SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
St. Francis Capital Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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[ ] Fee paid previously with preliminary materials.
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Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
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(1) Amount Previously Paid:
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[ST. FRANCIS CAPITAL CORPORATION LOGO]
13400 BISHOPS LANE, SUITE 350
BROOKFIELD, WISCONSIN 53005-6203
(262) 787-8700
December 20, 2001
Dear Shareholder:
You are cordially invited to attend our 2002 annual meeting of
shareholders, which will be held on Wednesday, January 23, 2002, at 10:00 a.m.,
local time, at the Sheraton Milwaukee Brookfield Hotel, 375 South Moorland Road,
Brookfield, Wisconsin 53005.
The attached notice of annual meeting of shareholders and proxy
statement describe the formal business we anticipate will be conducted at the
annual meeting. This proxy statement is part of our 2001 annual report, which
includes our Form 10-K annual report for the fiscal year ended September 30,
2001. Our directors and officers, as well as representatives of KPMG LLP, our
independent auditors, will be present at the annual meeting to respond to any
questions that you may have.
The vote of every shareholder is important to us. Please vote by phone
or over the Internet (if your shares are held in an account at a brokerage firm
or bank participating in the ADP Investor Communication Services program), or
sign and return the enclosed appointment of proxy form promptly in the
postage-paid envelope provided, regardless of whether you are able to attend the
annual meeting in person. If you attend the annual meeting, you may vote in
person even if you have already submitted your proxy electronically or by mail.
On behalf of our board of directors and all of our employees, I wish to
thank you for your continued support.
Sincerely yours,
/s/ THOMAS R. PERZ
Thomas R. Perz
President and Chief Executive Officer
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[ST. FRANCIS CAPITAL CORPORATION LOGO]
13400 BISHOPS LANE, SUITE 350
BROOKFIELD, WISCONSIN 53005-6203
(262) 787-8700
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NOTICE OF 2002 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 23, 2002
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TO THE HOLDERS OF COMMON STOCK OF ST. FRANCIS CAPITAL CORPORATION:
NOTICE IS HEREBY GIVEN that the 2002 annual meeting of shareholders of
St. Francis Capital Corporation will be held on Wednesday, January 23, 2002, at
10:00 a.m., local time, at the Sheraton Milwaukee Brookfield Hotel, 375 South
Moorland Road, Brookfield, Wisconsin 53005. At the annual meeting, the following
matters will be considered and voted upon, all of which are described more
completely in the accompanying proxy statement:
1. Election of three directors, each for three-year terms and in
each case until a successor is elected and qualified;
2. Ratification of the appointment of KPMG LLP as our independent
auditors for the fiscal year ending September 30, 2002; and
3. Such other matters as may properly arise before the annual
meeting or any adjournments or postponements thereof. Our
board of directors is not currently aware of any other such
business.
The record date for the determination of shareholders entitled to
notice of and to vote at the annual meeting and any adjournments or
postponements thereof has been set by the board of directors to be November 30,
2001. Only shareholders of record as of the close of business on that date will
be entitled to vote at the annual meeting or any adjournments or postponements
thereof. In the event there are not sufficient votes for a quorum or to approve
or ratify any of the foregoing proposals at the time of the annual meeting, the
annual meeting may be adjourned or postponed in order to permit further
solicitation of proxies by us.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ WILLIAM R. HOTZ
Milwaukee, Wisconsin William R. Hotz
December 20, 2001 Secretary and General Counsel
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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. WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY FORM PROMPTLY IN THE ENVELOPE PROVIDED. AS AN ALTERNATIVE TO
USING THE ENCLOSED PAPER PROXY TO VOTE, YOU MAY VOTE BY TELEPHONE OR OVER THE
INTERNET IF YOUR SHARES ARE HELD IN AN ACCOUNT AT A BROKERAGE FIRM OR A BANK
THAT PARTICIPATES IN THE ADP INVESTOR COMMUNICATION SERVICES PROGRAM. PLEASE SEE
"ELECTRONIC VOTING ALTERNATIVES" IN THE PROXY STATEMENT FOR ADDITIONAL DETAILS.
IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE EITHER IN PERSON OR BY PROXY. YOU
MAY REVOKE ANY PROXY GIVEN PRIOR TO THE EXERCISE THEREOF.
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[ST. FRANCIS CAPITAL CORPORATION LOGO]
13400 BISHOPS LANE, SUITE 350
BROOKFIELD, WISCONSIN 53005-6203
(262) 787-8700
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PROXY STATEMENT
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2002 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 23, 2002
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We are furnishing this proxy statement to our shareholders in
connection with the solicitation of proxies to be used at the 2002 annual
meeting of shareholders scheduled for Wednesday, January 23, 2002, at 10:00
a.m., local time, at the Sheraton Milwaukee Brookfield Hotel, 375 South Moorland
Road, Brookfield, Wisconsin 53005, and at any adjournments or postponements
thereof.
Our 2001 annual report includes this proxy statement and our Form 10-K
annual report, including our consolidated financial statements for the fiscal
year ended September 30, 2001 (which we sometimes refer to as "fiscal 2001").
The 2001 annual report and this proxy statement and appointment form of proxy
are being mailed to you on or about December 20, 2001. Generally, when we use
terms "we," "us," "our" or "ours," we mean St. Francis Capital Corporation (the
"Company") and its wholly owned subsidiary, St. Francis Bank, F.S.B. (the
"Bank"). If there is, in our opinion, an important distinction between the two
entities, we will refer to the "Company" or the "Bank," as appropriate.
RECORD DATE AND OUTSTANDING SHARES
Only our shareholders of record at the close of business on November
30, 2001 will be entitled to vote at the annual meeting. On that date, there
were 9,175,744 shares of common stock outstanding and we had no other class of
securities outstanding. When we use the terms "you," "your" or "yours," we mean
our shareholders of record on November 30, 2001.
QUORUM
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of common stock entitled to vote is
necessary to constitute a quorum at the annual meeting.
ABSTENTIONS AND BROKER NON-VOTES
Abstentions (i.e., shares for which authority is withheld to vote for a
matter) are included in the determination of shares present and voting for
purposes of whether a quorum exists. For the election of directors, abstentions
will have no effect on the outcome of the vote because directors are elected by
a plurality of the votes cast. For all other matters to be voted upon at the
annual meeting, abstentions will be included in the number of shares voting on a
matter, and consequently, an abstention will have the same practical effect as a
vote against such matter.
Proxies relating to "street name" shares (i.e., shares held of record
by brokers or other third-party nominees) that are voted by brokers or other
third-party nominees on certain matters will be treated as shares present and
voting for purposes of determining the presence or absence of a quorum. "Broker
non-votes" (i.e., proxies submitted by brokers or third-party nominees
indicating that such persons have not received instructions from the beneficial
owners or other persons entitled to vote shares as to a matter with respect to
which the brokers or third-party nominees do not have discretionary power to
vote under the rules of the New York Stock Exchange) will be considered present
for the purpose of establishing a quorum, but will not be treated as shares
entitled to vote on such matters.
All matters to be considered at the annual meeting are considered
"discretionary" proposals for which brokers and third-party nominees may vote
proxies notwithstanding the fact that they have not received voting instructions
from the beneficial owners of shares. Consequently, shares held by brokers or
third-party nominees will be counted if and as voted by such brokers and
third-party nominees.
VOTING
As provided in our Articles of Incorporation, record holders of common
stock who beneficially own in excess of 10% of the outstanding shares of common
stock are not entitled to vote the shares held in excess of the 10% limit, but
shares held in excess of the 10% limit will not be counted for determining
quorum. A person or entity is deemed to beneficially own shares owned by an
affiliate of, as well as persons acting in concert with, such person or entity.
Our Articles of Incorporation authorize our board of directors to make all
determinations necessary to implement and apply the 10% limit. The provisions of
our Articles of Incorporation relating to the 10% limit do not apply to an
acquisition of more than 10% of the shares of common stock if such acquisition
has been approved by a majority of disinterested directors; provided such
approval will be effective only if obtained at a meeting where a quorum of
disinterested directors was present.
MATTER 1 (ELECTION OF DIRECTORS)
The proxy being provided by our board of directors enables you to vote
for the election of the nominees proposed by the board or to withhold authority
to vote for the nominees being proposed. Article VI of our Articles of
Incorporation provides that there will be no cumulative voting by shareholders
for the election of the directors. Under the Wisconsin Business Corporation Law,
directors are elected by a plurality of the votes cast with a quorum present,
meaning that the three nominees receiving the most votes will be elected
directors.
MATTER 2 (APPOINTMENT OF KPMG LLP).
The affirmative vote of a majority of the shares of common stock
represented in person or by proxy at the annual meeting is necessary to ratify
the appointment of KPMG LLP as our independent auditors for fiscal 2002.
SOLICITATION AND REVOCATION
You are requested to vote electronically (if your shares are held in an
account at a brokerage firm or bank participating in the ADP Investor
Communication Services program) (see "Electronic Voting Alternatives") or by
completing the enclosed proxy card and returning it signed and dated in the
enclosed postage-paid envelope. Your proxy will be voted according to your
instructions. If you do not provide instructions, a properly executed proxy will
be voted:
o FOR the election of the nominees for director named in this
proxy statement; and
o FOR the ratification of the appointment of KPMG LLP as our
independent auditors for fiscal 2002.
Submitting your proxy via mail or electronically will not prevent you from
voting in person at the annual meeting should you be present and wish to do so.
You have the power to revoke your proxy any time before it is exercised
by (i) filing with our Secretary written notice thereof (William R. Hotz,
Secretary, St. Francis Capital Corporation, 13400 Bishops Lane, Suite 350,
Brookfield, Wisconsin 53005-6203); (ii) submitting a duly-executed proxy bearing
a later date or overriding a previously submitted electronic proxy by submitting
a subsequent electronic proxy; or (iii) appearing at the annual meeting and
giving our Secretary notice of your intention to vote in person. If your shares
are not registered in your own name, you will need additional documentation from
the record holder of your shares to vote personally at the annual meeting.
Proxies solicited hereby may be exercised only at the annual meeting and any
adjournment or postponement thereof and will not be used for any other meeting.
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We will bear the cost of solicitation of proxies on behalf of our board
of directors. We have retained D.F. King & Co., Inc., a professional proxy
solicitation firm, to assist in the solicitation of proxies. D.F. King & Co.,
Inc. will be paid a fee of $4,500, plus reimbursement for out-of-pocket
expenses. Proxies may also be solicited by personal interview or by telephone,
in addition to the use of the mails by our directors, officers and regular
employees, without additional compensation therefor. We have also made
arrangements with brokerage firms, banks, nominees and other fiduciaries to
forward proxy solicitation materials for shares of common stock held of record
by the beneficial owners of such shares. We will reimburse such brokerage firms,
banks, nominees and other fiduciaries for their reasonable out-of-pocket
expenses.
Proxies solicited hereby will be returned to our board of directors,
and will be tabulated by inspectors of election designated by the board who will
not be our or our affiliates' employees or directors.
ELECTRONIC VOTING ALTERNATIVES
If your shares are held in an account at a brokerage firm or a bank
that participates in the ADP Investor Communication Services program, you are
now able to vote your shares by telephone or over the Internet. Submitting your
vote electronically will not affect your right to vote in person if you decide
to attend the annual meeting.
Numerous brokerage firms and banks are participating in a program
provided through ADP Investor Communication Services that offers electronic
voting alternatives. If your shares are held in an account at a brokerage firm
participating in the ADP program, you may vote your shares telephonically by
calling the telephone number referenced on your voting form or over the Internet
by going to the website referenced on your voting form. Votes electronically
submitted through the ADP program must be received by the time indicated on the
materials enclosed regarding electronic voting through the ADP program.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of shares of
common stock as of November 30, 2001 (except as noted otherwise below) by (i)
each shareholder known to us to beneficially own more than 5% of the shares of
common stock outstanding, as disclosed in certain reports regarding such
ownership filed with us and with the Securities and Exchange Commission
(commonly referred to as the "SEC"), in accordance with Sections 13(d) or 13(g)
of the Securities Exchange Act of 1934, as amended, (ii) each of our directors
and director nominees, (iii) each of our executive officers appearing in the
summary compensation table further below, and (iv) all directors and executive
officers as a group.
NUMBER OF SHARES
NAME BENEFICIALLY OWNED (1) PERCENT OF CLASS
---- ---------------------- ----------------
St. Francis Bank, F.S.B.
Employee Stock Ownership Trust (2).......................... 855,356 9.3%
Dimensional Fund Advisors Inc. (3)............................ 583,100 6.4
Thomas R. Perz (4)(5)(6)...................................... 524,746 5.6
David J. Drury (4)(5)......................................... 69,566 *
Gerald A. Kiefer (4)(5)....................................... 12,066 *
Edward W. Mentzer (4)(5)...................................... 114,754 1.2
Jeffrey A. Reigle (4)(5)...................................... 45,116 *
Julia H. Taylor (4)(5)........................................ 49,582 *
Edmund O. Templeton (4)(5).................................... 157,050 1.7
Bradley J. Smith (4)(5)(6).................................... 80,601 *
James C. Hazzard (4)(5)(6).................................... 91,574 1.0
James S. Eckel (4)(5)(6)...................................... 127,011 1.4
Jon D. Sorenson (4)(5)(6)..................................... 147,590 1.6
All directors and executive officers
as a group (29 persons) (4)(5)(6)........................... 2,256,575 22.1%
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* Amount represents less than 1% of the total shares of common stock
outstanding.
(1) Unless otherwise indicated, includes shares of common stock held
directly by the individuals as well as by members of such individuals'
immediate family who share the same household, shares held in trust and
other indirect forms of ownership over which shares the individuals
effectively exercise sole or shared voting and/or investment power.
Fractional shares of common stock held by certain executive officers
under the St. Francis Bank, F.S.B. Employee Stock Ownership Plan (which
we refer to as the "ESOP") have been rounded to the nearest whole
share.
(2) Marshall & Ilsley Trust Company is the trustee for the ESOP. Its
address is 1000 North Water Street, Milwaukee, Wisconsin 53202.
(3) Based on a Schedule 13G filed with the SEC on December 31, 2000
pursuant to the Securities Exchange Act of 1934, as amended, by
Dimensional Fund Advisors Inc. reporting the beneficial ownership of
common stock where it has sole voting and dispositive power. The
principal business office of Dimensional is located at 1299 Ocean
Avenue, 11th Floor, Santa Monica, CA 90401. Dimensional disclaims
beneficial ownership of the common stock, because the stock is held by
investment companies, commingled group trusts and separate accounts for
which Dimensional acts as the investment advisor and/or investment
manager.
(4) Includes shares of common stock that the named individuals have the
right to acquire within 60 days of the voting record date pursuant to
the exercise of stock options as follows: Mr. Perz - 139,460 shares;
Mr. Drury - 68,516 shares; Mr. Kiefer - 10,666 shares; Mr. Mentzer -
58,634 shares; Mr. Reigle - 42,516 shares; Ms. Taylor - 49,182 shares;
Mr. Templeton - 82,160 shares; Mr. Hazzard - 72,136 shares; Mr. Smith -
67,468 shares; Mr. Eckel - 79,054 shares; and Mr. Sorenson - 60,800
shares.
(5) Does not include options for shares of common stock that do not vest
within 60 days of the voting record date that have been awarded to
executive officers and directors under the St. Francis Capital
Corporation 1993 Incentive Stock Option Plan (which we refer to as the
"1993 Option Plan") and the St. Francis Capital Corporation 1997 Stock
Option Plan (which we refer to as the "1997 Option Plan").
(6) Includes shares of common stock allocated to certain executive officers
under the ESOP, for which such individuals possess shared voting power,
of which approximately 74,785 have been allocated to the accounts of
the named executive officers in the summary compensation table as
follows: Mr. Perz - 20,966; Mr. Smith - 8,583; Mr. Hazzard - 13,938;
Mr. Eckel - 16,120 and Mr. Sorenson - 15,718.
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MATTERS TO BE VOTED ON AT THE ANNUAL MEETING
MATTER 1.
ELECTION OF DIRECTORS
Pursuant to our Articles of Incorporation, at the first annual meeting
of shareholders held on January 26, 1994, our directors were divided into three
classes as equal in number as possible. Directors of the first class were
elected to hold office for a term expiring at the first succeeding annual
meeting, directors of the second class were elected to hold office for a term
expiring at the second succeeding annual meeting and directors of the third
class were elected to hold office for a term expiring at the third succeeding
annual meeting, and in each case until their successors are elected and
qualified. At each subsequent annual meeting of shareholders, one class of
directors, or approximately one-third of the total number of directors, is
elected for a term of three years. There are no family relationships among any
of our directors and/or executive officers. No person being nominated as a
director is being proposed for election pursuant to any agreement or
understanding between us and any person.
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 the persons named as nominees are unable or unwilling to stand for
election at the time of the annual meeting, the proxies will nominate and vote
for any replacement nominee recommended by our board of directors. At this time,
the board knows of no reason why the nominees listed below may not be able to
serve as a director if elected. The following tables present information
concerning the nominees for director and continuing directors.
POSITION WITH US DIRECTOR OF DIRECTOR OF
AND PRINCIPAL OCCUPATION THE COMPANY THE BANK
NAME AGE DURING THE PAST FIVE YEARS SINCE SINCE
---- --- -------------------------- ----------- -----------
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERMS EXPIRING IN 2005
David J. Drury 53 Director of the Company and the Bank; Since 1994 1997
July 1999, President of Poblocki & Sons,
LLC, a privately held exterior and interior
sign systems company, located in West Allis,
Wisconsin; From 1994 to 1997, President,
Stolper-Fabralloy Company LLC, a privately
held manufacturer of turbomachinery
components, located in Brookfield,
Wisconsin; From 1989 to 2000, director of
Jason, Inc., a publicly held manufacturer of
automotive trim, finishing, power generation
and industrial products, located in
Milwaukee, Wisconsin; Director, Plexus
Corporation, a publicly traded electronic
products manufacturing and design company,
located in Neenah, Wisconsin.
Gerald A. Kiefer 55 Director of the Company and the Bank; 2001 1996
Principal, the Kiefer Law Office, Kewaskum,
Wisconsin, a general practice law firm,
since 1991.
Thomas R. Perz 57 President, Chief Executive Officer and 1992 1983
Director of the Company; Chairman of the
Board, President and Chief Executive
Officer of the Bank.
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POSITION WITH US DIRECTOR OF DIRECTOR OF
AND PRINCIPAL OCCUPATION THE COMPANY THE BANK
NAME AGE DURING THE PAST FIVE YEARS SINCE SINCE
---- --- -------------------------- ----------- -----------
INFORMATION WITH RESPECT TO CONTINUING DIRECTORS
DIRECTORS WHOSE TERMS EXPIRE IN 2003
Jeffrey A. Reigle 50 Director of the Company and the Bank; 1997 1997
Since 1992, President and Chief Executive
Officer of Regal Ware, Inc., a privately
held manufacturer of utensils and
electrical appliances, located in
Kewaskum, Wisconsin.
Edmund O. Templeton 58 Director of the Company and the Bank; 1992 1990
Currently retired; From 1969 to 2001,
President, Pilot Systems, Inc., a
privately held company that sells,
develops and services a variety of
computer software programs for
medium-sized manufacturing companies,
located in Brookfield, Wisconsin.
DIRECTORS WHOSE TERMS EXPIRE IN 2004
Edward W. Mentzer 65 Director of the Company and the Bank; 1992 1982
Currently Chairman Emeritus, and from 1995
to 1997, Chairman of the Board of Plastic
Engineered Components, Inc., a privately
held plastic injection molded products
manufacturer, located in Lincolnshire,
Illinois (formerly located in Waukesha,
Wisconsin); From 1989 to 1995, President and
Chairman of the Board of Plastic Engineered
Components, Inc.
Julia H. Taylor 48 Director of the Company and the Bank; 1997 1996
Since 1986, Executive Director and Chief
Executive Officer of the YWCA of Greater
Milwaukee.
THE AFFIRMATIVE VOTE OF A PLURALITY OF THE VOTES CAST IS REQUIRED FOR
THE ELECTION OF THE DIRECTOR NOMINEES. UNLESS OTHERWISE SPECIFIED, THE SHARES OF
COMMON STOCK REPRESENTED BY THE PROXIES SOLICITED HEREBY WILL BE VOTED IN FAVOR
OF THE ELECTION OF THE ABOVE-DESCRIBED NOMINEES. OUR BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR ELECTION OF THE NOMINEES FOR DIRECTOR.
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MATTER 2.
RATIFICATION OF APPOINTMENT OF AUDITORS
Our independent auditors for fiscal 2001 were KPMG LLP. Our board of
directors has reappointed KPMG LLP to perform the audit of our financial
statements for fiscal 2002. We have been advised by KPMG LLP that neither that
firm nor any of its associates has any relationship with us other than the usual
relationship that exists between independent certified public accountants and
clients.
Representatives of KPMG LLP will be present at the annual meeting and
will be given the opportunity to make a statement if they desire to do so. They
will also be available to respond to appropriate questions from our
shareholders.
FEES BILLED TO US BY KPMG LLP IN FISCAL 2001
The following is a summary of the fees billed to us by KPMG LLP for
certain audit and non-audit services during fiscal 2001.
AUDIT FEES
The aggregate fees billed by KPMG LLP for professional services
rendered to us for the audit of our annual financial statements for fiscal 2001
and for the reviews of the financial statements included in our quarterly
reports on Form 10-Q for that fiscal year were $124,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The aggregate fees billed by KPMG LLP for professional services
rendered to us for the information technology services relating to financial
information systems design and implementation for fiscal 2001 were $0.
ALL OTHER FEES
The aggregate fees billed by KPMG LLP for services rendered to us,
other than the services described above under "Audit Fees" and "Financial
Information Systems Design and Implementation Fees," for fiscal 2001 were
$60,400.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF COMMON STOCK
REPRESENTED IN PERSON OR BY PROXY AND VOTED AT THE ANNUAL MEETING IS REQUIRED
FOR RATIFICATION OF KPMG LLP AS OUR INDEPENDENT AUDITORS. UNLESS MARKED TO THE
CONTRARY, THE SHARES OF COMMON STOCK REPRESENTED BY THE SUBMITTED PROXIES WILL
BE VOTED FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT
AUDITORS. OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF
THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT AUDITORS.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
Regular meetings of the board of directors are held six times per
calendar year. During fiscal 2001, the board held six regular meetings and no
special meetings. No incumbent director attended fewer than 75% of the aggregate
total number of meetings of the board held and the total number of committee
meetings on which such director served during fiscal 2001.
In fiscal 2001, our audit committee of the board of directors (which we
refer to as the "Audit Committee") consisted of Messrs. David J. Drury, Jeffrey
A. Reigle, Edmund O. Templeton and Ms. Julia H. Taylor, who are neither officers
nor employees (which we sometimes refer to as "outside directors"). The Audit
Committee reviews the scope and timing of the audit of our financial statements
by our independent auditors and reviews with our independent auditors our
management policies and procedures with respect to auditing and accounting
controls. The
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Audit Committee also reviews and evaluates the independence of our auditors and
approves services rendered by such auditors. The Audit Committee met four times
during fiscal 2001. For a further discussion of the activities of the Audit
Committee, see "Audit Committee Report."
In fiscal 2001, our compensation committee of the board of directors
(which we refer to as the "Compensation Committee") consisted of three outside
directors, including Messrs. David J. Drury, Edward W. Mentzer and Edmund O.
Templeton. During fiscal 2001, the Company did not pay separate compensation to
its executive officers and did not have any salaried employees. However,
pursuant to an agreement between the Company and the Bank, the Company
reimburses the Bank for the services of the Bank's officers and employees for
time devoted to Company affairs. In fiscal 2001, our Compensation Committee
reviewed and ratified the compensation policies set by, and decisions made by,
the board of directors of the Bank. The Compensation Committee met two times
during fiscal 2001. For a further discussion of our compensation policies, see
"Compensation Committee Report."
Our entire board of directors acted as a nominating committee for the
selection of the nominees for director to stand for election at the annual
meeting. In October 2001, the board, acting as the nominating committee,
considered nominations for directors. Our By-laws allow for shareholder
nominations of the directors and require that such nominations be made pursuant
to timely written notice to our Secretary. See "Shareholder Proposals for the
2003 Annual Meeting."
AUDIT COMMITTEE REPORT
The Report of the Audit Committee will not be deemed incorporated by
reference by any general statement into any filing under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, except to
the extent we specifically incorporate such information by reference, and will
not otherwise be deemed filed under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended.
AUDIT COMMITTEE COMPOSITION AND FUNCTION
The members of the Audit Committee are appointed by the Chairman of the
Board and are approved by our board of directors. During fiscal 2001, the Audit
Committee was composed of four independent directors, Messrs. David J. Drury,
Jeffrey A. Reigle, Edmund O. Templeton and Ms. Julia H. Taylor. Each of the
current members of the Audit Committee is "independent" as defined by The Nasdaq
Stock Market, Inc. ("Nasdaq") listing standards. These listing standards include
qualitative and quantitative requirements regarding the independence and
qualifications of Audit Committee members and the size of the Audit Committee.
The Audit Committee acts pursuant to a written charter adopted and
approved by our board of directors on October 19, 2001. The Audit Committee is
responsible for assisting our board in its oversight responsibilities regarding
our auditing, accounting and financial reporting process. Consistent with this
function, the Audit Committee encourages continuous improvement of, and
adherence to, our policies, procedures and practices at all levels related to
the financial control and reporting process. The Audit Committee's primary
duties and responsibilities are outlined in the charter, which is attached to
this proxy statement as Appendix A.
Our independent auditors, KPMG LLP, are responsible for auditing our
financial statements and expressing an opinion as to their conformity with
accounting principles generally accepted in the United States of America. The
members of the Audit Committee are not professionally engaged in the practice of
auditing or accounting and are not experts in the fields of accounting or
auditing, including the area of auditor independence. Members of the Audit
Committee rely without independent verification on the information provided to
them and on the representations made by management and KPMG LLP. Accordingly,
the Audit Committee's oversight does not provide an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or appropriate internal controls and procedures designed to
assure compliance with accounting standards and applicable laws and regulations.
-8-
AUDIT COMMITTEE ACTIONS IN FISCAL 2001
In fiscal 2001, in connection with its oversight function, the Audit
Committee met with KPMG LLP. Pursuant to Statement on Auditing Standards ("SAS")
No. 90 (Audit Committee Communications), KPMG LLP discussed various matters
relating to our financial results for fiscal 2001 and discussed matters required
to be discussed by SAS No. 61 (Communication with Audit Committees). KPMG LLP
also provided the Audit Committee with the written disclosures required by
Independence Standards Board Standard No. 1 (Independence Discussions with Audit
Committees), disclosing any relationships between KPMG LLP and us and stating
that in its professional judgment KPMG LLP believes that it is "independent"
with respect to us within the meaning of the Securities Act of 1933, as amended,
and the Securities Exchange Act of 1934, as amended.
The Audit Committee also has reviewed written confirmations from
management with respect to internal audit services and services not related to
the audit of our annual financial statements ("non-audit services") provided by
KPMG LLP in fiscal 2001. The Audit Committee has considered whether the
provision of such non-audit services by KPMG LLP to us is compatible with
maintaining KPMG LLP's independence and has discussed with them their
independence.
Each year, the Audit Committee is responsible for providing our board
of directors with a recommendation as to whether our annual financial statements
should be included in our annual report on Form 10-K filed with the SEC. Based
on the Audit Committee's discussions with our management and KPMG LLP concerning
the fiscal 2001 audit, the financial statements and related review process and
other matters deemed relevant and appropriate by the Audit Committee, and
subject to the limitations on the role and responsibilities of the Audit
Committee referred to above and in the charter, the Audit Committee met on
December 7, 2001 to issue this Audit Committee Report and recommended to the
board that our fiscal 2001 financial statements be included in the 2001 annual
report on Form 10-K filed with the SEC.
DECEMBER 7, 2001
AUDIT COMMITTEE
DAVID J. DRURY
JEFFREY A. REIGLE
JULIA H. TAYLOR
EDMUND O. TEMPLETON
-9-
COMPENSATION COMMITTEE REPORT
The Report of the Compensation Committee will not be deemed
incorporated by reference by any general statement into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, except to the extent we specifically incorporate such information by
reference, and will not otherwise be deemed filed under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended.
COMPENSATION COMMITTEE, COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In fiscal 2001, the Compensation Committee consisted of outside
directors, Messrs. David J. Drury, Edward W. Mentzer and Edmund O. Templeton,
who are not former officers or employees of the Company or any of its
subsidiaries. There are no interlocks, as defined under the rules and
regulations of the SEC, between the Compensation Committee and corporate
affiliates of members of the Compensation Committee.
During fiscal 2001, the Company did not pay separate compensation to
its executive officers and did not have any salaried employees. However,
pursuant to an agreement between the Company and the Bank, the Company
reimburses the Bank for the services of the Bank's officers and employees for
time devoted to Company affairs. In fiscal 2001, the Compensation Committee
reviewed and ratified the compensation policies set by, and decisions made by,
the board of directors of the Bank. In November 2001, the Compensation Committee
met to issue this Compensation Committee Report.
EXECUTIVE COMPENSATION POLICIES AND PLANS
It is the policy of the Company to maintain an executive compensation
program which will attract, motivate, retain and reward senior executives and
provide appropriate incentives intended to generate long-term financial results
which will benefit the Company and shareholders of the Company. The Company's
executive compensation program incorporates a pay-for-performance policy that
compensates executives for both corporate and individual performance. The
executive compensation program is designed to achieve the following objectives:
(i) provide competitive compensation packages comparable to those offered by
other peer group financial institutions; (ii) provide the Company and its
subsidiaries with the ability to compete for and retain talented executives that
are critical to the Company's long-term success; and (iii) provide incentives to
achieve the Company's financial performance objectives and exceptional
individual performance with the goal of enhancing shareholder value.
The executive compensation package consists of three major components:
(i) cash compensation, including base salary and an annual incentive bonus; (ii)
long-term incentive compensation in the form of stock options awarded under the
Company's stock option plans, and (iii) executive benefits. As discussed further
herein, annual incentive bonuses are paid pursuant to the terms of incentive
compensation programs for the Bank (which we refer to as the "SFB-ICP") and the
Company (which we refer to as the "STFR-ICP"). The corporate and bank
performance targets for the SFB-ICP and STFR-ICP are reviewed and established
annually by the board of directors of the Bank and the Company, respectively,
and may vary from year to year, as may the parameters of such plans. For a
further discussion of the executive benefits made available to officers of the
Company during fiscal 2001, see "Compensation of Executive Officers and
Directors-Benefits."
The Compensation Committee and the Company's board of directors
recognize that stock options are a performance-motivating incentive because they
have no value unless the price of the common stock increases above the exercise
price applicable to outstanding option grants. The Company has two stock option
plans, the 1993 Option Plan and the 1997 Option Plan (collectively referred to
as the "Option Plans"). Executive officers and directors of the Company and the
Bank are eligible to receive both discretionary option grants (as determined by
the Company's board and the Compensation Committee) and option grants subject to
performance-based vesting. In fiscal 1997, the board of directors of the Company
adopted the St. Francis Capital Corporation 1997 Stock Option Allocation Plan
(which we refer to as the "Option Allocation Plan"), which outlines the
guidelines for, and factors to be considered by, the Compensation Committee in
granting options subject to performance-based vesting, and the guidelines for
determining the vesting schedule applicable to any non-performance-based options
granted each fiscal year. For a further discussion of the Option Allocation
Plan, see "Compensation of Executive Officers and
Directors-Benefits-Stock Option Plans."
-10-
The Compensation Committee recognizes that "compensation" (as that term
is defined in Section 162(m) of the Internal Revenue Code of 1986, as amended)
in excess of $1,000,000 per year to an executive officer is not deductible by
the Company unless such compensation is performance-based compensation approved
by shareholders of the Company and, thus, is not "compensation" for purposes of
complying with the limit on deductibility. The Compensation Committee has been
advised that no executive officer of the Company received compensation in fiscal
2001 that will result in the loss of a corporate federal income tax deduction
under Section 162(m) of the Internal Revenue Code of 1986, as amended.
COMPENSATION DECISIONS FOR FISCAL 2001
In reviewing and approving compensation decisions for fiscal 2001, the
Compensation Committee considered both individual and corporate performance.
Base salary adjustments for fiscal 2001 for the five most highly compensated
executive officers of the Company are reflected in the summary compensation
table set forth in this proxy statement. The average increase in base salary for
the four highest paid executive officers (other than Mr. Perz, the Company's
President and CEO) was 4.9% in fiscal 2001.
During fiscal 2001, executive officers of the Company participated in
an incentive compensation program (the STFR-ICP) established and approved by the
Compensation Committee. Incentive compensation earned under the STFR-ICP is
established as a percentage of each officer's base salary and may exceed
established percentages of base salaries if the Company surpasses specific
corporate performance targets applicable to various executive officer groups and
individual performance objectives are met or exceeded. Incentive compensation
may be less than the established percentages if the Company does not achieve the
corporate performance targets and/or individual performance objectives are not
met. In addition, the STFR-ICP provides that the Committee has the discretion in
administering the program to award discretionary incentive compensation based
upon an assessment of the Company's overall financial performance or other
corporate performance factors.
For fiscal 2001, the STFR-ICP corporate performance targets for the
executive groups were based upon the Company's net income. In fiscal 2001, the
STFR-ICP provided for a target of 40% of base salary for the Company's President
(Mr. Thomas R. Perz), and targets of 35%, 30%, or 25% of base salaries for other
executive officers who participate in the STFR-ICP. Remuneration earned under
the STFR-ICP and the Bank incentive compensation program (the SFB-ICP) for the
fiscal year ended September 30, 2001 will be paid by the Bank in January 2002.
The Compensation Committee determined that the Company did not achieve
the net income target established under the STFR-ICP in fiscal 2001. As a result
of the Committee's consideration of the corporate performance targets and
individual performance in fiscal 2001, the Committee awarded executive officers
participating in the STFR-ICP incentive compensation at levels less than the
targeted amounts. The aggregate payout under the STFR-ICP for fiscal 2001 was
$85,640. The average bonus earned under the STFR-ICP in fiscal 2001 by
participants (other than Mr. Perz) was 24.2% of their base salaries.
Executive officers of the Bank who do not participate in the STFR-ICP
are eligible to participate in the SFB-ICP. Under this plan, incentive
compensation earned also is established as a percentage of each officer's base
salary and may exceed established percentages of base salaries if the Bank
surpasses the target level of net and individual performance objectives are met
or exceeded. Incentive compensation may be less than the established percentages
if the Bank does not achieve the target net income level and individual
performance objectives are not met. In addition, the SFB-ICP provides that the
Committee has the discretion in administering the program to award discretionary
incentive compensation based upon an assessment of the Bank's overall financial
performance or other corporate performance factors. In fiscal 2001, the SFB-ICP
provided for targets of 35%, 30%, 25% or 20% of base salaries for executive
officers of the Bank.
For fiscal 2001, the Compensation Committee determined that the Bank
did not achieve the net income target established under the SFB-ICP. As a result
of the Compensation Committee's consideration of corporate performance, all
participants in the SFB-ICP were eligible to earn incentive compensation at
levels below the targeted levels. Based on adjustments for individual
performance in fiscal 2001, participants earned incentive compensation at levels
below the targeted amounts. The aggregate payout under the SFB-ICP for fiscal
2001 was
-11-
$165,124. The average bonus earned under the SFB-ICP in fiscal 2001 by
participants was 16.9% of their base salaries.
In fiscal 2001, no performance-based options were granted to executive
officers of the Company and its subsidiaries pursuant to the Option Allocation
Plan. Options to purchase 10,000 shares of common stock (non-performance based)
were granted to an executive officer of the Bank who was hired in fiscal 2001.
In fiscal 2001, a portion of the performance-based options granted in
fiscal 1997 and fiscal 1999 vested. Based upon the Company achieving 67.5% of
its earnings per share target and 100% of the business line targets (average) in
fiscal 2001, under the vesting formula established under the Option Allocation
Plan, participants who received performance-based options in fiscal 1997 and
fiscal 1999 vested at a rate of 67.5% of the maximum vestable amount of their
initial option grant for fiscal 2001. In fiscal 1997, Messrs. Smith, Hazzard,
Sorenson and Eckel were granted 50,000, 50,000, 50,000 and 30,000
performance-based options (split adjusted), respectively, under the Option
Allocation Plan. Of the performance-based options awarded to each of these
individuals, 11,133 vested in fiscal 2001 for each of Messrs. Smith, Hazzard and
Sorenson, and 6,680 vested in fiscal 2001 for Mr. Eckel, based upon the formula
under the Option Allocation Plan. As a result of the Company's performance in
fiscal 2001, all of the performance-based options granted in 1997 have vested.
In fiscal 1999, Messrs. Smith, Hazzard, Sorenson and Eckel were each granted
48,000 performance-based options (split adjusted) under the Option Allocation
Plan. Of the performance-based options awarded to each of these individuals,
10,800 vested in fiscal 2001 for each of Messrs. Smith, Hazzard, Sorenson and
Eckel, based upon the formula under the Option Allocation Plan.
PRESIDENT AND CHIEF EXECUTIVE OFFICER COMPENSATION IN FISCAL 2001
In establishing the compensation of Mr. Perz for fiscal 2001, the
Compensation Committee specifically considered the Company's and the Bank's
overall operating performance as compared to the operating results of other peer
group thrift institutions. The Compensation Committee also considered the
individual performance of Mr. Perz who serves as President and Chief Executive
Officer of the Company and the Bank, and Chairman of the Board of directors of
the Bank, including his performance and ability to develop, train and motivate a
competent management team and to execute the directives of the board, as well as
to manage the Bank and the Company in a profitable, safe and sound manner.
Mr. Perz's base salary (excluding STFR-ICP and SFB-ICP remuneration)
for fiscal 2001 was $420,000, a 5% increase over fiscal 2000. Based upon the
Compensation Committee's assessment of corporate performance as well as Mr.
Perz's individual performance pursuant to the STFR-ICP for fiscal 2001, Mr. Perz
received incentive compensation equal to $134,400 for fiscal 2001, or 32.0% of
his $420,000 base salary established at the beginning of fiscal 2001. Of the
100,000 performance-based options granted to Mr. Perz in fiscal 1997, 22,267
vested in fiscal 2001 based upon the formula under the Option Allocation Plan,
which resulted in full vesting for 1997 options granted. Mr. Perz was also
granted 100,000 performance-based options in fiscal 1999 and 74,548
performance-based options in fiscal 2000. Of the 174,548 performance-based
options awarded in fiscal 1999 and fiscal 2000, 39,274 vested in fiscal 2001
based upon the formula under the Option Allocation Plan.
NOVEMBER 14, 2001
COMPENSATION COMMITTEE
DAVID J. DRURY
EDWARD W. MENTZER
EDMUND O. TEMPLETON
-12-
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
During fiscal 2001, the Company did not pay separate compensation to
its executive officers. Separate compensation will not be paid to the officers
of the Company until such time as its officers devote significant time to
separate management of Company affairs, which is not expected to occur until the
Company becomes actively involved in additional significant business beyond the
Bank. The following table summarizes the total compensation earned by the Bank's
CEO and the next four highest paid executive officers of the Bank whose
compensation (salary and bonus) exceeded $100,000 during fiscal 2001, 2000 and
1999.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
ANNUAL NUMBER OF
COMPENSATION(1) SHARES
------------------------- SUBJECT TO ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(2) BONUS(3) OPTIONS(4) COMPENSATION(5)
--------------------------- ---- --------- -------- ------------ ---------------
Thomas R. Perz................. 2001 $ 420,000 134,400 -- $ 59,065
President and CEO of the 2000 400,000 20,000 74,598 227,658
Company and the Bank 1999 350,000 200,000 100,000 49,938
Bradley J. Smith............... 2001 178,500 43,800 -- 25,497
Executive Vice President- 2000 170,000 27,111 -- 103,267
Retail Banking of the Bank 1999 160,000 60,000 48,000 31,703
James C. Hazzard .............. 2001 140,000 26,500 -- 35,014
Executive Vice President- 2000 140,000 13,650 -- 114,120
Commercial Banking of 1999 136,500 55,000 48,000 42,048
the Bank
James S. Eckel................. 2001 135,850 28,530 -- 28,604
Executive Vice President - 2000 123,850 21,672 -- 106,029
Mortgage Lending of 1999 117,500 55,000 48,000 32,098
the Bank
Jon D. Sorenson................ 2001 133,350 37,340 -- 29,696
Executive Vice President, 2000 127,000 16,000 -- 108,772
Chief Financial Officer and 1999 115,500 55,000 48,000 6,647
Treasurer of the Company
and the Bank
----------
(Footnotes on following page)
-13-
(1) Perquisites and other personal benefits provided to the named executive
officers by us did not exceed the lesser of $50,000 or 10% of each
named executive officer's total annual salary and bonus during the
fiscal years indicated, and accordingly, are not included.
(2) Amounts shown include compensation earned and deferred at the election
of the named executive officers during fiscal 2001, 2000 and 1999.
(3) Senior executive officers of the Company and the Bank receive
remuneration under the STFR-ICP and the SFB-ICP, respectively. The
amounts indicated for fiscal 2001, 2000 and 1999 represent incentive
compensation earned by the named executive officers under the STFR-ICP
and SFB-ICP for those fiscal years.
(4) The option awards indicated for fiscal 2000 and 1999 were granted to
the named executive officers pursuant to Option Allocation Plan. None
of the fiscal 2000 or 1999 awards indicated in the table vested in
fiscal 2000 for any of the named individuals. The first permissible
vesting date for the performance-based options granted in fiscal 1999
was September 30, 2001. The first permissible vesting date for the
performance-based options granted in fiscal 2000 was October 1, 2001.
Pursuant to the terms of the Company's Option Plans, the number of
shares subject to outstanding option grants were adjusted in fiscal
1999 to reflect the Company's 2-for-1 stock split in April 1999.
Accordingly, the number of shares subject to option grants indicated in
the table for fiscal 1999 have been adjusted to reflect the April 1999
stock split. For further information regarding the Option Allocation
Plan, see "Compensation Committee Report."
(5) Amounts shown in this column represent contributions by the Bank
pursuant to the St. Francis Bank, F.S.B. Money Purchase Pension Plan
(which we refer to as the "Pension Plan"), the St. Francis Bank, F.S.B.
401(k) Savings Plan (which we refer to as the "401(k) Plan"), the ESOP
and long-term disability policies, the reportable economic benefit to
the named individuals pursuant to the Executive Split Dollar Life
Insurance Plan (which we refer to as the "Split Dollar Plan"), and
committee fees during fiscal 2001, 2000 and 1999. The amounts shown for
each individual for fiscal 2001 are derived from the following figures:
(i) Mr. Perz: $1,349 - Pension Plan contribution; $6,375 - 401(k) Plan
matching contribution; $28,839 - ESOP allocation; $1,956 - Split Dollar
Plan benefit; $11,546 - long-term disability policy premium; $6,000 -
loan committee fees; $1,000 - policy committee fees; $2,000 - Bank
committee fees; (ii) Mr. Smith: $1,349 - Pension Plan contribution;
$4,830 - 401(k) Plan matching contribution; $19,199 - ESOP allocation;
$119 - Split Dollar Plan benefit; (iii) Mr. Hazzard: $1,349 - Pension
Plan Contribution; $3,627 - 401(k) Plan matching contribution; $23,347
- ESOP allocation; $510 - long-term disability policy premium; $181 -
Split Dollar Plan benefit; $6,000 - loan committee fees; (iv) Mr.
Eckel: $1,349 - Pension Plan contribution; $2,038 - 401(k) Plan
matching contribution; $25,118 - ESOP allocation; $99 - Split Dollar
Plan benefit; and (v) Mr. Sorenson: $1,349 - Pension Plan contribution;
$3,480 - 401(k) Plan matching contribution; $24,771 - ESOP allocation;
$96 - Split Dollar Plan benefit.
EMPLOYMENT AGREEMENTS
In fiscal 2000, the Company and the Bank entered into three-year
employment agreements with Mr. Perz to be effective commencing on January 1,
2000. In October 1996 and 1998, the Company and the Bank entered into three-year
employment agreements with Messrs. Sorenson and Eckel, respectively, and Bank
Wisconsin entered into a new three-year employment agreement with Mr. Hazzard
that was assumed by the Bank in connection with the merger of the Bank and Bank
Wisconsin in September 1997. On January 6, 1997, in connection with his
retention as Executive Vice President of the Bank, the Company and the Bank
entered into a three-year employment agreement with Mr. Smith. In fiscal 2000,
the employment agreements with Messrs. Smith, Hazzard, Eckel and Sorenson were
amended as described herein. The term of these employment agreements with
Messrs. Perz, Smith, Hazzard, Eckel and Sorenson, which are described herein,
may be restored to three years by action of the boards of directors annually,
subject to the board's performance evaluation. In October 2000, the employment
agreements with Messrs. Perz, Smith, Hazzard, Eckel and Sorenson were restored
to three-year terms by board action. These employment agreements are intended to
ensure that the Company and the Bank maintain a stable and competent management
base.
-14-
Under the employment agreements in effect for fiscal 2001, the base
salaries for Messrs. Perz, Smith, Hazzard, Eckel and Sorenson were $420,000,
$178,500, $140,000, $135,850 and $133,350, respectively. Base salaries may be
increased by the board of directors of the Company or the Bank, as applicable,
but may not be reduced except as part of a general pro rata reduction in
compensation for all executive officers. The employment agreements provide that
the Company may reimburse the Bank for any compensation paid to each of Messrs.
Perz, Smith, Hazzard, Eckel and Sorenson pursuant to such agreements as jointly
determined by the boards of the Company and the Bank to reflect appropriately
the allocation of the executive's time between Company and the Bank affairs. In
addition to base salary, the agreements provide for payments from other
incentive compensation plans, and provide for other benefits, including
participation in any group health, life, disability, or similar insurance
program and in any pension, profit-sharing, employee stock ownership plan,
deferred compensation, 401(k) or other retirement plan maintained by the Bank.
The agreements also provide for participation in any stock-based incentive
programs made available to executive officers of the Company and its
subsidiaries. Commencing in fiscal 2000, the agreements with Mr. Perz and the
amended agreements with the other executives provide for reimbursement of
various expenses, including tax preparation and financial consulting fees,
subject to reasonable documentation and other limitations as determined by the
Company's board.
The agreements with Messrs. Perz, Smith, Hazzard, Eckel and Sorenson
may be terminated by the Company or the Bank upon death, disability, retirement,
for cause at any time, or in certain events specified by the regulations of the
OTS. If the Company or the Bank terminate the agreements due to death or
retirement, for cause or pursuant to OTS regulations, the executives will be
entitled to receive all compensation and benefits in which they were vested as
of the termination date. If the agreements are terminated due to disability, the
executives will be entitled to receive 100% of their base salary at the rate in
effect at the time of termination for a period of one year and thereafter an
amount equal to 75% of such base salary for any remaining portion of the
employment term (offset by any payments received by executives under any
employer disability plans or government social security or workers' compensation
programs), together with other compensation and benefits in which they were
vested as of the termination date. If the Company or the Bank terminate the
agreements other than for the foregoing reasons, or the executives terminate the
agreements in accordance with the terms stated therein, the executives are
entitled to severance payments equal to one year's base salary (in the case of
Messrs. Smith, Hazzard, Eckel and Sorenson) and two year's base salary (in the
case of Mr. Perz) based upon the highest base salary within the three years
preceding the date of termination. In addition, pursuant to the fiscal 2000
amendments and Mr. Perz's 2000 agreements, in such event the executives would
receive bonus and incentive compensation in an amount equal to the average bonus
payment paid to the executives in the three years preceding the date of
termination (as opposed to the amount of bonus paid in the most recently
completed calendar year) payable over a twelve or 24-month period, as
applicable. In addition, the executives will be entitled to participate in all
group insurance, life insurance, health and accident, disability and certain
other employee benefit plans maintained by the employer, at no cost to the
executives, for a period of one year (in the case of Messrs. Smith, Hazzard,
Eckel and Sorenson) or two years (in the case of Mr. Perz), or such earlier time
as the executives are employed on a full-time basis by another employer that
provides substantially similar benefits. The employment agreements also contain
covenant-not-to-compete provisions that prohibit the executives from competing
with a "significant competitor" (as defined therein) of the Company or the Bank
for a period of twelve months following termination.
The employment agreements provide for severance payments if the
executives' employment terminates following a change in control. Under the
agreements, a "change in control" is generally defined to include any change in
control required to be reported under the federal securities laws, as well as
(i) the acquisition by any person of 25% or more of the Company's outstanding
voting securities, or (ii) a change in a majority of the directors of the
Company during any two-year period without approval of at least two-thirds of
the persons who were directors at the beginning of such period.
Within 24 months of the effective date of any change in control, the
executives may terminate the agreements in the event certain conditions
contained therein are satisfied, and will be entitled to receive as severance
three years' base salary (based upon the highest base salary within the three
years preceding the date of termination) and three times the average amount of
bonus and incentive compensation paid to the executives in the three years
preceding the date of termination, payable over a three-year period. In
addition, the executives will be entitled to all other benefits and compensation
which would have been payable to them in the event of termination other than for
death, disability, cause or pursuant to OTS regulations, as described herein. In
addition, the executives are entitled to all qualified retirement and other
benefits in which they were vested. Utilizing the bonus amounts for fiscal 2001
as
-15-
reflected in the summary compensation table for purposes of the severance
payment calculation, severance pay in the event of a change in control would
amount to $1,614,400, $666,411, $515,150, $512,752, and $508,390 for Messrs.
Perz, Smith, Hazzard, Eckel and Sorenson, respectively.
If the severance benefits payable following a change in control would
constitute "parachute payments" within the meaning of Section 280G(b)(2) of the
Internal Revenue Code, and the present value of such "parachute payments" equals
or exceeds three times the executive's average annual compensation for the five
calendar years preceding the year in which a change in control occurred, the
severance benefits will be reduced to an amount equal to the present value of
2.99 times the average annual compensation paid to the executive during the five
years immediately preceding such change in control. Mr. Perz's employment
agreement with the Company provides that the Company will pay Mr. Perz the
entire amount of any unpaid severance that is not paid to him as a result of the
change in control restriction under his employment agreement with the Bank. In
addition, under applicable law, a 20% excise tax would be triggered by
change-in-control-related payments that equal or exceed three times Mr. Perz's
annual compensation over the five years preceding the change in control. The
agreement with the Company provides that to the extent payments related to a
change in control are subject to the excise tax, the Company will provide Mr.
Perz with an additional amount sufficient to enable Mr. Perz to retain the full
value of the change in control benefits as if the excise tax had not applied.
BENEFITS
SPLIT DOLLAR PLAN
The Bank established the Split Dollar Plan, effective September 13,
1992, in which certain senior officers of the Bank participate. The life
insurance benefit is equal to the executives' salary up to $250,000. The Bank
pays the PS-58 cost of the insurance and the premium. Upon the executive's death
or the policy maturity date, the Bank will receive all premiums paid on behalf
of the executive and the executive will receive the remainder of the death
benefit or the cash surrender value.
In June 1997, Mr. Perz and the Bank entered into an agreement pursuant
to which Mr. Perz is entitled to split dollar life insurance benefits in
addition to those provided for under the Split Dollar Plan. The life insurance
benefit is equal to $2,321,553. The Bank pays the PS-58 cost of the insurance
and the premium. Upon the death of Mr. Perz or the policy maturity date, the
Bank will receive the greater of $750,000 or the aggregate premiums paid on
behalf of Mr. Perz and Mr. Perz will receive the remainder of the death benefit
or the cash surrender value.
401(k) PLAN, ESOP AND PENSION PLAN
The Bank participates in the 401(k) Plan, covering all of its eligible
employees. Employees are eligible to participate on the first of the month
following completion of 30 days of employment and attaining age 21. The 401(k)
Plan permits participants, subject to the limitations imposed by Section 401(k)
of the Internal Revenue Code, to make voluntary tax deferred contributions in
amounts between 2% and 10% of their annual compensation. For fiscal 2001, the
Bank made a semi-monthly contribution to the 401(k) Plan in an amount equal to
50% of the first 4% (which percentage increased to 6% as of January 1, 2001) of
compensation deferred by the participant for those participants currently
employed. The 401(k) Plan's trustee is the Marshall & Ilsley Trust Company.
In connection with the conversion of the Bank, the Bank established the
ESOP for its eligible employees. Benefits generally become 20% vested after
three years of credited service, with vesting increasing 20% per year thereafter
to 100% vesting after seven years. Participants also become 100% vested on
death, disability and attainment of age 65. Benefits may be payable, in either
shares of common stock or cash, upon death, retirement, early retirement,
disability or separation from service. The ESOP's trustee is Marshall & Ilsley
Trust Company.
-16-
The Bank maintains the Pension Plan, a tax-qualified, defined
contribution plan covering all eligible employees. Employees are eligible to
participate after completing a twelve-month period of 1,000 or more hours of
employment and attaining age 21. Benefits generally become 20% vested after
three years of credited service, with vesting increasing 20% per year thereafter
to 100% vesting after seven years. Participants also become 100% vested on
death, disability or attainment of age 65. The Pension Plan's trustee is the
Marshall & Ilsley Trust Company.
STOCK OPTION PLANS
The Company has two stock option plans, the 1993 Option Plan and the
1997 Option Plan.
In 1993, the Company's board of directors adopted the 1993 Option Plan.
All employees of the Company and its subsidiaries are eligible to participate in
the 1993 Option Plan. As of September 30, 2001, the Company and its subsidiaries
had 532 eligible employees. The 1993 Option Plan authorizes the grant of (i)
options to purchase shares of common stock intended to qualify as incentive
stock options under Section 422A of the Internal Revenue Code (which we refer to
as "Incentive Stock Options"), (ii) options that do not so qualify (which we
refer to as "Non-statutory Options"), and (iii) options that are exercisable
only upon a change in control of the Bank or the Company (which we refer to as
the "Limited Rights"). As of the date of this proxy statement, options to
purchase 1,437,924 shares of common stock have been granted under the 1993
Option Plan and 20,000 shares of common stock (adjusted to include plan shares
forfeited) were available for granting under the 1993 Option Plan.
In November 1996, the Company's board of directors adopted the 1997
Option Plan in which all directors, officers and employees of the Company and
its subsidiaries are eligible to participate. The 1997 Option Plan was approved
by the Company's shareholders on January 22, 1997. As of September 30, 2001, the
Company had 543 directors, officers and employees eligible to participate in the
1997 Option Plan. The 1997 Option Plan authorizes the grant of (i) Incentive
Stock Options; and (ii) Non-statutory Options. As of the date of this proxy
statement, options to purchase a total of 1,163,395 shares of common stock have
been granted under the 1997 Option Plan and a total of 40,650 shares of common
stock (adjusted to include plan shares forfeited) were available for granting.
Pursuant to the terms of the option plans, the number of shares subject
to outstanding option grants and the exercise price of such options, and the
remaining plan share reserve under each of such plans was adjusted in fiscal
1999 to reflect the Company's 2-for-1 stock split in April 1999. Accordingly,
the option tables that follow below reflect such adjustments.
In fiscal 1997, the Company's board of directors adopted the Option
Allocation Plan, which outlines the guidelines for, and factors to be considered
by, the Compensation Committee in granting options subject to performance-based
vesting. The Option Allocation Plan is designed to strengthen the link between
executive compensation and long-term organization performance by providing
guidelines for the granting of options to executive officers subject to
performance-based vesting. Pursuant to the Option Allocation Plan, participants
are granted options that are subject to vesting over a maximum of a six-year
period based upon the Company's achievement of certain "business line" goals and
"earnings per share" goals established by the boards of directors of the Bank
and the Company, respectively, at the beginning of each fiscal year. The
"business line" targets relate to the following areas: (i) one-to-four family
lending (origination target); (ii) commercial lending (growth target); (iii)
consumer lending (growth target); (iv) commercial real estate and multi-family
lending (growth target); (v) deposits (growth target); and (vi) investment
products sales. The option grants to eligible participants are intended to
qualify as Incentive Stock Options under the Internal Revenue Code to the extent
permitted by applicable law.
At the end of each fiscal year, the Compensation Committee will compare
the Company's performance for the fiscal year to the established goals under the
Option Allocation Plan to determine the percentage of option shares that will
vest in such year for each participant. Each year, during the option award term,
a set maximum number of options granted (or if less, the remaining options
granted) will be subject to accelerated vesting, depending upon the degree of
the Company's success in achieving the annual performance targets budgeted for
the fiscal year. No vesting will occur in a fiscal year if the Company's
earnings per share or the "business line" targets (average) are less than 80% of
the budgeted target. The Compensation Committee, may, in its discretion,
accelerate the vesting of all or a portion of the options awarded to
participants, on an individual or group basis, which do not vest due to failure
to achieve budgeted targets for the "business line" and "earnings per share"
targets in any particular year of the option award term. All option shares not
vested by the last year of the option award term will become vested in such
year, irrespective of the Company's performance.
-17-
Under the Option Allocation Plan, a participant must be employed at the
end of the fiscal year to be eligible for vesting of option grants. Termination
of a participant's service for any reason (other than death, disability, change
in control or retirement) (as defined in the 1997 Option Plan) will result in
the forfeiture of all unvested options. For further information regarding option
grants and decisions related thereto in fiscal 2001, see "Compensation Committee
Report."
No individual grants of stock options were made to any of the executive
officers named in the summary compensation table during fiscal 2001.
There were no exercises of options by any of the executive officers
named in the summary compensation table during fiscal 2001. The following table
sets forth certain information concerning the stock options owned by each of
those executive officers during fiscal 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS AT
AT FISCAL YEAR END FISCAL YEAR END (1)
------------------------------ ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------- ------------ -------------
Thomas R. Perz ......................... 139,459 135,275 $ 865,620 $ 620,299
Bradley J. Smith ....................... 64,134 53,866 395,049 227,801
James C. Hazzard ....................... 72,136 42,864 514,511 164,489
James S. Eckel ......................... 79,054 37,200 855,707 91,140
Jon D. Sorenson ........................ 60,800 37,200 367,710 91,140
----------
(1) The value of unexercised in-the-money options is based upon the
difference between the fair market value of the securities underlying
the options ($21.325, which was the average of the bid and ask price of
the common stock on September 30, 2001) and the exercise price of the
options at September 30, 2001.
Incentive Stock Options granted to any person who is the beneficial
owner of more than 10% of the outstanding shares of common stock may be
exercised only for a period of five years following the date of grant, and the
exercise price at the time of grant must be equal to at least 110% of the fair
market value of the common stock on the date of the grant. No option granted in
connection with the 1993 Option Plan will be exercisable three months after the
date on which the optionee ceases to perform services for the Bank or the
Company, except that in the event of death, disability or retirement, options
may be exercisable for up to one year thereafter or such longer period as
determined by the Company with respect to the exercise of Non-statutory Options.
If an optionee ceases to perform services for the Bank or the Company due to
retirement, Incentive Stock Options exercised more than three months following
the date the optionee ceases to perform services will be treated as
Non-statutory Options. Options of employees terminated for cause will terminate
on the date of termination. Termination for cause includes termination due to
the intentional failure to perform stated duties, breach of fiduciary duty
involving personal dishonesty resulting in a material loss to the Company,
willful violations of law or the entry of a final cease and desist order which
results in a material loss to the Company. Options will be immediately
exercisable in the event of a change in control. "Change of control" is defined
to include the acquisition of beneficial ownership of 20% or more of any class
of equity security by a person or group of persons acting in concert, a tender
offer or exchange offer, merger or other form of business combination, a sale of
assets or a contested election of directors that results in a change in control
of a majority of the board of directors.
-18-
EXECUTIVE OFFICER AND DIRECTOR DEFERRED COMPENSATION AGREEMENTS
In September 1986, the Bank and Mr. Perz entered into a deferred
compensation agreement in lieu of a $5,000 per annum increase in Mr. Perz' base
salary, pursuant to which the Bank agreed to pay Mr. Perz $3,333 per month for
the first year upon his retirement, death or disability, with such monthly
payments to be increased 5% each year thereafter for the following 14 years. In
fiscal 1999, the deferred compensation agreement was amended to provide that if
Mr. Perz voluntarily terminates his employment with the Company for any reason
other than disability prior to January 1, 2010 (his normal retirement date), he
will be entitled to a lump-sum payment equal to the present value of the monthly
payment stream to which he would have been entitled had he remained employed
with the Company until January 1, 2010, utilizing a discount rate of 10%. If Mr.
Perz's employment is terminated involuntarily by the Company (or any successor
thereto), he will receive the full monthly benefits for the following 15 years.
No benefits are payable if Mr. Perz's employment is terminated for cause.
"Cause" is defined as (i) an intentional failure to perform his duties, (ii)
willful misconduct, (iii) criminal conviction for any felony or any act
involving dishonesty, breach of trust or violation of banking laws, (iv) breach
of fiduciary duty involving personal profit, (v) willful violation of any law,
rule or regulation (other than traffic violation or similar offenses), or (vi)
personal dishonesty or material breach of the agreement. The deferred
compensation agreement is a non-tax qualified, unfunded plan.
In November 1987 and February 1988, Messrs. Mentzer and Perz each
entered into deferred compensation agreements whereby they agreed to defer
certain directors' fees paid to them by the Bank and the Company. These
agreements were renewed in January 1993 and January 1994 for Messrs. Mentzer and
Perz, respectively. The deferred compensation agreements are non-tax qualified,
unfunded plans, which establish deferred benefit accounts for both Messrs. Perz
and Mentzer. The deferred benefit accounts are credited annually on April 30 of
each year with interest at a rate equal to one percentage point over the
composite yield on Moody's Long Term Bond Index Rate in effect on the preceding
April 30. Upon retirement, deferred compensation with accrued interest is to be
paid to each director or his designated beneficiary over ten years in annual
installment portions as designated in the deferred compensation agreements. In
the event of Mr. Perz' death before retirement, his deferred compensation
agreement provides that the Bank will pay his designated beneficiary an annual
sum of $76,000 for a period of ten years. In the event of Mr. Mentzer's death
before retirement, his deferred compensation agreement provides his designated
beneficiary will receive the balance in his director's deferred benefit account
over a period of ten years. In January 1999, Mr. Mentzer's agreement was amended
to provide that he will receive $4,000 per month from his deferred compensation
commencing in January 1999.
DIRECTORS' COMPENSATION
BOARD FEES
Compensation paid to the Company directors in fiscal 2001 included a
monthly retainer of $1,125 plus a fee of $1,500 per regular meeting attended and
$500 per Company board of directors committee meeting attended. The directors
were not paid any additional compensation for attending the one special meeting
of the board held in fiscal 2001.
The Company directors who also were directors of the Bank received a
fee of $1,000 per Bank board of directors meeting attended and $500 per board
committee meeting attended. In fiscal 2001, all Company directors also served on
the board of the Bank.
OPTION GRANTS TO OUTSIDE DIRECTORS UNDER THE OPTION PLANS
No options were granted to any directors during fiscal 2001.
-19-
PERFORMANCE GRAPH
The following graph shows an annual comparison from September 1996 to
September 2001 of our cumulative shareholder return on the common stock with (i)
the cumulative total return on stocks included in the Nasdaq Stock Market Index
(for United States companies) and (ii) the cumulative total return on stocks of
Nasdaq listed companies included in the Standard Industrial Classification (SIC)
codes 602 - 679 (which we refer to as the "Nasdaq Financial Index"), commencing
on September 30, 1996 through September 30, 2001. The cumulative returns set
forth in each graph assume the reinvestment of dividends into additional shares
of the same class of equity securities at the frequency with which dividends
were paid on such securities during the applicable comparison period.
COMPARISON OF ANNUAL CUMULATIVE TOTAL RETURN AMONG THE COMPANY,
THE NASDAQ STOCK MARKET (U.S.) INDEX AND THE NASDAQ FINANCIAL INDEX(1)
[GRAPH]
09/30/96 09/30/97 09/30/98 09/30/99 09/30/00 09/30/01
-------- -------- -------- -------- -------- --------
Company common stock ......... $ 100.00 $ 147.01 $ 143.84 $ 166.23 $ 128.74 $ 178.25
Nasdaq (U.S.) ................ 100.00 137.27 139.44 227.82 302.47 123.64
Nasdaq Financial Index ....... 100.00 157.61 145.42 158.07 167.71 184.76
----------
(1) Assumes $100.00 invested on September 30, 1996, and all dividends
reinvested through September 30, 2001. The performance graph is based
upon closing prices on the trading day specified.
-20-
INDEBTEDNESS OF MANAGEMENT AND CERTAIN TRANSACTIONS
Current federal law requires that all loans or extensions of credit to
officers and directors must be made only (i) on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with the general public and must not involve more than
the normal risk of repayment or present other unfavorable features, or (ii)
pursuant to benefit or compensation programs which are widely available to
employees of the Bank and which do not give such executive officers and
directors preference over other Bank employees. In addition, loans made to a
director or executive officer in excess of the greater of $25,000 or 5% of the
Bank's capital and surplus (up to a maximum of $500,000) must be approved in
advance by a majority of the disinterested members of the board of directors.
The policies of the Bank provide that all loans or extensions of credit
to executive officers and directors are to be made in the ordinary course of
business (i.e., on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and do not involve more than the normal risk of collectibility or
present other unfavorable features), or in accordance with the terms of
nonpreferential benefit or compensation plans generally available to Bank
employees. All loans were made by the Bank in the ordinary course of business or
pursuant to nonpreferential benefit or compensation plans generally available to
employees of the Bank. All loans or extensions of credit to executive officers
and directors were current as of September 30, 2001.
Mr. Jeffrey A. Reigle, a director of the Company and the Bank, is the
President and Chief Executive Officer of Regal Ware, Inc. In fiscal 1998, the
Bank participated in a credit facility originated at another financial
institution for Regal Ware, Inc. During fiscal 1999, the credit facility was
refinanced for a lower amount. The balance of the Bank's participation interest
in the credit facility was paid on January 3, 2000. The terms of the credit
facility were substantially the same, including interest rates and collateral,
as those prevailing at the time for comparable transactions, and did not involve
more than the normal risk of collectibility or present other unfavorable
features.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers and directors,
and persons who own more than ten percent of the shares of common stock
outstanding, to file reports of ownership and changes in ownership with the SEC
and the National Association of Securities Dealers, Inc. Officers, directors and
greater than ten percent shareholders are required by regulation to furnish us
with copies of all Section 16(a) forms they file. Based upon review of the
information provided to us, we believe that during the fiscal year ended
September 30, 2001, officers, directors and greater than ten percent
shareholders complied with all Section 16(a) filing requirements.
SHAREHOLDER PROPOSALS FOR THE 2003 ANNUAL MEETING
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS FOR INCLUSION IN 2003 PROXY
MATERIALS
To be considered for inclusion in the proxy statement relating to the
annual meeting to be held in January 2003, your proposals must be received at
our principal executive offices at 13400 Bishops Lane, Suite 350, Brookfield,
Wisconsin 53005-6203, Attention: William R. Hotz, Secretary, no later than
August 22, 2002. If such proposal is in compliance with all of the requirements
of Rule 14a-8 under the Securities Exchange Act of 1934, as amended, it will be
included in the proxy statement and set forth on the appointment form of proxy
issued for such annual meeting of shareholders. We urge you to send any such
proposals by certified mail and request a return receipt. Nothing in this
section will be deemed to require us to include in our proxy statement and proxy
relating to the 2003 annual meeting any shareholder proposal that does not meet
all of the requirements for inclusion established by the SEC in effect at the
time such proposal is received.
-21-
ADVANCE NOTICE REQUIREMENT FOR ANY PROPOSAL OR NOMINATION TO BE RAISED BY A
SHAREHOLDER
If your proposals are not submitted for inclusion in our proxy
materials pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, you may bring them before an annual meeting pursuant to Article VII of
our Articles of Incorporation. For business to be properly brought before an
annual meeting by you, you must have given timely notice thereof in writing to
our Secretary. To be timely, your notice must be delivered to or mailed by first
class United States mail, postage prepaid, to our principal executive offices
not later than the close of business on the tenth day following the day on which
notice of such annual meeting is first given to our shareholders. Your notice
must set forth certain information in accordance with Article VII of our
Articles of Incorporation. The advance notice must include your name and
address, as they appear on our record of shareholders, the class and number of
shares of our common stock beneficially owned by you, a brief description of the
proposed business, the reason for considering such business at the annual
meeting and any material interest in the proposed business. If you intend to
submit nominations for elections to the board of directors, you also need to
provide certain information regarding the nominees.
DISCRETIONARY VOTING OF 2003 PROXIES
Pursuant to Rule 14a-4(c) under the Securities Exchange Act of 1934, as
amended, and Article VII of our Articles of Incorporation, if a shareholder who
intends to present a proposal at the 2003 annual meeting timely and properly
notifies us of such proposal at least ten days after mailing of the 2003 proxy
statement, as described above, management proxies may not use their
discretionary voting power for such proposal unless we send to shareholders
information on the matter to be presented at the meeting and how the management
proxies intend to exercise their discretionary vote of such matter.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
Our board of directors knows of no business that will be presented for
consideration at the 2002 annual meeting other than as stated in the notice of
annual meeting of shareholders. If, however, other matters are properly brought
before the annual meeting or any adjournments or postponements thereof, it is
the intention of the persons named in the accompanying proxy to vote the shares
represented thereby on such matters in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ WILLIAM R. HOTZ
Milwaukee, Wisconsin William R. Hotz
December 20, 2001 Secretary and General Counsel
================================================================================
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE REQUEST THAT YOU SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. AS
AN ALTERNATIVE TO USING THE ENCLOSED PAPER PROXY TO VOTE, YOU MAY VOTE BY
TELEPHONE OR OVER THE INTERNET IF YOUR SHARES ARE HELD IN AN ACCOUNT AT A
BROKERAGE FIRM OR A BANK THAT PARTICIPATES IN THE ADP INVESTOR COMMUNICATION
SERVICES PROGRAM. PLEASE SEE "ELECTRONIC VOTING ALTERNATIVES" IN THE PROXY
STATEMENT FOR ADDITIONAL DETAILS. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. YOU MAY REVOKE ANY PROXY GIVEN PRIOR TO THE
EXERCISE THEREOF.
================================================================================
-22-
APPENDIX A
CHARTER OF ST. FRANCIS CAPITAL CORPORATION
AUDIT COMMITTEE
I. AUDIT COMMITTEE TITLE
The title of the committee hereby chartered is the Audit Committee (the
"Committee") of the Board of Directors of St. Francis Capital
Corporation (the "Company").
II. AUDIT COMMITTEE PURPOSE
The Committee is appointed by the Chairman and approved by the Board of
Directors (the "BOD") to assist the BOD in fulfilling its oversight
responsibilities. The Committee's primary duties and responsibilities
are to:
o Monitor the integrity of the Company's financial reporting
process and systems of internal controls regarding finance,
accounting and legal compliance.
o Monitor the independence and performance of the Company's
independent auditors and internal auditing department.
o Provide an avenue of communication among the independent
auditors, management, the internal auditing department and the
BOD.
o Encourage adherence to, and continuous improvement of, the
Company's policies, procedures and practices at all levels.
o Review areas of potential significant financial risk to the
Company.
o Monitor compliance with legal and regulatory requirements.
o Report to the BOD.
The Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct
access to the independent auditors as well as anyone in the
organization. The Committee is authorized to retain, at the Company's
expense, special legal, accounting, or other consultants or experts it
deems necessary in the performance of its duties.
III. AUDIT COMMITTEE COMPOSITION AND MEETINGS
Committee members shall meet the requirements of the Nasdaq Exchange.
The Committee shall be comprised of three or more directors as
determined and appointed by the BOD, each of whom shall be independent
nonexecutive directors, free from any relationship that would interfere
with their ability to exercise independent judgment. All members of the
Committee shall have the basic understanding of finance and accounting
and be able to read and understand fundamental financial statements. At
least one member of the Committee shall have accounting or related
financial management expertise.
The Committee shall meet at least four times annually. Annually, the
Committee will meet with management, the director of the internal
auditing department, the independent auditors, and the full BOD to
discuss any matters that the Committee or each of these groups believes
should be discussed. The Committee may ask members of management or
others to attend quarterly meetings and provide pertinent information
as necessary. In addition, the Committee, or at least its Chair, should
communicate with management and the independent auditor quarterly to
review the Company's financial statements and significant findings
based upon the auditors limited review procedures. Significant findings
will be reported to the BOD.
A-1
IV. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
Review Procedures
o Review and submit the charter to the BOD to approve at least
annually. The charter shall be published at least every three
years in accordance with SEC regulations.
o Review the Company's annual audited financial statements prior
to filing or distribution. Review should include discussion
with management and independent auditors of significant issues
regarding accounting principals, practices and judgements.
o In consultation with the management, the independent auditors
and the internal auditors, consider the integrity of the
Company's financial reporting processes and controls. Discuss
significant financial risk exposures and the steps management
has taken to monitor, control and report such exposures.
Review significant findings prepared by the independent
auditors and the internal auditing department together with
management's responses including the status of previous
recommendations.
o Review with financial management and the independent auditors
the company's quarterly financial results prior to the release
of earnings. At this time, discuss any significant changes to
the Company's accounting principles and any items required to
be communicated by the independent auditors in accordance with
SAS 61. The chair of the committee may represent the Committee
for the purposes of this section.
Independent Auditors
o The independent auditors are ultimately accountable to the
Committee and the BOD. The Committee shall receive from the
independent auditors a formal written statement delineating
all relationships between the auditors and the Company and
ensuring the independence and performance of the auditors.
Annually, the Committee will then recommend to the BOD the
appointment of the independent auditors or approve any
discharge of auditors when circumstances warrant.
o Review and approve the independent auditors, engagement letter
and audit plan to ensure that significant areas of concern
that the Committee may have are covered and that the fee is
reasonable.
o Consider the independent auditors' judgements about the
quality and appropriateness of the Company's accounting
principles as applied in its financial reporting.
Internal Audit Department and Legal Compliance
o Review the budget, plan, changes in plan, activities,
organizational structure, and qualifications of the internal
audit department.
o The internal audit department shall be responsible to senior
management, but have a direct reporting responsibility to the
BOD through the Committee.
o Review the appointment and performance of the senior internal
audit executive. Changes in the senior internal audit
executive shall be subject to committee approval.
o Review significant reports prepared by the internal audit
department together with management's response and follow-up
to these reports.
o Review all reports concerning any significant fraud or
regulatory noncompliance that occurs at the Company.
Other Audit Committee Responsibilities
o Develop an annual plan responsive to the "responsibilities and
duties" detailed herein with input from management and other
key committee advisors. The annual agenda shall be reviewed
and approved by the full BOD.
o Minutes from quarterly meetings will be forwarded to the BOD
after final approval.
o Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. The report should be
included in the Company's annual proxy statement.
o Periodically review the Code of Ethical Conduct and ensure
that management has established a system to enforce this Code.
Annually review a summary of director and officers' related
party transactions and potential conflicts of interest.
A-2
ST. FRANCIS CAPITAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 23, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the notice of annual meeting
of shareholders and the proxy statement and, revoking any proxy heretofore
given, hereby constitutes and appoints Mr. Thomas R. Perz or Ms. Julia H.
Taylor, directors of St. Francis Capital Corporation, to represent and to vote,
as designated below, all the shares of common stock of St. Francis Capital
Corporation held of record by the undersigned on November 30, 2001, at the
annual meeting that will be held on January 23, 2002, at 10:00 a.m., local
time, at the Sheraton Milwaukee Brookfield Hotel, 375 South Moorland Road,
Brookfield, Wisconsin 53005, and at any adjournments or postponements thereof.
This proxy is revocable and will be voted as directed below, but if no
instructions are specified, this proxy will be voted FOR each of the matters
listed below. If any other business is presented at the annual meeting or any
adjournments or postponements thereof, this proxy will be voted by the named
proxies in their best judgment and discretion. At the present time, the board of
directors of St. Francis Capital Corporation knows of no other business to be
presented at the annual meeting.
Please mark your votes as in this example: [X]
o DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED o
------------------------------------------------------------------------------------------------------------------------------------
ST. FRANCIS CAPITAL CORPORATION ANNUAL MEETING OF SHAREHOLDERS
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR MATTERS 1 AND 2.
1. ELECTION OF DIRECTORS: 1 - DAVID J. DRURY [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
2 - GERALD A. KIEFER listed to the left to vote for all nominees
3 - THOMAS R. PERZ (except as specified listed to the left.
below).
(Instructions: To withhold authority to vote for any indicated nominee, [ ]
write the number(s) of the nominee(s) in the box provided to the right). ----------------------------------------------------
2. Ratification of the appointment of KPMG LLP as independent auditors of [ ] FOR [ ] AGAINST [ ] ABSTAIN
St. Francis Capital Corporation for the fiscal year ending
September 30, 2002; and
3. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the annual meeting
or any adjournments or postponements thereof.
Check appropriate box Date NO. OF SHARES
Indicate changes below: ----------------------
Address Change? [ ] Name Change? [ ] [ ]
--------------------------------------------
SIGNATURE(S) IN BOX
IMPORTANT: Please sign exactly as it appears
hereon. When signing as an attorney,
administrator, agent, corporation, officer,
executor, trustee, guardian or similar
position, please add your full title to your
signature. If shares of common stock are held
jointly, each holder may sign but only one
signature is required.