UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
FirstFed Bancorp
- --------------------------------------------------------------------------------
(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:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
________________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________________________________
3) Filing Party:
________________________________________________________________________________
4) Date Filed:
________________________________________________________________________________
<PAGE>
March 27, 2000
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 25, 2000, 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 April 25, 2000
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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 25, 2000, 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 17, 2000, 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 27, 2000
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
April 25, 2000
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, April 25, 2000, 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 27, 2000.
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.
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.
VOTING SECURITIES
Stockholders of record as of the close of business on March 17, 2000
(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 3,089,389 shares of Common Stock issued, of which 2,509,487 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>
SECURITIES 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.
Name and Address of Amount and Nature of Percent of Common
Beneficial Owner Beneficial Ownership(1) Stock Outstanding
---------------- ----------------------- -----------------
First Federal Savings Bank
Employee Stock Ownership
Plan and Trust
1630 Fourth Avenue North
Bessemer, Alabama 35020 227,916 (2) 9.08%
Wellington Management Company, LLP (3)
75 State Street
Boston, Massachusetts 02109 252,000 10.04%
- --------------------
(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, 157,626 shares
of Common Stock in the ESOP had been allocated to participating employees,
and, therefore, the ESOP Trustee will vote the remaining 70,290 unallocated
shares in the same proportion as allocated shares.
(3) Includes First Financial Fund, Inc. a registered closed-end investment
company. Wellington Management Company, LLP is the investment advisor to
First Financial Fund, Inc.
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.
Amount and Nature of Percent of Common
Name Beneficial Ownership(1) Stock Outstanding
Fred T. Blair 39,777 (2) 1.58%
B. K. Goodwin, III 76,543 (3) 2.98
James B. Koikos 44,055 (4) 1.75
A. W. Kuhn 114,822 4.57
Malcolm E. Lewis 85,440 (5) 3.40
E. H. Moore, Jr. 81,812 (6) 3.25
James E. Mulkin 78,542 3.13
Robert E. Paden 75,123 2.98
G. Larry Russell 49,903 (7) 1.98
C. Larry Seale 49,946 (3) 1.98
All directors and executive
officers as a group (11 persons) 733,597 (3) 29.08
(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 1,400 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 1,099 shares, 56,826 shares, 9,839
shares, 989 shares, 1,101 shares, 7,399 shares, 989 shares, 7,401 shares,
8,526 shares, 18,835 shares and 139,264 shares of Common Stock, as to which
shares Directors Blair, Goodwin, Koikos, Kuhn, Lewis, Moore, Mulkin, Paden
and Russell, Mr. Seale 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 30 shares, 139
shares, 139 shares, 6 shares, 6 shares, 304 shares and 872 shares of Common
Stock for Directors Goodwin, Kuhn, Lewis, Paden, Russell, Mr. Seale 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 8,695 shares, 18,338 shares and 36,432 shares of Common Stock
owned by the ESOP and allocated to the accounts of Mr. Goodwin, Mr. Seale
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 2,000 shares of Common Stock owned by Mr. Moore's wife.
(7) Includes 4,120 shares of Common Stock owned jointly by Mr. Russell's wife
and minor children.
<PAGE>
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, the
Company believes that during the fiscal year ended December 31, 1999 ("fiscal
1999"), all the filing requirements applicable to such persons have been timely
met.
3
<PAGE>
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 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 2003
Year First Elected as Current
Age at Director of Term to
Name Record Date First Federal(1) Expire
---- ----------- ---------------- ------
Fred T. Blair 71 1968 2000
Malcolm E. Lewis 89 1968 2000
G. Larry Russell 49 1990 2000
DIRECTORS CONTINUING IN OFFICE
Year First Elected as Current
Age at Director of Term to
Name Record Date First Federal(1) Expire
---- ----------- ---------------- ------
B. K. Goodwin, III 48 1995
A. W. Kuhn 78 1979 2001
Robert E. Paden 69 1992 2001
James B. Koikos 61 1995 2002
E. H. Moore, Jr. 65 1991 2002
James E. Mulkin 69 1992 2002
<PAGE>
(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.
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 Plant, a processor for wholesale and retail
meat sales.
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 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.
E. H. Moore, Jr. Mr. Moore is President and owner of Buddy Moore
Trucking, Inc. in Birmingham, Alabama.
James E. Mulkin. Mr. Mulkin is the President of Mulkin Enterprises,
Bessemer, Alabama, a diversified business operation.
Other Executive Officers
C. Larry Seale, age 63, is Executive Vice President of the Company and
First Federal.
Lynn J. Joyce, age 36, 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 year ended December 31, 1999, the Board of Directors of the
Company held 12 regular meetings and no special meetings. During the year ended
December 31, 1999, 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.
<PAGE>
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 year
ended December 31, 1999, 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 year ended December 31, 1999.
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 year ended December 31, 1999, 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 year ended December 31, 1999, the nine months ended
December 31, 1998, and for the year ended March 31, 1998, awarded to or earned
by the Chief Executive Officer and Executive Vice President of the Company. No
other executive officer of the Company earned salary and bonus for the year
ended December 31, 1999, 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>
B. K. Goodwin, III Fiscal
Chairman of the 1999 $190,000 $ 19,304 $ -- $ 3,195(3) 1,775 $ -- $ 28,808(5)
Board, Chief 9 Months
Executive Officer Ended
and President of 12/31/98 $131,250 $ 16,100 $ -- $25,739 1,245 $ -- $ 22,730
the Company and Fiscal
First Federal; 1998 $156,250 $ 4,785 $ -- $ 834 235 $ -- $ 28,188
Chairman of the
Board of First State
C. Larry Seale Fiscal
Executive Vice 1999 $102,000 $ 10,363 $ -- $ 1,710(4) 950 $ -- $ 5,494(5)
President of the 9 Months
Company and Ended
First Federal 12/31/98 $74,250 $ 9,108 $ -- $ 1,551 705 $ -- $ 4,950
Fiscal
1998 $96,750 $ 3,063 $ -- $ 3,195 180 $ -- $ 3,783
</TABLE>
- -------------------------
(1) Executive officers of the Company receive indirect compensation in the form
of certain perquisites and other personal benefits. The amount of such
<PAGE>
benefits received by the named executive officers during the year ended
December 31, 1999, 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 based on the closing sale price of the
Common Stock on the date the shares were awarded as reported on the Nasdaq
SmallCap Market ($9.00 per share). See " - - Directors' Compensation."
(3) As of December 31, 1999, Mr. Goodwin held 30 shares of restricted stock
with an aggregate value of $277 based on the closing sale price of the
Common Stock on such date ($9.25 per share). These shares will vest in
2000. Pursuant to the Incentive Plan, Mr. Goodwin is entitled to receive
dividends and other distributions made with respect to such shares.
(4) As of December 31, 1999, Mr. Seale held 324 shares of restricted stock with
an aggregate value of $2,994 based on the closing sale price of the Common
Stock on such date ($9.25 per share). Of this amount, 150 shares will vest
in 2000, 110 shares will vest in 2001 and 64 shares will vest in 2002.
Pursuant to the Incentive Plan, Mr. Seale is entitled to receive dividends
and other distributions made with respect to such shares.
(5) Includes director's fees of $21,500 (including $3,500 received as a
director of First State) paid to Mr. Goodwin. See " - - Directors'
Compensation." Also includes $7,308 and $5,494 paid to Mr. Goodwin and Mr.
Seale, respectively, for unused vacation and sick leave.
6
<PAGE>
Option Grants in the Year Ended December 31, 1999. The following table
contains information concerning the grant of stock options during the year ended
December 31, 1999, to the executive officers named in the Summary Compensation
Table, above. Options were granted pursuant to the Incentive Plan or to the 1991
Stock Option Plan, or stock options or stock appreciation rights pursuant to the
1995 Stock Option and Incentive Plan.
<TABLE>
<CAPTION>
Number of Securities % of Total Options Exercise or Base
Underlying Options Granted to Employees Price Expiration
Name Granted (# of Shares)(1) in Fiscal Year ($ per Share) Date
---- ------------------------ -------------- ------------- ----
<S> <C> <C> <C> <C> <C>
B. K. Goodwin, III 1,775 23.87% $ 9.00 09/30/09
C. Larry Seale 950 12.78% $ 9.00 09/30/09
</TABLE>
- -------------------------
(1) See " - - Directors' Compensation."
Aggregate Year Ended December 31, 1999, Option Exercises and December
31, 1999, Option Values. The following table sets forth information concerning
options exercised during the year ended December 31, 1999, and the value of
options held by the named executive officers at December 31, 1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at December 31, 1999 December 31, 1999(1)
Shares Value ---------------------------- ----------------------
Name Acquired on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- -------------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
B. K. Goodwin, III --- $ --- 56,826/--- $185,540/$ ---
C. Larry Seale --- $ --- 18,835/--- $ 57,387/$ ---
</TABLE>
- -------------------------
(1) Calculated based on the fair market value of the underlying Common Stock as
reported on the Nasdaq SmallCap Market at December 31, 1999.
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 and with Mr. Seale as Executive Vice President of First Federal
(collectively, 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. Mr. Goodwin's Employment Agreements were extended for an additional
year as of January 1, 2000. 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.
<PAGE>
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 in the case of Mr. Goodwin, 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, while Mr. Seale would be entitled to
continued coverage for a period of six months following termination.
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
7
<PAGE>
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 executives assuming termination of employment under the foregoing
circumstances at December 31, 1999, and without regard to other severance
payments would have been approximately $875,000.
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.
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.
<PAGE>
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.
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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.
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
individual participant accounts at December 31, 1999. 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 Exchange Act), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or a
<PAGE>
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.
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<PAGE>
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.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Arthur Andersen LLP, which was the Company's independent auditors for
the year ended December 31, 1999, is expected to be retained by the Board of
Directors to be the Company's auditors for the year ending December 31, 2000. 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.
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 26, 2000, 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, 1999, 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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<PAGE>
STOCKHOLDER PROPOSALS
It is expected that the 2001 Annual Meeting of Stockholders will be
held on or about April 24, 2001. 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 27,
2000. With respect to the 2001 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 24, 2001. Under SEC rules, if a stockholder notifies the Company of such
stockholder's intent to present a proposal for consideration at the 2001 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 2001 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
/s/Lynn J. Joyce
----------------
Lynn J. Joyce
Secretary
Bessemer, Alabama
March 27, 2000
ANNUAL REPORT ON FORM 10-KSB
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED
DECEMBER 31, 1999, 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.
11
<PAGE>
REVOCABLE PROXY
FirstFed Bancorp, Inc.
[ X ] PLEASE MARK VOTES
AS IN THIS EXAMPLE
Annual Meeting of Stockholders
April 25, 2000
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, April 25, 2000, 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 (except as marked to the
contrary below):
Fred T. Blair, Malcolm E. Lewis and G. Larry Russell
With- For All
For hold Except
[ ] [ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.
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 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.
Please be sure to sign and date this Proxy in the box below.
_________________________________________
Date
_________________________________________
Stockholder sign above
_________________________________________
Co-holder (if any) sign above
<PAGE>
Detach above card, sign, date and mail in postage paid envelope provided.
FirstFed Bancorp, Inc.
Bessemer, Alabama
The above signed acknowledges receipt from the Company prior to the execution of
this proxy of a notice of the Meeting, a Proxy Statement dated March 27, 2000,
and the Company's December 31, 1999, Annual Report to Stockholders.
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
