SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12Under Rule 14a-12
WSFS FINANCIAL CORPORATION
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(A)0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / 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 Formform or Scheduleschedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
WSFS FINANCIAL CORPORATION
838 Market Street
Wilmington, Delaware 19801
(302) 792-6000
March 24, 200023, 2001
Dear Stockholder:
I am pleased to invite you to attend the Annual Meeting of Stockholders of WSFS
Financial Corporation (the "Company"), to be held at The DuPont Country Club,
Rockland Road, Wilmington, Delaware 19880 on Thursday, April 27, 200026, 2001 at 4:00
p.m. At this meeting, stockholders will be asked to consider proposalsa proposal to
re-elect four directors whose terms are expiring and to increase the number of
shares reserved under the 1997 Stock Option Plan.expiring.
Your vote is important regardless of how many shares of Company stock you own.
If you hold stock in more than one account or name, you will receive a proxy
card for each account. Please sign and return each card since each represents a
separate number of shares. Postage paidPostage-paid envelopes are provided for your
convenience.
You are cordially invited to attend the Annual Meeting. REGARDLESS OF WHETHER
YOU PLAN TO ATTEND THE ANNUAL MEETING, WE URGE YOU TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD AS SOON AS POSSIBLE. 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.
Sincerely,
Marvin N. Schoenhals
Chairman, President and Chief Executive Officer
WSFS FINANCIAL CORPORATION
838 Market Street
Wilmington, Delaware 19801
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on April 27, 200026, 2001
To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of WSFS Financial
Corporation (the "Company") will be held at The DuPont Country Club, Rockland
Road, Wilmington, Delaware 19880 on Thursday, April 27, 2000,26, 2001, at 4:00 p.m., for
the purpose of considering and acting upon the following:
1. Election of four directors for terms of three years each.
2. Approval of an amendment to the 1997 Stock Option Plan to increase the
number of shares reserved thereunder.
3. Such other matters as may properly come before the meeting or any
adjournment thereof.
Any action may be taken on any one of the foregoing proposals at the Annual
Meeting on the date specified above or any date or dates to which, by original
or later adjournment, the Annual Meeting may be adjourned. The Board of
Directors has fixed the close of business on March 16, 2000,2001, as the record date
for the determination of stockholders entitled to notice of and to vote at the
meeting and any adjournment thereof.
A complete list of stockholders entitled to vote at the Annual Meeting
will be open for examination by any stockholder for any purpose germane to the
Annual Meeting during ordinary business hours at the Company's main office
during the ten days prior to the Annual Meeting.
You are requested to fill in and sign the enclosed form of proxy which is
solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the Annual
Meeting.
By Order of the Board of Directors,
Mark A. Turner
Executive Vice President
Chief Financial Officer Treasurer and Secretary
March 24, 200023, 2001
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE YOUR COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
- --------------------------------------------------------------------------------
WSFS FINANCIAL CORPORATION
838 Market Street
Wilmington, Delaware 19801
(302) 792-6000
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 27, 200026, 2001
This Proxy Statement and the accompanying proxy card are being furnished to
stockholders of WSFS Financial Corporation (the "Company") by the Board of
Directors in connection with the solicitation of proxies for use at the Annual
Meeting of Stockholders of the Company to be held on April 27, 2000,26, 2001, and at any
adjournments or postponements thereof (the "Annual Meeting"). This Proxy
Statement and the accompanying proxy card are first being mailed to stockholders
on or about March 24, 2000.23, 2001.
VOTING AND REVOCABILITY OF PROXIES
Proxies solicited by the Board of Directors of the Company will be voted in
accordance with the directions given therein. Where no instructions are
indicated, proxies will be voted FOR the nominees for directors as set forth
below and FOR approval of the amendment to the 1997 Stock Option Plan to
increase the number of shares reserved thereunder.forth.
The proxy confers discretionary authority on the persons named therein to vote
with respect to the election of any person as a director where the nominee is
unable to serve or for good cause will not serve, and with respect to matters
incident to the conduct of the Annual Meeting. If any other business is
presented at the Annual Meeting, proxies will be voted by those named therein in
accordance with the determination of a majority of the Board of Directors.
Proxies marked as abstentions will not be counted as votes cast. In addition,
shares held in street name which have been designated by brokers on proxy cards
as not voted will not be counted as votes cast. Proxies marked as abstentions or
as broker no votes will be treated as shares present for purposes of determining
whether a quorum is present.
Stockholders who execute proxies retain the right to revoke them at any time.
Unless so revoked, the shares represented by properly executed proxies will be
voted at the Annual Meeting and any adjournments or postponements thereof.
Proxies may be revoked by written notice to the Secretary of the Company at the
address above or by the filing of a later dated proxy prior to a vote being
taken on the proposal at the Annual Meeting. A proxy will not be voted if a
stockholder attends the Annual Meeting and votes in person. The presence of a
stockholder at the Annual Meeting will not revoke such stockholder's proxy.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The securities entitled to vote at the Annual Meeting consist of the Company's
common stock, $.01 par value per share (the "Common Stock"), the holders of
which are entitled to one vote for each share of Common Stock held except in
elections of directors, in which holders have cumulative voting rights. The
close of business on March 16, 20002001 has been fixed as the record date for
determination of stockholders entitled to notice of and to vote at the Annual
Meeting (the "Record Date"). As of the Record Date, the Company had outstanding
10,947,74410,038,634
shares of Common Stock.Stock outstanding. 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 Annual Meeting is required for a quorum.
1
Stock Ownership of Certain Beneficial Owners
Persons and groups beneficially owning in excess of 5% of the Common Stock are
required to file certain reports with respect to such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The following
table sets forth, as of the Record Date, certain information as to those persons
who have filed the reports required of persons beneficially owning more than 5%
of the Common Stock or who were known to the Company to beneficially own more
than 5% of the Company's Common Stock outstanding at the Record Date.
Amount and Nature
Of Beneficial Percent
Name Ownership (1) of Class
- --------------------------------------------------------------------------------
John W. Rollins, Sr.Peninsula Capital Partners, L.P. (2) 1,012,033909,411 shares 9.24%8.94 %
Quaker Capital Management Corporation (3) 751,925 shares 7.39 %
Wellington Management Company, LLP (3) 1,119,850(4) 705,200 shares 10.22%6.93 %
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to
be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he or she has or shares voting or investment power with
respect to such Common Stock or has a right to acquire beneficial ownership
at any time within 60 days from the Record Date. As used herein, "voting
power" is the power to vote or direct the voting of shares and "investment
power" is the power to dispose or direct the disposition of shares. Except
as otherwise noted, ownership is direct, and the named individuals and
group exercise sole voting power over the shares of the Common Stock.
(2) John W. Rollins, Sr. owns 852,133Includes 899,500 shares owned by Peninsula Capital Partners, L.P., an
investment partnership controlled by R. Ted Weschler, a director of the
Company. Mr. Weschler disclaims beneficial ownership of these shares.
Shares also include 9,311 shares held directly by Mr. Weschler and 600
shares of Common Stock individually
andthat may be acquired through the exercise of options
within 60 days of the Record Date. The address of Peninsula Capital
Partners, L.P. is 404-B East Main Street, Charlottesville, VA 22902.
(3) According to the Statement on Schedule 13G of Quaker Capital Management
Corporation, 718,250 shares are held by its investment advisory clients as
to which it disclaims beneficial ownership. Quaker Capital Management
Corporation has soleshared voting and investment power with respect to these shares.
The amount shown in the table includes 159,900 shares of Common Stock
owned by his wife, who has sole voting and investment power with
respect to these436,950
shares. The address of Mr. RollinsQuaker Capital Management Corporation is One Rollins
Plaza, Post Office Box 1026, Wilmington, Delaware 19899.
(3)404 Wood
Street, Suite 1300, Pittsburgh, PA 15222.
(4) According to the Statement on Schedule 13G of Wellington Management
Company, LLP, the above shares consist of sharesare held by its investment advisory clients as to
which it shares voting or investment power. The address of Wellington
Management Company, LLP is 75 State Street, Boston, Massachusetts 02109.
2
PROPOSAL 1 -- ELECTION OF DIRECTORS
The number of directors is currently fixed at eleven members. The Board of
Directors is divided into three classes. The members of each class are elected
for a term of three years and until their successors are elected and qualified;
provided that in the event the number of directors has been increased during the
preceding year and such new directorships have been filled by action of the
Board of Directors, the terms of those newly appointed directors expire at the
annual meeting when the class to which they have been elected expires. Each of
the current members of the Board of Directors of the Company also serves on the
Board of Directors of the Company's principal subsidiary, Wilmington Savings
Fund Society, Federal Savings Bank ("WSFS" or the "Bank"). In accordance with
the Delaware General Corporation Law, directors of the Company will be elected
by a plurality vote of the outstanding shares of Common Stock present in person
or represented by proxy at the Annual Meeting.
Pursuant to the CertificateCompany's certificate of Incorporation,incorporation, every stockholder voting
for the election of directors is entitled to cumulate his votes by multiplying
his shares times the number of directors to be elected. Each stockholder will be
entitled to cast his votes for one director or distribute his votes among any
number of the nominees being voted on at the Annual Meeting. The Board of
Directors intends to vote the proxies solicited by it equally among the four
nominees of the Board of Directors. Stockholders may not cumulate their votes on
the form of proxy solicited by the Board of Directors. In order to cumulate
votes, stockholders must attend the meeting and vote in person or make
arrangements with their own proxies. Unless otherwise specified in the proxy,
however, the right is reserved, in the sole discretion of the Board of
Directors, to distribute votes among some or all of the nominees of the Board of
Directors in a manner other than equally so as to elect as directors the maximum
possible number of such nominees.
At the Annual Meeting, four directors will be elected for terms of three years
each and until their successors have been elected and qualified. The Board of
Directors has nominated Linda C. Drake, David E. Hollowell, Claiborne D. Smith,John F. Downey, Thomas P. Preston, Marvin N. Schoenhals
and Eugene W. Weaver,R. Ted Weschler all of whom are currently directors, for election as
directors at the Annual Meeting. If any nominee is unable to serve, the shares
represented by all properly executed proxies will be voted for the election of
such substitute as the Board of Directors may recommend or the Board of
Directors may reduce the number of authorized directors to eliminate the
vacancy.
3
Directors and Nominees
The following table sets forth for each nominee and each director continuing in
office, including their name, age (as of December 31, 1999)2000), year first elected
or appointed as a director of WSFS,the Company, year of expiration of their current term as
a director of the Company, their principal occupation for at least the last five years
and their directorships in other subsidiaries of the Company and in other companies:
Year First Current
Elected or CurrentTerm
Appointed Term
Director to
Name Age of WSFSDirector Expire Principal Occupation Directorship(s)
- ---- ---- ---------- -------- ------ -------------------- ---------------
NOMINEES FOR A TERM TO EXPIRE IN 20032004
Linda C. Drake 51 1999 2000 Since 1988, Chief Executive WSFS; TCIM Services, Inc.;
Officer of TCIM Services, Inc. LTD Direct Marketing, Inc.
(a direct marketing and
business services company)
David E. Hollowell 52 1997 2000 Executive Vice President, WSFS
University of Delaware
Claibourne D. Smith 61 1994 2000 Vice President - Technology and WSFS
Professional Development, E.I. `
duPont de Nemours & Company,
Incorporated, (multinational
chemical and energy company)
(1964-1999) (retired)
Eugene W. Weaver 67 1998 2000 Vice President of Finance of WSFS, Dover Downs
John W. Rollins & Associates Entertainment, Inc.
(Investment Management
Company), Chief Financial
Officer/Senior Vice President
of Dover Downs Entertainment,
Inc. (1970-1999) (retired)
DIRECTORS CONTINUING IN OFFICE
John F. Downey 6263 1998 2001 Executive Director of the WSFS
Office of Thrift Supervision (OTS),
1989-1998 (retired)
Thomas P. Preston 5354 1990 2001 Since March 2000, Partner, Reed WSFS; Wood Royalty
Smith, Shaw, & McClay; prev-LLP; previously Partner, Management Company
iously Partner,
Duane, Morris & Heckscher LLP
(law(Law firms)
Marvin N. Schoenhals 5253 1990 2001 Chairman of WSFS Financial WSFS; Star States Development
Corporation since 1992; President Company; WSFS Credit
and Chief Executive Officer of Corporation;
WSFS Financial Corporation since 838 Investment Group, Inc.;
since November 1990 Wilmington National Finance, Inc;
CustomerOne Financial Network, Inc.;
Federal Home Loan Bank of
Pittsburgh;
Brandywine Fund, Inc.;
Brandywine Blue Fund, Inc.;
CustomerOne Financial Network,Burris Foods, Inc.
4
Year First
Elected or Current
Appointed Term
Director to
Name Age of WSFS Expire Principal Occupation Directorship(s)
- ---- ---- ------- ------ -------------------- ---------------
R. Ted Weschler 3839 1992 2001 Since January 2000, Managing WSFS; Star States Development
MemberPartner of Peninsula Capital Company; Deerfield HealthcareCustomerOne Financial
Advisors, L.L.C., an investment Network; Deerfield Healthcare
advisory firm; October 1989 to Corporation; Virginia National
advisory firm; January 1990 to Bank; Nationwide Warehouse
December 1999, Executive Bank; Nucentrix Broadband Networks;
Officer - and Storage, LLC; Nucentrixof Quad-C, Inc., a Teletrac
Delaware corporation Broadband Networks; Teletrac which
acts as the general partner for
several investment partnerships
4
DIRECTORS CONTINUING IN OFFICE
Year First Current
Elected or Term
Appointed to
Name Age Director Expire Principal Occupation Directorship(s)
- ---- ---- -------- ------ -------------------- ---------------
Charles G. Cheleden 5657 1990 2002 October 1992 to present: Vice WSFS,WSFS; Star States Development
Chairman of WSFS Financial Company
Corporation; August 1990 to
October 1992: Chairman WSFS
Financial Corporation;
January 1990 to present:
self-employed attorney
Joseph R. Julian 62 198363 1988 2002 President, JJID, Inc. WSFS,WSFS; JJID, Inc.
(highway construction company)
Dale E. Wolf 7576 1993 2002 March 1998 to present: WSFS; WSFS Credit Corp.;
Vice Chairman of WSFS Harmony Products, Inc.;
Daynel
Financial Corporation; since Daynel International, Inc; Auxein
1993, Senior International Emerald Bio Corporation
Consultant, Mezzullo and McCandlish
(lawKaine (Law firm);
1989-1993, Lieutenant
Governor/Governor of the
State of Delaware
Linda C. Drake 52 1999 2003 Founder and Chair WSFS; TCIM Services, Inc.
TCIM Services, Inc.
(a direct marketing and
business services company)
David E. Hollowell 53 1996 2003 Executive Vice President, WSFS
University of Delaware
Claibourne D. Smith 62 1994 2003 Vice President - Technology and WSFS;
Professional Development, E.I. Wilmington National Finance, Inc.
duPont de Nemours & Company,
Incorporated, (multinational
chemical and energy company)
(1964-1998) (retired)
Eugene W. Weaver 68 1998 2003 Vice President of Finance of WSFS; Dover Downs
John W. Rollins & Associates Entertainment, Inc.
(Investment Management
Company), Chief Financial
Officer/Senior Vice President
of Dover Downs Entertainment,
Inc. (1970-1999) (retired)
5
Stock Ownership of Management
The following table sets forth, as of the Record Date, the amount of Common
Stock beneficially owned by the Company's directors, by each executive officer including those
named in the Summary Compensation Table, and by all directors and executive
officers as a group:
Amount and Nature
of Beneficial Percent
Name Ownership (1) of Class (2)
- ---- ----------------- ------------
Charles G. Cheleden (3) 38,700(4) 39,300 shares *
John F. Downey 1,900(4)(5) 3,000 shares *
Linda C. Drake 2,100(6) 900 shares *
David E. Hollowell 6,500(4) 8,600 shares *
Joseph R. Julian 60,676(4) 61,276 shares *
Thomas P. Preston 1,500(4)(7) 3,100 shares *
Marvin N. Schoenhals (4) 255,320(8) 348,406 shares 2.33%3.39%
Claibourne D. Smith 1,800(4) 3,100 shares *
Eugene W. Weaver(5) 6,500Weaver (4)(9) 7,100 shares *
R. Ted Weschler (6) 393,811(4)(10) 909,411 shares 3.60%8.94%
Dale E. Wolf 23,140(4) 23,740 shares *
Karl L. Johnston (7) 10,480(11) 22,035 shares *
Joseph M. Murphy (8) 27,167(12) 15,315 shares *
Thomas E. Stevenson (9) 14,056Deborah A. Powell (13) 2,300 shares *
Mark A. Turner (10) 17,207(14) 37,199 shares *
Directors and executive officers
as a group (15 persons) 860,8571,484,782 shares 7.86%14.38%
* Less than 1.0%.
(1) For purposes of this table, a person is deemed to be the beneficial owner
of any shares of Common Stock over which he or she has or shares voting or
investment power or of which he or she has the right to acquire beneficial
ownership within 60 days of the Record Date. As used herein, "voting power"
is the power to vote or direct the voting of shares and "investment power"
is the power to dispose or direct the disposition of shares. Other than as
noted below, all persons shown in the table above have sole voting and
investment power, except that the following directors and executive
officers held the following numbers of shares jointly with their respective
spouses: Mr. Cheleden, 16,50018,000 shares; Ms Drake, 500 shares; Mr. Hollowell,
6,500 shares; Mr. Julian, 59,176 shares; Mr. Hollowell, 5,500 shares; Mr. Johnston, 1,500 shares; and
Mr. Turner, 7,780 shares.
(2) In calculating the percentage ownership of each named individual and the
group, the number of shares outstanding is deemed to include any shares of
the Common Stock which the individual or the group has the right to acquire
within 60 days of the Record Date.
(3) The amount shown includesIncludes 16,700 shares of Common Stock held in an Individual Retirement
Account ("IRA"), 2,200 shares of Common Stock which are held in an IRA for
Mr. Cheleden's wife, and 1,800 shares of Common Stock held by Mr. Cheleden's
children, over which he has Powerpower of Attorney.attorney. Mr. Cheleden disclaims
beneficial ownership of his wife's shares.
(4) The amount shown includes 27,908Includes 600 shares of Common Stock that may be acquired through the
exercise of options within 60 days of the Record Date.
(5) Includes 600 shares of Common Stock held in an IRA.
(6) Includes 400 shares of Common Stock that may be acquired through the
exercise of options within 60 days of the Record Date.
(7) Includes 2,500 shares of Common Stock held in an IRA.
(8) Includes 30,365 shares of Common Stock held in Mr. Schoenhals' account in
the Company's 401(k) Plan, 16,220 shares of
Common Stock that may be acquired through options granted under the
Company's Stock Option Plans, all of which were exercisable as of the
Record Date, and 5,500 shares of Common Stock held by his wife in
an Individual Retirement Account.
6
(5) The amount shown includesIRA and 106,849 shares of Common Stock that may be acquired through the
exercise of options within 60 days of the Record Date.
(9) Includes 1,000 shares of Common Stock held in an Individual Retirement Account ("IRA")IRA and 1,000 shares of
common stockCommon Stock held by Mr. Weaver's wife. Mr. Weaver disclaims beneficial
ownership of his wife's shares.
(6)6
(10) Includes 384,500899,500 shares held by Peninsula Capital Partners, LP,L.P., an
investment firm managed by Peninsula Capital Advisors, LLC of which Mr.
Weschler is the Managing Member. Mr. Weschler disclaims beneficial
ownership of the shares held by Peninsula Capital Partners, LP.
(7)L.P.
(11) Includes 2,3403,455 shares of Common Stock held in Mr. Johnston's account in the
Company's 401(k) Plan, and 300 shares owned by Mr. Johnston's son.
The amount also includes 6,340son and 16,780
shares of Common Stock that may be acquired through the exercise of options
granted under Stock Option
Plans, all of which are exercisable aswithin 60 days of the record date.
(8) Includes 13,827Record Date.
(12) Represents shares of Common Stock held in Mr. Murphy's account in the
Company's 401(k) Plan. Also includes 13,400Mr. Murphy resigned in August 2000.
(13) Represents 2,300 shares of Common Stock that may be acquired through the
exercise of options granted under the
Stock Option Plans, all of which are exercisable aswithin 60 days of the Record Date.
(9)(14) Includes 1,796 shares of Common Stock held in Mr. Stevenson's account
in the Company's 401(k) Plan. Also includes 12,260 shares of Common
Stock that may be acquired through the exercise of options granted
under the Stock Option Plans, all of which are exercisable as of the
Record Date.
(10) Includes 2,6674,787 shares of Common Stock held in Mr. Turner's account in the
Company's 401(k) Plan and 4,26022,132 shares of Common Stock that may be
acquired through the exercise of options granted under the Stock Option
Plans, all of which are exercisable aswithin 60 days of the Record Date.
Meetings and Committees of the Board of Directors
The Board of Directors conducts its business through its meetings ofand the
Board andmeetings of its committees. During the year ended December 31, 1999,2000, the Board
of Directors held 1210 meetings. All directors attended more than 75% of the total
aggregate meetings of the Board of Directors and committees on which such Board
member served during this period except for Mr. Weschler.period.
A list of the Committees of the Board of Directors and a general description of
their respective duties follows:follows.
Executive Committee. The Executive Committee generally meets one time each month
and as needed, and exercises the powers of the Board of Directors between
meetings of the Board. The Executive Committee is presently composed of Marvin
N. Schoenhals, Chairman, Charles G. Cheleden, Thomas P. Preston, Eugene W.
Weaver and R. Ted Weschler. The Executive Committee met 1112 times during 1999.2000.
Audit Committee. The Audit Committee is composed of directors who are not
officers of the Company and oversees the audit program of the Company and its
subsidiaries. This Committee reviews the examination reports of federal
regulatory agencies as well as reports of the internal auditors and independent
auditors. The Audit Committee meets with the head of the Audit Department and
representatives of the Company's independent auditors, with and without
representatives of management present, to review accounting and auditing
matters, including an annual review of risk analysis and the associated audit
plan. The appointmentBoard revised its Audit Committee Charter in 2001, and is included as
Appendix A hereto. The Board of Directors appoints the independent auditors is made by the Board of
Directors upon
the recommendation of the Audit Committee. Present members of the Audit
Committee are Thomas P. Preston, Chairman, David E. Hollowell, Joseph R. Julian, and John F. Downey.Downey and
Eugene W. Weaver. Each member of the Audit Committee is "independent" as defined
in the listing standards of the National Association of Securities Dealers. The
Audit Committee meets at least quarterly and met fourseven times during fiscal year 1999.2000. Under the revised
charter, beginning in 2001 the Audit Committee will meet at least eight times
each year.
Nominating Committee. The Nominating Committee consists of the entire Board of
Directors and considers candidates for nomination for election as directors. The
7
Nominating Committee will consider nominees recommended by stockholders in
accordance with the procedures set forth in the Bylawsbylaws of the Company. The Board
of Directors met once as a Nominating Committee during 1999.2000.
7
Personnel and Compensation Committee. The Personnel and Compensation Committee
("Personnel Committee") is composed of directors who are not officers of the
Company. The Personnel and
Compensation Committee reviews and recommends for approval ofto the Board of
Directors, for their approval, the compensation and benefits of the executive
officers, broad guidelines for the salary and benefits administration forof other
officers and employees, and the compensation of directors. In addition, the
Personnel Committee is responsible for the administration of the 1986 Stock
Option PlansPlan and the 1997 Stock Option Plan (the "Stock Option Plans") and the
executive incentive plans, including recommendations to the Board of Directors
for awards under such plans. Present members of the Personnel Committee are
Dale E. Wolf, Chairman, Charles G. Cheleden, Chairman, David E. Hollowell, Joseph R. Julian, Eugene W. Weaver and R. Ted Weschler.Weschler and Dale E.
Wolf. The Personnel Committee met three3 times during 1999.2000.
Directors' CompensationCompensation. During 19992000, each non-employee director received an
annual retainer of $9,000 andplus 500 shares of the Company's common stock.Common Stock and a
grant of 1,000 shares under the 1997 Stock Option Plan. Chairpersons of board
committees or subsidiary boards received an additional $1,000 annual retainer,
and each member of a committee or subsidiary board received $400 for each
meeting attended. As
Vice Chairman of the Company, Mr. Cheleden received an additional $5,000 for
1999 to compensate him for his continuing advice and service to the Company. Mr.
Wolf earned an additional fee of $6,000 in 1999 as compensation for services
provided to the Company related to marketing campaigns.
Mr. Schoenhals does not receive director fees as Chairman,
President and Chief Executive Officer does not
receive director fees.
Executive OfficersOfficer.
EXECUTIVE OFFICERS
Marvin N. Schoenhals, age 52,53, has served as President and Chief Executive
Officer of the Company since November 1990 and was elected Chairman in October
1992. Prior to joining the Company, Mr. Schoenhals was President and Chief
Executive Officer of Peoples Savings Bank of Monroe, Michigan from April 1988
until January 1990. From April 1987 until October 1987, Mr. Schoenhals was
President and Chief Executive Officer of Sterling Savings Bank, Southfield,
Michigan. Prior to that, Mr. Schoenhals held various management positions at Old
Kent Financial Corporation, a bank holding company located in Grand Rapids,
Michigan from 1974 to 1987. Mr. Schoenhals was elected to the Board of Directors of the Federal Home
Loan Bank of Pittsburgh in 1997, to the BoardsBoard of Directors of Brandywine Fund,
Inc. and Brandywine Blue Fund, Inc. in 1998 and to the Board of Directors of
CustomerOne Financial Network, Inc. and Wilmington National Finance, Inc. in
1999. He is also a volunteer board member of numerous community-based
organizations.
Karl L. Johnston, age 51,52, joined the Bank as Executive Vice President, Chief
Lending Officer in May 1997. Mr. Johnston has over 2730 years of banking
experience in the Bank's local market area. Prior to joining the Bank, Mr.
Johnston spent his entire banking career at the Delaware Trust Company (which
becamewhere he
was Executive Vice President and Commercial Banking Group executive. When
Delaware Trust was merged into CoreStates Bank, as a result of a 1996 merger and ultimately First Union
as a result of a 1998 merger). With CoreStates, he was a Senior Vice President
responsible for middle market business relationships for the stateState of Delaware,
8
Delaware County, Pennsylvania and northern Maryland and Virginia.
Previous to
the merger with CoreStates, he was Executive Vice President and Commercial
Banking Group executive for Delaware Trust.
Joseph M. Murphy,Deborah A. Powell, age 57, joined the Bank as Executive Vice President, Retail
Banking in December 1996. Mr. Murphy44, has over 20 years of experience in retail
banking. Prior to joining WSFS, Mr. Murphy had been a Regional President of
Centerbank, a Waterbury, Connecticut savings bank, since 1995, after having
served as the Chairman and President of Center Capital Corp., Avon, Connecticut,
an equipment leasing subsidiary of Centerbank, since 1990.
Thomas E. Stevenson, age 47, served as Executive Vice President Chief
Information Officerand Director
of the Bank from October 1996 to July 1999 when he became
President of CashConnect, the Electronic Banking Division of WSFS. Mr. Stevenson
has worked in the field of banking and technology for over 20 years. Most
recently, Mr. Stevenson had worked with Electronic Payment Services, Inc., a
provider of electronic funds transfer services, where he had served as Quality
Assurance ManagerHuman Resources since 1994 and asMay 2000. Before joining WSFS, Ms Powell was Vice
President of Operations for oneHuman Resources at Huffy Service First, a national retail services
company, from November 1997 to May 2000. Prior to that, she was Human Resources
Manager of its
predecessorsThe Limited-Alliance Data System, a retail call center operation,
from 1990November 1996 to 1994.October 1997. From 1991 to 1996, she was National Practice
Director of Midwest Resources, Inc., a Human Resources and Organizational
Development consulting practice.
Mark A. Turner, age 37,38, has served as Executive Vice President and Chief
Financial Officer since March 1999. Mr. Turner joined the BankCompany in August 1996 as
Managing Vice President and Controller. Prior to joining WSFS, Mr. Turner had
been Vice President of Finance for the Capital Markets Division, and Vice
President of Corporate Development, for Meridian Bancorp in Reading,
Pennsylvania from March 1994 to August 1996. Prior to that, Mr. Turner was a Senior Audit
Manager with KPMG LLP in Philadelphia, Pennsylvania.
98
Audit Committee Report
In accordance with rules recently established by the SEC, the Audit Committee
has prepared the following report for inclusion in this proxy statement:
As part of its ongoing activities, the Audit Committee has:
o Reviewed and discussed with management the Company's audited consolidated
financial statements for the fiscal year ended December 31, 2000;
o Discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communications with
Audit Committees, as amended; and
o Received the written disclosures and the letter from the independent
accountants required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and has discussed with the
independent accountants their independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000 for filing with the SEC.
The Audit Committee comprised of Messrs. Preston, Downey, Julian and Weaver has
provided this report.
Personnel and Compensation Committee Report on Executive Compensation
Overview and Philosophy. The Personnel Committee administers the Company's
executive compensation program is
administered by theprogram. The Personnel and Compensation Committee (the "Personnel
Committee") of the Board of Directors. The Committee's responsibilities
include reviewing and making recommendations to the Board of Directors regarding
compensation of the Chief Executive Officer and reviewing and approving the
compensation paid to other executive officers of the Company (the "Named
Executive Officers") listed in the "Summary Compensation Table" that follows
this report (the "Named Executive
Officers").report. The Committee also administers stock option and incentive plans and
administers compliance with Rule 16b-3 of the Exchange Act.
The objective of the compensation program is to establish levels of compensation
sufficient to attract and retain highly qualified and motivated executives. The
program also seeks to align the interests of the Company's executive management
with those of stockholders through the use of both incentive basedincentive-based compensation
for specific performance based criteria and stock basedstock-based compensation for
long-term stockholder value.
Compensation Program Elements. The Company's executive compensation program
consists of base salaries, a short-term cash incentive plan, a stock option plan
and miscellaneous other fringe benefits.
Base Salary. Base salary levels are determined by the Personnel Committee
with reference to corporate and individual performance in relation to
strategic goals established each year, competitive market trends and
special circumstances particular to the Company's staffing needs. In
determining base salaries, the committee refers to data obtained from
nationally recognized compensation surveys as well as information from
similar sizedsimilar-sized banks and thrifts in the Mid-Atlantic region.
Short-Term Incentive Plan. In 1994, the Personnel Committee of2000, the Board of Directors approved a
Management Incentive PlanProgram (MIP) designed to reward the accomplishment
9
of specific annual financial
objectives. These objectives for 1999 were profitability,
capitalizationcorporate and individual performance criteria. For 2000, the
corporate performance criteria were: return on equity, level of net
income, earnings per share and the level of nonperforming assets.efficiency ratio. Plan participants
include members of management as designated from time-to-time bycertain vice presidents to the Personnel Committee. A "bonus pool" is established under the MIP each
year. The Board of Directors has undertaken an extensive study of the
incentive program for future years. Final determination of the "bonus
pool," is subject to adjustment byChief
Executive Officer. Each year the Personnel Committee establishes a bonus
pool based uponon the level and the quality of the Company's earnings versusas compared
to its plan.
Individual awards are earned for successfully completing
agreed-uponattaining objectives as well asbased
on the individual's contribution to the
Company's financial performance. Allfour criteria above, and in completion of the "Named Executive Officers"
(including the CEO) are eligible to receive such awards.specific individual
performance criteria. Total awards accrued under the MIP in 1999during 2000 were
approximately $508,000$127,000 and were paid in cash.cash during 2001.
Stock Options and SARs.Options. As a performance incentive, and to encourage ownership of
the Common Stock and to further align the interests of management and
stockholders, the Personnel Committee has issued
10
issues stock options and stock appreciation rights (SARs) under the 1986 and
1997 Stock Option Plans ("Stock Option Plans"). The 1986 Stock Option
Plan expired in November 1996 and the SARs expired in November, 1999.
The Personnel Committee issued 296,225 stock options in 1999 under the 1997
Stock Option Plan. Under that Plan, the Personnel Committee issued 372,700
stock options in 2000. The Personnel Committee periodically reviews and
awards stock options to management based on factors it deems important;
however, the Personnel Committee is not required to issue awards on an
annual basis.
Compensation of the Chief Executive Officer. For fiscal year 1999,2000, Mr.
Schoenhals earned $297,600$319,375 in base salary. Mr. Schoenhals'His base salary was increased during
the year, from $260,000$310,000 to $310,000 reflecting the Committee's
desire to increase his salary due to the Company's financial performance coupled
with the fact that Mr. Schoenhal's salary had not increased for five years. Mr.
Schoenhals earned $100,000 in bonus for fiscal year 1999 under the MIP which was
paid after the end of the fiscal year. The bonus awarded to Mr. Schoenhals under
the MIP reflects the Company's achievement of specific financial goals for the
1999 fiscal year as well as the Personnel Committee's assessment of Mr.
Schoenhals' contribution to the achievement of those goals.$322,500. Factors considered by the Personnel
Committee in assessing Mr. Schoenhals' contribution included his leadership role
in formulating and executing the Company's business strategy. In addition to the
foregoing cash compensation, Mr. Schoenhals was awarded options to purchase
70,000162,600 shares of the Common Stock under the 1997 Stock Option Plan representing
34.2%43.6% of the regular options granted to all employees during the year. In addition, he received 86,445 reload options underIncluded
in the reload
option program during 1999. The reload option program, which162,000 shares was authorized by
the Board of Directors in 1999, allows for the additional grant of options under
certain circumstances. If the grantee uses cash to exercise options within one
year of the options becoming vested, the optionee will receive an equivalent
number of additional options (at the then current market price). The original
shares received upon exercise must be held for two years from the date of
receipt for the reload options to vest, and the reload options vest in 20% per
annum increments. The reload provision provides incentive for management to use
their personal assets to become a long-term holder of the Company's stock, thus
further aligning the interest of management and shareholders.
The Personnel and Compensation Committee approved a special one-time Stock
Option grant to Mr. Schoenhals of 110,000 shares at a strike price of $14.88 per
share (an approximate 30% premium to the Company's stock price as of the record
date)granted in exchange for the
cancellation of the existingMr. Schoenhals' employment contract. This
stock option grant, which is subject to certain other conditionscontract (See "2000 Stock Option and
subject to
final approval by the Board of Directors, is intended to increase
performance-based incentives for Mr. Schoenhals and further align Mr.
Schoenhal's interests with those of the shareholders.
11
Temporary Severance Agreement" on page 14).
Compensation Committee Interlocks and Insider Participation. During fiscal year
1999,2000, no members of the Personnel Committee were considered insiders nor were
there any interlocking relationships or relationships with the Company other
than as disclosed in the "Business Relationships and Related Transactions"
section of this Proxy Statement.
Dale E. Wolf, Chairman
Charles G. Cheleden
David E. Hollowell
Joseph R. Julian
Eugene W. Weaver
R. Ted Weschler
(Members of theThe Personnel and Compensation Committee)
12Committee comprised of Messrs. Cheleden,
Hollowell, Weschler and Wolf has provided this report.
10
COMPARATIVE STOCK PERFORMANCE GRAPH
The graph and table which follow show the cumulative total return on the common stockCommon
Stock of the Company over the last five years compared with the cumulative total
return of the Dow Jones Savings & Loan Associations Index and the Dow Jones
EquityTotal Market Index over the same period. Cumulative total return on the stockCommon
Stock or the index equals the total increase in value since December 31, 1994,1995,
assuming reinvestment of all dividends paid into the stockCommon Stock or the index,
respectively. The graph and table were prepared assuming that $100 was invested
on December 31, 19941995 in the Common Stock of the Company and in each of the
indexes.
CUMULATIVE TOTAL SHAREHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDEXES
December 31, 19941995 through December 31, 19992000
[GRAPHIC OMITTED]
- -------------------------------------- -------- -------- -------- ------- -------- --------
1994Cumulative Total Return
--------------------------------------------------------
1995 1996 1997 1998 1999 - -------------------------------------- -------- -------- -------- ------- -------- --------2000
--------------------------------------------------------
WSFS Financial Corporation $100 $248 $281 $551 $468 $354
- -------------------------------------- -------- -------- -------- ------- -------- --------$ 100 $ 113 $ 222 $ 188 $ 142 $ 147
Dow Jones EquityTotal Market Index 100 134 162 213 270 321
- -------------------------------------- -------- -------- -------- ------- -------- --------122 161 201 247 224
Dow Jones Savings & Loan Associations 100 161 195 334 310 227
Associations Index
- -------------------------------------- -------- -------- -------- ------- -------- --------140 226 202 157 283
1311
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncashnon-cash compensation for the years
ended December 31, 2000, 1999 1998 and 19971998 for the Company's Chief Executive Officer
and the four other most highly compensated executive officers of the Company
whose salary and bonus earned in 19992000 exceeded $100,000 (herein referred to as
"Named Executive Officers").
Long-Term Compensation
-----------------------------------
Awards
----------
Annual Compensation Securities
Awards
Name and Other Annual----------------------- Underlying All Other
Principal Position Year Salary Bonus(1) Compensation(2) Options/SARs(3) Compensation(4)Bonus (1) Options (2) Compensation (3)
- ------------------ ---- ------ -------- --------------- --------------- ------------------------ ----------- ----------------
Marvin N. Schoenhals 1999 $297,600 $100,0002000 $319,375 $ -- 156,445 $11,200162,600 $11,900
Chairman of the Board, 1999 297,600 100,000 156,445 11,200
President and Chief 1998 260,400 37,000 -- 15,300 21,338
President and Chief 1997 260,400 202,000 -- 16,600 12,146
Executive Officer
Karl L. Johnston (5)2000 169,167 15,000 18,900 11,900
Executive Vice President, 1999 163,750 53,000 -- 14,500 11,200
Chief Lending Officer 1998 159,385 16,000 7,100 7,081
Joseph M. Murphy (4) 2000 119,110 -- -- 59,129
Executive Vice President, 1998 159,385 16,000 -- 7,100 7,081
Chief Lending Officer 1997 89,693 50,000 -- 12,300 --
Joseph M. Murphy 1999 163,750 40,000 -- 15,500 11,200
Retail Banking 1998 160,000 16,000 7,100 11,200
Deborah A. Powell (5) 2000 84,695 30,000 24,100 --
Executive Vice President, 1999 -- -- -- --
Director, Human Resources 1998 160,000 16,000 -- 7,100 11,200
Retail Banking 1997 160,000 75,000 -- 7,700 -- Thomas E. Stevenson 1999 134,375 20,000 -- 17,000 10,820
President, 1998 125,000 20,000 -- 11,000 11,200
CashConnect Division 1997 125,000 86,000 -- 7,600 1,689
Mark A. Turner 2000 155,399 21,000 56,000 11,900
Executive Vice President, 1999 123,540 68,000 -- 21,980 11,098
Executive Vice President,Chief Financial Officer 1998 103,530 20,000 -- 9,800 10,117
Chief Financial Officer, 1997 83,125 41,000 -- 2,900 2,525
Treasurer
and Secretary
(1) For each fiscal year, includes bonuses earned but not paid until the
following fiscal year under the Company's Management Incentive PlanProgram
(MIP).
(2) Does not include certain perquisites and other personal benefits the
value of which did not exceed the lesser of $50,000 or 10% of salary
for any Named Executive Officer.
(3) Represents Stock Optionsstock options granted under the Company's 1997 Stock Option
Plans (includes reload options, see "Stock Option Grants" section on
pg. 14).
(4) The amounts included in All Other Compensation in 1999 representPlan.
(3) Represents contributions made by the Company to the 401(k) Plan.Plan and in the
case of Mr. Murphy, $48,125 in severance payments.
(4) Mr. Murphy resigned in August 2000.
(5) Mr. JohnstonMs Powell was hired in May 1997.
142000. Her bonus payment was made pursuant to her
hiring agreement.
12
OPTION/SAROPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock options
under the Company's 1997 Stock Option Plan to the Chief Executive Officer and
each of the other Named Executive Officers during 1999. No SARs were
granted during 1999.2000.
Potential Realizable
Value at Assumed
Number of % of Total Annual Rates of Stock
Securities Options Price Appreciation
Underlying Granted to Exercise for Option Term (4)(3)
Options Employees in or BaseExercise Expiration -------------------------------------------
Name Granted (1)(2) Fiscal Year Price (3)(2) Date 5% 10%
- ---- ------------------------- ----------- --------- ---- --- -------
Marvin N. Schoenhals 48,800 16.4%110,000 28.5% $14.88 03/02/24/2009 $456,515 $1,156,898
23,769 8.02010 $423,752 $1,644,284
43,400 11.6 10.81 11/16/2010 295,048 747,711
9,200 2.5 14.88 05/19/2009 222,354 563,490
49,636 16.8 14.25 06/24/2009 444,825 1,127,275
13,040 4.4 14.31 08/26/2009 117,374 297,448
21,200 7.2 14.88 11/18/2009 198,322 502,58716/2010 25,147 121,103
Karl L. Johnston 6,000 2.016,000 4.3 10.81 11/16/2010 108,774 275,654
2,900 0.8 14.88 03/24/2009 56,129 142,242
8,500 2.9 14.88 11/18/2009 79,516 201,50916/2010 7,927 38,174
Joseph M. Murphy 6,000 2.0(4) -- -- -- -- -- --
Deborah A. Powell 11,500 3.1 11.84 05/22/2010 85,658 217,074
9,700 2.6 10.81 11/16/2010 65,944 167,115
2,900 0.8 14.88 03/24/2009 56,129 142,242
1,000 0.3 15.18 07/29/2009 9,552 24,206
8,500 2.9 14.88 11/18/2009 79,516 201,509
Thomas E. Stevenson 6,300 2.1 14.88 03/24/2009 58,935 149,354
10,700 3.6 14.88 11/18/2009 100,096 253,66416/2010 7,927 38,174
Mark A. Turner 4,700 1.640,000 10.7 11.31 01/26/2010 284,575 721,168
14,300 3.8 10.81 11/16/2010 97,216 246,365
1,700 0.5 14.88 03/24/2009 43,968 111,423
4,280 1.4 14.88 05/19/2009 40,039 101,466
13,000 4.4 14.88 11/18/2009 121,612 308,19016/2010 4,647 22,378
(1) Options vest and become exercisable at the rate of 20% per year beginning
one year from grant date, and expire ten years from the grant date. To the
extent not already exercisable, the options generally become immediately
exercisable in the event of a change in control of the Company, generally
defined as the acquisition of beneficial ownership of 25% or more of the
Company's voting securities by any person or group of persons. (2) Included in the options granted in 1999 are reload options of
86,445, 1,000, and 4,280 for Messrs. Schoenhals, Murphy and Turner,
respectively. The Stock
Option Plan permits a reload option program, which was authorized by
the Board of Directors in 1999,that allows for the additional grant of
options under certain circumstances. If the grantee uses cash to exercise
options within one year of the options becoming vested, the optionee will
receive an equivalent number of additional options (at the then current
market price). The original shares received upon exercise must be held for
two years from the date of receipt for the reload options to vest, and thevest. The
reload options vest in 20% per annumannual increments.
The reload provision provides
incentive for management to use their personal assets to become a
long-term holder of the Company's stock, thus further aligning the
interest of management and shareholders.
(3)(2) In each case, the exercise or base price was equivalent tono lower than the fair market
value of the Common Stock on the date of grant.
15
(4)(3) The potential realizable dollar value of a grant consists of the product
of: (a) the difference between (i) the product of the per share market
price at the time of grant and the sum of 1 plus the adjusted stock price
appreciation rate (the assumed rate of appreciation compounded annually
over the term of the option) and (ii) the per share exercise price of the
option; and (b) the number of securities underlying the grant at fiscal
year-end.
OPTION/SAR(4) Mr. Murphy resigned in August 2000.
13
OPTION EXERCISES AND YEAR-END OPTION/SAROPTION VALUE
The following table sets forth information concerning the exercise of options and SARs by
the Chief Executive Officer and the other Named Executive Officers during the
last fiscal year, as well as the value of such options and
SARs held by such persons at
the end of the fiscal year.
Value of Securities
Number of Securities Underlying Unexercised
Shares Underlying Unexercised In-the Money Options
Acquired on Value Options/SARsOptions at Fiscal Year End Options/SARs at Fiscal Year End (2)(1)
On Value ------------------------------ -----------------------------
Name Exercise Realized(1)Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ -------------------- -------- ----------- ------------- ----------- -------------
Marvin N. Schoenhals 151,445 $1,878,552 16,220 191,685 $20,766 $41,532-- -- 60,408 310,097 $44,792 $112,017
Karl L. Johnston -- -- 6,340 27,560 -- --13,120 39,680 923 33,655
Joseph M. Murphy 1,000 5,094 13,340 32,360 23,205 17,220
Thomas E. Stevenson(2) -- -- 12,260 35,040 22,359 14,906-- -- -- --
Deborah A. Powell -- -- -- 24,100 -- 37,922
Mark A. Turner 4,280 28,669 4,260 33,840 3,631 7,262-- -- 12,336 81,764 7,832 96,045
(1) Based on the closing price per share as reported for the Common Stock
on the Nasdaq National Market on the date of exercise less the
exercise/base price.
(2) Based on the closing price of $12.63$12.875 per share as reported for the
Common Stock on the Nasdaq National Market on December 31, 19992000 less
the exercise/baseexercise price. Options and SARs are considered in-the-money if the market
value of the underlying securities exceeds their exercise or base prices, respectively.
16
EMPLOYMENTprices.
(2) Mr. Murphy resigned in August 2000.
2000 STOCK OPTION AND TEMPORARY SEVERANCE AGREEMENTSAGREEMENT
The Company originally entered into an employment agreementa 2000 Stock Option and Temporary Severance Agreement
(the "Agreement") with Mr. Schoenhals for a period of thirty-six months,two years beginning
May 1, 1993. In
1995February 24, 2000, in exchange for the cancellation of his employment contract.
The Agreement increases Mr. Schoenhals' performance-based incentives to further
align his interests with those of the shareholders. The Agreement provides for a
one-time grant of stock options and a transitional severance arrangement in the
event of his involuntary termination. During the term of this agreement was extended to August 1, 1998the Agreement, and in
April 1997
the term was extended to May 1, 2000. The agreement provides for the employment
ofevent Mr. Schoenhals as Chairman, President and Chief Executive Officer at a
current base salary of $310,000, as maintained, increased or decreased from
time-to-timeis involuntary terminated by the Board. The employment agreement further provides for
participation by Mr. Schoenhals in incentive compensation and other employee
benefit plans maintained by the Company. In the event of Mr. Schoenhals'
involuntary termination of employment in connection with, or within one year
after, any change in control of the Bank or the Company
other than for "just cause," he will be paid within 10 days of such termination
an amount equal to 2.99two times his highest annual salary atwithin three years of his
date of termination, prorated for the rate in effect immediately prior to
termination provided that the aggregate amount payablenumber of days remaining under the
agreement may
not equal or exceed the difference between (i) 2.99 times his "base amount," as
defined in Section 280G(b)(3) of the Internal Revenue Code of 1986 (the "Code"),
and (ii) the sum of any other parachute payments, as defined under Section
280G(b)(2) of the Code, thatAgreement.
Mr. Schoenhals receives on account of a change in
control. "Control" generally refersmay voluntarily terminate his employment with "good reason" and
be entitled to the acquisition, by any person or entity,
of the ownership or power to vote more than 25% of the Bank's or Company's
voting stock, the control of the election of a majority of the Bank's or the
Company's directors or the exercise of a controlling influence over the
management or policies of the Bank or the Company. In addition, under the
employment agreement, a change in control occurs when, during any consecutive
two-year period, directors of the Company or the Bank at the beginning of such
period cease to constitute two-thirds of the Board of Directors of the Company
or the Bank, unless the election of replacement directors was approved by
two-thirds vote of the initial directors then in office. The employment
agreement also provides for a similar lump sum payment to be made in the event
of Mr. Schoenhals' voluntary termination of employment within 30 days of a
change in control or one year following a change in control ifsame payment. Good reason includes certain events have occurred, which have not been
consented to in writing by Mr. Schoenhals including (i) Mr. Schoenhals being requested toin advance, including: a requirement that he move
his personal residence or perform his principal executive functions more than 35
miles from his currentthe Company's primary office, (ii)office; a significant reduction in his
compensation and benefits as then in
effect, (iii) thebenefits; assignment of duties and responsibilities
to Mr. Schoenhals
which are other thansubstantially inconsistent with those normally associated with his position withposition; a
material reduction in responsibilities or authority; or failure to be re-elected
to the Board of Directors.
The Agreement grants a total of 110,000 shares of Common Stock pursuant to the
1997 Stock Option Plan at an option price of $14.875 per share. At the date of
the grant, the option price of $14.875 was approximately 30% higher than the
market price per share. The grant is subject to the provisions of the 1997 Stock
Option Plan except as otherwise set forth in the Agreement. Exceptions include:
accelerated vesting of options granted pursuant to the Agreement in the event of
Mr. Schoenhals' termination for a reason other than death, disability or just
cause. Such options may be exercisable for the longer of (i) 30 days or (ii) the
period ending immediately after the twelfth business day following the Company's
next release of quarterly or annual financial information occurring after the
termination of employment.
14
Under the Agreement, the Company andwill reimburse Mr. Schoenhals for any federal
golden parachute excise taxes liabilities incurred resulting from exercising the
Bank, (iv) a material decrease in his authority and
responsibility, or (v) failing to re-elect him toprovisions of the Company's or the Bank's
Board of Directors.Agreement.
The maximum aggregate payments that would be made to Mr. Schoenhals assuming his
termination of employment under the foregoing circumstances at December 31, 19992000
would have been approximately $927,000$645,000 without regard to any reimbursement for
excise tax liabilities.
SEVERANCE POLICY
In March 2001 WSFS adopted a severance policy that provides benefits to certain
of its Executive Vice Presidents ("EVPs"). The policy provides for payments
resulting from release without cause or change of control.
Release without cause
In the limitations imposed by Section 280Gevent an EVP is released without cause, a minimum of six months severance
and one year of professional level outplacement will be offered. If the Code.
The Personnel and Compensation Committee approved a special one-time
Stock Option grant to Mr. Schoenhals of 110,000 sharesformer
EVP does not find new employment six months after termination, severance pay
would continue for another six months, or until the former EVP found employment,
whichever occurs first. If the former EVP finds another job at a strike pricelower rate of
$14.88 per share (an approximate 30% premium topay than previously received at WSFS, then WSFS would make up the Company's stock price as ofdifference
until the record date)second six-month period ends. Health benefits would continue at the
Associate rate through the severance period.
Change in exchange for the cancellation of the existing employment
contract. This stock option grant, which is subject to certain other conditions
and subject to final approval by the Board of Directors, is intended to increase
performance-based incentives for Mr. Schoenhals.
17
WSFS also has entered into severance agreements with Messrs.
Karl L. Johnston, and Joseph M. Murphy, which provide for severance benefits of
one-times base salary tocontrol
Benefits would be paid in lump sums to the executives in the event of
termination without cause. The amounts payable to the executives under these
agreements if they had been terminatedan EVP released without cause during fiscalwithin one year 1999
would have been approximately $165,000 each. Furthermore, in the event of a
change in control the agreementsor if offered a position that is not within 35 miles of Mr. Johnstontheir
current work-site and Mr. Murphy provide for the
guaranteed payout of two timesat their current WSFS salary and bonus opportunity. The
EVP would receive 24 months base salary atseverance offset by the time, tovalue arising
from the extent the
benefits of acceleration of stock option vesting triggered by the change in
control. The value of the accelerated vesting would account for no more than 12
months of the 24-month minimum commitment. Twelve months of executive level
outplacement will be offered and health benefits would continue at the Associate
rate through the 24-month period.
In the event an EVP decides to leave WSFS after being offered the same salary
and bonus opportunity and the position is within 35 miles of their work
location, then the value of the severance benefit will equal at least 12 months
base pay. If the value of the accelerated vesting of stock options granted themis less than
12 months of base pay, then severance pay will be added to date do notthe value of the
accelerated options to equal two
times their12 months of base salary. In each case thispay. No additional severance will
be paid if the value of accelerated options is greater than, or equal to, 12
months of base pay. Six months of professional level outplacement will be
offered and health benefits would result in acontinue at the Associate rate through the
12-month period.
Based on salary levels at December 31, 2000, the maximum benefit that would be
received by each Executive Vice President under the WSFS severance policy,
exclusive of $330,000, based on current salaries. An agreement withhealth benefit and executive outplacement costs, would be as
follows: Mr. Thomas E. Stevenson
provides for salary continuation (currently $137,500 per year) for a period of
18 months following a change in control leading to the elimination of his
position or a significant change in responsibilities.Johnston $340,000, Mr. Turner $310,000 and Ms Powell $280,000.
15
BUSINESS RELATIONSHIPS AND RELATED TRANSACTIONS
During 2000, Thomas P. Preston was a partner during 1999 with the
Wilmington, Delaware office of the law firm of Duane, Morris & HeckscherReed Smith,
LLP. The law firm represented the Company and its affiliates in certain matters
during fiscal year 1999.2000. The Company expects Mr. Preston now a partner with
Reed, Smith, Shaw & McClay, to continue such
representation in fiscal year 2000.2001.
Certain directors and executive officers of the Company and their associates
were customers of, and had transactions with, the Company and the Bank in the
ordinary course of business during fiscal year 1999.2000. Similar transactions may be
expected to take place with the Company and the Bank in the future. Loans and
commitments included in such transactions were made on substantially the same
terms, including interest rate and collateral, as those prevailing at the time
for comparable transactions with other persons and did not involve more than the
normal risk of collectibility, nor did such loans present other unfavorable
features.
18
PROPOSAL 2 -- APPROVAL OF AN AMENDMENT TO THE 1997 STOCK OPTION
PLAN TO INCREASE THE NUMBER OF SHARES RESERVED THEREUNDER
General
Subject to approval of the Company's stockholders, the Board of
Directors of the Company proposes to amend the WSFS Financial Corporation 1997
Stock Option Plan (the "1997 Option Plan") to increase the number of shares of
Common Stock reserved for issuance thereunder from 625,000 shares to 1,165,000
shares. The Board of Directors is proposing the amendment in order to ensure
that sufficient shares are available for future grants of options.
Purpose of the 1997 Option Plan and the Amendment
The purpose of the 1997 Option Plan is to advance the interests of the
Company by providing directors and selected employees of the Company and its
affiliates, including the Bank, with the opportunity to acquire shares of Common
Stock. 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 incentive to directors and employees of
the Company and its affiliates to promote the success of the business of the
Company.
In order to ensure that the 1997 Stock Option Plan continues to serve
its purpose, the Board of Directors believes that it is imperative that the
Company increase the number of shares reserved for issuance thereunder. As of
the Record Date, awards to purchase a total of 553,525 shares of Common Stock
have been granted under the 1997 Option Plan. The shares remaining in the plan
would not be sufficient for the proposed grant of options to Mr. Schoenhals in
exchange for the cancellation of his employment agreement as described in the
Personnel and Compensation Committee Report on Executive Compensation and, in
any event, would not be sufficient to allow the Company to continue granting
options at the same rate as in prior years.
Description of the 1997 Option Plan
Effective Date. The 1997 Option Plan originally became effective April
25, 1997, the date of its approval by the Company's stockholders (the "Effective
Date"). Awards made prior to the Effective Date were contingent on stockholder
approval of the 1997 Stock Option Plan.
Administration. The 1997 Option Plan is administered by a committee
(the "Committee"), appointed by the Board of Directors, consisting of at least
two directors of the Company who are "non-employee directors" within the meaning
of the federal securities laws. The Personnel and Compensation Committee acts as
the Committee for purposes of administering the 1997 Option Plan. The Committee
has discretionary authority to select participants and grant awards, to
determine the form and content of any awards made under the 1997 Option Plan, to
interpret the 1997 Option Plan, and to make other decisions necessary or
advisable in connection with administering the 1997 Option Plan. All decisions,
determinations, and interpretations of the Committee are final and conclusive on
all persons affected thereby. Members of the Committee are indemnified to the
full extent permissible under the Company's governing instruments in connection
with any claims or other actions relating to any action taken under the 1997
Option Plan. Under the 1997 Option Plan, in the absence of a duly appointed
Committee, the Company's Board may act in lieu of the Committee.
19
Eligible Persons; Types of Awards. The 1997 Option Plan authorizes the
Committee to grant stock options ("Options"), stock appreciation rights
("SARs"), and phantom stock ("Phantom Stock") (collectively, "Awards") to such
employees as the Committee shall designate, although only employees who are one
of a "select group of management or highly compensated employees" (within the
meaning of the Employee Retirement Income Security Act, as amended) are eligible
to receive Phantom Stock. Only the Board may make Awards to non-employee
directors. As of the Record Date, the Company and its subsidiaries had
approximately 41 employees and 10 non-employee directors who were eligible to
participate in the 1997 Option Plan.
Shares Available for Grants. If the proposed amendment is approved, the
1997 Option Plan will authorize the issuance of up to 1,165,000 shares of Common
Stock of which 553,525 shares will have already been reserved for options
previously granted. Such shares may be (i) authorized but unissued shares, (ii)
shares held in treasury, or (iii) shares held in a grantor trust. 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 Company, the Committee will adjust the number
and kind of shares reserved for issuance under the 1997 Option Plan, and 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 number of shares available for grant under the
1997 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 1997 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 1997 Option Plan shall have been terminated, be available for the
grant of additional Awards under the 1997 Option Plan.
Options. Options may be either incentive stock options ("ISOs") as
defined in Section 422 of the Internal Revenue Code of 1986 (the "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 1997 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
option price may not be less than 110% of fair market value of the shares. 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 a participant for the first time during any calendar
year (under all plans of the Company 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. At March 16, 2000, the fair market value of the Common Stock was $11.56
per share based on the closing price reported on the Nasdaq National Market.
20
SARs. An SAR may be granted in tandem with all or part of any Option
granted under the 1997 Option Plan, or without any relationship to any Option.
For SARs granted in tandem with Options, the participant's exercise of the SAR
may cancel his or her right to exercise the Option, and vice versa. An SAR
granted in tandem with an ISO in circumstances in which the exercise of the SAR
affects the right to exercise the ISO, or vice versa, 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. Regardless of whether an SAR
is granted in tandem with an Option, exercise of the SAR will entitle the
participant 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 is
subject to such terms and conditions as are established by the Committee in a
written agreement between the Committee and the Plan participant, provided that
each Option shall become exercisable no more rapidly than with respect to 20% of
the underlying shares on each of the five anniversary dates of the date on which
the Award occurred. Such vesting shall accelerate to 100% upon a participant's
termination of service as an employee or director due to death or disability (as
defined in the 1997 Option Plan) or upon a "Change in Control" (as such term is
defined below) of the Company or the Bank. See "--Change in Control." In the
absence of Committee action to the contrary, an otherwise unexpired Option shall
cease to be exercisable upon (i) a participant's termination of employment for
"just cause" (as defined in the 1997 Option Plan), (ii) the date 30 days after a
participant terminates service for a reason other than just cause, death, or
disability, (iii) the date one year after a participant terminates service due
to disability, or (iv) the date two years after a participant terminates service
due to death.
21
A participant 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 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. 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. An election to exercise an SAR may only be made
during the period beginning on the third business day following the release for
publication of quarterly or annual financial information and ending on the
twelfth business day following such date.
Phantom Stock Awards. The Committee may make Phantom Stock awards
through credits of Common Stock to separate accounts established for Plan
participants. Any cash and stock dividends attributable to the phantom shares
will also be credited to participant accounts. The Committee has broad
discretion at the time of making a Phantom Stock award to impose conditions that
must be satisfied in order for the Phantom Stock to become unrestricted (i.e.,
vested and nonforfeitable). For example, the Committee may condition vesting
upon continued employment or upon the Company's attainment of specified
performance goals. The vesting period and conditions for vesting may be
different for each participant, provided that a participant's Phantom Stock
award will automatically become 100% vested in the event of the participant's
death or disability prior to the expiration of the restriction period, the
satisfaction of the restrictions applicable to an award of Phantom Stock or upon
a Change in Control of the Company or the Bank. See "-- Change in Control." In
addition, 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.
After a participant terminates service as a director or as an
employee, the participant will receive the vested portion of his or her account
in a lump-sum cash payment, unless the participant elects, more than six months
before first becoming vested in any portion of the Phantom Stock award, to
receive all or part of his or her vested account (i) in substantially equal
annual installments over a period of up to five years, beginning with the year
in which the participant terminates service, and/or (ii) in unrestricted whole
shares of Common Stock, with cash paid in lieu of fractional shares. The
Committee has the discretion to make payments in cash regardless of the
participant's election.
Conditions on Issuance of Shares. The Committee has the discretionary
authority to impose, in agreements, such restrictions on shares of Common Stock
issued pursuant to the 1997 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.
22
Change in Control. The provisions of any Award for its exercise or
vesting in installments shall immediately and permanently lapse on the date of a
Change in Control. Consequently, all Options, SARs, and Phantom Stock awards
shall become immediately exercisable and fully vested on the date of the Change
in Control. For purposes of the 1997 Option Plan a "Change in Control" means any
one of the following events: (i) the acquisition of ownership, holding or power
to vote more than 25% of the voting stock of the Bank or the Company; (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 of the Company by any person or
by persons acting as a "group" (within the meaning of Section 13(d) of the
Exchange Act); 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 of 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, the Company's ownership of the Bank shall not of itself constitute a
Change in Control for purposes of the Agreement. For purposes of the definition
of Change in Control 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.
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 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 participant. Although these
provisions are included in the 1997 Option Plan primarily for the protection of
a participant in the event of a Change in Control of the Company, they may also
be regarded as having a takeover defensive effect, which may reduce the
Company's vulnerability to hostile takeover attempts and certain other
transactions which have not been negotiated with and approved by the Board of
Directors.
Nontransferability. Participants may transfer their Awards to family
members or trusts under specified circumstances. Awards may otherwise 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.
Effect of Dissolution and Related Transactions. 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, 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
Code, of outstanding ISOs.
23
Duration of the 1997 Option Plan and Grants. The 1997 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 participant owns more than 10% of the
Common Stock on the date of grant. The expiration of the 1997 Option Plan, or
its termination by the Committee, will not affect any Award then outstanding.
Amendment and Termination of the 1997 Option Plan. The Board of
Directors of the Company may from time to time amend the terms of the 1997
Option Plan and, with respect to any shares at the time not subject to Awards,
suspend or terminate the 1997 Option Plan. No amendment, suspension, or
termination of the 1997 Option Plan will, without the consent of any affected
participant, alter or impair any rights or obligations under any Award
previously granted. Stockholder approval will not be required for plan
amendments that would not materially increase the benefits accruing to plan
participants, materially increase the number of securities which may be issued
under the plan or materially modify eligibility requirements for plan
participation. The Board of Directors has previously amended the 1997 Stock
Option Plan to eliminate a provision that allowed optionees to use shares
subject to an option to pay the exercise price, to include a requirement that
any shares used to pay the exercise price must have been held for at least six
months and to include a provision regarding withholding option shares to pay
taxes.
Financial Effects of Awards. The Company receives no monetary
consideration for the granting of Awards under the 1997 Option Plan. It receives
no monetary consideration other than the exercise price for shares of Common
Stock issued to participants upon the exercise of their Options, and receives 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 (although footnote disclosure is
required). Options may have a potentially dilutive impact on earnings per share
in future periods.
The granting of SARs requires charges to the income of the Company
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.
If the average 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).
Neither the Company nor the Bank receives any monetary consideration
for the granting of awards of Phantom Stock. Under current accounting standards,
when Phantom Stock awards are granted, the Company must recognize compensation
expense based on the fair market value of the underlying Common Stock on the
date the awards are granted, with such amount being amortized over the expected
vesting period for the award. The awarding of Phantom Stock requires charges to
the income of the Company based on the amount of the appreciation, if any, in
the market price of the Common Stock to which the Phantom Stock relates over the
initial amounts credited to each participant's account. If the average market
price of the Common Stock declines subsequent to a charge against earnings due
to estimated appreciation in the Common Stock, the amount of the decline will
reverse such prior charges against earnings (but not by more than the aggregate
of such prior charges). If Phantom Stock awards are paid in Common Stock, such
payment will have a dilutive impact on earnings per share.
24
Federal Income Tax Consequences
There are no tax consequences to participants or the Company on the
mere granting of an Option, SAR, or Phantom Stock award. Subsequent taxation
depends on the type of Award, and is highlighted below.
ISOs. If the participant holds the shares purchased upon exercise of an
ISO for at least two years from the date the ISO is granted, and for at least
one year from the date the ISO is exercised, any gain realized on the sale of
the shares received upon exercise of the ISO is taxed as long-term capital gain.
However, the difference between the fair market value of the Common Stock on the
date of exercise and the exercise price of the ISO will be treated by the
participant as an item of tax preference in the year of exercise for purposes of
the alternative minimum tax. If a participant 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 participant
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 Company will not be entitled to any deduction for federal income
tax purposes as the result of the grant or exercise of an ISO, regardless of
whether or not the exercise of the ISO results in liability to the participant
for alternative minimum tax. However, if a participant has ordinary income
taxable as compensation as a result of a disqualifying disposition, the Company
will be entitled to deduct an equivalent amount.
Non-ISOs. In the case of a Non-ISO, a participant 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 participant is subject to certain restrictions
imposed by the federal securities laws, upon the lapse of those restrictions
unless the participant 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 participant in excess of the fair
market value of the shares as of the exercise will be taxed as capital gain. The
Company 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
participant in connection with the exercise of a Non-ISO.
SARs. The grant of an SAR has no tax effect on the participant or the
Company. Upon exercise of the SARs, however, any cash or Common Stock received
by the participant in connection with the surrender of his or her SAR will be
treated as compensation income to the participant, and the Company will be
entitled to a business expense deduction for the amounts treated as compensation
income.
25
Phantom Stock Awards. When cash or shares are transferred to the
participant pursuant to the vesting of a Phantom Stock award, the participant
will recognize ordinary income equal to the cash received and the fair market
value of the shares delivered to him under the Phantom Stock award. A
participant may instead elect to accelerate recognition pursuant to Section
83(b) of the Code.
Stock Option Grants
As of the Record Date, 553,525 Options had been granted pursuant to the
1997 Option Plan including 188,345, 33,900, 30,300, 35,600 and 74,680 options
granted to Messrs. Schoenhals, Johnston, Murphy, Stevenson and Turner,
respectively, 418,225 options granted to all executive officers as a group,
19,000 options granted to all directors who are not executive officers as a
group and 116,300 options granted to all employees who are not executive
officers as a group. Assuming that the cancellation of his employment agreement
is effected on the terms currently contemplated, Mr. Schoenhals will be granted
options for 38,525 of the additional shares authorized by the amendment to the
1997 Option Plan. If the proposal is not approved by stockholders, the Company
will not be able to effect the cancellation of Mr. Schoenhals' employment
agreement on the terms currently proposed.
Recommendation and Vote Required
The Board of Directors has determined that the proposed amendment is
necessary to maintain the 1997 Option Plan as an effective incentive plan. Since
the amendment will materially increase the number of shares of Common Stock
which may be issued under the 1997 Option Plan, the Board of Directors is
seeking stockholder approval of the amendment.
Stockholder approval of the amendment to the 1997 Option Plan requires
the affirmative vote of the holders of a majority of the votes eligible to be
cast at the Annual Meeting. The Board of Directors recommends a vote "FOR"
approval of the amendment to the 1997 Option Plan.
26
NEW PLAN BENEFITS
The following table sets forth certain information regarding the benefits that
will be received under the 1997 Option Plan by the indicated persons as a result
of the amendment.
Dollar Number
Value ($)(1) of Units
Marvin N. Schoenhals $ 0 38,525
Chairman of the Board, President ---------- ---------
and Chief Executive Officer
Karl L. Johnston $ 0 0
Executive Vice President, ---------- ---------
Chief Lending Officer
Joseph M. Murphy $ 0 0
Executive Vice President, ---------- ---------
Retail Banking
Thomas E. Stevenson $ 0 0
President, ---------- ---------
CashConnect Division
Mark A. Turner $ 0 0
Executive Vice President, ---------- ---------
Chief Financial Officer,
Treasurer and Secretary
All executive officers as a group $ 0 38,525
(1 persons) ---------- ---------
All directors who are not executive officers 0 0
as a group (0 persons) ---------- ---------
All employees who are not executive officers 0 0
as a group (0 persons) ---------- ---------
(1) Based on the fair market value of the Common Stock on the date of
grant less the exercise price.
27
INDEPENDENT AUDITORS
The Board of Directors of the Company expects to appoint KPMG LLP as independent
auditors of the Company for the year ended December 31, 2000.2001. KPMG LLP has
served as the Company's independent auditors since 1994. A representative of
KPMG LLP is expected to be present at the Annual Meeting to respond to
appropriate questions and will have the opportunity to make a statement if they
desire to do so.
During 2000 the following fees were paid to KPMG LLP for services performed:
Audit Fees $ 275,002
Financial Information Systems Design and Implementation Fees $ --
All Other Fees $ 105,574
The Audit Committee has determined that the non-audit services performed by its
principal accountants during 2000 were compatible with maintaining the principal
accountants' independence.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to regulations promulgated under the Exchange Act, the Company's
officers and directors and all persons who beneficially own more than ten
percent of the Common Stock ("Reporting Persons") are required to file reports
detailing their ownership and changes of ownership in the Common Stock and to
furnish the Company with copies of all such ownership reports that are filed.
Based solely on the Company's review of the copies of such ownership reports
which it has received in the past fiscal year or with respect to the past fiscal
year, or written representations from the Reporting Persons that no annual
report of changes in beneficial ownership were required, the Company believes
that during fiscal year 19992000 and prior fiscal years all Reporting Persons have
complied with these reporting requirements.
16
ADVANCE NOTICE OF CERTAIN MATTERS
TO BE CONDUCTED AT AN ANNUAL MEETING
The Bylawsbylaws of the Company provide an advance notice procedure for certain
business, or nominations to the Board of Directors, to be brought before the
Annual Meeting. In order for a stockholder to properly bring business before the
Annual Meeting or to propose a nominee to the Board of Directors, the
stockholder must give written notice to the Secretary of the Company not less
than thirty days before the time originally fixed for such meeting; provided,
however, that in the event that less than forty days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be received no later than the close of
business on the tenth day following the day on which such notice of the date of
the Annual Meeting was mailed or such public disclosure was made. The notice
must include the stockholder's name and address as they appear on the records of
the Company, and number of shares beneficially owned by the stockholder, and
describe brieflya brief
description of the proposed business, the reasons for bringing the business
before the Annual Meeting and any material interest of the stockholder in the
proposed business. In the case of nominations to the Board of Directors, certain
information regarding the nominee must also be provided.
STOCKHOLDER PROPOSALS FOR 20012002 ANNUAL MEETING
It is anticipated that the proxy statement and form of proxy for the 20012002 Annual
Meeting of Stockholders will be mailed during March of 2001.2002. Stockholder
proposals intended to be presented at the 20012002 annual meeting of stockholders of
WSFS Financial Corporation must be received by November 25,
2000,23, 2001, to be
considered for inclusion in the proxy statement and form of proxy relating to
such meeting and should be addressed to the Secretary at the Company's principal
office.
28
ADDITIONAL INFORMATION
No matters other than those set forth in the Notice of Meeting accompanying this
Proxy Statement are expected to be presented to stockholders for action at the
Annual Meeting other than matters incident to the conduct of the Annual Meeting.
However, if other matters are presented which are proper subjectsubjects for action by
stockholders, and which may properly come before the meeting, it is the
intention of those named in the accompanying proxy to vote such proxy in
accordance with the determination of a majority of the Board of Directors upon
such matters.
MISCELLANEOUS
The expenses of the solicitation of the proxies, including the cost of preparing
and distributing the proxy materials, the handling and tabulation of proxies
received and charges of brokerage houses and other institutions, nominees or
fiduciaries in forwarding such documents to beneficial owners, will be paid by
the Company. In addition to the mailing of the proxy materials, solicitation may
be made in person or by telephone, telegraph or other modes of electronic
communication by the Company or its employees. The Company's directors,
management and employees will receive no compensation for their proxy
solicitation services other than their regular salaries and overtime, if
applicable, but may be reimbursed for out-of-pocket expenses.
17
ANNUAL REPORT AND FINANCIAL STATEMENTS
The Company's Annual Report for the fiscal year ended December 31, 1999,2000,
including financial statements prepared in conformity with generally accepted
accounting principles, accompanies this Proxy Statement. Such Annual Report is
not part of the proxy solicitation materials. A copy of the Company's Annual
Report on Form 10-K for the Fiscal Year Ended December 31, 19992000 (without
exhibits) will be furnished without charge to stockholders as of the Record Date
upon written request to: Investor Relations Department, WSFS Financial
Corporation, 838 Market Street, Wilmington, Delaware, 19801.
2918
Appendix A
WSFS FINANCIAL CORPORATION
AUDIT COMMITTEE CHARTER
WSFS Financial Corporation has created a Committee of the Board of Directors to
be known as the AUDIT COMMITTEE with its goals and objectives, composition, term
of office, and duties and responsibilities as follows:
GOALS AND OBJECTIVES
The primary goal of the Committee will be to assist the Board of Directors in
fulfilling its fiduciary responsibilities relating to corporate accounting and
reporting practices of the holding company, WSFS, and all related subsidiaries.
In addition, the Committee will:
o Oversee and appraise the quality of the audit effort of the company's
Internal Audit function and that of its independent auditors;
o Maintain, by scheduling regular meetings, open lines of communication among
the Board, internal auditors, and the independent accountants to exchange
views and information as well as confirm their respective authority and
responsibilities; and
o Determine the adequacy of the Company's administrative, operating, and
internal accounting controls and evaluate adherence.
COMPOSITION
The Board of Directors shall annually elect the membership of the Audit
Committee, upon the recommendation of the Chairman, which will be comprised of a
minimum of three outside directors, each of whom will be independent of senior
management and operating executives of the holding company, WSFS, and all
related subsidiaries, and free from any relationships which might in the opinion
of the Board of Directors be construed as a conflict of interest. One of the
members shall be elected chairperson of the Committee by the members of the
Committee.
TERM OF MEMBERSHIP
Each member of the Committee shall serve a term of one continuous year after
election. The chairperson shall be elected annually by the members of the
Committee, and no chairperson shall serve more than three consecutive years as
chairperson of the Audit Committee. Exceptions to the above noted terms will
require a formal approval process by the Board of Directors.
DUTIES AND RESPONSIBILITIES
The Committee will hold at least eight regular meetings per year, and such
additional meetings as the Chairperson of the Committee shall require in order
to meet the following duties:
o Review and reassess the adequacy of this Charter annually and submit it to
the Board for approval;
o Recommend to the full Board the appointment of the independent accountant
for the coming year;
o Ensure that members of the Committee have unrestricted access to the
independent accountants (without management present) to review and discuss
Corporate financial or other matters at such times and under such
circumstances as the Committee may deem necessary or appropriate;
o Approve the scope of external audit services; review adjustments
recommended by the independent public accountant and address disagreements
between the independent public accountant and management; review documents
required by this part, and meet with independent public accountants
(without management present) prior to the filing of reports upon completion
of audit services;
o Review with management the Company's quarterly financial statements prior
to the release of quarterly earnings;
o Ensure that an external audit is conducted in compliance with statutory
requirements;
o Review and approve the audit plan of the independent accountants;
o Review and approve the audit plan of the Internal Audit Department;
19
o Supervise the internal audit function, approve the selection, compensation,
and termination of internal auditors; approve the scope of internal audits
to assure regular testing of the systems and controls associated with
preparing financial reports, complying with laws and regulations, and
preventing management from overriding the internal control system or
compromising the control environment;
o Evaluate the effectiveness of both the internal and external audit effort
through regular meetings with each respective group;
o Determine that no management restrictions are being placed upon either the
internal or external auditors;
o Review the adequacy of internal controls and management's handling of
identified material inadequacies and reportable conditions in the internal
controls over financial reporting and compliance with laws and regulations;
o Evaluate the adequacy of the Company's internal accounting control system
by review of written reports from the internal and external auditors, and
monitor management's response to actions to correct any noted deficiencies;
o Ensure compliance with all applicable statutes and regulations setting
forth duties, responsibilities and obligations for Audit Committees
contained in the FDIC Improvement Act (FDICIA) of 1991 and the Securities
and Exchange Commission (SEC) - Blue Ribbon Committee Recommendations on
Improving the Effectiveness of Audit Committees;
o Ensure that there are no members of the Committee who are not independent
as required by applicable regulation;
o Ensure that members of the Committee have the expertise required by
applicable regulation; that the Committee will hire its own independent
counsel that does not perform work for the Corporation at such times and
under such circumstances as the Committee may deem necessary or
appropriate;
o Review all regulatory reports submitted to the Company and monitor
management's response to them;
o Require periodic reports from management, the independent accountants, and
internal auditors on any significant proposed regulatory, accounting, or
reporting issue to assess the potential impact upon the Company's financial
reporting process;
o Review and approve all significant accounting changes;
o Review and approve the report required by the rules of the Securities and
Exchange Commission to be included in the Company's annual proxy statement;
o Identify and direct any special projects or investigations deemed
necessary;
o Shall maintain minutes and other relevant records of their meetings and
activities. Such minutes shall be made available for review by the FDIC,
SEC and the appropriate federal banking agency;
o Submit minutes of all meetings of the Audit Committee to the Board of
Directors of the Corporation;
In carrying out their responsibilities, the Audit Committee believes its
policies and procedures should remain flexible in order that it be able to react
to changing conditions and the environment, and to assure the directors and
shareholders that the corporate accounting and reporting practices of the
Corporation are in accordance with all requirements and are of the highest
quality. While the Audit Committee has the responsibilities and powers set forth
in this Charter, it is the responsibility of management and the independent
auditor to determine that the Company's financial statements are complete and
accurate and are in accordance with Generally Accepted Accounting Principles
(GAAP).
20
This Proxy is Solicited on Behalf of the Board of Directors of
WSFS FINANCIAL CORPORATION
for the
20002001 Annual Meeting of Stockholders
REVOCABLE PROXY
The undersigned hereby appoints Marvin N. Schoenhals and Mark
A. Turner, or either of them, with full power of substitution, to act as
attorneys and proxies for the undersigned and to vote all shares of Common Stock
of WSFS Financial Corporation, which the undersigned is entitled to vote, at the
Annual Meeting of Stockholders to be held on April 27, 200026, 2001 at 4:00 p.m., or at
any adjournments thereof, as follows:
30
/x/- ---
X Please mark your
- --- votes as in this
example.
The Board of Directors recommends a vote FOR all nominees listed below.
WITHHOLD AUTHORITY
to vote for all
FOR nominees listed belowat right Nominees:
Linda C. DrakeJohn F. Downey
1. Election of / / / / David E. HollowellThomas P. Preston
Directors: Claibourne D. Smith
Eugene W. Weaver
2. Stock Option Plan (amendment)Marvin N. Schoenhals
R. Ted Weschler
Each for a three year term
expiring 2004.
(To withhold authority to vote any individual nominee write the nominee's name
on the line provided below).
- ---------------------------------------
The proxy is revocable and, when properly executed will be voted in the
manner directed hereby by the undersigned. If no directions are made, this
proxy will be voted FOR each of the nominees. The undersigned, by
executing and delivering this proxy, revokes the authority given with
respect to any earlier dated proxy submitted by the undersigned.
Unless contrary direction is given, the right is reserved in the sole
discretion of the Board of Directors to distribute votes among some or all
of the above nominees in a manner other than equally so as to elect as
directors the maximum possible number of such nominees.
In their discretion the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and of a Proxy Statement of WSFS Financial Corporation.
Please sign exactly as name appears hereon. If signing as
attorney, executor, administrator, trustee or guardian, please
indicate the capacity in which you are acting. Proxies
executed by corporations should be signed by a duly authorized
officer.
SIGNATURE(S) ____________________________________________
Date_________________________________________Date ____________________
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
31