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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Milton Federal Financial Corporation
----------------------------------------------
(Name of Registrant as Specified in its Charter)
Milton Federal Financial Corporation
----------------------------------------------
(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(1)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined)
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials
[ ] check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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MILTON FEDERAL FINANCIAL CORPORATION
25 LOWRY DRIVE
WEST MILTON, OHIO 45383
(513) 698-4168
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the 1997 Annual Meeting of Shareholders of
Milton Federal Financial Corporation ("MFFC") will be held at the offices of
MFFC at 25 Lowry Drive, West Milton, Ohio 45383, on January 22, 1997, at 2:00
p.m., local time (the "Annual Meeting"), for the following purposes, all of
which are more completely set forth in the accompanying Proxy Statement:
1. To reelect three directors of MFFC for terms expiring in 1999;
2. To ratify the selection of Crowe, Chizek and Company as the
auditors of MFFC for the current fiscal year; and
3. To transact such other business as may properly come before the
Annual Meeting and any adjournments thereof.
Only shareholders of MFFC of record at the close of business on
December 5, 1996, will be entitled to receive notice of and to vote at the
Annual Meeting and at any adjournments thereof. Whether or not you expect to
attend the Annual Meeting, we urge you to consider the accompanying Proxy
Statement carefully and to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY SO
THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF
A QUORUM MAY BE ASSURED. The giving of a Proxy does not affect your right to
vote in person in the event you attend the Annual Meeting.
By Order of the Board of Directors
December 20, 1996 E. Lynn App, Secretary
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MILTON FEDERAL FINANCIAL CORPORATION
25 LOWRY DRIVE
WEST MILTON, OHIO 45383
(513) 698-4168
PROXY STATEMENT
PROXIES
The enclosed Proxy is being solicited by the Board of Directors of
Milton Federal Financial Corporation, an Ohio corporation ("MFFC"), for use at
the 1997 Annual Meeting of Shareholders of MFFC to be held at the offices of
MFFC at 25 Lowry Drive, West Milton, Ohio 45383, on January 22, 1997, at 2:00
p.m., local time, and at any adjournments thereof (the "Annual Meeting").
Without affecting any vote previously taken, the Proxy may be revoked by a
shareholder executing a later dated proxy which is received by MFFC before the
Proxy is exercised or by giving notice of revocation to MFFC in writing or in
open meeting before the Proxy is exercised. Attendance at the Annual Meeting
will not, of itself, revoke a Proxy.
Each properly executed Proxy received prior to the Annual Meeting and
not revoked will be voted as specified thereon or, in the absence of specific
instructions to the contrary, will be voted:
FOR the reelection of Messrs. Glenn E. Aidt, Kenneth J. Faze and David
R. Hayes as directors of MFFC for terms expiring in 1999; and
FOR the ratification of the selection of Crowe, Chizek and Company
("Crowe Chizek") as the auditors of MFFC for the current fiscal year.
Proxies may be solicited by the directors, officers and other employees
of MFFC and Milton Federal Savings Bank ("Milton Federal") in person or by
telephone, telegraph or mail only for use at the Annual Meeting. Such Proxies
will not be used for any other meeting. The cost of soliciting Proxies will be
borne by MFFC.
Only shareholders of record as of the close of business on December 5,
1996 (the "Voting Record Date"), are eligible to vote at the Annual Meeting.
Each such shareholder will be entitled to cast one vote for each share owned.
MFFC's records disclose that, as of the Voting Record Date, there were 2,401,432
votes entitled to be cast at the Annual Meeting.
This Proxy Statement is first being mailed to shareholders of MFFC on
or about December 20, 1996.
VOTE REQUIRED
ELECTION OF DIRECTORS
Under Ohio law and MFFC's Code of Regulations (the "Regulations"), the
three nominees receiving the greatest number of votes will be elected as
directors. Shares as to which the authority to vote is withheld are not counted
toward the election of directors or toward the election of the individual
nominees specified on the Proxy. If the accompanying Proxy is signed and dated
by the shareholder but no vote is specified thereon, the shares held by such
shareholder will be voted FOR the reelection of the three nominees.
RATIFICATION OF SELECTION OF AUDITORS
The affirmative vote of the holders of a majority of the shares
represented in person or by proxy at the Annual Meeting is necessary to ratify
the selection of Crowe Chizek as the auditors of MFFC for the current fiscal
year. The effect of an abstention is the same as a vote against ratification. If
the accompanying Proxy is signed and dated by the shareholder but no vote is
specified thereon, the shares held by such shareholder will be voted FOR the
ratification of the selection of Crowe Chizek as auditors.
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VOTING SECURITIES AND OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
only person known to MFFC to own beneficially more than five percent of the
outstanding common shares of MFFC as of November 30, 1996:
Amount and Nature of Percent of
Name and Address Beneficial Ownership Shares Outstanding
- ---------------- -------------------- ------------------
National City Bank 152,992 6.37%
6 North Main Street
Dayton, Ohio 45412
- -----------------------------
(1) Consists of shares held by National City Bank as the Trustee for the
Milton Federal Financial Corporation Employee Stock Ownership Plan (the
"ESOP") not yet allocated to the accounts of participants, with respect
to which the Trustee has voting control.
The following table sets forth certain information with respect to the
number of common shares of MFFC beneficially owned by each director of MFFC and
by all directors and executive officers of MFFC as a group as of November 30,
1996:
Amount and Nature
of Beneficial Ownership
-----------------------------------
Sole Voting and Shared Voting and Percent of
Name and Address(1) Investment Power Investment Power Shares Outstanding
- ------------------- ---------------- ---------------- ------------------
Glenn E. Aidt 18,943(2) 15,000 1.41%
E. Lynn App 5,909(3) 90,798(4) 4.02
Kenneth J. Faze 3,609(3) 15,000 .77
David R. Hayes 3,609(3) 99,698(4) 4.30
Robert E. Hine 11,885(3) 6,397 .76
Christopher S. Long 13,609(3) 88,198(4) 4.23
Cletus G. Minnich, Jr 6,309(3) 10,080 .68
All directors and executive officers
of MFFC as a group (8 persons) 86,508(5) 148,875(6) 9.67%
- -----------------------------
(1) Each of the persons listed in this table may be contacted at the address of MFFC.
(2) This number includes 10,315 shares that may be acquired upon the
exercise of options awarded pursuant to the Milton Federal Financial
Corporation 1995 Stock Option and Incentive Plan (the "Stock Option
Plan") and 5,148 shares allocated to Mr. Aidt's ESOP account, with
respect to which Mr. Aidt has voting control.
(3) This number includes 2,578 shares that may be acquired upon the exercise of options awarded pursuant to the Stock
Option Plan.
(4) This number includes 88,198 shares held by the Milton Federal Savings
Bank Recognition and Retention Plan and Trust (the "RRP"), with respect
to which Messrs. App, Hayes and Long have shared voting power as
Trustees of the RRP.
(5) This number includes 33,519 shares that may be acquired upon the
exercise of options awarded pursuant to the Stock Option Plan and 7,984
shares allocated to the ESOP accounts of executive officers.
(6) The 88,198 shares held by the RRP Trust are reflected in each of three
directors' amounts but counted only once in the total amount
beneficially owned by all directors and executive officers of MFFC as a
group.
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BOARD OF DIRECTORS
ELECTION OF DIRECTORS
The Regulations provide for a Board of Directors consisting of seven
persons. Each of the directors of MFFC is also a director of Milton Federal.
In accordance with Section 2.03 of the Regulations, nominees for
election as directors may be proposed only by the directors or by a shareholder
entitled to vote for directors if such shareholder has submitted a written
nomination to the Secretary of MFFC by the later of the November 30 immediately
preceding the annual meeting of shareholders or the sixtieth day before the
first anniversary of the most recent annual meeting of shareholders held for the
election of directors. Each such written nomination must state the name, age,
business or residence address of the nominee, the principal occupation or
employment of the nominee, the number of common shares of MFFC owned either
beneficially or of record by each such nominee and the length of time such
shares have been so owned.
The Board of Directors proposes the reelection of the following persons
to terms which will expire in 1999:
Director Director
of MFFC of Milton Federal
Name Age(1) Position(s) Held Since (2) Since
- ---- --- ---------------- --------- -----------------
Glenn E. Aidt 56 Director, President and 1994 1989
Chief Executive Officer
Kenneth J. Faze 63 Director 1994 1985
David R. Hayes 47 Director 1994 1986
- -----------------------------
<FN>
(1) As of November 30, 1996.
(2) Each director nominee became a director of MFFC in connection with the
conversion of Milton Federal from mutual to stock form (the
"Conversion") and the formation of MFFC as the holding company for
Milton Federal.
The following directors will continue to serve after the Annual Meeting
for the terms indicated:
Director Director
of MFFC of Milton Federal
Name Age(1) Position(s) Held Since (2) Term Expires
- ---- --- ---------------- - --------- ----------- ------------
Since
-----
E. Lynn App 54 Director and Secretary 1994 1986 1998
Robert E. Hine 67 Director and Vice Chairman 1994 1973 1998
Christopher S. Long 54 Director 1994 1989 1998
Cletus G. Minnich, Jr. 72 Director and Chairman 1994 1957 1998
- -----------------------------
<FN>
(1) As of November 30, 1996.
(2) Each director became a director of MFFC in connection with the Conversion.
MR. AIDT has served as the President, the Chief Executive Officer and a
director of Milton Federal since November 1989. From 1979 to 1989, Mr. Aidt was
employed by Gem Savings Association, last serving as Group Vice President.
DR. FAZE has served as a director of Milton Federal since 1985. A
practicing physician since 1961, Dr. Faze has been the Chief Executive Officer
of Milton-Union Medical Center, Inc., in West Milton, Ohio, since 1984. Dr. Faze
has also been the Medical Director of Villa Convalescent Center since 1990.
DR. HAYES has served as a director of Milton Federal since 1986 and has
been the President of West Milton Veterinary Clinic, Inc., West Milton, Ohio,
since 1984.
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MR. APP has served as a director of Milton Federal since 1986 and is
the principal shareholder and President of E Lynn App, Inc., Architects, in
Englewood, Ohio.
MR. HINE has served as the Vice Chairman of the Board of Directors of
Milton Federal since 1993 and as a director since 1973 and has been a co-owner
and the President of Hine's Hardware, Inc., in Union, Tipp City and Troy, Ohio,
since 1954.
MR. LONG, who has served as a director of Milton Federal since 1989,
has been the President and co-owner of Long & Associates, Inc., an association
management firm in West Milton, Ohio, since 1984.
MR. MINNICH has served as the Chairman of the Board of Directors of
Milton Federal since 1978. From 1958 to 1988, Mr. Minnich served as the
President and a director of Milton Federal.
MEETINGS OF DIRECTORS
The Board of Directors of MFFC met 21 times for regularly scheduled and
special meetings during the fiscal year ended September 30, 1996. Each director
attended at least 75% of the aggregate of such meetings and all meetings of
committees of the Board of Directors of which such director was a member.
Each director of MFFC is also a director of Milton Federal. The Board
of Directors of Milton Federal met 21 times for regularly scheduled and special
meetings during the fiscal year ended September 30, 1996. Each director attended
at least 75% of the aggregate of such meetings and all meetings of committees of
the Board of Directors of which such director was a member.
COMMITTEES OF DIRECTORS
The Board of Directors of MFFC has an Audit Committee, an ESOP
Committee and a Stock Option Committee.
The Audit Committee recommends audit firms to the full Board of
Directors and reviews and approves the annual independent audit report. The
Audit Committee also monitors management's responses to Office of Thrift
Supervision ("OTS") examination reports. The members of the Audit Committee are
Messrs. Faze, Hine and Minnich. The Audit Committee met four times during fiscal
year 1996.
The ESOP Committee administers the ESOP and presently consists of
Messrs. Aidt, Hayes and Hine. The ESOP Committee met four times during the
fiscal year ended September 30, 1996.
The Stock Option Committee is responsible for administering the Stock
Option Plan, including interpreting the Stock Option Plan and awarding options
pursuant to its terms. Its members are Messrs. App, Hayes and Hine. The Stock
Option Committee met four times during the fiscal year ended September 30, 1996.
The Board of Directors of MFFC does not have a nominating committee or
a compensation committee. Nominees for election to the Board of Directors are
selected by the entire Board of Directors.
The Board of Directors of Milton Federal has several committees,
including Compensation, Benefits, RRP, Executive and Loan Committees.
The Compensation Committee reviews the executive officers' compensation
and makes recommendations to the full Board of Directors for approval. Messrs.
Faze, Hayes and Long are the members of the Compensation Committee. The
Compensation Committee met four times during fiscal year 1996.
The Benefits Committee considers all benefits for employees and
directors and makes recommendations to the full Board of Directors. The members
of the Benefits Committee are Messrs. Aidt, Hayes and Hine. The Benefits
Committee met four times during fiscal year 1996.
The RRP Committee, which administers the RRP, consists of Messrs. Aidt,
Hayes and Hine. The RRP Committee met four times during fiscal year 1996.
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The Executive Committee is authorized to act, with certain limitations,
on behalf of the Board of Directors between meetings of the Board of Directors.
Messrs. Aidt, Hine and Minnich are the members of the Executive Committee.
The Executive Committee met seven times during fiscal year 1996.
The Loan Committee reviews the recommendations of Milton Federal's loan
officers and approves or disapproves loans of up to $300,000. Any loans of
amounts exceeding $300,000 are referred to the full Board of Directors. The
members of the Loan Committee are Messrs. Aidt, Hine and Minnich. The Loan
Committee met 46 times during fiscal year 1996.
EXECUTIVE OFFICERS
In addition to Mr. Aidt, the President of both MFFC and Milton Federal,
and Mr. App, the Secretary of MFFC, the following persons are executive officers
of MFFC and Milton Federal and hold the designated positions:
Name Age(1) Position(s) Held
---- ------ ----------------
Thomas P. Eyer 42 Treasurer and Chief Financial
Officer of MFFC; Senior Vice
President/Financial Operations,
Treasurer and Chief Financial
Officer of Milton Federal
Michael J. Hufford 43 Secretary, Senior Vice
President/Lending Operations of
Milton Federal
Debbie A. Jones 48 Senior Vice President/Banking
Operations of Milton Federal
<FN>
- -----------------------------
(1) As of November 30, 1996.
MR. EYER has served as Senior Vice President/Financial Operations,
Chief Financial Officer and Treasurer of Milton Federal since January 1993. He
served as Vice President, Chief Financial Officer and Treasurer of Milton
Federal from 1992 until 1993. From 1991 to 1992, Mr. Eyer was Assistant
Controller of First National Bank, Dayton, and from 1975 to 1991 was employed by
Gem Savings Association, last serving as Controller.
MR. HUFFORD has served as Senior Vice President/Lending Operations for
Milton Federal since January 1993. He has worked for Milton Federal since 1974.
MRS. JONES has served as Senior Vice President/Banking Operations for
Milton Federal since January 1994 and has worked for Milton Federal since 1979.
Mr. Hufford is the brother of Mr. Minnich's daughter-in-law.
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COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to Glenn E. Aidt,
the President and Chief Executive Officer of both MFFC and Milton Federal, for
the fiscal years ended September 30, 1996, 1995 and 1994. No other executive
officer of MFFC earned salary and bonus in excess of $100,000 during such
period.
Summary Compensation Table
--------------------------
-------------------------------------------------------------
Annual Compensation Long Term Compensation
----------------------------------------------------------------------------------
---------------------------------
Awards
-------------------------------
Name and Principal Year Salary ($)(1) Bonus ($) Restricted Securities All Other
Position Stock Awards Underlying Compensation
($) Options/
SARs(#)
------------------------------------------------------------------------------------------------------------------
Glenn E. Aidt 1996 $116,613(2) $19,810 $266,267(5) -- $52,380(7)
President, Chief 1995 $104,826(3) $18,270 -- 51,578(6) $20,740(8)
Executive Officer 1994 $100,074(4) $16,372 -- -- $1,107(9)
- -------------------------
<FN>
(1) Does not include amounts attributable to other miscellaneous benefits
received by executive officers. The cost to Milton Federal of providing
such benefits to Mr. Aidt was less than 10% of his cash compensation.
(2) Includes salary of $108,373 and directors' fees of $8,240.
(3) Includes salary of $96,973 and directors' fees of $7,853
(4) Includes salary of $92,783 and directors' fees of $7,291.
(5) Mr. Aidt was awarded 18,052 common shares of MFFC under the RRP on October
16, 1995. One-fifth of such awarded shares are earned on each of the first
five anniversaries of the date the shares were awarded. The figure
represents the dollar value of such awarded shares based on the $14.75
closing sale price per share reported by The Nasdaq Stock Market for the
shares on October 16, 1995. The aggregate fair market value of the 18,052
shares at September 30, 1996, was $243,702 based upon the $13.50 per share
closing sale price reported by The Nasdaq Stock Market. Dividends are paid
on all awarded shares at the same rate as they are paid to all
shareholders.
(6) Represents the number of common shares of MFFC underlying options granted
to Mr. Aidt pursuant to the Stock Option Plan.
(7) Consists of Milton Federal's matching contribution to Mr. Aidt's defined
contribution plan account in the amount of $1,153; the $50,988 aggregate
value at the date of allocation of 3,777 common shares of MFFC allocated to
Mr. Aidt's account pursuant to the ESOP; and the premium of $239 paid by
Milton Federal for insurance on the life of Mr. Aidt payable to a
beneficiary designated by Mr. Aidt.
(8) Consists of Milton Federal's matching contribution to Mr. Aidt's defined
contribution plan account in the amount of $1,032; the $19,541 aggregate
value at the date of allocation of 1,241 common shares of MFFC allocated to
Mr. Aidt's account pursuant to the ESOP; and the premium of $167 paid by
Milton Federal for insurance on the life of Mr. Aidt payable to a
beneficiary designated by Mr. Aidt.
(9) Consists of Milton Federal's matching contribution to Mr. Aidt's defined
contribution plan account in the amount of $928 and the premium of $179
paid by Milton Federal for insurance on the life of Mr. Aidt payable to a
beneficiary designated by Mr. Aidt.
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STOCK OPTION PLAN
At the 1995 Annual Meeting of the Shareholders of MFFC, the
shareholders approved the Stock Option Plan. The Board of MFFC reserved 257,887
common shares, which is equal to 10% of the common shares issued in connection
with the Conversion, for issuance by MFFC upon the exercise of options to be
granted to certain directors, officers and employees of Milton Federal and MFFC
from time to time under the Stock Option Plan. Options to purchase 225,651
common shares of MFFC have been awarded pursuant to the Stock Option Plan.
The Stock Option Committee may grant options under the Stock Option
Plan at such times as it deems most beneficial to Milton Federal and MFFC on the
basis of the individual participant's responsibility, tenure and future
potential to Milton Federal and MFFC. Options granted to the officers and
employees under the Stock Option Plan may be "incentive stock options" ("ISOs")
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), which, if certain conditions are met, permits the
optionees to delay the recognition of federal taxable income on the shares
received upon the exercise of the options. Options granted under the Stock
Option Plan to directors who are not employees of MFFC or Milton Federal will
not qualify under the Code and thus will not be ISOs ("Non-qualified Stock
Options").
Each option is exercisable commencing on the first anniversary of the
grant of the option with respect to no more than one-fifth of the shares subject
to the option on each anniversary of the date of grant of the option. The option
exercise price for ISOs and Non-qualified Stock Options is determined by the
Committee at the time of option grant. The exercise price for an option,
however, must not be less than 100% of the fair market value of the shares on
the date of the grant; provided, however, for an employee who owns more than 10%
of MFFC's outstanding common shares, the exercise price of an ISO may not be
less than 110% of the fair market value of the shares on the date of the grant,
and the ISO shall not be exercisable after the expiration of five years from the
date it is granted. No stock option will be exercisable after the expiration of
ten years from the date of grant.
An option recipient cannot transfer or assign an option other than by
will or in accordance with the laws of descent and distribution. Termination for
cause, as defined in the Stock Option Plan, will result in the annulment of any
outstanding options. The Stock Option Plan provides that in the event of a
"change in control," as defined in the Stock Option Plan, all options then
outstanding shall become immediately exercisable. A "change in control" includes
approval by the shareholders of the execution of an agreement for a merger or
acquisition, a change in control as defined under OTS regulations or the
acquisition of the beneficial ownership of 25% or more of the voting shares of
MFFC by any person or entity.
The following table sets forth information regarding the number and
value of unexercised options held by Mr. Aidt at September 30, 1996:
Aggregated Option/SAR Exercises In Last Fiscal Year and 9/30/96 Option/SAR Values
---------------------------------------------------------------------------------
Number of Securities
Underlying
Unexercised Value of Unexercised
Options/SARs at In-the-Money
9/30/96 (#) Options/SARs at
9/30/96 ($)
Exercisable/
Shares Acquired Unexercisable Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable
- --------------------------------------------------------------------------------------------------------------------
Glenn E. Aidt -0- N/A 10,315/41,263 (1)
- -----------------------------
<FN>
(1) No value of such options is provided because the $13.69 exercise price
exceeds the fair market value of MFFC's common shares, which was $13.50 per
share on September 30, 1996, based on the closing sale price reported by
The Nasdaq Stock Market.
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RECOGNITION AND RETENTION PLAN AND TRUST
At the 1995 Annual Meeting of the Shareholders of MFFC, the
shareholders of MFFC approved the RRP. With funds contributed by Milton Federal,
the RRP purchased 103,155 shares of MFFC, 74,784 of which were awarded to
directors and executive officers of Milton Federal in October 1995.
The RRP is administered by the RRP Committee. Subject to express
provisions of the RRP and to review and acceptance or rejection by the Board of
Directors, the RRP Committee determines which directors and employees of Milton
Federal are eligible to receive awards of MFFC common shares under the RRP,
which eligible persons will be awarded shares under the RRP and the number of
shares awarded.
One-fifth of the RRP shares awarded to a recipient will be earned and
non-forfeitable on each of the first five anniversaries of the date of the
awards. Until shares awarded are earned by the participant, such shares will be
forfeited in the event that the employment of the employee is terminated. In the
event of the death or disability of a participant, however, the participant's
shares will be deemed to be earned and nonforfeitable upon such date. In
addition, all shares awarded pursuant to the RRP become earned and
nonforfeitable if, within one year following a "change in control" of MFFC or
Milton Federal, (i) the participant's employment is involuntarily terminated for
any reason other than just cause or (ii) a material adverse change occurs in the
capacity, conditions or circumstances of the participant's employment. Change of
control for such purpose means the acquisition of voting or investment control
of 25% or more of the voting securities of MFFC by any person or persons acting
as a group.
RRP shares will be distributed as soon as practicable after they are
earned. Each participant granted shares under the RRP will be entitled to the
benefit of any dividends or other distributions paid on such shares prior to
such shares being earned, although the dividends or other distributions will be
retained by the RRP until the shares are earned. All plan shares which have not
been earned and distributed will be voted by the Trustees of the RRP, who are
currently the members of the RRP Committee.
EMPLOYMENT AGREEMENTS
Milton Federal entered into an employment agreement with Mr. Aidt
effective in November 1994. Such employment agreement provided for an expiration
date of November 28, 1997, although the Board of Directors has executed a new
agreement with an expiration date of November 28, 1998 (the "Employment
Agreement"). A salary and performance review must be conducted by the Board of
Directors not less often than annually. The Employment Agreement requires the
inclusion of Mr. Aidt in any formally established employee benefit, bonus,
pension and profit-sharing plans for which senior management personnel are
eligible. The Employment Agreement also provides for vacation and sick leave.
The Employment Agreement is terminable by Milton Federal at any time.
In the event of termination by Milton Federal for "just cause," as defined in
the Employment Agreement, Mr. Aidt will have no right to receive any
compensation or other benefits for any period after such termination. In the
event of termination by Milton Federal other than for just cause, at the end of
the term of the Employment Agreement or in connection with a "change of
control," as defined in the Employment Agreement, Mr. Aidt will be entitled to a
continuation of salary payments for a period of time equal to the term of the
Employment Agreement and a continuation of benefits substantially equal to those
being provided at the date of termination of employment until the end of the
term of the Employment Agreement or the date Mr. Aidt becomes employed full-time
by another employer, whichever occurs first.
The Employment Agreement also contains provisions with respect to the
occurrence within one year of a "change of control" of (1) the termination of
employment for any reason other than just cause, retirement or termination at
the end of the term of the agreement, (2) a change in the capacity or
circumstances in which Mr. Aidt is employed or (3) a material reduction in Mr.
Aidt's responsibilities, authority, compensation or other benefits provided
under the Employment Agreement without Mr. Aidt's written consent. In the event
of any such occurrence, Mr. Aidt will be entitled to payment of an amount equal
to three times his average annual compensation for the three taxable years
immediately preceding the termination of employment. In addition, Mr. Aidt will
be entitled to continued coverage under all benefit plans until the earliest of
the end of the term of the Employment Agreement or the date on which Mr. Aidt is
included in another employer's benefit plans as a full-time employee. The
maximum which Mr. Aidt may receive, however, is limited to an amount which will
not result in the imposition of a penalty tax pursuant to Section 280G(b)(3) of
the Code. "Control," as defined in the
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Employment Agreement, generally refers to the acquisition by any person or
entity of the ownership or power to vote 10% or more of the voting stock of
Milton Federal or MFFC, the control of the election of a majority of Milton
Federal's or MFFC's directors or the exercise of a controlling influence over
the management or policies of Milton Federal or MFFC.
DEFINED BENEFIT PLAN
Milton Federal sponsors a defined benefit pension plan (the "Pension
Plan") covering all employees age 21 or older who have completed at least one
year of service to Milton Federal.
The normal Pension Plan retirement benefit payable upon retirement at
or after age 65 is the product of (a) 1%, multiplied by (b) years of service,
multiplied by (c) average annual salary for the five consecutive years of
highest salary. Employees become 100% vested in the Pension Plan after five
years of employment. Participants are automatically 100% vested at 65 years of
age regardless of years of service. The Pension Plan also includes provisions
for early retirement, disability retirement and a death benefit. The
compensation covered by the Pension Plan includes only the employee's basic
annual salary, exclusive of bonuses, fees or other special payments.
PENSION PLAN TABLE
HIGH-5 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
AVERAGE BENEFIT BENEFIT BENEFIT BENEFIT BENEFIT
COMPENSATION SERVICE SERVICE SERVICE SERVICE SERVICE
------------ -------- -------- ------- ------- -------
$ 15,000 $ 2,300 $ 3,000 $ 3,800 $ 4,500 $ 5,300
30,000 4,500 6,000 7,500 9,000 10,500
45,000 6,800 9,000 11,300 13,500 15,800
60,000 9,000 12,000 15,000 18,000 21,000
75,000 11,300 15,000 18,800 22,500 26,300
90,000 13,500 18,000 22,500 27,000 31,500
105,000 15,800 21,000 26,300 31,500 36,800
120,000 18,000 24,000 30,000 36,000 42,000
135,000 20,300 27,000 33,800 40,500 47,300
150,000 22,500 30,000 37,500 45,000 52,500
Milton Federal had no Pension Plan expense for fiscal year 1996 because
the Pension Plan was overfunded. Mr. Aidt has seven years of credited service
under the Pension Plan. The base salary of Mr. Aidt for 1996 is set forth in the
Summary Compensation Table under the "Salary" heading. Benefits under the
Pension Plan are computed based on the straight life annuity method and are not
subject to deduction for social security or any other offset amount.
DIRECTOR COMPENSATION
MFFC pays no directors' fees. Effective January 1, 1996, each director
of Milton Federal receives a fee of $8,560 per year for service as a director of
Milton Federal. Each non-employee director also receives $125 per hour for
attending committee meetings. During fiscal year 1996, a total of $57,680 was
paid in directors' compensation.
In October 1993, Milton Federal instituted a deferred compensation
program for its directors pursuant to which the directors may defer payment of
their directors' fees. Under an agreement between each of six of the directors
and Milton Federal, such fees are credited to an account for the director. The
amount credited bears interest at a rate determined by the Board of Directors,
currently an annual rate of seven percent. The deferred amounts plus interest
will be paid from the general assets of Milton Federal to the director at the
time of his termination of board service. If the director dies while serving as
a director of Milton Federal, an annual payment will be made for five years to
the director's beneficiary. Such death benefit payments will total the amount
which would have accrued to the director's account assuming deferral of $7,000
per year until age 70. The plan may be amended or terminated by Milton Federal
at any time.
Milton Federal has purchased insurance contracts on the lives of the
participants in the deferred compensation plan and named Milton Federal as the
beneficiary. While the insurance contracts are not committed to fund the
deferred
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compensation plan and the plan is an unsecured obligation of Milton
Federal, management currently intends to use the insurance for such purpose.
The directors of MFFC are also eligible for awards under the Stock
Option Plan and the RRP. During fiscal year 1996, Messrs. App, Faze, Hayes,
Hine, Long and Minnich were each awarded 5,157 common shares, and Mr. Aidt was
awarded 18,052 MFFC common shares pursuant to the RRP.
COMPENSATION COMMITTEE REPORT
As a unitary savings and loan holding company, the business of MFFC
consists principally of holding the stock of Milton Federal. The functions of
the executive officers of MFFC, who are also executive officers of Milton
Federal, pertain primarily to the operations of Milton Federal. The executive
officers receive their compensation, therefore, from Milton Federal, rather than
from MFFC. The Compensation Committee of the Milton Federal Board of Directors
(the "Committee") has furnished the following report concerning executive
compensation.
PROCESS FOR DETERMINING COMPENSATION. MFFC has not paid any cash
compensation to its executive officers since its formation. All executive
officers of MFFC also currently hold positions with Milton Federal and receive
cash compensation from Milton Federal.
The compensation levels of the executive officers, including the Chief
Executive Officer/ President (the "CEO"), are reviewed each year by the
Committee. The Committee reviews independent surveys of compensation of officers
in the thrift industry. In addition, it assesses each executive officer's
contribution to MFFC and Milton Federal, the skills and experiences required by
such officer's position and the potential of the officer to contribute to MFFC
and Milton Federal in the future. Based on the foregoing assessment, the
Committee makes recommendations to the full Board of Directors of Milton
Federal. The Board of Directors reviews such recommendations and makes final
determinations with respect to the compensation of the executive officers,
except that directors who are also executive officers do not participate in
discussions regarding their own respective compensation.
COMPENSATION POLICIES. The Committee's executive compensation policies
are designed to provide competitive levels of compensation that will assist
Milton Federal and MFFC in attracting and retaining qualified executives and
that will also integrate compensation with the short- and long-term performance
goals of Milton Federal and MFFC and reward individual performance, initiative
and achievements. The cash compensation program for executive officers consists
of the following three elements: a base salary, an officer incentive bonus and a
bonus to all employees. The executive officers of Milton Federal are also
eligible for discretionary awards under the Stock Option Plan and the RRP. The
combination of base salary, bonus and stock benefit plan awards is designed to
relate total compensation levels to the performance of Milton Federal and MFFC
and each individual executive officer's contribution thereto.
The objectives of the discretionary officer cash bonuses are to
motivate and reward the executive officers in connection with the accomplishment
of annual objectives of Milton Federal and MFFC, to reinforce a strong
performance orientation with differentiation and variability in individual
awards based on contribution to annual and long-range business results and to
provide a competitive compensation package that will attract, reward and retain
individuals of the highest quality. For executive officers of Milton Federal and
MFFC, including the CEO, bonuses are determined as a percentage of annual base
salary, which percentage is calculated utilizing a corporate goal factor and an
individual performance factor. The corporate goal factor is based upon the
achievement of certain levels of profitability of MFFC and Milton Federal. The
performance factor is based upon the particular executive officer's performance
measured by the attainment of individual and corporate goals during the
preceding year.
No stock option awards were considered during fiscal year 1996.
Executive officers of Milton Federal received discretionary awards under the RRP
during fiscal year 1996 based upon their positions, responsibilities and
performance of duties, among other considerations. The Committee considered such
awards in its determination of total compensation.
DETERMINATION OF CEO'S COMPENSATION. The Committee determined the
compensation of the CEO in fiscal year 1996 pursuant to the policies described
above for executive officers. The corporate profitability measurements
considered were net income, return on assets and return on equity. Additional
corporate goals considered were the implementation of stock repurchases, the
implementation of a strategic plan and the successful completion of the fiscal
1996 Business Plan.
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The individual goals considered were related to the CEO's efforts in Milton
Federal's achieving certain regulatory ratings, the development of branching
strategies, the development of a plan to utilize excess capital, community
involvement and industry involvement.
Submitted by the Compensation Committee of Milton Federal's Board of Directors:
David R. Hayes, Chairman
Kenneth J. Faze
Christopher S. Long
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
MFFC pays no cash compensation to officers or employees of MFFC
or Milton Federal and therefore has no compensation committee. The Board
of Directors does, however, have a Stock Option Committee, whose members are
Messrs. Aidt, Hayes and Hine. Mr. Aidt is the President and Chief Executive
Officer of MFFC and Milton Federal, and Mr. Hine is Vice Chairman of both
companies.
The Board of Directors of Milton Federal has a Compensation Committee,
the members of which are Messrs. Faze, Hayes and Long, none of whom are or ever
have been officers of MFFC or Milton Federal. The Board of Directors of Milton
Federal also has an RRP Committee, composed of Messrs. Aidt, Hayes and Hine,
which determines RRP awards and administers the RRP. During fiscal year 1996,
there were no other reportable relationships between the members of the
aforementioned committees and MFFC or Milton Federal.
PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in
MFFC's cumulative total shareholder return against the cumulative return of a
broad index of The Nasdaq National Market and an index of savings associations
with assets of less than $250 million for the period from October 7, 1994, the
date on which trading of MFFC's shares commenced, and September 30, 1996. The
graph assumes the investment of $100 on October 7, 1994. Cumulative total
shareholder return is measured by dividing (i) the sum of (A) the cumulative
amount of dividends for the measurement period, assuming dividend reinvestment,
and (B) the difference between the price of MFFC's common shares at the end and
at the beginning of the measurement period; by (ii) the price of MFFC's common
shares at the beginning of the measurement period.
[Performance graph represented by the following chart]
10/07/94 03/31/95 09/30/95 03/31/96 09/30/96
----------------- ----------------- ----------------- ----------------- ------------------
MFFC $100.00 $135.68 $159.82 $171.55 $149.80
Nasdaq Total Return 100.00 109.79 140.70 149.07 166.97
SNL < $250 million Thrifts 100.00 104.48 131.68 138.17 154.59
CERTAIN TRANSACTIONS WITH MFFC
During the fiscal year ended September 30, 1996, certain directors of
MFFC had loans from Milton Federal with balances in excess of $60,000. All of
such loans were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and did
not involve more than the normal risk of collectibility or present other
unfavorable features.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, MFFC's directors and executive
officers and persons holding more than ten percent of the common shares of MFFC
are required to report their ownership of common shares and any changes in such
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ownership to the Securities and Exchange Commission (the "SEC") and to
MFFC. Based upon a review of such reports, MFFC must disclose any failure to
file such reports timely in Proxy Statements used in connection with annual
meetings of shareholders. The Forms 5 reporting allocations made to the ESOP
accounts of Messrs. Aidt and Eyer for the fiscal year ended September 30, 1995,
were not timely filed.
SELECTION OF AUDITORS
The Board of Directors has selected Crowe Chizek as the auditors of
MFFC and Milton Federal for the current fiscal year and recommends that the
shareholders ratify the selection. Management expects that a representative of
Crowe Chizek will be present at the Annual Meeting, will have the opportunity to
make a statement if he or she so desires and will be available to respond to
appropriate questions.
PROPOSALS OF SHAREHOLDERS AND OTHER MATTERS
Any proposals of shareholders intended to be included in MFFC's proxy
statement for the 1998 Annual Meeting of Shareholders should be sent to MFFC by
certified mail and must be received by MFFC not later than August 22, 1997.
Management knows of no other business which may be brought before the
Annual Meeting. It is the intention of the persons named in the enclosed Proxy
to vote such Proxy in accordance with their best judgment on any other matters
which may be brought before the Annual Meeting.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN AND
RETURN THE PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
By Order of the Board of Directors
December 20, 1996 E. Lynn App, Secretary
15
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
MILTON FEDERAL FINANCIAL CORPORATION
THE MILTON FEDERAL FINANCIAL CORPORATION ANNUAL MEETING OF SHAREHOLDERS
JANUARY 22, 1997
The undersigned shareholder of Milton Federal Financial Corporation
("MFFC") hereby constitutes and appoints E. Lynn App and Christopher S. Long, or
either one of them, the Proxy or Proxies of the undersigned with full power of
substitution and resubstitution, to vote at the Annual Meeting of Shareholders
of MFFC to be held at 25 Lowry Drive, West Milton, Ohio, on January 22, 1997, at
2:00 p.m. (the "Annual Meeting"), all of the shares of MFFC which the
undersigned is entitled to vote at the Annual Meeting, or at any adjournment
thereof, on each of the following proposals, all of which are described in the
accompanying Proxy Statement:
1. The election of three directors:
/ / FOR all nominees listed below / / WITHHOLD authority to vote for all
(except as marked to the contrary below): nominees listed below:
Glenn E. Aidt Kenneth J. Faze David R. Hayes
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided.) ______________________________________________________
2. The ratification of the selection of Crowe, Chizek and Company as the
auditors of MFFC for the current fiscal year.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, upon such other business as may properly come
before the Annual Meeting.
IMPORTANT: PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE.
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This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. Unless otherwise specified, the
shares will be voted FOR proposals 1 and 2.
All Proxies previously given by the undersigned are hereby revoked.
Receipt of the Notice of the Annual Meeting of Shareholders of MFFC and of the
accompanying Proxy Statement is hereby acknowledged.
Please sign exactly as your name appears on your Stock Certificate(s).
Executors, Administrators, Trustees, Guardians, Attorneys and Agents should give
their full titles.
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Signature Signature
--------------------------- ------------------------------
Print or Type Name Print or Type Name
Dated: Dated:
--------------------- ------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
MFFC. PLEASE DATE, SIGN AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED FOR MAILING IN THE U.S.A.