SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-12
Wells Financial Corp.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] 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:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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[WELLS FINANCIAL CORP. LETTERHEAD]
March 15, 2004
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Wells Financial
Corp., we cordially invite you to attend the Annual Meeting of Stockholders (the
"Meeting") to be held at the Wells Community Building located at 189 2nd Street,
S.E., Wells, Minnesota on Wednesday, April 21, 2004, at 4:00 p.m. local time.
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 Company. Directors and officers of the Company
will be present to respond to any questions stockholders may have.
At the meeting, stockholders will be asked to vote upon the election of two
directors of the Company and to ratify the appointment of McGladrey & Pullen,
LLP as the Company's independent auditors for the fiscal year ending December
31, 2004.
Whether or not you plan to attend the Meeting, please sign and date the
enclosed form of proxy and mail it in the accompanying postage-paid return
envelope as promptly as possible. This will not prevent you from voting in
person at the Meeting, but will assure that your vote is counted if you are
unable to attend. YOUR VOTE IS VERY IMPORTANT.
Sincerely,
/s/ Lonnie R. Trasamar
Lonnie R. Trasamar
President and Chief Executive Officer
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WELLS FINANCIAL CORP.
53 FIRST STREET, S.W.
WELLS, MINNESOTA 56097
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 21, 2004
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Wells Financial Corp. (the "Company") will be held at the Wells
Community Building located at 189 2nd Street, S.E., Wells, Minnesota on April
21, 2004, at 4:00 p.m. local time. The Meeting is for the purpose of considering
and acting upon:
1. The election of two directors of the Company;
2. To ratify the appointment of McGladrey & Pullen, LLP as the
independent auditors for the Company for the fiscal year ending
December 31, 2004; and
3. The transaction of such other matters as may properly come before the
Meeting or any adjournments thereof. The Board of Directors is not
aware of any other business to come before the meeting.
Action may be taken on any one of 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 March 1, 2004 are entitled to notice of and to vote at the
Meeting and any adjournments thereof.
You are requested to sign and date the enclosed form of proxy which is
solicited by the Board of Directors and mail it promptly in the enclosed
envelope. This will not prevent you from voting in person at the Meeting, but
will assure that your vote is counted if you are unable to attend. YOUR VOTE IS
VERY IMPORTANT.
EACH STOCKHOLDER, WHETHER OR NOT HE OR SHE PLANS TO ATTEND THE MEETING, IS
REQUESTED TO SIGN, DATE, AND MAIL THE ENCLOSED FORM OF PROXY WITHOUT DELAY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE
REVOKED BY FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A
DULY EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE MEETING
MAY REVOKE HIS OR HER PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT BEFORE THE
MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN
YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO
VOTE IN PERSON AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Richard Mueller
Richard Mueller
Secretary
Wells, Minnesota
March 15, 2004
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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 AT THE MEETING. 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
WELLS FINANCIAL CORP.
53 FIRST STREET, S.W.
WELLS, MINNESOTA 56097
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ANNUAL MEETING OF STOCKHOLDERS
APRIL 21, 2004
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GENERAL
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This Proxy Statement is furnished to the holders of the common stock
("Common Stock") of Wells Financial Corp. (the "Company"). Proxies are being
solicited by the Board of Directors of the Company to be used at the Annual
Meeting of Stockholders of the Company (the "Meeting") which will be held at the
Wells Community Building, 189 2nd Street, S.E., Wells, Minnesota on April 21,
2004, at 4:00 p.m. local time. This Proxy Statement and the accompanying Notice
of Meeting and proxy card are being first mailed on or about March 15, 2004 to
those stockholders entitled to vote at the Meeting.
All properly executed written proxies that are delivered pursuant to this
proxy statement will be voted on all matters that properly come before the
Meeting for a vote. If your signed proxy specifies instructions with respect to
matters being voted upon, your shares will be voted in accordance with your
instructions. If no instructions are specified, your shares will be voted (a)
FOR the election of directors named in Proposal 1, (b) FOR Proposal 2
(ratification of independent auditors), and (c) in the discretion of the proxy
holders, as to any other matters that may properly come before the Meeting.
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VOTING AND REVOCABILITY OF PROXIES
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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 at the address of the Company shown above or by the
filing of a later dated proxy prior to a vote being taken on a particular
proposal at the Meeting. A proxy will not be voted if a stockholder attends the
Meeting and votes in person.
As to the election of directors, as set forth in Proposal 1, the proxy
being provided by the Board enables a stockholder to vote for the election of
the nominees proposed by the Board, or to withhold authority to vote for the
nominees being proposed. Directors are elected by a plurality of votes of the
shares present, in person or represented by proxy, at a meeting and entitled to
vote in the election of directors, without regard to either (i) broker non-votes
or (ii) proxies as to which authority to vote for the nominee being proposed is
withheld. The proxy confers discretionary authority on the persons named therein
to vote with respect to the election of any person as a director should the
nominee be unable to serve, or for good cause, will not serve.
As to the ratification of independent auditors as set forth in Proposal 2,
by checking the appropriate box, a stockholder may: (i) vote "FOR" the item,
(ii) vote "AGAINST" the item, or (iii) vote to "ABSTAIN" on such item. Unless
otherwise required by law, Proposal 2 and any other matters shall be determined
by a majority of votes cast affirmatively or negatively without regard to (a)
Broker Non-Votes or (b) proxies marked "ABSTAIN" as to that matter.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on March 1, 2004
("Voting Record Date"), are entitled to one vote for each share of Common Stock
then held. As of the Voting Record Date, the Company had 1,159,751 shares of
Common Stock issued and outstanding.
The Articles of Incorporation of the Company (the "Articles") provide that
in no event shall any record owner of any outstanding Common Stock which is
beneficially owned, directly or indirectly, by a person who beneficially owns in
excess of 10% of the then outstanding shares of Common Stock (the "Limit") be
entitled or permitted to any vote with respect to the shares held in excess of
the Limit and such person may have his or her voting rights reduced below 10%.
Beneficial ownership is determined pursuant to the definition in the Articles
and includes shares beneficially owned by such person or any of his or her
affiliates or associates (as defined in the Articles), shares which such person
or his or her affiliates or associates have the right to acquire upon the
exercise of conversion rights or options, and shares as to which such person and
his or her affiliates or associates have or share investment or voting power,
but shall not include shares beneficially owned by any employee stock ownership
or similar plan of the Company or any subsidiary.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) is necessary to constitute a quorum at the
Meeting.
Security Ownership of Certain Beneficial Owners
Persons and groups owning in excess of 5% of the Common Stock are required
to file certain reports regarding such ownership pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Other than as noted
below, management knows of no person or entity, including any "group" as that
term is used in Section 13(d)(3) of the Exchange Act, who or which is the
beneficial owner of more than 5% of the outstanding shares of Common Stock on
the Voting Record Date. Information concerning the security ownership of
management is included under "Information with Respect to Nominees for Director
and Directors Continuing in Office."
Percent of Shares of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
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Wells Federal Bank, fsb 110,948 (1) 9.6%
Employee Stock Ownership Plan
53 First Street, S.W.
Wells, Minnesota 56097
Advisory Research, Inc. 57,300 (2) 4.9%
180 North Stetson Street, Suite 5780
Chicago, IL 60601
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(1) The Bank's Employee Stock Ownership Plan ("ESOP") purchased such shares for
the exclusive benefit of ESOP participants with funds borrowed from the
Company. These shares are held in a suspense account and are allocated
among ESOP participants annually on the basis of compensation as the ESOP
debt is repaid.
(2) Based on a 13G filed with the Securities and Exchange Commission on
February 17, 2004.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of the Common Stock, to
file reports of ownership and changes in ownership of the Common Stock, with the
Securities and Exchange Commission and to provide copies of those reports to the
Company. Other than as set forth herein, the Company is not aware of any
beneficial owner (as defined in the Exchange Act regulations) of more than ten
percent of the Common Stock.
Based upon a review of the copies of the forms furnished to the Company, or
written representations from certain reporting persons, the Company believes
that all Section 16(a) filing requirements applicable to its executive officers
and directors were complied with during the year ended December 31, 2003.
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PROPOSAL I - ELECTION OF DIRECTORS
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Election of Directors
The Articles require that directors be divided into three classes, as
nearly equal in number as possible, each class to serve for a three year term,
with approximately one-third of the directors elected each year. The Board of
Directors currently consists of six members. Two directors will be elected at
the Meeting, each to serve for a three-year term, as noted below, or until
respective successors have been elected and qualified.
Richard Mueller and David Buesing have been nominated by the Board of
Directors to serve as directors. Both are currently directors of the Company and
have consented to being named in this Proxy Statement and to serve if elected.
If the nominees are unable to serve, the shares represented by all valid proxies
will be voted for the election of such substitutes as the Board of Directors may
recommend or the size of the Board may be reduced to eliminate the vacancy. At
this time, the Board knows of no reason why the nominees might be unavailable to
serve.
The following table sets forth the nominees and the directors continuing in
office, their name, age, the year they first became a director of the Company or
the Bank, the expiration date of their current term as a director of the
Company, and the number and percentage of shares of the Common Stock
beneficially owned. Currently, each director of the Company is also a member of
the Board of Directors of the Bank.
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Year First Current Shares of Common Stock Percent
Elected or Term to Beneficially Owned As of
Name Age(1) Appointed(2) Expire of March 1, 2004 (3)(4) Class
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COMPANY'S NOMINEES FOR TERM TO EXPIRE IN 2007
Richard Mueller 54 1986 2004 23,313 (6)(7) 1.9%
David Buesing 57 1998 2004 20,186 (6)(8) 1.7%
DIRECTORS CONTINUING IN OFFICE
Lonnie R. Trasamar 49 2002 2006 2,596 (5) *
Gerald D. Bastian 63 1986 2006 31,136 2.6%
Randel I. Bichler 59 1998 2005 20,435 (6)(9) 1.7%
Dale E. Stallkamp 58 1999 2005 38,311 (8) 3.2%
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
James D. Moll 53 -- -- 12,584 1.0%
All directors and executive officers
of the Company as a group (7 persons) 148,561 (10) 12.2%
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* Less than 1%.
(1) At December 31, 2003.
(2) Refers to the year the individual first became a director of the Bank or
the Company. All directors of the Bank in December 1994 became directors of
the Company upon its formation in December 1994.
(3) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust and other indirect ownership, over which shares
the individuals exercise sole voting and/or investment power, unless
otherwise indicated.
(4) Beneficial ownership as of the Voting Record Date.
(5) Includes exercisable options to purchase 944 shares of Common Stock.
(6) Excludes 110,948 shares of Common Stock held under the Employee Stock
Ownership Plan ("ESOP") and shares held under the Management Stock Bonus
Plan ("MSBP") for which such individual serves as a member of the ESOP or
MSBP Committee or Trustee Committee. Such individual disclaims beneficial
ownership with respect to such shares held in a fiduciary capacity. The
Board of Directors or the ESOP Committee may instruct the ESOP Trustees
regarding investments of funds contributed to the ESOP. The ESOP Trustees
must vote all allocated shares held in the ESOP in accordance with the
instructions of the participating employees. Unallocated shares and
allocated shares for which no timely direction is received will be voted by
the ESOP Trustees as directed by the Board of Directors or the ESOP
Committee, subject to the ESOP Trustees' fiduciary duties. Shares held in
the MSBP are voted by the MSBP Trustees as directed by the MSBP Committee.
At the Voting Record Date, all shares had been allocated to employees under
the ESOP and there were 30,335 shares in the MSBP.
(7) Includes exercisable options to purchase 11,835 shares of Common Stock.
(8) Includes exercisable options to purchase 15,561 shares of Common Stock.
(9) Includes exercisable options to purchase 11,187 shares of Common Stock.
(10) Includes exercisable options to purchase 55,088 shares of Common Stock.
4
Executive Officers of the Company
The following individuals were executive officers of the Company as of
December 31, 2003:
Name Age (1) Positions Held With The Company and Bank
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Lonnie R. Trasamar 49 President and Chief Executive Officer
Gerald D. Bastian 63 Vice President and Director
James D. Moll 53 Treasurer and Chief Financial Officer
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(1) At December 31, 2003.
Biographical Information
The principal business experience of each director, nominee for director,
and executive officer of the Company is set forth below. Unless otherwise noted,
all persons have held their present occupation for at least the last five years.
Richard Mueller has been a director of the Bank since 1986 and of the
Company since its formation in December 1994. Mr. Mueller is the sole owner of
Wells Drug Co., Inc. Mr. Mueller has served as a member of the local school
board as well as a member of the Wells Chamber of Commerce. Mr. Mueller is a
first cousin of Mr. James D. Moll, an executive officer of the Company.
David Buesing has been a director of the Company since 1998. Mr. Buesing
has been employed by Wells Concrete Product since 1973. He became President and
General Manager of that company in 1982. He is a registered engineer in
Minnesota, North Dakota and Kansas. He is a past Director of the Pre-stressed
Concrete Institute and the Associated Minnesota Pre-stressed Association.
Lonnie R. Trasamar was appointed as President and Chief Executive Officer
of the Company and the Bank effective March 1, 2002. Mr. Trasamar was appointed
director of the Company in November 2002. Prior to joining the Company, Mr.
Trasamar was in the commercial banking and real estate fields both as a Chief
Financial Officer of a ten-bank holding company and as an independent
businessman. Mr. Trasamar also served as Chairman, President and Chief Executive
Officer of MidAmerica Bank South in Mankato and Blue Earth, Minnesota.
Gerald D. Bastian has been the Vice President of the Bank since 1974 and a
director of the Bank since 1986 and has been a Vice President and director of
the Company since its formation in December 1994. Mr. Bastian is a member of
Southern Minnesota Realtors, Valley Industrial Development Corp., Mankato Area
Chamber of Commerce, Bethlehem Lutheran Church, and the Hilltop Kiwanis Club.
Randel I. Bichler has been a director of the Company and the Bank since
1998. Mr. Bichler has been engaged in the general practice of law in Wells since
1978. He retired from the United States Army Reserve as a Lt. Colonel in 1997.
Dale E. Stallkamp has been a director of the Company and the Bank since
April 1999. Mr. Stallkamp started his certified public accounting practice in
September 1972. Prior to that time he was employed by the public accounting firm
of Peat, Marwick, Mitchell.
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Named Executive Officers Who Are Not Directors
James D. Moll, CPA, has been, since December 1994, the Chief Financial
Officer of the Company and the Bank and, since February 1995, the Treasurer of
the Company and the Bank. Prior to December 1994, Mr. Moll was an employee of
the Bank's subsidiary, Wells Insurance Agency ("WIA"). Mr. Moll managed WIA for
more than five years. Mr. Moll is a first cousin of Mr. Richard Mueller, a
director of the Company and the Bank.
Meetings and Committees of the Board of Directors
The Board of Directors conducts its business through meetings of the Board
and through activities of its committees. Each member of the Board of Directors
also currently serves as a member of the Board of Directors of the Bank, which
meets monthly and may have special meetings.
During the year ended December 31, 2003, the Board of Directors of the
Company held 12 regular meetings and one special meeting. No director attended
fewer than 75% of the total meetings of the Board of Directors of the Company
and the committees on which such director served during the year ended December
31, 2003.
The Compensation Committee, a standing committee, consists of the present
non-employee members of the Board of Directors of the Company. Mr. Trasamar, a
non-voting advisory member of the committee, advises the committee on
compensation matters for employees other than himself. The Compensation
Committee met seven times during the year ended December 31, 2003.
The Audit Committee currently consists of Directors Bichler, Stallkamp, and
Buesing, all of whom have been determined to be independent in accordance with
the requirements of the Nasdaq Stock Market.
The Audit Committee is responsible for recommending the appointment of the
Company's independent public accountants and meeting with such accountants with
respect to the scope and review of the annual audit. Additional responsibilities
of the Audit Committee are to ensure that the Board of Directors receives
objective information regarding policies, procedures and activities of the
Company with respect to auditing, accounting, internal accounting controls,
financial reporting, regulatory matters and such other activities of the Company
as may be directed by the Board of Directors. The Audit Committee met ten times
during the year ended December 31, 2003.
The Board of Directors has reviewed, assessed the adequacy of and approved
a formal written charter for the Audit Committee. The full text of the Charter
of the Audit Committee is attached as Appendix A to this proxy statement.
The Board of Directors has not appointed a member of its Board to be an
Audit Committee Financial Expert as that term is defined in the Securities
Exchange Act of 1934 as no member of the Board has consented to such
designation.
Report of the Audit Committee. For the fiscal year ended December 31, 2003,
the Audit Committee (i) reviewed and discussed the Company's audited financial
statements with management, (ii) discussed with Company's independent auditor,
McGladrey & Pullen, LLP ("McGladrey"), all matters required to be discussed
under Statement on Auditing Standards No. 61., and (iii) received from McGladrey
disclosures regarding McGladrey's independence as required by Independence
Standards Board Standard No. 1 and discussed with McGladrey its independence.
Based on the foregoing review and discussions, the Audit
6
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2003.
Audit Committee:
Randel I. Bichler
Dale E. Stallkamp
David Buesing
Audit Fees. The aggregate fees billed by McGladrey for professional
services rendered for the audit of the Company's annual consolidated financial
statements, for the review of the consolidated financial statements included in
the Company's Quarterly Reports on Form 10-QSB, and for the review of the
Company's quarterly and annual SEC filings for the fiscal years ended December
31, 2003 and 2002 were $112,677 and $81,432, respectively.
Audit Related Fees. The aggregate fees billed by McGladrey for assurance
and related services related to the audit of the annual financial statements and
to the review of the quarterly financial statements for the years ended December
31, 2003 and 2002 were $7,030 and $4,535, respectively.
Tax Fees. The aggregate fees billed by RSM McGladrey, Inc. for professional
services rendered for tax compliance, tax advice or tax planning for the years
ended December 31, 2003 and 2002 were $8,120 and $5,750, respectively.
All Other Fees. The aggregate fees billed by RSM McGladrey, Inc. for
professional services rendered for services or products other than those listed
under the captions "Audit Fees," "Audit-Related Fees," and "Tax Fees" for the
years ended December 31, 2003 and 2002 were $2,835 and $525, respectively, and
consisted of the review of Company policies.
The Audit Committee's current practice on pre-approval of services
performed by the independent auditors is to approve annually all audit services
and, on a case-by-case basis, all permitted non-audit services to be provided by
the independent auditors during the fiscal year. The Audit Committee reviews
each non- audit service to be provided and assesses the impact of the service on
the auditor's independence. In addition, the Audit Committee may pre-approve
other non-audit services during the year on a case-by-case basis. No services
were approved pursuant to the de minimus exception of the Sarbanes-Oxley Act of
2002.
Director Nomination Process
The Nominating Committee of the Company recommends nominees for election as
directors to the Board of Directors. The Nominating Committee, a non-standing
committee, which met one time during 2003, consists of the entire Board of
Directors. The Board feels it is appropriate for the directors to serve this
function without forming a standing committee because the Company has a
relatively small Board, making action by committee unnecessary for purposes of
managing nominations. Because the committee is not a standing committee, the
Company does not have a nominating committee charter.
The Company does not currently pay fees to any third party to identify or
evaluate or assist in identifying or evaluating potential nominees. The
Committee's process for identifying and evaluating potential nominees includes
soliciting recommendations from directors and officers of the Company and its
wholly-owned subsidiary, Wells Federal Bank. Additionally, the Committee will
consider persons recommended by stockholders of the Company in selecting the
Committee's nominees for election. There
7
is no difference in the manner in which the Committee evaluates persons
recommended by directors or officers and persons recommended by stockholders in
selecting Board nominees.
To be timely, a stockholder's notice shall be delivered to, or mailed and
received at, the principal executive offices of the Corporation not less than 60
days prior to the anniversary date of the immediately preceding annual meeting
of stockholders of the Corporation. Recommendations should identify the
submitting stockholder, the person recommended for consideration and the reasons
the submitting stockholder believes such person should be considered, as well as
the specific information set forth in the Company's Articles of Incorporation. A
copy of such provisions is available upon request to: Wells Financial Corp., 53
First Street, S.W., Wells, Minnesota 56097, Attention: Corporate Secretary. The
Committee believes potential directors should be knowledgeable about the
business activities and market areas in which the Company and its subsidiaries
engage.
Stockholder Communications
The Board of Directors does not have a formal process for stockholders to
send communications to the Board. In view of the infrequency of stockholder
communications to the Board of Directors, the Board does not believe that a
formal process is necessary. Written communications received by the Company from
stockholders are shared with the full Board no later than the next regularly
scheduled Board meeting. The Board encourages, but does not require, directors
to attend the annual meeting of stockholders. All of the Board's members
attended the 2003 annual meeting of stockholders.
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
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Director Compensation
Members of the Board of Directors of the Company are not compensated by the
Company for serving as a director. During 2003, each member of the Board of
Directors of the Bank, except for Lonnie Trasamar, received $1,100 per month
regardless of attendance at Board meetings. For 2003, non-employee directors
received between $100 and $350 per committee meeting attended ($26,000 in the
aggregate) for Audit, Employment Enhancement, Commercial Credit, Building Site
and Compensation Committee meetings. For the year ended December 31, 2003, fees
paid to directors totaled $111,200.
Executive Compensation
Summary Compensation Table. The following table sets forth the compensation
awarded to or earned by the Chief Executive Officer and other highly compensated
officers for the years ended December 31, 2001, 2002 and 2003, as applicable. No
other executive officer of the Bank or the Company had a salary and bonus during
such period that exceeded $100,000 for services rendered in all capacities to
the Bank or the Company in the aggregate.
8
Annual Compensation (1)
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Name and Other Annual All Other
Principal Position Year Salary Bonus Compensation(2) Compensation
- ------------------- ---- ------------ ----- ------------ ------------
Lonnie R. Trasamar 2003 $124,800 $62,400 $ -- $23,772(3)
President and Chief 2002 112,923 $60,000 -- 6,920
Executive Officer
Gerald D. Bastian 2003 $107,913 $14,216 $13,200 $18,955(4)
Vice President 2002 105,979 11,205 12,000 28,483
2001 98,809 5,685 12,000 30,077
James D. Moll 2003 $99,778 $24,882 $ -- $12,847(5)
Chief Financial Officer 2002 95,615 23,925 -- 22,773
2001 86,897 7,220 -- 20,479
James R. Sauer 2003 $85,800 21,450 $ -- 11,276(6)
Chief Operations Officer 2002 81,935 20,625 -- 19,674
2001 69,697 4,070 -- 15,664
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(1) All compensation was paid by the Bank.
(2) Constitutes Bank directors' fees.
(3) Consists of $8,622 and $6,920 of health, life, and disability insurance
premiums paid on behalf of Mr. Trasamar for the years ended December 31,
2003 and 2002, respectively. For the year ended December 31, 2003, the
amount includes an allocation of 409 shares under the ESOP, valued at the
closing per share market price of $30.00 on December 31, 2003. For the year
ended December 31, 2003, Mr. Trasamar had 3,500 shares of unvested
restricted stock which had a value of $105,000 (based on the closing price
of $30.00 on December 31, 2003). Dividends on shares of restricted stock
are held in arrears and paid upon vesting of the applicable award. For the
year ended December 31, 2003, includes $2,880 in matching funds for the
401(k) Plan.
(4) Consists of $8,515, $7,300 and $6,752 of health, life, and disability
insurance premiums paid on behalf of Mr. Bastian for the years ended
December 31, 2003, 2002 and 2001, respectively. For the years ended
December 31, 2003, 2002 and 2001, the amount includes an allocation of 267,
1,016 and 1,246 shares under the ESOP, valued at the closing per share
market prices of $30.00, $20.85 and $18.72 on December 31, 2003, 2002 and
2001, respectively. As of December 31, 2003, Mr. Bastian had 962 shares of
unvested restricted stock which had a value of $28,860 (based on the
closing market price of $30.00 on December 31, 2003). Dividends on shares
of restricted stock are held in arrears and paid upon vesting of the
applicable award. For the year ended December 31, 2003, includes $2,430 in
matching funds for the 401(k) Plan.
(5) Consists of $2,360, $1,694 and $1,684 of health, life, and disability
insurance premiums paid on behalf of Mr. Moll for the years ended December
31, 2003, 2002 and 2001, respectively. For the years ended December 31,
2003, 2002 and 2001, the amount includes an allocation of 273, 1,011 and
1,004 shares under the ESOP, valued at the closing per share prices of
$30.00, $20.85 and $18.72 on December 31, 2003, 2002 and 2001,
respectively. As of December 31, 2003, Mr. Moll had 720 shares of unvested
restricted stock which had a value of $21,600 (based on the closing price
of $30.00 on December 31, 2003). Dividends on shares of restricted stock
are held in arrears and paid upon vesting of the applicable award. For the
year ended December 31, 2003, includes $2,297 in matching funds for the
401(k) Plan.
(6) Consists of $2,276, $1,597 and $1,568 of health, life and disability
insurance premiums paid on behalf of Mr. Sauer for the years ended December
31, 2003, 2002 and 2001, respectively. For the years ended December 31,
2003, 2002 and 2001, the amount includes an allocation of 234, 867 and 753
shares under the ESOP, valued at the closing per share prices of $30.00,
$20.85 and $18.72 on December 31, 2003, 2002 and 2001, respectively. As of
December 31, 2003, Mr. Sauer had 396 shares of unvested restricted stock
which had a value of $11,880 (based on the closing price of $30.00 on
December 31, 2003). Dividends on shares of restricted stock are held in
arrears and paid upon vesting of the applicable award. For the year ended
December 31, 2003, includes $1,980 in matching funds for the 401(k) Plan.
9
Stock Awards
The following table sets forth information concerning options held by the
named executives as of December 31, 2003. The Company has not granted to the
named executive officers any stock appreciation rights.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options/SARs in-the-Money Options/SARs
Acquired on Value at Fiscal Year-End at Fiscal Year-End
Exercise Realized (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ----------------------------------------------------------------------------------------------------------
Lonnie R. Trasamar 1,243 7,147 944 / 8,748 8,590 / 79,607 (1)
Gerald D. Bastian 4,616 50,499 4,616 / -- 87,704 / -- (2)
James D. Moll 2,025 34,243 -- / 1,350 -- / 22,437 (3)
James R. Sauer 2,635 33,663 -- / 540 -- / 8,975 (3)
- --------------------
(1) Based upon an exercise price of $20.90 per share and the closing market
price of $30.00 at December 31, 2003.
(2) Based upon an exercise price of $11.00 per share and the closing market
price of $30.00 at December 31, 2003.
(3) Based upon an exercise price of $13.38 per share and the closing market
price of $30.00 as of December 31, 2003.
- --------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
The Bank had no "interlocking" relationships existing on or after January
1, 2003 in which (i) any executive officer is a member of the Board of
Directors/Trustees of another entity, one of whose executive officers is a
member of the board of directors of the Bank, or where (ii) any executive
officer is a member of the compensation committee of another entity, one of
whose executive officers is a member of board of directors of the Bank.
The Bank, like many financial institutions, has followed a policy of
granting various types of loans to executive officers, directors, employees, or
immediate family members or affiliates thereof. All the loans have been made in
the ordinary course of business and on substantially the same terms and
conditions (including interest rates and collateral) that apply to the Bank's
other customers, and do not involve more than the normal risk of collectibility,
nor present other unfavorable features. Loans by the Bank to its directors and
executive officers are subject to Office of Thrift Supervision ("OTS")
regulations restricting loans and other transactions with affiliated persons of
the Bank. The Bank's affiliates must qualify for any loans on the same terms and
conditions that apply to other customers.
10
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PROPOSAL 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
McGladrey & Pullen, LLP were the Company's independent auditors for fiscal
2003. The Board of Directors has appointed McGladrey & Pullen, LLP to be its
accountants for the fiscal year ending December 31, 2004, subject to
ratification by the Company's stockholders. The engagement of McGladrey &
Pullen, LLP was approved in advance by the Audit Committee. A representative of
McGladrey & Pullen, LLP is not expected to be present at the Meeting and will,
therefore, be unable to respond to stockholders' questions or make a statement.
Ratification of the appointment of the independent auditors requires the
affirmative vote of a majority of the votes cast by the stockholders of the
company at the meeting. The Board of Directors recommends that stockholders vote
"FOR" the ratification of the appointment of McGladrey & Pullen, LLP as the
Company's independent auditors for the 2004 fiscal year.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be considered for inclusion in the Company's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's executive offices at 53
First Street, S.W., P.O. Box 310, Wells, Minnesota 56097, no later than November
15, 2004. In addition, stockholder proposals must meet other applicable criteria
as set forth in the Company's bylaws in order to be considered for inclusion in
the Company's proxy materials.
The Company's Articles provide that if notice of a stockholder proposal to
take action at next year's annual meeting is not received at the Company's main
office by February 15, 2005, the proposal will not be eligible for presentation
at that meeting. In addition, stockholder proposals must meet other applicable
criteria as set forth in the Company's bylaws in order to be eligible for
presentation at next year's annual meeting.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described in this Proxy Statement. However, if
any other matters should properly come before the 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 such proxies.
- --------------------------------------------------------------------------------
ANNUAL REPORTS
- --------------------------------------------------------------------------------
The Company's Annual Report to Stockholders for the year ended December 31,
2003, including financial statements, will be mailed on March 15, 2004 to all
stockholders of record as of the Voting Record Date. Any stockholder who has not
received a copy of the Annual Report may obtain a copy, without cost, by writing
to the Secretary of the Company.
11
Upon written request, the Company will furnish without charge (excluding
exhibits) to any stockholder a copy of the Company's Annual Report on Form
10-KSB for the year ended December 31, 2003. All requests should be directed to
Richard Mueller, Secretary, Wells Financial Corp., 53 First Street, S.W., P.O.
Box 310, Wells, Minnesota 56097-0310.
BY ORDER OF THE BOARD OF DIRECTORS
Richard Mueller
Secretary
Wells, Minnesota
March 15, 2004
12
Appendix A
WELLS FINANCIAL CORP
AUDIT COMMITTEE CHARTER
Purpose
- -------
There shall be an Audit Committee of the Board of Directors (the "Board")
of Wells Financial Corp. (the "Company").
The Audit Committee's purpose is to oversee accounting and financial
reporting processes of the Company and the audits of the financial statements of
the Company. The Committee also has oversight of the independent auditor's
qualifications and independence and the performance of the Company's internal
audit function and independent auditor.
Organization
- ------------
The Audit Committee shall consist of at least three directors. The members
of the Audit Committee and the Chair of the Audit Committee shall be appointed
by the Board. Each director appointed to the Audit Committee shall:
1. satisfy the requirements of The Nasdaq Stock Market, Inc. ("Nasdaq")
rules relating to Audit Committee members, including (a) the applicable
independence requirements in effect from time to time, (b) the requirement that
Audit Committee members not have participated in the preparation of the
financial statements of the Company or any current subsidiary of the Company at
any time during the past three years and (c) the requirement that the Audit
Committee members be able to read and understand financial statements, including
the Company's balance sheet, income statement and cash flow statement;
2. satisfy, as applicable, the independence requirements of the Federal
Deposit Insurance Corporation rules and regulations; and
3. satisfy, as applicable, the independence requirements of Section
10A(m)(3) of the Securities Exchange Act of 1934 (the "Exchange Act") and the
rules and regulations of the Securities and Exchange Commission (the "SEC").
At least one member of the Audit Committee must have accounting or
financial management expertise as required by the Nasdaq rules.
Compliance with the foregoing requirements shall be determined by the Board
in its business judgment and in accordance with applicable rules, regulations
and standards in effect from time to time.
A-1
Responsibilities
- ----------------
The Audit Committee recognizes that the preparation of the Company's
financial statements and other financial information is the responsibility of
the Company's management and that auditing, or conducting reviews of, those
financial statements and other financial information is the responsibility of
the Company's independent auditor. The Audit Committee's responsibility is to
oversee the management and the outside auditors in regard to the accounting and
financial reporting processes of the Company and the audits of the financial
statements of the Company.
The Company's management, and its independent auditor, in the exercise of
their responsibilities, acquire greater knowledge and more detailed information
about the Company and its financial affairs than members of the Audit Committee.
Consequently, the Audit Committee is not responsible for providing any expert or
special assurance as to the Company's financial statements and other financial
information or any professional certification as to the independent auditor's
work, including without limitation its reports on and reviews of the Company's
financial statements and other financial information.
Oversight of Independent Auditor
1. The Audit Committee shall be directly responsible, subject to
shareholder ratification, for the appointment, retention, compensation,
evaluation, termination and oversight of the work of the independent auditor
(including resolution of disagreements between management and the independent
auditor regarding financial reporting) for the purpose of preparing or issuing
an audit report or related work. The Audit Committee shall have sole authority
to approve all audit engagement fees and terms and any non-audit engagements of
the independent auditor, subject to the Audit Committee's right to delegate such
authority as provided below and to the provisions of any policy regarding
pre-approval of services established by the Audit Committee as provided below.
The independent auditor shall report directly to the Audit Committee. The
Company shall provide appropriate funding, as determined by the Audit Committee,
for payment of compensation to any accounting firm engaged for the purpose of
preparing or issuing an audit report or performing other audit, review or attest
services for the Company.
2. The Audit Committee shall pre-approve all auditing services and
permitted non-audit services (including the fees and terms thereof) to be
performed for the Company by its independent auditor, subject to the de minimis
exceptions for non-audit services described in Section 10A(i)(1)(B) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule
2-01(c)(7) of Regulation S-X. The Audit Committee may delegate authority to one
or more members of the Audit Committee, who are independent directors of the
Board, the authority to grant pre-approvals of audit and permitted non-audit
services, provided that decisions of such member(s) shall be presented to the
full Audit Committee at its next scheduled meeting. The Audit Committee may
establish policies and procedures regarding the engagement of the independent
auditor to render services to the Company, provided that the policies and
procedures are detailed as to the particular service, the Audit Committee is
informed of each service and the pre-approval policies and procedures do not
include the delegation of the Audit Committee responsibilities to management. If
pre-approval policies and procedures are adopted, the Company may engage the
independent auditor to perform services consistent with the policies and
procedures. When pre-approving non-audit services, the Audit Committee should
consider whether the provision of the non-audit services by the independent
auditor is compatible with maintaining the independent auditor's independence.
A-2
Authority to Engage Independent Advisors
The Audit Committee shall have the authority to retain independent counsel
and other legal, accounting or other advisors as it determines necessary to
carry out its duties. The Company shall provide appropriate funding, as
determined by the Audit Committee, for payment of compensation to any advisors
employed by the Audit Committee.
Other Responsibilities
The Audit Committee, to the extent it deems necessary or appropriate or to
the extent required by the Exchange Act, the rules and regulations of the SEC or
the rules of the Nasdaq, shall:
1. Responsibility for Financial Statement and Disclosure Matters
-------------------------------------------------------------
(a) Review and discuss with management and the independent auditor
the Company's annual audited financial statements, including
disclosures made in management 's discussion and analysis, and
recommend to the Board whether the audited financial statements
should be included in the Company's Form 10-K.
(b) Review the Company's quarterly financial statements, including
disclosures made in management's discussion and analysis, prior
to the filing of its Form 10-Q, including the results of the
independent auditor's review of the quarterly financial
statements. The review and discussion should include any matters
identified by the independent auditor pursuant to Statement on
Auditing Standards No. 71 regarding the Company's interim
financial statements.
(c) Discuss with management and the independent auditor significant
financial reporting issues and judgments made in connection with
the preparation of the Company's financial statements, including
any significant changes in the Company's selection or application
of accounting principles, any major issues as to the adequacy of
the Company's internal controls and any special steps adopted in
light of material control deficiencies.
(d) Review and discuss any quarterly reports from the independent
auditor on:
(i) all critical accounting policies and practices to be used,
(ii) all alternative treatments of financial information within
generally accepted accounting principles that have been
discussed with management, ramifications of the use of such
alternative disclosures and treatments and the treatment
preferred by the independent auditor, and
(iii)other material written communications between the
independent auditor and management, such as any management
letter or schedule of unadjusted differences.
(e) Discuss with management and the independent auditor the effect of
regulatory and accounting initiatives as well as off-balance
sheet structures on the Company's financial statements.
(f) Review and consider the matters required to be discussed by
Statement on Auditing Standards No. 61 with the independent
auditor and management relating to the
A-3
conduct of the audit, including any difficulties encountered in
the course of the audit work, any restrictions on the scope of
activities or access to requested information, and any
significant disagreements with management.
(g) Receive information from the Company's management about any
significant deficiencies or material weaknesses in the design or
operation of internal controls that could adversely affect the
Company's ability to record, process, summarize and report
financial data and any fraud, whether or not material, that
involves management or other employees who have a significant
role in the Company's internal controls.
2. Oversight of the Company's Relationship with the Independent Auditor
--------------------------------------------------------------------
(a) Review and evaluate the lead partner of the independent audit
team.
(b) Obtain and review a report from the independent auditor at least
annually regarding:
(i) the independent auditor's internal quality-control
procedures,
(ii) any material issues raised by the most recent internal
quality-control review, or peer review, of the firm, or by
any inquiry or investigation by governmental or
professional authorities within the preceding five years
respecting one or more independent audits carried out
by the firm,
(iii) any steps taken to deal with any such issues, and
(iv) all relationships between the independent auditor and the
Company consistent with Independence Standards Board
Standard No. 1.
(c) Actively engage in a dialogue with the independent auditor
regarding any disclosed relationships or services that may impact
the objectivity and independence of the independent auditor.
Evaluate the qualifications, performance and independence of the
independent auditor, including considering whether the auditor's
quality controls are adequate and the provision of permitted
non-audit services is compatible with maintaining the auditor's
independence, taking into account the opinions of management and
internal auditors. Present its conclusions with respect to the
independent auditor to the Board.
(d) Ensure the rotation of the audit partner, lead partner and
concurring partner of the independent auditor as required by law.
(e) Recommend to the Board policies for the Company's hiring of
employees or former employees of the independent auditor who
participated in any capacity in the audit of the Company in order
to ensure the independence of the independent auditor under the
SEC rules.
(f) Confirm that none of the audit partners earn or receive
compensation based on procuring engagements with the Company for
providing products or services, other than audit, review or
attest services.
(g) Discuss with the national office of the independent auditor
issues on which they were consulted by the Company's audit team
and matters of audit quality and consistency.
A-4
(h) Meet with the independent auditor prior to the audit to discuss
the planning and staffing of the audit.
3. Oversight of the Company's Internal Audit Function
--------------------------------------------------
(a) Review the appointment and replacement of the senior internal
auditing executive.
(b) Review the significant reports to management prepared by the
internal auditing department and management's responses.
(c) Discuss with the independent auditor and management the internal
audit department responsibilities, budget and staffing and any
recommended changes in the planned scope of the internal audit.
4. Compliance Oversight
--------------------
(a) Obtain from the independent auditor assurance that the audit was
conducted in a manner consistent with Section 10A(b) of the
Exchange Act.
(b) Administer and oversee, to the extent directed by the Board, any
codes of ethics or business conduct adopted by the Company.
(c) Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters, and the confidential,
anonymous submission by employees of concerns regarding
questionable accounting or auditing matters.
(d) Discuss with management and the independent auditor any
correspondence with regulators or governmental agencies and any
published reports which raise material issues regarding the
Company's financial statements or accounting policies.
(e) Review and evaluate related party transactions required to be
disclosed by Item 404 of SEC Regulation S-K for potential
conflict of interest situations on an ongoing basis.
(f) Prepare an audit committee report as required by the rules of the
SEC to be included in the Company's annual proxy statement.
(g) Review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval.
A-5
Meetings
- --------
The Audit Committee shall meet as often as it determines, but not less
frequently than quarterly. The Audit Committee shall meet periodically with
management, the internal auditors and the independent auditor in separate
executive sessions. The Audit Committee may request any officer or employee of
the Company or the Company's outside counsel or independent auditor to attend a
meeting of the Audit Committee or to meet with any members of, or consultants
to, the Audit Committee. The Audit Committee shall report regularly to the Board
through presentations at Board meetings or by submission of the minutes of the
Audit Committee meetings to the Board. In addition to funding for the specific
purposes described above, the Company shall provide appropriate funding, as
determined by the Audit Committee, for ordinary administrative expenses that are
necessary for the Audit Committee to carry out its duties.
A-6
- --------------------------------------------------------------------------------
WELLS FINANCIAL CORP.
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 21, 2004
- --------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors of Wells Financial
Corp. (the "Company"), or its designee, with full powers of substitution, to act
as attorneys and proxies for the undersigned, to vote all shares of common stock
of the Company which the undersigned is entitled to vote at the Annual Meeting
of Stockholders (the "Meeting"), to be held at the Wells Community Building
located at 189 Second Street, S.W., Wells, Minnesota on April 21, 2004, at 4:00
p.m., local time and at any and all adjournments thereof, as follows:
FOR WITHHELD
1. The election as director of the nominees for
director listed below, each for a three-year term: |_| |_|
Richard Mueller
David Buesing
INSTRUCTIONS: To withhold your vote for any individual nominee, insert the
------------
nominee's name on the line provided below.
----------------------------------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. To ratify the appointment of McGladrey
& Pullen, LLP as independent auditors
for the Company for the 2004 fiscal year. |_| |_| |_|
The Board of Directors recommends a vote "FOR" each of the listed proposals.
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
SIGNED PROXY WILL BE VOTED "FOR" THE PROPOSALS STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN THEIR BEST JUDGMENT.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of Notice of the Meeting, a Proxy Statement dated March
15, 2004 and the 2003 Annual Report to Stockholders.
|_| Please check here if you plan to attend the Meeting.
Dated: , 2004
------------------------------------
- ---------------------------------- ------------------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
- ---------------------------------- ------------------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
Please sign exactly as your name appears on this proxy card. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, SIGN, DATE, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
- --------------------------------------------------------------------------------