SCHEDULE 14A INFORMATION
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. ___)
Filed by the Registrant [x]
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Check the appropriate box:
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[x]Definitive Proxy Statement Commission Only (as permitted
[ ]Definitive Additional Materials by Rule 14a-6(e)(2))
[ ]Soliciting Material Under Rule 14a-12
COMMERCIAL FEDERAL CORPORATION
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(Name of Registrant as Specified in Its Charger)
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Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
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[COMMERCIAL FEDERAL CORPORATION LETTERHEAD]
April 3, 2001
ANNUAL MEETING
MAY 8, 2001
Dear Fellow Stockholder:
You are cordially invited to attend the 2001 Annual Meeting of Stockholders
of Commercial Federal Corporation (the "Corporation") to be held on Tuesday, May
8, 2001, at 10:00 a.m. at the Holiday Inn Central Convention Centre, 3321 South
72nd Street, "Holiday C" Meeting Room, Omaha, Nebraska. Your Board of Directors
and Management look forward to greeting personally those stockholders able to
attend.
At this meeting, as set forth in the accompanying Notice of Annual Meeting
and Proxy Statement, stockholders will be asked to consider and act upon the
election of three directors for three-year terms (the Board having nominated
Talton K. Anderson, Carl G. Mammel and James P. O'Donnell). During the meeting,
we will also report on the operations of the Corporation and its principal
subsidiary, Commercial Federal Bank, a Federal Savings Bank. Directors and
officers of the Corporation will be present to respond to any questions you may
have.
Your vote is important, regardless of the number of shares you own. We urge
you to sign, date and mail the enclosed Proxy Card as soon as possible, even if
you currently plan to attend the annual meeting. This will not prevent you from
voting in person, but will assure that your vote is counted if you are unable to
attend the meeting.
On behalf of your Board of Directors, thank you for your continued support.
Sincerely,
/s/ William A. Fitzgerald
William A. Fitzgerald
Chairman of the Board and
Chief Executive Officer
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COMMERCIAL FEDERAL CORPORATION
2120 SOUTH 72ND STREET
OMAHA, NEBRASKA 68124
(402) 554-9200
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 8, 2001
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NOTICE IS HEREBY GIVEN that the 2001 Annual Meeting of Stockholders (the
"Meeting") of Commercial Federal Corporation (the "Corporation") will be held at
the Holiday Inn Central Convention Centre, 3321 South 72nd Street, "Holiday C"
Meeting Room, Omaha, Nebraska, on Tuesday, May 8, 2001, at 10:00 a.m.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of three directors each for a three-year term; and
2. Such other matters as may properly come before the Meeting or any
adjournments or postponements thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Meeting.
Any action may be taken on the foregoing matters at the Meeting on the date
specified above or on any date or dates to which, by original or later
adjournment or postponement, the Meeting may be adjourned or postponed. Pursuant
to the Bylaws of the Corporation, the Board of Directors has fixed the close of
business on March 27, 2001, as the record date for determination of the
stockholders entitled to notice of and to vote at the Meeting and any
adjournments or postponements thereof.
You are requested to sign and date the enclosed Proxy Card which is
solicited by the Board of Directors and to mail it promptly in the enclosed
postage-paid envelope. The proxy will not be used if you attend and vote at the
Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gary L. Matter
GARY L. MATTER
SECRETARY
Omaha, Nebraska
April 3, 2001
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AND VOTED AT THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND PROMPTLY
MAIL YOUR ENCLOSED PROXY CARD.
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PROXY STATEMENT
OF
COMMERCIAL FEDERAL CORPORATION
2120 SOUTH 72ND STREET
OMAHA, NEBRASKA 68124
(402) 554-9200
2001 ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 2001
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GENERAL
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This Proxy Statement and the enclosed Proxy Card are furnished in
connection with the solicitation of proxies by the Board of Directors of
Commercial Federal Corporation (the "Corporation"), to be used at the 2001
Annual Meeting of Stockholders of the Corporation and at any adjournments or
postponements thereof (the "Meeting") which will be held at the Holiday Inn
Central Convention Centre, 3321 South 72nd Street, "Holiday C" Meeting Room,
Omaha, Nebraska, on Tuesday, May 8, 2001, at 10:00 a.m. The accompanying Notice
of Annual Meeting, this Proxy Statement and the Proxy Card are being first
mailed to stockholders on or about April 3, 2001.
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VOTING AND REVOCABILITY OF PROXIES
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The close of business on March 27, 2001, has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Meeting. At that date, the Corporation had outstanding 51,730,303 shares of
common stock, par value $.01 per share (the "Common Stock"). Holders of Common
Stock are entitled to one vote per share for the election of directors, subject
to the right to cumulate votes as described below, and upon all matters on which
stockholders are entitled to vote.
Proxies solicited by the Board of Directors of the Corporation which are
properly executed and returned to the Corporation will be voted at the Meeting,
and any adjournments or postponements thereof, in accordance with the directions
given thereon. Executed proxies on which no directions are indicated will be
voted FOR the election of the Corporation's nominees named herein. If any other
matters are properly brought before the Meeting, the proxies solicited by the
Board of Directors will be voted on such matters as determined by a majority of
the Board. Other than the election of directors, the Board of Directors is not
currently aware of any other matters to be brought before the Meeting.
The presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is necessary
to constitute a quorum thereat. If a quorum is not present or represented by
proxy, the stockholders entitled to vote, present or represented by proxy, have
the power to adjourn the Meeting from time to time, without notice other than an
announcement at the Meeting, until a quorum is present or represented. Assuming
a quorum is present, under Nebraska law directors shall be elected by a
plurality of votes cast by stockholders at the Meeting (abstention and broker
non-votes not being considered in determining the outcome of the election).
Pursuant to the Bylaws of the Corporation and Nebraska law, every
stockholder entitled to vote for the election of directors has the right to vote
the number of shares owned thereby for as many persons as there are directors to
be elected, or to cumulate votes by multiplying the number of shares held by
such stockholder by the number of directors to be elected and to cast such votes
for one director or distribute them among any number of candidates. Unless
otherwise indicated by the stockholder, a vote FOR the Board of Directors'
nominees on the accompanying Proxy Card will give the proxies named therein
discretionary authority to cumulate all votes to which the stockholder is
entitled and to allocate such votes in favor of one or more of the Board's
nominees, as the proxies may determine. Additionally, executed proxies will
confer discretionary authority on the proxies named therein to
vote with respect to the election of any person recommended by the Board of
Directors as a director where the nominee is unable to serve or for good cause
will not serve (an event not now anticipated).
Execution of a Proxy Card will not affect your right to attend the Meeting
and to vote in person. A stockholder executing a proxy may revoke such proxy at
any time before it is voted by (i) filing a written notice of revocation with
the Secretary of the Corporation at the address provided above, (ii) filing a
duly executed proxy bearing a later date, or (iii) attending and voting in
person at the Meeting. Attendance at the Meeting without voting thereat will not
revoke a proxy previously executed and duly submitted by you.
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PRINCIPAL STOCKHOLDERS
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Persons and groups owning in excess of 5.0% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based upon
such reports, and certain other available information, the following table sets
forth, as of March 27, 2001, certain information as to the Common Stock
beneficially owned by each stockholder owning in excess of 5.0% of the
Corporation's outstanding shares of common stock and each of the executive
officers listed in the Summary Compensation Table on page 9 and by all executive
officers and directors of the Corporation as a group.
PERCENT OF SHARES
AMOUNT AND NATURE OF OF COMMON STOCK
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OUTSTANDING
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Franklin Mutual Advisers, LLC
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078 4,663,852 9.02%
Private Capital Management
3003 Tamiani Trail N.
Naples, Florida 34103 2,882,600 5.57%
William A. Fitzgerald 887,826 (2) 1.70%
David S. Fisher 50,611 (2) .10%
Gary L. Matter 91,549 (2) .18%
Roger L. Lewis 73,211 (2) .14%
Kevin C. Parks 38,282 (2) .07%
All Executive Officers and Directors
as a Group (18 persons) 2,022,551 (2) 3.84%
<FN>
__________
(1) As to ownership of shares by executive officers and directors, includes
certain shares of Common Stock owned by businesses in which the
director or executive officer is an officer or major stockholder, or by
spouses or as a custodian or trustee for minor children, over which
shares the named individual or all executive officers and directors as
a group effectively exercise sole or shared voting and investment
power, unless otherwise indicated.
(2) Includes 387,603, 50,000, 49,798, 49,421, 28,145 and 926,059 shares,
respectively, which Messrs. Fitzgerald, Fisher, Matter, Lewis and Parks
and all executive officers and directors as a group have the right to
purchase pursuant to the exercise of stock options, as well as stock
held in retirement accounts or funds for the benefit of the named
individuals or group.
</FN>
2
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Corporation's Board of Directors is composed of ten members. The
Corporation's Articles of Incorporation provide that directors are to be elected
for terms of three years, approximately one-third of whom are to be elected
annually. Three directors will be elected at the Meeting to serve three-year
terms, or until their respective successors have been elected and qualified. The
Corporation's Board of Directors has nominated Talton K. Anderson, Carl G.
Mammel and James P. O'Donnell for these seats, all of whom are currently members
of the Board. If any nominee is unable to serve, the shares represented by all
valid proxies will be voted for the election of such substitute as the Board of
Directors may recommend. At this time, the Board knows of no reason why any of
the Corporation's nominees might be unavailable to serve.
The Board of Directors intends to vote all of the shares for which it is
given proxies, to the extent permitted thereunder, FOR the election of the
Board's nominees and intends to cumulate votes so as to maximize the number of
such nominees elected to serve as directors of the Corporation.
The following table sets forth the names of the Board's nominees for
election as directors and of those directors who will continue to serve as such
after the Meeting. Also set forth is certain other information with respect to
each person's age, the year he became a director, the expiration of his term as
a director, and the number and percentage of shares of Common Stock beneficially
owned at March 27, 2001. At present, each director of the Corporation is also a
member of the Board of Directors of the Corporation's wholly owned subsidiary,
Commercial Federal Bank, a Federal Savings Bank (the "Bank"). The Board of
Directors of the Bank is elected by the Corporation as the sole stockholder of
the Bank. The selection of nominees for the election of directors of the Bank is
within the discretion of the Board of Directors and director nominees for the
Bank are selected by a majority vote of the Board of Directors.
YEAR FIRST ELECTED SHARES OF COMMON STOCK
AGE AT OR APPOINTED CURRENT TERM BENEFICIALLY OWNED AT PERCENT
NAME MARCH 27, 2001 AS DIRECTOR TO EXPIRE MARCH 27, 2001 (1) OF CLASS
---- -------------- ----------- --------- ------------------ --------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2004
Talton K. Anderson 64 1991 2001 86,334 (2) .17%
Carl G. Mammel 68 1991 2001 159,968 (2) .31%
James P. O'Donnell 53 1991 2001 39,209 (2) .08%
DIRECTORS CONTINUING IN OFFICE
William A. Fitzgerald 63 1984 2002 887,826 (3) 1.70%
Robert D. Taylor 53 1996 2002 115,757 (3) .22%
Aldo J. Tesi 49 1996 2002 34,340 (3) .07%
Robert F. Krohn 67 1984 2003 200,643 (3) .39%
Michael P. Glinsky 56 1997 2003 26,995 (3) .05%
George R. Zoffinger 53 1999 2003 13,985 (3) .03%
Joseph J. Whiteside 59 1999 2003 6,112 (3) .01%
<FN>
___________
(1) Includes certain shares of Common Stock owned by businesses in which
the director is an officer or major stockholder or by a spouse, or as a
custodian or trustee for minor children, over which shares the named
individual effectively exercises sole or shared voting and investment
power, unless otherwise indicated. Also includes shares held in
retirement accounts or funds for the benefit of the named individuals.
(2) Includes shares totaling 32,226 (Anderson), 30,735 (Mammel) and 30,834
(O'Donnell) which such individuals have the right to acquire within 60
days of the Record Date pursuant to the exercise of stock options.
(3) Includes shares totaling 387,603 (Fitzgerald), 31,918 (Taylor), 31,143
(Tesi), 32,768 (Krohn), 25,554 (Glinsky), 12,872 (Zoffinger) and 5,000
(Whiteside) which such individuals have the right to acquire within 60
days of the Record Date pursuant to the exercise of stock options.
</FN>
3
The principal occupation of each director of the Corporation for the last
five years is set forth below:
TALTON K. ANDERSON - Chairman of five automobile dealerships in Omaha,
Nebraska, as well as one in Lincoln, Nebraska. Mr. Anderson is also the owner
and President of a reinsurance company.
CARL G. MAMMEL - President of Mammel Foundation and member of the board of
Silverstone Group, a consulting firm providing services in employee benefits,
human resource consulting and risk management solutions. Mr. Mammel is also a
member of the board of M Financial Corporation, a network of financial service
firms throughout the United States.
JAMES P. O'DONNELL - Executive Vice President, Chief Financial Officer and
Corporate Secretary of ConAgra, Inc., an Omaha, Nebraska-based international
diversified food company.
WILLIAM A. FITZGERALD - Chairman of the Board and Chief Executive Officer
of the Corporation and the Bank.
ROBERT D. TAYLOR - President and Chief Executive Officer of Executive
Aircraft Corporation, Wichita, Kansas, which sells, maintains and refurbishes
corporate jet aircraft. Since October 1995, Mr. Taylor also owns and is
President of Taylor Financial, a consulting and investment firm based in
Wichita, Kansas. From January, 1991, to October 1995, Mr. Taylor served as
Chairman of the Board of Directors and Chief Executive Officer of Railroad
Financial Corporation and its wholly owned subsidiary, Railroad Savings Bank,
F.S.B. Railroad Financial Corporation was acquired by the Corporation.
ALDO J. TESI - President and Chief Executive Officer of Election Systems
and Software since September 1999. Formerly the Group President of First Data
Card Enterprise, a leading third-party provider of credit, debit, private label
and commercial card processing services. Prior to this position, Mr. Tesi was
President of First Data Resources from 1992 to 1997.
ROBERT F. KROHN - Chairman and Chief Executive Officer of PSI Group, Inc.,
a national mail presort company. Mr. Krohn is the former President and Chief
Executive Officer of HDR, Inc., an international architecture, planning and
engineering firm. Mr. Krohn served as Chairman of the Board of the Corporation
and the Bank from 1990 through 1994.
MICHAEL P. GLINSKY - Executive Vice President and Chief Financial Officer
of NorthPoint Communications Group, Inc., a broadband telecommunications
company, since April 2000. On January 16, 2001, NorthPoint Communications Group,
Inc. filed a petition for Chapter 11 protection in the U.S. Bankruptcy Court for
the Northern District of California. Mr. Glinsky was the Executive Vice
President and Chief Financial Officer of U S WEST, Inc., an international
telecommunications, entertainment and directory and information services
company, a position he held from 1996 to 1998. Mr. Glinsky served as managing
partner of the Denver office of Coopers & Lybrand LLP from 1990 to 1996.
GEORGE R. ZOFFINGER - President and Chief Executive Officer of
Constellation Capital Corp., since February 1998. Mr. Zoffinger served as
President and Chief Executive Officer of Constellation Bank Corp. from December
1991 to December 1995 and as President and Chief Executive Officer of Value
Property Trust from October 1995 to February 1998. Mr. Zoffinger serves as a
director of New Jersey Resources Corporation, MFN Financial Corporation,
Admiralty Bancorp, Inc. and Silverline Technologies Limited.
JOSEPH J. WHITESIDE - Executive Vice President and Senior Advisor since
1996 to National Australia Bank and Chairman of WeatherWise USA, Inc., a
Pittsburgh-based company that provides financial and other services to the
public utilities industry. From 1994 to 1996, Mr. Whiteside served as Executive
Vice President and Chief Financial Officer of Michigan National Corp., a bank
holding company based in Farmington Hills, Michigan.
4
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Board of Directors conducts its business through meetings of the Board
and through its committees, which permits the Board to more efficiently
discharge its duties. During the transitional year ended December 31, 2000, the
Board of Directors held four meetings. No director attended fewer than 75% of
the total meetings of the Board of Directors and committees on which such
directors were members during the periods which such directors served with the
exception of Director O'Donnell who attended two of four meetings.
The Corporation's audit committee is currently comprised entirely of
non-employee Directors Glinsky, Krohn (Chairman), O'Donnell, Tesi and Zoffinger.
Michael T. O'Neil, a director of the Bank, also serves as an ex-officio member
of the audit committee. All members of the audit committee are deemed to be
independent within the meaning of Sections 303.01(B)(2)(a) and (3) of the New
York Stock Exchange's listing standards. This committee's function is to approve
the outside accounting firm for use by the Corporation and Bank and to review
regulatory examination reports. This committee conducts its business through the
Bank's audit committee and serves as the liaison with the Bank's internal audit
department. The audit committee has adopted a written charter, a copy of which
is attached as Exhibit A to this Proxy Statement. The audit committee meets
quarterly or on an as needed basis. During the transition year ended December
31, 2000, the audit committee met twice.
The Corporation's compensation and stock option committee is currently
comprised entirely of non-employee Directors Glinsky, O'Donnell (Chairman) and
Tesi. Robert S. Milligan, a Bank director, also serves. This committee is
responsible for developing the Corporation's executive compensation policies
generally, and for implementing those policies for the Corporation's executive
officers and the Bank's senior executive officers (the Chairman of the Board and
Chief Executive Officer of the Corporation and the Bank and the President and
Chief Operating Officer of the Corporation and the Bank). See "Executive
Compensation -- Compensation and Stock Option Committee Report on Executive
Compensation." The compensation committee did not meet during the transition
year ended December 31, 2000.
The Corporation's full Board of Directors currently acts as a nominating
committee for the annual selection of its nominees for election as directors.
While the Board of Directors will consider nominees recommended by stockholders,
it has not actively solicited recommendations from the Corporation's
stockholders for nominees nor, subject to the procedural requirements set forth
in the Corporation's Articles of Incorporation and Bylaws, are there any formal
procedures for this purpose. The Board of Directors did not meet in its capacity
as nominating committee during transition year 2000.
The Corporation's finance committee is currently comprised of Directors
Anderson, Fitzgerald, Mammel (Chairman), Taylor and Whiteside and Bank Directors
Marvin and Milligan. This committee met two times during the 2000 transition
year. This committee is responsible for monitoring the Corporation's
asset/liability and risk management strategies.
The Corporation's executive committee is comprised of Directors Anderson,
Fitzgerald (Chairman), Krohn and Taylor. This committee transacts necessary
business between Board meetings and met three times during the transition year
ended December 31, 2000.
5
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EXECUTIVE COMPENSATION
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COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overview and Objectives
Composed exclusively of outside directors, Michael P. Glinsky, Robert S.
Milligan, James P. O'Donnell (Chairman) and Aldo J. Tesi, the Compensation and
Stock Option Committee (the "Committee") of the Board of Directors establishes
the Corporation's and the Bank's executive compensation policies. The Committee
is responsible for developing the Corporation's and the Bank's executive
compensation policies generally, and for implementing those policies for the
Corporation's executive officers and the Bank's senior executive officers (the
Chairman of the Board and Chief Executive Officer of the Corporation and the
Bank and the President and Chief Operating Officer of the Corporation and the
Bank). The Chief Executive Officer of the Bank, under the direction and pursuant
to the policies of the Committee, implements the executive compensation policies
for the remainder of the Bank's executive officers. The Corporation established
structured compensation guidelines recommended by an outside professional
consulting firm in fiscal year 1994. In fiscal year 1999, the Corporation
requested an update to ensure its compensation practices were relevant to the
growth and changes the Corporation experienced during that year, and were not
unusual or unreasonable.
The Committee's overall objectives in designing and administering the
specific elements of the Corporation's and the Bank's executive compensation
program are as follows:
o to align executive compensation to increases in shareholder value, as
measured by favorable long-term operating results and continued
strengthening of the Corporation's financial condition;
o to provide incentives for executive officers to work towards achieving
successful annual results as a step in fulfilling the Corporation's
long-term operating results and strategic objectives;
o to link, as closely as possible, executive officers' receipt of
incentive awards with the attainment of specified performance
objectives;
o to maintain a competitive mix of total executive compensation with
particular emphasis on awards directly related to increases in
long-term shareholder value; and
o to attract, retain and motivate top performing executive officers in a
cost effective manner for the long-term success of the Corporation.
The Board of Directors strongly believes that it is in the best interests
of shareholders to encourage ownership of stock by management. Accordingly, the
Stock Option Committee established the following guidelines on stock ownership.
Members of executive management hired during 2000 do not yet own the minimum
number of recommended shares. The Committee feels such guidelines will align
shareholders' and management's interests and enhance employee performance.
Chief Executive Officer: 5 times annual salary
Chief Operating Officer: 5 times annual salary
Executive Vice Presidents: 3 times annual salary
In furtherance of the above objectives, the Corporation's executive
compensation program for the transition year consisted of the following
components.
o BASE SALARY. The Committee makes recommendations to the Board
concerning executive compensation on the basis of regional and national surveys
of salaries paid to executive officers of other savings and loan holding
companies, non-diversified banks, other financial institutions similar to the
Corporation in size, market
6
capitalization and other characteristics, and where applicable, other
industries. The Committee's objective is to provide base salaries as well as the
appropriate mix of total compensation that is reasonably competitive with total
compensation paid by the Corporation's peers.
o EXECUTIVE INCENTIVE PLAN. The Corporation maintains an Executive
Incentive Plan which provides for annual incentive compensation based on
achieving a combination of Corporation and individual performance objectives.
Under this plan, the Committee establishes challenging corporate objectives,
such as a targeted level of annual net income, at the beginning of the fiscal
year. If the Corporation meets such objectives, an amount equal to 6% of net
income is set aside for payment to executive officers (defined for this purpose
as the Bank's Chief Executive and Chief Operating Officers, Executive, Senior,
and First Vice Presidents and such other officers as are designated by the
Committee for any fiscal year) as short-term and long-term compensation. No
funds were made available for awards under this plan for the Transition Period.
Further, during the Transition Period no cash awards to executive officers were
granted under the plan.
Pursuant to a policy adopted in June 1993 and subsequently amended and
restated by the Stock Option Committee (the "Stock Option Committee"), whose
members are all outside directors, the Stock Option Committee determines, in its
discretion, whether, to whom and in what amounts restricted stock and/or
incentive/non-incentive stock options will be awarded for any fiscal year.
Shares of restricted stock awarded under this policy normally vest over a period
of not more than five years, assuming the individual's continued service with
the Corporation or the Bank, thus helping to retain qualified officers. The
Stock Option Committee determines the vesting of the stock options awarded under
this policy at the time of the award. The policy may be amended or terminated at
any time by action of the Committee.
The Committee believes this plan provides a direct link between the value
created for the Corporation's shareholders and the compensation paid to
executive officers. As previously mentioned, executive officers are not eligible
to receive any short-term compensation under this plan for a given fiscal year
unless the Corporation's net income for that year exceeds 85% of a predetermined
goal. The distribution of awards under the plan is determined by the relative
success of individual executive officers in meeting specified performance
objectives. Fulfillment of these objectives promotes both the short-term and the
long-term success of the Corporation and is in the best interests of
shareholders.
o 1984 AND 1996 STOCK OPTION AND INCENTIVE PLANS. The Corporation
maintains the 1984 Stock Option and Incentive Plan, as Amended and Restated, and
the 1996 Stock Option and Incentive Plan (collectively, the "Option Plans") as a
means of providing employees and directors the opportunity to acquire a
proprietary interest in the Corporation and to align their interests with those
of the Corporation's stockholders. Under each plan, participants are eligible to
receive stock options, stock appreciation rights ("SARs") or shares of
restricted stock. Awards under the Option Plans are subject to vesting and
forfeiture as determined by the Committee. Options and SARs are generally
granted at the market value of the Common Stock on the date of grant. Thus, such
awards acquire value only if the Corporation's stock price increases. In
addition, under the 1996 plan, the Stock Option Committee may, at the election
of a director or employee selected by the Stock Option Committee, permit such
individual to receive stock options in lieu of cash compensation. The exercise
price of such stock options will be discounted below the market value of the
underlying Common Stock, such that the aggregate discount on the exercise price
of the stock options is equal to the compensation foregone by the individual.
Pursuant to the Option Plans, during the Transition Period the Stock Option
Committee awarded non-incentive stock options totaling 44,595 shares and
incentive stock options totaling 5,405 shares to Mr. Peter J. Purcell, Chief
Information Officer and Executive Vice President of the Bank, upon date of hire
(December 11, 2000). The stock options were immediately vested.
The Committee believes that the Option Plans align shareholders', officers'
and employees' interests and help to retain and motivate executive officers to
improve long-term shareholder value.
7
Compensation of the Chief Executive Officer
The Committee determines the Chief Executive Officer's compensation on the
basis of several factors including:
o Return on Average Assets
o Core Profitability
o Leadership Inside and Outside the Corporation
o Capital Compliance and Regulatory Guidelines
In order to further align the compensation, rewards and performance measurements
with shareholder expectations, the Committee revises the criteria periodically
to reflect measurements generally viewed by analysts that follow the
Corporation's peer group. These measurements are tied to specific objectives
established during the Corporation's annual planning meeting and benchmarked to
the performance of the Corporation's peer group.
For the transition year, Mr. Fitzgerald's base salary remained the same at
his request. Furthermore, Mr. Fitzgerald did not receive any stock options,
stock appreciation rights (SARs) or shares of restricted stock during this
period.
The Committee believes that the Corporation's executive compensation
program serves the Corporation and all of its shareholders by providing a direct
link between the interests of executive officers and shareholders generally, and
by helping to attract and retain qualified executive officers who are dedicated
to the long-term success of the Corporation.
COMPENSATION AND STOCK OPTION COMMITTEE
James P. O'Donnell (Chairman)
Michael P. Glinsky
Robert S. Milligan
Aldo J. Tesi
8
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for the
Transition Period and each of the last three fiscal years awarded to or earned
by (i) the Chief Executive Officer, and (ii) the four highest paid executive
officers of the Corporation and the Bank.
LONG-TERM COMPENSATION
AWARDS
-------------------------
ANNUAL COMPENSATION (2) RESTRICTED SECURITIES
NAME AND PRINCIPAL FISCAL ----------------------- STOCK UNDERLYING ALL OTHER
POSITION YEAR(1) SALARY BONUS AWARDS (3) OPTIONS COMPENSATION (4)
- ------------------ ------- ------ ----- ---------- ------- ----------------
William A. Fitzgerald Transition Period $295,050 $ -- $ -- -- $24,906
Chairman and Chief Executive Officer 2000 590,106 -- -- 113,527 46,162
of the Corporation and the Bank 1999 562,000 -- 155,635 96,477 44,960
1998 477,000 211,955 256,226 150,000 38,160
David S. Fisher (5) Transition Period $120,000 $ 45,000 (6) $ -- -- $ --
Executive Vice President and Chief 2000 5,538 -- -- 50,000 --
Financial Officer of the Corporation
and the Bank
Gary L. Matter Transition Period $112,455 $ -- $ -- -- $ 8,996
Senior Vice President, Controller and 2000 218,750 -- -- 15,000 17,500
Secretary of the Corporation and 1999 206,667 -- 46,537 13,500 16,534
the Bank 1998 177,000 68,951 77,639 25,800 14,160
Roger L. Lewis Transition Period $ 81,900 $ -- $ -- -- $ 6,552
Senior Vice President 2000 156,250 -- -- 15,000 12,500
Corporate Marketing 1999 147,083 -- 33,228 11,500 11,767
1998 121,833 48,084 52,023 15,700 9,747
Kevin C. Parks Transition Period $ 71,890 $ -- $ -- -- $ 5,751
Senior Vice President 2000 134,417 -- -- 10,000 10,753
Audit and Risk Services 1999 110,417 -- 18,527 7,000 8,833
1998 100,833 32,855 32,858 5,000 8,067
<FN>
______________
(1) On August 14, 2000 the Corporation changed its fiscal year end from
June 30 to December 31. Accordingly, fiscal years 2000, 1999 and 1998
refer to the twelve months ended June 30. The Transition Period refers
to the six months ended December 31, 2000.
(2) Does not include certain perquisite and other personal benefits which
do not exceed the lesser of $50,000 or 10.0% of the individual's salary
and bonus.
(3) Represents awards under the policy of the Stock Option Committee
adopted in conjunction with the Corporation's Executive Incentive Plan.
See "Compensation and Stock Option Committee Report on Executive
Compensation -- Overview and Objectives." There was no restricted stock
granted during the Transition Period or fiscal year 2000. Restricted
stock granted in fiscal years 1998 and 1999 vests over a period of five
years, at a rate of 20.0% per year, assuming continued service with the
Corporation. As of December 31, 2000, the number and value, based on
the closing sales price of the Common Stock of $19.4375 at December 31,
2000, of the unvested restricted stock holdings for Messrs. Fitzgerald,
Matter, Lewis and Parks, were 13,668 shares (value of $265,672), 4,091
shares (value of $79,519), 2,782 shares (value of $54,075) and 1,767
shares (value of $34,346). Dividends are payable on these shares if and
to the extent paid on the Common Stock generally. Upon a change in
control of the Corporation, all restrictions on the restricted stock
immediately lapse.
(4) Includes net contributions to the Bank's 401(k) Plan on behalf of each
of the named executive officers to match elective deferral
contributions made by each to such plan and amounts paid under the
Bank's Supplemental Retirement Plan. Matching contributions under the
Bank's 401(k) Plan amounted to $1,302, $1,680, $4,200 and $5,040 while
the employer matching contributions under the Supplemental Retirement
Plan benefits, were $23,604, $7,316, $2,352 and $711 for Messrs.
Fitzgerald Matter, Lewis and Parks, respectively. Mr. Fisher did not
meet length of service requirements to receive any matching
contributions.
(5) Mr. Fisher joined the Corporation on June 23, 2000.
(6) Mr. Fisher received a $45,000 payment in consideration of forfeitures
from various benefit plans as a result of his change in employment.
</FN>
9
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
The following table sets forth information concerning the exercise of
options by the Chief Executive Officer and the other named executive officers
during the Transition Period ended December 31, 2000, as well as the value of
such options held by such persons at December 31, 2000. There were no option
grants to any named executive officer during the Transition Period.
NUMBER OF
SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS IN-THE-MONEY
AT FISCAL OPTIONS AT
YEAR-END FISCAL YEAR-END
SHARES ACQUIRED VALUE (EXERCISABLE/ (EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE) UNEXERCISABLE) (1)
- ---- ----------- -------- -------------- ------------------
William A. Fitzgerald -- $ -- 317,592/145,695 $196,720/425,442
David S. Fisher -- -- 50,000/-- $198,375/--
Gary L. Matter -- -- 40,298/19,500 $4,475/56,213
Roger L. Lewis -- -- 40,587/18,834 $108,986/56,213
Kevin C. Parks -- -- 22,478/12,334 $30,581/37,475
<FN>
________
(1) Based on the closing sales price of the Common Stock as reported on the New
York Stock Exchange on December 31, 2000, which was $19.4375.
</FN>
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
Set forth below is a discussion of certain employment and change in control
agreements entered into between the Corporation and the Bank and those executive
officers listed in the Summary Compensation Table on page 9.
The agreement with William A. Fitzgerald, which became effective in June
1995, provides for Mr. Fitzgerald's employment as Chairman of the Board and
Chief Executive Officer of the Corporation and the Bank for a term of three
years. Pursuant to the agreement, Mr. Fitzgerald receives an annual salary and
bonus determined by agreement with the Board of Directors, but in no event less
than the rate of compensation Mr. Fitzgerald received on June 8, 1995. The base
compensation following his election as Chairman of the Board of Directors was
$385,000. The Boards of Directors of the Corporation and the Bank reviewed the
employment agreement and again extended the agreement for an additional one-year
period beyond the effective expiration dates. The contract provides for
termination for cause or in certain events specified by regulatory authorities.
The contract is also terminable by the Bank without cause wherein Mr. Fitzgerald
would be entitled to receive all compensation and benefits through the effective
date of termination, plus a severance payment equal to 36 months of base salary.
Mr. Fitzgerald shall be entitled to the same benefits and severance in the event
he becomes disabled while the agreement is in effect. In the event Mr.
Fitzgerald dies while the agreement is in effect, his heirs shall receive a
severance payment equal to 12 months of base salary. The agreement provides,
among other things, for Mr. Fitzgerald's participation in an equitable manner in
all benefits available to executive officers of the Corporation and the Bank,
including:
10
o short-term and long-term incentive compensation and deferred
compensation;
o health, disability, life insurance, retirement and vacation benefits;
and
o any benefits available under perquisite programs.
The Corporation and the Bank have also entered into change in control
agreements with Messrs. Fitzgerald, Fisher, Matter, Lewis and Parks. Under these
agreements, in the event of the executive's involuntary termination of
employment in anticipation of, or after, a change in control of the Corporation
or the Bank, other than for "cause," the executive will be paid in equal monthly
installments, the base salary and all commissions and bonuses (including
short-term and long-term incentive compensation awards and stock options granted
under the Corporation's executive incentive plan) in effect at the time of
termination for a period of 35.88 months. Messrs. Fitzgerald, Fisher, Matter,
Lewis and Parks, where not prohibited by law, shall also be entitled to receive
reimbursement for up to one-half of all legal fees and expenses reasonably
incurred by them as a result of an involuntary termination. During this period,
the executive shall also continue to participate in any health, disability, life
insurance and perquisite plans of any successor corporation in which such
executive was entitled to participate with the Corporation prior to the change
in control. All benefits and payments under the agreements shall be reduced, if
necessary, to the largest aggregate amount that will result in no portion
thereof being subject to federal excise tax or being nondeductible to the
Corporation and the Bank for federal income tax purposes. Messrs. Fisher's,
Matter's, Lewis' and Parks' severance shall be reduced by amounts received by
the executive as a result of alternative employment obtained during the period
in which salary, commissions and bonuses are payable under the change in control
agreements. Further, Mr. Fitzgerald's severance payments under his change in
control agreements shall be reduced by the amount of severance received under
his employment agreement.
A "change in control" shall be deemed to have occurred under these
agreements in each of the following events:
o at any time a majority of the directors of the Corporation or the Bank
are not the persons for whom election proxies have been solicited by
the Boards of Directors of the Corporation and the Bank, or persons
then serving as directors appointed by such Boards, except where such
appointments are necessitated by removal of directors;
o at any time 49% or more of the outstanding stock of the Corporation or
the Bank is acquired or beneficially owned by any person or entity
(excluding the Corporation, the Bank or the executive) or any
combination of persons or entities acting in concert; or
o at any time the shareholders of the Corporation or the Bank approve an
agreement to merge or consolidate the Corporation or the Bank with or
into another corporation, or to sell or otherwise dispose of all, or
substantially all, of the assets of the Corporation or the Bank.
The executive shall also be entitled to receive such payment in the event of a
"constructive involuntary termination," which under the terms of the agreements
shall be deemed to have occurred if, in anticipation of or following a change in
control,
o the agreement or the executive's employment is terminated,
o the executive's compensation is reduced, responsibilities diminished
or job title lowered,
o the level of the executive's participation in incentive compensation
is reduced or eliminated,
o the executive's benefit coverage or perquisites are reduced or
eliminated, except to the extent such reduction or elimination applies
to all other employees, or
11
o the executive's office location is changed to a location more than 50
miles from the location of the executive's office at the time of the
change in control.
Pursuant to the terms of a separate agreement between the Bank and William
A. Fitzgerald, in the event of Mr. Fitzgerald's termination of employment with
the Bank, Mr. Fitzgerald will be entitled to receive in 120 equal monthly
installments an amount equal to three times his highest annual salary received
from the Bank during the five-year period ending with the close of the fiscal
year in which he attains age 65 (or, in the case of death or disability prior to
age 65, the year in which he became disabled or died). In the event of his death
before the payment of all installments, all remaining installments shall be paid
to his designated beneficiary. In the event of the death of both Mr. Fitzgerald
and the designated beneficiary, all remaining unpaid installments shall be paid
in one lump sum payment to the estate of the designated beneficiary. Pursuant to
the terms of the agreement, the right to receive any and all unpaid installments
will be forfeited upon the occurrence of any of the following events (i) without
the approval of the Board of Directors, Mr. Fitzgerald has or possesses,
directly or indirectly, any interest competing with or inimical to the interests
of the Bank within an area within a 300 mile radius of Omaha, Nebraska, or (ii)
Mr. Fitzgerald engages in any activity or conduct which, in the opinion of the
Board, is inimical to the interests of the Bank.
- --------------------------------------------------------------------------------
DIRECTORS' COMPENSATION
- --------------------------------------------------------------------------------
Directors receive $500 per month for service on the Board of the
Corporation and $1,500 per month plus $750 per meeting attended for service on
the Board of the Bank, with the exception of William A. Fitzgerald, who does not
receive director's compensation. Fees for members of the committees of the
Corporation and the Bank are paid at the rate of $750 per committee meeting
attended. The chairman of the audit committee, Compensation and Stock Option
Committee, and the Finance Committee each receive an additional $2,000 per year.
Effective July 1, 1999, the 1996 Stock Option and Incentive Plan was amended to
allow Directors to substitute cash compensation and shares of the Corporation's
Common Stock for non-incentive stock options with an exercise price equal to 75%
of the market value of the optioned shares. The aggregate difference between the
exercise price and the market value of the underlying shares equals the
compensation foregone. In no event shall the exercise price of the stock option
be less than 50% of the market value of the underlying shares on the date of the
grant. All directors receiving remuneration elected to receive the discounted
non-incentive stock options. During the Transition Period ended December 31,
2000, discounted non-incentive stock options to purchase 42,935 shares were
granted to the non-employee directors of the Corporation and the Bank.
- --------------------------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT AND OTHERS
- --------------------------------------------------------------------------------
The Bank offers first and second mortgages, refinance, equity and various
consumer loans to its directors, officers and employees. Loans to executive
officers and directors are made in the ordinary course of business on
substantially the same terms and collateral, including interest rates and loan
fees charged, as those of comparable transactions prevailing at the time and do
not involve more than the normal risk of collectibility or present other
unfavorable features.
12
- --------------------------------------------------------------------------------
COMPARATIVE STOCK PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
The graph set forth below compares the cumulative total shareholder return
on the Common Stock over the last five years with the cumulative total return on
the S&P 500 Index and an index comprised of the top 50 publicly traded thrifts
in the United States based on total asset size over the same period. Cumulative
total return on the stock or the index equals the total increase in value from
June 30, 1995 to December 31, 2000, assuming reinvestment of all dividends paid
into the stock or the index, respectively. The graph was prepared assuming that
$100 was invested on June 30, 1995 in the Common Stock and in the respective
indices.
June 30, 1995 through December 31, 2000
[Line graph appears here depicting the cumulative total shareholder return
of $100 invested in the Common Stock as compared to $100 invested in the S&P 500
Index and an index comprised of the top 50 publicly traded thrifts in the United
States. Line graph begins at June 30, 1995 and plots the cumulative total return
at June 30, 1996, 1997, 1998, 1999, 2000 and December 31, 2000. Plot points are
provided below.]
CUMULATIVE TOTAL RETURN
---------------------------------------------------------------------------
6/95 6/96 6/97 6/98 6/99 6/00 12/00
---- ---- ---- ---- ---- ---- -----
Commercial Federal 100 141.88 208.16 267.67 198.41 135.33 170.25
S & P 500 100 126.00 169.73 220.92 271.19 290.85 265.50
Peer Group 100 126.89 207.31 268.74 223.70 187.18 305.59
13
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the Corporation's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Corporation's executive office at
2120 South 72nd Street, Omaha, Nebraska 68124, no later than December 4, 2001.
Any such proposal shall be subject to the requirements of the proxy rules
adopted under the Exchange Act.
Stockholder proposals, other than those submitted pursuant to the Exchange
Act, must be submitted in writing to the Corporation's principal executive
offices at the address given in the preceding paragraph not less than 60 days
prior to the date of such meeting.
- --------------------------------------------------------------------------------
AUDIT COMMITTEE REPORT
- --------------------------------------------------------------------------------
The audit committee has reviewed and discussed the audited financial
statements of the Corporation with management and has discussed with Deloitte &
Touche LLP, the Corporation's independent auditors, the matters required to be
discussed under Statements on Auditing Standards No. 61 ("SAS 61"). In addition,
the audit committee has received from Deloitte & Touche LLP the written
disclosures and the letter required to be delivered by Deloitte & Touche LLP
under Independence Standards Board Standard No. 1 ("ISB Standard No. 1")
addressing all relationships between the auditors and the Corporation that might
bear on the auditors' independence. The audit committee has reviewed the
materials to be received from Deloitte & Touche LLP and has met with
representatives of Deloitte & Touche LLP to discuss the independence of the
auditing firm.
In connection with the new standards for independence of the Corporation's
independent auditors promulgated by the Securities and Exchange Commission, the
audit committee has reviewed the non-audit services currently provided by the
Corporation's independent auditor and has considered whether the provision of
such services is compatible with maintaining the independence of the
Corporation's independent auditors.
Based on the audit committee's review of the financial statements, its
discussion with Deloitte & Touche LLP regarding SAS 61, and the written
materials provided by Deloitte & Touche LLP under ISB Standard No. 1 and the
related discussion with Deloitte & Touche LLP of their independence, the audit
committee has recommended to the Board of Directors that the audited financial
statements of the Corporation be included in its Transition Report on Form 10-K
for the Transition Period ended December 31, 2000, for filing with the
Securities and Exchange Commission.
THE AUDIT COMMITTEE
Robert F. Krohn (Chairman)
Michael P. Glinsky
James P. O'Donnell
Aldo J. Tesi
George R. Zoffinger
Michael T. O'Neil (Ex-Officio)
14
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors presently has renewed the Corporation's arrangements
with Deloitte & Touche LLP to be its auditors for the 2001 calendar year.
Deloitte & Touche LLP were the Corporation's independent auditors for the 2000
transition year. Representatives of Deloitte & Touche LLP are expected to be
present at the Meeting to respond to appropriate questions from stockholders and
will have the opportunity to make a statement if they so desire.
AUDIT FEES
During the Transition Period ended December 31, 2000, the aggregate fees
billed for professional services rendered for the audit of the Corporation's
annual financial statements and the reviews of the financial statements included
in the Corporation's Quarterly Reports on Form 10-Q filed during the Transition
Period ended December 31, 2000 were $308,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Corporation did not engage Deloitte & Touche LLP to provide advice to
the Corporation regarding financial information systems design and
implementation during the Transition Period ended December 31, 2000.
ALL OTHER FEES
For the Transition Period ended December 31, 2000, the aggregate fees paid
by the Corporation to Deloitte & Touche LLP for all other services (other than
audit services) were $4,336,000.
- --------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
Pursuant to regulations promulgated under the Securities Exchange Act of
1934, as amended, the Corporation's officers, directors and persons who own more
than 10 percent of the outstanding Common Stock ("Insiders") are required to
file reports detailing their ownership and changes of ownership in such Common
Stock, and to furnish the Corporation with copies of all such reports. Based
solely on its review of the copies of such reports or written representations
that no such reports were necessary that the Corporation received during the
past fiscal year or with respect to the last fiscal year, management believes
that during the Transition Period ended December 31, 2000, all of the
Corporation's Insiders complied with these reporting requirements.
- --------------------------------------------------------------------------------
EXPENSES OF SOLICITATION
- --------------------------------------------------------------------------------
The cost of soliciting proxies will be borne by the Corporation. The
Corporation will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Corporation may solicit proxies
personally or by telegraph, telephone or other electronic means without
additional compensation. The Corporation has retained D. F. King & Co., Inc. to
assist in the solicitation of proxies by mail, personally or by telephone or
other means of communication, for a fee estimated at $5,500 plus expenses.
15
- --------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
as determined by a majority of the Board of Directors.
The Corporation's December 2000 Summary Annual Report and its Transition
Report on Form 10-K, including financial statements, are being mailed to all
stockholders of record as of the close of business on March 27, 2001. Any
stockholder who has not received copies of such reports may obtain copies by
writing to the Secretary of the Corporation. Such reports are not to be treated
as a part of the proxy solicitation material or as having been incorporated
herein by reference.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gary L. Matter
GARY L. MATTER
SECRETARY
Omaha, Nebraska
April 3, 2001
16
EXHIBIT A
COMMERCIAL FEDERAL CORPORATION/BANK
CHARTER - AUDIT COMMITTEE
COMMITTEE ROLE
The committee's role is to act on behalf of the board of directors and oversee
all material aspects of Commercial Federal's reporting, control and audit
functions. The audit committee's role includes a focus on financial reporting to
shareholders, company processes for the management of business/financial risk
and compliance with significant applicable regulatory requirements.
The role also includes coordination with other board committees and maintenance
of strong, positive working relationships with management, external and internal
auditors, regulators, legal counsel and other committee advisors.
COMMITTEE MEMBERSHIP
The committee shall consist of three or more independent board members.
Committee members shall have (1) knowledge of banking or related financial
management expertise; (2) the ability to read and understand fundamental
financial statements, including the company's balance sheet, income statement,
statement of cash flow and key performance indicators; and (3) the ability to
understand key business and financial risks and related controls and control
processes. The committee shall have access to its own counsel and other advisors
at the committee's sole discretion.
One member, preferably the chairperson, should be literate in business and
financial reporting and control, including knowledge of the regulatory
requirements, and should have past employment experience in finance or
accounting or other comparable experience or background. Committee appointments
shall be approved annually by the full board. The committee chairperson shall be
selected by the chairman of the board of directors.
COMMITTEE OPERATING PRINCIPLES
The committee shall fulfill its responsibilities within the context of the
following overriding principles:
o Communications - The chairperson and others on the committee shall, to
the extent appropriate, have contact throughout the year with senior
management, other committee chairpersons and other key committee
advisors, external and internal auditors, etc., as applicable, to
strengthen the committee's knowledge of relevant current and
prospective business issues.
o Annual Plan - The committee, with input from management and other key
committee advisors, shall develop an annual plan responsive to the
"primary committee responsibilities" detailed herein.
o Meeting Agenda - Committee meeting agendas shall be the responsibility
of the committee chairperson, with input from committee members. It is
expected that the chairperson would also ask for management and key
committee advisors, and perhaps others, to participate in this
process.
A-1
o Committee Expectations and Information Needs - The committee shall
communicate committee expectations and the nature, timing and extent
of committee information needs to management, internal audit and
external parties, including external auditors. Written materials,
including key performance indicators and measures related to key
business and financial risks, shall be received from management,
auditors and others at least one week in advance of meeting dates.
Meeting conduct will assume board members have reviewed written
materials in sufficient depth to participate in committee/board
dialogue.
o External Resources - The committee shall be authorized to access
internal and external resources, as the committee requires, to carry
out its responsibilities.
o Committee Meeting Attendees - The committee shall request members of
management, counsel, internal audit and external auditors, as
applicable, to participate in committee meetings, as necessary, to
carry out the committee responsibilities. Periodically, and at least
annually, the committee shall meet in private session with only the
committee members. It shall be understood that either internal or
external auditors or counsel may at any time request a meeting with
the audit committee or committee chairperson, with or without
management attendance. In any case, the committee shall meet in
executive session separately with internal and external auditors at
least annually.
o Reporting to the Board of Directors - The committee, through the
committee chairperson, shall report periodically to the full board of
directors.
MEETING FREQUENCY
The committee shall meet at least four times each calendar year. Additional
meetings shall be scheduled as considered necessary by the committee or
chairperson.
REPORTING TO SHAREHOLDERS/OTHERS
The committee shall make available to shareholders, NYSE, SEC and others a
summary report on the scope of its activities and a written affirmation of
independence, financial literacy/expertise, review/reassessment of the charter
and communications with external auditors as required by the rules/regulations
of the NYSE, NASD, SEC and AICPA.
COMMITTEE'S RELATIONSHIP WITH EXTERNAL AND INTERNAL AUDITORS
o The external auditors, in their capacity as independent public
accountants, shall be responsible to the board of directors and the
audit committee as representatives of the shareholders. The audit
committee is responsible for the selection, evaluation and replacement
of auditors with the consent of the full Board of Directors.
o As the external auditors review financial reports, they will be
reporting to the audit committee. They shall report all relevant
issues to the committee responsive to agreed-on committee
expectations.
o The committee shall annually review the performance (effectiveness,
objectivity and independence) of the external and internal auditors.
The committee shall ensure receipt of a formal written statement from
the external auditors consistent with standards set by the
A-2
Independence Standards Board. Additionally, the committee shall
discuss with the auditor relationships or services that may affect
auditor objectivity or independence. If the committee is not satisfied
with the auditors' assurances of independence, it shall take or
recommend to the full board appropriate action to ensure the
independence of the external auditor.
o The internal audit function shall be responsible to the board of
directors through the committee.
o If either the internal or the external auditors identify significant
issues relative to the overall responsibility of the board of
directors that have been communicated to management, but in the
auditors' judgment have not been adequately addressed, they should
communicate these issues to the committee chairperson.
PRIMARY COMMITTEE RESPONSIBILITIES
The committee should review:
o Risk Management - The results of the periodic internal audit
assessment of the company's risk management process, including the
adequacy of the company's overall control environment and controls in
selected areas.
o Annual Reports and Other Major Regulatory Filings
o Internal Controls and Regulatory Compliance - The results of the
internal audit assessment of the company's system of internal controls
for detecting accounting and financial reporting errors, fraud and
defalcations, legal violations and noncompliance with the corporate
code of conduct.
o Internal Audit Responsibilities - The annual audit plan and the
process used to develop the plan. Status of activities, significant
findings, recommendations and management's response.
o Regulatory Examinations - SEC inquiries and the results of
examinations by other regulatory authorities in terms of important
findings, recommendations and management's response.
o External Audit Responsibilities - Auditor independence and the overall
scope and focus of the annual/interim audit, including the scope and
level of involvement with unaudited quarterly or other interim-period
information.
o Financial Reporting and Controls - Review with management and the
independent external auditors the quarterly and annual financial
statements; an analysis prepared by management of significant
financial reporting issues and judgments; and discuss periodically
with management the major financial risks and steps taken by
management to monitor and control such exposures.
o Auditor Recommendations - Important internal and external auditor
recommendations on financial reporting, controls, other matters and
management's response. The views of management and auditors on the
overall quality of annual and interim financial reporting.
A-3
COMMERCIAL
FEDERAL
CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 8, 2001
10:00 A.M. LOCAL TIME
HOLIDAY INN CENTRAL CONVENTION CENTRE
"HOLIDAY C" MEETING ROOM
3321 SOUTH 72ND STREET
OMAHA, NEBRASKA
COMMERCIAL
FEDERAL
CORPORATION PROXY
- --------------------------------------------------------------------------------
The undersigned hereby appoints William A. Fitzgerald,
Robert D. Taylor and Aldo J. Tesi, and each of them, with
full power of substitution, as attorneys in fact, agents and
proxies for the undersigned to vote all of the shares of
Common Stock, par value $.01 per share, of COMMERCIAL
FEDERAL CORPORATION (the "Corporation") which the
undersigned is entitled to vote at the Annual Meeting of
Stockholders to be held at the Holiday Inn Central
Convention Centre, 3321 South 72nd Street, "Holiday C"
Meeting Room, Omaha, Nebraska on Tuesday, May 8, 2001 at
10:00 a.m., local time, and at any and all adjournments or
postponements thereof (the "Meeting") as indicated on the
reverse side and as directed by the Board of Directors, with
respect to such other matters as may properly come before
the Meeting.
See reverse for voting instructions.
Please detach here
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1.
1. Election of directors: For terms to expire in 2004 [ ] Vote FOR [ ] Vote WITHHELD
01 Talton K. Anderson 03 James P. O'Donnell all nominees from all nominees
02 Carl G. Mammel (except as marked)
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE, _______________________________
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) |_______________________________|
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED BY THOSE NAMED
IN THIS PROXY "FOR" PROPOSAL 1. IF OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE MEETING, THIS PROXY WILL BE
VOTED BY THOSE NAMED IN THIS PROXY AS DIRECTED BY A MAJORITY OF THE BOARD OF DIRECTORS. There is cumulative voting
in the election of directors and, unless otherwise indicated by the stockholder, a vote for the nominees listed in
Proposal 1 will give the proxies discretionary authority to cumulate all votes to which the undersigned is entitled
and to allocate such votes in favor of one or more of such nominees, as the proxies may determine.
THE UNDERSIGNED HEREBY REVOKES ANY PREVIOUS PROXIES WITH RESPECT TO THE MATTERS COVERED BY THIS PROXY.
Address Change? Mark Box [ ] Indicate change below: Date ____________________________________
_________________________________________
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|_______________________________________|
Signature(s) in Box
Please sign exactly as your name appears on this card. Joint
owners should each sign personally. Corporation proxies
should be signed in corporate name by an authorized officer.
Executors, administrators, trustees or guardians should give
their title when signing.