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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
(Amendment No. 1)
Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1998 Commission File No.: 0-20082
ALLIANCE BANCORP
(exact name of registrant as specified in its charter)
Delaware 36-3811768
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
One Grant Square, Hinsdale, Illinois 60521
(Address of principal executive offices)
Registrant's telephone number, including area code: (630) 323-1776
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Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock par value $0.01 per share
(Title of class)
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. |_|
The aggregate market value of the voting stock held by non-affiliates
of the registrant, i.e., persons other than directors and executive officers of
the registrant, is $205,802,957 and is based upon the last sales price as quoted
on the Nasdaq National Market for March 11, 1999.
The Registrant had 11,352,781 shares of common stock outstanding as of
March 11, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
None
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<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
The Board of Directors of Alliance Bancorp is comprised of 15 members
divided into three classes. Directors are elected for staggered terms of three
years each, with the term of office of only one class of Directors expiring in
each year. The table below sets forth certain information regarding the members
of the Board, including the five nominees for election to the Board at the 1999
Annual Meeting of Stockholders, as well as information regarding the executive
officers of Alliance Bancorp.
<TABLE>
<CAPTION>
Amount and
Nature of
Year First Beneficial Percent
Name, Age, Principal Occupation and Elected Term to Ownership of of
-------
Business Experience for Past 5 Years to Board (1) Expire Stock (2) Class
------------------------------------ -------------- ------ --------- ------
NOMINEES AT THE 1999 ANNUAL MEETING OF STOCKHOLDERS
<S> <C> <C> <C> <C>
Edward J. Burns, Age 69 (3)................. 1963 2002 204,628(4) 1.72%
Retired; Chairman of the Board of
Liberty Bancorp from 1991 and
Liberty Federal Savings from 1982
until February 1997. President and
Chief Executive Officer of Liberty
Bancorp and Liberty Federal Savings
until 1994.
Whit G. Hughes, Age 73...................... 1982 2002 102,639(5) 0.86%
Chairman and former Chief Executive
Officer of Hughes Enterprises, Inc., a
distributor of appliances and parts and
a developer and operator of self-service
laundry stores.
Edward J. Nusrala, Age 59 (3)............... 1997 2002 24,200(6) 0.20%
Founder, owner and President of
Famous Brand Shoes, Inc., a retail shoe company.
William R. Rybak, Age 48 (3)................ 1986 2002 58,668(7) 0.49%
Chairman of the Board of Directors of
Hinsdale Federal from 1990 to
February 1997, and Chairman of the
Board of Hinsdale Financial from its
formation in 1992 to February 1997.
Executive Vice President and Chief
Financial Officer of Van Kampen American
Capital, Inc., a financial services
company specializing in money
management and the distribution of
mutual funds.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of
Year First Beneficial Percent
Name, Age, Principal Occupation and Elected Term to Ownership of of
-------
Business Experience for Past 5 Years to Board (1) Expire Stock (2) Class
------------------------------------ -------------- ------ --------- ------
<S> <C> <C> <C> <C>
Donald E. Sveen, Age 67 (3)................. 1971 2002 103,000(7) 0.86%
Retired; prior to July 1996, President,
Chief Operating Officer and Director
of The John Nuveen Company and
Subsidiaries and Chairman, Chief
Executive Officer and Director of the
Nuveen Select Tax-Free Income
Portfolio Funds. Nuveen is a financial
services company specializing in tax-
exempt investments and money
management.
CONTINUING DIRECTORS
Howard R. Jones, Age 63..................... 1991 2000 60,544(7) 0.51%
President of Packaging Design
Corporation, a manufacturer of
corrugated containers and specialties.
Fredric G. Novy, Age 60 (3)................. 1994 2000 286,157(8) 2.40%
Chairman of the Board of Directors of
Alliance Bancorp and Liberty Federal
Bank; President and Chief Executive
Officer of Liberty Bancorp and Liberty
Federal Savings from 1994 to February
1997. President of Cragin Financial
Corporation and Cragin Federal Bank
for Savings from 1990 through 1994.
William C. O'Donnell, Age 76................ 1979 2000 136,574(5) 1.14%
President of ODON Communications
Group, a radio broadcasting company.
Russell F. Stephens, Jr., Age 66............ 1971 2000 46,198(7) 0.39%
President of Insurance Concepts &
Design Inc., an insurance agency.
Vernon B. Thomas, Jr., Age 65 (3)........... 1969 2000 150,587(5) 1.26%
Attorney whose practice concentrates
in corporate, banking, real estate and
estate planning.
Kenne P. Bristol, Age 56 (3)................ 1986 2001 183,193(9) 1.54%
President and Chief Executive Officer
of Alliance Bancorp and Liberty
Federal Bank; previously President and
Chief Executive Officer of Hinsdale
Financial and Hinsdale Federal.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of
Year First Beneficial Percent
Name, Age, Principal Occupation and Elected Term to Ownership of of
-------
Business Experience for Past 5 Years to Board (1) Expire Stock (2) Class
------------------------------------ -------------- ------ --------- ------
<S> <C> <C> <C> <C>
Howard A. Davis, Age 51..................... 1995 2001 37,062(10) 0.31%
President and Chief Executive Officer
of Preferred Mortgage Associates, Ltd.,
a subsidiary of the Bank.
H. Verne Loeppert, Age 77................... 1964 2001 73,971(11) 0.62%
Retired; until December 31, 1996,
President and Chief Executive Officer
of CDV Corporation, a holding
company whose subsidiaries are
engaged in metal working tool
manufacturing.
David D. Mill, Age 70 (3)(12)............... 1967 2001 123,057(5) 1.03%
Dentist; Dr. Mill has owned his own
general dental practice since 1957.
Richard E. Webber, Age 69................... 1959 2001 298,476 2.50%
Mr. Webber is the former President
and Chief Financial Officer of
Southwest Bancshares and President
and Chief Executive Officer of
Southwest Federal. Previously, he had
been President of Southwest Federal
since 1970 and Chief Executive Officer
of Southwest Federal since 1959.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Richard A. Hojnicki, Age 49................. -- -- 81,510(13) 0.68%
Mr. Hojnicki is Executive Vice
President, Secretary and Chief
Financial Officer of Alliance Bancorp
and Liberty Federal Bank.
Edward J. Munin, Age 45..................... -- -- 3,167(14) 0.03%
Mr. Munin is a Senior Vice President
of Liberty Federal Bank and President
and Chief Executive Officer of Liberty
Financial Services, Inc., a subsidiary of
the Bank.
All directors and executive officers as a -- -- 1,973,631(15) 16.54%
group (17persons)
</TABLE>
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(1) Includes service on the Board of Directors of Hinsdale Federal Bank for
Savings, Liberty Federal Savings Bank, or Southwest Federal Savings and
Loan Association of Chicago.
4
<PAGE>
(2) Unless otherwise indicated, each person effectively exercises sole (or
shared with spouse) voting and dispositive power as to the shares
reported.
(3) Also serves on the Board of Directors of Liberty Federal Bank, the
wholly-owned subsidiary of Alliance Bancorp. (4) Includes 114,868 shares
with respect to Mr. Burns which may be acquired through the exercise of
stock options granted under the Liberty Bancorp, Inc. Amended and Restated
1991 Incentive Stock Option Plan (the "Liberty Bancorp Incentive Stock
Option Plan").
(5) Includes 49,657 shares subject to options which may be acquired by each
outside director indicated under the Liberty Bancorp, Inc 1991 Stock Option
Plan for Outside Directors (the "Liberty Bancorp Directors' Option Plan").
(6) Includes 15,000 shares that may be acquired by Mr. Nusrala pursuant to the
exercise of options granted under the Hinsdale Financial Directors' Option
Plan.
(7) Includes 23,043 shares that may be acquired pursuant to the exercise of
options granted under the Hinsdale Financial Corporation 1992 Stock Option
Plan for Outside Directors (the "Hinsdale Financial Directors' Option
Plan").
(8) Includes 183,669 shares with respect to Mr. Novy which may be acquired
through the exercise of stock options under the Liberty Bancorp Incentive
Stock Option Plan, and 8,334 shares which may be acquired pursuant to
presently exercisable stock options by Mr. Novy.
(9) Includes 136,411 shares that may be acquired pursuant to presently
exercisable stock options by Mr. Bristol.
(10) Includes 32,500 shares that may be acquired pursuant to presently
exercisable stock options by Mr. Davis.
(11) Includes 45,495 shares subject to options which may be acquired by Mr.
Loeppert under the Liberty Bancorp Directors' Option Plan.
(12) Dr. Mill is married to Mr. Burns' first cousin.
(13) Includes 44,729 shares that may be acquired pursuant to presently
exercisable stock options by Mr. Hojnicki.
(14) Includes 1,667 shares that may be acquired pursuant to presently
exercisable stock options by Mr. Munin.
(15) Includes 522,178 shares that may be acquired pursuant to presently
exercisable stock options granted to executive officers of Alliance
Bancorp and its subsidiaries, and 351,295 shares that may be acquired
pursuant to presently exercisable stock options granted to directors who
are not executive officers.
Ownership Reports by Directors and Officers
The Common Stock is registered pursuant to Section 12(g) of the Exchange
Act. The officers and directors of the Company and beneficial owners of greater
than 10% of the outstanding shares of Company Common Stock ("10% beneficial
owners") are required to file reports on Forms 3, 4 and 5 with the SEC
disclosing beneficial ownership and changes in beneficial ownership of the
Company Common Stock. SEC rules require disclosure in the Company's Proxy
Statement and Annual Report on Form 10-K of the failure of an officer, director
or 10% beneficial owner of the Company Common Stock to file a Form 3, 4 or 5 on
a timely basis. President and Chief Executive Officer Bristol filed a Form 4 in
October to report one transaction that should have been reported in September,
and filed a Form 4 in September to report one transaction that should have been
reported in August. Director Burns filed a Form 5 to report one transaction
which should have been reported on Form 4. Director Hughes filed a Form 5 to
report one transaction which should have been reported on Form 4. Senior Vice
President Munin filed a Form 4 in May to report one transaction which should
have been reported in February. Director Stachnik filed a Form 5 to report three
transactions which should have been reported on Form 4. Based on the Company's
review of such ownership reports, no other officer, director or 10% beneficial
owner of the Company failed to file ownership reports on a timely basis for the
fiscal year ended December 31, 1998.
Item 11. Executive Compensation.
Directors' Compensation
Fees. Outside directors of Alliance Bancorp receive a fee of $1,500 per
meeting of the Board. Prior to the merger of equals transaction, directors of
Alliance Bancorp did not receive any directors' fees. Outside Directors of
Liberty Federal Bank ("Liberty Federal") receive a monthly fee of $1,500.
Directors who are not officers also receive $300 for each committee meeting
attended. Outside directors of Liberty Federal's subsidiaries receive $300 per
quarter for serving on one or all of these Boards.
5
<PAGE>
Stock Benefit Plans for Directors. Directors have received options to
purchase common stock under various stock option plans. Currently, directors are
eligible to receive stock options and restricted stock awards under the 1997
Long-Term Incentive Stock Benefit Plan. Effective June 30, 1998, the date of the
acquisition of Southwest Bancshares, Inc., Richard E. Webber was granted an
option to purchase 30,000 shares of Common Stock, which option vests in three
equal annual installments. The exercise price for these options was $24.25, the
fair market value of the Common Stock at the date of grant.
Executive Compensation
Compensation Committee Report. Under rules established by the SEC,
Alliance Bancorp is required to provide certain data and information in regard
to the compensation and benefits provided to Alliance Bancorp's Chief Executive
Officer and other executive officers of Alliance Bancorp. The disclosure
requirements for the Chief Executive Officer and other executive officers
include the use of tables and a report explaining the rationale and
considerations that led to fundamental executive compensation decisions
affecting those individuals. In fulfillment of this requirement, the
Compensation and Personnel Administration Committee, at the direction of the
Board of Directors has prepared the following report, which report relates to
Alliance Bancorp's fiscal year ended December 31, 1998.
The compensation committee is composed solely of independent outside
Directors. The Board has delegated to the committee the responsibility of
assuring that the compensation of the Chief Executive Officer and other
executive officers is consistent with the compensation strategy, competitive
practices, the performance of Alliance Bancorp, and the requirements of
appropriate regulatory agencies. Non-employee directors who do not sit on the
compensation committee also participate in executive compensation
decision-making through the review, discussion and ratification of compensation
committee recommendations. All cash compensation paid to executive officers is
paid by Liberty Federal. Alliance Bancorp does not currently pay cash
compensation to executive officers.
Executive Compensation Philosophy. Since the predecessor of Alliance
Bancorp became a public company in 1992, the committee has had the following
goals for the compensation programs impacting the executives of Alliance Bancorp
and Liberty Federal:
o to provide motivation for the executives to enhance
shareholder value by linking a significant portion of their
compensation to earnings and the value of Alliance Bancorp's
Common Stock;
o to retain the executive officers who are capable of leading
Alliance Bancorp to high performance levels and to allow
Liberty Federal to attract high quality executives in the
future by providing total compensation opportunities which are
consistent with competitive norms of the industry and Alliance
Bancorp's level of performance; and
o to maintain reasonable "fixed" compensation costs by targeting
base salaries at competitive average levels.
The compensation committee of the Board of Directors of Liberty Federal
periodically reviews salaries, stock options and other aspects of executive
compensation. In general, the purpose of this evaluation is to ensure that
Liberty Federal's overall executive compensation programs remain competitive
with savings institutions and banks that are similar in both asset size and
geographical markets to Liberty Federal and that total executive pay represents
both the individual's performance as well as the current and past performance of
Liberty Federal.
For purposes of determining the competitive market for Liberty
Federal's executives, the committee has consulted with Crowe Chizek to review
the comprehensive compensation paid to top executives of thrifts and banks with
total assets in the range of Liberty Federal's total asset size and performance
results comparable to those of Liberty Federal.
6
<PAGE>
Crowe Chizek reviewed the following published compensation surveys to
determine competitive compensation levels:
1998 Crowe Chizek Bank Compensation Survey;
1998 Midwest Bank Holding Company Executive Compensation Report;
1998/1999 Watson Wyatt Financial Institutions Compensation Report;
1998 BAI BankCash Compensation Survey; and
1997 BAI Key Executive Compensation Survey.
In addition, Crowe Chizek conducted an independent review of the
compensation practices of eight midwest institutions with assets ranging from
$768 million to $1.9 billion. All compensation data from the surveys is updated
by a factor of 4% per year, which is consistent with wage inflation trends.
The surveys provide data for both commercial banks and thrifts. Crowe
Chizek has been recommending to their thrift clients for several years that for
compensation purposes they should compare themselves to commercial banks of
comparable size as well as other thrifts for the following reasons:
o the similarity in the balance sheet structure and the complexity
level between operating a thrift and a bank have significantly
narrowed; and
o thrifts are recruiting senior executives from commercial banks
more frequently, and to obtain top talent, the thrifts are
required to provide compensation levels competitive with banks.
In addition, the compensation committee reviewed the salary history and
performance levels for each of the executive officers in determining appropriate
compensation levels. It is expected that the comparative salary data compiled by
Crowe Chizek on comprehensive executive compensation will continue to be
utilized as the primary source of information in subsequent years in determining
compensation levels for executive officers.
Executive officers' compensation consists principally of salary, annual
incentive payments, and stock options. The salaries are generally in the average
range compared to other similar institutions. The incentive payments are based
on performance as well as position.
Compensation of Chief Executive Officer. The compensation committee meets
periodically to evaluate Mr. Bristol's performance and reports on that
evaluation to the Outside Directors of the Board. The Chief Executive's
compensation consists principally of three components:
o Salary
o Annual Incentive Payment
o Stock Option Grants
Under the leadership of the compensation committee, subsequent to the
determination of Mr. Bristol's fiscal 1998 compensation, the Board of Directors
of Liberty Federal, with Mr. Bristol excused, determined his fiscal 1998
compensation giving consideration to the size of Liberty Federal, the duties and
responsibilities of his position and a comparison of the compensation of chief
executive officers of similarly situated financial institutions. Mr. Bristol's
total cash compensation was based on his contribution to the overall long-term
strategy and financial strength and performance of Alliance Bancorp.
In 1993, Liberty Federal adopted a discretionary Annual Incentive
Compensation Program based on
7
<PAGE>
achievement of profitability performance goals while maintaining safety and
soundness standards. The program's objective is to build shareholder value by
providing an incentive to executives and staff to develop those business
strategies and take those actions that will impact Alliance Bancorp's annual as
well as long-term profitability. In order to attract and retain high quality
executives, Liberty Federal's executive compensation strategy is based on
providing total target compensation opportunities that are at, or above, the
competitive norms for companies competing in Liberty Federal's employment
market. Alliance Bancorp's total compensation philosophy is based on a
combination of surveyed average base compensation plus an average to above
average incentive opportunity with the intent of motivating management to
continually meet or exceed the goals of increasing shareholder value.
In addition to projected levels of profitability, the Chief Executive's
annual incentive is dependent on Liberty Federal maintaining certain levels of
performance in the following areas:
o the interest rate risk as measured by the one year interest rate
sensitivity gap,
o the ratio of non-performing assets to total assets; and
o the regulatory capital ratios.
While these measures may change from year-to-year based on the
strategic focus of Alliance Bancorp, the objective of achieving annual
profitability goals and enhancing shareholder value while maintaining long-term
safety and soundness will continue.
The 1998 annual incentive award granted to the Chief Executive Officer
is based on 40% of base salary if the target performance goals are achieved. If
the performance goals are exceeded, the percentage of base salary award can be
up to a maximum of 80%. Liberty Federal performance awards are based on pre-tax
income objectives in addition to safety and soundness considerations. Based upon
the criteria established by the Board, Mr. Bristol received a bonus of $100,000,
representing approximately 38% of his salary, for the period ended December 31,
1998. Also, during the period ended December 31, 1998, the committee granted Mr.
Bristol options to purchase 25,000 shares of Common Stock at an exercise price
equal to the fair market value of the shares at the time of grant.
In light of the termination of the Bank's defined benefit pension plan,
during 1998 the Bank implemented a supplemental executive retirement plan that
is intended to provide Mr. Bristol with a benefit at retirement equal to 70% of
the highest average annual salary payable to him for five consecutive years
during the ten years prior to retirement, less any amounts payable to him
pursuant to other qualified benefit plans. This plan was adopted in order to
provide Mr. Bristol with a level of retirement benefit comparable to that
provide to chief executive officers of other financial institutions of similar
size.
Compensation Committee
Edward J. Burns, Whit G. Hughes, Russell F. Stephens, Jr.,
Edward J. Nusrala and Donald E. Sveen (Chairman)
8
<PAGE>
Stock Performance Graph. The following table shows a comparison of the
cumulative total stockholder return on Alliance Bancorp's Common Stock, based on
the market price of the Common Stock, with the cumulative total return of
companies in the Nasdaq National Market and Standard & Poor's Savings & Loan
Companies Index. The Common Stock began trading on July 7, 1992.
COMPARISON OF 63 MONTH CUMULATIVE TOTAL RETURN*
Among Alliance Bancorp, The Nasdaq Stock Market (U.S.) Index
and The S&P Savings & Loan Companies Index
[GRAPHIC OMITTED]
* $100 INVESTED ON 9/30/93 IN STOCK OR INDEX - INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
<TABLE>
<CAPTION>
9/93 9/94 9/95 9/96 12/97 12/98
<S> <C> <C> <C> <C> <C> <C>
Alliance Bancorp.......................................... 100.0 115 131 138 238 179
Nasdaq Stock Market (U.S.)................................ 100.0 101 139 165 213 299
S&P Savings & Loan Companies.............................. 100.0 101 129 150 296 276
</TABLE>
9
<PAGE>
Summary Compensation Table. The following table sets forth the cash
compensation paid by Liberty Federal, for services rendered during the years
ended December 31, 1998, 1997 and the fiscal year ended September 30, 1996, to
the Chief Executive Officer and other executive officers of Liberty Federal
and/or Alliance Bancorp, who received an amount in salary and bonus in excess of
$100,000 in the fiscal year ended December 31, 1998 ("Named Executive
Officers").
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
(1)
Years
Ended Other All
12/31/98 Annual Awards Payout Other
Name and 12/31/97 Compensation Compensation
Principal Position 9/30/96 Salary Bonus (3) (4)
===================== =========== ============= ============== ============= ------------------------ ------------- ============
Restricted
Stock Options/ LTIP
Awards SARS (#) Payout
============ ============ =============
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kenne P. Bristol 1998 $260,000 $100,000 $ -- $ -- 25,000 $-- $46,160(7)(8)
President, Chief 1997 230,000 125,000 (2) -- -- 65,430 -- 158,470
Executive Officer 1996 220,000 75,000 -- -- 28,125 -- 20,919
and Director
Richard A. Hojnicki 1998 $120,000 $35,000 $ -- $ -- 7,500 $-- $773(7)
Executive Vice 1997 103,000 41,000 (2) -- -- 6,750 -- 70,695
President, Chief 1996 99,000 23,000 -- -- 8,437 -- 13,388
Financial Officer
and Corporate
Secretary
Fredric G. Novy 1998 $225,000 $100,000 $-- $-- 25,000 $-- $--
Chairman of the 1997 177,534 (5) 100,000 -- -- -- -- --
Board of Directors
Edward J. Munin 1998 $200,000 $57,000 $-- $-- 5,000 $-- $--
Senior Vice 1997 188,333 (6) 45,000 -- -- -- -- --
President of Bank,
President and Chief
Executive Officer of
Liberty Financial
Services, Inc.
Howard A. Davis 1998 $200,000 -- $-- $-- 7,500 $-- $2,375(7)
President and Chief 1997 200,000 $5,000 -- -- 11,250 -- --
Executive Officer of 1996 200,000 -- -- -- 22,500 -- --
Preferred Mortgage
Associates, Ltd. and
Director
====================================================================================================================================
- ------------------------------------
</TABLE>
(1) In 1996 Alliance Bancorp changed its fiscal year end from September 30 to
December 31. Changes in salary for Mr. Bristol and Mr. Hojnicki were
effective October 1, 1996.
(2) Bonuses relating to the 15 months ended December 31, 1997 are included in
the 1997 amount.
(3) Perquisites for the fiscal years ended December 31, 1998, 1997 and
September 30, 1996 did not exceed the lesser of $50,000 or 10% of the total
of the salary and bonus as reported for the Named Executive Officers.
(4) Represents the value of shares of Common Stock allocated to the account of
the Named Executive Officer under the ESOP. Allocations as of December 31,
1995, valued at the market price of the Common Stock as of that date is
included in the fiscal year ended September 30, 1996. In accordance with
the Merger with Liberty Bancorp, Inc., the Hinsdale Federal Bank for
Savings ESOP was terminated in 1997; therefore, the 1997 amount includes
the December 31, 1996 allocation, valued at the market price on that date
and the final termination allocation valued at the market price of Common
Stock as of December 31, 1997.
(5) Includes Mr. Novy's salary from February 10, 1997, the date of the merger
of Liberty Bancorp, Inc. with Alliance Bancorp.
(6) Includes Mr. Munin's salary from the date of his employment in February
1997.
(7) Includes a contribution by the Company in 1998 to match 25% of the Named
Executive's 1997 401(k) contribution: Bristol $2,250, Hojnicki $773 and
Davis $2,375.
(8) Includes the value of stock and accumulated dividends representing recovery
of benefits that would have been included in the 1997 termination of the
ESOP if not limited by the IRS Code.
10
<PAGE>
Employment Agreements. Liberty Federal has entered into an employment
agreement with Mr. Bristol, which provides for a term of thirty-six months. On
each anniversary date, the agreement may be extended for an additional twelve
months, so that the remaining term shall be thirty-six months. If the agreement
is not renewed, the agreement with Mr. Bristol will expire thirty-six months
following the anniversary date. The current Base Salary for Mr. Bristol is
$275,000. The base salary may be increased but not decreased. In addition to the
Base Salary, the agreement provides for, among other things, disability pay,
participation in stock benefit plans and other fringe benefits applicable to
executive personnel. The agreement provides for termination by Liberty Federal
for cause at any time. In the event Liberty Federal terminates the executive's
employment for reasons other than for cause, or in the event of the executive's
resignation from Liberty Federal upon (i) failure to re-elect the executive to
his current offices, (ii) a material change in the executive's functions, duties
or responsibilities, or relocation of his principal place of employment, (iii)
liquidation or dissolution of Liberty Federal, or (iv) a breach of the agreement
by Liberty Federal, the executive, or in the event of death, his beneficiary
would be entitled to severance pay in an amount equal to 2.99 times the annual
rate of Base Salary at the time of termination. Liberty Federal would also
continue the executive's life, health, dental and disability coverage for the
remaining unexpired term of the agreement.
If termination, voluntary or involuntary, follows a change in control
of Liberty Federal or Alliance Bancorp, the executive or, in the event of death,
his beneficiary, would be entitled to a severance payment equal to 2.99 times
the annual rate of Base Salary at the time of termination, which currently would
be approximately $1,125,000. Liberty Federal would also continue the executive's
life, health, dental and disability coverage for thirty-six months. 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 Liberty Federal's or
Alliance Bancorp's Common Stock during the term of the agreement, 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.
Alliance Bancorp has agreed to reimburse the executive for any excise taxes that
may be imposed under the federal income tax code in connection with any payments
made following a change in control.
As a result of the merger of Liberty Bancorp and Hinsdale Financial,
Alliance Bancorp and Liberty Federal are parties to employment agreements with
Messrs. Burns and Novy. The employment agreements provide for three-year terms.
Commencing on the first anniversary date and continuing each anniversary date
thereafter, the agreements may be extended by the Board of Directors for an
additional year so that the remaining terms shall remain three years. Base
salaries will be reviewed annually. In 1998, the base salaries of Messrs. Burns
and Novy provided for by the employment agreements were $125,000, and $225,000,
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 Liberty Federal or Alliance Bancorp for cause at any time. In the
event Liberty Federal or Alliance Bancorp choose to terminate the executive's
employment for reasons other than for cause; or in the event of the executive's
resignation from Liberty Federal and Alliance Bancorp upon (i) failure to
re-elect the executive to his current offices or nominate for board membership,
(ii) a material change in the executive's functions, duties or responsibilities,
or relocation of his principal place of employment, (iii) liquidation or
dissolution of Liberty Federal or Alliance Bancorp, or (iv) a breach of the
agreement by Liberty Federal or Alliance Bancorp; the executive, or in the event
of death, his beneficiary would be entitled to severance pay. Pursuant to his
agreements, in the event of such termination, Mr. Burns would receive a sum
equal to: (i) the amount of remaining salary payments under the agreement; (ii)
the annual weighted average of the amount of bonus and other compensation paid
to or accrued on behalf of Mr. Burns during the term of the agreement times the
remaining number of years, and any fraction thereof, under the agreement; and
(iii) an amount equal to the average of the annual contributions that were made
on his behalf to any employee benefit plans during the term of the agreement
times the remaining number of years, and any fraction thereof, under the
agreement. Under the terms of their agreements, in the event of such
termination, Mr. Novy would receive the greater of (i) the payments due for the
remaining term of his agreement, or (ii) one times his average annual
compensation for the three preceding taxable years and the amount of any
benefits received pursuant to any employee benefit plans on his behalf during
the term of his agreement.
If termination, voluntary or involuntary, follows a change in control
of Liberty Federal or Alliance Bancorp, the executive or, in the event of death,
his beneficiary, would be entitled to a severance payment equal to three times
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his average annual compensation over the past three years of employment with
Liberty Federal or Alliance Bancorp. Liberty Federal and Alliance Bancorp would
also continue the executive's life, medical, dental and disability coverage for
the remaining term of the agreement. 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 Liberty Federal's or Alliance Bancorp'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 term of the agreement. Payments to the executive under
Liberty Federal's agreements will be guaranteed by Alliance Bancorp in the event
that payments or benefits are to paid by Liberty Federal.
In the event of a change of control, based upon the past fiscal year's
salary, bonus and fees, Mr. Burns would receive approximately $375,000, and Mr.
Novy would receive approximately $975,000 in severance payments. In addition,
the agreements provide for continued life, medical, dental and disability
coverage for a period of 36 months. Any outstanding options vest upon a change
in control.
Severance Agreements. Liberty Federal has entered into a severance
agreement with Mr. Hojnicki. The Severance Agreement provides for a term of
twelve months; on the first anniversary date and continuing on each anniversary
thereafter, the agreement may be extended so that the remaining term shall be
twelve months. If not renewed, the Severance Agreement expires twelve months
thereafter. The Severance Agreement provides that at any time following a change
in control of Alliance Bancorp or Liberty Federal, if Alliance Bancorp or
Liberty Federal terminates the officer's employment for any reason other than
cause, or if the officer terminates his employment following his demotion, loss
of title, office or significant authority, a reduction in his compensation, or
relocation of his principal place of employment, the officer or, in the event of
death, his beneficiary, would be entitled to receive a severance payment equal
to an amount equal to one and one half times the base salary. The Bank would
also continue the officer's life, health, dental and disability coverage for the
remaining unexpired term of the Severance Agreement. Payment to the officer
under the Severance Agreement will be provided by Alliance Bancorp in the event
that payment or benefits are not paid by Liberty Federal. Liberty Federal has
entered into similar severance agreements with fifteen other officers of Liberty
Federal paying one times salary and one officer at one-half times salary.
Stock Option Plans. The Board of Directors of Alliance Bancorp
established stock option plans which provide discretionary awards to its
officers and key employees. The grant of awards to employees under the option
plans is determined by a committee of the Board of Directors consisting of
"Non-Employee" directors.
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Set forth below is information relating to options granted under the
Alliance Bancorp Stock Option Plans to the Named Executive Officers during
fiscal 1998.
<TABLE>
<CAPTION>
==============================================================================================================================
OPTION GRANTS IN LAST FISCAL YEAR
==============================================================================================================================
Potential Realizable
Value at Assumed
Individual Grants Annual Rates of Stock
Price Appreciation for
Option Term
Percent of Total Options
Name Options Granted to Employees in Exercise or Expiration 5% 10%
Granted(1) FY 1998 Base Price Date
<S> <C> <C> <C> <C> <C> <C> <C>
Kenne P. Bristol 25,000 14 $25.65 1/15/2008 $101,000 $212,250
- --------------------------- ----------------- ----------------- -------------------------- --------------------------
Fredric G. Novy 25,000 14 $25.65 1/15/2008 $101,000 $212,250
- ------------------------ ---------------- ------------------------- ------------- -------------- ------------ ------------ -
Richard A. Hojnicki 7,500 4 $25.65 1/15/2008 $30,300 $63,675
- ------------------------ ---------------- ------------------------- ------------- -------------- ------------ ------------ -
Howard A. Davis 7,500 4 $25.65 1/15/2008 $30,300 $63,675
- ------------------------ ---------------- ------------------------- ------------- -------------- ------------ ------------ -
Edward J. Munin 5,000 3 $25.65 1/15/2008 $20,200 $42,450
- ------------------------ ---------------- ------------------------- ------------- -------------- ------------ ------------ -
</TABLE>
- -----------------------------------
(1) These options become exercisable in three equal installments commencing
January 15, 1999.
The following table provides certain information with respect to the
number of shares of Alliance Bancorp Common Stock represented by stock options
held by the Named Executive Officers as of December 31, 1998. Also reported are
the values for "in-the-money" options which represent the positive spread
between the exercise price of any such existing stock options and the fiscal
year-end price of the Common Stock. No options were exercised during fiscal
1998.
<TABLE>
<CAPTION>
=========================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
=========================================================================================================================
Number of Unexercised Value of Unexercised In-
Options at The-Money Options at
Shares Acquired Value Fiscal Year-End Year-End (1)
Name Upon Exercise Realized
Exercisable/ Exercisable/
Unexercisable Unexercisable
(#) ($)
<S> <C> <C> <C> <C>
Kenne P. Bristol -- -- 112,267 / 62,620 $1,009,582 / $39,027
- --------------------------- ----------------- ----------------- -------------------------- --------------------------
Richard A. Hojnicki -- -- 42,229 / 9,750 $480,514 / $8,954
- --------------------------- ----------------- ----------------- -------------------------- --------------------------
Howard A. Davis -- -- 30,000 / 11,250 $152,001 / $14,922
- --------------------------- ----------------- ----------------- -------------------------- --------------------------
Fredric G. Novy -- -- 183,669 / 25,000 $516,271 / $--
- --------------------------- ----------------- ----------------- -------------------------- --------------------------
Edward J. Munin -- -- -- / 5,000 -- /--
- --------------------------- ----------------- ----------------- -------------------------- --------------------------
</TABLE>
- ------------------------------------
(1) Equals the difference between the aggregate exercise price of such options
and the aggregate fair market value of the shares of Common Stock that
would be received upon exercise, assuming such exercise occurred on
December 31, 1998, at which date the last sales price of the Common Stock,
as quoted on the Nasdaq National Market, was $19.5625.
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Retirement Plan. Until November 1997, Liberty Federal maintained the
Pension Plan ("Retirement Plan"), for the benefit of certain employees of
Liberty Federal (i.e., those persons who formerly had been employed by Hinsdale
Federal Bank for Savings). In March 1997, Liberty Federal adopted resolutions
terminating the Retirement Plan. Subsequent to the Retirement Plan's
termination, no additional benefits were accrued by any participants. Liberty
Federal requested and received a favorable determination letter on the
termination of the Retirement Plan. In November 1997, the participants' accrued
benefits were distributed and the trust was dissolved.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Security Ownership of Certain Beneficial Owners
Persons and groups owning in excess of 5% of Alliance Bancorp's Common
Stock are required to file certain reports regarding such ownership with
Alliance Bancorp and with the Securities and Exchange Commission ("SEC"), in
accordance with the Securities Exchange Act of 1934 (the "Exchange Act"). Based
on reports filed with the SEC, there were no persons who beneficially owned of
more than five percent of the Common Stock outstanding as of March 31, 1999.
For information regarding the security ownership of management,
reference is made to Item 10 of this Form 10K/A, which information is
incorporated herein by reference.
Item 13. Certain Relationship and Related Transactions.
Liberty Federal does not make loans to its directors and executive
officers except for overdraft lines of credit on checking accounts issued by
Liberty Federal, which are made in the ordinary course of business, and on
substantially the same terms, including interest rates, as those prevailing at
the time for comparable transactions with other persons and do not involve more
than the normal risk of collectibility or present other unfavorable features.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ALLIANCE BANCORP
Registrant
Date: April 29, 1999 By: /s/ Kenne P. Bristol
--------------------------
Kenne P. Bristol
President, Chief Executive
Officer and Director
15
