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-12
Bingham Financial Services Corporation
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(Name of Registrant as Specified in Its Charter)
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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:
- --------------------------------------------------------------------------------
(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:
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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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BINGHAM FINANCIAL SERVICES CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 19, 2001
The annual meeting of shareholders of Bingham Financial Services
Corporation, a Michigan corporation, will be held at 2:00 p.m., local time, on
December 19, 2001, at the Birmingham Community House, 380 South Bates Street,
Birmingham, Michigan 48009, for the following purposes:
1. To elect two nominees to our board of directors to serve until the
annual meeting of shareholders to be held in 2004 or until their successors
shall have been duly elected and qualified.
2. To ratify the appointment of Plante & Moran, LLP, as our
independent auditors for the 2001 fiscal year.
3. To transact such other business as may properly come before the
annual meeting or any adjournments or postponements thereof.
Our board of directors is not aware of any other business to come before
the annual meeting.
Only holders of record of shares of Bingham common stock at the close of
business on November 15, 2001 are entitled to notice of the annual meeting and
to vote at the annual meeting or at any and all adjournments or postponements
thereof. A list of Bingham shareholders entitled to vote at the annual meeting
will be available to and subject to inspection by any shareholder during the
meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Gary A. Shiffman
Chairman of the Board and
Secretary
Birmingham, Michigan
December 7, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THE BINGHAM ANNUAL MEETING, PLEASE
COMPLETE, SIGN AND DATE YOUR PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE. YOU MAY REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN
THIS DOCUMENT AT ANY TIME BEFORE THE PROXY HAS BEEN VOTED AT THE BINGHAM ANNUAL
MEETING.
BINGHAM FINANCIAL SERVICES CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 19, 2001
PROXIES AND SOLICITATIONS
This proxy statement is furnished to shareholders of Bingham Financial
Services Corporation in connection with the solicitation of proxies by Bingham's
board of directors to be used at the annual meeting of shareholders and at any
adjournments.
The executive offices of Bingham are located at 260 East Brown Street,
Suite 200, Birmingham, Michigan 48009. The approximate date of mailing of this
proxy statement and the enclosed proxy materials to Bingham's shareholders is
December 7, 2001.
All shares of Bingham common stock represented by properly executed proxies
in the enclosed form that we receive in time for the annual meeting and that
have not been revoked will be voted in accordance with the instructions
indicated in the proxies. IF YOU SUBMIT A PROXY WITHOUT DIRECTIONS, YOUR SHARES
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES AND FOR THE RATIFICATION OF THE
INDEPENDENT AUDITORS. In addition, the persons designated in the proxy will have
discretion to vote your shares upon any procedural matter relating to the annual
meeting, including the right to vote for any adjournment or postponement thereof
proposed by the Bingham board of directors, including a postponement and
adjournment to solicit additional proxies.
To submit a written proxy by mail, you should complete, sign, date and mail
the proxy card provided with this document in accordance with the instructions
set forth on such card.
Your vote is confidential. The tabulator and inspectors of election are not
employees of Bingham, nor are they affiliated with Bingham in any way. However,
Bingham may be advised of whether you have voted. Also, your vote may be
disclosed to Bingham if a contested proxy solicitation occurs or if a disclosure
is required by law.
Any person who submits a proxy may revoke it any time before it is voted:
- by giving written notice of revocation to Bingham, addressed to our
Corporate Secretary, 260 East Brown Street, Suite 200, Birmingham,
Michigan 48009;
- by submitting a later-dated proxy with voting instructions by mail, if
the proxy is received before the annual meeting; or
- by VOTING in person at the annual meeting; a proxy is not revoked by
simply ATTENDING the Bingham annual meeting.
Shareholders who have instructed a broker to vote their shares must follow
directions received from their broker to change or revoke their proxy.
In addition to the use of mails, proxies may be solicited by personal
interview, telephone and telegram, by directors, officers and employees of
Bingham. Arrangements may also be made with brokerage houses or other
custodians, nominees and fiduciaries to forward solicitation material to the
beneficial owners of shares of Bingham's common stock held of record by those
persons, and Bingham may reimburse those persons for reasonable out-of-pocket
expenses incurred in forwarding
material. Bingham anticipates that fees and expenses for these parties will not
exceed $1,000. Bingham will bear the costs of all proxy solicitation.
TIME AND PLACE OF MEETING
The Annual Meeting will be held at the Birmingham Community House, 380
South Bates Street, Birmingham, Michigan 48009, on December 19, 2001, at 2:00
p.m., local time.
VOTING RIGHTS AND
PRINCIPAL HOLDERS OF VOTING SECURITIES
Only shareholders of record at the close of business on November 15, 2001
are entitled to notice of and to vote at the annual meeting or at any
adjournments. As of that date, Bingham had 2,542,988 shares of common stock
issued, outstanding and entitled to vote held by 75 holders of record. Each
outstanding share entitles the record holder to one vote. Shares cannot be voted
at the annual meeting unless the holder is present in person or represented by
proxy. The presence, in person or by proxy, of shareholders entitled to vote a
majority of the voting shares that are outstanding and entitled to vote will
constitute a quorum.
Directors will be elected by a plurality of the votes cast at the annual
meeting, meaning the two nominees receiving the most votes will be elected
directors. Broker non-votes (i.e., proxies from brokers or nominees indicating
that those persons have not received instructions from the beneficial owners or
other persons as to certain proposals on which the beneficial owners or persons
are entitled to vote their shares but with respect to which the brokers or
nominees have no discretionary power to vote without instructions), abstentions
and instructions to withhold authority to vote for one or more of the nominees
will result in those nominees receiving fewer votes.
Information concerning principal holders of Bingham's common stock is
discussed under "Security Ownership of Certain Beneficial Owners and
Management."
INCORPORATION BY REFERENCE
To the extent this proxy statement has been or will be specifically
incorporated by reference into any filing by Bingham under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, the
sections of this proxy statement entitled "Report of the Compensation Committee
on Executive Compensation" and "Shareholder Return Performance Presentation"
shall not be deemed to be so incorporated unless specifically otherwise provided
in any such filing.
ANNUAL REPORT
Shareholders are concurrently being furnished with a copy of the Company's
2000 Annual Report on Form 10-K for the year ended December 31, 2000, as
amended, which contains our audited financial statements as of December 31,
2000. In addition, copies of our Annual Report on Form 10-K for the year ended
December 31, 2000, as amended, as filed with the Securities and Exchange
Commission (the "SEC"), will be sent to any shareholder, without charge, upon
written request to our Corporate Secretary, 260 East Brown, Suite 200,
Birmingham, Michigan 48009.
2
MATTERS TO COME BEFORE THE ANNUAL MEETING
ELECTION OF DIRECTORS
(PROPOSAL ONE)
Two directors will be elected at the Bingham annual meeting to serve for
three-year terms beginning at the annual meeting and expiring at the 2004 annual
shareholders meeting. It is proposed that these positions be filled by persons
nominated to the board of directors by management. Each director will be elected
by the affirmative vote of a plurality of the votes cast at the annual meeting.
Therefore, if a quorum is present, abstentions and broker non-votes will have no
effect on the election of directors. Proxies will be tabulated by Bingham's
transfer agent. The inspector of elections appointed at the annual meeting will
then combine the proxy votes with the votes cast at the annual meeting.
If either of the nominees are unavailable to serve for any reason, then a
valid proxy may be voted for the election of such other persons as the person or
persons voting the proxy may deem advisable in their best judgment. Management
has no present knowledge that either of the persons named will be unavailable to
serve. In any event, the enclosed proxy can be voted for only the two nominees
named in this document or their substitutes.
BINGHAM'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF
THE NOMINEES NAMED BELOW. Proxies solicited by the board will be voted "for" the
nominees unless instructions to withhold or to the contrary are given.
The following table identifies each incumbent director and nominee for
election to the board at the annual meeting. Each director has served
continuously from the date of his election to the present time.
<Table>
<Caption>
NAME OFFICE
---- ------
Mark A. Gordon*...................... Director
Brian M. Hermelin*................... Director
Ronald A. Klein...................... Director, President and Chief Executive Officer
Robert H. Orley...................... Director
Gary A. Shiffman..................... Chairman of the Board and Secretary
Arthur A. Weiss...................... Director
</Table>
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* Nominee for election at the annual meeting.
MARK A. GORDON, 56, has been a director of Bingham since February 1999. He
is currently a member of Bingham's Audit Committee. Mr. Gordon has been with The
Budd Company, an automotive parts manufacturer, since 1976 and currently holds
the position of Assistant General Counsel. Previously, he was President of Budd
Financial Corporation, a financial services affiliate of The Budd Company. Mr.
Gordon is a certified public accountant and an attorney. Before his employment
with The Budd Company, Mr. Gordon was a tax specialist with the public
accounting firms KPMG Peat Marwick and Coopers & Lybrand.
BRIAN M. HERMELIN, 36, has been a director of Bingham since October 1997.
He is a member of Bingham's Audit Committee and Compensation Committee. Since
1997, Mr. Hermelin has held several executive positions with and has been a
director of USA Jet Airlines Inc., a cargo airline that also operates Active
Aero Charter, an air charter broker and logistics provider. Mr. Hermelin has
been President and Co-Chief Executive Officer of USA Jet Airlines since January
2001. From 1992 to 1997, Mr. Hermelin provided acquisition analysis, strategic
planning and business development services through various consulting
arrangements. Mr. Hermelin is Mr. Orley's brother-in-law.
3
RONALD A. KLEIN, 43, has been a director and the Chief Executive Officer of
Bingham since February 1999. He was named Bingham's President in June 1999. He
is a member of Bingham's Nominating Committee. Since 1994, he has been the
Managing Director of Equity Growth L.L.C., a private real estate investment
company. From 1990 to 1994, Mr. Klein served as Executive Vice President of
Alaron Inc., an international distributor of consumer electronics. From 1985 to
1990, Mr. Klein was a member of the Chicago Board Options Exchange. Mr. Klein
has also served as the Managing Director of a financial derivatives trading firm
and, before 1985, he was in the private practice of law.
ROBERT H. ORLEY, 46, has been a director of Bingham since October 1997. He
is a member of Bingham's Audit Committee and Compensation Committee. Mr. Orley
is the Executive Vice President of the Oxford Investment Group, Inc., where
since 1985, he has supervised the legal, administrative, taxation and financial
reporting aspects of Oxford's business portfolio and acquisition searches. Since
1984, Mr. Orley has also been Vice President and a director of Real Estate
Interests, Inc., a real estate development and management company affiliated
with Oxford. Mr. Orley is Mr. Hermelin's brother-in-law.
GARY A. SHIFFMAN, 47, has been the Chairman of the Board of Bingham since
August 1996. He is a member of Bingham's Nominating Committee. Mr. Shiffman has
been the Secretary of Bingham since 1997. Since 1994, Mr. Shiffman has been the
Chief Executive Officer and a director of Sun Communities, Inc., a publicly held
REIT with its stock traded on the New York Stock Exchange. Since March 2000, Mr.
Shiffman has served as Chairman of the Board of Sun. He has been actively
involved in the management, acquisition, financing, construction and development
of manufactured housing communities for over 15 years. He has overseen the land
acquisition, rezoning, development and marketing of numerous manufactured home
expansion projects. In addition, Mr. Shiffman has extensive experience in the
debt and capital markets and retains significant interests in a diverse
portfolio of real estate assets.
ARTHUR A. WEISS, 52, has been a director of Bingham since February 1998. He
is a member of Bingham's Nominating Committee and Compensation Committee. Since
1976, Mr. Weiss has practiced law with, and is currently a stockholder of, the
law firm of Jaffe, Raitt, Heuer & Weiss, Professional Corporation, which
represents Bingham in various matters. Mr. Weiss is also a director of Sun.
To the best of Bingham's knowledge, there are no material proceedings to
which any nominee is a party, or has a material interest, adverse to Bingham. To
the best of Bingham's knowledge, there have been no events under any bankruptcy
act, no criminal proceedings and no judgments or injunctions that are material
to the evaluation of the ability or integrity of any nominee during the past
five years.
BOARD OF DIRECTORS AND COMMITTEES
Our board of directors is divided into three classes, as equal in number as
possible. At each annual meeting, the successors to the class of directors whose
terms expire at that meeting will be elected to hold office for a term expiring
at the annual meeting of shareholders held in the third year following the year
of their election.
Messrs. Gordon and Hermelin have terms expiring at the annual meeting and
are nominees for the class to hold office for a term expiring at the annual
meeting of shareholders to be held in 2004. Messrs. Klein and Weiss have terms
expiring at the annual meeting of shareholders to be held in 2002 and Messrs.
Shiffman and Orley have terms expiring at the annual meeting of shareholders to
be held in 2003.
4
As of July 1, 2000, Bingham and Mr. Klein entered into an agreement under
which Mr. Klein agreed to tender his resignation as a director in the event his
employment with Bingham is terminated for any reason.
The board of directors met two times during the three months ended December
31, 1999 and 11 times during the year ended December 31, 2000 and took various
actions by written consent without a meeting during those periods. All incumbent
directors attended at least 75% of the meetings of the board and of each
committee on which they served.
Committees made up of members of the board perform several important
functions of the board of directors. Our bylaws authorize the formation of
committees and grant the board the authority to prescribe the functions and
standards for membership of each committee. In addition, the board appoints the
members of each committee. The board currently has three standing committees: an
Audit Committee, a Compensation Committee and a Nominating Committee.
Audit Committee
The Audit Committee:
- annually recommends a firm of independent public accountants to the board
of directors to act as auditors of Bingham;
- reviews the scope of the annual audit with the auditors in advance of the
audit;
- generally reviews the results of the audit and the adequacy of our
accounting, financial and operating controls;
- reviews our accounting and reporting principles, policies and practices;
and
- performs such other duties as may be delegated to it by the board.
Currently, the Audit Committee is comprised of Messrs. Orley, Hermelin and
Gordon. The Audit Committee held one formal meeting during the three months
ended December 31, 1999 and four formal meetings during the fiscal year ended
December 31, 2000.
Compensation Committee
The Compensation Committee:
- reviews and modifies the compensation (including salaries and bonuses) of
our officers as initially set by our President;
- administers our stock option plan; and
- performs such other duties as may be delegated to it by the board.
Currently, the Compensation Committee is comprised of Messrs. Hermelin, Weiss
and Orley. During the three months ended December 31, 1999 and the fiscal year
ended December 31, 2000, the Compensation Committee did not hold any formal
meetings but took various actions by written consent without a meeting.
5
Nominating Committee
The Nominating Committee:
- nominates persons for election or appointment to the office of director
of Bingham; and
- performs such other duties as may be delegated to it by the board.
Currently, the Nominating Committee is comprised of Messrs. Shiffman, Weiss and
Klein. During the three months ended December 31, 1999 and the fiscal year ended
December 31, 2000, the Nominating Committee did not hold any formal meetings but
took various actions by written consent without a meeting. The Nominating
Committee will consider nominees recommended by shareholders who comply with the
procedures described below under "General Information -- Shareholders'
Proposals."
DIRECTOR COMPENSATION
Directors who are not employees of Bingham are entitled to an annual
retainer fee of $12,000, payable $3,000 per calendar quarter. Messrs. Gordon,
Hermelin and Orley each earned directors' fees of $3,000 and $12,000 for
services during the three months ended December 31, 1999 and the fiscal year
ended December 31, 2000, respectively. Although Mr. Weiss earned director's fees
of the same amounts for services during those periods, he declined such fees.
James Raiskin, who resigned as a director in December 2000, earned directors'
fees of $3,000 and $9,000 for services during the three months ended December
31, 1999 and the fiscal year ended December 31, 2000, respectively.
MANAGEMENT AND COMPENSATION
Executive Officers
The following table contains information about executive officers and other
key employees of Bingham.
<Table>
<Caption>
NAME OFFICE
---- ------
W. Anderson Geater....................................... Chief Financial Officer and Treasurer
Ronald A. Klein.......................................... President and Chief Executive Officer
J. Peter Scherer......................................... Chief Operating Officer
Gary A. Shiffman......................................... Chairman of the Board and Secretary
</Table>
See above for background information for Messrs. Shiffman and Klein.
W. ANDERSON GEATER, 53, has been Bingham's Chief Financial Officer and
Treasurer since May 2000. From 1994 through April 2000, Mr. Geater was the Chief
Financial Officer and Chief Administrative Officer of UFS Holdings, LLC and
Central Park Capital, LLC. UFS Holdings provides a wide range of support
services to financial institutions related to mortgage products. Central Park
Capital originates commercial real estate mortgage loans. From 1991 to 1993, Mr.
Geater was the Chief Operating Officer of First Mortgage Strategies Group, Inc.,
which provides support services related to mortgage products. From 1990 to 1991,
he was the director of financial services for Pannell Kerr Forster, a public
accounting firm. From 1975 to 1990, he was Executive Vice President and Chief
Financial Officer of Leader Federal Bank for Savings, a national savings bank.
Before joining Leader Federal Bank, Mr. Geater was an audit supervisor with the
public accounting firm of KPMG Peat Marwick.
6
J. PETER SCHERER, 52, has been Bingham's Chief Operating Officer since
October 1999. From 1984 through 1998 he served in various capacities at The
Taubman Company, a publicly-traded company engaged in the ownership, management,
leasing, acquisition, development, and expansion of regional shopping centers.
Mr. Scherer was most recently Senior Vice President and chairman of the asset
management group at Taubman. From 1976 to 1980 and from 1980 to 1984 Mr. Scherer
was an attorney with American Motors Corporation and Volkswagen of America,
Inc., respectively.
To the best of Bingham's knowledge, there have been no events under any
bankruptcy act, no criminal proceedings and no judgments or injunctions that are
material to the evaluation of the ability or integrity of any executive officer
during the past five years.
7
Executive Compensation
The following table sets forth all compensation paid to our Chief Executive
Officer and our four highest paid other executive officers whose remuneration
from Bingham exceeded $100,000 during the last three fiscal years (the "Named
Executive Officers"). Effective February 4, 2000, Bingham changed its fiscal
year end from September 30 to December 31. The information in the following
tables is presented for the fiscal year ended September 30, 1998, the fiscal
year ended September 30, 1999, the three months ended December 31, 1999 (the
"Stub Period"), and the fiscal year ended December 31, 2000.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
COMPENSATION
--------------------------
ANNUAL COMPENSATION RESTRICTED SHARES
FISCAL ------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS OPTIONS(#) COMPENSATION
- --------------------------- ----------- -------- -------- ---------- ---------- ------------
Ronald A. Klein.......... 9/30/1998 -- -- -- -- --
President and Chief 9/30/1999 $105,000 $ 50,000 $145,000(1) 5,000 --
Executive Officer Stub Period 37,500 50,000 -- 30,000 --
12/31/2000 250,000 150,000 -- -- --
Daniel E. Bober(2)....... 9/30/1998 87,500 -- -- -- $14,583(4)
Vice President 9/30/1999 155,625 150,000(3) -- -- 25,000(4)
Stub Period 65,846 -- -- -- 25,000(4)
12/31/2000 165,375 105,882 -- -- 25,000(4)
Creighton J. Weber(5).... 9/30/1998 87,500 -- -- -- 14,583(7)
Vice President 9/30/1999 155,625 150,000(6) -- -- 25,000(7)
Stub Period 65,846 -- -- -- 25,000(7)
12/31/2000 165,375 105,882 -- -- 25,000(7)
W. Anderson Geater, Jr.... 9/30/1998 -- -- -- -- --
Chief Financial Officer 9/30/1999 -- -- -- -- --
Stub Period -- -- -- -- --
12/31/2000 106,250 50,000 -- 10,000 --
J. Peter Scherer......... 9/30/1998 -- -- -- -- --
Chief Operating 9/30/1999 -- -- -- -- --
Officer Stub Period 31,250 1,442 100,000(8) 2,500 --
12/31/2000 131,250 55,000 -- 10,000 --
</Table>
- -------------------------
(1) On April 14, 1999, Bingham granted Mr. Klein 10,000 shares of restricted
stock of which 5% vest on April 14 of each of 2000 and 2001 and 25% vest on
April 14 of each of 2002 and 2003 and the balance vests on April 14, 2004.
As of December 31, 2000, the value of these restricted shares (as determined
in accordance with the rules promulgated by the SEC) was $22,500. If
dividends on Bingham's common stock are paid, Mr. Klein has the right to
receive any dividends paid on these restricted shares.
(2) Mr. Bober resigned as a director and executive officer of Bingham as of June
13, 2001.
(3) Mr. Bober earned this bonus for services rendered to Bingham for the period
from March of 1998 through March of 1999. This bonus was paid in 17 equal
monthly installments beginning September 1, 1999.
(4) Represents contribution to an annuity plan of Mr. Bober's choice.
8
(5) Mr. Weber resigned as a director and executive officer of Bingham as of June
13, 2001.
(6) Mr. Weber earned this bonus for services rendered to Bingham for the period
from March of 1998 through March of 1999. This bonus was paid in 17 equal
monthly installments beginning September 1, 1999.
(7) Represents contribution to an annuity plan of Mr. Weber's choice.
(8) On October 1, 1999, Bingham granted Mr. Scherer 9,709 shares of restricted
stock of which 5% vest on October 1 of each of 2000 and 2001 and 25% vest on
October 1 of each of 2002 and 2003 and the balance vests on October 1, 2004.
As of December 31, 2000, the value of these restricted shares (as determined
in accordance with the rules promulgated by the SEC) was $21,845. If
dividends on Bingham's common stock are paid, Mr. Scherer has the right to
receive any dividends paid on these restricted shares
STOCK OPTIONS
The following table sets forth summary information concerning individual
grants of stock options made to each of the Named Executive Officers during the
Stub Period and the fiscal year ended December 31, 2000:
OPTION GRANTS IN THREE MONTHS ENDED DECEMBER 31, 1999 AND
FISCAL YEAR ENDED DECEMBER 31, 2000
<Table>
<Caption>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SHARES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2)
OPTIONS EMPLOYEES PRICE EXPIRATION ----------------------
NAME GRANTED IN PERIOD(1) PER SHARE DATE 5% 10%
---- ---------- ------------ --------- ---------- --------- ---------
Ronald A. Klein............ 30,000(3) 34.9% $ 7.25 12/20/09 $136,784 $346,638
Daniel E. Bober(4)......... -- -- -- -- -- --
Creighton J. Weber(5)...... -- -- -- -- -- --
W. Anderson Geater, Jr. ... 10,000(6) 11.7 7.00 5/8/10 44,022 111,562
J. Peter Scherer........... 2,500(7) 2.9 10.00 10/1/09 15,722 39,843
10,000(8) 11.7 7.00 5/8/10 44,022 111,562
</Table>
- -------------------------
(1) Based on a total of 85,750 option shares granted to our employees under our
Second Amended and Restated 1997 Stock Option Plan during the Stub Period
and the fiscal year ended December 31, 2000.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date. The gains shown are net of the option exercise price but do
not include deductions for taxes or other expenses associated with the
exercise of the options or the sale of the underlying shares of common
stock. The 5% and 10% assumed rates of appreciation are mandated by rules of
the SEC and do not represent our estimate or projection of the future price
of our common stock. There can be no assurance that any of the values
reflected in this table will be achieved. The actual gains, if any, will
depend on the future performance of the common stock, the optionee's
continued employment through applicable vesting periods and the date on
which the options are exercised.
(3) This grant was made December 20, 1999.
9
(4) Mr. Bober resigned as a director and executive officer of Bingham as of June
13, 2001.
(5) Mr. Weber resigned as a director and executive officer of Bingham as of June
13, 2001.
(6) This grant was made May 8, 2000.
(7) This grant was made October 1, 1999.
(8) This grant was made May 8, 2000.
The following table sets forth the number of shares of common stock
acquired upon the exercise of stock options by each Named Executive Officer
during three months ended December 31, 1999 and the fiscal year ended December
31, 2000 and the number and value of securities underlying unexercised options
held by each Named Executive Officer as of December 31, 2000:
AGGREGATED OPTION EXERCISES IN THREE MONTHS ENDED DECEMBER 31, 1999
AND FISCAL YEAR ENDED DECEMBER 31, 2000 AND YEAR-END OPTION VALUES
<Table>
<Caption>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 2000(1) DECEMBER 31, 2000(2)
SHARES ACQUIRED ---------------------------- ----------------------------
NAME ON EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ------------- ----------- -------------
Ronald A. Klein............. -- 11,666 23,334 N/A N/A
Daniel E. Bober(3).......... -- -- -- N/A N/A
Creighton J. Weber(4)....... -- -- -- N/A N/A
W. Anderson Geater, Jr. .... -- -- 10,000 N/A N/A
J. Peter Scherer............ -- 833 11,667 N/A N/A
</Table>
- -------------------------
(1) All options granted under our Second Amended and Restated 1997 Option Plan
must be exercised within ten years of the date of grant.
(2) None of the options included in this table were in the money as of December
31, 2000.
(3) Mr. Bober resigned as a director and executive officer of Bingham as of June
13, 2001.
(4) Mr. Weber resigned as a director and executive officer of Bingham as of June
13, 2001.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From June 11, 1999 to March 19, 2000, the members of the Compensation
Committee of our board of directors were Messrs. Hermelin, Weiss and Raiskin.
Mr. Raiskin resigned from the board of directors on December 13, 2000. From
March 19, 2000 to December 13, 2000, the members were Messrs. Hermelin, Weiss,
Raiskin and Orley. Since December 13, 2000, the members have been Messrs.
Hermelin, Weiss and Orley. Mr. Weiss' law firm provided services to Bingham in
fiscal year ended December 31, 2000. Please see "Certain Relationships and
Related Transactions."
EMPLOYMENT AGREEMENTS
Ronald A. Klein
We have entered into an employment agreement with Ronald A. Klein under
which Mr. Klein serves as Bingham's Chief Executive Officer and President. Mr.
Klein's employment agreement is for an initial term of three years ending
December 31, 2002. The term is automatically renewed for successive one year
periods unless either party terminates the agreement. Mr. Klein's annual base
salary in the first, second and third year of the agreement is $250,000,
$275,000 and $300,000,
10
respectively. After the third year, the base salary will be increased by 5% or
more per year as determined by our board. Mr. Klein will be paid an annual bonus
under the terms of an executive bonus plan to be agreed upon by us and Mr.
Klein. The agreement provides for a cash payment of up to 2.99 times Mr. Klein's
base salary if there is a change in control of Bingham. Mr. Klein's employment
agreement precludes him for the term of the agreement plus 18 months, from
diverting business from Bingham or its subsidiaries or inducing anyone to leave
the employment of Bingham or its subsidiaries. As of July 1, 2000, Bingham and
Mr. Klein entered into an agreement pursuant to which Mr. Klein agreed to tender
his resignation as a director in the event his employment is terminated for any
reason.
AUDIT COMMITTEE REPORT
Our board of directors maintains an Audit Committee comprised of three of
our outside directors. The board of directors and the Audit Committee believe
that the Audit Committee's current member composition satisfies the rules of the
National Association of Securities Dealers, Inc. that governs audit committee
composition, including the requirement that audit committee members all be
"independent directors."
In accordance with its written charter adopted by the board of directors
(set forth in Appendix A to this proxy statement), the Audit Committee assists
the Board of Directors with fulfilling its oversight responsibility regarding
the quality and integrity of our accounting, auditing and financial reporting
practices. In discharging its oversight responsibilities regarding the audit
process, the Audit Committee:
- reviewed and discussed the audited financial statements with management;
- discussed with the independent auditors the material required to be
discussed by Statement on Auditing Standards No. 61; and
- reviewed the written disclosures and the letter from the independent
auditors required by the Independence Standards Board's Standard No. 1,
and discussed with the independent auditors any relationships that may
impact their objectivity and independence.
Based upon the review and discussions referred to above, the Audit
Committee recommended to the board of directors that the audited financial
statements be included in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2000, as filed with the SEC.
The Audit Committee presents the following summary of all fees billed by
Plante & Moran, LLP, Bingham's auditors, during the Stub Period and the fiscal
year ended December 31, 2000:
<Table>
<Caption>
THREE MONTHS ENDED FISCAL YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 2000
------------------ -----------------
Audit Fees........................................... $20,000 $141,905
Financial Information Systems
Design and Implementation Fees..................... 0 0
All Other Fees....................................... 0 496,302
------- --------
Total........................................... $20,000 $638,207
</Table>
The Audit Committee has considered and determined that the level of Plante
& Moran fees for provision of services other than the audit and the quarterly
review services is compatible with
11
maintaining the auditor's independence. The Audit Committee has also approved
the selection of Plante & Moran as Bingham's independent auditor for the year
ended December 31, 2001.
Respectfully submitted,
Mark A. Gordon
Brian M. Hermelin
Robert H. Orley
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Policy of Executive Officer Compensation
The Compensation Committee of the board of directors, which is comprised of
non-employee directors, Messrs. Hermelin, Orley and Weiss, administers the
executive compensation program. The program supports our commitment to providing
superior shareholder value. It is designed to attract and retain high-quality
executives, to encourage them to make career commitments to us, and to
accomplish our short and long term objectives. The Compensation Committee
attempts to structure a compensation program for us that will reward our top
executives with bonuses and stock and option awards upon attainment of specified
goals and objectives while striving to maintain salaries at reasonably
competitive levels. During the three months ended December 31, 1999 and the
fiscal year ended December 31, 2000, the Compensation Committee did not hold any
formal meetings but took various actions by written consent without a meeting.
In reviewing the compensation to be paid to our executive officers during
the three months ended December 31, 1999 and the fiscal year ended December 31,
2000, the Compensation Committee sought to ensure that executive officers were
rewarded for long-term strategic management, for increasing Bingham's value for
our shareholders, and for achieving internal goals established by the board of
directors.
The key components of executive officer compensation are salary, bonuses
and stock option awards. Salary is generally based on factors such as an
individual officer's level of responsibility, prior years' compensation,
comparison to compensation of other Bingham officers, and compensation provided
at competitive companies and companies of similar size. Bonuses and stock option
awards are intended to reward exceptional performances. Benchmarks for
determining base salary and bonus levels include performance of Bingham's
operations, strength of the balance sheet and creation of shareholder value.
Stock option awards are also intended to increase an officer's interest in our
long-term success as measured by the market and book value of its common stock.
Stock awards may be granted to our and our subsidiaries' officers, employees,
directors and consultants under our stock option plan. Stock awards may be stock
options, stock appreciation rights, restricted share rights or any variation
thereof. Four executive officers and directors and 22 other employees and
consultants received stock options or restricted stock awards under the 1997
option plan for services rendered during the three months ended December 31,
1999 and the fiscal year ended December 31, 2000.
CEO Compensation
Ronald A. Klein served as Chief Executive Officer during the three months
ended December 31, 1999 and the year ended December 31, 2000. Mr. Klein was paid
a salary of $37,500 and an incentive-based bonus of $50,000 during the three
months ended December 31, 1999 Mr. Klein was paid a salary of $250,000 and an
incentive-based bonus of $150,000 during the year ended December 31, 2000. Mr.
Klein received stock options to purchase 30,000 shares of common stock on
12
December 20, 1999. The Compensation Committee believes that Mr. Klein's total
compensation for the three months ended December 31, 1999 and the year ended
December 31, 2000 was appropriate for his position, particularly in view of his
performance. Bingham and Mr. Klein entered into an employment agreement as of
January 1, 2000. See "-- Employment Agreements."
Respectfully submitted,
Brian M. Hermelin
Robert H. Orley
Arthur A. Weiss
13
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The line graph below compares the yearly percentage change in the
cumulative total shareholder return on Bingham's common stock against the
cumulative total return of a broad market index composed of all issuers listed
on the Nasdaq SmallCap Market, the SNL Mortgage Company Index (an industry index
composed of 60 publicly-traded residential mortgage companies) and the SNL
Commercial Lenders Index (and industry index composed of 34 publicly-traded
commercial mortgage companies), for the period starting on November 13, 1997
(the date of Bingham's initial public offering) and ending on December 31, 2000.
This line graph assumes a $100 investment on November 13, 1997, a reinvestment
of dividends and actual increase of the market value of Bingham's common stock
relative to an initial investment of $100. The comparisons in this table are
required by the SEC and are not intended to predict future performance of
Bingham's common stock.
TOTAL RETURN PERFORMANCE
[PERFORMANCE GRAPH]
<Table>
<Caption>
PERIOD ENDING
---------------------------------------------------------------------------
INDEX 11/13/97 09/30/98 03/31/99 12/31/99 03/31/00 12/31/00
----- -------- -------- -------- -------- -------- --------
Bingham Financial Services Corp. 100.00 135.90 157.69 92.31 74.36 23.08
NASDAQ -- Total US* 100.00 109.75 159.94 265.03 297.45 159.47
SNL Commercial Lenders Index 100.00 87.27 87.66 101.65 95.10 44.89
SNL ALL Mortgage Bank Index 100.00 67.15 62.52 40.48 37.36 58.35
</Table>
14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Based upon information available to us, the following table shows, as of
November 1, 2001, the shareholdings of:
- each person known to us to be the beneficial owner of more than 5% of our
common stock;
- each of our directors;
- the Named Executive Officers; and
- all of our executive officers and directors as a group.
<Table>
<Caption>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING SHARES(1)
------------------- -------------------- ---------------------
Gary A. Shiffman.............................. 90,332(2) 3.54%
31700 Middlebelt Road, Suite 145
Farmington Hills, MI 48334
Ronald A. Klein............................... 41,633(3) 1.62
260 E. Brown Street, Suite 200
Birmingham, MI 48009
Robert H. Orley............................... 92,500(4) 3.63
2000 North Woodward, Suite 130
Bloomfield Hills, MI 48304
Brian M. Hermelin............................. 137,000(5) 5.37
2064 D Street
Belleville, MI 48111
Arthur A. Weiss............................... 146,920(6) 5.77
One Woodward Avenue, Suite 2400
Detroit, MI 48226
Mark A. Gordon................................ 500(7) *
3155 W. Big Beaver Road
Troy, Michigan 48084
W. Anderson Geater, Jr. ...................... 3,333(8) *
260 E. Brown Street, Suite 200
Birmingham, MI 48009
J. Peter Scherer.............................. 14,708(9) *
260 E. Brown Street, Suite 200
Birmingham, MI 48009
Daniel E. Bober............................... 113,784(10) 4.47
260 E. Brown Street, Suite 200
Birmingham, MI 48009
Creighton J. Weber............................ 113,584(11) 4.47
260 E. Brown Street, Suite 200
Birmingham, MI 48009
</Table>
15
<Table>
<Caption>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING SHARES(1)
------------------- -------------------- ---------------------
Lois T. Shiffman.............................. 242,714(12) 9.54
5315 Isle Royale Ct
West Bloomfield, MI 48323
All current executive officers and directors
as a group (8 persons)(13).................. 527,626 20.28
</Table>
- -------------------------
* Less than 1% of the outstanding shares.
(1) In accordance with SEC regulations, the percentage calculations are based
on 2,542,988 shares of common stock issued and outstanding as of November
1, 2001, plus shares of common stock which may be acquired pursuant to
options exercisable within 60 days of November 1, 2001 by each individual
or group listed.
(2) Includes 11,666 shares of common stock that may be acquired pursuant to
options exercisable within 60 days of November 1, 2001.
(3) Includes 23,333 shares of common stock that may be acquired pursuant to
options exercisable within 60 days of November 1, 2001 and 300 shares of
common stock held by a trust for the benefit of Mr. Klein's wife.
(4) Includes 5,000 shares of common stock that may be acquired pursuant to
options exercisable within 60 days of November 1, 2001. Includes 60,000
shares held by the Four O Group, L.L.C., a Michigan limited liability
company, which are attributable to Mr. Orley because he is the manager of
the limited liability company. Includes 7,500 shares held by Mr. Orley's
wife that are attributable to him.
(5) Includes 5,000 shares of common stock that may be acquired pursuant to
options exercisable within 60 days of November 1, 2001. Includes 70,000
shares of common stock held by Kamar J. Fabri, a Michigan limited
partnership, and 18,000 shares of common stock held by Lamm Investments, a
Michigan limited partnership, which are attributable to Mr. Hermelin
because he is the President of Gamm, Inc. a Michigan corporation and the
general partner of the partnerships.
(6) Includes 49,420 shares of common stock held by the Lois T. Shiffman
Qualified Annuity Trust u/t/a dated March 20, 2000, of which Mr. Weiss is
the sole trustee; 22,500 shares of common stock held by the 1997 Shiffman
Charitable Remainder Trust, of which Mr. Weiss is the co-trustee; and
67,000 shares of common stock owned by the Estate of Milton M. Shiffman, of
which Mr. Weiss is the co-personal representative. Mr. Weiss disclaims
beneficial ownership of all such shares. Includes 5,000 shares of common
stock that may be acquired pursuant to options exercisable within 60 days
of November 1, 2001.
(7) Includes 500 shares of common stock that may be acquired pursuant to
options exercisable within 60 days at November 1, 2001.
(8) Includes 3,333 shares of common stock that may be acquired pursuant to
options exercisable within 60 days of November 1, 2001.
(9) Includes 4,999 shares of common stock that may be acquired pursuant to
options exercisable within 60 days of November 1, 2001.
(10) Includes 200 shares of common stock held by two trusts for the benefit of
Mr. Bober's children, as to which beneficial ownership is disclaimed. We
have agreed to file a registration statement to register 350,065 shares of
our common stock held by the former owners of Bloomfield Acceptance
Company, L.L.C., and Bloomfield Servicing Company, L.L.C., our former
commercial real estate mortgage lending and servicing subsidiaries. We sold
substantially all of
16
the assets of these subsidiaries in June 2001. Persons whose shares will be
registered include Mr. Bober and Mr. Weber, each of whom resigned as a
director and executive officer of Bingham when the assets were sold, and
various former employees of the subsidiaries.
(11) We have agreed to file a registration statement to register 350,065 shares
of our common stock held by the former owners of Bloomfield Acceptance
Company, L.L.C., and Bloomfield Servicing Company, L.L.C., our former
commercial real estate mortgage lending and servicing subsidiaries. We sold
substantially all of the assets of these subsidiaries in June 2001. Persons
whose shares will be registered include Mr. Bober and Mr. Weber, each of
whom resigned as a director and executive officer of Bingham when the
assets were sold, and various former employees of the subsidiaries.
(12) Includes 22,500 shares of common stock held by the 1997 Shiffman Charitable
Remainder Trust, of which Mrs. Shiffman is the co-trustee, and 67,000
shares of common stock held by the Estate of Milton M. Shiffman, of which
Mrs. Shiffman is a co-personal representative.
(13) Includes 45,498 shares of common stock that may be acquired pursuant to
options exercisable within 60 days of November 1, 2001. Includes 138,920
shares of common stock owned by executive officers and directors with
respect to which beneficial ownership is disclaimed. Does not include
holdings of Mr. Bober or Mr. Weber, each of whom resigned as a director and
executive officer of Bingham as of June 13, 2001.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors, executive officers and beneficial owners of more than 10% of our
capital stock to file reports of ownership and changes of ownership with the SEC
and Nasdaq. Based solely on its review of the copies of such reports received by
it, and written representations from certain reporting persons, we believe that
during the year ended December 31, 2000, our directors, executive officers and
beneficial owners of more than 10% of our common stock timely filed all required
reports.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Professional Fees
During the fiscal year ended December 31, 2000, the law firm of Jaffe,
Raitt, Heuer & Weiss, Professional Corporation, acted as our general counsel and
represented us in various matters. Arthur A. Weiss, one of our directors, is a
shareholder of Jaffe, Raitt, Heuer & Weiss.
Relationship with Sun Communities Operating Limited Partnership
Gary A. Shiffman is a director and executive officer of Sun Communities,
Inc. Mr. Weiss is also a director of Sun. Through its operating subsidiary, Sun
Communities Operating Limited Partnership, Sun currently provides financing to
the Company through three separate facilities: a $4.0 million subordinated term
loan, bearing interest at the rate of 9.75% per annum (the "Term Loan"); a $10.0
million subordinated demand line of credit, bearing interest at a rate of LIBOR
plus a spread (the "$10 Million Line"); and a $50.0 million subordinated demand
line of credit, bearing interest at a rate of LIBOR plus a spread (the "$50
Million Line" and, together with the Term Loan and $10 Million Line, the
"Subordinated Debt Facilities"). The Term Loan matures on September 30,
17
2004. The Term Loan may be paid in full or in part without premium or penalty
subject to approval of Bingham's non-employee directors.
The entire unpaid principal balance of each of the $10 Million Line and the
$50 Million Line, together with all accrued and unpaid interest, will be due and
payable in full within ten days after the date of demand. The Sun operating
partnership in its sole discretion may refuse to make advances under the $50
Million Line. As of December 31, 2000 there was $4.0 million outstanding under
the Term Loan, no borrowings under the $10 Million Line, and $35.8 million
outstanding under the $50 Million Line.
Bingham has granted the Sun operating partnership a subordinated security
interest in substantially all of its assets to secure its obligations under the
Subordinated Debt Facilities.
In connection with the Term Loan, in 1997 we issued warrants to Sun to
purchase up to 400,000 shares of common stock at our initial public offering
price of $10 per share. In exchange for offering us as a preferred financing
source to potential home buyers in Sun's communities we granted Sun options to
purchase 330,000 shares of our common stock. These options vest in eight equal
annual amounts beginning in January 2001. In April 1999, we began to pay Sun a
1% origination fee for loans originated in Sun's communities, similar to our
arrangements with our other dealers. For the year ended December 31, 2000, we
paid Sun approximately $44,000 under this arrangement.
Sale of MHFC, Inc.
As part of our plan to conduct all of our manufactured home loan
origination operations through Dynex Financial, Inc., in March 2000 Dynex
Financial purchased $66.9 million of loans from MHFC, Inc., a subsidiary of
Bingham specializing in manufactured home lending, and we sold MHFC to Gwenuc,
LLC, a limited liability company owned by Gary A. Shiffman, Chairman of Bingham.
Gwenuc paid us $400,000 in cash and assumed $2.7 million of seller financed debt
to us.
Proposed Recapitalization
We intend to effect a recapitalization of our operating subsidiaries by the
end of the first quarter in 2002. Under the recapitalization plan, certain
parties will invest $40 million into the recapitalized operating subsidiaries.
The parties include: (a) Shiffman Family LLC, of which Mr. Shiffman is a
one-third owner and Mr. Weiss is the manager; and (b) SUI TRS, Inc., of which
(i) Sun Communities Operating Limited Partnership owns all of the preferred
non-voting stock (which represents 95% of the total equity of the investing
corporation) and (ii) Mr. Shiffman and the Estate of Milton M. Shiffman (of
which Mr. Shiffman is a beneficiary and Mr. Weiss is a co-personal
representative) own all of the voting common stock (which represents 95% of the
total equity of the investing corporation). Shiffman Family LLC and SUI TRS,
Inc. will receive ownership interests of 8.42% and 31.58%, respectively, in the
recapitalized subsidiaries. Together with the other participant in the
transaction, these entities will receive an aggregate 80% interest in the
recapitalized subsidiaries. Bingham will retain an initial 20% ownership
interest in the recapitalized subsidiaries, subject to future dilution.
While the investors have signed an investment agreement, the consummation
of the recapitalization is subject to the receipt of shareholder and regulatory
approvals and other customary conditions. Substantially all of the proceeds of
the recapitalization will be used to pay off the Subordinated Debt Facilities,
which we expect will be terminated. Although it has not made formal demand for
payment, Sun Communities Operating Limited Partnership has expressed its strong
desire that we repay the Subordinated Debt Facilities in their entirety in the
near term.
18
RATIFICATION OF INDEPENDENT AUDITOR
(PROPOSAL TWO)
The firm of Plante & Moran, LLP served as Bingham's independent auditor for
the fiscal year ended December 31, 2000. The board of directors has selected
Plante & Moran to continue in this capacity for the fiscal year ending December
31, 2001. Although the selection of Plante & Moran is not required to be
submitted to a vote of the shareholders, the board of directors believes it
appropriate as a matter of policy to request that the shareholders ratify the
selection of the independent auditor. Accordingly, Bingham is asking the
stockholders to ratify the selection of Plante & Moran as independent auditor.
Representatives of Plante & Moran are expected to be present at the annual
meeting, and will have the opportunity to make a statement if they desire to do
so and to respond to appropriate questions.
The affirmative vote of the holders of a majority of shares of common stock
issued and outstanding is required to ratify the appointment of Plante & Moran
as independent auditor.
If the appointment of Plante & Moran as independent auditor for fiscal 2001
is not ratified by the shareholders, the board of directors will consider other
auditors for our next fiscal year. However, because of the difficulty in making
any substitution of auditor for the current year, the appointment of Plante &
Moran for fiscal 2001 will stand, unless the board of directors finds other
reason for making a change.
BINGHAM'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
RATIFICATION OF THE SELECTION OF PLANTE & MORAN AS BINGHAM'S INDEPENDENT AUDITOR
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2001. Proxies solicited by the board
will be voted "for" the nominees unless instructions to withhold or to the
contrary are given.
Change in independent accountants
On September 30, 1999, we dismissed PricewaterhouseCoopers LLP as our
independent accountants. The reports of PricewaterhouseCoopers on our financial
statements for the years ended September 30, 1997 and 1998 contained no adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principle. The decision not to continue
the relationship with PricewaterhouseCoopers was recommended by our Audit
Committee and approved by our board of directors. There were no disagreements
with PricewaterhouseCoopers on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of PricewaterhouseCoopers,
would have caused it to make reference thereto in its report on the financial
statements.
We engaged Plante & Moran as our independent accountants as of September
30, 1999. This decision was made pursuant to a recommendation of the Audit
Committee and was approved by the board of directors on September 30, 1999. The
decision to engage Plante & Moran was based on Plante & Moran's experience in
providing accounting and auditing services to specialized financial
institutions.
19
GENERAL INFORMATION
SHAREHOLDERS' PROPOSALS
Any and all shareholder proposals for inclusion in the proxy materials for
Bingham's next annual meeting of shareholders to be held in 2002 must comply
with the rules and regulations promulgated under the Securities Exchange Act of
1934 Proposals should be addressed to Bingham's Secretary. Proposals must be
received by Bingham, at its offices at 260 East Brown Street, Suite 200,
Birmingham, Michigan 48009, not later than August 1, 2002. However, if the date
of Bingham's 2002 annual meeting is more than 30 days before the date of this
year's annual meeting, the deadline will be a reasonable time before Bingham
begins to print and mail next year's proxy materials. In that case, Bingham will
announce the new deadline in a quarterly report on Form 10-Q to be filed with
the SEC or by press release.
Bingham's bylaws also contain certain provisions that affect shareholder
proposals. Bingham's bylaws provide that: (a) with respect to an annual meeting
of shareholders, nominations of persons for election to the board of directors
and the proposal of business to be considered by shareholders may be made only
(i) pursuant to Bingham's notice of the meeting, (ii) by the board of directors,
or (iii) by a shareholder who is entitled to vote at the meeting and has
complied with the advance notice procedures set forth in the bylaws; and (b)
with respect to special meetings of shareholders, only the business specified in
Bingham's notice of meeting may be brought before the meeting of shareholders,
and nominations of persons for election to the board of directors may be made
only (i) by the board of directors, or (ii) provided that the board of directors
has determined that directors shall be elected at such meeting, by a shareholder
who is entitled to vote at the meeting and has complied with the advance notice
provisions set forth in the bylaws.
OTHER MATTERS
Shareholders are being furnished with copies of our Annual Report on Form
10-K, as amended, for the year ended December 31, 2000, which contains financial
statements for the period then ended.
Management knows of no matters which will be presented for consideration at
the annual meeting other than those stated in the notice of meeting. However, if
any other matters do properly come before the annual meeting, the person or
persons named in the accompanying proxy form will vote the proxy in accordance
with their best judgment regarding such matters, should an emergency or
unexpected occurrence make the use of such discretionary authority necessary,
and also regarding matters incident to the conduct of the meeting, including any
decisions to adjourn the meeting.
WE REQUEST THAT SHAREHOLDERS COMPLETE, DATE AND SIGN THE ACCOMPANYING FORM
OF PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
By Order of the Board of Directors
GARY A. SHIFFMAN
Chairman of the Board and Secretary
Dated: December 7, 2001
20
APPENDIX A
BINGHAM FINANCIAL SERVICES CORPORATION
CHARTER FOR AUDIT COMMITTEE
Purpose & Composition
The charter details the composition, roles and responsibilities of the
audit committee. The board of directors shall appoint at least three directors
who are independent of the Company's management and have no relationships that
could interfere with their independence and execution of the committee's
responsibilities to the committee. At least one member must have expertise in
accounting or other aspects of financial management, and all members are
expected to be financially literate or to gain such literacy after appointment.
The committee shall review this charter annually and receive approval for its
continued use (and any recommended amendments) from the board of directors.
The Role of the Committee
The audit committee assists the board of directors in their oversight of
the Company to protect the interests of current and potential shareholders, the
investment industry, and others affected by the Company's operations in the
areas of adequacy and accuracy of financial statements, ethics and legal
compliance. In this role, the committee shall have complete access to all
records, employees and facilities of Company, along with the ability to retain
outside counsel or other experts to assist it in the completion of its
responsibilities, and the freedom to investigate any situation brought to its
attention. The committee is expected to maintain clear communication with
Company management, internal audit personnel and independent auditors.
Delineation of Responsibilities
The audit committee is principally responsible for overseeing the Company's
financial reporting and reporting details of such activities to the board,
primarily in the form of auditing the financial statements which management
prepares on the Company's behalf. The committee shall take a flexible approach
to the execution of its role to best reflect current circumstances and changing
business conditions, and is expected to establish on the board's behalf the
overall attitude of the Company as it pertains to financial reporting, risk
management and ethical conduct.
Ongoing Processes
In performing these responsibilities, the audit committee shall follow a
number of prescribed guidelines, and may augment these when appropriate:
- Independent auditors are accountable to the committee and the board in
their roles as appointed representatives of the Company's shareholders.
As such, the committee is expected to evaluate, and if necessary,
recommend replacement of the independent auditors to the board and
shareholders. The committee shall review the nature of this independence,
and any written disclosures prepared by the auditors, with the auditors.
- The committee shall discuss the plans and scope of audits, including
staffing and compensation, with both internal auditors and independent
auditors. The committee shall conduct separate meetings with both the
internal auditors and independent auditors, both with and without members
of the management team present. Finally, the committee will discuss
21
the effectiveness and adequacy of financial controls, accounting
procedures, risk management, and legal and ethical compliance issues with
management, internal auditors and independent auditors.
- Before the filing of the Company's quarterly Form 10-Q report, the
committee, management and the independent auditors shall review the
interim financial statements. The independent auditors shall discuss the
results with the committee (or its chairperson), along with any other
matters required under generally accepted auditing standards.
- Before the filing of the Company's annual Form 10-K report, the
committee, management and the independent auditors shall review the
interim financial statements. This review should look beyond adequacy to
the quality of the underlying accounting principles, the clarity of any
financial statement disclosures and whether accounting judgments are
reasonable. The independent auditors shall discuss the results with the
committee, along with any other matters required under generally accepted
auditing standards.
22
- --------------------------------------------------------------------------------
BINGHAM FINANCIAL SERVICES CORPORATION
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS ON DECEMBER 19, 2001
The undersigned hereby appoints Ronald A. Klein and Gary A. Shiffman, or either
of them, as attorneys and proxies of the undersigned shareholder, with full
power of substitution, to vote on behalf of the undersigned and in his or her
name and stead, all shares of the common stock of Bingham Financial Services
Corporation (the "Company") which the undersigned would be entitled to vote if
personally present at the Company's Annual Meeting of Shareholders to be held at
Birmingham Community House, 380 East Bates Street, Birmingham, MI 48009, on
Wednesday, December 19, 2001, and at any adjournments thereof.
The undersigned shareholder acknowledges receipt of the Notice of Annual Meeting
and Proxy Statement dated December 7, 2001.
The giving of this Proxy does not affect the right of the undersigned
shareholder to vote in person should the undersigned shareholder attend the
Annual Meeting. This Proxy may be revoked at any time before it is voted.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH
PROPOSAL.
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PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES OF AMERICA.
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DO YOU HAVE ANY COMMENTS?
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22
BINGHAM FINANCIAL SERVICES CORPORATION
Dear Shareholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are issues related to the management and operation of the Company that
require your immediate attention and approval. These are discussed in detail in
the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders, December
19, 2001.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Bingham Financial Services Corporation
- Please Detach and Mail in the Envelope Provided -
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A [X] PLEASE MARK YOUR __ |
VOTES AS IN THIS | |___
EXAMPLE.
WITHHOLD
FOR AUTHORITY
all nominees to vote for all nominees
listed at right listed at right
1. Election
of [ ] [ ] NOMINEES: Mark A. Gordon
Directors. Brian M. Hermelin
NOTE: IF YOU DO NOT WISH YOUR SHARES VOTED
"FOR" A PARTICULAR NOMINEE, MARK THE "FOR ALL
NOMINEES" BOX AND STRIKE A LINE THROUGH THAT
NOMINEE'S NAME. YOUR SHARES WILL BE VOTED "FOR"
THE REMAINING NOMINEES.
FOR AGAINST ABSTAIN
2. The ratification of the appointment of Plante & [ ] [ ] [ ]
Moran, LLP as independent auditors for the
fiscal year ending December 31, 2001.
3. The above-appointed proxies are authorized to vote upon all matters
incidental to the conduct of the Annual Meeting and such other business as may
properly come before the Annual Meeting in accordance with their best judgment.
Mark box at right if an address change or comment has been noted on the reverse
side of this card. [ ]
Date
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SHAREHOLDER SIGN HERE Co-owner sign here
NOTE: Please be sure to sign and date this Proxy.