[CAPITOL FEDERAL FINANCIAL LETTERHEAD]
December 20, 1999
Dear Fellow Shareholder:
The Board of Directors and management of Capitol Federal Financial
cordially invite you to attend the first Annual Meeting of Shareholders. The
meeting will be held at 10:00 a.m. central standard time, on January 20, 2000 at
the Maner Conference Center, 1701 SW Western, Topeka, Kansas. This annual
meeting will include management's report to you on Capitol Federal Financial's
1999 financial and operating performance.
We encourage you to attend the meeting in person. Whether or not you
plan to attend, PLEASE READ THE ENCLOSED PROXY STATEMENT AND THEN COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTPAID
RETURN ENVELOPE AS PROMPTLY AS POSSIBLE. This will save us the additional
expense in soliciting proxies and will ensure that your shares are represented
at the meeting.
Your Board of Directors and management are committed to the continued
success of Capitol Federal Financial and the enhancement of your investment. As
Chairman of the Board and Chief Executive Officer of Capitol Federal Financial,
I want to express my appreciation for your confidence and support.
Very truly yours,
JOHN C. DICUS
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
<PAGE>
CAPITOL FEDERAL FINANCIAL
700 Kansas Avenue
Topeka, Kansas 66603
(785) 235-1341
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 20, 2000
Notice is hereby given that the Annual Meeting of Shareholders of
Capitol Federal Financial will be held at the Maner Conference Center, 1701 SW
Western, Topeka, Kansas on January 20, 2000, at 10:00 a.m. central standard
time.
A proxy card and a proxy statement for the meeting are enclosed.
The meeting is for the purpose of considering and acting upon:
1. The election of two directors of Capitol Federal Financial;
2. The ratification of the appointment of Deloitte & Touche LLP
as Capitol Federal Financial's independent auditors for the
fiscal year ending September 30, 2000; and
such other matters as may properly come before the meeting or any adjournments
thereof. The Board of Directors is not aware of any other business to come
before the meeting.
Any action may be taken on the foregoing proposals at the meeting on
the date specified above, or on any date or dates to which the meeting may be
adjourned. Shareholders of record at the close of business on December 10, 1999,
are the shareholders entitled to vote at the meeting and any adjournments
thereof. A complete list of shareholders entitled to vote at the meeting will be
available for inspection by shareholders at the executive offices of Capitol
Federal Financial during the 20 days prior to the meeting as well as at the
meeting.
You are requested to complete, sign and date the enclosed form of proxy
which is solicited on behalf of the Board of Directors, and to mail it promptly
in the enclosed envelope. The proxy will not be used if you attend and vote at
the meeting in person or otherwise properly revoke such proxy.
BY ORDER OF THE BOARD OF DIRECTORS
JOHN C. DICUS
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
Topeka, Kansas
December 20, 1999
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE CAPITOL FEDERAL FINANCIAL THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A
PRE-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
CAPITOL FEDERAL FINANCIAL
700 Kansas Avenue
Topeka, Kansas 66603
(785) 235-1341
--------------------
PROXY STATEMENT
--------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 20, 2000
This proxy statement is furnished in connection with the solicitation
on behalf of the Board of Directors of Capitol Federal Financial of proxies to
be used at the Annual Meeting of Shareholders of Capitol Federal Financial and
all adjournments thereof. The annual meeting is being held at the Maner
Conference Center, 1701 SW Western, Topeka, Kansas on January 20, 2000, at 10:00
a.m. central standard time. The accompanying Notice of Annual Meeting of
Shareholders and this proxy statement are first being mailed to shareholders on
or about December 20, 1999. Certain of the information provided herein relates
to Capitol Federal Savings Bank, a wholly-owned subsidiary of Capitol Federal
Financial.
At the meeting, shareholders of Capitol Federal Financial are being
asked to consider and vote upon (i) the election of two directors of Capitol
Federal Financial and (ii) the ratification of the appointment of Deloitte &
Touche LLP as Capitol Federal Financial's independent auditors for the fiscal
year ending September 30, 2000.
PROXIES AND PROXY SOLICITATION
Proxies are solicited to provide all shareholders of record on the
voting record date, an opportunity to vote on the matters scheduled for the
annual meeting and described in these materials. Shares of common stock can only
be voted if the shareholder is present in person at the annual meeting or by
proxy. Shares of common stock represented by properly executed proxies will be
voted by the individuals named in such proxy in accordance with the
shareholder's instructions. Where properly executed proxies are returned to
Capitol Federal Financial with no specific instruction as how to vote at the
annual meeting, the persons named in the proxy will vote the shares "FOR" each
of the proposals described in the proxy statement. Should any other matters be
properly presented at the annual meeting for action, the persons named in the
enclosed proxy and acting thereunder will have the discretion to vote on such
matters in accordance with their best judgment.
Capitol Federal Financial maintains an Employee Stock Ownership Plan
("ESOP") which owns approximately 3.3% of Capitol Federal Financial's common
stock. Full time employees of Capitol Federal Financial and Capitol Federal
Savings participate in the ESOP. Each ESOP participant has the right to direct
the ESOP trustee on how to vote the shares of common stock allocated to his or
her account under the ESOP. If an ESOP participant properly executes the proxy
distributed by the ESOP trustee, the ESOP trustee will vote the shares
represented by that proxy at the annual meeting. Shares of common stock
represented by properly executed proxies will be voted by the ESOP trustee in
accordance with the shareholder's instructions. Where properly executed proxies
are returned to the ESOP trustee with no specific instructions as how to vote at
the annual meeting, the trustee will vote the shares "FOR" each of the proposals
described in this proxy statement. The ESOP trustee will vote all of the
unallocated ESOP shares (i.e., shares of common stock held in the ESOP, but not
allocated to any participant's account) in the same proportion as the voted
allocated shares with respect to such issue. In the event the ESOP participant
fails to give timely voting instructions to the trustee with respect to the
voting of the common stock that is allocated to his or her ESOP account, the
trustee will not vote such shares. If other matters are presented for a vote at
<PAGE>
the annual meeting, the shares for which proxies have been received will be
voted in accordance with the discretion of the proxies.
Any person giving a proxy may revoke it at any time before it is voted
by delivering to the Secretary of Capitol Federal Financial, at 700 Kansas
Avenue, Topeka, Kansas 66603, a written revocation or a proxy bearing a later
date. Shareholders may also revoke their proxies by attending the annual meeting
in person and casting a ballot. Attendance at the meeting will not in itself
constitute the revocation of a proxy.
Capitol Federal Financial will pay the costs of soliciting proxies. In
addition to the solicitation of proxies by mail, solicitation may be made by
directors, officers and employees of Capitol Federal Financial and Capitol
Federal Savings by telephone or other communication. Directors, officers and
employees will receive no additional compensation for the solicitation of
proxies. Capitol Federal Financial will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
sending proxy materials to the beneficial owners of common stock.
VOTING RIGHTS AND VOTE REQUIRED
Shareholders of record as of the close of business on December 10, 1999
will be entitled to notice of and to vote at the annual meeting. As of December
10, 1999, Capitol Federal Financial had 91,462,287 shares of common stock issued
and outstanding. Each shareholder of record on December 10, 1999, is entitled to
one vote per share on each matter to be voted on at the annual meeting. Such
votes may be exercised in person or by a properly executed proxy as discussed
above.
Director nominees who receive the highest number of votes for the
positions to be filled will be elected. Ratification of the appointment of
Deloitte & Touche LLP as Capitol Federal Financial's independent auditors for
the fiscal year ending September 30, 2000 requires the affirmative vote of the
majority of shares present in person or represented by proxy at the annual
meeting and entitled to vote on the matter. Abstentions may be specified on all
proposals except the election of directors and will be counted as votes cast on
a particular matter as well as shares present and represented for purposes of
establishing a quorum. Accordingly, abstentions on the proposal to ratify the
appointment of Deloitte & Touche LLP as Capitol Federal Financial's independent
auditors will have the effect of a negative vote. Broker nonvotes (i.e., proxies
from brokers or nominees indicating that such persons have not received
instructions from the beneficial owners or other persons as to certain proposals
on which such beneficial owners or persons are entitled to vote their shares but
with respect to which the brokers or nominees have no discretionary power to
vote without such instructions) will not be treated as votes cast on a
particular matter but will be treated as shares present or represented for
purposes of establishing a quorum. Accordingly, broker nonvotes have no effect
on the outcome of the election of directors or the ratification of the
appointment of the independent auditors.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth, as of December 10, 1999, the voting
record date, information regarding share ownership of: (i) those persons or
entities known by management to beneficially own more than five percent of
Capitol Federal Financial's common stock, (ii) the shares of common stock
beneficially owned by the named executive officers of Capitol Federal Financial
and Capitol Federal Savings and (iii) all current directors and executive
officers of Capitol Federal Financial and Capitol Federal Savings as a group.
See "Proposal I - Election of Directors" for information regarding share
ownership of Capitol Federal Financial's directors.
2
<PAGE>
SHARES OF PERCENT
BENEFICIAL OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP CLASS
- --------------------------------------- -------------- ---------
Capitol Federal Savings Bank MHC
700 Kansas Avenue
Topeka, Kansas 66603(1) 52,192,817 57.06%
NAMED EXECUTIVE OFFICERS
- ------------------------
John C. Dicus, Chairman and Chief
Executive Officer 54,545 *
John B. Dicus, President and Chief Operating
Officer 52,345 *
Stanley F. Mick, Executive Vice President
and Chief Lending Officer 12,045 *
Neil F.m. Mckay, Executive Vice President,
Chief Financial Officer and Treasurer 7,045 *
Larry K. Brubaker, Executive Vice President
for Corporate Services 22,873 *
Directors and Executive Officers
of Capitol Federal Financial
as a Group (16 Persons)(2) 379,023 *
- ----------------------
* Represents less than one percent of the outstanding common stock of
Capitol Federal Financial.
(1) As reported by Capitol Federal Savings Bank MHC in a Schedule 13D dated
March 31, 1999, who reported power and sole dispositive power with
respect to 52,192,817 shares.
(2) Includes shares held directly, through the ESOP, held jointly with
family members, held in a fiduciary capacity, held by certain of the
group members' families, or held by trusts of which the group member is
a trustee or substantial beneficiary, with respect to which shares the
group member may be deemed to have sole or shared voting and/or
investment powers.
PROPOSAL I
ELECTION OF DIRECTORS
Capitol Federal Financial's Board of Directors is composed of seven
members, each of whom is also a director of Capitol Federal Savings.
Approximately one-third of the directors are elected annually. Directors of
Capitol Federal Financial are elected to serve for a three-year term or until
their respective successors are elected and qualified.
The following table sets forth certain information, as of December 10,
1999, the voting record date, regarding the composition of Capitol Federal
Financial's Board of Directors, including each director's term of office. The
Board of Directors, acting as the nominating committee, has recommended and
approved the nominees identified in the following table. It is intended that the
proxies solicited on behalf of the Board of Directors (other than proxies in
which the vote is withheld as to a nominee) will be voted at the annual meeting
"FOR" the election of the nominees identified below. If a nominee is unable to
3
<PAGE>
serve, the shares represented by all valid proxies will be voted for the
election of such substitute nominee as the Board of Directors may recommend. At
this time, the Board of Directors knows of no reason why a nominee might be
unable to serve if elected. Except as disclosed herein, there are no
arrangements or understandings between any nominee and any other person pursuant
to which the nominee was selected.
<TABLE>
<CAPTION>
Term of
Position(s) Held in Director Office Beneficial Percent
Name Age(1) Capitol Federal Financial Since(2) Expires Ownership(3) Class
- ------------------- ------- --------------------------- -------- ----------- --------------- -------
NOMINEES
<S> <C> <C> <C> <C> <C> <C>
B. B. Andersen 63 Director 1981 2003 52,306 *
John C. Dicus 66 Chairman, Chief Executive 1963 2003 54,545 *
Officer and Director
DIRECTORS REMAINING IN OFFICE
John B. Dicus 38 President, Chief Operating 1989 2001 52,345 *
Officer and Director
Frederick P. Reynolds 75 Director 1979 2001 50,000 *
Robert B. Maupin 74 Director 1973 2002 53,500 *
Carl W. Quarnstrom 70 Director 1985 2002 10,000 *
Marilyn S. Ward 60 Director 1977 2002 10,000 *
</TABLE>
- --------------------
* Represents less than 1 percent of the outstanding common stock of
Capitol Federal Financial.
(1) At September 30, 1999.
(2) Includes service as a director of Capitol Federal Savings.
(3) Includes shares held directly, held by certain members of the named
individuals' families, or held by trusts of which the named individuals
are trustees or substantial beneficiaries, with respect to which shares
the named individuals may be deemed to have sole or shared voting or
dispositive power.
The business experience of each director of Capitol Federal Financial
for at least the past five years is set forth below.
B.B. ANDERSEN. Mr. Andersen had a life long career in construction and
development activities. He is currently involved in various real estate
development projects in Colorado.
JOHN B. DICUS. Mr. Dicus is President and Chief Operating Officer of
Capitol Federal Savings and Capitol Federal Financial. He has served in such
capacities for Capitol Federal Savings since 1996 and for Capitol Federal
Financial since its inception in March 1999. Prior to that, he served as the
Executive Vice President of Corporate Services for Capitol Federal Savings for
four years. He has been with Capitol Federal Savings in various other positions
since 1985. Mr. John B. Dicus is the son of Mr. John C. Dicus.
JOHN C. DICUS. Mr. Dicus is Chairman of the Board of Directors and
Chief Executive Officer of Capitol Federal Savings and Capitol Federal
Financial. He has served in such capacities for Capitol Federal Savings since
1989 and with Capitol Federal Financial since its inception in March 1999. He
has served Capitol Federal Savings in various capacities since 1959. He also
served as President of Capitol Federal Savings from 1969 until 1996. Mr. Dicus
also serves as a director for Western Resources, Inc., an electric utility and
consumer services company located in Topeka, Kansas.
4
<PAGE>
ROBERT B. MAUPIN. Mr. Maupin is currently retired. Previously, he
worked for Capitol Federal Savings for over forty years. He retired in 1991 as
Capitol Federal Savings' Senior Executive Vice President and Chief Lending
Officer.
CARL W. QUARNSTROM. Mr. Quarnstrom is a partner in the law firm of
Shaw, Hergenreter, Quarnstrom & Kocher, L.L.P., located in Topeka, Kansas. The
firm serves as general counsel for Capitol Federal Savings.
FREDERICK P. REYNOLDS. Mr. Reynolds is currently the Chairman of the
Board of Sound Products, Inc., a music and sound system company located in
Kansas City. Over the last forty years, Mr. Reynolds has been an owner, operator
and investor in radio stations, on both a local Topeka and national level, and
in cable television in eastern Missouri.
MARILYN S. WARD. Since 1985, Ms. Ward has been Executive Director of
ERC/Resource & Referral, a family resource center located in Topeka, Kansas.
MEETINGS AND COMMITTEES OF THE BOARDS OF DIRECTORS
MEETINGS AND COMMITTEES OF CAPITOL FEDERAL FINANCIAL. Meetings of
Capitol Federal Financial's Board of Directors are generally held on a quarterly
basis. For the year ended September 30, 1999, the Board of Directors met three
times. During fiscal 1999, no incumbent director of Capitol Federal Financial
attended fewer than 75% of the aggregate of the total number of Board meetings
and the total number of meetings held by the committees of the Board of
Directors on which they served.
Capitol Federal Financial's Board of Directors has a standing Executive
and Audit Committees. The entire Board acts as Capitol Federal Financial's
Nominating Committee. Capitol Federal Financial currently does not pay any
salaries to its officers or employees; accordingly, all compensation matters are
addressed by Capitol Federal Savings.
The members of the boards of Capitol Federal Financial and Capitol
Federal Savings are identical and serve the same function for both companies.
The Executive Committee is comprised of John C. Dicus (Chairman) and
Directors John B. Dicus, Andersen and Maupin. The Executive Committee meets on
an as needed basis and exercises the power of the board of directors between
board meetings, to the extent permitted by applicable law. This committee is
responsible for formulating and implementing policy decisions, subject to review
by the entire Board of Directors. The Executive Committee did not meet during
1999.
The Audit Committee is comprised of Director Ward (Chairperson) and
Directors Andersen, Maupin, Quarnstrom and Reynolds. The Audit Committee
oversees the audit program for Capitol Federal Financial and meets periodically
with its accounting firm in order to review the annual audit. In 1999, this
committee did not meet at the Company level; however, Capitol Federal Savings'
audit committee, which serves the same function and has the identical makeup,
met four times during 1999.
The entire Board of Directors of Capitol Federal Financial acts as the
Nominating Committee for selecting nominees for election as directors.
Nominations of persons for election to the Board of Directors may be made only
by or at the direction of the Board of Directors or by any shareholder entitled
to vote for the election of directors who complies with the notice procedures.
The committee generally meets once a year to make nominations.
5
<PAGE>
MEETINGS AND COMMITTEES OF CAPITOL FEDERAL SAVINGS. Meetings of Capitol
Federal Savings' Board of Directors are generally held on a monthly basis. For
the year ended September 30, 1999, the Board of Directors met 12 times. During
fiscal 1999, no incumbent director of Capitol Federal Savings attended fewer
than 75% of the aggregate of the total number of Board meetings and the total
number of meetings held by the committees of the Board of Directors on which
they served.
Capitol Federal Savings' Board of Directors has standing Executive,
Compensation and Audit Committees. The entire Board acts as its Nominating
Committee.
Capitol Federal Savings' Executive Committee exercises the power of the
Board of Directors between board meetings, to the extent permitted by applicable
law. The Executive Committee did not meet during 1999.
Capitol Federal Savings' Audit Committee oversees the audit program for
Capitol Federal Savings and meets periodically with its accounting firm in order
to review the annual audit. The Audit Committee met four times during 1999.
The Compensation Committee is comprised of Directors Andersen
(Chairman), Maupin, Reynolds, Quarnstrom and Ward. The Compensation Committee is
responsible for reviewing and approving all issues pertaining to executive
compensation. The Compensation Committee met three times during 1999.
The entire Board of Directors of Capitol Federal Savings acts as the
Nominating Committee. The Nominating Committee reviews the terms of the
directors and makes nominations for directors to be voted on by Capitol Federal
Financial, as the sole stockholder of Capitol Federal Savings. The committee
generally meets once a year to make nominations.
DIRECTOR COMPENSATION
The members of the Board of Directors of Capitol Federal Financial and
Capitol Federal Savings are identical. During fiscal 1999, each director of
Capitol Federal Savings received a $1,000 monthly retainer, plus $1,000 for each
meeting attended. In addition, each non-employee director received $500 per
committee meeting attended.
Mr. Quarnstrom, a director of Capitol Federal Financial, is a partner
in the law firm of Shaw, Hergenreter, Quarnstrom & Kocher, L.L.P. The firm
receives a retainer fee to serve as general counsel for Capitol Federal Savings
regarding real estate and litigation issues. The legal fees received by the law
firm for professional services rendered to Capitol Federal Savings during the
year ending September 30, 1999 was approximately $81,143.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
paid by Capitol Federal Savings, to the Chairman and Chief Executive Officer of
Capitol Federal Financial and Capitol Federal Savings and the four other highest
compensated executive officers of Capitol Federal Savings during the fiscal year
ended September 30, 1999, the first year Capitol Federal Financial operated as a
public company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation(1) Compensation Awards
----------------------------------------- --------------------------
Other Restricted
Annual Stock All Other
Fiscal Compensation Award Options Compen-
Name and Principal Position Year Salary Bonus ($)(1) ($) (#) sation
- --------------------------------- ---------- ---------- --------- --------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
John C. Dicus, Chairman and Chief 1999 $624,000(2) $99,477 23,754(3) $ 99,715(4)
Executive Officer 1998 622,800(2) 95,355 109,620(3) --- --- 219,630
John B. Dicus, President and Chief 1999 314,000(2) 46,391 19,292(3) 95,500(4)
Operating Officer 1998 312,800(2) 40,096 19,292(3) --- --- 76,650
Stanley F. Mick, Executive Vice 1999 256,000 46,443 8,148(3) 60,700(4)
President and Chief Lending Officer 1998 256,000 45,149 8,148(3) --- --- 41,850
Neil F. M. McKay, Executive Vice 1999 230,000 32,592 5,086(3) 48,100(4)
President, Chief Financial Officer and 1998 203,500 31,410 5,086(3) --- --- 29,250
Treasurer
Larry K. Brubaker, Executive Vice 1999 186,500 35,462 --- --- --- 27,100(4)
President for Corporate Services 1998 186,500 38,938 --- --- --- 8,250
</TABLE>
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(1) Does not include perquisites, which did not exceed the lesser of
$50,000 or 10% of the named individuals' salary and bonus.
(2) Includes director fees of $24,000 and $22,800 for service on the board
of directors for fiscal years 1999 and 1998, respectively.
(3) Represents the amount reimbursed for all or part of the tax liability
resulting from the payment of premiums on life insurance policies
pursuant to Executive Bonus Agreements for 1999 and 1998, respectively.
(4) Amounts represent allocations under Capitol Federal Savings' profit
sharing plan, allocations under Capitol Federal Savings' ESOP, and
premiums on universal life insurance policies pursuant to Executive
Bonus Agreements for the year ended September 30, 1999. These amounts,
respectively, include $5,802, $21,298 and $72,615 for Mr. John C.
Dicus; $5,802, $21,298 and $68,400 for Mr. John B. Dicus; $5,802,
$21,298 and $33,600 for Mr. Mick; $5,802, $21,298 and $21,000 for Mr.
McKay; and $5,802, $21,928 and $0 for Mr. Brubaker.
EMPLOYEE'S PENSION PLAN
Capitol Federal Savings sponsored a defined benefit pension plan for
its employees which terminated on May 31, 1999. Following the approval of the
pension plan's termination by the IRS and the Pension Benefit Guaranty
Corporation, Capitol Federal Savings distributed the plan's assets to
participants in accordance with their accrued benefits and the requirements of
applicable law.
7
<PAGE>
Under the pension plan, employees were eligible to participate in the
pension plan following the completion of at least 1,000 hours of service during
a continuous 12-month period and attainment of age 21. A participant must have
been credited with 5 years of service before attaining a vested interest in his
or her retirement benefits, after which such participant was 100% vested. The
pension plan was funded solely through contributions made by Capitol Federal
Savings.
The benefit provided to a participant at normal retirement age, which
is generally the later of age 65 or the fifth anniversary of the year in which
the participant commenced participation in the pension plan, is based on the
average of the participant's annual compensation during the five plan years
(June 1st to the following May 31st) of a participant's service which yields the
highest average compensation. Compensation for this purpose equaled the
participant's base salary, including any contributions through a salary
reduction arrangement to a plan described under Section 125 or 401(k) of the
Internal Revenue Code, but exclusive of overtime, discretionary bonuses, excess
commissions, severance pay, or any special payments or other deferred
compensation arrangements.
The following table sets forth, as of May 31, 1999, the fiscal year end
for this plan, estimated annual pension benefits for individuals at age 65
payable in the form of a life annuity under the most advantageous plan
provisions for various levels of compensation and years of service. At May 31,
1999, the years of credited service of Messrs. John C. Dicus, John B. Dicus,
Stanley F. Mick, Neil F.M. McKay and Larry K. Brubaker were 40, 14, 38, 5 and 28
years, respectively.
YEARS OF CREDITED SERVICE
REMUNERATION 15 20 25 30 35
$50,000 $9,290 $12,387 $15,483 $18,580 $21,677
$75,000 $14,694 $19,592 $24,490 $29,388 $34,285
$100,000 $20,098 $26,797 $33,496 $40,195 $46,894
$125,000 $25,501 $34,002 $42,502 $51,003 $59,503
$150,000 $30,905 $41,207 $51,508 $61,810 $72,112
$175,000 $33,067 $44,089 $55,111 $66,133 $77,155
$200,000 $33,067 $44,089 $55,111 $66,133 $77,155
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Board of Directors of Capitol Federal Financial has furnished the
following report on executive compensation:
Capitol Federal Savings' executive compensation programs are
administered by the five non-employee directors of the Board of Directors of
Capitol Federal Savings, with assistance from the Human Resources Department.
Serving as a committee, those Board members review and approve all issues
pertaining to executive compensation. The objective of Capitol Federal Savings'
two compensation programs (base salary and annual incentive bonus) has been to
provide compensation which enables Capitol Federal Savings to attract, motivate
and retain talented and dedicated executives, promote a team orientation toward
the achievement of business objectives and goals and link the success of Capitol
Federal Savings executives with that of Capitol Federal Financial. For fiscal
2000, the committee has revamped its compensation program to better link
individual's compensation to specific performance criteria, including results of
operations and benefits to stockholders.
8
<PAGE>
BASE SALARY COMPENSATION
A base salary range is established for each executive position to
reflect the potential contribution of each position to the achievement of
Capitol Federal Savings' business objectives and to be highly competitive with
base salaries paid for comparable positions in the national market by thrift
institutions. The committee annually utilizes comparative executive compensation
information for stock thrift institutions and makes further comparisons with a
selected peer group of institutions with similarities in asset size and
operational conduct. The committee also is cognizant of the salaries paid by
other non-financial institution companies in Capitol Federal Savings' market
areas with whom it believes Capitol Federal Savings competes for executives.
Within the established base salary ranges, actual base salary is
determined by Capitol Federal Savings' financial performance in relation to
attainment of the financial goals set forth in the annual forecast of operations
and the three-year financial plan and a subjective assessment of each
executive's achievements of any individual objectives and managerial
effectiveness. Base salary is intended to be within the top quartile of Capitol
Federal Savings' peer group. The committee annually reviews the performance of
the Chairman of the Board and executive officers.
ANNUAL INCENTIVE BONUS
The primary form of short term incentive compensation is Capitol
Federal Savings' annual incentive bonus plan. All officers of Capitol Federal
Savings, including the executive officers, are eligible to participate in the
plan. A bonus pool is determined by applying a percentage, as approved by the
Board, to the net income before taxes for the fiscal year being considered. Each
eligible participant shares in the pool according to a formula which emphasizes
current base salary and length of service.
CHIEF EXECUTIVE OFFICER
John C. Dicus has been the Chief Executive Officer of Capitol Federal
Savings since January 1989. His base salary and his annual incentive bonus are
established annually based on the information discussed above. Specific
performance goals have not been used by the committee in determining Mr. Dicus'
base salary. Based on the review of his salary in relation to Capitol Federal
Savings' peer group, Mr. Dicus' salary for this fiscal year was not increased
from the prior year. Factors considered in determining Mr. Dicus' specific base
salary included his continuing leadership and contribution to corporate
direction, management of change, including the stock reorganization, in a highly
competitive banking environment, control of expenses, management of operations
and the overall profitability of Capitol Federal Savings. As discussed above,
Mr. Dicus' bonus was based primarily on his base salary and years of service to
Capitol Federal Savings.
The foregoing report is furnished by the Compensation Committee of the
Board of Directors.
B.B. ANDERSEN (CHAIRMAN)
ROBERT B. MAUPIN
FREDERICK P. REYNOLDS
CARL W. QUARNSTROM
MARILYN S. WARD
9
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SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The line graph below compares the cumulative total shareholder return
on Capitol Federal Financial's common stock to the cumulative total return of a
broad index of the Nasdaq Stock Market and a savings and loan industry index for
the period April 1, 1999 through September 30, 1999 (Capitol Federal Financial
became a public company on March 31, 1999).
[GRAPHIC: PLOT POINTS APPEAR IN TABLE BELOW]
<TABLE>
<CAPTION>
4/1/99 4/30/99 5/28/99 6/30/99 7/30/99 8/31/99 9/30/99
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Capitol Federal Financial.. $100.00 $98.71 $101.37 $108.52 $107.87 $106.29 $104.65
Selected Thrift Index...... 100.00 104.68 99.97 98.37 96.00 90.21 87.03
Nasdaq Market Index........ 100.00 103.21 100.16 108.72 106.79 110.45 110.61
</TABLE>
CERTAIN TRANSACTIONS
Capitol Federal Savings has followed a policy of granting loans to
officers and directors. Loans to directors and executive officers are made in
the ordinary course of business and on the same terms and conditions as those of
comparable transactions with the general public prevailing at the time, in
accordance with our underwriting guidelines, and do not involve more than the
normal risk of collectibility or present other unfavorable features.
All loans we make to our directors and executive officers are subject
to Office of Thrift Supervision regulations restricting loans and other
transactions with affiliated persons of Capitol Federal Savings. Loans to all
directors and executive officers and their associates totaled approximately $1.5
million at September 30, 1999, which was 0.15% of our equity at that date. All
loans to directors and executive officers were performing in accordance with
their terms at September 30, 1999.
10
<PAGE>
PROPOSAL II
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has renewed Capitol Federal Financial's
arrangement for Deloitte & Touche LLP to be its independent auditors for the
fiscal year ending September 30, 2000 subject to the ratification of the
appointment by Capitol Federal Financial's shareholders. A representative of
Deloitte & Touche LLP is expected to attend the meeting to respond to
appropriate questions and will have an opportunity to make a statement if he or
she so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS CAPITOL FEDERAL
FINANCIAL'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2000.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in Capitol Federal Financial's
proxy materials for next year's Annual Meeting of Shareholders, any shareholder
proposal to take action at such meeting must be received at Capitol Federal
Financial's executive office at 700 Kansas Avenue, Topeka, Kansas 66603 no later
than August 22, 2000.
To be considered for presentation at next year's annual meeting,
although not included in the proxy statement, any shareholder proposal must be
received at Capitol Federal Financial's executive office at least five days
prior to next year's annual meeting. All shareholder proposals for inclusion in
Capitol Federal Financial's proxy materials will be subject to the requirements
of the proxy rules adopted under the Securities Exchange Act of 1934, as
amended, and, as with any shareholder proposal (regardless of whether included
in Capitol Federal Financial's proxy materials), Capitol Federal Financial's
Charter and Bylaws.
OTHER MATTERS
The Board of Directors 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 holders of the proxies will act in accordance with their best
judgment.
11
<PAGE>
REVOCABLE PROXY
CAPITOL FEDERAL FINANCIAL
ANNUAL MEETING OF SHAREHOLDERS--JANUARY 20, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the members of the Board of Directors
of Capitol Federal Financial, and its survivor, with full power of substitution,
to act as attorneys and proxies for the undersigned to vote all shares of common
stock of Capitol Federal Financial which the undersigned is entitled to vote at
the Annual Meeting of Shareholders, to be held on January 20, 2000 at the Maner
Conference Center, 1701 SW Western, Topeka, Kansas at 10:00 a.m. central
standard time, and at any and all adjournments thereof, as indicated on the
reverse side hereof.
This proxy may be revoked at any time before it is voted by delivering
to the Secretary of Capitol Federal Financial, on or before the taking of the
vote at the annual meeting, a written notice of revocation bearing a later date
than the proxy or a later dated proxy relating to the same shares of Capitol
Federal Financial's common stock, or by attending the meeting and voting in
person. Attendance at the annual meeting will not in itself constitute the
revocation of a proxy. If this proxy is properly revoked as described above,
then the power of such attorneys and proxies shall be deemed terminated and of
no further force and effect.
The undersigned acknowledges receipt from Capitol Federal Financial,
prior to the execution of this Proxy, of Notice of the Annual Meeting of
Shareholders, a Proxy Statement dated December 20, 1999 and Capitol Federal
Financial's Annual Report to Shareholders for the fiscal year ended September
30, 1999.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE PROPOSALS STATED. IF ANY OTHER BUSINESS IS PRESENTED
AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR
BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE MEETING.
(See Reverse Side)
<PAGE>
A /X/ Please mark your votes
as in this example
using dark ink only.
FOR all nominees WITHHOLD OF
listed at right AUTHORITY to vote For a term of
(except as marked to for all nominees three years:
the contrary below) listed at right
I. The Election /_/ /_/ B.B. ANDERSEN
of Directors AND
JOHN C. DICUS
INSTRUCTIONS: TO WITHHOLD YOUR VOTE FOR AN INDIVIDUAL NOMINEE MARK THE BOX "FOR
ALL EXCEPT" WITH AN "X" AND WRITE THE NAME OF THE NOMINEE ON THE LINE PROVIDED
BELOW FOR WHOM YOU WISH TO WITHHOLD YOUR VOTE.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
II. The ratification of the /_/ /_/ /_/
appointment of Deloitte &
Touche LLP as Capitol Federal
Financial's independent
auditors for the fiscal year
ending September 30, 2000.
In their discretion, the proxies are authorized to vote on any other business
that may properly come before the meeting or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSALS.
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE
- ------------------------------ ------------------------------
SIGNATURE DATE
- ------------------------------ ------------------------------
SIGNATURE IF HELD JOINTLY DATE
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ABOVE ON THIS CARD. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE YOUR FULL
TITLE. IF SHARES ARE HELD JOINTLY, EACH HOLDER SHOULD SIGN.
