REPUBLIC SECURITY FINANCIAL
CORPORATION
4400 Congress Avenue
West Palm Beach, Florida 33407-3288
(561) 840-1200
--------------------------------------------
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 29, 1998
--------------------------------------------
The Annual Meeting of Shareholders of Republic Security Financial
Corporation (the "Company") will be held at the Palm Beach Airport Hilton, 150
Australian Avenue, West Palm Beach, Florida, on Wednesday, April 29, 1998, at
2:00 p.m., to consider and act upon the following matters:
1. The election of six directors; each to serve until the 2001 Annual Meeting
and until his or her successor is elected and qualified.
2. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on February 27,
1998 as the record date for determining shareholders of the Company entitled to
notice of and to vote at the meeting. A list of shareholders entitled to notice
of the meeting shall be available for inspection by any shareholder, during
regular business hours, for a period of ten days prior to the meeting at the
principal executive office of the Company and at the Annual Meeting. You may
revoke your proxy at any time before it is exercised by following the
instructions set forth on the first page of the accompanying proxy statement.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. TO INSURE YOUR
REPRESENTATION AT THE MEETING, PLEASE COMPLETE AND PROMPTLY MAIL YOUR PROXY IN
THE PREPAID RETURN ENVELOPE PROVIDED. THIS WILL NOT PREVENT YOU FROM VOTING IN
PERSON, SHOULD YOU SO DESIRE.
By Order of the Board of Directors
H. Gearl Gore
Secretary
West Palm Beach, Florida
March 30, 1998
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<PAGE>
REPUBLIC SECURITY FINANCIAL CORPORATION
4400 Congress Avenue
West Palm Beach, Florida 33402-3288
(561) 840-1200
PROXY STATEMENT
Annual Meeting of Shareholders
to be held on
April 29, 1998
The accompanying proxy is solicited by the Board of Directors of
Republic Security Financial Corporation (the "Company"), the holding company of
Republic Security Bank (the "Bank"), for use at the Annual Meeting of
Shareholders of the Company to be held at the Palm Beach Airport Hilton, 150
Australian Avenue, West Palm Beach, Florida, on Wednesday, April 29, 1998, at
2.00 p.m., and at any postponements or adjournments thereof, for the purposes
set forth herein and in the accompanying Notice of Annual Meeting of
Shareholders. A proxy may be revoked at any time prior to voting by providing
the Secretary with written notice revoking such proxy or a duly executed proxy
bearing a later date, or by attending the meeting and voting in person.
Attending the meeting by itself will not revoke a proxy previously given.
This proxy statement and the accompanying proxy are first being mailed
to shareholders on or about March 30, 1998, together with the Company's Annual
Report to Shareholders for the fiscal year ended December 31, 1997.
The Company's principal executive offices are located at 4400 Congress
Avenue, West Palm Beach, Florida 33402-3288 and its telephone number is (561)
840-1200.
Holders of shares of Common Stock of record at the close of business on
February 27, 1998, will be entitled to vote on all matters presented at the
Annual Meeting and at any postponement or adjournment thereof. As of such date,
there were 22,781,445 shares of Common Stock issued and outstanding. Each share
of Common Stock entitles the holder to one vote in the election of directors and
all other matters voted upon by the shareholders. The presence, either in person
or by proxy, of persons entitled to vote a majority of the Company's outstanding
shares of Common Stock is necessary to constitute a quorum for the transaction
of business at the Annual Meeting. Directors are elected by the affirmative vote
of a plurality of the votes cast at the Annual Meeting. If no instructions are
given on a proxy, it will be voted for the election as directors of the six
nominees. Abstentions and broker non-votes will, if present, be counted for
purposes of establishing a quorum at the Annual Meeting, but will not be counted
for purposes of the number of votes cast at the meeting.
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ELECTION OF DIRECTORS
The Board of Directors, which is currently comprised of eighteen
members, is divided into three classes. The prescribed term for a director is
three years. Each class is comprised of 6 members. All members of Class 2 are
standing for re-election in 1998.
The Company has no reason to believe that any nominee for election will
not be able to serve his prescribed term. The persons named in the proxy will,
however, have discretionary authority to vote for another if a nominee is unable
or unwilling to serve.
Set forth below is information regarding such nominees and other
directors whose terms of office will continue after the Annual Meeting,
including their ages and principal occupations or employment and business
experience during the last five years.
Nominees for Election as Directors through 2001
Class 2 Directors (terms expire 1998):
George M. Apelian, 66, has been a Director and Executive Vice
President, Dade County, of the Company since December 1997 when the Company
acquired County Financial Corporation ("CFC"). Mr. Apelian served as President
and director of CFC since 1984 and as President, Chief Executive Officer and
director of County National Bank of South Florida ("County") since 1984. Mr.
Apelian has been in the banking industry since 1958.
Paula Berliner, 54, has been a Director of the Company since June 1997,
when the Company acquired Family Bank and was a Director of Family Bank since
its inception in 1986. Ms. Berliner has been Vice President and Director of
Acorn Venture Capital Corporation, a public venture capital company traded on
the Nasdaq Small-Cap Market, since June 1992.
H. Gearl Gore, 50, has been a Director and the Secretary of the Company
since its inception. He has been the President of H. Gearl Gore, Inc., a real
estate appraisal firm in Jupiter, Florida since 1983. Mr. Gore has been the
President and Chief Operating Officer of Northco Investment Properties, Inc., a
real estate brokerage firm in Jupiter, Florida, from 1981 to present.
Mary McCarty, 43, has been a Director of the Company since December
1997 when the Company acquired CFC. Ms. McCarty served as a Director of CFC and
County since May 1997. She was elected to District IV Palm Beach County
Commission in November 1990 and continues to serve in such position. She was
voted Chair of the Palm Beach Commission in November of 1992.
William F. Spitznagel, 71, has been a Director of the Company since its
inception through December 31, 1986 and from February 21, 1987 to present. He
was Chairman and President of Roadway Services, Inc., a motor freight company,
from 1978 until his retirement in 1981.
William Wolfson, 69, has been a Director of the Company since 1993. He
has been a certified public accountant since 1960 and in 1995 retired as senior
partner in the accounting firm of Wolfson, Milowsky, Melzer, Ettinger &
Wieselthier, P.C.
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Directors whose Terms do not Expire this Year
Class 3 Directors (terms expire 1999):
Mary Anna Fowler, 70, has been a Director of the Company since June 1997,
when the Company acquired Family Bank and was a Director of Family Bank since
its inception in 1986. Since 1991, Ms. Fowler has been Vice President of Exotic
Gardens, Inc., a florist company.
Thomas J. Langan, Jr., 77, has been a Director of the Company since
December 1997, when the Company acquired CFC. He served as a Director of Carney
Bank from 1991 until the merger with County in 1996 when he became a director of
CFC and County. Mr. Langan was in the banking profession from 1949 to 1983.
Carol R. Owen, 62, has been a Director and Chairman of the Board,
Broward County, of the Company since June 1997, when the Company acquired Family
Bank and was a Director, Chief Executive Officer and President of Family Bank
since its inception in 1986.
Richard C. Rathke, 66, has been a Director of the Company since its
inception. He has been the President of RCR Enterprises, Inc., a real estate
development firm in Jupiter, Florida, since 1979.
Rudy E. Schupp, 47, has been President and Chief Executive Officer of
the Company since 1985, and the President and Chief Executive Officer of the
Bank since its inception. From 1980 to 1984, Mr. Schupp was employed by
AmeriFirst Bank, FSB, Miami, Florida, where he held the position of Division
Vice President and, previously, was Senior Vice President and Division Manager
of the Orlando Division of AmeriFirst Bank, FSB.
Victor Siegel, M.D., 50, has been a Director of the Company since 1989.
He is a physician and surgeon specializing in Obstetrics and Gynecology and has
been practicing in Palm Beach County since January 1982. He has been Chief of
the Department of Obstetrics and Gynecology at Wellington Hospital since 1993.
He is also on the Board of Directors for the non profit Jupiter Theater of the
Performing Arts.
Class 1 Directors (terms expire 2000):
Dr. Thomas F. Carney, 71, has been a Director of the Company since
December 1997, when the Company acquired CFC. He served as a member of the Board
of Directors of County since 1962 and as Chairman of the Board of County since
1967. Dr. Carney served as a member of the Board of Directors of CFC since 1984.
Dr. Carney is also the treasurer of Rockingham Venture, Inc., since 1984,
treasurer of Connecticut Yankee Greyhound Racing, Inc., and PM Management Group,
Inc., since 1975 and treasurer of Yankee Greyhound Racing, Inc., since 1973.
Joseph D. Cesarotti, 69, has been a Director of the Company since June
1997, when the Company acquired Family Bank and was a Director of Family Bank
since its inception in 1986. Mr. Cesarotti has been retired since June 1992.
Prior to his retirement and from 1956, Mr. Cesarotti served as President and
Chief Executive Officer of Sungraf Inc., a sign manufacturing company.
Richard J. Haskins, 48, has been Executive Vice President and Chief
Financial Officer of the Company and the Bank since 1989, Senior Vice President
of the Company and the Bank since August 1984, and a Director of the Company and
the Bank since 1986. For ten years prior to 1984, he had been an accountant with
the West Palm Beach, Florida office of Deloitte Haskins & Sells, certified
public accountants, where he held the position of Manager.
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<PAGE>
Eugene W. Hughes, Jr., 65, has been a Director of the Company since June
1997, when the Company acquired Family Bank and was a Director of Family Bank
since its inception in 1986. Mr. Hughes served as Vice President and Chief
Financial Officer of Family Bank from August 1988 to December 31, 1994. Mr.
Hughes is currently retired.
Lennart E. Lindahl, Jr., 54, has been a Director of the Company since
its inception. From 1970 through 1994, he was President of Lindahl, Browning,
Ferrari & Hellstrom, Inc., Consulting Engineers in Jupiter, Florida, and
currently serves as Chairman of the Board. He is past chairman of the Economic
Council of Palm Beach County and past president of the Palm Beach County
Development Board. Additionally, he currently serves as a member and past
Chairman of the Florida Inland Navigation District.
Bruce E. Wiita, M.D., 60, has been a Director of the Company since its
inception. He is a surgeon and urologist practicing in Jupiter and Palm Beach
Gardens since 1973. He is the former Chief of Staff of the Jupiter Hospital and
Chief of Surgery of the Palm Beach Gardens Hospital and Jupiter Hospital.
Currently, he is a Director of the American Heritage Management and Development
Corporation, a real estate development company, and Chairman of the DevMed Group
Inc., a medical device manufacturing corporation.
Committees of the Board of Directors and Meeting Attendance
During the year ended December 31, 1997 there were 12 regular meetings
of the Board of Directors, and one special meeting. Each director attended at
least 75% of the meetings of the Board and of committees of the Board on which
such director served.
The Board of Directors has an Audit Committee which reviews, reports to
and advises the Board with respect to various auditing and accounting matters
involving the selection of and the nature of services to be performed by the
Company's independent auditors, the performance of the auditors and the fees to
be paid to them, the scope of audit procedures and the Company's accounting
procedures and internal controls. Until June 1997 the members of the Audit
Committee were Directors Gore, Rathke and Wolfson. Since June 1997 the members
of the Audit Committee are Directors Berliner, Gore, Hughes, Rathke and Wolfson.
Four Audit Committee meetings were held during the year ended December 31, 1997.
The Board of Directors has a Compensation Committee which investigates
comparative compensation, reviews levels of staffing and compensation and
reports its findings and recommendations to the Board of Directors. See "Report
of the Compensation Committee". Until June 1997 the members of the Compensation
Committee were Directors Lindahl, Spitznagel and Wiita. Since June 1997 the
members of the Compensation Committee are Directors Fowler, Lindahl, Spitznagel
and Wiita. Nine Compensation Committee meetings were held in the year ended
December 31, 1997.
The Board of Directors has a Nominating Committee, which reviews the
qualifications of candidates for the Board and reports its findings and
recommendations to the Board. The members of the Nominating Committee are
Directors Haskins, Lindahl, Siegel and Spitznagel. One Nominating Committee
meeting was held during the year ended December 31, 1997. The Nominating
Committee will consider proposals for nominees for Director from shareholders
which are made in writing to the Secretary of the Company at 4400 Congress
Avenue, West Palm Beach, Florida, 33407-3288.
Director Compensation
In 1997 each non employee director received a retainer of $700 per
month plus $800 per Board meeting attendance and committee members received $200
for each committee meeting attended, while Committee Chairman received $250. In
1997, each outside director was granted 7,500 stock options under the 1997
Performance Incentive Plan (see "Long-term Incentive Compensation") at an
exercise price of $9.125. These director options are exercisable on August 20,
2000 and expire on August 20, 2007.
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<PAGE>
The Company established a non-qualified unfunded retirement plan in
1997 for non employee directors of the Company. The annual retirement benefit
for the directors will be 75% of the final fees paid in the calendar year of the
director's termination of service for a duration of 180 months.
Consent to Findings of Exchange Act Violations
On October 22, 1993, the Company and Mr. Haskins consented, without
admitting or denying the matters therein, to findings of the Securities and
Exchange Commission that he caused violations of Sections 13(a) and 13(b)(2)(A)
of the Securities Exchange Act of 1934 and Rules 12b-20 and 13a-13 promulgated
hereunder and to an order of the Commission that he cease and desist from
committing or causing future violations of such provisions. The Company's and
Mr. Haskins' consents were given in connection with a determination that the
Company failed to timely record a loss on a certain lease transaction in its
Form 10-Q for the quarter ended June 30, 1989 and that Haskins, as the Company's
chief financial officer, determined not to record the loss in such 10-Q.
EXECUTIVE COMPENSATION, BENEFITS AND RELATED MATTERS
The following table sets forth certain information relating to the
total annual compensation paid or accrued by the Company and its subsidiaries,
during the fiscal years ending December 31, 1997 and 1996 and the nine months
ended December 31, 1995, to its Chief Executive Officer, its other two most
highly compensated executive officers who served in such capacities on December
31, 1997 whose total annual salary and bonus exceeded $100,000 (the "Named
officers").
<TABLE>
<CAPTION>
====================================================================================================================================
Annual Compensation Long-Term Compensation Awards
Other Restricted Stock Securities
Fiscal Annual Award(s) Underlying
Name and Principal Position Year Salary($)(a) Bonus($)(b) Compensation ($)(c) SARs (#)
- --------------------------- --------------- ------------- -------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Rudy E. Schupp
Chairman and Dec 31, 1997 198,960 238,465 * 0 0
Chief Executive Officer Dec 31, 1996 180,760 122,910 * 0 0
of the Company and the Bank Dec 31, 1995 116,760 97,060 * 25,000 500,000
- --------------------------- --------------- ------------- -------------- --------------- --------------- ----------------
Richard J. Haskins
Executive Vice President Dec 31, 1997 128,850 132,480 * 0 0
and Chief Financial Officer Dec 31, 1996 130,680 65,420 * 0 0
of the Company and the Bank Dec 31, 1995 91,680 45,530 * 12,750 200,000
- --------------------------- --------------- ------------- -------------- --------------- --------------- ----------------
Roger Savage
Senior Vice President Dec 31, 1997 116,665 16,000 * 0 0
Business Banking Dec 31, 1996 90,000 9,560 * 0 0
Dec 31, 1995 56,250 2,345 * 0 0
====================================================================================================================================
<FN>
* Value of perquisites and other personal benefits does not exceed the lesser of
$50,000 or 10% of the total annual salary and bonus reported for the executive
officer.
FOOTNOTES:
(a) Salary: Total base salary paid for the years December
31, 1997 and 1996 and the nine months ended
1995 for the Company and the Bank.
(b) Bonus: Annual incentive compensation paid for financial
results achieved during the fiscal year.
(c) Restricted Stock Awards: The amounts represent
the dollar value of Company awards on the date
of grant for stock grants. Restricted stock
awards vest after three years provided the
executive does not resign or is not terminated
for cause. Dividends are paid on restricted
stock. The aggregate number of shares and
market value of restricted stock as of December
31, 1997 held by each named executive was as
follows: Schupp 6,000 shares ($58,800); Haskins
3,000 shares ($29,400).
</FN>
</TABLE>
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OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
====================================================================================================================================
Number of % of Total Options
Securities Granted to Exercise
Underlying Option Employees in Fiscal Price Grant Date
Name Granted(1) Year ( $/Share) Expiration Date Present Value ($)
- -------------------- ------------------ ------------------- ------------------ -------------------- --------------------
<S> <C> <C> <C> <C> <C>
Rudy E. Schupp 50,000 12% $9.125 8/20/07 95,500
Richard J. Haskins 25,820 6% $9.125 8/20/07 49,300
Roger Savage 25,307 6% $9.125 8/20/07 48,300
====================================================================================================================================
<FN>
(1) Options vest on August 20, 2000 and expire on August 20, 2007
(2) Grant date present value is determined using a variation of the
Black-Scholes model. This is a theoretical value for stock options.
The amount realized from these stock options will ultimately depend
on the market value of RSFC common stock at a future date.
</FN>
</TABLE>
Assumptions used in the Black-Sholes Model
Risk-Free
Expected Life Vesting Dividend Yield Volatility Rate of Return
9 years 3 years 2% 28.7% 6.0%
AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION /SAR VALUES
The following table summarizes the options and SARs exercised in the
last fiscal year and the value of unexercised options and SARs held at year end
by persons named in the Summary Compensation Table.
<TABLE>
<CAPTION>
====================================================================================================================================
Number of Shares Underlying Value of Unexercised In-the-Money
Shares Acquired Unexercised Options/SARS Options/SARS
on at FY-End (#) at FY-End ($)
Name Exercise (#) Value Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Rudy E. Schupp 63,294 288,500 469,652 50,000 1,070,900 31,250
Richard J. Haskins 25,000 93,750 187,120 25,820 461,900 17,685
Roger Savage 0 0 0 25,307 0 17,335
====================================================================================================================================
</TABLE>
EMPLOYMENT AGREEMENTS
Mr. Schupp and Mr. Haskins have employment agreements with the Company,
renewable each year, which provide for the payment of incentive compensation
equal to 1.4% for Schupp, and 0.6% for Haskins, of the Company's quarterly
consolidated income before taxes. These amounts are reflected in column (b) of
the Summary Compensation Table. The agreements also provide for a severance
payment equal to 200% and 150% of base salary and incentive compensation for
Schupp and Haskins, respectively, in the event of termination without cause and
provide for benefits including the use of an automobile and $200,000 term life
insurance for the benefit of the executive.
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If a change in control of the Company should occur, then he would be
entitled under the employment agreements to receive a lump sum payment equal to
three times his annual salary. The agreements also provide for payments the
executive would have received in respect to cash incentive compensation and
contemplate an additional payment of 20% of three times his annual salary as
compensation for discounted fringe benefits, as well as for the continuation of
any applicable employee benefit plans for a thirty-six month period. A "Change
of Control" is defined in the agreements as the acquisition by any person or
group of 25% or more of the combined voting power of the Company's then
outstanding securities.
Supplemental Executive Retirement Plan
In 1987 the Company initiated a non-qualified pension plan for senior
officers and division heads of the Company and the Bank. Eligibility to
participate in the plan requires that the employee be a division head with the
title of Vice President or above, have three years of consecutive service and be
approved by the Board of Directors. The number of persons eligible for this plan
in the current year is four. The expected cost of the plan for the current year
is $155,000. Those executives currently participating in the plan are Messrs.
Schupp, Haskins, Savage and one former executive officer. The retirement benefit
to the employee will range between 30% to 75% of his or her average base salary
for the last three years of employment and will commence no earlier than age 55
nor later than age 62. Participants vest 20% in the plan in the year they enter
the plan and become fully vested under various vesting schedules depending on
their retirement benefit.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is composed of Directors Fowler, Lindahl,
Spitznagel and Wiita. None of the members of the committee has ever been an
officer or employee of the Company or the Bank.
REPORT OF THE COMPENSATION COMMITTEE
General Policy
The Board Compensation Committee is responsible for making
recommendations to the Company's Board of Directors as to compensation of the
Company's executive officers. In addition, the Compensation Committee makes
recommendations to the Board of Director's as to outside director compensation,
company-wide benefit programs, including the Company's 1997 Performance
Incentive Plan, 401(k) program and employee stock purchase program, as well as
executive retirement plans. In terms of executive compensation, the Compensation
Committee bases its compensation decisions primarily on its overall assessment
of the executive's contribution to the profitability of the Company on both a
long-term and short-term basis, the executive's performance in connection with
the overall and specific strategic and tactical plans in the prior year, as well
as an assessment of the executive's role in ensuring the overall financial
success of the Company in future periods. In this respect, the Compensation
Committee seeks to reward leadership, innovation, strategic and tactical
achievements and entrepreneurship. In its deliberations, the Compensation
Committee generally does not perform a rote application of specific criteria in
making its decisions and such decisions are necessarily based in part on the
committee's subjective assessment of the executive's performance. Given the
differences in magnitude of a business unit or division, its line or staff
configuration, goal achievement may or may not be weighted heavily on financial
performance of the business unit or division as the amount of non-financial
accountability varies materially among executives of the Company. The
Compensation Committee continues to place emphasis on the close link between the
strategic and financial interests of shareholders and executive compensation as
the committee believes that this orientation is both motivating to the
executives and supports the highest levels of corporate strategic performance
over the Company's planning horizon. The Compensation Committee approaches the
mix of executive cash
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compensation with a belief that it should involve a fair base salary combined
with emphasis on incentive compensation as this approach has served the Company
well in the motivation and retention of its senior executives.
1997 Compensation
In planning and deliberating 1997 compensation decisions, the
Compensation Committee reviewed the Company's financial performance on both a
long-term and short-term basis, the job performance of each executive officer,
both financial and non-financial, compensation survey information provided by
outside professional compensation consultants with national and regional peer
group data, internally prepared performance review analyses and various other
information that the Compensation Committee viewed as relevant. In its
deliberations, the Compensation Committee reviewed the referenced information
for comparison purposes, and in doing so, did not set the compensation for any
of the Company's executive officers at a specific level due solely to
comparisons with the peer group. Instead, the committee's compensation decisions
generally reflect competitive factors, job performance in relation to
accountabilities, goal achievement, as well as circumstances and events that are
unique to each executive such as extraordinary efforts and expanded
responsibilities. In assessing the Company's performance, the Compensation
Committee considered, among other things, the profitability of the Company as a
whole, progress with the overall shareholder value plan, with special emphasis
on the executive's progress with the long-term strategic plan.
The Compensation Committee's compensation decisions reflect the factors
described, including objective factors and the subjective assessment of
executive performance with no specific rigid criteria applied to compensation
decisions.
Base Salary and Cash Incentive Compensation
Cash compensation decisions by the Compensation Committee take the form
of base salary and cash incentive compensation for the senior executive team.
The committee takes both a long-term and short-term view in arriving at its
determinations for overall cash compensation. The evaluation of varied criteria,
including objective and subjective factors, is brought to the Compensation
Committee's executive cash compensation decisions. In this connection, in 1997
the committee awarded increases in base salary to two of the four senior
executives - the Senior Vice President of Business Banking and the Senior Vice
President of Personal Banking. The Compensation Committee also elevated the
quarterly cash incentive compensation programs for these two executives based
upon achievement of a myriad of financial and non-financial goals. The
Compensation Committee continues to place emphasis on "at risk" compensation
related to executive performance as it believes that such compensation is
aligned with the Company's and shareholders' short-term and long-term interests
and such compensation also presents a traceable record of motivating and
retaining such executives. Base salary and the rate of cash incentive
compensation for the Company's Executive Vice President remained unchanged from
1996 to 1997, as the Compensation Committee determined that the existing base
salary was considered fair and an unchanged rate of cash incentive compensation
would place emphasis on achieving overall company performance goals while
placing clear emphasis on "at risk" compensation.
Long-term Incentive Compensation
The purpose of the Company's 1997 Performance Incentive Plan is to
encourage directors, officers and employees of the Company to contribute to the
growth and performance of the Company. The Plan is administered by the Board
Compensation Committee. The Compensation Committee granted 498,000 stock options
to directors, officers and employees in 1997 at various exercise prices, vesting
within three years of the grant date and expiring ten years from the grant. The
stock options granted in 1997 were designed to
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<PAGE>
recognize the individual's contribution to the Company's success during 1997 and
to communicate the importance of the individual's future contribution to
upcoming Corporate initiatives.
Chief Executive Officer Compensation
In determining Mr. Schupp's compensation, the Committee's review
emphasizes the Company's current and prior year's financial performance,
achievement of the Company's overarching strategic plan goals as well as the
prevailing market rates of compensation for the position. With regard to its
strategic plan, merger and acquisition goals were achieved as well as
significant growth of the Bank particularly through a successful merger and
acquisition initiative. A variety of market data was analyzed by the committee
in order to assess Mr. Schupp's relative compensation. It was the Compensation
Committee's conclusion that Mr. Schupp's current base salary and rate of cash
incentive compensation from the holding company are considered fair and
appropriate and remained unchanged for fiscal 1997. However, compensation from
the Bank was increased. This decision continues to place an emphasis on "at
risk" incentive compensation for Mr. Schupp revolving around the achievement of
long-term and short-term strategic and earnings goals for the Company. In this
connection, Mr. Schupp's compensation can expand and contract according to the
performance of the Company. As a result, a significant portion of Mr. Schupp's
cash compensation bears a close relationship to the shareholders' interests.
COMPENSATION COMMITTEE
Mary Anna Fowler
Lennart E. Lindahl, Jr.
William F. Spitznagel
Bruce E. Wiita, M.D.
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SECURITY OWNERSHIP
The following table sets forth, as of February 27, 1998, the number of
shares of the Company's Common Stock beneficially owned by each nominee for the
board of directors, the directors remaining in office, each person named in the
Summary Compensation Table, all directors and executive officers as a group and
each beneficial owner known to the Company of 5% or more of the Common Stock.
Except otherwise indicated, each individual named has sole investment and voting
power with respect to the shares shown.
<TABLE>
<CAPTION>
===================================================================================================================================
Amount and nature of
Title of Class Name of Beneficial Owner Beneficial Ownership Percent of Class
- --------------------- ---------------------------------------------- --------------------------------- ---------------
<S> <C> <C> <C>
Common George M. Apelian 59,278 (4) *
Common Paula Berliner 275,793 (1)(7)(8) 1.2
Common Dr. Thomas F. Carney 1,440,981 (4) 6.3
Common Joseph D. Cesarotti, Sr, 160,835 (1)(7)(8) *
Common Mary Anna Fowler 111,797 (8) *
Common H. Gearl Gore 149,924 (2)(3)(5)(8) *
Common Richard J. Haskins 106,608 (3)(4)(8) *
Common Eugene W. Hughes 196,119 (1)(7)(8) *
Common Thomas J. Langan, Jr. 11,201 (4) *
Common Lennart E. Lindahl 139,354 (2)(3)(5)(8) *
Common Mary A. McCarty 7,788 (4) *
Common Carol R. Owen 308,985 (1)(7)(8) 1.4
Common Richard C. Rathke 148,099 (2)(3)(5)(8) *
Common Rudy E. Schupp 209,568 (3)(4)(6)(8) *
Common Victor Siegel, M.D. 275,206 (2)(3)(8) 1.2
Common William F. Spitznagel 287,576 (2)(3)(8) 1.3
Common Bruce E. Wiita, M.D. 152,825 (2)(3)(5)(8) *
Common William Wolfson 16,774 (2)(8) *
Common Roger Savage 2,425 (4)(8) *
Common All Directors and Executive Officers as a Group
(26 persons) 4,280,478 (9) 18.0
====================================================================================================================================
<FN>
* Less than 1%
The address of each 5% shareholder is:
C/O Republic Security Financial Corporation
4400 Congress Avenue
West Palm Beach, Florida 33407
(1) Includes 7,150 shares issuable upon the exercise of options, at an exercise price of $1.65 per share.
(2) Includes 5,250 shares issuable upon the exercise of options, at an exercise price of $3.33 per share.
(3) Includes 12,128 shares issuable upon exercise of options, at an exercise price of $2.48 per share.
(4) Includes 7,500 shares issuable upon exercise of options, at an exercise price of $9.00 for
Carney, Langan and McCarty, 22,000, 15,000, 5,000 and 40,000 for Apelian, Haskins, Savage and Schupp, respectively.
(5) Includes 27,536 shares issuable upon exercise of warrants, at an exercise price of $5.00 per share.
(6) Includes 5,524 shares issuable upon exercise of options, at an exercise price of $2.50 per share.
(7) Includes 75,647 shares issuable upon exercise of options, at an exercise price of $2.078 per share.
(8) Includes 7,500 shares issuable upon exercise of options, at an exercise price of $9.13 per share, except
for Messrs. Haskins, Savage and Schupp, which are 25,820, 25,307 and 50,000, respectively.
(9) Includes options and warrants for 1,015,124 shares of Common Stock. Actual Common Stock owned is 14.4% of the total
outstanding.
</FN>
</TABLE>
10
<PAGE>
STOCK PERFORMANCE
Setforth below is a five-year comparison of the total shareholder return
of the Company with both a broad equity market index and a peer group.
The table assumes $100 was invested on December 31,
1992 and shows the cumulative total return as of each December 31 thereafter.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL
RETURN* Among Republic Security Financial Corporation, the
Russell 2000 Index,
and a Peer Group
<TABLE>
<CAPTION>
====================================================================================================================================
December 31,
(dollars in thousands) 1992 1993 1994 1995 1996 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Republic Security Financial Corporation 100 122 126 172 198 328
Peer Group 100 128 139 167 206 340
Russell 2000 100 119 117 150 175 214
====================================================================================================================================
<FN>
$100 invested on December 31, 1992 in stock or index-including reinvestment of
dividends. Fiscal year ending December 31.
</FN>
</TABLE>
The board equity market index used was the Russell 2000 and the peer group
represents publicly traded commercial banks with asset size between $750 million
and $1 billion at September 30, 1997.
11
<PAGE>
MANAGEMENT INDEBTEDNESS TO THE BANK
<TABLE>
<CAPTION>
====================================================================================================================================
Largest Amount
Outstanding During
the Year Ended Balance December Interest Rate at
Officer and/or Director Purpose December 31, 1997 31, 1997 December 31, 1997
- --------------------------------------- ---------------- --------------------- ------------------ ----------------------
<S> <C> <C> <C> <C>
Absolute Health Care - Victor Siegel 3 $135,762 $131,801 9.50 %
Adult & Pediatric - Bruce Wiita 3 233,190 214,939 9.50
Paula Berliner 1 296,263 249,437 8.50
Paula Berliner 1 219,158 212,720 8.50
Joseph Cesarotti 1 581,409 540,437 8.50
H. Gearl Gore 1 170,195 165,232 4.12
H. Gearl Gore 2 35,658 30,456 10.50
H. Gearl Gore 3 38,471 37,482 9.50
Gulfstream Exterminating - H. Gearl Gore 3 9,789 9,789 10.50
Gulfstream Exterminating - H. Gearl Gore 3 2,580 580 10.50
H. Gearl Gore, Inc. 3 26,714 21,947 9.50
Richard J. Haskins 2 50,000 0 9.50
Richard J. Haskins 2 14,852 13,017 8.50
Rudy E. Schupp 2 18,789 0 9.50
Rudy E. Schupp 2 52,062 42,973 9.50
Victor Siegel 2 61,172 57,327 9.50
Sungraf - Joseph Cesarotti 3 59,459 53,719 8.75
Sungraf - Joseph Cesarotti 3 551,179 527,403 10.50
Bruce Wiita 2 76,094 76,094 9.50
Bruce Wiita 3 50,000 49,596 9.50
====================================================================================================================================
<FN>
1 - Personal Residence
2 - Consumer
3 - Business
Note: As of February 28, 1998 there have been no material changes in balances
since December 31, 1997.
</FN>
</TABLE>
All extensions of credit to officers, directors and employees of the
Company and its subsidiaries are made based on the same underwriting guidelines
used for extensions of credit to the general public.
12
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, executive officers and persons owning more
than 10% of the Company's equity securities to file with the Securities and
Exchange Commission reports of ownership of the Company's equity securities.
During the year ended December 31, 1997 the Company believes that all such
persons filed the reports on time.
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young has acted as the Company's independent auditors for the
year ended December 31, 1997. The Audit Committee has not met to select
independent auditors for the current year. Representatives from Ernst & Young
are expected to be present at the Annual Meeting, whereby they will have the
opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions from share holders.
FINANCIAL AND OTHER INFORMATION
A copy of the Company's Annual Report to Shareholders for the year
ended December 31, 1997, including financial statements, is being mailed to
shareholders together with this proxy statement and the accompanying proxy.
OTHER MATTERS
In order for shareholder proposals to be included in the
Company's 1999 proxy statement, such proposals must be received by the Company
no later than November 30, 1998 and must otherwise be in compliance with
applicable Securities and Exchange Commission regulations.
The cost of furnishing the Annual Report and of making this proxy
solicitation is being borne by the Company. In addition to the solicitation of
proxies by mail, directors, officers and employees of the Company or the Bank
may, without additional compensation, solicit proxies personally or by other
appropriate means. Arrangements may also be made with brokerage firms, banks and
other custodians, nominees and fiduciaries for the forwarding of proxy
solicitation materials to, and the obtaining of proxies from, beneficial owners
of the Common Stock held of record by such entities or persons. The Company will
reimburse such entities and persons for their reasonable expenses incurred in
that regard.
Management knows of no other business to be presented at the
Annual Meeting. Should additional business properly come before the Annual
Meeting, the persons acting as the proxies will have discretion to vote in
accordance with their own judgment on such business.
By Order of the Board of Directors
R. E. Schupp
Chairman of the Board
West Palm Beach, Florida
March 30, 1998
13
