FIDELITY BANCORP, INC.
5455 West Belmont Avenue
Chicago, Illinois 60641
(773) 736-4414
January 13, 2003
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Fidelity Bancorp, Inc., the holding company for Fidelity Federal Savings Bank.
The annual meeting will be held on Wednesday, February 12, 2003 at 10:00 a.m.,
local time, at our corporate offices, which are located at 5455 West Belmont,
Chicago, Illinois 60641.
As described in the enclosed proxy statement, matters scheduled to be presented
for stockholder action at the annual meeting include the election of two Class
III directors and the ratification of Crowe, Chizek and Company LLP as our
independent auditors for the fiscal year ending September 30, 2003. Our
officers will also present a report on our operations at the meeting.
Directors, executive officers and representatives of our independent auditors
will be present to respond to appropriate questions.
The board of directors has determined that approval of the matters to be
considered at the meeting is in the best interest of the company and our
stockholders. For the reasons set forth in the proxy statement, the board
unanimously recommends a vote "FOR" each nominee selected by the board and the
ratification of Crowe, Chizek and Company LLP as our independent auditors.
We hope you will be able to attend the annual meeting in person. WHETHER OR
NOT YOU EXPECT TO ATTEND, WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED
PROXY CARD SO THAT YOUR SHARES WILL BE REPRESENTED.
On behalf of the board of directors and all of our employees, I wish to thank
you for your interest and support. I look forward to seeing you at the annual
meeting.
Sincerely yours,
Raymond S. Stolarczyk
Chairman of the Board
and Chief Executive Officer
FIDELITY BANCORP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on February 12, 2003
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of Fidelity
Bancorp, Inc. will be held on Wednesday, February 12, 2003 at 10:00 a.m., local
time, at our corporate offices, which are located at 5455 West Belmont Avenue,
Chicago, Illinois 60641.
The annual meeting is for the purpose of considering and voting upon the
following matters:
1. the election of two Class III directors for terms of three years each;
2. the ratification of Crowe, Chizek and Company LLP as our independent
auditors for the fiscal year ending September 30, 2003; and
3. other matters as may properly come before the annual meeting or any
adjournments or postponements of the meeting.
The board of directors fixed December 23, 2002 as the record date for the
determination of stockholders entitled to notice of, and to vote at, the annual
meeting and at any adjournments or postponements of the meeting. Only holders
of record of our common stock as of the close of business on that date will be
entitled to vote at the annual meeting or any adjournments or postponements of
the meeting. In the event there are an insufficient number of votes for a
quorum or to approve or ratify any of the foregoing proposals at the time of
the annual meeting, the meeting may be adjourned or postponed in order to
permit further solicitation of proxies.
You are requested to complete, sign and date the enclosed proxy card and to
mail it promptly in the enclosed pre-addressed envelope.
By order of the board of directors
Judith K. Leaf
Corporate Secretary
Chicago, Illinois
January 13, 2003
FIDELITY BANCORP, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
February 12, 2003
Fidelity Bancorp, Inc., a Delaware corporation, is the holding company for
Fidelity Federal Savings Bank, a federally-chartered stock savings bank. We
offer retail and business banking services and products through Fidelity
Savings' five full-service branch offices, located in Chicago, Franklin Park,
and Schaumburg, Illinois. We also offer brokerage, insurance and annuity
products through Fidelity Corporation, a subsidiary of Fidelity Savings.
This proxy statement is being furnished to stockholders in connection with the
solicitation by our board of directors of proxies to be used at the annual
meeting to be held on Wednesday, February 12, 2003 at our corporate offices
located at 5455 West Belmont Avenue, Chicago, Illinois 60641 at 10:00 a.m.,
local time, and any adjournments or postponements of the meeting. The 2002
annual report to stockholders on Form 10-K, including the audited consolidated
financial statements for the fiscal year ended September 30, 2002, accompanies
this proxy statement, which is first being mailed to stockholders on or about
January 13, 2003.
The following is information regarding the meeting and the voting process,
presented in a question and answer format.
WHY AM I RECEIVING THIS PROXY STATEMENT AND A PROXY CARD?
You are receiving a proxy statement and a proxy card from us because on
December 23, 2002, you owned shares of Federal Bancorp's common stock. This
proxy statement describes the matters that will be presented for consideration
by the stockholders at the annual meeting. It also gives you information
concerning the matters to assist you in making an informed decision.
When you sign the enclosed proxy card, you appoint the proxy holder as your
representative at the meeting. The proxy holder will vote your shares as you
have instructed in the proxy card, thereby ensuring that your shares will be
voted whether or not you attend the meeting. Even if you plan to attend the
meeting, you should complete, sign and return your proxy card in advance of the
meeting just in case your plans change.
If you have signed and returned the proxy card and an issue is considered and
voted upon at the meeting that is not identified on the card, the proxy holder
will vote your shares, pursuant to your proxy, in accordance with his or her
judgment.
WHAT MATTERS WILL BE VOTED ON AT THE MEETING?
You are being asked to vote on the election of two directors of Fidelity
Bancorp and the ratification of Crowe, Chizek and Company LLP as our
independent auditors for the 2003 fiscal year. These matters are more fully
described in this proxy statement.
HOW DO I VOTE?
You may vote either by mail or in person at the meeting. To vote by mail,
complete and sign the enclosed proxy card and mail it in the enclosed
pre-addressed envelope. No postage is required if mailed in the United States.
If you mark your proxy card to indicate how you want your shares voted, your
shares will be voted as you instruct.
If you sign and return your proxy card but do not mark the form to provide
voting instructions, the shares represented by your proxy card will be voted
"FOR" both nominees for director named in this proxy statement and "FOR" the
ratification of our auditors.
If you want to vote in person, please come to the annual meeting. We will
distribute written ballots to anyone who wants to vote at the meeting. Please
note, however, that if your shares are held in the name of your broker (or in
what is usually referred to as "street name"), you will need to arrange to
obtain a proxy from your broker in order to vote in person at the meeting.
Even if you plan to attend the annual meeting, you should complete and return
your proxy card in advance of the annual meeting in case your plans change.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY CARD?
It means that you have multiple holdings reflected in our stock transfer
records and/or in accounts with brokers. Please sign and return ALL proxy
cards to ensure that all your shares are voted.
IF I HOLD SHARES IN THE NAME OF A BROKER, WHO VOTES MY SHARES?
If you received this proxy statement from your broker, your broker should have
given you instructions for directing how your broker should vote your shares.
It will then be your broker's responsibility to vote your shares for you in the
manner you direct.
Under the rules of various national and regional securities exchanges, brokers
may generally vote on routine matters, such as the election of directors and
the ratification of independent auditors, but cannot vote on non-routine
matters, such as an amendment to a stock option plan, unless they have received
voting instructions from the person for whom they are holding shares. If your
broker does not receive instructions from you on how to vote particular shares
on a matter on which your broker does not have discretionary authority to vote,
your broker will return the proxy card to us, indicating that it does not have
the authority to vote on these matters. This is generally referred to as a
"broker non-vote" and will affect the outcome of the voting as described below,
under "How many votes are needed for approval of each proposal?" Therefore, we
encourage you to provide directions to your broker as to how you want your
shares voted on the matters to be brought before the meeting. You should do
this by carefully following the instructions your broker gives you concerning
its procedures. This ensures that your shares will be voted at the meeting.
WHAT IF I CHANGE MY MIND AFTER I RETURN MY PROXY?
If you hold your shares in your own name, you may revoke your proxy and change
your vote at any time before the polls close at the meeting. You may do this
by:
* signing another proxy with a later date and returning that proxy to our
transfer agent or proxy solicitor;
* sending notice to us that you are revoking your proxy; or
* voting in person at the meeting.
If you hold your shares in the name of your broker and desire to revoke your
proxy, you will need to contact your broker to revoke your proxy. You may
contact our transfer agent at the following address:
Computershare Investor Services
2 North LaSalle Street
Chicago, IL 60602
You may contact our proxy solicitor at the following address:
Morrow & Co., Inc.
909 Third Avenue
New York, NY 10022
HOW MANY VOTES DO WE NEED TO HOLD THE ANNUAL MEETING?
A majority of the shares that are outstanding and entitled to vote as of the
record date must be present in person or by proxy at the meeting in order to
hold the meeting and conduct business.
Shares are counted as present at the meeting if the stockholder either:
* is present and votes or registers its abstention from voting in person at
the meeting; or
* has properly submitted a signed proxy card.
On December 23, 2002, the record date, there were 3,091,515 shares of common
stock issued and outstanding. Therefore, at least 1,545,759 shares need to be
present at the annual meeting. The number of shares issued and outstanding
reflects the results of a three for two stock split (effected in the form of a
dividend) completed in February 2002.
WHAT HAPPENS IF A NOMINEE IS UNABLE TO STAND FOR RE-ELECTION?
The board may, by resolution, provide for a lesser number of directors or
designate a substitute nominee. In the latter case, shares represented by
proxies may be voted for a substitute nominee. Proxies cannot be voted for
more than two nominees. The board has no reason to believe that either nominee
will be unable to stand for re-election.
WHAT OPTIONS DO I HAVE IN VOTING ON EACH OF THE PROPOSALS?
You may vote "FOR" or "WITHHOLD AUTHORITY TO VOTE FOR" both nominees for
director. You may vote "FOR," "AGAINST" or "ABSTAIN" on any other proposal
that may properly be brought before the meeting. Abstentions will be
considered in determining the presence of a quorum, but will not affect the
vote required for any proposal.
HOW MANY VOTES MAY I CAST?
Generally, you are entitled to cast one vote for each share of stock you owned
on the record date. The proxy card included with this proxy statement
indicates the number of shares owned by an account attributable to you.
As provided in our certificate of incorporation, holders of common stock who
beneficially own in excess of 10% of the outstanding shares of common stock
(referred to as "the limit"), are not entitled to any vote in respect of the
shares held in excess of the limit. A person or entity is deemed to
beneficially own shares owned by an affiliate of, as well as persons acting in
concert with, the person or entity. Our certificate of incorporation
authorizes the board of directors to make all determinations necessary to
implement and apply the limit, including determining whether persons or
entities are acting in concert, and to demand that any person who is reasonably
believed to beneficially own common stock in excess of the limit supply
information to us to enable the board to implement and apply the limit.
HOW MANY VOTES ARE NEEDED FOR APPROVAL OF EACH PROPOSAL?
The two individuals receiving the highest number of votes cast "FOR" their
election will be elected as directors of Fidelity Bancorp.
The ratification of our auditors must receive the affirmative vote of a
majority of the shares present in person or by proxy at the meeting and
entitled to vote. Broker non-votes, if any, will not be counted as entitled to
vote, but will count for purposes of determining whether or not a quorum is
present.
WHERE DO I FIND THE VOTING RESULTS OF THE MEETING?
We will announce voting results as soon as practicable during or after the
meeting. We will also disclose the voting results in our Form 10-Q for the
quarter ended March 31, 2003.
WHO BEARS THE COST OF SOLICITING PROXIES?
We will bear the cost of soliciting proxies. We have retained Morrow & Co.,
Inc. to assist, as necessary, in the solicitation of proxies, for a fee
estimated to be approximately $5,000.00, plus reasonable out-of-pocket
expenses. In addition to solicitations by mail, officers, directors or
employees of Fidelity Bancorp or its subsidiaries may solicit proxies in person
or by telephone. These persons will not receive any special or additional
compensation for soliciting proxies. We may reimburse brokerage houses and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
expenses for forwarding proxy and solicitation materials to stockholders.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as to those persons we
believe to be beneficial owners of more than 5% of the outstanding shares of
common stock on December 23, 2002, the record date for the annual meeting. The
information below is based upon reports regarding ownership required to be
filed with us and with the Securities and Exchange Commission in accordance
with Sections 13(d),13(f) or 13(g) of the Securities Exchange Act of 1934, by
the beneficial owner.
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership(1) Class
-------------------- ----------------------- ----------
Fidelity Federal Savings Bank 332,211(2) 10.75%
Employee Stock Ownership
Plan and Trust
5455 W. Belmont Avenue
Chicago, Illinois 60641
Raymond S. Stolarczyk 315,818(3) 9.93%
Chairman of the Board and
Chief Executive Officer of
Fidelity Bancorp, Inc.
5455 W. Belmont Avenue
Chicago, Illinois 60641
John Wm. Palmer, Richard J.Lashley 305,250(4) 9.87%
and Garrett Goodbody
20 E. Jefferson Avenue, Suite 22
Naperville, Illinois 60540
First Manhattan Co. 246,150(5) 7.96%
437 Madison Avenue
New York, New York 10022
Dimensional Investors 182,450(6) 5.90%
1299 Ocean Avenue
Santa Monica, CA 90401
(1) The total number of shares of common stock issued and outstanding on
December 23, 2002 was 3,091,515. The outstanding number of shares reflects
a three for two stock split (effected in the form of a dividend) completed
in February 2002.
(2) The Human Resource Policy Committee of the board of directors has been
appointed to administer the ESOP. An unrelated financial institution has
been appointed as the corporate trustee for the ESOP. The committee may
instruct the trustee regarding investment of funds contributed to the ESOP.
The trustee must vote all allocated shares held in the ESOP in accordance
with the instructions of the participating employees. As of the record
date, 436,425 shares of common stock in the ESOP had been allocated to
participating employees. Of these, 104,214 shares had been disbursed to
retiring participants.
(3) Includes 33,990 shares held by Ms. Stolarczyk. Ms. Stolarczyk is a
director of Fidelity Savings. Also includes 2,115 shares held as custodian
for Ms. Stolarczyk's children. Also included are 85,376 exercisable
options held by Mr. Stolarczyk and 3,486 exercisable options held by Ms.
Stolarczyk.
(4) Messrs. Palmer, Lashley and Goodbody filed an amended Schedule 13D with the
Securities and Exchange Commission on October 30, 2002. The Schedule 13D
was filed by them on behalf of several investment funds and other
organizations controlled by either Messrs. Palmer, Lashley or Goodbody.
(5) Based upon a Form 13F filed with the Securities and Exchange Commission on
November 13, 2002.
(6) Based upon a Form 13F filed with the Securities and Exchange Commission on
October 28, 2002.
ELECTION OF DIRECTORS
Pursuant to our bylaws, the number of directors that comprise the board of
directors of Fidelity Bancorp is six unless otherwise designated by the board
of directors. Each of the six members of the board of directors also presently
serves as a director of Fidelity Savings. Directors are elected for staggered
terms of three years each, with a term of only one of the three classes of
directors expiring each year. Directors serve until their successors are
elected and qualified.
The two nominees proposed for election as Class III directors at the annual
meeting are Thomas E. Bentel, President and Chief Operating Officer and Raymond
S. Stolarczyk, Chairman of the Board and Chief Executive Officer. These
nominations are not being proposed pursuant to any agreement or understanding
between us and any person.
In the event that any nominee is unable to serve or declines to serve for any
reason, the proxies will be voted for the election of another person as may be
designated by the present board of directors. The board of directors has no
reason to believe that either of the nominees will be unable or unwilling to
serve. UNLESS AUTHORITY TO VOTE FOR THE NOMINEES IS WITHHELD, THE SHARES
REPRESENTED BY THE ENCLOSED PROXY CARD, IF EXECUTED AND RETURNED, WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES PROPOSED BY THE BOARD OF DIRECTORS.
--------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
NOMINEES NAMED IN THIS PROXY STATEMENT
--------------------------------------------------
INFORMATION WITH RESPECT TO THE NOMINEES, CONTINUING DIRECTORS AND OTHER
EXECUTIVE OFFICERS
The following table and related biographical information sets forth the names
of the nominees, continuing directors and executive officers, as well as their
ages. It also contains a brief description of their business experience for the
past five years, including present occupation and employment, the year in which
each became a director and the year in which their term as director of Fidelity
Bancorp expires. The table also sets forth the amount of our common stock and
the percent beneficially owned by each nominee, director and executive officer
and all directors and executive officers as a group as of December 23, 2002.
No director is related to any other director or executive officer of Fidelity
Bancorp by marriage or other family relationship.
Amount and Nature
Expiration of Term of Beneficial
Name as Director Ownership (1,2) Percent of Class
- ----- ------------------- ----------------- ----------------
NOMINEES
CLASS III
Thomas E. Bentel 2003 111,054 3.51%
President and Chief
Operating Officer
Raymond S. Stolarczyk 2003 315,818 9.93%
Chairman of the Board
and Chief Executive
Officer
CONTINUING DIRECTORS
CLASS I
Paul J. Bielat 2004 50,329 1.62%
Director
Richard J. Kasten 2004 12,830 *
Director
CLASS II
Edward J. Burda 2005 12,080 *
Director
Patrick J. Flynn 2005 26,330 *
Director
OTHER EXECUTIVE OFFICERS
Elizabeth A. Doolan 21,764 *
Sr. Vice President Finance
and Chief Financial Officer
All directors and executive 550,205 16.70%
officers as a group
(7 individuals)
* Does not exceed 1.0% of the issued and outstanding shares of Fidelity
Bancorp's common stock.
(1) The total number of shares of common stock issued and outstanding on
December 23, 2002 was 3,091,515. The outstanding number of shares
reflects a three for two stock split (effected in the form of a dividend)
completed in February 2002.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family member) voting and disposition power as to shares
reported. Represents the following exercisable options: 10,960 for Mr.
Flynn, 10,959 for Messrs. Bielat and Burda and 5,459 for Mr. Kasten under
the Fidelity Bancorp, Inc. 1993 Stock Option Plan for Outside Directors.
Includes 85,376 and 68,808 presently exercisable options granted to
Messrs. Stolarczyk and Bentel respectively and 6,960 exercisable options
granted to Ms. Doolan under our 1993 Incentive Stock Option Plan. Also,
includes 30,070 and 30,240 shares awarded to Messrs. Stolarczyk and
Bentel, respectively, and 11,337 shares awarded to Ms. Doolan under the
ESOP as of December 31, 2002. Also included are 2,115 shares held as
custodian for Ms. Stolarczyk's children and 3,486 exercisable options held
by Ms. Stolarczyk.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLICANCE
Section 16(a) of the Exchange Act requires that our executive officers,
directors and persons who own more than 10% of our common stock file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
They are also required to furnish us with copies of all Section 16(a) forms
they file. Based solely on our review of the copies of such forms, and, if
appropriate, representations made to us by any reporting person concerning
whether a Form 5 was required to be filed for 2002, we are not aware that any
of our directors, executive officers or 10% stockholders failed to comply with
the filing requirements of Section 16(a) during the fiscal year ended September
30, 2002.
NOMINEES
CLASS III
THOMAS E. BENTEL, age 56, became Fidelity Savings' Chief Operating Officer in
1987, and its President in 1991 and has held those same positions for Fidelity
Bancorp since 1993. Mr. Bentel was appointed a director of Fidelity Savings in
1988 and of Fidelity Bancorp in 1997. Since 1988 he has served as a director
of Fidelity Corporation, a wholly owned subsidiary of Fidelity Savings and
served as President since 1993. Previously, he was Executive Vice President of
Heritage Bancorporation of Chicago. Mr. Bentel is a director and member of the
Executive Committee of the Illinois League of Financial Institutions and a
director and past Chairman of the Chicagoland Association of Financial
Institutions.
RAYMOND S. STOLARCZYK, age 64, joined Fidelity Savings in 1975 as Vice
President-Finance. Prior to 1975, he worked as a Financial Specialist at Ernst
& Young. He was promoted to President and director of Fidelity Savings in 1981
and Chief Executive Officer of Fidelity Savings in 1985. In 1991 the board of
directors appointed him Chairman of the Board for both Fidelity Savings and
Fidelity Corporation. In 1993 Mr. Stolarczyk assumed the additional positions
of Chairman of the Board and Chief Executive Officer of the Fidelity Bancorp
and Chairman of the Executive Committee of the Board of Fidelity Bancorp. Mr.
Stolarczyk is a past director of the Federal Home Loan Bank of Chicago and is a
past Chairman of its Audit Committee. He is past Chairman of the Illinois
League of Financial Institutions Trust, elected in 1999. Mr. Stolarczyk also
maintains memberships in the Illinois Society of Certified Public Accountants
and the American Institute of Certified Public Accountants.
CONTINUING DIRECTORS
CLASS I
PAUL J. BIELAT, age 63, has been a director of Fidelity Savings since 1992 and
of Fidelity Bancorp since 1993. He is a retired principal of Compliance
Assistance Partners, Inc., a firm that engaged in the business of advising
banks and thrift institutions regarding regulatory compliance matters. From
1982 to 1991 he held the position of Senior Vice President and Treasurer of the
Federal Home Loan Bank of Chicago.
RICHARD J. KASTEN, age 64, has been a director of Fidelity Bank since 1998 and
was elected director of Fidelity Bancorp in 2000. He was a partner with Ernst
& Young when he retired in 1989. Mr. Kasten was the president and owner of a
fastener manufacturing company from 1990 to 1996 following his retirement from
Ernst and Young. He is a member of the American Institute of Certified Public
Accountants and the Illinois Society of Certified Public Accountants.
CLASS II
PATRICK J. FLYNN, age 60, has been a director of Fidelity Savings and of
Fidelity Bancorp since 1993. He is a retired Executive Vice President of
McDonalds Corporation. Mr. Flynn is also a director of Chipotle Mexican Grill.
EDWARD J. BURDA, age 64, has been a director of Fidelity Savings since 1997 and
was elected director of Fidelity Bancorp in 2000. He is the president and
owner of Stangard Steel Corporation, an importer of high-grade tool steel that
is distributed nationally and internationally.
OTHER NAMED EXECUTIVE OFFICERS
ELIZABETH A. DOOLAN, age 39, became the Sr. Vice President Finance in January
2002, Vice President and Chief Financial Officer for Fidelity Bancorp and
Fidelity Savings in 2000. She joined Fidelity Savings as Accounting Manager in
1993 and was promoted to Controller in 1997. Prior to joining Fidelity
Savings, Ms. Doolan was a Senior Audit Manager in Financial Services at KPMG
LLP, where she worked for seven years. Ms. Doolan is a member of the American
Institute of Certified Public Accountants, the Illinois Society of Certified
Public Accountants and the Financial Managers' Society.
MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD
The board of directors conducts its business through meetings of the board and
through activities of its committees. During fiscal 2002, the board of
directors of Fidelity Bancorp held eight meetings. Each of the directors
attended at least 75% of the total number of the board meetings held and
committee meetings on which such director served during fiscal 2002. The
boards of directors of Fidelity Bancorp and Fidelity Savings jointly maintain
the following committees:
AUDIT COMMITTEE. The Audit Committee consists of Messrs. Bielat (Chair), Flynn
and Kasten. The committee selects and retains the independent auditors,
approves the services to be performed by the auditors, reviews the results of
the auditor's services and reviews with management the systems of internal
control and internal audit reports. The Audit Committee met three times in
fiscal 2002. The committee has adopted a written charter, which sets forth the
committee's duties and responsibilities. A copy of the charter is attached to
this proxy statement as Exhibit A.
HUMAN RESOURCE POLICY COMMITTEE. The Human Resource Policy Committee consists
of Messrs. Flynn (Chair), Bielat and Burda. The purpose of the committee is to
recommend the compensation, pension, benefit and other human resource policies
and programs for key executive management personnel to the full board, and to
monitor compliance with Fidelity Savings' policies and applicable laws and
regulations. This committee met four times in fiscal 2002.
NOMINATING COMMITTEE. The Nominating Committee for the 2002 annual meeting
consisted of Messrs. Bielat, Flynn and Kasten. The committee considers and
recommends the nominees for director to stand for election at our annual
meeting. Our certificate of incorporation and bylaws also provide for
stockholder nominations of directors. Such nominations must be in writing and
must otherwise comply with the provisions of Section 6 of our bylaws. See
"Additional Information - Stockholder Proposals - Bylaw Requirements." The
Nominating Committee met once in fiscal 2002.
DIRECTOR COMPENSATION
Because the directors of Fidelity Bancorp also serve on the board of directors
of Fidelity Savings, prior to 2002, we did not pay fees for service on the
board of directors of Fidelity Bancorp. During fiscal 2002 each non-employee
director of Fidelity Bancorp was paid $725 per meeting for attending two
special meetings. For calendar year 2002, each non-employee director of
Fidelity Savings was paid a monthly retainer of $725 plus a fee of $725 for
each Fidelity Savings board meeting attended. The chairperson of each
committee of the board of Fidelity Savings received $375 for each committee
meeting attended and committee members received a fee of $325 for each
committee meeting attended. Directors who are officers or executives of
Fidelity Savings received no fees for meetings attended.
EXECUTIVE COMPENSATION
HUMAN RESOURCE POLICY COMMITTEE REPORT OF EXECUTIVE COMPENSATION
THE INCORPORATION BY REFERENCE OF THIS PROXY STATEMENT INTO ANY DOCUMENT FILED
BY US WITH THE SECURITIES AND EXCHANGE COMMISSION SHALL NOT BE DEEMED TO
INCLUDE THE FOLLOWING REPORT OR STOCK PERFORMANCE GRAPH AND RELATED INFORMATION
UNLESS SUCH REPORT AND GRAPH ARE SPECIFICALLY STATED TO BE INCORPORATED BY
REFERENCE INTO SUCH DOCUMENT.
Under rules established by the Securities and Exchange Commission, we are
required to provide certain data and information with regard to the
compensation and benefits provided to our Chief Executive Officer and other
executive officers. The disclosure requirements for the Chief Executive
Officer and other executive officers include a report explaining the rationale
and considerations that led to fundamental compensation decisions affecting
those individuals. In fulfillment of this requirement, the Human Resource
Policy Committee, at the direction of the board of directors, has prepared the
following report for inclusion in this proxy statement.
The Human Resource Policy Committee is responsible for establishing the
compensation levels and benefits of executive officers of Fidelity Bancorp and
Fidelity Savings. The committee is comprised solely of "independent" directors
in accordance with guidance issued by the Nasdaq Stock Market Inc. The board
has delegated to the committee the responsibility of assuring that the
compensation of the Chief Executive Officer and other executive officers is
consistent with our performance, our compensation policy, competitive practices
and the requirements of appropriate regulatory agencies. Non-employee
directors who do not sit on the committee also participate in executive
compensation decision-making through the review and ratification of the
committee's recommendations.
For the past fiscal year, the committee established the following goals for
consideration in setting executive officer compensation:
* to provide motivation for the executives to increase stockholder value by
linking a portion of their compensation to income and other key metrics;
* to provide financial rewards for those executives whose performance had a
significant impact on corporate profitability;
* to reward individual performance and the performance of Fidelity Savings; and
* to provide competitive compensation in order to attract and retain key
personnel.
In order to determine the appropriate level of salary for the executive
officers for calendar year 2002, the committee focused its attention upon what
they considered to be the key financial goals established in the 2001 Financial
Plan. At the end of fiscal year 2001, earnings per share increased from $1.31
to $1.54, an 18% increase. Net income increased by $630,000 or 15% and return
on average assets increased from 0.70% to 0.77%. The committee also evaluated
the operating goals established in the 2001 Financial Plan and determined that
Fidelity had successfully attained those goals that were considered crucial by
the committee and the full board. All financial and operating goals were
achieved while maintaining excellent safety and soundness ratings. Based upon
Fidelity Bancorp's and Fidelity Savings' financial performance for fiscal 2001,
the committee increased the base salary of the Chief Executive Officer to
$240,000 effective January 1, 2002. This represents an approximate 3.4%
increase from his 2001 base salary. The base salary of Thomas E. Bentel,
President and Chief Operating Officer, was increased 4.2% and the base salary
of Elizabeth A. Doolan, Senior Vice President Finance and Chief Financial
Officer was increased 8.2%. The increase in Ms. Doolan's salary was based, in
part, on her promotion to the position of Senior Vice President Finance.
In order to determine the appropriate bonuses for fiscal year 2002, the
committee evaluated financial performance during fiscal 2002 (using estimates
where appropriate). At the end of fiscal year 2002, earnings per share
increased from $1.54 to $2.49, a 62% increase. Net income increased by $3.1
million or 61% and return on average assets increased from 0.77% to 1.20%. The
foregoing was achieved while maintaining excellent safety and soundness
ratings. Based upon these fiscal year 2002 accomplishments described above,
the committee approved the grant of a cash bonus for Raymond S. Stolarczyk,
Thomas E. Bentel and Elizabeth A. Doolan, in the amounts of $84,000, $67,000
and $35,000 respectively.
The committee does not believe that the limitations on the deductibility of
executive compensation imposed under Section 162(m) of the Internal Revenue
Code of 1986, as amended, will affect the deductibility of compensation
expected to be paid during 2002 to our executives. However, the committee will
continue to evaluate the impact which Section 162(m) may have and take such
actions as it deems appropriate.
HUMAN RESOURCE POLICY COMMITTEE:
Patrick J. Flynn (Chair)
Paul J. Bielat
Edward J. Burda
HUMAN RESOURCE POLICY COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As mentioned above, the members of the Human Resource Policy Committee during
2002 were Messrs. Bielat, Burda and Flynn. During 2002, no Company executive
officer served on the board of directors or compensation committee of any other
corporation with respect to which any member of the Human Resource Policy
Committee was engaged as an executive officer. No member of the Human Resource
Policy Committee was a Fidelity Bancorp employee in 2002 and none was formerly
a Fidelity Bancorp executive officer.
STOCK PERFORMANCE GRAPH
The following table shows a comparison of our cumulative return since our
initial public offering with the cumulative total returns of both a broad
market and a peer group index. The comparison assumes $100 invested on
September 30, 1997, with all dividends reinvested. The broad market index
chosen was the Nasdaq Market Index and the peer group index chosen was the
Media General Industry Group, which is comprised of savings and loan holding
companies. The data was supplied by Media General Financial Services.
09/30/1997 09/30/1998 09/30/1999 09/30/2000 09/30/2001 09/28/2002
Fidelity Bancorp, Inc. (FBCI) 100.00 84.59 68.40 74.12 98.75 145.43
Peer Group Index 100.00 88.24 84.86 103.69 138.31 145.14
Broad Market Index 100.00 103.92 168.12 229.98 94.23 75.81
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by us, including by our
subsidiaries to our Chief Executive Officer and two other executive officers
who received a total annual salary and bonus in excess of $100,000 for the
fiscal year ended September 30, 2002. Three fiscal years, ending with
September 30, 2002 are represented for the Chief Executive Officer and for the
President and Chief Operating Officer. Two fiscal years ending with September
30, 2002 are represented for the Senior Vice President and Chief Financial
Officer.
Long-Term
Compensation
Securities All Other
Name and Principal Fiscal Annual Compensation Underlying Compen-
Position Year Salary($) Bonus($) Options (#) sation ($)(1)
Raymond S. Stolarczyk 2002 $237,662 $84,000 7,500 $20,311
Chairman of the Board 2001 $229,346 $70,000 -- $35,642
and Chief Executive Officer 2000 $222,800 $15,000 -- $48,499
Thomas E. Bentel 2002 $187,779 $67,000 6,000 $19,654
President and Chief 2001 $179,890 $12,000 -- $35,642
Operating Officer 2000 $173,700 $12,000 -- $48,499
Elizabeth A. Doolan (2) 2002 $ 96,808 $35,000 4,800 $10,488
Senior Vice President 2001 $ 90,491 $20,000 -- $17,205
Finance and Chief 2000 -- -- -- --
Financial Officer
(1) 2002 figure represents fair market value for ESOP shares allocated on
December 31, 2001; proration of discretionary ESOP cash contribution of
$200,000 and Fidelity Savings 401(k) contribution of 3% of salary. ESOP
shares represent participant forfeitures only due to all plan shares having
been allocated as of December 31, 2000. Fair market value for the total
shares allocated under the ESOP as of September 30, 2002 is: $665,984 for
Mr. Stolarczyk, $669,816 for Mr. Bentel and $251,115 for Ms. Doolan. 2001
and 2000 figures represent fair market value of ESOP shares allocated on
December 31, 2000 and December 31, 1999, respectively.
(2) Ms. Doolan became Vice President Finance and Chief Financial Officer in
2000 and Senior Vice President Finance in January 2002.
EMPLOYMENT AGREEMENTS AND SPECIAL TERMINATION AGREEMENTS
We have employment agreements with Messrs. Stolarczyk and Bentel. The
employment agreements are intended to ensure that we will be able to maintain a
stable and competent management team. The employment agreements provide for
three-year terms. Commencing on the expiration of the term and continuing each
anniversary date thereafter, the term of each agreement is automatically
extended for an additional year unless written notice of non-renewal is given
by the board of directors after conducting a performance evaluation of the
respective executive. In addition to specifying base salary, which is subject
to annual review by the board of directors, the employment agreements provide
for, among other things, disability pay and other fringe benefits applicable to
executive personnel. The employment agreements provide for termination by us
for cause at any time. In the event we choose to terminate the executive's
employment for reasons other than for cause or disability, or the executive's
termination, voluntary or involuntary, following a change in control of
Fidelity Bancorp or Fidelity Savings, as defined in the agreement, or in the
event of the executive's resignation upon: (i) the failure to re-elect the
executive to his current office; (ii) a material change in the executive's
functions, duties or responsibilities, which change would cause the position to
become one of lesser responsibility, importance or scope, or relocation of his
principal place of employment by more than thirty miles or reduction in base
salary, benefits or perquisites; (iii) the liquidation or dissolution of
Fidelity Bancorp or Fidelity Savings; or (iv) a breach of the agreement by us,
the executive or, in the event of his death, his beneficiary, is entitled to
receive an amount equal to the sum of three times his base salary (three year
average) his bonus (highest paid in last three years), our contributions to our
retirement plans on his behalf (three year average) and the annual average of
the cash value of three additional years of service under the Fidelity Federal
Savings Supplemental Executive Retirement Plan.
We would also continue the executive's life, health and disability coverage for
three years or until he receives substantially identical coverage with a new
employer. In the event of a change in control, Messrs. Stolarczyk and Bentel
would receive approximately $983,508 and $907,495, respectively, in severance
payments, in addition to other cash and non-cash benefits, under the
agreements, exclusive of any additional payment which may be due to each
executive relating to reimbursement of excise taxes, as discussed below. We
have guaranteed payments to the executives under Fidelity Savings' agreements
in the event that payments or benefits are not paid by Fidelity Savings.
We have special termination agreements with certain executive officers
(including Ms. Doolan whose agreement provides for a two year term) that
provide for two and one year terms with automatic renewal on each anniversary
unless earlier terminated. Each agreement provides that at any time following
a change in control of Fidelity Bancorp or Fidelity Savings, as defined in the
agreements, if Fidelity Bancorp or Fidelity Savings were to terminate the
executive's employment for any reason other than "cause", as defined in the
agreements, or if the executive were to elect to terminate his or her own
employment following his or her demotion, loss of title, office or significant
authority, a reduction in his or her annual compensation or benefits, or
relocation of his or her principal place of employment by more than thirty
miles, the executive would be entitled to receive a termination payment in an
amount equal to the sum of two (or one) times his or her base salary (two year
average), bonus (highest paid in last two (or one) years) and our contributions
to our retirement plans (two (or one) year average). In the event of a change
in control, Ms. Doolan would receive approximately $271,611 in severance
payments, in addition to other cash and non-cash benefits, under the agreement,
exclusive of any additional payment which may be due to her relating to the
reimbursement of excise taxes, (as discussed below). We would also continue
the executive's life, health and disability coverage for two (or one) year or,
if earlier, until the executive is employed by another employer.
Payments upon a change in control under the employment agreements and special
termination agreements could constitute excess parachute payments under Section
280G of the Internal Revenue Code (the "Code"), which may result I the
imposition of an excise tax on the recipient and denial of the deduction for
such excess amounts to Fidelity Bancorp or Fidelity Savings. The agreements
provide that benefits payable following a change in control will, in most
cases, be increased by the amount necessary to reimburse the executive officer
for the amount of the excise tax and any related tax due on such reimbursement
payment.
DEFINED BENEFIT PLAN
Fidelity Savings maintains a non-contributory defined benefit plan. All
employees credited with 1,000 or more hours of employment during a twelve month
period with Fidelity Savings and have attained age 21 are eligible to
participate in the retirement plan.
The normal retirement age is 65 years. The retirement benefit provided is
based on the highest consecutive five-year average salary and years of benefit
service, as shown in the following table. Retirement plan benefits are also
payable upon termination due to late retirement and death. Upon termination of
employment, other than as specified above, a participant who was employed by
Fidelity Savings for a minimum of five years is eligible to receive his or her
accrued benefit, reduced for early retirement, or a deferred retirement benefit
commencing on the participant's normal retirement date. Benefits are payable
in various annuity forms, as well as in the form of a single lump sum payment.
Fidelity Savings made no contributions to the plan for the fiscal year ended
September 30, 2002. Under the applicable accounting rules, Fidelity Savings
accrued $318,875 with respect to the retirement plan for the twelve-month
period ended September 30, 2002.
The following table indicates the annual retirement benefit that would be
payable under the plan upon retirement at age 65 to a participant electing to
receive his or her retirement benefit in the standard form, assuming various
specified levels of plan compensation and various specified years of credited
service.
15 Years 20 Years 25 Years 30 Years 35 Years
Average Credited Credited Credited Credited Credited
Compensation Service Service Service Service Service
$25,000 $3,750 $5,000 $6,250 $7,000 $8,750
50,000 7,500 10,000 12,500 15,000 17,500
75,000 11,250 15,000 18,750 22,500 26,250
100,000 15,000 20,000 25,000 30,000 35,000
150,000 22,500 30,000 37,500 45,000 52,500
The following table sets forth the years of credit service (i.e., benefit
service) as of the fiscal year ended September 30, 2002, for each of the
executive officers.
Credited Service
Years Months
Raymond S. Stolarczyk 26 0
Thomas E. Bentel 20 0
Elizabeth A. Doolan 7 6
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Fidelity Savings also maintains a Supplemental Executive Retirement Plan, a
nonqualified, unfunded retirement program within the meaning of the Employee
Retirement Income Security Act. The SERP is intended to provide retirement
benefits and preretirement death and disability benefits to Raymond S.
Stolarczyk and Thomas E. Bentel. Fidelity Savings accrued approximately
$550,000 with respect to the SERP for the twelve-month period ended September
30, 2002.
At the normal retirement age of 65, the SERP is designed to provide a 20 year
fixed monthly annuity payment. The amount of the benefit represents 55% of the
average compensation of the participant as of his normal retirement date,
reduced by the actuarial equivalent of the benefit actually payable to the
participant under the retirement plan.
A participant whose service ends prior to the normal retirement date is
entitled to a benefit equal to the actuarial equivalent of the participant's
accrued benefit, determined at the time of separation. Accrued benefit means
the supplemental benefit of a participant, payable in the normal form,
multiplied by a fraction the numerator of which is the number of completed
years of participation on the date of determination and the denominator of
which is the number of his or her expected completed years of participation
projected to his or her normal retirement date. A participant is, at all
times, 100% vested in his or her accrued benefit.
If a participant dies prior to the time benefits under the SERP commence, the
amount of his pre-retirement death benefit is equal to the value of the
supplemental benefit calculated as if the participant had terminated his
employment on his or her normal retirement date. If a participant becomes
disabled prior to the normal retirement date, he or she is entitled to a
benefit equal to the actuarial equivalent of the participant's accrued benefit,
calculated as if such participant had terminated employment on that date.
INCENTIVE STOCK OPTION PLAN
We maintain the Incentive Stock Option Plan, which provides discretionary
awards to certain officers and key employees as determined by the Human
Resource Policy Committee, which administers the option plan. The following
table provides information regarding stock options granted to executive
officers during the fiscal year ended September 30, 2002.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Individual Grants Value at Assumed
% of Total Annual Rates of
Number of Options Stock Price
Securities Granted to Exercise or Appreciation for
Underlying Options Employees in or Base Expiration Option Term
Name Granted (#) Fiscal Year Price ($/Sh) Date 5% ($) 10% ($)
Raymond S. Stolarczyk 7,500 20 19.465 12/15/12 80,487 198,243
Thomas E. Bentel 6,000 16 19.465 12/15/12 64,390 158,594
Elizabeth A. Doolan 4,800 12 19.465 12/15/12 51,512 126,875
The following table provides certain information with respect to the number of
shares of common stock represented by outstanding stock options held by the
named executive officers as of September 30, 2002 and the number of shares
acquired and value realized by such officers on the exercise of the options
during fiscal 2002. Also reported are the values for "in-the-money" options,
which amounts represent the positive spread between the exercise price of any
such existing stock options and the fiscal year-end price of common stock.
During the fiscal year ended September 30, 2002, Messrs. Stolarczyk and Bentel
exercised 33,150 and 3,750 shares respectively.
AGGREGATE OPTION EXERCISES IN FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Shares
Acquired Number of Securities
on Value Underlying Unexercised Value of Unexercised In-The-
Exercise Realized Options at Fiscal Year End Money Options at Fiscal Year
(#) ($) (#)(1) End ($)
Name Exercisable Unexercisable Exercisable Unexercisable
Raymond S. Stolarczyk 33,150 385,647 83,876 7,500 $1,298.677 $ 20,138
Thomas E. Bentel 3,750 41,250 67,608 6,000 $1,046.795 $ 16,110
Elizabeth A. Doolan -- -- 6,000 4,800 $ 92,900 $ 12,888
(1) All options expire 10 years from the date of grant.
(2) Represents the per share market value of the common stock at fiscal year
end ($22.15) minus the exercise price per share ($6.6667) after a three for
two stock split effected in the form of a stock dividend completed in
February 2002.
(3) Represents the fair market value of the common stock at fiscal year end
($22.15) minus the exercise price per share ($19.465).
TRANSACTION WITH CERTAIN RELATED PERSONS
The Financial Institutions Reform, Recovery and Enforcement Act of 1989,
requires that all loans or extensions of credit to executive officers and
directors be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
the general public, and must not involve more than the normal risk of repayment
or present other unfavorable features. In addition, loans made to a director or
executive officer in excess of the greater of $25,000 or 5% of Fidelity
Savings' capital and surplus (up to a maximum of $500,000) must be approved in
advance by a majority of the disinterested members of the board of directors.
Additionally, the recently enacted Sarbanes-Oxley Act of 2002 prohibits us from
making personal loans to our directors and executive officers unless the loans
are permitted pursuant to an exemption from such prohibitions. In general,
financial institution subsidiaries, such as Fidelity Savings, are exempt from
the prohibition provided the loans are made in compliance with applicable
regulations promulgated by the Office of Thrift Supervision and the Federal
Deposit Insurance Corporation.
Any loans made by Fidelity Savings to our 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 and do not involve more than the normal risk of
collectibility or present other unfavorable features. In accordance with an
exemption from the general prohibition on loans to directors and executive
officers imposed by the Sarbanes-Oxley Act of 2002, Fidelity Savings provided a
residential mortgage loan to Edward J. Burda, a director of Fidelity Bancorp
and Fidelity Savings. As of September 30, 2002, this loan had an outstanding
balance of $100,915. The terms of the loan are comparable with terms of loans
made to other unrelated persons.
AUDIT COMMITTEE REPORT
THE INCORPORATION BY REFERENCE OF THIS PROXY STATEMENT INTO ANY DOCUMENT FILED
BY US WITH THE SECURITIES AND EXCHANGE COMMISSION SHALL NOT BE DEEMED TO
INCLUDE THE FOLLOWING REPORT AND RELATED INFORMATION UNLESS SUCH REPORT IS
SPECIFICALLY STATED TO BE INCORPORATED BY REFERENCE INTO SUCH DOCUMENT.
The Audit Committee assists the board in carrying out its oversight
responsibilities for our financial reporting process, audit process and
internal controls. The Audit Committee also reviews the audited financials and
recommends to the board that they be included in our annual report on Form
10-K. The committee is comprised solely of "independent directors" in
accordance with guidance issued by Nasdaq.
The Audit Committee has reviewed and discussed our audited financial statements
for the fiscal year ended September 30, 2002 with our management and Crowe,
Chizek and Company LLP, our independent auditors. The committee has also
discussed with Crowe, Chizek and Company LLP the matters required to be
discussed by SAS 61 (Codification for Statements on Auditing Standards) as well
as having received and discussed the written disclosures and the letter from
the auditors required by Independence Standards Board Statement No. 1
(Independence Discussions with Audit Committees). Based on the review and
discussions with management and Crowe, Chizek and Company LLP, the committee
has recommended to the board that the audited financial statements be included
in our annual report on Form 10-K for the fiscal year ended September 30, 2002
for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE:
Paul J. Bielat (Chair)
Patrick J. Flynn
Richard J. Kasten
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
Our independent auditors for the fiscal year ended September 30, 2002 were
Crowe, Chizek and Company LLP. The Audit Committee has evaluated the past
performance of Crowe, Chizek and Company LLP and has determined that Crowe
Chizek should continue to be engaged as our independent auditors. Accordingly,
Crowe, Chizek and Company LLP has been appointed to continue as our independent
auditors for the fiscal year ending September 30, 2003. The stockholders have
the opportunity to ratify the appointment of Crowe, Chizek and Company LLP at
the annual meeting. Crowe, Chizek and Company LLP representatives will be
present at the annual meeting and will have an opportunity to make a statement,
if they so desire, as well as to respond to appropriate questions that may be
asked by a stockholder.
ACCOUNTANT FEES
AUDIT FEES. The aggregate fees and expenses billed by Crowe, Chizek and
Company LLP in connection with the audit of our annual financial statements as
of and for the fiscal year ended September 30, 2002 and for the required review
of our financial information included in our Securities and Exchange Commission
filings for the fiscal year 2002 was $73,200.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. There were no
fees incurred for financial information systems design and implementation for
fiscal 2002.
ALL OTHER FEES. The aggregate fees and expenses billed by Crowe, Chizek and
Company LLP for all other services rendered to us during the fiscal year ended
September 2002 was $23,725. The Audit Committee, after consideration of the
matter, does not believe that the rendering of these services by Crowe, Chizek
and Company LLP to be incompatible with maintaining Crowe, Chizek and Company
LLP's independence as our independent auditors.
-------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
CROWE, CHIZEK AND COMPANY LLP AS OUR INDEPENDENT AUDITORS
-------------------------------------
ADDITIONAL INFORMATION
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE ANNUAL MEETING
The board of directors knows of no business that will be presented for
consideration at the annual meeting other than as stated in this proxy
statement and the attached notice. If, however, other matters are properly
brought before the annual meeting, it is the intention of the proxy holders to
vote the shares represented by the proxies on such matters in accordance with
their best judgment.
STOCKHOLDER PROPOSALS
To be considered for inclusion in the proxy statement and proxy relating to the
annual meeting to be held in 2004, stockholder proposals must be received by
our corporate secretary at the address set forth on the first page of this
proxy statement, not later than September 15, 2003. Any such proposal will be
subject to the provisions of our bylaws and the Securities Exchange Act's rules
and regulations.
BYLAW REQUIREMENTS. Section 6 of our bylaws provides an advance notice
procedure for a stockholder to properly nominate directors or bring other
business before an annual meeting. Nominees for director must be Illinois
residents. The stockholder must give advance written notice to our corporate
secretary not less than 90 days before the date originally fixed for such
meeting; provided, however, that in the event that less than 100 days notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be received not later
than the close of business on the tenth day following the date on which our
notice to stockholders of the annual meeting date was mailed or such public
disclosure was made. The advance notice by a stockholder must include the
stockholder's name and address, as it appears on our record of stockholders, a
brief description of the proposed business, the reason for conducting such
business at the annual meeting, the class and number of shares of our capital
stock that are beneficially owned by such stockholder and any material interest
of such stockholder in the proposed business. In the case of nominations to
the board, certain additional information regarding the nominee must also be
provided, as set forth in Section 6 of the bylaws. Additionally, we are not
required to include in our proxy statement and proxy relating to an annual
meeting any stockholder proposal which does not meet all of the requirements
for inclusion established under applicable state laws and the rules and
regulations of the Securities and Exchange Commission in effect at the time
such proposal is received.
By order of the board of directors
Judith K. Leaf
Corporate Secretary
Chicago, Illinois
January 13, 2003
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING
IN PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, YOU ARE REQUESTED TO SIGN AND PROMPTLY RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.