Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. 2)
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
OREGON TRAIL FINANCIAL CORP.
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(Name of Registrant as Specified in Its Charter)
OREGON TRAIL FINANCIAL CORP
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(Name of Person(s) Filing 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:
N/A
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(2) Aggregate number of securities to which transactions applies:
N/A
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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[ ] 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
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(2) Form, schedule or registration statement no.:
N/A
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(3) Filing party:
N/A
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(4) Date filed:
N/A
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[Oregon Trail Financial Corp. Letterhead]
September 5, 2001
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Oregon Trail Financial Corp. The meeting will be held at the Sunridge Inn and
Conference Center, One Sunridge Lane, Oregon, on Friday, September 28, 2001 at
10:00 a.m., Pacific Daylight Time.
The Notice of Annual Meeting of Stockholders and Proxy Statement
appearing on the following pages describe the formal business to be transacted
at the meeting. During the meeting, we will also update you on the operations
of the Company during the past year. In January and again in August of this
year, we provided you through our press releases with an overview of our
renewed strategic direction and guidance on our estimate for future earnings.
At the meeting, we will further address some strategic alternatives that have
been reviewed and considered by the Board of Directors with the assistance of
the investment banking firm of Keefe Bruyette & Wood ("KBW"). KBW has been
retained to examine the Company's performance and assess the implementation of
the new business plan that the Company announced earlier this year. KBW
analyzed the anticipated value to shareholders of (i) continuing the business
plan without additional shares repurchased, (ii) continuing the business plan
coupled with significant share repurchases, or (iii) selling the Company at
this time. Based in part on KBW's analysis and considering the anticipated
benefits of its current business plan, the Board of Directors concluded that
continuing the business plan with significant share repurchases presented the
best anticipated results to shareholders over other alternatives, at this
time. To date, the Company has repurchased 26% of its shares originally
outstanding, or 1,238,889 shares, and the Company currently has $18 million of
cash available to facilitate additional repurchases.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person and regardless of the number of shares
you own. To make sure your shares are represented, we urge you to complete
and mail the enclosed green proxy card. If you attend the meeting, you may
vote in person even if you have previously mailed a proxy card.
Directors and officers of the Company, as well as a representative of
Deloitte & Touche LLP, the Company's independent auditors, will be present to
respond to appropriate questions of shareholders.
For the reasons set forth in the proxy statement, the Board unanimously
recommends a vote "FOR" each of the nominees as directors specified under
Proposal I and "FOR" the ratification of auditors under Proposal II.
For shareholders holding shares in "street name," you should sign the
voting instruction card and return it in the special envelope provided.
We look forward to seeing you at the meeting.
Sincerely,
/s/Stephen R. Whittemore /s/Berniel L. Maughan
Stephen R. Whittemore Berniel L. Maughan
Chairman of the Board President and Chief Executive Officer
OREGON TRAIL FINANCIAL CORP.
2055 FIRST STREET
BAKER CITY, OREGON 97814
(541) 523-6327
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On September 28, 2001
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Oregon
Trail Financial Corp. ("Company") will be held at the Sunridge Inn and
Conference Center, One Sunridge Lane, Oregon, on Friday, September 28, 2001 at
10:00 a.m., Pacific Daylight Time, for the following purposes:
(1) To elect two directors of the Company;
(2) To approve the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending March 31, 2002; 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. Stockholders of record at the
close of business on August 16, 2001 are entitled to notice of and to vote at
the meeting and any adjournments or postponements thereof.
You are requested to complete and sign the enclosed form of proxy, which
is solicited by the Board of Directors, and to 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/ZANE F. LOCKWOOD
ZANE F. LOCKWOOD
CORPORATE SECRETARY
Baker City, Oregon
September 5, 2001
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY 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.
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PROXY STATEMENT
OF
OREGON TRAIL FINANCIAL CORP.
2055 FIRST STREET
BAKER CITY, OREGON 97814
(541) 523-6327
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ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 28, 2001
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Oregon Trail Financial Corp. ("Company")
to be used at the Annual Meeting of Stockholders of the Company ("Meeting").
The Company is the holding company for Pioneer Bank, A Federal Savings Bank
("Savings Bank"). The Meeting will be held at the Sunridge Inn and Conference
Center, One Sunridge Lane, Oregon, on Friday, September 28, 2001 at 10:00
a.m., Pacific Daylight Time. This Proxy Statement and the enclosed proxy card
are being first mailed to shareholders on or about September 5, 2001.
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VOTING AND PROXY PROCEDURE
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Shareholders Entitled to Vote. Stockholders of record as of the close of
business on August 16, 2001 ("Voting Record Date") are entitled to one vote
for each share of common stock ("Common Stock") of the Company then held. At
the close of business the Voting Record Date, the Company had 3,576,411 shares
of Common Stock entitled to vote.
As provided in the Company's Articles of Incorporation, record holders of
the Company's Common Stock who beneficially own, either directly or
indirectly, in excess of 10% of the Company's outstanding shares are not
entitled to any vote in respect of the shares held in excess of the 10% limit.
If you are a beneficial owner of Company Common Stock held by a broker,
bank or other nominee (i.e., in "street name"), you will need proof of
ownership to be admitted to the Meeting. A recent brokerage statement or
letter from a bank or broker are examples of proof of ownership. If you want
to vote your shares of Company Common Stock held in street name in person at
the meeting, you will have to get a written proxy in your name from the
broker, bank or other nominee who holds your shares.
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 Meeting. Abstentions and broker
non-votes will be counted as shares present and entitled to vote at the
Meeting for purposes of determining the existence of a quorum.
Proxies; Proxy Revocation Procedures. The Board of Directors solicits
proxies so that each shareholder has the opportunity to vote on the proposals
to be considered at the Meeting. When the green 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 FOR the nominees for directors set forth
below and FOR the approval of the appointment of Deloitte & Touche LLP as
independent auditors. If a shareholder attends the Meeting, he or she may
vote by ballot.
Stockholders who execute proxies retain the right to revoke them at any
time. Proxies may be revoked by written notice delivered in person or mailed
to the Secretary of the Company or by filing a later dated proxy prior to a
vote being taken on a particular proposal at the Meeting. Attendance at the
Meeting will not automatically revoke a proxy, but a shareholder in attendance
may request a ballot and vote in person, thereby revoking a prior granted
proxy.
If your Company Common Stock is held in street name, you will receive
instructions from your broker, bank or other nominee that you must follow in
order to have your shares voted. If you wish to change your voting
instructions after you have returned your voting instruction form to your
broker or bank, you must contact your broker or bank.
Participants in the Pioneer Bank, A Federal Savings Bank ESOP. If a
stockholder is a participant in the Pioneer Bank, A Federal Savings Bank
Employee Stock Ownership Plan ("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 instruct the
trustees as to the manner in which shares of Common Stock allocated to the
participant's plan account are to be voted. The instructions are confidential
and will not be disclosed to the Company. 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 in the same proportion as shares for
which the trustees have received voting instructions. The deadline for
returning your voting instructions to the trustees is September 20, 2001.
Vote Required. Abstentions and "broker non-votes" (which occur if a
broker or other nominee does not have discretionary authority and has not
received voting instructions from the beneficial owner with respect to the
particular item) are counted for purposes of determining the presence or
absence of a quorum for the transaction of business.
The directors to be elected at the Meeting will be elected by a plurality
of the votes cast by shareholders present in person or by proxy and entitled
to vote. Votes may be cast for or withheld from each nominee for election as
director. Votes that are withheld and broker non-votes will have no effect on
the outcome of the election because directors will be elected by a plurality
of the votes cast. The Company's Articles of Incorporation prohibits
stockholders from cumulating their votes for the election of directors.
Approval of the appointment of independent auditors requires the
affirmative vote of a majority of the outstanding shares of Common Stock
present in person or by proxy and entitled to vote at the Meeting. In
determining whether such proposal has received the requisite number of
affirmative votes, abstentions will be counted and will have the same effect
as a vote against the proposal; broker non-votes will be disregarded and will
have no effect on the outcome of the vote.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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Persons and groups who beneficially own in excess of 5% of the Company's
Common Stock are required to file certain reports with the Securities and
Exchange Commission ("SEC"), and provide a copy to the Company, disclosing
such ownership pursuant to the Securities Exchange Act of 1934, as amended
("Exchange Act"). Based on such reports, the following table sets forth, at
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,
certain information as to shares of Common Stock beneficially owned by the
Company's directors, "named executive officers," and all directors and
executive officers as a group.
Number of Shares Percent of Shares
Name Beneficially Owned (1) Outstanding
- ---- ---------------------- -----------
Beneficial Owners of More Than 5%
Pioneer Bank, A Federal Savings Bank(2) 359,673 10.06%
Employee Stock Ownership Plan Trust
Joseph Stilwell(3) 295,000 8.25
26 Broadway, 23rd Floor
New York, NY 10004
(table continued on following page)
2
Number of Shares Percent of Shares
Name Beneficially Owned (1) Outstanding
- ---- ---------------------- -----------
Beneficial Owners of More Than 5% (continued)
Westport Asset Management, Inc.(4) 232,500 6.50%
253 Riverside Avenue
Westport, Connecticut 06880
Brandes Investment Partners, L.P.(5) 199,285 5.57
12750 High Bluff Drive
San Diego, California 92130
Directors(6)
John Gentry 36,126 1.01
John A. Lienkaemper 36,351 1.02
Albert H. Durgan 31,643 *
Edward H. Elms 45,195 1.26
Stephen R. Whittemore 41,126 1.15
Charles H. Rouse 41,126 1.15
Named Executive Officers(6)(7)
Berniel L. Maughan 10,000 *
Zane F. Lockwood 35,153 *
All Executive Officers and
Directors as a Group (eight persons) 276,720 7.74%
- ------------
* Less than 1 percent of shares outstanding.
(1) 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. The table includes exercisable
stock options under the Company's 1998 Stock Option Plan ("Option Plan")
in the amounts of 11,737 each for Messrs. Gentry, Lienkaemper, Durgan,
Elms, Whittemore and Rouse. The table also includes exercisable stock
options under the Option Plan in the amounts of 10,000 and 18,779 for
Messrs. Maughan and Lockwood, respectively.
(2) Under the terms of the ESOP, the trustees will vote unallocated shares
and allocated shares for which no voting instructions are received in the
same proportion as shares for which the trustees have received voting
instructions from participants. As of the Voting Record Date, 159,915
shares have been allocated to participants' accounts. The trustees of the
ESOP are William H. Winegar, Michelle Kaseburg, Anne Raffetto and
Jonathan McCreary.
(3) Based on a SEC Schedule 13D, dated August 21, 2001, that discloses shared
voting and dispositive power as to 295,000 shares.
(4) Based on a SEC Schedule 13G, dated February 14, 2001, that discloses
shared voting and dispositive power as to 232,500 shares.
(5) Based on a SEC Schedule 13G dated February 11, 1999, that discloses
shared voting and dispositive power as to 199,285 shares.
(footnotes continued on following page)
3
(6) Includes unvested shares in the Company's Management Recognition and
Development Plan ("MRDP"). Participants in the MRDP exercise all rights
incidental to ownership, including voting rights.
(7) SEC regulations define the term "named executive officers" to include all
individuals serving as chief executive officer during the most recently
completed fiscal year, regardless of compensation level, and the four
most highly compensated executive officers, other than the chief
executive officer, whose total annual salary and bonus for the last
completed fiscal year exceeded $100,000. Messrs. Maughan and Lockwood
were the Company's only "named executive officers" during the fiscal year
ended March 31, 2001.
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Company's Board of Directors consists of six members. In accordance
with the Company's Articles of Incorporation, the Board is divided into three
classes with three-year staggered terms, with approximately one-third of the
directors elected each year. The Board of Directors has nominated John
Gentry and John A. Lienkaemper for election as directors, each to serve for a
three-year period or until their respective successors have been duly elected
and qualified. Messrs. Gentry and Lienkaemper are both current members of the
Board of Directors of the Company and each has consented to being named in
this Proxy Statement and to serving as a director on the Board if elected.
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 adopt a resolution to amend the Bylaws and reduce the
size of the Board. At this time the Board of Directors knows of no reason why
any nominee might be unavailable to serve.
The Board of Directors recommends a vote "FOR" the election of Messrs.
Gentry and Lienkaemper.
The following table sets forth certain information regarding the nominees
for election at the Meeting, as well as information regarding those directors
continuing in office after the Meeting.
Year First
Elected or
Appointed Term to
Name Age(1) Director (2) Expire
- ---- ------ ------------ ------
NOMINEES
John Gentry 53 1992 2001(3)
John A. Lienkaemper 64 1979 2001(3)
CONTINUING DIRECTORS
Albert H. Durgan 70 1985 2002
Edward H. Elms 53 1986 2002
Stephen R. Whittemore 51 1983 2003
Charles H. Rouse 55 1991 2003
(1) As of March 31, 2001.
(2) Includes prior service on the Board of Directors of the Savings Bank.
Each member of the Board of Directors of the Company is also a member of
the Board of Directors of the Savings Bank.
(3) Each nominee has been nominated to serve for a three-year period or until
their respective successors have been duly elected and qualified.
4
The present principal occupation and other business experience during the
last five years of each nominee for election and each director continuing in
office is set forth below:
John Gentry has been President and General Manager of Gentry Ford Sales,
Inc., an automobile dealership located in Ontario, Oregon, since 1985. He
served as Vice President of that company between 1972 and 1985. Mr. Gentry
has a Bachelor of Science degree in Business/Journalism from the University of
Oregon. He has been a Director and President of the Ontario, Oregon, Chamber
of Commerce, a Director of the City of Ontario, Oregon, Budget Board, a
Director and President of the Oregon Automobile Dealers Association, and a
Director of the Western States Ford Dealer Advertising Association.
John A. Lienkaemper has been a senior auditor, consultant and U.S. Safety
Coordinator for The Loewen Group, which owns and operates funeral homes,
cemeteries, and crematories, since 1993. Mr. Lienkaemper was a consultant for
Malletta-Verton Partnership, a funeral home operator, from 1989 to 1993.
Prior to 1989, he owned and operated Lienkaemper Chapels located in Nyssa,
Ontario, and Vale, Oregon. Mr. Lienkaemper has a Bachelor of Science in
Geology from Oregon State University.
Albert H. Durgan is retired from the Savings Bank after 34 years of
service. He served as President of the Savings Bank from 1986 to 1992. Prior
to being President, he held the position of Executive Vice President for seven
years, Branch Manager for 18 years, and also served in other front-line and
back office positions. Mr. Durgan has a Bachelor of Science degree in Real
Estate and Finance from the University of Oregon.
Edward H. Elms has been the owner of P&E Distributing Company, a beverage
distributor, located in Baker City, Oregon, for 29 years. He also owns and
manages commercial and residential rental properties in the Baker City area.
Mr. Elms was the co-owner of Heritage Chevrolet, a car dealership located in
Baker City, Oregon, from 1996 to 1999. Mr. Elms has a degree in Diesel
Technology from the Oregon Institute of Technology.
Stephen R. Whittemore has been the owner of BesTruss, an engineered roof
systems company, since 1996. He was a partner in Wallowa Lake Tram, Inc. from
1983 to 2001, and was the owner of La Grande Lumber Company, a distributor of
building materials, from 1971 to 1996. Mr. Whittemore has a Bachelor of
Science degree in Economics from Oregon State University.
Charles H. Rouse has been employed by Norris Beggs & Simpson Realtors as
Vice President, Corporate Services, since January of 2001. Prior to 2001, Mr.
Rouse was an authorized Sears dealer in Baker City, Oregon, and a property
developer and manager since 1995. He was the owner of Rouse's Home
Furnishings, Baker City, Oregon, from 1985 to 1995. He has been a Director of
the Oregon Tourism Commission and the Western Building Materials Association.
Mr. Rouse has a Bachelor of Science degree in Biology and a Masters of
Business Administration from Oregon State University.
The Stilwell Group and Joseph Stilwell have advised the Company of their
intent to nominate one or both of Kevin D. Padrick and Neil R. Bryant to the
Board of Directors at the Meeting. The Stilwell Group has filed definitive
proxy materials to solicit proxies for the election of Kevin D. Padrick to the
Board of Directors at the Meeting. YOUR BOARD OF DIRECTORS URGES YOU TO
RETURN ONLY MANAGEMENT'S GREEN PROXY CARD, WHICH IS ENCLOSED, AND TO VOTE
"FOR" THE ELECTION OF EACH OF THE BOARD'S NOMINEES, JOHN GENTRY AND JOHN A.
LIENKAEMPER.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Boards of Directors of the Company and the Savings Bank conduct their
business through meetings of the Boards and through their committees. During
the fiscal year ended March 31, 2001, the Board of Directors of the Company
held five special meetings and four regularly scheduled meetings, and the
Board of Directors of the Savings
5
Bank held one special meeting and 12 regularly scheduled meetings. No
director of the Company or the Savings Bank attended fewer than 75% of the
total meetings of the Boards and committees on which such person served during
this period.
Committees of the Company's Board. The Company's Board of Directors has
established Audit and Nominating Committees.
The Audit Committee consists of Directors Elms (Chairman), Gentry and
Durgan. It receives and reviews all reports prepared by the Company's
external and internal auditors. The internal auditor reports monthly to the
Audit Committee. The Audit Committee met five times during the fiscal year
ended March 31, 2001.
The full Board of Directors acts as a Nominating Committee for the annual
selection of management's nominees for election as directors of the Company.
The full Board of Directors met once in its capacity as Nominating Committee
on July 24, 2001.
Committees of the Savings Bank's Board. The Savings Bank's Board of
Directors has established Personnel and Compensation, Audit and Nominating
Committees, among others.
The Personnel Committee, consisting of Directors Rouse (Chairman), Elms
and Lienkaemper, is responsible for all personnel issues, including
recommending compensation levels for all employees and senior management to
the Board of Directors. The Personnel Committee meets at least twice a year
and met four times during the year ended March 31, 2001.
The Audit Committee, consisting of Directors Elms (Chairman), Gentry and
Durgan, receives and reviews all reports prepared by the Savings Bank's
external auditor and the internal audit function. The Audit Committee met
four times during the year ended March 31, 2001.
The full Board of Directors of the Savings Bank acts as a Nominating
Committee for the annual selection of its nominees for election as directors.
The full Board of Directors met once in its capacity as Nominating Committee
on July 24, 2001.
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DIRECTORS' COMPENSATION
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Fees
The Company and the Savings Bank each pay fees to its directors. Each
director of the Company receives a quarterly fee of $1,000, except that the
Chairman of the Board receives a quarterly fee of $1,250. Each director of
the Savings Bank, other than the Chairman of the Board, receives a monthly fee
of $1,075. The Chairman of the Board of the Savings Bank receives a monthly
fee of $1,125. Each director receives an additional $125 per month for
service on the Board of Directors of Pioneer Development Corporation, a
wholly-owned subsidiary of the Savings Bank. The Company and the Savings Bank
paid total fees to directors of $165,000 for the fiscal year ended March 31,
2001.
Directors Emeritus Plan
The Savings Bank maintains the Pioneer Bank Director's Plan which confers
director emeritus status on a director who retires at or after attaining age
70 with 10 or more years of service. Under the Director's Plan, a director
emeritus receives a fee equal to the greater of $800 or 65% of the fee payable
to regular Board members for attendance at monthly Board meetings. The fee is
payable for the life of the director emeritus. As a condition of receipt of
benefits under the Director's Plan, a director emeritus is expected to be
available to advise and consult with management of the Savings Bank, represent
and promote the interests of the Savings Bank in its primary market area, and
refrain from business activities that are competitive with or contrary to the
interests of the Savings Bank. An additional feature of
6
the Director's Plan provides that, in the event of a change in control of the
Company or the Savings Bank (as defined in the Director's Plan), each active
director would be treated as a director emeritus on the effective date of the
change of control. Within 30 days of such date, each director would receive a
payment equal to the present value of seven times the annual fees payable to
the director at the effective time of the change in control. The present
value calculation is based on the applicable federal rate as published by the
Internal Revenue Service. Assuming a change in control had occurred at March
31, 2001, the aggregate amount payable under the Director's Plan to all
current directors would be approximately $326,000.
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EXECUTIVE COMPENSATION
- ------------------------------------------------------------------------------
Summary Compensation Table
The following information is provided for Messrs. Maughan and Lockwood.
Long-term Compensation
Annual Compensation(1) Awards
-------------------------- -------------------------
Restricted Number All
Name and Stock of Other Annual
Position Year Salary($) Bonus Awards($)(2) Options(3) Compensation(4)
- -------- ---- --------- ----- ------------ ---------- ---------------
<s> <c> <c> <c> <c> <c> <c>
Berniel L. Maughan(5) 2001 $124,039 $25,000 $ -- 50,000 $ 3,000
President and
Chief Executive Officer
Zane F. Lockwood(6) 2001 96,000 -- -- -- 27,758
Executive Vice 2000 84,224 -- -- -- 19,661
President and 1999 76,324 20,000 209,386 46,948 4,654
Corporate Secretary
- ---------------
(1) Does not include certain benefits, the aggregate amounts of which do not exceed 10% of total annual
salary and bonus.
(2) Represents the value of restricted stock awards at October 8, 1998, the date of grant, for Mr.
Lockwood, pursuant to the MRDP. The MRDP was approved by stockholders at the 1998 Annual Meeting of
Stockholders and provides for the award of Common Stock in the form of restricted stock awards to
directors, officers and key employees. Dividends are paid on such awards if and when declared and paid
by the Company on the Common Stock. At March 31, 2001, the value of the unvested awards (which vest
pro rata over the remaining three year period) for Mr. Lockwood was approximately $158,448 (11,267
shares at $14.063 per share).
(3) For Mr. Maughan, represents the number of options granted on May 22, 2000, which vest at a rate of 20%
per year over a five year period. For Mr. Lockwood, represents the number of options granted on
October 8, 1998, which vest at a rate of 20% per year over a five year period.
(4) Consists of employer 401(k) plan contributions, ESOP shares allocated but not necessarily vested and
life insurance premium benefit. ESOP shares allocated are valued at the Company's Common Stock share
price on the close of business on March 31, 2001 ($14.063). Mr. Maughan received a $3,000 relocation
benefit during the fiscal year ended March 31, 2001.
(5) On May 23, 2000, Berniel L. Maughan was appointed by the Board of Directors to become the President and
Chief Executive Officer of the Company and the Savings Bank.
(6) Prior to Mr. Maughan's appointment as President and Chief Executive Officer, Mr. Lockwood, Executive
Vice President and Corporate Secretary of the Company and the Savings Bank, was appointed by the Boards
of Directors of the Company and the Savings Bank as Acting President and Chief Executive Officer.
7
Option Grants in Last Fiscal Year. The Company maintains the Option Plan, which provides discretionary
awards of options to purchase Common Stock to officers, directors and employees as determined by the Board
of Directors. The Option Plan was approved by stockholders at the 1998 Annual Meeting of Stockholders. The
following table lists all grants of options under the Option Plan to Mr. Maughan for the year ended March
31, 2001 and contains certain information about the potential value of the options based upon certain
assumptions as to the appreciation of the Company's Common Stock over the life of the option. No options
were granted to Mr. Lockwood during the year ended March 31, 2001.
Potential Realizable
Value at Assumed
Number of Percent of Annual Rates of Stock Price
Securities Total Options Appreciation for
Underlying Granted to Option Term(2)
Options Employees in Exercise Expiration ---------------------------
Name Granted (1) Year Price Date 5%($) 10%($)
- ---- ----------- ---- ----- ---- ---------------------------
<s> <c> <c> <c> <c> <c> <c>
Berniel L. Maughan 50,000 75.47% $9.125 5/22/10 $642,500 $1,224,500
- ------------------
(1) Each option grant reported in the table vests at the rate of 20% per annum. Options will become
immediately exercisable in the event of a change in control of the Company.
(2) The dollar gains under these columns result from calculations required by the SEC's rules and are not
intended to forecast future price appreciation of the Common Stock of the Company. 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
executives to realize the potential values set forth in the 5% and 10% columns in the table, the price
per share of the Company's Common Stock would be approximately $21.97 and $33.61, respectively, as of
the expiration of the options granted on May 22, 2000.
Option Exercise/Value Table. The following table sets forth certain information about outstanding
options under the Option Plan held by Messrs. Maughan and Lockwood.
Number of
Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Shares at Fiscal Year End(#) at Fiscal Year End($)(1)
Acquired on Value -------------------------- --------------------------
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ----------- ----------- ------------- ----------- -------------
<s> <c> <c> <c> <c> <c> <c>
Berniel L. Maughan -- -- -- 50,000 -- $246,900
Zane F. Lockwood -- -- 18,779 28,169 $ 54,703 $ 82,056
- --------------
(1) Value of unexercised in-the-money options equals market value of shares covered by in-the-money options
on March 31, 2001 less the option exercise price. Options are in-the-money if the market value of the
shares covered by the options is greater than the option exercise price.
Employment Agreements. The Company (the "Employer") entered into
employment agreements ("Employment Agreement") with Messrs. Maughan and
Lockwood (individually, the "Executive") on May 22, 2000 and April 1, 2000,
respectively, which were subsequently amended on February 12, 2001. The
amendments to the Employment Agreements were made to provide the benefits to
the Executive intended when the Board of Directors adopted the initial
Employment Agreements.
Mr. Maughan's Employment Agreement has an initial four-year term, which
may be extended annually for an additional year at the discretion of the Board
of Directors of the Company. Mr. Lockwood's Employment Agreement was for an
initial term of 20 months until June 1, 2001, and may be extended annually for
an additional year at the discretion of the Board of Directors of the Company.
The Employment Agreements provide that the Executive's base salary is subject
to annual review by the Board of Directors. The current base salaries for
Messrs. Maughan and Lockwood are $150,000 and $96,000, respectively. The
Employment Agreements are terminable by the
8
Employer at any time, by the Executive if the Executive is assigned duties
inconsistent with his initial position, duties, responsibilities and status,
or upon the occurrence of certain events specified by federal regulations.
The Employment Agreements provide for liquidated damages in the event of
involuntary termination, not involving a change in control. Under this
provision, Mr. Maughan would receive the lesser of three years' base salary or
the base salary for the remaining term of his Employment Agreement, plus the
average bonus paid over the last two fiscal years, all payable monthly. Mr.
Lockwood would receive the lesser of 18 month's base salary or the base salary
for the remaining term of his Employment Agreement, payable monthly. The
Executives would also be entitled to health and other insurance coverage as
currently provided. All of these payments would be reduced, dollar for
dollar, by any earnings or insurance the Executive receives over this same
time period from any other employment.
The Employment Agreements also provide for severance payments and other
benefits in the event of involuntary termination of employment in connection
with any change in control of the Employer. Severance payments also will be
provided on a similar basis in connection with a voluntary termination of
employment where, subsequent to a change in control, the Executive is assigned
duties inconsistent with his position, duties, responsibilities and status
immediately prior to such change in control. The term "change in control" is
defined in the agreement as having occurred when, among other things, (a) a
person other than the Company purchases shares of Common Stock pursuant to a
tender or exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities, (c) a majority of the membership of the Board of
Directors changes as the result of a contested election, or (d) shareholders
of the Company approve a merger, consolidation, sale or disposition of all or
substantially all of the Company's assets, or a plan of partial or complete
liquidation.
In the event of the Executive's termination six months preceding, at the
time of, or within 24 months following a change of control, the Executives
would be entitled to receive the liquidated damages described above and a lump
sum cash payment equal to 2.99 times the Executive's base amount of
compensation, minus the acceleration and lapse value of any unvested stock
options. Assuming that a change in control had occurred at March 31, 2001 and
that the Executives received a lump sum cash payment under the change in
control provisions of the Employment Agreements, Messrs. Maughan and Lockwood
would have been entitled to a payment of approximately $448,500 and $287,040,
respectively. Section 280G of the Code provides that severance payments that
equal or exceed three times the individual's base amount are deemed to "excess
parachute payments" if they are contingent upon a change in control.
Individuals receiving excess parachute payments are subject to a 20% excise
tax on the amount of such excess payments. The Employment Agreements provide
that in the event any payments or benefits provided to the Executives
constitute excess parachute payments, the Employer will pay the Executive in
cash any additional amounts equal to the amount needed to ensure that the
amount of such payment and the value of such benefits received by the
Executive, net of any taxes, equals the amount of such payments and value of
such benefits as the Executive would receive in the absence of any excise
taxes.
The Employment Agreements restrict the Executive's right to compete
against the Employers for a period of one year from the date of termination of
the Employment Agreement if the Executive voluntarily terminates employment,
except in the event of a change in control.
- ------------------------------------------------------------------------------
AUDIT COMMITTEE MATTERS
- ------------------------------------------------------------------------------
Audit Committee Charter
The Audit Committee operates pursuant to a Charter approved by the
Company's Board of Directors. The Audit Committee reports to the Board of
Directors and is responsible for overseeing and monitoring financial
accounting and reporting, the system of internal controls established by
management and the audit process of the Company. The Audit Committee Charter
sets out the responsibilities, authority and specific duties of the Audit
9
Committee. The Charter specifies, among other things, the structure and
membership requirements of the Committee, as well as the relationship of the
Audit Committee to the independent accountants, the internal audit department,
and management of the Company. A copy of the Audit Committee Charter is
attached to this Proxy Statement as Appendix A.
Report of the Audit Committee
In connection with the specific activities performed by the Committee in
its oversight role, it has issued the following report:
(1) The Audit Committee has reviewed and discussed the audited financial
statements as of and for the year ended March 31, 2001 with
management of the Company.
(2) The Audit Committee has discussed with the independent auditors the
matters required to be discussed by SAS 61 and SAS 90.
(3) The Audit Committee has received from the independent accountants,
as required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committee, (i) a written
disclosure, indicating all relationships, if any, between the
independent auditor and its related entities and the Company and its
related entities which, in the auditor's professional judgment,
reasonably may be thought to bear on the auditor's independence, and
(ii) a letter from the independent auditor confirming that, in its
professional judgment, it is independent of the Company; and the
Audit Committee has discussed with the auditor the auditor's
independence from the Company.
Based on the review and discussions referred to in paragraphs (1) through
(3) above, the Audit Committee recommended to the Board of Directors that the
audited financial statements should be included in the Company's Annual Report
on Form 10-K for the fiscal year ended March 31, 2001, for filing with the
SEC.
The Audit Committee:
Edward H. Elms (Chairman)
John Gentry
Albert H. Durgan
Independence and Other Matters
Each member of the Audit Committee is "independent," as defined under the
Nasdaq Stock Market Rules. The Audit Committee members do not have any
relationship to the Company that may interfere with the exercise of their
independence from management and the Company. None of the Audit Committee
members are current officers or employees of the Company or its affiliates.
- ------------------------------------------------------------------------------
COMPENSATION COMMITTEE MATTERS
- ------------------------------------------------------------------------------
Notwithstanding anything to the contrary set forth in any of the
Company'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 of the Compensation
Committee and Performance Graph shall not be incorporated by reference into
any such filings.
Report of the Compensation Committee. Under rules established by the
SEC, the Company is required to provide certain data and information in regard
to the compensation and benefits provided to the Company's Chief Executive
Officer and other
10
executive officers. The disclosure requirements for the Chief Executive
Officer and other executive officers include the use of tables and a report
explaining the rationale and considerations that led to the fundamental
executive compensation decisions affecting those individuals.
The Personnel and Compensation Committee ("Committee") of the Savings
Bank's Board of Directors sets and administers all policies, as defined by the
SEC, that govern the total compensation, including long-term compensation of
the Company's Chief Executive Officer and other executive officers. None of
the members of the Committee is an employee of the Company. The Committee's
policy is to offer executive officers competitive compensation and benefits
that will permit the Company to attract and retain highly qualified
individuals and to motivate such individuals by rewarding them based on the
Company's performance.
Currently, the Company's executive compensation package consists
primarily of base salary and bonus awards. Individual executive salaries are
established based on the individual's subjective performance evaluation, the
Company's performance, and market parity. The Committee uses compensation and
bonus survey data from the Oregon Banker's Association, America's Community
Bankers, and the Washington Financial Industry for its market comparison. The
data compares the Company's executive officers to those similarly situated in
other similarly sized financial institutions in the region. The compensation
of Mr. Maughan, the Company's President and Chief Executive Officer, and Mr.
Lockwood, the Company's Executive President and Corporate Secretary, is
determined in the same manner as other executive officers as described above.
Therefore, Messrs. Maughan's and Lockwood's compensation is largely dependent
upon their individual performance, the Company's overall performance, and
market comparison.
Bonuses may be awarded to executive and other officers of the Company
based on their performance and that of the Company. The Committee determines
the appropriate level of bonuses using the Committee's assessment of each
executive officer's contributions to the Company's success. More
specifically, the Company's return on average assets, return on equity,
corporate management, and staffing controls all are used in this assessment.
The Company has implemented a Stock Option Plan and MRDP as part of its
overall compensation to executive officers.
The Company provides benefits to its executive officers that are
generally available to other Company officers and employees. This includes a
401(k) profit sharing plan, an employee stock ownership plan, and a
non-qualified deferred compensation plan for key executives. A committee
appointed by the Board of Directors administers the plans. Messrs. Maughan
and Lockwood participate in the 401(k) profit sharing plan and the employee
stock ownership plan.
The Committee has recognized that the efforts of key Company executives
are, and will continue to be, paramount to its success. Therefore, the Board
of Directors approved, based upon the Committee's recommendation, the adoption
of an employment agreement with Mr. Maughan, which is designed to retain him
and allow him a concerted focus on Company operations. The Company has also
entered into an employment agreement with Mr. Lockwood. The terms of Messrs.
Maughan's and Lockwood's employment agreements are discussed under "Executive
Compensation -- Employment Agreements."
The Committee has reviewed the total compensation of all executive
officers during fiscal year 2001 and has concluded that their compensation is
reasonable and consistent with the Company's compensation philosophy and
industry practice.
PERSONNEL AND COMPENSATION COMMITTEE
/s/ Charles H. Rouse (Chairman)
/s/ John A. Lienkaemper
/s/ Edward H. Elms
11
Compensation Committee Interlocks and Insider Participation. No
executive officer of the Company or the Savings Bank has served as a member of
the compensation committee of another entity, one of whose executive officers
served on the Personnel Committee. No executive officer of the Company or the
Savings Bank has served as a director of another entity, one of whose
executive officers served on the Personnel Committee. No executive officer of
the Company or the Savings Bank has served as a member of the compensation
committee of another entity, one of whose executive officers served as a
director of the Company or the Savings Bank.
Performance Graph. The following graph compares the cumulative total
shareholder return on the Company's Common Stock with the cumulative total
return on the Nasdaq U.S. Companies Index and a peer group of the SNL
Securities, Inc. $250 Million to $500 Million Asset Thrift Index. Total
return assumes (i) the reinvestment of all dividends and (ii) the value of the
investment in the Company's Common Stock and each index was $100 at the close
of trading on October 6, 1997, the date on which the Company's Common Stock
began trading on the Nasdaq National Market.
[graph appears here]
Period Ended
-----------------------------------------------------------------------------------
Index 10-06-97 03/31/98 09/30/98 03/31/99 09/30/99 03/31/00 09/30/00 03/31/01
- ----- -------- -------- -------- -------- -------- -------- -------- --------
<s> <c> <c> <c> <c> <c> <c> <c> <c>
Oregon Trail
Financial Corp. $100.00 106.26 78.31 78.26 68.75 54.99 73.73 90.29
NASDAQ - Total U.S.* 100.00 107.16 99.35 144.79 162.33 269.30 215.49 107.80
SNL $250MM to $500MM
Thrift Index 100.00 116.82 92.65 99.50 115.26 104.63 122.28 139.58
*Source: CRSP, Center for Research in Security Prices, Graduate School of Business, The University of
Chicago, 2001. Used with permission. All rights reserved. crsp.com
12
- ------------------------------------------------------------------------------
LEGAL PROCEEDINGS WITH THE STILWELL GROUP
- ------------------------------------------------------------------------------
The Company is a party to several legal proceedings involving a dissident
shareholder. Stilwell Associates, L.P. has filed four separate suits or
proceedings against the Company and/or individual directors. The first was a
mandamus proceeding brought in Baker County, Oregon under Oregon's shareholder
inspection statute. Stilwell petitioned the Court to require the Company to
produce certain shareholder records (the Cede & Co. and NOBO lists) prepared
and maintained by third parties. The mandamus proceeding was dismissed on
technical grounds, and the court ordered Stilwell Associates, L.P. to pay the
Company's costs and attorney fees. The Company's fee petition is now before
the Court. Stillwell has already served notice that it is appealing the award
to the Oregon Court of Appeals.
Stilwell Associates, L.P. commenced a second mandamus proceeding after
the first was dismissed. The Court recently ruled that the document requests
do fall within the state shareholder inspection statute, and ordered the
Company to produce the documents under specified terms and to pay Stilwell
Associates, L.P.'s attorney fees. The Company has produced the documents and
will not appeal the Court's ruling.
Stilwell Associates, L. P. has also brought a state action in Multnomah
County, Oregon against Charles Henry Rouse to remove him from the Company's
Board of Directors. Stilwell Associates, L.P. alleges that Mr. Rouse violated
the Board's residency requirements. After taking the testimony of Stilwell's
investigator under oath, Mr. Rouse filed a motion to compel production of
documents. The motion was denied. Mr. Rouse then filed a motion for summary
judgment against Stilwell Associates, L.P., which will be argued on September
12, 2001.
The fourth action is a derivative suit brought in federal court in
Portland, Oregon against both the Company and director Edward H. Elms.
Stilwell Associates, L.P. alleges that Mr. Elms perjured himself in a
deposition given in the Rouse case because his testimony allegedly did not
match that of the other Company directors, and that Mr. Elms should therefore
be removed from the Board of Directors. The Company and Mr. Elms moved to
dismiss the case against them. Stilwell Associates, L.P. responded with a
motion to amend and supplement its claims. Both motions were heard on August
23, 2001. Stilwell Associates, L.P. asked for leave to submit additional
briefs before the federal magistrate rules on the motions. The Court allowed
time for each party to file one legal memorandum regarding subject matter
jurisdiction.
The Company and Mr. Elms also denied the claims against them and filed
counterclaims and third-party claims against Joseph Stilwell, Stilwell
Associates, L.P., Stilwell Value LLC and Stilwell Value Partners II, L.P. (the
"Stilwell Group"). The Company alleges that the Stilwell Group made false and
misleading statements under federal securities laws in its Schedule 13D
filings with the Securities and Exchange Commission; both the Company and Mr.
Elms also alleged that certain of the Stilwell Group's statements were
defamatory. The Stilwell Group moved to dismiss the counterclaims and third-
party claims or, in the alternative, for summary judgment on these claims. The
defamation claims were dismissed with prejudice by agreement of the parties.
The alternative motions were also heard on August 23, 2001. The Court has not
yet ruled on these motions.
Pursuant to the Company's Articles of Incorporation and Bylaws and in
accordance with Oregon law, the Company is providing defense costs for both
directors. Mr. Rouse is represented by the Company's counsel. Mr. Elms has
separate counsel.
- ------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
- ------------------------------------------------------------------------------
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than 10% of any registered
class of the Company'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 Company with
copies of all Section 16(a) forms they file.
13
Based solely on its review of the copies of such forms it has received
and written representations provided to the Company by the above referenced
persons, the Company believes that during the fiscal year ended March 31, 2001
all filing requirements applicable to its reporting officers, directors and
greater than 10% shareholders were properly and timely complied with.
- ------------------------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT
- ------------------------------------------------------------------------------
Federal regulations require that all loans or extensions of credit to
executive officers and directors of insured financial institutions must be
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 must not involve more than the normal risk of repayment or
present other unfavorable features. The Company's subsidiary financial
institution is therefore prohibited from making any new loans or extensions of
credit to executive officers and directors at different rates or terms than
those offered to the general public, except for loans made pursuant to
programs generally available to all employees, and has adopted a policy to
this effect. In addition, loans made to a director or executive officer in an
amount that, when aggregated with the amount of all other loans to such person
and his or her related interests, are in excess of the greater of $25,000 or
5% of the Savings Bank's capital and surplus (up to a maximum of $500,000)
must be approved in advance by a majority of the disinterested members of the
Board of Directors. At March 31, 2001, loans to directors and executive
officers totalled approximately $1.2 million.
- ------------------------------------------------------------------------------
PROPOSAL II -- APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
- ------------------------------------------------------------------------------
Deloitte & Touche LLP served as the Company's independent auditors for
the calendar year ended March 31, 2001. The Board of Directors has appointed
Deloitte & Touche LLP as independent auditors for the fiscal year ending March
31, 2002, subject to approval by stockholders. A representative of Deloitte &
Touche LLP is expected to be present at the Meeting to respond to
stockholders' questions and will have the opportunity to make a statement if
he or she so desires.
Audit Fees
The aggregate fees billed to the Company by Deloitte & Touche LLP for
professional services rendered for the audit of the Company's financial
statements for fiscal 2001 and the reviews of the financial statements
included in the Company Forms 10-Q for that year, including travel expenses,
were $85,456.
Financial Information Systems Design and Implementation Fees
Deloitte & Touche LLP performed no financial information system design or
implementation work for the Company during the fiscal year ended March 31,
2001.
All Other Fees
Other than audit fees, the aggregate fees billed to the Company by
Deloitte & Touche LLP for fiscal 2001, none of which were financial
information systems design and implementation fees, were approximately
$11,000. The Audit Committee of the Board of Directors determined that the
services performed by Deloitte & Touche LLP other than audit services are not
incompatible with Deloitte & Touche LLP maintaining its independence.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS
OF THE COMPANY FOR THE FISCAL YEAR ENDING MARCH 31, 2002.
14
- ------------------------------------------------------------------------------
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 matters should properly come before the Meeting, it is
intended that the persons named as proxies on the enclosed green proxy card
will have discretionary voting authority regarding any such matters. The
persons voting these proxies may exercise discretionary authority only as to
matters unknown to the Company a reasonable time before this proxy
solicitation.
- ------------------------------------------------------------------------------
MISCELLANEOUS
- ------------------------------------------------------------------------------
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
Allen Nelson & Co., a professional proxy solicitation firm, to assist in the
solicitation of proxies. Pursuant to an engagement letter, the Company has
paid Allen Nelson & Co. a retainer of $25,000, and will pay fees based on the
prescribed hourly rate of persons in the firm, plus out of pocket costs. It
is anticipated that approximately 10 employees of Allen Nelson & Co. will be
utilized in the solicitation. The Company estimates that total costs of
solicitation including printing, mailing, reimbursement of brokers' costs and
fees payable to Allen Nelson & Co. for proxy solicitation will be
approximately $66,500 of which approximately $39,400 has been incurred to
date. In addition to solicitation by mail and the efforts of Allen Nelson &
Co., directors, officers and regular employees of the Company and/or the
Savings Bank may solicit proxies personally, or by telephone, facsimile or
electronic mail, without additional compensation.
The Company's Annual Report to Stockholders has been mailed to
stockholders as of 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 Company. The Annual Report is not to
be treated as part of the proxy solicitation material or as having been
incorporated herein by reference.
- ------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- ------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy solicitation
materials for next year's Meeting of Stockholders, any stockholder proposal to
take action at such meeting must be received at the Company's main office at
2055 First Street, Baker City, Oregon, no later than March 29, 2002. Any such
proposals shall be subject to the requirements of the proxy solicitation rules
adopted under the Exchange Act.
The Company's Articles of Incorporation generally provide that
shareholders will have the opportunity to nominate directors of the Company if
such nominations are made in writing and are delivered to the Secretary of the
Company not less than 30 days nor more than 60 days before the annual meeting
of shareholders; provided, however, if less than 31 days notice of the annual
meeting is given, such notice shall be delivered to the Secretary of the
Company no later than the close of the tenth day following the date on which
notice of the meeting was mailed to shareholders. The notice must set forth
(i) the name, age, business address and, if known, residence address of each
nominee for election as a director, (ii) the principal occupation or
employment of each nominee, (iii) the number of shares of stock of the Company
which are beneficially owned by each such nominee, (iv) such other information
as would be required to be included in a proxy statement soliciting proxies
for the election of the proposed nominee pursuant to the Exchange Act,
including, without limitation, such person's written consent to being named in
the proxy statement as a nominee and to serving as a director, if elected, and
(v) as to the shareholder giving such notice (a) his
15
or her name and address as they appear on the Company's books and (b) the
class and number of shares of the Company which are beneficially owned by such
shareholder.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ZANE F. LOCKWOOD
ZANE F. LOCKWOOD
CORPORATE SECRETARY
Baker City, Oregon
September 5, 2001
- ------------------------------------------------------------------------------
FORM 10-K
- ------------------------------------------------------------------------------
A copy of the Company's Form 10-K for the fiscal year ended March 31, 2001, as
filed with the SEC will be furnished without charge to stockholders as of the
close of business on the Voting Record Date upon written request to Zane F.
Lockwood, Corporate Secretary, Oregon Trail Financial Corp., 2055 First
Street, Baker City, Oregon 97814.
- ------------------------------------------------------------------------------
16
APPENDIX
The following table sets forth the names, principal occupations, business
addresses and the number of shares of the common stock of Oregon Trail
Financial Corp. (the "Company") beneficially owned by the directors of the
Company and Pioneer Bank, A Federal Savings Bank (the "Savings Bank") and such
other officers and employees, and associates of such directors, officers and
employees, as may be deemed participants in this proxy solicitation under the
federal securities laws (together the "Participants").
Name, Occupation and Address Shares Owned (1)
- ---------------------------- ----------------
Berniel L. Maughan 10,000
President and Chief Executive Officer
Oregon Trail Financial Corp.
2055 First Street
Baker City, Oregon 97814
Jonathan McCreary 1,262
Chief Financial Officer
Oregon Trail Financial Corp.
2055 First Street
Baker City, Oregon 97814
Zane F. Lockwood 35,153
Executive Vice President and Corporate Secretary
Oregon Trail Financial Corp.
2055 First Street
Baker City, Oregon 97814
Stephen R. Whittemore 41,126
Chairman of the Board
Owner
BesTruss
1405 Adams
La Grande, Oregon 97850
John Gentry 36,126
President and General Manager
Gentry Ford Sales, Inc.
1802 SW 4th Avenue
Ontario, Oregon 97914
John A. Lienkaemper 36,351
Senior Auditor, Consultant and U.S.
Safety Coordinator
The Loewen Group
78 NW 1st Avenue
Ontario, Oregon 97914
(table continued on following page)
1
Name, Occupation and Address Shares Owned (1)
- ---------------------------- ----------------
Albert H. Durgan 31,643
Retired
1130 E. Street
Baker City, Oregon 97814
Edward H. Elms 45,195
Owner
P&E Distributing Company
1320 7th Street
Baker City, Oregon 97814
Charles H. Rouse 41,126
Vice President, Corporate Services
Norris Beggs & Simpson Realtors
121 SW Morrison, Suite 200
Portland, Oregon 97204
Total 277,982
- ----------------
(1) For detailed information regarding each Participant's beneficial
ownership of common stock, including the number of shares listed above
which represent shares currently purchasable upon the exercise of stock
options and unvested MRDP shares. See the tables in the Proxy Statement
listing beneficial ownership under the captions "Security Ownership of
Certain Beneficial Owners and Management " and "Proposal I - Election of
Directors."
None of the Participants has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) during the past ten
years. No Participant owns any shares of common stock of record but not
beneficially. No Participant owns any securities of any subsidiary of the
Company.
During the past two years, none of the Participants has borrowed or
otherwise obtained funds for the purpose of acquiring or holding any
securities of the Company.
None of the Participants has any substantial direct or indirect interest
in any matters to be acted upon at the Meeting, other than the directors who
have been re-nominated for election to the Board.
During the past two years, the Participants listed above have not
effected any purchases and sales of the Company's common stock.
One of the Participants, Mr. Lockwood, has, during the past two years,
acquired beneficial ownership of shares of common stock through his
participation in the Company's Employee Stock Ownership Plan (the "ESOP").
Share allocations under the ESOP to Mr. Lockwood for the plan years ended
March 31, 2001 and 2000 were 1,611 shares and 1,899 shares.
2
Each of the Participants listed above has been granted options to
purchase common stock under the Oregon Trail Financial Corp. 1998 Stock Option
and Incentive Plan as follows:
Options Exercise Annual Vesting
Participant Date Granted Granted Price Vesting begins on
- ----------- ------------ ------- ----- ------- ---------
Berniel L. Maughan 05/22/2000 50,000 9.125 20.00% 04/08/2001
Jonathan McCreary 07/19/2000 5,047 10.75 25.00 04/08/2001
Zane F. Lockwood 10/08/1998 46,948 11.15 20.00 10/08/1999
Stephen R. Whittemore 10/08/1998 23,474 11.15 25.00 10/08/1999
John Gentry 10/08/1998 23,474 11.15 25.00 10/08/1999
John A. Lienkaemper 10/08/1998 23,474 11.15 25.00 10/08/1999
Albert H. Durgan 10/08/1998 23,474 11.15 25.00 10/08/1999
Edward H. Elms 10/08/1998 23,474 11.15 25.00 10/08/1999
Charles H. Rouse 10/08/1998 23,474 11.15 25.00 10/08/1999
Each of the Participants listed above has been awarded shares of
restricted stock under the Oregon Trail Financial Corp. 1999 Management
Recognition and Development Plan, as follows:
Restricted Annual Vesting
Participant Date Awarded Shares Vesting begins on
- ----------- ------------ ------ ------- ---------
Zane F. Lockwood 10/08/1998 18,779 20.00% 10/08/1999
Stephen R. Whittemore 10/08/1998 9,389 25.00 10/08/1999
John Gentry 10/08/1998 9,389 25.00 10/08/1999
John A. Lienkaemper 10/08/1998 9,389 25.00 10/08/1999
Albert H. Durgan 10/08/1998 9,389 25.00 10/08/1999
Edward H. Elms 10/08/1998 9,389 25.00 10/08/1999
Charles H. Rouse 10/08/1998 9,389 25.00 10/08/1999
Other than the stock option and restricted stock awards discussed above
and the participation by Mr. Lockwood in the ESOP, no Participant is, or was
within the past year, a party to any contract, arrangement or understanding
with any person with respect to any securities of the Company.
Except as disclosed in this Proxy Statement, none of the Participants has
any arrangement or understanding with respect to any future employment by the
Company or its subsidiaries or any future transactions to which the Company or
any of its subsidiaries will or may be a party, nor any material interest,
direct or indirect, in any transaction which has occurred since April 1, 2000
or any currently proposed transaction, or series of similar transactions, to
which the Company or any of its subsidiaries was or is to be a party and in
which the amount involved exceeds $60,000.
* * * * *
3
Exhibit A
OREGON TRAIL FINANCIAL CORP.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
I. Audit Committee Purpose
The Audit Committee is appointed by the Board of Directors to assist
the Board in fulfilling its oversight responsibilities. The Audit
Committee's primary duties and responsibilities are to:
. Monitor the integrity of the Company's financial reporting
process and systems of internal controls regarding finance,
accounting, and legal compliance.
. Monitor the independence and performance of the Company's
independent auditors and internal auditing department.
. Provide an avenue of communication among the independent
auditors, management, the internal auditing department, and
the Board of Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct
access to the independent auditors as well as anyone in the
organization. The Audit Committee has the ability to retain, at the
Company's expense, special legal, accounting, or other
consultants or experts it deems necessary in the performance of its
duties.
Audit Committee Composition and Meetings
Audit Committee members shall meet the requirements of the NASDAQ
National Market. The Audit Committee shall be comprised of three or
more directors as determined by the Board, each of whom shall be
independent non-executive directors, free from any relationship that
would interfere with the exercise of his or her independent
judgment. All members of the Committee shall have a basic
understanding of finance and accounting, and be able to read and
understand fundamental financial statements. At least one member of
the Committee shall have accounting or related financial management
expertise.
Audit Committee members shall be appointed by the Board on
recommendation of the Chairman. If an Audit Committee Chair is not
designated or present, the members of the Committee may designate a
Chair by majority vote of the Committee membership.
The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. The Audit Committee Chair
shall prepare and/or approve an agenda in advance of each meeting.
The Committee should meet privately in executive session at least
annually with management, the director of the internal auditing
department, the independent auditors, and as a committee to discuss
any matters that the Committee, or each of these groups believe
should be discussed. In addition, the Committee, or at least its
Chair, should communicate with management and the independent
auditors quarterly to review the Company's financial statements and
significant findings based upon the auditors limited review
procedures.
A-1
III. Audit Committee Responsibilities and Duties
Review Procedures
. Review and reassess the adequacy of this Charter at least
annually. Submit the charter to the Board of Directors for
approval and have the document published at least every three
years in accordance with SEC regulations.
. Review the Company's annual audited financial statements and
other published documents containing the company's financial
information prior to filing or distribution. Review should
include a discussion with management and the independent auditors
of significant issues regarding accounting principles, practices,
and judgments.
. Review annual filings with the SEC and other published documents
containing the company's financial information. Review should
consider whether the information presented in the filings is
consistent with the information contained in the financial
statements.
. In consultation with management, the independent auditors, and
the internal auditors, consider the integrity of the Company's
financial reporting processes and controls. Discuss significant
financial and operational risk exposures and the steps management
has taken to monitor, control, and report such exposures. Review
significant findings prepared by the independent auditors and
the internal auditing department together with management's
responses.
. Review with financial management, the independent auditors, and
the internal auditor the company's quarterly financial results
prior to the release of earnings; and/or the Company's
quarterly financial statements prior to filing with the SEC or
other regulators or prior to distribution. Discuss any
significant changes to the Company's accounting principles and
any items required to be communicated by the independent auditors
in accordance with SAS 61. The Chair of the Committee may
represent the entire Audit Committee for purposes of this review.
Independent Auditors
. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall
review, confirm, and assure the independence and performance of
the independent auditors. Annually, the Committee will recommend
to the Board of Directors the appointment of the independent
auditors or approve any discharge of auditors when circumstances
warrant.
. Approve the fees and other significant compensation to be paid to
the independent auditors.
. On an annual basis, the Committee will review and discuss with
the independent auditors all significant relationships they have
with the Company that could impair the auditors' independence.
This should include a review of any consulting services provided
by the independent auditors and the fees paid for those services.
. Prior to releasing the year-end earnings, discuss the results of
the audit with the independent auditors. Discuss certain matters
required to be communicated to audit committees in accordance
with AICPA SAS 61.
. Consider the independent auditors' judgments about the quality
and appropriateness of the Company's accounting principles as
applied in its financial reporting.
A-2
Internal Audit Department and Legal Compliance
. Review the budget, plan, changes in the plan, activities,
organizational structure, and qualifications of the internal
audit department as needed.
. Review and retain veto power over the appointment, performance,
and replacement of the internal auditor.
. Annually, confirm and assure the independence of the internal
auditor.
. Review significant reports prepared by the internal audit
department, together with management's response and follow-up to
these reports.
. On at least an annual basis, review with the Company's counsel
any legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance
with applicable laws and regulations, and inquiries received from
regulators or governmental agencies.
Additional Audit Committee Responsibilities
. Annually prepare a report to shareholders as required by the
Securities and Exchange Commission. The report shall detail the
Committee's review of the audited financial statements with
management, discussions with the independent auditors pertaining
to the requirements set out in SAS 61, the auditors' continued
independence, and the Committees' recommendations as to inclusion
of the financial statements in the Company's annual report. The
report shall be included in the Company's annual proxy statement.
. Establish, review, and periodically update a Code of Ethical
Conduct; and ensure that management has established a system to
enforce the Code.
. Periodically perform a self-assessment of Audit Committee
performance.
. Review financial and accounting personnel succession-planning
within the Company.
. Annually review policies and procedures as well as audit results
associated with directors' and officers' expense accounts and
perquisites. Annually review a summary of directors' and
officers' related-party transactions and potential conflicts of
interest.
. Perform any other activities consistent with this charter, the
Company's by-laws, and governing law, as the Committee or the
Board deems necessary or appropriate.
. Maintain minutes of meetings and periodically report to the Board
of Directors on significant results of the foregoing activities.
* * * * *
A-3
REVOCABLE PROXY
OREGON TRAIL FINANCIAL CORP.
- ------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 28, 2001
- ------------------------------------------------------------------------------
I hereby appoint Stephen R. Whittemore and Berniel L. Maughan with full
powers of substitution, as my attorneys and proxies to vote all shares of
common stock of Oregon Trail Financial Corp. that I am entitled to vote at the
Annual Meeting of Stockholders, to be held at the Sunridge Inn and Conference
Center, One Sunridge Lane, Oregon, on Friday, September 28, 2001 at 10:00
a.m., Pacific Daylight Time, and at any and all adjournments thereof, with
respect to the following.
FOR ALL
FOR WITHHELD EXCEPT
--- -------- -------
1. The election as directors of all nominees [ ] [ ] [ ]
listed (except as marked to the contrary
below).
John Gentry
John A. Lienkaemper
INSTRUCTION: To withhold authority to vote
for any individual nominee, mark "For All
Except" and write that nominee's name in the
space provided below.
-------------------------------------------
2. The approval of the appointment of [ ] FOR [ ] AGAINST [ ] ABSTAIN
Deloitte & Touche LLP as independent
auditors for the fiscal year ending
March 31, 2002.
3. In their discretion, upon such other
matters as may properly come before
the meeting.
The Board of Directors recommends a vote "FOR" the above proposals.
- ------------------------------------------------------------------------------
THE NAMED PROXIES WILL VOTE YOUR SHARES AS YOU INSTRUCT, BUT IF YOU DO NOT
SPECIFY HOW YOU WANT TO VOTE YOUR SHARES, THE NAMED PROXIES WILL VOTE YOUR
SHARES FOR THE BOARD OF DIRECTORS' NOMINEES IN THE ELECTION OF DIRECTORS AND
FOR THE APPROVAL OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT
AUDITORS. THE NAMED PROXIES WILL VOTE YOUR SHARES IN THEIR BEST JUDGMENT ON
ANY OTHER MATTERS PRESENTED AT THE MEETING. THE NAMED PROXIES VOTING THESE
PROXIES MAY EXERCISE DISCRETIONARY AUTHORITY ONLY AS TO MATTERS UNKNOWN TO THE
COMPANY A REASONABLE TIME BEFORE THE PROXY SOLICITATION. THE BOARD OF
DIRECTORS DOES NOT KNOW OF ANY OTHER MATTERS TO BE PRESENTED AT THE MEETING.
- ------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the stockholder(s) be present and elect to vote at the Meeting or
at any adjournment 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 said attorneys and proxies shall be deemed terminated and of
no further force and effect. This proxy revokes all prior proxies given by
the stockholder(s).
The undersigned stockholder acknowledges receipt from the Company prior
to the execution of this proxy of the Notice of Annual Meeting of
Stockholders, a Proxy Statement for the Annual Meeting of Stockholders, and
the 2001 Annual Report to Stockholders.
Dated: , 2001
---------------------------
- ---------------------------------- ----------------------------------
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
- ---------------------------------- ----------------------------------
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
Please sign exactly as your name appears on the enclosed card. When signing
as attorney, executor, administrator, trustee or guardian, please give your
full title. If shares are held jointly, only one signature is required, but
each holder should sign, if possible.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.