<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FLAGSTAR BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
FLAGSTAR BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
[FLAGSTAR BANCORP LOGO]
April 3, 2000
Dear Stockholder:
We invite you to attend the Annual Meeting of Stockholders of Flagstar
Bancorp, Inc. to be held at the national headquarters of Flagstar Bank, FSB,
2600 Telegraph Road, Bloomfield Hills, Michigan on May 9, 2000 at 1:00 p.m.,
local time.
The Annual Meeting has been called for the election of directors and the
conduct of incidental matters. Enclosed is a proxy statement, a proxy card and
the Annual Report to Stockholders for 1999. Directors and officers of the
Company as well as representatives of Grant Thornton LLP, the Company's
independent auditors for 1999, will be present to respond to any questions the
stockholders may have.
Your vote is important regardless of the number of shares you own. On
behalf of the Board of Directors, we urge you to sign, date and return the
enclosed proxy as soon as possible, even if you currently plan to attend the
Annual Meeting. This will not prevent you from voting in person, but will assure
that your vote is counted if you are unable to attend the Annual Meeting.
Thank you for your cooperation and continuing support.
Sincerely,
/s/ THOMAS J. HAMMOND
Thomas J. Hammond
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
FLAGSTAR BANCORP, INC.
2600 TELEGRAPH ROAD
BLOOMFIELD HILLS, MI 48302
(248) 338-7700
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 9, 2000
NOTICE IS HEREBY GIVEN that the 1999 annual meeting of stockholders (the
"Annual Meeting") of Flagstar Bancorp, Inc. (the "Company") will be held on
Monday, May 9, 2000 at 1:00 p.m., local time, at the national headquarters of
Flagstar Bank, FSB, 2600 Telegraph Road, Bloomfield Hills, Michigan.
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon the
following matters:
1. to re-elect three directors to the Board of Directors to hold office for
a period of three years and until their successors shall have duly
elected and qualified; and
2. to transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Annual Meeting.
Any action may be taken on any one of the foregoing proposals at the Annual
Meeting on the date specified above or on any date or dates to which, by
original or later adjournments, the Annual Meeting may be adjourned.
Stockholders of record at the close of business on March 17, 2000 will be
entitled to vote at the Annual 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 choose to vote in person
at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ MARY KAY MCGUIRE
Mary Kay McGuire
Secretary
Bloomfield Hills, Michigan
April 3, 2000
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE, AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
2
<PAGE> 4
PROXY STATEMENT
OF
FLAGSTAR BANCORP, INC.
2600 TELEGRAPH ROAD
BLOOMFIELD HILLS, MI 48302
(248) 338-7700
-------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 9, 2000
GENERAL
This Proxy Statement is furnished to stockholders of Flagstar Bancorp, Inc.
(the "Company") in connection with the solicitation of proxies by the Company's
Board of Directors to be used at the 1999 annual meeting of stockholders of the
Company (the "Annual Meeting"), to be held on Monday, May 9, 2000 at 1:00 p.m.,
local time, at the national headquarters of Flagstar Bank, FSB (the "Bank"),
2600 Telegraph Road, Bloomfield Hills, Michigan. The accompanying Notice of
Annual Meeting and form of proxy and this Proxy Statement are being first mailed
to stockholders on or about April 3, 2000.
VOTING AND REVOCABILITY OF PROXIES
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
EXECUTED BUT UNMARKED PROXIES WILL BE VOTED FOR ELECTION OF THE THREE NOMINEES
AS DIRECTORS OF THE COMPANY. The proxy confers discretionary authority on the
persons named therein to vote with respect to the election of any person or a
director where the nominee is unable to serve or for good cause will not serve,
with respect to matters incident to the conduct of the Annual Meeting and with
respect to any other matter presented to the Meeting if notice of such matter
has not been delivered to the Company in accordance with the Company's Bylaws.
If any other matters are properly brought before the Annual Meeting, the persons
named in the proxy will vote the shares represented by such proxies on such
matters as determined by a majority of the Board of Directors. Except for
procedural matters incident to the conduct of the Annual Meeting, the Company
does not know of any other matters that are to come before the Annual 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,
but will be counted for purposes of determining a quorum at the Annual Meeting.
Stockholders who execute proxies may revoke them at any time prior to their
exercise by filing with the Secretary of the Company a written notice of
revocation, by delivering to the Company a duly executed proxy bearing a later
date, or by attending the Annual Meeting and voting in person. The mere presence
of a stockholder at the Annual Meeting will not, by itself, automatically revoke
such stockholder's proxy.
VOTING SECURITIES
The securities which can be voted at the Annual Meeting consist of shares
of common stock, par value $0.01 per share (the "Common Stock"), of the Company.
Each share entitles its owner to one vote on all matters. The close of business
on March 17, 2000 (the "Record Date") has been fixed by the Board of Directors
as the Record Date for determination of stockholders entitled to vote at the
Annual Meeting. The number of shares of Common Stock outstanding as of the
Record Date was 12,535,073.
3
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Persons and groups beneficially owning more than 5% of the Common Stock are
generally required under federal securities laws to file certain reports with
the Securities and Exchange Commission ("SEC") detailing such ownership. The
following table sets forth, as of the Record Date, certain information as to the
Common Stock beneficially owned by any person or group of persons who is known
to the Company to be the beneficial owners of more than 5% of the Common Stock.
Other than as disclosed below, management knows of no person who beneficially
owned more than 5% of the Common Stock at the Record Date.
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF PERCENT OF COMMON
OWNER OWNERSHIP(A) STOCK OUTSTANDING
------- -------------------- -----------------
<S> <C> <C>
Thomas J. Hammond(b)..................... 3,082,332 23.9%
Janet G. Hammond(c)...................... 962,913 7.5
Mark T. Hammond(d)....................... 968,955 7.5
Catherine H. Rondeau(e).................. 966,955 7.5
Carrie C. Langdon(f)..................... 966,955 7.5
</TABLE>
- ---------------
(a) Does not include stock owned by the respective stockholder's spouse, as to
which the respective person disclaims beneficial ownership.
(b) Does not include 401,000 shares of stock which are acquirable by Mr. Hammond
in accordance with the Option Plan.
(c) Janet G. Hammond is the wife of Thomas J. Hammond.
(d) Does not include 271,000 shares of stock which are acquirable by Mr. Hammond
in accordance with the Option Plan. Mark T. Hammond is the son of Thomas J.
Hammond.
(e) Catherine H. Rondeau is the daughter of Thomas J. Hammond.
(f) Carrie C. Langdon is the daughter of Thomas J. Hammond.
4
<PAGE> 6
The following table sets forth, as of the Record Date, certain information
known to the Company as to the Common Stock beneficially owned by each director,
affiliate, and executive officer of the Company and the Bank and by all
directors and executive officers of the Company and the Bank as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
NAME AND POSITION SHARES(1) OF CLASS
----------------- --------- --------
<S> <C> <C>
Thomas J. Hammond, Chairman of the Board and Chief
Executive Officer of the Company and the Bank......... 3,482,332 25.0%
Mark T. Hammond, Vice Chairman of the Board and
President of the Company and the Bank................. 1,218,955 8.7
C. Michael Kojaian, Director of the Company............. 76,000 *
James D. Coleman, Director of the Company............... 71,500 *
Michael W. Carrie, Director of the Company and Executive
Vice President and Chief Financial Officer of the
Company and the Bank.................................. 73,223 *
Joan H. Anderson, Director of the Company and Executive
Vice President of the Company and the Bank............ 45,250 *
Mary Kay McGuire, Director of the Bank and Senior Vice
President and Secretary of the Company and the Bank... 40,660 *
Robert O. Rondeau, Jr., Executive Vice President of the
Bank.................................................. 17,770 *
Kirstin A. Hammond, Executive Vice President of the
Bank.................................................. 16,866 *
Charles Bazzy, Director of the Bank..................... 16,100 *
Ronald I. Nichols, Sr., Director of the Bank............ 10,000 *
Harry S. Ellman, Director of the Bank................... 8,500 *
William B. Bortels, Director of the Bank................ 5,800 *
John R. Kersten, Director of the Company................ 4,800 *
James D. Isbister, Director of the Company.............. 2,500 *
Richard S. Elsea, Director of the Company............... 1,000 *
Catherine H. Rondeau.................................... 966,955 6.9
Carrie C. Langdon....................................... 966,955 6.9
Janet H. Hammond........................................ 962,913 6.9
All directors, affiliates, and executive officers as a
group
(19 persons).......................................... 7,988,042 57.3%
</TABLE>
- ---------------
* Less than 1.0%
(1) Based on information provided by the respective directors, affiliates, and
executive officers. These totals include options granted under the 1997
Stock Option Plan. Unless otherwise indicated, the amounts shown include
shares owned jointly with family members with whom the person shares voting
and dispositive powers, or as custodian or trustee over which shares the
person effectively exercises voting and dispositive powers. These amounts
also include certain shares held in the person's Savings and Investment Plan
(the "Plan") account, as of December 31, 1999, with respect to which the
person has sole dispositive power and shared voting rights with the Plan's
trustees.
5
<PAGE> 7
PROPOSAL I -- ELECTION OF DIRECTORS
The Company's Board of Directors is currently composed of nine members. The
Company's Certificate of Incorporation requires that directors be divided into
three classes, as nearly equal in number as possible, the members of each class
to serve for a term of three years and until their successors are elected and
qualified, with one-third of the directors elected each year. The Board of
Directors has nominated for election as directors, Michael W. Carrie, James D.
Coleman, and Richard S. Elsea, all of whom are currently members of the Board,
to serve for three years and until his successor is elected and qualified. Under
Michigan law, directors are elected by a plurality of the votes present in
person or by proxy and entitled to vote on the election of directors.
It is intended that the persons named in the proxies solicited by the Board
of Directors will vote for the election of the named nominee. If the nominee is
unable to serve, the shares represented by all properly executed proxies which
have not been revoked will be voted for the election of such substitute as the
Board of Directors may recommend or the size of the Board of Directors may be
reduced to eliminate the vacancy. At this time, the Board knows of no reason why
any nominee might be unavailable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION AS DIRECTORS OF ALL
OF THE NOMINEES LISTED BELOW.
The following table sets forth, for the nominee and each continuing
director, his or her name, age as of the Record Date, the year he or she first
became a director of the Company and the expiration of his or her current term
as a director of the Company.
<TABLE>
<CAPTION>
AGE AS YEAR CURRENT
OF THE FIRST ELECTED TERM
RECORD DIRECTOR OF TO
NAME DATE THE COMPANY EXPIRE
---- ------ ------------- -------
<S> <C> <C> <C>
BOARD NOMINEE FOR TERMS TO EXPIRE IN 2003
Michael W. Carrie............................. 45 1997..... 2000
James D. Coleman.............................. 53 1993..... 2000
Richard S. Elsea.............................. 70 1997..... 2000
DIRECTORS CONTINUING IN OFFICE
Mark T. Hammond............................... 34 1993 2001
James D. Isbister............................. 63 1997 2001
John R. Kersten............................... 58 1997 2001
Thomas J. Hammond............................. 56 1993 2002
Joan H. Anderson.............................. 49 1997 2002
C. Michael Kojaian............................ 38 1997 2002
</TABLE>
The following sets forth the business experience of each director of the
Company.
THOMAS J. HAMMOND has served as Chairman of the Board of Directors and
Chief Executive Officer of the Company since its formation in 1993. Mr. Hammond
also serves as Chairman of the Board of Directors and Chief Executive Officer of
the Bank. Mr. Hammond founded Flagstar Bank, FSB in 1987.
JOAN H. ANDERSON has served as a Director since 1997. Mrs. Anderson also
serves as the Executive Vice President of the Company and the Bank. Mrs.
Anderson has been employed by the Company or the Bank in various capacities
since 1987.
C. MICHAEL KOJAIAN has served as a Director since 1997. He serves as
Executive Vice President and a Director of the Kojaian Companies, a real estate
development and asset management organization.
MARK T. HAMMOND has served as Vice-Chairman of the Board of Directors since
1993. Mr. Hammond also serves as President of the Company and the Bank. Mr.
Hammond has been employed by the Company since 1987. Mr. Hammond is the son of
Thomas J. Hammond, the Chairman and Chief Executive Officer.
6
<PAGE> 8
MICHAEL W. CARRIE has served as a Director since 1997. Mr. Carrie also
serves as the Executive Vice President and Chief Financial Officer of the
Company and the Bank. Mr. Carrie has been employed by the Company since 1993.
RICHARD S. ELSEA has served as a Director since 1997. Mr. Elsea is
President and Owner of Real Estate One, Michigan's largest real estate brokerage
company.
JAMES D. ISBISTER has served as a Director since 1997. He is the Chairman
of Advanced Pharma, Inc. Mr. Isbister is the father-in-law of Mark T. Hammond
and father of Kirstin A. Hammond.
JOHN R. KERSTEN has served as a Director since 1997. Mr. Kersten is the
owner and President of Century 21 Town and Country Real Estate, Michigan's 2nd
largest real estate brokerage company.
DR. JAMES D. COLEMAN has been a Director of the Company since 1993. He also
serves on the Foundation Board of Directors of Oakwood Hospital located in
Dearborn, Michigan.
MEETINGS AND COMMITTEES AND COMPENSATION OF THE BOARDS OF DIRECTORS
The Boards of Directors of the Company and the Bank generally meet on a
monthly basis, or as needed. During the year ended December 31, 1999, the
Company Board of Directors met 10 times. No Company director attended fewer than
70% of the total number of meetings held during 1999. The Bank Board of
Directors met 11 times. No Bank director attended fewer than 70% of the total
number of meetings held during 1999.
The Company's Board of Directors acts as a nominating committee for the
annual selection of its nominees for election as directors of the Company and
also appoints the members of the Bank's Board of Directors. While the Company's
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
Restated and Amended Articles of Incorporation and Bylaws, established any
procedures for this purpose. The Company's Board of Directors met once in its
capacity as the nominating committee during 1999.
The Company's Audit Committee consists of directors C. Michael Kojaian, Dr.
James Coleman, and John R. Kersten. The Audit Committee is responsible for
reviewing the Bank's auditing programs and the activity of the Bank's Audit
Committee. The Bank's Audit Committee consists of Bank directors Charles Bazzy,
William B. Bortels, and Ronald I. Nichols, Sr. The committee oversees the
quarterly regulatory reporting process, overseeing internal compliance audits as
necessary, receiving and reviewing the results of each external audit, reviewing
management's responses to auditors' recommendations, and reviewing management's
reports on cases of financial misconduct by employees, officers or directors.
The Bank Audit Committees met five times during 1999.
Directors of the Company and the Bank receive a monthly fee of $1,200 for
attendance at each board meeting. Non-Employee directors are also reimbursed for
reasonable travel expense incurred in connection with board and committee
meetings. Directors of the Company who are also directors of the Bank are
compensated for their role as Bank director as well as their role as Company
director.
During 1999, outside board members received a $3,500 year-end bonus.
Directors do not receive any additional compensation for serving on committees.
Directors are not paid if they do not attend a meeting. All directors are
eligible to participate in the Option Plan.
7
<PAGE> 9
BANK DIRECTORS
The Bank's Board of Directors are appointed by the Company's Board of
Directors for three year terms. The directors of the Bank are as follows:
<TABLE>
<CAPTION>
CURRENT
DIRECTOR TERM
NAME AGE POSITION(S) HELD WITH COMPANY SINCE EXPIRES
---- --- ----------------------------- -------- -------
<S> <C> <C> <C> <C>
Ronald I. Nichols Sr........... 65 Director 1987 2000
William B. Bortels............. 65 Director 1991 2001
Mary Kay McGuire............... 44 Senior Vice President, Secretary and Director 1987 2000
Harry S. Ellman................ 53 Director 1990 2002
Thomas J. Hammond.............. 56 Chairman of the Board and Chief Executive 1987 2002
Officer
Mark T. Hammond................ 34 Vice Chairman of the Board and President 1991 2001
Charles Bazzy.................. 70 Director 1987 2001
</TABLE>
CHARLES BAZZY has served as a Director of the Bank since 1987. He is
retired from Ford Motor Company where he served as a planning and development
manager for 33 years.
WILLIAM B. BORTELS has been a Director of the Bank since 1991. He has been
a self-employed single-family home builder in Brighton, Michigan since 1964.
MARY KAY MCGUIRE has been a Director of the Bank since 1987. Mrs. McGuire
also serves as Secretary and Senior Vice President of the Company and the Bank.
Mrs. McGuire has been employed by the Company since 1987. Mrs. McGuire has over
25 years experience in the financial services industry.
HARRY S. ELLMAN has served as a Director since 1990. He has been a title
insurance agent and attorney with Fidelity Title Co. located in Bingham Farms,
Michigan.
RONALD I. NICHOLS, SR. has served as a Director since 1987. He has been
President of Nichols Sales Associates, Inc., located in Bloomfield Hills,
Michigan since 1969.
8
<PAGE> 10
EXECUTIVE COMPENSATION AND OTHER BENEFITS
The following tables sets forth information with respect to the
compensation paid or accrued by the Company or the Bank during the last three
years ended December 31, 1999, to or on behalf of each executive officer, in all
capacities in which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
------------------------------------------------ COMPENSATION
INCENTIVE OTHER ------------
SALARY COMPENSATION OFFICER ANNUAL STOCK
NAME AND PRINCIPAL POSITION(S) YEAR ($) ($) BONUS $(1) OPTIONS
- ------------------------------ ---- ------ ------------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Thomas J. Hammond.............. 1999 $ 600,000 $1,000,000 -- $30,000 81,600 shs.
Chairman and Chief Executive 1998 600,000 1,000,000 $35,313 32,400 1,000 shs.
of the Company and the Bank 1997 733,333 1,000,000 -- 26,400 400,000 shs.
Mark T. Hammond................ 1999 422,242 600,000 -- 27,600 81,600 shs.
Vice Chairman and President 1998 406,248 450,000 50,200 32,400 21,000 shs.
of the Company and the Bank 1997 405,002 250,000 -- 30,936 250,000 shs.
Michael W. Carrie.............. 1999 231,988 181,545 30,000 27,971 24,100 shs.
Director, Executive Vice
President................. 1998 219,969 -- 70,125 22,800 1,000 shs.
and Chief Financial Officer 1997 205,076 226,000 18,921 5,383 65,000 shs.
of the Company and the Bank
Joan H. Anderson............... 1999 191,147 -- 25,000 20,400 13,100 shs.
Director and Executive Vice 1998 165,422 -- 42,625 24,000 1,000 shs.
President of the Company and 1997 156,838 -- 10,080 19,200 45,000 shs.
the Bank
Kirstin A. Hammond............. 1999 190,402 -- 25,000 4,800 11,500 shs.
Executive Vice President 1998 164,566 -- 42,625 4,800 5,000 shs.
of the Bank 1997 148,267 -- 7,532 4,800 15,000 shs.
Robert O. Rondeau, Jr.......... 1999 190,402 -- 25,000 4,800 11,500 shs.
Executive Vice President 1998 162,067 -- 42,625 4,800 5,000 shs.
of the Bank 1997 148,967 -- 7,532 4,800 15,000 shs.
</TABLE>
- ---------------
(1) Includes board fees, 401k matching contributions, car allowance, and
miscellaneous other.
(2) Additionally, the Company pays premiums on a life insurance/annuity policy
which benefits the individual executive officer. These policies require the
executive officer to also make contributory premium payments and do not
allow any benefit to be paid to any beneficiary until the Company is fully
reimbursed for its contributions.
9
<PAGE> 11
EXECUTIVE OFFICERS
THOMAS J. HAMMOND has served as Chief Executive Officer of the Bank since
its formation in 1987 and the Company since its formation in 1993. Mr. Hammond
also serves as Chairman of the Board of Directors for both the Company and the
Bank. Mr. Hammond founded Flagstar Bank, FSB in 1987.
MARK T. HAMMOND has served as President of the Company since 1997 and the
Bank since 1995. Mr. Hammond also serves as Vice-Chairman of the Board of
Directors of the Company and the Bank. Mr. Hammond has been employed by the
Company since its formation in 1993 and the Bank since 1987. Mr. Hammond is the
son of Thomas J. Hammond, the Chairman and Chief Executive Officer.
MICHAEL W. CARRIE has served the Executive Vice President and Chief
Financial Officer of the Company and the Bank. Mr. Carrie has also served as a
Director since 1997. Mr. Carrie has been employed by the Company and the Bank
since 1993.
JOAN H. ANDERSON has served as an Executive Vice President of the Company
since 1993 and the Bank since 1988. Mrs. Anderson also serves as on the Board of
Directors of the Company. Mrs. Anderson has been employed by the Company since
its formation in 1993 and the Bank since its formation in 1987.
ROBERT O. RONDEAU, JR. has served as an Executive Vice President of the
Bank since 1998. Mr. Rondeau has been employed by the Bank since 1995. Mr.
Rondeau manages the Consumer Loan Division, the Commercial Loan Division, and
the Retail Banking Operation. Mr. Rondeau is the son-in-law of Thomas J.
Hammond, the Chairman of the Board and Chief Executive Officer of the Bank and
Company.
KIRSTIN A. HAMMOND has served as an Executive Vice President of the Bank
since 1998. Mrs. Hammond has been employed by the Company since 1991. Mrs.
Hammond manages the Secondary Marketing Department. Mrs. Hammond is the wife of
Mark T. Hammond, the President and Vice Chairman of the Board of Directors of
the Company and the Bank and the daughter-in-law of Thomas J. Hammond, the
Chairman of the Board and Chief Executive Officer of the Bank and Company.
10
<PAGE> 12
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's Option Plan to the persons named in the Summary
Compensation Table set forth above.
<TABLE>
<CAPTION>
% OF TOTAL GRANT DATE
NUMBER OF OPTIONS AND GRANT DATE
YEAR OPTIONS GRANTED IN EXERCISE PRICE PRESENT
GRANTED GRANTED(A) YEAR GRANTED ($ PER SHARE) VALUE(B)
------- ---------- ------------ -------------- ----------
<S> <C> <C> <C> <C> <C>
Thomas J. Hammond..................... 1999 81,600 18.1% $23.834 $ 599,244
1998 1,000 1.1 28.125 6,900
1997 400,000 36.1 13.000 1,388,000
Mark T. Hammond....................... 1999 81,600 18.1 24.692 604,044
1998 21,000 22.7 19.950 101,640
1997 250,000 22.6 13.000 867,500
Michael W. Carrie..................... 1999 24,100 5.3 23.885 177,194
1998 1,000 1.1 28.125 6,900
1997 65,000 5.9 13.000 225,550
Joan H. Anderson...................... 1999 13,100 2.9 23.946 96,454
1998 1,000 1.1 28.125 6,900
1997 45,000 4.1 13.000 156,150
Kirstin A. Hammond.................... 1999 11,500 2.5 23.813 84,410
1998 5,000 5.4 21.500 25,450
1997 15,000 1.4 13.000 156,150
Robert O. Rondeau, Jr................. 1999 11,500 2.5 23.813 84,410
1998 5,000 5.4 21.500 25,450
1997 15,000 1.4 13.000 156,150
</TABLE>
- ---------------
(a) Options granted under the Option Plan are incentive stock options with an
exercise price equal to the fair market value at the time of issuance. All
options issued under the Plan have a vesting period from the grant date.
(b) Represents the present value of the option at the date of grant as
determined using the Black-Scholes option pricing model. In calculating the
present value of the option grant, the following assumptions were utilized:
(i) the continuously compounded risk-free rate of return expressed on an
annual basis was 5.8%, 5.6%, and 7.0%, (ii) expected volatility of the
underlying Common Stock was 35.5%, 31.4%, and 39.0%; and (iii) dividends on
the underlying Common Stock increased at an annual rate of 2.0% in 1999,
1998, and 1997, respectively. These assumptions are used for illustrative
purposes only. No assurance can be given that actual experience will
correspond to the assumptions utilized.
AGGREGATED OPTION EXERCISES IN 1999 AND YEAR END OPTION VALUES. The
following table sets forth information concerning the value of options held by
the named executive officers at the end of the year.
<TABLE>
<CAPTION>
SHARES
ACQUIRED NUMBER OF SECURITIES VALUE OF UNEXERCISED
ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
EXERCISE REALIZED OPTIONS AT YEAR END YEAR END(A)
NAME (#) ($) (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)
---- -------- -------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
Thomas J. Hammond........... -- -- 401,000/81,600 $1,700,000/--
Mark T. Hammond............. -- -- 271,000/81,600 1,062,500/--
Michael W. Carrie........... 7,690 -- 58,310/24,100 243,568/--
Joan H. Anderson............ -- -- 46,000/13,100 191,250/--
Kirstin A. Hammond.......... -- -- 15,000/16,500 63,750/--
Robert O. Rondeau, Jr. ..... -- -- 15,000/16,500 63,750/--
</TABLE>
- ---------------
(a) Represents the difference between the fair value of in the money options
underlying the Common Stock at year-end (based on the most recent sales
price) and the exercise price of the options. Options are in-the-money if
the fair value of the underlying securities exceeds the exercise price of
the option and out-of-the-money if the exercise price of unexercisable
options exceeds the current fair value.
11
<PAGE> 13
EMPLOYMENT CONTRACTS. The Company and the Bank entered into separate
employment agreements pursuant to which Thomas J. Hammond serves as Chief
Executive Officer, Mark T. Hammond serves as President, Michael W. Carrie serves
as Executive Vice President and Chief Financial Officer, and Joan H. Anderson
serves as Executive Vice President. In such capacities, the above mentioned
senior executives are responsible for overseeing all operations of the Company
and the Bank and for implementing the policies adopted by the Board of Directors
of the Company and the Bank. All such employment agreements are referred to
herein collectively as "Employment Agreements" and all persons who have entered
into such Employment Agreements are referred to herein as "Employees."
The Board of Directors of the Company and the Bank each believe that the
Employment Agreements assure fair treatment of the Employees in relation to
their career providing them with a limited form of financial security while
committing such persons to future employment for the term of their respective
agreements. In the event that any Employee prevails over the Company and the
Bank in a legal dispute as to an Employment Agreement, he or she will be
reimbursed for his or her legal and other expenses.
The term of the agreements are three years. The agreements provide for an
annual base salary. On each anniversary date from the date of commencement of
the Employment Agreements, the term of the Employee's employment under the
Employment Agreements will be extended for an additional one-year period beyond
the then effective expiration date, upon a determination by the Board of
Directors that the performance of the Employee has met the required performance
standards and that such Employment Agreements should be extended. The Employment
Agreements provide the Employee with a salary review by the Board of Directors
not less often than annually, as well as with inclusion in any discretionary
bonus plans, retirement and medical plans, customary fringe benefits, vacation,
and sick leave.
The Employment Agreements terminate upon the Employee's death or
disability, and are terminable by the Company and the Bank for "just cause" as
defined in the Employment Agreements. In the event of termination for just
cause, no severance benefits are available. If the Company terminates the
Employee without just cause, the Employee will be entitled to a continuation of
his or her salary and benefits from the date of termination through the
remaining term of such Employee's Employment Agreement, plus an additional
12-month period, and, at the Employee's election, either cash in an amount equal
to the cost to the Employee of obtaining health, life, disability, and other
benefits which the Employee would have been eligible to participate in through
the Employment Agreement's expiration date or continued participation in such
benefit plans through the agreement's expiration date, provided the Employee
continued to qualify for participation therein. If the Employment Agreements are
terminated due to the Employee's "disability" (as defined in the Employment
Agreements), the Employee will be entitled to a continuation of his or her
salary and benefits for up to 180 days following such termination. In the event
of the Employee's death during the term of the Employment Agreement, his or her
estate will be entitled to receive his or her salary through the last day of the
calendar month in which the Employee's death occurred. The Employee is able to
terminate voluntarily his or her Employment Agreement by providing 90 days'
written notice to the Board of Directors, in which case the Employee is entitled
to receive only his compensation, vested rights and benefits up to the date of
termination.
The Employment Agreements contain provisions stating that in the event of
the Employee's involuntary termination of employment in connection with, or
within one year after, any change in control of the Company or the Bank, other
than for "just cause," the Employee will be paid within 10 days of such
termination an amount equal to the difference between (i) 2.99 times his or her
"base amount," as defined in Section 280G(b)(3) of the Code, and (ii) the sum of
any other parachute payments, as defined under Section 280G(b)(2) of the Code,
that the Employee receives on account of the change in control. "Control"
generally refers to the acquisition, by any person or entity, of the ownership
or power to vote more than 50% of the Company's or the Bank's voting stock, the
control of the election of a majority of the Company's or the Bank's directors,
or the exercise of a controlling influence over the management or policies of
the Company or the Bank. In addition, under the Employment Agreements, 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 Directors of the Company or the Bank. The amount
determined using the forgoing formula would also be paid (a) in the event of an
Employee's involuntary termination of
12
<PAGE> 14
employment within 30 days following a change in control, or (b) in the event of
the Employee's voluntary termination of employment within one year following a
change in control, upon the occurrence, or within 90 days thereafter, of certain
specified events following the change in control, which have not been consented
to in writing by the Employee, including (i) the requirement that the Employee
perform his or her principal executive functions more than 50 miles from his or
her primary office, (ii) a reduction in the Employee's base compensation as then
in effect, (iii) the failure of the Bank or the Company to continue to provide
the Employee with contractual compensation and benefits, including material
vacation, fringe benefits, stock option and retirement plans, (iv) the
assignment to the Employee of duties and responsibilities which are other than
those normally associated with his or her position with the Company and the
Bank, (v) a material reduction in the Employee's authority and responsibility,
and (vi) in the case of an employee who is also a director, the failure to
re-elect the Employee to the Bank's or the Company's Board of Directors. The
aggregate payments that would be made to Messrs. Thomas J. Hammond, Mark T.
Hammond and Carrie and Ms. Anderson, assuming termination of employment, other
than for just cause, within one year of the change in control at January 1,
1999, would be approximately as follows: Mr. Thomas J. Hammond -- $5.1 million;
Mr. Mark T. Hammond -- $2.6 million; Mr. Carrie -- $1.2 million; Mrs. Anderson
- -- $619,000.
EMPLOYEE STOCK ACQUISITION PLAN. The Company has implemented the Flagstar
Bancorp, Inc. 1997 Employee Stock Acquisition Plan ("Purchase Plan"), the
purpose of which is to encourage broad-based ownership by employees of the
Company and, as a result, to provide an incentive for employees at all levels to
contribute to the profitability and success of the Company. The Purchase Plan
enables the Company to offer a convenient means for the employees who might not
otherwise own Common Stock to purchase and hold the Common Stock, and through
the partial refund feature of the Purchase Plan, to provide a meaningful
inducement to participate.
The Purchase Plan is administered by the Board of Directors. All employees
of the Company, its subsidiaries or affiliates who work 20 hours per week or
more with at least 12 months of continuous employment and all directors are
eligible to participate.
Under the Purchase Plan, eligible participants are to purchase from any
third party and on the open market shares of the Common Stock and, upon
providing evidence of the purchase to the Company, the employees would receive a
payment from the Company equal to 15% of the full price of the shares.
Reimbursement for total purchases in any one year is limited to 7% of the
employee's gross income from the Company in the prior calendar year. Costs
related to the sale of such shares are borne by the individuals. Participants
must sign a statement acknowledging that they are aware of the condition of the
Purchase Plan that the shares purchased may not be sold for a period of one
year.
Participants are entitled, with respect to Common Stock acquired under the
Purchase Plan, to the same rights and distributions as are other holders of the
Common Stock. The Purchase Plan was not designed to comply with the requirements
of Section 423 of the Code with respect to "employee stock purchase plans." As a
result, participants in the Purchase Plan are taxed for federal income tax
purposes in the year the refund is received by them. Costs incurred by the
Company pursuant to the Purchase Plan are deductible as an expense by the
Company.
INCENTIVE COMPENSATION PLAN. The Company has also implemented the Flagstar
Bancorp, Inc. 1997 Incentive Compensation Plan (the "Incentive Compensation
Plan") which is unfunded and as to which benefits are payable only in the form
of cash from the Company's general assets. The purposes of the Incentive
Compensation Plan is to attract and retain the best available personnel for
positions of substantial responsibility with the Company and to provide
additional incentives to employees of the Company in the event the Company
achieves certain financial performance goals indicative of its profitability and
stability.
The Incentive Compensation Plan is administered by the Company's
Compensation Committee. The Compensation Committee decides, from year to year,
which employees of the Company are eligible to participate in the Incentive
Compensation Plan and the size of the bonus pool. Directors who are not
employees may not participate in the Incentive Compensation Plan.
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<PAGE> 15
Each employee who is eligible to receive a bonus at the end of a plan year
will receive a bonus equal to a predetermined amount adjusted by a mathematical
formula which reflects aspects of the Company's results for that year. However,
the Incentive Compensation Committee may, in its discretion, by resolution
adopted before the first day of any plan year, change said percentage. The
aggregate amount of bonuses payable for any plan year will be proportionately
reduced to the extent that the payment would cause the Bank to cease to be a
"well-capitalized" institution. For 1999, the Incentive Compensation Plan
provided for bonuses to be tied to return on equity, return on assets, deposit
growth, CAMELS rating, and the volume of loan originations.
Only Messrs. Thomas and Mark Hammond, were participants in this plan during
1999, 1998, and 1997.
DEFERRED COMPENSATION PLAN. The Company has implemented the 1997 Deferred
Compensation Plan, which is intended to permit employees and directors to defer
the current receipt of income until such time as funds or assets are distributed
in the future. Employees may elect to defer up to 25 percent of annual
compensation and directors may defer their entire compensation. Funds deferred
remain the property of the Bank or the Company and subject to the claims of the
creditors of the Bank or the Company in the event of default. However, the funds
will be placed in a trust with an independent trustee and the individual
participants may direct that their deferred amounts be invested in stock of the
Company purchased on the open market. Upon withdrawal, the participant will have
the option of receiving the stock or the proceeds of its sale at the then market
price. All withdrawals from the trust would then be taxable as ordinary income.
There have been no participants in this plan.
WHOLE LIFE INSURANCE POLICY. The Bank pays the premiums of variable whole
life insurance policies which are available to all officers of the Bank. The
beneficiary of each such policy is the estate of the officer, except that the
Bank is the beneficiary to the extent of all premiums paid by the Bank for such
policy.
REPORT OF THE COMPENSATION COMMITTEE
OVERVIEW AND PHILOSOPHY
The Company's executive officers are also executive officers of the Bank
and are compensated by the Bank not the Company. However, the responsibility for
setting policies that govern executive compensation, and for recommending the
components and structure of the compensation plans for executive officers of the
Company rests with the Company's Compensation Committee (the "Committee"). The
Committee is comprised of Directors James D. Coleman, Chairman, Richard S.
Elsea, and John R. Kersten.
Under the direction of the Committee, the Company has developed and
implemented compensation policies and plans that embody a pay-for-performance
philosophy. The policies and plans encourage achievement of objectives as
formulated by the Company's Board of Directors and its committees and reward
exceptional performance as determined by the Committee. In the opinion of the
Committee, this approach strengthens the Company's long-term performance by
making the goals and objectives of executive management congruent with those of
the Company and its stockholders. The Committee also believes that competitive
executive compensation and the structure of the Company's compensation plans are
essential to the Company's desire to attract and retain qualified management.
For 1999, the Committee considered and determined the compensation for each of
the executive officers stated above.
EXECUTIVE COMPENSATION PROGRAMS
Within this overall purpose, the Committee has determined that the
Company's executive compensation program should have four primary components:
base salary; cash bonuses under the stockholder-approved incentive compensation
plan; long-term incentive compensation in the form of stock option awards under
the stockholder-approved stock option plan; and other competitive benefits. Base
and incentive compensation for executive officers depends primarily on regional
and national surveys of compensation paid to executive officers of other savings
and loan holding companies, commercial banks and mortgage lending institutions
similar in size, market capitalization, scope of operations and other
characteristics, as well as the Company's operating results.
14
<PAGE> 16
Base Compensation. The Committee has determined that the base compensation
for the Company's executive officers should be based primarily on the salaries
paid to executives having comparable responsibilities at other similar
institutions. A primary, but not the sole, source of information upon which the
base compensation of executive officers is based are available surveys of
compensation paid to executives performing similar functions at other financial
institutions and/or mortgage banking companies. In setting base salaries, the
Committee also considers other qualitative factors such as the overall
performance of the Company and the personal performance and effectiveness of
each officer.
Incentive Compensation. The Company has adopted the Incentive Plan, which
relies on the specific performance of the Company each year compared with
benchmark performance levels of returns on assets and equity, the OTS CAMELS
rating of the Bank, deposit growth and loan origination volume, all considered
in relation to the annual forecasted goals of the Company. Incentive
compensation under the Incentive Plan is issued in the form of cash, the amount
of which is generally based upon a mathematical formula.
Long-Term Incentive Compensation. The Compensation Committee believes that
the grant of stock options encourages the Company's executives to focus on
managing the Company from the perspective of an equity owner. The Company has
therefore adopted two plans that enable employees and officers to develop an
equity interest in Flagstar, the most significant of which for senior officers
are the Option Plan and the Purchase Plan.
Stock options have been granted under the Option Plan to senior and
mid-level executives, the amounts and terms of which were determined by the
Committee. The number of options granted was based on criteria that included
consideration for the officer's responsibility, performance and salary level.
The value of these options, which vest after a two-year period and are
exercisable for five years thereafter, is intended to track the performance of
the Common Stock over an extended period of time.
Other Benefits. In addition to the foregoing, the Company provides medical,
dental and life insurance and defined contribution pension plan qualifying under
Sections 401(a) and Section 401(k) of the Internal Revenue Code of 1986, as
amended to senior executives that are generally available to all Company
employees, and other perquisites that are comparable to standards within the
financial institutions industry.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
As Chairman and Chief Executive Officer, Thomas J. Hammond's base salary is
reviewed annually by the Committee in accordance with the procedures and
policies described above. Since the Company's executive compensation plans
discussed previously are for the most part linked to the Company's performance
compared with the peer group and subject to formula calculation, his
participation in these plans is determined in the same general manner as are
other executive officers.
The Committee believes that Mr. Hammond's total compensation for 1999
appropriately reflected his contribution to the Company's financial results. For
1999, the Company's performance in the key area of return on equity greatly
exceeded the performance of its peers. The Company's financial results for 1999,
especially as measured by net income, were also significantly above all previous
results for the Company, less the record performance of 1999. The Committee
believes that this performance was indicative of a well-managed company during a
challenging business climate.
COMPENSATION COMMITTEE
James D. Coleman, Chairman
Richard S. Elsea
John R. Kersten
15
<PAGE> 17
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors of the Bank acts as a compensation committee for the
officers of the Bank. The Compensation Committee of the Company reviews the
compensation of the executive officers of the Company.
Except for Directors Thomas J. Hammond, Mark T. Hammond, and Mary Kay
McGuire, no member of the Board of Directors of the Bank was (a) an officer or
employee of the Bank, or any of its subsidiaries during the year ended December
31, 1999, (b) a former officer of the Bank, or any of its subsidiaries, or (c)
an insider (i.e., director, officer, director or officer nominee, greater than
5% stockholder, or immediate family member of the foregoing) of the Bank, or any
of its subsidiaries.
Mr. John Kersten is a member of the Company's Board of Directors and the
Company's Compensation Committee, and in that role sets the annual compensation
amount for the executive officers of the Company. Mr. Kersten is the owner of
Cambridge Mortgage Company, a correspondent of the Company. All of the following
business transactions were conducted in the ordinary course of business on
substantially the same terms, including interest rates and collateral, as those
prevailing for comparable transactions with non-affiliated persons. It is the
belief of management that such loans neither involved more than the normal risk
of collection nor presented other unfavorable features.
Cambridge Mortgage is the Company's fourth largest correspondent and
sold $93.0 million in mortgage loans to the Company during 1999.
Cambridge Mortgage is also a customer that utilizes the Company's
warehouse lending program offered through the Company's commercial loan
division. Cambridge Mortgage has an approved line of credit of $10.0
million. The average amount outstanding during 1999 was $4.8 million,
with a high balance of $8.0 million and a balance at December 31, 1999
of $2.4 million. Mr. Kersten has personally guaranteed this line of
credit
Mr. John Kersten and Town and Country Real Estate Company are also joint
guarantors on a $400,000 commercial line of credit which had an average
outstanding balance during 1999 of $297,208. The outstanding balance of
this loan at December 31, 1999 was $296,021.
Mr. Richard Elsea is a member of the Company's Board of Directors and the
Company's Compensation Committee, and in that role sets the annual compensation
amount for the executive officers of the Company. Mr. Elsea is the owner of John
Adams Mortgage Company, a wholesale mortgage broker that sells mortgage loans to
the Company. The following business transactions were conducted in the ordinary
course of business on substantially the same terms, as those prevailing for
comparable transactions with non-affiliated persons.
John Adams Mortgage sold $6.7 million in mortgage loans to the Company
during 1999.
No other member of the Committee engaged in transactions with the Company
or any subsidiary involving more than $60,000 during the year ended December 31,
1999 or otherwise rendered services to the Company through a law firm or
investment banking firm.
No executive officer of the Company or the Bank, at any time during 1999,
also served on a compensation committee or otherwise as a director of another
company whose executive officer served on the Company's Compensation Committee
or as a director of the Company.
16
<PAGE> 18
CUMULATIVE STOCK PERFORMANCE GRAPH
The graph and table that follow show the cumulative return on the Common
Stock since May 1, 1997. This return is compared in the table and graph with the
cumulative return over the same period with the following three indices: (i) the
Nasdaq Financial 100 Index (2) the Nasdaq Bank Index, and (3) the S&P Mid Cap
400 Index. The graph and table were prepared assuming that $100 was invested on
January 1, 1999 in the Common Stock and in each of the indices. Cumulative total
return on the Common Stock or the three indices equals the total increase in
value since May 1, 1997. No reinvestment of dividends has been assumed due to
immaterial amounts paid in 1999. The stockholder returns shown on the
performance graph are not necessarily indicative of the future performance of
the Common Stock or any particular index.
CUMULATIVE TOTAL STOCKHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDICES
APRIL 30, 1997 THROUGH DECEMBER 31, 1999
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
S&P MIDCAP 400
FLAGSTAR BANCORP, INC. NASDAQ FINANCIAL 100 NASDAQ BANKS INDEX
---------------------- -------------------- ------------ --------------
<S> <C> <C> <C> <C>
4/30/97 100.00 100.00 100.00 100.00
6/30/97 125.00 113.84 116.80 100.00
12/31/97 152.28 147.14 150.66 100.52
6/30/98 187.50 148.42 153.53 108.57
12/31/98 200.96 143.07 132.92 118.29
6/30/99 194.23 149.45 135.04 125.64
12/31/99 132.69 130.25 122.31 134.07
</TABLE>
<TABLE>
<CAPTION>
INDEX 4/30/97 6/30/97 12/31/97 6/30/98 12/31/98 6/30/99 12/31/99
<S> <C> <C> <C> <C> <C> <C> <C>
FLAGSTAR BANCORP, INC. 100.00 125.00 152.28 187.50 200.96 194.23 132.69
NASDAQ FINANCIAL 100 100.00 113.84 147.14 148.42 143.07 149.45 130.25
NASDAQ BANKS 100.00 116.80 150.66 153.53 132.92 135.04 122.31
S & P MIDCAP 400 INDEX 100.00 100.00 100.52 108.57 118.29 125.64 134.07
</TABLE>
CERTAIN TRANSACTIONS
The Company and its subsidiaries have had, and expect to have in the
future, transactions in the ordinary course of business with directors and
executive officers and members of their immediate families, as well as with
principal stockholders.
All loan transactions were made in the ordinary course of business on
substantially the same terms, including interest rates and collateral, as those
prevailing for comparable transactions with non-affiliated persons. It is the
belief of management that such loans neither involved more than the normal risk
of collection nor presented other unfavorable features.
Mr. Geoffrey Langdon is the spouse of Carrie Langdon, a 7.5%
shareholder of the Company and the daughter of Thomas J. Hammond, the Chief
Executive Officer and Chairman of the Board of the Company. Mr. Geoffrey
Langdon and Mrs. Carrie Langdon own 96% of Net Planet, LLC, a software
17
<PAGE> 19
development company which transacted business with the Company, through
their individual trusts. Mr. Langdon is a former Senior Vice President of
the Bank. All of the following business transactions were conducted in the
ordinary course of business on substantially the same terms as those
prevailing for comparable transactions with non-affiliated persons.
Net Planet, LLC completed a redesign of the Company's internet web
site in 1999 for a total cost of $44,755.
Net Planet, LLC completed the design of Bankave.com's internet web
site in 1999 for a total cost of $347,341.
Net Planet LLC was also the borrower on a time note issued through
the Company's commercial loan division. Geoffrey Langdon Trust and
Carrie Langdon Trust were guarantors on the borrowing. The note was
issued December 31, 1999 in the amount of $304,000 and repaid on January
20, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater-than-10% stockholders
are required to furnish the Company with copies of all such reports. Based
solely on its review of copies of such reports received by it, or written
representations from certain reporting persons that no annual report of change
in beneficial ownership is required, the Company believes that, during the year
ended December 31, 1999, all such filing requirements were satisfied.
INDEPENDENT AUDITORS
The Board of Directors has appointed the public accounting firm of Grant
Thornton LLP to continue as independent auditors for the Company for the year
ending December 31, 2000. Grant Thornton LLP served as the Company's independent
auditors for the year ended December 31, 1999. A representative of Grant
Thornton LLP is expected to be present at the Annual Meeting and available to
respond to appropriate questions, and will have the opportunity to make a
statement if he or she so desires.
STOCKHOLDER PROPOSALS
It is anticipated that the Company's Annual Meeting in 2001 will be held on
May 10, 2001 and any stockholder who intends to present a proposal for action at
that meeting and would like a copy of the proposal included in the Company's
proxy materials must forward a copy of the proposal or proposals to the
Company's principal executive office at 2600 Telegraph Road, Bloomfield Hills,
Michigan 48302, and must be received by the Company not later than November 30,
2000. The Company will have discretionary authority to vote proxies on matters
at the 2000 Annual Meeting if the matter is not included in the proxy statement
and notice by a stockholder to consider the matter was not received by the
Company prior to the deadline provided in the Company's Bylaws for such matters.
Nothing in this paragraph shall be deemed to require the Company to include in
its proxy statement and proxy relating to the 2000 Annual Meeting any
stockholder proposal that does not meet all of the requirements for inclusion
established by the Securities and Exchange Commission in effect at the time such
proposal is received.
OTHER MATTERS
The Board of Directors is not aware of any other business to be presented
for action by the stockholders at the Annual Meeting other than those matters
described in this Proxy Statement and matters incident to the conduct of the
Annual Meeting. If, however, any other matters known are properly brought before
the Annual
18
<PAGE> 20
Meeting, the persons named in the accompanying proxy will vote such proxy on
such matters as determined by a majority 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 number without additional compensation.
The Company's 1999 Annual Report to Stockholders (the "Annual Report"),
including financial statements, has been mailed to all persons who were
stockholders of record as of the close of business on the Record Date. Any
stockholder who has not received a copy of the Annual Report may obtain a copy
by writing to the Secretary of the Company. The Annual Report is not to be
treated as a part of this proxy solicitation material or as having been
incorporated herein by reference.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ MARY KAY MCGUIRE
Mary Kay McGuire
Secretary
Bloomfield Hills, Michigan
April 1, 1999
ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1999, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
FURNISHED WITHOUT CHARGE TO PERSONS WHO WERE STOCKHOLDERS AS OF THE RECORD DATE
UPON WRITTEN REQUEST TO THE SECRETARY, FLAGSTAR BANCORP, INC., 2600 TELEGRAPH
ROAD, BLOOMFIELD HILLS, MICHIGAN 48302.
19
<PAGE> 21
FLAGSTAR BANCORP, INC.
2600 TELEGRAPH ROAD
BLOOMFIELD HILLS, MICHIGAN 48302
REVOCABLE PROXY FOR THE ANNUAL MEETING
OF STOCKHOLDERS
MAY 9, 2000
The undersigned hereby constitutes and appoints C. Michael Kojaian, John R.
Kirsten, and Mark T. Hammond, and each of them, the proxies of the undersigned,
with full power of substitution, to attend the Annual Meeting of Stockholders of
Flagstar Bancorp, Inc. (the "Company") to be held at the national headquarters
of Flagstar Bank, FSB, 2600 Telegraph Road, Bloomfield Hills, Michigan on May 9,
2000 at 1:00 p.m., local time, and any adjournments thereof, and to vote all the
shares of stock of the Company which the undersigned may be entitled to vote,
upon the following matters.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY, WILL BE VOTED
IN ACCORDANCE WITH THE INSTRUCTIONS MARKED HEREIN, AND WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND AS DETERMINED BY A MAJORITY OF THE BOARD OF DIRECTORS
AS TO OTHER MATTERS, IF NO INSTRUCTIONS TO THE CONTRARY ARE MARKED HEREIN AND TO
THE EXTENT THIS PROXY CONFERS SUCH DISCRETIONARY AUTHORITY.
(1) The Election of Directors: Michael W. Carrie, James D. Coleman, and
Richard S. Elsea.
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to vote
above (except as marked to for all nominees listed
the contrary below). above.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PRINT
THAT NOMINEE'S NAME BELOW.)
- --------------------------------------------------------------------------------
(2) The transaction of such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The undersigned hereby acknowledges receipt of a copy of the accompanying Notice
of Annual Meeting of the Stockholders and Proxy Statement and the Annual Report
to Stockholders for the year ended December 31, 1999, and hereby revokes any
proxy heretofore given. THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE ITS
EXERCISE.
Date:
--------------------------------
Signature:
---------------------------
Signature:
---------------------------
PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS HEREIN AND RETURN IN THE
ENCLOSED ENVELOPE. If acting as executor, administrator, trustee, guardian, etc.
you should so indicate when signing. If the signor is a corporation, please sign
the full name by duly appointed officer. If a partnership, please sign in
partnership name by authorized person. If shares are held jointly, each
stockholder named should sign.
20
