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
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Charter Financial, Inc.
-----------------------------------------------------
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other identifying value of transaction
computed pursuant to Exchange Act Rule 0-11:
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 offset 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 Number:
3) Filing Party:
4) Date Filed:
<PAGE>
December 10, 1997
Dear Stockholder:
You are cordially invited to attend the second Annual Meeting of Stockholders
(the "Annual Meeting") of Charter Financial, Inc. (the "Company"). The Annual
Meeting will be held at Charter Bank, S.B.'s (the "Bank") Main Office, 114 West
Broadway, Sparta, Illinois at 1:30 p.m. (local time) on January 15, 1998.
The enclosed Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted at the Annual Meeting. During the Annual Meeting we
will also report on the operations of the Company and the Bank. Directors and
officers of the Company and the Bank, as well as a representative of the
Company's independent auditors, will be present at the Annual Meeting to respond
to any questions that stockholders may have.
The Annual Meeting is being held so that stockholders may consider and vote upon
the election of four directors of the Company and the ratification of the
appointment of KPMG Peat Marwick LLP as auditors for the Company's 1998 fiscal
year. For the reasons set forth in the proxy statement, the Board of Directors
unanimously recommends a vote "FOR" each of the nominees for director listed
therein and "FOR" the ratification of the appointment of KPMG Peat Marwick LLP.
Also enclosed is our 1997 Annual Report to Stockholders, which contains detailed
information concerning the activities and operating performance of the Company
and the Bank.
On behalf of the Board of Directors, we urge you to sign, date and return the
enclosed proxy card as soon as possible even if you currently plan to attend the
Annual Meeting. Your vote is important, regardless of the number of shares that
you own. This will not prevent you from voting in person, but will ensure that
your vote is counted if you are unable to attend the Annual Meeting.
Sincerely,
/s/John A. Becker
- -----------------
John A. Becker
President and Chief Executive Officer
<PAGE>
Charter Financial, Inc.
114 West Broadway
Sparta, Illinois 62286
(618) 443-2166
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On January 15, 1998
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Charter Financial, Inc. (the "Company") will be held at the Main
Office of Charter Bank, S.B., 114 West Broadway, Sparta, Illinois, on Thursday,
January 15, 1998 at 1:30 p.m., local time.
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon:
1. The election of four directors of the Company;
2. The ratification of the appointment of KPMG Peat Marwick LLP as
auditors for the Company for the fiscal year ending September 30,
1998; and
such other matters as may properly come before the Annual Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Annual Meeting.
Any action may be taken on the foregoing proposals at the Annual Meeting on
the date specified above, or on any date or dates to which by original or later
adjournment the Annual Meeting may be adjourned. Stockholders of record at the
close of business on December 4, 1997 are the stockholders entitled to vote at
the Annual Meeting, and any adjournments thereof.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE
REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING
WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE ANNUAL MEETING MAY REVOKE
HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL
MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN
YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO
VOTE PERSONALLY AT THE ANNUAL MEETING.
By Order of the Board of Directors
/s/Linda M. Johnson
-------------------
Linda M. Johnson
Secretary
Sparta, Illinois
December 10, 1997
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE YOUR COMPANY THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE ANNUAL MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED WITHIN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
of
CHARTER FINANCIAL, INC.
114 West Broadway
Sparta, Illinois 62286
(618) 443-2166
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
January 15, 1998
- --------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Charter Financial, Inc. (the
"Company") to be used at the Annual Meeting of Stockholders of the Company (the
"Meeting"), which will be held at the Main Office of Charter Bank, S.B. (the
"Bank"), 114 West Broadway, Sparta, Illinois, on Thursday, January 15, 1998 at
1:30 p.m., local time, and all adjournments thereof. The accompanying Notice of
Annual Meeting of Stockholders and this Proxy Statement are first being mailed
to stockholders on or about December 10, 1997.
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Revocation of Proxies
- --------------------------------------------------------------------------------
Stockholders who execute proxies in the form solicited hereby retain the
right to revoke them in the manner described below. Unless so revoked, the
shares represented by such proxies will be voted at the Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of Directors of
the Company will be voted in accordance with the directions given thereon. Where
no instructions are indicated, proxies will be voted FOR each of the nominees
for director named herein and FOR the appointment of KPMG Peat Marwick LLP as
independent auditors of the Company for the fiscal year ending September 30,
1998.
Proxies may be revoked by sending written notice of revocation to the
Secretary of the Company at the address shown above. The presence at the Meeting
of any stockholder who had given a proxy shall not revoke such proxy unless the
stockholder delivers his or her ballot in person at the Meeting or delivers a
written revocation to the Secretary of the Company prior to the voting of such
proxy.
- --------------------------------------------------------------------------------
Voting Securities and Principal Holders Thereof
- --------------------------------------------------------------------------------
Holders of record of the Company's common stock, par value $.10 per share
(the "Common Stock") as of the close of business on December 4, 1997 are
entitled to one vote for each share then held (the "Record Date"). As of the
Record Date, the Company had 4,150,123 shares of Common Stock issued and
outstanding. The presence in person or by proxy of a majority of the outstanding
shares of Common Stock entitled to vote is necessary to constitute a quorum at
the Meeting.
<PAGE>
As provided in the Company's Certificate of Incorporation, record holders of
Common Stock who beneficially own in excess of 10% of the outstanding shares of
Common Stock (the "Limit") are not entitled to vote any shares held in excess of
the Limit. A person or entity is deemed to own beneficially shares owned by an
affiliate of, as well as persons acting in concert with, such person or entity.
As to the election of directors, the proxy card being provided by the Board
of Directors enables a stockholder to vote FOR the election of the nominees
proposed by the Board, or to WITHHOLD AUTHORITY to vote for one or more of the
nominees being proposed. Under Delaware law and the Company's Certificate of
Incorporation and Bylaws, directors are elected by a plurality of votes cast,
without regard to broker non-votes. As to the ratification of the appointment of
KPMG Peat Marwick LLP as independent auditors of the Company, a stockholder may
vote FOR the item, AGAINST the item or ABSTAIN from voting. The approval of this
matter requires the affirmative vote of a majority of the votes present and cast
at the Meeting, without regard to broker non-votes. Proxies marked ABSTAIN will
have the effect of a vote against the proposal. Broker non-votes will have no
effect on the vote on the proposal.
The following table sets forth, as of the Record Date, information
concerning the beneficial ownership of shares of Common Stock by the executive
officers and directors of the Company as a group and by each person who was the
beneficial owner of more than five percent of the Company's outstanding shares
of Common Stock (except for John A. Becker, whose share ownership information is
provided along with the share ownership information of the other directors of
the Company elsewhere herein under "Proposal I -- Election of Directors.")
<TABLE>
<CAPTION>
Amount
Owned and Nature Percent of Shares
Name and Address of Beneficial of Common Stock
of Beneficial Owner Ownership(1) Outstanding
------------------- ------------ -----------
<S> <C> <C>
All Directors and Executive Officers 1,008,677(2) 22.84%
as a Group (12 persons)
5% Owners
Charter Bank, S.B. Employee 407,575(3) 9.82
Stock Ownership Plan
114 West Broadway
Sparta, Illinois 62286
Brandes Investment Partners, L.P. 387,713(4) 9.34
12750 High Bluff Drive
San Diego, California 92130
Corbyn Investment Management, Inc., et al. 234,150(5) 5.64
Suite 108
2330 W. Joppa Road
Lutherville, Maryland 21093
- -------------------
</TABLE>
<PAGE>
(1) In accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), a person is deemed to be the
beneficial owner for purposes of this table, of any shares of Common
Stock if he has sole or shared voting or investment power with
respect to such shares, or has a right to acquire beneficial
ownership of such shares currently or will have such right at any
time within 60 days of December 4, 1997. As used herein, "voting
power" is the power to vote or direct the voting of shares and
"investment power" is the power to dispose or direct the disposition
of shares.
(2) Includes all shares, including restricted shares, held directly, as
well as shares held by spouses and minor children, in trust and in
other forms of indirect ownership, over which shares a group member
effectively exercises sole or shared voting or investment power. The
amount also includes an aggregate of 266,776 shares which directors
and executive officers as a group have the right to acquire pursuant
to stock options granted under the Company's 1993 Incentive Stock
Option Plan, 1993 Stock Option Plan for Outside Directors and the
1997 Stock Option Plan which are currently exercisable with respect
to such shares or which will become exercisable with respect to such
shares within 60 days of the Record Date.
(3) Includs 234,027 shares which have been allocated to accounts of
participants, who have the right to direct the voting of such
shares.
(4) As reported by Brandes Investment Partners, L.P., an Investment
Adviser registered under Section 203 of the 1940 Act ("Brandes"), as
of December 31, 1996 on a Schedule 13G under the Exchange Act. Of
the amount listed, Brandes reported sole voting power as to 387,713
shares, sole investment power as to 100 shares and shared investment
power as to 387,613 shares.
(5) As reported by Corbyn Investment Management, Inc., et al., a "group"
for purposes of Rule 13d-5 under the Exchange Act consisting of
Corbyn Investment Management, Inc., an Investment Adviser registered
under Section 203 of the Investment Advisers Act of 1940 (the "1940
Act") ("Corbyn"), and Greenspring Fund, Inc., an Investment Company
registered under Section 8 of the Investment Company Act
("Greenspring"), as of December 31, 1996 on a Schedule 13G under the
Exchange Act. Of the amount listed, Corbyn reported sole voting and
investment powers as to 184,750 shares and Greenspring reported sole
voting and investment powers as to 49,400 shares.
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Planned Merger of the Company
- --------------------------------------------------------------------------------
On November 19, 1997, the Company entered into an Agreement and Plan of
Merger (the "Agreement") with Magna Group, Inc. ("Magna"), pursuant to which the
Company will merge with and into a wholly-owned subsidiary of Magna ("Merger
Sub"), with Merger Sub as the surviving entity (the "Merger"). The Agreement
provides that each share of the Company's Common Stock will be exchanged for
0.5751 of a share of the common stock, par value $2.00 per share, of Magna and
associated Preferred Share Purchase Rights issued pursuant to the Rights
Agreement, dated as of November 11, 1988, between Magna and Magna Trust Company.
<PAGE>
Consummation of the Merger is subject to various conditions, including
approval of the Merger by certain regulatory authorities and by the stockholders
of the Company. No assurance can be given as to when or whether the necessary
approvals will be obtained, or, even if obtained, when or whether the Merger
will be consummated. Stockholders of the Company will not be voting on the
Merger at the Meeting, but will likely be asked to do so at a separate special
meeting of stockholders to be held subsequent to the Meeting. At this time, the
date of such special meeting of stockholders is unknown.
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PROPOSAL I--ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
The Company's Board of Directors is currently composed of eleven members.
The Company's bylaws provide that approximately one-third of the directors are
to be elected annually. Directors of the Company are generally elected to serve
for a three year period or until their respective successors shall have been
elected and shall qualify. All of the Company's nominees are currently members
of the Board of Directors and have been nominated for three year terms to expire
in 2001.
<PAGE>
The table below sets forth certain information regarding the composition of
the Company's Board of Directors, including the terms of office of Board
members. 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 one or more
nominees) will be voted at the Meeting for the election of the nominees
identified below. If any nominee is unable to serve, the shares represented by
all such proxies will be voted for the election of such substitute as the Board
of Directors may recommend. At this time, the Board of Directors knows of no
reason why any of the nominees might be unable to serve, if elected. Except as
indicated herein, there are no arrangements or understandings between any
nominee and any other person pursuant to which such nominee was selected.
<TABLE>
<CAPTION>
Shares of
Common
Stock
Beneficially
Age at Owned on Percent
Record Positions Held in Director Term to the Record of
Name Date the Bank Since(1) Expire Date(2) Class
---- ---- -------- -------- ------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
NOMINEES
Truman D. Cashman 73 Director 1972 1998 9,277 *
Linda M. Johnson 48 Senior Vice President, 1991 1998 126,713 3.02
Secretary and Director
Carl S. Schlageter, M.D. 60 Director 1976 1998 46,854 1.12
James H. Clutts 52 Director 1994 1998 73,926 1.78
DIRECTORS CONTINUING IN OFFICE
John Petkas, Jr. 54 Director 1991 1999 34,788 *
Klondis T. Pirtle 58 Director 1975 1999 37,324 *
Ralph Eugene Watson 57 Director 1996 1999 64,981 1.56
John A. Becker 65 President, Chief 1964 2000 243,534 5.73
Executive Officer and
Chairman of the Board
Michael R. Howell 39 Executive Vice 1991 2000 178,007 4.25
President, Treasurer
and Director
William A. Norton 71 Director 1973 2000 43,791 1.05
Dennis F. Doelitzsch 50 Director 1996 2000 114,983 2.77
- -----------------
</TABLE>
* Less than 1%.
(1) Includes service as a director of the Bank.
(2) Amounts include shares held directly, as well as shares held by spouses and
minor children, in trust and in other forms of indirect ownership, over
which the directors have sole or shared voting or investment power. Amounts
also include 3,200, 43,992, 15,203, 3,200, 13,119, 14,002, 3,200, 100,314,
40,608, 15,203 and 3,200 shares which Directors Cashman, Johnson,
Schlageter, Clutts, Petkas, Pirtle, Watson, Becker, Howell, Norton and
Doelitzsch have the right to acquire, respectively, pursuant to stock
options which are currently exercisable with respect to such shares or
which will become exercisable with respect to such shares within 60 days of
the Record Date.
<PAGE>
The principal occupation during the past five years of each director
and executive officer of the Company is set forth below. All directors and
executive officers have held their present positions for five years unless
otherwise stated.
Truman D. Cashman is retired. Prior to his retirement in 1994, he was a
Vice President of the Bank.
Linda M. Johnson, the Senior Vice President and Secretary of the
Company, has been Senior Vice President of the Bank since 1983 and Secretary of
the Bank since 1976. Ms. Johnson is responsible for retail operations and
marketing. Ms. Johnson has been employed by the Bank since 1974.
Carl S. Schlageter, M.D. is a family physician and President of the
Family Health Care Center located in Sparta, Illinois.
James H. Clutts is President of Cherry Insurance Services, Inc.
John Petkas, Jr. is a Manager with the Illinois Power Company.
Klondis T. Pirtle is President of Lynn Furniture Company located in
Sparta, Illinois.
Ralph Eugene Watson is President of Marion Dairy Queen, Inc. and
President of Harrisburg Dairy Queen, Inc.
John A. Becker, the President and Chief Executive Officer of the
Company, has been the Bank's President and Chief Executive Officer since 1976
and the Chairman of the Board of Directors of the Bank since 1980. Mr. Becker
has been affiliated with the Bank for 42 years.
Michael R. Howell, the Executive Vice President, Treasurer and Chief
Financial Officer of the Company, has been Executive Vice President and
Treasurer of the Bank since 1989. The Bank hired Mr. Howell as its Vice
President and Treasurer in 1985. Mr. Howell is responsible for the Bank's
lending and investment activities.
William A. Norton is retired. Prior to his retirement in 1982, Mr.
Norton was Treasurer and Vice President of the Bank.
Dennis F. Doelitzsch is the President, General Manager and owner of 3-D
Communications Corporation, located in Marion, Illinois, and the Chairman of
Clearly Superior Radio, LLC, organized in March 1997, located in Marion,
Illinois.
- --------------------------------------------------------------------------------
Section 16(a) Beneficial Ownership Reporting Compliance
- --------------------------------------------------------------------------------
The Common Stock of the Company is registered pursuant to Section 12(g)
of the Exchange Act. The officers and directors of the Company and beneficial
owners of greater than 10% of the Company's Common Stock ("10% beneficial
owners") are required to file reports on Forms 3, 4, and 5 with the Securities
and Exchange Commission (the "SEC") disclosing information regarding their
beneficial ownership of the Common Stock. SEC rules require disclosure in the
Company's Proxy Statement and Annual Report on Form 10-K of the failure of an
<PAGE>
officer, director or 10% beneficial owner of the Company's Common Stock to file
a Form 3, 4, or 5 on a timely basis. Based on the Company's review of such
ownership reports, no officer, director or 10% beneficial owner of the Company
failed to file ownership reports on a timely basis for the fiscal year ended
September 30, 1997. However, Director Carl S. Schlageter inadvertently failed to
timely report a transaction which occurred in February 1995. A Form 5 was
subsequently filed by Director Schlageter to report the transaction.
- --------------------------------------------------------------------------------
Meetings and Committees of the Board of Directors
- --------------------------------------------------------------------------------
The primary business of the Company is to hold the common stock of its
wholly-owned subsidiary, the Bank. The business of the Bank's Board of Directors
is conducted through meetings and activities of the Board and its committees.
During the year ended September 30, 1997, the Board of Directors of the Company
and the Bank each held 12 regular meetings and the Board of Directors of the
Bank held two special meetings. During the year ended September 30, 1997, no
director attended fewer than 75% of the total meetings of the Board of Directors
of the Company and the Bank and committees on which such director served. The
Board of Directors of the Company and the Bank have established various
committees to which certain responsibilities have been delegated. The committees
include the following:
The Nominating Committee of the Board of Directors currently consists
of Directors John A. Becker (Chairman), Linda M. Johnson, William A. Norton,
Carl S. Schlageter, M.D., and Ralph Eugene Watson, and met in November 1997 to
nominate the nominees for director set forth in this Proxy Statement. The full
Board of Directors acting as Nominating Committee met once during fiscal year
1997 to nominate management's nominees for last year's Annual Meeting of
Stockholders.
The Audit Committee of the Board of Directors of the Bank consists of
Directors Dennis F. Doelitzsch, (Chairman), James H. Clutts and Carl S.
Schlageter. The Audit Committee meets quarterly in order to examine and approve
the audit report prepared by the Bank's independent auditors. The Board of
Directors of the Company does not have an audit committee.
The full Board of Directors of the Bank acts as the Bank's Compensation
Committee. Because the Company does not separately compensate senior officers
and employees of the Bank, the Board of Directors of the Company does not have a
Compensation Committee. The Compensation Committee reviews the salary and
benefits provided to the Bank's officers and employees. During the year ended
September 30, 1997, the Board of Directors of the Bank met in its capacity of
Compensation Committee one time.
In addition to the committees described above, the Bank has also
established various other committees which consist of members of the Board of
Directors, officers of the Company and Bank and outside counsel to the Board of
Directors.
<PAGE>
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Executive Compensation
- --------------------------------------------------------------------------------
The Company has not paid any compensation to its executive officers
since its formation. The following table sets forth for the fiscal years ended
September 30, 1997, 1996, and 1995, certain information as to the total
remuneration paid by the Bank to the Chief Executive Officer and the other
executive officers whose salary and bonus for the year ended September 30, 1997
exceeded $100,000 (the "Named Officers").
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
---------------------------------- -----------------------------------
Securities
Other Restricted Underlying
Annual Stock Options/ All Other
Name and Salary Bonus Compensation Award(s) SARs LTIP Compensation
Principal Position Year ($) ($) ($) ($)(1) (#)(2) Payouts ($)
------------------ ---- --- --- --- ------ ------ ------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John A. Becker 1997 181,668 25,473 -- 359,520 45,000 -- 128,868(3)
President and Chief 1996 157,913 18,999 -- -- -- -- 53,837
Executive Officer 1995 151,973 27,595 -- -- -- -- 64,088
Michael R. Howell 1997 100,328 11,254 -- 231,120 26,000 -- 41,264(3)
Executive Vice 1996 87,241 8,244 -- -- -- -- 34,417
President and 1995 82,441 11,826 -- -- -- -- 32,368
Treasurer
Linda M. Johnson 1997 97,400 10,926 -- 231,120 26,000 -- 42,004(3)
Senior Vice 1996 84,696 7,990 -- -- -- -- 35,019
President and 1995 79,896 16,444(4) -- -- -- -- 33,053
Secretary
- -------------
</TABLE>
(1) Represents the value of 28,000, 18,000 and 18,000 shares of restricted
stock granted to Messrs. Becker and Howell and Ms. Johnson, respectively,
based on the $12.84 closing market price per share of the Common Stock on
January 16, 1997, the date of grant. The shares are scheduled to vest in
five equal annual installments (beginning on January 16, 1998), 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 Common Stock. Based on the closing market price per share of the
Common Stock on September 30, 1997, the 28,000, 18,000 and 18,000 shares of
restricted stock held by Messrs. Becker and Howell and Ms. Johnson,
respectively, had aggregate market values of $588,000, $378,000 and
$378,000, respectively.
(2) Options were granted to Messrs. Becker, Howell and Ms. Johnson on January
16, 1997. For additional information regarding these options, see the table
captioned "Option Grants in Last Fiscal Year" below.
<PAGE>
(3) Includes director's fees, allocations to the Bank's ESOP (valued at cost),
non-preferential dividends on restricted stock which vested during the
fiscal year, interest on such dividends and other miscellaneous
compensation, respectively, as follows Mr. Becker: $10,010, $30,779,
$16,355, $1,504 and $2,727; Mr. Howell: $10,010, $21,778 $7,500, $690 and
$1,286; Ms. Johnson: $10,010, $21,242, $7,500, $690 and $2,562. Amount for
Mr. Becker also includes a contribution of $67,493 made on Mr. Becker's
behalf to the Bank's non-qualified supplemental executive retirement plan.
(4) Includes a special $5,000 bonus in connection with data processing
conversion.
The following table sets forth certain information concerning grants of
stock options during the last fiscal year to the Named Officers. No stock
appreciation rights were granted during fiscal 1997.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Number of % of Total Potential Realizable
Shares Options Value at Assumed
Underlying Granted to Per Share Annual Rates of Stock
Options Employees in Exercise Expiration Price Appreciation for
Granted (1) in Fiscal Year Price($) Date Option Term
----------- -------------- -------- ---- -----------
5% ($) 10% ($)
------ -------
<S> <C> <C> <C> <C> <C> <C.
John A. Becker 45,000 28.94% 12.84 01/16/07 363,375 920,864
Michael A. Howell 26,000 16.72% 12.84 01/16/07 209,950 532,055
Linda M. Johnson 26,000 16.72% 12.84 01/16/07 209,950 532,055
</TABLE>
(1) Twenty percent of each option vested immediately upon grant, and the
remaining 80% is scheduled to vest in four equal annual installments
beginning January 16, 1998.
Set forth below is information concerning the number and value of stock
options at September 30, 1997 held by the Named Officers.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options at The-Money Options at
Shares Acquired Value Fiscal Year-End Fiscal Year-End ($)(1)
Name Upon Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
John A. Becker N/A N/A 91,314 / 36,000 1,406,927 / 293,760
Michael R. Howell N/A N/A 35,408 / 20,800 531,802 / 169,728
Linda M. Johnson N/A N/A 38,792 / 20,800 586,622 / 169,728
</TABLE>
(1) Represents the difference between the aggregate exercise price of such
options and the aggregate fair market value of the shares of Common Stock
that would be received upon exercise, assuming such exercise occurred on
September 30, 1997, at which date the closing market price per share of the
Common Stock was $21.00.
<PAGE>
Employment Agreements
The Bank has entered into employment agreements with John A. Becker,
President and Chief Executive Officer, Michael R. Howell, Executive Vice
President and Treasurer and Linda M. Johnson, Senior Vice President and
Secretary. The employment agreements are intended to ensure that the Bank and
the Company maintain a stable and competent management. The continued success of
the Bank and the Company depends to a significant degree on the skill and
competence of Messrs. Becker and Howell and Ms. Johnson.
The employment agreements provide for three-year terms for Mr. Becker,
Mr. Howell and Ms. Johnson. Commencing on the first anniversary date and
continuing each anniversary date thereafter, the Board of Directors may extend
the employment agreements for an additional year such that the remaining term
shall be three years unless written notice of nonrenewal is given by the Board
of Directors after conducting a performance evaluation of the executive. Each
agreement provides that the base salary of the executive will be reviewed
annually. Mr. Becker's current base salary is $188,935. Mr. Howell's and Ms.
Johnson's current base salaries are $104,341 and $101,297, respectively. In
addition to the base salary, the employment agreements provide that the
executive is to receive all benefits provided to permanent full-time employees
of the Bank, including among other things, participation in stock benefit plans
and other fringe benefits applicable to executive personnel. The employment
agreements provide for termination by the Bank for "just cause" at any time. In
the event the Bank chooses to terminate the executive's employment for reasons
other than for "just cause," or upon the termination of the executive's
employment for reasons other than a change in control, as defined, or in the
event of the executive's resignation from the Bank upon (i) failure to re-elect
him or her to his or her current office, (ii) a material change in the
executive's functions, duties or responsibilities, (iii) relocation of the
executive's principal place of employment, (iv) the liquidation or dissolution
of the Bank, or (v) a breach of the employment agreement by the Bank, the
executive, or in the event of death, the executive's beneficiary, would be
entitled to receive an amount equal to the greater of the remaining payments,
including base salary, bonuses and other payments due under the remaining term
of the employment agreement or three times the average of the executive's base
salary, including bonuses and other cash compensation paid, and the amount of
any benefits received pursuant to any employee benefit plans maintained by the
Bank.
If termination, whether voluntary or involuntary, follows a change in
control of the Bank, as defined in the employment agreement, the executive or,
in the event of death, the executive's beneficiary, would be entitled to a
payment equal to the greater of (i) the payments due under the remaining term of
the employment agreement or (ii) 2.99 times his average annual compensation over
the five years preceding termination. The Bank would also continue the
executive's life, health, and disability coverage for the remaining unexpired
term of the employment agreement to the extent allowed by the plan or policies
maintained by the Bank from time to time.
The employment agreements each provide that for a period of one year
following termination the executive agrees not to compete with the Bank in any
city, town or county in which the Bank maintains an office or has filed an
application to establish an office.
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Bank's full Board of Directors acts as the Bank's Compensation
Committee. As such, members of this committee include current officers Becker,
Howell and Johnson and former officers Truman D. Cashman and William A. Norton.
Except for the meeting of the Compensation Committee held in October 1997, at
which a 4% cost of living increase was approved for all employees (and no
individual officer's compensation was discussed), all current officers who are
members of the Compensation Committee recuse themselves from the Committee's
discussions regarding their own compensation.
Report of the Compensation Committee on Executive Compensation
Under rules adopted by the SEC, the Company is required to provide
certain data and information in regard to the compensation and benefits provided
to its Chief Executive Officer and other executive officers. The disclosure
requirements for the Chief Executive Officer and other executive officers
include the use of tables and a report explaining the rationale and
considerations that led to fundamental executive compensation decisions
affecting those individuals. The Chief Executive Officer of the Company did not
receive compensation from the Company. Consequently, in fulfillment of this
requirement, the Compensation Committee of the Bank's Board of Directors has
prepared the following report for inclusion in this proxy statement.
The Compensation Committee annually reviews the performance of the
Chief Executive Officer and other executive officers and approves changes to
base compensation as well as the level of bonus, if any, to be awarded. In
determining whether the base salary of the Chief Executive Officer and other
executive officers should be increased, the Compensation Committee takes into
account individual performance, performance of the Bank, the size of the Bank
and the complexity of its operations.
While the Compensation Committee does not use strict numerical formulae
to determine changes in compensation for the Chief Executive Officer, Executive
Vice President and Senior Vice President; and while it weighs a variety of
different factors in its deliberations, it has emphasized and will continue to
emphasize earnings, profitability, capital position and income level, and return
on average assets as factors in setting the compensation of the Chief Executive
Officer, Executive Vice President and Senior Vice President. Other
non-quantitative factors considered by the Compensation Committee in fiscal 1997
included general management oversight of the Bank, the quality of communication
with the Board of Directors, and the productivity of employees. Finally, the
Compensation Committee considered the standing of the Bank with customers and
the community, as evidenced by the level of customer/community complaints and
compliments. While each of the quantitative and non-quantitative factors
described above was considered by the Compensation Committee, such factors were
not assigned a specific weight in evaluating the performance of the Chief
Executive Officer, Executive Vice President and Senior Vice President. Rather,
all factors were considered, and based upon the effectiveness of such officers
in addressing each of the factors, and the range of compensation paid to
officers of peer institutions, the Compensation Committee approved an increase
in the base salary of the Chief Executive Officer, Executive Vice President and
Senior Vice President. In addition, the Compensation Committee approved salary
increases totaling $200,251 for the Bank's 26 officers, bringing fiscal 1997
total base compensation for all officers to $1,095,430, compared to $895,179 for
23 officers in 1996.
<PAGE>
This report has been provided by the Compensation Committee of the
Board of Directors of the Bank, consisting of Directors John A. Becker, Truman
D. Cashman, Dennis F. Doelitzsch, Michael R. Howell, Linda M. Johnson, James H.
Clutts, William A. Norton, John Petkas, Jr., Klondis T. Pirtle, Carl S.
Schlageter and Ralph Eugene Watson.
Performance Graph
The line graph below compares the cumulative total return on the Common
Stock (including the performance of the Bank's common stock prior to the Second
Step Conversion (as defined below)) to (i) the cumulative total return of an
index comprised of all stocks trading in the Nasdaq Stock Market and (ii) an
industry index comprised of bank and thrift institutions (or holding companies
of such institutions) located in the same geographical region of the United
States as the Company, for the period from October 15, 1993 (the date on which
the Bank reorganized into a mutual holding company, as described below) through
September 30, 1997. The graph assumes that $100 was invested on October 15,
1993, and that all dividends were reinvested.
The Bank reorganized from a mutual savings bank to a mutual holding
company (the "MHC") on October 15, 1993, and in connection therewith, the Bank
offered a minority equity interest in the Bank to its depositors, with the MHC
retaining majority ownership of the Bank. On December 29, 1995, the MHC merged
with and into the Company and in connection therewith, the Company sold shares
of its Common Stock to the former members of the MHC and to the minority
stockholders of the Bank (through the exchange of Company Common stock for the
common stock of the Bank) and became the sole stockholder of the Bank (the
"Second Step Conversion"). Because the MHC owned a majority of the Bank's common
stock prior to the Second Step Conversion, the number of holders of Common Stock
increased significantly following the Second Step Conversion.
[GRAPHIC-GRAPH PLOTTED TO POINTS LISTED BELOW]
<TABLE>
<CAPTION>
PERIOD ENDING
-------------------------------------------------------------
INDEX 10/15/93 09/30/94 09/30/95 09/30/96 09/30/97
- ----- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Charter Financial, Inc. 100.00 126.00 173.22 202.56 346.72
Industry Index 100.00 102.07 128.48 160.90 253.97
Nasdaq Index 100.00 104.67 127.09 148.38 201.67
</TABLE>
There can be no assurance that the Company's stock performance will
continue in the future with the same or similar trend depicted in the graph. The
Company will not make or endorse any predictions as to future stock performance.
Director Compensation
During the year ended September 30, 1997, the Company paid directors'
fees of $10,010 to each member of the Board of Directors. Members of the Board
of Directors are not compensated for serving on committees.
<PAGE>
On January 16, 1997, each non-employee director of the Company was
granted an option to purchase 8,000 shares of Common Stock at an exercise price
of $12.84 per share, with 20% of each option vesting immediately upon grant and
the remaining 80% scheduled to vest in four equal annual installments beginning
January 16, 1998. For information concerning the grant of option during fiscal
1997 to directors employed by the Company. See the table captioned "Option
Grants in Last Fiscal Year" elsewhere herein.
Retirement Plan
The Bank maintains a tax-qualified, non-contributory, defined benefit
retirement plan for its employees (the "Retirement Plan"). Generally, all
full-time employees of the Bank upon attaining age 21 and completing one year of
service are eligible to participate in the Retirement Plan.
The Retirement Plan provides for normal retirement at age 65. The
Retirement Plan requires five years of service for a non-forfeitable right to
retirement benefits. Employees earn one benefit year for each year during which
they complete at least 1,000 hours of service. The benefit formula provides for
an accrual for each benefit year of 2.0% of final average earnings up to the
average salary received during the employee's five highest years of
compensation. Employees may elect to receive reduced retirement benefits
commencing at age 45. Employees who choose to defer receipt of their retirement
benefits until age 70 will be entitled to have their normal retirement benefits
increased by .8% for each month of deferment (up to 9.6% per annum, with a
maximum increase in benefits of 48%). The Retirement Plan provides for
disability and death benefits. The Retirement Plan is funded by the Bank. During
the year ended September 30, 1997, the Retirement Plan was fully funded and,
therefore, no contributions were made by the Bank.
The following table indicates the annual retirement benefit that would
be payable under the Retirement Plan upon retirement at age 65 to a participant
electing to receive retirement benefits in the standard form of benefit,
assuming various specified levels of plan compensation and various specified
years of credited service. At September 30, 1997, Officers Becker, Howell and
Johnson had 40, 10 and 22 years of credited service, respectively.
<TABLE>
<CAPTION>
High-5 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
Average Benefit Benefit Benefit Benefit Benefit Benefit
Compensation Service Service Service Service Service Service
------------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$ 25,000 $ 2,500 $ 5,000 $ 7,500 $ 10,000 $ 12,500 $ 15,000
50,000 5,000 10,000 15,000 20,000 25,000 30,000
75,000 7,500 15,000 22,500 30,000 37,500 45,000
100,000 10,000 20,000 30,000 40,000 50,000 60,000
125,000 12,500 25,000 37,500 50,000 62,500 75,000
150,000 15,000 30,000 45,000 60,000 75,000 90,000
175,000 17,500 35,000 52,500 70,000 87,500 105,000
200,000 20,000 40,000 60,000 80,000 100,000 118,182*
225,000 22,500 45,000 67,500 90,000 112,500 118,182*
250,000 25,000 50,000 75,000 100,000 118,182* 118,182*
- ------------------------------------
</TABLE>
* Maximum benefit allowable in 1998.
<PAGE>
Supplemental Executive Retirement Plan
The Bank maintains a non-qualified supplemental executive retirement
plan ("SERP") for certain executives of the Bank to compensate those executive
participants in the Bank's tax-qualified benefit plans whose benefits are
limited by Section 415 or Section 401(a)(17) of the Code. As of September 30,
1997, Mr. Becker was participating in the SERP. The SERP provides participants
with retirement benefits generally equal to the difference between the annual
benefit the participant would have received under the Bank's Retirement Plan if
such benefits were computed without giving effect to the limitations on benefits
imposed by application of Section 401(a)(17) and Section 415 of the Internal
Revenue Code and the amounts actually payable to the Participant under the terms
of the Retirement Plan. In addition, the Participant is entitled to an ESOP
benefit in a dollar amount equal to the difference between the fair market value
of the number of shares of Common Stock of the Company that would have been
allocated to the account of the Participant had the limitations of Section
401(a)(17) and 415 of the Internal Revenue Code not been applicable and the fair
market value of the number of shares of Common Stock actually allocated to the
account of the Participant.
The SERP is considered an unfunded plan for tax and ERISA purposes. All
obligations arising under the SERP are payable from the general assets of the
Bank, however, the Bank has set up a trust to ensure that sufficient assets will
be available to pay the benefits under the SERP. The Bank's cost attributable to
the SERP was approximately $67,500 for the year ended September 30, 1997.
Transactions With Certain Related Persons
The Bank makes loans to its directors and executive officers in the
ordinary course of business, on substantially the same terms, including fees,
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons, and such loans do not involve more than the
normal risk of collectability or present other unfavorable features.
The Bank intends that all transactions between the Bank and its
executive officers, directors, holders of 10% or more of the shares of any class
of the Company's Common Stock and affiliates thereof, will contain terms no less
favorable to the Bank than could have been obtained by it in arm's-length
negotiations with unaffiliated persons and will be approved by a majority of
independent directors of the Bank not having any interest in the transactions.
As of September 30, 1997, the aggregate principal balance of loans
outstanding for: (i) all non-employee directors was $910,000; (ii) the Named
Officers was $1.1 million; and (iii) all directors, executive officers and their
family members was $3.1 million.
- --------------------------------------------------------------------------------
PROPOSAL II--RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors of the Company has approved the engagement of
KPMG Peat Marwick LLP as the Company's auditors for the 1998 fiscal year,
subject to the ratification of the engagement by the Company's stockholders at
the Meeting. A representative of KPMG Peat Marwick LLP is expected to attend the
Meeting to respond to appropriate questions and to make a statement if he or she
so desires.
<PAGE>
The Board of Directors recommends a vote "FOR" the ratification of KPMG
Peat Marwick LLP as the Company's auditors for the 1998 fiscal year.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's executive office, 114
West Broadway, Sparta, Illinois 62286, no later than August 12, 1998. Any such
proposals shall be subject to the requirements of the proxy rules adopted under
the Exchange Act.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in the Proxy Statement. However,
if any matters should properly come before the Meeting, it is intended that
holders of the proxies will act as directed by a majority of the Board of
Directors, except for matters related to the conduct of the Meeting, as to which
they shall act in accordance with their best judgment.
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 solicitations by mail,
directors, officers and regular employees of the Company and Bank may solicit
proxies personally or by telegraph or telephone without additional compensation.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Linda M. Johnson
-------------------
Linda M. Johnson
Secretary
Sparta, Illinois
December 10, 1997
<PAGE>
REVOCABLE PROXY
CHARTER FINANCIAL, INC.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 15, 1998
The undersigned hereby appoints the full Board of Directors, with full powers
of substitution to act as attorneys and proxies for the undersigned to vote all
shares of Common Stock of the Company which the undersigned is entitled to vote
at the Annual Meeting of Stockholders ("Meeting") to be held at the Main Office
of Charter Bank, S.B., 114 West Broadway, Sparta, Illinois, at 1:30 p.m. (local
time) on Thursday, January 15, 1998. The official proxy committee is authorized
to cast all votes which the undersigned is entitled as follows:
1. The election as directors of all nominees listed (except as marked to the
contrary below):
For a three year term:
Truman D. Cashman, Linda M. Johnson, Carl S. Schlageter,
James H. Clutts
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. The ratification of the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending September 30, 1998.
The Board of Directors recommends a vote "FOR" each of the nominees listed
above and "FOR" the ratification of the apointment of KPMG Peat Marwick LLP.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE NOMINEES LISTED ABOVE AND FOR THE
APPOINTMENT OF KPMG PEAT MARWICK LLP. IF ANY OTHER BUSINESS IS PRESENTED AT THE
MEETING, THIS PROXY WILL BE VOTED BY THE ABOVE-NAMED PROXIES IN ACCORDANCE WITH
THEIR JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE MEETING
Please be sure to sign and date
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.
CHARTER FINANCIAL, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
Should the above signed be present and elect to vote at the Meeting or at any
adjournment 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 said attorneys and proxies shall be deemed terminated and of no further
force and effect. This proxy may also be revoked by sending written notice to
the Secretary of the Company at the address set forth on the Notice of Annual
Meeting of Stockholders, or by the filing of a later proxy prior to a vote being
taken on a particular proposal at the Meeting.
The above signed acknowledges receipt from the Company prior to the execution
of this proxy of a Notice of the Meeting and a proxy statement dated December
10, 1997.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
