SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Peoples Financial Corporation
(Name of Registrant as Specified In Its Charter)
Peoples 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 table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined)
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
PEOPLES FINANCIAL CORPORATION
211 Lincoln Way East
Massillon, Ohio 44646
(330) 832-7441
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the 1998 Annual Meeting of Shareholders of
Peoples Financial Corporation ("PFC") will be held at the main office of Peoples
Federal Savings and Loan Association of Massillon, 211 Lincoln Way East,
Massillon, Ohio 44646, on January 28, 1998, at 2:00 p.m., Eastern Time (the
"Annual Meeting"), for the following purposes, all of which are more completely
set forth in the accompanying Proxy Statement:
1. To re-elect three directors of PFC for terms expiring in 2000;
2. To ratify the selection of Grant Thornton LLP as the auditors of
PFC for the current fiscal year; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Only shareholders of PFC of record at the close of business on December
5, 1997, will be entitled to receive notice of and to vote at the Annual Meeting
and at any adjournments thereof. Whether or not you expect to attend the Annual
Meeting, we urge you to consider the accompanying Proxy Statement carefully and
to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY SO THAT YOUR SHARES MAY BE
VOTED IN ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF A QUORUM AT THE ANNUAL
MEETING MAY BE ASSURED. The giving of a proxy does not affect your right to vote
in person in the event you attend the Annual Meeting.
By Order of the Board of Directors
Massillon, Ohio
December 17, 1997 Paul von Gunten, President
<PAGE>
Peoples Financial Corporation
211 Lincoln Way East
Massillon, Ohio 44646
(330) 832-7441
PROXY STATEMENT
PROXIES
The enclosed proxy (the "Proxy") is being solicited by the Board of
Directors of Peoples Financial Corporation, an Ohio corporation ("PFC"), for use
at the 1998 Annual Meeting of Shareholders of PFC to be held at the main office
of Peoples Federal Savings and Loan Association of Massillon ("Peoples
Federal"), 211 Lincoln Way East, Massillon, Ohio 44646, on January 28, 1998, at
2:00 p.m., Eastern Time, and at any adjournments thereof (the "Annual Meeting").
Without affecting any vote previously taken, the Proxy may be revoked by a
shareholder by execution of a later dated proxy which is received by PFC before
the Proxy is exercised or by giving notice of revocation to PFC in writing or in
open meeting before the Proxy is exercised. Attendance at the Annual Meeting
will not, of itself, revoke a proxy.
Each properly executed Proxy received prior to the Annual Meeting and
not revoked will be voted as specified thereon or, in the absence of specific
instructions to the contrary, will be voted:
FOR the re-election of James P. Bordner, Thomas E. Shelt and
Vince E. Stephan as directors of PFC for terms expiring in 2000;
and
FOR the ratification of the selection of Grant Thornton LLP
("Grant Thornton") as the auditors of PFC for the current fiscal
year.
Proxies may be solicited by the directors, officers and other employees of PFC
and Peoples Federal, in person or by telephone, telecopy, telegraph or mail,
only for use at the Annual Meeting. Such Proxies will not be used for any other
meeting. The cost of soliciting Proxies will be borne by PFC.
Only shareholders of record as of the close of business on December 5,
1997 (the "Voting Record Date"), are entitled to vote at the Annual Meeting.
Each such shareholder will be entitled to cast one vote for each share owned.
PFC's records disclose that, as of the Voting Record Date, there were 1,416,612
votes entitled to be cast at the Annual Meeting.
This Proxy Statement is first being mailed to the shareholders of PFC
on or about December 29, 1997.
<PAGE>
VOTE REQUIRED
Election of Directors
Under Ohio law and PFC's Code of Regulations (the "Regulations"), the
three nominees receiving the greatest number of votes will be elected as
directors. Each shareholder will be entitled to cast one vote for each share
owned. Shares as to which the authority to vote is withheld are not counted
toward the election of directors or toward the election of the individual
nominees specified in the enclosed Proxy. If the enclosed Proxy is signed and
dated by the shareholder but no vote is specified thereon, the shares held by
such shareholder will be voted FOR the re-election of the three nominees.
Ratification of Selection of Auditors
The affirmative vote of the holders of a majority of the shares of PFC
represented in person or by proxy at the Annual Meeting is necessary to ratify
the selection of Grant Thornton as the auditors of PFC for the current fiscal
year. Shares that are held by a nominee for a beneficial owner and that are
represented in person or by proxy at the Annual Meeting but not voted with
respect to such ratification ("Non-votes") will have the same effect as a vote
against the approval of such ratification, as will abstentions. If, however, a
shareholder has signed and dated a proxy in the form of the enclosed Proxy but
has not voted on the ratification of the selection of Grant Thornton by checking
an appropriate block on the Proxy, such person's shares will be voted FOR the
ratification of the selection of Grant Thornton and will not be considered
Non-votes.
VOTING SECURITIES AND OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
only persons known to PFC to own beneficially more than five percent of the
outstanding common shares of PFC as of December 10, 1997:
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address Beneficial Ownership Shares Outstanding
<S> <C> <C>
United National Bank 141,353(1) 9.98%
& Trust Company
P.O. Box 24190
Canton, OH 44701
Jeffrey S. Hallis 132,384 9.35%
500 Park Avenue
Fifth Floor
New York, NY 10022
Paul von Gunten (2) 77,997 5.51%
----------------------------
<FN>
(1) Consists of 59,640 shares held in trust for the Peoples Financial
Corporation Recognition and Retention Plan and Trust, and 81,713 shares
held in trust for the Peoples Financial Corporation Employee Stock
Ownership Plan.
(2) Mr. von Gunten may be contacted at the address of PFC.
</FN>
</TABLE>
<PAGE>
The following table sets forth certain information with respect to the
number of common shares of PFC beneficially owned by each director of PFC and by
all directors and executive officers of PFC as a group as of December 10, 1997:
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership
Sole Voting and Shared Voting and Percent of
Name and Address (1) Investment Power Investment Power Shares Outstanding
- -------------------- ---------------- ---------------- ------------------
<S> <C> <C> <C>
Victor C. Baker 9,500 - 0.67%
James P. Bordner 2,800 4,100 (2) 0.49
Vincent G. Matecheck 11,200 100 (3) 0.80
Thomas E. Shelt 19,500 5,775 (4) 1.78
Vince E. Stephan 11,000 - 0.78
Paul von Gunten 64,997 13,000 (5) 5.51
All directors and executive officers of
PFC as a group (7 people) 120,200 23,975 10.18%
- ----------------------------
<FN>
(1) Each of the persons listed in this table may be contacted at the address of
PFC.
(2) Consists of shares held by Mr. Bordner's spouse.
(3) Consists of shares held by Mr. Matecheck's daughter.
(4) Consists of shares held by Mr. Shelt's spouse.
(5) Consists of shares held by Mr. von Gunten's spouse.
</FN>
</TABLE>
PROPOSAL ONE - ELECTION OF DIRECTORS
Election of Directors
The Regulations provide for a Board of Directors consisting of six
persons divided into two classes. In accordance with Section 2.02 of the
Regulations, nominees for election as directors may be proposed only by the
directors or by a shareholder entitled to vote for directors if such shareholder
has submitted a written nomination to the Secretary of PFC by the later of the
November 30th immediately preceding the annual meeting of shareholders or the
sixtieth day before the first anniversary of the most recent annual meeting of
shareholders held for the election of directors. Each such written nomination
must state the name, age, business or residence address of the nominee, the
principal occupation or employment of the nominee, the number of common shares
of PFC owned either beneficially or of record by each such nominee and the
length of time such shares have been so owned.
The Board of Directors proposes the re-election of the following
persons to serve until the Annual Meeting of Shareholders in 2000 and until
their successors are duly elected and qualified or until their earlier
resignation, removal from office or death:
<TABLE>
<CAPTION>
Director of Director of Peoples
Name Age (1) Positions Held PFC Since (2) Federal Since
- ---- ------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
James P. Bordner 55 Director 1995 1992
Thomas E. Shelt 64 Director 1995 1978
Vince E.Stephan 81 Director and Chairman of the Board 1995 1970
- -----------------------------
<FN>
(1) As of December 10, 1997.
(2) Messrs. Bordner, Shelt and Stephan became directors of PFC in connection
with the conversion of Peoples Federal from mutual to stock form and the
formation of PFC as the holding company for Peoples Federal (the
"Conversion").
</FN>
</TABLE>
<PAGE>
If any nominee is unable to stand for election, any proxies granting
authority to vote for such nominee will be voted for such substitute as the
Board of Directors recommends.
The following directors will continue to serve as directors of PFC
after the Annual Meeting for the terms indicated:
<TABLE>
<CAPTION>
Director of Director of Peoples
Name Age (1) Positions Held PFC Since (2) Term Expires Federal Since
---- ------- -------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Victor C. Baker 74 Director 1995 1999 1984
Vincent G. Matecheck 52 Director, Secretary and Attorney 1995 1999 1987
Paul von Gunten 71 Director, President and Chief 1995 1999 1968
Executive Officer
- -----------------------------
<FN>
(1) As of December 10, 1997.
(2) Messrs. Baker, Matecheck and von Gunten became directors of PFC in
connection with the Conversion.
</FN>
</TABLE>
Mr. Bordner has been the President of P. J. Bordner and Company, Inc., a
grocery store chain in Massillon, Ohio, since 1980.
Mr. Shelt was employed by Peoples Federal from 1961 until his retirement in
December 1994. For the last fifteen years of his employment, he served as Vice
President. He is currently engaged in farming and real estate investment.
Mr. Stephan has been Chairman of the Board of Peoples Federal since 1989.
He is Vice President of Manchester Hardware, Inc., a hardware store located in
Manchester, Ohio, and retired in 1980 after serving for 25 years as an insurance
agent for Nationwide Company in Canal Fulton, Ohio. Mr. Stephan currently
operates a family farm.
Mr. Baker retired in 1982 after owning and operating Sunny Slope Orchard, a
family operated, wholesale and retail fruit market, bakery and sweet shop
located in Massillon, Ohio, for 40 years.
Mr. Matecheck has served as legal counsel to Peoples Federal since 1992. A
lawyer in private practice, Mr. Matecheck is also the Secretary and a director
of P. J. Bordner and Company, Inc., and Polymer Packaging, Inc., of Canton,
Ohio; a partner of Federal Avenue Office Building Company; a director of Gordy
Graybill, Inc.; and the former President and a current member of the Board of
Trustees of the United Way of Western Stark County.
Mr. von Gunten has been employed by Peoples Federal since 1948 and has
served as President and Chief Executive Officer since 1979. Mr. von Gunten has
served as President of PFC since 1995.
Meetings of Directors
The Board of Directors of PFC met 11 times for regularly scheduled and
special meetings during the fiscal year ended September 30, 1997. Each director
attended at least 75% of the aggregate of such meetings and meetings of all
committees of the Board of Directors of which he is a member.
Committees of Directors
The Board of Directors of PFC does not have a nominating committee or a
compensation committee. Nominees for election to the Board of Directors are
selected by the entire Board of Directors.
The Board of Directors of PFC has an Audit Committee. The Audit Committee
recommends audit firms to the full Board of Directors and reviews and approves
the annual independent audit report. The members of the Audit Committee are
Messrs. Baker, Bordner and Shelt. The Audit Committee met one time during the
fiscal year ended September 30, 1997.
<PAGE>
Executive Officers
In addition to Mr. von Gunten, the President of both PFC and Peoples
Federal, and Mr. Matecheck, the Secretary of PFC, the following persons are
executive officers of PFC and Peoples Federal and hold the designated positions:
<TABLE>
<CAPTION>
Name Age (1) Position(s) Held
<S> <C> <C>
William P. Hart 59 Vice President of Peoples Federal
Linda L. Fowler 53 Secretary of Peoples Federal
James R. Rinehart 54 Treasurer of PFC and Peoples Federal
Cindy A. Wagner 45 Assistant Treasurer of Peoples Federal
- -----------------------------
<FN>
(1) As of December 10, 1997.
</FN>
</TABLE>
Mr. Hart joined Peoples Federal in January 1996. Prior to joining Peoples
Federal, Mr. Hart was employed by Citizens Savings Bank in Canton, Ohio, serving
as Vice President of Loan Originations since 1978. For the past 20 years, Mr.
Hart has served on the Board of Trustees of the Building Industry Association of
Stark County.
Ms. Fowler has been employed by Peoples Federal since 1962. She served as
Treasurer from 1986 to 1991 and has served as Secretary since 1991. Ms. Fowler
is the Vice President and a member of the Board of Trustees of the Massillon
Downtown Merchants' Association and the Treasurer and a member of the Board of
Directors of the Massillon Club.
Mr. Rinehart has served as the Treasurer of PFC since 1995. Mr. Rinehart
has also been employed by Peoples Federal since May 1994 and has served as the
Treasurer of Peoples Federal since March 1996. Prior to joining Peoples Federal,
Mr. Rinehart was an accountant with Hall, Kistler & Company P.L.L. ("Hall,
Kistler") for 29 years.
Ms. Wagner has been employed by Peoples Federal in various capacities since
1986, as an officer since 1991, and as Assistant Treasurer since March 1996. Ms.
Wagner is a member of the Board of Trustees of the Massillon Downtown Merchants'
Association and a member of the Board of Directors of the Massillon Club.
Section 16(a) Beneficial Ownership Reporting Requirements
Under the federal securities laws, PFC's directors, executive officers and
persons holding more than ten percent of the common shares of PFC are required
to report their ownership of common shares and any changes in such ownership to
the Securities and Exchange Commission (the "SEC") and to PFC. Based upon a
review of such reports, PFC must disclose any failure to file such reports
timely in Proxy Statements used in connection with annual meetings of
shareholders. Messrs. Rinehart, Shelt and Stephan each reported late one
acquisition of common shares.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Compensation
The following table presents certain information regarding the cash
compensation received by the President and Chief Executive Officer of PFC and
Peoples Federal. No other executive officer of PFC received compensation in
excess of $100,000 during the fiscal years ended September 30, 1997, 1996 and
1995:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
----------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
----------------------------------------------------------------------------------
Awards
-------------------------------
Name and Principal Year Salary ($)(1) Bonus ($) Restricted Securities All Other
Position Stock Awards Underlying Compensation(2)
($) Options/
SARs(#)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Paul von Gunten 1997 $115,647 $14,000 $190,848(3) 22,365(4) $13,767
President and 1996 113,648 12,500 - - 17,556
Chief Executive 1995 105,796 11,000 - - 21,812
Officer
------------------------------------------------------------------------------------------------------------------
- -----------------------------
<FN>
(1) Includes salary of $107,247, $103,148 and $97,496 and directors' fees of
$8,400, $10,500 and $8,300 in fiscal years 1997, 1996 and 1995,
respectively. Does not include amounts attributable to other miscellaneous
benefits received by executive officers. The cost to PFC or Peoples Federal
of providing such benefits to Mr. von Gunten was less than 10% of his cash
compensation.
(2) Consists of Peoples Federal's contribution to Mr. von Gunten's 401(k)
defined contribution plan account in the amount of $12,878, $17,347 and
$21,711, and premiums totaling $889, $209 and $101 paid by Peoples Federal
for insurance against the death or long term disability of Mr. von Gunten
payable to a beneficiary designated by Mr. von Gunten in fiscal years 1997,
1996 and 1995, respectively. Does not reflect contributions made to PFC's
Employee Stock Ownership Plan and accrued to Mr. von Gunten's account for
the fiscal year ended September 30, 1997, which had not been determined as
of December 10, 1997.
(3) Represents the value of the common shares of PFC awarded to Mr. von Gunten
pursuant to PFC's Recognition and Retention Plan and Trust Agreement (the
"RRP"), determined by multiplying the number of shares awarded on March 19,
1997, by $16.00 per share, the fair market value on such date based on the
mean between the closing high bid and low asked quotation reported on The
Nasdaq SmallCap Market. One-fifth of the awarded shares will be earned and
delivered on each anniversary of the date of the award commencing on March
19, 1998.
(4) Represents the number of common shares of PFC underlying options granted to
Mr. von Gunten pursuant to PFC's 1997 Stock Option and Incentive Plan (the
"Stock Option Plan"). "SARs" stands for "Stock Appreciation Rights." PFC
does not have a plan that provides for the grant of SARs.
</FN>
</TABLE>
Stock Option Plan
At the 1997 Annual Meeting of the Shareholders of PFC, the shareholders
approved the Stock Option Plan. The Board of PFC reserved 149,101 common shares,
which is equal to 10% of the common shares issued in connection with the
Conversion, for issuance by PFC upon the exercise of options to be granted to
certain directors, officers and employees of Peoples Federal and PFC from time
to time under the Stock Option Plan. Options to purchase 104,371 common shares
of PFC have been awarded pursuant to the Stock Option Plan.
The Stock Option Plan is administered by the Stock Option Committee (the
"Committee"), which may grant options under the Stock Option Plan at such times
as it deems most beneficial to Peoples Federal and PFC on the basis of the
individual participant's position and duties and the value of the individual's
service and responsibilities to Peoples Federal and PFC. Options
<PAGE>
granted to the officers and employees under the Stock Option Plan may be
"incentive stock options" ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), which, if certain
conditions are met, permits the optionees to delay the recognition of federal
taxable income on the shares received upon the exercise of the options. Options
granted under the Stock Option Plan to directors who are not employees of PFC or
Peoples Federal will not qualify under the Code and thus will not be ISOs
("Non-qualified Stock Options").
The option exercise price for ISOs and Non-qualified Stock Options is
determined by the Committee at the time of option grant. The exercise price for
an option, must not be less than 100% of the fair market value of the shares on
the date of the grant; provided, however, for an employee who owns more than 10%
of PFC's outstanding common shares, the exercise price of an ISO may not be less
than 110% of the fair market value of the shares on the date of the grant, and
the ISO shall not be exercisable after the expiration of five years from the
date it is granted. No stock option will be exercisable after the expiration of
ten years from the date of grant. An option cannot be transferred or assigned
other than by will or in accordance with the laws of descent and distribution.
Termination for cause, as defined in the Stock Option Plan, will result in the
annulment of any outstanding options.
The following table sets forth information regarding all grants of
options to purchase PFC common shares made to Mr. von Gunten during fiscal year
1997:
<TABLE>
<CAPTION>
Option/SAR Grants In Last Fiscal Year
Individual Grants
- --------------------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise or Base Expiration
Name Granted (#) 1997 Fiscal Year Price ($/Share) Date
- ---- --------------- ---------------- ----------------- ---------
<S> <C> <C> <C> <C>
Paul von Gunten 22,365(1) 21.4% $16.00 March 19, 2007
- ------------------------
<FN>
(1) The option was granted on March 19, 1997, and is first exercisable with
respect to one-fifth of the shares subject to the option on each
anniversary of the date of grant of the option commencing on March 19,
1998. The option is intended to qualify as an ISO.
</FN>
</TABLE>
The following table sets forth information regarding the number and
value of unexercised options held by Mr. von Gunten at September 30, 1997:
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises In Last Fiscal Year and 9/30/97 Option/SAR Values
Number of
Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
9/30/97 (#) 9/30/97 ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Paul von Gunten -0- N/A 0/22,365 (1)
- -----------------------------
(Footnote on next page)
<PAGE>
<FN>
(1) No value of such options is provided because the $16.00 exercise price
exceeds the fair market value of PFC's common shares, which was $14.00 per
share on September 30, 1997, based on the mean between the closing high bid
and low asked quotation reported by The Nasdaq SmallCap Market. The
exercise price of such option is expected to be reduced pursuant to the
terms of the Stock Option Plan, due to distribution of capital to the
shareholders in September 1997, but the amount of such adjustment has not
yet been determined.
</FN>
</TABLE>
Recognition and Retention Plan and Trust
At the 1997 Annual Meeting of the Shareholders of PFC, the shareholders
of PFC approved the RRP. With funds contributed by PFC, the RRP purchased 59,640
shares of PFC's common stock, 47,712 of which were awarded to directors and
executive officers of PFC and Peoples Federal in March 1997.
The RRP is administered by the RRP Committee of the Board of Directors
of PFC. Subject to express provisions of the RRP, the RRP Committee determines
which directors and employees of Peoples Federal and PFC are eligible to receive
awards of PFC common shares under the RRP, which eligible persons will be
awarded shares under the RRP and the number of shares to be awarded.
Unless the RRP Committee specifies a longer period of time, one-fifth
of the RRP shares awarded to a recipient will be earned and nonforfeitable on
each of the first five anniversaries of the date of the awards. Until shares
awarded are earned by the participant, such shares will be forfeited in the
event that the participant ceases to be either a director, an officer or an
employee of PFC or Peoples Federal. In the event of the death or disability of a
participant, however, the participant's shares will be deemed to be earned and
nonforfeitable upon such date.
RRP shares will be distributed as soon as practicable after they are
earned. All plan shares which have been awarded but not earned will be voted in
the discretion of the RRP Trustee appointed by the RRP Committee.
Employment Agreements
On November 15, 1996, Peoples Federal entered into an employment
agreement with Mr. von Gunten (the "Employment Agreement"). The Employment
Agreement provides for a term of three years, a salary of not less than $102,408
and a performance review by the Board of Directors not less often than annually.
The Employment Agreement also provides for the inclusion of Mr. von Gunten in
any formally established employee benefit, bonus, pension and profit-sharing
plans for which senior management personnel are eligible.
The Employment Agreement is terminable by Peoples Federal at any time.
In the event of termination by Peoples Federal for "just cause," as defined in
the Employment Agreement, Mr. von Gunten will have no right to receive any
compensation or other benefits for any period after such termination. In the
event of termination by Peoples Federal other than for just cause, at the end of
the term of the Employment Agreement or in connection with a "change of
control," as defined in the Employment Agreement, Mr. von Gunten will be
entitled to a continuation of salary payments for a period of time equal to the
term of the Employment Agreement and a continuation of benefits substantially
equal to those being provided at the date of termination of employment until the
earliest to occur of (1) the end of the term of the Employment Agreement or (2)
the date on which Mr. von Gunten becomes employed full-time by another employer.
The Employment Agreement also contains provisions with respect to the
occurrence of the following within one year of a "change of control": (1) the
termination of employment of Mr. von Gunten for any reason other than just
cause, retirement or termination at the end of the term of the Employment
Agreement; (2) a material change in the capacity or circumstances in which Mr.
von Gunten is employed; or (3) a material reduction in his responsibilities,
authority, compensation or other benefits provided under the Employment
Agreement. In the event of any such occurrence, Mr. von Gunten will be entitled
to receive an amount equal to three times his average annual compensation for
the three taxable years immediately preceding the termination of employment. In
addition, Mr. von Gunten will be entitled to continued coverage under all
benefit plans until the earliest of the end of the term of the Employment
Agreement or the date on which he is included in another employer's benefit
plans as a full-time employee. The maximum which Mr. von Gunten may receive
under such provisions, however, is limited to an amount that will not result in
the imposition of a penalty tax pursuant to Section 280G(b)(3) of the Internal
Revenue Code of 1986, as amended (the "Code"), and an amount that will not
violate applicable restrictions of the Office of Thrift Supervision (the "OTS").
A "change of control," as defined in the Employment Agreement, generally refers
to the acquisition by any person or entity of the ownership or power to vote 10%
or more of the voting stock of Peoples Federal or PFC, the control of the
election of a majority of the directors of Peoples or PFC or the exercise of a
controlling influence over the management or policies of Peoples Federal or PFC.
<PAGE>
Directors' Compensation
PFC currently pays no directors' fees. Each director of Peoples Federal
receives a retainer fee of $2,400 for service as a director, plus $500 for each
monthly meeting attended. The Chairman of the Board and the Vice Chairman of the
Board also receive additional monthly fees of $600 and $350, respectively.
Certain Transactions
During the fiscal year ended September 30, 1997, Peoples Federal
retained the services of Vincent G. Matecheck, an attorney engaged in private
practice in the Massillon area. Mr. Matecheck is a director of Peoples Federal
and PFC, serves as the Secretary of PFC and serves as general counsel to Peoples
Federal. During fiscal years 1997 and 1996, Mr. Matecheck was paid $14,166 and
$16,199, respectively, for services rendered as general counsel to Peoples
Federal.
Although Peoples Federal makes loans to its employees and directors on
the same terms as those of comparable loans to other persons, People Federal
requires employees and directors to pay interest at a rate of one percent less
than the rate required of other customers while such employees and directors
serve Peoples Federal in their respective capacities. Should the service of an
employee or director cease for any reason, Peoples Federal will discontinue the
one percent reduction and enforce the nominal terms of the loan.
Peoples Federal made a mortgage loan to Mr. Matecheck with such a
favorable rate on June 6, 1996. The loan was secured by his personal residence,
was originated in the amount of $350,000 at a rate of 7.65%, before the 1%
reduction, and had a balance of $238,653 at December 10, 1997.
No other loans which, in the aggregate to one person, exceeded $60,000
at any time during the two years ended September 30, 1997, were made to
directors or executive officers of PFC on preferential terms. None of the
outstanding loans to directors or executive officers involve more than the
normal risk of collectibility or present other unfavorable features, and all are
current in accordance with their terms.
PROPOSAL TWO - SELECTION OF AUDITORS
On September 16, 1996, the Board of Directors approved the
recommendation of its Audit Committee to change the independent accountant of
PFC and Peoples Federal from Hall, Kistler & Company P.L.L. ("Hall, Kistler"),
to Grant Thornton LLP ("Grant Thornton"). No adverse opinion, disclaimer or
qualification was contained in Hall, Kistler's report for either of the last two
fiscal years for which Hall, Kistler completed an audit of Peoples Federal's
financial statements, nor were such reports modified as to uncertainty, audit
scope or accounting principles. Further, there was no disagreement between PFC
or Peoples Federal and Hall, Kistler or Grant Thornton on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure.
The Board of Directors has selected Grant Thornton as the auditors of
PFC and Peoples Federal for the current fiscal year and recommends that the
shareholders ratify such selection. Management expects that a representative of
Grant Thornton will be present at the Annual Meeting, will have the opportunity
to make a statement if he or she so desires and will be available to respond to
appropriate questions.
PROPOSALS OF SHAREHOLDERS AND OTHER MATTERS
Any proposals of shareholders intended to be included in the proxy
statement for the 1999 Annual Meeting of Shareholders of PFC should be sent to
PFC by certified mail and must be received by PFC not later than August 31,
1998.
Management knows of no other business which may be brought before the
Annual Meeting. It is the intention of the persons named in the enclosed Proxy
to vote such Proxy in accordance with their best judgment on any other matters
which may be brought before the Annual Meeting.
<PAGE>
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN AND
RETURN THE PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
By Order of the Board of Directors
Massillon, Ohio
December 17, 1997 Paul von Gunten, President
<PAGE>
REVOCABLE PROXY
PEOPLES FINANCIAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF PEOPLES FINANCIAL CORPORATION
The undersigned shareholder of Peoples Financial Corporation ("PFC")
hereby constitutes and appoints Paul von Gunten and Vincent G. Matecheck, or
either of them, as the Proxy or Proxies of the undersigned with full power of
substitution and resubstitution, to vote at the Annual Meeting of Shareholders
of PFC to be held at 211 Lincoln Way East, Massillon, Ohio 44646, on January 28,
1998, at 2:00 p.m., Eastern Time (the "Annual Meeting"), all of the shares of
PFC which the undersigned is entitled to vote at the Annual Meeting, or at any
adjournment thereof, on each of the following proposals, all of which are
described in the accompanying Proxy Statement:
1. The election of three directors for terms expiring in 2000:
FOR all nominees WITHHOLD authority to
listed below vote for all nominees
(except as marked to the listed below:
contrary below):
James P. Bordner
Thomas E. Shelt
Vince E. Stephan
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below).
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2. The ratification of the selection of Grant Thornton LLP, certified public
accountants, as the auditors of PFC for the current fiscal year.
FOR AGAINST ABSTAIN
3. In their discretion, upon such other business as may properly come before
the Annual Meeting or any adjournments thereof.
The Board of Directors recommends a vote "FOR" the nominees and the
proposals listed above.
Important: Please sign and date this proxy on the reverse side.
<PAGE>
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. Unless otherwise specified, the
shares will be voted FOR proposals 1 and 2.
All Proxies previously given by the undersigned are hereby revoked.
Receipt of the Notice of the Annual Meeting and of the accompanying Proxy
Statement is hereby acknowledged.
Please sign exactly as your name appears on your Stock Certificate(s).
Executors, Administrators, Trustees, Guardians, Attorneys and Agents should give
their full titles.
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Signature Signature
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Print or Type Name Print or Type Name
Dated: _____________________ Dated: _______________________
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED FOR MAILING IN THE U.S.A.
