SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
UnionFed Financial Corporation
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
UnionFed Financial Corporation
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
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14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11:*
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determined.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
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Notes:
UNIONFED FINANCIAL CORPORATION
330 EAST LAMBERT ROAD
BREA, CALIFORNIA 92621
October 21, 1994
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of UnionFed Financial Corporation ("UnionFed"), which will be held in the Middle
Nile Ballroom, Embassy Suites Hotel, 900 East Birch Street, Brea, California
92621 at 10:00 a.m., California time, on November 16, 1994.
As described in the accompanying Notice of Annual Meeting of
Stockholders and Proxy Statement, stockholders will be asked to vote on the
election of three of the directors for UnionFed.
I URGE YOU TO VOTE YOUR PROXY AS SOON AS POSSIBLE. Your vote is very
important, regardless of the number of shares you own. Please mark, sign and
date each proxy card you receive and return it in the postage-paid envelope
provided, even if you currently plan to attend the Annual Meeting. This will not
prevent you from voting in person, but will assure that your vote is counted if
you are unable to attend the meeting.
PLEASE VOTE TODAY.
Sincerely,
/s/ DAVID S. ENGELMAN
David S. Engelman
Chairman of the Board,
President and Chief Executive Officer
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IF YOUR UNIONFED SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM OR NOMINEE,
ONLY THEY CAN EXECUTE A PROXY ON YOUR BEHALF. TO ENSURE THAT YOUR SHARES ARE
VOTED, PLEASE TELEPHONE THE INDIVIDUAL RESPONSIBLE FOR YOUR ACCOUNT TODAY AND
OBTAIN INSTRUCTIONS ON HOW TO DIRECT HIM OR HER TO EXECUTE A PROXY.
IF YOU HAVE ANY QUESTIONS CONCERNING THIS PROXY STATEMENT OR THE ACCOMPANYING
PROXY OR IF YOU NEED ANY HELP IN VOTING YOUR STOCK, PLEASE TELEPHONE D.F. KING &
CO., INC., COLLECT, AT (212) 269-5550 TODAY.
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UNIONFED FINANCIAL CORPORATION
330 EAST LAMBERT ROAD
BREA, CALIFORNIA 92621
(714) 255-8100
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 16, 1994
----------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
UnionFed Financial Corporation ("UnionFed"), will be held in the Middle Nile
Ballroom, Embassy Suites Hotel, 900 East Birch Street, Brea, California 92621 on
November 16, 1994, at 10:00 a.m., California time, for the following purposes:
1. To elect three directors for terms of three years each.
2. To transact such other business as may properly come before the
Annual Meeting or any adjournment and postponement thereof and may properly
be voted upon.
The Board of Directors has selected October 19, 1994, as the record
date for the Annual Meeting. Only those stockholders of record at the close of
business on that date will be entitled to notice of and to vote at the Annual
Meeting or any adjournment thereof.
By Order of the Board of Directors
/s/ RONALD M. GRIFFITH
Ronald M. Griffith
Corporate Secretary
Brea, California
October 21, 1994
UNIONFED FINANCIAL CORPORATION
330 EAST LAMBERT ROAD
BREA, CALIFORNIA 92621
(714) 255-8100
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
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INFORMATION RELATING TO VOTING AT THE ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of UnionFed Financial Corporation, a
Delaware corporation ("UnionFed" or the "Company"), for use at the Annual
Meeting of Stockholders to be held on November 16, 1994 (the "Annual Meeting"),
and at any meetings held upon adjournment and postponement thereof. The mailing
date of this Proxy Statement and the accompanying form of proxy will be on or
about October 21, 1994.
The Board of Directors of UnionFed has selected October 19, 1994 as the
record date for the Annual Meeting. Only those stockholders of record at the
close of business on that date will be entitled to notice of and to vote at the
Annual Meeting. UnionFed had a total of 27,201,993 shares of common stock, par
value $.01 per share ("Common Stock"), outstanding at that date. Stockholders
will be entitled to one vote for each share of Common Stock held by them of
record at the close of business on the record date on any matter that may be
presented for consideration and action by the stockholders at the Annual
Meeting. The holders of a majority of the shares of Common Stock outstanding on
the record date and entitled to be voted at the Annual Meeting, present in
person or by proxy, will constitute a quorum for the transaction of business at
the Annual Meeting and any adjournments and postponements thereof. In all
matters other than the election of directors, the affirmative vote of the
majority of shares of Common Stock present in person or represented by proxy at
the Annual Meeting and entitled to vote on the subject matter will be the act of
the stockholders. Directors will be elected by a plurality of the votes of the
shares of Common Stock present in person or represented by proxy and entitled to
vote on the election of directors. Abstentions and broker non-votes are counted
for the purpose of determining the presence or absence of a quorum for the
transaction of business. Abstentions are counted in tabulations of the votes
cast on proposals presented to stockholders, whereas broker non-votes are not
counted for purposes of determining whether a proposal has been approved.
All valid proxies received in response to this solicitation will be
voted in accordance with the instructions indicated thereon by the stockholders
giving such proxies. If no contrary instructions are given, proxies received
will be voted in favor of the election of the three director nominees named in
this Proxy Statement. The Board of Directors does not know of any other business
to be presented for action at the Annual Meeting. If any other business is
properly presented at the Annual Meeting and may properly be voted upon, the
proxies solicited hereby will be voted on such matters in accordance with the
discretion of the proxy holders named in such proxies. A stockholder may revoke
his or her proxy at any time before it is voted at the Annual Meeting by giving
written notice of such revocation to the Corporate Secretary of UnionFed (which
notice may be given by the filing of a duly executed proxy bearing a later date)
or by attending the Annual Meeting and voting in person.
The costs of this proxy solicitation will be paid by UnionFed. UnionFed
has retained D.F. King & Co., Inc. to assist in the solicitation of proxies for
a fee of $3,500 and reimbursement of certain expenses. To the extent necessary,
proxies may also be solicited by personnel of UnionFed or Union Federal Bank, a
federal savings bank (the "Bank"), in person, by telephone, or through other
forms of communication. UnionFed and the Bank personnel who participate in this
solicitation will not receive any additional compensation for such solicitation.
UnionFed will request record holders of shares beneficially owned by others to
forward this Proxy Statement and related materials to the beneficial owners of
such shares and will reimburse such record holders for their reasonable expenses
incurred in doing so.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The information set forth below is based upon filings known by UnionFed
to have been made with the Securities and Exchange Commission. Except as set
forth below, as of September 15, 1994, no person was known to UnionFed to have
owned beneficially more than 5% of the outstanding shares of Common Stock. The
number of shares beneficially owned is deemed to include shares of Common Stock
in which the persons named have or share either investment or voting power. On
September 15, 1994, there were 27,201,993 shares of Common Stock outstanding.
NUMBER OF SHARES PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED OF CLASS
- - ------------------------------------ ------------------ ---------
Morgan Stanley International 2,138,301 7.86% (3)
(Asset Management Division)
25 Cabot Square
Canary Wharf, London E14 4QA
EQSF Advisors Inc. and Martin J. Whitman 1,914,858 (2) 7.04%
Third Avenue Value Fund, Inc.
767 Third Avenue
New York, New York 10022
Morgan Stanley Asset Management, Ltd. 1,774,422 6.52% (3)
25 Cabot Square
Canary Wharf, London E14 4QA
First Pacific Advisors, Inc. 1,372,900 (2) 5.05% (3)
11400 West Olympic Boulevard
Suite 1200
Los Angeles, California 90064
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(1) Each of the beneficial owners listed in the table is a registered
investment advisor under the Investment Advisors Act of 1940, as amended.
(2) Does not include warrants issued as part of UnionFed's recapitalization
which entitle the holders to purchase Common Stock at $2.33 per share
during the five years after the September 28, 1993 issue date. Third Avenue
Value Fund, Inc. and accounts for which First Pacific Advisors, Inc.
provides investment advisory services received warrants to purchase an
additional 571,429 shares and 200,000 shares, respectively. The exercise of
such warrants during the three year period following the issue date is
restricted to the extent that UnionFed determines that such exercise could
reasonably be expected to result in an "ownership" change under Section 382
of the Internal Revenue Code and the regulations promulgated thereunder.
2
(3) To the best knowledge of UnionFed, none of the accounts for which such
entity provides investment advisory services individually holds 5% or
more of the outstanding shares of Common Stock of UnionFed.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of September 15, 1994, information
concerning the beneficial ownership of shares of Common Stock by each director
or director nominee of UnionFed, by each of the executive officers named in the
Summary Compensation Table set forth herein and by all directors, director
nominees and executive officers of UnionFed as a group. Unless otherwise
indicated, each person listed below has sole investment and voting power with
respect to the shares indicated, subject to applicable community property laws.
NUMBER OF SHARES PERCENTAGE
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------------ ------------------ ----------
Donald L. Criswell............................................ 58,283 *
William T. Donovan............................................ 85,715(1) *
David S. Engelman............................................. 126,800 *
J. David Kall................................................. 95,000(2) *
Thomas P. Kemp................................................ 11,453 *
Wm. S. Martin, Jr............................................. 8,678 *
David J. Primuth.............................................. 60,000 *
Dale A. Welke................................................. 3,007 *
John R. Wise.................................................. 11,428(3) *
Ralph E. Lautmann............................................. 0 *
Edward L. Pollard(4).......................................... 58,000 *
Ronald M. Griffith............................................ 25,595 *
Stephen J. Austin............................................. 34,285 *
All directors and executive officers as a group (18 persons).. 590,816(1) 2.17%
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* Less than 1% of outstanding Common Stock at September 15, 1994.
(1) Includes warrants issued as part of UnionFed's recapitalization to
purchase 28,572 shares of Common Stock at $2.33 per share during the five
years after the September 28, 1993 issue date. The exercise of such
warrants during the three year period following the issue date is
restricted to the extent that UnionFed determines that such exercise
could reasonably be expected to result in an "ownership" change under
Section 382 of the Internal Revenue Code and the regulations promulgated
thereunder.
(2) Held with spouse as trustees of the Kall Family Trust.
(3) All such shares are held indirectly by Mr. Wise. The shares are in the
name of Oakmont Mortgage Company, of which Mr. Wise is the Chairman of
the Board, Chief Executive Officer and 41% shareholder.
(4) Edward L. Pollard resigned as the Senior Vice President, Mortgage Banking
Division, on August 4, 1994.
3
ELECTION OF DIRECTORS
UnionFed's Certificate of Incorporation and Bylaws provide that the
Board of Directors shall be divided into three classes as nearly equal in number
as possible. The members of each class are elected for terms of three years and
until their successors are elected and qualified, with one of the three classes
of directors being elected each year. The number of directors currently
authorized was increased from seven to nine effective October 1, 1993, following
the recapitalization of UnionFed. Three directors are to be elected at the
Annual Meeting for three-year terms expiring in 1997. The Board of Directors'
nominees are Donald L. Criswell, William T. Donovan and J. David Kall. Pursuant
to the Certificate of Incorporation and the Bylaws, stockholders may not
cumulate votes in the election of directors.
The nominees for election as directors at the Annual Meeting set forth
in the table below are all incumbent directors. Each of the nominees has
consented to serve as a director if elected. Unless authority to vote for any
directors is withheld in a proxy, it is intended that each proxy will be voted
FOR such nominees. In the event that any of the nominees for director should
before the Annual Meeting become unable to serve if elected, it is intended that
shares represented by proxies which are executed and returned will be voted by
the proxy holders for such substitute nominees as may be recommended by the
Company's existing Board of Directors, unless other directions are given in the
proxies. To the best of the Company's knowledge, all the nominees will be
available to serve.
The following table sets forth certain information concerning (i) the
three nominees standing for election to the Board of Directors at the Annual
Meeting and (ii) all other directors whose terms as directors will continue
after the Annual Meeting.
POSITION(S) YEAR IN
CURRENTLY DIRECTOR WHICH TERM
NAME AGE HELD WITH UNIONFED SINCE(1) WILL EXPIRE
- - ---- --- -------------------- ----------- -----------
NOMINEES FOR ELECTION
Donald L. Criswell 60 Director 1983 1997
William T. Donovan 42 Director 1993 1997
J. David Kall 59 Director 1993 1997
CONTINUING DIRECTORS
Thomas P. Kemp 64 Director 1991 1995
Wm. S. Martin, Jr. 69 Director 1958 1995
David J. Primuth 56 Director 1993 1995
David S. Engelman 57 Director, Chairman 1991 1996
of the Board,
President and Chief
Executive Officer
Dale A. Welke 56 Director 1990 1996
John R. Wise 54 Director 1991 1996
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(1) The date given is the date such director became a director of the Bank
or UnionFed. UnionFed was organized on September 18, 1986 and became the
holding company for the Bank effective June 25, 1987.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS ELECTION OF EACH OF THE
ABOVE NOMINEES.
4
INFORMATION CONCERNING NOMINEES AND DIRECTORS
Donald L. Criswell is a certified public accountant and an independent
accounting consultant. Prior thereto, from 1974 through 1982, Mr. Criswell was a
partner in the accounting firm of Grant Thornton, UnionFed's independent
auditors prior to the selection of KPMG Peat Marwick. Mr. Criswell became a
director of UnionFed upon its formation in 1986 and has served as a director of
the Bank since 1983. He is a member of the Executive Committee and is the Chair
of both the Supplemental Retirement Plan Committee and the Executive
Compensation and Stock Option Committee.
William T. Donovan is Executive Vice President and Chief Financial
Officer of Christiana Companies, Inc., an investment holding company, which he
joined in April 1990 as a Vice President. He also serves as a member of
Christiana's board of directors. Mr. Donovan is also a member of the board of
directors of Prideco, Inc. Effective February 1980, Mr. Donovan became a partner
of Lubar & Co., a private investment and venture capital firm. Mr. Donovan was
appointed as a director of UnionFed effective October 1, 1993 to fill a Board
seat vacancy and is a member of the Audit Committee.
J. David Kall is a private investor who was also appointed as a director
of UnionFed effective October 1, 1993 to fill a Board seat vacancy and is a
member of the Audit Committee. In 1975, he founded Kall & Co., Inc., a discount
brokerage firm which was sold to Spear Financial Services in 1986. He served as
President and Chief Operating Officer of Spear Securities until his retirement
in 1987.
Thomas P. Kemp is Co-Chairman of the United States Committee to Assist
Russian Reform. He is the retired Chief Executive Officer of the Coca-Cola
Bottling Company of Los Angeles. From 1989 to 1990 he served as a director of
Financial Corporation of Santa Barbara and its subsidiary, Santa Barbara
Savings and Loan Association. From 1984 to 1988 he served as a director of
Financial Corporation of America and its subsidiary, American Savings and Loan
Association. Mr. Kemp is a member of UnionFed's Supplemental Retirement Plan
Committee and Executive Compensation and Stock Option Committee and has served
as a director of UnionFed and the Bank since 1991. Mr. Kemp is presently a
director of Pimco Commercial Mortgage Security Trust, Inc. and a trustee for
mutual funds advised by Pacific Investment Management Corp. Mr. Kemp is also a
member of the board of directors of Hydro-Mill.
Wm. S. Martin, Jr. has served as a director of UnionFed since its
organization in September 1986 and as a director of the Bank since 1958. He is
also a member of UnionFed's Executive Committee. Mr. Martin served as Chairman
of the Board and Chief Executive Officer of UnionFed and the Bank until his
retirement on June 30, 1990. Mr. Martin is presently a director of Watson Land
Company.
David J. Primuth has been the Chairman of the Board of JWP Pacific
International, Inc. since 1988 and also served as the Chairman of the Board and
Chief Executive Officer of JWP West from 1988 to 1991. JWP Pacific
International, Inc. is an electrical/mechanical contracting company listed on
the New York Stock Exchange. Mr. Primuth was appointed as a director of UnionFed
effective October 1, 1993 to fill a Board seat vacancy and is a member of the
Audit Committee.
David S. Engelman became the Chairman of the Board, President and Chief
Executive Officer of UnionFed and the Bank in April 1991. He also serves as the
Chair of UnionFed's Executive Committee. From October 1989 to March 1991, Mr.
Engelman was a consultant to Portland General Corporation, a diversified holding
company, which includes ownership of Portland General Electric Co., and from
April 1988 to May 1989 he served as a consultant to Weyerhaeuser Financial
Services, Inc. In addition, Mr. Engelman was formerly a director and Chair of
the Executive Committee of Commercial Federal Bank in Omaha, Nebraska. Mr.
Engelman is presently a director of MGIC Investment Corporation and Mortgage
Guaranty Insurance Corporation.
5
Dale A. Welke has been a partner in the law firm of Adams, Duque, and
Hazeltine since July 1970 and is currently a member of their Executive Committee
and Compensation Committee. Mr. Welke became a director of UnionFed and the Bank
in 1990 and is a member of UnionFed's Supplemental Retirement Plan Committee and
the Executive Compensation and Stock Option Committee.
John R. Wise has served as a director of UnionFed and the Bank since
1991. He has been the Chairman of the Board and Chief Executive Officer of
Oakmont Mortgage Company since 1989. Prior thereto, he was the President and
Chief Executive Officer of Weyerhauser Mortgage Company for over 10 years. Mr.
Wise is also the Chair of UnionFed's Audit Committee.
INFORMATION REGARDING THE BOARD OF DIRECTORS
COMMITTEES AND MEETINGS
During the fiscal year ended June 30, 1994, there were 8 meetings of the
Board of Directors. While a director, each of the current board members
attended at least 75% of the aggregate of (i) the meetings of the Board and
(ii) the meetings of the committees of the Board on which such directors
served.
The Executive Committee of the Board of Directors, which met 12 times in
fiscal 1994, implements the operating policy of UnionFed and is authorized to
exercise the powers of the Board of Directors between regular meetings. Messrs.
Engelman (Chair), Criswell and Martin are the current members of the Executive
Committee.
The Audit Committee of the Board of Directors, which met 6 times in
fiscal 1994, recommends to the Board of Directors its choice of independent
auditors to perform audit and nonaudit services, reviews the scope and results
of such services, reviews the systems of internal control and audit with
management and UnionFed's independent auditors and monitors adherence in
accounting and financial reporting to generally accepted accounting principles.
Messrs. Wise (Chair), Donovan, Kall and Primuth are the current voting members
of the Audit Committee.
The Executive Compensation and Stock Option Committee (the "Compensation
Committee") of the Board of Directors, formerly known as the Stock Option
Committee, which met 7 times in fiscal 1994, is responsible for making all
executive compensation and stock option determinations. The Compensation
Committee makes recommendations to the Board of Directors concerning
compensation of the executive officers of UnionFed and the Bank. Messrs.
Criswell (Chair), Kemp and Welke are the current voting members of the
Compensation Committee.
The Board of Directors selects nominees for election as directors.
UnionFed does not have a standing nominating committee. To be eligible for
appointment, election or re-election to the Board, a prospective Board member
(including incumbent directors) must not have reached his or her 68th birthday.
In accordance with UnionFed's Bylaws, stockholder nominations for election of
directors may be voted on at an annual meeting only if such nominations are made
pursuant to a written notice delivered to, or mailed and received at, the
principal executive offices of UnionFed not less than 60 days nor more than 90
days prior to the scheduled date for the meeting, regardless of any
postponements or adjournments of the meeting to a later date. Such notice must
contain certain information specified in UnionFed's Bylaws, and the Bylaws
establish a procedure for curing notices timely made but which do not meet the
applicable informational requirements.
DIRECTOR COMPENSATION
Directors (including employees of UnionFed) currently receive a monthly
retainer of $1,500 plus an additional monthly fee of $100 per committee if they
are members of the Executive, Audit, Compensation or CRA and Fair Lending
Committee. All directors of UnionFed also serve on the Board of Directors of the
Bank, for which they receive no additional compensation.
6
Pursuant to UnionFed's 1992 Stock Incentive Plan, as amended, stock-
based incentives may be awarded to persons serving on UnionFed's Board of
Directors. Only a committee of disinterested directors has full and final
authority to select directors to whom awards may be granted, to grant such
awards, and to determine the number of shares to be issued or sold pursuant
thereto, and to adopt, amend and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the 1992 Stock Incentive Plan
with respect to directors. All such committee functions for the 1992 Stock
Incentive Plan are performed by the Compensation Committee. During fiscal 1994,
no awards were granted to non-employee directors pursuant to the 1992 Stock
Incentive Plan.
UnionFed also maintains a non-qualified retirement plan for directors,
which took effect upon its formation as the holding company for the Bank. The
plan originally became effective on January 1, 1985 for the benefit of directors
of the Bank. The plan provides that a director who has served for 20 years, or
has reached age 65 and has served on the Board of UnionFed or the Bank at least
five consecutive years, may retire and receive monthly pension payments from
UnionFed until the death of such director. The amount paid to a retired director
is to be equal to the basic director's fee (excluding fees for committee service
or any other compensation) paid to that director as of the last month of service
before retirement. No benefit under the plan may be transferred, encumbered or
anticipated.
REPORT OF THE COMPENSATION COMMITTEE ON COMPENSATION MATTERS
During fiscal 1994, the Compensation Committee of the Board of Directors
was responsible for the administration and further development of UnionFed's
executive compensation policies and programs and for making recommendations to
the Board of Directors with respect to these policies and programs. The
Compensation Committee is composed solely of three outside, non-employee
directors. The Compensation Committee reviewed the compensation paid to the
Chief Executive Officer and to each of the other senior executive officers of
UnionFed. Stock option determinations were also made by the Compensation
Committee with recommendations from the Executive Committee.
COMPENSATION PHILOSOPHY
In light of the financial condition of UnionFed in fiscal 1994, the
Compensation Committee sought to minimize cash compensation expenses. During
fiscal 1994, the Compensation Committee continued UnionFed's executive pay
freeze at the request of UnionFed management, which resulted in no increases in
1994 salaries over 1993 levels. However, in connection with the
recapitalization, most senior executive officers received bonuses of varying
amounts during fiscal 1994. In addition, Mr. Lautmann was paid a bonus based
upon a pre-determined formula which considered, among other items, the extent to
which the Special Assets Division of the Bank, which Mr. Lautmann supervises,
had achieved its asset disposition goals during calendar year 1993. Stock option
grants were made during fiscal 1994 to provide incentive to UnionFed senior
executive officers to enhance the performance of UnionFed and to undertake the
efforts to achieve a successful recapitalization.
CHIEF EXECUTIVE OFFICER COMPENSATION
Compensation of UnionFed's Chief Executive Officer, David S. Engelman,
during fiscal 1994 was principally determined by the provisions of his April 1,
1991 employment agreement, as amended on December 1, 1993. In addition, Mr.
Engelman received a bonus of $50,000 in connection with the recapitalization of
UnionFed in September 1993. While Mr. Engelman is entitled under his employment
agreement to a bonus of at least 30% of his base compensation during each
calendar year, the Compensation Committee, with Mr. Engelman's concurrence,
elected not to award a bonus in excess of $50,000 for calendar 1993 in light of
UnionFed's financial condition, notwithstanding its view that Mr. Engelman had
substantially achieved the goals set for him by the Compensation Committee.
7
During fiscal 1994, the Committee acknowledged that existing options
were exercisable at prices considerably higher than the current value of the
Company's stock and therefore did not constitute a proper incentive to
employees. In order to provide an appropriate incentive to members of
management, the Committee determined to cancel the existing old options and
reissue new options at current market value as of September 28, 1993.
CONCLUSION
The Compensation Committee believes that the compensation programs
established for UnionFed and the Bank's senior executives reflect appropriate
levels for fiscal 1994.
1994 COMPENSATION COMMITTEE
Donald L. Criswell
Thomas P. Kemp
Dale A. Welke
The report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933 or under
the Securities Exchange Act of 1934, except to the extent that UnionFed
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
8
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The executive compensation disclosure in the following section of this
Proxy Statement reflects compensation for the named executives.
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid to UnionFed's Chief
Executive Officer and the four other most highly paid executive officers for
fiscal years 1994, 1993 and 1992 for services rendered in all capacities to
UnionFed and its subsidiaries.
Long-Term
Annual Compensation Compensation
------------------------- ----------------------
Awards
------
Securities Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Options/SARs (#)(1) Compensation ($)(2)
- - --------------------------- ---- ---------- --------- --------------------- -------------------
David S. Engelman, 1994 300,000 50,000 511,000 42,243
Chairman of the Board and 1993 300,000 0 0 26,757
Chief Executive Officer 1992 300,000 0 0 *
Ralph E. Lautmann, 1994 151,200 36,708(3) 0 5,501
Senior Vice President, Special 1993 166,002 39,328 0 6,674
Assets Division 1992 80,004 0 0 *
Edward L. Pollard, 1994 130,000 17,500 125,000 5,125
Senior Vice President, Mortgage 1993 130,000 0 0 4,952
Banking Division (4) 1992 100,500 0 0 *
Ronald M. Griffith, 1994 125,000 22,500 140,000 5,702
Senior Vice President, General 1993 125,000 0 0 5,020
Counsel and Corporate Secretary 1992 125,000 361 0 *
Stephen J. Austin, 1994 115,008 17,500 125,000 4,544
Senior Vice President, Chief 1993 115,008 0 0 4,382
Financial Officer and Treasurer 1992 93,260 0 0 *
- - ----------------
* In accordance with transitional provisions applicable to the revised
rules for executive compensation disclosure adopted by the Securities
and Exchange Commission, amounts of All Other Compensation are excluded
for fiscal year 1992.
(1) Options shown reflect a one-for-ten reverse stock split effective August
18, 1993. On September 28, 1993 (the recapitalization date of UnionFed),
all outstanding options were canceled and therefore do not appear in the
table for fiscal years 1993 and 1992. On September 28, 1993, the
Compensation Committee granted new options to the named executive
officers as identified in the Option Grants table found elsewhere in
this Proxy Statement. UnionFed does not grant stock appreciation rights.
(2) The amounts disclosed in the "All Other Compensation" column for fiscal
1994 include:
(a) contributions to UnionFed's Retirement Savings Plan, a 401(k)
plan, on behalf of each of Mr. Engelman ($5,695), Mr. Lautmann
($4,951), Mr. Pollard ($4,637), Mr. Griffith ($5,234) and
Mr. Austin ($4,113);
(b) premiums paid by UnionFed for term life insurance on behalf of
each of Mr. Engelman ($998), Mr. Lautmann ($550), Mr. Pollard
($488), Mr. Griffith ($468) and Mr. Austin ($431);
(c) $19,800 which represents fees paid to Mr. Engelman for his
service on the Boards of Directors of UnionFed and the Bank and
on the Executive and CRA and Fair Lending Committee; and
9
(d) premiums paid for whole life insurance on a split dollar premium
payment arrangement on behalf of Mr. Engelman of $15,750.
(3) Mr. Lautmann was paid a bonus based upon a pre-determined formula which
considered, among other items, the extent to which the Special Assets
Division of the Bank, which Mr. Lautmann supervises, had achieved its
asset disposition goals during calendar year 1993.
(4) Edward L. Pollard resigned as the Senior Vice President, Mortgage
Banking Division, on August 4, 1994.
EMPLOYMENT AGREEMENT
UnionFed and the Bank entered into an employment agreement with David S.
Engelman which commenced on April 1, 1991. Such employment agreement was amended
on December 1, 1993 and will expire on June 30, 1997 unless terminated earlier.
Mr. Engelman's amended employment agreement provided for an annual base salary
of $300,000 for fiscal 1994. In addition, the agreement provided that Mr.
Engelman would receive a bonus of up to $50,000 for calendar year 1991 as
determined by the Board of Directors based upon Mr. Engelman's performance in
specified areas. The agreement further provides that bonuses in calendar years
after 1991 shall generally range from 30% (the specified minimum) to 50% of Mr.
Engelman's base salary, with the amount of such bonus in excess of the specified
minimum to be determined by the Compensation Committee. Mr. Engelman received a
bonus of $50,000 in connection with the recapitalization of UnionFed in
September 1993. As a result of UnionFed's financial condition, the Compensation
Committee, with Mr. Engelman's concurrence, elected not to award a bonus in
excess of $50,000 for calendar year 1993 notwithstanding its view that Mr.
Engelman had substantially achieved the goals set for him by the Compensation
Committee. Also as a result of UnionFed's financial condition, the Board of
Directors, with Mr. Engelman's concurrence, elected not to award a bonus for
calendar years 1991 and 1992 notwithstanding its view that Mr. Engelman had
substantially achieved the goals set for him for such years.
Mr. Engelman's employment agreement also includes customary terms and
provisions of employment agreements, such as duties, benefits and termination
provisions. Employment under the agreement can be terminated by UnionFed or the
Bank at any time, but unless such termination is for cause (defined in the
agreement and under existing federal regulations), Mr. Engelman's right to
receive the compensation and certain benefits provided thereunder would not be
affected by such termination. The agreement also provides that if Mr. Engelman
terminates employment for "good reason," such as a reduction in compensation or
benefits or other significant adverse change in conditions of employment, such
change is treated as a termination of employment by UnionFed or the Bank without
cause, as a result of which Mr. Engelman would retain rights to compensation for
the balance of his employment term and certain benefits under the agreement.
SUPPLEMENTAL RETIREMENT PLAN
UnionFed, through the Bank, adopted a 1991 Supplemental Retirement Income
Plan (the "1991 Supplemental Plan") to provide certain additional retirement
benefits for employees and officers that are from time to time designated by the
Board of Directors. Effective as of April 1, 1991, the Bank entered into a
Participation Agreement with David S. Engelman designating him as a participant
in the 1991 Supplemental Plan. Pursuant to this agreement, after seven years of
service to the Bank, Mr. Engelman will be entitled to receive upon his
retirement annual payments equal to 70% of the highest annual compensation paid
to him during the preceding 60 months, reduced by the amount paid to him, if
any, under any pension plan. In the event Mr. Engelman serves the Bank for more
than two but less than seven years, his supplemental retirement benefits will be
reduced pro rata based upon the amount of time served with the Bank. No payments
were made under the 1991 Supplemental Plan in fiscal 1994. The 1991 Supplemental
Plan incurred expenses of $402,000 in fiscal 1994. In the event Mr. Engelman's
employment is terminated following a change in control of UnionFed, he is
entitled under the 1991 Supplemental Plan to be paid a lump sum payment equal to
the present value of the monthly annuity payments to which he is entitled upon
the termination of his employment.
10
OPTION/SAR* GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock options granted
to the named executive officers during the fiscal year ended June 30, 1994.
Potential
Realizable Value
at Assumed
Annual Rates of
Stock Price
Appreciation
for Option Term
Individual Grants (2)
--------------------------------------------------- ------------------
% of Total
Options/ Options/SARs
SARs Granted to Exercise or
Date of Granted Employees in Base Price
Name Grant (#)(1) Fiscal Year ($/sh) Expiration Date 5% ($) 10% ($)
- - -------------------- --------- ---------- -------------- ------------- ----------------- -------- --------
David S. Engelman 9/28/93 255,000 39.43% $ 1.75 9/29/03 $280,644 $711,208
12/14/93 34,800 1.875 9/28/03 45,235 107,041
4/14/94 221,200 1.75 9/28/03 232,168 601,656
Ralph E. Lautmann -- -- -- -- -- -- --
Edward L. Pollard 9/28/93 64,400 9.65 1.75 9/28/03 70,876 179,614
4/14/94 60,600 1.75 9/28/03 63,605 164,830
Ronald M. Griffith 9/28/93 78,400 10.80 1.75 9/28/03 86,284 218,661
4/14/94 61,600 1.75 9/28/03 64,654 167,550
Stephen J. Austin 9/28/93 64,400 9.65 1.75 9/28/03 70,876 179,614
4/14/94 60,600 1.75 9/28/03 63,605 164,830
- - -----------------
* UnionFed does not grant stock appreciation rights ("SARs").
(1) These options were granted under UnionFed's 1992 Stock Incentive Plan,
as amended. The options vest over a period of 4 years according to the
following schedule: 1/4 on September 28, 1995, another 1/4 on September
28, 1996, 1/4 on September 28, 1997 and the final 1/4 on September 28,
1998. These options were granted after the effective date of a one-for-
ten reverse stock split on August 18, 1993. Some of the options set
forth in this column were granted in connection with the
recapitalization of UnionFed on September 28, 1993, when all of the
outstanding options at that time were canceled. The 1992 Stock
Incentive Plan is administered by the Compensation Committee.
(2) Potential realizable value is based on an assumption that the market
price of the stock appreciates at the stated rate, compounded annually,
from the date of grant to the expiration date. These values are
calculated on requirements promulgated by the Securities and Exchange
Commission and do not reflect UnionFed's estimate of future stock price
appreciation. Actual gains, if any, are dependent on the future market
price of UnionFed's Common Stock.
11
AGGREGATED OPTION/SAR* EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth the number of shares covered by exercisable
and unexercisable options held by UnionFed's executive officers named in the
Summary Compensation Table on June 30, 1994. At fiscal year end, none of these
options were in-the-money. Options are in-the-money if the market value of the
shares covered thereby is greater than the option exercise price. There were no
option exercises by such executives during fiscal 1994. UnionFed does not grant
stock appreciation rights.
Number of Unexercised
Options/SARs
At Fiscal Year End (#)(1)
----------------------------------
Name Exercisable Unexercisable
------------------------ --------------- -----------------
David S. Engelman 0 511,000
Ralph E. Lautmann 0 0
Edward L. Pollard 0 125,000
Ronald M. Griffith 0 140,000
Stephen J. Austin 0 125,000
---------------------
- - ----------------
* UnionFed does not grant SARs.
(1) A one-for-ten reverse stock split occurred effective August 18, 1993.
All options set forth above were issued after the date of such
reverse stock split.
12
OPTION REPRICING
The following table sets forth information with respect to UnionFed's
executive officers, concerning options which have been repriced from June 30,
1984 through and including June 30, 1994. No SARs were repriced by the Company
during that period.
Length of
Number of Original
Securities Market Price of Exercise Price Option Term
Underlying Stock at Time of at Time of Remaining
Options/SARs Repricing or Repricing or New Exercise at Date of
Name and Repriced or Amendment Amendment (2) Price Repricing or
Principal Position Date (1) Amended (2) ($) ($) ($) Amendment
- - ------------------ --------- ------------- ---------------- ---------------- ------------ ----------------
David S. Engelman, 9/28/93 15,000 $1.75 $ 10.00 $ 1.75 9 yrs, 105 days
Chairman of the Board, 9/28/93 5,000 1.75 10.00 1.75 8 yrs, 81 days
President and Chief 9/28/93 10,000 1.75 30.00 1.75 7 yrs, 184 days
Executive Officer
Edward L. Pollard, (3) 9/28/93 2,000 1.75 10.00 1.75 4 yrs, 105 days
Senior Vice President 9/28/93 2,500 1.75 10.00 1.75 3 yrs, 82 days
9/28/93 2,000 1.75 10.00 1.75 3 yrs, 310 days
Ronald M. Griffith, 9/28/93 2,000 1.75 10.00 1.75 4 yrs, 105 days
Senior Vice President and 9/28/93 2,600 1.75 10.00 1.75 3 yrs, 82 days
General Counsel 9/28/93 2,000 1.75 10.00 1.75 3 yrs, 310 days
12/18/91 200 6.25 97.50 10.00 344 days
12/18/91 200 6.25 133.75 10.00 2 yrs, 3 days
12/18/91 100 6.25 162.50 10.00 3 yrs, 2 days
Stephen J. Austin, 9/28/93 2,000 1.75 10.00 1.75 4 yrs, 105 days
Senior Vice President, 9/28/93 1,000 1.75 10.00 1.75 3 yrs, 82 days
Chief Financial Officer 9/28/93 2,000 1.75 10.00 1.75 3 yrs, 310 days
and Treasurer
Janice R. Hamilton 9/28/93 500 1.75 10.00 1.75 4 yrs, 105 days
Senior Vice President
Dale J. Schiering, 9/28/93 1,500 1.75 10.00 1.75 4 yrs, 105 days
First Vice President 9/28/93 600 1.75 10.00 1.75 3 yrs, 82 days
9/28/93 1,600 1.75 10.00 1.75 3 yrs, 310 days
12/18/91 200 6.25 97.50 10.00 344 days
12/18/91 200 6.25 133.75 10.00 2 yrs, 3 days
12/18/91 100 6.25 162.50 10.00 3 yrs, 2 days
Neil Fischer, (3) 12/18/91 500 6.25 97.50 10.00 344 days
Senior Vice President
Jeffrey Speaks, (3) 12/18/91 1,400 6.25 97.50 10.00 344 days
Senior Vice President
Ronald Spinoglio, (3) 12/18/91 500 6.25 97.50 10.00 344 days
Senior Vice President
- - ----------------
(1) Options repriced at September 28, 1993 were cancelled and replaced with
new options. Market price of stock at time of repricing and new exercise
price shown for the repricings dated December 18, 1991 reflect a
one-for-ten reverse stock split effective August 18, 1993. One new
option was granted for each five old options cancelled for the
repricings dated December 18, 1991.
13
(2) Number of options and exercise price at time of repricing shown reflect
a one-for-ten reverse stock split effective August 18, 1993.
(3) Options have expired concurrently with individual's termination of
employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1994, the Compensation Committee of the Board of Directors
was responsible for continuing the development UnionFed's executive compensation
policies and programs and for making recommendations to the Board of Directors
with respect to these policies and programs. The following non-employee
directors serve on the Compensation Committee of UnionFed's Board of Directors:
Donald L. Criswell (Chair), Thomas P. Kemp and Dale A. Welke.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return of
UnionFed's Common Stock with the cumulative total return of the Russell 2000
Index and the Russell S&L Peer Group for the five years ended June 30, 1994. The
graph assumes that $100 was invested on June 30, 1989 in UnionFed's Common Stock
and each index and that all dividends were reinvested. No cash dividends have
been declared on UnionFed's Common Stock since fiscal 1991. Stockholder returns
over the indicated period should not be considered indicative of future
stockholder returns.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG UNIONFED FINANCIAL CORPORATION
RUSSELL 2000 AND RUSSELL S&L PEER GROUP
(PERFORMANCE GRAPH APPEARS HERE)
Measurement Period UnionFed Russell Russell S&L
(Fiscal Year Covered) Financial 2000 Peer Group
- - --------------------- --------- ------- -----------
Measurement Pt-06/30/1989 $100.00 $100.00 $100.00
FYE 06/30/1990 $ 51.83 $103.05 $ 86.54
FYE 06/30/1991 $ 7.91 $104.32 $ 81.74
FYE 06/30/1992 $ 7.25 $119.49 $ 98.94
FYE 06/30/1993 $ 1.81 $150.50 $114.62
FYE 06/30/1994 $ 0.46 $157.13 $125.48
14
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Under the securities laws of the United States, the directors and executive
officers of UnionFed and persons who own more than ten percent of UnionFed's
Common Stock are required to report their initial ownership of UnionFed's Common
Stock and any subsequent changes in that ownership to the Securities and
Exchange Commission and the New York Stock Exchange. Specific due dates for
these reports have been established, and UnionFed is required to disclose in
this proxy statement any late filings during fiscal year 1994. To UnionFed's
knowledge, based solely on its review of the copies of such reports required to
be furnished to UnionFed during the fiscal year ended June 30, 1994, all of
these reports were timely filed.
CERTAIN TRANSACTIONS AND OTHER MATTERS
Under the Bank's current employee home loan program, UnionFed makes both
adjustable and fixed rate first trust deed loans on owner-occupied residences at
prevailing market interest rates to those officers and employees who have been
with UnionFed or its subsidiaries for at least one year of continuous full-time
employment. Such loans are made in the ordinary course of business on
substantially the same terms and collateral as similar loans to unrelated
parties. Loan fees charged are reduced and miscellaneous fees are waived for
employees and officers other than executive officers. In the judgment of
management, such loans do not involve more than the normal risk of
collectibility or present other unfavorable features.
As of June 30, 1994, there were no loans made to current and former
directors and executive officers of UnionFed or its subsidiaries under the
current or prior home loan programs.
STOCKHOLDER PROPOSALS
Any stockholder wishing to have a proposal considered for inclusion in
UnionFed's 1995 proxy solicitation materials must give notice of such proposal
in writing to the Corporate Secretary of UnionFed on or before June 24, 1995.
The notice must comply with Section 13 of Article II of UnionFed's Bylaws (a
copy of which is available upon request to the Corporate Secretary of UnionFed),
which section requires that the notice contain a brief description of such
proposal, the name and address of the stockholders making or supporting such
proposal, the number of UnionFed shares owned by such stockholders, any
financial or other interest of such stockholders in such proposal, and certain
other information specified in such section. The Board of Directors of UnionFed
will review any stockholder proposals which are filed and will determine whether
such proposals qualify for inclusion in UnionFed's 1995 proxy solicitation
materials.
Stockholders who do not present proposals for inclusion in the Proxy
Statement but who still intend to submit a proposal at the 1995 Annual Meeting
must, in accordance with UnionFed's Bylaws, provide timely written notice of the
matter to the Corporate Secretary of UnionFed. To be timely, a stockholder's
written notice must be delivered to or mailed and received at the principal
executive offices of UnionFed not less than 60 days prior to the scheduled date
of the 1995 Annual Meeting. Any notice to the Corporate Secretary must comply
with the requirements of Section 13 of Article II of UnionFed's Bylaws described
above.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP has served as UnionFed's independent auditors since
fiscal 1990 and is anticipated to serve in this capacity for fiscal 1995. A
representative of KPMG Peat Marwick LLP will be present at the Annual Meeting,
at which time he or she will be given an opportunity to make a statement, if
desired, and to respond to appropriate stockholder questions.
15
OTHER MATTERS
The Board of Directors of UnionFed does not know of any other matters that
are to be presented for action at the Annual Meeting. Should any other matters
come before the Annual Meeting or any adjournments and postponements thereof,
the persons named in the enclosed proxy will have the discretionary authority to
vote all proxies received with respect to such matters in accordance with their
judgments.
ANNUAL REPORT
UnionFed's Annual Report to Stockholders for the fiscal year ended June 30,
1994, including audited financial statements, is being mailed to stockholders
along with these proxy materials. In an effort to reduce the expense associated
with the preparation of a separate annual report, this year's Annual Report to
Stockholders includes, without exhibits, the Annual Report on Form 10-K as filed
with the Securities and Exchange Commission. Exhibits to the Annual Report on
Form 10-K may be obtained from UnionFed upon payment of UnionFed's reasonable
expenses to furnish such exhibits. To obtain any such exhibits, contact Ronald
M. Griffith, Corporate Secretary, UnionFed Financial Corporation, 330 East
Lambert Road, Brea, California, 92621.
YOU ARE URGED TO VOTE, SIGN, DATE, AND RETURN THE ACCOMPANYING PROXY CARD
IN THE ENCLOSED POSTAGE PAID ENVELOPE AT YOUR EARLIEST CONVENIENCE, WHETHER OR
NOT YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON.
By Order of the Board of Directors
/s/ RONALD M. GRIFFITH
Ronald M. Griffith
Corporate Secretary
October 21, 1994
16
[FRONT SIDE OF PROXY CARD]
- - --------------------------------------------------------------------------------
REVOCABLE PROXY
UNIONFED FINANCIAL CORPORATION
The undersigned hereby appoints David S. Engelman, Dale A. Welke and John R.
Wise, or any of them, each with full power of substitution, as the lawful
proxies of the undersigned and hereby authorizes such persons to represent and
to vote as designated below all shares of the common stock of UnionFed
Financial Corporation ("UnionFed") to which the undersigned would be entitled
to vote if personally present at the Annual Meeting of Stockholders of UnionFed
to be held on November 16, 1994 and at any adjournments or postponements
thereof (the "1994 Annual Meeting").
1. ELECTION OF DIRECTORS
[_] FOR all nominees listed [_] WITHHOLD AUTHORITY to
below (except as indicated vote for all nominees
to the contrary below) listed below
Donald L. Criswell
William T. Donovan
J. David Kall
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name here:
- - --------------------------------------------------------------------------------
2. To transact such other business as may properly come before the 1994 Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NAMED NOMINEES.
IMPORTANT--PLEASE SIGN AND DATE ON OTHER SIDE AND RETURN PROMPTLY.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF UNIONFED.
(Continued on other side)
- - --------------------------------------------------------------------------------
[BACK SIDE OF PROXY CARD]
- - --------------------------------------------------------------------------------
THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED
FOR THE NAMED NOMINEES.
The undersigned acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement for the 1994 Annual Meeting.
When signed as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full corporate name
by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Whether or not you plan to attend the 1994 Annual Meeting, you are urged to
execute, date and return this proxy, which may be revoked at any time prior to
its use.
Dated: ____________________, 1994
_________________________________
(Signature of Stockholder)
_________________________________
(Signature of Additional
Stockholder(s))
Please sign your name exactly as
it appears herein, date and
return this proxy in the reply
envelope provided. If you
receive more than one proxy
card, please sign, date and
return all cards received.
- - --------------------------------------------------------------------------------