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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_]Confidential, for Use of the
[_]Preliminary Proxy Statement Commission Only (as permitted by
Rule 14a-6(e)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SKY FINANCIAL GROUP, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: ________
(2) Aggregate number of securities to which transaction applies: ___________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): _____________
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction: _______________________
(5) Total fee paid: ________________________________________________________
[_]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: ________________________________________________
(2) Form, Schedule or Registration Statement No.: __________________________
(3) Filing Party: __________________________________________________________
(4) Date Filed: ____________________________________________________________
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Sky Financial Group, Inc.
[LOGO] SKY
2002 Notice of
Annual Meeting and
Proxy Statement
221 South Church Street
Bowling Green, Ohio 43402
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------
March 4, 2002
To the Shareholders of Sky Financial Group, Inc.:
The Annual Meeting of Shareholders of Sky Financial Group, Inc. (the
"Company") will be held at The Forum Conference Center, One Cleveland Center,
1375 East 9th Street, Cleveland, Ohio 44114, on April 17, 2002 at 10:00 a.m.
(local time) for the purpose of considering and voting upon the following
matters:
1. The election of five (5) Class I Directors to serve a three-year term
until the Annual Meeting of Shareholders in 2005;
2. The approval of the Sky Financial Group, Inc. 2002 Stock Option and
Stock Appreciation Rights Plan; and
3. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Shareholders of record at the close of business on February 19, 2002 are
entitled to notice of and to vote at the Annual Meeting of Shareholders. The
Proxy Statement and Annual Report of the Company, including financial
statements for the year-ended December 31, 2001, have been mailed to all
shareholders with this Notice of Annual Meeting.
By Order of the Board of Directors,
/s/ W. Granger Souder, Jr.
W. Granger Souder, Jr.
Secretary
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE
PROVIDED.
Sky Financial Group, Inc.
221 South Church Street
Bowling Green, Ohio 43402
----------------
PROXY STATEMENT
----------------
GENERAL INFORMATION
The Board of Directors of Sky Financial Group, Inc. (the "Company") is
soliciting proxies to be voted at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held on April 17, 2002, and any adjournments thereof.
The Company is a financial holding company headquartered in Bowling Green,
Ohio. The mailing address of the principal executive offices of the Company is
221 S. Church Street, Bowling Green, Ohio 43402, and its telephone number is
(419) 327-6300. Through its wholly owned subsidiaries, the Company operates a
commercial bank, trust company, health care financing company, and several
related financial service companies including insurance agencies. Its market
area includes Ohio, Pennsylvania, West Virginia, Michigan, and Indiana.
Each of the 82,601,259 shares of common stock of the Company, without par
value ("Common Stock"), outstanding on February 19, 2002, will be entitled to
one vote on matters acted upon at the Annual Meeting, either in person or by
proxy. The shares represented by all properly executed proxies sent to the
Company or its designee will be voted as designated, and in the absence of
instructions will be voted in the manner recommended by the Board of Directors
of the Company. Any shareholder executing a proxy has the right to revoke it at
any time prior to its exercise, by written notice delivered to the Secretary of
the Company, by subsequently dated proxy, or by voting in person at the Annual
Meeting any time prior to its exercise.
All costs associated with the solicitation of proxies will be paid for by
the Company. Proxies will be solicited primarily by mail, but certain officers
and employees of the Company or its subsidiaries may personally solicit proxies
without additional compensation. Banks, brokers, and other holders of record
will be asked to send proxies and proxy materials to the beneficial owners of
Common Stock to obtain necessary voting instructions, and the Company will
reimburse them for their reasonable expenses.
The proxy materials are first being mailed to shareholders on or about March
4, 2002.
PROPOSAL 1:
ELECTION OF DIRECTORS
Under the Code of Regulations of the Company, the Board of Directors is
divided into three classes designated as Class I, Class II, and Class III. Each
class consists of approximately one-third of the total number of directors, as
fixed from time-to-time by the Board of Directors. Directors serve staggered
three-year terms so that directors of only one class are elected at each annual
meeting of shareholders. As of the date of this Proxy Statement, no vacancies
exist on the Company's Board of Directors.
At the Annual Meeting, shareholders will be asked to elect five Class I
Directors, as described below. If any of the Company's nominees are unable to
serve (which is not now contemplated), the proxies will be voted for such
substitute nominee(s) as the Board of Directors recommends or the number of
directors constituting the full Board of Directors may be reduced. In
accordance with the Company's Code of Regulations and Ohio law, if a quorum is
present at the Annual Meeting, the nominees for director who receive the
greatest number of votes cast by the shares present in person or by proxy and
entitled to vote at the Annual Meeting will be
elected to serve as directors of the Company. Proxies will be voted in favor of
the nominees named below or any substitutes unless otherwise instructed by the
shareholder. Abstentions and shares of Common Stock not voted by brokers and
other entities holding shares of Common Stock on behalf of beneficial owners
will not affect the election of directors, because such shares are not
considered present for voting purposes.
Information as to Nominees
The following information is provided with respect to each nominee for re-
election at the Annual Meeting. Each person listed below has been nominated for
election as a Class I Director. Nominations are made by the Governance
Committee of the Board of Directors. Unless otherwise indicated, the business
experience and principal occupations indicated for each director has extended
for five or more years.
Class I Directors--Term Expires 2005
Period of Service as a
Name, Age, and Certain Biographical Information Director
- ----------------------------------------------- ---------------------
Marty E. Adams, 49.............................................. Director since 1998;
Chairman, President and CEO, Sky Financial Group, Inc.; Director of
formerly Vice subsidiary or
Chairman of the Board, President and CEO of Citizens predecessor since
Bancshares, Inc., a 1984
predecessor of the Company.
Jonathan A. Levy, 41............................................ Director since 1999;
Partner, Redstone Investments, a real estate development, Director of
acquisition, and management firm. subsidiary or
predecessor since
1996
Thomas J. O'Shane, 54 .......................................... Director since 1999;
Senior Executive Vice President, Sky Financial Group, Inc.; Director of
formerly CEO of First Western Bancorp, Inc., which was acquired subsidiary or
by the Company. predecessor since
1988
Edward J. Reiter, 62 ........................................... Director since 1998;
Senior Chairman, Sky Financial Group, Inc.; formerly Chairman Director of
and CEO, Mid Am, Inc., a predecessor of the Company. subsidiary or
predecessor since
1988
C. Gregory Spangler, 61 ........................................ Director since 1998;
Chairman, Spangler Candy Company, a manufacturer of candy Director of
products. subsidiary or
predecessor since
1993
Information as to Directors Whose Terms of Office Continue
The following information is provided with respect to incumbent Class II and
Class III Directors who are not nominees for election at the Annual Meeting.
Unless otherwise indicated, the business experience and principal occupations
indicated for each director has extended for five or more years.
Class II Directors--Term Expires 2003
Period of Service as a
Name, Age, and Certain Biographical Information Director
- ----------------------------------------------- ---------------------
George N. Chandler, II, 64 ..................................... Director since 1998;
Retired Vice President, Cleveland-Cliffs, Inc., a producer of Director of
iron ore pellets subsidiary or
and iron ore; Mr. Chandler is the brother-in-law of Richard R. predecessor since
Hollington, 1997
Jr., a Class III Director of the Company.
Robert C. Duvall, 59 ........................................... Director since 1999;
Retired; formerly Vice President/Finance and Director of Wampum Director of
Hardware Co., an explosives distributor; formerly Director of subsidiary or
Nobel Insurance LTD. predecessor since
1995
2
D. James Hilliker, 54 .......................................... Director since 1998;
Vice President, Better Food Systems, Inc., a company which owns Director of
and operates Wendy's restaurant franchises. subsidiary or
predecessor since
1995
Gregory L. Ridler, 55 .......................................... Director since 1999;
Chairman, Mahoning Valley Region, Sky Bank; formerly President Director of
& CEO, Mahoning National Bank of Youngstown, which was acquired subsidiary or
by the Company. predecessor since
1988
Emerson J. Ross, Jr., 60 ....................................... Director since 1998;
Manager, Corporate Community Relations, Owens Corning, a Director of
manufacturer subsidiary or
of building materials and composite products. predecessor since
1988
Class III Directors--Term Expires 2004
Period of Service as a
Name, Age, and Certain Biographical Information Director
- ----------------------------------------------- ---------------------
Richard R. Hollington, Jr., 69 ................................. Director since 1998;
Senior Partner in the law firm of Baker & Hostetler, LLP. Mr. Director of
Hollington is subsidiary or
the brother-in-law of George N. Chandler, II, a Class II predecessor since
Director of the 1958
Company. Mr. Hollington serves as the Company's Lead Director.
Fred H. Johnson, III, 40 ....................................... Director since 1998;
President and CEO, Summitcrest, Inc., a company which operates Director of
Angus cattle farms. subsidiary or
predecessor since
1987
James C. McBane, 62 ............................................ Director since 1998;
Principal, McBane Insurance Agency, Inc. Director of
subsidiary or
predecessor since
1964
Gerard P. Mastroianni, 46 ...................................... Director since 1998;
President, Alliance Ventures, a real estate holding company. Director of
subsidiary or
predecessor since
1996
Robert E. Spitler, 52 .......................................... Director since 1999;
Managing Partner in the law firm of Spitler, Vogtsberger & Director of
Huffman, LLP. subsidiary or
predecessor since
1987
Joseph N. Tosh, II, 60 ......................................... Director since 1998;
Retired Officer of Sky Bank, a subsidiary of the Company; Director of
formerly President and CEO, Century National Bank & Trust subsidiary or
Company, which was acquired by Citizens Bancshares, Inc., a predecessor since
predecessor of the Company. 1986
3
MEETINGS, COMMITTEES, FUNCTIONS, AND COMPENSATION
The Board of Directors of the Company held twelve regular and no special
meetings in 2001. Each director attended at least 75% of the total meetings of
the Board of Directors and its committees held in 2001. To assist in carrying
out its responsibilities, the Board of Directors has established five standing
committees which are described below.
Executive Committee
The members of the Executive Committee of the Board of Directors are Marty
E. Adams, James C. McBane, Thomas J. O'Shane, Edward J. Reiter, C. Gregory
Spangler, Joseph N. Tosh, II, and Richard R. Hollington, Jr., who serves as
Chairperson. The Executive Committee met two times in 2001. The Executive
Committee exercises all powers of the Board of Directors in the management of
the business and affairs of the Company while the Board of Directors is not in
session, subject to certain limitations.
Audit Committee
The members of the Audit Committee of the Board of Directors are Emerson J.
Ross, Jr., C. Gregory Spangler, and Fred H. Johnson, III, who serves as
Chairperson. The Audit Committee met five times in 2001. The oversight
functions of the Audit Committee, which are defined in its charter, include:
(i) the appointment of the Company's independent auditors; (ii) review of the
external audit plan and the results of the auditing engagement; (iii) review of
the internal audit plan and results of the internal audits; and (iv) review of
the adequacy of the Company's system of internal control. The Company's
securities are listed on the NASDAQ National Market, and all members of the
Audit Committee meet the independence standards of the National Association of
Securities Dealers, Inc.
Risk Management Committee
The members of the Risk Management Committee of the Board of Directors are
Jonathan A. Levy, Gregory L. Ridler, and George N. Chandler, II, who serves as
Chairperson. The Risk Management Committee met five times in 2001. The Risk
Management Committee is responsible for reviewing the adequacy of systems and
procedures controlling risk throughout the Company and its subsidiaries,
including credit risk, interest rate risk, market risk, legal risk, reputation
risk and transaction risk.
Governance Committee
The members of the Governance Committee of the Board of Directors are
Emerson J. Ross, Jr., Jonathan A. Levy, and Robert C. Duvall, who serves as
Chairperson. The Governance Committee met six times in 2001. The Governance
Committee is responsible for making independent recommendations to the Board of
Directors as to best practices for Board governance and evaluation of Board
performance, and further serves as the Company's nominating committee,
selecting individuals for election to the Board of Directors and considering
incumbent directors for nomination for re-election. The Governance Committee
considers shareholder nominations for directors in accordance with the
Company's Code of Regulations.
Compensation Committee
The members of the Compensation Committee of the Board of Directors are
Robert C. Duvall, Gerard P. Mastroianni, Robert E. Spitler, and D. James
Hilliker, who serves as Chairperson. The Compensation Committee met five times
in 2001. The Compensation Committee is responsible for the oversight and
administration of the compensation and benefit plans of the Company and its
subsidiaries. The Compensation Committee oversees (i) the Company's
compensation strategy, policies, and programs; (ii) the compensation levels of
directors and executive management; (iii) management development and succession
planning; and (iv) administration of the Company's employee benefit plans.
4
Compensation Committee Interlocks and Insider Participation
Members of the Compensation Committee, or their associates, were customers
of or had transactions with the Company or the Company's banking or other
subsidiaries in the ordinary course of business during 2001, and additional
transactions may be expected to take place in the future. All outstanding loans
to directors and their associates, and purchases and placements of investment
securities and other financial instruments included in such transactions, were
made in the ordinary course of business, on substantially the same terms,
including interest rates and collateral where applicable, as those prevailing
at the time for comparable transactions with other persons, and did not involve
more than normal risk of collectibility or present other unfavorable features.
Compensation of Directors
Each director of the Company receives an annual cash retainer of $12,000. In
addition, non-employee directors receive a fee of $1,000 for each Board of
Directors meeting attended ($500 for teleconference meetings) and a fee of $750
for each committee meeting attended. Committee chairpersons receive an
additional fee of $500 for each committee meeting attended. In 2001, each non-
employee director was granted an option to purchase 10,000 shares of the
Company's Common Stock pursuant to the Amended and Restated 1998 Stock Option
Plan for Directors.
5
BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
Generally, under the rules of the Securities and Exchange Commission, a
person is deemed to be the beneficial owner of a security with respect to which
such person, through any contract, arrangement, understanding, relationship, or
otherwise, has or shares voting power (which includes power to vote, or direct
the voting of, such security) or investment power (which includes power to
dispose of, or direct the disposition of, such security). In addition, a person
is deemed to be the beneficial owner of a security if he or she has the right
to acquire such voting or investment power over the security within sixty days,
for example, through the exercise of a stock option.
The following table shows the beneficial ownership of the Company's Common
Stock as of December 31, 2001, by (i) each person who is the beneficial owner
of more than five percent of the outstanding shares of the Company's Common
Stock; (ii) each director of the Company; (iii) each executive officer named in
the Summary Compensation Table and (iv) all directors and executive officers as
a group.
Amount and Nature
of Beneficial
Ownership as of
December 31, Percent of Class
Five Percent Holder 2001(1), (2) (if 1% or Greater)
- ------------------- ----------------- ------------------
Sky Trust, National Association.......... 8,476,431(3) 10.26%
30050 Chagrin Blvd.
Suite 150
Pepper Pike, Ohio 44124
Directors and Executive Officers
- --------------------------------
Marty E. Adams........................... 294,290
George N. Chandler, II................... 693,587
Robert C. Duvall......................... 116,522
D. James Hilliker........................ 128,768
Richard R. Hollington, Jr. .............. 601,060(4)
Fred H. Johnson, III..................... 190,671
Frank J. Koch............................ 63,633
Jonathan A. Levy......................... 73,063
Gerard P. Mastroianni.................... 62,530
James C. McBane.......................... 245,512(5)
Thomas J. O'Shane........................ 317,252
Edward J. Reiter......................... 374,728
Gregory L. Ridler........................ 62,890
Emerson J. Ross, Jr. .................... 62,811
W. Granger Souder, Jr. .................. 62,932
C. Gregory Spangler...................... 76,251
Robert E. Spitler........................ 151,574
Kevin T. Thompson........................ 48,410
Joseph N. Tosh, II....................... 291,210
All Directors and Executive Officers as a
group................................... 4,291,156 5.20%
(1) Includes shares held in the name of spouses, minor children, certain
relatives, trusts, estates, and certain affiliated companies as to which
beneficial ownership may be disclaimed.
(2) The amounts shown represent the total shares owned outright by such
individuals together with shares issuable upon the exercise of currently
vested, but unexercised stock options. Specifically, vested but unexercised
options entitle the following individuals to acquire the indicated number
of shares: Mr. Adams, 135,492; Mr. Chandler, 38,957; Mr. Duvall, 31,686;
Mr. Hilliker, 58,824; Mr. Hollington, Jr., 38,865; Mr. Johnson, 20,171; Mr.
Koch, 34,446; Mr. Levy, 37,267; Mr. Mastroianni, 41,587;
6
Mr. McBane, 39,627; Mr. O'Shane, 167,396; Mr. Reiter, 218,038; Mr.
Ridler, 20,240; Mr. Ross, 47,397; Mr. Souder, 49,600; Mr. Spangler,
68,337; Mr. Spitler, 33,901; Mr. Thompson, 38,102; Mr. Tosh, 116,402;
and all directors and executive officers as a group, 1,387,472.
(3) Sky Trust, N.A., the Company's trust company subsidiary, was deemed
beneficial owner of portions of the referenced number of shares based upon
its sole or shared voting or investment power over the shares. Sky Trust
holds the shares solely in a fiduciary or custodial capacity under numerous
trust relationships, none of which represents more than five percent of the
Company's outstanding shares. The Company disclaims beneficial ownership of
the shares which may be deemed to be beneficially owned by Sky Trust.
(4) The number of shares of Common Stock shown as beneficially owned by Mr.
Hollington includes 73,716 shares owned by his wife, for which Mr.
Hollington disclaims beneficial ownership.
(5) The number of shares of Common Stock shown as beneficially owned by Mr.
McBane includes 2,662 shares owned by his wife, for which Mr. McBane
disclaims beneficial ownership.
7
EXECUTIVE COMPENSATION
The following table is a summary of certain compensation awarded, paid to,
or earned by the Company's Chief Executive Officer and its other four most
highly compensated executive officers (the "Named Executives").
Summary Compensation Table
Annual Compensation Long Term Compensation
------------------------------ ------------------------------
Awards
--------------
Securities
Other Annual Underlying All Other
Name/Title Year Salary Bonus Compensation Option/SARs(1) Compensation(2)
- ---------- ---- -------- -------- ------------ -------------- ---------------
Marty E. Adams.......... 2001 $601,094 $398,224 $35,000 50,000 $ 111,209
Chairman, President and
CEO 2000 550,504 277,894 17,600 102,109
Sky Financial Group,
Inc. 1999 500,912 475,551 44,000 62,886
Thomas J. O'Shane....... 2001 330,602 172,243 12,000 25,000 58,372
Senior EVP 2000 275,462 119,176 11,000 49,920
Sky Financial Group,
Inc. 1999 343,235 140,250 27,500 2,023,148
Kevin T. Thompson....... 2001 225,410 119,467 12,000 17,500 34,626
EVP and CFO 2000 210,353 84,949 6,600 29,164
Sky Financial Group,
Inc. 1999 180,547 127,683 16,500 17,229
Frank J. Koch........... 2001 191,364 81,044 12,000 12,500 38,572
EVP, Senior Credit
Officer 2000 185,311 110,000 4,400 30,976
Sky Financial Group,
Inc. 1999 167,803 118,670 11,000 19,189
W. Granger Souder, Jr... 2001 183,334 92,034 12,000 12,500 32,188
EVP, General Counsel 2000 175,294 70,791 4,400 28,986
Sky Financial Group,
Inc. 1999 158,581 112,148 11,000 18,617
- --------
(1) Options granted have been adjusted for the stock splits, stock dividends,
and similar occurrences affecting all outstanding shares.
(2) In 2001, All Other Compensation for Messrs. Adams, O'Shane, Thompson, Koch
and Souder consists of contributions under the Company's ESOP Pension Plan,
Profit Sharing Plan and 401(k) Plan (Mr. Adams, $20,400; Mr. O'Shane,
$20,400; Mr. Thompson, $15,810; Mr. Koch, $20,400; and Mr. Souder,
$20,400). Also included are amounts accrued under the Company's
supplemental retirement plan (Mr. Adams, $89,279; Mr. O'Shane, $36,283; Mr.
Thompson, $18,283; Mr. Koch, $17,562; and Mr. Souder, $11,541); and group
term life insurance and bank owned life insurance premiums paid by the
Company (Mr. Adams, $1,530; Mr. O'Shane, $1,689, Mr. Thompson, $533; Mr.
Koch, $610; and Mr. Souder, $247). In 1999, all Other Compensation for Mr.
O'Shane includes $2,007,941 paid by First Western by operation of the
change in control provisions of his employment contract with First Western
Bancorp, Inc.
8
Stock Options
The following table sets forth information concerning 2001 grants to the
Named Executives of options to purchase Common Stock under the Company's 1998
Stock Option Plan for Employees.
Option/SAR Grants in Last Fiscal Year
Potential Realizable
Value at Assumed Rates
of Stock Price
Appreciation for Option
Individual Grants Term(1)
---------------------------------- -----------------------
Number of % of
Securities Total Options Exercise
Underlying Granted to Price
Options Employees in Per Expiration
Name Granted Fiscal Year Share Date 5% 10%
- ---- ---------- ------------- -------- ---------- -----------------------
Marty E. Adams.......... 50,000(2) 7.01% $16.75 3/21/11 $ 526,699 $ 1,334,759
8,042(3) 6.99 20.34 12/31/11 102,871 260,695
Thomas J. O'Shane....... 25,000(2) 3.51 16.75 3/21/11 263,350 667,380
Kevin T. Thompson..... . 17,500(2) 2.45 16.75 3/21/11 184,344 467,166
5,455(3) 4.74 20.34 12/31/11 69,779 176,833
Frank J. Koch........... 12,500(2) 1.75 16.75 3/21/11 131,675 333,690
3,446(3) 3.00 20.34 12/31/11 44,080 111,708
W. Granger Souder,
Jr. ................... 12,500(2) 1.75 16.75 3/21/11 131,675 333,690
1,148(3) 1.00 20.34 12/31/11 14,685 37,214
- --------
(1) The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates set by the Securities and Exchange Commission and are
not intended to forecast possible future appreciation, if any, in the
market value of the Common Stock.
(2) Grant Options--Options were granted as 2001 compensation under the
Company's 1998 Stock Option Plan for Employees ("Employee Option Plan") on
March 21, 2001 and vest over five years in the following increments: 40%
on the second anniversary of the grant date and an additional 20% on each
successive anniversary of the grant date. The option exercise price is not
adjustable except for stock splits, stock dividends and similar
occurrences affecting all outstanding shares.
(3) Elective Options--Options were granted under the Employee Option Plan on
December 31, 2001 in exchange for the individual's voluntary forfeiture of
a portion of 2002 salary. Elective options are fully vested on the grant
date. The option exercise price is not adjustable except for stock splits,
stock dividends, and similar occurrences affecting all outstanding shares.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
Number of Securities Underlying
Unexercised Options /SARs at Value of Unexercised In-the-
Shares 12/31/01 Money Options /SARS at 12/31/01
Acquired on Value ------------------------------- -------------------------------
Name Exercise(#) Realized($) Exercisable(#) Unexercisable(#) Exercisable($) Unexercisable($)
- ---- ----------- ----------- -------------- ---------------- -------------- ----------------
Marty E. Adams.......... 4,918 44,311 135,486 82,896 290,404 223,344
Thomas J. O'Shane....... 6,866 37,694 167,394 38,500 1,300,234 139,590
Kevin T. Thompson....... 0 0 49,597 36,657 35,859 145,704
Frank J. Koch........... 0 0 34,445 35,886 42,596 100,086
W. Granger Souder,
Jr. ................... 6,209 61,985 38,101 51,248 187,430 74,175
9
Employment Contracts and Change in Control Arrangements
Employment Agreements
Employment agreements are in effect between the Company and certain key
executives (including Mr. Adams, Mr. O'Shane and Mr. Koch).
The employment agreement with Mr. Adams is for an initial five year term and
automatically renews for an additional one year upon each anniversary of the
agreement commencing with the third such anniversary, unless prior notice not
to renew is given. The agreement provides for an initial base salary of
$500,000 for Mr. Adams, which may not be reduced during the term of the
agreement. Mr. Adams is eligible to receive an annual target bonus equal to at
least 40% of such base salary.
Mr. Adams' agreement provides for payments upon the executive's termination
without "cause" or for "good reason" (as defined in the agreement), or if the
agreement is not renewed by the Company, equal to the greater of (i) the sum of
Mr. Adams' annual base salary plus targeted annual bonus ("Annual Cash
Compensation") multiplied by the number of whole and partial years remaining in
the employment term as it existed immediately preceding termination, or (ii)
three times Annual Cash Compensation. Welfare benefit continuation will be
provided for the remainder of the term. If such termination occurs during the
two-year period following a "Change in Control," Mr. Adams would receive the
greater of the termination payment described above, or three times the sum of
his highest annual rate of base salary and his highest annual bonus during the
three-year period immediately prior to the date of termination, and continued
welfare benefits for the longer of three-years or the remaining period of the
term as it existed immediately prior to termination. Upon any such termination
all stock options granted after the effective time shall vest and become
immediately exercisable in full.
If any payments pursuant to the agreements or otherwise would be subject to
any excise tax under the Internal Revenue Code, the Company will provide an
additional payment such that the executive retains a net amount equal to the
payments he would have retained if such excise tax had not applied.
In connection with the August, 1999 acquisition of First Western Bancorp,
Inc., the Company entered into an employment agreement with Mr. O'Shane for a
term of ten years. The agreement provides for an initial base salary of
$275,000, which may not be reduced during the term of the agreement. Mr.
O'Shane is entitled to receive an annual targeted bonus equal to at least 50%
of such base salary.
Mr. O'Shane's agreement provides for a lump sum payment upon the executive's
termination without "cause" or for "good reason" (as defined in the agreement),
equal to the sum of Mr. O'Shane's annual base salary plus the average of the
prior two bonuses paid, times the number of whole and partial years remaining
in the employment term. Additionally, the agreement provides that upon Mr.
O'Shane's voluntary termination of employment after the third anniversary of
the agreement, without "good reason," the Company shall pay to the executive an
amount equal to the product of Mr. O'Shane's annual base salary times the
number of whole and partial years remaining in the employment term, provided
that Mr. O'Shane agrees to the terms of a covenant not-to-compete for a period
of two years following termination.
Citizens Bancshares, Inc., the Company's predecessor, entered into an
employment agreement with Mr. Koch, which was assumed by the Company as a
result of the October 1998 merger of Citizens and Mid Am. The agreement is
automatically extended for an additional two-year period on each anniversary of
the agreement, unless the Company gives notice of non-renewal. The agreement
provides for a base salary at least equal to the annual salary paid in the
preceding year, a bonus at the discretion of the Company, and participation in
the Company's profit sharing, health and welfare plans on a basis consistent
with other Company executives.
10
Change in Control Agreements
Change in control agreements are in effect between the Company and certain
key executives, including Mr. Thompson and Mr. Souder (the "Change in Control
Agreements").
Pursuant to the Change in Control Agreements, the Company and its
subsidiaries may terminate an executive officer's employment for any reason or
for no reason, with or without notice. The Change in Control Agreements do not
change the individual's status as employees at will under the laws of the State
of Ohio. In the event of an involuntary termination or diminution of status
without cause after a change in control (as defined in the agreements), the
executive officers are entitled to compensation payable in a lump sum or
monthly installments equal to a percentage of the individual's average total
compensation for the immediately preceding two years. The applicable percentage
is two hundred percent for Mr. Thompson and two hundred fifty percent for Mr.
Souder. The Company and its subsidiaries are not obligated to pay any amount
which is in excess of the then maximum amount which is deductible for federal
income tax purposes.
11
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is comprised of four non-employee directors who
are not eligible to participate in management compensation programs. The Board
of Directors has delegated to the Committee responsibility for the oversight
and administration of all compensation and benefit plans of the Company. The
Committee retained Buck Consultants, an independent compensation consulting
firm, to advise the Company on matters of short-term and long-term compensation
for 2001.
Compensation Policies
The Committee has adopted a performance-driven compensation philosophy,
which seeks to directly link pay to individual results as well as contributions
toward team and organizational results. Organizational results are measured in
terms of achieving both current and long-term strategic objectives, as
established by the Board of Directors from time-to-time. The intended result of
this linkage is the alignment of management's interests with those of the
Company's shareholders.
The Company's compensation program includes three core components: base
salary, annual cash incentive, and long-term incentive compensation. The
Committee manages all three components on an integrated basis to achieve the
following objectives: to attract and retain highly qualified management; to
provide short-term incentive compensation which varies directly with the
Company's financial performance; and to link long-term compensation directly
with long-term stock price performance.
Base Salary
Base salaries for executive management are established annually by the
Committee. The Committee also considers the recommendations of the Chief
Executive Officer as to the parameters for annual salary adjustments for all
employees, to assure that salaries are competitively established. Salary ranges
are determined for each executive position, based upon peer group survey data
comprised of reasonably comparable financial services holding companies. For
2001, the Committee considered, among other things, its objective of targeting
executive management base salaries at the 50th percentile of the salary range
for the specific position, adjusted for individual performance.
Annual Incentive Compensation
Corporate-wide incentive compensation awards play a key role in implementing
the Company's strategy of attracting and retaining qualified executive officers
by rewarding quality performance. The Company's annual cash incentive
compensation is based on the Company's short-term performance as measured by
certain financial ratios tied to the Company's strategic objectives.
Specifically, rewards under the plan are tied to four key performance measures:
client service quality; balance sheet quality/risk management; profitability;
and growth. These measures may relate to the Company's consolidated results or
the results of a subsidiary, region or departmental group. The relative
weighting of each measurement criteria is weighted for each plan participant
depending upon the participant's position and ability to affect the financial
performance of the Company or the participant's subsidiary. For each category,
the Company establishes an Entry point, below which no incentive compensation
is paid, a Goal point, which represents the achievement of budgeted financial
performance, and a Maximum point, which represents the highest level of payout
for each measurement category. Linkage exists between performance measures,
inasmuch as performance below the Entry point for any category will reduce the
aggregate incentive payout in other categories. Incentive compensation for each
of the Executive Officers identified in the Summary Compensation Table is
weighted with particular emphasis on corporate earnings per share and credit
quality ratios.
The range of awards under the incentive plan are determined on the basis of
the participant's level of responsibility, and are paid as a function of the
participant's base salary. For 2001, Goal and Maximum bonus
12
percentages for Mr. Adams were 50% and 100% of base salary, respectively. Goal
and Maximum bonus percentages for Messrs. O'Shane, Thompson, Koch, and Souder
were 40% and 80% of base salary, respectively for 2001.
Long-Term Incentive Compensation
The Committee considers long-term stock-based compensation as an essential
tool in aligning the interests of management with that of the Company's
shareholders. In its evaluation of the appropriate level of long-term stock-
based compensation, the Committee considers industry peer group data, the
Company's prior long-term incentive compensation practice, and the number of
stock options outstanding relative to the number of shares of the Company's
common stock outstanding. Non-qualified options to purchase common stock of the
Company are granted to executive officers under the 1998 Stock Option Plan for
Employees to encourage these individuals to manage the Company in a manner that
would increase long-term shareholder value. Options are granted at an exercise
price of 100% of the common stock's market value on the grant date, vest in
increments over five years, and will expire 10 years from the date of grant
unless the optionee no longer serves as an employee or director of the Company
or a subsidiary. Options are granted by the Committee using the Black-Scholes
option valuation model and take into consideration other factors such as
dilution, the number of shares of the Company's common stock outstanding, the
Company's financial performance, and the officer's individual performance.
Other long-term compensation includes Company contributions under the Profit
Sharing Plan and the Employee Stock Ownership Pension Plan. Profit Sharing Plan
contributions are made by the Company if corporate earnings targets established
by the Company are achieved. Contributions under the ESOP are a function of
annual cash compensation and are invested in the Company's common stock.
Chief Executive Officer's Compensation
The Committee established Mr. Adams' base salary for 2001 at $600,000 after
considering factors such as the Company's financial performance as measured by
ROE and earnings per share, the achievement of the Company's strategic
objectives, and comparative compensation data. Using similar criteria, the
Committee established Mr. Adams' annual cash incentive opportunity at a range
of 50% to 100% of base salary, and granted a non-qualified stock option to
acquire 50,000 shares of Company common stock at $16.75, the market price as of
March 21, 2001, the date of grant.
Respectfully submitted,
The Compensation Committee
D. James Hilliker, Chairperson
Robert C. Duvall
Gerard P. Mastroianni
Robert E. Spitler
13
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total shareholder
returns for the Company, the Nasdaq Bank Index, and the Russell 2000 Index for
the five-year period ended December 31, 2001. The total shareholder return
assumes a $100 investment in the common stock of Citizens Bancshares, Inc., the
Company's predecessor, and each index on December 31, 1996 and that all
dividends were reinvested.
[CHART]
Sky Financial Nasdaq Bank Russell 2000
Group Index Index
1996 $100 $100 $100
1997 220 164 121
1998 175 144 116
1999 146 133 139
2000 134 152 133
2001 163 168 135
PROPOSAL 2:
APPROVAL OF 2002 STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
The Sky Financial Group, Inc. 2002 Stock Option and Stock Appreciation
Rights Plan (the "2002 Plan") is being submitted for approval by the
shareholders of the Company. The following description of the 2002 Plan does
not purport to be complete and is qualified in its entirety by reference to the
text of the 2002 Plan attached as Appendix A to this Proxy Statement.
Purpose
The Board of Directors believes that it is appropriate for the Company to
maintain a stock option plan to aid the Company and its subsidiaries in
attracting, securing and retaining key employees of outstanding ability and to
provide additional motivation to such employees to exert their best efforts on
behalf of the Company and its subsidiaries. The Company last submitted to its
shareholders the 1998 Stock Option Plan for Employees and the 1998 Stock Option
Plan for Directors (the "1998 Plans"), in September, 1998. Due to the Company's
growth and the assumption (or replacement) of stock options in connection with
acquisitions of other banks or financial service companies, the number of
shares available for issuance in the 1998 Plans is limited. As a result, the
Board of Directors has proposed the adoption of a new plan. The 2002 Plan
permits the Board of Directors to grant options to purchase the Company's
common stock (in the form of both non qualified and incentive stock options) as
well as stock appreciation rights (collectively, the "Rights").
Summary of the 2002 Plan
Plan Administration. The 2002 Plan will be administered by the Compensation
Committee of the Board of Directors ("the Committee"). The Committee will,
subject to the authority reserved by the Board of Directors, have the authority
to: (i) construe and interpret the 2002 Plan and the terms and provisions of
all
14
Rights granted under the 2002 Plan; (ii) define the terms used in the 2002
Plan; (iii) prescribe, amend and rescind rules and regulations relating to the
2002 Plan; and (iv) make all other determinations and interpretations necessary
or advisable for the administration of the 2002 Plan. The Board of Directors
has reserved the authority, in conjunction with the recommendations of the
Committee, to: (i) determine the persons eligible for Rights granted under the
2002 Plan; (ii) determine the number of shares and the exercise price or value
pertaining to Rights granted under the 2002 Plan; and (iii) delegate the
authority to the Company's CEO to grant a limited number of Rights under the
2002 Plan.
Eligibility and Participation. All current and future employees, including
officers, and non-employee directors of the Company and its subsidiaries, who
are from time-to-time responsible for the management, oversight, growth and
protection of the business of the Company and its subsidiaries, will be
eligible to receive grants of Rights under the 2002 Plan. Upon recommendation
of the Committee, the Board of Directors will determine, in accordance with the
terms of the 2002 Plan, the number of Rights each eligible person will be
granted from time to time.
Common Shares Available; Restrictions on Transferability. The 2002 Plan
provides that 2,046,178 shares, representing 2% of the total issued and
outstanding shares of the Company common stock, will be reserved for issuance
in connection with Rights under the 2002 Plan. The number of shares of Company
common stock subject to the 2002 Plan will be proportionately and equitably
adjusted to reflect stock dividends, stock splits, recapitalizations, mergers,
consolidations or other corporate reorganizations. In the event that a Right is
forfeited, terminates or is cancelled, the common shares relating thereto will
again become available for the grant of Rights under the 2002 Plan. Unless
otherwise determined by the Committee, the Rights granted are not transferable
by the holder, other than by will or by the laws of descent and distribution.
Exercise Price of Rights. The exercise price of the Company common stock
relating to Rights shall, upon recommendation of the Committee, be determined
by the Board of Directors on the date of grant based upon the fair market value
of the Company's common stock. Fair market value of a share of Company common
stock on a particular date will be the closing price for such date of the
shares of the Company common stock (or the last day shares of the Company
common stock were traded prior to the grant date) as quoted on the Nasdaq
National Market System, or if no such quotations are available, as determined
by the Committee.
Time of Exercise of Rights. Unless otherwise determined by the Committee,
each Right will be exercisable during and over a period ending not later than
ten (10) years from the date it was granted. Unless otherwise determined by the
Committee or as otherwise required by the 2002 Plan, the Rights shall be
exercisable as follows:
Time Amount Exercisable
- ---- ------------------
After Second Anniversary of Date of Grant.................... 40%
After Third Anniversary of Date of Grant..................... 60%
After Fourth Anniversary of Date of Grant.................... 80%
After Fifth Anniversary of Date of Grant..................... 100%
Certain events, however, will accelerate the above vesting schedule. These
events include the participant's death, retirement or permanent disability, or
a change in control of the Company as defined in the 2002 Plan.
Termination of Participants for Cause; Activities Harmful to the Company. In
the event an employee's employment is terminated for cause, the participant's
Rights shall terminate and no Right shall thereafter be exercisable.
Furthermore, if an employee within one (1) year of the date on which
participant exercises a Right (i) is terminated for cause by the Company or a
subsidiary, or (ii) engages in any activity determined in the discretion of the
Committee to be in competition with any activity, or otherwise inimical,
contrary or harmful to the interest of the Company or any subsidiary, then an
amount of cash equal to any gain realized by the participant from the exercise
of the Right shall be paid by the participant to the Company immediately upon
notice from the Company.
15
Designation of Certain Options as Incentive Stock Options. Options or
portions of options granted to employees under the 2002 Plan may, in the
discretion of the Board of Directors, be designated as "incentive stock
options" ("ISOs") within the meaning of Section 422 of the Internal Revenue
Code. In addition to the terms and conditions otherwise set forth in the 2002
Plan, options designated as ISOs shall also be subject to certain aggregate
fair market value limitations as may be imposed from time to time under Section
422 of the Code. Currently, the aggregate fair market value of common stock
with respect to which ISOs may become exercisable by an employee in any
calendar year may not exceed $100,000. Any ISO granted to an employee who, on
the date of grant, owned shares of the Company possessing more than ten percent
of the combined voting power of all classes of stock of the Company, shall have
an exercise price that is at least 110% of the fair market value of the shares
and shall not be exercisable after five years from the date of grant. To the
extent such options do not otherwise comply with Section 422, the options will
be treated as non qualified stock options.
Stock Appreciation Rights. The 2002 Plan permits stock appreciation rights
("SARs"), not related to stock options, to be granted to employees and non-
employee directors. In general, SARs give the grantees the right to receive
cash equal to the increase in the value of the underlying shares of Company
stock from the date of grant to the date of exercise.
Effective Date; Termination and Amendment. The 2002 Plan will not become
effective unless and until the date on which it is approved by the shareholders
of the Company. The 2002 Plan will continue for a period of ten (10) years
after the effective date thereof. The Board of Directors of the Company may
amend, suspend, or terminate the 2002 Plan at any time, except that no action
of the Board of Directors may materially impair a grantee's rights under any
outstanding option or SAR without the grantee's consent, and no action may be
taken without the Company shareholders' consent to (i) increase the total
number of shares as to which Rights may be granted under the 2002 Plan, (ii)
adjust or amend the exercise price of options or SARs previously awarded to any
grantee, or (iii) materially increase any obligations under any award made
under the 2002 Plan, except as otherwise specified in the 2002 Plan.
Federal Income Tax Consequences
The following is a general summary of the federal income tax consequences of
the grant and exercise of Rights under the 2002 Plan. This summary is not
intended to provide tax advice to recipients and holders of Rights.
Generally, the grant of Rights does not result in taxable income for federal
income tax purposes, to the holder and the Company is not entitled to a
corresponding income tax deduction.
Upon the exercise of a non qualified stock option, the Company is entitled
to a federal income tax deduction and the optionee realizes ordinary income in
the amount by which the fair market value of the shares of common stock, or
cash, he or she receives exceeds the exercise price. Upon the exercise of a
SAR, the Company is also entitled to a deduction and the grantee realizes
ordinary income in the amount of cash he or she receives. On the subsequent
sale of shares received upon the exercise of a non qualified stock option, the
difference between the fair market value of the shares on the date of option
exercise and the amount realized on the sale will be treated as a capital gain
or loss, which will be short or long term depending on the length of the period
for which shares are held prior to sale.
In the case of an ISO, the optionee generally does not realize taxable
income until the shares received upon exercise of the ISO are sold. The
difference between the ISO's exercise price and the fair market value of the
shares on the date of exercise is, however, an alternative minimum tax
preference item. If a sale of such shares does not occur within either two
years after grant or one year after exercise of the ISO, any realized gain or
loss will be treated as a long term capital gain or loss; and the Company will
not be entitled to an income tax deduction. If, however, a disposition occurs
prior to two years after grant or one year after exercise, the difference
between the exercise price and the fair market value of the shares on the date
of exercise is taxable as ordinary income to the optionee and is deductible by
the Company.
16
Recommendation and Vote
Proposal 2 to adopt and approve the 2002 Plan must be approved by the
affirmative vote of the holders of a majority of the outstanding shares of the
Company's Common Stock, assuming a quorum is present at the Annual Meeting.
Proxies will be voted in favor of Proposal 2, unless otherwise instructed by
the shareholder. Abstensions and shares not voted by the holder will have the
practical effect of a vote against Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Directors and executive officers of the Company and their associates were
customers of, or had transactions with, the Company or the Company's banking or
other subsidiaries in the ordinary course of business during 2001. Additional
transactions may be expected to take place in the future. All outstanding loans
to directors and executive officers and their associates, commitments and
sales, purchases and placements of investment securities, and other financial
instruments included in such transactions were made in the ordinary course of
business, on substantially the same terms, including interest rates and
collateral where applicable, as those prevailing at the time for comparable
transactions with other persons, and did not involve more than normal risk of
collectibility or present other unfavorable features. During 2001, the Company
retained Baker & Hostetler, LLP, a law firm in which Mr. Hollington is a Senior
Partner, for the provision of certain legal services at competitive rates. Also
during 2001, several real estate partnerships and investment companies in which
Mr. Spitler has an ownership interest paid interest on certain real estate
loans to the Company in the normal course of business.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16 of the Securities Exchange Act of 1934, members of the
Board of Directors and certain executive officers of the Company and its
subsidiaries file periodic reports with the Securities and Exchange Commission
disclosing their beneficial ownership of Common Stock. During 2001, and based
solely upon a review of such reports, the Company believes that all filing
requirements under Section 16 were complied with on a timely basis.
AUDITORS
During 2001, the Company engaged Crowe, Chizek and Company LLP to provide
audit services for the Company and its subsidiaries and to provide certain non-
audit services including advice on accounting, tax, and reporting matters.
Pursuant to the recommendation of the Audit Committee, the Board of Directors
has retained Crowe, Chizek and Company LLP as its independent auditors for
2002. A representative of Crowe, Chizek and Company LLP will be at the Annual
Meeting of Shareholders and such representative will have an opportunity to
make a statement if he desires to do so, and will be available to respond to
appropriate questions.
AUDIT COMMITTEE REPORT
The Company's Audit Committee has reviewed and discussed with management the
audited financial statements of the Company for the year ended December 31,
2001. In addition, the Committee has discussed with Crowe, Chizek and Company
LLP (Crowe Chizek), the independent auditing firm for the Company, the matters
required by Statement on Auditing Standards No. 61, Communication with Audit
Committees.
The Committee also has received the written disclosures from Crowe Chizek
required by Independence Standards Board Standard No. 1, and have discussed
with Crowe Chizek its independence from the Company.
17
Based on the foregoing discussions and reviews, the Committee has
recommended to the Company's Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001 for filing with the Securities and Exchange Commission.
In accordance with rules related to auditor independence, the table below
shows fees for services rendered by Crowe Chizek to the Company and its
affiliates during fiscal year 2001.
Audit Fees (including reviews of Forms 10-Q)....................... $207,000
Financial Information Systems Design and Implementation Fees....... $ 0
All Other Fees..................................................... $828,568
The Committee has been provided with information regarding the services
provided by Crowe Chizek and has considered the compatibility of such services
with maintaining the auditors' independence. The Company did not retain Crowe
Chizek in 2001 for internal audit services or information technology consulting
services relating to financial information systems design and implementation.
Respectfully submitted,
The Audit Committee
Fred H. Johnson, III, Chairperson
Emerson J. Ross, Jr.
C. Gregory Spangler
2003 SHAREHOLDER PROPOSALS
To be considered eligible for inclusion in the Company's Proxy Statement for
the 2003 Annual Meeting of Shareholders, a proposal must be made by a qualified
shareholder and received by the Company at its principal office in Bowling
Green, Ohio, prior to November 5, 2002. Any shareholder who intends to propose
any other matter to be acted upon at the 2003 Annual Meeting of Shareholders
must inform the Company not less than sixty nor more than ninety days prior to
the meeting; provided, however, that if less than seventy-five days' notice or
prior public disclosure of the date of the meeting is given to shareholders,
notice by the shareholder must be received not later than the close of business
on the fifteenth day following the earlier of the day on which such notice of
the date of the meeting was mailed or such public disclosure was made. If
notice is not provided by that date, the persons named in the Company's proxy
for the 2003 Annual Meeting will be allowed to exercise their discretionary
authority to vote upon any such proposal without the matter having been
discussed in the proxy statement for the 2003 Annual Meeting.
OTHER BUSINESS
The Board of Directors of the Company is not aware of any other matters that
may come before the Annual Meeting. However, the enclosed proxy will confer
discretionary authority with respect to matters which are not now known to the
Board of Directors and which may properly come before the meeting.
March 4, 2002 By Order of the Board of Directors,
/s/ W. Granger Souder, Jr.
W. Granger Souder, Jr.
Secretary
18
Appendix A
SKY FINANCIAL GROUP, INC.
2002
STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
SKY FINANCIAL GROUP, INC.
2002 STOCK OPTION AND STOCK APPRECIATION RIGHTS PLAN
This is the Sky Financial Group, Inc. 2002 Stock Option and Stock
Appreciation Rights Plan ("Plan") of Sky Financial Group, Inc. (the
"Corporation" or "Company"), an Ohio corporation, under which (1) Incentive
Stock Options and/or Nonqualified Options to acquire shares of the Stock, and
(2) Stock Appreciation Rights, may be granted from time to time to certain
Eligible Persons of the Corporation and of any of its subsidiaries, including,
without limitation, Sky Bank (collectively, the "Subsidiaries," and,
individually, a Subsidiary), subject to the following provisions:
ARTICLE I
DEFINITIONS
The following terms shall have the meanings set forth below. Additional
terms defined in this Plan shall have the meanings ascribed to them when first
used herein.
Board. The Board of Directors of Sky Financial Group, Inc.
Change In Control Transaction. The occurrence of any one or more of the
following:
(a) Individuals who constitute the Board (the "Incumbent Directors")
cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent thereto whose
election or nomination for election was approved by a vote of at least two-
thirds of the Incumbent Directors then on the Board (either by a specific
vote or by approval by the shareholders pursuant to a proxy statement of
the Company in which such person is named as a nominee for director,
without written objection to such nomination) shall be an Incumbent
Director; provided, however, that no individual initially elected or
nominated as a director of the Company as a result of an actual or
threatened election contest with respect to directors or as a result of any
other actual or threatened solicitation of proxies or consents by or on
behalf of any person other than the Board shall be deemed to be an
Incumbent Director;
(b) Any "person" (as such term is defined in Section 3(a)(9) of the 1934
Act and as used in Sections 13(d)(3) and 14(d)(2) of the 1934 Act) is or
becomes a "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, of securities of the Company representing twenty-
five percent (25%) or more of the combined voting power of the Company's
then outstanding securities eligible to vote for the election of the Board
(the "Company Voting Securities"); provided, however, that the event
described in this Section 13(b) shall not be deemed to be a Change in
Control by virtue of any of the following acquisitions: (i) by the Company
or any Subsidiary, (ii) by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Subsidiary or (iii) by any
underwriter temporarily holding securities pursuant to an offering of such
securities.
(c) The consummation of a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving the Company or
any of its Subsidiaries that requires the approval of the Company's
shareholders, whether for such transaction or the issuance of securities in
the transaction (a "Business Combination"), unless immediately following
such Business Combination: (i) more than sixty percent (60%) of the total
voting power of (x) the company resulting from such Business Combination
(the "Surviving Company"), or (y) if applicable, the ultimate parent
company that directly or indirectly has beneficial ownership of one hundred
percent (100%) of the voting securities eligible to elect directors of the
Surviving Company (the "Parent Company"), is represented by Company Voting
Securities that were outstanding immediately prior to such Business
Combination (or, if applicable, is represented by shares into which such
Company Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in
substantially the same
A-1
proportion as the voting power of such Company Voting Securities among the
holders thereof immediately prior to the Business Combination; (ii) no
person (other than any employee benefit plan (or related trust) sponsored
or maintained by the Surviving Company or the Parent Company), is or
becomes the beneficial owner, directly or indirectly, of twenty-five
percent (25%) or more of the total voting power of the outstanding voting
securities eligible to elect directors of the Parent Company (or, if there
is no Parent Company, the Surviving Company); and (iii) at least fifty
percent (50%) of the members of the board of directors of the Parent
Company (of, if there is no Parent Company, the Surviving Company)
following the consummation of the Business Combination were Incumbent
Directors at the time of the Board's approval of the execution of the
initial agreement providing for such Business Combination; or
(d) The shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or a sale of all or substantially
all of the Company's assets.
Notwithstanding the foregoing, a Change in Control Transaction shall not be
deemed to occur solely because any person acquires beneficial ownership of
more than twenty-five percent (25%) of the Company Voting Securities as a
result of the acquisition of Company Voting Securities by the Company which
reduces the number of Company Voting Securities outstanding; provided,
however, that if after such acquisition by the Company such person becomes the
beneficial owner of additional Company Voting Securities that increases the
percentage of outstanding Company Voting Securities beneficially owned by such
person, a Change in Control Transaction shall then occur.
Code. The Internal Revenue Code of 1986, as amended, together with the
rules and regulations promulgated thereunder.
Committee. The Compensation Committee of the Board.
Common Stock. The common stock of the Corporation.
Death. The date of death (as established by the relevant death certificate)
of an Eligible Person who has received Rights.
Director Option. The award of a Nonqualified Option to a Nonemployee
Director pursuant to Article V.
Director Option Agreement. The agreement entered into with respect to a
Director Option pursuant to Article V.
Disability. The date on which an Eligible Person who has received Rights
becomes permanently and totally disabled within the meaning of Section
22(e)(3) of the Code, which shall be determined by the Committee on the basis
of such medical or other evidence as it may reasonably require or deem
appropriate.
Effective Date. The date as of which this Plan is effective, which shall be
the date it is approved by the Company's shareholders.
Eligible Persons. Any (i) Employee employed by the Company or a Subsidiary
as an employee, including officers and prospective employees (conditioned upon
them becoming employees) who are from time to time responsible for the
management, growth and protection of the business of the Company and its
Subsidiaries, or (ii) Nonemployee Director, and who, in each case, meets the
following conditions:
(1) If no Registration shall have occurred with respect to the Rights or
Stock underlying the Rights granted, such individual must have such
knowledge and experience in financial and business matters that he or she
is capable of evaluating the merits and risks of the investment involved in
the receipt and/or exercise of a Right.
(2) Such individual, being otherwise an Eligible Person under the
foregoing items, shall have been selected by the Committee, with the
approval of the Board, as a person to whom a Right or Rights shall be
granted under the Plan.
A-2
Employee. An individual with whom the Corporation or a Subsidiary has the
legal and bona fide relationship of employer and employee. In determining
whether such relationship exists, the regulations of the United States
Treasury Department relating to the determination of such relationship for the
purpose of collection of income tax at the source on wages shall be applied.
Employee Optionee. An Eligible Person Employee who is granted Options
pursuant to Article III hereof.
Fair Market Value. With respect to Common Stock and the granting of ISOs
pursuant to this Plan, the market price per share of such Common Stock
determined by the Committee, consistent with the requirements of Section 422
of the Code and to the extent consistent therewith, as follows, as of the date
specified in the context within which such term is used:
(i) if the Common Stock was traded on a stock exchange on the date in
question, then the Fair Market Value will be equal to the closing price
reported by the applicable composite-transactions report for such date;
(ii) if the Common Stock was traded over-the-counter on the date in
question, and was classified as a national market issue, then the Fair
Market Value will be equal to the last transaction price quoted by the
National Association of Securities Dealers Automated Quotation System
("NASDAQ"), National Market System ("NMS");
(iii) if the Common Stock was traded over-the-counter on the date in
question but was not classified as a national market issue, then the Fair
Market Value will be equal to the average of the last reported
representative bid and asked prices quoted by the NASDAQ for such date; and
(iv) if none of the foregoing provisions is applicable, then the Fair
Market Value will be determined by the Committee in good faith on such
basis as it deems appropriate, subject to the approval of the Board. In
such case, the Committee shall maintain a written record of its method of
determining Fair Market Value.
ISO. An "incentive stock option" as defined in Section 422 of the Code.
Just Cause Termination. A termination of employment for cause by the
Corporation or a Subsidiary of an Employee who is an Eligible Person.
Nonemployee Director. A director of the Company or of a Subsidiary who is
not also an Employee.
Nonqualified Option. Any Option granted under this Plan whether designated
by the Committee as a Nonqualified Option or any Option designated as an ISO
but which, for any reason, fails to qualify as an ISO pursuant to Section 422
of the Code and the rules and regulations thereunder.
Option Agreement. The agreement between the Corporation and an Employee
Optionee with respect to Options granted to such Employee Optionee under
Article III.
Options. ISOs and Nonqualified Options are collectively referred to herein
as "Options"; provided, however, whenever reference is specifically made only
to ISOs or Nonqualified Options, such reference shall be deemed to be made to
the exclusion of the other.
Plan Pool. A total of two million forty-six thousand one hundred seventy-
eight (2,046,178) of authorized, but unissued, shares of Common Stock, as
adjusted pursuant to Section 2.3(b), which shall be available as Stock under
this Plan.
Registration. The registration by the Corporation under the 1933 Act and
applicable state "Blue Sky" and securities laws of this Plan, the offering of
Rights under this Plan, the offering of Stock under this Plan, and/or the
Stock acquirable under this Plan.
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Retirement. "Retirement" shall mean the termination of an Eligible Person's
employment under conditions which would constitute "normal retirement" or
"early retirement" under any tax qualified retirement plan maintained by the
Corporation or a Subsidiary except in the case of a Just Cause Termination.
Rights. The rights to exercise, purchase or receive any one or more of the
Options and SARs described herein.
Rights Agreement. Either an Option Agreement or a SAR Agreement.
SAR. The stock appreciation right of a SAR Recipient to receive cash when,
as, and in the amount described in Article IV.
SAR Agreement. The agreement between the Corporation and a SAR Recipient
with respect to the SAR awarded to the SAR Recipient, including such terms and
conditions as are necessary or appropriate under Article IV.
SEC. The Securities and Exchange Commission.
Stock. The shares of Common Stock in the Plan Pool available for grants of
Rights.
Tax Withholding Liability. All federal and state income taxes, social
security tax, and any other taxes applicable to the compensation income arising
from the transaction required by applicable law to be withheld by the
Corporation or any Subsidiary.
Transfer. The sale, assignment, transfer, conveyance, pledge, hypothecation,
encumbrance, loan, gift, attachment, levy upon, assignment for the benefit of
creditors, by operation of law (by will or descent and distribution), transfer
by a qualified domestic relations order, a property settlement or maintenance
agreement, transfer by result of the bankruptcy laws or otherwise of a share of
Stock or of a Right.
1933 Act. The Securities Act of 1933, as amended, together with the rules
and regulations promulgated thereunder.
1934 Act. The Securities Exchange Act of 1934, as amended, together with the
rules and regulations promulgated thereunder.
ARTICLE II
GENERAL
SECTION 2.1. PURPOSE.
The purpose of this Plan is to (i) attract, secure, and retain qualified
employees of outstanding ability and to provide additional motivation to such
employees to exert their best efforts on behalf of the Corporation and its
Subsidiaries, and (ii) to increase the proprietary interest of Nonemployee
Directors in the success of the Corporation and its Subsidiaries and to enhance
the Company's ability to retain and attract experienced and knowledgeable
directors. These objectives will be promoted through the granting of Rights to
designated Eligible Persons and pursuant to the terms of this Plan.
SECTION 2.2. ADMINISTRATION.
(a) The Plan shall be administered by the Committee. Subject to the
provisions of SEC Rule 16b-3(d), the Committee may designate any officers
or Employees to assist in the administration of the Plan, to execute
documents on behalf of the Committee and to perform such other ministerial
duties as may be delegated to them by the Committee.
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(b) Subject to the provisions of the Plan, the determinations (but not
the interpretation and construction of any provision of the Plan which
shall be solely in the discretion of the Committee) by the Committee shall
be recommended to the Board for approval, and when so approved by the Board
shall be final and conclusive upon persons affected thereby. By way of
illustration and not of limitation, the Committee shall have the
discretion, without the approval by the Board:
(i) to construe and interpret the Plan and all Rights granted
hereunder and to determine the terms and provisions (and amendments
thereof) of the Rights granted under the Plan (which need not be
identical);
(ii) to define the terms used in the Plan and in the Rights granted
hereunder;
(iii) to prescribe, amend and rescind the rules and regulations
relating to the Plan;
(iv) to interpret whether leaves of absence which may be granted to
Eligible Persons by the Company constitute terminations of employment
for the purposes of the Plan; and
(v) to make all other determinations and interpretations necessary
or advisable for the administration of the Plan.
By way of further illustration and not of limitation, the Committee
shall have the discretion with the approval of the Board:
(vi) to determine the Eligible Persons to whom and the time or times
at which such Rights shall be granted;
(vii) to determine the number of shares to Stock, as and when
applicable, to be subject to each Right; and
(viii) to determine the exercise price or other relevant purchase
price or value pertaining to a Right.
(c) Notwithstanding the foregoing, or any other provision of this Plan,
the Committee will have no authority to determine any matters, or exercise
any discretion, to the extent that the power to make such determinations or
to exercise such discretion would cause the loss of the exemption under SEC
Rule 16b-3 of any grant or award hereunder.
(d) It shall be in the discretion of the Committee, subject to approval
by the Board, to grant Options to purchase shares of Stock which qualify as
ISOs under the Code or which will be given tax treatment as Nonqualified
Options. Any Options granted which fail to satisfy the requirements for
ISOs shall automatically become Nonqualified Options.
(e) In the event Registration occurs, the Corporation shall make
available to Eligible Persons receiving Rights and/or shares of Stock in
connection therewith all disclosure documents required under such federal
and state laws. If such Registration shall not occur, the Committee shall
be responsible for supplying the recipient of a Right and/or shares of
Stock in connection therewith with such information about the Corporation
as is contemplated by the federal and state securities laws in connection
with exemptions from the registration requirements of such laws, as well as
providing the recipient of a Right with the opportunity to ask questions
and receive answers concerning the Corporation and the terms and conditions
of the Rights granted under this Plan.
In addition, if such Registration shall not occur, the Committee shall
be responsible for determining the maximum number of Eligible Persons and
the suitability of particular persons to be Eligible Persons in order to
comply with applicable federal and state securities statutes and
regulations governing such exemptions.
(f) In determining the Eligible Persons to whom Rights may be granted
and the number of shares of Stock to be covered by each Right, the
Committee and the Board shall take into account the nature of the services
rendered by such Eligible Persons, their present and potential
contributions to the success of the
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Corporation and/or a Subsidiary and such other factors as the Committee and
the Board shall deem relevant. An Eligible Person who has been granted a
Right under this Plan may be granted an additional Right or Rights under
this Plan if the Committee and the Board shall so determine. If, pursuant
to the terms of this Plan, or otherwise in connection with this Plan, it is
necessary that the percentage of Stock ownership of an Eligible Person be
determined, the ownership attribution provisions set forth in
Section 424(d) of the Code shall be controlling.
(g) The granting of Rights pursuant to this Plan is in the exclusive
discretion of the Board, and until the Board acts, no individual shall have
any rights under this Plan. The terms of this Plan shall be interpreted in
accordance with this intent.
SECTION 2.3. STOCK AVAILABLE FOR RIGHTS.
(a) The total number of shares of Stock for which, or with respect to
which, Rights may be granted under this Plan shall be those designated in
the Plan Pool. In the event that a Right granted under this Plan to any
Eligible Person expires or is terminated or is unexercised as to any shares
of Stock covered thereby, such shares of Stock thereafter shall be deemed
available in the Plan Pool for the granting of Rights under this Plan;
provided, however, if the expiration or termination date of a Right is
beyond the term of existence of this Plan as described in Section 6.3, then
any shares of Stock covered by unexercised or terminated Rights shall not
reactivate the existence of this Plan.
(b) In the event the outstanding shares of Common Stock are increased,
decreased, changed into or exchanged for a different number or kind of
securities as a result of a stock split, reverse stock split, stock
dividend, recapitalization, merger, share exchange, acquisition,
combination or reclassification, appropriate proportionate adjustments will
be made in: (i) the aggregate number and/or kind of shares of Stock in the
Plan Pool that may be issued pursuant to the exercise of, or that are
underlying, Rights granted hereunder; (ii) the exercise or other purchase
price or value pertaining to, and the number and/or kind of shares of Stock
called for with respect to, or underlying, each outstanding Right granted
hereunder; and (iii) other rights and matters determined on a per share
basis under this Plan or any Rights Agreement. Any such adjustments will be
made only by the Committee, subject to approval by the Board, and when so
approved will be effective, conclusive and binding for all purposes with
respect to this Plan and all Rights then outstanding. No such adjustments
will be required by reason of the issuance or sale by the Corporation for
cash of additional shares of its Common Stock or securities convertible
into or exchangeable for shares of its Common Stock.
(c) The grant of a Right pursuant to this Plan shall not affect in any
way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge or to consolidate or to dissolve, liquidate, or sell,
or transfer all or any part of its business or assets.
(d) No fractional shares of Stock shall be issued under this Plan.
SECTION 2.4. SEVERABLE PROVISIONS.
The Corporation intends that the provisions of each of Articles III, IV and
V, in each case together with Articles I and II, shall each be deemed to be
effective on an independent basis, and that if one or more of such Articles, or
the operative provisions thereof, shall be deemed invalid, void or voidable,
the remainder of such Articles shall continue in full force and effect.
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ARTICLE III
EMPLOYEE OPTIONS
SECTION 3.1. GRANT OF OPTIONS.
(a) The Company may grant Options to Employees who are Eligible Persons
as provided in this Article III. Options will be deemed granted pursuant to
this Article III only upon (i) authorization by the Committee, (ii) the
approval of such grant by the Board, and (iii) the execution and delivery
of an Option Agreement by the Eligible Person Employee (the "Employee
Optionee") and a duly authorized officer of the Company. Options will not
be deemed granted hereunder merely upon authorization of such grant by the
Committee. The aggregate number of shares of Stock potentially acquirable
under all Options granted shall not exceed the total number of shares of
Stock remaining in the Plan Pool, less all shares of Stock potentially
acquired under, or underlying, all other Rights outstanding under this
Plan.
(b) Subject to approval by the Board, the Committee shall designate, at
the time a grant is authorized, Options as either ISOs or Nonqualified
Options. In accordance with Section 422(d) of the Code, the aggregate Fair
Market Value (determined as of the date an ISO is granted) of the shares of
Stock as to which an ISO may first become exercisable by an Employee
Optionee in a particular calendar year (pursuant to Article III and all
other plans of the Company and/or its Subsidiaries) may not exceed $100,000
(the "$100,000 Limitation"). If an Employee Optionee is granted Options in
excess of the $100,000 Limitation, or if such Options otherwise become
exercisable with respect to a number of shares of Stock which would exceed
the $100,000 Limitation, such excess Options shall be Nonqualified Options
instead of ISOs.
(c) Notwithstanding the foregoing, the Board may delegate authority to
the Company's Chief Executive Officer to grant specified numbers of Options
(as determined by the Board from time to time and during such time periods
determined by the Board) to existing or prospective Employees as the Chief
Executive Officer determines appropriate without further action of the
Board.
SECTION 3.2. EXERCISE PRICE.
Subject to approval by the Board, the initial exercise price of each Option
granted under this Plan (the "Exercise Price") shall be determined by the
Committee; provided, however, that the Exercise Price of an ISO shall not be
less than (i) the Fair Market Value of the Common Stock on the date of grant of
the Option, in the case of any Eligible Person who does not own capital stock
of the Company possessing more than ten percent (10%) of the total combined
voting power of all classes of the capital stock of the Company (within the
meaning of Section 422(b)(6) of the Code), or (ii) one hundred ten percent
(110%) of such Fair Market Value in the case of any Eligible Person who owns
stock in excess of such amount.
SECTION 3.3. TERMS AND CONDITIONS OF OPTIONS.
(a) All Options must be granted within ten (10) years of the Effective
Date.
(b) The Committee, subject to approval by the Board, may grant ISOs and
Nonqualified Options, either separately or jointly, to an Employee
Optionee.
(c) Each grant of Options shall be evidenced by an Option Agreement in
form and substance satisfactory to the Committee in its discretion,
consistent with the provisions of this Article III.
(d) At the discretion of the Committee, an Employee Optionee, as a
condition to the granting of an Option, may be required execute and deliver
to the Company a nonsolicitation and/or noncompetition agreement approved
by the Committee.
(e) Nothing contained in Article III, any Option Agreement, or any other
agreement executed in connection with the granting of an Option under this
Article III will confer upon any Employee Optionee
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any right with respect to the continuation of his or her status as an
Employee of the Company or any of its Subsidiaries.
(f) Except as otherwise provided herein, each Option Agreement shall
specify the period or periods of time within which each Option or portion
thereof will first become exercisable (the "Vesting Period") with respect
to the total number of shares of Stock acquirable thereunder; provided,
however, that unless otherwise specified in the Option Agreement, the
Vesting Period of each Option shall be as follows:
Amount
Time Exercisable
---- -----------
After second year anniversary of date of grant:.................. 40%
After third year anniversary of date of grant:................... 60%
After fourth year anniversary of date of grant:.................. 80%
After fifth year anniversary of date of grant:................... 100%
; provided, however, that in the event of an Employee Optionee's
Retirement, Death or Disability or a Change in Control Transaction, any
Option then outstanding shall become fully vested and immediately
exercisable unless the applicable Option Agreement provides otherwise.
(g) Not less than one hundred (100) shares of Stock may be purchased at
any one time through the exercise of an Option unless the number of shares
of Stock purchased equals the total number at that time purchasable under
all Options granted to the Employee Optionee.
(h) An Employee Optionee shall have no rights as a shareholder of the
Company with respect to any shares of Stock covered by Options granted to
the Employee Optionee until payment in full of the Exercise Price by such
Employee Optionee for the shares being purchased. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities
or other property) or distributions or other rights for which the record
date is prior to the date such Stock is fully paid for, except as provided
in Section 2.3(b).
SECTION 3.4. EXERCISE OF OPTIONS.
(a) An Employee Optionee must be an Eligible Person at all times from
the date of grant until the exercise of the Options granted, except as
provided in Section 3.5(b).
(b) An Option may be exercised to the extent exercisable (i) by giving
written notice of exercise to the Company, specifying the number of full
shares of Stock to be purchased and, if applicable, accompanied by full
payment of the Exercise Price thereof and the amount of the Tax Withholding
Liability pursuant to Section 3.4(c) below; and (ii) by giving assurances
satisfactory to the Company that the shares of Stock to be purchased upon
such exercise are being purchased for investment and not with a view to
resale in connection with any distribution of such shares in violation of
the 1933 Act; provided, however, that in the event the prior occurrence of
the Registration or in the event resale of such Stock without such
Registration would otherwise be permissible, this second condition will be
inoperative if, in the opinion of counsel for the Company, such condition
is not required under the 1933 Act or any other applicable law, regulation
or rule of any governmental agency.
(c) As a condition to the issuance of the shares of Stock upon full or
partial exercise of a Nonqualified Option, the Employee Optionee will pay
to the Company in cash, or in such other form as the Committee may
determine in its discretion, the amount of the Company's Tax Withholding
Liability required in connection with such exercise.
(d) The Exercise Price of an Option shall be payable to the Company
either (i) in United States dollars, in cash or by check, or money order
payable to the order of the Company, or (ii) unless the applicable Option
Agreement provides otherwise, at the discretion of the Committee, through
the delivery of shares of Stock owned by the Employee Optionee having a
Fair Market Value as of the date of delivery equal to the Exercise Price,
or (iii) at the discretion of the Committee and the Board, by a combination
of
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(i) and (ii) above, or (iv) unless the applicable Option Agreement provides
otherwise, at the discretion of the Committee and to the extent permitted
by law, by cashless exercise through a broker or by such other method as
the Committee may from time to time prescribe, or (v) in the case of a
Nonqualified Option, in accordance with the provisions of Article III
Deferral of Stock Option Income and related provisions of the Sky Financial
Group, Inc. Non-Qualified Retirement Plan (or any successor plan thereto).
SECTION 3.5. TERM AND TERMINATION OF OPTIONS.
(a) Subject to approval by the Board, the Committee shall determine, and
each Option Agreement shall state, the expiration date or dates of each
Option, but such expiration date shall be not later than ten (10) years
after the date such Option was granted (the "Option Period"). In the event
an ISO is granted to a 10% Shareholder, the expiration date or dates of
each Option Period shall be not later than five (5) years after the date
such ISO is granted. Subject to approval by the Board, the Committee may
extend the expiration date or dates of an Option Period of any Nonqualified
Option after such date was originally set; provided, however such
expiration date may not exceed the maximum expiration date described in
this Section 3.5(a).
(b) Prior to the expiration of the Option Period of a Nonqualified
Option, the unexercised Nonqualified Option shall automatically and without
notice expire and become null and void at the time of the earliest to occur
of the following, unless otherwise determined by the Committee:
(i) the expiration of thirty-six (36) months after the date of the
Employee Optionee's termination of employment due to retirement in
accordance with Company policy; provided, however, that if the Employee
Optionee dies within such thirty-six (36) month period post-retirement
date period, any unexercised Nonqualified Option may thereafter be
exercised by the legal representative of the Employee Optionee's estate
or by the legatee of such Nonqualified Option under the Employee
Optionee's last will and testament (or in accordance with the laws of
descent and distribution if the Employee Optionee did not have a valid
last will and testament) for a period of twelve (12) months after the
date of the Employee Optionee's death or the expiration of the Option
Period, if shorter;
(ii) the expiration of twelve (12) months following the date of death
or date of termination of employment due to permanent disability of the
Employee Optionee;
(iii) the expiration of ninety (90) days following the date of the
Employee Optionee's termination of employment for reasons other than
retirement, permanent disability, death or Just Cause Termination; or
(iv) the date the Employee Optionee ceases to be an Employee by
reason of a Just Cause Termination.
(c) Prior to the expiration of the Option Period of an ISO, the
unexercised ISO shall automatically and without notice expire and become
null and void at the time of the earliest to occur of the following, unless
otherwise determined by the Committee in compliance with the requirements
of Code Section 422:
(i) the expiration of three (3) months after the date of the Employee
Optionee's termination of employment due to retirement in accordance
with Company policy; provided, however, that if the Employee Optionee
dies within such three (3) month period post-retirement date period, any
unexercised ISO may thereafter be exercised by the legal representative
of the Employee Optionee's estate or by the legatee of such ISO under
the Employee Optionee's last will and testament (or in accordance with
the laws of descent and distribution if the Employee Optionee did not
have a valid last will and testament) during the balance of such three
(3) month period or the expiration of the Option Period, if shorter;
(ii) the expiration of one (1) year following the date of termination
of employment due to permanent disability of the Employee Optionee;
(iii) the expiration of three (3) months following the date of death
of the Employee Optionee;
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(iv) the expiration of three (3) months following the date of the
Employee Optionee's termination of employment for reasons other than
retirement, permanent disability, or death or Just Cause Termination;
or
(v) the date the Employee Optionee ceases to be an Employee by
reason of a Just Cause Termination.
(d) Notwithstanding the foregoing, if an Employee Optionee's employment
is terminated due to a Just Cause Termination, the Employee Optionee's
Options shall thereupon terminate and no Options shall thereafter be
exercisable by such Employee Optionee. In addition, if at any time within
one (1) year of the date of which an Employee Optionee exercises an Option,
the Employee Optionee (i) incurs a Just Cause Termination, and/or (ii)
engages in any activity determined in the discretion of the Committee to be
in competition with any activity, or otherwise inimical, contrary or
harmful to the interests of the Company or any Subsidiary (including, but
not limited to, accepting employment with or serving as a consultant,
advisor or in any other capacity to an entity that is in competition with
or acting against the interests of the Company or any Subsidiary), then an
amount of cash equal to any gain ("Gain") realized by the Employee Optionee
from the exercise of any of the Employee Optionee's Options shall be paid
by the Employee Optionee to the Company immediately upon notice from the
Company. Such Gain shall be determined as of the Option exercise date,
without regard to any subsequent change in the Fair Market Value of the
Common Stock. The Company shall have the right to offset such Gain against
any amounts otherwise owed to the Employee Optionee by the Company or any
Subsidiary (whether as wages, vacation pay, or pursuant to any benefit plan
or other compensatory arrangement).
SECTION 3.6. CHANGE IN CONTROL TRANSACTION.
All of the Options granted under this Article III shall become immediately
exercisable in full upon the public announcement of a Change in Control
Transaction, and may thereafter be exercised at any time before the date of
consummation of the Change in Control Transaction (except as otherwise provided
in Article II hereof, and except to the extent that such acceleration of
exercisability would result in an "excess parachute payment" within the meaning
of Section 280G of the Code). Any Option that has not been fully exercised
before the date of consummation of the Change in Control Transaction shall
terminate on such date, unless a provision has been made in writing in
connection with such transaction for the assumption of all Options theretofore
granted, or the substitution for such Options of options to acquire the voting
stock of a successor employer corporation, or a parent or a subsidiary thereof,
with adjustments as the Committee determines appropriate, in which event the
Options theretofore granted shall continue in the manner and under the terms so
provided.
SECTION 3.7. RESTRICTIONS ON TRANSFER.
Except as otherwise determined by the Committee solely with respect to
Nonqualified Options, an Option granted under this Article III may not be
Transferred except by last will and testament or the laws of descent and
distribution and, during the lifetime of the Employee Optionee to whom it was
granted, may be exercised only by such Employee Optionee.
SECTION 3.8. STOCK CERTIFICATES.
Certificates representing the Stock issued pursuant to the exercise of
Options will bear all legends required by law and necessary to effectuate the
provisions hereof. The Company may place a "stop transfer" order against such
shares of Stock until all restrictions and conditions set forth in this Article
III, the applicable Option Agreement, and in the legends referred to in this
Section 3.8 have been complied with.
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SECTION 3.9. AMENDMENT AND DISCONTINUANCE.
The Board may amend, suspend or discontinue the provisions of this Article
III at any time or from time to time; provided that any action of the Board
will not cause ISOs granted under this Plan to fail to comply with Section 422
of the Code unless the Board specifically declares such action to be made for
that purpose; and, provided, further, that no such action may, without the
approval of the shareholders of the Company, materially increase (other than by
reason of an adjustment pursuant to Section 2.3(b) hereof) the aggregate number
of shares of Stock in the Plan Pool, materially increase the benefits accruing
to Eligible Persons or materially modify eligibility requirements for
participation under this Article III. Moreover, no such action may alter or
impair any Option previously granted under this Article III without the consent
of the applicable Employee Optionee.
SECTION 3.10. COMPLIANCE WITH RULE 16b-3.
With respect to persons subject to Section 16 of the 1934 Act, transactions
under this Article III are intended to comply with all applicable conditions of
Rule 16b-3 or its successors under the 1934 Act. To the extent any provision of
this Article III or action by the Board or the Committee fails so to comply, it
shall be deemed null and void to the extent permitted by law and deemed
advisable by the Committee and the Board.
ARTICLE IV
STOCK APPRECIATION RIGHTS
SECTION 4.1. GRANTS OF SARS.
(a) The Corporation may grant SARs under this Article IV. SARs will be
deemed granted only upon (i) authorization by the Committee, (ii) approval
by the Board, and (iii) the execution and delivery of a SAR Agreement by
the Eligible Person to whom the SARs are to be granted (the "SAR
Recipient") and a duly authorized officer of the Corporation. SARs will not
be deemed granted merely upon authorization by the Committee. The aggregate
number of shares of Stock which shall underlie SARs granted hereunder shall
not exceed the total number of shares of Stock remaining in the Plan Pool,
less all shares of Stock potentially acquirable under or underlying all
other Rights outstanding under this Plan.
(b) Each grant of SARs pursuant to this Article IV shall be evidenced by
a SAR Agreement between the Corporation and the SAR Recipient, in form and
substance satisfactory to the Committee in its sole discretion, consistent
with this Article IV.
SECTION 4.2. TERMS AND CONDITIONS OF SARS.
(a) All SARs must be granted within ten (10) years of the Effective
Date.
(b) Each SAR issued pursuant to this Article IV shall have an initial
base value (the "Base Value") equal to the Fair Market Value of a share of
Common Stock on the date of issuance of the SAR.
(c) At the discretion of the Committee, a SAR Recipient, as a condition
to the granting of a SAR, may be required execute and deliver to the
Corporation a nonsolicitation and/or noncompetition agreement approved by
the Committee.
(d) Nothing contained in this Article IV, any SAR Agreement or in any
other agreement executed in connection with the granting of a SAR under
this Article IV will confer upon any SAR Recipient any right with respect
to the continuation of his or her status as an Employee or Nonemployee
Director of the Corporation or any of its Subsidiaries.
(e) Except as otherwise provided herein, each SAR Agreement may specify
the period or periods of time within which each SAR, or portion thereof,
will first become exercisable (the "SAR Vesting Period"). Such SAR Vesting
Period shall be fixed by the Committee, subject to approval by the Board,
and may be accelerated or shortened by the Committee, subject to approval
by the Board.
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(f) SARs relating to no less than one hundred (100) shares of Stock may
be exercised at any one time unless the number SARs exercised is the total
number of all SARs at that time exercisable by the SAR Recipient.
(g) A SAR Recipient shall have no rights as a shareholder of the
Corporation with respect to any shares of Stock underlying such SAR. No
adjustment shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property) or distributions or other rights,
except as provided in Section 2.3(b).
SECTION 4.3. RESTRICTIONS ON TRANSFER OF SARS.
Except as otherwise determined by the Committee or as provided in Section
4.7, SARs granted under this Article IV may not be Transferred and during the
lifetime of the SAR Recipient to whom it was granted, may be exercised only by
such SAR Recipient.
SECTION 4.4. EXERCISE OF SARS.
(a) A SAR Recipient (or his or her executors or administrators, or heirs
or legatees) shall exercise a SAR by giving written notice of such exercise
to the Corporation. SARs may be exercised only upon the completion of the
SAR Vesting Period, if any, applicable to such SAR (the date such notice is
received by the Corporation being referred to herein as the "SAR Exercise
Date").
(b) Within thirty (30) business days of the SAR Exercise Date applicable
to a SAR exercised in accordance with Section 4.4(a), the SAR Recipient
shall be paid in cash the difference between the Base Value of such SAR and
the Fair Market Value of the Common Stock as of the SAR Exercise Date, as
such difference is reduced by the Company's Tax Withholding Liability
arising from such exercise.
SECTION 4.5. TERMINATION OF SARS.
Subject to approval by the Board, the Committee shall determine, and each
SAR Agreement shall state, the expiration date or dates of each SAR, but such
expiration date shall be not later than ten (10) years after the date such SAR
is granted (the "SAR Period"). Subject to approval by the Board, the Committee
may extend the expiration date or dates of a SAR Period after such date was
originally set; provided, however, such expiration date may not exceed the
maximum expiration date described in this Section 4.5.
Notwithstanding the foregoing, if an Employee's employment is terminated due
to a Just Cause Termination, the Employee's SARs shall thereupon terminate and
no SARs shall thereafter be exercisable by such Employee. In addition, if at
any time within one (1) year of the date of which an Employee exercises SARs,
the Employee (i) incurs a Just Cause Termination, and/or (ii) engages in any
activity determined in the discretion of the Committee to be in competition
with any activity, or otherwise inimical, contrary or harmful to the interests
of the Company or any Subsidiary (including, but not limited to, accepting
employment with or serving as a consultant, advisor or in any other capacity to
an entity that is in competition with or acting against the interests of the
Company or any Subsidiary), then an amount of cash equal to any gain ("Gain")
realized by the Employee from the exercise of any of the Employee's SARs shall
be paid by the Employee to the Company immediately upon notice from the
Company. Such Gain shall be determined as of the SAR exercise date, without
regard to any subsequent change in the Fair Market Value of the Common Stock.
The Company shall have the right to offset such Gain against any amounts
otherwise owed to the Employee by the Company or any Subsidiary (whether as
wages, vacation pay, or pursuant to any benefit plan or other compensatory
arrangement).
SECTION 4.6. CHANGE IN CONTROL TRANSACTION.
At any time prior to the date of consummation of a Change in Control
Transaction, the Committee may, in its absolute discretion, determine that all
or any part of the SARs theretofore granted under this Article IV shall
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become immediately exercisable in full and may thereafter be exercised at any
time before the date of consummation of the Change in Control Transaction
(except as otherwise provided in Article II hereof, and except to the extent
that such acceleration of exercisability would result in an excess parachute
payment within the meaning of Section 280G of the Code). Any SAR that has not
been fully exercised before the date of consummation of the Change in Control
Transaction shall terminate on such date, unless a provision has been made in
writing in connection with such transaction for the assumption of all SARs
theretofore granted, or the substitution for such SARs of grants of stock
appreciation rights having comparable characteristics under a stock
appreciation rights plan of a successor employer corporation or bank, or a
parent or a subsidiary thereof, with adjustments the Committee determines
appropriate, in which event the SARs theretofore granted shall continue in the
manner and under the terms so provided.
SECTION 4.7. DESIGNATION OF BENEFICIARIES.
A SAR Recipient may designate a beneficiary or beneficiaries to receive all
or part of the cash to be paid to the SAR Recipient under this Article IV in
case of Death. A designation of beneficiary may be replaced by a new
designation or may be revoked by the SAR recipient at any time. A designation
or revocation shall be on a form to be provided for that purpose and shall be
signed by the SAR Recipient and delivered to the Corporation prior to the SAR
recipient's Death. In case of the SAR Recipient's Death, the amounts to be
distributed to the SAR Recipient under this Article IV with respect to which a
designation of beneficiary has been made (to the extent it is valid and
enforceable under applicable law) shall be distributed in accordance with this
Article IV to the designated beneficiary or beneficiaries. The amount
distributable to a SAR Recipient upon Death and not subject to such a
designation shall be distributed to the SAR Recipient's estate. If there shall
be any question as to the legal right of any beneficiary to receive a
distribution under this Article IV, the amount in question may be paid to the
estate of the SAR Recipient in which event the Corporation shall have no
further liability to anyone with respect to such amount.
SECTION 4.8. AMENDMENT AND DISCONTINUANCE.
The Board may amend, suspend or discontinue the provisions of this Article
IV at any time or from time to time provided that no action of the Board may,
without the approval of the shareholders of the Corporation materially increase
(other than by reason of an adjustment pursuant to Section 2.3(b) hereof) the
maximum aggregate number of shares of Stock in the Plan Pool, materially
increase the benefits accruing to Eligible Persons or materially modify
eligibility requirements for participation under this Article IV. Moreover, no
such action may alter or impair any SAR previously granted under this Article
IV without the consent of the applicable SAR Recipient.
SECTION 4.9. COMPLIANCE WITH RULE 16b-3.
With respect to persons subject to Section 16 of the 1934 Act, transactions
under this Article IV are intended to comply with all applicable conditions of
Rule l6b-3 or its successors under the 1934 Act. To the extent any provision of
this Article IV or action by the Board or the Committee fails so to comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee and the Board.
ARTICLE V
OPTIONS TO NONEMPLOYEE DIRECTORS
SECTION 5.1. GRANTS OF DIRECTOR OPTIONS.
On an annual basis during the term of this Plan, the Committee, shall, in
its sole discretion, from among Eligible Persons, select the Nonemployee
Directors who shall receive Director Options and determine the number of
Director Options to be granted to each such Nonemployee Director.
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SECTION 5.2. EXERCISE PRICE.
(a) The exercise price of each Director Option granted under this Plan
(the "Exercise Price") shall be the Fair Market Value of the Common Stock
on the date of grant of the Director Option.
SECTION 5.3 TERMS AND CONDITIONS OF DIRECTOR OPTIONS.
(a) All grants of Director Options must be made within ten (10) years of
the Effective Date.
(b) Each Director Option shall be evidenced by a Director Option
Agreement, which shall contain such provisions as may be determined by the
Committee, consistent with this Article V.
(c) Not less that one hundred (100) shares of Stock may be purchased at
any one time through the exercise of a Director Option unless the number of
shares of Stock purchased equals the total number at that time purchasable
under all Director Options granted to the Nonemployee Director.
(d) A Nonemployee Director shall have no rights as a shareholder of the
Company with respect to any shares of Stock covered by Director Options
granted to the Director until payment in full of the Exercise Price by such
Director for the shares being purchased. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is
prior to the date such Stock is fully paid for, except as provided in
Section 2.3(b).
(e) Additionally and notwithstanding any other provisions of this
Article V, no shares of Stock obtained pursuant to the exercise of a
Director Option may be Transferred until at least six (6) months and one
(1) day shall have elapsed since the date such Director Option was granted.
SECTION 5.4. EXERCISE OF DIRECTOR OPTIONS.
(a) A Director Option may be exercised to the extent exercisable (i) by
giving written notice of exercise to the Company, specifying the number of
full shares of Stock to be purchased and, if applicable, accompanied by
full payment of the Exercise Price thereof and the amount of the Tax
Withholding; and (ii) by giving assurances satisfactory to the Company that
the shares of Stock to be purchased upon such exercise are being purchased
for investment and not with a view to resale in connection with any
distribution of such shares in violation of the 1933 Act; provided,
however, that in the event the prior occurrence of the Registration or in
the event resale of such Stock without such Registration would otherwise be
permissible this second condition will be inoperative if, in the opinion of
counsel for the Company, such condition is not required under the 1933 Act
or any other applicable law, regulation or rule of any governmental agency.
(b) As a condition to the issuance of the shares of Stock upon full or
partial exercise of a Director Option, the Nonemployee Director will pay to
the Company in cash, or in such other form as the Committee may determine
in its discretion, the amount of the Company's Tax Withholding Liability
required in connection with such exercise.
(c) The Exercise Price of a Director Option shall be payable to the
Company either (i) in United States dollars, in cash or by check, or money
order payable to the order of the Company, or (ii) unless the applicable
Director Option Agreement provides otherwise, at the discretion of the
Committee and the Board, through the delivery of shares of Stock owned by
the Nonemployee Director for at least six months prior to the Director
Option Exercise Date having a Fair Market Value as of the date of delivery
equal to the Exercise Price, or (iii) at the discretion of the Committee
and the Board, by a combination of (i) and (ii) above, or (iv) unless the
applicable Director Option Agreement provides otherwise, at the discretion
of the Committee and to the extent permitted by law, by cashless exercise
through a broker or by such other method as the Committee may from time to
time prescribe, or (v) in accordance with the provisions of Article III
Deferral of Stock Option Income and related provisions of the Sky Financial
Group, Inc. Non-Qualified Retirement Plan.
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SECTION 5.5. TERM AND TERMINATION OF DIRECTOR OPTIONS.
(a) The term of each Director Option ("Term"), after which each such
Director Option shall expire, shall be ten (10) years from the date of
grant.
(b) Prior to the expiration of the Term of a Director Option, the
unexercised portion of each Director Option shall automatically and without
notice expire and become null and void at the time of the earliest to occur
of the following, unless otherwise determined by the Committee:
(i) the expiration of thirty-six (36) months after the date of the
Nonemployee Director's termination of as a Nonemployee Director due to
retirement in accordance with Company policy; provided, however, that
if the Nonemployee Director dies within such thirty-six (36) month
period post-retirement date period, any unexercised Director Option may
thereafter be exercised by the legal representative of the Nonemployee
Director's estate or by the legatee of such Director Option under the
Nonemployee Director's last will and testament (or in accordance with
the laws of descent and distribution if the Nonemployee Director did
not have a valid last will and testament) for a period of twelve (12)
months after the date of the Nonemployee Director's death or the
expiration of the Term, if shorter;
(ii) the expiration of ninety (90) days after the optionee ceases to
be a Nonemployee Director, other than by reason of retirement,
permanent disability, death, or for cause; or
(iii) the expiration of twelve (12) months following the date of
death or date of termination of service as a Nonemployee Director due
to permanent disability of the optionee.
SECTION 5.6. CHANGE IN CONTROL TRANSACTION.
At any time prior to the date of consummation of a Change in Control
Transaction, the Committee may, in its absolute discretion, determine that all
or any part of the Director Options theretofore granted under this Article V
shall become immediately exercisable in full and may thereafter be exercised at
any time before the date of consummation of the Change in Control Transaction
(except as otherwise provided in Article II hereof). Any Director Option that
has not been fully exercised before the date of consummation of the Change in
Control Transaction shall terminate on such date, unless a provision has been
made in writing in connection with such transaction for the assumption of all
Director Options theretofore granted, or the substitution for such Director
Options of options to acquire the voting stock of a successor employer
corporation, or a parent or a subsidiary thereof, with adjustments as the
Committee determines appropriate, in which event the Director Options
theretofore granted shall continue in the manner and under the terms so
provided.
SECTION 5.7. RESTRICTIONS ON TRANSFER.
Director Options shall not be transferable except by last will and testament
or the laws of descent and distribution and shall be exercisable during the
Nonemployee Director's lifetime only by such Nonemployee Director. Nonemployee
Directors are eligible to receive awards of SARs under Article IV of this Plan
in addition to (and not in lieu of) any awards pursuant to this Article V.
SECTION 5.8. STOCK CERTIFICATES.
Certificates representing the Stock issued pursuant to the exercise of
Director Options will bear all legends required by law and necessary to
effectuate the provisions hereof. The Company may place a "stop transfer" order
against such shares of Stock until all restrictions and conditions set forth in
this Article V, the applicable Director Option Agreement, and in the legends
referred to in this Section 5.8 have been complied with.
SECTION 5.9. AMENDMENT AND DISCONTINUANCE.
The Board may amend, suspend or discontinue the provisions of this Article V
at any time or from time to time; provided, that no such action may, without
the approval of the shareholders of the Company, materially
A-15
increase (other than by reason of an adjustment pursuant to Section 2.3(b)
hereof) the aggregate number of shares of Stock in the Plan Pool, materially
increase the benefits accruing to Nonemployee Directors or materially modify
eligibility requirements for participation under this Article V.
SECTION 5.10 COMPLIANCE WITH RULE 16b-3.
With respect to persons subject to Section 16 of the 1934 Act, transactions
under this Article V are intended to comply with all applicable conditions of
Rule 16b-3 or its successors under the 1934 Act. To the extent any provision of
this Article V or action by the Board or the Committee fails so to comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee and the Board.
SECTION 5.11. NO RIGHT TO CONTINUE AS DIRECTOR.
Neither this Plan nor the granting of a Director Option, nor any other
action taken pursuant to this Plan shall constitute or be evidence of any
agreement or understanding, express or implied, that the Board will nominate
any Nonemployee Director for reelection, or that the Company or any Subsidiary
will retain a Nonemployee Director for any period of time, or at any particular
rate of Nonemployee Director fees.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. APPLICATION OF FUNDS.
The proceeds received by the Corporation from the sale of Stock pursuant to
the exercise of Rights will be used for general corporate purposes.
SECTION 6.2. NO OBLIGATION TO EXERCISE RIGHT.
The granting of a Right shall impose no obligation upon the recipient to
exercise such Right.
SECTION 6.3. TERM OF PLAN.
Except as otherwise specifically provide herein, Rights may be granted
pursuant to this Plan from time to time within ten (10) years from the
Effective Date.
* * *
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[LOGO] SKY FINANCIAL GROUP
www.skyfi.com
[LOGO] Sky Financial Group
Dear Shareholder,
Enclosed is your Notice of Annual Meeting of Shareholders and related Proxy
Statement for our 2002 Annual Meeting. Also enclosed is the Company's Annual
Report for 2001.
The business of the 2002 Annual Meeting, including the matters to be voted upon
as described in the Notice and Proxy Statement, will be conducted on April 17,
2002 at 10:00 a.m. at The Forum Conference Center, One Cleveland Center, 1375
East 9th Street, Cleveland, Ohio. You are welcome to attend this Annual Meeting
of Shareholders.
The matters to be acted upon at the meeting are important to you as a
shareholder. Therefore, whether or not you plan to attend, we urge you to
complete and return the proxy card at your earliest convenience.
We look forward to seeing you at our Annual Meeting.
Sincerely,
/s/ Marty E. Adams
Marty E. Adams
Chairman, President and CEO
Please Detach Proxy Card Here
\/ \/
[ ] PLEASE DATE, SIGN, AND MAIL THIS PROXY TO THE
BANK OF NEW YORK. AN ENVELOPE IS ENCLOSED FOR
YOUR CONVENIENCE.
[X]
Votes must be indicated (x) in Black or Blue
ink.
Directors recommend a vote FOR Proposal 1.
1. Election of all Nominees for Director
FOR [ ] WITHHOLD [ ] EXCEPTIONS [ ]
ALL FOR ALL
Nominees for Director in Class I: Marty E. Adams; Jonathan A. Levy; Thomas J.
O'Shane; Edward J. Reiter; and
C. Gregory Spangler.
(INSTRUCTIONS: To withhold authorization to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space provided
below.)
*Exceptions
----------------------------------------------------
Directors recommend a vote FOR Proposal 2.
2. Adoption and approval of the 2002
Stock Option and Stock Appreciation FOR AGAINST ABSTAIN
Rights Plan. [ ] [ ] [ ]
To change your address, please mark this box. [ ]
Please check the box to the right if you wish
to attend the Annual Meeting. PLEASE SEE [ ]
LETTER TO SHAREHOLDERS FOR DETAILS.
SCAN LINE
Please be sure to sign and date the Proxy Voting Instruction Card. When signing
as attorney, executor, administrator, trustee, or guardian, please give full
title as such. If more than one owner, all should sign.)
Date Share Owner sign here Co-Owner sign here
- ------------------------------------ -------------------------
- ------------------------------------ -------------------------
SKY FINANCIAL GROUP, INC.
PROXY VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS ON APRIL 17, 2002
The undersigned hereby appoints Robert C. Duvall and Robert E. Spitler,
each of them, proxies, with the powers the undersigned would possess if present
with full power of substitution, to vote all common shares of the undersigned in
Sky Financial Group, Inc., at the Annual Meeting and at any adjournments or
postponements thereof, upon all subjects that may properly come before the
Annual Meeting, including the matters described in the Proxy Statement furnished
herewith, subject to any directions indicated on this card. If no directions are
given, the proxies will vote for the election of all listed nominees, and at
their discretion, on any other matter that may properly come before the Annual
Meeting.
(Continued, and to be signed and dated, on the reverse side.)
SKY FINANCIAL GROUP, INC.
P.O. BOX 11486
NEW YORK, N.Y. 10203-0486