SCHEDULE 14A
(Rule 14a-101)
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
REPUBLIC SECURITY FINANCIAL CORPORATION
(Name of Registrant as Specified in Its Charter)
REPUBLIC SECURITY FINANCIAL CORPORATION
(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 the 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:
[ ] 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>
REPUBLIC SECURITY FINANCIAL CORPORATION
450 SOUTH AUSTRALIAN AVENUE
WEST PALM BEACH, FL 33401
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 1999
----------------
To our Shareholders:
The 1999 Annual Meeting of Shareholders of Republic Security Financial
Corporation will be held at The Palm Beach Airport Hilton, 150 Australian
Avenue, West Palm Beach, Florida, on Wednesday, April 28, 1999, beginning at
3:00 p.m. local time. At the meeting, shareholders will act on the following
matters:
(1) Election of seven directors, each for a term of three years; as well as
one director for a term of one year and one director for a term of two
years;
(2) Approval of an amendment to the Company's 1997 Performance Incentive
Plan; and
(3) Any other matters that properly come before the meeting.
Shareholders of record at the close of business on February 25, 1999 are
entitled to vote at the meeting or any postponement or adjournment.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. TO ENSURE 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. SHAREHOLDERS HOLDING STOCK IN BROKERAGE ACCOUNTS
("STREET NAME" HOLDERS) WILL NEED TO BRING A COPY OF A BROKERAGE STATEMENT
REFLECTING STOCK OWNERSHIP AS OF THE RECORD DATE. CAMERAS, RECORDING DEVICES
AND OTHER ELECTRONIC DEVICES WILL NOT BE PERMITTED AT THE MEETING.
By order of the Board of Directors,
/s/ Alissa E. Ballot
------------------------------------
Alissa E. Ballot
Secretary
March 25, 1999
West Palm Beach, Florida
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
ABOUT THE MEETING ....................................................... 1
What is the purpose of the Annual Meeting? .............................. 1
Who is entitled to vote? ................................................ 1
Who can attend the meeting? ............................................. 1
What constitutes a quorum? .............................................. 1
How do I vote? .......................................................... 1
Can I change my vote after I return my proxy card? ...................... 2
What are the Board's recommendations? ................................... 2
What vote is required to approve each item? ............................. 2
Do the Company's directors or executive officers have a personal interest
in the outcome of any proposal? ........................................ 2
STOCK OWNERSHIP ......................................................... 3
Who are the largest owners of the Company's stock? ...................... 3
How much stock do the Company's directors and executive officers own? ... 3
ITEM 1--ELECTION OF DIRECTORS ........................................... 5
Directors standing for election ......................................... 5
Directors continuing in office .......................................... 7
How are directors compensated? .......................................... 8
How often did the Board meet during 1998? ............................... 9
What Committees has the Board established? .............................. 9
Certain relationships and related transactions .......................... 10
Management Indebtedness to the Bank ..................................... 10
Who are the Company's and the Bank's executive officers? ................ 11
Executive Compensation .................................................. 12
Report of the Compensation Committee .................................... 13
Compensation Committee Interlocks and Insider Participation ............. 15
Employment Agreements ................................................... 15
Change of Control Agreements ............................................ 16
Executive Compensation Summary Table .................................... 17
Option Grants for 1998 .................................................. 19
Option and SAR Exercises and Values for 1998 ............................ 20
Supplemental Executive Retirement Plan .................................. 20
Stock Performance ....................................................... 21
ITEM 2--APPROVAL OF AMENDMENT TO REPUBLIC SECURITY FINANCIAL
CORPORATION 1997 PERFORMANCE INCENTIVE PLAN ............................ 23
General Plan Information ................................................ 23
Purpose of the Incentive Plan ........................................... 23
Description of the Amended Incentive Plan ............................... 23
Federal Income Tax Consequences ......................................... 27
New Plan Benefits ....................................................... 28
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT ....................... 29
WHO IS THE COMPANY'S INDEPENDENT AUDITOR? ............................... 29
OTHER MATTERS ........................................................... 29
ADDITIONAL INFORMATION .................................................. 30
APPENDIX A--AMENDMENT 2 TO 1997 PERFORMANCE INCENTIVE PLAN .............. A-1
</TABLE>
i
<PAGE>
REPUBLIC SECURITY FINANCIAL CORPORATION
450 S. AUSTRALIAN AVENUE
WEST PALM BEACH, FLORIDA 33401
----------------
PROXY STATEMENT
----------------
This proxy statement contains information related to the Annual Meeting of
Shareholders of Republic Security Financial Corporation (the "Company"), the
holding company for Republic Security Bank (the "Bank") to be held on
Wednesday, April 28, 1999, beginning at 3:00 p.m., at The Palm Beach Airport
Hilton, 150 Australian Avenue, West Palm Beach, Florida, and at any
postponements or adjournments thereof. We are first mailing this proxy
statement to our shareholders on or about March 25, 1999.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the Company's Annual Meeting, shareholders will act upon the matters
outlined in the accompanying notice of meeting, including the election of seven
directors for three-year terms, one director for a two-year term and one
director for a one-year term and the approval of an amendment to the Company's
1997 Performance Incentive Plan. In addition, the Company's management will
report on the performance of the Company during 1998 and respond to questions
from shareholders.
WHO IS ENTITLED TO VOTE?
Only shareholders of record at the close of business on the record date,
February 25, 1999, are entitled to receive notice of the Annual Meeting and to
vote the shares of common stock that they held on that date at the meeting, or
any postponement or adjournment of the meeting. Each outstanding share entitles
its holder to cast one vote in the election of each director and one vote on
each other matter to be voted upon.
WHO CAN ATTEND THE MEETING?
All shareholders as of the record date, or their duly appointed proxies,
may attend the meeting. Each shareholder may be asked to present valid picture
identification, such as a driver's license or passport. Cameras, recording
devices and other electronic devices will not be permitted at the meeting. A
list of shareholders entitled to notice of and to attend the meeting will be
available for inspection by any shareholder, during regular business hours, for
a period of ten days before the meeting at the principal executive offices of
the Company. The list will also be available at the Annual Meeting.
Please note that if you hold your shares in "street name" (that is,
through a broker or other nominee), you will need to bring a copy of a
brokerage statement reflecting your stock ownership as of the record date and
check in at the registration desk at the meeting.
WHAT CONSTITUTES A QUORUM?
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, permitting the meeting to conduct its business. As of the
record date, 47,952,366 shares of common stock of the Company were outstanding.
Proxies received but marked as abstentions and broker non-votes will be
included in the calculation of the number of shares considered to be present at
the meeting.
HOW DO I VOTE?
If you complete and properly sign the accompanying proxy card and return
it to the transfer agent (as agent for the Company), it will be voted as you
direct. If you are a registered shareholder
<PAGE>
and attend the meeting, you may deliver your completed proxy card in person.
"Street name" shareholders who wish to vote at the meeting will need to obtain
a proxy form from the institution that holds their shares.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy, you may change your vote at
any time before the proxy is exercised by filing with the Secretary of the
Company either a notice of revocation or a duly executed proxy bearing a later
date. The powers of the proxy holders will be suspended if you attend the
meeting in person and so request, although attendance at the meeting will not
by itself revoke a previously granted proxy.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons named
as proxy holders on the proxy card will vote in accordance with the
recommendations of the Board of Directors. The Board's recommendation is set
forth together with the description of each item in this proxy statement. In
summary, the Board recommends a vote:
FOR election of the nominated slate of directors (see pages 5-6); and
FOR approval of the amendment to the Company's 1997 Performance Incentive
Plan (see pages 23-28).
With respect to any other matter that properly comes before the meeting,
the proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The affirmative vote of a plurality of the votes
cast at the meeting is required for the election of directors. A properly
executed proxy marked "WITHHOLD AUTHORITY" with respect to the election of one
or more directors will not be voted with respect to the director or directors
indicated, although it will be counted for purposes of determining whether
there is a quorum.
OTHER ITEMS. For each other item, the affirmative vote of the holders of a
majority of the shares represented in person or by proxy and entitled to vote
on the item will be required for approval. A properly executed proxy marked
"ABSTAIN" with respect to any such matter will not be voted, although it will
be counted for purposes of determining whether there is a quorum. Accordingly,
an abstention will have the effect of a negative vote.
If you hold your shares in "street name" through a broker or other
nominee, your broker or nominee will be permitted to exercise voting discretion
with respect to the matters to be acted upon. If you do not give your broker or
nominee specific instructions and your broker submits a signed proxy card that
does not give specific instructions for your shares, your shares will be voted
as the Board recommends on those matters and will be counted in determining the
number of shares necessary for approval. Shares represented by such "broker
non-votes" will, in addition, be counted in determining whether there is a
quorum.
DO THE COMPANY'S DIRECTORS OR EXECUTIVE OFFICERS HAVE A PERSONAL INTEREST IN
THE OUTCOME OF ANY PROPOSAL?
Shareholders are being asked to approve an amendment to the 1997
Performance Incentive Plan. If approved, it will increase the annual limit on
the number of shares of the Company's common stock that the Compensation
Committee can award to any individual in the form of stock options or other
incentive awards. Directors and executive officers who may participate in the
1997 Performance Incentive Plan in the future may be deemed to have an interest
in this proposal.
2
<PAGE>
STOCK OWNERSHIP
WHO ARE THE LARGEST OWNERS OF THE COMPANY'S STOCK?
The Company knows of no single person or group that is the beneficial
owner of more than 5% of the Company's common stock.
HOW MUCH STOCK DO THE COMPANY'S DIRECTORS AND
EXECUTIVE OFFICERS OWN?
The following table shows the amount of common stock of the Company
beneficially owned (unless otherwise indicated) by the Company's directors, the
executive officers of the Company named in the Summary Compensation Table below
and the directors and executive officers of the Company as a group.
Each named individual and the members of the group are deemed to
beneficially own all shares over which they possess sole or shared voting or
dispositive power and an additional number of shares over which they may,
within 60 days after March 18, 1999, acquire sole or shared voting or
dispositive power, by exercise of a stock option or other existing contract
right. Except as otherwise indicated, all information is as of March 18, 1999
and each named individual has the sole power to vote and the sole power to
dispose of the shares he or she is deemed to beneficially own. The address of
all named individuals is c/o Republic Security Financial Corporation, 450 S.
Australian Avenue, West Palm Beach, Florida 33401.
STOCK OWNERSHIP
<TABLE>
<CAPTION>
AMOUNT AND NATURE AMOUNT OF SHARES PERCENT OF SHARES
OF SHARES ACQUIRABLE WITHIN OF COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED 60 DAYS(2) OUTSTANDING(3)
- ------------------------------------- -------------------- ------------------- ------------------
<S> <C> <C> <C>
Johnny Adcock ....................... 93,608(4) 0 *
Paula Berliner ...................... 184,732(5) 82,797 *
Thomas F. Carney .................... 568,221 0 1.12%
Joseph D. Cesarotti, Sr. ............ 70,536(6) 82,797 *
Mary Anna Fowler .................... 109,297 0 *
H. Gearl Gore ....................... 97,510(7) 44,914 *
Fred A. Greene ...................... 30,496(8) 93,215 *
R. Randy Guemple .................... 159,986(9) 0 *
Richard J. Haskins .................. 72,161 12,128 *
Eugene W. Hughes .................... 116,213(10) 82,797 *
Bruce Keir .......................... 25,172 35,750 *
Thomas J. Langan, Jr. ............... 7,895(11) 0 *
Lennart E. Lindahl, Jr. ............. 86,940(12) 44,914 *
Mary A. McCarty ..................... 1,313(13) 0 *
Carol R. Owen ....................... 218,504(14) 82,797 *
Richard C. Rathke ................... 112,461 44,914 *
Roger Savage ........................ 2,426 0 *
Rudy E. Schupp ...................... 111,826(15) 19,652 *
Daniel O. Sokoloff .................. 23,227(16) 55,570 *
William F. Spitznagel ............... 261,868(17) 0 *
Thomas Tribby ....................... 3,619(18) 0 *
Bruce E. Wiita ...................... 116,145 44,914 *
William Wolfson ..................... 9,132 5,250 *
All Directors and Executive Officers
as a group (32 persons)(1) ......... 2,874,062 763,864 7.09%
</TABLE>
- ----------------
* Represents less than 1% of the Company's outstanding common stock.
3
<PAGE>
(1) For all directors and executive officers as a group, includes 151,855
shares held in the Company's 401(k) Plan as of December 31, 1998, as to
which one executive officer, as one of three trustees, shares voting and
dispositive power. Such executive officer has a pecuniary interest in
1,748 of such shares, which are allocated to her account. For other
executive officers, does not include any shares held in the 401(k) Plan,
as to which such officers have a pecuniary interest in the shares
allocated to their accounts, but no voting and limited dispositive power.
Includes 23,798 shares held by Marine Midland Bank as Trustee of the First
Bank of Florida Employee Stock Ownership Plan, as to which one director
has voting but no dispositive power and 7,410 shares held by Marine
Midland Bank as Trustee under the First Bank of Florida Recognition and
Retention Plan for Outside Directors, as to which one director has voting
but no dispositive power.
(2) Reflects the number of shares that could be purchased by exercise of
options and warrants available at March 18, 1999 or within 60 days
thereafter under the Company's 1997 Performance Incentive Plan or other
option or warrant grants.
(3) Based on the number of shares outstanding at March 18, 1999 plus, in the
case of each individual and the group, the number of additional shares
listed in the column headed "Acquirable within 60 days" for that
individual or group.
(4) Mr. Adcock shares voting and dispositive power on all but 2,800 of such
shares with his spouse.
(5) Ms. Berliner shares voting and dispositive power over such shares with her
spouse as co-trustees of two trusts.
(6) 35,269 of such shares are held by Mr. Cesarotti's spouse, who has
sole voting and dispositive power.
(7) 4,787 of such shares are held by Mr. Gore's spouse, who has sole voting
and dispositive power. In addition, Mr. Gore shares voting and dispositive
power over 87,193 of such shares with his spouse.
(8) Mr. Greene shares voting and dispositive power over 10,000 of such shares
with his spouse, with whom he is co-trustee of a revocable trust for the
benefit of his spouse.
(9) Includes 23,798 shares held by Marine Midland Bank as Trustee of the First
Bank of Florida Employee Stock Ownership Plan, as to which Mr. Guemple has
voting power but no dispositive power.
(10) 706 of such shares are held by Mr. Hughes' spouse, who has sole voting and
dispositive power.
(11) 2,000 of such shares are held jointly with Mr. Langan's spouse, with whom
he shares voting and dispositive power.
(12) 13,003 of such shares are held jointly with Mr. Lindahl's spouse,
with whom he shares voting and dispositive power, and 2,522 of such shares
are held by Mr. Lindahl's spouse, who has sole voting and dispositive
power.
(13) 1,000 of such shares are held by Ms. McCarty's spouse, who has sole voting
and dispositive power.
(14) 11,791 of such shares are held by Mr. Owen's spouse, who has sole voting
and dispositive power.
(15) 2,516 of such shares are held by Mr. Schupp's spouse, who has sole voting
and dispositive power.
(16) Includes 7,410 shares held by Marine Midland Bank as Trustee under the
First Bank of Florida Recognition and Retention Plan for Outside Directors,
as to which Dr. Sokoloff has voting power but no dispositive power.
(17) 109,061 of such shares are held by Mr. Spitznagel's spouse, who has sole
voting and dispositive power.
(18) 1,469 of such shares are held by Mr. Tribby's spouse, who has sole voting
and dispositive power.
4
<PAGE>
ITEM 1--ELECTION OF DIRECTORS
DIRECTORS STANDING FOR ELECTION
The Board of Directors of the Company, which is currently comprised of 20
members, is divided into three classes, each having three-year terms that
expire in successive years. Classes 1 and 3 have seven members each, and Class
2 has six members. All members of the Company's Board are also members of the
Board of Directors of the Bank.
The current three-year term of office of directors in Class 3 expires at
the 1999 Annual Meeting. The Board of Directors proposes that the nominees
described below, who are currently serving as Class 3 directors, be elected to
Class 3 for a new term of three years and until their successors are duly
elected and qualified. In addition, the Board proposes that Mr. Greene and Mr.
Guemple, who (along with Dr. Sokoloff) originally filled vacancies created by
the Board in connection with the Company's merger with First Palm Beach
Bancorp, Inc., be elected by the shareholders to, in the case of Mr. Guemple,
Class 1, with a term expiring at the 2000 Annual Meeting, and, in the case of
Mr. Greene, Class 2, with a term expiring at the 2001 Annual Meeting.
Each of the nominees has consented to serve the terms indicated. If any of
them should become unavailable to serve as a director, the Board may designate
a substitute nominee. In that case, the persons named as proxies will vote for
the substitute nominee designated by the Board.
THE DIRECTORS STANDING FOR ELECTION ARE:
CLASS 3 DIRECTORS:
JOHNNY ADCOCK Director since 1999
Mr. Adcock, 54, became a director of the Company following the merger of
Northside Bank of Tampa ("Northside") into the Bank in February 1999. Mr.
Adcock had been a director of Northside since 1989 and was serving as Chairman
of the Board at the time of the merger. Mr. Adcock is also a member of the
University Community Hospital Foundation Board of Trustees and the University
Community Hospital Board of Trustees, both in Tampa, Florida. Mr. Adcock has
been President and a director of the Adcock Financial Group, which focuses in
the estate planning and executive fringe benefit areas, since 1967. Mr.
Adcock's experience is in the fields of insurance, investment and financial
planning. Mr. Adcock is also a director of Partners Financial Group, a
registered investment company in Austin, Texas.
MARY ANNA FOWLER Director since 1997
Ms. Fowler, 71, has been Vice President of Exotic Gardens, Inc., a florist
company, since 1991. Ms. Fowler was a director of Family Bank from its
inception in 1986 through its merger with the Bank in 1997.
THOMAS J. LANGAN, JR. Director since 1997
Mr. Langan, 78, retired as President of The County Trust Company in White
Plains, New York in 1983. He served as a director of Carney Bank from 1991
until Carney Bank's merger with County National Bank of South Florida
("County") in 1996, and thereafter served as a director of County and of its
parent, County Financial Corporation ("CFC"), until 1997 when the Company
acquired CFC.
CAROL R. OWEN Director since 1997
Mr. Owen, 63, has served as Chairman of the Board, Broward County, of the
Bank since it acquired Family Bank in June 1997. Prior to that time Mr. Owen
was a director, Chief Executive Officer and President of Family Bank since its
inception in 1986.
5
<PAGE>
RICHARD C. RATHKE Director since 1983
Mr. Rathke, 67, has been the President of RCR Enterprises, Inc., a real
estate development firm in Jupiter, Florida, since 1979.
RUDY E. SCHUPP Director since 1984
Mr. Schupp, 48, has been Chairman of the Board, President and Chief
Executive Officer of the Company since 1985, and the Chairman of the Board,
President and Chief Executive Officer of the Bank since 1984. Mr. Schupp is
also a director of Florida Public Utilities Corp., a public company whose
shares are listed on the American Stock Exchange.
DANIEL O. SOKOLOFF, M.D. Director since 1998
Dr. Sokoloff, 47, served as a director of First Palm Beach Bancorp, Inc.
("FFPB") from 1996 to 1998, when FFPB merged into the Company. Dr. Sokoloff has
been a dermatologist in West Palm Beach, Florida since 1982. Under the
Agreement and Plan of Merger by which the Company acquired FFPB, each of the
three directors added at the time of the acquisition whose initial term expires
before 2001 is expected to be nominated for election to serve an additional
term of three years following the expiration of his initial term.
CLASS 1 DIRECTOR:
R. RANDY GUEMPLE Director since 1998
Mr. Guemple, 47, served as a director of FFPB from 1997 to 1998, when FFPB
merged into the Company. Mr. Guemple also served as Executive Vice President
and Chief Operating Officer of FFPB and its subsidiary, First Bank of Florida,
from July, 1996 until the merger. Mr. Guemple served as Senior Vice President,
Treasurer and Chief Financial Officer of FFPB and First Bank of Florida from
1992 to July 1996. Under the Agreement and Plan of Merger by which the Company
acquired FFPB, each of the three directors added at the time of the acquisition
whose initial term expires before 2001 is expected to be nominated for election
to serve an additional term of three years following the expiration of his
initial term.
CLASS 2 DIRECTOR:
FRED A. GREENE Director since 1998
Mr. Greene, 67, served as a director of FFPB from 1984 to 1998, when FFPB
merged into the Company. Mr. Greene has served as a director, Chairman of the
Board, President and Chief Executive Officer of Gee & Jenson, Engineers,
Architects & Planners, Inc. since 1990, and has been a civil engineer with such
company since 1956. Under the Agreement and Plan of Merger by which the Company
acquired FFPB, each of the three directors added at the time of the acquisition
whose initial term expires before 2001 is expected to be nominated for election
to serve an additional term of three years following the expiration of his
initial term.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION AS
DIRECTORS OF THE NOMINEES NAMED IN THIS PROXY STATEMENT.
6
<PAGE>
DIRECTORS CONTINUING IN OFFICE:
CLASS 1 DIRECTORS. The following Class 1 directors have terms ending in 2000:
DR. THOMAS F. CARNEY Director since 1997
Dr. Carney, 72, was a member of the Board of Directors of CFC from 1962
until its merger into the Company, and was Chairman of the Board of County from
1967 until its merger into the Bank. Dr. Carney has also been 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, SR. Director since 1997
Mr. Cesarotti, 70, was a director of Family Bank from 1986 until its
merger into the Bank. Mr. Cesarotti has been retired since June 1992. Prior to
his retirement, Mr. Cesarotti was President and Chief Executive Officer of
Sungraf Inc., a sign manufacturing company.
RICHARD J. HASKINS Director since 1986
Richard J. Haskins, 49, has been Senior Executive Vice President and Chief
Financial Officer of the Company and the Bank since January 1999. Mr. Haskins
had been Executive Vice President and Chief Financial Officer of the Company
and the Bank since 1989 and Senior Vice President of the Company and the Bank
since 1984. For ten years prior to 1984, Mr. Haskins 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.
EUGENE W. HUGHES Director since 1997
Mr. Hughes, 66, was a director of Family Bank from 1986 until its merger
into the Bank in 1997. Mr. Hughes, who is currently retired, served as Chief
Financial Officer of Family Bank from 1988 to 1994.
LENNART E. LINDAHL, JR. Director since 1983
Mr. Lindahl, 55, has been Chairman of the Board of Lindahl, Browning,
Ferrari & Hellstrom, Inc., Consulting Engineers, in West Palm Beach, Florida
since 1994. From 1970 to 1994, Mr. Lindahl served as President of that firm. He
is a past Chairman of the Economic Council of Palm Beach County and a past
president of the Palm Beach County Development Board. Additionally, he served
as a member and past Chairman of the Florida Inland Navigation District.
BRUCE E. WIITA, M.D. Director since 1983
Dr. Wiita, 61, has been a surgeon and urologist practicing in Jupiter and
Palm Beach Gardens, Florida 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 company.
CLASS 2 DIRECTORS. The following Class 2 directors have terms ending in 2001:
PAULA BERLINER Director since 1997
Ms. Berliner, 55, was a director of Family Bank from 1986 until its merger
with the Bank in 1997. Ms. Berliner has been Vice President and director of
Acorn Holding Corp., a public venture capital
7
<PAGE>
company traded on the Nasdaq Small-Cap Market, since 1992. Prior to that, Ms.
Berliner was Vice President and a director of Broward Window Products, Inc., a
company specializing in the sale of window-related products.
H. GEARL GORE Director since 1983
Mr. Gore, 51, served as Secretary of the Company from 1983 until 1998. He
has been the President of H. Gearl Gore, Inc., a real estate appraisal firm in
Jupiter, Florida since 1983. In 1998, approximately 40% of that firm's gross
revenues were derived from appraisal services provided to the Bank. 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 the present.
MARY MCCARTY Director since 1997
Ms. McCarty, 44, was a director of CFC and County from May 1997 until
CFC's merger into the Company in December 1997. Ms. McCarty was elected to
District IV Palm Beach County Commission in November 1990 and continues to
serve in such position. She was elected Chair of the Palm Beach County
Commission in November of 1992.
WILLIAM F. SPITZNAGEL Director since February 1987; also from 1983-1986
Mr. Spitznagel, 72, was Chairman and President of Roadway Services, Inc.,
a motor freight company, from 1978 until his retirement in 1981.
WILLIAM WOLFSON Director since 1993
Mr. Wolfson, 70, has been a certified public accountant since 1960. He
retired in 1994 as senior partner in the accounting firm of Wolfson, Kapit,
Melzer, Milowsky, Ettinger & Wieselthier, P.C.
HOW ARE DIRECTORS COMPENSATED?
BASE COMPENSATION. In 1998 each non-employee director received a retainer
based on an annualized rate of $3,840, together with a fee of $1,080 per
regular quarterly Board meeting attended. All Company directors are also
directors of the Bank, and directors are separately compensated for their
service on the Bank Board at an annualized rate of $6,804, together with a fee
of $333 per Board meeting attended and a fee of $300 per Committee meeting
attended ($350 per meeting for the Chairman of the Committee). Directors who
are also employees of the Company or the Bank receive no additional
compensation for service as directors.
OPTIONS. In January 1998, directors Carney, Langan, and McCarty, all of
whom joined the Board following the closing of the CFC merger in December 1997,
were each granted options to purchase 7,500 shares of the common stock of the
Company at an exercise price of $9.00 per share under the Company's 1997
Performance Incentive Plan. Such options have a term of ten years and vest,
except in certain limited circumstances, on January 28, 2001. In November 1998
each non-employee director then serving on the Board was granted options to
purchase 10,000 shares of the common stock of the Company at an exercise price
of $9.3125 per share under the Company's 1997 Performance Incentive Plan. Such
options have a term of ten years and one-third of the total number of options
become exercisable on each of November 18, 1999, November 18, 2000 and November
18, 2001.
DIRECTORS RETIREMENT PLAN. In 1997 the Bank established a non-qualified
unfunded retirement plan for non-employee directors ("Directors Retirement
Plan"). To be eligible a director must be specifically included in the
Directors Retirement Plan by action of the Board, and to vest in benefits a
director generally must have served at least five years on the Bank's Board
prior to retirement. The annual benefit under the Directors Retirement Plan is
a percentage of the fees that
8
<PAGE>
would have been paid to the director for the full calendar year in which the
director terminates service, with such percentage being calculated by
multiplying 5% times the director's years of service (including for this
purpose service with any predecessor Board), with a maximum of 75%. Such
benefit will be paid for a total of 180 months.
HOW OFTEN DID THE BOARD MEET DURING 1998?
The Company's Board of Directors, which after its July 1998 meeting began
meeting quarterly, met 11 times during 1998, including 3 special meetings. The
Bank's Board met 12 times during 1998. Each director attended more than 75% of
the total number of meetings of the Board and Committees on which he or she
served.
WHAT COMMITTEES HAS THE BOARD ESTABLISHED?
The Company's Board of Directors has standing Executive, Compensation and
Audit Committees. The Board as a whole acted as the Nominating Committee in
connection with the nomination of directors for election at the 1999 Annual
Meeting.
BOARD COMMITTEE MEMBERSHIP
<TABLE>
<CAPTION>
NAME EXECUTIVE COMMITTEE AUDIT COMMITTEE COMPENSATION COMMITTEE
- ------------------------------- --------------------- ----------------- -----------------------
<S> <C> <C> <C>
Paula Berliner ................ * *
Thomas Carney ................. *
Mary Anna Fowler .............. *
H. Gearl Gore ................. *
Thomas Langan, Jr. ............ *
Lennart Lindahl, Jr. .......... * **
Carol R. Owen ................. *
Richard Rathke ................ *
Rudy E. Schupp ................ **
William Spitznagel ............ *
Bruce A. Wiita ................ *
William Wolfson ............... **
</TABLE>
- ----------------
* Member.
** Chair.
EXECUTIVE COMMITTEE. The Executive Committee possesses all of the powers
of the Board except the power to approve or recommend to shareholders actions
required by law to be approved by shareholders, fill vacancies on the Board or
any committees, amend or repeal the bylaws, authorize or approve stock buybacks
except in certain circumstances, or issue stock, and certain other powers
specifically reserved by Florida law to the Board. In 1998, the Executive
Committee held 4 meetings.
COMPENSATION COMMITTEE. The Compensation Committee is charged with
reviewing the Company's general compensation strategy; establishing salaries
and reviewing benefit programs for the Chief Executive Officer and the four
next most highly compensated officers; reviewing, approving, recommending and
administering the Company's 1997 Performance Incentive Plan; and approving
certain employment and change of control agreements. In 1998, the Compensation
Committee met 11 times.
AUDIT COMMITTEE. The Audit Committee reviews, reports to and advises the
Board with respect to various auditing and accounting matters involving the
selection of and the nature of the services to be performed by the Company's
independent auditors, the performance of the independent
9
<PAGE>
and internal auditors and the fees to be paid to the independent auditors, the
scope of audit procedures and the Company's accounting procedures and internal
controls. The Audit Committee met 4 times during 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Owen provides consulting services to the Company and the Bank in his
capacity as Broward County Chairman. During 1998, the Company and the Bank paid
Mr. Owen an aggregate of $95,000 for these services.
MANAGEMENT INDEBTEDNESS TO THE BANK
The Financial Institutions Reform, Recovery and Enforcement Act of 1989
requires that all loans or extensions of credit to executive officers and
directors must be made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with the general public and must not involve more than the normal
risk of repayment or present other unfavorable features. In addition, loans
made to a director or executive officer in excess of the greater of $25,000 or
5% of the Bank's capital and surplus (up to a maximum of $500,000) must be
approved in advance by a majority of the disinterested members of the Board of
Directors.
All loans made by the Bank to its directors and executive officers were
made in the ordinary course of business, were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons and did not involve more than
the normal risk of collectibility or present other unfavorable features, except
for the following loan, which, at the time it was made, complied with all
applicable laws and regulations and Bank policies:
<TABLE>
<CAPTION>
LARGEST AMOUNT
OUTSTANDING
DURING THE YEAR BALANCE INTEREST RATE AT
OFFICER AND/OR DIRECTOR PURPOSE ENDED 12/31/98 12/31/98 12/31/98
- ------------------------- -------------------- ----------------- ---------- -----------------
<S> <C> <C> <C> <C>
H. Gearl Gore ........... Personal residence $165,232 $159,777 3.50%
</TABLE>
10
<PAGE>
WHO ARE THE COMPANY'S AND THE BANK'S EXECUTIVE OFFICERS?
The following individuals are the executive officers of the Company and/or
the Bank and hold the offices set forth below opposite their names.
<TABLE>
<CAPTION>
NAME AGE POSITIONS HELD
- ----------------------- ----- --------------------------------------------------------------
<S> <C> <C>
Rudy E. Schupp 48 Chairman of the Board, President and
Chief Executive Officer of the Company and the Bank
Louis J. Dunham 45 Senior Executive Vice President and
Chief Credit Officer of the Bank
Richard J. Haskins 49 Senior Executive Vice President and
Chief Financial Officer of the Company and the Bank
R. Michael Strickland 48 Senior Executive Vice President and
Chief Banking Officer of the Bank
Alissa E. Ballot 43 Senior Vice President and Secretary of the Company
and Senior Vice President for Legal Affairs and
Secretary of the Bank
Bruce M. Keir 46 Executive Vice President--Market President--
Broward County of the Bank
W. Andrew Kirkman 44 Senior Vice President--Personal Banking of the Bank
Richard A. Kuci, Jr. 41 Executive Vice President--Market President--
Dade County of the Bank
Carla H. Pollard 34 Senior Vice President and Controller of the Company
and the Bank
John G. Primeau 55 Senior Vice President--Mortgage Banking of the Bank
Roger P. Savage 52 Senior Vice President--Business Banking of the Bank
Joan K. Schimelman 40 Senior Vice President--Human Resources/Training of the Bank
Thomas L. Tribby 55 President--Trust and Investment Services Division of the Bank
Jose Vivero 57 President--Central Florida of the Bank
</TABLE>
The executive officers of the Company and the Bank are elected annually
and hold office until their respective successors have been elected and
qualified or until their earlier resignation or removal. The Company and/or the
Bank have entered into Employment Agreements and/or Change of Control
Agreements with the executive officers which set forth certain terms of such
officers' employment. These are discussed in more detail later in this proxy
statement.
Biographical information about the executive officers of the Company
and/or the Bank who are not directors is set forth below.
Louis J. Dunham joined the Bank as its Senior Executive Vice President and
Chief Credit Officer on February 26, 1999. Prior to that time, Mr. Dunham
served as the Executive Vice President and Chief Credit Officer of Vermont
National Bank from May 1991 until February 1999.
R. Michael Strickland joined the Bank as its Senior Executive Vice
President and Chief Banking Officer on February 16, 1999. Prior to that time,
Mr. Strickland was the Palm Beach County Market President for NationsBank from
the time it merged with Barnett Bank in January 1998 until February 1999, and
was the CEO of Barnett Bank of Palm Beach County from July 1985 until January
1998.
Alissa E. Ballot has been the Senior Vice President and Secretary of the
Company and the Senior Vice President for Legal Affairs and Secretary of the
Bank since October 1998, when First Palm Beach Bancorp, Inc. merged into the
Company and its subsidiary, First Bank of Florida, merged into the Bank. Ms.
Ballot had served as Senior Vice President for Legal Affairs for First Bank of
Florida
11
<PAGE>
from October 1997 until the merger, and as Vice President--Legal of First Bank
of Florida from April to October 1997. Prior thereto Ms. Ballot was the General
Counsel of North Side Savings Bank in Floral Park, New York from April 1992
until its merger in December 1996.
Bruce Keir has been Executive Vice President--Market President--Broward
County of the Bank since June 1997, when Family Bank merged into the Bank.
Prior to that time, he had served as the Executive Vice President of Family
Bank for six years.
W. Andrew Kirkman has been Senior Vice President--Personal Banking of the
Bank since August 1995. Prior to that time he served as Vice President and Hub
Manager for First Union Bank for ten years.
Richard A. Kuci, Jr. has been Executive Vice President--Market
President--Dade County of the Bank since January 1999. Prior to that time he
served as an Executive Vice President of the Bank following the merger of
County Bank into the Bank in December 1997. Prior to the merger he was the
Executive Vice President and Senior Lending Officer of County Bank from 1996
through 1997 and, prior thereto, the Senior Vice President and Senior Lending
Officer of County.
Carla H. Pollard has been Senior Vice President and Controller of the
Company and the Bank since March 1999. She served as Vice President and
Controller of the Company and the Bank from June 1994 until March 1999. Before
joining the Company and the Bank, she was a certified public accountant with
the accounting firm of KPMG Peat Marwick for four years.
John G. Primeau has been Senior Vice President--Mortgage Banking of the
Bank since July 1998, when Unifirst Federal Savings Bank merged with the Bank.
Prior to that time he was the President of Unifirst for seven years.
Roger P. Savage has been Senior Vice President--Business Banking of the
Bank since September 1992.
Joan K. Schimelman has been Senior Vice President--Human
Resources/Training of the Bank since May 1993.
Thomas L. Tribby has been President--Trust and Investment Services
Division of the Bank since July 1997. Prior to that time he was the Trust
Consultant for the states of Arizona and Utah for Banc One Trust Company from
September 1996 to June 1997. Prior thereto he served in various capacities,
including Senior Vice President, of Barnett Banks Trust Company, NA in Palm
Beach County from May 1990 through August 1996.
Jose Vivero has been President--Central Florida of the Bank since the
merger of Northside Bank of Tampa into the Bank on February 26, 1999. Mr.
Vivero had served as President of Northside Bank of Tampa since 1988.
EXECUTIVE COMPENSATION
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE AND THE PERFORMANCE
GRAPHS INCLUDED ELSEWHERE IN THIS PROXY STATEMENT DO NOT CONSTITUTE SOLICITING
MATERIAL AND SHOULD NOT BE DEEMED FILED OR INCORPORATED BY REFERENCE INTO ANY
OTHER COMPANY FILING UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THE COMPANY SPECIFICALLY
INCORPORATES THIS REPORT OR THE PERFORMANCE GRAPHS BY REFERENCE THEREIN.
12
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for 1998.
WHAT IS THE COMPANY'S GENERAL POLICY WITH RESPECT TO
EXECUTIVE OFFICER COMPENSATION?
The Board Compensation Committee is responsible for making recommendations
to the Company's and the Bank's Boards of Directors as to compensation of the
Company's and the Bank's executive officers. In addition, the Compensation
Committee makes recommendations to the Boards of Directors 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, and executive employment agreements and retirement plans. For
executive compensation, the Compensation Committee bases its decisions
primarily on its overall assessment of the executive's contribution to the
profitability of the Company and the Bank 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, and an assessment of the
executive's role in ensuring the overall financial success of the Company and
the Bank 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, and its 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 and 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 both motivates 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 compensation with a
belief that it should involve a fair base salary combined with an emphasis on
incentive compensation, as this approach has served the Company well in the
motivation and retention of its senior executives.
HOW DID THE COMPANY APPLY THIS POLICY IN 1998?
In planning and deliberating 1998 compensation decisions, the Compensation
Committee reviewed the Company's and the Bank'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 including national and regional
peer group data, internally prepared performance review analyses and 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, and 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 and progress with respect to the overall shareholder value plan, with
special emphasis on the executive's progress with respect to 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.
13
<PAGE>
WHAT ARE THE COMPONENTS OF EXECUTIVE COMPENSATION?
BASE SALARY AND CASH INCENTIVE COMPENSATION
Cash compensation takes 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 1998 the Committee awarded
increases in base salary to the three named executive officers who had been
with the Bank throughout 1997. The other two named executive officers joined
the Bank in mid-1997, and their compensation was determined in accordance with
the Employment Agreements entered into at the time their employment commenced
(see "Employment Agreements"). Incentive compensation for all these executives
was based directly on Company and Bank performance. 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.
LONG-TERM INCENTIVE COMPENSATION
The purpose of the Company's 1997 Performance Incentive Plan ("PIP") is to
encourage directors, officers and employees of the Company to contribute to the
growth and performance of the Company. The PIP is administered by the Board
Compensation Committee. The Compensation Committee granted 1,369,500 stock
options to directors, officers and employees in 1998 at various exercise
prices, with 1,091,000 of such options vesting ratably over the three year
period beginning on the grant date and 278,500 of such options vesting three
years from the date of grant, and expiring ten years from the grant. The stock
options granted in 1998 were designed to recognize the individual's
contribution to the Company's success during 1997 and 1998 and to communicate
the importance of the individual's future contribution to upcoming corporate
initiatives.
HOW IS THE COMPANY'S CHIEF EXECUTIVE OFFICER COMPENSATED?
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 and the
prevailing market rates of compensation for the position. With regard to its
strategic plan, merger and acquisition goals were surpassed as the Bank
experienced significant growth, 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 base salary should be increased, while
the rate applied in the formula used to determine his cash incentive
compensation, due to the growth of the Company, was decreased, though the
amount available to be earned 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
Paula Berliner
Mary Anna Fowler
Lennart E. Lindahl, Jr.
William F. Spitznagel
Bruce E. Wiita, M.D.
14
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1998, the Compensation Committee consisted of Ms. Berliner, Ms.
Fowler, Mr. Lindahl, Mr. Spitznagel and Dr. Wiita. None of these individuals
was an officer or employee of the Company or any of its subsidiaries during
1998, and none is a former officer of the Company or any of its subsidiaries.
During 1998, none of the Company's executive officers served as a director or a
member of the compensation committee (or equivalent body) of another entity of
which any director of the Company or member of the Company's Compensation
Committee was an executive officer.
EMPLOYMENT AGREEMENTS
AGREEMENTS WITH MESSRS. SCHUPP AND HASKINS. The Company and the Bank have
jointly entered into an employment agreement with Mr. Schupp to secure his
services as Chairman, President and Chief Executive Officer and an employment
agreement with Mr. Haskins to secure his services as Senior Executive Vice
President and Chief Financial Officer. The employment agreements have rolling
three-year terms which may be converted to a fixed three-year term by decision
of the executive or by joint decision of the Company and the Bank. These
agreements provide for minimum annual salaries of $415,000 (for Mr. Schupp) and
$170,000 (for Mr. Haskins), discretionary bonuses that are expected to be
determined with reference to consolidated net income before restructuring
charges, taxes and extraordinary items, life insurance coverage in prescribed
amounts, and participation on generally applicable terms and conditions in
other compensation and fringe benefit plans. They also guarantee customary
corporate indemnification and errors and omissions insurance coverage
throughout the employment term and, in the case of Mr. Schupp, for six years
thereafter.
The Bank and the Company may terminate either executive's employment, and
either executive may resign, at any time with or without cause. However, in the
event of termination during the term without cause, the Bank and the Company
will owe the executive severance benefits generally equal to the value of the
cash compensation and fringe benefits that the executive would have received if
he had continued working for an additional three years. The same severance
benefits would be payable if the executive resigns during the term following a
loss of title, office or membership on the Board of Directors, material
reduction in duties, functions or responsibilities, involuntary relocation of
the executive's principal place of employment to a location outside of a stated
geographic area or other material breach of contract by the Company and the
Bank or if he resigns during the term for any reason following a change of
control.
If the Bank or the Company experiences a change in ownership, a change in
effective ownership or control or a change in the ownership of a substantial
portion of their assets as contemplated by section 280G of the Internal Revenue
Code, a portion of any severance payments made to Mr. Schupp under his
employment agreement might constitute an "excess parachute payment" under
current federal tax laws. Any excess parachute payment would be subject to a
federal excise tax payable by Mr. Schupp and would be nondeductible by the Bank
and the Company for federal income tax purposes. Mr. Schupp's employment
agreement requires the Bank and the Company to indemnify Mr. Schupp against the
financial effects of such an excise tax, if it is assessed. Mr. Haskins'
employment agreement imposes a maximum limitation on the severance benefits
payable to him for the purpose of preventing the characterization of any such
benefits as an excess parachute payment.
In general, compensation and other expenses incurred under the employment
agreements are to be allocated between the Bank and the Company. The Company
has guaranteed the performance of the Bank's obligations under these employment
agreements.
AGREEMENTS WITH MESSRS. SAVAGE AND KEIR. The Bank has entered into
employment agreements with Messrs. Savage and Keir that are currently scheduled
to expire on December 31, 1999. These employment agreements automatically renew
for an additional year each December 31st unless the
15
<PAGE>
Bank or the executive chooses to discontinue the renewals. These employment
agreements provide for minimum base salaries of $125,000 (for Mr. Savage) and
$100,000 (for Mr. Keir), annual performance-based incentive compensation of up
to 20% of base salary (for Mr. Savage) and 28% of base salary (in the case of
Mr. Keir), and participation on generally applicable terms and conditions in
other compensation and fringe benefit plans. The Bank may terminate either
executive's employment at any time with or without cause. In the event of
termination without cause during the term of the employment agreements, the
Bank will owe the terminated executive severance benefits equal to one year's
base salary, payable in a lump sum or in installments at the Bank's option.
The employment agreements prohibit each executive from working for or
being affiliated with a competitor of the Bank, or soliciting the Bank's
employees for a period of 24 months after termination of employment, and
prohibit the disclosure of the Bank's trade secrets and other proprietary
information indefinitely.
AGREEMENT WITH MR. TRIBBY. The Bank has entered into an employment
agreement with Mr. Tribby that is currently scheduled to expire on December 31,
1999. This employment agreement automatically renews for an additional year
each December 31st unless the Bank or Mr. Tribby choose to discontinue the
renewals. This employment agreement provides for a minimum base salary of
$110,000, quarterly performance-based incentive compensation of the lesser of
25% of base salary paid during the quarter or 10% of the new fee income of the
Bank's Trust Division during the quarter, and participation on generally
applicable terms and conditions in other compensation and fringe benefit plans.
The Bank may terminate Mr. Tribby's employment at any time with or without
cause. In the event of termination without cause during the term, the Bank will
owe Mr. Tribby severance benefits equal to base salary for the lesser of one
year or the unexpired balance of the employment term, payable in a lump sum or
in installments at the Bank's option.
The employment agreement prohibits Mr. Tribby from working for or being
affiliated with a competitor of the Bank in the trust services area or
soliciting the Bank's employees for a period of 24 months after termination of
employment, and prohibits the disclosure of the Bank's trade secrets and other
proprietary information indefinitely.
OTHERS. The Bank is also a party to employment agreements with terms
similar to those in Mr. Savage and Mr. Keir's agreements with Richard Kuci,
Dade Market President, Jose Vivero, President--Central Florida, and John
Primeau, Senior Vice President. The Company and the Bank also, in the first
quarter of 1999, entered into employment agreements with terms similar to those
in Mr. Haskins' agreement (except with a two-year rolling term and severance
benefits generally equal to the value of the cash compensation and fringe
benefits that the executive would have received if he had continued working for
an additional two years) with R. Michael Strickland, Senior Executive Vice
President and Chief Banking Officer of the Bank and Louis J. Dunham, Senior
Executive Vice President and Chief Credit Officer of the Bank, both of whom
joined the Bank in February 1999.
CHANGE OF CONTROL AGREEMENTS
AGREEMENTS WITH MESSRS. SAVAGE, KEIR AND TRIBBY. The Company and the Bank
have jointly entered into separate change of control agreements with each of
Messrs. Savage, Keir and Tribby. Upon the occurrence of a change of control, as
defined, the change of control agreements supersede in their entirety the
employment agreements between these executives and the Bank. The change of
control agreements provide for continuing employment for rolling two-year terms
which begin on the date of a change of control and may be converted on any date
after a change of control to fixed terms of two years by decision of the Bank
or the executive.
The Bank and the Company (or their successors) may terminate employment of
any of these executives, and any of these executives may resign, at any time
with or without cause. However, in the
16
<PAGE>
event of termination without cause following a change of control (or within 3
months before the change of control occurs, if termination is in connection
with the change of control), the Bank and the Company will owe the executive
severance benefits generally equal to the value of the cash compensation and
fringe benefits that the executive would have received if he had continued
working for an additional two years. The same severance benefits would be
payable if the executive resigns during the term following a loss of title or
office, material reduction in duties, functions or responsibilities,
involuntary relocation of the executive's principal place of employment to a
location outside of a specified geographic region or other material breach of
contract by the Company and the Bank, or if he resigns following the change of
control for any reason within 90 days after consummation of a merger or other
business combination or reorganization that is a change of control or within 90
days following the occurrence of any other event that is a change of control.
Each change of control agreement imposes a maximum limitation on the
severance benefits payable to an executive for the purpose of preventing the
characterization of any such benefits as an excess parachute payment under
section 280G of the Internal Revenue Code of 1986.
In general, compensation and other expenses incurred under the change of
control agreements are to be borne by the Bank. The Company has guaranteed the
performance of the Bank's obligations under these change of control agreements.
OTHERS. In the first quarter of 1999, the Company and the Bank entered
into change of control agreements with Alissa E. Ballot, Senior Vice President
and Secretary of the Company and the Bank, W. Andrew Kirkman, Senior Vice
President of the Bank, Richard Kuci, Dade Market President of the Bank, Carla
Pollard, Senior Vice President and Controller of the Company and the Bank, John
Primeau, Senior Vice President of the Bank, Joan Schimelman, Senior Vice
President of the Bank, and Jose Vivero, President--Central Florida of the Bank,
with substantially the same terms as the change of control agreements with
Messrs. Savage, Keir and Tribby.
EXECUTIVE COMPENSATION SUMMARY TABLE
The following table sets forth information concerning total compensation
earned or paid to the Chief Executive Officer and the four other most highly
compensated executive officers of the Company and the Bank with salary and
bonus for 1998 of $100,000 or more who served in such capacities as of December
31, 1998 (the "named executive officers") for services rendered to the Company
and the Bank during each of the last three fiscal years.
17
<PAGE>
EXECUTIVE COMPENSATION SUMMARY TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------- ---------------
OTHER ANNUAL NUMBER OF
SALARY BONUS COMPENSATION STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR ($)(1) ($)(2) ($)(3) GRANTED COMPENSATION(4)
- ------------------------------ ------ --------------- ----------- -------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Rudy E. Schupp 1998 $ 300,000 $234,245 -- 100,000 $149,634
Chairman, President and 1997 198,960 198,476 -- 50,000 71,599
CEO of the Company 1996 180,760 81,911 -- 0 48,749
and the Bank
Richard J. Haskins 1998 144,000 142,778 -- 65,000 71,928
Senior Executive Vice 1997 128,850 81,911 -- 25,820 48,102
President and CFO of the 1996 130,680 65,417 -- 0 37,451
Company and the Bank
Roger Savage 1998 135,000 22,251 -- 20,000 56,359
Senior Vice President 1997 116,665 16,000 -- 25,307 32,895
Business Banking of 1996 90,000 9,560 -- 0 17,244
the Bank
Thomas Tribby 1998 110,000 18,797 -- 15,000 1,851
President--Trust and 1997 68,579(5) 0 -- 19,604 0
Investment 1996 N/A N/A N/A N/A N/A
Services Division of
the Bank
Bruce Keir 1998 106,000 20,511 -- 10,000 6,278
EVP--Market 1997 78,324(6) 5,250 -- 22,746 2,854
President--Broward Co. 1996 N/A N/A N/A N/A N/A
of the Bank
</TABLE>
- ----------------
(1) For Messrs. Schupp and Haskins, total paid by the Company and the Bank for
the years indicated.
(2) Annual incentive compensation paid by the Company and the Bank for
financial results achieved and goals met during the year.
(3) The Company and/or the Bank provide the named executive officers with
certain group life, health, medical and other non-cash benefits generally
available to all salaried employees and not included in this column
pursuant to S.E.C. rules. Also not included is the value of perquisites
and other personal benefits which do not exceed the lesser of $50,000 or
10% of the total annual salary and bonus reported for the executive
officer.
(4) The amounts shown in this column include (i) matching contributions by the
Bank under the Bank's 401(k) Plan, all of which are invested in common
stock of the Company. During 1998, the Bank's matching contributions were
$7,680 for Mr. Schupp, $7,680 for Mr. Haskins, $0 for Mr. Savage, $1,851
for Mr. Tribby and $6,278 for Mr. Keir; (ii) for Mr. Schupp, annual
premium value of death benefit coverage provided under split-dollar life
insurance where the Company or the Bank owns the cash value of the policy.
During 1998, the annual premium value was $1,509; (iii) for Messrs. Schupp
and Haskins, annual premium on excess disability insurance, which in 1998
was $3,898 for Mr. Schupp and $5,382 for Mr. Haskins; and (iv) present
value of the additional benefit earned with respect to Supplemental
Executive Retirement Plan for Messrs. Schupp, Haskins and Savage. During
1998, the present value of the additional benefit earned was $136,547 for
Mr. Schupp, $58,866 for Mr. Haskins and $56,359 for Mr. Savage.
(5) Mr. Tribby's employment with the Bank commenced on July 15, 1997.
(6) Mr. Keir's employment with the Bank commenced on July 1, 1997 following the
merger of Family Bank into the Bank.
18
<PAGE>
OPTION GRANTS FOR 1998
The following table sets forth information with respect to option grants
to the named executive officers during 1998 and the potential realizable value
of such option grants:
(1) the number of shares of common stock underlying options granted during
the year;
(2) the percentage that such options represent of all options granted to
employees during the year;
(3) the exercise price;
(4) the expiration date; and
(5) the hypothetical present value, as of the grant date, of the options
under the option pricing model discussed below.
The hypothetical value of the options as of their date of grant has been
calculated below, using the Black-Scholes option pricing model, as permitted by
S.E.C. rules, based upon a set of assumptions set forth in the footnote to the
table. It should be noted that this model is only one method of valuing
options, and the Company's use of the model should not be interpreted as an
endorsement of its accuracy. The actual value of the options may be
significantly different, and the value actually realized, if any, will depend
upon the excess of the market value of the common stock over the option
exercise price at the time of exercise.
OPTION GRANTS DURING 1998
<TABLE>
<CAPTION>
NUMBER OF SECURITIES % OF TOTAL OPTIONS GRANT DATE
UNDERLYING OPTIONS GRANTED TO EMPLOYEES EXERCISE PRICE PRESENT
NAME GRANTED(#) IN FISCAL YEAR ($/SHARE) EXPIRATION DATE VALUE($)(1)
- -------------------- ---------------------- ---------------------- ---------------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Rudy E. Schupp 40,000 $9.00 1/28/08 $210,000
60,000 8.5% 9.3125 11/18/08 326,400
Richard J. Haskins 15,000 9.00 1/28/08 78,750
50,000 5.5% 9.3125 11/18/08 272,000
Roger Savage 5,000 9.00 1/28/08 26,250
15,000 1.7% 9.3125 11/18/08 81,600
Thomas Tribby 15,000 1.3% 9.3125 11/18/08 81,600
Bruce Keir 10,000 .8% 9.3125 11/18/08 54,400
</TABLE>
- ----------------
(1) The estimated present value at grant date of options granted during 1998
has been calculated using the Black-Scholes option pricing model, based
upon the following assumptions: estimated time until exercise of 10 years;
a risk-free interest rate of 6%, a volatility rate of 57.1%; and a
dividend yield of 2.5%. The approach used in developing the assumptions
upon which the Black-Scholes valuation was done is consistent with the
requirements of Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation."
The $9.00 options are exercisable on January 28, 2001. One-third of the
$9.3125 options become exercisable on each of November 18, 1999, November 18,
2000 and November 18, 2001.
19
<PAGE>
OPTION AND SAR EXERCISES AND VALUES FOR 1998
The table below sets forth the following information with respect to
option and stock appreciation right ("SAR") exercises during 1998 by each of
the named executive officers and the status of their options at December 31,
1998:
(1) the number of shares of common stock acquired upon exercise of options
or the number of securities with respect to which SARs were exercised
during 1998;
(2) the aggregate dollar value realized upon the exercise of such options;
(3) the total number of exercisable and non-exercisable stock options held
at December 31, 1998, and
(4) the aggregate dollar value of in-the-money exercisable options at
December 31, 1998.
AGGREGATED OPTION/SAR EXERCISES DURING 1998
AND OPTION VALUES ON DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
SHARES AT 12/31/98(#) AT 12/31/98($)(1)
ACQUIRED ON VALUE ------------------------------- ------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ------------- ------------ ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Rudy E. Schupp ............. 76,000 $497,250 19,652 524,000 $183,280 $1,822,750
Richard J. Haskins ......... 15,672 103,316 12,128 260,820 113,185 1,095,920
Roger Savage ............... 0 N/A 0 45,307 0 119,575
Thomas Tribby .............. 0 N/A 0 34,604 0 90,186
Bruce Keir ................. 0 N/A 35,750 32,746 381,399 86,130
</TABLE>
- ----------------
(1) In accordance with S.E.C. rules, values are calculated by subtracting the
exercise price from the fair market value of the underlying common stock.
For purposes of this table, fair market value is deemed to be $11.8125,
the average of the high and low common stock sales prices reported for
NASDAQ transactions on December 31, 1998.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Bank has entered into a separate supplemental executive retirement
plan, or "SERP", agreement with each of Messrs. Schupp, Haskins and Savage.
The SERP agreement with Mr. Schupp provides an annual retirement benefit
equal to a percentage of Mr. Schupp's average annual base salary for the three
years during his final five years of employment that produces the highest
average. If Mr. Schupp terminates employment with the Bank at age 55, the
percentage is 60%. If Mr. Schupp terminates employment with the Bank prior to
age 55, the percentage will be equal to the sum of 30% plus an additional
1.875% for each year of his employment with the Bank after attaining age 39, up
to and including his attainment of age 55. If Mr. Schupp terminates employment
with the Bank after age 55, the percentage will be equal to the sum of 60% plus
an additional 1.4% for each year of his employment with the Bank after
attaining age 55, but no higher than 75%. The annual benefit will be payable
beginning at the later of termination of employment or attainment of age 55 and
will be paid in monthly installments for a fixed period of 240 months.
Provision is also made for payments in cases of death or disability while
employed by the Bank. In the event that Mr. Schupp's employment is terminated
other than due to death or disability or cause coupled with a determination
that he has engaged in conduct inimical to the interests of the Bank and the
Company, he may elect to receive a lump sum payment of the present value of the
20
<PAGE>
future retirement benefit to which he is entitled, computed as though his final
rate of salary were equal to his average annual base salary for the three years
during his final five years of employment that produces the highest average if
that assumption yields a higher benefit. In the event of a change of control,
as defined, Mr. Schupp will be entitled to an annual retirement benefit equal
to 75% of his average annual base salary for the three years during his final
five years of employment that produces the highest average, payable immediately
in a lump sum. If Mr. Schupp's employment is terminated for cause coupled with
a determination that he has engaged in conduct inimical to the interests of the
Bank and the Company, no benefit will be paid.
The SERP agreement for Mr. Haskins is substantially the same as Mr.
Schupp's, except that it provides for an annual retirement benefit equal to the
following percentages of his average annual base salary for the three years
during his final five years of employment that produces the highest average:
60% if he terminates employment at age 55; the sum of 30% plus an additional 2%
for each year of employment after attaining age 39, if he terminates employment
after age 40 and before age 55; and the sum of 60% plus an additional 1.4% for
each year of employment after age 55, to a maximum of 75%, if he terminates
employment after age 55.
The SERP Agreement for Mr. Savage provides for an annual retirement
benefit payable commencing upon attainment of age 62 equal to 30% of his
average annual base salary for the three years during his final five years of
employment that produces the highest average (24% if his termination of
employment occurs prior to December 31, 1999 in the absence of a change of
control). Benefits are payable in equal monthly installments for a fixed period
of 240 months. Provision is also made for payments in cases of death or
disability while employed by the Bank. In the event that Mr. Savage's
employment is terminated other than due to death or disability or cause coupled
with a determination that he has engaged in conduct inimical to the interests
of the Bank and the Company, he may elect to receive a lump sum payment of the
present value of the future retirement benefit to which he is entitled,
computed as though his final rate of salary were equal to his average annual
base salary for the three years during his final five years of employment that
produces the highest average. In the event of a change of control, as defined,
Mr. Savage will be entitled to an annual retirement benefit equal to 30% of his
average annual base salary for the three years during his final five years of
employment that produces the highest average, payable immediately in a lump
sum. If Mr. Savage's employment is terminated for cause coupled with a
determination that he has engaged in conduct inimical to the interests of the
Bank and the Company, no benefit will be paid.
If Messrs. Schupp, Haskins and Savage had terminated employment on
December 31, 1998 their future annual benefits under their SERP agreements
would have been: Mr. Schupp, $106,206 payable commencing at age 55; Mr.
Haskins, $67,255 payable commencing at age 55; and Mr. Savage $20,500 payable
commencing at age 62. If they continued employment through their respective
62nd birthdays at their current annual salary rates, their future annual
benefits would be: Mr. Schupp, $311,250; Mr. Haskins, $127,500; and Mr. Savage,
$43,800.
STOCK PERFORMANCE
The following graph compares the performance of the Company's common stock
with the performance of the Russell 2000 Index, which is a broad equity market
index, and a peer group index over the five-year period ending on December 31,
1998. The graph assumes that $100 was invested on December 31, 1993 in the
Company's common stock, the Russell 2000 Index and the peer group index, and
that all dividends were reinvested.
21
<PAGE>
Included in the Republic Security Peer Group are all publicly traded banks
with assets as of 9/30/98 between $2 billion and $3.5 billion, as follows:
<TABLE>
<S> <C> <C>
BANK
1st Source Corporation First Financial Bancorp Silicon Valley Bancshares
Area Bancshares Corporation First Republic Bank Southwest Bancorporation of Texas, Inc.
BancFirst Corporation First United Bancshares, Inc. Triangle Bancorp, Inc.
Carolina First Corporation First Western Bancorp, Inc. Trust Company of New Jersey (The)
Chittenden Corporation Hancock Holding Company TrustCo Bank Corp NY
Community Trust Bancorp, Inc. MainStreet Financial Corporation UCBH Holdings, Inc.
Corus Bankshares, Inc. National Bancorp of Alaska, Inc. USBANCORP, Inc.
F&M Bancorporation, Inc. Park National Corporation Vermont Financial Services Corp.
F&M National Corporation Republic Bancorp Inc. WesBanco, Inc.
F.N.B. Corporation Republic Bancshares, Inc. Western Bancorp
First Commerce Bancshares, Inc. S&T Bancorp, Inc. Westernbank Puerto Rico
</TABLE>
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[GRAPH OMITTED]
<TABLE>
<CAPTION>
PERIOD ENDING
----------------------------------------------------------------------------
INDEX 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
----- ---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Republic Security Financial Corporation ......... 100.00 103.08 141.16 162.54 268.42 338.81
Russell 2000 .................................... 100.00 98.18 126.11 146.91 179.76 175.19
Republic Security Peer Group .................... 100.00 100.96 133.86 161.30 258.36 261.70
</TABLE>
22
<PAGE>
ITEM 2--APPROVAL OF AMENDMENT TO REPUBLIC SECURITY FINANCIAL CORPORATION 1997
PERFORMANCE INCENTIVE PLAN
GENERAL PLAN INFORMATION
The Company's Board of Directors adopted the Republic Security Financial
Corporation 1997 Performance Incentive Plan ("Incentive Plan"), subject to
approval by the shareholders, and the shareholders approved the Incentive Plan
at the 1997 Annual Meeting. The Incentive Plan was amended in 1998, with
shareholder approval obtained at the October 1998 special meeting, to increase
from 2,000,000 to 5,000,000 the number of shares of the Company's common stock
authorized for use in making various types of incentive awards under the
Incentive Plan.
The Incentive Plan currently imposes a 100,000 share limit on the number
of stock options, restricted stock awards and other stock-based incentive
awards that may be made to any one participant in any one calendar year. The
Compensation Committee has determined that this annual limit does not afford
the flexibility it needs to provide competitive equity-based incentive
compensation opportunities to the key executive officers of the Bank and the
Company, in light of the Company's increased size. It has, therefore, amended
the Incentive Plan, subject to approval by the shareholders, to increase this
limit from 100,000 shares to 750,000 shares. This amendment does not increase
the number of shares authorized for issuance under the Incentive Plan, decrease
the exercise or base price per share at which stock options or stock
appreciation rights may be granted under the Incentive Plan, modify or waive
any performance criteria or conditions established under the Incentive Plan or
alter the classes of individuals eligible to participate in the Incentive Plan.
The Company is not required by law to seek the approval of shareholders
for this amendment. However, by conditioning the amendment on shareholder
approval, the Company seeks to maximize the availability to it of federal
income tax deductions for compensation paid through the Incentive Plan. In the
event that the amendment is not approved by shareholders, the amendment will
not take effect, but the Incentive Plan will remain in effect without the
amendment. The principal provisions of the Incentive Plan, as it would be
amended by the amendment, are described below. The full text of the amendment
is set forth as Appendix A to this Proxy Statement, to which reference is made,
and the description of the amendment provided below is qualified in its
entirety by such reference.
PURPOSE OF THE INCENTIVE PLAN
The purpose of the Incentive Plan is to encourage designated directors,
officers and employees of the Company and its subsidiaries to contribute
materially to the growth of the Company, thereby benefitting the Company's
shareholders, and aligning the economic interests of the participants with
those of the shareholders.
DESCRIPTION OF THE AMENDED INCENTIVE PLAN
ADMINISTRATION. A Plan Committee consisting of members of the Compensation
Committee of the Board (or any successor committee) or such other committee as
the Board may designate ("Plan Committee") administers the Incentive Plan. The
Plan Committee is comprised of at least three directors of the Company, and all
directors on the Plan Committee are "outside directors" (as that term is
defined under section 162(m) of the Code) and "disinterested directors" (as
such term is defined under section 16(b) of the Exchange Act and the rules and
regulations promulgated thereunder) who are not currently employees of the
Company, the Bank or any affiliate. The Plan Committee will determine, within
the limitations of the Incentive Plan, the directors, officers and employees to
whom incentive awards will be granted and the terms and conditions of such
awards. Subject to certain specific limitations and restrictions set forth in
the Incentive Plan, the Plan Committee has full and final authority to
interpret the Incentive Plan, to prescribe, amend and rescind rules and
regulations, if any, relating to the Incentive Plan and to make all
determinations necessary or advisable for the administration of the Incentive
Plan. The costs and expenses of administering the Incentive Plan are borne by
the Company.
23
<PAGE>
STOCK SUBJECT TO THE INCENTIVE PLAN. The Company has authorized the
issuance of up to 5,000,000 shares of its common stock for the settlement of
incentive awards granted under the Incentive Plan. None of the authorized
shares have been issued. Any shares subject to grants under the Incentive Plan
which expire or are terminated, forfeited or canceled without having been
exercised or vested in full shall again be available for purposes of the
Incentive Plan. As of March 18, 1999, the aggregate fair market value of the
shares remaining was $43,750,000, based on the closing sales price per share of
$8.75 on the Nasdaq Stock Market National Market System on such date.
ELIGIBILITY. Any officer, employee or director of the Company (or a
participating affiliate) who is selected by the Plan Committee is eligible to
participate in the Incentive Plan. As of March 18, 1999, there were
approximately 880 eligible individuals.
TERMS AND CONDITIONS OF INCENTIVE AWARDS. The Incentive Plan provides for
the grant of the following types of incentive awards the value of which is
based on the value (or appreciation in value) of shares of the Company's common
stock: stock options which qualify for favorable federal income tax treatment
as "incentive stock options" ("ISOs"); non-qualified stock options which do not
so qualify ("NQSOs"); stock appreciation rights ("SARs"); restricted stock;
phantom stock; and performance shares. It also provides for the grant of
incentive awards, in the form of performance units, the value of which is based
on criteria other than the value of the Company's common stock. Currently, no
individual may be granted incentive awards in any calendar year the value of
which is based on the value (or appreciation in value) of shares of the
Company's common stock that would require the issuance of more than 100,000
shares for settlement or a cash payment in excess of the fair market value of
100,000 shares for settlement. If the shareholders approve the amendment, this
limit would be raised to 750,000 shares. Currently, no individual may be
granted incentive awards the value of which is based on criteria other than the
value of the Company's common stock that require the payment of more than
$1,000,0000 in any calendar year. The amendment would not change this limit.
STOCK OPTIONS AND SARS. In addition to the terms and conditions
established by the Plan Committee and the general conditions and limitations
described above, grants of stock options and SARS will be subject to the
following additional conditions. No ISO, NQSO or SAR may be granted with an
exercise or base price that is less than the fair market value of a share of
common stock on the date of grant (110% of fair market value in the case of an
ISO if the recipient of the grant is a 10% owner of the Company) or for a term
in excess of ten years (five years in the case of an ISO if the recipient of
the grant is a 10% owner of the Company). The maximum number of ISOs that may
first become exercisable in any calendar year is that number with an aggregate
exercise price not exceeding $100,000.
RESTRICTED STOCK. In addition to the terms and conditions established by
the Plan Committee and the general conditions and limitations described above,
grants of restricted stock will be subject to the following additional
conditions. The Plan Committee, in its sole discretion, may determine that the
Company not issue any certificates for shares subject to a restricted stock
award or that the Company retain possession of any certificates for shares
issued pursuant to a restricted stock award, until all restrictions have
lapsed. Shares may be issued for consideration or for no consideration, as the
Plan Committee determines. Awards of restricted stock will be made subject to
such restrictions and conditions as the Plan Committee may determine in its
sole discretion. The award instrument may provide for a restriction period
during which the award will remain subject to certain restrictions, including
restrictions on transferability. During the restriction period the award
recipient will have the right to receive any dividends or other distributions
paid thereon, subject to any restrictions deemed appropriate by the Plan
Committee. Unless the Plan Committee otherwise determines, during the
restriction period an award recipient will not have the right to vote the
shares subject to the award. The award recipient may not sell, assign,
transfer, pledge or otherwise dispose of such shares except by will or the laws
of descent and distribution. If the award recipient ceases to be employed by
the Company during the restriction period (or ceases to be a member of the
Board) or if other specified conditions are not met, the restricted stock award
will terminate with respect to all shares as to which the restrictions have not
lapsed and those shares must be returned to the Company.
24
<PAGE>
PERFORMANCE UNITS AND PERFORMANCE SHARES. In addition to the terms and
conditions established by the Plan Committee and the general conditions and
limitations described above, grants of performance shares and performance units
will be subject to the following additional conditions. Performance units or
performance shares will represent the right of the award recipient to receive
an amount based on the value of the performance units or performance shares if
certain performance goals are met. A performance unit will have a value based
on such measurements or criteria as the Plan Committee determines. A
performance share will have a value equal to the fair market value of a share
of common stock. Such awards will be contingent upon the attainment of such
performance goals over a performance period to be determined by the Plan
Committee. The performance goals to be achieved during a performance period and
the measure of whether and to what degree such goals have been attained will
also be determined by the Plan Committee. If the award recipient ceases to be
employed by the Company during the performance period or if other specified
conditions are not met, the performance unit or performance shares will be
forfeited at the close of business on the award recipient's last day of
employment. The Plan Committee may, however, provide for complete or partial
exceptions to this requirement as it deems appropriate. If the award recipient
ceases to be employed by the Company after the expiration of a performance
period but prior to payment, payment will be made to the award recipient or his
or her successor in interest, if applicable. Non-employee Directors are not
eligible to receive performance units or performance shares.
PHANTOM STOCK. In addition to the terms and conditions established by the
Plan Committee and the general conditions and limitations described above,
grants of phantom stock will be subject to the following additional conditions.
The initial value of the phantom stock will be determined by the Plan Committee
at the time of grant and may be greater than, equal to or less than the fair
market value of a share of common stock. The Committee may grant dividend
equivalents in connection with phantom stock. Such dividends may be paid
currently or accrued as contingent cash obligations and may be payable in cash
or shares of common stock, upon such terms as the Plan Committee may establish,
including the achievement of specific performance goals. The Plan Committee
will determine whether the phantom stock will be paid in the form of cash,
shares of common stock or a combination of the two. Cash payments will be in an
amount equal to the fair market value on the payment date of the number of
shares of common stock equal to the number of shares of phantom stock with
respect to which payment is made. The number of shares of common stock
distributed in settlement of a phantom stock award will equal the number of
shares of phantom stock with respect to which settlement is made. Payment will
be made in accordance with the terms and at such times as determined by the
Plan Committee at the time of the award. If the award recipient ceases to be
employed by the Company (or a member of the Board) prior to becoming vested or
otherwise entitled to payment, the award recipient's phantom stock shall be
forfeited at the close of business on the recipient's last day of employment or
service as a director. The Plan Committee may, however, provide for complete or
partial exceptions to this requirement as it deems appropriate.
DIVIDEND EQUIVALENTS. The Plan Committee may grant dividend equivalents to
an award recipient in such number and upon such other terms, including in
either case the achievement of specific performance goals, and at any time and
from time to time, as may be determined by the Plan Committee. Each dividend
equivalent will represent the right to receive an amount in cash, or shares of
common stock having a fair market value, equal to the amount of dividends paid
on one share of common stock during such period as may be established by the
Plan Committee. Dividend equivalents may be paid currently or accrued as
contingent cash obligations, upon such terms as the Plan Committee may
establish. The Plan Committee will determine whether dividend equivalents will
be paid in the form of cash, shares of common stock or a combination of the
two. The number of any shares of common stock payable in satisfaction of
dividend equivalents will be determined by dividing the amount credited to the
award recipient with respect to such dividend equivalents by the fair market
value of a share of common stock on the day instructions are given to the
Company's Chief Financial Officer or transfer agent to issue or purchase such
shares. Payment shall be made at such times as determined by the Plan Committee
at the time of grant. If the award recipient ceases to be employed by the
Company prior to becoming entitled to payment, the recipient's dividend
equivalents
25
<PAGE>
shall be forfeited at the close of business on his or her last day of
employment or service as a director. The Plan Committee may, however, provide
for complete or partial exceptions to this requirement as it deems appropriate.
RESTRICTIONS ON TRANSFERABILITY OF GRANTS. No awards under the Incentive
Plan may be transferred, except by will or the laws of descent and
distribution. However, if permitted by the Plan Committee, awards other than
ISOs may be transferred pursuant to a domestic relations order, within the
meaning of the Code or of Title I of the Employee Retirement Income Security
Act of 1974, as amended. Notwithstanding the foregoing, the Plan Committee may
provide in an award instrument that an award recipient may transfer NQSOs to
family members or other persons or entities according to such terms as the Plan
Committee may determine; provided that the award recipient receives no
consideration for the transfer of the NQSO and the transferred NQSO continues
to be subject to the same terms and conditions as were applicable to the NQSO
immediately before the transfer.
AMENDMENT, TERM AND TERMINATION OF THE INCENTIVE PLAN. The Plan Committee
may amend or terminate the Incentive Plan at any time; provided, however, that
the Plan Committee may not amend the Incentive Plan without shareholder
approval if such approval is required by section 162(m) of the Internal Revenue
Code or the rules of any stock exchange on which the Company's common stock is
listed. No award may be made under the Incentive Plan after its termination,
but awards made prior thereto may extend beyond the date of termination.
ADJUSTMENT PROVISIONS. If there is any change in the number or kind of
shares of common stock outstanding (i) by reason of a stock dividend, spinoff,
recapitalization, stock split, or combination or exchange of shares, (ii) by
reason of a merger, reorganization or consolidation in which the Company is the
surviving corporation, (iii) by reason of a reclassification or change in par
value, or (iv) by reason of any other extraordinary or unusual event affecting
the outstanding common stock as a class without the Company's receipt of
consideration, or if the value of outstanding shares of the Company's common
stock is substantially reduced as a result of a spinoff or the Company's
payment of an extraordinary dividend or distribution, the maximum number of
shares of common stock available for incentive awards, the maximum number of
shares of common stock that any individual participating in the Incentive Plan
may be granted in any year, the number of shares covered by outstanding awards,
the kind of shares issued under the Incentive Plan, and the price per share or
the applicable market value of such awards may be appropriately adjusted by the
Plan Committee to reflect any increase or decrease in the number of, or change
in the kind or value of, issued shares of common stock to preclude, to the
extent practicable, the enlargement or dilution of rights and benefits;
provided, however, that any fractional shares resulting from such adjustment
will be eliminated. If and to the extent that any such change in the number or
kind of shares of common stock outstanding is effected solely by application of
a mathematical formula (e.g., a 2-for-1 stock split), the adjustment described
above will be automatic, without action by the Plan Committee.
SECTION 162(m). Under Section 162(m) of the Internal Revenue Code, the
Company may be precluded from claiming a federal income tax deduction for total
remuneration in excess of $1,000,000 paid to the chief executive officer or to
any of the other four most highly compensated officers in any one year. An
exception exists, however, for "performance-based compensation," including
amounts received upon the exercise of stock options (the exercise price for
which is at or above the fair market value of the underlying shares at the date
of grant) or stock appreciation rights, if such options or stock appreciation
rights are granted pursuant to a plan approved by shareholders that meets
certain requirements. The Incentive Plan, and the amendment thereto when
approved by shareholders, is intended to make grants of stock options and stock
appreciation rights thereunder meet the requirements of "performance-based
compensation." "Performance-based compensation" also includes remuneration paid
upon the attainment of performance goals if specified requirements are met.
Section 162(m) of the Code requires that a compensation committee consisting of
two or more "outside directors" establish performance goals that must be met
before such remuneration may be awarded. The committee also must certify that
the performance goals have actually been met before payment of the
remuneration. Finally, the business criteria on which performance goals may be
based
26
<PAGE>
must be disclosed to and approved by the shareholders. The Plan provides that
any award to a recipient who is a "covered employee" within the meaning of
Section 162(m), the exercisability or settlement of which is subject to the
achievement of performance goals, will qualify as "qualified performance-based
compensation" within the meaning of Section 162(m) of the Code and the
regulations thereunder. The Plan Committee will specify the performance goals
in writing, prior to (or within 90 days after commencement of ) the applicable
performance period.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended only as a summary and does not
purport to be a comprehensive description of the federal tax laws, regulations
and policies affecting the Company and recipients of ISOs and NQSOs that may be
granted under the Incentive Plan and any descriptions of the provisions of any
law, regulation or policy. Any change in applicable law or regulation or in the
policies of various taxing authorities may have a material effect on the
discussion contained herein.
There are no federal income tax consequences for the Company or the option
holder at the time an ISO is granted or for the Company upon the exercise of an
ISO. Upon the exercise of an ISO, the option holder does not recognize income
for tax purposes but the difference between the fair market value of the shares
acquired upon exercise and the exercise price is an item of tax preference that
may affect the option holder's liability for alternative minimum tax. If there
is no sale or other disposition of the shares acquired upon the exercise of an
ISO within two years after the date the ISO was granted, or within one year
after the exercise of the ISO, then at no time will any amount be deductible by
the Company with respect to the ISO. If the option holder exercises an ISO and
sells or otherwise disposes of the shares so acquired after satisfying the
foregoing holding period requirements, then he will realize a capital gain or
loss on the sale or disposition. If the option holder exercises his ISO and
sells or disposes of his shares prior to satisfying the foregoing holding
period requirements, then an amount equal to the difference between the amount
realized upon the sale or other disposition of such shares and the price paid
for such shares upon the exercise of the ISO will be includible in the ordinary
income of such person, and such amount will ordinarily be deductible by the
Company at the time it is includible in such person's income.
With respect to the grant of NQSOs, there are no federal income tax
consequences for the Company or the option holder at the date of the grant.
Upon the exercise of a NQSO, an amount equal to the difference between the fair
market value of the shares to be purchased on the date of exercise and the
aggregate purchase price of such shares is generally includible in the ordinary
income of the person exercising such NQSO, although such inclusion may be at a
later date in the case of an option holder whose disposition of such shares
could result in liability under Section 16(b) of the Exchange Act. The Company
will ordinarily be entitled to a deduction for federal income tax purposes at
the time the option holder is taxed on the exercise of the NQSO equal to the
amount which the option holder is required to include as ordinary income.
In the case of other awards, recipients are generally subject to ordinary
income tax on the monetary payment received (or the fair market value of common
stock or other property received) for the taxable year in which the payment is
made or the property is received. However, if common stock is transferred to an
award recipient subject to the satisfaction of future employment or performance
conditions, the award recipient will generally be subject to ordinary income
tax on the fair market value of common stock in the year in which the common
stock becomes substantially vested, unless the recipient elects to be subject
to tax in the year of receipt.
The foregoing statements are intended to summarize the general principles
of current federal income tax law applicable to awards that may be granted
under the Incentive Plan. State and local tax consequences may also be
significant. Participants are advised to consult with their tax advisor as to
the tax consequences of the Incentive Plan.
Due to the discretionary nature of awards under the Incentive Plan, the
amount of stock options or other awards that may be granted in the future under
the Incentive Plan, as it would be amended,
27
<PAGE>
to any individual is not determinable. The following table sets forth
information with respect to the stock option awards actually made under the
Incentive Plan in the fiscal year ended December 31, 1998 to the individuals
and groups indicated. These awards comply with the existing terms of the
Incentive Plan and are not contingent on shareholder approval of the amendment.
NEW PLAN BENEFITS
1997 PERFORMANCE INCENTIVE PLAN
<TABLE>
<CAPTION>
STOCK OPTIONS
-------------------------------------
NAME DOLLAR VALUE($) NUMBER OF SHARES
- ---- ----------------- -----------------
<S> <C> <C>
Rudy E. Schupp ..................................................... N/A 100,000
Chairman, President, CEO and Director
Richard J. Haskins ................................................. N/A 65,000
Senior Executive Vice President & CFO
Roger Savage ....................................................... N/A 20,000
Senior Vice President, Business Banking
Thomas Tribby ...................................................... N/A 15,000
President, Trust and Investment Services
Bruce Keir ......................................................... N/A 10,000
EVP--Market President, Broward County
Each Director Nominee other than Mr. Adcock and Mr. Langan ......... N/A 10,000
Thomas J. Langan, Jr. .............................................. N/A 17,500
Director and Nominee
Johnny Adcock ...................................................... N/A 0
Director and Nominee
All current executive officers as a group (14 persons) ............. N/A 325,000
All current directors who are not executive officers (including
nominees) as a group (18 persons) ................................. N/A 192,500
All employees who are not executive officers as a group ............ N/A 852,000
</TABLE>
During the fiscal year ended December 31, 1998, there were no grants or
awards under the Incentive Plan other than stock options.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE APPROVAL OF THE AMENDMENT TO THE REPUBLIC SECURITY FINANCIAL CORPORATION
1997 PERFORMANCE INCENTIVE PLAN.
28
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon a review of filings with the Securities and Exchange
Commission and written representations that no other reports were required, the
Company believes that all of the persons required to file reports of ownership
of the Company's common stock under section 16(a) of the Securities Exchange
Act of 1934 complied during 1998 with such requirements, with the exception of
the grant of stock appreciation rights (in 1995, when such grants were exempt
from the reporting requirements) to Messrs. Gore, Haskins, Lindahl, Rathke,
Spitznagel, Schupp and Wolfson and Dr. Wiita, and the subsequent exercise of
certain of those stock appreciation rights by Mr. Schupp (in July 1997 and
April 1998) and Mr. Haskins (in July 1997 and April 1998), the exchange of
shares of First Palm Beach Bancorp, Inc. for shares of the Company pursuant to
the merger of First Palm Beach Bancorp, Inc. into the Company on October 29,
1998, which exchange was not reported by directors Berliner, Schupp, Langan and
Rathke until early December 1998, the private sale of a total of 865,260 shares
of the Company's stock by director Thomas Carney to his three sons, which sale
occurred in June of 1998 but was not reported until Dr. Carney's Form 5 for
December 1998 was filed, a transfer of 9,685 shares from indirect to direct
ownership by Mr. Hughes which occurred in May 1998 but was not reported until
Mr. Hughes' Form 5 for December 1998 was filed, and the purchase of 1,000
shares by Mr. Wolfson in September 1998 which was not reported until Mr.
Wolfson's Form 5 for December 1998 was filed. In addition, the following
individuals did not report their holdings under the Bank's 401(k) Plan as
required on Form 5 filings prior to December 31, 1998: Messrs. Haskins,
Kirkman, Keir, Savage and Schupp, and Mss. Pollard and Schimelman, and the
following individuals did not report their holdings under the Company's
Dividend Reinvestment Plan or Employee Stock Purchase Plan as required on Form
5 filings prior to December 31, 1998: Mss. Pollard and Schimelman and Messrs.
Haskins, Keir, Kirkman, Owen, Savage and Schupp and Dr. Wiita.
WHO IS THE COMPANY'S INDEPENDENT AUDITOR?
The Company has selected Ernst & Young LLP to serve as its firm of
independent public accountants for the fiscal year ending December 31, 1999.
The same firm has served in this capacity since 1990. Representatives of this
firm are expected to be present at the Annual Meeting. Such representatives
will have the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
OTHER MATTERS
As of the date of this proxy statement, the Company knows of no business
that will be presented for consideration at the Annual Meeting other than the
items referred to above and procedural matters incident to the conduct of the
meeting. If any other matter is properly brought before the meeting for action
by shareholders, proxies in the enclosed form returned to the transfer agent
(as agent for the Company) will be voted in accordance with the recommendation
of the Board of Directors or, in the absence of such a recommendation, in
accordance with the judgment of the proxy holder.
29
<PAGE>
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING. Shareholders interested
in presenting a proposal for consideration at the Company's Annual Meeting of
Shareholders in 2000 may do so by following the procedures prescribed in Rule
14a-8 under the Securities Exchange Act of 1934 and the Company's by-laws. To
be eligible for inclusion, shareholder proposals must be received by the
Company's Secretary no later than November 26, 1999. In addition, the Board of
Directors will consider proposals for nominees for director from shareholders
which are made in writing to the Secretary of the Company.
PROXY SOLICITATION COSTS. The proxies being solicited hereby are being
solicited by the Company. The cost of soliciting proxies in the enclosed form
will be borne by the Company.
The Company has retained D.F. King & Company, 77 Water Street, New York,
New York 10005, to aid in the solicitation. For these services, the Company
will pay D.F. King & Company a fee of $5,000 and reimburse it for certain
out-of-pocket disbursements and expenses. Officers and regular employees of the
Company or the Bank may, but without compensation other than their regular
compensation, solicit proxies by further mailing or personal conversations, or
by telephone, telex, facsimile or electronic means. The Company will, upon
request, reimburse brokerage firms and others for their reasonable expenses in
forwarding solicitation material to the beneficial owners of stock.
By order of the Board of Directors,
/s/ Alissa E. Ballot
------------------------------------
Alissa E. Ballot
Secretary
March 25, 1999
30
<PAGE>
APPENDIX A
REPUBLIC SECURITY FINANCIAL CORPORATION
1997 PERFORMANCE INCENTIVE PLAN
ADOPTED JUNE 27, 1997, AMENDED AND RESTATED ON OCTOBER 27, 1998
AMENDMENT 2
1. SECTION 3(b)--Effective as of January 1, 1999, section 3(b) of the Plan
shall be amended to read in its entirety as follows:
(b) INDIVIDUAL LIMITS. Grants to any individual in any calendar year
shall be subject to the following limitations:
(i) Grants that may be settled only by delivery of a fixed number of
shares of Common Stock shall be limited such that delivery of no more than
750,000 shares of Common Stock shall be required for full settlement.
(ii) Grants that may be settled only by monetary payment the amount of
which is computed with reference to the Fair Market Value of a share of
Common Stock shall be limited such that the monetary payment shall not
exceed the Fair Market Value of 750,000 shares of Common Stock, determined
as of the date of grant or the date of settlement (whichever produces the
higher limit).
(iii) Grants that may be settled either by delivery of a fixed number of
shares of Common Stock or by monetary payment the amount of which is
computed with reference to the Fair Market Value of a share of Common
Stock shall be limited such that (A) delivery of no more than 750,000
shares of Common Stock shall be required for full settlement and (B) the
monetary payment shall not exceed the Fair Market Value as of the date of
grant or the date of settlement (whichever produces the higher limit) of a
number of shares of Common Stock determined by subtracting the number of
shares of Common Stock actually issued in settlement of such Grants from
750,000.
(iv) Grants that may be settled by monetary payment the amount of which
is computed without reference to the Fair Market Value of a share of
Common Stock shall be limited such that the monetary payment shall not
exceed $1,000,000. If shares of Common Stock may be delivered in full or
partial substitution for such payment, the maximum monetary payment shall
be limited such that it shall not exceed $1,000,000 reduced by the Fair
Market Value of the Common Stock so delivered, determined as of the date
of settlement.
The limits imposed under section 3(b)(i), (ii) and (iii) shall be adjusted
at the times and in the manner provided in section 3(e).
IN WITNESS WHEREOF, Republic Security Financial Corporation has caused
this instrument to be executed as of this 12th day of January, 1999.
REPUBLIC SECURITY FINANCIAL CORPORATION
By:
------------------------------------
Name:
TITLE:
A-1
<PAGE>
APPENDIX B
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
REPUBLIC SECURITY FINANCIAL CORPORATION
450 S. AUSTRALIAN AVENUE
WEST PALM BEACH, FLORIDA 33401
The undersigned hereby appoints Richard J. Haskins and Alissa E. Ballot, and
each of them, acting alone, with the power to appoint his or her substitute,
proxy to represent the undersigned and vote as designated on the reverse all of
the shares of common stock of Republic Security Financial Corporation ("RSFC")
held of record by the undersigned on February 25, 1999, at the Annual Meeting of
Shareholders to be held on April 28, 1999 and at any adjournment or postponement
thereof.
(CONTINUED ON REVERSE SIDE)
PLEASE DATE, SIGN AND MAIL YOUR PROXY
CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
REPUBLIC SECURITY FINANCIAL CORPORATION
APRIL 28, 1999
Please Detach and Mail in the Envelope Provided
[X] Please mark your
votes as in this
example.
1. Election of seven directors, each for a term of three years, one
director for a term of two years and one director for a term on one
year.
NOMINEES: 3-YEAR TERM:
Johnny Adcock
Mary Anna Fowler
Thomas J. Langan, Jr.
Carol R. Owen
Richard C. Rathke
Rudy E. Schupp
Daniel O. Sokoloff
2-YEAR TERM:
Fred A. Greene
1-YEAR TERM:
R. Randy Guemple
WITHHOLD
AUTHORITY
FOR TO VOTE
[ ] [ ]
(Instructions: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- ----------------------------------------
<PAGE>
2. Approval of an amendment to the Company's 1997 Performance Incentive
Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In his discretion, the proxy is authorized to vote upon such other
matters as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" PROPOSALS 1 AND 2.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature ___________________ _______________________ Dated _____________
Signature if held jointly
NOTE: Please sign exactly as name appears above. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name
by authorized person.
<PAGE>
APPENDIX C
March 25, 1999
Dear Directors:
As you may know, in connection with the conversion of First Bank of Florida
("First Bank") from a mutual to a stock form of organization in September 1993
and the formation of First Palm Beach Bancorp, Inc. ("FFPB") as the parent
holding company for First Bank, 211,600 shares of Common Stock of FFPB were
acquired by the First Bank Recognition and Retention Plan for Officers and
Employees and the Recognition and Retention Plan for Outside Directors ("the
RRPs") for the benefit of the directors and employees of First Bank. Upon the
merger of FFPB with Republic Security Financial Corporation (the "Company") on
October 29, 1998, the shares of common stock of FFPB were exchanged for shares
of common stock of the Company ("Common Stock"). As a participant in the RRPs,
you may direct the voting, at the Company's Annual Meeting of Shareholders to be
held on April 28, 1999 (the "1999 Annual Meeting"), of the shares of the
Company's Common Stock held by the RRPs Trust allocated to your account as of
February 25, 1999, the voting record date for the 1999 Annual Meeting (the
"Record Date").
A committee consisting of Richard J. Haskins, Joan Schimelman and Alissa E.
Ballot administers the RRPs. An unrelated corporate trustee for the RRPs has
been appointed, Marine Midland Bank (the "RRPs Trustee"). The RRPs Trustee will
vote those shares of the Company's Common Stock held in the RRPs Trust and
allocated to participants in accordance with instructions of the participants.
We, the Committee responsible for operating the RRPs, are forwarding to you the
attached Voting Instruction Card, provided for the purpose of conveying your
voting instructions to the RRPs Trustee.
If you do not file a Voting Instruction Card or if your Voting Instruction Card
is received too late to be included in the tally, any shares allocated to you
will be voted to reflect the same proportions of affirmative and negative votes
as the aggregate affirmative and negative votes reflected for such proposal on
the Voting Instruction Cards.
At this time, in order to direct the voting of shares allocated to your account
under the RRPs, you must fill out and sign the enclosed Voting Instruction Card
and return it in the accompanying envelope by April 18, 1999. The RRPs Trustee
will tally the instructions and use the tally in voting all of the shares in the
RRPs Trust on the proposals specified on the Voting Instruction Card.
<PAGE>
Please mail the Voting Instruction Card to the RRPs Trustee, Marine Midland
Bank, using the self-addressed envelope provided.
At the 1999 Annual Meeting, it is possible, although very unlikely, that
shareholders will be asked to vote on matters other than those specified on the
attached Voting Instruction Card. In such a case, there may not be time to ask
you for further voting directions. If this situation arises, the RRPs Trustee
will decide how to vote all of the shares held in the RRPs Trust.
Sincerely,
RRPs Committee
<PAGE>
VOTING INSTRUCTION CARD
I, the undersigned, understand that the RRPs Trustee is the holder of record and
custodian of all shares allocated to me of Republic Security Financial
Corporation (the "Company") Common Stock under the First Bank of Florida
Recognition and Retention Plan for Officers and Employees and the Recognition
and Retention Plan for Outside Directors. Further, I understand that my voting
instructions are solicited on behalf of the RRPs Trustee for the Annual Meeting
of Shareholders on April 28, 1999.
Accordingly, you are instructed to vote all shares allocated to me as follows:
1. The election as directors of all nominees listed (except as marked to the
contrary below):
3-year terms:
Johnny Adcock
Mary Anna Fowler
Thomas J. Langan, Jr.
Carol R. Owen
Richard C. Rathke
Rudy E. Schupp
Daniel O. Sokoloff
2-year term:
Fred A. Greene
1-year term:
R. Randy Guemple
FOR
ALL NOMINEES
(EXCEPT AS INDICATED BELOW) VOTE WITHHELD AS TO ALL NOMINEES
[ ] [ ]
Instructions: To withhold your vote for any individual nominee, write that
nominee's name on the line provided below.
------------------------------------------
<PAGE>
2. The approval of an amendment to the Company's 1997 Performance Incentive
Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In the discretion of the RRPs Trustee, as to any other matter or proposal
to be voted on by the Company's shareholders at the Annual Meeting of
Shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
The RRPs Trustee is hereby authorized to vote any shares allocated to me as
indicated above. I understand that if I sign this form without indicating
specific instructions, shares allocated to me will be voted FOR all nominees and
all of the listed proposals. By signing below, I acknowledge receipt of a copy
of the Proxy Statement dated March 25, 1999 that was furnished to shareholders
of the Company in connection with the Annual Meeting of Shareholders and the
accompanying letter dated March 25, 1999 from the Committee appointed to
administer the RRPs.
Dated _____________________ 1999
________________________________
Signature
PLEASE DATE, SIGN AND RETURN THIS FORM IN THE ENCLOSED ENVELOPE BY APRIL 18,
1999.
<PAGE>
APPENDIX D
Republic Security Financial Corporation Letterhead
March 25, 1999
Dear ESOP Account Holder:
As you may know, in connection with the conversion of First Bank of
Florida ("First Bank") from a mutual to a stock form of organization in
September 1993, and the formation of First Palm Beach Bancorp, Inc. (the
"Company") as the parent holding company for First Bank, 423,200 shares of
common stock of the Company were acquired by the Employee Stock Ownership Plan
("ESOP") for the benefit of participating employees. These shares of common
stock were purchased with borrowed funds and placed in a suspense account for
future transfer to the allocated accounts of individual participating employees
as the borrowed funds are repaid. Upon the merger of the Company with Republic
Security Financial Corporation ("RSFC") on October 29, 1998, the shares of
common stock of the Company were exchanged for shares of Common Stock of RSFC
("Common Stock").
A total of 1,445,046 shares of Common Stock of RSFC were held in the
allocated and suspense accounts by the ESOP as of February 25, 1999, which is
the voting record date (the "Record Date") for RSFC's Annual Meeting of
Shareholders to be held on April 28, 1999 (the "1999 Annual Meeting"). As a
participant in the ESOP, you may direct the voting, at the 1999 Annual Meeting,
of the shares of RSFC's Common Stock held by the ESOP Trust and allocated to
your account as of the Record Date.
A committee consisting of Messrs. Haskins and Guemple and Ms. Schimelman
administers the ESOP (the "ESOP Committee"). An unrelated corporate trustee for
the ESOP has been appointed, Marine Midland Bank (the "ESOP Trustee").
HOW YOU EXERCISE YOUR VOTING RIGHTS
Because the ESOP Trustee is the owner of record of all of the Common Stock
held in the ESOP Trust, only it may submit an official proxy card or ballot to
cast votes for this Common Stock. You exercise your right to direct the vote of
Common Stock that has been allocated to your account by submitting a
Confidential Voting Instruction Card that will tell the ESOP Trustee how to
complete the proxy card or ballot for your shares. The ESOP Committee is
furnishing to you the enclosed Confidential Voting Instruction Card, together
with a copy of the Company's Proxy Statement for the 1999 Annual Meeting, so
that you may exercise your right to direct the voting of shares of Common Stock
allocated to your account. The Confidential Voting Instruction Card indicates
how many shares of Common Stock were allocated to your account, and thus how
many votes you have, as of the Record Date. The Confidential Voting Instruction
Card also lists the specific proposals to be voted on at the 1999 Annual
Meeting.
In order to direct the voting of shares allocated to your account under
the ESOP, you must fill-out and sign the enclosed Confidential Voting
Instruction Card and return it in the accompanying envelope by April 18, 1999.
The Confidential Voting Instruction Card will be delivered directly to the
ESOP Trustee who will tally all the instructions received. If your Confidential
Voting Instruction Card is received on or before April 18, 1999, the ESOP
Trustee will vote the number of shares of Common Stock indicated on your
Confidential Voting Instruction Card in the manner you direct. The contents of
your Confidential Voting Instruction Card will be kept confidential. No one at
Republic Security Bank or RSFC will have access to information about anyone's
individual choices.
<PAGE>
UNALLOCATED SHARES
The ESOP Trustee has a legal duty to decide how to vote the shares held in
the ESOP suspense account. In making a decision, it will act solely in the
interest of participating employees and their beneficiaries.
UNSPECIFIED PROPOSALS
At the 1999 Annual Meeting, it is possible, although very unlikely, that
stockholders will be asked to vote on matters other than those specified on the
attached Confidential Voting Instruction Card. In such a case, there may not be
time to ask you for further voting directions. If this situation arises, the
ESOP Trustee has a legal duty to decide how to vote all of the shares held in
the ESOP Trust. In making a decision, it will act solely in the interest of
participating employees and their beneficiaries.
IF YOU DO NOT VOTE
The ESOP Trustee has a legal duty to see that all voting rights for shares
of Common Stock held in the ESOP Trust are exercised. If you do not file a
Confidential Voting Instruction Card, or if the independent tabulator receives
your Confidential Voting Instruction Card after the deadline, the ESOP Trustee
will decide how to exercise the votes for your shares. In making a decision, it
will act solely in the interest of participating employees and their
beneficiaries.
This voting direction procedure is your opportunity to participate in
decisions that will affect the future of Republic Security Bank and RSFC.
Please take advantage of it by completing and signing the Confidential Voting
Instruction Card using the self-addressed envelope provided.
Sincerely,
Sincerely, ESOP Committee
Enclosure: Proxy Statement
<PAGE>
CONFIDENTIAL VOTING INSTRUCTION CARD
NAME:
ALLOCATED SHARES:
I, the undersigned, understand that the ESOP Trustee is the holder of
record and custodian of all shares of Republic Security Financial Corporation
(the "Company") Common Stock allocated to my account under the First Bank of
Florida Employee Stock Ownership Plan. Further, I understand that my voting
directions are solicited on behalf of the ESOP Trustee for the Annual Meeting
of Shareholders on April 28, 1999.
As a named fiduciary with respect to the Company Common Stock allocated to
me, I direct you to vote all such Company Common Stock as follows:
1. The election of seven directors for terms of three years each, as listed
below:
Johnny Adcock, Mary Anna Fowler, Thomas J. Langan, Jr., Carol R. Owen,
Richard C. Rathke, Rudy E. Schupp, Daniel O. Sokoloff
The election of one director for a term of two years: Fred A. Greene
The election of one director for a term of one year: R. Randy Guemple
<TABLE>
<S> <C>
FOR ALL NOMINEES
(EXCEPT AS INDICATED BELOW) VOTE WITHHELD AS TO ALL NOMINEES
[ ] [ ]
</TABLE>
INSTRUCTION: To withhold your vote for any individual nominee, write that
nominee's name in the space provided:
- ----------------------------------------------------------------------------
.
2. The approval of an amendment to the Company's 1997 Performance Incentive
Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In the discretion of the ESOP Trustee, as to any other matter or proposal
to be voted on by the Company's shareholders at the Annual Meeting of
Shareholders.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE `FOR' EACH OF THE LISTED PROPOSALS.
The ESOP Trustee is hereby directed to vote any shares allocated to me. I
understand that if I sign this form without indicating specific instructions,
shares attributable to me will be voted FOR all nominees and all of the listed
proposals.
By signing below, I acknowledge receipt of a copy of the Proxy Statement
dated March 25, 1999 that was furnished to shareholders of the Company in
connection with the Annual Meeting of Shareholders and the accompanying letter
dated March 25, 1999 from the Committee appointed to administer the ESOP.
Dated: , 1999.
---------------------------------
PRINT NAME OF ESOP ACCOUNT HOLDER
----------------------------------
SIGNATURE OF ESOP ACCOUNT HOLDER
PLEASE DATE, SIGN AND RETURN THIS FORM IN THE ENCLOSED ENVELOPE TO BE RECEIVED
NO LATER THAN APRIL 18, 1999.
