<PAGE> 1
SCHEDULE 14-A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [ ]
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 ss.240.14a-11(c) or ss.240.14a-12
Westco Bancorp, Inc.
--------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Douglas P. Faucette, Muldoon, Murphy & Faucette
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
................................................................
2) Aggregate number of securities to which transaction applies:
................................................................
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:
................................................................
<PAGE> 2
[ ] 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> 3
WESTCO BANCORP, INC.
2121 S. MANNHEIM ROAD
WESTCHESTER, ILLINOIS 60154
(708) 865-1100
March 11, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Westco Bancorp, Inc. ("Westco Bancorp" or "Company"), the holding company for
First Federal Savings and Loan Association of Westchester ("Association"), which
will be held on April 15, 1997 at 10:00 a.m., at 2121 S. Mannheim Road,
Westchester, Illinois.
The attached Notice of the Annual Meeting and the Proxy Statement describe
the formal business to be transacted at the Annual Meeting. Directors and
officers of Westco Bancorp, as well as representatives of Cobitz, VandenBerg &
Fennessy, the Company's independent auditors, will be present at the Annual
Meeting to respond to any questions that our stockholders may have.
The Board of Directors of Westco Bancorp has determined that the matters
to be considered at the Annual Meeting are in the best interests of the Company
and its stockholders. For the reasons set forth in the proxy statement, the
Board unanimously recommends a vote "FOR" each of the nominees specified under
Proposal 1 and "FOR" Proposal 2, the ratification of accountants.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOUR COOPERATION
IS APPRECIATED SINCE A MAJORITY OF THE WESTCO BANCORP COMMON STOCK MUST BE
REPRESENTED, EITHER IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE
CONDUCT OF BUSINESS.
On behalf of the Board of Directors and all of the employees of the Westco
Bancorp and the Association, I wish to thank you for your continued support. We
appreciate your interest.
Sincerely yours,
/s/ David C. Burba
David C. Burba
CHAIRMAN OF THE BOARD AND PRESIDENT
<PAGE> 4
WESTCO BANCORP, INC.
2121 S. MANNHEIM ROAD
WESTCHESTER, ILLINOIS 60154
(708) 865-1100
----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 15, 1997
----------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Westco Bancorp, Inc. will be held on April 15, 1997, at
10:00 a.m., at 2121 S. Mannheim Road, Westchester, Illinois.
The Annual Meeting is for the purpose of considering and voting upon the
following matters:
1. The election of two directors for terms of three years each;
2. The ratification of Cobitz, VandenBerg & Fennessy as independent
auditors of the Company for the fiscal year ending December 31,
1997; and
3. Such other matters as may properly come before the Annual Meeting or
any adjournment thereof.
The Board of Directors has fixed February 14, 1997, as the record date for
the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and at any adjournments thereof. Only record holders of the
common stock of the Company as of the close of business on that date will be
entitled to vote at the Annual Meeting or any adjournments thereof. In the event
there are not sufficient votes to approve or ratify any of the foregoing
proposals at the time of the Annual Meeting, the Annual Meeting may be adjourned
in order to permit further solicitation of proxies by the Company. A list of
stockholders entitled to vote at the Annual Meeting will be available at 2121 S.
Mannheim Road, Westchester, Illinois, for a period of ten days prior to the
Annual Meeting and will also be available for inspection at the Annual Meeting
itself.
By Order of the Board of Directors
/s/ Mary S. Suffi
Mary S. Suffi
VICE PRESIDENT AND SECRETARY
Westchester, Illinois
March 11, 1997
<PAGE> 5
WESTCO BANCORP, INC.
-----------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 15, 1997
----------------------
SOLICITATION AND VOTING OF PROXY
This proxy statement is being furnished to stockholders of Westco Bancorp,
Inc. ("Westco Bancorp" or the "Company"), in connection with the solicitation by
the Board of Directors of the Company ("Board of Directors" or the "Board") of
proxies to be used at the Annual Meeting of Stockholders (the "Annual Meeting")
to be held on April 15, 1997 at 2121 S. Mannheim Road, Westchester, Illinois at
10:00 a.m., and at any adjournments thereof. The 1996 Annual Report to
Stockholders, including the consolidated financial statements for the fiscal
year ended December 31, 1996, accompanies this proxy statement.
This proxy statement and the accompanying proxy card are initially being
mailed to stockholders on or about March 11, 1997.
Regardless of the number of shares of common stock owned, it is important
that stockholders of a majority of the shares be represented by proxy or present
in person at the Annual Meeting. Stockholders are requested to vote by
completing the enclosed proxy card and returning it signed and dated in the
enclosed postage-paid envelope. Stockholders are urged to indicate their vote in
the spaces provided on the proxy card. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS OF WESTCO BANCORP WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS
GIVEN THEREIN. WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED PROXIES WILL BE VOTED
"FOR" THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR NAMED IN THIS PROXY
STATEMENT AND "FOR" THE RATIFICATION OF COBITZ, VANDENBERG & FENNESSY AS
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31,
1997.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if
any, that may properly come before the Annual Meeting or any adjournments
thereof.
A proxy may be revoked at any time prior to its exercise by the filing of a
written notice of revocation with the Secretary of the Company, by delivering to
the Company a duly executed proxy bearing a later date, or by attending the
Annual Meeting and voting in person. However, if you are a stockholder whose
shares are not registered in your own name, you will need additional
documentation from your recordholder to vote personally at the Annual Meeting.
<PAGE> 6
The cost of solicitation of proxies in the form enclosed herewith will be
borne by Westco Bancorp. In addition to the solicitation of proxies by mail,
Morrow & Co., a proxy solicitation firm, will assist the Company in soliciting
proxies for the Annual Meeting and will be paid a fee estimated to be $2,000,
plus out-of-pocket expenses. Proxies may also be solicited personally or by
telephone or telegraph by directors, officers and regular employees of the
Company or the Association, without additional compensation therefor. Westco
Bancorp will also request persons, firms and corporations holding shares in
their names, or in the name of their nominees, which are beneficially owned by
others, to send proxy material to and obtain proxies from such beneficial
owners, and will reimburse such holders for their reasonable expenses in doing
so.
VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of shares
of common stock of Westco Bancorp (the "Common Stock"), with each share
entitling its owner to one vote on all matters to be voted on at the Annual
Meeting except as described below. There is no cumulative voting for the
election of directors.
The close of business on February 14, 1997 has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at this Annual Meeting
and any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 2,569,853 shares. All per share amounts
referenced in the proxy statement have been adjusted for the 3 for 2 stock split
distributed in May 1996.
As provided in the Company's Certificate of Incorporation, stockholders of
Common Stock who beneficially own in excess of 10% of the outstanding shares of
Common Stock (the "Limit") are not entitled to any vote in respect of the shares
held in excess of the Limit. A person or entity is deemed to beneficially own
shares owned by an affiliate of, as well as persons acting in concert with, such
person or entity. The Company's Certificate of Incorporation authorizes the
Board of Directors (i) to make all determinations necessary to implement and
apply the Limit, including determining whether persons or entities are acting in
concert, and (ii) to demand that any person who is reasonably believed to
beneficially own stock in excess of the Limit supply information to the Company
to enable the Board to implement and apply the Limit.
The presence, in person or by proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote (after
subtracting any shares held in excess of the Limit pursuant to the Company's
Certificate of Incorporation) is necessary to constitute a quorum at the Annual
Meeting. In the event there are not sufficient votes for a quorum or to approve
or to ratify any proposal at the time of the Annual Meeting, the Annual Meeting
may be adjourned in order to permit the further solicitation of proxies.
As to the election of directors, the proxy card being provided by the Board
of Directors enables a stockholder to vote "FOR" the election of the nominees
proposed by the Board, or to "WITHHOLD AUTHORITY" to vote for one or more of the
nominees being proposed. Under
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<PAGE> 7
Delaware law and the Company's Bylaws, directors are elected by a plurality of
votes cast, without regard to either (i) broker non-votes or (ii) proxies as to
which authority to vote for one or more of the nominees being proposed is
withheld.
As to the ratification of Cobitz, VandenBerg & Fennessy as independent
auditors of the Company and all other matters that may properly come before the
Annual Meeting, by checking the appropriate box, a stockholder may: (i) vote
"FOR" the item; (ii) vote "AGAINST" the item; or (iii) "ABSTAIN" from voting on
such item. Under the Company's Certificate of Incorporation and Bylaws, unless
otherwise required by law, the ratification of Cobitz, VandenBerg & Fennessy as
independent auditors of the Company, and all other matters shall be determined
by a majority of the votes cast, without regard to (a) broker non-votes, or (b)
proxies marked "ABSTAIN" as to that matter.
Proxies solicited hereby will be returned to the proxy solicitors or the
Company's transfer agent, and will be tabulated by inspectors of election
designated by the Board, who will not be employed by, or a director of, the
Company or any of its affiliates. After the final adjournment of the Annual
Meeting, the proxies will be returned to the Company for safekeeping.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as to those persons
believed by management to be beneficial owners of 5% or more of the Company's
outstanding shares of Common Stock on the Record Date. Certain reports regarding
beneficial ownership of 5% or more are required to be filed with the Company and
with the Securities and Exchange Commission ("SEC"), in accordance with Sections
13(d) or 13(g) of the Securities Exchange Act of 1934, as amended ("Exchange
Act") by persons or groups owning 5% or more. Other than those persons listed
below and Mr. Burba, whose ownership information is listed in the table
"Information with Respect to Nominees, Continuing Directors and Executive
Officers," the Company is not aware of any person or group that owns more than
5% of the Company's Common Stock as of the Record Date.
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<PAGE> 8
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------ ---------------------------- ------------- -------
<S> <C> <C> <C>
Common Stock First Federal Savings and Loan 252,389(1) 9.8%
Association of Westchester
Employee Stock Ownership Plan
and Trust ("ESOP")
2121 S. Mannheim Road
Westchester, Illinois 60154
Common Stock First Manhattan Company 163,350(2) 6.4%
437 Madison Avenue
New York, New York 10022
</TABLE>
- ----------------------
(1) The ESOP Administration Committee of the Association (the "Committee"),
consisting of Messrs. Burba and Brechlin and Mrs. Suffi, administers the
ESOP. Harris Bank Palatine has been appointed as the corporate trustee for
the ESOP ("ESOP Trustee"). The ESOP Committee may instruct the ESOP Trustee
regarding investment of funds contributed to the ESOP. The ESOP Trustee,
subject to its fiduciary duty, must vote all allocated shares held in the
ESOP in accordance with the instructions of the participating employees. As
of the Record Date, 161,310 shares of Common Stock in the ESOP had been
allocated to participating employees. Under the ESOP, unallocated shares
held in the suspense account will be voted by the ESOP Trustee in a manner
calculated to most accurately reflect the instructions received from
participants regarding the allocated stock so long as such vote is in
accordance with the provisions of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA").
(2) First Manhattan Company, in its capacity as investment advisor, may be
deemed beneficial owner of 163,350 shares of Common Stock.
-4-
<PAGE> 9
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
Pursuant to the Bylaws of Westco Bancorp, the Board of Directors is set at
seven (7) members unless otherwise designated by the Board. Each of the seven
members of the Board of Westco Bancorp also presently serves as a director of
the Association. Directors are elected for staggered terms of three years each,
with a term of office of only one of the three classes of directors expiring
each year. Directors serve until their successors are elected and qualified.
The two (2) nominees proposed for election at the Annual Meeting are
Messrs. Thomas J. Nowicki and David C. Burba. All nominees named are presently
directors of the Company and the Association. No person being nominated as a
director is being proposed for election pursuant to any agreement or
understanding between any person and Westco Bancorp, except as described under
the "-- Employment Agreements".
In the event that any such nominee is unable to serve or declines to serve
for any reason, it is intended that proxies will be voted for the election of
the balance of those nominees named and for such other persons as may be
designated by the present Board of Directors. The Board of Directors has no
reason to believe that any of the persons named will be unable or unwilling to
serve. UNLESS AUTHORITY TO VOTE FOR THE DIRECTORS IS WITHHELD, IT IS INTENDED
THAT THE SHARES REPRESENTED BY THE ENCLOSED PROXY CARD, IF EXECUTED AND
RETURNED, WILL BE VOTED "FOR" THE ELECTION OF ALL NOMINEES PROPOSED BY THE BOARD
OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL
NOMINEES NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO NOMINEES, CONTINUING DIRECTORS AND EXECUTIVE
OFFICERS
The following table sets forth, as of the Record Date, the names of
nominees, continuing directors and "named executive officers," as defined below,
as well as their age, a brief description of their recent business experience,
including present occupations and employment, certain directorships held by
each, the year in which each became a director of the Association, and the year
in which their terms (or in the case of nominees, their proposed terms) as
directors of the Company expire. This table also sets forth the amount of Common
Stock and the percent thereof beneficially owned by each director and by all
directors and executive officers as a group as of the Record Date.
-5-
<PAGE> 10
<TABLE>
<CAPTION>
NAME AND PRINCIPAL SHARES OF
OCCUPATION EXPIRATION COMMON STOCK OWNERSHIP
AT PRESENT AND FOR PAST DIRECTOR OF TERM AS BENEFICIALLY AS PERCENT
FIVE YEARS AGE SINCE(1) DIRECTOR OWNED (2) OF CLASS
- ----------------------- ---- -------- ----------- ---------------- -----------
NOMINEES
<S> <C> <C> <C> <C> <C>
Thomas J. Nowicki 54 1985 2000 12,141(3) *
Owner of Affiliated
Appraisal Company,
an independent fee
appraiser
David C. Burba 49 1973 2000 202,406(5)(6) 7.6%
Chairman of the Board (7)(8)
and President of the
Company; President,
Chief Executive and
Operating Officer of the
Association; President and
Director of Westco, Inc.;
and Former Chairman of the
Illinois League of Savings
Institutions(4)
CONTINUING DIRECTORS
Rosalyn M. Lesak 81 1978 1999 45,798(3)(5) 1.8%
Chairman of the Board of
the Association; Vice
President of Westco, Inc.
Edward A. Matuga 75 1961 1999 72,076(3)(9) 2.8%
Attorney in private
practice
Edward C. Moticka 80 1978 1999 27,096(3) 1.1%
President of Moticka
& Ralph, Inc., an
accounting and tax service
corporation
James E. Dick 65 1988 1998 20,188(3) *
President of Human
Resource Associates, a
personnel man-
agement consulting firm
Robert E. Vorel, Jr. 46 1988 1998 45,018(3) 1.7%
President of Crest Communi-
cations, Inc., a full
service advertising agency
-6-
<PAGE> 11
SHARES OF
NAME AND PRINCIPAL EXPIRATION COMMON STOCK OWNERSHIP
OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIALLY AS PERCENT
AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNED (2) OF CLASS
- ------------------------- ----- -------- ---------- ---------------- ----------
NAMED EXECUTIVE OFFICERS
(WHO ARE NOT DIRECTORS)
<S> <C> <C> <C> <C> <C>
Richard A. Brechlin 48 -- -- 73,758(5)(6) 2.8%
Executive Vice President (7)(8)
and Treasurer of the Company
and the Association
Gregg P. Goossens 48 -- -- 134,640(5)(6) 5.2%
Executive Vice President of (7)(8)
the Company and the Asso-
ciation
Stock Ownership of all directors 754,130(10)(11) 27.1%
and executive officers as a
group (12 persons)
- ----------------------------
</TABLE>
* Less than 1.0% of the Company's voting securities.
(1) Includes years of service as a director of the Company's predecessor, the
Association.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family member) voting and dispositive power as to shares reported.
(3) Includes 5,540, 18,975, 12,075, 6,095, 7,417 and 7,417 shares subject to
options granted to Mr. Nowicki, Mrs. Lesak, Messrs. Matuga, Moticka, Dick
and Vorel, respectively, under the Westco Bancorp, Inc. 1992 Stock Option
Plan for Outside Directors ("Directors' Option Plan") which are currently
exercisable.
(4) Mr. Burba is Mrs. Lesak's son-in-law.
(5) Includes 15,915, 613, 14,822, and 14,337 shares allocated to Mr. Burba, Mrs.
Lesak, Messrs. Brechlin and Goossens, respectively, under the Association's
ESOP.
(6) Includes 50,359, 20,739 and 21,198 shares held for Messrs. Burba, Brechlin,
and Goossens, respectively, in the First Federal Savings of Westchester
Profit Sharing Plan and Trust, of which they are participants and for which
they claim beneficial ownership.
(7) Includes 7,728, 5,244 and 4,416 shares awarded to Messrs. Burba, Brechlin
and Goossens, respectively, under the First Federal Saving and Loan
Association of Westchester Recognition and Retention Plans and Trusts (the
"ARPs") and as to which voting may be directed. Under the ARPs, the original
awards vest at 20% per year beginning on June 26, 1993 for officers and
employees.
(8) Includes 83,904, 29,844 and 29,244 shares subject to options granted to
Messrs. Burba, Brechlin and Goossens, respectively, under the Westco
Bancorp, Inc. 1992 Incentive Stock Option Plan ("Incentive Option Plan")
which are currently exercisable and excludes 20,976, 9,936 and 9,936 options
which are not exercisable. Such options vest at an annual rate of 20% of the
original amount awarded per year beginning on June 26, 1993.
(9) Includes 37,500 shares held in trust, of which Mr. Matuga is the trustee.
(10)Includes 23,736 shares (including 17,388 shares set forth in footnote 7
above) subject to awards under the ARPs as to which voting may be directed.
Includes 208,194 shares subject to options which are currently exercisable
under the Incentive Option Plan (including the 142,992 shares set forth in
footnote 8 above), which vest at a rate of 20% of the original amount
awarded, beginning on June 26, 1993, and 57,519 shares subject to options
which are currently exercisable under the Directors' Option Plan (set forth
in footnote 3 above). Includes 67,735 shares (including 45,687 shares set
forth in footnote 5 above) allocated to executive officers as a group under
the Association's ESOP as of December 31, 1996.
(11)Includes 127,471 shares (including 92,296 shares set forth in footnote 6
above) held in account for executive officers in the First Federal Savings
and Loan Association of Westchester Profit Sharing Plan and Trust.
-7-
<PAGE> 12
MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD
During 1996 the Board of Directors of the Company held 12 regular
meetings. All directors attended at least 75% in the aggregate of the total
number of Board meetings held and meetings of the committees on which he or she
served during 1996. The Board of Directors of the Company and the Association
maintain committees, the nature and composition of which are described below:
The Audit Committee of the Company consists of Messrs. Moticka and Vorel.
The purpose of this committee is to review the Company's and the Association's
budgets and audit performance and to evaluate policies and procedures relating
to auditing functions and controls. This committee also selects the Company's
independent auditors. The committee met 3 times in 1996 .
The Executive Committee of the Association consists of Messrs. Burba,
Brechlin and Goossens. This committee has the authority to approve transactions
and exercise most powers of the Board in the intervals between meetings of the
Board and to report any activity to the Board as needed between regular meetings
of the Board. This committee met 2 times in 1996.
The Compensation Committee of the Association consists of Messrs. Dick,
Nowicki and Matuga. The purpose of this committee is to establish compensation
for the executive officers and establish guidelines for the entire staff. See
"Executive Compensation - Compensation Committee Report on Executive
Compensation." The committee met 4 times in 1996.
The Company's Bylaws require the Nominating Committee to be comprised of
at least three directors, one of which must be the Chairman of the Board. The
Company's Nominating Committee for the 1997 Annual Meeting consists of Messrs.
Burba, Dick and Vorel. The committee considers and recommends the nominees for
director to stand for election at the Company's annual meeting of stockholders.
The Company's Bylaws provide for stockholder nominations for directors. These
provisions require such nominations to be made pursuant to timely written notice
to the Secretary of the Company. The stockholder's notice of nominations must
contain all information relating to the nominee which is required to be
disclosed by the Company's Bylaws and by the Exchange Act. See "Additional
Information - Notice of Business to be Conducted at an Annual Meeting." The
Company's Nominating Committee met on December 10, 1996.
DIRECTORS' COMPENSATION
DIRECTORS' FEES. Directors of the Company do not receive fees for serving
on the Company's Board. All directors of the Association receive an annual
retainer of $9,000. Directors also receive $250 for each board meeting attended
and outside directors receive an additional fee of $150 for each committee
meeting attended. Directors may defer fees pursuant to the Association's
deferred fee plan discussed below. The Company reimburses to the Association 10%
of fees paid. The Board awarded Mr. Dick an additional fee of $500 for his
participation as Chairman of the Compensation Committee.
-8-
<PAGE> 13
DIRECTOR DEFERRED FEE PLAN. The Association maintains the First Federal
Savings and Loan Association of Westchester Deferred Compensation Plan for
Directors. This is a non-tax qualified, unfunded plan that permits members of
the Board of Directors to defer compensation until termination of service as a
director. The plan was amended to allow participants to make a one-time election
to withdraw previously deferred funds prior to conversion from mutual to stock
form. Such an election would make a participant ineligible to participate in the
plan for five years. The directors will earn annual interest equal to the
Association's monthly cost of funds minus 0.5% on their accounts. The deferred
amounts vest immediately.
DIRECTORS' OPTION PLAN. Under the Directors' Option Plan, the total number
of options authorized to be granted to outside directors was 69,000. Each
outside director was granted, effective June 26, 1992, options to purchase
shares of Common Stock at an exercise price of $6.67 per share. The number of
options granted on such date was based on a formula whereby each outside
director was granted options equal to 1,207 shares for each year of service as
an outside director up to a maximum of ten years. In addition, the Chairman of
the Board was granted additional options for 690 shares for each year of service
as Chairman, up to a maximum of ten years. Additional grants were made on an
annual basis to outside directors with less than ten years of service. Such
options are exercisable one year from the date of grant. To the extent
available, each outside director on each anniversary of the effective date of
the Director's Option Plan, June 26, 1992, will be granted options to purchase
shares of Common Stock under the same formula specified above at an exercise
price equal to the fair market value of the Common Stock on the date of grant.
No shares remain in the Plan to be granted. In total, under the Directors'
Option Plan formula, 18,975, 7,417, 12,075, 12,075, 11,040 and 7,417 shares
subject to options have been granted to Mrs. Lesak, and Messrs. Dick, Matuga,
Moticka, Nowicki and Vorel, respectively. In the first quarter of 1996, Messrs.
Moticka and Nowicki exercised 1,000 options each on a pre-split basis.
SPECIAL TERMINATION AGREEMENT. The Association and the Company entered
into special termination agreements with Mrs. Lesak which provide for two year
terms and which may be extended for an additional year so that the remaining
term shall be two years. The agreements provide that if Mrs. Lesak's employment
is terminated at any time following a change in control of the Company or the
Association, Mrs. Lesak would be entitled to receive a severance payment equal
to two times her average annual compensation over the past two years of her
employment with the Association. The Association and the Company would also
continue Mrs. Lesak's life, health, and disability coverage for two years. Based
upon the past fiscal year's salary, in the event of a change in control Mrs.
Lesak would receive approximately $78,000.
EXECUTIVE COMPENSATION
THE REPORT OF THE COMPENSATION COMMITTEE AND THE STOCK PERFORMANCE GRAPH
SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT
INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR THE EXCHANGE ACT, EXCEPT AS TO
THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY
REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
-9-
<PAGE> 14
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. Under rules
established by the SEC, the Company is required to provide certain data and
information in regard to the compensation and benefits provided to the Company's
Chief Executive Officer and other executive officers. The disclosure
requirements for these executive officers include the use of tables and a report
explaining the rationale and considerations that led to the fundamental
compensation decisions affecting those individuals. In fulfillment of this
requirement, the Compensation Committee, at the direction of the Board of
Directors, has prepared the following report for inclusion in this proxy
statement.
GENERAL. The Company does not pay any cash compensation to the executive
-------
officers of the Company and, therefore, the Company does not maintain a
compensation committee. The Compensation Committee of the Board of Directors of
the Association (the "Compensation Committee") is responsible for establishing
the compensation levels and benefits for executive officers of the Association
who serve as executive officers of the Company and for reviewing the
recommendations of management for compensation and benefits for other officers
and employees of the Association. The executive officers of the Association and
the Company are David C. Burba, Chief Executive Officer and Chief Operations
Officer, Richard A. Brechlin, Executive Vice President and Treasurer (Chief
Financial Officer), and Gregg P. Goossens, Executive Vice President (Chief
Lending Officer). The Compensation Committee, which is composed of Messrs. Dick
(Chairman), Matuga and Nowicki, recommends to the Board of Directors the amount
of compensation to be paid to the executive officers and the Board of Directors
ratifies the compensation amounts.
COMPENSATION POLICIES. It is the Compensation Committee's policy to
---------------------
develop an executive compensation program which is designed to:
(i) support a pay for performance policy that differentiates in
compensation amounts based upon corporate performance;
(ii) motivate key executive officers to achieve strategic business
initiatives and reward them for their achievement; and
(iii) provide compensation opportunities which are comparable to those
offered in the industry, thus allowing the Company to retain
talented executives who are critical to the Company's long term
success.
In addition, in order to align the interests and performance of its
executive officers with the long term interests of its stockholders, the Company
and the Association adopted plans which reward the executives for delivering
long term value to the Company and the Association through stock ownership.
The compensation package available to executive officers is composed of
the following components:
(i) Base Salary;
(ii) Annual Cash Incentive Awards; and
-10-
<PAGE> 15
(iii) Long Term Incentive Compensation, including Option and Stock Awards.
Messrs. Burba, Brechlin and Goossens have employment agreements which specify a
minimum base salary and requires periodic review of such salary. In addition,
executive officers participate in other benefit plans available to all employees
including the Employee Stock Ownership Plan.
BASE SALARIES. In determining salary levels, the Compensation Committee
-------------
considers the entire compensation package, including the equity compensation
provided under the Company's stock plans, of the executive officers. The salary
levels are intended to be consistent with competitive practices of other
comparable financial institutions and each executives' level of responsibility.
The Compensation Committee consulted surveys of compensation paid to executive
officers performing similar duties for depository institutions and their holding
companies, with particular focus on the level of compensation paid by comparable
institutions in the Association's market area including the 1996 SNL Executive
Compensation Review .
Although the Compensation Committee's decisions are discretionary and no
specific formula is used for decision making, salary increases are aimed at
reflecting the overall performance of the Company and the performance of the
individual executive officer. Specifically, the Compensation Committee
considered the increased net income and relatively high earnings on equity
experienced by the Company in 1996.
ANNUAL CASH INCENTIVE AWARDS. The Compensation Committee believes that a
----------------------------
significant portion of the compensation package should be based on the
performance of the Executive Officer and awarded through bonuses. As discussed
under Base Salary, the bonus awards are intended to be consistent with
comparative practices of other comparable financial institutions and each
Executive Officer's level of responsibility. In 1995, the Compensation Committee
developed a formula that ties the amount of bonus awarded to four specific
performance parameters.
(i) Return on Investment
(ii) Return on Average Assets
(iii) Return on Average Equity
(iv) Earnings Per Share
Targets are set in each of these categories. The establishment of the
performance parameters included an assessment of how the Company's financial
performance compared with a peer group; the Sheshunoff 1996 Asset/Matrix, an
industry performance ranking; and the historical performance data of the
Association. The peer group was established by the Compensation Committee and
consisted of regional savings and loan associations, by asset size and
comparability. The peer group may change at the Compensation Committee's
discretion.
The four specific performance parameters represent 70% of the award. The
remaining 30% of the award is based on a fifth parameter entitled "Personal
Performance," where each officer receives a subjective evaluation by members of
the Compensation Committee. In all parameters, the bonus can range from 0% for
performance at or below 80% of the target; to 200% for performance at or above
120% of the target.
-11-
<PAGE> 16
In determining the amount of bonus awarded, the Compensation Committee
determines the awards that would be made pursuant to the performance parameters
discussed above and then adjusts the award at the committee's discretion to
reflect actions by regulatory agencies. Specifically, in the fall of 1996,
Congress passed and the President signed the Deposit Insurance Funds Act 1996.
Part of this bill dealt with the recapitalization of the Savings Association
Insurance Fund ("SAIF"). To fund this part of the bill, a special assessment was
levied on all SAIF-insured institutions. The levy for the Association was
approximately $1,602,000. This one-time assessment dramatically reduced
earnings, as it was booked in the quarter ended September 30, 1996. The
Compensation Committee disregarded this assessment and its effect on earnings
when computing the bonus awards for the officers as this was a one-time charge
over which the three executives had no control.
LONG TERM INCENTIVE COMPENSATION. The Company and the Association maintain
--------------------------------
the Incentive Option Plan and the Recognition and Retention Plan, respectively,
under which executive officers may receive grants and awards. The Compensation
Committee believes that stock ownership is a significant incentive in building
stockholder's wealth and aligning the interests of employees and stockholders.
In connection with the Company's initial public offering, all the executive
officers received grants and awards which had vesting periods of 20% per year
beginning June 26, 1993. Therefore, such grants and awards are currently
four-fifths vested. Although the Compensation Committee did not make any awards
during 1996, the committee does consider prior grants and awards when
determining the total compensation package. The value of this component of
compensation grows as the stock of the Company appreciates in value.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. After taking into
---------------------------------------------------
consideration the factors discussed above, including the overall compensation
package, surveys consulted and the specified performance factors, the Board of
Directors, acting on the recommendation of the Compensation Committee,
determined to grant Mr. Burba a raise of $6,500 or 3.4% effective January 1,
1996 which makes his compensation comparable to the compensation paid by peer
institutions in the Association's market area. In addition, the committee
determined that Mr. Burba's bonus would be $86,184 for fiscal 1996 since the
Association had met its performance targets under the bonus plan as well as
other discretionary performance factors described above. This bonus was
comparable to the amounts provided to chief executive officers of the surveyed
institutions. In addition, the committee considered the outstanding grants and
awards to Mr. Burba as well as the appreciation of such awards in determining
his 1996 compensation package.
-12-
<PAGE> 17
THE COMPENSATION COMMITTEE
James E. Dick Edward A. Matuga Thomas J. Nowicki
BOARD OF DIRECTORS
Rosalyn M. Lesak Edward C. Moticka Edward A. Matuga
David C. Burba Thomas J. Nowicki James E. Dick
Robert E. Vorel, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. All members
of the Compensation Committee are outside directors of the Company. In addition,
the Board of Directors participates in the decisions concerning the compensation
of executive officers. Mr. Burba does not participate in the Board of Director's
consideration of the executive officers' compensation. However, Mrs. Lesak
participates in compensation decisions and is a vice president of Westco, Inc.
Mr. Vorel is President of Crest Communications, Inc. which received a total of
$109,724 from the Association for its advertising services during the fiscal
year ended December 31, 1996.
-13-
<PAGE> 18
STOCK PERFORMANCE GRAPH. The following graph shows a comparison of the
cumulative total stockholder return on the Company's Common Stock based on the
market price of the Common Stock assuming reinvestment of dividends, with the
cumulative total returns of the companies on the Nasdaq National Market (U.S.
companies) and Nasdaq Bank Stock Indices. The data used to prepare the graph was
prepared by the Center for Research in Security Prices ("CRSP") of the
University of Chicago Graduate School of Business. In the table, the lines
represent yearly index levels derived from compounded daily returns that
include all dividends and if the yearly interval, based on the Company's fiscal
year-end, is not a trading day, the preceding trading day is used. In the table,
the index level for all indices is set to $100 on June 30, 1992. The Company's
Common Stock began trading on June 26, 1992.
COMPARISON OF CUMULATIVE TOTAL RETURNS
WESTCO BANCORP, INC.
JUNE 30, 1992 TO DECEMBER 31, 1996
[GRAPH GOES HERE]
<TABLE>
<CAPTION>
SUMMARY
06/30/92 12/31/92 12/31/93 12/30/94 12/29/95 12/21/96
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
WESTCO BANCORP, INC. 100.00 126.84 159.10 153.94 243.10 294.71
CRSP NASDAQ COMPOSITE INDEX (U.S.) 100.00 121.12 139.04 135.91 192.20 236.42
CRSP NASDAQ BANK INDEX 100.00 119.07 135.79 135.30 201.51 266.37
</TABLE>
NOTES:
A. THE LINES REPRESENT YEARLY INDEX LEVELS FROM COMPOUNDED
DAILY RETURNS THAT INCLUDE ALL DIVIDENDS.
B. THE INDEXES ARE REWEIGHTED DAILY, USING THE MARKET CAPITALIZATION
ON THE PREVIOUS TRADING DAY.
C. IF THE YEARLY INTERVAL, BASED ON THE FISCAL YEAR-END, IS NOT A
TRADING DAY, THE PRECEDING TRADING DAY IS USED.
D. THE INDEX LEVEL FOR ALL SERIES WAS SET TO $100.00 ON 06/30/92.
-14-
<PAGE> 19
SUMMARY COMPENSATION TABLE. The following table shows, for the fiscal
years ended December 31, 1996, 1995 and 1994, the cash compensation as well as
certain other compensation paid or accrued for those years, paid by the
Association, to the Chief Executive Officer and other executive officers of the
Company and the Association who received an amount in salary and bonus in excess
of $100,000 in 1996 ("Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------- ---------------------------
AWARDS PAYOUTS
------------------- --------
SECURITIES
RESTRICTED UNDERLYING
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
POSITION YEAR ($)(1) ($)(2) ($)(3) ($)(4) (#)(5) ($)(6) ($)(7)
- ------------------ ---- ------ ------ ----------- -------- --------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David C. Burba 1996 $211,350 $86,184 $ -- $ -- -- None $29,234
President 1995 204,250 78,500 -- -- -- None 61,917
1994 196,650 73,000 -- -- -- None 17,800
Richard A. Brechlin 1996 $109,200 $47,174 $ -- $ -- -- None $29,234
Executive Vice 1995 105,000 36,300 -- -- -- None 25,794
President and 1994 100,000 33,000 -- -- -- None 17,800
Treasurer
Gregg P. Goossens 1996 $ 92,000 $29,808 $ -- $ -- -- None $29,234
Executive Vice 1995 89,000 28,600 -- -- -- None 18,920
President 1994 85,000 26,000 -- -- -- None 17,800
</TABLE>
(1) Includes directors' fees for Mr. Burba.
(2) Includes bonuses granted to executive officers, based upon performance and
other factors discussed under the "Compensation Committee Report on
Executive Compensation."
(3) For 1996, 1995 and 1994, there were no (a) perquisites over the lesser of
$50,000 or 10% of the individual's total salary and bonus for each year;
(b) payments of above-market preferential earnings on deferred
compensation; (c) payments of earnings with respect to long term incentive
plans prior to settlement or maturation; (d) tax payment reimbursements;
or (e) preferential discounts on stock.
(4) As of December 31, 1996, Messrs. Burba, Brechlin and Goossens held 7,728,
5,244 and 4,416, respectively, shares under the ARPs with a market value
of $166,152, $112,746 and $94,944, respectively, based on a market price
of $21.50 at December 31, 1996. Such awards were made in 1992 which began
vesting in June of 1993. Such awards will be 100% vested upon termination
of employment due to death, disability or normal retirement, or following
a change in control of the Association or the Company. When shares become
vested and are distributed, the recipient will also receive an amount
equal to accumulated dividends and earnings thereon (if any).
(5) The Company maintains the Incentive Option Plan which provides for
discretionary awards to officers and employees. Options granted pursuant
to the Incentive Option Plan vest at a rate of 20% per year commencing on
June 26, 1993. Options granted include limited rights as described under
the heading "Incentive Stock Option Plan."
(6) The Company does not maintain a long term incentive plan and therefore,
there were no payouts or awards under such plans.
(7) Includes $29,234, $29,234 and $29,234 contributed by the Association to
the accounts of Messrs. Burba, Brechlin and Goossens, respectively,
pursuant to the Association's ESOP during 1996.
-15-
<PAGE> 20
EMPLOYMENT AGREEMENTS. The Association and the Company entered into
employment agreements with David C. Burba, Richard A. Brechlin and Gregg P.
Goossens in connection with the conversion from mutual to stock form of
organization. These agreements are designed to ensure that the Association and
Company will be able to maintain a stable and experienced management base.
The employment agreements with the Association and the Company provide for
a three-year term for Mr. Burba and two-year terms for Messrs. Brechlin and
Goossens. Commencing on the first anniversary date and continuing each
anniversary date thereafter, the respective Board of Directors may extend the
agreements for an additional year so that the remaining terms shall be three
years for Mr. Burba and two years for Messrs. Brechlin and Goossens unless
written notice of non-renewal is given by the Board of Directors after
conducting a performance evaluation of the executive. The agreements provide
that the base salary of the executive will be reviewed annually. For fiscal
1997, the base salaries for Messrs. Burba, Brechlin and Goossens are $199,500,
$109,200 and $92,000, respectively.
In addition to the base salary, the agreements provide for, among other
things, disability pay, participation in stock benefit plans and other fringe
benefits applicable to executive personnel. The agreements provide for
termination by the Association or the Company for cause at any time. In the
event that the Association or the Company choose to terminate the executive's
employment for reasons other than for cause, or in the event of the executives'
resignation from the Association and the Company upon (i) failure to re-elect
the executive to his current offices or board membership, (ii) a material change
in the executive's functions, duties or responsibilities, or relocation of his
principal place of employment, (iii) a relocation of the executive's principal
place of employment by more than 30 miles from its location at the effective
date of the agreement, or a material reduction in the benefits and perquisites
to the executive, (iv) liquidation or dissolution of the Association or the
Company, or (v) a breach of the agreement by the Association or the Company, the
executive, or in the event of death, his beneficiary would be entitled to
severance pay or liquidated damages in an amount equal to the salary to which he
would be entitled for the remaining term of the agreement.
If termination, voluntary or involuntary, follows a change in control of
the Association or the Company, the executive or, in the event of death prior to
payment, his beneficiary, would be entitled to a severance payment equal to the
greater of (i) the payment due for the remaining term of the agreement or (ii)
three times for Mr. Burba or two times for Messrs. Brechlin and Goossens average
compensation over the past three years of employment with the Association or the
Company. The Association and the Company would also continue the executive's
life, health, and disability coverage for the remaining unexpired term of the
agreements.
A change in control is generally defined to mean the acquisition by a
person or group of persons having beneficial ownership of 20% or more of the
Association's or the Company's Common Stock or a merger or other form of
business combination, sale of assets or contested election of directors which
results in a change of a majority of the Board of Directors during the
-16-
<PAGE> 21
term of the agreement. Payments to the officers under the employment agreements
will be guaranteed by the Company in the event payments or benefits are not paid
by the Association.
In the event of a change in control, based upon the past fiscal year's
salary, Messrs. Burba, Brechlin and Goossens would receive approximately
$850,000, $287,100 and $233,600, respectively, in severance payments in addition
to other non cash benefits provided for under the agreements. See "Salary
Continuation Agreements." In addition, any options granted under the Incentive
Option Plan and any awards granted under the ARPs will vest immediately upon a
change in control. Payments under the employment agreements in the event of a
change in control including other payments that might be made as a result of the
change in control, for example for the grant of limited rights and the present
value of acceleration in the exercisability of stock options or the vesting of
ARP awards, may constitute an excess parachute payment under Section 280G of the
Internal Revenue Code of 1986, as amended, resulting in the imposition of an
excise tax on the recipient and denial of the deduction for such excess amounts
to the Company and the Association.
EXECUTIVE SALARY CONTINUATION PLAN. The Association entered into Executive
Salary Continuation Agreements with Messrs. Burba, Brechlin and Goossens in 1988
providing for annual payments at retirement, death or disability. The
Association purchased insurance policies on each of the executives to help
defray the potential costs of benefits if payments were ultimately required. In
1996, while maintaining the insurance policies, these separate agreements were
replaced by an Executive Salary Continuation Plan.
If Messrs. Burba, Brechlin and Goossens continue employment until they
attain the age of 65, the Association will pay to Messrs. Burba, Brechlin and
Goossens (or their beneficiaries) an amount of $45,000, $15,000 and $23,000,
respectively, annually on the date of retirement for a period of ten years. This
benefit may also be paid upon retirement at age 55, but the amounts will be in
proportion to years of service divided by a factor of 30. In the event Messrs.
Burba, Brechlin or Goossens dies prior to retirement, the Association will pay
to their designated beneficiaries an amount of $60,000, $20,000 or $31,000,
respectively, for a period of ten years or, if so requested, in a lump sum based
upon the present value of the payments at the time of death. The amount of this
benefit will be increased annually by 3% during the course of the executive's
employment. In the event that the executive officer is disabled, as defined in
the plan, prior to retirement, the executive officer will receive an annual
payment equal to the retirement benefit for ten years, reduced proportionately
to years of service divided by a factor of 30. In consideration for these
benefits, the executive officer will provide post employment consulting services
to the Association over the 36 months following retirement. In the event that
the employment of Messrs. Burba, Brechlin or Goossens terminates following or in
connection with a change in control, the Association will pay such executive a
lump sum equal to the present value of the annual retirement benefit payable at
the executive's early retirement date. The aggregate expense of maintaining this
plan for the fiscal year ended December 31, 1996 was $54,150.
-17-
<PAGE> 22
INCENTIVE STOCK OPTION PLAN. The Company maintains the Incentive Option
Plan which provides discretionary awards to officers and employees as determined
by a committee of disinterested directors who administer the plan. The purpose
of the Incentive Option Plan is to advance the interest of the Company and its
stockholders by providing officers and employees with an additional incentive to
perform in a superior manner.
The following table provides certain information with respect to the
number of shares of Common Stock acquired upon the exercise of stock options and
the value realized thereon and the number of shares of Common Stock represented
by outstanding stock options held by the Named Executive Officers as of December
31, 1996. Also reported are the values for "in-the-money" options which
represent the positive spread between the exercise price of any such existing
stock options and the year-end price of the Common Stock.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING
SHARES VALUE UNEXERCISED OPTIONS/SARS AT VALUE OF UNEXERCISED IN-THE-
ACQUIRED ON REALIZED FISCAL YEAR-END MONEY OPTIONS/SARS AT
NAME EXERCISE(#) ($)(1) (#)(2)(3)(4)(5)(6) FISCAL YEAR-END ($)(7)
- ---------------- ----------- ---------- -------------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
David C. Burba - $ - 83,904 20,976 $1,244,296 $311,074
Richard A. Brechlin - - 29,844 9,936 442,587 147,351
Gregg P. Goossens 4,500 66,923 29,244 9,936 433,689 147,351
</TABLE>
- ----------------------------
(1) Based on the market value of the Common Stock as of the date of exercise
minus the exercise price.
(2) Options granted pursuant to the Incentive Option Plan become exercisable in
equal installments at a rate of 20% commencing one year from the date of
grant, June 26, 1993. To the extent not already exercisable, the options
become exercisable upon a change in control. In addition, vesting of non-
statutory options may be accelerated by the committee that administers the
plan.
(3) The purchase price may be made in whole or in part through the surrender of
previously held shares of Common Stock at the fair market value.
(4) Under limited circumstances, such as death, disability or normal retirement
of an employee, the employee (or his beneficiary) may request that the
Company, in exchange for the employee's surrender of an option, pay to the
employee (or beneficiary) the amount by which the fair market value of the
Common Stock exceeds the exercise price of the option on the date of the
employee's termination of employment. It is within the Company's discretion
to accept or reject such a request.
(5) Under the Incentive Option Plan, the committee may issue replacement options
in exchange for previously granted non-statutory options at exercise prices
that may be less than the previous exercise price, but may not be less than
85% of the fair market value of the common stock on the date such
replacement options are granted.
(6) Options are subject to limited rights (similar to stock appreciation rights
("SARs") pursuant to which the options, to the extent outstanding for at
least six months, may be exercised in the event of a change in control of
the Company. Upon the exercise of a limited right, the optionee would
receive a cash payment equal to the difference between the exercise price of
the related option on the date of grant and the fair market value of the
underlying shares of Common Stock on the date the limited right is
exercised.
(7) The options in this table have an exercise price of $6.67. As of December
31, 1996, the closing market price of the Common Stock was $21.50.
-18-
<PAGE> 23
DEFINED BENEFIT PLAN. The Association maintains the First Federal Savings
of Westchester Retirement Plan ("Retirement Plan"), for the benefit of those
eligible employees of the Association. In addition, the Association maintains
the First Federal Savings & Loan Association of Westchester Supplemental
Executives' Retirement Plan for the benefit of certain of its executive officers
effective February 14, 1995. The Retirement Plan is a noncontributory defined
benefit pension plan. The following table sets forth the estimated annual
benefits payable upon retirement at age 65 in calendar year 1996, expressed in
the form of a single life annuity, for the final average salary and benefit
service classification specified under the Retirement Plan and the Supplemental
Executive Retirement Plan.
<TABLE>
<CAPTION>
PLAN YEARS OF SERVICE AT RETIREMENT(1)
----------------------------------------------------------
FINAL AVERAGE
COMPENSATION(2) 15 YEARS 20 YEARS 35 YEARS(3) 42 YEARS
- --------------- -------- -------- ----------- --------
<C> <C> <C> <C> <C>
$ 25,000 $ 5,212 $ 6,950 $ 12,162 $ 14,595
50,000 11,400 15,200 26,600 31,920
75,000 17,587 23,450 41,037 49,245
100,000 23,775 31,700 55,475 66,570
150,000(4) 36,150 48,200 84,350 101,220
200,000(5) 48,525 64,700 113,225 135,870
250,000(5) 60,900 81,200 142,100 170,520
300,000(5) 73,275 97,700 170,975 205,170
350,000(5) 85,650 114,200 199,850 239,820
400,000(5) 98,025 130,700 228,725 274,470
</TABLE>
- ------------------------
(1) The benefit amounts shown in the table are subject to deductions for social
security benefits and other offset amounts.
(2) The compensation utilized for formula purposes includes the salary and bonus
reported in the "Summary Compensation Table" for each executive officer
excluding any directors fees paid to Mr. Burba.
(3) Years of service in excess of 35 will not increase benefits payable under
the Retirement Plan.
(4) Maximum allowed under IRS Code.
(5) Benefits provided under Supplemental Executive Retirement Plan.
The following table sets forth the years of credited service (I.E.,
benefit service) as of December 31, 1996 for each of the individuals named in
the summary compensation table.
<TABLE>
<CAPTION>
CREDITED SERVICE YEARS
------------------------
<S> <C>
David C. Burba 26
Richard A. Brechlin 14
Gregg P. Goossens 20
</TABLE>
-19-
<PAGE> 24
INDEBTEDNESS OF MANAGEMENT AND TRANSACTIONS WITH CERTAIN RELATED PERSONS
All loans made by the Association to its executive officers and directors
were made in the ordinary course of business, were made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons and did not involve more
than the normal risk of collectibility or present other unfavorable features.
PROPOSAL 2. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the year ended December 31, 1996
were Cobitz, VandenBerg & Fennessy. The Company's Board of Directors has
reappointed Cobitz, VandenBerg & Fennessy to continue as independent auditors
for the Association and the Company for the year ending December 31, 1997
subject to ratification of such appointment by the stockholders.
Representatives of Cobitz, VandenBerg & Fennessy will be present at the
Meeting. They will be given an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
stockholders present at the Meeting. UNLESS MARKED TO THE CONTRARY, THE SHARES
REPRESENTED BY THE ENCLOSED PROXY CARD WILL BE VOTED "FOR" RATIFICATION OF THE
APPOINTMENT OF COBITZ, VANDENBERG & FENNESSY AS THE INDEPENDENT AUDITORS OF THE
COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF COBITZ, VANDENBERG & FENNESSY AS THE
INDEPENDENT AUDITORS OF THE COMPANY.
ADDITIONAL INFORMATION
STOCKHOLDER PROPOSALS
To be considered for inclusion in the proxy statement and proxy relating
to the Annual Meeting of Stockholders to be held in 1998, a stockholder proposal
must be received by the Secretary of the Company at the address set forth in the
Notice of Annual Meeting of Stockholders, not later than November 11, 1997. Any
such proposal will be subject to Rule 14a-8 of the Rules and Regulations under
the Exchange Act.
NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING
The Bylaws of the Company provide an advance notice procedure for a
stockholder to properly bring business before an annual meeting. The stockholder
must give written advance notice to the Secretary of the Company not less than
ninety (90) days before the date originally fixed for such meeting; provided,
however, that in the event that less than one hundred (100) days notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
to be timely, advance notice by the stockholder must be received not later than
the close of business on the tenth day following the date on which the Company's
notice to stockholders of the annual
-20-
<PAGE> 25
meeting date was mailed or such public disclosure was made. The advance notice
by a stockholder must include the stockholder's name and address, as it appears
on the Company's record of stockholders, a brief description of the proposed
business, the reason for conducting such business at the annual meeting, the
class and number of shares of the Company's capital stock that are beneficially
owned by such stockholder and any material interest of such stockholder in the
proposed business. In the case of nominations to the Board, certain information
regarding the nominee must be provided. Nothing in this paragraph shall be
deemed to require the Company to include in its proxy statement and proxy
relating to an annual meeting any stockholder proposal which does not meet all
of the requirements for inclusion established by the SEC in effect at the time
such proposal is received.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
Whether or not you intend to be present at this Annual Meeting, you are
urged to return your proxy promptly. If you are present at this Annual Meeting
and wish to vote your shares in person, your proxy may be revoked by voting at
the Annual Meeting.
A COPY OF THE FORM 10-K (WITHOUT EXHIBITS) FOR THE YEAR ENDED
DECEMBER 31, 1996, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS OF
RECORD UPON WRITTEN REQUEST TO WESTCO BANCORP, INC., MS. MARY S.
SUFFI, SECRETARY, 2121 S. MANNHEIM ROAD, WESTCHESTER, ILLINOIS 60154.
By Order of the Board of
Directors
/s/ Mary S. Suffi
Mary S. Suffi
VICE PRESIDENT AND SECRETARY
Westchester, Illinois
March 11, 1997
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE
REQUESTED TO SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
-21-
<PAGE> 26
[FRONT SIDE]
REVOCABLE PROXY
WESTCO BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
APRIL 15, 1997
10:00 A.M.
The undersigned hereby appoints the official proxy committee, consisting of
each member of the Board of Westco Bancorp, Inc. (the "Company"), each with full
power of substitution to act as attorneys and proxies for the undersigned, and
to vote all shares of Common Stock of the Company which the undersigned is
entitled to vote only at the Annual Meeting of Stockholders, to be held at 2121
S. Mannheim Road, Westchester, Illinois, on April 15, 1997, at 10:00 a.m., and
at any and all adjournments thereof, as follows:
1. The election as directors of all nominees listed (except as marked to
the contrary below).
Thomas J. Nowicki and David C. Burba
FOR VOTE WITHHELD
|_|
INSTRUCTION: To withhold your vote for any individual nominee, write that
nominee's name on the line provided below.
- --------------------------------------------------------------------------------
2. The ratification of the appointment of Cobitz, VandenBerg & Fennessy
as the Company's independent auditors for the fiscal year ending
December 31, 1997.
FOR AGAINST ABSTAIN
|_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
<PAGE> 27
[BACK SIDE]
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS
ARE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" EACH OF THE PROPOSALS LISTED. IF
ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS PROXY WILL BE VOTED
BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE
BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL
MEETING.
The undersigned acknowledges receipt from the Company prior to the execution
of this proxy of a Notice of Meeting and of a Proxy Statement dated March 11,
1997.
Dated:
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------------------------
SIGNATURE OF STOCKHOLDER
------------------------
SIGNATURE OF STOCKHOLDER
Please sign exactly as your name
appears on this card. When signing as
attorney, executor, administrator,
trustee or guardian, please give your
full title. If shares are held
jointly, each holder should sign,
but the signature of one holder is
sufficient, unless contested.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
-------------------------------
