SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by the 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
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HOPFED BANCORP, INC
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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|_| Fee paid previously with preliminary materials:
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1. Amount previously paid:
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2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
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4. Date Filed:
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<PAGE>
HOPFED BANCORP, INC.
2700 FORT CAMPBELL BOULEVARD
HOPKINSVILLE, KENTUCKY 42440
April 20, 2000
Dear Stockholder:
We invite you to attend the Annual Meeting of Stockholders (the "Annual
Meeting") of HopFed Bancorp, Inc. (the "Company") to be held at the main office
of Hopkinsville Federal Savings Bank, 2700 Fort Campbell Boulevard,
Hopkinsville, Kentucky on Wednesday, May 10, 2000 at 3:00 p.m., local time.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Annual Meeting.
As an integral part of the Annual Meeting, we will report on the operations
of the Company. Directors and officers of the Company will be present to respond
to any questions that our stockholders may have. Detailed information concerning
our activities and operating performance is contained in our Annual Report which
also is enclosed.
YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. On
behalf of the Board of Directors, we urge you to please sign, date and return
the enclosed proxy card in the enclosed postage-prepaid envelope 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.
Sincerely,
WD Kelley
Chairman of the Board
<PAGE>
HOPFED BANCORP, INC.
2700 FORT CAMPBELL BOULEVARD
HOPKINSVILLE, KENTUCKY 42440
(502) 885-1171
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 10, 2000
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of HopFed Bancorp, Inc. (the "Company") will be held at the main
office of Hopkinsville Federal Savings Bank, 2700 Fort Campbell Boulevard,
Hopkinsville, Kentucky on Wednesday, May 10, 2000 at 3:00 p.m., local time.
The Annual Meeting is for the following purposes, which are more completely
described in the accompanying Proxy Statement:
1. The election of one director of the Company.
2. Such other matters as may properly come before the Annual Meeting or
any adjournment thereof.
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 or any adjournments thereof. Stockholders of record at the close of
business on March 20, 2000, are the stockholders entitled to vote at the Annual
Meeting and any adjournment thereof.
You are requested to fill in and sign the enclosed 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 Annual Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
BOYD M. CLARK
SECRETARY
Hopkinsville, Kentucky
April 20, 2000
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF A
FURTHER REQUEST FOR PROXIES IN ORDER TO INSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
WITHIN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
HOPFED BANCORP, INC.
2700 FORT CAMPBELL BOULEVARD
HOPKINSVILLE, KENTUCKY 42440
(502) 885-1171
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
MAY 10, 2000
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INTRODUCTION
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of HopFed Bancorp, Inc. (the "Company") for
the Annual Meeting of Stockholders (the "Annual Meeting") to be held at the main
office of Hopkinsville Federal Savings Bank (the "Bank"), 2700 Fort Campbell
Boulevard, Hopkinsville, Kentucky on Wednesday, May 10, 2000, at 3:00 p.m.,
local time. The accompanying Notice of Annual Meeting and this Proxy Statement,
together with the enclosed form of proxy, are first being mailed to stockholders
on or about April 20, 2000.
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VOTING AND REVOCATION OF PROXIES
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Proxies solicited by the Board of Directors of the Company will be voted in
accordance with the directions given therein. PROPERLY EXECUTED BUT UNMARKED
PROXIES WILL BE VOTED FOR PROPOSAL I TO ELECT ONE NOMINEE OF THE BOARD OF
DIRECTORS AS A DIRECTOR OF THE COMPANY. If any other matters are properly
brought before the Annual Meeting as to which proxies in the accompanying form
confer discretionary authority, the persons named in the accompanying proxies
will vote the shares represented thereby on such matters as determined by a
majority of the Board of Directors. The proxies solicited by the Board of
Directors confer 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, with respect to matters
incident to the conduct of the Annual Meeting and with respect to any other
matter presented to the Annual Meeting if notice of such matter has not been
delivered to the Company in accordance with the Certificate of Incorporation and
Bylaws. Proxies marked as abstentions will not be counted as votes cast. In
addition, shares held in street name which have been designated by brokers on
proxy cards as not voted ("broker no votes") will not be counted as votes cast.
Proxies marked as abstentions or as broker no votes, however, will be treated as
shares present for purposes of determining whether a quorum is present.
Stockholders who execute the form of proxy enclosed herewith retain the
right to revoke such proxies at any time prior to exercise. Unless so revoked,
the shares represented by properly executed proxies will be voted at the Annual
Meeting and all adjournments thereof. Proxies may be revoked at any time prior
to exercise by written notice to the Secretary of the Company or by the filing
of a properly executed, later-dated proxy. A proxy will not be voted if a
stockholder attends the Annual Meeting and votes in person. The presence of a
stockholder at the Annual Meeting alone will not revoke such stockholder's
proxy.
The Company has retained Corporate Communications, Inc. to aid in the
solicitation of proxies and to verify certain records related to the
solicitation of proxies at a fee of $2,250 plus reimbursement of normal
expenses.
2
<PAGE>
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VOTING SECURITIES
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The securities which can be voted at the Annual Meeting consist of shares
of the Company's common stock, $.01 par value per share ("Common Stock").
Stockholders of record as of the close of business on March 20, 2000 (the
"Record Date") are entitled to one vote for each share of Common Stock then held
on all matters. As of the Record Date, 3,993,592 shares of the Common Stock were
issued and outstanding. The presence, in person or by proxy, of at least
one-third of the total number of shares of Common Stock outstanding and entitled
to vote will be necessary to constitute a quorum at the Annual Meeting.
Persons and groups owning in excess of 5% of Common Stock are required to
file certain reports regarding such ownership with the Company and the
Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). As of the Record Date, management
was not aware of any person who beneficially owned more than 5% of the
outstanding shares of Common Stock.
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PROPOSAL I -- ELECTION OF DIRECTORS
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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. As a result of the retirement of Bruce Thomas as an
officer and director of the Company effective May 5, 2000, the Board of
Directors has reduced the number of directors from eight to seven as of that
date. The Board of Directors has nominated Peggy R. Noel to serve for a
three-year term or until her successor is elected and qualified. Delaware law
provides that directors shall be elected by a plurality of the votes of the
shares present in person or represented 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. Stockholders are
not entitled to cumulate their votes for the election of directors. If the
nominee is unable to serve, the shares represented by all valid proxies will be
voted for the election of such substitute director as the Board of Directors may
recommend, or the Board of Directors may reduce the number of directors to
eliminate the vacancy.
3
<PAGE>
The following table sets forth for the nominee and for each director,
including the named executive officer, such person's name, age, the year such
person first became a director and the number of shares and percentage of Common
Stock beneficially owned.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEE NAMED BELOW AS
DIRECTOR OF THE COMPANY.
<TABLE>
<CAPTION>
PRESENT SHARES OF
YEAR FIRST TERM COMMON STOCK
ELECTED TO BENEFICIALLY PERCENT
NAME AGE(1) DIRECTOR (2) EXPIRE OWNED (3) OF CLASS
---- ------ ------------ ------ -------------- --------
BOARD NOMINEE FOR TERM TO EXPIRE IN 2003
<S> <C> <C> <C> <C> <C>
Peggy R. Noel 61 1995 2000 136,106 3.3%
DIRECTORS CONTINUING IN OFFICE
WD Kelley 79 1972 2001 49,775 1.2%
Clifton H. Cochran 78 1977 2001 54,401(4) 1.4%
Walton G. Ezell 65 1965 2001 54,737(4) 1.4%
Boyd M. Clark 54 1990 2002 93,812 2.3%
Harry J. Dempsey 42 1999 2002 40,097 1.0%
Gilbert E. Lee 56 1999 2002 34,319 0.9%
DIRECTOR NOT CONTINUING IN OFFICE
Bruce Thomas 62 1990 2000 143,557 3.5%
All Executive Officers and
Directors as a Group (8 persons)...................................... 606,804(4) 14.1%
</TABLE>
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(1) At December 31, 1999.
(2) Includes term of office as director of the Bank prior to the conversion of
the Bank to a stock savings bank as a wholly owned subsidiary of the Company on
February 6, 1998 (the "Conversion"). Each director of the Company is also a
director of the Bank.
(3) At the Record Date. In accordance with Rule 13d-3 under the Exchange Act, a
person is considered to "beneficially own" any shares of Common Stock (a) over
which he has or shares voting or investment power, or (b) as to which he has the
right to acquire beneficial ownership at any time within 60 days of the Record
Date. As used herein, "voting power" is the power to vote or direct the vote of
shares, and "investment power" is the power to dispose or direct the disposition
of shares. Includes shares owned directly by the named individuals, shares held
by their spouses, minor children and trusts over which they have or share voting
or investment power, and Employee Stock Ownership Plan ("ESOP") shares allocated
to the accounts of Messrs. Thomas and Clark and Ms. Noel. Does not include
shares held or beneficially owned by other relatives as to which the named
individuals disclaim beneficial ownership. Also includes options to purchase
Common Stock which are exercisable within 60 days of the Record Date. See "--
Directors' Compensation -- 1999 Stock Option Plan."
(4) Messrs. Cochran and Ezell serve as trustees of the ESOP trust. As of the
Record Date, 167,028 shares held in the ESOP trust had been allocated to the
accounts of participating employees. ESOP trustees vote all allocated shares in
accordance with the instructions of participating employees. Allocated shares
for which no instructions have been received are voted by the trustees in the
same ratio as participants direct the voting of allocated shares or, in the
absence of such direction, as directed by the Board of Directors. As of the
Record Date, the ESOP held no unallocated shares. The amount of Common Stock
beneficially owned by each individual trustee and by all executive officers and
directors as a group does not include shares held by the ESOP trust with respect
to which the ESOP trustees have shared voting power in such capacity.
4
<PAGE>
Listed below is certain information about the principal occupations of the
Board nominee and the other directors of the Company. Unless otherwise noted,
all such persons have held these positions for at least five years.
PEGGY R. NOEL. Ms. Noel has served as Executive Vice President, Chief
Financial Officer and Chief Operations Officer of the Bank since 1990. She has
been an employee of the Bank since 1966. Ms. Noel also serves as Vice President,
Chief Financial Officer and Treasurer of the Company.
WD KELLEY. Prior to his retirement in 1980, Mr. Kelley served as
superintendent of Schools for Christian County, Kentucky. Mr. Kelley currently
serves as Chairman of the Board of Directors of the Bank, a position he has held
since 1995. He also serves as Chairman of the Board of Directors of the Company.
CLIFTON H. COCHRAN. Prior to his retirement in 1982, Mr. Cochran was in the
retail clothing business.
WALTON G. EZELL. Mr. Ezell is a self-employed farmer engaged in the
production of grain in Christian County, Kentucky.
BOYD M. CLARK. Mr. Clark has served as Senior Vice President --Loan
Administrator of the Bank since 1995. Prior to his current position, Mr. Clark
served as First Vice President of the Bank. He has been an employee of the Bank
since 1973. Mr. Clark also serves as Vice President and Secretary of the
Company. Effective May 5, 2000, Mr. Clark will become Acting President of each
of the Company and the Bank.
HARRY J. DEMPSEY. Dr. Dempsey has served as an anesthesiologist with
Christian County Anesthesia in Hopkinsville, Kentucky, since 1985.
GILBERT E. LEE. Mr. Lee is co-owner of Reliable Finance Inc., a consumer
finance company.
BRUCE THOMAS. Mr. Thomas has served as President and Chief Executive
Officer of the Bank since 1992. He has been an employee of the Bank since 1962.
Mr. Thomas also serves as President and Chief Executive Officer of the Company.
Effective May 5, 2000, Mr. Thomas will retire as an officer and director of each
of the Company and the Bank.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held 13 meetings during the year
ended December 31, 1999. The members of the Company's Board of Directors are
also members of the Bank's Board of Directors, which held 13 meetings during the
year ended December 31, 1999. All incumbent directors attended 75% or more of
the total number of Board meetings held during the year ended December 31, 1999
and the total number of meetings held by committees on which such directors
served during such period.
The Board of Directors of the Company serves as a nominating committee for
selecting the management nominees for election as directors. While the Board of
Directors will consider nominees recommended by stockholders, it has not
actively solicited recommendations from stockholders for nominees, nor has it
established any procedures for this purpose. The Board of Directors held one
meeting during the year ended December 31, 1999 in its capacity as a nominating
committee.
The Board of Directors' Audit and Finance Committee consists of directors
Ezell, Kelley and Cochran. The Audit and Finance Committee met four times during
the year ended December 31, 1999. The Audit and Finance Committee is authorized
to examine and approve the audit report prepared by the independent auditors of
the Bank, to review and recommend the independent auditors to be engaged by the
Bank, to review the internal audit function and internal accounting controls,
and to review and approve conflict of interest and audit policies.
In the year ended December 31, 1999, there were no standing committees of
the Board of Directors of the Company other than the Audit and Finance
Committee. The Board of Directors of the Bank carries out many of its duties
through committees.
5
<PAGE>
The Bank's Executive Committee consists of directors Kelley, Thomas and
Ezell and is authorized to take actions it deems necessary or appropriate
between regular meetings of the Board. The Executive Committee met eight times
during the year ended December 31, 1999.
The Bank's Personnel and Compensation Committee consists of directors Lee,
Cochran and Ezell. The Personnel and Compensation Committee evaluates the
compensation and benefits of the directors, officers and employees, recommends
changes, and monitors and evaluates employee performance. All compensation
decisions are made by the full Board of Directors. However, directors who are
also employees of the Bank abstain from voting and are not present during
discussions of the Board on matters relating to their employee compensation. The
Personnel and Compensation Committee met three times during the year ended
December 31, 1999.
EXECUTIVE COMPENSATION
Directors and officers do not receive separate compensation directly from
the Company. All compensation is paid by the Bank. The following table sets
forth a summary of certain information concerning the compensation paid for
services rendered in all capacities during the years ended December 31, 1999,
1998 and 1997 to the President and Chief Executive Officer. No other executive
officer of the Company earned salary and bonus in the year ended December 31,
1999 exceeding $100,000 for services rendered in all capacities to the Company
and the Bank.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
-----------------------------------------------------
Annual Compensation Awards Payouts
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Restricted Securities
Name and Other Annual Stock Underlying LTIP All Other
Principal Position Year Salary Bonus Compensation (1) Award(s) Options/SARs(#) Payouts Compensation
- ------------------- ---- ------ ----- ---------------- -------- --------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bruce Thomas 1999 $105,000 $ 1,500 $-- $645,380(2) 96,094(3) $-- $188,436(4)
President and Chief 1998 $100,000 $ -- $-- $ -- -- $-- $ 48,467(5)
Executive Officer of 1997 $ 93,500 $ -- $-- $ -- -- $-- $ --
the Company and
the Bank
</TABLE>
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(1) Executive officers of the Company receive indirect compensation in the form
of certain perquisites and other personal benefits. The amount of such
benefits received by the named executive officer in the year ended December
31, 1999 did not exceed 10% of the executive officer's salary and bonus.
(2) Represents 32,269 shares of restricted Common Stock granted in 1999
pursuant to the Management Recognition Plan ("MRP"), which had the
indicated value on the date of grant and a fair market value of $512,270 on
December 31, 1999. See "-- Directors' Compensation -- Management
Recognition Plan."
(3) See "-- Directors' Compensation -- 1999 Stock Option Plan."
(4) Represents fair market value on December 31, 1999 of 11,870 shares of
Common Stock allocated pursuant to the ESOP in 1999, including 8,147 shares
allocated upon termination of the ESOP. See "-- Certain Benefit Plans and
Agreements - Employee Stock Ownership Plan."
(5) Represents fair market value on December 31, 1998 of 2,851 shares of Common
Stock allocated pursuant to the ESOP in 1998.
DIRECTORS' COMPENSATION
FEES. The members of the Board of Directors of the Company currently do not
receive fees in their capacity as such. The Bank's non-employee directors
receive a fee of $550 per meeting attended, plus all non-employee directors
receive a retainer of $250 per month. The Chairman of the Board receives a fee
of $650 per meeting attended. Non-employee directors of the Bank also receive a
fee of $275 per committee meeting attended. During the year ended December 31,
1999, the Bank's non-employee directors' fees totaled $63,200.
6
<PAGE>
1999 STOCK OPTION PLAN. Pursuant to the 1999 Stock Option Plan (the "Option
Plan") which was approved at the 1999 Annual Meeting of Stockholders, directors
and employees of the Company and the Bank are eligible to receive options to
acquire shares of Common Stock and stock appreciation rights. Upon stockholders'
approval, each director of the Company (other than Dr. Dempsey and Mr. Lee who
were subsequently elected to the Board of Directors) received an option to
acquire shares of Common Stock. As a result of the Company's return of capital
distribution of $4.00 per share in December 1999, the exercise price and the
number of shares subject to stock options were adjusted pursuant to the Option
Plan in a manner dictated under federal tax regulations applicable to the
qualification of incentive stock options for continued tax-favored treatment and
to preserve favorable accounting treatment under generally accepted accounting
principles. As of the Record Date, no stock options granted under the Option
Plan had been exercised and no stock appreciation rights had been granted. As of
the Record Date, each non-employee director (other than Messrs. Dempsey and Lee)
held an option for 24, 023 shares of Common Stock, and each employee director
held an option as follows: Mr. Thomas - 96,094 shares, Ms. Noel - 86,485 shares
and Mr. Clark - 57,656 shares. The exercise price of all such options is $17.42
per share. As of the Record Date, all options granted under the Option Plan were
exercisable, and the fair market value of the Common Stock was $11.125 per
share.
MANAGEMENT RECOGNITION PLAN. Pursuant to the Management Recognition Plan
(the "MRP") which was approved at the 1999 Annual Meeting of Stockholders,
directors, advisory directors and employees of the Company and the Bank are
eligible to receive awards of Common Stock under the MRP. Upon stockholder
approval, each non-employee director and advisory director of the Company (other
than Dr. Dempsey and Mr. Lee who were subsequently elected to the Board of
Directors) received an MRP award of 8,067 shares, and each employee director
received an MRP award as follows: Mr. Thomas - 32,269 shares, Ms. Noel - 29,042
shares and Mr. Clark - 19,361 shares. Each MRP became vested with respect to 33
- - 1/3% of the awarded shares on each of the date of the award (February 24,
1999) and January 1, 2000 and will become vested with respect to the final 33
- -1/3% of the awarded shares on January 1, 2001.
OPTION GRANTS IN FISCAL YEAR 1999
The following table contains information concerning the grant of stock
options under the Option Plan to the named executive officer. No stock
appreciation rights have been awarded under the Option Plan.
<TABLE>
<CAPTION>
Individual Grants
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Number of Percent of
Securities Total Options Potential Realizable Value at
Underlying Granted to Exercise or Assumed Annual Rates of
Options Granted Employees in Base Price Expiration Stock Price Appreciation
(Number of Shares) Fiscal Year ($ per Share)(1) Date For Option Term(2)
------------------ ----------- ---------------- ------------ -----------------------------
5%($) 10%($)
--------- -----------
<S> <C> <C> <C> <C> <C> <C>
Bruce Thomas 96,094 28.6% $17.42 2/24/09 $1,052,743 $2,667,856
</TABLE>
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(1) The exercise price was based on the fair market value of the Common Stock
on the date of grant. See "-- Directors' Compensation -- 1999 Stock Option
Plan." As of the Record Date, the fair market value of the Common Stock was
$11.125 per share.
(2) Represents the difference between the aggregate exercise price of the
options and the aggregate value of the underlying Common Stock at the end
of the expiration date assuming the indicated annual rate of appreciation
in the value of the Common Stock.
7
<PAGE>
YEAR END OPTION VALUES
The following table sets forth information concerning the value of options
held by the named executive officer at the end of fiscal year 1999. No options
were exercised by the named executive officer during the fiscal year.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Fiscal Year End Fiscal Year End ($)(1)
-------------------------- ----------------------
Exercisable/Unexercisable Exercisable/
Name (Number of Shares) Unexercisable
- ---- ------------------ -------------
Bruce Thomas 48,047 / 48,047 $-- / $--
- -------------------
(1) Difference between fair market value of underlying Common Stock ($15.875
per share) and the exercise price ($17.42 per share) at fiscal year end. An
option is in-the-money if the fair market value of the underlying security
exceeds the exercise price of the option.
CERTAIN BENEFIT PLANS AND AGREEMENTS
PENSION PLAN. The Bank maintains a non-contributory, defined benefit
pension plan (the "Pension Plan") for the benefit of employees who are 21 years
of age and have completed one year of service with the Bank. The benefits are
based on years of service and the employee's average final compensation, which
is computed using the five consecutive years prior to retirement that yield the
highest average. The normal retirement benefit is equal to 1.75% of average
final compensation, multiplied by service not in excess of 35 years. The normal
retirement date is age 65 and completion of five years of participation in the
Pension Plan or age 60 with 30 years of vesting service, if earlier. The Pension
Plan also provides for early retirement benefits beginning at age 55 and
completion of 10 years of service, and for death benefits.
The following table illustrates the maximum estimated annual benefits
payable upon retirement pursuant to the Pension Plan based upon the Pension Plan
formula for specified average final compensation and specified years of service.
Years of Service
Average Final ------------------------------------------------
Compensation 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
$ 20,000 .......... $ 5,250 $ 7,000 $ 8,750 $10,500 $12,250
40,000 .......... 10,500 14,000 17,500 21,000 24,500
60,000 .......... 15,750 21,000 26,250 31,500 36,750
80,000 .......... 21,000 28,000 35,000 42,000 49,000
100,000 .......... 26,250 35,000 43,750 52,500 61,250
Benefits are hypothetical amounts only. Currently, the maximum annual
benefit payable under the Pension Plan is $98,000. Also, compensation in excess
of $160,000 is not covered under the Pension Plan. "Average Final Compensation"
is based upon compensation that would appear under the "Salary" column of the
Summary Compensation Table. As of December 31, 1999, Mr. Thomas had 35 years of
credited service under the Pension Plan. Benefits set forth in the preceding
table are computed as a straight-life annuity and are unaffected by payments
expected to be made to employees by Social Security.
Pursuant to the Pension Plan, employees who terminate employment or who
have qualified for normal retirement may elect to receive a lump sum payment of
vested Pension Plan benefits. Such a payment to a qualified employee may be for
either 100% or 50% of the vested amount, at the employee's discretion. Prior to
December
8
<PAGE>
31, 1998, Mr. Thomas satisfied the conditions for normal retirement and elected
to receive a lump sum distribution of 50% of his vested benefit.
EMPLOYMENT AGREEMENTS. The Company and the Bank have entered into separate
employment agreements (the "Employment Agreements") with the following officers
of the Company and the Bank: Bruce Thomas, President and Chief Executive Officer
of the Company and the Bank; Peggy R. Noel, Vice President, Chief Financial
Officer and Treasurer of the Company and Executive Vice President, Chief
Financial Officer and Chief Operations Officer of the Bank; and Boyd M. Clark,
Vice President and Secretary of the Company and Senior Vice President -- Loan
Administration of the Bank (collectively, the "Employees"). The Board of
Directors of each of the Company and the Bank believe that the Employment
Agreements assure fair treatment of the Employees in their careers with the
Company and the Bank by assuring them of some financial security.
The Employment Agreements became effective upon consummation of the
Conversion, each for a term of one year and with an annual base salary equal to
the Employee's current base salary. As of the first anniversary date of the
commencement of each of the Employment Agreements, the term was extended for two
years. The Employment Agreements provide the Employees 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. Each of the Employment Agreements shall
terminate upon the Employee's death, may terminate upon the Employee's
disability and are terminable by 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 or the Bank terminates any of the
Employees 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 the Employment Agreement and, at the Employee's election,
either continued participation in benefit plans which the Employee would have
been eligible to participate in through the Employment Agreements' expiration
date or the cash equivalent thereof. If an Employment Agreement is 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 through the date of such termination, including any period prior to the
establishment of the Employee's disability. In the event of the Employee's death
during the term of the Employment Agreements, 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. Each of the Employees is able to voluntarily
terminate his or her Employment Agreements by providing 60 days' prior written
notice to the Boards of Directors of the Bank and the Company, in which case the
Employee is entitled to receive only his or her compensation, vested rights and
benefits accrued up to the date of termination.
In the event of the Employee's involuntary termination of employment other
than for "just cause" within 12 months after a change in control of the Company
or the Bank which has not been approved in advance by a two-thirds vote of the
full Board of Directors of each of the Company and the Bank, 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 Internal Revenue Code, and (ii) the sum of any other parachute
payments, as defined under Section 280G(b)(2) of the Internal Revenue Code, that
the Employee receives on account of the change in control. The term "change in
control" is defined in the Employment Agreements to mean (i) a change in the
ownership, holding or power to vote more than 25% of the Bank's or Company's
voting stock, (ii) a change in the ownership or possession of the ability to
control the election of a majority of the Bank's or Company's directors, or
(iii) a change in the ownership or possession of the ability to exercise a
controlling influence over the management or policies of the Bank or the Company
by any person or by persons acting as a "group" within the meaning of Section
13(d) of the Exchange Act. The aggregate payment that would be made to Mr.
Thomas assuming his termination of employment under the foregoing circumstances
at December 31, 1998 would have been approximately $240,000. These provisions
may have an anti-takeover effect by making it more expensive for a potential
acquiror to obtain control of the Company. In the event that the Employee
prevails over the Company and the Bank, or obtains a written settlement, in a
legal dispute as to the Employment Agreement, the Employee will be reimbursed
for his or her legal and other expenses.
EMPLOYEE STOCK OWNERSHIP PLAN. The Company adopted the ESOP in connection
with the Conversion. Employees of the Company and the Bank who had attained age
21 and completed one year of service were eligible to participate in the ESOP
which borrowed funds from the Company sufficient to purchase 322,690 shares of
Common Stock. The loan was secured by the shares of Common Stock purchased with
loan proceeds and earnings
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therein. Shares purchased with loan proceeds were held in a suspense account for
allocation among participants as the loan was repaid. Contributions to the ESOP
and shares released from the suspense account were allocated among participants
on the basis of their annual wages.
On December 15, 1999, the Board of Directors of the Company announced that
it had approved termination of the ESOP, effective December 31, 1999. The Board
of Directors determined that this was in the Company's best interests because of
the ESOP's annual maintenance expenses. For the year ended December 31, 1999,
the maintenance expenses for the ESOP were approximately $408,000. The Company
incurred a one-time ESOP termination expense of approximately $2.5 million.
Termination of the ESOP and distribution to participants of its assets are
contingent upon receipt of an Internal Revenue Service determination that the
ESOP will be tax-qualified upon its termination, as well as compliance with
other applicable regulatory requirements.
Upon termination of the ESOP the following allocations of shares were made
to the accounts of the following executive officers and other employees: Bruce
Thomas - 8,147 shares; Peggy R. Noel - 7,220 shares; Boyd M. Clark - 6,887
shares; all employees as a group - 92,334 shares. The fair market value of the
Common Stock was $15.875 per share on December 31, 1999.
TRANSACTIONS WITH MANAGEMENT
The Bank offers loans to its directors and officers. These loans currently
are made in the ordinary course of business with the same collateral, interest
rates and underwriting criteria as those of comparable transactions prevailing
at the time and do not involve more than the normal risk of collectibility or
present other unfavorable features. Under current law, the Bank's loans to
directors and executive officers are required to be made on substantially the
same terms, including interest rates, as those prevailing for comparable
transactions and must not involve more than the normal risk of repayment or
present other unfavorable features. No loans to directors and officers have
terms more favorable than might be otherwise offered to customers.
REPORT OF THE COMPENSATION COMMITTEE
As members of the Personnel and Compensation Committee (the "Compensation
Committee") of the Bank, it is our duty to review compensation policies
applicable to executive officers; to consider the relationship of corporate
performance to that compensation; to recommend salary and bonus levels for
executive officers for consideration by the Board of Directors of the Bank; and
to administer various incentive plans of the Company and the Bank.
Overview. Under the compensation policies of the Bank, which are endorsed
by the Compensation Committee, compensation is paid based both on the executive
officer's performance and the performance of the entire Company. In assessing
the performance of the Company and the Bank for purposes of compensation
decisions, the Compensation Committee considers a number of factors, including
profits of the Company and the Bank during the past year relative to their
profit plans, changes in the value of the Company's stock, reports of federal
regulatory examinations of the Company and the Bank, growth, business plans for
future periods, and regulatory capital levels. The Compensation Committee
assesses individual executive performance based upon its determination of the
officer's contributions to the performance of the Company and the Bank and the
accomplishment of the Company's and the Bank's strategic goals, such as loan
growth, deposit growth, expense control and net income. In assessing
performance, the members of the Committee did not make use of a mechanical
weighting formula or use specific performance targets, but instead weighed the
described factors as they deemed appropriate in the total circumstances.
Benefit Plan Restructuring. On December 15, 1999, the Board of Directors
approved a benefit plan restructuring on the basis of its belief that a
reduction of the expenses associated with the Company's Employee Stock Ownership
Plan "(ESOP") would improve the Company's profitability and, therefore, the
Company's long-term prospects for independence. For the year ended December 31,
1999, the maintenance expenses for the ESOP were approximately $408,000, and the
Company's one-time termination expense was approximately $2.5 million.
Termination of the ESOP and distribution to participants of its assets are
contingent on receipt of an Internal
10
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Revenue Service determination that the ESOP will be tax-qualified upon its
termination, as well as compliance with other applicable regulatory
requirements.
Base Salary. The 1999 salary levels of the Bank's senior officers were
established in 1998 consistent with this compensation policy. In its review of
base compensation, the Committee determined that the performance of Mr. Thomas
in managing the Company and the Bank was satisfactory, based upon the 1998
financial performance of the Bank, including the growth in assets, income, and
capitalization during 1998; the financial performance trends for 1997 and the
preceding four years, which included growth in assets, net income, and total
equity in each year; the results of confidential regulatory examinations; his
continued involvement in community affairs in the communities served by the
Bank; the Company's planned levels of financial performance for 1999; and a
general level of satisfaction with the management of the Company and the Bank.
Based upon the results of this review, the salary of Mr. Thomas was established
at $105,000 per year for 1999, which represented an increase of $5,000 over his
1998 base salary.
No member of the Compensation Committee is a former or current officer of
the Company or the Bank.
Gilbert E. Lee, Chairman
Clifton H. Cochran
Walton G. Ezell
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STOCK PERFORMANCE COMPARISONS
The following graph, which was prepared by SNL Securities LC,
Charlottesville, Virginia, shows the cumulative total return on the Common Stock
of the Company since the Conversion, compared with the NASDAQ Total Return
Index, comprised of all U.S. Companies quoted on NASDAQ, and the SNL < $250
Million Thrift Index, comprised of publicly traded thrifts and thrift holding
companies with total assets of less than $250 million. Cumulative total return
on the Common Stock or the index equals the total increase in value since
February 9, 1998 assuming reinvestment of all dividends paid into the Common
Stock or the index, respectively. The graph was prepared assuming that $100 was
invested on February 9, 1998 in the Common Stock, and the securities included in
the indexes.
CUMULATIVE TOTAL STOCKHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDEXES
FEBRUARY 9, 1998 THROUGH DECEMBER 31, 1999
PERIOD ENDING
----------------------------------------------------
INDEX 02/09/98 06/30/98 12/31/98 06/30/99 12/31/99
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HopFed Bancorp, Inc. 100.00 112.26 103.15 132.97 119.51
NASDAQ - Total US 100.00 111.61 130.79 160.07 237.69
SNL <$250M Thrift Index 100.00 101.06 81.96 80.35 76.98
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act 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 complied with, except
that initial statements of beneficial ownership were not filed by Harry J.
Dempsey and Gilbert E. Lee and a report of change in beneficial ownership was
not filed by Walton G. Ezell, but such reports were subsequently filed.
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INDEPENDENT AUDITORS
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York, Neel & Co. - Hopkinsville, LLP served as the Company's and the Bank's
independent auditors for the year ended December 31, 1999. The Board of
Directors presently intends to renew the Company's arrangement with York, Neel &
Co. - Hopkinsville, LLP to serve as the Company's independent auditors for the
fiscal year ending December 31, 2000. A representative of York, Neel & Co. -
Hopkinsville, LLP is expected to be present at the Annual Meeting to respond to
appropriate questions and will have the opportunity to make a statement if he so
desires.
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OTHER MATTERS
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The Board of Directors is not aware of any business to come before the
Annual Meeting other than those matters described above in this Proxy Statement
and matters incident to the conduct of the Annual Meeting. Properly executed
proxies in the accompanying form that have not been revoked confer discretionary
authority on the persons named therein to vote at the direction of a majority of
the Board of Directors on any other matters presented at the Annual Meeting.
Under SEC rules, if a stockholder notifies the Company after April 10, 2000 of
such stockholder's intent to present a proposal at the Annual Meeting, the
persons named in the accompanying proxy may exercise such discretionary voting
authority if the proposal is raised at the Annual Meeting, without any
discussion of the matter in this Proxy Statement.
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MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy material
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company and the Bank may
solicit proxies personally, by telegraph or telephone without additional
compensation.
The Annual Report to Stockholders for the year ended December 31, 1999,
including financial statements, is being mailed to all stockholders of record as
of the close of business on 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 part of the
proxy solicitation material nor as having been incorporated herein by reference.
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STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the proxy statement and proxy
relating to the 2001 annual meeting of stockholders of the Company, which will
be held on or about May 9, 2001, any stockholder proposal to take action at such
meeting must be received by the Secretary of the Company at 2700 Fort Campbell
Boulevard, Hopkinsville, Kentucky no later than December 21, 2000. With respect
to the 2001 annual meeting of stockholders of the Company, if notice of a
stockholder proposal, which the stockholder has not previously sought to include
in the Company's proxy statement, is not received by April 9, 2001, management
proxies will be allowed to use their
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discretionary authority to vote on such proposal without any discussion of the
matter in the proxy statement. Nothing in this paragraph shall be deemed to
require the Company to include in its proxy statement and proxy relating to the
2001 annual meeting, or to consider and vote upon at any such meeting, any
stockholder proposal which does not meet all of the requirements established by
the SEC or the Company's Certificate of Incorporation or Bylaws in effect at the
time such proposal is received.
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ANNUAL REPORT ON FORM 10-K
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A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 1999, AS FILED WITH THE SEC, WILL BE FURNISHED WITHOUT CHARGE TO
STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, HOPFED
BANCORP, INC., 2700 FORT CAMPBELL BOULEVARD, HOPKINSVILLE, KENTUCKY.
BY ORDER OF THE BOARD OF DIRECTORS
BOYD M. CLARK
SECRETARY
Hopkinsville, Kentucky
April 20, 2000
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REVOCABLE PROXY
HOPFED BANCORP, INC.
-------------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2000
-------------------------------
The undersigned stockholder of HopFed Bancorp, Inc. (the "Company") hereby
appoints Gilbert E. Lee and Walton G. Ezell, or either of them, with full powers
of substitution, as attorneys and proxies for the undersigned, to vote all
shares of Common Stock of the Company which the undersigned is entitled to vote
at the Annual Meeting of Stockholders, to be held at the main office of
Hopkinsville Federal Savings Bank, 2700 Fort Campbell Boulevard, Hopkinsville,
Kentucky on Wednesday, May 10, 2000 at 3:00 p.m., local time, and at any and all
adjournments thereof, as indicated below and as determined by a majority of the
Board of Directors with respect to such other matters as may come before the
Annual Meeting.
VOTE
FOR WITHHELD
--- --------
I. Election as director of nominee [ ] [ ]
listed below.
Peggy R. Noel
II. Such other matters as may properly come before the Annual Meeting or any
adjournment thereof.
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THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS
IS PRESENTED AT THE ANNUAL MEETING AS TO WHICH THIS PROXY CONFERS DISCRETIONARY
AUTHORITY, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY AS DETERMINED
BY A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
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<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Annual Meeting
or at any adjournment thereof and after notification to the Secretary of the
Company at the Annual Meeting of the stockholder's decision to terminate this
proxy, then the power of said attorneys and proxies shall be deemed terminated
and of no further force and effect. The undersigned hereby revokes any and all
proxies heretofore given with respect to shares of Common Stock of the Company
which the undersigned is entitled to vote at the Annual Meeting.
The undersigned stockholder acknowledges receipt from the Company, prior to
the execution of this proxy, of Notice of the Annual Meeting, a Proxy Statement,
and the Annual Report to Stockholders.
Dated: , 2000
----------------- -----
- -------------------------------------- --------------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- -------------------------------------- --------------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in which this card was
mailed. When signing as attorney, executor, administrator, trustee or guardian,
please give your full title. If shares are held jointly, each holder should
sign.
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PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
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