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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 [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 Rule 14a-11(c) or Rule 14a-12
FLAGSTAR BANCORP
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(Name of Registrant as Specified in Its Charter)
FLAGSTAR BANCORP
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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.
[ ] 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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FLAGSTAR BANCORP LOGO
April 1, 1999
Dear Stockholder:
We invite you to attend the Annual Meeting of Stockholders of Flagstar
Bancorp, Inc. to be held at the national headquarters of Flagstar Bank, FSB,
2600 Telegraph Road, Bloomfield Hills, Michigan on May 10, 1999 at 1:00 p.m.,
local time.
The Annual Meeting has been called for the election of directors, the
amendment of the Company's 1997 Employees and Director's Stock Option Plan, and
the conduct of incidental matters. Enclosed is a proxy statement, a proxy card
and the Annual Report to Stockholders for 1998. Directors and officers of the
Company as well as representatives of Grant Thornton LLP, the Company's
independent auditors for 1998, will be present to respond to any questions the
stockholders may have.
Your vote is important regardless of the number of shares you own. On
behalf of the Board of Directors, we urge you to sign, date and return the
enclosed proxy as soon as possible, even if you currently plan to attend the
Annual Meeting. This will not prevent you from voting in person, but will assure
that your vote is counted if you are unable to attend the Annual Meeting.
Thank you for your cooperation and continuing support.
Sincerely,
/s/ THOMAS J. HAMMOND
Thomas J. Hammond
Chairman of the Board
and Chief Executive Officer
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FLAGSTAR BANCORP, INC.
2600 TELEGRAPH ROAD
BLOOMFIELD HILLS, MI 48302
(248) 338-7700
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 10, 1999
NOTICE IS HEREBY GIVEN that the 1998 annual meeting of stockholders (the
"Annual Meeting") of Flagstar Bancorp, Inc. (the "Company") will be held on
Monday, May 10, 1999 at 1:00 p.m., local time, at the national headquarters of
Flagstar Bank, FSB, 2600 Telegraph Road, Bloomfield Hills, Michigan.
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon the
following matters:
1. to re-elect three directors to the Board of Directors to hold office for
a period of three years or until their successors shall have duly
elected and qualified; and
2. to approve the amendment to the 1997 Employees and Director's Stock
Option Plan ("Option Plan") which will reserve an additional 683,500
shares of common stock; and
3. to transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Annual Meeting.
Any action may be taken on any one of the foregoing proposals at the Annual
Meeting on the date specified above or on any date or dates to which, by
original or later adjournments, the Annual Meeting may be adjourned.
Stockholders of record at the close of business on March 17, 1999 will be
entitled to vote at the Annual Meeting and any adjournments thereof.
You are requested to fill in and sign the enclosed form of proxy which is
solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and choose to vote in person
at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ MARY KAY MCGUIRE
Mary Kay McGuire
Secretary
Bloomfield Hills, Michigan
April 1, 1999
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE, AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
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PROXY STATEMENT
OF
FLAGSTAR BANCORP, INC.
2600 TELEGRAPH ROAD
BLOOMFIELD HILLS, MI 48302
(248) 338-7700
-------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 1999
GENERAL
This Proxy Statement is furnished to stockholders of Flagstar Bancorp, Inc.
(the "Company") in connection with the solicitation of proxies by the Company's
Board of Directors to be used at the 1999 annual meeting of stockholders of the
Company (the "Annual Meeting"), to be held on Monday, May 10, 1999 at 1:00 p.m.,
local time, at the national headquarters of Flagstar Bank, FSB (the "Bank"),
2600 Telegraph Road, Bloomfield Hills, Michigan. The accompanying Notice of
Annual Meeting and form of proxy and this Proxy Statement are being first mailed
to stockholders on or about April 1, 1998.
VOTING AND REVOCABILITY OF PROXIES
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
EXECUTED BUT UNMARKED PROXIES WILL BE VOTED FOR ELECTION OF THE THREE NOMINEES
AS DIRECTORS OF THE COMPANY AND FOR THE AMENDMENT TO THE OPTION PLAN. The proxy
confers discretionary authority on the persons named therein to vote with
respect to the election of any person or a director where the nominee is unable
to serve or for good cause will not serve, with respect to matters incident to
the conduct of the Annual Meeting and with respect to any other matter presented
to the Meeting if notice of such matter has not been delivered to the Company in
accordance with the Company's Bylaws. If any other matters are properly brought
before the Annual Meeting, the persons named in the proxy will vote the shares
represented by such proxies on such matters as determined by a majority of the
Board of Directors. Except for procedural matters incident to the conduct of the
Annual Meeting, the Company does not know of any other matters that are to come
before the Annual Meeting. Proxies marked as abstentions and shares held in
street name which have been designated by brokers on proxies as not voted will
not be counted as votes cast. Such proxies will be counted for purposes of
determining a quorum at the Annual Meeting.
Stockholders who execute proxies may revoke them at any time prior to their
exercise by filing with the Secretary of the Company a written notice of
revocation, by delivering to the Company a duly executed proxy bearing a later
date, or by attending the Annual Meeting and voting in person. The mere presence
of a stockholder at the Annual Meeting will not, by itself, automatically revoke
such stockholder's proxy.
VOTING SECURITIES
The securities which can be voted at the Annual Meeting consist of shares
of common stock, par value $0.01 per share (the "Common Stock"), of the Company.
Each share entitles its owner to one vote on all matters. The close of business
on March 17, 1999 (the "Record Date") has been fixed by the Board of Directors
as the Record Date for determination of stockholders entitled to vote at the
Annual Meeting. The number of shares of Common Stock outstanding as of the
Record Date was 13,670,000.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Persons and groups beneficially owning more than 5% of the Common Stock are
generally required under federal securities laws to file certain reports with
the Securities and Exchange Commission ("SEC") detailing such ownership. The
following table sets forth, as of the Record Date, certain information as to the
Common Stock beneficially owned by any person or group of persons who is known
to the Company to be the beneficial owners of more than 5% of the Common Stock.
Other than as disclosed below, management knows of no person who beneficially
owned more than 5% of the Common Stock at the Record Date.
NAME OF AMOUNT AND NATURE OF PERCENT OF COMMON
OWNER OWNERSHIP(A) STOCK OUTSTANDING
------- -------------------- -----------------
Thomas J. Hammond(b)..................... 3,082,332 22.5%
Janet G. Hammond(c)...................... 962,913 7.0
Mark T. Hammond(d)....................... 968,955 7.1
Catherine H. Rondeau(e).................. 966,955 7.1
Carrie C. Langdon(f)..................... 966,955 7.1
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(a) Does not include stock owned by the respective stockholder's spouse, as to
which the respective person disclaims beneficial ownership.
(b) In January 1999, Mr. Thomas J. Hammond sold 1,225,000 shares in a public
offering. Does not include 962,913 shares of Common Stock owned by Janet G.
Hammond, Thomas J. Hammond's spouse, as to which he disclaims beneficial
ownership. Does not include 400,000 share of stock which is acquirable by
Mr. Hammond on May 5, 1999 in accordance with the Option Plan.
(c) Does not include 3,482,332 shares of Common Stock beneficially owned by
Thomas J. Hammond, Janet G. Hammond's spouse, as to which she disclaims
beneficial ownership.
(d) Does not include 16,866 shares of Common Stock beneficially owned by Kirstin
A. Hammond, Mark T. Hammond's spouse, as to which she disclaims beneficial
ownership. Does not include 250,000 share of stock which is acquirable by
Mr. Hammond on May 5, 1999 in accordance with the Option Plan. Mark T.
Hammond is the son of Thomas J. Hammond.
(e) Does not include 17,770 shares of Common Stock beneficially owned by Robert
O. Rondeau, Catherine H. Hammond's spouse, as to which she disclaims
beneficial ownership. Catherine H. Rondeau is the daughter of Thomas J.
Hammond.
(f) Carrie C. Langdon is the daughter of Thomas J. Hammond.
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The following table sets forth, as of the Record Date, certain information
known to the Company as to Common Stock beneficially owned by each director and
executive officer of the Company and the Bank and by all directors and executive
officers of the Company as a group.
NUMBER OF PERCENT
NAME AND POSITION SHARES(1) OF CLASS
----------------- --------- --------
Thomas J. Hammond, Chairman of the Board and Chief
Executive Officer of the Company and the Bank......... 3,482,332 23.1%
Mark T. Hammond, Vice Chairman of the Board and
President of the Company and the Bank................. 1,218,955 8.3%
C. Michael Kojaian, Director of the Company............. 76,000 .5
James D. Coleman, Director of the Company............... 71,500 .5
Michael W. Carrie, Director of the Company and Executive
Vice President and Chief Financial Officer of the
Company and the Bank.................................. 69,937 .5%
Joan H. Anderson, Director of the Company and Executive
Vice President of the Company and the Bank............ 45,250 .3
Mary Kay McGuire, Director of the Bank and Senior Vice
President and Secretary of the Company and the Bank... 40,623 .3
Robert O. Rondeau, Jr., Executive Vice President of the
Bank.................................................. 17,770 .1
Kirstin A. Hammond, Executive Vice President of the
Bank.................................................. 16,866 .1
Charles Bazzy, Director of the Bank..................... 16,100 .1
Ronald I. Nichols, Sr., Director of the Bank............ 10,000 .1
Harry S. Ellman, Director of the Bank................... 8,500 .1
William B. Bortels, Director of the Bank................ 5,800 *
John R. Kersten, Director of the Company................ 4,800 *
James D. Isbister, Director of the Company.............. 2,500 *
Richard S. Elsea, Director of the Company............... 1,000 *
Catherine H. Rondeau.................................... 966,955 6.6
Carrie C. Langdon....................................... 966,955 6.6
Janet H. Hammond........................................ 962,913 6.5
All directors, affiliates, and executive officers as a
group (19 persons).................................... 7,115,461 54.2%
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* Less than 0.1%
(1) Based on information provided by the respective directors, affiliates, and
executive officers. These totals include options granted under the 1997
Stock Option Plan which will vest on May 5, 1999. Unless otherwise
indicated, the amounts shown include shares owned jointly with family
members with whom the person shares voting and dispositive powers, or as
custodian or trustee over which shares the person effectively exercises
voting and dispositive powers. These amounts also include certain shares
held in the person's Savings and Investment Plan (the "Plan") account, as of
December 31, 1998, with respect to which the person has sole dispositive
power and a right to vote. However, the Trustee under the Plan may vote the
shares, in accordance with a formula set forth in the Plan, if the Plan
participant does not vote the shares.
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PROPOSAL I -- ELECTION OF DIRECTORS
The Company's Board of Directors is currently composed of nine members. The
Company's Certificate of Incorporation requires that directors be divided into
three classes, as nearly equal in number as possible, the members of each class
to serve for a term of three years and until their successors are elected and
qualified, with one-third of the directors elected each year. The Board of
Directors has nominated for election as directors, Thomas J. Hammond, Joan H.
Anderson, and C. Michael Kojaian, all of whom are currently members of the
Board, to serve for three years and until his or her successor is elected and
qualified. Under Michigan law, directors are elected by a plurality of the votes
present in person or by proxy and entitled to vote on the election of directors.
It is intended that the persons named in the proxies solicited by the Board
of Directors will vote for the election of the named nominee. If the nominee is
unable to serve, the shares represented by all properly executed proxies which
have not been revoked will be voted for the election of such substitute as the
Board of Directors may recommend or the size of the Board of Directors may be
reduced to eliminate the vacancy. At this time, the Board knows of no reason why
any nominee might be unavailable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION AS DIRECTORS OF ALL
OF THE NOMINEES LISTED BELOW.
The following table sets forth, for the nominee and each continuing
director, his or her name, age as of the Record Date, the year he or she first
became a director of the Company and the expiration of his or her current term
as a director of the Company.
AGE AS YEAR FIRST CURRENT
OF THE ELECTED TERM
RECORD DIRECTOR OF TO
NAME DATE THE COMPANY EXPIRE
---- ------ ----------- -------
BOARD NOMINEE FOR TERMS TO EXPIRE IN 2002
Thomas J. Hammond............................. 55 1993 1999
Joan H. Anderson.............................. 48 1997 1999
C. Michael Kojaian............................ 37 1997 1999
DIRECTORS CONTINUING IN OFFICE
Mark T. Hammond............................... 33 1993 2001
James D. Isbister............................. 62 1997 2001
John R. Kersten............................... 57 1997 2001
Michael W. Carrie............................. 44 1997 2000
James D. Coleman.............................. 52 1993 2000
Richard S. Elsea.............................. 69 1997 2000
The following sets forth the business experience of each director of the
Company.
THOMAS J. HAMMOND has served as Chairman of the Board of Directors and
Chief Executive Officer of the Company since its formation in 1993. Mr. Hammond
also serves as Chairman of the Board of Directors and Chief Executive Officer of
the Bank. Mr. Hammond founded Flagstar Bank, FSB in 1987. Mr. Hammond has 30
years experience in the financial services industry.
JOAN H. ANDERSON has served as a Director since 1997. Mrs. Anderson also
serves as the Executive Vice President of the Company and the Bank. Mrs.
Anderson has been employed by the Company since 1987. Mrs. Anderson has 25 years
experience in the financial services industry.
C. MICHAEL KOJAIAN has served as a Director since 1997. He serves as
Executive Vice President and a Director of the Kojaian Companies, a real estate
development and asset management organization.
MARK T. HAMMOND has served as Vice-Chairman of the Board of Directors since
1993. Mr. Hammond also serves as President of the Company and the Bank. Mr.
Hammond has been employed by the Company since 1987. Mr. Hammond is the son of
Thomas J. Hammond, the Chairman and Chief Executive Officer.
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MICHAEL W. CARRIE has served as a Director since 1997. Mr. Carrie also
serves as the Executive Vice President and Chief Financial Officer of the
Company and the Bank. Mr. Carrie has been employed by the Company since 1993.
Mr. Carrie has 14 years experience in the financial services industry.
RICHARD S. ELSEA has served as a Director since 1997. Mr. Elsea is
President and Owner of Real Estate One, Michigan's largest real estate brokerage
company.
JAMES D. ISBISTER has served as a Director since 1997. He is the Vice
Chairman of Shire Laboratories. Mr. Isbister is the father-in-law of Mark T.
Hammond and father of Kirstin A. Hammond.
JOHN KERSTEN has served as a Director since 1997. Mr. Kersten is the owner
and President of Century 21 Town and Country Real Estate, Michigan's 2nd largest
real estate brokerage company.
DR. JAMES D. COLEMAN has been a Director of the Company since 1993. He also
serves on the Foundation Board of Directors of Oakwood Hospital located in
Dearborn, Michigan.
MEETINGS AND COMMITTEES AND COMPENSATION OF THE BOARDS OF DIRECTORS
The Boards of Directors of the Company and the Bank generally meet on a
monthly basis, or as needed. During the year ended December 31, 1998, the Boards
of Directors met 12 times. No Company director attended fewer than 75% of the
total number of meetings held during 1998. Directors Kersten, Elsea, and Kojaian
did not attend four meetings during the year.
The Company's Board of Directors acts as a nominating committee for the
annual selection of its nominees for election as directors of the Company and
also appoints the members of the Bank's Board of Directors. While the Board of
Directors will consider nominees recommended by stockholders, it has not
actively solicited recommendations from the Company's stockholders for nominees
nor, subject to the procedural requirements set forth in the Company's Restated
and Amended Articles of Incorporation and Bylaws, established any procedures for
this purpose. The Company's Board of Directors met once in its capacity as the
nominating committee during 1998.
The Company's Audit Committee consists of directors C. Michael Kojaian and
Dr. James Coleman. The Audit Committee is responsible for reviewing the Bank's
auditing programs and the activity of the Bank's Audit Committee. The Bank's
Audit Committee consists of Bank directors Charles Bazzy and William B. Bortels.
The committee oversees the quarterly regulatory reporting process, overseeing
internal compliance audits as necessary, receiving and reviewing the results of
each external audit, reviewing management's responses to auditors'
recommendations, and reviewing management's reports on cases of financial
misconduct by employees, officers or directors. The Audit Committees met four
times during 1998.
Directors of the Company and the Bank receive a monthly fee of $1,200 for
attendance at each board meeting. Non-Employee directors are also reimbursed for
reasonable travel expense incurred in connection with board and committee
meetings. Directors of the Company who are also directors of the Bank are
compensated for their role as Bank director as well as their role as Company
director.
During 1998, directors' fees for both members of both the Bank and
Company's Board of Directors totaled $14,400 plus a $5,600 year-end bonus.
Directors do not receive any additional compensation for serving on committees.
All directors are eligible to participate in the Option Plan.
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BANK DIRECTORS
The Bank's Board of Directors are appointed by the Company's Board of
Directors for three year terms. The directors of the Bank are as follows:
CURRENT
DIRECTOR TERM
NAME AGE POSITION(S) HELD WITH COMPANY SINCE EXPIRES
---- --- ----------------------------- -------- -------
Ronald I. Nichols Sr. ......... 64 Director 1988 2000
William B. Bortels............. 64 Director 1991 2001
Mary Kay McGuire............... 43 Senior Vice President, Secretary and Director 1987 2000
Harry S. Ellman................ 52 Director 1990 1999
Thomas J. Hammond.............. 55 Chairman of the Board and Chief Executive 1987 1999
Officer
Mark T. Hammond................ 33 Vice Chairman of the Board and President 1991 2001
Charles Bazzy.................. 69 Director 1988 2001
CHARLES BAZZY has served as a Director of the Bank since 1988. He is
retired from Ford Motor Company where he served as a planning and development
manager for 33 years.
WILLIAM B. BORTELS has been a Director of the Bank since 1991. He has been
a self-employed single-family home builder in Brighton, Michigan since 1964.
MARY KAY MCGUIRE has been a Director of the Bank since 1987. Mrs. McGuire
also serves as Secretary and Senior Vice President of the Company and the Bank.
Mrs. McGuire has been employed by the Company since 1987. Mrs. McGuire has 25
years experience in the financial services industry.
HARRY S. ELLMAN has served as a Director since 1990. He has been a title
insurance agent and attorney with Fidelity Title Co. located in Bingham Farms,
Michigan since 1987.
RONALD I. NICHOLS, SR. has served as a Director since 1988. He has been
President of Nichols Sales Associates, Inc., located in Bloomfield Hills,
Michigan since 1969.
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EXECUTIVE COMPENSATION AND OTHER BENEFITS
EXECUTIVE COMPENSATION
The following tables sets forth information with respect to the
compensation paid or accrued by the Company or the Bank during the last three
years ended December 31, 1998, to or on behalf of each executive officer, in all
capacities in which they served:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM
------------------------------------------------ COMPENSATION
INCENTIVE OTHER ------------
COMPENSATION OFFICER ANNUAL STOCK
NAME AND PRINCIPAL POSITION(S) YEAR SALARY ($) ($) BONUS $(1) OPTIONS
- ------------------------------ ---- ---------- ------------ ------- ------ -------
Thomas J. Hammond.............. 1998 $ 600,000 $1,000,000 $35,313 $32,400 1,000 shs.
Chairman and Chief Executive 1997 733,333 1,000,000 -- 26,400 400,000 shs.
of the Company and the Bank 1996 1,000,000 780,000 13,580 17,700
Mark T. Hammond................ 1998 406,248 450,000 50,200 32,400 21,000 shs.
Vice Chairman and President 1997 405,002 250,000 -- 30,936 250,000 shs.
of the Company and the Bank 1996 405,002 -- 12,600 17,619
Michael W. Carrie.............. 1998 219,969 -- 70,125 22,800 1,000 shs.
Director, Executive Vice 1997 205,076 226,000 18,921 5,383 65,000 shs.
President and Chief Financial 1996 194,314 -- 8,568 14,500
Officer of the Company and
the Bank
Joan H. Anderson............... 1998 165,422 -- 42,625 24,000 1,000 shs.
Director and Executive Vice 1997 156,838 -- 10,080 19,200 45,000 shs.
President of the Company and 1996 149,450 -- 10,080 18,900
the Bank
Kirstin A. Hammond............. 1998 164,566 -- 42,625 -- 5,000 shs.
Executive Vice President 1997 148,267 -- 7,532 -- 15,000 shs.
of the Bank 1996 138,010 -- 7,532 --
Robert O. Rondeau, Jr. ........ 1998 162,067 -- 42,625 -- 5,000 shs.
Executive Vice President 1997 148,967 -- 7,532 -- 15,000 shs.
of the Bank 1996 139,721 -- 7,532 --
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(1) Includes board fees, 401k matching contributions, car allowance, and
miscellaneous other.
(2) Additionally, the Company pays premiums on a life insurance/annuity policy
which benefits the individual executive officer. These policies require the
executive officer to also make contributory premium payments and do not
allow any benefit to be paid to any beneficiary until the Company is fully
reimbursed for its contributions.
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STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's Option Plan to the persons named in the Summary
Compensation Table set forth above.
% OF TOTAL GRANT DATE
NUMBER OF OPTIONS AND GRANT DATE
YEAR OPTIONS GRANTED IN EXERCISE PRICE PRESENT
GRANTED GRANTED(A) YEAR GRANTED ($ PER SHARE) VALUE(B)
------- ---------- ------------ -------------- ----------
Thomas J. Hammond..................... 1998 1,000 1.1% $28.125 $ 6,900
1997 400,000 36.1 13.000 1,388,000
Mark T. Hammond....................... 1998 (c) 21,000 22.7 19.950 101,640
1997 250,000 22.6 13.000 867,500
Michael W. Carrie..................... 1998 1,000 1.1 28.125 6,900
1997 65,000 5.9 13.000 225,550
Joan H. Anderson...................... 1998 1,000 1.1 28.125 6,900
1997 45,000 4.1 13.000 156,150
Kirstin A. Hammond.................... 1998 5,000 5.4 21.500 25,450
1997 15,000 1.4 13.000 156,150
Robert O. Rondeau, Jr. ............... 1998 5,000 5.4 21.500 25,450
1997 15,000 1.4 13.000 156,150
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(a) Options granted under the Option Plan are incentive stock options with an
exercise price equal to the fair market value at the time of issuance. All
options issued under the Plan have a two year vesting period from the grant
date and an expiration date of May 4, 2004.
(b) Represents the present value of the option at the date of grant as
determined using the Black-Scholes option pricing model. In calculating the
present value of the option grant, the following assumptions were utilized:
(i) the continuously compounded risk-free rate of return expressed on an
annual basis was 5.6% and 7.0%, (ii) expected volatility of the underlying
Common Stock was 31.4% and 39.0%; and (iii) dividends on the underlying
Common Stock increased at an annual rate of 2.0% in 1998 and 1997,
respectively. These assumptions are used for illustrative purposes only. No
assurance can be given that actual experience will correspond to the
assumptions utilized.
(c) Mark T. Hammond was granted 20,000 options on January 19, 1998 @ $19.50 per
share and 1,000 options on May 1, 1998 @ $28.125 per share
The following table sets forth information concerning the value of options
held by the named executive officers at the end of the year.
AGGREGATED OPTION EXERCISES IN 1998 AND YEAR END OPTION VALUES. The
following table sets forth information concerning the value of options held by
the named executive officers at the end of the year.
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ON REALIZED OPTIONS AT YEAR END AT YEAR END(A)
NAME EXERCISE(#) ($) (EXERCISED/UNEXERCISED) (EXERCISED/UNEXERCISED)
---- ----------- -------- ----------------------- -----------------------
Thomas J. Hammond................ -- -- --/401,000 --/5,250,000
Mark T. Hammond.................. -- -- --/271,000 --/3,413,750
Michael W. Carrie................ -- -- --/ 66,000 --/ 853,125
Joan H. Anderson................. -- -- --/ 46,000 --/ 590,625
Kirstin A. Hammond............... -- -- --/ 20,000 --/ 220,000
Robert O. Rondeau, Jr. .......... -- -- --/ 20,000 --/ 220,000
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(a) Represents the difference between the fair value of in the money options
underlying the Common Stock at year-end (based on the most recent sales
price) and the exercise price of the options. Options are in-the-money if
the fair value of the underlying securities exceeds the exercise price of
the option and out-of-the-money if the exercise price of unexercisable
options exceeds the current fair value.
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EMPLOYMENT CONTRACTS. The Company and the Bank entered into separate
employment agreements pursuant to which Thomas J. Hammond will serve as Chief
Executive Officer, Mark T. Hammond will serve as President, Michael W. Carrie
will serve as Executive Vice President and Chief Financial Officer, and Joan H.
Anderson will serve as Executive Vice President. In such capacities, the above
mentioned senior executives are responsible for overseeing all operations of the
Company and the Bank and for implementing the policies adopted by the Board of
Directors of the Company and the Bank. All such employment agreements are
referred to herein collectively as "Employment Agreements" and all persons who
have entered into such Employment Agreements are referred to herein as
"Employees."
The Board of Directors of the Company and the Bank each believe that the
Employment Agreements assure fair treatment of the Employees in relation to
their career providing them with a limited form of financial security while
committing such persons to future employment for the term of their respective
agreements. In the event that any Employee prevails over the Company and the
Bank in a legal dispute as to an Employment Agreement, he or she will be
reimbursed for his or her legal and other expenses.
The term of the agreements are three years. The agreements provide for an
annual base salary. On each anniversary date from the date of commencement of
the Employment Agreements, the term of the Employee's employment under the
Employment Agreements will be extended for an additional one-year period beyond
the then effective expiration date, upon a determination by the Board of
Directors that the performance of the Employee has met the required performance
standards and that such Employment Agreements should be extended. The Employment
Agreements provide the Employee with a salary review by the Board of Directors
not less often than annually, as well as with inclusion in any discretionary
bonus plans, retirement and medical plans, customary fringe benefits, vacation,
and sick leave.
The Employment Agreements terminate upon the Employee's death or
disability, and are terminable by the Company and the Bank for "just cause" as
defined in the Employment Agreements. In the event of termination for just
cause, no severance benefits are available. If the Company terminates the
Employee without just cause, the Employee will be entitled to a continuation of
his or her salary and benefits from the date of termination through the
remaining term of such Employee's Employment Agreement, plus an additional
12-month period, and, at the Employee's election, either cash in an amount equal
to the cost to the Employee of obtaining health, life, disability, and other
benefits which the Employee would have been eligible to participate in through
the Employment Agreement's expiration date or continued participation in such
benefit plans through the agreement's expiration date, provided the Employee
continued to qualify for participation therein. If the Employment Agreements are
terminated due to the Employee's "disability" (as defined in the Employment
Agreements), the Employee will be entitled to a continuation of his or her
salary and benefits for up to 180 days following such termination. In the event
of the Employee's death during the term of the Employment Agreement, his or her
estate will be entitled to receive his or her salary through the last day of the
calendar month in which the Employee's death occurred. The Employee is able to
terminate voluntarily his or her Employment Agreement by providing 90 days'
written notice to the Board of Directors, in which case the Employee is entitled
to receive only his compensation, vested rights and benefits up to the date of
termination.
The Employment Agreements contain provisions stating that in the event of
the Employee's involuntary termination of employment in connection with, or
within one year after, any change in control of the Company or the Company,
other than for "just cause," the Employee will be paid within 10 days of such
termination an amount equal to the difference between (i) 2.99 times his or her
"base amount," as defined in Section 280G(b)(3) of the Code, and (ii) the sum of
any other parachute payments, as defined under Section 280G(b)(2) of the Code,
that the Employee receives on account of the change in control. "Control"
generally refers to the acquisition, by any person or entity, of the ownership
or power to vote more than 50% of the Company's or the Bank's voting stock, the
control of the election of a majority of the Company's or the Bank's directors,
or the exercise of a controlling influence over the management or policies of
the Company or the Bank. In addition, under the Employment Agreements, a change
in control occurs when, during any consecutive two-year period, directors of the
Company or the Bank at the beginning of such period cease to constitute at least
a majority of the Board of Directors of the Company or the Bank. The amount
determined using the forgoing formula would also be paid (a) in the event of an
Employee's involuntary termination of
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employment within 30 days following a change in control, or (b) in the event of
the Employee's voluntary termination of employment within one year following a
change in control, upon the occurrence, or within 90 days thereafter, of certain
specified events following the change in control, which have not been consented
to in writing by the Employee, including (i) the requirement that the Employee
perform his or her principal executive functions more than 50 miles from his or
her primary office, (ii) a reduction in the Employee's base compensation as then
in effect, (iii) the failure of the Bank or the Company to continue to provide
the Employee with contractual compensation and benefits, including material
vacation, fringe benefits, stock option and retirement plans, (iv) the
assignment to the Employee of duties and responsibilities which are other than
those normally associated with his or her position with the Company and the
Bank, (v) a material reduction in the Employee's authority and responsibility,
and (vi) in the case of an employee who is also a director, the failure to
re-elect the Employee to the Bank's or the Company's Board of Directors. The
aggregate payments that would be made to Messrs. Thomas J. Hammond, Mark T.
Hammond and Carrie and Ms. Anderson, assuming termination of employment, other
than for just cause, within one year of the change in control at January 1,
1999, would be approximately as follows: Mr. Thomas J. Hammond--$5,221,000; Mr.
Mark T. Hammond--$2,053,000; Mr. Carrie--$982,000; Mrs. Anderson--$595,000.
EMPLOYEE STOCK ACQUISITION PLAN. The Company has implemented the Flagstar
Bancorp, Inc. 1997 Employee Stock Acquisition Plan ("Purchase Plan"), the
purpose of which is to encourage broad-based ownership by employees of the
Company and, as a result, to provide an incentive for employees at all levels to
contribute to the profitability and success of the Company. The Purchase Plan
enables the Company to offer a convenient means for the employees who might not
otherwise own Common Stock to purchase and hold the Common Stock, and through
the partial refund feature of the Purchase Plan, to provide a meaningful
inducement to participate.
The Purchase Plan is administered by the Board of Directors. All employees
of the Company, its subsidiaries or affiliates who work 20 hours per week or
more with at least 12 months of continuous employment and all directors are
eligible to participate.
Under the Purchase Plan, eligible participants are to purchase from any
third party and on the open market shares of the Common Stock and, upon
providing evidence of the purchase to the Company, the employees would receive a
payment from the Company equal to 15% of the full price of the shares.
Reimbursement for total purchases in any one year is limited to 7% of the
employee's gross income from the Company in the prior calendar year. Costs
related to the sale of such shares are borne by the individuals. Participants
must sign a statement acknowledging that they are aware of the condition of the
Purchase Plan that the shares purchased may not be sold for a period of one
year.
Participants are entitled, with respect to Common Stock acquired under the
Purchase Plan, to the same rights and distributions as are other holders of the
Common Stock. The Purchase Plan was not designed to comply with the requirements
of Section 423 of the Code with respect to "employee stock purchase plans." As a
result, participants in the Purchase Plan are taxed for federal income tax
purposes in the year the refund is received by them. Costs incurred by the
Company pursuant to the Purchase Plan are deductible as an expense by the
Company.
INCENTIVE COMPENSATION PLAN. The Company has also implemented the Flagstar
Bancorp, Inc. 1997 Incentive Compensation Plan (the "Incentive Compensation
Plan") which is unfunded and as to which benefits are payable only in the form
of cash from the Company's general assets. The purposes of the Incentive
Compensation Plan is to attract and retain the best available personnel for
positions of substantial responsibility with the Company and to provide
additional incentives to employees of the Company in the event the Company
achieves certain financial performance goals indicative of its profitability and
stability.
The Incentive Compensation Plan is administered by the Company's
Compensation Committee. The Compensation Committee decides, from year to year,
which employees of the Company are eligible to participate in the Incentive
Compensation Plan and the size of the bonus pool. Directors who are not
employees may not participate in the Incentive Compensation Plan.
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Each employee who is eligible to receive a bonus at the end of a plan year
will receive a bonus equal to a predetermined amount adjusted by a mathematical
formula which reflects aspects of the Company's results for that year. However,
the Incentive Compensation Committee may, in its discretion, by resolution
adopted before the first day of any plan year, change said percentage. The
aggregate amount of bonuses payable for any plan year will be proportionately
reduced to the extent that the payment would cause the Bank to cease to be a
"well-capitalized" institution. For 1998, the Incentive Compensation Plan
provided for bonuses to be tied to return on equity, return on assets, deposit
growth, CAMELS rating and the volume of loan originations.
Only Messrs. Thomas and Mark Hammond, were participants in this plan during
1998 and 1997.
DEFERRED COMPENSATION PLAN. The Company has implemented the 1997 Deferred
Compensation Plan, which is intended to permit employees and directors to defer
the current receipt of income until such time as funds or assets are distributed
in the future. Employees may elect to defer up to 25 percent of annual
compensation and directors may defer their entire compensation. Funds deferred
remain the property of the Bank or the Company and subject to the claims of the
creditors of the Bank or the Company in the event of default. However, the funds
will be placed in a trust with an independent trustee and the individual
participants may direct that their deferred amounts be invested in stock of the
Company purchased on the open market. Upon withdrawal, the participant will have
the option of receiving the stock or the proceeds of its sale at the then market
price. All withdrawals from the trust would then be taxable as ordinary income.
There have been no participants in this plan.
WHOLE LIFE INSURANCE POLICY. The Bank pays the premiums of variable whole
life insurance policies which are available to all officers of the Bank. The
beneficiary of each such policy is the estate of the officer, except that the
Bank is the beneficiary to the extent of all premiums paid by the Bank for such
policy.
REPORT OF THE COMPENSATION COMMITTEE
OVERVIEW AND PHILOSOPHY
The Company's executive officers are also executive officers of the Bank
and are compensated by the Bank not the Company. However, the responsibility for
setting policies that govern executive compensation, and for recommending the
components and structure of the compensation plans for executive officers of the
Company rests with the Company's Compensation Committee (the "Committee"). The
Committee is comprised of Directors James D. Coleman, Chairman, Richard S.
Elsea, and John R. Kersten.
Under the direction of the Committee, the Company has developed and
implemented compensation policies and plans that embody a pay-for-performance
philosophy. The policies and plans encourage achievement of objectives as
formulated by the Company's Board of Directors and its committees and reward
exceptional performance as determined by the Committee. In the opinion of the
Committee, this approach strengthens the Company's long-term performance by
making the goals and objectives of executive management congruent with those of
the Company and its stockholders. The Committee also believes that competitive
executive compensation and the structure of the Company's compensation plans are
essential to the Company's desire to attract and retain qualified management.
For 1998, the Committee considered and determined the compensation only for
Messrs. Thomas and Mark Hammond, whereas the balance of the executive officers
were considered by the Bank's Compensation Committee. Beginning in 1999, the
Committee will review and determine the compensation for all four executive
officers of the Company.
EXECUTIVE COMPENSATION PROGRAMS
Within this overall purpose, the Committee has determined that the
Company's executive compensation program should have four primary components:
base salary; cash bonuses under the stockholder-approved incentive compensation
plan; long-term incentive compensation in the form of stock option awards under
the stockholder-approved stock option plan; and other competitive benefits. Base
and incentive compensation for executive officers depends primarily on regional
and national surveys of compensation paid to executive officers of other savings
and loan holding companies, commercial banks and mortgage lending institutions
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similar in size, market capitalization, scope of operations and other
characteristics, as well as the Company's operating results.
Base Compensation. The Committee has determined that the base compensation
for the Company's executive officers should be based primarily on the salaries
paid to executives having comparable responsibilities at other similar
institutions. A primary, but not the sole, source of information upon which the
base compensation of executive officers is based are available surveys of
compensation paid to executives performing similar functions at other financial
institutions and/or mortgage banking companies. In setting base salaries, the
Committee also considers other qualitative factors such as the overall
performance of the Company and the personal performance and effectiveness of
each officer.
Incentive Compensation. The Company has adopted the Incentive Plan, which
relies on the specific performance of the Company each year compared with
benchmark performance levels of returns on assets and equity, the OTS CAMELS
rating of the Bank, deposit growth and loan origination volume, all considered
in relation to the annual forecasted goals of the Company. Incentive
compensation under the Incentive Plan is issued in the form of cash, the amount
of which is generally based upon a mathematical formula.
Long-Term Incentive Compensation. The Compensation Committee believes that
the grant of stock options encourages the Company's executives to focus on
managing the Company from the perspective of an equity owner. The Company has
therefore adopted two plans that enable employees and officers to develop an
equity interest in Flagstar, the most significant of which for senior officers
are the Option Plan and the Purchase Plan.
Stock options have been granted under the Option Plan to senior and
mid-level executives, the amounts and terms of which were determined by the
Committee. The number of options granted was based on criteria that included
consideration for the officer's responsibility, performance and salary level.
The value of these options, which vest after a two-year period and are
exercisable for five years thereafter, is intended to track the performance of
the Common Stock over an extended period of time.
Other Benefits. In addition to the foregoing, the Company provides medical,
dental and life insurance and defined contribution pension plan qualifying under
Sections 401(a) and Section 401(k) of the Internal Revenue Code of 1986, as
amended to senior executives that are generally available to all Company
employees, and other perquisites that are comparable to standards within the
financial institutions industry.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
As Chairman and Chief Executive Officer, Thomas J. Hammond's base salary is
reviewed annually by the Committee in accordance with the procedures and
policies described above. Since the Company's executive compensation plans
discussed previously are for the most part linked to the Company's performance
compared with the peer group and subject to formula calculation, his
participation in these plans is determined in the same general manner as are
other executive officers.
In connection with the initial public offering of the Company's Common
Stock in early 1997, Mr. Hammond agreed that his prior year's base salary of
$1,000,000 be reduced to $600,000 with the primary purpose of placing greater
emphasis on incentive compensation in the form of bonuses. During 1998 and 1997,
Mr. Hammond was awarded $1,000,000 as a bonus under the Incentive Plan.
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The Committee believes that Mr. Hammond's total compensation for 1998
appropriately reflected his contribution to the Company's financial results. For
1998, the Company's performance in the key area of return on equity greatly
exceeded the performance of its peers. The Company's record financial results
for 1998, especially as measured by net income, were also significantly above
all previous results for the Company. The Committee believes that this
performance was indicative of a well-managed company during a challenging
business climate.
COMPENSATION COMMITTEE
James D. Coleman, Chairman
Richard S. Elsea
John R. Kersten
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors of the Bank acts as a compensation committee for the
officers of the Bank. The Compensation Committee of the Company reviews the
compensation of the executive officers of the Company.
Except for Directors Thomas J. Hammond, Mark T. Hammond, and Mary Kay
McGuire, no member of the Board of Directors of the Bank was (a) an officer or
employee of the Bank, or any of its subsidiaries during the year ended December
31, 1998, (b) a former officer of the Bank, or any of its subsidiaries, or (c)
an insider (i.e., director, officer, director or officer nominee, greater than
5% stockholder, or immediate family member of the foregoing) of the Bank, or any
of its subsidiaries.
Mr. John Kersten is a member of the Company's Board of Directors and the
Company's Compensation Committee, and in that role sets the annual compensation
amount for the executive officers of the Company. Mr. Kersten is the owner of
Cambridge Mortgage Company, a correspondent of the Company. All of the following
business transactions were conducted in the ordinary course of business on
substantially the same terms, including interest rates and collateral, as those
prevailing for comparable transactions with non-affiliated persons. It is the
belief of management that such loans neither involved more than the normal risk
of collection nor presented other unfavorable features.
Cambridge Mortgage is the Company's fifth largest correspondent and sold
$134.2 million in mortgage loans to the Company during 1998.
Cambridge Mortgage is also a customer that utilizes the Company's
warehouse lending program offered through the Company's commercial loan
division. Cambridge Mortgage has an approved line of credit of $10.0
million. The average amount outstanding during 1998 was $7.7 million,
with a high balance of $12.2 million and a balance at December 31, 1998
of $9.0 million. Mr. Kersten has personally guaranteed this line of
credit
Mr. John Kersten and Cambridge Mortgage are joint borrowers in a
$130,000 commercial real estate loan which had an average outstanding
balance in 1998 of $130,000. The outstanding balance of this loan at
December 31, 1998 was $130,000.
Mr. John Kersten and Cambridge Mortgage are also joint borrowers in a
$298,400 commercial real estate loan which had an average outstanding
balance since the borrowing (9/30/98) of $298,400. The outstanding
balance of this loan at December 31, 1998 was $298,400.
Mr. Richard Elsea is a member of the Company's Board of Directors and the
Company's Compensation Committee, and in that role sets the annual compensation
amount for the executive officers of the Company. Mr. Elsea is the owner of John
Adams Mortgage Company, a wholesale mortgage broker that sells mortgage loans to
the Company. The following business transactions were conducted in the ordinary
course of business on substantially the same terms, as those prevailing for
comparable transactions with non-affiliated persons.
John Adams Mortgage sold $39.3 million in mortgage loans to the Company
during 1998.
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No other member of the Committee was engaged in transactions with the
Company or any subsidiary involving more than $60,000 during the year ended
December 31, 1998 or otherwise rendered services to the Company through a law
firm or investment banking firm.
No executive officer of the Company or the Bank, at any time during 1998,
also served on a compensation committee or otherwise as a director of another
company whose executive officer served on the Company's Compensation Committee
or as a director of the Company.
CUMULATIVE STOCK PERFORMANCE GRAPH
The graph and table that follow show the cumulative return on the Common
Stock since January 1, 1998. This return is compared in the table and graph with
the cumulative return over the same period with the following three indices: (i)
the Russel 1000 (2) All U.S. Nasdaq Index, and (3) the S&P 600 Small Cap Index.
The graph and table were prepared assuming that $100 was invested on January 1,
1998 in the Common Stock and in each of the indices. Cumulative total return on
the Common Stock or the three indices equals the total increase in value since
January 1, 1998. No reinvestment of dividends has been assumed due to immaterial
amounts paid in 1998. The stockholder returns shown on the performance graph are
not necessarily indicative of the future performance of the Common Stock or any
particular index.
CUMULATIVE TOTAL STOCKHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDICES
JANUARY 1, 1998 THROUGH DECEMBER 31, 1998
PERFORMANCE GRAPH
S&P 600 SMALL CAP
FLAGSTAR BANCORP, INC. RUSSEL 1000 NASDAQ US INDEX
---------------------- ------------ --------- -----------------
1/1/98 100.00 100.00 100.00 100.00
6/30/98 123.11 114.74 120.39 105.73
12/31/98 131.94 125.81 140.57 97.90
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INDEX 1/1/98 6/30/98 12/31/98
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FLAGSTAR BANCORP, INC. 100.00 123.11 131.94
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RUSSEL 1000 100.00 114.74 125.81
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NASDAQ US 100.00 120.39 140.57
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S & P 600 SMALL CAP INDEX 100.00 105.73 97.90
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STOCKHOLDER PROPOSAL 2. INCREASE IN OPTION SHARES
In January 1997, the Company's Board of Directors adopted resolutions to
implement the Option Plan. Upon completion of the initial public offering, the
Company reserved 1,367,000 shares of Common Stock to the Option Plan. In
February 1999, the Company's Board of Directors adopted similar resolutions to
reserve an additional 683,500 shares of common stock to the Option Plan.
The purpose of the Option Plan is to provide an additional incentive to
directors and employees by facilitating their purchase of Common Stock. The
Option Plan has a term of 10 years, from May 5, 1997, after which no awards may
be made, unless the plan is earlier terminated by the Board of Directors.
Pursuant to the Option Plan, approximately 1,210,000 shares have been issued to
recipients, leaving a reserve of less than 200,000 shares of Common Stock
available for future issuance.
All options granted under the Option Plan have been incentive stock options
("ISOs"), to the extent allowable by tax law. ISO's are options that comply with
certain restrictions pursuant the Internal Revenue Code of 1986, as amended (the
"Code") and thereby provide favorable tax treatment to the recipient.
The Company accounts for the Option Plan in accordance with the provisions
of APB No. 25, "Accounting for Stock issued to Employees" and adopted the
disclosure requirements of Statement of Financial Accounting Standards No. 123.
Stock options have been granted under the Option Plan to senior and
mid-level executives, the amounts and terms of which were determined by the
Option Committee. The number of options granted was based on criteria that
included consideration for the officer's responsibility, performance, and salary
level. The value of these options, which vest after a two-year period and are
exercisable for five years thereafter, is intended to track the performance of
the Common Stock over an extended period of time.
The Board of Directors believes that an increase in the shares reserved for
the Option Plan is in the best interest of the Company and, therefore, at a
meeting held February 16, 1998, the Board of Directors adopted a proposed
amendment to increase the number of reserved shares of common stock from
1,367,000 shares, to 2,050,500 shares.
The additional shares of common stock for which authorization is sought
will have the same terms and rights as the shares of common stock now
authorized. No pre-emptive rights would be attached to these shares. If the
proposed amendment is approved, the additional shares will be reserved for the
Option Plan and will be available for issuance.
The Option Committee presently has no plans to issue any of the proposed
shares that the approval of this amendment would allow. The Board of Directors
believes that the proposed increase in the number of shares provide the Option
Committee the flexibility it will need in conducting its business.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED AMENDMENT TO
THE CHARTER INCREASING THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK RESERVED
UNDER THE OPTION PLAN. The enclosed proxy will be so voted unless the
shareholder specifies a contrary choice. The affirmative vote of a majority of
the outstanding shares of Common Stock is required for approval of this proposed
amendment. A failure to vote, abstention, or broker non vote with respect to the
proposed amendment will have the effect of a vote against the proposed
amendment.
CERTAIN TRANSACTIONS
The Company and its subsidiaries have had, and expect to have in the
future, transactions in the ordinary course of business with directors and
executive officers and members of their immediate families, as well as with
principal stockholders. All loans included in such transactions were made in the
ordinary course of business on substantially the same terms, including interest
rates and collateral, as those prevailing for comparable transactions with
non-affiliated persons. It is the belief of management that such loans neither
involved more than the normal risk of collection nor presented other unfavorable
features.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater-than-10% stockholders
are required to furnish the Company with copies of all such reports. Based
solely on its review of copies of such reports received by it, or written
representations from certain reporting persons that no annual report of change
in beneficial ownership is required, the Company believes that, during the year
ended December 31, 1998, all such filing requirements were satisfied.
INDEPENDENT AUDITORS
The Board of Directors has appointed the public accounting firm of Grant
Thornton LLP to continue as independent auditors for the Company for the year
ending December 31, 1999. Grant Thornton LLP served as the Company's independent
auditors for the year ended December 31, 1998. A representative of Grant
Thornton LLP is expected to be present at the Annual Meeting and available to
respond to appropriate questions, and will have the opportunity to make a
statement if he or she so desires.
STOCKHOLDER PROPOSALS
It is anticipated that the Company's Annual Meeting in 2000 will be held on
May 9, 2000 and any stockholder who intends to present a proposal for action at
that meeting and would like a copy of the proposal included in the Company's
proxy materials must forward a copy of the proposal or proposals to the
Company's principal executive office at 2600 Telegraph Road, Bloomfield Hills,
Michigan 48302, and must be received by the Company not later than November 30,
1999. The Company will have discretionary authority to vote proxies on matters
at the 2000 Annual Meeting if the matter is not included in the proxy statement
and notice by a stockholder to consider the matter was not received by the
Company prior to the deadline provided in the Company's Bylaws for such matters.
Nothing in this paragraph shall be deemed to require the Company to include in
its proxy statement and proxy relating to the 1999 annual meeting any
stockholder proposal that does not meet all of the requirements for inclusion
established by the Securities and Exchange Commission in effect at the time such
proposal is received.
OTHER MATTERS
The Board of Directors is not aware of any other business to be presented
for action by the stockholders at the Annual Meeting other than those matters
described in this Proxy Statement and matters incident to the conduct of the
Annual Meeting. If, however, any other matters known are properly brought before
the Annual Meeting, the persons named in the accompanying proxy will vote such
proxy on such matters as determined by a majority of the Board of Directors.
MISCELLANEOUS
The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telegraph or telephone number without additional compensation.
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The Company's 1998 Annual Report to Stockholders (the "Annual Report"),
including financial statements, has been mailed to all persons who were
stockholders of record as of the close of business on the Record Date. Any
stockholder who has not received a copy of the Annual Report may obtain a copy
by writing to the Secretary of the Company. The Annual Report is not to be
treated as a part of this proxy solicitation material or as having been
incorporated herein by reference.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ MARY KAY MCGUIRE
Mary Kay McGuire
Secretary
Bloomfield Hills, Michigan
April 1, 1999
ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1998, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
FURNISHED WITHOUT CHARGE TO PERSONS WHO WERE STOCKHOLDERS AS OF THE RECORD DATE
UPON WRITTEN REQUEST TO THE SECRETARY, FLAGSTAR BANCORP, INC., 2600 TELEGRAPH
ROAD, BLOOMFIELD HILLS, MICHIGAN 48302.
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FLAGSTAR BANCORP, INC.
2600 TELEGRAPH ROAD
BLOOMFIELD HILLS, MICHIGAN 48302
REVOCABLE PROXY FOR THE ANNUAL MEETING
OF STOCKHOLDERS
MAY 10, 1999
The undersigned hereby constitutes and appoints Michael W. Carrie, Joan H.
Anderson and James D. Coleman, and each of them, the proxies of the undersigned,
with full power of substitution, to attend the Annual Meeting of Stockholders of
Flagstar Bancorp, Inc. (the "Company") to be held at the national headquarters
of Flagstar Bank, FSB, 2600 Telegraph Road, Bloomfield Hills, Michigan on May
10, 1999 at 1:00 p.m., local time, and any adjournments thereof, and to vote all
the shares of stock of the Company which the undersigned may be entitled to
vote, upon the following matters.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY, WILL BE VOTED
IN ACCORDANCE WITH THE INSTRUCTIONS MARKED HEREIN, AND WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND AS DETERMINED BY A MAJORITY OF THE BOARD OF DIRECTORS
AS TO OTHER MATTERS, IF NO INSTRUCTIONS TO THE CONTRARY ARE MARKED HEREIN AND TO
THE EXTENT THIS PROXY CONFERS SUCH DISCRETIONARY AUTHORITY.
(1) The Election of Directors: Thomas J. Hammond, Joan H. Anderson, and C. Michael Kojaian.
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed
contrary below). above.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PRINT THAT
NOMINEE'S NAME BELOW.)
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(2) Amendment of the Company's 1997 Employees and Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) The transaction of such other business as may properly come before
the Annual Meeting or any adjournments thereof.
The undersigned hereby acknowledges receipt of a copy of the accompanying Notice
of Annual Meeting of the Stockholders and Proxy Statement and the Annual Report
to Stockholders for the year ended December 31, 1998, and hereby revokes any
proxy heretofore given. THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE ITS
EXERCISE.
Date:_______________________________________
Signature:__________________________________
Signature:__________________________________
PLEASE MARK, DATE AND SIGN AS YOUR NAME APPEARS HEREIN AND RETURN IN THE
ENCLOSED ENVELOPE. If acting as executor, administrator, trustee, guardian, etc.
you should so indicate when signing. If the signor is a corporation, please sign
the full name by duly appointed officer. If a partnership, please sign in
partnership name by authorized person. If shares are held jointly, each
stockholder named should sign.
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