1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant / /
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
D&N FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
D&N FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
2
D&N FINANCIAL CORPORATION
400 QUINCY STREET
HANCOCK, MICHIGAN 49930
(906) 482-2700
------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 23, 1996
------------
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of D&N Financial Corporation ("D&N" or the "Corporation") will be
held at the Franklin Square Inn located at 820 Shelden Avenue, Houghton,
Michigan, on Tuesday, April 23, 1996, at 2:00 p.m. (Eastern Daylight Time). A
Proxy Card and a Proxy Statement for the Meeting are enclosed. The Meeting is
for the purpose of:
I. Electing three directors of the Corporation;
II. Approving and adopting an amendment to D&N's Certificate of Incorporation
to increase the number of authorized shares of D&N common stock to
25,000,000;
III. Ratifying the appointment of Coopers & Lybrand L.L.P. as independent
auditors for the Corporation for the fiscal year ending December 31,
1996; and
IV. Transacting such other business as may properly come before the Meeting or
any adjournments or postponements thereof.
The Board of Directors is not aware of any other business to come before
the Meeting. Any action may be taken on any one of the foregoing proposals at
the Meeting on the date specified above, or on any date or dates to which the
Meeting may be adjourned or postponed. Stockholders of record at the close of
business on March 11, 1996 will be entitled to vote the number of shares held of
record in their names on that date.
A complete list of stockholders entitled to vote at the Meeting will be
available for examination by any stockholder for any purpose relevant to the
Meeting between 8 a.m. and 5 p.m. on working days at the 901 W. Sharon Avenue,
Suite 1, Houghton, Michigan office of D&N Bank, for a period of ten days prior
to the Meeting.
You are requested to fill in and sign the enclosed form of proxy which is
solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend and vote at the
Meeting in person.
By Order of the Board of Directors
LK KORPELA
LINDA K. KORPELA
Corporate Secretary
Hancock, Michigan
March 22, 1996
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE CORPORATION THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED, POSTAGE-PREPAID ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
3
PROXY STATEMENT
OF
D&N FINANCIAL CORPORATION
400 QUINCY STREET
HANCOCK, MICHIGAN 49930
(906) 482-2700
ANNUAL MEETING OF STOCKHOLDERS
APRIL 23, 1996
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of D&N Financial Corporation,
a Delaware corporation ("D&N" or the "Corporation"), for use at its 1996 Annual
Meeting of Stockholders to be held on Tuesday, April 23, 1996, at 2:00 p.m.
(Eastern Daylight Time), at the Franklin Square Inn located at 820 Shelden
Avenue, Houghton, Michigan, and at any adjournment or postponement thereof (the
"Meeting"). This Proxy Statement and the accompanying Notice of Meeting and
Proxy Card are first being mailed to stockholders of the Corporation on or about
March 22, 1996. Certain of the information provided herein relates to D&N Bank
(the "Bank"), a wholly owned subsidiary of the Corporation.
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments or postponements thereof. Proxies may be
revoked by written notice to Linda K. Korpela, Secretary of the Corporation, 400
Quincy Street, Hancock, Michigan 49930 or by the filing of a later dated proxy
prior to a vote being taken on a particular proposal at the Meeting. A proxy
will not be voted if a stockholder attends the Meeting and votes in person. A
proxy may be revoked by a stockholder who attends the Meeting by notice to the
Secretary of the Corporation of the stockholder's decision to terminate his or
her proxy prior to any vote being taken. Proxies solicited on behalf of the
Board of Directors of the Corporation will be voted in accordance with the
directions given therein. Where no instructions are indicated, proxies will be
voted "FOR" the proposals set forth in this Proxy Statement for consideration at
the Meeting.
Proxies marked as abstaining will be treated as present for purposes of
determining a quorum at the Meeting, and will be counted as present and entitled
to vote on any matter as to which abstention is indicated. Proxies returned by
brokers as "non-votes" on behalf of shares held in street name, because the
beneficial owners' discretion has been withheld as to one or more matters on the
agenda for the Meeting, will be treated as present for purposes of determining a
quorum for the Meeting, but will not be counted as voting on any matter as to
which a non-vote is indicated on the broker's proxy.
VOTE REQUIRED FOR APPROVAL OF PROPOSALS
Directors shall be elected by a plurality of the shares present in person
or represented by proxy at the Meeting and entitled to be voted on the election
of directors.
Approval of the proposal to amend the Corporation's Certificate of
Incorporation requires the affirmative vote of the holders of at least a
majority of the shares entitled to be voted at the Meeting.
Approval of the ratification of Coopers & Lybrand L.L.P. as auditors for
the Corporation for the fiscal year ending December 31, 1996 requires the
affirmative vote of the holders of at least a majority of the shares actually
voted on such proposal.
VOTING SECURITIES AND CERTAIN HOLDERS THEREOF
Stockholders of record as of the close of business on March 11, 1996 will
be entitled to one vote for each share then held. As of such date, there were
6,809,007 shares of common stock (the "Common Stock") outstanding and entitled
to vote.
1
4
Set forth below is certain information as of March 11, 1996, as to (i)
those persons who were known by the Corporation to own beneficially more than 5%
of the Common Stock of the Corporation and (ii) as to the shares of Common Stock
beneficially owned by the executive officers named below and all directors and
executive officers as a group:
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------------------------------------------------------- -------------------- ----------
Value Partners, Ltd. ......................................... 403,720(1) 5.86
c/o Fisher Ewing Partners
2200 Ross Avenue, Suite 4600 West
Dallas, Texas 75201
George J. Butvilas, President
and Chief Executive Officer................................. 193,508(2) 2.77
D&N Financial Corporation and D&N Bank
Alan R. Giever, Executive Vice President
and Chief Lending Officer(3)................................ 55,288(2) 0.81
D&N Bank
Kenneth R. Janson, Executive Vice President,
Chief Financial Officer and Treasurer....................... 28,999(2) 0.42
D&N Financial Corporation and D&N Bank
Alfred J. Sliwinski, Executive Vice President/
Community Banking........................................... 45,384(2)(4) 0.66
D&N Bank
All directors and executive officers as a group (16 711,440(6) 9.91
persons)(5).................................................
- ---------------
(1) The above information regarding beneficial ownership by Value Partners, Ltd.
("VP") is as reported by them as of December 30, 1993 in a Schedule 13-D
dated January 7, 1994 under the Securities Exchange Act of 1934. VP reported
sole voting and sole dispositive power as to 403,720 shares (including
currently exercisable warrants without voting power for 74,780 shares) and
shared voting and shared dispositive power as to no shares. VP is a limited
partnership whose principal business is that of a private investment
partnership, along with Fisher Ewing Partners ("FEP"), a general partnership
and the general partner of VP. Richard W. Fisher and Timothy G. Ewing are
the general partners of FEP and Mr. Fisher is the Managing General Partner
of FEP. FEP and Messrs. Ewing and Fisher also may be deemed to possess sole
voting and sole dispositive power as to the 403,720 shares beneficially
owned by VP.
(2) Includes for Messrs. Butvilas, Giever, Janson and Sliwinski, respectively,
175,444, 9,926, 23,256 and 36,888 shares subject to options granted under
D&N's Amended and Restated Stock Option and Incentive Plan (the "Stock
Option Plan") that are exercisable within 60 days of March 11, 1996 and for
Mr. Butvilas, 60 warrants that are currently exercisable.
(3) During the fiscal year ending December 31, 1995, Mr. Giever ceased being an
executive officer of the Bank.
(4) Mr. Sliwinski has disclaimed beneficial ownership over 183 shares of D&N
Common Stock.
(5) Includes directors and executive officers of the Corporation and the Bank as
of March 11, 1996.
(6) In addition to shares held directly, this amount includes restricted stock
and 334,678 shares subject to options exercisable within 60 days of March
11, 1996 granted under the Corporation's stock option plans and 37,987
warrants which are currently exercisable. Also included are shares allocated
under the D&N Bank 401(k) Plan, shares held in retirement accounts or by
certain family members, over which shares the respective directors and
officers may be deemed to have shared voting and investment powers. However,
1,853 of these shares have been disclaimed for such purposes.
2
5
PROPOSAL I -- ELECTION OF DIRECTORS
Approximately one-third of the Corporation's Board of Directors is elected
annually.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF THE
THREE NOMINEES PROPOSED BY YOUR BOARD OF DIRECTORS.
INFORMATION REGARDING DIRECTORS
Since the April 25, 1995 Annual Meeting of Stockholders, the number of
directors was increased from 7 to 8 pursuant to action taken at the September
25, 1995 Board of Directors meeting, and B. Thomas M. Smith, Jr. was appointed
to fill the vacancy until the Meeting. In addition, on January 22, 1996 the
Board of Directors of the Corporation increased the number of directors from 8
to 9 effective with the Corporation's merger with Macomb Federal Savings Bank
which is expected to be effective during the first half of 1996.
The table below sets forth certain information regarding the composition
of the Corporation's Board of Directors, including terms of office. It is
intended that the proxies solicited on behalf of the Board of Directors (other
than proxies in which the vote is withheld as to one or more nominees) will be
voted at the Meeting for the election of the nominees listed below. If any
nominee is unable to serve, the shares represented by all valid proxies will be
voted for the election of such substitute as the Board of Directors may
recommend. At this time, the Board of Directors knows of no reason why any of
the nominees might be unable to serve if elected. There are no arrangements or
understandings between any nominee and any other person pursuant to which such
nominee was selected. Except for Messrs. Smith and Butvilas who beneficially own
approximately 3.46% and 2.77%, respectively, of the outstanding shares of the
Corporation's Common Stock including warrants and options exercisable within 60
days of March 11, 1996, no director of the Corporation owned in excess of one
percent of the total outstanding shares of the Corporation's Common Stock at
March 11, 1996.
DIRECTOR OF SHARES OF COMMON
POSITIONS HELD CORPORATION TERM STOCK/WARRANTS
IN THE CORPORATION OR BANK TO BENEFICIALLY OWNED AS OF
NAME AGE AND THE BANK SINCE EXPIRE MARCH 11, 1996(1)
- ---------------------------- --- --------------------------- ----------- ------ ------------------------
NOMINEES
George J. Butvilas.......... 50 Director, President and 1990 1999 193,448(2)/60
Chief Executive Officer of
the Corporation and the
Bank
B. Thomas M. Smith, Jr. .... 61 Director of the Corporation 1995 1999 203,341/33,122
and the Bank
Thomas J. St. Dennis ....... 40 Director of the Corporation 1991 1999 7,741(2)/289
and the Bank
DIRECTORS CONTINUING IN OFFICE
Joseph C. Bromley........... 67 Director of the Corporation 1980 1997 9,015/825
and the Bank
Sharon A. Reese Dalenberg... 51 Director of the Corporation 1994 1997(3) 1,623/0
and the Bank
Peter Van Pelt.............. 63 Director of the Corporation 1988 1997 9,094(2)/402
and the Bank
Randolph P. Piper........... 47 Director of the Corporation 1982 1998 18,011(2)(4)/1,489
and the Bank
Kenneth D. Seaton........... 66 Director and Chairman of 1964 1998 48,804(2)/1,800
the Board of the
Corporation and the Bank
3
6
- ---------------
(1) Includes shares held directly, as well as restricted stock and shares
subject to options exercisable within 60 days of March 11, 1996 granted
under the Corporation's stock option plans, warrants which are currently
exercisable, shares allocated under the D&N Bank 401(k) Plan and shares held
in retirement accounts or by certain members of the named individuals'
families. To the extent that restricted stock is held pursuant to the Tandem
Restricted Stock/Stock Option Program under the Stock Option Plan, these
shares are included in this total and the related tandem options are not so
included.
(2) Includes shares subject to options which are exercisable within 60 days of
March 11, 1996: George J. Butvilas, 175,444; Randolph P. Piper, 4,000;
Kenneth D. Seaton, 3,775; Thomas J. St. Dennis, 4,000; and Peter Van Pelt,
4,000.
(3) The Office of Thrift Supervision ("OTS") extended an exemption from the
Depository Institution Management Interlocks Act until July 26, 1997.
(4) 1,670 of these shares have been disclaimed for beneficial ownership
purposes.
The business experience of each of the directors during the last five
years is as follows:
George J. Butvilas. Mr. Butvilas joined D&N as President in May 1990. He
was named Chief Executive Officer of the Bank in 1991 and Chief Executive
Officer of the Corporation in 1992. Prior to joining D&N, he had over 16 years
experience as a commercial and community banker, most recently as Executive Vice
President and Director of Boulevard Bancorp, Inc. of Chicago, Illinois.
B. Thomas M. Smith, Jr. Mr. Smith has been a consultant for ITT
Corporation, a multi-national conglomerate headquartered in New York, since
January 1996. Prior to that, he served as Vice President and Director of
Corporate Purchasing for ITT.
Thomas J. St. Dennis. Mr. St. Dennis is an attorney and President of St.
Dennis Development, Inc., a home building and land development corporation. He
also holds a real estate broker's license and is managing officer of Independent
Realty Group. Mr. St. Dennis was General Counsel, Chief Operating Officer and
Secretary of de novo chartered Sterling Savings Bank, FSB (now known as Sterling
Bank and Trust) in Southfield, Michigan from 1984 to 1990.
Joseph C. Bromley. Mr. Bromley has been associated with Churchill
Transportation, Inc. of Detroit, Michigan, a 48-state truck load carrier, since
October 1990 and presently serves as its Executive Vice President and Treasurer.
Prior to that, he had been Director, President, Chief Executive Officer and
majority stockholder of Regency Motor Freight, Inc. in Detroit, Michigan, a
common carrier trucking firm. Mr. Bromley was a Director of First Farmington
Savings and Loan Association from 1959 until its merger with the Bank in 1980.
Sharon A. Reese Dalenberg ("Ms. Reese"). Ms. Reese is founder and has been
President of The Astor Group of Chicago, Illinois since 1978, which is a
management consulting firm specializing in all aspects of human resource
training and management development with Fortune Five Hundred and Fifty firms.
Ms. Reese is President and CEO of Continental Courier, Inc., a courier service
provider in the Chicago metropolitan area. She also serves as a member of the
Board of Directors for Standard Federal Bank in Chicago, Illinois.
Peter Van Pelt. Mr. Van Pelt has served as the manager of North Wind Books
(and its predecessor business, The Museum Shop) of Eagle Harbor, Michigan since
January 1994. In addition, he has been an independent management consultant
since August 1990. He also served as President of Runzheimer International of
Rochester, Wisconsin, a specialized management consulting firm.
Randolph P. Piper. Mr. Piper has been an attorney-at-law in Flint,
Michigan for over 22 years. He was a Director of First Federal Savings and Loan
Association of Flint from 1979 until its merger with the Bank in 1982.
Kenneth D. Seaton. Mr. Seaton has been Chairman of the Board of the
Corporation since its formation in 1988 and served as its Chief Executive
Officer from 1988 to 1992. He was Chief Executive Officer of the Bank from 1968
to 1991. He joined the Bank in 1957 and had been an executive officer since
1962.
4
7
BOARD OF DIRECTORS MEETINGS, COMPENSATION AND COMMITTEES
The Board conducts its business through meetings of the Board and through
the activities of its committees. The Board of Directors of the Corporation held
11 meetings during 1995. No incumbent director of the Corporation attended fewer
than 95% of the total meetings of the Board of Directors and committees on which
such director served during this period. The Corporation has standing Audit,
Compensation, Stock Option and Executive Committees.
The Corporation has no standing nominating committee. The full Board of
Directors acts as a nominating committee for the annual selection of its
nominees for election as directors. During fiscal year 1995, the Board of
Directors acting as a nominating committee met two times. While the Board of
Directors will consider nominees recommended by stockholders, it has neither
actively solicited nominations nor established any procedures for this purpose
outside of the requirements of the Bylaws of the Corporation.
The Bank, as the principal subsidiary of the Corporation, has certain
standing committees of its Board of Directors. These committees consist of the
Asset/Liability, Audit, Community Responsibility, Compensation, Executive and
Loan Committees. The Bank's Board of Directors is comprised of the same
individuals who currently serve on the Board of Directors of the Corporation.
During fiscal year 1995, the Board of Directors of the Bank held 11 meetings. No
incumbent director of the Bank attended fewer than 91% of the total meetings of
the Board of Directors and committees on which such director served during this
period.
During fiscal year 1995, directors received $8,500 per annum, payable
monthly; the chairpersons of the Board's Asset/Liability, Audit, Community
Responsibility, Compensation and Loan Committees received additional
compensation of $50 per month; and the Chairman of the Board received additional
compensation of $750 per month. In addition, directors received a fee of $325
per day for attendance at meetings of the Board of Directors and a fee of $325
for attendance at Board committee meetings. These are the total fees paid for
representation on both the Corporation and the Bank Boards of Directors and are
allocated pursuant to a cost allocation agreement between the Corporation and
the Bank. A separate attendance fee is not received for a Corporation Board or
committee meeting if a fee is received for a meeting of the Bank Board or
parallel Bank committee held on the same day. Directors who are full-time
employees of the Corporation or the Bank did not receive the Board meeting or
committee meeting attendance fees. In January 1995, three non-employee directors
who were not members of the Stock Option Committee were each granted 12,000
non-qualified stock options pursuant to the 1994 Management Stock Incentive Plan
with an exercise price equal to the fair market value of D&N Common Stock on the
date of grant. Effective January 1, 1996, the Board meeting and committee
meeting attendance fees were increased from $325 to $400.
Set forth below is a list of the principal committees formed by the Board
of Directors of the Corporation and the Bank and members of those committees.
Asset/Liability Committee. The Asset/Liability Committee is responsible
for monitoring the Bank's exposure to interest rate risk in conjunction with
credit, operational and liquidity risks as they affect net interest income,
capital and return on equity and other aspects of asset/liability management.
Directors St. Dennis, Piper, Smith and Van Pelt currently compose the
Asset/Liability Committee. This committee met four times during fiscal year
1995.
Audit Committee. The Audit Committee meets with the Corporation's
independent auditors and oversees the internal audit functions of the
Corporation and the Bank. The Audit Committee currently is composed of Directors
Piper, Reese, Smith and Van Pelt. The Corporation Audit Committee met four times
and the Bank Audit Committee met four times during fiscal year 1995.
Community Responsibility Committee. The Community Responsibility Committee
is responsible for ensuring that an affirmative effort is made by the Bank to
meet the banking and financial needs within its communities, with an
understanding of cultural diversity. The Community Responsibility Committee
currently is composed of Directors Reese, Piper, Smith and Van Pelt. The
Community Responsibility Committee met four times during fiscal year 1995.
5
8
Compensation Committee. The Compensation Committee is responsible for
reviewing and recommending to the Board of Directors senior officers' salaries,
other compensation and benefit programs and other aspects of personnel matters.
Directors Bromley, Reese and Van Pelt currently compose the Compensation
Committee. The Corporation Compensation Committee met four times and the Bank
Compensation Committee met four times during fiscal year 1995.
Executive Committee. The Executive Committee is authorized to exercise all
of the authority of the Board of Directors in the management of the Corporation
and the Bank between Board meetings, unless otherwise provided for in the Bylaws
of such entities. The Executive Committee currently is composed of Directors
Butvilas, Bromley, Seaton and St. Dennis. The Executive Committee did not meet
during fiscal year 1995.
Loan Committee. The Loan Committee is responsible for monitoring the
credit risk and other aspects of the Bank's lending operations. Members of the
committee currently are Directors St. Dennis, Piper and Seaton. This committee
met eleven times during fiscal year 1995.
Stock Option Committee. The Stock Option Committee is responsible for
administering the Corporation's stock option plans. Current members of the
committee are Directors Bromley and Reese. This committee met two times during
fiscal year 1995.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the compensation
paid or granted to the Corporation's Chief Executive Officer and to each of the
most highly compensated other executive officers of the Corporation and the Bank
whose aggregate cash compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
-----------------------------------
AWARDS
------------------------
ANNUAL COMPENSATION SECURITIES PAYOUTS
------------------------------------ RESTRICTED UNDERLYING -------
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- ---------------------------- ---- -------- ------ ------------ ---------- ---------- ------- ------------
George J. Butvilas.......... 1995 $248,500(1) 0 0 0 0 0 $ 5,270(3)
President and Chief 1994 207,544(1) 0 0 0 0 0 5,208(3)
Executive Officer 1993 207,544(1) 0 0 0 78,444 0 4,878(3)
Alan R. Giever(2)........... 1995 $125,057 $7,600 0 0 0 0 $ 14,798(3)
Executive VP and Chief 1994 122,008 0 0 0 0 0 3,984(3)
Lending Officer 1993 122,008 0 0 0 21,835 0 1,626(3)
Kenneth R. Janson........... 1995 $106,968 $6,800 0 0 0 0 $ 3,568(3)
Executive VP, Chief
Financial 1994 100,000 0 0 0 0 0 3,352(3)
Officer and Treasurer 1993 101,383 0 0 0 10,756 0 2,839(3)
Alfred J. Sliwinski......... 1995 $ 95,559 $5,000 0 0 0 0 $ 3,190(3)
Executive VP/Community 1994 86,029 0 0 0 0 0 2,953(3)
Banking 1993 86,029 0 0 0 0 0 2,609(3)
- ---------------
(1) Includes annual fees received as a director; no meeting or committee fees
were received.
(2) Prior to the end of fiscal 1995, Mr. Giever ceased being an executive
officer of the Bank
6
9
(3) Represents employer matching contribution under the D&N Bank 401(k) Plan
("401(k)"), life insurance premiums ("Life Ins.") paid by the Corporation
and lump sum earned vacation pay for Mr. Giever ("Vacation") as follows:
YEAR 401(K) LIFE INS. VACATION
---- ------ --------- --------
Butvilas....................................... 1995 $4,620 $ 650 $ 0
1994 4,619 589 0
1993 4,386 492 0
Giever......................................... 1995 $3,751 $ 365 $ 10,682
1994 3,660 324 0
1993 1,361 265 0
Janson......................................... 1995 $3,208 $ 360 $ 0
1994 2,999 353 0
1993 2,542 297 0
Sliwinski...................................... 1995 $2,866 $ 324 $ 0
1994 2,647 306 0
1993 2,318 291 0
The following table sets forth certain information concerning the number
and value of stock options and SARs at December 31, 1995 held by the named
executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END(#) FY-END($)
SHARES ACQUIRED ---------------------------- ----------------------------
NAME ON EXERCISE(#) VALUE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- --------------- ------------------ ----------- ------------- ----------- -------------
Butvilas............ 0 N/A 175,444 0 $ 600,914 $ 0
Giever.............. 15,000 $113,437 33,835 0 $ 147,413 $ 0
Janson.............. 800 $ 4,700 23,256 0 $ 99,635 $ 0
Sliwinski........... 2,000 $ 12,000 36,888 0 $ 158,235 $ 0
EMPLOYMENT CONTRACTS
The Bank has an employment contract with the President and Chief Executive
Officer of the Bank and the Corporation, Mr. Butvilas, which expires in May
1998.
The employment contract provides for a salary as determined by the Board
of Directors. Salary increases may be reviewed at least annually and are subject
to the sole discretion of the Board of Directors, except that any new salary
must not be less than the employee's prior year's salary. The contract also
provides for, among other things, participation in an equitable manner in
employee benefits applicable to executive personnel.
This contract provides for termination upon the employee's death, for
cause or in certain events as specified by OTS regulations. The contract is
terminable by Mr. Butvilas upon 90 days notice to the Bank. Mr. Butvilas'
contract also provides for a severance payment up to the remaining amount under
his contract term with a minimum payment of 200% of his annual salary in the
event of an involuntary termination or other specified circumstances in
connection with a change of control or within one year thereafter, provided that
the employee is not thereafter employed by the purchasing entity. Change of
control means the acquisition of 25% or more of voting securities of the Bank or
the Corporation by any person or persons acting as a group within the meaning of
Section 13(d) of the Securities Exchange Act of 1934.
7
10
PENSION PLAN
The Bank's employees are included in a pension plan. Separate actuarial
valuations are not made for individual members of the plan. The
non-contributory, defined benefit retirement plan covers substantially all
employees and provides for monthly retirement benefits based on the employee's
base compensation and years of service. Pension costs and funding include normal
costs and amortization of unfunded prior service costs over periods as
prescribed by federal law. During fiscal year 1995, the Plan was overfunded,
resulting in no required contributions. The Bank terminated the pension plan on
September 15, 1995 subject to regulatory approval.
The table below illustrates estimated annual normal retirement benefits
payable upon retirement, based upon various levels of compensation and years of
service at normal retirement date and assuming payment in the form of a straight
line annuity.
PENSION PLAN TABLE (1)(2)
YEARS OF SERVICE
---------------------------------------------------------------------------
REMUNERATION(3) 15 20 25 30 35(4)
- -------------------------- ------- ------- ------- ------- -------
$125,000.................. $33,900 $45,200 $56,500 $67,800 $67,800
150,000(5)............... 41,400 55,200 69,000 82,800 82,800
175,000.................. 41,400 55,200 69,000 82,800 82,800
200,000.................. 41,400 55,200 69,000 82,800 82,800
225,000.................. 41,400 55,200 69,000 82,800 82,800
250,000.................. 41,400 55,200 69,000 82,800 82,800
300,000.................. 41,400 55,200 69,000 82,800 82,800
400,000.................. 41,400 55,200 69,000 82,800 82,800
450,000.................. 41,400 55,200 69,000 82,800 82,800
500,000.................. 41,400 55,200 69,000 82,800 82,800
- ---------------
(1) Payable in the normal form of payment which is a life annuity (joint and
66 2/3% to surviving spouse). For 1996, the maximum annual Social Security
amount is $15,016. The formula under the plan is offset for Social Security.
As a result, the above table reflects this offset.
(2) Maximum annual normal retirement benefit (TEFRA limitation of $120,000 in
1996).
(3) Compensation shall mean the remuneration paid to an employee by the employer
for services rendered to the employer during a Plan Year in which he/she was
an active participant.
(4) Maximum normal retirement benefit is earned after 30 years of service.
(5) Maximum compensation for normal retirement benefit calculations is $150,000.
Messrs. Butvilas, Giever, Janson and Sliwinski have approximately 5 years,
4 years, 7 years and 18 years, respectively, of benefit service under the
pension plan as of January 1, 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") is composed of three
non-employee directors. The Committee is responsible for overseeing all
compensation policies of the Corporation and the Bank (the "Company"), and
recommending to the full Board of Directors actions governing executive officer
salaries, and annual and long-term incentive plans. Described below is an
accounting of those actions taken by the Committee regarding executive officer
and CEO compensation in 1995.
8
11
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
As in prior years, the Committee's principal philosophy is to integrate
compensation consideration with the execution of the Company's strategic plan,
to ensure Company performance results and stockholder return. This is
accomplished by providing both short-term and long-term incentives that reward
achievement of the Company's performance goals and business plans. Assessments
of both individual and corporate performance are made within a framework, where
the executive shares compensation risk and reward, relative to results achieved.
It is also the objective of the Committee, in its compensation policies,
to attract and recruit quality professional talent, encourage stock ownership by
senior management in the Company, and ensure that executive compensation is
competitive to industry peer institutions. The Committee continues to use
independent compensation survey information from national and regional financial
research organizations that report compensation practices and salary levels for
various executive positions at comparable size financial institutions. It is the
Committee's philosophy to provide executive base compensation that is
competitive to other regional financial institutions' median base salary levels.
During 1995, the executive officers met their short-term stock ownership
targets, and were on track to achieving their longer-term target of stock
ownership equivalent to 100% of annual salary.
During 1995, the Committee recommended, and the Board adopted, an annual
incentive plan and a long-term incentive formula, which is administered under
the stockholder-approved 1994 Management Stock Incentive Plan. Both the annual
and long-term incentives are directed toward the achievement of the Company's
annual earnings goal. Additionally, the short-term plan incorporates
consideration of several financial and individual performance measures that are
integral to the Company's strategic business plan. As designed, both plans
reinforce a direct relationship between compensation and return to the
stockholders.
ANNUAL INCENTIVE AWARDS
Short-term cash awards are made to the executive officers based upon the
achievement of both corporate and individual performance measures. All executive
officers share the same corporate goals, which are based on earnings. Each
executive officer has different individual performance targets and weighting
factors between corporate, financial and individual goals. The corporate
performance level is determined by actual percent of goal achievement in excess
of 100%. Failure to reach 100% corporate performance results in no incentive
being paid, despite the achievement of the individual performance goals. To
encourage progressive results in excess of performance goals, no performance
ceilings are established but payment amounts are subject to a maximum percent of
salary target.
LONG-TERM INCENTIVE AWARDS
Long-term stock option awards under the control of the
stockholder-approved 1994 Management Stock Incentive Plan are designed to
increase long-term stockholder value. The plan has a formula with respective
target stock option award levels, based upon average percentages of compensation
paid to banking executives at financial institutions of similar size as D&N.
Award payouts are subject to the achievement of Return on Average Assets and
Return on Average Equity targets each year as delineated in the Company's
business plan. Minimum key ratios including tangible capital, loan loss
reserve/total loans, and non-performing assets/tangible capital and loan loss
reserve must also be met for an award payout. Options are granted at the fair
market value of D&N Common Stock on the date of grant and no earlier than ninety
days following the end of the fiscal year. One third of the options are
exercisable immediately, with one third each vesting on the first and second
anniversaries of the grant date.
CEO COMPENSATION DISCUSSION
The basis for the Committee's determination of Mr. Butvilas' compensation
in 1995 included his continued effectiveness in leading the Company to a higher
level of profitability. Mr. Butvilas' base salary was adjusted to bring his
salary more in line with the competitive market rate for his position, and to
retain his
9
12
leadership with the Company. The Committee's principal consideration in
evaluating Mr. Butvilas' performance in 1995 was his ability to achieve the core
profitability goals of the Company. Mr. Butvilas has continued to lead the
Company in improved ROAA and ROAE performance as evident by the five-year
Performance Chart on page 12. Mr. Butvilas' 1995 performance further resulted in
expansion by the Company into new and lucrative markets, and the reduction of
non-performing assets. In 1995 the Committee recommended the adoption of a
non-qualified supplemental retirement plan for Mr. Butvilas, to compensate him
for benefits lost as a result of monetary ceilings applicable to the 401(k)
Plan. In 1995 the Committee also executed a new three year employment contract
with Mr. Butvilas to secure his continuance with the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In accordance with Item 404 of SEC Regulation S-K, no interlock
relationships existed by the Committee members. Furthermore, no member of the
Committee is a former or current officer or employee of the Corporation or any
of its subsidiaries.
The foregoing report has been furnished by the Compensation Committee of
the Board of Directors.
Joseph C. Bromley, Chairman
Sharon A. Reese Dalenberg
Peter Van Pelt
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Corporation's Common Stock
against the cumulative total return of Media General's Composite S&L Index ("MG
Group Index") and the NASDAQ Market Index for the period of five years
commencing January 1, 1991 and ending December 31, 1995.
10
13
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURN AMONG D&N FINANCIAL CORP.,
NASDAQ MARKET INDEX AND MG GROUP INDEX
MEASUREMENT PERIOD D&N FI- MG GROUP NASDAQ MARKET
(FISCAL YEAR COVERED) NANCIAL CORP. INDEX INDEX
1990 100 100 100
1991 186.36 161.52 128.38
1992 300.00 214.43 129.64
1993 281.82 265.89 155.50
1994 272.73 254.68 163.26
1995 440.91 403.39 211.77
ASSUMES $100 INVESTED ON JANUARY 1, 1991
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING DECEMBER 31
CERTAIN TRANSACTIONS
The Corporation, through the Bank, has followed a policy of granting to
its executive officers, directors and principal stockholders consumer loans as
well as mortgage loans for purposes of purchasing or repairing their residences.
These loans are made on the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with nonaffiliated
persons. It is the belief of management that these loans neither involve more
than the normal risk of collectability nor present other unfavorable features.
All loans by the Bank to its directors and executive officers are subject
to OTS regulations restricting loans and other transactions with affiliated
persons of the Bank. The Financial Institutions Reform, Recovery and Enforcement
Act of 1989 prohibits a savings association from making loans to its directors
and executive officers at favorable rates or on terms not comparable to those
available to the general public. As a result, there were no loans outstanding at
December 31, 1995 to any directors or executive officers of the Corporation or
the Bank that were made at preferential rates or terms.
11
14
PROPOSAL II -- APPROVAL OF AMENDMENT TO
D&N'S CERTIFICATE OF INCORPORATION
D&N is currently authorized to issue 10,000,000 shares of D&N Common
Stock. As of March 11, 1996, 6,830,463 shares of D&N Common Stock were issued
and outstanding. On that date, 998,952 shares were reserved for issuance in
connection with the exercise of outstanding warrants and 1,309,000 shares were
reserved for issuance pursuant to D&N's stock option plans. In addition, the
Corporation has reserved 765,000 shares for issuance to Macomb Federal Savings
Bank's stockholders pursuant to a merger agreement. After the issuance of
additional shares pursuant to the exercise of stock options and warrants and the
exchange of shares pursuant to the Macomb merger agreement, D&N would have
approximately 96,600 authorized shares of Common Stock left for issuance in the
future. As a result, the D&N Board of Directors has unanimously approved the
proposed amendment to increase the number of authorized shares of D&N Common
Stock from 10,000,000 to 25,000,000.
The D&N Board believes that the authorization of additional shares of D&N
Common Stock is advisable to provide D&N with the flexibility to take advantage
of opportunities to issue such stock in order to obtain capital, as
consideration for possible acquisitions or for other purposes including, without
limitation, stock splits and stock dividends in appropriate circumstances. There
are, at present, no plans, understandings, agreements or arrangements other than
as discussed above concerning the issuance of additional shares of D&N Common
Stock.
Uncommitted authorized but unissued shares of D&N Common Stock may be
issued from time to time to such persons and for such consideration as the D&N
Board may determine, and holders of the then outstanding shares of D&N Common
Stock may or may not be given the opportunity to vote thereon, depending upon
the nature of any such transactions, applicable law, the rules and policies of
the NASDAQ Stock Market and the judgment of the D&N Board regarding the
submission of such issuance to a vote of the D&N stockholders. D&N stockholders
have no preemptive rights to subscribe for newly issued shares.
Moreover, it is possible that additional shares of D&N Common Stock would
be issued for the purpose of making an acquisition by an unwanted suitor of a
controlling interest in D&N more difficult, time-consuming or costly or to
otherwise discourage an attempt to acquire control of D&N. Under such
circumstances, the availability of authorized and unissued shares of D&N Common
Stock may make it more difficult for stockholders to obtain a premium for their
shares. Such authorized and unissued shares could be used to create voting or
other impediments or to frustrate a person seeking to obtain control of D&N by
means of a merger, tender offer, proxy contest or other means. Such shares could
be privately placed with purchasers who might cooperate with the D&N Board in
opposing such an attempt by a third party to gain control of D&N or could also
be used to dilute ownership of a person or entity seeking to obtain control of
D&N. Although D&N does not currently contemplate taking such action, shares of
D&N Common Stock could be issued for the purposes and effects described above
and the D&N Board reserves its rights (if consistent with its fiduciary
responsibilities) to issue such stock for such purposes.
The D&N Board believes that the proposed increase in the number of
authorized shares of D&N Common Stock will provide the flexibility needed to
meet corporate objectives and is in the best interests of D&N and its
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF D&N COMMON STOCK TO 25,000,000.
12
15
PROPOSAL III -- RATIFICATION OF APPOINTMENT OF AUDITORS
The Corporation's independent auditors are Coopers & Lybrand L.L.P.,
certified public accountants. At the Meeting, the stockholders will consider and
vote on the ratification of the appointment of independent auditors for the
Corporation's fiscal year ending December 31, 1996. The Board of Directors has
engaged Coopers & Lybrand L.L.P. to be its auditors subject to ratification by
the Corporation's stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS THE CORPORATION'S
AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1996.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Corporation's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at D&N's main office, 400 Quincy Street,
Hancock, Michigan 49930, no later than November 28, 1996. Any such proposal
shall be subject to the requirements of the proxy rules adopted under the
Securities Exchange Act of 1934, as amended.
SOLICITATION OF PROXIES
The cost of solicitation of the proxies will be borne by the Corporation.
The Corporation has retained the services of Regan & Associates, Inc., a
professional proxy solicitation firm, to assist in the solicitation of proxies.
Such firm will receive a fee of approximately $3,000 for such services plus
reimbursement for reasonable out-of-pocket expenses. Under certain
circumstances, additional fees may be paid to Regan & Associates, Inc. In
addition to solicitations by mail, the directors and certain officers and
regular employees of the Corporation and Bank may solicit proxies personally
and/or by use of telecommunications equipment, without additional compensation.
The Corporation will reimburse brokerage firms and other custodians, nominees
and fiduciaries for reasonable expenses incurred by them in sending proxy
materials to and obtaining proxy materials from the beneficial owners of Common
Stock.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in this Proxy Statement. However,
if any other matters should properly come before the Meeting, it is intended
that holders of the proxies will act in accordance with their best judgment and
vote the proxies to the extent permitted by law.
By Order of the Board of Directors
LINDA K KORPELA
LINDA K. KORPELA
Corporate Secretary
Hancock, Michigan
March 22, 1996
13
16
The Directors and Officers of
[D&N LOGO]
cordially invite you to attend our
1996 Annual Meeting of Stockholders
Tuesday, April 23, 1996, 2:00 p.m.
Franklin Square Inn
820 Shelden Avenue
Houghton, Michigan
IMPORTANT
Please complete both sides of the PROXY CARD, sign, date,
detach and return in the enclosed envelope.
DETACH ATTENDANCE CARD HERE
DETACH PROXY CARD HERE AND MAIL WITH PROXY CARD
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IF NOT OTHERWISE SPECIFIED
ON THE REVERSE SIDE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES LISTED AND FOR PROPOSALS
II AND III. THE UNDERSIGNED REVOKES ALL PROXIES HERETOFORE GIVEN TO VOTE AT SUCH MEETING
AND ALL ADJOURNMENTS OR POSTPONEMENTS.
Dated:
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
(Please sign here)
Please sign your name as it appears above. If executed by a corporation, a duly authorized officer
should sign. Executors, administrators, attorneys, guardians and trustees should so indicate when signing. If
shares are held jointly, at least one holder must sign.
D&N FINANCIAL
CORPORATION
If you plan to personally attend the
Annual Meeting of Stockholders, please
check the box below and list names of
attendees on reverse side.
Return this stub in the enclosed
envelope with your completed proxy card.
I/We do plan to attend
the 1996 Meeting. / /
17
NAMES OF PERSONS ATTENDING
---------------------------
---------------------------
---------------------------
---------------------------
REVOCABLE PROXY D&N FINANCIAL
CORPORATION
The Stockholder whose signature appears hereon
appoints the Board of Directors of D&N
Financial Corporation (the "Corporation") with
full powers of substitution, to act as
attorneys and proxies for the undersigned to
vote all shares of Common Stock of the
Corporation which the undersigned is entitled
to vote at the Annual Meeting of Stockholders
to be held at the Franklin Square Inn located
at 820 Shelden Avenue, Houghton, Michigan, on
Tuesday, April 23, 1996, at 2:00 p.m. (Eastern
Daylight Time) and at any and all adjournments
or postponements thereof, with all the powers
the Stockholder would possess if personally
present, upon the proposals set forth below
and, in their discretion, upon any other
business that may properly come before said
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL
NOMINEES LISTED BELOW AND FOR PROPOSALS
II AND III.
I. Election of Directors: George J. Butvilas FOR WITHHELD
B. Thomas M. Smith, Jr.
Thomas J. St. Dennis --------- ------------
--------- ------------
--------- ------------
II. Approval of the proposal to amend the
Certificate of Incorporation to increase the
number of authorized shares of D&N Common
Stock to 25,000,000.
FOR AGAINST ABSTAIN
----------------------------------- ----------------------------------- --------------------------------
III. Ratification of the appointment of Coopers &
Lybrand L.L.P. as independent auditors for
the Corporation for the fiscal year ending
December 31, 1996.
FOR AGAINST ABSTAIN
----------------------------------- ----------------------------------- --------------------------------
(Continued and to be signed on other side)