SCHEDULE 14A
(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/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of
the Commission Only
/ X / Definitive Proxy Statement (as permitted by Rule
14a-6(e)(2))
/ X / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Harrington Financial Group, Inc.
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(Name of Registrant as Specified in Its Charter)
Harrington Financial Group, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box): (previously paid by wire
transfer)
/ X / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2), or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
------------------------
(2) Aggregate number of securities to which transactions applies:
-------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-----------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------
(5) Total fee paid:
------------------------------------------------
Fee paid previously with preliminary materials.
- -------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
----------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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[LOGO]
HARRINGTON FINANCIAL GROUP, INC.
September 25, 1996
Dear Stockholder:
You are cordially invited to attend the first Annual Meeting of
Stockholders of Harrington Financial Group, Inc. The meeting will be held at
the Westin Hotel, located at 50 South Capitol Avenue, Indianapolis, Indiana
46204, on Wednesday, October 23, 1996 at 2:00 p.m., Eastern Standard Time. The
matters to be considered by stockholders at the Annual Meeting are described in
the accompanying materials.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend the
meeting in person. We urge you to mark, sign, and date your proxy card today
and return it in the envelope provided, even if you plan to attend the Annual
Meeting. This will not prevent you from voting in person, but will ensure that
your vote is counted if you are unable to attend.
Your continued support of and interest in Harrington Financial Group, Inc.
are sincerely appreciated.
Sincerely,
/s/ Douglas T. Breeden
Douglas T. Breeden
Chairman of the Board
/s/ Craig J. Cerny
Craig J. Cerny
President
HARRINGTON FINANCIAL GROUP, INC.
722 PROMENADE
RICHMOND, INDIANA 47375
(317) 962-8531
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 23, 1996
--------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of Harrington Financial Group, Inc. (the "Company") will be held at
the Westin Hotel located at 50 South Capitol Avenue, Indianapolis, Indiana
46204, on Wednesday, October 23, 1996 at 2:00 p.m., Eastern Standard Time, for
the following purposes, all of which are more completely set forth in the
accompanying Proxy Statement:
(1) To elect three (3) directors for a three-year term or until their
successors are elected and qualified;
(2) To ratify the appointment by the Board of Directors of Deloitte &
Touche LLP as the Company's independent auditors for the fiscal year ending June
30, 1997; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof. Management is not aware of any other such
business.
The Board of Directors has fixed September 6, 1996 as the voting record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting. Only those stockholders of record as of the close of
business on that date will be entitled to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Debra L. Dugan
Debra L. Dugan
Corporate Secretary
Richmond, Indiana
September 25, 1996
- --------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN
TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY
VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN
WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
- --------------------------------------------------------------------------------
HARRINGTON FINANCIAL GROUP, INC.
-------------------------
PROXY STATEMENT
-------------------------
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 23, 1996
This Proxy Statement is furnished to holders of common stock, $0.125 par
value per share ("Common Stock"), of Harrington Financial Group, Inc. (the
"Company"), the Indiana-chartered registered thrift holding company for
Harrington Bank, FSB (the "Bank"). Proxies are being solicited on behalf of the
Board of Directors of the Company to be used at the Annual Meeting of
Stockholders ("Annual Meeting") to be held at the Westin Hotel located at 50
South Capitol Avenue, Indianapolis, Indiana 46204, on Wednesday, October 23,
1996 at 2:00 p.m., Eastern Standard Time, for the purposes set forth in the
Notice of Annual Meeting of Stockholders. This Proxy Statement is first being
mailed to stockholders on or about September 25, 1996.
The proxy solicited hereby, if properly signed and returned to the Company
and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted FOR the nominees for director described herein, FOR
ratification of the appointment of Deloitte & Touche LLP for fiscal 1997 and
upon the transaction of such other business as may properly come before the
meeting in accordance with the best judgment of the persons appointed as
proxies. Any stockholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Secretary of the Company written
notice thereof (Secretary, Harrington Financial Group, Inc., 722 Promenade,
Richmond, Indiana 47375); (ii) submitting a duly-executed proxy bearing a later
date; or (iii) appearing at the Annual Meeting and giving the Secretary notice
of his or her intention to vote in person. Proxies solicited hereby may be
exercised only at the Annual Meeting and any adjournment thereof and will not be
used for any other meeting.
VOTING
Only stockholders of record at the close of business on September 6, 1996
("Voting Record Date") will be entitled to vote at the Annual Meeting. On the
Voting Record Date, there were 3,256,738 shares of Common Stock outstanding and
the Company had no other class of equity securities outstanding. Each share of
Common Stock is entitled to one vote at the Annual Meeting on all matters
properly presented at the meeting. Directors are elected by a plurality of the
votes cast with a quorum present. The three persons who receive the greatest
number of votes of the holders of Common Stock represented in person or by proxy
at the Annual Meeting will be elected directors of the Company. Abstentions
are considered in determining the presence of a quorum and will not affect the
vote
required for the election of directors. The affirmative vote of the holders of
a majority of the total votes present in person or by proxy is required to
ratify the appointment of the independent auditors. Abstentions will not be
counted as votes cast, and accordingly will have no effect on the voting of this
proposal. Under rules of the New York Stock Exchange, all of the proposals for
consideration at the Annual Meeting are considered "discretionary" items upon
which brokerage firms may vote in their discretion on behalf of their clients if
such clients have not furnished voting instructions. Thus, there are no
proposals to be considered at the Annual Meeting which are considered "non-
discretionary" and for which there will be "broker non-votes."
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Amended and Restated Articles of Incorporation of the Company provide
that the Board of Directors of the Company shall be divided into three classes
which are as nearly equal in number as possible, and that members of each class
of directors are to be elected for a term of three years. One class is to be
elected annually. Stockholders of the Company are not permitted to cumulate
their votes for the election of directors.
No director or executive officer of the Company is related to any other
director or executive officer of the Company by blood, marriage or adoption, and
each of the nominees currently serve as a director of the Company.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominees for director listed
below. If the person or persons named as nominee should be unable or unwilling
to stand for election at the time of the Annual Meeting, the proxies will
nominate and vote for one or more replacement nominees recommended by the Board
of Directors. At this time, the Board of Directors knows of no reason why the
nominees listed below may not be able to serve as directors if elected.
The following tables present information concerning the nominees for
director of the Company and each director whose term continues.
- 2 -
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 1999
Director
Name Age(1) Since
- ----------------------------------- ------------- ----------------
Craig J. Cerny 41 1988
William F. Quinn, C.F.A. 32 1991
Stanley J. Kon 47 1994
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
ABOVE NOMINEES FOR DIRECTOR.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
DIRECTORS WHOSE TERM EXPIRE IN 1997
Director
Name Age(1) Since
- ----------------------------------- ------------- ----------------
Douglas T. Breeden 45 1988
Gerald J. Madigan 42 1988
Stephen A. Eason, C.F.A. 39 1991
Daniel C. Dektar 37 1996
DIRECTORS WHOSE TERMS EXPIRE IN 1998
Director
Name Age(1) Since
- ----------------------------------- ------------- ----------------
Michael J. Giarla 38 1988
Lawrence E. Golaszewski, C.P.A. 37 1991
David F. Harper, C.P.A. 53 1995
John J. McConnell 50 1995
- -------------------------
(1) As of September 6, 1996.
- 3 -
Information concerning the principal position with the Company and the Bank
and principal occupation of each nominee for director and members of the Board
continuing in office during the past five years is set forth below.
CRAIG J. CERNY. Mr. Cerny has been the President of the Company and the
Chairman of the Board and Chief Executive Officer of the Bank since February
1992. Prior thereto, Mr. Cerny was the Company's Executive Vice President since
1988. Mr. Cerny has been the Bank's President since July 1994. Mr. Cerny
currently serves as the Chairman of the Board and Chief Executive Officer of
Harrington West Financial Group, Inc. ("HWFG") and as a director of its wholly
owned subsidiary, Los Padres Savings Bank, F.S.B. ("LPSB"). Mr. Cerny is a
Principal, Executive Vice President and Director of Smith Breeden Associates,
Inc. ("Smith Breeden") where he has been employed since April 1985. Mr. Cerny
is active in Smith Breeden's bank consulting and investment advisory practice.
He holds a Master of Business Administration in Finance from Arizona State
University, where he graduated with distinction. Mr. Cerny earned a Bachelor of
Science in Finance from Arizona State University and was a member of the Honors
Convocation.
WILLIAM F. QUINN, JR., C.F.A. Mr. Quinn has been an Executive Vice
President of the Company since March 1992 and serves on the Bank's Investment
Committee, where he participates in the determination of the Bank's investment
strategies. Mr. Quinn is a Vice President and Principal of Smith Breeden where
he has been employed since June 1986. Mr. Quinn is in charge of Smith Breeden's
client services group, where he provides investment and risk management advice
to a number of institutional clients. He is actively involved in the
formulation and implementation of investment and risk management policies and
procedures as well as clients' strategic plans and business plans. Mr. Quinn
holds a Master of Science in Management with Concentrations in Finance, MIS and
System Dynamics from the Sloan School of Management, Massachusetts Institute of
Technology. He earned a Bachelor of Science in Management Science from the
Massachusetts Institute of Technology.
STANLEY J. KON. Dr. Kon has served as Professor of Finance at the
University of Michigan since 1987 and has been on the faculty of that
institution since 1982. He also serves on the Advisory Board of the Mitsui Life
Financial Research Center and has served as a director of two financial
institutions. Dr. Kon currently serves as a director of HWFG and its wholly-
owned subsidiary, LPSB. Dr. Kon holds a Ph.D. in Finance from the State
University of New York at Buffalo, and a Master of Business Administration in
Finance and Economics from St. John's University. He received his undergraduate
degree in chemical engineering from the Lowell Technological Institute.
DOUGLAS T. BREEDEN. Dr. Breeden is currently the Chairman of the Board of
the Company and is Chairman of the Board, President and Chief Executive Officer
of Smith Breeden, which he co-founded in June 1982. He is a Research Professor
of Finance at Duke University's Fuqua School of Business, where he has been on
the faculty since 1985. Dr. Breeden has also served on business school
faculties at Stanford University and the
- 4 -
University of Chicago, and as a visiting professor at Yale University and at the
Massachusetts Institute of Technology. He is the Editor of the JOURNAL OF FIXED
INCOME. Dr. Breeden has served as Associate Editor for five journals in
financial economics, and was elected to the Board of Directors of the American
Finance Association. He holds a Ph.D. in Finance from the Stanford University
Graduate School of Business, and a B.S. in Management Science from the
Massachusetts Institute of Technology. Dr. Breeden also serves as a director of
Roosevelt Financial Group, St. Louis, Missouri, a $9 billion thrift institution.
Dr. Breeden also serves as Chairman of the Board of the Smith Breeden Mutual
Funds.
GERALD J. MADIGAN. Mr. Madigan is an Executive Vice President and Director
of Smith Breeden where he has been employed since 1984. He is a Senior
Portfolio manager dealing with both pension and financial institution accounts.
Mr. Madigan founded the Smith Breeden Mutual Funds in 1992 and served as
President of the Smith Breeden Mutual Funds from 1992 through 1994. Mr. Madigan
served as the President of the Company from its incorporation in March 1988
until February 1992. Mr. Madigan also served as the Bank's Vice Chairman from
November 1988 until February 1990, its Chairman from February 1990 until
February 1992 and its President and Chief Executive Officer from January 1989
until February 1992. Mr. Madigan holds a Master of Business Administration,
Concentration in Finance with Distinction (from the Honors Program) from Indiana
University. He earned a Bachelor of Science in Accounting with High Distinction
from Indiana University.
STEPHEN A. EASON, C.F.A. Mr. Eason is an Executive Vice President and
Director of Smith Breeden where he has been employed since April 1988. Mr.
Eason manages Smith Breeden's Dallas office and is director of the firm's
discretionary separate account management business. He holds a Master of
Business Administration with Concentration in Finance from The Wharton School,
Graduate Division, University of Pennsylvania. Mr. Eason earned a Bachelor of
Science in Business Administration, Finance and Banking, from the University of
Arkansas, where he graduated with Highest Honors.
DANIEL C. DEKTAR. Mr. Dektar is a Director, Principal and Executive Vice
President of Smith Breeden where he has been employed since August 1986. He
serves as a liaison among the trading, client service, and research groups to
ensure accurate analysis and timely execution of trading opportunities. Mr.
Dektar manages mortgage portfolios for the Smith Breeden Family of Mutual Funds
and is a Vice President of several of the funds. Mr. Dektar consults
institutional clients in the areas of investments and risk management. He holds
a Master of Business Administration from Stanford University Graduate School of
Business. Mr. Dektar received a Bachelor of Science in Business Administration,
SUMMA CUM LAUDE, from the University of California at Berkeley, where he was a
University of California Regent's Scholar.
MICHAEL J. GIARLA. Mr. Giarla is an Executive Vice President, Chief
Operating Officer and Director of Smith Breeden where he has been employed since
July 1985. He also serves as President of the Smith Breeden Mutual Funds.
Formerly Smith Breeden's
- 5 -
Director of Research, he was involved in research and programming, particularly
in the development and implementation of models to evaluate and hedge mortgage
securities. Mr. Giarla holds a Master of Business Administration with
Concentration in Finance from the Stanford University Graduate School of
Business. He earned a Bachelor of Arts in Statistics, SUMMA CUM LAUDE, from
Harvard University.
LAWRENCE E. GOLASZEWSKI, C.P.A. Mr. Golaszewski is an independent
financial consultant. He served as Vice President and Principal of Smith
Breeden where he was employed from July 1987 until December 1995. At Smith
Breeden, Mr. Golaszewski was actively involved in the analysis, trading and
hedging of complex mortgage securities. Mr. Golaszewski has particular
expertise in the analysis and evaluation of mortgage banking operations,
including the formulation of models for evaluating excess mortgage servicing,
pipeline hedging, and pipeline fallout rates. Mr. Golaszewski holds a Master of
Business Administration with Specialization in Finance from University of
Chicago Graduate School of Business. He holds a Bachelor of Science in
Finance/Accounting, SUMMA CUM LAUDE, from the State University of New York at
Buffalo, where he won the New York State Regents Scholarship.
DAVID F. HARPER, C.P.A. Mr. Harper has been a Vice President of Harris
Harper Counsel, Inc., an investment advisory firm located in Richmond, Indiana,
since January 1991. Mr. Harper also has maintained a public accounting practice
since October 1990. He previously was a Partner in the Indiana C.P.A. Firm of
Geo. S. Olive & Co. from October 1978 to October 1990. Mr. Harper has served as
a director of the Bank since 1991. He holds a Bachelor of Business
Administration in Accounting, MAGNA CUM LAUDE, from the University of
Cincinnati.
JOHN J. MCCONNELL. Dr. McConnell is the Emanuel T. Weiler Distinguished
Professor of Management and the Director of Doctoral Programs and Research at
the Krannert School of Management, Purdue University, and has served in that
capacity since 1989. He has been a professor of Finance at that institution
since 1983. Dr. McConnell currently serves as a director of HWFG and its
wholly-owned subsidiary, LPSB. He served on the Board of Directors of the
Federal Home Loan Bank of Indianapolis from 1983 to 1986 and has done consulting
work for various government agencies, trade associations and corporations. He
has authored numerous publications on topics related to financial services and
general finance. Dr. McConnell holds a Ph.D. in Finance from Purdue University
and a Master of Business Administration in Finance and Accounting from the
University of Pittsburgh. He received his undergraduate degree in Economics
from Dennison University.
STOCKHOLDER NOMINATIONS
Article III, Section 14 of the Company's Amended and Restated Bylaws
("Bylaws") governs nominations for election to the Board of Directors and
requires all such nominations, other than those made by the nominating committee
of the Board, to be made at a meeting of stockholders called for the election of
directors, and only by a stockholder
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who has complied with the notice provisions in that section. Stockholder
nominations must be made pursuant to timely notice in writing to the Secretary
of the Company. To be timely, a stockholder's notice must be delivered to, or
mailed, postage prepaid, to the principal executive offices of the Company not
later than 90 days prior to the anniversary date of the mailing of proxy
materials by the Company in connection with the immediately preceding annual
meeting of stockholders of the Company. Each written notice of a
stockholder nomination shall set forth (a) the name and address of the
stockholder who intends to make the nomination and of the person or persons to
be nominated; (b) a representation that the stockholder is a holder of record of
stock of the Company entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified in
the notice; (c) a description of all arrangements or understandings between the
stockholder and each nominee and any arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder; (d) such other information regarding each nominee proposed by
such stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission; and (e)
the consent of each nominee to serve as a director of the Company if so elected.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES OF THE COMPANY AND THE BANK
Regular meetings of the Board of Directors of the Company are held as
necessary. During the year ended June 30, 1996, the Board of Directors of the
Company held five meetings and acted by unanimous consent in lieu of a meeting
on five occasions. No incumbent director attended fewer than 75% of the
aggregate of the total number of Board meetings held during his tenure in office
during the last fiscal year or the total number of all meetings held by
committees of the Board on which he served during such year. The Board of
Directors of the Company has established the following committees:
The Audit Committee of the Company recommends independent auditors to the
Board annually and reviews the Company's financial statements and the scope and
results of the audit performed by the Company's independent auditors. The Audit
Committee, which is comprised of Messrs. Harper, Kon and Golaszewski, was newly
formed by the Company's Board in February 1996 and did not meet during fiscal
1996. The previous Audit Committee of the Bank met four times during fiscal
1996.
The Nominating Committee of the Company makes director nominations for
service on the Board of Directors. The Nominating Committee members are Messrs.
Breeden, Giarla and McConnell. The Nominating Committee was newly formed by the
Company's Board in July 1996 and did not meet during fiscal 1996. The
Nominating Committee nominated the directors who are standing for election at
the Annual Meeting in July 1996.
The Compensation Plan Committee of the Company administers the stock
benefit plans of the Company. The Committee, which is comprised of Messrs.
Breeden, Giarla and
- 7 -
McConnell, was newly formed by the Company's Board in February 1996 and did not
meet during fiscal 1996.
The Executive Committee of the Company is empowered to act on behalf of the
Company's Board of Directors when the Board is not in session. The Executive
Committee members are Messrs. Breeden, Giarla, Cerny, McConnell, Kon and Harper.
The Executive Committee was newly formed by the Company's Board in August 1996
and did not meet during fiscal 1996.
The Executive Committee of the Bank reviews the compensation of senior
executive officers and recommends to the Board adjustments in such compensation
based on a number of factors, including the profitability of the Bank. See
"Executive Compensation - Compensation Committee Interlocks and Insider
Participation." The Executive Committee is also empowered to act on behalf of
the Bank's Board of Directors when the Board is not in session. Messrs. Cerny,
Kon and McConnell comprise the Executive Committee, which met two times during
fiscal 1996.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Set forth below is information concerning the executive officers of the
Company and the Bank who do not serve on the Board of Directors of the Company.
All executive officers are elected by the Board of Directors and serve until
their successors are elected and qualified. No executive officer is related to
any director or other executive officer of the Company by blood, marriage or
adoption, and there are no arrangements or understandings between a director of
the Company and any other person pursuant to which such person was elected an
executive officer.
CATHERINE A. HABSCHMIDT, C.P.A. Ms. Habschmidt is Chief Financial Officer
and Treasurer of the Company and Senior Vice President, Chief Financial Officer
and Secretary of the Bank. Ms. Habschmidt became Chief Financial Officer and
Treasurer of the Company in November 1995. Ms. Habschmidt has served as the
Bank's Chief Financial Officer since 1989, and as Senior Vice President and
Secretary since 1994. Prior thereto, she served as Controller of the Bank since
1987 and was employed by a public accounting firm from 1985 to 1987. Ms.
Habschmidt holds a Master of Science in Accounting from Ball State University
where she received the Outstanding Graduate Student Award. She holds a Bachelor
of Arts in Mathematics from Earlham College where she was elected to Phi Beta
Kappa.
JAMES C. STAPLETON. Mr. Stapleton has been Executive Vice President and
Chief Operating Officer of the Bank since June 1992. From August 1989 to June
1992, Mr. Stapleton served as the Bank's Compliance Officer. Prior thereto, Mr.
Stapleton was a Loan Officer for the Bank from 1986 through July 1989 and served
in various management positions for the Richmond Palladium - Item newspaper from
1976 to 1986.
- 8 -
DANIEL H. HAGLUND. Mr. Haglund has been Chief Investment Officer and
Treasurer of the Bank since June 1994 and Senior Vice President since October
1995. From September 1988 to June 1994, Mr. Haglund served as Portfolio Manager
for Hemet Federal Savings and Loan Association, Hemet, California. Mr. Haglund
holds a Master of Business Administration in Finance from Indiana University and
a Bachelor of Arts in Psychology from Alma College.
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN PERSONS
The following table sets forth, as of the Voting Record Date, certain
information as to the Common Stock beneficially owned by the directors of the
Company and all directors and executive officers of the Company and the Bank as
a group. Other than with respect to certain directors of the Company as set
forth below, the Company was not aware of any other person or entity, including
any "group" as that term is used in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended ("Exchange Act"), who or which was the beneficial owner
of more than 5% of the issued and outstanding Common Stock.
Common Stock
Beneficially Owned as of
Name of Beneficial Owner September 6, 1996(1)
- --------------------------------------- -----------------------------------
No. %
---------------- ---------------
Craig J. Cerny 245,760(2) 7.55%
Douglas T. Breeden 1,363,790(3) 41.88
William F. Quinn, C.F.A. 77,540(4) 2.38
Gerald J. Madigan 55,040 1.69
Michael J. Giarla 194,399(5) 5.97
Stephen A. Eason, C.F.A. 120,706(6) 3.71
Daniel C. Dektar 56,928 1.75
Lawrence E. Golaszewski, C.P.A. 62,064 1.91
David F. Harper, C.P.A. 10,092 *
Stanley J. Kon 9,924(7) *
John J. McConnell 3,092(8) *
All directors and executive officers 2,224,815(9) 68.31%
of the Company and the Bank
as a group (15 persons)
(FOOTNOTES ON FOLLOWING PAGE)
- 9 -
- -------------------------
* Represents less than 1% of the outstanding Common Stock.
(1) For purposes of this table, pursuant to rules promulgated under the
Exchange Act, an individual is considered to beneficially own shares of
Common Stock if he or she directly or indirectly has or shares (i) voting
power, which includes the power to vote or to direct the voting of the
shares; or (ii) investment power, which includes the power to dispose or
direct the disposition of the shares. Unless otherwise indicated, an
individual has sole voting power and sole investment power with respect to
the indicated shares.
(2) Includes 6,000 shares held by a profit sharing plan maintained by Smith
Breeden.
(3) Includes 10,000 shares held by Dr. Breeden's spouse and 4,000 shares held
by Dr. Breeden's spouse as custodian for their children.
(4) Includes 6,300 shares held by a profit sharing plan maintained by Smith
Breeden.
(5) Includes 30,347 shares held by a profit sharing plan maintained by Smith
Breeden, 9,393 shares held by Mr. Giarla as custodian for his child, and
3,899 shares held by Mr. Giarla's spouse in her Individual Retirement
Account.
(6) Includes 18,000 shares held by a profit sharing plan maintained by Smith
Breeden.
(7) Includes 3,536 shares held by Dr. Kon as custodian for his children.
(8) Includes 3,092 shares held jointly with Dr. McConnell's spouse.
(9) Does not include an aggregate of 12,000 shares held by the Harrington
Financial Group, Inc. Employee Stock Ownership Plan Trust ("Trust")
established pursuant to the Harrington Financial Group, Inc. Employee Stock
Ownership Plan ("ESOP"). As of the Voting Record Date, no shares held in
the Trust had been allocated to the accounts of participating employees.
Unallocated shares held in the ESOP will be voted by the ESOP trustees,
Craig J. Cerny, Catherine A. Habschmidt and James C. Stapleton
("Trustees"), in accordance with their fiduciary duties as Trustees. The
amount of Common Stock beneficially owned by directors who serve as
Trustees of the ESOP and by all directors and executive officers as a group
does not include the unallocated shares held by the Trust.
- 10 -
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers,
directors and persons who own more than 10% of the Company's Common Stock to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("SEC") and the National Association of Securities Dealers,
Inc. by certain dates. The Company believes that in the fiscal year ended June
30, 1996, all of these filing requirements were satisfied by its directors and
executive officers. In making the foregoing statements, the Company has relied
on representations of its directors and executive officers and copies of the
reports that they have filed with the SEC. The Company knows of no person,
other than Douglas T. Breeden, the Company's Chairman of the Board, who owns 10%
or more of the Company's Common Stock.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table includes individual compensation information with
respect to the President of the Company and the Bank (who serves as the Chief
Executive Officer), who is the only officer of the Company and its subsidiaries
whose total compensation exceeded $100,000 for services rendered in all
capacities during the two fiscal years ended June 30, 1996.
Long-Term
Compensation All Other
Annual Compensation Awards Compensation(3)
Name and Fiscal ----------------------- ----------------- -----------------
Principal Position Year Salary(1) Bonus Number of Options
- ------------------- ----------- ---------- ---------- ------------------
Craig J. Cerny, 1996 $145,833 $56,250 -- $ 8,511
President 1995 73,077 35,000 16,000(2) 11,058
- ----------------------
(1) Does not include amounts attributable to miscellaneous benefits received by
Mr. Cerny. The costs to the Company of providing such benefits to Mr.
Cerny during the indicated period did not exceed the lesser of $50,000 or
10% of the total of annual salary and bonus reported.
(2) Adjusted to take into consideration a four-for-one stock split with respect
to the Common Stock effective in October 1994 and a two-for-one stock split
effective in October 1995. Consists of stock options granted in August
1994, which options were exercised in December 1995.
(3) Comprised of $9,000 and $6,000 of Bank director fees and $3,453 and $5,058
in contributions pursuant to the Bank's Profit Sharing Plan in fiscal 1996
and 1995, respectively. See "- Benefits - Profit Sharing Plan."
- 11 -
No options were granted to the executive officer named in the Summary
Compensation Table during the year ended June 30, 1996.
The following table sets forth, with respect to the executive officer named
in the Summary Compensation Table, information with respect to the aggregate
amount of options exercised during the last fiscal year, any value realized
thereon, the number of unexercised options at the end of the fiscal year
(exercisable and unexercisable) and the value with respect thereto under
specified assumptions.
Shares Value of Unexercised
Acquired on Value Number of Unexercised in the Money Options at
Name Exercise Realized Options at Fiscal Year June 30, 1995
------------------ ------------- ----------- --------------------------------- -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
------------ -------------- ------------- -------------
Craig J. Cerny 16,000 -- (1) -- 16,000(2) -- $48,000(3)
- ----------------------
(1) The options were considered out-of-the-money at the time of exercise (on
December 29, 1995) based on the book value of the common stock.
(2) Exercisable between December 15, 1997 and January 15, 1998 at $7.50 per
share.
(3) Value is calculated as the difference between the market price of the
Company's stock at June 30, 1996 ($10.50) and the $7.50 exercise price.
BOARD FEES
Directors of the Company who were not affiliated with Smith Breeden
received fees of $500 for each meeting attended during fiscal 1996. In
addition, directors of the Bank received fees of $500 for each meeting attended
from July 1, 1995 to December 31, 1995, and the two directors who did not reside
in the Company's market area also received a $500 travel allowance per meeting
during that period. Directors (except for the Chief Executive Officer who does
not receive committee fees) received fees of $500 for Investment Committee
meetings attended, $300 for Audit Committee meetings attended and $100 for
Executive Committee meetings attended. Directors were not compensated for
attendance at Trust Committee meetings.
For the period January 1, 1996 to June 30, 1996, all directors of the Bank
received fees of $1,000 for each Board meeting attended in person and $500 for
each meeting attended by conference call. In addition, beginning January 1,
1996, Bank directors (except for the Chief Executive Officer who does not
receive committee fees) received $500 per
- 12 -
Executive Committee meeting, $500 per Investment Committee meeting, $300 per
Audit Committee meeting, and $200 per Trust Committee meeting.
BENEFITS
EMPLOYEE STOCK OWNERSHIP PLAN. The Company maintains the ESOP for
employees of the Company and the Bank. Full-time employees of the Company and
the Bank who have been credited with at least 1,000 hours of service during a
twelve month period and who have attained age 21 are eligible to participate in
the ESOP.
In connection with the Company's initial public offering, the Company
contributed sufficient funds to the ESOP in order to cause the ESOP to purchase
7,000 shares. The Company may, in any plan year, make additional discretionary
contributions for the benefit of plan participants in either cash or shares of
Common Stock, which may be acquired through the purchase of outstanding shares
of Common Stock in the market or from individual stockholders, upon the original
issuance of additional shares by the Company or upon the sale of treasury shares
by the Company. Such purchases, if made, could be funded through borrowing by
the ESOP or additional contributions from the Company. The timing, amount and
manner of future contributions to the ESOP will be affected by various factors,
including prevailing regulatory policies, the requirements of applicable laws
and regulations and market conditions.
Any shares of Common Stock purchased by the ESOP with the proceeds of a
loan are held in a suspense account and released on a pro rata basis as debt
service payments are made. Discretionary contributions to the ESOP and shares
released from the suspense account are allocated among participants on the basis
of compensation. Forfeitures will be reallocated among remaining participating
employees and may reduce any amount the Company might otherwise have contributed
to the ESOP. Participants will vest in their right to receive their account
balances within the ESOP at the rate of 20 percent per year. In the case of a
"change in control," as defined, however, participants will become immediately
fully vested in their account balances, subject to certain tax considerations.
Benefits may be payable upon retirement, early retirement, disability or
separation from service.
The ESOP is subject to the requirements of the Employee Retirement Income
Security Act of 1974, as amended, and the regulations of the Internal Revenue
Service and the Department of Labor thereunder.
STOCK OPTION PLAN. The Board of Directors of the Company maintains the
Stock Option Plan, which is designed to attract and retain qualified personnel
in key positions, provide officers and key employees with a proprietary interest
in the Company as an incentive to contribute to the success of the Company,
reward key employees for outstanding performance and the attainment of targeted
goals, and retain qualified directors for the Company and the Bank. The Stock
Option Plan was approved by the Company's stockholders in March 1996. An amount
of Common Stock equal to 126,500 shares (10%
- 13 -
of the shares of Common Stock sold in the Offering) has been authorized under
the Stock Option Plan, which may be filled by authorized but unissued shares,
treasury shares or shares purchased by the Company on the open market or from
private sources. The Stock Option Plan provides for the grant of incentive
stock options intended to comply with the requirements of Section 422 of the
Code ("incentive stock options"), non-incentive or compensatory stock options
and stock appreciation rights (collectively "Awards"). Awards are available for
grant to directors and key employees of the Company and any subsidiaries, except
that directors will not be eligible to receive incentive stock options.
The Stock Option Plan is administered and interpreted by a committee of the
Board of Directors ("Committee") which is "disinterested" pursuant to applicable
regulations under the federal securities laws. Unless sooner terminated, the
Stock Option Plan will be in effect for a period of ten years from the adoption
by the Board of Directors. Under the Stock Option Plan, the Committee will
determine which officers and key employees will be granted options, whether such
options will be incentive or compensatory options, the number of shares subject
to each option, whether such options may be exercised by delivering other shares
of Common Stock and when such options become exercisable. The per share
exercise price of all stock options shall be required to be at least equal to
the fair market value of a share of Common Stock on the date the option is
granted.
Stock options shall become vested and exercisable in the manner specified
by the Committee at the rate of 20% per year, beginning one year from the date
of grant. Each stock option or portion thereof shall be exercisable at any time
on or after it vests and is exercisable until ten years after its date of grant
or three months after the date on which the optionee's employment terminates,
unless extended by the Committee to a period not to exceed one year from such
termination. However, failure to exercise incentive stock options within three
months after the date on which the optionee's employment terminates may result
in adverse tax consequences to the optionee. Stock options are non-transferable
except by will or the laws of descent and distribution.
Under the Stock Option Plan, the Committee will be authorized to grant
rights to optionees ("stock appreciation rights") under which an optionee may
surrender any exercisable incentive stock option or compensatory stock option or
part thereof in return for payment by the Company to the optionee of cash or
Common Stock in an amount equal to the excess of the fair market value of the
shares of Common Stock subject to option at the time over the option price of
such shares, or a combination of cash and Common Stock. Stock appreciation
rights may be granted concurrently with the stock options to which they relate
or at any time thereafter which is prior to the exercise or expiration of such
options.
Options granted to directors of the Company and the Bank under the Stock
Option Plan are awarded under a formula pursuant to which non-employee directors
of the Company and the Bank received 1,000 and 500 shares, respectively, upon
commencement of the Company's initial public offering and will receive a similar
amount on each annual anniversary thereafter for as long as shares remain
available. An aggregate of 60,000 shares
- 14 -
of Common Stock are available for non-employee directors of the Company and the
Bank under the Stock Option Plan. Such stock options to directors will be
vested and exercisable under the same terms as options granted by the Committee
to officers and employees.
All unvested options are accelerated in the event of retirement under the
Bank's normal retirement policies or a change in control of the Company, as
defined in the Stock Option Plan. In addition, if an optionee dies or
terminates service due to disability, while serving as an employee or non-
employee director, all unvested options are accelerated. Under such
circumstances, the optionee or, as the case may be, the optionee's executors,
administrators, legatees or distributees, shall have the right to exercise all
unexercised options during the twelve-month period following termination due to
disability, retirement or death, provided no option will be exercisable within
six months after the date of grant or more than ten years from the date it was
granted.
In the event of a stock split, reverse stock split or stock dividend, the
number of shares of Common Stock under the Stock Option Plan, the number of
shares to which any Award relates and the exercise price per share under any
option or stock appreciation right shall be adjusted to reflect such increase or
decrease in the total number of shares of the Common Stock outstanding.
The Company has previously awarded options on a periodic basis without a
specific option plan. At June 30, 1996, the Company had granted stock options
to directors and officers of the Company and the Bank and certain other
affiliates of Smith Breeden to purchase an aggregate of 143,200 shares of Common
Stock at $7.50 per share, which are exercisable between December 15, 1997 and
January 15, 1998.
PROFIT SHARING PLAN. On July 1, 1990, the Bank adopted the Financial
Institutions Thrift Plan ("Profit Sharing Plan"), which is a tax-qualified
defined contribution plan. All employees are eligible to participate in the
Profit Sharing Plan on the first day of the month following the employee's date
of employment. Under the Profit Sharing Plan, a separate account is established
for each participating employee and the Bank may make discretionary
contributions to the Profit Sharing Plan which are allocated to the
participants' accounts. Participants vest in employer discretionary
contributions over a six year period. Distributions from the Profit Sharing
Plan are made upon termination of service, death or disability in a lump sum.
The normal retirement age under the plan is age 65.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
Under applicable federal law, 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.
- 15 -
The Bank's policy provides that all loans made by the Bank to its directors
and officers are made in the ordinary course of business, on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons. The Bank's policy provides
that such loans may not involve more than the normal risk of collectibility or
present other unfavorable features. As of June 30, 1996, mortgage and consumer
loans to employees in excess of $60,000 aggregated $73,599 or 0.3% of the
Company's consolidated stockholders' equity as of such date. All such loans
were made by the Bank in accordance with the aforementioned policy.
The Bank entered into an Investment Advisory Agreement with Smith Breeden
dated as of April 1, 1992, as amended on March 1, 1995. Under the terms of the
agreement, the Bank appointed Smith Breeden as investment advisor with respect
to the management of the Bank's portfolio of investments and its asset and
liability management strategies (the "Account"). Specifically, Smith Breeden
advises and consults with the Bank with respect to its investment activities,
including the acquisition of mortgage-backed securities, the use of repurchase
agreement transactions in funding and the acquisition of certain hedging
instruments to reduce the interest rate risk of the Account's investments.
Under the Agreement, Smith Breeden, as agent and attorney-in-fact with respect
to the Account, may (i) buy, sell, exchange and otherwise trade in mortgage-
backed securities or other investments, and (ii) arrange for necessary placement
of orders, execution of transactions, purchases, sales and conveyances with or
through such brokers, dealers, issuers or other persons as Smith Breeden may
select, subject to the approval of the Bank, and establish the price and trade
conditions, including brokerage commissions. For its services, Smith Breeden
receives a monthly fee which is based on the Bank's total consolidated assets
plus unsettled purchases of securities and minus unsettled sales of securities.
Smith Breeden received fees of $232,000, $194,000 and $183,000 during fiscal
1996, 1995 and 1994, respectively, under such agreement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Committee of the Bank's Board of Directors reviews the
compensation of senior executive officers and recommends to the Board
adjustments in such compensation. During fiscal 1996, the members of the
Executive Committee were Messrs. Cerny, Kon and McConnell. Mr. Cerny does not
participate in the Committee's consideration of his own compensation.
The Compensation Plan Committee of the Company administers the stock
benefit plans of the Company. The Compensation Plan Committee is comprised of
Messrs. Breeden (Chairman), Giarla and McConnell. Mr. Cerny, the President of
the Company, serves as a director of Smith Breeden, whose President and Chief
Executive Officer, Mr. Breeden, serves on the Compensation Plan Committee of the
Company.
- 16 -
The report of the Executive Committee with respect to compensation for the
President and all other executive officers for the fiscal year ended June 30,
1996 is set forth below:
REPORT OF THE EXECUTIVE COMMITTEE WITH RESPECT TO COMPENSATION
For most of fiscal year 1996, the Executive Committee of the Bank's Board
of Directors was responsible for administering compensation matters relating to
the Bank's senior officers. This Committee, in consultation with the Company's
Board of Directors, administered compensation matters with respect to the Chief
Executive Officer. In February 1996, a Compensation Plan Committee of the
Company's Board of Directors, including Dr. John J. McConnell, Dr. Douglas T.
Breeden, and Mr. Michael J. Giarla, was formed to administrate the Company's
Stock Option Plan.
The purpose of the Committee is to assist the Board of Directors of the
Company, the Bank, and its subsidiaries in attracting and retaining qualified,
competent management, motivating executives to achieve a range of performance
goals consistent with a business plan approved by the Board of Directors, and
insuring that proposed compensation and benefit programs are reasonable and
consistent with industry standards, management performance, and shareholder
interests.
The Committee considers the following criteria in annual performance
reviews prior to making a recommendation to the Board with regard to the
compensation of the Chief Executive Officer and other executive officers of the
Company and the Bank:
1. The overall financial performance of the Company and the Bank
during the fiscal year under consideration, relative to stated
management objectives and financial goals and budgets.
2. Individual as well as combined measures of progress of the
Company and the Bank including the quality of the loan portfolio,
execution of retail expansion programs, interest rate risk and
investment management, deposit and loan growth, operating
efficiency, personnel development and training and other
objectives as may be established by management and the Board of
Directors.
3. The Office of Thrift Supervision's CRA and CAMEL ratings.
4. The performance of the Chief Executive Officer relative to
management, leadership, professional involvement, maintenance of
corporate stature, and enhancing the image of the Bank in its
market place.
- 17 -
5. The compensation and benefit levels of comparable positions to
peer group institutions within the financial services industry.
The compensation recommendations of the Committee include a base salary,
with the possibility of bonus and stock option components, if the Executive's
performance is judged to warrant such compensation.
The base compensation of Craig J. Cerny, Chief Executive Officer, was
established at $150,000 on August 1, 1995. Mr. Cerny's compensation level was
determined with regard to the aforementioned criteria, which included an
examination of the executive compensation survey for savings institutions as
published by America's Community Bankers for the Midwest and other regions. In
addition, Mr. Cerny was paid bonuses totalling $56,250 based on his performance
and the performance of the Company. Mr. Cerny does not participate in the
review of his compensation.
With respect to the Bank's other executive officers, the Committee
considered salary and bonus recommendations prepared by the Chief Executive
Officer to establish 1996 compensation. The salary adjustment recommendation
and bonus were based on the individual's and the Company's overall performance
in the past year as well as an analysis of competitive compensation levels
necessary to maintain and attract quality personnel.
Craig J. Cerny
Stanley J. Kon
John J. McConnell
- 18 -
PERFORMANCE GRAPH
The following graph compares the cumulative total returns for the Common
Stock of the Company, the Nasdaq Financial Index and the Nasdaq Composite Index
since the Company's initial public offering in May 1996.
[GRAPH]
TOTAL RETURN ANALYSIS
5/7/96 6/28/96
- ------------------------------------------------------------------------------
Harrington Financial Group, Inc. $ 100.00 $ 105.00
- -------------------------------------------------------------------------------
NASDAQ Financial $ 100.00 $ 102.73
- -------------------------------------------------------------------------------
NASDAQ Composite $ 100.00 $ 100.24
- -------------------------------------------------------------------------------
Source: Carl Thompson Associates www.ctaonline.com (303)494-5472. Data from
Bloomberg Financial Markets
The above graph represents $100 invested in the Company's initial public
offering of Common Stock on May 7, 1996 at $10.00 per share. The Common Stock
commenced trading on the Nasdaq Stock Market on May 7, 1996.
- 19 -
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Deloitte & Touche LLP,
independent certified public accountants, to perform the audit of the Company's
financial statements for the year ending June 30, 1997, and further directed
that the selection of auditors be submitted for ratification by the stockholders
at the Annual Meeting.
Following completion of the audit on the Consolidated Financial Statements
of the Company for the year ended June 30, 1994, the Company dismissed Geo. S.
Olive & Co. LLC, independent certified public accountants, and engaged Deloitte
& Touche LLP, effective June 29, 1995. The change in accountants was
recommended by the Board of Directors of the Company. For the fiscal years
ended June 30, 1994 and 1993, the independent auditor's reports with respect to
the Company's consolidated financial statements neither contained an adverse
opinion or a disclaimer of opinion, nor were such reports qualified or modified
as to uncertainty, audit-scope or accounting principles. For the fiscal years
ended June 30, 1994 and 1993 and up to the date of the discontinuation of
services of Geo. S. Olive & Co. LLC, there were no disagreements with Geo. S.
Olive & Co. LLC, on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure which, if not resolved to
the satisfaction of Geo. S. Olive & Co. LLC, would have caused it to make a
reference to the subject matter of the disagreement in connection with its
reports. During that period, the Company did not consult with Deloitte & Touche
LLP regarding either (i) the application of accounting principles to a specific
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company's financial statements or (ii) any other matter
that would be required to be reported herein.
The Company has been advised by Deloitte & Touche LLP that neither that
firm nor any of its associates has any relationship with the Company or its
subsidiaries other than the usual relationship that exists between independent
certified public accountants and clients. Deloitte & Touche LLP will have one
or more representatives at the Annual Meeting who will have an opportunity to
make a statement, if they so desire, and who will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING JUNE 30, 1997.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which is scheduled to be held in October 1997, must be received at
the principal executive offices of the Company, 722 Promenade, Richmond, Indiana
47375, Attention: Corporate
- 20 -
Secretary, no later than May 28, 1997. If such proposal is in compliance
with all of the requirements of Rule 14a-8 under the 1934 Act, it will be
included in the proxy statement and set forth on the form of proxy issued for
such annual meeting of stockholders. It is urged that any such proposals be
sent by certified mail, return receipt requested.
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the 1934 Act may be
brought before an annual meeting pursuant to Article II, Section 13 of the
Company's Amended and Restated Bylaws, which provides that business at an annual
meeting of stockholders must be (a) properly brought before the meeting by or at
the direction of the Board of Directors, or (b) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the Company. To be timely a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Company not later than 90 days prior to the
anniversary date of the mailing of proxy materials by the Company in connection
with the immediately preceding annual meeting of stockholders of the Company. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting: (a) a brief
description of the business desired to be brought before the annual meeting, (b)
the name and address, as they appear on the Company's books, of the stockholder
proposing such business, (c) the class and number of shares of the Company which
are beneficially owned by the stockholder, and (d) any financial interest of the
stockholder in such business.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year ended
June 30, 1996 accompanies this Proxy Statement. Such annual report is not part
of the proxy solicitation materials.
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR FISCAL 1996 REQUIRED TO BE FILED UNDER THE 1934 ACT. SUCH WRITTEN REQUESTS
SHOULD BE DIRECTED TO CATHERINE A. HABSCHMIDT, C.P.A., CHIEF FINANCIAL OFFICER
AND TREASURER, HARRINGTON FINANCIAL GROUP, INC., 722 PROMENADE, RICHMOND,
INDIANA 47375. THE FORM 10-K IS NOT PART OF THE PROXY SOLICITATION MATERIALS.
OTHER MATTERS
Each proxy solicited hereby also confers discretionary authority on the
Board of Directors of the Company to vote the proxy with respect to the approval
of the minutes of the last meeting of stockholders, the election of any person
as a director if the nominee is unable to serve or for good cause will not
serve, matters incident to the conduct of the
- 21 -
meeting, and upon such other matters as may properly come before the Annual
Meeting. Management is not aware of any business that may properly come before
the Annual Meeting other than the matters described above in this Proxy
Statement. However, if any other matters should properly come before the
meeting, it is intended that the proxies solicited hereby will be voted with
respect to those other matters in accordance with the judgment of the persons
voting the proxies.
The cost of the solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending the proxy
materials to the beneficial owners of the Company's Common Stock. In addition
to solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
YOUR VOTE IS IMPORTANT! WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY
CARD AND RETURN IT TODAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
- 22 -
REVOCABLE PROXY
HARRINGTON FINANCIAL GROUP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HARRINGTON
FINANCIAL GROUP, INC. ("COMPANY") FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 23, 1996 AND AT ANY ADJOURNMENT THEREOF.
The undersigned, being a stockholder of the Company as of September 6,
1996, hereby authorizes the Board of Directors of the Company or any successors
thereto as proxies with full powers of substitution, to represent the
undersigned at the Annual Meeting of Stockholders of the Company to be held at
the Westin Hotel located at 50 South Capitol Avenue, Indianapolis, Indiana, on
Wednesday, October 23, 1996 at 2:00 p.m., Eastern Standard Time, and at any
adjournment of said meeting, and thereat to act with respect to all votes that
the undersigned would be entitled to cast, if then personally present, as
follows:
1. ELECTION OF DIRECTORS
Nominees for a three-year term: Craig J. Cerny, William F. Quinn, C.F.A. and
Stanley J. Kon
/ / FOR / / WITHHOLD
AUTHORITY
NOTE: To withhold authority to vote for an individual
nominee, strike a line through that nominee's name.
Unless authority to vote for all of the foregoing
nominees is withheld, this Proxy will be deemed to
confer authority to vote for each nominee whose name
is not struck.
2. PROPOSAL to ratify the appointment by the Board of Directors of Deloitte &
Touche LLP as the Company's independent auditors for the fiscal year
ending June 30, 1997.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF
RETURNED BUT NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF THE BOARD OF DIRECTORS' NOMINEES TO THE BOARD OF DIRECTORS, FOR RATIFICATION
OF THE COMPANY'S INDEPENDENT AUDITORS AND OTHERWISE AT THE DISCRETION OF THE
PROXIES. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED AT
THE ANNUAL MEETING.
Dated:
--------------------------------------
---------------------------------------------
Signature of Shareholder
--------------------------------------------
Signature of Shareholder
NOTE: PLEASE SIGN THIS EXACTLY AS YOUR NAME(S)
APPEAR(S) ON THIS PROXY. WHEN SIGNING IN A
REPRESENTATIVE CAPACITY, PLEASE GIVE FULL
TITLE. WHEN SHARES ARE HELD JOINTLY, ONLY ONE
HOLDER NEED SIGN.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.