<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FIRSTFED BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
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(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)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
-------------------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
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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):
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4. Proposed maximum aggregate value of transaction:
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5. Total Fee Paid:
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[_] 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>
[Company Letterhead]
June 18, 1997
Dear Stockholder:
We invite you to attend the Annual Meeting of Stockholders (the
"Meeting") of FirstFed Bancorp, Inc. (the "Company") to be held at the main
office of the Company located at 1630 Fourth Avenue North, Bessemer,
Alabama, on Tuesday, July 22, 1997 at 4:30 p.m., local time.
The attached Notice of Meeting and Proxy Statement describe the formal
business to be transacted at the Meeting. During the Meeting, we will also
report on the operations of the Company's two financial institution
subsidiaries, First Federal Savings Bank and First State Bank of Bibb
County. Directors and officers of the Company as well as representatives
of Arthur Andersen LLP, the Company's independent auditors, will be present
to respond to any questions the stockholders may have.
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE EVEN IF YOU CURRENTLY
PLAN TO ATTEND THE MEETING. Your vote is important, regardless of the
number of shares you own. This will not prevent you from voting in person
but will assure that your vote is counted if you are unable to attend the
Meeting.
Sincerely,
/s/ B. K. Goodwin, III
B. K. Goodwin, III
Chairman of the Board, Chief Executive
Officer and President
<PAGE>
FIRSTFED BANCORP, INC.
1630 Fourth Avenue North
Bessemer, Alabama 35020
(205) 428-8472
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on July 22, 1997
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of FirstFed Bancorp, Inc. (the "Company") will be held at the main
office of the Company located at 1630 Fourth Avenue North, Bessemer, Alabama, on
Tuesday, July 22, 1997 at 4:30 p.m., local time.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon the
following matters:
(i) The election of three directors of the Company for terms of
three years; and
(ii) The transaction of such other matters as may properly come
before the Meeting or any adjournments thereof.
The Board of Directors is not aware of any other business to come
before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above or on any date or dates to which, by original or later
adjournment, the Meeting may be adjourned. Stockholders of record at the close
of business on June 6, 1997, are the stockholders entitled to vote at the
Meeting and any adjournments thereof.
You are requested to fill in and sign the enclosed form of proxy which
is solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the Meeting in
person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Lynn J. Joyce
Lynn J. Joyce
Secretary
Bessemer, Alabama
June 18, 1997
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
OF
FIRSTFED BANCORP, INC.
1630 Fourth Avenue North
Bessemer, Alabama 35020
ANNUAL MEETING OF STOCKHOLDERS
July 22, 1997
- --------------------------------------------------------------------------------
GENERAL
- --------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of FirstFed Bancorp, Inc. (the "Company")
to be used at the Annual Meeting of Stockholders of the Company (the "Meeting")
which will be held at the main office of the Company located at 1630 Fourth
Avenue North, Bessemer, Alabama, on Tuesday, July 22, 1997 at 4:30 p.m., local
time. The accompanying Notice of Meeting and this Proxy Statement are being
first mailed to stockholders on or about June 18, 1997.
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VOTING AND REVOCABILITY OF PROXIES
- --------------------------------------------------------------------------------
Proxies solicited by the Board of Directors of the Company will be
voted in accordance with the directions given therein. Where no instructions are
indicated, proxies will be voted for the nominees for director set forth below
and in favor of each of the other proposals set forth in this Proxy Statement
for consideration at the Meeting. The proxy confers discretionary authority on
the persons named therein to vote with respect to the election of any person as
a director where the nominee is unable to serve or for good cause will not
serve, and with respect to matters incident to the conduct of the Meeting. If
any other business is presented at the Meeting, proxies will be voted by those
named therein in accordance with the determination of a majority of the Board of
Directors. Proxies marked as abstentions will not be counted as votes cast. In
addition, shares held in street name which have been designated by brokers on
proxy cards as not voted will not be counted as votes cast. Proxies marked as
abstentions or as broker no votes, however, will be treated as shares present
for purposes of determining whether a quorum is present.
Stockholders who execute proxies retain the right to revoke them at
any time. Unless so revoked, the shares represented by such proxies will be
voted at the Meeting and all adjournments thereof. Proxies may be revoked by
written notice to Lynn J. Joyce, Secretary of the Company, at the address shown
above, by filing of a later-dated proxy prior to a vote being taken on a
particular proposal at the Meeting or by attending the Meeting and voting in
person. A proxy will not be voted if a stockholder attends the Meeting and votes
in person. However, the mere presence of a stockholder at the Meeting will not,
by itself, revoke such stockholder's proxy.
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VOTING SECURITIES
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Stockholders of record as of the close of business on June 6, 1997
(the "Record Date"), are entitled to one vote for each share of the Company's
common stock, par value $0.01 per share (the "Common Stock"), then held, except
that pursuant to the Company's Restated Certificate of Incorporation, beneficial
owners of shares of Common Stock exceeding 10% of the then-outstanding shares of
Common Stock are not permitted to vote such
<PAGE>
excess shares. On February 18, 1997, the Board of Directors of the Company
declared a 2-for-1 stock split (to be effected as a 100% stock dividend) payable
on April 16, 1997, to stockholders who were record owners of the Common Stock at
the close of business on April 1, 1997. All stock information in this Proxy
Statement reflects this stock split. As of the Record Date, the Company had
1,481,730 shares of Common Stock issued, of which 1,235,782 shares were
outstanding. The presence, in person or by proxy, of at least a majority of the
total number of shares of Common Stock outstanding and entitled to vote is
necessary to constitute a quorum at the Meeting.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- --------------------------------------------------------------------------------
Persons and groups beneficially owning more than 5% of the Common Stock are
required under federal securities laws to file certain reports with the
Securities and Exchange Commission ("SEC") detailing such ownership. The
following table sets forth information, as of the Record Date, with respect to
any person, including any group of persons, known by the Company to be the
beneficial owner of more than 5% of the issued and outstanding Common Stock.
Other than as disclosed below, management knows of no person who beneficially
owned more than 5% of the Common Stock at the Record Date.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent of Common
Beneficial Owner Beneficial Ownership/(1)/ Stock Outstanding
---------------- ------------------------ -----------------
<S> <C> <C>
First Federal Savings Bank
Employee Stock Ownership Plan and Trust
1630 Fourth Avenue North
Bessemer, Alabama 35020 73,972 /(2)/ 6.0%
Wellington Management Company/(3)/
75 State Street
Boston, Massachusetts 02109 126,000 10.2%
SoGen International Fund, Inc.
50 Rockefeller Plaza
New York, NY 10020 87,934 7.1%
</TABLE>
- --------------------
/(1)/ Based on information furnished by the respective beneficial owners. In
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, a
person is deemed to be the beneficial owner, for purposes of this table,
if that person either has or shares voting or investment power with
respect to such Common Stock or has a right to acquire beneficial
ownership at any time within 60 days from the Record Date. As used herein,
"voting power" is the power to vote or direct the voting of shares, and
"investment power" is the power to dispose or direct the disposition of
shares. Except as otherwise noted, ownership is direct, and the named
individuals exercise sole voting and investment power over the shares of
the Common Stock.
/(2)/ Shares of Common Stock were acquired by the Employee Stock Ownership Plan
and Trust ("ESOP") in connection with the mutual-to-stock conversion (the
"Conversion") of First Federal Savings Bank ("First Federal"), the
Company's wholly-owned savings bank subsidiary. A committee consisting of
all directors of the Company administers the ESOP. An unrelated corporate
trustee for the ESOP (the "ESOP Trustee") has been appointed by the Board
of Directors, which may instruct the ESOP Trustee regarding investment of
funds contributed to the ESOP. Shares held by the ESOP and allocated to
participating employees must be voted in accordance with the instructions
received from the participating employees. Unallocated shares, and
allocated shares for which no instruction has been received, will be voted
in the same proportion as the allocated shares for which instruction has
been received. As of the Record Date, 57,770 shares of Common Stock in the
ESOP had been allocated to participating employees, and, therefore, the
ESOP Trustee will vote the remaining 16,022 unallocated shares in the same
proportion as allocated shares.
/(3)/ Includes First Financial Fund, a mutual fund.
2
<PAGE>
The following table sets forth, as of the Record Date, the beneficial
ownership of the Company's Common Stock by each of the Company's directors and
nominees, the executive officers named in the Summary Compensation Table and by
all executive officers and directors as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent of Common
Name Beneficial Ownership/(1)/ Stock Outstanding
---- ------------------------- ------------------
<S> <C> <C>
Fred T. Blair 26,650 /(2)/ 2.16 %
B. K. Goodwin, III 33,626 /(3)/ 2.72
James B. Koikos 22,502 /(4)/ 1.82
A. W. Kuhn 55,856 4.52
Malcolm E. Lewis 44,182 /(5)/ 3.58
E. H. Moore, Jr. 44,330 /(6)/ 3.59
James E. Mulkin 35,260 2.85
Robert E. Paden 34,600 2.80
G. Larry Russell 32,690 /(7)/ 2.64
All directors and executive officers as 377,140 30.52
a group (12 Persons)
</TABLE>
- --------------------
/(1)/ For the definition of beneficial ownership, see footnote 1 to the previous
table. Includes certain shares of Common Stock owned by businesses in
which the director is an officer or major stockholder or by spouses, by
immediate family members, or as a custodian or trustee for minor children,
over which shares the director effectively exercises sole or shared voting
and/or investment power, unless otherwise indicated. Includes 624 shares,
600 shares and 1,224 shares of Common Stock awarded under First Federal's
Recognition and Retention Plan ("RRP") to Directors Goodwin and Koikos and
to all executive officers and directors as a group, respectively, as to
which shares such directors have voting power. Includes 2,250 shares,
26,668 shares, 4,370 shares, 3,150 shares, 8,650 shares, 3,150 shares,
14,650 shares and 88,028 shares of Common Stock, as to which shares
Directors Blair, Goodwin, Koikos, Lewis, Moore, Paden and Russell and all
executive officers and directors as a group, respectively, have the right
to purchase pursuant to stock options exercisable within 60 days after the
Record Date. Such shares are deemed to be outstanding for the purpose of
computing the percentage of outstanding shares of Common Stock
beneficially owned by each director and the group. Includes 12 shares, 194
shares, 24 shares, 114 shares, 114 shares, 114 shares, 114 shares, 114
shares, 114 shares and 1,492 shares of Common Stock which vest over a
three year period for Directors Blair, Goodwin, Koikos, Kuhn, Lewis,
Moore, Mulkin, Paden and Russell and for all executive officers and
directors as a group, respectively, pursuant to the Company's Incentive
Compensation Plan ("Incentive Plan"). See " -- Directors' Compensation --
Incentive Compensation Plan." Includes 3,840 shares, 400 shares, 3,840
shares, 800 shares, 3,840 shares and 13,920 shares of Common Stock vested
from the RRP and held by a Deferred Compensation Plan trust for the
benefit of Directors Blair, Koikos, Moore, Mulkin and Russell and all
executive officers and directors as a group, respectively. See "--
Directors' Compensation."
/(2)/ Includes 15,236 shares of Common Stock owned by Mr. Blair's wife.
/(3)/ Includes 1,654 shares and 16,340 shares of Common Stock owned by the ESOP
and allocated to the accounts of Mr. Goodwin and all executive officers as
a group, respectively.
/(4)/ Includes 6,000 shares held in a trust of which Mr. Koikos is a trustee.
/(5)/ Includes 782 shares of Common Stock owned by Mr. Lewis's wife.
/(6)/ Includes 2,000 shares of Common Stock owned by Mr. Moore's wife.
/(7)/ Includes 2,020 shares of Common Stock owned jointly by Mr. Russell's wife
and minor children. Also includes 2,000 shares of Common Stock owned by
Mr. Russell's brother's political campaign fund, of which fund Mr. Russell
is Chairman and as to which shares Mr. Russell has voting power.
3
<PAGE>
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
Based solely on the Company's review of the copies of ownership reports
which it has received in the past fiscal year, or written representations from
officers, from directors or from persons who own more than 10% of the Common
Stock that no annual report of change in beneficial ownership was required, and
the Company believes that during the fiscal year ended March 31, 1997 ("fiscal
1997"), all the filing requirements applicable to such persons have been timely
met.
- --------------------------------------------------------------------------------
PROPOSAL I -- ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
The Company's Board of Directors currently is composed of nine members. The
Company's Certificate of Incorporation requires that directors be divided into
three classes, as nearly equal in number as possible, each class to serve for a
three year period and until their successors are elected and qualified, with
approximately one-third of the directors elected each year. The Board of
Directors has nominated for election as directors Fred T. Blair, Malcolm E.
Lewis and G. Larry Russell, all of whom are currently members of the Board, to
each serve as directors for three-year terms and until their successors are
elected and qualified. Under Delaware law, directors are elected by a plurality
of the votes present in person or by proxy and entitled to vote on the election
of directors.
It is intended that the persons named in the proxies solicited by the Board
of Directors will be voted for the election of the named nominees. If any
nominee is unable to serve, the shares represented by all properly executed
proxies that have not been revoked will be voted for the election of such
substitute as the Board of Directors may recommend, or the size of the Board of
Directors may be reduced to eliminate the vacancy. At this time, the Board knows
of no reason why any nominee might be unavailable to serve.
The Board of Directors recommends a vote "FOR" election as directors of all
the nominees listed below.
4
<PAGE>
The following table sets forth certain information regarding each of the
Company's directors. Each director of the Company is also a member of the Board
of Directors of First Federal, its wholly-owned savings bank subsidiary. In
addition, B. K. Goodwin, III, who serves as Chairman of the Board of Directors
of the Company, also serves as Chairman of the Board of Directors of First State
Bank of Bibb County ("First State"), which is wholly-owned by First State
Corporation, a wholly-owned subsidiary of the Company. No other director of the
Company serves as a director of First State.
<TABLE>
<CAPTION>
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2000
Age at Year First Elected Current
Record Date as Director of Term to
Name ---- First Federal/(1)/ Expire
---- ------------------ ------
<S> <C> <C> <C>
Fred T. Blair 69 1968 1997
Malcolm E. Lewis 87 1968 1997
G. Larry Russell 46 1990 1997
<CAPTION>
DIRECTORS CONTINUING IN OFFICE
Age at Year First Elected Current
Record Date as Director of Term to
Name ---- First Federal/(1)/ Expire
---- ------------------ ------
<S> <C> <C> <C>
B. K. Goodwin, III 45 1995 1998
A. W. Kuhn 75 1979 1998
Robert E. Paden 66 1992 1998
James B. Koikos 59 1995 1999
E. H. Moore, Jr. 63 1991 1999
James E. Mulkin 67 1992 1999
</TABLE>
- ------------------
(1) With the exception of Messrs. Mulkin and Paden, who were appointed as
directors of the Company in 1992, and Messrs. Goodwin and Koikos, who were
appointed as directors of the Company in 1995, all directors were initially
appointed in May 1991 in connection with the incorporation and organization
of the Company.
Unless otherwise stated, the principal occupation of each director of the
Company for the last five years is set forth below.
Fred T. Blair. Mr. Blair is retired. On January 1, 1996, Mr. Blair retired
from his positions as Chairman of the Board, President and Chief Executive
Officer of the Company and First Federal. He had served as President and Chief
Executive Officer of the Company since its inception in 1991 and with First
Federal since 1968 and Chairman since 1995.
Malcolm E. Lewis. Mr. Lewis is retired.
G. Larry Russell. Mr. Russell is a self-employed Certified Public
Accountant in Bessemer, Alabama.
B. K. Goodwin, III. Mr. Goodwin is the Chairman of the Board, Chief
Executive Officer and President of the Company and First Federal, positions he
has occupied since January 1, 1996. He has also served
5
<PAGE>
as Chairman of the Board of First State since January 1996. He had previously
served as Senior Executive Vice President of the Company and First Federal since
February 1995. Prior to that time, Mr. Goodwin served as Chairman of the Board,
Chief Executive Officer and President of Steiner Bank in Birmingham, Alabama,
and as President, Chief Operating Officer and Director of Secor Bank, Federal
Savings Bank, in Birmingham, Alabama.
A. W. Kuhn. Mr. Kuhn retired as the Executive Director of Bessemer Housing
Authority, a public housing program, in 1994.
Robert E. Paden. Mr. Paden is a self-employed Attorney in Bessemer,
Alabama.
James B. Koikos. Mr. Koikos is a restaurateur. He is owner/partner of the
Bright Star Restaurant, Bessemer, Alabama, and the Merritt House, Birmingham,
Alabama.
E. H. Moore, Jr. Mr. Moore retired in 1992 from his position as President
of Deaton, Inc., a trucking company in Ensley, Alabama.
James E. Mulkin. Mr. Mulkin is the President of Mulkin Enterprises,
Bessemer, Alabama, a diversified business operation.
Meetings and Committees of the Board of Directors
During fiscal year 1997, the Board of Directors of the Company held twelve
regular meetings and one special meeting. During fiscal year 1997, no director
of the Company attended fewer than 75% of the aggregate of the total number of
meetings of the Board of Directors of the Company and the total number of
meetings held by all committees of the Board on which he served. The Board of
Directors of the Company maintains committees, the nature and composition of
which are described below. Commencing in January 1995, the Board of Directors
determined that all committees would consist of the full Board of Directors,
except that only non-employee directors may serve on the Audit Committee.
The Audit Committee of the Company meets periodically to examine and
approve the audit report prepared by the independent auditors of the Company, to
review and recommend the independent auditors to be engaged by the Company, to
review the internal audit function and internal accounting controls, and to
review and approve conflict of interest and audit policies. During fiscal 1997,
the Audit Committee, which consists of all non-employee directors of the
Company, met one time.
The Company's Compensation Committee, which consists of all the directors
of the Company, meets periodically to evaluate the compensation and fringe
benefits of the directors, officers and employees and to recommend changes and
to monitor and evaluate employee morale. The Compensation Committee met one time
during fiscal 1997.
The Company's Nominating Committee, which consists of all directors of the
Company, meets periodically for the purpose of nominating candidates for
director of the Company. While the Board of Directors will consider nominees
recommended by stockholders, it has not actively solicited recommendations from
the Company's stockholders for nominees, nor has it established any procedures
for this purpose. During fiscal 1997, the Board met once in its capacity as the
Nominating Committee. Stockholders who make nominations of candidates for
directors must make such nominations in accordance with the procedures set forth
in the Company's Bylaws.
6
<PAGE>
Executive Compensation and Other Benefits
Summary Compensation Table. The following table sets forth the cash
and noncash compensation for fiscal 1997, 1996 and 1995 awarded to or earned by
the Chief Executive Officer of the Company. No other executive officer of the
Company earned salary and bonus in fiscal 1997 in excess of $100,000 for
services rendered in all capacities to the Company and its subsidiaries.
<TABLE>
<CAPTION>
Long-Term Compensation
--------------------------------------
Annual Compensation Awards Payouts
------------------------------------- ---------------------------- --------
Other Restricted Securities
Name and Fiscal Annual Stock Underlying LTIP All Other
Principal Position Year Salary Bonus Compensation Award(s)/(1)/ Options Payouts Compensation
------------------ ---- ------ ----- ------------ -------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
B.K. Goodwin, III 1997 $ 138,750 $ 5,805 $ -- $ 1,423/(2)/ 15,390 $ -- $ 25,938/(3)/
Chairman of the 1996 101,250 19,685 -- 29,136 1,278 -- 23,188
Board, Chief 1995 15,000 -- -- -- 10,000 -- --
Executive Officer
and President of
the Company and
First Federal;
Chairman of the
Board of First State
</TABLE>
- --------------
/(1)/ Calculated by multiplying the number of shares of Common Stock awarded
pursuant to the Incentive Plan based on the closing sale price of the
Common Stock on June 6, 1997 as reported on the Nasdaq SmallCap Market
($18.25 per share). See " -- Directors' Compensation." Mr. Goodwin's award
for fiscal 1996 included an award pursuant to the RRP.
/(2)/ As of March 31, 1997, Mr. Goodwin held 818 shares of restricted stock with
an aggregate value of $14,929, based on the closing sale price of the
Common Stock on June 6, 1997 as reported on the Nasdaq SmallCap Market
($18.25 per share). Of this amount, 292 shares will vest in fiscal 1998,
292 shares will vest in fiscal 1999 and 234 shares will vest in fiscal
2000. Pursuant to the Incentive Plan and the RRP, Mr. Goodwin is entitled
to receive dividends and other distributions made with respect to such
shares.
/(3)/ Includes director's fees of $18,150 (including $2,400 received as a
director of First State) paid to Mr. Goodwin. See " -- Directors'
Compensation." Also includes $7,788 paid to Mr. Goodwin for unused
vacation and sick leave. Executive officers of the Company receive
indirect compensation in the form of certain perquisites and other
personal benefits. The amount of such benefits received by the named
executive officer in fiscal 1997 did not exceed 10% of the executive
officer's salary and bonus.
Option Grants in Fiscal Year 1997. The following table contains
information concerning the grant of stock options during fiscal year 1997 to the
executive officers named in the Summary Compensation Table, above. Options were
granted pursuant to the Incentive Plan or to the 1991 Stock Option Plan, or
stock options or stock appreciation rights pursuant to the 1995 Stock Option and
Incentive Plan.
<TABLE>
<CAPTION>
Numbers of Securities % of Total Options Exercise or Base
Underlying Options Granted to Employees Price Expiration
Name Granted (# of Shares)/(1)/ in Fiscal Year ($ per Share) Date
---- --------------------- -------------- ------------- ----
<S> <C> <C> <C> <C>
B. K. Goodwin, III 15,000 36.9% $11.875 11/21/05
390 1.0% 12.50 12/12/06
</TABLE>
- --------------
/(1)/ See " -- Directors' Compensation."
7
<PAGE>
Aggregate Fiscal 1997 Option Exercises and Fiscal Year-End Option
Values. The following table sets forth information concerning options exercised
during fiscal 1997 and the value of options held by the named executive officers
at the end of the fiscal year.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Fiscal Year-End Fiscal Year-End /(1)/
Shares Value -------------------------- ---------------
Name Acquired on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- -------------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
B. K. Goodwin, III -- $ -- 26,668 / -- 183,575 / $ --
</TABLE>
- -------------
/(1)/ Calculated based on the product of: (a) the number of shares subject to
options and (b) the difference between the fair market value of the
underlying Common Stock based on the closing sale price of the Common
Stock on June 6, 1997 as reported on the Nasdaq SmallCap Market ($18.25
per share), and the exercise price of the options.
Employment Agreements. Effective January 1, 1996, the Company and First
Federal entered into employment agreements with Mr. Goodwin as Chief Executive
Officer and President of the Company and First Federal (the "Employment
Agreements"). The Employment Agreements are intended to enable the Company and
its banking subsidiaries to maintain a stable and competent management base.
The Employment Agreements provide for three-year terms and may be
extended each year for an additional year so that the remaining term shall be
three years. Each of the Employment Agreements was extended for an additional
year as of January 1, 1997. The Employment Agreements provide for, among other
things, a discretionary cash bonus, participation in all employee benefit plans,
death benefits and reimbursement of reasonable out-of-pocket business expenses.
In the event of the executive's death, the Employment Agreements provide for
payment of the remaining compensation due thereunder, plus medical insurance for
the executive's spouse for six months thereafter.
The Employment Agreements provide for termination for cause at any time.
In the event termination is other than for cause, the executive would be
entitled to receive his base salary for the remaining term of the Employment
Agreement, plus his salary for an additional 12-month period. In addition, the
executive would be entitled, at his election, to continued insurance benefits
coverage through the expiration of the term of the Employment Agreements or a
cash payment in an amount equal to the cost of obtaining substantially equal
benefits.
In the event of a change in control of the Company or First Federal that
results in either the dismissal of the executive or the executive's resignation
upon the occurrence of certain specified events, the executive would be entitled
to a severance payment equal to the excess of (i) 2.99 times his "base amount,"
as defined in Section 280G(b)(3) of the Internal Revenue Code, over (ii) the sum
of any other parachute payments, as defined under Section 280G(b)(2) of the
Internal Revenue Code, that the executive receives on account of the change in
control. Subject to the foregoing, the Company and First Federal also would
continue the executive's life, health, accident, and disability coverage for six
months following termination and, in the event of executive's death, pay death
benefits and health insurance (for the remainder of the six month period, if
any) to the executive's surviving spouse, if any. In addition, during the first
year following a change in control, the executive would receive such severance
payment if he voluntarily terminates employment within 90 days of the occurrence
of certain specified events (for example, a required move of his personal
residence or a material reduction in his base compensation) which had not been
agreed to in advance. The aggregate payments that would be made to the executive
assuming termination of employment under the foregoing circumstances at March
31, 1997, and without regard to other severance payments would have been
approximately $413,000.
8
<PAGE>
In addition, all directors of the Company have entered into Indemnification
Agreements with the Company. For a description of the terms of such
Indemnification Agreements, see " -- Directors' Compensation-- Indemnification
Agreements."
Directors' Compensation
Fees. Through December 1996, the directors of the Company received $750 per
month in connection with their service on the Board of Directors of the Company
and $500 per month in connection with their service on the Board of Directors of
First Federal. Beginning in January 1997, the directors of the Company receive
$900 per month in connection with their service on the Board of Directors of the
Company and $600 per month in connection with their service on the Board of
Directors of First Federal. In addition, Mr. Goodwin receives $200 per month in
connection with his service as Chairman of the Board of Directors of First
State.
Incentive Compensation Plan. Employees and directors of the Company are
eligible to participate in the Incentive Plan, the purpose of which is to
provide incentive compensation for employees and directors in the event the
Company achieves certain performance goals indicative of its profitability and
stability. A mathematical formula set forth in the Incentive Plan determines
three forms of incentive compensation that participants may receive: (i) annual
cash bonuses ("Bonuses"), (ii) restricted stock awards ("Restricted Stock"), and
(iii) stock options ("Options"). For each year in which the Incentive Plan is in
effect, the Company will pay each participant a Bonus equal to the product of
(i) 8% of the participant's annual base salary or director's fees, and (ii) a
"Multiplier," defined as the sum of (a) the percentage by which the Company's
and First Federal's return-on-assets ("ROA") exceeds the median ROA of other
members of a peer group of other thrift institutions headquartered in the
Southeast, plus (b) one-half of the percentage by which the percentage of
nonperforming assets ("NPA") of other companies in the peer group exceeds the
percentage of the Company's and First Federal's NPA.
For each Incentive Plan year, each participating key employee and director
will receive a Restricted Stock award in the form of a right, conditioned on the
participant's future performance of services, to shares of Common Stock. On a
per capita basis, non-employee directors receive in the aggregate, shares of
Restricted Stock having an aggregate fair market value equal to 7% of the total
Bonuses paid to directors and key employees for such year. On a pro rata basis,
key employees receive a Restricted Stock award based on their relative
compensation equal to 14% of the total Bonuses paid to directors and key
employees for such year. Vesting of Restricted Stock awards will generally occur
at the rate of 33 1/3% per year of a participant's service after the date of the
Restricted Stock award. Vesting will be accelerated to 100% upon a participant's
retirement at or after age 65, death, discharge from service for any reason
other than cause, or a change in control of the Company.
In addition, for each Incentive Plan year, each participating key employee
and director will receive Options to purchase five times the number of shares
subject to a Restricted Stock award granted to the participant for such year.
1991 Stock Option Plan. Pursuant to the FirstFed Bancorp, Inc. 1991 Stock
Option Plan for Outside Directors, non-employee directors first elected to the
Board of Directors subsequent to the conversion of First Federal from mutual to
stock form in 1991 automatically are awarded options to acquire 1,000 shares of
Common Stock, provided sufficient options are available for grant under such
plan. In addition, pursuant to the RRPs, such newly elected non-employee
directors automatically are awarded 500 shares of restricted Common Stock,
provided shares are available for grant under such plan.
1995 Stock Option Plan. Pursuant to the FirstFed Bancorp, Inc. 1995 Stock
Option and Incentive Plan (the "1995 Stock Option Plan"), directors and selected
employees of the Company and its affiliates are eligible to receive options to
acquire shares of Common Stock and to receive stock appreciation rights
(collectively, the "Awards"). The Company has reserved 30,000 shares of Common
Stock for issuance of Awards under the 1995 Stock Option Plan, and such Awards
are granted at the discretion of a committee that is comprised solely of non-
employee members of the Board of Directors.
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Directors' Retirement Plan. In their capacity as directors of First
Federal, directors of the Company participate in First Federal's Directors'
Retirement Plan (the "Directors' Plan"), which was approved by the Company's
stockholders in 1992 and amended effective January 1, 1994. Each director of
First Federal, whenever elected or appointed and whether or not also employed by
First Federal, is entitled to participate in the Directors' Plan, and thereby to
receive an annual retirement benefit for ten years in an amount per year equal
to $9,600 times the director's "applicable percentage." A director's "applicable
percentage" is based on his or her overall years of service as a director of
First Federal and increases from 0% for less than three years of service, to 50%
for between three and five years of service, to 75% for between six and nine
years of service, to 100% for 10 or more years of service. Retirement benefits
become payable upon a director's termination of service on the Board of
Directors for any reason. If a Participant dies prior to collecting his entire
vested benefit under the Directors' Plan, First Federal will pay the present
value of such vested but unpaid benefit to the director's designated beneficiary
(if living), and otherwise to the director's estate (unless the director had
elected to have said death benefit paid in installments). First Federal's Board
of Directors may amend or terminate the Directors' Plan at any time, provided
that such action may not affect the rights of directors to receive their vested
interest. The Directors' Plan is an unfunded plan for federal income tax and
labor law purposes, although First Federal has established a grantor trust, the
assets of which remain subject to the claims of First Federal's creditors. First
Federal expects to regularly contribute amounts to the trust equal to the
accrued expense for plan benefits.
Deferred Compensation Plans. First Federal and the Company maintain
separate but similar deferred compensation plans pursuant to which directors,
officers and select employees may annually elect to defer the receipt of Board
fees and up to 25% of their salary. Associated with each plan is a separate
grantor trust to which all fee and salary deferrals may be contributed. The
assets of these trusts will be used to pay benefits to participants, but are
subject to the claims of general creditors until distributed from the trusts.
Subject to the guidelines under each plan, each participant may elect (i) the
time and manner under which his or her plan benefit will be paid, and (ii) the
measure of the deemed investment return on his or her deferred compensation
account. Such return may be based in whole or part on either the rate of return
on Common Stock or First Federal's highest yielding certificate of deposit. A
participant's interest in the plans is at all times nonforfeitable, nonalienable
and nontransferable, although the interest of a deceased participant will be
paid to his or her designated beneficiary. The Boards of Directors of First
Federal and the Company are responsible for management of the operation and
administration of the respective plans and have the discretion to amend these
plans and the related trust agreements (subject to participant consent as to
vested benefits).
Indemnification Agreements. The Company has entered into Indemnification
Agreements (the "Indemnification Agreements") with each of the Company's
directors and with certain officers of the Company and First Federal. The
Indemnification Agreements provide for retroactive as well as prospective
indemnification to the fullest extent permitted by law against any and all
expenses (including attorneys' fees and all other costs and obligations),
judgments, fines, penalties and amounts paid in settlement in connection with
any claim or proceeding arising out of that person's service as an officer or
director of the Company or First Federal. The Indemnification Agreements also
provide for the prompt advancement of expenses to the director or officer in
connection with investigating, defending or being a witness or participating in
any proceeding. The Indemnification Agreements further provide a mechanism
through which the director or officer may seek court relief in the event the
Company's Board of Directors (or other person appointed by such Board)
determines that the director or officer would not be permitted to be indemnified
under applicable law. The Indemnification Agreements impose on the Company the
burden of proving that the director or officer is not entitled to
indemnification in any particular case.
Following a Change in Control, all determinations regarding a right to
indemnity and a right to advancement of expenses shall be made by independent
legal counsel to be selected by the director or officer and approved by the
Board. The Indemnification Agreements provide that a Change in Control shall be
deemed to have occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than
a trustee or other fiduciary holding securities under an employee benefit plan
of the Company or a corporation owned directly or indirectly by the stockholders
of the Company in substantially the same proportions as their ownership of stock
of the Company, is or becomes the "beneficial owner" (as
10
<PAGE>
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing 25% or more of the total voting power represented by
the Company's then outstanding Voting Securities, or (ii) during any 24-
consecutive-month-period, individuals who at the beginning of such period
constitute the Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof, or (iii) the stockholders
of the Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 80% of the total power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (iv) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company (in one
transaction or a series of transactions) of all or substantially all the
Company's assets. In the event of a potential Change of Control, the director or
officer may require the Company to establish a trust in an amount sufficient to
cover the anticipated claims under the agreement.
While not requiring the maintenance of directors' and officers' liability
insurance, the Indemnification Agreements require that the directors and
officers be provided with maximum coverage if there is such a policy. Further,
the Indemnification Agreements provide that if the Company pays a director or
officer pursuant to an Indemnification Agreement, the Company will be subrogated
to such director's or officer's rights to recover from third parties.
Transactions with Management
First Federal and First State each offer loans to officers and directors of
First Federal, First State and the Company in the ordinary course of business.
Such loans to directors and executive officers were made in the ordinary course
of business, were made on substantially the same terms, including interest rates
and collateral, as those prevailing for comparable transactions with non-
affiliates and do not involve more than the normal risk of collectibility or
present other unfavorable features.
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RELATIONSHIP WITH INDEPENDENT AUDITORS
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Arthur Andersen LLP, which was the Company's independent auditors for the
1997 fiscal year, is expected to be retained by the Board of Directors to be the
Company's auditors for the 1998 fiscal year. A representative of Arthur Andersen
LLP is expected to be present at the Meeting to respond to stockholders'
questions and will have the opportunity to make a statement if he or she so
desires.
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OTHER MATTERS
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The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting the proxies.
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MISCELLANEOUS
- -------------------------------------------------------------------------------
The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of common stock. In addition to solicitations by mail,
directors, officers and
11
<PAGE>
regular employees of the Company may solicit proxies personally or by telegraph
or telephone without additional compensation.
The Company's 1997 Annual Report to Stockholders, including financial
statements, is being mailed to all stockholders of record as of the close of
business on the Record Date. Any stockholder who has not received a copy of such
Annual Report may obtain a copy by writing to the Secretary of the Company. Such
Annual Report is not to be treated as a part of the proxy solicitation material
nor as having been incorporated herein by reference.
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STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's main office at 1630
Fourth Avenue North, Bessemer, Alabama 35020, no later than February 18, 1998.
Nothing in this paragraph shall be deemed to require the Company to include in
its proxy statement and proxy relating to the 1998 annual meeting any
shareholder proposal which does not meet all of the requirements for inclusion
established by the SEC in effect at the time such proposal is received.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Lynn J. Joyce
Lynn J. Joyce
Secretary
Bessemer, Alabama
June 18, 1997
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ANNUAL REPORT ON FORM 10-K
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A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED MARCH 31, 1997, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL
BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN
REQUEST TO THE SECRETARY, FIRSTFED BANCORP, INC., 1630 FOURTH AVENUE NORTH,
BESSEMER, ALABAMA 35020.
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12
<PAGE>
REVOCABLE PROXY
FIRSTFED BANCORP, INC.
Bessemer, Alabama
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ANNUAL MEETING OF STOCKHOLDERS
July 22, 1997
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The undersigned hereby appoints James B. Koikos, E.H. Moore, Jr. and
James E. Mulkin, or any of them, with full powers of substitution, to act as
proxies for the undersigned to vote all shares of the Company's common stock
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
(the "Meeting"), to be held at the main office of the Company located at 1630
Fourth Avenue North, Bessemer, Alabama, on Tuesday, July 22, 1997 at 4:30 p.m.,
local time, and at any and all adjournments thereof, as follows:
FOR WITHHOLD
--- --------
1. The election as directors of the [_] [_]
nominees listed below.
Fred T. Blair
Malcolm E. Lewis
G. Larry Russell
INSTRUCTION: To withhold your vote for any
nominee, write that nominee's name on the line below.
----------------------------------
The Board of Directors recommends a vote "FOR" election as directors of
all the nominees listed above.
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THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE NOMINEES FOR ELECTION AS A DIRECTOR. IF ANY
OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THOSE
NAMED IN THIS PROXY AS DIRECTED BY A MAJORITY OF THE BOARD OF DIRECTORS. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED
AT THE MEETING. THIS PROXY CONFERS DISCRETIONARY AUTHORITY ON THE HOLDERS
THEREOF TO VOTE WITH RESPECT TO THE ELECTION OF ANY PERSON AS DIRECTOR WHERE THE
NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE AND MATTERS INCIDENT
TO THE CONDUCT OF THE 1997 ANNUAL MEETING.
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<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting or
at any adjournment thereof and after notification to the Secretary of the
Company at the Meeting of the stockholder's decision to terminate this proxy,
then the power of said attorneys and proxies shall be deemed terminated and of
no further force and effect.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of notice of the Meeting, a Proxy Statement dated June
18, 1997 and the Company's 1997 Annual Report to Stockholders.
Dated: , 1997
------------------------
- --------------------------------- ------------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- --------------------------------- ------------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in which this card was
mailed. When signing as attorney, executor, administrator, trustee or guardian,
please give your full title. If shares are held jointly, each holder should
sign.
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PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
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