<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Western Ohio Financial Corporation
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
[WESTERN OHIO FINANCIAL CORPORATION LETTERHEAD]
March 17, 1997
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Western Ohio
Financial Corporation (the "Company"), I cordially invite you to attend the
Annual Meeting of Stockholders of the Company. The meeting will be held at 9:00
a.m., local time, on April 16, 1997 at the Springfield Inn located at 100 South
Fountain Avenue, Springfield, Ohio.
An important aspect of the meeting process is the stockholder vote on
corporate business items. I urge you to exercise your rights as a stockholder to
vote and participate in this process. Stockholders are being asked to elect two
directors of the Company, to consider and vote upon the proposals to approve an
amendment to the Company's 1995 Stock Option and Incentive Plan, and to elect to
ratify the appointment of auditors.
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 and return it in the accompanying
postpaid return envelope as promptly as possible. This will save the Company
additional expense in soliciting proxies and will ensure that your shares are
represented at the meeting.
Very truly yours,
/s/ John T. Heckman
---------------------------------------------
John T. Heckman
Interim President and Chief Executive Officer
<PAGE>
WESTERN OHIO FINANCIAL CORPORATION
28 East Main Street
Springfield, Ohio 45501-0509
(937) 325-9994
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on April 16, 1997
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Western Ohio Financial Corporation (the "Company") will be held at
the Springfield Inn located at 100 South Fountain Avenue, Springfield, Ohio on
April 16, 1997 at 9:00 a.m., local time.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company;
2. Pursuant to the acquisition of Seven Hills Financial Corporation,
approving an amendment to the 1995 Stock Option and Incentive Plan
to increase by 43,057 the number of shares reserved for issuance
thereunder (which is less than 1.9% of the issued and outstanding
shares of the Corporation's common stock);
3. The ratification of the appointment of Clark, Schaefer, Hackett &
Co. as auditors for the Company for the fiscal year ending December
31, 1997;
and such other matters as may properly come before the Meeting, or any
adjournments or postponements 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 proposal at the Meeting on the
date specified above, or on any date or dates to which the Meeting may be
adjourned or postponed. Stockholders of record at the close of business on
February 21, 1997 are the stockholders entitled to vote at the Meeting, and any
adjournments or postponements thereof. A complete list of stockholders entitled
to vote at the Meeting will be available at the main office of the Company
during the ten days prior to the Meeting, as well as at the Meeting.
You are requested to complete and sign the enclosed Proxy Card 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.
By Order of the Board of Directors
/s/ John T. Heckman
---------------------------------------------
John T. Heckman
Interim President and Chief Executive Officer
Springfield, Ohio
March 17, 1997
- --------------------------------------------------------------------------------
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 SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
WESTERN OHIO FINANCIAL CORPORATION
28 East Main Street
Springfield, Ohio 45501-0509
(937) 325-9994
ANNUAL MEETING OF STOCKHOLDERS
April 16, 1997
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of Western Ohio Financial Corporation (the
"Company") of proxies to be used at the Annual Meeting of Stockholders (the
"Meeting") which will be held at the Springfield Inn located at 100 South
Fountain Avenue, Springfield, Ohio on April 16, 1997 at 9:00 a.m., local time,
and all adjournments and postponements of the Meeting. The accompanying Notice
of Annual Meeting of Stockholders and this Proxy Statement are first being
mailed to stockholders on or about March 17, 1997. Certain of the information
provided herein relates to Springfield Federal Savings Bank (the "Bank"), a
wholly owned subsidiary and predecessor of the Company.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon (i) the election of two directors of the Company; (ii) a proposal
to ratify the appointment of Clark, Schaefer, Hackett & Co. as the Company's
independent auditors for the fiscal year ending December 31, 1997 and (iii) the
approval of an amendment to the 1995 Stock Option and Incentive Plan (the "Stock
Option Plan") to increase by 43,057 shares the number of shares reserved for
issuance thereunder (which is less than 1.9% of the issued and outstanding
shares of the Company's common stock as of February 21, 1997).
Vote Required and Proxy Information
All shares of common stock of the Company, par value $.01 per share
(the "Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the nominees and the
adoption of the proposal set forth in this Proxy Statement. The Company does not
know of any matters, other than as described in the Notice of Annual Meeting of
Stockholders, that are to come before the Meeting. If any other matters are
properly presented at the Meeting for action, the persons named in the enclosed
Proxy Card and acting pursuant thereto will have the discretion to vote on such
matters in accordance with their best judgment.
Directors will be elected by a plurality of the votes present in person
or represented by proxy at the Meeting and entitled to vote on the election of
directors. In all matters other than the election of directors, 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 will be the act of the stockholders.
Proxies marked abstain with respect to a proposal and broker non-votes have the
same effect as votes against the proposal. One-third of the shares of the Common
Stock, present in person or represented by proxy, shall constitute a quorum for
purposes of the Meeting. Abstentions and broker non-votes will be treated as
shares present at the Meeting for purposes of determining a quorum.
<PAGE>
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by: (i) filing
with the Secretary of the Company at or before the Meeting a written notice of
revocation bearing a later date than the proxy, (ii) duly executing a subsequent
proxy relating to the same shares and delivering it to the Secretary of the
Company at or before the Meeting or (iii) attending the Meeting and voting in
person (although attendance at the Meeting will not in and of itself constitute
revocation of a proxy). Any written notice revoking a proxy should be delivered
to Susan Inskeep, Secretary, at the address shown above.
Voting Securities and Principal Holders Thereof
Stockholders of record as of the close of business on February 21, 1997
will be entitled to one vote for each share then held. As of that date, the
Company had 2,312,088 shares of Common Stock issued and outstanding. The
following table sets forth, as of February 21, 1997, information regarding share
ownership of: (i) those persons or entities known by management to beneficially
own more than five percent of the Common Stock and (ii) all directors and
executive officers of the Company and the Bank as a group. For information
regarding the beneficial ownership of Common Stock by directors of the Company,
see "Proposal I--Election of Directors--General."
Shares Percent
Beneficially of
Beneficial Owner Owned Class
- --------------------------------- -------------- ------
Western Ohio Financial Corporation 148,266(1) 6.4%
Employee Stock Ownership Plan
All directors, nominees and executive 165,788(2) 7.2%
officers (10 persons) as a group
- ------------
(1) The amount reported represents shares held by the Western Ohio
Financial Corporation Employee Stock Ownership Plan (the "ESOP"),
37,195 shares of which have been allocated to accounts of participants.
First Bankers Trust Co., N.A., Quincy, Illinois, the trustee of the
ESOP, may be deemed to beneficially own the shares held by the ESOP
which have not been allocated to the accounts of participants.
(2) This amount includes shares held directly, including restricted shares
and shares allocated under the ESOP to the accounts of the executive
officers, as well as shares held in retirement accounts, in a fiduciary
capacity or by certain family members or affiliated entitites, with
respect to which shares the respective directors and officers may be
deemed to have sole voting and/or investment powers. This amount also
includes an aggregate of 30,204 shares subject to options granted under
the Company's Stock Option and Incentive Plan (the "Stock Option
Plan"), which are exercisable within 60 days of February 21, 1997.
PROPOSAL I
ELECTION OF DIRECTORS
General
The Company's Board of Directors currently consists of six members,
each of whom is also a director of the Bank. The Board is divided into three
classes, and approximately one-third of the directors are elected annually.
Directors of the Company are generally elected to serve for a three-year term or
until their respective successors are elected and qualified.
2
<PAGE>
The following table sets forth certain information, as of February 21,
1997, regarding the composition of the Company'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 any nominee may be unable to serve, if elected. Except as disclosed herein,
there are no arrangements or understandings between the nominees and any other
person pursuant to which the nominees were selected.
<TABLE>
<CAPTION>
Shares of
Common Stock Percent
Position(s) Held Director Term to Beneficially of
Name Age in the Company Since(1) Expire Owned(2) Class
- --------------------- ----- ---------------- -------- -------- ---------- ------
<S> <C> <C> <C> <C> <C> <C>
NOMINEES
John E. Field 63 Director 1992 2000 25,791 1.12%
William N. Scarff 68 Director 1986 2000 27,665 1.20
DIRECTORS CONTINUING IN OFFICE
David L. Dillahunt 62 Chairman of the Board 1974 1998 24,780 1.07
Howard V. Dodds 57 Director 1995 1998 7,740 0.33
Jeffrey L. Levine 45 Director 1995 1999 21,064 0.91
Carl E. Mumma 74 Director 1972 1999 26,611 1.15
</TABLE>
- ------
(1) Includes service as a director of the Bank.
(2) Includes shares held directly, including restricted shares, as well as
shares held in retirement accounts, in a fiduciary capacity or by certain
family members or affiliated entities, with respect to which shares the
respective directors may be deemed to have sole voting and/or investment
powers. Also includes 27,204 shares subject to options granted under the
Stock Option Plan to each non-employee director, which options are
exercisable within 60 days of February 21, 1997.
The principal occupation of each director of the Company and each of
the nominees for director is set forth below. All directors and nominees have
held their present position for at least five years unless otherwise indicated.
John E. Field. Mr. Field is President of Wallace & Turner, Inc., a full
service insurance agency located in Springfield, Ohio. He is responsible for the
financial and sales management of the agency.
William N. Scarff. Mr. Scarff is President of Scarff's Nursery, Inc., a
major wholesale grower of nursery plants located in New Carlisle, Ohio. While
the bulk of the company's sales are wholesale, they are also involved in
landscaping and operate a garden center on site. Mr. Scarff is also President of
Scarff Land Company, located in New Carlisle, which holds land and buildings for
lease.
3
<PAGE>
David L. Dillahunt. Mr. Dillahunt is Senior Vice President of Advest
Inc., a regional stock brokerage firm based in Hartford, Connecticut. He is
responsible for sales and management of the Springfield, Ohio office.
Howard V. Dodds. Mr. Dodds is President of Howard's Foods Inc., a
five-store retail grocery chain headquartered in Springfield, Ohio.
Jeffrey L. Levine. Mr. Levine is President of Larry Stein Realty and
the Levine Realty Company, commercial and industrial real estate brokerage firms
located in Dayton and Springfield, Ohio, respectively.
Carl E. Mumma. Mr. Mumma is the senior member of Mumma & Mumma Realty,
an auction and real estate business located in Springfield, Ohio.
Meetings and Committees of the Board of Directors
Meetings of the Company's Board of Directors are generally held on a
monthly basis. The Board of Directors met 13 times during the fiscal year ended
December 31, 1996. During fiscal 1996, no incumbent director of the Company
attended fewer than 75% of the aggregate of the total number of Board meetings.
The Company has not established any standing committees.
The Bank's Board of Directors generally meets monthly and may have
additional special meetings upon request of the Chairman of the Board, the
Interim President or one-third of the directors. The Board of Directors of the
Bank met 13 times during the year ended December 31, 1996. During fiscal 1996,
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 Board of Directors of the Bank has standing Audit, Executive and
Compensation Committees. The Board selects members for service on all
committees.
The Audit Committee is composed of Directors Field, Scarff, Mumma and
Levine. The Audit Committee currently meets at least quarterly and is
responsible for reviewing the annual audit report and making recommendations to
the Board of Directors with respect to the Bank's independent auditors. This
committee met four times during the year ended December 31, 1996.
The Executive Committee generally acts in lieu of the full Board of
Directors between Board meetings. This committee consists of Directors
Dillahunt, Mumma and Interim President Heckman. During the fiscal year ended
December 31, 1996, this committee met 26 times.
4
<PAGE>
The Bank's Compensation Committee makes recommendations to the Board
with respect to the salary and incentive compensation of the chief executive
officer. This Committee also is responsible for administering the Stock Option
Plan and the Management Recognition Plan. The current members of the
Compensation Committee are Directors Field, Dodds and Alfred P. Strozdas
(emeritus). This committee met three times during the fiscal year ended December
31, 1996.
The full Board of Directors of the Company acts as a Nominating
Committee for the annual selection of nominees for election as directors.
Pursuant to the Company's Bylaws, nominations for directors by stockholders must
be made in writing and delivered to the Secretary of the Company at least 30
days prior to the meeting and such written nomination must contain certain
information as provided in the Company's Bylaws. While the Board of Directors
will consider nominees recommended by stockholders, it has not actively
solicited nominations.
Executive Compensation
The Company has not paid any compensation to its executive officers
since its formation. The Company does not presently anticipate paying any
compensation to such persons until it becomes actively involved in the operation
or acquisition of business other than the Bank and its subsidiaries.
The executive officers of the Company also hold the same positions with
the Bank and receive compensation from the Bank. The following table sets forth
information concerning the compensation for services in all capacities to the
Bank for the year ended December 31, 1996 of its Chief Executive Officer. No
other executive officer of the Bank received compensation in excess of $100,000
in fiscal 1996.
5
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================================================
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------------
Long Term
Compensation
Annual Compensation --------------------------
Awards
- -----------------------------------------------------------------------------------------------------------
Restricted
Stock Options/ All Other
Salary Bonus Award(s) SARs Compensation
Name and Principal Position Year ($)(1) ($) ($) (#) ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C.
C. William Clark, 1996 $137,450 $20,000 $ ---- --- $22,596(3)
President, Chief Executive
Officer and Director 1995 117,250 20,000 462,875(2) 66,125 31,308(3)
1994 96,250 16,400 ---- --- 17,737(3)
===============================================================================================================================
</TABLE>
(1) Includes director's fees of $27,250, $21,250 and $8,900 for fiscal years
1995, 1994 and 1993, respectively.
(2) Represents the dollar value of 26,450 restricted shares of Common Stock
based on the $17.50 closing price per share of the Common Stock on January
31, 1995 (the date of grant), as reported on the Nasdaq National Market. The
shares of restricted stock vest in five equal annual installments, with the
first installment having vested on January 31, 1996, subject to certain
conditions. Dividends are paid on the restricted shares to the extent and on
the same date as dividends are paid on all other outstanding shares of the
Common Stock. Based on the $23.25 closing price per share of the Common
Stock on December 31, 1995, as reported on the Nasdaq National Market, the
26,450 restricted shares held by Mr. Clark as of December 31, 1995, had an
aggregate market value of $614,963.
(3) Represented contributions to Mr. Clark's account under the ESOP.
There were no stock options granted by the Company in fiscal 1996. The
following table sets forth certain information concerning the number and value
of stock options held by Mr. Clark at December 31, 1996.
<TABLE>
<CAPTION>
=========================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
- -------------------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Options at FY-End (#) FY-End ($)(1)
Acquired on Value --------------------------------------------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
C. William Clark --- --- 13,225 52,900 $56,206 $224,825
=========================================================================================================================
</TABLE>
(1) Represents the aggregate market value (market price of the Common Stock less
the exercise price) of the options held at December 31, 1996, based upon the
exercise price of the options ($17.50) and the closing price of the Common
Stock ($21.75) on the Nasdaq National Market on December 31, 1996.
6
<PAGE>
Compensation of Directors
Directors of the Company receive a fee of $500 per month for serving on
the Board, except for the Chairman of the Board who receives $650 per month.
With respect to the Board of Directors of the Bank, the Chairman of the Board
receives monthly fees of $1,450, directors receive monthly fees of $1,250 and
directors emeriti receive monthly fees of $625. In addition, non-employee
directors receive $400 per month for service on the Executive Committee and $200
per meeting for service on all other committees.
Upon attainment of 75 years of age and after at least five years of
service as a director of the Bank, directors of the Bank may become directors
emeriti by a vote of the then existing Board of Directors and receive fees equal
to half of the fee paid to regular directors per meeting attended. Directors
emeriti generally are elected to serve five year terms.
Employment Agreement
The Bank entered in an employment agreement with Mr. Clark in 1994.
However, under the terms of that agreement, due to Mr. Clark's untimely death in
January, 1997, the agreement terminated.
Pension Plan
The following table sets forth annual pension benefits payable upon
retirement under the Bank's Employees' Pension Plan (the "Pension Plan"). The
benefits are based on an employee's years of service and the average of an
employee's average compensation over the five consecutive calendar years which
produce the highest average within the last ten completed years of employment
prior to retirement, with the payment being computed on the basis of straight
life annuity benefits. Such benefits, as shown, are non-integrated with the
recipient's primary Social Security benefits. In addition, participants in the
Pension Plan who are still employed by the Bank upon reaching normal retirement
age may elect to receive a lump sum payment of the present value of their
accrued benefits under the plan or an alternative form of distribution permitted
by the Pension Plan. The Pension Plan is a non-contributory, defined benefit
retirement plan.
7
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
------------------------------------------------------------------
Compensation 15 20 25 30
- ------------ ----------- ----------- ----------- --------
<S> <C> <C> <C> <C>
$25,000............................................... $ 8,625 $11,500 $14,375 $ 17,250
50,000............................................... 17,250 23,000 28,750 34,500
75,000............................................... 25,875 34,500 43,125 51,750
100,000............................................... 34,500 46,000 57,500 69,000
125,000............................................... 43,125 57,500 71,875 86,250
150,000............................................... 51,750 69,000 86,250 103,500
175,000............................................... 51,750 69,000 86,250 103,500
</TABLE>
For purposes of the Pension Plan, compensation means salary, cash bonus
awards and other forms of cash compensation. Cash compensation does not include
employer contributions pursuant to the Company's retirement and benefit plans
and amounts attributable to other miscellaneous benefits received by executive
officers. Mr. Clark was not a participant in the Pension Plan at December 31,
1996. As required by law, the maximum benefit currently permitted is $120,000.
In October 1995, the Board of Directors authorized the termination of
the Pension Plan in an effort to control expanding costs of compensation and
benefits. During fiscal 1996, the Pension Plan was liquidated and each
participant was granted the option of (i) receiving a lump sum payment of the
present value of his or her respective accrued benefits, (ii) causing an annuity
to be purchased on his or her behalf which would pay monthly benefits to the
participant upon retirement or (iii) having his or her accrued benefits under
the Pension Plan rolled into the Bank's 401(k) profit sharing plan, which was
established as of January 1, 1996.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Bank's Board of Directors has
furnished the following report on executive compensation:
The Company has not paid any cash compensation to its
executive officers since its formation. All executive officers of the
Company also currently hold positions with the Bank and receive cash
compensation from the Bank. Decisions on cash compensation of the
Bank's executive officers other than the chief executive officer were
made by Mr. Clark. The Compensation Committee makes recommendations to
the full Board regarding salary, bonus and incentive compensation of
the chief executive officer.
This report addresses the compensation policies for 1996 as
they affected Mr. Clark as the Chief Executive Officer of the Company
and the Bank.
8
<PAGE>
Compensation Policies Toward the Chief Executive Officer
Generally. The Compensation Committee's executive compensation policies
are designed to provide a competitive level of compensation that
integrates pay with the Company's annual and long-term performance
goals, reward above average Company performance, recognize individual
initiative and achievements, and assist the Company in attracting and
retaining a qualified chief executive officer. Target levels of the
Chief Executive Officer's overall compensation are intended to be
competitive with the compensation being paid to chief executive
officers of a peer group of publicly traded banks and thrifts in Ohio
and the Midwest. The Chief Executive Officer also is eligible for
selection by the Compensation Committee as a participant in the
Company's incentive compensation plans, and it is anticipated that Mr.
Clark typically receive a larger percentage of his compensation in the
form of incentive compensation.
Bonus Awards. Mr. Clark was awarded a cash bonus during the
year based on a review of the Bank's fiscal year performance and his
individual performance. The cash bonus awarded in 1996 was based upon
the Bank's success in attaining targets in excess of minimums
established annually in advance by the Board of Directors and goals
included in the Bank's business plan.
In 1993, Section 162(m) was added to the Code, the effect of
which was the elimination of the deductibility of compensation over $1
million, with certain exclusions, paid to certain highly compensated
executive officers of publicly held corporations, such as, in the
Company's case, Mr. Clark. 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.
The compensation of Mr. Clark was well below the $1 million threshold
at the time of his death in fiscal 1996.
Determination of Chief Executive Officer's Compensation. The
target incentive awards for Mr. Clark in 1996 were based upon, but not
limited to, the following accomplishments: (i) enhancement of the value
of the Company's Common Stock; (ii) the acquisition of Mayflower
Financial Corporation, Cincinnati, Ohio; (iii) the increase in the
volume of mortgage loan originations; (iv) the employment of two new
executive officers; (v) the increase in mortgage lending market share
in Clark County, Ohio; (vi) the purchase of a full service banking
office in Beavercreek, Ohio; (vii) the increase in the earnings per
share of the Company; and (viii) the acquisition of Seven Hills
Financial Corporation, Cincinnati, Ohio ("Seven Hills").
In targeting compensation for Mr. Clark, the Compensation
Committee also sought to be competitive with the total compensation
being paid to the chief executive officers of comparable publicly
traded thrifts. The Compensation Committee targeted Mr. Clark's total
compensation at or near the median total compensation paid to chief
executive officers of comparable thrifts.
9
<PAGE>
John E. Field (Chairman)
Howard V. Dodds
Alfred P. Strozdas (Director Emeritus)
Stock Performance Presentation
The line graph below compares the cumulative total stockholder return
on the Company's Common Stock (based on an assumed $100 investment) to the
cumulative total return of the Nasdaq Market Index and the SNL Thrift Index for
the period July 29, 1994 through December 31, 1996. The Company completed its
initial public offering of the Common Stock, and trading in the Common Stock
commenced, on July 29, 1994.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
200 |-------------------------------------------------------------------------|
| @ |
| # |
150 |-------------------------------------------------------------------------|
| @ |
| *# * |
100 |---*@#---------------#---------------------------------------------------|
| *@ |
| |
50 |-------------------------------------------------------------------------|
| |
| |
0 |-------------------------------------------------------------------------|
7/29/94 12/31/94 12/31/95 12/31/96
FISCAL YEAR ENDING
COMPANY 1994 1994 1995 1996
- -----------------------------------------------------------------------
WESTERN OHIO FINANCIAL * 100.00 83.16 134.91 132.05
INDUSTRY INDEX @ 100.00 88.80 140.65 183.56
BROAD MARKET # 100.00 101.04 131.05 162.85
Certain Transactions
The Bank has followed a policy of granting loans to officers, directors
and employees, if such loans are made in the ordinary course of business and on
the same terms and conditions, including interest rates and collateral, as those
of comparable transactions prevailing at the time, in accordance with the Bank's
underwriting guidelines, and do not involve more than the normal risk of
collectibility or present other unfavorable features. Loans to executive
officers and directors must be approved by a majority of the disinterested
directors and loans to other officers and employees must be approved by the
Bank's loan committee. All loans by the Bank to its directors and executive
officers are subject to OTS regulations restricting loan and other transactions
with affiliated persons of the Bank. Federal law currently requires that all
loans to directors and executive officers be made on terms and conditions
comparable to those for similar transactions with non-affiliates. Loans to all
directors and executive officers and their associates totalled approximately
$1.1 million at December 31, 1996, which amount was less than 2.0% of
stockholders' equity at that date.
10
<PAGE>
PROPOSAL II
The Company's Stock Option Plan currently authorizes the issuance of up
to 264,500 options to purchase Company stock (i.e., an amount equal to
approximately 10% of the stock issued pursuant to the Bank's conversion to
capital stock form), of which 230,271 options have been awarded. The Stock
Option Plan was initially ratified by the stockholders of the Corporation in
1995.
The Stock Option Plan was adopted in order to advance the interests of
the Company and its stockholders by affording executive officers, directors and
certain key employees an opportunity to acquire or increase their proprietary
interest in the Company through the grant of a variety of long-term incentive
awards. By encouraging such persons to become owners of the Company, the Company
seeks to attract, motivate, reward and retain those individuals whose judgment,
initiative, leadership and effort most directly determines the success of the
Company. The Company also believes that the Stock Option Plan is a useful tool
in negotiating potential mergers and acquisitions.
The Amendment to the Stock Option Plan
The Board of Directors has adopted, subject to stockholder approval, an
amendment to the Stock Option Plan which will increase by 43,057 (i.e., an
amount equal to approximately 1.9% of the current issued and outstanding Common
Stock) the number of shares available for issuance under the Stock Option Plan.
Reservation of the additional 43,057 shares under the Stock Option Plan
is being requested in connection with the Company's acquisition of Seven Hills
Financial Corporation which occurred in fiscal 1996. Under the terms of that
acquisition, the Company undertook to recommend to and seek approval from its
stockholders to reserve for issuance sufficient shares of the Company from
authorized and unissued or treasury shares to effect the substitution of the
Company's common stock for Seven Hills common stock under Seven Hills' stock
option plan. In the event that this proposal is not adopted, the Company will
pay an aggregate of $399,569 to certain Seven Hills option holders in alternate
compensation under the terms of the acquisition agreement.
As of February 21, 1997 (the latest date available prior to the mailing
of this proxy statement), of the 251,386 shares of Common Stock reserved for
issuance under the Stock Option Plan, awards representing 34,229 shares of
Common Stock are available for grant and previously granted options to purchase
217,157 shares of Common Stock remain unexercised. If the amendment to the Stock
Option Plan is approved, the total number of shares of Common Stock reserved for
issuance under the Stock Option Plan will be increased to 294,443. The exercise
of stock options may decrease certain per share financial measures for a period
of time and may diminish a stockholder's percentage voting power in the Company,
although the Company may consider repurchasing its shares in the future in order
to minimize or avoid any such effects.
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Attached as Exhibit A to this Proxy Statement is the complete text of
the proposed amendment to the Stock Option Plan. The principal features of the
Stock Option Plan are summarized below.
Principal Features of the Stock Option Plan
The Stock Option Plan provides for awards in the form of stock options,
stock appreciation rights ("SARs") and limited stock appreciation rights
("Limited SARs"). Each award shall be on such terms and conditions, consistent
with the Plan, as the committee administering the Plan may determine.
Shares may be either authorized but unissued shares or reacquired
shares held by the Company in its treasury. Any shares subject to an award which
expires or is terminated unexercised will again be available for issuance under
the Stock Option Plan or any other plan of the Company or its subsidiaries.
Generally, no award or any right or interest therein is assignable or
transferable except under certain limited exceptions set forth in the Plan.
The Stock Option Plan is administered by the executive committee of the
Board of Directors of the Company (the "Stock Option Committee"), none of whom
shall be eligible to receive discretionary awards under the Stock Option Plan.
Directors Field, Dobbs and Dillahunt have been appointed as the present members
of the Stock Option Committee. In granting awards under the Stock Option Plan,
the Committee considers, among other things, position and years of service,
value of the participant's services to the Company and the Bank and the added
responsibilities of such individuals as directors and officers of a public
company.
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Stock Options
The term of stock options will not exceed ten years from the date of
grant. The Committee may grant either "Incentive Stock Options" as defined under
Section 422 of the Code or stock options not intended to qualify as such
("non-qualified stock options").
In general, stock options will not be exercisable after the expiration
of their terms. Unless otherwise determined by the Committee, in the event that
a participant ceases to maintain continuous service (as defined in the Stock
Option Plan) to the Company, or one of its subsidiaries, for any reason other
than death or termination for cause, an exercisable stock option will continue
to be exercisable for two years but in no event after the expiration date of the
option. In the event of the death of a participant during such service or within
two years following termination, an exercisable option will continue to be
exercisable for one year, to the extent exercisable by the participant
immediately prior to his death, but in no event later than ten years after
grant. Following the death of any participant, the Committee may, as an
alternative means of settlement of an option, elect to pay to the holder an
amount of cash equal to the amount by which the market value of the shares
covered by the option on the date of exercise exceeds the exercise price. A
stock option will automatically terminate and will no longer be exercisable as
of the date a participant is terminated for cause.
Subject to certain limited exceptions, the exercise price for the
purchase of shares subject to a stock option at the date of grant may not be
less than 100% of the market value of the shares covered by the option on that
date. The exercise price must be paid in full in cash or shares of Common Stock,
or a combination of both, as determined by the Committee.
Stock Appreciation Rights
The Committee may grant SARs at any time, whether or not the
participant then holds stock options, granting the right to receive the excess
of the market value of the shares represented by the SARs on the date exercised
over the exercise price. SARs generally will be subject to the same terms and
conditions and exercisable to the same extent as stock options, as described
above. Upon the exercise of a SAR, the participant will receive the amount due
in cash or shares, or a combination of both, as determined by the Committee.
SARs may be related to stock options ("tandem SARs"), in which case the exercise
of one will reduce to that extent the number of shares represented by the other.
Notwithstanding the foregoing, no SAR may be exercisable by a director, senior
officer (as defined in the Stock Option Plan) or ten percent beneficial owner
(as defined in the Stock Option Plan) of the Company within six months of the
date of its grant.
SARs will require an expense accrual by the Company each year for the
appreciation on the SARs which it is anticipated will be exercised. The amount
of the accrual is dependent upon whether and the extent to which the SARs are
granted and the amount, if any, by which the market value of the SARs exceeds
the exercise price.
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Limited Stock Appreciation Rights
Limited SARs will be exercisable only for a limited period in the event
of a tender or exchange offer for shares of the Company's Common Stock, other
than by the Company, where 25% or more of the outstanding shares are acquired in
that offer or any other offer which expires within 60 days of that offer. The
amount paid on exercise of a Limited SAR will be the excess of (a) the market
value of the shares on the date of exercise, or (b) the highest price paid
pursuant to the offer, over the exercise price. Payment upon exercise of a
Limited SAR will be in cash.
Limited SARs may be granted at the time of, and must be related to, the
grant of a stock option or SAR. The exercise of one will reduce to that extent
the number of shares represented by the other. Limited SARs will be exercisable
only for the 45 days following the expiration of the tender or exchange offer,
during which period the related stock option or SAR will be exercisable.
However, no Limited SAR will be exercisable by a director, senior officer or ten
percent beneficial owner of the Company within six months of the date of its
grant.
Effect of Merger and Other Adjustments
Shares as to which awards may be granted under the Stock Option Plan,
and shares then subject to awards, will be adjusted by the Committee in the
event of any merger, consolidation, reorganization, recapitalization, stock
dividend, stock split or other change in the corporate structure of the Company.
In the case of any merger, consolidation or combination of the Company
with or into another thrift holding company or other entity, whereby either the
Company is not the continuing thrift holding company or its outstanding shares
are converted into or exchanged for securities, cash or property, or any
combination thereof, any participant to whom a stock option, SAR and Limited SAR
has been granted at least six months prior to such event will have the right
upon exercise of the option, SAR or Limited SAR to an amount equal to the excess
of fair market value on the date of exercise of the consideration receivable in
the merger, consolidation or combination with respect to the shares covered or
represented by the stock option, SAR or Limited SAR over the exercise price of
the option multiplied by the number of shares with respect to which the option,
SAR or Limited SAR has been exercised.
Amendment and Termination
The Board of Directors of the Company may at any time amend, suspend or
terminate the Stock Option Plan or any portion thereof but may not, without the
prior approval of the stockholders, make any amendment which materially (i)
increases the aggregate number of shares with respect to which awards may be
made under the Stock Option Plan, (ii) increases the aggregate number of shares
which may be subject to awards to participants who are not employees, or (iii)
changes the class of persons eligible to participate in the Stock Option Plan.
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Unless previously terminated, the Stock Option Plan shall continue in effect for
a term of ten years, after which no further awards may be granted under the
Stock Option Plan.
Federal Income Tax Consequences
Under present federal income tax laws, awards under the Stock Option
Plan will have the following consequences:
(1) The grant of an award will neither, by itself, result in
the recognition of taxable income to the participant nor entitle the
Company to a deduction at the time of such grant.
(2) The exercise of a stock option which is an "Incentive
Stock Option" within the meaning of Section 422 of the Code will
generally not, by itself, result in the recognition of taxable income
to the participant nor entitle the Company to a deduction at the time
of such exercise. However, the difference between the exercise price
and the fair market value of the option shares on the date of exercise
is an item of tax preference which may, in certain situations, trigger
the alternative minimum tax. The alternative minimum tax is incurred
only when it exceeds the regular income tax. The alternative minimum
tax will be payable at the rate of 26% to the first $175,000 of
"minimum taxable income" in excess of $33,750 (single person) or
$45,000 (married person filing jointly). This tax applies at a flat
rate of 28% of so much of the taxable excess as exceeds $175,000. If a
taxpayer has alternative minimum taxable income in excess of $150,000
(married persons filing jointly) or $112,500 (single person), the
$45,000 or $33,750 exemptions are reduced by an amount equal to 25% of
the amount by which the alternative minimum taxable income of the
taxpayer exceeds $150,000 or $112,500, respectively. The gain
recognized upon sale of the Incentive Stock Option will generally be
taxed at the ordinary income tax rates then in effect.
(3) The exercise of a stock option which is not an Incentive
Stock Option will result in the recognition of ordinary income by the
participant on the date of exercise in an amount equal to the
difference between the exercise price and the fair market value on the
date of exercise of the shares acquired pursuant to the stock option.
(4) The exercise of a SAR will result in the recognition of
ordinary income by the participant on the date of exercise in an amount
of cash, and/or the fair market value on that date of the shares,
acquired pursuant to the exercise.
(5) The Company will be allowed a deduction at the time, and
in the amount of, any ordinary income recognized by the participant
under the various circumstances described above, provided that the
Company meets its federal withholding tax obligations.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE RATIFICATION
OF THE AMENDMENT TO THE COMPANY'S 1995 STOCK OPTION AND INCENTIVE PLAN.
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PROPOSAL III
RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has renewed the Company's arrangement for Clark,
Schaefer, Hackett & Co. to be its auditors for the 1997 fiscal year, subject to
the ratification of the appointment by the Company's stockholders. A
representative of Clark, Schaefer, Hackett & Co. 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 STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF CLARK, SCHAEFER, HACKETT & CO. AS THE
COMPANY'S AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials
for the next Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's main office located at
28 East Main Street, Springfield, Ohio 45501-0509, no later than November 17,
1997. Any such proposal shall be subject to the requirements of the proxy rules
adopted under the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons owning more than 10% of a registered class of the
Company's equity securities, to file periodic reports of ownership and changes
in ownership with the Securities and Exchange Commission and to provide the
Company with copies of such reports. Based solely upon information provided to
the Company by the directors and officers subject to Section 16(a), no names of
the directors or executive officers failed to timely report transactions in the
Company's securities during 1996 as required by Section 16(a).
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The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company and/or the Bank may
solicit proxies personally or by telegraph or telephone without additional
compensation. The Company has retained Regan & Associates to assist in the
solicitation of proxies, for a fee estimated to be approximately $3,250 plus
reasonable out-of-pocket expenses.
BY ORDER OF THE BOARD OF DIRECTORS
John T. Heckman
Interim President and Chief Executive Officer
Springfield, Ohio
March 17, 1997
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EXHIBIT A
RESOLVED, that the 1995 Stock Option and Incentive Plan of Western Ohio
Financial Corporation is hereby amended to increase by 43,057 the number of
shares reserved for issuance thereunder.
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REVOCABLE PROXY REVOCABLE PROXY
Western Ohio Financial Corporation
ANNUAL MEETING OF STOCKHOLDERS
April 16, 1997
The undersigned hereby appoints the Board of Directors of Western Ohio
Financial Corporation (the "Company"), with full powers of substitution, to act
as attorneys and proxies for the undersigned to vote all shares of capital stock
of the Company which the undersigned is entitled to vote at the Annual Meeting
of Stockholders (the "Meeting") to be held at the Springfield Inn located at 100
South Fountain Avenue, Springfield, Ohio, on April 16, 1997 at 9:00 a.m. and at
any and all adjournments and postponements thereof.
I. The election as directors of all nominees listed below (except as marked
to the contrary) for a term to expire in 2000:
/ / FOR / / VOTE WITHHELD
INSTRUCTION: To withhold your vote for any individual nominee, strike a
line in that nominee's name below.
JOHN E. FIELD AND WILLIAM N. SCARFF
II. Pursuant to the acquisition of Seven Hills Financial Corporation,
approving an amendment to the 1995 Stock Option and Incentive Plan to
increase by 43,057 the number of shares reserved for issuance thereunder
(which is less than 1.9% of the issued and outstanding shares of the
Corporation's common stock).
/ / FOR / / AGAINST / / ABSTAIN
III. The ratification of the appointment of Clark, Schaefer, Hackett & Co. as
auditors for the Company for the fiscal year ending December 31, 1997.
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment or
postponement thereof.
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THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS AND THE NOMINEE
LISTED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE 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.
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The Board of Directors recommends a vote "FOR" each of the proposals and the
election of the nominee listed above.
(Continued and to be SIGNED on Reverse Side)
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and choose to vote at the Meeting or at
any adjournments or postponements thereof, and after notification to the
Secretary of the Company at the Meeting of the stockholder's decision to
terminate this proxy, then the power of such attorneys or proxies shall be
deemed terminated and of no further force and effect. This proxy may also be
revoked by filing a written notice of revocation with the Secretary of the
Company or by duly executing a proxy bearing a later date.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of notice of the Meeting, a Proxy Statement and an
Annual Report to Stockholders.
Dated: , 1997
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Signature of Stockholder
--------------------------------------
Signature of Stockholder
Please sign exactly as your name(s)
Appear(s) to the left. When signing as
attorney, executor, administrator,
trustee or guardian, please give your
full title. If shares are held
jointly, each holder should sign.
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PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE
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