SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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FFD FINANCIAL CORPORATION
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FFD FINANCIAL CORPORATION
321 North Wooster Avenue
Dover, Ohio 44622
(330) 364-7777
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The 2004 Annual Meeting of Shareholders of FFD Financial Corporation
("FFD" or the "Company") will be held at the Monarch Center, 831 Boulevard,
Dover, Ohio 44622, on October 19, 2004, at 1:00 p.m., local time (the "Annual
Meeting"), for the following purposes, all of which are more thoroughly
described in the accompanying Proxy Statement:
1. To elect five directors of FFD for terms expiring in 2005; and
2. To transact such other business as may properly come before
the Annual Meeting or any adjournments.
Only FFD shareholders of record at the close of business on August 31,
2004, will be entitled to receive notice of, and to vote at, the Annual Meeting
and at any adjournment of the Annual Meeting. Whether or not you expect to
attend the Annual Meeting, we urge you to consider the accompanying Proxy
Statement carefully and to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY SO
THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF
A QUORUM MAY BE ASSURED. Submitting a Proxy does not affect your right to vote
in person if you attend the Annual Meeting.
By Order of the Board of Directors
Dover, Ohio Trent B. Troyer, President and
September 20, 2004 Chief Executive Officer
FFD FINANCIAL CORPORATION
321 North Wooster Avenue
Dover, Ohio 44622
(330) 364-7777
PROXY STATEMENT
PROXIES
The Board of Directors of FFD Financial Corporation (the "Company" or
"FFD") is soliciting the enclosed Proxy for use at the 2004 Annual Meeting of
Shareholders of FFD and at any adjournments thereof (the "Annual Meeting"). The
Annual Meeting will be held at the Monarch Center, 831 Boulevard, Dover, Ohio
44622, on October 19, 2004, at 1:00 p.m., local time. You may ensure your
representation at the Annual Meeting by signing, dating and returning the
enclosed Proxy. The Proxy will not be used for any other meeting.
Without affecting any vote previously taken, you may revoke your Proxy by
either (i) submitting a written revocation or a later-dated proxy which is
received by FFD before the Proxy is exercised or (ii) by attending the Annual
Meeting and revoking the Proxy in open meeting or voting in person before the
Proxy is exercised. Attending the Annual Meeting will not, by itself, revoke a
Proxy.
Each properly executed Proxy received prior to the Annual Meeting and not
revoked will be voted as directed by the shareholder or, in the absence of
specific instructions to the contrary, will be voted:
FOR the reelection of Richard A. Brinkman, Jr., Stephen G. Clinton,
Leonard L. Gundy, Enos L. Loader and Robert D. Sensel as directors
of FFD for terms expiring in 2005.
Proxies may be solicited by the directors, officers and other employees of
FFD and its subsidiary, First Federal Community Bank ("First Federal"), in
person or by telephone, telegraph or mail for use only at the Annual Meeting.
FFD will bear the costs of preparing, assembling, printing and mailing this
Proxy Statement and the enclosed Proxy and will pay all other costs incurred in
the solicitation of Proxies by the Board of Directors.
Only FFD shareholders at the close of business on August 31, 2004 are
entitled to notice of, and to vote at, the Annual Meeting, and each shareholder
is entitled to cast one vote for each share then owned. According to FFD's
records, as of August 31, 2004, there were 1,187,993 votes entitled to be cast
at the Annual Meeting.
This Proxy Statement is first being mailed to FFD shareholders on or about
September 20, 2004.
REQUIRED VOTE
Each shareholder of FFD is entitled to cast one vote for each share owned
on August 31, 2004. Under Ohio law and FFD's Code of Regulations (the
"Regulations"), the following proposal must receive the vote indicated to be
adopted:
Proposal Required Vote
-------- -------------
Election of Directors The five nominees receiving the
greatest number of votes will be
elected to the Board of Directors
Shareholders holding shares in "street name" should review the information
provided to them by their broker/dealer or other record holder of the shares.
This information will describe the procedures you must follow to instruct the
record holder how to vote the street name shares and how to revoke previously
given instructions.
If your shares are held in street name and you do not return a proxy card,
broker/dealers have the authority, under applicable rules of The Nasdaq Stock
Market and other self-regulatory organizations of which the broker/dealers are
members, to vote your shares in their discretion on certain routine matters. The
election of directors is considered routine. Consequently, if you do not provide
a proxy to vote your shares, your brokerage firm may elect to vote or not vote
your shares for you. Proxies signed and submitted by broker/dealers which have
not been voted are referred to as "non-votes." Broker non-votes and Proxies as
to which the authority to vote is withheld are counted toward the establishment
of a quorum, but are not counted toward the election of directors.
If you sign and date a Proxy but do not specify how you wish for it to be
voted, it will be voted FOR the election of the five nominees for director.
-2-
OWNERSHIP OF FFD SHARES
The following table provides certain information about the number of FFD
common shares beneficially owned as of August 31, 2004, by the directors and
executive officers of FFD.
Amount and nature of beneficial ownership
-----------------------------------------
Sole voting and Shared voting and Percent of total
Name and address (1) investment power investment power shares outstanding
- -------------------- ---------------- ---------------- ------------------
Richard A. Brinkman, Jr. -- 2,000(2) 0.17
Stephen G. Clinton 19,738(3) 16,167(4) 3.00
Leonard L. Gundy 5,006(5) -- 0.08
Enos L. Loader 17,992(6) 15,317(4) 2.79
Robert D. Sensel 22,500 10,000 2.74
Trent B. Troyer 4,974(7) 24,923(4)(8) 2.53
All directors and executive
officers of FFD as a group (10 people) 103,343(9) 72,434(10) 14.27
- ----------
(1) Each of the persons listed on this table may be contacted at FFD's
address.
(2) Includes 1,000 shares as to which Mr. Brinkman has shared voting and
investment power as trustee.
(3) Includes 8,945 shares that may be acquired upon the exercise of options
awarded under the FFD Financial Corporation 1996 Stock Option and
Incentive Plan (the "1996 Plan").
(4) Includes 14,317 shares as to which Mr. Clinton, Mr. Loader and Mr. Troyer
have shared voting power as Trustees of the First Federal Community Bank
Recognition and Retention Plan (the "RRP").
(5) Includes 3,578 shares that may be acquired upon the exercise of options
awarded under the FFD Financial Corporation 2002 Stock Option Plan for
Non-Employee Directors.
(6) Includes 7,156 shares that may be acquired upon the exercise of options
awarded under the 1996 Plan.
(7) Includes 3,952 shares that may be acquired upon the exercise of options
awarded under the 1996 Plan.
(8) Includes 10,606 shares held in the FFD Financial Corporation Employee
Stock Ownership Plan (the "ESOP").
(9) Includes 43,760 shares that may be acquired upon the exercise of options
awarded under the 1996 Plan, including 600 options that are expected to
vest in the next 60 days, and 200 shares that are expected to be earned
under the RRP in the next 60 days.
(10) Includes 38,267 shares held in the ESOP. The 14,317 shares as to which
Messrs. Clinton, Loader and Troyer have shared voting power as Trustees of
the RRP are counted only once.
-3-
The following table sets forth certain information about the only persons
known to FFD to beneficially own more than five percent of the outstanding
common shares of FFD as of August 31, 2004:
Amount and nature of Percent of
Name and address beneficial ownership shares outstanding
- ---------------- --------------------- ------------------
FFD Financial Corporation
Employee Stock Ownership Plan
First Bankers Trust Company, N.A.
1201 Broadway
Quincy, Illinois 62301 135,294 (1) 11.39%
- ----------
(1) Includes 39,527 unallocated shares as to which First Bankers Trust
Company, N.A. (the "ESOP Trustee"), as the Trustee for the ESOP, has sole
voting power. The ESOP Trustee also has voting power over shares that have
been allocated to the account of an ESOP participant but as to which no
voting instructions are given by the participant. The ESOP Trustee has
limited investment power over all 135,294 shares.
ELECTION OF DIRECTORS AND BOARD INFORMATION
The Board of Directors of FFD takes a critical role in guiding FFD's
strategic direction and overseeing the management of FFD. There are five members
of FFD's Board of Directors, each of whom, with the exception of Mr. Gundy, the
Board has determined is an "independent directors" under applicable Nasdaq
rules. Directors are elected to serve for one-year terms and until their
respective successors are duly elected and qualified.
Nominations Process and Candidate Selection
FFD's Nominating Committee oversees the nominations process and recommends
to the Board a slate of nominees for election as directors. The members of the
Nominating Committee are Mr. Brinkman, Mr. Clinton, Mr. Loader and Mr. Sensel,
each of whom is independent under applicable Nasdaq rules. The Nominating
Committee operates pursuant to a charter that sets forth its various
responsibilities regarding the nominations process. A copy of the Nominating
Committee Charter is attached to this Proxy Statement as Exhibit A. The charter
is not currently available on the Company's website.
The Nominating Committee has not established a formal process for
identifying and evaluating nominees due to the committee's desire to approach
the process according to the composition of the Board at the time. However, the
process for identifying and evaluating nominees is generally as follows: In the
case of incumbent directors, the Nominating Committee reviews each director's
overall service to FFD during his term of service, including the number of
meetings attended, level of participation and quality of performance and the
director's desire to continue to serve. The Nominating Committee will then
either nominate incumbent directors for reelection or, if the committee feels a
new director is necessary or desirable, will use its network of contacts to
compile a list of potential candidates. The committee then meets to discuss and
consider each candidate's qualifications and chooses the nominees by majority
vote. In the case of new director candidates, the committee looks at the
potential nominee's skills and experience
-4-
and also determines whether the nominee is "independent" for Nasdaq purposes and
whether the new director must be independent for FFD to remain in compliance
with Nasdaq listing requirements.
The Nominating Committee does not have any specific criteria that it
believes nominees for election as directors of FFD must meet. However, factors
such as community involvement, marketing or sales experience, financial
expertise, business experience and business development expertise are all
considered when evaluating potential nominees.
The Nominating Committee will consider director candidates recommended by
shareholders. The Nominating Committee charter provides that the committee will
receive and evaluate candidates recommended by shareholders equally, and using
the same criteria, as recommendations from the Board, the committee, management
or other sources. Other than as set forth in the charter, the Nominating
Committee does not have any other policies regarding the consideration of
candidates recommended by shareholders. The lack of policies regarding
shareholder recommendations is primarily due to FFD's lack of experience with
such recommendations and the need to evaluate any such recommendations on a
case-by-case basis.
A shareholder who wishes to make a recommendation for a director candidate
should contact the Board of Directors in the manner described in this Proxy
Statement under the heading "Shareholder Communications with Directors." Any
shareholder wishing to make a formal nomination for a director candidate must
follow the procedures set forth in Section 2.03 of the Regulations. This section
requires that nominees for election as directors may be proposed only by a
shareholder entitled to vote for directors if the shareholder has submitted a
written nomination to the Secretary of FFD by the later of the July 31st
immediately preceding the annual meeting of shareholders or the sixtieth day
before the first anniversary of the most recent annual meeting of shareholders
held for the election of directors. Each written nomination must state the name,
age, business or residence address of the nominee, the principal occupation or
employment of the nominee, the number of common shares of FFD owned either
beneficially or of record by the nominee and the length of time such shares have
been so owned.
Election of Directors
Pursuant to the Nominating Committee's recommendation, the Board of
Directors proposes the reelection of the following persons to serve as directors
of FFD until the annual meeting of shareholders in 2005 and until their
successors are duly elected and qualified:
Name Age Director of FFD since
---- --- ---------------------
Richard A. Brinkman, Jr. 49 2003
Stephen G. Clinton 51 1996
Leonard L. Gundy 55 2002
Enos L. Loader 67 1998
Robert D. Sensel 58 1996
-5-
Richard A. Brinkman, Jr. is the Chief Executive Officer of Tuscarawas
County AAA, a position he has held since 1993. Mr. Brinkman is also the Chairman
of the Ohio Conference of AAA Clubs, Vice Chair of the Tuscarawas County Port
Authority and is involved in several other community and civic organizations.
Stephen G. Clinton is President and a director of Capital Market
Securities, Inc., a brokerage firm located in Kent, Ohio and until 2004 served
as Vice President of Young & Associates, a financial institution consulting and
capital markets firm also located in Kent. Prior to joining Capital Market
Securities in 2001, Mr. Clinton was a principal of Tucker Anthony Capital
Markets, an investment banking firm headquartered in Boston, Massachusetts,
providing assistance to financial institutions in their implementation of
capital strategies, and the President of National Capital Companies, LLC, an
investment banking firm.
Leonard L. Gundy is President of Benchmark Construction, Inc. located in
New Philadelphia, Ohio. Mr. Gundy has served as President of Benchmark, formerly
Gundy Construction, Inc., since 1967.
Enos L. Loader was employed by Bank One Dover N.A. for 38 years, retiring
in 1998 as Executive Vice President and Chief Operating Officer. He currently
provides business financial consulting to several firms.
Robert D. Sensel has been President, Chief Executive Officer and a
director of Dover Hydraulics, Inc., Dover, Ohio, since 1984. Dover Hydraulics is
involved in the manufacture, repair and distribution of hydraulic cylinders and
components for the steel, construction and mining industries.
If any nominee is unable to stand for election, any Proxies granting
authority to vote for that nominee will be voted for a substitute nominee
recommended by the Board of Directors.
Your Board of Directors recommends that you vote FOR the reelection of the
above-named nominees.
Each of the directors of FFD is also a director of First Federal. Mr.
Clinton and Mr. Sensel became directors of FFD in 1996 in connection with the
conversion of First Federal from mutual to stock form and the formation of FFD
as the holding company for First Federal. Mr. Loader was appointed to the Board
of Directors of FFD effective June 1, 1998, Mr. Gundy was elected as a director
at the 2002 Annual Meeting of Shareholders and Mr. Brinkman was elected at the
2003 Annual Meeting of Shareholders.
Upon the retirement of a director from service, FFD may appoint such
person to serve as a Director Emeritus of FFD. Directors Emeritus serve for
one-year terms and are appointed annually by the Board of Directors of FFD.
Directors Emeritus may attend and participate in meetings but do not have voting
privileges. Currently, J. Richard Gray, Richard J. Herzig and Roy O. Mitchell,
Jr. serve as Directors Emeritus.
-6-
Meetings of the Board and Committees
The Board of Directors of FFD met twelve times for regularly scheduled and
special meetings during the fiscal year ended June 30, 2004, as did the Board of
Directors of First Federal. The FFD Board of Directors has a standing Audit
Committee, Stock Option Committee, ESOP Committee and Nominating Committee. FFD
does not have a compensation committee and, in accordance with Nasdaq rules, the
independent directors determine the compensation of FFD's executive officers.
Each director attended at least 75% of the total aggregate meetings of the FFD
Board of Directors and the meetings of the committees of the Board on which he
served during the last fiscal year.
Audit Committee. The Audit Committee is responsible for selecting and
engaging a firm to serve as the independent auditors of FFD and for overseeing
FFD's financial reporting process. The Audit Committee met four times during the
fiscal year ended June 30, 2004. The members of the Audit Committee are Mr.
Brinkman, Mr. Clinton and Mr. Loader, each of whom is independent under
applicable Nasdaq rules. The duties of the Audit Committee are more thoroughly
set forth in the Amended and Restated Audit Committee Charter (the "Audit
Charter"), which was attached as Annex A to the Proxy Statement for the 2003
Annual Meeting of Shareholders. Pursuant to the terms of the Audit Charter and
applicable law, at least one member of the Audit Committee must be a "financial
expert." The Board of Directors has determined that Mr. Clinton, the Chairman of
the Audit Committee, is a financial expert.
Nominating Committee. As is more thoroughly discussed under "Nominations
Process and Candidate Selection" above, the Nominating Committee is responsible
for recommending to the Board of Directors a slate of candidates for election as
directors. The committee is comprised of Mr. Brinkman, Mr. Clinton, Mr. Loader
and Mr. Sensel, each of whom is independent under applicable Nasdaq rules. The
Nominating Committee met once during the last fiscal year.
Stock Option Committee. The Stock Option Committee is responsible for
administering the 1996 Plan, including interpreting the plan and granting
options pursuant to its terms. All of the directors are the members of the Stock
Option Committee. The Stock Option Committee met once during the 2004 fiscal
year.
ESOP Committee. The ESOP committee is responsible for administering and
overseeing the ESOP. All of the directors serve on the ESOP Committee. The ESOP
Committee met once during the last fiscal year.
Shareholder Communications with Directors
A shareholder may communicate with the Board of Directors by mailing a
written communication addressed to the full Board of Directors, or to an
individual director or group of directors, at FFD's address at 321 North Wooster
Avenue, Dover, Ohio 44622. All such communications will be forwarded unopened to
an independent director if addressed to the full Board, to the specified
director, or if addressed to a group of directors, to a member of the group.
-7-
Director Attendance at the Annual Meeting
FFD encourages and expects all directors and nominees for election as a
director to attend each annual meeting of shareholders. Any director or nominee
who cannot attend an annual meeting is expected to notify the Company of his
inability to attend as far in advance of the annual meeting as possible. All
directors and nominees for election attended the 2003 Annual Meeting of
Shareholders.
EXECUTIVE OFFICERS
The following information describes the business experience during the
past five years of FFD's and First Federal's executive officers:
Trent B. Troyer, age 41, has served as the President and Chief Executive
Officer of FFD and First Federal since October 2000. From March 1997 to October
2000, Mr. Troyer was employed by First Federal as Senior Vice President of
Commercial Lending.
Robert R. Gerber, age 55, has served as Vice President, Treasurer and
Chief Financial Officer of FFD and First Federal since October 2000. Mr. Gerber
served as President of FFD and First Federal from 1996 until October 2000.
Shirley A. Wallick, age 59, is the Secretary of both FFD and First
Federal, and served as Treasurer of FFD from 1996 until 2000. Ms. Wallick has
been with First Federal since 1982.
Scott C. Finnell, age 35, has served as Executive Vice President of FFD
and First Federal since November 2000. From 1998 until joining FFD and First
Federal, Mr. Finnell was employed by Bank One, N.A. as Vice President,
Commercial Lending.
Sally K. O'Donnell, age 50, is Senior Vice President of Retail Lending of
First Federal. From 1998 until joining FFD and First Federal in April 2003, Ms.
O'Donnell was the President of the Dover Market and District Manager of Retail
Lending with Bank One, N.A.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Officer Compensation
The following table includes compensation paid to Mr. Troyer, who is
currently the President and Chief Executive Officer of FFD and First Federal. No
other executive officer of FFD or First Federal earned salary and bonus in
excess of $100,000 during the periods reported.
-8-
Summary Compensation Table
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Annual compensation (1) Long-term compensation
----------------------- -------------------------------------------------------------------
Awards Payouts
--------------------------------------- ------------------------
Name and principal Year Salary Bonus Restricted stock Securities underlying LTIP All other
position ($) ($) awards options/SARs payouts compensation
($) (#) (#) (2)
- ---------------------------------------------------------------------------------------------------------------------------
Trent B. Troyer, 2004 $93,000 $18,000 -- 2,000 -- $24,895
President and Chief 2003 $88,500 $12,500 -- 1,000 -- $20,035
Executive Officer 2002 $82,000 $25,000 -- 2,000 -- $15,132
- ----------
(1) Does not include amounts attributable to other miscellaneous benefits
received by Mr. Troyer, the cost of which was less than 10% of his
compensation.
(2) Consists of the value of allocations to Mr. Troyer's ESOP account and $373
in annual premiums for term life insurance for Mr. Troyer.
Stock Option Value and Grant Information
The following table sets forth information regarding the number and value
of unexercised options held by Mr. Troyer at June 30, 2004:
Aggregated Option/SAR Exercises in Last Fiscal Year and 6/30/04 Option/SAR Values
---------------------------------------------------------------------------------------------
Number of securities underlying Value of unexercised
Shares unexercised options/SARs at "in-the-money" options/
acquired on Value 6/30/04 (#) SARs at 6/30/04 ($)(1)
Name exercise (#) realized ($) exercisable/unexercisable exercisable/unexercisable
- ---- ------------ ------------ ------------------------- -------------------------
Trent B. Troyer -0- -0- 3,952/4,000 $10,258/$3,616
- ----------
(1) For purposes of this table, the value of the options was determined by
multiplying the number of shares subject to unexercised options by the
difference between the exercise price of the option and the closing price
of FFD's common shares of $14.00 per share on June 30, 2004. The exercise
price of 2,952 of Mr. Troyer's options is $11.17 per share, the exercise
price of 2,000 of Mr. Troyer's options is $12.00 per share, the exercise
price of 1,000 of Mr. Troyer's options is $12.48 per share and the
exercise price of 2,000 of Mr. Troyer's options is $14.88 per share.
-9-
The following table sets forth information regarding all stock option
grants to Mr. Troyer during the year ended June 30, 2004:
Option/SAR Grants in Last Fiscal Year
-----------------------------------------------------------------------
Number of Percent of total
securities options/SARs
underlying granted to
options/SARs employees Exercise or base
Name granted (#) in fiscal year price ($/sh) Expiration date
- ---- ----------- -------------- ------------ ---------------
Trent B. Troyer 2,000(1) 44.44% $14.88 1/13/2014
- ----------
(1) The options granted will vest and become exercisable in five equal annual
installments beginning January 13, 2005.
Change of Control Agreement
FFD has entered into a change of control agreement with Mr. Troyer. The
change of control agreement provides that if Mr. Troyer's employment is
terminated by FFD without "Just Cause" (as defined in the agreement), or by Mr.
Troyer for specified reasons set forth in the agreement, at any time during the
six months preceding or one year following a Change of Control (as defined in
the agreement), FFD will (i) pay the premiums required to maintain coverage for
Mr. Troyer and his dependents in all programs subject to the benefit provisions
of COBRA until the earlier of the date replacement coverage is obtained or the
one year anniversary of the termination and (ii) pay Mr. Troyer an amount equal
to 200% of his then current annual salary.
If the sum of these payments and any other payments or benefits
constitutes "excess parachute payments" to Mr. Troyer under the Internal Revenue
Code, then the amounts due under the Change of Control Agreement will be reduced
to the maximum amount that would not be an "excess parachute payment."
FFD is not a party to any other agreements that, upon the resignation or
retirement of an executive officer or upon the occurrence of a change in
control, would result in payments to an executive officer exceeding $100,000.
Director Compensation
Each director of FFD who is not an executive officer receives a fee of
$300 per regular FFD Board of Directors meeting attended and $100 per special
meeting attended. Each director of First Federal who is not an executive officer
receives a fee of $700 per regular First Federal Board of Directors meeting
attended and $100 per special meeting attended. In addition,
-10-
directors who are not executive officers of either FFD or First Federal receive
a fee of $25 per committee meeting attended and members of the Audit Committee
of FFD and the Senior Loan Committee of First Federal receive $100 per committee
meeting. Mr. Loader received $20,000 for his service as Chairman of the Board of
Directors of First Federal. Directors Emeritus receive $150 per month from FFD
and $350 per month from First Federal.
OTHER BENEFIT PLANS
Recognition and Retention Plan
There are currently 14,317 shares remaining in the RRP, 400 of which have
been awarded and not forfeited. When shares are granted from the RRP, one-fifth
of such shares become vested and non-forfeitable on each of the first five
anniversaries of the date of the award.
Employee Stock Ownership Plan
FFD has established the ESOP for the benefit of employees of FFD and its
subsidiaries, including First Federal, who are age 21 or older and who have
completed at least one year of service with FFD and its subsidiaries. The ESOP
provides an ownership interest in the Company to all eligible full-time
employees of the Company. The ESOP trust borrowed funds from FFD with which it
acquired 116,380 common shares in the Conversion. Due to subsequent purchases of
shares by the ESOP trust and distributions to employees upon termination of
employment, there are currently 135,294 shares held by the ESOP.
Contributions to the ESOP and shares released from the suspense account
are allocated among participants on the basis of compensation. Except for
participants who retire, become disabled or die during a plan year, all other
participants must have completed at least 1,000 hours of service in order to
receive an allocation. Benefits become fully vested after five years of service.
CERTAIN TRANSACTIONS
First Federal makes loans to executive officers and directors of FFD and
First Federal in the ordinary course of business. All amounts owed by directors
or executive officers in excess of $60,000 during the last two fiscal years were
owed pursuant to loans made on substantially the same terms as those prevailing
at the time for comparable transactions with other persons, did not involve more
than the normal risk of collectibility or present other unfavorable features and
are current in their payments.
In January 2002, Benchmark Construction, Inc. was awarded a contract to
renovate First Federal's branch office at 902 Boulevard, Dover, Ohio 44622.
During the 2003 fiscal year, FFD paid Benchmark $187,686 pursuant to the
contract. Mr. Gundy, a director of FFD, is the President and a director and
shareholder of Benchmark.
-11-
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, FFD's directors and executive officers
and persons holding more than 10% of the common shares of FFD are required to
report their ownership of common shares and any changes in such ownership to
both the Securities and Exchange Commission (the "SEC") and FFD. To FFD's
knowledge, based solely upon a review of such reports and written
representations that no other reports were required during the fiscal year ended
June 30, 2004, no directors, officers or 10% holders failed to timely file any
such reports.
SELECTION OF AUDITORS
The Audit Committee has selected Grant Thornton LLP as the auditors of FFD
for the current fiscal year. The Audit Committee and management expect that a
representative of Grant Thornton will be present at the Annual Meeting, will
have the opportunity to make a statement if he or she so desires and will be
available to respond to appropriate questions.
AUDIT COMMITTEE REPORT
The Audit Committee is responsible for overseeing the Company's accounting
functions and controls, as well as selecting an accounting firm to audit FFD's
financial statements. The Board of Directors has adopted the Audit Charter to
set forth the Audit Committee's responsibilities.
As required by the Audit Charter, the Audit Committee received and
reviewed the report of Grant Thornton regarding the results of their audit, as
well as the written disclosures and the letter from Grant Thornton required by
Independence Standards Board Standard No. 1. The Audit Committee reviewed the
audited financial statements with the management of FFD. A representative of
Grant Thornton also discussed with the Audit Committee the independence of Grant
Thornton from FFD, as well as the matters required to be discussed by Statement
of Auditing Standards 61, as amended. Discussions between the Audit Committee
and the representative of Grant Thornton included the following:
o Grant Thornton's responsibilities in accordance with generally
accepted auditing standards
o The initial selection of, and whether there were any changes in,
significant accounting policies or their application
o Management's judgments and accounting estimates
o Whether there were any significant audit adjustments
o Whether there were any disagreements with management
o Whether there was any consultation with other accountants
o Whether there were any major issues discussed with management prior
to Grant Thornton's retention
-12-
o Whether Grant Thornton encountered any difficulties in performing
the audit
o Grant Thornton's judgments about the quality of FFD's accounting
principles
o Grant Thornton's responsibilities for information prepared by
management that is included in documents containing audited
financial statements
Based on its review of the financial statements and its discussions with
management and the representative of Grant Thornton, the Audit Committee did not
become aware of any material misstatements or omissions in the financial
statements. Accordingly, the Audit Committee has approved the audited financial
statements for inclusion in the Annual Report on Form 10-KSB for the year ended
June 30, 2004, to be filed with the SEC.
Richard A. Brinkman, Jr. Stephen G. Clinton Enos L. Loader
Audit and Non-Audit Fees
The following table presents fees paid by FFD to Grant Thornton for the
audit of FFD's annual financial statements for the years ended June 30, 2004 and
June 30, 2003, and fees billed for other services rendered by Grant Thornton
during those periods.
Year ended Year ended
Type of fees June 30, 2004 June 30, 2003
------------ ------------- -------------
Audit fees (1) $44,750 $51,760
Audit related fees (2) 4,000 1,015
Tax fees (3) 5,255 4,725
All other fees (4) -- --
------- -------
Grant Thornton total fees $54,005 $57,500
======= =======
- ----------
(1) These are fees for professional services performed by Grant Thornton for
the audit of FFD's annual financial statements and review of financial
statements included in FFD's Forms 10-QSB, and services that are normally
provided in connection with statutory or regulatory filings or
engagements.
(2) These are fees for assurance and related services that are reasonably
related to the performance of the audit or review of FFD's financial
statements, such as consultations regarding the impact of accounting
pronouncements and the implementation of internal control procedures.
(3) These are fees for professional services performed by Grant Thornton with
respect to tax compliance, tax advice and tax planning, such as the
preparation of federal, state and local tax returns.
(4) These are fees for any other work that is not included in any of the above
categories.
-13-
SHAREHOLDER PROPOSALS
Shareholders of FFD desiring to submit proposals to be considered for
inclusion in FFD's Proxy Statement and form of Proxy (the "Proxy Materials") for
the 2005 Annual Meeting of Shareholders (the "2005 Annual Meeting") must provide
their proposals by certain deadlines. To be included in the Proxy Materials, a
shareholder proposal must be received by FFD no later than May 24, 2005. If a
shareholder intends to present a proposal at the 2005 Annual Meeting and the
proposal was not included in the Proxy Materials, then the proxies designated by
the FFD Board of Directors for the 2005 Annual Meeting will be entitled to vote
on such proposal in their discretion, despite the exclusion of any discussion of
the matter in the Proxy Materials, if the proposal is not received by FFD before
August 6, 2005.
OTHER MATTERS
The Board of Directors knows of no other business which may be brought
before the Annual Meeting. It is the intention of the persons named in the
enclosed Proxy to vote such Proxy in accordance with their best judgment on any
other matters which may be brought before the Annual Meeting. FFD's Annual
Report to Shareholders for 2004, including financial statements, is enclosed
with this Proxy Statement. Any shareholder who has not received a copy of the
2004 Annual Report may obtain a copy by writing to FFD. The 2004 Annual Report
is not part of the proxy solicitation materials and is not incorporated herein
by reference.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN AND
RETURN THE PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
By Order of the Board of Directors
Dover, Ohio Trent B. Troyer, President and
September 20, 2004 Chief Executive Officer
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EXHIBIT A
FFD FINANCIAL CORPORATION
CHARTER OF THE NOMINATING COMMITTEE
PURPOSE
The purpose of the Nominating Committee (the "Committee") of the Board of
Directors (the "Board") of FFD Financial Corporation (the "Company") shall be to
identify and screen individuals to become members of the Board; receive and
evaluate recommendations for potential Board members from shareholders;
recommend to the Board the slate of director nominees to be elected by
shareholders; recommend directors to be elected by the Board to fill any
vacancies; and handle other matters as the Board deems appropriate.
MEMBERS
The Committee shall consist of at least three members, all of whom must
qualify as independent directors ("Independent Directors") under the listing
standards of the The Nasdaq Stock Market and other applicable rules and
regulations.
The members of the Committee shall be appointed by the Board. The members
shall serve until their resignation, retirement, or removal by the Board or
until their successors shall be appointed and qualified. No member of the
Committee shall be removed except by majority vote of the Independent Directors
of the Board then in office.
RESPONSIBILITIES
The Committee's principal responsibilities are to:
1. Identify and evaluate prospective candidates for the Board,
including those individuals recommended by shareholders. Individuals
recommended by shareholders shall be evaluated equally and using the
same criteria as individuals nominated by the Board, the Committee,
management or other sources. In selecting nominees, the Committee
may consider whether a current Board member wishes to be re-elected
and, if a new nominee is needed, the skills and experience desired
in a new director, such as community involvement, marketing or sales
experience, financial expertise, business experience, technological
knowledge or business development expertise. The Committee shall
look for candidates who, both individually and as a group:
a. meet the Company's strategic needs and will be most effective
in meeting the long term interests of the Company and its
shareholders;
b. possess the highest personal values, judgment and integrity;
c. have an understanding of the regulatory and policy environment
in which the Company operates; and
d. have diverse experience in the key business, financial and
other challenges that face the Company.
2. Recommend to the Board a slate of potential nominees to be proposed
at the Company's annual meeting of shareholders, including the
nomination of incumbent directors for re-election, as appropriate.
3. Consider and recommend to the Board the appropriate size of the
Board and retirement and other tenure policies for directors.
4. Review the structure and compositions of the Board's other
committees and make recommendations to the Board with respect to
such matters.
5. Review directorships in other public companies held by or offered to
directors of the Company.
6. Evaluate annually the performance of the Committee and the adequacy
of the Committee's charter.
7. Review senior management membership on outside boards.
8. Adopt, as the Committee deems necessary, policies and procedures
regarding the nominations process.
OUTSIDE ADVISORS
The Committee shall have the authority to retain such outside counsel,
experts, and other advisors, including search firms to identify director
candidates, as it determines appropriate to assist it in the full performance of
its functions.
MEETINGS
The Committee shall meet as often as it deems necessary or appropriate and
at such times and places as it may determine. A majority of the Committee shall
constitute a quorum. The Committee may invite to meetings or exclude from
meetings, in its discretion, any members of management, other directors,
consultants or other persons as it deems necessary or desirable to provide the
information the Committee needs to carry out its duties and responsibilities.
Meetings of the Committee may be held through any communications equipment if
all persons participating can hear each other, and participation in a meeting
pursuant to this provision shall constitute presence at such meeting. Minutes
shall be kept and provided to the Board. The Committee shall make reports to the
Board on its activities at such times as the Committee deems appropriate.
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
FFD FINANCIAL CORPORATION
FFD FINANCIAL CORPORATION 2004 ANNUAL MEETING OF SHAREHOLDERS
October 19, 2004
The undersigned shareholder of FFD Financial Corporation ("FFD") hereby
constitutes and appoints Leonard L. Gundy and Enos L. Loader, or either one of
them, as the Proxy or Proxies of the undersigned with full power of substitution
and resubstitution, to vote at the 2004 Annual Meeting of Shareholders of FFD to
be held on October 19, 2004, at the Monarch Center, 831 Boulevard, Dover, Ohio
44622, at 1:00 p.m. local time (the "Annual Meeting"), all of the shares of FFD
which the undersigned is entitled to vote at the Annual Meeting, or at any
adjournment thereof, on each of the following proposals, all of which are
described in the accompanying Proxy Statement:
1. The election of the five directors listed below (except as marked to the
contrary below):
Richard A. Brinkman, Jr.
Stephen G. Clinton
Leonard L. Gundy
Enos L. Loader
Robert D. Sensel
|_| FOR |_| WITHHOLD
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below).
- --------------------------------------------------------------------------------
2. In their discretion, upon such other business as may properly come before
the Annual Meeting or any adjournments thereof.
IMPORTANT: Please sign and date this Proxy on the reverse side.
Your Board of Directors recommends that you vote "FOR" the nominees for
director listed above.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. Unless otherwise specified, the shares
will be voted FOR the nominees listed.
All Proxies previously given by the undersigned are hereby revoked.
Receipt of the Notice of the 2004 Annual Meeting of Shareholders of FFD and of
the accompanying Proxy Statement is hereby acknowledged.
Please sign exactly as your name appears on your Stock Certificate(s).
Executors, Administrators, Trustees, Guardians, Attorneys and Agents should give
their full titles.
- ------------------------------- ---------------------------------
Signature Signature
- ------------------------------- ---------------------------------
Print or Type Name Print or Type Name
Dated: ________________________ Dated: __________________________
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED FOR MAILING IN THE U.S.A.