Proxy Statement (Form DEF 14A)
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14AINFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant☒
Filed by a party other than the Registrant☐
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| ☐ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material under §240.14a-12 |
(
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| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of
Regardless of whether you plan to attend the annual meeting, please read the enclosed proxy statement and then vote by the Internet, telephone or mail as promptly as possible. Your prompt response will save us additional expense in soliciting proxies and will ensure that your shares are represented at the meeting.
This year we are using a
Your Board of Directors and management are committed to the success of
| Very truly yours, | |
| /s/ |
|
| Chairman of the Board, President and Chief Executive Officer |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of
| TIME | |||
| PLACE | |||
| WashbuUniversity Campus | |||
| ITEMS OF BUSINESS | (1) | The election of three directors. | |
| (2) | An advisory (non-binding) vote on executive compensation as disclosed in the accompanying proxy statement. | ||
| (3) | The ratification of the appointment of |
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| (4) | The approval of an amendment to the charter of |
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| RECORD DATE | Holders of record of |
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| PROXY VOTING | It is important that your shares be represented and voted at the annual meeting. Regardless of whether you plan to attend the annual meeting, please read the accompanying proxy statement and then vote by the Internet, telephone or mail as promptly as possible. |
| BY ORDER OF THE BOARD OF DIRECTORS | |
| /s/ |
|
| Chairman of the Board, President and Chief Executive Officer | |
(785) 235-1341
PROXY STATEMENT
INTRODUCTION
The
At the meeting, stockholders will be asked to vote on four proposals. The proposals are set forth in the accompanying Notice of Annual Meeting of Stockholders and are described in more detail below. Stockholders also will consider any other matters that may properly come before the meeting, although the Board of Directors knows of no other business to be presented.
On
We have decided to use the "Notice and Access" rule adopted by the
By submitting your proxy, either by executing and returning the proxy card or by voting electronically via the Internet or by telephone, you authorize the Company's Board of Directors to represent you and vote your shares at the meeting in accordance with your instructions. The Board of Directors also may vote your shares to adjouthe meeting from time to time and will be authorized to vote your shares at any adjournments or postponements of the meeting.
This proxy statement and the accompanying materials are first being made available to stockholders on or about
Your proxy vote is important. Whether or not you plan to attend the meeting, please submit your proxy by the Internet, telephone or mail as promptly as possible.
INFORMATION ABOUT THE ANNUAL MEETING
What is the purpose of the annual meeting?
At the annual meeting, stockholders will be asked to vote on the following proposals:
| Proposal 1. | The election of three directors of the Company. | |
| Proposal 2. | An advisory (non-binding) vote on executive compensation as disclosed in this proxy statement. | |
| Proposal 3. | The ratification of the appointment of |
|
| Proposal 4. | The approval of an amendment to the Company's charter to declassify the Company's Board of Directors. |
Stockholders also will transact any other business that may properly come before the meeting or any adjournment or postponement of the meeting. Members of our management team will be present at the meeting to respond to appropriate questions from stockholders.
How does the Board of Directors recommend that I vote?
The Board of Directors recommends that you vote "FOR" the election of the director nominees named in this proxy statement, "FOR" the advisory vote on executive compensation, "FOR" the ratification of the appointment of
Who is entitled to vote?
The record date for the meeting is
What if my shares are held in "street name" by a broker?
If you are the beneficial owner of shares held in "street name" by a broker, your broker, as the record holder of the shares, is required to vote those shares in accordance with your instructions. If you do not give instructions to your broker, your broker nevertheless will be entitled to vote the shares with respect to "discretionary" items, but will not be permitted to vote your shares with respect to any "non-discretionary" items. In the case of non-discretionary items, the shares will be treated as "broker non-votes." Whether an item is discretionary is determined by the exchange rules governing your broker. It is expected that the ratification of the appointment of
What if my shares are held in the Company's employee stock ownership plan?
We maintain an employee stock ownership plan, which beneficially owned approximately 5.2% of the outstanding shares of the Company's common stock as of the record date. Employees of the Company and Capitol Federal Savings participate in the employee stock ownership plan. Each participant may instruct the trustee of the plan how to vote the shares of common stock allocated to his or her account under the employee stock ownership plan. If a participant properly executes and completes the voting instruction card distributed by the trustee, the trustee will vote the participant's shares in accordance with the instructions. In the event the participant fails to give timely voting instructions to the trustee with respect to the voting of the common stock that is allocated to his or her employee stock ownership plan account, and in the case of shares held in the employee stock ownership plan but not allocated to any participant's account, the trustee will vote such shares in the same proportion as directed by the participants who directed the trustee as to the manner of voting their allocated shares in the employee stock ownership plan with respect to each proposal.
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How many shares must be present to hold the meeting?
A quorum must be present at the meeting for any business to be conducted. The presence at the meeting, in person or by proxy, of the holders of at least one-third of the shares of the Company's common stock outstanding on the record date will constitute a quorum. Proxies received but marked as abstentions or broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting.
What if a quorum is not present at the meeting?
If a quorum is not present at the scheduled time of the meeting, the stockholders who are represented may adjouthe meeting until a quorum is present. The time and place of the adjourned meeting will be announced at the time the adjournment is taken, and no other notice will be given. An adjournment will have no effect on the business that may be conducted at the meeting.
How do I vote?
1. You may vote by mail.If you properly complete, sign and retuthe proxy card, it will be voted in accordance with your instructions.
2. You may vote by telephone.If you are a registered stockholder, that is, if you hold your stock in your own name, you may vote by telephone by following the instructions included on the proxy card. If you vote by telephone, you do not have to mail in your proxy card.
3. You may vote on the internet.If you are a registered stockholder, that is, if you hold your stock in your own name, you may vote on the Internet by following the instructions included on the proxy card. If you vote on the Internet, you do not have to mail in your proxy card.
4. You may vote in person at the meeting. If you plan to attend the annual meeting and wish to vote in person, we will give you a ballot at the annual meeting. However, if your shares are held in the name of your broker, bank or other nominee, you will need to obtain a proxy form from the institution that holds your shares indicating that you were the beneficial owner of the Company's common stock on
Can I vote by telephone or on the Internet if I am not a registered stockholder?
If your shares are held in "street name" by a broker or other nominee, you should check the voting form used by that firm to determine whether you will be able to vote by telephone or on the Internet.
Can I change my vote after I submit my proxy?
If you are a registered stockholder, you may revoke your proxy and change your vote at any time before the polls close at the meeting by:
| ● | signing another proxy with a later date; |
| ● | voting by telephone or on the Internet -- your latest telephone or Internet vote will be counted; |
| ● | giving written notice of the revocation of your proxy to the Secretary of the Company prior to the annual meeting; or |
| ● | voting in person at the annual meeting. |
If you have instructed a broker, bank or other nominee to vote your shares, you must follow directions received from your nominee to change those instructions.
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What if I do not specify how my shares are to be voted?
If you are a registered stockholder and you submit an executed proxy but do not indicate any voting instructions, your shares will be voted:
| ● | FOR the election of the director nominees named in this proxy statement; |
| ● | FOR the advisory vote on executive compensation; |
| ● | FOR the ratification of the appointment of |
| ● | FOR the approval of the amendment to the Company's charter to declassify the Company's Board of Directors. |
Will any other business be conducted at the annual meeting?
The Board of Directors knows of no other business that will be conducted at the meeting. If any other proposal properly comes before the stockholders for a vote at the meeting, however, the proxy holders will vote your shares in accordance with their best judgment.
How many votes are required to approve the proposals?
The Company's bylaws provide that in all elections of directors at meetings of stockholders, other than contested elections, each director is elected by a majority of the votes cast with respect to such director. This means that in order to be elected, the number of votes cast FOR a director nominee's election must exceed the number of votes cast AGAINST such director nominee's election. In a contested election, which is one where the number of nominees exceeds the number of directors to be elected, directors are elected by a plurality of the votes cast. The election of directors at the annual meeting will not be a contested election. Therefore, directors will be elected at the annual meeting under the majority voting standard described above.
The advisory vote on executive compensation and the ratification of the appointment of
How will abstentions be treated?
If you abstain from voting for the election of any director nominee or from voting on the advisory vote on executive compensation or the ratification of the appointment of
How will broker non-votes be treated?
Broker non-votes will have no effect on the election of directors, the advisory vote on executive compensation or the ratification of the appointment of
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STOCK OWNERSHIP
The following table presents information regarding the beneficial ownership of the Company's common stock, as of
| ● | each beneficial owner of more than 5% of the outstanding shares of the Company's common stock known to the Company; |
| ● | each director of the Company and nominee for election; |
| ● | each executive officer of the Company named in the "Summary Compensation Table" appearing below; and |
| ● | all of the executive officers, directors and director nominees as a group. |
Except as indicated below, the address of each of the beneficial owners is the same address as that of the Company. An asterisk (*) in the table indicates that the individual beneficially owns less than one percent of the outstanding common stock of the Company. Beneficial ownership is determined in accordance with the
| Beneficial Ownership(1) (10) |
Percent of Common Stock Outstanding |
|||||||
| Greater than Five Percent Beneficial Owners | ||||||||
| 19,861,165 | (2) | 15.0 | % | |||||
| 55 East 52nd Street | ||||||||
| 13,249,386 | (3) | 10.0 | % | |||||
|
American |
8,878,745 | (4) | 6.7 | % | ||||
| 6,875,004 | (5) | 5.2 | % | |||||
| T. |
6,712,036 | (6) | 5.1 | % | ||||
| Directors, Director Nominees and Executive Officers | ||||||||
| 2,820,712 | (7) | 2.1 | % | |||||
| Michel' |
29,700 | * | ||||||
| 285,000 | * | |||||||
| 112,900 | (8) | * | ||||||
| 44,109 | * | |||||||
| 85,995 | * | |||||||
| 156,575 | * | |||||||
| 84,353 | * | |||||||
| 64,945 | * | |||||||
| 98,677 | ||||||||
| 260,690 | (9) | * | ||||||
| 238,741 | * | |||||||
| Directors, director nominees and executive officers of the Company as a group (13 persons) | 4,321,585 | 3.2 | % |
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| (1) | Included in the shares beneficially owned by the directors and executive officers named in the table are options to purchase shares of the Company's common stock which are currently exercisable or which will become exercisable within 60 days after |
| (2) | As reported in a Schedule 13G amendment filed with the |
| (3) | As reported in a Schedule 13G amendment filed with the |
| (4) | As reported in a Schedule 13G amendment filed with the |
| (5) | Of the 6,875,004 shares held by the employee stock ownership plan as of |
| (6) | As reported in a Schedule 13G amendment filed with the |
| (7) | The shares beneficially owned by |
| (8) | Of the shares beneficially owned by |
| (9) | Of the shares beneficially owned by |
| (10) | In the case of directors, director nominees and executive officers, both individually and as a group, includes shares held directly, as well as shares held by and jointly with certain family members, shares held in retirement accounts, shares held by trusts of which the individual or group member is a trustee or substantial beneficiary or shares held in another fiduciary capacity with respect to which shares the individual or group member may be deemed to have sole or shared voting and/or investment powers. The shares beneficially owned by directors, director nominees and executive officers as a group also include an aggregate of 211,026 shares of common stock issuable upon exercise of stock options that are currently exercisable or that will become exercisable within 60 days after |
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PROPOSAL I
ELECTION OF DIRECTORS
The Company's Board of Directors is currently composed of eight members, each of whom is also a director of Capitol Federal Savings. Approximately one-third of the directors are elected annually. Directors of the Company are elected to serve for a three-year term or until their respective successors are elected and qualified. If stockholders approve Proposal IV at the annual meeting, however, the classified structure of the Company's Board of Directors will be phased out so that all directors are elected annually to one-year terms starting with the annual meeting of stockholders in 2028. For more information, see "Proposal IV - Approval of Charter Amendment to Declassify Board of Directors."
The Company's bylaws provide that no person who has reached age 75 may be elected, reelected, appointed or reappointed to the Board of Directors.
The following table sets forth certain information regarding the composition of the Company's Board of Directors, including each director's term of office. The Board of Directors, acting on the recommendation of the Nominating Committee, has recommended and approved the nominations of
| Age(1) | Position(s) Held in the Company |
Director Since(2) |
Term of Office Expires |
|||||
| NOMINEES | ||||||||
| 63 | Chairman of the Board, President and Chief Executive Officer | 1989 | 2028 | |||||
| 70 | Director | 2013 | 2028 | |||||
| 63 | Director | 2004 | 2028 | |||||
| DIRECTORS REMAINING IN OFFICE | ||||||||
| Michel' |
61 | Director | 2017 | 2026 | ||||
| 58 | Director | 2005 | 2026 | |||||
| 75 | Director | 2005 | 2026 | |||||
| 75 | Director | 2009 | 2027 | |||||
| 67 | Director | 2020 | 2027 |
(1) As of
(2) Includes service as a director of Capitol Federal Savings.
Board Diversity
On
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Although we are not required to fully comply with the Diverse Board Representation Rule until 2025, we believe we presently meet the requirements of that rule based on the self-identified characteristics of the current members of our Board of Directors. In the matrix below, we have provided the statistical information required by the Board Diversity Disclosure Rule, which has not changed since we disclosed that information in our last annual meeting proxy statement.
| Board Diversity Matrix (As of |
||||
| Total Number of Directors | 8 | |||
| Female | Male |
Non- Binary |
Did Not Disclose Gender |
|
| Part I: Gender Identity | ||||
| Directors | 1 | 7 | 0 | 0 |
| Part II: Demographic Background | ||||
| 0 | 1 | 0 | 0 | |
| 0 | 0 | 0 | 0 | |
| Asian | 0 | 0 | 0 | 0 |
| Hispanic or Latinx | 0 | 1 | 0 | 0 |
| Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 0 |
| White | 1 | 6 | 0 | 0 |
| Two or More Races or Ethnicities | 0 | 1* | 0 | 0 |
| LGBTQ+ | 0 | |||
| Did Not Disclose Demographic Background | 0 |
* One director self-identified as
Business Experience and Qualifications of Our Directors
The Board believes that the many years of service our directors collectively have at the Company and Capitol Federal Savings is one of their most important qualifications for service on our Board. This service has given them extensive knowledge of the banking business and of the Company. Furthermore, their service on our Board committees, especially in the areas of audit, compensation and stock benefits, is critical to their ability to oversee the management of Capitol Federal Savings by our executive officers. Service on the Board by our Chief Executive Officer is critical to aiding the outside directors' understanding of the issues that are common in the banking business. Each outside director brings special skills, experience and expertise to the Board as a result of their other business activities and associations. The business experience of each of our directors and nominees for at least the past five years and the experience, qualifications, attributes, skills and areas of expertise of each director and nominee that further supports his or her service as a director are set forth below.
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Michel'
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Executive Officers Who Are Not Also Directors
Set forth below is a description of the business experience for at least the past five years of each executive officer who is not also a director of the Company. Each executive officer's age is as of
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Director Independence
The Company's Board of Directors has determined that the following directors, constituting a majority of the Board, are "independent directors," as that term is defined in NASDAQ Listing Rule 5605: Directors Cole, Huey, Johnson, McCoy, Morris, Ricketts and Thompson.
Board Leadership Structure and Role in Risk Oversight
The Company currently combines the positions of Chief Executive Officer and Chairman into one position. The Company does not have a lead outside director. The Company believes that this structure is appropriate because of the primarily singular operating environment of the Company, with the Company's focus on being a provider of retail and commercial financial services. Having the Chief Executive Officer and Chairman involved in the daily operations of this focused line of operations improves the communication between management and the Board and ensures that the Board's interest is represented in the daily operations of the Company, particularly with regard to risk management.
Management accountability and Board independence is managed by maintaining a majority of independent directors and the annual selection by the independent directors of a Lead Independent Director. Effective
Risk is inherent with the operation of every financial institution, and how well an institution manages risk can ultimately determine its success. The Company faces a number of risks, including but not limited to credit risk, interest rate risk, liquidity risk, operational risk, strategic risk, compliance risk, cybersecurity risk and reputation risk. The Company's primary risk areas are single-family lending, including originated and purchased loans, and commercial lending. Cybersecurity risk is a key consideration in the Company's operational risk management capabilities. Given the nature of the Company's operations and business, including the Bank's reliance on relationships with various third-party providers in the delivery of financial services, cybersecurity risk may manifest itself through various business activities and channels, and it is thus considered an enterprise-wide risk that is subject to control and monitoring at various levels of management and oversight by the Board and the Audit Committee. The Board receives updates on the status of the cybersecurity controls, reports of significant cybersecurity incidents and annual education in this area.
Management is responsible for the day-to-day management of the risks the Company faces, while the Board has ultimate responsibility for the oversight of risk management. The Board oversees risk through the annual review of key policies of the Bank and the Company. In addition, monthly, quarterly and annual reports are prepared for, presented to and reviewed with the Board addressing all major risk and compliance areas. For the policies of the Board that require risk assessments to be completed, the results are generally summarized and presented to the Board or a committee of the Board. The executive officers responsible for managing the various risks in the Bank and Company present reports to the Board as required by policy or as needed.
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The Board has integrated the oversight of certain risk areas with the responsibilities of the Audit Committee and the Compensation Committee. The Audit Committee works with the independent Audit Services Director to structure risk-based audits, the reports of which are presented to the Audit Committee, and progress toward the approved audit plan is reviewed and the committee is updated at least quarterly. In attempting to determine the appropriate levels and forms of compensation provided to the Bank's and the Company's officers and employees, the Compensation Committee considers whether compensation or incentive plans encourage excessive risk taking.
Board Meetings and Committees
The members of the Boards of Directors of the Company and Capitol Federal Savings are identical. During the fiscal year ended
The Company's Board of Directors has standing Executive, Compensation, Stock Benefit, Audit and Nominating Committees. The following is a summary of these committees.
The Executive Committee is currently comprised of Directors
The Compensation Committee is currently comprised of Directors
| ● | reviewing from time to time the Company's compensation plans and, if the Committee believes it to be appropriate, recommending that the Board amend these plans or adopt new plans; |
| ● | annually reviewing and approving corporate goals and objectives relevant to the Chief Executive Officer's compensation, evaluating the Chief Executive Officer's performance in light of these goals and objectives and recommending to the Board the Chief Executive Officer's compensation level based on this evaluation; |
| ● | overseeing the evaluation of management, and recommending to the Board the compensation for executive officers and other key members of management. This includes evaluating performance following the end of incentive periods and recommending to the Board specific awards for executive officers; |
| ● | recommending to the Board the appropriate level of compensation for directors; |
| ● | administering any benefit plan which the Board has determined should be administered by the Committee; and |
| ● | reviewing, monitoring and reporting to the Board, at least annually, on management development efforts to ensure a pool of candidates for adequate and orderly management succession. |
The Compensation Committee operates under a written charter adopted by the Board of Directors of the Company, a copy of which is available on the Company's website, at www.capfed.com, by clicking "Investor Relations" and then (under the "Corporate Overview" tab) "Corporate Governance." In fiscal year 2024, this committee met five times at the holding company level; the
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The Stock Benefit Committee operates under a written charter adopted by the Board of Directors of the Company. The Stock Benefit Committee is currently comprised of Directors
The Audit Committee is currently comprised of Directors
The Audit Committee operates under a written charter adopted by the Board of Directors of the Company, a copy of which is available on the Company's website, www.capfed.com, by clicking "Investor Relations" and then (under the "Corporate Overview" tab) "Corporate Governance." The Audit Committee is appointed by the Company's Board of Directors to represent and assist the Board in fulfilling its oversight responsibility relating to the integrity of the Company's consolidated financial statements and the financial reporting processes, the systems of internal accounting and financial controls, the systems of disclosure controls and procedures, compliance with ethical standards adopted by the Company, compliance with legal and regulatory requirements, the annual independent audit of the Company's consolidated financial statements, the independent registered public accounting firm's qualifications and independence, the performance of the Company's internal audit function and the independent (external) auditors and any other areas of potential financial risk to the Company specified by its Board of Directors. The Audit Committee also is responsible for hiring, retaining and terminating the Company's independent registered public accounting firm. The Audit Committee met 11 times in fiscal year 2024.
The Nominating Committee is comprised of Directors
The Nominating Committee operates under a formal written charter adopted by the Board, a copy of which is available on the Company's website, www.capfed.com, by clicking "Investor Relations" and then (under the "Corporate Overview" tab) "Corporate Governance." The Nominating Committee has the following responsibilities under its charter:
| ● | recommend to the Board the appropriate size of the Board and assist in identifying, interviewing and recruiting candidates for the Board; |
| ● | recommend candidates (including incumbents) for election and appointment to the Board of Directors, subject to the provisions set forth in the Company's charter and bylaws relating to the nomination or appointment of directors, based on the following criteria: business experience, education, integrity and reputation, independence, conflicts of interest, diversity, age, number of other directorships and commitments (including charitable organizations), tenure on the Board, attendance at Board and committee meetings, stock ownership, specialized knowledge (such as an understanding of banking, accounting, marketing, finance, regulation and public policy) and a commitment to the Company's communities and shared values, as well as overall experience in the context of the needs of the Board as a whole. The Company's Board of Directors looks for diversity among its members by ensuring directors have backgrounds with diverse business experience, living in our different local geographic markets with sound business experience in many areas of operations of business. The Board looks for experience from individuals with business experience from the top levels of a business, understanding of financial concepts, human resource, marketing and communications, risk management, information technology and customer service common among all businesses; |
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| ● | review nominations submitted by stockholders, which have been addressed to the Company's Secretary, and which comply with the requirements of the Company's charter and bylaws. Nominations from stockholders will be considered and evaluated using the same criteria as all other nominations; |
| ● | annually recommend to the Board committee assignments and committee chairs on all committees of the Board, and recommend committee members to fill vacancies on committees as necessary; and |
| ● | perform any other duties or responsibilities expressly delegated to the Committee by the Board. |
Nominations of persons for election to the Board of Directors may be made only by or at the direction of the Board of Directors or by any stockholder entitled to vote for the election of directors who complies with the notice procedures. Pursuant to the Company's bylaws, nominations for directors by stockholders must be made in writing and received by the Secretary of the Company at the Company's principal executive offices no earlier than 120 days prior to the meeting date and no later than 90 days prior to the meeting date. If, however, less than 100 days' notice or public announcement of the date of the meeting is given or made to stockholders, nominations must be received by the Company not later than the close of business on the tenth day following the earlier of the day on which notice of the date of the meeting was mailed or otherwise transmitted or the day on which public announcement of the date of the meeting was first made. In addition to meeting the applicable deadline, nominations must be accompanied by certain information specified in the Company's bylaws.
Board Refreshment and Assessment
The Board of Directors and each of its committees performs an annual self-assessment of their performance. The Nominating Committee also completes a skills and qualifications assessment for each director, the results of which are reflected in the matrix below. This matrix is not a complete list of each director's strengths and contributions to the Board; further information can be found under each director's biographical information.
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As indicated in the above matrix and their biographical information, the Company's directors have significant experience in finance, accounting, auditing, business operations, public relations, lending, banking, risk management and information technology. In addition to the skills and qualifications assessment, the Nominating Committee considers each director's and director nominee's professional and personal ethics and diversity of background, experience, education and geography. The Nominating Committee also considers the diversity disclosure criteria established by NASDAQ. As noted under "Board Diversity," the Company believes it complies with NASDAQ's Diverse Board Representation Rule based on the self-identified characteristics of the current members of the Company's Board of Directors. Each of the Company's primary geographical markets, including
The Nominating Committee is mindful of the foregoing as the Company refreshes the Board through the replacement of retiring directors. The Company's bylaws provide that no person who has reached 75 years of age may be elected, reelected, appointed or reappointed to the Company's Board of Directors. Two of the Company's directors recently attained age 75 (
Stockholders may communicate with the Board of Directors by writing to:
Board Member Attendance at Annual Stockholder Meetings
Although the Company does not have a formal policy regarding director attendance at annual stockholder meetings, directors are expected to attend these meetings absent extenuating circumstances. All of the Company's directors attended last year's annual meeting of stockholders.
Employee, Officer and Director Hedging
The Company has not adopted any practices or policies regarding the ability of its employees, officers or directors, or any of their designees, to purchase financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds), or otherwise engage in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company's equity securities.
Insider Trading
The Company has adopted an insider trading policy generally applicable to all transactions in the Company's securities by directors, officers and employees of the Company, and the Company itself, that is reasonably designed to promote compliance with insider trading laws, rules and regulations and applicable NASDAQ listing standards.
Director Compensation
The members of the Boards of Directors of Capitol Federal Savings and the Company are identical. Each non-employee director receives an annual retainer, paid monthly, one-half of which is for his or her service on Capitol Federal Savings' Board of Directors and one-half of which is for his or her service on the Company's Board of Directors. During fiscal year 2024, the combined annual retainer was
The following table sets forth certain information regarding the compensation earned by or awarded to each director, other than
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| Fees Earned or Paid in Cash ($)(1) |
Stock Awards ($) |
Option Awards ($)(2) |
All Other Compensation ($)(3) |
Total ($) |
||||||||||||||||
| Michel' |
$ | 72,000 | --- | --- | $ | --- | $ | 72,000 | ||||||||||||
| Morris J. Huey II | 72,000 | --- | --- | --- | 72,000 | |||||||||||||||
| 72,000 | --- | --- | --- | 72,000 | ||||||||||||||||
| 72,000 | --- | --- | --- | 72,000 | ||||||||||||||||
| 72,000 | --- | --- | --- | 72,000 | ||||||||||||||||
| 72,000 | --- | --- | 344 | 72,344 | ||||||||||||||||
| 77,000 | --- | --- | --- | 77,000 |
| (1) | Includes annual retainers for service on the Boards of Directors of the Company and Capitol Federal Savings. For |
| (2) | As of |
| (3) | For |
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This section discusses the Company's compensation program, including how it relates to the executive officers named in the compensation tables that follow this section (who we sometimes refer to below and elsewhere in this proxy statement as the "named executive officers," or "NEOs"), consisting of:
| ● |
| ● |
| ● |
| ● |
| ● |
Set forth below is an analysis of the objectives of our compensation program, the material compensation policy decisions we have made under this program and the material factors we considered in making those decisions.
Overview of Compensation Program
The Compensation Committee of our Board of Directors (the "Committee"), which consists solely of independent directors, has responsibility for developing, implementing and monitoring adherence to the Company's compensation philosophies and program. The Stock Benefit Committee, also comprised entirely of independent directors, administers and grants stock-based compensation awards from time to time. Grants currently are made under our 2012 Equity Incentive Plan, which was approved by our stockholders in
| ● | preserve the financial strength, safety and soundness of the Company and the Bank; |
| ● | reward and retain key personnel by compensating them in the range of salaries at comparable financial institutions and making them eligible for annual cash bonuses based primarily on the Company's performance; |
| ● | focus management on maximizing earnings while managing risk by maintaining high asset quality, managing interest rate risk within Board guidelines, emphasizing cost control, establishing adequate compliance programs and maintaining appropriate levels of capital; and |
| ● | provide an opportunity to eaadditional compensation if the Company's stockholders experience returns through stock price appreciation and/or dividends. |
The Company's primary forms of current compensation for executive officers include base salary, short-term incentive compensation and long-term incentive compensation. The Company has provided long-term compensation in the form of stock option and restricted stock awards and an employee stock ownership plan ("ESOP"). The Company also has a tax-qualified defined contribution retirement plan, health and life insurance benefits and paid time off benefits. The Company offers insurance benefits, including flexible spending accounts for unreimbursed medical expenses and child care expenses, on a pre-tax basis, in which executive officers may participate with the same eligibility requirements as all other employees.
| 17 |
As a general matter, we have not offered employment agreements to any of our officers or employees. We currently believe our named executive officers receive sufficient incentives from the existing compensation program that employment agreements are not necessary to induce them to remain with the Company. The Company has entered into change in control severance agreements with each of the NEOs. Each agreement entitles the executive to a severance payment if the executive's employment is terminated under certain circumstances within six months before or within 24 months after a change in control of the Company. The Company believes these agreements will help incentivize the executives to continue their employment with the Company amid the uncertainty that may arise in the event of a change in control. See "Change in Control Severance Agreements" and "Payments upon Termination or Change in Control."
The Committee meets as needed during the year to consider all aspects of the Company's compensation program, including a review at least once per year of a tally sheet for each NEO quantifying every component of the NEO's compensation package, in order to satisfy itself that the total compensation paid to the NEO is reasonable and appropriate. As discussed in greater detail below under "Role of Management," the Committee meets with management to receive their analyses and recommendations, as requested by the Committee, considers the information provided to the Committee and makes decisions accordingly.
Base Salary
The Committee sets the base salaries for all executive officers of the Company. The Committee sets policy directing fair and reasonable compensation levels throughout the Company by taking into account the influences of market conditions on each operational area of the Company and the relative compensation at different management levels within each operational area. The Committee recognizes that base salary is the primary compensation package component that is fixed in amount before the fiscal year begins and is paid during the year without regard to the Company's performance. The base salary for each NEO reflects the Committee's consideration of a combination of factors, including: competitive market salary, the comparability of responsibilities of similarly situated NEOs at other institutions, the officer's experience and tenure, overall operational and managerial effectiveness and breadth of responsibility for each officer.
Each NEO's base salary and performance is reviewed annually. Base salary is not targeted to be a percentage of total compensation, although the Committee does consider the total amount of each NEO's compensation when setting NEO base salaries.
The Committee has not used third party consultants or other service providers to present compensation plan suggestions or market compensation data for executive officers. Instead, the Committee has directed the President and CEO to provide comparable market salary data for executive officers based upon a selected population of comparable financial institutions.
The most recent comparison information was compiled from information reported in the then-most recent proxy statements of the financial institutions listed below. The financial institutions selected for comparison purposes were based upon the President and CEO's knowledge of the selected financial institutions and the comparability of their operations, corporate structure and/or size relative to the Company. Financial institutions selected for comparison purposes may be added or removed from the list each year as a result of acquisitions, closings, operating in a distressed mode or because another financial institution compares more appropriately to the operations of the Company than a previously listed financial institution.
The financial institutions in the most recent comparison included the following publicly held financial institutions with total assets, as of each institution's most recent fiscal year-end, of between
| 18 |
The comparison shows how our executive officer salaries and annual cash compensation compare on a national and local scale with other financial institutions, reflecting institutions among which we would most likely compete for executive talent, with a slightly greater weighting to regional institutions. The Committee received information showing the base compensation of the CEO, CFO and the next three NEOs in each company's proxy statement. The levels of compensation paid to our CEO and CFO are compared directly to the equivalent titles in the listed companies. The compensation of the highest paid NEO within each of the companies listed above, not including the CEO or CFO, is compared to compensation paid to our most highly compensated NEO, not including the CEO or CFO. The compensation of the second highest paid NEO within each of the companies listed above, not including the CEO or CFO, is compared to compensation paid to our second most highly compensated NEO, not including the CEO or CFO. The compensation of the third highest paid NEO within each of the companies listed above, not including the CEO or CFO, is compared to compensation paid to our third most highly compensated NEO, not including the CEO or CFO.
The Committee reviews the comparison data provided and does not attempt to set the base salaries of our NEOs at specific target percentiles of the comparison data provided. The Committee uses this data in conjunction with setting the base salary of each NEO, whose salary is discussed below, in light of the range of base salaries paid among the comparable financial institutions. Because the positions other than the CEO and CFO may not be directly comparable between financial institutions, the Committee exercises its judgment in determining where in the salary ranges of the comparison financial institutions the compensation for our other NEOs should fall. The salaries for the CEO and CFO, in general, fall within the 25th to 50th percentile of the range of comparable salaries based upon a review of the comparison companies. In general, the range of salaries for the NEOs other than the CEO and CFO is narrow because the comparison in range of salaries among the other NEO executive officer positions in the various market comparisons reviewed is not considered sufficiently different by the Committee to warrant a wider spread in base salary. The salary of the CEO is established to reflect his hands-on approach to leadership and the involvement he provides the Company on a daily basis, the leadership roles he fills in local, regional and national industry-related activities and his direct involvement in addressing stockholder value and stockholder relations. The salaries of the CFO and each of the other NEOs are established to also reflect their respective roles in the management structure of the Company.
The Committee does not put as much emphasis on the market comparison information when considering bonus or other incentive compensation as it does on base salary for the Company's executive officers. This is primarily because of the divergence in practice regarding the structure of bonus plans and the types of incentives offered executive officers at other financial institutions.
Compensation and Incentive Plan Risk Assessment
At the direction of the Compensation Committee, our Audit Services Director with the assistance of our Human Resources Director, reviewed all compensation and incentive programs within the Company to ensure the programs were working as designed and intended. The results of this review indicated that all plans were working as designed and intended and did not allow for compensation benefits beyond those intended by the programs.
Bonus Incentive Plans
All officers of the Company are eligible to receive cash bonuses on an annual basis under the Short Term Performance Plan ("STPP") based upon the Company's financial performance and the individual officer's performance during the fiscal year. The cash awards are generally made in January of the year following the fiscal year end of
A participant's STPP award may not exceed the percentage of salary specified in the plan for his or her position level. For the Chairman, President and CEO, the maximum percentage is 60%, and for each of the other NEOs, the maximum percentage is 40%. The STPP is intended to:
| ● | promote stability of operations and the achievement of earnings targets and business goals; |
| ● | link executive compensation to specific corporate objectives and individual results; and |
| ● | provide a competitive reward structure for officers. |
| 19 |
Generally, in November of each fiscal year, after considering management's company performance recommendations (see "Role of Management" below), the Committee sets target, maximum and minimum performance levels for that year. The targeted performance level is the most likely performance level forecasted for the Company in the ensuing fiscal year given the operational considerations described below. As discussed below, the Committee considers three targets in order to focus management on the performance of the Company as a whole: efficiency ratio; basic earnings per share and retuon average equity. By focusing on the overall performance of the Company, over time the Committee believes the value to the stockholder from management's performance will be maximized. In seeking to maximize the performance of the Company, management focuses on all critical risks and objectives of the Company. By not taking excessive credit risk and keeping interest rate risk at or below levels established by the Board, it is believed that the Company's earnings likely will remain strong over time. By managing the amount of capital of the Bank, the Company benefits by having a proper amount of leverage which improves the opportunities to enhance earnings. Focusing on cost control helps to mitigate risks that operating expenses will rise beyond the level at which they are supportable by the Bank's operating income.
As indicated above, the areas of Company performance targeted consist of the efficiency ratio, basic earnings per share and retuon average equity. The efficiency ratio is computed by dividing total non-interest expense by the sum of net interest and dividend income and total other income. Basic earnings per share is calculated by dividing net income for the fiscal year by the average basic shares outstanding for the fiscal year. Retuon average equity is computed by dividing net income for the fiscal year by the average month end balance of total stockholders' equity for the thirteen monthly time periods from the prior fiscal year end through the current fiscal year end, ending
In general, the Company performance targets for the STPP are based upon the ensuing year's forecast of business activity, interest rates, pricing assumptions, operating assumptions and net income determined using market- based assumptions as of
There are two "scales" for each performance target: (i) a "target" scale, which includes increments between the target level of performance and a maximum level of performance, and decrements between the target level of performance and a minimum level of performance; and (ii) an "award" scale, which proceeds at one percent increments beginning at 20% in correspondence to the minimum performance level on the target scale, through 60% in correspondence to the target level of performance on the target scale, and up to 100% in correspondence to the maximum level of performance on the target scale. Plan participants will eaa percentage on the award scale for a particular performance target of between 20% (if performance is at the minimum level of performance on the target scale) and 100% (if performance is at or above the maximum level of performance on the target scale). The percentage earned on the award scale for a particular performance target will be zero if performance is below the minimum level of performance on the target scale. The average of the percentages earned on the award scales for the three performance targets represents the total percentage of the maximum possible STPP award each participant has earned for the Company performance component of the STPP award. In order to pay the full amount of an award under the STPP based on performance above the target level, the Committee must determine that the Company had actual net income for the fiscal year in excess of targeted net income for the fiscal year equal to at least five times the aggregate dollar amount of the portion of the total STPP awards for that year that would be made above the target level.
Below is a table showing the targets established and the performance achieved for fiscal years 2024, 2023 and 2022. The "percent of total" columns represent, for each performance target (efficiency ratio, basic earnings per share and retuon average equity), the percentage earned on the award scale for that target, based on the level of achievement on the target scale. The "total" column represents the average of the award scale percentages earned for the three performance targets, which, as noted above, represents the total percentage of the maximum possible STPP award that has been earned for the Company performance component of the STPP award. For fiscal year 2024, the level of achievement was below the minimum for basic earnings per share and retuon average equity and between the target and the minimum for the efficiency ratio. For fiscal year 2023, for which the Company incurred a net loss, the award scale percentage earned for each performance target was determined to be zero. For fiscal year 2022, the levels of achievement for basic earnings per share and retuon average equity were in excess of the maximum, while the level of achievement for the efficiency ratio was between the target and the maximum.
| 20 |
| Target | Performance | Percent of total | ||||||||||||||||||||||||||||||||||||||
| Fiscal Year |
Efficiency Ratio |
Basic EPS |
ROAE | Efficiency Ratio |
Basic EPS |
ROAE | Efficiency Ratio |
Basic EPS |
ROAE | Total | ||||||||||||||||||||||||||||||
| 2024 | 65.49 | % | $ | 0.36 | 4.62 | % | 66.91 | % | $ | 0.29 | 3.69 | % | 55 | % | 0 | % | 0 | % | 18 | % | ||||||||||||||||||||
| 2023 | 59.14 | % | $ | 0.48 | 6.03 | % | -626.63 | % | $ | (0.76 | ) | -9.48 | % | 0 | % | 0 | % | 0 | % | 0 | % | |||||||||||||||||||
| 2022 | 54.59 | % | $ | 0.56 | 6.16 | % | 52.39 | % | $ | 0.62 | 7.16 | % | 79 | % | 100 | % | 100 | % | 93 | % |
Each NEO receives 90% of their STPP award based upon the achievement of the three pre-established financial performance targets of the Company discussed above. This is intended to focus each named executive officer on maximizing the overall performance of the Company and not on achievement of goals in a particular operational area. Because of the predominance of the focus of the NEO bonuses on the overall performance of the Company, specific individual performance goals are not usually set for named executive officers. Instead, each NEO's individual contribution to the Company's performance is a subjective determination by the Committee following discussion with the President and CEO, giving consideration to each NEO's response to the Company's changing operational needs during the year. If, as was the case for fiscal year 2023, the Company incurs a net loss for the fiscal year, the NEOs will not receive an STPP award.
The STPP includes a clawback provision that is applicable to all participants in the plan. Under this provision, any payment made under the STPP that was based upon materially inaccurate financial statements requiring a restatement or was a result of fraud in determining an individual or company performance metric must be paid back if discovered within 24 months of the filing of the inaccurate financial statement(s) or the discovery of the fraud. The STPP repayment, in whole or in part, is at the discretion of the Committee. The Company has also adopted a separate compensation recovery policy that incorporates the requirements of Section 10D of the securities Exchange Act of 1934, as amended, and NASDAQ Listing Rule 5608.
The Committee has the authority under the STPP to reduce bonus awards to executive officers that would otherwise be earned, for any reason the Committee believes appropriate. This may be done for all executive officers or for individual executive officers. The Committee did not exercise any such negative discretion with respect to STPP awards for fiscal years 2024 or 2022. As noted above, no STPP awards were made to the NEOs for fiscal year 2023.
The Company also maintains a deferred incentive bonus plan ("DIBP") for executive officers in conjunction with the STPP. The DIBP is administered as an unfunded plan of deferred compensation with all benefits expensed and recorded as liabilities as they are accrued. The purpose of the two plans working together is to provide incentives and awards to executive officers to enhance the Company's performance and stockholder value over a four-year time horizon. Each named executive officer has the opportunity to defer a minimum of
For participants in the STPP, it is generally required that the recipient be employed by the Bank through the last day of the fiscal year to receive an award. For participants in the DIBP, the recipient must remain continuously employed by the Bank during the mandatory deferral period to receive the Company match, dividend equivalents on the phantom shares over the deferral period and the increase in the market value of the Company's stock over the deferral period, if any, on the phantom shares. In the event that an NEO leaves the company during the deferral period for reasons other than a change in control, the NEO would be entitled to receive the deferred funds without the Company match or any earnings (including dividend equivalents) on the deferred funds or on the Company match.
| 21 |
The incentive bonus amounts awarded to the NEOs for fiscal years 2024 and 2022 under the STPP are set forth in the "Non-Equity Incentive Plan Compensation" column of the Summary Compensation Table. As noted above, no incentive bonus amounts were awarded to the NEOs for fiscal year 2023 under the STPP.
Stock Incentive Plans
The Company's Stock Incentive Plans are designed to provide incentives for long-term positive performance of the executive officers by aligning their interests with those of our stockholders by providing the executive officer the opportunity to participate in the appreciation, if any, in the Company's stock price which may occur after the date options are granted. Awards of restricted stock are intended to further align executive officers interests with stockholders' interest. Awards of stock options and restricted stock currently are made under our 2012 Equity Incentive Plan, which was approved by stockholders in
As required by the 2012 Equity Incentive Plan, stock options have an exercise price that is equal to the closing price as of the date of the grant. The Stock Benefit Committee does not take material non-public information into account when determining the timing and terms of options and stock awards, and we have not timed the disclosure of material non-public information for the purpose of affecting the value of executive compensation.
Role of Management
The Committee makes all decisions regarding the compensation of our executive officers. The Committee has asked the President and CEO to provide, in addition to the comparable market salary data based upon a selected population of comparable financial institutions at both the regional and national levels, reviews of the performance of each NEO except for himself and recommendations for the salaries of each NEO except for himself and any recommendations for stock awards. Management recommends the target, minimum and maximum performance goals for the Company and the related bonus targets under the STPP to be approved by the Committee. In addition, management may from time to time recommend changes to the compensation program in response to changes in the marketplace in which the Company competes for executive talent and in light of the absolute performance level of the Company. The compensation of the CEO is determined by the Committee without prior recommendations from him. The Committee makes all decisions in light of the information provided and the Committee members' experience and expectations for all NEOs.
Stockholder "Say-on-Pay" Vote
Since our annual meeting of stockholders held in
Perquisites and Other Personal Benefits
For fiscal year 2024, no NEO received any perquisites or other personal benefits in excess of
Retirement and Other Benefits Generally
The Company provides an ESOP and a defined contribution plan to all employees who qualify for participation under each plan. The ESOP provides for the allocation of shares of the Company's common stock annually among all participants based upon each employee's qualifying compensation as a percentage of the total of all qualifying compensation for all participants. Each NEO participates in the ESOP and the defined contribution plan.
| 22 |
The defined contribution plan is a 401(k) plan in which the eligibility and participation requirements, allocation calculations and contribution limits apply to all employees, including NEOs. All employees have the opportunity to direct their investment in the plan. For fiscal year 2024, the Company matched 25% of the employee's contribution, up to the first 3% of eligible compensation contributed by the employee. The Company does not offer any defined benefit plan or post-retirement benefit plan that requires expense to the Company following the termination of employment of any NEO.
The Company provides a life insurance benefit for every employee who works on average more than 20 hours per week. The benefit is 1.0 times the employee's base salary, subject to a cap on the total death benefit of
The Company has purchased a life insurance annuity for the CEO, which includes a
In addition to the life insurance benefits discussed above, the Bank has purchased Bank Owned Life Insurance for eligible employees. Each insured employee was provided the opportunity to designate a beneficiary to receive a death benefit equal to the insured employee's base salary as of the Board approval date of the purchase if the insured dies while employed by the Bank. All NEOs other than
Change in Control Benefits
The Company has entered into agreements with each of the NEOs to provide a severance payment if their employment is terminated under specified circumstances within six months before or 24 months after a change in control of the Company. See "Change in Control Severance Agreements" and "Payments upon Termination or Change in Control."
The terms of our stock options and restricted stock awards provide for accelerated vesting only in the case of a change in control. See "Payments upon Termination or Change in Control."
Stock Ownership Guidelines
In
| ● | The CEO shall own five times his salary, directors shall own four times their annual fee, executive vice presidents and senior vice presidents shall own three times their salaries and first vice presidents shall own one times their salary, in each case in shares of the Company's common stock. Each director and officer shall have five years to attain the ownership guidelines. |
| ● | Shares owned directly or by immediate family members of the director or officer shall be included in determining the amount of common stock owned for purposes of the guidelines. |
| 23 |
| ● | Shares acquired in the ESOP through the reinvestment of dividends shall also be included in determining the amount of common stock owned for purposes of the guidelines. |
| ● | If, at the end of five years, a director or an officer does not comply with the ownership guidelines, he or she shall not receive future awards under the Company's stock benefit plans until he or she complies with the guidelines. |
Other Tax Considerations
As in effect during fiscal year 2018 and prior taxable years, Section 162(m) of the Internal Revenue Code generally eliminated the deductibility of compensation over
| 24 |
Summary Compensation Table
The following table sets forth information concerning the compensation paid to or earned by the named executive officers for fiscal years 2024, 2023 and 2022:
Principal Position |
Year | Salary ($)(1) |
Bonus ($)(2) |
Non-Equity Incentive Plan Compensation ($)(3) |
All Other Compensation ($)(4) |
Total ($) |
||||||||||||||||||
| 2024 | $ | 765,539 | $ | --- | $ | 136,233 | $ | 112,349 | $ | 1,014,121 | ||||||||||||||
| President and Chief Executive | 2023 | 742,939 | --- | --- | 119,092 | 862,031 | ||||||||||||||||||
| Officer | 2022 | 722,654 | --- | 435,451 | 125,901 | 1,284,006 | ||||||||||||||||||
| 2024 | $ | 416,231 | $ | --- | $ | 48,940 | $ | 22,500 | $ | 487,671 | ||||||||||||||
| Vice President, Chief | 2023 | 403,469 | --- | --- | 23,396 | 426,865 | ||||||||||||||||||
| Financial Officer and Treasurer | 2022 | 392,231 | --- | 179,329 | 26,980 | 598,540 | ||||||||||||||||||
| 2024 | $ | 326,463 | $ | --- | $ | 39,193 | $ | 18,961 | $ | 384,617 | ||||||||||||||
| Vice President and Chief | 2023 | 296,539 | --- | --- | 18,773 | 315,312 | ||||||||||||||||||
| Lending Officer | 2022 | 285,962 | --- | 131,878 | 22,468 | 440,308 | ||||||||||||||||||
| 2024 | $ | 304,001 | $ | --- | $ | 37,522 | $ | 20,656 | $ | 362,179 | ||||||||||||||
| Vice President, General Counsel | 2023 | 282,770 | $ | --- | --- | 18,955 | 301,725 | |||||||||||||||||
| and Corporate Secretary | 2022 | 272,692 | --- | 125,820 | 22,603 | 421,115 | ||||||||||||||||||
| 2024 | $ | 283,695 | $ | --- | $ | 35,209 | $ | 17,985 | $ | 336,889 | ||||||||||||||
| Vice President and Chief | ||||||||||||||||||||||||
| Corporate Services Officer(5) |
| (1) | For fiscal years 2024, 2023 and 2022, includes director fees of |
| (2) | Bonus amounts are reported under the "Non-Equity Incentive Plan Compensation" column. |
| (3) | Represents incentive bonus amounts awarded for performance in fiscal years 2024 and 2022. No bonuses were awarded for fiscal year 2023. The bonus amounts for fiscal years 2024 and 2022 include Capitol Federal Savings' matching contributions under the Company's DIBP to those named executive officers who elected to defer receipt of a portion of their bonus for those fiscal years, as follows: |
| 2024 | 2022 | |||||||
| $ | 27,247 | $ | 50,000 | |||||
| $ | 9,788 | $ | 35,866 | |||||
| $ | 7,839 | $ | 26,376 | |||||
| $ | 7,504 | $ | 25,164 | |||||
| $ | 7,042 |
The amount deferred, if any, plus the matching contribution on the deferred amount is deemed to be invested in the Company's common stock through the purchase of phantom stock units. There will not be any reduction to the payout amount of the phantom stock units if the stock price has depreciated from the beginning of the deemed investment period of the phantom stock units to the end of such period. Receipt of the matching contribution is contingent on the executive officer remaining employed with the Company for a period of three years following the award of the phantom stock units. For additional information regarding this plan, see "Non-Qualified Deferred Compensation" below.
| (4) | Amounts include matching contributions under Capitol Federal Savings' 401(k) plan, values (based on the closing price of the Company's common stock on the last trading day of the fiscal year) of allocations under the ESOP, term life insurance premiums and earnings (in the form of Company stock price appreciation (depreciation) and dividend equivalents during the fiscal year) accrued by the Company on outstanding phantom stock units awarded under the DIBP. For fiscal year 2024, these include |
| (5) | No compensation information is provided for |
| 25 |
Grants of Plan-Based Awards
| Estimated Possible Payouts Under Non- Equity Incentive Plan Awards(1) |
All Other Stock Awards: Number of Shares |
Grant Date Fair Value of Stock |
||||||||||||||||||||
| Grant Date |
Threshold ($) |
Target ($) |
Maximum ($) |
of Stock or Units (#) |
and Option Awards |
|||||||||||||||||
| n/a | $ | 88,248 | $ | 264,744 | $ | 441,240 | --- | --- | ||||||||||||||
| n/a | $ | 33,040 | $ | 99,120 | $ | 165,200 | --- | --- | ||||||||||||||
| n/a | $ | 24,400 | $ | 73,200 | $ | 122,000 | --- | --- | ||||||||||||||
| n/a | $ | 23,360 | $ | 70,080 | $ | 116,800 | --- | --- | ||||||||||||||
| n/a | $ | 21,920 | $ | 65,760 | $ | 109,600 | --- | --- |
| (1) | For each named executive officer, represents the threshold (i.e., lowest), target and maximum amounts that were potentially payable for fiscal year 2024 under the Company's STPP. The actual amounts earned under these awards for fiscal year 2024 are reflected in the Summary Compensation Table under the "Non-Equity Incentive Plan Compensation" column. For additional information regarding the STPP, see "Compensation Discussion and Analysis-Bonus Incentive Plans." |
Change in Control Severance Agreements
As noted under "Compensation Discussion and Analysis," the Company has entered into change in control severance agreements with each of the named executive officers. Each agreement entitles the executive to a severance payment if, within six months before or 24 months after a change in control of the Company, the executive's employment is terminated by the Company without cause, is terminated as a result of the executive's death, disability or retirement or is terminated by the executive for "good reason." The term "good reason" includes a material reassignment of the executive's duties or a significant reduction in the executive's authority or responsibility, in each case without his express written consent, a reduction in the executive's then-current base salary or a failure to provide the executive with substantially the same fringe benefits that were provided to the executive immediately prior to entering into the agreement.
The amount of the severance payment under each change in control severance agreement is 2.99 times the executive's average annual W-2 compensation during the five full calendar years prior to the date of termination of employment. The agreements provide that severance and other payments that are subject to a change in control will be reduced as much as necessary to ensure that no amounts payable to the executive will be considered excess parachute payments under Section 280G of the Internal Revenue Code.
For information regarding the amounts that would have been payable to the named executive officers under their change in control severance agreements if their employment had been terminated as of
| 26 |
Outstanding Equity Awards at
The following table provides information regarding the unexercised stock options and stock awards held by each of the named executive officers as of
| Option Awards | Stock Awards | |||||||||||||||||||||||||||
| Number of Securities Underlying Unexercised Options (#) Exercisable |
Option Exercise Price ($) |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested (#) |
Market Value of Shares or Units of Stock That Have Not Vested ($) |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) |
||||||||||||||||||||||
| 100,116 (1) | $ | 11.91 | --- | --- | 13,239 | (3) | 18,733 | (3) | ||||||||||||||||||||
| --- | --- | --- | --- | --- | 17,341 | (4) | 10,318 | (4) | ||||||||||||||||||||
| Total | 100,116 | 30,580 | $ | 29,051 | ||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 7,516 | (3) | 10,635 | (3) | ||||||||||||||||||||
| --- | --- | --- | --- | --- | 12,439 | (4) | 7,401 | (4) | ||||||||||||||||||||
| Total | 19,955 | $ | 18,036 | |||||||||||||||||||||||||
| 55,910 (2) | $ | 14.43 | --- | --- | 5,435 | (3) | 7,691 | (3) | ||||||||||||||||||||
| --- | --- | --- | --- | --- | 9,147 | (4) | 5,443 | (4) | ||||||||||||||||||||
| Total | 55,910 | 14,582 | $ | 13,134 | ||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 5,211 | (3) | 7,374 | (3) | ||||||||||||||||||||
| --- | --- | --- | --- | --- | 8,727 | (4) | 5,193 | (4) | ||||||||||||||||||||
| Total | 13,938 | $ | 12,567 | |||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 4,810 | (3) | 6,806 | (3) | ||||||||||||||||||||
| --- | --- | --- | --- | --- | 8,080 | (4) | 4,808 | (4) | ||||||||||||||||||||
| Total | 12,890 | $ | 11,614 |
| (1) | Represents unexercised option having the following vesting schedule: 25,029 shares on each of |
| (2) | Represents unexercised option having the following vesting schedule: approximately 11,182 shares on each of |
| (3) | Represents phantom stock award under Company's DIBP as a result of deferring the named executive officer's annual bonus for fiscal year 2021 under the Company's STPP. The number of phantom stock units was determined by the portion of the bonus deferred plus the Company's 50% match thereon, divided by the Company's stock price on |
| (4) | Represents phantom stock award under Company's DIBP as a result of deferring the named executive officer's annual bonus for fiscal year 2022 under the Company's STPP. The number of phantom stock units was determined by the portion of the bonus deferred plus the Company's 50% match thereon, divided by the Company's stock price on |
| 27 |
Option Exercises and Stock Vested
During the fiscal year ended
Non-Qualified Deferred Compensation
The following table sets forth information about compensation payable to each named executive officer under the Company's DIBP.
| Executive | Registrant | Aggregate | Aggregate | Aggregate | ||||||||||||||||
| Contributions | Contributions | Earnings | Withdrawals/ | Balance | ||||||||||||||||
| in Last FY(1) | in Last FY(2) | in Last FY(3) | Distributions(4) | at Last FYE | ||||||||||||||||
| $ | --- | $ | --- | $ | 11,000 | $ | 103,706 | $ | 329,051 | |||||||||||
| $ | --- | $ | --- | $ | 7,010 | $ | 38,809 | $ | 210,798 | |||||||||||
| $ | --- | $ | --- | $ | 5,121 | $ | 28,065 | $ | 153,849 | |||||||||||
| $ | --- | $ | --- | $ | 4,894 | $ | 26,729 | $ | 147,104 | |||||||||||
| $ | --- | $ | --- | $ | 4,526 | $ | 24,673 | $ | 136,018 |
| (1) | Represents portion of bonus for immediately preceding fiscal year (2023), otherwise payable in last fiscal year (2024), under the STPP deferred by the named executive officer. Because no bonuses were awarded for fiscal year 2023 to the named executive officers, there were no amounts deferred in fiscal year 2024 by the named executive officers. |
| (2) | Represents match by Capitol Federal Savings on portion of bonus for immediately preceding fiscal year (2023), otherwise payable in last fiscal year (2024), under the STPP deferred by the named executive officer. Because no bonuses were awarded for fiscal year 2023 to the named executive officers, there were no amounts deferred in fiscal year 2024 by the named executive officers and no matching contributions in fiscal year 2024 by Capitol Federal Savings. For this reason, no named executive officer was awarded phantom stock units under the DIBP in fiscal year 2024. |
| (3) | Represents stock price appreciation (depreciation) and dividend equivalents on phantom stock units from deferrals (and matches thereon) of STPP bonuses for years prior to fiscal year 2024. This amount is reported as compensation for fiscal year 2024 under the "All Other Compensation" column of the Summary Compensation Table. As noted below, there will not be any reduction to the payout amount of the phantom stock units if the stock price has depreciated from the beginning of the deemed investment period of the phantom stock units to the end of such period. |
| (4) | Represents cash payout during fiscal year 2024 of phantom stock units for deferral (and 50% match thereon) of the STPP bonus for fiscal year 2020. The payout was comprised of appreciation in the Company's stock price from |
Under the DIBP, a participating NEO may defer from
As discussed under "Compensation Discussion and Analysis-Bonus Incentive Plans," no STPP award was earned for fiscal year 2023.
| 28 |
Payments upon Termination or Change in Control
As discussed under " Change in Control Severance Agreements," the Company has entered into change in control severance agreements with each of the NEOs. Each agreement entitles the executive to a severance payment if, within six months before or 24 months after a change in control of the Company, the executive's employment is terminated by the Company without cause, is terminated as a result of the executive's death, disability or retirement or is terminated by the executive for "good reason."
The amount of the severance payment under each change in control severance agreement is 2.99 times the executive's average annual W-2 compensation during the five full calendar years prior to the date of termination of employment. If their employment had been terminated as of
Under the general terms of stock options granted under the Company's 2012 Equity Incentive Plan and 2000 Stock Option and Incentive Plan and restricted stock granted under the Company's 2012 Equity Incentive Plan, upon the occurrence of a change in control of the Company, all unvested stock options and unvested shares of restricted stock will vest. As of
The Company's STPP provides that if, within two years following a change in control of the Company, a participant's employment is terminated other than due to death, disability, retirement, cause or resignation by the participant (other than resignation due to reassignment to a job that is not reasonably equivalent in responsibility or compensation, or that is not in the same geographic area, or resignation within 30 days following a reduction in base pay), then the participant will be paid a pro rata award for the performance year in which his or her termination of employment occurs, with the award amount determined assuming all individual and corporate performance targets have been met. Had any of Messrs. Dicus, Townsend or
The Company's DIBP provides that if, within two years following a change in control of the Company, a participant's employment is terminated other than due to death, disability, retirement, cause or resignation by the participant (other than resignation due to reassignment to a job that is not reasonably equivalent in responsibility or compensation, or that is not in the same geographic area, or resignation within 30 days following a reduction in base pay), then the participant will become fully vested in his or her plan account, which shall be paid to him or her within 90 days after the termination date. If Messrs. Dicus, Townsend or
As discussed under "Compensation Discussion and Analysis-Retirement and Other Benefits Generally," the Company provides a life insurance benefit for every employee who works on average more than 20 hours per week equal to 1.0 times the employee's base salary, subject to a cap on the total death benefit of
As also discussed under "Compensation Discussion and Analysis-Retirement and Other Benefits Generally," the Company has purchased a life insurance annuity for
| 29 |
In addition, as discussed under "Compensation Discussion and Analysis-Retirement and Other Benefits Generally," the Bank has purchased Bank Owned Life Insurance. Under the terms of the Bank Owned Life Insurance, each insured employee was provided the opportunity to designate a beneficiary to receive a death benefit equal to the insured employee's base salary as of the date of Board approval of the purchase if the insured dies while employed by the Bank. All the NEOs other than
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained above with management and, based on such review and discussion, the Compensation Committee recommended to the Company's Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
The foregoing report is furnished by the Compensation Committee of the Company's Board of Directors:
Michel'
CEO Pay Ratio
For fiscal year 2024, the annual total compensation for our median employee was
We identified the median employee by examining total W-2, Box 1 compensation for all individuals, excluding our CEO, who were employed by us on
We calculated the median employee's annual total compensation using the same methodology we use for our named executive officers as set forth in the fiscal year 2024 Summary Compensation Table in this proxy statement.
| 30 |
Pay Versus Performance
As required by the Dodd-Frank Act and the
The following table sets forth, for each of the fiscal years ended
| Average SCT | Average CAP | Year-end value of invested on |
Net Income | |||||||||||||||||||||||||||||||
| Fiscal Year |
SCT Total for PEO(1) |
CAP to PEO(2) |
Total for Non- PEO NEOs(1) |
to Non-PEO NEOs(2) |
CFFN TSR(3) |
Peer TSR(4) |
(loss) (in millions)(5) |
EPS(6) | ||||||||||||||||||||||||||
| 2024 | $ | 1,014,121 | $ | 1,014,121 | $ | 392,839 | $ | 392,839 | $ | 59.46 | $ | 146.57 | $ | 38.0 | $ | 0.29 | ||||||||||||||||||
| 2023 | 862,031 | 862,031 | 367,967 | 355,507 | 45.68 | 99.42 | (101.7 | ) | (0.76 | ) | ||||||||||||||||||||||||
| 2022 | 1,284,006 | 1,284,006 | 488,523 | 483,535 | 73.08 | 102.63 | 84.5 | 0.62 | ||||||||||||||||||||||||||
| 2021 | 1,187,578 | 1,187,578 | 452,315 | 464,816 | 94.25 | 133.58 | 76.1 | 0.56 | ||||||||||||||||||||||||||
| 2020 | 950,448 | 950,448 | 368,794 | 343,636 | 70.83 | 73.42 | 64.5 | 0.47 |
| (1) |
The Non-PEO NEOs for fiscal year 2024 include Messrs. Townsend and The dollar amounts reported are total compensation in the SCT for the PEO and the average for the Non-PEO NEOs for each covered year. |
| (2) | These dollar amounts do not reflect actual amounts of compensation paid during the covered year, but reflect adjustments for (i) the year-end fair values of unvested equity awards granted in the covered year, (ii) the year-over-year difference of year-end fair values for unvested awards granted in prior years, (iii) the fair values at vest date for awards granted and vested in the covered year, (iv) the difference between prior year-end fair values and vest date fair values for awards granted in prior years that vested at the end of or during the covered year and (v) the fair value at the end of the prior year of any awards granted in a prior year that failed to meet the applicable vesting conditions (i.e., were forfeited) during the covered year. |
| (3) | Reflects the cumulative TSR of the Company ("CFFN") over the five-year period ended |
| (4) | Reflects the five-year cumulative TSR of the S&P US BMI Bank Index, calculated in the same manner and using the same source as the CFFN TSR. This is the same peer group used by the Company in the stockholder retuperformance graph in its Annual Report on Form 10-K for the fiscal year ended |
| (5) | Represents our reported net income (loss) reflected in the Company's audited financial statements for each fiscal year indicated. |
| (6) | Represents our reported basic earnings (loss) per share reflected in the Company's audited financial statements for each fiscal year indicated. |
| 31 |
Calculation of Compensation Actually Paid ("CAP")
To calculate the CAP for our PEO and the average CAP for our Non-PEO NEOs in the table above, the following adjustments were made to total compensation as reported in the SCT for each covered fiscal year.
| 2024 | 2023 | 2022 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||||
| PEO | Non-PEO NEOs |
PEO | Non-PEO NEOs |
PEO | Non-PEO NEOs |
PEO | Non-PEO NEOs |
PEO | Non-PEO NEOs |
|||||||||||||||||||||||||||||||
| Total compensation from SCT | $ | 1,014,121 | $ | 392,839 | $ | 862,031 | $ | 367,967 | $ | 1,284,006 | $ | 488,523 | $ | 1,187,578 | $ | 452,315 | $ | 950,448 | $ | 368,794 | ||||||||||||||||||||
| Adjustments for equity awards: | ||||||||||||||||||||||||||||||||||||||||
| Grant date fair values in the SCT | --- | --- | --- | (40,147 | ) | --- | --- | --- | --- | --- | --- | |||||||||||||||||||||||||||||
| Year-end fair value of unvested awards granted in covered year | --- | --- | --- | 27,308 | --- | --- | --- | --- | --- | --- | ||||||||||||||||||||||||||||||
| Year-over-year difference of year-end fair values of unvested awards granted in prior years | --- | --- | --- | --- | --- | (6,240 | ) | --- | 8,686 | --- | (26,468 | ) | ||||||||||||||||||||||||||||
| Vest date fair values of awards granted and vested in covered year | --- | --- | --- | 966 | --- | --- | --- | --- | --- | --- | ||||||||||||||||||||||||||||||
| Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years that vested at end of or during covered year | --- | --- | --- | (587 | ) | --- | 1,252 | --- | 3,815 | --- | 1,310 | |||||||||||||||||||||||||||||
| Forfeitures during covered year equal to prior year end fair value of awards granted in prior years | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||||||||||||||||||||
| CAP (as calculated) | $ | 1,014,121 | $ | 392,839 | $ | 862,031 | $ | 355,507 | $ | 1,284,006 | $ | 483,535 | $ | 1,187,578 | $ | 464,816 | $ | 950,448 | $ | 343,636 |
Performance Measures
As required by
| ● | basic earnings per share* |
| ● | efficiency ratio |
| ● | retuon average equity |
Pay Versus Performance Graphs
In accordance with
| ● | Company TSR versus CAP to the PEO and average CAP to the Non-PEO NEOs for each covered year. |
| ● | Company net income versus CAP to the PEO and average CAP to the Non-PEO NEOs for each covered year. |
| ● | Company basic earnings per share CAP to the PEO and average CAP to the Non-PEO NEOs for each covered year. |
| ● | Company TSR versus peer group TSR for each covered year. |
| 32 |
| 33 |
| 34 |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's compensation plans and matters are administered by the Stock Benefit Committee and the Compensation Committee. The Stock Benefit Committee is currently comprised of Directors
CERTAIN TRANSACTIONS
The charter of the Audit Committee of the Company's Board of Directors provides that the Audit Committee is to review and approve all related party transactions (defined as transactions requiring disclosure under Item 404 of SEC Regulation S-K) on a regular basis.
Capitol Federal Savings has followed a policy of granting loans to officers and directors. These loans are made in the ordinary course of business and on the same terms and conditions as those of comparable transactions with the general public prevailing at the time, in accordance with our underwriting guidelines, and do not involve more than the normal risk of collectability or present other unfavorable features.
All loans that Capitol Federal Savings makes to directors and executive officers are subject to regulations of the
| 35 |
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The information contained in this report shall not be deemed to be "soliciting material" or to be "filed" with the
The Audit Committee has reviewed and discussed the audited financial statements of the Company for the fiscal year ended
The Audit Committee has also received the written disclosures and the letter from
Based on the Audit Committee's review and discussions noted above, the Audit Committee recommended to the Company's Board of Directors that the Company's audited financial statements be included in the Company's Annual Report on Form 10-K for the fiscal year ended
The foregoing report is furnished by the Audit Committee of the Company's Board of Directors.
Michel'
Jeffrey M. Johnson
Morris J. Huey, II
| 36 |
PROPOSAL II
ADVISORY VOTE ON EXECUTIVE COMPENSATION
Under the Dodd-Frank Act, we are including in this proxy statement and will present at the annual meeting a non-binding stockholder vote to approve the compensation of our executives, as described in the proxy statement pursuant to the compensation disclosure rules of the
RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed in the Company's proxy statement for the annual meeting pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.
This vote will not be binding on the Company's Board of Directors and may not be construed as overruling a decision by the Board or creating or implying any change to the fiduciary duties of the Board. Nor will it affect any compensation previously paid or awarded to any executive. The Compensation Committee and the Board may, however, take into account the outcome of the vote when considering future executive compensation arrangements.
The Dodd-Frank Act requires that we include a "say-on-pay" vote in our annual meeting proxy statement at least once every three years, and that at least once every six years we hold a non-binding, advisory vote on the frequency of future say-on-pay votes (commonly referred to as a "say-on-pay frequency vote"), with stockholders having the choice of every year, every two years or every three years. We last included a say-on-pay frequency vote at our annual meeting of stockholders held in
The purpose of our compensation programs is to attract and retain experienced, highly qualified executives critical to our long-term success and enhancement of stockholder value. The Board of Directors believes that our compensation programs achieve this objective, and therefore recommends that stockholders vote "FOR" this proposal.
| 37 |
PROPOSAL III
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee of the Company's Board of Directors has renewed the Company's arrangement for
Although not required by the Company's bylaws or otherwise, the Audit Committee and the Board of Directors believe it appropriate, as a matter of good corporate governance, to request that the Company's stockholders ratify the appointment of
Change in Independent Registered Public Accounting Firm
On
In connection with its selection of
During the Company's fiscal years ended
During the Company's fiscal years ended
| 38 |
Independent Registered Public Accounting Firm Fees
For the fiscal year ended
| (a) | Audit Fees: Aggregate fees billed for professional services rendered for the audit of the Company's annual financial statements, for the audit pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, for the review of financial statements included in the Company's Quarterly Reports on Form 10-Q, for statutory and regulatory audits and for consents: |
| (b) | Audit-Related Fees: |
| (c) | Tax Fees: Aggregate fees billed for professional services rendered related to tax retupreparation and tax consultations: |
| (d) | All other fees: Aggregate fees billed for all other professional services: |
For the fiscal years ended
| (a) | Audit Fees: Aggregate fees billed for professional services rendered for the audit of the Company's annual financial statements, for the audit pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, for the review of financial statements included in the Company's Quarterly Reports on Form 10-Q, for statutory and regulatory audits and for consents: |
| (b) | Audit-Related Fees: Aggregate fees billed for professional services rendered related to the Company's digital transformation project and agreed-upon procedures engagements: |
| (c) | Tax Fees: Aggregate fees billed for professional services rendered related to tax retupreparation and tax consultations: |
| (d) | All other fees: Aggregate fees billed for all other professional services, consisting of an accounting research tool subscription and, in 2024 only, transition fees in connection with the change in the Company's independent registered public accounting firm: |
The Audit Committee generally pre-approves all audit and permissible non-audit services to be provided by the independent registered public accounting firm. The Audit Committee has, however, delegated authority to the chairperson of the Audit Committee to pre-approve services not pre-approved by the Audit Committee, provided such action is reported to the Audit Committee at its next meeting. None of the services provided by
The Board of Directors recommends that stockholders vote "FOR" the ratification of the appointment of
| 39 |
PROPOSAL IV
APPROVAL OF CHARTER AMENDMENT TO DECLASSIFY BOARD OF DIRECTORS
The Board of Directors, as a result of stockholder comments, is proposing to amend the Company's charter to modify director terms of office from three years to one year. The proposed amendment would implement this change over a three-year time period.
Our Board of Directors is committed to strong corporate governance and believes stockholders should be provided the opportunity to vote to amend Article 7.B. of the Company's charter to phase out the classified structure of our Board of Directors over a three-year period. If approved, by the Company's 2028 annual meeting of stockholders, every director nominee will be subject to annual voting for election to serve a one-year term.
The Company's charter currently provides for our Board of Directors to be divided into three classes of directors serving staggered three-year terms, with the classes being as equal in number as possible. Consequently, at each annual meeting of our stockholders, the term of only one class expires, with only that class of directors being subject to stockholder re-election. The current structure of our Board of Directors sometimes is referred to as a "classified" or "staggered" board.
Our Board of Directors recognizes that a classified board structure may offer several advantages, such as promoting board continuity and stability, encouraging directors to take long-term perspectives and ensuring that a majority of directors will always have prior experience with the Company. In addition, the Company operates in a highly regulated environment, which takes time for directors to leaand understand. Classified boards may also provide increased protection in the context of certain company takeover tactics, as staggered terms make it more difficult to change a majority of directors in a single year. The primary advantage of declassification is the ability for our stockholders to evaluate all directors annually, which reinforces our directors' accountability to stockholders.
Following a recommendation by our Nominating Committee after receiving comments on this issue from certain stockholders, our Board of Directors decided on
If the Amendment is approved by our stockholders, the charter will be modified such that directors will be elected to one-year terms starting with our annual meeting of stockholders in 2026, but the existing terms of directors elected prior to the annual meeting in 2026 will be honored and served out accordingly. Our Board of Directors will be fully declassified, with all directors standing for annual election, beginning with the Company's 2028 annual meeting of stockholders. The following table illustrates how our classified Board of Directors will be phased out if stockholders approve the Amendment, assuming no change in the number of our directors.
|
Annual Meeting |
Number of Directors Elected | Term of Directors Elected (Year of Expiration) |
| 2026 | 3 | One-year term (expires 2027) |
| 2027 | 5 | One-year term (expires 2028) |
| 2028 | 8 | One-year term (expires 2029) |
If approved by our stockholders, the Amendment will become effective upon the filing of articles of amendment to the charter with the
If the Amendment is not approved by our stockholders, our Board of Directors will remain staggered, and our directors will continue to be subject to the charter's current classification, in which case each class of directors that is elected will serve a three-year term and will be subject to re-election for a subsequent three-year term at the expiration of that class's term.
| 40 |
Required Vote
Approval of the Amendment requires the affirmative vote of the holders of at least eighty percent (80%) of the voting power of the outstanding shares of the Company's common stock (after giving effect to the 10% voting limitation in Article 5.D. of the Company's charter) as of the voting record date for the annual meeting.
The Board of Directors recommends that stockholders vote "FOR" approval of the Amendment.
| 41 |
STOCKHOLDER PROPOSALS AND OTHER INFORMATION
REGARDING THE NEXT ANNUAL MEETING OF STOCKHOLDERS
In order to be eligible for inclusion in the Company's proxy materials for its next annual meeting of stockholders, any stockholder proposal to take action at the meeting must be received at the Company's executive office at
In addition to the deadline and other requirements referred to above for submitting a stockholder proposal to be included in the Company's proxy materials for its next annual meeting of stockholders, the Company's bylaws require a separate notification to be made in order for a stockholder proposal to be eligible for presentation at the meeting, regardless of whether the proposal is included in the Company's proxy materials for the meeting. In order to be eligible for presentation at the Company's next annual meeting of stockholders, written notice of a stockholder proposal containing the information specified in Article I, Section 6(a) of the Company's bylaws must be received by the Secretary of the Company not earlier than the close of business on
Stockholders who intend to solicit proxies in support of director nominees other than the Company's nominees in connection with the Company's next annual meeting of stockholders must provide notice to the Company that contains the information required by Rule 14a-19(b) under the Securities Exchange Act of 1934, as amended, no later than
OTHER MATTERS
The Board of Directors is not aware of any business to come before the annual meeting other than the matters described above in this proxy statement. However, if any other matters should properly come before the meeting, it is intended that holders of the proxies will act in accordance with their best judgment.
ADDITIONAL INFORMATION
The Company will pay the costs of soliciting proxies. The Company will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of common stock. In addition to solicitation by mail, directors, officers and employees of the Company may solicit proxies personally or by facsimile, telephone or other means, without additional compensation.
| 42 |
APPENDIX A
Set forth below is the text of the proposed amendment to the charter of
Article 7.
B. Number, Class and Terms of Directors; Cumulative Voting. The number of directors constituting the Board of Directors of the Corporation shall initially be seveneight, which number may be increased or decreased in the manner provided inbythe Bylaws of the Corporation; provided, however, that such number shall never be less than the minimum number of directors required by the Maryland General Corporation Law (the "MGCL") now or hereafter in force. TheExcept with respect to anydirectors, other than thosewho may be elected by the holders of any series of Preferred Stock, shall be divided into three classes, as nearly equal in number as reasonably possibleat the annual meeting of stockholders in 2026 (the "2026 Annual Meeting"), with the successors of the directors whose terms expire at that meeting shall be elected for a term of office of the first class ("Class I") to expire at the conclusion of the first annual meeting of stockholdersin 2027 (the "2027 Annual Meeting"), at the 2027 Annual Meeting, the successors of the directors whose terms expire at that meeting shall be elected for a term of officeof the second class ("Class II")to expire at the conclusion of theannual meeting of stockholders in 2028 (the "2028 Annual Meeting") and at the 2028 Annual Meeting and at eachannual meeting of stockholdersone yearthereafterand,the term of officesuccessorsof the third class ("Class III") todirectors whose termsexpire at the conclusion ofeach such meeting shall be elected for a term of office expiring atthe annual meeting of stockholders two years thereafternext following their election, with each director to hold office until his or her successor shall have been duly elected and qualified. At each annual meeting of stockholders, directors elected to succeed thoseFor purposes of clarification, each director elected to a three-year term prior to the 2026 Annual Meeting shall serve out the three-year term, and the annual election of alldirectorswhose terms expireshall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election or for such shorter period of time as the Board of Directors may determinephased in over a three-year time period, commencing with each director to hold office until his or her successor shall have been duly elected and qualifiedthe 2026 Annual Meeting and concluding with the 2028 Annual Meeting. The names of the individuals who will serve ascurrentdirectors of the Corporation, who shall serveuntil their successors are elected and qualifyqualified,are as follows:Michel'
(1) Class I directors:
| Term to Expire in | ||
| 2011 | ||
| 2011 | ||
| 2011 |
A-1
(2) Class II directors:
| Term to Expire in | ||
| 2012 | ||
| 2012 |
(3) Class III directors:
| Term to Expire in | ||
| 2013 | ||
| 2013 |
Stockholders shall not be permitted to cumulate their votes in the election of directors.
A-2
0 4475 REVOCABLE PROXY
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