UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(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 / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)
(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 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 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials:
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/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[COMMERCIAL FEDERAL CORPORATION LETTERHEAD]
April 2, 2004
ANNUAL MEETING
MAY 11, 2004
Dear Fellow Stockholder:
You are cordially invited to attend the 2004 Annual Meeting of Stockholders
of Commercial Federal Corporation (the "Corporation") to be held on Tuesday, May
11, 2004, at 10:00 a.m. Central Time 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
Talton K. Anderson, James P. O'Donnell, Robert J. Hutchinson and Jane E. Miller
for three-year terms) and the ratification of the appointment of Deloitte &
Touche LLP as the Corporation's independent auditors for the year ending
December 31, 2004. 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.
In closing, the Board would like to recognize Carl G. Mammel for his
valuable contribution to our stockholders. Carl is retiring from the Board of
Directors after 14 years of service. We want to acknowledge his outstanding
leadership, wisdom and guidance. His service to the Board has been greatly
appreciated.
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 11, 2004
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NOTICE IS HEREBY GIVEN that the 2004 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
11, 2004, at 10:00 a.m Central Time.
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. The ratification of Deloitte & Touche LLP as the Corporation's
independent auditors for the year ending December 31, 2004; and
3. 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 24, 2004, 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 2, 2004
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
2004 ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 2004
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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 2004
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 11, 2004, at 10:00
a.m Central Time. The accompanying Notice of Annual Meeting, this Proxy
Statement and the Proxy Card are being first mailed to stockholders on or about
April 2, 2004.
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VOTING AND REVOCABILITY OF PROXIES
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The close of business on March 24, 2004, 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 40,863,013 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 and FOR the
ratification of Deloitte & Touche LLP as the Corporation's independent auditors
for the year ending December 31, 2004. 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 and the ratification of independent auditors, 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. 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 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"). Based upon
such reports, the following table sets forth, as of March 24, 2004, certain
information as to the Common Stock beneficially owned by the stockholder owning
in excess of 5.0% of the Corporation's outstanding Common Stock.
Percent of Shares
Name and Address Amount and Nature of of Common Stock
of Beneficial Owner Beneficial Ownership Outstanding
------------------- --------------------- ------------------
Barclays Global Investors, N.A. (1) 3,053,943 (1) 7.47%
45 Fremont Street
San Francisco, CA 94105
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(1) Shares are beneficially owned by Barclays Global Investors, N.A. and
various affiliated entities, which have sole voting and dispositive power
over 2,714,562 shares of Common Stock.
The following table sets forth certain information as to the Common Stock
beneficially owned as of March 24, 2004 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 12 and by all executive officers and
directors of the Corporation and Commercial Federal Bank, a Federal Savings Bank
(the "Bank") as a group.
Percent of Shares
Amount and Nature of of Common Stock
Name of Beneficial Owner Beneficial Ownership (1)(2) Outstanding
------------------------ --------------------------- ------------------------
Carl G. Mammel 193,265 *
William A. Fitzgerald 1,206,358 2.90%
Robert J. Hutchinson 180,657 *
David S. Fisher 152,018 *
John S. Morris 59,675 *
Lauren W. Kingry 53,124 *
All Executive Officers and Directors
as a Group (17 persons) 2,603,278 6.11%
* Less than 1% of the Corporation's outstanding Common Stock.
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(1) 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 70,765, 736,422, 163,332, 136,655, 54,000, 39,966 and 1,759,628
shares, respectively, which Messrs. Mammel, 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 24, 2004, as well as stock held in retirement accounts or
funds for the benefit of the named individuals or group.
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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 Talton K. Anderson, James P.
O'Donnell, Robert J. Hutchinson and Jane E. Miller for these seats, all of whom
are currently members of the Board, except for Ms. Jane E. Miller who is a
member of the Board of the Corporation's wholly owned subsidiary, 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 or she became a director, the expiration of his
or her term as a director, and the number and percentage of shares of Common
Stock beneficially owned at March 24, 2004. 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 24, 2004 as Director to Expire March 24, 2004 (1)(2) of Class
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BOARD NOMINEES FOR TERMS TO EXPIRE IN 2007
Talton K. Anderson 67 1991 2004 124,983 *
James P. O'Donnell 56 1991 2004 77,971 *
Robert J. Hutchinson 56 2001 2004 180,657 *
Jane E. Miller 41 -- (3) -- (3) 5,000 *
DIRECTORS CONTINUING IN OFFICE
William A. Fitzgerald 66 1984 2005 1,206,358 2.90%
Robert D. Taylor 57 1996 2005 132,629 *
Aldo J. Tesi 52 1996 2005 46,071 *
Michael P. Glinsky 59 1997 2006 68,684 *
Robert S. Milligan 59 1987-1999; 2003 2006 77,691 *
George R. Zoffinger 56 1999 2006 51,939 *
Joseph J. Whiteside 62 1999 2006 23,623 *
* Less than 1% of the Corporation's outstanding Common Stock.
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(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 70,568 (Anderson), 69,394 (O'Donnell), 163,332
(Hutchinson), 5,000 (Miller), 736,422 (Fitzgerald), 64,550 (Taylor), 42,819
(Tesi), 67,204 (Glinsky), 63,714 (Milligan), 50,821 (Zoffinger), and 22,511
(Whiteside), which such individuals have the right to acquire within 60
days of March 24, 2004 pursuant to the exercise of stock options.
(3) Ms. Miller was appointed a director of the Bank in 2003 but does not
presently serve as a director of the Corporation. Ms. Miller was
recommended for nomination as a director of the Corporation by
non-management directors serving on the Governance/Nominating Committee,
the Corporation's Chief Executive Officer and other executive officers of
the Corporation.
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THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" EACH OF THE
NOMINEES.
The principal occupation of each director of the Corporation for the last
five years is set forth below:
TALTON K. (TAL) ANDERSON - Chairman of Performance Automotive Group and
Baxter Chrysler Plymouth, Inc., and President of Lexus of Omaha and Lexus of
Lincoln, all of which are automobile dealerships located in Omaha, Nebraska, and
Lincoln, Nebraska. Mr. Anderson is also the owner and President of a reinsurance
company.
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 through April 2001. Mr. Hutchinson also managed
Michigan National Bank's residential mortgage joint venture, served on that
bank's Executive Committee and 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. Mr. Hutchinson also managed
Non-Branch Delivery, significantly expanding non-traditional channels including
telephone banking, ATMs and debit cards.
JANE E. MILLER - Chief Operating Officer and Executive Vice President of
The Gallup Organization, Omaha, Nebraska. Ms. Miller joined Gallup in 1980,
became Vice President of Operations in 1992 and assumed her current role in
2000. Gallup is a performance management and consulting organization.
WILLIAM A. FITZGERALD - Chairman of the Board and Chief Executive Officer
of the Corporation and the Bank.
ROBERT D. TAYLOR - Mr. Taylor has served as President and Chief Executive
Officer of Executive AirShare Corporation, Wichita, Kansas since November 2001.
Executive AirShare charters, sells, and operates fractional jet and 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. Mr.
Taylor became President of Wichita Executive Aircraft Corporation in April 2003.
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.
MICHAEL P. GLINSKY - Managing Director of Glass Lewis & Company, LLC,
Broomfield, Colorado, since July 2003. Glass Lewis & Company is an independent
research company providing proxy advice and forensic
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accounting to institutional investors. Mr. Glinsky was a private investor from
April 2001 to June 2003. 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 of MI Industries, a meat and animal protein
processing company in Lincoln, Nebraska. Mr. Milligan joined MI Industries in
1977 and became Chairman and Chief Executive Officer in 1980. Mr. Milligan has
served as Chairman since November 2003. Mr. Milligan also served as President of
Oak Grove Farms, Inc., a pork production company in Lincoln, Nebraska, until
September 2003. Mr. Milligan serves as the President of CBMC International, a
Christian ministry with offices in Omaha, Nebraska and major cities in 85
nations throughout the world.
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 specializing in listed options. From
1996 to September 2001, Mr. Whiteside 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.
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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 both the
Board and its committees, which permits the Board to more efficiently discharge
its duties. During the year ended December 31, 2003, 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.
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The following table describes the members of each of the Committees, its
primary responsibilities and the number of meetings held during 2003:
Meetings
Members Responsibilities Held in 2003
------- ---------------- ------------
AUDIT
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Michael P. Glinsky (Chairman) o Credit and operational risk management oversight Nine
Carl G. Mammel o Annual report and related disclosures review and oversight
Robert S. Milligan o Quarterly financial results and earnings release review and
Aldo J. Tesi oversight
Joseph J. Whiteside o Internal audit and regulatory compliance oversight
Sharon Marvin Griffin (ex- o Regulatory examination review and oversight
officio) o Independent auditor appointment, review and oversight
o Pre-approval of all audit and non-audit work performed by
independent auditor
o Key credit risk management policy ratification
o Handling of complaints related to auditing and accounting
matters
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
James P. O'Donnell servicing rights
Robert D. Taylor o Oversight of Corporation's trading and hedging activities
George R. Zoffinger for secondary marketing of originated loans
Jane E. Miller (ex-officio) o Oversight of securities investment portfolio activities
Michael T. O'Neil (ex-officio) o Review policy and regulatory compliance with above activities
COMPENSATION
------------
Carl G. Mammel (Chairman) o Approve corporate goals and objectives relevant to Seven
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 Set the annual compensation for the Chief Executive Officer,
and review and recommend to the Board the annual
compensation of 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
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Meetings
Members Responsibilities Held in 2003
------- ---------------- ------------
EXECUTIVE
---------
William A. Fitzgerald (Chairman) o Exercise the power and authority of the Board of Directors Seven
James P. O'Donnell 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
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Aldo J. Tesi (Chairman) o Make recommendations to the Board regarding candidates for One
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 stockholder proposals
and proposed amendments to the
Corporation's Articles of
Incorporation or Bylaws, and
other corporate governance
matters
GOVERNANCE/NOMINATING COMMITTEE
The Board of Directors has adopted a Charter for the Governance/Nominating
Committee. The Charter is available on the Corporation's website
www.comfedbank.com. Each member of the Governance/Nominating Committee meets the
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independence requirements of the New York Stock Exchange, the Exchange Act and
the Corporation's Corporate Governance Guidelines.
As provided in its charter, the Governance/Nominating Committee is
responsible for identifying individuals to become directors of the Corporation
and seeks input from the Board of Directors, the Chairman of the Board and
executive management. In accordance with the Corporation's Corporate Governance
Guidelines, the Governance/Nominating Committee's goal is to maintain a strong
and diverse Board by continually assessing several factors, including the
Board's diversity, business background, areas of expertise, current
responsibilities, community involvement and expected period of time available
for service. The Governance/Nominating Committee seeks nominees with backgrounds
that bring strong business enterprise, Midwest retail experience, broad
technology experience, and financial expertise. Preferred nominees would have
appropriate business experience from previously or currently held executive
positions, such as a Chief Financial Officer, Chief Operating Officer, President
or Chief Executive Officer of a publicly traded company, large privately held
company or mutual company located in the Corporation's operating regions.
In addition to the candidate's experience and background, the Committee
also considers the independence of the candidate as defined in the Corporation's
Corporate Governance Guidelines and as in the rules of the New York Stock
Exchange. The Committee also reviews the candidate's service on other boards of
directors of public companies or other significant commitments involving
affiliation with other businesses or governmental units. While there may be
value to be gained from service on other boards of directors, such service may
have legal and
7
regulatory implications to the Corporation or may present recurrent conflicts.
In accordance with the Corporation's Bylaws, no person who is a controlling
person or management official of a federally insured depository institution
(other than affiliates of the Corporation) that operates branches in any market
in which the Bank operates branches shall be eligible to be nominated for
service, or to serve, as a director of the Corporation.
The Governance/Nominating Committee will consider recommendations for
directorships submitted by stockholders. Stockholders who wish the
Governance/Nominating Committee to consider their recommendations for nominees
for the position of Director should submit their recommendations in writing to
the Governance/Nominating Committee in care of the Secretary, Commercial Federal
Corporation, 13220 California Street, Omaha, Nebraska 68154. Each such written
recommendation must set forth (i) the name of the recommended candidate, (ii)
the number of shares of stock of the Corporation which are beneficially owned by
the stockholder making the recommendation and the recommended candidate, and
(iii) a detailed statement explaining why the stockholder believes the
recommended candidate should be nominated for election as a director. In
addition, the stockholder making such recommendation must promptly provide any
other information reasonably requested by the Governance/Nominating Committee.
In order to be considered by the Governance/Nominating Committee for nomination
for election at an annual meeting of stockholders, the recommendation must be
received by January 1 preceding that annual meeting. Recommendations by
stockholders that are made in accordance with these procedures will receive the
same consideration given to other candidates recommended by directors or
executive management.
COMMUNICATIONS WITH DIRECTORS
The Board of Directors of the Corporation has identified an independent
director to serve as lead director who presides over executive sessions of the
Board. Any stockholder wishing to send a written communication to a Director or
Directors should send this communication to the lead director at the following
address: Lead Director, c/o Ms. Kelly L. Sazama, Commercial Federal Corporation,
13220 California Street, Omaha, Nebraska 68154.
DIRECTOR ATTENDANCE AT ANNUAL MEETING
The Corporation's Directors are strongly encouraged to attend the
Corporation's annual meeting of stockholders. All eleven Directors attended the
Corporation's 2003 annual meeting of stockholders.
--------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overview and Objectives
The Compensation Committee (the "Committee") is composed exclusively of
independent directors and includes Carl G. Mammel (Chairman), Michael P.
Glinsky, Aldo J. Tesi, and George R. 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 Charter 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 2003, the Committee was assisted by
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.
8
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 stockholder
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 stockholder 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 Committee and the Board of Directors strongly believes that it is in
the best interests of stockholders to encourage ownership of stock by
management. Accordingly, the Committee established the following guidelines on
stock ownership.
Chief Executive Officer 5 times annual salary
Chief Operating Officer 5 times annual salary
Chief Financial Officer 3 times annual salary
Executive Vice Presidents 2 times annual salary
Senior Vice Presidents 2 times annual salary
First Vice Presidents 1.3 times annual salary
In furtherance of the above objectives, the Corporation's executive
compensation program for 2003 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 appropriate mix of total compensation that is reasonably
competitive with total compensation paid for similar 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 when the Corporation achieves less than 85% of the Corporation's
predetermined performance goal. The distribution of awards under the Management
Incentive Plan is triggered by the Corporation's achievement of the
predetermined performance goal and the individual executive officers'
performance. A portion of the award is paid in cash and a portion of the award
is paid in restricted stock. For the year ending December 31, 2003, executive
officers listed in the Summary Compensation Table on page 12 were paid a total
of $951,588 in cash and restricted stock valued at $364,591 based on 2003
results against pre-approved goals. The award was paid on March 5, 2004 and is
reflected in the 2003 Summary Compensation Table.
o EQUITY COMPENSATION. The Committee considers equity compensation an
essential tool in aligning the interests of management with those of the
Corporation's stockholders. The Committee uses a combination of stock options
and restricted stock awards to provide equity compensation to management.
9
Under the Corporation's option plans, participants are eligible to receive
stock options, stock appreciation rights ("SARs") or shares of restricted stock.
Options 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 the Common Stock as traded on the New York Stock Exchange on
the date of the grant and vest at the rate of 33.33% on each of the first,
second, and third anniversary of the grant. Such awards acquire value only if
the Corporation's stock price increases.
The Committee has authority to grant restricted stock awards and to set the
amount of any such award and the nature of the award. Restricted stock awards
were made in conjunction with the payment of the 2003 Management Incentive Plan
awards. Shares of restricted stock, as authorized by the Committee, vest over a
5-year period at the rate of 20% per year assuming the recipients continue
employment with the Corporation or the Bank. The Committee believes the
restricted stock awards provide a direct link between the value created for the
Corporation's stockholders and the compensation paid to executive officers and
further serve as an executive retention tool and also enable the executives to
achieve their share ownership targets.
Long-Term Incentive Plan
Following a comprehensive review of executive compensation conducted with
the assistance of Mercer Human Resources Consulting, the Committee recommended
to the Board and the Board approved the implementation of a Long-Term Incentive
Plan (the "LTIP") effective January 1, 2004.
The purpose of the LTIP is to promote the growth and the financial success
of the Corporation by implementing a performance based long-term incentive
program to motivate and reward participants for the achievement of long-term
business strategies and goals. The LTIP approved for implementation beginning
January 1, 2004 is a multi-year performance plan. The first performance
measurement period is a three-year period beginning January 1, 2004 and ending
December 31, 2006. A new plan measurement period with new goals will be
established each year. Performance goals and incentive opportunities will be
approved by the Committee. The Committee has determined that the performance
measures for the LTIP will include measures that assess the Corporation's
performance in a comparative manner to a broader base of banks.
The Committee has also determined that payout of the LTIP will be in the
form of restricted stock to foster the share ownership targets for participating
executives. Once an executive has achieved their share ownership targets, the
participants may request to receive up to 50% of their LTIP in cash.
In implementing the LTIP, the Committee has determined to adjust the
compensation of participating executives. Specifically, the annual incentive
compensation opportunity available under the annual Management Incentive Plan
will be reduced as the LTIP is fully implemented.
In the review of total compensation, the Committee concluded that
implementation of the LTIP, including the restructuring of incentive awards,
provides a total compensation level for participants that is competitive in the
marketplace and supports improving stockholder value.
10
Compensation of the Chief Executive Officer
The Committee determines the Chief Executive Officer's compensation, and in
making that determination considers:
o The performance of the Corporation, including earnings per share;
o The Chief Executive Officer's compensation compared to marketplace
practices for similarly sized financial institutions; and
o Leadership of the organization.
Mr. Fitzgerald's compensation for 2003 is reported in the Summary
Compensation Table on page 12. In March 2003, Mr. Fitzgerald received stock
option awards and an increase in his base salary. In deciding to make the
increase in base pay and grant incentive and non-incentive stock option awards
the Committee considered the Corporation's performance for the period ending
December 31, 2002. Under Mr. Fitzgerald's leadership the Corporation reported
earnings per share that exceeded the performance goals approved by the Committee
and the Board early in 2002. Other key performance measures such as net income,
return on average stockholders' equity and return on average assets also
exceeded the Committee's approved 2002 performance goals, which contributed to
the Committee's decision to increase Mr. Fitzgerald's base salary compensation
effective March 1, 2003. The Committee also considered information provided by
Mercer Human Resources Consulting, an outside professional consulting firm,
regarding competitive marketplace practices relative to base pay increases and
stock option award practices.
Pursuant to the terms of the Management Incentive Plan, Mr. Fitzgerald
received a cash bonus of $459,824 (paid on March 5, 2004) and 4,303 shares of
restricted stock with a market value of $114,933 as of December 31, 2003. This
incentive payment for 2003 was based on the Corporation's performance relative
to the pre-approved annual performance goal for the Management Incentive Plan.
The annual performance goal was approved by the Committee and the Board in early
2003. In approving the 2003 Management Incentive Plan, the Committee considered
information from Mercer Human Resources Consulting indicating that the
Corporation's annual incentive plan design is sound and that award levels are
competitive and not excessive relative to marketplace practices. The Committee
believes that the Corporation's executive compensation program serves the
Corporation and all its stockholders by providing a direct link between the
interest of the executive officers and the stockholders generally, and by
helping attract and retain qualified executive officers who are dedicated to the
long-term success of the Corporation.
COMPENSATION COMMITTEE
Carl G. Mammel (Chairman)
Michael P. Glinsky
Aldo J. Tesi
George R. Zoffinger
11
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.
Long-Term Compensation
Awards
-------------------------------
Annual Compensation (1) Securities
Name and Principal ----------------------- Restricted Stock Underlying All Other
Position Year Salary Bonus Awards (2) Options Compensation (3)
----------------------------- ---- ------ ----- ---------- ------- ----------------
William A. Fitzgerald 2003 $704,413 $459,824 $114,933 100,000 $56,354
Chairman and Chief Executive Officer 2002 673,066 412,295 412,295 150,000 53,845
of the Corporation and the Bank 2001 624,183 433,686 433,686 142,478 58,722
Robert J. Hutchinson (4) 2003 $393,400 $194,559 $ 64,852 50,000 $31,471
President and Chief Operating Officer 2002 357,000 169,388 169,388 70,000 16,818
of the Corporation and the Bank 2001 226,667 172,014 137,014 100,000 --
David S. Fisher 2003 $292,633 $119,599 $ 71,690 40,000 $17,852
Executive Vice President and Chief 2002 277,333 131,976 131,976 50,000 16,640
Financial Officer of the Corporation 2001 255,000 139,698 139,698 40,000 6,500
and the Bank
John S. Morris (5) 2003 $232,500 $103,242 $ 57,346 12,000 $15,510
Executive Vice President and Chief 2002 225,000 85,597 85,597 -- --
Credit Officer of the Bank 2001 14,062 37,500 -- 50,000 --
Lauren W. Kingry 2003 $204,177 $ 74,364 $ 55,770 12,000 $14,569
Executive Vice President of the Bank 2002 196,326 79,894 79,894 10,000 15,706
2001 178,237 87,838 87,838 12,000 14,699
------------------------
(1) Does not include certain perquisite and other personal benefits which do
not exceed the lesser of $50,000 or 10% of the individual's salary and
bonus.
(2) Represents awards approved by the Compensation Committee in conjunction
with the Corporation's Management Incentive Plan. See "Compensation
Committee Report on Executive Compensation -- Overview and Objectives."
Restricted stock granted in 2003, 2002 and 2001 vests over a period of five
years, at a rate of 20% per year, assuming continued service with the
Corporation. As of December 31, 2003, the number and value, based on the
closing sales price of the Common Stock of $26.71 at December 31, 2003, of
the unvested restricted stock holdings for Messrs. Fitzgerald, Hutchinson,
Fisher, Morris and Kingry, were 30,846 shares (value of $823,897), 11,730
shares (value of $313,308), 10,773 shares (value of $287,747), 5,079 shares
(value of $135,660) and 7,235 shares (value of $193,247), respectively.
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.
(3) 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 Deferred
Compensation Plan. Matching contributions under the Bank's 401(k) Plan
amounted to $6,359, $4,805, $12,000, $12,000 and $12,000, while the
employer matching contributions under the Deferred Compensation Plan
benefits were $49,995, $26,666, $5,852, $3,510 and $2,569 for Messrs.
Fitzgerald, Hutchinson, Fisher, Morris and Kingry, respectively.
(4) Mr. Hutchinson joined the Corporation on May 1, 2001.
(5) Mr. Morris joined the Corporation on December 10, 2001.
12
OPTION GRANTS TABLE
The following table contains information concerning the grant of stock
options 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, 2003. All such option grants vest over a three year period.
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 100,000 15.0% $22.54 2/27/13 $1,417,528 $3,592,296
Robert J. Hutchinson 50,000 7.5 22.54 2/27/13 708,764 1,796,148
David S. Fisher 40,000 6.0 22.54 2/27/13 567,011 1,436,918
John S. Morris 12,000 1.8 22.54 2/27/13 170,103 431,075
Lauren W. Kingry 12,000 1.8 22.54 2/27/13 170,103 431,075
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, 2003. None of these individuals exercised any stock options during
the year ended December 31, 2003.
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 606,929 248,836 $ 2,849,641 $ 814,004
Robert J. Hutchinson 123,333 96,667 507,899 288,301
David S. Fisher 93,327 86,673 716,087 286,613
John S. Morris 50,000 12,000 181,500 50,040
Lauren W. Kingry 28,633 22,667 146,975 80,281
-------------------
(1) Based on the closing sales price of the Common Stock as reported on the New
York Stock Exchange on December 31, 2003, which was $26.71.
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
The Corporation has entered into an agreement with William A. Fitzgerald.
Pursuant to the agreement, Mr. Fitzgerald is employed as Chairman of the Board
and Chief Executive Officer of the Corporation and the Bank. 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 effective date of the agreement. The term of the
employment agreement is for three years, and the Boards of Directors of the
Corporation and the Bank annually review the employment agreement and may extend
the agreement for an additional one-year period beyond the effective expiration
date. The agreement presently expires on June 8, 2006. 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 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:
13
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, if in anticipation of a change of control, or during the
three-year period after a change of control event has occurred, the executive's
employment is terminated other than for "cause," the executive will continue to
receive, in equal monthly installments, the base salary and all commissions and
bonuses (including short-term and long-term incentive programs and stock options
granted pursuant to the Corporation's executive incentive plan) in effect at the
time of the involuntary termination for a period of 35.88 months from the date
of termination reduced by the number of months the executive remained in the
employ of the Corporation or the Bank after the change of control event
occurred. During the months for which the executive receives installment
payments under this agreement, the executive shall also continue to participate
in any health, disability, and life insurance plans to the same extent as if the
executive were an employee of the Corporation or the Bank or of any successor
corporation. Further, the executive will continue to participate in any
perquisite programs through the end of the period for which compensation is
being paid. It is the intent of the plan that the payments will not constitute a
parachute payment as defined in Section 280G in the Internal Revenue Code.
Accordingly, all benefits and payments under the plan shall be reduced if
necessary to the largest aggregate amount that will result in no portion of the
payments being subject to federal excise tax or being nondeductible to the
Corporation and the Bank for federal income tax purposes under Section 280G or
499 of the Code.
A "change in control" generally is deemed to have occurred under these
agreements in each of the following events: (i) the acquisition by any
individual, entity or group of beneficial ownership of 49% or more of either the
then-outstanding shares of the Corporation's Common Stock, or the combined
voting power of the then-outstanding voting securities of the Corporation
entitled to vote generally in the election of directors; (ii) individuals who,
as of the date of the relevant agreement, constitute the Board of Directors of
the Corporation (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board of the Corporation, provided, however, that any
individual later becoming a director whose election, or nomination for election
by the Corporation's stockholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding any
such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a person other than the Board; (iii) consummation of a
reorganization, merger, consolidation or a sale or other disposition of all or
substantially all of the assets of the Corporation (each, a "Business
Combination"), in each case unless, following such Business Combination, (a) all
or substantially all of the individuals and entities that were the beneficial
owners of the Corporation's outstanding Common Stock or other voting securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the then-outstanding shares of Common Stock and the
combined voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination in substantially the same proportions
as their ownership immediately prior to such Business Combination of the
outstanding Common Stock and other voting securities, as the case may be, (b) no
person beneficially owns, directly or indirectly, 49% or more of, respectively,
the then-outstanding shares of common stock of the corporation resulting from
such Business Combination or the combined voting power of the then-outstanding
voting securities of such corporation, except to the extent that such ownership
existed prior to the Business Combination; and (c) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement or of the action of the Board of Directors
providing for such Business Combination; or (iv) approval by the stockholders of
the Corporation of a complete liquidation or dissolution of the Corporation.
14
The executive shall also be entitled to receive the payments and benefits
described above 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 during the three-year period following a change in control,
o the executive is assigned duties inconsistent with, or action is taken
to diminish, the executive's position (including status, offices,
titles and reporting requirements), duties or responsibilities,
o the executive's compensation is reduced,
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,
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,
o the executive's employment is terminated other than as permitted by
the agreement, or
o the executive terminates employment for any reason during the 30-day
period following the first anniversary of the change of control event.
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 attained age 65. 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 2003, directors received $500 per
month for service on the Board of the Corporation and $1,500 per month for
service on the Board of the Bank, plus $1,000 for each Corporation or Bank Board
or Committee meeting attended. The Chairman of the Audit Committee receives an
annual fee of $10,000 and the Chairman of the Compensation Committee, the
Finance Committee and the Governance/Nominating Committee each receive an
additional $3,000 per year. 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. For 2003, a total of 70,403 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 of the
Corporation and the Bank each received 5,000 non-incentive stock options,
totaling 60,000 shares, on February 27, 2003, and again on February 25, 2004.
15
--------------------------------------------------------------------------------
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
unfavorable features. The Bank was billed $291,850 by The Gallup Organization
("Gallup") during the year ended December 31, 2003, for management consulting
services. Ms. Jane E. Miller, a director of the Bank and a nominee for director
of the Corporation, is the Chief Operating Officer and Executive Vice President
of Gallup. The Corporation retains Gallup from time to time on an as needed
basis and anticipates that it may retain Gallup to provide management consulting
services in 2004.
--------------------------------------------------------------------------------
COMPARATIVE STOCK PERFORMANCE GRAPH
--------------------------------------------------------------------------------
The graph set forth below compares the cumulative total stockholder 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, 1998 to December 31, 2003, 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, 1998, in the Common Stock and in the
respective indices.
December 31, 1998 through December 31, 2003
[Line graph appears here depicting the cumulative total stockholder return
of $100 invested in the Common Stock as compared to $100 invested in all
companies whose equity securities are traded on the S&P 500 Index and as
compared to an index comprised of the top 50 publicly traded thrifts. Line graph
plots the cumulative total return from December 31, 1998 to December 31, 2003.
Plot points are provided below.]
Cumulative Total Return
---------------------------------------------------
12/98 12/99 12/00 12/01 12/02 12/03
----- ----- ----- ----- ----- -----
COMMERCIAL FEDERAL BANK $100.00 $ 78 $ 86 $106 $107 $124
S&P 500 INDEX 100.00 121 110 97 76 97
PEER GROUP 100.00 79 139 143 167 232
--------------------------------------------------------------------------------
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 3, 2004.
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
office at the address given in the preceding paragraph not less than 60 days
prior to the date of such meeting.
--------------------------------------------------------------------------------
AUDIT COMMITTEE REPORT
--------------------------------------------------------------------------------
In accordance with its charter, the Audit Committee assists the Board of
Directors in its oversight of the accounting, auditing and financial reporting
practices of the Corporation. The Audit Committee Charter is included as Exhibit
A to this Proxy Statement.
The Audit Committee of the Corporation consists of five members, who in the
business judgement of the Board of Directors are independent and financially
literate as defined by the New York Stock Exchange as well as being designated
as audit committee financial experts as defined by the rules of the Securities
and Exchange Commission.
Management is responsible for the Corporation's internal control and
financial reporting process. The independent auditors are responsible for
performing an audit of the Corporation's consolidated financial statements in
accordance with auditing standards generally accepted in the United States of
America and for issuing a report on such financial statements. The Audit
Committee's responsibility is to monitor and oversee these processes.
In performing its oversight function, the Audit Committee discussed with
management, the internal auditors and the independent auditors the quality and
adequacy of the Corporation's internal controls and the internal audit
function's organization, responsibilities and staffing. The Audit Committee
reviews with both the independent and internal auditors their audit plans, audit
scope and identification of audit risks. The Audit Committee meets individually,
at least once annually, with the Corporation's independent auditors, the
Corporation's internal auditors and management.
The Audit Committee has adopted a policy of pre-approving all audit and
non-audit services performed by the Corporation's independent auditors. The
Audit Committee has also established a procedure whereby persons with complaints
or concerns about accounting, internal control or auditing matters may report
these complaints and concerns confidentially and anonymously to the Audit
Committee.
The Audit Committee has reviewed and discussed the Corporation's audited
consolidated financial statements for the year ended December 31, 2003 with
management and has discussed with Deloitte & Touche LLP ("Deloitte & Touche"),
the Corporation's independent auditors, the matters required to be discussed
under Statement on Auditing Standards No. 61, as amended ("SAS 61")
"Communications with Audit Committees." In addition, the Audit Committee has
received from Deloitte & Touche the written disclosures and the letter required
to be delivered by Deloitte & Touche under Independence Standards Board Standard
No. 1 ("ISB Standard No. 1") "Independence Discussions with Audit Committees"
addressing all relationships between the auditors and the Corporation that might
bear on the auditors' independence. The Audit Committee has reviewed the
materials received from Deloitte & Touche and has met with representatives of
Deloitte & Touche to discuss the independence of the auditing firm.
17
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 provided by the
Corporation's independent auditors 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 regarding SAS 61, the written materials
provided by Deloitte & Touche under ISB Standard No. 1 and the related
discussion with Deloitte & Touche of their independence, the Audit Committee
recommended to the Board of Directors that the audited consolidated financial
statements of the Corporation be included in its Annual Report on Form 10-K for
the year ended December 31, 2003, for filing with the Securities and Exchange
Commission.
THE AUDIT COMMITTEE
Michael P. Glinsky (Chairman)
Carl G. Mammel
Robert S. Milligan
Aldo J. Tesi
Joseph J. Whiteside
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PROPOSAL II - RATIFICATION OF APPOINTMENT OF AUDITORS
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The Audit Committee of the Board of Directors has selected the firm of
Deloitte & Touche as the Corporation's auditors for the year ending December 31,
2004, subject to ratification by the Corporation's stockholders. The selection
of Deloitte & Touche was based on the qualifications of that firm including
their prior performance and their reputation for integrity and for competence in
the fields of accounting and auditing. Representatives of Deloitte & Touche 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.
All services rendered to the Corporation by Deloitte & Touche are
permissible under applicable laws, rules and regulations and are pre-approved by
the Audit Committee. These services are actively monitored by the Audit
Committee to maintain the appropriate objectivity and independence in Deloitte &
Touche's audit.
FEES PAID TO INDEPENDENT AUDITOR
The following table presents fees for professional audit services performed
by Deloitte & Touche regarding the audit of the Corporation's annual
consolidated financial statements for the years ended December 31, 2003 and
2002, and fees billed for the other services rendered by Deloitte & Touche
during those years.
2003 2002
------------------ ------------------
Audit Fees (1) $ 506,000 $ 389,000
Audit-Related Fees (2) 44,930 62,000
Tax Fees (3) 314,210 123,000
All Other Fees (4) -- 1,125,000
---------------
(1) Audit fees include billings for the audit of the Corporation's annual
consolidated financial statements, review of the Corporation's quarterly
consolidated financial statements and attestation of management's
assessment of internal controls as required by the Federal Deposit
Insurance Corporation Improvement Act of 1991.
(2) Audit-related fees consist of billings relating to annual audits of the
Corporation's benefit plans, as well as consultations on financial
accounting and reporting issues.
(3) Tax fees relate to the services provided for the review of the
Corporation's tax returns ($34,500 and $27,500 for 2003 and 2002,
respectively) and for tax planning and consulting issues ($279,710 and
$95,500 for 2003 and 2002, respectively).
(4) All other fees include fees incurred in 2002, totaling $1,125,000, for
Gramm-Leach-Bliley Act privacy procedures and consultation on efficiency of
operations, of which $772,000 were billed by Deloitte Consulting, an
affiliate of Deloitte & Touche.
18
THE APPOINTMENT OF THE AUDITORS MUST BE APPROVED BY A MAJORITY OF THE VOTES
CAST BY THE STOCKHOLDERS OF THE CORPORATION AT THE MEETING. THE BOARD OF
DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE APPROVAL OF THE
RATIFICATION OF THE APPOINTMENT OF AUDITORS.
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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% 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 year or
with respect to the last year, management believes that during the year ended
December 31, 2003, all of the Corporation's Insiders complied with these
reporting requirements.
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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 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
--------------------------------------------------------------------------------
The Corporation's 2003 Summary Annual Report to Stockholders and its Annual
Report on Form 10-K for the year ended December 31, 2003 (the "Form 10-K"),
including financial statements, are being mailed to all stockholders of record
as of the close of business on March 24, 2004, together with this Proxy
Statement. Any stockholder who has not received copies of such reports or who
desires copies of the exhibits to the Form 10-K 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.
19
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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 2, 2004
20
[FORM OF PROXY CARD]
COMMERCIAL FEDERAL CORPORATION
This Proxy is solicited by the Board of Directors for the
May 11, 2004 Annual Meeting of Stockholders
The undersigned hereby appoints Michael P. Glinsky, Robert S. Milligan 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 11, 2004 at 10:00 a.m. Central
Time, 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 AND "FOR"
PROPOSAL II. 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.
I. The election as directors of all nominees listed below (except as marked to
the contrary):
For terms to expire in 2007
Talton K. Anderson
James P. O'Donnell
Robert J. Hutchinson
Jane E. Miller
[ ] 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 WHOM YOU DO
NOT WISH TO VOTE ON THE LINE BELOW.
---
-------------------------------------
II. Ratification of the appointment of Deloitte & Touche LLP as the
Corporation's independent auditors for the year ending December 31,
2004
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES AND "FOR"
THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & Touche LLP.
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.