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 Section 240.14a-11(c) or Section 240.14a-12
Community Savings Bankshares, 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>
[COMMUNITY SAVINGS BANKSHARES, INC. LETTERHEAD]
March 24, 2000
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
of Community Savings Bankshares, Inc. (the "Company"). The meeting will be held
at The Embassy Suites PGA, 4350 PGA Boulevard, Palm Beach Gardens, Florida, on
Wednesday, April 26, 2000, at 1:30 p.m. Eastern Time.
The enclosed Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted. During the Annual Meeting we will also report
on the operations of the Company. Directors and officers of the Company, as well
as a representative of our independent auditors, will be present to respond to
any questions that shareholders may have.
The formal business to be conducted at the Annual Meeting includes the
(i) election of three directors to the Company's Board of Directors, and (ii)
ratification of the appointment of Crowe, Chizek and Company LLP as auditors for
the Company for the fiscal year ending December 31, 2000.
The Board of Directors of the Company has determined that the matters
to be considered at the Annual Meeting are in the best interest of the Company
and its shareholders. For the reasons set forth in the Proxy Statement, the
Board of Directors unanimously recommends a vote "FOR" each matter to be
considered.
It is very important that your shares be represented and voted at the
Annual Meeting regardless of the number you own or whether you are able to
attend the meeting in person. You may vote your shares either by telephone using
the instructions included on the enclosed proxy card (if this option is
available to you), OR by marking, signing, dating and promptly returning your
proxy card in the postage-paid envelope provided for that purpose. Any proxy may
be revoked in the manner described in the accompanying Proxy Statement at any
time prior to its exercise at the Annual Meeting.
Your continued support of and interest in the Company is sincerely
appreciated.
Sincerely,
James B. Pittard, Jr.
President and Chief Executive Officer
<PAGE>
COMMUNITY SAVINGS BANKSHARES, INC.
660 U.S. HIGHWAY ONE
NORTH PALM BEACH, FLORIDA 33408
(561) 881-2212
--------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 26, 2000
--------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of Community Savings Bankshares, Inc. (the "Company") will be
held at The Embassy Suites PGA, 4350 PGA Boulevard, Palm Beach Gardens, Florida,
on Wednesday, April 26, 2000, at 1:30 p.m., Eastern Time, for the following
purposes, all of which are more completely set forth in the accompanying Proxy
Statement:
(1) To elect two (2) directors for a three-year term and one (1)
director for a one-year term and until their successors are elected and
qualified;
(2) To ratify the appointment by the Board of Directors of Crowe,
Chizek and Company LLP as the Company's independent auditors for the year ending
December 31, 2000; 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 16, 2000 as the voting record
date for the determination of shareholders entitled to notice of and to vote at
the Annual Meeting and at any adjournment thereof. Only those shareholders 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
Deborah M. Rousseau
Vice President and Secretary
North Palm Beach, Florida
March 24, 2000
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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. YOU MAY ALSO VOTE BY TELEPHONE FOLLOWING THE
INSTRUCTIONS PROVIDED TO YOU. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF. HOWEVER, IF YOU ARE A
SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED
ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN ORDER TO VOTE IN PERSON AT
THE ANNUAL MEETING.
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<PAGE>
COMMUNITY SAVINGS BANKSHARES, INC.
-----------------
PROXY STATEMENT
-----------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 2000
This Proxy Statement is furnished to holders of common stock, $1.00 par
value per share ("Common Stock"), of Community Savings Bankshares, Inc., a
Delaware corporation (the "Company"), which is the sole shareholder of Community
Savings, F. A. (the "Association"), a federally chartered savings association.
Proxies are being solicited on behalf of the Board of Directors of the Company
to be used at the Annual Meeting of Shareholders ("Annual Meeting") to be held
at The Embassy Suites PGA, 4350 PGA Boulevard, Palm Beach Gardens, Florida, on
Wednesday, April 26, 2000, at 1:30 p.m., Eastern Time, and at any adjournment
thereof for the purposes set forth in the Notice of Annual Meeting of
Shareholders. This Proxy Statement is first being mailed to shareholders on or
about March 24, 2000.
Your vote is important. Because many shareholders cannot attend the
Annual Meeting in person, it is necessary that a large number be represented by
proxy. Shareholders have a choice of either completing a proxy card and mailing
it in the postage-paid envelope provided or voting by using a toll-free
telephone number. Check your proxy card or the information forwarded by your
broker or other holder of record to see which options are available to you. The
telephone voting facilities will close at 5:00 p.m. on April 25, 2000. The
telephone voting procedure is designed to authenticate shareholders by use of a
control number and to allow shareholders to confirm that their instructions have
been properly recorded.
Any shareholder 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 (mailed to the attention of Deborah M. Rousseau, Vice President
and Secretary, Community Savings Bankshares, Inc., 660 U.S. Highway One, North
Palm Beach, Florida 33408); (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.
The method by which you vote will in no way limit your right to vote at
the Annual Meeting if you later decide to attend in person. If your shares are
held in the name of a broker or other holder of record, you must obtain a proxy,
executed in your favor, from the holder of record, to be able to vote at the
Annual Meeting.
VOTING
Only shareholders of record of the Company at the close of business on
March 16, 2000 (the "Voting Record Date") are entitled to notice of and to vote
at the Annual Meeting and at any adjournment thereof. On the Voting Record Date,
there were 9,292,508 shares of Common Stock of the Company issued and
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 Annual Meeting.
The presence in person or by proxy of at least a majority of the issued
and outstanding shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. Directors will be elected by a
plurality of the votes cast at the Annual Meeting. The affirmative vote of a
majority of the total votes present in person or by proxy at the Annual Meeting
is required for approval of the proposal to ratify the appointment of the
Company's independent auditors. Shares represented by a proxy card or telephonic
vote which are voted as abstaining on any proposal, other than the election of
directors, will be treated as shares present and entitled to vote that were not
cast in favor of a particular matter, and thus will be counted as votes against
the matter. Under the rules of the New York Stock Exchange, the proposals for
the election of directors and to ratify the selection of Crowe Chizek and
Company LLP are considered to be "discretionary" items upon which brokerage
firms may vote in their discretion on behalf of their clients
<PAGE>
if such clients have not furnished voting instructions and for which there will
not be "broker non-votes." A broker non-vote would have the same effect as a
vote against a proposal.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR, DIRECTORS
WHOSE TERMS CONTINUE, AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors of the
Company shall be divided into three classes which are as equal in number as
possible.
No nominee for director is related to any other director or executive
officer of the Company by blood, marriage or adoption, and two of the nominees
currently serve as directors of the Company. In January, the Board nominated
John Sheldon Clark as a director for election at the Annual Meeting. In
accordance with the Company's Bylaws, the Board resolved to increase the number
of directors of the Company from six to seven, such increase to be effective
upon election of the three nominees for director. There are no arrangements or
understandings between the nominees and any other person pursuant to which any
such nominee was elected.
Unless otherwise directed, each proxy executed and returned by a
shareholder will be voted FOR the election of the nominees for director listed
below. If any person named as 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 three
nominees listed below may not be able to serve as a director if elected.
The following tables present information concerning the nominees for
director and each director whose term continues, including his tenure as a
director of the Company.
<TABLE>
<CAPTION>
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2003
Position with the Company and the
Association and Principal Occupation Director
Name Age (1) During the Past Five Years Since (2)
---- ------- ------------------------------------ ---------
<S> <C> <C>
Karl D. Griffin 71 Director, Secretary Emeritus of the Association; 1955
President of Kirklington Park, Inc., a
commercial real estate leasing company
located in Riviera Beach, Florida; President of
Smith & Yetter, Inc. from 1961 until 1994;
co-owner, Cromwell & Griffin, Riviera Beach,
Florida, a real estate investment firm.
Harold I. Stevenson, CPA 64 Director; retired; from 1987 through 1993, 1987
served as President of Harold I. Stevenson,
CPA, PA; from 1994 to 1996, self-employed, Palm
Beach Gardens, Florida and Rising Fawn, Georgia.
</TABLE>
2
<PAGE>
NOMINEE FOR DIRECTOR FOR ONE-YEAR TERM EXPIRING IN 2001
<TABLE>
<CAPTION>
Position with the Company and the
Association and Principal Occupation Director
Name Age (1) During the Past Five Years Since (2)
---- ------- ------------------------------------ ---------
<S> <C> <C>
John Sheldon Clark 54 Private investor; from 1985 to 1992, Senior N/A
Vice President, O'Brien Securities Management,
New York, New York, a registered broker dealer;
from 1980-1985, partner, Sheldon, Parker and
Staniford, New York, New York, investment
advisors; from 1976-1980, Director of Research,
Legg Mason Wood Walker, Baltimore, Maryland, a
registered broker-dealer.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF
THE NOMINEES FOR DIRECTOR.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
DIRECTORS WITH TERMS EXPIRING IN 2001
<TABLE>
<CAPTION>
Position with the Company and the
Association and Principal Occupation Director
Name Age (1) During the Past Five Years Since (2)
---- ------- ------------------------------------ ---------
<S> <C> <C>
Forest C. Beaty, Jr. 70 Director; retired; until September 1999, 1977
consultant and majority stockholder of FMS,
Inc., a holding company based in Lake Park,
Florida which owned retail clothing stores.
Frederick A. Teed 71 Chairman; retired; previously President and 1964
Chief Executive Officer of the Association from
1983 to 1992.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
DIRECTORS WITH TERMS EXPIRING IN 2002
Position with the Company and the
Association and Principal Occupation Director
Name Age (1) During the Past Five Years Since (2)
---- ------- ------------------------------------ ---------
<S> <C> <C>
James B. Pittard, Jr. 53 Director; President and Chief Executive 1993
Officer; President and Chief Executive
Officer of the Association since 1993;
from 1982 to 1993 served as Senior Vice
President and Treasurer of the Association.
Robert F. Cromwell 81 Director; Chairman Emeritus of the Association; 1955
retired; served as Chairman of the Board of the
Association from 1983 to 1993; co-owner,
Cromwell & Griffin, Riviera Beach, Florida, a
real estate investment firm; owner, Cromwell
Rentals, Jupiter, Florida, commercial real
estate rentals.
</TABLE>
- ------------
(1) As of the Voting Record Date.
(2) Includes period served as director of the Association.
SHAREHOLDER NOMINATIONS
Article IV, Section 4.15 of the Company's Bylaws (the "Bylaws") governs
the nominations for election to the Board of Directors and requires all such
nominations, other than those made by the Board of Directors or a committee
appointed by the Board, to be made at a meeting of shareholders called for the
election of directors, and only by a shareholder who has complied with the
notice provisions in that section. Shareholder nominations must be made pursuant
to timely notice in writing to the Secretary of the Company. Generally, to be
timely, a shareholder'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 shareholders of the
Company. Each written notice of a shareholder nomination is required to set
forth certain information specified by the Bylaws. Nominations must have been
delivered or received no later than the close of business on December 30, 1999
with respect to the Annual Meeting. No such nominations by shareholders were
received.
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARDS OF THE COMPANY AND
ASSOCIATION
The business of the Company's Board of Directors is conducted through
meetings and activities of the Board and its committees. Regular meetings of the
Board of Directors of the Company are held on a quarterly basis and special
meetings of the Board of Directors of the Company are held from time-to-time as
needed. There were 11 meetings of the Board of Directors of the Company held
during fiscal 1999. No director attended fewer than 75% of the total number of
meetings of the Board of Directors of the Company held during fiscal 1999 and
the total number of meetings held by all committees of the Board on which the
director served during such year.
The Board of Directors of the Company has established various
committees, including Nominating, Stock Benefits, ESOP, Audit and Proxy
Committees.
The Audit Committee reviews the records and affairs of the Company to
determine its financial condition, 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. Currently, all Directors
4
<PAGE>
except Mr. Pittard, although he is invited to the meeting by the Committee,
serve as members of this Committee. Mr. Clark will be appointed as a member of
this Committee upon his election to the Board. The Audit Committee met five
times during fiscal 1999.
The Stock Benefits Committee has exclusive responsibility for
determining the award of options to employees under the Amended and Restated
1995 Stock Option Plan (the "1995 Option Plan") and the Amended and Restated
1999 Stock Option Plan (the "1999 Option Plan") (collectively the "Option
Plans") and restricted stock awards to employees granted under the Amended and
Restated 1995 Recognition and Retention Plan for Employees and Outside Directors
(the "1995 RRP") and the 1999 Recognition and Retention Plan and Trust Agreement
(the "1999 RRP") (collectively, the "RRPs"), and are responsible for
administration of such plans. Currently, Messrs. Stevenson (Chairman), Beaty and
Teed serve as members of this Committee. The Stock Benefits Committee met 10
times during fiscal 1999.
The Nominating Committee currently consists of Messrs. Cromwell
(Chairman), Pittard, Stevenson and Teed. The Committee met once in fiscal 1999
and also met in January 2000 to nominate the persons listed herein as nominees.
The Board of Directors of the Association met 12 times during fiscal
1999. In addition, the Board of Directors of the Association has established
various committees including a Compensation and Benefits Committee. The
Compensation and Benefits Committee of the Association is responsible for
establishing the President's compensation and reviewing the compensation levels
for exempt personnel (consisting primarily of officers). Currently, the
Compensation and Benefits Committee is comprised of Messrs. Beaty (Chairman),
Stevenson and Teed. The Association's Board of Directors has also established a
Salary Administration Committee which is currently comprised of Messrs. Pittard,
Baker, Howard and Reinhardt and Mmes. Hughes and Kaminske, all of whom are
executive officers of the Association. The Salary Administration Committee is
responsible for establishing compensation levels for non-exempt personnel.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following table sets forth certain information with respect to the
executive officers of the Company and the Association who are not directors.
<TABLE>
<CAPTION>
Name Age (1) Position(s)
- ------------------------ ------- --------------------------------------------------------------
<S> <C> <C>
Larry J. Baker, CPA 60 Senior Vice President, Chief Financial Officer, Treasurer and
Director of the Association's Finance Division
Cecil F. Howard, Jr. 62 Senior Vice President and Director of the Association's
Lending Division
Feriel G. Hughes 50 Senior Vice President and Director of the Association's
Human Resources, Marketing and Training Division
Mary L. Kaminske 62 Senior Vice President and Director of the Association's
Operations Division
Michael E. Reinhardt 54 Senior Vice President and Director of the Association's
Properties and Insurance Division
</TABLE>
- --------------
(1) As of the Voting Record Date.
Set forth below is a brief description of the background for at least
the last five years of each executive officer of the Company and the Association
who is not a director of the Company.
LARRY J. BAKER, CPA is Senior Vice President, Chief Financial Officer
and Treasurer of the Company and the Association, and Director of the Finance
Division of the Association. Mr. Baker has been employed by the Association
since 1982 and has served as Senior Vice President since 1995, and Treasurer of
the Association since 1993. Mr. Baker
5
<PAGE>
has served in various other positions with the Association including Controller
from 1982 until 1996 and Vice President from 1987 to 1994.
CECIL F. HOWARD, JR. is Senior Vice President of the Company and the
Association and has been Director of the Lending Division and Chief Lending
Officer of the Association since 1987 (except for the period from October 1994
until January 1995 during which time he served as President of First Federal
Savings and Loan Association of Florida, Lakeland, Florida).
FERIEL G. HUGHES is Senior Vice President of the Company and the
Association, and Director of the Human Resources, Marketing and Training
Division of the Association. Ms. Hughes joined the Association in March 1997 and
became Senior Vice President in September 1997. She previously served as a sales
consultant with the national firm of Schneider Sales Management, from February
1995 to March 1997, Human Resources Director of Brooklyn Bow International,
Riviera Beach, Florida, from October 1994 to September 1996 and as Director of
Sales and Marketing of Flagler National Bank, West Palm Beach, Florida from
August 1986 until March 1994.
MARY L. KAMINSKE is Senior Vice President of the Company and the
Association, and Director of the Operations Division of the Association, which
includes oversight of the Association's branch office network. Mrs. Kaminske has
been employed by the Association since 1969 serving in various positions,
including serving as Vice President from 1987 until 1996 and as Senior Vice
President since January 1996.
MICHAEL E. REINHARDT is Senior Vice President of the Company and the
Association, and Director of the Properties and Insurance Division of the
Association. Mr. Reinhardt was first employed by the Association in 1973 serving
in various positions, including serving as Vice President from 1987 to 1996 and
as Senior Vice President since January 1997.
6
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common
Stock as of the Voting Record Date, and certain other information with respect
to (i) the only persons or entities, including any "group" as that term is used
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), who or which was known to the Association to be the beneficial
owner of more than 5% of the issued and outstanding Common Stock on the Voting
Record Date, (ii) each director 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 or Ownership as of Percent of
Number of Persons in Group March 16, 2000 (1)(2)(3)(4)(5) Common Stock
-------------------------- ------------------------------ ------------
<S> <C> <C>
Josiah T. Austin 868,452(6) 9.3%
El Coronado Holdings, L.L.C.
Star Route 395
Pearce, Arizona 85625
Capital Guardian Trust Company
Capital Group International, Inc. 1,010,710(7) 10.9%
11100 Santa Monica Boulevard
Los Angeles, California 90025-3384
John Sheldon Clark 536,968(8) 5.8%
146 Gomez Road
Hobe Sound, Florida 33455
Community Savings Bankshares, Inc. 765,643(9) 8.2%
Employee Stock Ownership Plan
660 U.S. Highway One
North Palm Beach, Florida 33408
DIRECTORS OR DIRECTOR NOMINEES:
Frederick A. Teed 58,247 *
James B. Pittard, Jr. 75,479(10) *
Forest C. Beaty, Jr. 61,462(11) *
John Sheldon Clark 536,968(8) 5.8%
Robert F. Cromwell 65,278 *
Karl D. Griffin 60,983(12) *
Harold I. Stevenson, CPA 55,611(13) *
EXECUTIVE OFFICERS:
Larry J. Baker, CPA 58,718(14) *
Cecil F. Howard, Jr. 35,683(15) *
Feriel G. Hughes 1,683(16) *
Mary L. Kaminske 45,212(17) *
Michael E. Reinhardt 44,077(18) *
All directors, director nominees and 1,099,401(19) 11.6%
executive officers as a
group (12 persons)
</TABLE>
* Represents less than 1% of the outstanding Common Stock.
7
<PAGE>
- ----------
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals and entities. 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.
(2) For shares, grants and options owned or made, as the case may be, prior
to December 15, 1998, the data presented reflects an adjustment made in
order to account for the share exchange ratio applied in connection
with the reorganization whereby the Association became the wholly owned
subsidiary of the Company which was consummated on December 15, 1998
(the "1998 Reorganization"). In connection with the consummation of the
1998 Reorganization, the common stock of Community Savings Bankshares,
Inc., a federal corporation (the "Mid-Tier Holding Company"),was
exchanged for the Company's Common Stock pursuant to a ratio of 2.0445
shares of the Company's Common Stock for each share of the Mid-Tier
Holding Company's common stock (the "Exchange Ratio").
(3) Under applicable regulations, a person is deemed to have beneficial
ownership of any shares of Common Stock which may be acquired within 60
days of the Voting Record Date pursuant to the exercise of outstanding
stock options. Shares of Common Stock which are subject to stock
options are deemed to be outstanding for the purpose of computing the
percentage of outstanding Common Stock owned by such person or group
but not deemed outstanding for the purpose of computing the percentage
of Common Stock owned by any other person or group.
(4) Includes, with respect to each of Messrs. Teed, Beaty, Cromwell,
Griffin and Stevenson, 10,941 shares granted pursuant to the 1999 RRP.
Includes with respect to Messrs. Pittard, Baker, Howard and Reinhardt
and Mrs. Kaminske amounts totaling 25,674, 13,288, 12,807, 14,265 and
16,986 shares, respectively, awarded pursuant to the RRPs (which
includes grants made pursuant to both the 1995 RRP and 1999 RRP). Such
shares may be voted by such persons although not all of such shares
have vested and been distributed. The awards vest at the rate of 20%
per year from the date of grant. (June 1999 with respect to the 1999
RRP and May 1999 with respect to the 1995 RRP except with respect to
Mr. Howard's whose grants under the 1995 RRP include a grant made in
January 1997, 60% of which had vested and been distributed as of the
Voting Record Date).
(5) Includes shares totaling 24,227, 24,227, 24,227, 24,227, 24,227,
17,445, 9,198, 10,742 and 10,538 which may be acquired upon the
exercise of options exercisable within 60 days of the Voting Record
Date granted to Messrs. Teed, Beaty, Cromwell, Griffin, Stevenson,
Baker, Howard, Reinhardt and Mrs. Kaminske, respectively, pursuant to
the 1995 Option Plan.
(6) Reflects 816,163 shares held by El Cornado Holdings, L.L.C. of which
Mr. Austin is the sole managing member. Also includes 35,000 shares
owned by Mr. Austin as well as 3,400 shares owned by the Christina E.
Lowery Trust, 3,400 shares owned by the Matthew Austin Lowery Trust,
2,100 shares owned by the Valerie A. Gordon Trust and 8,389 shares
owned by the Austin-Clark Insurance Trust. Mr. Austin serves as trustee
of each of the four trusts.
(7) Reflects shares held by Capital Guardian Trust Company (704,160) and
Capital Group International, Inc. (306,550). Capital Guardian Trust
Company is a Bank (as defined under Section 3(a)6 of the Exchange Act)
and is wholly owned by The Capital Group Companies, Inc. Capital
International Research and Management, Inc., dba Capital International,
Inc., is an Investment Advisor registered under Section 203 of the
Investment Advisor Act of 1940 and is a wholly owned subsidiary of
Capital Group International, Inc., which is wholly owned by The Capital
Group Companies, Inc. Neither Capital Guardian Trust Company nor
Capital International, Inc. owns shares for its own account. The shares
are deemed to be beneficially owned by them in their capacities as
investment manager and investment advisor, respectively, for various
investment companies and/or institutional accounts, as the case may be.
8
<PAGE>
- ----------
(8) Reflects 293,017 shares owned by Mr. Clark and 75,044 shares owned by
his spouse. Also includes 101,928 shares held by three trusts entitled
"Trust under the Will of Charles M. Clark, Jr." of which Mr. Clark is
trustee. In addition, includes 66,979 shares owned by the Clark Family
Foundation of which Mr. Clark is President. Mr. Clark has been
nominated for election at the Annual Meeting.
(9) Does not include 30,247 shares allocated to or deemed beneficially
owned pursuant to the ESOP by the executive officers, or such officers'
spouses, as the case may be, listed below, which shares are reflected
in such individuals' beneficial ownership.
(10) Includes 1,118 shares allocated to Mr. Pittard's wife, a former
employee of the Association, pursuant to the Association's ESOP, 121
shares owned by Mr. Pittard's children, 4,785 shares allocated to Mr.
Pittard pursuant to the ESOP and 43,781 shares owned jointly with Mr.
Pittard's wife.
(11) Includes 9,322 shares owned jointly with Mr. Beaty's wife and 1,567
shares owned by Mr. Beaty's wife.
(12) Includes 7,155 shares owned jointly with Mr. Griffin's wife and 4,475
shares owned by Mr. Griffin's wife.
(13) Includes 7,768 shares owned jointly with Mr. Stevenson's wife and 5,111
shares owned by Mr. Stevenson's wife.
(14) Includes 5,870 shares allocated to Mr. Baker pursuant to the ESOP.
(15) Includes 7,816 shares allocated to Mr. Howard pursuant to the ESOP and
196 shares owned by Mr. Howard's wife.
(16) Includes 1,583 shares allocated to Ms. Hughes pursuant to the ESOP.
(17) Includes 13,304 shares owned jointly with Mrs. Kaminske's husband and
4,384 shares allocated to her pursuant to the ESOP.
(18) Includes 14,379 shares owned jointly with Mr. Reinhardt's wife and
4,691 shares allocated to Mr. Reinhardt pursuant to the ESOP.
(19) Includes 137,725 shares granted pursuant to the RRPs, which may be
voted by directors and executive officers pending vesting and
distribution, 30,247 shares allocated to executive officers and their
spouses, as the case may be, pursuant to the ESOP and 169,058 shares
which may be acquired by directors and executive officers upon the
exercise of stock options exercisable within 60 days of the Voting
Record Date. Also includes shares of Common Stock beneficially owned by
Mr. Clark, a nominee for director.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of the Company's Common Stock, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission and the Nasdaq Stock Market. Officers, directors and greater
than 10% shareholders are required by regulation to furnish the Company with
copies of all Section 16(a) forms they file.
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 with respect to the year ended December 31, 1999, the Company's
officers and directors and 10% shareholders satisfied the reporting requirements
promulgated under Section 16(a) of the Exchange Act.
9
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of certain information
concerning the compensation awarded to or paid by the Association for services
rendered in all capacities during the past three years to the Chief Executive
Officer and the two other officers of the Association and its subsidiaries whose
compensation (salary and bonus) during the fiscal year ended December 31, 1999
exceeded $100,000. Said officers, who also serve as executive officers of the
Company, do not receive separate compensation from the Company.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------- -------------------------
Awards
-------------------------
Other Restricted Securities
Name and Fiscal Annual Stock Underlying All Other
Principal Position Year Salary(1) Compensation(2) Award(3) Options(5) Compensation(6)
------------------ ---- --------- --------------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
James B. Pittard, Jr. 1999 $249,938 $11,875 $313,468 61,697 $24,439
President and Chief 1998 228,053 10,500 -- 16,496
Executive Officer 1997 205,754 10,500 -- -- 30,238
--
Larry J. Baker 1999 $136,440 $ -- $162,241 31,935 $20,967
Senior Vice President, 1998 116,337 -- -- -- 11,466
Chief Financial Officer and 1997 100,596 -- -- -- 18,487
Treasurer and Director of
the Association's Finance
Division
Cecil F. Howard, Jr. 1999 $160,161 $ -- $131,460
Senior Vice President and 1998 152,189 -- -- 25,873 $25,237
Chief Lending Officer and 1997 144,131 -- 18,974(4) -- 15,097
Director of the 18,972(4) 26,543
Association's
Lending Division
</TABLE>
- ----------
(1) None of the named executive officers were awarded or paid bonuses or
received any payments pursuant to long-term incentive plans during the
three years presented.
(2) Includes director fees paid for attendance at Board meetings of the
Company and its subsidiaries. Does not include amounts attributable to
miscellaneous benefits received by executive officers. In the opinion
of management of the Association, the costs to the Association of
providing such benefits to any individual executive officer during the
year ended December 31, 1999 did not exceed the lesser of $50,000 or
10% of the total of annual salary and bonus reported for the
individual.
(3) Represents the grant during 1999 of 25,674, 13,288 and 10,767 shares of
restricted Common Stock to Messrs. Pittard, Baker and Howard,
respectively, pursuant to the RRPs which were deemed to have the
indicated value at the date of grant and which had a fair market value
at December 31, 1999 of $322,542, $166,937 and $135,266 for the grants
to Messrs. Pittard, Baker and Howard, respectively. Dividends paid on
the restricted shares of Common Stock are distributed to the grant
recipients as soon as practical after the payment thereof by the
Company to the RRPs. The awards vest at the rate of 20% per year
commencing on the first anniversary of the date of grant.
(4) Reflects an adjustment made in order to account for the Exchange Ratio
resulting from the 1998 Reorganization.
(5) Consists of stock options awarded pursuant to the Company's Option
Plans. All of such options vest at 20% per year starting on the first
anniversary of the date of grant.
(6) Represents amounts allocated during the years ended December 31, 1999,
1998, and 1997 on behalf of Messrs. Pittard, Baker and Howard pursuant
to the ESOP.
10
<PAGE>
STOCK OPTIONS
The following table sets forth certain information concerning grants of
stock options awarded to the named executive officers during the year ended
December 31, 1999.
<TABLE>
<CAPTION>
% of Total Options
Options Granted to Exercise Expiration Fair Value
Name Granted Employees (3) Price (4) Date of Options
---- ------- ------------- --------- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
James B. Pittard, Jr. 56,762(1) 10.4% $12.188 6/18/2009 $115,288(5)
4,915(2) 13.8 12.375 5/19/2009 10,813(6)
Larry J. Baker 29,391(1) 5.1 12.188 6/18/2009 59,664(5)
2,544(2) 7.2 12.375 5/19/2009 5,596(6)
Cecil F. Howard 23,812(1) 4.4 12.188 6/18/2009 48,338(5)
2,061(2) 5.8 12.375 5/19/2009 4,534(6)
- ----------------
</TABLE>
- ----------
(1) Consists of stock options which vest at the rate of 20% per year
starting June 18, 2000.
(2) Consists of stock options which vest at the rate of 20% per year
starting May 19, 2000.
(3) Percentage of options granted to all employees and non-employee
directors on either May 19, 2000 or June 18, 2000, as the case may be.
(4) In all cases, the exercise price was based on the fair market value of
a share of Common Stock as determined in accordance with the provisions
of the Option Plans.
(5) The fair value of the options granted was estimated using the Binomial
Pricing Model. Under such analysis, the interest rate was assessed to
be 5.76%, the expected life of the options to be 5 years, the expected
volatility to be 16.46% and the dividend yield to be 3.57% per share.
(6) The fair value of the options granted was estimated using the Binomial
Pricing Model. Under such analysis, the interest rate was assessed to
be 5.66%, the expected life of the options to be 5 years, the expected
volatility to be 18.10% and the dividend yield to be 3.57% per share.
The following table sets forth certain information concerning exercises
of stock options granted pursuant to the 1995 Option Plan by the named executive
officers during the fiscal year ended December 31, 1999 and options held at
December 31, 1999. No options granted pursuant to the 1999 Option Plan were
exercisable at December 31, 1999.
<TABLE>
<CAPTION>
Value of Unexercised in the
Shares Number of Unexercised Options Money Options at Fiscal Year
Acquired at Year End (1) End (2)
on Value ----------------------------- ----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James B. Pittard, Jr. 14,557 $100,813 23,226 76,254 $165,439 $125,907
Larry J. Baker 3,000 21,930 13,356 36,024 95,134 40,626
Cecil F. Howard, Jr. -- -- 4,599 28,939 32,758 31,156
</TABLE>
- ----------
(1) Reflects application of the Exchange Ratio to those grants under the
Option Plans made prior to consummation of the 1998 Reorganization.
(2) Based on a per share market price of $12.563 at December 31, 1999.
11
<PAGE>
DIRECTOR COMPENSATION
BOARD FEES. During the year ended December 31, 1999, each of the
Directors of the Company and its subsidiaries received a monthly meeting fee of
$2,000 except Mr. Pittard, who is also the President and Chief Executive Officer
of the Company, who received $1,000 per monthly meeting and the Chairman of the
Board of Directors of the Company and its subsidiaries who received $3,000 per
month.
STOCK OPTIONS. Pursuant to the 1995 Option Plan each non-employee
director of the Association was granted in January 1995 a compensatory stock
option to purchase 11,850 shares of Common Stock. Pursuant to the Exchange Ratio
utilized in the 1998 Reorganization each director (who is also a director of the
Company) now has an option to purchase 24,227 shares of Common Stock. In June
1999, subsequent to the 1999 Annual Meeting, each non-employee director of the
Company received a compensatory stock option to purchase 27,353 shares of Common
Stock pursuant to the 1999 Option Plan. All options granted to date to
non-employee directors under the Option Plans vest at the rate of 20% per year
starting on the first anniversary of the date of grant.
RESTRICTED STOCK AWARDS. Pursuant to the 1995 RRP, each non-employee
director of the Association was granted 4,750 shares of restricted stock, which
grant now represents 9,711 shares (assuming that previously vested shares have
not been sold) after giving effect to the Exchange Ratio. In June 1999,
subsequent to the 1999 Annual meeting, each non-employee director of the Company
was granted 10,941 shares of restricted stock pursuant to the 1999 RRP. All
restricted stock grants awarded to date to non-employee directors pursuant to
the RRPs vest at the rate of 20% per year starting on the first anniversary of
the date of grant.
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
The Company and the Association (the "Employers") have entered into an
employment agreement with James B. Pittard, Jr., President and Chief Executive
Officer of the Company and the Association, pursuant to which the Employers have
agreed to employ Mr. Pittard for a term of one year in his current position. The
agreement with Mr. Pittard initially is at his current salary level. The term of
the employment agreement remains for a one year period as it renews daily for
successive one-day periods unless the Company and the Association provide notice
not less than 60 days prior to such date not to extend the employment term. The
employment agreement will be reviewed annually by the Boards of Directors of the
Employers. In addition, under the employment agreement, Mr. Pittard agreed that
upon termination of the agreement (other than due to disability, retirement or
for cause) for a period of one year thereafter, he would not compete with the
Employers under certain circumstances.
The employment agreement is terminable with or without cause by the
Employers. Mr. Pittard shall have no right to compensation or other benefits
pursuant to the employment agreement for any period after voluntary termination
or termination by the Employers for cause, disability, retirement or death. In
the event that (i) Mr. Pittard terminates his employment because of the
Employer's failure to comply with any material provision of the employment
agreement or the Employers change Mr. Pittard's title or duties or (ii) the
employment agreement is terminated by the Employers other than for cause,
disability, retirement or death, Mr. Pittard will be entitled to a cash
severance amount equal to his annual compensation, as defined in the agreement.
The Employers have also entered into Change in Control Agreements with
seven officers, including five executive officers: Messrs. Pittard, Baker,
Howard and Reinhardt and Mrs. Kaminske (the "Executives"). The Change in Control
Agreements have terms of three years, which term shall be extended each year for
a successive additional one-year period upon approval of the Boards of Directors
unless the Executive or the Employers elect, not less than 30 days (60 days with
respect to Mr. Pittard) prior to the annual anniversary date, not to extend the
term.
The Change in Control Agreements provide that if certain adverse
actions are taken with respect to the Executive's employment following a change
in control, as defined, of the Company or the Association, the Executive will be
entitled to a cash severance amount equal to the Executive's annual
compensation, as defined in the Change in Control Agreements (except Mr.
Pittard's Change in Control agreement provides for payment equal to three times
his annual compensation). In addition, the Executive will be entitled to a
continuation of benefits similar to those he or she
12
<PAGE>
is receiving at the time of such termination for a period of one year (or the
remaining term of the agreement with respect to Mr. Pittard) or until he or she
obtains full-time employment with another employer, whichever occurs first. The
amount of severance benefits payable under both Change in Control Agreements and
the employment agreement are limited to that amount which will not result in any
position of such payment being deemed an excess parachute payment under Section
280G of the Internal Revenue Code.
A change in control is generally defined in the Change in Control
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 25% or more of the Company's outstanding voting securities and
(ii) a change in two-thirds of the directors of the Company during any two-year
period without the approval of at least a majority of the persons who were
directors of the Company at the beginning of such period. If a change in control
of the Company had occurred as of December 31, 1999, Messrs. Pittard, Baker,
Howard and Reinhardt and Mrs. Kaminske would be entitled to receive
approximately $738,000, $136,000, $167,000, $88,000, and $95,000, respectively.
DEFINED BENEFIT PLAN
The Association maintains a noncontributory defined benefit plan (the
"Retirement Plan"). All employees age 21 or older who have worked at the
Association for a period of one year and been credited with at least 1,000 hours
of employment with the Association during the year can accrue benefits under the
Retirement Plan. The Association annually contributes an amount to the
Retirement Plan necessary to satisfy the actuarially determined minimum funding
requirements in accordance with the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
At the normal retirement age of 65 (or completion of 30 years of
service with the Association, if earlier), the plan is designed to provide a
life annuity. The retirement benefit provided is an amount equal to 1.75% of a
participant's average monthly compensation based on the average of the three
consecutive years during the last 10 calendar years of employment which provides
the highest monthly average compensation multiplied by the participant's years
of credited service (not to exceed 35 years) to the normal retirement date.
Retirement benefits are also payable upon retirement due to early and late
retirement. A reduced benefit is payable upon early retirement at or after age
55 and the completion of fifteen years of service with the Association. Benefits
are also paid from the Retirement Plan upon a Participant's disability or death.
Upon termination of employment other than as specified above, a participant who
was employed by the Association for a minimum of two years is eligible to
receive his or her accrued benefit reduced for early retirement or a deferred
retirement benefit commencing on such participant's normal retirement date.
Benefits are payable in various annuity forms as well as in the form of a single
lump sum payment. Participants whose vested benefit upon termination is less
than $5,000 will normally receive their benefit in a single lump sum payment.
The following table sets forth estimated annual benefits payable upon
retirement at age 65 to the named executive officers under the Association's
Retirement Plan based upon various levels of compensation and years of service.
<TABLE>
<CAPTION>
Final Average
Compensation Years of Benefit Service at Retirement
- -------------------------------------------------------------------------------------------------------------
15 20 25 30 35
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$25,000 $ 6,563 $ 8,750 $10,938 $13,125 $15,313
50,000 13,125 17,500 21,875 26,250 30,625
75,000 19,688 26,250 32,813 39,375 45,938
100,000 26,250 35,000 43,750 52,500 61,250
125,000 32,813 43,750 54,688 65,625 76,563
150,000 39,375 52,500 65,625 78,750 91,875
170,000 44,625 59,500 74,375 89,250 104,125
and above
</TABLE>
13
<PAGE>
The maximum annual compensation which may be taken into account under
the Internal Revenue Code (as adjusted from time to time by the Internal Revenue
Service ("IRS")) for calculating contributions under qualified defined benefit
plans after December 31, 1999 is $170,000.
At December 31, 1999, Messrs. Pittard, Baker and Howard had 18, 17 and
12 years of credited service, respectively, under the Retirement Plan.
EMPLOYEE STOCK OWNERSHIP PLAN
The Company has an ESOP for employees age 21 or older who have at least
one year of credited service with the Company or its subsidiaries. The ESOP is
funded by the Company's contributions made in cash (which primarily will be
invested in Common Stock) or Common Stock. Benefits may be paid either in shares
of Common Stock or, to the extent permitted, in cash.
In October 1994, the ESOP borrowed $2.8 million from an unaffiliated
lender to purchase 190,388 shares of Association common stock in the open market
(which was converted to Company Common Stock using the Exchange Ratio in
connection with the 1998 Reorganization). The Association makes scheduled
discretionary cash contributions to the ESOP sufficient to amortize the
principal and interest on the loan, which has a maturity of seven years. During
1998, the Mid-Tier Holding Company loaned sufficient funds to the ESOP to permit
the ESOP to repay the loan to the unaffiliated lender. In connection with the
1998 Reorganization, the Company assumed the loan from the Mid-Tier Holding
Company. The terms of the loan to the ESOP from the Company are similar to those
of the loan from the unaffiliated lender. In connection with the 1998
Reorganization, the ESOP borrowed funds from the Company to purchase 437,652
shares of the Company's Common Stock. Collateral for the loan is the Company's
Common Stock purchased by the ESOP with the loan proceeds. The two loans will be
repaid principally from the Association's contributions to the ESOP over a
period of 3 and 15 years, respectively. The loans bear fixed interest rates of
8.50% and 7.75%, respectively.
The Company may, in any plan year, make additional discretionary
contributions for the benefit of plan participants in either cash or shares of
Common Stock, which may be acquired through the purchase of outstanding shares
in the market or from individual shareholders, upon the original issuance of
additional shares by the Company or upon the sale of treasury shares by the
Company. Such purchases, if made, would be funded through additional borrowings
by the ESOP or additional contributions from the Company. The timing, amount and
manner of future contributions to the ESOP will be affected by various factors,
including prevailing regulatory policies, the requirements of applicable laws
and regulations and market conditions.
Shares purchased by the ESOP with the proceeds of the loan are held in
a loan suspense account and released on a pro rata basis as debt service
payments are made. Discretionary contributions to the ESOP and shares released
from the suspense account will be allocated among participants on the basis of
compensation. Forfeitures will be reallocated among remaining participating
employees and may reduce any amount the Company might otherwise have contributed
to the ESOP. Benefits generally vest at the rate of 20% per year beginning in
the second year of participation until the participant becomes 100% vested after
six years of credited service. Benefits may be payable upon retirement, early
retirement, disability or separation from service. The Company's contributions
to the ESOP are not fixed, so benefits payable under the ESOP cannot be
estimated.
The ESOP Committee of the Board administers the ESOP and an
unaffiliated financial institution has been appointed to act as trustee of the
related trust. The ESOP Committee may instruct the trustee regarding investment
of funds contributed to the ESOP. Under the ESOP, the trustee must vote all
allocated shares held in the ESOP in accordance with the instructions of the
participating employees. Unallocated shares will be voted by the trustee in the
same ratio on any matter as those shares for which instructions are given. For
purposes of determining such ratio, allocated shares which abstain or which fail
to provide instructions to the trustee are excluded.
14
<PAGE>
The ESOP is subject to the requirements of ERISA and the regulations of
the IRS and the Department of Labor thereunder.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Association maintains a non-qualified supplemental executive
retirement plan ("SERP") for certain executives and former executives (including
Messrs. Teed, Pittard, Baker and Howard) of the Association to compensate those
executives participating in the Association's Retirement Plan whose benefits are
limited by Section 415 or Section 401(a)(17) of the Internal Revenue Code. As of
December 31, 1999, there were four executive officers participating in the SERP.
The SERP provides the designated executives with retirement benefits generally
equal to the difference between (i) seventy-five percent (75%) of the
executive's compensation and (ii) the sum of the executive's retirement benefit
under the Association's Retirement Plan and the executive's social security
benefits. Benefits under the SERP typically vest on normal retirement age (age
65). However, in the event of an executive's early retirement at or after age 50
and completion of ten years of service, the executive will receive an early
retirement benefit equal to the amount of benefits accrued as of such date by
the Association attributable to such executive. If an executive remains employed
with the Association after normal retirement age, the executive will receive
retirement benefits actuarially adjusted to reflect the executive's later
retirement. Retirement benefits will be payable to the executive in the form of
a quarterly benefit for fifteen consecutive years. If the executive dies
following retirement from the Association but prior to receipt of the entire
amount due, the executive's beneficiary will receive the remaining benefits due.
Benefits will be paid to the beneficiary until the executive and the beneficiary
have received a total of sixty quarterly payments.
The SERP is considered an unfunded plan for tax and ERISA purposes. All
obligations arising under the SERP are payable from the general assets of the
Association. However, the Association has chosen to purchase life insurance
contracts to ensure that sufficient assets will be available to pay the benefits
due under the SERP.
The benefits paid under the SERP supplement the benefits paid by the
Retirement Plan. The following table indicates the expected aggregate annual
retirement benefit payable from the SERP to SERP participants, expressed in the
form of a single-life annuity for the final average salary and years of service
specified below.
<TABLE>
<CAPTION>
Final Average Years of Service and
Compensation Benefit Payable at Retirement
- ------------------------------------------------------------------------------------------------------------
15 20 25 30 35
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$100,000 $ 31,542 $22,792 $14,042 $5,292 $ --
125,000 43,730 32,792 21,855 10,917 --
150,000 55,917 42,792 29,667 16,542 3,417
175,000 69,417 54,542 39,667 24,792 9,917
200,000 88,167 73,292 58,417 43,542 28,667
225,000 106,917 92,042 77,167 62,292 47,417
250,000 125,667 110,792 95,917 81,402 66,167
275,000 144,417 129,542 114,667 99,792 84,917
300,000 163,167 148,292 133,417 118,542 103,667
</TABLE>
Messrs. Pittard, Baker and Howard have 18, 17 and 12 years,
respectively, of credited service under the SERP. The Association's pension cost
attributable to the SERP was $114,000 for the year ended December 31, 1999.
15
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Establishing and reviewing executive compensation philosophy, policies,
levels and programs during fiscal 1999 was the responsibility of the full Board
of Directors. Mr. Pittard, who serves as President and Chief Executive Officer,
as well as a director of the Company and the Association, did not participate in
the Board's determination of compensation for the President and Chief Executive
Officer. In addition, Mr. Teed, currently Chairman of the Board, served as
President and Chief Executive Officer of the Association from 1983 to 1993. The
report of the Board with respect to compensation for the Chief Executive Officer
and certain executive officers for fiscal 1999 is set forth below.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
Under rules established by the Securities and Exchange Commission, the
Company is required to provide certain data and information regarding the
compensation and benefits provided to its Chief Executive Officer and certain
other executive officers of the Association (since such persons do not receive
compensation for service as officers of the Company) for the fiscal year just
completed. The disclosure requirements for the Chief Executive Officer and such
other executive officers include the use of various tables as well as a report
explaining the rationale and considerations that led to fundamental executive
compensation decisions affecting those individuals. In fulfillment of this
requirement, set forth below is the report of the Board of Directors which was
responsible during fiscal 1999 for the evaluation and determination of the
compensation of the Chief Executive Officer and the other executive officers of
the Association. For fiscal 2000, the Compensation and Benefits Committee of the
Association's Board of Directors will determine executive compensation.
In connection with establishing compensation levels during fiscal 1999,
the Board of Directors (excluding Mr. Pittard as Chief Executive Officer)
reviewed the performance of the Chief Executive Officer and other executive
officers and considered what changes, if any, in the executive officer's base
compensation were appropriate as well as the level of bonus, if any, to be
awarded. The purpose of such review, among other things, was to retain qualified
individuals and to maintain compensation levels which were competitive with
other financial institutions, particularly those located in the Association's
market area. With respect to all positions within the organization with the
exception of the Chief Executive Officer, the Association used a formal
quantitative system of job evaluation. In determining whether the base salary of
the Chief Executive Officer should be increased, the Board of Directors took
into account individual performance, performance of the Association, the size of
the Association and the complexity of its operations, and information regarding
compensation paid to executives performing similar duties for financial
institutions in the Association's market area. The Board also considered
executive officer compensation in light of the Association's 1999 operating
budget and strategic goals. The Board also reviewed the compensation surveys and
the analysis of an independent consultant. Under the Association's policy,
salary adjustments with respect to the President and most of the executive
officers are normally determined in June, with adjustments being effective in
July.
While the Board of Directors did not use strict numerical formulas to
determine whether changes in compensation for the Chief Executive Officer were
appropriate and while it weighed a variety of different factors in its
deliberations, it emphasized in its analysis earnings, general and
administrative expense levels, profitability, capital position and income level,
and return on tangible equity as factors in setting the compensation of the
Chief Executive Officer. Other non-quantitative factors considered by the Board
of Directors in fiscal 1999 included general management oversight of the
Association, the quality of communication with the Board of Directors, and the
productivity of employees. Finally, the Board of Directors considered the
Association's standing with customers and the community, as evidenced by the
level of customer/community complaints and compliments. While each of the
quantitative and non-quantitative factors described above was considered by the
Board of Directors, such factors were not assigned a specific weight in
evaluating the performance of the Chief Executive Officer.
Upon review of the above factors, the Board determined not to increase
the Chief Executive Officer's base salary or that of three of the other five
executive officers (the increase in compensation reflected in the Summary
Compensation Table reflects the effect of the timing of salary increases). Two
of the executive officers, including Mr. Baker, received increases. Mr. Baker's
base salary was increased by approximately $6,800 or 5.4% effective July 1,
16
<PAGE>
1999 from the level established in 1998. No executive officer participates in
the review of his or her respective compensation.
The Board of Directors
(Excluding Mr. Pittard)
-----------------------
Frederick A. Teed
Forest C. Beaty, Jr.
Robert F. Cromwell
Karl D. Griffin
Harold I. Stevenson, CPA
INDEBTEDNESS OF MANAGEMENT AND AFFILIATED TRANSACTIONS
In accordance and in compliance with applicable federal laws and
regulations, the Association offers mortgage loans to its directors, officers
and full-time employees for the financing of their primary residences and
certain other loans. Currently, except as described below, all existing loans
made by the Association to its executive officers and directors and their
associates were made on substantially the same terms, including interest rate
and collateral, 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. In accordance with applicable regulations, the Association
extends residential first mortgage loans to its officers secured by their
primary residence pursuant to a benefit program that is widely available to
employees of the Association who have provided service to the Association for at
least one year and does not give preference to any officer over other employees
of the Association. Under the terms of such loans, the interest on
adjustable-rate loans is 0.50% below that charged on similar loans to
non-employees and certain fees and charges, such as private mortgage insurance,
are waived.
Set forth in the following table is certain information relating to the
only such preferential loan to an executive officer or director which was
outstanding at December 31, 1999.
<TABLE>
<CAPTION>
Largest Amount of
Indebtedness between Balance as of
January 1, 1999 and December 31,
Name Year Loan Made December 31, 1999 1999 Interest Rate
- -------------------- -------------- ----------------- -------------- -------------
<S> <C> <C> <C> <C>
Feriel G. Hughes 1998 $112,406 $111,229 6.875%
</TABLE>
All transactions between the Company and/or the Association and their
respective executive officers, directors, holders of 10% or more of the shares
of its Common Stock and affiliates thereof, are on terms no less favorable to
the Company or the Association, as the case may be, than could have been
obtained by it in arm's-length negotiations with unaffiliated persons. Such
transactions must be approved by a majority of independent outside directors of
the Company, or the Association, as the case may be, not having any interest in
the transaction.
17
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Common
Stock since the Company's initial public offering of Common Stock in December
1998 with (i) the yearly cumulative total return on the stocks included in the
SNL Thrift Index; (ii) the yearly cumulative total return on the stocks indexed
in the SNL $500 Million to $1 Billion Thrift Index; and (iii) the yearly
cumulative total return on the stocks included in the Nasdaq Stock Market Index
(for United States companies). All of these cumulative returns are computed
assuming the reinvestment of dividends at the frequency with which dividends
were paid during the applicable period.
[THE FOLLOWING TABLE REPRESENTS A GRAPHIC CHART WHICH HAS BEEN OMITTED]
<TABLE>
<CAPTION>
PERIOD ENDING
-----------------------------------------------------
INDEX 12/15/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
- ----- -------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Community Savings Bankshares, Inc. 100.00 104.66 122.82 125.20 120.01 126.81
NASDAQ - Total US 100.00 109.08 122.02 133.50 136.55 197.07
SNL Thrift Index 100.00 108.08 108.83 107.54 94.69 88.29
SNL $500M - $1B Thrift Index 100.00 101.73 99.72 97.47 85.81 83.16
</TABLE>
The graph represents $100 invested in the Company's initial public
offering of common stock issued on December 15, 1998 at $10.00 per share. The
SNL Thrift Index and SNL $500 million to $1.0 billion Thrift Index are indices
created by SNL Securities, L.P., Charlottesville, Virginia, a nationally
recognized analyst of financial institutions.
18
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed Crowe, Chizek and
Company, LLP, independent accountants, to perform the audit of the Company's
financial statements for the year ending December 31, 2000, and further directed
that the selection of accountants be submitted for ratification by the
shareholders at the Annual Meeting.
The Company has been advised by Crowe, Chizek and Company, 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 accountants and clients. Crowe, Chizek and Company, 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 who will be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF CROWE, CHIZEK AND COMPANY, LLP AS INDEPENDENT ACCOUNTANTS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2000.
SHAREHOLDER PROPOSALS
Any proposal which a shareholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of shareholders of
the Company, which is currently scheduled to be held in April 2001, must be
received at the principal executive offices of the Company, 660 U.S. Highway
One, North Palm Beach, Florida 33408, Attention: Deborah M. Rousseau, Vice
President and Secretary, no later than November 24, 2000. If such proposal is in
compliance with all applicable requirements, it will be included in the proxy
statement and set forth on the form of proxy issued for such annual meeting of
shareholders. It is urged that any such proposals be sent certified mail, return
receipt requested.
Shareholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the Exchange Act may be
brought before an annual meeting pursuant to Section 2.14 of the Company's
Bylaws, which provides that business at an annual meeting of shareholders must
be (a) properly brought before the meeting by or at the direction of the Board
of Directors, or (b) otherwise properly brought before the meeting by a
shareholder. For business to be properly brought before an annual meeting by a
shareholder, the shareholder must have given timely notice thereof in writing to
the Secretary of the Company. To be timely, a shareholder's notice must be
delivered to, or mailed and received at, the principal executive offices of the
Company not later than 120 days prior to the mailing of proxy materials with
respect to the immediately preceding annual meeting of shareholders of the
Company, which was December 30, 1999 for the Annual Meeting. No such proposals
were received by such date. Such shareholder's notice is required to set forth
as to each matter the shareholder proposes to bring before an annual meeting
certain information specified in the Bylaws.
ANNUAL REPORTS
A copy of the Company's Annual Report to Shareholders for the year
ended December 31, 1999 accompanies this Proxy Statement. Such Annual Report is
not part of the proxy solicitation materials.
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
SHAREHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1999 AND THE LIST OF EXHIBITS THERETO REQUIRED
TO BE FILED WITH THE SEC UNDER THE EXCHANGE ACT. SUCH WRITTEN REQUEST SHOULD BE
DIRECTED TO DEBORAH M. ROUSSEAU, VICE PRESIDENT AND SECRETARY, COMMUNITY SAVINGS
BANKSHARES, INC., 660 U.S. HIGHWAY ONE, NORTH PALM BEACH, FLORIDA 33408. THE
FORM 10-K IS NOT PART OF THE PROXY SOLICITATION MATERIALS.
19
<PAGE>
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 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
Deborah M. Rousseau
Vice President and Secretary
20
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2 PLEASE MARK
YOUR VOTE AS [X]
INDICATED IN
THIS EXAMPLE
<TABLE>
<CAPTION>
<S> <C> <C>
WITHHOLD
FOR FOR ALL Proposal 2 - Appointment of Crowe Chizek & Company
Proposal 1 - Election of Directors: [ ] [ ] LLP as the Company's independent
auditors for fiscal 2000.
01 Karl D. Griffin
02 Harold I. Stevenson FOR AGAINST ABSTAIN
03 John Sheldon Clark [ ] [ ] [ ]
WITHHOLD FOR: (Write nominee(s) name(s) in the space provided below.)
- -----------------------------------------------------------------------
This proxy will be voted as directed,
but if no instruction is specified,
this Proxy will be voted FOR Proposal
1 and 2 and otherwise at the
discretion of the proxy holders.
The undersigned hereby acknowledges
receipt of the Notice of the Annual
Meeting of Shareholders of Community
Savings Bankshares, Inc. called for
April 26, 2000 and the accompanying
Proxy Statement and other materials
prior to the signing of this Proxy.
IF YOU VOTE BY TELEPHONE AS INSTRUCTED
BELOW, THERE IS NO NEED TO MAIL BACK
YOUR PROXY CARD.
</TABLE>
SIGNATURE__________________TITLE_______________________DATE_____________________
Please sign exactly as your name appears on the stock certificate(s). Where
stock is issued in two or more names, only one need sign. If signing as
attorney, executor, administrator, trustee or guardian, give full title as such.
A corporation should sign by an authorized officer and affix its seal. A
partnership should sign in the partnership name by an authorized person.
^ FOLD AND DETACH HERE ^
<PAGE>
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED] VOTE BY TELEPHONE [GRAPHIC OMITTED]
QUICK * * * EASY * * * IMMEDIATE
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT! - YOU CAN VOTE IN ONE OF TWO WAYS:
1. TO VOTE BY PHONE: Call toll-free 1-800-840-1208 on a touch tone telephone 24
hours a day - 7 days a week
There is NO CHARGE to you for this call. - Have your proxy card in hand.
You will be asked to enter a Control Number, which is located in the box in the
lower right hand corner of this form
- --------------------------------------------------------------------------------
OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1
- --------------------------------------------------------------------------------
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
- --------------------------------------------------------------------------------
OPTION 2: If you choose to vote on each Proposal separately, press 0. You will
hear these instructions:
- --------------------------------------------------------------------------------
Proposal 1 - To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL
nominees, press 9
To WITHHOLD FOR AN INDIVIDUAL nominee, press 0 and listen to the
instructions
Proposal 2 - To vote FOR, press 1; AGAINST, press 9, ABSTAIN, press 0.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
OR
2. TO VOTE BY PROXY: Mark, sign and date your proxy card and return promptly in
the enclosed envelope.
NOTE: IF YOU VOTE BY TELEPHONE, THERE IS NO NEED TO MAIL BACK YOUR PROXY CARD.
THANK YOU FOR VOTING.
<PAGE>
REVOCABLE PROXY
2000 ANNUAL MEETING OF SHAREHOLDERS
COMMUNITY SAVINGS BANKSHARES, INC.
660 U.S. HIGHWAY ONE
NORTH PALM BEACH, FLORIDA 33408
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, being a a shareholder of Community Savings Bankshares, Inc.
(the "Company") as of March 16, 2000, hereby authorizes Forest C. Beaty, Jr.,
Karl D. Griffin and James B. Pittard, Jr., or any of their successors, as
proxies, with full powers of substitution, to represent the undersigned at the
Annual Meeting of Shareholders to be held at The Embassy Suites PGA, 4350 PGA
Boulevard, Palm Beach Gardens, Florida, on Wednesday, April 26, 2000 at 1:30
p.m., Eastern Time, and at any adjournment of said meeting, and thereat to act
with respect to all votes that the undersigned would be entitled to cast, if
then personally present, as set forth on the reverse hereof.
^ FOLD AND DETACH HERE ^
EMBASSY SUITES
4350 PGA BLVD.
PALM BEACH GARDENS, FL 33410
TELEPHONE 561-622-1000
[GRAPHIC OMITTED]
LOCATION Conveniently located at Interstate 95 exit 57B PGA Blvd. west,
just 1 mile from the Florida Turnpike exit 109.
