SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] Filed by a party other than the registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Fidelity Bancorp, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
<PAGE>
<PAGE>
January 9, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Fidelity Bancorp, Inc. The meeting will be held at the Perrysville Branch of
Fidelity Bank, PaSB , 1009 Perry Highway, Pittsburgh, Pennsylvania 15237 on
Tuesday, February 3, 1998, at 5:00 p.m., Eastern Time. The matters to be
considered by stockholders at the Annual Meeting are described in detail in the
accompanying materials.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend the
meeting in person. We urge you to mark, sign and date your proxy card today and
return it in the envelope provided, even if you plan to attend the Annual
Meeting. This will not prevent you from voting in person, but it will ensure
that your vote is counted if you are unable to attend.
Your continued interest in Fidelity Bancorp, Inc. is sincerely
appreciated.
Very truly yours,
/s/William L. Windisch
-------------------
William L. Windisch
President
<PAGE>
Fidelity Bancorp, Inc.
1009 Perry Highway
Pittsburgh, Pennsylvania 15237
412-367-3300
NOTICE OF ANNUAL MEETING
To Be Held on February 3, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Fidelity Bancorp, Inc. (the "Company") will be held at 1009 Perry Highway,
Pittsburgh, Pennsylvania 15237, on Tuesday, February 3, 1998, at 5:00 p.m.,
Eastern Time, for the following purposes, all of which are more completely set
forth in the accompanying proxy statement:
(1) To elect a director for a term of three years or until his
successor is elected and qualified;
(2) To consider and approve the adoption of the Fidelity Bancorp,
Inc. 1997 Employee Stock Compensation Program;
(3) To ratify the appointment of KPMG Peat Marwick as the
Company's independent auditors for the fiscal year ending
September 30, 1998;
(4) To transact such other business as may properly come before
the Annual Meeting. Except with respect to procedural matters
incident to the conduct of the Annual Meeting, management of
the Company is not aware of any matters other than those set
forth above which may properly come before the Annual Meeting.
Stockholders of record of the Company at the close of business on
December 23, 1997 are entitled to notice of and to vote at the Annual Meeting
and at any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Lisa M. Cline
----------------
Lisa M. Cline, Assistant Secretary
Pittsburgh, Pennsylvania
January 9, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THIS MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN
WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
<PAGE>
Fidelity Bancorp, Inc.
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished to the holders of the common stock of
Fidelity Bancorp, Inc. (the "Company"), the bank holding company of Fidelity
Bank, PaSB, Pittsburgh, Pennsylvania (the "Bank"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Stockholders ("Annual Meeting") to be held at 1009 Perry
Highway, Pittsburgh, Pennsylvania 15237, on Tuesday, February 3, 1998, at 5:00
p.m., Eastern Time, and at any adjournment thereof for the purposes set forth in
the Notice of Annual Meeting. This Proxy Statement is expected to be mailed to
stockholders on or about January 9, 1998.
Each proxy solicited hereby, if properly signed and returned to the
Company and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted (i) for the election of the nominee for director
described herein; (ii) for approval of the adoption of the Fidelity Bancorp,
Inc. 1997 Employee Stock Compensation Plan; (iii) for the ratification of the
appointment of KPMG Peat Marwick as the Company's independent auditors; and (iv)
upon such matters as may properly come before the Annual Meeting, in accordance
with the best judgment of the persons appointed as proxies.
Any stockholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Secretary of the Company written
notice thereof (Lisa M. Cline, Assistant Secretary, Fidelity Bancorp, Inc., 1009
Perry Highway, Pittsburgh, Pennsylvania 15237), (ii) submitting a duly executed
proxy bearing a later date or (iii) appearing at the Annual Meeting and giving
the Assistant Secretary notice of his or her intention to vote in person.
Proxies solicited hereby may be exercised only at the Annual Meeting and any
adjournment thereof and will not be used for any other meeting.
VOTING
Only stockholders of record of the Company at the close of business on
December 23, 1997 ("Voting Record Date") are entitled to notice of and to vote
at the Annual Meeting and at any adjournment thereof. On the Voting Record Date,
there were 1,559,447 shares of common stock, par value $.01 (the "Common
Stock"), of the Company issued and outstanding, and the Company has no other
class of equity securities outstanding. Each share of Common Stock is entitled
to one vote at the Annual Meeting on all matters properly presented at the
Annual Meeting and does not vote cumulatively in the election of directors.
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common
Stock as of the Voting Record Date, and certain other information with respect
to (i) any persons or entities, including any "group" as that term is used in
Section 13(d) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), who or which was known to the Company to be the beneficial owner of more
than 5% of the issued and outstanding Common Stock and (ii) all directors and
executive officers of the Company and the Bank as a group.
<TABLE>
<CAPTION>
Amount and Nature
Name of Beneficial of Beneficial
Owner or Number of Ownership as of Percent of
Persons in Group December 24, 1997(1) Common Stock
- ---------------- -------------------- ------------
<S> <C> <C>
Fidelity Bancorp, Inc. 128,709(2) 8.25%
Employee Stock Ownership
Plan
1009 Perry Highway
Pittsburgh, PA 15237
The Banc Funds 98,356(3) 6.31%
208 South LaSalle Street
Chicago,IL 60604
William L. Windisch 80,823(4) 5.12%
Director; President and Chief
Executive Officer of the
Company and Bank
Directors, Nominees and 300,997(5) 18.12%
Officers as a Group (6)
- -----------------------
</TABLE>
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. Under regulations promulgated
pursuant to the Exchange Act, shares of Common Stock are deemed to be
beneficially owned by a person if he or she directly or indirectly has or
shares (i) voting power, which includes the power to vote or to direct the
voting of the shares or (ii) investment power, which includes the power to
dispose or direct the disposition of the shares. Unless otherwise
indicated, the named beneficial owner has sole voting and dispositive power
with the respect to the shares.
(2) Pursuant to a schedule 13G filed by National City Trust Company, trustee of
the Bank's Employee Stock Ownership Plan ("ESOP"), which has shared
dispositive power over 128,709 shares. Such shares are voted by the trustee
in accordance with instructions from either participants (as to shares
allocated to their accounts) or the Plan Administrator of the ESOP (as to
unallocated shares).
(3) Pursuant to a Schedule 13D filed which indicates that Banc Funds has sole
voting and dispositive power over 98,356 shares.
<PAGE>
(4) Includes 16,503 shares owned jointly with Mr. Windisch's wife, 12,000
shares owned solely by Mr. Windisch's wife, and 1,109 shares held by his
daughter who resides with him. Includes 12,186 shares of the Company Common
Stock held in the Bank's ESOP which have been allocated to Mr. Windisch's
account and 22,185 shares which may be acquired by Mr. Windisch within 60
days pursuant to exercise of stock options. Does not include 6,437 shares
held by the ESOP which have not been allocated to participants' accounts,
which shares are voted by the trustee of the ESOP in accordance with
instructions from Mr. Windisch in his capacity as the Plan Administrator of
the ESOP. See "Executive Compensation - Employee Stock Ownership Plan." Mr.
Windisch disclaims beneficial ownership of the 1,109 shares owned by his
daughter.
(5) Includes options for 101,456 shares of Common Stock which may be acquired
within 60 days pursuant to the exercise of outstanding stock options under
the Company's Employee Stock Compensation Program and 32,082 shares of
Common Stock held in the Bank's ESOP which have been allocated to the
accounts of the Bank's officers. See "Executive Compensation - Employee
Stock Compensation Program" and "- Employee Stock Ownership Plan." For
information with respect to beneficial ownership of individual directors,
see "Information with Respect to Nominee for Director, Directors Whose
Terms Continue and Executive Officers."
(6) The group consists of 11 persons, being Directors and Nominee and three
officers of the Company and two executive officers of the Bank at the
Voting Record Date.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
DIRECTORS WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS
Election of Directors
The Bylaws of the Company presently provide that (i) the Board of
Directors shall consist of not less than five members and (ii) the Board of
Directors shall be divided into three classes as nearly equal in number as
possible. The members of each class are to be elected for a term of three years
or until their successors are elected and qualified. One class of directors is
to be elected annually. Except for Ms. Wilder, the directors and nominees listed
below have served as directors of the Company since its inception and as
directors of the Bank since the year indicated. There are no arrangements or
understandings between the Company and any person pursuant to which such person
has been elected a director, and no director is related to any other director or
executive officer of the Company or the Bank by blood, marriage or adoption. All
directors were elected by the stockholders.
<PAGE>
The Nominee
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominee listed below. If the
nominee should be unable or unwilling to stand for election at the time of the
Annual Meeting, the Board of Directors, as proxies, will nominate and vote for a
replacement nominee recommended by the Board of Directors. At this time, the
Board of Directors knows of no reason why the nominee listed below may not be
able to serve as a director if elected.
<TABLE>
<CAPTION>
Nominee For Term Expiring in 2001
Principal Occupation
During the Past Director Common Stock (2)
Name Age Five Years Since (1) Amount Percentage
- ---- --- ----------- --------- ------ ----------
<S> <C> <C> <C> <C> <C>
J. Robert Gales 62 Director; President and 1984 59,940(3) 3.83%
owner of J.R. Gales &
Associates, Pittsburgh,
Pennsylvania, a civil
engineering consulting
firm.
<CAPTION>
Members of the Board of Directors Continuing in Office
Directors whose Terms Expire in 2000
Principal Occupation
During the Past Director Common Stock(2)
Name Age Five Years Since (1) Amount Percentage
- ---- --- ---------- --------- ------ ----------
<S> <C> <C> <C> <C> <C>
William L. Windisch 65 Director; President and 1958 80,823(3)(4)(5) 5.12%
Chief Executive Officer
of the Company and the
Bank.
Joanne Ross Wilder 55 Director; President of 1996 3,024(3) *
Wilder, Mahood & Crenney,
a legal services firm,
Pittsburgh, Pennsylvania
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Directors whose Terms Expire in 1999
Principal Occupation
During the Past Director Common Stock (2)
Name Age Five Years Since (1) Amount Percentage
- ---- --- ---------- --------- ------ ----------
<S> <C> <C> <C> <C> <C>
Robert F. Kastelic 63 Director; President and 1990 7,742(3) *
Chief Executive Officer
of X-Mark Industries, a
precision metal manufacturer
in Washington, Pennsylvania and
Chairman of Quasitronics Inc.,
an electronic and computer
peripheral equipment company in
Houston, Pennsylvania since March
1988.
Oliver D. Keefer 54 Director; Owner of Ralph 1987 29,637(3)(4) 1.89%
E. Lane, certified public
accountants, Zelienople,
Pennsylvania.
Charles E. Nettrour 65 Director; President and 1987 47,300(3)(4)(6) 3.02%
Chief Executive Officer
of Martin & Nettrour,
Incorporated, an insurance
brokerage and consulting firm,
Pittsburgh, Pennsylvania and of
Retirement Designs Unlimited, Inc.,
retirement plan specialists,
Pittsburgh, Pennsylvania.
</TABLE>
* Represents less than 1% of the outstanding Common Stock.
(1) Includes terms as a director of the Bank prior to the formation of the
Company in 1993. All directors of the Company currently serve as directors
of the Bank.
(2) Beneficially owned as of December 23, 1997. Based on information furnished
by the respective individuals. Under applicable regulations, shares are
deemed to be beneficially owned by a person if he or she directly or
indirectly has or shares the power to vote or dispose of the shares,
whether or not he or she has any economic interest in the shares. Unless
otherwise indicated, the named beneficial owner has sole voting and
dispositive power with respect to the shares.
(3) Includes shares of Common Stock which may be acquired within 60 days
pursuant to the exercise of outstanding stock options. Shares of Common
Stock which are subject to stock options are deemed to be outstanding for
the purpose of computing the percentage of Common Stock owned by such
person but are not deemed to be outstanding for the purpose of computing
the percentage of Common Stock owned by any other person. The amounts of
<PAGE>
such shares included above are as follows: Mr. Windisch, 22,185 shares; Mr.
Gales, 6,048 shares; Mr. Kastelic, 6,048 shares; Mr. Keefer, 10,277 shares;
Mr. Nettrour, 8,048 and Ms. Wilder, 2,914 shares. See "Executive Stock
Compensation - Employee Stock Ownership Plan" and " - Employee Stock
Compensation Program."
(4) Includes shares owned jointly with the person's spouse.
(5) Includes 16,503 shares owned jointly with Mr. Windisch's wife, 12,000
shares owned solely by Mr. Windisch's wife, and 1,109 shares held by his
daughter who resides with him. Includes 12,186 shares of the Company Common
Stock held in the Bank's ESOP which have been allocated to Mr. Windisch's
account. See "Executive Compensation - Employee Stock Ownership Plan." Mr.
Windisch disclaims beneficial ownership of the 1,109 shares owned by his
daughter.
(6) Includes 29,883 shares owned by Mr. Nettrour and 9,369 shares owned by
Martin & Nettrour, Incorporated.
Stockholder Nominations
Article 7 of the Company's Articles of Incorporation requires all
nominations for election to the Board of Directors, other than those made by the
Board or a committee appointed by the Board, to be made pursuant to timely
notice in writing to the Secretary of the Company. To be timely, a stockholder's
notice must be delivered to, or mailed and received at, the principal executive
offices of the Company not less than 60 days prior to the anniversary date of
the immediately preceding annual meeting of stockholders of the Company. Each
written notice of a stockholder nomination must set forth certain information
specified in the Company's Articles of Incorporation. The presiding officer of
the meeting may refuse to acknowledge the nomination of any person not made in
compliance with the procedures set forth in the Company's Articles of
Incorporation. Only stockholders entitled to vote for election of directors may
submit nominations.
Board Meetings and Committees
The Board of Directors of the Company met 14 times during the fiscal
year ended September 30, 1997 and maintains standing Audit, Investment,
Compensation, Nominating, Employee Stock Compensation and Shareholder Value
Committees. The Board of Directors of the Bank has regular monthly meetings and
may have special meetings and maintains standing Executive, Employee Stock
Compensation Program, Audit, Compensation, Investment, Shareholder Value and
Nominating Committees. During fiscal 1997, the Board of Directors of the Bank
met 13 times. No director attended fewer than 75% of the aggregate number of
meetings held during fiscal 1997 by the Board of Directors of the Company or the
Bank and by all committees on which he or she served during the year.
The Executive Committee of the Bank, which currently consists of all of
the directors, is authorized to exercise all the authority of the Board of
Directors in the management of the Bank between meetings of the Board of
Directors of the Bank. During fiscal 1997, the Executive Committee was
authorized to act as the Loan Committee of the Bank and review and approve loans
in excess of the lending limits for which the Board of Directors has granted
delegated authority to the Bank's officers. This Committee met 4 times during
fiscal 1997.
<PAGE>
The Audit Committee of the Company and the Bank, which met 2 times in
fiscal 1997, reviews the records and affairs of the Company and the Bank to
determine its financial condition, reviews with management and the independent
auditors the systems of internal control, and monitors the Company's and the
Bank's adherence in accounting and financial reporting to generally accepted
accounting principles. Currently, all non-employee directors serve as members of
this Committee.
The Investment Committee of the Bank, which currently consists of all
the directors, reviews the investment policies and procedures of the Bank. This
Committee met 2 times during fiscal 1997.
The Nominating Committees of the Company and the Bank, which consist of
the entire Boards of Directors, select nominees for elections as directors of
the Company and the Bank. Although the Nominating Committee of the Company will
consider nominees recommended by stockholders, it has not actively solicited
recommendations for nominees from stockholders nor has it established procedures
for this purpose. Nominations for election as directors may be made by
stockholders as set forth under "Stockholder Nominations" above. These
Committees of the Company and the Bank met once in fiscal 1997.
In February 1995, the Compensation Committee was reorganized to include
all independent outside directors of the Company. The Compensation Committee has
been designated by the Board of Directors with the responsibility of reviewing
the compensation paid by the Bank. This Compensation Committee met 2 times in
fiscal 1997.
The Shareholder Value Committee of the Company and the Bank, which
currently consists of all the directors, reviews the performance of the Company
and its stock in relation to other financial services providers and seeks to
maximize both short and long term shareholder value through the strategic
planning process. This Committee met once in fiscal 1997.
The Employee Stock Compensation Committee of the Company has been
designated by the Board of Directors to determine stock option awards to
employees. In February 1995, this Committee was reorganized to include all
independent outside directors. This Committee met once in fiscal 1997.
The Board of Directors of both the Company and the Bank have authority
under their respective Bylaws to establish such other committees from time to
time as may be deemed necessary.
Directors of the Company receive no fees from the Company for attending
Board or Committee meetings of the Company, although such meetings are generally
held in conjunction with comparable meetings of the Bank for which fees are
paid. Effective January 1997, directors of the Bank receive fees of $820 per
special Board meeting attended and for each regular Board meeting whether
attended or not attended except that fees will not be paid for any meeting not
attended in excess of two missed meetings in one calendar year. Effective
January 1997, members of the Bank's Committees receive fees of $260 per
committee meeting attended.
<PAGE>
Executive Officers Who Are Not Directors
The following sets forth information with respect to executive officers
of the Company and/or the Bank who do not serve on the Board of Directors of the
Company. There are no arrangements or understandings between the Company or the
Bank and any person pursuant to which such person has been elected as an
officer. No executive officer is related to any other executive officer or
director of the Company or the Bank by blood, marriage or adoption. Except as
noted below, each person has held the same position or another executive
position with the Company or the Bank for the past five (5) years.
<TABLE>
<CAPTION>
Position with the Bank and Principal
Names Age Occupation During the Past Five Years
- ----- --- -------------------------------------
<S> <C> <C>
Richard G. Spencer 50 Vice President, Chief Financial Officer and Treasurer of
the Company and Executive Vice President, Chief
Financial Officer and Treasurer of the Bank.
Michael A. Mooney 43 Vice President of the Company and Executive Vice
President and Chief Lending Officer of the Bank.
Lisa M. Cline 37 Assistant Secretary of the Company and Senior Vice
President - Human Resources and Administrative Services
and Assistant Secretary of the Bank.
Sandra L. Lee 35 Senior Vice President - Operations of the Bank.
Anthony F. Rocco 37 Senior Vice President - Community Banking of the Bank;
Vice President - Community Banking of the Bank,
February, 1994 to June, 1997. From July, 1983 to
February, 1994 was a Branch Manager and Regional
Manager, Landmark Savings Association.
</TABLE>
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires that the Company's officers
and directors and persons who own more than 10% of the Company's Common Stock
file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("SEC") and the National Association of Securities Dealers,
Inc. Officers, directors and such stockholders are required by regulation to
furnish the Company with copies of all Section 16(a) forms they file. The
Company knows of no person who owns 10% or more of the Company's Common Stock.
Based solely on review of the copies of such forms furnished to the
Company, the Company believes that during fiscal 1997, all Section 16(a) filing
requirements applicable to its officers and directors were complied with in a
timely manner except that Ms. Wilder's initial Form 3 was filed late.
<PAGE>
EXECUTIVE COMPENSATION
Summary
During the fiscal year ended September 30, 1997, no compensation was
paid directly by the Company to any of its executive officers, each of whom also
serves as an executive officer of the Bank and all of whom were compensated by
the Bank. The table below sets forth certain information with respect to the
annual compensation paid to the Chief Executive Officer of the Company and the
Bank. No other officer's cash compensation, defined as salary and bonus,
exceeded $100,000 during the year ended September 30, 1997.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
Name and Fiscal Other Annual Number of All Other
Principal Position Year Salary (1) Bonus Compensation (2) Options (3) Compensation(4)
- ------------------ ---- ---------- ----- ---------------- ----------- ---------------
Compensation
- ------------
<S> <C> <C> <C> <C> <C> <C>
William L. Windisch, 1997 $140,538 $20,250 0 3,025 $10,680
President and Chief 1996 $130,397 $ 5,000 0 2,420 $23,739
Executive Officer 1995 $125,255 $10,840 0 6,050 $21,086
- ------------------
</TABLE>
(1) Includes amounts deferred by the named executive officer pursuant to
the Company's Thrift Plan which allows employees to defer up to 15% of
their compensation, up to the maximum established by law; also includes
director's fees paid to the named executive officer.
(2) Does not include amounts attributable to miscellaneous benefits
received by the named executive officer, including the use of a
Bank-owned automobile. In the opinion of management of the Company, the
costs to the Company of providing such benefits to Mr. Windisch during
the year ended September 30, 1997 did not exceed the lesser of $50,000
or 10% of the total of annual salary and bonus reported for Mr.
Windisch.
(3) Consists of stock options granted pursuant to the Company's 1988 and
1993 Employee Stock Compensation Programs, adjusted to reflect stock
dividends in May 1997 and May, 1996. The exercise prices of the options
granted in fiscal 1997, 1996 and 1995 were $18.18, $13.64 and $11.57,
respectively, as adjusted.
(4) Consists of matching contributions by the Bank on behalf of Mr.
Windisch pursuant to the Bank's Thrift Plan and allocations to Mr.
Windisch's account in the Employee Stock Ownership Plan. The value
placed on the ESOP shares assumes a per share value as of the last day
of the fiscal year.
<PAGE>
Thrift Plan
In 1986, the Board of Directors of the Bank adopted The Financial
Institutions Thrift Plan (the "Thrift Plan"), a non-contributory benefit plan,
pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended (the
"Code"). Each employee, including officers of the Bank, as of January 1, 1987,
automatically became a member of the Thrift Plan. Persons becoming employees of
the Bank thereafter are eligible to become members of the Thrift plan on the
first day of the month following the date he or she completes one year of
service with the Bank, has 1,000 hours of service in that year, and has attained
the age of 21. Members of the Thrift Plan who were employed prior to January 1,
1996 are immediately and fully vested in the total value of his or her
contributions as well as the Bank's contributions. Members of the Thrift Plan
who were employed after January 1, 1996 are immediately and fully vested in the
total value of his or her own contributions and are vested in the value of the
Bank's contributions based on a graduated vesting schedule, beginning at 20%
vesting after two years and full vesting after six years.
Under the provisions of the Thrift Plan, a member may elect to save
through payroll deductions between 2% and 15% of his or her salary. The payroll
deductions may be made as a "before-tax contribution" (up to a maximum of $9,500
in 1997) through the 401(k) account or as an "after-tax contribution" through
the regular account. The Bank will match each employee's total contribution up
to 6% of salary at a rate of 50%. There is, however, a required minimum employer
contribution of 2% of salary for each eligible employee. The Bank, at its
option, may make an additional year-end contribution to the Thrift Plan under
formulas based on either (i) members' contributions, up to 6% of salary,
received by the Thrift Plan during the preceding calendar year or (ii) a uniform
percent (not over specified maximums) of all eligible employees' salary for the
preceding calendar or fiscal year. A special Internal Revenue Service
non-discriminatory test has been established which limits average Thrift Plan
contributions for highly compensated employees (including employees with
salaries in excess of $80,000 to generally two percentage points above the
average contribution rate of non-highly compensated employees. The Thrift Plan
offers a choice of nine investment funds to which contributions may be directed
as follows: an equity-index fund; an income fund invested in long-term,
fixed-income contracts; an S & P Midcap stock fund; an S & P 500 stock fund; a
government bond fund; an income fund invested in long-term, fixed income
contracts; a money market fund; an income fund invested in a combination of
stable value investments and U.S. Bonds; a growth and income fund; a growth
fund; and an international stock fund. Each member may decide which investment
fund(s) will hold his or her contributions.
Members who are participants in the Thrift Plan are permitted to borrow
from both their regular account and their 401(k) account. While continuing in
employment, members may also make total or partial withdrawals from their
accounts, subject to certain limitations and restrictions. Upon termination of
employment, a member may defer withdrawal of a portion of his or her total
account balance, provided that by age 70 1/2 he or she begins to receive
periodic distributions which will result in a total distribution of the account
over not more than 15 years. Upon notice of member's death, a lump sum payment
of the total amount will be made to the named beneficiary as soon as practicable
thereafter unless an election is made to receive benefits over the five-year
period following the member's death. As of September 30, 1997, the Thrift Plan
had 83 participants or 100% of the eligible officers and employees of the Bank.
Of those participants, Mr. Windisch and all executive officers as a group (six
persons) received contributions of $4,216 and $11,826, respectively, during
fiscal 1997.
<PAGE>
Employee Stock Ownership Plan
The Bank has an Employee Stock Ownership Plan ("ESOP") which originally
subscribed for 143,115 shares (as adjusted for four 10% stock dividends) or 10%
of the common stock issued in connection with the conversion of Fidelity Savings
Association, the predecessor to the Bank, from the mutual to stock form of
organization. In order to facilitate the purchase of such shares, the ESOP
borrowed $610,936 from another financial institution (the "Loan"). Such shares
were converted into Company Common Stock in connection with the Bank's
reorganization into the holding company structure in 1993. The ESOP is funded by
the Bank's contributions in cash or Company Common Stock, and the Loan was fully
repaid during fiscal 1995.
All employees of the Bank who (i) have completed one year of service
with the Bank and (ii) have attained the age of 21 are eligible and may
participate in the ESOP as of the effective date of the ESOP, or as of the
beginning of the plan year in which both such requirements are fulfilled. An
employee shall be credited with a year of service during a computation period
(generally, an ESOP year) if the employee completes at least 1,000 hours of
service during such period. Participants become 100% vested after five years of
credited service, with no vesting prior to such time. As of September 30, 1997,
12,186 shares had been allocated to the account of Mr. Windisch.
The Bank has entered into a Trust Agreement with a local commercial
bank (the "ESOP Trustee"), to hold, invest, reinvest and distribute the assets
of the ESOP for the exclusive benefit of participants, retired participants and
their beneficiaries. The ESOP Trustee is under the direction of the Plan
Administrator, currently the Chief Executive Officer of the Bank, who manages
and administers the ESOP and instructs the ESOP Trustee how to vote the shares
which have not yet been allocated to participants' accounts. All assets of the
ESOP are held in an Employee Stock Ownership Trust ("Trust") pursuant to the
terms of the Trust Agreement.
The ESOP is subject to the participation, vesting, fiduciary
responsibility, reporting, disclosure and claims procedure requirements of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Because
the ESOP provides benefits based on the employee's individual accounts rather
than a defined benefit based on compensation and years of service, the ESOP is
not subject to the minimum funding requirements of ERISA. Benefits under the
ESOP are not insured by the Pension Benefit Guaranty Corporation.
Contributions to the Trust in cash and other cash received by the trust
will be applied to pay any current obligations of the Trust incurred for the
purchase of Company Common Stock, or may be applied to purchase additional
shares of Common Stock from current stockholders or from the Company, subject to
certain limitations. The investment policy of the ESOP is designed to invest
primarily in Common Stock of the Company.
Upon termination of a participant's employment by death, disability or
retirement, the participant shall be 100% vested in his account. Upon
termination of a participant's employment for any reason other than death,
disability, retirement, layoff, reduction in force, job elimination, or job
consolidation, the participant shall be vested as to his account in accordance
with a vesting schedule pursuant to which a participant has no vested interest
for under five years of credited service and is fully vested after five years of
service.
<PAGE>
Vested benefits under the ESOP will normally be distributed in a single
distribution as soon as possible following separation from service.
Notwithstanding the above, distributions must commence not later than April 1 of
the calendar year following the calendar year in which the participant attains
age 70 1/2. In addition, unless the participant otherwise elects in writing,
payments of benefits must begin not later than 60 days after the close of the
ESOP year in which the latest of the following events occur: (i) the participant
attains age 65; (ii) the participant attains the tenth anniversary from the date
in which he or she commenced participation in the ESOP; or (iii) service with
the Bank is terminated. Distribution of benefits under the ESOP shall be made in
whole shares of Company Common Stock, in cash or in a combination of cash and
Company Common Stock, as elected by the participant or his or her beneficiary.
Employment Agreements
The Company and the Bank currently have an employment agreement with
William L. Windisch, the President and Chief Executive Officer of the Company
and the Bank (collectively, the "Employers"). Mr Windisch's employment agreement
commenced on January 1, 1994, with an initial term of three years, which may be
extended for an additional one-year term on each annual anniversary date if the
parties mutually agree to do so. The agreement was extended effective January 1,
1998, through December 31, 2000 by action of the Board of Directors.
Mr. Windisch's agreement is terminable by the Employers for just cause,
as defined, at any time upon written notice or in the occurrence of certain
events specified therein. The agreement contains provisions which provide Mr.
Windisch with specified benefits in the event that he is terminated subsequent
to a change in control of the Company, as defined, or terminates his employment
subsequent to a change in control for good reason, as defined. The current
salary level for Mr. Windisch under his employment agreement is $143,000, which
amount may be adjusted each year as determined by the Board of Directors.
For the purposes of Mr. Windisch's agreement, "change in control" is
defined to include any of the following: (i) any change in control required to
be reported pursuant to Item 6(e) of Schedule 14A promulgated under the Exchange
Act; (ii) the acquisition of beneficial ownership by any person (as defined in
Sections 13(d) and 14(d) of the Exchange Act) of 25% or more of the combined
voting power of the Company's then outstanding securities; or (iii) during any
period of two consecutive years, a change in the majority of the Board of
Directors for any reason unless the election of each new director was approved
by at least two-thirds of the directors then still in office who were directors
at the beginning of the period.
Severance payments and other benefits are provided for in the event of
involuntary termination of employment in connection with any change in control
of the Company. A severance payment will also be provided on a similar basis in
connection with a voluntary termination of employment where, subsequent to an
acquisition of control, Mr. Windisch is assigned duties inconsistent with his
position, duties, responsibilities and status immediately prior to such change
in control. The severance payment from the Employers to Mr. Windisch would equal
2.99 times his average annual compensation for the preceding five calendar
years, or approximately $386,191 if his employment had been terminated in 1997.
Such amount would be paid within five days following the termination of
employment. Section 280G of the Code states that severance payments which equal
or exceed three times the base compensation of an individual are deemed to be
"excess parachute payments" if they are contingent upon a change in control.
Individuals receiving excess parachute payments are subject to a 20% excise tax
on the amount of such excess payments, and the employer is not entitled to
deduct the amounts of such excess payments. Mr. Windisch's agreement provides
<PAGE>
that if the severance payments to him would constitute an excess parachute
payment, in the opinion of counsel to the Employers in consultation with the
Employers' independent accountants, then the payment would be reduced to the
largest amount that could be paid without constituting an excess parachute
payment. If Mr. Windisch's employment is terminated for reasons other than for
cause and other than in connection with or subsequent to a change in control, he
will be entitled to a severance payment equal to 2.99 times his then current
base salary.
The Employers also entered into three-year employment agreements with
Richard G. Spencer and Michael A. Mooney effective as of January 1, 1994. The
term of these agreements may be extended for an additional one year on each
annual anniversary date if the parties mutually agree to do so. The agreements
also provide for severance payments in the event of a change of control equal to
2.99 times Mr. Spencer's average compensation and two times Mr. Mooney's average
compensation, in each case subject to the limits of Section 280 G of the Code.
If employment is terminated for reasons other than for cause, disability,
retirement or death and other than in connection with or subsequent to a change
in control, the agreements provide for severance equal to one times the
officer's then current annual base salary, plus the continuation of various
benefits for one year.
Employee Stock Compensation Program
As a performance incentive and to encourage ownership of its Common
Stock, the Board of Directors of the Bank adopted in 1988 an Employee Stock
Compensation Program (the "1988 Program") for the benefit of directors,
officers, and other selected key employees of the Bank who were deemed to be
responsible for the future growth of the Bank. The stockholders of the Bank
approved the 1988 Program at the 1989 Annual Meeting. The Agreement and Plan of
Reorganization pursuant to which the Company acquired the Bank as a subsidiary
in August, 1993 provided that the 1988 Program was assumed by the Company as of
the consummation of that reorganization.
Four kinds of rights, evidenced by four plans, are contained in the
1988 Program and are available for grant: incentive stock options (Plan I),
compensatory stock options (Plan II), stock appreciation rights (Plan III), and
performance share awards (Plan IV). The 1988 Program is administered by a
committee composed of three directors of the Bank ("Program Administrators"),
who are given discretion under the 1988 Program to select the persons to whom
options, rights and awards will be granted and to determine the number of shares
subject to each option, right or award. The Board of Directors (with the Program
Administrators not voting) administers the 1988 Program with respect to options
granted to the Program Administrators in accordance with the provisions of Plan
II. The current Program Administrators are all independent outside directors of
the Company.
An aggregate of 143,115 shares (as adjusted for four 10% stock
dividends) of authorized but unissued Common Stock has been reserved for
issuance under the 1988 Program pursuant to the exercise of stock options and/or
the granting of stock appreciation rights and performance shares, subject to
modification or adjustments to reflect changes in the Company capitalization as,
for example, in the case of a merger, reorganization or stock split. No grants
were made in fiscal 1997 under the 1988 Program. During fiscal 1997, options for
27,880 shares were exercised. No stock appreciation rights or performance share
awards have been granted under the 1988 Program since its adoption. As of
September 30, 1997, no shares of Common Stock remained available for grant
pursuant to the 1988 Program, although unexercised options remain outstanding.
<PAGE>
At the 1994 Annual Meeting, the stockholders approved (i) the 1993
Employee Stock Compensation Program (the "1993 Program") and (ii) the 1993
Directors' Stock Option Plan ("Directors' Plan"). Under the 1993 Program, an
aggregate of 72,600 shares (as adjusted for two 10% stock dividends) of
authorized but unissued shares have been reserved for future issue. The program
is in effect for a period of ten (10) years unless sooner terminated. Four kinds
of rights, evidenced by four (4) plans, are available for grant: incentive stock
options (Plan I), compensatory stock options (Plan II), stock appreciation
rights (Plan III) and performance share awards (Plan IV). Grants may be made to
full-time officers and employees. During fiscal 1997, options to purchase an
aggregate of 23,859 shares of Common Stock at an exercise price of $18.18 per
share, including options to purchase 3,025 shares to Mr. Windisch as set forth
below were granted, and 3,902 options granted under the 1993 Program were
exercised. No stock appreciation rights or performance share awards have been
granted under the 1993 Program since its adoption. As of September 30, 1997, no
shares of Common Stock remain available for grant under the 1993 Program.
Under the Directors' Plan, an aggregate of 48,400 of authorized but
unissued shares (as adjusted for two 10% stock dividends) have been reserved for
future issue to non-employee directors. It shall remain in effect until December
31, 1998 unless sooner terminated in accordance with its provisions. Options
granted under the Directors' Plan do not qualify as incentive stock options as
defined in Section 422 of the Internal Revenue Code. Under the provision of the
Directors' Plan,a compensatory stock option for 1,512 shares (as adjusted for
two 10% stock dividends) was granted on December 31, 1996 to each of the five
(5) non-employee directors. It is anticipated that similar grants will be made
each December 31st through 1998.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning the grant of stock
options to Mr. Windisch during fiscal 1997.
<TABLE>
<CAPTION>
Percent of
Total Options/
SARs
Granted to Exercise
Options/SARs Employees or Base
Granted in Fiscal Price
Name (#) Year ($/Sh) Expiration Date
- ---- --- ---- ------ ---------------
<S> <C> <C> <C> <C>
William L. Windisch 3,025 12.68% $18.18 December 31, 2006
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
The following table sets forth certain information concerning exercises
of stock options granted pursuant to the 1988 and 1993 Programs by the named
executive officer during the year ended September 30, 1997 and options held at
September 30, 1997.
<PAGE>
<TABLE>
<CAPTION>
Shares Number of Unexercised Value of Unexercised
Acquired on Value Options at Sept. 30, 1997 Options at Sept. 30, 1997(1)
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William L. Windisch 8,600 $134,429 19,462 4,235 $252,544 $22,730
</TABLE>
(1) Based on a per share market price of $22.25 at September 30, 1997.
Indebtedness of Management
The following table sets forth information with respect to each current
director and executive officer of the Company and its affiliates who had
borrowings of $60,000 or greater from the bank during fiscal 1997. The Bank
offers loans to its directors, officers and employees. However, all of such
loans are made in the ordinary course of business, are made on substantially the
same terms, including interest rates, collateral and application fees, as those
prevailing at the time for comparable transactions with non-affiliated persons
and do not involve more than the normal risk of collectibility or present other
unfavorable features.
<TABLE>
<CAPTION>
Highest Principal
Amount from
October 1, 1996 Principal
Year Interest to Balance at
Name and Position Type of Loan Made Rate September 30, 1997 September 30, 1997
- ----------------- ------------ ---- ---- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Robert F. Kastelic Commercial Mortgage (1) 1996 8.50%(2) $1,343,109 $1,315,214
(Director)
Commercial Mortgage (3) 1994 8.625%(2) $ 258,706 $ -
Charles E. Nettrour Commercial Business (4) 1996 9.25% $ 91,322 $ 73,991
(Director)
Commercial Business (4) 1996 9.00% $ 18,613 $ 15,173
Commercial Business (4) 1997 8.00% $ 12,000 $ 9,470
Commercial Business (4) 1997 8.50% $ 25,000 $ 22,575
Commercial Business (4) 1997 7.79% $ 10,000 $ 8,994
</TABLE>
- ---------
(1) Loan to X-Mark Industries, of which Mr. Kastelic is President and CEO.
(2) Adjustable-rate loan.
(3) Loan to Quasitronics, Inc., of which Mr. Kastelic is Chairman.
(4) Loan to Martin & Nettrour, Incorporated of which Mr. Nettrour is
President and Chief Executive Officer.
<PAGE>
Certain Transactions
Charles E. Nettrour, a director of the Company, is the President and
sole owner of Martin & Nettrour, Incorporated, which provides insurance and
brokerage services to the Bank. During the fiscal year ended September 30, 1997,
that firm received $88,160 from the Bank in annualized general and group life,
health and long-term disability insurance premiums.
PROPOSAL TO ADOPT THE
1997 EMPLOYEE STOCK COMPENSATION PROGRAM
General
As a performance incentive and to encourage ownership of its Common
Stock, the Board of Directors has adopted the 1997 Employee Stock Compensation
Program (the "1997 Program") for the benefit of officers and other selected key
employees of the Company, the Bank, or any subsidiaries thereof who are deemed
to be responsible for the future growth of the Company.
An aggregate of 155,000 shares of authorized but unissued Common Stock
of the Company has been reserved for future issuance under the 1997 Program,
which is equal to approximately 9.94% of the Common Stock of the Company
outstanding on December 23, 1997. Shares will be issuable under the 1997 Program
pursuant to the exercise of stock options and/or the granting of stock
appreciation rights and performance shares, subject to modification or
adjustment to reflect changes in the Company's capitalization such as, for
example, in the case of a merger, reorganization, stock split or stock dividend.
The 1997 Program shall remain in effect for a term of ten years unless sooner
terminated in accordance with its provisions. Four kinds of rights, evidenced by
four plans, are contained in the 1997 Program and are available for grant:
incentive stock options (Plan I), and Compensatory stock options (Plan II),
stock appreciation rights (Plan III) and performance share awards (Plan IV).
Administration and Eligibility
The 1997 Program will be administered by a committee appointed by the
Board of Directors composed of not less than two non-employee directors of the
Company ("Program Administrators"), who are given absolute discretion under the
1997 Program to select the persons to whom options, rights and awards will be
granted and to determine the number of shares subject to each option, right or
award. The Company estimates that there are approximately 74 persons eligible to
receive awards under the 1997 Program. The initial Program Administrators are
all independent outside directors of the Company.
Description of the 1997 Program
THE FOLLOWING DESCRIPTION OF THE 1997 PROGRAM IS A SUMMARY OF ITS TERMS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE 1997 PROGRAM. A COPY OF THE
1997 PROGRAM IS AVAILABLE UPON REQUEST TO THE COMPANY BY A STOCKHOLDER OF
RECORD. ANY SUCH REQUEST SHOULD BE DIRECTED TO LISA M. CLINE, ASSISTANT
SECRETARY, FIDELITY BANCORP, INC., 1009 PERRY HIGHWAY,PITTSBURGH, PENNSYLVANIA
15237.
<PAGE>
Incentive and Compensatory Options. One or more options may be granted
under the 1997 Program to any eligible person, provided that the aggregate fair
market value (determined at the time the options are granted) of the stock for
which incentive options (defined below) are first exercisable by any employee
during any calendar year under the terms of the 1997 Program and all such plans
of the Company shall not exceed $100,000. Options granted within the foregoing
limitation will be granted under Plan I of the 1997 Program and are intended to
qualify as "incentive stock options" as defined in Section 422 of the Internal
Revenue Code ("Code"). Additional nonstatutory stock options may be granted
under Plan II ("compensatory options"). As described below, the tax treatment of
these types of options differs significantly.
An incentive stock option is defined in the Code as an option granted
to an employee in connection with his or her employment to purchase stock in the
Company and which satisfies certain conditions. The incentive stock option must
be granted pursuant to a plan specifying the aggregate number of shares to be
issued and the employees, or class of employees, eligible to receive options.
The plan must be approved by the stockholders of the granting corporation within
twelve months of the date of adoption of the plan by the Board of Directors. The
incentive stock option price must be not less than the fair market value of the
stock at the date of the grant, the incentive stock option must be granted
within ten years from the date of adoption of the plan and,by its terms, the
incentive stock option must not be exercisable after ten years from the date it
was granted. In the case of any employee who owned more than 10% of the combined
voting power of all classes of stock of the Company, or of its subsidiaries, the
option price may not be less than 110% of the fair market value of the stock at
the date of the grant and the employee must exercise any options within five
years from the date of the grant. The incentive stock option is not
transferable, except by will or by the laws of descent and distribution, and may
be exercised only by the optionee during his or her lifetime. Finally, under the
terms of the plan, the aggregate fair market value (determined at the time of
the grant) of stock for which incentive options first become exercisable by any
employee during any calendar year under the terms of the 1997 Program and all
such plans of the Company shall not exceed $100,000. Plan I of the 1997 Program
conforms with the above requirements.
Compensatory stock options granted under Plan II of the 1997 Program
shall expire on the date determined by the Program Administrators, but in no
event shall such options expire later than ten years and one month from the date
on which such compensatory stock options are granted. The purchase price for
shares acquired pursuant to the exercise of compensatory stock options can be
equal to or less than the fair market value of the shares at the time of the
grant of the option, as determined by the Program Administrators at the time of
grant. Like incentive stock options, compensatory stock options are not
transferable, except by will and the laws of descent and distribution, and may
be exercised only by the optionee during his or her lifetime.
Under the 1997 Program, holders of incentive and compensatory stock
options may be required to agree not to dispose of the underlying Common Stock
until at least six months shall have elapsed from the date of exercise of the
option. Officers subject to Section 16(b) of the Securities Exchange Act of 1934
(Exchange Act") will generally be asked to agree to such restriction.
In the event of a change in control of the Company (defined as the
acquisition of, or offer to acquire, 10% or more of the voting securities of the
Company by any person or group of persons, if such acquisition or offer did not
receive the prior approval of two-thirds of the Board of Directors of the
Company) or a threatened change in control of the Company, or if the Company or
<PAGE>
its stockholders enter into an agreement to dispose of all or substantially all
of the assets or stock of the Company by means of a sale, merger or other
reorganization or liquidation, all incentive and compensatory stock options
previously granted may become immediately exercisable notwithstanding any
existing installment limitation which may be established by the Program
Administrators. Under such circumstances, options may be exercised until the
agreement changing control is consummated.
If any optionee's employment is terminated due to disability, as
defined in Section 22(e)(3) of the Code, incentive stock options (and
compensatory stock options to the extent permitted by the Program Administrators
in their discretion) may be exercised (to the extent exercisable on the date of
termination of employment) within one year following such termination of
employment, unless either the option or the 1997 Program otherwise provides for
earlier termination. If any optionee's employment is terminated due to death,
both incentive and compensatory stock options may be exercised by the person(s)
to whom the optionee's rights pass by will or by the laws of descent and
distribution for a period of one year following the date of death, unless the
option by its terms expires sooner and except as otherwise limited by the
Program Administrators at the time the option was granted. If an optionee's
employment is terminated for any reason other than disability or death, both
incentive and compensatory stock options will immediately terminate; provided,
however, the that Program Administrators may, in their discretion, allow
incentive or compensatory stock options to be exercised within three months
after the date of termination, unless either the option or the 1997 Program
otherwise provides for earlier termination and in each case to the extent
exercisable on the date of termination.
Payment for shares purchased under the 1997 Program may be made either
in cash, certified or cashier's check or, at the sole discretion for the Program
Administrators, by exchanging shares of Common Stock (including shares acquired
pursuant to the exercise of an option) with a fair market value equal to the
total option price, or shares of Common Stock plus cash for any difference. To
the extent an optionee already owns shares of Common Stock prior to the exercise
of his or her option, such shares could be used (if permitted by the Program
Administrators) as payment for the exercise price of the option. If the fair
market value of a share of Common Stock at the time of exercise is greater than
the exercise price per share, this feature would enable the optionee to acquire
a number of shares of Common Stock upon exercise of the option which is greater
than the number of shares delivered as payment for the exercise price. In
addition, an optionee can partially exercise his or her option and then deliver
the shares acquired upon such exercise (if permitted by the Program
Administrators) as payment for the exercise price of the remaining option.
Again, if the fair market value of a share of Common Stock at the time of
exercise is greater than the exercise price per share, this feature would enable
the optionee to either (1) reduce the amount of cash required to receive a fixed
number of shares upon exercise of the option or (2) receive a greater number of
shares upon exercise of the option for the same amount of cash that would have
otherwise been used. Because options may be exercised in part from time to time,
the ability to deliver Common Stock as payment of the exercise price would
enable the optionee to turn a relatively small number of shares into a large
number of shares.
The granting of stock options does not confer upon the optionee any
right to remain in the employ of the company. The optionee will have no dividend
or voting rights with respect to the shares until the option price has been paid
in full upon exercise and the shares issued.
<PAGE>
Stock Appreciation Rights. Under Plan III of the 1997 Program, the
Program Administrators may, in their sole discretion, accept surrender of the
right to exercise any incentive option or compensatory option by an optionee in
return for payment by the Company to the optionee of cash or, subject to certain
conditions, shares of Common Stock of the Company in an amount equal to the
excess of the fair market value of the shares of Common Stock subject to the
option over the option price of such shares, or a combination of cash and shares
of Common Stock. An optionee may exercise such stock appreciation rights only
during the period beginning on the third business day following the release of
certain quarterly or annual financial information and ending on the twelfth
business day following such date.
Upon the exercise of a stock appreciation right, the stock option to
which it relates terminates with respect to the number of shares as to which the
stock appreciation right is so exercised. Conversely, upon the exercise of a
stock option, any related stock appreciation right shall terminate as to any
number of shares subject to the right that exceeds the total number of shares
for which the stock option remains unexercised. Stock appreciation rights which
relate to incentive stock options must be granted concurrently with the
incentive stock options, while stock appreciation rights which relate to
compensatory stock options may be granted concurrently with the option or at any
time thereafter which is prior to the exercise or expiration of such options.
In addition, Plan III of the 1997 Program contains a provision giving
the Program Administrators discretion to grant "limited stock appreciation
rights" in tandem with stock options in the event there is an "Offer." "Offer"
is defined to mean a tender offer or exchange offer for shares of the Company's
capital stock, provided that the person making the Offer acquires shares of the
Company's capital stock pursuant to such Offer. The limited stock appreciation
right would be exercisable between the first and thirtieth day following the
expiration date of the Offer, but could not be exercised on a date less than six
months after the date the limited stock appreciation right was granted. In
general, with respect to determining the value of the limited stock appreciation
right, the fair market value of the shares to which the stock appreciation right
relates is determined to be the highest price per share paid in any Offer that
is in effect at any time during the period beginning on the sixtieth day prior
to the date on which the limited stock appreciation right is exercised and
ending on such exercise date.
Performance Shares. Employees of the Company may also receive
performance share awards pursuant to Plan IV of the 1997 Program. The granting
of performance shares gives the recipient thereof the right to receive a
specified number of shares of Common Stock of the Company contingent upon the
achievement of specified performance objectives within a specified award period.
In lieu of some or all of said shares, the Program Administrators may distribute
cash in an amount equal to the fair market value thereof on the business day
next preceding the date of payment. The duration of the award period is
determined by the Program Administrators but cannot be less than one year nor
more than five years. If the participating individual dies or terminates his or
her position with the Company prior to the close of an award period, any
performance shares granted to him or her for the period are forfeited. A
participating employee may not transfer or assign a performance share. To date,
no performance objectives have been established by the Program Administrators.
Potential Anti-takeover Effect
As described above, the 1997 Program contains provisions which provide
for the acceleration of stock options granted under the 1997 Program in the
event of an actual or threatened change in control, as defined. Plan III of the
<PAGE>
1997 Program also contains a provision which provides for the granting of
"limited stock appreciation rights" in the event of an Offer. Pursuant to these
provisions, the Program Administrators, in their discretion, could accelerate or
increase the number of stock options, thereby potentially increasing the number
of shares of Common Stock outstanding. Such an increase in the number of shares
of Common Stock outstanding would increase the cost of acquiring a controlling
interest in the Company. To the extent that the provisions in the 1997 Program,
which specify rights in the event of a change in control of the Company or an
Offer to increase the costs of acquiring the Common Stock, they may be deemed to
have an anti-takeover effect. In addition, the provisions of the 1997 Program
may have the effect of deterring a non-negotiated takeover attempt due to the
ability of the Program Administrators to grant options to persons likely to
support the current Board of Directors and management.
Awards Under the 1997 Program
To date, no stock options, stock appreciation rights or performance
shares have been granted or awarded under the 1997 Program; and no determination
has been made as to the number of stock options, stock appreciation rights or
performance shares to be granted or awarded in the future to any executive
officer, non-executive officer or non-officer employee. In addition, at
September 30, 1997, no shares remain available under the 1993 Employee Stock
Compensation Program for the granting of stock options, stock appreciation
rights and performance shares. As of December 16, 1997, the market price for the
Common Stock was $28.25 per share.
Amendments
The Program Administrators may at any time amend or revise the terms of
the 1997 Program, including the form and substance of the option, stock
appreciation rights and performance share agreements to be used thereunder,
provided that no amendment or revision shall (i) increase the maximum aggregate
number of shares that may be sold, appreciated or distributed pursuant to
options, stock appreciation rights or performance shares granted under the 1997
Program, except as set forth in the anti-dilution provisions of the 1997 Program
and except as may be approved by the stockholders of the Company; (ii) change
the minimum purchase price for shares under Plan I; (iii) increase the maximum
term established under the 1997 Program for any option, stock appreciation right
or performance share; or (iv) permit the granting of an option, appreciation
right or performance share to any person other than as provided in the 1997
Program.
Federal Income Tax Consequences.
Under current provisions of the Code, the federal income tax treatment
of incentive stock options and compensatory stock options is substantially
different. As regards incentive stock options, an optionee who does not dispose
of the shares within two years after the option was granted, or within one year
after the option was exercised, whichever is later, will not recognize income at
the time the option is exercised; and no federal income tax deduction will be
available to the Company at any time as a result of such grant or exercise.
However, the excess of the fair market value of the stock subject to an
incentive stock option on the date such option is exercised over the exercise
price of the option will be treated as an item of tax preference in the year of
exercise for purposes of the alternative minimum tax. If stock acquired pursuant
to an incentive stock option is disposed of before the holding periods described
above expire, then the excess of the fair market value (but not in excess of the
<PAGE>
sales proceeds) of such stock on the option exercise date over the option
exercise price will be treated as compensation income to the optionee in the
year in which such disposition occurs; and, if it complies with applicable
withholding requirements, the Company will be entitled to a commensurate income
tax deduction. In such event, any difference between the sales proceeds and the
fair market value of the stock on the option exercise date will be treated as
long-term capital gain or loss if the shares were held more than one year after
the option exercise date.
With respect to compensatory stock options, the difference between the
fair market value of the Common Stock on the date of exercise and the option
exercise price generally will be treated as compensation income upon exercise;
and the Company will be entitled to a deduction in the amount of income so
recognized by the optionee. Upon a subsequent disposition of the shares, the
difference between the amount received by the optionee and the fair market value
on the option exercise date will be treated as long or short-term capital gain
or loss, depending on whether the shares were held for more than one year.
When an officer who is subject to Section 16(b) of the Exchange Act
exercises a compensatory option within six months of the date the option was
granted, no income is recognized for federal income tax purposes at the time of
the exercise of the compensatory stock option unless the optionee makes an
appropriate election within 30 days after the date of exercise, in which case
the rules described in the preceding paragraph would apply. If such an election
is not made, the optionee will recognize ordinary income on the date that is six
months after the date of grant (generally, the first date that sale of such
shares would not be subject to potential liability under Section 16(b) of the
Exchange Act). The ordinary income recognized will be the excess, if any, of the
fair market value of the shares on such later date over the option exercise
price; and the Company's tax deduction also will be deferred until such later
date.
No federal income tax consequences are incurred by the Company or the
holder at the time a stock appreciation right is granted. However, upon the
exercise of a stock appreciation right, the holder will realize income for
federal income tax purposes equal to the amount received by him, whether in
cash, shares of stock or both, and the Company will be entitled to a deduction
for federal income tax purposes at the same time and in the same amount.
No federal income tax consequences are incurred by the Company or the
participating employee at the time a performance share is granted. However, if
the specified performance objectives are met, the individual will realize
ordinary income at the end of the award period equal to the amount of cash or
the fair market value of the stock received by him or her. The Company will be
entitled to a deduction for federal income tax purposes at the same time and in
the same amount.
The above description of tax consequences is necessarily general in
nature and does not purport to be complete. Moreover, statutory provisions are
subject to change, as are their interpretations; and their application may vary
in individual circumstances. Finally, the consequences under applicable state
and local income tax laws may not be the same as under the federal income tax
laws.
<PAGE>
Accounting Treatment
Generally accepted accounting principles require that the estimated
costs of stock appreciation rights be charged to the Company's earnings based on
the change in the market price of the Common Stock at the beginning (or grant
date if granted during the period) and end of each accounting period, if it is
higher than the exercise price. In the event of a decline in the market price of
the Company's Common Stock subsequent to a charge against earnings related to
the estimated costs of stock appreciation rights, a reversal of prior charges is
made in the amount of such decline (but not to exceed aggregate prior
increases). The grant of performance share awards similarly may result in
charges against earnings.
Neither the grant nor the exercise of an incentive stock option or a
compensatory stock option under the 1997 Program requires any charge against
earnings. The Company may, however, recognize an expense for compensatory
options in the event that the exercise price of such options is less than the
fair market value of the Common Stock on the date of the grant of such options.
Vote Required.
The Company is seeking stockholder approval of the 1997 Program to
satisfy the requirements of Section 1757(a) of the Pennsylvania Business Company
Law (the "BCL"), the regulations of the National Association of Securities
Dealers, Inc. (the "NASD"), and Rule 16b-3 of the Exchange Act. The required
votes under the BCL, the NASD regulations and Rule 16b-3 of the Exchange Act are
as follows: (1) the affirmative vote of a majority of the votes cast by all
stockholders entitled to vote thereon; (2) the affirmative vote of a majority of
the total votes cast on the proposal in person or by proxy; and (3) the
affirmative vote of the holders of a majority of the Common Stock present, or
represented, and entitled to vote at the meeting, respectively. In order for a
quorum to exist, a majority of the outstanding shares of Common Stock entitled
to vote must be represented at the meeting in person or by proxy. Abstentions
are considered in determining the presence of a quorum at the meeting and will
have the same effect as a vote against the proposal.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR ADOPTION OF THE 1997 EMPLOYEE STOCK COMPENSATION
PROGRAM.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed KPMG Peat Marwick
as independent auditors for the Company for the fiscal year ending September 30,
1998 and has further directed that the selection of such auditors be submitted
for ratification by the stockholders at the Annual Meeting. The Company has been
advised by KPMG Peat Marwick that neither the firm nor any of its associates has
any relationship with the Company, the Bank or its subsidiary other than the
usual relationship that exists between independent public accountants and
clients. KPMG Peat Marwick will have one or more representatives at the Annual
Meeting who will have the opportunity to make a statement, if he or she so
desires, and who will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE "FOR" RATIFICATION OF THE APPOINTMENT OF KPMG PEAT
MARWICK AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 1998.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have presented at the next
annual meeting of stockholders, presently scheduled to be held in February,
1999, must be received at the main office of the Company, 1009 Perry Highway,
Pittsburgh, Pennsylvania 15237, no later than September 12, 1998. If such
proposal is in compliance with all of the requirements of Rule 14a-8 of the
Exchange Act, it will be included in the Proxy Statement and set forth on the
form of proxy issued for the next annual meeting of stockholders. It is urged
that any such proposals be sent by certified mail, return receipt requested.
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the Exchange Act may be
brought before an annual meeting pursuant to Article II, Section 2.15 of the
Company's Bylaws, which provides that for business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Assistant Secretary of the Company. To be
timely, a stockholder's notice must be delivered to, or mailed and received at,
the principal executive offices of the Company not less than 60 days prior to
the anniversary date of the mailing of proxy materials by the Company in
connection with the immediately preceding annual meeting of stockholders of the
Company. A stockholder's notice must set forth as to each matter the stockholder
proposes to bring before an annual meeting (a) a brief description of the
business desired to be brought before the annual meeting and (b) certain other
information set forth in the Company's Bylaws.
<PAGE>
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the fiscal
year ended September 30, 1997 accompanies this Proxy Statement. Such Annual
Report is not part of the proxy solicitation materials.
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997 AND A LIST OF THE EXHIBITS THERETO
REQUIRED TO BE FILED WITH THE SEC UNDER THE EXCHANGE ACT. UPON WRITTEN REQUEST
AND A PAYMENT OF A COPYING CHARGE OF TEN CENTS PER PAGE, THE COMPANY ALSO WILL
FURNISH TO ANY SUCH STOCKHOLDER A COPY OF THE EXHIBITS TO THE ANNUAL REPORT ON
FORM 10-KSB. SUCH WRITTEN REQUESTS SHOULD BE DIRECTED TO LISA M. CLINE,
ASSISTANT SECRETARY, FIDELITY BANCORP, INC., 1009 PERRY HIGHWAY, PITTSBURGH,
PENNSYLVANIA 15237. THE FORM 10-KSB REPORT IS NOT PART OF THE PROXY SOLICITATION
MATERIALS.
OTHER MATTERS
Each proxy solicited hereby also confers discretionary authority on the
Board of Directors of the Company to vote the proxy with respect to the approval
of the minutes of the last meeting of stockholders, the election of any person
as a director if the nominee is unable to serve or for good cause will not
serve, matters incident to the conduct of the meeting, and upon such other
matters as may properly come before the Annual Meeting. Management is not aware
of any business that may properly come before the Annual Meeting other than
those matters described above in this Proxy Statement. However, if any other
matters should properly come before the Annual Meeting, it is intended that the
proxies solicited hereby will be voted with respect to those other matters in
accordance with the judgment of the persons voting the proxies.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of the Company's Common Stock. In addition to
solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Lisa M. Cline
----------------
Lisa M. Cline, Assistant Secretary
Pittsburgh, Pennsylvania
January 9, 1998
<PAGE>
REVOCABLE PROXY
FIDELITY BANCORP, INC.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIDELITY BANCORP,
INC. FOR USE ONLY AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON FEBRUARY
3, 1998 AND AT ANY ADJOURNMENT THEREOF.
The undersigned hereby appoints the Board of Directors of the Company, or any
successors thereto, as proxies, with full powers of substitution, to vote the
shares of the undersigned at the Annual Meeting of Stockholders of the Company
to be held at the executive offices of the Company located at 1009 Perry
Highway, Pittsburgh, Pennsylvania, on February 3, 1998 at 5:00 p.m., Eastern
Time, or at any adjournment thereof, with all powers that the undersigned would
possess if personally present, as indicated hereon.
1. Election of Directors
Nominee for three-year term:
John R. Gales
[ ] FOR [ ] WITHHOLD [ ] EXCEPT
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"Except' and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. Proposal to approve the adoption of the Company's 1997 Employees Stock
Compensation Program.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to ratify the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for fiscal 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote for approval of the
minutes of the last meeting of stockholders, for the election of any person as a
director if the nominee is unable to serve or for good cause will not serve,
matters incident to the conduct of the meeting, and upon such matters as may
properly come before the meeting.
The Board of Directors recommends that you vote FOR the nominee listed above
and FOR Proposals 2 and 3. You are encouraged to specify your choices by marking
the appropriate boxes above; however, you need not mark any boxes if you wish to
vote in accordance with the Board of Directors' recommendations. This proxy may
not be voted for any person who is not a nominee of the Board of Directors of
the Company. This proxy may be revoked at any time before it is exercised.
Please be sure to sign and date this Proxy in the box below.
_______________________________
DATE
_______________________________
STOCKHOLDER SIGN ABOVE
_______________________________
CO-HOLDER (if any) SIGN ABOVE
<PAGE>
Detach above card, sign, date and mail in postage paid envelope provided.
FIDELITY BANCORP, INC.
Shares of Common Stock of the Company will be voted as specified. If no
specification is made, shares will be voted FOR the election of the Board of
Directors' nominee to the Board of Directors, FOR Proposals 2 and 3, and
otherwise at the discretion of the proxies.
The above signed hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders of the Company called for February 3, 1998, a Proxy Statement
for the Annual Meeting and the 1997 Annual Report to Stockholders.
Please sign exactly as your name(s) appear(s) on this proxy card. Only one
signature is required in case of a joint account. When signing in a
representative capacity, please give title.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
