<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Charter One Financial, Inc.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Charter One Financial, Inc.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
- --------------------------------------------------------------------------------
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<PAGE> 2
[CHARTER ONE LOGO]
CHARTER ONE FINANCIAL, INC.
1215 Superior Avenue
Cleveland, Ohio 44114
(216) 566-5300
_____________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, APRIL 17, 1996
______________________________
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of Shareholders of
Charter One Financial, Inc. ("Charter One" or the "Company") will be held on
Wednesday, April 17, 1996, at 2:00 p.m. at the Forum Conference and Education
Center, One Cleveland Center, 1375 East Ninth Street, Cleveland, Ohio, for the
following purposes:
1. To elect five directors each for a three-year term (Proposal 1);
2. To ratify the appointment by the Board of Directors of the firm of
Deloitte & Touche LLP as independent auditors of the Company for
the fiscal year ending December 31, 1996 (Proposal 2); and
3. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Pursuant to the Bylaws, the Board of Directors has fixed the close of
business on March 8, 1996 as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting. Only
holders of common stock of record at the close of business on that date will be
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. In the event that there are not sufficient votes to approve any one
or more of the foregoing proposals at the time of the Annual Meeting, the
Annual Meeting may be adjourned to permit further solicitation of proxies by
the Company.
By Order of the Board of Directors
/s/ Charles John Koch
Charles John Koch
Chairman of the Board
Cleveland, Ohio
March 25, 1996
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 3
CHARTER ONE FINANCIAL, INC.
1215 Superior Avenue
Cleveland, Ohio 44114
(216) 566-5300
_____________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 17, 1996
This Proxy Statement is furnished to shareholders of Charter One
Financial, Inc. ("Charter One" or the "Company") in connection with the
solicitation by the Board of Directors of Charter One of proxies to be used at
the 1996 Annual Meeting of Shareholders to be held on April 17, 1996, at 2:00
p.m. at the Forum Conference and Education Center, One Cleveland Center, 1375
East Ninth Street, Cleveland, Ohio, and at any adjournments thereof.
During the period since the 1995 Annual Meeting, the Company completed
a merger of equals (the "Merger") with FirstFed Michigan Corporation
("FirstFed"). The Merger, which was completed on October 31, 1995, was
approved by the Company's and FirstFed's shareholders at special meetings held
on October 27, 1995 (the "Special Meeting"). The Merger had a significant
impact on the respective companies, as is reflected by combined company's size,
Board of Directors, shareholder mix and number of shares outstanding. As part
of the Merger, FirstFed's operating subsidiary, First Federal of Michigan
("First Federal"), was merged into the Company's subsidiary, Charter One Bank,
F.S.B. (the "Bank").
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
Executed but unmarked proxies will be voted FOR Proposal 1 to elect the
nominees of the Board of Directors as directors; and (2) FOR Proposal 2 to
ratify the appointment by the Board of Directors of the firm of Deloitte &
Touche LLP as independent auditors of the Company for the fiscal year ending
December 31, 1996.
This Proxy Statement is initially being mailed to shareholders on or
about March 25, 1996. The presence of a shareholder at the Annual Meeting will
not automatically revoke such shareholder's proxy. Shareholders may, however,
revoke a proxy at any time prior to its exercise by delivering to the Company a
duly executed proxy bearing a later date, by attending the Annual Meeting and
voting in person, or by filing written notice of revocation with Robert J.
Vana, Secretary of the Company, at 1215 Superior Avenue, Cleveland, Ohio 44114.
OUTSTANDING VOTING SECURITIES
The securities which can be voted at the Annual Meeting consist of
shares of common stock of the Company (the "Common Stock") with each share
entitling its owner to one vote on all matters. The close of business on March
8, 1996 has been fixed by the Board of Directors as the record date for
determination of shareholders entitled to vote at the meeting. The number of
shares outstanding on March 8, 1996, which includes approximately 22.5 million
shares issued in conjunction with the Merger, was 45,063,623. The presence, in
person or by proxy, of at least the majority of the total number of outstanding
shares of common stock is necessary to constitute a quorum at the Annual
Meeting. Any proxies marked as abstentions, and any shares held in street name
which have been designated by brokers on proxy cards as not voted, will not be
counted as votes cast. Any proxies marked as abstentions or as broker nonvotes
will, however, be treated as shares present for purposes of determining whether
a quorum is present.
1
<PAGE> 4
Listed in the following table are beneficial owners as of March 8,
1996, of more than 5% of the Company's outstanding Common Stock.
<TABLE>
<CAPTION>
Amount and Percent of
Nature of Shares of
Name and Address of Beneficial Common Stock
Beneficial Owner Ownership Outstanding
------------------- ------------ -------------
<S> <C> <C>
FMR Corporation . . . . . . . . . . . . . . . . . . . . . . . . 4,442,095(1) 9.86%
82 Devonshire Street
Boston, MA 02109
Martinique Hotel, Inc., Max M. Fisher, Jane F. Sherman,
Phillip Wm. Fisher, Mary D. Fisher, Julie Fisher Cummings
and Marjorie Fisher Aronow . . . . . . . . . . . . . . . . . 2,422,804(2) 5.38%
2700 Fisher Building
Detroit, MI 48202
<FN>
________________________
(1) Included are 613,075 shares as to which the reporting party has sole
power to vote and no shares as to which shared voting may be exercised.
The reporting party has sole power to dispose of the entire 4,442,095
shares.
(2) Included are 511,764 shares owned by Martinique Hotel, Inc.
("Martinique"), 1,300,022 shares owned by Max M. Fisher, 102,824 shares
owned by Jane F. Sherman, 108,000 shares owned by Phillip Wm. Fisher,
67,500 shares owned by Mary D. Fisher, 104,600 shares owned by Julie
Fisher Cummings, and 108,000 shares owned by Marjorie Fisher Aronow, as
to which shares the named company and individuals have sole voting and
dispositive power. Also included are 120,094 shares held in various
trusts for the benefit of certain grandchildren of Max M. Fisher with
various trustees having sole voting and dispositive power. Martinique
is a personal holding company whose shares are owned by the individuals
named in the above table other than Max M. Fisher, and all of such
persons, including Max M. Fisher, are directors of Martinique.
Additionally, Max M. Fisher's wife, Marjorie S. Fisher, is a director
and serves as President of Martinique. As directors, such persons
exercise shared voting and dispositive power over the shares held by
Martinique.
</TABLE>
The following table sets forth, as of March 8, 1996, certain
information as to each of the named executive officers and directors and all
executive officers and directors as a group.
<TABLE>
<CAPTION>
Amount and Percent of
Nature of Shares of
Name of Beneficial Common Stock
Beneficial Owner Ownership(1)(2)(3)(4) Outstanding
---------------- ---------------------- ------------
<S> <C> <C>
Charles John Koch, Director, Chairman of the Board, 351,139(5) *
President and Chief Executive Officer of the Company
and the Bank
John D. Koch, Director, Senior Vice President of the 178,450(6) *
Company and Executive Vice President of the Bank
Mark D. Grossi, Director, Senior Vice President of the 150,699(7) *
Company and Executive Vice President of the Bank
Richard W. Neu, Director, Treasurer of the Company, 209,284(8) *
and Executive Vice President and Chief Financial
Officer of the Bank
Robert J. Vana, Chief Corporate Counsel and 71,295(9) *
Secretary of the Company and the Bank
Eugene B. Carroll, Sr., Director 13,073(10) *
Denise M. Fugo, Director 6,142(11) *
Charles M. Heidel, Director 2,460 *
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
Amount and Percent of
Nature of Shares of
Name of Beneficial Common Stock
Beneficial Owner Ownership(1)(2)(3)(4) Outstanding
---------------- --------------------- -------------
<S> <C> <C>
Charles F. Ipavec, Director 95,748 *
Richard J. Jacob, Director 125,100 *
Philip J. Meathe, Director 13,200 *
Henry R. Nolte, Jr., Director 3,000 *
Alonzo H. Poll, Director 12,150 *
Victor A. Ptak, Director 12,997(12) *
Jerome L. Schostak, Director 1,961,133 4.35%
Mark Shaevsky, Director 27,385 *
Eresteen R. Williams, Director 346 *
All executive officers and directors as a group 3,233,601(13) 7.09%
(17 persons)
<FN>
_____________________
* Does not exceed 1%.
(1) Shares held under the Bank's employee savings plan are reported as of
December 31, 1995. Shares held under the Employee Stock Ownership Plan
(the "ESOP") are reported as of December 31, 1994. The ESOP allocation
for December 31, 1995 will not be completed until April 1996.
(2) Assumes exercise of stock options held by beneficial owner exercisable
within 60 days.
(3) Included are shares owned directly or indirectly through a trust or
corporation or by spouses and minor children, as to which the
beneficial owner exercises sole voting and dispositive power, except as
otherwise noted herein.
(4) For the executive officers, included are shares allocated to such
executive officers under the ESOP, as well as a proportionate share of
the unallocated shares, which are deemed to be beneficially owned by
the executive officers as a result of the executive officers' ability
to direct the trustee's voting of such shares through the vote of the
executive officers' allocated shares.
(5) Included are 180,500 shares Mr. Charles John Koch has the right to
purchase pursuant to stock options exercisable within 60 days.
(6) Included are 88,349 shares Mr. John D. Koch has the right to purchase
pursuant to stock options exercisable within 60 days.
(7) Included are 42,894 shares Mr. Grossi has the right to purchase
pursuant to stock options exercisable within 60 days.
(8) Included are 200,665 shares Mr. Neu has the right to purchase pursuant
to stock options exercisable within 60 days.
(9) Included are 21,000 shares Mr. Vana has the right to purchase pursuant
to stock options exercisable within 60 days.
(10) Included are 9,000 shares Mr. Carroll has the right to purchase
pursuant to stock options exercisable within 60 days.
(11) Included are 4,500 shares Ms. Fugo has the right to purchase pursuant
to stock options exercisable within 60 days.
(12) Included are 4,500 shares Mr. Ptak has the right to purchase pursuant
to stock options exercisable within 60 days.
(13) Included are 551,408 shares the directors and executive officers as a
group have the right to purchase pursuant to stock options exercisable
within 60 days.
</TABLE>
3
<PAGE> 6
PROPOSAL 1 - ELECTION OF DIRECTORS
As a result of the Merger, the Board of Directors of the combined
company is comprised of eight directors previously serving on the Charter One
Board and eight previously serving on the FirstFed Board. At the time of the
Merger, the Charter One Board had 12 members and FirstFed's had 10. The
directors who served on the Charter One or FirstFed Board prior to the Merger
and did not become directors of the Company after the Merger are: Dr. Norman
R. Auburn; Otty J. Cerny; Robert L. Moore; George M. Jones; and Charles A.
Shirk from Charter One and C. Gene Harling and Fred C. Reynolds from FirstFed.
With the exception of Mr. Harling, these individuals are serving as directors
emeritus of the Company. In addition, Mark D. Grossi, an executive officer of
the Company, joined the Company's Board at the time of the Merger.
The Company's certificate of incorporation provides that the number of
directors of Charter One shall be between seven and 16 as the result of an
amendment approved by shareholders at the Special Meeting which increased the
number of authorized directors from 15 to 16. The certificate of incorporation
further provides that the directors are to be divided into three classes
composed of as equal a number per class as is possible. The term of office of
only one class of directors expires in each year, and their successors are
elected for terms of three years until their successors are elected and
qualified.
At the 1996 Annual Meeting, five directors will each be elected for a
three-year term. Unless otherwise specified on the proxy, it is the intention
of the persons named in the proxy to vote the shares represented by each
properly executed proxy for the election as directors of the persons named
below as nominees. Under Delaware law, directors are elected by a plurality of
the votes of the shares present in person or represented by proxy at a meeting
and entitled to vote on the election of directors. The Board of Directors
believes that the nominees will stand for election and will serve if elected as
directors. However, if any of the persons nominated by the Board of Directors
fails to stand for election or will be unable to accept election, the proxies
will be voted for the election of such other persons as the Board of Directors
may recommend, or the size of the Board may be reduced to eliminate the
vacancy. See "Corporate Governance and Other Matters" for additional
information on conditions of the Merger that relate to the Board of Directors.
INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS
The following tables set forth the names of the Board of Directors'
nominees for election as a director and those directors who will continue to
serve after the 1996 Annual Meeting. Also set forth is certain other
information with respect to each person's age at December 31, 1995, principal
occupation or employment during the past five years, the date the individual
first became a director of Charter One or FirstFed (including First Federal)
and, if applicable, positions currently held with the Company.
<TABLE>
<CAPTION> Principal Occupation First Became
Name or Employment (1) Age a Director
------ ------------------- --- -----------
<S> <C> <C> <C>
Nominees for Term Ending in 1999
Charles M. Heidel Retired President, Chief Operating Officer and 70 1980
Director of The Detroit Edison Company, a
public utility in Detroit, Michigan
Charles F. Ipavec General counsel to the Bank; 74 1987
President, La Porte and Ipavec Co., L.P.A.,
a law firm in Cleveland, Ohio
Richard W. Neu Treasurer of the Company and Executive Vice 39 1992
President and Chief Financial Officer of the
Treasurer of FirstFed prior to the Merger
Victor A. Ptak General partner, manager of J.C. Bradford & 63 1989
Co., L.P.A., an investment banking firm in
Cleveland, Ohio
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION> Principal Occupation First Became
Name or Employment (1) Age a Director
---- --------------------- --- ------------
<S> <C> <C> <C>
Eresteen R. Williams Retired Medical Office Manager for D.G. 70 1979
Williams, Jr., M.D., P.C., a medical practice
in Detroit, Michigan
Continuing Directors Whose Terms End in 1997
Mark D. Grossi Senior Vice President of the Company and 42 1995
Executive Vice President/Retail Banking of the
Bank since September 1992; President and Chief
Executive Officer of First American Savings Bank
from December 1989 through September 1992
Richard J. Jacob President of Richard J. Jacob and Associates, a 76 1987
private investing and consulting firm in Dayton,
Ohio, since 1993; owner of Jacob-Dourlet &
Associates, a real estate investment firm in
Dayton, Ohio, from 1987 to 1993; Director of
Durakon Industries, a manufacturer of truck
liners and related vehicle items.
John D. Koch (2) Senior Vice President of the Company and 43 1995
Executive Vice President of the Bank
Philip J. Meathe Retired Chairman of the Board and Chief 69 1976
Executive Officer of Smith, Hinchman & Grylls
Associates, Inc., an architectual engineering
and planning firm in Detroit, Michigan
Alonzo H. Poll Retired chairman, H. Poll Electric Company, 73 1987
an electrical equipment distributor in Toledo,
Continuing Directors Whose Terms End in 1998
Eugene B. Carroll, Sr. President, Employer Sponsored Plans, Inc., a 71 1987
party health plan administrator in Cleveland,
and agent for New England Mutual Life Insurance
Co.
Denise M. Fugo President of City Life Inc., a restaurant, 42 1993
and catering company in Cleveland, Ohio
Charles John Koch (2) President and Chief Executive Officer of the 49 1987
Company and the Bank
Henry R. Nolte, Jr. Of Counsel to Miller, Canfield, Paddock and 71 1983
Stone, a law firm headquartered in Detroit,
Michigan, and was a senior partner from 1989
to 1993; retired as Vice President/General
of Ford Motor Company, a vehicle manufacturer
headquartered in Dearborn, Michigan, in 1989
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION> Principal Occupation First Became
Name or Employment (1) Age a Director
---- --------------------- --- -----------
<S> <C>
Jerome L. Schostak Vice Chairman of the Company since the Merger; 62 1985
Chairman of the Board and Chief Executive
Officer of Schostak Brothers & Company, Inc.,
a full service real estate company in Southfield
Michigan, and served as President until 1994;
Director of Crowley Milner & Company, a retail
department store chain
Mark Shaevsky Partner in Honigman Miller Schwartz and Cohn, 60 1985
a law firm headquartered in Detroit, Michigan
<FN>
____________________
(1) Except as otherwise indicated, there has been no change in principal
occupation or employment during the past five years.
(2) Messrs. Charles John Koch and John D. Koch are brothers.
</TABLE>
CORPORATE GOVERNANCE AND OTHER MATTERS
The Board of Directors of the Company acts as a nominating committee
for selecting nominees for election as directors. Although the Board will
consider nominees recommended by shareholders, it has not established any
procedures for this purpose. A condition of the Merger stipulates that at all
times prior to October 31, 1999, the Board will consist of an equal number of
directors representing Charter One and FirstFed prior to the Merger and that
any vacancies be filled based on the recommendation of the directors remaining
from the board served by the departing director prior to the Merger. The same
condition further stipulates that for such four-year period Charles John Koch
and Jerome L. Schostak will serve as the Chairman and Vice Chairman,
respectively, of the Company's Board of Directors.
The Board of Directors of the Company has an Audit Committee which
recommends independent auditors to the Board, reviews the scope and results of
the auditors' services, reviews with management and the independent auditors
the systems of internal control and audit and ensures that the books and
records of the Company are kept in accordance with generally accepted
accounting principles. The members of the Audit Committee currently are Philip
J. Meathe (Chairman), Eugene B. Carroll, Sr., Charles F. Ipavec, Alonzo H.
Poll, Mark Shaevsky and Eresteen R. Williams. In 1995, the Audit Committee
met 10 times.
The Board of Directors of the Company has a standing Compensation
Committee which establishes the compensation of the Board of Directors and acts
on recommendations made by the President regarding the compensation of other
senior officers. The members of the Compensation Committee currently are
Eugene B. Carroll, Sr. (Chairman), Denise M. Fugo, Charles M. Heidel, Henry R.
Nolte, Jr., Victor A. Ptak and Jerome L. Schostak. The Compensation Committee
of the Company met nine times in 1995.
In 1995, Charter One held 12 meetings of the Board of Directors. No
incumbent director attended fewer than 75% of the aggregate of the total number
of meetings held by the Board of Directors and the total number of meetings
held by all committees of the Board on which he or she served during the period
that he or she served.
COMPENSATION OF DIRECTORS
Each non-officer member of the Company's Board of Directors receives
$200 per month plus $250 for each Board meeting attended by the director.
Additionally, each non-officer member of the Bank's Board of Directors receives
$1,000 per month plus $900 for each Board meeting attended by the director.
Executive officers of the Company or the Bank do not receive any fees as
directors of the Company or the Bank. In addition, members of the committees
of the Bank's Board receive $300 per month for each committee on which they
sit, except for the chairman of the Compensation and Audit Committees, who
receive $600 per month. In addition to other fees, Mr. Jerome L. Schostak
receives $11,500 per month for services rendered as Vice Chairman of the Board
of Directors of the Company.
For information regarding other business relationships between certain
directors and the Company, see "Compensation Committee Interlocks and Insider
Participation."
6
<PAGE> 9
DIRECTORS' STOCK OPTION PLAN
The Company has a directors' stock option plan (the "Director's Plan")
which is administered by the Company's Board of Directors and provides for
stock option grants to non-officer directors. During 1995, no options were
granted under the Director's Plan and no options were exercised by a current
director.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table includes individual compensation
information on the Chief Executive Officer and the four other most highly paid
executive officers, for services rendered in all capacities during the fiscal
years ended December 31, 1995, 1994 and 1993.
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------------
Annual Compensation Awards Payouts
------------------------------ ---------------------- --------
Securities
Other Under- All
Annual Restrict lying LTIP Other
Compen- Stock Options/ Payouts Compen-
Name and Salary(1) Bonus(2) sation Award(s) SARs(4) (5) sation(6)
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
------------------- ----- --------- ---------- ------- -------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles John Koch 1995 338,657 238,696 - - - - 45,501
Chief Executive 1994 321,740 227,113 - - - - 44,746
Officer 1993 301,629 278,853 - - - - 48,947
Richard W. Neu (7) 1995 240,000 159,657 - - - 139,906 32,331
Executive Vice 1994 240,000 - - - - 75,165 -
President and 1993 230,000 181,088 - - 77,400 - -
Chief Financial
Officer
John D. Koch 1995 229,103 133,775 - - - - 28,827
Executive Vice 1994 217,846 124,632 52,004(3) - - - 28,284
President 1993 202,242 184,939 - - - - 33,175
Mark D. Grossi 1995 190,201 115,522 - - - - 16,323
Executive Vice 1994 180,806 107,168 - - - - 15,826
President 1993 171,577 167,216 - - - - 5,621
Robert J. Vana 1995 122,193 69,190 - - - - 19,603
Chief Corporate 1994 109,340 59,385 - - - - 18,765
Counsel and 1993 102,888 86,489 - - - - 26,047
Secretary
<FN>
__________________
(1) Salary includes amounts deferred at the election of the executive
officer through the Bank's 401(k) Plan.
(2) Includes annual award under the Executive Incentive Goal Achievement
Plan and, in the case of Mr. Neu, payments under First Federal's Profit
Sharing Plan and Management Incentive Award Plan ("MIAP"). Both First
Federal plans were terminated upon the Merger.
(3) Includes tax gross-ups and perquisites.
(4) Includes grants in number of shares under the FirstFed Stock Option
Plan, converted by the 1.2 exchange ratio as a result of the Merger.
(5) Includes payment of appreciation on 1992 and 1993 Long-Term MIAP awards
which were distributed in conjunction with the termination of First
Federal's MIAP.
(6) Includes the Bank's contributions to the 401(k) Plan and ESOP, life
insurance premium payments, and, in 1995, Mr. Neu's relocation expenses
grossed up for taxes.
(7) Mr. Neu's individual compensation information includes his compensation
from First Federal prior to the Merger.
</TABLE>
7
<PAGE> 10
OPTION/SAR EXERCISES AND HOLDINGS
The following table sets forth information regarding options exercised
by the Chief Executive Officer and the other named executive officers during
1995 and options and stock appreciation rights ("SARs") held by such persons at
the end of 1995. No options or SARs were granted to such persons during 1995
other than the conversion of FirstFed options into those of Charter One in
conjunction with the Merger.
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs
Shares Options/SARs at FY-End
Acquired at FY-End (#) ($)(1)
on Value
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
---- -------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
Charles John Koch . . . . . . . . . . . . . . 5,000 $ 79,100 208,625(2) $4,489,379
Richard W. Neu . . . . . . . . . . . . . . . 7,236 124,320 169,705(3) 3,539,734/
30,960 393,569
John D. Koch . . . . . . . . . . . . . . . . 30,000 553,350 89,813(4) 1,800,197
Mark D. Grossi . . . . . . . . . . . . . . . - - 42,894(5) 845,635
Robert J. Vana . . . . . . . . . . . . . . . 15,000 357,769 29,438(6) 396,360
<FN>
___________________
(1) The value of the SARs at fiscal year end was determined in accordance
with the terms of the Stock Plan which provides that the value of the
SARs will appreciate at a maximum level of $1.333 per year from date of
grant. The value of the options at fiscal year end was determined by
subtracting the exercise price from the market value of the underlying
securities on December 29, 1995, which was $30.625 per share and
multiplying the same by the number of options.
(2) Amount reported includes 28,125 SARs.
(3) Represents options granted under the FirstFed Stock Option Plan, which
Plan has been maintained by the Company in connection with the Merger.
Options to purchase FirstFed common stock were converted to options to
purchase the Company's common stock at a 1.2 share exchange rate;
however, all other terms of the FirstFed Stock Option Plan were
unchanged.
(4) Amount reported includes 14,063 SARs.
(5) Represents options granted under the First American BanCorp Stock
Option Plan, which Plan has been maintained by the Company in
connection with the merger of First American Savings Bank into the
Bank. Options to purchase First American BanCorp stock were converted
to options to purchase the Company's stock; however, all other terms of
the First American BanCorp Stock Option Plan were unchanged.
(6) Amount reported includes 8,438 SARs.
</TABLE>
PENSION PLANS
The Bank previously maintained a tax qualified defined benefit pension
plan (the "Pension Plan') for the benefit of salaried employees. The Bank
elected to freeze the Pension Plan Benefit as of April 30, 1994, in connection
with the termination of the Pension Plan. Distribution of all Pension Plan
assets to the Plan Participants occurred during 1995. Amounts distributed to
Charles John Koch, John D. Koch, Mark D. Grossi and Robert J. Vana were
$6,964, $6,964, $43,384, and $4,848, respectively.
As part of the Merger, the Company and FirstFed agreed to a number of
changes that affected retirement benefit plans. FirstFed's tax qualified
defined benefit pension plan (the "FirstFed Pension Plan"), FirstFed's existing
supplemental executive retirement plan and the Company's salary continuation
agreements were to be terminated. It
8
<PAGE> 11
was further agreed that a new supplemental executive retirement plan
("SERP") would be put in place for executive officers of the Company.
As of October 31, 1995, the date the Merger was effective, the FirstFed
Pension Plan was amended to freeze benefits in anticipation of termination.
The Company assumed the obligations under the FirstFed Plan at that date.
Distribution of all Plan assets is anticipated during 1996. The amount of each
distribution is a function of the Plan's benefit formula and actuarial
determination of the value of the Plan assets. The Plan formula provides for
benefits based on the participant's years of service and base salary for the
highest consecutive 60-month period. At the time the Plan was frozen, Richard
W. Neu had accrued nine years of service and, based on the Plan formula, would
have been entitled to a monthly benefit of $3,001 at normal retirement age.
The Company's salary continuation agreements with Charles John Koch,
John D. Koch, and Robert J. Vana were terminated as was FirstFed's supplemental
executive retirement plan effective October 31, 1995. Termination of
FirstFed's plan accelerated benefits under the plan, resulting in a
distribution to Richard W. Neu of $33,352. There were no distributions as a
result of the termination of the salary continuation agreements with the
Company.
The new SERP became effective on October 31, 1995 for Charles John
Koch, Richard W. Neu, John D. Koch, Mark D. Grossi and Robert J. Vana. The
SERP is a nonqualified salary continuation program designed to provide monthly
benefits upon retirement. The amount of benefits is a function of years of
service and the highest three years of total compensation. Annual benefits
under the SERP are capped at $400,000 for Charles John Koch and John D. Koch,
and at $250,000 for Messrs. Neu, Grossi and Vana. As of December 31, 1995, the
monthly benefits that would be paid at normal retirement age would be $14,163,
$3,204, $4,097, $2,072, and $2,061 for Charles John Koch, Richard W. Neu, John
D. Koch, Mark D. Grossi and Robert J. Vana, respectively.
EMPLOYMENT AGREEMENTS
Effective October 31, 1995, the Bank entered into employment agreements
(the "Agreements") with Charles John Koch, John D. Koch, Mark D. Grossi,
Richard W. Neu and Robert J. Vana. The Agreements provide for an initial term
of five years, with one-year extensions of the term annually on October 31
beginning in 1998, unless the officer receives notice that such term will not
be extended and receives an unsatisfactory performance review from the Company
or the Bank Boards of Directors.
The Agreements provide for an annual base salary in an amount not less
than the executive's base salary as of October 31, 1995, subject to reduction
for amounts paid to the executive by any Company subsidiary. The Agreements
also entitle each executive to participate in an equitable manner with all
other executive officers in such performance-based and discretionary bonuses,
if any, as are authorized and declared by the Company or the Bank Boards of
Directors, and in the Bank's employee benefit, fringe benefit and welfare plans
and programs.
In the event an executive experiences an involuntary termination of
employment during the term of his Agreement, and the executive has offered to
continue to provide services as contemplated by his Agreement, the Agreement
obligates the Bank to pay the executive, during the lesser period of the
remaining term of the Agreement or three years following the date of
termination, monthly payments equal to one-twelfth of his annual base salary in
effect immediately prior to the date of termination and one-twelfth of the
average annual amount of cash bonus and cash incentive compensation of the
executive for the two full fiscal years preceding the date of termination. The
payments as described above will be reduced by any cash compensation actually
paid to the executive by Charter One's subsidiaries during the three-year
period following termination, as well as amounts received by the executive for
services other than to Charter One or Charter One's subsidiaries during the
unexpired term of his Agreement or the three-year period following termination.
In the event an executive experiences an involuntary termination of
employment within 12 months preceding or 24 months following a "change in
control" (as defined in the Agreements), the Agreements require Charter One, in
addition to its other payment obligations under the Agreements, to make a lump
sum payment to the executive in an amount equal to up to 299% of the
executive's "base amount" as determined under Section 280G of the Internal
Revenue Code. Based on current salaries, if Charles John Koch, Richard W. Neu,
John D. Koch, Mark D. Grossi or Robert J. Vana had terminated their employment
as of March 8, 1996 under circumstances entitling them to severance pay as
described above, they would have been entitled to receive lump sum cash
payments of $1,683,770, $1,224,459, $1,192,742, $1,070,189 and $967,885,
respectively.
9
<PAGE> 12
1995 COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Charter One Financial, Inc. (the "Company") is a unitary savings and
loan holding company which directly owns all of the outstanding capital stock
of Charter One Bank, F.S.B. (the "Bank"). The Company's business has consisted
primarily of the business of the Bank and its subsidiaries. The financial
results of the Company are a direct function of the Bank's achievement of its
goals as set forth in its annual business plan. Executives are compensated for
their contribution to the achievement of these goals which benefit the
shareholders, customers, employees and the communities in which the Bank
operates.
The Company's Compensation Committee (the "Committee") is composed
exclusively of outside directors. The Committee is dedicated to the philosophy
of linking executive pay to achievement of the Bank's goals and the resulting
performance of the Company. The Committee reviews all issues pertaining to
executive compensation and submits its recommendations to the full Board of
Directors for approval.
EXECUTIVE COMPENSATION PHILOSOPHY
The Executive Compensation Program ("Program") is designed to guide the
Compensation Committee in formulating an appropriate compensation structure for
senior management. Its overall objective is to align senior management
compensation with the goals of the Bank's annual business plan by creating
strong incentives to manage the business successfully from both a financial and
operating perspective. The Program, which is administered by the Committee, is
structured to accomplish the following specific objectives:
1) Maintain a program which:
a) clearly motivates personnel to perform and succeed according
to the goals outlined in the Bank's annual business plan;
b) retains key personnel critical to the long-term success of
the Bank; and
c) emphasizes formula-based components, such as incentive
plans, in order to better focus management efforts in its
execution of the Bank's annual business plan.
2) Maintain pay for performance as an integral component of the
Program by utilizing incentive plans that emphasize corporate
success;
3) Continue to incorporate compensation elements such as stock
options which clearly align the interests of management with those
of the shareholders;
4) Maintain a corporate environment which encourages stability and a
long-term focus for both the Bank and its management; and
5) Ensure that management:
a) fulfills its overall responsibility to its constituents,
including shareholders, customers, employees, the community
and government regulatory agencies;
b) conforms its business conduct to the highest ethical
standards;
c) remains free from any influences that could impair or appear
to impair the objectivity and impartiality of its judgments
or treatment of the Bank's constituents; and
d) continues to avoid any conflict between its responsibilities
to the Bank and each member's personal interests.
Achievement of these objectives should result in a compensation
structure that reasonably tracks the total performance of the Bank.
10
<PAGE> 13
The Program's compensation elements include base salary as well as
incentive plans. The incentive plans have been designed to reflect
corporate performance, individual performance, and alignment with the
interests of the Company's shareholders.
The Committee relies upon survey market research to determine and
maintain a relevant peer group (the "peer group") for total corporate
performance, for base salary comparison and for incentive compensation
comparison. The peer group survey is somewhat unique in that it looks to total
corporate performance and the relationship between performance, base pay and
incentive compensation. The resulting peer group is national in scope,
covering all 16 publicly traded savings institutions with assets between $5
billion and $20 billion and six selected banks, principally in the Midwest,
with assets in that range. The Committee believes the peer group is
representative of the Company's competitors for business, personnel recruitment
and compensation. Performance comparisons include rankings based on return on
average equity, return on average assets, efficiency ratio, nonperforming
assets over average assets, tangible equity over assets, the risk-based capital
ratio and total return on the company's stock price. Compensation data
utilized for comparisons is generally annual cash compensation including base
salary and most forms of cash bonus and annual incentive awards.
BASE SALARY
Base salary forms the foundation of the Bank's compensation program as
it represents income not at risk. The Committee believes that base salary
should function as an anchor: large enough that the executive is comfortable
remaining in the Bank's employ, but not so large as to conflict with the
executive's motivation to work hard to increase shareholder value. An
individual's base salary is directly related to his or her position scope, job
responsibilities, accountabilities, performance and contribution to the Bank.
In general, the base salary of each executive officer is intentionally set
below the median of the peer group. However, superior Company or individual
performance should result in incentive compensation which, when combined with
base salary, would place overall compensation above that of the peer group
median.
INCENTIVE PLANS
Executive Incentive Goal Achievement Plan (the "EIGAP"). The purpose of
the Bank's EIGAP is to achieve the following objectives:
1) promote stability and the achievement of the Bank's profitability
and business goals;
2) link executive compensation to specific Bank objectives and
individual goals;
3) provide a competitive reward structure for senior officers and
other key employees; and
4) encourage involvement and communication regarding Bank strategic
plans.
Eligibility is normally limited to those management positions where the
functional responsibility encompasses the establishment of the Bank's strategic
direction and long-range plans, or operating results at the divisional level.
Other selected employees may also be eligibile to participate as defined by
competitive compensation practices within the Bank's labor market.
All awards are established as a percentage of each participant's base
salary. Award levels differ due to the varying amount of impact on the Bank's
success. Participants earn awards by personally achieving their individual
goals and assisting the Bank in achieving its overall objectives. Awards are
weighted between Bank objectives and individual goals and vary by participant
level. The more control and influence a participant has on either Bank
objectives or individual goals, the greater the participant's weighting on that
particular factor. Individual goals and Bank objectives are established at the
beginning of each year. Bank objectives are established by the CEO and the
Committee. All measures under the EIGAP remain in effect for the entire year.
Should individual performance and goal achievement meet expectations
but the Bank fails to achieve certain of its objectives, no incentive award
will be made to any participant. Additionally, if the Bank achieves all of its
objectives but a participant's performance and/or goal achievement fails to
meet expectations, no incentive award will be made to that participant.
11
<PAGE> 14
Stock Options. At least annually, the Committee reviews the
appropriateness of granting stock options to senior management. The purposes
of this long-term element of the Program are to:
1) provide an incentive to key employees to promote the success of
the business;
2) provide key officers with a long-term incentive to increase
shareholder value;
3) encourage ownership rights through purchase of common stock; and
4) attract and retain the best available personnel.
In the past, the Committee has been careful to grant options based on
an individual's performance and impact on the Bank's financial results. All
options have a term of 10 years and all previous grants have contained
substantial vesting requirements (usually three years). This element of the
Program also clearly aligns the executive with corporate and shareholder
objectives.
Federal Income Tax Limitations. Commencing with the Company's tax year
beginning January 1, 1994, Section 162(m) of the Internal Revenue Code
generally limits to $1 million the Company's federal income tax deduction for
compensation paid in any year to its Chief Executive Officer and each of its
four highest paid executive officers, to the extent that such compensation is
not "performance-based compensation", within the meaning of Section 162(m).
Although it is unlikely that an executive's level of compensation will exceed
$1 million, if an executive exercises sufficient stock options it is possible
for the executive's compensation to exceed $1 million. Accordingly, in
structuring the Company's compensation arrangements with its highest paid
executive officers, the Committee attempted to provide incentive formulas that
qualify as "performance-based compensation" under Section 162(m) in order to
decrease the after-tax cost of such arrangements to the Company.
COMPANY PERFORMANCE AND EXECUTIVE PAY
Base Salary for 1995. Approximately half of the potential compensation of
Charles John Koch (the "CEO") is based upon the Company's Incentive Plan and,
therefore, is dependent upon specific Company achievements in any given year.
The balance of the CEO's annual compensation is primarily his base salary which
is established by the Committee after consideration of his current performance,
his past base salary, comparison of the base salaries within the peer group,
and the overall performance and economic condition of the Company. On April 1,
1995, the Board of Directors, acting on the recommendation of the Committee,
increased the CEO's salary by 5.1%. The increase in base salary was the result
of the CEO's outstanding efforts, evidenced in particular by the following: the
achievement of record earnings during 1994; the continued quality of the Bank's
financial statements; and continued compliance with governmental regulations.
The Committee recognized that national issues influence the value of the
shareholders' interest in the Company and, accordingly, the Committee
considered Mr. Koch's involvement in various committees such as the FDIC SAIF
Fund Advisory Committee and the Federal Reserve Thrift Institutions Advisory
Council. In comparing the CEO's base salary to the peer group, the Committee
found that it fell below the median base salary for the peer group. Base
salary for the CEO is targeted to fall below the median of the peer group
because of the Company's emphasis on incentive compensation for its executives.
Additionally, the Committee reviews the total compensation package of executive
officers to the peer group to ensure that the total package is competitive with
the marketplace. All executive officers, other than Richard W. Neu were also
granted salary increases effective April 1, 1995, based on the Committee's
subjective assessment of the individual's leadership, technical knowledge,
analytical ability, decision making, planning, personnel development and
communication effectiveness and their objective review of the individual
executive's goal achievement for the performance period in areas such as: loan
production, investment return, branch operating efficiency, merger and
acquisition integration, and deposit retention. It is the Committee's
understanding that Mr. Neu's base salary, which was established by FirstFed's
Compensation Committee, was based on comparisons to a similar peer group and a
compensation philosophy similar to that used for the Company.
Bonus Awards for 1995. The EIGAP for 1995 provided for the cash bonus
awarded to Mr. Koch recognizing his contribution to the achievement of the
Bank's annual goals. The Committee reviewed the Bank's performance relative to
the percentage achievement of the goals established in the 1995 Business Plan,
which focused on core earnings, net worth, asset quality, efficiency ratio,
loan origination, deposit growth, and interest rate risk. The Bank exceeded
the financial and operational goals it set for 1995 which resulted in a bonus
to Mr. Koch at the maximum level under the EIGAP. The goals established in the
Bank's annual business plan are designed such that if achieved, the Company's
12
<PAGE> 15
earnings should increase while maintaining the institution's historical
financial soundness. In order to qualify for a bonus, an individual must
achieve at least 50% of his or her preestablished goals, with the individual's
bonus increasing as the achievement percentage increases. Cash bonuses under
the EIGAP were awarded in January 1996. In comparing the CEO's bonus award to
the peer group, the Committee found that bonus earnings were above the average
for the peer group. This finding coincides with Charter One's focus on higher
at risk compensation and lower base compensation to provide a competitive total
compensation package. All executive officers were also awarded cash bonuses
which were functions of the achievement of the Company's aforementioned goals,
in conjunction with the achievement of related individual goals. As to Mr.
Neu, the Committee understands that his bonus payments were based on FirstFed's
1995 performance prior to the Merger and application of performance-based
formulas prescribed in FirstFed's incentive plans.
Submitted by the Compensation Committee
of the Company's Board of Directors
Eugene B. Carroll, Sr. (Chairman)
Denise M. Fugo
Charles M. Heidel
Henry R. Nolte
Victor A. Ptak
Jerome L. Schostak
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, no member of the Compensation Committee of the Company's
Board of Directors was a current or former officer or employee of the Company
or any of its subsidiaries or had a reportable business relationship with the
Company, except as set forth below.
Eugene B. Carroll, Sr., a director and chairman of the Compensation
Committee, is President and Chief Executive Officer of Employer Sponsored
Plans, Inc. ("ESP, Inc.") which provides third-party payment services for the
Company's self-insured medical plan and group life insurance policy. Mr.
Carroll is also President and Chief Executive Officer of Eugene B. Carroll,
CLU, Inc. ("E.B.C., Inc.") which provides, on an agency basis, group life
insurance benefits for the Company. During 1995, ESP, Inc. and/or E.B.C., Inc.
received from the Company fees and commissions in the amount of $99,364 for
services rendered to the Company. Additionally, Charles F. Ipavec, a director
and general counsel to the Company, served on the Compensation Committee until
the Merger. He is President of the law firm of La Porte and Ipavec Co., L.P.A.
("La Porte and Ipavec"). During 1995, La Porte and Ipavec received from the
Company fees in the amount of $100,803 for services rendered to the Company.
COMPARATIVE PERFORMANCE BY THE COMPANY
The following chart compares the Company's common stock with (i) the
S&P 500 Index, and (ii) a selected peer group which includes all publicly
traded thrifts (16 institutions) with an asset size greater than $5 billion and
less than $20 billion as of September 30, 1995 and six selected banks,
principally in the Midwest, with assets in that range(1)(2). The chart assumes
an investment of $100 on January 1, 1991, in each of the Company's common
stock, the S&P 500 Index and the stocks in the selected peer group. Each
year's performance is for the calendar year ended December 31. The overall
performance assumes dividend reinvestment throughout the period.
13
<PAGE> 16
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG CHARTER ONE FINANCIAL, INC., S&P 500 INDEX
AND PEER GROUP INDEX
<TABLE>
<CAPTION>
Charter One
Measurement Period Financial, S&P 500 Selected Peer
(Fiscal Year Covered) Inc. Index Group
<S> <C> <C> <C>
1990 100 100 100
1991 229.91 130.48 190.28
1992 358.15 140.46 270.88
1993 360.43 154.62 297.48
1994 356.88 156.66 285.73
1995 593.88 215.54 448.80
<FN>
______________________
(1) The specific institutions meeting the criteria established for Charter
One's selected peer group consisted of the following: Astoria
Financial Corporation, California Federal Bank, Charter One Financial,
Inc., Coast Savings Financial, Collective Bancorp, Inc., Commercial
Federal Corporation, Dime Bancorp, Inc., Fifth Third Bancorp, First
Financial Corporation, FirstMerit Corporation, Glendale Federal Bank,
Greenpoint Financial Corporation, Old Kent Financial Corporation,
ONBANCorp, Inc., Peoples Bank of Bridgeport, Connecticut, Provident
Bancorp, Inc., Roosevelt Financial Group, Inc., Sovereign Bancorp,
Inc., Standard Federal Bancorporation, Star Banc Corporation, TCF
Financial Corp., and Washington Mutual, Inc.
(2) The criteria used to define the selected peer group are similar to
those FirstFed used in Comparative Performance disclosures prior to the
Merger, except the minimum asset size was increased to $5 billion
reflecting the size of the combined company following the Merger and
publicly traded banks in the Company's geographic region were added to
make the comparison more meaningful. The peer group represented here
is identical to that used for compensation review purposes. The
specific institutions meeting the criteria in 1995 remained the same as
in 1994, with the following exceptions: (1) ten companies, Bay View
Capital, CSF Holdings, Inc., Downey Savings and Loan Association,
FirstFed Financial Corporation, FirstFed Michigan Corporation,
Metropolitan Financial Corporation, Northeast Federal Corp., Rochester
Community Savings Bank, St. Paul Bancorp, Inc., and SFFed Corp., were
removed either for having assets below $5 billion or because they are
no longer publicly traded; and (2) nine companies, Astoria Financial
Corporation, Fifth Third Bancorp, FirstMerit Corporation, Glendale
Federal Bank, Greenpoint Financial Corporation, Old Kent Financial
Corporation, ONBANCorp, Inc., Provident Bancorp, Inc., and Star Banc
Corporation, were added either for increasing assets above $5 billion
or because of expanding the peer group to include banks.
</TABLE>
TRANSACTIONS WITH RELATED PARTIES
Historically, the Bank provided residential mortgage loans to
directors, officers and other employees at reduced interest rates and without
loan fees. Since 1989, only employees and non-executive officers have been
eligible for preferential loans. Loans to directors and executive officers,
and their immediate families, have been made in the ordinary course of business
on substantially the same terms as those prevailing at the time for comparable
transactions with other persons and, when made, have not involved more than the
normal risk of uncollectibility or presented other unfavorable features. No
director or executive officer of the Company or the Bank had a loan with
preferential terms and an outstanding aggregate balance exceeding $60,000 at
any time since January 1, 1995 except Charles John Koch. Mr. Koch is the
borrower on an adjustable-rate loan, originated pursuant to the Bank's lending
policy in 1984, which provides for a rate .83% below current market. At March
8, 1996, the principal balance was $156,218, the rate was 6.57% and the largest
amount outstanding on the loan since January 1, 1995 was $157,666.
Mark Shaevsky, a director, is a partner of the law firm of Honigman
Miller Schwartz and Cohn. The firm has been retained to provide legal services
to the Company regarding the real estate taxation of office properties and
environmental issues. For information regarding other business relationships
between certain directors and the Company, see "Compensation Committee
Interlocks and Insider Participation."
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The firm of Deloitte & Touche LLP served as the Company's independent
auditors for the fiscal year ending December 31, 1995. Representatives of
Deloitte & Touche LLP will be present at the Annual Meeting. They will be
14
<PAGE> 17
given an opportunity to make a statement if they desire to do so and will
be available to respond to the appropriate questions.
The Board of Directors has appointed the firm of Deloitte & Touche LLP
to continue as independent auditors for the Company for the fiscal year ending
December 31, 1996, subject to ratification of such appointment by the
shareholders. Deloitte & Touche LLP has acted as the independent auditors of
the Bank since 1986, and of Charter One since its organization in July 1987.
Unless otherwise indicated, properly executed proxies will be voted in favor of
ratifying the appointment of Deloitte & Touche LLP, independent certified
public accountants, to audit the books and accounts of the Company for the
fiscal year ending December 31, 1996. This proposal requires the affirmative
vote of a majority of the votes actually cast at the Annual Meeting. No
determination has been made as to what action the Board of Directors would take
if the shareholders do not ratify the appointment.
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
TO BE PRESENTED AT 1997 ANNUAL MEETING OF SHAREHOLDERS
Any proposal intended to be presented by any shareholder for action at
the Annual Meeting of Shareholders of the Company must be received by the
Secretary of the Company at 1215 Superior Avenue, Cleveland, Ohio 44114, not
later than November 25, 1996, in order for the proposal to be considered for
inclusion in the proxy statement and proxy relating to the 1997 Annual Meeting.
Nothing in this paragraph shall be deemed to require the Company to include in
its proxy statement and proxy relating to the 1997 Annual Meeting any
shareholder proposal which does not meet all the requirements for inclusion
established by the Securities and Exchange Commission at the time such proposal
is received.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of
Charter One does not know of any other matters to be presented for action by
the shareholders at the 1996 Annual Meeting. If, however, any other matters
not now known are properly brought before the meeting, the persons named in the
accompanying proxy will vote such proxy in accordance with the determination of
a majority of the Board of Directors.
MISCELLANEOUS
The cost of soliciting proxies in the form enclosed herewith will be
borne by the Company. In addition to the solicitation of proxies by mail, the
Company, through its directors, officers and regular employees, may also
solicit proxies personally or by telephone or telegraph. The Company will also
request persons, firms and corporations holding shares in their names or in the
name of their nominees, which are beneficially owned by others, to send proxy
material to, and obtain proxies from, such beneficial owners and will reimburse
such holders for their reasonable expenses in doing so. The Company may engage
a proxy soliciting firm to assist in the solicitation of proxies. The cost of
such a firm would not be expected to exceed $5,000.
A copy of the Annual Report to Shareholders for the fiscal year ended
December 31, 1995 accompanies this Proxy Statement. Such Annual Report to
Shareholders is not to be treated as a part of the proxy solicitation material
or as having been incorporated herein by reference.
FORM 10-K
The Company is required to file an Annual Report for its fiscal year
ended December 31, 1995 on Form 10-K with the Securities and Exchange
Commission. Shareholders may obtain, free of charge, a copy of the Form 10-K
by writing to Robert J. Vana, Secretary, Charter One Financial, Inc., 1215
Superior Avenue, Cleveland, Ohio 44114.
By Order of the Board of Directors
/s/ Charles John Koch
CHARLES JOHN KOCH
Chairman of the Board
Cleveland, Ohio
March 25, 1996
15
<PAGE> 18
REVOCABLE PROXY CHARTER ONE FINANCIAL, INC REVOCABLE PROXY
ANNUAL MEETING, APRIL 17,1996
P PROXY SOLICITED BY BOARD OF DIRECTORS
R
O The undersigned hereby appoints Charles John Koch and Jerome L.
X Schostak, and each of them, proxies with power of substitution to vote on
Y behalf of the shareholders of Charter One Financial, Inc. on April 17,1996,
and any adjournments thereof, with all powers that the undersigned would
possess if personally present, with respect to the following:
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED ON THE
REVERSE HEREOF, BUT IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF DIRECTORS AND FOR APPROVAL OF PROPOSAL NO. 2. THE
PROXIES MAY VOTE IN THEIR DISCRETION AS TO OTHER MATTERS WHICH MAY COME
BEFORE THE MEETING.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT FROM CHARTER ONE FINANCIAL, INC.,
PRIOR TO THE EXECUTION OF THIS PROXY, OF NOTICE OF THE MEETING AND A PROXY
STATEMENT DATED MARCH 25, 1996.
-------------
SEE REVERSE
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE) SIDE
-------------
/ X / Please mark
votes as in
this example.
<TABLE>
<S> <C>
1. Election of Directors FOR AGAINST ABSTAIN
Nominees: Charles M. Heidel, Charles F. Ipavec, 2. Voting on selection of / / / / / /
Richard W. Neu, Victor A. Ptak and Deloitte & Touche LLP as
Eresteen R. Williams Independent Auditors of
the Company.
FOR WITHHELD
/ / / / 3. Transaction of such other business as may properly come before
the meeting and any adjournments thereof.
--------------------------------------
For all nominees except as noted above MARK HERE
FOR ADDRESS / /
CHANGE AND
NOTE AT LEFT
A majority of the proxies or substitutes present at the meeting
may exercise all powers granted hereby.
Please date and sign as name is imprinted hereon, including
designation as executor, trustee, etc. If applicable, a
corporation should sign in its name by the president or other
authorized officers. All co-owners must sign.
Signature: Date: Signature: Date:
----------------------------- ----------- --------------------------------- -------------
</TABLE>
<PAGE> 19
CHARTER ONE FINANCIAL, INC. ESOP
1996 ANNUAL MEETING OF SHAREHOLDERS
P
R THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CHARTER ONE
0 FINANCIAL, INC. FOR THE 1996 ANNUAL MEETING OF SHAREHOLDERS
X
Y
As a participant in the Charter One Bank Employee Stock Ownership Plan
(the "Plan"), I hereby direct the trustee of the Plan in which I participate
to vote all vested shares allocated to my account under such Plan as of
March 8, 1996 in accordance with the instructions on the reverse side of
this proxy card or, if no instructions are given, in accordance with the
Board of Directors recommendations, on all items of business to come before
the Annual Meeting of Shareholders to be held on April 17, 1996 or any
adjournment thereof. Your vote shall be confidential and will be seen only
by The First National Bank of Boston in the tabulation of votes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS
AND FOR ITEM 2.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT FROM CHARTER ONE FINANCIAL, INC.,
PRIOR TO THE EXECUTION OF THIS PROXY, OF NOTICE OF THE MEETING AND A PROXY
STATEMENT DATED MARCH 25, 1996.
--------------
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE) SEE REVERSE
SIDE
--------------
/ X / Please mark
votes as in
this example.
<TABLE>
<S> <C>
1. Election of Directors FOR AGAINST ABSTAIN
Nominees: Charles M. Heidel, Charles F. Ipavec, 2. Voting on selection of / / / / / /
Richard W. Neu, Victor A. Ptak and Deloitte & Touche LLP as
Eresteen R. Williams Independent Auditors of
the Company.
FOR WITHHELD
/ / / / 3. Transaction of such other business as may properly come before
the meeting and any adjournments thereof.
--------------------------------------
For all nominees except as noted above MARK HERE
FOR ADDRESS / /
CHANGE AND
NOTE AT LEFT
A majority of the proxies or substitutes present at the meeting
may exercise all powers granted hereby.
Please date and sign as name is imprinted hereon, including
designation as executor, trustee, etc. If applicable, a
corporation should sign in its name by the president or other
authorized officers. All co-owners must sign.
Signature: Date: Signature: Date:
----------------------------- ----------- --------------------------------- -------------
</TABLE>
<PAGE> 20
CHARTER ONE FINANCIAL, INC. 401K
1996 ANNUAL MEETING OF SHAREHOLDERS
P
R THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CHARTER ONE
O FINANCIAL, INC. FOR THE 1996 ANNUAL MEETING OF SHAREHOLDERS
X
Y
As a participant in the Charter One Bank Employee Savings Plan (the
"Plan"), I hereby direct the trustee of the Plan in which I participate to
vote all vested shares allocated to my account under such Plan as of March
8, 1996 in accordance with the instructions on the reverse side of this
proxy card or, if no instructions are given, in accordance with the Board of
Directors recommendations, on all items of business to come before the
Annual Meeting of Shareholders to be held on April 17, 1996 or any
adjournment thereof. Your vote shall be confidential and will be seen only
by The First National Bank of Boston in the tabulation of the votes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS
AND FOR ITEM 2.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT FROM CHARTER ONE FINANCIAL, INC.,
PRIOR TO THE EXECUTION OF THIS PROXY, OF NOTICE OF THE MEETING AND A PROXY
STATEMENT DATED MARCH 25, 1996.
--------------
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE) SEE REVERSE
SIDE
--------------
/ X / Please mark
votes as in
this example.
<TABLE>
<S> <C>
1. Election of Directors FOR AGAINST ABSTAIN
Nominees: Charles M. Heidel, Charles F. Ipavec, 2. Voting on selection of / / / / / /
Richard W. Neu, Victor A. Ptak and Deloitte & Touche LLP as
Eresteen R. Williams Independent Auditors of
the Company.
FOR WITHHELD
/ / / / 3. Transaction of such other business as may properly come before
the meeting and any adjournments thereof.
--------------------------------------
For all nominees except as noted above MARK HERE
FOR ADDRESS / /
CHANGE AND
NOTE AT LEFT
A majority of the proxies or substitutes present at the meeting
may exercise all powers granted hereby.
Please date and sign as name is imprinted hereon, including
designation as executor, trustee, etc. If applicable, a
corporation should sign in its name by the president or other
authorized officers. All co-owners must sign.
Signature: Date: Signature: Date:
----------------------------- ----------- --------------------------------- -------------
</TABLE>
