<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
<TABLE>
<S> <C>
[ ] PRELIMINARY PROXY STATEMENT [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
[X] DEFINITIVE PROXY STATEMENT (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO RULE 14a-11(C) OR RULE 14a-12
</TABLE>
CFS BANCORP, INC.
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- --------------------------------------------------------------------------------
(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:____
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:_______
(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION
COMPUTED PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FORTH THE AMOUNT ON
WHICH THE FILING FEE IS CALCULATED AND STATE HOW IT WAS
DETERMINED):________________________________________________________
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:____________________
(5) TOTAL FEE PAID:_____________________________________________________
[ ] FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.
[ ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT
RULE 0-11(a)(2) AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE WAS
PAID PREVIOUSLY. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT
NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
(1) AMOUNT PREVIOUSLY PAID:_____________________________________________
(2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.:_______________________
(3) FILING PARTY:_______________________________________________________
(4) DATE FILED:_________________________________________________________
<PAGE> 2
CFS LOGO
CFS BANCORP, INC.
707 RIDGE ROAD
MUNSTER, INDIANA 46321
(219) 836-5500
April 2, 1999
Dear Stockholder:
You are cordially invited to attend the first Annual Meeting of
Stockholders of CFS Bancorp, Inc. The meeting will be held at the Center for
Visual and Performing Arts located at 1040 Ridge Road, Munster, Indiana, on
Tuesday, May 4, 1999 at 10:00 a.m., Central Time. The matters to be considered
by stockholders at the Annual Meeting are described in the accompanying
materials.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend the
meeting in person. We urge you to mark, sign, and date your proxy card today and
return it in the envelope provided, even if you plan to attend the Annual
Meeting. This will not prevent you from voting in person, but will ensure that
your vote is counted if you are unable to attend.
Your continued support of and interest in CFS Bancorp, Inc. are sincerely
appreciated.
Best regards,
SIG
Thomas F. Prisby
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
CFS BANCORP, INC.
707 RIDGE ROAD
MUNSTER, INDIANA 46321
(219) 836-5500
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 4, 1999
------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of CFS Bancorp, Inc. (the "Company") will be held at the Center for
Visual and Performing Arts located at 1040 Ridge Road, Munster, Indiana, on
Tuesday, May 4, 1999 at 10:00 a.m., Central Time, for the following purposes,
all of which are more completely set forth in the accompanying Proxy Statement:
(1) To elect three directors for a three-year term expiring in 2002,
and until their successors are elected and qualified;
(2) To ratify the appointment by the Board of Directors of Ernst &
Young LLP as the Company's independent auditors for the fiscal year ending
December 31, 1999; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof. Management is not aware of any other
such business.
The Board of Directors has fixed March 19, 1999 as the voting record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and at any adjournment thereof. Only those stockholders of record
as of the close of business on that date will be entitled to vote at the Annual
Meeting or at any such adjournment.
BY ORDER OF THE BOARD OF DIRECTORS
SIG
Monica F. Sullivan
Corporate Secretary
Munster, Indiana
April 2, 1999
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
<PAGE> 4
CFS BANCORP, INC.
------------------
PROXY STATEMENT
------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 1999
This Proxy Statement is furnished to holders of common stock, $0.01 par
value per share ("Common Stock"), of CFS Bancorp, Inc. (the "Company"), the
parent holding company of Citizens Financial Services, FSB ("Citizens Financial"
or the "Bank"). Proxies are being solicited on behalf of the Board of Directors
of the Company to be used at the Annual Meeting of Stockholders ("Annual
Meeting") to be held at the Center for Visual and Performing Arts located at
1040 Ridge Road, Munster, Indiana, on Tuesday, May 4, 1999 at 10:00 a.m.,
Central Time, and at any adjournment thereof for the purposes set forth in the
Notice of Annual Meeting of Stockholders. This Proxy Statement is first being
mailed to stockholders on or about April 2, 1999.
The proxy solicited hereby, if properly signed and returned to the Company
and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted for the nominees for director described herein, for
ratification of the appointment of Ernst & Young LLP for fiscal 1999, and, upon
the transaction of such other business as may properly come before the meeting,
in accordance with the best judgment of the persons appointed as proxies. Any
stockholder giving a proxy has the power to revoke it at any time before it is
exercised by (i) filing with the Secretary of the Company written notice thereof
(Corporate Secretary, CFS Bancorp, Inc.); (ii) submitting a duly-executed proxy
bearing a later date; or (iii) appearing at the Annual Meeting and giving the
Secretary notice of his or her intention to vote in person. Proxies solicited
hereby may be exercised only at the Annual Meeting and any adjournment thereof
and will not be used for any other meeting.
VOTING
Only stockholders of record at the close of business on March 19, 1999
("Voting Record Date") will be entitled to vote at the Annual Meeting. On the
Voting Record Date, there were 23,022,496 shares of Common Stock issued and
21,872,496 shares of Common Stock outstanding and the Company had no other class
of equity securities outstanding. Each share of Common Stock is entitled to one
vote at the Annual Meeting on all matters properly presented at the meeting.
Directors are elected by a plurality of the votes cast with a quorum present.
Abstentions are considered in determining the presence of a quorum and will not
affect the plurality vote required for the election of directors. The
affirmative vote of a majority of the total votes present in person and by proxy
is required to ratify the appointment of the independent auditors. The proposal
for ratification of the auditors is considered a "discretionary" item upon which
brokerage firms may vote in their discretion on behalf of their clients if such
clients have not furnished voting instructions and for which there will not be
"broker non-votes."
2
<PAGE> 5
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR
AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Certificate of Incorporation of the Company provides that the Board of
Directors shall be divided into three classes as nearly equal in number as the
then total number of directors constituting the Board of Directors permits. The
directors shall be elected by the stockholders of the Company for staggered
terms, or until their successors are elected and qualified.
At the Annual Meeting, stockholders of the Company will be asked to elect
one class of directors, consisting of three directors, for a three-year term
expiring in 2002, and until their successors are elected and qualified.
No nominee for director is related to any other director or executive
officer of the Company by blood, marriage or adoption. Each nominee currently
serves as a director of the Company and of the Bank.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominees for director listed
below. If any person named as a nominee should be unable or unwilling to stand
for election at the time of the Annual Meeting, the proxies will nominate and
vote for any replacement nominee or nominees recommended by the Board of
Directors. At this time, the Board of Directors knows of no reason why any of
the nominees listed below may not be able to serve as a director if elected.
The following tables present information concerning the nominees for
director of the Company, including tenure as a director. All of the below-listed
directors also serve as directors of the Bank.
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERMS EXPIRING IN 2002
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AGE(1) THE PAST FIVE YEARS SINCE
- ---- ------ --------------------------- --------
<S> <C> <C> <C>
Sally A. Abbott...................... 64 Director of the Bank since 1986; Currently 1998
retired; Retired from the Bank as a Vice
President in 1994.
Gregory W. Blaine.................... 50 Director of the Bank since 1998; former 1998
Chairman and Chief Executive Officer of TN
Technologies; Served in various capacities
with True North Communications, Inc., the
parent of TN Technologies, since 1979,
including director of Global Operating Systems
and as a member of the Board from 1990 to
1997.
Thomas J. Burns...................... 65 Director of the Bank since 1994; Operates the 1998
Burns-Kish Funeral Homes, Hammond, Indiana
since 1954.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ELECTION OF THE
NOMINEES FOR DIRECTOR.
3
<PAGE> 6
DIRECTORS WHOSE TERMS ARE CONTINUING
DIRECTORS WITH A TERM EXPIRING IN 2000
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AGE(1) THE PAST FIVE YEARS SINCE
- ---- ------ --------------------------- --------
<S> <C> <C> <C>
Gene Diamond......................... 46 Director of the Bank since 1994; President and 1998
Chief Executive Officer of St. Margaret Mercy
Healthcare Centers, located in Hammond and
Dyer, Indiana, since April 1993.
James W. Prisby...................... 48 Vice Chairman, President and Chief Operating 1998
Officer of the Company since 1998 and of the
Bank since February 1996; previously Executive
Vice President of the Bank since 1993 and
Corporate Secretary of the Bank from 1977 to
1996. Mr. Prisby joined the Bank in 1974 as
internal auditor. Mr. Prisby is the brother of
Mr. Thomas F. Prisby.
</TABLE>
DIRECTORS WITH A TERM EXPIRING IN 2001
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AGE(1) THE PAST FIVE YEARS SINCE
- ---- ------ --------------------------- --------
<S> <C> <C> <C>
Thomas F. Prisby..................... 57 Chairman of the Board and Chief Executive 1998
Officer of the Company since 1998 and of the
Bank since February 1996. Previously, Mr.
Prisby served as the President and Chief
Operating Officer of the Bank from 1989 to
1996. Mr. Prisby joined the Bank in 1982 as
Executive Vice President. Mr. Prisby is the
brother of Mr. James W. Prisby.
Daniel P. Ryan....................... 58 Vice Chairman of the Company; Director of the 1998
Bank since July 1998; Mr. Ryan served as
Chairman, President and Chief Executive
Officer of SuburbFed Financial Corp. ("SFC")
and Suburban Federal Savings, a Federal
Savings Bank ("Suburban Federal") and the
wholly-owned subsidiary of SFC up through the
merger of SFC with and into the Company in
July 1998. Mr. Ryan joined Suburban Federal in
1974 and served as Vice Chairman and President
of Suburban Federal and SFC from 1986 and
1991, respectively, until 1997, when he was
elected Chairman of the Board.
</TABLE>
- ---------------
(1) As of March 19, 1999.
4
<PAGE> 7
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Set forth below is information with respect to the principal occupations
during the last five years for the four executive officers of the Company and
the Bank who do not serve as directors of the Company.
John T. Stephens. Age 54. Mr. Stephens currently serves as Executive Vice
President and Chief Financial Officer of the Company. Mr. Stephens also
currently serves as Executive Vice President, Chief Financial Officer and
Treasurer and Director of the Bank and has done so since 1993. Mr. Stephens
joined the Bank in 1983 as Senior Vice President, Chief Financial Officer and
Treasurer.
Jeffrey C. Stur. Age 50 years. Mr. Stur has served as Senior Vice
President of the Bank for Lending since February 1995. Prior to February 1995,
Mr. Stur had served as Vice President of the Bank for Lending since October
1980. Mr. Stur has been employed by the Bank since 1972 and has previously
served as a loan officer, a staff appraiser and the Manager of the Appraisal
Department.
Byron G. Thoren. Age 51 years. Mr. Thoren currently is Executive Vice
President -- Operations of the Bank. Mr. Thoren formerly served until July 1998
as Executive Vice President and Chief Operating Officer of SFC and Suburban
Federal. He has held such positions since 1988, with respect to Suburban
Federal, and 1991 with respect to SFC.
Steven E. Stock. Age 49 years. Mr. Stock currently is the Senior Vice
President of the Bank. Mr. Stock formerly served until July 1998 as Senior Vice
President, Chief Financial Officer and Treasurer of SFC and Suburban Federal.
Mr. Stock joined Suburban Federal in 1991.
COMPLIANCE WITH SECTION 16(A) OF THE 1934 ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), requires the officers and directors, and persons who own more than 10% of
the Company's Common Stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and the Nasdaq National Market.
Officers, directors and greater than 10% stockholders are required by regulation
to furnish the Company with copies of all Section 16(a) forms they file. The
Company knows of no person who owns 10% or more of the Company's Common Stock.
Based solely on review of the copies of such forms furnished to the
Company, or written representations from its officers and directors, the Company
believes that during, and with respect to, 1998, the Company's officers and
directors complied in all respects with the reporting requirements promulgated
under Section 16(a) of the 1934 Act.
DIRECTOR NOMINATIONS; MEETINGS OF THE BOARD OF THE COMPANY
Nominations for director of the Company are made by the Board of Directors
of the Company. During the fiscal year ended December 31, 1998, the Board of
Directors of the Company met nine times. No director of the Company attended
fewer than 75% of the aggregate of the total
5
<PAGE> 8
number of Board meetings held during the period for which he/she has been a
director and the total number of meetings held by all committees of the Board on
which he/she served during the periods that he/she served.
STOCKHOLDER NOMINATIONS
Article IV, Section 4.15 of the Bylaws governs nominations for election to
the Board of Directors and requires all such nominations, other than those made
by the Board of Directors or committee appointed by the Board, to be made at a
meeting of stockholders called for the election of directors, and only by a
stockholder who has complied with the notice provisions in that section.
Stockholder nominations must be made pursuant to timely notice in writing to the
Secretary of the Company. Generally, to be timely, a stockholder's notice must
be delivered to, or mailed, postage prepaid, to the principal executive offices
of the Company not later than 120 days prior to the anniversary date of the
mailing of proxy materials by the Company in connection with the immediately
preceding annual meeting of stockholders of the Company. Each written notice of
a stockholder nomination is required to set forth certain information specified
in the Bylaws. Any such nomination by a stockholder must have been delivered or
received no later than the close of business on November 30, 1998. No such
nominations by stockholders were received.
COMMITTEES
The Board of Directors has established the following committees, among
others:
COMPENSATION AND BENEFITS COMMITTEE
New executive compensation philosophy, policies and programs are currently
being developed to better reflect the Company's status as a public corporation
since its conversion from a mutual institution on July 24, 1998. It will be the
responsibility of the new Compensation and Benefits Committee of the Board of
Directors ("Committee") to institute a program which effectively provides
incentive for executive management to lead the Company to its full potential.
In January 1999, directors appointed to this Committee were Sally A.
Abbott, Gregory W. Blaine, and Gene Diamond. No member of the Committee is a
current officer or employee of the Company, the Bank or any of its subsidiaries.
Ms. Abbott is a former Vice President of the Bank. The report of the Committee
with respect to compensation and benefits for the Chief Executive Officer and
all other executive officers is set forth below.
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
The Committee members recognize that the Bank must attract, retain and
motivate the best people to achieve performance goals that reward management for
outstanding performance while serving the financial interests of the Company and
its stockholders.
To do so, the Company must compensate its executives fairly and
competitively in the markets in which it competes. The competitive market for
executives is primarily banks and thrifts
6
<PAGE> 9
of a similar asset size in Northwest Indiana and the Chicago metropolitan area,
and secondarily banks and thrifts of a similar asset size throughout the Midwest
section of the United States.
The Company's compensation philosophy is to provide its executives,
including the Chairman and Chief Executive Officer, with conservatively
competitive base salaries along with performance-based annual and long-term
incentives which provide an appropriate balance and focus between near-term and
long-term objectives of the Company. The compensation model for executives of
the Company will target total compensation to be competitive (at least the 50th
percentile) when measured against a range of selected comparable companies,
including financial institutions in the Company's size range. Executive
compensation will be comprised of base salary, short and long-term incentives,
stock grants, and stock options.
Prior to the conversion to a public corporation in 1998, the Compensation
and Benefits Committee of the Bank consisted of Ms. Abbott, Mr. Diamond and
Thomas F. Prisby, Chairman and Chief Executive Officer. In considering the
compensation of Chairman Prisby, the Committee, independent of Chairman Prisby's
position on the Committee, recommended to the Bank Board of Directors that a
compensation level in the top 25th percentile of financial institutions with
assets between $500 million and $1 billion (as reported in the 1997 BAI Bank Key
Executive Compensation Survey Results, the 1997 BAI Bank Cash Compensation
Survey Results, the 1997 SNL Executive Compensation Review for Thrift
Institutions, and the 1997 SNL Executive Compensation Review for Banks) would be
appropriate and equitable based on:
(1) the Bank's implementation of its long-term strategic plan to
transform its business from a traditional thrift to a full-service
financial center;
(2) the Bank's maintenance of capital levels in excess of regulatory
requirements due to sound lending policies, prudent pricing practices,
efficient operating policies and effective investment management; and
(3) management's efforts in the Bank's conversion to stock form and
acquiring SFC, and increasing the Company's assets to $1.3 billion.
The Committee is responsible for the approval and administration of the
base salary level and annual bonus compensation programs as well as the stock
option program for executive officers. In determining executive compensation
levels, the Committee will consider: salary and bonus levels which will attract
and retain qualified executives when considered with the other components of the
Company's compensation structure; specific annual performance criteria; and
rewarding executive officers for continuous improvement in those areas which
contribute to increases in stockholder value.
The level of any salary increase will be based upon an executive's job
performance over the year in conjunction with Company goals of profitability,
growth and customer satisfaction. Economic conditions and peer group
compensation surveys will provide additional information to support the
compensation planning process.
7
<PAGE> 10
STOCK OPTION PLAN AND RECOGNITION AND RETENTION PLAN. In accordance with a
Special Stockholders' meeting held on February 3, 1999, substantially all of the
Company's corporate officers will be awarded shares of restricted Company Common
Stock and/or incentive stock options. The purpose of the restricted stock and
incentive stock option awards is to provide the Company's employees with a
proprietary interest in the Company that will align the interests of employees
with those of stockholders. With respect to the Recognition and Retention Plan,
only Company and Bank officers who served as officers prior to the acquisition
of SFC will be awarded shares of Common Stock.
The Company's philosophy for granting stock options will be based on the
principles of encouraging key employees to remain with the Company by providing
them with a long-term interest in the Company's overall performance and
encouraging executive officers to manage with a view toward maximizing long-term
stockholder value.
Stock options to purchase Common Stock will be granted to key personnel
under the Company's 1998 Stock Option Plan at market exercise prices on the date
of the grant. Findley Davies & Associates, a nationally recognized executive
compensation consulting firm, has been engaged to evaluate long-term
compensation in order to determine appropriate guidelines for the grant and
target earn-out levels of stock options and thus ensure comparability with the
grants of stock options to executives at comparable companies.
In determining the total number of options to be granted to all recipients,
including the executive officers, the Committee will consider dilution, number
of shares of Common Stock outstanding, and performance of the Company. These
stock option grants provide incentive for the creation of stockholder value
since the full benefit of the grant to each executive officer can only be
realized with an appreciation in the price of the Company's Common Stock.
TAX DEDUCTIBILITY. At this point, and for the foreseeable future, the
Company does not anticipate problems with tax deductibility of executive
compensation. If, in the future, this becomes a concern, the Compensation and
Benefits Committee will revisit the issue.
Thomas F. Prisby
Sally A. Abbott
Gene Diamond
AUDIT COMMITTEE
The Audit Committee, which is a joint committee made up of members of the
Board of Directors of the Company and the Bank, reviews the records and affairs
of the Company and its financial condition. The Audit Committee reviews with
management and the independent auditors the systems of internal control, and
monitors the Company's adherence in accounting and financial reporting to
generally accepted accounting principles. Further, the Audit Committee ensures
that the Company's internal policies and procedures relative to the underwriting
of loans is adhered to by management. The current members of the Audit Committee
are Mr. Alan L. Wischhover, who is Chairman of the Committee and a director of
the Bank, Ms. Abbott, Mr. Burns, and Mr. Ryan. The Audit Committee met once in
1998.
8
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of certain information concerning
the compensation paid by the Bank for services rendered in all capacities during
the years ended December 31, 1998 and 1997 to the Chairman and Chief Executive
Officer and the three highest paid executive officers of the Company, and its
subsidiaries, whose total annual compensation during fiscal 1998 exceeded
$100,000.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------------- -----------------------------------------
AWARDS PAYOUTS
OTHER ----------------------------- -----------
ANNUAL SECURITIES
NAME AND COMPENSATION RESTRICTED UNDERLYING LTIP
PRINCIPAL POSITION YEAR SALARY BONUS (1)(2) STOCK OPTIONS PAYOUTS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas F. Prisby
Chairman and Chief 1998 $356,383 $89,060 $139,272 -- -- --
Executive Officer 1997 $333,600 $53,206 $113,036 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
James W. Prisby
President and Chief 1998 $314,830 $78,627 $119,607 -- -- --
Operating Officer 1997 $294,680 $46,688 $ 93,849 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
John T. Stephens
Executive Vice President 1998 $231,990 $57,733 $ 53,245 -- -- --
and Chief Financial Officer 1997 $216,840 $33,482 $ 42,237 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Jeffrey C. Stur
Senior Vice President- 1998 $ 98,191 $46,223 -- -- -- --
Commercial Lending 1997 $ 86,700 $11,688 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------
- --------------------------------------------------
ALL OTHER
NAME AND COMPENSATION
PRINCIPAL POSITION (3)
- --------------------------------------------------
<S> <C>
Thomas F. Prisby
Chairman and Chief $ 9,600
Executive Officer $ 9,500
- --------------------------------------------------
James W. Prisby
President and Chief $ 9,600
Operating Officer $ 9,500
- --------------------------------------------------
John T. Stephens
Executive Vice President $10,000
and Chief Financial Officer $ 9,500
- --------------------------------------------------
Jeffrey C. Stur
Senior Vice President- $ 7,320
Commercial Lending --
- --------------------------------------------------
- --------------------------------------------------
</TABLE>
- ---------------
(1) Does not include amounts attributable to miscellaneous benefits received by
the named executive officers. In the opinion of management of the Savings
Bank, the costs to the Savings Bank of providing such benefits to the named
executive officer during the year ended December 31, 1998 did not exceed the
lesser of $50,000 or 10% of the total of annual salary and bonus reported
for the individual.
(2) Amounts shown for 1998 and 1997 represent the payment of supplemental
retirement benefits in the amount equal to the difference between the
benefits that would be payable under the Bank's retirement plans but for the
limitation set forth in the Internal Revenue Code of 1986 (the "Code") with
respect to includable compensation and the maximum benefit payable under the
Bank's retirement plans.
(3) Consists of the Bank's contributions to the Bank's 401(k) profit sharing
plan to the account of the named executive officers.
9
<PAGE> 12
EMPLOYMENT AGREEMENTS
In connection with the conversion of the Bank from a federally-chartered
mutual savings bank to a federally-chartered stock savings bank, the Company and
the Bank (the "Employers") entered into employment agreements with each of
Messrs. Thomas F. Prisby, James W. Prisby and John T. Stephens (the
"Executives"), which agreements superseded existing employment agreements with
such persons. The Employers have agreed to employ the executives for a term of
three years, in each case in their current respective positions. The agreements
with the Executives are at their current salary levels. The Executives'
compensation and expenses shall be paid by the Company and the Bank in the same
proportion as the time and services actually expended by the Executives on
behalf of each respective Employer. With respect to the Executives, the
employment agreements will be reviewed annually by the Boards of Directors of
the Employers. The term of the Executives' employment agreements shall be
extended daily for a successive additional one-day period unless the Company and
the Bank provide notice not less than 60 days prior to such date, not to extend
the employment term.
Each of the employment agreements is terminable with or without cause by
the Employers. The Executives have no right to compensation or other benefits
pursuant to the employment agreements for any period after voluntary termination
or termination by the Employers for cause, disability, retirement or death. In
the event that (i) the Executive terminates his employment because of failure to
comply with any material provision of the employment agreement by the Employers
or the Employers change the Executive's title or duties or (ii) the employment
agreement is terminated by the Employers other than for cause, disability,
retirement or death or by the executive as a result of certain adverse actions
which are taken with respect to the Executive's employment following a change in
control of the Company, as defined, the Executive will be entitled to a cash
severance amount equal to three times their average annual compensation, as
defined, plus an amount to reimburse the Executive for certain tax obligations.
A change in control is generally defined in the employment agreements to
include any change in control of the Company required to be reported under the
federal securities laws, as well as (i) the acquisition by any person of 20% or
more of the Company's outstanding voting securities and (ii) a change in a
majority of the directors of the Company during any three-year period without
the approval of at least two-thirds of the persons who were directors of the
Company at the beginning of such period.
Although the above-described employment agreements could increase the cost
of any acquisition of control of the Company, management of the Company does not
believe that the terms thereof would have a significant anti-takeover effect.
The Company and/or the Bank may determine to enter into similar employment
agreements with other officers of the Company and/or the Bank in the future.
10
<PAGE> 13
DIRECTORS' COMPENSATION
Members of the Bank's Board of Directors, except for Messrs. Thomas F.
Prisby, James W. Prisby, John T. Stephens and Daniel P. Ryan, receive $1,800 per
meeting attended of the Board, $350 per Compensation Committee meeting, $250 per
Executive Committee meeting, $200 per Audit Committee meeting, $175 per Asset
Liability Management Committee meeting and $100 per Trust Committee meeting
attended. None of the above directors receive fees for any committees on which
they serve. Board fees are subject to periodic adjustment by the Board of
Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Determinations regarding compensation of the Company's and Bank's employees
are made by the Compensation and Benefits Committee of the Board of Directors.
Ms. Abbott, who was formerly Vice President of the Bank, and Messrs. Diamond and
Blaine, are the current members of the Compensation and Benefits Committee, and
also serve as directors of the Bank. Prior to January 1999, Mr. Thomas F.
Prisby, Chairman and Chief Executive Officer of the Company, served on the
Committee.
RETIREMENT PLAN. The Bank maintains a non-contributory, tax-qualified defined
benefit pension plan (the "Retirement Plan") for eligible employees. All
salaried employees at least age 21 who have completed at least one year of
service are eligible to participate in the Retirement Plan. The Retirement Plan
provides for a benefit for each participant, including executive officers named
in the Executive Compensation Table above, equal to 2% of the participant's
final average compensation (highest average annual compensation during 60
consecutive calendar months) multiplied by the participant's years (and any
fraction thereof) of eligible employment. A participant is fully vested in his
or her benefit under the Retirement Plan after five years of service. The
Retirement Plan is funded by the Bank on an actuarial basis and all assets are
held in trust by the Retirement Plan trustee.
The following table illustrates the annual benefit payable upon normal
retirement at age 65 (in single life annuity amounts with no offset for Social
Security benefits) at various levels of compensation and years of service under
the Retirement Plan.
<TABLE>
<CAPTION>
YEARS OF SERVICE(1)
----------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000............................... $ 37,500 $ 50,000 $ 62,500 $ 75,000 $ 87,500
150,000............................... 45,000 60,000 75,000 90,000 105,000
175,000(2)............................ 48,000 64,000 80,000 96,000 112,000
200,000(2)............................ 48,000 64,000 80,000 96,000 112,000
225,000(2)............................ 48,000 64,000 80,000 96,000 112,000
250,000(2)............................ 48,000 64,000 80,000 96,000 112,000
300,000(2)............................ 48,000 64,000 80,000 96,000 112,000
400,000(2)............................ 48,000 64,000 80,000 96,000 112,000
450,000(2)............................ 48,000 64,000 80,000 96,000 112,000
500,000(2)............................ 48,000 64,000 80,000 96,000 112,000
550,000(2)............................ 48,000 64,000 80,000 96,000 112,000
600,000(2)............................ 48,000 64,000 80,000 96,000 112,000
650,000(2)............................ 48,000 64,000 80,000 96,000 112,000
</TABLE>
(Footnotes continued on following page)
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<PAGE> 14
(Footnotes continued from previous page)
- ---------------
(1) The annual retirement benefits shown in the table do not reflect a deduction
for Social Security benefits and there are no other offsets to benefits.
(2) For the fiscal year of the Retirement Plan beginning on January 1, 1998, the
average final compensation for computing benefits under the Retirement Plan
did not exceed $160,000 (as adjusted for subsequent years pursuant to Code
provisions). Benefits in excess of the limitation are provided through cash
payments made annually to each officer affected by such limitation. For the
fiscal year of the Retirement Plan beginning on January 1, 1998, the maximum
annual benefit payable under the Retirement Plan did not exceed $130,000 (as
adjusted for subsequent years pursuant to Code provisions).
The following table sets forth the years of credited service and the
average annual earnings (as defined above) determined as of June 30, 1998, the
end of the 1998 plan year, for each of the individuals named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
YEARS OF AVERAGE
CREDITED ANNUAL
SERVICE EARNINGS(1)
-------- -----------
<S> <C> <C>
Thomas F. Prisby............................................ 15 $154,000
James W. Prisby............................................. 23 154,000
John T. Stephens............................................ 14 154,000
Jeffrey C. Stur............................................. 24 93,397
</TABLE>
- ---------------
(1) Reflects effect of limitation of compensation that may be used in
calculating benefits under the provisions of the Code.
Supplemental Executive Retirement Plan. The Bank is considering adopting a
supplemental executive retirement plan ("SERP") to provide for eligible
employees benefits that would be due under the ESOP if such benefits were not
limited under the Code. The Board of Directors also provided that the SERP will
provide eligible employees with benefits that would be due under the Retirement
Plan and the 401(k) Plan if such benefits were not limited under the Code.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
In accordance with applicable federal laws and regulations, the Bank offers
mortgage loans to its directors, officers and employees as well as members of
their immediate families for the financing of their primary residences and
certain other loans. These loans are generally made on substantially the same
terms as those prevailing at the time for comparable transactions with
non-affiliated persons. It is the belief of management that these loans neither
involve more than the normal risk of collectibility nor present other
unfavorable features.
12
<PAGE> 15
Section 22(h) of the Federal Reserve Act generally provides that any credit
extended by a savings institution, such as the Bank, to its executive officers,
directors and, to the extent otherwise permitted, principal stockholder(s), or
any related interest of the foregoing, must be on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions by the savings institution with non-affiliated parties;
unless the loans are made pursuant to a benefit or compensation program that (i)
is widely available to employees of the institution and (ii) does not give
preference to any director, executive officer or principal stockholder, or
certain affiliated interests of either, over other employees of the savings
institution, and must not involve more than the normal risk of repayment or
present other unfavorable features.
PERFORMANCE GRAPH
The following graph demonstrates comparison of the cumulative total returns
for the Common Stock of the Company, the NASDAQ Composite Index, and the NASDAQ
Bank Index from the close of trading on July 24, 1998 to the close of trading on
December 31, 1998.
CFS BANCORP, INC.
TOTAL RETURN PERFORMANCE
PERFORMANCE GRAPH
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Index 100 73.22 86.89 87.12 87.12 88.77
CFS Bancorp, Inc. 100 77.68 87.80 91.84 101.11 113.76
NASDAQ Bank Index 100 76.68 82.02 84.81 88.02 87.50
</TABLE>
13
<PAGE> 16
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table includes, as of the Voting Record Date, certain
information as to the Common Stock beneficially owned by (i) the only persons or
entities, including any "group" as that term is used in Section 13(d)(3) of the
1934 Act, who or which was known to the Company to be the beneficial owner of
more than 5% of the issued and outstanding Common Stock, (ii) the directors of
the Company, (iii) certain executive officers of the Company, and (iv) all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME OF BENEFICIAL OWNER OWNERSHIP AS OF PERCENT OF
OR NUMBER OF PERSONS IN GROUP MARCH 19, 1999(1) COMMON STOCK
- ----------------------------- ----------------- ------------
<S> <C> <C>
CFS Bancorp, Inc......................................... 1,428,300(2) 6.53%
Employee Stock Ownership Plan
707 Ridge Road
Munster, Indiana 46321
Thomson Horstmann & Bryant, Inc.......................... 1,477,000 6.75%
Park 80 West/Plaza One
Saddle Brook, New Jersey 07663
Directors:
Sally A. Abbott.......................................... 29,318(3) *
Gregory W. Blaine........................................ 10,000 *
Thomas J. Burns.......................................... 19,717(4) *
Gene Diamond............................................. 46,160(5) *
James W. Prisby.......................................... 200,497(3)(6)(7) *
Thomas F. Prisby......................................... 102,620(3)(6) *
Daniel P. Ryan........................................... 268,910(8) 1.23%
Other Executive Officer:
John T. Stephens......................................... 65,787(3)(6)(9) *
All Directors and Executive Officers of the Company as a
group (8 persons)...................................... 743,009(2) 3.40%
</TABLE>
- ---------------
* Represents less than 1% of the outstanding stock.
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. Under regulations promulgated
pursuant to the Exchange Act, shares of Common Stock are deemed to be
beneficially owned by a person if he or she directly or indirectly has or
shares (i) voting power, which includes the power to vote or to direct the
voting of the shares, or (ii) investment power, which includes the power to
dispose or to direct the disposition of the shares. Unless otherwise
indicated, the named beneficial owner has sole voting and dispositive power
with respect to the shares.
(Footnotes continued on following page)
14
<PAGE> 17
(Footnotes continued from previous page)
(2) The CFS Bancorp, Inc. Employee Stock Ownership Plan ("ESOP") was established
by an agreement between the Company and Messrs. James W. Prisby and John T.
Stephens and Ms. Janice S. Dobrinich who act as trustees of the plan
("Trustees"). Under the terms of the ESOP, the allocated shares held in the
ESOP will be voted in accordance with the instructions of the participating
employees. Unallocated shares held in the ESOP will generally be voted in
the same ratio on any matter as those allocated shares for which
instructions are given, subject in each case to the fiduciary duties of the
ESOP trustees and applicable law. Any allocated shares which either abstain
on the proposal or are not voted will be disregarded in determining the
percentage of stock voted for and against each proposal by the participants
and beneficiaries. As of the Voting Record Date, however, none of the shares
held by the ESOP had been allocated to the accounts of participating
employees. Under the terms of the ESOP, when no shares have been allocated
thereunder, the Trustees are authorized to vote such unallocated shares in
their discretion. The amount of Common Stock beneficially owned by directors
who serve as Trustees of the ESOP and by all directors and executive
officers as a group does not include the unallocated shares held by the
ESOP.
(3) Includes with respect to Ms. Sally Abbott and Messrs. James Prisby, Thomas
Prisby and John Stephens, 9,078, 11,960, 13,927 and 11,919 shares,
respectively, held by a trust established by the Company to fund its
obligations with respect to deferred supplemental retirement benefits. Ms.
Abbott and Messrs. Stephens, James Prisby and Thomas Prisby each disclaim
beneficial ownership of such shares except to the extent of their personal
pecuniary interests therein.
(4) Includes 17,500 shares owned by Mr. Burns jointly with his spouse and 2,217
shares held in an individual retirement account.
(5) Includes 1,160 shares held in an individual retirement plan.
(6) Includes with respect to Messrs. James Prisby, Thomas Prisby and Stephens,
25,037, 27,624 and 20,688 shares held in the Bank's 401(k) profit sharing
plan.
(7) Includes 57,000 shares owned by Mr. James Prisby's children, 60,000 shares
held in the James W. Prisby Trust for which Mr. James Prisby is the trustee
and sole beneficiary and 24,000 shares held by Mr. Prisby as custodian for
Phillip Prisby, his son. Also includes 22,500 shares held in the Donna A.
Prisby Trust. Ms. Donna Prisby is the wife of Mr. James Prisby.
(8) Includes 69,807 shares which Mr. Ryan has the right to acquire pursuant to
options granted under the stock option plans assumed in the acquisition of
SuburbFed Financial Corp., 22,064 shares allocated under the SuburbFed
Financial Corp. Employee Stock Option Plan and 35,685 shares held in the
Suburban Federal Savings 401(k) profit sharing plan.
(9) Includes 14,980 shares owned by Mr. Stephens' spouse and daughter.
15
<PAGE> 18
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Ernst & Young LLP,
independent certified public accountants, to perform the audit of the Company's
financial statements for the year ending December 31, 1999, and further directed
that the selection of auditors be submitted for ratification by the stockholders
at the Annual Meeting.
The Company has been advised by Ernst & Young LLP that neither that firm
nor any of its associates has any relationship with the Company or its
subsidiaries other than the usual relationship that exists between independent
certified public accountants and clients. Ernst & Young LLP will have one or
more representatives at the Annual Meeting who will have an opportunity to make
a statement, if they so desire, and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1999.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which is scheduled to be held in April 2000, must be received at
the principal executive offices of the Company, 707 Ridge Road, Munster, Indiana
46321, Attention: Monica F. Sullivan, Corporate Secretary, no later than
December 3, 1999. If such proposal is in compliance with all of the requirements
of Rule 14a-8 under the 1934 Act, it will be included in the proxy statement and
set forth on the form of proxy issued for such annual meeting of stockholders.
It is urged that any such proposals be sent certified mail, return receipt
requested.
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the 1934 Act may be
brought before an annual meeting pursuant to Section 2.14 of the Company's
Bylaws.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1998 accompanies this Proxy Statement. Such annual report is not
part of the proxy solicitation materials.
OTHER MATTERS
Management is not aware of any business to come before the Annual Meeting
other than the matters described above in this Proxy Statement. However, if any
other matters should properly
16
<PAGE> 19
come before the meeting, it is intended that the proxies solicited hereby will
be voted with respect to those other matters in accordance with the judgment of
the persons voting the proxies.
The cost of the 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 the proxy
materials to the beneficial owners of the Company's Common Stock. In addition to
solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
By Order of the Board of Directors
Monica F. Sullivan
Monica F. Sullivan
Corporate Secretary
April 2, 1999
17
<PAGE> 20
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY [X]
The Board of Directors recommends a vote FOR the election as directors of
the nominees listed below.
For Withhold For All
1. Election of Directors: All All Except
Director Nominees for three year terms [ ] [ ] [ ]
expiring in 2002 or until their successors
are elected and qualified:
Sally A. Abbott, Gregory W. Blaine
and Thomas J. Burns
INSTRUCTIONS: To withold authority to vote
for one or more of the nominees,
write the name of such nominee(s) in the space provided below.
___________________________________
Nominee Exception
2. Proposal to ratify the appointment of For Against Abstain
Ernst & Young LLP as independent [ ] [ ] [ ]
auditors of the Company for the year ending
December 31, 1999.
With discretionary authority upon such other matters as may properly come
before the Annual Meeting, this Proxy will be voted as directed, but if no
instructions are specified, this Proxy will be voted FOR the election of the
Board of Directors' Nominees to the Board of Directors and FOR ratification of
the Company's independent auditors and otherwise at the discretion of the proxy
holders.
Please sign this Proxy exactly as your name appears on your stock certificate.
When shares of the Company are held by joint tenants, both tenants should sign.
When signing this Proxy as attorney, executor, administrator, trustee, or
guardian, please give the full title of such. If the shares are owned by a
corporation, please sign the Proxy in full corporate name, by the President or
other authorized officer. If a partnership or other entity owns the shares,
please sign in the partnership or other name by an authorized person.
The undersigned hereby acknowledges receipt of notice of the Annual Meeting of
Stockholders of CFS Bancorp, Inc., called for May 4, 1999 and the accompanying
Proxy Statement and other materials prior to the signing of this proxy.
_________________________________________________
Date Signature of Stockholder
_________________________________________________
Date Signature of Stockholder
If you return this card properly signed but do not otherwise specify, shares
will be voted FOR the proposals specified above. If you do not return this
card, shares will not be voted.
- --------------------------------------------------------------------------------
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<PAGE> 21
REVOCABLE PROXY
CFS BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CFS BANCORP, INC.
FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 4, 1999 AND AT
ANY ADJOURNMENT THEREOF.
The undersigned hereby appoints the Board of Directors of CFS Bancorp,
Inc. (the "Company"), or any successors thereto, as proxies with full powers
of substitution, to represent and vote, as designated below, all the shares of
Common Stock of the Company held of record by the undersigned on March 19,
1999 at the Annual Meeting of Stockholders to be held at the Center for Visual
and Performing Arts, located at 1040 Ridge Road, Munster, Indiana, on Tuesday,
May 4, 1999, at 10:00 a.m., Central Time, and any adjournment thereof.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CFS
BANCORP, INC., PURSUANT TO ITS BYLAWS FOR USE ONLY AT THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON TUESDAY, MAY 4, 1999, AND AT ANY ADJOURNMENT THEREOF.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
