SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] Filed by a party other than the registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
FIRST DEFIANCE FINANCIAL CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
<PAGE>
FIRST DEFIANCE FINANCIAL CORP.
601 Clinton Street
Defiance, Ohio 43512
(419) 782-5015
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 18, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders ("Annual
Meeting") of First Defiance Financial Corp., Defiance, Ohio ("First Defiance")
will be held at the home office of its subsidiary First Federal Savings and
Loan, located at 601 Clinton Street, Defiance, Ohio 43512, Tuesday, April 18,
2000 at 1:00 p.m., Eastern Time, for the following purposes, all of which are
more completely set forth in the accompanying Proxy Statement:
(1) To elect three (3) directors for three-year terms, and
until their successors are elected and qualified;
(2) To transact such other business as may properly come
before the Annual Meeting or any adjournment thereof. Management is not
aware of any other business.
The Board of Directors has fixed March 6, 1999 as the voting record
date for the determination of shareholders entitled to notice of and to vote at
the Annual Meeting or at any adjournment thereof. Only those shareholders of
record as of the close of business on that date will be entitled to vote at the
Annual Meeting or at any such adjournment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/John W. Boesling
-------------------
John W. Boesling
Secretary
Defiance, Ohio
March 20, 2000
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YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
- --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
---------------
First Defiance Financial Corp.
601 Clinton Street
Defiance, Ohio 43512
---------------
2000 ANNUAL MEETING OF SHAREHOLDERS
April 18, 2000
General
This Proxy Statement is being furnished to holders of common stock,
$0.01 par value per share ("Common Stock"), of First Defiance Financial Corp.,
Defiance, Ohio ("First Defiance"). Proxies are being solicited on behalf of the
Board of Directors of First Defiance to be used at the Annual Meeting of
Shareholders ("Annual Meeting") to be held at the home office of First Federal
Savings and Loan ("First Federal") located at 601 Clinton Street, Defiance, Ohio
43512, on Tuesday April 18, 2000 at 1:00 p.m., Eastern Time, and at any
adjournment thereof for the purposes set forth in the Notice of Annual Meeting
of Shareholders. This Proxy Statement is first being mailed to shareholders on
or about March 20, 2000.
Proxies
The proxy solicited hereby, if properly signed and returned to First
Defiance and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted for the nominees for director described herein and,
upon the transaction of such other business as may properly come before the
meeting, in accordance with the best judgment of the persons appointed as
proxies. Any shareholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Secretary of First Defiance
written notice thereof (John W. Boesling, Secretary, First Defiance Financial
Corp., 601 Clinton Street, Defiance, Ohio 43512); (ii) submitting a
duly-executed proxy bearing a later date; or (iii) appearing at the Annual
Meeting and giving notice of revocation to the Secretary. Proxies solicited
hereby may be exercised only at the Annual Meeting and any adjournment thereof
and will not be used for any other meeting.
<PAGE>
Voting Rights
Only shareholders of record at the close of business on March 6, 2000
("Voting Record Date") will be entitled to notice of and to vote at the Annual
Meeting. On the Voting Record Date, there were 6,836,685 shares of Common Stock
issued and outstanding and First Defiance had no other class of equity
securities outstanding. Each share of Common Stock is entitled to one vote at
the Annual Meeting on all matters properly presented at the meeting.
The presence, either in person or by proxy, of at least a majority of
the outstanding shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. Directors are elected by a plurality
of the votes cast with a quorum present. Abstentions are considered in
determining the presence of a quorum and will not affect the plurality vote
required for the election of directors. The proposals for election of directors
are considered "discretionary" items upon which brokerage firms may vote in
their discretion on behalf of their clients if such clients have not furnished
voting instructions and for which there will not be "broker non-votes."
<PAGE>
Beneficial Ownership
The following table includes, as of the Voting Record Date, certain
information as to the Common Stock beneficially owned by (i) the only person or
entities, including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended ("1934 Act"), who or which was known
to First Defiance to be the beneficial owner of more than 5% of the issued and
outstanding Common Stock, (ii) each director and each person nominated to become
a director of First Defiance, (iii) the executive officers of First Defiance
named in the Summary Compensation Table set forth under "Executive
Compensation," and (iv) all directors and executive officers of First Defiance
as a group.
<TABLE>
<CAPTION>
Amount and Nature of
Name of Beneficial Owner or Beneficial Ownership as of Percent of
Number of Persons in Group March 6, 2000 (1) Common Stock
-------------------------- ----------------- ------------
<S> <C> <C>
First Federal Savings and Loan
Employee Stock Ownership Plan 771,952 (2) 11.32%
Dimensional Fund Advisors, Inc. 534,089 (3) 7.81%
William J. Small 125,800 (4) 1.82%
Don C. Van Brackel 287,354 (5) 4.12%
Dr. John U. Fauster III 61,860 (6)(7) .90%
Dr. Marvin J. Ludwig 65,189 (6)(8) .95%
Stephen L. Boomer 45,753 (6) .67%
Thomas A. Voigt 23,444 (9)(10) .34%
Dr. Douglas A. Burgei 23,220 (9) .34%
Gerald W. Monnin 35,768 (11) .52%
Peter Diehl 11,248 (12) .16%
John C. Wahl 90,341 (13) 1.31%
All directors and executive
officers as a group (11 persons) 871,803 (14) 12.01%
</TABLE>
(Footnotes on next page)
<PAGE>
(1) Unless otherwise indicated, the named person has sole voting power and
sole investment power with respect to the indicated shares.
(2) Shares owned by First Federal Savings and Loan Employee Stock Ownership
Plan ("ESOP") which have been allocated to persons listed in this
beneficial ownership table are also included in those persons'
holdings.
(3) Based on Form 13G filed with the Securities and Exchange Commission,
Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940,
possesses both voting and investment power over 534,089 shares of
Common Stock. All 534,089 shares reported are owned by the entities for
which Dimensional serves as investment advisor, and Dimensional
disclaims beneficial ownership of such securities.
(4) Includes 106 shares held as custodian for minor children, 2,760 shares
that vest within 60 days under the 1996 MRP, 9,539 shares that have
been allocated to Mr. Small's account in the ESOP and 79,960 shares
that may be acquired upon the exercise of stock options.
(5) Includes 118,094 shares owned by trusts for the benefit of Mr. Van
Brackel and his wife, 9,327 shares that vest within 60 days under the
1996 Management Recognition Plan and Trust ("1996 MRP"), 23,494 shares
that have been allocated to Mr. Van Brackel's account in the ESOP and
136,439 shares that may be acquired upon the exercise of stock options.
(6) Includes 1,555 shares that vest within 60 days under the 1996 MRP and
35,968 shares that may be acquired upon the exercise of stock options.
(7) Includes 1,000 shares owned by his wife.
(8) Includes 1,431 shares owned by his wife.
(9) Includes 1,555 shares that vest within 60 days under the 1996 MRP and
14,378 shares that may be acquired upon the exercise of stock options.
(10) Includes 1,230 shares owned by his wife.
(11) Includes 1,555 shares that vest within 60 days under the 1996 MRP and
6,383 shares that may be acquired upon the exercise of stock options.
(12) Includes 2,000 shares owned by trusts for the benefit of Mr. Diehl and
his wife, 1,399 shares that vest within 60 days under the 1996 MRP and
6,606 shares that may be acquired upon the exercise of stock options.
<PAGE>
(13) Includes 317 shares held as custodian for minor children, 4,000 shares
that vest within 60 days under the 1996 MRP, 12,624 shares that have
been allocated to Mr. Wahl's account in the ESOP and 54,000 shares that
may be acquired upon the exercise of stock options.
(14) Includes options to purchase 420,049 shares, 26,816 shares that vest
within 60 days under the 1996 MRP, 45,658 shares allocated to the
accounts of executive officers in the ESOP, and 123,318 shares held in
trust for the 1996 MRP which vest after 60 days.
<PAGE>
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR, DIRECTORS
WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS
Election of Directors
First Defiance's Board of Directors is currently composed of nine
members. The Code of Regulations of First Defiance provides that the Board of
Directors of First Defiance shall be divided into three classes which are as
equal in number as possible, and that the members of each class are to be
elected for a term of three years and until their successors are elected and
qualified. One class of directors is elected annually.
At the Annual Meeting, shareholders of First Defiance will be asked to
elect three directors for three year terms, and in each case until their
successors are elected and qualified. Unless otherwise directed, each proxy
executed and returned by a shareholder will be voted for the election of the
nominees for director listed below. If any person named as nominee should be
unwilling to stand for election at the time of the Annual Meeting, the proxies
will vote for any replacement nominee or nominees recommended by the Board of
Directors. At this time, the Board of Directors knows of no reason why any of
the nominees listed below may not be able to serve as a director if elected.
<PAGE>
Information Regarding Nominees for Director and Continuing Directors
The following tables present information concerning each nominee for
director and each director whose term continues, including his tenure as a
director of First Federal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE
NOMINEES BE RE-ELECTED AS DIRECTORS
NOMINEES FOR DIRECTOR WITH THREE-YEAR TERMS EXPIRING IN 2003
Positions Held in Director
Name Age First Defiance Since (1)
---- --- -------------- ---------
Don C. Van Brackel 61 Director, Vice Chairman 1979
Dr. Douglas A. Burgei 45 Director 1995
Gerald W. Monnin 61 Director 1997
DIRECTORS WITH TERMS EXPIRING IN 2001
Positions Held in Director
Name Age First Defiance Since (1)
---- --- -------------- ---------
William J. Small 49 Chairman, President
and Chief Executive Officer 1998
Stephen L. Boomer 49 Director 1994
Peter A. Diehl 49 Director 1998
(Footnotes on next page)
<PAGE>
DIRECTORS WITH TERMS EXPIRING IN 2002
Positions Held in Director
Name Age First Defiance Since (1)
---- --- -------------- ---------
Dr. John U. Fauster 62 Director 1975
Dr. Marvin J. Ludwig 73 Director 1979
Thomas A. Voigt 57 Director 1995
- ----------------
(1) Each director also serves as a director of First Federal Bank of the
Midwest ("First Federal"), a wholly owned subsidiary of First Defiance.
The indicated year includes service as a director for First Federal prior
to the formation of First Defiance in 1995, where applicable.
The business experience of each of the nominees or directors for at least
the past five years is as follows:
Don C. Van Brackel. Mr. Van Brackel has served as Vice Chairman of the First
Defiance Financial Corp. Board of Directors since January 1, 1999. Prior to
that, Mr. Van Brackel served as Chairman of the Board of Directors and Chief
Executive Officer of First Defiance and First Federal, from January 1, 1995
until his retirement on December 31, 1998. He was President and Managing Officer
of First Federal from July 1992 until June 1996 and has been a director of First
Defiance and its predecessors since 1979. He previously was president and chief
executive officer of A. Van Brackel & Sons, Inc., Defiance, Ohio, a company that
sells and services coin-operated equipment, sound systems and
satellite-delivered background music as a 3-M franchisee. Mr. Van Brackel is a
member of the Executive and Loan Review, Investment, Long-Range Planning and The
Leader Mortgage Committees.
Douglas A. Burgei, D.V.M. Dr. Burgei is a veterinarian practicing in
Napoleon, Ohio since 1978. He was appointed to the Board of Directors in August
1995 and he serves as a member of the Investment, Long-Range Planning and MRP -
Stock Options Committees and serves on the Executive and Loan Review Committees
on a rotating basis.
<PAGE>
Gerald W. Monnin. Mr. Monnin is President and Chief Executive Officer of
Northwest Controls, a Defiance, Ohio company that distributes high technology
electronic automation and control products and systems. He has been a director
since April 1997 and serves as chairman of the Compensation Committee and as a
member of the Long Range Planning, MRP - Stock Options and The Leader Mortgage
Committees and serves on the Executive and Loan Review Committees on a rotating
basis during the year.
William J. Small. Mr. Small has served as President, Chairman of the Board
and Chief Executive Officer of First Defiance and Chairman of the Board and
Chief Executive Officer of First Federal since January 1, 1999. He previously
served as President and Chief Operating Officer of First Federal from June 1996
through December 31, 1998 and before that he served as Senior Vice President
responsible for lending from July 1, 1994. As Chairman and CEO, Mr. Small is
also Chairman of the Executive and Loan Review, The Leader Mortgage Committees
and the First Insurance and Investments board of directors and a member of the
Investment and Trust Committees.
John U. Fauster III D.D.S. Dr. Fauster is affiliated with the Defiance
Dental Group and engages in the general practice of dentistry in Defiance, Ohio.
He has been a director of First Defiance and its predecessors since 1975 and
currently serves as a member of its Audit, Investment and Long Range Planning
Committees and serves on the Executive and Loan Review Committees on a rotating
basis during the year.
Marvin J. Ludwig. Dr. Ludwig was president of The Defiance College, an
independent, co-educational, liberal arts college affiliated with the United
Church of Christ, from 1975 until his retirement on June 30, 1994. He has served
as a director of First Defiance and its predecessors since 1979 and currently
serves as Chairman of the Audit Committee and as a member of the Compensation,
MRP -- Stock Options and The Leader Mortgage Committees and serves on the
Executive and Loan Review Committees on a rotating basis during the year.
Thomas A. Voigt. Mr. Voigt is vice president and general manager of the
Bryan Publishing Company, commercial printers and publishers of The Bryan Times,
The Countyline, The Montpelier Leader Enterprise and Realty Northwest. He was
appointed to the board in August, 1995 and he serves as Chairman of the
Long-Range Planning Committee and on the Compensation and MRP - Stock Options
Committees and serves on the Executive and Loan Review Committees on a rotating
basis during the year.
Peter A. Diehl. Mr. Diehl is President/Chief Executive Officer of Diehl,
Inc., a privately held company headquartered in Defiance, Ohio which produces
canned dairy products and non-dairy creamers for distribution throughout the
United States and Asia. He has been a director since April 1998 and currently
serves on the Audit, Compensation and Long Range Planning Committees as well as
the First Insurance and Investments board of directors. He also serves on the
Executive and Loan Review Committees on a rotating basis during the year.
Stephen L. Boomer. Mr. Boomer is President and co-owner of Arps Dairy
Inc., Defiance, Ohio, a processor and distributor of various dairy products. He
has been a director since August
<PAGE>
1994 and currently serves as Chairman of the MRP - Stock Options Committee and
as a member of the Audit, Trust and Compensation Committees as well as the First
Insurance and Investments board of directors. He also serves on the Executive
and Loan Review Committees on a rotating basis during the year.
Executive Officers Who Are Not Directors
The following sets forth certain information with respect to the executive
officers of First Defiance who are not directors or nominees, including their
business experience for at least the past five years.
John C. Wahl. Age 39. Mr. Wahl was promoted to Executive Vice President of
First Defiance and First Federal in November 1998. He previously was appointed
Treasurer in April, 1997 and Senior Vice President and Chief Financial Officer
in January, 1997 after having served as Controller since June 1, 1994. Prior to
joining First Defiance he was a senior manager with Ernst & Young LLP, the
Company's independent auditors.
James L. Rohrs, Age 52. Mr. Rohrs joined First Defiance in August 1999 as
Executive Vice President of First Defiance and President and Chief Operating
Officer of First Federal. Prior to joining First Defiance Mr. Rohrs was employed
by Huntington National Bank for 27 years. Since 1994 Mr. Rohrs served as
Business Banking Product Manager for Huntington's bank-wide small business
market center. Prior to that he was regional executive for Huntington's
Northwest Ohio region.
<PAGE>
Compliance with Section 16(a) of the 1934 Act
Section 16(a) of the 1934 Act requires First Defiance's officers and
directors, and persons who own more than 10% of the Common Stock to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission (the "SEC"). Officers, directors and greater than 10% shareholders
are required by regulation to furnish First Defiance with copies of all Section
16(a) forms they file.
SEC regulations require that First Defiance disclose any Section 16 filing
that was not made by the appropriate due date. Based on a review of the filings
for 1999, First Defiance determined that a Form 4 for Gerald W. Monnin was not
filed by the applicable due date.
The Board of Directors and Its Committees
Regular meetings of the Board of Directors of First Defiance are held
monthly and special meetings of the Board of Directors of First Defiance are
held from time to time as needed. Regular meetings of the Board of Directors of
First Federal are also held on at least a monthly basis and special meetings of
the Board of Directors of First Federal are held from time-to-time as needed.
There were 14 meetings of the Board of Directors of First Defiance and 13
meetings of the Board of Directors of First Federal held during 1999. No
director attended fewer than 75% of the total number of meetings of the Board of
Directors of either First Defiance or First Federal held during 1999 and the
total number of meetings held by all committees of the Board on which the
director served during such year.
The Boards of Directors of First Defiance and First Federal have
established various committees, including Executive, Audit, Compensation, Long
Range Planning, MRP - Stock Options and The Leader Mortgage Board Committees.
First Insurance and Investments, a subsidiary of First Defiance, has a separate
board of directors.
The Executive Committee generally has the power and authority to act on
behalf of the Board of Directors on important matters between scheduled Board
meetings unless specific board action is required or unless otherwise restricted
by First Defiance's or First Federal's charter or bylaws or its Board of
Directors. As Chairman of the Board, Mr. Small serves as Chairman of the
Executive Committee. Mr. Van Brackel serves as a permanent member of the
Executive Committee. The seven remaining directors serve on the Committee on a
rotating basis during the year. The Executive Committee met 52 times during
1999.
The Audit Committee reviews (i) the independent auditors' reports and
results of their examination (ii) the OTS and Federal Deposit Insurance
Corporation and other regulatory reports and (iii) reports issued in connection
with internal audit procedures performed by firms engaged by the Audit
Committee. The entire Board of Directors subsequently reviews such reports and
examinations. Currently, Drs. Ludwig and Fauster, and Messrs. Diehl and Boomer
serve as members of this committee. The Audit Committee met four times during
1999.
<PAGE>
The Compensation Committee, consisting of Messrs. Monnin, Voigt, Boomer
and Diehl and Dr. Ludwig was established by the Board of Directors to oversee
the compensation programs provided to First Defiance's management including base
salaries, bonuses and benefit plans.
The Long Range Planning Committee, consisting of Messrs. Voigt, Van
Brackel, Diehl and Monnin and Drs. Fauster and Burgei, is responsible for
reviewing strategic decisions which will have a long-term impact on First
Defiance's operations.
The MRP - Stock Options Committee, consisting of Messrs. Boomer, Voigt and
Monnin and Drs. Ludwig and Burgei, is responsible for reviewing and approving
grants made to management under First Defiance's 1996 Management Recognition
Plan (the "1996 MRP"), and the Option Plans. Such grants are also subject to
approval by the full Board of Directors.
The Leader Mortgage Board Committee, consisting of Messrs Small, Van
Brackel, Monnin and Ludwig along with certain senior management personnel from
The Leader Mortgage Company and First Defiance, is responsible for reviewing,
monitoring, and providing strategic direction for the operations of The Leader
Mortgage Company, which is organized as a single member limited liability
company. The Committee meets on a monthly basis.
The First Insurance and Investments Board of Directors includes Messrs
Small, Boomer and Diehl along with certain senior management personnel from
First Insurance and Investments and First Defiance. It is responsible for
reviewing, monitoring and providing strategic direction for the operations of
First Insurance and Investments. The Board meets on a monthly basis.
First Defiance does not have a nominating committee, the functions of
which are performed by the full Board of Directors.
<PAGE>
EXECUTIVE COMPENSATION
Summary
The following table sets forth a summary of certain information concerning
the compensation awarded to or paid by First Defiance for services rendered in
all capacities during the last three fiscal years to the Chief Executive Officer
and the most highly compensated executive officers of First Defiance and First
Federal whose total compensation during the year ended December 31, 1999
exceeded $100,000. Positions with First Defiance are listed as of December 31,
1999.
<TABLE>
<CAPTION>
Annual Compensation (3) Long Term Compensation
----------------------- -------------------------
Awards
--------------------------
Restricted Securities
Name and Bonus Stock Underlying All Other
Principal Position Year Salary (1) (2) Grants(4) Options Compensation (5)
<S> <C> <C> <C> <C> <C> <C>
William J. Small, 1999 $190,000 $56,857 --- --- $21,221
Chairman, President 1998 152,000 --- --- --- 31,816
and Chief Executive 1997 89,124 53,474 --- --- 50,786
Officer
- ---------------------- --------- ----------- ------------ ------------- --------------- --------------------
John C. Wahl, 1999 $117,000 $26,246 --- --- $17,070
Executive Vice 1998 115,000 --- --- --- 30,965
President, Chief 1997 82,168 49,301 $87,000 10,000 50,786
Financial Officer
and Treasurer
</TABLE>
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(Footnotes on next page)
<PAGE>
(1) Includes amounts deferred by Messrs. Small and Wahl pursuant to First
Defiance's deferred compensation program.
(2) Bonus amounts reflect amounts earned during the fiscal year as determined
by the Compensation Committee, including amounts which are paid in the
following year.
(3) Does not include amounts attributable to miscellaneous benefits received by
executive officers. In the opinion of management of First Defiance the
costs to First Defiance of providing such benefits to any individual
executive during the year ended December 31, 1999 did not exceed the lesser
of $50,000 or 10% of the total of annual salary and bonus reported for the
individual.
(4) Represents the grant of 8,000 shares of restricted Common Stock to Mr. Wahl
in April, 1997 under the 1996 MRP. All shares granted under this program
vest 20% per year over five years on the anniversary date of the grant.
Unvested shares are forfeited upon termination or retirement. The award to
Mr. Wahl had a fair value at December 31, 1999 of $84,000.
(5) Consists of amounts allocated by First Defiance on behalf of Messrs. Small
and Wahl pursuant to First Defiance's Employee Stock Ownership Plan and
matching and profit sharing contributions pursuant to First Defiance's
401(k) Plan.
<PAGE>
Stock Options
There were no option grants made during fiscal 1999 pursuant to First
Defiance's Stock Option Programs to the individuals named in the Summary
Compensation Table.
The following table sets forth certain information concerning exercises
of stock during the year ended December 31, 1999 and options held by the named
executive officers at December 31, 1999 under the 1993 Stock Incentive Plan and
the 1996 Stock Option Plan.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of
Securities Underlying Unexercised Value of Unexercised In the
Shares Options at Year End (1) Options at Year End (1)
Acquired on Value ------------------------------- --------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William J. Small --- --- 73,060 34,040 $ 3,795 $ 2,530
John C. Wahl --- --- 48,000 12,000 -0- -0-
</TABLE>
- -----------------
(1) Based on a per share market price of $10.50 at December 31, 1999 and
exercise prices ranging from $10.375 per share to $13.00 per share.
<PAGE>
Report of the Compensation Committee
In order to provide compensation levels comparable to its peers and to
provide incentives for achieving improved performance, the Compensation
Committee recommended and the Board of Directors adopted an incentive-based
executive salary program which will provide the Chief Executive Officer with a
base salary targeted at approximately 70% of total cash compensation with the
remaining 30% consisting of an incentive bonus. Other members of senior
management participate under a similar program, with base targets ranging from
75% to 80% of total compensation and incentive bonus targets ranging from 20% to
25%. Under the program, senior management would attain targeted levels of
compensation only upon realizing prescribed levels of performance established by
the Board.
The Committee evaluates the base salaries of the executive officers of
First Defiance and First Federal annually. An executive officer's base salary is
determined based upon longevity with First Defiance, the effectiveness of such
individual in performing his duties, peer averages at the position in question
and First Defiance's overall performance. No particular weight is assigned to
these variables. The base salary component alone, while designed to be
competitive with peer group averages, is not designed to produce top levels of
compensation for the executive officers of First Defiance when compared to its
peer group. The incentive component, as described below, which requires First
Defiance to achieve specific goals before additional compensation is paid, is
the element which is designed to make total compensation for each of the
executive officers comparable with compensation for executive officers in First
Defiance's peer group.
For 1999, the Board of Directors prescribed that certain target
measurements be met in order to fund the executive compensation pool. The
measurements included a minimum level of diluted earnings per share, a minimum
target for growth in net interest and non-interest income, and a maximum
efficiency ratio. Based on 1999 financial results, 78.1% of the executive bonus
pool was funded.
By the Compensation Committee: G.W. Monnin, Chairman, M.J. Ludwig, T.A.
Voigt and P.A. Diehl.
<PAGE>
Performance Graph
The following graph compares the yearly cumulative total return on the
Common Stock for the last five years with (i) the yearly cumulative total return
on the stocks included in the Nasdaq Stock Market Index (for United States
companies) (ii) the yearly cumulative total return on stocks included in the
Nasdaq Bank Stock Index and (iii) the yearly cumulative total return on stocks
included in the SNL Securities Midwest Thrift Index. All of these cumulative
returns are computed assuming the reinvestment of dividends at the frequency
with which dividends were paid during the applicable years.
First Defiance Financial Corp
(including predecessors)
[GRAPHIC-GRAPH PLOTTED TO POINTS LISTED BELOW]
<TABLE>
<CAPTION>
Period Ending
---------------------------------------------------------------
Index 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
<S> <C> <C> <C> <C> <C> <C>
First Defiance Financial Corp. 100.00 168.36 211.27 279.54 255.54 194.69
NASDAQ - Total US 100.00 141.33 173.89 213.07 300.25 542.43
NASDAQ Bank Index 100.00 149.00 196.73 329.39 327.11 314.42
SNL Midwest Thrift Index 100.00 151.14 190.42 306.89 283.55 235.73
</TABLE>
<PAGE>
Directors' Compensation
During the year ended December 31, 1999, each outside member of the Board
of Directors of First Defiance received an annual fee of $16,580 plus an
additional fee of $400 per Board meeting attended. Outside Directors have the
option to defer up to $5,000 of their annual fees pursuant to a deferred
compensation plan. Directors also received a $500 annual fee for each committee
they serve on, with the exception of rotating service on the Executive Committee
and service on The Leader Mortgage Board Committee. For service on the Executive
Committee, they received $100 per meeting attended during their term as members.
For service on The Leader Mortgage Board Committee, outside directors receive
$500 for each meeting attended. For service on the First Insurance and
Investments board, outside directors receive $300 for each meeting attended.
Mr. Van Brackel, formerly Chairman, President and CEO, assumed the
responsibilities of Vice Chairman of the Board on January 1, 1999. In that
capacity, Mr. Van Brackel is paid an annual salary of $63,000 for a three-year
period. Mr. Van Brackel is receiving that salary in lieu of any other director's
compensation. He has the option to defer up to $10,000 of his annual salary
pursuant to the deferred compensation plan. Mr. Small does not receive any
additional compensation for his service on the Board of Directors.
In 1999, the Mr. Diehl and Mr. Monnin each received grants under the 1996
Stock Option Plan to purchase an aggregate of 1,943 shares of Common Stock at a
$11.25 exercise price.
Employment Agreements
First Defiance has entered into employment agreements with Messrs. Small,
Wahl and Rohrs (the "Executives"). The form of employment agreement for each
Executive is substantially the same and provides each officer with a three-year
term of employment commencing on the date of the agreement. On the first
anniversary of each agreement and each anniversary thereafter, the Board of
Directors of First Defiance shall consider and review extension of the terms of
each agreement and shall continue to extend under such terms unless either party
gives notice of non-renewal to the other party.
The employment agreements are terminable with or without cause by First
Defiance. The Executives have no right to compensation or other benefits
pursuant to the employment agreement for any period after voluntary termination
or termination by First Defiance for cause, disability, retirement or death.
However, in the event that (i) an Executive terminates his employment because of
failure of First Defiance to comply with any material provision of the
employment agreement or (ii) the employment agreement was terminated by an
Executive for Good Reason, as defined, an Executive would be entitled to 2.99
times the average annual compensation paid to him by First Defiance during the
five most recent taxable years ending during the calendar year in which the
notice of termination occurs or such portion of such period in which the
Executive served as senior officer of First Defiance as well as continued
participation in employee benefit plans of First Defiance (other than retirement
plans and stock compensation plans) until the expiration of the remaining term
of employment. "Good Reason"
<PAGE>
would generally be defined in the employment agreements to include the
assignment by First Defiance to the Executive of any duties which, in the
Executive's good faith determination, are materially inconsistent with the
Executive's positions, duties, responsibilities and status with First Defiance
prior to such assignment or prior to a change in control of First Defiance.
The employment agreements provide that in the event that any of the
payments to be made thereunder or otherwise upon termination of employment are
deemed to constitute "excess parachute payments" within the meaning of Section
280G of the Internal Revenue Code of 1986, then such payments and benefits
received thereunder would be reduced, in the manner determined by First
Defiance, by the amount, if any, which is the minimum necessary to result in no
portion of the payments and benefits being nondeductible by First Defiance for
federal income tax purposes. Excess parachute payments generally would be
defined as payments in excess of three times the recipient's average annual
compensation from First Defiance includable in the recipients gross income
during the most recent five taxable years ending before the date on which a
change in control of First Defiance or other triggering events occurred ("base
amount"). A recipient of excess parachute payments is subject to a 20% excise
tax on the amount by which such payments exceed the base amount, in addition to
regular income taxes, and payments in excess of the base amount would not be
deductible by First Defiance as compensation expense for federal income tax
purposes.
<PAGE>
Indebtedness of Management
First Defiance has had no loans outstanding since January 1, 1999 in excess
of $60,000 to any director, nominee for election as a director or executive
officer of First Defiance, any member of the immediate family of any such person
or to certain corporations, organizations or trusts affiliated with any such
person, except loans made in the ordinary course of business on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons and did not involve more
than the normal risk of collectibility or present other unfavorable features.
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP served as the Company's independent auditors for the
fiscal year ended December 31, 1999, and has reported on the Company's
consolidated financial statements. Representatives of the firm will be present
at the Annual Meeting, will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions from
shareholders.
OTHER MATTERS
Each proxy solicited hereby also confers discretionary authority on the
Board of Directors of First Defiance to vote the proxy with respect to the
election of any person as a director if the nominee is unable to serve or for
good cause will not serve, matters incident to the conduct of the meeting, and
upon such other matters as may properly come before the Annual Meeting.
Management is not aware of any business to come before the Annual Meeting other
than those matters described in this Proxy Statement. However, if any other
matters should properly come before the Annual Meeting, it is intended that the
proxies solicited hereby will be voted with respect to those other matters in
accordance with the judgment of the persons voting the proxies.
The cost of solicitation of proxies will be borne by First Defiance. First
Defiance 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 the Common Stock. In addition to solicitations by
mail, directors, officers and employees of First Defiance may solicit proxies
personally or by telephone without additional compensation.
<PAGE>
SHAREHOLDER PROPOSALS
Any proposal that a shareholder intends to have included in First
Defiance's proxy statement for the 2001 Annual Meeting of Shareholders must be
sent to the main office of First Defiance and must be received by First Defiance
no later than November 20, 2000. If a shareholder intends to present a proposal
at the 2001 Annual Meeting but does not wish to have the proposal included in
the proxy materials for that meeting, the proxies designated by the Board of
Directors of First Defiance for the 2001 Annual Meeting may vote in their
discretion on the shareholder proposal without mentioning the shareholder
proposal in the proxy statement or on the proxy card for such meeting if the
proposal is not received by February 2, 2001. It is recommended that any such
proposals be sent by certified mail, return receipt requested.
ANNUAL REPORTS AND FINANCIAL STATEMENTS
Shareholders of First Defiance as of the Voting Date for the Annual Meeting
are being forwarded a copy of First Defiance's Annual Report to Shareholders and
Form 10-K for the year ended December 31, 1999 ("Annual Report"). Included in
the Annual Report are the consolidated financial statements of First Defiance as
of December 31, 1999 and 1998 and for each of the years in the three-year period
ended December 31, 1999, prepared in accordance with generally accepted
accounting principles, and the related report of First Defiance's independent
public accountants. The Annual Report is not a part of this Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
/s/John W. Boesling, Secretary
------------------------------
John W. Boesling, Secretary
March 20, 2000
Defiance, Ohio
<PAGE>
REVOCABLE PROXY
FIRST DEFIANCE FINANCIAL CORP.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST DEFIANCE
FINANCIAL CORP. FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
APRIL 18, 2000 AND AT ANY ADJOURNMENT THEREOF.
The undersigned hereby appoints the Board of Directors of First Defiance
Financial Corp. (the "Company") as proxies, each with power to appoint his
substitute, and hereby authorizes them to represent and vote, as designated
below, all the shares of Common Stock of the Company held of record by the
undersigned on March 6, 2000 at the Annual Meeting of Shareholders to be held at
the home office of its subsidiary, First Federal Bank, located at 601 Clinton
Street, Defiance, Ohio 43512, on Tuesday, April 18, 2000, at 1:00 p.m., Eastern
Time, and any adjournment thereof.
1. ELECTION OF DIRECTORS FOR THREE-YEAR TERM EXPIRING IN 2003
Nominees for a three-year term expiring in 2003:
Don C. Van Brackel, Douglas A. Burgei, Gerald W. Monnin
With- For All
[ ] For [ ] hold [ ] Except
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. THE SHARES OF THE COMPANY'S
COMMON STOCK WILL BE VOTED AS SPECIFIED. IF NOT OTHERWISE SPECIFIED, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE BOARD OF DIRECTORS' NOMINEES TO THE BOARD
OF DIRECTORS SPECIFIED IN ITEM 1 AND OTHERWISE AT THE DISCRETION OF THE PROXIES.
YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED AT THE
ANNUAL MEETING.
Please be sure to sign and date
this Proxy in the box below.
_________________________________________
Date
_________________________________________
Stockholder sign above
_________________________________________
Co-holder (if any) sign above
<PAGE>
Detach above card, sign, date and mail in postage paid envelope provided.
FIRST DEFIANCE FINANCIAL CORP.
Please sign this exactly as your name(s) appear(s) on this proxy card. When
signing in a representative capacity, please give title. When shares are held
jointly, only one holder need sign.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
