SCHEDULE 14A INFORMATION
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. ___)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ]Preliminary Proxy Statement [ ]Confidential, for Use of the
[x]Definitive Proxy Statement Commission Only (as permitted
[ ]Definitive Additional Materials by Rule 14a-6(e)(2))
[ ]Soliciting Material Under Rule 14a-12
COMMERCIAL FEDERAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
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3. Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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[ ] Fee paid previously with preliminary materials:___________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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4. Date Filed:
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[COMMERCIAL FEDERAL CORPORATION LETTERHEAD]
April 3, 2003
ANNUAL MEETING
MAY 13, 2003
Dear Fellow Stockholder:
You are cordially invited to attend the 2003 Annual Meeting of Stockholders
of Commercial Federal Corporation (the "Corporation") to be held on Tuesday, May
13, 2003, at 10:00 a.m. at the Omaha Marriott Hotel, 10220 Regency Circle,
Omaha, Nebraska. Your Board of Directors and Management look forward to greeting
personally those stockholders able to attend.
At this meeting, as set forth in the accompanying Notice of Annual Meeting
and Proxy Statement, stockholders will be asked to consider and act upon the
election of four directors for three-year terms (the Board having nominated
Michael P. Glinsky, Robert S. Milligan, George R. Zoffinger and Joseph J.
Whiteside for three-year terms). During the meeting, we will also report on the
operations of the Corporation and its principal subsidiary, Commercial Federal
Bank, a Federal Savings Bank. Directors and officers of the Corporation will be
present to respond to any questions you may have.
Your vote is important, regardless of the number of shares you own. We urge
you to sign, date and mail the enclosed Proxy Card as soon as possible, even if
you currently plan to attend the annual meeting. This will not prevent you from
voting in person, but will assure that your vote is counted if you are unable to
attend the meeting.
On behalf of your Board of Directors, thank you for your continued support.
Sincerely,
/s/ William A. Fitzgerald
William A. Fitzgerald
Chairman of the Board and
Chief Executive Officer
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COMMERCIAL FEDERAL CORPORATION
13220 CALIFORNIA STREET
OMAHA, NEBRASKA 68154
(402) 554-9200
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 2003
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NOTICE IS HEREBY GIVEN that the 2003 Annual Meeting of Stockholders (the
"Meeting") of Commercial Federal Corporation (the "Corporation") will be held at
the Omaha Marriott Hotel, 10220 Regency Circle, Omaha, Nebraska, on Tuesday, May
13, 2003, at 10:00 a.m.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of four directors for three-year terms;
2. Such other matters as may properly come before the Meeting or any
adjournments or postponements thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Meeting.
Any action may be taken on the foregoing matters at the Meeting on the date
specified above or on any date or dates to which, by original or later
adjournment or postponement, the Meeting may be adjourned or postponed. Pursuant
to the Bylaws of the Corporation, the Board of Directors has fixed the close of
business on March 28, 2003, as the record date for determination of the
stockholders entitled to notice of and to vote at the Meeting and any
adjournments or postponements thereof.
You are requested to sign and date the enclosed Proxy Card which is
solicited by the Board of Directors and to mail it promptly in the enclosed
postage-paid envelope. The proxy will not be used if you attend and vote at the
Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gary L. Matter
GARY L. MATTER
SECRETARY
Omaha, Nebraska
April 3, 2003
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AND VOTED AT THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND PROMPTLY
MAIL YOUR ENCLOSED PROXY CARD.
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PROXY STATEMENT
OF
COMMERCIAL FEDERAL CORPORATION
13220 CALIFORNIA STREET
OMAHA, NEBRASKA 68154
(402) 554-9200
2003 ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 2003
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GENERAL
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This Proxy Statement and the enclosed Proxy Card are furnished in
connection with the solicitation of proxies by the Board of Directors of
Commercial Federal Corporation (the "Corporation"), to be used at the 2003
Annual Meeting of Stockholders of the Corporation and at any adjournments or
postponements thereof (the "Meeting") which will be held at the Omaha Marriott
Hotel, 10220 Regency Circle, Omaha, Nebraska, on Tuesday, May 13, 2003, at 10:00
a.m. The accompanying Notice of Annual Meeting, this Proxy Statement and the
Proxy Card are being first mailed to stockholders on or about April 3, 2003.
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VOTING AND REVOCABILITY OF PROXIES
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The close of business on March 28, 2003, has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Meeting. At that date, the Corporation had outstanding 44,808,282 shares of
common stock, par value $.01 per share (the "Common Stock"). Holders of Common
Stock are entitled to one vote per share for the election of directors, subject
to the right to cumulate votes as described below, and upon all matters on which
stockholders are entitled to vote.
Proxies solicited by the Board of Directors of the Corporation which are
properly executed and returned to the Corporation will be voted at the Meeting,
and any adjournments or postponements thereof, in accordance with the directions
given thereon. Executed proxies on which no directions are indicated will be
voted FOR the election of the Corporation's nominees named herein. If any other
matters are properly brought before the Meeting, the proxies solicited by the
Board of Directors will be voted on such matters as determined by a majority of
the Board. Other than the election of directors, the Board of Directors is not
currently aware of any other matters to be brought before the Meeting.
The presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is necessary
to constitute a quorum thereat. If a quorum is not present or represented by
proxy, the stockholders entitled to vote, present or represented by proxy, have
the power to adjourn the Meeting from time to time, without notice other than an
announcement at the Meeting, until a quorum is present or represented. Assuming
a quorum is present, under Nebraska law directors shall be elected by a
plurality of votes cast by stockholders at the Meeting (abstention and broker
non-votes not being considered in determining the outcome of the election).
Pursuant to the Bylaws of the Corporation and Nebraska law, every
stockholder entitled to vote for the election of directors has the right to vote
the number of shares owned thereby for as many persons as there are directors to
be elected, or to cumulate votes by multiplying the number of shares held by
such stockholder by the number of directors to be elected and to cast such votes
for one director or distribute them among any number of candidates. Unless
otherwise indicated by the stockholder, a vote FOR the Board of Directors'
nominees on the accompanying Proxy Card will give the proxies named therein
discretionary authority to cumulate all votes to which the stockholder is
entitled and to allocate such votes in favor of one or more of the Board's
nominees, as the proxies may determine. Additionally, executed proxies will
confer discretionary authority on the proxies named therein to vote with respect
to the election of any person recommended by the Board of Directors as a
director where the nominee is unable to serve or for good cause will not serve
(an event not now anticipated).
Execution of a Proxy Card will not affect your right to attend the Meeting
and to vote in person. A stockholder executing a proxy may revoke such proxy at
any time before it is voted by (i) filing a written notice of revocation with
the Secretary of the Corporation at the address provided above, (ii) filing a
duly executed proxy bearing a later date, or (iii) attending and voting in
person at the Meeting. Attendance at the Meeting without voting thereat will not
revoke a proxy previously executed and duly submitted by you.
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PRINCIPAL STOCKHOLDERS
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Persons and groups owning in excess of 5.0% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Corporation is not aware of any stockholder that owned in excess of 5.0% of the
Common Stock as of March 28, 2003. The following table sets forth, as of March
28, 2003, certain information as to the Common Stock beneficially owned by the
director of the Corporation who is not standing for reelection, by each of the
executive officers listed in the Summary Compensation Table on page 11 and by
all executive officers and directors of the Corporation as a group.
PERCENT OF SHARES
AMOUNT AND NATURE OF OF COMMON STOCK
BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1)(2) OUTSTANDING
---------------- --------------------------- ------------------
Robert F. Krohn 226,970 .51%
William A. Fitzgerald 1,042,686 2.30%
Robert J. Hutchinson 137,050 .31%
David S. Fisher 105,731 .24%
John S. Morris 53,733 .12%
Lauren W. Kingry 36,925 .08%
All Executive Officers and Directors
as a Group (17 persons) 2,441,065 5.28%
__________
(1) As to ownership of shares by executive officers and directors, includes
certain shares of Common Stock owned by businesses in which the director or
executive officer is an officer or major stockholder, or by spouses or as a
custodian or trustee for minor children, over which shares the named
individual or all executive officers and directors as a group effectively
exercise sole or shared voting and investment power, unless otherwise
indicated.
(2) Includes 58,598, 569,082, 123,333, 93,327, 50,000, 26,033 and 1,424,622
shares, respectively, which Messrs. Krohn, Fitzgerald, Hutchinson, Fisher,
Morris and Kingry and all executive officers and directors as a group have
the right to purchase pursuant to the exercise of stock options within 60
days of March 28, 2003, as well as stock held in retirement accounts or
funds for the benefit of the named individuals or group.
2
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Corporation's Board of Directors is composed of eleven members. The
Corporation's Articles of Incorporation provide that directors are to be elected
for terms of three years, approximately one-third of whom are to be elected
annually. Four directors will be elected at the Meeting to serve three-year
terms, or until their respective successors have been elected and qualified. The
Corporation's Board of Directors has nominated Michael P. Glinsky, Robert S.
Milligan, George R. Zoffinger and Joseph J. Whiteside for these seats, all of
whom are currently members of the Board, except for Mr. Milligan who is a member
of the Board of the Corporation's wholly owned subsidiary, Commercial Federal
Bank, a Federal Savings Bank (the "Bank"). If any nominee is unable to serve,
the shares represented by all valid proxies will be voted for the election of
such substitute as the Board of Directors may recommend. At this time, the Board
knows of no reason why any of the Corporation's nominees might be unavailable to
serve.
The Board of Directors intends to vote all of the shares for which it is
given proxies, to the extent permitted thereunder, FOR the election of the
Board's nominees and intends to cumulate votes so as to maximize the number of
such nominees elected to serve as directors of the Corporation.
The following table sets forth the names of the Board's nominees for
election as directors and of those directors who will continue to serve as such
after the Meeting. Also set forth is certain other information with respect to
each person's age, the year he became a director, the expiration of his term as
a director, and the number and percentage of shares of Common Stock beneficially
owned at March 28, 2003. At present, each director of the Corporation is also a
member of the Board of Directors of the Bank.
YEAR FIRST ELECTED SHARES OF COMMON STOCK
AGE AT OR APPOINTED CURRENT TERM BENEFICIALLY OWNED AT PERCENT
NAME MARCH 28, 2003 AS DIRECTOR TO EXPIRE MARCH 28, 2003 (1)(2) OF CLASS
---- -------------- ----------- --------- --------------------- --------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2006
Michael P. Glinsky 58 1997 2003 52,552 .12%
Robert S. Milligan 58 1987 (3) -- 65,508 .15%
George R. Zoffinger 55 1999 2003 38,570 .09%
Joseph J. Whiteside 61 1999 2003 16,956 .04%
DIRECTORS CONTINUING IN OFFICE
Talton K. Anderson 66 1991 2004 111,809 .25%
Carl G. Mammel 69 1991 2004 178,436 .40%
James P. O'Donnell 55 1991 2004 64,409 .14%
Robert J. Hutchinson 55 2001 2004 137,050 .31%
William A. Fitzgerald 65 1984 2005 1,042,686 2.30%
Robert D. Taylor 56 1996 2005 128,813 .29%
Aldo J. Tesi 51 1996 2005 47,956 .11%
_____________
(1) Includes certain shares of Common Stock owned by businesses in which the
director is an officer or major stockholder or by a spouse, or as a
custodian or trustee for minor children, over which shares the named
individual effectively exercises sole or shared voting and investment
power, unless otherwise indicated. Also includes shares held in retirement
accounts or funds for the benefit of the named individuals.
(2) Includes shares totaling 51,086 (Glinsky), 51,544 (Milligan), 37,454
(Zoffinger), 15,844 (Whiteside), 57,513 (Anderson), 55,936 (Mammel), 55,832
(O'Donnell), 123,333 (Hutchinson), 569,082 (Fitzgerald), 50,634 (Taylor)
and 44,726 (Tesi), which such individuals have the right to acquire within
60 days of March 28, 2003 pursuant to the exercise of stock options.
(3) Mr. Milligan ceased service as a member of the Corporation's Board of
Directors in 1999, but has continued to serve as a director of the Bank.
3
The principal occupation of each director of the Corporation for the last
five years is set forth below:
MICHAEL P. GLINSKY - Private Investor. Mr. Glinsky served as Executive Vice
President and Chief Financial Officer of NorthPoint Communications Group, Inc.,
a broadband telecommunications company, from April 2000 until his resignation in
March 2001. On January 16, 2001, NorthPoint Communications Group, Inc. filed a
petition for Chapter 11 protection in the U.S. Bankruptcy Court for the Northern
District of California. On March 22, 2001, NorthPoint sold its assets to AT&T
and filed a petition for Chapter 7 liquidation on June 12, 2001. Mr. Glinsky was
formerly the Executive Vice President and Chief Financial Officer of U S WEST,
Inc., an international telecommunications, entertainment and directory and
information services company, a position he held from 1996 to 1998. Mr. Glinsky
served as managing partner of the Denver office of Coopers & Lybrand LLP from
1990 to 1996.
ROBERT S. MILLIGAN - Chairman and Chief Executive Officer of MI Industries
since 1980. Mr. Milligan also serves as President of Oak Grove Farms, Inc., a
pork production company in Lincoln, Nebraska. Mr. Milligan previously served on
the Commercial Federal Corporation Board of Directors for the period 1987 to
1999. Since 1987 he has been a member of Commercial Federal Bank's Board of
Directors.
GEORGE R. ZOFFINGER - President and Chief Executive Officer of New Jersey
Sports and Exposition Authority since 2002. President and Chief Executive
Officer of Constellation Capital Corporation from 1977 to 2002. Mr. Zoffinger
served as President and Chief Executive Officer of Constellation Bank Corp. from
December 1991 to December 1995 and as President and Chief Executive Officer of
Value Property Trust from October 1995 to February 1998. Mr. Zoffinger serves as
a director of New Jersey Resources Corporation and NTL Incorporated.
JOSEPH J. WHITESIDE - Vice Chairman of PNC Financial Services Group, Inc.,
Pittsburgh, Pennsylvania since October 2002. Chairman and Chief Executive
Officer of Homeside Lending, Inc., Jacksonville, Florida from September 2001 to
September 2002. Since May 2000, Mr. Whiteside also served as a director of
thinkorswim, Inc., a Chicago-based broker/dealer specializing in listed options.
From 1996 to September 2001, he served as Executive Vice President and Senior
Advisor to National Australia Bank and, from September 1999 to October 2002,
served as the Chairman of WeatherWise USA, Inc., a Pittsburgh-based company that
provides financial and other services to the public utilities industry. From
1994 to 1996, Mr. Whiteside served as Executive Vice President and Chief
Financial Officer of Michigan National Corp., a bank holding company based in
Farmington Hills, Michigan.
TALTON K. ANDERSON - Chairman of Anderson Automotive Group which consists
of several automobile dealerships in Omaha, Nebraska, and Lincoln, Nebraska. Mr.
Anderson is also the owner and President of a reinsurance company.
CARL G. MAMMEL - President of Mammel Foundation and member of the board of
Silverstone Group, a consulting firm providing services in employee benefits,
human resource consulting and risk management solutions. Mr. Mammel is also a
member of the board of M Financial Corporation, a network of financial service
firms throughout the United States.
JAMES P. O'DONNELL - Executive Vice President, Chief Financial Officer and
Corporate Secretary of ConAgra Foods, Inc., an Omaha, Nebraska-based
international diversified food company.
ROBERT J. HUTCHINSON - Director, President and Chief Operating Officer of
the Corporation and the Bank. Mr. Hutchinson was appointed President and Chief
Operating Officer of the Corporation and the Bank in May 2001. On May 8, 2001,
Mr. Hutchinson was named a Director of both the Corporation and the Bank. Mr.
Hutchinson served as Senior Vice President of the retail financial services
division of Michigan National Bank, managing the $11 billion bank's 184 branches
and sales team statewide. Mr. Hutchinson also managed the bank's residential
mortgage joint venture, served on the bank's Executive Committee, Asset and
Liability Committee and was a member of the Retail and Direct Worldwide
Leadership Team of the bank's former owner, National Australia Bank. Prior to
assuming responsibility for retail management in 1996, Mr. Hutchinson was Senior
Vice President of Small Business Banking for Michigan National Bank, managing
sales, credit management and back office operations for both small business and
mortgage. He also managed Non-Branch Delivery, significantly expanding
non-traditional channels including telephone banking, ATMs and debit cards.
4
WILLIAM A. FITZGERALD - Chairman of the Board and Chief Executive Officer
of the Corporation and the Bank.
ROBERT D. TAYLOR - President and Chief Executive Officer of Executive
AirShare Corporation, Wichita, Kansas, since November 2001. Executive AirShare
charters, sells, and operates fractional turboprop aircraft from its locations
in Wichita, Kansas and Kansas City, Missouri. From August 1998 until September
2001, Mr. Taylor was President of Executive Aircraft Corporation, which sold,
maintained and refurbished corporate jets. On August 23, 2002, Executive
Aircraft Corporation filed a petition for Chapter 11 protection in the U.S.
Bankruptcy Court for the District of Kansas. On December 30, 2002 the assets of
Executive Aircraft Corporation were sold to a new entity, Wichita Executive
Aircraft Corporation, of which Mr. Taylor is a Director.
Since October 1995, Mr. Taylor also owns and is President of Taylor
Financial, a consulting and investment firm based in Wichita, Kansas. From
January 1991 to October 1995, Mr. Taylor served as Chairman of the Board of
Directors and Chief Executive Officer of Railroad Financial Corporation and its
wholly owned subsidiary, Railroad Savings Bank, F.S.B. Railroad Financial
Corporation was acquired by the Corporation. Since 1994, Mr. Taylor also has
served as director of Elecsys Corporation, based in Lenexa, Kansas, which
manufactures and imports custom liquid displays and provides electronic
manufacturing services in the medical, aerospace, industrial and consumer
product industries.
ALDO J. TESI - President and Chief Executive Officer of Election Systems
and Software since September 1999. Formerly the Group President of First Data
Card Enterprise, a leading third-party provider of credit, debit, private label
and commercial card processing services. Prior to this position, Mr. Tesi was
President of First Data Resources from 1992 to 1997.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Board of Directors conducts its business through meetings of the Board
and through its committees, which permits the Board to more efficiently
discharge its duties. During the year ended December 31, 2002, the Board of
Directors held five meetings. No director attended fewer than 75% of the total
meetings of the Board of Directors and committees on which such directors were
members during the periods which such directors served.
5
The following table describes the members of each of the Committees, its
primary responsibilities and the number of meetings held during 2002:
MEETINGS
--------
MEMBERS RESPONSIBILITIES HELD IN 2002
------- ---------------- ------------
AUDIT (1)
---------
Michael P. Glinsky (Chairman) o Risk management oversight Eight
Carl G. Mammel o Annual report and related disclosures review and oversight
Aldo J. Tesi o Quarterly financial results and earnings release review and
Joseph J. Whiteside oversight
Sharon Marvin Griffin (ex-officio) o Internal audit and regulatory compliance oversight
o Regulatory examination review and oversight
Robert S. Milligan (ex-officio) o Independent auditor appointment, review and oversight
o Pre-approval of all audit and non-audit work performed by
independent auditor
o Key risk management policy ratification
FINANCE
-------
Talton K. Anderson (Chairman) o Oversight of risk management process for interest rate risk Four
William A. Fitzgerald o Oversight of Corporation's hedging and valuation of mortgage
Robert F. Krohn servicing rights
James P. O'Donnell o Oversight of Corporation's trading and hedging activities
Robert D. Taylor for secondary marketing of originated loans
George R. Zoffinger o Oversight of securities investment portfolio activities
Michael T. O'Neil (ex-officio) o Review policy and regulatory compliance with above activities
COMPENSATION AND
----------------
STOCK OPTION
------------
Carl G. Mammel (Chairman) o Approve corporate goals and objectives relevant to Six
Michael P. Glinsky compensation of the Chief Executive Officer, the Chief
Aldo J. Tesi Operating Officer and the Chief Financial Officer
George R. Zoffinger o Review and recommend to the Board, the annual compensation
for the Chief Executive Officer, the Chief Operating Officer
and the Chief Financial Officer
o Approve the achievement of
corporate performance relative to
the established annual
performance goals and approve any
annual Management Incentive Plan
reward for the Chief Executive
Officer, the Chief Operating
Officer and the Chief Financial
Officer
o Administer the Stock Option and Incentive Plan(s) of the
Corporation as specified in the Plan document
o Determine and recommend to the
Board, the stock option awards
for the Chief Executive Officer,
the Chief Operating Officer and
the Chief Financial Officer
o Review directors' compensation and make recommendations for
changes to the Board
6
MEETINGS
--------
MEMBERS RESPONSIBILITIES HELD IN 2002
------- ---------------- ------------
EXECUTIVE
---------
William A. Fitzgerald (Chairman) o Exercise the power and authority of the Board of Directors Seven
Robert F. Krohn between meetings, except to the extent that such authority
Robert D. Taylor shall be limited by the Nebraska Business Corporation Act
Aldo J. Tesi
GOVERNANCE/
-----------
NOMINATING
----------
Aldo J. Tesi (Chairman) o Make recommendations to the Board regarding candidates for None (2)
Robert D. Taylor election as Director
James P. O'Donnell o Recommend standards for determining Director independence
and review the qualifications and independence of members of
the Board and its committees
o Oversee Director orientation and training
o Assess and make recommendations regarding Director
compensation and retirement policy
o Review and make recommendations regarding the Board's
committee structure and the functions, procedures and
operation of committees
o Review and make recommendations
regarding shareholder proposals
and proposed amendments to the
Corporation's Articles of
Incorporation or Bylaws, and
other corporate governance
matters
--------
(1) All members of the Audit Committee are deemed to be independent within the
meaning of Sections 303.01(B)(2)(a) and (3) of the New York Stock
Exchange's listing standards.
(2) The Governance/Nominating Committee was established in February 2003.
The full Board, with employee directors not participating, acts as a
Nominating Committee to select the Board's nominees for election as directors.
The Nominating Committee selected the nominees, who had been recommended by the
Governance/Nominating Committee, for this Meeting. The Nominating Committee met
once during 2002. While the Governance/Nominating Committee and the Nominating
Committee will consider nominees recommended by stockholders, they have not
actively solicited recommendations from the Corporation's stockholders for
nominees nor, subject to the procedural requirements set forth in the
Corporation's Articles of Incorporation and Bylaws, are there any formal
procedures for this purpose.
7
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EXECUTIVE COMPENSATION
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COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overview and Objectives
The Compensation and Stock Option Committee (the "Committee") is composed
exclusively of outside Directors and includes Carl G. Mammel (Chairman), Michael
P. Glinsky, Aldo J. Tesi, and George Zoffinger. The Committee is responsible for
developing the Corporation's and the Bank's executive compensation policies
generally, and for implementing those policies for the Corporation's executive
officers and the Bank's senior executive officers (the Chairman of the Board and
the Chief Executive Officer of the Corporation and the Bank, the President and
Chief Operating Officer of the Corporation and the Bank, and the Chief Financial
Officer of the Corporation and the Bank). The Chief Executive Officer of the
Bank, under the direction and pursuant to the policies of the Committee,
implements the executive compensation policies for the remainder of the Bank's
executive officers. The Corporation maintains structured compensation guidelines
and reviews the structure and guidelines annually with the assistance of an
outside professional consulting firm. During 2002, the Committee was assisted by
Riley, Dettmann & Kelsey, LLC, and Mercer Human Resources Consulting in the
review of executive compensation practices to ensure its compensation practices
were competitive in the marketplace and were not excessive or unreasonable.
The Committee's overall objectives in designing and administering the
specific elements of the Corporation's and the Bank's executive compensation
program are as follows:
o to align executive compensation to increases in shareholder value, as
measured by favorable long-term operating results and continued
strengthening of the Corporation's financial condition;
o to provide incentives for executive officers to work towards achieving
successful annual results as a step in fulfilling the Corporation's
long-term operating results and strategic objectives;
o to link, as closely as possible, executive officers' receipt of
incentive awards with the attainment of specified performance
objectives;
o to maintain a competitive mix of total executive compensation with
particular emphasis on awards directly related to increases in
long-term shareholder value; and
o to attract, retain and motivate top performing executive officers in a
cost effective manner for the long-term success of the Corporation.
The Board of Directors strongly believes that it is in the best interests
of shareholders to encourage ownership of stock by management. Accordingly, the
Committee established the following guidelines on stock ownership. Certain
recently appointed members of executive management have not yet acquired the
minimum number of recommended shares. The Committee feels such guidelines will
align shareholders' and management's interests and enhance employee performance.
Chief Executive Officer: 5 times annual salary
Chief Operating Officer: 5 times annual salary
Executive Vice Presidents: 3 times annual salary
In furtherance of the above objectives, the Corporation's executive
compensation program for 2002 consisted of the following components:
o BASE SALARY. The Committee makes recommendations to the Board concerning
base salaries for executives considering regional and national surveys of
salaries paid to executive officers of other financial institutions similar to
the Corporation in size. The Committee's objective is to provide base salaries
as well as the
8
appropriate mix of total compensation that is reasonably competitive with total
compensation paid for executive positions in the marketplace.
o MANAGEMENT INCENTIVE PLAN. The Corporation maintains a Management
Incentive Plan which provides for annual incentive compensation based on
achieving a combination of Corporation and individual performance objectives.
Under this plan, the Committee approves corporate performance objectives, such
as earnings per share, at the beginning of the year. If the Corporation meets
such objectives, an amount equal to 4.5% of net income after taxes is set aside
for payment to executive officers (defined for purposes of the Management
Incentive Plan as the Bank's Chief Executive Officer, Chief Operating Officer,
Chief Financial Officer, Executive, Senior, and First Vice Presidents) as short-
and long-term compensation. Incentives are accrued through the year in
anticipation of payment from the Plan. Under the Management Incentive Plan,
executives are not eligible to receive an annual incentive compensation for plan
years unless the Corporation achieves at least 85% of the Corporation's
predetermined performance goal. The distribution of awards under the Management
Incentive Plan is triggered by Corporation's achievement of the predetermined
performance goal and the individual executive officers' performance. For the
year ending December 31, 2002, the Corporation exceeded its financial goals, and
paid qualified executive officers a total of $1,897,521 in cash and $1,897,521
in restricted stock. The award was paid on March 7, 2003 and is reflected in the
2002 Summary Compensation Table.
o RESTRICTED STOCK AWARDS. Pursuant to the authority delegated to the
Committee by the Stock Option and Incentive Plans of 1984, 1996 and 2002, the
Committee authorizes restricted stock awards to managers and key employees
including the type of award, the amount of the award, and the nature of the
award. Shares of restricted stock, as authorized by the Committee, vest over a
period of 5 years at the rate of 20% per year, and assumed the recipients
continued employment by the Corporation or the Bank. Restricted Stock Awards
were made in conjunction with the payment of the 2002 Management Incentive Plan
awards. The Committee believes the Restricted Stock Awards provide a direct link
between the value created for the Corporation's shareholders and the
compensation paid to executive officers and further serves as an executive
retention tool.
o STOCK OPTIONS. The Corporation maintains the 1984 Stock Option and
Incentive Plan, as Amended and Restated, the 1996 Stock Option and Incentive
Plan and the 2002 Stock Option and Incentive Plan (collectively, the "Option
Plans") as a means of providing employees and directors with the opportunity to
acquire a proprietary interest in the Corporation and to align their interests
with those of the Corporation's shareholders. Under each plan, participants are
eligible to receive stock options, stock appreciation rights ("SAR") or shares
of restricted stock. Awards under the Option Plans are subject to vesting and
forfeiture as determined by the Committee. Options and SARs are generally
granted at the average of the highest price and the lowest price of Commercial
Federal Common Stock as traded on the New York Stock Exchange on the date of the
grant. Such awards acquire value only if the Corporation's stock price
increases. In addition, under both the 1996 and 2002 plans, the Committee may,
at the election of a director or employee selected by the Committee, permit such
individual to receive stock options in lieu of cash compensation. The exercise
price of such options shall be discounted below the market value of the
underlying Common Stock, such that the aggregate discount on the price of the
stock option is equal to the compensation foregone by the individual.
On March 1, 2002, a total of 669,132 stock options were granted including
319,695 non-incentive stock options to the Chief Executive Officer, the Chief
Operating Officer, the Chief Financial Officer and the senior officers of the
Corporation and the Bank and 349,437 incentive stock options to all executive
officers, senior officers, and employees of the Corporation and the Bank as a
group. These options were granted with a vesting schedule providing for the
vesting of the option at the rate of 33.33% on each of the first, second, and
third anniversary of the grant. The Committee believes that the Option Plans
align shareholders', officers', and employees' interests and helps to retain and
motivate executive officers to improve long-term shareholder value. No stock
appreciation rights were awarded in 2002.
Compensation of the Chief Executive Officer
The Committee determines the Chief Executive Officer's compensation, and in
making that determination considers:
9
o The performance of the Corporation, including earnings per share;
o The CEO's compensation compared to marketplace practices for similarly
sized financial institutions; and
o Leadership of the organization.
Mr. Fitzgerald's compensation for 2002 is reported in the Summary
Compensation Table on page 11. In March 2002, Mr. Fitzgerald received an
increase in his base salary and stock option awards. In deciding to make the
increase in base pay and grant the incentive and non-incentive stock option
awards the Committee considered the performance of the Corporation for the
period ending December 31, 2001. Under Mr. Fitzgerald's leadership the
Corporation reported Earnings Per Share (EPS) that exceeded the performance
goals approved by the Committee and the Board early in 2001. Other key
performance measures such as Net Income, Return On Average Shareholder Equity
and Return On Assets also showed above Plan results. The Committee further
considered information provided by Riley, Dettmann & Kelsey, LLC, an outside
professional consulting firm, regarding the range of competitive base pay at
similar size financial service institutions for Mr. Fitzgerald's position and
stock option award practices. Pursuant to the terms of the Management Incentive
Plan, Mr. Fitzgerald received a cash bonus of $412,295 (paid on March 7, 2003)
and 17,657 shares of restricted stock with a market value of $412,295 as of
December 31, 2002. This incentive payment for 2002 performance was based on a
pre-approved Earnings Per Share Annual Performance Goal for the Management
Incentive Plan. The Annual Performance Goal was approved by the Committee and
the Board in early 2002. The actual Earnings Per Share performance of the
Corporation exceeded the pre-approved goal and the payment represents an above
target award. In approving the Annual Performance Goal, the Committee considered
information from the outside professional consultant indicating that the
Corporation's annual incentive plan design is sound and that award levels are
competitive. The Committee also noted Mr. Fitzgerald's leadership and that his
initiative in 2001 to restructure senior management of the Corporation has
resulted in improved performance.
The Committee believes that the Corporation's executive compensation
program serves the Corporation and all of its shareholders by providing a direct
link between the interests of executive officers and shareholders generally, and
by helping to attract and retain qualified executive officers who are dedicated
to the long-term success of the Corporation.
Compensation and Stock Option Committee Interlocks and Insider Participation.
The Corporation had no "interlocking" relationships in which (i) any
executive officer of the Corporation served as a member of the compensation
committee (or other board committee performing equivalent functions or, in the
absence of any such committee, the entire board of directors) of another entity,
one of whose executive officers served on the Compensation and Stock Option
Committee of the Corporation, (ii) any executive officer of the Corporation
served as a director of another entity, one of whose executive officers served
on the Compensation and Stock Option Committee of the Corporation, or (iii) any
executive officer of the Corporation served as a member of the compensation
committee (or other board committee performing equivalent functions or, in the
absence of any such committee, the entire board of directors) of another entity,
one of whose executive officers served as a member of the Corporation's Board of
Directors. No member of the Compensation and Stock Option Committee of the Board
of Directors of the Corporation was (a) an officer or employee of the
Corporation or any of its subsidiaries during the fiscal year ended December 31,
2002, (b) a former officer of the Corporation or any of its subsidiaries, or (c)
an insider (i.e., director, officer, director or officer nominee, greater than
5% stockholder, or immediate family member of the foregoing) of the Corporation
and directly or indirectly engaged in transactions with the Corporation or any
subsidiary involving more than the $60,000 during the fiscal year ended December
31, 2002.
COMPENSATION AND STOCK OPTION COMMITTEE
Carl G. Mammel (Chairman)
Michael P. Glinsky
Aldo J. Tesi
George R. Zoffinger
10
SUMMARY COMPENSATION TABLE
The following table sets forth for the periods shown the cash and noncash
compensation for each of (i) the Chief Executive Officer, and (ii) the four
highest paid executive officers of the Corporation and the Bank.
ANNUAL COMPENSATION (2)
NAME AND PRINCIPAL FISCAL -----------------------
POSITION YEAR(1) SALARY BONUS
----------------------------- ------- ------ -----
William A. Fitzgerald 2002 $673,066 $412,295
Chairman and Chief Executive Officer 2001 624,183 433,686
of the Corporation and the Bank Transition Period 295,050 --
2000 590,106 --
Robert J. Hutchinson (5) 2002 $357,000 $169,388
President and Chief Operating Officer 2001 226,667 172,014
of the Corporation and the Bank
David S. Fisher (6) 2002 $277,333 $131,976
Executive Vice President and Chief 2001 255,000 139,698
Financial Officer of the Corporation Transition Period 120,000 45,000
and the Bank 2000 5,538 --
John S. Morris (7) 2002 $225,000 $ 85,597
Executive Vice President and Chief 2001 14,062 37,500
Credit Officer of the Bank
Lauren W. Kingry 2002 $196,326 $ 79,894
Executive Vice President of the Bank 2001 178,237 87,838
Transition Period 69,833 --
2000 137,708 --
LONG-TERM COMPENSATION
AWARDS
-------------------------------
SECURITIES
NAME AND PRINCIPAL RESTRICTED STOCK UNDERLYING ALL OTHER
POSITION AWARDS (3) OPTIONS COMPENSATION (4)
----------------------------- ---------- ------- ----------------
William A. Fitzgerald $412,295 150,000 $53,845
Chairman and Chief Executive Officer 433,686 142,478 58,722
of the Corporation and the Bank -- -- 24,906
-- 113,527 46,162
Robert J. Hutchinson (5) $169,388 70,000 $16,818
President and Chief Operating Officer 137,014 100,000 --
of the Corporation and the Bank
David S. Fisher (6) $131,976 50,000 $16,640
Executive Vice President and Chief 139,698 40,000 6,500
Financial Officer of the Corporation -- -- --
and the Bank -- 50,000 --
John S. Morris (7) $ 85,597 -- --
Executive Vice President and Chief -- 50,000 --
Credit Officer of the Bank
Lauren W. Kingry $ 79,894 10,000 $15,706
Executive Vice President of the Bank 87,838 12,000 14,699
-- -- 5,587
-- 7,800 11,017
____________
(1) On August 14, 2000 the Corporation changed its fiscal year end from June 30
to December 31. Accordingly, fiscal year 2000 refers to the twelve months
ended June 30, 2000. The Transition Period refers to the six months ended
December 31, 2000. Fiscal years 2002 and 2001 reflects the twelve months
ended December 31, 2002 and 2001.
(2) Does not include certain perquisite and other personal benefits which do
not exceed the lesser of $50,000 or 10.0% of the individual's salary and
bonus.
(3) Represents awards under the policy of the Stock Option Committee adopted in
conjunction with the Corporation's Management Incentive Plan. See
"Compensation and Stock Option Committee Report on Executive Compensation
-- Overview and Objectives." There was no restricted stock granted during
the Transition Period and fiscal year 2000. Restricted stock granted in
fiscal year 2002 and 2001 vests over a period of five years, at a rate of
20.0% per year, assuming continued service with the Corporation. As of
December 31, 2002, the number and value, based on the closing sales price
of the Common Stock of $23.35 at December 31, 2002, of the unvested
restricted stock holdings for Messrs. Fitzgerald, Hutchinson, Fisher,
Morris and Kingry, were 36,729 shares (value of $857,622), 11,918 shares
(value of $278,285), 10,408 shares (value of $243,027), 3,665 shares (value
of $85,578) and 6,821 shares (value of $159,270). Dividends are payable on
these shares if and to the extent paid on the Common Stock generally. Upon
a change in control of the Corporation, all restrictions on the restricted
stock immediately lapse.
(4) Includes net contributions to the Bank's 401(k) Plan on behalf of each of
the named executive officers to match elective deferral contributions made
by each to such plan and amounts paid under the Bank's Supplemental
Retirement Plan. Matching contributions under the Bank's 401(k) Plan
amounted to $9,000, $9,000, $9,000 and $9,000 while the employer matching
contributions under the Supplemental Retirement Plan benefits, were
$44,845, $7,818, $7,640 and $6,706 for Messrs. Fitzgerald, Hutchinson,
Fisher and Kingry, respectively. Mr. Morris did not meet length of service
requirements to receive any matching contributions in 2002.
(5) Mr. Hutchinson joined the Corporation on May 1, 2001.
(6) Mr. Fisher joined the Corporation on June 23, 2000.
(7) Mr. Morris joined the Corporation on December 10, 2001.
11
OPTION GRANTS TABLE
The following table contains information concerning the grant of stock
options under the Corporation's Stock Option and Incentive Plan to the Chief
Executive Officer and each of the other executive officers named in the
preceding Summary Compensation Table during the year ended December 31, 2002.
All such option grants vest over a three year period in varying increments.
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------ VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN OR BASE EXPIRATION -----------------------
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
---- -------- ------------ ------- ------ ------ -------
William A. Fitzgerald 150,000 21.4% $25.00 3/01/12 $2,358,355 $5,976,534
Robert J. Hutchinson 70,000 10.0 25.00 3/01/12 1,100,566 2,789,049
David S. Fisher 50,000 7.1 25.00 3/01/12 786,118 1,992,178
John S. Morris -- -- -- -- -- --
Lauren W. Kingry 10,000 1.4 25.00 3/01/12 157,224 398,436
OPTION YEAR-END VALUE TABLE
The following table sets forth information concerning the value of options
held by the Chief Executive Officer and the other named executive officers at
December 31, 2002. None of these individuals exercised any stock options during
the year ended December 31, 2002.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
William A. Fitzgerald 472,930 282,835 $ 1,121,673 $ 418,142
Robert J. Hutchinson 100,000 70,000 132,000 --
David S. Fisher 63,333 76,667 412,000 36,000
John S. Morris 50,000 -- 13,500 --
Lauren W. Kingry 18,700 20,600 45,232 30,716
__________
(1) Based on the closing sales price of the Common Stock as reported on the New
York Stock Exchange on December 31, 2002, which was $23.35.
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
Set forth below is a discussion of certain employment and change in control
agreements entered into between the Corporation and the Bank and those executive
officers listed in the Summary Compensation Table on page 11.
The agreement with William A. Fitzgerald, which became effective in June
1995, provides for Mr. Fitzgerald's employment as Chairman of the Board and
Chief Executive Officer of the Corporation and the Bank for a term of three
years. Pursuant to the agreement, Mr. Fitzgerald receives an annual salary and
bonus determined by agreement with the Board of Directors, but in no event less
than the rate of compensation Mr. Fitzgerald received on June 8, 1995. The base
compensation following his election as Chairman of the Board of Directors was
$385,000. The Boards of Directors of the Corporation and the Bank reviewed the
employment agreement and again extended the agreement for an additional one-year
period beyond the effective expiration dates. The contract provides for
termination for cause or in certain events specified by regulatory authorities.
The contract is also terminable by the Bank without cause wherein Mr. Fitzgerald
would be entitled to receive all compensation and benefits through the
12
effective date of termination, plus a severance payment equal to 36 months of
base salary. Mr. Fitzgerald shall be entitled to the same benefits and severance
in the event he becomes disabled while the agreement is in effect. In the event
Mr. Fitzgerald dies while the agreement is in effect, his heirs shall receive a
severance payment equal to 12 months of base salary. No such benefit is payable
should Mr. Fitzgerald retire. The agreement provides, among other things, for
Mr. Fitzgerald's participation in an equitable manner in all benefits available
to executive officers of the Corporation and the Bank, including:
o short-term and long-term incentive compensation and deferred
compensation;
o health, disability, life insurance, retirement and vacation benefits;
and
o any benefits available under perquisite programs.
The Corporation and the Bank have also entered into change in control
agreements with Messrs. Fitzgerald, Hutchinson, Fisher, Morris, and Kingry.
Under these agreements, in the event of the executive's involuntary termination
of employment in anticipation of, or after, a change in control of the
Corporation or the Bank, other than for "cause," the executive will be paid in
equal monthly installments, the base salary and all commissions and bonuses
(including short-term and long-term incentive compensation awards and stock
options granted under the Corporation's executive incentive plan) in effect at
the time of termination for a period of 35.88 months. Messrs. Fitzgerald,
Hutchinson, Fisher, Morris and Kingry, where not prohibited by law, shall also
be entitled to receive reimbursement for up to one-half of all legal fees and
expenses reasonably incurred by them as a result of an involuntary termination.
During this period, the executive shall also continue to participate in any
health, disability, life insurance and perquisite plans of any successor
corporation in which such executive was entitled to participate with the
Corporation prior to the change in control. All benefits and payments under the
agreements shall be reduced, if necessary, to the largest aggregate amount that
will result in no portion thereof being subject to federal excise tax or being
nondeductible to the Corporation and the Bank for federal income tax purposes.
Messrs. Hutchinson's, Fisher's, Morris' and Kingry's severance shall be reduced
by amounts received by the executive as a result of alternative employment
obtained during the period in which salary, commissions and bonuses are payable
under the change in control agreements. Further, Mr. Fitzgerald's severance
payments under his change in control agreements shall be reduced by the amount
of severance received under his employment agreement.
A "change in control" shall be deemed to have occurred under these
agreements in each of the following events:
o at any time a majority of the directors of the Corporation or the Bank
are not the persons for whom election proxies have been solicited by
the Boards of Directors of the Corporation and the Bank, or persons
then serving as directors appointed by such Boards, except where such
appointments are necessitated by removal of directors;
o at any time 49% or more of the outstanding stock of the Corporation or
the Bank is acquired or beneficially owned by any person or entity
(excluding the Corporation, the Bank or the executive) or any
combination of persons or entities acting in concert; or
o at any time the shareholders of the Corporation or the Bank approve an
agreement to merge or consolidate the Corporation or the Bank with or
into another corporation, or to sell or otherwise dispose of all, or
substantially all, of the assets of the Corporation or the Bank.
The executive shall also be entitled to receive such payment in the event of a
"constructive involuntary termination," which under the terms of the agreements
shall be deemed to have occurred if, in anticipation of or following a change in
control,
o the agreement or the executive's employment is terminated,
13
o the executive's compensation is reduced, responsibilities diminished
or job title lowered,
o the level of the executive's participation in incentive compensation
is reduced or eliminated,
o the executive's benefit coverage or perquisites are reduced or
eliminated, except to the extent such reduction or elimination applies
to all other employees, or
o the executive's office location is changed to a location more than 50
miles from the location of the executive's office at the time of the
change in control.
Pursuant to the terms of a separate agreement between the Bank and William
A. Fitzgerald, in the event of Mr. Fitzgerald's termination of employment with
the Bank, Mr. Fitzgerald will be entitled to receive in 120 equal monthly
installments an amount equal to three times his highest annual salary received
from the Bank during the five-year period ending with the close of the fiscal
year in which he attains age 65 (or, in the case of death or disability prior to
age 65, the year in which he became disabled or died). In the event of his death
before the payment of all installments, all remaining installments shall be paid
to his designated beneficiary. In the event of the death of both Mr. Fitzgerald
and the designated beneficiary, all remaining unpaid installments shall be paid
in one lump sum payment to the estate of the designated beneficiary. Pursuant to
the terms of the agreement, the right to receive any and all unpaid installments
will be forfeited upon the occurrence of any of the following events (i) without
the approval of the Board of Directors, Mr. Fitzgerald has or possesses,
directly or indirectly, any interest competing with or inimical to the interests
of the Bank within an area within a 300 mile radius of Omaha, Nebraska, or (ii)
Mr. Fitzgerald engages in any activity or conduct which, in the opinion of the
Board, is inimical to the interests of the Bank.
--------------------------------------------------------------------------------
DIRECTORS' COMPENSATION
--------------------------------------------------------------------------------
Individuals who serve as directors of the Corporation or the Bank, with the
exception of William A. Fitzgerald and Robert J. Hutchinson, who are officers of
the Corporation and the Bank, are compensated for their service as directors.
There are nine non-employee directors of the Corporation and three additional
non-employee directors of the Bank. During 2002, directors received $500 per
month for service on the Board of the Corporation and $1,500 per month plus $750
per meeting attended for service on the Board of the Bank. Directors who serve
as members of the committees of the Corporation and the Bank were paid $750 per
committee meeting attended in 2002. Effective January 1, 2003, the fee paid to
directors for attending a regular meeting of the Board of the Corporation or
Bank increased to $1,000 and the fee paid to directors who are members on the
Board's committees increased to $1,000 per meeting attended. The Chairman of the
Audit Committee receives an annual fee of $10,000 and the Chairman of the
Compensation and Stock Option Committee, the Finance Committee and the
Governance/Nominating Committee each receive an additional $3,000 per year
effective January 1, 2003. The 1996 and 2002 Stock Option and Incentive Plans
allow Directors to elect to substitute cash compensation payable to them as
Directors' fees for discounted non-incentive stock options with an exercise
price equal to 75% of the market value of the optioned shares. The aggregate
difference between the exercise price and the market value of the underlying
shares equals the compensation foregone. In no event shall the exercise price of
the stock option be less than 50% of the market value of the underlying shares
on the date of the grant. During the year ended December 31, 2002, all twelve
directors elected to receive discounted stock options in lieu of cash
compensation. For 2002, a total of 63,954 non-incentive stock options were
granted in lieu of cash remuneration to the non-employee directors of the
Corporation and the Bank. In addition, non-employee directors each received
5,000 non-incentive stock options, totaling 60,000 shares, on March 1, 2002 and
again February 27, 2003.
--------------------------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT AND OTHERS
--------------------------------------------------------------------------------
The Bank offers first and second mortgages, refinance, equity and various
consumer loans to its directors, officers and employees. Loans to executive
officers and directors are made in the ordinary course of business on
substantially the same terms and collateral, including interest rates and loan
fees charged, as those of comparable transactions prevailing at the time and do
not involve more than the normal risk of collectibility or present other
14
unfavorable features. The Bank paid $213,000 to PSI Group, Inc. during the year
ended December 31, 2002 for mail sorting services. Director Robert F. Krohn is
the Chief Executive Officer and was a stockholder of PSI Group, Inc. until its
sale in August 2002.
--------------------------------------------------------------------------------
COMPARATIVE STOCK PERFORMANCE GRAPH
--------------------------------------------------------------------------------
The graph set forth below compares the cumulative total shareholder return
on the Common Stock over the last five years with the cumulative total return on
the S&P 500 Index and an index comprised of the top 50 publicly traded thrifts
in the United States based on total asset size over the same period. Cumulative
total return on the stock or the index equals the total increase in value from
December 31, 1997 to December 31, 2002, assuming reinvestment of all dividends
paid into the stock or the index, respectively. The graph was prepared assuming
that $100 was invested on December 31, 1997 in the Common Stock and in the
respective indices.
December 31, 1997 through December 31, 2002
[Line graph appears here depicting the cumulative total shareholder return
of $100 invested in the Common Stock as compared to $100 invested in the S&P 500
Index and an index comprised of the top 50 publicly traded thrifts in the United
States. Line graph begins at December 31, 1997 and plots the cumulative total
return at December 31, 1998, 1999, 2000, 2001 and 2002. Plot points are provided
below.]
Comercial Federal The S&P Peer
Corporation 500 Group
----------------- ------- -----
12/31/97 $100 $100 $100
12/31/98 $ 66 $129 $ 87
12/31/99 $ 51 $156 $ 69
12/31/00 $ 57 $141 $121
12/31/01 $ 70 $125 $125
12/31/02 $ 70 $ 97 $145
15
--------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
--------------------------------------------------------------------------------
In order to be eligible for inclusion in the Corporation's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Corporation's executive office at
13220 California Street, Omaha, Nebraska 68154 no later than December 5, 2003.
Any such proposal shall be subject to the requirements of the proxy rules
adopted under the Exchange Act.
Stockholder proposals, other than those submitted pursuant to the Exchange
Act, must be submitted in writing to the Corporation's principal executive
offices at the address given in the preceding paragraph not less than 60 days
prior to the date of such meeting.
--------------------------------------------------------------------------------
AUDIT COMMITTEE REPORT
--------------------------------------------------------------------------------
The audit committee has reviewed and discussed the audited financial
statements of the Corporation with management and has discussed with Deloitte &
Touche LLP, the Corporation's independent auditors, the matters required to be
discussed under Statement on Auditing Standards No. 61, as amended ("SAS 61").
In addition, the audit committee has received from Deloitte & Touche LLP the
written disclosures and the letter required to be delivered by Deloitte & Touche
LLP under Independence Standards Board Standard No. 1 ("ISB Standard No. 1")
addressing all relationships between the auditors and the Corporation that might
bear on the auditors' independence. The audit committee has reviewed the
materials to be received from Deloitte & Touche LLP and has met with
representatives of Deloitte & Touche LLP to discuss the independence of the
auditing firm.
In connection with the standards for independence of the Corporation's
independent auditors promulgated by the Securities and Exchange Commission, the
audit committee has reviewed the non-audit services currently provided by the
Corporation's independent auditor and has considered whether the provision of
such services is compatible with maintaining the independence of the
Corporation's independent auditors.
Based on the audit committee's review of the financial statements, its
discussion with Deloitte & Touche LLP regarding SAS 61, and the written
materials provided by Deloitte & Touche LLP under ISB Standard No. 1 and the
related discussion with Deloitte & Touche LLP of their independence, the audit
committee has recommended to the Board of Directors that the audited financial
statements of the Corporation be included in its 2002 Annual Report on Form 10-K
for the year ended December 31, 2002, for filing with the Securities and
Exchange Commission.
THE AUDIT COMMITTEE
Michael P. Glinsky (Chairman)
Aldo J. Tesi
Carl G. Mammel
Joseph J. Whiteside
16
--------------------------------------------------------------------------------
INDEPENDENT AUDITORS
--------------------------------------------------------------------------------
Deloitte & Touche LLP, independent public accountants, served as the
Corporation's independent auditors for the 2002 fiscal year. Representatives of
Deloitte & Touche LLP are expected to be present at the Meeting to respond to
appropriate questions from stockholders and will have the opportunity to make a
statement if they so desire.
The Audit Committee has not yet selected a firm to serve as independent
auditors for the Corporation for the 2003 fiscal year. The Board of Directors
historically has selected its auditor for the upcoming fiscal year during the
third quarter.
For the years ended December 31, 2002 and 2001, professional services were
performed by Deloitte & Touche LLP, the member firms of Deloitte Touche
Tohmatsu, and their respective affiliates (collectively, "Deloitte & Touche"),
which includes Deloitte Consulting. Deloitte & Touche has announced its
intention to separate from Deloitte Consulting.
Audit and audit-related fees aggregated $451,000 and $375,000 for the years
ended December 31, 2002 and 2001, respectively, and were composed of the
following:
AUDIT FEES
The aggregate fees billed for the audit of the Corporation's annual
financial statements for the fiscal years ended December 31, 2002 and 2001 and
for the reviews of the financial statements included in the Corporation's
Quarterly Reports on Form 10-Q were $389,000 and $330,000, respectively.
AUDIT-RELATED FEES
The aggregate fees billed for Audit-Related services for the fiscal years
ended December 31, 2002 and 2001 were $62,000 and $45,000, respectively. These
fees relate to the employee benefit plan audits, consultation of financial
accounting standards, and litigation support for the fiscal year ended December
31, 2002 and to the employee benefit plan audits and consultation of financial
accounting standards for the fiscal year ended December 31, 2001.
TAX FEES
The aggregate fees billed for tax services for the fiscal years ended
December 31, 2002 and 2001 were $123,000 and $202,000, respectively. These fees
related to review of the tax return, tax consulting and tax planning services
for the fiscal year ended December 31, 2002 and to review of the tax return, tax
consulting and tax planning services for the fiscal year ended December 31,
2001.
ALL OTHER FEES
The aggregate fees for services not included above were $1,125,000 and
$2,892,000, respectively, for the fiscal years ended December 31, 2002 and 2001.
The fees relate to the Gramm-Leach-Bliley Act privacy procedures and consulting
services for the fiscal year ended December 31, 2002 and to the
Gramm-Leach-Bliley Act privacy procedures for the fiscal year ended December 31,
2001.
All other fees include $772,000 and $2,774,000 of fees billed by Deloitte
Consulting for the years ended December 31, 2002 and 2001, respectively.
17
At its May 2002 meeting, the Audit Committee established a policy requiring
their pre-approval of the performance of permissible audit and non-audit
services by the Corporation's independent auditors as well as instituting hiring
restrictions on certain of the independent auditor's personnel.
--------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
--------------------------------------------------------------------------------
Pursuant to regulations promulgated under the Securities Exchange Act of
1934, as amended, the Corporation's directors and officers and persons who own
more than 10 percent of the outstanding Common Stock ("Insiders") are required
to file reports detailing their ownership and changes of ownership in such
Common Stock, and to furnish the Corporation with copies of all such reports.
Based solely on its review of the copies of such reports or written
representations that no such reports were necessary that the Corporation
received during the past fiscal year or with respect to the last fiscal year,
management believes that during the year ended December 31, 2002, all of the
Corporation's Insiders complied with these reporting requirements.
--------------------------------------------------------------------------------
EXPENSES OF SOLICITATION
--------------------------------------------------------------------------------
The cost of soliciting proxies will be borne by the Corporation. The
Corporation will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Corporation may solicit proxies
personally or by telegraph, telephone or other electronic means without
additional compensation. The Corporation has retained D. F. King & Co., Inc. to
assist in the solicitation of proxies by mail, personally or by telephone or
other means of communication, for a fee estimated at $8,000 plus expenses.
--------------------------------------------------------------------------------
HOUSEHOLDING OF PROXY STATEMENT AND ANNUAL REPORT
--------------------------------------------------------------------------------
It is the Corporation's policy to "Household" Annual Reports, Proxy
Statement and similar documents. Only one Summary Annual Report, Annual Report
on Form 10-K and Proxy Statement are being sent to multiple stockholders sharing
a single address unless the Corporation has received instructions to the
contrary. The Corporation will continue to separately mail a proxy card for each
registered stockholder account. You may send a written request for additional
copies of proxy material to: Investor Relations Department, Commercial Federal
Corporation, 13220 California Street, Omaha, Nebraska 68154.
--------------------------------------------------------------------------------
ANNUAL REPORT TO STOCKHOLDERS AND FINANCIAL STATEMENTS
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The Corporation's 2002 Summary Annual Report to Stockholders and its Annual
Report on Form 10-K for the year ended December 31, 2002, including financial
statements, are being mailed to all stockholders of record as of the close of
business on March 28, 2003 together with this Proxy Statement. Any stockholder
who has not received copies of such reports may obtain copies by writing to the
Secretary of the Corporation. Such reports are not to be treated as a part of
the proxy solicitation material or as having been incorporated herein by
reference.
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OTHER MATTERS
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The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
as determined by a majority of the Board of Directors.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gary L. Matter
GARY L. MATTER
SECRETARY
Omaha, Nebraska
April 3, 2003
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[FORM OF PROXY CARD]
COMMERCIAL FEDERAL CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
MAY 13, 2003 ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Talton K. Anderson, Robert J. Hutchinson
and William A. Fitzgerald, and each of them, with full power of substitution, as
attorneys in fact, agents and proxies for the undersigned to vote all of the
shares of Common Stock, par value $.01 per share, of COMMERCIAL FEDERAL
CORPORATION (the "Corporation") which the undersigned is entitled to vote at the
Annual Meeting of Stockholders to be held at the Omaha Marriott Hotel, 10220
Regency Circle, Omaha, Nebraska on Tuesday, May 13, 2003 at 10:00 a.m., local
time, and at any and all adjournments or postponements thereof (the "Meeting")
as indicated below and as directed by the Board of Directors, with respect to
such other matters as may properly come before the Meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO DIRECTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY "FOR" PROPOSAL I. IF OTHER
MATTERS ARE PROPERLY BROUGHT BEFORE THE MEETING, THIS PROXY WILL BE VOTED BY
THOSE NAMED IN THIS PROXY AS DIRECTED BY A MAJORITY OF THE BOARD OF DIRECTORS.
There is cumulative voting in the election of directors and, unless otherwise
indicated by the stockholder, a vote for the nominees listed in Proposal I will
give the proxies discretionary authority to cumulate all votes to which the
undersigned is entitled and to allocate such votes in favor of one or more of
such nominees, as the proxies may determine.
THE UNDERSIGNED HEREBY REVOKES ANY PREVIOUS PROXIES WITH RESPECT TO THE
MATTERS COVERED BY THIS PROXY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL
I. The election as directors of all nominees listed below (except as marked to
the contrary):
For terms to expire in 2006
Michael P. Glinsky
Robert S. Milligan
George R. Zoffinger
Joseph J. Whiteside
[ ] FOR [ ] WITHHOLD AUTHORITY FOR ALL NOMINEES
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE(S), MARK
"FOR" ABOVE AND WRITE THE NAME(S) OF THE NOMINEE(S) FOR WHICH YOU DO NOT
WISH TO VOTE ON THE LINE BELOW.
______________________________________
Please sign exactly as your name appears on this card. Joint
owners should each sign personally. Corporation proxies
should be signed in corporate name by an authorized
officer. Executors, administrators, trustees or guardians
should give their title when signing.
Date: _______________________________________
Signature(s): _______________________________
_______________________________________
Please Sign, Date and Mail your Proxy Promptly in the
Enclosed Postage-Paid Envelope.