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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
PROGRESS FINANCIAL CORPORATION
- -----------------------------------------------------------------------------
(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
/ / 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:
___________________________________________________________________________
[Progress Letterhead]
March 28, 2001
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Progress Financial Corporation. The meeting will be held at the Plymouth
Country Club located at Plymouth and Belvoir Roads, Norristown, Pennsylvania on
Wednesday, April 25, 2001 at 9:00 a.m., Eastern Time. The matters to be
considered by stockholders at the Annual Meeting are described 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.
We appreciate your support and interest in Progress Financial
Corporation.
Sincerely,
/s/ W. Kirk Wycoff
W. Kirk Wycoff
Chairman, President and
Chief Executive Officer
PROGRESS FINANCIAL CORPORATION
4 Sentry Parkway, Suite 200
P.O. Box 3036
Blue Bell, Pennsylvania 19422-0764
(610) 825-8800
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 25, 2001
----------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of Progress Financial Corporation (the "Company") will be held at the
Plymouth Country Club located at Plymouth and Belvoir Roads, Norristown,
Pennsylvania on Wednesday, April 25, 2001 at 9:00 a.m., Eastern Time, for the
following purposes, all of which are more completely set forth in the
accompanying Proxy Statement:
(1) To elect three (3) directors for a three-year term and until their
successors are elected and qualified;
(2) To ratify the appointment by the Board of Directors of
PricewaterhouseCoopers LLP as the Company's independent
accountants for the year ending December 31, 2001;
(3) To consider and vote upon a stockholder proposal, if presented at
the Annual Meeting; and
(4) To transact such other business as may properly come before the
meeting or any adjournment thereof. Management is not aware of any
other such business.
The Board of Directors has fixed March 5, 2001 as the voting record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting and at any adjournment thereof. Only those stockholders of
record as of the close of business on that date will be entitled to vote at the
Annual Meeting or at any such adjournment.
A copy of the Company's annual report to stockholders for 2000 is
enclosed. The annual report is not to be regarded as proxy solicitation
material.
By Order of the Board of Directors
/s/ Eric J. Morgan
Eric J. Morgan
Corporate Secretary
Blue Bell, Pennsylvania
March 28, 2001
- --------------------------------------------------------------------------------
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 THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF. HOWEVER, IF YOU ARE A
STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED
ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN ORDER TO VOTE IN PERSON AT
THE ANNUAL MEETING.
- --------------------------------------------------------------------------------
PROXY STATEMENT
----------
PROGRESS FINANCIAL CORPORATION
4 Sentry Parkway, Suite 200
P.O. Box 3036
Blue Bell, Pennsylvania 19422-0764
(610) 825-8800
----------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 25, 2001
This Proxy Statement is furnished to holders of common stock, $1.00 par
value per share ("Common Stock"), of Progress Financial Corporation (the
"Company"), a Delaware corporation, in connection with the solicitation by and
on behalf of the Board of Directors of the Company to be used at the Annual
Meeting of Stockholders ("Annual Meeting") to be held at the Plymouth Country
Club located at Plymouth and Belvoir Roads, Plymouth, Pennsylvania, on
Wednesday, April 25, 2001 at 9:00 a.m., Eastern Time, and at any adjournment
thereof. This Proxy Statement is first being mailed to stockholders on or about
March 28, 2001.
At the Annual Meeting, stockholders will be asked to elect three
directors to serve for three-year terms expiring at the Company's annual meeting
in 2004; to ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for the year ending December 31, 2001; to
consider a stockholder proposal, if presented at the meeting; and to transact
such other business as may properly come before the meeting and all adjournments
thereof.
The 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 "FOR" the nominees for director described herein,
"FOR" the appointment of PricewaterhouseCoopers LLP as the Company's independent
accountants for the year ending December 31, 2001, "AGAINST" the stockholder
proposal, and upon the transaction of such other business as may properly come
before the 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 (Attention: Eric J. Morgan, Corporate Secretary,
Progress Financial Corporation, 4 Sentry Parkway, Suite 200, P.O. Box 3036, Blue
Bell, Pennsylvania 19422-0764); (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. However, if you plan to attend
the meeting and vote in person and your shares are held in the name of a broker
or other nominee, please bring with you a proxy or letter from the broker or
nominee to confirm your ownership of the shares. 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 at the close of business on March 5, 2001
(the "Voting Record Date") will be entitled to vote at the Annual Meeting. On
the Voting Record Date, there were 5,688,895 shares of Common Stock issued and
outstanding, held by approximately 2,800 holders of record, 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 meeting.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Annual Meeting. Directors will be elected by a plurality of the
votes cast at the Annual Meeting. The affirmative vote of the holders of a
majority of the total votes cast at the Annual Meeting is required to ratify the
appointment of the Company's independent auditors and to consider the
stockholder proposal.
Abstentions will be counted for purposes of determining the presence of
a quorum at the Annual Meeting. Because of the required votes, abstentions will
not be counted as votes cast with respect to the proposals to elect directors,
to ratify the appointment of the Company's independent auditors and to consider
the stockholder proposal and, thus, will have no effect on the voting of these
proposals. Under rules applicable to broker-dealers, the election of directors
and the proposal to ratify the auditors 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. However, the
stockholder proposal is considered a "non-discretionary" item upon which
brokerage firms may not vote on behalf of their clients unless they have
received voting instructions. These "broker non-votes" will have no effect on
the outcome of the stockholder proposal.
INFORMATION WITH RESPECT TO NOMINEES FOR
DIRECTOR AND DIRECTORS WHOSE TERMS CONTINUE
Election of Directors
The Certificate of Incorporation and Bylaws of the Company provide that
the Board of Directors of the Company shall consist of no fewer than seven nor
more than 21 members, the exact number to be fixed from time to time by
resolution of the Board of Directors (which is currently set at ten members).
The Board of Directors shall be divided into three classes as nearly equal in
number as possible, and that the members of each class are to be elected for a
term of three years and until their successors are elected and qualified. One
class of directors is to be elected annually, and stockholders of the Company
are not permitted to cumulate their votes for the election of directors.
No nominee for director is related to any other director or executive
officer of the Company by blood, marriage or adoption, and there was no
arrangement or understanding pursuant to which any of the nominees for director
was selected as a nominee. All nominees currently serve as directors of the
Company.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the three nominees for director
listed below. If any person named as nominee should be unable or unwilling to
stand for election at the time of the Annual Meeting, the proxies will 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.
2
The following tables present information concerning each nominee for
director and each director whose term continues, including the principal
occupation of such person during at least the past five years, their tenure as a
director of the Company and the number and percent of Common Stock beneficially
owned by such persons as of the Voting Record Date.
Nominees for Director for Three-Year Term Expiring in 2004
Common Stock
Beneficially Owned
as of
March 5, 2001(1)
Principal Occupation During Director ------------------------
Name Age the Past Five Years Since No. %
- ---------------------------- ------ ----------------------------------------------- -------- ------------ ---------
William O. Daggett, Jr. 60 Chairman of the Board of NABCO; President 1990 109,481(2) 1.9%
of Kistler-Tiffany Benefits, a firm engaged in
financial and estate planning and employee
benefits in Wayne, Pennsylvania. Also,
President, Benefit Designs, Inc.; and Vice
President of Group Brokerage Associates,
Inc. and Group Marketing Services, Inc.
Joseph R. Klinger 58 Executive Vice President of the Bank and 1992 30,494(3) --
Chief Executive Officer of Progress Business
Finance since January 1, 2000. Previously
from 1991 to 1999, principal of KMR
Management, Inc., a management consulting
company in Glenside, Pennsylvania.
William L. Mueller 49 Attorney/Partner with the law firm Brandt, 1990 118,051(4) 2.1
Haughey, Penberthy, Lewis & Hyland in
Moorestown, New Jersey since December
1996. Former attorney with Clark, Ladner,
Fortenbaugh and Young in Cherry Hill, New
Jersey from November 1987 until November
1996.
The Board of Directors recommends a vote FOR election of the nominees for director.
3
Members of the Board of Directors Continuing in Office
Directors With Terms Expiring in 2002
Common Stock
Beneficially Owned
as of
March 5, 2001(1)
Principal Occupation During Director ------------------------
Name Age the Past Five Years Since No. %
- ---------------------------- ------ ----------------------------------------------- -------- ------------ ---------
G. Daniel Jones 49 Managing Director of CBIZ Business 1999 19,531(5) --
Solutions, Inc., a professional corporation of
certified public accountants, located in Bala
Cynwyd, Pennsylvania, since 1982.
Paul M. LaNoce 41 President of DAR Industrial Products, Inc., an 1991 49,387(6) --
industrial manufacturer in W. Conshohocken,
Pennsylvania since 1981.
Kevin J. Silverang 45 Attorney/Shareholder with the law firm of 1999 22,038(7) --
Buchanan Ingersoll in Philadelphia,
Pennsylvania since December 1997.
Former attorney and founding partner of
the law firm, Kaufman, Coren, Ress,
Weidman & Silverang, P.C. in
Philadelphia, Pennsylvania from May
1995 to November 1997. Previously, he
was an attorney and founding partner of
the law firm of Huggler & Silverang in
Philadelphia, Pennsylvania.
Stephen T. Zarrilli 39 Chief Executive Officer of Solution.com, 2000 8,531(8) --
Malvern, Pennsylvannia, since October 2000.
Previously, Chief Financial Officer of U.S.
Interactive, Inc., King of Prussia,
Pennsylvania from 1995 to January 1999 and
Chief Executive Officer from January 1999 to
September 2000 (U.S. Interactive, Inc. filed
for protection under Chapter 11,
Reorganization of the Federal bankruptcy
laws in January 2001).
4
Directors With Terms Expiring in 2003
Common Stock
Beneficially Owned
as of
March 5, 2001(1)
Principal Occupation During Director ------------------------
Name Age the Past Five Years Since No. %
- ---------------------------- ------ ----------------------------------------------- -------- ------------ ---------
A. John May, III 45 Partner in the law firm Pepper, Hamilton 1993 22,476(9) --
LLP in Berwyn, Pennsylvania since 1981.
Charles J. Tornetta 70 President of Tornetta Realty Corporation, a 1991 87,296(10) 1.5%
real estate broker in Norristown,
Pennsylvania. Also, President of
Commonwealth Insurance Agency, Inc.
W. Kirk Wycoff 43 Chairman, President and Chief Executive 1991 423,793(11) 7.1
Officer of the Company and the Bank.
John E. F. Corson 60 Consultant and President of Corson 1991 29,517(12) --
Investments, a group of family holding
companies in Plymouth Meeting,
Pennsylvania.
- ---------------
(1) Unless otherwise indicated, the number of shares owned is less than 1% of the issued and outstanding Common Stock of the
Company.
(2) Includes 65,611 shares owned by companies of which Mr. Daggett is a director, officer and 10% stockholder, 6,615 shares owned
by Mr. Daggett's wife and 16,781 shares subject to stock options which are exercisable within 60 days of the Voting Record
Date.
(3) Includes 6,900 shares owned jointly with Mr. Klinger's wife and 2,594 shares subject to stock options which are exercisable
within 60 days of the Voting Record Date.
(4) Includes 27,482 shares held jointly by Mr. Mueller with or for the benefit of certain family members and 15,624 shares subject
to stock options which are exercisable within 60 days of the Voting Record Date.
(5) Includes 6,449 shares held through the 401(k) plan of CBIZ Business Solutions, Inc., 3,198 shares held jointly with or for the
benefit of certain family members and 9,884 shares subject to stock options which are exercisable within 60 days of the Voting
Record Date.
(6) Includes 17,359 shares subject to stock options which are exercisable within 60 days of the Voting Record Date.
(7) Includes 12,154 shares held jointly by Mr. Silverang with or for the benefit of certain family members and 9,884 shares subject
to stock options which are exercisable within 60 days of the Voting Record Date.
(8) Includes 8,531 shares subject to stock options which are exercisable within 60 days of the Voting Record Date.
(9) Includes 11,105 shares held jointly by Mr. May with or for the benefit of certain family members and 11,371 shares subject to
stock options which are exercisable within 60 days of the Voting Record Date.
(10) Includes 6,076 shares held jointly by Mr. Tornetta with or for the benefit of certain family members and 16,781 shares subject
to stock options which are exercisable within 60 days of the Voting Record Date.
(11) Includes 29,779 shares held jointly by Mr. Wycoff with or for the benefit of certain family members, 2,392 shares held in the
Company's Employee Stock Ownership Plan ("ESOP") and 264,500 shares subject to stock options which are exercisable within 60
days of the Voting Record Date.
(12) Includes 15,624 shares subject to stock options which are exercisable within 60 days of the Voting Record Date.
5
Stockholder Nominations
Nominations for members of the Board of Directors of the Company are
made by the Board of Directors or by any stockholder entitled to vote at the
Annual Meeting. Section 8.4(d) of the Company's Certificate of Incorporation
sets forth the procedures which stockholders must follow in order to make
nominations for election to the Board of Directors. In general, such nominations
must be submitted in writing to the Company at least 30 days prior to the date
of the Annual Meeting. The Company is not required to include such nominations
in its proxy statement. If any stockholder properly makes such a nomination, the
ballots provided for use by stockholders at the Annual Meeting will bear the
name of such nominee or nominees.
The Board of Directors and Its Committees
The Board of Directors of the Company held a total of five meetings
during the year ended December 31, 2000. No incumbent director attended fewer
than 75% of the aggregate total number of meetings of the Board of Directors
held during the year ended December 31, 2000 and the total number of meetings
held by all committees on which he served during such year, except for Mr. May,
who attended three of the five Board meetings held during the year.
The Board of Directors of the Company has established several
committees, including an Executive Committee and an Audit Committee.
The Executive Committee of the Company has been established to make
decisions on acquisitions, investments, and other Board actions between Board
meetings. This committee also acts as the Compensation, Stock Benefits Plan and
Nominating Committees. For 2000, the following Board members served on the
Executive Committee which met three times in 2000: Kevin J. Silverang, Paul M.
LaNoce, William O. Daggett, Jr., Charles J. Tornetta and W. Kirk Wycoff. William
L. Mueller serves on, and replaces Mr. Wycoff on, the Compensation Committee.
The Audit Committee of the Company recommends to the Board independent
auditors to perform audit and non-audit services, reviews the scope and results
of such services, reviews with management and the independent auditors the
systems of internal control and audit, assures adherence in accounting and
financial reporting to generally accepted accounting principles, and performs
such other duties deemed appropriate by the Board of Directors. The Audit
Committee met five times in 2000. The following Board members served on the
Audit Committee in 2000: William O. Daggett, Jr. (Chairman), John E. F. Corson,
G. Daniel Jones, Paul LaNoce and William L. Mueller. The members are independent
as defined in Rule 4200 (a)(14) of the listing standards of the Nasdaq Stock
Market. The Board of Directors adopted an Audit Charter in the form attached
hereto as Appendix A.
Report of the Audit Committee
The Audit Committee has reviewed and discussed the audited financial
statements with management. The Audit Committee has discussed with the
independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61 "Communication with Audit Committees". The Audit
Committee has received the written disclosures and the letter from the
independent accountants required by Independence Standards Board Standard No. 1,
and has discussed with the independent accountant, the independent accountant's
independence. Based on the review and discussions referred to above in this
report, the Audit Committee recommended to the 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, 2000 for filing with the Securities and
Exchange Commission.
William O. Daggett, Jr.
John E.F. Corson
G. Daniel Jones
Paul M. LaNoce
William L. Mueller
6
Executive Officers Who Are Not Directors
The following table sets forth certain information with respect to the executive officers of the Company who are not
directors.
Name Age Positions(s)
- ---------------- ----- -----------------------------------------------------
Eric J. Morgan 48 Senior Vice President, Chief Credit Officer and Secretary
Michael B. High 52 Executive Vice President and Chief Financial Officer
Set forth below is a brief description of the background of each
executive officer of the Company who is not a director for at least the last
five years.
Eric J. Morgan. Mr. Morgan has served as Senior Vice President and Chief
Credit Officer of the Company and the Bank since June 1993. In addition, he has
served as Secretary of the Company and the Bank since June 1995. Prior to
joining the Company in 1993, Mr. Morgan served as President of Crusader Savings
Bank in Rosemont, Pennsylvania.
Michael B. High. Mr.High has served as Executive Vice President and
Chief Financial Officer of the Company and the Bank since October 1998. Prior to
joining the Company in 1998, Mr. High served as Senior Vice President of
Accounting and Reporting at CoreStates Financial Corporation, Philadelphia,
Pennsylvania, following the merger in 1996 of CoreStates and Meridan Bancorp,
Reading, Pennsylvania, where he was Senior Vice President of Finance since 1993.
Previously, Mr. High served as Senior Vice President of and Chief Financial
Officer of Meritor Savings Bank.
7
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table includes, as of the Voting Record Date, certain
information as to the Common Stock beneficially owned by: (i) the only persons
or entities, including any "group" as that term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended ("1934 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, other than members of the Board of Directors as
disclosed under "Information with Respect to Nominees for Director and Directors
Whose Terms Continue," (ii) certain named executive officers of the Company and
(iii) all directors and executive officers of the Company as a group.
Common Stock
Beneficially
Owned as of
March 5, 2001(1)
Name and Address of ---------------------------
Beneficial Owner No. %
----------------------------------------- -------------- -----------
Emerald Advisors, Inc (2) 984,323 17.3%
1857 William Penn Way
Lancaster, Pennsylvania 17601
Other named executive officers:
Michael B. High 15,257(3) --
Eric J. Morgan 27,500(4) --
All directors and executive officers 963,352(5) 15.8%
of the Company as a group (13 persons)
- ----------
(1) Unless otherwise indicated, the number of shares owned is less than 1% of the issued and outstanding Common Stock.
(2) Based upon filings under the Exchange Act, Emerald Advisors possesses sole voting power over 832,335 shares and sole
dispositive power over 984,323 shares.
(3) Includes 1,709 shares held in the ESPP, 271 shares held in the ESOP and 8,399 shares subject to stock options which are
exercisable within 60 days of the Voting Record Date.
(4) Includes 1,509 shares held in the ESOP, 1,185 shares held in the ESPP and 23,370 shares subject to stock options exercisable
within 60 days of the Voting Record Date.
(5) Includes, on behalf of all executive officers and directors as a group, 4,172 shares held in the ESOP, 2,894 shares held in the
ESPP and 420,702 shares subject to stock options which are exercisable within 60 days of the Voting Record Date.
8
EXECUTIVE COMPENSATION
Summary
The following table sets forth a summary of certain information
concerning the compensation awarded to or paid by the Company for services
rendered in all capacities during the last three fiscal years to the Chief
Executive Officer and the following named executive officers of the Company
whose compensation exceeded $100,000 in 2000.
SUMMARY COMPENSATION TABLE
====================================================================================================================================
Long Term
Annual Compensation Compensation
---------------------------------------------- ---------------
Other Awards All
Name and Annual --------------- Other
Principal Position Year Salary(1) Bonus(2) Compensation(3) Options # Compensation(4)
- ------------------------------------------------------------------------------------------------------------------------------------
W. Kirk Wycoff 2000 $ 406,250 $131,250 $ -- 42,000 $284,367
Chairman, President and 1999 345,385 119,263 -- - 190,929
Chief Executive Officer 1998 346,400 79,032 -- - 26,199
- ------------------------------------------------------------------------------------------------------------------------------------
Eric J. Morgan 2000 108,773 11,000 -- 2,625 5,694
Senior Vice President and 1999 104,204 20,207 -- - 6,179
Chief Credit Officer 1998 99,826 12,544 -- - 15,545
- ------------------------------------------------------------------------------------------------------------------------------------
Michael B. High (5) 2000 152,885 30,000 -- 5,250 5,954
Executive Vice President and 1999 138,808 26,588 -- - 3,699
Chief Financial Officer 1998 43,687 8,968 -- 15,000 1,092
- ------------------------------------------------------------------------------------------------------------------------------------
Joseph R. Klinger(6) 2000 175,000 0 -- - 4,000
Executive Vice President of the Bank
and Chief Executive Officer of
Progress Business Finance
====================================================================================================================================
(1) Includes amounts deferred pursuant to the Company's 401(k) Profit Sharing Plan, which generally allows employees to defer up to
12% of their compensation, subject to applicable limitations set forth in the Internal Revenue Code.
(2) Bonuses are payable in 2001 based on 2000 performance objectives.
(3) 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 any
individual executive officer during the year ended December 31, 2000 did not exceed the lesser of $50,000 or 10% of the total
of annual salary and bonus reported for the individual.
(4) Consists of employer contributions made by the Company pursuant to the Company's 401(k) Plan in 2000 of $4,000, $3,830, $4,000
and $4,000, respectively, for Messrs. Wycoff, Morgan, High and Klinger and allocations pursuant to the ESOP in 2000 of $3,012,
$1,864, $1,954, and $0, respectively. Also includes the payment to Mr. Wycoff in 2000 of $154,054 as an incentive fee received
in connection with the sale by the Company of Procall Teleservices, Inc., the payment of $44,810 from Progress Capital
Management, Inc. ("PCM") as compensation for raising third party capital for the Ben Franklin/Progress Capital Fund, L.P. and
NewSpring Ventures, L.P., which are managed by PCM, the payment of $78,255 from the Company in lieu of the gain associated with
the cancellation of warrants to acquire IQEplc, Emax and MCorp described below under "Long-Term Incentive Program," and $236
which is the portion of the premiums paid by the Company for split life insurance purchased by the Company for the value of the
portion of the death benefit to which Mr. Wycoff is entitled under the policy.
(5) Mr. High joined the Company in October 1998.
(6) Mr. Klinger became Executive Vice President on January 1, 2000.
9
Long-Term Incentive Program
The Company has established a long-term incentive program pursuant to
which certain officers and employees receive a portion of warrants that the
Company might receive in connection with loans made by the Bank's Specialized
Lending Division (TechBanc), primarily to early stage technology companies.
Under the incentive program, if the Company achieves certain minimum returns, up
to 15% of the warrants received by the Company from a customer are contributed
to a warrant incentive pool to be shared among the employees of TechBanc. The
incentive pool is reduced by a portion of the charge-offs the Bank has realized
from these loans. Allocation of interests in the pool are discretionary by
management, based upon, among other factors, the employee's position,
relationship with and contribution to the customer. Distributions are made in
cash to employees up to two times each year. At December 31, 2000, the Company
held warrants to purchase common stock of 43 companies that are customers of
TechBanc. Previously under the program, up to 25% of the warrants received by
the Company were issued directly to certain officers of the Bank as incentive
for establishing the new customer relationship and for negotiating the receipt
of warrants on behalf of the Company. In 2000, Mr. Wycoff received $78,255 from
the Company in lieu of the gain associated with the cancellation of warrants
previously received to acquire common stock of IQEplc ($40,278), and Emax and
MCorp ($37,977). Mr. Wycoff received no warrants in 2000 and no longer
participates in or receives warrants or compensation under the program but the
Compensation Committee will consider the effect of client warrant income on the
Company's profitability in determining Mr. Wycoff's annual compensation and
bonus.
Compensation of Directors
Director's Fees. The Board of Directors of the Bank meets monthly and
the Board of the Company meets at least quarterly. In 2000, non-employee
directors of both the Company and the Bank received an annual retainer of $9,000
and non-employee directors of the only the Company received an annual retainer
of $3,000, which was paid in stock options based upon the Black Scholes
valuation method. Directors of both companies received options to purchase 1,845
shares at an exercise price of $11.90 per share and directors of only the
Company received options to purchase 615 shares at an exercise price of $11.90
per share. Each non-officer director received a fee of $600 for each Executive
Committee Meeting attended, $500 for each Audit Committee meeting attended and
$400 for each Loan Committee attended.
Directors' Stock Option Plan. The Company maintains the Amended and
Restated 1993 Directors' Stock Option Plan (the "Directors' Plan") which
provides for the grant of compensatory stock options to non-employee directors
of the Company and the Bank. Pursuant to the Directors' Plan, in June 1993 each
non-employee director of the Company or the Bank was granted a compensatory
stock option to purchase 6,076 shares of Common Stock, at an exercise price of
$2.88 per share. In addition, options to purchase 302 shares were granted to
each non-employee director for each year from 1993 to 1996, options to purchase
606 shares were granted in 1997 and 1998 and options to purchase 607 shares were
granted in 1999 and 2000 and will also be granted to each non-employee director
each year until December 31, 2007. The exercise price is equal to the fair
market value of a share of Common Stock on the date of grant. Options granted
pursuant to the Directors' Plan are immediately vested and exercisable. Share
amounts have been adjusted for stock dividends paid on the Common Stock.
Sale of Procall Teleservices. In connection with the sale of Procall
Teleservices, Inc., a subsidiary of the Company, in May 2000, certain directors
and executive officers of Procall received an incentive fee for the successful
completion of such sale. William O. Daggett, Jr., a director of the Company,
received an incentive fee of $154,054 upon completion of the transaction in
2000.
Compliance with Section 16 (a) of the Securities Exchange Act
Pursuant to Item 405 of Regulation S-K, the Company is required to
disclose (based solely upon a review of forms furnished to the Company pursuant
to Rule 16a-3(e) during its most recent fiscal year) each person who, at any
time during the fiscal year, was a director, executive officer or beneficial
owner of more than ten percent of the Company's Common Stock that failed to file
on a timely basis, as disclosed in the above forms, reports required by Section
16(a) of the Exchange Act during the most recent fiscal year or prior fiscal
years.
Based upon its review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company, the Company is not aware of any director, officer,
beneficial owner or more than 10 percent of the Company's Common Stock or any
other person subject to Section 16 of the Exchange Act who has failed to file
any such form on a timely basis during 2000, except that Mr. Zarrilli filed his
initial report on Form 3 late upon becoming a director.
10
Stock Options
The following table sets forth certain information concerning
individual grants of stock options pursuant to the Company's stock option plans
to the named executive officers during the year ended December 31, 2000.
Potential Realizable Value at
Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term(4)
- --------------------------------------------------------------------------------------- ------------------------------
% of Total
Options
Options Granted to Exercise Expiration
Name Granted(1) Employees(2) Price(3) Date 5% 10%
---- ---------- ------------ -------- ---------- -------- -------
W. Kirk Wycoff 42,000 47.6% $11.90 2/01/10 $314,448 $796,874
Eric J. Morgan 2,625 3.0 11.90 2/01/10 19,653 49,805
Michael B. High 5,250 6.0 11.90 2/01/10 39,306 99,609
Joseph R. Klinger -- -- -- -- -- --
- ---------------
(1) The options granted to executive officers vest and become exercisable over three years, one-third per year commencing one year
from the date of grant.
(2) Percentage of options to purchase Common Stock granted to all employees during 2000.
(3) The exercise price was based on the market price of the Common Stock on the date of grant.
(4) Assumes compounded rates of return for the remaining life of the options and future stock prices of $19.39 and $30.88 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 December
31, 2000 and options held at December 31, 2000.
Aggregated Option Exercise in Last Fiscal Year
and Year End Option Values
Number of Value of
Unexercised Unexercised
Options at Options at
Shares Year End Year End(1)
Acquired on Value -------------------------------- -----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- --------- ----------- ------------- ----------- -------------
W. Kirk Wycoff -- -- 250,388 42,000 $507,622 $0
Eric J. Morgan -- -- 22,478 2,625 49,098 0
Michael B. High -- -- 6,614 15,173 0 0
Joseph R. Klinger 2,000 $17,352 2,725 0 1,919 0
(1) Based on a per share market price of $7.125 at December 31, 2000.
Compensation Committee Interlocks and Insider Participation
The Executive Committee of the Board of Directors (with the exception
of Mr. Wycoff) also serves as the Compensation Committee of the Board of
Directors of the Company. During 2000, the members of the Committee were Messrs.
LaNoce, Daggett, Silverang, Tornetta and Mueller. No member of the Committee is
a current officer or employee of the Company or the Bank. The Committee
generally meets in the first calendar quarter of each year to review the
compensation paid for the prior year, the Company's and the individual's
11
performance for the prior year, and to set compensation levels for the coming
year. The report of the Committee with respect to compensation for 2000 for the
Chief Executive Officer and all other executive officers is set forth below.
Report of the Compensation Committee
The Compensation Committee establishes the policy for compensation of
executive officers of the Company. The Committee also serves as the Stock
Benefits Plan Committee, which makes awards under the Company's stock benefit
plans and recommends to the Board of Directors changes or additions to the
Company's stock benefit programs. The goals of the Committee are to assist the
Company in attracting and retaining qualified management, motivating executives
to achieve performance goals, rewarding management for outstanding performance
and ensuring that the financial interests of the Company's management and
stockholders are satisfied. The Committee believes that this is best
accomplished through an appropriate mix of competitive base salaries, bonuses
and stock incentives.
The Committee considers the following factors among others in
determining base salary levels for executive officers, including the Chief
Executive Officer:
o the performance of the executive officer during the year;
o the Company's earnings, including its growth in earnings per share;
o the successful conversion of the data processing system of the Bank;
o the sale of Procall Teleservices, Inc. at terms advantageous to the
Company;
o the Bank's expansion as evidenced by the opening of two new branch
offices, loan growth of 15% and deposit growth of 20% during the
year; and
o the compensation paid by bank holding companies and commercial banks
of comparable size.
The Committee did not assign particular weights to any of the above
factors, but it did consider that the Company had met its earnings per share
targets for 2000. The Committee also reviewed the 2000 Commercial Bank
Compensation Survey from SNL Securities for banks of similar size.
The Committee discussed whether Mr. Wycoff's base salary should remain
at the 75th percentile for comparably sized banks. Based on the Company's
performance in 2000 and prior years, the Committee determined that it was
appropriate to provide a base salary above the median of the peer group and
agreed on a modest increase of $25,000 in base salary. The Committee ratified
the terms of Mr. Wycoff's employment agreement, extending the term for an
additional year.
The Committee grants bonuses to executive officers, including the Chief
Executive Officer, based upon the degree of attainment of specified individual
and Company performance objectives for the year. The Company's performance
objectives include reaching target levels based on Bank earnings, operating
efficiency and earnings per share. The bonus objectives are based on 50% for
Company performance and 50% for Bank performance. The amount of the 2000 bonus
was based on the formula in the existing bonus plan.
The Committee also reviewed Mr. Wycoff's efforts in raising third party
capital for the Ben Franklin/Progress Fund and NewSpring Ventures. Based on the
results of these efforts, the Committee re-approved the additional compensation
received annually from PCM, which totaled $44,810 in 2000. The Committee further
reviewed the success of the Bank's Specialized Lending Division (TechBanc) and
the $3.5 million of client warrant income recognized by the Company in 2000.
The Committee also considers the granting of stock options each year.
The Committee considers the Company's performance in terms of total shareholder
return relative to a peer group, the Company's profitability, and the number of
options available for grant. The amount of options granted each year is at the
sole discretion of the committee. The Committee believes that it is important
for the Company's executive officers to have a significant financial stake in
the Company's future so that their interests are aligned with all shareholders.
Paul M. LaNoce
William O. Daggett, Jr.
Kevin J. Silverang
Charles J. Tornetta
William R. Mueller
12
Performance Graph
The following graph compares the yearly cumulative total return on the
Common Stock of Progress Financial Corporation over the five year period ending
December 31, 2000 with (i) the yearly cumulative total return on the stocks
included in the Nasdaq Stock Market, Inc. and (ii) the yearly cumulative total
return on the stocks included in the Nasdaq Bank Stocks Index. All of these
cumulative returns are computed assuming the reinvestment of dividends at the
frequency with which dividends were paid during the applicable years. A share of
Common Stock purchased on December 31, 1995 and held until December 31, 2000,
delivered a compounded annual return of 10.4%, including the reinvestment of
dividends.
1995 1996 1997 1998 1999 2000
------ ------ ------ ------ ------ ------
Progress Financial Corporation 100.00 149.57 325.84 272.46 309.43 200.42
Nasdaq Stock Market 100.00 123.04 150.69 212.51 394.92 237.62
Nasdaq Bank Stocks 100.00 132.04 221.06 219.674 211.14 241.08
13
Employment Agreements
The Company and the Bank (the "Employers") have entered into an
employment agreement with W. Kirk Wycoff which provides for his employment for a
period of three years with provisions for one-year extensions subject to Board
approval unless sooner terminated by death, disability or termination for cause.
The employment contract provides for a base salary, bonus plan, and entitles Mr.
Wycoff to participate in all benefit plans and programs available to executive
officers. The employment agreement is terminable with or without cause by the
Employers or Mr. Wycoff. Mr. Wycoff shall have no right to compensation or other
benefits pursuant to the employment agreement for any period after voluntary
termination or termination by the Employers for cause, disability, retirement or
death, provided, however, that if the employment agreement is terminated by the
Employers other than for cause, disability, retirement or death or by Mr. Wycoff
following a change in control of the Company, as defined, Mr. Wycoff will be
entitled to a cash severance amount equal to 2.99 times the amount of Mr.
Wycoff's total annual compensation. The change in control is generally defined
in the employment agreement to mean a change in control of a nature that would
be required to be reported in response to Item 6(e) of the SEC proxy rules,
provided that a change in control shall be deemed to have occurred if (i) the
acquisition by any person of 25% or more of the Company's outstanding voting
securities, or (ii) during any two-year period a change in a majority of the
directors of the Company has occurred without the approval of at least
two-thirds of the persons who were directors of the Company at the beginning of
such period.
The Company has entered into change in control and termination
agreements with certain executive officers of the Company, including Messrs.
Michael B. High and Eric J. Morgan, in order to induce the executives to remain
in the employ of the Company and to assist the Company in maintaining a stable
and competent management base. The agreements are for a five-year term and
provide for payments to the executives upon involuntary termination of the
executive or the occurrence of other specified events related to a reduction in
position, compensation or benefits following a "change in control" of the
Company. Under the agreements, upon a change in control of the Company followed
by termination, the executive would be entitled to the payment of: (i) two times
the executive's highest base salary and annual cash bonus during the last two
years, (ii) life, medical and dental benefits for a period of 24 months
equivalent to benefits they would have received if they remained with the
Company, and (iii) outplacement services for a period of 12 months. The present
value of the total amount of payments under the agreements, when aggregated with
any other payments to the executive which constitute parachute payments under
Section 280G of the Internal Revenue Code of 1986, may not exceed 2.99 times the
executive's base amount as determined under Section 280G.
The Bank has entered into an employment agreement with Joseph R.
Klinger to serve as Executive Vice President of the Bank and Chief Executive
Officer of Progress Business Finance, a division of the Bank, for a three year
term expiring on December 31, 2002. The agreement provides for a base salary, a
performance bonus, based upon the annual profits of the division's supervised by
Mr. Klinger, and participation in certain benefit plans and programs available
to executive officers. The employment agreement may be terminated by the Bank
upon the disability of the executive or for justifiable cause, as such terms are
defined in the agreement. If the executive dies or is disabled, the executive is
entitled to receive his base salary through the date of death or disability and
a pro rata portion of the performance bonus for the year. If the executive is
terminated by the Bank for cause or the executive terminates his employment
before the end of the term of the agreement other than for death, disability or
absent good reason, as defined in the agreement, the executive is not entitled
to receive any payments after the date of termination. If the Bank terminates
the executive's employment for other than death, disability or cause or if the
executive terminates his employment for good reason, the executive is entitled
to his base salary through the date of termination, a pro rata portion of the
performance bonus for the year and a lump sum amount equal to the greater of
one-third of a specified payment based upon profits of a specified division of
the Bank or 12 months of his then current base salary. If the Bank does not
offer to renew the agreement on similar terms to the executive upon its
expiration, the executive shall be entitled to receive an amount equal to the
greater of 37.5% of a specified payment based upon profits of a specified
division of the Bank or 12 months of his then current base salary. In the event
that the executive voluntarily terminates his employment during the initial term
of the agreement other than for death, disability or good reason, the executive
is required to pay the Bank a specified cash payment as liquidated damages.
14
CERTAIN TRANSACTIONS
Indebtedness of Management. The Bank offers certain loans to its
directors, officers and employees. It is the belief of management that these
loans do not involve more than the normal risk of collectibility. Except for the
waiving in most cases of loan origination fees for officers and employees during
their employment or association with the Bank, these loans are made on
substantially the same terms as those prevailing at the time for comparable
transactions with nonaffiliated persons. Executive officers, directors, officers
and employees of the Bank receive no discount from the market interest rate for
loans made by the Bank. As of December 31, 2000, 15 loans totaling $4.2 million
(or 8.4% of the Company's total stockholders' equity) were outstanding to the
Company's directors and executive officers and their affiliated parties as a
group.
Related Transactions. W. Kirk Wycoff serves as limited partner of
Progress Capital L.P. and Progress Capital II, L.P., the general partner of the
Ben Franklin/Progress Capital Fund, L.P. and NewSpring Ventures, L.P.,
investment funds managed by Progress Capital Management, Inc. Mr. Wycoff did not
receive any cash fees from such limited partnership interests in 2000.
In January 2000, the Company acquired KMR Management, Inc. for
consideration of $1 million ($250,000 in cash and 60,000 shares of Common
Stock). Joseph R. Klinger, a director of the Company, was a principal and owner
of one-third of the stock of KMR Management and received $83,333 in cash and
20,000 shares of Common Stock.
In 2000, Progress Bank leased a branch office location from 436
Plymouth Road Associates LP, the partners of which are family members of Charles
J. Tornetta, a director of the Company. The lease has a term of 15 years with
annual lease payments which are currently $85,000 (which is the current market
rate).
The law firms of Buchanan Ingersoll, of which Kevin J. Silverang is a
shareholder, and Pepper, Hamilton LLP, of which A. John May, III is a partner,
provide legal services to the Company and its subsidiaries from time to time in
the ordinary course of business.
PROPOSAL TO RATIFY APPOINTMENT OF THE INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed
PricewaterhouseCoopers LLP, independent accountants, to perform the audit of the
Company's financial statements for the year ending December 31, 2000, and
further directed that the selection of auditors be submitted for ratification by
the stockholders at the Annual Meeting.
The Company has been advised by PricewaterhouseCoopers LLP that neither
that firm nor any of its associates has any relationship with the Company other
than the usual relationship that exists between independent certified public
accountants and clients. PricewaterhouseCoopers LLP will have one or more
representatives at the Annual Meeting who will have an opportunity to make a
statement, if they so desire, and will be available to respond to appropriate
questions.
Audit Fees
The aggregate amount of the fees billed by PricewaterhouseCoopers LLP
for its audit of the Company's annual financial statements for 2000 and its
reviews of the Company's unaudited interim financial statements included in
reports filed by the Company under the Exchange Act during the year was
$120,546.
Financial Information Systems Design and Implementation
PricewaterhouseCoopers LLP did not provide any services to the Company
for financial information systems design and implementation during 2000.
15
All Other Fees
The aggregate amount of the fees billed by PricewaterhouseCoopers LLP
for all other services rendered by it to the Company during 2000 was $296,989.
These services consisted primarily of internal audit services and a review of
certain internal controls.
The Board of Directors and its Audit Committee considered the
compatibility of the non-audit services provided to the Company by
PricewaterhouseCoopers LLP in 2000 on the independence of PricewaterhouseCoopers
LLP from the Company in evaluating whether to appoint PricewaterhouseCoopers LLP
to perform the audit of the Company's financial statements for the year ending
December 31, 2001.
The Board of Directors recommends that you vote FOR the ratification of
the appointment of PricewaterhouseCoopers LLP as independent auditors for the
year ending December 31, 2001.
STOCKHOLDER PROPOSAL
The Company has been notified that Jewelcor Management, Inc., 100 North
Wilkes-Barre Boulevard, Wilkes-Barre, Pennsylvania 18702, which is the record
owner of 220 shares of Common Stock and the beneficial owner of 11,355 shares of
Common Stock, intends to present the following stockholder proposal for
consideration at the Annual Meeting. For the reasons stated under "Response of
Your Board of Directors," the Board believes that approval of the proposal is
not in the best interests of the Company or its stockholders and recommends a
vote "AGAINST" the stockholder proposal.
Shareholder Proposal
Resolved, it is recommended that the Board of Directors of Progress
Financial Corporation (the "Company") take the steps necessary to implement the
following actions to remove the restrictions on the rights of the shareholders
presently contained in the Company's Certificate of Incorporation and Bylaws,
unless precluded by state or federal law:
1. Remove any provisions in the Company's Certificate of
Incorporation and Bylaws that restrict the shareholders' ability
to call a special meeting of shareholders.
2. Remove any provisions in the Company's Certificate of
Incorporation and Bylaws that restrict the shareholders' ability
to conduct business at a special meeting of shareholders.
3. Remove any provisions in the Company's Certificate of
Incorporation and Bylaws that restrict the shareholders' ability
to act by written consent.
4. Remove any provisions in the Company's Certificate of
Incorporation and Bylaws that segregate the Board of Directors
into separate classes with staggered terms of office.
5. Remove any provisions in the Company's Certificate of
Incorporation and Bylaws that require that certain shareholder
matters must receive the affirmative vote of more than a simple
majority of shares entitled to vote in an election of directors.
Supporting Statement
The Company's Certificate of Incorporation and Bylaws presently
restrict the shareholders' ability to meet, conduct business and take action.
Moreover, the present segregation of the Board of Directors into separate
classes with staggered terms of office is designed to limit the shareholders'
ability to alter the composition of a majority of the Board. If the above
actions were effectuated, we shareholders would have an increased ability to
affect the management of the Company. It is the opinion of this shareholder that
we shareholders should be given more of a voice in the Company's future. Please
vote YES on this proposal.
16
Response of Your Board of Directors
Your Board of Directors unanimously recommends that you vote "AGAINST"
the above stockholder proposal for the reasons set forth below.
Your Board is Committed to Enhancing Shareholder Value
Your Board of Directors is committed to enhancing shareholder value and
acting in accordance with its fiduciary duties to ALL shareholders. Your Board
will carefully consider any appropriate action that would serve the best
interests of the shareholders.
While the Board of Directors is not aware of any effort that might be
made to obtain control of the Company, the Board of Directors believes that it
is appropriate to include certain provisions as part of the Certificate of
Incorporation and Bylaws to protect the interests of the Company and its
shareholders from hostile takeovers that the Board of Directors might conclude
are not in the best interests of the Company's shareholders.
Your Board Believes That It Is in the Best Position to Negotiate on Behalf
of All Shareholders
Your Board of Directors believes that the provisions which Jewelcor
proposes to eliminate are in fact in the best interests of the Company and its
shareholders. In the opinion of the Board of Directors, the Board is in the best
position to determine the true value of the Company and to negotiate more
effectively on behalf of all shareholders. Accordingly, the Board believes that
it is in the best interests of the shareholders to encourage potential acquirors
to negotiate directly with the Board of Directors and that these provisions
encourage such negotiations while discouraging hostile takeover attempts which
may not be in the best interests of all the shareholders. It is also the view of
the Board of Directors that these provisions in the Certificate of Incorporation
and Bylaws should not discourage persons from proposing a merger or other
transaction at prices reflective of the true value of the Company and which is
in the best interests of all of the shareholders.
Attempts to take control of financial institutions have become more
common. Takeover attempts which have not been negotiated with and approved by
the Board of Directors present shareholders with the risk of a takeover on terms
which may be less favorable than might otherwise be available. A transaction
which is negotiated and approved by the Board of Directors, on the other hand,
can be carefully planned and undertaken at an opportune time in order to obtain
maximum value for the Company and its shareholders.
Repeal of the Provisions Could Be Detrimental to Shareholders
The proposed repeal of the provisions in our Certificate of
Incorporation and Bylaws that segregate the Board into separate classes with
staggered terms could result in a shareholder group acquiring control of your
Company through a proxy contest, without paying any control premium to any of
the other shareholders. The repeal of the provisions that restrict the
shareholders' ability to call and conduct business at a special meeting of
shareholders and restrict their ability to act by written consent would allow
the proxy contest to occur without having an annual meeting of shareholders.
Your Board of Directors believes that anyone seeking control of the Company
should have to pay a premium to ALL shareholders, and that the proposed repeal
of these provisions is not in your best interests.
In addition, an unsolicited takeover proposal can seriously disrupt the
business and management of a corporation and cause it great expense. Although a
tender offer or other takeover attempt may be made at a price above current
market prices, such offers are sometimes made for less than all of the
outstanding shares of a target company. As a result, shareholders may be
presented with the alternative of partially liquidating their investment at a
time that may be disadvantageous, or retaining their investment in an enterprise
which is under different management and whose objective may not be similar to
those of the remaining shareholders. Accordingly, the Board of Directors
believes that these provisions in the Certificate of Incorporation and Bylaws
provide benefits to all of the shareholders of the Company and should not be
removed.
17
The Board of Directors has a fiduciary responsibility to act in the
best interests of ALL shareholders and accordingly has a legal duty to oppose
unfair takeover offers. Anti-takeover measures are intended to (a) provide the
Board with adequate time and flexibility to negotiate on behalf of the
shareholders and (b) enhance the Board's ability to negotiate with a potential
acquiror, develop alternatives which may better maximize shareholder values,
preserve the long-term value of the Company for the shareholders, and ensure
that all shareholders are treated fairly and equally. The purpose of
anti-takeover defenses in general is to protect shareholders against abusive
takeover practices.
Your Board Believes That the Proposal Is Vague
Your Board of Directors believes that this proposal is so inherently
vague and indefinite as to be subject to varying interpretations by Jewelcor,
the Company and other shareholders. In this regard, Jewelcor fails to take into
account or discuss the effect of applicable Delaware and federal laws. Your
Board believes that the proposal is vague and indefinite because the repeal of
the various provisions referenced in the proposal will not result in the removal
of the "anti-takeover" defenses.
For example, the repeal of the provisions in our Certificate of
Incorporation and Bylaws which restrict the shareholders' ability to call a
special meeting will not result in shareholders being able to call special
meetings under Section 211(d) of the Delaware General Corporation Law. In
addition, provisions of our Certificate of Incorporation currently allows
shareholders to take action by written consent without a meeting if signed by
all of the shareholders.
Under our Certificate of Incorporation, repeal of the provisions in our
Certificate of Incorporation subject to the shareholder proposal require the
affirmative vote of 67% of the whole Board of Directors and the affirmative vote
of the holders of 67% or more or the outstanding voting shares. Thus, in order
to effect the changes suggested by the stockholder proposal, approval by 67% of
the Board of Directors and by 67% of the stockholders at a future meeting would
be required. Accordingly, even if the stockholder proposal is approved at the
Annual Meeting, additional action would be necessary to amend our Certificate of
Incorporation in the manner proposed, including approval by stockholders at a
future meeting with a more onerous vote standard.
For the reasons set forth above, the Board of Directors believes that
the stockholder proposal is not in the best interests of the Company and its
shareholders. Accordingly, the Board of Directors unanimously recommends that
you vote "AGAINST" the stockholder proposal.
STOCKHOLDER PROPOSALS FOR THE 2002 ANNUAL MEETING
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which is scheduled to be held in April 2002, must be received at
the principal executive offices of the Company, 4 Sentry Parkway, Suite 200,
P.O. Box 3036, Blue Bell, Pennsylvania 19422-0764, Attention: Eric J. Morgan,
Corporate Secretary, no later than November 28, 2001. If such proposal is in
compliance with all of the requirements of Rule 14a-8 under the Exchange Act, it
will be included in the proxy statement and set forth on the form of proxy
issued for such annual meeting of stockholders. It is urged that any such
proposals be sent 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 Section 8.9 of the Company's
Certificate of Incorporation, which provides that business at an annual meeting
of stockholders must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, or
(b) 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 30
days prior to the annual meeting. 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 the reasons for conducting such business at the annual meeting, (b)
the name and address, as they appear on the Company's books, of the stockholder
proposing such business and any other stockholders known by the stockholder to
be supporting such proposal, (c) the class and number of shares of Common Stock
of the Company which are beneficially owned by the stockholder, and by any other
stockholders known by the stockholder to be supporting such proposal and (d) any
financial interest of the stockholder in such business.
18
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year
ended December 31, 2000 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
required to be filed with the Securities and Exchange Commission under the 1934
Act. Such written requests should be directed to Dorothy Jaworski, Director of
Investor Relations, Progress Financial Corporation, 4 Sentry Parkway, Suite 230,
P.O. Box 3036, Blue Bell, Pennsylvania 19422-0764. The Form 10-K is not part of
the proxy solicitation materials.
OTHER MATTERS
Management is not aware of any business to come before the Annual
Meeting other than the matters described above in this Proxy Statement. However,
if any other matters should properly come before the 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 the solicitation of proxies will be borne by the Company.
The Company has retained Morrow & Co. Inc., a professional proxy solicitation
firm, to assist in the solicitation of proxies, such firm will receive a fee of
$5,000, plus reimbursement for out-of-pocket expenses. The Company will
reimburse brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending the 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.
19
Appendix A
Progress Financial Corporation
Audit Committee Charter
Organization
There shall be a committee of the board of directors to be known as the audit
committee. The audit committee shall be composed of at least three directors who
are independent of the management of the corporation and are free of any
relationship that, in the opinion of the board of directors, would interfere
with their exercise of independent judgment as a committee member. All members
of the committee shall have a working familiarity with basic finance, and at
least one member of the committee shall have accounting or related financial
management expertise. The committee shall meet as often as necessary but not
less than four times a year. The members will be appointed annually by the Board
of Directors and one member shall be designated by the Board as Chairperson of
the Committee.
Statement of Policy
The audit committee shall provide assistance to the corporate directors in
fulfilling their responsibility to the shareholders, potential shareholders, and
investment community relating to corporate accounting, reporting practices of
the corporation, and the quality and integrity of the financial reports of the
corporation. In so doing, it is the responsibility of the audit committee to
maintain free and open means of communication between the directors, the
independent auditors, the internal auditors, and the financial management of the
corporation.
Responsibilities
In carrying out its responsibilities, the audit committee believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and to ensure to the directors and shareholders that the corporate
accounting and reporting practices of the corporation are in accordance with all
requirements and are of the highest quality.
In carrying out these responsibilities, the audit committee will:
o Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the corporation and its
divisions and subsidiaries.
o Meet with the independent auditors and financia management of the
corporation to review the scope of the proposed audit for the current year
and the audit procedures to be utilized, and at the conclusion thereof
review such audit, including any comments or recommendations of the
independent auditors.
o Review with the independent auditors, the company's internal auditor, and
financial and accounting personnel, the adequacy and effectiveness of the
accounting and financial controls of the corporation, and elicit any
recommendations for the improvement of such internal control procedures or
particular areas where new or more detailed controls or procedures are
desirable. Particular emphasis should be given to the adequacy of such
internal controls to expose any payments, transactions, or procedures that
might be deemed illegal or otherwise improper. Further, the committee
periodically should review company policy statements to determine their
adherence to the code of conduct.
o Review the internal audit function of the corporation including the
independence and authority of its reporting obligations, the proposed audit
plans for the coming year, and the coordination of such plans with the
independent auditors.
A-1
Progress Financial Corporation
Audit Committee Charter
o Receive prior to each meeting, a summary of findings from completed
internal audits and a progress report on the proposed internal audit plan,
with explanations for any deviations from the original plan.
o Review the financial statements contained in th annual report to
shareholders with management and the independent auditors to determine that
the independent auditors are satisfied with the disclosure and content of
the financial statements to be presented to the shareholders. Any changes
in accounting principles recommended by management should be approved by
the Committee. Review with the independent accountants all items required
by Statement of Auditing Standards No. 61.
o Provide sufficient opportunity for the internal and independent auditors to
meet with the members of the audit committee without members of management
present. Among the items to be discussed in these meetings are the
independent auditors' evaluation of the corporation's financial,
accounting, and auditing personnel, and the cooperation that the
independent auditors received during the course of the audit.
o Submit the minutes of all meetings of the audit committee to, or discuss
the matters discussed at each committee meeting with, the Board of
Directors. Prepare report for inclusion in the Annual Proxy.
o Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate.
o Review and update the committee's charter with changes submitted to the
Board of Directors for approval annually.
o Review with independent accountants the quarterly earnings included in the
Company's Form 10-Q prior to filing with the SEC. In lieu of a meeting,
this review can be conducted by the chairman of the committee in person or
by telephone conference call.
A-2
REVOCABLE PROXY
PROGRESS FINANCIAL CORPORATION
4 Sentry Parkway, Suite 200
P.O. Box 3036
Blue Bell, PA 19422-0764
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF PROGRESS
FINANCIAL CORPORATION FOR USE ONLY AT THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD APRIL 25, 2001 AND AT ANY ADJOURNMENT THEREOF.
The undersigned being a stockholder of Progress Financial Corporation (the
"Company"), hereby appoints Eric J. Morgan as proxy, with full power of
substitution, to represent and vote as designated below all of the shares of
Common Stock of the Company which the undersigned is entitled to vote at the
Annual Meeting of Stockholders of the Company to be held at Plymouth Country
Club, located at Plymouth and Belvoir Roads, Norristown, Pennsylvania on
Wednesday, April 25, 2001 at 9:00 a.m., Eastern Time, and any adjournment
thereof.
(To be Signed on Reverse Side)
/X/ Please mark your
votes as in this
example.
WITHHOLD
FOR AUTHORITY
1. ELECTION OF / / all nominees / / to vote for
DIRECTORS listed below all nominees
(except as listed below
marked to
the contrary
below)
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
1. Nominees for a three-year term expiring in 2004:
William O. Daggett, Jr., Joseph R. Klinger, William L. Mueller
FOR AGAINST ABSTAIN
2. PROPOSAL to ratify the appointment of / / / / / /
PricewaterhouseCoopers L.L.P. as the Company's
independent accountants for the year ending
December 31, 2001. Directors recommend a vote "FOR."
3. PROPOSAL to consider a stockholder proposal, if / / / / / /
presented at the Annual Meeting. Directors recommend
a vote "AGAINST."
4. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
This Proxy is solicited by the Board of Directors of the Company. The shares of
Common Stock will be voted as specified. If not otherwise specified, this Proxy
will be voted FOR the election of the Board of Director's nominees for director,
FOR the proposal to ratify the independent accountants, AGAINST the stockholder
proposal, if presented at the meeting, and otherwise at the discretion of the
Proxy. You may revoke this Proxy at any time prior to the time it is voted at
the Annual Meeting.
SIGNATURE(S)_______________________________________ DATE ___________________
SIGNATURE(S)_______________________________________ DATE ___________________
Please sign this proxy exactly as your name(s) appears on this Proxy. When
signing in a representative capacity, please give title. When shares are held
jointly, only one holder need sign.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.