SCHEDULE 14-A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[x] Preliminary Proxy Statement
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CBES Bancorp, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Robert Lipsher, Luse Lehman Gorman Pomerenk & Schick, PC
--------------------------------------------------------
(Name of Person(s) Filling Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
..................................................
2) Aggregate number of securities to which transaction applies:
...................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
...................................................
4) Proposed maximum aggregate value of transaction:
...................................................
5) Total fee paid:
[_] Fee previously paid:
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
September 25, 1998
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of CBES Bancorp, Inc.
(the "Company"), I cordially invite you to attend the Annual Meeting of
Stockholders. The meeting will be held at 4:00 p.m. on October 22, 1998 at the
Company's main office located at 1001 North Jesse James Road, Excelsior Springs,
Missouri.
In addition to the annual stockholder vote on corporate business items, the
meeting will include management's report to you on the Company's fiscal 1998
financial and operating performance.
An important aspect of the meeting process is the stockholder vote on
corporate business items. I urge you to exercise your rights as a stockholder
to vote and participate in this process. Stockholders are being asked to
consider and vote upon the proposals to elect two directors of the Company and
to ratify the appointment of independent auditors of the Company for the fiscal
year ending June 30, 1999. The Board of Directors unanimously recommends that
you vote for each of the proposals.
I encourage you to attend the meeting in person. Whether or not you attend
the meeting, I hope that you will read the enclosed Proxy Statement and then
complete, sign and date the enclosed WHITE proxy card and return it in the
postage prepaid envelope provided. This will save the Company additional
expense in soliciting proxies and will ensure that your shares are represented.
Please note that you may vote in person at the meeting even if you have
previously returned the proxy.
Thank you for your attention to this important matter.
Sincerely,
Larry E. Hermreck
Chief Executive Officer
CBES BANCORP, INC.
1001 North Jesse James Road
Excelsior Springs, Missouri 64024
(816) 630-6711
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 22, 1998
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of CBES Bancorp, Inc. (the "Company") will be held at the Company's
main office located at 1001 North Jesse James Road, Excelsior Springs, Missouri
at 4:00 p.m., local time, on October 22, 1998.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company;
2. The ratification of the appointment of KPMG Peat Marwick LLP as the
auditors of the Company for the fiscal year ending June 30, 1999;
and such other matters as may properly come before the Meeting, or any
adjournments thereof. As of the date of this notice, the Board of Directors is
not aware of any other business to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on the
date specified above, or on any date or dates to which the Meeting may be
adjourned. Stockholders of record at the close of business on September 10,
1998 are the stockholders entitled to vote at the Meeting and any adjournments
thereof.
You are requested to complete and sign the enclosed WHITE proxy card, which
is solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend and vote at the
Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
Larry E. Hermreck
Chief Executive Officer
Excelsior Springs, Missouri
September 25, 1998
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF
MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
PROXY STATEMENT
CBES BANCORP, INC.
1001 North Jesse James Road
Excelsior Springs, Missouri 64024
(816) 630-6711
ANNUAL MEETING OF STOCKHOLDERS
To Be Held October 22, 1998
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of CBES Bancorp, Inc. (the "Company"), the
parent company of Community Bank of Excelsior Springs, a Savings Bank (the
"Bank"), of proxies to be used at the Annual Meeting of Stockholders of the
Company (the "Meeting") which will be held at the Company's main office located
at 1001 North Jesse James Road, Excelsior Springs, Missouri on October 22, 1998,
at 4:00 p.m., local time, and all adjournments of the Meeting. The accompanying
Notice of Annual Meeting and this Proxy Statement are first being mailed to
stockholders on or about September 25, 1998.
At the Meeting, stockholders of the Company are being asked to consider and
vote upon the election of two directors and the appointment of KPMG Peat Marwick
LLP as auditors for the Company.
VOTE REQUIRED AND PROXY INFORMATION
All shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the director nominees and
the proposal set forth in this Proxy Statement. The Company does not know of
any matters, other than as described in the Notice of Annual Meeting and this
Proxy Statement, that are to come before the Meeting. If any other matters are
properly presented at the Meeting for action, the persons named in the enclosed
form of proxy and acting thereunder will have the discretion to vote on such
matters in accordance with their best judgment.
As to the election of Directors, the proxy card being provided by the Board
of Directors enables a stockholder to vote FOR the election of the nominees
proposed by the Board, or to WITHHOLD AUTHORITY to vote for one or more of the
nominees being proposed. Under Delaware law and the Company's Certificate of
Incorporation and Bylaws, directors are elected by a plurality of votes cast,
without regard to either broker non-votes, or proxies as to which authority to
vote for one or more of the nominees being proposed is withheld.
As to the ratification of KPMG Peat Marwick LLP as independent auditors of
the Company, by checking the appropriate box, a stockholder may: (i) vote FOR
the item; (ii) vote AGAINST the item; or (iii) ABSTAIN from voting on such item.
Under the Company's Certificate of Incorporation and Bylaws, the ratification of
this matter shall be determined by a majority of the votes cast, without regard
to broker non-votes, or proxies marked ABSTAIN.
Any other matters that may be brought before the Annual Meeting will be
determined by majority of the votes cast, without regard to broker non-votes, or
any proxies as to which a stockholder abstains. One-third of the shares of the
Common Stock, present in person or represented by proxy, shall constitute a
quorum for purposes of the Meeting. Abstentions and broker non-votes are counted
for purposes of determining a quorum.
A proxy given pursuant to the solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary
of the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting, or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to Larry E.
Hermreck, Secretary, CBES Bancorp, Inc., 1001 North Jesse James Road, Excelsior
Springs, Missouri 64024.
VOTING SECURITIES AND CERTAIN HOLDERS THEREOF
Stockholders of record as of the close of business on September 10, 1998
will be entitled to one vote for each share of Common Stock then held. As of
that date, the Company had 969,607 shares of Common Stock issued and
outstanding. The following table sets forth information regarding share
ownership of those persons or entities known by management to beneficially own
more than five percent of the Common Stock and all directors and executive
officers of the Company and the Bank as a group.
SHARES
BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED OF CLASS
- -------------------------------------------------------------------------------------------------- ------------ ---------
CBES Bancorp, Inc. Employee Stock Ownership Plan/(1)/ 81,996 8.46%
1001 North Jesse James Road
Excelsior Springs, Missouri 64024
David H. Hancock 97,100 10.01%
12498 South 71 Highway
Grandview, Missouri 64030
Friedman, Billings, Ramsey Group, Inc. 66,996 6.90%
Eric F. Billings, Emanuel J. Friedman, and W. Russell Ramsey
1001 19th Street North
Arlington, Virginia 22209-1710
Bay Pond Partners, L.P. 101,000 10.41%
Wellington Hedge Management Limited Partnership
Wellington Hedge Management, Inc.
75 State Street
Boston, Massachusetts 02109
Directors and executive officers of the Company 149,071/(2)/ 15.37%
and the Bank, as a group (11 persons)
________________________
/(1)/ The amount reported represents shares held by the Employee Stock Ownership
Plan ("ESOP"), 14,702 shares of which have been allocated to accounts of
participants. First Bankers Trust of Quincy, Illinois, the trustee of the
ESOP, may be deemed to beneficially own the shares held by the ESOP which
have not been allocated to accounts of participants. Participants in the
ESOP are entitled to instruct the trustee as to the voting of shares
allocated to their accounts under the ESOP. Unallocated shares held in the
ESOP's suspense account are voted by the trustee in the same proportion as
allocated shares voted by participants.
/(2)/ Amount includes shares held directly, as well as shares held jointly with
family members, shares held in retirement accounts, shares held in a
fiduciary capacity or by certain family members, with respect to which
shares the group members may be deemed to have sole or shared voting
and/or investment power. The amount above includes 35,875 options to
purchase shares of Common Stock granted under the Company's 1997 Stock
Option and Incentive Plan and 14,337 awards of shares of restricted Common
Stock under the Company's Recognition and Retention Plan ("RRP") to
directors and executive officers of the Company, which have vested or vest
within 60 days of September 10, 1998. The amount above excludes options
and awards which do not vest within 60 days of September 10, 1998. Mr.
Hermreck, the Chief Executive Officer of the Company, is the beneficial
owner of 31,979 shares, or 3.30%, of the shares outstanding, including
9,020 stock options and 3,606 shares of restricted stock which have vested
or vest within 60 days of September 10, 1998, and 1,666 shares allocated
to the individual account of Mr. Hermreck under the Bank's Employee Stock
Ownership Plan.
2
PROPOSAL I - ELECTION OF DIRECTORS
The Company's Board of Directors is presently composed of six members, each
of whom is also a director of the Bank. The Directors are divided into three
classes. Directors of the Company are generally elected to serve for a three-
year term which is staggered to provide for the election of approximately one-
third of the directors each year.
The following table sets forth certain information regarding the Company's
Board of Directors, including their terms of office and nominees for election as
directors. It is intended that the proxies solicited on behalf of the Board of
Directors (other than proxies in which the vote is withheld as to the nominee)
will be voted at the Meeting for the election of the nominees identified in the
following table. If any nominee is unable to serve, the shares represented by
all such proxies will be voted for the election of such substitute as the Board
of Directors may recommend. At this time, the Board of Directors knows of no
reason why the nominee might be unable to serve, if elected. Except as
described herein, there are no arrangements or understandings between any
director or nominee and any other person pursuant to which such director or
nominee was selected.
SHARES OF COMMON
AGE AT TERM STOCK BENEFICIALLY PERCENT
JUNE 30, DIRECTOR TO OWNED AT OF
NAME 1998 POSITION(S) HELD SINCE/(1)/ EXPIRE SEPTEMBER 10, 1998/(2)/ CLASS
- ----------------------- -------- --------------------- ---------- ------ -------------------------- --------
NOMINEES
--------
Robert L. Lalumondier 58 Director 1992 1998 3,868(3) 0.55%
Cecil E. Lamb 69 Director 1985 1998 7,934(4) 0.82
DIRECTORS CONTINUING IN OFFICE
------------------------------
Edgar L. Radley 70 Vice Chairman of the Board 1979 2000 11,368(3) 1.63
Rodney G. Rounkles 60 Director 1984 2000 10,922(3) 1.56
Robert E. McCrorey 57 Chairman of the Board 1973 1999 29,120(5) 2.99
and President
Richard N. Cox 52 Director 1992 1999 26,368(3) 2.71
_______________________________
/(1)/ Includes service as a director of the Bank.
/(2)/ Includes shares held directly, as well as shares held in retirement
accounts, held by certain members of the named individuals' families, or
held by trusts of which the named individual is a trustee or substantial
beneficiary, with respect to which shares the named individuals may be
deemed to have sole or shared voting and/or investment power. Does not
include options to purchase shares of Common Stock granted under the
Company's 1997 Stock Option and Incentive Plan (the "Stock Option Plan")
and shares of restricted Common Stock awarded under the Company's
Recognition and Retention Plan, which shares have not yet vested.
/(3)/ Includes 2,050 stock options and 818 shares of restricted stock which
have vested or vest within 60 days of September 10, 1998 for Director
Cox, Lalumondier, Radley, and Rounkles.
/(4)/ Includes 1,025 stock options and 409 shares of restricted stock which
have vested or vest within 60 days of September 10, 1998 for Director
Lamb.
/(5)/ Includes 4,100 stock options and 1,638 shares of restricted stock which
have vested or vest within 60 days of September 10, 1998 for Director
McCrorey.
The business experience of each director and director nominee is set forth
below. All directors have held their present positions for at least the past
five years, except as otherwise indicated.
ROBERT L. LALUMONDIER Mr. Lalumondier is the owner of Lalumondier
Insurance Agency, located in Kearney, Missouri.
3
CECIL E. LAMB. Mr. Lamb is a retired postmaster.
EDGAR L. RADLEY. Mr. Radley is the retired owner and operator of a Coast
to Coast hardware store, which he operated until 1990.
RODNEY G. ROUNKLES. Mr. Rounkles was the plant manager of a molding
products plant in Excelsior Springs, Missouri until his retirement in 1995.
ROBERT E. MCCROREY Mr. McCrorey has served as a loan originator for the
Bank since 1993. Prior to that time, he served as a branch manager for a beer
distributor.
RICHARD N. COX Mr. Cox is the owner and operator of Cox Tool Co., Inc., a
designer/builder of plastic molds, located in Excelsior Springs, Missouri.
On July 2, 1998, Mr. David H. Hancock, a stockholder of the Company,
notified the Company that he intends to nominate John M. Adams for election to
the Board of Directors at the Meeting. The holders of the proxy card solicited
hereby do not intend to vote any shares for the election of any person other
that the nominees of the Company set forth above.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Executive officers of the Company and the Bank are elected annually by the
Board of Directors of the Company and the Bank, respectively. The business
experience of the executive officers of the Company and the Bank who are not
also directors are set forth below.
LARRY E. HERMRECK. Mr. Hermreck, age 58, has been with the Bank for the
past 25 years and has served as Chief Executive Officer for 20 years. In that
capacity, he is responsible for overseeing the day-to-day operations of the
Bank.
DERYL R. GOETTLING. Mr. Goettling, age 49, is the Manager of the Bank's
Mortgage Loan Department and is responsible for the supervision of all mortgage
lending operations of the Bank. Mr. Goettling joined the Bank in 1986 and
served in various capacities prior to being promoted to his current position in
1992.
MARGARET E. TEEGARDEN. Ms. Teegarden, age 49 is the Manager of the Bank's
Savings Department, responsible for managing the Bank's savings department. Ms.
Teegarden joined the Bank in 1978.
DENNIS D. HARTMAN. Mr. Hartman, age 44, is the Controller and Manager of
the Bank's Accounting Department. He is responsible for the supervision of the
Accounting Department and reporting to the regulatory authorities. He is also
responsible for overseeing the Bank's asset/liability management program. Mr.
Hartman joined the Bank in 1978.
JAMES V. ALDERSON. Mr. Alderson, age 52, has served as the Manager of the
Consumer Loan Department since June 1994, responsible for supervision of the
Bank's consumer lending operations. Mr. Alderson has been with the Bank since
1990 and served as a loan officer until June 1994.
OWNERSHIP REPORTS BY OFFICERS AND DIRECTORS
The Common Stock of the Company is registered pursuant to Section 12(g) of
the 1934 Act. The officers and directors of the Company and beneficial owners
of greater than 10% of the Company's Common Stock ("10% beneficial owners") are
required to file reports on Forms 3, 4, or 5 with the SEC disclosing changes in
beneficial ownership of the Common Stock. SEC rules require disclosure in the
Company's Proxy Statement and Annual Report on Form 10-K of the failure of an
officer, director or 10% beneficial owner of the Company's Common Stock to file
a Form 3, 4, or 5 on a timely basis. Based on the Company's review of such
ownership reports, no officer, director or 10% beneficial owner of the Company
failed to file ownership reports on a timely basis for the fiscal year ended
June 30, 1998.
4
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors met 17 times during the fiscal year ended June 30,
1998. During fiscal 1998, no incumbent director of the Company attended fewer
than 75% of the aggregate of the total number of Board meetings and the total
number of meetings held by the committees of the Board of Directors on which he
served.
The Board of Directors of the Company has standing Audit, Nominating and
Compensation Committees.
The Company's Audit Committee is responsible for the review of the
Company's annual audit report prepared by the Company's independent auditors.
The review includes a detailed discussion with the independent auditors and
recommendation to the full Board concerning any action to be taken regarding the
audit. The current members of this committee are Directors Cox, Lalumondier,
Lamb, Radley and Rounkles. The Company's Audit Committee met one time during
fiscal 1998.
The Compensation Committee is currently composed of Directors Cox,
Lalumondier, Lamb, Radley and Rounkles. This Committee is responsible for
evaluating the performance of the Company's principal officers and employees to
determine the compensation and benefits to be paid to such persons, and for
administering the Company's Stock Option Plan and RRP. This Committee met one
time during fiscal 1998.
The Nominating Committee meets annually in order to nominate candidates for
membership on the Board of Directors. This committee is comprised of the board
members who are not up for election. The Nominating Committee met one time
during fiscal 1998.
DIRECTOR COMPENSATION
During fiscal 1998, the Company paid directors a fee of $2,200 per annum.
Additionally, during fiscal 1998, each director of the Bank received a total of
$7,500 in board fees plus $3,000 for serving on various committees of the Bank.
Each director except for Messrs. Lalumondier and Lamb also receives group
hospitalization, dental, prescription and life insurance coverage. Mr. McCrorey
also is paid a salary for services performed as a loan originator for the Bank.
Stock Benefit Plans. Following approval by the Company's stockholders at
the Annual Meeting of Stockholders held on October 28, 1997, each director of
the Company who is not a full-time employee (5 persons) received an option to
purchase 5,125 shares of Common Stock under the Company's 1997 Stock Option and
Incentive Plan and an award of 2,049 shares of restricted stock under the
Company's Recognition and Retention Plan. In addition, Mr. McCrorey received
options to purchase 10,248 shares under the Stock Option Plan, and 4,099 shares
of restricted stock under the Recognition and Retention Plan.
Director Emeritus Agreement. In order to encourage directors to remain
members of the Bank's board, in February 1995 the Bank entered into Director
Emeritus Agreements (the "Emeritus Agreements") with each of the directors of
the Bank. Pursuant to the Emeritus Agreements, upon reaching age 75, directors
Radley, Lamb, Lalumondier, McCrorey, Rounkles and Cox will receive a benefit of
$671, $525, $642, $1,225, $817, and $846, respectively, per month paid monthly
for ten years following retirement. Upon termination of service for disability
or retirement prior to age 75, the director will receive a reduced amount
pursuant to a schedule as set forth in the Emeritus Agreements, paid monthly for
ten years following termination, or if earlier, until the director's recovery
from disability. Upon termination following a change in control of the Bank,
each director would be entitled to a lump sum payment of a reduced amount
pursuant to a schedule as set forth in the Emeritus Agreement. Upon the death
or termination for cause of a director, no benefits will be paid to such
director. The Bank purchased life insurance to finance the benefits that would
be payable to five of the six directors. The Bank accrued expenses during
fiscal 1998 in the aggregate amount of $1,042 for the Emeritus Agreements.
EXECUTIVE COMPENSATION
The Company has not paid any compensation to its executive officers since
its formation. However, the Company does reimburse the Bank for services
performed on behalf of the Company by its officers. The Company does not
presently anticipate paying any compensation to such persons until it becomes
actively involved in the operation or acquisition of businesses other than the
Bank.
5
The following table sets forth the compensation paid or accrued by the Bank
for services rendered by Larry E. Hermreck, the Chief Executive Officer of the
Bank. No executive officer earned in excess of $100,000 during fiscal 1998,
1997 or 1996.
=============================================================================================================================
SUMMARY COMPENSATION TABLE
- -----------------------------------------------------------------------------------------------------------------------------
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------- ------------------------------
OTHER
- --------------------------- ANNUAL RESTRICTED STOCK OPTIONS/ ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION AWARD(S) SARS COMPENSATION
POSITION YEAR ($) ($) ($)/(1)/ ($) (#) ($)
=============================================================================================================================
Larry E. Hermreck 1998 $81,863 $17,796 $--- $34,723/(2)/ /(3)/ $32,608/(4)/
Chief Executive Officer 1997 $67,500 $11,224 $--- ---/(2)/ ---/(3)/ $3,427/(4)/
1996 $62,328 $17,029 $--- ---/(2)/ ---/(3)/ $---
=============================================================================================================================
____________________
/(1)/ Mr. Hermreck did not receive any additional benefits or perquisites which,
in the aggregate, exceeded 10% of his salary and bonus or $50,000.
/(2)/ Based upon approximately 1804 shares of restricted stock which vested in
fiscal 1998. On October 28, 1997, pursuant to the Company's Recognition
and Retention Plan, Mr. Hermreck was awarded 9,019 shares of restricted
stock. The market value per share of the Common Stock was $19.25 on the
date of the grant. Such awards vest in equal installments at a rate of 20%
per year beginning on October 28, 1997, the date of grant, unless
otherwise determined by the Board. Awards will be 100% vested upon
termination of employment due to death or disability, or following a
change of control. The aggregate value of the 9,019 shares of restricted
stock awarded to Mr. Hermreck, including both vested and unvested shares,
as of June 30, 1998 was $180,921, based upon a closing price of $20.06 per
share on June 30, 1998.
/(3)/ On October 28, 1997, pursuant to the Company's Stock Option Plan, Mr.
Hermreck was awarded options to purchase 22,550 shares of Common Stock.
Such options vest in equal installments at a rate of 20% per year
commencing on the date of grant. The exercise price of such options is
$19.25, the fair market value of the underlying shares on October 28,
1997, the date of grant.
/(4)/ Includes $32,039 contributed under the ESOP for the benefit of Mr.
Hermreck, and $569 contributed under the Bank's 401K Plan for the benefit
of Mr. Hermreck in fiscal 1998; includes $3,282 contributed under the ESOP
for the benefit of Mr. Hermreck, and $145 contributed under the Bank's
401K Plan for the benefit of Mr. Hermreck in fiscal 1997.
STOCK OPTIONS
The Board of Directors of the Company has adopted the Stock Option Plan,
which has been approved by the stockholders. Certain directors, officers and
employees of the Bank and the Company are eligible to participate in the Stock
Option Plan. The Stock Option Plan is administered by a committee of outside
directors (the "Committee"). The Stock Option Plan authorizes the grant of
stock options equal to 102,495 shares of Common Stock. The Stock Option Plan
provides, among other things, for the grant of options to purchase Common Stock
intended to qualify as incentive stock options under Section 422 of the Internal
Revenue Code, and options that do not so qualify ("nonstatutory options"). For
information regarding options granted to directors under the Stock Option Plan,
see "Director Compensation--Stock Benefit Plans," herein. Options must be
exercised within 10 years from the date of grant. The exercise price of the
options must be at least 100% of the fair market value of the underlying Common
Stock at the time of the grant.
Set forth below is information relating to options granted under the Stock
Option Plan to the named executive officer during the year ended June 30, 1998.
===============================================================================================
OPTION GRANTS IN LAST FISCAL YEAR
===============================================================================================
INDIVIDUAL GRANTS
- -----------------------------------------------------------------------------------------------
PERCENT OF TOTAL OPTIONS
GRANTED TO EMPLOYEES IN EXERCISE OR EXPIRATION
NAME OPTIONS GRANTED FY 1998 BASE PRICE DATE
- ------------------ --------------- ------------------------ ---------------- ------------
Larry E. Hermreck 22,550 36.7% $19.25 October 2007
- -----------------------------------------------------------------------------------------------
6
Set forth below is certain additional information concerning options
outstanding to the named executive officer at June 30, 1998. No options were
exercised during fiscal 1998.
========================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
========================================================================================================
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT THE-MONEY OPTIONS AT
FISCAL YEAR-END YEAR-END (1)
------------------------- -------------------------
SHARES ACQUIRED VALUE EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME UPON EXERCISE REALIZED (#) ($)
- ------------------ --------------- -------- ------------------------- -------------------------
Larry E. Hermreck -- $ -- 4,510/18,040 $3,653/$14,612
- --------------------------------------------------------------------------------------------------------
- -----------------
(1) Equals the difference between the aggregate exercise price of such options
and the aggregate fair market value of the shares of Common Stock that
would be received upon exercise, assuming such exercise occurred on June
30, 1998, at which date the closing price of the Common Stock as reported
on the Nasdaq SmallCap Market was $20.06.
EMPLOYMENT AGREEMENTS
The Bank entered into an employment agreement effective upon consummation
of the conversion with Larry E. Hermreck, the Bank's Chief Executive Officer,
providing for a term of three years. The contract provides for payment to the
employee for the remaining term of the contract unless the employee is
terminated "for cause."
The employment agreement for Mr. Hermreck provides for an annual base
salary as determined by the Board of Directors. Mr. Hermreck's base salary
(exclusive of bonuses) was approximately $71,500 during fiscal 1998. So long as
the contract remains in force, salary increases will be reviewed not less often
than annually thereafter, and are subject to the sole discretion of the Board of
Directors. The employment contract provides for annual extensions for one
additional year, but only upon express authorization by the Board of Directors
at the end of each year. The contract provides for termination upon the
employee's death, for cause or in certain events specified by OTS regulations.
The employment contract is terminable by the employee upon 90 days' notice to
the Bank.
In the event there is a change in control of the Holding Company or the
Bank, as defined in the agreement, and if employment terminates involuntarily,
as defined in the Agreement, in connection with such change in control or within
12 months thereafter, the employment contract provides for a payment equal to
299% of Mr. Hermreck's base amount of compensation as defined in the Code.
Assuming a change in control were to take place as of June 30, 1998, the
aggregate amounts payable to Mr. Hermreck pursuant to this change in control
provision would be approximately $252,000.
The contract provides, among other things, for participation in an
equitable manner in employee benefits applicable to executive personnel.
The Bank also entered into an employment agreement with Messrs. Goettling
and Hartman and Ms. Teegarden. These agreements provide for a term of eighteen
months and a change of control payment equal to 150% of the employee's prior
years' compensation plus certain additional benefits such as health insurance.
These agreements are otherwise similar to the employment agreement with Mr.
Hermreck.
On March 24, 1998, the Bank entered into a severance agreement with Larry
E. Hermreck, the Bank's Chief Executive Officer, effective upon termination of
the employment agreement ( September 1999) previously entered into upon the
conversion of the Bank from mutual to stock form. The severance agreement
provides for a term of three years. The agreement provides for the payment of
benefits in the event of a change in control of the Bank or the Company during
the term of the contract unless the executive is "terminated for cause." The
severance agreement provides for annual extensions for one additional year, but
only upon express authorization by the Board of Directors at the end of each
year.
7
In the event there is a change in control of the Bank or Company, as
defined in the agreement, and if employment terminates involuntarily, as defined
in the agreement, in connection with such change in control or within 12 months
thereafter, the severance agreement provides for a payment equal to 2.99 times
Mr. Hermreck's base amount of compensation as defined in Section 280G of the
Code. In addition to the severance payment, Mr. Hermreck would be entitled to
receive health benefits for the remaining term of the agreement.
Notwithstanding any provision to the contrary in the severance agreement,
payments under the severance agreement are limited so that they will not
constitute an excess parachute payment under Section 280G of the Code.
In March 1998, the Bank also entered into a severance agreement with
Messrs. Goettling and Hartman and Ms. Teegarden effective upon termination of
their respective employment agreements in March 1998. These agreements provide
for a term of two years and a change of control payment on involuntary
termination equal to 150% of the executive's salary during the preceding
calendar year including bonuses and any other cash compensation paid. These
agreements are otherwise similar to the severance agreement with Mr. Hermreck.
SALARY CONTINUATION AGREEMENTS
In order to encourage the Bank's Chief Executive Officer to remain an
employee of the Bank, the Bank entered into a Salary Continuation Agreement (the
"Agreement") in February 1995 with Mr. Hermreck. Pursuant to the Agreement,
upon retirement on or after reaching age 65, Mr. Hermreck would receive a
monthly benefit of $2,917 paid monthly for 15 years following retirement. Upon
termination of service for disability or retirement prior to age 65, Mr.
Hermreck would receive a reduced amount pursuant to a schedule set forth in the
Agreement, paid monthly for 15 years following termination or, if earlier, until
Mr. Hermreck's recovery from disability. Upon termination following a change in
control of the Bank, Mr. Hermreck would be entitled to a lump sum payment of a
reduced amount pursuant to a schedule set forth in the Agreement. The Agreement
provides for a death benefit if Mr. Hermreck dies while in active service of the
Bank equal to the amount that would be paid to Mr. Hermreck upon serving until
age 65. If Mr. Hermreck dies after benefit payments commence but before
receiving all payments, the Bank will pay the remaining benefits at the same
time and in the same amounts they would have been paid had Mr. Hermreck
survived. The Bank purchased life insurance on Mr. Hermreck whereby the Bank is
the beneficiary in order to offset the expected payments to Mr. Hermreck. The
Bank accrued expenses during fiscal 1998 in the amount of $5,909 for the
Agreement. The Bank has also entered into Salary Continuation Agreements with
Messrs. Alderson, Goettling and Hartman and Ms. Teegarden. These agreements are
similar to the Agreement with Mr. Hermreck, although providing for lower
payments.
CERTAIN TRANSACTIONS
The Bank has followed a policy of granting consumer loans and loans secured
by one- to four-family real estate to officers, directors and employees. Loans
to directors and executive officers are made in the ordinary course of business
and on the same terms and conditions as those of comparable transactions with
the general public prevailing at the time, in accordance with the Bank's
underwriting guidelines, and do not involve more than the normal risk of
collectibility or present other unfavorable features.
All loans by the Bank to its directors and executive officers are subject
to OTS regulations restricting loan and other transactions with affiliated
persons of the Bank. Federal law generally requires that all loans to directors
and executive officers be made on terms and conditions comparable to those for
similar transactions with non-affiliates, subject to limited exceptions.
However, recent regulations now permit executive officers and directors to
receive the same terms on loans through plans that are widely available to other
employees, as long as the director or executive officer is not given
preferential treatment compared to the other participating employees. Loans to
all directors, executive officers, and their associates totaled $549,000 at June
30, 1998, which was 3.3% of the Company's stockholders' equity at that date.
There were no loans outstanding to any director, executive officer or their
affiliates at preferential rates or terms which in the aggregate exceeded
$60,000 during the three years ended June 30, 1998. All loans to directors and
officers were performing in accordance with their terms at June 30, 1998.
8
PROPOSAL II - RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed KPMG Peat Marwick LLP,
independent accountants, to be the Company's auditors for the fiscal year ending
June 30, 1999, subject to the ratification of the appointment by the Company's
shareholders. Representatives of KPMG Peat Marwick LLP are expected to attend
the Meeting to respond to appropriate questions and to make a statement if they
so desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S
AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 1999.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for
the next annual meeting of stockholders, any stockholder proposal to take action
at such meeting must be received at the Company's office located at 1001 North
Jesse James Road, Excelsior Springs, Missouri 64024, no later than May 29, 1999.
Any such proposal shall be subject to the requirements of the proxy rules
adopted under the Exchange Act.
Under the Company's By-laws, certain procedures are provided which a
stockholder must follow to nominate persons for election as directors or to
introduce an item of business at an annual meeting of stockholders. These
procedures provide, generally, that stockholders desiring to make nominations
for directors, or to bring a proper subject of business before the meeting, must
do so by a written notice timely received (generally not later than 90 days in
advance of such meeting, subject to certain exceptions) by the Secretary of the
Company. The notice must include certain information as specified in the
Company's bylaws.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. The Company has retained Regan &
Associates, Inc., to assist in the solicitation of proxies for a fee estimated
to be approximately $5,000, plus out-of-pocket expenses. In addition to
solicitation by mail, directors, officers and regular employees of the Company
and the Bank may solicit proxies personally or by telegraph or telephone without
additional compensation.
Excelsior Springs, Missouri
September 25, 1998
9
CBES BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 22, 1998
The undersigned hereby appoints Rodney G. Rounkles and Richard N. Cox, with
full powers of substitution, to act as attorneys and proxies for the undersigned
to vote all shares of capital stock of CBES Bancorp, Inc. (the "Company") which
the undersigned is entitled to vote at the Annual Meeting of Stockholders (the
"Meeting") to be held at the Company's main office, located at 1001 North Jesse
James Road, Excelsior Springs, Missouri on October 22, 1998 at 4:00 p.m. and at
any and all adjournments and postponements thereof.
1. The election as directors of all nominees listed below (except as marked to
the contrary):
[_] FOR [_] VOTE WITHHELD
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
IN THAT NOMINEE'S NAME BELOW.
ROBERT L. LALUMONDIER CECIL E. LAMB
2. The ratification of the appointment of KPMG Peat Marwick LLP as auditors for
the Company for the fiscal year ending June 30, 1999.
[_] FOR [_] AGAINST [_] ABSTAIN
In their discretion, the proxies are authorized to vote on any other business
that may properly come before the Meeting or any adjournment or postponement
thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE PROPOSAL AND EACH OF THE NOMINEES LISTED ABOVE.
IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY
THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE
BOARD OF DIRECTORS KNOWS OF NO BUSINESS, OTHER THAN AS DESCRIBED IN THE
COMPANY'S NOTICE OF THE MEETING AND PROXY STATEMENT, TO BE PRESENTED AT THE
MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL
AND THE ELECTION OF THE NOMINEES LISTED ABOVE.
(Continued and to be SIGNED on Reverse Side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and choose to vote at the Meeting or at any
adjournments or postponements thereof, and after notification to the Secretary
of the Company at the Meeting of the stockholder's decision to terminate this
proxy, then the power of such attorneys or proxies shall be deemed terminated
and of no further force and effect. This proxy may also be revoked by filing a
written notice of revocation with the Secretary of the Company or by duly
executing a proxy bearing a later date.
The undersigned acknowledges receipt from the Company, prior to the execution
of this proxy, of notice of the Meeting, a Proxy Statement and an Annual Report
to Stockholders.
Dated: ____________________, 1998 ________________________________
Signature of Stockholder
Please sign exactly as your name(s)
appear(s) to the left. When signing as
attorney, executor, administrator,
trustee or guardian, please give your
full title. If shares are held jointly,
each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE