SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
X Definitive Additional Materials
Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
CAPITOL FEDERAL FINANCIAL
- --------------------------------------------------------------------------------
(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>
This is the definitive proxy material relating to the Company's upcoming
special meeting of shareholders revised to include the definitive copies of the
benefit plans being voted upon at the meeting.
<PAGE>
[CAPITOL FEDERAL FINANCIAL LETTERHEAD]
March 15, 2000
Dear Fellow Shareholder:
On behalf of the Board of Directors and management of Capitol Federal
Financial, we cordially invite you to attend the special meeting of the Capitol
Federal Financial shareholders. The meeting will be held at 10:00 a.m. local
time on Tuesday, April 18, 2000 at the Hill's Festival Hall, lower level, Topeka
Performing Arts Center located at 214 SE 8th Street, Topeka, Kansas.
Shareholders are being asked to consider and vote upon proposals to approve
our 2000 Stock Option and Incentive Plan and 2000 Recognition and Retention
Plan. The Board of Directors has carefully considered both of these proposals
and believes that approval of these plans will enhance our ability to recruit
and retain quality directors and management. Accordingly, the Board of Directors
unanimously recommends that you vote "FOR" both of the proposals.
We encourage you to attend the meeting in person. Whether or not you plan
to attend, however, 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 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 success of
Capitol Federal Financial and the enhancement of your investment. As Chairman of
the Board and Chief Executive Officer, 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 LETTERHEAD]
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 18, 2000
NOTICE IS HEREBY GIVEN that the Special Meeting of Shareholders of Capitol
Federal Financial will be held as follows:
TIME................................. 10:00 a.m. local time
Tuesday, April 18, 2000
PLACE................................ Hill's Festival Hall, lower level
Topeka Performing Arts Center
214 SE 8th Street
Topeka, Kansas
ITEMS OF BUSINESS.................... (1) To adopt the Capitol Federal Financial
2000 Stock Option and Incentive Plan.
(2) To adopt the Capitol Federal Financial
2000 Recognition and Retention Plan.
(3) To transact such other business as
may properly come before the meeting
and any adjournment thereof.
RECORD DATE.......................... Holders of Capitol Federal Financial
common stock of record at the close of
business on March 3, 2000, are entitled
to vote at the meeting or any adjournment
thereof. A complete list of shareholders
entitled to vote at the special meeting
will be available for your inspection
at our executive offices during the 20
days prior to the special meeting, as
well as at the special meeting.
PROXY VOTING......................... It is important that your shares be
represented and voted at the meeting. You
can vote your shares by completing and
returning the enclosed proxy card.
Registered shareholders, that is,
shareholders who hold their stock in
their own name, can also vote their
shares over the Internet or by telephone.
If Internet or telephone voting is
available to you, voting instructions are
printed on the proxy card sent to you.
REGARDLESS OF THE NUMBER OF SHARES YOU
OWN, YOUR VOTE IS VERY IMPORTANT. PLEASE
ACT TODAY.
BY ORDER OF THE BOARD OF DIRECTORS
JOHN C. DICUS
Chairman of the Board and Chief Executive Officer
Topeka, Kansas
March 15, 2000
<PAGE>
CAPITOL FEDERAL FINANCIAL
700 Kansas Avenue
Topeka, Kansas 66603
(785) 235-1341
--------------------------------------------
PROXY STATEMENT
--------------------------------------------
SPECIAL MEETING OF SHAREHOLDERS
April 18, 2000
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
INTRODUCTION......................................................................................................1
INFORMATION ABOUT THE SPECIAL MEETING.............................................................................2
What is the purpose of the special meeting?..............................................................2
Who is entitled to vote?.................................................................................2
What if my shares are held in "street name" by a broker?.................................................2
What if my shares are held in Capitol Federal Financial's employee stock ownership plan?.................2
How many shares must be present to hold the meeting?.....................................................2
What if a quorum is not present at the meeting?..........................................................3
How do I vote?...........................................................................................3
Can I vote by telephone or on the Internet if I am not a registered shareholder?.........................3
Can I change my vote after I submit my proxy?............................................................3
How does the board of directors recommend I vote on the proposals?.......................................3
What if I do not specify how my shares are to be voted?..................................................3
Will any other business be conducted at the meeting?.....................................................4
How many votes are required to approve the proposals?....................................................4
How will abstentions be treated?.........................................................................4
How will broker non-votes be treated?....................................................................4
STOCK OWNERSHIP...................................................................................................4
Stock Ownership of Significant Shareholders, Directors and Executive Officers............................4
PROPOSAL I CAPITOL FEDERAL FINANCIAL 2000 STOCK OPTION AND INCENTIVE PLAN.........................................6
Purpose ................................................................................................6
Administration of the Stock Option Plan..................................................................6
Number of Shares That May Be Awarded.....................................................................6
Reload Feature...........................................................................................7
Eligibility to Receive Awards............................................................................7
Exercise Price of Awards.................................................................................7
Exercisability of Awards and Other Terms and Conditions..................................................7
Transferability of Awards................................................................................8
Effect of Merger on Option or Right......................................................................8
Amendment and Termination................................................................................8
Federal Income Tax Consequences..........................................................................9
Awards Under the Stock Option Plan......................................................................10
Vote Required for Approval..............................................................................11
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PROPOSAL II CAPITOL FEDERAL FINANCIAL 2000 RECOGNITION AND RETENTION PLAN........................................11
Purpose ...............................................................................................11
Administration of the Recognition and Retention Plan....................................................11
Number of Shares That May Be Awarded....................................................................12
Transferability of Awards...............................................................................12
Terms and Conditions of Awards under the Recognition and Retention Plan.................................12
Amendment of the Recognition and Retention Plan.........................................................13
Federal Income Tax Consequences.........................................................................13
Awards Under the Recognition and Retention Plan.........................................................14
Vote Required for Approval..............................................................................14
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS.................................................................15
Director Compensation...................................................................................15
Executive Compensation..................................................................................15
Employee's Pension Plan.................................................................................16
OTHER MATTERS....................................................................................................16
ADDITIONAL INFORMATION...........................................................................................16
Proxy Solicitation Costs................................................................................16
Shareholder Proposals for 2001 Annual Meeting...........................................................17
</TABLE>
ii
<PAGE>
CAPITOL FEDERAL FINANCIAL
700 Kansas Avenue
Topeka, Kansas 66603
(785) 235-1341
--------------------------------------------
PROXY STATEMENT
--------------------------------------------
INTRODUCTION
The Capitol Federal Financial board of directors is using this proxy
statement to solicit proxies from the holders of common stock of Capitol Federal
Financial for use at the company's upcoming special meeting of shareholders. The
special meeting of shareholders will be held on Tuesday, April 18, 2000 at 10:00
a.m. local time, at the Hill's Festival Hall, lower level, Topeka Performing
Arts Center, 214 SE 8th Street, Topeka, Kansas. At the meeting, shareholders
will be asked to vote on two proposals. The proposals are set forth in the
accompanying Notice of Special Meeting of Shareholders and are described in more
detail below. Shareholders also will consider any other matters that may
properly come before the meeting, although the board of directors knows of no
other business to be presented. Capitol Federal Financial is referred to in this
proxy statement from time to time as "Capitol Federal Financial" or the
"Company."
By submitting your proxy, either by executing and returning the enclosed
proxy card or by voting electronically via the Internet or by telephone, you
authorize the Company's board of directors to represent you and vote your shares
at the meeting in accordance with your instructions. The board of directors also
may vote your shares to adjourn the meeting from time to time and will be
authorized to vote your shares at any adjournments or postponements of the
meeting.
This proxy statement and the accompanying materials are being mailed to
shareholders on or about March 14, 2000.
YOUR PROXY VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING, PLEASE SUBMIT YOUR PROXY PROMPTLY EITHER IN THE ENCLOSED ENVELOPE, VIA
THE INTERNET OR BY TELEPHONE.
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<PAGE>
INFORMATION ABOUT THE SPECIAL MEETING
WHAT IS THE PURPOSE OF THE SPECIAL MEETING?
At the special meeting, shareholders will be asked to vote on the
following proposals:
Proposal 1. Adoption of the Capitol Federal Financial 2000 Stock Option and
Incentive Plan.
Proposal 2. Adoption of the Capitol Federal Financial 2000 Recognition and
Retention Plan.
The shareholders also will transact any other business that may properly come
before the meeting. Members of our management team will be present at the
meeting to respond to appropriate questions from shareholders.
WHO IS ENTITLED TO VOTE?
The record date for the meeting is March 3, 2000. Only shareholders of
record at the close of business on that date are entitled to notice of and to
vote at the meeting. The only class of stock entitled to be voted at the meeting
is the Capitol Federal Financial common stock. Each outstanding share of common
stock is entitled to one vote for all matters before the meeting. At the close
of business on the record date there were 87,449,087 shares of common stock
outstanding.
WHAT IF MY SHARES ARE HELD IN "STREET NAME" BY A BROKER?
If you are the beneficial owner of shares held in "street name" by a
broker, your broker, as the record holder of the shares, is required to vote
those shares in accordance with your instructions. If you do not give
instructions to your broker, your broker will nevertheless be entitled to vote
the shares with respect to "discretionary" items, but will not be permitted to
vote your shares with respect to "non-discretionary" items. In the case of
non-discretionary items, the shares will be treated as "broker non-votes." Under
The Nasdaq Stock Market rules, both proposals set forth in this proxy statement
are considered "non-discretionary" items and, therefore, your broker may not
vote your shares on either proposal without instructions from you. Shares
treated as broker non-votes will be included for purposes of calculating the
presence of a quorum, which is necessary in order for us to conduct the meeting,
but are not otherwise counted as shares entitled to vote on a proposal.
WHAT IF MY SHARES ARE HELD IN CAPITOL FEDERAL FINANCIAL'S EMPLOYEE STOCK
OWNERSHIP PLAN?
We maintain an employee stock ownership plan which owns approximately 4.0
percent of Capitol Federal Financial common stock. Employees of Capitol Federal
Financial and our subsidiary, Capitol Federal Savings Bank participate in the
employee stock ownership plan. Each participant instructs the trustee of the
plan how to vote the shares of common stock allocated to his or her account
under the employee stock ownership plan. If a participant properly executes the
voting instruction card distributed by the trustee, the trustee will vote the
participant's shares in accordance with the instructions. Where properly
executed voting instruction cards are returned to the trustee with no specific
instruction as how to vote at the special meeting, the trustee will vote the
shares "FOR" each of the proposals set forth in this proxy statement. In the
event the 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
employee stock ownership plan account, the trustee will vote such shares "FOR"
each of the proposals set forth in this proxy statement. The trustee will vote
the shares of Capitol Federal Financial common stock held in the employee stock
ownership plan but not allocated to any participant's account in the same
proportion as directed by the participants who directed the trustee as to the
manner of voting their allocated shares in the employee stock ownership plan
with respect to each such proposal.
HOW MANY SHARES MUST BE PRESENT TO HOLD THE MEETING?
A quorum must be present at the meeting for any business to be conducted.
The presence at the meeting, in person or by proxy, of the holders of a majority
of the shares of common stock outstanding on the record date will constitute a
quorum. Proxies received but marked as abstentions or broker non-votes will be
included in the calculation of the number of shares considered to be present at
the meeting.
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WHAT IF A QUORUM IS NOT PRESENT AT THE MEETING?
If a quorum is not present at the scheduled time of the meeting, the
shareholders who are represented may adjourn the meeting until a quorum is
present. The time and place of the adjourned meeting will be announced at the
time the adjournment is taken, and no other notice will be given. An adjournment
will have no effect on the business that may be conducted at the meeting.
HOW DO I VOTE?
1. YOU MAY VOTE BY MAIL. If you properly complete and sign the
accompanying proxy card and return it in the enclosed envelope, it will be voted
in accordance with your instructions. The enclosed envelope requires no
additional postage if mailed in the United States.
2. YOU MAY VOTE BY TELEPHONE. If you are a registered shareholder, that
is, if you hold your stock in your own name, you may vote by telephone by
following the instructions included on the proxy card. If you vote by telephone,
you do not have to mail in your proxy card.
3. YOU MAY VOTE ON THE INTERNET. If you are a registered shareholder,
that is, if you hold your stock in your own name, you may vote on the Internet
by following the instructions included on the proxy card. If you vote on the
Internet, you do not have to mail in your proxy card.
4. YOU MAY VOTE IN PERSON AT THE MEETING. If you plan to attend the
special meeting and wish to vote in person, we will give you a ballot at the
special meeting. However, if your shares are held in the name of your broker,
bank or other nominee, you will need to obtain a proxy form from the institution
that holds your shares indicating that you were the beneficial owner of Capitol
Federal Financial common stock on March 3, 2000, the record date for voting at
the special meeting.
CAN I VOTE BY TELEPHONE OR ON THE INTERNET IF I AM NOT A REGISTERED SHAREHOLDER?
If your shares are held in "street name" by a broker or other nominee,
you should check the voting form used by that firm to determine whether you will
be able to vote by telephone or on the Internet.
CAN I CHANGE MY VOTE AFTER I SUBMIT MY PROXY?
Yes, you may revoke your proxy and change your vote at any time before
the polls close at the meeting by:
o signing another proxy with a later date;
o voting by telephone or on the Internet -- your latest telephone or
Internet vote will be counted;
o giving written notice of the revocation of your proxy to the Secretary
of Capitol Federal Financial prior to the special meeting; or
o voting in person at the special meeting.
HOW DOES THE BOARD OF DIRECTORS RECOMMEND I VOTE ON THE PROPOSALS?
Your board of directors recommends that you vote:
o FOR adoption of the Capitol Federal Financial 2000 Stock Option and
Incentive Plan; and
o FOR adoption of the Capitol Federal Financial 2000 Recognition and
Retention Plan.
WHAT IF I DO NOT SPECIFY HOW MY SHARES ARE TO BE VOTED?
If you submit an executed proxy but do not indicate any voting
instructions, your shares will be voted:
o FOR adoption of the Capitol Federal Financial 2000 Stock Option and
Incentive Plan; and
o FOR adoption of the Capitol Federal Financial 2000 Recognition and
Retention Plan.
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<PAGE>
WILL ANY OTHER BUSINESS BE CONDUCTED AT THE MEETING?
The board of directors knows of no other business that will be presented at
the meeting. If any other proposal properly comes before the shareholders for a
vote at the meeting, however, the proxy holders will vote your shares in
accordance with their best judgment.
HOW MANY VOTES ARE REQUIRED TO APPROVE THE PROPOSALS?
Approval of the Capitol Federal Financial 2000 Stock Option Plan and the
Capitol Federal Financial 2000 Recognition and Retention Plan requires the
affirmative vote of the majority of shares cast, in person or by proxy, at the
special meeting by shareholders of Capitol Federal Financial common stock.
Capitol Federal Savings Bank MHC, which owns 57.03% of Capitol Federal
Financial, intends to vote its shares in favor of the proposals.
HOW WILL ABSTENTIONS BE TREATED?
If you abstain from voting on one or more proposals, your shares will still
be included for purposes of determining whether a quorum is present. In
addition, if you abstain from voting on a proposal, your shares will be included
in the number of shares voting on the proposal and, consequently, your
abstention will have the same practical effect as a vote against the proposal.
HOW WILL BROKER NON-VOTES BE TREATED?
Shares treated as broker non-votes on one or more proposals will be
included for purposes of calculating the presence of a quorum. Otherwise, shares
represented by broker non-votes will be treated as shares not entitled to vote
on a proposal. Consequently, broker non-votes will not be counted in determining
the number of shares necessary for approval of the plans and will, therefore,
reduce the absolute number, but not the percentage, of the affirmative votes
required for approval of these proposals.
STOCK OWNERSHIP
STOCK OWNERSHIP OF SIGNIFICANT SHAREHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS
The following table presents information regarding the beneficial ownership
of Capitol Federal Financial common stock as of March 3, 2000, by:
o those persons or entities (or group of affiliated persons or entities)
known by management to beneficially own more than five percent of the
outstanding common stock of Capitol Federal Financial;
o each director of Capitol Federal Financial;
o each officer of Capitol Federal Financial named in the "Summary
Compensation Table" appearing below; and
o all of the executive officers and directors of Capitol Federal
Financial as a group.
The persons named in the following table have sole voting power for all
shares of common stock shown as beneficially owned by them, subject to community
property laws where applicable and except as indicated in the footnotes to this
table. The address of each of the beneficial owners, except where otherwise
indicated, is the same address as Capitol Federal Financial. An asterisk (*) in
the tables indicates that an individual beneficially owns less than one percent
of the outstanding common stock of Capitol Federal Financial. Beneficial
ownership is determined in accordance with the rules of the SEC. As of March 3,
2000, there were 87,449,087 shares of Capitol Federal Financial common stock
outstanding.
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<TABLE>
<CAPTION>
Percent of
Beneficial Common Stock
Name of Beneficial Owner Ownership(1) Outstanding
- --------------------------------------------------------------------------- ----------------- ------------------
<S> <C> <C>
Significant Shareholder
Capitol Federal Savings Bank MHC 52,192,817 59.7%
700 Kansas Avenue
Topeka, Kansas 66603(1)
Directors and Named Executive Officers
B. B. Andersen, Director 52,306(2) *
John C. Dicus, Chairman, Chief Executive Officer and Director 54,545(2) *
John B. Dicus, President, Chief Operating Officer and Director 52,345(2) *
Frederick P. Reynolds, Director 50,000(2) *
Robert B. Maupin, Director 53,500(2) *
Carl W. Quarnstrom, Director 10,000(2) *
Marilyn S. Ward, Director 10,000(2) *
Stanley F. Mick, Executive Vice President and Chief Lending Officer 12,045 *
Neil F.M. McKay, Executive Vice President, Chief Financial Officer and 7,045 *
Treasurer
Larry K. Brubaker, Executive Vice President for Corporate Services 22,873 *
Directors and executive officers of Capitol Federal Financial 379,023 *
as a group (16 persons)(2)
- -------------------
<FN>
(1) As reported by Capitol Federal Savings Bank MHC in a Schedule 13D dated
March 31, 1999, which reported sole voting and dispositive power with
respect to 52,192,817 shares.
(2) Includes shares held directly, as well as shares held jointly with family
members, shares held in retirement accounts, held in a fiduciary capacity,
held by certain of the individual's or group members' families, or held by
trusts of which the individual or group member is a trustee or substantial
beneficiary, with respect to which shares the individual or group member
may be deemed to have sole or shared voting and/or investment powers.
</FN>
</TABLE>
5
<PAGE>
PROPOSAL I
CAPITOL FEDERAL FINANCIAL 2000 STOCK OPTION AND INCENTIVE PLAN
PURPOSE
The purpose of the 2000 stock option plan is to promote the long-term
success of Capitol Federal Financial and increase shareholder value by:
o attracting and retaining key employees and directors;
o encouraging directors and key employees to focus on long-range
objectives; and
o further linking the interests of directors, officers and employees
directly to the interests of the shareholders.
In furtherance of these objectives, our board of directors has adopted the stock
option plan, subject to approval by the shareholders at the special meeting. A
summary of the stock option plan is set forth below. This summary is, however,
qualified by and subject to the more complete information set forth in the stock
option plan, a copy of which is attached to this document as Appendix A.
ADMINISTRATION OF THE STOCK OPTION PLAN
The stock option plan will be administered by a committee of two or more
members, each of whom must be a "non-employee director" and an "outside
director," as those terms are defined in the stock option plan. The stock
benefit plan committee will:
o select persons to receive options or stock appreciation rights from
among the eligible participants;
o determine the types of awards and the number of shares to be awarded
to participants;
o set the terms, conditions and provisions of the options or stock
appreciation rights consistent with the terms of the stock option
plan; and
o establish rules for the administration of the stock option plan.
The committee has the power to interpret the stock option plan and to make all
other determinations necessary or advisable for its administration.
In granting awards under the stock option plan, the committee will
consider, among other factors, the position and years of service of the
individual, the value of the individual's services to Capitol Federal Financial
and its subsidiaries and the added responsibilities of these individuals as
employees, directors and officers of a public company.
NUMBER OF SHARES THAT MAY BE AWARDED
Under the stock option plan, the committee may grant awards for an
aggregate of 3,780,718 shares of Capitol Federal Financial common stock. This
amount represents 10.0 percent of the shares sold in our initial public offering
in March 1999 and 4.3 percent of our issued and outstanding shares of common
stock as of March 3, 2000. These awards may be in the form of (i) options to
purchase shares of common stock for cash and/or (ii) stock appreciation rights
granting the right to receive the excess of the market value of the shares of
common stock represented by the stock appreciation rights on the date exercised
over the exercise price. Stock options and stock appreciation rights are
sometimes collectively referred to in this proxy statement as "awards." The
stock option plan also provides that no person may be granted options for more
than 1,000,000 shares during any fiscal year.
The 3,780,718 shares of Capitol Federal Financial common stock available
under the stock option plan are subject to adjustment in the event of certain
corporate reorganizations. As described in greater detail below, the total
number of shares reserved for issuance under the stock option plan may increase
over time as a result of the "reload"
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<PAGE>
feature contained in the stock option plan. Awards that expire or are terminated
unexercised will be available again for issuance under the stock option plan.
The stock option plan provides for the use of authorized but unissued
shares or treasury shares. Treasury shares are previously issued and outstanding
shares of Capitol Federal Financial common stock which are no longer outstanding
as a result of having been repurchased or otherwise reacquired by the company.
We intend to fund the exercise of stock options with treasury shares to the
extent available. To the extent we use authorized but unissued shares, rather
than treasury shares, to fund exercise of stock options under the plan, the
exercise of stock options will have the effect of diluting the holdings of
persons who own our common stock. Assuming all options under the stock option
plan are awarded and exercised through the use of authorized but unissued common
stock, current shareholders would be diluted by approximately 2.5 percent. Some
additional dilution may occur as a result of the stock option plan's "reload"
feature, however, we would not expect such additional dilution to be material.
RELOAD FEATURE
The number of shares available for awards under the stock option plan may
be increased, from time to time and without shareholder approval, as a result of
the plan's "reload" provision. Under the "reload" provision additional shares
may be added to the remaining shares available under the plan as follows:
(i) the cash proceeds received by us from the exercise of stock
options granted under the plan may be used to repurchase
shares of Capitol Federal Financial common stock with an
aggregate price no greater than such cash proceeds; and
(ii) any shares of Capitol Federal Financial common stock
surrendered to us in payment of the exercise price of stock
options granted under the plan will be made available for
future awards.
ELIGIBILITY TO RECEIVE AWARDS
The committee may grant options to directors, advisory directors, officers
and employees of Capitol Federal Financial and its subsidiaries. The committee
will select persons to receive options among the eligible participants and
determine the number of shares underlying the options to be granted. There are
currently 810 individuals who are eligible to receive awards under the stock
option plan.
EXERCISE PRICE OF AWARDS
Under the terms of the stock option plan, the committee may grant stock
appreciation rights or options to purchase shares of Capitol Federal Financial
common stock at a price which may not be less than the fair market value of the
common stock, as determined by the mean between the closing bid and asked
quotations on The Nasdaq Stock Market on the date the option is granted. The
mean between the closing bid and asked quotations on The Nasdaq Stock Market on
March 3, 2000 was $9.39.
EXERCISABILITY OF AWARDS AND OTHER TERMS AND CONDITIONS
STOCK OPTIONS. Generally, options under the stock option plan may not be
exercised later than 15 years after the grant date. Subject to the limitations
imposed by the provisions of the Internal Revenue Code, certain of the options
granted under the stock option plan may be designated "incentive stock options."
Incentive stock options may not be exercised later than ten years after the
grant date. Options which are not designated and do not otherwise qualify as
incentive stock options in this document are referred to as "non-qualified stock
options."
The committee will determine the time or times at which a stock option may
be exercised in whole or in part and the method or methods by which, and the
form or forms in which, payment of the exercise price with respect to the stock
option may be made. Unless otherwise determined by the committee and set forth
in the written award agreement evidencing the grant of the stock option, upon
termination of service of the participant for any reason other than for cause,
all stock options then currently exercisable by the participant shall remain
exercisable for the lesser of (i) three years following such termination of
service or (ii) until the expiration of the stock option by its terms. Upon
termination of service for cause, all stock options not previously exercised
shall immediately be forfeited.
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STOCK APPRECIATION RIGHTS. The committee may grant stock appreciation
rights at any time, whether or not the participant then holds stock options. A
stock appreciation right gives the recipient of the award the right to receive
the excess of the market value of the shares represented by the stock
appreciation rights on the date exercised over the exercise price. Stock
appreciation rights generally will be subject to the same terms and conditions
and exercisable to the same extent as stock options, as described above. Upon
the exercise of a stock appreciation right, the holder will receive the amount
due in cash or shares, or a combination of both, as determined by the committee.
Stock appreciation rights may be related to stock options ("tandem stock
appreciation rights"), in which case the exercise of one will reduce to that
extent the number of shares represented by the other.
Stock appreciation rights will require an expense accrual by Capitol
Federal Financial each year for the appreciation on the stock appreciation
rights which it anticipates will be exercised. The amount of the accrual is
dependent upon whether and the extent to which the stock appreciation rights are
granted and the amount, if any, by which the market value of the stock
appreciation rights exceeds the exercise price.
ACCELERATION OF VESTING REQUIREMENTS. The committee has the right to
determine the terms and conditions upon which an award shall be granted.
Accordingly, the committee may provide in the applicable award agreement, among
other provisions not inconsistent with the stock option plan, that upon the
occurrence of certain events, such as involuntary termination of an employee, a
holder of any unexpired option under the stock option plan will have the right
to exercise the option in whole or in part without regard to the date the option
would be first exercisable. In addition, the stock option plan provides that
upon the occurrence of a change in control of Capitol Federal Financial a holder
of any unexpired option under the stock option plan will have the right to
exercise the option in whole or in part without regard to the date the option
would be first exercisable.
TRANSFERABILITY OF AWARDS
An incentive stock option awarded under the stock option plan may be
transferred only upon the death of the holder to whom it has been granted, by
will or the laws of inheritance. An award other than an incentive stock option
may be transferred during the lifetime of the holder to whom it was awarded
pursuant to a qualified domestic relations order or by gift to any member of the
holder's immediate family or to a trust for the benefit of any member of the
holder's immediate family.
EFFECT OF MERGER ON OPTION OR RIGHT
Upon a merger or other business combination of Capitol Federal Financial in
which it is not the surviving entity, the stock option plan provides that each
holder of an unexpired award will have the right, after consummation of such
transaction and during the remaining term of the award, to receive upon exercise
of the award an amount equal to the excess of the fair market value on the date
of exercise of the securities or other consideration receivable in the merger in
respect of a share of common stock over the exercise price of the award,
multiplied by the number of shares of common stock with respect to which the
award is exercised. This amount may be payable fully in cash, fully in one or
more of the kind or kinds of property payable in the merger, consolidation or
combination, or partly in cash and partly in one or more of the kind or kinds of
property, all in the discretion of the committee.
AMENDMENT AND TERMINATION
The stock option plan shall continue in effect for a term of 15 years,
after which no further awards may be granted under the stock option plan. The
board of directors may at any time amend, suspend or terminate the stock option
plan or any portion thereof, except to the extent shareholder approval is
necessary or required for purposes of any applicable federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which our common stock may then be listed or quoted. Shareholder approval will
generally be required with respect to an amendment to the stock option plan that
will (i) increase the aggregate number of securities which may be issued under
the plan, except as specifically set forth under the stock option plan, (ii)
materially increase the benefits accruing to participants under the stock option
plan, (iii) materially change the requirements as to eligibility for
participation in the stock option plan, or (iv) change the class of persons
eligible to participate in the stock option plan. No amendment, suspension or
termination of the stock option plan, however, will impair the rights of any
participant, without his or her consent, in any award made under the stock
option plan.
8
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
Under current federal tax law, the non-qualified stock options granted
under the stock option plan will not result in any taxable income to the
optionee at the time of grant or any tax deduction to Capitol Federal Financial.
Upon the exercise of a non-qualified stock option, the excess of the market
value of the shares acquired over their cost is taxable to the optionee as
compensation income and is generally deductible by Capitol Federal Financial.
The optionee's tax basis for the shares is the market value of the shares at the
time of exercise.
Neither the grant nor the exercise of an incentive stock option under the
stock option plan will result in any federal tax consequences to either the
optionee or Capitol Federal Financial. Except as described below, at the time
the optionee sells shares acquired pursuant to the exercise of an incentive
stock option, the excess of the sale price over the exercise price will qualify
as a long-term capital gain. If the optionee disposes of the shares within two
years of the date of grant or within one year of the date of exercise, an amount
equal to the lesser of (i) the difference between the fair market value of the
shares on the date of exercise and the exercise price, or (ii) the difference
between the exercise price and the sale price will be taxed as ordinary income
and Capitol Federal Financial will be entitled to a deduction in the same
amount. The excess, if any, of the sale price over the sum of the exercise price
and the amount taxed as ordinary income will qualify as long-term capital gain
if the applicable holding period is satisfied. If the optionee exercises an
incentive stock option more than three months after his or her termination of
employment, he or she generally is deemed to have exercised a non-qualified
stock option. The time frame in which to exercise an incentive stock option is
extended in the event of the death or disability of the optionee.
The exercise of a stock appreciation right will result in the recognition
of ordinary income by the recipient on the date of exercise in an amount of cash
and/or the fair market value on that date of the shares acquired pursuant to the
exercise. Capitol Federal Financial will be entitled to a corresponding
deduction.
9
<PAGE>
AWARDS UNDER THE STOCK OPTION PLAN
The following table presents information with respect to the options to
purchase Capitol Federal Financial common stock granted under the stock option
plan. The options are granted to our directors, officers and employees as
incentives. Accordingly, we will not receive any cash consideration for the
granting of the options. Payment in full of the option exercise price, however,
must be made upon exercise of any option. The option awards are subject to
approval of the stock option plan by our shareholders. On March 8, 2000, the
latest practicable date available prior to mailing this proxy statement, the
mean between the closing bid and asked quotations on The Nasdaq Stock Market was
$9.42 per share.
<TABLE>
<CAPTION>
Capitol Federal Financial 2000 Stock Option and Incentive Plan
- --------------------------------------------------------------------------------------------------------------------
Dollar Number
Name and Position Value(1) of Shares
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
JOHN C. DICUS
Chairman of the Board and Chief Executive Officer............................. $ --- 500,000
JOHN B. DICUS
Director, President and Chief Operating Officer............................... --- 525,000
STANLEY F. MICK
Executive Vice President and Chief Lending Officer............................. --- 150,000
NEIL F. M. MCKAY
Executive Vice President, Chief Financial Officer and Treasurer................ --- 150,000
LARRY K. BRUBAKER
Executive Vice President for Corporate Services................................ --- 150,000
EXECUTIVE GROUP (11 persons).................................................... --- 1,925,000
NON-EXECUTIVE DIRECTOR GROUP (5 persons)........................................ --- 500,000
NON-EXECUTIVE OFFICER EMPLOYEE GROUP (97 persons)............................... --- 675,500
- ---------------------------
<FN>
(1) Any value realized will be the difference between the exercise price and
the market value upon exercise. Since the exercise price for the options
will be set as of the date of shareholder approval, there is no current
value.
</FN>
</TABLE>
All options reflected in the table above have been granted, subject to
shareholder approval of the stock option plan, as follows:
(i) the exercise price of the stock options will be equal to the mean
between the closing bid and asked quotations on The Nasdaq Stock Market of the
Capitol Federal Financial common stock on the date of grant, which will be the
date of this special meeting if our shareholders approve the stock option plan.
(ii) All executive officers granted awards will receive incentive stock
options to the maximum extent permitted by law, with the remainder of these
options being non-qualified stock options. The non-executive director group will
receive non-qualified stock options and the non-executive officer employee group
will receive incentive stock options. The incentive stock options have a term of
ten years and the non-qualified stock options have a term of 15 years.
(iii) the stock options will vest in five equal installments with the first
installment vesting on the date of shareholder approval of the stock option plan
and the additional installments vesting ratably over the next four years on the
anniversary of the date of shareholder approval of the stock option plan.
(iv) the optionees generally may exercise their vested stock options, in
whole or in part, at any time prior to, or within three months of, terminating
their service with Capitol Federal Financial. If the optionee terminates service
as a result of a disability, the exercise period is 12 months after termination
of service. The exercise periods in the preceding sentences are extended for a
12-month period in the case of death of the optionee during these periods. If an
optionee's service is terminated for cause, all of his or her rights under any
unexercised options expire immediately upon
10
<PAGE>
his or her notice of the termination. Under no circumstances may an option
holder exercise an option after the expiration of the option period.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the shares present at the meeting in
person or by proxy and entitled to vote is required to approve the stock option
plan. Capitol Federal Savings Bank MHC, which owns 57.03% of Capitol Federal
Financial, intends to vote for approval of the stock option plan.
Your Board of Directors recommends that you vote "FOR" this proposal.
PROPOSAL II
CAPITOL FEDERAL FINANCIAL 2000 RECOGNITION AND RETENTION PLAN
Purpose
The purpose of the recognition and retention plan is to promote the
long-term success of Capitol Federal Financial and increase shareholder value.
The recognition and retention plan is a stock-based compensation plan designed
to:
o provide directors, advisory directors, officers and employees
with a proprietary interest in Capitol Federal Financial in a
manner designed to encourage such individuals to remain with the
company;
o reward directors, advisory directors, officers and employees for
service; and
o further link the interests of directors, officers and employees
directly to the interests of the shareholders.
In furtherance of these objectives, our board of directors has adopted the
recognition and retention plan, subject to approval by the shareholders at the
special meeting. A summary of the recognition and retention plan is set forth
below. This summary is, however, qualified by and subject to the more complete
information set forth in the recognition and retention plan, a copy of which is
attached to this document as Appendix B.
ADMINISTRATION OF THE RECOGNITION AND RETENTION PLAN
The recognition and retention plan will be administered by the stock
benefit plan committee of Capitol Federal Financial. The stock benefit plan
committee will:
o select persons to receive stock awards from among the eligible
participants;
o determine the number of shares to be awarded to participants;
o set the terms, conditions and provisions of the awards consistent
with the terms of the recognition and retention plan; and
o establish rules for the administration of the recognition and
retention plan.
The stock benefit plan committee has the power to interpret the recognition and
retention plan and to make all other determinations necessary or advisable for
its administration.
In determining to whom and in what amount to grant awards under the
recognition and retention plan, the stock benefit plan committee consider the
position, responsibilities and years of service of eligible individuals, the
value of their services to Capitol Federal Financial and its subsidiaries and
other factors it deems relevant.
11
<PAGE>
NUMBER OF SHARES THAT MAY BE AWARDED
Under the recognition and retention plan, the stock benefit plan committee
may grant, from time to time, awards for an aggregate of 1,512,287 shares of
Capitol Federal Financial common stock, subject to adjustment in the event of
certain corporate reorganizations. This amount represents 4.0 percent of the
shares sold in our initial public offering in March 1999 and 1.7 percent of our
issued and outstanding shares of common stock as of March 3, 2000. Recognition
and retention plan awards which are forfeited by a recipient will again be
available for issuance under the plan.
The recognition and retention plan provides for the use of authorized but
unissued shares or treasury shares. We intend to fund the issuance of stock
under the recognition and retention plan with treasury shares to the extent
available. To the extent that treasury shares are not used to fund the issuance
of stock under the recognition and retention plan, authorized but unissued
shares of common stock will be issued to fund such awards. To the extent we use
authorized but unissued shares of Capitol Federal Financial common stock, the
interests of current shareholders will be diluted. Assuming all recognition and
retention plan shares are awarded through the use of authorized but unissued
shares of common stock, current shareholders would be diluted by approximately
1.01 percent.
ELIGIBILITY TO RECEIVE AWARDS
The stock benefit plan committee may grant awards of restricted stock to
directors, advisory directors and officers of Capitol Federal Financial and its
subsidiaries. The stock benefit plan committee will select persons to receive
stock awards among the eligible participants and determine the number of shares
to be granted. There are currently 29 individuals who are eligible to receive
stock awards under the recognition and retention plan.
TRANSFERABILITY OF AWARDS
Awards under the recognition and retention plan generally may not be sold,
assigned, transferred, pledged or otherwise encumbered by the holder during the
restricted period other than by will, the laws of descent and distribution or
pursuant to a domestic relations order.
TERMS AND CONDITIONS OF AWARDS UNDER THE RECOGNITION AND RETENTION PLAN
The stock benefit plan committee is authorized to grant awards of common
stock to plan participants with the following terms and conditions and with
additional terms and conditions not inconsistent with the provisions of the
recognition and retention plan:
(i) the stock benefit plan committee will establish for each
participant a restricted period during which, or at the
expiration of which, the shares of common stock awarded as
restricted stock shall no longer be subject to restriction.
(ii) the recipient of such shares, as owner, will have all the rights
of a shareholder, including the power to vote and the right to
receive dividends with respect to the restricted stock. Shares of
restricted stock generally may not be sold, assigned,
transferred, pledged or otherwise encumbered by the participant
during the restricted period.
(iii) the stock benefit plan committee has the right to determine any
other terms and conditions, not inconsistent with the recognition
and retention plan, upon which a restricted stock award shall be
granted. Accordingly, the stock benefit plan committee may
provide in the applicable award agreement that upon the
occurrence of certain events, such as the involuntary termination
of an employee, any restrictions remaining with respect to the
shares of stock granted pursuant to the recognition and retention
plan will lapse without regard to the date that these
restrictions would otherwise lapse and that the shares will no
longer be subject to forfeiture by the recipient. In addition,
the recognition and retention plan provides that upon the
occurrence of a change of control of Capitol Federal Financial,
any restrictions remaining with respect to the shares of stock
granted pursuant to the recognition and retention plan will lapse
without regard to the date that these restrictions would
otherwise lapse and that the shares will no longer be subject to
forfeiture by the recipient.
12
<PAGE>
(iv) the stock benefit plan committee also has the authority, in its
discretion, to accelerate the time at which any or all of the
restrictions will lapse with respect to any restricted stock
awards, or to remove any or all of such restrictions, whenever it
may determine that this action is appropriate by reason of
changes in applicable tax or other laws or other changes in
circumstances occurring after the commencement of the restricted
period.
AMENDMENT OF THE RECOGNITION AND RETENTION PLAN
The recognition and retention plan will continue in effect for a term of 15
years, after which no further awards may be granted under the plan. Our board of
directors may at any time amend, suspend or terminate the recognition and
retention plan or any portion thereof, except to the extent shareholder approval
is necessary or required for purposes of any applicable federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which our common stock may then be listed or quoted. Shareholder approval will
generally be required with respect to an amendment to the recognition and
retention plan that will (i) increase the aggregate number of securities which
may be issued under the plan, (ii) materially increase the benefits accruing to
participants, (iii) materially change the requirements as to eligibility for
participation in the plan or (iv) change the class of persons eligible to
participate in the plan. No amendment, suspension or termination of the
recognition and retention plan, however, will impair the rights of any
participant, without his or her consent, in any award made pursuant to the
recognition and retention plan.
FEDERAL INCOME TAX CONSEQUENCES
Recipients of shares granted under the recognition and retention plan will
recognize ordinary income on the date that the shares are no longer subject to a
substantial risk of forfeiture, in an amount equal to the fair market value of
the shares on that date. In certain circumstances, a holder may elect to
recognize ordinary income and determine the fair market value on the date of the
grant of the restricted stock. Recipients of shares granted under the
recognition and retention plan will also recognize ordinary income equal to
their dividend or dividend equivalent payments when these payments are received.
13
<PAGE>
AWARDS UNDER THE RECOGNITION AND RETENTION PLAN
The following table presents information with respect to the number of
shares of common stock granted by the board of directors under the recognition
and retention plan. These awards are subject to approval of the recognition and
retention plan by our shareholders at the special meeting. Awards under the
recognition and retention plan are granted at no cost to the recipient. The
dollar value of the shares set forth in the table below is based on $9.42 per
share, the mean between the closing bid and asked quotations on The Nasdaq Stock
Market on March 8, 2000, the latest practicable date available prior to mailing
this proxy statement. The market price of Capitol Federal Financial common stock
may fluctuate between the date of this document and the special meeting.
Fluctuations in the market price of Capitol Federal Financial common stock will
result in an increase or decrease in the value of the Capitol Federal Financial
shares to be received by the individuals listed in the following table.
<TABLE>
<CAPTION>
Capitol Federal Financial 2000 Recognition and Retention Plan
- --------------------------------------------------------------------------------------------------------------------
Dollar Shares of Stock
Name and Position Value
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
JOHN C. DICUS
Chairman of the Board and Chief Executive Officer............................. $2,826,000 300,000
JOHN B. DICUS
Director, President and Chief Operating Officer............................... $1,884,000 200,000
STANLEY F. MICK
Executive Vice President and Chief Lending Officer............................. $ 659,400 70,000
NEIL F. M. MCKAY
Executive Vice President, Chief Financial Officer and Treasurer................ $ 659,400 70,000
LARRY K. BRUBAKER
Executive Vice President for Corporate Services................................ $ 659,400 70,000
EXECUTIVE GROUP (11 persons).................................................... $8,525,100 905,000
NON-EXECUTIVE DIRECTOR GROUP (5 persons)........................................ $2,355,000 250,000
NON-EXECUTIVE OFFICER EMPLOYEE GROUP (13 persons)............................... $1,177,500 125,000
</TABLE>
All shares of common stock reflected in the table above have been granted
subject to shareholder approval of the recognition and retention plan, on the
following terms and conditions, as follows:
(i) the restricted shares will vest in five equal installments with the
first installment vesting on the date of shareholder approval of the recognition
and retention plan and the additional installments vesting ratably over the next
four years on the anniversary of the date of shareholder approval of the
recognition and retention plan . Once restricted shares have vested, they are no
longer subject to forfeiture or restrictions under the recognition and retention
plan.
(ii) the recipients of the restricted shares, as owner of these shares,
will have the power to vote, and the right to receive dividends with respect to,
all of the restricted stock granted to them.
(iii) the restrictions on an individual's restricted stock will
automatically lapse and no longer be subject to the risk of forfeiture if the
person's services with us are terminated as a result of death, disability or a
change in control of Capitol Federal Financial. Termination of service for any
reason, other than death, disability or a change in control of Capitol Federal
Financial, will result in the forfeiture of any restricted stock then still
subject to restrictions.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the shares present at the meeting in
person or by proxy and entitled to vote is required to approve the recognition
and retention plan. Capitol Federal Savings Bank MHC, which owns 57.03% of
Capitol Federal Financial, intends to vote for approval of the recognition and
retention plan.
Your board of directors recommends that you vote "FOR" this proposal.
14
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
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 & Peters, 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 were $81,143.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation paid
by Capitol Federal Savings, to the Chairman and Chief Executive Officer of
Capitol Federal Financial and Capitol Federal Savings and the four other highest
compensated executive officers of Capitol Federal Savings during the fiscal year
ended September 30, 1999, the first year Capitol Federal Financial operated as a
public company.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation(1) Compensation Awards
--------------------------------------------------------------------------------
Other Restricted
Annual Stock All Other
Fiscal Compensation Award Options Compen-
Name and Principal Position Year Salary Bonus ($)(1) ($) (#) sation
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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 1998 203,500 31,410 5,086(3) --- --- 29,250
and 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
- -------------
<FN>
(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;
</FN>
</TABLE>
15
<PAGE>
$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.
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.
<TABLE>
<CAPTION>
Years of Credited Service
Remuneration 15 20 25 30 35
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$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
$300,000 $33,067 $44,089 $55,111 $66,133 $77,155
$400,000 $33,067 $44,089 $55,111 $66,133 $77,155
$600,000 $33,067 $44,089 $55,111 $66,133 $77,155
$800,000 $33,067 $44,089 $55,111 $66,133 $77,155
</TABLE>
OTHER MATTERS
The Board of Directors knows of no other business that will be presented at
the meeting. If any other matter properly comes before the shareholders for a
vote at the meeting, however, the proxy holders will vote your shares in
accordance with their best judgment.
ADDITIONAL INFORMATION
PROXY SOLICITATION COSTS
Capitol Federal Financial will pay the costs of soliciting 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. In addition to solicitation
by mail, directors, officers and
16
<PAGE>
employees of Capitol Federal Financial may solicit proxies personally or by
facsimile, telegraph or telephone, without additional compensation.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
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.
17
<PAGE>
APPENDIX A
CAPITOL FEDERAL FINANCIAL
2000 Stock Option and Incentive Plan
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, advisory directors and employees of the
Corporation and its Affiliates.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" -- means any "parent corporation" or "subsidiary
corporation" of the Corporation, as such terms are defined in Section 424(e) and
(f), respectively, of the Code.
"Award" -- means the grant by the Committee of an Incentive Stock
Option, a NonQualified Stock Option, a Right, or any combination thereof, as
provided in the Plan.
"Award Agreement" -- means the agreement evidencing the grant of an
Award made under the Plan.
"Board" -- means the board of directors of the Corporation.
"Cause" -- means Termination of Service by reason of personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties or gross
negligence.
"Code" -- means the Internal Revenue Code of 1986, as amended.
"Committee" -- means the Committee referred to in Section 3 hereof.
"Corporation" -- means Capitol Federal Financial, a federally-chartered
corporation, and any successor thereto.
"Incentive Stock Option" -- means an option to purchase Shares granted
by the Committee which is intended to qualify as an incentive stock option under
Section 422(b) of the Code. Unless otherwise set forth in the Award Agreement,
any Option which does not qualify as an Incentive Stock Option for any reason
shall be deemed ab initio to be a Non-Qualified Stock Option.
"Market Value" -- means the average of the high and low quoted sales
price on the date in question (or, if there is no reported sale on such date, on
the last preceding date on which any reported sale occurred) of a Share on the
Composite Tape for New York Stock Exchange-Listed Stocks, or, if on such date
the Shares are not quoted on the Composite Tape, on the New York Stock Exchange,
or if the Shares are not listed or admitted to trading on such Exchange, on the
principal United States securities exchange registered under the Securities
Exchange Act of 1934 (the "Exchange Act") on which the Shares are listed or
admitted to trading, or, if the Shares are
<PAGE>
not listed or admitted to trading on any such exchange, the mean between the
closing bid and asked quotations with respect to a Share on such date on the
Nasdaq Stock Market, or any similar system then in use, or, if no such
quotations are available, the fair market value on such date of a Share as the
Committee shall determine.
"Non-Qualified Stock Option" -- means an option to purchase Shares
granted by the Committee which does not qualify, for any reason, as an Incentive
Stock Option.
"Option" -- means an Incentive Stock Option or a Non-Qualified
Stock Option.
"Participant" -- means any director, advisory director or employee of
the Corporation or any Affiliate who is selected by the Committee to receive an
Award.
"Plan" -- means this Capitol Federal Financial 2000 Stock Option
and Incentive Plan.
"Related" -- means (i) in the case of a Right, a Right which is granted
in connection with, and to the extent exercisable, in whole or in part, in lieu
of, an Option or another Right and (ii) in the case of an Option, an Option with
respect to which and to the extent a Right is exercisable, in whole or in part,
in lieu thereof.
"Right" -- means a stock appreciation right with respect to Shares
granted by the Committee pursuant to the Plan.
"Shares" -- means the shares of common stock of the Corporation.
"Termination of Service" -- means cessation of service, for any reason,
whether voluntary or involuntary, so that the affected individual is not either
(i) an employee of the Corporation or any Affiliate for purposes of an Incentive
Stock Option, or (ii) a director, advisory director or employee of the
Corporation or any Affiliate for purposes of any other Award.
3. Administration. The Plan shall be administered by a Committee
consisting of two or more members of the Board, each of whom (i) shall be an
"outside director," as defined under Section 162(m) of the Code and the Treasury
regulations thereunder, and (ii) shall be a "non-employee director," as defined
under Rule 16(b) of the Securities Exchange Act of 1934 or any similar or
successor provision. The members of the Committee shall be appointed by the
Board. Except as limited by the express provisions of the Plan or by resolutions
adopted by the Board, the Committee shall have sole and complete authority and
discretion to (i) select Participants and grant Awards; (ii) determine the
number of Shares to be subject to types of Awards generally, as well as to
individual Awards granted under the Plan; (iii) determine the terms and
conditions upon which Awards shall be granted under the Plan; (iv) prescribe the
form and terms of Award Agreements; (v) establish from time to time regulations
for the administration of the Plan; and (vi) interpret the Plan and make all
determinations deemed necessary or advisable for the administration of the Plan.
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A majority of the Committee shall constitute a quorum, and the acts of
a majority of the members present at any meeting at which a quorum is present,
or acts approved in writing by a majority of the Committee without a meeting,
shall be acts of the Committee.
4. Shares Subject to Plan.
(a) Subject to adjustment by the operation of Section 6, the
maximum number of Shares with respect to which Awards may be made under the Plan
is 3,780,718, plus (i) the number of Shares repurchased by the Corporation in
the open market or otherwise with an aggregate price no greater than the cash
proceeds received by the Corporation from the exercise of Options granted under
the Plan; plus (ii) any Shares surrendered to the Corporation in payment of the
exercise price of Options granted under the Plan. The Shares with respect to
which Awards may be made under the Plan may be either authorized and unissued
Shares or previously issued Shares reacquired and held as treasury Shares.
Shares which are subject to Related Rights and Related Options shall be counted
only once in determining whether the maximum number of Shares with respect to
which Awards may be granted under the Plan has been exceeded. An Award shall not
be considered to have been made under the Plan with respect to any Option or
Right which terminates, and new Awards may be granted under the Plan with
respect to the number of Shares as to which such termination has occurred.
(b) During any calendar year, no Participant may be granted
Awards under the Plan with respect to more than 1,000,000 Shares, subject to
adjustment as provided in Section 6.
5. Awards.
(a) Options. The Committee is hereby authorized to grant Options
to Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan and the
requirements of applicable law as the Committee shall determine, including the
granting of Options in tandem with other Awards under the Plan:
(i) Exercise Price. The exercise price per Share for an
Option shall be determined by the Committee; provided, however, that such
exercise price shall not be less than 100% of the Market Value of a Share on the
date of grant of such Option.
(ii) Option Term. The term of each Option shall be fixed by
the Committee, but shall be no greater than 10 years in the case of an Incentive
Stock Option or 15 years in the case of a Non-Qualified Stock Option.
(iii) Time and Method of Exercise. The Committee shall
determine the time or times at which an Option may be exercised in whole or in
part and the method or methods by which, and the form or forms (including,
without limitation, cash, Shares, other Awards or any combination thereof,
having a fair market value on the exercise date equal to the relevant exercise
price) in which, payment of the exercise price with respect thereto may be made
or deemed to have been made.
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(iv) Incentive Stock Options. Incentive Stock Options may be
granted by the Committee only to employees of the Corporation or its Affiliates.
(v) Termination of Service. Unless otherwise determined by
the Committee and set forth in the Award Agreement evidencing the grant of the
Option, upon Termination of Service of the Participant for any reason other than
for Cause, all Options then currently exercisable shall remain exercisable for
the lesser of (A) three years following such Termination of Service or (B) until
the expiration of the Option by its terms. Upon Termination of Service for
Cause, all Options not previously exercised shall immediately be forfeited.
(b) Rights. A Right shall, upon its exercise, entitle the
Participant to whom such Right was granted to receive a number of Shares or cash
or combination thereof, as the Committee in its discretion shall determine, the
aggregate value of which (i.e., the sum of the amount of cash and/or Market
Value of such Shares on date of exercise) shall equal (as nearly as possible, it
being understood that the Corporation shall not issue any fractional Shares) the
amount by which the Market Value per Share on the date of such exercise shall
exceed the exercise price of such Right, multiplied by the number of Shares with
respect to which such Right shall have been exercised. A Right may be Related to
an Option or may be granted independently of any Option as the Committee shall
from time to time in each case determine. In the case of a Related Option, such
Related Option shall cease to be exercisable to the extent of the Shares with
respect to which the Related Right was exercised. Upon the exercise or
termination of a Related Option, any Related Right shall terminate to the extent
of the Shares with respect to which the Related Option was exercised or
terminated.
6. Adjustments Upon Changes in Capitalization. In the event of any change
in the outstanding Shares subsequent to the effective date of the Plan by reason
of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Corporation, the maximum aggregate number
and class of shares and exercise price of the Award, if any, as to which Awards
may be granted under the Plan and the number and class of shares and exercise
price of the Award, if any, with respect to which Awards have been granted under
the Plan shall be appropriately adjusted by the Committee, whose determination
shall be conclusive. Except as otherwise provided herein, any Award which is
adjusted as a result of this Section 6 shall be subject to the same terms and
conditions as the original Award.
7. Effect of Merger on Options or Rights. In the case of any merger,
consolidation or combination of the Corporation (other than a merger,
consolidation or combination in which the Corporation is the continuing
corporation and which does not result in the outstanding Shares being converted
into or exchanged for different securities, cash or other property, or any
combination thereof), any Participant to whom an Option or Right has been
granted shall have the additional right (subject to the provisions of the Plan
and any limitation applicable to such Option or Right), thereafter and during
the term of each such Option or Right, to receive upon exercise of any such
Option or Right an amount equal to the excess of the fair market value on the
date of such exercise of the securities, cash or other property, or combination
thereof, receivable upon such merger, consolidation or combination in respect of
a Share over the exercise price of such
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Right or Option, multiplied by the number of Shares with respect to which such
Option or Right shall have been exercised. Such amount may be payable fully in
cash, fully in one or more of the kind or kinds of property payable in such
merger, consolidation or combination, or partly in cash and partly in one or
more of such kind or kinds of property, all in the discretion of the Committee.
8. Effect of Change in Control. Each of the events specified in the
following clauses (i) through (iii) of this Section 8 shall be deemed a "change
in control": (i) any third person, other than Capitol Federal Savings Bank MHC,
including a "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, shall become the beneficial owner of shares of the Corporation with
respect to which 25% or more of the total number of votes for the election of
the Board may be cast, (ii) as a result of, or in connection with, any cash
tender offer, merger or other business combination, sale of assets or contested
election, or combination of the foregoing, the persons who were directors of the
Corporation shall cease to constitute a majority of the Board, or (iii) the
stockholders of the Corporation shall approve an agreement providing either for
a transaction in which the Corporation will cease to be an independent
publicly-owned corporation (whether in stand alone or mutual holding company
form) or for a sale or other disposition of all or substantially all the assets
of the Corporation. If a tender offer or exchange offer for Shares (other than
such an offer by the Corporation) is commenced, or if a change in control shall
occur, unless the Committee shall have otherwise provided in the Award
Agreement, all Options and Rights granted and not fully exercisable shall become
exercisable in full upon the happening of such event. Provided, however, that no
Option or Right which has previously been exercised or otherwise terminated
shall become exercisable.
9. Assignments and Transfers. No Incentive Stock Option granted under the
Plan shall be transferable other than by will or the laws of descent and
distribution. Any other Award shall be transferable by will, the laws of descent
and distribution, a "domestic relations order," as defined in Section
414(p)(1)(B) of the Code, or a gift to any member of the Participant's immediate
family or to a trust for the benefit of one or more of such immediate family
members. During the lifetime of an Award recipient, an Award shall be
exercisable only by the Award recipient unless it has been transferred as
permitted hereby, in which case it shall be exercisable only by such transferee.
For the purpose of this Section 9, a Participant's "immediate family" shall mean
the Participant's spouse, children and grandchildren.
10. Employee Rights Under the Plan. No person shall have a right to be
selected as a Participant nor, having been so selected, to be selected again as
a Participant, and no employee or other person shall have any claim or right to
be granted an Award under the Plan or under any other incentive or similar plan
of the Corporation or any Affiliate. Neither the Plan nor any action taken
thereunder shall be construed as giving any employee any right to be retained in
the employ of the Corporation or any Affiliate.
11. Delivery and Registration of Stock. The Corporation's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests, be
conditioned upon the receipt of a representation as to the investment intention
of the Participant to whom such Shares are to be delivered, in such form as the
Committee shall determine to be necessary or advisable to comply with the
provisions of the Securities Act of 1933 or any other federal, state or local
securities
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legislation. It may be provided that any representation requirement shall become
inoperative upon a registration of the Shares or other action eliminating the
necessity of such representation under such Securities Act or other securities
legislation. The Corporation shall not be required to deliver any Shares under
the Plan prior to (i) the admission of such Shares to listing on any stock
exchange on which Shares may then be listed and (ii) the completion of such
registration or other qualification of such Shares under any state or federal
law, rule or regulation, as the Committee shall determine to be necessary or
advisable.
12. Withholding Tax. The Corporation shall have the right to deduct from
all amounts paid in cash with respect to the exercise of a Right under the Plan
any taxes required by law to be withheld with respect to such cash payments.
Where a Participant or other person is entitled to receive Shares pursuant to
the exercise of an Option or Right pursuant to the Plan, the Corporation shall
have the right to require the Participant or such other person to pay the
Corporation the amount of any taxes which the Corporation is required to
withhold with respect to such Shares, or, in lieu thereof, to retain, or sell
without notice, a number of such Shares sufficient to cover the amount required
to be withheld. All withholding decisions pursuant to this Section 12 shall be
at the sole discretion of the Committee or the Corporation.
13. Amendment or Termination.
(a) The Board may amend, alter, suspend, discontinue, or terminate
the Plan without the consent of shareholders or Participants, except that any
such action will be subject to the approval of the Corporation's shareholders
if, when and to the extent such shareholder approval is necessary or required
for purposes of any applicable federal or state law or regulation or the rules
of any stock exchange or automated quotation system on which the Shares may then
be listed or quoted, or if the Board, in its discretion, determines to seek such
shareholder approval.
(b) The Committee may waive any conditions of or rights of the
Corporation or modify or amend the terms of any outstanding Award. The Committee
may not, however, amend, alter, suspend, discontinue or terminate any
outstanding Award without the consent of the Participant or holder thereof,
except as otherwise provided herein.
14. Effective Date and Term of Plan. The Plan shall become effective upon
the later of its adoption by the Board or its approval by the shareholders of
the Corporation. It shall continue in effect for a term of fifteen years
thereafter unless sooner terminated under Section 13 hereof.
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APPENDIX B
CAPITOL FEDERAL FINANCIAL
2000 Recognition and Retention Plan
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, advisory directors and employees of the
Corporation and its Affiliates.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" -- means any "parent corporation" or "subsidiary
corporation" of the Corporation, as such terms are defined in Section 424(e) and
(f), respectively, of the Code.
"Award" -- means the grant by the Committee of Restricted Stock,
as provided in the Plan.
"Award Agreement" -- means the agreement evidencing the grant of an
Award made under the Plan.
"Board" -- means the board of directors of the Corporation.
"Code" -- means the Internal Revenue Code of 1986, as amended.
"Committee" -- means the Committee referred to in Section 3 hereof.
"Corporation" -- means Capitol Federal Financial, a federally-chartered
corporation, and any successor thereto.
"Participant" -- means any director, advisory director or employee of
the Corporation or any Affiliate who is selected by the Committee to receive an
Award.
"Plan" -- means this Capitol Federal Financial Recognition and
Retention Plan.
"Restricted Period" -- means the period of time selected by the
Committee for the purpose of determining when restrictions are in effect under
Section 5 hereof with respect to Restricted Stock awarded under the Plan.
"Restricted Stock" -- means Shares awarded to a Participant by the
Committee pursuant to Section 5 hereof.
"Shares" -- means the shares of common stock of the Corporation.
"Termination of Service" -- means cessation of service, for any reason,
whether voluntary or involuntary, so that the affected individual is not a
director, advisory director or employee of the Corporation or any Affiliate.
Service shall not be considered to have ceased in the case of sick
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leave, military leave or any other leave of absence approved by the Corporation
or any Affiliate or in the case of transfers between payroll locations of the
Corporation or between the Corporation, its subsidiaries or its successor.
3. Administration. The Plan shall be administered by a Committee
consisting of two or more members of the Board, each of whom (i) shall be an
"outside director," as defined under Section 162(m) of the Code and the Treasury
regulations thereunder, and (ii) shall be a "non-employee director," as defined
under Rule 16(b) of the Securities Exchange Act of 1934 or any similar or
successor provision. The members of the Committee shall be appointed by the
Board. Except as limited by the express provisions of the Plan or by resolutions
adopted by the Board, the Committee shall have sole and complete authority and
discretion to (i) select Participants and grant Awards; (ii) determine the
number of Shares to be subject to types of Awards generally, as well as to
individual Awards granted under the Plan; (iii) determine the terms and
conditions upon which Awards shall be granted under the Plan; (iv) prescribe the
form and terms of Award Agreements; (v) establish from time to time regulations
for the administration of the Plan; and (vi) interpret the Plan and make all
determinations deemed necessary or advisable for the administration of the Plan.
A majority of the Committee shall constitute a quorum, and the acts of
a majority of the members present at any meeting at which a quorum is present,
or acts approved in writing by a majority of the Committee without a meeting,
shall be acts of the Committee.
4. Shares Subject to Plan. Subject to adjustment by the operation of
Section 6, the maximum number of Shares with respect to which Awards may be made
under the Plan is 1,512,287 Shares. The Shares with respect to which Awards may
be made under the Plan may be either authorized and unissued Shares or
previously issued Shares reacquired and held as treasury Shares. An Award shall
not be considered to have been made under the Plan with respect to Restricted
Stock which is forfeited, and new Awards may be granted under the Plan with
respect to the number of Shares as to which such forfeiture has occurred.
5. Terms and Conditions of Restricted Stock. The Committee is hereby
authorized to grant Awards of Restricted Stock to Participants with the
following terms and conditions and with such additional terms and conditions as
the Committee shall determine:
(a) At the time of an Award of Restricted Stock, the Committee
shall establish for each Participant a Restricted Period, during
which or at the expiration of which, as the Committee shall
determine and provide in the Award Agreement, the Shares awarded
as Restricted Stock shall no longer be subject to restriction.
Subject to any such other terms and conditions as the Committee
shall provide, Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered by the
Participant, except as hereinafter provided, during the Restricted
Period. Except for such restrictions, and subject to paragraph (b)
of this Section 5 and Section 6 hereof, the Participant as owner
of such shares shall have all the rights of a stockholder,
including the right to vote the Restricted Stock and the right to
receive dividends with respect to the Restricted Stock.
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The Committee shall have the authority, in its discretion,
to accelerate the time at which any or all of the restrictions
shall lapse with respect thereto, or to remove any or all of such
restrictions, whenever it may determine that such action is
appropriate by reason of changes in applicable tax or other laws
or other changes in circumstances occurring after the commencement
of such Restricted Period.
(b) Each certificate in respect of Shares of Restricted Stock
awarded under the Plan shall be registered in the name of the
Participant and deposited by the Participant, together with a
stock power endorsed in blank, with the Corporation and shall bear
the following (or a similar) legend:
The transferability of this certificate and
the Shares of stock represented hereby are subject to the
terms and conditions (including forfeiture) contained in the
Capitol Federal Financial 2000 Recognition and Retention
Plan. Copies of such Plan are on file in the office of the
Secretary of Capitol Federal Financial, 700 S. Kansas
Avenue, Topeka, Kansas 66603.
(c) At the time of any Award, the Participant shall enter into an
Award Agreement with the Corporation in a form specified by the
Committee, agreeing to the terms and conditions of the Award and
such other matters as the Committee, in its sole discretion, shall
determine.
(d) Upon the lapse of the Restricted Period, the Corporation shall
redeliver to the Participant (or in the case of a deceased
Participant, to his legal representative, beneficiary or heir) the
certificate(s) and stock power deposited with it pursuant to
paragraph (b) of this Section 5, and the Shares represented by
such certificate(s) shall be free of the restrictions imposed
pursuant to paragraph (a) of this Section 5.
6. Adjustments Upon Changes in Capitalization. In the event of any change
in the outstanding Shares subsequent to the effective date of the Plan by reason
of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Corporation, the maximum aggregate number
and class of Shares as to which Awards may be granted under the Plan and the
number and class of Shares with respect to which Awards have been granted under
the Plan shall be appropriately adjusted by the Committee, whose determination
shall be conclusive. Any Award which is adjusted as a result of this Section 6
shall be subject to the same restrictions as the original Award, and the
certificate(s) or other instruments representing or evidencing such Restricted
Stock shall be legended and deposited with the Corporation in the manner
provided in Section 5(b) hereof.
7. Effect of Change in Control. Each of the events specified in the
following clauses (i) through (iii) of this Section 7 shall be deemed a "change
in control": (i) any third person, other than Capitol Federal Savings Bank MHC,
including a "group" as defined in Section 13(d)(3) of the Securities Exchange
Act of 1934, shall become the beneficial owner of shares of the
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Corporation with respect to which 25% or more of the total number of votes for
the election of the Board may be cast, (ii) as a result of, or in connection
with, any cash tender offer, merger or other business combination, sale of
assets or contested election, or combination of the foregoing, the persons who
were directors of the Corporation shall cease to constitute a majority of the
Board, or (iii) the stockholders of the Corporation shall approve an agreement
providing either for a transaction in which the Corporation will cease to be an
independent publicly-owned corporation or for a sale or other disposition of all
or substantially all the assets of the Corporation. If a tender offer or
exchange offer for Shares (other than such an offer by the Corporation) is
commenced, or if a change in control shall occur, unless the Committee shall
have otherwise provided in the Award Agreement, any Restricted Period with
respect to Restricted Stock theretofore awarded to such Participant shall lapse
and all Shares awarded hereunder as Restricted Stock shall become fully vested
in the Participant to whom such Shares were awarded. Notwithstanding the above,
no Award which has previously been forfeited shall become vested.
8. Assignments and Transfers. During the Restricted Period, no Award nor
any right or interest of a Participant in any instrument evidencing an Award may
be assigned, encumbered or transferred other than by will, the laws of descent
and distribution or pursuant to a "domestic relations order," as defined in
Section 414(p)(1)(B) of the Code.
9. Employee Rights Under the Plan. No person shall have a right to be
selected as a Participant nor, having been so selected, to be selected again as
a Participant, and no employee or other person shall have any claim or right to
be granted an Award under the Plan or under any other incentive or similar plan
of the Corporation or any Affiliate. Neither the Plan nor any action taken
thereunder shall be construed as giving any employee any right to be retained in
the employ of the Corporation or any Affiliate.
10. Delivery and Registration of Stock. The Corporation's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests, be
conditioned upon the receipt of a representation as to the investment intention
of the Participant to whom such Shares are to be delivered, in such form as the
Committee shall determine to be necessary or advisable to comply with the
provisions of the Securities Act of 1933 or any other federal, state or local
securities legislation. It may be provided that any representation requirement
shall become inoperative upon a registration of the Shares or other action
eliminating the necessity of such representation under such Securities Act or
other securities legislation. The Corporation shall not be required to deliver
any Shares under the Plan prior to (i) the admission of such Shares to listing
on any stock exchange on which Shares may then be listed and (ii) the completion
of such registration or other qualification of such Shares under any state or
federal law, rule or regulation, as the Committee shall determine to be
necessary or advisable.
11. Withholding Tax. Upon the termination of the Restricted Period with
respect to any Shares of Restricted Stock (or at any such earlier time, if any,
that an election is made by the Participant under Section 83(b) of the Code, or
any successor provision thereto, to include the value of such Shares in taxable
income), the Corporation shall have the right to require the Participant or
other person receiving such Shares to pay the Corporation the amount of any
taxes which the Corporation is required to withhold with respect to such Shares,
or, in lieu thereof, to
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retain or sell without notice, a sufficient number of Shares held by it to cover
the amount required to be withheld. The Corporation shall have the right to
deduct from all dividends paid with respect to Shares of Restricted Stock the
amount of any taxes which the Corporation is required to withhold with respect
to such dividend payments.
12. Amendment or Termination.
(a) The Board may amend, alter, suspend, discontinue, or terminate
the Plan without the consent of shareholders or Participants, except that any
such action will be subject to the approval of the Corporation's shareholders
if, when and to the extent such shareholder approval is necessary or required
for purposes of any applicable federal or state law or regulation or the rules
of any stock exchange or automated quotation system on which the Shares may then
be listed or quoted, or if the Board, in its discretion, determines to seek such
shareholder approval.
(b) The Committee may waive any conditions of or rights of the
Corporation or modify or amend the terms of any outstanding Award. The Committee
may not, however, amend, alter, suspend, discontinue or terminate any
outstanding Award without the consent of the Participant or holder thereof,
except as otherwise provided herein.
13. Effective Date and Term of Plan. The Plan shall become effective upon
the later of its adoption by the Board or its approval by the shareholders of
the Corporation. It shall continue in effect for a term of fifteen years
thereafter unless sooner terminated under Section 12 hereof.
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