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:
[ ] Preliminary proxy statement
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CASCADE FINANCIAL CORPORATION
- ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
CASCADE FINANCIAL CORPORATION
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] No filing fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
- ------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
N/A
- ------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
N/A
- ------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
- ------------------------------------------------------------------------------
[ ] 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:
N/A
- ------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
N/A
- ------------------------------------------------------------------------------
(3) Filing party:
N/A
- ------------------------------------------------------------------------------
(4) Date filed:
N/A
- ------------------------------------------------------------------------------
September 27, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Cascade Financial Corporation, to be held at the Corporation's main office,
2828 Colby Avenue, Everett, Washington, on Saturday, October 21, 2000 at 10:00
a.m.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the meeting. During the meeting, we will
also report on the operations of the Corporation. Directors and officers of
the Corporation as well as a representative from the Corporation's independent
accounting firm, KPMG, LLP, will be present to respond to appropriate
questions of stockholders.
Detailed information concerning our activities and operating performance
during our fiscal year ended June 30, 2000 is contained in the enclosed Annual
Report to Stockholders.
To ensure proper representation of your shares at the meeting, the Board
of Directors requests that you sign, date and return the enclosed proxy card
in the enclosed postage-prepaid envelope as soon as possible, even if you
currently plan to attend the meeting. If you attend the meeting, you may vote
in person even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
/s/Frank M. McCord
Frank M. McCord
Chairman of the Board and
Chief Executive Officer
CASCADE FINANCIAL CORPORATION
2828 Colby Avenue
Everett, Washington 98201
(425) 339-5500
- ------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On October 21, 2000
- ------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Cascade
Financial Corporation ("Corporation") will be held at the Corporation's main
office located at 2828 Colby Avenue, Everett, Washington, on Saturday, October
21, 2000 at 10:00 a.m., for the following purposes:
1. To elect four directors to serve for a term of three years;
2. To approve the appointment of KPMG, LLP as the Corporation's
independent auditors for the fiscal year ending June 30, 2001;
and
3. To consider and act upon such other matters as may properly
come before the meeting or any adjournments thereof.
NOTE: 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, by original or later
adjournment, the meeting may be adjourned. Pursuant to the Bylaws, the Board
of Directors has fixed the close of business on August 31, 2000, as the record
date for determination of the stockholders entitled to vote at the meeting and
any adjournments thereof.
Please complete and sign the enclosed form of proxy, which is solicited
by the Board of Directors, and mail it promptly in the enclosed envelope. The
proxy will not be used if you attend the meeting and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/LARS H. JOHNSON
LARS H. JOHNSON
Secretary
Everett, Washington
September 27, 2000
- ------------------------------------------------------------------------------
IMPORTANT: The prompt return of proxies will save your Corporation the
expense of further requests for proxies in order to ensure a quorum. A
self-addressed envelope is enclosed for your convenience. No postage is
required if mailed in the United States.
- ------------------------------------------------------------------------------
PROXY STATEMENT
OF
CASCADE FINANCIAL CORPORATION
2828 Colby Avenue
Everett, Washington 98201
- ------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 21, 2000
- ------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Cascade Financial Corporation
("Corporation") to be used at the Annual Meeting of Stockholders of the
Corporation ("Annual Meeting"). The Annual Meeting will be held at the
Corporation's main office located at 2828 Colby Avenue, Everett, Washington,
on Saturday, October 21, 2000 at 10:00 a.m. The Corporation is the holding
company for Cascade Bank ("Cascade" or the "Bank"). This Proxy Statement and
the enclosed proxy card are being first mailed to stockholders on or about
September 27, 2000.
- ------------------------------------------------------------------------------
VOTING AND PROXY PROCEDURE
- ------------------------------------------------------------------------------
Stockholders Entitled to Vote. Stockholders of record as of the close of
business on August 31, 2000 ("Voting Record Date") are entitled to one vote
for each share of common stock ("Common Stock") of the Corporation then held.
As of the close of business on the Voting Record Date, the Corporation had
5,510,484 shares of Common Stock issued and outstanding.
Quorum. The presence, in person or by proxy, of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum at the Annual Meeting. Abstentions will be
counted as shares present and entitled to vote at the Annual Meeting for
purposes of determining the existence of a quorum. Broker non-votes will be
considered shares present for purposes of determining whether a quorum is
present.
Voting. The Board of Directors solicits proxies so that each stockholder
has the opportunity to vote on the proposals to be considered at the Annual
Meeting. When a proxy card is returned properly signed and dated, the shares
represented thereby will be voted in accordance with the instructions on the
proxy card. Where no instructions are indicated, proxies will be voted in
accordance with the recommendations of the Board of Directors. If a
stockholder of record attends the Annual Meeting, he or she may vote by
ballot. The Board recommends a vote FOR the election of the nominees for
director and FOR the approval of the appointment of independent auditors.
The four directors to be elected at the Annual Meeting will be elected by
a plurality of the votes cast by stockholders present in person or by proxy
and entitled to vote. Stockholders are not permitted to cumulate their votes
for the election of directors. Votes may be cast for or withheld from each
nominee. Votes that are withheld and broker non-votes will have no effect on
the outcome of the election because the nominees receiving the greatest number
of votes will be elected.
With respect to the other proposal to be voted upon at the Annual
Meeting, stockholders may vote for or against the proposal or may abstain from
voting. Approval of the appointment of independent auditors requires the
affirmative vote of a majority of the shares of Common Stock present in person
or by proxy and entitled to vote. Broker non-votes will have no effect on the
outcome of this proposal. Abstentions, however, will have the same effect as
a vote against this proposal.
Revocation of a Proxy. Stockholders who execute proxies retain the right
to revoke them at any time before they are voted. Proxies may be revoked by
written notice delivered in person or mailed to the Secretary of the
Corporation or by filing a later proxy prior to a vote being taken on a
particular proposal at the Annual Meeting.
Attendance at the Annual Meeting will not automatically revoke a proxy, but a
stockholder of record in attendance may request a ballot and vote in person,
thereby revoking a prior granted proxy.
Participants in the Cascade Financial Corporation ESOP. If a stockholder
is a participant in the Cascade Financial Corporation Employee Stock Ownership
Plan (the "ESOP"), the proxy card represents a voting instruction to the
trustees of the ESOP as to the number of shares in the participant's plan
account. Each participant in the ESOP may direct the trustees as to the
manner in which shares of Common Stock allocated to the participant's plan
account are to be voted. Unallocated shares of Common Stock held by the ESOP
and allocated shares for which no voting instructions are received will be
voted by the trustees.
- ------------------------------------------------------------------------------
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------------
Persons and groups who beneficially own more than 5% of the Corporation's
Common Stock are required to file certain reports with the Securities and
Exchange Commission ("SEC"), and provide a copy to the Corporation, disclosing
such ownership pursuant to the Securities Exchange Act of 1934, as amended
("Exchange Act"). Based on such reports, the following table sets forth, as
of the close of business on the Voting Record Date, certain information as to
those persons who were beneficial owners of more than 5% of the outstanding
shares of Common Stock. Management knows of no persons other than those set
forth below who beneficially owned more than 5% of the outstanding shares of
Common Stock at the close of business on the Voting Record Date.
The table also sets forth, as of the close of business on the Voting
Record Date, information as to the shares of Common Stock beneficially owned
by (a) each director, (b) each of the executive officers named in the Summary
Compensation Table found below (the "named executive officers") and (c) by all
executive officers and directors of the Corporation as a group.
Amount and Nature of Percent of Shares
Name Beneficial Ownership(a) Outstanding
- ---- ----------------------- -----------
Beneficial Owners of More Than 5%
Arthur W. Skotdal, Andrew Skotdal 385,589(b) 7.0%
and Craig G. Skotdal
c/o Douglas A. Schafer
Schafer Law Firm
P.O. Box 1134
Tacoma, WA 98401
Frank M. McCord 304,706 5.5
2828 Colby Avenue
Everett, WA 98201
Directors
Paull H. Shin 12,337 *
Janice Halladay 8,087 *
Dwayne Lane 40,951 *
Gary L. Meisner 14,120 *
David W. Duce 25,927 *
G. Brandt Westover 21,385 *
(table continued on following page)
2
Amount and Nature of Percent of Shares
Name Beneficial Ownership(a) Outstanding
- ---- ----------------------- -----------
Dennis R. Murphy 27,336 *
Ronald E. Thompson 39,309 *
Henry Robinett 30,034 *
David O'Connor 95,773 1.7
Named Executive Officers
Frank M. McCord** 304,706 5.5
C. Fredrick Safstrom** 117,094 2.1
Robert G. Disotell 104,924 1.9
Steven R. Erickson 19,876 *
All Executive Officers and Directors
as a Group (18 persons) 924,510 16.8
- ----------------
* Less than 1%.
** Also a director of the Corporation and the Bank
(a) In accordance with Rule 13d-3 under the Exchange Act, a person is
deemed to be the beneficial owner, for purposes of this table, of any
shares of Common Stock if he or she has voting and/or investment power
with respect to such security. The table includes shares owned by
spouses, other immediate family members in trust, shares held in
retirement accounts or funds for the benefit of the named individuals,
and other forms of ownership, over which shares the persons named in
the table may possess voting and/or investment power. Shares held in
accounts under the Corporation's ESOP as of June 30, 2000, as to which
the holders have voting power but not investment power, are included as
follows: Mr. McCord, 9,633 shares; Mr. Safstrom, 7,204 shares; Mr.
Disotell, 6,931 shares; Mr. Erickson, 6,328 all executive officers and
directors as a group, 32,193 shares. Does not include 109,078 shares
held under Cascade Bank's 401(k) Plan, for which Messrs. McCord and
Safstrom act as trustees. The amounts shown also include the following
amounts of Common Stock which the indicated individuals have the right
to acquire within 60 days of the close of the Voting Record Date
through the exercise of stock options granted pursuant to the
Corporation's stock option plans: Mr. Shin, 9,155; Ms. Halladay, 2,390;
Mr. Lane, 7,324; Mr. Meisner, 7,324; Mr. Duce, 3,741; Mr. Westover,
7,498; Mr. Murphy,13,909; Mr. Thompson, 13,909; Mr. Robinett, 4,945;
Mr. O'Connor, 4,945; Mr. McCord, 76,670; Mr. Safstrom, 66,641; Mr.
Disotell, 51,123; Mr. Erickson, 13,548; and all executive officers and
directors as a group, 332,834.
(b) Information concerning the shares owned by the Skotdals was obtained
from an amended Schedule 13D dated January 6,2000. According to this
filing, Arthur Skotdal has sole voting and dispositive power with
respect to 144,351 shares and shared voting and dispositive power with
respect to 241,238 shares, Andrew Skotdal has shared voting and
dispositive power with respect to 241,238 shares and Craig Skotdal has
shared voting and dispositive power with respect to 241,238 shares.
- ------------------------------------------------------------------------------
PROPOSAL I -- ELECTION OF DIRECTORS
- ------------------------------------------------------------------------------
The Corporation's Board of Directors currently consists of twelve
members. The Board of Directors is divided into three classes with three-year
staggered terms, with one-third of the directors elected each year. The
Nominating Committee has nominated for election as directors Messrs. Dwayne
Lane, G. Brandt Westover, Dennis R. Murphy and Ronald E. Thompson each for a
three year term. All nominees currently serve as members of the Boards of
Directors of the Corporation and the Bank.
3
It is intended that the proxies solicited by the Board of Directors will
be voted for the election of the above named nominees. If any nominee is
unable to serve, the shares represented by all valid proxies will be voted for
the election of such substitute as the Board of Directors may recommend or the
Board of Directors may amend the Bylaws and reduce the size of the Board. At
this time, the Board knows of no reason why any nominee might be unable to
serve.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" ALL OF
THE NOMINEES NAMED BELOW FOR DIRECTORS OF THE CORPORATION.
The following table sets forth certain information regarding the nominees
for election at the Annual Meeting, as well as information regarding those
directors continuing in office after the Annual Meeting.
Year First
Elected or
Positions Held With Appointed Term to
Name Age (a) the Corporation Director (b) Expire
- ---- ------- --------------- ------------ ------
BOARD NOMINEES
Dwayne Lane 65 Director 1995 2003(c)
G. Brandt Westover 40 Director 1986 2003(c)
Dennis R. Murphy 58 Vice Chairman of the Board 1991 2003(c)
Ronald E. Thompson 51 Director 1991 2003(c)
DIRECTORS CONTINUING IN OFFICE
Janice Halladay 56 Director 1999 2001
Paull H. Shin 64 Director 1995 2001
Gary L. Meisner 64 Director 1995 2001
Henry Robinett 69 Director 1997 2001
Frank M. McCord 70 Chairman of the Board, 1986 2002
Chief Executive Officer
and Director
C. Fredrick Safstrom 46 President, Chief Operating 1990 2002
Officer and Director
David W. Duce 40 Vice Chairman of the Board 1991 2002
David O'Connor 55 Director 1997 2002
________________
(a) At June 30, 2000.
(b) Includes prior service on the Board of Directors of the Bank.
(c) Assuming the individuals are reelected at the Annual Meeting.
The principal occupation of each director of the Corporation is set forth
below. All of the directors reside in Everett, except as noted, and have held
their present position for at least five years unless otherwise stated.
4
DWAYNE LANE is the owner of three automobile dealerships in Everett and
Arlington, Washington. Mr. Lane, an Everett native, is active in community
affairs. Mr. Lane served 12 years as an Everett Port Commissioner and was a
board member for Olympic Bank and Providence Hospital.
G. BRANDT WESTOVER is a Corporate Vice President and Branch Manager for
PaineWebber Inc. in Bellevue, Washington, a position he has held since 1996.
From 1993 to 1996, Mr. Westover was a Vice President/Investments with
PaineWebber in Seattle, Washington. Mr. Westover was recently elected to the
Board of Trustees for the University of Washington Alumni Association. He is
also active with the Juvenile Diabetes Association. Mr. Westover is a
resident of Bellevue, Washington.
DENNIS R. MURPHY, Ph.D., is Dean of the College of Business and Economics
and Professor of Economics at Western Washington University, Bellingham,
Washington. He serves on the boards of the Northwest Medical Bureau, the PACE
Foundation, Jr. Achievement, and the Whatcom Chamber of Commerce and Industry.
He also serves on the Audit and Finance Committee of the Western Foundation,
Inc. He is Past-President of the United Way of Whatcom County and the
Bellingham Rotary. Dr. Murphy was elected Vice-Chairman of the Corporation in
July 1998. He is a resident of Bellingham, Washington.
RONALD E. THOMPSON is the President of Windermere Commercial and Property
Management, Inc., Everett, Washington, a real estate sales and property
management company. He is a past president of the Snohomish County-Camano
Association of Realtors, a past State director of the Washington Association
of Realtors, and served on the Board of Directors for the Mt. Baker Council
Boy Scouts of America. Mr. Thompson is a member of the Everett Rotary Club.
He is a resident of Everett, Washington.
JANICE HALLADAY is a retired bank executive. Ms. Halladay was previously
employed by Pinoneer Bank, Lynnwood, as Senior Vice President. She was
subsequently employed by a regional accounting firm, Moss Adams LLP. She is
currently a member of the Board of Directors of the Northwest Service Area of
the Providence Health System and also serves on the Board of Trustees for
Deaconess Children's Services. She is a resident of Everett, Washington.
PAULL H. SHIN, Ph.D., is a Washington State Senator and a retired
Professor of History at Shoreline Community College, Seattle, Washington. Dr.
Shin is Chairman of Transpacific Telecommunications, Inc. and a board member
of the Snohomish County United Way, and the Mulilteo YMCA. Dr. Shin is a
resident of Edmonds, Washington.
GARY L. MEISNER is President of Clearview Management, Inc., a management
and investment services company in Everett, Washington. From 1978 to December
1996, Mr. Meisner served as President of the Small Business Center, Inc., a
firm that provided accounting, tax preparation and insurance services to
individuals and small businesses in Everett and Seattle, Washington. Prior to
this position, Mr. Meisner spent 14 years in commercial and consumer banking.
Mr. Meisner is a graduate of Wayne State College and the Pacific Coast Banking
School. Mr. Meisner is active in community affairs.
HENRY ROBINETT is general partner of Boyden, Robinett & Assoc. L.P. and
was a founding director of American First National Bank in 1984. Mr. Robinett
is active in real estate development in Snohomish County and is very involved
in community activities. Mr. Robinett resides in Snohomish, Washington.
FRANK M. MCCORD, C.P.A., became Chairman of the Board of Directors,
President and Chief Executive Officer of the Bank in 1990. Mr. McCord was the
Managing Partner of the KPMG Peat Marwick LLP, Seattle, Washington office
until his retirement in 1986. In addition to his responsibilities to the
Corporation, Mr. McCord is a Director of the Washington Financial League. He
is also a Director of the Everett Performing Arts Association and the Advisory
Council of the Washington Society of CPAs. Mr. McCord has previously served
as President of the Evergreen Area Council of Boy Scouts of America, Treasurer
of the United Way of King County, Campaign Chairman of United Way of Snohomish
County, Trustee of Seattle University, a Fellow of Seattle Pacific University,
Treasurer
5
of the Washington Society of Certified Public Accountants, Director of the
Everett Rotary Club, Director of the Seattle Chamber of Commerce and as a
Director and Chairman of the Everett Area Chamber of Commerce.
C. FREDRICK SAFSTROM is the Bank's President and Chief Operating Officer.
He has served Cascade in a variety of managerial positions with increasing
responsibilities since 1976. Mr. Safstrom is a trustee and treasurer of
Seattle Pacific University, Board chair of the Snohomish County YMCA,
past-president and director of the Everett Public Schools Foundation, director
and treasurer of Housing Hope and a member of the Everett Rotary.
DAVID W. DUCE is a practicing attorney with Duce, Bastian, Peterson and
Zielke in Everett, Washington. He is the chairman of the Professional
Negligence Section of the Washington State Trial Lawyers Association. He is a
court approved arbitrator for the Snohomish County Superior Court lawsuits and
worked as a member of the Court Congestion Steering Committee of the Snohomish
County Bar Association. Mr. Duce has served as a Bishop in the Church of Jesus
Christ Latter Day Saints and was a member of Senator Henry M. Jackson's staff
in Washington, D.C.
DAVID O'CONNOR is Co-Owner of Mobile Country Club in Everett Washington,
and was a founding director of American First National Bank. Mr. O'Connor was
Co-Owner of O'Connor & Oehler Construction Inc. from 1974 to 1996 and
continues in his development business. Mr. O'Connor is a member of the
Manufactured Housing Communities of Washington. Mr. O'Connor resides in
Arlington, Washington.
Meetings and Committees of the Board of Directors
The Board of Directors of the Corporation and the Bank conduct their
business through meetings of the Board and through their committees. During
the fiscal year ended June 30, 2000, the Board of Directors of the Corporation
and the Bank held six meetings. No director of the Corporation or the Bank
attended fewer than 75% of the total meetings of the Board of Directors and
committee meetings on which such Board member served during this period.
The Board of Directors of the Corporation and the Bank has an Executive
Committee consisting of Messrs. McCord (Chairman), O'Connor, Robinett,
Safstrom, Thompson and Westover. This committee primarily serves as a large
loan review committee but also has the authority to generally act for the full
board. This committee meets as necessary and met 36 times during the 2000
fiscal year.
The Board of Directors of the Corporation and the Bank has an Audit and
Finance Committee consisting of Messrs. Murphy (Chairman), Robinett, Meisner
and Thompson, all of whom are outside directors. The purpose of the committee
is to provide direction and oversight to the Internal Audit Department and
bears responsibility for the audit function and reviews the examination of the
Bank by federal regulatory authorities and the audit by the independent
auditing firm. The Audit and Finance Committee meets at least quarterly and
met ten times during the 2000 fiscal year.
The Board of Directors of the Corporation and the Bank has a Compensation
and Personnel Committee consisting of Messrs. Duce (Chairman), Lane, Shin and
Halladay, all of whom are outside directors. This committee is responsible
for reviewing the compensation policies of the Corporation and the Bank,
approving compensation of executive officers, and recommending the granting of
stock options. The committee met five times during the 2000 fiscal year.
In connection with the Annual Meeting and selection of the nominees for
election as directors, the Board of Directors of the Corporation acts as a
nominating committee for selecting the nominees for election as directors.
The Board of Directors of the Corporation by resolution in lieu of a meeting
nominated the individuals for election at the Annual Meeting.
6
Directors' Compensation
During fiscal 2000, outside members of the Board of Directors received a
retainer of $7,500. In addition, outside members of the executive committee
received a retainer of $2,000 plus 150 shares of Common Stock in fiscal 2000.
Committee chairmen also received $3,000 plus 150 shares of Common Stock in
fiscal 2000 instead of per meeting fees. Other members of the board received
in fiscal 2000 a fee of $200 for each committee meeting attended other than on
a day of a regular board meeting.
A director bonus program was started during fiscal 1999. Under the
program, outside directors individually qualify for a bonus equal to 1% of the
executive management bonus pool. In fiscal 2000, a total of $12,871 was paid
to directors under the program.
- ------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
- ------------------------------------------------------------------------------
Summary Compensation Table
The following information is furnished for the Chief Executive Officer of
the Corporation for the year ended June 30, 2000 and those executive officers
of the Corporation who received salary and bonus in excess of $100,000 during
the year ended June 30, 2000.
Long-Term
Compensation
Annual Compensation Awards
------------------------------------ ------
Name and Fiscal Other Annual Number of All Other
Principal Position Year Salary Bonus Compensation(1) Options Compensation(2)
- ------------------ ---- ------ ----- --------------- ------- ---------------
Frank M. McCord 2000 $130,548 $52,370 -- -- $11,580
Chief Executive Officer 1999 130,548 31,180 -- -- 11,365
1998 118,680 25,286 -- -- 6,720
C. Fredrick Safstrom 2000 95,474 36,263 -- 15,784
President 1999 91,300 24,187 -- 12,500 13,055
1998 83,016 19,453 -- -- 13,459
Robert G. Disotell 2000 83,016 10,000 -- -- 11,541
Executive Vice President 1999 83,016 30,140 -- 3,750 13,478
1998 83,016 36,109 -- -- 8,919
Steven R. Erickson 2000 73,500 40,000 -- 8,000 7,692
Executive Vice President 1999 70,000 35,010 -- 7,500 9,345
1998 60,000 6,215 -- 3,906 3,759
- ---------------
(1) Does not include perquisites which did not exceed $50,000 or 10% of salary and bonus.
(2) All Other Compensation for fiscal year 2000 includes the following: for Mr. McCord, employer
contribution to 401(k) Plan of $4,572 and ESOP contribution of $7,008; for Mr. Safstrom, cash
distribution of accrued leave of $5,092 pursuant to executive's election, employer contribution to
401(k) Plan of $5,071 and ESOP contribution of $5,075, and employer contribution to employee stock
purchase plan of $636; for Mr. Disotell, cash distribution of accrued leave of $3,832 pursuant to
executive's election, employer contribution to 401(k) Plan of $3,878, and ESOP contribution of
$3,831; for Mr. Erickson, employer contribution to 401(k) Plan of $2,927 and ESOP contribution of
$4,770.
7
Option Grants Table
The following table sets forth information concerning the grant of stock options to the named executive
officer during the fiscal year ended June 30, 2000.
Individual Grants
------------------------------------------------- Potential Realizable Value
Number of Percent of at Assumed Annual Rates of
Securities Total Options Stock Price Appreciation
Underlying Granted to Exercise for Option Term(2)
Options Employees in Price Expiration --------------------------
Name Granted(1) Fiscal Year ($/sh) Date 5% 10%
- -------------------- ---------- ----------- ------ ------ -------- --------
Steven R. Erickson 2,000 1.78 11.75 8/23/09 23,840 36,500
Steven R. Erickson 6,000 5.35 7.13 5/17/10 74,160 117,600
(1) Options granted vest at the rate of 20% per annum after the second year of grant. Options will become
immediately exercisable in the event of a change in control of the Corporation. Options were granted
under the Corporation's 1997 Stock Option Plan, as amended, and have an exercise price equal to the
fair market value of the Common Stock on the date of grant. Mr. Erickson received a 2,000 share grant
on August 23, 1999 and 6,000 grant on May 17, 2000.
(2) The dollar gains under these columns result from calculations required by the SEC rules and are not
intended to forecast future price appreciation of the Common Stock of the Corporation. It is important
to note that options have value to the listed executive only if the stock price increases above the
exercise price shown in the table during the effective option period. In order for the listed
executive to realize the potential values set forth in the 5% in the table, the price per share of the
Corporation's Common Stock would range from approximately $11.92 and $12.36, depending on the
expiration date of the options. For the 10% column the range of the stock price is $18.25 to $19.66
depending on the expiration date of the option.
Option Exercise/Value Table
The following table sets forth information with respect to options exercised during the fiscal year
ended June 30, 2000 and remaining unexercised at the end of the fiscal year for the named executive
officers.
Value of Unexercised
Number of Number of Securities In-the-Money Options
Shares Underlying Unexercised Options at Fiscal Year End(1)
Acquired on Value ------------------------------ ---------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
Frank M. McCord 2,000 24,750 76,670 -- 488,388 --
C. Fredrick Safstrom 5,000 35,940 64,141 12,500 408,578 0
Robert G. Disotell 14,000 113,192 50,373 3,750 320,876 0
Steven R. Erickson -- -- 11,267 24,976 64,624 6,251
- ------------------
(1) The value of unexercised in-the-money options is calculated using a fair market value of $7.63 as of
June 30, 2000, based on the last known trade on or before such date. Options have been adjusted for
stock dividends.
Notwithstanding anything to the contrary set forth in any of the
Corporation's previous filings under the Securities Act of 1933, as amended,
or the Exchange Act that might incorporate future filings, including this
Proxy Statement, in whole or in part, the following report and Performance
Graph shall not be incorporated by reference into any such filings.
8
Report of the Compensation and Personnel Committee
Under rules established by the SEC, the Corporation is required to
provide certain data and information in regard to the compensation and
benefits provided to the Corporation's Chief Executive Officer and other
executive officers of the Bank and Corporation. The Compensation and
Personnel Committee's duties are to establish and administer policies that
govern executive compensation for the Corporation. The Committee evaluates
the individual performance of the Chief Executive Officer, the President and
Chief Operating Officer, the Chief Financial Officer, and other senior level
officers and reviews compensation policies for all senior management. The
Committee receives input from the Chief Executive Officer on the other two
executive officers' performance and has final authority to set individual
compensation levels.
The executive compensation policies of the Corporation are designed to
reflect the attainment of short and long-term financial performance goals and
to enhance the ability of the Corporation to attract and retain qualified
executive officers. The Committee considers a variety of subjective and
objective factors in determining the compensation package for individual
executives. These factors include the performance of the Corporation overall,
the responsibilities assigned to each executive, and the performance of each
executive in their assigned areas of responsibilities.
Base salary. The Corporation's compensation plan involves a combination
of salary and cash bonuses tied to short-term performance. Salary levels are
designed to be competitive within the banking industry based on a peer group
analysis of Washington State financial institutions. Specifically, the
Committee reviews the compensation report on senior banking executives
commissioned by the Washington Financial League. Given the Corporation's
performance and size, the Committee concluded that the base salaries of the
reviewed executive officers will be adjusted appropriately for fiscal 2001.
Bonus program. An incentive bonus plan is in effect for the executive
officers of the Corporation that is designed to compensate for performance.
The plan provides for a bonus pool to be shared by the Chief Executive
Officer, President, Chief Financial Officer, and the Marketing and Operations
Director, who was added in fiscal 1999, based on net earnings of the
Corporation above predetermined annual targets. For the year ended June 30,
1999 the bonus pool was $132,000. For the year ended June 30, 2000 no bonuses
will be paid to these officer under the plan..
Option grants. The Committee selects employees who will receive stock
options and determines the number to be granted. Stock option grants are
designed to provide long-term incentives for key employees. The Committee
grants options throughout each year. For the year ended June 30, 2000, 8,000
options were granted to Mr. Steven R. Erickson, a named executive officer, and
a total of 112,500 were granted to all employees. These grants were made at
current market prices under the rules of the 1997 Stock Option Plan, as
amended.
Compensation of the Chief Executive Officer and Named Executive Officers.
For the year ended June 30, 2000, the base salary of Frank M. McCord, Chairman
and Chief Executive Officer of the Bank and Cascade Financial Corporation, was
$130,548. In addition, he received $52,370 in deferred bonuses for the fiscal
year ended June 30, 1999. He was also credited with $11,580 in compensation
relating to his 401(k) and ESOP accounts. Mr. McCord's performance bonus
reflected the attainment of the specific performance criteria for the 1999
fiscal year established by the Compensation and Personnel Committee. The
Committee believes that Mr. McCord's compensation is appropriate based on the
Corporation's overall performance.
For the year ended June 30, 2000, the base salary of C. Fredrick
Safstrom, President of the Bank and Cascade Financial Corporation, was
$95,474. In addition he received $36,263 in deferred bonuses for the fiscal
year ended June 30, 1999. He was also credited with $15,784 in compensation
relating to his 401(k), ESOP accounts, and a cash distribution of accrued
leave. Mr. Safstrom's performance bonus reflected the attainment of the
specific performance criteria for the 1999 fiscal year established by the
Compensation and Personnel Committee. The Committee believes that Mr.
Safstrom's compensation is appropriate based on the Corporation's overall
performance.
9
For the year ended June 30, 2000, the base salary of Robert G. Disotell,
Executive Vice President of the Bank and Cascade Financial Corporation, was
$83,016. In addition he received $10,000 in deferred bonuses for the fiscal
year ended June 30, 1999. He was also credited with $11,541 in compensation
relating to his 401(k) and ESOP accounts, and a cash distribution for accrued
leave. Mr. Disotell's performance bonus reflected the attainment of the
specific performance criteria for the 1999 fiscal year established by the
Compensation and Personnel Committee. The Committee believes that Mr.
Disotell's compensation is appropriate based on the Corporation's overall
performance.
For the year ended June 30, 2000, the base salary of Steven R. Erickson,
Executive Vice President of the Bank, was $73,200. In addition he received
$40,000 in bonuses for the fiscal year ended June 30, 1999. He was also
credited with $7,692 in compensation relating to his 401(k) and ESOP accounts.
Mr. Erickson's performance bonus reflected the attainment of the specific
performance criteria for the 2000 fiscal year established by the Compensation
and Personnel Committee. The Committee believes that Mr. Erickson's
compensation is appropriate based on the Corporation's overall performance.
Compensation and Personnel Committee
David W. Duce (Chairman)
Janice Halladay
Dwayne Lane
Paull H. Shin
10
Performance Graph
The following graph compares the Corporation's cumulative stockholder
return on its Common Stock with the return on the Nasdaq (U.S. Stock) Index
and a peer group of the Nasdaq's Financial Index. Total return assumes the
reinvestment of all dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL*
[Graph Appears Here]
6/30/95 6/30/96 6/30/97 6/30/98 6/30/99 6/30/00
------- ------- ------- ------- ------- -------
Cascade Financial
Corporation 100.00 115.80 110.34 166.67 201.15 109.63
Nasdaq (Composite)
Index 100.00 126.95 154.49 202.98 202.98 424.89
Nasdaq OTC Financial
Index 100.00 125.79 184.90 250.88 250.88 243.89
* Assumes that the value of the investment in the Corporation's Common Stock
and each index was $100 on June 30, 1995, and that all dividends were
reinvested.
11
- ------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
- ------------------------------------------------------------------------------
Section 16(a) of the Exchange Act requires the Corporation's executive
officers and directors, and persons who own more than 10% of any registered
class of the Corporation's equity securities, to file reports of ownership and
changes in ownership with the SEC. Executive officers, directors and greater
than 10% shareholders are required by regulation to furnish the Corporation
with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms it has received
and written representations provided to the Corporation by the above
referenced persons, the Corporation believes that all filing requirements
applicable to its reporting officers, directors and greater than 10%
shareholders were properly and timely complied with during the fiscal year
ended June 30, 2000, except for several directors who recently indicated to
the Corporation that they may have transactions that were not timely reported.
The directors are reviewing their transaction records and may be required to
file late or amended reports with the SEC.
- ------------------------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT
- ------------------------------------------------------------------------------
As required by federal regulations, all loans or extensions by the Bank
of credit to executive officers and directors are made on substantially the
same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons (except for loans made
pursuant to programs generally available to all employees) and do not involve
more than the normal risk of repayment or present other unfavorable features.
In addition, loans made by the Bank to a director or executive officer in an
amount that, when aggregated with the amount of all other loans by the Bank to
such person and his or her related interests, are in excess of the greater of
$25,000 or 5% of the Bank's capital and surplus (up to a maximum of $500,000)
are subject to approval in advance by a majority of the disinterested members
of the Board of Directors.
- ------------------------------------------------------------------------------
PROPOSAL II -- APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
- ------------------------------------------------------------------------------
KPMG, LLP was the Corporation's independent auditors for the fiscal year
ended June 30, 2000. The Board of Directors has appointed KPMG, LLP as
independent auditors for the fiscal year ending June 30, 2001, subject to
approval by stockholders. A representative of KPMG, LLP is expected to be
present at the Annual Meeting to respond to stockholders' questions and will
have the opportunity to make a statement if she so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE APPOINTMENT OF KPMG, LLP AS INDEPENDENT AUDITORS OF THE
CORPORATION FOR THE FISCAL YEAR ENDING JUNE 30, 2001.
- ------------------------------------------------------------------------------
OTHER MATTERS
- ------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Annual Meeting other than those matters described above in this Proxy
Statement. However, if any other matters should properly come before the
Annual Meeting, it is intended that proxies in the accompanying form will be
voted in respect thereof in accordance with the judgment of the person or
persons voting the proxies, including matters relating to the conduct of the
Annual Meeting.
12
- ------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- ------------------------------------------------------------------------------
In order to be eligible for inclusion in the Corporation's proxy
materials for the 2001 annual meeting of stockholders, any stockholder
proposal to take action at such meeting must be received at the Corporation's
executive offices at 2828 Colby Avenue, Everett, Washington 98201 no later
than May 26, 2001. Any such proposal shall be subject to the requirements of
the proxy rules adopted under the Exchange Act.
The Corporation's Certificate of Incorporation provides that in order for
a stockholder to make nominations for the election of directors or proposals
for business to be brought before the Annual Meeting, a stockholder must
deliver notice of such nominations and/or proposals to the Secretary not less
than 30 nor more than 60 days prior to the date of the Annual Meeting;
provided that if less than 31 days' notice of the Annual Meeting is given to
stockholders, such notice must be delivered not later than the close of the
tenth day following the day on which notice of the Annual Meeting was mailed
to stockholders. Based on the date of the 2000 Annual Meeting, the
Corporation anticipates that, in order to be timely, shareholder nominations
or proposals intended to be made at the 2000 Annual Meeting must be made by
September 20, 2000. As specified in the Certificate of Incorporation, the
notice with respect to nominations for election of directors must set forth
certain information regarding each nominee for election as a director,
including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director, if elected, and certain information
regarding the stockholder giving such notice. The notice with respect to
business proposals to be brought before the Annual Meeting must state the
stockholder's name, address and number of shares of Common Stock held, and
briefly discuss the business to be brought before the Annual Meeting, the
reasons for conducting such business at the Annual Meeting and any interest of
the stockholder in the proposal.
- ------------------------------------------------------------------------------
MISCELLANEOUS
- ------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Corporation.
The Corporation will reimburse brokerage firms and other custodians, nominees
and fiduciaries for reasonable expenses incurred by them in sending proxy
material to the beneficial owners of the Corporation's Common Stock. In
addition to solicitations by mail, directors, officers and regular employees
of the Corporation and Bank may solicit proxies personally, by telegraph or
telephone without additional compensation.
The Corporation's Annual Report to Stockholders, including financial
statements, has been mailed to all stockholders of record at the close of
business on the Voting Record Date. Any stockholder who has not received a
copy of such Annual Report may obtain a copy by writing to the Secretary of
the Corporation. Such Annual Report is not to be treated as part of the proxy
solicitation material or as having been incorporated herein by reference.
A copy of the Form 10-K as filed with the SEC will be furnished without
charge to stockholders of record as of August 31, 2000 upon written request to
Lars H. Johnson, Secretary, Cascade Financial Corporation, 2828 Colby Avenue,
Everett, Washington 98201. Reports, proxy statements and other information
filed by the Corporation are also available on the Internet at the SEC's World
Wide Web site at http://www.sec.gov.
BY ORDER OF THE BOARD OF DIRECTORS
/s/LARS H. JOHNSON
LARS H. JOHNSON
Secretary
Everett, Washington
September 27, 2000
13
REVOCABLE PROXY
CASCADE FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
October 21, 2000
----------------
The undersigned hereby appoints the official proxy committee consisting
of all of the members of the Board of Directors of Cascade Financial
Corporation ("Corporation"), Everett, Washington, with full powers of
substitution, to act as attorneys and proxies for the undersigned, to vote all
shares of Common Stock of the Corporation which the undersigned is entitled to
vote at the Annual Meeting of Stockholders, to be held at the Corporation's
main office located at 2828 Colby Avenue, Everett, Washington, on Saturday,
October 21, 2000, at 10:00 a.m., and at any and all adjournments thereof, as
follows:
FOR VOTE WITHHELD
--- -------------
1. The election as directors of all nominees [ ] [ ]
listed below (except as marked to the
contrary below).
Dwayne Lane
G. Brandt Westover
Dennis R. Murphy
Ronald E. Thompson
INSTRUCTION: To withhold your vote for any individual
nominee, write the nominee's name on the line below.
FOR AGAINST ABSTAIN
--- ------- -------
2. To approve the appointment of KPMG, LLP, [ ] [ ] [ ]
as independent auditors for the fiscal
year ending June 30, 2001.
3. In their discretion, upon such other matters
as may properly come before the meeting.
The Board of Directors recommends a vote "FOR" the listed propositions.
- ------------------------------------------------------------------------------
This proxy will be voted as directed, but if no instructions are specified
this proxy will be voted "for" the proposals stated. 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 other business to be presented at the meeting. This proxy also
confers discretionary authority on the board of directors to vote with respect
to the election of any person as director where the nominee is unable to serve
or for good cause will not serve, and matters incident to the conduct of the
annual meeting.
- ------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Annual Meeting
or at any adjournment thereof and after notification to the Secretary of the
Corporation at the Annual Meeting of the stockholder's decision to terminate
this proxy, then the power of said attorneys and proxies shall be deemed
terminated and of no further force and effect.
The undersigned acknowledges receipt from the Corporation prior to the
execution of this Proxy, of the Notice of the Annual Meeting of Stockholders,
a Proxy Statement dated September 27, 2000 and the 2000 Annual Report to
Stockholders.
Dated: , 2000
--------------------
- ------------------------------- -----------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ------------------------------- -----------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in which this card
was mailed. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If a corporation, please sign in full
corporate name by the president or other authorized officer. If a
partnership, please sign in partnership name by authorized person. For joint
accounts, only one signature is required.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.