SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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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-12
RFS Bancorp, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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/X/ No fee required.
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and 0-11.
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[RFS BANCORP, INC. LOGO]
December 20, 2000
Dear Stockholder:
You are cordially invited to attend the 2001 Annual Meeting of Shareholders
of RFS Bancorp, Inc. (the "Company"), the holding company for Revere Federal
Savings Bank (the "Bank"), Revere, Massachusetts, which will be held on
January 17, 2001 at the main office of the Company located at 310 Broadway,
Revere, Massachusetts 02151, at 3:00 p.m., local time (the "Annual Meeting").
The attached Notice of the 2001 Annual Meeting of Shareholders and proxy
statement describe the formal business to be transacted at the Annual Meeting.
In addition to the formal items of business, management will report on the
operations and activities of the Company and the Bank and you will have an
opportunity to ask questions.
The Board of Directors of the Company has determined that an affirmative
vote on each matter to be considered at the Annual Meeting is in the best
interests of the Company and its shareholders and unanimously recommends a vote
"FOR" each of these matters.
Please complete, sign and return the enclosed proxy card promptly whether or
not you plan to attend the Annual Meeting. YOUR VOTE IS IMPORTANT REGARDLESS OF
THE NUMBER OF SHARES YOU OWN. VOTING BY PROXY WILL NOT PREVENT YOU FROM VOTING
IN PERSON AT THE ANNUAL MEETING BUT WILL ASSURE THAT YOUR VOTE IS COUNTED IF YOU
CANNOT ATTEND.
On behalf of the Board of Directors, officers and the employees of RFS
Bancorp, Inc. and Revere Federal Savings Bank, we thank you for your continued
support and look forward to seeing you at the meeting.
Sincerely yours,
/s/ James J. McCarthy
James J. McCarthy
PRESIDENT AND CHIEF EXECUTIVE OFFICER
RFS BANCORP, INC.
310 BROADWAY
REVERE, MASSACHUSETTS 02151
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DATE: WEDNESDAY, JANUARY 17, 2001
TIME: 3:00 P.M., LOCAL TIME
PLACE: 310 BROADWAY, REVERE, MASSACHUSETTS 02151
------------------------
At our 2001 Annual Meeting, we will ask you to:
- Elect three directors for a three-year term expiring at the 2004
Annual Meeting. The following three directors are the Board of
Director's nominees.
Theodore E. Charles James J. McCarthy J. Michael O'Brien
- Ratify the appointment of Shatswell, MacLeod & Co., P.C. as our
independent auditors for the fiscal year ending September 30, 2001;
and
- Transact any other business as may properly come before the Annual
Meeting.
You may vote at the Annual Meeting if you were a stockholder of the Company
at the close of business on December 15, 2000, the record date.
By Order of the Board of Directors,
/s/ Ernest F. Becker
Ernest F. Becker
SECRETARY
Revere, Massachusetts
December 20, 2000
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF SHARES YOU OWN. THE BOARD
OF DIRECTORS URGES YOU TO SIGN, DATE AND MARK THE ENCLOSED PROXY CARD PROMPTLY
AND RETURN IT IN THE ENCLOSED ENVELOPE. RETURNING THE PROXY CARD WILL NOT
PREVENT YOU FROM VOTING IN PERSON IF YOU ATTEND THE ANNUAL MEETING.
GENERAL INFORMATION
GENERAL
We sent you this proxy statement and enclosed proxy card because the Board
of Directors is soliciting your proxy to vote at the Annual Meeting. This proxy
statement summarizes the information you need to know to cast an informed vote
at the Annual Meeting. You do not need to attend the Annual Meeting to vote your
shares. You may simply complete, sign and return the enclosed proxy card and
your votes will be cast for you at the Annual Meeting.
We began mailing this proxy statement, the Notice of Annual Meeting and the
enclosed proxy card on or about December 20, 2000 to all shareholders entitled
to vote. If you owned RFS Bancorp, Inc.'s (the "Company") common stock at the
close of business on December 15, 2000, the record date, you are entitled to
vote at the Annual Meeting. On the record date, there were 884,923 shares of
common stock outstanding.
QUORUM REQUIREMENT
A quorum of shareholders is necessary to hold a valid meeting. If the
holders of at least a majority of the total number of the outstanding shares of
common stock of the Company entitled to vote are represented in person or by
proxy at the Annual Meeting, a quorum will exist. We will include proxies marked
as abstentions and broker non-votes to determine the number of shares present at
the Annual Meeting.
VOTING RIGHTS
You are entitled to one vote at the Annual Meeting for each share of the
Company's common stock that you owned of record at the close of business on
December 15, 2000. The number of shares you own (and may vote) is listed at the
top of the back of the proxy card.
You may vote your shares at the Annual Meeting in person or by proxy. To
vote in person, you must attend the Annual Meeting, and obtain and submit a
ballot, which we will provide to you at the Annual Meeting. To vote by proxy,
you must complete, sign and return the enclosed proxy card. If you properly
complete your proxy card and send it to us in time to vote, your "proxy" (one of
the individuals named on your proxy card) will vote your shares as you have
directed. IF YOU SIGN THE PROXY CARD BUT DO NOT SPECIFY HOW YOU WANT TO VOTE
YOUR SHARES, YOUR PROXY WILL VOTE YOUR SHARES FOR THE ELECTION OF EACH NOMINEE
FOR DIRECTOR LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
If any other matter is presented, your proxy will vote the shares
represented by all properly executed proxies on such matters as a majority of
the Board of Directors determines. As of the date of this proxy statement, we
know of no other matters that may be presented at the Annual Meeting, other than
those listed in this proxy statement.
VOTE REQUIRED
PROPOSAL 1: The three nominees for director who receive the most votes
Elect Three Directors will be elected. So, if you do not vote for a nominee, or
you indicate "withhold authority" for any nominee on your
proxy card, your vote will not count "for" or "against" the
nominee. You may not vote your shares cumulatively for the
election of directors.
PROPOSAL 2: The affirmative vote of a majority of the shares present in
Ratify Appointment person or by proxy at the of Annual Meeting and entitled to
Independent Public vote on this proposal is required to ratify the appointment
Accountants of Shatswell, MacLeod & Co., P.C. as the Company's
independent certified public accountants. So, if you
"abstain" from voting, it has the same effect as if you
voted "against" this proposal.
1
EFFECT OF BROKER NON-VOTES
If your broker holds shares that you own in "street name," the broker may
vote your shares on the two proposals listed above even if the broker does not
receive instructions from you. If your broker does not vote on ANY of the
proposals, this will constitute a "broker non-vote." Broker non-votes will be
treated as shares that are not represented on Proposals 1 and 2 and will have no
effect on the outcome of the votes.
CONFIDENTIAL VOTING POLICY
The Company maintains a policy of keeping stockholder votes confidential. We
only let our Inspectors of Election and our independent tabulating agent examine
the voting materials. We will not disclose your vote to management unless it is
necessary to meet legal requirements. We will, however, forward any written
comments that you may have to management.
REVOKING YOUR PROXY
You may revoke your proxy at any time before it is exercised by:
- Filing with the Company a letter revoking the proxy;
- Submitting another signed proxy with a later date; and
- Attending the Annual Meeting and voting in person, if you file a written
revocation with the Secretary of the Annual Meeting prior to the voting of
such proxy.
IF YOUR SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED
APPROPRIATE DOCUMENTATION FROM YOUR STOCKHOLDER OF RECORD TO VOTE PERSONALLY AT
THE ANNUAL MEETING. Examples of such documentation include a valid proxy from
the registered holder of your shares confirming your ownership of shares of the
Company.
SOLICITATION OF PROXIES
The Company will pay the costs of soliciting proxies from its shareholders.
Directors, officers or employees of the Company and Revere Federal Savings Bank
(the "Bank") may solicit proxies by:
- mail;
- telephone; and
- other forms of communication.
We will also reimburse banks, brokers, nominees and other fiduciaries for
the expenses they incur in forwarding the proxy materials to you.
OBTAINING AN ANNUAL REPORT ON FORM 10-KSB
If you would like a copy of our Annual Report on Form 10-KSB for the year
ended September 30, 2000, which will be filed with the Securities and Exchange
Commission ("SEC"), we will send you one (without exhibits) free of charge.
Please write to:
Anthony J. Patti
Executive Vice President and Chief Financial Officer
RFS Bancorp, Inc.
310 Broadway
Revere, Massachusetts 02151
Email Address: Tony@reverefed.com
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL SHAREHOLDERS OF THE COMPANY
The following table contains stockholder information for persons known to
the Company to "beneficially own" 5% or more of the Company's common stock as of
December 15, 2000. In general, beneficial ownership includes those shares that a
person has the power to vote, sell, or otherwise dispose. Beneficial ownership
also includes that number of shares which an individual has the right to acquire
within 60 days (such as stock options). Two or more persons may be considered
the beneficial owner of the same share. We obtained the information provided in
the following table from filings with the Securities and Exchange Commission
(the "SEC") and with the Company. In this proxy statement, "voting power" is the
power to vote or direct the voting of shares, and "investment power" includes
the power to dispose or direct the disposition of shares.
NAME AND ADDRESS OF AMOUNT AND NATURE OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT
- -------------- ------------------- -------------------- --------
Common stock, $.01 par value................... Revere, MHC 494,767 53.0%
310 Broadway
Revere, MA 02151
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the Company's common stock beneficially owned by
each director and named executive officer identified in the Summary Compensation
Table included elsewhere in this proxy statement, and all directors and
executive officers of the Company as a group, as of December 15, 2000. Except as
otherwise indicated, each person and each group shown in the table has sole
voting and investment power with respect to the shares of common stock owned by
such person or group.
AMOUNT AND PERCENT OF
NATURE OF COMMON
BENEFICIAL STOCK
NAME TITLE(1) OWNERSHIP(2)(3) OUTSTANDING
- ---- --------------------------------------------- --------------- -----------
Ernest F. Becker............ Vice-Chairman and Director 1,987 *
Arno P. Bommer.............. Chairman of the Board and Director 11,487 1.3%
Theodore E. Charles......... Director 15,987 1.7%
Anthony R. Conte............ Director 3,487 *
Carmen R. Matthuchio........ Director 15,987 1.7%
James J. McCarthy........... President, Chief Executive Officer and
Director 23,596 2.6
J. Michael O'Brien.......... Director 1,987 *
Anthony J. Patti............ Executive Vice President and Chief Financial
Officer 12,716 1.4
Mark Robinson............... Director 987 *
John J. Verrengia........... Director 7,929 *
Angelo A. Todisco........... Director Emeritus 2,987 *
All directors and executive
officers as a group (12
persons)(4)(5)............ 136,548 15.1
- ------------------------
* Less than one percent.
(1) Titles are for both the Company and the Bank.
(2) See "Principal Shareholders of the Company" above for a definition of
"beneficial ownership."
3
(3) The figures shown above include shares held in trust pursuant to the RFS
Bancorp, Inc. Employee Stock Ownership Plan (the "ESOP") that have been
allocated as of September 30, 2000, to individual accounts as follows:
Messrs McCarthy--1,284 shares, Mr. Patti--913 shares, and all other
executive officers as a group 498 shares. Such persons have voting power
(subject to the legal duties of the ESOP Trustee) but no investment power,
except in limited circumstances, over such shares. The amount of shares for
all directors and executive officers as a group includes 26,842 shares held
by the ESOP Trust that have not been allocated to eligible participants as
of September 30, 2000, over which the Compensation Committee (consisting of
Messrs. Becker, McCarthy and Bommer) may be deemed to have sole "investment
power," except in limited circumstances, thereby causing each such committee
member to be deemed a beneficial owner. Each such person disclaims
beneficial ownership of these shares. The individual participants in the
ESOP have shared voting power with the ESOP Trustee with respect to the
unallocated shares held in the ESOP Trust.
(4) Includes restricted stock award of 658 shares made to each outside director
under the RFS Bancorp, Inc. 1999 Recognition and Retention Plan ("RRP") as
of June 29, 2000, except for Mr. Robinson, who was awarded 658 shares under
the RRP on January 19, 2000. Under the RRP, Messrs. McCarthy and Patti were
also granted restricted stock awards of 4,388 and 2,633 shares of common
stock, respectively, and all other executive officers as a group were
granted restricted stock awards of 878 shares. Each recipient of restricted
stock award has sole voting power, but no investment power, over the common
stock covered by the award. The restricted stock awards vest at the rate of
20% per year on each anniversary date of the grant. The first installment
for each outside director and to Messrs. McCarthy and Patti vested on
June 29, 2000 except for awards held by Mr. Robinson whose first installment
will vest on January 19, 2001.
(5) Includes shares of common stock as to which the named individual has the
right to acquire beneficial ownership, currently or within 60 days of the
December 15, 2000 voting record date, pursuant to the exercise of stock
options, as follows: (i) 329 shares each for Mr. Becker, Mr. Bommer,
Mr. Charles, Mr. Conte, Ms. Matthuchio, Mr. O'Brien, Mr. Robinson,
Mr. Verrengia and Mr. Todisco; (ii) 2,193 shares for Mr. McCarthy; and
(iii) 1,315 shares for Mr. Patti.
4
PROPOSAL 1
ELECTION OF DIRECTORS
GENERAL
The Board has nominated three persons for election as directors at the
Annual Meeting. All three nominees are currently serving on the Company's Board
of Directors. If you elect the nominees, they will hold office until the Annual
Meeting in 2004 or until their successors have been elected.
We know of no reason why any nominee may be unable to serve as a director.
If any nominee is unable to serve, your proxy may vote for another nominee
proposed by the Board. If for any reason these nominees prove unable or
unwilling to stand for election, the Board will nominate alternates or reduce
the size of the Board of Directors to eliminate the vacancy. The Board has no
reason to believe that its nominees would prove unable to serve if elected.
TERM DIRECTOR
NOMINEES AGE(1) EXPIRES POSITION(S) HELD WITH THE COMPANY SINCE(2)
- -------- -------- -------- ------------------------------------------ --------
Theodore E. Charles....................... 58 2004 Director 1997
James J. McCarthy......................... 40 2004 President, Chief Executive Officer and 1989
Director
J. Michael O'Brien........................ 47 2004 Director 1997
CONTINUING DIRECTORS
- ------------------------------------------
Ernest F. Becker.......................... 70 2002 Vice-Chairman and Director 1977
Arno P. Bommer............................ 73 2002 Chairman of the Board and Director 1955
Anthony R. Conte.......................... 52 2002 Director 1988
Carmen Mattuchio.......................... 62 2003 Director 1994
Mark Robinson............................. 43 2003 Director 1999
John J. Verrengia......................... 45 2003 Director 1994
Angelo A. Todisco......................... 72 -- Director Emeritus 1980
- ------------------------
(1) At September 30, 2000.
(2) Includes terms served on the Board of Directors of the Bank.
BIOGRAPHICAL INFORMATION
The following information relates to the directors and executive officers of
the Company and the Bank. Unless otherwise indicated, each director and
executive officer has held his or her current occupation for the last five
years.
NOMINEES
THEODORE E. CHARLES has been a director of the Bank since 1997 and the
Company's inception in 1998. Mr. Charles is the Chairman of the Board and Chief
Executive Officer of Investors Capital Holdings which is located in Lynnfield,
Massachusetts. As Chairman and Chief Executive Officer of Investors Capital
Holdings, Mr. Charles is responsible for supervising the brokerage and
investment services provided by its affiliates, Investors Capital Corporation, a
brokerage concern registered with the National Association of Securities Dealers
and Eastern Point Advisors, registered investment advisors.
JAMES J. MCCARTHY joined the Bank in 1985 and has served as President and
Chief Executive Officer of the Bank since 1989 and the Company since 1998. He
has also served as a director of the Bank since 1989 and the Company since 1998.
Prior to that, Mr. McCarthy, a CPA, was employed by the predecessor to Ernst &
Young, Boston, Massachusetts, serving in a variety of audit functions.
5
Mr. McCarthy has also been employed by Pell Rudman & Company, a Broker
Dealer/Investment Advisor firm as a consultant with respect to accounting and
reporting to the National Association of Securities Dealers. Mr. McCarthy is on
the Board of Directors of the Massachusetts Bankers Association and is involved
in many local Revere charities and business organizations including the Revere
Chamber of Commerce, Revere Rotary and the Revere Partnership for Economic
Development. Mr. McCarthy also served as the Executive Committee Chairman of the
Massachusetts Thrift Fund for Economic Development until its dissolution in
1997.
J. MICHAEL O'BRIEN has been a director of the Bank since 1997 and the
Company since 1998. He is the President, Chief Executive Officer and a principal
of Eagle Air Freight, a domestic air freight provider, founded in 1981 and based
in Chelsea, Massachusetts. Mr. O'Brien is also the trustee and a principal of
O'Brien Realty Trust. O'Brien Realty Trust owns and leases warehouse and
commercial office space in Chelsea, Massachusetts.
CONTINUING DIRECTORS
ERNEST F. BECKER has been a director of the Bank since 1977 and the Company
since 1998. Mr. Becker, a licensed professional engineer, served as Chief
Engineer, Vice President and President of Whitmor Company, an engineering
company located in Revere, Massachusetts, from 1952 until his retirement in
1996.
ARNO P. BOMMER has served on the Board of Directors of the Bank since 1955
and the Company since 1998. He was elected to the position of Chairman of the
Bank's Board of Directors in 1978 and the Company's Board of Directors in 1998.
Mr. Bommer is a consultant to both the Massachusetts Dental Service Corporation
and the Division of Medical Assistance of the Commonwealth of Massachusetts. He
is also a partner in Fanuiel Associates, which provides dental office reviews
throughout the Commonwealth of Massachusetts. Mr. Bommer is a also a licensed
dentist and had a private practice in Revere, Massachusetts before his
retirement in 1996.
ANTHONY R. CONTE was elected to the Bank's Board of Directors in 1988 and
the Company's Board of Directors in 1998. Mr. Conte has been a practicing
attorney since 1974. He is presently the Regional Solicitor for the U.S.
Department of the Interior, Northeast Region.
CARMEN R. MATTUCHIO has served on the Board of Directors of the Bank since
1994 and the Company since 1998. Mr. Mattuchio is the owner of Burnett &
Moynihan, Inc., a building materials supplier, located in Revere, Massachusetts.
Mr. Mattuchio has been self-employed by Burnett & Moynihan for the past
20 years.
MARK ROBINSON has been a director of the Bank and the Company since
July 1999. Mr. Robinson is President of TransDel Corporation, a real estate
development company. Prior to becoming President, Mr. Robinson also served as a
general partner, manager and partner.
JOHN J. VERRENGIA has served on the Board of Directors of the Bank since
1994 and the Company since 1998. Mr. Verrengia is a certified public accountant
and is currently self-employed as principal accountant of John J. Verrengia,
CPA, P.C., a professional corporation. Mr. Verrengia is also a registered
investment advisor and provides financial and investment advice to clients. He
has been active in both the Revere Chambers of Commerce and Revere Rotary
Service as Presidents of both organizations.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
ANTHONY J. PATTI, age 45, has been the Executive Vice President and Chief
Financial Officer of the Bank since 1992 and the Company since 1998. He is
responsible for the financial, lending operations, information systems, customer
service and marketing functions of the Bank on a day-to-day basis. Prior to
joining the Bank, Mr. Patti served as an Operations Specialist for the
Resolution Trust Corporation.
6
Mr. Patti has also been employed by the Home Owners Savings Bank, F.S.B.,
located in Boston, Massachusetts where he served as a First Vice President and
Controller and by Andover Savings Bank, Andover, Massachusetts, where he served
as Comptroller.
JUDITH E. TENAGLIA, age 48, has been employed by the Bank for 22 years and
has been Treasurer of the Bank since 1991. Prior to becoming the Bank's
Treasurer, Ms. Tenaglia was the Operations Manager. In addition to her role as
Treasurer, she is also responsible for the Human Resources functions within the
Bank. She is involved in a number of community activities including the Revere
Rotary of which she is a director.
DIRECTOR EMERITUS
ANGELO A. TODISCO was elected to the Board of Directors of the Bank in 1980,
and served on the Board of Directors of the Company and the Bank until 1999.
Mr. Todisco is a retired licensed public adjuster and serves as President of
DePiano & Todisco Adjusters, Inc., which appraises damages to residential and
commercial properties on behalf of its clients in connection with the settlement
of insurance claims.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL OF THE NOMINEES
FOR ELECTION AS DIRECTORS.
7
INFORMATION ABOUT BOARD OF DIRECTORS AND MANAGEMENT
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Board of Directors currently consists of nine members. The
Company's Charter and Bylaws provide that the Board of Directors shall be
divided into three classes, as nearly equal in number as possible. The terms of
three directors expire at the Annual Meeting.
The Board of Directors oversees our business and monitors the performance of
our management. In accordance with our corporate governance procedures, the
Board of Directors does not involve itself in the day-to-day operations of the
Company. The Company's executive officers and management oversee the day-to-day
operations of the Company. Our directors fulfill their duties and
responsibilities by attending regular meetings of the Board which are held on a
monthly basis. Our directors also discuss business and other matters with the
Chairman and the President, other key executives, and our principal external
advisers (legal counsel, auditors, financial advisors and other consultants).
The Board of Directors of the Company held 12 regular meetings during the
fiscal year ended September 30, 2000. Each incumbent director attended at least
75% of the meetings of the Board of Directors plus committee meetings on which
that particular director served during this period.
COMMITTEES OF THE BOARD
The Board of Directors of the Company has established the following
committees:
The current members of the Nominating Committee consists of
NOMINATING Messrs. Bommer, McCarthy and Charles, with Director Bommer
COMMITTEE serving as the Chairman of this committee.
This committee nominates individuals for election to the
Company's Board of Directors. The Nominating Committee met
once in November, 2000 to select nominees for election as
directors at the Annual Meeting. The Company's Bylaws also
set forth a procedure for shareholders to nominate directors
by notifying the Secretary of the Company in writing and
meeting other requirements as set forth in the Company's
Bylaws.
The current members of the Compensation Committee consists
COMPENSATION of Messrs. Becker, Bommer and McCarthy and is chaired by
COMMITTEE Director Becker.
The Compensation Committee provides advice and
recommendations to the Board in areas of employee salaries
and directors' compensation.
The Compensation Committee met one time in the 2000 fiscal
year.
The current members of the Executive Committee, under
certain circumstances and to the extent permitted by law,
EXECUTIVE can exercise all powers of the Board of Directors when the
COMMITTEE Board is not in session.
The Executive Committee held 12 meetings in fiscal 2000. The
present members of the Executive Committee are Messrs.
Bommer, Becker, Charles and McCarthy, with Director Bommer
serving as Chairman of this committee.
8
The current members of the Audit Committee function is
carried out by the entire Board of Directors and is
responsible for reviewing a number of periodic management
reports. It also reviews the annual audit report prepared by
the independent accountants and recommends the appointment
AUDIT of the accountants. The Board of Directors of the Company
COMMITTEE has not adopted a written charter for the Audit Committee.
The Audit Committee held one meeting in fiscal 2000.
AUDIT COMMITTEE REPORT
RFS BANCORP, INC.'S AUDIT COMMITTEE REPORT
THE FOLLOWING AUDIT COMMITTEE REPORT IS PROVIDED IN ACCORDANCE WITH THE
RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC").
PURSUANT TO SUCH RULES AND REGULATIONS, THIS REPORT SHALL NOT BE DEEMED
"SOLICITING MATERIALS," FILED WITH THE SEC, SUBJECT TO REGULATION 14A OR 14C OF
THE SEC OR SUBJECT TO THE LIABILITIES OF SECTION 18 OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.
The Audit Committee has reviewed and discussed the audited financial
statements with management. The committee has also reviewed and discussed with
Shatswell, MacLeod & Co., P.C. ("Shatswell"), their independent auditors, the
matters required to be discussed by SAS 61, as may be modified or supplemented.
The Audit Committee has received the written disclosures and the letter from
Shatswell required by Independence Standards Board Standard No. 1 (Independence
Standards Board Standard No. 1, Independence Discussions with Audit Committees),
as may be modified or supplemented, and has discussed with Shatswell its
independence.
Based on the foregoing discussions, the Audit Committee recommended to the
Board of Directors of RFS Bancorp, Inc. that the audited financial statements be
included in RFS Bancorp, Inc.'s Annual Report on Form 10-KSB for the year ended
September 30, 2000.
AUDIT COMMITTEE OF RFS BANCORP, INC.
ENTIRE BOARD OF DIRECTORS OF RFS
BANCORP, INC.
DIRECTORS' COMPENSATION
FEE ARRANGEMENTS. Currently, each director of the Bank receives the
following fees:
- fee of $350 to each director per Board meeting attended;
- fee of $400 to the Chairman and Vice-Chairman for each Board meeting
attended; and
- fee ranging from $25 to $100 monthly for each committee meeting attended.
Total directors' fees for fiscal 2000 were $32,350 and total committee fees
were $4,850. The Company does not compensate directors of the Company for their
services, but directors are eligible to participate in RFS Bancorp, Inc.'s 1999
Stock Option Plan ("Stock Option Plan") and RFS Bancorp, Inc.'s 1999 Recognition
and Retention Plan ("RRP"). These stock benefit plans are discussed under
"--Stock Option Plan" and "Recognition and Retention Plan."
EXECUTIVE COMPENSATION
CASH COMPENSATION. The following table shows the cash compensation paid
during the fiscal years ended September 30, 2000 and 1999 to the Chief Executive
Officer of the Company and all other
9
executive officers of the Company who received compensation in excess of
$100,000 (each, a "Named Executive Officer") during the 2000 fiscal year.
LONG-TERM
COMPENSATION
---------------------
RESTRICTED
ANNUAL COMPENSATION STOCK ALL OTHER
FISCAL ----------------------- AWARD OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) ($)(2) (#) ($)(3)
- --------------------------- -------- ------------ -------- ---------- -------- ------------
James J. McCarthy, ............... 2000 156,800 -- -- -- 9,818
President and Chief Executive 1999 156,800 6,031 31,813 10,969 12,014
Officer
Anthony J. Patti, ................ 2000 110,000 -- -- -- 8,382
Executive Vice President and 1999 110,000 4,231 19,089 6,581 10,040
Chief Financial Officer
- ------------------------
(1) Includes the Named Executive Officer's base salary including all payroll
deductions for health insurance under the Bank's health insurance plan and
pre-tax contributions to the Bank's 401(k) Plan.
(2) The values reflected for restricted stock awards represent the value of
4,388 shares of restricted stock and 2,633 shares of restricted stock
awarded to Mr. McCarthy and Mr. Patti, respectively, on June 29, 1999,
determined on the basis of the closing price per share on such date of $7.25
These restricted stock awards vest in 20% annual installments over a period
of five years beginning on the first anniversary of the date of grant, with
accelerated vesting in the event of death, disability, or retirement while
in service with the Company or the Bank. The first installment vested on
June 29, 2000. Cash dividends made with respect to these shares of
restricted stock, if any, will be distributed to the award holders.
(3) Reflects matching contributions made by the Bank under the 401(k) Plan on
behalf of each of Mr. McCarthy and Mr. Patti during the fiscal years ended
September 30, 2000 and 1999 of $5,000. Also, reflects $4,818 and $7,014 and
$3,382 and $5,040 allocated as of September 30, 2000 and 1999, respectively,
under the ESOP on behalf of Mr. McCarthy and Mr. Patti, respectively.
EMPLOYMENT AGREEMENTS
The Bank is a party to an employment agreement with each of the following
persons: James J. McCarthy, President and Chief Executive Officer; Anthony J.
Patti, Executive Vice President and Chief Financial Officer; and Judith E.
Tenaglia, Treasurer (the "Senior Executives"). These employment agreements
establish the respective duties and compensation of the Senior Executives and
are intended to ensure that the Bank will be able to maintain a stable and
competent management base. The success of the Bank depends to a significant
degree on the skills and competence of the Senior Executives.
The employment agreements provide for initial terms of three years, in the
case of Messrs. McCarthy, Patti and Ms. Tenaglia. Commencing on the first
anniversary of the effective date of each employment agreement and continuing on
each anniversary date afterwards, the Senior Executive's agreement may be
extended, after review by the Bank's Board of Directors, for an additional
one-year period, so that the remaining term will be three years for
Messrs. McCarthy and Patti and Ms. Tenaglia. If the Senior Executive's
employment agreement is not renewed, the agreement will expire in accordance
with its terms. The current base salaries for Mr. McCarthy, Mr. Patti and
Ms. Tenaglia are $156,800, $110,000, and $60,000, respectively. The employment
agreements provide for each Senior Executive's base salary to be reviewed
annually and it is anticipated that each Senior Executive's base salary will be
increased on the basis of his or her job performance and the overall performance
of the Bank. In addition to base salary, each employment agreement provides for,
among
10
other things, participation in stock, retirement and welfare benefit plans and
eligibility for fringe benefits applicable to executive personnel such as fees
for club and organization membership deemed appropriate by the Bank and the
Senior Executive.
The agreements provide for the termination of the Senior Executive by the
Bank for "cause" as defined in the Agreement at any time during the term. In the
event the Bank terminates a Senior Executive's employment for reasons other than
for "cause," or in the event of the Executive's resignation from the Bank upon
(i) failure to re-appoint, elect or re-elect the executive to his or her current
offices; (ii) a material change in the Senior Executive's functions, duties or
responsibilities, or relocation of the Senior Executive's principal place of
employment by more than 30 miles; (iii) a "change in control" of the Bank (as
defined below) such as its liquidation or dissolution; or (iv) a breach of the
agreement by the Bank, the Senior Executive, or in the event of death, his or
her beneficiary would be entitled to a lump sum cash payment in an amount equal
to the remaining base salary due to the Senior Executive at the time of
termination that would have been payable during the remaining term of the
Executive's employment agreement. In addition, the employment agreement for
Mr. McCarthy provides for him to receive, as additional severance, the highest
cash bonus and the additional contributions or benefits that he would have
earned or accrued under any employee benefit plan of the Bank or the Company
during the remaining unexpired term of his employment agreement. As additional
severance, all of the employment agreements provide for the Bank to continue the
Senior Executive's life, health, dental and disability coverage for the
remaining term of the Executive's employment agreement.
The Bank's employment agreements have restrictions on the aggregate dollar
amount of compensation and benefits payable to a Senior Executive in the event
of an employment termination following a "change in control" of the Bank. In
general, for purposes of the employment agreements and the plans maintained by
the Bank, a "change in control" will be deemed to occur when a person or group
of persons acting in concert acquires beneficial ownership of 25% or more of any
class of equity security, such as common stock of the Bank, or in the event of a
tender offer, exchange offer, merger or other form of business combination, sale
of assets or contested election of directors which results in a "change in
control" of the majority of the Board of Directors of the Bank.
If the total cash and benefits paid to a Senior Executive under an
employment agreement together with payments under other benefit plans following
a "change in control" constitute an "excess parachute payment" under
section 280G of the Internal Revenue Code of 1986, the compensation payable to
the Senior Executive would be reduced (but not below zero) to avoid the
assessment of excise taxes on such excess parachute payments.
PENSION PLAN
The Bank maintains a tax-qualified defined benefit plan through the
Financial Institutions Retirement Fund ("Pension Plan"). An employee of the Bank
who has attained age 21 and completed at least one year of service with the Bank
will be eligible to participate and accrue benefits under the Pension Plan.
The Pension Plan provides an annual pension benefit for each participant,
including the Named Executive Officers, equal to 2.25% of the participant's
"average annual salary" multiplied by the participant's years of benefit
service, up to a maximum of 30 years. The Pension Plan defines "average annual
salary" to mean the average of a participant's salary over a five year period of
employment with the Bank during which the participant's salary was the highest.
A participant will become fully vested in the benefits that have been accrued
for him under the Pension Plan after completion of five years of service with
the Bank. The Pension Plan provides for benefits to be paid in a straight life
or joint and survivor annuity; however, optional forms of benefits payment, such
as lump sum distributions, are also available under the Plan.
11
The Bank makes annual contributions to the Pension Plan in an amount
necessary to satisfy the actuarially determined minimum funding requirements of
the Internal Revenue Code and the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). The assets of the Pension Plan are held in a
separate trust established by the Financial Institutions Retirement Fund.
PENSION PLAN TABLE. The following table sets forth the estimated annual
benefits payable under the Pension Plan upon a participant's normal retirement
at age 65, expressed in the form of a single life annuity and for the average
annual salary and years of credited service specified therein. The annual
benefits shown in the table assume the participant would receive his or her
retirement benefits under the Pension Plan in the form of a straight life
annuity, upon normal retirement, at age 65. The benefits provided under the
Pension Plan are not integrated with federal social security retirement
benefits. Pursuant to the terms of the Pension Plan, no more than a maximum of
30 years of service may be recognized for benefit accrual purposes.
YEARS OF SERVICE AND BENEFIT PAYABLE AT RETIREMENT
AVERAGE ANNUAL -----------------------------------------------------
SALARY(1) 15 20 25 30
- ---------------- ----------- ----------- ----------- -----------
$ 50,000 $16,900 $22,500 $28,100 $ 33,800
$ 75,000 $25,300 $33,800 $42,200 $ 50,600
$100,000 $33,800 $45,000 $56,300 $ 67,500
$125,000 $42,200 $56,300 $70,300 $ 84,400
$150,000 $50,600 $67,500 $84,400 $101,300
$160,000 $54,000 $72,000 $90,000 $108,000
- ------------------------
(1) Pursuant to the Internal Revenue Code, the amount of annual compensation
that may be taken into account in determining pension plan benefits is
limited to $160,000, as adjusted.
As of September 30, 2000, Mr. McCarthy had 13 years and 11 months of
credited service and Mr. Patti had 7 years and 6 months of credited service for
benefit accrual purposes under the Pension Plan.
STOCK OPTION PLAN
The purpose of the Stock Option Plan is to promote the growth of the
Company, the Bank and other affiliates by linking the incentive compensation of
officers, key executives and directors with the profitability of the Company.
The Stock Option Plan is not subject to ERISA and is not a tax-qualified plan.
The Company has reserved an aggregate of 43,876 shares of common stock for
issuance upon the exercise of stock options granted under the Stock Option Plan.
The members of the Board's Compensation Committee who are disinterested
directors ("Option Committee") administer the Stock Option Plan. In general,
both "incentive stock options" and non-qualified stock options to purchase
common stock of the Company may be granted to eligible officers, employees and
outside directors, subject to the restrictions of the Internal Revenue Code. The
Option Committee has discretion under the Stock Option Plan to establish certain
material terms of the options granted to officers and employees provided such
grants are made in accordance with the Stock Option Plan's requirements. As of
December 15, 2000, each outside director of the Company had been granted a
non-qualified stock option to purchase an aggregate of 14,805 shares of common
stock at an exercise price of $7.25, except that Mr. Robinson was granted stock
options to purchase shares of common stock at an exercise price of $7.625.
All stock options granted under the Plan vest in 20%, 40%, 60%, 80%
increments over a five year period with all remaining options vesting during the
fifth year. These options are subject to automatic full vesting upon the
optionee's death, disability or retirement with the Company. The first
installment of options became exercisable on June 29, 2000. The Company believes
the use of a vesting schedule
12
will encourage each option recipient to remain in the service of the Company (or
an affiliate) and contribute to its profitability in order to enjoy the full
economic benefit of the option. The Company pays all costs and expenses of the
Stock Option Plan. The Company has reserved the right to amend or terminate the
Plan, in whole or in part, subject to the requirements of all applicable laws.
The following table provides the value for "in-the-money" options, which
represent the positive spread between the exercise price of any such existing
stock options and the fiscal year-end price of the common stock, which was $1.00
per share.
AGGREGATED OPTIONS IN 2000 FISCAL YEAR AND 2000 FISCAL YEAR END OPTIONS
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT FISCAL OPTIONS/SARS AT FISCAL
YEAR-END YEAR-END(1)
(#) ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
James J. McCarthy, ................................ 2,139/8,557 $2,139/8,557
President and Chief Executive Officer 1,316/5,265 $1,316/5,265
Anthony J. Patti, .................................
Executive Vice President and Chief Financial
Officer
- ------------------------
(1) The closing price per share of common stock on September 20, 2000 was $8.25,
and all options have an exercise price of $7.25 per share, which equals a
spread of $1.00 per share.
RECOGNITION AND RETENTION PLAN
Similar to the Stock Option Plan, the RRP functions as a long-term incentive
compensation program for eligible officers, employees and outside directors of
the Company, the Bank and other affiliates. The members of the Board's
Compensation Committee who are disinterested directors ("RRP Committee")
administer the RRP. The Company pays all costs and expenses of administering the
RRP.
As required by the terms of the RRP, the Company has established a trust and
will contribute, or cause to be contributed, to the trust, from time to time,
funds sufficient to purchase up to 17,550 shares of common stock, the maximum
number of restricted stock awards that may be granted under the RRP. Shares of
common stock subject to a restricted stock award are held in the trust until the
award vests at which time the shares of common stock attributable to the portion
of the award that have vested are distributed to the award holder. An award
recipient is entitled to exercise voting rights and receive cash dividends with
respect to the shares of common stock subject to the award, whether or not the
underlying shares have vested.
Restricted stock awards are granted under the RRP on a discretionary basis
to eligible officers and executives selected by the RRP Committee and are
awarded to outside directors pursuant to the terms of the RRP. As of
December 15, 2000, each outside director has been granted a restricted stock
award with respect to 5,922 shares of common stock. All outstanding restricted
stock awards will vest and become distributable at the rate of 20% per year,
over a five year period, subject to automatic full vesting on the date of the
award holder's death, disability or retirement.
The Company may amend or terminate the RRP, in whole or in part, at any
time, subject to the requirements of all applicable laws.
13
TRANSACTIONS WITH CERTAIN RELATED PERSONS
Under applicable federal law, all loans or extensions of credit to executive
officers and directors must be made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with the general public and must not involve more than the normal
risk of repayment or present other unfavorable features. The Bank has made loans
or extended credit to executive officers and directors and also to certain
persons related to executive officers and directors. All such loans were made by
the Bank in the ordinary course of business and were not made with more
favorable terms nor did they involve more than the normal risk of collectibility
or present unfavorable features. At September 30, 2000, the Bank had a total of
$225,763 loans outstanding to its executive officers and directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that the Company's directors, executive officers, and any person holding more
than ten percent of the Company's common stock file with the SEC reports of
ownership changes, and that such individuals furnish the Company with copies of
the reports.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that all of our executive officers and directors complied with all
Section 16(a) filing requirements applicable to them, except that Mr. Robinson
inadvertently failed to timely file a Form 4 to report a transaction.
Mr. Robinson reported this transaction on a Form 4 dated December 14, 2000.
14
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Shatswell, MacLeod & Co., P.C. as the
independent auditors for the Company for the fiscal year ending September 30,
2001, and we are asking shareholders to ratify the appointment. Representatives
of Shatswell MacLeod are not expected to attend the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF SHATSWELL, MACLEOD AS OUR INDEPENDENT PUBLIC ACCOUNTANTS.
ADDITIONAL INFORMATION
INFORMATION ABOUT STOCKHOLDER PROPOSALS
If you wish to submit proposals to be included in our proxy statement for
the 2002 Annual Meeting of Shareholders, we must receive them by August 20,
2001, pursuant to the proxy soliciting regulations of the SEC. SEC rules contain
standards as to what stockholder proposals are required to be in the proxy
statement. Any such proposal will be subject to 17 C.F.R. Section240.14a-8 of
the rules and regulations promulgated by the SEC.
In addition, under the Company's Bylaws, if you wish to nominate a director
or bring other business before an annual meeting:
- You must be a stockholder of record and have given timely notice in
writing to the Secretary of the Company.
- Your notice must contain specific information required in our Bylaws.
By Order of the Board of Directors,
/s/ Ernest F. Becker
Ernest F. Becker
SECRETARY
Revere, Massachusetts
December 20, 2000
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING, PLEASE
COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE
POSTAGE-PAID ENVELOPE PROVIDED.
15
RFS BANCORP, INC. REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF RFS BANCORP, INC.
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JANUARY 17, 2001.
The undersigned stockholder of RFS Bancorp, Inc. (the "Company") hereby
appoints Arno P. Bommer, Ernest F. Becker and James J. McCarthy, each of
them, with full powers of substitution, to represent and to vote as proxy, as
designated, all shares of common stock of RFS Bancorp, Inc. held of record by
the undersigned on December 15, 2000, at the 2001 Annual Meeting of
Stockholders (the "Annual Meeting") to be held at the main office of the
Company, located at 310 Broadway, Revere, Massachusetts 02151, at 3:00 p.m.,
local time, on January 17, 2001 or at any adjournment or postponement
thereof, upon the matters described in the accompanying Notice of the Annual
Meeting of Stockholders and the proxy statement and upon such other matters
as may properly come before the 2001 Annual Meeting. The undersigned hereby
revokes all prior proxies.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF ALL NOMINEES LISTED IN ITEM 1 AND "FOR" THE
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT AUDITORS LISTED IN ITEM 2.
PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL OF THE NOMINEES
NAMED IN ITEM 1 AND A VOTE "FOR" THE PROPOSAL IN ITEM 2.
I WILL ATTEND THE ANNUAL MEETING. |_|
Please Mark Your Choice Like This
in Blue or Black Ink. |X|
- -------------------------------------------------------------------------------
1. Election of three directors for terms of three years each.
NOMINEES: Theodore E. Charles, James J. McCarthy and J. Michael O'Brien.
FOR AGAINST ABSTAIN
|_| |_| |_|
- -------------------------------------------------------------------------------
INSTRUCTION: TO WITHHOLD AUTHORITY to vote for any individual nominee,
write that nominee's name in the space provided:
- -------------------------------------------------------------------------------
2. Ratification of the appointment of Shatswell, MacLeod & Co., P.C. as
independent auditors for the fiscal year ending September 30, 2001.
FOR AGAINST ABSTAIN
|_| |_| |_|
- -------------------------------------------------------------------------------
The undersigned hereby acknowledges
receipt of the Notice of Annual Meeting
of Stockholders and the proxy statement
for the 2001 Annual Meeting.
---------------------------------------
---------------------------------------
Signature(s)
Dated:
--------------------------------
Please sign exactly as your name appears
on this proxy. Joint owners should each
sign personally. If signing as attorney,
executor, administrator, trustee or
guardian, please include your full
title. Corporate or partnership proxies
should be signed by an authorized
officer.