, 1998 and the total number of meetings held by committees
on which such director served during such fiscal year.
The Company does not have a Nominating Committee. Under the Company's
Bylaws, the board of directors acts as a nominating committee for selecting the
management nominees for election as directors. The full Board of Directors
served as a nominating committee for the nominees chosen for election as
directors at the Meeting. While the Board of Directors will consider nominees
recommended by stockholders, it has not actively solicited recommendations from
the Company's stockholders for nominees nor, subject to the procedural
requirements set forth in the Company's Articles of Incorporation and Bylaws,
established any procedures for this purpose.
The Company's Audit Committee consists of directors Brinkman
(Chairman), Heimerdinger and Kemp. The Audit Committee is responsible for
reviewing the Bank's auditing program, overseeing the quarterly regulatory
reporting process by annually reviewing the process with the chief financial
officer, overseeing the Bank's internal compliance audits as necessary,
receiving and reviewing the results of each external audit, reviewing
managements response to auditors' recommendations, and reviewing management's
reports on cases of financial misconduct by employees, officers or directors.
The Audit Committee met three times in fiscal 1998.
The Company's Compensation Committee consists of directors Bennet
(Chairman), Bockhorst, Brinkman, Heimerdinger, Higley, Jacobs and Kemp. This
committee monitors the Company's compensation plans and practices and
specifically designates compensation levels for the Bank's executive officers.
The Compensation Committee met four times during fiscal 1998.
- --------------------------------------------------------------------------------
REPORT OF THE COMPENSATION COMMITTEE OF THE
BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
The Committee, which consists entirely of outside, non-employee
Directors, establishes and regularly reviews executive compensation levels and
policies. The Committee's objective in determining executive compensation is to
attract, retain and motivate Executive Officers for the long-term success of the
Company. The Committee believes the compensation levels of the Company's
Executive Officers are competitive and in line with those of comparable
companies. In furtherance of this objective, the Bank's executive compensation
program currently consists of salary and bonus.
Base salaries are reviewed and adjusted annually following review of
the Company's performance during the previous year, individual contributions to
that performance and levels of responsibility. Bonuses are paid quarterly based
on the weighted average of budget goals achieved in the completed quarter. To
align Executive Officers' interests more closely with that of shareholders of
the Company, the Committee annually considers the granting of stock options and
5
<PAGE> 9
management recognition awards. The Company also maintains an Employee Stock
Ownership Plan in which Executive Officers are permitted to participate, which
allows Executives to receive awards of common stock, provided certain
eligibility requirements are met.
In evaluating the performance of CEO Michael P. Brennan for 1998, the
Committee utilized the "Monitoring CEO Performance" format developed by
Professional Bank Services, which involved reviewing Mr. Brennan's performance
according to a variety of criteria, including: success in establishing the
Company's strategic direction; building the Company's and Bank's management
team; leadership qualities; and employee, community, investor and regulatory
relations. The Committee also considered the Company's level of improvement in
profitability during 1998 and Mr. Brennan's total compensation in relation to
relevant peer groups. Based on its assessment of all these factors, the
Committee approved continuing the base salary of the CEO and payment of a bonus
per the Bank's bonus plan.
During 1998, the Committee approved the grant of options to purchase
7,000 shares of Common Stock to Mr. Brennan. The Committee's decision was based
on its recognition that options previously granted to the CEO and other
executives had no value based on the market price of the Common Stock and its
desire to further align the CEO's interests with those of shareholders
generally.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
John B. Bennet, Sr.
Robert H. Bockhorst
Raymond J. Brinkman
Carl H. Heimerdinger
Roger M. Higley
Mary Ann Jacobs
James D. Kemp
6
<PAGE> 10
- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of certain information
concerning the compensation paid by the Bank for services rendered in all
capacities during the indicated periods to the President and Chief Executive
Officer of the Bank. No other executive officer of the Bank had total
compensation during the last fiscal year exceeding $100,000.
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
-------------------
Annual Compensation Restricted Securities
Name and Fiscal ------------------- Stock Underlying All Other
Principal Position Year Salary Bonus Awards (1) Options Compensation
- ------------------ ------ ------ ----- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Michael P. Brennan 1998 $130,000 $18,362 -- 7,000 (2) $ 46,256 (4)
President and Chief 1997 $125,000 $16,917 $485,155 86,582 (3) $103,122 (5)
Executive Officer 1996 $110,000 $25,000 -- -- $ 6,405 (6)
</TABLE>
- -------------
(1) 11,374 shares of restricted Common Stock awarded under the MRP are
currently vested. An additional 5,687 shares will vest annually over
three years. At December 31, 1998, Mr. Brennan held 28,434 shares of
restricted stock with a value, based on the closing sale price of the
Common Stock as reported on the Nasdaq National Market on December 31,
1998, of $9.50 per share. Dividends are payable on these shares if and
to the extent paid on the Common Stock generally.
(2) 1,400 of the shares underlying these stock options are immediately
exercisable. Over the next four years options to purchase 5,600 shares
will vest annually.
(3) 34,632 of the shares underlying these stock options are immediately
exercisable. Over the next three years options to purchase 17,316
shares will vest annually.
(4) For the 1998 fiscal year, includes 4,869 shares allocated under the
ESOP at a value of $9.50 per share.
(5) For the 1997 fiscal year, includes 6,066 shares allocated under the
ESOP at a value of $17.00 per share.
(6) Consists of unused vacation and personal days.
Option Grants in Last Fiscal Year. The following table contains
information concerning the grant of stock options under the Company's Stock
Option Plan to the Chief Executive Officer during fiscal 1998.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
-------------------------------------
Individual Grants
-----------------
Potential Realizable
Number of % of Total Valued at Assumed
Securities Options Annual Rates of Stock
Underlying Granted to Exercise Price Appreciation
Options Employees in or Base Expiration for Option Term
Name Granted (1) Fiscal Year Price Date 5% 10%
- ---- ------------ --------------- --------- ----------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Michael P. Brennan 7,000 20% $ 10.00 10/20/08 $3,500 $7,000
</TABLE>
- ------------
(1) Mr. Brennan's option to purchase 7,000 shares, granted on October 20,
1998, is immediately exercisable for 20% of the underlying shares and
becomes exercisable for the remaining 80% of the shares on the second
through the fourth anniversary of the date of grant. To the extent not
already exercisable, the options generally become immediately
exercisable in the event of a change of control in the Company.
7
<PAGE> 11
YEAR-END OPTIONS/SAR VALUES. The following table sets forth information
concerning the number and potential realizable value at the end of the fiscal
year of options held by the Chief Executive Officer. Mr. Brennan did not
exercise any options during the fiscal year 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Options/SARs at Fiscal Year End at Fiscal Year-End (1) (2) (3)
------------------------------- ----------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Michael P. Brennan 36,032 57,550 $ -0- $ -0-
</TABLE>
(1) Mr. Brennan's option to purchase 86,852 shares, granted on September
29, 1997, is immediately exercisable for 40% of the underlying shares
and becomes exercisable for the remaining 60% of the shares on the
third through the fourth anniversary of the date of grant. To the
extent not already exercisable, the options generally become
immediately exercisable in the event of a change in control of the
Company.
(2) Mr. Brennan's option to purchase 7,000 shares, granted on October 20,
1998, is immediately exercisable for 20% of the underlying shares and
becomes exercisable for the remaining 80% of the shares on the second
through the fourth anniversary of the date of grant. To the extent not
already exercisable, the options generally become immediately
exercisable in the event of a change of control in the Company.
(3) The value of these options was zero at December 31, 1998, since the
exercisable price of the options exceeded the market price of the
Common Stock on that date (based on the $9.50 closing sale price of the
Common Stock on that date as reported on the Nasdaq National Market).
EMPLOYMENT AGREEMENT. In February 1995, the Bank entered into an
employment agreement (the "Employment Agreement") with Mr. Michael P. Brennan,
who serves as its Chief Executive Officer and President (the "Executive"). The
Employment Agreement was amended in connection with the Bank's conversion from
mutual to stock form to add the Company as a party jointly and severally liable
for the Bank's obligations, and to update its definition of a change in control
to take into account the Company's formation. The Executive is responsible for
overseeing all operations of the Bank and for implementing the policies adopted
by the Bank's Board of Directors. The Board of Directors believes that the
Employment Agreement assures fair treatment of the Executive in relation to his
position with the Bank by assuring him of some financial security.
The Employment Agreement became effective on February 23, 1995 for a
term of three years, with an annual base salary of $110,000. On each anniversary
from the date of commencement of the Employment Agreement, the term of the
Executive's employment will be extended for an additional one-year period beyond
the then effective expiration date, upon a determination by the Board that the
performance of the Executive has met the required performance standards and that
such Employment Agreement should be extended. The Employment Agreement provides
the Executive with a salary review by the Board not less often than annually, as
well as with inclusion in any discretionary bonus plans, retirement and medical
plans, customary fringe benefits, vacation and personal leave. The Employment
Agreement is terminable by the Bank for "cause" as defined therein, in which
event no severance benefits are available. If the Bank terminates the Executive
for any reason other than cause, retirement, death, disability, or expiration of
the Agreement, the Executive will be entitled to a continuation of his salary
from the last day of the month following the date of the event of termination
through the remaining term of the Employment Agreement. If the Employment
Agreement is terminated due to the Executive's disability, the Executive will be
entitled to a continuation of his salary for up to 30 days. If the Executive is
disabled for a continuous period exceeding 30 days, the Bank may terminate the
Employment Agreement, in which event the Executive shall be entitled to receive
secondary disability benefits under any group or individual disability benefit
program maintained by the Bank. In the event of the Executive's death during the
term of the Employment Agreement, his estate will be entitled to receive his
salary through the remaining term of the Employment Agreement.
The Employment Agreement contains provisions stating that if the
Executive terminates employment after a change in control of the Bank or the
Company, for any reason other than cause, retirement, disability, death,
expiration
8
1
<PAGE> 12
of the Agreement, or otherwise a change in the present capacity or circumstances
in which the Executive is employed, or a reduction in compensation or other
benefits provided under this Agreement without the Executive's written consent,
theExecutive will be paid, in addition to the continuation of the Executive's
compensation and benefits through the expiration of the Agreement, an amount
equal to 2.99 times the Executive's average annual compensation for the most
recent five taxable years before the change in control, provided such payments
do not constitute an "excess parachute payment" under Section 280G of the
Internal Revenue Code of 1986, as amended. In the event such payments would
constitute an excess parachute payment, they would be reduced accordingly.
"Control" generally refers to the acquisition, by any person or entity, of the
ownership or power to vote more than 25% of the Bank's or the Company's voting
stock, the control of the election of a majority of the Bank's or the Company's
directors, or the exercise of a controlling influence over the management or
policies of the Bank or the Company. In addition, under the Employment
Agreement, a change in Control occurs when, during any consecutive two-year
period, directors of the Company or the Bank at the beginning of such period
cease to constitute at least a majority of the Board of the Company or the Bank,
unless the election of the replacement directors was approved by at least a
majority of the initial directors then in office.
- --------------------------------------------------------------------------------
DIRECTORS' COMPENSATION
- --------------------------------------------------------------------------------
The Company's non-employee directors received fees of $16,400 in 1998
in compensation for service provided to the Bank. The Chairman of the Board
received an additional $5,000 for his duties as Chairman. Employee directors do
not receive board fees. Chairman of the Board and Former Chief Executive Officer
of the Bank, Carl Heimerdinger, received an additional $3,750, pursuant to an
agreement with the Bank that expired at the end of 1998. Director Brinkman
received an additional $2,500 per year for his position as internal auditor
during 1998. Director Higley received an additional $2,500 per year for his
position as security officer during 1998.
Non-employee directors also receive payment for medical insurance
costs. During fiscal year 1998, outside directors received as a reimbursement or
premium paid in the amount of $27,000 for these costs.
DIRECTORS' RETIREMENT PLAN. The Bank maintains a Directors' Retirement
Plan, the terms of which were approved by the Company's shareholders at a
special meeting held on December 23, 1996. Under this plan, a bookkeeping
account in each participant's name is credited, on a quarterly basis, with an
amount equal to the sum of ([iota]) the quarterly accrual attributable to the
participant, ([iota][iota]) any appreciation or depreciation on the balance of
the participant's account during the calendar quarter, with the investment
return measured by the director's choice between the rate of return on
certificates of deposit and the Company's Common Stock, and ([iota][iota][iota])
a retirement adjustment which will arise if the director terminates service on
the Board prior to the crediting of all quarterly accruals scheduled to be made
to his or her account. Benefits under this plan increase with the length of a
director's service on the Bank's Board. During 1998, the Bank credited
approximately $19,000 to the directors' accounts in this plan.
9
<PAGE> 13
- --------------------------------------------------------------------------------
STOCK PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
The graph which follows shows the cumulative total return on the Common
Stock since the commencement of trading of the Common Stock on September 27,
1996 compared with the cumulative total return of ([iota]) SNL Midwest Thrifts
Index; and ([iota][iota]) the Standard & Poors 500 Index. Cumulative total
return on the stock or the index equals the total increase in value since
September 27, 1996, assuming reinvestment of all dividends paid on the stock or
the index, respectively. The graph and table were prepared assuming that $100
was invested at the closing price on September 27, 1996 in the Common Stock and
in each of the indices. The shareholder returns shown on the performance graph
are not necessarily indicative of the future performance of the Common Stock or
of any particular index.
10
<PAGE> 14
WESTWOOD HOMESTEAD SAVINGS BANK
MARCH 10,1999 PROXY
Data points for graph:
- --------------------------------------------------------------------------------
WEHO SNL MIDWEST S&P 500
THRIFT INDEX
- --------------------------------------------------------------------------------
09-27-96 100.00 101.00 102.00
12-31-96 121.25 117.28 108.50
12-31-97 207.80 189.02 144.24
12-31-98 136.60 174.64 184.31
- --------------------------------------------------------------------------------
<PAGE> 15
- --------------------------------------------------------------------------------
RELATIONSHIP WITH INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
KPMG Peat Marwick LLP was the Company's independent certified public
accountant for the 1998 fiscal year. A representative of KPMG Peat Marwick LLP
is expected to be present at the Meeting to respond to appropriate questions and
to make a statement, if so desired.
On December 21, 1998, with the recommendation of the Audit Committee,
the Board of Directors decided to terminate the appointment of KPMG Peat Marwick
LLP ("KPMG") as principal accountants for the Company upon completion by KPMG of
the audit for the year ended December 31, 1998 and the issuance of the auditors
report thereon. KPMG has served as principal accountants for the Company since
1989. This change in principal accountants is intended to be effective for the
year ended December 31, 1999.
In connection with the audits of the two fiscal years ended December
31, 1998 and 1997, there were no disagreements with KPMG on any matter of
accounting principles or practices, financial statement disclosure, or audit
scope or procedures, which if not resolved to the satisfaction of KPMG, would
have caused them to refer to the nature of such disagreements in their reports
on the consolidated financial statements of the Company. The audit reports of
KPMG on the consolidated financial statements of the Company as of and for the
years ended December 31, 1998 and 1997 did not contain any adverse opinion or
disclaimer of opinion nor were they qualified or modified as to uncertainty,
audit scope or accounting principles.
On December 21, 1998, the Board of Directors approved and appointed
Crowe Chizek & Company LLP as the Company's principal accountants for the year
ended December 31, 1999. Crowe Chizek & Company LLP will be engaged as principal
accountants upon completion by KPMG of the audit for the year ended December 31,
1998 and issuance of the auditors' report thereon.
- --------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP REPORTS
- --------------------------------------------------------------------------------
Pursuant to regulations promulgated under the Exchange Act, the
Company's officers, directors and persons who own more than ten percent of the
outstanding Common Stock are required to file reports detailing their ownership
and changes of ownership in such Common Stock, and to furnish the Company with
copies of all such reports. All insiders filed timely reports. To the Company's
knowledge based on its review of the reports filed, all such persons filed
timely reports.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the determination of the Board of Directors.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of soliciting 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 Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
The Company's Annual Report to Stockholders, including financial
statements, is being mailed to all stockholders of record as of the Record Date.
Any stockholder who has not received a copy of such Annual Report may obtain a
copy by writing to the Secretary of the Company. Such Annual Report is not to be
treated as a part of the proxy solicitation material or as having been
incorporated herein by reference.
11
<PAGE> 16
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible to be considered for inclusion in the Company's
proxy materials for the next Annual Meeting of Stockholders, any stockholder
proposal to take action at such meeting must be received at the Company's
executive office at 3002 Harrison Avenue, Cincinnati, Ohio 45211-5789, no later
than November 10, 1999. Any such proposal shall be subject to the requirements
of the proxy rules adopted under the Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
MARY ANN JACOBS
SECRETARY
Cincinnati, Ohio
March 10, 1999
- --------------------------------------------------------------------------------
FORM 10-K
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT
CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN REQUEST TO THE
SECRETARY, WESTWOOD HOMESTEAD FINANCIAL CORPORATION, 3002 HARRISON AVENUE,
CINCINNATI, OHIO 45211-5789.
- --------------------------------------------------------------------------------
12
