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OMB APPROVAL
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UNITED STATES OMB Number: 3235-0059
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SCHEDULE 14A --------------------------
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))
|_| Definitive Proxy Statement
|X| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
StateFed Financial Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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[on StateFed letterhead]
October 23, 2002
Dear Fellow Stockholder:
The Annual Meeting of Stockholders (the "Meeting") has been adjourned in
order to permit you to consider the attached supplemental disclosure regarding
the proposals to be voted upon. On behalf of the Board of Directors and
management of StateFed Financial Corporation (the "Company"), we cordially
invite you to attend the reconvened Meeting. The Meeting will be reconvened at
2:30 p.m. Des Moines, Iowa time, on Monday, November 11, 2002, at the West Des
Moines Marriott, 1250 74th Street, West Des Moines, Iowa 50266.
In addition to the election of two directors, stockholders are being asked
to approve the 2002 Omnibus Incentive Plan. The Board of Directors unanimously
recommends that you vote to elect the nominees and in favor of the proposal.
Whether or not you plan to attend the reconvened Meeting, please carefully
read the enclosed Proxy Supplement. Instructions with respect to completing the
enclosed Blue proxy card may be found on page 4 of the Proxy Supplement.
Thank you for your continued support and attention to this important
matter.
Very truly yours,
/s/ Randall C. Bray
Randall C. Bray
Chairman of the Board
STATEFED FINANCIAL CORPORATION
13523 University Avenue
Clive, Iowa 50325
(515) 223-8484
SUPPLEMENT TO PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
The following information supplements, and should be read in conjunction
with, the proxy statement of StateFed Financial Corporation ("StateFed
Financial" or the "Company") which was mailed to our stockholders on or about
September 26, 2002. Copies of this supplement to proxy statement were first
mailed to our stockholders on or about October 23, 2002. Certain of the
information provided herein relates to State Federal Savings and Loan
Association of Des Moines ("State Federal" or the "Bank"), a wholly owned
subsidiary and predecessor of the Company.
ADJOURNMENT OF MEETING
In order to permit our stockholders additional time to consider our proposals in
light of the following supplemental disclosure, we adjourned the annual meeting
of stockholders on October 23, 2002 until Monday, November 11, 2002 at 2:30 p.m.
The reconvened meeting will still be held at the West Des Moines Marriott, 1250
74th Street, West Des Moines, Iowa.
PROPOSAL II - APPROVAL OF OMNIBUS INCENTIVE PLAN
In the proxy statement, we asked our stockholders to consider and vote upon
a proposal to adopt the 2002 Omnibus Incentive Plan (the "2002 Plan") to promote
the long-term interests of StateFed Financial Corporation and its stockholders
by providing a flexible and comprehensive means for attracting and retaining
directors, advisory directors, officers and employees of StateFed Financial
Corporation and its corporate affiliates and to replace the existing Stock
Option and Incentive Plan, which has been depleted of awards.
We hereby supplement the disclosure concerning the options that have been
granted by the Board of Directors, subject to stockholder approval of the 2002
Plan, as follows:
The Board of Directors has conditionally granted options to purchase 60,506
shares of the Company's common stock. Randall C. Bray, chief executive officer,
was granted options to purchase 19,256 shares on July 1, 2002, with an exercise
price of $10.00 per share and expiring on June 30, 2012 (options to purchase
10,000 shares vest immediately, with the remainder to vest incrementally over 5
years). Current executive officers, as a group, were granted options to purchase
40,256 shares on July 1, 2002 ,with an exercise price of $10.00 per share and
expiring on June 30, 2012 (these options vest incrementally over 5 years). All
non-employee directors, including Kevin J. Kruse, were granted options to
purchase 2,500 shares on July 1, 2002, with an exercise price of $10.00 per
share and expiring on June 30, 2012 (these options vest incrementally over 5
years). Each of John Kallemyn, senior vice president, and Steve Blazek, senior
vice president, were granted options to purchase 10,000 shares on July 1, 2002,
with an exercise price of $10.00 per share and expiring on June 30, 2012 (these
options vest incrementally over 5 years). Options to purchase 7,750 shares were
also granted to employees other than executive officers (options to purchase
7,250 shares were granted on July 1, 2002 with an exercise price of $10.00 per
share and expiring on June 30, 2012). Of the options granted to certain
non-executive employees, options to purchase 3,000 shares vest incrementally
over 5 years, the remaining options to purchase 4,750 shares vest on the earlier
of (i) 5 years and (ii) the date the market price of the common stock reaches
$14.50 per share (so long as such employee is still employed by StateFederal at
that time).
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These options were granted in connection with services rendered and to be
rendered by each of the directors, advisory directors, officers or employees
receiving such grants. Each of the foregoing grants is subject to stockholder
approval of the 2002 Plan. The market price of the Company's Common Stock as of
October 18, 2002 was $12.12.
CERTAIN TAX AND ACCOUNTING CONSIDERATIONS
In general, a participant will only recognize income (and we will be entitled to
a corresponding deduction) upon the exercise of a non-qualified stock option, in
an amount equal to the excess of the fair market value of the underlying stock
at the time of exercise over the option price. However, in the case of an
incentive stock option where the participant holds the option shares for more
than two years from the date the option was granted, and one year from the date
the option is exercised, the participant's gain will be taxed as a long-term
capital gain (and we will not receive any deduction with respect to such
option).
A participant will not recognize income upon the receipt of restricted shares
until such shares become vested, unless the participant makes an election under
Section 83(b) of the Internal Revenue Code within 30 days after the shares are
transferred to him or her to have the shares taxed to him or her as ordinary
income at their fair market value on the date of transfer, less any amount paid
by him or her (and, in either case, we will be entitled to a corresponding
deduction).
The Company has determined that it will expense the fair value of all stock
option grants, effective as of July 1, 2002, in accordance with SFAS No. 123,
Accounting for Stock-Based Compensation. In addition, if the exercise prices of
the options granted under the 2002 Plan prior to the date the stockholders
approve the 2002 plan are less than the fair market value of the Company's
common stock on the date the stockholders approve the 2002 Plan, the Company may
recognize a corresponding expense.
EXECUTIVE COMPENSATION
We hereby supplement the information contained in the proxy statement discussing
Director and Executive Compensation by amending and restating the sections and
replacing the disclosure in its entirety with the following:
DIRECTOR COMPENSATION
The Company's directors do not receive a fee for serving on the Company's
Board of Directors. No fee is paid for membership on the Board's committees. All
Bank directors receive a fee of $700 per meeting. A fee of $200 is paid to
non-employee directors of the Bank for committee meetings that are held
separately from board meetings. $200 was paid to certain directors for each of
three audit committee meetings, one compensation committee meeting and one extra
meeting. Each of the non-employee directors was granted an option on July 1,
2002, subject to stockholder approval of the 2002 Plan, to purchase 2,500 shares
of common stock, with an exercise price of $10.00 per share and expiring on June
30, 2012 (these options vest incrementally over 5 years).
EXECUTIVE COMPENSATION
The Company has not paid any compensation to its executive officers since
its formation. The Company does not presently anticipate paying any compensation
to such persons until it becomes actively involved in the operation or
acquisition of business other than the Bank.
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The following table sets forth information regarding compensation paid by
the Bank to its President for services rendered during the fiscal year ended
June 30, 2002. No executive officer made in excess of $100,000 during the fiscal
year ended June 30, 2002.
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SUMMARY COMPENSATION TABLE
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ANNUAL LONG TERM
COMPENSATION COMPENSATION
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NAME AND PRINCIPAL FISCAL SALARY BONUS SECURITIES ALL OTHER
POSITION YEAR ($) ($) UNDERLYING COMPENSATION
OPTIONS/SARS ($)(2)
(#)(1)
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Randall C. Bray, President 2002 $62,400 $500 - $7,800
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2001 25,200(3) - 10,744 1,800
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2000 - - - -
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(1) The table does not include options to purchase 19,256 shares at a price of
$10.00 per share, that were granted as of July 1, 2002, subject to
stockholder approval of the 2002 Plan and expire on June 30, 2012. Options
to purchase 10,000 shares would vest immediately, and the remaining options
would vest incrementally over 5 years. This grant represents 31.8% of all
of the options granted to employees to date under the 2002 Plan.
(2) Includes director fees of $7,800 and 1,800 for fiscal years 2002 and 2001.
(3) Includes consulting fees of $15,600 received in the fiscal year 2001 prior
to executive's appointment as President.
The following table sets forth information regarding the number and value
of stock options at June 30, 2002 held by the Company's President.
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AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
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VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#)(1) FY-END ($)(2)
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SHARES ACQUIRED VALUE
NAME ON EXERCISE (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
($)
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Randall C. Bray - - 2,148 8,596 - -
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(1) Represents an option to purchase Common Stock awarded to the Company's
Chief Executive Officer pursuant to the terms of the incentive stock option
award. This table does not include the options that have been granted since June
30, 2002 that are subject to approval of the 2002 Plan by the stockholders.
(2) Represents the aggregate market value (market price of the common
stock less the exercise price) of the option granted based upon the average of
the bid and asked price of $9.95 per share of the common stock as reported on
the NASDAQ Bulletin Board on June 30, 2002.
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EQUITY COMPENSATION PLAN INFORMATION(1)
- ----------------------------------- ----------------------- -------------------- --------------------------------
Plan category Number of securities Weighted-average Number of securities remaining
to be issued upon exercise price of available for future issuance
exercise of outstanding under equity compensation plans
outstanding options, options, warrants (excluding securities reflected
warrants and rights and rights in column (a))
- ----------------------------------- ----------------------- -------------------- --------------------------------
(a) (b) (c)
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Equity compensation plans approved 49,050 $7.08 -
by security holders
- ----------------------------------- ----------------------- -------------------- --------------------------------
Equity compensation plans not - - -
approved by security holders
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Total 49,050 $7.08 -
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(1) This table does not include the shares that would be issuable under the
2002 Plan following stockholder approval of the 2002 Plan. The Company has
made 127,952 shares of common stock available for issuance under the 2002
Plan. The Board of Directors has granted, subject to stockholder approval,
options to purchase 60,506 shares under the 2002 Plan. The weighted-average
exercise price of the options granted to date under the 2002 Plan is
$10.00.
EMPLOYMENT AGREEMENTS AND SALARY CONTINUATION PLAN
Employment Agreements. The continued success of the Bank depends to a
significant degree on the skills and competence of its officers. In April 2001,
the Bank entered into an employment agreement with President Bray. The
employment agreement provides for an initial annual base salary of $62,400,
subject to annual review and adjustment by the Company's Board of Directors, and
an initial term of three years. The agreement provides for extensions of one
year, in addition to the then-remaining term under the agreement, on each
anniversary of the effective date of the agreement, subject to a formal
performance evaluation performed by disinterested members of the Board of
Directors of the Bank. The Board performed such a review and consequently the
term of Mr. Bray's employment contract will expire in April 2005. Effective May
1, 2002, Mr. Bray's salary was increased by $1,600 to $64,000 per year. The
agreement provides for termination upon the employee's death, for cause or in
certain events specified by OTS regulations. The employment agreement is also
terminable by the employee upon 60-days' notice to the Bank.
The employment agreement provides for payment to the employee of his salary
for the remainder of the term of the agreement, plus up to 299% of the
employee's base compensation, in the event there is a "change in control" of the
Bank where employment terminates involuntarily in connection with such change in
control or within 12 months thereafter. This termination payment is subject to
reduction by the amount of all other compensation to the employee deemed for
purposes of the Code to be contingent on a "change in control," and may not
exceed three times the employee's average annual compensation over the most
recent five-year period or be non-deductible by the Bank for federal income tax
purposes. For the purposes of the employment agreement, a "change in control" is
defined as any event which would require the filing of an application for
acquisition of control or notice of change in control pursuant to 12 C.F.R. ss.
574.3 or 4. Such events are generally triggered prior to the acquisition or
control of 10% of the Common Stock. The agreement guarantees participation in an
equitable manner in employee benefits applicable to executive personnel.
Based on current salaries, if Mr. Bray's employment had been terminated as
of June 30, 2002, under circumstances entitling him to severance pay as
described above, he would have been entitled to receive a lump sum cash payment
of approximately $186,576.
VOTE REQUIRED AND PROXY INFORMATION
For the convenience of the stockholders, we have enclosed a new BLUE proxy
card. If you wish to change your vote and have previously submitted a WHITE
proxy card, simply fill out the BLUE proxy card and return it in the envelop
provided. Only the latest dated proxy card will be counted at the meeting. If
you have not yet voted, you may do so by signing and returning either proxy card
to the Company in accordance with the instructions on the card. If you have
voted by returning the WHITE proxy card and do not wish to change your vote, you
need not do anything further, and your vote will be cast in accordance with your
instructions. If your shares are held by a bank,
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brokerage firm or other nominee, only the bank, broker or nominee can vote your
shares and only after receiving your instructions. If they have previously
voted, you will need to direct them to fill out the BLUE proxy card if you want
to change your vote.
As set forth in the proxy statement, stockholders of record as of the close
of business on September 25, 2002, will be entitled to one vote for each share
then held. All shares of Company 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
nominees and the adoption of the proposal set forth in the proxy statement. The
Company does not know of any matters, other than as described in the proxy
statement, that are properly 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.
Directors will be elected by a plurality of the votes cast. The approval of
the 2002 Omnibus Incentive Plan requires the affirmative vote of a majority of
the votes cast on the matter. In the election of directors, stockholders may
either vote "FOR" all nominees for election or withhold their votes from one or
more nominees for election. Votes that are withheld and shares held by a broker,
as nominee, that are not voted (so-called "broker non-votes") in the election of
directors will not be included in determining the number of votes cast. For the
proposal to approve the 2002 Omnibus Incentive Plan, stockholders may vote
"FOR," "AGAINST" or "ABSTAIN" with respect to this proposal. Proxies marked to
abstain will have the same effect as votes against the proposal, and broker
non-votes will have no effect on the proposal. The holders of at least one-third
of the outstanding shares of the Common Stock, present in person or represented
by proxy, will constitute a quorum for purposes of the Meeting. Proxies marked
to abstain and broker non-votes will be counted for purposes of determining a
quorum.
A proxy given pursuant to 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). Pursuant to the Company's Employee Stock Ownership Plan, unallocated
shares will be voted by the Trustee in the same proportion as allocated shares
voted by participants. Any written notice revoking a proxy should be delivered
to Andra K. Black, Secretary, StateFed Financial Corporation, 13523 University
Avenue, Clive, Iowa 50325.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO ADOPT THE 2002
OMNIBUS INCENTIVE PLAN AND THE ELECTION OF THE NOMINEES LISTED ON THE PROXY
CARD.