SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the Commission Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Maryland Federal Bancorp, Inc.
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(Name of Registrant as Specified in its Charter)
Maryland Federal Bancorp, Inc.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box): (previously paid by wire
transfer)
[_] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2), or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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Fee paid previously with preliminary materials.
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[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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MARYLAND FEDERAL BANCORP, INC.
3505 HAMILTON STREET
HYATTSVILLE, MARYLAND 20782
(301) 779-1200
May 16, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Maryland Federal Bancorp, Inc. The meeting will be held at La Fontaine Bleu,
located at 7963 Annapolis Road, Lanham, Maryland, on Wednesday, June 18, 1997,
at 10:00 a.m., Eastern Time. The matters to be considered by stockholders at
the Annual Meeting are described in detail in the accompanying materials.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend
the meeting in person. We urge you to mark, sign and date your proxy card
today and return it in the envelope provided, even if you plan to attend the
Annual Meeting. This will not prevent you from voting in person, but will
ensure that your vote is counted if you are unable to attend.
Your continued support of and interest in Maryland Federal Bancorp, Inc. are
sincerely appreciated.
Sincerely,
/s/ Richard B. Bland
Richard B. Bland
Chairman of the Board
/s/ Robert H. Halleck
Robert H. Halleck
President and Chief Executive
Officer
MARYLAND FEDERAL BANCORP, INC.
3505 HAMILTON STREET
HYATTSVILLE, MARYLAND 20782
(301) 779-1200
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NOTICE OF ANNUAL MEETING
TO BE HELD ON JUNE 18, 1997
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Maryland
Federal Bancorp, Inc. (the "Company") will be held at La Fontaine Bleu, 7963
Annapolis Road, Lanham, Maryland, on Wednesday, June 18, 1997, at 10:00 a.m.,
Eastern Time, for the following purposes, all of which are more completely set
forth in the accompanying proxy statement:
(1) To elect two directors for terms of three years or until their
successors are elected and qualified;
(2) To ratify the appointment of Stoy, Malone & Company, P.C. as the
Company's independent auditors for the fiscal year ending February 28,
1998; and
(3) To transact such other business as may properly come before the
Annual Meeting. Except with respect to procedural matters incident to the
conduct of the Annual Meeting, management of the Company is not aware of
any matters other than those set forth above which may properly come before
the Annual Meeting.
Stockholders of record of the Company at the close of business on April 25,
1997 are entitled to notice of and to vote at the Annual Meeting and at any
adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Sarah M. Costlow
Sarah M. Costlow
Secretary
Hyattsville, Maryland
May 16, 1997
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF
YOU PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN
THE ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THIS
MEETING, YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY. ANY PROXY GIVEN
MAY BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE
EXERCISE THEREOF.
MARYLAND FEDERAL BANCORP, INC.
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished to the holders of the common stock of
Maryland Federal Bancorp, Inc. (the "Company"), the savings and loan holding
company of Maryland Federal Savings and Loan Association, Hyattsville,
Maryland ("Maryland Federal" or the "Association"), in connection with the
solicitation of proxies by the Board of Directors for use at the Annual
Meeting of Stockholders ("Annual Meeting") to be held at La Fontaine Bleu,
7963 Annapolis Road, Lanham, Maryland, on Wednesday, June 18, 1997, at 10:00
a.m., Eastern Time, and at any adjournment thereof for the purposes set forth
in the Notice of Annual Meeting. This Proxy Statement is expected to be mailed
to stockholders on or about May 16, 1997.
Each proxy solicited hereby, if properly signed and returned to the Company
and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. IF NO CONTRARY INSTRUCTIONS ARE GIVEN, EACH
PROXY RECEIVED WILL BE VOTED (I) FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR
DESCRIBED HEREIN; (II) FOR THE RATIFICATION OF THE APPOINTMENT OF STOY, MALONE
& COMPANY, P.C. AS THE COMPANY'S INDEPENDENT AUDITORS; AND (III) UPON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING, IN ACCORDANCE
WITH THE BEST JUDGMENT OF THE PERSONS APPOINTED AS PROXIES.
Any stockholder giving a proxy has the power to revoke it at any time before
it is exercised by (i) filing with the Secretary of the Company written notice
thereof (Sarah M. Costlow, Secretary, Maryland Federal Bancorp, Inc., 3505
Hamilton Street, Hyattsville, Maryland 20782), (ii) submitting a duly executed
proxy bearing a later date, or (iii) appearing at the Annual Meeting and
giving the Secretary notice of his or her intention to vote in person. Proxies
solicited hereby may be exercised only at the Annual Meeting and any
adjournment thereof and will not be used for any other meeting.
VOTING
Only stockholders of record of the Company at the close of business on April
25, 1997 ("Voting Record Date") are entitled to notice of and to vote at the
Annual Meeting and at any adjournment thereof. On the Voting Record Date,
there were 3,204,485 shares of common stock, par value $.01 per share (the
"Common Stock"), of the Company issued and outstanding and the Company had no
other class of equity securities outstanding. Each share of Common Stock is
entitled to one vote at the Annual Meeting on all matters properly presented
at the Annual Meeting. Directors are elected by a plurality of the votes cast
with a quorum present. Abstentions are considered in determining the presence
of a quorum and will not affect the plurality vote required for the election
of directors. The affirmative vote of the holders of a majority of the total
votes cast at the Annual Meeting is required for approval of the proposal to
ratify the appointment of the independent auditors. Abstentions will not be
counted as votes cast, and accordingly will have no effect on the voting of
these proposals. Under rules of the New York Stock Exchange, all of the
proposals for consideration at the Annual Meeting are considered
"discretionary" items upon which brokerage firms may vote in their discretion
on behalf of their clients if such clients have not furnished voting
instructions. Thus, there are no proposals to be considered at the Annual
Meeting which are considered "non-discretionary" and for which there will be
"broker non-votes."
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
DIRECTORS WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Bylaws of the Company presently provide that the Board of Directors
shall consist of six members and that the Board of Directors shall be divided
into three classes as nearly equal in number as possible. The members of each
class are to be elected for a term of three years or until their successors
are elected and qualified. One class of directors is to be elected annually.
There are no arrangements or understandings between the Company and any person
pursuant to which such person has been elected a director, and no director is
related to any other director or executive officer of the Company by blood,
marriage or adoption.
THE NOMINEES
Unless otherwise directed, each proxy executed and returned by a stockholder
will be voted for the election of each of the nominees listed below. If any
person named as a nominee should be unable or unwilling to stand for election
at the time of the Annual Meeting, the Board of Directors, as proxies, will
nominate and vote for any replacement nominee or nominees recommended by the
Board of Directors. At this time, the Board of Directors knows of no reason
why any of the nominees listed below may not be able to serve as a director if
elected.
NOMINEES FOR TERMS EXPIRING IN 2000
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AGE THE PAST FIVE YEARS SINCE(1)
---- --- ---------------------------------------------------- --------
Richard R. Mace 58 Director of the Company and the Association; Self- 1977
employed as a sporting goods dealer in Potomac,
Maryland.
David A. McNamee 72 Director of the Company and the Association; 1973
President, law firm of McNamee, Hosea, Jernigan and
Kim, P.A., Greenbelt, Maryland; Director, Allied
Fund, Inc., Greenbelt, Maryland, since 1956;
Director, National Harmony Memorial Park, Inc.,
Hyattsville, Maryland, since 1961.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE ABOVE NOMINEES
BE ELECTED AS DIRECTORS
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
DIRECTORS WHOSE TERMS EXPIRE IN 1998
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AGE THE PAST FIVE YEARS SINCE(1)
---- --- ---------------------------------------------------- --------
Richard B. Bland 65 Chairman of the Board of the Company since 1980
incorporation; Chairman of the Board of the
Association since October 1987, and General
Counsel; Senior Partner, law firm of Lancaster,
Bland, Eisele and Herring, Hyattsville, Maryland.
Robert H. Halleck 54 Director of the Company and the Association; 1982
President and Chief Executive Officer of the
Company since incorporation; President and Chief
Executive Officer of the Association since October
1987.
2
DIRECTORS WHOSE TERMS EXPIRE IN 1999
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AGE THE PAST FIVE YEARS SINCE (1)
---- --- ---------------------------------------------------- ---------
Thomas H. Welsh, III 51 Director of the Company and the Association; Self- 1986
employed as a real estate developer and builder in
Prince George's County, Maryland.
A. William Blake, Jr. 58 Director of the Company and the Association; 1990
Executive Vice President of the Company and the
Association since November 1989.
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(1) Includes term as a director of the Association, including service prior to
the formation of the Company in 1989. All directors of the Company
currently serve as directors of the Association.
STOCKHOLDER NOMINATIONS
Article IV, Section 4.14 of the Company's Bylaws governs nominations for
election to the Board of Directors and requires all nominations for election
to the Board of Directors, other than those made by the Board or a committee
appointed by the Board, to be made pursuant to timely notice in writing to the
Secretary of the Company, as set forth in Section 4.14. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
principal executive offices of the Company not later than (i) with respect to
an election to be held at an annual meeting of stockholders, 60 days prior to
the anniversary date of the mailing of proxy materials by the Company in
connection with the immediately preceding annual meeting of stockholders of
the Company, and (ii) with respect to a special meeting of stockholders for
the election of directors, the close of business on the tenth day following
the date on which notice of such meeting is first given to the stockholders.
Each written notice of a stockholder nomination must set forth certain
information specified in the Company's Bylaws. The presiding officer of the
meeting may refuse to acknowledge the nomination of any person not made in
compliance with the procedures set forth in the Company's Bylaws.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company generally meets monthly. The Board of
Directors of the Company met ten times during the fiscal year ended February
28, 1997. The Board of Directors of the Company maintains standing audit,
compensation and nominating committees. No director of the Company attended
fewer than 75% in the aggregate of the meetings of the Board of Directors held
during fiscal 1997 and the total number of meetings held by all committees of
the Board on which he or she served during the year.
The Audit Committee of the Board of Directors examines and reviews the
affairs and reports of the Company as well as reports of independent auditors.
The Audit Committee, which met five times in fiscal 1997, consists of Messrs.
McNamee (Chairman), Mace and Welsh.
The Compensation Committee of the Board of Directors reviews existing
compensation, investigates new and different forms of compensation and makes
recommendations with respect thereto to the Board of Directors. The
Compensation Committee, which met one time in fiscal 1997, consists of Messrs.
Bland, McNamee, Mace and Welsh.
The Nominating Committee of the Company selects nominees for election as
directors of the Company. The Nominating Committee, which met one time during
fiscal 1997, consists of the whole Board of Directors.
The Board of Directors of the Association meets monthly and may have
additional special meetings. During the fiscal year ended February 28, 1997,
the Board of Directors of the Association met twelve times. No director
attended fewer than 75% in the aggregate of the total number of Board meetings
held during fiscal 1997 and the total number of meetings held by committees on
which he or she served during the year.
3
The Board of Directors of both the Company and the Association have
authority under their respective Bylaws to establish such other committees
from time-to-time as may be deemed necessary.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following sets forth information with respect to executive officers of
the Company and/or the Association who do not serve on the Board of Directors
of the Company. There are no arrangements or understandings between the
Company or the Association and any person pursuant to which such person has
been elected as an officer.
DAVID E. BAKER (AGE 51)--Mr. Baker is Senior Vice President and Chief
Lending Officer of the Association and has served as such since December 1989.
From December 1985 to November 1989, Mr. Baker was Senior Vice President with
James Madison Mortgage Company. Prior to December 1985, Mr. Baker was a Vice
President of the Association.
NANCY B. COHEN (AGE 47)--Ms. Cohen is Senior Vice President and Director of
Human Resources of the Association. She joined Maryland Federal in 1987 and
was named Senior Vice President in March 1994.
CLARICE M. GEORGE (AGE 63)--Ms. George is Senior Vice President, Deposit
Administrator and Treasurer of the Association. She joined Maryland Federal in
1971 and was named Senior Vice President in 1988.
LYNN B. HOUNSLOW (AGE 37)--Ms. Hounslow is Senior Vice President, Treasurer
and Chief Financial Officer of the Company and Senior Vice President and
Comptroller of the Association. She joined Maryland Federal in 1993. Prior to
joining Maryland Federal, Ms. Hounslow was a Partner with Stoy, Malone &
Company, P.C., Bethesda, Maryland, a certified public accounting firm.
RONALD R. O'BRIEN (AGE 53)--Mr. O'Brien is Senior Vice President and head of
Information Systems of the Association. He joined Maryland Federal in 1983 and
was named Senior Vice President in 1986. Prior to joining the Association, Mr.
O'Brien was Data Processing Operations Manager for Perpetual American Bank,
F.S.B., Alexandria, Virginia.
J. DIANE STEVENSON (AGE 49)--Ms. Stevenson is Senior Vice President and
Branch Coordinator of the Association. She joined Maryland Federal in 1976 and
was named Senior Vice President in 1992.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), requires the Company's officers and directors, and persons who own more
than 10% of the Company's Common Stock, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc. Officers, directors and
greater than 10% stockholders are required by regulation to furnish the
Company with copies of all Section 16(a) forms they file. The Company knows of
no person who owns 10% or more of the Company's Common Stock.
Based solely on review of the copies of such forms furnished to the Company,
the Company believes that during fiscal 1997, all Section 16(a) filing
requirements applicable to its officers and directors and greater than 10%
beneficial owners were complied with.
4
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common Stock
as of the Voting Record Date, and certain other information with respect to
(i) any persons or entities, including any "group" as that term is used in
Section 13(d) of the Exchange Act who, or which was known to the Company to be
the beneficial owner of more than 5% of the issued and outstanding Common
Stock, (ii) each director of the Company, (iii) certain executive officers who
are not directors and (iv) all directors and executive officers of the Company
and the Association as a group.
AMOUNT AND NATURE
NAME OF BENEFICIAL OF BENEFICIAL
OWNER OR NUMBER OF OWNERSHIP AS OF PERCENT OF
PERSONS IN GROUP APRIL 25, 1997(1)(2) COMMON STOCK
------------------ -------------------- ------------
First Manhattan Co. ......................... 240,982 7.5%
437 Madison Avenue
New York, New York 10022
Robert I. Schattner, D.D.S. ................. 192,333 6.0
5901 Montrose Road, Suite 12005
Rockville, Maryland 20852
Directors:
A. William Blake, Jr........................ 42,275(3) 1.3
Richard B. Bland............................ 79,598(4) 2.5
Robert H. Halleck........................... 45,325(5) 1.4
Richard R. Mace............................. 40,677(6) 1.3
David A. McNamee............................ 52,590(7) 1.6
Thomas H. Welsh, III........................ 57,575(8) 1.8
Executive Officer:
David E. Baker.............................. 19,821(9) *
All directors and executive officers as a
group (12 persons).......................... 377,554(10) 11.2
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* Represents less than 1% of the outstanding Common Stock.
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. Under regulations promulgated
pursuant to the Exchange Act, shares of Common Stock are deemed to be
beneficially owned by a person if he or she directly or indirectly has or
shares (i) voting power, which includes the power to vote or to direct
the voting of the shares, or (ii) investment power, which includes the
power to dispose or to direct the disposition of the shares. Unless
otherwise indicated, the named beneficial owner has sole voting and
dispositive power with respect to the shares.
(2) Under applicable regulations, a person is deemed to have beneficial
ownership of any shares of Common Stock which may be acquired within 60
days of the Voting Record Date pursuant to the exercise of outstanding
stock options. Shares of Common Stock which are subject to stock options
are deemed to be outstanding for the purpose of computing the percentage
of outstanding Common Stock owned by such person or group but not deemed
outstanding for the purpose of computing the percentage of Common Stock
owned by any other person or group.
(3) Includes 18,300 shares jointly owned by Mr. Blake and his spouse, with
whom voting and dispositive power is shared and 23,975 shares which may
be acquired upon the exercise of stock options exercisable within 60 days
of the Voting Record Date.
(4) Includes 5,553 shares owned jointly by Mr. Bland and his spouse, with
whom voting and dispositive power is shared, and 22,050 shares which may
be acquired upon the exercise of stock options exercisable within 60 days
of the Voting Record Date.
5
(5) Includes 22,065 shares held by Mr. Halleck's spouse and 22,250 shares
which may be acquired upon the exercise of stock options exercisable
within 60 days of the Voting Record Date.
(6) Includes 2,427 shares held in Mr. Mace's Keogh account and 22,050 shares
which may be acquired upon the exercise of stock options exercisable
within 60 days of the Voting Record Date.
(7) Includes 22,050 shares which may be acquired upon the exercise of stock
options exercisable within 60 days of the Voting Record Date.
(8) Includes 2,030 shares held by Mr. Welsh's spouse, 1,019 shares held by
Mr. Welsh's children, 4,157 shares owned by Mr. Welsh as trustee for the
benefit of his children and 22,050 shares which may be acquired upon the
exercise of stock options exercisable within 60 days of the Voting Record
Date.
(9) Includes 3,150 shares jointly owned by Mr. Baker and his spouse, with
whom voting and dispositive power is shared, and 12,250 shares which may
be acquired upon the exercise of stock options exercisable with 60 days
of the Voting Record Date.
(10) Includes 175,442 shares which may be acquired by all directors and
executive officers as a group upon the exercise of stock options
exercisable within 60 days of the Voting Record Date.
EXECUTIVE COMPENSATION
SUMMARY
The following table sets forth a summary of certain information concerning
the compensation awarded or paid by the Company for services rendered in all
capacities during the last three fiscal years to the Chief Executive Officer
and other executive officers of the Company and the Association whose total
compensation during the last fiscal year exceeded $100,000.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------- ------------
OTHER ANNUAL AWARDS(3) ALL OTHER
NAME AND PRINCIPAL FISCAL COMPENSATION ------------ COMPENSATION
POSITION YEAR SALARY(1) BONUS (2) OPTIONS (4)
------------------ ------ --------- ----- ------------ ------------ ------------
Robert H. Halleck....... 1997 $242,667 $-- -- 15,000 $3,678
President and Chief 1996 216,523 -- -- 19,950 4,582
Executive Officer 1995 203,471 -- -- 15,750 4,385
A. William Blake, Jr.... 1997 $156,707 $-- -- 10,000 $3,814
Executive Vice 1996 150,731 -- -- 14,700 3,771
President 1995 120,031 -- -- 10,500 3,013
David E. Baker.......... 1997 $118,132 $-- -- 3,000 $2,996
Senior Vice President 1996 109,535 -- -- 7,350 2,953
1995 104,400 -- -- 4,200 2,671
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(1) Includes amounts deferred by the named executive officer pursuant to the
Company's Savings 401(k) Plan which allows employees to defer up to 15% of
compensation, up to the maximum established by law.
(2) Does not include amounts attributable to miscellaneous benefits received
by executive officers, including the use of Company-owned automobiles. In
the opinion of management of the Company, the costs to the Company of
providing such benefits to such executive officers during the year ended
February 28, 1997 did not exceed the lesser of $50,000 or 10% of the total
of annual salary and bonus reported for such individual. Does not include
the value of the discount on shares of Common Stock purchased pursuant to
the Company's 1988 Employee Stock Purchase Plan, which generally allows
all participating employees to purchase shares of Common Stock during two
six-month offering periods during a calendar year at a per share price
which is equal to the lesser of (i) 85% of the fair market value of a
share of Common Stock on the first business day of the offering period or
(ii) 85% of the fair market value of a share of Common Stock on the last
day of the offering period.
6
(3) Consists of awards granted pursuant to the Company's Key Employee Stock
Compensation Program, the 1989 Stock Option and Stock Appreciation Rights
Plan, the 1992 Stock Incentive Plan or the 1995 Stock Option Plan, as
adjusted for the 5% stock dividend distributed on December 12, 1996.
(4) Consists of matching contributions by the Company on behalf of the named
executive officer pursuant to the Company's Savings 401(k) Plan.
STOCK OPTIONS
The following table sets forth certain information concerning individual
grants of stock options awarded to the named executive officers during the
year ended February 28, 1997.
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
----------------------------------------- ----------------------------
% OF TOTAL
OPTIONS
OPTIONS GRANTED TO EXERCISE EXPIRATION
NAME GRANTED(1) EMPLOYEES PRICE(2) DATE 5%(3) 10%(3)
---- ---------- ---------- -------- ---------- ------------- --------------
Robert H. Halleck....... 15,000 24.8% $37.50 2/20/07 $ 353,700 $ 896,550
A. William Blake, Jr.... 10,000 16.5 37.50 2/20/07 235,800 597,700
David E. Baker.......... 3,000 5.0 37.50 2/20/07 70,740 179,310
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(1) The options were granted on February 20, 1997, vest one third each year
over three years from the date of grant and expire ten years from the date
of grant.
(2) The exercise price was based on the market price of the Common Stock on
the date of grant.
(3) Assumes compounded rates of return for the remaining life of the options
and future stock prices of $61.08 and $97.27 at compounded rates of return
of 5% and 10%, respectively.
The following table sets forth certain information concerning exercises of
stock options by the named executive officers during the year ended February
28, 1997 and options held at February 28, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED OPTIONS AT
SHARES OPTIONS AT YEAR END YEAR END(1)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Robert H. Halleck....... 10,550(2) $151,728(2) 10,850 44,050 $136,980 $347,994
A. William Blake, Jr.... 5,775 123,966 11,200 30,300 152,469 240,719
David E. Baker.......... 4,620 99,032 6,650 12,100 95,210 110,495
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(1) Based on a per share market price of $37.25 at February 28, 1997.
(2) Includes 4,000 shares acquired upon exercise of options with a value
realized of $31,861 which were exercised pursuant to a divorce decree
issued in 1994.
PENSION PLAN
The Association maintains a qualified, defined benefit, noncontributory
retirement plan ("Pension Plan") in which all full-time employees are eligible
to participate after attaining a minimum age and meeting a required period of
service. The Pension Plan provides for monthly payments to, or on behalf of,
each covered employee upon retirement at age 65, or disability, or death, with
the benefits based upon the employee's highest five-year average annual salary
and length of service.
7
The following table sets forth, in straight-line annuity amounts, the
estimated annual benefits payable upon retirement to participants at normal
retirement age (65), in the average five-years salary and years of credited
service classifications specified. The benefits listed in the following table
are not subject to any deduction for social security or other offset amounts.
PENSION PLAN TABLE
YEARS OF SERVICE
-------------------------------
REMUNERATION 15 20 30 40
------------ ------- ------- ------- -------
$ 25,000.................................. $15,000 $15,000 $15,000 $15,000
50,000.................................. 30,000 30,000 30,000 30,000
75,000.................................. 45,000 45,000 45,000 45,000
100,000.................................. 60,000 60,000 60,000 60,000
125,000.................................. 75,000 75,000 75,000 75,000
150,000.................................. 90,000 90,000 90,000 90,000
175,000.................................. 105,000 105,000 105,000 105,000
200,000.................................. 120,000 120,000 120,000 120,000
225,000.................................. 135,000 135,000 135,000 135,000
250,000.................................. 150,000 150,000 150,000 150,000
The maximum annual compensation which may be taken into account under the
Internal Revenue Code ("Code") (as adjusted from time to time by the Internal
Revenue Service) for calculating contributions under qualified defined benefit
plans currently is $150,000 and the maximum annual benefit permitted under
such plans currently is $120,000.
At February 28, 1997, Messrs. Halleck, Blake and Baker had 25, 32 and 23
years, respectively, of credited service under the Pension Plan.
NON-QUALIFIED EXECUTIVE DEFERRED COMPENSATION PLAN FOR ROBERT H. HALLECK
As of May 16, 1996, the Company established a Non-Qualified Executive
Deferred Compensation Plan (the "Plan") to provide deferred compensation to
Mr. Halleck in order to compensate him for reduced retirement benefits payable
under the Association's Pension Plan due to limitations imposed by the Code.
Pursuant to the Plan, the Company shall make annual contributions in the
amount of $65,000 to a trust (the "Trust"), which the Company established in
conjunction with the Plan. The Company shall make such contributions to the
Trust every year, commencing with the calendar year ended December 31, 1995,
and continuing until Mr. Halleck's retirement or other termination of
employment. However, the Company shall make no contributions in any year in
which Mr. Halleck provides less than 1,000 hours of service. The deferred
amounts shall be payable in installments following Mr. Halleck's retirement,
death, or disability.
COMPENSATION OF DIRECTORS
BOARD FEES. Directors of the Company generally receive no fees from the
Company for attending Board or committee meetings of the Company, although
such meetings are generally held in conjunction with comparable meetings of
the Association for which fees are paid. Directors of the Association (other
than directors who are also executive officers) receive fees of $1,250 per
Board meeting of the Association attended. Directors who are executive
officers do not receive fees for attendance at Board meetings. Members of the
Association's Audit Committee receive fees of $1,000 per committee meeting
attended. In addition, Richard B. Bland, Chairman of the Board of the Company
and the Association, is paid additional compensation of $2,500 per month by
the Association.
8
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee")
consists of the four independent outside directors of the Company. The
Committee has been designated by the Board of Directors with the
responsibility of administering the Company's executive compensation program.
No member of the Committee is a current or former officer or employee of the
Company or any of its subsidiaries. The report of the Committee with respect
to compensation for the Chief Executive Officer and all other executive
officers is set forth below.
REPORT OF THE COMPENSATION COMMITTEE
The goals of the Committee are to assist the Company and its subsidiary in
attracting and retaining qualified management, motivating executives to
achieve performance goals established by the Board of Directors, and to ensure
that the financial interests of the Company's management and shareholders are
congruent.
The Committee considers the following in setting the compensation of the
Chief Executive Officer and the other executive officers of the Company:
(1) The overall performance during the fiscal year after adjusting for
economic conditions occurring during the year.
(2) The individual performance appraisals of the officers and their
contributions toward meeting the Company's performance goals, maintenance
of loan quality and capital ratios, and other objectives as established by
the Board of Directors.
(3) The compensation levels of similar positions of executives at other
peer group companies, defined as thrift institutions of similar size and
operating characteristics, operating within the Middle Atlantic Region. The
Committee also considers the overall compensation level of all employees of
the Company with the intent that the salary of the Chief Executive Officer
of the Company shall not exceed ten times the amount of the average salary
of all employees of the Company.
The compensation arrangements adopted by the Committee include three
components: (1) a base salary, (2) incentive stock options, and (3) a bonus
set at the same percentage as that given to all Company employees if the
Company performance is judged to warrant such a bonus.
The Committee encourages all executives of the Company to commit a portion
of their base salary to the purchase of Company stock through the Employee
Stock Purchase Plan. The belief is that substantial ownership encourages
management to take action favorable to shareholders of the Company.
In October 1996, the Compensation Committee set Mr. Halleck's base salary at
$250,000 for the next 12 months, which was a 16.2% increase over his previous
base salary. At this level, Mr. Halleck's salary is approximately 7.8 times
the average Company salary. The Committee felt the adjustment this year was
justified by the efficiency results being achieved in the current fiscal year,
the substantial increase in the Company's core profitability, and a
comparative salary survey which showed that at the new salary level, Mr.
Halleck's compensation would still be only 70% of the Chief Executive Officer
salaries within the Company's peer groups.
Recommendations regarding the base salary of Company officers other than Mr.
Halleck are made to the Committee by Mr. Halleck and are subject to its
approval. Recommendations are made based on a review of their performance and
their attainment of mutually agreed upon goals.
This report has been prepared by members of the Compensation Committee.
Members of this Committee are:
Richard B. Bland
David A. McNamee
Richard R. Mace
Thomas H. Welsh, III
9
PERFORMANCE GRAPH
The following graph compares the yearly cumulative total return of the
Common Stock over a five year measurement period with (i) the yearly
cumulative total return on the stocks included in the National Association of
Securities Dealers Automated Quotations ("NASDAQ") Market Index and (ii) the
yearly cumulative total return on the stocks included in the Standard
Industrial Classification ("SIC") Code for federally chartered savings
institutions as reported by Media General Financial Services, Richmond,
Virginia. All of these cumulative returns are computed assuming the
reinvestment of dividends at the frequency with which dividends were paid
during the applicable years.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG MARYLAND FEDERAL BANCORP, INC.,
NASDAQ MARKET INDEX AND SIC CODE INDEX
[BAR GRAPH APPEARS HERE]
Maryland Industry Broad
Federal Market Market
-------- -------- ------
1992 100 100 100
1993 151.33 134.61 100.16
1994 181.81 144.52 127.62
1995 186.91 158.79 121.85
1996 230.3 216.98 168.25
1997 302.63 327.04 201.94
EMPLOYMENT AGREEMENTS
The Company and the Association have entered into a three-year employment
agreement with Robert H. Halleck, President and Chief Executive Officer of the
Company and the Association, which became effective May 1, 1991 and was
amended in July 1993 (the Company and the Association are hereinafter
sometimes collectively referred to as the "Employers"). The Association has
also entered into a three-year employment agreement with Mr. Blake, which
became effective April 1, 1993, and a two-year employment agreement with Mr.
Baker, which became effective February 1, 1992. The agreements provide for a
salary level which may be adjusted each year as determined by the Board of
Directors. Under such agreements, Messrs. Halleck, Blake and Baker currently
receive annual base compensation of $250,000, $160,000 and $115,000,
respectively. After the initial term, the agreements renew automatically for
successive terms of one year each, unless either the Board of Directors or the
employee gives contrary written notice to the other not less than 45 days in
advance of any annual anniversary date.
10
The agreements may be terminated by the Employers for "just cause," as
defined, at any time or upon the occurrence of certain events specified by
Office of Thrift Supervision ("OTS") regulations. "Just cause" is defined in
the agreements to mean termination for personal dishonesty, willful
misconduct, breach of fiduciary duty involving personal profit, conviction of
a felony, willful violation of any law or regulation to be enforced by the
OTS, willful violation of a final cease-and-desist order, willful or
intentional breach or neglect by the employee of his duties under the
agreement, persistent negligence or misconduct in the performance of such
duties or material breach of any provision of the agreement, as determined by
a court of competent jurisdiction or a federal or state regulatory agency
having jurisdiction over the Employers.
The agreements also provide for severance payments and other benefits in the
event that the employee terminates his employment for "good reason." "Good
reason" is defined in the agreements to mean: (i) a failure by the Employers
to comply with any material provision of the agreement or, without the
employee's written consent, the assignment to him of any duties inconsistent
with his positions, duties, responsibilities and status with the Employers; or
(ii) subsequent to a change in control of the Employers, as defined, and
without the employee's written consent, the assignment to the employee of any
duties inconsistent with his positions, duties, responsibilities and status
with the Employers immediately prior to a change in control of the Employers,
or a change in his reporting responsibilities, titles or offices as in effect
immediately prior to a change in control of the Employers, any removal of the
employee from or any failure to re-elect him to any of his positions, a
reduction in his annual salary as in effect immediately prior to a change in
control or as his salary may be increased from time-to-time, or the failure of
the Employers to continue in effect any bonus, benefit or compensation plan or
life, health, accident or disability plan in which he is participating at the
time of a change in control of the Employers, or the taking of any actions by
the Employers which adversely affects his participation in or materially
reduces his benefits under any such plans, unless agreed to. The employment
agreements define "change in control" to include any of the following: (i) any
change in control required to be reported pursuant to Item 6(e) of Schedule
14A promulgated under the Exchange Act; (ii) the acquisition of beneficial
ownership by any person (as defined in Sections 13(d) and 14(d) of the
Exchange Act) of 25% or more of the combined voting power of the Employer's
then outstanding securities; or (iii) during any period of two consecutive
years, a change in the majority of the Board of Directors for any reason
unless the election of each new director was approved by at least two-thirds
of the directors then still in office who were directors at the beginning of
the period.
If the employee terminates his employment for good reason pursuant to clause
(i) as described above, or if the agreement is terminated by the Employers for
other than just cause, he would be entitled to a severance payment equal to
the product of his monthly base salary in effect as of the date of termination
multiplied by the number of months remaining in the term of employment under
the agreement.
If the employee terminates his employment for good reason pursuant to clause
(ii) as described above, or if subsequent to a change in control, the
Employers terminate his employment other than for just cause, then the
Employers would provide severance payments to the employee in an amount equal
to 2.99 times his average annual compensation for the preceding five calendar
years. Average annual compensation includes base compensation and bonuses.
Such severance payment is to be paid in a lump sum on or before the fifth day
following the date of termination. If the employment is terminated during
fiscal 1998 pursuant to a change in control of the Employers, as defined,
Messrs. Halleck, Blake and Baker would be entitled to receive a severance
payment amounting to approximately $616,191, $395,094 and $311,752,
respectively. The employment agreements further provide that, in the event of
a change in control of the Employers, if the severance payments under the
respective employment agreements, either alone or together with any other
payments which the employee has a right to receive from the Employers, are
deemed to constitute an "excess parachute payment" under Section 280G of the
Internal Revenue Code of 1986, as amended ("Code"), the Employers shall
reimburse the employee for any federal income tax liability which would not
otherwise have been incurred by him.
11
The Board of Directors may, from time-to-time, extend employment agreements
to other officers of the Company and the Association.
INDEBTEDNESS OF MANAGEMENT
The Association offers single-family residential mortgage loans and consumer
loans to its directors, officers and employees. In the judgment of management,
these loans do not involve more than the normal risk of collectibility. All
loans, with the exception of mortgage and automobile loans, are made on
exactly the same terms as those prevailing at the time for non-affiliated
persons. For first trust mortgage loans, employees with at least one year of
service with the Association are not charged an origination fee. For
automobile loans, a rate is charged which is equal to 1% less than the rate
which would be charged to a non-employee customer. In no case may this rate be
below the Association's cost of funds. The preferential rates on mortgage and
automobile loans are charged as long as the borrower remains employed by the
Association. If the borrower ceases to be employed by the Association, the
rate charged is increased to the market rate in effect at the inception of the
loan.
The following table sets forth information with respect to each director and
executive officer of the Company and the Association who had borrowings of
$60,000 or greater from the Association during the period shown. All first
mortgage loans are secured by the named individual's primary residence, unless
otherwise indicated.
HIGHEST
PRINCIPAL
BALANCE FROM
MARCH 1, 1996
TO BALANCE AT
TYPE OF YEAR FEBRUARY 28, FEBRUARY 28, INTEREST
NAME LOAN MADE 1997 1997 RATE
---- -------------------- ---- ------------- ------------ --------
A. William Blake, Jr. .. Mortgage 1993 $141,056 $130,019 6.125%
Home Equity LOC 1997 85,596 84,533 8.25
Robert H. Halleck....... Mortgage 1995 259,679 257,105 7.625
Home Equity LOC 1995 23,018 18,125 8.250
Ronald R. O'Brien....... Mortgage 1987 71,550 67,219 7.515
J. Diane Stevenson...... Mortgage 1992 80,000 78,319 7.000
Automobile 1994 21,000 16,263 8.000
Overdraft--Unsecured 1989 2,500 2,343 15.000
Overdraft--Unsecured 1991 5,000 4,626 15.000
Clarice M. George....... Mortgage 1993 105,460 104,028 6.250
Richard B. Bland........ Mortgage 1993 192,139 189,052 5.625
Home Equity LOC 1995 99,212 99,212 8.250
Nancy B. Cohen.......... Mortgage 1989 121,127 117,808 7.545
Richard R. Mace......... Mortgage 1994 344,372 0 7.125
Lynn B. Hounslow........ Mortgage 1995 175,759 169,642 8.500
CERTAIN TRANSACTIONS
The law firm of Lancaster, Bland, Eisele & Herring, in which Chairman of the
Board Richard B. Bland is a partner, performs legal services for the
Association in the ordinary course of business. For the year ended February
28, 1997, the firm received fees of $409,748 for services performed for the
Association, in addition to fees which were paid by borrowers.
12
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed Stoy, Malone & Company,
P.C. as independent auditors for the Company for the fiscal year ending
February 28, 1998, and has further directed that the selection of such
auditors be submitted for ratification by the stockholders at the Annual
Meeting. The Company has been advised by Stoy, Malone & Company, P.C. that
neither the firm nor any of its associates has any relationship with the
Company, the Association or its subsidiary other than the usual relationship
that exists between independent public accountants and clients. Stoy, Malone &
Company, P.C. will have one or more representatives at the Annual Meeting who
will have an opportunity to make a statement, if he or she so desires, and
will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF STOY, MALONE & COMPANY, P.C. AS INDEPENDENT AUDITORS FOR
THE FISCAL YEAR ENDING FEBRUARY 28, 1998.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have presented at the next annual
meeting of stockholders, presently scheduled to be held in June 1998, must be
received at the main office of the Company, 3505 Hamilton Street, Hyattsville,
Maryland 20782, no later than January 16, 1998. If such proposal is in
compliance with all of the requirements of Rule 14a-8 of the Exchange Act, it
will be included in the Proxy Statement and set forth on the form of proxy
issued for the next annual meeting of stockholders. It is urged that any such
proposals be sent by certified mail, return receipt requested.
Stockholder proposals which are not submitted for inclusion in the Company's
proxy materials pursuant to Rule 14a-8 under the Exchange Act may be brought
before an annual meeting pursuant to Article II, Section 2.15 of the Company's
Bylaws, which provides that to be properly brought before an annual meeting,
business must be (a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (b) otherwise
properly brought before the meeting by or at the direction of the Board of
Directors, or (c) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing
to the Secretary of the Company. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive offices of
the Company not less than 60 days prior to the anniversary date of the mailing
of proxy materials by the Company in connection with the immediately preceding
annual meeting of stockholders of the Company. A stockholder's notice must set
forth as to each matter the stockholder proposes to bring before an annual
meeting (a) a brief description of the business desired to be brought before
the annual meeting and (b) certain other information set forth in the
Company's Bylaws.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the fiscal year
ended February 28, 1997 accompanies this Proxy Statement. Such Annual Report
is not part of the proxy solicitation materials.
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1997 AND A LIST OF THE EXHIBITS THERETO
REQUIRED TO BE FILED WITH THE SEC UNDER THE EXCHANGE ACT. UPON WRITTEN REQUEST
AND A PAYMENT OF A COPYING CHARGE OF TEN CENTS PER PAGE, THE COMPANY ALSO WILL
FURNISH TO ANY SUCH STOCKHOLDER A COPY OF THE EXHIBITS TO THE ANNUAL REPORT ON
FORM 10-K. SUCH WRITTEN REQUESTS SHOULD BE
13
DIRECTED TO SARAH M. COSTLOW, SECRETARY, MARYLAND FEDERAL BANCORP, INC., 3505
HAMILTON STREET, HYATTSVILLE, MARYLAND 20782. THE FORM 10-K REPORT IS NOT PART
OF THE PROXY SOLICITATION MATERIALS.
OTHER MATTERS
Each proxy solicited hereby also confers discretionary authority on the
Board of Directors of the Company to vote the proxy with respect to the
approval of the minutes of the last meeting of stockholders, the election of
any person as a director if the nominee is unable to serve or for good cause
will not serve, matters incident to the conduct of the meeting, and upon such
other matters as may properly come before the Annual Meeting. Management is
not aware of any business that may properly come before the Annual Meeting
other than those matters described above in this Proxy Statement. However, if
any other matters should properly come before the Annual Meeting, it is
intended that the proxies solicited hereby will be voted with respect to those
other matters in accordance with the judgment of the persons voting the
proxies.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy
materials to the beneficial owners of the Company's Common Stock. In addition
to solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Sarah M. Costlow
Sarah M. Costlow
Secretary
May 16, 1997
14
MARYLAND FEDERAL BANCORP, INC. REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MARYLAND
FEDERAL BANCORP, INC. FOR USE ONLY AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON JUNE 18, 1997 AND ANY ADJOURNMENT THEREOF.
The undersigned, being a stockholder of the Company, hereby authorizes the
Board of Directors of the Company or any successors thereto as proxies with full
powers of substitution, to represent the undersigned at the Annual Meeting of
Stockholders of the Company to be held at La Fontaine Bleu, 7963 Annapolis Road,
Lanham, Maryland, on June 18, 1997 at 10:00 a.m., Eastern Time, and at any
adjournment of said meeting, and thereat to act with respect to all votes that
the undersigned would be entitled to cast, if then personally present, as
follows:
1. ELECTION OF DIRECTORS:
[_] FOR all nominees [_] WITHHOLD AUTHORITY
listed below (except to vote for all nominees
as marked to the listed below
contrary below)
Nominees for three-year terms: Richard R. Mace and David A. McNamee
(INSTRUCTIONS: To withhold authority to vote for one or more of the nominees,
write the name of the nominee(s) in the space provided below.)
- --------------------------------------------------------------------------------
2. PROPOSAL to ratify the appointment of Stoy, Malone & Company, P.C. as the
Company's independent auditors for the fiscal year ending February 28, 1998.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In their discretion, the proxies are authorized to vote with respect to
approval of the minutes of the last meeting of stockholders, the election of any
person as a director if a nominee is unable to serve or for good cause will not
serve, matters incident to the conduct of the meeting, and upon such other
matters as may properly come before the meeting.
(Continued and to be signed on other side)
This proxy may be revoked at any time before it is exercised.
Shares of Common Stock of the Company will be voted as specified. If no
specification is made above, shares will be voted FOR the election of the Board
of Directors' nominees to the Board of Directors and FOR Proposal 2. This proxy
may not be voted for any person who is not a nominee of the Board of Directors
of the Company.
The undersigned hereby acknowledges receipt of a Notice of Annual Meeting
of the Stockholders of Maryland Federal Bancorp, Inc. called for June 18, 1997,
and any adjournment thereof, and a Proxy Statement for the Annual Meeting prior
to the signing of this proxy.
Dated:_____________________, 1997
_________________________________
Signature
_________________________________
Signature
Please sign exactly as your name(s)
appear(s) on this proxy. Only one signature
is required in case of a joint account.
When signing in a representative capacity,
please give title.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING THE
ENCLOSED ENVELOPE.