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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
ST. PAUL BANCORP
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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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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ST. PAUL BANCORP LOGO
6700 West North Avenue
Chicago, Illinois 60707
(773) 622-5000
March 27, 1997
Dear Shareholder:
You are invited to attend the annual meeting of shareholders (the "Annual
Meeting") of St. Paul Bancorp, Inc. (the "Corporation") to be held on Wednesday,
May 7, 1997 at 10:00 a.m. at the Drury Lane Oakbrook, 100 Drury Lane, Oakbrook
Terrace, Illinois 60181.
The Annual Meeting has been called for the following purposes: (1) to elect
each of three directors for a three-year term; (2) to ratify the appointment by
the Board of Directors of the firm of Ernst & Young LLP as independent auditors
of the Corporation for the year ending December 31, 1997; and (3) to transact
such other business as may properly come before the Annual Meeting or any
adjournments thereof.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS THAT YOU VOTE "FOR"
ELECTION OF THE THREE NOMINEES OF THE BOARD OF DIRECTORS AS DIRECTORS; AND "FOR"
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF
THE CORPORATION FOR THE YEAR ENDING DECEMBER 31, 1997. The accompanying proxy
statement provides detailed information concerning the matters to be voted on at
the Annual Meeting. Also enclosed is our 1996 annual report to shareholders,
which reviews results for the 1996 fiscal year.
It is important that your shares be represented at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, you are requested to
complete, date, sign and return the enclosed proxy card in the enclosed
postage-paid envelope.
On behalf of the Board of Directors, thank you for returning your proxy and
for your continued interest and support.
Sincerely yours,
JOSEPH C. SCULLY
Joseph C. Scully
Chairman of the Board and
Chief Executive Officer
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ST. PAUL BANCORP LOGO
6700 West North Avenue
Chicago, Illinois 60707
(773) 622-5000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, MAY 7, 1997
------------------------
NOTICE IS HEREBY GIVEN that the 1997 annual meeting of shareholders (the
"Annual Meeting") of St. Paul Bancorp, Inc. (the "Corporation") will be held on
Wednesday, May 7, 1997 at 10:00 a.m. at the Drury Lane Oakbrook, 100 Drury Lane,
Oakbrook Terrace, Illinois 60181 for the following purposes:
(1) To elect each of three directors for a three-year term (Proposal 1);
(2) To ratify the appointment by the Board of Directors of the firm of
Ernst & Young LLP as independent auditors of the Corporation for the
year ending December 31, 1997 (Proposal 2); and
(3) To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Pursuant to the Corporation's Bylaws, the Board of Directors has fixed the
close of business on March 18, 1997 as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting. Only
holders of common stock of record at the close of business on that date will be
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
In the event that there are not sufficient votes to approve any one or more
of the foregoing proposals at the time of the Annual Meeting, the Annual Meeting
may be adjourned in order to permit further solicitation of proxies by the
Corporation.
By Order of the Board of Directors
JOSEPH C. SCULLY
Joseph C. Scully
Chairman of the Board and
Chief Executive Officer
Chicago, Illinois
March 27, 1997
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, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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ST. PAUL BANCORP LOGO
6700 West North Avenue
Chicago, Illinois 60707
(773) 622-5000
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 7, 1997
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SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This proxy statement is furnished to shareholders of St. Paul Bancorp, Inc.
(the "Corporation") in connection with the solicitation by the Board of
Directors of the Corporation of proxies to be used at the 1997 annual meeting of
shareholders (the "Annual Meeting") to be held on Wednesday, May 7, 1997 at
10:00 a.m. at the Drury Lane Oakbrook, 100 Drury Lane, Oakbrook Terrace,
Illinois 60181, and at any adjournments thereof. This proxy statement and the
accompanying proxy are initially being mailed to shareholders on or about March
27, 1997.
The Annual Meeting has been called for the following purposes: (1) to elect
each of three directors for a three-year term; (2) to ratify the appointment by
the Board of Directors of the firm of Ernst & Young LLP as independent auditors
of the Corporation for the year ending December 31, 1997; and (3) to transact
such other business as may properly come before the Annual Meeting or any
adjournments thereof.
If the enclosed form of proxy is properly executed and returned to the
Corporation 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 (1) FOR PROPOSAL 1 TO ELECT EACH OF
THE THREE NOMINEES TO THE BOARD OF DIRECTORS; AND (2) FOR PROPOSAL 2 TO RATIFY
THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF THE CORPORATION
FOR THE YEAR ENDING DECEMBER 31, 1997. Except for procedural matters incident to
the conduct of the Annual Meeting, the Corporation does not know of any matters
other than those described in the Notice of Annual Meeting that are to come
before the Annual Meeting. If any other matters are properly brought before the
Annual Meeting, the persons named in the accompanying proxy will vote the shares
represented by the proxies on such matters as determined by a majority of the
Board of Directors.
The presence of a shareholder at the Annual Meeting will not automatically
revoke such shareholder's proxy. Shareholders may, however, revoke a proxy at
any time prior to its exercise by delivering to the Corporation a duly executed
proxy bearing a later date, by attending the Annual Meeting and voting in
person,
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or by filing a written notice of revocation with Clifford M. Sladnick, Senior
Vice President, General Counsel and Corporate Secretary, at 6700 West North
Avenue, Chicago, Illinois 60707.
The cost of soliciting proxies in the form enclosed herewith will be borne
by the Corporation. In addition to the solicitation of proxies by mail, the
Corporation and its wholly-owned subsidiary, St. Paul Federal Bank For Savings
(the "Bank" or "St. Paul Federal"), through their directors, officers and
employees, may also solicit proxies personally or by telephone or
telecommunication. The Corporation also will request persons, firms and
corporations holding shares in their names or in the name of their nominees,
which are beneficially owned by others, to send proxy material to and obtain
proxies from such beneficial owners and will reimburse such holders for their
reasonable expenses in doing so. The Corporation also has retained Morrow & Co.
to assist in the solicitation of proxies at a fee of $7,000, plus reimbursement
of certain out-of-pocket expenses.
The securities which can be voted at the Annual Meeting consist of shares
of common stock, par value $.01 per share (the "Common Stock") of the
Corporation, with each share entitling its owner to one vote on all matters.
There is no cumulative voting of shares. The close of business on March 18, 1997
has been fixed by the Board of Directors as the record date for the
determination of shareholders entitled to vote at the Annual Meeting. The number
of shares of the Corporation's Common Stock outstanding on March 18, 1997 was
22,996,602. There were approximately 6,547 record holders of the Corporation's
Common Stock as of that date. The presence, in person or by proxy, of at least
one-third of the total number of issued and outstanding shares of Common Stock
of the Corporation is necessary to constitute a quorum at the Annual Meeting.
Votes cast, either in person or by proxy, will be tabulated by The First
National Bank of Boston. Under Delaware corporate law and the Corporation's
Bylaws, directors are elected by plurality of votes of shares present (in person
or by proxy) and entitled to vote. Unless otherwise required by law or the
Corporation's Certificate of Incorporation or Bylaws, any other matter put to a
shareholder vote will be decided by the affirmative vote of a majority of the
votes cast on the matter. Abstentions and broker non-votes will be treated as
shares that are present, or represented, and entitled to vote for purposes of
determining the presence of a quorum. Broker non-votes will not be counted as
shares present and entitled to vote nor as a vote cast on any matter presented
at the Annual Meeting.
THE CORPORATION IS REQUIRED TO FILE AN ANNUAL REPORT/FORM 10-K FOR ITS
FISCAL YEAR ENDED DECEMBER 31, 1996 WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE "SEC"). A COPY OF THE ANNUAL REPORT/FORM 10-K, EXCLUDING EXHIBITS,
ACCOMPANIES THIS PROXY STATEMENT. FOR A REASONABLE FEE, THE CORPORATION WILL
PROVIDE COPIES OF THE EXHIBITS TO THE ANNUAL REPORT/FORM 10-K UPON WRITTEN
REQUEST DIRECTED TO CLIFFORD M. SLADNICK, SENIOR VICE PRESIDENT, GENERAL COUNSEL
AND CORPORATE SECRETARY, ST. PAUL BANCORP, INC., 6700 WEST NORTH AVENUE,
CHICAGO, ILLINOIS 60707.
ELECTION OF DIRECTORS
(PROPOSAL 1)
Under the Corporation's Bylaws, the number of directors is set at nine. The
directors are divided into three classes. The term of office of only one class
of directors expires in each year, and their successors are elected for terms of
three years and until their successors are elected and qualified.
At the 1997 Annual Meeting, each of three directors will be elected for a
three-year term. Unless otherwise specified on the proxy, it is the intention of
the persons named in the proxy to vote the shares represented by each properly
executed proxy for the election as director of the persons named below as
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nominees. The Board of Directors believes that each of the nominees will stand
for election and will serve if elected as directors. However, if any of the
persons nominated by the Board of Directors fails to stand for election or will
be unable to accept election, the proxies will be voted for the election of such
other person or persons as the Board of Directors may nominate.
INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS
The following table sets forth the names of the Board of Directors' three
nominees for election as directors and those directors who will continue to
serve as such after the 1997 Annual Meeting. Also set forth is certain other
information, some of which has been obtained from the Corporation's records and
some of which has been supplied by the nominees and continuing directors, with
respect to each such person's age at March 18, 1997, the periods during which
such person has served as a director of the Bank, and positions currently held
with the Corporation. Each person has been a director of the Corporation since
its formation in 1987, except for Patrick J. Agnew, who joined the Board in
1989, John W. Croghan and Jean C. Murray, O.P., who joined the Board in 1993,
and Paul C. Gearen, who joined the Board in 1997.
DIRECTOR OF
THE BANK POSITIONS HELD WITH EXPIRATION
AGE SINCE THE CORPORATION OF TERM
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NOMINEES FOR 3-YEAR TERM:
Paul C. Gearen (a).................... 45 1997 Director 2000
Joseph C. Scully (a)(b)(c)(d)(e)(f)... 56 1980 Chairman of the Board, 2000
Chief Executive Officer
and Director
John J. Viera (d)(f)(g)(h)(i)......... 65 1978 Director 2000
CONTINUING DIRECTORS:
Patrick J. Agnew (a)(b)(c)(d)(e)(f)... 54 1989 President, Chief Operating 1998
Officer and Director
William A. Anderson (b)(c)(d)(i)...... 71 1985 Director 1998
Alan J. Fredian (d)(e)(g)(h).......... 66 1977 Director 1998
Jean C. Murray, O.P. (e)(f)........... 69 1993 Director 1998
John W. Croghan (b)(i)................ 66 1993 Director 1999
Kenneth J. James (a)(c)............... 64 1987 Director 1999
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(a) Member of the Loan Committee of the Bank.
(b) Member of the Investment Committee of the Bank.
(c) Member of the Loan Loss Reserve Committee of the Bank.
(d) Member of the Executive Committees of the Corporation and the Bank.
(e) Member of the Profit Sharing, Pension and ESOP Trust Committee of the Bank.
(f) Member of the Corporate Responsibility Committee of the Bank.
(g) Member of the Organizational Planning Committees of the Corporation and the
Bank.
(h) Member of the Stock Option Committee of the Corporation.
(i) Member of the Audit and Accounting Committees of the Corporation and the
Bank.
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The principal occupation of each nominee and continuing director of the
Corporation for the past five years is set forth below.
PAUL C. GEAREN is the President of Nicolson, Porter & List, Inc., a
corporate real estate brokerage and management company, specializing in
industrial real estate. He is a director of Motion Engineering, Inc., a software
company in Santa Barbara, California that manufactures motion control boards for
computerized manufacturing. He is also the Chairman of Records Management
Services, Inc., a national records storage firm. Mr. Gearen is a member of the
Chicago Council on Foreign Relations and has been involved in fundraising for
various organizations, including Horizons for Youth, ACORN, Link Unlimited and
DePorres House. Mr. Gearen holds a BA degree from the University of Wisconsin,
Madison.
JOSEPH C. SCULLY joined the Bank in 1963 as a real estate appraiser. He was
appointed Assistant Vice President in 1965, Vice President in 1968, Corporate
Secretary in 1971 and Senior Vice President in 1974. He was elected President,
Chief Operating Officer and a Director in 1980. He was elected Chief Executive
Officer in 1982. Mr. Scully held the dual roles of President and Chief Executive
Officer from 1982 to 1989, when he relinquished the role of President to become
Chairman and Chief Executive Officer. He holds undergraduate and graduate
degrees from Loyola University. In 1981, Loyola University named him alumnus of
the year. He serves as a trustee of Loyola University and chairs its investment
committee. Mr. Scully serves on the board of the Austin Career Education Center
Corp., the advisory board of Goodwill Industries, and the Leadership Committee
of the Central Board of Neighborhood Housing Services. For the 1994 United
Way/Crusade of Mercy campaign, he was chairman of the West Region's Major
Employers Division. Mr. Scully presently serves as a member of the Thrift
Institutions Advisory Council, a panel established by the Federal Reserve Board.
He is also the past chairman of the Community Investment Corporation of Chicago,
the Institute of Financial Education of the United States League, the Federal
Savings and Loan Council and the Chicagoland Association of Savings
Institutions.
JOHN J. VIERA is a retired Corporate Vice President of Commonwealth Edison
Company. He holds an undergraduate degree in electrical engineering from
Marquette University and a graduate degree in business administration from the
Illinois Institute of Technology. After joining Commonwealth Edison Company in
1957, he held several engineering and administrative positions. Mr. Viera is a
member of the Economic and Serra Clubs of Chicago, a Northwestern Associate and
a member of the advisory boards for Marquette University and the Local
Initiatives Support Corporation. He is a member of the Illinois Housing
Development Authority and a trustee of Roosevelt University and the Chicago
Architecture Foundation. He is on the boards of Children's Memorial Hospital,
Urban Gateways, Neighborhood Housing Services and Catholic Charities.
PATRICK J. AGNEW joined the Bank in 1979 as General Counsel. He was
appointed President, Chief Operating Officer and a Director in December 1989.
Prior to joining the Bank, he was a partner in the law firm of Righeimer, Martin
and Cinquino. Mr. Agnew holds a juris doctor degree from DePaul University
College of Law. He serves on the boards of directors of the Oak Park Development
Corporation and the Oak Park YMCA. Mr. Agnew is a board member of the
Chicagoland Association of Savings Institutions and the Illinois League of
Savings Associations. He is also a member of the President's Council of Rosary
College.
WILLIAM A. ANDERSON is a Certified Public Accountant and a retired partner
of Ernst & Young LLP. While with that firm, he specialized in providing
professional accounting services to the savings and loan industry. Since his
retirement, he has provided consulting services to financial institutions and
other companies. He is Secretary, Treasurer of the Mason Foundation, Inc., a
private charitable foundation, and a member of the board of trustees of the
Fourth Presbyterian Church of Chicago. He is a member of the
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American Institute of Certified Public Accountants and the Illinois CPA Society.
Mr. Anderson holds a bachelor's degree in accounting from the University of
Illinois.
JOHN W. CROGHAN is President of Lincoln Partners, a partnership of Lincoln
Capital Management Company, a Chicago-based investment counseling firm of which
he was a founder in 1967. Mr. Croghan is a graduate of Loyola University and
holds a Masters of Business Administration degree from Harvard University. He is
a director of Lindsay Manufacturing Company and Morgan Stanley's public
closed-end funds. Mr. Croghan serves on several non-profit boards, including
Northwestern University and Evanston Hospital.
ALAN J. FREDIAN is an organizational psychologist and president of Alan J.
Fredian and Associates, management consultants. Dr. Fredian is a retired
Professor of the Institute of Human Resources and Industrial Relations at Loyola
University and has been affiliated with the University since 1967. He has
authored several books and publications. He is a member of the Academy of
Management and the American Psychological Association's Division of Industrial
and Organizational Psychology. Dr. Fredian is a life member of the board of
directors of Building Owners and Managers Institute International. He holds a
doctorate degree in industrial psychology from the Illinois Institute of
Technology.
KENNETH J. JAMES is Chairman of the Board of James Investment Company, real
estate developers. He is a director of the Illinois Masonic Medical Center and
the Robert R. McCormick unit of the Chicago Boys' and Girls' Clubs. Mr. James is
also a director and Vice President/Secretary of the Homebuilders Association of
Greater Chicago. He holds an A.B. degree in economics from Stanford University
and a juris doctor degree from Northwestern University. Mr. James is a member of
the Illinois Bar.
JEAN C. MURRAY, O.P., is the retired President of Rosary College in River
Forest, Illinois. She has been affiliated with the College since 1961, serving
as a professor and an administrator in various capacities prior to her
appointment as President in 1981. She is currently an Associate Professor of
French and a senior advisor to the President of the College. Dr. Murray has been
a member of the Sinsinawa Dominicans since 1952. She holds an undergraduate
degree in French from Rosary College and a doctorate degree in French from the
University of Fribourg, Switzerland. She also holds a certificate from the
Institute of Educational Management at Harvard University. Dr. Murray is a
member of the Board of Governors of the American Heart Association of
Metropolitan Chicago and a trustee of North Central College in Naperville.
DIRECTOR COMPENSATION
Directors of the Corporation are not paid for attending meetings of the
Board of Directors of the Corporation. Each director of the Corporation is also
a director of the Bank. Non-employee directors of the Bank are paid an annual
director's fee of $24,000. In addition to the annual fee, non-employee directors
receive board and committee meeting fees of $500 per meeting ($600 for committee
chairpersons), based upon attendance. Non-employee directors also receive
monthly meeting fees of $500 per month from St. Paul Financial Development
Corporation and $200 per month from Annuity Network, Inc., which are both
wholly-owned subsidiaries of the Corporation, as well as $300 per month from SPF
Insurance Agency, Inc., a wholly-owned subsidiary of the Bank. Directors who are
employees of the Bank do not receive any such fees.
Under the terms of the Corporation's 1995 Incentive Plan, each non-employee
director is automatically granted, on the date of each annual meeting of
shareholders beginning with the 1995 Annual Meeting, a non-qualified option to
purchase 1,500 shares of the Corporation's Common Stock at an option price per
share equal to the fair market value of a share of Common Stock on the date of
grant.
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The Corporation and the Bank have adopted a nonqualified retirement plan,
as amended (the "Retirement Plan") for non-employee directors of the Corporation
and the Bank. Under the Retirement Plan, eligible directors receive annual
benefits consisting of a minimum of 60% (increasing to 70% for eleven or more
years of service and increasing by an additional 1% for each year of service in
excess of 20 years) of the regular annual compensation paid for services as a
director of the Corporation, the Bank or any of their subsidiaries during the
12-month period immediately preceding a termination of service (or, if greater,
during any 12 consecutive month period occurring during the three-year period
immediately preceding a termination of service). The Retirement Plan provides
that benefits are paid once a director reaches age 70; after the director's
permanent and total disability; after a director nominated by the Corporation is
not reelected; or after termination following a change in control. For the
definition of "change in control," see "Executive Compensation--Employment
Agreements." Benefits are not paid if the director is removed from the board for
"cause," as defined.
Monthly payments are made under the Retirement Plan for the number of
months equal to the number of full months the eligible director has served as a
director. Directors have the right to elect to receive a lump-sum payment, as
calculated based upon an actuarial determination of the present value of the
plan's benefits. The Retirement Plan provides for a spouse's benefit if the
director is married at the time of death. Eligible directors must agree not to
become an employee of any financial institution located within 50 miles of the
Bank's headquarters for a one-year period after termination of service as a
director in order to receive benefits. The Retirement Plan provides that the
obligation of the Corporation and the Bank to each eligible director will be
funded as each such director becomes entitled to receive payment of benefits.
The Retirement Plan may be amended or terminated at any time, but without
affecting the vested rights of directors to receive benefits.
CORPORATE GOVERNANCE AND OTHER MATTERS
The Board of Directors of the Corporation acts as a nominating committee
for selecting nominees for election as directors and has made its nominations
for the 1997 Annual Meeting. The Corporation's Bylaws also permit shareholders
eligible to vote at the Annual Meeting to make nominations for directors, but
only if such nominations are made pursuant to timely notice in writing to the
Secretary of the Corporation. To be timely, notice must be delivered to, or
mailed to and received at, the principal executive offices of the Corporation
not less than 30 days nor more than 90 days prior to the date of the meeting,
provided that at least 45 days' notice or prior public disclosure of the date of
the meeting is given or made to shareholders. Public disclosure of the date of
the 1997 Annual Meeting was made on March 17, 1997 by the issuance of a press
release followed by a filing of a Current Report on Form 8-K under the
Securities Exchange Act of 1934 (the "1934 Act") with the SEC. A shareholder's
notice of nomination must also set forth certain information specified in
Article III, Section 13 of the Corporation's Bylaws concerning each person the
shareholder proposes to nominate for election and the nominating shareholder.
Prior to printing this proxy statement, the Corporation had received no such
nominations.
The Boards of Directors of the Corporation and the Bank have each appointed
a standing audit committee. During the year ended December 31, 1996, the audit
committees each conducted four meetings. The current members of the audit
committees are Messrs. Anderson, Croghan and Viera. The duties of the committees
include reviewing with management and the Corporation's independent auditors the
annual financial statements, significant accounting policies, audit conclusions
regarding significant accounting estimates and the independent auditors' letter
to management concerning the effectiveness of financial and accounting controls.
In addition, the committees review the scope of the annual independent auditors'
audit and recommend to the Board of Directors the firm to be engaged as the
independent auditor. The committees
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also oversee the Corporation's internal audit function and review with the
Director of Internal Audit his conclusions regarding the adequacy of the
organization's internal controls. The committees may also examine and consider
other matters relating to the financial affairs of the Corporation and the Bank
as they determine appropriate.
The Boards of Directors of the Corporation and the Bank have each appointed
a standing organizational planning committee. During the year ended December 31,
1996, the organizational planning committees each conducted three meetings. The
current members of the organizational planning committees are Dr. Fredian and
Mr. Viera. The organizational planning committees function as compensation
committees. The duties of such committees include making recommendations to the
Boards of Directors concerning compensation of executive officers and employee
benefit plans. See "Executive Compensation--Report of the Organizational
Planning and Stock Option Committees on Executive Compensation."
The Boards of Directors of the Corporation and the Bank have each appointed
a standing executive committee. The Bylaws of the Corporation and the Bank give
the executive committees certain powers and authority in the management of the
business and affairs of the Corporation and the Bank when the Boards of
Directors are not in session. During the year ended December 31, 1996, no
executive committee meetings were conducted. The current members of the
executive committees are Dr. Fredian and Messrs. Agnew, Anderson, Scully and
Viera.
The Board of Directors of the Corporation has appointed a standing stock
option committee. The duties of the committee include making recommendations to
the Board of Directors concerning eligible persons to whom options will be
granted under the Corporation's 1995 Incentive Plan. During the year ended
December 31, 1996, the stock option committee conducted two meetings. The
current members of the stock option committee are Dr. Fredian and Mr. Viera. See
"Executive Compensation--Report of the Organizational Planning and Stock Option
Committees on Executive Compensation."
During 1996, the Corporation's Board of Directors held twelve meetings. No
incumbent director attended fewer than 75% of the aggregate of the total number
of meetings of the Corporation's Board of Directors and the total number of
meetings held by all committees of such board on which the director served.
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EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth certain summary information concerning the
compensation paid by the Corporation and its subsidiaries for services rendered
during each of the fiscal years ended December 31, 1994, 1995 and 1996 to the
Corporation's chief executive officer and to each of the four other most highly
compensated executive officers of the Corporation determined as of December 31,
1996 (the "named executive officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
------------
AWARDS
------------
SECURITIES
ANNUAL COMPENSATION(B) UNDERLYING ALL OTHER
------------------------- OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS ($)(A) #(C) ($)(D)
--------------------------- ---- --------- ------------- ------------ ------------
Joseph C. Scully......................... 1996 $394,644 $153,056 37,500 $149,660
Chairman of the Board, 1995 372,036 298,758 50,000 144,019
Chief Executive Officer and Director 1994 366,618 278,246 -0- 132,373
Patrick J. Agnew......................... 1996 280,008 149,552 37,500 94,055
President, Chief 1995 263,713 295,516 50,000 90,689
Operating Officer and Director 1994 259,992 275,048 -0- 82,606
Robert N. Parke.......................... 1996 152,580 63,126 12,500 2,897
Senior Vice President, Finance 1995 146,700 123,865 25,000 2,765
and Chief Financial Officer 1994 141,726 115,262 -0- 2,378
Thomas J. Rinella........................ 1996 160,788 61,203 12,500 2,897
Senior Vice President, 1995 154,595 119,677 25,000 2,765
Community Lending 1994 149,351 111,380 -0- 2,512
Donald G. Ross........................... 1996 150,456 59,021 12,500 2,897
Senior Vice President, 1995 144,661 115,557 25,000 2,765
Retail Banking 1994 134,221 105,211 -0- 2,330
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(a) Includes incentive compensation paid in July of 1994, 1995 and 1996 to the
Bank's officers based on a percentage of earnings, as well as annual
holiday bonuses (3% of base compensation) paid in December of each year.
Incentive compensation, if any, is paid in July of each year based upon the
Corporation's earnings during the preceding twelve month period, and is
included in the table based on the amount earned with respect to each year
presented. The amount of incentive compensation earned by the named
executive officers for the last six months of 1996 is not yet calculable.
(b) Certain executive officers of St. Paul Federal receive indirect
compensation in the form of personal benefits; including insurance
premiums, personal tax, financial and estate planning services, club
memberships and the use of automobiles. The amount of such indirect
compensation in 1996 did not exceed, with respect to any named executive
officer, the lesser of $50,000 or 10% of the total amount of annual salary
and bonus paid to such officer.
(c) Represents stock options granted on June 26, 1995 and June 20, 1996 under
the Corporation's Stock Option Plan and 1995 Incentive Plan to purchase the
stated number of shares of the Corporation's Common Stock at exercise
prices of $18.00 and $18.40 per share, respectively. The number of shares
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subject to stock options and the per share exercise prices have been
adjusted to reflect the Corporation's five-for-four stock split on January
14, 1997. Although the Corporation's Stock Option Plan and 1995 Incentive
Plan permit the grant of stock appreciation rights ("SARs"), no grants of
SARs have been made.
(d) Consists of contributions to the Corporation's Employee Stock Ownership
Plan (the "ESOP") with respect to Mr. Parke, Mr. Rinella and Mr. Ross. With
respect to Messrs. Scully and Agnew, 1996 data consists of ESOP
contributions of $2,897 each, as well as deferred compensation of $146,753
and $91,158, respectively, earned under their respective employment
agreements.
STOCK OPTION GRANTS
The following table sets forth certain information concerning the grant of
stock options under the Corporation's 1995 Incentive Plan during the fiscal year
ended December 31, 1996 to each of the named executive officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES BASE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED(#)(A)(B) IN FISCAL YEAR ($/SHARE)(B) DATE ($)(C)
---- ---------------- -------------- ------------ ---------- -------------
Joseph C. Scully................ 37,500 8.12% $18.40 7/20/06 $295,875
Patrick J. Agnew................ 37,500 8.12% 18.40 7/20/06 295,875
Robert N. Parke................. 12,500 2.71% 18.40 7/20/06 98,625
Thomas J. Rinella............... 12,500 2.71% 18.40 7/20/06 98,625
Donald G. Ross.................. 12,500 2.71% 18.40 7/20/06 98,625
- ---------------
(a) All options were granted with an exercise price equal to the fair market
value of the Corporation's Common Stock on the date of grant. Options
granted under the 1995 Incentive Plan are exercisable in respect of 50% of
the number of shares on the first anniversary of the date of grant and are
exercisable in respect of an additional 12.5% on each of the second, third,
fourth and fifth anniversaries of the grant, provided that options are 100%
exercisable for any employee who has completed five years of employment
with the Corporation. The options also become exercisable upon any merger
or consolidation in which the Corporation is not the surviving entity.
(b) Number of options granted and exercise price per share have been adjusted
to reflect the Corporation's five-for-four stock split on January 14, 1997.
(c) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The actual value, if any, an employee may realize
will depend on the excess of the stock price over the exercise price on the
date the option is exercised. There is no assurance that the value realized
by an employee will be at or near the value estimated by the Black-Scholes
model. The estimated values under that model are based on assumptions as to
variables such as the expected term of the option (seven years), the
risk-free interest rate for the expected term of the option (based upon the
rate available on the date of grant on a seven-year zero-coupon U.S.
Treasury Note of 6.91%), stock price volatility (based on the Corporation's
month-end stock price history over the seven-year period prior to the date
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of grant), and expected future dividend yield (based upon the dividend
yield at date of grant). No adjustments were made for non-transferability
and risk of forfeiture.
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth certain information, with respect to the
named executive officers, concerning the exercise of options during the fiscal
year ended December 31, 1996 and the value of unexercised options held as of
December 31, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/SARS AT OPTIONS/SARS AT FISCAL
ON VALUE FISCAL YEAR-END (#)(A) YEAR-END ($)(B)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#)(A) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ---------- ----------- ------------- ----------- -------------
Joseph C. Scully........... 81,250 $1,133,424 387,500 -0- $5,434,983 -0-
Patrick J. Agnew........... 50,000 704,705 290,625 -0- 3,675,094 -0-
Robert N. Parke............ 46,875 680,309 69,375 -0- 684,312 -0-
Thomas J. Rinella.......... 31,250 454,206 94,375 -0- 1,138,477 -0-
Donald G. Ross............. 25,000 366,659 78,750 -0- 854,624 -0-
- ---------------
(a) Adjusted for Corporation's five-for-four stock split on January 14, 1997.
(b) Market value of underlying securities at year-end, minus the exercise price.
REPORT OF THE ORGANIZATIONAL PLANNING AND STOCK OPTION COMMITTEES ON EXECUTIVE
COMPENSATION
Overview and Philosophy
The Organizational Planning Committee (the "Planning Committee") and the
Stock Option Committee (together with the Planning Committee herein referred to
as the "Committee") of the Corporation's Board of Directors are both composed of
two outside directors, Dr. Fredian and Mr. Viera. Mr. James B. Wood was a
director of the Corporation and a member of the Committee until his death on
September 14, 1996. Mr. Michael R. Notaro was a director of the Corporation and
a member of the Committee until his retirement on November 25, 1996.
The Planning Committee is responsible for developing and making
recommendations to the Board with respect to the Corporation's executive
compensation policies. In addition, the Planning Committee determines annually
the compensation that is paid to the Chief Executive Officer and the other
executive officers of the Corporation, subject to Board approval. The Stock
Option Committee selects, subject to Board approval, the eligible persons to
whom options will be granted based on each individual's performance and
responsibilities. The Stock Option Committee prescribes the terms and provisions
(which need not be identical) of each option granted under the Stock Option Plan
and the 1995 Incentive Plan.
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The Committee has access to outside compensation consultants and
independent national, regional and industry compensation survey information.
The objectives of the Corporation's executive compensation program are to:
- Directly tie individual executive pay to corporate performance;
- Support the achievements of the long- and short-term strategic goals and
performance objectives of the Corporation;
- Provide a competitive compensation program that will attract and retain
talented and qualified executives while rewarding individual achievement
and contribution; and
- Align the executives' interests with corporate success by making a
substantial portion of compensation subject to profitability.
The Corporation's executive compensation program provides an overall level
of compensation opportunity that is competitive within the thrift and banking
industry. The Committee will use its discretion to set executive compensation
where, in its judgment, external, internal or individual circumstances warrant
it.
The 1993 Tax Act
The Omnibus Budget Reconciliation Act of 1993 added a provision to the
Internal Revenue Code of 1986, as amended (the "Code"), which generally limits
to $1.0 million the Corporation's allowable deduction for federal income tax
purposes of certain compensation paid to executive officers, except for certain
"performance-based" compensation and certain compensation related to employee
benefit plans.
The Committee has considered the implications of this new law and has
concluded that, since the cash compensation paid to the Corporation's executive
officers is significantly below the $1.0 million limitation, no general policy
with respect to this matter is necessary at this time. The Corporation, however,
could be impacted by this law to the extent that option exercises by executive
officers cause an individual's compensation in a particular year to exceed $1.0
million. Accordingly, the Committee has attempted to conform the terms of the
Stock Option Plan and the 1995 Incentive Plan to the new law such that
compensation attributable to awards thereunder will not be subject to the
deduction limitation.
Executive Officer Compensation Program
The Corporation's executive officer compensation program consists of base
salary, annual cash incentive compensation, long-term incentive compensation in
the form of stock options, deferred compensation, personal benefits such as tax
services, club memberships, financial planning and the use of automobiles, and
various benefits including medical and retirement plans generally available to
employees of the Corporation. The executive officer compensation program is
reviewed, with the assistance of an independent compensation consultant,
relative to other well-managed large thrift institutions, regional thrifts and
local bank competitors (the "Compensation Peer Group"). The Compensation Peer
Group (which consists of 30 large national thrifts, 13 regional and local
thrifts and six local banks) is used to compare the Corporation's compensation
packages to that of other companies that compete with the Bank for executives.
The Committee believes that this peer group, which differs from the published
NASDAQ indices utilized in the Comparative Performance Graph set forth below, is
appropriate for executive compensation purposes.
Base Salary. Executive officer base salaries are set relative to market
data and surveys of the Compensation Peer Group. Base salaries are reviewed
position by position and are generally set at levels lower than the market due
to the large emphasis on incentive compensation determined by annual corporate
and individual performance. Overall base salaries for the named executive
officers average 20% below the
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combined base salaries of the Compensation Peer Group. In determining base
salaries, the Committee also takes into consideration individual experience and
contributions, as well as level of responsibility.
Annual Incentive Compensation. The officer incentive compensation program
is the Corporation's annual incentive program for corporate officers. The
purpose of the incentive compensation program is to provide a direct link
between executive officer compensation and corporate earnings. The Planning
Committee believes that compensation tied to corporate performance strengthens
management's incentive to increase the Corporation's profitability. Accordingly,
annual incentive compensation is a significant component of the executive
officers' total cash compensation. For the named executive officers, the portion
of compensation attributable to the incentive program in 1996 ranged from 34% to
43% of total compensation.
Incentive compensation for all corporate officers has averaged 5% of the
Corporation's earnings for the preceding twelve-month period, without deducting
for net additions to general loss reserves and taxes (but reduced by specific
loan loss reserves and loan charge-offs) and has been distributed to officers
based on individual performance and position within the Corporation. In the
absence of earnings, no bonus is paid.
For the period from July 1, 1995 to June 30, 1996, the Corporation's
pre-tax earnings increased by 2.5%, or $1.4 million, over the same period in
1995. Bonus payments made in July 1996 to all officers of the Corporation were
approximately the same as the prior year. The Planning Committee believes that
the annual incentive program provides an excellent link between the level of the
Corporation's earnings and the incentives paid to executive officers.
Individual incentive bonus awards to the executive officers are determined,
at the discretion of the Planning Committee, based on individual performance and
achievement. The annual incentive bonus, when combined with base salary,
resulted in average compensation payments during 1996 to the named executive
officers at 3% below the average of the Compensation Peer Group. The Planning
Committee believes that the level of compensation paid to the named executive
officers during 1996 was appropriate based upon the Corporation's financial
performance and the significant portion of compensation tied to corporate
performance.
Stock Options. The Board of Directors of the Corporation believes that
stock options are important to increase the incentive and to attract and
encourage the continued employment and service of executive officers and other
key officers and employees by facilitating their purchase of a stock interest in
the Corporation. The Stock Option Committee believes that the grant of stock
options aligns management with the interests of the Corporation's shareholders,
while creating another form of performance-based compensation.
The 1995 Incentive Plan authorizes the Stock Option Committee to administer
the plan and make recommendations to award stock options to key officers,
directors and employees. Stock options are granted at the discretion of the
Stock Option Committee, with grants generally made based on individual
contributions and upon promotion. Stock options are granted at an option price
equal to the fair market value of the Corporation's Common Stock on the date of
grant, have ten year terms and have exercise restrictions based on length of
service. The amount of stock option grants increases according to salary and
position within the Corporation.
In fiscal 1996, the named executive officers received stock option grants
for an aggregate of 112,500 shares of Common Stock, at an exercise price of
$18.40 per share. These grants represent 24% of all stock options granted in
fiscal 1996 and, based on option prices, result in an average multiple of 1.2
times 1996 total annual cash compensation for this group. These grants were made
by the Committee to reward outstanding corporate and individual performance.
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Deferred Compensation Plan. A deferred compensation plan is provided to
Messrs. Scully and Agnew as part of their long-term incentive compensation
program. This plan, as specified in their employment agreements, requires that a
specified sum be credited annually to their account. In fiscal 1996, the amounts
credited (without earnings) for Messrs. Scully and Agnew were $146,763 and
$91,158, respectively, representing 20% of Mr. Scully's and 15% of Mr. Agnew's
annual compensation.
Benefits. The Corporation provides medical, life insurance and retirement
benefits to the executive officers that are generally available on the same
terms to other employees of the Corporation. Certain executive officers receive
indirect compensation in the form of personal benefits; including insurance
premiums, personal tax services, financial planning, club memberships and the
use of automobiles. As to each executive officer, the amount of these
perquisites, as determined in accordance with the rules of the SEC relating to
executive compensation, did not exceed the lesser of either $50,000 or 10% of
annual compensation for fiscal 1996.
Chief Executive Officer Compensation
At the beginning of fiscal 1996, Mr. Scully's base salary was $386,904.
During the year, Mr. Scully received a base salary increase of $15,480,
representing an increase of 4% effective July 1, 1996. His base salary at the
end of the fiscal year was $402,384. Mr. Scully's base salary is reviewed
annually by the Committee. The Committee consults with an independent
compensation consultant who conducts a customized survey of the Compensation
Peer Group. The survey data is used to develop trend line analysis which shows
the relationship between CEO total compensation and return on assets, as well as
CEO total compensation and institution asset size. As discussed above, the
Corporation's base salaries are set at the low end of the market data range,
allowing for an effective incentive compensation program. For 1996, Mr. Scully's
base salary was 25% below the peer group.
Mr. Scully received a bonus in fiscal 1996 of $286,000 for the period from
July 1, 1995 through June 30, 1996. The bonus was the result of corporate
performance for the above period and was paid from a pool which averaged 5% of
the Corporation's earnings for such period, without deducting for net additions
to general loss reserves and taxes (but reduced by specific loan loss reserves
and loan charge-offs).
The Corporation's incentive program is designed to reward officers
according to annual earnings. Mr. Scully's 1996 incentive bonus payment was
equal to the 1995 incentive bonus payment. The Committee believes that Mr.
Scully's leadership and management abilities have allowed the Corporation to
successfully compete within a challenging business environment, while achieving
financial results generally equivalent to the Compensation Peer Group. Mr.
Scully's total cash compensation paid in 1996 was 28% below the average of the
Compensation Peer Group.
The stock options for 37,500 shares granted to Mr. Scully in fiscal 1996
brought his cumulative option grants to 518,750 since the Corporation's
formation in 1987. The 1996 grant was made by the Committee to reward Mr. Scully
for his outstanding leadership of the Corporation's senior management group.
Submitted by the Members of the
Organizational Planning Committee
and the Stock Option Committee
Alan J. Fredian, Chairman
John J. Viera
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COMPARATIVE PERFORMANCE GRAPH
The following graph sets forth comparative information regarding the
Corporation's cumulative shareholder return on its Common Stock over the last
five fiscal years. The shareholder return is measured by dividing total
dividends (assuming dividend reinvestment) plus share price change for a period
by the share price at the beginning of the measurement period. The Corporation's
cumulative shareholder return, based on an investment of $100 at the beginning
of the five-year period beginning January 1, 1992, is compared to the cumulative
total return of the NASDAQ Stock Market Index and the NASDAQ Bank Stock Index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
MEASUREMENT PERIOD ST. PAUL NASDAQ NASDAQ
(FISCAL YEAR COVERED) BANCORP BANK
12/31/91 100 100 100
12/31/92 177.59 116.38 145.55
12/31/93 220.52 133.59 165.99
12/31/94 208.89 130.59 165.38
12/31/95 308.36 184.67 246.32
12/31/96 361.57 227.16 325.60
99999
Employment Agreements. The Corporation and the Bank have entered into
employment agreements with Joseph C. Scully, Chairman of the Board and Chief
Executive Officer, and Patrick J. Agnew, President and Chief Operating Officer.
The salaries for Messrs. Scully and Agnew for the twelve-month period
ending June 30, 1997 are $402,384 and $285,504, respectively. Each officer
receives annual salary increases as determined by the Bank's Board of Directors.
Both Mr. Scully and Mr. Agnew are entitled to participate in any discretionary
bonuses and retirement or other benefit plans applicable to the Corporation's or
the Bank's executive officers. The employment agreements for Messrs. Scully and
Agnew, as amended, are each for terms of three years, with each expiring on
December 19, 1999. The Corporation and the Bank may, upon the majority
affirmative vote
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of each of their respective Boards, by written notice to the officer, renew the
employment agreements for one additional year on each anniversary date,
commencing with the December 19, 1997 anniversary date, unless the officer gives
contrary written notice to the other parties prior to such anniversary date. The
employment agreements provide that the terms thereof are automatically
terminated upon the officer attaining the age of 65.
The employment of Messrs. Scully and Agnew may be terminated by the Boards
of Directors of the Corporation and the Bank at any time; provided, however,
that if the termination is not for cause, as defined in the agreements, each is
entitled: (a) to receive a lump sum payment in an amount equal to his
then-current compensation (including any bonuses paid during the then-current
fiscal year and deferred compensation credited for the preceding year)
calculated for a period equal to the remaining term of the agreement (provided
that the aggregate amount of such payment shall not exceed three times the
officer's then-current compensation) and (b) subject to certain limitations, to
continue to participate in retirement and other benefit plans for the remaining
term of the agreement, to be funded by an irrevocable trust established by the
Corporation and the Bank. Such lump sum payments for termination without cause
would be $2,541,624 and $2,013,657 for Messrs. Scully and Agnew, respectively,
based upon current salary and deferred compensation plus the most recent
incentive compensation paid to such officers, assuming a remaining term of three
years. However, if the termination of employment is in connection with a "change
in control," the lump sum severance payment would instead be calculated in
accordance with the provisions described below.
If any such officer terminates his employment without the consent of both
Boards, then the agreements restrict the terminating officer for one year or the
remaining term of the agreement plus six months, whichever is less, from being
employed by a competing bank, savings bank, savings and loan association or
mortgage banking company, or a holding company affiliate of any of the
foregoing, having an office in Illinois within 50 miles of the Bank's home
office, out of which the terminating officer would be primarily based.
If, during the term of the employment agreements, there is a "change in
control" of the Corporation or of the Bank, and the employment of Messrs. Scully
or Agnew is terminated, voluntarily or involuntarily, within two years
thereafter (except by reason of normal retirement, disability, death or for
cause), each will be entitled to receive, as liquidated damages for services
previously rendered, a lump sum cash payment. Such payment will be in the amount
of one year's then-current compensation, including deferred compensation and any
bonuses paid during the past twelve months, if employment is voluntarily
terminated without "good reason," defined in the agreements as, among other
things, a material reduction in the officer's salary or deferred compensation, a
material reduction in the officer's bonus below a certain amount, the officer's
relocation of more than 50 miles or a material reduction in his position,
authority, duties or responsibilities. If the officer's employment is terminated
by him voluntarily with good reason or involuntarily by the Corporation or the
Bank, such payment will be equal to the sum of (X) the amount of the officer's
then-current compensation which, but for such termination, would be payable for
the remaining term of the agreement, plus (Y) one year's then-current
compensation; provided that the aggregate amount of such payment shall not
exceed three times the officer's then-current compensation. Based upon current
salary and deferred compensation plus the most recent incentive compensation
paid to such officers, such payments would be $847,208 and $671,219 for Messrs.
Scully and Agnew, respectively, if employment were terminated as described in
the second sentence of this paragraph, and, $2,541,624 and $2,013,657,
respectively, if employment were terminated as described in the third sentence
of this paragraph. This payment will be in lieu of the lump sum amount payable
for termination without cause. The agreements also permit Messrs. Scully and
Agnew to receive a lump sum amount equal to, but in lieu of, the above payment
if they elect to terminate their employment agreements while continuing to work
for the Corporation and the Bank following a change
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in control. In addition, such officers would be entitled, subject to certain
limitations, to continue to participate in retirement and other benefit plans to
be funded by an irrevocable trust created by the Corporation and the Bank. The
employment agreements provide that the officers shall not have the right to
receive any payment or benefits under the agreement to the extent that such
payment or benefit would cause any payment to be considered a "parachute
payment" under Section 280G of the Code.
A "change in control" of the Corporation will be deemed to have occurred if
(i) any person becomes the beneficial owner of 25% or more of the Corporation's
voting shares; (ii) any person receives certain regulatory approvals to acquire
control of the Corporation; (iii) any person enters into a binding agreement to
acquire (by means of stock purchase, tender offer or merger) beneficial
ownership of 25% or more of the Corporation's voting shares, provided that a
change in control would not be deemed to occur unless the Board of Directors
makes a determination that such action constitutes a change in control, and
further provided that a change in control shall no longer be deemed to have
occurred upon any termination of such an agreement; (iv) any person becomes the
beneficial owner of 10% to 25% of the Corporation's voting shares, provided that
the OTS has made a determination that such ownership constitutes a change in
control of the Corporation; (v) any person (other than persons named as proxies
solicited on behalf of the Corporation) holds irrevocable proxies for 25% or
more of the Corporation's voting shares, provided that the Board of Directors
has made a determination that such action constitutes a change in control; (vi)
as the result of any tender offer, business combination or contested proxy
solicitation, the persons who were directors prior to such transaction cease to
constitute at least two-thirds of the Board of Directors of the Corporation;
(vii) the Corporation enters into an agreement with respect to any merger other
than (a) a merger which would result in the voting shares of the Corporation
outstanding immediately prior thereto continuing to represent more than 80% of
the combined voting power of the voting shares outstanding immediately after
such merger or (b) a merger effected to implement a recapitalization of the
Corporation; or (viii) the Corporation enters into an agreement with respect to
any merger with any other person having total consolidated assets in an amount
that is at least 60% of the Corporation's total consolidated assets; provided
that a change in control will not be deemed to have occurred under clauses (vii)
or (viii) if the Board of Directors of the Corporation has made a determination
that such action will not constitute a change in control. The Board of Directors
may de-trigger any transaction or event (pursuant to which any person became the
beneficial owner of up to 50% of the Corporation's voting shares) which
terminates or ceases to exist. A "change in control" of the Bank will be deemed
to have taken place if the Corporation's beneficial ownership of the total
number of outstanding voting shares of the Bank is reduced to less than 50%.
The employment agreements with Messrs. Scully and Agnew each provide for
deferred compensation. In general, the employment agreements require St. Paul
Federal to credit a specified sum annually as deferred compensation for each of
these officers. The accrued payments will be paid to a named beneficiary if the
officer dies prior to retirement. In case of involuntary termination before the
end of the term of the agreement, the officer will receive the entire accrued
amount in annual payments over a period of ten years or a lesser period at the
option of the Bank. If the officer voluntarily terminates his employment, 75% of
the accrued amount will be payable to the officer in five annual payments. If
the officer remains in the employment of St. Paul Federal until he retires due
to age, early retirement or disability and refrains from engaging in any
competitive business, as described above, the accrued payments will be paid to
the officer in ten annual installments or a lesser period at the option of the
Bank. Each officer may elect, one year prior to the officer's retirement, to
extend the period within which he or his beneficiaries will receive distribution
of the accrued payments to a period not in excess of 15 years, except that at
the option of the Bank it may be paid over a lesser period. Also, at the option
of the Bank distribution of the accrued payments may begin at age 70 and such
payments may be made over a 15-year period. The employment agreements permit
Messrs. Scully and
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Agnew to direct that deferred compensation contributions be invested in
government securities, the Common Stock of the Corporation or such other types
of investments as directed by the officer.
Severance Agreements. The Corporation and the Bank have entered into
severance agreements with the Senior Vice Presidents and First Vice Presidents
of the Corporation and the Bank, including Robert N. Parke, Thomas J. Rinella
and Donald G. Ross, Senior Vice Presidents of the Corporation and the Bank.
Under these agreements, each officer is entitled to receive a severance payment
in the event his employment with the Corporation and the Bank is terminated,
voluntarily or involuntarily (except by reason of normal retirement, disability,
death or for cause), within two years of a change in control of the Corporation
or of the Bank.
The severance agreements provide that each officer will receive one year's
then-current compensation, including any bonuses paid and any deferred
compensation credited to his account during the past twelve months, if he
voluntarily terminates his employment without "good reason" (defined in the
agreements to include, among other things, a reduction in the officer's salary,
a reduction in the officer's bonus below a certain amount, the officer's
relocation of more than 50 miles, or a material reduction in the position,
authority, duties or responsibilities which existed prior to the change in
control). In the event the employment of any such officer is terminated by him
voluntarily with good reason or involuntarily by the Corporation or the Bank, he
will receive three times his average annual compensation for the five-year
period before termination. Based upon current salaries and the most recent
incentive compensation payments received, the aggregate amount of such payments
under the severance agreements would be $278,927, $283,149 and $268,504 for
Messrs. Parke, Rinella and Ross, respectively, if employment were terminated as
described in the first sentence of this paragraph, and would be $802,526,
$812,969 and $739,658 for Messrs. Parke, Rinella and Ross, respectively, if
employment were terminated as described in the second sentence hereof. In
addition, such employees will be entitled, subject to certain limitations, to
continue to participate in retirement and other benefit plans to be funded by an
irrevocable trust created by the Corporation and the Bank. The severance
agreements provide that the officers shall not have the right to receive any
payment or benefits under the agreement to the extent that such payment or
benefit would cause any payment to be considered a "parachute payment" under
Section 280G of the Code.
The severance agreements are each for terms of three years, with each
expiring on December 20, 1999. The Corporation and the Bank may, upon the
majority affirmative vote of each of their respective Boards, by written notice
to the officer, renew the severance agreements for one additional year on each
anniversary date, commencing with the December 20, 1997 anniversary date, unless
the officer gives contrary written notice to the other parties prior to such
anniversary date.
Pension Plans. The Bank maintains a qualified noncontributory pension plan
administered by trustees appointed by the Board of Directors of the Bank for its
employees and the employees of its subsidiaries. All of the current trustees are
members of the Bank's Board of Directors. The plan covers those employees who
have reached the age of 21 and who have completed at least 1,000 hours of
employment in a 12-month period. Contributions are determined in accordance with
actuarial principles, subject to the approval of the Board of Directors. Accrued
benefits of eligible employees become vested after five years of service.
The Board of Directors has adopted an excess benefit plan entitled the "St.
Paul Federal Supplemental Retirement Plan and Excess Benefit Plan." The purpose
of this plan is to provide employees who are participants in the pension plan
with benefits which are not currently available because such benefits would be
in excess of the limitations on contributions and benefits imposed by the Code.
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The following table shows estimated aggregate annual pension benefits at
age 65 payable to employees under the pension plan and the supplemental benefit
plan in the form of a single life annuity for various levels of compensation and
years of credited service, without any limitations on benefits imposed by the
Code:
PENSION PLAN TABLE
YEARS OF SERVICE
----------------------------------------------------
COMPENSATION(A) 15 20 25 30 35
--------------- -------- -------- -------- -------- --------
$150,000.................................. $ 47,280 $ 64,155 $ 81,029 $ 97,903 $112,903
200,000.................................. 63,930 86,805 109,679 132,553 152,853
250,000.................................. 80,580 109,455 138,329 167,203 192,803
300,000.................................. 97,230 132,105 166,979 201,853 232,753
350,000.................................. 113,880 154,755 195,629 236,503 272,703
400,000.................................. 130,530 177,405 224,279 271,153 312,653
450,000.................................. 147,180 200,055 252,929 305,803 352,603
500,000.................................. 163,830 222,705 281,579 340,453 392,553
550,000.................................. 180,480 245,355 310,229 375,103 432,503
600,000.................................. 197,130 268,005 338,879 409,753 472,453
650,000.................................. 213,780 290,655 367,529 444,403 512,403
700,000.................................. 230,430 313,305 396,179 479,053 552,353
750,000.................................. 247,080 335,955 424,829 513,703 592,303
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(a) Compensation is assumed to be the average of the final 60 months of
compensation, which includes base salary plus incentive compensation (as set
forth under "Annual Compensation" in the Summary Compensation Table with
respect to the named executive officers), multiplied by 12. Benefits shown
reflect the Social Security offset allowance as defined in the pension plan.
The amount of any lump sum payment under the plans is calculated based upon
an actuarial determination of the present value, as of the date of retirement,
of the annual pension benefits.
Messrs. Scully, Agnew, Parke, Rinella and Ross had 33, 17, 19, 28 and 24
years of credited service, respectively, under the plans as of December 31,
1996.
Certain Transactions. Certain directors and executive officers of the
Corporation and the Bank, as well as certain members of their families and
certain business entities with which they or their families are affiliated, are
borrowers from the Bank. All such loans, including bridge loans, were made in
the ordinary course of business, did not involve more than the normal risk of
collection or present other unfavorable features, and were made on substantially
the same terms, including interest rates and collateral, as those prevailing at
the same time for comparable transactions with unaffiliated persons. All loans
to directors and executive officers must be approved by the Board of Directors.
The Bank leases a warehouse facility from a limited partnership in which
Mr. Paul C. Gearen, a nominee for election as a director of the Corporation,
owns a general partner interest. The lease, which commenced in April 1983,
expires on August 31, 1998 and provides for a monthly rental payment of
$6,916.67 (increasing to $7,166.67 effective September 1, 1997).
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STOCK OWNED BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth information as of March 18, 1997 with
respect to the shares of the Corporation's Common Stock beneficially owned by
each director of the Corporation, each of the named executive officers and by
all directors and executive officers of the Corporation as a group. Such
individuals and certain of the Corporation's employee benefit plans beneficially
own a total of 3,699,071 shares of the Corporation's Common Stock, or 15.4% of
the Common Stock outstanding, including shares subject to options that will
become exercisable within 60 days.
AMOUNT AND PERCENT OF
NATURE OF COMMON
BENEFICIAL STOCK
NAME AND POSITION WITH THE CORPORATION OWNERSHIP(A) OUTSTANDING
-------------------------------------- ------------ -----------
Joseph C. Scully
Chairman of the Board, Chief Executive Officer and
Director............................................... 408,918(b) 1.8%
Patrick J. Agnew
President, Chief Operating Officer and Director........... 399,833(b) 1.7%
William A. Anderson
Director.................................................. 11,388 *
John W. Croghan
Director.................................................. 78,000 *
Alan J. Fredian
Director.................................................. 23,921(b)(c) *
Paul C. Gearen
Director.................................................. 36,628 *
Kenneth J. James
Director.................................................. 94,174 *
Jean C. Murray, O.P.
Director.................................................. 12,375(b)(c) *
John J. Viera
Director.................................................. 21,915 *
Robert N. Parke
Senior Vice President..................................... 162,096 *
Thomas J. Rinella
Senior Vice President..................................... 140,327 *
Donald G. Ross
Senior Vice President..................................... 127,759 *
All directors and executive officers as a group (15
persons).................................................. 1,814,633(b)(c) 7.6%
- ---------------
* Less than 1%
(a) In accordance with Rule 13d-3 under the 1934 Act, a person is deemed to be
the beneficial owner, for purposes of this table, of any shares of Common
Stock if he has or shares voting power or investment power with respect to
such security, or has the right to acquire beneficial ownership at any time
within 60 days from March 18, 1997. As used herein, "voting power" is the
power to vote or direct the voting of shares and "investment power" is the
power to dispose or direct the disposition of shares. The table
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includes shares owned by spouses or other immediate family members or that
are held in trust, as to which the persons named in the table possess shared
voting and/or investment power as follows: Mr. Scully, 22,231 shares; Mr.
Agnew, 47,461 shares; Dr. Fredian, 11,549 shares; Mr. James, 81,798 shares;
Mr. Viera, 9,615 shares; Mr. Parke, 51,401 shares; Mr. Rinella, 9,497
shares; Mr. Ross, 14,224 shares; and all directors and executive officers as
a group, 250,252 shares. The table includes 8,916 shares and 29,660 shares
as of March 18, 1997 held for the benefit of Mr. Scully and Mr. Agnew,
respectively, under the St. Paul Federal Bank For Savings Deferred
Compensation Trust. All other shares included in the table are held by
persons who have sole voting and investment power over such shares. The
table includes 969,965 shares of Common Stock subject to outstanding options
which are exercisable within 60 days from March 18, 1997. The table also
includes 289,450 shares as of March 18, 1997 allocated to executive
officers' accounts under the Bank's ESOP and 401(k) Profit Sharing Plan.
(b) Does not include 222,772 shares as of March 18, 1997 with respect to which
the St. Paul Federal Bank For Savings Employees Pension Plan has sole voting
and dispositive power. Also does not include 267,745 unallocated shares with
respect to which the ESOP has shared voting and dispositive power. Dr.
Fredian, Dr. Murray and Messrs. Scully and Agnew are the trustees of the
Employees Pension Plan and the ESOP.
(c) Except as allotted to Messrs. Scully and Agnew as indicated above, does not
include 58,107 shares as of March 18, 1997 with respect to which the St.
Paul Federal Bank For Savings Deferred Compensation Trust has shared voting
and dispositive power. Dr. Fredian and Dr. Murray are the trustees of the
Deferred Compensation Trust.
As of March 18, 1997, no persons are known by the Corporation to have filed
a beneficial ownership report with the SEC with regard to 5% or more of the
Corporation's outstanding Common Stock.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the 1934 Act requires the Corporation's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Corporation's equity securities, to file with the SEC initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Corporation. Officers, directors and greater than
ten-percent shareholders are required by SEC regulation to furnish the
Corporation with copies of all Section 16(a) forms they file.
To the Corporation's knowledge, based solely upon review of the copies of
such reports furnished to the Corporation and written representations that no
other reports were required, all Section 16(a) filing requirements applicable to
its officers, directors and greater than ten-percent beneficial owners were
complied with.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 2)
The Board of Directors has appointed the firm of Ernst & Young LLP to
continue as independent auditors for the Corporation for the year ending
December 31, 1997, subject to ratification of such appointment by the
shareholders. Ernst & Young LLP was appointed as the independent auditors of St.
Paul Federal in 1981 and has performed audits for the Bank for the years since
then. Ernst & Young LLP has also served as the independent auditors of the
Corporation since its organization as the holding company of St. Paul Federal.
Unless otherwise indicated, properly executed proxies will be voted in favor of
ratifying the
20
24
appointment of Ernst & Young LLP, independent certified public accountants, to
audit the books and accounts of the Corporation for the year ending December 31,
1997. No determination has been made as to what action the Board of Directors
would take if the shareholders do not ratify the appointment.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting. They will be given an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
TO BE PRESENTED AT 1998 ANNUAL MEETING OF SHAREHOLDERS
Any proposal intended to be presented by any shareholder for action at the
1998 annual meeting of shareholders of the Corporation must be received by the
Secretary of the Corporation at 6700 West North Avenue, Chicago, Illinois 60707
not later than November 27, 1997 in order for the proposal to be considered for
inclusion in the proxy statement and proxy relating to the 1998 annual meeting.
In addition, the Corporation's Bylaws require that notice of shareholder
proposals and nominations for director be delivered to, or mailed to and
received at, the principal executive offices of the Corporation not less than 30
days nor more than 90 days prior to the date of an annual meeting, unless notice
or public disclosure of the date of the meeting occurs less than 45 days prior
to the date of such meeting, in which event, shareholders may deliver such
notice not later than the 15th day following the day on which notice of the date
of the meeting was mailed or public disclosure thereof was made. Nothing in this
paragraph shall be deemed to require the Corporation to include in its proxy
statement and proxy relating to the 1998 annual meeting any shareholder proposal
which does not meet all of the requirements for inclusion established by the SEC
in effect at the time such proposal is received.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors of the
Corporation does not know of any other matters to be presented for action by the
shareholders at the Annual Meeting. If, however, any other matters not now known
are properly brought before the meeting, the persons named in the accompanying
proxy will vote such proxy in accordance with the determination of a majority of
the Board of Directors.
By Order of the Board of Directors
JOSEPH C. SCULLY
Joseph C. Scully
Chairman of the Board and
Chief Executive
Officer
Chicago, Illinois
March 27, 1997
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=========================================================
TABLE OF CONTENTS
ITEM PAGE
---- ----
Solicitation, Voting and Revocability of
Proxies................................ 1
Election of Directors.................... 2
Executive Compensation................... 8
Stock Owned by Management and Principal
Shareholders........................... 19
Ratification of Appointment of
Independent Auditors................... 20
Deadline for Submission of Shareholder
Proposals to be Presented at 1998
Annual Meeting of Shareholders......... 21
Other Matters............................ 21
=========================================================
=========================================================
ST. PAUL BANCORP LOGO
-------------------------------
PROXY STATEMENT
-------------------------------
MARCH 27, 1997
=========================================================
26
[ST. PAUL BANCORP INC.LOGO]
The officers and directors of St. Paul Bancorp, Inc.
cordially invite you to attend
the Annual Meeting of Shareholders
Wednesday, May 7, 1997 at 10:00 a.m.
Drury Lane Oakbrook
100 Drury Lane, Oakbrook Terrace, Illinois
Joseph C. Scully
Chairman and Chief Executive Officer
PLEASE BRING THIS CARD TO THE MEETING AS YOUR ADMISSION TICKET.
Directions to The Drury Lane Oakbrook on reverse.
DETACH HERE STP F
REVOCABLE PROXY ST. PAUL BANCORP, INC. REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of St. Paul Bancorp, Inc. (the
"Corporation") hereby appoints Patrick J. Agnew and Alan J. Fredian, or
P either of them, with full power of substitution in each, as proxies to
R cast all votes which the undersigned shareholder is entitled to cast at the
O annual meeting of shareholders to be held at 10:00 a.m. on May 7, 1997, at
X the Drury Lane Oakbrook, 100 Drury Lane, Oakbrook Terrace, Illinois 60181,
Y and at any adjournments thereof, upon the following matters. The
undersigned shareholder hereby revokes any proxy or proxies heretofore
given.
THIS PROXY WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED SHAREHOLDER.
UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2 TO RATIFY
THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF THE
CORPORATION FOR THE YEAR ENDING DECEMBER 31, 1997 AND IN ACCORDANCE WITH
THE DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS AS TO OTHER
MATTERS. THE UNDERSIGNED SHAREHOLDER MAY REVOKE THIS PROXY AT ANY TIME
BEFORE IT IS VOTED BY DELIVERING TO THE SECRETARY OF THE CORPORATION EITHER
A WRITTEN REVOCATION OF THE PROXY OR A DULY EXECUTED PROXY BEARING A LATER
DATE, OR BY APPEARING AT THE ANNUAL MEETING AND VOTING IN PERSON. THE
UNDERSIGNED SHAREHOLDER HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL
MEETING AND PROXY STATEMENT.
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE) SEE REVERSE
SIDE
27
DIRECTIONS TO THE DRURY LANE OAKBROOK
When approaching the Drury Lane Oakbrook:
From the North or South on Route 83 (Kingery), exit at Roosevelt Road (38)
East and follow GREEN sign to DRURY LANE.
From the East or West on Roosevelt Road, exit Route 83 (Kingery) South to
Roosevelt Road (38) East and follow GREEN sign to DRURY LANE.
From Downtown Chicago and the Loop, take Eisenhower Expressway (I-290) West
to Roosevelt Road (38) West. Proceed to 83 (Kingery) South, exit 83 South
at Roosevelt Road (38) East and follow GREEN sign to DRURY LANE.
From the West on I-88, exit at Midwest Road, proceed north to Butterfield
Road (56), turn right onto Butterfield Road, exit Roosevelt Road (38) East
to DRURY LANE.
From I-294 (Tri-State), take I-88 West to Aurora, exit at Cermak Road (22nd
Street), make no turns and proceed north on Spring Road 3/4 of a mile to
DRURY LANE.
DRURY LANE OAKBROOK, 100 DRURY LANE, OAKBROOK TERRACE, ILLINOIS
Located next door to the 31-Story Oakbrook Terrace Tower
DETACH HERE STP F
/X/ Please mark
votes as in
this example.
If you receive more than one proxy card, please sign and return all cards in the accompanying envelope.
The Board of Directors recommends a vote FOR Proposals 1 and 2.
FOR AGAINST ABSTAIN
1. Election of each of three directors for a three-year term. 2. To ratify the appointment by the / / / / / /
NOMINEES: board of directors of the firm of
Paul C. Gearen, Joseph C. Scully and John J. Viera Ernst & Young LLP as independent
auditors of the Corporation for the
FOR WITHHELD year ending December 31, 1997.
/ / / /
For, except vote withheld from the following nominee(s):
THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
/ / ___________________________________________________ BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING, OR ANY
ADJOURNMENTS THEREOF, IN ACCORDANCE WITH THE DETERMINATION
OF A MAJORITY OF THE CORPORATION'S BOARD OF DIRECTORS.
MARK HERE MARK HERE
FOR ADDRESS / / IF YOU PLAN / /
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
Please date and sign exactly as name appears hereon. Each
executor, administrator, trustee, guardian, attorney-in-fact
and other fiduciary should sign and indicate his or her full
title. When stock has been issued in the name of two or more
persons, all should sign.
Signature:_________________________ Date: _________________ Signature: ________________________ Date: _____________________