<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Ottawa Financial Corporation
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Ottawa Financial Corporation
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
[OTTAWA FINANCIAL CORPORATION LETTERHEAD]
April 2, 1998
Dear Fellow Shareholder:
On behalf of the Board of Directors and management of Ottawa Financial
Corporation (the "Corporation"), we cordially invite you to attend the Annual
Meeting of Shareholders of the Corporation. The meeting will be held at 10:00
A.M., Holland, Michigan time, on April 28, 1998 at the Holiday Inn located at
650 E. 24th Street, Holland, Michigan. This annual meeting will include
management's report to you on the Corporation's 1997 financial and operating
performance.
We encourage you to attend the meeting in person. Whether or not you plan
to attend, however, PLEASE READ THE ENCLOSED PROXY STATEMENT AND THEN COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING
POSTPAID RETURN ENVELOPE AS PROMPTLY AS POSSIBLE. This will save the
Corporation additional expense in soliciting proxies and will ensure that your
shares are represented at the meeting.
Your Board of Directors and management are committed to the continued
success of Ottawa Financial Corporation and the enhancement of your investment.
As President and Chief Executive Officer, I want to express my appreciation
for your confidence and support.
Very truly yours,
/s/ GORDON L. GREVENGOED
GORDON L. GREVENGOED
President and Chief Executive Officer
<PAGE> 3
OTTAWA FINANCIAL CORPORATION
245 Central Avenue
Holland, Michigan 49423
(616) 393-7000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on April 28, 1998
Notice is hereby given that the Annual Meeting of Shareholders of Ottawa
Financial Corporation (the "Corporation") will be held at the Holiday Inn
located at 650 E. 24th Street, Holland, Michigan on April 28, 1998, at 10:00
A.M., Holland, Michigan time.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of three directors of the Corporation;
2. The ratification of the appointment of Crowe, Chizek and
Company LLP as independent auditors for the Corporation for the
fiscal year ending December 31, 1998; and
such other matters as may properly come before the Meeting or any adjournments
thereof. The Board of Directors is not aware of any other business to come
before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on the
date specified above, or on any date or dates to which the Meeting may be
adjourned. Shareholders of record at the close of business on March 12, 1998,
are the shareholders entitled to vote at the Meeting and any adjournments
thereof. A complete list of shareholders entitled to vote at the Meeting will
be available for inspection by shareholders at the offices of the Corporation
during the ten days prior to the Meeting, as well as at the Meeting.
You are requested to complete, sign and date the enclosed form of Proxy
which is solicited on behalf of the Board of Directors, and to mail it promptly
in the enclosed envelope. The Proxy will not be used if you attend and vote at
the Meeting in person or otherwise properly revoke such proxy.
By Order of the Board of Directors
/s/ GORDON L. GREVENGOED
Gordon L. Grevengoed
President and Chief Executive Officer
Holland, Michigan
April 2, 1998
- -----------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A
PRE-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED WITHIN THE UNITED STATES.
- -----------------------------------------------------------------------------
<PAGE> 4
OTTAWA FINANCIAL CORPORATION
245 Central Avenue
Holland, Michigan 49423
(616) 393-7000
____________________
PROXY STATEMENT
____________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 1998
____________________
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of Ottawa Financial Corporation (the
"Corporation") of proxies to be used at the Annual Meeting of Shareholders (the
"Meeting") of the Corporation, to be held at the Holiday Inn located at 650 E.
24th Street, Holland, Michigan on April 28, 1998, at 10:00 A.M., Holland,
Michigan time, and all adjournments of the Meeting. The accompanying Notice of
Meeting and this Proxy Statement are first being mailed to shareholders on or
about April 2, 1998. Certain of the information provided herein relates to
AmeriBank (the "Bank"), a wholly-owned subsidiary of the Corporation.
At the Meeting, shareholders of the Corporation are being asked to
consider and vote upon (i) the election of three directors of the Corporation
and (ii) the ratification of the appointment of Crowe, Chizek and Company LLP
as the Corporation's independent auditors for the fiscal year ending December
31, 1998.
PROXIES AND PROXY SOLICITATION
If a shareholder properly executes the enclosed proxy distributed by the
Corporation, the proxies named will vote the shares represented by that proxy
at the Meeting. Where a shareholder specifies a choice, the proxy will be
voted in accordance with the shareholder's instructions. Where no specific
direction is given, the proxies will vote the shares "FOR" the election of
management's nominees for directors of the Corporation and "FOR" the
appointment of Crowe, Chizek and Company LLP as auditors for the fiscal year
ending December 31, 1998. As to any other matters presented at the Meeting,
the shares for which proxies have been received will be voted in accordance
with the discretion of the proxies.
Any proxy given pursuant to this solicitation or otherwise may be revoked
by the shareholder giving it at any time before it is voted by delivering to
the Secretary of the Corporation at the above address, on or before the taking
of the vote at the Meeting, a written notice of revocation bearing a later date
than the proxy or a later dated proxy relating to the same shares of common
stock of the Corporation (the "Common Stock"), or by attending the Meeting and
voting in person. Attendance at the Meeting will not in itself constitute the
revocation of a proxy.
The cost of solicitation of proxies will be borne by the Corporation. The
Corporation will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and employees of the Corporation and the Bank may solicit
proxies personally or by facsimile, telegraph or telephone, without additional
compensation.
VOTING RIGHTS; VOTE REQUIRED
Shareholders of record as of the close of business on March 12, 1998 (the
"Voting Record Date") will be entitled to one vote on each matter presented for
a vote at the Meeting for each share of Common Stock then held. Such vote may
be exercised in person or by a properly executed proxy as discussed above.
Directors shall be elected by a plurality of the shares present in person or
represented by proxy at the Meeting and entitled to vote on the election of
directors. Ratification of the of the appointment of Crowe, Chizek and Company
LLP as auditors for the year ending December 31, 1998 requires the affirmative
vote of the majority of shares present in person or represented by proxy at the
Meeting and entitled to vote on the matter.
<PAGE> 5
With regard to the election of directors, votes may be cast in favor of or
withheld from each nominee; votes that are withheld will be excluded entirely
from the vote and will have no effect. Abstentions may be specified on all
proposals except the election of directors and will be counted as present for
purposes of the item on which the abstention is noted. Abstentions on the
proposal to ratify the appointment of Crowe, Chizek and Company LLP as the
Corporation's independent auditors will have the effect of a negative vote
since that proposal requires the affirmative vote of a majority of the shares
present in person or by proxy and entitled to vote at the Meeting. A broker
non-vote (i.e., proxies from brokers or nominees indicating that such persons
have not received instructions from the beneficial owners or other persons as
to certain proposals on which such beneficial owners or persons are entitled to
vote their shares but with respect to which the brokers or nominees have no
discretionary power to vote without such instructions) will have no effect on
the outcome of the election of directors or the ratification of auditors.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of the Voting Record Date, the Corporation had 5,304,141 shares of
Common Stock issued and outstanding. The following table sets forth, as of the
Voting Record Date, information regarding share ownership of: (i) those persons
or entities known by management to beneficially own more than five percent of
the Corporation's Common Stock and (ii) all directors and executive officers as
a group. See "Proposal I - Election of Directors" for information regarding
share ownership of the Corporation's Directors and named Executive Officers in
the Summary Compensation Table.
<TABLE>
<CAPTION>
Beneficial Percent of
Beneficial Owners Ownership(1) Class
------------------------------------ ------------- ----------
<S> <C> <C>
Ottawa Financial Corporation(2) 464,025 8.75%
Employee Stock Ownership Plan
245 Central Avenue
Holland, Michigan 49423
Schwartz Investment Counsel, Inc.(3) 532,680 10.04%
and Schwartz Investment Trust
3707 W. Maple
Bloomfield Hills, Michigan 48301
Directors and executive officers 772,220 13.87%
of the Corporation and the Bank
as a group (11 persons)(4)
</TABLE>
____________________
(1) All amounts have been adjusted to reflect the 10% stock dividend paid by
the Corporation on September 30, 1997.
(2) Represents shares held by the Ottawa Financial Corporation Employee Stock
Ownership Plan (the "ESOP"), of which 191,796 shares have been allocated
to accounts of participants. Pursuant to the terms of the ESOP,
participants in the ESOP have the right to direct the voting of shares
allocated to participant accounts. First Bankers Trust Company, N.A.,
Quincy, Illinois, as the trustee of the ESOP, may also be deemed to be a
"beneficial owner" of the shares held by the ESOP which have not been
allocated to a specific participant's account or which have been allocated
but not voted by the participants.
(3) As reported to the Company by representatives of Schwartz Investment
Counsel, Inc. ("SICI") and related entities, Schwartz Value Fund, ("SVF"),
G&G Limited Partnership ("G&G"), George P. Schwartz ("GPS") and Gregory J.
Schwartz ("GJS"). SICI reported sole voting power with respect to 163,410
shares of Common Stock, sole investment power with respect to 121,020
shares of Common Stock, and shared investment power with respect to 42,390
shares of Common Stock; SVF reported sole voting power and investment
power with respect to 181,500 shares of Common Stock; G&G reported sole
voting power and investment power with respect to 179,740 shares of Common
Stock; GPS reported sole voting power and investment power with respect to
5,830 shares of Common Stock; and GJS reported sole voting power and
investment power with respect to 2,200 shares of Common Stock.
(4) Includes shares held directly, as well as shares held jointly with family
members, shares held in retirement accounts, held in a fiduciary capacity,
held by certain of the group members' families, or held by trusts of which
the group member is a trustee or substantial beneficiary, with respect to
which shares the group member may be deemed to have sole or shared voting
and/or investment powers. This amount also includes 262,345 shares as to
which directors and executive officers have the right to acquire
beneficial ownership pursuant to stock options and warrants.
2
<PAGE> 6
PROPOSAL I -- ELECTION OF DIRECTORS
The Corporation's Board of Directors is composed of ten members.
Approximately one-third of the directors are elected annually. Directors of
the Corporation are generally elected to serve for a three-year term or until
their respective successors are elected and qualified.
The following table sets forth certain information, as of the Voting
Record Date, regarding the composition of the Corporation's Board of Directors,
including each director's term of office. The Board of Directors acting as the
nominating committee has recommended and approved the nominees identified in
the following table. It is intended that the proxies solicited on behalf of
the Board of Directors (other than proxies in which the vote is withheld as to
a nominee) will be voted at the Meeting "FOR" the election of the nominees
identified below. If a nominee is unable to serve, the shares represented by
all valid proxies will be voted for the election of such substitute nominee as
the Board of Directors may recommend. At this time, the Board of Directors
knows of no reason why a nominee might be unable to serve if elected. Except
as disclosed herein, there are no arrangements or understandings between any
nominee and any other person pursuant to which the nominee was selected. An
asterisk (*) in the table indicates that an individual beneficially owns less
than one percent of the outstanding Common Stock of the Corporation.
<TABLE>
<CAPTION>
POSITION(S) HELD IN DIRECTOR TERM TO BENEFICIAL PERCENT OF
NAME AGE THE CORPORATION SINCE(1) EXPIRE OWNERSHIP(2)(3) CLASS
- ---- ----- ------------------- -------- ------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C>
NOMINEES
Gordon L. Grevengoed 66 President, Chief 1986 2001 169,166 3.15%
Executive Officer
and Vice Chairman of
the Board
G. W. Haworth 86 Director 1966 2001 74,283 1.40%
Leon E. Koops 53 Director 1986 2001 46,789 *
DIRECTORS CONTINUING IN OFFICE
Gordon H. Cunningham 67 Chairman of the Board 1973 2000 57,948(4) 1.09%
B. Patrick Donnelly, III 53 Director 1984 2000 33,039 *
Robert D. Kolk 57 Director 1989 2000 61,089 1.15%
Ronald L. Haan 44 Director, Senior 1996 1999 88,773 1.66%
Vice President and
Assistant Secretary
Ronald J. Bieke 65 Director 1998 1999 74,854 1.40%
Brian W. Koop 48 Director 1992 1999 44,039 *
Douglas J. Iverson 48 Executive Vice 1993 1999 115,640(5) 2.16%
President, Chief
Operating Officer,
Secretary and
Director
</TABLE>
______________________
(1) Includes service as a director of the Bank.
(2) The nature of beneficial ownership for shares reported in this column is
sole voting and investment power, except as otherwise indicated in these
footnotes. All amounts reported under this column have been adjusted for
the 10% stock dividend paid by the Corporation on September 30, 1997.
(3) Includes shares of Common Stock as to which the named individual has the
right to acquire beneficial ownership pursuant to stock options or
warrants, as follows: Mr. Grevengoed - 74,192 shares; Mr. Haworth - 3,957
shares; Mr. Koops - 11,871 shares; Mr. Cunningham - 17,806 shares; Mr.
Donnelly - 11,871 shares ; Mr. Kolk - 11,871 shares; Mr. Haan - 31,913
shares; Mr. Bieke - 26,949 shares; Mr. Koop - 11,871 shares; and Mr.
Iverson - 55,644 shares.
(4) Includes 2,750 shares of Common Stock beneficially owned by Mr.
Cunningham as a trustee under a trust for the benefit of his client, the
beneficial ownership of which is disclaimed by Mr. Cunningham.
(5) Includes shared voting and investment power over 1,100 shares of Common
Stock owned by a living trust of which Mr. Iverson is a co-trustee and
beneficiary.
3
<PAGE> 7
The business experience of each director of the Corporation for at least
the past five years is set forth below.
GORDON L. GREVENGOED. Mr. Grevengoed is President, Chief Executive
Officer and Vice Chairman of the Board of the Corporation. He also serves as
Vice Chairman of the Board and Chief Executive Officer of the Bank. He has
served in such capacities with the Corporation since its incorporation in March
1994. He was elected President and Chief Executive Officer of the Bank in 1985
and elected Vice Chairman of the Bank in 1992. Mr. Grevengoed joined the Bank
in 1956. He also serves as President of O.S. Services, Inc. and as Chairman of
the Board of AmeriPlan Financial Services, Inc., the Bank's two wholly-owned
subsidiaries.
G. W. HAWORTH. Mr. Haworth is founding Chairman of the Board of Haworth,
Inc., an office furnishings manufacturer.
LEON E. KOOPS. Mr. Koops is President of Hamilton Distributing Company,
an agricultural equipment distributor.
GORDON H. CUNNINGHAM. Mr. Cunningham has been Chairman of the Board of
Directors of Ottawa since its incorporation in March 1994. Mr. Cunningham is a
partner in the law firm of Cunningham Dalman, P.C., which acts as general
counsel to AmeriBank. He was appointed Chairman of the Board of the Bank in
1992.
B. PATRICK DONNELLY, III. Mr. Donnelly became the Plant Manager of RAN
Enterprises, Inc., an auto parts manufacturer, in November 1995. He was the
Production Manager of Technical Auto Parts, also an auto parts manufacturer,
since 1993. Mr. Donnelly had also served as President of Donnelly - Cooper
Industries, a powder coating company, and President of Lithibarmatik, a
manufacturer of machinery. Donnelly - Cooper Industries filed for bankruptcy
in 1990, was discharged in 1992, and voluntarily went out of business in 1993.
He is also a director of Donnelly Corporation, a publicly held company.
ROBERT D. KOLK. Mr. Kolk is President and Co-owner of Mechanical
Transplanter Company, a manufacturer of agricultural transplanting machinery.
RONALD L. HAAN. Mr. Haan is the Executive Vice President, Chief Operating
Officer and Assistant Secretary of the Bank and Senior Vice President and
Assistant Secretary of the Corporation. Mr. Haan also serves as a director of
the Bank and the Corporation. Prior to joining the Corporation in February
1996, Mr. Haan was employed in 1989 as Executive Vice President of AmeriBank
Federal Savings Bank ("AFSB"), headquartered in Muskegon, Michigan (AFSB was
acquired by the Corporation in February 1996) and in February 1990 was
appointed Chief Financial Officer. In December 1990, he was elected President,
Chief Administrative Officer and a director of AFSB. Prior to his employment
at AFSB, Mr. Haan was employed by MetroBanc Federal Savings Bank of Grand
Rapids, Michigan, from 1978 to 1987 as Vice President, and from 1987 to 1989 at
Comerica Bank, Grand Rapids, Michigan, as Vice President and Regional Manager.
RONALD J. BIEKE. Mr. Bieke is the Chairman of FMB-Arcadia Bank, a full
service commercial bank, and President of Arcadia BIDCO Corporation, a business
and industrial development corporation, both of which are located in Kalamazoo
Michigan. Since 1996, Mr. Bieke has also been serving as Vice Chairman of the
Board of Directors of Mercantile Bank of Southwest Florida. From 1987 to 1996,
Mr. Bieke served as Chairman and Chief Executive Officer of AFSB.
BRIAN W. KOOP. Mr. Koop is Vice President and General Manager of Prince,
a Johnson Controls company, which manufactures automotive parts.
DOUGLAS J. IVERSON. Mr. Iverson is Executive Vice President, Secretary
and Chief Operating Officer of the Corporation, positions he has held since the
Corporation's inception in March 1994. He was elected President and Secretary
of the Bank effective in February 1996. Prior to that date, Mr. Iverson had
served as Chief Operating Officer of the Bank since 1994; Executive Vice
President, Chief Administrative Officer and Secretary since 1986; and was first
elected a Director in 1993. He joined the Bank in 1972.
4
<PAGE> 8
MEETINGS AND COMMITTEES OF THE BOARDS OF DIRECTORS
Meetings and Committees of the Corporation. Meetings of the Corporation's
Board of Directors are generally held on a monthly basis. For the year ended
December 31, 1997, the Board of Directors met 13 times. During 1997, no
incumbent director of the Corporation attended fewer than 75% of the aggregate
of the total number of Board meetings and the total number of meetings held by
the committees of the Board of Directors on which they served.
The Board of Directors of the Corporation has standing Executive, Audit,
Compensation and Nominating Committees.
The Corporation's Executive Committee generally acts in lieu of the full
Board of Directors between board meetings. This committee is responsible for
formulating and implementing policy decisions, subject to review by the entire
Board of Directors. The Executive Committee is currently composed of Directors
Cunningham (Chairman), Grevengoed, Iverson, Haan and Officer Jon Swets on a
regular basis and Directors Bieke, Koop, Koops, Kolk and Haworth on a rotating
basis. The Executive Committee met 18 times during the year ended December 31,
1997.
The Corporation's Audit Committee is responsible for the review of the
Corporation's annual audit report prepared by the Corporation's independent
auditors. The review includes a detailed discussion with the independent
auditors and recommendation to the full Board concerning any action to be taken
regarding the audit. Directors Cunningham, Donnelly and Koops currently serve
on this Committee. The Audit Committee met seven times during 1997.
The Compensation Committee, consisting of Chairman Cunningham and
Directors Koop and Koops, is responsible for developing and making
recommendations to the Board of Directors with respect to the Corporation's
executive compensation policies. In addition, the Compensation Committee,
pursuant to authority delegated by the Board, determines on an annual basis the
compensation to be paid to the Chief Executive Officer and each of the other
executive officers of the Corporation and the Bank. 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
the Compensation Committee's recommendations. The Compensation Committee is
also responsible for administering the Corporation's 1995 Stock Option and
Incentive Plan (the "Stock Option Plan") and Management Recognition Plan (the
"MRP"). This committee met six times during 1997.
The entire Board of Directors acts as a nominating committee for selecting
nominees for election as directors. Nominations of persons for election to the
Board of Directors may be made only by or at the direction of the Board of
Directors or by any shareholder entitled to vote for the election of directors
who complies with the notice procedures set forth in the Bylaws of the
Corporation. Pursuant to the Corporation's Bylaws, nominations by shareholders
must be delivered in writing to the Secretary of the Corporation at least 30
days prior to the date of the annual meeting.
Meetings and Committees of the Bank. The Bank's Board of Directors meets
at least monthly and held 13 meetings during the year ended December 31, 1997.
During 1997, no incumbent director of the Bank attended fewer than 75% of the
aggregate of the total number of Board meetings and the total number of
meetings held by the committees of the Board of Directors on which he served.
The principal standing committees of the Bank are Executive, Loan Review,
Personnel, Compensation, Audit and Nominating. The Bank also has other
committees which meet as needed to review various other functions of the Bank.
DIRECTOR COMPENSATION
Non-employee directors are paid a fee of $300 per month for their service
as a director of the Corporation and $425 per month for their service as a
director of the Bank. In addition, each non-employee director is paid $200 for
each Corporation board meeting attended and $350 for each Bank board meeting
attended. The Chairman of the Board also receives an additional $175 for each
Bank board meeting attended. In addition to their board fees, non-employee
directors of the Corporation and the Bank also receive $100 per hour for
committee meetings attended.
5
<PAGE> 9
In connection with his appointment to the Board of Directors in December
1997, Mr. Bieke was granted a ten year option to purchase 19,785 shares of
Common Stock at an exercise price of $29.125 per share (the fair market value
of the Common Stock on the date of the grant). The options granted to Mr.
Bieke vest equally over a five year period, are subject to his "continuous
service" (as defined under such plans) as a director of the Corporation, and
accelerate under certain circumstances, including a "change in control" of the
Corporation (as defined under such plans).
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation of
the Corporation's Chief Executive Officer and Executive Vice Presidents. No
other officer made in excess of $100,000 during fiscal 1997.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------------
LONG TERM COMPENSATION
ANNUAL COMPENSATION(1) AWARDS
- --------------------------------------------------------------------------------------------------- ALL OTHER
SALARY BONUS RESTRICTED STOCK OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) AWARD($)(2) (#)(3) ($)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gordon L. Grevengoed, President, 1997 $143,000 $82,800 --- --- $15,980(6)
Chief Executive Officer and Vice 1996 138,000 35,009 --- --- 16,208
Chairman of the Board 1995 119,888 31,791 $733,945(5) 123,652 29,215
- -----------------------------------------------------------------------------------------------------------------
Douglas J. Iverson, Executive Vice 1997 $133,000 $76,800 --- --- $15,935(6)
President, Chief Operating Officer, 1996 128,000 32,211 --- 16,142
Secretary and Director 1995 110,310 30,129 $504,122(5) 92,739 27,295
- -----------------------------------------------------------------------------------------------------------------
Ronald L. Haan, Executive Vice 1997 $123,000 $70,800 --- --- $15,353(6)
President, Chief Operating Officer, 1996 118,000 --- $160,600(5) 65,984 15,259
Assistant Secretary and Director(4)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The named executive officers in the table did not receive any additional
benefits or perquisites which, in the aggregate, exceeded the lesser of
10% of his salary and bonus, or $50,000.
(2) Represents the dollar value, based on the average of the closing bid and
asked price per share of the Common Stock on the date of grant. The
shares of restricted stock vest in five equal annual installments, subject
to the individual's "Continuous Service" (as defined in the MRP) with the
Corporation and/or the Bank. Any dividends paid on Common Stock granted
pursuant to the MRP are held in a restricted interest-bearing account
until such shares are no longer subject to restriction.
(3) Adjusted to reflect the 10% stock dividend paid by the Corporation on
September 30, 1997. See the table captioned "AGGREGATE OPTIONS EXERCISED
IN LAST FISCAL YEAR AND FY-END OPTION VALUES" for additional information
on stock options.
(4) Compensation for Mr. Haan is reported for the period from February 13,
1996 (the date Mr. Haan commenced employment with the Corporation) to
December 31, 1997.
(5) At December 31, 1997, Messrs. Grevengoed, Iverson and Haan had 36,722
shares, 25,224 shares and 8,800 shares, respectively, of Common Stock
still subject to restrictions with a value, based upon the average of the
closing bid and asked price of $34.00 per share of Common Stock as
reported on The Nasdaq National Market at such date, of $1,248,548,
$857,616 and $299,200, respectively.
(6) Represents the Bank's contributions to the ESOP on behalf of Messrs.
Grevengoed, Iverson, and Haan, respectively. At December 31, 1997, the
value of the shares allocated to Messrs. Grevengoed, Iverson and Haan
under the ESOP was $38,643, $38,533 and $37,126, respectively.
6
<PAGE> 10
The following table sets forth information as to the aggregate number and
value of stock options held by the named individuals at December 31, 1997. No
stock appreciation rights have been granted by the Corporation to date.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
AGGREGATE OPTIONS EXERCISED IN LAST FISCAL YEAR AND FY-END OPTION VALUES
- --------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT FY-END (#)(1) FY-END ($)(2)
EXERCISE REALIZED ---------------------------------------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gordon L. Grevengoed --- --- 49,463 74,190 $1,088,659 $1,632,922
- --------------------------------------------------------------------------------------------------------
Douglas J. Iverson --- --- 37,097 55,643 816,483 1,224,702
- --------------------------------------------------------------------------------------------------------
Ronald L. Haan --- --- 13,196 52,788 253,342 1,013,369
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Adjusted for the 10% stock dividend paid by the Corporation on September
30, 1997.
(2) Represents the aggregate market value of the named executive officer's
stock options as of December 31, 1997. The market value per share of
Common Stock is the difference between the market price per share of the
Common Stock less the exercise price of the options.
EMPLOYMENT AGREEMENTS
At December 31, 1997, the Bank had employment agreements with Messrs.
Grevengoed, Iverson and Haan. Messrs. Grevengoed's and Iverson's employment
agreements became effective upon completion of the Conversion, August 19, 1994.
Mr. Haan's employment agreement became effective on February 13, 1996. The
employment agreements were for an initial term of three years and provide for
annual base salary in an amount not less than the employees' current salary.
The agreements provide for annual extensions of one year, in addition to the
then-remaining term under the agreements, on each anniversary of the effective
date of the agreements, subject to a formal performance evaluation performed by
disinterested members of the Bank's Board of Directors. The agreements provide
for termination upon the employees' death, for cause or in certain other
events. The employment agreements are also terminable by the employees upon 90
days notice to the Bank. For the year ended December 31, 1997, the
disinterested members of Bank's Board of Directors authorized contract
extensions for Messrs. Iverson and Haan for an additional year. Accordingly,
Messrs. Iverson and Haan have three years remaining on their existing
employment agreements and Mr. Grevengoed has two years remaining on his
employment agreement.
The employment agreements provide for payment of the greater of the
employee's salary for the remainder of the term of the agreement or 299% of the
employee's base compensation (as defined in Section 280G(b)(3) of the Internal
Revenue Code of 1986, as amended (the "Code")) in the event there is a "change
in control" of the Bank where employment terminates involuntarily in connection
with such change in control or within 12 months thereafter. This termination
payment is subject to reduction by the amount of all other compensation to the
employee deemed for purposes of the Code to be contingent on a "change in
control," and may not exceed three times the employee's average annual
compensation over the most recent five-year period or be non-deductible by the
Bank for federal income tax purposes. For the purposes of the employment
agreements, a "change in control" is defined as any event which would require
the filing of an application for acquisition of control or notice of change in
control pursuant to 12 C.F.R. Section 574.3 or Section 574.4. Such events
are generally triggered prior to the acquisition of control of 10% of the
Common Stock. Each agreement also guarantees participation in an equitable
manner in employee benefits applicable to executive personnel.
Based on their current salaries, if Messrs. Grevengoed's, Iverson's and
Haan's employment had been terminated as of December 31, 1997, under
circumstances entitling them to severance pay as described above, they would
have been entitled to receive a lump sum cash payment of approximately
$751,000, $634,000 and $574,000, respectively.
7
<PAGE> 11
DEFINED BENEFIT PENSION PLAN
The Bank maintains two qualified defined benefit pension plans
(collectively, the "Pension Plans"), one for AmeriBank (the "AmeriBank Pension
Plan") and the one obtained in connection with the Company's acquisition of
AFSB (the "Acquired Pension Plan"). The AmeriBank Pension Plan covers AmeriBank
employees who are at least 20 1/2 years of age and have completed at least one
year (1,000 hours) of eligible service. The Acquired Pension Plan covers
employees of the institution acquired by AmeriBank in 1996 who are at least 21
years of age and have completed at least one year (1,000 hours) of eligible
service.
The AmeriBank Pension Plan provides for a normal monthly retirement
benefit at age 65 equal to up to 50% of a participant's average monthly
compensation earned during the latest five consecutive years of service. The
Acquired Pension Plan provides for a normal monthly retirement benefit at age
65 equal to the sum of (a) and (b) as follows: (a) the accrued monthly benefit
as of December 31, 1988 and (b) the sum of (1) 1.75% of average monthly
compensation and (2) 0.6% of the excess (if any) of average monthly
compensation over covered compensation, multiplied by the number of years of
credited benefit service earned after December 31, 1988 with no more than a
total of 35 years of service taken into account under (a) and (b). Under both
Pension Plans, the term "average monthly compensation" means the five highest
paid consecutive calendar years during the final ten years preceding
termination. The term "compensation" means total salary and wages paid or
otherwise accrued to an employee, including bonuses, overtime and extra
remuneration, but excluding employer contributions to the Pension Plan and
other non-taxable fringe benefits.
<TABLE>
<CAPTION>
- -----------------------------------------------------
AMERIBANK PENSION PLAN TABLE
- -----------------------------------------------------
YEARS OF CREDITED SERVICE
---------------------------------------
REMUNERATION 15 20 25 30 35
- -----------------------------------------------------
<S> <C> <C> <C> <C> <C>
75,000 16,875 22,500 28,125 33,750 37,500
- -----------------------------------------------------
100,000 22,500 30,000 37,500 45,000 50,000
- -----------------------------------------------------
125,000 28,125 37,500 46,875 56,250 62,500
- -----------------------------------------------------
150,000 33,750 45,000 56,250 67,500 75,000
- -----------------------------------------------------
175,000 33,750 45,000 56,250 67,500 75,000
- -----------------------------------------------------
200,000 33,750 45,000 56,250 67,500 75,000
- -----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------
ACQUIRED PENSION PLAN TABLE
- -----------------------------------------------------
YEARS OF CREDITED SERVICE
---------------------------------------
REMUNERATION 5 10 15 20 25
- -----------------------------------------------------
<S> <C> <C> <C> <C> <C>
75,000 8,035 16,070 24,105 32,140 40,175
- -----------------------------------------------------
100,000 10,972 21,945 32,917 43,890 54,862
- -----------------------------------------------------
125,000 13,910 27,820 41,730 55,640 69,550
- -----------------------------------------------------
150,000 16,847 33,695 50,542 67,390 84,237
- -----------------------------------------------------
175,000 16,847 33,695 50,542 67,390 84,237
- -----------------------------------------------------
200,000 16,847 33,695 50,542 67,390 84,237
- -----------------------------------------------------
</TABLE>
8
<PAGE> 12
The foregoing tables show annual benefits payable at normal retirement age
(age 65) in the form of a life annuity. These estimates are based on
compensation for an individual reaching age 65 in 1997. At December 31, 1997,
Messrs. Grevengoed, Iverson and Haan had 37 years, 23 years and 6.5 years of
credited service under the Pension Plan, respectively. Messrs. Grevengoed and
Iverson are covered under the AmeriBank Pension Plan and Mr. Haan is covered
under the Acquired Pension Plan. As required by the Internal Revenue Code of
1986, as amended, the Pension Plan may not provide annual benefits which exceed
certain maximum limits or which are based on annual compensation in excess of
$150,000 in 1997. The Bank has curtailed benefits under both plans.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is composed entirely of independent outside
directors and is responsible for developing and making recommendations to the
Board of Directors with respect to the Corporation's executive compensation
policies, as well as administering the Stock Option Plan and the MRP. In
addition, the Compensation Committee, pursuant to authority delegated by the
Board, determines on an annual basis the compensation to be paid to the Chief
Executive Officer and each of the other executive officers of the Corporation.
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 the Compensation Committee's recommendations.
Overview and Philosophy
The Compensation Committee has developed and implemented an executive
compensation program which is based on guiding principles designed to align
executive compensation with the values and objectives, business strategy,
management initiatives, and the business and financial performance of the
Corporation. In applying these principals, the Compensation Committee has
established a program to:
o Support a performance-oriented environment that rewards performance not
only with respect to the Corporation's goals but also the Corporation's
performance as compared to that of industry performance levels;
o Attract and retain key executives critical to the long-term success of
the Corporation and the Bank;
o Integrate compensation programs with both the Corporation's annual and
long-term strategic planning and measuring processes; and
o Reward executives for long-term strategic management and the enhancement
of shareholder value.
Furthermore, in making compensation decisions, the Compensation Committee
focuses on the individual contributions of executive officers to the
Corporation. The Compensation Committee uses its discretion to set executive
compensation where, in its judgment, external, internal or an individual's
circumstances warrant it. The Compensation Committee also periodically reviews
the compensation policies of other similarly situated companies, as set forth
in various industry publications, to determine whether the Corporation's
compensation decisions are competitive within its industry.
Executive Officer Compensation Program
The Corporation's executive officer compensation program is comprised of
base salary, annual incentive bonuses, long-term incentive compensation in the
form of stock options and restricted stock awards, and various benefits,
including medical and pension plans generally available to employees of the
Corporation.
Base Salary. Base salary levels for the Corporation's executive officers
are competitively set relative to companies in the thrift industry. In
determining salaries, the Compensation Committee also takes into account
individual experience and performance, and specific issues particular to the
Corporation.
Annual Incentive Bonuses. Executive officers are paid an annual incentive
bonus, which is a percentage of such executive officers' base salary, if the
Corporation's targeted goals established at the beginning of each year are met
and certain safety and soundness standards at the Bank level are maintained.
The annual incentive bonus awards for Messrs. Grevengoed, Iverson and Haan are
calculated based on a comparison of the Corporation's actual results to its
targeted goals for return on equity and asset quality. The remaining executive
officer's annual incentive bonus award is based on a comparison of the
Corporation's actual results to its targeted goals for return on assets and
certain departmental goals. The Board of Directors establishes the minimum and
maximum bonus pool based on a range of return on assets, taking into
consideration the Corporation's performance goals included in its business
plan.
9
<PAGE> 13
Stock Benefit Plans. The Corporation's Stock Option Plan and MRP are the
Corporation's long-term incentive plans for directors, officers and employees.
The objectives of the program are to align executive and shareholder long-term
interests by creating a strong and direct link between executive pay and the
Corporation's performance, and to enable executives to develop and maintain a
significant, long-term stock ownership position in the Corporation's Common
Stock. Awards are made at a level calculated to be competitive with the thrift
industry and within the limits prescribed by the OTS.
Chief Executive Officer Compensation
Mr. Grevengoed was appointed to the position of President and Chief
Executive Officer of the Bank in 1985 and has served in such capacity with the
Corporation since its inception in March 1994. Mr. Grevengoed is currently
receiving a base salary of approximately $153,000 per year, subject to such
adjustments in future years as shall be determined by the Compensation
Committee. Mr. Grevengoed's base salary for 1997 was approximately $143,000.
The increase reflected the Compensation Committee's consideration of base
salaries in the industry, Mr. Grevengoed's responsibilities of running a public
company, and the Committee's and the Board's assessment of Mr. Grevengoed's
performance over the year in recognition of the performance by the Corporation
during 1997 as compared to the Corporation's goals.
Mr. Grevengoed was awarded a cash bonus in January 1998 of approximately
$95,300 in connection with the Corporation achieving it 1997 targeted
performance goals and Mr. Grevengoed's individual performance.
In 1993, Section 162(m) was added to the Internal Revenue Code, the effect
of which is to eliminate the deductibility of compensation over $1 million,
with certain exclusions, paid to each of certain highly compensated executive
officers of publicly held corporations, such as the Corporation. Section
162(m) applies to all remuneration (both cash and non-cash) that would
otherwise be deductible for tax years beginning on or after January 1, 1994,
unless expressly excluded. Because the current compensation of each of the
Corporation's executive officers is below the $1.0 million threshold, the
Corporation has not yet considered its policy regarding the new provision.
The foregoing report is furnished by the Compensation Committee of the
Board of Directors of the Corporation.
Gordon H. Cunningham
Brian W. Koop
Leon E. Koops
10
<PAGE> 14
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The line graph below compares the cumulative total shareholder return on
the Corporation's Common Stock to the cumulative total return of a broad index
of the Nasdaq Stock Market and a savings and loan industry index for the period
August 19, 1994 (the date the Corporation became a public company) through
December 31, 1997.
[SHAREHOLDER RETURN PERFORMANCE LINE GRAPH]
<TABLE>
<CAPTION>
08/19/94 12/31/94 12/31/95 12/31/96 12/31/97
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Ottawa Financial Corporation $100.00 $86.02 $128.52 $141.17 $319.34
Selected Thrift Index....... 100.00 85.62 135.62 177.00 297.59
Nasdaq Market Index......... 100.00 96.91 125.70 156.21 191.07
</TABLE>
CERTAIN TRANSACTIONS
The Bank has followed a policy of granting loans to eligible directors,
officers, employees and members of their immediate families for the financing
of their personal residences and for consumer purposes. As of December 31,
1997, all loans or extensions of credit to executive officers and directors
were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
the general public and do not involve more than the normal risk of repayment or
present other unfavorable features. All loan requests by directors and
executive officers are submitted to the Bank's loan committee for approval.
Gordon H. Cunningham, Chairman of the Board of the Bank, is a partner in
the law firm of Cunningham Dalman P.C. Such firm acts as counsel to the Bank.
The legal fees received from the Corporation or the Bank for professional
services during the fiscal year ended December 31, 1997 did not exceed 5% of
the firm's gross revenues.
11
<PAGE> 15
PROPOSAL II - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has renewed the Corporation's arrangement for
Crowe, Chizek and Company LLP to be its independent auditors for the fiscal
year ending December 31, 1998 subject to the ratification of the appointment by
the Corporation's shareholders. A representative of Crowe, Chizek and Company
LLP is expected to attend the Meeting to respond to appropriate questions and
will have an opportunity to make a statement if he or she so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF CROWE CHIZEK AND
COMPANY LLP AS THE COMPANY'S AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1998.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in the Corporation's proxy materials
for next year's Annual Meeting of Shareholders, any shareholder proposal to
take action at such meeting must be received at the Corporation's executive
office, 245 Central Avenue, Holland, Michigan 49423, no later than December 3,
1998. Any such proposal shall be subject to the requirements of the proxy
rules adopted under the Securities Exchange Act of 1934, as amended.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
12
<PAGE> 16
<TABLE>
<S><C>
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE OTTAWA FINANCIAL CORPORATION WITH- FOR ALL
FOR HOLD EXCEPT
ANNUAL MEETING OF SHAREHOLDERS - APRIL 28, 1998 I. The election of the following [ ] [ ] [ ]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. directors for terms of three years:
The undersigned hereby appoints the members of the Board GORDON L. GREVENGOED
of Directors of Ottawa Financial Corporation (the "Company"), G.W. HAWORTH
and its survivor, with full power of substitution, to act as LEON E. KOOPS
attorneys and proxies for the undersigned to vote all shares INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
of common stock of the Company which the undersigned is NOMINEE, MARK "FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN
entitled to vote at the Annual Meeting of Shareholders (the THE SPACE PROVIDED BELOW.
"Meeting") to be held on Tuesday, April 28, 1998 at the
Holiday Inn located at 650 E. 24th Street, Holland, Michigan,
at 10:00 A.M., Holland, Michigan time, and at any and all
adjournments thereof, as follows: _______________________________________________________________
FOR AGAINST ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED II. The ratification of the appointment [ ] [ ] [ ]
PROPOSALS. of Crowe, Chizek and Company LLP,
independent auditors for the Company
for the fiscal year ending December
31, 1998.
In their discretion, the proxies are authorized to vote on any
other business that may properly come before the Meeting or any
adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSALS STATED. IF
ANY OTHER BUSINESS IS PRESENTED AT SUCH 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 MEETING.
Please be sure to sign and date Date___________________ The undersigned acknowledges receipt from the Company, prior to
this Proxy in the box below. the execution of this Proxy, of Notice of the Annual Meeting, a
related Proxy Statement and the Company's Annual Report to
_______________________________________________________________ Shareholders for the fiscal year ended December 31, 1997.
Shareholder sign above Co-holder (if any) sign above
</TABLE>
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DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
OTTAWA FINANCIAL CORPORATION
- -------------------------------------------------------------------------------
This proxy may be revoked at any time before it is voted by delivering to the
Secretary of the Company, on or before the taking of the vote at the Meeting, a
written notice of revocation bearing a later date than the proxy or a later
dated proxy relating to the same shares of Company common stock, or by attending
the Meeting and voting in person. Attendance at the Meeting will not in itself
constitute the revocation of a proxy. If this proxy is properly revoked as
described above, then the power of attorneys and proxies shall be deemed
terminated and of no further force and effect.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ABOVE 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.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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