<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
FIRST FED BANCORP, INC.
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(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 0-11.
(1) Title of each class of securities to which transaction applies:
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
March 29, 1999
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,
April 27, 1999, 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,
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
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 27, 1999
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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, April 27, 1999 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 March 19, 1999, 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
Lynn J. Joyce
Secretary
Bessemer, Alabama
March 29, 1999
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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.
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<PAGE>
PROXY STATEMENT
OF
FIRSTFED BANCORP, INC.
1630 Fourth Avenue North
Bessemer, Alabama 35020
ANNUAL MEETING OF STOCKHOLDERS
April 27, 1999
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GENERAL
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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, April 27, 1999, 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 March 29, 1999.
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VOTING AND REVOCABILITY OF PROXIES
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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.
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, with respect to matters
incident to the conduct of the Meeting, and with respect to any other matter
presented to the Meeting if notice of such matter has not been delivered to the
Company in accordance with the Bylaws. If any other business is presented at the
Meeting as to which proxies in the accompanying form confer discretionary
authority, 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 March 19, 1999 (the
"Record Date"), are entitled to one vote for each share of the Company's common
stock, par value $.01 per share (the "Common Stock"), then held, except that
pursuant to the Company's 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 excess shares. As of the Record Date, the
Company had 3,052,829 shares of Common Stock issued, of which 2,476,447 shares
were outstanding. The presence, in person or by proxy, of the holders of record
of shares of capital stock of the Company entitling the holders to cast a
majority of the votes entitled to be cast is necessary to constitute a quorum at
the Meeting.
<PAGE>
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SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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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 231,632 (2) 9.35%
Wellington Management Company (3)
75 State Street
Boston, Massachusetts 02109 252,000 10.18%
</TABLE>
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(1) Based on information furnished by the respective beneficial owners. In
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), 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 initially 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, 143,770 shares
of Common Stock in the ESOP had been allocated to participating employees,
and, therefore, the ESOP Trustee will vote the remaining 87,862
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 officer named in the Summary Compensation Table and by
all executive officers and directors as a group.
Amount and Nature of Percent of Common
Name Beneficial Ownership(1) Stock Outstanding
---- -------------------- -----------------
Fred T. Blair 39,312 (2) 1.59%
B. K. Goodwin, III 73,593 (3) 2.91
James B. Koikos 43,590 (4) 1.75
A. W. Kuhn 116,428 4.70
Malcolm E. Lewis 86,882 (5) 3.51
E. H. Moore, Jr. 81,254 (6) 3.27
James E. Mulkin 75,580 3.05
Robert E. Paden 69,858 2.81
G. Larry Russell 54,358 (7) 2.18
All directors and executive
officers as a group
(11 persons) 723,264 (3) 27.60
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(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 or executive officer 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 or executive officer
effectively exercises sole, or shares, voting and/or investment power,
unless otherwise indicated. Includes 416 shares of Common Stock awarded
under First Federal's Recognition and Retention Plan (the "RRP") to Mr.
Goodwin, as to which shares he has voting power. Includes 2,000 share of
Common Stock awarded to Mr. Kuhn in connection with the 1995 Stock Option
and Incentive Plan (the "1995 Stock Option Plan") as to which shares he
has voting power within 60 days after the Record Date. Includes 634
shares, 55,051 shares, 9,374 shares, 524 shares, 636 shares, 6,934 shares,
524 shares, 6,936 shares, 19,936 shares and 143,899 shares of Common
Stock, as to which shares Directors Blair, Goodwin, Koikos, Kuhn, Lewis,
Moore, Mulkin, 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. Includes 15
shares, 115 shares, 91 shares, 91 shares, 31 shares, 31 shares and 737
shares of Common Stock for Directors Blair, Goodwin, Kuhn, Lewis, Paden
and Russell and for all executive officers and directors as a group,
respectively, pursuant to the Company's Incentive Compensation Plan (the
"Incentive Plan") as to which shares such directors have voting power.
(2) Includes 30,496 shares of Common Stock owned by Mr. Blair's wife.
(3) Includes 7,706 shares and 34,200 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 12,000 shares held in a trust of which Mr. Koikos is a trustee.
(5) Includes 2,000 shares of Common Stock owned by Mr. Lewis's wife.
(6) Includes 4,000 shares of Common Stock owned by Mr. Moore's wife.
(7) Includes 4,040 shares of Common Stock owned jointed by Mr. Russell's wife
and minor children.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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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, the
Company believes that during the fiscal year ended December 31, 1998 ("fiscal
1998"), all the filing requirements applicable to such persons have been timely
met.
3
<PAGE>
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PROPOSAL I - ELECTION OF DIRECTORS
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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 James B. Koikos, E. H. Moore,
Jr. and James E. Mulkin, 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 recommended a vote "FOR" election as directors of
all the nominees listed below.
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 both First
State Bank of Bibb County ("First State"), and First State's parent, First State
Corporation ("FSC"), which is a wholly-owned subsidiary of the Company. No other
director of the Company serves as a director of First State or FSC.
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2001
Year First Elected as Current
Age at Director of Term to
Name Record Date First Federal(1) Expire
---- ----------- ------------- ------
James B. Koikos 60 1995 1998
E. H. Moore, Jr. 64 1991 1998
James E. Mulkin 68 1992 1998
DIRECTORS CONTINUING IN OFFICE
Year First Elected as Current
Age at Director of Term to
Name Record Date First Federal(1) Expire
---- ----------- ------------- ------
Fred T. Blair 70 1968 1999
Malcolm E. Lewis 88 1968 1999
G. Larry Russell 48 1990 1999
B. K. Goodwin, III 47 1995 2000
A. W. Kuhn 77 1979 2000
Robert E. Paden 68 1992 2000
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(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.
4
<PAGE>
Unless otherwise stated, the principal occupation of each director of the
Company for the last five years is set forth below.
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 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 Executive Director of The Bessemer Housing
Authority in 1994. He was formerly a regional housing economist for the Public
Housing Administration (forerunner of H.U.D.), a Federal Aids Director, and
Community Development Director for the City of Bessemer.
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.
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. He was formerly owner and president
of Polar Storage Locker Plan, a processor for wholesale and retail meat sales.
G. Larry Russell. Mr. Russell is a self-employed Certified Public
Accountant in Bessemer, Alabama.
Other Executive Officers
C. Larry Seale, age 62, is Executive Vice President of the Company and
First Federal.
Lynn J. Joyce, age 35, is Chief Financial Officer, Vice President,
Secretary and Treasurer of the Company and First Federal.
Meetings and Committees of the Board of Directors
During the nine months ended December 31, 1998, the Board of Directors of
the Company held 9 regular meetings and no special meetings. During the nine
months ended December 31, 1998, 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. All
committees 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 the nine
months ended December 31, 1998, the Audit Committee, which consists of all
non-employee directors of the Company, met one time.
5
<PAGE>
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 the nine months ended December 31, 1998.
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 the nine months ended December 31, 1998, 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.
Executive Compensation and Other Benefits
Summary Compensation Table. The following table sets forth the cash and
noncash compensation for the nine months ended December 31, 1998, and for the
years ended March 31, 1998 and 1997, awarded to or earned by the Chief Executive
Officer of the Company. No other executive officer of the Company earned salary
and bonus for the nine months ended December 31, 1998, 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 Annual Stock Underlying LTIP All Other
Principal Position Period Salary Bonus Compensation (1) Awards(2) Options Payouts Compensation
- ------------------ ------ ------ ----- ---------------- --------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
B. K. Goodwin, III 9 Months
Chairman of the Ended
Board, Chief 12/31/98 $131,250 $ 16,100 $ --- $ 25,739 1,245 $ --- $ 22,730 (3)
Executive Officer Fiscal
and President of 1998 $156,250 $ 4,785 $ --- $ 834 235 $ ---
the Company and Fiscal
First Federal; 1997 $138,750 $ 5,805 $ --- $ 1,423 15,390 $ --- $ 25,938
Chairman of the
Board of First State
</TABLE>
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(1) 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 during the nine months
ended December 31, 1998, did not exceed 10% of the executive officer's
salary and bonus.
(2) Calculated by multiplying the number of shares of Common Stock awarded
pursuant to the Incentive Plan and 1995 Stock Option Plan based on the
closing sale price of the Common Stock on the date the shares were awarded
as reported on the Nasdaq SmallCap Market ($11.00 per share and $11.50 per
share, respectively). See " - - Directors' Compensation." The restricted
stock awarded in connection with the 1995 Stock Option Plan was transferred
to a deferred compensation plan. As of December 31, 1998, Mr. Goodwin held
530 shares of restricted stock with an aggregate value of $5,896 based on
the closing sale price of the Common Stock on such date ($11.125 per
share). Of this amount, 500 shares will vest in 1999 and 30 shares will
vest in 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 $13,500 (including $2,500 received as a
director of First State) paid to Mr. Goodwin. See " - - Directors'
Compensation." Also includes $6,730 paid to Mr. Goodwin for unused
vacation.
Option Grants in the Nine Months Ended December 31, 1998. The following
table contains information concerning the grant of stock options during the nine
months ended December 31, 1998, to the executive officer named in the Summary
Compensation Table, above. Options were granted pursuant to the Incentive Plan
or to the 1991 Stock Option Plan, or stock options or stock appreciation rights
pursuant to the 1995 Stock Option and Incentive Plan.
<TABLE>
<CAPTION>
Number of Securities % of Total Options Exercise or Base
Underlying Options Granted to Employees Price Expiration
Name Granted (# of Shares) in Fiscal Year ($ per Share) Date
---- --------------------- -------------- ------------- ----
<S> <C> <C> <C> <C>
B. K. Goodwin, III 1,245 (1) 18.35% $11.00 09/30/08
</TABLE>
- -------------
(1) See " - - Directors' Compensation."
6
<PAGE>
Aggregate Nine Months Ended December 31, 1998, Option Exercises and
December 31, 1998, Option Values. The following table sets forth information
concerning options exercised during the nine months ended December 31, 1998, and
the value of options held by the named executive officer at December 31, 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Value Options at December 31, 1998 December 31, 1998(1)
Name Acquired on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- -------------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
B. K. Goodwin, III --- $ --- 55,051/--- $291,315/$ ---
</TABLE>
(1) Calculated based on the fair market value of the underlying Common Stock as
reported on the Nasdaq SmallCap Market at December 31, 1998.
Employment Agreements. Effective January 1, 1996, the Company and First
Federal entered into employment agreements with Mr. Goodwin in his respective
capacities 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, 1999. 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, Mr. Goodwin
would be entitled, at his election, to continued insurance benefits coverage
through the expiration of the term of his 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 voluntary
resignation for any reason within 30 days thereafter, 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, Mr. Goodwin 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 December 31, 1998, and without regard to other severance
payments would have been approximately $625,000 to Mr. Goodwin.
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. 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 $250 per month in connection with his service as
Chairman of the Board of Directors of First State.
7
<PAGE>
Incentive Compensation Plan. The Company maintains the Incentive Plan, the
purpose of which is to provide incentive compensation for eligible 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) the participant's annual base
salary or director's fees, and (ii) a "Bonus Percentage," defined as the sum of
(a) "Safe ROA Bonus Percentage" which considers return-on-assets ("ROA")
compared to the median ROA of other members of a peer group in the Southeast,
the nonperforming assets ("NPA") compared to the peer group and the CAMEL rating
of First Federal, plus (b) "Growth Rewards," which are determined by the Board
of Directors each year.
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 the event of a
change in control, a participant will be entitled to receive Incentive Plan
benefits for the Plan year based on the number of days during the year in which
the Incentive Plan was in effect and the benefits paid to the participant during
the preceding three Incentive Plan years.
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 automatically are awarded
options to acquire 4,000 shares of Common Stock, provided sufficient options are
available for grant under such plan.
Recognition and Retention Plan. Pursuant to the RRP, newly elected
non-employee directors automatically are awarded 2,000 shares of restricted
Common Stock, provided shares are available for grant under such plan.
1995 Stock Option Plan. Pursuant to 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, stock appreciation rights and
restricted stock awards (collectively, the "Awards"). The Company has reserved
144,000 shares of Common Stock for issuance of Awards under the 1995 Stock
Option Plan. Effective May 19, 1998, each director of the Company received a
restricted stock award for 2,000 shares of Common Stock that vests at the rate
of 20% per year of service and accelerates to 100% upon a Change in Control, as
defined in the 1995 Stock Option Plan, or termination of service due to death,
disability, or retirement after age 65. Awards may also be granted at the
discretion of a committee that is comprised solely of non-employee members of
the Board of Directors. Participants may elect to defer receipt of all or a
percentage of shares that would otherwise be transferred upon the vesting of a
restricted stock award.
Deferred Compensation Plan. The Company maintains a Deferred Compensation
Plan 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. In June
1998, the Company merged the Directors' Retirement Plan with and into the
Deferred Compensation Plan. Associated with the Deferred Compensation Plan is a
separate grantor trust to which all fee and salary deferrals may be contributed.
The trust assets will be used to pay benefits to participants, but are subject
to the claims of general creditors until distributed from the trust. Subject to
the guidelines under the Deferred Compensation 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 one-year
certificate of deposit. Each director of the Company, whenever elected or
appointed and whether or not also employed by the Company, is also entitled to
receive an initial credit to his or her account of $71,000, which will vest
based on his or her overall years of service as a director of the Company.
Vested benefits become payable at the election of a participant as made one year
prior to distribution. If a participant dies prior to collecting his or her
entire vested benefit under the Deferred Compensation Plan, the value of such
vested but unpaid benefit will be paid to the director's designated beneficiary
or estate. The Company will contribute amounts to the trust equal to the accrued
expense for Plan benefits. The trust assets equal or exceed the amount of the
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individual participant accounts at December 31, 1998. The Board of Directors of
the Company is responsible for management of the operation and administration of
the Deferred Compensation Plan and has the discretion to amend the Plan 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 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 in 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
- --------------------------------------------------------------------------------
Arthur Andersen LLP, which was the Company's independent auditors for the
nine months ended December 31, 1998, is expected to be retained by the Board of
Directors to be the Company's auditors for the fiscal year ending December 31,
1999. 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
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than the matter described above in this Proxy Statement. However,
if any other matters should properly come before the Meeting, as to which
proxies in the accompanying form confer discretionary authority, the persons
named in the accompanying proxy will vote such proxy in respect thereof as
directed by a majority of the Board of Directors. Under SEC rules and the
Company's Bylaws, if a stockholder notified the Company of such stockholder's
intent to present a proposal at the Meeting after January 27, 1999, the persons
named in the accompanying proxy may exercise such discretionary voting authority
if the proposal is raised at the Meeting, without any discussion of the matter
in this Proxy Statement.
- --------------------------------------------------------------------------------
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 regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
The Company's December 31, 1998, 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
- --------------------------------------------------------------------------------
It is expected that the 2000 Annual Meeting of Stockholders will be held on
or about April 25, 2000. In order to be eligible for inclusion in the Company's
proxy materials for the 2000 Annual Meeting, 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 November 30, 1999.
With respect to the 2000 Annual Meeting, notice of a stockholder proposal, which
the stockholder has not previously sought to include in the Company's proxy
materials, is required under the Company's Bylaws to be received by January 26,
2000. Under SEC rules, if a stockholder notifies the Company of such
stockholder's intent to present a proposal for consideration at the 2000 Annual
Meeting after such date, the Company, acting through the persons named as
proxies in the proxy materials for such meeting, may exercise discretionary
voting authority with respect to such proposal without including information
regarding such proposal in its proxy materials. Nothing in this paragraph shall
be deemed to require the Company to include in its proxy materials relating to
the 2000 Annual Meeting, or to consider and vote upon at such meeting, any
stockholder proposal which does not meet all of the requirements established by
the SEC or the Company's Certificate of Incorporation or Bylaws in effect at the
time such proposal is received.
BY ORDER OF THE BOARD OF DIRECTORS
Lynn J. Joyce
Secretary
Bessemer, Alabama
March 29, 1999
- --------------------------------------------------------------------------------
ANNUAL REPORT ON FORM 10-KSB
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE NINE MONTHS
ENDED DECEMBER 31, 1998, 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.
10
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REVOCABLE PROXY
FirstFed Bancorp, Inc.
Bessemer, Alabama
ANNUAL MEETING OF STOCKHOLDERS
April 27, 1999
The undersigned hereby appoints Fred T. Blair, Robert E. Paden and G. Larry
Russell, 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, April 27, 1999 at 4:30 p.m., local
time, and at any and all adjournments thereof, as follows:
1. The election as directors of the nominees listed below.
James B. Koikos, E.H. Moore, Jr. and James E. Mulkin
FOR [_]WITHHOLD [_]
INSTRUCTION: To withhold your vote for any nominee, write that nominee's
name on the line below.
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The Board of Directors recommends a vote "FOR" election as directors of all
the nominees listed above.
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 AS TO WHICH THIS PROXY
CONFERS DISCRETIONARY AUTHORITY, 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 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 March 29, 1999,
and the Company's December 31, 1998 Annual Report to Stockholders.
Dated: ___________ , 1999 -------------------------------------
PRINT NAME OF STOCKHOLDER
-------------------------------------
SIGNATURE OF STOCKHOLDER
-------------------------------------
PRINT NAME 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.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
