UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14-A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No...........)
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[ ] PRELIMINARY PROXY STATEMENT
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO SS.240.14A-12
K-FED BANCORP
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
-------------------------------------
(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)(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: ______________, 200__
September 30, 2005
Dear Stockholder:
We cordially invite you to attend the 2005 Annual Meeting of Stockholders of
K-Fed Bancorp, the parent company of Kaiser Federal Bank. The annual meeting
will be held at the main office of Kaiser Federal Bank, located at 1359 North
Grand Avenue, Covina, California 91724, at 5:00 p.m., local time, on October 25,
2005.
The enclosed notice of annual meeting of stockholders and proxy statement
describes the formal business to be transacted at the annual meeting. During the
annual meeting we will also report on the operations of K-Fed Bancorp. Directors
and officers of K-Fed Bancorp will be present to respond to any questions that
stockholders may have.
The business to be conducted at the annual meeting includes the election of two
directors and the ratification of the appointment of Crowe Chizek and Company
LLP as the independent registered public accounting firm for K-Fed Bancorp for
the fiscal year ending June 30, 2006.
The board of directors of K-Fed Bancorp has determined that the matters to be
considered at the annual meeting are in the best interests of K-Fed Bancorp and
its stockholders. For the reasons set forth in the proxy statement, the board of
directors unanimously recommends a vote "FOR" each matter to be considered.
Also enclosed for your review is our 2005 Annual Report to Stockholders, which
contains detailed information concerning the activities and operating
performance of K-Fed Bancorp. On behalf of the board of directors, we urge you
to vote your shares of common stock as soon as possible even if you currently
plan to attend the annual meeting. You can vote your shares of common stock
prior to the annual meeting with the enclosed proxy card in accordance with the
instructions on the proxy card. This will not prevent you from voting in person,
but will assure that your vote is counted if you are unable to attend the annual
meeting.
Sincerely,
/s/ K. M. Hoveland
K. M. Hoveland
President and Chief Executive Officer
K-FED BANCORP
1359 North Grand Avenue
Covina, California 91724
(800) 524-2274
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To be held on October 25, 2005
Notice is hereby given that the 2005 Annual Meeting of Stockholders of
K-Fed Bancorp will be held at the main office of Kaiser Federal Bank, located at
1359 North Grand Avenue, Covina, California 91724, on October 25, 2005, at 5:00
p.m., local time.
A proxy card and a proxy statement for the annual meeting are enclosed.
The annual meeting is for the purpose of considering and acting upon:
1. The election of two directors of K-Fed Bancorp;
2. The ratification of the appointment of Crowe Chizek and Company
LLP as the independent registered public accounting firm for
K-Fed Bancorp for the fiscal year ending June 30, 2006; and
such other matters as may properly come before the annual meeting, or any
adjournments thereof. As of the date of this notice, the board of directors of
K-Fed Bancorp is not aware of any other business to come before the annual
meeting.
Any action may be taken on the foregoing proposals at the annual meeting
on the date specified above, or on any date or dates to which the annual meeting
may be adjourned. Stockholders of record at the close of business on August 31,
2005, are the stockholders entitled to vote at the annual meeting, and any
adjournments thereof.
Even if you do not plan to attend the annual meeting, please vote your
shares of common stock without delay. You can vote your shares of common stock
prior to the annual meeting by mail with the enclosed proxy card in accordance
with the instructions on the proxy card. You may revoke a proxy at any time
before the vote is taken at the annual meeting. You may do so by executing and
returning a proxy card dated later than a previously submitted proxy or by
submitting a written revocation to the secretary of K-Fed Bancorp before the
vote is taken at the annual meeting. If you hold shares of common stock through
a broker, you should follow the instructions of your broker regarding revocation
of proxies. If you attend the annual meeting you may revoke your proxy and vote
personally on each matter brought before the annual meeting. However, if your
shares are not registered in your name, you will need additional documentation
from your record holder to vote personally at the annual meeting.
By Order of the Board of Directors
/s/ Rita H. Zwern
Rita H. Zwern
Secretary
Covina, California
September 30, 2005
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A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
PROXY STATEMENT
K-FED BANCORP
1359 North Grand Avenue
Covina, California 91724
(800) 524-2274
ANNUAL MEETING OF STOCKHOLDERS
October 25, 2005
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the board of directors of K-Fed Bancorp to be used at the
2005 Annual Meeting of Stockholders of K-Fed Bancorp, which will be held at the
main office of Kaiser Federal Bank, located at 1359 North Grand Avenue, Covina,
California 91724, on October 25, 2005, at 5:00 p.m., local time, and all
adjournments of the annual meeting. The accompanying notice of annual meeting of
stockholders and this proxy statement are first being mailed to stockholders on
or about September 30, 2005.
REVOCATION OF PROXIES
Stockholders who execute proxies in the form solicited hereby retain the
right to revoke them in the manner described below. Unless so revoked, the
shares represented by such proxies will be voted at the annual meeting and all
adjournments thereof. Proxies solicited on behalf of the board of directors of
K-Fed Bancorp will be voted in accordance with the directions given thereon. YOU
CAN VOTE YOUR SHARES OF K-FED BANCORP COMMON STOCK PRIOR TO THE ANNUAL MEETING
BY SIGNING AND RETURNING THE ENCLOSED PROXY CARD TO K-FED BANCORP, IN ACCORDANCE
WITH INSTRUCTIONS SET FORTH ON THE PROXY CARD. PROXIES RECEIVED BY K-FED
BANCORP, WHICH ARE SIGNED, BUT CONTAIN NO INSTRUCTIONS FOR VOTING, WILL BE VOTED
"FOR" THE PROPOSALS SET FORTH IN THIS PROXY STATEMENT FOR CONSIDERATION AT THE
ANNUAL MEETING.
Proxies may be revoked by sending written notice of revocation to the
Secretary of K-Fed Bancorp, Rita H. Zwern, at the address of K-Fed Bancorp shown
above, or by returning a duly executed proxy bearing a later date by mail. The
presence at the annual meeting of any stockholder who had given a proxy shall
not revoke such proxy unless the stockholder delivers his or her ballot in
person at the annual meeting or delivers a written revocation to the Secretary
of K-Fed Bancorp prior to the voting of such proxy.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Holders of record of K-Fed Bancorp's common stock, par value $0.01 per
share, as of the close of business on August 31, 2005 are entitled to one vote
for each share then held. As of August 31, 2005, there were 14,418,330 shares of
common stock issued and outstanding. The presence in person or by proxy of a
majority of the outstanding shares of common stock entitled to vote is necessary
to constitute a quorum at the annual meeting. Abstentions and broker non-votes
will be counted for purposes of determining that a quorum is present.
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 of directors, or to WITHHOLD authority to vote
for one or more of the nominees being proposed. Directors are elected by a
plurality of votes cast, without regard to either broker non-votes, or proxies
as to which the authority to vote for the nominees being proposed is withheld.
As to the ratification of Crowe Chizek and Company LLP as K-Fed
Bancorp's independent registered public accounting firm, by checking the
appropriate box, a stockholder may: (i) vote FOR the ratification; (ii) vote
AGAINST the ratification; or (iii) ABSTAIN from voting on such ratification. The
affirmative vote of holders of a majority of the votes cast at the annual
meeting in person or by proxy is required for the ratification of Crowe Chizek
and Company LLP as the independent registered public accounting firm for the
fiscal year ending June 30,
2006. The ratification of this matter shall be determined by a majority of the
votes cast at the annual meeting, without regard to broker non-votes or proxies
marked "ABSTAIN".
Management of K-Fed Bancorp anticipates that K-Fed Mutual Holding
Company, the majority stockholder of K-Fed Bancorp, will vote all of its shares
of common stock in favor of all the matters set forth above. If K-Fed Mutual
Holding Company votes all of its shares in favor of each proposal, the approval
of the election of the director nominees and the ratification of Crowe Chizek
and Company LLP would be assured.
Persons and groups who beneficially own in excess of 5% of the common
stock of K-Fed Bancorp are required to file certain reports with the Securities
and Exchange Commission regarding such ownership pursuant to the Securities
Exchange Act of 1934, as amended. The following table sets forth, as of August
31, 2005, the shares of common stock beneficially owned by each person who was
the beneficial owner of more than 5% of the outstanding shares of common stock
of K-Fed Bancorp, as well as shares beneficially owned in the aggregate by K-Fed
Mutual Holding Company and all directors and executive officers as a group.
AMOUNT OF SHARES
OWNED AND NATURE PERCENT OF SHARES
NAME AND ADDRESS OF OF BENEFICIAL OF COMMON STOCK
BENEFICIAL OWNERS OWNERSHIP (1) OUTSTANDING
- --------------------- ----------------- -----------
K-Fed Mutual Holding Company 8,861,750 61.46%
1359 North Grand Avenue
Covina, California 91724
K-Fed Mutual Holding Company, 9,251,978 64.17%
and all of K-Fed Bancorp's and
Kaiser Federal Bank's directors and
executive officers as a group
(10 directors and officers) (2)
- ----------------------------
(1) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, a
person is deemed to be the beneficial owner for purposes of this table, of
any shares of common stock if he has shared voting or investment power with
respect to such security, or has a right to acquire beneficial ownership at
any time within 60 days from the date as of which beneficial ownership is
being determined. As used herein, "voting power" is the power to vote or
direct the voting of shares and "investment power" is the power to dispose
or direct the disposition of shares, and includes all shares held directly
as well as by spouses and minor children, in trust and other indirect
ownership, over which shares the named individuals effectively exercise
sole or shared voting or investment power.
(2) Includes shares of common stock held by K-Fed Mutual Holding Company, of
which K-Fed Bancorp's and Kaiser Federal Bank's directors and two of its
executive officers are also executive officers and directors. K-Fed
Bancorp's and Kaiser Federal Bank's executive officers and directors
beneficially owned 390,228 shares of common stock, or 2.71% of the
outstanding shares of common stock.
PROPOSAL I - ELECTION OF DIRECTORS
K-Fed Bancorp's board of directors consists of seven members. K-Fed
Bancorp's bylaws provide that approximately one-third of the directors are to be
elected annually. Directors of K-Fed Bancorp are generally elected to serve for
a three-year period, or a shorter period if the director is elected to fill a
vacancy, and until their respective successors shall have been elected and shall
qualify. Two directors will be elected at the annual meeting and will serve
until their successors have been elected and qualified. The
governance/nominating committee of K-Fed Bancorp has nominated Marilyn T. Owsley
and Rita H. Zwern to serve as directors for three-year terms. Both of the
nominees are currently members of the board of directors.
The table below sets forth certain information regarding the composition
of K-Fed Bancorp's board of directors as of August 31, 2005, including the terms
of office of board members. 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 annual meeting for the election of the
nominees identified below. If the nominees are 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 nominees might be
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unable to serve, if elected. Except as indicated herein, there are no
arrangements or understandings between the nominees and any other person
pursuant to which such nominees were selected.
SHARES OF
POSITIONS COMMON STOCK
HELD WITH K-FED DIRECTOR CURRENT TERM BENEFICIALLY PERCENT
NAME (1) AGE(2) BANCORP SINCE (3) TO EXPIRE OWNED (4)(5) OF CLASS
- ----------------------- --------- ----------------------- ---------- -------------- -------------- ----------
NOMINEES
Marilyn T. Owsley 46 Director 2000 2005 37,200 (6) *
Rita H. Zwern 57 Director and Secretary 1987 2005 22,200 *
DIRECTORS CONTINUING IN OFFICE
Kay M. Hoveland 58 Director, President 2000 2006 86,762 (7) *
and Chief Executive
Officer
Gerald A. Murbach 57 Director 2000 2006 37,200 (8) *
Robert C. Steinbach 52 Director 2000 2006 40,600 (9) *
James L. Breeden 62 Chairman of the Board 1987 2007 43,687 (10) *
Frank G. Nicewicz 49 Director 1995 2007 22,200 *
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Daniel A. Cano 50 Chief Financial Officer N/A N/A 50,397 (11) *
Nancy J. Huber** 42 Chief Credit Officer N/A N/A 28,175 *
Jeanne R. Thompson** 58 Chief Operating Officer N/A N/A 21,807 (12) *
All directors and
executive officers as a
group (10 persons) 390,228 2.71%
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* Less than 1%.
** Ms. Huber and Ms. Thompson are officers of Kaiser Federal Bank only.
(1) The mailing address for each person listed is 1359 North Grand Avenue,
Covina, California 91724.
(2) As of August 31, 2005.
(3) Reflects initial appointment to the board of directors of Kaiser Permanente
Federal Credit Union, the predecessor to Kaiser Federal Bank, with the
exception of Directors Steinbach, Murbach, Hoveland and Owsley. Each
director of K-Fed Bancorp is also a director of Kaiser Federal Bank and
K-Fed Mutual Holding Company, which owns the majority of the issued and
outstanding shares of common stock of K-Fed Bancorp.
(4) See definition of "beneficial ownership" in the table in "Voting Securities
and Principal Holders Thereof."
(5) Includes 7,200 unvested shares of restricted stock for each of directors
Murbach, Nicewicz, Owsley, Steinbach and Zwern, 11,300 unvested shares of
restricted stock for Chairman Breeden, and 40,000, 15,000, 10,000 and
10,000 unvested shares of restricted stock for Ms. Hoveland, Mr. Cano, Ms.
Huber and Ms. Thompson, respectively, granted under the K-Fed Bancorp 2004
Recognition and Retention Plan. Includes 3,499, 3,397, 3,175 and 3,078
shares of common stock allocated to the accounts of Ms. Hoveland, Mr. Cano,
Ms. Huber and Ms. Thompson, respectively, under the K-Fed Bancorp employee
stock ownership plan. Excludes the remaining 441,791 shares of common
stock, or 3.06% of the common stock outstanding, owned by the employee
stock ownership plan for the benefit of employees. Under the terms of the
employee stock ownership plan, shares of common stock allocated to the
account of employees are voted in accordance with instructions of the
respective employees. Unallocated shares of common stock are voted by the
trustee of the employee stock ownership plan.
(6) Includes 15,000 shares of common stock held by Ms. Owsley's spouse.
(7) Includes 15,000 shares of common stock held in a trust for Ms. Hoveland,
15,000 shares of common stock held in a trust for Ms. Hoveland's spouse,
100 shares of common stock held in a Keogh plan for Ms. Hoveland's spouse
and 3,163 shares of common stock held in the Kaiser Federal Bank 401(k)
Plan.
(8) Includes 15,000 shares of common stock held by Mr. Murbach's spouse.
(9) Includes 15,000 shares of common stock held by Mr. Steinbach's spouse.
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(10) Includes 1,887 shares of common stock held by Mr. Breeden's spouse and
15,500 shares of common stock held in an IRA for Mr. Breeden.
(11) Includes 15,000 shares of common stock held by Mr. Cano's spouse.
(12) Includes 1,172 shares of common stock held by Ms. Thompson's spouse, 1,400
shares of common stock held in a trust for Ms. Thompson and 1,763 shares of
common stock held in the Kaiser Federal Bank 401(k) Plan.
The principal occupation during the past five years of each director of
K-Fed Bancorp is set forth below. All directors have held their present
positions for five years unless otherwise stated.
MARILYN T. OWSLEY. Ms. Owsley has served as a financial executive with
the Kaiser Permanente Medical Care Program since 1994.
RITA H. ZWERN. Ms. Zwern has been employed by Kaiser Foundation Health
Plan since 1984 and currently is the manager of State Programs, located in
Pasadena, California. Ms. Zwern has served as secretary of K-Fed Bancorp since
its formation in July 2003.
KAY M. HOVELAND. Ms. Hoveland has served as president and chief
executive officer of Kaiser Federal Bank since 1987. Ms. Hoveland has served as
president and chief executive officer of K-Fed Bancorp since its formation in
July 2003.
GERALD A. MURBACH. Mr. Murbach is currently retired. He previously
served as a human resources consultant for the Universal Music Group during 2001
and the Times Mirror newspapers from 1992 to 2001.
ROBERT C. STEINBACH. Mr. Steinbach has served as the chief inspector for
the Building and Safety Department of the City of Los Angeles since 2002 and has
been with the Department since 1985. Mr. Steinbach is the brother-in-law of
Daniel A. Cano, the Chief Financial Officer of K-Fed Bancorp and Kaiser Federal
Bank.
JAMES L. BREEDEN. Mr. Breeden has served as chairman of the board of
directors since November 2000. He is a retired hospital administrator for the
Kaiser Foundation Hospitals where he worked for 14 years.
FRANK G. NICEWICZ. Mr. Nicewicz has been employed by Kaiser Foundation
Health Plan since 1995 and currently holds the position of financial manager in
Oakland, California.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The business experience for at least the past five years for each of
three executive officers of Kaiser Federal Bank, including service with Kaiser
Permanente Federal Credit Union, who do not serve as directors, is set forth
below.
DANIEL A. CANO. Mr. Cano has served as chief financial officer of Kaiser
Federal Bank since 1998, and K-Fed Bancorp since its formation in July 2003. Mr.
Cano is also responsible for the information technology function of Kaiser
Federal Bank.
NANCY J. HUBER. Ms. Huber has served as chief credit officer of Kaiser
Federal Bank since 1999 and Community Reinvestment Act officer since 2002. From
1995 until 1999, she served as vice president of credit.
JEANNE R. THOMPSON. Ms. Thompson has served as chief operating officer
of Kaiser Federal Bank since 2001. She served as senior vice president for
branch operations of IndyMacBank, located in Pasadena, California from 1983
until 2001.
BOARD INDEPENDENCE
The board of directors consists of a majority of "independent directors"
within the meaning of the Nasdaq corporate governance listing standards. The
board of directors of K-Fed Bancorp has determined that directors Breeden,
Murbach, Nicewicz, Owsley and Zwern are each "independent" within the meaning of
the Nasdaq corporate governance listing standards. The board of directors has
adopted a policy that the independent directors of
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the board shall meet in executive sessions periodically, which meetings may be
held in conjunction with regularly scheduled board meetings.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business of K-Fed Bancorp is conducted at regular and special
meetings of the full board of directors and its standing committees. The
standing committees consist of the executive, audit, compensation and
governance/nominating committees. During the fiscal year ended June 30, 2005,
the board of directors held twelve regular meetings and no special meetings were
held. No director attended fewer than 75% in the aggregate of the total number
of board meetings held and the total number of committee meetings on which he or
she served during fiscal 2005.
EXECUTIVE COMMITTEE. The executive committee consists of directors
Breeden, who serves as chairman, Hoveland, Zwern and Steinbach. The executive
committee meets as needed. The executive committee is generally authorized to
act on behalf of the full board of directors when certain business matters
require prompt action. The executive committee met three times during the fiscal
year ended June 30, 2005.
AUDIT COMMITTEE. The audit committee consists of directors Nicewicz, who
serves as chairman, Owsley and Zwern. The audit committee meets as needed. The
audit committee meets with the internal auditor to review audit programs and the
results of audits of specific areas as well as other regulatory compliance
issues. In addition, the audit committee meets with the independent certified
public accountants on a quarterly basis to discuss the results of operations and
on an annual basis to review the results of the annual audit and other related
matters. Each member of the audit committee is "independent" as defined in the
Nasdaq corporate governance listing standards and Rule 10A-3 of the Securities
and Exchange Commission. The board of directors has determined that director
Nicewicz qualifies as an "audit committee financial expert" as that term is used
in the rules and regulations of the Securities and Exchange Commission. K-Fed
Bancorp's board of directors has adopted a written charter for the audit
committee. The audit committee met six times during the fiscal year ended June
30, 2005.
COMPENSATION COMMITTEE. The compensation committee is responsible for
recommending to the full board the compensation of the chief executive officer
and senior management, reviewing and administering overall compensation policy,
including setting performance measures and goals, approving benefit programs,
establishing compensation of the board of directors and other matters of
personnel policy and practice and coordinating such actions with the human
resources committee of Kaiser Federal Bank. The compensation committee of K-Fed
Bancorp is comprised of directors Breeden (Chairman), Murbach, Nicewicz, Owsley
and Zwern. Each member of the compensation committee is considered "independent"
as defined in the Nasdaq corporate governance listing standards. The report of
the compensation committee of K-Fed Bancorp is included elsewhere in this proxy
statement. The compensation committee of K-Fed Bancorp met one time during 2005.
GOVERNANCE/NOMINATING COMMITTEE. The governance/nominating committee of
K-Fed Bancorp consists of directors Murbach, Owsley and Zwern. Each member of
the governance/nominating committee is considered "independent" as defined in
the Nasdaq corporate governance listing standards. The board of directors of
K-Fed Bancorp has adopted a written charter for the governance/nominating
committee, which is available on K-Fed Bancorp's website at www.k-fed.com.
The functions of the governance/nominating committee include the
following:
o leading the search for individuals qualified to become members
of the board of directors and to select director nominees to be
presented for stockholder approval;
o developing and recommending to the board of directors other
specific criteria not specified in its charter for the selection
of individuals to be considered for election or re-election to
the board of directors;
o adopting procedures for the submission of recommendations by
stockholders for nominees for the board of directors; and
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o annually reviewing the adequacy of its charter and recommending
any proposed changes to the board of directors.
The governance/nominating committee identifies nominees by first
evaluating the current members of the board of directors willing to continue in
service. Current members of the board of directors with skills and experience
that are relevant to K-Fed Bancorp's business and who are willing to continue in
service are first considered for re-nomination, balancing the value of
continuity of service by existing members of the board of directors with that of
obtaining a new perspective. In addition, the governance/nominating committee is
authorized by its charter to engage a third party to assist in the
identification of director nominees. The governance/nominating committee would
seek to identify a candidate who, at a minimum, satisfies the following
criteria:
o the highest personal and professional ethics and integrity and
whose values are compatible with K-Fed Bancorp's values;
o experience and achievements that have given them the ability to
exercise and develop good business judgment;
o a willingness to devote the necessary time to the work of the
board of directors and its committees, which includes being
available for board and committee meetings;
o a familiarity with the communities in which K-Fed Bancorp
operates and/or is actively engaged in community activities;
o involvement in other activities or interests that do not create
a conflict with their responsibilities to K-Fed Bancorp and its
stockholders; and
o the capacity and desire to represent the balanced, best
interests of the stockholders of K-Fed Bancorp as a group, and
not primarily a special interest group or constituency.
The governance/nominating committee will also take into account whether
a candidate satisfies the criteria for "independence" under the Nasdaq corporate
governance listing standards.
PROCEDURES FOR THE NOMINATION OF DIRECTORS BY STOCKHOLDERS. The
governance/nominating committee has adopted procedures for the submission of
director nominees by stockholders of K-Fed Bancorp. If a determination is made
that an additional candidate is needed for the board of directors, the
governance/nominating committee will consider candidates submitted by K-Fed
Bancorp's stockholders. Stockholders can submit the names of qualified
candidates for director by writing to the chairman of the governance/nominating
committee at 1359 North Grand Avenue, Covina, California 91724. The chairman
must receive a submission not less than one hundred and twenty (120) days prior
to the date of K-Fed Bancorp's proxy materials for the preceding year's annual
meeting. The submission must include the following information:
o a statement that the writer is a stockholder of K-Fed Bancorp
and is proposing a candidate for consideration by the
governance/nominating committee;
o the name and address of the stockholder as they appear on K-Fed
Bancorp's books, and number of shares of K-Fed Bancorp's common
stock that are owned beneficially by such stockholder (if the
stockholder is not a holder of record, appropriate evidence of
the stockholder's ownership will be required);
o the name, address and contact information for the candidate, and
the number of shares of common stock of K-Fed Bancorp that are
owned by the candidate (if the candidate is not a holder of
record, appropriate evidence of the stockholder's ownership
should be provided);
o a statement of the candidate's business and educational
experience;
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o such other information regarding the candidate as would be
required to be included in the proxy statement pursuant to
Regulation 14A of the Securities Exchange Act of 1934;
o a statement detailing any relationship between the candidate and
any customer, supplier or competitor of K-Fed Bancorp or its
affiliates;
o detailed information about any relationship or understanding
between the proposing stockholder and the candidate; and
o a statement of the candidate that the candidate is willing to be
considered and willing to serve as a director of K-Fed Bancorp
if nominated and elected.
A nomination submitted by a stockholder for presentation by the
stockholder at an annual meeting of stockholders of K-Fed Bancorp must comply
with the procedural and informational requirements described in K-Fed Bancorp's
bylaws.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS. A stockholder of
K-Fed Bancorp who wants to communicate with the board of directors or with any
individual director can write to K-Fed Bancorp at 1359 North Grand Avenue,
Covina, California 91724, attention: chairman of the governance/nominating
committee. The letter should indicate that the author is a stockholder of K-Fed
Bancorp and, if shares are not held of record, should include appropriate
evidence of stock ownership. Depending on the subject matter, management will:
o forward the communication to the director or directors to whom
it is addressed;
o attempt to handle the inquiry directly, or forward the
communication for response by another employee of K-Fed Bancorp.
For example, a request for information about K-Fed Bancorp as a
stock-related matter may be forwarded to K-Fed Bancorp's
stockholder relations officer; or
o not forward the communication if it is primarily commercial in
nature, relates to an improper or irrelevant topic, or is unduly
hostile, threatening, illegal or otherwise inappropriate.
At each board of directors meeting, management shall present a summary
of all communications received since the last meeting that were not forwarded
and make those communications available to the directors.
CODE OF ETHICS
The board of directors has adopted a Code of Business Conduct and Ethics
that applies to all of K-Fed Bancorp's officers, directors and employees, and a
Code of Ethics for the Chief Executive Officer and Senior Financial Officers
(collectively the "Codes"). The Codes are intended to promote honest and ethical
conduct, full and accurate reporting and compliance with laws. The Codes are
available on K-Fed Bancorp's website at www.k-fed.com. Amendments to and waivers
from the Code of Ethics will also be disclosed on K-Fed Bancorp's website.
AUDIT COMMITTEE REPORT
The audit committee of K-Fed Bancorp operates under a written charter
adopted by the board of directors. The audit committee charter is available on
K-Fed Bancorp's website at www.k-fed.com. The audit committee of K-Fed Bancorp
has issued a report which states that it has:
o reviewed and discussed with management and K-Fed Bancorp's
independent auditors, K-Fed Bancorp's audited consolidated
financial statements for the fiscal year ended June 30, 2005;
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
7
o received the written disclosures and the letter from the
independent accountants required by Independence Standards Board
Standard No. 1, INDEPENDENCE DISCUSSIONS WITH AUDIT COMMITTEES,
and have discussed with the independent accountants their
independence from K-Fed Bancorp.
Based on the review and discussions referred to above, the audit
committee recommended to the board of directors of K-Fed Bancorp that the
audited consolidated financial statements be included in K-Fed Bancorp's annual
report on Form 10-K for the fiscal year ended June 30, 2005 and to be filed with
the Securities and Exchange Commission. In addition, the audit committee
approved the appointment of Crowe Chizek and Company LLP as the independent
registered public accounting firm for K-Fed Bancorp for the fiscal year ending
June 30, 2006, subject to the ratification of this appointment by the
stockholders of K-Fed Bancorp.
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 K-Fed Bancorp specifically incorporates
this report by reference, and shall not otherwise be deemed filed with the
Securities and Exchange Commission.
This report has been provided by the audit committee.
Frank G. Nicewicz, Chairman
Marilyn T. Owsley
Rita H. Zwern
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The common stock of K-Fed Bancorp is registered pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended. The officers and
directors of K-Fed Bancorp and beneficial owners of greater than 10% of the
common stock of K-Fed Bancorp ("10% beneficial owners") are required to file
reports on Forms 3, 4 and 5 with the Securities and Exchange Commission
disclosing beneficial ownership and changes in beneficial ownership of the
common stock of K-Fed Bancorp. Securities and Exchange Commission rules require
disclosure in a company's annual proxy statement and annual report on Form 10-K
of the failure of an officer, director or 10% beneficial owner of the common
stock to file a Form 3, 4 or 5 on a timely basis. Based on K-Fed Bancorp's
review of such ownership reports, no officer, director or 10% beneficial owner
of K-Fed Bancorp failed to file such ownership reports on a timely basis for the
fiscal year ended June 30, 2005.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation committee is composed of independent directors within
the meaning of the Nasdaq corporate governance listing standards. The
compensation committee consists of directors Breeden, who serves as chairman,
Murbach, Nicewicz, Owsley and Zwern. Under the board's policies, Ms. Hoveland,
and any other director who is also an executive officer of K-Fed Bancorp and
Kaiser Federal Bank, will not participate in the board of directors
determination of compensation for their respective offices.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
Under rules established by the Securities and Exchange Commission, K-Fed
Bancorp is required to provide certain data and information regarding
compensation and benefits provided to its chief executive officer and other
executive officers. The disclosure requirements for the chief executive officer
and other executive officers include a report explaining the factors and
criteria that led to fundamental executive compensation decisions affecting
those individuals. In fulfillment of this requirement, the compensation
committee of the board of directors of K-Fed Bancorp has prepared the following
report for inclusion in this proxy statement. K-Fed Bancorp does not
independently compensate its directors or executive officers.
The role of the compensation committee is to annually review the
compensation levels of the executive officers and recommend compensation changes
to the board of directors. The committee is composed entirely of outside,
non-employee directors. It is intended that the executive compensation program
will enable K-Fed
8
Bancorp and Kaiser Federal Bank to attract, develop and retain talented
executive officers who are capable of maximizing K-Fed Bancorp's performance for
the benefit of the stockholders. The committee has adopted a compensation
strategy that seeks to provide competitive, performance-based compensation
strongly aligned with the financial and stock performance of K-Fed Bancorp. The
compensation program has three key elements of total direct compensation: base
salary, annual incentive compensation and long term incentives. Another element
of the compensation program is benefits, such as stock-based incentive plans.
While the committee does not use strict numerical formulas to determine
changes in compensation for the chief executive officer and other executive
officers, and while it weighs a variety of different factors in its
deliberations, it has emphasized and expects to continue to emphasize the
profitability and scope of K-Fed Bancorp's operations, the experience, expertise
and management skills of the executive officers and their roles in the future
success of K-Fed Bancorp, as well as compensation surveys prepared by
professional firms to determine compensation paid to executives performing
similar duties for similarly-sized institutions. While each of the quantitative
and non-quantitative factors described above was considered by the committee,
such factors were not assigned a specific weight in evaluating the performance
of the chief executive officer and other executive officers. Rather, all factors
were considered.
BASE SALARIES. Base salary and changes to base salary reflect a variety
of factors including the results of the independent review of the
competitiveness of the total compensation program, the individual's performance
and contribution to the long-term goals of K-Fed Bancorp, performance targets,
K-Fed Bancorp's financial performance and other relevant factors.
ANNUAL INCENTIVES. Payouts under Kaiser Federal Bank's annual incentive
compensation program are based on the attainment of annual performance
objectives. Individual payouts are a function of Kaiser Federal Bank's financial
performance and the performance of the individual executive based upon goals
established by the individual and approved by the committee. The committee
believes that this funding formula provides a direct link between financial
performance and actual compensation.
LONG-TERM INCENTIVES. The committee believes that long-term incentives,
specifically stock options and stock awards, which replaced Kaiser Federal
Bank's long-term incentive plan, should be a key element in the executive
compensation program. These incentives strongly align the rewards provided to
executives with the value created for stockholders through stock price
appreciation. The K-Fed Bancorp 2004 Stock Option Plan, and the K-Fed Bancorp
2004 Recognition and Retention Plan were submitted and received stockholder
approval at the 2004 Annual Meeting of Stockholders. K-Fed Bancorp has made and
intends to continue making stock option and stock award program grants to
executives and a broader employee population in the future.
CHIEF EXECUTIVE OFFICER. Effective July 1, 2005, the compensation
committee increased the base salary level of the chief executive officer by
approximately 5.7% based upon the same criteria used for other executive
officers. For the year ended June 30, 2005, the chief executive officer earned
an annual incentive award of $87,450 under the annual incentive plan, based on
the committee's review of the goals established for the chief executive officer
and approved by the committee. The committee has provided the chief executive
officer with stock option and stock awards consistent with the approach
discussed for other executives.
This report has been provided by the compensation committee:
James L. Breeden, Chairman Gerald A. Murbach
Frank G. Nicewicz Marilyn T. Owsley Rita H. Zwern
9
STOCK PERFORMANCE GRAPH
Set forth hereunder is a stock performance graph comparing (a) the
cumulative total return on the common stock of K-Fed Bancorp between March 31,
2004, the day the common stock commenced trading, and June 30, 2005, (b) the
cumulative total return on stocks included in the Total Return Index for the
Nasdaq Composite over such period, and (c) the cumulative total return on stocks
included in the SNL Thrift Index over such period. Cumulative return assumes the
reinvestment of dividends, and is expressed in dollars based on an assumed
investment of $100.
There can be no assurance that K-Fed Bancorp stock performance will
continue in the future with the same or similar trend depicted in the graph.
K-Fed Bancorp will not make or endorse any predictions as to future stock
performance.
- --------------------------------------------------------------------------------
K-FED BANCORP
- --------------------------------------------------------------------------------
[TOTAL RETURN PERFORMANCE GRAPH]
PERIOD ENDING
----------------------------------------------------------------
INDEX 03/31/04 06/30/04 09/30/04 12/31/04 03/31/05 06/30/05
- --------------------------------------------------------------------------------
K-Fed Bancorp 100.00 94.51 109.34 111.28 94.29 91.45
NASDAQ Composite 100.00 102.80 95.36 109.54 100.83 103.93
SNL Thrift Index 100.00 91.29 95.58 103.34 98.30 102.92
10
EXECUTIVE COMPENSATION
The following table sets forth for the fiscal years ended June 30, 2005,
2004 and 2003, certain information as to the total remuneration paid by Kaiser
Federal Bank to Ms. Hoveland, who serves as President and Chief Executive
Officer, and certain information as to the total remuneration paid by Kaiser
Federal Bank to the three most highly compensated executive officers of Kaiser
Federal Bank, other than Ms. Hoveland, who received annual compensation in
excess of $100,000. Each of the individuals listed in the table below are
referred to as a named executive officer.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------ ---------------------------------
AWARDS PAYOUTS
---------------------- ---------
OTHER ALL
ANNUAL OTHER
YEAR COMPEN- RESTRICTED COMPEN
NAME AND ENDED SATION STOCK OPTION/ LTIP SATION
PRINCIPAL POSITION 6/30 SALARY(1) BONUS (2) AWARDS(3) SARS (#) PAYOUTS (4)
- -------------------- ------ ------------ ------- ------- ---------- --------- --------- --------
K. M. Hoveland 2005 $266,538 $87,450 -- $564,000 100,000 $ -- $30,339
President and Chief 2004 268,537(5) 82,500 -- -- -- 123,750 19,766
Executive Officer 2003 220,000 79,200 -- -- -- -- 16,880
Daniel A. Cano 2005 151,052 26,878 -- 211,500 22,000 -- 6,647
Chief Financial 2004 144,557 28,400 -- -- -- 42,600 6,244
Officer 2003 137,119 27,500 -- -- -- -- 8,115
Jeanne R. Thompson 2005 131,445 26,000 -- 141,000 22,000 -- 6,625
Chief Operating 2004 126,988 19,200 -- -- -- 38,400 4,953
Officer 2003 123,600 18,525 -- -- -- -- 4,842
Nancy J. Huber 2005 137,808(6) 25,432 -- 141,000 22,000 -- 6,483
Chief Credit Officer 2004 123,160 25,000 -- -- -- 37,500 6,510
2003 97,500 7,050 -- -- -- -- 5,275
- --------------------------------------------------------------
(1) Includes deferred compensation for Ms. Hoveland in the sum of $185,648 for
2005 and $184,448 for 2004 . See "Benefits-Kaiser Federal Bank Executive
Non-Qualified Retirement Plan.
(2) For the fiscal years ended June 30, 2005, 2004 and 2003, there were no
perquisites exceeding the lesser of $50,000 or 10% of the individual's
total salary and bonus for the year.
(3) Restricted stock awards under the K-Fed Bancorp 2004 Recognition and
Retention Plan were made on November 16, 2004. The awards vest in 20%
increments over a five year period beginning on the first anniversary of
the award. The awards were valued at $14.10, the closing price of K-Fed
Bancorp common stock on the grant date. Restricted stock award recipients
are entitled to vote the unvested restricted stock and to receive any
dividends declared on unvested restricted stock.
(4) Amount represents employer matching contributions under Kaiser Federal
Bank's 401(k) Plan for Ms. Hoveland in the amount of $8,039 for fiscal year
2005, $7,466 for fiscal year 2004 and $3,380 for fiscal year 2003 and
director fees for Ms. Hoveland in the amount of $22,300 for fiscal year
2005, $12,300 for fiscal year 2004 and $13,500 for fiscal year 2003 for her
service on the board of directors and the executive committee. The amounts
reported for Mr. Cano, Ms. Thompson and Ms. Huber consist of employer
matching contributions.
(5) Includes $19,231 of vacation pay paid in cash.
(6) Includes $7,500 of vacation pay paid in cash.
DIRECTORS COMPENSATION
Members of the board of directors and the committees of K-Fed Bancorp do
not receive separate compensation for their service on the board of directors or
the committees of K-Fed Bancorp.
For the fiscal year ended June 30, 2005, members of the board of
directors of Kaiser Federal Bank received an annual stipend of $10,000 plus an
annual fee of $7,500 for board of directors meetings. The chairman of the board
of directors received an annual stipend of $25,000 plus an annual fee of $7,500
for board of directors meetings. Each member of Kaiser Federal Bank's executive
committee received an annual fee of $4,800. Each member of Kaiser Federal Bank's
other committees received an annual fee of $1,200 with the committee chairman
receiving $1,600. The Board Chairman received annual fees of $15,000 for
attending weekly credit committee and asset/liability management committee
meetings.
11
BENEFITS
GENERAL. Kaiser Federal Bank currently provides health and welfare
benefits to its employees, including hospitalization and comprehensive medical
insurance, life insurance, subject to deductibles and co-payments by employees.
KAISER FEDERAL BANK EXECUTIVE NON-QUALIFIED RETIREMENT PLAN. Kaiser
Federal Bank also maintains an executive deferral program for the benefit of
certain senior executives that have been designated to participate in the
program. The program allows an additional opportunity for key executives to
defer a portion of their compensation into a non-qualified deferral program to
supplement their retirement earnings. Ms. Hoveland, currently the only
participant in the program, had $185,648 in compensation deferred pursuant to
this program for the fiscal year ended June 30, 2005.
401(K) PLAN. Kaiser Federal Bank provides its employees with a qualified
profit sharing plan under the applicable provisions of the Internal Revenue Code
of 1986, as amended.
Employees who are age 21 or older are eligible to begin making salary
deferral contributions beginning in the first calendar quarter on or after they
become an employee. This is their earliest entry date. Employees are eligible to
receive contributions other than salary deferral contributions beginning in the
first calendar quarter on or after they are an employee, are age 21 or older,
and have completed one year of entry service.
Eligible employees may contribute up to 15% of their compensation each
pay period to the 401(k) Plan on a pre-tax basis, not to exceed $14,000 for the
calendar year 2005. The maximum deferral percentage and/or dollar amount may
also be limited by Internal Revenue Service regulations. For eligible employees,
we currently match 50% of the first 10% of the compensation an employee defers
each pay period.
Employees are always 100% vested in the contributions they choose to
defer, whereas vesting in Kaiser Federal Bank contributions is based on years of
vesting service in which an employee works at least 1,000 hours. Vesting in
Kaiser Federal Bank contributions begins after two years of vesting service and
increases for each year of vesting service until an employee becomes fully
vested after six years of vesting service.
Employees may receive money from their vested accounts at retirement
(age 65), early retirement (age 55 and ten years of vesting service), age 59 1/2
and still working, death, disability, or termination of employment. Employees
may obtain loans from their vested account balances or withdraw all or part of
their vested accounts (not earnings) if they can prove financial hardship and
are unable to meet their financial needs another way.
Kaiser Federal Bank may amend the 401(k) Plan at any time, except that
no amendment may be made which would reduce the interest of any participant in
or beneficiary of the 401(k) Plan trust fund or divert any of the assets of the
401(k) Plan trust fund to purposes other than the benefit of participants or
their beneficiaries unless necessary to comply with any law or regulation issued
by any governmental agency to which the 401(k) Plan is subject.
EMPLOYEE STOCK OWNERSHIP PLAN. In connection with its stock offering,
K-Fed Bancorp adopted the K-Fed Bancorp Employee Stock Ownership Plan ("ESOP")
for eligible employees of K-Fed Bancorp and any subsidiary, including Kaiser
Federal Bank. Employees of K-Fed Bancorp and Kaiser Federal Bank who have been
credited with at least 1,000 hours of service during a twelve month period are
eligible to participate in the ESOP.
The ESOP borrowed funds from K-Fed Bancorp to purchase 454,940 shares of
the common stock sold in K-Fed Bancorp's stock offering. The shares of common
stock were purchased with proceeds of a $4.5 million loan from K-Fed Bancorp.
The loan to the ESOP bears interest at 4.0% and will be repaid principally from
Kaiser Federal Bank's contributions to the ESOP over a period of ten years. The
collateral for the loan is the shares of common stock of K-Fed Bancorp purchased
by the ESOP. Shares purchased by the ESOP are held in a suspense account and are
released to participants' accounts as debt service payments are made. Shares
released from the ESOP are allocated to each eligible participant's ESOP account
based on the ratio of each such participant's compensation to the total
compensation of all eligible participants. Forfeitures are reallocated among
remaining
12
participating employees and may reduce any amount K-Fed Bancorp might otherwise
have contributed to the ESOP. A participant vests in 100% of his or her account
balance after six years of credited service. In the case of a "change in
control," as defined in the ESOP, which triggers a termination of the ESOP,
participants will become immediately fully vested in their account balances.
Benefits are payable upon retirement or other separation from service. K-Fed
Bancorp's contributions to the ESOP are not fixed, so benefits payable under the
ESOP cannot be estimated.
STAFF BONUS PLAN. Kaiser Federal Bank maintains an Annual Incentive Plan
for our key employees. Participants are awarded a percentage of their base
salary, based upon their position with Kaiser Federal Bank, that is tied to
financial goals established by Kaiser Federal Bank and the attainment of
personal performance goals established by the employee and his or her
supervisor.
K-FED BANCORP 2004 STOCK BENEFIT PLANS
Outside directors and key employees of Kaiser Federal Bank, K-Fed
Bancorp or their affiliates are eligible to participate in and receive awards of
stock options and restricted stock under the K-Fed Bancorp 2004 Stock Option
Plan, and the K-Fed Bancorp 2004 Recognition and Retention Plan, respectively. A
total of 568,675 shares of K-Fed Bancorp common stock is reserved for the 2004
Stock Option Plan and 227,470 shares of K-Fed Bancorp common stock is reserved
for the 2004 Recognition and Retention Plan. On November 16, 2004, directors
Murbach, Nicewicz, Owsley, Steinbach and Zwern were granted non-qualified stock
options to purchase 14,000 shares of K-Fed Bancorp common stock. Chairman
Breeden was granted non-qualified stock options to purchase 28,000 shares of
K-Fed Bancorp common stock. Additionally, incentive stock options to purchase
100,000, 22,000, 22,000 and 22,000 shares of K-Fed Bancorp common stock were
granted to Ms. Hoveland, Mr. Cano, Ms. Huber and Ms. Thompson, respectively. A
total of 373,600 stock options were granted to directors and employees. All of
the stock options granted to the directors and key employees on November 16,
2004 were granted at an exercise price of $14.50 per share, the fair market
value of K-Fed Bancorp common stock on the grant date.
On November 16, 2004, directors Murbach, Nicewicz, Owsley, Steinbach and
Zwern were granted a restricted stock award of 7,200 shares of common stock.
Chairman Breeden was granted a restricted stock award of 11,300 shares of common
stock. Additionally, restricted stock awards of 40,000, 15,000, 10,000 and
10,000 shares of common stock were granted to Ms. Hoveland, Mr. Cano, Ms. Huber
and Ms. Thompson, respectively.
All stock options and restricted stock awards vest in 20% increments
over a five-year period, beginning on the first anniversary of the award date.
Stock options will vest and become immediately exercisable and restricted stock
awards will vest upon the grantee's death, disability or following a change in
control of K-Fed Bancorp.
EQUITY COMPENSATION PLANS
Set forth below is information, as of December 31, 2004, regarding
equity compensation plans categorized by those plans that have been approved by
stockholders and those plans that have not been approved by stockholders.
NUMBER OF SECURITIES
TO BE ISSUED UPON
EXERCISE OF NUMBER OF SECURITIES
OUTSTANDING OPTIONS WEIGHTED AVERAGE REMAINING AVAILABLE FOR
PLAN AND RIGHTS (1) EXERCISE PRICE (2) ISSUANCE UNDER PLAN
- ---- --------------------- ------------------- -----------------------
Equity compensation plans approved by
stockholders......................... 568,675 $14.50 195,075
Equity compensation plans not approved by
stockholders......................... -- -- --
Total..................................... 568,675 $14.50 195,075
- ---------------------------
(1) Consists of options to purchase 568,675 shares of common stock under the
2004 K-Fed Bancorp Stock Option Plan.
(2) The weighted average exercise price reflects the exercise price of 14.50
per share.
13
STOCK OPTIONS
Set forth below is certain information concerning exercised and unexercised
options held by named executive officers on June 30, 2005.
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED FISCAL YEAR-END FISCAL YEAR-END (1)
UPON VALUE ----------------------------- -----------------------------
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------ ------------ ------------ ----------------------------- -----------------------------
K. M. Hoveland -- -- 0/100,000 $0/(231,000)
Daniel A. Cano -- -- 0/22,000 0/(50,820)
Nancy J. Huber -- -- 0/22,000 0/(50,820)
Jeanne R. Thompson -- -- 0/22,000 0/(50,820)
- --------------------------------------------------------------
(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 June
30, 2005, at which date the last sale of the common stock as quoted on the
Nasdaq National Market was at $12.19 per share.
Set forth in the table that follows is information relating to options
granted under the stock option plan to the named executive officers during the
fiscal year ended June 30, 2005.
OPTION GRANTS IN LAST FISCAL YEAR
- -----------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- -----------------------------------------------------------------------------------------------------------------------------
PERCENT OF TOTAL
OPTIONS GRANTED
TO EMPLOYEES AND
DIRECTORS IN FY EXERCISE OR EXPIRATION GRANT DATE PRESENT VALUE
NAME OPTIONS GRANTED 2005 BASE PRICE(1) DATE (2)
- -------------------------- ----------------- ------------------ -------------- ------------ --------------------------
K. M. Hoveland 100,000 26.8% $14.50 11/16/2014 $5.10
Daniel A. Cano 22,000 5.9 14.50 11/16/2014 5.10
Nancy J. Huber 22,000 5.9 14.50 11/16/2014 5.10
Jeanne R. Thompson 22,000 5.9 14.50 11/16/2014 5.10
- --------------------------------------------------------------
(1) The exercise price of the options is equal to the fair market value of the
underlying shares on the date of the award.
(2) Based on a grant date present value of $14.50 per share derived using the
Black-Scholes option pricing model with the following assumptions:
volatility of 39.18%; risk free rate of return of 3.54%; dividend yield of
1.33%; and a five-year option life.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
Kaiser Federal Bank has a policy of granting loans to officers and
directors, which fully complies with all applicable federal regulations. Loans
to directors and executive officers are made in the ordinary course of business
and on the same terms and conditions as those of comparable transactions with
unaffiliated third parties prevailing at the time, in accordance with our
underwriting guidelines, and do not involve more than the normal risk of
collectibility or present other unfavorable features. In addition, all loans to
directors and executive officers are approved by at least a majority of the
independent, disinterested members of the board.
All loans Kaiser Federal Bank makes to its directors and executive
officers are subject to regulations restricting loans and other transactions
with affiliated persons of Kaiser Federal Bank. Loans to all directors and
executive officers and their associates totaled approximately $986,000 at June
30, 2005, which was 1.09% of our
14
stockholders' equity at that date. All loans to directors and executive officers
were performing in accordance with their terms at June 30, 2005.
PROPOSAL II - RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
K-Fed Bancorp's independent registered public accounting firm for the
year ended June 30, 2005 was Crowe Chizek and Company LLP. The audit committee
of K-Fed Bancorp has approved the engagement of Crowe Chizek and Company LLP to
be K-Fed Bancorp's independent registered public accounting firm for the fiscal
year ending June 30, 2006, subject to the ratification of the engagement by
K-Fed Bancorp's stockholders. At the annual meeting, the stockholders of K-Fed
Bancorp will consider and vote on the ratification of the engagement of Crowe
Chizek and Company LLP for K-Fed Bancorp's fiscal year ending June 30, 2006. A
representative of Crowe Chizek and Company LLP is not expected to attend the
annual meeting.
K-Fed Bancorp's independent auditor for the year ended June 30, 2004 was
McGladrey & Pullen, LLP. On September 16, 2004, the audit committee of K-Fed
Bancorp met and decided to dismiss McGladrey & Pullen, LLP as K-Fed Bancorp's
independent auditor. K-Fed Bancorp's financial statements in recent years,
including the years ended June 30, 2004 and 2003, were audited by McGladrey &
Pullen, LLP. On September 16, 2004, the audit committee also approved the
engagement of Crowe Chizek and Company LLP as K-Fed Bancorp's independent
auditor for the fiscal year ending June 30, 2005.
The reports of McGladrey & Pullen, LLP on the financial statements of
K-Fed Bancorp for the fiscal years ended June 30, 2003 and 2004 contained no
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles. In connection with its
audits for the fiscal years ended June 30, 2003 and 2004 and through September
16, 2004, there were no disagreements with McGladrey & Pullen, LLP on any matter
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of McGladrey & Pullen, LLP would have caused McGladrey & Pullen,
LLP to make reference thereto in its report on K-Fed Bancorp's financial
statements. During the fiscal years ended June 30, 2003 and 2004 and through
September 16, 2004, there were no reportable events (as set forth in Regulation
S-K Item 304(a)(1)(v)) with McGladrey & Pullen, LLP.
During the fiscal years ended June 30, 2003 and 2004 and through
September 16, 2004, neither K-Fed Bancorp nor anyone on its behalf consulted
with Crowe Chizek and Company LLP regarding either (i) the application of
accounting principles to a specific completed or proposed transaction, or the
type of audit opinion that might be rendered on K-Fed Bancorp's financial
statements; or (ii) any matter that was the subject matter of a disagreement or
reportable event with McGladrey & Pullen, LLP (as set forth in Regulation S-K
Item 304(a)(1)(iv) or (v)).
Set forth below is certain information concerning aggregate fees billed
for professional services rendered by Crowe Chizek and Company LLP and McGladrey
& Pullen, LLP and its affiliate, RSM McGladrey, Inc., during the fiscal years
ended June 30, 2005 and June 30, 2004, respectfully.
The aggregate fees included in the audit category were fees billed for
the fiscal years for the audit of K-Fed Bancorp's annual financial statements
and the review of K-Fed Bancorp's quarterly financial statements. The aggregate
fees included in each of the other categories were fees billed in the noted
fiscal years.
2005 2004
---------- ----------
Audit Fees $ 83,500 $ 200,000
Audit-Related Fees $ 35,000 --
Tax Fees $ 27,750 $ 17,000
All Other Fees $ 18,375 $ 22,000
AUDIT FEES. Audit fees of $83,500 in fiscal 2005 were for the audit of
the consolidated financial statements of K-Fed Bancorp. The audit fees for
fiscal 2005 included fees for review of the financial statements included in
K-Fed Bancorp's annual and quarterly reports and filed with the Securities and
Exchange Commission and the internal controls attestation required under
regulations of the Securities and Exchange Commission. Audit fees of $200,000
15
in fiscal year 2004 were for the audit of the consolidated financial statements
of K-Fed Bancorp. The audit fees for fiscal year 2004 includes fees relating to
K-Fed Bancorp's initial public offering, review of the financial statements
included in K-Fed Bancorp's annual and quarterly reports and filed with the
Securities and Exchange Commission and the internal controls attestation
required under regulations of the Securities and Exchange Commission.
AUDIT-RELATED FEES. Audit-related fees of $35,000 in fiscal year 2005
were for internal audit assistance, which are reasonably related to the
performance of the audit of and review of the financial statements and that are
not reported in "Audit Fees," above. There were no audit-related fees in fiscal
year 2004.
TAX FEES. Tax fees of $27,750 in fiscal year 2005 and $17,000 in fiscal
year 2004 were for services related to tax compliance and tax planning.
ALL OTHER FEES. Other fees of $18,375 in fiscal year 2005 were for the
software license fee for management's assessment of internal controls over
financial reporting and other fees of $22,000 in fiscal year 2004 were for
information technology consulting.
The audit committee has considered whether the provision of non-audit
services, which relate primarily to tax consulting and other compliance services
rendered, is compatible with maintaining the independence of Crowe Chizek and
Company LLP. The audit committee concluded that performing such services does
not affect the independence of Crowe Chizek and Company LLP in performing its
function as auditor of K-Fed Bancorp.
The audit committee's policy is to pre-approve all audit and non-audit
services provided by the independent auditors. These services may include audit
services, audit-related services, tax services and other services. The audit
committee has delegated pre-approval authority to its chairman when expedition
of services is necessary. The independent auditors and management are required
to periodically report to the full audit committee regarding the extent of
services provided by the independent auditors in accordance with this
pre-approval, and the fees for the services performed to date.
In order to ratify the selection of Crowe Chizek and Company LLP as the
independent registered public accounting firm for the fiscal year ending June
30, 2006, the proposal must receive at least a majority of the votes cast,
without regard to broker non-votes, either in person or by proxy, in favor of
such ratification. The audit committee of the board of directors recommends a
vote "FOR" the ratification of Crowe Chizek and Company LLP as the independent
registered public accounting firm for the fiscal year ending June 30, 2006.
ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED
AT AN ANNUAL MEETING
The bylaws of K-Fed Bancorp provide an advance notice procedure for
certain business, or nominations to the board of directors, to be brought before
an annual meeting. For business to be properly brought before an annual meeting
by a stockholder, the stockholder must have given timely notice thereof in
writing to the Secretary of K-Fed Bancorp. To be timely a stockholder's notice
must be delivered to or mailed and received at the principal executive offices
of K-Fed Bancorp no later than five days before the date of the meeting. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting, (b) the name
and address, as they appear on K-Fed Bancorp's books, of the stockholder
proposing such business, (c) the class and number of shares of K-Fed Bancorp
which are beneficially owned by the stockholder, and (d) any material interest
of the stockholder in such business. The chairman of an annual meeting may, if
the facts warrant, determine and declare to the meeting that certain business
was not properly brought before the meeting in accordance with the provisions of
K-Fed Bancorp's bylaws, and if he should so determine, he shall so declare to
the meeting and any such business not properly brought before the meeting shall
not be transacted. This provision is not a limitation on any other applicable
laws and regulations. Accordingly, advance written notice of business or
nominations to the board of directors to be brought before the 2006 Annual
Meeting of Stockholders must be given to K-Fed Bancorp no later than five days
prior to the date of the meeting, as indicated above.
16
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in K-Fed Bancorp's proxy materials
for K-Fed Bancorp's 2006 Annual Meeting of Stockholders, any stockholder
proposal to take action at such meeting must be received at K-Fed Bancorp's
executive office, 1359 North Grand Avenue, Covina, California 91724, no later
than May 27, 2006. Any such proposals shall be subject to the requirements of
the proxy rules adopted under the Securities Exchange Act of 1934, as amended.
OTHER MATTERS
As of the date of this document, the board of directors is not aware of
any business to come before the annual meeting other than the matters described
above in the proxy statement. However, if any matters should properly come
before the annual meeting, it is intended that the holders of the proxies will
act in accordance with their best judgment.
MISCELLANEOUS
The cost of solicitation of proxies will be borne by K-Fed Bancorp.
K-Fed Bancorp 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 solicitations by mail,
directors, officers and regular employees of K-Fed Bancorp may solicit proxies
personally or by telegraph or telephone without additional compensation. K-Fed
Bancorp's 2005 Annual Report to Stockholders has been mailed to all stockholders
of record as of August 31, 2005. Any stockholder who has not received a copy of
such annual report may obtain a copy by writing K-Fed Bancorp at the address
below. Such annual report is not to be treated as a part of the proxy
solicitation material nor as having been incorporated herein by reference.
HOUSEHOLDING OF PROXY STATEMENTS AND ANNUAL REPORTS
K-Fed Bancorp intends to deliver only one annual report and proxy
statement to multiple registered stockholders sharing the same address unless it
has received contrary instructions from one or more of the stockholders. If
individual stockholders wish to receive a separate copy of the annual report or
proxy statement they may call or write and request separate copies currently or
in the future as follows:
Stockholder Relations
K-Fed Bancorp
1359 North Grand Avenue
Covina, California 91724
Phone: (800) 524-2274
Fax: (626) 858-5745
Registered stockholders sharing the same address and receiving multiple copies
of annual reports or proxy statements may request the delivery of a single copy
by writing or calling the above address or phone number.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Rita H. Zwern
Rita H. Zwern
Secretary
Covina, California
September 30, 2005
17
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE K-FED BANCORP
WITH-
ANNUAL MEETING OF STOCKHOLDERS FOR HOLD
OCTOBER 25, 2005 1. The election as directors of the [ ] [ ]
nominees listed below (except as
The undersigned hereby appoints the proxy committee of the marked to the contrary below) for
board of directors of K-Fed Bancorp (the "Company"), with full a three-year term:
powers of substitution, to act as attorneys and proxies for the
undersigned to vote all shares of common stock of the Company that Marilyn T. Owsley Rita H. Zwern
the undersigned is entitled to vote at the 2005 Annual Meeting of
Stockholders of the Company ("Meeting") to be held at the main INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
office of Kaiser Federal Bank, 1359 North Grand Avenue, Covina, INDIVIDUAL NOMINEE, MARK "WITHHOLD" AND WRITE THAT
California, at 5:00 p.m., local time, on Tuesday, October 25, NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
2005.The proxy committee is authorized to cast all votes to which
the undersigned is entitled as follows:
--------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR AGAINST ABSTAIN
2. The ratification of the appointment [ ] [ ] [ ]
of Crowe Chizek and Company LLP as
the independent registered public
accounting firm for the Company for
the fiscal year ending June 30, 2006.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE
ABOVE-LISTED PROPOSALS.
--------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH
OF THE PROPOSALS STATED ABOVE. IF ANY OTHER BUSINESS IS
PRESENTED AT THE ANNUAL MEETING, THIS PROXY WILL BE VOTED BY
THE MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME,
THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE
PRESENTED AT THE ANNUAL MEETING.
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Please be sure to sign and date -------------------------
this proxy card in the box below. Date
- ----------------------------------------------------------------- PLEASE CHECK BOX IF YOU PLAN TO ------------------> [ ]
ATTEND THE ANNUAL MEETING.
- ---Stockholder sign above ------ Co-holder (if any) sign above---
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^ DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED. ^
K-FED BANCORP
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Should the above-signed be present and elect to vote at the Meeting or at any adjournment 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 said attorneys and
proxies shall be deemed terminated and of no further force and effect. This proxy may also be revoked by sending written notice to
the Secretary of the Company at the address set forth on the Notice of Annual Meeting of Stockholders, or by the filing of a later
dated proxy card prior to a vote being taken on a particular proposal at the Meeting.
The above-signed acknowledges receipt from the Company prior to the execution of this proxy card of notice of the Meeting, a
proxy statement dated September 30, 2005, and an annual report to stockholders.
Please sign exactly as your name appears on this proxy card. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares of Company common stock are held jointly, each holder should sign.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY CARD AND RETURN IT PROMPTLY
IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
- ------------------------------------------------------------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED,
PLEASE CORRECT THE ADDRESS IN
THE SPACE PROVIDED BELOW AND
RETURN THIS PORTION WITH THE
PROXY IN THE ENVELOPE PROVIDED.
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