[ Letterhead of First Federal of Olathe Bancorp, Inc. ]
March 29, 2002
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of First Federal of
Olathe Bancorp, Inc. (the "Company"), I cordially invite you to attend the 2002
Annual Meeting of Stockholders. The meeting will be held at 3:00 p.m., local
time on April 25, 2002 at the Company's main office located at 100 East Park
Street, Olathe, Kansas.
The enclosed Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted. During the meeting we will also report on the
Company's fiscal 2001 financial and operating performance.
An important aspect of the meeting process is the stockholder vote on
corporate business items. I urge you to exercise your rights as a stockholder to
vote and participate in this process. Stockholders are being asked to consider
and vote upon the proposals to elect two directors of the Company and to ratify
the appointment of independent auditors of the Company for the fiscal year
ending December 31, 2002. The Board has carefully considered these proposals and
believes that their approval is in the best interests of the Company and its
stockholders. Accordingly, your Board of Directors unanimously recommends that
you vote for each of these proposals.
I encourage you to attend the meeting in person. Whether or not you attend
the meeting, I hope that you will read the enclosed Proxy Statement and then
complete, sign and date the enclosed proxy card and return it in the postage
prepaid envelope provided. Returning a properly executed and dated proxy card
will save the Company additional expense in soliciting proxies and will ensure
that your shares are represented. Please note that you may vote in person at the
meeting even if you have previously returned the proxy.
Thank you for your attention to this important matter.
Sincerely,
/s/ Mitch Ashlock
----------------------
Mitch Ashlock
PRESIDENT AND CHIEF EXECUTIVE OFFICER
FIRST FEDERAL OF OLATHE BANCORP, INC.
100 East Park Street
Olathe, Kansas, 66061
(913) 782-0026
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on April 25, 2002
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of First Federal of Olathe Bancorp, Inc. will be held at the
Company's main office located at 100 East Park Street, Olathe, Kansas at 3:00
p.m., local time, on April 25, 2002.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company for a three year term;
2. The ratification of the appointment of BKD, LLP as the auditors of
the Company for the fiscal year ending December 31, 2002;
and such other matters as may properly come before the Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on the
date specified above, or on any date or dates to which the Meeting may be
adjourned. Stockholders of record at the close of business on March 13, 2002
(the "Record Date") are the stockholders entitled to vote at the Meeting and any
adjournments thereof.
You are requested to complete and sign the enclosed form of proxy, which
is solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend and vote at the
Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Kenda Camp
------------------------
Kenda Camp
SECRETARY
Olathe, Kansas
March 29, 2002
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF
MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
PROXY STATEMENT
FIRST FEDERAL OF OLATHE BANCORP, INC.
100 East Park Street
Olathe, Kansas, 66061
(913) 782-0026
ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 25, 2002
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors of First Federal of Olathe Bancorp, Inc. (the
"Company"), the parent company of First Federal Savings and Loan Association of
Olathe (the "Association" or "First Federal Savings"), of proxies to be used at
the Annual Meeting of Stockholders of the Company (the "Meeting") which will be
held at the Company's main office located at 100 East Park Street, Olathe,
Kansas on April 25, 2002 at 3:00 p.m., local time, and all adjournments of the
Meeting. The accompanying Notice of Annual Meeting and this Proxy Statement are
first being mailed to stockholders on or about March 29, 2002.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon the proposals to elect two directors of the Company and to ratify
the appointment of BKD, LLP as auditors of the Company for the fiscal year
ending December 31, 2002.
VOTE REQUIRED AND PROXY INFORMATION
All shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the proposals set forth
in this Proxy Statement. The Company does not know of any matters, other than as
described in the Notice of Annual Meeting, that are to come before the Meeting.
If any other matters are properly presented at the Meeting for action, the
persons named in the enclosed form of proxy and acting thereunder will have the
discretion to vote on such matters in accordance with their best judgment.
The holders of a majority of all of the shares of the Company's Common
Stock entitled to vote at the Meeting, present in person or by proxy, shall
constitute a quorum for all purposes. Abstentions and broker non-votes are
counted for purposes of determining a quorum.
As to the election of directors, the proxy card being provided by the
Board of Directors enables a stockholder to vote FOR the election of the
nominees proposed by the Board, or to WITHHOLD AUTHORITY to vote for one or more
of the nominees being proposed. Under Kansas law and the Company's Articles of
Incorporation and Bylaws, directors are elected by a plurality of votes cast,
without regard to either broker non-votes or proxies as to which authority to
vote for the nominees being proposed is withheld.
As to the ratification of the appointment of BKD, LLP as independent
auditor of the Company, by checking the appropriate box, a stockholder may: (i)
vote FOR the item; (ii) vote AGAINST the item; or (iii) ABSTAIN from voting on
the item. Under Kansas law and the Company's Articles of Incorporation and
Bylaws, the ratification of this matter shall be determined by a majority of the
votes cast without regard to broker non-votes or proxies marked ABSTAIN.
A proxy given pursuant to the solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting, or (iii) attending the Meeting and voting in person
(although attendance at the Meeting will not in and of itself constitute
revocation of a proxy). Any written notice revoking a Proxy should be delivered
to Kenda Camp, Secretary, First Federal of Olathe Bancorp, Inc., 100 East Park
Street, Olathe, Kansas, 66061.
In accordance with the provisions of the Company's Articles of
Incorporation, record holders of Common Stock who beneficially own in excess of
10% of the outstanding shares of Common Stock (the "Limit") are not entitled to
any vote with respect to the shares held in excess of the Limit. The Company's
Articles of Incorporation authorizes the Board of Directors (i) to make all
determinations necessary or desirable to implement the Limit, including
determining whether persons or entities are acting in concert, and (ii) to
demand that any person who is reasonably believed to beneficially own stock in
excess of the Limit supply information to the Company to enable the Board of
Directors to implement and apply the Limit.
VOTING SECURITIES AND CERTAIN HOLDERS THEREOF
Stockholders of record as of the close of business on March 13, 2002 will
be entitled to one vote for each share of Common Stock then held. As of that
date, the Company had 513,726 shares of Common Stock issued and outstanding. The
following table sets forth information as of March 13, 2002 regarding share
ownership of those persons or entities known by management to own beneficially
more than five percent of the Common Stock and of all directors and executive
officers of the Company and the Association as a group. This information is
based solely upon information supplied to the Company and the filings required
pursuant to the Securities Exchange Act of 1934.
SHARES
BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED OF CLASS
- ------------------------------------------- ------------ --------
First Federal Savings and Loan Association 44,506 8.66%
of Olathe Employee Stock Ownership Plan(1)
100 East Park Street
Olathe, Kansas 66061
Paul H. O'Leary 44,000 8.56%
One Penn Plaza, Suite 4720
New York, New York 10119
Mitch Ashlock 31,448(2) 6.02%
100 East Park Street
Olathe, Kansas 66061
Directors and executive officers of the Company 82,968(3) 15.61%
and the Association as a group (5 persons)
- ----------
(1) The amount reported represents shares held by the Employee Stock Ownership
Plan ("ESOP"), no shares of which have been allocated to accounts of
participants. First Bankers Trust Company, N.A. of Quincy, Illinois, the
trustee of the ESOP, may be deemed to beneficially own the shares held by
the ESOP which have not been allocated to accounts of participants.
Participants in the ESOP are entitled to instruct the trustee as to the
voting of shares allocated to their accounts under the ESOP. Unallocated
shares held in the ESOP's suspense account are voted by the trustee in the
same proportion as allocated shares voted by participants.
(2) Includes 8,900 stock options and 11,126 shares of restricted stock.
(3) Amount includes shares held directly, as well as shares held jointly with
family members, shares held in retirement accounts, shares held in a
fiduciary capacity or by certain family members, with respect to which
shares the group members may be deemed to have sole or shared voting
and/or investment power. The amount above includes 17,796 options to
purchase shares of Common Stock granted under the Company's 2001 Stock
Option Plan and 22,250 awards of shares of restricted Common Stock under
the Company's 2001 Recognition and Retention Plan ("RRP") to directors and
executive officers of the Company. The amount above excludes options which
do not vest within 60 days of March 13, 2002.
2
PROPOSAL I - ELECTION OF DIRECTORS
The Company's Board of Directors is presently composed of five members,
each of whom is also a director of the Association. The Directors are divided
into three classes. Directors of the Company are generally elected to serve for
a three-year term which is staggered to provide for the election of
approximately one-third of the directors each year.
The following table sets forth certain information regarding the Company's
Board of Directors, including their terms of office and nominees for election as
directors. It is intended that the proxies solicited on behalf of the Board of
Directors (other than proxies in which the vote is withheld as to the nominee)
will be voted at the Meeting for the election of the nominees identified in the
following table. If any nominee is unable to serve, the shares represented by
all such proxies will be voted for the election of such substitute as the Board
of Directors may recommend. At this time, the Board of Directors knows of no
reason why the nominee might be unable to serve, if elected. Except as described
herein, there are no arrangements or understandings between any director or
nominee and any other person pursuant to which such director or nominee was
selected.
SHARES OF COMMON
AGE AT TERM STOCK BENEFICIALLY PERCENT
DECEMBER 31, DIRECTOR TO OWNED AT OF
NAME(1) 2001 POSITION(S) HELD SINCE(2) EXPIRE MARCH 13, 2002(3) CLASS
- --------------------- -------- ----------------- -------- ------- ----------------- -------
NOMINEES FOR TERMS TO EXPIRE IN 2005
Donald K. Ashlock 75 Chairman of the Board 1952 2002 15,005(5) 2.91%
Marvin Eugene Wollen 69 Director 1986 2002 6,505(5) 1.26
DIRECTORS CONTINUING IN OFFICE
John M. Bowen 69 Director 1973 2003 15,005(5) 2.91
Carl R. Palmer 65 Director 1982 2003 15,005(5) 2.91
Mitch Ashlock 44 President, Chief Executive 1995 2004 31,448(4)(6) 6.02
Officer and Director
- ----------
(1) The mailing address for each person listed is 100 East Park Street,
Olathe, Kansas 66061.
(2) Includes service as a director of the Association.
(3) Includes all shares of Common Stock held directly as well as by spouses
and minor children, in trust and other indirect ownership, over which
shares the executive officers and directors effectively exercise sole or
shared voting and investment power. Does not include options to purchase
shares of Common Stock granted under the Company's 2001 Stock Option Plan
which do not vest within 60 days of March 13, 2002.
(4) Excludes 5,000 shares held jointly with Donald K. Ashlock, which are
included in the shares reported by Donald K. Ashlock.
(5) Includes 2,224 stock options and 2,781 shares of restricted stock for
Directors Donald K. Ashlock, John M. Bowen, Carl R. Palmer and Marvin
Eugene Wollen. (6) Includes 8,900 stock options and 11,126 shares of
restricted stock for Director Mitch Ashlock.
The business experience of each director and director nominee is set forth
below. All directors have held their present positions for at least the past
five years, except as otherwise indicated.
BOARD OF DIRECTORS
DONALD K. ASHLOCK. Mr. Ashlock served as President and Chief Executive
Officer of First Federal Savings from 1982 until his retirement in 1995. He
originally joined First Federal Savings in 1952.
MARVIN EUGENE WOLLEN. Mr. Wollen is an optometrist practicing in Olathe,
Kansas.
JOHN M. BOWEN. Mr. Bowen is the owner and managing officer of John M.
Bowen & Associates, a court reporting company, located in Olathe, Kansas and
Kansas City, Missouri.
3
CARL R. PALMER. Mr. Palmer is the owner of Carl Palmer Realty, a real
estate sales firm located in Olathe, Kansas.
MITCH ASHLOCK. Mr. Ashlock has been employed by First Federal Savings
since 1992. He served as Vice President from 1992 to 1995, and was appointed
President and Chief Executive Officer in 1995. Mr. Ashlock is the son of Donald
K. Ashlock.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met nine times during the fiscal year ended
December 31, 2001. During fiscal 2001, no incumbent director of the Company
attended fewer than 75% of the aggregate of the total number of Board meetings
and the total number of meetings held by the committees of the Board of
Directors on which he served.
The Board of Directors of the Company has standing Audit, Nominating and
Compensation Committees.
The Company's Audit Committee is responsible for the review of the
Company's annual audit report prepared by the Company's independent auditors.
The review includes a detailed discussion with the independent auditors and
recommendation to the full Board concerning any action to be taken regarding the
audit. A majority of the members of the Audit Committee is "independent" as
defined in the listing standards of the National Association of Securities
Dealers. The Board of Directors has adopted a written charter for the Audit
Committee. The current members of the Audit Committee are Directors Donald K.
Ashlock, Carl R. Palmer and Marvin Eugene Wollen. The Company's Audit Committee
met four times during fiscal 2001.
The Compensation Committee is currently composed of Directors Donald K.
Ashlock, John M. Bowen and Carl R. Palmer. This Committee is responsible for
evaluating the performance of the Company's principal officers and employees to
determine the compensation and benefits to be paid to such persons, and is also
responsible for administering the Company's 2001 Stock Option Plan and 2001
Retention and Recognition Plan. This Committee met one time during fiscal 2001.
The Nominating Committee meets annually in order to nominate candidates
for membership on the Board of Directors. This committee is comprised of the
board members who are not up for election. The Nominating Committee met one time
during fiscal 2001.
AUDIT COMMITTEE REPORT
In accordance with rules recently established by the SEC, the Audit
Committee has prepared the following report for inclusion in this proxy
statement:
As part of its ongoing activities, the Audit Committee has:
o Reviewed and discussed with management the Company's audited
consolidated financial statements for the fiscal year ended December
31, 2001;
o Discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, COMMUNICATIONS
WITH AUDIT COMMITTEES, as amended; and
o Received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1,
INDEPENDENCE DISCUSSIONS WITH AUDIT COMMITTEES, and has discussed
with the independent auditors their independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10- KSB for the
fiscal year ended December 31, 2001.
4
This report shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
This report has been provided by the Audit Committee:
Donald K. Ashlock
Carl R. Palmer
Marvin Eugene Wollen
OWNERSHIP REPORTS BY OFFICERS AND DIRECTORS
The Common Stock of the Company is registered pursuant to Section 12(g) of
the Securities Exchange Act of 1934 ("Exchange Act"). The officers and directors
of the Company and beneficial owners of greater than 10% of the Company's Common
Stock ("10% beneficial owners") are required to file reports on Forms 3, 4 and 5
with the Securities and Exchange Commission (the "SEC") disclosing changes in
beneficial ownership of the Common Stock. SEC rules require disclosure in the
Company's Proxy Statement of the failure of an officer, director or 10%
beneficial owner of the Company's Common Stock to file a Form 3, 4 or 5 on a
timely basis. Based on the Company's review of such ownership reports, no
officer, director or 10% beneficial owner of the Company failed to file such
ownership reports on a timely basis for the fiscal year ended December 31, 2001.
DIRECTORS' COMPENSATION
During fiscal 2001, the Company paid directors a fee of $400 per month.
Additionally, during fiscal 2001, each director of the Association received a
fee of $400 per meeting attended. The Chairman of the Board of the Association,
Donald K. Ashlock, received a fee of $740 per month plus $400 per meeting
attended.
STOCK BENEFIT PLANS. For information regarding awards to directors under
the Company's stock benefit plans, see "Benefit Plans--Stock Option Plan" and
- --"Recognition and Retention Plan" herein.
EXECUTIVE COMPENSATION
The Company has not paid any compensation to its executive officers since
its formation. However, the Company does reimburse the Association for services
performed on behalf of the Company by its officers. The Company does not
presently anticipate paying any compensation to such persons until it becomes
actively involved in the operation or acquisition of businesses other than the
Association.
The following table sets forth the compensation paid or accrued by the
Association for services rendered by Mitch Ashlock, the Chief Executive Officer
of the Association, during fiscal 2001, 2000, and 1999. Except for Mr. Ashlock,
no executive officer earned in excess of $100,000 during fiscal 2001, 2000 or
1999.
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------- --------------------------
OTHER
ANNUAL RESTRICTED STOCK OPTIONS/ ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) SARS COMPENSATION
POSITION FISCAL ($) YEAR ($) ($) ($) (#) ($) (1)
========================================================================================================================
Mitch Ashlock 2001 $75,000 $25,000 $-- $228,083(2) 22,252(3) $63,004
Chief Executive Officer 2000 $65,700 $27,500 $-- $ -- -- $ 7,200
1999 $63,500 $26,500 $-- $ -- -- $ 4,250
========================================================================================================================
5
- ----------
(1) In 2001, consists of $9,600 of Board fees, the payment of $4.00 per share
special cash distribution on 8,901 shares of unvested restricted stock,
which totaled $35,604, and the payment of $4.00 per share special cash
distribution with respect to 4,450 vested stock options, which totaled
$17,800. In 2000, consists of $7,200 of Board fees. In 1999, consists of
$4,250 of Board fees. Does not include the value of any allocation of
shares to Mr. Ashlock's account under the ESOP during 2001 and 2000. The
administratior of the ESOP has not yet notified the Company of the shares
allocated to individual participants. Does not include the aggregate
amount of other personal benefits, which did not exceed 10% of the total
salary and bonus reported.
(2) Represents the total value of the award of 11,126 shares of restricted
stock on April 25, 2001, the date of grant. The awards were made pursuant
to the Company's 2001 Recognition and Retention Plan. The market value per
share of the Common Stock was $20.50 on the date of the grant. The award
vests in equal installments at a rate of 20% per year (equal to 2,225
shares per year) beginning on April 25, 2001, the date of grant. Awards
will be 100% vested upon termination of employment due to death or
disability, or following a change of control. The aggregate value of the
11,126 shares of restricted stock awarded to Mr. Ashlock, including both
vested and unvested shares, as of December 31, 2001 was $280,932, based
upon a closing price of $25.25 per share on December 31, 2001.
(3) On April 25, 2001, pursuant to the Company's Stock Option Plan, Mr.
Ashlock was awarded options to purchase 22,252 shares of Common Stock.
Such options vest in equal installments at a rate of 20% per year
commencing on the date of grant. The exercise price of such options is
$20.50, the fair market value of the underlying shares on April 25, 2001,
the date of grant.
BENEFIT PLANS
GENERAL. First Federal Savings currently provides health care benefits,
including medical, prescription and dental, subject to certain deductibles and
copayments by employees, and group life insurance to its full time employees.
STOCK OPTION PLAN. During the year ended December 31, 2001, the Company
adopted, and the Company's stockholders approved, the 2001 Stock Option Plan
(the "Stock Option Plan"). The Stock Option Plan authorizes the grant of stock
options equal to 55,633 shares of Common Stock. Certain directors, officers and
employees of the Association and the Company are eligible to participate in the
Stock Option Plan. The Stock Option Plan is administered by a committee of
outside directors (the "Committee"). The Stock Option Plan provides for awards
in the form of stock options, reload options, limited stock appreciation rights
and dividend equivalent rights. Stock options granted under the Stock Option
Plan may be either "Incentive Stock Options" as defined under Section 422 of the
Code or stock options not intended to qualify as such ("non-statutory stock
options"). Options must be exercised within 10 years from the date of grant. The
exercise price of the options must be at least 100% of the fair market value of
the underlying Common Stock at the time of the grant.
Pursuant to the Stock Option Plan, options to purchase 5,563 shares were
granted to each non-employee director of the Company (4 persons), and options to
purchase 22,252 shares were awarded to Mitch Ashlock, the Company's Chief
Executive Officer, at an exercise price of $20.50 per share, the fair market
value of the underlying shares on the date of the award. The awards included
dividend equivalent rights ("Dividend Equivalent Rights"), which entitle the
option holder to receive a cash benefit per share if certain extraordinary
dividends are declared equal to the amount of the extraordinary dividend
multiplied by the number of options that the person holds. In December 2001, the
Company paid a special cash distribution of $4.00 per share. The holders of
options granted under the Stock Option Plan will receive this cash benefit equal
to the amount of the special cash distribution as their options vest. Each
non-employee director received $4,450 in 2001 pursuant to this provision.
6
The following table sets forth information relating to options granted
under the Stock Option Plan to the named executive officer during the year ended
December 31, 2001.
=========================================================================================================================
OPTION GRANTS IN LAST FISCAL YEAR
=========================================================================================================================
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------------------------------------------------
PERCENT OF TOTAL OPTIONS
GRANTED TO EMPLOYEES IN EXERCISE OR BASE EXPIRATION
NAME OPTIONS GRANTED FY 2001 PRICE DATE
- -------------------------------------------------------------------------------------------------------------------------
Mitch Ashlock 22,252 80% $20.50 April 25, 2011
- -------------------------------------------------------------------------------------------------------------------------
Set forth below is certain additional information concerning options
outstanding to the named executive officer at December 31, 2001. No options were
exercised during fiscal 2001.
=========================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
=========================================================================================================================
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT THE-MONEY OPTIONS AT
FISCAL YEAR-END YEAR-END (1)
------------------------------------------------------
SHARES ACQUIRED VALUE EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME UPON EXERCISE REALIZED (#) ($)
- --------------------------------------------------------------------------------------------------------------------------
Mitch Ashlock -- $-- 4,450/17,802 $21,138/$84,560
- --------------------------------------------------------------------------------------------------------------------------
- ---------------
(1) Equals the difference between the aggregate exercise price of such options
and the aggregate fair market value of the shares of Common Stock that
would be received upon exercise, assuming such exercise occurred on
December 31, 2001, at which date the most recent sales price of the Common
Stock as reported on the Over-the- Counter Electronic Bulletin Board was
$25.25.
RECOGNITION AND RETENTION PLAN. During the fiscal year ended December 31,
2001 the Company adopted, and the Company's stockholders approved, the 2001
Recognition and Retention Plan. Pursuant to the Recognition Plan, 2,781 shares
of stock were awarded to each non-employee director. The market value per share
of the Common Stock was $20.50 on the date of the grant, and the aggregate value
of 2,781 shares at $20.50 per share totals $57,011. Such awards vest in equal
installments at a rate of 20% per year beginning on April 25, 2001, the date of
grant. Awards will be 100% vested upon termination of employment due to death or
disability, or following a change of control. Each non-employee director
received the $4.00 per share special cash distribution on his shares of
restricted stock, equal to $8,900 per director on the 2,225 unvested shares of
restricted stock.
EMPLOYMENT AGREEMENT. In connection with the consummation of the
conversion, First Federal Savings entered into an employment agreement with Mr.
Ashlock which provides for a term of 36 months. On each anniversary date, the
agreement may be extended for an additional 12 months, so that the remaining
term shall be 36 months. If the agreement is not renewed, the agreement will
expire 36 months following the anniversary date. The current annual base salary
for Mr. Ashlock is $78,000. The base salary may be increased but not decreased.
In addition to the base salary, the agreement provides for, among other things,
participation in other employee and fringe benefits applicable to executive
personnel. The agreement provides for termination by First Federal Savings for
cause at any time. In the event First Federal Savings terminates the executive's
employment for reasons other than for cause, or in the event of the executive's
resignation from First Federal Savings upon (1) failure to re-elect the
executive to his current offices, (2) a material change in the executive's
functions, duties or responsibilities, or relocation of his principal place of
employment by more than 30 miles, (3) liquidation or dissolution of First
Federal Savings, or (4) a breach of the agreement by First Federal Savings
during the term of the agreement (whether before, coincident with or following a
7
change in control of the Company or the Association), the executive, or in the
event of death, his beneficiary would be entitled to severance pay in an amount
equal to approximately $233,220 if termination occurred at December 31, 2001.
First Federal Savings would also continue the executive's life, health, dental
and disability coverage for 36 months from the date of executive's termination.
In the event the payments to the executive would include an "excess parachute
payment" as defined in the Internal Revenue Code, the payments would be reduced
in order to avoid having an excess parachute payment.
The executive's employment may be terminated upon his attainment of age 65
or such later age as may be required by law or consented to by the board of
directors. Upon Mr. Ashlock's retirement, he will be entitled to all benefits
available to him under any retirement or other benefit plan maintained by First
Federal Savings. In the event of the executive's disability for a period of six
months, First Federal Savings may terminate the agreement provided that First
Federal Savings will be obligated to pay the executive his base salary for the
remaining term of the agreement or one year, whichever is longer, reduced by any
benefits paid to the executive pursuant to any disability insurance policy or
similar arrangement maintained by First Federal Savings. In the event of the
executive's death, First Federal Savings will pay his base salary to his named
beneficiaries for one year following his death, and will also continue medical,
dental, and other benefits to his family for one year.
The employment agreement provides that, following termination of
employment, the executive will not compete with First Federal Savings for a
period of one year, provided, however, that in the event of a termination in
connection with a change in control within the meaning of certain federal laws,
the noncompete provisions will not apply.
DEFINED BENEFIT PENSION PLAN. First Federal Savings maintains the
Financial Institutions Retirement Fund, which is a qualified, tax-exempt defined
benefit plan ("Retirement Plan"). All employees age 21 or older who have worked
at First Federal Savings for a period of one year are eligible for membership in
the Retirement Plan; however, only employees that have been credited with 1,000
or more hours of service with First Federal Savings during the year are eligible
to accrue benefits under the Retirement Plan. First Federal Savings annually
contributes an amount to the Retirement Plan, if necessary, to satisfy the
actuarially determined minimum funding requirements in accordance with the
Employee Retirement Income Security Act.
The regular form of all retirement benefits is guaranteed for the life of
the retiree. An optional form of benefit may be selected. These optional forms
include various joint and survivor annuity form. Benefits payable upon death may
be made in a lump sum, installments, or a lifetime annuity. For a married
participant, the normal form of benefit is a joint and survivor annuity where,
upon the participant's death, the participant's spouse is entitled to receive a
benefit equal to 50% of that paid during the participant's lifetime.
The normal retirement benefit payable at age 65 is an amount equal to 3%
of a participant's high 3-year average salary, defined as income reportable on
Form W-2, multiplied by each year of credited service under the Retirement Plan.
A reduced benefit may be payable at or after age 45 and before normal retirement
age after completion of five years of service. If an employee continues in
employment after age 65 or defers commencement of his or her retirement benefit,
his or her retirement benefit will be increased by .8% for each month of
deferment, or 9.6% per year with a maximum increase of 48%. In addition to the
retirement benefit, a retiree will receive an annual retirement allowance at the
end of the calendar year in which he or she attains age 66, and at the end of
each succeeding year equal to 2% times the annual retirement benefit multiplied
by the number of years after retirement. For the plan year ended June 30, 2001,
First Federal Savings was not required to make a contribution to the Retirement
Plan.
8
The following table indicates the annual retirement benefit that would be
payable under the Retirement Plan upon retirement at age 65 in calendar year
2001, expressed in the form of a single life annuity for the average salary and
benefit service classifications specified below.
HIGHEST THREE-YEAR YEARS OF SERVICE AND BENEFIT PAYABLE AT RETIREMENT
AVERAGE ------------------------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40
------------ -------- -------- -------- -------- --------- ---------
$ 50,000 $22,500 $30,000 $ 37,500 $ 45,000 $ 50,000 $ 50,000
75,000 33,750 45,000 56,250 67,500 75,000 75,000
100,000 45,000 60,000 75,000 90,000 100,000 100,000
125,000 56,250 75,000 93,750 112,500 125,000 125,000
150,000 67,500 90,000 112,500 135,000(1) 135,000(1) 135,000(1)
170,000 76,500 102,000 127,500 135,000(1) 135,000(1) 135,000(1)
- ----------
(1) Benefits are limited by tax laws which limit, in 2001, the maximum annual
benefit payable under a defined benefit pension plan to the lesser of (i)
$135,000, or (ii) 100% of the participant's average compensation for his
high 3 years.
As of December 31, 2001, Mr. Mitch Ashlock had 8 years of credited service
under the Retirement Plan.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST. First Federal Savings implemented
the ESOP in connection with the conversion. Employees with at least one year of
employment with First Federal Savings and who have attained age 21 are eligible
to participate. As part of the conversion, the ESOP borrowed funds from First
Federal of Olathe Bancorp and used those funds to purchase a number of shares
equal to 8.0% of the common stock issued in the conversion. Collateral for the
loan will be the common stock purchased by the ESOP. The loan will be repaid
principally from First Federal Savings' discretionary contributions to the ESOP.
It is contemplated that the loan will be repaid over a period of not less than
20 years, provided that prepayment is permitted under certain circumstances. The
loan will bear interest at the fixed rate of 8.5% per year. Shares purchased by
the ESOP will be held in a suspense account for allocation among participants as
the loan is repaid.
Contributions to the ESOP and shares released from the suspense account in
an amount proportional to the repayment of the ESOP loan will be allocated among
ESOP participants on the basis of compensation in the year of allocation.
Participants in the ESOP will receive credit for up to two years of service
prior to the effective date of the ESOP. A participant vests in his ESOP benefit
at the rate of 20% per year of service so that a participant is 100% vested in
his benefits after five years or upon normal retirement as defined in the ESOP,
early retirement, disability or death of the participant. A participant who
terminates employment for reasons other than death, retirement, or disability
prior to five years of credited service will forfeit his benefits under the
ESOP. Benefits will also vest fully in the event of a change in control of First
Federal Savings. Benefits will be payable in the form of common stock and/or
cash upon death, retirement, early retirement, disability or separation from
service. First Federal Savings' contributions to the ESOP are discretionary,
subject to the loan terms and tax law limits, and, therefore, benefits payable
under the ESOP cannot be estimated. Pursuant to SOP 93-6, First Federal Savings
is required to record compensation expense in an amount equal to the fair market
value of the shares released from the suspense account.
In connection with the establishment of the ESOP, First Federal Savings
established a committee of nonemployee directors to administer the ESOP. First
Federal Savings has appointed an independent financial institution to serve as
trustee of the ESOP. The ESOP trustee, subject to its fiduciary duty, must vote
all allocated shares held in the ESOP in accordance with the instructions of
participating employees. Under the ESOP, nondirected shares, and shares held in
the suspense account, will be voted in a manner calculated to most accurately
reflect the instructions it has received from participants regarding the
allocated stock so long as such vote is in accordance with the provisions of
ERISA.
INDEBTEDNESS OF MANAGEMENT
In the ordinary course of business, First Federal Savings makes loans
available to its directors, officers and employees. Such loans are made in the
ordinary course of business on the same terms, including interest rates and
collateral, as comparable loans to other borrowers. It is the belief of
management that these loans neither involve more
9
than the normal risk of collectibility nor present other unfavorable features.
At December 31, 2001, First Federal Savings had 14 loans outstanding to
directors and executive officers of First Federal Savings, or members of their
immediate families. These loans totaled approximately $499,000, or 16% of the
Company's total equity at December 31, 2001.
PROPOSAL II - RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended December 31,
2001 were BKD, LLP. The Company's Board of Directors has reappointed BKD, LLP to
continue as independent auditors for the Company for the fiscal year ending
December 31, 2002, subject to ratification of such appointment by the
stockholders. Representatives of BKD, LLP are expected to attend the Meeting.
They will be given the opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions from stockholders
present at the Meeting.
Set forth below is certain information concerning aggregate fees billed
for professional services rendered by BKD, LLP during 2001:
Audit Fees $20,000
Financial Information Systems $ -0-
Design and Implementation Fees
All Other Fees $65,474
The Audit Committee has considered whether the provision of non-audit
services (which relate to accounting research and regulatory compliance
consulting) is compatible with maintaining BKD, LLP's independence. The Audit
Committee concluded that performing such services does not affect BKD, LLP's
independence in performing its function as auditor of the Company.
On August 28, 2000, the Board of Directors of the Company determined to
change their outside accounting firm to BKD, LLP from Taylor, Perky & Parker,
L.L.C. During each of the prior two years, the opinion of Taylor, Perky &
Parker, L.L.C. did not contain any adverse opinion or a disclaimer of opinion
and was not qualified or modified as to uncertainty, audit scope or principal.
During the preceding two years and any subsequent interim period, the Company
had no disagreements with Taylor, Perky & Parker, L.L.C. on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure. None of the events described at Item 304(a)(1)(iv) of
Regulation S-B took place within the preceding two years or any subsequent
interim period. BKD, LLP's engagement was effective August 28, 2000.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF BKD, LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2002.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for
the next annual meeting of stockholders, any stockholder proposal to take action
at such meeting must be received at the Company's office located at 100 East
Park Street, Olathe, Kansas 66061 no later than November 30, 2002. Any such
proposal shall be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934.
Under the Company's Bylaws, certain procedures are provided which a
stockholder must follow to nominate persons for election as directors or to
introduce an item of business at an annual meeting of stockholders. These
procedures provide, generally, that stockholders desiring to make nominations
for directors, or to bring a proper subject of business before the meeting, must
do so by a written notice timely received (generally not later than 90 days
10
in advance of such meeting, subject to certain exceptions) by the Secretary of
the Company. The notice must include certain information as specified in the
Company's bylaws.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company and the Association may
solicit proxies personally or by telegraph or telephone without additional
compensation.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2001, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE
RECORD DATE UPON WRITTEN OR TELEPHONIC REQUEST TO KENDA CAMP, SECRETARY, FIRST
FEDERAL OF OLATHE BANCORP, INC., 100 EAST PARK STREET, OLATHE, KANSAS 66061 OR
CALL (913) 782-0026.
Olathe, Kansas
March 29, 2002
11
FIRST FEDERAL OF OLATHE BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 2002
The undersigned hereby appoints Mitch Ashlock and Carl R. Palmer, with
full powers of substitution, to act as attorneys and proxies for the undersigned
to vote all shares of capital stock of First Federal of Olathe Bancorp, Inc.
(the "Company") which the undersigned is entitled to vote at the Annual Meeting
of Stockholders (the "Meeting") to be held at the Company's main office, located
at 100 East Park Street, Olathe, Kansas on April 25, 2002 at 3:00 p.m. and at
any and all adjournments and postponements thereof.
1. The election as directors of all nominees listed below (except as marked
to the contrary):
|_| FOR |_| VOTE WITHHELD
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE IN THAT NOMINEE'S NAME BELOW.
DONALD K. ASHLOCK MARVIN EUGENE WOLLEN
2. The ratification of the appointment of BKD, LLP as auditors for the
Company for the fiscal year ending December 31, 2002.
|_| FOR |_| AGAINST |_| ABSTAIN
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment or
postponement thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSALS AND EACH OF THE NOMINEES
LISTED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL
BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT
TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
PROPOSALS AND THE ELECTION OF THE NOMINEES LISTED ABOVE.
(Continued and to be SIGNED on Reverse Side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and choose to vote at the Meeting or at
any adjournments or postponements thereof, and after notification to the
Secretary of the Company at the Meeting of the stockholder's decision to
terminate this proxy, then the power of such attorneys or proxies shall be
deemed terminated and of no further force and effect. This proxy may also be
revoked by filing a written notice of revocation with the Secretary of the
Company or by duly executing a proxy bearing a later date.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of notice of the Meeting, a Proxy Statement and an
Annual Report to Stockholders.
Dated:_______________________, 2002 ________________________________________
Signature of Stockholder
Please sign exactly as your name(s)
appear(s) to the left. When signing as
attorney, executor, administrator,
trustee or guardian, please give your
full title. If shares are held jointly,
each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE