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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 Section 240.14a-11(c) or Section 240.14a-12
PFF BANCORP, INC.
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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)(4) 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 filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
PFF BANCORP, INC.
350 SOUTH GAREY AVENUE
POMONA, CALIFORNIA 91766
(909) 623-2323
July 16, 1997
Fellow Stockholders:
You are cordially invited to attend the annual meeting of stockholders
(the "Annual Meeting") of PFF Bancorp, Inc. (the "Company"), the holding company
for PFF Bank & Trust (the "Bank"), which will be held on Wednesday, August 27,
1997, at 9:00 a.m., Pacific Time, at the Sheraton Suites Fairplex, 601 W.
McKinley Avenue, Pomona, California.
The attached Notice of the Annual Meeting and the Proxy Statement
describe the formal business to be transacted at the Annual Meeting. Directors
and officers of the Company, as well as a representative of KPMG Peat Marwick
LLP, the Company's independent auditors, will be present at the Annual Meeting
to respond to any questions that our stockholders may have regarding the
business to be transacted.
The Board of Directors of the Company has determined that the matters
to be considered at the Annual Meeting are in the best interests of the Company
and its stockholders. For the reasons set forth in the Proxy Statement, the
Board unanimously recommends that you vote "FOR" the nominees as directors
specified under Proposal 1 and "FOR" Proposal 2, the ratification of auditors.
WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY CARD PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED SO THAT YOUR
SHARES WILL BE REPRESENTED. YOUR COOPERATION IS APPRECIATED SINCE A MAJORITY OF
THE COMMON STOCK MUST BE REPRESENTED, EITHER IN PERSON OR BY PROXY, TO
CONSTITUTE A QUORUM FOR THE CONDUCT OF BUSINESS.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, we thank you for your continued interest and support.
Sincerely yours,
/s/ Larry M. Rinehart
Larry M. Rinehart
President, Chief Executive Officer
and Director
PFF BANCORP, INC.
350 SOUTH GAREY AVENUE
POMONA, CALIFORNIA 91766
(909) 623-2323
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 27, 1997
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NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the
"Annual Meeting") of PFF Bancorp, Inc. (the "Company") will be held on
Wednesday, August 27, 1997, at 9:00 a.m., Pacific Time, at the Sheraton Suites
Fairplex, 601 W. McKinley Avenue, Pomona, California.
The purpose of the Annual Meeting is to consider and vote upon the
following matters:
1. The election of two directors for terms of three years each or until
their successors are elected and qualified;
2. The ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors of the Company for the fiscal year ending March
31, 1998; and
3. Such other matters as may properly come before the meeting and at any
adjournments thereof, including whether or not to adjourn the meeting.
The Board of Directors has established June 30, 1997, as the record
date for the determination of stockholders entitled to receive notice of and to
vote at the Annual Meeting and at any adjournments thereof. Only recordholders
of the Common Stock of the Company as of the close of business on such record
date will be entitled to vote at the Annual Meeting or any adjournments 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 in order to permit further solicitation of proxies by
the Company. A list of stockholders entitled to vote at the Annual Meeting will
be available at the administrative offices of the Company, 350 South Garey
Avenue, Pomona, California 91766, for a period of ten days prior to the Annual
Meeting and will also be available at the Annual Meeting itself.
By Order of the Board of Directors
/s/ Carole F. Olson
Carole F. Olson
Secretary
Pomona, California
July 16, 1997
PFF BANCORP, INC.
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 27, 1997
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SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is being furnished to stockholders of PFF Bancorp,
Inc. (the "Company") in connection with the solicitation by the Board of
Directors (the "Board of Directors" or "Board") of proxies to be used at the
annual meeting of stockholders (the "Annual Meeting"), to be held on Wednesday,
August 27, 1997 at 9:00 a.m., at the Sheraton Suites Fairplex, 601 W. McKinley
Avenue, Pomona, California and at any adjournments thereof. The 1997 Annual
Report to Stockholders, including consolidated financial statements for the
fiscal year ended March 31, 1997, accompanies this Proxy Statement, which is
first being mailed to recordholders on or about July 16, 1997.
Regardless of the number of shares of Common Stock owned, it is
important that recordholders of a majority of the shares be represented by proxy
or present in person at the Annual Meeting. Stockholders are requested to vote
by completing the enclosed proxy card and returning it signed and dated in the
enclosed postage-paid envelope. Stockholders are urged to indicate their vote in
the spaces provided on the proxy card. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS GIVEN
THEREIN. WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED PROXY CARDS WILL BE VOTED
"FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED IN THIS PROXY STATEMENT
AND "FOR" THE RATIFICATION OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS OF
THE COMPANY FOR THE FISCAL YEAR ENDING MARCH 31, 1998.
Other than the matters set forth on the attached Notice of Annual
Meeting of Stockholders, the Board of Directors knows of no additional matters
that will be presented for consideration at the Annual Meeting. Execution of a
proxy, however, confers on the designated proxy holders discretionary authority
to vote the shares in accordance with their best judgment on such other
business, if any, that may properly come before the Annual Meeting and at any
adjournments thereof, including whether or not to adjourn the Annual Meeting.
A PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS EXERCISE BY FILING A
WRITTEN NOTICE OF REVOCATION WITH THE SECRETARY OF THE COMPANY, BY DELIVERING TO
THE COMPANY A DULY EXECUTED PROXY BEARING A LATER DATE, OR BY ATTENDING THE
ANNUAL MEETING AND VOTING IN PERSON. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE
SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED APPROPRIATE
DOCUMENTATION FROM YOUR RECORDHOLDER TO VOTE PERSONALLY AT THE ANNUAL MEETING.
1
The cost of solicitation of proxies on behalf of management will be
borne by the Company. In addition to the solicitation of proxies by mail,
Kissel-Blake Inc., a proxy solicitation firm, will assist the Company in
soliciting proxies for the Annual Meeting and will be paid a fee of $3,500, plus
out-of-pocket expenses. Proxies may also be solicited personally or by telephone
by directors, officers and other employees of the Company and its subsidiary,
PFF Bank & Trust (the "Bank"), without additional compensation therefor. The
Company will also request persons, firms and corporations holding shares in
their names, or in the name of their nominees, which are beneficially owned by
others, to send proxy material to and obtain proxies from such beneficial
owners, and will reimburse such holders for their reasonable expenses in doing
so.
VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of
shares of common stock of the Company ("Common Stock"), with each share
entitling its owner to one vote on all matters to be voted on at the Annual
Meeting, except as described below. There is no cumulative voting for the
election of directors.
The close of business on June 30, 1997 has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 18,715,625 shares.
As provided in the Company's Certificate of Incorporation,
recordholders of Common Stock who beneficially own in excess of 10% of the
outstanding shares of Common Stock (the "Limit") are not entitled to any vote in
respect of the shares held in excess of the Limit. A person or entity is deemed
to beneficially own shares owned by an affiliate of, as well as by persons
acting in concert with, such person or entity. The Company's Certificate of
Incorporation authorizes the Board of Directors (i) to make all determinations
necessary to implement and apply the Limit, including determining whether
persons or entities are acting in concert, and (ii) to demand that any person
who is reasonably believed to beneficially own stock in excess of the Limit to
supply information to the Company to enable the Board of Directors to implement
and apply the Limit.
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 (after
subtracting any shares in excess of the Limit pursuant to the Company's
Certificate of Incorporation) is necessary to constitute a quorum at the Annual
Meeting. In the event there are not sufficient votes for a quorum or to approve
or ratify any proposal at the time of the Annual Meeting, the Annual Meeting may
be adjourned in order to permit the further solicitation of proxies.
As to the election of directors set forth in Proposal 1, the proxy card
being provided by the Board of Directors enables a stockholder to vote "FOR" the
election of the nominees proposed by the Board of Directors, or to "WITHHOLD"
authority to vote for one or more of the nominees being proposed. Under Delaware
law and the Company's bylaws, directors are elected by a plurality of
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votes cast, without regard to either (i) broker non-votes, or (ii) proxies as to
which authority to vote for one or more of the nominees being proposed is
withheld.
As to the ratification of KPMG Peat Marwick LLP as independent auditors
of the Company set forth in Proposal 2, and all other matters that may properly
come before the Annual Meeting, by checking the appropriate box, a shareholder
may: (i) vote "FOR" the item; (ii) vote "AGAINST" the item; or (iii) "ABSTAIN"
from voting on such item. Under the Company's bylaws, unless otherwise required
by law, all such matters shall be determined by a majority of the votes cast,
without regard to either (a) broker non-votes, or (b) proxies marked "ABSTAIN"
as to that matter.
Proxies solicited hereby will be returned to the Company's transfer
agent, ChaseMellon Shareholder Services, and will be tabulated by inspectors of
election designated by the Board of Directors, who will not be employed by, or
be a director of, the Company or any of its affiliates. After the final
adjournment of the Annual Meeting, the proxies will be returned to the Company
for safekeeping.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to those persons believed
by management to be beneficial owners of more than 5% of the Company's
outstanding shares of Common Stock on the Record Date or as disclosed in certain
reports regarding such ownership filed by such persons with the Company and with
the Securities and Exchange Commission ("SEC"), in accordance with Sections
13(d), 13(f) and 13(g) of the Securities Exchange Act of 1934, as amended
("Exchange Act"). Other than those persons listed below, the Company is not
aware of any person, as such term is defined in the Exchange Act, that owns more
than 5% of the Company's Common Stock as of the Record Date.
3
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS(1)
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Common Stock PFF Bank & Trust Employee 1,587,000(2) 8.48%
Stock Ownership Plan ("ESOP")
350 South Garey Avenue
Pomona, California 91766
Common Stock Thomson Horstmann & 1,050,100(3) 5.61%
Bryant, Inc.
Park 80 West, Plaza Two
Saddle Brook, New Jersey 07663
Common Stock Capital Guardian Trust Co. 1,020,000(3)(4) 5.45%
333 South Hope Street
Los Angeles, California 90071
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(1) Based on 18,715,625 shares outstanding.
(2) California Central Trust Bank Corporation has been appointed as the
corporate trustee for the ESOP ("ESOP Trustee"). The ESOP Trustee,
subject to its fiduciary duty, must vote all allocated shares held in
the ESOP in accordance with the instructions of the participants. At
June 30, 1997, 158,700 shares had been allocated under the ESOP and
1,428,300 shares remain unallocated. Under the terms of the ESOP, the
ESOP Trustee will vote the unallocated shares in a manner calculated to
most accurately reflect the instructions received from participants
regarding allocated shares so long as the ESOP Trustee determines such
vote is in accordance with the provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
(3) Based on information contained in Forms 13F filed with the SEC for the
period ending March 31, 1997.
(4) A subsidiary of The Capital Group Companies, Inc.
PROPOSALS TO BE VOTED ON AT THE MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of eight (8)
directors and is divided into three classes. Each of the eight members of the
Board of Directors of the Company also presently serves as a director of the
Bank. Directors are elected for staggered terms of three years each, with the
term of office of only one of the three classes of directors expiring each year.
Directors serve until their successors are elected and qualified.
4
The two nominees proposed for election at this Annual Meeting are Jil
H. Stark and Dwight E. Bert. No person being nominated as a director is being
proposed for election pursuant to any agreement or understandings between any
such person and the Company.
In the event that any such nominee is unable to serve or declines to
serve for any reason, it is intended that the proxies will be voted for the
election of such other person as may be designated by the present Board of
Directors. The Board of Directors has no reason to believe that either of the
persons named will be unable or unwilling to serve. UNLESS AUTHORITY TO VOTE FOR
THE NOMINEE IS WITHHELD, IT IS INTENDED THAT THE SHARES REPRESENTED BY THE
ENCLOSED PROXY CARD, IF EXECUTED AND RETURNED, WILL BE VOTED "FOR" THE ELECTION
OF THE NOMINEES PROPOSED BY THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF
THE NOMINEES NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO THE NOMINEES, CONTINUING DIRECTORS AND CERTAIN
EXECUTIVE OFFICERS
The following table sets forth, as of the Record Date, the names of the
nominees, continuing directors and Named Executive Officers (as defined herein)
as well as their ages, a brief description of their recent business experience,
including present occupations and employment, certain directorships held by
each, the year in which each director became a director of the Bank, the year in
which their terms (or in the case of the nominees, their proposed terms) as
director of the Company expire. The table also sets forth the amount of Common
Stock and the percent thereof beneficially owned by each director and Named
Executive Officer and all directors and executive officers as a group as of the
Record Date.
SHARES OF
NAME AND PRINCIPAL EXPIRATION COMMON STOCK
OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIALLY PERCENT OF
AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNED(2) CLASS
- ----------------------- --- -------- -------- -------- -----
NOMINEES
Jil H. Stark................................. 60 1975 2000 39,006(3)(4) *
Formerly a Director of Marian Miner Cook
Athenaeum of Claremont McKenna
College, and currently Community
Relations Manager. Mrs. Stark also serves
on the Board of Directors of Pomona
Financial Services, Inc., PFF Insurance
Service and Diversified Services, Inc.
5
SHARES OF
NAME AND PRINCIPAL EXPIRATION COMMON STOCK
OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIALLY PERCENT OF
AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNED(2) CLASS
- ----------------------- --- -------- -------- -------- -----
Dwight E. Bert............................... 74 1987 2000 39,056(3)(4) *
Currently owns and operates a car care
center in the Rancho Cucamonga area.
Retired owner of an agricultural business.
CONTINUING DIRECTORS
William T. Dingle............................ 69 1974 1999 39,006(3)(4) *
Chief Executive Officer of Graves
Automotive Supply and Parkway
Automotive Warehouse. Mr. Dingle also
serves on the Board of Directors of Pomona
Financial Services, Inc., PFF Insurance
Service and Diversified Services, Inc.
Robert W. Burwell............................ 65 1984 1999 64,006(3)(4) *
Vice Chairman of the Board of Directors of
the Company and the Bank. Mr. Burwell
was President and Chief Executive Officer
of the Pomona Valley Hospital Medical
Center from 1972 until his retirement in
1993.
Curtis W. Morris............................. 61 1988 1999 48,103(3)(4) *
Mr. Morris is associated with the law firm
of Lamb, Morris & Lobello and has been a
practicing attorney for 28 years.
Donald R. DesCombes.......................... 65 1979 1998 64,163(3)(4) *
Chairman of the Board of Directors of the
Company and the Bank. Mr. DesCombes
has served as Chairman of the Board of the
Bank since 1989. Mr. DesCombes is an
owner of Averbeck Company Insurance
Brokers.
Robert D. Nichols............................ 69 1986 1998 41,506(3)(4) *
President and Chief Executive Officer of
the Bank from August 1986 until his
retirement in August 1992. Mr. Nichols is
on the Board of Trustees of San Antonio
Community Hospital.
6
SHARES OF
NAME AND PRINCIPAL EXPIRATION COMMON STOCK
OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIALLY PERCENT OF
AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNED(2) CLASS
- ----------------------- --- -------- -------- -------- -----
Larry M. Rinehart............................ 49 1994 1998 180,949(5)(6)(7) *
President and Chief Executive Officer of
the Company and the Bank since July 1992.
Served as President-elect and Executive
Vice President from July 1991 to July 1992.
Mr. Rinehart also serves as Director,
President and Chief Executive Officer of
Pomona Financial Services, Inc., PFF
Insurance Service and Diversified Services,
Inc.
NAMED EXECUTIVE OFFICERS
Kevin McCarthy............................... 45 - - 110,605(5)(6)(7) *
Senior Executive Vice President of the
Company and Senior Executive Vice
President and Chief Operating Officer of
the Bank. Mr. McCarthy is a Director of
Pomona Financial Services, Inc., PFF
Insurance Service and Diversified Services,
Inc.
Gregory C. Talbott........................... 43 - - 98,121(5)(6)(7) *
Executive Vice President, Chief Financial
Officer and Treasurer of the Company
and the Bank.
Gilbert F. Smith............................. 51 - - 54,733(5)(6)(7) *
Senior Vice President and
General Counsel of the Bank. Mr. Smith
also serves as Chairman of the Board of
Pomona Financial Services, Inc., PFF
Insurance Service, and Diversified Services,
Inc.
Janice M. Lemons............................. 53 - - 54,241(5)(6)(7) *
Senior Vice President and Director of
Administrative Services of the Bank.
7
SHARES OF
NAME AND PRINCIPAL EXPIRATION COMMON STOCK
OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIALLY PERCENT OF
AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNED(2) CLASS
- ----------------------- --- -------- -------- -------- -----
Stock Ownership of all Directors - - - 983,564(8) 5.0%
and Executive Officers as a Group
(15 persons)
- ------------
* Does not exceed 1.0% of the Company's voting securities.
(1) Includes years of service as a director of the Bank.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family member) voting or dispositive power as to shares reported
herein (except as noted).
(3) Includes 34,006 shares awarded to each outside director pursuant to the
PFF Bancorp, Inc. 1996 Incentive Plan (the "Incentive Plan"), which vest
in five equal annual installments commencing on October 23, 1997 and March
26, 1998. Each outside director presently has voting power as to the
shares awarded.
(4) Excludes 85,017 shares subject to options granted to each outside director
under the Incentive Plan. Options granted pursuant to the Incentive Plan
become exercisable at a rate of 20% per year commencing on October 23,
1997 and March 26, 1998.
(5) Includes 150,000, 90,000, 80,000, 42,500 and 42,500 shares awarded to
Messrs. Rinehart, McCarthy, Talbott and Smith and Ms. Lemons,
respectively, under the Incentive Plan. Awards to officers under the
Incentive Plan vest at a rate of 20% per year commencing on October 23,
1997; provided, however, that 75% of the third, fourth and fifth annual
installments will only vest if the performance criteria established by the
Compensation Committee is satisfied. See "Executive Compensation-
Compensation Committee Report on Executive Compensation." Each participant
presently has voting power as to the shares awarded.
(6) Excludes 375,000, 200,000, 170,000, 96,000 and 96,000 shares subject to
options granted to Messrs. Rinehart, McCarthy, Talbott and Smith and Ms.
Lemons, respectively, under the Incentive Plan. Options become exercisable
at a rate of 20% per year commencing on October 23, 1997. See "Executive
Compensation- Incentive Plan."
(7) Includes 1,973, 2,058, 2,084, 1,827 and 1,717 shares allocated to Messrs.
Rinehart, McCarthy, Talbott and Smith and Ms. Lemons, respectively, under
the Bank's ESOP.
(8) Includes a total of 770,542 shares awarded under the Incentive Plan as to
which voting may be directed. Excludes a total of 1,820,119 shares subject
to options under the Incentive Plan which are not currently exercisable.
Includes 13,892 shares (including 9,659 shares set forth in footnote 7
above) allocated to executive officers as a group under the Bank's ESOP.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS OF
THE COMPANY
The Board of Directors of the Company conducts its business through
meetings of the Board of Directors and through activities of its committees. The
Board of Directors of the Company meets monthly and may have additional meetings
as needed. During the year ended March 31, 1997, the Board of Directors of the
Company, held 13 meetings. All of the directors of the Company attended at least
75% of the total number of the Company's Board meetings held and committee
meetings on which such directors served during fiscal 1997. The Board of
Directors of the Company maintains committees, the nature and composition of
which are described below:
AUDIT COMMITTEE. The Audit Committee of the Company and the Bank consists
of Mrs. Stark and Messrs. Dingle, Bert and Burwell. The Audit Committee is
responsible for reporting to the
8
Board on the general financial condition of the Bank and the results of the
annual audit, and is responsible for ensuring that the Bank's activities are
being conducted in accordance with applicable laws and regulations. The Audit
Committee of the Company met 2 times in fiscal 1997. The Audit Committee of the
Bank met 4 times in fiscal 1997.
NOMINATING COMMITTEE. The Company's Nominating Committee for the 1997
Annual Meeting consisted of Messrs. Dingle, Burwell and Rinehart. The committee
considers and recommends the nominees for director to stand for election at the
Company's annual meeting of shareholders. The Company's Certificate of
Incorporation and Bylaws provide for stockholder nominations of directors. These
provisions require such nominations to be made pursuant to timely notice in
writing to the Secretary of the Company. The stockholder's notice of nomination
must contain all information relating to the nominee which is required to be
disclosed by the Company's Bylaws and by the Exchange Act. The Nominating
Committee met on April 23, 1997.
EMPLOYEE COMPENSATION AND BENEFITS COMMITTEE. The Employee Compensation
and Benefits Committee of the Company consists of Messrs. Burwell, Dingle,
Morris, Nichols and Rinehart. The committee meets to establish compensation and
benefits for the executive officers and to review the incentive compensation
programs when necessary. The committee is also responsible for all matters
regarding compensation and benefits, hiring, termination and affirmative action
issues for other officers and employees of the Company and the Bank. The
Employee Compensation and Benefits Committee of the Company met 4 times in
fiscal 1997. The Compensation, Pension and Personnel Practices Committee of the
Bank met 4 times in fiscal 1997.
DIRECTORS' COMPENSATION
DIRECTORS' FEES. The directors of the Company, except for Mr. Rinehart,
receive a retainer of $5,000 per year for service on the Board of Directors of
the Company. No committee meeting fees are paid by the Company. Currently, all
directors of the Bank except the Chairman of the Board and Mr. Rinehart receive
a retainer of $2,825 per month. The Chairman of the Board receives a monthly
retainer of $3,165 and a monthly car allowance of $900. Mr. Rinehart does not
receive any additional compensation for serving as a director. No committee
meeting fees are paid by the Bank. No fees are currently being paid to the
directors for service on the Board of Directors of the service companies.
DIRECTOR RETIREMENT PLAN. The Bank maintains the PFF Bank & Trust
Directors' Retirement Plan (the "Directors' Retirement Plan"). The Directors'
Retirement Plan is frozen, in that no new benefits are accruing under the Plan
effective December 31, 1995. The Directors' Retirement Plan provides that, upon
retirement, retiring directors are eligible to receive an annual benefit equal
to 70% of the retiring directors' annualized final earnings based on monthly
board compensation as of December 31, 1995 (reduced by one one hundred and
twentieth (1/120) for each month of service less than 120) which shall continue
to be paid for at least 10 years and over the lifetime of the director
thereafter. All directors are currently credited with 120 months of service
under the plan except for Mr. Nichols who has been credited with 60 months of
service. Mr. Rinehart does not
9
participate in the plan. Benefits may not start until the director reaches age
65. The Directors' Retirement Plan provides that in the event of a participant's
death prior to payment of all benefits due to the participant under the plan,
the remaining benefits are to be paid to the beneficiary or beneficiaries
designated by the participant or, if no such designation had been made, to the
estate of the participant.
DIRECTORS' DEFERRED COMPENSATION PLAN. The Bank provides a non-qualified
plan which offers directors the opportunity to defer fee compensation and stock
awarded under the Incentive Plan. The primary form of benefit for deferred fees
is 120 monthly installment payments of the account balance. Such balance shall
equal the amount of the deferrals and interest thereon. Other forms of benefit,
including a lump sum payout, are available with certain restrictions. Deferred
stock awarded under the Incentive Plan, is accounted for in the plan in the form
of Common Stock units. The form of benefit for deferred stock is a single lump
sum payout made in shares of Common Stock. Prior to March 1996, deferrals had
been credited with an interest rate equal to the highest interest rate paid on a
designated date to depositors of the Bank. The plan has been amended to allow
for an alternative choice whereby deferrals may be credited with investment
earnings or losses equivalent to that of the Common Stock issued in connection
with the Company's initial public offering ("Common Stock Rate"). Previous
deferrals, as well as future deferrals, may be credited with the Common Stock
Rate as of the initial public offering. The Bank established an irrevocable
grantor trust ("rabbi trust") to hold the assets of the Bank that are intended
to be used to satisfy the Bank's obligation with respect to benefits payable
under the Deferred Compensation Plan. Assets of the rabbi trust are subject to
the claims of creditors of the Bank solely in the event of the Bank's insolvency
thereby foregoing any tax consequences to participants until assets are
distributed to participants.
INCENTIVE PLAN. Under the Incentive Plan maintained by the Company, each
director who is not an officer or employee of the Company or the Bank received
non-statutory stock options to purchase 76,516 shares of Common Stock at an
exercise price of $12.75, which was the fair market value of the shares on the
date of grant, October 23, 1997 (with Dividend Equivalent Rights attached, as
discussed below), and an award of 30,606 shares of Common Stock. On March 26,
1997, each director who is not an officer or employee of the Company or the Bank
was granted non-statutory stock options to purchase 8,501 shares of Common Stock
at an exercise price of $15.50, which was the fair market value of the shares on
the date of grant (with Dividend Equivalent Rights attached, as discussed
below), and an award of 3,400 shares of Common Stock (collectively, the
"Directors' Awards"). The Dividend Equivalent Rights provide a separate cash
benefit equal to 100% of the amount of any extraordinary dividend (as defined in
the Incentive Plan) declared by the Company on shares of Common Stock subject to
an option. The Directors' Awards initially granted under the Incentive Plan will
vest over a five-year period, at a rate of 20% each year commencing on October
23, 1997 and March 26, 1998, the first anniversaries of the respective dates of
grant. On February 18, 1997, the Employee Compensation and Benefits Committee of
the Company and the Compensation, Pension and Personnel Practices Committee of
the Bank amended the Directors' Awards agreements, effective March 28, 1997, to
provide for acceleration of the vesting of Directors' Awards upon a change in
control of the Company or the Bank (as defined in the Incentive Plan).
10
All unexercised options granted under the Incentive Plan expire 10 years
following the date of grant. All Directors' Awards will immediately vest upon
death or disability.
EXECUTIVE COMPENSATION
The report of the Compensation Committee and the stock performance graph
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, as amended (the "Securities Act") or the Exchange Act,
except as to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. Under rules
established by the Securities and Exchange Commission ("SEC"), the Company is
required to provide certain data and information in regard to the compensation
and benefits provided to the Company's Chief Executive Officer and other
executive officers of the Company or the Bank. The disclosure requirements for
the Chief Executive Officer and other executive officers include the use of
tables and a report explaining the rationale and considerations that led to
fundamental compensation decisions affecting those individuals. In fulfillment
of this requirement, the Employee Compensation and Benefits Committee of the
Board of Directors of the Company, at the direction of the Board of Directors,
has prepared the following report for inclusion in this Proxy Statement.
The Bank and the Company have begun a process to revise current executive
compensation policies to reflect the status of the Company as a public company
and to assure competitive compensation levels. It is currently intended that the
new policies will incorporate financial results of the Company and the
performance of the Company's stock.
HISTORICAL APPROACH. Historically, executive compensation has been
reviewed annually by the Bank's Compensation, Pension and Personnel Practices
Committee (the "Committee"). The Committee utilized various sources of
compensation information upon which to base their decisions. Compensation
information included compensation surveys, utilization of consultants and peer
group analysis.
The Bank participated in a number of salary surveys to obtain current data
including: The Nash Survey - Fourth Annual Board of Directors and Executive
Compensation, California Banks and Savings and Loans Survey, Western Management
Group Survey, KPMG - Executive Compensation and Benefits Survey, SNL Executive
Compensation Review 1996, Cole Executive Compensation Survey and BAI Key
Executive Compensation Survey.
The Bank utilizes a merit pay system to determine pay increases. The range
of percentage increases has been the same throughout the Bank - whether at the
executive, management or employee level.
11
Historically, the Committee has focused on the salary and pay adjustments
for the President and Chief Executive Officer. The President and CEO has focused
on the salary and pay adjustments of the remainder of the Executive Committee.
In recent years, the Board has more fully reviewed the total compensation
package of the entire Executive Committee.
In reviewing the compensation package for the Executive Committee, the
Committee considers a number of factors including asset size, earnings, type of
operations, corporate structure, geographic locations and budget considerations.
As a result, the Committee is provided with relevant, timely and reliable data
with which to make recommendations to the Board of Directors regarding
compensation.
COMPENSATION POLICIES. The Committee has established the following goals
as incentives in setting Executive Compensation, including benefits:
. to target base salaries at a competitive average;
. to reward the achievement of the Bank's annual and long term strategic
goals;
. to retain executive officers by offering a full range of benefits
available at a competitive level to other executives of savings
institutions;
. to provide additional motivation for the executive officers to enhance
stockholder value by linking a portion of the compensation package to
the performance of the Company's stock.
COMPONENTS OF SALARY. Compensation is defined as cash or non-cash
remuneration in the form of salary, bonus, profit sharing, deferred
compensation, auto allowance, 401(k) employer match contribution, Supplemental
Executive Retirement Plan ("SERP") payments, ESOP allocations, stock grants and
options, and any other type of remuneration deemed by the Board to be
appropriate.
In March of 1997, the Board of Directors approved a modest payout to all
employees in recognition of the positive response to changes and new performance
demands during the past year. The payout was made in April, 1997. The amount of
benefits provided by the 401(k) and ESOP are determined, or will be determined,
solely by the participant's level of compensation under the guidelines set forth
in such plans.
INCENTIVE PLAN. On October 23, 1996, stockholders approved the PFF
Bancorp, Inc. 1996 Incentive Plan, under which officers may receive options and
awards. Stock option awards will vest in five equal annual installments. Stock
awards under the Incentive Plan vest in five equal annual installments. The
first and second annual installments will vest respectively on the first and
second anniversary of the date of grant. Twenty-five percent (25%) of the third,
fourth and fifth annual installment will vest on the third, fourth and fifth
respective anniversary dates of the date of grant. The remaining seventy-five
percent (75%) of each of the third, fourth and fifth annual installments will be
subject to the achievement of multilevel performance goals relating to the
attainment of a target amount of earnings per share on the Common Stock
established by the Committee. The Committee believes that stock ownership is a
significant incentive in building stockholders' wealth
12
and aligning the interests of employees with those of stockholders. Stock
options and stock awards under the Incentive Plan were allocated by the
Committee based upon the Company's fiscal responsibility, regulatory practices
and policies, the practices of other recently converted financial institutions,
as verified by external surveys based upon the officers' level of responsibility
and contributions to the Company and the Bank. Stock awards under the Incentive
Plan may be deferred under the Employee Deferred Compensation Plan. The
Committee will consider the amount of outstanding awards in determining the
total annual compensation package. See "-Summary Compensation Table" and
"Incentive Plan."
CHIEF EXECUTIVE OFFICER. The Chief Executive Officer's evaluation
included consideration of leadership qualities demonstrated during the
transition period to a public company. Specific accomplishments included a
realignment of key executives, cost reductions and initiation of new programs.
The CEO's new salary was established at $238,164 per year, a 5.5% increase. This
percentage increase was in line with industry standards and represented the low
to median range compared to a peer group of institutions. In addition, the
Committee considered the grants of options and stock awards to Mr. Rinehart
which the Committee was proposing to shareholders for approval (See Summary
Compensation Table).
Although certain quantitative and qualitative factors were reviewed to
determine the Chief Executive Officer's compensation (as well as that of the
entire Executive Committee of Management), no specific formula was utilized in
the Committee's decisions nor did the Committee establish a direct link between
salary levels and the Bank's performance.
The Committee is currently supervising the development of an executive
compensation plan that will, in future years, tie compensation directly to
performance goals. The Business Plan and a high level of executive commitment to
its success will be of particular importance to the Committee.
The goal of the above referenced compensation policies, as implemented
by the Committee, is to be certain that all Executives are compensated
consistent with the above guidelines. Compensation levels will be reviewed as
frequently as necessary to ensure this result.
THE EMPLOYEE COMPENSATION AND BENEFITS COMMITTEE
Robert W. Burwell Robert D. Nichols
William T. Dingle Larry M. Rinehart
Curtis W. Morris
13
STOCK PERFORMANCE GRAPH. The following graph shows a comparison of
cumulative total stockholder return on the Company's Common Stock based on the
market price of the Common Stock with the cumulative total return of companies
on the Nasdaq Stock Market (U.S.) Index and Nasdaq Bank Stocks for the period
beginning on March 29, 1996, the day the Company's Common Stock began trading,
through March 31, 1997. The graph was derived from a limited period of time,
and, as a result, may not be indicative of possible future performance of the
Company's Common Stock.
COMPARISON OF CUMULATIVE TOTAL RETURNS FOR PFF BANCORP, INC. COMMON STOCK, THE
NASDAQ STOCK MARKET INDEX AND THE NASDAQ BANK STOCK INDEX
[PERFORMANCE GRAPH APPEARS HERE]
SUMMARY
03/29/96 06/28/96 09/30/96 12/31/96 03/31/97
-------- -------- -------- -------- --------
PFF BANCORP, INC. 100.00 111.30 123.80 148.80 143.80
NASDAQ STOCK MARKET (U.S.) 100.00 108.90 112.80 118.30 111.90
NASDAQ BANK STOCKS 100.00 102.10 113.00 127.60 137.10
NOTES:
A. THE LINES REPRESENT MONTHLY INDEX LEVELS DERIVED FROM COMPOUNDED DAILY
RETURNS THAT INCLUDE ALL DIVIDENDS.
B. THE INDEXES ARE REWEIGHTED DAILY, USING THE MARKET CAPITALIZATION ON THE
PREVIOUS TRADING DAY.
C. IF THE MONTHLY INTERVAL, BASED ON THE FISCAL YEAR-END, IS NOT A TRADING
DAY, THE PRECEDING TRADING DAY IS USED.
D. THE INDEX LEVEL FOR ALL THE SERIES WAS SET TO $100.00 ON 3/29/96. PFF'S
INDEX LEVEL WAS SET USING THE $10.00 INITIAL PUBLIC OFFERING PRICE.
14
SUMMARY COMPENSATION TABLE. The following table shows, for the years
ended March 31, 1997, 1996 and 1995, the cash compensation paid by the Bank, as
well as certain other compensation paid or accrued for those years, to the Chief
Executive Officer and the four highest paid executive officers of the Bank who
received compensation in excess of $100,000 ("Named Executive Officers").
LONG TERM COMPENSATION
---------------------------------------
ANNUAL COMPENSATION(1) AWARDS PAYOUTS
-------------------------------------- ---------------------------- --------
OTHER RESTRICTED SECURITIES ALL
ANNUAL STOCK UNDERLYING LTIP OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($)(2) ($)(3) (#)(4) ($)(5) ($)
- ------------------------- ------- ----------- -------- -------------- ----------- -------------- -------- -----------
Larry M. Rinehart, 1997 $238,164 $18,320 - $1,912,500 375,000 - $45,335(6)
President and Chief 1996 226,211 - - - - - 44,747
Executive Officer 1995 206,261 - - - - - 46,438
Kevin McCarthy 1997 $156,000 $12,000 - $1,147,500 200,000 - $42,796(6)
Senior Executive Vice 1996 143,943 - - - - - 32,437
President, Director of 1995 100,908 - - - - - 19,870
Operations
Gregory C. Talbott 1997 $155,880 $11,990 - $1,020,000 170,000 - $42,944(6)
Executive Vice 1996 148,128 - - - - - 28,452
President, Chief 1995 136,392 - - - - - 24,649
Financial Officer and
Treasurer
Gilbert F. Smith 1997 $130,440 $10,034 - $ 541,875 96,000 - $40,849(6)
Senior Vice 1996 124,740 - - - - - 25,489
President, General 1995 114,538 - - - - - 25,105
Counsel
Janice M. Lemons 1997 $126,732 $9,749 - $ 541,875 96,000 - $38,492(6)
Senior Vice President, 1996 121,222 - - - - - 20,067
Administrative Services 1995 109,982 - - - - - 22,449
Director
- -------------------------------
(1) Under Annual Compensation, the column titled "Salary" includes amounts
deferred by the Named Executive Officer pursuant to the Bank's 401(k) Plan,
as hereinafter defined, pursuant to which employees may defer up to 15% of
their compensation and executive officers may defer up to 6% of their
compensation, up to the maximum limits under the Code.
(2) There were no (a) perquisites over the lesser of $50,000 or 10% of the
individual's total salary and bonus for the last year, (b) payments of
above-market preferential earnings on deferred compensation, (c) payments
of earnings with respect to long-term incentive plans prior to settlement
or maturation, (d) tax payment reimbursements, or (e) preferential
discounts on stock.
(3) Pursuant to the Incentive Plan, Messrs. Rinehart, McCarthy, Talbott and
Smith and Ms. Lemons were awarded 150,000, 90,000, 80,000, 42,500 and
42,500 shares, respectively, in fiscal 1997 which had a market value at
March 31, 1997 of $2,156,250, $1,293,750, $1,150,000, $610,938 and
$610,938. The dollar amounts set forth in the table represent the market
value of the shares awarded on the date of grant. The awards vest in five
annual installments commencing on October 23, 1997, the first anniversary
of the date of grant. When shares become vested and are distributed, the
recipient will also receive an amount equal to accumulated dividends and
earnings thereon (if any). All awards vest immediately upon termination due
to death or disability. The awards to Messrs. Rinehart, McCarthy, Talbott
and Smith and Ms. Lemons are subject to the attainment of certain
performance goals established by the Committee. See "-Compensation
Committee Report on Executive Compensation."
(4) For discussion of options granted under the Incentive Plan, see the "Option
Grants in Last Fiscal Year" table.
(5) For fiscal 1997, 1996 and 1995, the Bank had no long-term incentive plans
in existence. Accordingly, there were no payments or awards under any
long-term incentive plan.
(6) Includes $11,210, $7,044, $7,707, $8,803 and $6,973 in life insurance
premiums; $4,500, $4,500, $4,500, $3,880 and $3,779 in contributions to the
Bank's 401(k) Plan and $19,725, $20,576, $20,837, $18,266 and $17,167 in
contributions to the ESOP paid by the Bank for the benefit of Messrs.
Rinehart, McCarthy, Talbott and Smith and Ms. Lemons, respectively. Also
includes $9,900 as payment for auto allowances. Includes $417 in interest
on deferred compensation for the benefit of Ms. Lemons and $776 and $256 in
interest on the Bank's SERP Plan for the benefit of Mr. McCarthy and Ms.
Lemons, respectively.
15
EMPLOYMENT AGREEMENTS
The Bank and the Company have entered into employment agreements with
Messrs. Rinehart and McCarthy, (individually, the "Executive"). The employment
agreements are intended to ensure that the Bank and the Company will be able to
maintain a stable and competent management base. The continued success of the
Bank and the Company depends to a significant degree on the skills and
competence of Messrs. Rinehart and McCarthy.
The employment agreements provide for a three-year term for Messrs.
Rinehart and McCarthy. The Bank employment agreements provide that, commencing
on the first anniversary date and continuing each anniversary date thereafter,
the Board of Directors of the Bank may extend the agreement for an additional
year so that the remaining term shall be three years, unless written notice of
non-renewal is given by the Board of Directors of the Bank after conducting a
performance evaluation of the Executive. The terms of the Company employment
agreements shall be extended on a daily basis unless written notice of
non-renewal is given by the Board of Directors of the Company. The agreements
provide that the Executive's base salary will be reviewed annually. The annual
base salaries for Messrs. Rinehart and McCarthy for the fiscal year ended 1997
are $238,164 and $156,000, respectively. In addition to the base salary, the
agreements provide for, among other things, participation in stock benefit plans
and other fringe benefits applicable to executive personnel.
The agreements provide for termination by the Bank or the Company for
cause as defined in the agreements at any time. In the event the Bank or the
Company chooses to terminate the Executive's employment for reasons other than
for cause, or in the event of the Executive's resignation from the Bank and the
Company upon: (i) failure to re-elect the Executive to his current office(s);
(ii) a material change in the Executive's functions, duties or responsibilities;
(iii) a relocation of the Executive's principal place of employment by more than
25 miles; (iv) a material reduction in the benefits and perquisites to the
Executive; (v) liquidation or dissolution of the Bank or the Company; or (vi) a
breach of the agreement by the Bank or the Company, the Executive or, in the
event of the Executive's subsequent death, his beneficiary, would be entitled to
receive an amount equal to the remaining base salary payments due to the
Executive and the contributions that would have been made on the Executive's
behalf to any employee benefit plans of the Bank or the Company during the
remaining term of the agreement provided, however, that the payment shall not,
in the aggregate, exceed three times the average of the Executive's five
preceding taxable years' annual compensation. The Bank and the Company would
also continue and pay for the Executive's life, health and disability coverage
for the remaining term of the agreement.
Under the agreements, if voluntary or involuntary termination follows a
change in control of the Bank or the Company (as defined in the Employment
Agreement), the Executive or, in the event of the Executive's death, his
beneficiary, would be entitled to a severance payment equal to the greater of:
(i) the payments due for the remaining term of the agreement; or (ii) three
times the average of the five preceding taxable years' annual compensation. The
Bank and the Company would also continue the Executive's life, health, and
disability coverage for thirty-six months.
16
Notwithstanding that both agreements provide for a severance payment in the
event of a change in control, the Executive would only be entitled to receive a
severance payment under one agreement. In the event of a change in control,
based upon three times 1997 base salary as reported in the Summary Compensation
Table, Messrs. Rinehart and McCarthy would receive approximately $714,492 and
$468,000, respectively, in severance payments, in addition to other cash and
noncash benefits.
Payments under the agreements in the event of a change in control may
constitute an excess parachute payment under Section 280G of the Internal
Revenue Code (the "Code") for executive officers, resulting in the imposition of
an excise tax on the recipient and denial of the deduction for such excess
amounts to the Company and the Bank. Under the Company's agreements, if such
payment constitutes an excess parachute payment under Section 280G of the Code,
the executive officer will receive a benefit under the agreement equal to the
greater of (i) the total benefits payable under the agreement taking into
account the state and federal income and excise taxes on such amounts or (ii)
the amount that is one dollar less than the triggering amount for the imposition
of the excise tax under Section 280G.
Payments to the Executive under the Bank's agreement will be guaranteed
by the Company in the event that payments or benefits are not paid by the Bank.
Payment under the Company's agreement would be made by the Company. All
reasonable costs and legal fees paid or incurred by the Executive pursuant to
any dispute or question of interpretation relating to the Agreements shall be
paid by the Bank or Company, respectively, if the Executive is successful
pursuant to a legal judgment, arbitration or settlement. The employment
agreements also provide that the Bank and Company shall indemnify the Executive
to the fullest extent allowable under federal and Delaware law, respectively.
TERMINATION AND CHANGE IN CONTROL AGREEMENTS.
The Bank has entered into two-year termination and change in control
agreements ("CIC Agreement") with Messrs. Talbott, Smith, Golish and Groene and
Ms. Lemons and Ms. Scullin. Commencing on the first anniversary date and
continuing on each anniversary thereafter, the Bank's CIC Agreements may be
renewed by the Board of Directors for an additional year. The Company has
entered into a two-year CIC Agreement with Mr. Talbott similar to the Bank's CIC
Agreement except that the term of the Company's CIC Agreement shall be extended
on a daily basis. The CIC Agreements provide that in the event voluntary or
involuntary termination follows a change in control of the Bank or the Company,
the officer or, in the event of death, his beneficiary, would be entitled to
receive a severance payment equal to two times the officer's average annual
compensation for the five (two in the case of the Company's CIC Agreement) years
preceding termination subject to the limitation that such payment not exceed
three times the officer's average annual compensation of the previous five years
(the Company's CIC Agreement has no such limitation). The Bank would also
continue, and pay for, the officer's life, health and disability coverage for a
period of twenty-four (24) months from the date of termination. Payments to the
officer under the Bank's CIC Agreements will be guaranteed by the Company in the
event that payments or benefits are not paid by the Bank.
17
The CIC Agreements also provide for a severance payment in the event of an
involuntary termination of the officer by the Bank other than in a change in
control, except for cause. The severance payment is a sum equal to twenty-six
weeks of base salary for each three years of service up to a maximum of
one-hundred and four weeks and is conditioned on the officer releasing the Bank
from any causes of action against the Bank or the Company arising during any
period of employment from the employment relationship, other than claims under
the various employee benefit plans of the Bank and the Company.
INCENTIVE PLAN. The Company maintains the Incentive Plan, which
provides discretionary awards of options to purchase Common Stock,
option-related awards and awards of Common Stock (collectively, "Awards") to
officers, directors and key employees as determined by a committee of the Board
of Directors. Awards of Common Stock to officers, directors and key employees is
provided under "Restricted Stock Awards" in the "Summary Compensation Table."
The following table lists all grants of options under the Incentive Plan to the
Named Executive Officers for fiscal 1997 and contains certain information about
the potential value of those options based upon certain assumptions as to the
appreciation of the Company's stock over the life of the option.
18
OPTIONS GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTIONS(1)
- ------------------------------------------------------------------------------------------ ---------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTION/SARS EXERCISE OR
OPTIONS/ GRANTED TO BASE PRICE
SARS GRANTED EMPLOYEES IN PER EXPIRATION
NAME (#)(2)(3)(4)(5)(6) FISCAL YEAR SHARE DATE(7) 5% 10%
- -------------------- ------------------- --------------- ------------ ------------ ------------- --------------
Larry M. Rinehart 375,000 27.4% $12.75 10/23/06 $3,011,250 $7,316,250
Kevin McCarthy 200,000 14.6 12.75 10/23/06 1,606,000 3,902,000
Gregory C. Talbott 170,000 12.4 12.75 10/23/06 1,365,100 3,316,700
Gilbert F. Smith 96,000 7.0 12.75 10/23/06 770,880 1,872,960
Janice M. Lemons 96,000 7.0 12.75 10/23/06 770,880 1,872,960
- --------------------------------
(1) The amounts represent certain assumed rates of appreciation. Actual gains,
if any, on stock option exercises and Common Stock holdings are dependent
on the future performance of the Common Stock and overall stock market
conditions. There can be no assurance that the amounts reflected in this
table will be realized.
(2) Options granted pursuant to the Incentive Plan are exercisable in five
equal annual installments commencing on October 23, 1997, provided,
however, options will be immediately exercisable in the event the optionee
terminates employment due to death or disability. In addition, on February
18, 1997, the Employee Compensation and Benefits Committee (the
"Committee") amended the Incentive Plan, effective March 28, 1997, to
provide for the acceleration of the vesting of option awards upon a change
in control of the Company or the Bank (as defined in the Incentive Plan).
(3) The purchase price may be made in whole or in part in cash or Common Stock.
(4) Options include limited rights (SARs) pursuant to which the options may be
exercised in the event of a change in control of the Company. Upon the
exercise of a limited right, the optionee would receive a cash payment
equal to the difference between the exercise price of the related option on
the date of grant and the fair market value of the underlying shares of
Common Stock on the date the limited right is exercised.
(5) Options include an Equitable Adjustment Right (EAR), which provides that
upon payment of an extraordinary dividend (as defined in the Incentive
Plan), the Committee may adjust the number of shares and/or the exercise
price of the options underlying the EAR, as the Committee deems
appropriate.
(6) All options are intended to be Incentive Stock Options to the extent
permissible under Section 422 of the Code.
(7) The option term is ten years.
19
The following table provides certain information with respect to the
number of shares of Common Stock represented by outstanding options held by the
Named Executive Officers as of March 31, 1997. Also reported are the values for
"in-the-money" options which represent the positive spread between the exercise
price of any such existing stock options and the year end price of the Common
Stock.
FISCAL YEAR-END OPTION/SAR VALUE
VALUE OF
NUMBER UNEXERCISED
OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARS
OPTIONS/SARS AT FISCAL YEAR-
NAME AT FISCAL YEAR-END(#)(1) END($)(2)(3)
- ------------------------ -------------------------------- ------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
Larry M. Rinehart -- 375,000 -- $609,375
Kevin McCarthy -- 200,000 -- $325,000
Gregory C. Talbott -- 170,000 -- $276,250
Gilbert F. Smith -- 96,000 -- $156,000
Janice M. Lemons -- 96,000 -- $156,000
- ------------------------------------
(1) The options in this table have an exercise price of $12.75.
(2) The price of the Common Stock on March 31, 1997 was $14.375.
(3) Based on the market value of the underlying Common Stock at fiscal year
end, minus the exercise price.
RETIREMENT PLAN. The Bank maintains a defined benefit plan (the
"Retirement Plan") for certain salaried employees who had attained the age of 21
and completed one year of service prior to December 31, 1995. Effective December
31, 1995, the Retirement Plan was frozen and Participants ceased the accrual of
additional benefits under the Retirement Plan although vesting will continue
according to the terms of the Retirement Plan. After December 31, 1995 no new
Participants entered the Retirement Plan. The Retirement Plan is designed to
comply with the requirements under Section 401(a) of the Code.
The Retirement Plan provides for a monthly benefit to the employee upon
retirement at the age of 65, or if later, the fifth anniversary of the
employee's initial participation in the Retirement Plan ("Normal Retirement
Age"). The Retirement Plan also provides for a monthly benefit upon the
Participant's death, disability and early retirement. Early retirement is
conditioned upon the attainment of the age of 55, and the completion by the
Participant of 15 years of service. No new accrual of years of service will
occur after December 31, 1995. Benefits under the Plan are determined taking
into account the participant's final average earnings, social security benefits
and years of credited service under the Retirement Plan as of December 31, 1995.
20
The following table sets forth the estimated annual benefits payable
upon retirement at age 65 in the year ended December 31, 1995, expressed in the
form of a single life annuity, for the final average salary and benefit service
classifications specified.
PFF BANK & TRUST EMPLOYEE PENSION PLAN
--------------------------------------------------------------------------------
FINAL AVERAGE YEARS OF SERVICE
COMPENSATION 15 20 25 30 35
- -------------------- ------------- ------------- ------------- ------------- -------------
50,000 13,598 18,130 22,663 22,663 22,663
100,000 29,723 39,630 49,538 49,538 49,538
150,000 45,848 61,130 76,413 76,413 76,413
200,000 45,848 61,130 76,413 76,413 76,413
250,000 45,848 61,130 76,413 76,413 76,413
300,000 45,848 61,130 76,413 76,413 76,413
350,000 45,848 61,130 76,413 76,413 76,413
400,000 45,848 61,130 76,413 76,413 76,413
Compensation under the Retirement Income Plan includes all regular pay
and overtime. The benefit amounts listed above were computed on a single life
annuity basis, which is the normal form under the plan.
The approximate years of service, as of January 1, 1996 for the Named
Executive Officers are as follows:
NAME SERVICE
---- -------
YEARS MONTHS
----- ------
Larry M. Rinehart 18 3
Kevin McCarthy 18 -
Gregory C. Talbott 8 7
Gilbert F. Smith 24 2
Janice M. Lemons 9 9
The freezing of accrued benefits on December 31, 1995 results in no
additional service for purposes of benefit determination being accrued for the
named executive officer.
21
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The Bank maintains a
non-qualified Supplemental Executive Retirement Plan to provide certain officers
and highly compensated employees with additional retirement benefits. The SERP
reflects the freezing of the Pension Plan as of December 31, 1995. The benefits
provided under the SERP are directly related to those provided under these three
qualified employee benefit plans sponsored by the Bank, namely the ESOP, the
401(k) Plan and the Pension Plan. With respect to the Pension Plan, the SERP
provides a benefit equal to the present value of the previous SERP benefit
accrued as of December 31, 1995. No additional contributions will be made by the
Bank to provide this benefit, as this portion of the SERP is only a deferral
mechanism (with interest) of the frozen Pension Plan benefit. The SERP also
provides a benefit equal to the difference between (i) the benefits which would
have been provided by employer contributions to the 401(k) Plan and the ESOP if
such contributions and benefits were calculated without the limitations imposed
by the qualification rules of the Code and (ii) the actual benefit provided
under each plan. Benefits under the SERP will be provided at retirement in the
form of some combination of an annuity, lump sum cash or stock distribution.
The Bank has established an irrevocable grantor's trust in connection
with the SERP. This trust is funded with contributions from the Bank for the
purpose of providing the benefits promised to the participants under the terms
of the SERP. The SERP participants have only the rights of unsecured creditors
with respect to the trust's assets, and will not recognize income with respect
to benefits provided by the SERP until such benefits are received by the
participants. The assets of the trust are subject to the claims of the Bank's
creditors solely in the event of the Bank's insolvency, thereby foregoing any
tax consequences to the participants until assets are distributed to
participants. Earnings on the trust's assets are taxable to the Bank. The
trust's assets may be invested in the Company's stock.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
With certain exceptions permitted under the Federal Reserve Act and
Regulation O, all loans or extensions of credit to executive officers and
directors must be made 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. 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 Bank has determined that preferred rate loans for executive
officers and directors are part of the Bank's overall benefits and compensation
program, and therefore, executive officers and directors are permitted to
receive the preferred rate so long as they are made within the limitations of
the Federal Reserve Act and Regulation O.
As of March 31, 1997, ten of the Bank's executive officers or directors
had a total of twelve loans outstanding, totalling $1.9 million in the
aggregate. Of the twelve loans currently outstanding
22
to executive officers or directors, eleven loans are receiving a preferred rate.
For those receiving the preferred rate, ten loans are secured by the borrower's
principal residence and one loan to a director is secured by rental property.
It is the policy of the Company that all transactions between the
Company and its executive officers, directors, holders of 10% or more of the
shares of any class of its common stock and affiliates thereof, contain terms no
less favorable to the Company than could have been obtained by it in
arm's-length negotiations with unaffiliated persons and are required to be
approved by a majority of independent outside directors of the Company not
having any interest in the transaction.
PROPOSAL 2. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended March 31,
1997 were KPMG Peat Marwick LLP. The Company's Board of Directors has
reappointed KPMG Peat Marwick LLP to continue as independent auditors for the
Bank and the Company for the year ending March 31, 1998, subject to ratification
of such appointment by the shareholders.
Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting. They will be given an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
stockholders present at the Annual Meeting.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED
PROXY CARD WILL BE VOTED FOR RATIFICATION OF THE APPOINTMENT OF KPMG PEAT
MARWICK LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement and
form of proxy relating to the 1998 Annual Meeting of Stockholders a stockholder
proposal must be received by the Secretary of the Company at the address set
forth on the Notice of Annual Meeting of Stockholders not later than March 16,
1998. Any such proposal will be subject to 17 C.F.R. ss. 240.14a-8 of the Rules
and Regulations under the Exchange Act.
23
NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING
The bylaws of the Company provide an advance notice procedure for a
stockholder to properly bring business before an Annual Meeting. The stockholder
must give written advance notice to the Secretary of the Company not less than
ninety (90) days before the date originally fixed for such meeting; provided,
however, that in the event that less than one hundred (100) days notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be received not later than the close
of business on the tenth day following the date on which the Company's notice to
stockholders of the annual meeting date was mailed or such public disclosure was
made. The advance notice by stockholders must include the shareholder's name and
address, as they appear on the Company's record of stockholders, a brief
description of the proposed business, the reason for conducting such business at
the Annual Meeting, the class and number of shares of the Company's capital
stock that are beneficially owned by such stockholder and any material interest
of such stockholder in the proposed business. In the case of nominations to the
Board of Directors, certain information regarding the nominee must be provided.
Nothing in this paragraph shall be deemed to require the Company to include in
its proxy statement or the proxy relating to an annual meeting any stockholder
proposal which does not meet all of the requirements for inclusion established
by the SEC in effect at the time such proposal is received.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the Annual Meeting, 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.
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are then present at the Annual
Meeting and wish to vote your shares in person, your original proxy may be
revoked by voting at the Annual Meeting. However, if you are a stockholder whose
shares are not registered in your own name, you will need appropriate
documentation from your recordholder to vote personally at the Annual Meeting.
24
A COPY OF THE FORM 10-K (WITHOUT EXHIBITS) FOR THE YEAR ENDED MARCH 31,
1997, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED
WITHOUT CHARGE TO STOCKHOLDERS OF RECORD UPON WRITTEN REQUEST TO PFF BANCORP,
INC., 350 SOUTH GAREY AVENUE, POMONA, CALIFORNIA 91766.
By Order of the Board of Directors
/s/ Carole F. Olson
Carole F. Olson
Secretary
Pomona, California
July 16, 1997
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE
REQUESTED TO COMPLETE, DATE, SIGN AND PROMPTLY
RETURN THE ACCOMPANYING PROXY CARD IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
25
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REVOCABLE PROXY
PFF BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 27, 1997
9:00 A.M. PACIFIC TIME
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the official proxy committee of the Board of
Directors of PFF Bancorp, Inc. (the "Company"), each with full power of
substitution, to act as proxies for the undersigned, and to vote all shares of
Common Stock of the Company which the undersigned is entitled to vote only at
the Annual Meeting of Stockholders, to be held on August 27, 1997, at 9:00
a.m. Pacific Time, at the Sheraton Suites Fairplex, 601 W. McKinley Avenue,
Pomona, California, and at any and all adjournments thereof, as set forth on
the reverse side.
This proxy is revocable and will be voted as directed, but if no instructions
are specified, this proxy will be voted FOR each of the proposals listed. If
any other business is presented at the Annual Meeting, including whether or not
to adjourn the meeting, this proxy will be voted by those named in this proxy
in their best judgment. At the present time, the Board of Directors knows of no
other business to be presented at the Annual Meeting.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
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[X] Please mark your votes as indicated
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
1. The election as directors of all nominees listed VOTE
(except as marked to the contrary below). FOR WITHHELD
[_] [_]
Jil H. Stark and Dwight E. Bert
INSTRUCTION: To withhold your vote for any individual nominee, write that
nominee's name on the line provided below:
________________________________________________________________________________
2. The ratification of the appointment of KPMG Peat Marwick LLP as independent
auditors of PFF Bancorp, Inc. for the fiscal year ending March 31, 1998.
FOR [_] AGAINST [_] ABSTAIN [_]
The undersigned acknowledges receipt from the Company prior to the execution of
this proxy of a Notice of Annual Meeting of Stockholders and of a Proxy
Statement dated July 16, 1997 and of the Annual Report to Stockholders.
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
Signature of Stockholder _____________________________ Date _______________
Signature of Stockholder _____________________________ Date _______________
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
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