SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. __)
Filed by 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
California Financial Holding Company
(Name of Registrant as Specified In Its Charter)
California Financial Holding Company
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14-
6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 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:_________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11(1) (set forth
the amount on which the filing is calculated and state how
it was determined):__________________________________
______________________________________________
4) Proposed maximum aggregate value of transaction:_
_________________________________________________
5) Total fee paid:__________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the 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:__________________________________
2) Form, Schedule or Registration Statement Number:_________
_________________________________________________________
3) Filing Party:____________________________________________
4) Date Filed:______________________________________________
[LOGO GOES HERE.]
April 5, 1996
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend
the Annual Meeting of Stockholders of California Financial Holding Company
("Company"). The Annual Meeting will be held at the Haggin Museum, 1201
North Pershing Avenue, Stockton, California 95203, on Monday, May 13, 1996
at 2:00 p.m., Pacific time.
The stockholders will be asked at the Annual Meeting to approve one
proposal that has been adopted unanimously by the Board of Directors. The
proposal proposes the reelection, with terms ending in 1999, of two
directors of the Company.
Your vote is very important, regardless of the number of shares you
own. Please sign and return each proxy card that you receive in the
postage-paid return envelope, which is provided for your convenience. The
return of your proxy cards will not prevent you from voting in person but
will assure that your vote is counted if you are unable to attend the
Annual Meeting. We look forward to seeing you on Monday, May 13, 1996.
Sincerely,
David K. Rea
Chairman of the Board
and Chief Executive Officer
Parent Company of Stockton Savings Bank, F.S.B.
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501 West Weber Avenue / Stockton, California 95203 / (209) 948-1675
CALIFORNIA FINANCIAL HOLDING COMPANY
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501 West Weber Avenue Stockton, California 95203 (209) 948-1675
NOTICE
ANNUAL MEETING OF STOCKHOLDERS
May 13, 1996
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of Stockholders
("Annual Meeting") of California Financial Holding Company ("Company")
will be held on Monday, May 13, 1996 at 2:00 p.m., Pacific time, at the
Haggin Museum, 1201 North Pershing Avenue, Stockton, California 95203, for
the following purposes:
1. To approve a proposal ("Proposal"), proposing the reelection of
two directors for a term of office ending in 1999; and
2. To transact any other business as may properly come before the
Annual Meeting, or any adjournment thereof.
The Board of Directors has fixed the close of business on March 15,
1996 as the record date ("Record Date") for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting and
at any adjournment thereof. A complete list of stockholders of record of
the Company on the Record Date will be available for examination by any
stockholder, for any purpose germane to the Annual Meeting, during
ordinary business hours, for the 10-day period prior to the Annual
Meeting, at the executive offices of the Company, 501 West Weber Avenue,
Stockton, California 95203.
BY ORDER OF THE BOARD OF DIRECTORS
Dennis Donald Geiger
Secretary
Stockton, California
April 5, 1996
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER
OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
SELF-ADDRESSED, POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN MAY BE REVOKED BY
YOU IN WRITING, OR IN PERSON, AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
CALIFORNIA FINANCIAL HOLDING COMPANY
----------------------------------------
501 West Weber Avenue Stockton, California 95203 (209) 948-1675
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
The enclosed proxy is solicited by the Board of Directors of
California Financial Holding Company, a Delaware corporation ("Company"),
for use at the Annual Meeting of Stockholders on Monday, May 13, 1996
("Annual Meeting"), and at any adjournment thereof. The approximate date
of mailing of this Proxy Statement is April 5, 1996.
INFORMATION RELATING TO VOTING AT THE ANNUAL MEETING
The securities to be voted at the Annual Meeting consist of shares of
common stock of the Company, $.01 par value per share ("Common Stock"),
with each share entitling its record owner to one vote on the Proposal and
on all other matters properly brought before the Annual Meeting. The close
of business on March 15, 1996 has been fixed by the Board of Directors as
the record date ("Record Date") for determination of stockholders entitled
to notice of, and to vote at, the Annual Meeting. There were 1,089 record
holders of the Common Stock on the Record Date and 4,675,907 shares of
Common Stock were outstanding and eligible to be voted at the Annual
Meeting as of that date. The Company had no other class of voting
securities outstanding on the Record Date.
The presence, in person or by proxy, of at least a majority of the
total number of outstanding shares of the Common Stock entitled to vote at
the Annual Meeting is necessary to constitute a quorum at the Annual
Meeting. In the event that less than a majority of the outstanding shares
are present at the Annual Meeting either in person or by proxy, a majority
of the shares so represented may vote to adjourn the Annual Meeting from
time to time without further notice. Directors receiving a plurality of
votes will be elected in the order of the number of votes received. On any
other matter properly brought before the Annual Meeting or any adjournment
thereof, the vote required for approval shall be the affirmative vote of a
majority of the total number of votes that those present at the Annual
Meeting, in person or by proxy, are entitled to cast. There is no
cumulative voting in the election of directors.
All shares entitled to vote represented by a properly executed and
unrevoked proxy received in time for the Annual Meeting will be voted at
the Annual Meeting in accordance with the instructions given; in the
absence of instructions to the contrary, such shares will be voted FOR the
Proposal to elect the designated nominees for directors. If any other
matters properly come before the Annual Meeting, the persons named as
proxies will vote upon such matters as determined by a majority of the
Board of Directors.
Votes cast "for" and "against" the Proposal will be tallied as
indicated. "Broker non-votes" (i.e., shares of Common Stock held by
brokers or nominees as to which instructions have not been received from
the beneficial owners or the persons entitled to vote such shares and the
broker or nominee does not have discretionary voting power under
applicable New York Stock Exchange rules) are not counted and will have no
effect on whether the Proposal is adopted. Abstentions will be treated as
shares of Common Stock that are present and entitled to vote for purposes
of determining the presence of a quorum and the number of votes necessary
to adopt a Proposal. The vote of a stockholder who abstains will have the
same effect as if he or she had voted "against" a Proposal.
The cost of soliciting proxies will be borne by the Company. In
addition to use of the mails, proxies may be solicited personally or by
telephone or telegraph by officers, directors or employees of the Company
who will not be specially compensated for such solicitation activities.
Arrangements will also be made with brokerage houses and other custodians,
nominees and fiduciaries for forwarding solicitation materials to the
beneficial owners of shares held of record by such persons, and the
Company will reimburse such persons for their reasonable expenses incurred
in that connection. The Company has also retained Morrow and Co., Inc., a
proxy soliciting firm, to assist in the solicitation of proxies at a fee
of $2,500, plus reimbursement of certain out-of-pocket costs.
A stockholder may revoke his or her proxy at any time prior to its
exercise by (i) filing with Dennis Donald Geiger, Secretary, California
Financial Holding Company, 501 West Weber Avenue, Stockton, California
95203, written notice thereof, (ii) submitting a duly executed proxy
bearing a later date or (iii) appearing at the Annual Meeting and giving
the Secretary notice of his or her intention to vote in person. Unless
previously revoked or otherwise instructed thereon, proxies will be voted
at the Annual Meeting on the Proposals as described above.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of March 15, 1996, no persons or groups within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), were known by management to beneficially own more than
five percent of the Company's Common Stock except as follows:
2
PERCENT OF
NUMBER OF SHARES OUTSTANDING
NAME AND ADDRESS OF COMMON STOCK COMMON STOCK
The Cortopassi Family 283,000(1) 6.1%
Trust U.A.D. March 25, 1992
11280 North Alpine Road
Stockton, California 95212
and
DACCO Inc.
LICO Brands, Inc.
11292 North Alpine Road
Stockton, California 95212
Dimensional Fund Advisors Inc. 257,210(2) 5.5%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
_________________________________
(1) Of these 283,000 shares of Common Stock, 79,000 shares are owned
beneficially by The Cortopassi Family Trust U.A.D. March 25, 1992
("Cortopassi Trust"), 151,000 shares are owned beneficially by DACCO,
Inc. ("DACCO") and 53,000 shares are owned beneficially by LICO
Brands, Inc. ("LICO"). Each such trust or corporation has sole
voting and dispositive power with respect to the shares beneficially
owned by it.
(2) Of these 257,210 shares, 40,830 shares are owned beneficially by DFA
Investment Dimensions Group Inc. ("Fund") and 43,870 shares are owned
beneficially by The DFA Investment Trust Company ("Trust").
Dimensional Fund Advisors Inc. is the investment manager of the Fund
and the Trust and thus has sole voting and dispositive power with
respect to the shares beneficially owned by the Fund and the Trust,
as well as the remaining shares. This information is based on a
Schedule 13G dated February 7, 1996.
The number of shares of Common Stock held as of the Record Date, by
each director of the Company, each nominee for reelection as a director,
each executive officer named in the "Summary Compensation Table," and by
all executive officers and directors of the Company and Stockton Savings
Bank, F.S.B., a federally-chartered savings bank and a wholly owned
subsidiary of the Company ("Stockton Savings" or the "Bank"), as a group
is set forth below. All of the shares shown in the following table are
shares of Common Stock and are owned both of record and beneficially by
3
the person named; the person named possesses sole voting and investment
power, except as otherwise indicated in the footnotes to the table.
Amount and Nature of Percentage
Name of Beneficial Owner Beneficial Ownership (1)(2) of Class
Gerald L. Barton (3) . . . . . . . . . . . . . . . . . 0 0
Jane R. Butterfield . . . . . . . . . . . . . . . . . . 29,364 (4) (5)
W. Henry Claussen . . . . . . . . . . . . . . . . . . . 16,169 (6) (5)
Dean A. Cortopassi . . . . . . . . . . . . . . . . . . 283,000 (7) 6.1%
G. Thomas Egan . . . . . . . . . . . . . . . . . . . . 60,390 (8) 1.3%
Dennis Donald Geiger . . . . . . . . . . . . . . . . . 11,550 (5)
Robert V. Kavanaugh . . . . . . . . . . . . . . . . . 164,816 (9) 3.5%
Jerald Kirsten (3) . . . . . . . . . . . . . . . . . . 96,800 2.1%
Morris W. Knight . . . . . . . . . . . . . . . . . . . 21,742 (5)
David K. Rea . . . . . . . . . . . . . . . . . . . . . 164,632 (10) 3.5%
Executive Officers and Directors as a group (11
persons) . . . . . . . . . . . . . . . . . . . . . . . 857,260 17.9%
__________________________
(1) In accordance with Rule 13d-3 of the Exchange Act, a person is deemed
to be the beneficial owner of a security if he or she has or shares
voting power or investment power with respect to such security or has
the right to acquire such ownership within 60 days.
(2) Includes shares of the Common Stock subject to stock options issued
pursuant to the Company's Incentive Stock Plan and held as follows:
Mr. Rea, options to purchase 13,082 shares; Mr. Kavanaugh, options to
purchase 37,344 shares; Senior Vice President Jane R. Butterfield,
options to purchase 23,047 shares; Senior Vice President W. Henry
Claussen, options to purchase 15,392 shares; Senior Vice President
Morris W. Knight, options to purchase 18,985 shares; and Senior Vice
President Mark Barawed, options to purchase 8,758 shares.
(3) Nominee for reelection as a director.
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(4) Does not include 1,246 shares owned by Ms. Butterfield's husband, as
to which Ms. Butterfield disclaims beneficial ownership.
(5) Less than 1%.
(6) Includes 720 shares beneficially owned by Mr. Claussen's minor son.
(7) See footnote (1) to the preceding table. Mr. Cortopassi is the sole
trustee of the Cortopassi Trust, the sole controlling person, sole
executive officer and sole director of DACCO, and the controlling
shareholder, the President and a director of LICO. Mr. Cortopassi
was elected a director by the Company's Board of Directors on March
20, 1995.
(8) Includes 37,290 shares owned by a trust of which Mr. Egan is a
beneficiary and 23,100 shares owned by Connell Motor Truck Co., Inc.
(9) Includes 126,814 shares owned by a trust of which Mr. Kavanaugh is a
beneficiary and 550 shares owned with Mr. Kavanaugh's wife as
community property.
(10) Includes 151,550 shares owned by a trust of which Mr. Rea is a
beneficiary. Does not include 3,300 shares owned by Mr. Rea's wife,
as to which Mr. Rea disclaims beneficial ownership.
ELECTION OF DIRECTORS
The directors of the Company are the same persons who currently serve
as the directors of the Bank. The term of office of Messrs. Barton and
Kirsten on the Board of Directors of the Company will expire at the Annual
Meeting. Messrs. Barton and Kirsten have been nominated by the Company's
Board of Directors for reelection to the Board, each to serve for a
three-year term.
There are no arrangements or understandings between the Company and
any person pursuant to which such person has been elected as a director or
selected as a nominee. If any nominee becomes unavailable for any reason,
or if any other vacancy in the class of directors to be elected at the
Annual Meeting should occur before the election, the shares represented by
the proxy will be voted for the person, if any, who is designated by the
Board of Directors to replace the nominee or to fill such other vacancy on
the Board. The Board of Directors has no reason to believe that any of the
nominees will be unavailable or that any other vacancy on the Board will
occur. Each nominee has consented to be named and has indicated his intent
to serve if elected.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE "FOR" THE TWO NOMINEES FOR REELECTION
AS DIRECTORS AS SET FORTH ABOVE
5
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The directors of the Company are currently classified into three
classes, which are elected on a staggered basis. Each director serves for
a three-year term and until his successor is duly elected and qualified.
The current members of the Board of Directors are set forth below:
DIRECTOR DIRECTOR
OF THE OF THE
BANK COMPANY TERM POSITION(S) CURRENTLY
NAME SINCE SINCE EXPIRES HELD WITH THE COMPANY
David K. Rea . . . . . . . . . 1955 1988 1998 Chairman of the Board
and Chief Executive Officer
Gerald L. Barton (1)(2) . . . . 1996 1996 1996 Director
Dean A. Cortopassi (3) . . . . 1995 1995 1997 Director
G. Thomas Egan . . . . . . . . 1974 1988 1997 Director
Dennis Donald Geiger . . . . . 1989 1989 1998 Director and Secretary
Robert V. Kavanaugh . . . . . 1988 1988 1998 Director, President and
Chief Operating Officer
Jerald Kirsten (1) . . . . . . 1975 1988 1996 Director
_____________________
(1) Nominees for reelection.
(2) On January 17, 1996, Mr. Barton was elected by the Company's and the
Bank's Boards of Directors to fill the vacancy created by the
retirement of Robert F. McKeegan, who was appointed a director
emeritus.
(3) On March 20, 1995, Mr. Cortopassi was elected by the Company's and
the Bank's Boards of Directors to fill the vacancy created by the
retirement of J. Corbin Shepherd, who was appointed a director
emeritus.
DAVID K. REA, 77, has been a director and employee of Stockton
Savings since 1955, President of Stockton Savings from 1973 to 1991, Chief
Executive Officer of Stockton Savings from 1955 to May 1994, and Chairman
of the Board of Directors of the Bank since 1980. Mr. Rea has also been
the Chairman of the Board and Chief Executive Officer of the Company since
its incorporation in 1987, and served as President of the Company from its
incorporation in 1987 until 1993.
6
GERALD L. BARTON, 62, is the President of Barton Ranch, Inc., which
manages farming interests in San Joaquin and Stanislaus counties in
California.
DEAN A. CORTOPASSI, 58, is Chief Executive Officer of San Tomo Group,
which oversees the operations of Stanislaus Food Products Company
(Modesto), Gilroy Canning Company, Inc. (Gilroy), Lodi Mission Partners, a
California limited partnership (Sacramento), Sierra Quality Canners, Inc.
(Sacramento) and Muir Glen, Inc. (Sacramento). Each of these companies is
an agribusiness concern.
G. THOMAS EGAN, 69, was, until his retirement, President of Connell
Motor Truck Co., Inc. and Lift Truck Service Corporation. Mr. Egan is
Honorary Board Chairman of Connell Motor Truck Co., Inc. Mr. Egan also is
a former President of the Greater Stockton Chamber of Commerce.
DENNIS DONALD GEIGER, 52, is a partner of Bray Geiger Rudquist &
Nuss, the general counsel for the Company, and is a former President of
the San Joaquin County Bar Association. In 1991, Mr. Geiger became
Secretary of the Company and the Bank.
ROBERT V. KAVANAUGH, 59, was the Executive Vice President and
Treasurer of Stockton Savings from 1986 to 1991, was Chief Operating
Officer from 1987 to May 1994, and became Chief Executive Officer in May
1994. In 1991, Mr. Kavanaugh became President of Stockton Savings. From
1960 to 1986, he served as the Bank's Controller and Chief Financial
Officer. Mr. Kavanaugh served as the Executive Vice President and Chief
Operating Officer of the Company from its incorporation in 1987 until 1993
and served as Treasurer of the Company from 1987 to 1991. Since 1993, he
has served as President and Chief Operating Officer of the Company. Mr.
Kavanaugh is a director of M.J. Hall & Co. (excess lines insurance
company) and of Credit Bureau of San Joaquin County.
JERALD KIRSTEN, 71, a retired Certified Public Accountant, is also a
real estate investor. He is a former Mayor of the City of Lodi, a past
President of the San Joaquin Chapter of the California Society of
Certified Public Accountants, a past President of the Stockton Estate
Planning Council, a past Master of Lodi Lodge #256, Free and Accepted
Masons, and a retired U.S. Naval Reserve Captain.
COMPENSATION OF DIRECTORS
Directors of the Company received no compensation from the Company
for services in 1995. Each director of Stockton Savings received
compensation of $1,000 per meeting attended for his services in 1995, with
no additional amount paid for committee assignments. Beginning in March
1994, employee directors no longer received a fee for service as a
director of the Company or the Bank.
Nonemployee directors and their spouses also are provided with health
insurance by the Bank. The approximate annual cost to the Bank is $3,200
per director.
7
Nonemployee directors also receive a one-time grant of a stock
option. Under the California Financial Holding Company Incentive Stock
Plan ("Incentive Stock Plan"), each director of the Company who is not,
and has not for all or any part of the preceding twelve-month period been,
a full-time employee of the Company or the Bank (or any of their
subsidiaries) (an "Outside Director") is automatically granted a single
nonstatutory option with terms fixed by the provisions of the Incentive
Stock Plan. Each then nonemployee director of the Bank was granted an
option as of June 1, 1988, the date the Company became the holding company
for the Bank. Each person who is subsequently elected as an Outside
Director by the stockholders of the Company is also granted a nonstatutory
option on the same terms.
Each such single nonstatutory option granted to an Outside Director
is for 11,000 shares of Common Stock. All nonstatutory options granted to
Outside Directors have an exercise price per share equal to the greater of
(1) the fair market value of a share of Common Stock on the date of
stockholder approval of the Incentive Stock Plan (or, if the optionee is
first elected as an Outside Director by the stockholders thereafter, on
the date he or she is elected and has qualified) or (2) 85% of the fair
market value of one share of Common Stock on the date such nonstatutory
option is actually granted. All such nonstatutory options are exercisable
for a period of five years from the date of stockholder approval of the
Incentive Stock Plan (or, if the optionee is first elected an Outside
Director by the stockholders thereafter, from the date he or she is
elected and has qualified). All nonstatutory options granted to Outside
Directors are exercisable at any time during such five-year period
notwithstanding the prior termination of the optionee's status as an
Outside Director. If, however, such an optionee should die prior to the
expiration of the five-year exercise period (without regard to whether
such optionee is an Outside Director at the time of his or her death), his
or her nonstatutory option may be exercised at any time and from time to
time, to the extent that it was exercisable at the time of his or her
death and prior to the expiration of the five-year exercise period, by his
or her personal representatives or the persons to whom the option has been
transferred by will or the laws of descent and distribution.
Directors of the Bank who cease to serve as directors and who have
reached age 70 with 10 years of continuous service as a director of the
Bank may be elected by the Bank's Board of Directors as a director
emeritus. A director emeritus serves for life or until removed as such by
the Board, with or without cause. A director emeritus may attend regular
Board meetings, if invited, and discuss matters with the Board. However,
a director emeritus cannot cast a vote as a director.
During the term of a director emeritus, he or she receives the same
Board fees as are paid to other directors of the Bank, whether or not he
or she attends Board meetings or otherwise provides services to the Bank.
A director emeritus is also provided with health insurance (without
spousal benefits) if the Board determines that such insurance is
available.
8
BOARD OF DIRECTORS AND COMMITTEES
Meetings of the Board of Directors of the Company are held regularly
each month and as required. During 1995, the Board of Directors of the
Company held 14 meetings. The following are the committees of the Board of
Directors of the Company and the Bank:
(1) The Audit Committee of the Company and the Bank is
currently composed of directors G. Thomas Egan and Jerald Kirsten.
The functions of the Audit Committee include: recommending to the
Board of Directors the engaging and discharging of the independent
auditors; directing and supervising special investigations; reviewing
with the independent auditors the planning and results of their audit
examination; reviewing the scope and results of the internal audit
examinations; approving each professional service provided by the
independent auditors prior to the performance of such services;
considering the range of audit and nonaudit fees of the independent
auditors and reviewing the adequacy of the Company's system of
internal accounting controls. The Audit Committee met 5 times in
1995.
(2) The Compensation/Stock Option Committee of the Company is
currently composed of directors G. Thomas Egan, Dennis Donald Geiger
and Jerald Kirsten. This Committee administers the Company's
Incentive Stock Plan and reviews the compensation of officers and
recommends changes in officers' compensation to the full Board of
Directors. This Committee held 1 meeting in 1995.
(3) The Pension Committee of the Bank is currently composed of
directors Dennis Donald Geiger, Robert V. Kavanaugh, Jerald Kirsten
and David K. Rea (ex officio). Various pension matters were discussed
from time to time with the Pension Committee and with the full Board
of Directors.
(4) The Loan Committee of the Bank is currently composed of
directors Dennis Donald Geiger, Robert V. Kavanaugh and David K. Rea
(ex officio). The Loan Committee reviews all new loans together with
the entire Board at regular monthly meetings.
(5) The Executive Committee of the Company and the Bank is
currently composed of directors Dennis Donald Geiger, Robert V.
Kavanaugh and David K. Rea. The Executive Committee, when the Board
is not in session, may exercise all of the authority of the Board
with certain limitations. The Executive Committee held 1 meeting in
1995.
The Company has no standing nominating committee. The full Board of
Directors acts to nominate persons for positions on the Board.
No current member of the Board of Directors attended fewer than
seventy-five percent (75%) of the meetings of the Board of Directors and
committees of the Board of Directors on which he served during 1995.
9
SECTION 16 FILINGS
Directors and executive officers of the Company are required to file
certain reports (on Forms 3, 4 and 5) with the Securities and Exchange
Commission ("SEC") under Section 16(a) of the Exchange Act showing
transactions in the Company's Common Stock. Due to an oversight, Ms.
Butterfield failed to correctly report on a Form 4 during 1994 the total
number of shares purchased. This report was subsequently corrected.
REMUNERATION AND OTHER TRANSACTIONS
WITH MANAGEMENT AND OTHERS
Since the formation of the Company, none of its executive officers
has received any separate compensation from the Company. David K. Rea,
Robert V. Kavanaugh, Jane R. Butterfield and Morris W. Knight are the only
executive officers of the Company, and they also hold positions with
Stockton Savings. The Company's executive officers are elected each year
by the Company's Board of Directors and may be removed by the Board of
Directors whenever in its judgment the best interests of the Company will
be served thereby. Biographical information with respect to Messrs. Rea
and Kavanaugh is provided above. See "Information Concerning the Board of
Directors." Biographical information regarding the other executive
officers of the Company and the Bank is as follows:
MARK BARAWED, 45, has served the Bank as Senior Vice President and
Chief Administrative Officer since 1995. Previously, he served the Bank
as Vice President and Manager, Human Resources, from 1991 to 1995, as
Administrative Coordinator from 1990 to 1991, and as Financial Analyst
from 1988 to 1990.
JANE R. BUTTERFIELD, 38, is Senior Vice President, Chief Financial
Officer and Treasurer of the Company. In 1991, Ms. Butterfield became
Treasurer of Stockton Savings and has served as its Senior Vice President
and Chief Financial Officer since 1988. Ms. Butterfield served as the
Controller of Stockton Savings from 1984 through 1988.
W. HENRY CLAUSSEN, 44, has served the Bank as Senior Vice President
and Loan Manager since 1991. Previously, he served as Assistant Loan
Manager of the Bank from 1984 through 1991.
MORRIS W. KNIGHT, 52, is Vice President of the Company. Mr. Knight
has been Marketing Manager of Stockton Savings since 1983 and Vice
President since 1986. In December 1990, Mr. Knight was named Retail
Banking Manager and became a Senior Vice President in January 1991.
REPORT OF THE COMPENSATION/STOCK OPTION COMMITTEE ON EXECUTIVE
COMPENSATION
As members of the Compensation/Stock Option Committee, it is our duty
to review the compensation levels of management, to evaluate the
performance of management, and to consider management succession and
related matters. The Compensation/Stock Option Committee does not decide
10
the issues before it but formulates options and recommendations for
decision by the Board of Directors. Before decisions are made, the
Committee reviews with the Board in detail all aspects of compensation for
the executive officers.
PHILOSOPHY. The general philosophy of the Compensation/Stock Option
Committee is to provide levels of compensation that are competitive with
those provided at institutions that are considered to be comparable with
the Company, so as to attract and retain qualified executives for the
Company and the Bank. In recent years, the Compensation/Stock Option
Committee has sought to align, to a greater degree, each executive's total
compensation package with overall corporate performance and individual
achievement.
SALARY. In December 1994, the Compensation/Stock Option Committee
reviewed the salaries of the five executive officers of the Company and
the Bank. (All of these officers are employees of the Bank.) The
Compensation/Stock Option Committee compared their salary levels with the
salary levels of officers of comparable institutions holding similar
positions by considering both the comparative compensation data provided
by various sources, including the California Financial Institutions
Compensation Survey, the California League of Savings Institutions Survey,
the SNL Executive Compensation Review 1993 for Thrift Institutions, the
Sheshunoff Bank Executive and Director Compensation Survey for 1993, and
outside consultants, as well as data prepared by members of the
Compensation/Stock Option Committee themselves. The compensation data
reviewed by the Compensation/Stock Option Committee covered substantially
more companies, including some nonfinancial institutions, than are
included in the Nasdaq Financial Index used in the Stock Performance
Graph.
As in 1994, Mr. Rea advised the Compensation/Stock Option Committee
that he wished to have a more flexible work schedule and would elect to
receive no salary increase in 1995. The Committee and the Board concurred
in Mr. Rea's election.
In 1994, the Compensation/Stock Option Committee contracted for the
services of Strategic Compensation Associates to review management
compensation and to provide recommendations with respect to compensation
program design and implementation. The Committee received a comprehensive
report from Strategic Compensation Associates and reviewed it in detail
with a representative of Strategic Compensation Associates.
In March 1995, the Compensation/Stock Option Committee determined
that, based on an analysis of peer group compensation practices, salary
adjustments were warranted. The Committee recommended, and the Board of
Directors subsequently approved, a 14% salary increase for Chief Operating
Officer, Robert Kavanaugh, and an additional adjustment of 6% to
compensate for estimated inflation from 1993 to 1995. Salaries of the
remaining four executive officers were tied to the Chief Operating
Officer's salary by using 1994 compensation levels to determine an
11
individual's salary as a percentage of the Chief Operating Officer's
salary.
BONUS. In 1994, in order to more closely align short-term incentives
with corporate performance, the Compensation/Stock Option Committee
recommended, and the Board of Directors adopted, an Incentive Plan for
Bank employees. The structure of the Incentive Plan conformed to
recommendations made by the Performance and Compensation Management
Division of KPMG Peat Marwick LLP. Under the Incentive Plan, specific
corporate performance factors (return on equity, return on assets, risk-
based capital and nonperforming assets) are utilized to determine the
level of short-term incentive. In 1995, the Compensation/Stock Option
Committee replaced the performance category risk-based capital with
efficiency ratio. Individual performance of the executive is also taken
into consideration. Because the Company did not meet the performance
objectives set for 1995, no bonuses were paid to any executive officer for
services rendered in 1995.
INCENTIVE STOCK PLAN. The Incentive Stock Plan is administered by
the Compensation/Stock Option Committee. The Compensation/Stock Option
Committee has in the past awarded options to all of the Company's
executive officers because the members of the Compensation/Stock Option
Committee believe that grants of stock options serve to more closely link
executive compensation to stockholder returns. No options were granted in
1995.
401(K) PLAN. On June 30, 1995, the Bank curtailed future benefit
accruals under its noncontributory defined benefit pension plan.
Effective August 1, 1995, the Bank modified its 401(k) plan to permit
employer matching contributions and employer contributions in the form of
cash and Common Stock.
EXECUTIVE COMPENSATION PLAN. Effective July 1, 1995, the Bank
adopted an Executive Compensation Plan ("ECP"). The purpose of the ECP is
to restore most of the retirement benefits of certain selected executive
officers of the Bank as of the result of the curtailment of benefit
accruals under the pension plan as of June 30, 1995. Robert Kavanaugh is
currently the sole executive officer participant in the ECP. Under the
ECP, Mr. Kavanaugh's account is credited on the last day of each month
with $3,750; however, his account in the ECP can never exceed $263,789.
DEDUCTIBILITY OF COMPENSATION IN EXCESS OF $1 MILLION. Section
162(m) of the Internal Revenue Code of 1986, as amended ("Code"), limits
the ability of a public company, such as the Company, to deduct, in 1994
and subsequent years, compensation paid to an executive officer who is
named in its "Summary Compensation Table" in excess of $1 million per year
unless certain conditions are met. Currently, no executive officer of the
Company is paid compensation exceeding $1 million per annum and it is not
anticipated that any executive officer will be paid in excess of $1
million in 1996. Accordingly, the Compensation/Stock Option Committee has
determined that none of the Company's compensation programs need to be
revised to comply with Section 162(m) at this time.
12
Members of the Compensation/Stock Option Committee
G. Thomas Egan
Dennis Donald Geiger
Jerald Kirsten
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation/Stock Option Committee are G.
Thomas Egan, Dennis Donald Geiger and Jerald Kirsten. No member of the
Compensation/Stock Option Committee is a current or former officer or
employee of the Company or the Bank other than Mr. Geiger, who has served
as Secretary of the Company and the Bank since 1991. Mr. Geiger is not an
employee of the Company or the Bank. Mr. Geiger is a partner in the law
firm of Bray Geiger Rudquist & Nuss, general counsel to the Company.
During 1995, the Company paid $94,581 to Bray Geiger Rudquist & Nuss for
legal services rendered.
Stockton Savings offers loans to its directors, officers and
employees upon the security of their homes. Prior to the enactment of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989
("FIRREA"), loans were made on substantially the same terms as those
prevailing at the time for comparable transactions, except that loans to
directors and executive officers were made at an interest rate 1/2% above
the Bank's monthly cost of funds. Interest rates on loans to directors and
executive officers were adjusted monthly. Loans to employees, other than
directors and executive officers, were made at the same interest rate as
loans to members of the general public but at a reduced loan origination
fee.
As a result of the enactment of FIRREA, Section 22(h) of the Federal
Reserve Act, 12 U.S.C. 375b ("FRA"), applies to savings associations as if
they were member banks. Section 22(h) of the FRA requires, among other
things, that loans to directors and executive officers of the Bank be made
on substantially the same terms, including interest rates and collateral,
as those prevailing for other transactions. Thus, the current policy of
Stockton Savings with respect to loans to its directors and executive
officers is that such loans will be made in compliance with Section 22(h)
of the FRA.
All loans made by Stockton Savings to the Company's directors and
executive officers (1) were made in the ordinary course of business, (2)
were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions
with other persons, and (3) did not involve more than the normal risk of
collectability or present other unfavorable features.
STOCK PERFORMANCE GRAPH
The following graph compares the change on an annual basis in the
Company's cumulative total return on its Common Stock with (a) the change
in the cumulative total return on the stocks included in the Nasdaq
13
Composite Index for U.S. Companies and (b) the change in the cumulative
total return on the stocks included in the Nasdaq Financial Index,
assuming an initial investment of $100 on December 31, 1990. All of these
cumulative total returns are computed assuming the reinvestment of
dividends at the frequency with which dividends were paid during the
period. The Common Stock price performance shown below should not be
viewed as being indicative of future performance.
[Stock performance graph appears here using the plot points noted below.]
1990 1991 1992 1993 1994 1995
California Financial $100 $127.13 $166.40 $265.17 $187.12 $328.13
Holding Company
Nasdaq Financial Index $100 $154.74 $221.32 $257.23 $257.83 $375.64
Nasdaq Composite Index $100 $160.56 $186.87 $214.51 $209.69 $296.30
SUMMARY COMPENSATION TABLE
The following table provides a three-year summary of compensation for
the five executive officers of the Company whose aggregate salary and
bonus exceeded $100,000 in 1995 ("Named Executive Officers"):
ANNUAL COMPENSATION LONG-TERM
COMPENSATION
AWARDS
NAME AND OTHER
PRINCIPAL ANNUAL SECURITIES UNDERLYING ALL OTHER
POSITION YEAR SALARY ($) BONUS($) COMPENSATION($)(1) OPTIONS(#) COMPENSATION($)
David K. Rea 1995 $107,400 $ 0(3) -- 0 $ 774(6)(9)
Chairman of the 1994 $120,900(2) $ 0(3) -- 0 $ 2,166(6)(8)(9)
Board and Chief 1993 $156,000 $28,080(3) -- 0 $14,166(6)(8)(9)
Executive Officer
14
Robert V. Kavanaugh 1995 $230,904 $ 0 -- 0 $55,927(7)
President and Chief 1994 $174,290 $ 0 -- 7,271(4) $ 2,166(8)(9)
Operating Officer 1993 $144,000 $ 4,320 -- 14,568(5) $14,166(8)(9)
Jane R. Butterfield 1995 $129,000 $ 0 -- 0 $10,679(10)(11)
Senior Vice President, 1994 $108,000 $ 0 -- 4,326(4) $ 581(10)
Chief Financial 1993 $100,200 $ 3,006 -- 10,138(5) $ 581(10)
Officer and Treasurer
W. Henry Claussen 1995 $124,006 $ 0 -- 0 $11,407(12)(13)
Senior Vice President 1994 $103,800 $ 0 -- 4,158(4) $ 581(12)
and Loan Manager 1993 $ 98,000 $ 2,880 -- 9,713(5) $ 581(12)
Morris W. Knight 1995 $100,006 $ 0 -- 0 $10,258(14)(15)
Senior Vice President 1994 $ 84,000 $ 0 -- 3,365(4) $ 581(14)
1993 $ 78,000 $ 2,340 -- 7,891(5) $ 581(14)
______________________________
(1) The Bank furnishes automobiles, provides financial planning services,
and provided, through 1994, and reimbursed the officer for, in 1995,
club memberships and provides other personal benefits to certain
executive officers. The estimated value of such benefits to each
named executive officer is less than $50,000 or 10% of such officer's
salary and bonus for the relevant year.
(2) Mr. Rea became a part-time employee in March 1994.
(3) In December 1990, Mr. Rea waived his membership in the Stockton
Savings Bank Pension Plan effective July 1, 1988. In lieu of plan
membership, a cash bonus in the amount of $23,400 was paid in 1993.
Mr. Rea waived receipt of this bonus in 1994 and 1995.
(4) These options were granted on December 19, 1994 at an exercise price
of $12.75 per share, the fair market value of the Common Stock on the
date of grant.
(5) These options were granted on June 21, 1993 at an exercise price of
$13.41 per share, the fair market value of the Common Stock on such
date.
(6) Does not include the value of the life insurance policy purchased on
Mr. Rea's behalf. The Bank had agreed to pay, upon the death of Mr.
Rea prior to age 75, $200,000 over ten years to his surviving spouse
or children. This obligation was funded by the Bank's purchase of a
single premium life insurance policy in 1984 at a cost of $50,000.
This policy was terminated in 1995.
15
(7) Includes $26,178 paid as compensation for excess sick-leave, $6,349
contributed by the Bank to his account in the Bank's 401(k) Plan and
$22,500 accrued with respect to his account in the Bank's ECP.
(8) Includes the following for services as a director of the Bank: 1994 -
$2,000 and 1993 - $14,000.
(9) Includes $774 with respect to Mr. Rea and $900 with respect to Mr.
Kavanaugh in 1995 and $166 in 1994 and 1993, representing the dollar
value of term life insurance paid for by the Bank with respect to
which the executive may designate the beneficiary.
(10) Includes $900 in 1995 and $581 in 1994 and 1993, representing the
dollar value of term life insurance paid for by the Bank with respect
to which Ms. Butterfield may designate the beneficiary.
(11) Includes $6,231 paid as compensation for excess sick-leave and $3,548
contributed by the Bank to her account in the Bank's 401(k) Plan.
(12) Includes $894 in 1995 and $581 in 1994 and 1993, representing the
dollar value of term life insurance paid for by the Bank with respect
to which Mr. Claussen may designate the beneficiary.
(13) Includes $7,103 paid as compensation for excess sick-leave and $3,410
contributed by the Bank to his account in the Bank's 401(k) Plan.
(14) Includes $722 in 1995 and $581 in 1994 and 1993, representing the
dollar value of term life insurance paid for by the Bank with respect
to which Mr. Knight may designate the beneficiary.
(15) Includes $6,785 paid as compensation for excess sick-leave and $2,751
contributed by the Bank to his account in the Bank's 401(k) Plan.
CHANGE IN CONTROL AGREEMENTS
As of June 21, 1993 ("Effective Date"), the Bank entered into change
in control agreements with each of the Named Executive Officers.
Effective March 18, 1996 ("New Effective Date"), the change in control
agreements for Mr. Kavanaugh, Ms. Butterfield, Mr. Claussen and Mr. Knight
were amended and restated. Mr. Rea's change in control agreement was not
amended and restated at that time (although it was amended as of November
21, 1994).
Mr. Rea's change in control agreement provides that, if his
employment with the Bank is terminated:
(1) by the Bank contemporaneously with or within one year
after the happening of a "Change in Control" for any
reason other than (A) for "Cause," (B) upon his death
or disability, or (C) due to the request or demand of
any regulatory authority; or
16
(2) by him, contemporaneously with or within one year
after a Change in Control, for "Good Reason,"
he shall, notwithstanding such termination, be treated by the Bank as an
employee for all purposes for a period of one year commencing on the date
such termination of employment is otherwise effective. This means that,
among other things:
(1) the Bank shall pay to Mr. Rea his regular base salary,
at the rate then in effect (unless a reduction in
compensation has preceded his resignation or
retirement for Good Reason, in which case the rate of
base salary payable under the change in control
agreement shall be the rate in effect prior to such
reduction) for one year at the times and in
installments consistent with the Bank's payroll
practices then in effect;
(2) at the Bank's expense, he shall participate in and be
covered by all employee benefit and compensation
plans, programs, policies or arrangements of the Bank
applicable to executive employees, whether funded or
unfunded, for a period of one year; and
(3) the Bank shall pay to Mr. Rea an amount equal to the
bonus he received under the Bank's bonus plan with
respect to the preceding fiscal year.
The payments under Mr. Rea's change in control agreement are subject to
and conditioned upon their compliance with 12 U.S.C. Section 1828(k) and
any regulations promulgated thereunder. As consideration for entering
into the change in control agreement, Mr. Rea agreed to remain in the
employ of the Bank until June 21, 1994.
Under Mr. Rea's change in control agreement, the term "Cause" is
defined as his personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule, or regulation
(other than traffic violations or similar offenses) or final cease-and-
desist order, or material breach of any provision of the change in control
agreement. The term "Good Reason" is defined, absent his written consent
to the contrary, to be:
(1) any material breach by the Bank of its obligations
contained in the change in control agreement;
(2) the assignment to him of any duties inconsistent with
the status of his position with Bank on the day
immediately preceding the happening of a Change in
Control or an alteration in the nature or status of
his duties and responsibilities that renders his
position to be of less dignity, responsibility or
17
scope from that which existed on the day immediately
preceding the happening of a Change in Control;
(3) a reduction by the Bank in his annual base salary as
in effect on the day immediately preceding the
happening of a Change in Control or as the same may be
increased from time to time, except for proportional
across-the-board salary reductions similarly affecting
all employees of the Bank;
(4) the relocation of the Bank's principal executive
offices to a location other than Stockton, California,
or the Bank's requiring him to be based anywhere other
than the Bank's principal executive offices except for
required travel on the Bank's business to an extent
substantially consistent with his present business
travel obligations; or
(5) any material reduction by the Bank or the Company of
the benefits enjoyed by him under any of the Bank's or
the Company's pension, retirement, profit sharing,
savings, life insurance, medical, health-and-accident,
disability or other employee benefit plans, programs
or arrangements as in effect from time to time, the
taking of any action by the Bank or the Company that
would directly or indirectly materially reduce any of
such benefits or deprive him of any material fringe
benefits, or the failure by the Bank to provide him
with the number of paid vacation days to which he is
entitled on the basis of years of service with the
Bank in accordance with the Bank's normal vacation
policy, other than any proportional across-the-board
reduction or action similarly affecting all employees
of the Bank or the Company.
A "Change in Control" is defined in Mr. Rea's change in control agreement
as the occurrence, after the Effective Date, of any of the following
events, directly or indirectly or in one or more series of transactions:
(1) A consolidation or merger of the Bank or the Company
with any entity unless the Bank or the Company is the
entity surviving in such merger or consolidation;
(2) A transfer of all or substantially all of the assets
of the Bank or the Company;
(3) Any person, entity or group, directly or indirectly,
through one or more subsidiaries or transactions or
acting in concert with one or more persons or
entities, (A) acquires more than 20% of any class of
voting stock of the Bank or the Company; (B) acquires
irrevocable proxies representing more than 20% of any
18
class of voting stock of the Bank or the Company; (C)
acquires any combination of voting stock and
irrevocable proxies representing more than 20% of any
class of voting stock of the Bank or the Company; (D)
acquires the ability to control in any manner the
election of a majority of the directors of the Bank or
the Company; or (E) acquires the ability to directly
or indirectly exercise a controlling influence over
the management or policies of the Bank or the Company;
(4) Any election has occurred of persons to the Board of
Directors of the Company that causes a majority of the
Board of Directors of the Company to consist of
persons other than (A) persons who were members of the
Board of Directors of the Company on the Effective
Date and/or (B) persons who were nominated for
election as members of such Board by the Board of
Directors of the Company (or a committee of such
Board) at a time when the majority of such Board (or
of such committee) consisted of persons who were
members of the Board of Directors of the Company on
the Effective Date; or
(5) A determination is made by the Office of Thrift
Supervision ("OTS"), the Federal Deposit Insurance
Corporation ("FDIC"), the SEC or any similar agency
having regulatory control over the Bank or the Company
that a change in control, as defined in the banking,
insurance, or securities laws or regulations then
applicable to the Bank or the Company, has occurred.
The change in control agreements with Mr. Kavanaugh, Ms. Butterfield,
Mr. Claussen and Mr. Knight provide that, if the executive officer's
employment with the Bank is terminated:
(1) by the Bank, contemporaneously with or within the
"Applicable Number of Months" after a "Change in
Control," for any reason other than (A) for "Cause" or
(B) upon the death or "Disability" of the executive
officer;
(2) by the executive officer, contemporaneously with or
within the Applicable Number of Months after a Change
in Control, for "Good Reason"; or
(3) before a Change in Control occurs either (A) by the
Bank other than for Cause or upon the death or
Disability of the executive officer, or (B) by the
executive officer for Good Reason, and in either case
it is reasonably demonstrated that the termination of
employment (i) was at the request of a "Third Party"
that has taken steps reasonably calculated to effect a
19
Change in Control or (ii) otherwise arose in
connection with or in anticipation of a Change in
Control,
then the executive officer shall be entitled to receive certain payments.
"Applicable Number of Months" means thirty-six months for Mr. Kavanaugh,
twenty-four months for Messrs. Knight and Claussen and twelve months plus
one month for each full year of service with the Bank prior to termination
of employment, up to a maximum of twenty-four months in the aggregate, for
Ms. Butterfield.
Under these change in control agreements, the Bank is obligated to
pay the executive officer:
(1) within ten days after the termination of his or her
employment, a lump sum payment equal to the aggregate
of the future base salary payments the executive
officer would have received if he or she had continued
in the Bank's employ until the Applicable Number of
Months following the date his or her employment is
terminated (unless a reduction in compensation
preceded the executive officer's resignation or
retirement for Good Reason, in which case the Bank
shall pay the executive officer a lump sum payment
based on his or her highest base salary in effect
during the twelve-month period preceding the
termination of employment), discounted to present
value;
(2) within ten days after the termination of his or her
employment, a lump sum payment equal to his or her
projected bonus for the current year, which shall be
computed assuming that the executive officer had
remained in the employ of the Bank until the end of
the current year and that all performance goals or
other performance measures have been met at the then
current level for the remainder of the year; and
(3) during the Applicable Number of Months following the
date the executive officer's employment is terminated,
at the Bank's expense, the executive officer shall
participate in and be covered by all employee benefit
plans, programs, policies or arrangements of the Bank
applicable to executive employees, whether funded or
unfunded.
The payments under these change in control agreements are subject to
and conditioned upon their compliance with 12 U.S.C. Section 1828(k) and
any regulations promulgated thereunder. In addition, if any portion of
any payment by the Bank or the Company under a change in control agreement
or otherwise would constitute an "excess parachute payment," then the
payments to be made to the executive officer under the agreement will be
20
reduced such that the value of the aggregate payments that executive
officer is entitled to receive under the agreement and any other
agreement, plan or program of the Bank and/or the Company shall be $1 less
than the maximum amount of payments that executive officer may receive
without becoming subject to the tax imposed by Section 4999 of the Code.
As consideration for entering into the amended and restated change in
control agreements, the executive officers agreed to remain in the employ
of the Bank until March 18, 1997.
In these change in control agreements, the term "Cause" is defined as
the executive officer's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any
law, rule, or regulation (other than traffic violations or similar
offenses) or final cease-and-desist order, or material breach of any
provision of the agreement. The term "Disability" is defined as the
complete inability of the executive officer to perform his or her duties
by reason of his or her total and permanent disability, as determined by
an independent physician selected with the approval of the Bank's Board of
Directors and the executive officer. The term "Good Reason" is defined,
absent the executive officer's written consent to the contrary, to be:
(1) any material breach by the Bank of its obligations
contained in the change in control agreement;
(2) the assignment to the executive officer of any duties
inconsistent with the status of his or her position
with the Bank on the day immediately preceding the
happening of a Change in Control or an alteration in
the nature or status of his or her duties and
responsibilities that renders his or her position to
be of less dignity, responsibility or scope from that
which existed on the day immediately preceding the
happening of a Change in Control; however, in the
event the executive officer terminates his or her
employment prior to a Change in Control, the
assignment or alteration must have occurred reasonably
contemporaneously with such termination of employment;
(3) a reduction by the Bank in the executive officer's
annual base salary as in effect on the day immediately
preceding the happening of a Change in Control or as
the same may be increased from time to time, except
for proportional across-the-board salary reductions
similarly affecting all of the Bank's employees;
however, in the event the executive officer terminates
his or her employment prior to a Change in Control,
the reduction in annual base salary must have occurred
reasonably contemporaneously with such termination of
employment;
21
(4) the relocation of the Bank's principal executive
offices to a location other than Stockton, California
or the Bank's requiring the executive officer to be
based anywhere other than the Bank's principal
executive offices except for required travel on the
Bank's business to an extent substantially consistent
with his or her present business travel obligations;
or
(5) any material reduction by the Bank or the Company of
the benefits enjoyed by the executive officer under
any of the Bank's or the Company's pension,
retirement, profit sharing, savings, life insurance,
medical, health-and-accident, disability or other
employee benefit plans, programs or arrangements as in
effect from time to time, the taking of any action by
the Bank or the Company that would directly or
indirectly materially reduce any of such benefits or
deprive the executive officer of any material fringe
benefits, or the failure by the Bank to provide the
executive officer with the number of paid vacation
days to which he or she is entitled on the basis of
years of service with the Bank in accordance with the
Bank's normal vacation policy, other than proportional
across-the-board reduction or action similarly
affecting all employees of the Bank or the Company.
A "Change in Control" is defined as the occurrence, after the New
Effective Date, of any of the following events, directly or indirectly or
in one or more series of transactions:
(1) A consolidation or merger of the Bank or the Company
with any third party (which includes a single person
or entity or a group of persons or entities acting in
concert) not wholly owned directly or indirectly by
the Bank or the Company (a "Third Party"), unless the
Bank or the Company is the entity surviving such
merger or consolidation;
(2) A transfer of all or substantially all of the assets
of the Bank or the Company to a Third Party or a
complete liquidation or dissolution of the Bank or the
Company;
(3) A Third Party, directly or indirectly, through one or
more subsidiaries or transactions or acting in concert
with one or more persons or entities: (A) acquires
beneficial ownership of more than 20% of any class of
voting stock of the Bank or the Company; (B) acquires
irrevocable proxies representing more than 20% of any
class of voting stock of the Bank or the Company; (C)
acquires any combination of beneficial ownership of
22
voting stock and irrevocable proxies representing more
than 20% of any class of voting stock of the Bank or
the Company; (D) acquires the ability to control in
any manner the election of a majority of the directors
of the Bank or the Company; or (E) acquires the
ability to directly or indirectly exercise a
controlling influence over the management or policies
of the Bank or the Company;
(4) Any election has occurred of persons to the Board of
Directors of the Company ("Board") that causes a
majority of the Board to consist of persons other than
(A) persons who were members of the Board on the New
Effective Date and/or (B) persons who were nominated
for election as members of the Board by the Board (or
a committee of the Board) at a time when the majority
of the Board (or of such committee) consisted of
persons who were members of the Board on the New
Effective Date; or
(5) A determination is made by the OTS, the FDIC, the SEC
or any similar agency having regulatory control over
the Bank or the Company that a change in control, as
defined in the banking, insurance, or securities laws
or regulations then applicable to the Bank or the
Company, has occurred.
PENSION PLAN
The Bank maintains a defined benefit pension and disability plan for
all of its eligible employees ("Pension Plan"). An employee is eligible
for participation in the Pension Plan if he or she has: (i) attained the
age of 20 and (ii) completed at least six months of eligibility service.
The Pension Plan provides normal retirement benefits in an amount equal to
the sum of (a) 2.5% of monthly compensation for each year of service and
(b) .5% of monthly compensation in excess of $700 for each year of service
times (c) the number of years of benefit service. Monthly compensation is
the participant's basic rate of compensation as of March 31 of the current
plan year. The Pension Plan also provides for early retirement benefits at
age 60 and disability benefits.
The following table sets forth the estimated annual benefits payable
under the Pension Plan on retirement at normal retirement (age 65) for the
compensation levels and number of years of service noted (assuming the
limitation under Section 415 of the Code is adjusted from time to time by
the Secretary of the Treasury to be greater than the $150,000 in effect
for plan-years 1994 and 1995 and/or the grandfathered limit of $235,840 in
effect for plan-year 1993 that is used to calculate benefits):
23
YEARS OF SERVICE (2)
REMUNERATION (1) 15 20 25 30 35
$ 10,200 . . . . . . . . . $ 3,960 $ 5,280 $ 6,600 $ 7,920 $ 9,240
18,000 . . . . . . . . . 7,470 9,960 12,450 14,940 17,430
36,000 . . . . . . . . . 15,570 20,760 25,950 31,140 36,330
72,000 . . . . . . . . . 31,770 42,360 52,950 63,540 74,130
108,000 . . . . . . . . . 47,970 63,960 79,950 95,940 111,930
144,000 . . . . . . . . . 64,170 85,560 106,950 128,340 149,730
180,000 . . . . . . . . . 80,370 107,160 133,950 160,740 187,530
200,000 . . . . . . . . . 89,371 119,160 148,950 178,740 208,530
____________________________
(1) Compensation is based upon a participant's salary as of March 31 of
the current plan year and includes regular salary but excludes all
bonuses, incentive pay and overtime payments.
(2) Maximum annual pension benefits are limited under Section 415 of the
Code to $120,000 currently (subject to future adjustment by the
Secretary of the Treasury based on cost of living factors). The
Pension Plan provides for elections as to form of payment (e.g., lump
sum distribution or annuities). The benefits listed are not subject
to offset for payments received from other sources.
The Pension Plan provides for vesting as follows:
24
YEARS OF PARTICIPATION PERCENTAGE
VESTED
Zero-Two...................................... 0%
Two........................................... 20%
Three......................................... 40%
Four.......................................... 60%
Five.......................................... 80%
Six or more................................... 100%
Years of service credited to the Pension Plan for the Named Executive
Officers were: Mr. Kavanaugh, 35 years, Ms. Butterfield, 10 years, Mr.
Knight, 13 years and Mr. Claussen, 15 years. As of June 30, 1988, Mr. Rea
was no longer covered by the Pension Plan.
On June 30, 1995, the Bank curtailed future benefit accruals and
service under the Pension Plan by "freezing" the Pension Plan under the
provisions of Statement of Financial Accounting Standards No. 88.
EXECUTIVE COMPENSATION PLAN
Effective July 1, 1995, the Bank adopted an Executive Compensation
Plan ("ECP"). The purpose of the ECP is to restore most of the retirement
benefits of certain selected executive officers of the Bank as of the
result of the curtailment of benefit accruals under the pension plan as of
June 30, 1995. Named Executive Officer participation in the ECP is
currently limited to Robert Kavanaugh.
Under the ECP, Mr. Kavanaugh's account is credited on the last day of
each month with $3,750; however, his account in the ECP can never exceed
$263,789. Because of Mr. Kavanaugh's years of service with the Bank, his
account in the ECP is fully vested.
In the event Mr. Kavanaugh retires from service with the Bank after
reaching age 65 (or at such earlier date as may be approved by the
Compensation/Stock Option Committee), he may elect to receive the value of
his account in the ECP in the form of a lump sum payment or in
installments over a 12 to 36 month period. In the event of his death, his
beneficiary receives the value of his account in the ECP in a lump sum.
In the event Mr. Kavanaugh otherwise terminates his employment with the
Bank, the Bank determines whether he receives the value of his account in
the ECP in the form of a lump sum payment or in installments over up to 36
months.
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401(K) PLAN
Effective August 1, 1995, the Bank modified its 401(k) Plan. Prior
to August 1, the 401(k) Plan was funded entirely by employee
contributions. On August 1, 1995, the 401(k) Plan became a defined
contribution profit sharing plan. The Bank makes a monthly cash
contribution equal to 5% of each employee's base salary and an employer
matching contribution of .25% for each 1% of employee contribution up to a
maximum contribution of 1.00% by the Bank. The Bank also contributes
1.50% of each employee's base salary in Common Stock on a monthly basis.
The Bank's total contribution ranges from 6.50% of base salary to 7.50% of
base salary, depending on the level of employee contribution. The assets
of the 401(k) Plan are maintained by a trustee and administered by the
Bank.
OPTIONS AND STOCK APPRECIATION RIGHTS GRANTED DURING THE YEAR ENDED
DECEMBER 31, 1995
No options were granted during 1995 to the Named Executive Officers.
No stock appreciation rights ("SARs") were granted to any Named Executive
Officer during 1995.
AGGREGATED OPTION/SAR EXERCISES IN 1995 AND OPTION/SAR VALUES AT DECEMBER
31, 1995
The following table contains certain information regarding options
exercised by the Named Executive Officers in 1995. No Named Executive
Officer holds any SARs.
26
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-THE-
UNEXERCISED MONEY OPTIONS
OPTIONS AT AT DECEMBER 31,
DECEMBER 31, 1995 ($)
1995 (#)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
David K. Rea 0 $ 0 13,082/0(1) $161,170/$0
Robert V. Kavanaugh 5,014 $62,048(2) 31,753/4,855(1) $304,195/$34,422
Jane R. Butterfield 0 $ 0 19,916/3,377(1) $188,229/$23,943
W. Henry Claussen 0 $ 0 12,389/1,619(1) $115,700/$11,479
Morris W. Knight 0 $ 0 16,563/2,630(1) $159,475/$18,647
_____________________________
(1) In the event of a change of control of the Company, all options
become immediately exercisable.
(2) Based on fair market value on date of exercise, January 19, 1995, of
$12.38 per share and exercise price of $4.89 per share.
INDEPENDENT AUDITORS
The Company's Audit Committee and Board of Directors have selected
KPMG Peat Marwick LLP to serve as the Company's and the Bank's independent
accountants for the year ending December 31, 1996. KPMG Peat Marwick LLP
served as the Company's and Stockton Savings' auditors for the year ended
December 31, 1995. Representatives of KPMG Peat Marwick LLP will be
present at the Annual Meeting where they will have the opportunity to make
a statement if they desire to do so and where they will be available to
respond to any appropriate questions.
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ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1995 ACCOMPANIES THIS PROXY STATEMENT. A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, WILL BE PROVIDED WITHOUT CHARGE TO ANY STOCKHOLDER
UPON WRITTEN REQUEST. REQUESTS SHOULD BE DIRECTED TO MORRIS W. KNIGHT,
VICE PRESIDENT--STOCKHOLDER RELATIONS, CALIFORNIA FINANCIAL HOLDING
COMPANY, 501 WEST WEBER AVENUE, STOCKTON, CALIFORNIA 95203.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1997 Annual
Meeting of Stockholders must be received by the Company no later than
December 5, 1996 to be considered for inclusion in the Company's Proxy
Statement and form of proxy relating to such meeting.
OTHER MATTERS
As of the date of this Proxy Statement, the Company knows of no
business other than that described herein that will be presented for
consideration at the Annual Meeting. If, however, any other business shall
properly come before the Annual Meeting, the proxy holders intend to vote
the proxies as determined by a majority of the Board of Directors.
By Order of the Board of Directors
DENNIS DONALD GEIGER
Secretary
April 5, 1996
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REVOCABLE PROXY
CALIFORNIA FINANCIAL HOLDING COMPANY
This Proxy is Solicited on Behalf of the Board of Directors of the Company
The undersigned hereby appoints the Board of Directors, or any of
them, each with full power of substitution as the lawful proxies of the
undersigned and hereby authorizes them to represent and to vote as
designated below all shares of common stock of California Financial
Holding Company ("Company") which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Shareholders of the
Company to be held on May 13, 1996, and at any adjournment thereof.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is given,
this proxy will be voted FOR proposal 1.
Whether or not you plan to attend the meeting, you are urged to
execute and return this proxy, which may be revoked at any time prior to
its use.
(Continued and to be dated and signed on the reverse side)
CALIFORNIA FINANCIAL HOLDING COMPANY
P.O. BOX 11063
NEW YORK, NY 10203-0063
29
[ ]
1. Proposal One: Election of Directors FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] *EXCEPTIONS [ ]
for a term ending in 1999. listed below. for all nominees listed below.
Nominees: Jerald Kirsten and Gerald L. Barton
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that nominee's
name in the space provided below.)
*Exceptions
_____________________________________________________________________________________________________________________
2. In their discretion on such other business as may properly come before the meeting or any adjournment thereof.
Change of Address or [ ]
Comments Mark Here
Please sign your name exactly as it appears hereon.
When signing 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.
Date: __________________________________, 1996
_________________________________________________
(Signature of Shareholder)
_________________________________________________
(Signature of Additional Shareholder(s)
Votes must be indicated
(x) in Black or Blue Ink. [ ]
(Please sign, date and return this proxy in the enclosed postage prepaid envelope.)
30