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 ss. 240.14a-11(c) or ss. 240.14a-12
SFSB Holding Company
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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>
SFSB HOLDING COMPANY
Parent Company of
STANTON FEDERAL SAVINGS BANK
900 Saxonburg Boulevard * Pittsburgh, PA 15223 * Phone (412) 487-4200
March 31, 1999
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of SFSB Holding
Company (the "Company"), I cordially invite you to attend the Annual Meeting of
Stockholders to be held at the Company's office at 900 Saxonburg Boulevard,
Pittsburgh, Pennsylvania, on Tuesday, April 20, 1999, at 9:00 a.m. The attached
Notice of Annual Meeting and Proxy Statement describe the formal business to be
transacted at the Annual Meeting. During the Annual Meeting, I will report on
the operations of the Company. Directors and officers of the Company, as well as
a representative of S.R. Snodgrass, A.C., certified public accountants, will be
present to respond to any questions stockholders may have.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID
RETURN ENVELOPE AS PROMPTLY AS POSSIBLE. This will not prevent you from voting
in person at the Annual Meeting, but will assure that your vote is counted if
you are unable to attend the Annual Meeting. YOUR VOTE IS VERY IMPORTANT.
Sincerely,
/s/ Barbara J. Mallen
------------------------------------
Barbara J. Mallen
President
<PAGE>
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SFSB HOLDING COMPANY
900 SAXONBURG BOULEVARD
PITTSBURGH, PENNSYLVANIA 15223
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on April 20, 1999
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of SFSB Holding Company ("the Company"), will be held at Bank's Main Office at
900 Saxonburg Boulevard, Pittsburgh, Pennsylvania on Tuesday, April 20, 1999, at
9:00 a.m. for the following purposes:
1. To elect one director of the Company;
2. To ratify the SFSB Holding Company 1998 Stock Option Plan, as amended;
3. To ratify the Stanton Federal Savings Bank Restricted Stock Plan; and
4. To ratify the appointment of S.R. Snodgrass, A.C. as independent auditors
of the Company for the fiscal year ending December 31, 1999;
all as set forth in the Proxy Statement accompanying this notice, and
to transact such other business as may properly come before the meeting and any
adjournments. The Board of Directors is not aware of any other business to come
before the Meeting. Stockholders of record at the close of business on March 15,
1999 are the stockholders entitled to vote at the Meeting and any adjournments
thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN, DATE
AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. ANY SIGNED PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED BY FILING
WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER DATE. IF YOU ARE PRESENT AT THE MEETING YOU MAY REVOKE YOUR
PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE MEETING. HOWEVER, IF
YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL
NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO VOTE PERSONALLY AT THE
MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Joseph E. Gallagher
-------------------------------------
Joseph E. Gallagher
Secretary
Pittsburgh, Pennsylvania
March 31, 1999
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
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<PAGE>
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PROXY STATEMENT
OF
SFSB HOLDING COMPANY
900 SAXONBURG BOULEVARD
PITTSBURGH, PENNSYLVANIA 15223
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ANNUAL MEETING OF STOCKHOLDERS
April 20, 1999
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GENERAL
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This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of SFSB Holding Company (the "Company") to
be used at the first Annual Meeting of Stockholders which will be held at the
Company's office at 900 Saxonburg Boulevard, Pittsburgh, Pennsylvania, on
Tuesday, April 20, 1999, 9:00 a.m. local time (the "Meeting"). The accompanying
Notice of Annual Meeting of Stockholders and this Proxy Statement are being
first mailed to stockholders on or about March 31, 1999. The Company acquired
all of the outstanding stock of Stanton Federal Savings Bank (the "Bank") issued
in connection with the completion of the Bank's mutual-to-stock conversion on
February 26, 1998 (the "Conversion").
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VOTING AND REVOCABILITY OF PROXIES
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If the enclosed proxy card is properly signed and returned, your shares
will be voted on all matters that properly come before the Meeting for a vote.
If instructions are specified in your signed proxy card with respect to the
matters being voted upon, your shares will be voted in accordance with your
instructions. If no instructions are specified in your signed proxy card, your
shares will be voted (a) FOR the election of the director named in Proposal 1,
(b) FOR Proposal 2 (ratification of the SFSB Holding Company 1998 Stock Option
Plan ("1998 Stock Option Plan"), (c) FOR Proposal 4 (ratification of the Stanton
Federal Savings Bank Restricted Stock Plan ("RSP")), (d) FOR Proposal 3
(ratification of independent auditors), and (e) in the discretion of the proxy
holders, as to any other matters that may properly come before the Meeting
(including any adjournment). Your proxy may be revoked at any time prior to
being voted by: (i) filing with the secretary of the Company (the "Secretary")
written notice of such revocation, (ii) submitting a duly executed proxy card
bearing a later date, or (iii) attending the Meeting and giving the Secretary
notice of your intention to vote in person.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on March 15, 1999
(the "Record Date"), are entitled to one vote for each share of common stock of
the Company (the "Common Stock") then held. As of the Record Date, the Company
had 726,005 shares of Common Stock issued and outstanding.
The Articles of Incorporation of the Company ("Articles of
Incorporation") provide that in no event shall any record owner of any
outstanding Common Stock which is beneficially owned, directly or indirectly, by
a person who beneficially owns in excess of 10% of the then outstanding shares
of Common Stock (the "Limit") be entitled or permitted to any vote with respect
to the shares held in excess of the Limit. Beneficial ownership is determined
pursuant to the definition in the Articles of Incorporation and includes shares
beneficially owned by such person or any of his or her affiliates (as such terms
are defined in the Articles of Incorporation), or which such person or any of
his or her affiliates has the right to acquire upon the exercise of conversion
rights or options and shares as to which
<PAGE>
such person or any of his or her affiliates or associates have or share
investment or voting power, but neither any employee stock ownership or similar
plan of the Company or any subsidiary, nor any trustee with respect thereto or
any affiliate of such trustee (solely by reason of such capacity of such
trustee), shall be deemed, for purposes of the Articles of Incorporation, to
beneficially own any Common Stock held under any such plan.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) is necessary to constitute a quorum at the
Meeting. With respect to any matter, any shares for which a broker indicates on
the proxy that it does not have discretionary authority as to such shares to
vote on such matter (the "Broker Non-Votes") will not be considered present for
purposes of determining whether a quorum is present. In the event there are not
sufficient votes for a quorum or to ratify any proposals at the time of the
Meeting, the Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of a director, the proxy being provided by the Board
enables a stockholder to vote for the election of the nominee as submitted as
Proposal 1, proposed by the Board, or to withhold authority to vote for the
nominee being proposed. Directors are elected by a plurality of votes of the
shares present in person or represented by proxy at a meeting and entitled to
vote in the election of directors.
As to the ratifications of the 1998 Stock Option Plan, the RSP, and the
independent auditors, which are submitted as Proposals 2, 3 and 4, respectively,
a stockholder may: (i) vote "FOR" the ratification; (ii) vote "AGAINST" the
ratification; or (iii) "ABSTAIN" with respect to the ratification. With respect
to each Proposal, such votes shall be determined by a majority of the total
votes cast affirmatively or negatively on such matters without regard to broker
non-votes. Votes for which the "ABSTAIN" box is selected shall have the effect
of a vote against each such proposal.
Unless otherwise required by law, all other matters shall be determined
by a majority of votes cast affirmatively or negatively without regard to (a)
Broker Non-Votes, or (b) proxies marked "ABSTAIN" as to that matter.
Persons and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The following
table sets forth, as of the Record Date, persons or groups who own more than 5%
of the Common Stock and the ownership of all executive officers and directors of
the Company as a group. Other than as noted below, management knows of no person
or group that owns more than 5% of the outstanding shares of Common Stock at the
Record Date.
-2-
<PAGE>
Percent of Shares
Amount and Nature of of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
- ------------------------------------ -------------------- -----------------
Stanton Federal Savings Bank
Employee Stock Ownership Plan ("ESOP")
900 Saxonburg Boulevard
Pittsburgh, Pennsylvania 15223 (1) 58,080 8.0%
Tontine Financial Partners, L.P.
Tontine Management, L.L.C.
Jeffrey L. Gendell
31 West 52nd Street, 17th Floor
New York, New York 10106 (2) 68,500 9.4%
All directors and officers of the Company
as a group (five persons) (3) 60,928 8.4%
- -------------------------------------
(1) The ESOP purchased such shares for the exclusive benefit of plan
participants with funds borrowed from the Company. These shares are
held in a suspense account and will be allocated among ESOP
participants annually on the basis of compensation as the ESOP debt is
repaid. The Bank's board of directors (the "Bank's board") has
appointed a committee consisting of directors Mary Lois Loftus, Timothy
R. Maier, and Jerome L. Kowalewski to serve as the ESOP administrative
committee ("ESOP Committee") and to serve as the ESOP Trustees ("ESOP
Trustees"). The ESOP Committee or the Board instructs the ESOP Trustees
regarding investment of ESOP plan assets. The ESOP Trustees must vote
all shares allocated to participants accounts under the ESOP as
directed by participants. Unallocated shares and shares for which no
timely voting director is received, will be voted by the ESOP Trustee
as directed by the Bank's Board or the ESOP Committee. As of the Record
Date, 5,808 shares have been allocated under the ESOP to participant
accounts.
(2) The information as to Tontine Financial Partners, L.P., Tontine
Management, L.L.C., and Jeffrey L. Gendell (the "Reporting Persons") is
derived from a Schedule 13D, dated March 9, 1998, filed by the
Reporting Persons, which states that, as of February 27, 1998, the
Reporting Persons had shared voting and dispositive power with respect
to 68,500 shares.
(3) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust and other indirect ownership, over which
shares the individuals effectively exercise sole voting and investment
power, unless otherwise indicated. No options may be exercised within
60 days of the Record Date to purchase shares of Common Stock under the
1998 Stock Option Plan. Similarly, there are no shares of Common Stock
previously awarded under the RSP that are exercisable within 60 days of
the Record Date. Excludes 55,422 shares held by the ESOP (58,080 shares
minus 2,658 shares allocated to executive officers) and 21,780 RSP
shares over which certain directors, as trustees to the ESOP and the
RSP, respectively, exercise shared voting and investment power. Such
individuals serving as trustees disclaim beneficial ownership with
respect to such shares. See Proposal 1 - Information with Respect to
Nominees for Director; Directors Whose Terms Continue; and Executive
Officers.
-3-
<PAGE>
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the 1934 Act requires the Company's officers and
directors, and persons who own more than ten percent of the Common Stock, to
file reports of ownership and changes in ownership of the Common Stock, on Forms
3, 4 and 5, with the Securities and Exchange Commission ("SEC") and to provide
copies of those Forms 3, 4 and 5 to the Company. The Company is not aware of any
beneficial owner of more than ten percent of its Common Stock. Based solely upon
a review of the copies of these Form 3, 4 and 5 reports received by the Company,
and certain written representations received from the Company's directors and
executive officers, the Company believes that all filing requirements applicable
to such persons were complied with for 1998, and the Company does not know of
any such persons who may have failed to file on a timely basis any required
forms.
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INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
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Employees, officers, and directors of the Company have an interest in
certain matters being presented for stockholder ratification. Ratification of
the 1998 Stock Option Plan and the RSP are being presented as Proposals 2 and 3,
respectively. See "Voting Securities And Principal Holders Thereof" for
information regarding the voting control of shares of Common Stock held by
executive officers and directors.
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PROPOSAL 1 - INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
DIRECTORS CONTINUING IN OFFICE, AND EXECUTIVE OFFICERS
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Election of Directors
The Articles of Incorporation require that the Board of Directors be
divided into four classes. The directors are elected by the stockholders of the
Company for staggered four-year terms, or until their successors are elected and
qualified. The Board of Directors currently consists of five members. One
director will be elected at the Meeting to serve for a four-year term or until a
successor has been elected and qualified.
Jerome L. Kowalewski has been nominated by the Board of Directors to
serve as a director. Mr. Kowalewski is currently a member of the Board and has
been nominated for a four-year term to expire in 2003. It is intended that the
persons named in the proxies solicited by the Board will vote for the election
of the named nominee. If the nominee is unable to serve, the shares represented
by all valid proxies will be voted for the election of such substitute as the
Board of Directors may recommend. At this time, the Board knows of no reason why
the nominee might be unavailable to serve.
The following table sets forth information with respect to the nominees
and the other sitting directors, including for each their name, age, the year
they first became a director of the Company or the Bank, the expiration date of
their current term as a director, and the number and percentage of shares of the
Common Stock beneficially owned. Each director of the Company is also a member
of the Board of Director of the Bank. Beneficial ownership of executive officers
and directors of the Company, as a group, is shown under "Voting Securities and
Principal Holders Thereof."
-4-
<PAGE>
Shares of
Common Stock
Current Beneficially
Year First Term Owned as of
Name and Title Elected or to March 15, Percent
- --------------- Age(1) Appointed(2) Expire 1999 (3) Owned
------ ------------ ------- --------- ------
BOARD NOMINEE FOR TERM TO EXPIRE IN 2003
Jerome L. Kowalewski 55 1993 1999 12,500(4) 1.7%
Director
DIRECTORS CONTINUING IN OFFICE
Joseph E. Gallagher 47 1989 2000 13,760 1.9%
Senior Vice President, Secretary
and Director
Barbara J. Mallen 56 1972 2001 14,168 2.0%
President and Director
Mary Lois Loftus 69 1995 2002 7,500(4) 1.0%
Director
Timothy R. Maier 39 1986 2002 13,000(4) 1.8%
Chairman of the Board and
Director
- --------------------------
(1) At December 31, 1998.
(2) Refers to the year the individual first became a director of the Company or
the Bank.
(3) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust, and other indirect ownership, over which shares
the individuals effectively exercise sole or shared voting and investment
power, unless otherwise indicated. Excludes stock options awarded under
1998 Stock Option Plan and approved by stockholders on October 20, 1998,
which are not exercisable within 60 days of the Record Date. See "Proposal
2 - Ratification of the 1998 Stock Option Plan. Excludes certain such
shares awarded and approved by stockholders on October 20, 1998 on which
such individuals exercise no voting control and shares are subject to
forfeiture. See "Proposal 3 - Approval of the RSP."
(4) Excludes 55,422 shares and 21,780 shares of Common Stock held under the
ESOP and RSP, respectively, for which such individual serves as a member of
the ESOP Committee, ESOP Trust and the RSP trust. Such individual disclaims
beneficial ownership with respect to shares held in a fiduciary capacity.
See "Voting Securities and Principal Holders Thereof".
Executive Officers of the Company
The following individuals hold the executive offices in the Company set
forth below opposite their names.
Age as of
Name December 31, 1998 Positions Held With the Company
- ---- ----------------- -------------------------------
Barbara J. Mallen 56 President and Director
Joseph E. Gallagher 47 Senior Vice President, Secretary
and Director
-5-
<PAGE>
Biographical Information
Set forth below is certain information with respect to the directors,
including director nominees and executive officers of the Company. All directors
of the Bank in October 1997 became directors of the Company at that time.
Executive Officers receive compensation from the Bank. See "-- Executive
Compensation." All directors and executive officers have held their present
positions for five years unless otherwise stated.
Joseph E. Gallagher has been employed by us since 1979 and has been
Senior Vice President and Secretary since 1996 and a member of the board since
1989.
Jerome L. Kowalewski has been a member of the board since 1993 and
Treasurer since 1996. Mr. Kowalewski is the majority shareholder and President
of Al & Bob's Auto Parts Inc., in the local Pittsburgh area. Mr. Kowalewski is a
member of the Lawrenceville Business Association.
Mary Lois Loftus has been a member of the board since 1995. Ms. Loftus
is a retired real estate agent and the former owner of Loftus Florist in the
local Pittsburgh area.
Timothy R. Maier has been a member of the board since 1986 and Chairman
since 1996. Mr. Maier is in the insurance business and owns two insurance
agencies in the local Pittsburgh area. Mr. Maier is the Past President and the
President Elect of the Rotary Club of Lawrenceville and a member of the
Lawrenceville Business Association and the Lawrenceville Development
Corporation.
Barbara J. Mallen has been employed by us since 1960 and has been the
President since 1988 and a member of the board since 1972. Ms. Mallen is a
member of the Lawrenceville Business Association and past Director of the
Western Pennsylvania League of Savings Associations.
Meetings and Committees of the Board of Directors
The Board of Directors of the Company conducts its business through
meetings of the Board of the Bank and through activities of its committees.
During the fiscal year ended December 31, 1998, the Board of Directors held a
total of 17 meetings. No director attended fewer than 75% of the total meetings
of the Board of Directors and committees during the period of his or her
service. In addition to other committees, as of December 31, 1998, the Board had
a Nominating Committee, a Compensation Committee, and an Audit Committee.
The Nominating Committee consists of the Board of Directors of the
Company. Nominations to the Board of Directors made by stockholders must be made
in writing to the Secretary and received by the Company not less than 60 days
prior to the anniversary date of the immediately preceding annual meeting of
stockholders of the Company. However, with respect to the first annual meeting,
nominations to the Board of Directors made by stockholders must be made in
writing and received no later than the close of business on the tenth day
following the day on which the notice of the Meeting was mailed. Notice to the
Company of such nominations must include certain information required pursuant
to the Company's Bylaws. The Nominating Committee, which is not a standing
committee, met once during the 1998 fiscal year.
-6-
<PAGE>
The Compensation Committee is comprised of directors Maier and Loftus.
This standing committee establishes the Bank's salary budget for approval by the
Board of Directors. The Committee met once during the 1998 fiscal year.
The Audit Committee is comprised of directors Maier, Loftus, and
Kowalewski. The Audit Committee is responsible for developing and maintaining
the Bank's audit program. The Committee also meets with the Bank's outside
auditors to discuss the results of the annual audit and any related matters.
The Audit Committee met once during the 1998 fiscal year.
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
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Director Compensation
Each director is paid quarterly and total aggregate fees paid to the
directors for the year ended December 31, 1998 were $47,000. Directors are not
paid for committee meetings.
The Directors Consultant and Retirement Plan ("DRP") provides
retirement benefits to the directors of the Bank based upon the number of years
of service to the Bank's board, which must be at least 5 years. If a director
agrees to become a consulting director to the Bank's board upon retirement, he
or she will receive a monthly payment of between $450 to $650 for 5 years or
until death, whichever is earlier. Benefits under the DRP will begin upon a
director's retirement. In the event there is a change in control, all directors
will be presumed to have not less than 5 years of service and each director will
receive a lump sum payment equal to the present value of future benefits
payable.
Pursuant to the 1998 Stock Option Plan and the RSP, each director was
awarded stock options to purchase shares of Common Stock of the Company and RSP
shares. See "Proposal 2 and 3 Ratification of the 1998 Stock Option Plan and
Ratification of the RSP."
Executive Compensation
The Company has no full time employees, but relies on the employees of
the Bank for the limited services required by the Company. All compensation paid
to officers and employees is paid by the Bank.
Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by the chief executive officer. No
executive officer of either the Bank or the Company had a salary and bonus for
the three fiscal years then ended, that exceeded $100,000 for services rendered
in all capacities to the Bank or the Company.
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
-------------------------------------- --------------------------
#Securities
Restricted Underlying
Name and Fiscal Other Annual Stock Options/ All Other
Principal Position Year Salary ($) Bonus ($) Compensation(1) Award(s)($)(2) SARs(3) Compensation($)
- ------------------- ---- ---------- --------- --------------- -------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Barbara J. Mallen 1998 96,000 18,000 -- 67,155 18,150 47,725(4)(5)
President 1997 86,256 25,000 -- -- -- 55,769(5)
1996 78,420 25,300 -- -- -- --
</TABLE>
(footnotes continued on next page)
-7-
<PAGE>
- -----------------------------
(1) For perquisites and other personal benefits, aggregate value does not
exceed the lesser of $50,000 or 10% of the named executive officer's total
salary and bonuses for the year. For the periods presented, there were no:
(a) payments of above-market preferential earnings on deferred
compensation; (b) payments of earnings with respect to long term incentive
plans prior to settlement or maturity; (c) tax payment reimbursements; or
(d) preferential discounts on stock.
(2) Represents the award of 7,260 shares of Common Stock under the RSP as of
October 20, 1998 on which date the market price of such stock was $9.25 per
share. Such stock awards become non-forfeitable at the rate of 20% shares
per year commencing on October 21, 1999. Dividend rights associated with
such stock are accrued and held in arrears to be paid at the time that such
stock becomes non-forfeitable. As of December 31, 1998, based upon a market
price of $9.75 per share, such award of 7,260 shares had an aggregate value
of $70,785.
(3) Such awards under the 1998 Stock Option Plan are first exercisable at the
rate of 20% per year commencing on October 21, 1999. The exercise price
equals the market value of the Common Stock on the date of grant of $9.25.
(4) At December 31, 1998, consists of the value of 1,598 shares of stock
($15,980) allocated under the ESOP, with an aggregate market value of
$15,581.
(5) For 1998, reflects an accrual by the Bank under the supplemental retirement
plan of $31,745. In 1997, reflects accruals by the Bank under the DRP and
supplemental retirement plan in the aggregate amount of $55,769.
Stock Awards. The following tables sets forth additional information
concerning stock options granted during the 1998 fiscal year pursuant to the
1998 Stock Option Plan to the named executive officer in the Summary
Compensation Table and the year end value of such outstanding options.
OPTION/SAR GRANTS TABLE
Option/SAR Grants in Last Fiscal Year (1)
-----------------------------------------
Individual Grants
-----------------
% of Total
# of Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted(#) Fiscal Year ($/Sh) Date
- ------------------ --------------- ------------ ----------- ----------------
Barbara J. Mallen 18,150 38% $9.25 October 20, 2008
- -----------------
(1) No Stock Appreciation Rights (SARs) are authorized under the plan.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year,and FY-End Option/SAR Values
---------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options/SARs at Options/SARs
FY-End (#) at FY-End ($)
Shares Acquired
Name on Exercise (#) Value Realized($)(1) Exercisable/Unexercisable Exercisable/Unexercisable(1)
- ---- --------------- -------------------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Barbara J. Mallen 0 0 0/18,150 $ 0/$0
</TABLE>
- ------------------
(1) Based upon an exercise price of $9.25 per share and estimated price of
$9.75 at December 31, 1998.
Employment Agreement. The Bank has entered into an employment agreement
with Barbara J. Mallen, President of the Bank ("Agreement"). The Agreement has a
three year term. Ms. Mallen's base compensation under the Agreement is $96,000.
Under the Agreement, Ms. Mallen's employment may be terminated by the Bank for
"just cause" as defined in the Agreement. If the Bank terminates Ms.
-8-
<PAGE>
Mallen without just cause, Ms. Mallen will be entitled to a continuation of her
salary from the date of termination through the remaining term of the Agreement.
In the event of the termination of employment in connection with any change in
control of the Bank during the term of the Agreement, Ms. Mallen will be paid in
a lump sum an amount equal to 2.99 times her prior five year's average taxable
compensation. In the event of a change in control at December 31, 1998, Ms.
Mallen would have been entitled to a lump sum payment of approximately $314,000.
Supplemental Executive Retirement Plan ("SERP"). A SERP has been
implemented for the benefit of the President, Barbara J. Mallen. The SERP
provides that Ms. Mallen may receive the full income replacement percentage
provided under the Bank's defined benefit pension plan ("Pension Plan") (67% of
final average compensation payable at age 62 rather than at age 65), provided
she remains employed until she becomes 58 years old, in the year 2000. In such
event, she will be eligible to receive a supplemental retirement benefit that
will have the effect of reducing the early retirement discount payable under the
Pension Plan from a reduction of 7% for each year that benefits commence prior
to age 65 to a reduction of approximately 3% per year for retirement prior to
age 62, but after age 58. Upon a termination of employment following a change in
control, Ms. Mallen will be presumed to have attained not less than the minimum
retirement age under the SERP.
Certain Related Transactions
The Bank, like many financial institutions, has followed a policy of
granting various types of loans to officers, directors, and employees. The loans
have been made in the ordinary course of business and on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with the Bank's other customers, and do not involve
more than the normal risk of collectibility, or present other unfavorable
features.
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PROPOSAL 2 - RATIFICATION OF THE 1998 STOCK OPTION PLAN, AS AMENDED
- --------------------------------------------------------------------------------
General
The Board of Directors adopted the 1998 Stock Option Plan and the
Company's stockholders approved it on October 20, 1998 ("Effective Date").
Pursuant to the 1998 Stock Option Plan, up to 72,600 shares of Common Stock are
reserved for issuance by the Company upon exercise of stock options to be
granted to officers, directors, key employees and other persons from time to
time. The purpose of the 1998 Stock Option Plan is to attract and retain
qualified personnel for positions of substantial responsibility and to provide
additional incentive to certain officers, directors, key employees and other
persons to promote the success of the business of the Company and the Bank.
Pursuant to regulations of the Office of the Thrift Supervision (the
"OTS") applicable to stock benefit plans established or implemented within one
year following the completion of a mutual-to-stock conversion of a federally
chartered savings institution such as the Bank, the 1998 Stock Option Plan
contains certain restrictions and limitations. The 1998 Stock Option Plan
provides that options granted to employees or directors become first exercisable
no more rapidly than ratably over a five-year period (with acceleration upon
death or disability or a Change in Control, as such term is defined in the 1998
Stock Option Plan); provided, however, that such accelerated vesting is not
inconsistent with the regulations of the OTS at the time of such acceleration.
Recent OTS interpretive letters permit awards under stock benefit plans to
accelerate vesting of awards upon a Change in Control; provided that
stockholders ratify such plan provisions by action of stockholders taken more
than one year following the
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completion of the mutual-to-stock conversion. The Board of Directors is seeking
ratification of the 1998 Stock Option Plan as previously approved by the
stockholders on October 20, 1998, and as amended by the Amendment to the Stock
Option Plan included as Exhibit A to this proxy statement as a means of
complying with the OTS interpretive letters. Such amendment provides that the
Board or the Plan Committee may accelerate the vesting of option awards within
its sole discretion at any time.
Ratification of the 1998 Stock Option Plan, as amended, does not
increase the number of shares reserved for issuance thereunder or alter the
classes of individuals eligible to participate in the 1998 Stock Option Plan. In
the event that the 1998 Stock Option Plan is not ratified by stockholders at the
Meeting, the 1998 Stock Option Plan will nevertheless remain in effect. However,
any employee or director of the Company or the Bank that has their service
terminated prior to the vesting of such stock awards may forfeit such unvested
awards to the extent that may be required under applicable OTS regulations and
policies.
The 1998 Option Plan is administered by the Board of Directors or a
committee of not less than two non-employee directors appointed by the Company's
Board of Directors and serving at the pleasure of the Board (the "Option
Committee"). Members of the Option Committee shall be deemed "Non- Employee
Directors" within the meaning of Rule 16b-3 pursuant to the 1934 Act. The Option
Committee may select the officers and employees to whom options are to be
granted and the number of options to be granted based upon several factors
including prior and anticipated future job duties and responsibilities, job
performance, the Bank's financial performance and a comparison of awards given
by other institutions. A majority of the members of the Option Committee shall
constitute a quorum and the action of a majority of the members present at any
meeting at which a quorum is present shall be deemed the action of the Option
Committee.
Officers, directors, key employees and other persons who are designated
by the Option Committee will be eligible to receive, at no cost to them, options
under the 1998 Stock Option Plan (the "Optionees"). Each option granted pursuant
to the 1998 Stock Option Plan shall be evidenced by an instrument in such form
as the Option Committee shall from time to time approve. Option shares may be
paid for in cash, shares of Common Stock, or a combination of both. The Company
will receive no monetary consideration for the granting of stock options under
the 1998 Stock Option Plan. Further, the Company will receive no consideration
other than the option exercise price per share for Common Stock issued to
Optionees upon the exercise of those options.
Shares of Common Stock issuable under the 1998 Stock Option Plan may be
from authorized but unissued shares, treasury shares or shares purchased in the
open market. An option which expires, becomes unexercisable, or is forfeited for
any reason prior to its exercise will again be available for issuance under the
1998 Stock Option Plan. No option or any right or interest therein is assignable
or transferable except by will or the laws of descent and distribution. The 1998
Stock Option Plan shall continue in effect for a term of ten years from the
Effective Date.
Stock Options
The Option Committee may grant either Incentive Stock Options or
Non-Incentive Stock Options. In general, if an Optionee ceases to serve as an
employee of the Company for any reason other than disability or death, an
exercisable Incentive Stock Option may continue to be exercisable for three
months but in no event after the expiration date of the option, except as may
otherwise be determined by the
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<PAGE>
Option Committee at the time of the award. In the event of the disability or
death of an Optionee during employment, an exercisable Incentive Stock Option
will continue to be exercisable for one year and two years, respectively, to the
extent exercisable by the Optionee immediately prior to the Optionee's
disability or death but only if, and to the extent that, the Optionee was
entitled to exercise such Incentive Stock Options on the date of termination of
employment. The terms and conditions of Non-Incentive Stock Options relating to
the effect of an Optionee's termination of employment or service, disability, or
death shall be such terms as the Option Committee, in its sole discretion, shall
determine at the time of termination of service, disability or death, unless
specifically determined at the time of grant of such options.
Currently, the 1998 Stock Option requires that options granted to
employees or directors become first exercisable no more rapidly than ratably
over a five-year period (with acceleration upon death or disability or a Change
in Control, as such terms are defined in the 1998 Stock Option Plan); provided,
however, that such accelerated vesting is not inconsistent with the regulations
of the OTS at the time of such acceleration. Ratification of the 1998 Stock
Option Plan at the Meeting will conform the acceleration of vesting of options
upon a Change in Control with applicable OTS interpretive letters. Such
amendment to the Option Plan will also authorize the Board or the Plan Committee
to accelerate the vesting of option awards within its discretion. Such
stockholder ratification will be effective with respect to previously awarded
options and any options that may be granted in the future. Pursuant to the 1998
Stock Option Plan, upon a Change in Control, all options previously granted and
outstanding as of the date of a Change in Control will automatically become
exercisable and non-forfeitable.
No shares of Common Stock shall be issued upon the exercise of an
option until full payment has been received by the Company, and no Optionee
shall have any of the rights of a stockholder of the Company until shares of
Common Stock are issued to such Optionee. Upon the exercise of an option by an
Optionee (or the Optionee's personal representative), the Option Committee, in
its sole and absolute discretion, may make a cash payment to the Optionee, in
whole or in part, in lieu of the delivery of shares of Common Stock. Such cash
payment to be paid in lieu of delivery of Common Stock shall be equal to the
difference between the fair market value of the Common Stock on the date of the
option exercise and the exercise price per share of the option. Any cash payment
shall be in exchange for the cancellation of such option. A cash payment shall
not be made in the event that such transaction would result in liability to the
Optionee and the Company under Section 16(b) of the 1934 Act, and regulations
promulgated thereunder.
The 1998 Stock Option Plan provides that the Board of Directors of the
Company may authorize the Option Committee to direct the execution of an
instrument providing for the modification, extension or renewal of any
outstanding option, provided that no such modification, extension or renewal
shall confer on the Optionee any right or benefit which could not be conferred
on the Optionee by the grant of a new option at such time, and shall not
materially decrease the Optionee's benefits under the option without the
Optionee's consent, except as otherwise provided under the 1998 Stock Option
Plan.
Awards Under the 1998 Stock Option Plan
The Board or the Option Committee shall from time to time determine the
officers, directors, key employees and other persons who shall be granted
options under the Plan, the number of options to be granted to any participant,
and whether options granted to each such Plan participant shall be Incentive
Stock Options and/or Non-Incentive Stock Options. In selecting participants and
in determining the number of shares of Common Stock subject to options to be
granted to each such participant, the Board
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<PAGE>
or the Option Committee may consider the nature of the services rendered by each
such participant, each such participant's current and potential contribution to
the Company and such other factors as may be deemed relevant. Participants who
have been granted an option may, if otherwise eligible, be granted additional
options. In no event shall shares of Common Stock subject to options granted to
non-employee directors in the aggregate under this 1998 Stock Option Plan exceed
more than 30% of the total number of shares of Common Stock authorized for
delivery under this Plan, and no more than 5% of total shares of Common Stock
may be awarded to any individual non-employee director. In no event shall shares
of Common Stock subject to options granted to any employee exceed more than 25%
of the total number of shares of Common Stock authorized for delivery under the
1998 Stock Option Plan.
The table below presents information related to options previously
awarded by the Company under the 1998 Stock Option Plan. Ratification of the
1998 Stock Option Plan does not impact the number of options previously awarded.
Stockholder ratification of the 1998 Stock Option Plan confirms the provisions
of the 1998 Stock Option Plan previously approved by stockholders of the
Company, and authorizes the Board or the Plan Committee to accelerate the
vesting of option awards. In accordance with the 1998 Stock Option Plan, all
outstanding options shall become immediately exercisable in the event of a
Change in Control of the Company or the Bank.
PREVIOUSLY AWARDED BENEFITS
1998 STOCK OPTION PLAN
----------------------
Number of Options
Name and Position Previously Granted(1)(2)
- ----------------- ------------------------
Barbara J. Mallen, President and Director............. 18,150(3)
Joseph E. Gallagher, Senior Vice President,
Secretary and Director................................ 14,520(3)
Timothy R. Maier, Chairman of the Board
and Director ......................................... 3,630(4)
Jerome L. Kowalewski, Treasurer and
Director ............................................. 3,630(4)
Mary Lois Loftus...................................... 3,630(4)
Executive Officer Group (2 persons)................... 36,670
Non-Executive Officer Director Group
(3 persons)......................................... 10,890
Non-Executive Officer Employee Group
(8 persons)......................................... 10,890
- ------------------------------------
(1) The exercise price of such options is equal to the fair market value of the
Common Stock on the date of grant.
(2) Options shall vest, on the one year anniversary of the date of grant, 20%
annually during periods of continued service as an employee, director, or
director emeritus. In accordance with the amendment to the Option Plan,
upon stockholder ratification of this Proposal, the Board or the Plan
Committee may accelerate the vesting of such awards. Upon vesting, options
shall remain exercisable for ten years from the date of grant without
regard to continued service as an employee, director, or director emeritus.
(3) Options awarded to officers and employees will be exercisable as follows:
options awarded at the time of stockholder approval are first exercisable
at the rate of 20% on the one year anniversary of the date of grant and 20%
annually thereafter during periods of continued service as an employee,
Director or Director
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<PAGE>
Emeritus. Such awards shall be 100% exercisable in the event of death,
disability, or upon a change in control of the Company or the Bank. Options
awarded to employees shall continue to be exercisable during continued
service as an employee, Director or Director Emeritus. Options not
exercised within three months of termination of service as an employee
shall thereafter be deemed non-incentive stock options. In accordance with
the amendment to the Option Plan, upon stockholder ratification of this
Proposal, the Board or the Plan Committee may accelerate the vesting of
such awards.
(4) Options awarded to directors are first exercisable at a rate of 20% one
year after the date of grant and 20% annually thereafter, during such
period of service as a director or director emeritus, and shall remain
exercisable for ten years without regard to continued service as a director
or director emeritus. Upon disability, death, or a change in control of the
Company or the Bank, such awards shall be 100% exercisable. In accordance
with the amendment to the Option Plan, upon stockholder ratification of
this Proposal, the Board or the Plan Committee may accelerate the vesting
of such awards.
Effect of Mergers, Change of Control and Other Adjustments
Subject to any required action by the stockholders of the Company,
within the sole discretion of the Option Committee, the aggregate number of
shares of Common Stock for which Options may be granted hereunder or the number
of shares of Common Stock represented by each outstanding Option will be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding shares of Common Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend or any other increase
or decrease in the number of shares of Common Stock effected without the receipt
or payment of consideration by the Company. Subject to any required action by
the stockholders of the Company, in the event of any change in control,
recapitalization, merger, consolidation, exchange of shares, spin-off,
reorganization, tender offer, partial or complete liquidation or other
extraordinary corporate action or event, the Option Committee, in its sole
discretion, shall have the power, prior to or subsequent to such action or
events, to (i) appropriately adjust the number of shares of Common Stock subject
to each option, the exercise price per share of such option, and the
consideration to be given or received by the Company upon the exercise of any
outstanding options; (ii) cancel any or all previously granted options, provided
that appropriate consideration is paid to the Optionee in connection therewith;
and/or (iii) make such other adjustments in connection with the 1998 Stock
Option Plan as the Option Committee, in its sole discretion, deems necessary,
desirable, appropriate or advisable. However, no action may be taken by the
Option Committee which would cause Incentive Stock Options granted pursuant to
the 1998 Stock Option Plan to fail to meet the requirements of Section 422 of
the Code without the consent of the Optionee. The 1998 Stock Option Plan
provision to accelerate the exercise of options and the immediate exercisability
of options in the case of a Change in Control of the Company could have an
anti-takeover effect by making it more costly for a potential acquiror to obtain
control of the Company due to the higher number of shares outstanding following
such exercise of options.
The power of the Option Committee to accelerate the exercise of options
and the immediate exercisability of Options in the case of a Change in Control
of the Company could have an anti-takeover effect by making it more costly for a
potential acquiror to obtain control of the Company due to the higher number of
shares outstanding following such exercise of options. The power of the Option
Committee to make adjustments in connection with the 1998 Stock Option Plan,
including adjusting the number of shares subject to options and canceling
options, prior to or after the occurrence of an extraordinary corporate action,
allows the Option Committee to adapt the 1998 Stock Option Plan to operate in
changed circumstances, to adjust the 1998 Stock Option Plan to fit a smaller or
larger company, and to permit the issuance of options to new management
following such extraordinary corporate action. However, this power of the Option
Committee also has an anti-takeover effect, by
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<PAGE>
allowing the Option Committee to adjust the 1998 Stock Option Plan in a manner
to allow the present management of the Company to exercise more options and hold
more shares of the Company's Common Stock, and to possibly decrease the number
of options available to new management of the Company.
Amendment and Termination of the 1998 Stock Option Plan
The Board of Directors may alter, suspend or discontinue the 1998 Stock
Option Plan, except that no action of the Board shall increase the maximum
number of shares of Common Stock issuable under the 1998 Stock Option Plan,
materially increase the benefits accruing to Optionees under the 1998 Stock
Option Plan or materially modify the requirements for eligibility for
participation in the 1998 Stock Option Plan unless such action of the Board
shall be subject to approval or ratification by the stockholders of the Company.
Possible Dilutive Effects of the 1998 Stock Option Plan
The Common Stock to be issued upon the exercise of options awarded
under the 1998 Stock Option Plan may either be authorized but unissued shares of
Common Stock or shares purchased in the open market. Because the stockholders of
the Company do not have preemptive rights, to the extent that the Company funds
the 1998 Stock Option Plan, in whole or in part, with authorized but unissued
shares, the interests of current stockholders will be diluted. If upon the
exercise of all of the options, the Company delivers newly issued shares of
Common Stock (i.e., 72,600, shares of Common Stock), then the dilutive effect to
current stockholders would be approximately 9.1%. Ratification of the 1998 Stock
Option Plan does not increase the maximum number of shares issuable under the
1998 Stock Option Plan as previously approved by stockholders.
Federal Income Tax Consequences
Under present federal tax laws, awards under the 1998 Stock Option Plan
will have the following consequences:
1. The grant of an option will not by itself result in the
recognition of taxable income to an Optionee nor entitle the
Company to a tax deduction at the time of such grant.
2. The exercise of an option which is an "Incentive Stock Option"
within the meaning of Section 422 of the Code generally will not,
by itself, result in the recognition of taxable income to an
Optionee nor entitle the Company to a deduction at the time of
such exercise. However, the difference between the option
exercise price and the fair market value of the Common Stock on
the date of option exercise is an item of tax preference which
may, in certain situations, trigger the alternative minimum tax
for an Optionee. An Optionee will recognize capital gain or loss
upon resale of the shares of Common Stock received pursuant to
the exercise of Incentive Stock Options, provided that such
shares are held for at least one year after transfer of the
shares or two years after the grant of the option, whichever is
later. Generally, if the shares are not held for that period, the
Optionee will recognize ordinary income upon disposition in an
amount equal to the difference between the option exercise price
and the fair market value of the Common Stock on the date of
exercise, or, if less, the sales proceeds of the shares acquired
pursuant to the option.
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<PAGE>
3. The exercise of a Non-Incentive Stock Option will result in the
recognition of ordinary income by the Optionee on the date of
exercise in an amount equal to the difference between the
exercise price and the fair market value of the Common Stock
acquired pursuant to the option.
4. The Company will be allowed a tax deduction for federal tax
purposes equal to the amount of ordinary income recognized by an
Optionee at the time the Optionee recognizes such ordinary
income.
5. In accordance with Section 162(m) of the Code, the Company's tax
deductions for compensation paid to the most highly paid
executives named in the Company's Proxy Statement may be limited
to no more than $1 million per year, excluding certain
"performance-based" compensation. The Company intends for the
award of options under the 1998 Stock Option Plan to comply with
the requirement for an exception to Section 162(m) of the Code
applicable to stock option plans so that the Company's deduction
for compensation related to the exercise of options would not be
subject to the deduction limitation set forth in Section 162(m)
of the Code.
Accounting Treatment
Neither the grant nor the exercise of an option under the 1998 Stock
Option Plan currently requires any charge against earnings under generally
accepted accounting principles. Common Stock issuable pursuant to outstanding
options which are exercisable under the 1998 Stock Option Plan will be
considered outstanding for purposes of calculating earnings per share on a fully
diluted basis.
Stockholder Ratification
Stockholder ratification of the 1998 Stock Option Plan is being sought
in accordance with interpretive letters of the OTS. An affirmative vote of a
majority of the votes cast at the Meeting on the matter, in person or by proxy,
is required to constitute stockholder ratification of the 1998 Stock Option
Plan, as amended, submitted as Proposal 2.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE 1998 STOCK OPTION PLAN AS AMENDED.
- --------------------------------------------------------------------------------
PROPOSAL 3 - RATIFICATION OF THE RSP
- --------------------------------------------------------------------------------
General
The Board of Directors of the Company previously adopted the RSP as a
method of providing directors, officers, and key employees of the Bank with a
proprietary interest in the Company in a manner designed to encourage such
persons to remain in the employment or service of the Bank. As previously
approved by stockholders of the Company on October 20, 1998, the Bank
contributed sufficient funds to the RSP to purchase Common Stock representing up
to 4% of the aggregate number of shares issued in the Conversion (i.e., 29,040
shares of Common Stock) in the open market. All of the Common Stock purchased by
the RSP was purchased at the fair market value of such stock on the date of
purchase. Awards under the RSP were made in recognition of expected future
services to the
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<PAGE>
Bank by its directors, officers and key employees responsible for implementation
of the policies adopted by the Bank's Board of Directors and as a means of
providing a further retention incentive.
Pursuant to regulations of the OTS applicable to stock benefit plans
established or implemented within one year following the completion of a
mutual-to-stock conversion of a federally chartered savings institution such as
the Bank, the RSP contains certain restrictions and limitations. The RSP
provides that stock awards ("Awards") granted to employees or directors become
vested no more rapidly than ratably over a five-year period (with acceleration
upon death or disability or a Change in Control, as such term is defined in the
RSP); provided, however, that such accelerated vesting is not inconsistent with
the regulations of the OTS at the time of such acceleration. Recent OTS
interpretive letters permit awards under stock benefit plans to accelerate
vesting of awards upon a Change in Control; provided that stockholders ratify
such plan provisions by action of stockholders taken more than one year
following the completion of the mutual-to-stock conversion. The Board of
Directors is seeking ratification of the RSP (as previously approved by the
stockholders on October 20, 1998) as a means of complying with the OTS
interpretive letters.
Ratification of the RSP does not increase the number of shares reserved
for issuance thereunder, alter the classes of individuals eligible to
participate in the RSP, or otherwise amend or modify the terms of the RSP. In
the event that the RSP is not ratified by stockholders at the Meeting, the RSP
will nevertheless remain in effect. However, any employee or director of the
Company or the Bank that has their service terminated prior to the vesting of
such stock awards may forfeit such unvested awards to the extent that may be
required under applicable OTS regulations and policies.
Awards Under the RSP
Currently, the RSP requires that Awards granted to employees or
directors become first exercisable no more rapidly than ratably over a five-year
period (with accelerated vesting upon death or disability or a Change in
Control, as such terms are defined in the RSP); provided, however, that such
accelerated vesting is not inconsistent with the regulations of the OTS at the
time of such acceleration. Ratification of the RSP at the Meeting will conform
the acceleration of vesting of Awards upon a Change in Control with applicable
OTS interpretive letters. Such stockholder ratification will be effective with
respect to previously granted Awards and any Awards that may be granted in the
future. Pursuant to the RSP, upon a Change in Control, all Awards previously
granted and outstanding as of the date of a Change in Control will automatically
become exercisable and non-forfeitable.
Benefits under the RSP ("Plan Share Awards") may be granted at the sole
discretion of a committee comprised of not less than two directors who are not
employees of the Bank or the Company (the "RSP Committee") appointed by the
Bank's Board of Directors. The RSP is managed by trustees (the "RSP Trustees")
who are non-employee directors of the Bank or the Company and who have the
responsibility to invest all funds contributed by the Bank to the trust created
for the RSP (the "RSP Trust"). Unless the terms of the RSP or the RSP Committee
specifies otherwise, awards under the RSP will be in the form of restricted
stock payable as the Plan Share Awards shall be earned and non- forfeitable.
Twenty percent (20%) of such awards shall be earned and non-forfeitable on the
one year anniversary of the date of grant of such awards, and 20% annually
thereafter, provided that the recipient of the award remains an employee,
Director or Director Emeritus during such period. A recipient of such restricted
stock will not be entitled to voting rights associated with such shares prior to
the applicable date such shares are earned. Dividends paid on Plan Share Awards
shall be held in arrears and distributed upon the date such applicable Plan
Share Awards are earned. Any shares held by the RSP
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<PAGE>
Trust which are not yet earned shall be voted by the RSP Trustees, as directed
by the RSP Committee. If a recipient of such restricted stock terminates
employment or service for reasons other than death, disability, or a change in
control of the Company or the Bank, the recipient forfeits all rights to the
awards under restriction. If the recipient's termination of employment or
service is caused by death, disability, or a change in control of the Company or
the Bank (provided that such accelerated vesting is not inconsistent with
applicable regulations of the OTS at the time of such change in control), all
restrictions expire and all shares allocated shall become unrestricted. Awards
of restricted stock to directors shall be immediately non-forfeitable in the
event of the death or disability of such director, or a change in control of the
Company or the Bank and distributed as soon as practicable thereafter. The Board
of Directors can terminate the RSP at any time, and if it does so, any shares
not allocated will revert to the Company.
Plan Share Awards under the RSP will be determined by the RSP
Committee. In no event shall any Employee receive Plan Share Awards in excess of
25% of the aggregate Plan Shares authorized under the Plan. Plan Share Awards
may be granted to newly elected or appointed non-employee Directors of the Bank
subsequent to the effective date (as defined in the RSP) provided that the Plan
Share Awards made to non-employee directors shall not exceed 30% of total Plan
Share Reserve in the aggregate under the Plan or 5% of the total Plan Share
Reserve to any individual non-employee Director.
The aggregate number of Plan Shares available for issuance pursuant to
the Plan Share Awards and the number of shares to which any Plan Share Award
relates shall be proportionately adjusted for any increase or decrease in the
total number of outstanding shares of Common Stock issued subsequent to the
effective date (as defined in the RSP) of the RSP resulting from any split,
subdivision or consolidation of the Common Stock or other capital adjustment,
change or exchange of Common Stock, or other increase or decrease in the number
or kind of shares effected without receipt or payment of consideration by the
Company.
The following table presents information related to the previously
granted awards of Common Stock under the RSP as authorized pursuant to the terms
of the RSP. Ratification of such RSP does not change the number of shares
awarded or other terms. Such ratification of the RSP confirms the provisions of
the RSP previously approved by the stockholders of the Company.
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<PAGE>
PRIOR AWARDS UNDER THE RSP
--------------------------
Number of Shares
----------------
Name and Position Previously Granted (1)(2)
- ----------------- -------------------------
Barbara J. Mallen
President and Director .......................... 7,260
Joseph E. Gallagher
Senior Vice President, Secretary
and Director .................................... 5,808
Timothy R. Maier
Chairman of the Board of Director and
Director........................................ 1,452
Jerome L. Kowalewski
Treasurer and Director........................... 1,452
Mary Lois Loftus
Director......................................... 1,452
Executive Officer Group (2 persons)................ 13,068
Non-Executive Officer Director
Group (3 persons)................................ 4,356(3)
Non-Executive Officer Employee
Group (3 persons)............................... 4,356
- -------------------------------
(1) All Plan Share Awards presented herein shall be earned at the rate of 20%
one year from date of grant, and 20% annually thereafter. All awards become
immediately 100% vested upon death, disability, or termination of service
following a change in control (as defined in the RSP).
(2) Plan Share Awards shall continue to vest during periods of service as an
employee, director, or director emeritus.
(3) Such number of shares to be awarded to each non-employee director shall be
limited to 1,452 shares per individual and 4,356 in the aggregate.
Amendment and Termination of the Plan
The Board may amend or terminate the RSP at any time. However, no
action of the Board may increase the maximum number of Plan Shares permitted to
be awarded under the RSP, except for adjustments in the Common Stock of the
Company, materially increase the benefits accruing to Participants under the RSP
or materially modify the requirements for eligibility for participation in the
RSP unless such action of the Board shall be subject to ratification by the
stockholders of the Company.
Federal Income Tax Consequences
Common Stock awarded under the RSP is generally taxable to the
recipient at the time that such awards become earned and non-forfeitable, based
upon the fair market value of such stock at the time of such vesting.
Alternatively, a recipient may make an election pursuant to Section 83(b) of the
Code within 30 days of the date of the transfer of such Plan Share Award to
elect to include in gross income for the current taxable year the fair market
value of such award. Such election must be filed with the
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Internal Revenue Service within 30 days of the date of the transfer of the stock
award. The Company will be allowed a tax deduction for federal tax purposes as a
compensation expense equal to the amount of ordinary income recognized by a
recipient of Plan Share Awards at the time the recipient recognizes taxable
ordinary income. A recipient of a Plan Share Award may elect to have a portion
of such award withheld by the RSP Trust in order to meet any necessary tax
withholding obligations.
Accounting Treatment
For accounting purposes, the Company will recognize compensation
expense in the amount of the fair market value of the Common Stock subject to
Plan Share Awards at the grant date pro rata over the period of years during
which the awards are earned.
Stockholder Ratification
The Company is submitting the RSP to stockholders for ratification in
accordance with the interpretive letters of the OTS. An affirmative vote of a
majority of the votes cast at the Meeting on the matter, in person or by proxy,
is required to constitute stockholder ratification of the RSP, submitted as
Proposal 3.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE RSP.
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PROPOSAL 4 -- RATIFICATION OF APPOINTMENT OF AUDITORS
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On March 17, 1998, the board of directors of the Company determined to
engage S.R. Snodgrass, A.C. as its independent auditors for the fiscal year
ended December 31, 1997. On March 20, 1998, the registrant orally notified
LaFrance, Walker, Jackley & Saville, LLP ("LWJS"), its independent auditors for
the fiscal years ended December 31, 1996 and 1995, of this determination and
that LWJS would not continue to be engaged for the fiscal year ending December
31, 1997. On March 10, 1998, the registrant had orally advised LWJS that the
board of directors of the registrant would likely consider this matter during a
meeting on March 17, 1998. The determination to replace LWJS was approved by the
full board of directors of the registrant.
The reports of LWJS for the fiscal years ended December 31, 1996 and
1995 contained no adverse opinion or disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended December 31, 1996 and 1995 and during the period
from December 31, 1996 to March 17, 1998, there were no disagreements between
the registrant and LWJS concerning accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.
S.R. Snodgrass, A.C. was the Company's independent public accountant
for the 1997 and 1998 fiscal year. The Board of Directors of the Company
presently intends to renew the Company's arrangement with S.R. Snodgrass, A.C.
to be its auditors for the fiscal year ended December 31, 1999. A representative
of S.R. Snodgrass, A.C. is expected to be present at the meeting to respond to
stockholders' questions and will have the opportunity to make a statement if the
representative so desires.
Ratification of the appointment of the auditors requires the approval
of a majority of the votes cast by the stockholders of the Company at the
Meeting. The Board of Directors recommends
-19-
<PAGE>
that stockholders vote "FOR" the ratification of the appointment of S.R.
Snodgrass, A.C. as the Company's auditors for the fiscal year ending December
31, 1999.
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OTHER MATTERS
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The Board of Directors does not know of any other matters that are
likely to be brought before the Meeting. If any other matters, not now known,
properly come before the Meeting or any adjournments, the persons named in the
enclosed proxy card, or their substitutes, will vote the proxy in accordance
with their judgment on such matters. Under the Articles of Incorporation no new
business or proposals submitted by stockholders shall be acted upon at the
Meeting unless such business or proposal is stated in writing and filed with the
Secretary by April 9, 1999.
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MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of soliciting proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers, and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
The Company's Annual Report to Stockholders for the year ended December
31, 1998, including financial statements, will be 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 a part of
the proxy solicitation material or as having been incorporated herein by
reference.
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STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be considered for inclusion in the Company's proxy
statement for the annual meeting of stockholders to be held in 2000, all
stockholder proposals must be submitted to the Secretary at the Company's
office, Saxonburg Boulevard, Pittsburgh, Pennsylvania 15223, on or before
December 2, 1999. Under the Articles of Incorporation, in order to be considered
for possible action by stockholders at the 2000 annual meeting of stockholders,
stockholder nominations for director and stockholder proposals not included in
the Company's proxy statement must be submitted to the Secretary of the Company,
at the address set forth above, no later than February 20, 2000. In addition,
stockholder nominations and stockholder proposals must meet other applicable
criteria set forth in the Articles of Incorporation in order to be considered at
the 2000 annual meeting of stockholders.
-20-
<PAGE>
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FORM 10-KSB
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A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1998 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE
RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, SFSB HOLDING COMPANY, 900
SAXONBURG BOULEVARD, PITTSBURGH, PENNSYLVANIA 15223.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Joseph E. Gallagher
----------------------------------
Joseph E. Gallagher
Secretary
Pittsburgh, Pennsylvania
March 31, 1999
-21-
<PAGE>
Exhibit A
---------
Amendment
to the
SFSB Holding Company
1998 Stock Option Plan
----------------------
1. Revision to the Plan by addition of the following Section 24 in its
entirety as follows:
24. Plan Provisions Effective as of March 16, 1999.
----------------------------------------------
(a) Modification of Award Vesting. Notwithstanding anything
herein to the contrary, the Board or the Committee may, in its sole discretion,
amend the vesting schedule of any Award made pursuant to Sections 6(a) and 9(a)
to provide for immediate or more rapid vesting of such Award.
<PAGE>
Annex A
- --------------------------------------------------------------------------------
SFSB HOLDING COMPANY
900 SAXONBURG BOULEVARD
PITTSBURGH, PENNSYLVANIA 15223
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
April 20, 1999
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The undersigned hereby appoints the Board of Directors of SFSB Holding
Company (the "Company"), or its designee, with full powers of substitution, to
act as attorneys and proxies for the undersigned, to vote all shares of Common
Stock of the Company which the undersigned is entitled to vote at the Annual
Meeting of Stockholders (the "Meeting"), to be held at the Company's office, 900
Saxonburg Boulevard, Pittsburgh, Pennsylvania, on Tuesday, April 20, 1999, at
9:00 a.m. and at any and all adjournments thereof, in the following manner:
FOR WITHHELD
1. To elect as director the nominee
listed below (except as marked to the contrary below): |_| |_|
Jerome L. Kowalewski
(Instruction: To withhold authority to vote
for the individual nominee, write the nominee's name
on the space provided below)
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FOR AGAINST ABSTAIN
2. To ratify the SFSB Holding Company
1998 Stock Option Plan, as amended. |_| |_| |_|
3. To ratify the Stanton Federal Savings
Bank Restricted Stock Plan. |_| |_| |_|
4. To ratify the appointment of S.R.
Snodgrass, A.C. as independent auditors
for the Company for the fiscal year
ending December 31, 1999. |_| |_| |_|
The Board of Directors recommends a vote "FOR" the above listed
proposition. ---
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THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY
OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS SIGNED PROXY WILL BE VOTED BY
THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD
OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting, or
at any adjournments thereof, and after notification to the Secretary of the
Company at the Meeting of the Stockholder's decision to terminate this Proxy,
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned may also revoke this Proxy by filing a
subsequently dated Proxy or by written notification to the Secretary of the
Company of his or her decision to terminate this Proxy.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders, a Proxy
Statement dated March 31, 1999 and the 1998 Annual Report.
Dated: , 1999
------------------------------
- ----------------------------------- ----------------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ----------------------------------- ----------------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this Proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
- --------------------------------------------------------------------------------
