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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 toss.240.14a-12
Sturgis Bancorp, Inc.
=========================================================================
(Name of Registrant as Specified in its Charter)
=========================================================================
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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 (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 Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
PROXY MATERIALS
STURGIS BANCORP, INC.
125 East Chicago Road
Sturgis, MI 49091
(616) 651-9345
-------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 30, 2002
--------------------------------------------------
The Annual Meeting of Stockholders of Sturgis Bancorp, Inc.
("Company"), will be held at the Sturges-Young Auditorium, 201 N. Nottawa Road,
Sturgis, Michigan on Tuesday, April 30, 2002 at 1:30 p.m.
A Proxy and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of three (3) directors of the Company;
2. The ratification of the appointment of Plante & Moran, LLP as
Independent Public Accountants for the Company for the fiscal
year ending December 31, 2002.
3. Such other matters as may properly come before the Meeting or
any adjournment thereof.
NOTE: The Board of Directors is not aware of any other business to
come before the meeting.
Any action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. Stockholders of
record at the close of business on March 15, 2002 are the Stockholders entitled
to vote at the Meeting and any adjournments thereof.
You are requested to fill in and sign the accompanying 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
Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Brian P. Hoggatt
----------------------------------
Brian P. Hoggatt
Secretary
Sturgis, Michigan
March 28, 2002
PROXY STATEMENT
OF
STURGIS BANCORP, INC.
125 East Chicago Road
Sturgis, Michigan 49091
ANNUAL MEETING OF STOCKHOLDERS
April 30, 2002
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Sturgis Bancorp, Inc. (hereinafter called
the "Company") to be used at the Annual Meeting of Stockholders of the Company
(hereinafter called the "Meeting") which will be held at the Sturges-Young
Auditorium, 201 N. Nottawa Road, Sturgis, Michigan, on Tuesday, April 30, 2002,
at 1:30 p.m. The accompanying Notice of Meeting and this Proxy Statement are
being first mailed to Stockholders on or about March 25, 2002.
REVOCATION OF PROXIES
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Company or by the filing of a later dated proxy
prior to a vote being taken on a particular proposal at the Meeting. A written
notice of revocation of proxy should be sent to the Secretary at Sturgis
Bancorp, Inc., 125 East Chicago Road, P.O. Box 600, Sturgis, Michigan 49091, and
will be effective if received by the Secretary prior to the Meeting. A
previously submitted proxy will also be revoked if a stockholder attends the
Meeting and votes in person. 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
set forth under "PROPOSAL I--ELECTION OF DIRECTORS", "PROPOSAL II--RATIFICATION
OF PLANTE & MORAN, LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR
2002."
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stockholders of record as of the close of business on March 15, 2002 are
entitled to one vote for each share then held. As of March 15, 2002, the Company
had 2,986,334 shares of common stock, $1.00 par value, issued and outstanding
("Common Stock").
A majority of the outstanding shares of the Company entitled to vote,
represented in person or proxy, shall constitute a quorum at the Meeting.
Abstentions shall be included in a determination of a quorum, however broker
non-votes shall not be included.
Stockholders may not cumulate their votes for the election of directors.
The individuals with the most votes will be elected as directors.
The ratification of Plante & Moran, LLP shall be approved if the number
of shares voting for the ratification, either in person or by proxy, exceed the
number of shares voting against.
1
BACKGROUND
On December 11, 2001, the shareholders of Sturgis Bank and Trust
Company (the "Bank") approved the reorganization of the Bank to become a wholly
owned subsidiary of Sturgis Bancorp, Inc. (the "Company"), a financial holding
company. The Company is a financial holding company under the Bank Holding
Company Act of 1956, as amended. This reorganization was approved at a special
meeting of the shareholders of the Bank on December 11, 2001. The necessary
affirmative vote of the holders of at least two-thirds (2/3) of the Bank's
common stock (of which 3,101,534 shares were outstanding on October 30th, 2001
the record date for the meeting) was obtained.
Prior to the special meeting of the shareholders of the Bank, the Bank
and the Company received the necessary approvals from the Board of Governors of
the Federal Reserve and the Federal Deposit Insurance Corporation. On December
21, 2001, the Michigan Department of Consumer and Industry Services, Office of
Financial and Insurance Services, Division of Financial Institutions approved
the consolidation to complete the consummation of the Company acquiring one
hundred percent of the issued and outstanding common stock of Sturgis Bank &
Trust Company. This reorganization became effective as of the opening of
business on January 1, 2002.
With the consummation of the reorganization, each outstanding share of
the Bank's outstanding common stock, $1.00 par value, has been converted into
one share of the Company's common stock, $1.00 par value. The shareholders of
the Bank and their percentage of shareholder ownership, immediately prior to the
consummation of the reorganization are identical to those of the Company
immediately after consummation of the reorganization.
Based upon the reorganization of the Bank described above, the
Company's common stock was deemed registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended, pursuant to Rule 12g-3(a)
promulgated thereunder. The Company filed a Form 8-K with the Securities and
Exchange Commission as a successor issuer to Sturgis Bank and Trust Company as
required by paragraph (f) of Rule 12g-3 under the Securities Exchange Act of
1934. Pursuant to paragraph (g) of Rule 12g-3 under the Exchange Act, the
Company, as the successor issuer, is responsible for making the necessary annual
filings for the Bank, the predecessor issuer.
As a result of the above described reorganization, the meetings, events
and descriptions contained below for events that took place in calendar year
2001 relate the Company while it operated as the Bank and prior to the effective
date of the reorganization (effective January 1, 2002).
The following table sets forth, as of March 15, 2002 the shares of
Common Stock beneficially owned by executive officers and all directors of the
Company as a group. Individual beneficial ownership of shares by the Company's
directors is set forth under "PROPOSAL I--ELECTION OF DIRECTORS". Ownership is
direct unless otherwise specified.
Shares of Shares which Percent of
Common Stock may be acquired Total Shares Shares of Common
Directly or within 60 days of Stock Stock Outstanding
Indirectly upon exercise Beneficially and Deemed
Owned(1) of Stock Options Owned Outstanding(2)
--------------------------------------------------------------------------------
Executive Officers
and Directors as a 464,201 54,145 518,346 17.36%
Group (9 Persons)
(1) Includes certain shares owned by spouses and children or as custodian or
trustee, or over which shares the individual effectively exercises sole or
shared voting and investment power.
(2) The 54,145 shares able to be acquired within 60 days upon exercise of stock
options are deemed outstanding at March 15, 2002.
2
Persons and groups owning in excess of 5% of the Company's Common Stock are
shown in the following table.
Percent of
Shares of Nature Shares of Common
Common Stock of Ownership Stock Outstanding
-----------------------------------------------------------------
Raymond H. Dresser, Jr.(1) 150,775(2) Direct--98,175(2)
215 Haral Avenue Indirect--52,600 5.05%
Sturgis, Michigan 49091
Newell A. Franks(3)
509 N. Lakeview Ave. 187,200 Direct 6.27%
Sturgis, Michigan 49091
(1) Gretchen M. Dresser, Raymond H. Dresser, Jr.'s spouse, filed a joint
Schedule 13G with the Securities and Exchange Commission relating to
these total shares.
(2) Includes 975 shares of unexercised options.
(3) Newell A. Franks is the father of director Lawrence A. Franks.
PROPOSAL I -- ELECTION OF DIRECTORS
The Board is divided into three classes with staggered terms, consisting
of two directors in Class I, three directors in Class II and three directors in
Class III. Each director holds office for a term of three years. The term of
directors in Class II expires in 2002, in Class III in 2003, and in Class I in
2004. Class II directors are scheduled for election at the Meeting.
The Board of Directors has nominated for election Raymond H. Dresser,
Jr., Leonard L. Eishen, and Lawrence A. Franks to the three available seats in
Class II on the Board and to serve in those positions until 2005. If any nominee
is unable to serve, shares represented by all valid proxies will be voted for
the election of such substitute director as the Board of Directors may
recommend. At this time, the Board knows of no reason why any nominee might be
unable to serve.
The following table sets forth certain information with respect to
current directors and nominees for director of the Company.
Year Director's
Year First Appointed or Current Term
Name Age Position Elected as a Director(1) Expires
---- --- -------- ------------------------ -------
Raymond H. Dresser, Jr. 71 Director 1968 2002
Leonard L. Eishen 64 Director, President and 1977 2002
Chief Executive Officer
Eric L. Eishen 36 Director, Vice President 1999 2003
Lawrence A. Franks 68 Director, Chairman of the 1996 2002
Board
Donald L. Frost 56 Director 1995 2004
James A. Goethals 65 Director 1972 2003
Gary J. Malloy 55 Director 1994 2003
3
Philip G. Ward 66 Director 1988 2004
(1) These dates reflect the date the respective director was first appointed or
elected director of the Bank. Each director became a director of the Company on
August 20, 2001.
The principal occupation and certain other information for each current
director, executive officer and nominee for director of the Company is set forth
below. Unless otherwise noted, all individuals have held the position described
below for at least the past five years.
NOMINEES FOR ELECTION AS CLASS II DIRECTORS CONTINUING IN OFFICE UNTIL 2005
RAYMOND H. DRESSER, JR., is a principal stockholder of and serves as
Chairman of the law firm of Dresser, Dresser, Haas & Caywood, P.C., which was
founded in Sturgis in 1898. The firm has served as legal counsel to the Bank for
many years. He is President and a director of the Economic Development
Corporation of the City of Sturgis and the Sturgis Improvement Association.
LEONARD L. EISHEN is the President and Chief Executive Officer of the
Company. He has been President of the Bank, the wholly owned subsidiary of the
Company, since 1980 and Chief Executive Officer since 1976. He is a past
Chairman of the Michigan League of Community Banks. He is a member of the board
of directors of America's Community Bankers (since 1998) and former Vice
Chairman of District V (1998) of the Michigan Chamber of Commerce. He is also a
past Vice Chairman of the Federal Home Loan Bank of Indianapolis.
LAWRENCE A. FRANKS is President of Burr Oak Tool and Gauge Company,
Inc., Oak Products, Inc., and Chairman of the Board of Oak Japan. He is past
Vice President of the Sturgis Improvement Association and the Economic
Development Corporation of Sturgis. He is a Trustee (since 1984) and Chairman
Emeritus of the Board (1999) of Tri-State University, Angola, Indiana. He is
also a past Lieutenant Governor for Kiwanis International and a past President
of the Kiwanis Club of Sturgis. Director Franks serves as the Chairman of the
Board of the Company.
CLASS III DIRECTORS CONTINUING IN OFFICE UNTIL 2003
ERIC L. EISHEN is the Vice President of the Company. He has been
Executive Vice President and Chief Operating Officer of the Bank, a wholly owned
subsidiary of the Company since April, 1999. He has been a full time employee of
the Bank since 1987 and became Vice President of Administration in 1991, First
Vice President Chief Administration Officer in 1995, and First Vice President
and Chief Administrative Officer in 1998. He is a member of the Board of
Directors of the Sturgis Public Schools Endowment Fund, past President of the
Sturgis Area Chamber of Commerce (1997) and the Kiwanis Club of Sturgis (1999).
He is the son of Leonard L. Eishen.
JAMES A. GOETHALS is past President of Sturgis Foundry Corporation. He
is a past President of the Sturgis Chamber of Commerce and Sturgis United Fund
and is the President and a trustee of the Sturgis Area Community Foundation. He
is the Chairman of the Board of the Bank.
GARY J. MALLOY is President of Sturgis Machining, Inc. and past
President of Indiana Metalworks Corporation (formerly known as Angola Die
Casting Corporation) in Angola, Indiana. He is a former director of the Sturgis
Improvement Association and the Economic Development Corporation of the City of
Sturgis.
CLASS I DIRECTORS CONTINUING IN OFFICE UNTIL 2004
DONALD L. FROST is President of LTI Printing, Inc. He served on the
Board of the Glen Oaks Community College Foundation and served as the Chairman
of the Building Committee for the Doyle Community Center in 1994 to 1995.
PHILIP G. WARD is past President of Glen Oaks Community College. He is
also a past President of the Michigan Association of Community Colleges and
currently serves on the Sturgis Hospital Board (since 2000) and is a member of
the City of Sturgis Planning Board (since 2000).
4
In addition to Leonard L. Eishen and Eric L. Eishen , the Company has
one additional executive officer.
BRIAN P. HOGGATT is the Secretary and Treasurer. He is 35 years old and
has been with the Bank since 1988 where he was Controller of the Company from
1991 to 1994, became Vice President in 1993, and Chief Financial Officer and
Treasurer in 1994.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
As a result of the previously described reorganization, the meetings,
events and descriptions contained below for events that took place in calendar
year 2001 relate the Company while it operated as the Bank and prior to the
effective date of the reorganization (effective January 1, 2002).
The Board of Directors met 15 times (12 regular, 1 organizational, and
2 special) during the fiscal year ended December 31, 2001 while the Company
operated as the Bank and before the reorganization into a bank holding company
structure with the Bank becoming a wholly owned subsidiary of the Company
effective January 1, 2002.
The Board of Directors has established various committees, including a
standing Audit Committee, Compensation Committee and Loan Committee.
The Audit Committee selects the Company's independent public
accountants and reviews major financial, accounting and internal auditing
policies and the audit scope. This committee meets with the independent public
accountants in connection with their annual audit. This Committee met 4 times
during the year ended December 31, 2001. The Audit Committee was comprised of
Directors Frost, Goethals, and Malloy during the year ended December 31, 2001.
The Compensation Committee recommends the compensation to be allowed to
officers and managers selected by the Board. The Compensation Committee was
comprised of Directors Frost, Goethals, and Malloy during the year ended
December 31, 2001 and met 4 times during 2001.
The Directors Loan Committee meets to review all commercial loans in
excess of loan officer limits which is over $500,000 up to $1 million aggregate
for any one borrower. Any aggregate loan request, for any one borrower, over $1
million is presented to the full board. This Committee was comprised of
Directors Dresser, Malloy, Ward, L. Eishen and E. Eishen during the year ended
December 31, 2001 and met 3 times during 2001.
The Board's other committees include an Executive Committee, Planning
and Budgeting Committee, Investments and Funds Management Committee, Trust
Committee, and a Community Reinvestment Act Advisory Board (comprised of
Director E. Eishen and members of the community).
Pursuant to the Company's Bylaws, the total Board of Directors
recommends individuals for election to the Board based upon the individual's
experience and qualifications.
Generally when nominating candidates for director the Board of
Directors will not consider nominees recommended by Stockholders, however,
nominations for directors may be made by Stockholders, but such nominations must
be in writing and delivered to the Secretary of the Company at least five (5)
days prior to the date of the Annual Meeting. Upon delivery, such nominations
shall be posted in a conspicuous place in each office of the Company. Ballots
bearing the names of all persons nominated by the Board of Directors and by
Stockholders shall be provided for use at the Annual Meeting. If the Board of
Director shall fail or refuse to name nominees at least 20 days prior to the
Annual Meeting, nominations for directors may be made at the Annual Meeting by
any stockholders entitled to vote and shall be voted upon.
No Director attended fewer than 75 percent of the aggregate of the
total number of meetings of the Board of Directors and the total number of
meetings held by all committees of the Board on which he served.
5
AUDIT COMMITTEE REPORT
The Audit Committee reports:
1. The Audit Committee has reviewed and discussed the audited financial
statements with management.
2. The Audit Committee has discussed with the Company's independent
auditors the matters required to be discussed by SAS 61(codification of
statements on auditing standards, AU 380), as may be modified or
supplemented.
3. The audit committee has received the written disclosures in the letter
from the Company's independent accountants required by Independence
Standards Board Standard No. 1, as may be modified or supplemented, and
has discussed with the independent accountants the independent
accountant's independence.
4. Based on the review and discussions referred to in paragraphs 1 through
3 of this section, the audit committee recommended to the Board of
Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the last fiscal year for
filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Donald L. Frost, Chairman
James A. Goethals
Gary J. Malloy
The Board of Directors of both the Company and the Bank have adopted
Audit Committee charters. A copy of the Company's Audit Committee Charter is
attached to the Proxy at Appendix A and a copy of the Bank's Audit Committee
Charter is attached to this Proxy as Appendix B. All directors of the Audit
Committee are determined to be independent as defined by Rule 4200(a)(14) of the
NASD's listing standards.
6
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates as of March 15, 2002 beneficial ownership
by all current directors and nominees for director of the Company's Common
Stock, which is the only class of common stock outstanding.
Name and Address of Shares of Common Shares which may Total Shares of Percent of Shares of
Beneficial owner or Number Stock Directly be acquired Stock deemed as Common Stock
in Group or Indirectly within 60 days being Outstanding and
Owned (1) upon exercise of Beneficially Deemed Outstanding
stock options Owned (2)
------------------------------------------------------------------------------------------------------------
Raymond H. Dresser, Jr. 149,800 975 150,775 5.05%
215 Haral Avenue
Sturgis, MI 49091
Eric L. Eishen 9,002 13,514 22,516 .75%
284 Kruszka
Bronson, MI 49028
Leonard L. Eishen 83,092 25,753 108,845 3.64%
66002 Knollwood Drive
Sturgis, MI 49091
Lawrence A. Franks (3) 114,474 975 115,449 3.87%
609 E. Chicago Road
Sturgis, MI 49091
Donald L. Frost 21,206 975 22,181 .74%
68592 Benham Beach
Sturgis, MI 49091
James A. Goethals 21,692 975 22,667 .76%
25580 Waneta Way
Sturgis, MI 49091
Gary J. Malloy 10,650 975 11,625 .39%
68601 Crooked Creek
Sturgis, MI 49091
Philip G. Ward 48,390 975 49,365 1.65%
1000 S. Lakeview
Sturgis, MI 49091
------------------------------------------------------------------------------------------------------------
All Directors and Nominees
of the Company as a Group 458,306 45,117 503,423 16.84%
============================================================================================================
(1) Includes certain shares owned by spouses and children or as custodian or
trustee, or over which shares the individual effectively exercises sole or
shared voting and investment power.
(2) The 45,117 shares able to be acquired within 60 days upon exercise of stock
options are deemed outstanding as of March 15, 2002.
(3) Lawrence A. Franks is a son of Newell A. Franks.
7
EXECUTIVE COMPENSATION
The following tables set forth certain information as to compensation
received by certain executive officers during the periods indicated. These
periods relate to compensation received from Sturgis Bank & Trust Company and
prior to the previously described reorganization.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
Name and Principal Salary and Securities
Position Year Directors Fees ($) Bonus ($) Underlying Options(1)
-----------------------------------------------------------------------------------------------------------------------
Leonard L. Eishen,
President and CEO 2001 $174,000 $0 0
2000 $174,000 $0 0
1999 $176,500 $0 375
Eric L. Eishen,
Vice President 2001 $120,679(2) $14,000 0
2000 $103,300 $14,200 0
1999 $ 81,800 $12,350 0
(1) Adjusted for the June 15, 1998 two-for-one stock split.
(2) This figure includes the taxable value of the car allowance received by
Mr. Eishen.
FISCAL YEAR-END OPTION VALUE TABLE
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Fiscal Year-End Fiscal Year-End
Aggregate or Value ---------------------------- ----------------------------
Name Exercised Realized Exercisable Unexercisable Exercisable Unexercisable
-------------------- ------------ -------- ----------- ------------- ----------- -------------
Leonard L. Eishen -0- -0- 25,753 -0- -0- -0-
Eric L. Eishen -0- -0- 13,514(1) -0- -0- -0-
(1) Includes 2878 shares of unexercised options of spouse, Chandre
Eishen.
The Board of Directors of the Bank entered into a one (1) year
employment contracts with the President and Chief Executive Officer, Leonard L.
Eishen, Vice President Eric L. Eishen, and Secretary and Treasurer Brian P.
Hoggatt, effective May 1, 2001. Mr. L. Eishen received an initial annual base
salary of $174,000 on the effective date of the contract, which salary is
subject to increases or decreases as approved by the Board of Directors. Mr. E.
Eishen received an initial annual base salary of $120,000 on the effective date
of the contract, which salary is subject to increases or decreases as approved
by the Board of Directors. Mr. Hoggatt received an initial annual base salary of
$80,000 on the effective date of the contract, which salary is subject to
increases or decreases as approved by the Board of Directors. The contract for
Mssr. Eishens and Hoggatt also provides, among other things, for participation
in an equitable manner in employee benefits applicable to all employees of the
Company. The Company may discharge Mr. L. Eishen, Mr. E. Eishen and/or Mr.
Hoggatt for cause at any time or upon the occurrence of certain events specified
by State of Michigan Division of Financial Institutions of the Office of
Financial and Insurance Services regulations. Upon termination of Mr. E.
Eishen's, Mr. L. Eishen's and/or Mr. Hoggatt's employment by the Company for
reasons other than cause or in the event of termination of employment by Mr. E.
Eishen, Mr. L. Eishen or Mr. Hoggatt for good reason, Mr. L. Eishen, Mr. E.
Eishen or Mr. Hoggatt will receive his base compensation (subject to IRS Code
Sec. 280(G)) under the contract for an additional three (3) years if the
termination follows a change of control. If this would have occurred in 2001,
Mr. L. Eishen would have been entitled to receive a total of $522,000, Mr. E.
Eishen would have been entitled to receive a total of $360,000, and Mr. Hoggatt
would have been entitled to receive $240,000. The agreement provides the Company
with protection of its confidential business information and protection from
competition by Mr. L. Eishen, Mr. E. Eishen or Mr. Hoggatt should any of their
employment terminate pursuant to specified conditions.
8
On December 17, 2001, the Board of Directors of the Bank implemented a
Supplemental Executive Retirement Program ("SERP") for the senior executives of
the Bank. The SERP provides a supplemental retirement benefit equal to a
percentage of compensation, based on the average of the highest five consecutive
years of employment prior to retirement and based upon years of service with the
Bank. The SERP benefit is paid for fifteen years after retirement. Normal
retirement age under the SERP is sixty-five (65) years old and the employee must
have one year of SERP participation to receive a retirement benefit. The SERP
also contains provisions for early retirement, benefits to the employee's
beneficiaries upon death, and disability provisions. The SERP is fully paid by
the Bank and is financed through life insurance coverage on each of the program
participants that is owned and paid for by the Bank. The SERP is effective
December 31, 2001. The SERP participants are Eric L. Eishen, Brian P. Hoggatt,
Tracey L. Parker and Ronald W. Scheske.
DIRECTORS COMPENSATION
As a result of the previously described reorganization, the historical
discussion contained below relates the Company while it operated as Sturgis Bank
& Trust Company and prior to the effective date of the reorganization (effective
January 1, 2002). With respect to matters relating to January 1, 2002 and after,
the discussion relates to the Company. As part of the reorganization, the stock
options plans discussed below continue in full force and effect for the option
to purchase shares of the Company.
Except for Mr. L. Eishen and Mr. E. Eishen, each Director of the
Company currently receives $ 6,000.00 per year plus $500.00 for each Board
Meeting attended. Members of the various committees who are not also Company
employees receive fees of $175.00 for each meeting attended. The Chairman
receives an additional $ 3,300.00 per year.
In 1995, the Stockholders adopted a stock option plan that allows all
Directors, both employee and non-employee Directors, to participate ("Director
Plan"). Pursuant to the Director Plan, 7,000 shares of authorized but unissued
Common Stock were reserved for issuance to Directors upon exercise of options
granted under the Director Plan. Under the Director Plan each Director was
granted an annual option to purchase 200 shares of Common Stock at an exercise
price to be determined as the closing price of the Common Stock reported on the
OTC Bulletin Board on the day before grant. Each option for 200 shares was
granted immediately after each of the four annual meetings of Stockholders,
beginning with the 1995 Annual Meeting, to those individuals who remain
Directors after the respective annual meeting or who are elected at the
respective annual meeting. Pursuant to the plan, after the 1999 Annual Meeting,
all remaining options (375 shares per Director at $10.50 per share) were
allocated pro rata among the Directors.
In 1995, options for 1,400 shares were granted under the Director Plan.
Each director received an option for 200 shares at an exercise price of $14.50
per share. In 1996, options for 1,400 shares were granted under the Director
Plan; each director received an option for 200 shares at an exercise price of
$17.25 per share. In 1997, options for 1,600 shares were granted under the
Director Plan; each director received an option for 200 shares at an exercise
price of $27.25 per share. In 1998, options for 2400 shares were granted under
the Director Plan; each director received an option for 300 shares at an
exercise price of $31.75 per share. As of June 15, 1998, options to purchase
1,400 shares at $14.50 per share, 1,400 shares at $17.25 per share, 1,600 shares
at $27.25 per share had been exercised under the Director Plan. The Director
Plan provides that options granted to Directors vest on the date of grant. There
remain 6,825 shares subject to purchase and issuance.
In 1999, the Stockholders of the Company approved an amendment to the
Director Plan to adjust for the two-for-one stock split which occurred on June
15, 1998. The Director Plan amendment changed the exercise price per share for
options granted on April 28, 1998 from $31.75 to $15.88. The number of shares to
be issued upon the exercise of currently outstanding options yet to be granted
was changed from 300 to 600 shares.
The purpose of the Director Plan was to increase the incentives and
attract and encourage the continued service of Directors of the Company by
facilitating the purchase of the Company's shares. The Director Plan authorizes
the grant of Non-Qualified Stock Options (options that subject the option holder
to Federal Income Tax in the amount by which the market price of the stock at
the time of exercise exceeds the exercise price and the
9
Company will receive a deduction in the same amount at the time of exercise,
pursuant to the Internal Revenue Code of 1986). The Board of Directors has
limited discretion in the administration of the Director Plan so that they can
remain "disinterested" persons as that term is used in Securities and Exchange
Commission Rule 16b-3(c)(2) promulgated under the Securities Exchange Act of
1934, in relation to the plan.
Options under the Director Plan are only exercisable within 10 years
and one day from the date of grant, unless the individual ceases being a
Director prior to that time. In that event, if the individual ceases being a
Director for reasons other than death or disability, the option is exercisable
only within 30 days of cessation of Director status; if the individual's status
as a Director terminates because of death or disability, the option will only be
exercisable within 90 days from the date of such cessation of Director status.
The Board, without further action on the part of the Stockholders of
the Company, may from time to time alter, amend, or suspend the Director Plan or
any stock option granted thereunder or may at any time terminate the Director
Plan, except that, unless approved by a majority of the Stockholders represented
at an Annual Meeting or Special Meeting held in accordance with the Company's
By-Laws, the Board of Directors may not, (i) change the total number of shares
of Common Stock available for grant under the Director Plan; (ii) extend the
duration of the Director Plan; (iii) increase the maximum term of stock options;
or (iv) change the exercise option price of the stock options under the Director
Plan. No action taken by the Board of Directors as outlined above may materially
and adversely affect any outstanding stock option without the consent of the
holder thereof. In any case, the Board of Directors may not amend the Director
Plan more than once every six months, other than to comport with the Internal
Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder.
TRANSACTIONS WITH THE COMPANY
Mr. Raymond H. Dresser, Jr. is the majority stockholder in Dresser,
Dresser, Haas & Caywood, P.C. and is also a Director of the Company. Dresser,
Dresser, Haas & Caywood, P.C. acts as legal counsel to the Company and was paid
$185,413 by Bank (the wholly owned subsidiary of the Company) in 2001 for legal
fees and disbursements and $240,683 in 2000. Extraordinary legal fees in 2001
arose in connection with the reorganization of the Bank into a bank holding
company structure as described earlier in this Proxy. Extraordinary legal fees
in 2000 arose in connection with the later terminated planned merger with
Southern Michigan Bancorp, Inc.
The Bank, a wholly owned subsidiary of the Company, provides
residential mortgage loans and other types of loans to its directors, officers
and employees. The Bank has a policy that all loans to officers, principal
stockholders, or directors of the Company must be on substantially the same
terms as with any customer including terms of interest and collateral. The Bank
has followed this policy in regard to these loans and it is the belief of the
management of the Company that these loans neither involve more than the normal
risk of collectability nor present other unfavorable features, and none of these
loans is a nonaccrual, past due, restructured or potential problem loan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Directors, and certain officers and security holders during 2001 were
required to file timely reports of their security holdings and transactions with
the Securities and Exchange Commission. A registrant is required to identify any
of these individuals failing to timely file these reports. The directors and
relevant officers timely filed the necessary Form 5 reporting of annual changes
in beneficial ownership for 2001.
PROPOSAL II -- RATIFICATION OF PLANTE & MORAN, LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS OF THE COMPANY FOR 2002
The Board of Directors recommends the engagement of Plante & Moran,
LLP, as independent public accountants, to be its independent public accountants
for the 2002 fiscal year, subject to ratification by the Company's Stockholders.
A representative of Plante & Moran, LLP, is expected to be present at the
Meeting, will have the opportunity to make a statement if he or she desires to
do so, and will be available to respond to appropriate questions.
10
The Board of Directors' selection of the Plante & Moran, LLP accounting
firm for the Company, occurred after solicitation and receipt of bids from
qualified accounting firms in 1999 to provide services through 2001. Plante &
Moran, LLP submitted the most favorable plan to conduct the Company's
independent accounting reports. As a result, the shareholders at the 1999 Annual
Meeting ratified the selection of Plante & Moran, LLP and the Company's previous
accounting firm, PricewaterhouseCoopers, LLP was terminated. There were no
disagreements with PricewaterhouseCoopers, LLP on any accounting matter. The
selection of Plante & Moran, LLP as independent auditor was also ratified by the
shareholders at the 2000 and 2001 Annual Meetings.
The appointment of the independent public accountants must be approved
by a majority of the votes cast by the Stockholders of the Company at the
Meeting. The Board of Directors recommends that Stockholders vote "FOR" the
approval of the appointment of Plante & Moran, LLP, as the Company's independent
public accountants.
PRINCIPAL ACCOUNTING FIRM FEES
As a result of the previously described reorganization, the discussion
contained below relates the Company while it operated as Sturgis Bank & Trust
Company and prior to the effective date of the reorganization (effective January
1, 2002).
AUDIT FEES
Audit fees billed to the Company by Plante & Moran, LLP for review of
the Company's annual financial statements for 2001 and the financial statements
included in the Company's quarterly reports on Form 10-Q for 2001 totaled
$52,680.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company did not engage Plante & Moran, LLP to provide advice to the
Company regarding financial information systems design and implementation during
2001.
ALL OTHER FEES
Fees billed to the Company by Plante & Moran, LLP for all other
non-audit services rendered to the Company during 2001 totaled $76,095. The
Audit Committee considered and confirmed that the provision of these non-audit
services was compatible with maintaining the independence of Plante & Moran, LLP
as the Company's independent auditors for the year 2001 audit.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that Proxies in the accompanying form will be voted in accordance with
the judgment of the person or persons voting the Proxies.
MISCELLANEOUS
The solicitation of proxies is being made by the Company. The cost of
solicitation of proxies will be borne by the Company. In addition to
solicitations by mail, directors, officers, regular employees of the Company,
and its agent, may solicit proxies personally or by telegraph or telephone
without additional compensation.
The Company's Annual Report to Stockholders has been mailed to all
Stockholders of record who owned Company stock at the close of business on March
15, 2002. Any Stockholder who has not received a copy of such Annual Report may
obtain a copy by writing the Company. Such Annual Report is not to be treated as
a part of the proxy solicitation material nor as having been incorporated herein
by reference.
11
STOCKHOLDERS' PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials
for next year's Annual Meeting of Stockholders, any Stockholder's proposal to
take action at such Meeting must be received at the Company's home office, at
125 East Chicago Road, Sturgis, Michigan 49091, no later than November 26, 2002.
Any such proposal shall be subject to the proxy rules adopted under the
Securities and Exchange Act of 1934, as amended.
If a shareholder proposal is not presented to the Company by February
8, 2003, SEC Rule 14a-4(c)(1) provides that the Company may use discretionary
authority to vote on the matter.
Also the Company has discretionary authority under its By-laws whether
or not to call a vote on any matter, without discussion in the proxy statement,
on any stockholder proposal for which it has notice, in writing, 5 days before
the Annual Meeting. A shareholder may obtain a copy of the Company's By-laws by
sending a request to Sturgis Bancorp, Inc., 125 E. Chicago Road, P.O. Box 600,
Sturgis, Michigan 49091.
Set forth below is a list of exhibits included as part of this Proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Brian P. Hoggatt
Secretary
Sturgis, Michigan
March 28, 2002
FORM 10-K
THE BANK HAS DESIGNATED THE FORM 10-K OF THE COMPANY AS ITS ANNUAL DISCLOSURE
STATEMENT UNDER 12 CFR PART 350. A COPY OF THE COMPANY'S FORM 10-K FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2001, AS FILED WITH THE UNITED STATES SECURITIES
EXCHANGE COMMISSION, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE
RECORD DATE UPON WRITTEN REQUEST TO STURGIS BANCORP, INC., 125 EAST CHICAGO
ROAD, P.O. BOX 600, STURGIS, MICHIGAN 49091. PHONE (616) 651-9345. THIS FORM
10-K IS ALSO AVAILABLE FROM THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
EDGAR SYSTEM AT WWW.SEC.GOV.
-----------
APPENDICES
Appendix A Sturgis Bancorp, Inc. Audit Committee Charter
Appendix B Sturgis Bank & Trust Company Audit Committee Charter
12
STURGIS BANCORP, INC.
REVOCABLE PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF STURGIS BANCORP, INC., FOR THE
FIRST ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 30, 2002.
All matters to be acted upon have been proposed by Sturgis Bancorp, Inc.
The undersigned Stockholder of Sturgis Bancorp, Inc. ("Company") hereby appoints
the Board of Directors of the Company as proxy to cast all votes which the
undersigned Stockholder is entitled to cast at the First Annual Meeting of
Stockholders of the Company to be held at the Sturges-Young Auditorium on
Tuesday, April 30, 2002 at 1:30 p.m., and any adjournments thereof. They are
authorized to cast all votes to which the undersigned is entitled as follows:
(1) To vote FOR or to WITHHOLD AUTHORITY TO VOTE for the election
of Raymond H. Dresser, Jr., Leonard L. Eishen, and Lawrence A.
Franks to the Board of Directors of the Company.
(2) To vote FOR or AGAINST, or ABSTAIN from voting on, the
ratification of the appointment of Plante & Moran, LLP as
independent public accountants of the Company for the fiscal
year ending December 31, 2002.
(3) To vote, with its discretion, upon any other matters that may
lawfully come before this Annual Meeting.
UNLESS A CONTRARY DIRECTION IS GIVEN, OR IN THE CASE OF ELECTION OF DIRECTORS,
AUTHORITY TO VOTE FOR A NOMINEE IS WITHHELD, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF RAYMOND H. DRESSER, JR., LEONARD L. EISHEN, AND LAWRENCE A. FRANKS
TO THE BOARD OF DIRECTORS, AND FOR THE RATIFICATION OF THE APPOINTMENT OF PLANTE
& MORAN, LLP, AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY. IN ADDITION,
THIS PROXY WILL BE VOTED AT THE DISCRETION OF THE BOARD OF DIRECTORS UPON ANY
OTHER MATTER WHICH MAY PROPERLY COME BEFORE THE FIRST ANNUAL MEETING, INCIDENT
TO THE CONDUCT OF THE MEETING.
(IMPORTANT: PLEASE VOTE, DATE AND SIGN ON NEXT PAGE)
SHARES WILL BE VOTED IN THE MANNER SELECTED BELOW, HOWEVER, THE UNDERSIGNED
STOCKHOLDER MAY ELECT TO VOTE AT SAID MEETING OR AT ANY ADJOURNMENT THEREOF AND,
AFTER NOTIFICATION TO THE SECRETARY OF THE COMPANY AT SAID MEETING OF THE
STOCKHOLDER'S DECISION TO TERMINATE THIS PROXY, THEN THE POWER OF SAID
ATTORNEYS-IN-FACT OR AGENT SHALL BE DEEMED TERMINATED AND OF NO FORCE AND
EFFECT.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF A NOTICE OF ANNUAL MEETING OF THE
STOCKHOLDERS OF THE COMPANY CALLED FOR THE 30TH DAY OF APRIL, 2002 AND A PROXY
STATEMENT FROM THE COMPANY DATED THE 28TH DAY OF MARCH, 2002 PRIOR TO THE
EXECUTION OF THIS PROXY.
PLEASE MARK VOTES BELOW:
1. Election of Directors:
Raymond H. Dresser, Jr. For Authority to Vote Withheld
------ ------
Leonard L. Eishen For Authority to Vote Withheld
------ ------
Lawrence A. Franks For Authority to Vote Withheld
------ ------
Note: You may not cumulate your votes.
2. Ratification of Appointment of Plante & Moran, LLP as the Company's
Independent Public Accountants:
For Against Abstain
------- ------- -------
Date: , 2002 x
-------------- ---------------------------------
x
---------------------------------
IMPORTANT: PLEASE SIGN YOUR NAME EXACTLY AS IT APPEARS ON THIS PROXY. WHEN
SIGNING AS AN ATTORNEY, ADMINISTRATOR, AGENT, CORPORATION, OFFICER,
PERSONAL REPRESENTATIVE, TRUSTEE, GUARDIAN, ETC., PLEASE ADD YOUR
FULL TITLE TO THE SIGNATURE.
NOTE: IF YOU RECEIVE MORE THAN ONE PROXY FORM, PLEASE SIGN AND RETURN ALL FORMS
IN THE ACCOMPANYING ENVELOPE.
=========================================================================
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE
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.
=========================================================================
APPENDIX A
STURGIS BANCORP, INC. (THE "COMPANY")
CHARTER
-------
AUDIT COMMITTEE
The Audit Committee is a committee of the Board of Directors.
PURPOSE & COMPOSITION
The charter details the composition, roles and responsibilities of the audit
committee. The Board of Directors shall appoint at least three directors who are
independent of the Company's management and have no relationships that could
interfere with their independence and execution of the Committee's
responsibilities to the Board of Directors. At least one member must have
expertise in accounting or other aspects of financial management and all members
are expected to be financially literate or to gain such literacy after
appointment. The Committee shall review this charter annually and receive
approval for its continued use (and any recommended amendments) from the Board
of Directors.
DELINEATION OF RESPONSIBILITIES
The audit committee is principally responsible for overseeing the Company's
financial reporting and reporting details of such activities to the Board,
primarily in the form of auditing the financial statements which management
prepares on the Company's behalf. The Committee shall take a flexible approach
to the execution of its role to best reflect current circumstances and changing
business conditions, and is expected to establish on the board's behalf the
overall attitude of the Company as it pertains to financial reporting, risk
management and ethical conduct.
ONGOING PROCESSES
In performing these responsibilities, the audit committee shall follow a number
of prescribed guidelines, and may augment these when appropriate:
o Independent auditors are accountable to the Committee and the Board in their
roles as appointed representatives of the Company's shareholders. As such, the
Committee is expected to evaluate, and if necessary, recommend replacement of
the independent auditors to the Board and shareholders. The Committee shall
APPENDIX A
PAGE 1
review the nature of this independence, and any written disclosures prepared by
the auditors, with the auditors.
o The Committee shall discuss the plans and scope of audits, including
staffing and compensation, with both internal and independent
auditors. The Committee shall conduct separate meetings with both the
internal auditors and independent auditors, both with and without
members of the management team present. Finally, the Committee will
discuss the effectiveness and adequacy of financial controls,
accounting procedures, risk management, and legal and ethical
compliance issues with management, internal auditors and independent
auditors.
o Before the filing of the Company's quarterly Form 10-Q report, the
Committee, management and the independent auditors shall review the
interim financial statements. The independent auditors shall discuss
the results with the Committee (or its chairperson,) along with any
other matters required under generally accepted auditing standards.
o Before the filing of the Company's annual Form 10-K report, the
Committee, management and the independent auditors shall review the
interim financial statements. This review should look beyond adequacy
to the quality of the underlying accounting principles, the clarity of
any financial statement disclosures and whether accounting judgments
are reasonable. The independent auditors shall discuss the results
with the Committee, along with any other matters required under
generally accepted auditing standards.
o The Audit Committee is empowered to review, with the Company's
counsel, legal matters, including litigation, compliance with
securities trading policies, the foreign corrupt practices act and
other laws having a significant impact on the Company's business or
its financial statements; and, to investigate any matter brought to
its attention within the scope of its duties, and retain outside
counsel for this purpose if, in its judgment, that is appropriate.
February 18, 2002
APPENDIX A
PAGE 2
APPENDIX B
STURGIS BANK & TRUST COMPANY
CHARTER FOR AUDIT COMMITTEE
---------------------------
PURPOSE & COMPOSITION
The charter details the composition, roles and responsibilities of the audit
committee. The board of directors shall appoint at least three directors who are
independent of the Company's management and have no relationships that could
interfere with their independence and execution of the committee's
responsibilities to the committee. At lease one member must have expertise in
accounting or other aspects of financial management and all members are expected
to be financially literate or to gain such literacy after appointment. The
committee shall review this charter annually and receive approval for its
continued use (and any recommended amendments) from the board of directors.
DELINEATION OF RESPONSIBILITIES
The audit committee is principally responsible for overseeing the Company's
financial reporting and reporting details of such activities to the board,
primarily in the form of auditing the financial statements which management
prepares on the Company's behalf. The committee shall take a flexible approach
to the execution of its role to best reflect current circumstances and changing
business conditions, and is expected to establish on the board's behalf the
overall attitude of the Company as it pertains to financial reporting, risk
management and ethical conduct.
ONGOING PROCESSES
In performing these responsibilities, the audit committee shall follow a number
of prescribed guidelines, and may augment these when appropriate:
o Independent auditors are accountable to the committee and the board in
their roles as appointed representatives of the Company's
shareholders. As such, the committee is expected to evaluate, and if
necessary, recommend replacement of the independent auditors to the
board and shareholders. The committee shall review the nature of this
independence, and any written disclosures prepared by the auditors,
with the auditors.
o The committee shall discuss the plans and scope of audits, including
staffing and compensation, with both internal and independent
auditors. The committee shall conduct separate meetings with both the
internal auditors and independent auditors, both with and without
members of the management team present. Finally, the committee will
discuss the effectiveness and adequacy of financial controls,
accounting procedures, risk management, and legal and ethical
compliance issues with management, internal auditors and independent
auditors.
APPENDIX B
PAGE 1
o Before the filing of the Company's quarterly Form 10-Q report, the
committee, management and the independent auditors shall review the
interim financial statements. The independent auditions shall discuss
the results with the committee (or its chairperson,) along with any
other matters required under generally accepted auditing standards.
o Before the filing of the Company's annual Form 10-K report, the
committee, management and the independent auditors shall review the
interim financial statements. This review should look beyond adequacy
to the quality of the underlying accounting principles, the clarity of
any financial statement disclosures and whether accounting judgements
are reasonable. The independent auditors shall discuss the results
with the committee, along with any other matters required under
generally accepted auditing standards.
September, 2001
APPENDIX B
PAGE 2