SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Provident Financial Group, Inc.
-------------------------------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
[ ] 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 identity 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>
PROVIDENT FINANCIAL GROUP, INC.
Notice of Annual Meeting
and Proxy Statement
Dear Shareholder:
We invite you to attend our annual meeting of shareholders on April 25, 2000, in
Cincinnati, Ohio. At the meeting, you will hear a report on our operations and
have a chance to meet your directors and executive officers.
This booklet includes the formal notice of the meeting and the proxy statement.
The proxy statement tells you more about the agenda and procedures for the
meeting. It also describes how the Board operates and gives personal information
about our director candidates.
Even if you only own a few shares, we want your shares to be represented at the
meeting. I urge you to complete, sign, date and promptly return your proxy form
in the enclosed envelope.
Sincerely yours,
Robert L. Hoverson
President and Chief Executive Officer
March 31, 2000
<PAGE>
PROVIDENT FINANCIAL GROUP, INC.
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TIME: 9:00 A.M., Eastern Time
DATE: April 25, 2000
PLACE: Provident Tower
Third Floor
One East Fourth Street
Cincinnati, Ohio 45202
PURPOSE: Elect Directors
Vote on Shareholder Proposal as described herein
Conduct other business if properly raised
Only shareholders of record on February 29, 2000, may vote at the meeting. The
approximate mailing date of this Proxy Statement and accompanying proxy form is
March 31, 2000.
Your vote is important. Please complete, sign, date and promptly return your
proxy form in the enclosed envelope.
Mark E. Magee
Secretary
March 31, 2000
<PAGE>
PROVIDENT FINANCIAL GROUP, INC.
2000 PROXY STATEMENT
GENERAL INFORMATION
Who may vote
- ------------
Shareholders of Provident, as recorded in our stock register on February 29,
2000, may vote at the meeting. On that date, Provident had 48,702,871 shares of
Common Stock outstanding.
How to vote
- -----------
You may vote in person at the meeting or by proxy. We recommend you vote by
proxy even if you plan to attend the meeting. You can always change your vote at
the meeting.
How proxies work
- ----------------
Provident's Board of Directors is asking for your proxy. Giving us your proxy
means you authorize us to vote your shares at the meeting in the manner you
direct. You may receive more than one proxy form depending on how you hold your
shares. Shares registered in your name are covered by one proxy form. And if you
hold shares through someone else, such as a stockbroker, you may get material
from them asking how you want to vote.
Revoking a proxy
- ----------------
You may revoke your proxy before it is voted by submitting a new proxy form with
a later date, by voting i n person at the meeting, or by notifying Provident's
Secretary in writing at the following address: Mark E. Magee, Secretary
Provident Financial Group, Inc. MS 860A One East Fourth Street Cincinnati, Ohio
45202
Quorum
- ------
In order to carry on the business of the meeting, we must have a quorum. This
means at least 35 percent of the outstanding shares eligible to vote must be
represented at the meeting, either by proxy or in person.
Votes needed
- ------------
The seven director candidates receiving the most votes will be elected to fill
the seats on the Board. Approval of any other proposals requires the favorable
vote of a majority of the votes cast. Only votes for or against a proposal
count. Abstentions and broker non-votes count for quorum purposes but not for
voting purposes. Broker non-votes occur when a broker returns a proxy form but
does not have authority to vote on a particular proposal.
Other matters
- -------------
Any other matters considered at the meeting, including adjournment, will require
the affirmative vote of a majority of shares voting.
Voting by proxy
- ---------------
All proxies properly signed will, unless a different choice is indicated, be
voted "FOR" the election of all nominees for Directors proposed by the Board of
Directors and "against" the shareholder proposal. You may vote for all, some, or
none of our director candidates.
If any other matters come before the meeting or any adjournment, each proxy will
be voted in the discretion of the individuals named as proxies on the proxy
form.
ELECTION OF DIRECTORS
(Item 1 on the proxy form)
The Board of Directors oversees the management of the Company on your behalf.
The Board reviews Provident's long-term strategic plans and exercises direct
decision-making authority in key areas such as choosing the Chief Executive
Officer, setting the scope of his authority to manage the company's business day
to day, and evaluating management's performance. The Board met 9 times last
year.
The Board is nominating for reelection all of the following seven current
directors: Jack M. Cook, Thomas D. Grote, Jr., Robert L. Hoverson, Philip R.
Myers, Joseph A. Pedoto, Sidney A. Peerless, and Joseph A. Steger.
Proxies solicited by the Board will be voted for the election of these nominees.
All directors elected at the meeting will be elected to hold office until the
next annual meeting. In voting to elect directors, shareholders are entitled to
cumulate their votes and to give one candidate a number of votes equal to the
number of directors to be elected multiplied by the number of shares held by the
shareholder, or to distribute their votes on the same principle among as many
candidates as the shareholder sees fit. In order to invoke cumulative voting,
notice of cumulative voting must be given in writing by a shareholder to the
Secretary of Provident not less than 48 hours prior to the meeting. The proxies
solicited include discretionary authority to cumulate their votes.
Five of our seven nominees are not Provident employees. Only non-employee
directors serve on Provident's Audit and Compensation committees. All Provident
directors are elected for one-year terms. Personal information on each of our
nominees is given below.
If a director nominee becomes unavailable before the election, your proxy form
authorizes us to vote for a replacement nominee if the Board names one.
Nominees receiving the highest number of votes cast for the positions to be
filled will be elected.
<PAGE>
NOMINEES
The Board recommends you vote FOR each of the following candidates:
Jack M. Cook SinceJanuary of 1995, Mr. Cook has served as President
Age 55 and Chief Executive Officer of Health Alliance of
Director since 1992 Greater Cincinnati, which includes Christ, University,
Fort Hamilton, Jewish and St. Luke Hospitals. Prior to
that, he served as President and Chief Executive Officer
of Christ Hospital, and Director and Chief Executive
Officer of University Hospital. Mr. Cook serves on the
Audit Committee.
Thomas D. Grote, Jr. Mr. Grote has served as President of Grote Enterprises,
Age 45 LLC, a management consulting firm providing consulting
Director since 1991 services to the construction and real estate industries,
since January, 1998. Prior to that, Mr. Grote served as
President of the Thomas J. Dyer Co., a mechanical
contractor. Mr. Grote serves on the Compensation
Committee.
Robert L. Hoverson Mr. Hoverson has served as President and Chief Executive
Age 58 Officer of Provident and The Provident Bank since May,
Director since 1998 1998. Mr. Hoverson served as Senior Vice President of
Provident from August, 1992 to May, 1998, and served as
Executive Vice President of The Provident Bank from
September, 1985 to May, 1998. Mr. Hoverson serves as
Chairman of the Executive Committee.
Philip R. Myers Mr. Myers has served as an Executive Vice President
Age 57 of Provident since November, 1998 and as Senior
Director since 1982 Executive Vice President of The Provident Bank since
September, 1984. Mr. Myers served as Senior Vice
President of Provident from May, 1992 to November,
1998. Mr. Myers serves on the Executive Committee.
Joseph A. Pedoto Mr. Pedoto has served as President of JLM Financial,
Age 58 Inc., a financial consulting firm, since 1990. Mr.
Director since 1980 Pedoto serves on the Executive and Compensation
Committees. Mr. Pedoto's service as a Director of
Provident was interrupted from September, 1991 to
August, 1993.
Sidney A. Peerless Dr. Peerless is a practicing physician and surgeon
Age 78 specializing in diseases of the ear, nose and throat.
Director since 1980 Dr. Peerless is Chief Emeritus of the Otolaryngology
Department of The Jewish Hospital, Cincinnati, Ohio.
Dr. Peerless is Chairman of the Audit and Compensation
Committees.
Joseph A. Steger Dr. Steger has served as the President of the University
Age 63 of Cincinnati since 1984. He also serves as a Director
Director since 1992 of Milacron, Inc. Dr. Steger serves on the Audit
Committee.
<PAGE>
PROVIDENT FINANCIAL SHAREHOLDER PROPOSAL
CONCERNING CORPORATE STRATEGIC PLAN REPORT
(Item 2 on the proxy form)
The following proposal was submitted for inclusion in this proxy statement by
the Trust for the International Brotherhood of Electrical Workers' Pension
Benefit Fund, 1125 Fifteenth Street, N.W., Washington, D.C. 20005. At the time
the proposal was submitted, the Fund was the beneficial owner of 5,288 shares of
common stock.
RESOLVED: The shareholders of Provident Financial ("Company") urge that the
Board of Directors and senior management prepare for shareholders an annual
Strategic Plan Report ("SPR"). The Company's SPR should describe the Company's
goals, the strategic initiatives designed to accomplish the stated goals, and
the accompanying range of corporate policies and programs. In the SPR, the Board
and senior management should detail the roles of the corporate constituents,
such as shareholders, employees, customers, suppliers, and the community, that
are integral to the achievement of the Company's long-term strategic goals.
Further, the SPR should describe specific Company programs and policies designed
to ensure the contribution of important corporate constituents to the long-term
success of the Company.
Statement of Support
The long-term success of the Company is dependent upon the development and
implementation of a strategic plan by the Board of Directors and its management
team. Management creates and implements its corporate strategic plan under the
oversight of the Board of Directors. Shareholder understanding of the Company's
long-term strategic plan is critical in that this understanding can develop a
supportive and patient source of capital for the Company. We do not believe that
the Company's annual report and other communications to shareholders provide the
information shareholders need to properly evaluate the Company's operating
strategy.
The SPR should include a comprehensive discussion of the Company's long-term
goals and the policies established and implemented to fulfill these goals.
Policies and programs to be described should include growth strategies, research
and development initiatives, expansion plans, workplace practices, community
involvement initiatives, capital expenditure programs, and other pertinent
aspects of Company operations.
An important component of the SPR would be Constituent Reports that outline the
Company policies and practices related to the corporate constituencies critical
to the long-term success of the Company. Constituent Reports related to
shareholders, employees, the communities where the Company operates, customers,
and key suppliers should be included within the SPR. These Constituent Reports
should detail the Board's views on the relative importance of each constituent
group to the Company's long-term success and outline the policies and programs
instituted in relation to each constituent group that are designed to contribute
to the Company's long-term success.
Revealing information relating to aspects of the Company's operations, such as
specific acquisition plans or the status of specific research and development
projects, could put the Company at a competitive disadvantage. Thus, the Board
must exercise its judgment as to the appropriate level of detail to provide on
sensitive areas of corporate operations. However, confidentiality concerns
should not impede the Board's ability to provide a comprehensive and insightful
report designed to help shareholders better understand its vision for the
Company.
The SPR would serve as the focal point for review, analysis, and discussion at
the Company's annual meeting of shareholders. It should be prepared at a
reasonable expense and provided to shareholders that request it. It should also
be posted on the Company's web site as a cost-effective means of communicating
the Company's long-term strategic plan to shareholders and prospective
investors.
BOARD OF DIRECTORS
RECOMMENDATION AGAINST THIS PROPOSAL
Provident's Board of Directors does not believe that adoption of the resolution
would be in the best interests of shareholders. Senior management is constantly
involved in developing and implementing strategies aimed at increasing
shareholder value.
<PAGE>
Many of these are disclosed to shareholders directly and others become apparent
as the strategy is implemented. For example, Provident reported to shareholders
in its 1998 Annual Shareholders' Report and in SEC filings the performance
optimization project it initiated aimed at reducing operating expenses as a
percentage of net revenue. It's acquisition strategy became apparent as it
developed when Provident acquired several Florida financial institutions and,
recently, several savings institutions in the greater Cincinnati area.
Management believes, however, that the kind of formal activity called for by the
resolution would involve competitive risks and also the unnecessary expenditure
of resources in developing and disclosing the type of plan urged by this
resolution. For example, the requirement to present a plan that would "detail
the roles"...of "shareholders, employees, customers, suppliers and the
community" would seem to involve a solution in search of a problem. Likewise,
where long-term approaches are particularly relevant, there would be increased
risk of their disclosure prior to implementation which could be harmful to
Provident's progress.
Provident's primary goal has always been known to shareholders, that is, to
increase shareholder value. Specific strategies for implementing that goal
evolve to meet changing circumstances in the banking industry in general and in
the markets Provident serves. The production of a report as called for by the
resolution would not aid this process but rather could serve to reduce
management's flexibility to react to changing circumstances.
The Board recommends a vote against this proposal.
DIRECTOR COMPENSATION
Non-employee directors receive $15,000 per year for serving as a director and as
members of committees of the Board. They also receive $1,000 for each director
or committee meeting attended, except if a committee meeting occurs by telephone
or on the same day as a directors' meeting, in which case, the committee meeting
fee is $600. Directors who are employees of Provident are not separately
compensated for serving as directors. Non-employee directors may postpone the
receipt of from 5% to 100% of their Board compensation. Amounts deferred may be
invested in a Provident Common Stock Account, in which case the Account is
credited annually with a percentage of Provident's pre-tax earnings per share
for each share of Provident Common Stock in the Account, with the percentage to
be credited depending upon Provident's return on equity.
Each non-employee director is also granted a non-qualified option to purchase
1,000 shares of Common Stock at the time of election or re-election to the Board
of Directors, with the exercise price being the average of the closing bid and
ask prices on the last trading date immediately prior to the date of grant.
Non-employee directors with ten years of service as a director receive annual
retirement benefits equal to the fees paid during the 12 months immediately
preceding the retirement date, with payments to commence at retirement or 65th
birthday, whichever is later. Retirement benefits will be paid for a period of
years equal to the number of the director' s years of service, divided by three.
BOARD COMMITTEES
The Board appoints committees to help carry out its duties. In particular, Board
committees work on key issues in greater detail than would be possible at full
Board meetings. Each committee reviews the results of its meetings with the full
Board. The Board of Directors does not have a nominating committee.
The Audit Committee is responsible for reviewing with the independent auditors
the plans and results of the audit engagement of Provident and reviewing the
scope and results of the procedures for internal auditing. The Committee is
authorized generally to superintend the administration of the Internal Audit
Department, which has the responsibility to perform internal audit functions for
Provident and its subsidiaries.
Committee members: Messrs. Cook, Peerless (Chairman) and Steger.
Meetings last year: 6
The Compensation Committee is responsible for establishing compensation for
management and administering the Company's stock option plans, deferred
compensation plans and supplemental executive retirement plan.
Committee members: Messrs. Grote, Pedoto and Peerless (Chairman).
Meetings last year: 1
<PAGE>
PRINCIPAL SHAREHOLDERS
The following persons are the only shareholders known by the Company to own
beneficially 5% or more of its outstanding Common Stock as of February 29, 2000:
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent of Class (a)
- ------------------------------ -------------------- --------------------
American Financial Group, Inc. 6,489,179 (b) 13.1
Carl H. Lindner 1,738,780 (c)(d) 3.6
Carl H. Lindner III 2,533,788 (c)(e) 5.2
S. Craig Lindner 2,906,856 (c)(f) 6.0
Keith E. Lindner 2,874,182 (c)(g) 5.9
One East Fourth Street
Cincinnati, Ohio 45202
(a) The percentages of outstanding shares of Common Stock beneficially owned
(within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934) by Carl H. Lindner III, S. Craig Lindner and Keith E. Lindner are
4.6%, 5.9% and 6.7%, respectively, after attributing the shares held in
various trusts for the benefit of the minor children of Carl H. Lindner III
and S. Craig Lindner (for which Keith E. Lindner acts as trustee with
voting and dispositive power) to Keith E. Lindner.
(b) Includes 5,500,979 shares held by subsidiaries of American Financial Group,
Inc. ("AFG") and 988,200 shares issuable upon conversion of Provident's
Series D Convertible Preferred stock held by an AFG subsidiary. Carl H.
Lindner, Carl H. Lindner III, S. Craig Lindner, Keith E. Lindner and trusts
for their benefit (collectively the "Lindner Family"), are the beneficial
owners of approximately 48% of AFG's common stock, and share with AFG
voting and dispositive power with respect to the shares of Provident Common
Stock beneficially owned by AFG. The Lindner Family and AFG may be deemed
to be controlling persons of Provident.
(c) Excludes 6,489,179 shares of Common Stock beneficially owned by AFG.
(d) Includes 1,477,920 shares held by his spouse and 146,760 shares held by a
foundation over which he has voting and dispositive power.
(e) Includes 5,135 shares held by his spouse individually and as trustee.
Includes 317,731 shares which are held in various trusts for the benefit of
his minor children for which Keith E. Lindner acts as trustee with voting
and dispositive power.
(f) Includes 5,135 shares held by his spouse individually and as trustee,
346,996 shares held by his spouse as custodian for their minor children and
56,726 shares held by a foundation over which he has voting and dispositive
power. Includes 50,000 shares which are held in various trusts for the
benefit of his minor children for which Keith E. Lindner acts as trustee
with voting and dispositive power.
(g) Includes 169,311 shares held by his spouse, 14,408 shares he holds as
custodian for his minor children and 171,631 shares held in trusts for the
benefit of his minor children, over which he or his spouse have shared
voting and dispositive power. This number excludes 367,731 shares
(described in footnotes (e) and (f) above), which are held in trusts for
the benefit of the minor children of his brothers, Carl H. Lindner III and
S. Craig Lindner over which Keith E. Lindner has voting and dispositive
power but no financial interest.
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
This table lists the executive officers and directors of Provident and shows how
much common stock each owned on February 29, 2000. Except as described in the
footnotes to the table, each person has sole investment and voting power over
the shares shown.
Common Stock
Beneficially
Owned Percent of
Name and Age Position Amount(1) Class(2)
- ------------------------ ------------------------- ------------- ------------
Robert L. Hoverson, President, Chief
58 Executive Officer and 485,162 1.0%
Director
Philip R. Myers(3), Executive Vice President 752,592 1.5%
57 and Director
Christopher J. Carey(4), Executive Vice President 9,890 *
45 and Chief Financial
Officer
Mark E. Magee(5), Vice President, Secretary 144,107 *
52 and General Counsel
Jack M. Cook, Director 17,812 *
55
Thomas D. Grote, Jr., Director 20,451 *
45
Joseph A. Pedoto(6), Director 1,234,008 2.5%
58
Sidney A. Peerless, Director 52,554 *
78
Joseph A. Steger, Director 18,043 *
63
All Executive Officers 2,734,619 5.6%
and Directors as a
Group (9)
(1) Including options to purchase common stock currently exercisable or
exercisable within 60 days from February 29, 2000 as follows: Mr. Hoverson,
332,325 shares; Mr. Myers, 200,825 shares; Mr. Carey, 8,000; Mr. Magee,
80,985 shares; 15,375 shares each for Messrs. Cook, Grote, Peerless and
Steger; Mr. Pedoto, 12,000 shares. Includes shares held in Provident's
401(k) Plan, Deferred Compensation Plan and Outside Director Deferred
Compensation Plan, over which such persons do not have voting power,
collectively, as follows: Mr. Hoverson, 69,112 shares; Mr. Myers, 66,501
shares; Mr. Carey, 890 shares; Mr. Magee, 23,389 shares; Mr. Cook, 750
shares; Mr. Grote, 984 shares; Mr. Pedoto, 2,054 shares, Dr. Steger, 1,200
shares.
(2) Ownership of less than 1% is indicated by an asterisk (*).
(3) Includes 72,710 shares held by the Philip R. Myers Family Limited
Partnership, for which Mr. Myers and his spouse serve as general partners.
(4) Mr. Carey joined Provident as Executive Vice President and Chief Financial
Officer on November 19, 1998. For the five year period prior to joining
Provident, Mr. Carey served as Senior Vice President and Controller of
Corestates Financial Corp. and Chief Financial Officer of Corestates Bank.
Mr. Carey is employed under an arrangement which provides for an annual
salary of $250,000, a guaranteed bonus of $150,000 for 1999, 40,000 stock
options in 1998, a change in control severance benefit of two times his
annual salary and bonus, plus health and other benefits, and a termination
severance benefit of one times his annual salary and bonus, plus health and
other benefits. Mr. Carey's employment arrangement has no term.
(5) Mr. Magee has served as Vice President and General Counsel of Provident
since February, 1989, and Secretary since April, 1990. Mr. Magee has served
as Senior Vice President and General Counsel of The Provident Bank since
February, 1989, and Secretary since April, 1990.
(6) Includes 1,181,250 shares held in Trust under which Mr. Pedoto serves as
co-trustee with shared voting and dispositive powers.
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who own more than 10% of a registered
class of the Company's equity securities to file reports of ownership and
changes in ownership. Based on a review of the copies of such forms received by
it, the Company believes that during the last fiscal year, all of its executive
officers, directors and ten percent stockholders complied with the Section 16(a)
reporting requirements.
SUMMARY COMPENSATION TABLE
Securities
Name and Annual Compensation Underlying All Other
Principal Position Year Salary($) Bonus($) Options(#) Compensation(1)($)
- -------------------- ---- --------- -------- ---------- ------------------
Robert L. Hoverson 1999 577,885 550,000 65,000 349,160
President and Chief 1998 542,467 500,000 82,500 270,911
Executive Officer 1997 435,192 447,120 67,000 304,290
Christopher J. Carey 1999 254,808 200,000 0 142,349
Executive Vice 1998 25,962 0 40,000 0
President and 1997 0 0 0 0
Chief Financial
Officer
Mark E. Magee 1999 180,296 80,000 9,000 114,553
Vice President, 1998 181,042 77,000 8,900 101,107
Secretary, and 1997 168,039 74,520 22,500 119,592
General Counsel
Philip R. Myers 1999 469,794 325,000 28,000 265,541
Executive Vice 1998 471,681 310,000 26,750 223,241
President 1997 437,740 289,440 44,000 246,199
(1) For 1999, Mr. Hoverson received contributions of $17,500, Mr. Magee
received $17,749 and Mr. Myers received $17,749, pursuant to the Employee
Stock Ownership Plan. Employer contributions made pursuant to other benefit
plans were as follows: 401(k) Plan: Mr. Hoverson, $2,500 and Mr. Magee,
$1,645; the Excess Benefit Plan: Mr. Hoverson, $84,137, Mr. Magee, $455,
and Mr. Myers, $50,345 ; the net premiums paid on Provident 's Split Dollar
Life Insurance Plan: Mr. Hoverson, $78,297, Mr. Carey, $20,250, Mr. Magee,
$2,857, and Mr. Myers, $35,166; the Deferred Compensation Plan: Mr.
Hoverson, $166,725, Mr. Carey, $9,842, Mr. Magee, $91,846, and Mr. Myers,
$162,280. Mr. Carey received $112,257 as reimbursement for relocation
expenses incurred in connection with his hiring.
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Number of % of Total Potential Realized Value at
Securities Options Assumed Annual Rates of Price
Underlying Granted to Exercise Appreciation for Option Term($)
Options Employees Price Expiration -------------------------------
Names Granted(1) Fiscal 1999 ($/Share) Date 0% 5% 10%
- --------------------- ----------- ----------- --------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert L. Hoverson 65,000 8.9 38.25 2/24/2009 0 1,563,589 3,962,442
Christopher J. Carey 0
Mark E. Magee 2,253 .31 38.25 2/24/2009 0 54,196 137,344
6,747 .92 36.34 2/24/2009 12,886 154,196 390,763
Philip R. Myers 28,000 3.83 38.25 2/24/2009 0 673,545 1,706,898
<FN>
(1) The right to exercise the options shown vests at 20% per year.
</FN>
</TABLE>
FISCAL 1999 OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Shares Underlying Unexercised Value of Unexercised In-the-
Acquired Value Options at FY-End Money Options at FY-End
Name On Exercise Realized($) Exercisable/Unexercisable Exercisable/Unexercisable($)
- ------------------------ ----------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Robert L. Hoverson None None 273,925/210,575 6,266,049/884,412
Christopher J. Carey None None 8,000/ 32,000 18,586/ 74,345
Mark E. Magee None None 70,405/ 40,870 1,554,803/281,676
Philip R. Myers None None 173,700/ 97,175 4,138,479/480,144
</TABLE>
<PAGE>
Supplemental Executive Retirement Plan
Pension Plan Table
Years of Service
------------------------------------------------------------
10 15 20 25 30
Remuneration and over
- ---------------- -------- -------- -------- -------- ---------
$ 150,000 $45,000 $ 52,500 $ 60,000 $ 67,500 $ 75,000
250,000 75,000 87,500 100,000 112,500 125,000
400,000 120,000 140,000 160,000 180,000 200,000
500,000 150,000 175,000 200,000 225,000 250,000
600,000 180,000 210,000 240,000 270,000 300,000
800,000 240,000 280,000 320,000 360,000 400,000
1,000,000 300,000 350,000 400,000 450,000 500,000
1,200,000 360,000 420,000 480,000 540,000 600,000
1,400,000 420,000 490,000 560,000 630,000 700,000
1,600,000 480,000 560,000 640,000 720,000 800,000
In November, 1993, the Board of Directors adopted a Supplemental Executive
Retirement Plan ("SERP" ) to provide a supplemental retirement benefit to key
management or highly compensated employees of the Company who may be designated
from time to time by the Compensation Committee.
The purpose of the SERP is to assure that each participant receives an annual
retirement benefit starting at age 65, based on years of service, of up to 50%
of the average of his or her highest consecutive five years' annual compensation
(which relates to the salary and bonus columns of the Summary Compensation Table
on page ) during the ten years preceding the participant's retirement,
disability, termination of employment or removal from the SERP. When a
participant retires, or if a participant's employment is terminated within 24
months of a change in control, the SERP benefit is calculated, and then funds
from the following sources are deducted to determine the payment due from the
Company under the SERP; (i) one half of the participant's monthly social
security insurance benefit and (ii) the participant's accrued benefits
attributable to employer contributions to the Company's Employee Stock Ownership
Plan, 401 (k) Plan, Excess Benefit Plan, Deferred Compensation Plan and any
other qualified or non-qualified pension or deferred compensation plans
maintained by the Company. If the sum of these payments exceeds the
participant's benefit computed under the SERP, then no payment will be due from
the Company under the SERP.
The table above shows the assumed actuarial value of the retirement plan
benefits plus the SERP payment which, when taken together, will result in a
total retirement payment based on average compensation and years of service.
Assuming retirement at age 65, or termination of employment within 24 months of
a change in control, the number of years of service for the four individuals
named in the summary compensation table would Christopher J. Carey, 20 years;
Robert L. Hoverson, 24 years; Mark E. Magee, 28 years; and Philip R. Myers, 42
years.
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes salaries,
bonuses and stock option awards for executive officers on an annual basis. The
Committee's policy is to encourage and motivate Provident's executive officers
to achieve both short-term and long-term business, financial and community
goals, and thereby build shareholder value on a steady basis. The Committee
believes it important to provide competitive levels of compensation that will
enable Provident to attract and retain the most qualified executives and to
provide incentive plans that emphasize stock ownership, thus aligning more
closely the interests of management with those of shareholders.
The Committee has established three primary components which it utilizes in
setting annual compensation levels, namely:
o Base Compensation
o Annual Bonuses
o Stock Option Grants
In establishing compensation levels for 1999, the Committee utilized executive
compensation surveys which the Committee believes are appropriate. In addition,
the Committee reviewed compensation levels paid by Midwest-based bank holding
companies of similar asset size. The Committee sets the levels of executive
compensation at the high end of the ranges described in the surveys.
Compensation in excess of $1,000,000 per year paid to the Chief Executive
Officer of a company as well as the other executive officers listed in the
compensation table is not deductible for Federal income tax purposes unless it
is "performance-based" and approved by shareholders. The Committee does not
believe these limitations should interfere with the application of policies
which guide its compensation decisions.
Base compensation
- ------------------
In establishing base salaries for 1999 the Committee took into account each
particular executive officer's level of responsibility and potential for future
responsibilities, salary levels of competitors for similar functions and
Provident's results of operations in 1998. The Committee also took into account
the recommendations of the President for executive officers other than himself
in establishing base salaries.
Bonuses and stock options
- -------------------------
Bonuses for 1999, other than for the President, were based primarily on
recommendations made by the President, the Committee's review of bonus awards
paid by the banking institutions included in the surveys and the Committee's
evaluation of Provident's performance and the relative contributions to that
performance by the executive officers to whom bonuses were awarded. While the
bonus awards were based on Provident's performance, they were not tied to
specific performance objectives.
Awards of stock options are made by the Committee to motivate long-term future
performance and as a reward for past performance, consistent with the purposes
set forth in Provident's 1997 Stock Option Plan.
Chief Executive Officer
- -----------------------
In determining the compensation paid to Robert L. Hoverson, who served as
Provident's President and Chief Executive Officer in 1999, the Committee
utilized each of the components described above for executive officers. In this
regard, the Committee established Mr. Hoverson's salary level for 1999 based on
its evaluation of not only Provident's financial performance, but also on the
Committee's evaluation of Mr. Hoverson's creative abilities in planning for and
leading Provident during 1998, and setting Provident on a course of sustained
and soundly managed growth and profitability. The Committee similarly made its
own evaluation of Mr. Hoverson's contributions to Provident on a subjective
basis in establishing the amount of his bonus payment and stock option awards.
While the compensation for Mr. Hoverson was based on Provident's performance, it
was not tied to specific performance objectives.
Compensation Committee of the Board of Directors:
Sidney A. Peerless, Chairman
Thomas D. Grote, Jr.
Joseph A. Pedoto
<PAGE>
FINANCIAL PERFORMANCE
The graph below summarizes the cumulative return experienced by Provident's
shareholders over the years 1994 through 1999, compared to the NASDAQ Index and
the Keefe, Bruyette & Woods 50 Bank Index which is a market-capitalization
weighted bank stock index that includes all money-center banks and most major
regional bank holding companies, and is a widely available index. The number of
companies comprising the KBW 50 Index allows ready comparisons of Provident's
stock with an industry standard. Provident is not included in the KBW 50 Index.
Provident Financial Group Inc. Total Return Analysis
Proxy Statement Year Ended December 31, 1999
Total
Accm Total Return
Closing Dividend Dividend Including Index
Period Price Per Share Per Share Dividends PFGI Nasdaq KBW 50
- ------- ------- --------- --------- --------- -------- ------- -------
1994 15.1111
1995 20.8889 0.4667 0.4667 21.3556 141.32 141.33 160.16
1996 34.0000 0.6300 1.0967 35.0967 232.26 173.89 226.56
1997 48.5000 0.7200 1.8167 50.3167 332.98 213.07 331.21
1998 37.7500 0.8000 2.6167 40.3667 267.13 300.25 358.62
1999 35.8750 0.8800 3.4967 39.3717 260.55 542.43 346.17
Adjusted For Stock Splits
<PAGE>
CERTAIN TRANSACTIONS
Provident and its subsidiaries, in their normal course of business have had and,
to the extent permitted by applicable regulations and other regulatory
restrictions expect to continue to have, transactions with Provident's
directors, officers, principal shareholders and affiliates of such persons
including American Financial Group, Inc. ("AFG") and its subsidiaries. All such
transactions are and will be on terms no less favorable to Provident than those
which could be obtained with non-affiliated parties.
Provident received $211,000 in 1999 from AFG in connection with an expense
sharing arrangement for a cafeteria operated by Provident for the employees of
both companies. A subsidiary of AFG provides security guard and surveillance
services at Provident's main office for which Provident was charged $100,000 in
1999. Provident leases its main banking and corporate offices from a trust for
the benefit of a subsidiary of AFG. Provident was charged rent under the leases
of $2,538,000 in 1999. Provident purchased payroll services from a subsidiary of
AFG, for which it was charged $70,000 in 1999. During 1999, $65,000 was paid by
Provident for various real estate leasing services provided by a company owned
by a son of Dr. Sidney A. Peerless.
Certain of the principal shareholders, directors and executive officers of
Provident maintain investments in Provident commercial paper. The average
month-end commerc ial paper balances for such persons (including commercial
paper held by corporations they control, members of their immediate families and
trusts for their benefit) for 1999 were as follows: Carl H. Lindner, $8,913,000;
Keith E. Lindner, $4,813,000; siblings of Carl H. Lindner, $3,954,000; and
Philip R. Myers, $74,000. Loans and lines of credit were extended by Provident
Bank in 1999 to certain of Provident's executive officers, directors, principal
shareholders, affiliates of such persons and to members of their families.
Management believes that such loans and lines of credit were made in the
ordinary course of business, on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons and do not involve more than the normal risk of
collectibility or present other unfavorable features. During 1999, the highest
month-end outstanding balances of loans to principal shareholders of Provident
and their related interests were as follows: AFG, $10,953,000; Carl H. Lindner,
$2,169,000; siblings of Carl H. Lindner, $15,884,000; Carl H. Lindner III,
$63,000; Keith E. Lindner, $136,000; and S. Craig Lindner, $2,472,000. In
addition, subsidiaries of Provident Bank have entered into various automobile
and equipment leases with AFG from time to time on market terms and conditions.
During 1999, the aggregate payments on these leases were $953,000 by AFG.
INDEPENDENT AUDITORS
The accounting firm of Ernst & Young LLP served as Provident's independent
auditors for 1999 and has been selected to serve in the same capacity for the
current year. One or more representatives of that firm will attend the Annual
Meeting and will be given the opportunity to comment, if they so desire, and to
respond to appropriate questions that may be asked by shareholders.
SHAREHOLDER PROPOSALS FOR NEXT YEAR
The deadline for shareholder proposals to be included in the Proxy Statement for
next year's meeting is December 1, 2000.
The form of Proxy for this meeting grants authority to the designated proxies to
vote in their discretion on any matters that come before the meeting except
those set forth in the Company's Proxy Statement and except for matters as to
which adequate notice is received. In order for a notice to be deemed adequate
for the 2001 Annual Shareholders' Meeting, it must be received prior to February
14, 2001. If there is a change in the anticipated date of next year's annual
meeting or these deadlines by more than 30 days, we will notify you of this
change through our Form 10-Q filings.
<PAGE>
QUESTIONS?
Provident will send upon written request, without charge, a copy of Provident's
current annual report on Form 10-K to any Provident shareholder who writes to
Provident's Investor Relations Coordinator at the address shown below. If you
have questions or need more information about the annual meeting, write to:
Patricia A. Forsythe
Investor Relations Coordinator
Provident Financial Group, Inc.
MS 843A
One East Fourth Street
Cincinnati, Ohio 45202
E-mail: [email protected]
or call us at (513) 345-7102 or
(800) 851-9521.
For more information about Provident, visit our website at
www.provident-financial.com. For information about your record holdings call The
Provident Bank Shareholder Services at (888) 863-5893.
By Order of the Board of Directors
Mark E. Magee
Secretary
<PAGE>
PROXY
Registration Name and Address
The undersigned hereby appoints Robert L. Hoverson and Mark E. Magee, or either
of them, the proxies of the undersigned, each with the power of substitution, to
vote cumulatively or otherwise all shares of Common Stock which the undersigned
would be entitled to vote at the Annual Meeting of Shareholders of Provident
Financial Group, Inc., to be held April 25, 2000, at 9:00 A.M. Eastern Time, as
specified below on the matters described in Provident's Proxy Statement and in
their discretion with respect to such other business as may properly come before
the meeting or any adjournment thereof. THE PROXY WILL BE VOTED AS RECOMMENDED
BY THE BOARD OF DIRECTORS UNLESS A CONTRARY CHOICE IS SPECIFIED.
The Board of Directors recommends a vote for the following:
Election of seven Directors
[ ] for authority to vote for the [ ] Withhold authority to vote for
nominess listed below (except all nominees listed below
those whose names
have been crossed out)
Jack M. Cook Thomas D. Grote, Jr. Robert L. Hoverson
Philip R. Myers Joseph A. Pedoto Sidney A. Peerless
Joseph A. Steger
The Board Of Directors recommends a vote against the following proposal:
Shareholder proposal urging Board of Directors to present an annual Strategic
Plan Report.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Dated: , 2000 Signature:
-------------------------------------------
Important: Please sign exactly as name(s)
appears on this form indicating, where
proper, official position or representative
capacity. In case of joint holders, all
should sign.
To vote your shares, you must mark, sign, date and return this proxy form.
When properly signed, this proxy will be voted in the manner directed by the
above signed shareholder(s). A properly signed proxy that gives no
direction will be voted as recommended by the Board of Directors.
This proxy is solicited on behalf of the board of directors.
