Mutual
Federal Bancorp, Inc.
April 13, 2009
Dear
Shareholder:
You are
cordially invited to attend the 2009 Annual Meeting of Shareholders of Mutual
Federal Bancorp, Inc. The meeting will be held at 2212 W. Cermak
Road, Chicago, Illinois, on Wednesday, May 13, 2009, at 2:00 p.m.
local time. The matters to be considered by shareholders at the
Annual Meeting are described in detail in the accompanying
materials.
The
attached Notice of Annual Meeting of Shareholders and Proxy Statement describe
the formal business to be conducted at the meeting. Directors and
officers of Mutual Federal Bancorp, Inc., as well as a representative from Crowe
Horwath LLP, the Company’s independent accountants, will be present at the
meeting to respond to any questions from our shareholders.
The Board
of Directors of Mutual Federal Bancorp, Inc. has determined that the specific
proposals to be considered at the meeting are in the best interests of the
company and its shareholders. For the reasons set forth in the Proxy
Statement, the Board unanimously recommends that you vote “FOR” each of these
matters.
It is very important that you be
represented at the Annual Meeting regardless of the number of shares you own or
whether you are able to attend the meeting in person.
I urge
you to mark, sign and date your proxy card today and return it in the envelope
provided, even if you plan to attend the Annual Meeting. This will
not prevent you from voting in person, but will ensure that your vote is counted
if you are unable to attend.
Thank you
for your continued support of Mutual Federal Bancorp, Inc. and Mutual Federal
Savings and Loan Association of Chicago.
Sincerely,
Stephen M.
Oksas
Chairman,
President
and Chief
Executive Officer
Mutual
Federal Bancorp, Inc.
2212
WEST CERMAK ROAD
CHICAGO,
ILLINOIS 60608
(773) 847-7747
___________________
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD ON MAY 13, 2009
___________________
NOTICE IS
HEREBY GIVEN that an Annual Meeting of Shareholders of Mutual Federal Bancorp,
Inc. (the “Company”) will be held at the Company’s main office located at 2212
West Cermak Road, Chicago, Illinois, on Wednesday, May 13, 2009, at
2:00 p.m. local time for the following purposes, all of which are further
described in the accompanying Proxy Statement:
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(1)
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To
elect the three Class III director nominees identified in the
attached proxy statement for a three-year
term;
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(2)
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To
ratify the appointment of Crowe Horwath LLP as the Company’s independent
auditor for the fiscal year ending December 31, 2009;
and
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(3)
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To
transact such other business as may properly come before the meeting or
any adjournment thereof, including whether or not to adjourn the
meeting.
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The Board
of Directors has fixed March 27, 2009 as the record date for determining
shareholders entitled to notice of and to vote at the Annual Meeting and at any
adjournments thereof. Only those shareholders of record as of the
close of business on that date will be entitled to vote at the Annual
Meeting. If there is an insufficient number of shares represented for
a quorum, the meeting may be adjourned to permit further solicitation of proxies
by the Company. A list of shareholders entitled to vote at the
meeting will be available for inspection at the Company’s main office located at
2212 West Cermak Road, Chicago, Illinois 60608, on the day of the Annual Meeting
and for a period of 20 days prior to the meeting.
BY ORDER
OF THE BOARD OF DIRECTORS,
Julie H.
Oksas
April 13,
2009
Chicago,
Illinois
Mutual
Federal Bancorp, Inc.
____________________
PROXY
STATEMENT
____________________
2009
ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD ON MAY 13, 2009
General
This
Proxy Statement is being furnished to the holders of common stock, $0.01 par
value per share (“Common Stock”), of Mutual Federal Bancorp, Inc. (the
“Company”), a federally chartered corporation and the savings and loan holding
company of Mutual Federal Savings and Loan Association of Chicago (the “Bank”),
in connection with the solicitation of proxies by the Board of Directors of the
Company for use at its 2009 Annual Meeting of Shareholders (the “Annual
Meeting”) and at any adjournment thereof. The meeting will be held at
the Company’s and the Bank’s main office at 2212 West Cermak Road, Chicago,
Illinois on Wednesday, May 13, 2009, at 2:00 p.m. local time for the
purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders. This Proxy Statement is first being mailed to
shareholders on or about April 13, 2009.
Voting
Rights
Only
shareholders of record at the close of business on March 27, 2009 (the
“Record Date”) will be entitled to notice of and to vote at the Annual
Meeting. At such date, there were 3,334,273 shares of Common Stock
outstanding, and the Company had no other class of equity securities
outstanding. Each share of Common Stock is entitled to one vote at
the Annual Meeting on all matters properly presented at the Annual
Meeting.
The
presence in person or by proxy of at least 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 the presence of a quorum at the Annual
Meeting. A broker non-vote occurs when a broker, bank or other
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the broker, bank or other nominee does not have discretionary
voting power with respect to that item and has not received voting instructions
from the beneficial owner. Because Mutual Federal Bancorp, MHC
(“Mutual MHC”), the mutual holding company for the Company, owns approximately
76% of the outstanding shares of the Company, the shares it holds will ensure
the presence of a quorum at the Annual Meeting.
Because
of the required votes, abstentions will have the effect of a vote “against” the
proposal to ratify the appointment of the Company’s independent
accountants. Under rules applicable to brokerage firms, the election
of directors and the proposal to ratify the appointment of the Company’s
independent auditors are considered “discretionary” items upon which brokerage
firms may vote in their discretion on behalf of their clients if such clients
have not furnished voting instructions. Directors are elected by a
plurality of the votes cast, without regard to broker non-votes or proxies as to
which authority to vote for one or more of the nominees being proposed is
withheld.
Proxies
Shares of
Common Stock represented by properly executed proxies, if such proxies are
received in time and not revoked, will be voted in accordance with the
instructions indicated on the proxies. If no contrary instructions
are given, each proxy received will be voted as follows:
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(1)
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FOR
the nominees for director described in this Proxy
Statement;
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(2)
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FOR
ratification of the appointment of Crowe Horwath LLP as the Company’s
independent auditor for the fiscal year ending December 31, 2009;
and
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(3)
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upon
the transaction of such other business as may properly come before the
meeting or any adjournments thereof, including whether or not to adjourn
the meeting, in accordance with the best judgment of the persons appointed
as proxies.
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Any
shareholder giving a proxy has the power to revoke it at any time before it is
exercised by either (1) filing a written notice of revocation with the
Secretary of the Company (Julie H. Oksas, Secretary, Mutual Federal
Bancorp, Inc., 2212 West Cermak Road, Chicago, Illinois 60608);
(2) delivering to the Company a duly-executed proxy bearing a later date;
or (3) attending the Annual Meeting and giving the Secretary notice of his
or her intention to vote in person. Proxies solicited hereby may be
exercised only at the Annual Meeting and any adjournment thereof and will not be
used for any other meeting.
Vote
by Mutual MHC
Mutual
MHC owned approximately 76% of the outstanding shares of Common Stock of the
Company as of the Record Date. All shares of Common Stock owned by
Mutual MHC will be voted in accordance with the instructions of the Board of
Directors of Mutual MHC, the members of which also serve as the members of the
Board of Directors of the Company. Mutual MHC is expected to vote its
shares “FOR” each proposal.
Participants
in the Company’s ESOP
If you
participate in the Company’s Employee Stock Ownership Plan (the “ESOP”), you
will receive a voting instruction form that reflects all the shares that you may
direct the applicable trustee of each plan to vote on your
behalf. Under the terms of the ESOP, the ESOP trustee votes all
shares held by the ESOP, but each ESOP participant may direct the trustee how to
vote the shares of Common Stock allocated to his or her account. The
ESOP trustee, subject to the exercise of its fiduciary duties, will vote all
unallocated shares of Company Common Stock held by the ESOP and allocated shares
for which no voting instructions are received in the same proportion as shares
for which it has received timely voting instructions.
Cost
of Proxy Solicitation
The cost
of solicitation of proxies will be borne by the Company. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of the Common Stock. In addition to solicitations
by mail, directors, officers and employees of the Company may solicit proxies
personally or by telephone without additional compensation.
Important
Notice Regarding the Availability of Proxy Materials for the 2009 Annual Meeting
of Shareholders:
This proxy statement and the
Company’s Form 10-K for the fiscal year ended December 31, 2008 are
available at www.mutualfederalbank.com/proxymaterials.
The SEC
has adopted new proxy rules that allow companies, at their option, to provide
access to their proxy materials via the Internet and mail only a notice that
alerts shareholders of the availability of such proxy materials on the
Internet. Because we do not have a large shareholder base in
comparison to other companies, we have chosen to continue to mail physical
copies of our proxy statement and annual report. However, in
accordance with these new proxy rules, the Company also is posting a full set of
its proxy materials on the Internet. On or about April 13, 2009,
shareholders will have the ability to access all of the proxy materials on the
website referred to above; however, no voting will be permitted through such
site. Access to this site will be available free of
charge.
PROPOSAL
1. — ELECTION OF DIRECTORS
The
Company’s Board of Directors currently consists of eight members. The
Company’s bylaws provide that the Board of Directors shall be divided into three
classes as nearly equal in number as possible, and that the members of each
class shall be elected for terms of three years and until their successors are
elected and qualified, with one of the three classes of directors to be elected
each year. Of the eight current members of the Board, five directors
have been determined by the Board to be “independent” within the meaning of
“independent” under the rules of the Nasdaq Stock Market.
There are
three persons currently serving as Class III directors whose term will
expire at the 2009 Annual Meeting. At the Annual Meeting,
shareholders will be asked to elect three directors to serve for a three-year
term and until their successors are elected and qualified. Each of
the three director nominees set forth below are currently serving as directors
and were selected by the Nominating Committee of the Board of Directors for
re-election as Class III directors. One of the Class III
director nominees, John L. Garlanger, was appointed to the Board of
Directors on July 15, 2008. The remaining Class III
director nominees have served as directors of the Company since the Company’s
formation in 2006. There are no arrangements or understandings
between the nominees and any other person pursuant to which such person was
selected as a nominee for election as a director at the Annual
Meeting.
Each of
the nominees has indicated a willingness to serve, and the Board of Directors
knows of no reason why any of the nominees may not be able to serve as a
director if elected. However, if any nominee should be unable or
unwilling to stand for election at the Annual Meeting, the proxies may be voted
for the election of such other person(s) selected by the Board of Directors of
the Company. Proxies cannot be voted for a greater number of persons
than the number of nominees for director named. To be elected as a
director, each nominee must receive the affirmative vote of a plurality of the
shares present in person or represented by proxy and entitled to vote at the
meeting. Shareholders of the Company have no cumulative voting rights
with respect to the election of directors.
Information
With Respect to Nominees for Director
The
following presents certain biographical and background information about each
director nominee.
Nominees
for Class III Director to Serve
a
Three-Year Term Expiring in 2012
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Position
with the Company,
the
Bank and Mutual MHC
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John
L. Garlanger
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62
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Executive
Vice President,
Chief
Financial Officer and Treasurer
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2008
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Leonard
F. Kosacz
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85
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Director
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1991
(1)
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Stephen
M. Oksas
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51
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Chairman,
President and
Chief
Executive Officer
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1997
(1)
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(1)
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Includes
service with the Bank prior to the formation of the Company as a holding
company for the Bank.
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John L.
Garlanger
. Mr. Garlanger has served as Executive Vice
President, Chief Financial Officer and Treasurer of Mutual MHC and the Bank
since May 2005, and of the Company since its formation. He has
served as director of Mutual MHC, the Company and the Bank since
July 2008. Mr. Garlanger served as a securities and
financial reporting consultant to Chesterfield Financial Corp., the holding
company for Chesterfield Federal Savings and Loan based in Chicago, Illinois,
from December 2001 until the completion of Chesterfield’s acquisition in
December 2004. From
December 1999
until December 2001, he was the Chief Financial Officer of Recruiter
Toolbox, Inc., an Internet-based recruitment advertising agency. From
December 1974 until May 1999, Mr. Garlanger was with Calumet
Federal Savings and Loan Association of Chicago and its publicly traded holding
company, Calumet Bancorp, Inc., most recently as Senior Vice President and Chief
Financial Officer. Mr. Garlanger is a certified public
accountant.
Leonard F.
Kosacz
. Mr. Kosacz, currently retired, was with the
Metropolitan Bank in Chicago from 1949 to 1989, most recently as Senior Vice
President. During his 40 years with Metropolitan Bank, his
responsibilities included commercial lending, operations and
marketing.
Stephen M.
Oksas
. Mr. Oksas has served as a director of the Bank
since January 1997 and was appointed President of the Bank in
March 1998 and Chairman in March 2000. In addition, he has
served as Chairman, President and Chief Executive Officer of Mutual MHC since
November 2001, and of the Company since its formation. Prior to
joining the Bank, he was a senior examiner with the Federal Reserve Bank of
Chicago and held various positions in finance and credit administration with
First Interstate Bancorp and its subsidiary First Interstate Bank of
California. He currently is a director of the Illinois League of
Financial Institutions. Mr. Oksas is the spouse of Julie H.
Oksas.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE
ABOVE NOMINEES FOR CLASS III DIRECTOR.
Members
of the Board of Directors Continuing in Office
Certain
biographical and background information about each director whose term continues
after the Annual Meeting is set forth below.
Class
I Directors with Terms Expiring in 2010
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Position
with the Company, the Bank and Mutual MHC
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Amy P.
Keane
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46
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Director
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2007
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Julie H.
Oksas
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47
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Director
and Secretary;
Executive
Vice President
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2002
(1)
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Stephanie
Simonaitis
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96
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Director
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1969
(1)
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(1)
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Includes
service with the Bank prior to the formation of the Company as a holding
company for the Bank.
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Amy P.
Keane.
Ms. Keane, a certified public accountant, has been
principal of Keane & Associates, an accounting, tax and consulting
services firm, since November 1990. Prior to forming
Keane & Associates, Ms. Keane was an audit manager with the public
accounting firm Coopers & Lybrand in Chicago.
Julie H.
Oksas
. Ms. Oksas was appointed Executive Vice President
of Mutual MHC in March 2005, of the Bank in March 2006, and of the
Company upon its inception, and has served as director of the Bank and Mutual
MHC since January 2002, and of the Company since its
formation. Prior to joining the Bank, Ms. Oksas served as Vice
President of Bank of America in its commercial real estate lending and loan
workout departments. Since 2002, she has been an Illinois-licensed
insurance salesperson. Ms. Oksas is the spouse of
Stephen M. Oksas.
Stephanie
Simonaitis
. Ms. Simonaitis is currently
retired. Previously, she was employed by the Bank for 69 years,
including several years as a consultant following her retirement in
1996.
Ms. Simonaitis
acted as Secretary/Treasurer of the Bank and managed its daily
operations. She is an aunt of Robert P. Kazan.
Class II
Directors with Terms Expiring in 2011
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Position
with the Company,
the
Bank and Mutual MHC
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Stanley
Balzekas, III
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54
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Director
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1999
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Robert P.
Kazan
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62
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Director
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1996
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(1)
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Includes
service with the Bank prior to the formation of the Company as a holding
company for the Bank.
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Stanley
Balzekas III
. Mr. Balzekas, an attorney, has been
the general manager of Balzekas Motor Sales, Inc. in Chicago, Illinois for over
20 years. He is actively involved in the Chicago Lithuanian
community, including serving as a director of the Balzekas Museum of Lithuanian
Culture and the Lithuanian Chamber of Commerce.
Robert P.
Kazan, M.D.
Dr. Kazan is a neurosurgeon and has
served as the president of West Suburban Neurosurgical Associates, P.C., in
Hinsdale, Illinois since 2000. He is a nephew of Stephanie
Simonaitis.
CORPORATE
GOVERNANCE
Director
Independence
In
addition to the transactions disclosed under “Transactions With Related
Persons”, in making its determination regarding director independence, the
Nominating Committee as well as the full Board of Directors consider any other
material relationships each of our directors has with the Company, other than as
a director, that would impair his or her independence. In making
independence determinations, the Nominating Committee and the Board of Directors
evaluate each director to determine whether he or she meets the director
independence standards established by the Nasdaq National Market (although the
Company’s stock is not listed on the Nasdaq market). To assist the
Committee and the Board in this regard, each director may complete a
questionnaire designed to identify relationships that could affect his or her
independence. The Committee and the Board reach their independence
determinations by considering all relevant facts and circumstances surrounding a
director’s business, commercial, industrial, banking, consulting, legal,
accounting, charitable and familial relationships, among others.
Based
upon this analysis and the recommendations of the Nominating Committee, the
Board of Directors has determined that Mss. Keane and Simonaitis, Messrs.
Balzekas and Kosacz, and Dr. Kazan are “independent” directors in
accordance with the Nasdaq listing standards.
Director
Nomination Procedures
The
Nominating Committee of the Board of Directors is responsible for identifying
and selecting director nominees who are in a position to exercise independent
judgment, provide effective oversight of management and serve the best interests
of shareholders. Pursuant to the Company’s bylaws, the entire Board
of Directors acts as the Nominating Committee for the purpose of selecting the
proposed slate of director nominees for election at the annual meeting of
shareholders.
In
selecting director nominees, the Nominating Committee will consider, among other
factors, the existing composition of the Board and the Committee’s evaluation of
the mix of Board members
appropriate
for the perceived needs of the Company. The Nominating Committee
seeks a range of experience, knowledge and judgment and a diversity of
perspectives on the Board to enhance the Board’s effectiveness. The
Nominating Committee also believes continuity in leadership and board tenure
maximizes the Board’s ability to exercise meaningful board
oversight. Because qualified incumbent directors are generally
uniquely positioned to provide shareholders the benefit of continuity of
leadership and seasoned judgment gained through experience as a director of the
Company, the Nominating Committee will generally consider as potential
candidates those incumbent directors interested in standing for re–election who
the committee believes have satisfied director performance expectations,
including regular attendance at, preparation for and meaningful participation in
Board and committee meetings.
Under its
policies, the Nominating Committee also considers the following in selecting the
proposed nominee slate:
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at
least a majority of directors should be “independent” in the opinion of
the Board as determined in accordance with Nasdaq
standards;
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at
all times at least three members of the Board must satisfy the heightened
standards of independence for Audit Committee members;
and
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at
all times the Board should have at least one member who satisfies the
criteria to be designated by the Board as an “audit committee financial
expert.”
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The Board
recognizes the following characteristics and skills as minimum qualifications
for any potential director candidate:
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highest
personal and professional ethics and integrity; commitment to the
Company’s values;
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ability
and willingness to devote sufficient time and attention to fulfilling
Board duties and responsibilities;
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relevant
business, professional or managerial skills and experience; mature
wisdom;
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communication,
leadership and team building
skills;
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comprehension
of the Company’s business plans and strategies; financial
sophistication;
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ability
to assist in the formulation of business strategies and to monitor and
guide expectations;
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ability
and willingness to exercise independent judgment and express tough
opinions;
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collegial
personality; nonconfrontational and constructive, but able to challenge,
ask questions and assess responses;
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good
health and mental alertness; and
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alignment
of personal interests with long term interests of
shareholders.
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Under the
Company’s bylaws, the Nominating Committee is required to deliver written
director nominations to the Secretary of the Company at least 20 days prior to
the date of the annual meeting. Upon delivery, the nominations must be posted in
a conspicuous place in each of the Company’s offices.
Shareholder
Director Nominee Recommendations
.
It is generally
the policy of the Nominating Committee to consider shareholder recommendations
of proposed director nominees if such recommendations are serious and timely
received. Under the Company’s bylaws, in order to be considered
timely received, recommendations must be received in writing at the principal
executive offices of the Company, addressed to the Secretary, at least five days
prior to the annual meeting date. Upon delivery, the nominations must be posted
in a conspicuous place in each of the Company’s offices.
Board
Meetings
Regular
meetings of the Board of Directors of the Company are held on a monthly basis
and special meetings of the Board of Directors of the Company are held from
time-to-time as needed. There were 12 meetings of the Board of
Directors of the Company during the fiscal year ended December 31,
2008. No director attended fewer than 75% of the aggregate total
number of meetings of the Board of Directors held during fiscal 2008 and the
total number of meetings held by all committees of the Board on which the
director served during fiscal 2008.
Board
Committees
The Board
of Directors currently has a separate Audit Committee, Strategic Planning
Committee, Compensation and Benefits Committee (the “Compensation Committee”)
and Nominating Committee. The Audit Committee, the Strategic Planning
Committee and the Compensation Committee were established by the Board of
Directors in May 2006, and the Nominating Committee was established in
March 2007.
Audit
Committee
. The Audit Committee is responsible for supervising
the Company’s accounting, reporting and financial control
practices. Generally, the Audit Committee reviews the quality and
integrity of the Company’s financial information and reporting functions, the
adequacy and effectiveness of the Company’s system of internal accounting and
financial controls, and the independent audit process, and annually reviews the
qualifications of the independent public accountants. The independent
public accountants are responsible for auditing the Company’s financial
statements and expressing an opinion as to their conformity with generally
accepted accounting principles. The current members of the Audit
Committee are Amy P. Keane, who replaced Stanley Balzekas III as
chairperson of the Audit Committee in March 2008, Leonard F. Kosacz,
Stephanie Simonaitis and Mr. Balzekas, each of whom is “independent” within
the meaning of the Nasdaq rules, as currently in effect, and satisfies the
heightened independence standards under the rules of the Securities and Exchange
Commission (“SEC”), as currently in effect. The Board of Directors
has determined that Ms. Keane is an “audit committee financial expert” as
that term is defined in SEC rules. The Audit Committee met four times
in 2008. A copy of the charter under which the Audit Committee
operates is attached as Annex A to the proxy statement distributed to the
Company’s shareholders and filed with the SEC in connection with the 2007 Annual
Meeting of Shareholders.
Strategic
Planning Committee
. The Strategic Planning Committee is
responsible for studying strategic issues related to the Company and, where
appropriate, presenting such matters to the entire Board of Directors for
consideration and approval. The Strategic Planning Committee
currently consists of Stephen M. Oksas, Julie H. Oksas, Stanley
Balzekas III and Robert P. Kazan.
Compensation
Committee
. The Compensation Committee is responsible for
reviewing the performance of the Chief Executive Officer; reviewing and
recommending the compensation of the Company’s officers, including the Chief
Executive Officer; recommending and approving stock option grants, restricted
stock and other awards to management under the Company’s 2006 Stock Option Plan
(the “Option Plan”) and its amended and restated 2006 Management Recognition and
Retention Plan (the “Management Recognition Plan”); reviewing and recommending
compensation programs including stock
option
grants, profit sharing contributions and annual bonuses; reviewing and
recommending director compensation; advising the Chief Executive Officer on
miscellaneous compensation issues; and advising management regarding management
succession planning issues. The Compensation Committee also advises
and assists management in formulating policies regarding
compensation. The current members of the Compensation Committee are
Mr. Kosacz (Chair), Mr. Balzekas and Dr. Kazan. Each
of the members of the Compensation Committee are “independent” within the
meaning of the Nasdaq rules, as currently in effect. The Compensation
Committee operates under a written charter, which is attached as Annex B to
the proxy statement distributed to the Company’s shareholders and filed with the
SEC in connection with the 2007 Annual Meeting of Shareholders. The
Compensation Committee met twice in 2008.
Nominating
Committee
. The Nominating Committee is responsible for
proposing to the Board a slate of nominees for election as directors by
shareholders at each annual meeting. The Nominating Committee is also
responsible for taking a leadership role in shaping the Company’s corporate
governance practices. In carrying out its duties, the Nominating
Committee has also been delegated the responsibility to: determine
criteria for the selection and qualification of the Board members; recommend for
Board approval persons to fill vacancies on the Board which occur between annual
meetings; evaluate, at least annually, each Board member’s “independence” and
make recommendations, at least annually, regarding each Board member’s
“independence” status consistent with then applicable legal requirements; make
recommendations regarding director orientation and continuing education; and
consider the effectiveness of corporate governance practices and policies
followed by the Company and the Board.
Pursuant
to the Company’s bylaws, the entire Board of Directors acts as the Nominating
Committee. Mr. Oksas is the Committee’s Chair. The
Nominating Committee operates under a written charter, which is attached as
Annex C to the proxy statement distributed to the Company’s shareholders
and filed with the SEC in connection with the 2007 Annual Meeting of
Shareholders. The Nominating Committee met once in 2008.
Shareholder
Communications with Directors
The Board
of Directors has adopted a policy addressing shareholder communications with
directors. Any shareholder who wishes to communicate directly with
the Board of Directors, any committee of the Board of Directors, or one or more
individual directors, may direct correspondence in writing to the Board, any
committee of the Board or any named director, c/o Julie H. Oksas, the
Secretary of the Company, at 2212 W. Cermak Road, Chicago, Illinois
60608. The Company’s policy is to promptly forward bona fide written
communications received from shareholders to the appropriate directors, other
than communications that are clearly marketing or general solicitation
materials.
The Board
of Directors encourages directors to attend the Company’s annual meeting of
shareholders each year, and it is expected that at least a majority of the
current members of the Board will attend the Company’s 2009 Annual
Meeting.
EXECUTIVE
COMPENSATION
Executive
Officer Compensation
Summary Compensation
Table
. The following table summarizes the compensation paid by
the Company and its subsidiaries for services rendered in all capacities during
the fiscal years ended December 31, 2008 and 2007 to the President and
Chief Executive Officer and next most highly compensated executive officer, the
Executive Vice President and Chief Financial Officer (the Company’s “Named
Executive Officers”).
Summary
Compensation Table
Name
and
Principal
Position
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|
|
|
|
|
|
|
|
|
|
Non-
Equity
Incentive
Plan
Compen-sation
|
|
|
Nonquali-
fied
Deferred
Compen-sation Earnings
|
|
|
All
Other
Compen-sation
(2)
|
|
|
|
|
|
Stephen
M. Oksas
|
|
|
2008
2007
|
|
|
$
|
137,836
132,535
|
|
|
$
|
10,000
15,600
|
|
|
$
|
53,926
49,332
|
|
|
$
|
35,285
33,891
|
|
|
|
—
—
|
|
|
|
—
—
|
|
|
$
|
35,599
39,541
|
|
|
$
|
272,646
270,899
|
|
|
Chairman,
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
L. Garlanger
|
|
|
2008
2007
|
|
|
$
|
102,378
98,440
|
|
|
|
15,000
26,000
|
|
|
|
43,139
39,463
|
|
|
|
28,228
27,113
|
|
|
|
—
—
|
|
|
|
—
—
|
|
|
|
24,119
21,371
|
|
|
|
212,863
212,387
|
|
|
Executive
Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_________
|
(1)
|
The
amounts in the “Stock Awards” and “Option Awards” columns reflect the
dollar amount recognized by the Company for financial statement reporting
purposes for the fiscal year ended December 31 for each year shown
that is attributable to stock and option awards in accordance with FAS
123(R), but without regard to discounts for estimated
forfeitures.
|
|
(2)
|
Amounts
shown for Mr. Oksas include (i) $14,100 and $14,100,
respectively, in director’s fees for 2008 and 2007; (ii) the
estimated expense recognized by the Company of $15,585 and $19,516,
respectively, for 2008 and 2007 with respect to shares attributed to
Mr. Oksas under the Company’s Employee Stock Ownership Plan (“ESOP”);
and (iii) 401(k) matching contributions by the
Company. Amounts shown for Mr. Garlanger include
(i) $7,050 in director’s fees for 2008; (ii) the estimated
expense recognized by the Company of $12,374 and $16,394, respectively,
for 2008 and 2007 with respect to shares of Company common stock
attributed to Mr. Garlanger under the ESOP; and (iii) 401(k)
matching contributions by the
Company.
|
Outstanding
Equity Awards at Fiscal Year End
The
following table summarizes for each Named Executive Officer the number of shares
of common stock subject to outstanding equity awards and the value of such
awards that were unexercised or that have not vested at December 31,
2008.
Outstanding
Equity Awards as of December 31, 2008
|
|
|
|
|
|
|
|
|
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
|
|
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
(1)
|
|
|
Option
Exercise Price
($)
|
|
|
|
Number
of Shares or Units of Stock that have not Vested
(#)
(1)(2)
|
|
|
Market
Value of Shares or Units of Stock that have not Vested
($)
|
|
|
Stephen
M. Oksas
|
|
|
17,820
|
|
|
|
26,732
|
|
|
|
14.41
|
|
1/16/2017
|
|
|
10,692
|
|
|
|
96,228
|
|
|
John
L. Garlanger
|
|
|
14,256
|
|
|
|
21,385
|
|
|
|
14.41
|
|
1/16/2017
|
|
|
8,553
|
|
|
|
76,977
|
|
|
(1)
|
Stock
options and restricted stock reported in this table vest over five years
in annual equal installments on each anniversary of the date of grant
(January 16, 2007) and are fully vested on the fifth anniversary of
the date of grant.
|
|
(2)
|
Holders
of unvested restricted stock awards may exercise voting rights as if the
underlying shares were beneficially owned by the named executive
officer.
|
Employment
Agreements
In
connection with the Company’s minority stock offering in April 2006 (the
“Offering”), the Bank and the Company entered into employment agreements with
Mr. Oksas, Mr. Garlanger and Ms. Oksas.
Stephen M.
Oksas
. The Company and the Bank entered into an employment
agreement with Stephen M. Oksas, President and Chief Executive Officer,
effective as of the closing of the Offering on April 4, 2006. As
a result of term extensions permitted by the agreement and approved by the board
of directors, the current term of the agreement extends through April 3,
2012, and, subject to board approval, will be extended for an additional year as
of April 4 of each year, unless either party gives 90 days’ advance notice
of an intention to terminate the agreement. The agreement provides
for an annual base salary, subject to review from time to time, and may be
increased when and to the extent the board of directors, in its discretion,
determines. Mr. Oksas may receive a discretionary bonus to the
extent determined by the board of directors and is entitled to participate in
benefit plans and other fringe benefits available to the Bank’s executive
officers.
Under the
agreement, Mr. Oksas’ employment may be terminated at any time for “cause,”
as defined in the agreement. If he resigns without “good reason,” the
agreement will immediately terminate, and he would be entitled only to unpaid
benefits accrued during the term of his employment. If Mr. Oksas
chooses to resign with good reason, or the Bank chooses to terminate his
employment without cause, he also will be entitled to receive severance in the
amount equal to 200% of his then-current base annual salary, plus the average of
the sum of any bonuses he earned during the previous three years, in addition to
a pro rata bonus for the year of termination based on the prior year’s bonus
amount, if any. The agreement also provides for death benefits equal
to six months of his then-current annual base salary.
In the
event that Mr. Oksas is terminated after a change in control (as defined in
the agreement) of the Company, he will be entitled to a lump sum payment equal
to three times the sum of (1) his annual base salary; (2) the greater
of (a) his bonus amount, if any, for the prior year or (b) his average
bonus, if any, for the three preceding years; and (3) the sum of the
contributions that the Bank would have made to him during the year under benefit
plans and the annual value of any other executive perquisites. The
agreement also entitles Mr. Oksas to receive gross-up payments to cover any
federal excise taxes payable
by him in
the event the change in control benefits are deemed to constitute “excess
parachute payments” under section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”).
The
agreement contains certain nonsolicitation provisions that prohibit
Mr. Oksas from soliciting, either for his own account or for the benefit of
any entity located within a 40 mile radius of any of the Company’s or its
subsidiaries’ locations, any clients or employees of the Company or its
subsidiaries. These nonsolicitation provisions will remain in effect
for a period of one year after the termination of his employment.
Other
Executives
. The Company and the Bank entered into employment
agreements with John L. Garlanger, Executive Vice President and Chief Financial
Officer, and Julie H. Oksas, Executive Vice President and Secretary
(collectively referred to herein as the “Executives”), which became effective as
of the closing of the Offering. As a result of term extensions
permitted by their agreements and approved by the board of directors, the
current term of the agreement with each Executive extends through April 3,
2011, and, subject to board approval, will be extended for an additional year as
of April 4 of each year, unless either party gives 90 days’ advance notice
of an intention to terminate the agreement.
Each
agreement establishes an initial base salary, which is subject to periodic
review from time to time, and may be increased when and to the extent the board
of directors, in its discretion, determines. Ms. Oksas’ base
salary reflects Ms. Oksas’ part-time schedule. The Bank and
Ms. Oksas will periodically review her part-time status and she may switch
to a full-time position with a commensurate full-time salary in the
future.
If the
Executive chooses to resign with good reason, or the Bank chooses to terminate
his/her employment without cause, he/she will be entitled to receive severance
in the amount equal to 100% of his/her then-current annual base salary, plus the
average of the sum of any bonuses he/she earned during the previous three years,
in addition to a pro rata bonus for the year of termination based on the prior
year’s bonus amount, if any.
In the
event the Executive is terminated after a change of control (as defined in the
agreement) of the Company, he/she will be entitled to unpaid benefits accrued
during the term of his/her employment, a pro rata bonus for the year of
termination based on the prior year’s bonus amount, if any, and a lump-sum
payment equal to the sum of: (a) two times annual base salary;
plus (b) the greater of his/her bonus amount, if any, for the prior year or
his/her average bonus, if any, for the three preceding years; and (c) the
sum of contributions that the Bank would have made to him/her during the year
under benefit plans and the annual value of any other executive
perquisites. The Executive also will be entitled to outplacement
counseling services for a reasonable period of time following
termination.
Each
agreement also contains certain nonsolicitation provisions that prohibit the
Executive from soliciting, either for his/her own account or for the benefit of
any entity located within a 40 mile radius of any of the Company’s or its
subsidiaries’ locations, any clients or employees of the Company or its
subsidiaries. These nonsolicitation provisions remain in effect for a
period of one year after the termination of his/her employment.
Employees’
Savings and Profit Sharing Plan
The Bank
maintains an Employees’ Savings and Profit Sharing Plan in which substantially
all employees may participate, including executive officers of the
Company. Generally, eligible employees are permitted to make salary
deferral contributions of up to $15,000 each year (as indexed
annually). Employees age 50 and older may make additional salary
deferral contributions of up to another $5,000 each year (as indexed
annually). The Bank makes “safe harbor” matching contributions on
behalf of all participants who make salary deferral contributions in accordance
with and as limited by the plan. All
employee
contributions and “safe harbor” matching contributions, and earnings on these
contributions, are fully and immediately vested. The Bank, at the
discretion of its board of directors, may make annual profit sharing
contributions to the plan on behalf of all eligible
participants. Profit sharing contributions vest at a rate of 20% per
year. There were no profit sharing contributions during fiscal
2008.
Employee
Stock Ownership Plan
The
Company has an employee stock ownership plan, or ESOP, for its eligible
employees, including its executive officers. Shares of common stock
purchased by the ESOP are held in an unallocated reserve and released for
allocations to the accounts of eligible participants. Shares released
from the unallocated reserve are allocated to each eligible participant’s ESOP
account based on the ratio of a participant’s compensation (as defined in the
ESOP) up to $220,000 (as indexed annually) to the total compensation of all
eligible ESOP participants. Forfeitures are reallocated among
eligible participants in a similar manner. After completing one year
of service with the Company, the ESOP account balances of each participant
become 20% vested and continue to vest at the rate of 20% for each additional
year of service. A participant’s account will become 100% vested
after completing five years of service. Credit is given for years of
service with the Bank prior to the adoption of the ESOP. In the case
of death, retirement, disability or a change in control (each as defined under
the ESOP), however, participants immediately become fully vested in their ESOP
account balances. Partial distributions may be made after a
participant attains age 55 and completes 10 years of active participation in the
ESOP, even if he or she has not separated from service.
Executive
Compensation Processes and Procedures
In
May 2006, the Board of Directors constituted a Compensation and Benefits
Committee (“Compensation Committee”) to oversee executive compensation and
related matters and to administer the Company’s benefit programs for its senior
executives. The Compensation Committee is comprised entirely of
non-management directors and includes Messrs. Kosacz and Balzekas, and
Dr. Kazan. The Compensation Committee is responsible for
reviewing the compensation of the Company’s chief executive officer and making
recommendations regarding his compensation for approval to the full Board, as
well as setting the compensation and benefit policies and programs for the
Company’s other executive officers. The Compensation Committee also
advises and assists management in formulating policies regarding overall
compensation.
Executive
Compensation.
Since the formation of the Company as a holding
company for the Bank and the Company’s stock offering in April 2006, under
the direction of the Compensation Committee, the Company’s compensation policies
have been designed to align the interests of the executives with those of the
Company’s shareholders. Through its policies, the Company seeks to
improve profitability and long-term shareholder value by rewarding its
executives based on criteria set for individual and corporate
performance. The compensation program and policies are also designed
to aid in the attraction, motivation and retention of key
personnel. In the future, the Compensation Committee may retain
third-party consultants and use compensation surveys to help develop and
maintain a competitive compensation program. The Compensation
Committee will select consultants based on their experience in compensation
matters and their experience in the financial services industry.
Director
Compensation
.
Through its
director compensation practices, the Company seeks to enhance its ability to
attract and retain directors that meet the Company’s director qualification
criteria as discussed under “Director Nomination Procedures.” The
Compensation Committee annually reviews and recommends to the Board of Directors
the annual director’s compensation and any additional compensation for service
on committees of the Board, other meeting fees or any other benefit payable by
virtue of the director’s position as a member of the Board of
Directors.
Performance
Criteria.
Under the direction of the Compensation Committee,
the chief executive officer’s performance goals are based on a combination of
objective and subjective performance criteria. Objective criteria
include the growth of net income, earnings, and loans. Subjective
criteria include strategy, leadership, ethics, effectiveness and execution of
strategic initiatives.
The
performance goals of the other senior executives are set by the chief executive
officer. These goals are based upon both corporate and personal
performance. Corporate goals are based upon achievement of the same
earnings and growth targets as for the chief executive
officer. Individual performance goals are based upon a combination of
personal objective and subjective performance criteria.
Base
Salary.
In considering annual base salary increases, the
Compensation Committee, in conjunction with the chief executive officer, reviews
the performance of each of its senior executives individually. In
general, competitive trends of the industry and in the Company’s peer group are
followed. In November of each year, the Compensation Committee
approves annual base salaries for the executive officers for the following
fiscal year.
Cash Incentive
Compensation.
Cash incentive compensation is based on both
corporate goal achievement and individual performance. Bonuses paid
are at, above or below the target percentage depending upon the degree to which
individual and corporate goals are met. In November of each
year, the Compensation Committee approves annual cash incentive compensation
amounts, based on performance reviews and the achievement of projected corporate
and individual performance levels. Also, goals and target cash
incentive compensation percentages are set for the following year in conjunction
with the Board’s approval of the annual business plan.
Equity-Based
Incentive Compensation.
Since December 2006, employees,
including senior executives of the Company, have been eligible to receive awards
under the Company’s Option Plan and Management Recognition Plan. At
its discretion, the Compensation Committee reviews and recommends for full Board
approval any grant to the chief executive officer and other senior executives of
stock-based awards under the plans. The Compensation Committee
considers recommendations from the chief executive officer regarding awards for
the other senior executives. The Compensation Committee bases the
awards on past performance and the expectation that each executive officer’s
future performance will positively impact shareholder value.
DIRECTOR
COMPENSATION
The
following table sets forth information regarding the fees paid to the Company’s
directors and option and stock award costs recognized by the Company in 2008,
other than with respect to directors who are Named Executive
Officers.
|
|
|
Fees
Earned or Paid in Cash
($)
|
|
|
|
|
|
|
|
|
|
|
|
Amy
P. Keane
(2)
|
|
|
15,100
|
|
|
|
4,228
|
|
|
|
2,396
|
|
|
|
21,724
|
|
|
Stephanie
Simonaitis
(3)
|
|
|
15,100
|
|
|
|
10,784
|
|
|
|
7,057
|
|
|
|
32,941
|
|
|
Stanley
Balzekas, III
(4)
|
|
|
15,850
|
|
|
|
10,784
|
|
|
|
7,057
|
|
|
|
33,691
|
|
|
Robert
P. Kazan
(5)
|
|
|
14,850
|
|
|
|
10,784
|
|
|
|
7,057
|
|
|
|
32,691
|
|
|
Leonard
F. Kosacz
(6)
|
|
|
18,975
|
|
|
|
10,784
|
|
|
|
7,057
|
|
|
|
36,816
|
|
|
Julie
H. Oksas
(7)
|
|
|
14,100
|
|
|
|
12,942
|
|
|
|
8,468
|
|
|
|
35,510
|
|
|
(1)
|
The
amounts in the “Stock Awards” and “Option Awards” columns reflect the
dollar amount recognized by the Company for financial statement reporting
purposes for the fiscal year ended December 31, 2008 that is
attributable to stock and option awards in accordance with FAS 123(R), but
without regard to discounts for estimated
forfeitures.
|
|
(2)
|
Fees
received by Ms. Keane include $10,200 in fees for service on the
board of directors and committees of the
Bank.
|
|
(3)
|
Fees
received by Ms. Simonaitis include $10,200 in fees for service on the
board of directors and committees of the
Bank.
|
|
(4)
|
Fees
received by Mr. Balzekas include $10,450 in fees for service on the
board of directors and committees of the
Bank.
|
|
(5)
|
Fees
received by Dr. Kazan include $10,450 in fees for service on the board of
directors and committees of the
Bank.
|
|
(6)
|
Fees
received by Mr. Kosacz include $13,575 in fees for service on the
board of directors and committees of the
Bank.
|
|
(7)
|
Fees
received by Ms. Oksas include $10,200 in fees for service on the
board of directors of the Bank.
|
The
aggregate number of shares of restricted stock and shares subject to stock
options held by each director as of December 31, 2008 was as
follows:
|
|
|
Number
of Shares of Restricted Stock
|
|
|
|
|
|
Amy
P. Keane
|
|
|
2,138
|
|
|
|
5,346
|
|
|
Stephanie
Simonaitis
|
|
|
3,564
|
|
|
|
8,910
|
|
|
Stanley
Balzekas, III
|
|
|
3,564
|
|
|
|
8,910
|
|
|
Robert
P. Kazan
|
|
|
3,564
|
|
|
|
8,910
|
|
|
Leonard
F. Kosacz
|
|
|
3,564
|
|
|
|
8,910
|
|
|
Julie
H. Oksas
|
|
|
4,277
|
|
|
|
10,692
|
|
Each
director who serves on the board of directors of the Company also serves on the
board of directors of the Bank and Mutual MHC. For fiscal year 2008,
the Company paid a monthly retainer of $325 to each director for attendance at
meetings of the board of directors of the Company, and $250 to each non-employee
director for each attended meeting of a committee of the Company’s board of
directors. Similarly, Mutual MHC pays a monthly retainer of $300 to
each director for attendance at its board meetings and $250 to each non-employee
director for each committee meeting attended. The Bank pays a monthly
retainer of $850 to each director for attendance at meetings of its board of
directors and a fee of $250 to each non-employee director for each committee
meeting attended. Generally, only one committee fee is received by a
participating director in the event of joint committee meetings of the Company
and the Bank or Mutual MHC.
In
addition to the cash compensation described above, each director is eligible to
participate in and receive awards under the Option Plan and the Management
Recognition Plan. No stock options, restricted stock or other
equity-based awards were granted to the directors in 2008 other than to
Ms. Keane. Effective March 18, 2008, Ms. Keane was
granted an option to purchase 5,346 shares of common stock of the Company at an
exercise price of $11.35 per share and was awarded 2,138 restricted shares of
common stock in connection with her service on the board of
directors. The stock options and the restricted stock vest over five
years in annual equal installments and are fully vested on the fifth anniversary
of the date of grant.
Effective
January 16, 2007, each non-employee director (other than Ms. Keane)
was granted an option to purchase 8,910 shares of common stock of the Company at
an exercise price of $14.41 per share and was awarded 3,564 restricted shares of
common stock. The stock options and the restricted stock vest over
five years in annual equal installments, and are fully vested on the fifth
anniversary of the date of grant. Ms. Oksas, in light of her
position as director and as Secretary and Executive Vice President of the
Company, was granted an option to purchase 10,692 shares of common stock of the
Company at an exercise price of $14.41 per share and awarded 4,277 restricted
shares of stock, each on the same vesting terms as the awards received by the
other directors.
TRANSACTIONS
WITH RELATED PERSONS
Some of
the executive officers and directors of the Company are, and have been during
the preceding year, customers of the Bank. As such customers, they
have had transactions in the ordinary course of business of the Bank, including
borrowings, all of which transactions are or were on substantially the same
terms (including interest rates and collateral on loans) as those prevailing at
the time for comparable transactions with nonaffiliated persons. In
the opinion of management of the Company, none of the transactions involved more
than the normal risk of collectibility or presented any other unfavorable
features. At December 31, 2008, the Bank had
one
loan for $140,000 outstanding to one director of the Company, which amount
represented less than one percent of the Company’s total loans outstanding as of
that date.
Approximately
76% of the outstanding common stock of the Company is held by Mutual MHC, the
mutual holding company of the Company. All members of the Board of
Directors of Mutual MHC are members of the Board of Directors of the Bank and
the Company.
BENEFICIAL
OWNERSHIP
The
following table sets forth information as to the Common Stock beneficially owned
as of March 31, 2009 by (1) each director and named executive officer,
(2) all directors and executive officers of the Company as a group, and
(3) persons known to the Company to be the beneficial owner of 5% or more
of the Common Stock.
|
Name
and Address of Beneficial Owner
|
|
|
Number of Shares Beneficially Owned
(1)
|
|
|
|
Currently
Exercisable Options
|
|
|
|
Total
Amount of Beneficial Ownership
|
|
|
|
Percentage
Ownership
of Common Stock Outstanding
|
|
|
Directors and Named Executive
Officers:
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen
M. Oksas
|
|
|
49,256
|
(3)
|
|
|
22,096
|
(11)
|
|
|
71,352
|
|
|
|
2.1
|
%
|
|
Stephanie
Simonaitis
|
|
|
8,564
|
(4)
|
|
|
3,564
|
|
|
|
12,128
|
|
|
|
*
|
|
|
Leonard
F. Kosacz
|
|
|
18,564
|
(5)
|
|
|
3,564
|
|
|
|
22,128
|
|
|
|
*
|
|
|
Robert
P. Kazan
|
|
|
18,564
|
(6)
|
|
|
3,564
|
|
|
|
22,128
|
|
|
|
*
|
|
|
Stanley
Balzekas III
|
|
|
20,064
|
(7)
|
|
|
3,564
|
|
|
|
23,628
|
|
|
|
*
|
|
|
Julie
H. Oksas
|
|
|
49,256
|
(8)
|
|
|
22,096
|
(11)
|
|
|
71,352
|
|
|
|
2.1
|
%
|
|
Amy
P. Keane
|
|
|
3,138
|
(9)
|
|
|
1,069
|
|
|
|
4,207
|
|
|
|
*
|
|
|
John
L. Garlanger
|
|
|
23,235
|
(10)
|
|
|
14,256
|
|
|
|
37,491
|
|
|
|
*
|
|
|
Directors
and Executive Officers as a Group (8 persons)
|
|
|
141,385
|
|
|
|
51,677
|
|
|
|
193,062
|
|
|
|
5.7
|
%
|
|
5% or Greater
Shareholders
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual
Federal Bancorp, MHC
2212
W. Cermak Road
Chicago,
Illinois 60608
|
|
|
2,545,813
|
|
|
|
—
|
|
|
|
2,545,813
|
|
|
|
76.4
|
%
|
_____________
|
*
|
Equals
less than 1% of the outstanding Common
Stock.
|
|
(1)
|
Beneficial
ownership is determined in accordance with Rule 13d-3 promulgated by the
Securities and Exchange Commission (“SEC”) under the Securities Exchange
Act of 1934, as amended.
|
|
(2)
|
The
address for each director and executive officer is 2212 W. Cermak Road,
Chicago, IL 60608.
|
|
(3)
|
Includes
9,526 shares held directly by Mr. Oksas’ wife, Julie H.
Oksas. Mr. Oksas may share voting and dispositive power
over these shares with Ms. Oksas. Also includes 5,200
shares held as custodian for his children, 10,692 shares of restricted
stock that remain subject to forfeiture and 3,661 shares allocated to
Mr. Oksas under the Company’s ESOP, all of which are
vested.
|
|
(4)
|
Includes
2,138 shares of restricted stock that remain subject to
forfeiture.
|
|
(5)
|
Includes
2,138 shares of restricted stock that remain subject to
forfeiture. Mr. Kosacz may share voting and dispositive
power with respect to 15,000 shares with his
spouse.
|
|
(6)
|
Includes
2,138 shares of restricted stock that remain subject to
forfeiture. Dr. Kazan may share voting and dispositive power
with respect to 15,000 shares with his
spouse.
|
|
(7)
|
Includes
2,800 shares held indirectly by Mr. Balzekas as custodian for his
children, 9,000 shares indirectly held by Mr. Balzekas through Stan
Balzekas, Ltd., and 2,138 shares of restricted stock that remain subject
to forfeiture.
|
|
(8)
|
Includes
39,730 shares held directly and indirectly by Ms. Oksas’ husband,
Stephen M. Oksas. Ms. Oksas may share voting and
dispositive power over these shares with Mr. Oksas. Also
includes 2,565 shares of restricted stock that remain subject to
forfeiture and 1,126 shares allocated to Ms. Oksas under the
Company’s ESOP, 901 of which are
vested.
|
|
(9)
|
Includes
1,000 shares held by Ms. Keane’s spouse and 1,710 shares of
restricted stock that remain subject to
forfeiture.
|
|
(10)
|
Includes
8,553 shares of restricted stock that remain subject to forfeiture and
2,979 shares allocated to Mr. Garlanger under the Company’s ESOP,
2,383 of which are vested.
|
|
(11)
|
Represents
17,820 shares subject to currently exercisable options held by
Mr. Oksas and 4,276 shares subject to options held by
Ms. Oksas.
|
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a)
of the Exchange Act requires the Company’s directors, certain executive officers
and persons who own more than 10% of the Company’s Common Stock to file reports
of beneficial ownership and changes in such ownership with the
SEC. Officers, directors and 10% shareholders are required by
regulation to furnish the Company with copies of all Section 16(a) forms
they file.
Based
solely on review of the copies of such forms filed with the SEC and available on
the SEC’s website, the Company believes that during fiscal 2008, all
Section 16(a) filing requirements applicable to its executive officers and
directors were complied with except for Form 4s reporting transfers from
the Company’s 401(k) plan stock fund by Stephen Oksas and Julie Oksas, which
were filed two business days late on December 17, 2008.
PROPOSAL
2. — RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
General
The
Company’s independent accountants for the fiscal year ended December 31,
2008, were Crowe Horwath LLP (formerly known as Crowe Chizek and Company
LLC). The Company’s Audit Committee has selected Crowe Horwath to
serve as the Company’s independent public accountants for the fiscal year ending
December 31, 2009, and further directs that the selection of the
independent accountants be submitted for ratification by the shareholders at the
Annual Meeting. Although the selection of the independent accountants is, by
law, the responsibility of the Audit Committee, the Board of Directors has
determined to provide shareholders the opportunity to express their view
concerning such appointment by voting on this non-binding ratification
proposal.
The
Company has been advised by Crowe Horwath that neither the firm nor any of its
associates has any relationship with the Company or its subsidiaries other than
the usual relationship that exists between independent public accountants and
clients. Crowe Horwath will have representatives at the Annual
Meeting who will have an opportunity to make a statement, if they so desire, and
will be available to respond to appropriate questions from
shareholders.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE
APPOINTMENT OF CROWE HORWATH LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2009.
Audit
Fees
The
aggregate amount of the fees billed or to be billed by Crowe Horwath for
professional services rendered for the audit of the Company’s annual financial
statements, including its reviews of the Company’s unaudited interim financial
statements included in reports on Form 10-Q filed by the Company under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), for fiscal
2008 and 2007 was $83,800 and $82,714, respectively.
Audit-Related
Fees
Audit-related
fees include fees for assurance and related services that are reasonably related
to the performance of the audit or review of the Company’s financial statements
and are not reported above. There were no audit-related fees in
fiscal 2008 and 2007.
Tax
Fees
Tax fees
include fees for tax compliance services, including the preparation of tax
returns, tax return preparation advice and tax planning
services. Aggregate fees for tax services were $18,900 in fiscal 2008
and $19,800 in fiscal 2007.
All
Other Fees
There
were no fees for any other services rendered by Crowe Horwath to the Company
during fiscal 2008 or 2007.
The Audit
Committee considered whether the provision of the non-audit services by Crowe
Horwath in fiscal 2008 was compatible with maintaining the independence of Crowe
Horwath and in evaluating whether to appoint Crowe Horwath to perform the audit
of the Company’s financial statements for the fiscal year ending
December 31, 2009.
Report
of the Audit Committee
The Audit
Committee of the Company’s Board of Directors is currently comprised of four
outside directors, each of whom is “independent” within the meaning of the
Nasdaq rules and satisfy the heightened independence standards under the SEC
rules. The Committee operates under a written charter adopted by
it. The Board appoints the Audit Committee and its chairman, with the
Committee to consist of no fewer than three directors. The Board has
designated Amy P. Keane as the “audit committee financial
expert.” The Committee assists the Board, through review and
recommendation, in its oversight responsibility related to the quality and
integrity of the Company’s financial information and reporting functions, the
adequacy and effectiveness of the Company’s system of internal accounting and
financial controls, and the independent audit process.
The
responsibility for the quality and integrity of the Company’s financial
statements and the completeness and accuracy of its internal controls and
financial reporting process rests with the Company’s management. The
Company’s independent public accountants for 2008, Crowe Horwath LLP, are
responsible for performing an audit and expressing an opinion as to whether the
Company’s financial statements are fairly presented, in all material respects,
in conformity with generally accepted accounting principles.
The Audit
Committee reviewed and discussed with management and Crowe Horwath the audited
financial statements of the Company for the year ended December 31,
2008. The Audit Committee also reviewed and discussed with Crowe
Horwath the matters required to be discussed by Statement on Auditing Standards
No. 61, as amended, as currently in effect.
Crowe
Horwath also provided to the Committee the written disclosures and the letter
required by the applicable requirements of the Public Company Accounting
Oversight Board, as currently in effect, regarding Crowe Horwath’s
communications with the Audit Committee concerning its
independence. The disclosures described the relationships and fee
arrangements between the firm and the Company. At a meeting held on
March 24, 2009, the Audit Committee considered whether these relationships
and arrangements were compatible with maintaining Crowe Horwath’s independence
and discussed with representatives of Crowe Horwath that firm’s independence
from the Company.
Based on
the above-mentioned reviews and discussions with management and Crowe Horwath,
the Audit Committee, exercising its business judgment and based on the roles and
responsibilities described in its charter, recommended to the Board of Directors
that the Company’s audited financial statements be included in its Annual Report
on Form 10-K for the year ended December 31, 2008, for filing with the
SEC.
This
report is submitted on behalf of the Audit Committee of the Board of
Directors:
Amy P.
Keane (Chair)
Stanley
Balzekas III
Leonard
F. Kosacz
Stephanie
Simonaitis
The
foregoing Audit Committee 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, (the “Acts”) except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
SHAREHOLDER PROPOSALS
Any
proposal that a shareholder wishes to have included in the proxy solicitation
materials to be used in connection with the 2010 Annual Meeting of Shareholders
of the Company must be received at the Company’s main office, 2212 W. Cermak
Road, Chicago, Illinois 60608, Attention: Secretary, no later than
December 15, 2009. If such proposal is in compliance with all of
the requirements of Rule 14a-8 promulgated under the Exchange Act, it will
be included in the Company’s Proxy Statement and set forth on the form of proxy
issued for the 2009 Annual Meeting, subject to any grounds for exclusion under
Rule 14a-8. It is urged that any such proposals be sent by
certified mail, return receipt requested.
Shareholder
proposals that are not submitted for inclusion in the Company’s proxy materials
pursuant to Rule 14a-8 under the Exchange Act may be brought before an
annual meeting pursuant to Section 15 of Article II of the Company’s
Bylaws. For business to be properly brought before an annual meeting
by a shareholder, the shareholder must have given proper notice thereof in
writing to the Secretary of the Company, which must be received at least five
(5) days before the date of the annual meeting. A shareholder’s
notice must set forth, as to each matter the shareholder proposes to bring
before an annual meeting, a brief description of the business desired to be
brought before the annual meeting. No shareholder proposals have been
received by the Company in connection with the 2009 Annual Meeting.
OTHER
MATTERS
Management
is not aware of any business to come before the Annual Meeting other than those
matters described in the Notice of Annual Meeting of Shareholders and this Proxy
Statement. However, if any other matters should properly come before
the Annual Meeting, it is intended that the proxies solicited hereby will be
voted with respect to those other matters in accordance with the best judgment
of the persons voting the proxies.
By Order
of the Board of Directors,
Julie H.
Oksas
Secretary
April 13,
2009
Chicago,
Illinois