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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
WINTON FINANCIAL CORPORATION
(Name of Registrant as Specified In Its Charter)
-------------------------------------------------------------------------
(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 O-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 O-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 O-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>
WINTON FINANCIAL CORPORATION
5511 Cheviot Road
Cincinnati, Ohio 45247
(513) 385-3880
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders of Winton
Financial Corporation ("WFC") will be held at Shuller's Wigwam Restaurant, 6210
Hamilton Ave., Cincinnati, Ohio 45224, on January 29, 1999, at 10:00 a.m.,
Eastern Standard Time (the "Annual Meeting"), for the following purposes, all of
which are more completely set forth in the accompanying Proxy Statement:
1. To reelect three directors of WFC for terms expiring in 2002;
2. To consider and vote upon a proposed amendment to Article Fourth of
the amended Articles of Incorporation of WFC to increase the
authorized number of shares from 7,000,000 to 20,000,000, 18,000,000
of which will be common shares, each without par value, and 2,000,000
of which will be preferred shares, each without par value;
3. To consider and vote upon the Winton Financial Corporation 1999 Stock
Option and Incentive Plan, a copy of which is attached hereto as
Exhibit A;
4. To consider and vote upon the ratification of the selection of Grant
Thornton LLP as the auditors of WFC for the current fiscal year; and
5. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Only shareholders of WFC of record at the close of business on December 11,
1998, 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 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
Cincinnati, Ohio Robert L. Bollin
December 28, 1998 President
<PAGE>
WINTON FINANCIAL CORPORATION
5511 Cheviot Road
Cincinnati, Ohio 45247
(513) 385-3880
PROXY STATEMENT
PROXIES
The enclosed Proxy is being solicited by the Board of Directors of Winton
Financial Corporation, an Ohio corporation ("WFC"), for use at the 1999 Annual
Meeting of Shareholders of WFC to be held at Shuller's Wigwam Restaurant, 6210
Hamilton Ave., Cincinnati, Ohio 45224, on January 29, 1999, at 10:00 a.m.,
Eastern Standard Time, and at any adjournments thereof (the "Annual Meeting").
Without affecting any vote previously taken, the Proxy may be revoked by a
shareholder before exercise by executing a later-dated Proxy or by giving notice
of revocation to WFC in writing or in open meeting. 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 reelection of Messrs. Robert E. Hoeweler, Timothy M. Mooney and J.
Clay Stinnett as directors of WFC for terms expiring in 2002;
FOR the adoption of an amendment to Article Fourth of the amended Articles
of Incorporation of WFC (the "Amended Articles") to increase the authorized
number of shares from 7,000,000 to 20,000,000, 18,000,000 of which will be
common shares, each without par value, and 2,000,000 of which will be
preferred shares, each without par value (the "Amendment");
FOR the approval of the Winton Financial Corporation 1999 Stock Option and
Incentive Plan (the "1999 Stock Option Plan"), a copy of which is attached
hereto as Exhibit A; and
FOR the ratification of the selection of Grant Thornton LLP ("Grant
Thornton") as the auditors of WFC for the current fiscal year.
Proxies may be solicited by the directors, officers and other employees of
WFC and The Winton Savings and Loan Co., the wholly-owned subsidiary of WFC
("Winton"), in person or by telephone, telegraph, telecopy or mail. WFC may
reimburse brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy materials to beneficial
owners. The cost of soliciting proxies will be borne by WFC.
Only shareholders of record as of the close of business on December 11,
1998 (the "Voting Record Date"), are eligible to vote at the Annual Meeting and
will be entitled to cast one vote for each share of WFC (the "Common Shares")
owned. WFC's records disclose that, as of the Voting Record Date, there were
4,015,304 votes entitled to be cast at the Annual Meeting.
This Proxy Statement is first being mailed to shareholders of WFC on or
about December 28, 1998.
<PAGE>
VOTE REQUIRED
Election of Directors
Under Ohio law and the Code of Regulations of WFC (the "Regulations"), the
three nominees receiving the greatest number of votes will be elected as
directors. Common Shares as to which the authority to vote is withheld and
shares held by a nominee for a beneficial owner that are represented in person
or by proxy at the Annual Meeting, but not voted with respect to the election of
directors ("Non-votes"), are not counted toward the election of directors or
toward 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 Common Shares held by such shareholder will be voted FOR the reelection of
the three nominees.
Adoption of Amendment, Approval of 1999 Stock Option Plan and Ratification of
Selection of Auditors
The affirmative vote of the holders of at least a majority of the
outstanding Common Shares, voting in person or by proxy, is necessary to approve
the Amendment and the 1999 Stock Option Plan and to ratify the selection of
Grant Thornton as the auditors of WFC for the current fiscal year. The effect of
an abstention or a Non-vote is the same as a vote against the Amendment, against
the 1999 Stock Option Plan and against ratification. If the accompanying Proxy
is signed and dated by the shareholder, but no vote is specified thereon, the
Common Shares held by such shareholder will be voted FOR the adoption of the
Amendment, FOR the approval of the 1999 Stock Option Plan and FOR the
ratification of the selection of Grant Thornton as auditors.
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 WFC to own beneficially more than five percent of the Common
Shares as of December 1, 1998:
<TABLE>
<CAPTION>
Amount and Nature Percentage of Common
Name and Address of Beneficial Ownership (1) Shares Outstanding (2)
- ---------------- ----------------------- --------------------
<S> <C> <C>
Star Bank, N.A., as Trustee 321,992 (3) 8.02%
P.O. Box 1118
Cincinnati, Ohio 45201
Daniel P. Randolph 239,608 (4) 5.97%
Suite 700
105 East Fourth Street
Cincinnati, Ohio 45202
Henry L. Schulhoff 289,800 (5) 7.13%
7 West Seventh Street
Cincinnati, Ohio 45202
</TABLE>
- -----------------------------
(1) A person is the beneficial owner of Common Shares if such person, directly
or indirectly, has sole or shared voting or investment power over such
shares directly or indirectly or has the right to acquire such voting or
investment power within 60 days. All Common Shares are owned directly with
sole voting or investment power, unless otherwise indicated by footnote.
All stock options granted under the Winton Financial Corporation Stock
Option and Incentive Plan, as amended (the "1988 Option Plan"), are
currently exercisable.
(2) For each person, assumes a total of 4,015,304 Common Shares outstanding,
plus the number of Common Shares such person may acquire pursuant to the
1988 Option Plan, if any.
(Footnotes continue on next page)
2
<PAGE>
(3) The Common Shares are held by Star Bank, N.A., as trustee under The Winton
Financial Corporation Employee Stock Ownership Plan (the "ESOP"). Star
Bank, N.A., has investment power with respect to all of such common shares
and voting power with respect to the unallocated common shares.
(4) Based on a Schedule 13G filed with the Securities and Exchange Commission
by Daniel P. Randolph. Includes 42,144 Common Shares held by Daniel P.
Randolph in an individual retirement account; 178,164 Common Shares owned
as trustee under a trust for the benefit of R. Irene Randolph; 10,800
Common Shares owned as trustee under a trust for the benefit of Ronald I.
Oldiges; and 8,500 Common Shares owned as trustee under a trust for the
benefit of Charles Randolph.
(5) Includes 50,000 Common Shares that may be acquired upon the exercise of
options; 17,600 Common Shares owned by Mr. Schulhoff's spouse as to which
Mr. Schulhoff disclaims beneficial ownership; and 14,200 Common Shares
owned by Schulhoff & Company, Inc., a corporation of which Mr. Schulhoff is
a major shareholder.
The following table sets forth certain information with respect to the
number of Common Shares beneficially owned by each director of WFC and by all
directors and executive officers of WFC as a group as of December 1, 1998:
<TABLE>
<CAPTION>
Amount and Nature of Percent of Common
Name and Address (1) Beneficial Ownership (2) Shares Outstanding (3)
- ----------------- --------------------- -------------------
<S> <C> <C>
Robert J. Bollin 92,940 (4) 2.29%
Robert L. Bollin 193,508 (5) 4.73
Robert E. Hoeweler 181,200 (6) 4.46
Thomas H. Humes 12,000 (7) 0.30
Timothy M. Mooney 12,000 (8) 0.30
William J. Parchman 181,835 (9) 4.48
Henry L. Schulhoff 289,800 (10) 7.13
J. Clay Stinnett 11,000 (11) 0.27
All directors and executive officers
of WFC as a group (12 persons) 1,290,789 (12) 29.15%
</TABLE>
(1) Each of the persons listed in this table may be contacted at the address of
WFC, 5511 Cheviot Road, Cincinnati, Ohio 45247.
(2) A person is the beneficial owner of Common Shares if such person, directly
or indirectly, has sole or shared voting or investment power over such
shares directly or indirectly or has the right to acquire such voting or
investment power within 60 days. All Common Shares are owned directly with
sole voting and investment power, unless otherwise indicated by footnote.
All stock options granted under the 1988 Option Plan are currently
exercisable.
(3) For each person, assumes a total of 4,015,304 Common Shares outstanding,
plus the number of Common Shares such person may acquire pursuant to the
1988 Option Plan, if any.
(4) Includes 40,000 Common Shares that may be acquired upon the exercise of
options and 52,940 Common Shares held in the individual retirement account
of Robert J. Bollin, the trustee of which is A. G. Edwards, Inc.
(5) Includes 80,000 Common Shares that may be acquired upon the exercise of
options; 37,453 Common Shares held for the benefit of Robert L. Bollin in
The Winton Savings and Loan Co. Cash and Deferred Plan (the "Deferred
Plan"), the trustees of which are James W. Brigger, Robert L. Bollin and
Mary Ellen Lovett, executive officers of WFC; 34,415 Common Shares held for
the benefit of Robert L. Bollin in the ESOP; 1,360 Common Shares held by
the individual retirement account of Robert L. Bollin, the trustee of which
is Merrill Lynch; 36,080 Common Shares held jointly with Mr. Bollin's
spouse; 4,000 Common Shares held by A. G. Edwards, Inc., for the benefit of
Elaine Bollin; and 200 Common Shares held by Elaine Bollin as custodian for
Anthony Bollin.
(Footnotes continue on next page)
3
<PAGE>
(6) Includes 50,000 Common Shares that may be acquired upon the exercise of
options; 51,600 Common Shares held jointly with Mr. Hoeweler's spouse;
39,800 Common Shares owned as trustee under a trust for the benefit of
Brian Hoeweler; and 39,800 Common Shares owned as trustee under a trust for
the benefit of Jennifer Hoeweler.
(7) Includes 10,000 Common Shares that may be acquired upon the exercise of an
option and 2,000 Common Shares held by Prudential Securities for the
benefit of Thomas H. and Marcia Humes.
(8) Includes 10,000 Common Shares that may be acquired upon the exercise of an
option and 2,000 Common Shares held by PaineWebber for the benefit of
Timothy M. Mooney.
(9) Includes 40,000 Common Shares that may be acquired upon the exercise of
options; 114,480 Common Shares held in the individual retirement account of
William J. Parchman, the trustee of which is Alex Brown & Sons, Inc.; and
14,075 Common Shares owned by Mr. Parchman's spouse.
(10) Includes 50,000 Common Shares that may be acquired upon the exercise of
options; 17,600 Common Shares owned by Mr. Schulhoff's spouse, as to which
Mr. Schulhoff disclaims beneficial ownership; and 14,200 Common Shares
owned by Schulhoff & Company, Inc., a corporation of which Mr. Schulhoff is
a major shareholder.
(11) Includes 10,000 Common Shares that may be acquired upon the exercise of an
option and 1,000 Common Shares held by Merrill Lynch for the benefit of J.
Clay Stinnett.
(12) Includes 414,000 Common Shares that may be acquired upon the exercise of
options and 111,135 Common Shares held in the ESOP.
PROPOSAL ONE - REELECTION OF DIRECTORS
The Regulations provide for a Board of Directors consisting of nine
persons, divided into three classes of three directors each. Each class serves
for a three-year period. Each of the directors of WFC is also a director of
Winton.
The entire Board of Directors of WFC acts as a nominating committee for
selecting nominees for election as directors. In accordance with Section 2.03 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 WFC by the later of the
February 1st 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
owned either beneficially or of record by each such nominee and the length of
time such Common Shares have been so owned.
The Board of Directors proposes the reelection of the following directors
to terms which will expire in 2002:
<TABLE>
<CAPTION>
Name Age (1) Position(s) Held Director Since
---- ---- ---------------- --------------
<S> <C> <C> <C>
Robert E. Hoeweler 51 Director 1989
Timothy M. Mooney 51 Director 1996
J. Clay Stinnett 47 Director 1996
</TABLE>
- -----------------------------
(1) As of December 1, 1998.
If any nominee is unable to stand for election, the Proxies will be voted
for such substitute as the Board of Directors recommends. At this time, the
Board of Directors knows of no reason why any nominee would be unable to serve
if elected. No shareholder may cumulate votes in the election of directors.
There is presently one vacancy on the Board of Directors in the class of
directors which will stand for election in January 2000, which resulted from the
decision of a director not to stand for re-election in 1997.
4
<PAGE>
The following directors will continue to serve after the Annual Meeting for
the terms indicated:
<TABLE>
<CAPTION>
Position(s) Director Term
Name Age(1) Held Since Expires
<S> <C> <C> <C> <C>
Robert J. Bollin (2) 76 Director 1989 2001
Robert L. Bollin (2) 46 Director and President 1989 2000
Thomas H. Humes 49 Director 1996 2001
William J. Parchman 79 Director and 1989 2000
Chairman of the Board
Henry L. Schulhoff 54 Director 1989 2001
</TABLE>
- -----------------------------
(1) As of December 1, 1998.
(2) Robert L. Bollin, a director and the President of WFC, is the son of Robert
J. Bollin, a director of WFC, and a brother of Gregory J. Bollin, a Vice
President of WFC.
Robert E. Hoeweler was elected to the Board of Directors of Winton in 1988.
Mr. Hoeweler is a certified public accountant. Since 1972, Mr. Hoeweler has been
active in the management of a group of family-owned companies which includes
Aluminum Extruded Shapes, Inc.
Timothy M. Mooney has served as Vice President and Chief Financial Officer
of Kendle International Inc., a clinical research organization in Cincinnati,
since 1996. From 1994 to 1995, he served as Vice President, Chief Financial
Officer and Treasurer of The Future Now, Inc., a computer reseller located in
Cincinnati. From 1988 to 1994, Mr. Mooney served as Senior Vice President and
Chief Financial Officer of Hook-SupRx, Inc., a retail drug store chain.
J. Clay Stinnett has served since 1993 as President and a director of J.R.
Concepts, Inc., a direct mail advertising company in Cincinnati. Prior to 1993,
Mr. Stinnett spent almost 20 years in the banking business, including serving as
President and Chief Operating Officer of PNC Bank, N.A. (formerly The Central
Trust Co., N.A.), until 1992.
Robert J. Bollin began his banking career in 1947 as an office manager for
Cincinnati Federal Savings Association in Price Hill. He then moved to the
O'Bryonville Savings and Loan Association, where he served as Assistant
Secretary and Chief Executive Officer. In 1955, Mr. Bollin joined Winton as
Secretary and Chief Executive Officer. He has since retired from his positions
as Secretary and Chief Executive Officer, but still participates in Winton's
business as a Vice President and an appraiser of construction loans. Mr. Bollin
has been active in the McAuley High School Development Board and the LaSalle
High School Advisory Board.
Robert L. Bollin has been the President and a director of Winton since 1988
and the President and a director of WFC since incorporation in November 1989.
Mr. Bollin joined Winton in 1969, initially working part time while completing a
degree in Business Management at Miami University. In 1979, he was promoted to
Secretary and Assistant Managing Officer of Winton, responsible for managing
Winton's accounting operations, developing and implementing Winton's investment
policy in consultation with the Board of Directors and managing the day-to-day
operations of Winton.
Thomas H. Humes has served as President of Great Traditions Land and
Development Co., a real estate and land development company in Cincinnati, for
the past six years.
William J. Parchman has served as a director of Winton for 43 years. A
graduate of the University of Cincinnati, he received his law degree and was
admitted to the practice of law in Ohio in 1949. Mr. Parchman was the founder of
Parchman & Oyler Company Realtors which, at its peak, was Cincinnati's
largest
residential real estate company. Mr. Parchman served as National Alumni
President of the University of Cincinnati and more recently as Chairman of the
Board of the University of Cincinnati Foundation. He was also a director of the
Cincinnati Metropolitan Housing Authority for 18 years, past president of the
Cincinnati Board of Realtors and President of Clovernook Country Club. Mr.
Parchman was the first recipient of the Carl H. Lindner Medal for Outstanding
Business Achievement presented by the College of Business Administration Alumni
Association, University of Cincinnati.
5
<PAGE>
Henry L. Schulhoff became a director of Winton in February 1988. Since
1976, Mr. Schulhoff has been the President of
Schulhoff and Company, Inc., a local investment counseling firm.
Meetings of Directors
The Board of Directors of WFC met 12 times for regularly scheduled and
special meetings during the fiscal year ended September 30, 1998. Each director
attended at least 75% of the aggregate of such meetings.
The Board of Directors of Winton met 12 times for regularly scheduled and
special meetings during the fiscal year ended September 30, 1998. Each director
attended at least 75% of the aggregate of such meetings.
Committees of Directors
The Board of Directors of WFC has no standing committees. Nominations for
election of directors are determined by the entire Board of Directors. See
"Election of Directors."
The committees of the Board of Directors of Winton includes an Audit
Committee, an Executive Committee, a Loan Committee, a Compensation Committee,
an ESOP Committee and a Stock Option Committee. Each director attended at least
75% of the aggregate of all meetings of each committee on which he served as a
regular member.
The members of Winton's Audit Committee are Thomas H. Humes, Timothy M.
Mooney and J. Clay Stinnett. The function of the Audit Committee is to
communicate with WFC outside auditors and to recommend to the Board of Directors
a firm of accountants to serve as independent auditors for WFC. The Audit
Committee met twice during the fiscal year ended September 30, 1998.
The members of the Executive Committee are Robert L. Bollin, Robert E.
Hoeweler, William J. Parchman and Henry L. Schulhoff. The function of the
Executive Committee is to examine, together with management, levels and methods
of investment, to review and evaluate alternative and additional investment
programs and to consider and establish interest rates on the various forms of
savings deposits and mortgage loans. The Executive Committee met 32 times during
the fiscal year ended September 30, 1998.
Winton's Loan Committee is comprised of Robert J. Bollin, William J.
Parchman and Henry L. Schulhoff. Robert L. Bollin serves as alternate. The
function of the Loan Committee is to approve loan applications and exercise the
authority of the Board of Directors when the Board is not in session, subject to
certain limitations. The Loan Committee met 37 times during the fiscal year
ended September 30, 1998.
Winton's Compensation Committee consists of Thomas H. Humes, Timothy M.
Mooney and J. Clay Stinnett. The function of the Compensation Committee is to
confer with management and make recommendations to the Board of Directors
regarding the compensation of Winton's executive officers and employees. The
Compensation Committee met once during the fiscal year ended September 30, 1998.
The ESOP is administered by a committee of at least three directors
designated by the Board of Directors. The ESOP committee presently consists of
Robert J. Bollin, Robert E. Hoeweler and William J. Parchman. The ESOP Committee
did not meet during the fiscal year ended September 30, 1998.
The Stock Option Committee is responsible for administering the 1988 Option
Plan, including interpreting the 1988 Option Plan and awarding options pursuant
to its terms. The 1988 Stock Option Committee did not meet during the fiscal
year ended September 30, 1998. The current members of the Stock Option Committee
are Robert L. Bollin, Robert E. Hoeweler, William J. Parchman and Henry L.
Schulhoff.
6
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
current executive officers of WFC, other than those who are also directors:
<TABLE>
<CAPTION>
Name Age(1) Position(s) Held
<S> <C> <C>
Gregory J. Bollin 44 Vice President
Jill M. Burke 36 Treasurer and Chief
Financial Officer
James W. Brigger 50 Secretary
Mary Ellen Lovett 60 Vice President
</TABLE>
- -----------------------------
(1) As of December 1, 1998.
Gregory J. Bollin is a Vice President of WFC, a position he has held since
January 1994. Mr. Bollin also serves as Executive Vice President of Winton, a
position he has held since January 1993. Mr. Bollin served as Vice President of
Winton from 1988 until January 1993. Mr. Bollin is the brother of Robert L.
Bollin and the son of Robert J. Bollin.
Jill M. Burke is the Treasurer and Chief Financial Officer of WFC, a
position she has held since 1989. Ms. Burke also serves as Treasurer and
Controller of Winton, a position she has held since 1989.
James W. Brigger is the Secretary of WFC, a position he has held since
1989. Mr. Brigger also serves as Vice President of Winton.
Mary Ellen Lovett is a Vice President of WFC, a position she has held since
January 1994. Ms. Lovett also serves as Senior Vice President of Winton, a
position she has held since January 1993. Ms. Lovett served as Vice President of
Winton from 1988 to May 1993.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Director Compensation
WFC does not pay directors fees. Each director of Winton receives $12,000
annually for monthly meetings and $100 for each meeting attended of a committee
of the Board of Directors of Winton, except for meetings of the Executive
Committee for which members receive $200 per meeting.
Executive Compensation
WFC does not pay any compensation to its executive officers. Executive
officers of Winton are compensated by Winton for services rendered to Winton.
Except for the President and Executive Vice President of Winton, no director or
executive officer of WFC received more than $100,000 in salary and bonus
payments from Winton during the year ended September 30, 1998.
7
<PAGE>
The following table sets forth certain information with respect to
compensation paid to the President and Executive Vice President of Winton:
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Annual Compensation Compensation
Awards All Other
- --------------------------------------------------------------------------------------------------------------------
Options/SARs Compensation
Name and Principal Position Year Salary($) Bonus($) (#)(1) ($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert L. Bollin, President 1998 $165,330 $52,000 - $8,567 (2)
1997 $158,599 $16,000 - $8,352 (2)
1996 $153,649 $16,000 20,000 $6,929 (2)
Gregory J. Bollin, Executive 1998 $120,669 $39,000 - $7,034 (3)
Vice President 1997 $115,569 $13,000 - $6,293 (3)
1996 $109,838 $13,000 12,000 $4,789 (3)
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------------
(1) These figures represent the number of Common Shares underlying options
granted to the named individuals during the year indicated pursuant to the
1988 Option Plan. Mr. Robert L. Bollin's and Mr. Gregory J. Bollin's
outstanding options were adjusted for the two 2-for-1 stock splits in the
form of stock dividends effective in 1993, 1994 and 1998. WFC has no
restricted stock awards or stock appreciation rights ("SARs").
(2) Consists of cash or stock contributions to the ESOP or the reallocation of
forfeited shares in the ESOP of $6,157, $6,202 and $4,862 allocated to Mr.
Robert L. Bollin's account and $2,410, $2,150 and $2,067 in matching
contributions to the Deferred Plan for Mr. Robert L. Bollin's account for
the years ended September 30, 1998, 1997 and 1996, respectively.
(3) Consists of cash or stock contributions to the ESOP or the reallocation of
forfeited shares in the ESOP of $6,144, $5,316 and $3,982 allocated to Mr.
Gregory J. Bollin's account and $890, $977 and $807 in matching
contributions to the Deferred Plan for Mr. Gregory J. Bollin's account for
the years ended September 30, 1998, 1997 and 1996, respectively.
Option Plan
In 1988, Winton converted from mutual to stock form (the "Conversion"). In
connection with the Conversion, the shareholders of Winton approved the 1988
Stock Option Plan. In 1990, the shareholders of Winton approved the
reorganization of Winton into a holding company structure, as a result of which
the shareholders of Winton became shareholders of WFC and Winton became a
wholly-owned subsidiary of WFC. The shareholders of WFC approved certain
amendments to the 1988 Stock Option Plan at the 1995 Annual Meeting of
Shareholders.
Pursuant to the 1988 Stock Option Plan, WFC has reserved 523,000 Common
Shares for issuance upon the exercise of options granted to directors and
employees of WFC. On December 1, 1998, options to purchase 480,000 Common Shares
were outstanding and exercisable. On August 8, 1998, the ten-year anniversary of
the effective date of the Conversion, the 1988 Stock Option Plan terminated. No
additional options may be granted under the 1988 Stock Option Plan.
Options granted to employees of Winton may be "incentive stock options"
("ISOs") within the meaning of Section 422 of the Internal Revenue Code (the
"Code"), while options granted to non-employee directors do not qualify as ISOs.
See "PROPOSAL THREE APPROVAL OF WINTON FINANCIAL CORPORATION 1999 STOCK OPTION
AND INCENTIVE PLAN - Tax Treatment of Incentive Stock Options."
8
<PAGE>
No option granted under the 1988 Stock Option Plan may be exercised after
the expiration of ten years from the date of grant, and an option recipient
generally cannot transfer or assign an option other than by will or in
accordance with the laws of descent and distribution.
The following table sets forth information regarding the number and value
of unexercised options granted pursuant to the 1988 Stock Option Plan held by
the persons listed in the Summary Compensation Table. No stock appreciation
rights have been granted under the 1988 Stock Option Plan.
<TABLE>
<CAPTION>
Aggregate Option/SAR Exercises in Last Fiscal Year and 9/30/98 Option/SAR Values
Value of Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options/SARs
Options/SARs at 9/30/98(#) at 9/30/98($) (1)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized ($) Unexercisable Unexercisable
- ---- ----------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Robert L. Bollin - - 80,000/ - $950,000/ -
Gregory J. Bollin - - 48,000/ - $570,000/ -
</TABLE>
- ------------------------
(1) An option is "in-the-money" if the fair value of the underlying stock
exceeds the market price of the option. The figure represents the value of
such unexercised options, determined by multiplying the number of
unexercised options by the difference between the exercise price of such
options and the $11.875 closing bid price for the Common Shares reported by
the American Stock Exchange ("AMEX"), on September 30, 1998.
Employment Contracts
WFC and Winton have entered into employment agreements with Robert L.
Bollin, President of WFC and Winton, and Gregory J. Bollin, Vice President of
WFC and Executive Vice President of Winton, which expire on April 30, 2001. The
employment agreements have a term of three years and provide for an annual
salary of not less than $182,000 for Robert L. Bollin and $134,000 for Gregory
J. Bollin and an annual salary and performance review by the Board of Directors.
The employment agreements require the inclusion of Robert L. and Gregory J.
Bollin in any formally established employee benefit, bonus, pension and profit
sharing plans for which senior management personnel are eligible and also
provide for vacation and sick leave.
The employment agreements are terminable by WFC and Winton at any time. If
the employment of either Robert L. Bollin or Gregory J. Bollin is terminated at
any time during such three-year term for any reason other than "just cause" (as
defined in the agreements), he will be entitled to receive his annual
compensation for the remainder of the three-year term of the 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 the expiration of
the term of the employment agreement or the date on which the employee becomes
employed full-time by another employer.
If such employment is terminated, or if the position or responsibilities of
the employee is changed, in connection with or within one year of a change in
control of WFC or Winton, he will be entitled to receive an amount equal to his
then current annual compensation, multiplied by three, subject to reduction to
the extent necessary to comply with certain provisions of the Internal Revenue
Code of 1986, as amended, and regulations of the Office of Thrift Supervision.
Assuming employment termination in connection with such a change of control, the
maximum payment to Robert L. Bollin would be $546,000 and to Gregory J. Bollin
would be $402,000 or three times the greater of the minimum salary levels in the
agreements or the salary levels for fiscal 1998 reflected in the Summary
Compensation Table above.
9
<PAGE>
Personnel and Salary Committee Report on Executive Compensation
As a unitary savings and loan holding company, the business of WFC consists
principally of holding the stock of Winton. The functions of the executive
officers of WFC, who are also the executive officers of Winton, pertain
primarily to the operations of Winton. The executive officers receive their
compensation, therefore, from Winton, rather than from WFC. The Compensation
Committee of Winton has furnished the following report concerning executive
compensation:
Process for Determining Compensation
WFC has not paid any cash compensation to its executive officers since its
formation. All executive officers of WFC also currently hold positions with
Winton and receive cash compensation from Winton. Decisions on cash compensation
of Winton's executives are made by the three-member Compensation Committee of
Winton's Board of Directors.
The Compensation Committee reviews the compensation levels of the executive
officers, including the CEO, each year. The Compensation Committee utilizes
independent surveys of compensation of officers in the thrift industry, taking
into account comparable asset bases and geographic locations. The Compensation
Committee also assesses each particular executive officer's contribution to WFC
and Winton, the skills and experiences required by his/her position and the
potential of the executive officer. Based on the foregoing factors,
recommendations are made by the Compensation Committee to the Board of Directors
of Winton. Such recommendations are reviewed by the Board of Directors of
Winton, except that Board members who are also executive offices do not
participate in deliberations regarding their own respective compensation.
Compensation Policies toward Executive Officers Generally
The Compensation Committee's executive compensation policies are designed
to provide competitive levels of compensation that will attract and retain
qualified executives and will reward individual performance, initiative and
achievement, while enhancing overall corporate performance and shareholder
value. The cash compensation program for executive officers consists of three
elements, a base salary component, a discretionary cash bonus, and an incentive
component payable under an incentive plan (the "Incentive Plan").
The objectives of the discretionary cash bonuses are to motivate and reward
the executive officers based on each individual's contribution to the total
performance of Winton and WFC and to reinforce a strong performance orientation.
The objectives of the Incentive Plan are to motivate and reward the
executive officers in connection with the accomplishment of annual objectives of
Winton and WFC, to reinforce a strong performance orientation with
differentiation and variability in individual awards based on contribution to
annual and long range business results and to provide a competitive compensation
package which will attract, reward and retain individuals of the highest
quality. For the President and the Executive Vice President of Winton and the
President and Vice President of WFC, incentive awards are determined as a
percentage of gross income, which percentage is calculated utilizing a corporate
goal factor and a performance factor. The corporate goal factor is based upon
WFC's achievement of certain levels of earnings and a predetermined return on
equity. The performance factor is based upon the particular executive officer's
performance during the preceding year.
Determination of CEO's Compensation
The Compensation Committee based the compensation of Mr. Robert L. Bollin
in 1998 on the policies described above for executive officers. The corporate
profitability measurements considered were return on equity, net income,
earnings per share and return on assets. Additional corporate goals considered
were merger and acquisition activities, continued updating and implementation of
Winton's strategic plan and subsidiary oversight and progress. The Compensation
Committee believes that the level of compensation paid to Mr. Robert L. Bollin
in 1998 was fair and reasonable when compared with compensation levels in the
thrift industry reported in various independent surveys. The compensation earned
by Mr. Robert L. Bollin in 1998 reflects the significant management and
leadership responsibilities required of him and the effective manner in which
those responsibilities were fulfilled.
10
<PAGE>
Submitted by the Compensation Committee of Winton's Board of Directors
Thomas H. Humes
Timothy M. Mooney
J. Clay Stinnett
Personnel and Salary Committee Interlocks
During fiscal 1998, no member of the Compensation Committee was a current
or former executive officer or employee of WFC or Winton or had a reportable
business relationship with WFC or Winton.
Performance Graph
The following graph compares the cumulative total return on WFC's common
shares for the fiscal year ended September 30, 1998, with the cumulative total
return of the SNL Index, which is an index of banks whose shares are traded on
The New York Stock Exchange, AMEX or The Nasdaq Stock Market, and the cumulative
total return of the Standard and Poor's 500 for the same period.
Certain Transactions with Winton
Some of the directors and officers of WFC and Winton were customers of and
had transactions with Winton in the ordinary course of Winton's business during
the two years ended September 30, 1998. All loans and commitments to loan
included in such transactions were made in the ordinary course of business on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and, in
the opinion of the management of WFC, do not involve more than a normal risk of
collectibility or present other unfavorable features. Winton had no loans
outstanding to directors and executive officers at December 1, 1998.
11
<PAGE>
PROPOSAL TWO - APPROVAL OF AMENDMENT TO ARTICLES
On November 20, 1998, the Board of Directors of WFC unanimously approved
and recommended that the shareholders consider and approve an amendment to
Article Fourth of the Amended Articles that would increase the number of WFC's
authorized Common Shares from 5,000,000 shares to 18,000,000 shares.
The Amended Articles currently authorize 7,000,000 shares, consisting of
5,000,000 Common Shares, each without par value, and 2,000,000 preferred shares,
each without par value. As of the Voting Record Date, there were 4,015,304
Common Shares issued and outstanding, 480,000 Common Shares reserved for
issuance upon the exercise of options and no preferred shares issued. On
December 4, 1998, WFC and BenchMark Federal Savings Bank, a federal savings bank
("BenchMark"), jointly announced the execution of a merger agreement (the
"Merger Agreement") that provides for the merger of BenchMark with and into
Winton (the "Merger"). Pursuant to the terms of the Merger Agreement, WFC will
issue 3.35 of its Common Shares for each of the 112,307 outstanding shares of
BenchMark, or an aggregate of 376,228 Common Shares. Following the consummation
of the Merger, therefore, only 128,468 Common Shares will be available for
future acquisitions, stock dividends, stock options or other corporate purposes.
In considering the Amendment, the Board of Directors concluded that it
would be advisable for the additional Common Shares to be available for issuance
at the discretion of the Board in connection with acquisitions, stock dividends,
stock splits and for any other purpose determined by the Board to be in the best
interests of WFC, without the delay attendant upon obtaining shareholder
approval prior to each issuance. Where approval by shareholders is otherwise
required for the issuance of Common Shares, whether by Ohio law, the rules of
the AMEX or other applicable requirement, such approval by shareholders will be
sought.
The Board of Directors of WFC recommends that the shareholders approve the
Amendment. Accordingly, the shareholders of WFC will be asked to approve the
following resolution at the Annual Meeting:
RESOLVED, that Article Fourth of the Amended Articles of Incorporation of
Winton Financial Corporation be, and it hereby is, deleted in its entirety
and replaced with the following new Article Fourth:
FOURTH: The authorized number of shares of the corporation shall be
twenty million (20,000,000), eighteen million (18,000,000) of which
shall be common shares, each without par value, and two million
(2,000,000) of which shall be preferred shares, each without par
value.
The directors of the corporation are authorized to adopt amendments to
the Articles of Incorporation in respect of any unissued or treasury
common and preferred shares and thereby to fix or change, to the full
extent now or hereafter permitted by Ohio law: the division of such
shares into series and the designation and authorized number of shares
of each series; the dividend rate; the dates of payment of dividends
and the dates from which they are cumulative; the liquidation price;
the redemption rights and price; the sinking fund requirements; the
conversion rights; the restrictions on the issuance of shares of any
class or series; and such other rights, preferences and limitations as
shall not be inconsistent with this Article Fourth.
Except as hereinafter provided and as may otherwise be required by the
laws of the State of Ohio, all voting power of the corporation for all
purposes is vested exclusively in the holders of the common shares.
The holders of common shares shall be entitled to one vote for each
common share held. The holders of the preferred shares shall not be
entitled to vote at meetings of the shareholders of the corporation or
to receive notices of such meetings; provided, however, that in the
event dividends on the preferred shares, if any, shall at any time
become in arrears, the holders of the preferred shares shall thereupon
become entitled to one vote for each preferred share held and to
notice of all meetings of the shareholders. Such voting and notice
rights of the preferred shareholders shall continue until all
dividends in arrears on the preferred shares shall have been paid in
full, whereupon such voting and notice rights of the preferred
shareholders shall cease and terminate.
All Common Shares, including those now authorized and those which would be
authorized by the Amendment, are equal in rank and have the same voting,
dividend and liquidation rights. Holders of WFC shares do not have pre-emptive
rights. Any increase in the number of authorized Common Shares will have no
immediate dilutive effect on the proportionate voting power of shareholders.
12
<PAGE>
However, the future issuance of additional Common Shares or preferred shares
could have a dilutive effect on the proportionate voting power, earnings per
share and book value per share of present shareholders. Under some
circumstances, the issuance of new shares may discourage certain potential
business combinations which some shareholders may believe to be in their best
interest and make more difficult management changes which might occur if the
potential business combination were successful.
PROPOSAL THREE - APPROVAL OF WINTON FINANCIAL CORPORATION
1999 STOCK OPTION AND INCENTIVE PLAN
General
The following is a summary of the terms of the 1999 Stock Option Plan and
is qualified in its entirety by reference to the full text of the 1999 Stock
Option Plan, a copy of which is attached hereto as Exhibit A.
Purpose, Administration and Eligibility
The purpose of the Stock Option Plan is to promote and advance the
interests of WFC and its shareholders by enabling WFC to attract, retain and
reward directors, managerial and other key employees of WFC and any subsidiary,
including Winton, and to strengthen the mutuality of interests between such
directors and employees and WFC's shareholders by providing such persons with a
proprietary interest in pursuing the long-term growth, profitability and
financial success of WFC. Pursuant to the Stock Option Plan, 401,530 Common
Shares have been reserved for issuance by WFC upon the exercise of options to be
granted to certain directors, officers and employees of WFC and Winton from time
to time under the 1999 Stock Option Plan. At December 1, 1998, approximately 20
persons were eligible to receive options granted under the 1999 Stock Option
Plan.
The Stock Option Plan will be administered by the Stock Option Committee, a
committee of directors composed of at least three directors of WFC. The Stock
Option Committee may grant options under the 1999 Stock Option Plan at such
times as they deem most beneficial to Winton and WFC on the basis of the
individual participant's position and duties and the value of the individual's
services and responsibilities to Winton and WFC.
Without further approval of the shareholders, the Board of Directors may at
any time terminate the 1999 Stock Option Plan or may amend it from time to time
in such respects as the Board of Directors may deem advisable, except that the
Board of Directors may not, without the approval of the shareholders, make any
amendment which would (a) increase the aggregate number of Common Shares that
may be issued under the 1999 Stock Option Plan (except for adjustments to
reflect certain changes in the capitalization of WFC), (b) materially modify the
requirements as to eligibility for participation in the 1999 Stock Option Plan,
or (c) materially increase the benefits accruing to participants under the 1999
Stock Option Plan. Notwithstanding the foregoing, the Board of Directors may
amend the 1999 Stock Option Plan to take into account changes in applicable
securities, federal income tax and other applicable laws.
Option Terms
Options granted to the officers and employees under the 1999 Stock Option
Plan may be ISOs within the meaning of Section 422 of the Code, or may be
options which do not qualify under Section 422 of the Code ("Non-Qualified Stock
Options"). Options granted under the 1999 Stock Option Plan to directors who are
not employees of WFC or Winton will be Non-Qualified Stock Options.
The exercise price of each option granted under the 1999 Stock Option Plan
will be determined by the Stock Option Committee at the time the option is
granted. However, the exercise price of an option may not be less than 100% of
the fair market value of the shares on the date of the grant. In addition, 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 if the recipient owns more than 10% of the
outstanding common shares of WFC. Subject to certain exceptions specified in the
1999 Stock Option Plan or as otherwise specified by the Stock Option Committee
at the time of grant, stock options are immediately exercisable in full. No
13
<PAGE>
stock option will be exercisable after the expiration of ten years from the date
of the grant. However, if a recipient of an ISO owns a number of shares
representing more than 10% of WFC shares outstanding at the time the ISO is
granted, the term of the ISO will not exceed five years. If the fair market
value of shares awarded pursuant to ISOs that are exercisable for the first time
during any calendar year by a participant under the 1999 Stock Option Plan
exceeds $100,000, the ISOs will be considered Non-Qualified Stock Options to the
extent of such excess.
An option recipient cannot transfer or assign an option other than by will
or in accordance with the laws of descent and distribution. Termination of an
option recipient's employment for cause, as defined in the 1999 Stock Option
Plan, will result in the annulment of any outstanding exercisable options. Any
outstanding options that have not yet been exercised will terminate upon the
resignation, removal or retirement of a director of WFC or Winton, or upon the
termination of employment of an officer or employee of WFC or Winton, except in
the case of death or disability of the option recipient or a change in control
of WFC or Winton.
WFC will receive no monetary consideration for the granting of options
under the Stock Option Plan. Upon the exercise of options, WFC will receive
payment of cash or, if acceptable to the Stock Option Committee, Common Shares
or outstanding awarded stock options. The market value of the Common Shares
underlying the options reserved for the 1999 Stock Option Plan is approximately
$5.4 million, based upon the number of shares reserved, multiplied by the $13.50
per share closing sales price of the Common Shares on December 10, 1998, as
quoted on AMEX.
Purchase Right
The Stock Option Committee may include as a term of any option granted
under the 1999 Stock Option Plan the right (a "Purchase Right"), but not the
obligation, of WFC to purchase all or any amount of the Common Shares acquired
by an optionee pursuant to the exercise of any such options. The Purchase Right
will provide for, among other terms, a specified duration of the Purchase Right,
a specified price per Common Share to be paid upon the exercise of the Purchase
Right and a restriction on the disposition of the Common Shares by the optionee
during the period of the Purchase Right.
Stock Appreciation Right
The Stock Option Committee may include a stock appreciation right (a "Stock
Appreciation Right") as a component of an option or independent of an option.
The Stock Appreciation Right would entitle the recipient to receive a number of
Common Shares or cash, or combination thereof, as the Stock Option Committee
shall determine, equal to the amount by which the fair market value of the
Common Shares subject to the Stock Appreciation Right exceeds the exercise price
of the Stock Appreciation Right.
Tax Treatment of Incentive Stock Options
An optionee who is granted an ISO will not recognize taxable income either
on the date of grant or on the date of exercise, although the difference between
the fair market value of the shares at the time of exercise and the exercise
price is a tax preference item potentially subject to the alternative minimum
tax.
Upon disposition of shares acquired from the exercise of an ISO, capital
gain or loss is generally recognized in an amount equal to the difference
between the amount realized on the sale or disposition and the exercise price.
However, if the optionee disposes of the shares within two years of the date of
grant or within one year from the date of the issuance of the shares to the
optionee (a "Disqualifying Disposition"), then the optionee will recognize
ordinary income, as opposed to capital gain, at the time of disposition. In
general, the amount of ordinary income recognized will be equal to the lesser of
(i) the amount of gain realized on the disposition, or (ii) the difference
between the fair market value of the shares received on the date of exercise and
the exercise price. Any remaining gain or loss is treated as a short-term,
mid-term or long-term capital gain or loss, depending upon the period of time
the shares have been held.
WFC will not be entitled to a tax deduction upon either the exercise of an
ISO or the disposition of shares acquired pursuant to such exercise, except to
the extent that the optionee recognizes ordinary income in a Disqualifying
Disposition. Ordinary income from a Disqualifying Disposition will constitute
compensation but will not be subject to tax withholding, nor will it be
considered wages for payroll tax purposes.
If the holder of an ISO pays the exercise price, in whole or in part, with
previously acquired shares, the exchange should not affect the ISO tax treatment
of the exercise. Upon such exchange, and except for Disqualifying Dispositions,
no gain or loss is recognized by the optionee upon delivering previously
acquired shares to WFC, and shares received by the optionee equal in number to
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<PAGE>
the previously acquired common shares exchanged therefor will have the same
basis and holding period for long-term or mid-term capital gain purposes as the
previously acquired shares. (The optionee, however, will not be able to utilize
the prior holding period for the purpose of satisfying the ISO statutory holding
period requirements for avoidance of a Disqualifying Disposition.) Shares
received by the optionee in excess of the number of shares previously acquired
will have a basis of zero and a holding period which commences as of the date
the shares are transferred to the optionee upon exercise of the ISO. If an ISO
is exercised using shares previously acquired through the exercise of an ISO,
the exchange of such previously acquired shares will be considered a disposition
of such shares for the purpose of determining whether a Disqualifying
Disposition has occurred.
Tax Treatment of Non-Qualified Stock Options
A recipient of a Non-Qualified Stock Option does not recognize taxable
income on the date of grant of the option, provided that the option does not
have a readily ascertainable fair market value at the time it is granted. In
general, the optionee must recognize ordinary income at the time of exercise of
a Non-Qualified Stock Option in the amount of the difference between the fair
market value of the shares on the date of exercise and the option exercise
price. The ordinary income recognized will constitute compensation for which tax
withholding by WFC generally will be required. The amount of ordinary income
recognized by an optionee will be deductible by WFC in the year that the
optionee recognizes the income if WFC complies with any applicable withholding
requirement.
If the sale of the shares could subject the optionee to liability under
Section 16(b) of the Securities Exchange Act of 1934, the optionee generally
will recognize ordinary income only on the date that the optionee is no longer
subject to such liability in an amount equal to the fair market value of the
shares on such date less the option exercise price. Nevertheless, the optionee
may elect under Section 83(b) of the Code, within 30 days of the date of
exercise, to recognize ordinary income as of the date of exercise, without
regard to the restriction of Section 16(b).
Shares acquired upon the exercise of a Non-Qualified Stock Option will have
a tax basis equal to their fair market value on the exercise date or other
relevant date on which ordinary income is recognized, and the holding period for
the shares generally will begin on the date of exercise or such other relevant
date. Upon subsequent disposition of the shares, the optionee will recognize
long-term capital gain or loss if the optionee has held the shares for more than
eighteen months prior to disposition, mid-term capital gain or loss if the
optionee has held the shares for more than one year but less than eighteen
months prior to disposition, or short-term capital gain or loss if the optionee
has held the shares for one year or less prior to disposition.
If an optionee with a Non-Qualified Stock Option pays the exercise price,
in whole or in part, with previously acquired shares, the optionee will
recognize ordinary income in the amount by which the fair market value of the
shares received exceeds the exercise price. The optionee will not recognize gain
or loss upon delivering such previously acquired shares to WFC. Shares received
by an optionee equal in number to the previously acquired shares exchanged
therefor will have the same basis and holding period as such previously acquired
shares. Shares received by an optionee in excess of the number of such
previously acquired shares will have a basis equal to the fair market value of
such additional shares as of the date ordinary income is recognized. The holding
period for such additional shares will commence as of the date of exercise or
such other relevant date.
Tax Treatment of Stock Appreciation Rights
A participant in the 1999 Stock Option Plan is not taxed upon the grant of
Stock Appreciation Rights. Instead, participants will generally be taxed on the
exercise date, at ordinary income rates, on the amount of each received and the
fair market value of any Common Shares received. However, if the sale of Common
Shares could subject a participant to liability under Section 16(b) of the
Exchange Act, such participant generally will not recognize ordinary income with
respect to such Common Shares until the participant is no longer subject to such
liability, at which time the participant will recognize ordinary income in an
amount equal to the fair market value of Common Shares on such date.
The Stock Option Committee may grant options under the 1999 Stock Option
Plan to the directors, officers and employees of WFC and Winton in the future at
such times as they deem most beneficial to WFC and Winton on the basis of the
individual participant's responsibility, tenure and future potential.
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<PAGE>
The Board of Directors of WFC recommends that the shareholders of WFC
approve the 1999 Stock Option Plan. Accordingly, the shareholders of WFC will be
asked to approve the following resolution at the Annual Meeting:
RESOLVED, that the Winton Financial Corporation 1999 Stock Option and
Incentive Plan be, and it hereby is, approved.
PROPOSAL FOUR - SELECTION OF AUDITORS
The Board of Directors has selected Grant Thornton LLP ("Grant Thornton")
as the auditors of WFC for the current fiscal year and recommends that the
shareholders ratify the selection. Grant Thornton has audited the financial
statements of WFC or Winton since 1985. 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.
The Board of Directors recommends a vote FOR the ratification of the
selection of Grant Thornton as auditors for the current fiscal year.
PROPOSALS OF SECURITY HOLDERS AND OTHER MATTERS
Any proposals of qualified shareholders intended to be included in the
proxy statement for the 2000 Annual Meeting of Shareholders of WFC should be
sent to WFC by certified mail and must be received by WFC not later than August
30, 1999. In addition, if a shareholder intends to present a proposal at the
2000 Annual Meeting without including the proposal in the proxy materials
related to that meeting, and if the proposal is not received by November 13,
1999, then the proxies designated by the Board of Directors of WFC for the 2000
Annual Meeting of Shareholders of WFC may vote in their discretion on any such
proposal any shares for which they have been appointed proxies without mention
of such matter in the proxy statement or on the proxy card for such meeting.
Management knows of no other business which may be brought before the
Annual Meeting, including matters incident to the conduct of 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.
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
Cincinnati, Ohio Robert L. Bollin
December 28, 1998 President
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EXHIBIT A
WINTON FINANCIAL CORPORATION
1999 STOCK OPTION AND INCENTIVE PLAN
1. Purpose. The purpose of the Winton Financial Corporation 1999 Stock
Option and Incentive Plan (this "Plan") is to promote and advance the interests
of Winton Financial Corporation (the "Company") and its shareholders by enabling
the Company to attract, retain and reward directors, managerial and other
employees of the Company and any Subsidiary (hereinafter defined) and to
strengthen the mutuality of interests between such directors and employees and
the Company's shareholders by providing such persons with a proprietary interest
in pursuing the long-term growth, profitability and financial success of the
Company.
2. Definitions. For purposes of this Plan, the following terms shall have
the meanings set forth below:
(a) "Award" means the grant by the Committee of an Incentive Stock
Option, a Non-Qualified Stock Option or a Stock Appreciation Right, or any
combination thereof, as provided in the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto, together with rules, regulations and interpretations
promulgated thereunder.
(d) "Committee" means the Committee of the Board constituted as
provided in Section 3 of this Plan.
(e) "Common Shares" means the common shares, without par value, of the
Company or any security of the Company issued in substitution, in exchange
or in lieu thereof.
(f) "Company" means Winton Financial Corporation, an Ohio corporation,
or any successor corporation.
(g) "Employment" means regular employment with the Company or a
Subsidiary and does not include service as a director only.
(h) "ERISA" means the Employment Retirement Income Security Act, as
amended, or any successor thereto, together with rules, regulations and
interpretations promulgated thereunder.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
(j) "Fair Market Value" shall mean the average of the highest and the
lowest selling price on the American Stock Exchange, Inc. on the date such
Stock Option is granted or, if there were no sales on such date, then on
the next prior business day on which there was a sale.
(k) "Incentive Stock Option" means any Stock Option granted pursuant
to the provisions of Section 6 of this Plan which is intended to be and is
specifically designated as an "incentive stock option" within the meaning
of Section 422 of the Code.
(l) "Non-Qualified Stock Option" means any Stock Option granted
pursuant to the provisions of Section 6 of this Plan which is not an
Incentive Stock Option.
(m) "OTS" means the Office of Thrift Supervision, Department of the
Treasury.
(n) "Participant" means an employee or director of the Company or a
Subsidiary who is granted a Stock Option under this Plan. Notwithstanding
the foregoing, for the purposes of the granting of any Incentive Stock
Option under this Plan, the term "Participant" shall include only employees
of the Company or a Subsidiary.
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(o) "Plan" means the Winton Financial Corporation 1999 Stock Option
and Incentive Plan, as set forth herein and as it may be hereafter amended
from time to time.
(p) "Related" means (i) in the case of a Stock Appreciation Right, a
Stock Appreciation Right which is granted in connection with, and to the
extent exercisable, in whole or in part, in lieu of, an Option and (ii) in
the case of an Option, an Option with respect to which and to the extent to
which a Stock Appreciation Right is exercisable, in whole or in part, in
lieu thereof has been granted.
(q) "Repurchase Right" means the right defined in Section 10 of this
Plan.
(r) "Stock Appreciation Right" means a Stock Appreciation Right with
respect to shares granted by the Committee pursuant to Section 11 hereof.
(s) "Stock Option" means an award to purchase Common Shares granted
pursuant to the provisions of Section 6 of this Plan.
(t) "Subsidiary" means any corporation or entity in which the Company
directly or indirectly controls 50% or more of the total voting power of
all classes of its stock having voting power and includes, without
limitation, The Winton Savings and Loan Co.
(u) "Terminated for Cause" means any removal of a director or
discharge of an employee for personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of a material provision
of any law, rule or regulation (other than traffic violations or similar
offenses), a material violation of a final cease-and-desist order or any
other action of a director or employee which results in a substantial
financial loss to the Company or a Subsidiary.
3. Administration.
(a) This Plan shall be administered by the Committee, which shall be
comprised of not fewer than three of the members of the Board. The members
of the Committee shall be appointed from time to time by the Board. Members
of the Committee shall serve at the pleasure of the Board, and the Board
may from time to time remove members from, or add members to, the
Committee. A majority of the members of the Committee shall constitute a
quorum for the transaction of business. An action approved in writing by a
majority of the members of the Committee then serving shall be fully as
effective as if the action had been taken by unanimous vote at a meeting
duly called and held.
(b) The Committee is authorized to construe and interpret this Plan
and to make all other determinations necessary or advisable for the
administration of this Plan. The Committee may designate persons other than
members of the Committee to carry out its responsibilities under such
conditions and limitations as it may prescribe. Any determination, decision
or action of the Committee in connection with the construction,
interpretation, administration, or application of this Plan shall be final,
conclusive and binding upon all persons participating in this Plan and any
person validly claiming under or through persons participating in this
Plan. The Company shall effect the granting of Stock Options under this
Plan in accordance with the determinations made by the Committee, by
execution of instruments in writing in such form as approved by the
Committee.
4. Duration of, and Common Shares Subject to, this Plan.
(a) Term. This Plan shall terminate on the date which is ten (10)
years from the date on which this Plan is adopted by the Board, except with
respect to Stock Options then outstanding. Notwithstanding the foregoing,
no Incentive Stock Option may be granted under this Plan after the date
which is ten (10) years from the date on which this Plan is adopted by the
Board or the date on which this Plan is approved by the shareholders of the
Company, whichever is earlier.
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(b) Common Shares Subject to Plan. The maximum number of Common Shares
in respect of which Awards may be granted under this Plan, subject to
adjustment as provided in Section 9 of this Plan, shall be 401,530 Common
Shares.
For the purpose of computing the total number of Common Shares available
for Awards under this Plan, there shall be counted against the foregoing
limitations the number of Common Shares subject to issuance upon exercise or
settlement of Stock Options as of the dates on which such Stock Options are
granted. If any Stock Options or Stock Appreciation Rights are forfeited,
terminated or exchanged for other Stock Appreciation Rights or Stock Options, or
expire unexercised, the Common Shares which were theretofore subject to such
Awards shall again be available for Awards under this Plan to the extent of such
forfeiture, termination or expiration of such Awards.
Common Shares which may be issued under this Plan may be either authorized
and unissued shares or issued shares which have been reacquired by the Company.
No fractional shares shall be issued under this Plan.
5. Eligibility and Grants. Persons eligible for Awards under this Plan
shall consist of directors and managerial and other key employees of the Company
or a Subsidiary who hold positions with significant responsibilities or whose
performance or potential contribution, in the judgment of the Committee, will
benefit the future success of the Company or a Subsidiary. In selecting the
directors and employees to whom Awards will be made and the number of shares
subject to such Awards, the Committee shall consider the position, duties and
responsibilities of the eligible directors and employees, the value of their
services to the Company and the Subsidiaries and any other factors the Committee
may deem relevant.
6. Stock Options. Stock Options granted under this Plan may be in the form
of Incentive Stock Options or Non-Qualified Stock Options, and such Stock
Options shall be subject to the following terms and conditions and in such form
as the Committee may from time to time approve and shall contain such additional
terms and conditions as the Committee shall deem desirable, not inconsistent
with the express provisions of the Plan:
(a) Grant. Stock Options may be granted under this Plan on terms and
conditions not inconsistent with the provisions of this Plan.
(b) Stock Option Price. The option exercise price per Common Share
purchasable under a Stock Option shall be determined by the Committee at
the time of grant; provided, however, that in no event shall the exercise
price of an Incentive Stock Option be less than 100% of the Fair Market
Value of the Common Shares on the date of the grant of such Incentive Stock
Option, and in the case of a Participant who owns Common Shares
representing more than 10% of the outstanding Common Shares at the time an
Incentive Stock Option is granted, the option exercise price shall in no
event be less than 110% of the Fair Market Value of the Common Shares at
the time the Incentive Stock Option is granted to such Participant.
(c) Stock Option Terms. Subject to the right of the Company to provide
for earlier termination in the event of any merger, acquisition or
consolidation involving the Company, the term of each Stock Option shall be
fixed by the Committee; provided, however, that the term of an Incentive
Stock Option will not exceed ten years after the date the Incentive Stock
Option is granted; provided further, however, that in the case of a
Participant who owns a number of Common Shares representing more than 10%
of the Common Shares outstanding at the time the Incentive Stock Option is
granted, the term of the Incentive Stock Option shall not exceed five
years.
(d) Exercisability. Except as set forth in this Plan or as designated
by the Committee at the time of grant, Stock Options awarded under this
Plan shall be immediately exercisable in full.
(e) Method of Exercise. A Stock Option may be exercised, in whole or
in part, by giving written notice of exercise to the Company specifying the
number of Common Shares to be purchased. Such notice shall be accompanied
by payment in full of the purchase price in cash or, if acceptable to the
Committee in its sole discretion, in Common Shares already owned by the
Participant, or by surrendering outstanding Stock Options. The Committee
may also permit Participants, either on a selective or aggregate basis, to
simultaneously exercise Stock Options and sell Common Shares thereby
acquired, pursuant to a brokerage or similar arrangement, approved in
advance by the Committee, and use the proceeds from such sale as payment of
the purchase price of such shares.
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(f) Special Rule for Incentive Stock Options. With respect to
Incentive Stock Options granted under this Plan, to the extent the
aggregate Fair Market Value (determined as of the date the Incentive Stock
Option is granted) of the number of shares with respect to which Incentive
Stock Options are exercisable under all plans of the Company or a
Subsidiary for the first time by a Participant during any calendar year
exceeds $100,000, or such other limit as may be required by the Code, such
Stock Options shall be Non-Qualified Stock Options to the extent of such
excess.
7. Effect of Termination of Employment, Disability, Death or Change in
Control .
(a) Except in the event of the death or disability of a Participant or
in the event a Participant is Terminated for Cause, upon the resignation,
removal or retirement from the board of directors of any Participant who is
a director of the Company or a Subsidiary or upon the termination of
Employment of a Participant who is not a director of the Company or a
Subsidiary, all Stock Options which have not yet become exercisable shall
thereupon terminate and be of no further force or effect, and, unless the
Committee shall specifically state otherwise at the time a Stock Option is
granted, all Stock Options which have become exercisable shall terminate if
they are not exercised by the earlier of (i) the respective dates of such
Stock Options or (ii) the date which is three (3) months after such
resignation, removal, retirement or termination of Employment.
(b) Unless the Committee shall specifically state otherwise at the
time a Stock Option is granted, all Stock Options granted under this Plan
shall become exercisable in full on the date of termination of a
Participant's employment or directorship with the Company or a Subsidiary
because of his death or disability, and, subject to extension by the
Committee, all Stock Options shall terminate if not exercised by the
earlier of (i) the respective expiration dates of any such Stock Options or
(ii) the date which is twelve (12) months after the Participant's death or
disability.
(c) Unless the Committee shall specifically state otherwise at the
time a Stock Option is granted, in the event the Employment or the
directorship of a Participant is Terminated for Cause, any Stock Option
which has not been exercised shall terminate and be of no further force or
effect as of the date the Participant is Terminated for Cause.
(d) All outstanding Stock Options shall become immediately exercisable
in the event of a change in control or imminent change in control of the
Company or any Subsidiary, as determined by the Committee. For purposes of
this Section 7, "change in control" shall mean: (i) the execution of an
agreement for the sale of all, or a material portion of, the assets of the
Company or The Winton Savings and Loan Co.; (ii) the execution of an
agreement for a merger or recapitalization of the Company or The Winton
Savings and Loan Co. or any merger or recapitalization whereby the Company
or The Winton Savings and Loan Co. is not the surviving entity; (iii) a
change of control of the Company or The Winton Savings and Loan Co., as
defined or determined by the OTS; or (iv) the acquisition, directly or
indirectly, of the beneficial ownership (within the meaning of the term
"beneficial ownership" as defined under Section 13(d) of the Exchange Act
and the rules promulgated thereunder) of twenty-five percent (25%) or more
of the outstanding voting securities of the Company or The Winton Savings
and Loan Co. by any person, trust, entity or group. For purposes of this
Section 7, "imminent change in control" shall refer to any offer or
announcement, oral or written, by any person or any persons acting as a
group, to acquire control of the Company or The Winton Savings and Loan Co.
as to which an application or notice has been filed with the OTS and such
application has been approved or such notice has not been disapproved.
8. Non-transferability of Stock Options. No Stock Option under this Plan,
and no rights or interests therein, shall be assignable or transferable by a
Participant except by will or the laws of descent and distribution. During the
lifetime of a Participant, Stock Options are exercisable only by, and payments
in settlement of Stock Options will be payable only to, the Participant or his
or her legal representative.
9. Adjustments Upon Changes in Capitalization.
(a) The existence of this Plan and the Awards granted hereunder shall
not affect or restrict in any way the right or power of the Board or the
shareholders of the Company to make or authorize the following: any
adjustment, recapitalization, reorganization or other change in the
Company's capital structure or its business; any merger, acquisition or
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consolidation of the Company; any issuance of bonds, debentures, preferred
or prior preference stocks ahead of or affecting the Company's capital
stock or the rights thereof; the dissolution or liquidation of the Company
or any sale or transfer of all or any part of its assets or business; or
any other corporate act or proceeding, including any merger or acquisition
which would result in the exchange of cash, stock of another company or
options to purchase the stock of another company for any Awards outstanding
at the time of such corporate transaction or which would involve the
termination of all Awards outstanding at the time of such corporate
transaction.
(b) In the event of any change in capitalization affecting the Common
Shares of the Company, such as a stock dividend, stock split,
recapitalization, merger, consolidation, spin-off, split-up, combination or
exchange of shares or other form of reorganization, or any other change
affecting the Common Shares, such proportionate adjustments, if any, as the
Board in its discretion may deem appropriate to reflect such change shall
be made with respect to the aggregate number of Common Shares for which
Awards in respect thereof may be granted under this Plan, the maximum
number of Common Shares which may be sold or awarded to any Participant,
the number of Common Shares covered by each outstanding Award, and the
exercise price per share in respect of outstanding Awards.
10. Right of Repurchase and Restrictions on Disposition. The Committee, in
its sole discretion, may include, as a term of any Incentive Stock Option or
Non-Qualified Stock Option, the right (hereinafter the "Repurchase Right"), but
not the obligation, to repurchase all or any amount of the Common Shares
acquired by a Participant pursuant to the exercise of any such options. The
Repurchase Right shall provide for, among other terms, a specified duration of
the Repurchase Right, a specified price per Common Share to be paid upon the
exercise of the Repurchase Right and a restriction on the disposition of the
Common Shares by the Participant during the period of the Repurchase Right. The
Repurchase Right may permit the Company to transfer or assign such right to
another party. The Company may exercise the Repurchase Right only to the extent
permitted by applicable law.
11. Stock Appreciation Rights. A Stock Appreciation Right shall, upon its
exercise, entitle the Participant to whom such Stock Appreciation Right is
granted, to receive a number of Common Shares or an amount of cash or
combination thereof, as the Committee in its discretion shall determine, the
aggregate value of which (i.e., the sum of the amount of cash and/or the fair
market value of such Common Shares on the date of exercise) shall equal (as
nearly as possible) the amount by which the Fair Market Value per Common Share
on the date of such exercise shall exceed the exercise price of such Stock
Appreciation Right, multiplied by the number of Common Shares with respect to
which such Stock Appreciation Right shall have been exercised. A Stock
Appreciation Right may be Related to an option or may be granted independently
of any option and the Committee shall determine whether and to what extent a
Related Stock Appreciation Right shall be granted with respect therein;
provided, however, that notwithstanding any other provision of this Plan, in the
event that the Related Option is an Incentive Stock Option, the Related Stock
Appreciation Right shall satisfy all the applicable restrictions and limitations
of Section 6 hereof as if such Related Stock Appreciation Right were an
Incentive Stock Option. In the case of a Related Stock Option, such Related
Stock Option shall cease to be exercisable to the extent of the Common Shares to
which the Related Stock Appreciation Right was exercised. Upon the exercise or
termination of a Related Stock Option, any Related Stock Appreciation Right
shall terminate to the extent of the Common Shares with respect to which the
Related Stock Option was exercised or terminated.
12. Amendment and Termination of this Plan. Without further approval of the
shareholders, the Board may at any time terminate this Plan, or may amend it
from time to time in such respects as the Board may deem advisable, except that
the Board may not, without approval of the shareholders, make any amendment
which would (a) increase the aggregate number of Common Shares which may be
issued under this Plan (except for adjustments pursuant to Section 9 of this
Plan), (b) materially modify the requirements as to eligibility for
participation in this Plan, or (c) materially increase the benefits accruing to
Participants under this Plan. The above notwithstanding, the Board may amend
this Plan to take into account changes in applicable securities, federal income
tax and other applicable laws.
13. Modification of Options. The Board may authorize the Committee to
direct the execution of an instrument providing for the modification of any
outstanding Stock Option which the Board believes to be in the best interests of
the Company; provided, however, that no such modification, extension or renewal
shall confer on the holder of such Stock Option any right or benefit which could
not be conferred on him by the grant of a new Stock Option at such time and
shall not materially decrease the Participant's benefits under the Stock Option
without the consent of the holder of the Stock Option, except as otherwise
permitted under this Plan.
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14. Miscellaneous.
(a) Tax Withholding. The Company shall have the right to deduct from
any settlement made under this Plan, including the delivery or vesting of
Common Shares, any federal, state or local taxes of any kind required by
law to be withheld with respect to such payments or to take such other
action as may be necessary in the opinion of the Company to satisfy all
obligation for the payment of such taxes. If Common Shares are used to
satisfy tax withholding, such shares shall be valued based on the Fair
Market Value when the tax withholding is required to be made.
(b) No Right to Employment. Neither the adoption of this Plan nor the
granting of any Award shall confer upon any employee of the Company or a
Subsidiary any right to continued Employment with the Company or a
Subsidiary, as the case may be, nor shall it interfere in any way with the
right of the Company or a Subsidiary to terminate the Employment of any of
its employees at any time, with or without cause.
(c) Annulment of Stock Options. The grant of any Stock Option under
this Plan payable in cash is provisional until cash is paid in settlement
thereof. The grant of any Stock Option under this Plan payable in Common
Shares is provisional until the Participant becomes entitled to the
certificate in settlement thereof. In the event the Employment or the
directorship of a Participant is Terminated for Cause, any Stock Option
which is provisional shall be annulled as of the date of such termination.
(d) Other Company Benefit and Compensation Programs. Payments and
other benefits received by a Participant under an Award made pursuant to
this Plan shall not be deemed a part of a Participant's regular, recurring
compensation for purposes of the termination indemnity or severance pay law
of any country and shall not be included in, nor have any effect on, the
determination of benefits under any other employee benefit plan or similar
arrangement provided by the Company or a Subsidiary unless expressly so
provided by such other plan or arrangement, or except where the Committee
expressly determines that an Award or portion of an Award should be
included to accurately reflect competitive compensation practices or to
recognize that an Award has been made in lieu of a portion of competitive
annual cash compensation. An Award under this Plan may be made in
combination with or in tandem with, or as an alternative to, grants, stock
options or payments under any other plans of the Company or a Subsidiary.
This Plan notwithstanding, the Company or any Subsidiary may adopt such
other compensation programs and additional compensation arrangements as it
deems necessary to attract, retain and reward directors and employees for
their service with the Company and its Subsidiaries.
(e) Securities Law Restrictions. No Common Shares shall be issued
under this Plan unless counsel for the Company shall be satisfied that such
issuance will be in compliance with applicable federal and state securities
laws. Certificates for Common Shares delivered under this Plan may be
subject to such stop-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange
upon which the Common Shares are then listed, and any applicable federal or
state securities law. The Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such
restrictions.
(f) Award Agreement. Each Participant receiving an Award under this
Plan shall enter into an agreement with the Company in a form specified by
the Committee agreeing to the terms and conditions of the Award and such
related matters as the Committee shall, in its sole discretion, determine.
(g) Cost of Plan. The costs and expenses of administering this Plan
shall be borne by the Company.
(h) Governing Law. This Plan and all actions taken hereunder shall be
governed by and construed in accordance with the laws of the State of Ohio,
except to the extent that federal law shall be deemed applicable.
(i) Effective Date. This Plan shall be effective upon the later of
adoption by the Board and approval by the Company's shareholders. This Plan
shall be submitted to the shareholders of the Company for approval at an
annual or special meeting of shareholders held within twelve (12) months of
the adoption of the Plan by the Board.
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