SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Section 240.14a-12
BANK MUTUAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
n/a
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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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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[BANK MUTUAL LOGO]
March 27, 2002
Dear Fellow Shareholder,
We invite you to attend the Bank Mutual Corporation 2002 Annual Meeting
of Shareholders, which will be held at the Four Points Sheraton Milwaukee North
Hotel, 8900 N. Kildeer Court, Milwaukee, Wisconsin at 10:00 a.m., Central Time,
on Tuesday, May 7, 2002.
Bank Mutual's Notice of Annual Meeting of Shareholders and Proxy
Statement which are enclosed describe the business to be conducted at the Annual
Meeting. If you plan to attend the Annual Meeting, please check the box on the
proxy form so that we can make the appropriate arrangements.
Also enclosed is a copy of Bank Mutual's Summary Annual Report and
attached is the Annual Report on Form 10-K for the year ended December 31, 2001.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the
Annual Meeting, we urge you to MARK, SIGN, DATE AND RETURN YOUR PROXY FORM IN
THE ENCLOSED POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE to make sure that you are
represented. This will not prevent you from voting in person at the Annual
Meeting, but will ensure that your shares will be represented if you are unable
to attend.
Sincerely,
BANK MUTUAL CORPORATION
/s/ Michael T. Crowley, Jr.
MICHAEL T. CROWLEY, JR.
Chairman and Chief Executive Officer
[BANK MUTUAL LOGO] BANK MUTUAL CORPORATION
4949 WEST BROWN DEER ROAD
MILWAUKEE WISCONSIN 53223
(414) 354-1500
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 7, 2002
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To the Shareholders of Bank Mutual Corporation:
The 2002 annual meeting of shareholders of Bank Mutual Corporation will
be held on Tuesday, May 7, 2002, at 10:00 a.m., Central Time, at the Four Points
Sheraton Milwaukee North Hotel, 8900 N. Kildeer Court, Milwaukee, Wisconsin for
the following purposes:
(1) To elect four directors to serve for terms expiring
in 2005;
(2) To consider and approve an amendment to the Bank
Mutual Corporation 2001 Stock Incentive Plan; and
(3) To transact such other business as may properly come
before the annual meeting or any adjournment thereof.
The board of directors has fixed the close of business on March 15,
2002 as the record date for the determination of shareholders entitled to notice
of and to vote at the annual meeting and any adjournment thereof. Only
shareholders of record at the close of business on that date will be entitled to
vote at the annual meeting.
We call your attention to the proxy statement accompanying this notice
for a more complete statement regarding the matters to be acted upon at the
annual meeting. Please read it carefully.
By Order of the Board of Directors
/s/ Eugene H. Maurer, Jr.
Eugene H. Maurer, Jr.
Senior Vice President and Secretary
Milwaukee, Wisconsin
March 27, 2002
YOUR VOTE IS IMPORTANT
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE INDICATE YOUR
VOTING DIRECTIONS, SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY, WHICH
IS SOLICITED BY THE BANK MUTUAL BOARD OF DIRECTORS, USING THE ENCLOSED
SELF-ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. IF FOR ANY REASON YOU SHOULD DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO
AT ANY TIME BEFORE IT IS VOTED AT THE ANNUAL MEETING.
PROXY STATEMENT
BANK MUTUAL CORPORATION
4949 WEST BROWN DEER ROAD
MILWAUKEE, WISCONSIN 53223
(414) 354-1500
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SOLICITATION AND VOTING
This proxy statement and accompanying proxy are furnished to the
shareholders of Bank Mutual Corporation ("Bank Mutual") in connection with the
solicitation of proxies by Bank Mutual's board of directors for use at the
annual meeting of Bank Mutual shareholders on Tuesday, May 7, 2002, and at any
adjournment of that meeting. The 2001 summary annual report to shareholders,
which accompanies this proxy statement, and the annual report on Form 10-K,
attached hereto, contain financial statements and certain other information
concerning Bank Mutual. We are mailing the proxy materials to shareholders
beginning on or about March 27, 2002.
Bank Mutual was formed in a restructuring on November 1, 2000 of Mutual
Savings Bank into mutual holding company form. In that restructuring, Bank
Mutual became the holding company of Mutual Savings Bank, and Mutual Savings
Bank's depositors were given the opportunity to purchase shares of Bank Mutual
stock. Information in this proxy statement includes information relating to
Mutual Savings Bank prior to the restructuring. On the same day, Bank Mutual
acquired First Northern Capital Corp., whose First Northern Savings Bank
subsidiary became a wholly owned subsidiary of Bank Mutual. Certain executive
officers and directors of First Northern became Bank Mutual executive officers
and directors as a result of this transaction. Information regarding First
Northern prior to its acquisition by Bank Mutual is not included in this proxy
statement unless otherwise stated.
The board of directors has fixed the close of business on March 15,
2002 as the record date for the determination of shareholders entitled to notice
of and to vote at the annual meeting and any adjournment thereof. Only holders
of record of Bank Mutual common stock, the only class of voting stock of Bank
Mutual outstanding, on the record date are entitled to notice of and to vote at
the annual meeting. Each share of common stock is entitled to one vote. At the
record date, there were 22,310,165 shares of common stock validly issued and
outstanding.
Any shareholder entitled to vote at the annual meeting may vote either
in person or by a properly executed proxy. Shares represented by properly
executed proxies received by Bank Mutual will be voted at the annual meeting, or
any adjournment thereof, in accordance with the terms of such proxies, unless
revoked. If no voting instructions are given on a properly executed proxy, the
shares will be voted FOR the election of management's director nominees and FOR
approval of the amendment (the "Amendment") to the Bank Mutual Corporation 2001
Stock Incentive Plan (the "2001 Plan").
If a shareholder participates in the Bank Mutual Dividend Reinvestment
and Stock Purchase Plan (the "DRIP"), the proxy also will serve as voting
instructions for the participant's shares held in the DRIP. Participants' shares
will be voted by the administrator of the DRIP in accordance with those voting
instructions. If a participant does not return a proxy, the DRIP administrator
will not vote that participant's shares held in the DRIP.
Any shareholder who owns Bank Mutual shares through an investment in
the Bank Mutual Common Stock Fund of the Bank Mutual Corporation 401(k) Plan
(including its predecessors, the "401(k) Plan") will receive a separate blue
proxy card to instruct the 401(k) Plan's administrator how to vote those shares.
The administrator of the 401(k) Plan will vote shares held in those employees'
401(k) Plan accounts in accordance with the voting instructions on the blue
proxies. If a participant in the 401(k) Plan does not return a proxy, the
administrator will vote that participant's shares held in the 401(k) Plan in the
same proportion the voting of all shares in the 401(k) Plan for which voting
instructions have been received.
Any shareholder who owns Bank Mutual shares through an allocation to
that person's account under the Bank Mutual Employee Stock Ownership Plan (the
"ESOP") will receive a separate green proxy card to instruct the ESOP's
administrator how to vote those shares. The ESOP administrator, which is Bank
Mutual acting through its
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board, will vote shares allocated to those employees' ESOP accounts in
accordance with the participant's voting instructions on the green proxies. The
ESOP administrator may vote, at its discretion, both unallocated ESOP shares and
any allocated ESOP shares which are not voted by individuals to whom they are
allocated.
A shareholder may revoke a proxy at any time prior to the time when it
is voted by filing a written notice of revocation with the corporate secretary
of Bank Mutual, by delivering a properly executed proxy bearing a later date or
by voting in person at the annual meeting. Attendance at the annual meeting will
not in itself constitute revocation of a proxy.
A majority of the votes entitled to be cast by the shares entitled to
vote, represented in person or by proxy, will constitute a quorum of
shareholders at the annual meeting. Shares for which authority is withheld to
vote for director nominees and broker non-votes (i.e., proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owners or other persons entitled to vote shares as to a matter with
respect to which the brokers or nominees do not have discretionary power to
vote) will be considered present for purposes of establishing a quorum. The
inspectors of election appointed by the board of directors will count the votes
and ballots at the annual meeting.
A plurality of the votes cast at the annual meeting by the holders of
shares of common stock entitled to vote is required for the election of
directors. In other words, the individuals who receive the largest number of
votes are elected as directors up to the maximum number of directors in a class
to be chosen at the annual meeting. Votes for the nominees in each class will be
tallied separately. With respect to the election of directors, any shares not
voted, whether by withheld authority, broker non-vote or otherwise, will have no
effect on the election of directors except to the extent that the failure to
vote for an individual results in another individual receiving a comparatively
larger number of votes. Mutual Savings Bancorp, MHC (the "MHC"), Bank Mutual's
mutual holding company, owns a majority of Bank Mutual's shares. The MHC intends
to vote in favor of the management nominees for director.
Under Bank Mutual's bylaws, assuming a quorum is present, the
affirmative vote of a majority of the shares represented at the meeting and
entitled to vote on the subject matter is generally required for approval of an
item other than the election of directors, such as approval of the Amendment.
The MHC intends to vote for the Amendment.
Expenses in connection with the solicitation of proxies will be paid by
Bank Mutual. Proxies will be solicited principally by mail, but may also be
solicited by the directors, officers and other employees of Bank Mutual in
person or by telephone, facsimile or other means of communication. Those
directors, officers and employees will receive no compensation therefor in
addition to their regular compensation, but may be reimbursed for their related
out-of-pocket expenses. Brokers, dealers, banks, or their nominees, who hold
common stock on behalf of another will be asked to send proxy material and
related documents to the beneficial owners of such stock, and Bank Mutual will
reimburse those persons for their reasonable expenses.
The board of directors of Bank Mutual knows of no matters to be acted
upon at the annual meeting other than as set forth in the notice attached to
this proxy statement. If any other matters properly come before the annual
meeting, or any adjournment thereof, it is the intention of the persons named in
the proxy to vote such proxies in accordance with their best judgment on such
matters.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below sets forth information regarding the beneficial
ownership of Bank Mutual common stock on the record date by each person known by
Bank Mutual to beneficially own more than 5% of the outstanding shares of its
common stock, by each director and nominee for director, by each executive
officer named in the Summary Compensation Table below and by all directors and
executive officers of Bank Mutual as a group.
Number of Shares and
Nature of Beneficial Percent
Name of Beneficial Owner Ownership (1)(2) of Class
------------------------ -------------------- --------
Mutual Savings Bancorp, MHC (3)......... 11,193,174 50.2%
Thomas H. Buestrin...................... 31,551 *
Rick B. Colberg......................... 38,616 *
Michael T. Crowley, Jr.................. 271,536 1.2%
Michael T. Crowley, Sr.................. 72,419 *
Raymond W. Dwyer, Jr.................... 11,041 *
Mark C. Herr............................ 9,300 *
Thomas J. Lopina, Sr.................... 56,245 *
Eugene H. Maurer, Jr.................... 33,313 *
Michael D. Meeuwsen..................... 165,902 *
William J. Mielke....................... 60,015 *
Robert B. Olson......................... 113,515 *
David J. Rolfs.......................... 25,500 *
Marlene M. Scholz....................... 30,928 *
J. Gus Swoboda.......................... 40,443 *
All directors and executive officers
as a group (14 persons) (2)(3)(4)(5) 1,738,267 7.7%
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* Less than 1.0%
(1) Unless otherwise noted, the specified persons have sole voting and
dispositive power as to the shares. Beneficial ownership of the
following shares is shared: Mr. Buestrin - 17,551 shares; Mr. Colberg -
15,524; Mr. Crowley, Jr. - 20,406; Mr. Lopina - 10,963; Mr. Meeuwsen -
48,203; Mr. Olson - 104,515; Mr. Rolfs - 11,500; Mr. Swoboda - 31,243;
group - 1,037,848. See also notes (2), (3) and (4) below.
(2) Includes the following shares which are subject to options granted
under the 2001 Plan exercisable within 60 days of the record date:
Messrs. Buestrin, Dwyer, Herr, Lopina, Mielke, Olson, Rolfs and Swoboda
- 4,000 each; Mr. Colberg - 9,000; Mr. Crowley, Jr. - 36,800; Mr.
Crowley, Sr. - 20,000; Mr. Maurer - 9,000; Mr. Meeuwsen - 16,000 and
Ms. Scholz - 9,000; all directors and executive officers as a group -
131,800. All restricted shares which have been awarded under the 2001
Plan are included, whether or not vested, because the recipients have
voting rights as to those shares.
(3) The members of the Bank Mutual board also comprise the MHC board of
directors. While the MHC board members may therefore be deemed as a
group to control the vote of shares held by the MHC, those shares are
not included in directors' individual or group ownership. The address
of the MHC is 4949 West Brown Deer Road, Milwaukee, Wisconsin 53223.
(4) The total for the group (but not any individual) includes 777,943
unallocated shares held in the ESOP, as to which voting and dispositive
power is shared. As administrator, Bank Mutual (through its board) may
vote, in its discretion, shares which have yet been allocated to
participants. Employees may vote the shares allocated to their
accounts; the administrator will vote unvoted shares in its discretion.
Allocated shares are included only if allocated to named executive
officers, in which case they are included in those individuals'
beneficial ownership.
(5) Because the 401(k) Plan permits participants to vote shares and make
investment decisions (except for certain takeover offers), shares held
in the plans are included only if held in the accounts of named
persons, even though certain of the officers are trustees or
administrators of one of the plans.
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The above beneficial ownership information is based on data furnished
by the specified persons and is determined in accordance with Rule 13d-3 under
the Securities Exchange Act, as required for purposes of this proxy statement.
It is not necessarily to be construed as an admission of beneficial ownership
for other purposes.
ELECTION OF DIRECTORS
The bylaws provide that the number of directors of Bank Mutual shall be
eleven. At each annual meeting the term of office of one class of directors
expires and a class of directors is elected to serve for a term of three years
or until their successors are elected and qualified. Messrs. Herr, Lopina,
Olson and Rolfs, the directors whose terms expire at the annual meeting, are
being nominated for re-election as directors for terms expiring in 2005.
Shares represented by proxies will be voted FOR the election of the
nominees unless otherwise specified by the executing shareholder. If any nominee
should decline or be unable to act as a director, which we do not foresee,
proxies may be voted with discretionary authority for a substitute nominee
designated by the board.
Information regarding the nominees and the directors whose terms
continue is set forth in the following table. The board of directors unanimously
recommends that shareholders vote FOR the election of the director nominees
listed below.
PRINCIPAL OCCUPATION AND DIRECTOR
NAME AND AGE BUSINESS EXPERIENCE (1) SINCE (2)
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NOMINEES FOR TERMS EXPIRING IN 2005
Mark C. Herr, Vice President-Corporate Division, Plunkett Raysich 2001
49 Architects (8)
Thomas J. Lopina, Sr. Associate, Spectrum Solutions, Inc., a small business 1979
64 (3)(4) consulting firm, since 1997; previously, CEO of
Ingersoll Equipment Co., Inc., outdoor power equipment
Robert B. Olson, Paper industry consultant (self-employed); prior to 1997
64 (4)(5) 2000, Vice President of Manufacturing Operations,
Little Rapids Corporation, specialty paper producer
David J. Rolfs, Retired; prior thereto, president of ABCO Dealers 1984
80 (3)(5) Inc., health care industry
CONTINUING DIRECTORS--TERMS EXPIRING IN 2003
Thomas H. Buestrin, President of Buestrin, Allen & Associates Ltd., real 1995
65 (5) estate investment, management and development
Michael T. Crowley, Jr., Chairman and CEO of Bank Mutual since 2000; President 1970
59 (6)(7) and CEO of Mutual Savings Bank (9)
Michael D. Meeuwsen, President and Chief Operating Officer of Bank Mutual 1988
48 (4)(6) since 2000; President and CEO of First Northern
Savings Bank
William J. Mielke, President and CEO of Ruekert & Mielke Inc., engineering 1988
54 (3) (5)
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CONTINUING DIRECTORS--TERMS EXPIRING IN 2004
Michael T. Crowley, Sr., Chairman of the Board of Mutual Savings Bank and, 1960
88 (6)(7) since 2000, the MHC
Raymond W. Dwyer, Jr., Retired; prior thereto architect with R.W. Dwyer 1957
78 (3)(6) Architects
J. Gus Swoboda, Retired; prior thereto, Senior Vice President, Human 1987
67 (4)(6) and Corporate Development, Wisconsin Public Service
Corporation, electric and gas utility (10)
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(1) Unless otherwise noted, all directors have been employed in their
respective principal occupations listed for at least the past five
years.
(2) Indicates the date when director was first elected to the board of
Mutual Savings Bank, First Northern Savings Bank or First Northern
Capital Corp., as the case may be. Each of these persons, other than
Mr. Herr, became a director of Bank Mutual in 2000.
(3) Member of the Compensation Committee, of which Mr. Rolfs is Chairman.
The Compensation Committee held five meetings in 2001. The Compensation
Committee reviews, and either establishes or recommends to the board:
compensation policies and plans; salaries, bonuses and benefits for all
employees, including determinations with respect to stock options; and
personnel policies and procedures. See "Compensation Committee Report
on Executive Compensation" below.
(4) In the First Northern merger agreement, Mutual Savings Bank committed
that it would designate four of the six directors of First Northern to
be elected to the initial Bank Mutual board. Mutual Savings Bank
designated Messrs. Lopina, Meeuwsen, Olson and Swoboda as those
directors. They were elected by board action after the merger and then
were subsequently re-elected by the Bank Mutual shareholders at the
2001 annual meeting.
(5) Member of the Audit Committee, of which Mr. Mielke is Chairman. The
Audit Committee held four meetings in 2001. See "Report of the Audit
Committee" below for further information as to the duties of the Audit
Committee.
(6) Member of the Executive Committee, of which Mr. Crowley, Jr. is
Chairman. The Executive Committee did not meet in 2001. The Executive
Committee may act on most matters on behalf of the entire board between
board meetings.
(7) Mr. Crowley, Sr. is the father of Mr. Crowley, Jr.
(8) From time to time, Plunkett Raysich Architects and affiliates provide
services to Bank Mutual and subsidiaries. Fees paid by Bank Mutual to
Plunkett Raysich for services during 2001 were below $50,000.
(9) Also a director of PULSE EFT Association, an ATM network operator of
which Mutual Savings Bank and First Northern Savings Bank are members.
(10) Mr. Swoboda is also a director of American Medical Security Group,
Inc., a health and life insurance company.
The Bank Mutual bylaws provide that the board of directors as a whole
will act as a Nominating Committee. As such, the board will consider appropriate
nominees for any vacancy on the Bank Mutual board of directors. Shareholders
should forward any nominations to the board, in care of the corporate secretary.
The Bank Mutual board of directors held five meetings in 2001. During
the period in the last fiscal year in which they served, all members of the
board of directors attended at least 75% of the aggregate of the total number of
meetings of the Bank Mutual board and the total number of meetings held by all
committees of the board on which they served.
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DIRECTORS' COMPENSATION
MEETING FEES
Bank Mutual. There is no annual retainer for membership on the Bank
Mutual board of directors. Each director receives a fee of $1,000 per board
meeting attended, and non-officer director receives a $500 fee for each
committee meeting attended. Each of the directors of Bank Mutual also serves as
a director of Mutual Savings Bank and/or First Northern Savings Bank.
Compensation for service on those boards is described below. Each Bank Mutual
director also serves as a director of the MHC, without additional compensation.
Mutual Savings Bank. Mutual Savings Bank pays a $10,000 annual retainer
fee to each of its non-management directors. Each of the directors receives a
$1,000 fee for attendance at each board meeting, and each non-officer receives a
fee for attendance at a committee meeting, as follows: executive committee-$700;
other-$150. Under an arrangement pre-dating the establishment of the current
payment structure, Mr. Dwyer receives a fee for directors' and executive
committee meetings for each month regardless of attendance. Messrs. Buestrin,
Crowley, Jr., Crowley, Sr., Dwyer, Herr, Meeuwsen, Mielke and Rolfs are
currently directors of Mutual Savings Bank, although Mr. Meeuwsen does not
receive any compensation as a Mutual Savings Bank board member.
First Northern Savings Bank. First Northern Savings Bank does not pay a
retainer fee. Each director receives a $1,250 fee for attendance at each board
meeting, other than the chairman (currently Mr. Swoboda) who receives $1,500,
and each non-officer director receives fees of $125 per hour for attendance at
any committee meeting. Messrs. Crowley, Jr., Lopina, Meeuwsen, Olson and Swoboda
are directors of First Northern Savings Bank, although Mr. Crowley, Jr. does not
receive compensation as a First Northern Savings Bank board member.
2001 STOCK INCENTIVE PLAN
Bank Mutual directors are eligible to participate in the 2001 Plan.
Pursuant to the 2001 Plan and OTS regulations, no individual may receive more
than 25% of the shares which can be issued under the 2001 Plan, and non-employee
directors as a group are limited to not more than 30% of the shares which can be
issued under the 2001 Plan, and individually to not more than 5%. In 2001, each
non-employee director received 5,000 shares of restricted stock (3,000 shares in
May to each non-employee director valued at $11.76 each on the date of grant,
and 2,000 shares each in November valued at $16.29), and options to purchase
20,000 shares at $11.76 per share, under the 2001 Plan. See "Executive
Compensation" for grants to executive officers. The options and grants vest 20%
per year, becoming fully vested after five years. See "Amendment to 2001 Plan"
for a proposed amendment to accelerate vesting in the event of a change in
control and provide the administering committee discretion to waive conditions
to exercise.
DEFERRED RETIREMENT PLANS FOR DIRECTORS
Both Mutual Savings Bank and First Northern Savings Bank maintain
deferred retirement plans for non-officer directors. Both the deferred
retirement plans below include provisions whereby the directors may forfeit
their benefits for matters specified in each of the plans which are adverse to
the banks. Both plans may be amended by the appropriate board of directors,
although a plan amendment may generally not impair the rights of persons who are
receiving benefits under the plans.
Mutual Savings Bank. Mutual Savings Bank non-officer directors who have
provided at least five years of service will be paid $833 per month for 10 years
(or, if less, the number of years of service on the board) after their
retirement from the Mutual Savings Bank board or age 65, whichever is later. All
of the existing eligible directors' benefits (other than Mr. Herr's) have
vested. In the event a director dies prior to completion of these payments,
payments will go to the director's heirs. Mutual Savings Bank has funded these
arrangements through "rabbi trust" arrangements, and based on actuarial analyses
believes these obligations are adequately funded.
First Northern Savings Bank. Eligible directors under the First
Northern Savings Bank Directors' Deferred Retirement Plan include non-officers
serving as members of the First Northern Savings Bank board and any director of
an advisory board established by the bank if the person was a director of a
predecessor institution and is
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designated by the board to participate. Eligible directors who either terminate
board service for any reason after both attaining age 62 and completing at least
nine full years of service on the First Northern Savings Bank board or any
predecessor board, or who terminate service before attaining age 62, but whose
age plus full years of service equals or exceeds 70, will be entitled to a
monthly retirement benefit of $1,000 for 180 months or until the director's
death if earlier. If the eligible director dies after benefits have commenced,
but prior to the receipt of 36 monthly payments, the benefit will continue to
the director's beneficiary for the duration of the 36-month period. Benefits are
payable for a maximum of 15 years. This plan is funded through insurance.
OTHER
See "Executive Compensation" for compensation paid to, and compensatory
agreements with, Messrs. Crowley, Sr., Crowley, Jr. and Meeuwsen as executive
officers of Bank Mutual, its subsidiaries and/or the MHC.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, Bank Mutual's directors, its
executive officers and any person holding more than 10% of the common stock are
required to report their initial ownership of the common stock and any
subsequent change in that ownership to the SEC. Specific due dates for these
reports have been established and Bank Mutual is required to disclose in this
proxy statement any failure to file such reports by these dates during the last
year.
We believe all of these filing requirements were satisfied for the year
ended December 31, 2001. In making these disclosures, Bank Mutual has relied
solely on written representations of its directors and executive officers and
copies of the reports that they have filed with the SEC.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the total
compensation of the chief executive officer, the other four most highly
compensated Bank Mutual executive officers, and Mr. Crowley, Sr. for services in
all capacities to Bank Mutual for the last three fiscal years. The information
includes service to, and payments by, Bank Mutual and its subsidiaries.
Messrs. Meeuwsen and Colberg were executive officers of First Northern
prior to its acquisition by Bank Mutual, and became executive officers of Bank
Mutual upon the acquisition as well as continuing as officers of First Northern
Savings Bank. Bank Mutual agreed in the acquisition to continue Mr. Meeuwsen's
employment agreement and to replace Mr. Colberg's employment agreement with one
with substantially similar economic terms. Therefore, Bank Mutual is reporting
their compensation for fiscal 2000 as including cash compensation from First
Northern during periods in 2000 prior to the acquisition. Information for 1999
is not presented for Messrs. Meeuwsen and Colberg, as neither Bank Mutual nor
Mutual Savings Bank had any involvement with determining that compensation. In
addition, information is presented for Mr. Crowley, Sr., who is an executive
officer of Mutual Savings Bank and the MHC but not of Bank Mutual, as a
consequence of his service on the Bank Mutual board and the MHC's ownership
position in Bank Mutual.
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LONG-TERM COMPENSATION
----------------------
AWARDS
------
SECURITIES
UNDERLYING
ANNUAL COMPENSATION (1) RESTRICTED OPTIONS ALL OTHER
----------------------- STOCK AWARDS ------- COMPENSATION
NAME AND PRINCIPAL POSITIONS YEAR SALARY($)(2) BONUS($)(3) ($)(4) (#)(5) ($)(6)
---------------------------- ---- ------------ ----------- ------ ------ ------
Michael T. Crowley, Jr. 2001 $607,060 $ 68,425 $1,063,110 184,000 $ 71,245
Chairman and Chief Executive 2000 $609,060 $ 23,800 -- -- $ 1,700
Officer of Bank Mutual; President 1999 $573,556 -- -- -- $ 1,600
and CEO of Mutual Savings Bank
Michael T. Crowley, Sr. 2001 $252,052 $ 27,600 $533,820 100,000 $ 28,344
Chairman of Mutual Savings Bank 2000 $254,052 $ 9,600 -- -- $ 1,020
and the MHC (7) 1999 $238,052 -- -- -- $ 1,280
Michael D. Meeuwsen 2001 $207,000 $ 75,000 $533,820 80,000 $ 41,471
President and Chief Operating 2000 $199,500 $ 46,000 -- --(8) $ 12,750(8)
Officer of Bank Mutual; President --
and CEO of First Northern Savings
Bank
Eugene H. Maurer, Jr. 2001 $149,390 $ 13,740 $175,530 45,000 $ 18,491
Senior Vice President and 2000 $145,040 $ 10,800 -- -- $ 1,500
Secretary of Bank Mutual; Senior 1999 $139,465 -- -- -- $ 1,435
VP and Secretary/Treasurer of
Mutual Savings Bank
Rick B. Colberg 2001 $ 94,400 $ 30,000 $175,530 45,000 $ 22,005
Chief Financial Officer of Bank 2000 $ 89,500 $ 18,500 -- --(8) $ 12,750(8)
Mutual; Senior VP and Treasurer --
of First Northern Savings Bank
Marlene M. Scholz 2001 $103,065 $ 9,478 $175,530 45,000 $ 12,757
Senior Vice President of Bank 2000 $100,065 $ 9,001 -- $ 1,051
Mutual; Senior VP-Controller of 1999 $ 84,065 -- -- $ 865
Mutual Savings Bank
- ------------------
(1) While each of the named individuals received perquisites or other
personal benefits in the years shown, the value of these benefits is
not indicated, in accordance with Securities and Exchange Commission
("SEC") regulations, since they did not together exceed the lesser of
$50,000 or 10% of the individual's salary and bonus in any year.
(2) Includes any directors' fees paid to the individual while serving as an
executive officer.
(3) Annual bonus amounts are earned and accrued during the years indicated
and paid after the beginning of the next calendar year.
(4) Represents grants of restricted shares under the management recognition
plan provisions of the 2001 Plan. Shares vest over a five year period.
The amounts represent the number of shares granted times the average
market price on the date of grant.
(5) Represents stock options granted under the 2001 Plan. No SARs have been
granted thereunder.
(6) In 2001, includes employer contributions to the 401(k) Plan in the
following amounts: Mr. Crowley, Jr.--$2,100; Mr. Crowley, Sr.--$2,100;
Mr. Meeuwsen--$14,875; Mr. Maurer--$1,552; Mr. Colberg--$9,791; and Ms.
Scholz--$1,071. The 2001 amounts also include the following ESOP
allocations: Mr. Crowley, Jr.--$18,556; Mr. Crowley, Sr.--$18,556; Mr.
Meeuwsen--$18,556; Mr. Maurer--$16,939; Mr. Colberg--$12,214; and Ms.
Scholz--$11,686. Also included in 2001 are the following Restoration
Plan payments: Mr. Crowley, Jr.--$50,589; Mr. Crowley, Sr.--$7,688; and
Mr. Meeuwsen--$8,040.
(7) Mr. Crowley, Sr. is an executive officer of Mutual Savings Bank and the
MHC, but not of Bank Mutual.
(8) Messrs. Meeuwsen and Colberg received stock option grants from First
Northern prior to its acquisition by Bank Mutual. Those First Northern
options were "cashed out" as part of Bank Mutual's acquisition of First
Northern. In that transaction, each First Northern option holder
received an amount equal to the cash
-8-
difference between the option stock price and the $15.00 per share cash
price offered to First Northern shareholders. Bank Mutual agreed to an
additional payment of 25% of the cash difference to recognize the tax
effect resulting from the required conversion into cash. These
additional 25% payments, which are not included in the table, were
$275,286 for Mr. Meeuwsen, and $129,710 for Mr. Colberg. Bank Mutual
did not award the underlying options or determine the value of the
option spread; therefore, those amounts are not included. The options
were granted by First Northern over the course of ten years.
STOCK OPTIONS AND EQUITY COMPENSATION PLANS
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to options
granted to the six executive officers named in the Summary Compensation table
concerning options granted in fiscal 2001.
Percent of Realized Value at
Securities Options/ Assumed Annual
Underlying SARs Rates of Stock Price
Options/ Granted to Appreciation
SARs Employees Exercise or for Option Term (2)
Granted in Fiscal Base Price Expiration -------------------
Name (#)(1) Year ($/sh) Date 5% 10%
- ---- ------------ ---------- ------------ ---------- -------- --------
Michael T. Crowley, Jr. 184,000 19.7% $11.76 5/8/11 $ 1,360,827 $ 3,448,604
Michael T. Crowley, Sr. 100,000 10.7% $11.76 5/8/11 $ 739,580 $ 1,874,241
Michael D. Meeuwsen 80,000 8.6% $11.76 5/8/11 $ 591,664 $ 1,499,393
Eugene H. Maurer, Jr. 45,000 4.8% $11.76 5/8/11 $ 332,811 $ 843,409
Rick B. Colberg 45,000 4.8% $11.76 5/8/11 $ 332,811 $ 843,409
Marlene M. Sholz 45,000 4.8% $11.76 5/8/11 $ 332,811 $ 843,409
- ------------------
(1) No SARs have been granted; all grants reflect stock options under the
Option Plan.
(2) Assumes the stated appreciation from the date of grant.
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR END OPTIONS/SAR VALUES
The following table sets forth information with respect to the six
executive officers named in the Summary Compensation Table concerning the number
and value of options outstanding at December 31, 2001. No options were exercised
in fiscal 2001 or were exercisable at the fiscal year end.
Number of Securities Underlying Value of Unexercised in the
Unexercised Options/ Money Options/SARs
SARs at FY-End (#)(1) at FY-End ($)(2)
Name Unexercisable Unexercisable
- ---- --------------------- ------------------
Michael T. Crowley, Jr. 184,000 $647,680
Michael T. Crowley, Sr. 100,000 $352,000
Michael D. Meeuwsen 80,000 $281,600
Eugene H. Maurer, Jr. 45,000 $158,400
Rick B. Colberg 45,000 $158,400
Marlene M. Scholz 45,000 $158,400
- ------------------
(1) Represents options granted under the 2001 Plan. No SARs have been
granted. No options were yet exercisable on December 31, 2001.
(2) Represents the difference between the exercise price and the $15.28
reported closing price of Bank Mutual common stock on the Nasdaq Stock
Market on December 31, 2001, the last trading date of the fiscal year.
No options were exercisable on December 31, 2001.
-9-
EQUITY COMPENSATION PLAN INFORMATION
The following chart gives aggregate information regarding grants under
all equity compensation plans of Bank Mutual through December 31, 2001.
Number of securities
remaining available
Number of securities for future issuance under
to be issued upon Weighted-average equity compensation
exercise of exercise price of plans (excluding
outstanding options, outstanding options, securities reflected
Plan category warrants and rights warrants and rights in 1st column)
------------- ------------------- ------------------- --------------
Equity compensation plans approved 1,094,000 $11.76 20,849
by securityholders (1)
Equity compensation plans not -0- n/a -0-
approved by securityholders
Total 1,094,000 $11.76 20,849
- ------------------
(1) Represents options granted under the 2001 Plan, which was approved by
shareholders in May 2001. In addition, as of December 31, 2001, grants
of 329,000 restricted shares had been made under the 2001 Plan, and
5,454 shares remained available for grant as restricted shares.
DEFINED BENEFIT RETIREMENT PLANS
Mutual Savings Bank has maintained a qualified defined benefit pension
plan that covers substantially all employees who are age 21 or over and who have
at least one year of service. Effective January 1, 2002, this plan became a Bank
Mutual plan, in which employees of both Mutual Savings Bank and First Northern
Savings Bank now participate. Pension benefits are based on the participant's
average annual compensation (salary and bonus) and years of credited service.
Years of credited service in the qualified defined benefit pension plan begin at
date of participation in the plan. Benefits are determined in the form of a ten
year certain and life annuity.
Designated officers also participate in a non-qualified defined benefit
pension plan. This non-qualified plan provides monthly supplemental benefits to
participants which will be paid out of the rabbi trust established for this
plan, or unsecured corporate assets. The amount of the non-qualified plan
benefit in the form of a ten year certain and life annuity is determined as:
- an amount calculated under the qualified defined benefit
pension plan without regard to the limitations imposed by the
Internal Revenue Code on benefit or compensation amounts and
without regard to certain limitations on years of service;
minus
- the pension benefit accrued in the qualified defined benefit
pension plan.
The following table shows the estimated annual benefits payable in ten
year certain and life annuity form for participants retiring on their normal
retirement date at age 65 with various combinations of years of service and
average annual compensation under the qualified defined benefit plan plus, for
those officers eligible to participate, the non-qualified plan. At March 31,
2002, accrued years of service for officers named in the summary compensation
table were: Mr. Crowley, Sr. - 68 years; Mr. Crowley, Jr. - 34 years, Mr. Maurer
- - 19 years, and Ms. Scholz - 20 years. Messrs. Meeuwsen and Colberg were not
eligible in 2001 to participate in the defined benefit retirement plan because
they were not Mutual Savings Bank employees. Going forward, they will
participate in it, but their accrued years of service to determine benefits will
begin on January 1, 2002.
-10-
Final Average
Compensation Years of Service(1)
------------ ---------------------------------------------------------------------
15 20 25 30 35 40
-- -- -- -- -- --
$ 100,000 $ 28,300 $ 37,700 $ 49,700 $ 61,600 $ 73,500 $ 83,600
150,000 44,000 58,600 77,000 95,400 113,800 128,900
200,000 59,600 79,500 104,400 129,300 154,200 174,300
250,000 75,300 100,400 131,800 163,100 194,500 219,600
300,000 91,000 121,300 159,200 197,000 234,800 265,000
350,000 106,700 142,200 186,500 230,800 275,100 310,300
400,000 122,300 163,100 213,900 264,700 315,500 355,700
450,000 138,000 184,000 241,300 298,500 355,800 401,000
500,000 153,700 204,900 268,700 332,400 396,100 446,400
550,000 169,400 225,800 296,000 366,200 436,400 491,700
600,000 185,000 246,700 323,400 400,100 476,800 537,100
650,000 200,700 267,600 350,800 433,900 517,100 582,400
700,000 216,400 288,500 378,200 467,800 557,400 627,800
750,000 232,100 309,400 405,500 501,600 597,700 673,100
- -----------------------------
(1) Years of service in the non-qualified defined benefit pension plan
begin at date of hire. As of December 31, 2001, Mr. Crowley, Sr. has
more than 68 years of service with Mutual Savings Bank. The amount of
his total annual accrued benefit as of December 31, 2001 was
approximately $326,484.
EMPLOYMENT ARRANGEMENTS
Mutual Savings Bank Employment Agreements. Mutual Savings Bank has
employment agreements with Messrs. Crowley Sr. and Jr. and Maurer, Ms. Scholz,
and certain executive officers of Mutual Savings Bank. The initial terms of the
employment agreements are three years. For Messrs. Crowley, each year the
agreement may be extended so that the agreement remains in effect for a rolling
three years upon agreement of Messrs. Crowley and by affirmative action of
Mutual Savings Bank's board of directors. For the other executives, at the end
of the initial three year term and on each anniversary date thereafter, the
employment term may be extended for an additional year upon agreement of the
executive and by affirmative action taken by Mutual Saving Bank's board. Under
the employment agreements, each executive is entitled to a base salary which is
reviewed annually based upon individual performance and Mutual Saving Bank's
financial results, as well as benefits and perquisites, in accordance with
Mutual Saving Bank's policies.
The initial annual salary amounts for each of the covered executive
officers were as follows: Mr. Crowley, Jr.-$595,000; Mr. Crowley, Sr.-$240,000;
Mr. Maurer-$145,000; and Ms. Scholz-$100,025. These amounts may be changed in
subsequent years, but generally may not be reduced.
The employment agreements can be terminated at the election of the
executive officer or Mutual Savings Bank at the expiration of the term, at any
time for cause, upon the occurrence of certain events specified by federal
statute or regulation, or as a result of the executive officer's retirement,
disability or death. Each employment agreement can also be voluntarily
terminated without cause by the executive officer or Mutual Savings Bank. Each
executive officer may also terminate his or her employment agreement under
certain circumstances following a change in control.
Upon termination of an executive's employment at his or her election at
the expiration of the term of the employment agreements, the executive is
entitled to receive unpaid compensation for the period of employment plus
accrued but unused vacation time. Upon termination of employment at the election
of Mutual Savings Bank at the expiration of the term, the executive is entitled
to receive the same compensation as if he or she had voluntarily
-11-
terminated at the end of the term as well as an amount equal to 100% of his or
her annual base salary at the date of termination and certain benefits for a
period of twelve months thereafter.
Upon each executive's death or retirement at age 65, the executive or
the executive's personal representative will receive his or her earned but
unpaid base salary and incentive compensation prorated to the end of the
calendar month in which such termination occurs and compensation for accrued but
unused vacation time. If the executive officer terminates employment voluntarily
or is terminated by Mutual Savings Bank for cause, the executive shall not be
entitled to any compensation or benefits for any period after the date of
termination.
If during the term Mutual Savings Bank terminates an executive officer
without cause or the employment agreement is terminated by the executive officer
for cause, the executive would be entitled to receive 100% of base salary at the
time of termination through the end of a severance period. If the termination
occurs within the initial three year term of employment, the severance period
will be through the end of the initial three year term, but not less than one
year, and if the termination shall occur after the initial three year term, the
severance period will be one year. In the case of Messrs. Crowley, the period is
extended to 12 months beyond the current term of employment, but not more than
36 months. Also, the executive would continue to receive certain insurance and
other benefits until twelve months after the end of the term of employment.
Mutual Savings Bank must also pay to each executive an additional lump sum cash
payment in an amount equal to the product of Mutual Savings Bank's annual
aggregate contributions for the benefit of the executive to all qualified
retirement plans in the year preceding termination and the number of years in
the severance period.
Under each employment agreement, the executive officer may also
terminate employment following a change in control of Mutual Savings Bank, as
defined in the agreements, under certain circumstances, including a reduction in
compensation or responsibilities. Upon any such termination as a result of a
change in control, each executive officer has a right to receive payments and
benefits as if a termination by Mutual Savings Bank without cause had occurred.
However, under no circumstances may the aggregate amount of all severance
payments and termination benefits, computed on a present value basis, exceed an
amount which would cause the payments to be characterized as parachute payments
within the meaning of Section 280G(b)(2) of the Internal Revenue Code (the
"Code"). That section generally defines parachute payments to include any
severance payments and termination benefits which, on a present value basis,
equal or exceed three times the executive officer's average annual total
compensation over a five-year period immediately preceding the change in
control.
First Northern Employment Agreements. First Northern Savings Bank has
employment agreements with Messrs. Meeuwsen and Colberg and several other
executive officers of First Northern Savings Bank.
Mr. Meeuwsen's agreement was entered into in 1990. The initial term of
his agreement was five years; it is automatically extended for an additional
year on the annual anniversary date unless contrary written notice is given by
either First Northern Savings Bank or Mr. Meeuwsen, and has been extended on
every anniversary date. Under his agreement, Mr. Meeuwsen is entitled to a base
salary which is reviewed annually based upon individual performance and the
financial results of First Northern Savings Bank. His initial annual base salary
for 2000 was $182,000. The agreement also provides that he shall be eligible for
incentive compensation and be entitled to reimbursement of business expenses and
other benefits and perquisites, in accordance with the bank's policies.
The agreement can be terminated at the election of Mr. Meeuwsen or
First Northern Savings Bank at the expiration of the term, at any time for
cause, upon the occurrence of certain events specified by federal statute or
regulation, or as a result of his retirement, disability or death. It can also
be voluntarily terminated without cause by him or First Northern Savings Bank
during the term of the agreement. Mr. Meeuwsen may also terminate his employment
agreement under certain circumstances following a change in control.
Upon termination of Mr. Meeuwsen's employment at his election at the
expiration of his employment agreement, he is entitled to receive unpaid base
salary and incentive compensation for the period of employment and compensation
for accrued but unused vacation time. Upon termination of employment at the
expiration of the agreement at the election of First Northern Savings Bank, he
is entitled to receive the same compensation as if he had voluntarily terminated
at the end of the term as well as an amount equal to 100% of his annual base
salary at the date of termination and certain benefits for a period of twelve
months thereafter.
-12-
Upon Mr. Meeuwsen's death or retirement, he or his personal
representative, as the case may be, shall receive his earned but unpaid base
salary and incentive compensation prorated to the end of the calendar month in
which such termination occurs and compensation for accrued but unused vacation
time. His agreement defines retirement to mean retirement in accordance with and
pursuant to any retirement plan of the bank generally applicable to its
executive officers or in accordance with any arrangements established with his
consent.
If Mr. Meeuwsen terminates employment voluntarily during a term or he
is terminated for cause, as defined in the employment agreement, he shall not be
entitled to any compensation or benefits for any period after the date of
termination. If during the term he is terminated without cause or he terminates
the agreement for cause, he would be entitled to receive 100% of salary at
termination until twelve months after the then-current term, provided that such
compensation may not exceed an amount equal to 60 months of base salary, along
with unpaid base salary and incentive compensation and accrued but unused
vacation time. Mr. Meeuwsen would also continue to receive certain insurance and
other benefits for that period. First Northern Savings Bank must also pay him,
if it terminates him without cause, an additional lump sum cash payment in an
amount equal to the product of First Northern Savings Bank's annual aggregate
contributions for his benefit to all qualified retirement plans in the year
preceding termination and the number of years remaining in his employment
agreement.
Mr. Meeuwsen may also terminate employment following a change in
control, as defined in the agreement, of First Northern Savings Bank or Bank
Mutual under certain circumstances, including a reduction in compensation and
benefits or responsibilities and duties. Upon any such termination as a result
of a change in control, Mr. Meeuwsen has a right under his employment agreement
to receive payments and benefits as if a termination without cause had occurred.
Mr. Meeuwsen agreed not to take any of these benefits in connection with the
Bank Mutual transaction.
The agreement provides that under no circumstances may the aggregate
amount of all severance payments and termination benefits, computed on a present
value basis, exceed an amount which would cause the payments to be characterized
as parachute payments within the meaning of Section 280G(b)(2) of the Code.
Mr. Colberg, along with various other executive officers of First
Northern, had agreements similar to Mr. Meeuwsen's prior to the Bank Mutual
acquisition, although those agreements were generally for a term of three years.
In connection with the Bank Mutual transaction, Mr. Colberg entered into a new
employment agreement with First Northern Savings Bank. The terms of the new
employment agreement are substantially the same as those for Mr. Maurer and Ms.
Scholz described above, with an initial base salary of $88,500 in Mr. Colberg's
case, except that Mr. Colberg would be entitled to two years' salary in the
event First Northern Savings Bank would not renew the agreement at the end of
its initial term.
OTHER COMPENSATION AGREEMENTS
Crowley Sr. Deferred Compensation Agreement. Mutual Savings Bank has
had a deferred compensation arrangement with Mr. Crowley, Sr. for over 20 years
under which Mutual Savings Bank agreed to defer a portion of Mr. Crowley's
compensation in exchange for compensation payments at the later date. The
precise provisions have been modified from time to time, most recently in a 1998
agreement. To fund this obligation, Mutual Savings Bank purchased a life
insurance policy on the life of Mr. Crowley, Sr. The policy is now fully paid,
and Mutual Savings Bank believes the arrangements are fully funded.
Upon Mr. Crowley, Sr.'s retirement, he will receive a life income in
monthly installments, with a minimum of 240 installments. The monthly
installments will be equal to the amount that would be payable to Mutual Savings
Bank under the life insurance policy if Mutual Savings Bank were to exercise a
settlement option under the policy for monthly life income, with a 240 month
period certain, with payments commencing as of the date of Mr. Crowley's
retirement. If Mr. Crowley were to die before retirement or receipt of 240
monthly payments, the amounts otherwise payable to him will be paid in equal
shares to his two children (including Mr. Crowley, Jr.) or to their survivors.
Under certain circumstances, Mutual Savings Bank may elect to make a
lump sum or other type of payment to Mr. Crowley, Sr. or his heirs. Those
payments would be based upon other forms of payment which may be available under
the life insurance policy.
-13-
First Northern Supplemental Retirement Agreements. First Northern
Savings Bank has entered into supplemental retirement agreements with Mr.
Meeuwsen and certain of its other executive officers (including Mr. Colberg).
Messrs. Meeuwsen and Colberg, or their beneficiaries, will receive a total of
180 monthly payments of $10,520 and $2,646 per month, respectively, commencing
on the first day of the month following the earlier of their respective
attainment of age 65 or their death. If the supplemental retirement benefits
commence prior to the executive's attainment of age 65 because of his death, or
if the executive officer requests acceleration of his benefit payments (and the
compensation committee consents to such acceleration), the amount of the monthly
payment will be reduced to reflect a 6% discount rate compounded monthly. These
supplemental retirement agreements are subject to the same parachute payment
limitations that govern employment agreements. Mr. Meeuwsen's supplemental
retirement agreement benefits vested as a result of the Bank Mutual transaction.
Mr. Colberg's benefits had already vested.
OTHER BENEFIT PLANS
Employee Stock Ownership Plan. The ESOP is a tax-qualified plan that
covers substantially all salaried employees who have at least one year of
service and have attained age 21. It became effective at the completion of the
Mutual Savings Bank restructuring. Bank Mutual loaned this plan sufficient funds
to purchase up to 8% of the Bank Mutual shares issued to persons other than the
MHC. The ESOP purchased 60,910 shares in the Mutual Savings Bank restructuring
subscription offering and 830,969 shares on the open market after the
restructuring.
The loan is for a term of ten years and calls for level annual payments
of principal. Interest payments, at the prime rate, will be made quarterly. The
ESOP initially pledged the shares it purchased as collateral for the loan and
holds them in a suspense account.
The ESOP does not allocate the pledged shares immediately. Instead, it
will release a portion of the pledged shares annually as payments are made on
the loan. The loan payments made by the ESOP come from employer contributions
and dividends paid on the shares held in the plan. No shares were released in
2000. If the ESOP repays its loan as scheduled over a 10-year term, 10% of the
shares will be released annually in 2001 through 2010. The ESOP will allocate
the shares released each year that are attributable to employer contributions
among the accounts of participants in proportion to their compensation for the
year. For example, if a participant's compensation for a year represents 1% of
the total compensation of all participants for the year, the ESOP would allocate
to that participant 1% of the shares released for the year attributable to
employer contributions.
ESOP participants will direct the voting of shares allocated to their
individual accounts. Shares in the suspense account, which are those not yet
allocated to individual accounts, will be voted at the Bank Mutual board's
discretion.
Restoration Plan. Mutual Savings Bank also established in 2001 a
"Restoration Plan" to compensate selected executive officers for any benefits
under the ESOP and the Bank Mutual Corporation 401(k) Plan which they are unable
to receive because of limitations under the Code on contributions and benefits.
The Code limits the salary deferrals that an employee may contribute to the
401(k) Plan and also restricts the amount of tax-qualified plan benefits that
can be received by plan participants.
The restoration plan permits eligible officers (which includes vice
presidents, senior vice presidents or other officers) to defer compensation
which they are unable to contribute to the 401(k) Plan because of Code limits.
In addition, the restoration plan provides benefits for eligible officers based
upon the allocations they would have received in the ESOP and 401(k) Plan in the
absence of Code limitations. Under the Code, in 2002, only the first $200,000 of
compensation may be considered in determining benefits under tax-qualified plans
(subject to annual cost-of-living adjustments).
For example, under the ESOP, only the first $200,000 of earnings are
considered in determining ESOP benefits for 2002. Under the restoration plan, an
executive officer would receive an amount equal to the benefit that the officer
would have received under the ESOP in the absence of the compensation limit.
Therefore, if an executive officer had total compensation of $250,000, the
officer would receive an award equal to the average allocation percentage under
the ESOP for the $50,000 of compensation in excess of the Code limit.
-14-
The restoration plan currently covers all executive officers and
several other persons. The annual allocations to employees under the restoration
plan will not be tax deductible by the employer or included in the taxable
compensation of the employees receiving the allocations. When benefits are paid
to employees following their termination of employment, the payments will be
deductible by the employer and included in the taxable compensation of the
employees receiving those payments.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Committee Composition. The Bank Mutual board of directors has
established a Compensation Committee to determine salaries, and make other
compensation and plan decisions. It served to make compensation determinations
for 2001, and expects to continue in that role going forward. The current
members of the Compensation Committee are identified below.
Messrs. Meeuwsen and Colberg were executive officers of First Northern
prior to its acquisition by Bank Mutual, and became executive officers of Bank
Mutual upon the acquisition as well as continuing as officers of First Northern
Savings Bank. Bank Mutual agreed in connection with the acquisition to continue
Mr. Meeuwsen's employment agreement and replace Mr. Colberg's agreement with one
on substantially similar economic terms. That compensation was not, however,
initially determined by Bank Mutual or Mutual Savings Bank.
Compensation Philosophy. In determining compensation, the Committee has
recognized that Bank Mutual and its subsidiaries must provide its executive
officers and key employees an attractive compensation package in order to
attract and retain talented and highly experienced personnel. The Committee has
sought to offer compensation which it believes is in line with compensation paid
by other similarly situated institutions (including banks, savings banks and
savings associations, but not co-extensive with the broad based, nationwide
group used for peer group comparison in the Performance Graph), so as to be
neither unduly generous nor lagging other institutions. In making its decisions,
the Committee has also noted that, as a mutual institution, Mutual Savings Bank
previously could not provide stock-based incentive compensation, as could
publicly held institutions, and noted the effect on prior compensation when
going forward.
Base Salary. In determining the base salary of executive officers, the
Committee reviewed, among other things, third party surveys of peer
institutions, the historical compensation of those officers and performance of
Bank Mutual and its subsidiaries, including First Northern Savings Bank prior to
the acquisition in the case of former First Northern officers. In that regard,
the Committee noted that there was an acceleration of charges in 1999 relating
to the impairment of Mutual Savings Bank's intangible assets which resulted from
a prior acquisition, and the Committee therefore focused primarily on results,
and comparisons of 1999 to 2000, before those unusual expense items. The
Committee also noted that comparisons between 1999 and 2000 were also difficult
because of the occurrence of the First Northern acquisition and the conversion
in November 2000.
In making those reviews about performance before the unusual items, the
Committee noted that Mutual Savings Bank's profitability in 2000 had increased
over 20%. As to First Northern Savings Bank, the Committee noted that results
were lower than the prior year; however, those results were significantly
affected by matters relating to the acquisition by Bank Mutual. Without those
unusual occurrences, First Northern Savings results would have been improved.
The Committee also recognized the significant and extraordinary efforts which
all executive officers had made during 2000 to successfully complete Mutual
Savings Bank's unique restructuring transaction, the formation of Bank Mutual
and the acquisition of First Northern. Based upon those results, the Committee
determined that the executive officers should receive either level salaries or a
small increase (up to 5.5%) in base salary. The Committee also noted that
stock-based incentives would likely become available for the year 2001 and would
provide an additional means of compensation.
Bonus/Incentives. For fiscal 2001, cash incentive payments were
determined under the Mutual Savings Bank and First Northern Savings Bank cash
incentive plans. Executive officers were covered by plan for the particular
savings bank for which the officer performed the bulk of his or her services.
Under the Mutual Savings Bank plan for 2001, the Committee set Mutual Savings
Bank return on assets and income targets, as well as target bonus payments for
each of the executive officers. Actual bonus amounts would be determined based
upon Mutual Savings Bank's performance as to those financial criteria. Although
the Mutual Savings Bank plan permitted a portion of the bonus to be determined
based on individual performance goals, that alternative was not used for fiscal
-15-
2001. Mutual Savings Bank exceeded both its return on assets and net income
goals in 2001, and executive officers therefore earned bonuses equaling 115% of
the target bonus amount.
The First Northern Savings Bank Cash Incentive Plan operated in a
similar manner to Mutual Savings Bank's, although for fiscal 2001 certain
individuals (such as Mr. Colberg) had a portion of their bonus determined by the
degree to which individual goals were met. As to corporate performance, First
Northern Savings Bank substantially exceeded both the earnings and return on
assets goals and, therefore, each covered executive officer earned 120% of his
performance target bonus to the extent it was based on First Northern Savings
Bank's performance. The remaining portions were determined based upon individual
goals.
Chief Executive Officer Compensation. In addition to the factors
discussed above, when determining the salary of the Chief Executive Officer, the
Committee believed that it was appropriate to continue a transition that began
the prior year from base salary to more incentive-based compensation. Therefore,
although the Committee was well pleased with his performance and accomplishments
during 2000, particularly the successful completion of the restructuring and the
First Northern acquisition, the Committee did not increase the cash base salary
to the CEO. The Committee noted, however, that under the incentive provisions,
the Chief Executive Officer would be eligible to earn a cash incentive bonus of
up to 20% of his base salary. His ultimate bonus number was $68,425, determined
under Mutual Savings Bank's cash incentive plan. In addition, the Committee
noted that the Chief Executive Officer would be eligible for stock-based
compensation, assuming shareholder approval of the 2001 Plan, which occurred
after salaries were determined. The Chief Executive Officer was later awarded
80,000 restricted shares, and options to purchase 184,000 shares.
Stock-Based Incentives. The Committee believes that stock-based
compensation can provide an important incentive to executive officers that also
aligns their interests with those of shareholders, since the value of the
compensation will depend upon the performance of the stock price. The ESOP has
been established, and the 2001 Plan was approved by shareholders, to provide
certain stock-based compensation. However, Office of Thrift Supervision ("OTS")
regulations limited the amount and types of stock-based compensation which could
be authorized or granted within one year of Bank Mutual's restructuring.
In making awards under the 2001 Plan during 2001, the Committee
complied with the OTS limits. However, it also recognized that, over the course
of many years of service, Mutual Savings Bank officers, employees and directors
had not been able to receive any equity-based compensation. Further, the
Committee considered that former First Northern officers, employees and
directors had been required to "cash out" options in connection with the First
Northern acquisition by Bank Mutual. The Committee noted the desirability of
substantial equity-based incentives going forward and the elongated five-year
vesting schedule mandated by OTS regulations. Therefore, the Committee
determined in 2001 to award most of the shares of stock available for option or
stock grant under the 2001 Plan, reserving an allowance for future employees. To
the extent that the Committee determines that further equity-based compensation
will be desirable in the future, additional or different stock-based
compensation can then be proposed. In the case of Chief Executive Officer, he
was awarded options to purchase 184,000 shares and granted 80,000 shares of
restricted stock. These awards were intended to both incent him in going forward
and to recognize his many prior years of service to Mutual Savings Bank and his
significant efforts in 1999 and 2000 in the creation of Bank Mutual and its
acquisition of First Northern. Awards to other executive officers reflected
similar considerations.
Section 162(m) Limitations. Section 162(m) of the Code limits the
deductibility of compensation to certain executive officers of publicly held
companies of over $1 million in any fiscal year. Exceptions are made for, among
other things, performance-based plans approved by shareholders. Going forward,
the Committee intends to be mindful of these limitations. Shareholder approval
of the 2001 Plan was sought, and obtained, among other reasons to qualify for an
exception from Section 162(m) for performance-based compensation payable under
the 2001 Plan.
Current Compensation Committee Members:
David J. Rolfs (Chairman) Raymond W. Dwyer, Jr. Thomas J. Lopina, Sr. William J. Mielke
-16-
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Mutual Savings Bank Finance Committee was an
officer or employee of Mutual Savings Bank or Bank Mutual, nor did they have any
other reportable interlock or transaction. Mr. Lopina, who joined the Bank
Mutual Compensation Committee in December 2000 has an outstanding loan from
First Northern Savings Bank. For a description of Bank Mutual's policies with
respect to loans to officers, directors and employees, and Mr. Lopina's loan,
see "Certain Transactions with Bank Mutual."
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
shareholder return on Bank Mutual common stock, based on the market price of the
common stock and assuming reinvestment of cash dividends, with the cumulative
total return of companies on the NASDAQ Stock Market US Index and the SNL Mutual
Holding Company Thrift Index. The graph assumes $100 was invested on November 2,
2000, the first date of Bank Mutual stock trading, in Bank Mutual common stock
and each of those indices.
Stock/Index 11/02/00 12/31/00 3/31/01 6/30/01 9/30/01 12/31/01
- ----------- -------- -------- ------- ------- ------- --------
Bank Mutual Common Stock $100.00 $ 93.83 $108.74 $140.90 $161.52 $153.94
NASDAQ Stock Market (U.S.) $100.00 $ 71.67 53.50 63.05 43.74 $ 56.87
SNL Mutual Holding Company $100.00 $113.45 116.74 130.82 136.62 $147.65
Thrift Index
AMENDMENT OF 2001 PLAN
The information in this Proxy Statement with respect to the proposed
Amendment to the 2001 Plan is qualified in its entirety by reference to the text
of the Bank Mutual Corporation 2001 Stock Incentive Plan, which is attached
hereto as Appendix A. The text of the proposed amendment is shown on Appendix A
using italics. The Bank Mutual board adopted the Amendment on February 4, 2002,
subject to shareholder approval.
-17-
GENERAL
At the 2001 annual meeting, Bank Mutual shareholders approved the Bank
Mutual Corporation 2001 Stock Incentive Plan. The 2001 Plan is intended to
constitute a stock-based incentive plan for Bank Mutual, as contemplated in the
offering materials for the restructuring of Mutual Savings Bank in 2000. It
includes provisions by which Bank Mutual may grant (and now has granted)
directors, executive officers and other officers and key employees stock options
and/or grants of restricted stock under management recognition provisions.
The 2001 Plan is intended to enhance the operations of Bank Mutual and
its subsidiaries by providing increased incentives for selected officers, key
salaried employees and directors of Bank Mutual. The Bank Mutual board believes
that adoption of the 2001 Plan is desirable because it will promote the
interests of Bank Mutual and its shareholders by strengthening Bank Mutual's
ability to retain and attract key salaried employees and directors, by
encouraging them to maintain their personal interest in Bank Mutual's continued
success and progress, and by providing a means linking personal compensation to
creation of value to shareholders.
REASONS FOR THE AMENDMENT
The terms and conditions of any stock incentive plan implemented within
one year of a mutual-to-stock conversion are substantially limited by
regulations of the OTS, and Bank Mutual had drafted the plan to comply with
those OTS regulations. Among other things, OTS regulations require that all
options in such a plan vest over a period of five years, and that no exception
be made in the case of the change in control of an institution and no discretion
be given to the administering committee to waive limitations, conditions or
restrictions on exercise (including vesting provisions). A later amendment of
such a plan, or the vesting schedule, is not prohibited. The 2001 Plan and the
Amendment comply with the regulations of the OTS. However, the OTS in no way
endorses or approves the Amendment. No written or oral representation shall, or
may, be made regarding OTS approval. If any such representations are made, they
should not be relied upon.
Now that a period of more than one year has elapsed since Bank Mutual's
formation transactions, the board of directors and shareholders are free to
amend the 2001 Plan in any way they now feel is appropriate. The board of
directors believes it is appropriate to provide for immediate vesting in the
event of a change in control, so as to eliminate concerns for loss of personal
benefits when directors, executive officers and key employees are evaluating
such proposal, to further promote shareholder value irrespective of the time
period, and to fairly compensate those persons in the case of such a
transaction. Further, the board believes it is appropriate to grant the
administering committee discretion to make waivers of conditions, including the
vesting schedule, so that it can address appropriate circumstances. The board of
directors believes that plan provisions providing for immediate vesting in the
event of a change in control and for committee waiver discretion are common
among other publicly held companies.
This proposal is not being made in connection with any pending or
proposed change in control of Bank Mutual. Rather, the board of directors
believes it is best to consider such a change in the absence of an actual
proposal, to reduce immediate conflicts of interest.
THE BANK MUTUAL BOARD OF DIRECTORS HAS ADOPTED, SUBJECT TO SHAREHOLDER
APPROVAL, THE AMENDMENT TO THE 2001 PLAN AS ADVISABLE AND IN THE BEST INTERESTS
OF BANK MUTUAL AND ITS SHAREHOLDERS. THE BOARD UNANIMOUSLY RECOMMENDS THAT BANK
MUTUAL SHAREHOLDERS VOTE FOR APPROVAL OF THE AMENDMENT.
THE AMENDMENT
The 2001 Plan provides that all options and restricted stock awards
vest 20% per year, beginning on the first anniversary of grant and ending with
complete vesting on the fifth anniversary of grant. That vesting schedule was
mandated by OTS regulations for a plan implemented within the first year after a
stock reorganization.
The proposed Amendment would not affect vesting schedules absent a
"change in control" in Bank Mutual or absent a committee waiver. However, in the
event of a change in control of Bank Mutual, all outstanding stock
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options would become fully exercisable and vested, and all restrictions on
restricted stock would lapse. In the Amendment, a change in control is defined
to include:
- any person other than the MHC becoming a majority owner of Bank
Mutual;
- a change, during any two-year period, in a majority of the
directors;
- an SEC filing by Bank Mutual indicating a change in its control;
or
- any person other than Bank Mutual or the MHC becoming owner of
more than 25% of Mutual Savings Bank or First Northern Savings
Bank, as to employees of that particular bank.
Notwithstanding those provisions, specified reorganizations of Bank Mutual and
the MHC, with prior approval, in which MHC members, Bank Mutual shareholders and
certain members of the public control the resulting entity would not constitute
a change in control. For further information, see the definition of "Change in
Control" in Section 9.02 of the amended plan, on Exhibit A hereto.
As indicated above, the board of directors believes that such change in
control and discretionary waiver provisions are common in option and restricted
stock plans. The board of directors wishes to provide for this change so that,
in the event of consideration of a change in control, distraction by personal
considerations will be minimized. Additionally, in such a circumstance, the
board believes that accelerated vesting would fairly recognize the value of
those persons in contributing to a successful transaction. The board also wishes
that the committee have the discretion to waive conditions to option exercise,
including their vesting, if deemed appropriate; however, there are no current
plans or proposals to grant any such waivers.
Except for the addition of provisions providing for full vesting upon
change in control, the 2001 Plan will not otherwise be amended or changed. It
will thus remain in effect as originally approved by shareholders other than the
specific change created by the Amendment.
BACKGROUND INFORMATION
During 2001, there were grants of options and of restricted stock made
under the 2001 Plan to directors and executive officers. Those grants are
discussed elsewhere in this proxy statement, but are also summarized below. If
the Amendment is approved, the options and restricted stock granted to each of
these directors and executive officers would fully vest upon any change in
control, even if less than five years after the grant, and would be subject to
the Committee's discretion to waive conditions.
Number of Shares Number of
Director / Executive Officer Subject to Option Restricted Shares
---------------------------- ----------------- -----------------
Michael T. Crowley, Jr. 184,000 80,000
Michael T. Crowley, Sr. 100,000 40,000
Michael D. Meeuwsen 80,000 40,000
Eugene H. Maurer, Jr. 45,000 13,000
Rick B. Colberg 45,000 13,000
Marlene M. Scholz 45,000 13,000
Each of Messrs. Buestrin, Dwyer, Herr,
Lopina, Mielke, Olson, Rolfs and Swoboda 20,000 5,000
All directors and executive officers as a group 659,000 239,000
In addition to the above, options to purchase 435,000 shares and awards
of 90,000 restricted shares were granted to persons who were not either
executive officers or directors. As a result of those grants and subsequent
terminations before vesting, at March 1, 2002 there were approximately 20,849
shares remaining available for option and 5,454 shares available for future
restricted stock grants under the 2001 Plan. The 2001 Plan also permits Bank
Mutual to re-grant any restricted shares or options which have lapsed prior to
vesting or exercise.
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Bank Mutual estimates that the approximate number of persons currently
eligible to participate in the 2001 Plan is fifty, including each of the
executive officers and directors. Bank Mutual cannot determine at this time the
number of awards which will be granted in the future to persons named in the
summary compensation table in this proxy statement, to all current executive
officers as a group, to all employees as a group or to all directors.
MATERIAL PLAN PROVISIONS
The following is a summary of other materials provisions of the 2001
Plan, which would not be affected by the Amendment. The 2001 Plan provides for
the grant of:
- incentive stock options ("ISOs"), intended to qualify within the
meaning of Section 422 of the Code;
- non-qualified stock options ("NSOs"); and
- restricted stock awards under management recognition provisions.
Under the 2001 Plan, the maximum number of shares of Bank Mutual common stock
that may be issued pursuant to options is 1,114,849, and the maximum number of
shares subject to restricted stock awards is 334,454. The total number of shares
that may be issued under the 2001 Plan represents approximately 6.5% of the
number of shares of common stock outstanding and 13% of the shares owned by
persons other than the MHC. The 2001 Plan has a term of ten years from its
adoption.
The 2001 Plan is administered by a committee designated by the Bank
Mutual board, which initially is the Compensation Committee. The Committee, in
its discretion, designates the persons to whom awards are made, grants the
awards in the form and amount as it determines, and imposes such limitations,
restrictions and conditions upon any such award as it deems appropriate.
Officers, key salaried employees and directors of Bank Mutual or any subsidiary
are eligible to receive awards, with the following limits:
- No one person may receive more than 25% of the shares available
for award;
- Non-employee directors may not receive more than 5% individually,
or 30% in the aggregate, of the shares available for option or
award of restricted stock.
The exercise price of options under the 2001 Plan may not be less than 100% of
the fair market value of the shares on the date the option is granted. Unless
the Committee otherwise determines 20% of the shares covered by options granted
under the 2001 Plan will become exercisable after one year and an additional 20%
in each of the next four years. Options will have a maximum exercise term of ten
years from grant.
No person may receive an ISO if, at the time of grant, the person owns,
directly or indirectly, more than 10% of the total combined voting power of Bank
Mutual, unless the exercise price is at least 110% of the fair market value of
the shares and the exercise period of such ISO is limited to five years. The
maximum fair market value, determined at time of grant, of shares covered by
ISOs that first become exercisable by any employee in any one calendar year is
limited to $100,000.
Shares of restricted stock may be issued either alone or in addition to
other awards granted under the 2001 Plan. The Committee determines the eligible
persons to whom and the times at which grants of restricted stock are made, the
number of shares awarded, the time or times within which such awards may be
subject to forfeiture, and any other terms and conditions of the awards. Shares
of restricted stock will not vest more quickly than provided by the schedule for
options. Grants of restricted stock also may be (but to date have not been)
conditioned upon the attainment of specified performance goals or other criteria
determined by the Committee, and the provisions of restricted stock awards do
not need to be the same with respect to each recipient.
Each individual receiving a restricted stock award is issued a stock
certificate in the recipient's name and bearing a legend referring to the
restrictions applicable to the shares. Until the restrictions lapse, a grantee
will not be permitted to transfer or encumber the shares of restricted stock,
but will have all of the other rights of a shareholder, including the right to
vote the shares and the right to receive dividends. All shares still subject to
restriction will be forfeited upon termination of a grantee's service.
-20-
In the event of any recapitalization, stock split or reverse split,
stock dividend, merger in which Bank Mutual is the surviving entity, or other
capital change affecting the Bank Mutual common stock, appropriate changes in
the number and kind of shares available for grant under the 2001 Plan and in the
number, price and kind of shares covered by outstanding awards shall be made. In
the case of an acquisition of Bank Mutual, the related agreement may provide for
conversion of options in an equitable manner comparable to the consideration
received by shareholders. Special accelerated vesting and exercise rules apply
in the event of death or disability. If an optionee is terminated for cause, all
options held by such optionee shall be deemed terminated and not exercisable.
Payment for shares acquired through the exercise of options issued
under the 2001 Plan may be made either in cash or in shares of Bank Mutual
common stock beneficially owned by the optionee for at least six months prior to
exercise, valued at their fair market value as of the exercise date, or in a
combination thereof.
TAX CONSEQUENCES
The following is a brief summary of the material federal income tax
consequences of awards made under the 2001 Plan based upon the applicable
provisions of the Code in effect on the date hereof. They are not affected by
the Amendment.
Non-Qualified Stock Options. An optionee does not recognize taxable
income at the time an NSO is granted. Upon exercise of an NSO, an optionee will
recognize taxable income in an amount equal to the difference between the
exercise price and the fair market value of the shares at the date of exercise.
The amounts of such difference will be a deductible expense to Bank Mutual for
tax purposes. On a subsequent sale or exchange of shares acquired pursuant to
the exercise of an NSO, the optionee will recognize a taxable gain or loss,
measured by the difference between the amount realized on the disposition and
the tax basis of such shares. The tax basis will, in general, be the amount paid
for the shares plus the amount treated as compensation income at the time the
shares were acquired pursuant to the exercise of the option.
Incentive Stock Options. A optionee does not recognize taxable income
at the time an ISO is granted. Further, an optionee will not recognize taxable
income upon exercise of an ISO if the optionee complies with two separate
holding periods: shares acquired upon exercise of an ISO must beheld for at
least two years after the date of grant and for at least one year after the date
of exercise. The difference between the exercise price and the fair market value
of the stock at the date of exercise is, however, a tax preference item. When
the shares of stock received pursuant to the exercise of an ISO are sold or
otherwise disposed of in a taxable transaction, the optionee will recognize a
capital gain or loss, measured by the difference between the exercise price and
the amount realized.
Ordinarily, an employer granting ISOs will not be allowed any business
expense deduction with respect to stock issued upon exercise of an ISO. However,
if all of the requirements for an ISO are met except for the holding period
rules set forth above, the optionee will be required, at the time of the
disposition of the stock, to treat the lesser of the gain realized or the
difference between the exercise price and the fair market value of the stock at
the date of exercise as ordinary income and the excess, if any, as capital gain.
Bank Mutual will be allowed a corresponding business expense deduction to the
extent of the amount of the optionee's ordinary income.
Restricted Stock. A grantee receiving a restricted stock award will
generally recognize ordinary income in an amount equal to the fair market value
of the stock at the time the stock is no longer subject to forfeiture. While the
restrictions are in effect, the grantee will recognize compensation income equal
to the amount of any dividends received and Bank Mutual will be allowed a
deduction for that amount. A grantee may elect, under Section 83(b) of the Code,
within 30 days of the stock grant, to recognize taxable ordinary income on the
date of grant equal to the fair market value of the shares (determined without
regard to the restrictions) on such date. Bank Mutual will generally be entitled
to a deduction equal to the amount that is taxable as ordinary income to the
grantee in the year that such income is taxable.
CERTAIN TRANSACTIONS WITH BANK MUTUAL
Mutual Savings Bank. Mutual Savings Bank has had, and expects to
continue to have, regular business dealings with its officers and directors, as
well as their associates in firms which they serve in various capacities.
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Consistent with applicable law, Mutual Savings Bank's policy is that
transactions with its directors and executive officers be on terms that are no
more beneficial to the director or executive officer than Mutual Savings Bank
would provide to unaffiliated third parties. Directors and executive officers,
and their associates, regularly deposit funds with Mutual Savings Bank; the
deposits are on terms and conditions offered to other depositors.
To help prevent any inadvertent violations of its policy, Mutual
Savings Bank discourages lending transactions between Mutual Savings Bank and
its insiders, but loans are occasionally made. Certain of the directors and
executive officers have been indebted to Mutual Savings Bank for loans made in
the ordinary course of business. All such loans have been on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons. These loans do not involve
more than the normal risk of collectability or present other unfavorable
features.
First Northern Savings Bank. Prior to its acquisition by Bank Mutual,
First Northern established somewhat different policies relating to loans to
directors and officers which, consistent with applicable laws and regulations,
permitted certain preferential loan terms to directors and executive officers.
Those policies have continued. The following table sets forth certain data
relating to existing loans with these special terms to directors and executive
officers of Bank Mutual who were formerly First Northern directors or officers
where the aggregate amount of such loans exceeded $60,000 at any time since
January 1, 2001 and the interest rate was below that offered to all other
customers for comparable transactions. Information for loans with no
preferential terms is not, and need not be, presented. Management believes that
the loans made to directors, officers and employees do not involve more than the
normal risk of collectability or present other unfavorable features.
Interest Comparable
Original Maximum Balance Rate During Note Rate
Name and Date of Amount of Balance as of Last Fiscal for Other
Positions Type Loan Loan (1) in 2001 12/31/01 Year Customers
--------- ---- ---- -------- ------- -------- ---- ---------
Thomas J. Lopina Mortgage 6/23/93 $110,000 $ 90,087 $ 86,375 5.5%(2) 6.25%
Director
Line of 12/11/00 $ 65,000(4) $ 14,801 $ 14,801 4.75%(3) 7.95%(3)
Credit
Michael D. Meeuwsen Mortgage 02/24/97 $156,000 $104,677 $ 92,986 5.5%(2) 7.25%
President of Bank Mutual
and First Northern Second 07/11/91 $100,000(4) -0- -0- 4.75%(3) 7.95%(3)
Savings Mortgage
Robert B. Olson Mortgage 7/31/97 $160,000 $130,937 $119,599 5.5%(2) 7.375%
Director
Second 9/29/98 $100,000(4) $ 62,011 $ 35,406 6.875% 6.875%
Mortgage
J. Gus Swoboda Mortgage 4/13/98 $170,000 $146,544 $141,778 5.5%(2) 6.875%
Director; Chairman of
First Line of 3/15/01 $100,000(4) $ 95,000 $ 95,000 4.75%(3) 8.00%(3)
Northern Savings Credit (5)
- ------------------
(1) The largest unpaid balance during 2000 was less than the original
amount of the respective loan.
(2) On January 1, 2001, in accordance with First Northern Savings Bank's
mortgage loan policy for directors, officers and employees, the
interest rate on mortgage loans for officers and directors was 5.5%.
The interest rate for 2002 is 4.0%.
(3) The line of credit interest rate is the prime interest rate, which
varied from 9.0% to 4.75% during 2001; amounts shown are at year end.
(4) Line of credit; the amount shown is the maximum amount which may be
borrowed under the line.
(5) Replaced a prior second mortgage arrangement.
-22-
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Bank Mutual board of directors was
constituted upon the effectiveness of the Mutual Savings Bank restructuring. The
Audit Committee's functions include meeting with Bank Mutual's independent
auditors and making recommendations to the board regarding independent public
accountants; assessing the adequacy of internal controls, accounting methods and
procedures; review of public disclosures required for compliance with securities
laws; and consideration and review of various other matters relating to Bank
Mutual's financial accounting and reporting. No member of the Audit Committee is
employed by or has any other material relationship with Bank Mutual. The members
are "independent" as defined in Rule 4200(a)(15) of the NASD listing standards
for the Nasdaq Stock Market. The board of directors has adopted a written
charter for the Audit Committee. A copy of that charter was attached to the 2001
annual meeting proxy statement.
In connection with its function to oversee and monitor the financial
reporting process of Bank Mutual, the Audit Committee has done the following:
- reviewed and discussed the audited financial statements for
the fiscal year ended December 31, 2001 with Bank Mutual
management;
- discussed with Ernst & Young LLP, Bank Mutual's independent
auditors, those matters which are required to be discussed by
SAS 61 (Codification of Statements on Auditing Standards, AU
ss.380); and
- received the written disclosures and the letter from Ernst &
Young LLP required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees) and has
discussed with Ernst & Young LLP its independence.
Based on the foregoing, the Audit Committee recommended to the board
that those audited financial statements be included in the Bank Mutual annual
report on Form 10-K for the year ended December 31, 2001.
In addition, the Audit Committee also considered the fees paid to Ernst
& Young LLP for services during 2001. See "Independent Auditors" below. The
Committee believes, in view of the substantial transactions which occurred in
2000, with continuing effects in 2001, that the provision of the other services
is compatible with maintaining Ernst & Young's independence.
Members of the Audit Committee: William J. Mielke, Chairman Thomas H. Buestrin
Robert B. Olson David J. Rolfs
INDEPENDENT AUDITORS
The firm of Ernst & Young LLP has audited the books and records of Bank
Mutual for 2001; it has served as the independent accountants for Mutual Savings
Bank for more than 20 years and of Bank Mutual since its inception. The board of
directors has appointed Ernst & Young LLP as the independent auditors to audit
the books and accounts of Bank Mutual for 2002. Representatives of Ernst & Young
LLP are expected to be present at the annual meeting to respond to appropriate
questions and to make a statement if they so desire.
Fees (including reimbursements for out-of-pocket expenses) paid to
Ernst & Young LLP for services in fiscal 2001 were as follows:
Audit Fees $159,025
All Other Fees: $134,955
"All Other Fees" paid to Ernst & Young LLP include approximately $38,150 of
audit-related fees for matters such as benefit plan audits and registrations of
employee plan securities under the Securities Act. The remaining fees paid were
for tax-related services and for consultations on internal audit and accounting
matters. The Audit Committee considered the compatibility of non-audit services
by Ernst & Young LLP with the maintenance of Ernst & Young LLP's independence.
-23-
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Secretary of Bank Mutual,
Eugene H. Maurer, no later than November 29, 2002 in order to be considered for
inclusion in next year's annual meeting proxy materials pursuant to SEC Rule
14a-8.
Under SEC rules relating to the discretionary voting of proxies at
shareholder meetings, if a proponent of a matter for shareholder consideration
(other than a shareholder proposal) notifies Bank Mutual at least 45 days prior
to the month and day of mailing the prior year's proxy statement, then
management proxies are allowed to use their discretionary voting authority if a
proposal is raised at the annual meeting, without any discussion of the matter
in the proxy statement. Therefore, any such matters must be received by Bank
Mutual by February 11, 2003 in the case of the Bank Mutual 2003 annual meeting
of shareholders. Bank Mutual is not aware of any such proposals for the 2002
annual meeting.
The Bank Mutual bylaws also require that any matters for consideration
of the meeting must be presented to Bank Mutual's corporate secretary at least
five days prior to a meeting. That deadline is May 2, 2002 in the case of the
2002 annual meeting.
By Order of the Board of Directors
/s/ Eugene H. Maurer, Jr.
Eugene H. Maurer, Jr.
Senior Vice President and Secretary
Milwaukee, Wisconsin
March 27, 2002
A copy (without exhibits) of Bank Mutual's Annual Report on Form 10-K filed with
the SEC for the year ended December 31, 2001 is attached to this proxy
statement. Bank Mutual will provide an additional copy of the 10-K (without
exhibits) without charge to any record or beneficial owner of Bank Mutual common
stock on the written request of that person directed to: Rick B. Colberg, Chief
Financial Officer, Bank Mutual Corporation, 4949 West Brown Deer Road,
Milwaukee, Wisconsin 53223.
-24-
APPENDIX A
BANK MUTUAL CORPORATION
2001 STOCK INCENTIVE PLAN
(as amended February 4, 2002, subject to shareholder approval)
[Note: New language is in BOLD ITALICS;
see Section 3.01(d) and Article IX]
I. PURPOSE
1.01 Establishment of Plan. The purpose of this Plan is to promote the
growth and development of Bank Mutual Corporation ("Bank Mutual") by providing
increased incentives for key salaried employees and directors of Bank Mutual and
of any present or future Subsidiaries. A "Subsidiary" as used herein shall mean
any corporation in which Bank Mutual or another corporation qualifying as a
Subsidiary within this definition owns 50% or more of the total combined voting
power of all classes of stock. This Plan provides for the granting of (i)
incentive stock options ("ISOs") intended to qualify as such within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended from time to
time (the "Code"), (ii) non-qualified stock options ("NSOs"), and (iii)
Management Recognition Awards. The three types of benefits that may be granted
under the Plan are collectively referred to as "Awards".
II. SHARES SUBJECT TO OPTION
2.01 Available Shares. A total of not more than 334,454 shares of Bank
Mutual common stock are available for the issuance of Management Recognition
Awards under the Plan and a total of not more than 1,114,849 shares of Bank
Mutual common stock are available for the issuance of other Awards under the
Plan. The shares issued under the Plan must be shares issued and reacquired by
Bank Mutual; provided, however, that such shares may be authorized but unissued
shares if permitted by OTS regulations then in effect. Shares subject to and not
issued under an Award which expires, terminates or is cancelled for any reason
during the term of the Plan shall again become available for the granting of
Awards under the Plan.
2.02 Changes in the Number of Available Shares. In the event of any
recapitalization, stock split or reverse split, combination or exchange of
shares, stock dividend, merger in which Bank Mutual is the surviving
corporation, combination or exchange of shares, or other capital change
affecting the common stock of Bank Mutual, the Committee (defined in Section
3.01 hereof) shall make, subject to the approval of the Board of Directors of
Bank Mutual, equitable and appropriate changes in the aggregate number and kind
of shares available for which Awards may be granted under the Plan and in the
number, price and kind of shares covered by Awards granted or to be granted
under the Plan, provided that no changes shall be made in any ISO which would
cause such option to fail to continue to qualify as an incentive stock option
within the meaning of Section 422 of the Code.
III. ADMINISTRATION
3.01 Administration by the Committee. The Plan shall be administered by
a committee designated by the Board of Directors of Bank Mutual (the
"Committee"), and shall initially be the Compensation Committee of the Board.
The Committee shall be constituted to permit the Plan to comply with the
provisions of Rule 16b-3 under the Securities Exchange Act of 1934, as amended
or any successor rule ("Rule 16b-3") and Section 162(m) of the Code. A majority
of the members of the Committee shall constitute a quorum. The approval of such
a quorum, expressed by a vote at a meeting, or the unanimous consent of all
members in writing without a meeting, shall constitute the action of the
Committee and shall be valid and effective for all purposes of the Plan. The
Committee is empowered to adopt such rules, regulations and procedures and take
such other action as it shall deem necessary or proper for the administration of
the Plan. Subject to Section 8.04 hereof, the Committee, in its discretion, may
modify, extend or renew any Award theretofore granted. The Committee shall also
have authority to interpret the Plan, and the decision of the Committee on any
questions concerning the interpretation of the Plan shall be final and
conclusive. The Committee may consult with counsel, who may be counsel for the
Company, and shall not incur any liability for any action taken in good faith in
reliance upon the advice of counsel. The Committee shall have the power, subject
to and within the limits of the express provisions of the Plan:
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(a) to determine from time to time which of the eligible persons
shall be granted Awards under the Plan, the type of Awards,
and time or times when, and the number of shares for which, an
Award or Awards shall be granted to such persons;
(b) to prescribe the other terms and provisions (which need not be
identical) of each Award granted under the Plan to eligible
persons;
(c) to construe and interpret the Plan and Awards granted under
it, and to establish, amend and revoke rules and regulations
for Plan administration. The Committee, in the exercise of
this power, may correct any defect or supply any omission, or
reconcile any inconsistency in the Plan, or in any agreement,
in the manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective. All decisions and
determinations by the Committee in exercising this power shall
be final and binding upon Bank Mutual and the individuals; and
(d) WAIVE IN WHOLE OR IN PART ANY LIMITATIONS, RESTRICTIONS OR
CONDITIONS IMPOSED UPON ANY SUCH AWARD (WITHOUT REGARD TO ANY
VESTING REQUIREMENTS CONTAINED IN THE AWARD); AND
(e) generally, to exercise such powers and to perform such acts as
are deemed necessary or expedient to promote the best
interests of Bank Mutual with respect to the Plan.
IV. ELIGIBILITY FOR AWARDS
4.01 Eligibility. Key salaried employees and directors of Bank Mutual
or any Subsidiary shall be eligible to receive Awards.
4.02 Grant of Awards. From among all eligible persons, the Committee
shall determine from time to time those persons to whom Awards shall be granted,
provided that (i) no eligible person shall be eligible to receive an Award or
Awards covering or relating to, in the aggregate, more than 25% of the shares
available for issuance under the Plan and (ii) directors of Bank Mutual or a
Subsidiary who are not also employees of Bank Mutual or any Subsidiary may not
receive more than 5% individually, or 30% in the aggregate, of the option shares
available for issuance under the Plan. No person shall have any right whatsoever
to receive an Award unless so determined by the Committee.
V. OPTION TERMS AND CONDITIONS
5.01 Option Contracts. Options granted hereunder shall be evidenced by
option contracts containing such terms and conditions as the Committee shall
establish from time to time consistent with the Plan. Option contracts need not
be identical but each option contract shall, as appropriate, contain language
including the substance of the following provisions:
(a) Number of Shares and Price. Each option contract shall state
the number of shares to which it pertains and the option price
therefor. Such price for each ISO or NSO shall be not less
than 100% of the fair market value of the shares on the date
such option is granted. For all purposes of the Plan, fair
market value shall mean average of the high and low sales
prices for the shares in the over-the-counter market on the
valuation date, as reported by NASDAQ (the National
Association of Securities Dealers, Inc. Automatic Quotation
System). In the absence of reported sales on NASDAQ on any
trading date, fair market value shall be the average of the
reported closing bid and asked price for the stock on NASDAQ
on such date. Notwithstanding any other provision in this
Plan, for any eligible employee who, at the time an ISO is
granted, owns (directly and under the attributable rules of
Section 425(d) of the Code) stock possessing more than 10% of
the total combined voting power of Bank Mutual (or any parent
or Subsidiary) the option price under such ISO shall be not
less than 110% of the fair market value of the shares subject
to such ISO and such option, by its terms, shall not be
exercisable after the expiration of five years from the date
such option is granted.
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(b) Vesting of Options. Options may be exercised only in
accordance with the terms of each option contract. For vesting
purposes, options may not be deemed to have been granted prior
to the date of shareholder approval of the Plan. Unless the
Committee determines otherwise at the time of grant, no option
shall be exercisable until the optionee has completed at least
the number of years of continuous service from the date of
grant of each option as follows, and then the same shall be
exercisable for any amount of shares covered by such option up
to the maximum percentage of shares covered thereunder as
follows:
Number of Completed Years of Maximum Percentage of
Continuous Service After Shares Becoming Exercisable
the Date of Grant of Option Under the Option
---------------------------- -------------------------
Less than 1 year Zero
At least 1 but less than 2 20%
At least 2 but less than 3 40%
At least 3 but less than 4 60%
At least 4 but less than 5 80%
At least 5 years 100%
To the extent provided in Article VI, all options then
outstanding shall become immediately exercisable. No
fractional shares shall be issuable on exercise of any
option and if the application of the maximum percentage set
forth above would result in a fractional share, the number
of shares exercisable shall be rounded up to the next full
share. Finally, the maximum fair market value of Bank Mutual
stock (determined at the time of grant) covered by ISOs that
first become exercisable by any optionee in any calendar
year is limited to $100,000.
(c) Term of Options and Restriction on Exercise. Unless otherwise
determined by the Committee, all rights to exercise an ISO or
NSO shall expire ten years from the date of option grant.
Although Bank Mutual intends to exert its best efforts so that
the shares purchasable upon the exercise of an option will be
registered under, or exempt from the registration requirements
of the federal Securities Act of 1933 and any applicable state
securities law at the time the option becomes exercisable, if
the exercise of an option would otherwise result in the
violation by Bank Mutual of any provision of such Act or of
any state securities law, Bank Mutual may require that such
exercise be deferred until Bank Mutual has taken appropriate
action to avoid any such violation.
(d) Nontransferability. Except as provided in Article VI hereof:
(i) all options granted pursuant to the Plan shall not be
transferable except by will or the laws of descent and
distribution, and shall be exercisable during the optionee's
lifetime only by the optionee or by his/her guardian or legal
representative; and
(ii) no options or any privileges pertaining thereto or under
the Plan shall be transferred, assigned, pledged or
hypothecated in any way, whether by operation of law or
otherwise, nor be subject to execution, attachment or similar
process.
(e) Method of Exercise and Payment of Purchase Price. Subject to
(c) above, an option may be exercised, as to all or part of
the shares covered by the option, by the optionee delivering
to the Committee at its principal business office on any
business day, a written notice specifying the number of shares
the optionee desires to purchase. The option price shall be
paid in full in cash or, in the discretion of the Committee in
shares of stock of Bank Mutual which have been beneficially
owned by the optionee for at least six months prior to the
time of exercise, valued at their fair market value determined
as of the date of exercise, or in a combination thereof.
5.02 Rights as Shareholder. An optionee shall not be deemed the holder
of any shares covered by an option until such shares are fully paid and issued
to him/her after exercise of such option.
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VI. TERMINATION OF SERVICE
6.01 Death. In the event of the death of an optionee while in the
service of Bank Mutual or its Subsidiaries, the options then held by such
optionee, whether or not otherwise exercisable at the time of such death, may be
exercised, by the estate of the optionee or by a person who acquired the right
to exercise such options by bequest or inheritance from such optionee, within
one year after the date of such death, but not later than the date on which the
options would otherwise expire. Any options or portions thereof not so exercised
shall terminate.
6.02 Disability. If the service of an optionee is terminated by reason
of disability (in case of an ISO, as defined in Section 105(d)(4) of the Code
and in case of an NSO, as determined by the Committee), the options then held by
such optionee may be exercised, whether or not otherwise exercisable at the time
of such termination, within one year after such termination, but not later than
the date on which the options would otherwise expire. Any options or portions
thereof not so exercised shall terminate.
6.03 Other Termination. If the service of an optionee is terminated for
any reason other than such death or disability, options then held by such
optionee to the extent that the same are exercisable on the date of such
termination may be exercised at any time within one year thereafter (provided
that any ISO exercised more than three months after the optionee's termination
of employment will not be eligible for tax treatment as an ISO and instead will
be treated as an NSO), but not later than the date on which the options would
otherwise expire. However, notwithstanding any other provision of the Plan, if
the service of an optionee is terminated for cause, as determined by the
Committee, all options then held by such optionee shall be deemed terminated and
not exercisable by such optionee.
6.04 Transfers and Leaves. A change in employment from Bank Mutual to a
Subsidiary, or vice versa, shall not constitute termination of employment for
purposes of the Plan. The Committee may determine that for purposes of the Plan,
an optionee who is on leave of absence (but in the case of ISOs, only to the
extent that employment is not determined to be interrupted thereby for purposes
of Section 422 of the Code) will still be considered as in the continuous
employment of Bank Mutual or a Subsidiary.
VII. MANAGEMENT RECOGNITION AWARDS
7.01 Administration. Management recognition awards may be issued either
alone or in addition to other Awards granted under the Plan. The Committee shall
determine the eligible persons to whom and the time or times at which management
recognition awards will be granted, the number of shares to be awarded, the time
or times within which such Awards may be subject to forfeiture and any other
terms and conditions of the Awards. The Committee may condition the grant of
Management Recognition Awards upon the attainment of specified performance goals
or such other factors or criteria as the Committee shall determine. The
provisions of the Awards need not be the same with respect to each recipient.
7.02 Awards and Certificates. Each individual receiving a Management
Recognition Award shall be issued a certificate in respect of such shares. Such
certificate shall be registered in the name of such individual and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Bank Mutual Corporation 2001 Stock Incentive Plan
and an agreement identifying the restrictions applicable to the shares.
Copies of such Plan and agreement are on file at the corporate office
of Bank Mutual."
The Committee may require that the certificates evidencing such shares
be held in custody by Bank Mutual until the restrictions thereon shall have
lapsed and that, as a condition of any Award, the grantee shall have delivered a
stock power, endorsed in blank, relating to the stock covered by such Award.
7.03 Terms and Conditions. Management Recognition Awards shall be
subject to the following terms and conditions:
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(a) Until the applicable restrictions lapse, the grantee shall not
be permitted to sell, assign, transfer, pledge or otherwise
encumber the shares.
(b) The grantee shall have, with respect to the shares covered by
the Award, all of the rights of a stockholder of Bank Mutual,
including the right to vote the shares and the right to
receive any cash dividends. Unless otherwise determined by the
Committee, cash dividends shall be automatically paid in cash
and dividends payable in stock shall be paid in the form of
additional restricted stock.
(c) Except to the extent otherwise provided in the applicable
agreement and (d) below, all shares still subject to
restriction shall be forfeited by the grantee upon termination
of a grantee's service for any reason.
(d) The restrictions applicable to any Management Recognition
Award may lapse no more quickly and in no greater percentage
than options are allowed to vest under Section 5.01(b) above.
(e) If and when the applicable restrictions lapse, unlegended
certificates for such shares shall be delivered to the
grantee.
(f) Each Award shall be confirmed by, and be subject to the terms
of, an agreement identifying the restrictions applicable to
the shares.
(g) The aggregate amount of all shares of Bank Mutual common stock
obtained by any Bank Mutual tax-qualified employee stock
benefit plan in Mutual Savings Bank's restructuring completed
November 1, 2000 or within one year following the
restructuring, together with the number of shares of Bank
Mutual common stock available for issuance as Management
Recognition Awards under the Plan, shall not exceed 1,114,849
shares.
VIII. MISCELLANEOUS
8.01 Term of Plan and Effective Date. Awards may be granted under this
Plan at any time up until the expiration of ten years following the Effective
Date of the Plan; on which date the plan shall expire, except as to outstanding
options, which options shall remain in effect until they have been exercised or
have expired. The Effective Date of the Plan shall be February 5, 2001, the date
of its adoption by the Board of Directors of Bank Mutual, subject, however, to
approval by the shareholders of Bank Mutual within a period of twelve months
after such adoption. Notwithstanding any other provision hereof, no options
granted hereunder shall be exercisable and no restriction with respect to any
Award shall lapse, until a date at least one year after such shareholder
approval has been obtained.
8.02 No Employment or Retention Agreement Intended. The grant of an
Award hereunder shall not be deemed to imply the right to continued service in
any capacity by Bank Mutual or a Subsidiary and shall not constitute an
employment agreement or retention agreement of any kind.
8.03 Separate Plan. This Plan is separate and independent from any
other stock incentive plan or similar plan of Bank Mutual.
8.04 Amendment or Discontinuance. The Board of Directors of Bank Mutual
may amend or discontinue this Plan at any time, but may not, without the consent
of the optionee to whom an option has been granted, make any alteration in such
option which would adversely affect the same, or be made without shareholder
approval if such approval would be required in order to comply with Rule 16b-3,
the Code or the applicable regulations of the OTS.
8.05 Liability. No member of the Board of Directors, or the Committee,
or the officers or employees of Bank Mutual shall be personally liable for any
action, omission or determination made in good faith in connection with the
Plan.
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8.06 Government and Other Regulations. The obligations of Bank Mutual
to sell and deliver shares of stock under this Plan shall be subject to all
applicable laws, rules and regulations and the obtaining of all such approvals
by the governmental agencies as may be deemed necessary or desirable by the
Board of Directors of Bank Mutual, including (without limitation) the
satisfaction of all applicable federal, state and local tax withholding
requirements.
8.07 Withholding Taxes. All distributions under the Plan shall be
subject to any required withholding taxes and other withholdings and, in case of
distributions in Bank Mutual common stock, the participant or other recipient
may, as a condition precedent to the delivery of said common stock, be required
to pay to his/her participating employer the excess if any, of the amount of
required withholding if any, from distributions in cash under the Plan. The
required withholding may be paid in full or in the discretion of the Committee,
in shares of stock of Bank Mutual, valued at its fair market value as of the
date the withholding obligation arises, or in a combination thereof. Any such
request or election (to satisfy a withholding obligation using shares) by an
individual who is subject to the provisions of Section 16 of the Securities
Exchange Act of 1934 shall be made in accordance with the rules and regulations
of the Securities and Exchange Commission promulgated thereunder. No
distribution under the Plan shall be made in fractional shares of Bank Mutual's
common stock but the proportional market value thereof shall be paid in cash.
8.08 Governing Law. This Plan and any option contracts extended
pursuant hereto shall be interpreted and enforced in accordance with the laws of
the State of Wisconsin.
IX. CHANGE IN CONTROL
9.01 ACCELERATED VESTING. ALL OUTSTANDING OPTIONS SHALL BE FULLY
EXERCISABLE AND THE RESTRICTIONS WITH RESPECT TO ALL OUTSTANDING MANAGEMENT
RECOGNITION AWARDS SHALL LAPSE UPON A CHANGE IN CONTROL (AS DEFINED IN SECTION
9.02 BELOW).
9.02 CHANGE IN CONTROL DEFINITION. A "CHANGE IN CONTROL" SHALL BE
DEEMED TO HAVE OCCURRED IF: (a) ANY "PERSON" (AS SUCH TERM IS USED IN SECTION
13(d) AND 14(d)(2) OF THE SECURITIES EXCHANGE ACT OF 1934) OTHER THAN MUTUAL
SAVINGS BANCORP, MHC ("MHC") BECOMES THE BENEFICIAL OWNER, DIRECTLY OR
INDIRECTLY, OF A MAJORITY OF THE CAPITAL STOCK OF BANK MUTUAL IN A TRANSACTION
OR TRANSACTIONS SUBJECT TO THE NOTICE PROVISIONS OF THE CHANGE IN BANK CONTROL
ACT OF 1978, (12 USC SS. 1817(j)) AS AMENDED FROM TIME TO TIME, OR APPROVAL
UNDER THE SAVINGS AND LOAN HOLDING COMPANY ACT (12 USC SS. 1467A), AS AMENDED
FROM TIME TO TIME; (b) DURING ANY PERIOD OF TWO (2) CONSECUTIVE YEARS, THE
INDIVIDUALS, WHO AT THE BEGINNING OF ANY SUCH PERIOD CONSTITUTED THE DIRECTORS
OF BANK MUTUAL, CEASE FOR ANY REASON TO CONSTITUTE AT LEAST A MAJORITY THEREOF;
(c) BANK MUTUAL FILES A REPORT OR PROXY STATEMENT WITH THE SECURITIES AND
EXCHANGE COMMISSION AND/OR THE OFFICE OF THRIFT SUPERVISION DISCLOSING IN
RESPONSE TO ITEM 1 OF FORM 8-K OR ITEM 5 OF PART II OF FORM 10-Q, EACH
PROMULGATED PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
("EXCHANGE ACT") OR ITEM 6(e) OF SCHEDULE 14A PROMULGATED THEREUNDER, OR
SUCCESSOR ITEMS, THAT A CHANGE IN CONTROL OF BANK MUTUAL HAS OR MAY HAVE
OCCURRED PURSUANT TO ANY CONTRACT OR TRANSACTION; OR (d) ANY PERSON OTHER THAN
BANK MUTUAL OR MHC BECOMES THE OWNER OF MORE THAN 25% OF THE VOTING SECURITIES
OF MUTUAL SAVINGS BANK OR FIRST NORTHERN SAVINGS BANK (BUT THE CHANGE IN CONTROL
SHALL ONLY BE DEEMED TO OCCUR FOR INDIVIDUALS WHO ARE EMPLOYED BY SUCH ENTITY).
HOWEVER, NOTWITHSTANDING THE FOREGOING PROVISIONS, A REORGANIZATION OF BANK
MUTUAL AND MHC IN WHICH THE SHAREHOLDERS OF BANK MUTUAL PRIOR TO SUCH
REORGANIZATION, THE MEMBERS OF MHC AND ANY MEMBERS OF THE PUBLIC, WHICH ACQUIRE
SHARES OF SUCH ENTITY PURSUANT TO A PUBLIC OFFERING OF SECURITIES APPROVED IN
ADVANCE BY THE BOARD OF DIRECTORS OF MHC, TOGETHER CONTROL THE SUCCESSOR ENTITY
SHALL NOT CONSTITUTE A "CHANGE IN CONTROL" HEREUNDER.
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REVOCABLE PROXY
BANK MUTUAL CORPORATION
[X] PLEASE MARK VOTES 1. The election of the following nominees as director for
AS IN THIS EXAMPLE terms expiring in 2005 (except as marked to the contrary
below):
ANNUAL MEETING OF SHAREHOLDERS
MAY 7, 2002 FOR ALL WITHHOLD FOR ALL EXCEPT
The undersigned hereby appoints Michael T. Crowley, Mark C. Herr, Thomas J. Lopina, Robert B. Olson, David J. Rolfs
Jr., Rick B. Colberg and Eugene H. Maurer, Jr., and each of
them, with full power of substitution, to act as attorneys INSTRUCTION: To withhold your vote for any individual nominee,
and proxies for the undersigned to vote all shares of common mark "FOR ALL EXCEPT" with an "X" and write, in the space
stock of Bank Mutual Corporation which the undersigned is provided below, the name(s) of the nominee(s) for whom you wish to
entitled to vote at the annual meeting of shareholders (the withhold your vote.
"Meeting") to be held at the Four Points Sheraton Milwaukee
North Hotel, 8900 N. Kildeer Court, Milwaukee, Wisconsin on ------------------------------------------------------------------
Tuesday, May 7, 2002, at 10:00 a.m., and at any and all
adjournments and postponements thereof. 2. Approval of an amendment to the Bank Mutual
Corporation 2001 Stock Incentive Plan
FOR AGAINST ABSTAIN
I/We Plan to Attend the Meeting -- __
In their discretion, the proxies are authorized to vote on any
other business that may properly come before the Meeting or any
adjournment or postponement thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE
PROPOSALS AND THE NOMINEES LISTED ABOVE. IF ANY OTHER
Please be sure to sign and date BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE
this proxy in the box below VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT.
AT THE PRESENT TIME THE BOARD OF DIRECTORS KNOWS OF NO OTHER
|------------| BUSINESS TO BE PRESENTED AT THE MEETING.
| Date |
| | The Board of Directors recommends a vote "FOR" the
|------------| proposal and the election of the nominees listed above.
Shareholder sign above Co-holder (if any) sign above)
Detach above card, sign, date and mail in postage paid envelope provided.
BANK MUTUAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the above signed be present and choose to vote at the Meeting or
at any adjournments thereof, and after notification to the Secretary of Bank
Mutual at the Meeting of the shareholder's decision to terminate this proxy,
then the power of such attorneys or proxies shall be deemed terminated and of no
further force and effect. This Proxy may also be revoked by filing a written
notice of revocation with the Secretary of Bank Mutual or by duly executing a
proxy bearing a later date.
The above signed acknowledges receipt from Bank Mutual, prior to the
execution of this proxy, of a notice of annual meeting of shareholders, a proxy
statement and an annual report to shareholders.
Please sign exactly as your name(s) appear(s) on this card. When
signing as attorney, executor, administrator, trustee or guardian, please give
your full title. If shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN WITH THE PROXY IN THE ENVELOPE PROVIDED.
___________________________
___________________________
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