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
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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5. Total fee paid:
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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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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 4, 2002
ANNUAL MEETING
MAY 14, 2002
Dear Fellow Stockholder:
You are cordially invited to attend the 2002 Annual Meeting of Stockholders
of Commercial Federal Corporation (the "Corporation") to be held on Tuesday, May
14, 2002, 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 one director for a two-year term and three directors for three-year
terms (the Board having nominated Robert J. Hutchinson for the two-year term and
William A. Fitzgerald, Robert D. Taylor and Aldo J. Tesi for three-year terms)
and the consideration of the Commercial Federal Corporation 2002 Stock Option
and Incentive Plan. 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 14, 2002
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NOTICE IS HEREBY GIVEN that the 2002 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
14, 2002, 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 one director for a two-year term and three directors
for three-year terms;
2. Approval of the Commercial Federal Corporation 2002 Stock Option and
Incentive Plan; 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 28, 2002, 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 4, 2002
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
2002 ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 2002
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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 2002
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 14, 2002, 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 4, 2002.
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VOTING AND REVOCABILITY OF PROXIES
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The close of business on March 28, 2002, 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 45,264,821 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
approval of the Commercial Federal Corporation 2002 Stock Option and Incentive
Plan (the "2002 Option Plan"). 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 consideration of the Option Plan, 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).
Approval of the Option Plan requires the affirmative vote of a majority of the
votes cast at a meeting at which a quorum is present.
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"). Based upon
such reports, and certain other available information, the following table sets
forth, as of March 28, 2002, certain information as to the Common Stock
beneficially owned by each stockholder owning in excess of 5.0% of the
Corporation's outstanding shares of common stock and each of the executive
officers listed in the Summary Compensation Table on page 9 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) OUTSTANDING
---------------- ----------------------- -----------------
Private Capital Management
3003 Tamiani Trail N.
Naples, Florida 34103 2,485,705 5.49%
Franklin Mutual Advisers, LLC
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078 2,279,502 5.04%
William A. Fitzgerald 961,820 (2) 2.10%
Robert J. Hutchinson 105,959 (2) .23%
David S. Fisher 70,256 (2) .15%
Peter J. Purcell 682 (2) --
Lauren W. Kingry 25,522 (2) .06%
All Executive Officers and Directors
as a Group (17 persons) 2,060,516 (2) 4.45%
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(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 472,937, 100,000, 63,333, 0, 18,700 and 1,051,481 shares,
respectively, which Messrs. Fitzgerald, Hutchinson, Fisher, Purcell and
Kingry and all executive officers and directors as a group have the right
to purchase pursuant to the exercise of stock options, 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. One director will be elected at the Meeting to serve for a two-year
term or until his successor has been elected or qualified. The Board of
Directors has nominated Robert J. Hutchinson for this seat. Three 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 William A. Fitzgerald, Robert D. Taylor and Aldo J. Tesi for these
seats, all of whom are currently members of the Board. 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, 2002. At present, each director of the Corporation is also a
member of the Board of Directors of the Corporation's wholly owned subsidiary,
Commercial Federal Bank, a Federal Savings Bank (the "Bank").
YEAR FIRST ELECTED SHARES OF COMMON STOCK
AGE AT OR APPOINTED CURRENT TERM BENEFICIALLY OWNED AT PERCENT
NAME MARCH 28, 2002 AS DIRECTOR TO EXPIRE MARCH 28, 2002 (1) OF CLASS
---- -------------- ----------- --------- ------------------ --------
BOARD NOMINEE FOR TERMS TO EXPIRE IN 2004
Robert J. Hutchinson 54 2001 2002 (2) 105,959 (3) .23%
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2005
William A. Fitzgerald 64 1984 2002 961,820 (3) 2.10%
Robert D. Taylor 55 1996 2002 111,403 (3) .25%
Aldo J. Tesi 50 1996 2002 41,889 (3) .09%
DIRECTORS CONTINUING IN OFFICE
Robert F. Krohn 68 1984 2003 209,451 (3) .46%
Michael P. Glinsky 57 1997 2003 34,553 (3) .08%
George R. Zoffinger 54 1999 2003 21,368 (3) .05%
Joseph J. Whiteside 60 1999 2003 13,084 (3) .03%
Talton K. Anderson 65 1991 2004 94,604 (3) .21%
Carl G. Mammel 68 1991 2004 160,832 (3) .36%
James P. O'Donnell 54 1991 2004 47,369 (3) .10%
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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) Mr. Hutchinson was appointed to the Board of Directors on May 8, 2001.
Under Nebraska law, a director appointed to the Board must stand for
election at the next annual meeting.
(3) Includes shares totaling 472,937 (Fitzgerald), 100,000 (Hutchinson), 40,099
(Taylor), 38,676 (Tesi), 41,340 (Krohn), 33,100 (Glinsky), 20,254
(Zoffinger), 11,972 (Whiteside), 40,407 (Anderson), 38,332 (Mammel) and
38,883 (O'Donnell) which such individuals have the right to acquire within
60 days of the Record Date pursuant to the exercise of stock options.
3
The principal occupation of each director of the Corporation for the last
five years is set forth below:
WILLIAM A. FITZGERALD - Chairman of the Board and Chief Executive Officer
of the Corporation and the Bank.
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 April 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.
ROBERT D. TAYLOR - President and Chief Executive Officer of Executive
AirShare Corporation, Wichita, Kansas, which sells, maintains and refurbishes
corporate jet aircraft. 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.
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.
ROBERT F. KROHN - Chairman and Chief Executive Officer of PSI Group, Inc.,
a national mail presort company. Mr. Krohn is the former President and Chief
Executive Officer of HDR, Inc., an international architecture, planning and
engineering firm. Mr. Krohn served as Chairman of the Board of the Corporation
and the Bank from 1990 through 1994.
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.
GEORGE R. ZOFFINGER - President and Chief Executive Officer of
Constellation Capital Corporation, since February 1998. 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, MFN Financial Corporation,
Admiralty Bancorp, Inc. and Silverline Technologies Limited.
JOSEPH J. WHITESIDE - Chairman and Chief Executive Officer of Homeside
Lending, Inc., Jacksonville, Florida since September 2001. Since May 2000, Mr.
Whiteside has 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 the present, served as the Chairman of WeatherWise
USA, Inc., a Pittsburgh-based company that provides financial and other services
to
4
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.
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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, 2001, 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.
The Corporation's audit committee is currently comprised entirely of
non-employee Directors Glinsky, Krohn (Chairman), O'Donnell, Tesi and Zoffinger.
Michael T. O'Neil, a director of the Bank, also serves as an ex-officio member
of the audit committee. 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. This committee's function is to approve
the outside accounting firm for use by the Corporation and Bank and to review
regulatory examination reports. This committee conducts its business through the
Bank's audit committee and serves as the liaison with the Bank's internal audit
department. The audit committee has adopted a written charter. The audit
committee meets quarterly or on an as needed basis. During the year ended
December 31, 2001, the audit committee met five times.
The Corporation's compensation and stock option committee is currently
comprised entirely of non-employee Directors Glinsky, O'Donnell (Chairman) and
Tesi. Robert S. Milligan, a Bank director, also serves. This committee is
responsible for developing the Corporation'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
Chief Executive Officer of the Corporation and the Bank and the President and
Chief Operating Officer of the Corporation and the Bank). See "Executive
Compensation -- Compensation and Stock Option Committee Report on Executive
Compensation." The compensation committee met two times during the year ended
December 31, 2001.
The Corporation's nominating committee is comprised entirely of the
non-employee members of the Board. The nominating committee selects the Board's
nominees for election as directors. The nominating committee selected the
nominees for this Meeting. While the nominating committee will consider nominees
recommended by stockholders, it has 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. Prior to the
establishment of a separate nominating committee, the full Board of Directors
acted as the nominating committee. The Board of Directors met once in its
capacity as nominating committee during year 2001.
The Corporation's finance committee is currently comprised of Directors
Anderson, Fitzgerald, Mammel (Chairman), Taylor and Whiteside and Bank Directors
Marvin and Milligan. This committee met four times during the 2001 year. This
committee is responsible for monitoring the Corporation's asset/liability and
risk management strategies.
5
The Corporation's executive committee is comprised of Directors Anderson,
Fitzgerald (Chairman), Krohn and Taylor. This committee transacts necessary
business between Board meetings and met seven times during the year ended
December 31, 2001.
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EXECUTIVE COMPENSATION
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COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overview and Objectives
Composed exclusively of outside directors, Michael P. Glinsky, Robert S.
Milligan, James P. O'Donnell (Chairman) and Aldo J. Tesi, the Compensation and
Stock Option Committee (the "Committee") of the Board of Directors establishes
the Corporation's and the Bank's executive compensation policies. 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 Chief Executive Officer of the Corporation and the
Bank and the President and Chief Operating 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 established
structured compensation guidelines recommended by an outside professional
consulting firm in fiscal year 1994. In fiscal year 1999, the Corporation
requested an update to ensure its compensation practices were relevant to the
growth and changes the Corporation experienced during that year, and were not
unusual 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
Stock Option Committee established the following guidelines on stock ownership.
Members of executive management hired during 2001 do not yet own 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 the year consisted of the following components.
6
o BASE SALARY. The Committee makes recommendations to the Board concerning
executive compensation on the basis of regional and national surveys of salaries
paid to executive officers of other savings and loan holding companies,
non-diversified banks, other financial institutions similar to the Corporation
in size, market capitalization and other characteristics, and where applicable,
other industries. 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 by the Corporation's peers.
o EXECUTIVE INCENTIVE PLAN. The Corporation maintains an Executive
Incentive Plan which provides for annual incentive compensation based on
achieving a combination of Corporation and individual performance objectives.
Under this plan, the Committee establishes challenging corporate objectives,
such as a targeted level of annual net income, at the beginning of the fiscal
year. If the Corporation meets such objectives, an amount equal to 4.5% of net
income is set aside for payment to executive officers (defined for this purpose
as the Bank's Chief Executive and Chief Operating Officers, Executive, Senior,
and First Vice Presidents and such other officers as are designated by the
Committee for any fiscal year) as short-term and long-term compensation. Funds
were set aside throughout the year in anticipation of a payout from the Plan.
For year ending December 31, 2001, the Corporation exceeded its financial goals,
and paid to qualified executive officers a total of $1,780,723 in cash and
$1,809,499 in restricted stock. The award was paid in March 2002, and reflected
in the 2001 Summary Compensation Table.
Pursuant to a policy adopted in June 1993 and subsequently amended and
restated by the Stock Option Committee (the "Stock Option Committee"), whose
members are all outside directors, the Stock Option Committee determines, in its
discretion, whether, to whom and in what amounts restricted stock and/or
incentive/non-incentive stock options will be awarded for any fiscal year.
Shares of restricted stock awarded under this policy normally vest over a period
of not more than five years, assuming the individual's continued service with
the Corporation or the Bank, thus helping to retain qualified officers. The
Stock Option Committee determines the vesting of the stock options awarded under
this policy at the time of the award. The policy may be amended or terminated at
any time by action of the Committee.
The Committee believes this plan provides a direct link between the value
created for the Corporation's shareholders and the compensation paid to
executive officers. As previously mentioned, executive officers are not eligible
to receive any short-term compensation under this plan for a given fiscal year
unless the Corporation's net income for that year exceeds 85% of a predetermined
goal. The distribution of awards under the plan is determined by the relative
success of individual executive officers in meeting specified performance
objectives. Fulfillment of these objectives promotes both the short-term and the
long-term success of the Corporation and is in the best interests of
shareholders.
o 1984 AND 1996 STOCK OPTION AND INCENTIVE PLANS. The Corporation maintains
the 1984 Stock Option and Incentive Plan, as Amended and Restated, and the 1996
Stock Option and Incentive Plan (collectively, the "Option Plans") as a means of
providing employees and directors the opportunity to acquire a proprietary
interest in the Corporation and to align their interests with those of the
Corporation's stockholders. Under each plan, participants are eligible to
receive stock options, stock appreciation rights ("SARs") 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 market value of the Common Stock on the date of grant. Thus, such
awards acquire value only if the Corporation's stock price increases. In
addition, under the 1996 plan, the Stock Option Committee may, at the election
of a director or employee selected by the Stock Option Committee, permit such
individual to receive stock options in lieu of cash compensation. The exercise
price of such stock options will be discounted below the market value of the
underlying Common Stock, such that the aggregate discount on the exercise price
of the stock options is equal to the compensation foregone by the individual.
Effective March 1, 2001, non-incentive stock options to purchase an
aggregate of 255,429 shares were granted to the Chief Executive Officer, the
Chief Financial Officer and the senior officers of the Corporation and the Bank,
and incentive stock options to purchase an aggregate of 610,379 shares were
granted to all executive officers, senior officers and employees of the
Corporation and the Bank. These options vest one-third on the first
7
anniversary, one-third on the second anniversary and one-third on the third year
anniversary for executive and senior officers and 100% on the one year
anniversary for employees.
The Committee believes that the Option Plans align shareholders', officers'
and employees' interests and help to retain and motivate executive officers to
improve long-term shareholder value.
Compensation of the Chief Executive Officer
The Committee determines the Chief Executive Officer's compensation on the
basis of several factors including:
o Competitive position in regard to executive officers of
similarly situated thrifts and non diversified banks.
o Return on Average Assets
o Core Profitability
o Leadership Inside and Outside the Corporation
o Capital Compliance and Regulatory Guidelines
In order to further align the compensation, rewards and performance measurements
with shareholder expectations, the Committee revises the criteria periodically
to reflect measurements generally viewed by analysts that follow the
Corporation's peer group. These measurements are tied to specific objectives
established during the Corporation's annual planning meeting and benchmarked to
the performance of the Corporation's peer group.
For fiscal year 2001, Mr. Fitzgerald received a 7% increase in base pay (to
$631,000 annually), effective March 1, 2001. Furthermore, Mr. Fitzgerald
received on March 1, 2001, incentive stock options to purchase 4,545 shares of
Common Stock at a price of $22.00 per share. These options are fully vested on
February 28, 2004. Also, effective March 1, 2001, Mr. Fitzgerald received
non-incentive stock options to purchase 137,933 shares of Common Stock at a
price of $22.00 per share, which vest 34.43% on the one year anniversary of the
date of grant, 34.43% on the second anniversary, and 31.14% on the third year
anniversary. Pursuant to the terms of the Executive Incentive Plan, Mr.
Fitzgerald received a cash bonus of $433,686 and 18,454 shares of restricted
stock with a market vale of $433,686 as of December 31, 2001.
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
James P. O'Donnell (Chairman)
Michael P. Glinsky
Robert S. Milligan
Aldo J. Tesi
8
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 2001 $624,183 $433,686
Chairman and Chief Executive Officer Transition Period 295,050 --
of the Corporation and the Bank 2000 590,106 --
1999 562,000 --
Robert J. Hutchinson (5) 2001 $226,667 $172,014
President and Chief Operating Officer
of the Corporation and the Bank
David S. Fisher (6) 2001 $255,000 $139,698
Executive Vice President and Chief Transition Period 120,000 45,000
Financial Officer of the Corporation 2000 5,538 --
and the Bank
Peter J. Purcell (7) 2001 $190,000 $121,166
Executive Vice President and Chief Transition Period 6,576 --
Information Officer of the Corporation
and the Bank
Lauren W. Kingry 2001 $178,237 $87,838
Executive Vice President of the Bank Transition Period 69,833 --
2000 137,708 --
1999 117,167 --
LONG-TERM COMPENSATION
AWARDS
--------------------------------
SECURITIES
NAME AND PRINCIPAL RESTRICTED STOCK UNDERLYING ALL OTHER
POSITION AWARDS (3) OPTIONS COMPENSATION (4)
------------------ ---------------- ---------- ----------------
William A. Fitzgerald $433,686 142,478 $58,722
Chairman and Chief Executive Officer -- -- 24,906
of the Corporation and the Bank -- 113,527 46,162
155,635 96,477 44,960
Robert J. Hutchinson (5) $137,014 100,000 $ --
President and Chief Operating Officer
of the Corporation and the Bank
David S. Fisher (6) $139,698 40,000 $6,500
Executive Vice President and Chief -- -- --
Financial Officer of the Corporation -- 50,000 --
and the Bank
Peter J. Purcell (7) $ -- 10,000 $ --
Executive Vice President and Chief -- 50,000 --
Information Officer of the Corporation
and the Bank
Lauren W. Kingry $87,838 12,000 $14,699
Executive Vice President of the Bank -- -- 5,587
-- 7,800 11,017
-- 7,000 9,373
----------
(1) On August 14, 2000 the Corporation changed its fiscal year end from June 30
to December 31. Accordingly, fiscal years 2000 and 1999 refer to the twelve
months ended June 30. The Transition Period refers to the six months ended
December 31, 2000. Fiscal year 2001 reflects the twelve months ended
December 31, 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 Executive 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 2001 and 1999 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, 2001, the number and value, based on the closing sales price
of the Common Stock of $23.50 at December 31, 2001, of the unvested
restricted stock holdings for Messrs. Fitzgerald, Hutchinson, Fisher,
Purcell and Kingry, were 27,367 shares (value of $643,125), 5,830 shares
(value of $137,005), 5,944 shares (value of $139,684), 0 shares (value of
$0) and 4,385 shares (value of $103,048). 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 $10,500, $0, $6,500 and $10,500 while the employer matching
contributions under the Supplemental Retirement Plan benefits, were
$48,222, $0, $0 and $4,199 for Messrs. Fitzgerald, Hutchinson, Fisher and
Kingry, respectively. Mr. Hutchinson and Mr. Purcell did not meet length of
service requirements to receive any matching contributions.
(5) Mr. Hutchinson joined the Corporation on May 1, 2001.
(6) Mr. Fisher joined the Corporation on June 23, 2000.
(7) Mr. Purcell joined the Corporation on December 1, 2000. Effective February
5, 2002, Mr. Purcell terminated employment. Pursuant to the terms of a
Separation, Waiver and Release Agreement entered into in connection with
this resignation, Mr. Purcell will continue to receive his base salary
through August 15, 2002. He also received a cash payment of $121,166 in
lieu of the bonus and restricted stock he would have been entitled to
receive had he remained employed through the declaration date of such bonus
and received $9,000 in outplacement assistance.
9
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, 2001.
With the exception of the grant to Mr. Hutchinson which was immediately fully
vested, 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 142,478 15.69% $22.00 3/1/11 $1,971,280 $4,995,611
Robert J. Hutchinson 100,000 11.02 22.03 5/1/11 1,385,455 3,511,015
David S. Fisher 40,000 4.41 22.00 3/1/11 553,427 1,402,493
Peter J. Purcell 10,000 1.10 22.00 3/1/11 138,357 350,623
Lauren W. Kingry 12,000 1.32 22.00 3/1/11 166,028 420,748
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, 2001. None of these individuals exercised any stock options during
the year ended December 31, 2001.
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 387,603 218,162 $ 788,899 $804,809
Robert J. Hutchinson 100,000 -- 147,000 --
David S. Fisher 50,000 40,000 401,500 60,000
Peter J. Purcell 50,000 10,000 250,000 15,000
Lauren W. Kingry 12,100 17,200 20,306 58,612
----------
(1) Based on the closing sales price of the Common Stock as reported on the New
York Stock Exchange on December 31, 2001, which was $23.50.
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 9.
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
10
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. 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, Purcell, and Kingry. The
agreement with Mr. Purcell terminated upon his resignation from the Corporation.
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 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, 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,
11
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
--------------------------------------------------------------------------------
Directors receive $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, with the exception of William A. Fitzgerald and Robert J.
Hutchinson, who do not receive director's compensation. Fees for members of the
committees of the Corporation and the Bank are paid at the rate of $750 per
committee meeting attended. The chairman of the Audit Committee, Compensation
and Stock Option Committee, and the Finance Committee each receive an additional
$2,000 per year. Effective July 1, 1999, the 1996 Stock Option and Incentive
Plan was amended to allow Directors to substitute cash compensation and shares
of the Corporation's Common Stock for 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. All directors receiving remuneration
elected to receive the discounted non-incentive stock options in lieu of cash
compensation. During the year ended December 31, 2001, discounted non-incentive
stock options to purchase 68,660 shares were granted in lieu of cash
remuneration to the non-employee directors of the Corporation and the Bank. In
addition, directors received non-incentive stock options totaling 60,000 shares
on March 1, 2001.
--------------------------------------------------------------------------------
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.
12
--------------------------------------------------------------------------------
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, 1996 to December 31, 2001, 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, 1996 in the Common Stock and in the
respective indices.
December 31, 1996 through December 31, 2001
[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, 1996 and plots the cumulative total
return at December 31, 1996, 1997, 1998, 1999, 2000 and 2001. Plot points are
provided below.]
CUMULATIVE TOTAL RETURN
------------------------------------------------------------------
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
-------- -------- -------- -------- -------- --------
Commercial Federal 100 167.85 110.37 86.26 95.64 117.20
S & P 500 100 133.36 171.47 207.56 188.66 166.24
Peer Group 100 158.75 141.16 110.32 194.65 197.02
13
--------------------------------------------------------------------------------
PROPOSAL II - APPROVAL OF 2002 STOCK OPTION AND INCENTIVE PLAN
--------------------------------------------------------------------------------
GENERAL
The Board of Directors of the Corporation has adopted the Commercial
Federal Corporation 2002 Stock Option and Incentive Plan (the "2002 Option
Plan"), subject to its approval by the Corporation's stockholders. The 2002
Option Plan is attached hereto as Exhibit A and should be consulted for
additional information. All statements made herein regarding the 2002 Option
Plan, which are only intended to summarize the 2002 Option Plan, are qualified
in their entirety by reference to the 2002 Option Plan.
PURPOSE OF THE 2002 OPTION PLAN
The purpose of the 2002 Option Plan is to advance the interests of the
Corporation by providing directors and employees of the Corporation and its
affiliates with the opportunity to acquire shares of Common Stock. By
encouraging such stock ownership, the Corporation seeks to attract, retain and
motivate the best available personnel for positions of substantial
responsibility and to provide additional incentive to directors and employees of
the Corporation and its affiliates to promote the success of the business of the
Corporation by aligning their interests with those of the Corporation's
stockholders.
DESCRIPTION OF THE 2002 OPTION PLAN
Effective Date. The 2002 Option Plan will become effective on the date of
its approval by the Corporation's stockholders (the "Effective Date"), and prior
thereto no awards may be made.
Administration. The 2002 Option Plan is administered by a committee (the
"Committee"), appointed by the Board of Directors, consisting of at least two
non-employee directors who are non-employee directors within the meaning of Rule
16b-3 of the Exchange Act and who are "outside directors" under Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code").
The Committee has discretionary authority to select participants and grant
awards, to determine the form and content of any awards made under the 2002
Option Plan, to interpret the 2002 Option Plan, to prescribe, amend and rescind
rules and regulations relating to the 2002 Option Plan, and to make other
decisions necessary or advisable in connection with administering the 2002
Option Plan. All decisions, determinations, and interpretations of the Committee
are final and conclusive on all persons affected thereby. Members of the
Committee will be indemnified to the full extent permissible under the
Corporation's governing instruments in connection with any claims or other
actions relating to any action taken under the 2002 Option Plan.
Notwithstanding the foregoing, neither the Committee nor the Board is
authorized to reprice options under the terms of the 2002 Option Plan.
Eligible Persons; Types of Awards. Under the 2002 Option Plan, the
Committee may grant stock options ("Options"), stock appreciation rights
("SARs") and restricted stock ("Restricted Stock") (collectively, "Awards") to
such directors (including members of the Committee) and employees as the
Committee shall designate. As of March 28, 2002, the Corporation and its
affiliates had 2,800 employees and 12 non-employee directors who were eligible
to participate in the 2002 Option Plan.
Shares Available for Grants. The 2002 Option Plan reserves 2,100,000 shares
of Common Stock for issuance upon the exercise of Options or SARs or the grant
of Restricted Stock. Such shares may either be newly-issued shares, treasury
shares or shares held in a grantor trust created by the Corporation. In the
event of any merger, consolidation, recapitalization, reorganization,
reclassification, stock dividend, split-up, combination of shares, or similar
event in which the number or kind of shares is changed without receipt or
payment of consideration by the Corporation, the Committee will adjust the
number and kind of shares reserved for issuance under the 2002 Option Plan, the
number and kind of shares subject to outstanding Awards and the exercise prices
of such Awards. Generally, the number of shares as to which SARs are granted are
charged against the aggregate
14
number of shares available for grant under the 2002 Option Plan, provided that,
in the case of an SAR granted in conjunction with an Option, under circumstances
in which the exercise of the SAR results in termination of the Option and vice
versa, only the number of shares of Common Stock subject to the Option shall be
charged against the aggregate number of shares of Common Stock remaining
available under the 2002 Option Plan. If Awards should expire, become
unexercisable, or be forfeited for any reason without having been exercised, the
shares of Common Stock subject to such Awards shall, unless the 2002 Option Plan
shall have been terminated, be available for the grant of additional Awards
under the 2002 Option Plan.
Options. Options may be either incentive stock options ("ISOs") as defined
in Section 422 of the Internal Revenue Code, or options that are not ISOs
("Non-ISOs"). The exercise price as to any Option may not be less than the fair
market value (determined under the 2002 Option Plan) of the optioned shares on
the date of grant. In the case of a participant who owns more than 10% of the
outstanding Common Stock on the date of grant, such exercise price may not be
less than 110% of fair market value of the shares. Notwithstanding the
foregoing, the Committee may grant discounted Non-ISOs ("Discounted Non-ISOs")
to directors or officers selected by the Committee who have previously elected
to defer cash compensation at a per-share discounted exercise price equal to the
fair market value of the Common Stock underlying the Discounted Non-ISOs on the
date of grant less the amount of cash compensation deferred during the calendar
year divided by the number of shares that may be purchased pursuant to the
Discounted Non-ISO. As required by federal tax laws, to the extent that the
aggregate fair market value (determined when an ISO is granted) of the Common
Stock with respect to which ISOs are exercisable by an optionee for the first
time during any calendar year (under all plans of the Corporation and of any
subsidiary) exceeds $100,000, the Options granted in excess of $100,000 will be
treated as Non-ISOs, and not as ISOs.
SARs. An SAR may be granted in tandem with all or part of any Option
granted under the 2002 Option Plan, or without any relationship to any Option.
An SAR granted in tandem with an ISO must expire no later than the ISO, must
have the same exercise price as the ISO and may be exercised only when the ISO
is exercisable and when the fair market value of the shares subject to the ISO
exceeds the exercise price of the ISO. An SAR granted in tandem with an Option
may be an alternative right whereby the exercise of the SAR cancels the
participant's right to exercise the Option to the extent of the number of shares
with respect to which the SAR is exercised and, correspondingly, the exercise of
the Option terminates the SAR to the extent of the number of shares purchased
upon exercise of the Option. Regardless of whether an SAR is granted in tandem
with an Option, exercise of the SAR will entitle the optionee to receive, as the
Committee prescribes in the grant, all or a percentage of the difference between
(i) the fair market value of the shares of Common Stock subject to the SAR at
the time of its exercise, and (ii) the fair market value of such shares at the
time the SAR was granted (or, in the case of SARs granted in tandem with
Options, the exercise price). The exercise price as to any particular SAR may
not be less than the fair market value of the optioned shares on the date of
grant.
Exercise of Options and SARs. The exercise of Options and SARs will be
subject to such terms and conditions as are established by the Committee in a
written agreement between the Committee and the optionee. Unless otherwise
provided by the Committee in a stock option agreement, all Options shall be
immediately exercisable. In the absence of Committee action to the contrary, an
otherwise unexpired ISO shall cease to be exercisable upon (i) an optionee's
termination of continuing service to the Company for "just cause" (as defined in
the 2002 Option Plan), (ii) the date three months after an optionee terminates
service for a reason other than just cause, death, or disability, (iii) the date
one year after an optionee terminates service due to disability, or (iv) the
date two years after an optionee terminates service due to death. Except as
otherwise provided in an agreement, a Non-ISO may be exercised by a participant
only during the period during which he or she has maintained continuous service
from the date of grant, provided that such Non-ISO shall (i) expire immediately
if the participant's continuous service terminates due to just cause and (ii)
continue to be exercisable for one year following his or her termination of
continuous service for any reason other than death. In the event of the
participant's death, then to the extent that the participant would have been
entitled to exercise the Non-ISO immediately prior to his or her death, such
Non-ISO of the deceased participant may be exercised within two years from the
date of his or her death (but not later than the date on which the Non-ISO would
otherwise expire) by the personal representatives of his or her estate or person
or person to whom his or her rights under such Non-ISO shall have passed by will
or by laws of descent and distribution. In no event, however, may an Option or
SAR be exercised later than the date that it would otherwise expire. An
individual's service as an advisory director or
15
director emeritus shall be deemed to be service as a director, for purposes of
determining eligibility to exercise an Option or SAR.
An optionee may exercise Options or SARs, subject to provisions relative to
their termination and limitations on their exercise, only by (i) written notice
of intent to exercise the Option or SAR with respect to a specified number of
shares of Common Stock, and (ii) in the case of Options, payment to the
Corporation (contemporaneously with delivery of such notice) in cash, in Common
Stock owned for more than six months, or a combination of cash and Common Stock
owned for more than six months, of the amount of the exercise price for the
number of shares with respect to which the Option is then being exercised plus
applicable withholding taxes. Common Stock owned for more than six months
utilized in full or partial payment of the exercise price for Options shall be
valued at its market value at the date of exercise.
Restricted Stock. The Committee has broad discretion at the time of making
a Restricted Stock grant to determined a period during which the shares granted
will be subject to restrictions (the "Restriction Period") and the conditions
that must be satisfied in order for the shares of Restricted Stock to become
unrestricted (i.e., vested and nonforfeitable). For example, the Committee may
condition vesting upon a grantee's continuous service to the Corporation or upon
the attainment of specific corporate, divisional or individual standards or
goals. The Restriction Period may be no longer than five years and may differ
among participants and may have different expiration dates with respect to
portions of shares of Restricted Stock covered by the same Award.
The Committee shall determine the percentage of the award of Restricted
Stock which shall vest in the participant in the event of death, disability or
retirement prior to the expiration of the Restriction Period or the satisfaction
of the restrictions applicable to an award of Restricted Stock. Notwithstanding
the Restriction Period and the restrictions imposed by the Committee on the
Restricted Stock, the Committee may shorten the Restriction Period or waive any
restrictions if the Committee concludes that it is in the best interests of the
Corporation to do so.
Until a grantee's interest vests, his or her Restricted Stock is
nontransferable and forfeitable. Nevertheless, the grantee is entitled to vote
the Restricted Stock and to receive dividends and other distributions made with
respect to the Restricted Stock. To the extent that a grantee becomes vested in
his or her Restricted Stock at any time and has satisfied applicable income tax
withholding obligations, the Corporation will deliver unrestricted shares of
Common Stock to the grantee. At the end of the Restriction Period, the grantee
will forfeit to the Corporation any shares of Restricted Stock as to which he or
she did not earn a vested interest during the Restriction Period.
Change in Control. Notwithstanding the provisions of any Award which
provide for its exercise or vesting in installments, all shares of Restricted
Stock shall become fully vested upon a "change in control," and all Options and
SARs shall be immediately exercisable and fully vested. With respect to Options,
at the time of a change in control, the optionee shall, at the discretion of the
Committee, be entitled to receive cash in an amount equal to the excess of the
fair market value of the Common Stock subject to such Option over the exercise
price of such shares, in exchange for the cancellation of such Options by the
optionee.
For purposes of the Option Plan, "change in control" means any one of the
following events: (1) the ownership, holding or power to vote more than 20% of
the Corporation's voting stock or the voting stock of the Bank; (2) the
acquisition of the ability to control of the election of a majority of the
Corporation's or the Bank's directors; (3) the acquisition of a controlling
influence over the management or policies of the Corporation or the Bank by any
person or by persons acting as a group within the meaning of Section 13(d) of
the Securities Exchange Act of 1934, as amended (except in the case of the
foregoing, ownership or control of the Bank or its directors by the Corporation
itself shall not constitute a "change in control"); or (4) during any period of
two consecutive years, individuals (the "Continuing Directors") who at the
beginning of such period constitute the Board of Directors of the Corporation or
the Bank (the "Existing Board") cease for any reason to constitute at least
two-thirds thereof, provided that any individual whose election or nomination
for election as a member of the Existing Board was approved by a vote of at
least two-thirds of the Continuing Directors then in office shall be considered
a Continuing Director. For purposes of defining "change in control," the term
"person" refers to an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed.
16
Although these provisions are included in the 2002 Option Plan primarily
for the protection of an employee-optionee in the event of a change in control
of the Corporation, they may also be regarded as having a takeover defensive
effect, which may reduce the Corporation's vulnerability to hostile takeover
attempts and certain other transactions which have not been negotiated with and
approved by the Board of Directors.
Conditions on Issuance of Shares. The Committee will have the discretionary
authority to impose, in agreements, such restrictions on shares of Common Stock
issued pursuant to the 2002 Option Plan as it may deem appropriate or desirable,
including but not limited to the authority to impose a right of first refusal or
to establish repurchase rights or both of these restrictions. In addition, the
Committee may not issue shares unless the issuance complies with applicable
securities laws, and to that end may require that a participant make certain
representations or warranties.
Nontransferability. Awards may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent and distribution. Notwithstanding the foregoing, to the
extent permissible under Rule 16b-3 of the Exchange Act, a participant who
receives Non-ISOs may transfer such Non-ISOs to his or her spouse, lineal
ascendants, lineal descendants, or to a duly established trust, provided that,
except in certain limited circumstances, such Non-ISOs may not be transferred
again. Non-ISOs which are transferred shall be exercisable by the transferee
subject to the same terms and conditions as would have applied to such Non-ISOs
in the hands of the participant that originally received the grant.
Effect of Dissolution and Related Transactions. In the event of (i) the
liquidation or dissolution of the Corporation, (ii) a merger or consolidation in
which the Corporation is not the surviving entity, or (iii) the sale or
disposition of all or substantially all of the Corporation's assets (any of the
foregoing to be referred to herein as a "Transaction"), all outstanding Awards,
together with the exercise prices thereof, will be equitably adjusted for any
change or exchange of shares for a different number or kind of shares which
results from the Transaction. However, any such adjustment will be made in such
a manner as to not constitute a modification, within the meaning of Section
424(h) of the Internal Revenue Code, of outstanding ISOs.
Duration of the 2002 Option Plan and Grants. The 2002 Option Plan has a
term of 10 years from the Effective Date, after which date no Awards may be
granted. The maximum term for an Award is 10 years from the date of grant,
except that the maximum term of an ISO (and an SAR granted in tandem with an
ISO) may not exceed five years if the optionee owns more than 10% of the Common
Stock on the date of grant. The expiration of the 2002 Option Plan, or its
termination by the Committee, will not affect any Award previously granted.
Amendment and Termination of the 2002 Option Plan. The Board of Directors
of the Corporation may from time to time amend the terms of the 2002 Option Plan
and, with respect to any shares at the time not subject to Awards, suspend or
terminate the 2002 Option Plan. No amendment, suspension, or termination of the
2002 Option Plan will, without the consent of any affected holders of an Award,
alter or impair any rights or obligations under any Award previously granted.
Financial Effects of Awards. The Corporation will receive no monetary
consideration for the granting of Awards under the 2002 Option Plan. It will
receive no monetary consideration other than the option price for shares of
Common Stock issued to optionees upon the exercise of their Options, and will
receive no monetary consideration upon the exercise of SARs. Under current
accounting standards, recognition of compensation expense is not required when
Options are granted at an exercise price equal to or exceeding the fair market
value of the Common Stock on the date the Option is granted.
The granting of SARs will require charges to the income of the Corporation
based on the amount of the appreciation, if any, in the market price of the
Common Stock to which the SARs relate over the exercise price of those shares
for the particular income period. If the market price of the Common Stock
declines subsequent to a charge against earnings due to estimated appreciation
in the Common Stock subject to SARs, the amount of the decline will reverse such
prior charges against earnings (but not by more than the aggregate of such prior
charges).
17
Discounted Non-ISOs will require charges to the income of the Corporation
based on the aggregate difference between the fair market value of the Common
Stock underlying the Discounted Non-ISO and the total exercise price payable
pursuant to such Discounted Non-ISO.
PROPOSED GRANTS
Neither the Board of Directors nor the Committee has made any determination
as to whom Awards under the 2002 Option Plan will be made or the amounts or
forms thereof.
FEDERAL INCOME TAX CONSEQUENCES
ISOs. An optionee recognizes no taxable income upon the grant of ISOs. If
the optionee holds the Option shares for at least two years from the date the
ISO is granted, and for one year from the date the ISO is exercised, any gain
realized on the sale of the shares received upon exercise of such ISO is taxed
as long-term capital gain. However, the difference between the fair market value
of the Common Stock at the date of exercise and the exercise price of the ISO
will be treated by the optionee as an item of tax preference in the year of
exercise for purposes of the alternative minimum tax. If an optionee disposes of
the shares before the expiration of either of the two special holding periods
noted above, the disposition is a "disqualifying disposition." In this event,
the optionee will be required, at the time of the disposition of the Common
Stock, to treat the lesser of the gain realized or the difference between the
exercise price and the fair market value of the Common Stock at the date of
exercise as ordinary income and the excess, if any, as capital gain.
The Corporation will not be entitled to any deduction for federal income
tax purposes as a result of the grant or exercise of an ISO, regardless of
whether or not the exercise of the ISO results in liability to the optionee for
alternative minimum tax. However, if an optionee has ordinary income taxable as
compensation as a result of a disqualifying disposition, the Corporation will be
entitled to deduct an equivalent amount.
Non-ISOs. An optionee will not recognize taxable income upon the grant of a
Non-ISO. In the case of such a Non-ISO, an optionee will recognize ordinary
income upon the exercise of the Non-ISO in an amount equal to the difference
between the fair market value of the shares on the date of exercise and the
option price (or, if the optionee is subject to certain restrictions imposed by
federal securities laws, upon the lapse of those restrictions unless the
optionee makes a special tax election within 30 days after the date of exercise
to have the general rule apply). Upon a subsequent disposition of such shares,
any amount received by the optionee in excess of the fair market value of the
shares as of the exercise will be taxed as capital gain. The Corporation will be
entitled to a deduction for federal income tax purposes at the same time and in
the same amount as the ordinary income recognized by the optionee in connection
with the exercise of a Non-ISO. Although no assurances can be given, Discounted
Non-ISOs are expected to be treated in the same manner as Non-ISOs for federal
income tax purposes.
SARs. The grant of an SAR has no tax effect on the optionee or the
Corporation. Upon exercise of the SARs, however, any cash or Common Stock
received by the optionee in connection with the surrender of his or her SAR will
be treated as compensation income to the optionee, and the Corporation will be
entitled to a business expense deduction for tax purposes for the amounts
treated as compensation income.
Restricted Stock. The receipt of shares of Restricted Stock is generally
taxable to the recipient at the time all of the restrictions on any portion of
such awards lapse, based upon the fair market value of such stock at the time of
the lapse. The Corporation generally will be allowed a tax deduction for federal
income tax purposes as a compensation expense equal to the amount of ordinary
income recognized by the recipient of the Restricted Stock at the time the
recipient recognizes ordinary income.
RECOMMENDATION AND VOTE REQUIRED
The Board of Directors has determined that the 2002 Option Plan is
desirable, cost effective, and produces incentives which will benefit the
Corporation and its stockholders. The Board of Directors is seeking stockholder
18
approval of the 2002 Option Plan pursuant to the requirements of the New York
Stock Exchange, in order to satisfy the requirements of the Internal Revenue
Code for favorable tax treatment of ISOs, and to exempt certain option
transactions from the short-swing trading rules of the SEC.
Stockholder approval of the 2002 Option Plan requires the affirmative vote
of the holders of a majority of the votes cast at the Meeting. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE 2002 OPTION PLAN.
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STOCKHOLDER PROPOSALS
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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, 2002.
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.
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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 Statements on Auditing Standards No. 61 ("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 2001 Annual Report on Form 10-K
for the year ended December 31, 2001, for filing with the Securities and
Exchange Commission.
THE AUDIT COMMITTEE
Robert F. Krohn (Chairman)
Michael P. Glinsky
James P. O'Donnell
Aldo J. Tesi
George R. Zoffinger
19
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INDEPENDENT AUDITORS
--------------------------------------------------------------------------------
Representatives of Deloitte & Touche LLP, independent auditors for 2001,
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.
AUDIT FEES
The aggregate fees billed by Deloitte & Touche LLP, the member firms of
Deloitte Touche Tohmatsu, and their respective affiliates (collectively,
"Deloitte & Touche") for professional services rendered for the audit of the
Corporation's annual financial statements and the reviews of the financial
statements included in the Corporation's Quarterly Reports on Form 10-Q filed
during the year ended December 31, 2001 were $330,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Corporation did not engage Deloitte & Touche to provide professional
services to the Corporation regarding financial information systems design and
implementation during the year ended December 31, 2001.
ALL OTHER FEES
For the year ended December 31, 2001, the aggregate fees paid by the
Corporation to Deloitte & Touche for all other services rendered to the
Corporation, other than the services rendered above under "Audit Fees" for the
year ended December 31, 2001 were $3,139,000 including audit related services of
approximately $45,000, tax services of $202,000, nonaudit services of $118,000
and consulting services billed by Deloitte Consulting of $2,774,000. Deloitte &
Touche has recently announced its intent to separate Deloitte Consulting from
the firm. Audit related services generally include fees for audits of the
Corporation's employee benefit plans and registration statements.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Pursuant to regulations promulgated under the Securities Exchange Act of
1934, as amended, the Corporation's officers, directors 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, 2001, 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 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 $12,000 plus
20
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HOUSEHOLDING OF PROXY STATEMENT AND ANNUAL REPORT
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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.
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ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
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.
The Corporation's 2001 Summary Annual Report to Stockholders and its Annual
Report on Form 10-K for the year ended December 31, 2001, including financial
statements, are being mailed to all stockholders of record as of the close of
business on March 28, 2002. 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.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gary L. Matter
GARY L. MATTER
SECRETARY
Omaha, Nebraska
April 4, 2002
21
EXHIBIT A
COMMERCIAL FEDERAL CORPORATION
2002 STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE OF THE PLAN.
The purpose of this Plan is to advance the interests of the Company through
providing select key Employees and Directors of the Bank, the Company, and their
Affiliates with the opportunity to acquire Shares. By encouraging such stock
ownership, the Company seeks to attract, retain and motivate the best available
personnel for positions of substantial responsibility and to provide additional
incentives to Directors and Employees of the Company or any Affiliate to promote
the success of the business.
2. DEFINITIONS.
As used herein, the following definitions shall apply.
(a) "Affiliate" shall mean any "parent corporation" or "subsidiary
corporation" of the Company, as such terms are defined in Section 424(e) and
(f), respectively, of the Code.
(b) "Agreement" shall mean a written agreement entered into in accordance
with Paragraph 5(c).
(c) "Awards" shall mean, collectively, Options, SARs and Shares of
Restricted Stock, unless the context clearly indicates a different meaning.
(d) "Bank" shall mean Commercial Federal Bank, a Federal Savings Bank.
(e) "Board" shall mean the Board of Directors of the Company.
(f) "Change in Control" shall mean any one of the following events: (i) the
acquisition of ownership, holding or power to vote more than 20% of the Bank's
or the Company's voting stock, (ii) the acquisition of the ability to control
the election of a majority of the Bank's or the Company's directors, (iii) the
acquisition of a controlling influence over the management or policies of the
Bank or the Company by any person or by persons acting as a "group" (within the
meaning of Section 13(d) of the Securities Exchange Act of 1934), or (iv) during
any period of two consecutive years, individuals (the "Continuing Directors")
who at the beginning of such period constitute the Board of Directors of the
Bank or the Company (the "Existing Board") cease for any reason to constitute at
least two-thirds thereof, provided that any individual whose election or
nomination for election as a member of the Existing Board was approved by a vote
of at least two-thirds of the Continuing Directors then in office shall be
considered a Continuing Director. Notwithstanding the foregoing, in the case of
(i), (ii) and (iii) hereof, ownership or control of the Bank by the Company
itself shall not constitute a Change in Control. For purposes of this paragraph
only, the term "person" refers to an individual or a corporation, partnership,
trust, association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically listed
herein.
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(h) "Committee" shall mean the Stock Option Committee appointed by the
Board in accordance with Paragraph 5(a) hereof.
(i) "Common Stock" shall mean the common stock of the Company.
(j) "Company" shall mean Commercial Federal Corporation.
A-1
(k) "Continuous Service" shall mean the absence of any interruption or
termination of service as an Employee or Director of the Company or an
Affiliate. Continuous Service shall not be considered interrupted in the case of
sick leave, military leave or any other leave of absence approved by the
Company, in the case of transfers between payroll locations of the Company or
between the Company, an Affiliate or a successor, or in the case of a Director's
performance of services in an emeritus or advisory capacity.
(l) "Director" shall mean any member of the Board, and any member of the
board of directors of any Affiliate that the Board has by resolution designated
as being eligible for participation in this Plan.
(m) "Disability" has the meaning ascribed to it in Section 22 (e)(3) of the
Code
(n) "Effective Date" shall mean the date specified in Paragraph 15 hereof.
(o) "Employee" shall mean any person employed by the Company, the Bank, or
an Affiliate.
(p) "Exercise Price" shall mean the price per Optioned Share at which an
Option or SAR may be exercised.
(q) "ISO" means an option to purchase Common Stock which meets the
requirements set forth in the Plan, and which is intended to be and is
identified as an "incentive stock option" within the meaning of Section 422 of
the Code.
(r) "Market Value" shall mean the fair market value of the Common Stock, as
determined under Paragraph 7(b) hereof.
(s) "Non-Employee Director" shall have the meaning provided in Rule 16b-3.
(t) "Non-ISO" means an option to purchase Common Stock which meets the
requirements set forth in the Plan but which is not intended to be and is not
identified as an ISO.
(u) "Option" means an ISO and/or a Non-ISO.
(v) "Optioned Shares" shall mean Shares subject to an Award granted
pursuant to this Plan.
(w) "Participant" shall mean any person who receives an Award pursuant to
the Plan.
(x) "Plan" shall mean this Commercial Federal Corporation Stock Option and
Incentive Plan.
(y) "Restricted Stock" means Common Stock which is subject to restrictions
against transfer and forfeiture and such other terms and conditions determined
by the Committee, as provided in Paragraph 10.
(z) "Rule 16b-3" shall mean Rule 16b-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended.
(aa) "Share" shall mean one share of Common Stock.
(bb) "SAR" (or "Stock Appreciation Right") means a right to receive the
appreciation in value, or a portion of the appreciation in value, of a specified
number of shares of Common Stock.
3. TERM OF THE PLAN AND AWARDS.
(a) Term of the Plan. The Plan shall continue in effect for a term of ten
years from the Effective Date, unless sooner terminated pursuant to Paragraph 17
hereof. No Award shall be granted under the Plan after ten years from the
Effective Date.
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(b) Term of Awards. The term of each Award granted under the Plan shall be
established by the Committee, but shall not exceed 10 years; provided, however,
that in the case of an Employee who owns Shares representing more than 10% of
the outstanding Common Stock at the time an ISO is granted, the term of such ISO
shall not exceed five years.
4. SHARES SUBJECT TO THE PLAN.
(a) General Rule. Except as otherwise required under Paragraph 12, the
aggregate number of Shares deliverable pursuant to Awards shall not exceed
2,100,000 Shares. Such Shares may either be authorized but unissued Shares,
Shares held in treasury, or Shares held in a grantor trust created by the Bank
or the Company. If any Awards should expire, become unexercisable, or be
forfeited for any reason without having been exercised, the Optioned Shares
shall, unless the Plan shall have been terminated, be available for the grant of
additional Awards under the Plan.
(b) Special Rule for SARs. The number of Shares with respect to which an
SAR is granted, but not the number of Shares which the Company delivers or could
deliver to an Employee or individual upon exercise of an SAR, shall be charged
against the aggregate number of Shares remaining available under the Plan;
provided, however, that in the case of an SAR granted in conjunction with an
Option, under circumstances in which the exercise of the SAR results in
termination of the Option and vice versa, only the number of Shares subject to
the Option shall be charged against the aggregate number of Shares remaining
available under the Plan. The Shares involved in an Option as to which option
rights have terminated by reason of the exercise of a related SAR shall not be
available for the grant of further Options under the Plan.
5. ADMINISTRATION OF THE PLAN.
(a) Composition of the Committee. The Plan shall be administered by the
Committee, which shall consist of not less than two (2) members of the Board who
are Non-Employee Directors and who are "outside directors" under Section 162(m)
of the Code and the regulations thereunder. Members of the Committee shall serve
at the pleasure of the Board. In the absence at any time of a duly appointed
Committee, the Plan shall be administered by those members of the Board who are
Non-Employee Directors and "outside directors".
(b) Powers of the Committee. Except as limited by the express provisions of
the Plan or by resolutions adopted by the Board, the Committee shall have sole
and complete authority and discretion (i) to select Participants and grant
Awards, (ii) to determine the form and content of Awards to be issued in the
form of Agreements under the Plan, (iii) to interpret the Plan, (iv) to
prescribe, amend and rescind rules and regulations relating to the Plan, and (v)
to make other determinations necessary or advisable for the administration of
the Plan. The Committee shall have and may exercise such other power and
authority as may be delegated to it by the Board from time to time. A majority
of the entire Committee shall constitute a quorum and the action of a majority
of the members present at any meeting at which a quorum is present, or acts
approved in writing by a majority of the Committee without a meeting, shall be
deemed the action of the Committee.
(c) Agreement. Each Award shall be evidenced by a written agreement
containing such provisions as may be approved by the Committee. Each such
Agreement shall constitute a binding contract between the Company and the
Participant, and every Participant, upon acceptance of such Agreement, shall be
bound by the terms and restrictions of the Plan and of such Agreement. The terms
of each such Agreement shall be in accordance with the Plan, but each Agreement
may include such additional provisions and restrictions determined by the
Committee, in its discretion, provided that such additional provisions and
restrictions are not inconsistent with the terms of the Plan. In particular, the
Committee shall set forth in each Agreement (i) the Exercise Price of an Option
or SAR, (ii) the number of Shares subject to, and the expiration date of, the
Award, (iii) the manner, time and rate (cumulative or otherwise) of exercise or
vesting of such Award, and (iv) the restrictions, if any, to be placed upon such
Award, or upon Shares which may be issued upon exercise of such Award.The
Chairman of the Committee and such other Directors and officers as shall be
designated by the Committee are hereby authorized to execute Agreements on
behalf of the Company and to cause them to be delivered to the recipients of
Awards.
(d) Effect of the Committee's Decisions. All decisions, determinations and
interpretations of the Committee shall be final and conclusive on all persons
affected thereby.
A-3
(e) Indemnification. In addition to such other rights of indemnification as
they may have, the members of the Committee shall be indemnified by the Company
in connection with any claim, action, suit or proceeding relating to any action
taken or failure to act under or in connection with the Plan or any Award,
granted hereunder to the full extent provided for under the Company's governing
instruments with respect to the indemnification of Directors.
6. GRANT OF OPTIONS.
(a) General Rule. The Committee shall have the discretion to make Awards to
Employees and Directors (including members of the Committee). In selecting those
Employees and Directors to whom Awards will be granted and the number of shares
covered by such Awards, the Committee shall consider the position, duties and
responsibilities of the eligible Employees and Directors, the value of their
services to the Company and its Affiliates, and any other factors the Committee
may deem relevant.
(b) Special Rules for ISOs. The aggregate Market Value, as of the date the
Option is granted, of the Shares with respect to which ISOs are exercisable for
the first time by an Employee during any calendar year (under all incentive
stock option plans, as defined in Section 422 of the Code, of the Company or any
present or future Affiliate of the Company) shall not exceed $100,000.
Notwithstanding the foregoing, the Committee may grant Options in excess of the
foregoing limitations, in which case such Options granted in excess of such
limitation shall be Options which are Non-ISOs.
(c) Discounted Non-ISOs. Notwithstanding any provision of this Plan to the
contrary, the Committee may, at the election of a Director or Employee selected
by the Committee, grant Non-ISOs to such individual in lieu of cash compensation
otherwise payable by the Company or the Bank. An individual's election pursuant
to this Paragraph 6(c) shall be made prior to the calendar year for which such
election will be deemed effective, and in accordance with regulations prescribed
by the Committee. Elections shall be approved or disapproved in the discretion
of the Committee and in accordance with the terms of the Plan. Changes to a
Participant's election pursuant to this Paragraph 6(c) shall be prospective
only. Pursuant to an election accepted and approved by the Committee, a
Participant may elect to forgo the receipt of cash compensation otherwise
expected from the Company or the Bank and instead receive, as of the last day of
the calendar year, Non-ISOs with an aggregate difference between the Market
Value of the underlying shares and the Exercise Price (determined as of the
first day of the calendar year) equal to the amount of cash compensation forgone
by the Participant pursuant to an election covering the calendar year. Such
Non-ISOs will be at all times fully exercisable following their date of grant,
and shall otherwise be subject to the terms of the underlying Agreement and this
Plan. In no event however, may a Non-ISO be granted pursuant to this Paragraph
6(c) with an Exercise Price which is less than 50% of the Market Value of the
underlying shares on the date of grant.
A Participant's interest in receiving Non-ISOs pursuant to this Paragraph
6(c) shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge; and the Company shall not
be obligated to make any Awards to persons other than as specifically provided
in the Plan. A Participant shall not have a secured claim against the assets of
the Company, and such Participant shall rely solely on the unsecured promise of
the Company for the payment of any compensation deferred through an election to
receive a Non-ISO pursuant to the Plan. Nothing herein shall be construed to
give any person any right, title, interest, or claim in or to any specific
asset, fund, reserve, account, or property of any kind whatsoever owned by them
or in which it may have any right, title or interest now or in the future; but
such persons shall have the right to enforce his or her claim against the
Company in the same manner as any unsecured creditor.
7. EXERCISE PRICE FOR OPTIONS.
(a) Limits on Committee Discretion. Except as provided in Paragraph 6(c)
hereof, the Exercise Price as to any particular Option shall not be less than
100% of the Market Value of the Optioned Shares on the date of grant. In the
case of an Employee who owns Shares representing more than 10% of the Company's
outstanding Shares of Common Stock at the time an ISO is granted, the Exercise
Price shall not be less than 110% of the Market Value of the Optioned Shares at
the time the ISO is granted.
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(b) Standards for Determining Exercise Price. If the Common Stock is listed
on a national securities exchange (or the NASDAQ National Market System) on the
date in question, then the Market Value per Share shall be the average of the
highest and lowest selling price on such exchange on such date, or if there were
no sales on such date, then the Exercise Price shall be the mean between the bid
and asked price on such date. If the Common Stock is traded otherwise than on a
national securities exchange on the date in question, then the Market Value per
Share shall be the mean between the bid and asked price on such date, or, if
there is no bid and asked price on such date, then on the next prior business
day on which there was a bid and asked price. If no such bid and asked price is
available, then the Market Value per Share shall be its fair market value as
determined by the Committee, in its sole and absolute discretion.
8. EXERCISE OF OPTIONS.
(a) Generally. Unless otherwise provided by the Committee pursuant to an
applicable Agreement, each Option shall be fully (100%) exercisable immediately
upon the date of its grant.
(b) Procedure for Exercise. A Participant may exercise Options, subject to
provisions relative to its termination and limitations on its exercise, only by
(1) written notice of intent to exercise the Option with respect to a specified
number of Shares, and (2) payment to the Company (contemporaneously with
delivery of such notice) in cash, in Common Stock owned for more than six
months, or a combination of cash and Common Stock owned for more than six
months, of the amount of the Exercise Price for the number of Shares with
respect to which the Option is then being exercised. Each such notice (and
payment where required) shall be delivered, or mailed by prepaid registered or
certified mail, addressed to the Treasurer of the Company at its executive
offices. Common Stock owned for more than six months utilized in full or partial
payment of the Exercise Price for Options shall be valued at its Market Value at
the date of exercise.
(c) Period of Exercisability for ISOs. Except to the extent otherwise
provided in the terms of an Agreement, an ISO may be exercised by a Participant
only while he is an Employee and has maintained Continuous Service from the date
of the grant of the ISO, or within three months after termination of such
Continuous Service (but not later than the date on which the ISO would otherwise
expire), except if the Employee's Continuous Service terminates by reason of --
(1) "Just Cause" which for purposes hereof shall have the
meaning set forth in any unexpired employment or severance agreement
between the Employee and the Bank and/or the Company (and, in the
absence of any such agreement, shall mean termination because of the
Employee's personal dishonesty, incompetence, willful misconduct,
breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule
or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order), then the Employee's rights to exercise
such ISO shall expire on the date of such termination;
(2) death, then to the extent that the Employee would have been
entitled to exercise the ISO immediately prior to his death, such ISO
of the deceased Employee may be exercised within two years from the
date of his death (but not later than the date on which the ISO would
otherwise expire) by the personal representatives of his estate or
person or persons to whom his rights under such ISO shall have passed
by will or by laws of descent and distribution;
(3) Disability, then to the extent that the Employee would have
been entitled to exercise the ISO immediately prior to his or her
Disability, such ISO may be exercised within one year from the date of
termination of employment due to Disability, but not later than the
date on which the ISO would otherwise expire.
(d) Period of Exercisability for Non-ISOs. Except as otherwise provided in
an Agreement, a Non-ISO may be exercised by a Participant only during the period
during which he has maintained Continuous Service from the date of grant of the
Non-ISO, provided that such Non-ISO shall (i) expire immediately if the
Participant's Continuous Service terminates due to Just Cause, and (ii) continue
to be exercisable for one year following his termination of Continuous Service
for any reason other than death. In the event of the Participant's death, then
to the extent that the Participant would have been entitled to exercise the
Non-ISO immediately prior to his death, such
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Non-ISO of the deceased Participant may be exercised within two years from the
date of his death (but not later than the date on which the Non-ISO would
otherwise expire) by the personal representatives of his estate or person or
persons to whom his rights under such Non-ISO shall have passed by will or by
laws of descent and distribution. Notwithstanding the foregoing, a Non-ISO may
not be exercised later than the date on which the Non-ISO would otherwise
expire.
(e) Effect of the Committee's Decisions. The Committee's determination
whether a Participant's Continuous Service has ceased, and the effective date
thereof, shall be final and conclusive on all persons affected thereby.
9. SARS (STOCK APPRECIATION RIGHTS)
(a) Granting of SARs. In its sole discretion, the Committee may from time
to time grant SARs to Employees either in conjunction with, or independently of,
any Options granted under the Plan. An SAR granted in conjunction with an Option
may be an alternative right wherein the exercise of the Option terminates the
SAR to the extent of the number of shares purchased upon exercise of the Option
and, correspondingly, the exercise of the SAR terminates the Option to the
extent of the number of Shares with respect to which the SAR is exercised.
Alternatively, an SAR granted in conjunction with an Option may be an additional
right wherein both the SAR and the Option may be exercised. An SAR may not be
granted in conjunction with an ISO under circumstances in which the exercise of
the SAR affects the right to exercise the ISO or vice versa, unless the SAR, by
its terms, meets all of the following requirements:
(1) The SAR will expire no later than the ISO;
(2) The SAR may be for no more than the difference between the Exercise
Price of the ISO and the Market Value of the Shares subject to the ISO
at the time the SAR is exercised;
(3) The SAR is transferable only when the ISO is transferable, and under
the same conditions;
(4) The SAR may be exercised only when the ISO may be exercised; and
(5) The SAR may be exercised only when the Market Value of the Shares
subject to the ISO exceeds the Exercise Price of the ISO.
(b) Exercise Price. The Exercise Price as to any particular SAR shall not
be less than the Market Value of the Optioned Shares on the date of grant.
(c) The provisions of Paragraphs 8(c) and 8(d) regarding the period of
exercisability of Options are incorporated by reference herein, and shall
determine the period of exercisability of SARs.
(d) Exercise of SARs. An SAR granted hereunder shall be exercisable at such
times and under such conditions as shall be permissible under the terms of the
Plan and of the Agreement granted to a Participant, provided that an SAR may not
be exercised for a fractional Share. Upon exercise of an SAR, the Participant
shall be entitled to receive, without payment to the Company except for
applicable withholding taxes, an amount equal to the excess of (or, in the
discretion of the Committee if provided in the Agreement, a portion of) the
excess of the then aggregate Market Value of the number of Optioned Shares with
respect to which the Participant exercises the SAR, over the aggregate Exercise
Price of such number of Optioned Shares. This amount shall be payable by the
Company, in the discretion of the Committee, in cash or in Shares valued at the
then Market Value thereof, or any combination thereof.
(e) Procedure for Exercising SARs. To the extent not inconsistent herewith,
the provisions of Paragraph 8(b) as to the procedure for exercising Options are
incorporated by reference, and shall determine the procedure for exercising
SARs.
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10. RESTRICTED STOCK AWARDS.
Any Share of Restricted Stock which the Committee may grant to Employees
and Directors shall be subject to the following terms and conditions, and to
such other terms and conditions as are either applicable generally to Awards, or
prescribed by the Committee in the applicable Agreement:
(a) Restriction Period. At the time of each award of Restricted Stock,
there shall be established for the Restricted Stock a restriction period, which
shall be no greater than 5 years (the "Restriction Period"). Such Restriction
Period may differ among Participants and may have different expiration dates
with respect to portions of shares of Restricted Stock covered by the same
award.
(b) Vesting Restrictions. The Committee shall determine the restrictions
applicable to the award of Restricted Stock, including, but not limited to,
requirements of Continuous Service for a specified term, or the attainment of
specific corporate, divisional or individual performance standards or goals,
which restrictions may differ with respect to each Participant. The Agreement
shall provide for forfeiture of Shares covered thereby if the specified
restrictions are not met during the Restriction Period, and may provide for
early termination of any Restriction Period in the event of satisfaction of the
specified restrictions prior to expiration of the Restricted Period.
(c) Vesting upon Death, Disability, or Retirement. The Committee shall set
forth in the Agreement the percentage of the award of Restricted Stock which
shall vest in the Participant in the event of death, disability or retirement
prior to the expiration of the Restriction Period or the satisfaction of the
restrictions applicable to an award of Restricted Stock.
(d) Acceleration of Vesting. Notwithstanding the Restriction Period and the
restrictions imposed on the Restricted Stock, as set forth in any Agreement, the
Committee may shorten the Restriction Period or waive any restrictions, if the
Committee concludes that it is in the best interests of the Company to do so.
(e) Ownership; Voting. Stock certificates shall be issued in respect of
Restricted Stock awarded hereunder and shall be registered in the name of the
Participant, whereupon the Participant shall become a stockholder of the Company
with respect to such Restricted Stock and shall, to the extent not inconsistent
with express provisions of the Plan, have all the rights of a stockholder,
including but not limited to the right to receive all dividends paid on such
Shares and the right to vote such Shares. Said stock certificates shall be
deposited with the Company or its designee, together with a stock power endorsed
in blank, and the following legend shall be placed upon such certificates
reflecting that the shares represented thereby are subject to restrictions
against transfer and forfeiture:
"The transferability of this certificate and the shares of
stock represented thereby are subject to the terms and conditions
(including forfeiture) contained in the 2002 Stock Option and
Incentive Plan of Commercial Federal Corporation, and an agreement
entered into between the registered owner and Commercial Federal
Corporation. Copies of such Plan and Agreement are on file in the
offices of the Secretary of Commercial Federal Corporation, 450
Regency Parkway, Atrium West, Omaha, Nebraska 68114".
(f) Lapse of Restrictions. At the expiration of the Restricted Period
applicable to the Restricted Stock, the Company shall deliver to the
Participant, or the legal representative of the Participant's estate, or if the
personal representative of the Participant's estate shall have assigned the
estate's interest in the Restricted Stock, to the person or persons to whom his
rights under such Stock shall have passed by assignment pursuant to his will or
to the laws of descent and distribution, the stock certificates deposited with
it or its designee and as to which the Restricted Period has expired and the
requirements of the restrictions have been met. If a legend has been placed on
such certificates, the Company shall cause such certificates to be reissued
without the legend.
(g) Forfeiture of Restricted Stock. The Agreement shall provide for
forfeiture of any Restricted Stock which is not vested in the Participant or for
which the restrictions have not been satisfied during the Restriction Period.
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11. CHANGE IN CONTROL
Notwithstanding the provisions of any Award which provides for its exercise
or vesting in installments, all Shares of Restricted Stock shall become fully
vested upon a Change in Control, and all Options and SARs shall be immediately
exercisable and fully vested. With respect to Options, at the time of a Change
in Control, the Participant shall, at the discretion of the Committee, be
entitled to receive cash in an amount equal to the excess of the Market Value of
the Common Stock subject to such Option over the Exercise Price of such Shares,
in exchange for the cancellation of such Options by the Participant.
12. EFFECT OF CHANGES IN COMMON STOCK SUBJECT TO THE PLAN.
(a) Recapitalizations; Stock Splits, Etc. The number and kind of shares
reserved for issuance under the Plan, and the number and kind of shares subject
to outstanding Awards, and the Exercise Price thereof, shall be proportionately
adjusted for any increase, decrease, change or exchange of Shares for a
different number or kind of shares or other securities of the Company which
results from a merger, consolidation, recapitalization, reorganization,
reclassification, stock dividend, split-up, combination of shares, or similar
event in which the number or kind of shares is changed without the receipt or
payment of consideration by the Company.
(b) Transactions in which the Company is Not the Surviving Entity. In the
event of (i) the liquidation or dissolution of the Company, (ii) a merger or
consolidation in which the Company is not the surviving entity, or (iii) the
sale or disposition of all or substantially all of the Company's assets (any of
the foregoing to be referred to herein as a "Transaction"), all outstanding
Awards, together with the Exercise Prices thereof, shall be equitably adjusted
for any change or exchange of Shares for a different number or kind of shares or
other securities which results from the Transaction.
(c) Special Rule for ISOs. Any adjustment made pursuant to subparagraphs
(a) or (b)(1) hereof shall be made in such a manner as not to constitute a
modification, within the meaning of Section 424(h) of the Code, of outstanding
ISOs.
(d) Conditions and Restrictions on New, Additional, or Different Shares or
Securities. If, by reason of any adjustment made pursuant to this Paragraph, a
Participant becomes entitled to new, additional, or different shares of stock or
securities, such new, additional, or different shares of stock or securities
shall thereupon be subject to all of the conditions and restrictions which were
applicable to the Shares pursuant to the Award before the adjustment was made.
(e) Other Issuances. Except as expressly provided in this Paragraph, the
issuance by the Company or an Affiliate of shares of stock of any class, or of
securities convertible into Shares or stock of another class, for cash or
property or for labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, shall not affect, and no adjustment
shall be made with respect to, the number, class, or Exercise Price of Shares
then subject to Awards or reserved for issuance under the Plan.
13. NON-TRANSFERABILITY OF AWARDS.
Awards may not be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner other than by will or by the laws of descent and
distribution. Notwithstanding any other provision of this Plan to the contrary,
to the extent permissible under Rule 16b-3, a Participant who is granted
Non-ISOs pursuant to this Plan may transfer such Non-ISOs to his or her spouse,
lineal ascendants, lineal descendants, or to a duly established trust, provided
that Non-ISOs so transferred may not again be transferred other than to the
Participant originally receiving the grant of Non-ISOs or to an individual or
trust to whom such Participant could have transferred Non-ISOs pursuant to this
Paragraph 13. Non-ISOs which are transferred pursuant to this Paragraph 13 shall
be exercisable by the transferee subject to the same terms and conditions as
would have applied to such Non-ISOs in the hands of the Participant originally
receiving the grant of such Non-ISOs.
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14. TIME OF GRANTING AWARDS.
The date of grant of an Award shall, for all purposes, be the later of the
date on which the Committee makes the determination of granting such Award, and
the Effective Date. Notice of the determination shall be given to each
Participant to whom an Award is so granted within a reasonable time after the
date of such grant.
15. EFFECTIVE DATE.
The Plan shall become effective immediately upon its approval by a
favorable vote of stockholders owning at least a majority of the total votes
cast at a duly called meeting of the Company's stockholders held in accordance
with applicable laws. No Awards may be made prior to approval of the Plan by the
stockholders of the Company.
16. MODIFICATION OF AWARDS.
At any time, and from time to time, the Board may authorize the Committee
to direct execution of an instrument providing for the modification of any
outstanding Award, provided no such modification shall confer on the holder of
said Award any right or benefit which could not be conferred on him by the grant
of a new Award at such time, or impair the Award without the consent of the
holder of the Award. In no event, however, may the Committee or the Board
reprice any outstanding Option.
17. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may from time to time amend the terms of the Plan and, with
respect to any Shares at the time not subject to Awards, suspend or terminate
the Plan. No amendment, suspension or termination of the Plan shall, without the
consent of any affected holders of an Award, alter or impair any rights or
obligations under any Award theretofore granted.
18. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Compliance with Securities Laws. Shares of Common Stock shall not be
issued with respect to any Award unless the issuance and delivery of such Shares
shall comply with all relevant provisions of law, including, without limitation,
the Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder, any applicable state securities law, and the requirements of any
stock exchange upon which the Shares may then be listed.
(b) Special Circumstances. The inability of the Company to obtain approval
from any regulatory body or authority deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder shall relieve
the Company of any liability in respect of the non-issuance or sale of such
Shares. As a condition to the exercise of an Option or SAR, the Company may
require the person exercising the Option or SAR to make such representations and
warranties as may be necessary to assure the availability of an exemption from
the registration requirements of federal or state securities law.
(c) Committee Discretion. The Committee shall have the discretionary
authority to impose in Agreements such restrictions on Shares as it may deem
appropriate or desirable, including but not limited to the authority to impose a
right of first refusal or to establish repurchase rights or both of these
restrictions.
19. RESERVATION OF SHARES.
The Company, during the term of the Plan, will reserve and keep available a
number of Shares sufficient to satisfy the requirements of the Plan.
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20. WITHHOLDING TAX.
The Company's obligation to deliver Shares upon exercise of Options and/or
SARs or upon the vesting of Restricted Stock shall be subject to the
Participant's satisfaction of all applicable federal, state and local income and
employment tax withholding obligations. The Committee, in its discretion, may
permit the Participant to satisfy the obligation, in whole or in part, by
irrevocably electing to have the Company withhold Shares, or to deliver to the
Company Shares that he already owns, having a value equal to the amount required
to be withheld. The amount of the withholding requirement shall be the
applicable statutory minimum federal, state or local income tax with respect to
the Award on the date that the amount of tax is to be withheld. The value of the
Shares to be withheld, or delivered to the Company, shall be based on the Market
Value of the Shares on the date the amount of tax to be withheld is to be
determined. As an alternative, the Company may retain, or sell without notice, a
number of such Shares sufficient to cover the amount required to be withheld.
21. NO EMPLOYMENT OR OTHER RIGHTS.
In no event shall an Employee's or Director's eligibility to participate or
participation in the Plan create or be deemed to create any legal or equitable
right of the Employee, Director, or any other party to continue service with the
Company, the Bank, or any Affiliate of such corporations. No Employee or
Director shall have a right to be granted an Award or, having received an Award,
the right to again be granted an Award. However, an Employee or Director who has
been granted an Award may, if otherwise eligible, be granted an additional Award
or Awards.
22. GOVERNING LAW.
The Plan shall be governed by and construed in accordance with the laws of
the State of Nebraska, except to the extent that federal law shall be deemed to
apply.
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[FORM OF PROXY CARD]
COMMERCIAL FEDERAL CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
MAY 14, 2002 ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Michael P. Glinsky, Robert F. Krohn and
Joseph J. Whiteside, 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 14, 2002 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" PROPOSALS I AND 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL I AND II
I. The election as directors of all nominees listed below (except as marked to
the contrary):
For a term to expire in 2004
Robert J. Hutchinson
For terms to expire in 2005
William A. Fitzgerald
Robert D. Taylor
Aldo J. Tesi
[ ] 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.
-------------------------------------
II. The approval of the Commercial Federal Corporation 2002 Stock Option and
Incentive Plan
[ ] FOR [ ] ABSTAIN [ ] AGAINST
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.