SCHEDULE 14A INFORMATION
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CAMCO FINANCIAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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CAMCO FINANCIAL CORPORATION
6901 Glenn Highway
Cambridge, Ohio 43725
(740) 435-2020
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 2003 Annual Meeting of Stockholders of Camco Financial Corporation
("Camco") will be held at Camco's Corporate Center, 6901 Glenn Highway,
Cambridge, Ohio 43725, on April 22, 2003, at 3:00 p.m., Eastern Daylight Time
(the "Annual Meeting"), for the following purposes:
1. To elect three directors of Camco for terms expiring in
2006;
2. To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
Only stockholders of Camco of record at the close of business on March
3, 2003, will be entitled to vote at the Annual Meeting and at any adjournments
thereof. Whether or not you expect to attend the Annual Meeting, we urge you to
consider the accompanying proxy statement carefully and to SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY SO THAT YOUR SHARES MAY BE VOTED IN
ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF A QUORUM MAY BE ASSURED. Giving
a proxy does not affect your right to vote in person in the event you attend the
Annual Meeting.
By Order of the Board of Directors
/s/D. Edward Rugg
March 14, 2003 D. Edward Rugg, Secretary
CAMCO FINANCIAL CORPORATION
6901 Glenn Highway
Cambridge, Ohio 43725
(740) 435-2020
PROXY STATEMENT
PROXIES
The Board of Directors of Camco Financial Corporation ("Camco") is
soliciting proxies in the form accompanying this Proxy Statement, for use at the
2003 Annual Meeting of Stockholders of Camco to be held at Camco's Corporate
Center, 6901 Glenn Highway, Cambridge, Ohio 43725, on April 22, 2003, at 3:00
p.m., Eastern Daylight Time, and at any adjournments thereof (the "Annual
Meeting"). Only stockholders of record as of the close of business on March 3,
2003 (the "Voting Record Date"), are entitled to vote at the Annual Meeting.
Each such stockholder will be entitled to cast one vote for each share owned. As
of the Voting Record Date, there were 7,687,132 votes entitled to be cast at the
Annual Meeting.
Each properly executed proxy received prior to the Annual Meeting and
not revoked will be voted as specified thereon or, in the absence of specific
instructions to the contrary, will be voted FOR the reelection of Richard C.
Baylor, Robert C. Dix and Paul D. Leake as directors of Camco for terms expiring
in 2006.
The directors, officers and other employees of Camco may solicit
proxies in person or by telephone, telegraph or mail only for use at the Annual
Meeting. Proxies may be revoked by (a) delivering a written notice expressly
revoking the proxy to the Secretary of Camco at the above address prior to the
Annual Meeting, (b) delivering a later dated proxy to Camco at the above address
prior to the Annual Meeting, or (c) attending the Annual Meeting and voting in
person. The cost of soliciting Proxies will be borne by Camco.
This Proxy Statement is first being mailed to stockholders of Camco on
or about March 14, 2003.
ELECTION OF DIRECTORS
The Board of Directors proposes the reelection of the following persons
to terms which will expire in 2006:
Director
Name Age Position(s) held since
Richard C. Baylor 48 President 2001
Chief Executive Officer
Chief Operating Officer
Robert C. Dix 63 Director 1994
Paul D. Leake 62 Director 1996
1
Richard C. Baylor was named President of Camco on January 1, 2000,
and Chief Executive Officer on January 1, 2001. He has been Camco's Chief
Operating Officer since October 21, 1998. From October 21, 1998 until January 1,
2000, Mr. Baylor was the Executive Vice President of Camco. From August 1989 to
June 1998, Mr. Baylor was employed as a Vice President of Lending by State
Savings Bank, Columbus, Ohio. Mr. Baylor is also a director of each of Camco's
subsidiaries.
Robert C. Dix, Jr. is Publisher of The Daily Jeffersonian, Cambridge,
Ohio, and is one of the five principals of the group known as Dix Communication.
Mr. Dix is Executive Vice President of Wooster Republican Printing Company,
which owns a group of newspapers and radio stations. Mr. Dix is also President
of MDM Broadcasting, a television station holding company, which is a
wholly-owned subsidiary of Wooster Republican Printing Company.
Paul D. Leake retired in June 2001 as the President and Chief Executive
Officer of First Bank for Savings, a position he had held since 1976.
Under Delaware law and Camco's Bylaws, the three nominees receiving the
greatest number of votes will be elected as directors. Abstentions, shares not
voted by brokers and votes withheld are not counted toward the election of
directors.
In accordance with Section 3.13 of the Bylaws, nominees for election as
directors may be proposed only by the directors or by a stockholder who is
entitled to vote for directors and who has submitted a written nomination to the
Secretary of Camco by the later of the February 21st immediately preceding the
annual meeting of stockholders or the sixtieth day before the first anniversary
of the most recent annual meeting of stockholders held for the election of
directors. Each such written nomination must state the name, age, business and
residence address of the nominee, the principal occupation or employment of the
nominee, the number of each class of shares of Camco owned either beneficially
or of record by each such nominee and the length of time such shares have been
so owned.
INCUMBENT DIRECTORS
The following directors will continue to serve after the Annual Meeting
for the terms indicated:
Director Term
Name Age Position(s) held Since Expires
Larry A. Caldwell 66 Chairman of the Board 1970 2005
Carson K. Miller 57 Director 2002 2005
Samuel W. Speck 66 Director 1991 2005
Jeffrey T. Tucker 45 Director 1987 2005
Terry A. Feick 53 Director 2000 2004
Susan J. Insley 57 Director 2002 2004
Larry A. Caldwell is the Chairman of the Board of Directors of Camco, a
position he has held since January 1996. Mr. Caldwell was the Chief Executive
Officer of Camco from Camco's organization in 1970 until January 1, 2001.
Carson K. Miller retired in 2002 as the President of Washington State
Community College in Marietta, Ohio, a position he had held since 1985.
2
Samuel W. Speck is the director of the Ohio Department of Natural
Resources. Prior to joining the cabinet of the Governor of Ohio, Dr. Speck
served as President of Muskingum College, New Concord, Ohio from 1986 to 1999.
Jeffrey T. Tucker is a Certified Public Accountant and a partner in the
accounting firm of Tucker & Tucker, Cambridge, Ohio.
Terry A. Feick is the Superintendent of Schools for the Washington
Court House City Schools, a position he has held since 1991.
Susan J. Insley is the Executive Vice President and Principal of
Cochran Public Relations, Inc., Columbus, Ohio, a position she has held
since 1996.
BOARD MEETINGS, COMMITTEES AND COMPENSATION
The Board of Directors of Camco met six times for regularly scheduled
meetings during the year ended December 31, 2002. Each director attended at
least 75% of the aggregate of the total number of the Board of Directors'
meetings and the total number of meetings held by committees on which such
director served during 2002.
The Board of Directors of Camco has a Compensation Committee, whose
members are Messrs. Speck and Tucker and Ms. Insley. The Compensation Committee
reviews and recommends to the Board of Directors executive compensation and
directors' fees for Camco and its subsidiaries. The Compensation Committee met
six times during 2002.
The Board of Directors of Camco has an Audit Committee, whose members
are Messrs. Tucker, Dix, Feick, and Miller. The function of the Audit Committee
is to recommend an audit firm to the full Board of Directors, to review and
approve the annual audit report and to conduct quarterly accounting and internal
audit reviews. The Audit Committee met six times during 2002.
During 2002, the Board of Directors of Camco had a Nominating
Committee, whose members were Messrs. Speck and Tucker and Ms. Insley. The
Nominating Committee met once during 2002 to determine board nominees for the
2002 annual meeting of stockholders.
In January 2003, the Board of Directors established a Corporate
Governance Committee to provide a forum for independent directors to address
issues of corporate governance, including selecting director nominees. The
Corporate Governance Committee selected the 2003 nominees for election to the
Board of Directors. The Corporate Governance Committee has a charter, which is
attached to this Proxy Statement as Exhibit A. The members of the Corporate
Governance Committee are Messrs. Dix, Feick and Speck and Ms. Insley.
Each non-employee director of Camco receives a retainer of $5,000 per
year for service on the board of Camco and $825 for each board meeting attended,
with one paid absence per year. Each director of Camco is also a director of
Advantage Bank. Each non-employee director receives a retainer for $5,000 per
year for service on the board of Advantage Bank and $425 per board meeting
attended, with one paid absence per year. In addition, directors who are not
executive officers of Camco receive a fee of $400 for each committee meeting
attended, except that if the committee meeting is held on the same day as a
Board of Directors' meeting the fee is $200.
3
EXECUTIVE OFFICERS
The following information is supplied for certain executive officers of
Camco and Advantage Bank who do not serve on Camco's Board of Directors.
D. Edward Rugg has served as the Secretary of Camco since January
2001 and as the Executive Vice President and Chief Operating Officer of
Advantage Bank since May 2001. Mr. Rugg had been President and Chief Executive
Officer of Cambridge Savings Bank since January 1996. Mr. Rugg joined Camco in
1976.
Mark A. Severson has served as the Treasurer and Chief Financial
Officer of Camco and Chief Financial Officer and Senior Vice President of
Advantage Bank since November 2001. From May 1990 to May 2001, Mr. Severson was
a Senior Vice President and Chief Financial Officer of FCNB Corp., Frederick,
Maryland.
David S. Caldwell has served as the Senior Vice President in charge
of retail banking and financial services of Advantage Bank since December 2001.
Since July 2001, Mr. Caldwell has been the Division President of Cambridge
Savings. Mr. Caldwell joined Camco in September 2000 as President and CEO of
Westwood Homestead Savings Bank in Cincinnati, Ohio. Prior to joining Camco, Mr.
Caldwell served for three years as a Senior Vice President of Central Carolina
Bank & Trust, Durham, North Carolina.
Edward A. Wright has served as the Senior Vice President in charge of
operations of Advantage Bank since December 2001. Mr. Wright was the Vice
President of Operations at Advantage Bank since July 2001. Mr. Wright joined
Cambridge Savings in 1984 and served as Vice President and COO of Cambridge
Savings since 1994 until July 2001.
4
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth the compensation paid to the chief
executive officer of Camco and the other four highest compensated executive
officers of Camco who received cash and cash equivalent compensation in excess
of $100,000 from Camco and its subsidiaries for services rendered to Camco and
its subsidiaries (the "Named Executive Officers") for the years ended December
31, 2002, 2001 and 2000:
Annual compensation Long term All other
compensation compensation
($)
Awards
----------------
Other annual Securities
compensation underlying
Name and principal position Year Salary ($) ($) Bonus ($) options/SARs(#)
--------------------------------- ------ -------- ------------ ----------- ---------------- ----------------
Richard C. Baylor, President and 2002 $225,000 $78 $33,894 (1) 16,810 (1) $9,220 (2)
Chief Executive Officer 2001 182,442 - 49,425 - 29,341
2000 109,698 - 36,713 5,000 46,128
Larry A. Caldwell, 2002 119,308 - - - 435 (3)
Chairman of the Board 2001 201,490 - 25,000 - 36,833
2000 177,142 - 56,411 - 63,032
D. Edward Rugg, Secretary of Camco 2002 156,000 136 23,500 (1) 8,741 (1) 6,924 (2)
and Executive Vice President and 2001 140,395 - 22,680 - 8,823
Chief Operating Officer of
Advantage Bank
Mark A. Severson, Treasurer and 2002 145,000 47 21,843 (1) 5,416 (1) -
Chief Financial Officer
David S. Caldwell, Senior Vice 2002 129,875 49 19,565 (1) 4,854 (1) 6,208 (2)
President (Retail Banking) of 2001 127,144 - 16,396 2,500 120,870
Advantage Bank
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(1) Bonus amounts and options to acquire shares of Camco stock are based upon
performance in fiscal year 2002, but will be awarded in January 2003.
(2) Consists of employer contributions to the Camco 401(k) Plan.
(3) Consists of director's fees.
5
Stock Options
The following table sets forth information regarding the number and
value of unexercised options held by the Named Executive Officers at December
31, 2002:
Aggregated Option/SAR Exercises in Last Fiscal Year and 12/31/02 Option/SAR Values
Number of Value of unexercised
securities underlying "in the money"
Shares unexercised options options at
acquired on Value at 12/31/02(#) 12/31/02($)(1)
Name exercise(#) realized($) Exercisable/Unexercisable Exercisable/Unexercisable
Richard C. Baylor -0- N/A 10,250/0 $26,350/0
Larry A. Caldwell 2,238 9,829 23,400/0 84,864/0
D. Edward Rugg -0- N/A 11,485/0 36,841/0
Mark A. Severson -0- N/A 1,000/2,000 2,850/5,700
David S. Caldwell -0- N/A 5,000/0 18,275/0
--------------------------
(1) The value of the options was determined by multiplying the number of "in
the money" options by the difference between the applicable option exercise
price and the fair market value of a share of Camco common stock, which was
$14.21 on December 31, 2002, based on the closing bid price reported by The
Nasdaq Stock Market.
Compensation Committee Report On Executive Compensation
Camco's business consists primarily of the business of Advantage Bank
and its subsidiaries and or affiliates. The financial results of Camco are
primarily a function of Advantage Bank's achievement of its goals as set forth
in its business plan. Executives are compensated for their contribution to the
achievement of these goals, which benefit the shareholders, customers,
employees, and the communities in which we operate.
During 2002, Larry A. Caldwell, the Chairman of the Board, received his
compensation entirely from Camco. Richard C. Baylor, the President, Chief
Executive Officer and Chief Operating Officer, and Mark A. Severson, the
Treasurer and Chief Financial Officer, each received 50% of his compensation
from Advantage Bank and 50% from Camco. Camco's Compensation Committee (the
"Committee") recommends to Camco's Board of Directors the executive compensation
for Camco executives for responsibilities at the holding company level.
Membership of the Committee is composed exclusively of outside directors who
meet the criteria of SEC Rule 16(b). The Committee is dedicated to the
philosophy of linking executive compensation to the achievement of Advantage
Bank's goals and the resulting performance of Camco.
Executive Compensation Philosophy and Process
The compensation levels of the executive officers, including the Chief
Executive Officer, are reviewed each year by the Committee. The Committee also
assesses each executive officer's contribution to Camco, the skills and
experience of each executive officer and the on-going potential of each
executive officer. Total corporate return performance is also a consideration in
determining executive officer compensation. The Committee's determinations are
presented to the full board of directors, but directors who are also executive
officers do not participate in discussions regarding their own compensation.
6
The overall objective of the executive compensation program is to
provide competitive levels of compensation that will attract and retain
qualified executives and will reward individual performance, initiative and
achievement, while enhancing overall corporate performance and shareholder
value. The program is designed to align senior management compensation with the
goals of our business plan by creating strong incentives to manage business
successfully from both a financial and operating perspective. The executive
compensation program is structured to accomplish the following specific
objectives:
1) Align the interests of management with the interests of the
shareholders;
2) Clearly motivate management to perform and succeed according to the
goals outlined in our business plan;
3) Retain key personnel critical to our long-term success;
4) Emphasize formula-based components, such as incentive plans, in order
to better focus management efforts in its execution of our business
plan;
5) Maintain pay for performance as an integral component of the program
by utilizing incentive plans that emphasize corporate success;
6) Maintain a corporate environment which encourages stability and a
long-term focus for both Camco and its management; and
7) Ensure that management: (a) fulfills its overall responsibility to its
constituents, including shareholders, customers, employees, the
community and government regulatory agencies; (b) conforms its
business conduct to the highest ethical standards; (c) remains free
from any influences that could impair or appear to impair the
objectivity and impartiality of its judgement or treatment of Camco's
constituents; and (d) continues to avoid any conflict between its
responsibilities to Camco and each individual's personal interests.
The Committee utilizes independent compensation surveys of officers in
the thrift industry, taking into account comparable asset bases and geographic
locations. Performance comparisons include rankings based on return on average
equity, return on average assets, efficiency ratio, asset quality and total
return on a company's stock price, among other factors. Compensation data
utilized for comparisons is generally annual cash compensation including base
salary and most forms of cash bonus and annual incentive awards.
Components of the Program
The program's compensation elements include cash compensation,
including base salary and an incentive-based bonus plan, and stock-based
compensation. The incentive plans have been designed to reflect corporate
performance, individual performance, and alignment with the interests of Camco's
shareholders. Superior corporate or individual performance should result in
compensation which, when combined with incentives, would place overall
compensation at or above that of the peer group median.
7
Base salary forms the foundation of the compensation program as it
represents income not at risk. The Committee believes that base salary should
function as an anchor: large enough that the executive is comfortable remaining
in Camco's employ, but not so large as to conflict with the executive's
motivation to work diligently to increase shareholder value. An individual's
base salary is directly related to his or her position, job responsibilities,
accountability, performance and contribution to Camco.
Camco maintains both a short-term cash bonus plan and a long-term
stock-based incentive plan. Bonus and incentive plan awards for the Named
Executive Officers are based on the achievement of corporate performance
objectives which are established by Camco's Compensation Committee at the
beginning of each year. The performance objectives include four primary
elements, consisting of return on average tangible equity, earnings per share
growth, efficiency ratio improvement and net interest margin growth, each of
which accounts for one-sixth of the total performance measurement. Secondary
objectives, each of which accounts for one-twelfth of the performance
measurement, include deposit growth, commercial real estate loan volume,
non-interest income growth and the Bank's CAMEL rating.
The cash bonus amounts range from 0% to 25% of the officer's base
salary, subject to the percentage of performance measurements achieved.
Additional discretionary bonus amounts may also be awarded under the cash bonus
plan in recognition of other achievements, such as merger and acquisition
activities, which are not part of the established performance objectives.
The long-term incentive plan provides for the award of stock options of
varying levels for each of the Named Executive Officers, ranging in amount from
0% to a maximum of between 100% and 200% of the officer's base salary, subject
to the percentage of performance measurements achieved. Options are issued at
market prices and typically vest at a rate of 20% each year beginning on the
grant date and have a term of ten years. This element of the executive
compensation program is designed to align the interests of the executive with
corporate shareholder objectives since the price performance of Camco's common
stock directly affects the value of these long-term awards.
Determination of CEO's Compensation
The Committee determined the compensation for Mr. Baylor for 2002
pursuant to the policies described above for executive officers. Additional
factors considered included merger and acquisition activities, continued
updating and implementation of Camco's strategic plan and subsidiary oversight
and progress. The Committee increased Mr. Baylor's base compensation by $6,750,
or 3.0%, bringing his base salary to $231,750 for 2003. Camco achieved 60.3% of
the performance targets established by the Committee for 2002. Based on that
level of achievement, Mr. Baylor was awarded a cash bonus of $33,894 and he was
awarded options for a number of Camco shares having a market value on the date
of grant, as well as an exercise price, of $271,156.
Submitted by the Compensation Committee of Camco's Board of Directors:
Dr. Samuel W. Speck, Chairman
Jeffrey T. Tucker
Susan J. Insley
8
Compensation Committee Interlocks
During 2002, no member of the Compensation Committee was a current or
former executive officer or employee of Camco or one of its subsidiaries or had
a reportable business relationship with Camco or one of its subsidiaries.
Performance Graph
The following graph compares the cumulative total return on Camco's
common stock with the cumulative total return of an index of companies whose
shares are traded on Nasdaq and two peer group indices for the same period. In
previous fiscal years, Camco has used the Peer Group 1 Index as an indicator of
how Camco compares to other peers in its line of business. Camco's assets have
grown since the time Camco began using the Peer Group 1 Index. As a result,
Camco believes that the Peer Group 2 Index is now a better index of peers to use
as a comparison because these companies are more comparable to Camco's current
asset size.
[Total return performance graph omitted plotting points set forth below]
Period Ending
----------- ----------- ------------ ----------- ----------- -----------
Index 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
------------------------------------------- ----------- ----------- ------------ ----------- ----------- -----------
Camco Financial Corporation 100.00 90.20 67.06 67.01 91.05 105.82
NASDAQ - Total US 100.00 140.99 261.48 157.42 124.89 86.33
Camco Financial Peer Group 1** 100.00 89.07 77.43 70.49 90.83 122.55
Camco Financial Peer Group 2*** 100.00 94.79 82.02 90.43 117.11 142.08
**The Camco Financial Peer Group 1 includes Fidelity Bancorp, Inc., First
Defiance Financial Corporation, First Federal Financial Corporation, PVF Capital
Corporation, HF Financial, Inc., HMN Financial, Inc., and Home Federal Bancorp.
***The Camco Financial Peer Group 2 includes American Financial Holdings, Inc.,
Connecticut Bancshares, Inc., CFS Bancorp, Inc., Berkshire Hills Bancorp, Inc.,
First Essex Bancorp, Inc., Troy Financial Corp., First Place Financial Corp.,
United Community Financial Corp., Klamath First Bancorp, Inc., ESB Financial
Corp., First Financial Holdings, Inc., Anchor BanCorp Wisconsin, Inc., and First
Federal Capital Corp.
9
Employment Agreements
Camco has an employment agreement with Richard Baylor for a term ending
January 31, 2006. The agreement provides for a base salary of not less than
$231,750 and a performance review by the Board of Directors not less often than
annually, at which time the Board of Directors may extend the term of the
agreement. The agreement also provides for the inclusion of Mr. Baylor in any
formally established employee benefit, bonus, pension and profit-sharing plans
for which senior management personnel are eligible and provides for vacation and
sick leave.
Mr. Baylor's employment is terminable by Camco at any time. In the
event of termination by Camco other than for just cause or in connection with a
"change of control," as defined in the agreement, Mr. Baylor will be entitled to
(i) a continuation of salary payments for the remainder of the term of his
agreement and (ii) a continuation of health. life and disability insurance
benefits substantially equal to those being provided at the date of termination
of employment until the earliest to occur of the end of the term of the
agreement or the date Mr. Baylor becomes employed full-time by another employer.
The agreement also contains provisions with respect to the occurrence
within one year after a "change of control" of (1) the termination of Mr.
Baylor's employment for any reason other than just cause, (2) a change in the
capacity or circumstances in which Mr. Baylor is employed or (3) a material
reduction in Mr. Baylor's responsibilities, authority, compensation or other
benefits provided under the agreement without the written consent of Mr. Baylor.
In the event of any such occurrence, Mr. Baylor will be entitled to payment of
an amount equal to three times his average annual compensation for the three
taxable years immediately preceding the termination of employment. In addition,
Mr. Baylor is entitled to continued coverage under all health, life and
disability benefit plans until the earlier of the end of the term of the
agreement or the date on which Mr. Baylor is included in another employer's
benefit plans as a full-time employee. The maximum which Mr. Baylor may receive,
however, is limited to an amount which will not result in the imposition of a
penalty tax pursuant to Section 280G(b)(3) of the Internal Revenue Code.
Camco also has an employment agreement with Larry Caldwell for a
one-year term commencing November 9, 2002. The agreement provides for a base
salary of $125,000 and provides for the inclusion of Mr. Caldwell in any
tax-qualified employee benefit, pension and profit-sharing plans for which
senior management personnel are eligible. The agreement is terminable by Camco
at any time. In the event of termination by Camco other than for just cause or
in connection with a "change of control," as defined in the agreement, Mr.
Caldwell will be entitled to a continuation of salary payments for the remainder
of the term of his agreement. In the event of the voluntary or involuntary
termination of Mr. Caldwell's employment for any reason other than just cause
within one year after a "change of control", Mr. Caldwell would receive a change
of control payment of $353,999.
Change of Control Agreements
Camco has change of control agreements with Edward Rugg, Mark Severson
and David Caldwell. The agreements are for terms of one year and provide for
annual performance reviews by the Board of Directors, at which time the Board of
Directors may extend the agreements for an additional one-year period.
The agreements provide that if the officer is terminated by Camco or
its successors for any reason other than just cause, within six months prior to
a change of control, as defined in the agreement, or within one year after a
change of control, Camco will pay (1) the officer an amount equal to two times
10
the amount of his annual salary and (2) the premiums required to maintain
coverage under the health insurance plan in which the officer is a participant
immediately prior to the change of control until the earlier of (i) the first
anniversary of his termination or (ii) the date the officer is included in
another employer's benefit plans. The officer will also be entitled to the above
payments if he voluntarily terminates his employment within twelve months
following a change of control if (1) the capacity or circumstances in which the
officer is employed are changed; (2) the officer no longer holds his specified
office; (3) the officer is required to move his personal residence, or perform
his principal executive functions, more than thirty-five miles from his primary
office as of the date of the agreement; or (4) Camco otherwise breaches the
agreement. The maximum amount that the officer may receive under the agreement
is limited to an amount which will not result in the imposition of a penalty tax
pursuant to Section 280G(b)(3) of the Code.
Salary Continuation Agreements
Advantage Bank has entered into Salary Continuation Agreements with
each of Richard Baylor, Edward Rugg, Mark Severson and David Caldwell (the
"Salary Continuation Agreements"). The Salary Continuation Agreements provide
for continued monthly compensation to each employee, or his beneficiary, for a
period of 15 years following the employee's termination of employment for any
reason other than Early Termination or Termination for Cause (as defined in the
Salary Continuation Agreements). Early Termination is defined in the Salary
Continuation Agreements to mean termination of employment before age 65 for
reasons other than death, Disability (as defined in the Salary Continuation
Agreements), Termination for Cause or following a Change of Control (as defined
in the Salary Continuation Agreements).
Upon termination of employment after the employee reaches age 65, each
employee will receive the following maximum amounts, divided into 12 monthly
payments, annually for 15 years: Mr. Baylor - $410,100; Mr. Rugg - $98,300; Mr.
Severson - $197,400; and Mr. David Caldwell - $140,900. In the event of Early
Termination, termination for Disability or upon a Change of Control, the
employee will receive monthly payments for a period of 15 years, in an amount
equal to the accrual balance, which amount increases annually at a specified
rate until it reaches the maximums set forth above. If an employee is terminated
upon a Change of Control, the employee may elect to have the present value of
the monthly payments made in a single lump sum payment. An employee is not
entitled to any payments upon Termination for Cause.
Salary Continuation Plan
In connection with the termination of its non-contributory defined
benefit pension plan in 1996, Camco implemented a non-qualified retirement plan
(the "Salary Continuation Plan") for the benefit of certain executive officers.
Mr. Rugg is the only Named Executive Officer who is a participant in this plan.
The Salary Continuation Plan provides for continued monthly compensation to Mr.
Rugg, or his beneficiary, for 179 months following his retirement at age 65 from
one of Camco's subsidiaries. If Mr. Rugg retires after age 55 or after having
completed 15 years of full-time service (the "Early Retirement Date"), and
before age 65, the Salary Continuation Plan provides for a reduced benefit. Upon
a change in control of the applicable Camco subsidiary and the subsequent
termination of Mr. Rugg's employment, he is entitled to a lump sum payment of a
reduced amount. If Mr. Rugg's employment is terminated prior to the Early
Retirement Date for any reason other than death, he is not entitled to receive
any benefits under the Salary Continuation Plan.
11
Split-Dollar Plan
Flexible payment universal life insurance policies, which are carried
on the books of Camco as tax-free earning assets, have been purchased on the
lives of the employees. Upon the death of the participating employee, a
beneficiary named by the employee will receive the lesser of (1) two times the
employee's base salary for the 12 months preceding the month in which the
employee dies up to a maximum of $300,000, or (2) the total death proceeds of
the life insurance policy. The balance of the life insurance proceeds will be
payable to Camco or the applicable subsidiary and are expected to be sufficient
to cover all investment costs associated with the policy.
Executive Deferred Compensation Agreements
Executives may elect to defer the payment of up to 10% of their salary
and 50% of their bonus annually until a specified date or until they are no
longer associated with Camco. Interest is credited on the deferral amounts at an
annual rate equal to 75% of Camco's return on equity rate for the preceding
year, not to exceed a return on equity of 20%.
OWNERSHIP OF CAMCO SHARES
As of March 3, 2003, no persons were known by Camco to own beneficially
more than 5% of the outstanding shares of Camco's common stock.
The following table sets forth certain information regarding the number
of shares of common stock of Camco beneficially owned by each incumbent
director, nominee and Named Executive Officer of Camco and by all directors and
executive officers of Camco as a group as of March 3, 2003:
Sole voting Shared voting Percentage of
and and/or shares
Name and address (1) investment power (2) investment power outstanding
---------------- -------------------- ------------------- -----------
Richard C. Baylor 25,401 10,180 *
David S. Caldwell 8,813 14,901 *
Larry A. Caldwell 94,549 132,552 2.9%
Robert C. Dix, Jr. 10,352 4,504 *
Terry A. Feick -- 5,267 *
Susan J. Insley -- 371 *
Paul D. Leake 125,525 20,368 1.9
Carson K. Miller 180 371 *
D. Edward Rugg 96,804 28,144 1.6
Mark A. Severson 4,083 - *
Samuel W. Speck 5,211 17,507 *
Jeffrey T. Tucker 16,295 371 *
All directors and executive
officers as a group (13 persons) 394,501 250,892 8.2
-------------------------
* Less than 1% of the outstanding shares.
(1) Each of the persons listed in this table may be contacted at the address of
Camco, 6901 Glenn Highway, Cambridge, Ohio 43725.
(2) Includes the following number of shares that may be acquired upon the
exercise of options: Mr. Baylor - 13,612; Mr. D. Caldwell - 5,970; Mr. L.
Caldwell - 23,400; Mr. Dix - 1,050; Mr. Leake - 64,831; Mr. Rugg - 13,233;
Mr. Severson - 2,083; Mr. Speck - 5,211; Mr. Tucker - 3,544; and directors
and executive officers as a group - 140,852.
12
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Camco's
executive officers and directors, and persons who own more than ten percent of
Camco's common stock, to file reports of ownership and changes in ownership on
Forms 3, 4 and 5 with the Securities and Exchange Commission and to provide
Camco with a copy of such form. Based on Camco's review of the copies of such
forms it has received, Camco believes that its executive officers and directors
complied with all filing requirements applicable to them with respect to
transactions during the fiscal year ended December 31, 2002, except for the
following: Mr. Leake- one late Form 4 reporting three late transactions and a
Form 5 reporting one late transaction; Mr. Rugg- one late Form 3 and a Form 5
reporting one late transaction; Mr. Dix- one late Form 4 reporting one
transaction and one Form 5 reporting one late transaction; Mr. David Caldwell-
one late Form 4 reporting one late transaction; and each of the following
persons filed a Form 5 reporting one late transaction- Messrs. Feick, Miller and
Tucker and Ms. Insley.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors of Camco is comprised of
four directors, all of whom are considered "independent" under Rule 4200(a)(14)
of the Nasdaq's listing standards. The Audit Committee is responsible for
overseeing Camco's accounting functions and controls, as well as recommending to
the Board of Directors an accounting firm to audit Camco's financial statements.
The Audit Committee has adopted a charter to set forth its responsibilities.
The Audit Committee received and reviewed the report of Grant Thornton,
LLP ("Grant Thornton") regarding the results of their audit, as well as the
written disclosures and the letter from Grant Thornton required by Independence
Standards Board Standard No. 1. The Audit Committee determined that the
provision by Grant Thornton of the services discussed in the Section All Other
Fees included below is compatible with maintaining Grant Thornton's
independence. The Audit Committee reviewed the audited financial statements with
the management of Camco. A representative of Grant Thornton also discussed with
the Audit Committee the independence of Grant Thornton from Camco, as well as
the matters required to be discussed by Statement of Auditing Standards 61.
Discussions between the Audit Committee and the representative of Grant Thornton
included the following:
o Grant Thornton's responsibilities in accordance with generally
accepted auditing standards
o The initial selection of, and whether there were any changes in,
significant accounting policies or their application
o Management's judgments and accounting estimates
o Whether there were any significant audit adjustments
o Whether there were any disagreements with management
o Whether there was any consultation with other accountants
o Whether there were any major issues discussed with management prior to
Grant Thornton's retention
o Whether Grant Thornton encountered any difficulties in performing the
audit
o Grant Thornton's judgments about the quality of Camco's accounting
principles
o Grant Thornton's responsibilities for information prepared by
management that is included in documents containing audited financial
statements
13
Based on its review of the financial statements and its discussions
with management and the representative of Grant Thornton, the Audit Committee
did not become aware of any material misstatements or omissions in the financial
statements. Accordingly, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Annual Report
on Form 10-K for the year ended December 31, 2002, to be filed with the SEC.
Jeffrey T. Tucker, Chairman
Robert C. Dix, Jr.
Terry A. Feick
Carson K. Miller
Audit Fees
During the fiscal year ended December 31, 2002, Grant Thornton billed
Camco $162,305 in fees for professional services in connection with the audit of
Camco's annual financial statements and the review of financial statements
included in Camco's Forms 10-Q.
Financial Information Systems Design and Implementation Fees
During the 2002 fiscal year, Camco did not incur fees for professional
accounting services to design, implement or manage, hardware or software that
collects or generates information significant to Camco's financial statements.
All Other Fees
During fiscal year 2002, Grant Thornton billed Camco $41,390 in fees
for services rendered by Grant Thornton for all accounting services other than
the services discussed under the headings Audit Fees and Financial Information
Systems Design and Implementation Fees above.
PROPOSALS OF STOCKHOLDERS AND OTHER MATTERS
Any proposals of stockholders intended to be included in Camco's proxy
statement for the 2004 Annual Meeting of Stockholders (other than nominations
for directors, as explained herein at "ELECTION OF DIRECTORS") should be sent to
Camco by certified mail and must be received by Camco not later than November
14, 2003. In addition, if a stockholder intends to present a proposal at the
2004 Annual Meeting without including the proposal in the proxy materials
related to the meeting, and if the proposal is not received by January 29, 2004,
then the proxies designated by the Board of Directors of Camco for the 2004
Annual Meeting of Stockholders of Camco may vote in their discretion on any such
proposal any shares for which they have been appointed proxies without mention
of such matter in the proxy statement or on the proxy card for such meeting.
Management knows of no other business which may be brought before the
Annual Meeting. It is the intention of the persons named in the enclosed Proxy
to vote such Proxy in accordance with their best judgment on any other matters
which may be brought before the Annual Meeting.
14
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING
IN PERSON, YOU ARE URGED TO FILL IN, SIGN AND RETURN THE PROXY IN THE ENCLOSED
SELF-ADDRESSED POSTAGE PAID ENVELOPE.
By Order of the Board of Directors
/s/D. Edward Rugg
March 14, 2003 D. Edward Rugg, Secretary
15
EXHIBIT A
CHARTER FOR THE CORPORATE GOVERNANCE COMMITTEE
OF CAMCO FINANCIAL CORPORATION
1. PURPOSE. The Committee is intended to provide a forum for independent
Directors to address issues of corporate governance to ensure that the board is
appropriately constituted and conducts its affairs in a manner that will best
serve the interests of the Company and its shareholders.
2. ORGANIZATION. The Committee shall consist of at least three
independent Directors. The committee chair shall be elected by and from the
Committee. The Committee shall meet at least twice each year.
3. PRINCIPAL RESPONSIBILITIES. The principal responsibilities of the
Committee shall be as follows:
General
o Periodically review and recommend to the Board any appropriate
modifications to the Company's Corporate Governance Policy.
o Periodically review and recommend to the Board any appropriate changes to
the process for evaluation of the CEO and Chairman of the Board and to
oversee the Board's self-assessment process.
o Evaluate candidates for the positions of CEO, Chairman, and Chair of the
Executive Committee, as appropriate.
o In carrying out its duties, the Committee will confer with and solicit the
views of the Chairman and the CEO.
Board Composition and Membership
o Establish criteria for the selection of new directors and nominees for
vacancies on the Board.
o Evaluate the qualifications, skills and other attributes of prospective
nominees.
o Reassess annually the composition, challenges and needs of the Board as a
whole, both in connection with recommending candidates for election to the
Board and in analyzing the composition of the Board committees. The
assessment of the overall composition of the Board considers issues of
judgment, diversity in skills, background, and experience.
o Review the tendered resignation of a Director for reason of change of
employment or other circumstances and make a recommendation regarding his
or her suitability for remaining on the board.
A-1
o Evaluate the performance of any Director whose term is expiring and whether
such Director should be invited to stand for reelection.
o Review and determine the philosophy underlying the Director's compensation
and be informed regarding the Compensation Committee's actions in approving
executive compensation to maintain alignment between shareholder interests,
management and the Board's role to ensure that alignment. The Committee
shall conduct a thorough analysis of director compensation and stock
ownership at least every three years and make recommendations to the Board
for any adjustments deemed appropriate.
A-2
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CAMCO FINANCIAL CORPORATION
CAMCO FINANCIAL CORPORATION ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of Camco Financial Corporation ("Camco")
hereby constitutes and appoints Terry A. Feick and Jeffrey T. Tucker, or either
one of them, as the proxies of the undersigned with full power of substitution
and resubstitution, to vote at the 2003 Annual Meeting of Stockholders of Camco
to be held at Camco's Corporate Center, 6901 Glenn Highway, Cambridge, Ohio
43725, on April 22, 2003, at 3:00 p.m. Eastern Daylight Saving Time (the "Annual
Meeting"), all of the shares of Camco common stock which the undersigned is
entitled to vote at the Annual Meeting, or at any adjournment thereof, on each
of the following proposals, all of which are described in the accompanying Proxy
Statement:
1. The election of four directors:
[ ] FOR all nominees [ ] WITHHOLD authority to
listed below vote for all nominees
(except as marked to the listed below:
contrary below):
Richard C. Baylor
Robert C. Dix
Paul D. Leake
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below).
-----------------------------------------------------------------------
2. In their discretion, upon such other business as may properly come before
the Annual Meeting or any adjournments thereof.
The Board of Directors recommends a vote "FOR" the nominees listed above.
IMPORTANT: Please sign and date this Proxy on the reverse side.
UNLESS THIS PROXY IS REVOKED, THE SHARES OF COMMON STOCK REPRESENTED BY THIS
PROXY WILL BE VOTED AS DIRECTED. WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR
SET FORTH ABOVE. THIS PROXY CONFERS DISCRETIONARY AUTHORITY ON THE PERSONS NAMED
ABOVE TO VOTE WITH RESPECT TO THE ELECTION OF ANY PERSON AS A DIRECTOR IF A
NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE AND MATTERS INCIDENT
TO THE ANNUAL MEETING.
At the present time, the Board of Directors knows of no other business to be
presented at the Annual Meeting.
All Proxies previously given by the undersigned are hereby revoked.
Receipt of the Notice of the 2003 Annual Meeting of Stockholders of Camco and of
the accompanying Proxy Statement is hereby acknowledged.
Please sign exactly as your name appears on your Stock Certificate(s).
Executors, Administrators, Trustees, Guardians, Attorneys and Agents should give
their full titles.
---------------------------- ------------------------------
Signature Signature
---------------------------- ------------------------------
Print or Type Name Print or Type Name
Dated: --------------------- Dated: -----------------------
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED FOR MAILING IN THE U.S.A.