SCHEDULE 14A
United States
Securities and Exchange Commission
Washington, D.C. 20549
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
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Harleysville Savings Financial Corporation
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(Name of Registrant as Specified in Its Charter)
n/a
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or Registration Statement No.:
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(4) Date filed:
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[Harleysville Savings Financial Corporation Letterhead]
December 21, 2007
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Harleysville Savings Financial Corporation, the holding company for Harleysville
Savings Bank. The meeting will be held at the Indian Valley Country Club,
located at 650 Bergey Road, Telford, Pennsylvania 18969, on Wednesday, January
23, 2008 at 9:30 a.m., local time. The matters to be considered by stockholders
at the annual meeting are described in the accompanying materials.
It is very important that your shares be voted at the annual meeting
regardless of the number you own or whether you are able to attend the meeting
in person. We urge you to mark, sign, and date your proxy card today and return
it in the envelope provided, even if you plan to attend the annual meeting. This
will not prevent you from voting in person, but will ensure that your vote is
counted if you are unable to attend.
Your continued support of and interest in Harleysville Savings Financial
Corporation is sincerely appreciated.
Sincerely,
/s/Edward J. Molnar
Edward J. Molnar
Chairman of the Board
HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
271 Main Street
Harleysville, Pennsylvania 19438
(215) 256-8828
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 23, 2008
--------------------
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of
Harleysville Savings Financial Corporation (the "Company") will be held at the
Indian Valley Country Club, located at 650 Bergey Road, Telford, Pennsylvania
18969, on Wednesday, January 23, 2008 at 9:30 a. m., local time, for the
following purposes, all of which are more completely set forth in the
accompanying proxy statement:
(1) To elect two (2) directors for a three-year term and in each case
until their successors are elected and qualified;
(2) To ratify the appointment of Beard Miller Company LLP as the
Company's independent registered public accounting firm for the year
ending September 30, 2008; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof. Management is not aware of any
other such business.
The board of directors has fixed December 12, 2007 as the voting record
date for the determination of stockholders entitled to notice of and to vote at
the annual meeting and at any adjournment thereof. Only those stockholders of
record as of the close of business on that date will be entitled to vote at the
annual meeting or at any such adjournment.
By Order of the Board of Directors
/s/Adrian D. Gordon
Adrian D. Gordon
Senior Vice President and
Corporate Secretary
Harleysville, Pennsylvania
December 21, 2007
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YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
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HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
JANUARY 23, 2008
General
This proxy statement is furnished to holders of common stock, $.01 par
value per share, of Harleysville Savings Financial Corporation (the "Company"),
the bank holding company for Harleysville Savings Bank (the "Bank"). Proxies are
being solicited on behalf of the board of directors of the Company to be used at
the annual meeting of stockholders to be held at the Indian Valley Country Club,
located at 650 Bergey Road, Telford, Pennsylvania 18969, on Wednesday, January
23, 2008 at 9:30 a.m., local time, and at any adjournment thereof for the
purposes set forth in the Notice of Annual Meeting of Stockholders. This proxy
statement is first being mailed to stockholders on or about December 21, 2007.
Voting Rights
Only stockholders of record at the close of business on December 12, 2007
will be entitled to notice of and to vote at the annual meeting. At such date,
there were 3,727,477 shares of common stock issued and outstanding and the
Company had no other class of equity securities outstanding.
Each share of common stock is entitled to one vote at the annual meeting
on all matters properly presented at the meeting. The presence in person or by
proxy of at least a majority of the issued and outstanding shares of common
stock entitled to vote is necessary to constitute a quorum at the annual
meeting. Directors are elected by a plurality of the votes cast with a quorum
present. The affirmative vote of a majority of the total votes cast at the
annual meeting is required for approval of the proposal to ratify the
appointment of the Company's independent registered public accounting firm.
Abstentions will be counted for purposes of determining the presence of a
quorum at the annual meeting. Because of the required votes, abstentions will
have no effect on the voting for the election of directors or the proposal to
ratify the appointment of the Company's independent registered public accounting
firm. Under rules applicable to broker-dealers, all of the proposals for
consideration at the annual meeting are considered "discretionary" items upon
which brokerage firms may vote in their discretion on behalf of their client if
such clients have not furnished voting instructions. Thus, there are no
proposals to be considered at the annual meeting which are considered
"non-discretionary" and for which there will be "broker non-votes."
Proxies
The proxy solicited hereby, if properly signed and returned to the Company
and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted (i) FOR the nominees for director described herein;
(ii) FOR ratification of Beard Miller Company LLP as the Company's independent
registered public accounting firm for the year ending September 30, 2008; and
(iii) upon the transaction of such other business as may properly come before
the meeting, in accordance with the best judgment of the persons appointed as
proxies. Any stockholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the secretary of the Company written
notice thereof (Adrian D. Gordon, Senior Vice President and Corporate Secretary,
Harleysville Savings Financial Corporation, 271 Main Street, Harleysville,
Pennsylvania 19438); (ii) submitting a duly-executed proxy bearing a later date;
or (iii) appearing at the annual meeting and giving the secretary notice of his
or her intention to vote in person. Proxies solicited hereby may be exercised
only at the annual meeting and any adjournment thereof and will not be used for
any other meeting.
1
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR, DIRECTORS
WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS
Election of Directors
The articles of incorporation of the Company provide that the board of
directors of the Company shall be divided into three classes which are as equal
in number as possible, and that the members of each class are to be elected for
a term of three years and until their successors are elected and qualified. One
class of directors is to be elected annually and stockholders are not permitted
to cumulate their votes for the election of directors. No nominee for director
is related to any other director or executive officer of the Company by blood,
marriage or adoption.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominees for director listed
below. If any person named as nominee should be unable or unwilling to stand for
election at the time of the annual meeting, the proxies will nominate and vote
for any replacement nominee or nominees recommended by the board of directors.
At this time, the board of directors knows of no reason why any of the nominees
listed below may not be able to serve as a director if elected.
The following tables present information concerning the nominees for
director and each director whose term continues, including his or her tenure as
a director of the Company.
Nominees for Director for a Three-Year Term Expiring in 2011
Principal Occupation During Director
Name Age the Past Five Years Since(1)
--------------------- ----- ------------------------------------ -----------
Edward J. Molnar 67 Mr. Molnar has served as the 1968
Chairman of the Board of the
Company since February 2000.
Prior to his retirement in
January 2007, Mr. Molnar
served as Chief Executive
Officer of the Company from
February 2000 until January
2007 and as President of the
Company from February 2000
until November 2002. Mr.
Molnar also served as the
Bank's Chief Executive Officer
from 1967 until January 2007
and as the Bank's President
from 1976 to November 2002.
Mr. Molnar joined the Bank in
1967.
Charlotte A. Hunsberger 39 Ms. Hunsberger is a partner in 2005
the law firm of Bricker,Landis
& Hunsberger, LLP, located in
Souderton, Pennsylvania.
The Board of Directors Recommends a Vote FOR
Election of the Nominees for Director.
2
Members of the Board of Directors Continuing in Office
Directors With Terms Expiring in 2009
Principal Occupation During Director
Name Age the Past Five Years Since(1)
-------------------- ----- ------------------------------------ -----------
David J. Friesen 64 Mr. Friesen is a certified 1987
public accountant and serves
as the Senior Vice
President/Chief Financial
Officer for Trefoil Properties
located in Lansdale,
Pennsylvania since January
2006. He previously served as
Director of Development at
Penn View Christian School
located in Souderton,
Pennsylvania.
George W. Meschter 55 Mr. Meschter is the President 1981
of Meschter Insurance Group,
an insurance agency located in
Collegeville, Pennsylvania.
James L. Rittenhouse 46 Mr. Rittenhouse is a certified 2005
public accountant and a
shareholder in the firm
Detweiler, Hershey &
Associates, P.C., located in
Souderton, Pennsylvania
Directors With Terms Expiring in 2010
Principal Occupation During Director
Name Age the Past Five Years Since(1)
------------------- ----- ------------------------------------ -----------
Sanford L. Alderfer 55 Mr. Alderfer is President of 2001
Alderfer Auction Company,
located in Hatfield,
Pennsylvania.
Mark R. Cummins 51 Mr. Cummins is Executive Vice 1995
President, Chief Investment
Officer and Treasurer of
Harleysville Insurance
Companies located in
Harleysville, Pennsylvania.
Ronald B. Geib 53 Mr. Geib has served as the 2001
President and Chief Executive
Officer of the Company and the
Bank since January 2007.
Previously, Mr. Geib served as
President and Chief Operating
Officer of the Company and the
Bank from November 2002 until
January 2007. Mr. Geib also
previously served as Executive
Vice President and Chief
Operating Officer of the
Company and the Bank from 1999
to November 2002. Mr. Geib
served as the Bank's Senior
Vice President, Treasurer, and
Chief Financial Officer from
1980 to 1999. Mr. Geib joined
the Bank in 1976.
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(1) Includes service as a director of the Bank.
3
Stockholder Nominations
Article III, Section 3.12 of the Company's bylaws governs nominations for
election to the board and requires all such nominations, other than those made
by the board, to be made at a meeting of stockholders called for the election of
directors, and only by a stockholder who has complied with the notice provisions
in that section. Stockholder nominations must be made pursuant to timely notice
in writing to the secretary of the Company. To be timely, a stockholder's notice
must be delivered to, or mailed and received at, the principal executive offices
of the Company not later than (i) with respect to an election to be held at an
annual meeting of stockholders, 90 days prior to the anniversary date of the
mailing of proxy materials by the Company for the immediately preceding annual
meeting, and (ii) with respect to an election to be held at a special meeting of
stockholders for the election of directors, the close of business on the tenth
day following the date on which notice of such meeting is first given to
stockholders.
Each written notice of a stockholder nomination shall set forth: (a) the
name and address of the stockholder who intends to make the nomination and of
the person or persons to be nominated; (b) a representation that the stockholder
is a holder of record of stock of the Company entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all arrangements
or understandings between the stockholder and each nominee and any other person
or persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would be required to be
included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission; and (e) the consent of each nominee to serve
as a director of the Company if so elected. The presiding officer of the meeting
may refuse to acknowledge the nomination of any person not made in compliance
with the foregoing procedures. The Company did not receive any nominations from
stockholders for the annual meeting.
The Board of Directors and Its Committees
Regular meetings of the board of directors of the Company and the Bank are
typically held on a monthly basis and special meetings of the board of directors
are held from time-to-time as needed. There were 12 meetings of the board of
directors of the Company held during fiscal 2007. No director attended fewer
than 75% of the aggregate of the total number of meetings of the board of
directors and the total number of meetings of committees of the board on which
the director served during the year.
The board of directors of the Company has established various committees,
including Audit, Compensation and Human Resources and Corporate Governance and
Nominating Committees.
The Compensation and Human Resources Committee, which met four times
during fiscal 2007, reviews the Company's compensation programs and recommends
salary and benefits for the Company's employees. The members of the committee
are currently Messrs. Alderfer, Clemens, Cummins and Meschter. The Compensation
and Human Resources Committee operates pursuant to a written charter.
The Corporate Governance and Nominating Committee, which met three times
during fiscal 2007 with respect to nominations for directors for the annual
meeting, advises the board of directors with respect to nominations of directors
and recommends candidates to the board of directors as nominees for election,
reviews existing corporate governance documents and establishes corporate
governance principles for the Company, reviews nominations for director
submitted by stockholders pursuant to the Company's bylaws and identifies and
recommends to the board the selection of qualified individuals to serve as
officers of the Company. The members of the Corporate Governance and Nominating
Committee are Messrs. Friesen and Meschter and Ms. Hunsberger. Each of these
persons is independent within the meaning of the rules of the NASDAQ Stock
Market. The Corporate Governance and Nominating Committee operates pursuant to a
written charter.
The Corporate Governance and Nominating Committee considers candidates for
director suggested by its members and other directors, as well as management and
stockholders. The Corporate Governance and Nominating Committee also may solicit
prospective nominees identified by it. A stockholder who desires to recommend a
prospective nominee for the board should submit in writing the name and
qualifications, including place of principal residence and place of employment,
of such persons to the Corporate Governance and Nominating Committee no later
4
than July 31st of any year. Submissions shall be made sent to the Corporate
Governance and Nominating Committee, Harleysville Savings Financial Corporation,
Corporate Secretary, 271 Main Street, Harleysville, Pennsylvania 19438. The
Corporate Governance and Nominating Committee also considers whether to nominate
any person nominated pursuant to the provision of the Company's articles of
incorporation relating to stockholder nominations, which is described above
under "- Stockholder Nominations." The Corporate Governance and Nominating
Committee has the authority and ability to retain a search firm to identify or
evaluate potential nominees if it so desires.
The charter of the Corporate Governance and Nominating Committee sets
forth certain criteria the committee may consider when recommending individuals
for nomination as director including: (a) ensuring that the board of directors,
as a whole, is diverse and consists of individuals with various and relevant
career experience, relevant technical skills, industry knowledge and experience,
financial expertise (including expertise that could qualify a director as a
"financial expert," as that term is defined by the rules of the SEC), local or
community ties and (b) minimum individual qualifications, including strength of
character, mature judgment, familiarity with our business and industry,
independence of thought and an ability to work collegially. The committee also
may consider the extent to which the candidate would fill a present need on the
board of directors.
The charter of the Corporate Governance and Nominating Committee also provides
that a director should have:
o a solid understanding of general management best practices and their
application;
o a history of making good business decisions;
o the ability to read a balance sheet, income statement, cash flow
statement and understand the use of financial ratios and other
indicators for evaluating Company performance;
o the ability and the time to perform during periods of both
short-term and prolonged crises;
o an understanding of what it takes to attract, motivate and energize
a high-performance leadership team;
o an understanding of the importance of the strategic planning process
in creating a competitive advantage through strategy;
o a good reputation for high ethical standards and integrity in their
personal and professional dealings;
o mature confidence and value board and team performance over
individual performance; respects others, is open to the opinions of
others, has good listening skills, is confident enough to ask tough
questions, and can communicate persuasively;
o a history of high performance standards as reflected in the person's
history of achievements;
o high intelligence, exhibit wisdom and will be expected to exercise
prudence and care in carrying out the responsibilities of the
position; and
o no existing or potential conflict of interest situation.
In addition, a director must be:
o a citizen of the United States of America and shall have his or her
primary residence and place of employment within the Bank's market
area;
o a person who has a reputation for being trusted with confidential
information; and
o a person who will faithfully attend board meetings, committee
meetings and the annual meeting of the shareholders and takes the
time to prepare for meaningful discussion.
5
Once the Corporate Governance and Nominating Committee has identified a
prospective nominee, the committee makes an initial determination as to whether
to conduct a full evaluation of the candidate. This initial determination is
based on whatever information is provided to the committee with the
recommendation of the prospective candidate, as well as the committee's own
knowledge of the prospective candidate, which may be supplemented by inquiries
to the person making the recommendation or others.
The Audit Committee reviews the records and affairs of the Company to
determine its financial condition, reviews with management and the Company's
independent registered public accounting firm the systems of internal control,
monitors the Company's adherence in accounting and financial reporting to
generally accepted accounting principles, and performs such other duties deemed
appropriate by the board of directors. The Audit Committee met eight times in
fiscal 2007. Messrs. Cummins and Rittenhouse and Ms. Hunsberger served on the
Audit Committee in fiscal 2007. The members the Audit Committee are independent
as defined in the listing standards of the NASDAQ Stock Market.
The board of directors has determined that Messrs. Cummins and
Rittenhouse, members of the Audit Committee, meet the requirements adopted by
the Securities and Exchange Commission for qualification as an audit committee
financial expert. An audit committee financial expert is defined as a person who
has the following attributes: (i) an understanding of generally accepted
accounting principles and financial statements; (ii) the ability to assess the
general application of such principles in connection with the accounting for
estimates, accruals and reserves; (iii) experience preparing, auditing,
analyzing or evaluating financial statements that present a breadth and level of
complexity or accounting issues that are generally comparable to the breadth and
complexity of issues that can reasonably be expected to be raised by the
registrant's financial statements, or experience actively supervising one or
more persons engaged in such activities; (iv) an understanding of internal
controls and procedures for financial reporting; and (v) an understanding of
audit committee functions.
The identification of a person as an audit committee financial expert does
not impose on such person any duties, obligations or liability that are greater
than those that are imposed on such person as a member of the Audit Committee
and the board of directors in the absence of such identification. Moreover, the
identification of a person as an audit committee financial expert for purposes
of the regulations of the Securities and Exchange Commission does not affect the
duties, obligations or liability of any other member of the Audit Committee or
the board of directors. Finally, a person who is determined to be an audit
committee financial expert will not be deemed an "expert" for purposes of
Section 11 of the Securities Act of 1933.
Report of the Audit Committee
The Audit Committee has reviewed and discussed the audited financial
statements with management. The Audit Committee has discussed with the
independent registered public accounting firm the matters required to be
discussed by Statement on Auditing Standards No. 61 "Communication with Audit
Committees". The Audit Committee has received the written disclosures and the
letter from the independent registered public accounting firm required by
Independence Standards Board Standard No. 1, and has discussed with the
independent registered public accounting firm, the independent registered public
accounting firm's independence. Based on the review and discussions referred to
above in this report, 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 year ended September 30, 2007 for filing with the
Securities and Exchange Commission.
Mark R. Cummins
Charlotte A. Hunsberger
James L. Rittenhouse
6
Executive Officers Who Are Not Directors
The following table sets forth certain information with respect to the
executive officers of the Company and the Bank who are not directors or
nominees.
Position(s) with the Company and
Principal Occupation
Name Age During the Past Five Years
------------------- -------- --------------------------------------------------
Brendan J. McGill 39 Mr. McGill has served as the Company's
Senior Vice President, Treasurer and
Chief Financial Officer since February
2000 and joined the Bank in September
1999 as Senior Vice President, Chief
Financial Officer and Treasurer. Prior
thereto, Mr. McGill was an auditor with
the accounting firm of Deloitte & Touche
LLP, specializing in financial
institutions.
Adrian D. Gordon 36 Mr. Gordon has served as Senior Vice
President/Chief Information Officer for
the Company and the Bank since January
2006. Mr. Gordon joined the Bank in 1995
serving as Loan Servicing Manager/Data
Information Coordinator until 1997, as
Information Systems Manager from 1997
until 1999, as Assistant Vice President
from 1999 until 2000 and as Vice
President from 2000 until January 2006.
Stephen J. Kopenhaver 45 Mr. Kopenhaver has served as Senior Vice
President and Chief Lending Officer for
the Company and the Bank since December
2006. Mr. Kopenhaver was Senior Vice
President/Commercial Services for the
Company and the Bank from January 2006
to December 2006. Mr. Kopenhauer joined
the Bank in 2006 and has 22 years of
commercial banking experience.
Sheri Strouse 44 Ms. Strouse has served as Senior Vice
President and Branch Administrator for
the Company and the Bank since January
2006. Ms. Strouse previously served as
Vice President of the Bank from 2000
until January 2006 and has been with the
Bank since 1997.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
10% of the common stock to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and the NASDAQ Stock Market.
Officers, directors and greater than 10% stockholders are required by regulation
to furnish the Company with copies of all Section 16(a) forms they file. The
Company knows of no person who owns 10% or more of the common stock. Based
solely on review of the copies of such forms furnished to the Company, the
Company believes that during the year ended September 30, 2007, all Section
16(a) filing requirements applicable to its executive officers and directors
were met, except that James Rittenhouse and Ronald Geib each filed a form late
during the fiscal year.
7
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the common
stock as of the record date, and certain other information with respect to (i)
the only persons or entities, including any "group" as that term is used in
Section 13(d)(3) of the Exchange Act, who or which was known to the Company to
be the beneficial owner of more than 5% of the issued and outstanding common
stock on the record date, (ii) each director and nominee for director of the
Company, (iii) certain named executive officers of the Company, and (iv) all
directors, nominees for director and executive officers of the Company as a
group.
Amount and Nature
Name of Beneficial of Beneficial
Owner or Number of Ownership as of Percent of
Persons in Group December 12, 2007(1)(2) Common Stock
---------------- ----------------------- ------------
Harleysville Savings Financial 204,477 (3) 5.5%
Corporation Employee Stock
Ownership Pension Plan
271 Main Street
Harleysville, Pennsylvania 19438
First Manhattan Company 264,500 (4) 7.1
437 Madison Avenue
New York, New York 10022
Directors:
Sanford L. Alderfer 13,786 (5)(6) *
Philip A. Clemens 44,516 (6)(7) 1.2
Mark R. Cummins 129,164 (8) 3.5
David J. Friesen 43,423 (9) 1.2
Ronald B. Geib 109,884 (10) 2.9
Charlotte A. Hunsberger 2,896 (11) *
George W. Meschter 53,919 (6)(12) 1.4
Edward J. Molnar 103,850 (13) 2.8
James L. Rittenhouse 3,488 (14) *
Named Executive Officers:
Brendan J. McGill 35,129 (15) *
Adrian D. Gordon 12,881 (16) *
Stephen J. Kopenhaver 1,000 *
Sheri Strouse 11,688 (17) *
All directors and executive 564,634 (18) 14.8
officers as a group (13 persons)
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*Less than 1% of the outstanding common stock.
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. Under regulations promulgated
pursuant to the Exchange Act, shares of common stock are deemed to be
beneficially owned by a person if he or she directly or indirectly has or
shares (i) voting power, which includes the power to vote or to direct the
voting of the shares, or (ii) investment power, which includes the power
to dispose or to direct the disposition of the shares. Unless otherwise
indicated, the named beneficial owner has sole voting and dispositive
power with respect to the shares.
(2) Under applicable regulations, a person is deemed to have beneficial
ownership of any shares of common stock which may be acquired within 60
days of the record date pursuant to the exercise of outstanding stock
options.
8
Shares of common stock which are subject to stock options are deemed to be
outstanding for the purpose of computing the percentage of outstanding
common stock owned by such person or group but not deemed outstanding for
the purpose of computing the percentage of common stock owned by any other
person or group.
(3) Includes 204,477 shares held in the Company's Employee Stock Ownership
Pension Plan ("ESOP") for the account of employees who may direct the
voting of such shares.
(4) Pursuant to filings under the Exchange Act, includes 245,521 shares which
First Manhattan Company has sole voting and dispositive power and 6,666
shares which it has shared dispositive and voting power.
(5) Includes 3,927 shares held jointly with Mr. Alderfer's wife, and 7,776
shares held in the Sanford Alderfer Auction Company, Inc. Profit Sharing
Plan, which Mr. Alderfer is a trustee. Also includes 2,083 shares which
may be acquired within 60 days of the record date pursuant to vested stock
options.
(6) Does not include the shares held in the ESOP as to which Messrs. Alderfer,
Clemens, Cummins and Meschter serve as trustees and disclaim beneficial
ownership.
(7) Includes 2,303 shares held by Mr. Clemens' wife and 10,917 shares held by
Mr. Clemens' daughters.
(8) Includes 3,333 shares held jointly with Mr. Cummins' wife and 123,748
shares owned by the Harleysville Insurance Companies of which Mr. Cummins
is the Executive Vice President, Chief Investment Officer and Treasurer,
and as such, Mr. Cummins has the power to direct the voting and
disposition of these shares. Mr. Cummins disclaims beneficial ownership of
these 123,748 shares. Also includes 2,083 shares which may be acquired
within 60 days of the record date pursuant to vested stock options.
(9) Includes 17,246 shares held jointly with Mr. Friesen's wife and 6,940
shares held solely by Mr. Friesen's wife.
(10) Includes 68,017 shares held by Mr. Geib under the ESOP, 3 shares held by
Mr. Geib's children and 20,500 shares which may be acquired within 60 days
of the record date pursuant to vested stock options.
(11) Includes 2,471 shares held jointly with Ms. Hunsberger's husband and 425
shares which may be acquired within 60 days of the record date pursuant to
vested stock options.
(12) Includes 12,741 shares owned by Meschter Insurance Group of which Mr.
Meschter is President, 7,640 shares held in a trust which Mr. Meschter is
trustee, 1,495 shares held by Mr. Meschter's wife as custodian for their
child and 2,500 shares which may be acquired within 60 days of the record
date pursuant to vested stock options.
(13) Includes 37,484 shares held by Mr. Molnar's wife and 12,833 shares which
may be acquired within 60 days of the record date pursuant to vested stock
options.
(14) Includes 1,272, shares held by Mr. Rittenhouse's children and 425 shares
which may be acquired within 60 days of the record date pursuant to vested
stock options.
(15) Includes 1,475 shares held by Mr. McGill under the ESOP, 2,437 shares held
by Mr. McGill's wife and 27,083 shares which may be acquired within 60
days of the record date pursuant to vested stock options.
(16) Includes 1,995 shares held jointly with Mr. Gordon's wife, 2,913 shares
held by Mr. Gordon in the ESOP and 7,150 shares which may be acquired
within 60 days of the record date pursuant to vested stock options.
(17) Includes 858 shares held jointly with Ms. Strouse's husband, 1,530 shares
held by Ms. Strouse in the ESOP and 9,300 shares which may be acquired
within 60 days of the record date pursuant to vested stock options.
(18) Includes 84,382 shares subject to outstanding stock options which are
exercisable within 60 days of the record date and 73,935 shares held in
the ESOP for the account of all executive officers and directors as a
group.
9
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation Discussion and Analysis
Overview of Compensation Philosophy. Our compensation philosophy is to
provide compensation to our executive officers that is competitive in the
marketplace in order to attract, retain, motivate and energize qualified and
experienced officers. The compensation of our executive officers, including the
various components of such compensation, is determined by our Compensation and
Human Resources Committee. The committee consists solely of non-employee
directors who meet all applicable requirements to be independent of management.
When setting the compensation of our executive officers, the committee
generally targets compensation which is comparable with our peer group with
respect to each of our components of compensation. The compensation we provide
to our executive officers primarily consists of the following:
o annual base salary,
o incentive cash bonuses,
o stock options, and
o other forms of cash and equity-based compensation.
Since our mutual to stock conversion and initial public stock offering in
1987, we have implemented various stock option plans in order to more closely
align the interests of our officers and directors with our stockholders. Each of
these plans were approved by our stockholders. Grants of stock options are
generally made to our executive officers annually and to our directors every
five years.
We also provide all of our employees, including our executive officers,
with tax-qualified retirement benefits through our Employee Stock Ownership
Pension Plan (the "ESOP") and a 401(k) plan. In addition, all of our employees
participate in our Profit Sharing Incentive Plan, which provides annual cash
bonuses based upon annual performance goals. We also offer various benefits to
all of our employees, including our executive officers, on a non-discriminatory
basis, including group policies for medical, dental, life, disability and
accidental death insurance.
Independent Compensation Committee. The committee, composed entirely of
independent directors, administers the Company's executive compensation program.
The members of the committee, Messrs. Alderfer, Clemens, Cummins and Meschter,
meet all of the independence requirements under applicable laws and regulations,
including the listing requirements of the NASDAQ Stock Market. None of the
members is a current or former officer or employee of the Company or any of its
subsidiaries or has any separate material business relationship with the
Company. The role of the committee is to oversee the Company's compensation and
benefit plans and policies, administer its stock benefit plans (including
reviewing and approving stock option grants to executive officers) and review
and approve annually all compensation decisions relating to executive officers,
including those for the President and Chief Executive Officer, the Chief
Financial Officer and the other executive officers named in the Summary
Compensation Table (which we refer to as the "named executive officers").
The committee is committed to high standards of corporate governance, as
embraced most notably in the Sarbanes-Oxley Act of 2002 and the various
regulations implementing the letter and spirit of that statute. The committee's
Charter reflects the foregoing responsibilities and commitment, and the
committee and the board of directors periodically review and revise the Charter.
The full text of the compensation committee Charter is available on our website
at www.harleysvillesavings.com. The committee's membership is determined by the
Board. The committee held four meetings in fiscal 2007.
Even prior to the recent intensified interest in corporate governance, the
committee adhered to sound governance principles and practices. The committee
has typically exercised exclusive authority over the compensation paid to
Company executives, including not only the amount of awards granted to
executives under our stock option plans, but
10
also on the issues of executive salaries, bonuses, retirement and severance
arrangements, and other benefits. As a matter of philosophy, the board of
directors and the committee have been committed to creating a compensatory
structure for executives that is simple and readily comprehensible to investors.
The types of compensation we offer our executives remain within the traditional
categories: salary, short and long-term incentive compensation (cash bonuses and
stock option awards), standard executive benefits, and retirement benefits. The
Company does not provide executives with excessive or exotic perquisites.
General Compensation Philosophy. The committee believes that compensation
paid to executive officers should be closely aligned with the performance of the
Company on both a short-term and long-term basis, and that such compensation
should assist the Company in attracting and retaining key executives critical to
its long-term success. The compensation of executive officers is structured to
ensure that a significant portion of an executive's compensation will be
directly related to the Company's corporate performance and other factors that
directly and indirectly influence shareholder value. To that end, total
compensation of the executive officers consists of the following:
o Salaries;
o Annual cash incentive bonuses;
o Long-term incentive compensation consisting of stock options; and
o Cash and equity based benefits available on a broad basis to all
employees.
The overriding philosophy in setting corporate goals is to ensure that the
interests of senior management are aligned with the interests of stockholders.
The committee believes that, over time, the financial performance of the Company
is reflected in the value of its stock and that internal results, such as
financial performance, and external results, such as stock price, ultimately
move in a complementary fashion. In particular, the committee believes that the
most critical performance measure which provides an accurate gauge of
management's success in implementing the Company's strategy is return on average
equity. The executive officers' annual discretionary bonus is tied to financial
performance (internal results), while other elements, specifically stock options
are tied to stock performance (external results). Under both considerations,
financial performance and stock performance, the emphasis is on steady but
consistent progress over time, achieved through careful execution of a
well-designed business strategy.
The financial performance of the Company on a period-to-period basis is
principally reflected in salary adjustments and annual cash bonuses. The
committee uses these elements of compensation to incentivize executives to
achieve continuous, near-term results. Executives' stock-based compensation, on
the other hand, is focused on achievement of long-term success. As is true of
most publicly traded entities, the Company's stock performance fluctuates over
time, typically more so than does our financial performance. However, over time,
the committee believes that the return to stockholders investing in our stock,
including dividend payout, is a good indicator of corporate performance.
Stock-based awards are thus a way to link executive compensation to long-term
performance.
In fiscal 2007, the Company granted stock options to employees and
executive officers which vest over five years. This structure reinforces the
executive's incentive to seek long-term growth in stock value through strong
corporate performance. In addition, the Company has never re-priced stock
options downward or exchanged new lower priced options for outstanding higher
priced options.
In determining the overall amounts and types of executive compensation,
the committee weighs not only corporate performance measures but personal
factors as well, including commitment, leadership, teamwork and community
involvement. We also consider executive compensation practices of our
competitors and peers. It is the intent of the committee that generally salaries
be set at or about the average of a peer group of bank and thrift companies
based on available survey data prepared by America's Community Bankers and SNL
Financial. The peer group consists of 420 community bank and thrifts throughout
the country. In addition, for setting the salary of each executive officer, the
committee looks at specified peer groups including a group of banks and thrifts
with assets between $500 million to $1 billion.
11
Role of Executive Officers and Management. The Company's Chief Executive
Officer provides recommendations to the committee on matters of compensation
philosophy, plan design and the general guidelines for executive officer
compensation. These recommendations are then considered by the committee.
Tax Deductibility of Pay. Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), places a limit of $1.0 million on the amount of
compensation that the Company may deduct in any one year with respect to each of
its five most highly paid executive officers. There is an exception to the $1.0
million limitation for performance-based compensation meeting certain
requirements. Stock options are performance-based compensation meeting those
requirements and, as such, are fully deductible.
To date, Section 162(m) has not affected the ability of the Company to
deduct the expense of the executive compensation paid.
Salaries. The salaries of the executive officers are reviewed on an annual
basis, as well as at the time of a promotion or other change in
responsibilities. Increases in salary are based on an evaluation of the
individual's performance and level of pay compared to the peer group. Salary
increases normally take effect in January of each year. In setting the 2007
compensation for the President and Chief Executive Officer, the Committee
considered his performance during fiscal 2006 (Mr. Geib served as President
during fiscal 2006 and assumed the additional position of Chief Executive
Officer in January 2007). Specifically, the committee looked at the Company's
return on average equity of 8.76% for the year ended September 30, 2006, as well
as the Company's net income of $4.2 million for the year ended September 30,
2006.
In setting compensation increases for officers, the committee also
considered the following factors in setting compensation:
o qualifications and experience of the officer;
o compensation paid to other persons employed by the Company;
o compensation paid to persons having similar duties and
responsibilities in other public companies;
o the size of the Company and the complexity of its operations;
o the financial condition, including income of the Company and the
officer's contribution thereto; and
o the value of benefits provided to the officer as well as
prerequisites.
For fiscal 2007, salaries for the named executive officers were increased
between 12.60% and 23.89%, with Mr. Geib's salary increasing 23.89% to $221,250
in light of the change in his position to Chief Executive Officer, and the other
named executive officers salary increasing by 12.60% to 22.06% up to $95,230 to
$142,250. Base salary is considered in conjunction with the short-term annual
bonus component of the Company's executive compensation program.
Bonuses. The Company maintains the Profit Sharing Incentive Plan which is
designed to provide cash incentive payments to the Company's officers and
employees when the Company exceeds certain performance criteria. All of the
Company's employees participate in the profit sharing plan, including the named
executive officers. The profit sharing plan provides that the Company will make
allocations to a bonus pool provided three performance criteria are satisfied:
(1) the Company's return on total stockholders' equity shall exceed an
annualized rate of 7.0 percent (the "target return"), (2) the Company's one year
gap position under the asset liability management policy may not exceed the
guidelines established by the board of directors, and (3) the percentage of the
Company's loans which are non-performing may not exceed 0.5 percent of its total
assets. If these criteria are satisfied, a percentage of the Company's profit in
excess of the target return is allocated to a bonus pool. The percentage of the
Company's profit in excess of the target return which is allocated to the bonus
pool ranges from 50 percent of the first fifteen basis points by which the
Company's profit exceeds the target return to ten percent of any profit greater
than 1.50 percent in excess of the target return. Awards from the
12
bonus pool are based on each participant's base earnings as a percentage of the
total base earnings of all participants, and a weighing factor which recognizes
that the Company's senior management, middle management and other employees have
varying levels of responsibility for the Company's overall performance. There is
a minimum bonus of 1.92 percent of compensation for non-executive officers.
There were no bonuses paid to executive officers under the profit sharing plan
for the year ended September 30, 2007. The total amount of incentive payments
made to all employees (112 people) who received payments pursuant to the profit
sharing plan for the year ended September 30, 2007, was $64,780.
Long-Term Compensation. The committee believes that, from a motivational
standpoint, the use of stock-based compensation has contributed to the Company's
financial performance, eliciting maximum effort and dedication from our
executive officers. Long-term incentive compensation primarily consists of
grants of stock options under the Company's stock option plans. These grants are
designed to provide incentives for long-term positive performance by the
executive and other senior officers and to align their financial interests with
those of the Company's stockholders by providing the opportunity to participate
in any appreciation in the stock price of the Company's common stock which may
occur after the date of grant of stock options.
Under the stock option plans, the committee has discretion in determining
grants of stock options to executive officers, including the timing, amounts and
types of awards. In the case of individual executives, our award decisions are
based in part on corporate performance. In addition, for fiscal 2007, the amount
of such grants were based, in part, on the officer's position within the
organization and an assessment of the officer's performance during the fiscal
year.
The exercisability and vesting of options depend upon the executive
officer continuing to render services to the Company. All options granted under
the Company's stock option plans must have an exercise price at least equal to
the market value of the common stock on the date of grant. Options may be
exercised only for a limited period of time after the optionee's departure from
the Company in most cases.
Our long-term incentive compensation has primarily consisted of stock
options. We emphasized stock options primarily for two reasons. First, prior to
the adoption of Financial Accounting Standards ("FAS") No. 123(R), the granting
and vesting of stock options did not result in any financial statement expenses,
whereas restricted stock awards had to be expensed over the vesting period.
Second, because the exercise price of all of our stock options equaled the fair
market value of our common stock on the date of grant, our executive officers
only benefit from stock options if the market value of our common stock
increases after the date of grant. By comparison, restricted stock awards have
some value to the recipients of the awards even if the market value of our stock
declines after the date of grant. With the adoption of FAS No. 123(R), all stock
options are now required to be expensed over the applicable vesting period. In
addition, an increasing number of companies are using restricted stock awards,
or a combination of restricted stock awards and stock options. The Company will
consider adopting or amending its stock option plans to permit the award of
restricted stock in the future.
Stock Options. The committee granted stock options to each named executive
officer in fiscal 2007. Executive officers were granted stock options with an
exercise price equal to the fair market value of the Company's common stock on
the date of grant. Accordingly, those stock options will have value only if the
market price of the common stock increases after that date. In determining the
size of stock option grants to executive officers, the committee considers
similar awards to individuals being granted comparable values in our peer group
as well as the Company's financial performance against the strategic plan as
attributed to executive officers.
The named executive officers were awarded the following number of stock
options: Mr. Geib, 10,000 shares; Mr. Molnar, no shares; Mr. McGill, 10,000
shares; Mr. Gordon, 3,000 shares; Mr. Kopenhaver, 3,000 shares; and Ms. Strouse,
3,000 shares. The options vest five years from the date of grant.
Stock Ownership Guidelines. The Company has not established any formal
policies or guidelines addressing expected levels of stock ownership by the
named executive officers or for other executive officers. However, this matter
remains under consideration.
Additional Components of Executive Compensation. The Company and the Bank
have also entered into an employment agreement with Mr Geib. The purpose of the
employment agreement is to retain for the benefit of the Company and Bank the
talents of highly skilled officers who are integral to the development and
implementation of the
13
Company's business. The agreement, as discussed below, provide for termination
benefits in the event of Mr. Geib's termination or in the event of the
occurrence of certain events. The severance payments of the agreement are
intended to align the executive officers' and the stockholders' interests by
enabling executive officers to consider corporate transactions that are in the
best interests of the stockholders and other constituents of the Company without
undue concern over whether the transactions may jeopardize the executive
officers' own employment or impose financial hardship on him or her. The grounds
under which severance payments are triggered in the employment agreement is
similar to or the same as those included in many employment agreements for
senior executive officers of comparable financial institutions.
Employment Agreements
In October, 2006, the Company and the Bank entered into an amended and
restated employment agreement with Ronald B. Geib in order to update Mr. Geib's
existing employment agreement to comply with Section 409A of the Internal
Revenue Code and the proposed regulations thereunder relating to deferred
compensation arrangements and to reflect Mr. Geib's new position as President
and Chief Executive Officer of the Company and the Bank.
The agreement provides for Mr. Geib to serve in his current position as
President and Chief Operating Officer of the Company and the Bank through
January 23, 2007 and to serve as President and Chief Executive Officer effective
January 24, 2007, at a minimum base salary of $167,500 per year. The initial
term of the agreement is five years from May 1, 2006, which term will extend
automatically on May 1st of each year to continue for a five year term unless
the board of directors of the Company, the Bank or Mr. Geib gives advance notice
not to extend the term.
The agreement is terminable with or without cause by the Company and the
Bank. Mr. Geib shall have no right to compensation or other benefits pursuant to
the agreement for any period after voluntary termination or termination by the
Company and the Bank for cause, retirement or death. If Mr. Geib's employment is
terminated due to disability, he will be entitled to a declining percentage of
his base salary for the remaining term of the agreement.
If prior to a change in control of the Company or the Bank either (i) Mr.
Geib terminates his employment because of failure of the Company and the Bank to
comply with any material provision of the agreement or (ii) the agreement is
terminated by the Company and the Bank other than for cause, disability,
retirement or death, then Mr. Geib will be entitled to a lump sum cash severance
amount equal to his base salary for the remaining term of the agreement or, if
greater, for 2.99 years, with such base salary to be discounted to present
value. If Mr. Geib's employment is terminated concurrently with or subsequent to
a change in control of the Company or the Bank, as defined, by either (a) the
Company or the Bank for other than cause, disability, retirement or death or (b)
Mr. Geib as a result of certain adverse actions by the Company or the Bank, then
Mr. Geib will be entitled to a cash severance amount equal to three times his
annual compensation. Annual compensation is defined as the average aggregate
annual compensation paid to Mr. Geib and includible in his gross income for
federal income tax purposes during the five calendar years preceding the year in
which the date of termination occurs, and such compensation includes among other
things salary, bonuses and income related to the exercise of stock options. In
addition, in any of the termination events set forth in this paragraph, Mr. Geib
will also be entitled to the continuation of benefits similar to those he is
receiving at the time of such termination for periods specified in the agreement
or until he obtains full-time employment with another employer providing similar
benefits, whichever occurs first.
The agreement also provides that in the event that any of the payments to
be made thereunder or otherwise upon termination of employment are deemed to
constitute "parachute payments" within the meaning of Section 280G of the Code,
the Company shall reimburse Mr. Geib for the 20% excise tax owed by Mr. Geib and
shall also pay Mr. Geib an additional amount such that after payment of all
federal, state and local income and employment related taxes and additional
excise tax on the reimbursement, Mr. Geib will be in the same after-tax position
he would have been in if the excise tax had not been imposed. Parachute payments
generally are payments in excess of three times the recipient's average annual
compensation from the employer includible in the recipient's gross income during
the most recent five taxable years ending before the year in which the change in
control of the employer occurs ("base amount"). Recipients of parachute payments
are subject to a 20% excise tax on the amount by which such payments exceed the
base amount, in addition to regular income taxes, and payments in excess of the
base amount are not deductible by the employer as compensation expense for
federal income tax purposes.
14
The Bank had previously entered into five-year employment agreements with
Edward J. Molnar and Marian Bickerstaff. The agreement with Mr. Molnar
terminated upon his retirement as Chief Executive Officer on January 24, 2007
and the agreement with Mrs. Bickerstaff terminated upon her retirement as an
executive officer on December 31, 2006.
For a description of potential payments under the agreement in the event
of a termination of Mr. Geib's employment, see "- Potential Payments Upon
Termination of Employment or a Change in Control."
Employee Stock Ownership Plan and 401(k) Plan
We also provide all of our employees, including our executive officers,
with tax-qualified retirement benefits through our Employee Stock Ownership
Pension Plan (the "ESOP") and a 401(k) plan. See "Employee Stock Ownership
Pension Plan" and "401(k) Plan."
Compensation Committee Interlocks and Insider Participation
No member of the Compensation and Human Resources Committee has served as
an officer or employee of the Company at any time. None of the Company's
executive officers serve as a member of the compensation committee of any other
for-profit company that has an executive officer serving as a member of the
Company's board of directors. None of the Company's executive officers serve as
a member of the board of directors of any other company that has an executive
officer serving as a member the Company's Compensation and Human Resources
Committee.
Report of the Compensation Committee
We have reviewed and discussed with management certain Compensation
Discussion and Analysis provisions to be included in the Company's Proxy
Statement for the 2007 Annual Meeting of Stockholders filed with the SEC
pursuant to Section 14(a) of the Securities Exchange Act of 1934. Based on the
reviews and discussions referred to above, we recommend to the Board of
Directors that the Compensation Discussion and Analysis referred to above be
included in the Company's Proxy Statement.
Compensation and Human Resources Committee
Sanford L. Alderfer
Philip A. Clemens
Mark R. Cummins
George W. Meschter
15
Executive Compensation
The following table sets forth a summary of certain information concerning
the compensation awarded to or paid by the Company or its subsidiaries for
services rendered in all capacities during the last fiscal year to our principal
executive officer (including persons who served as principal executive officer
for any part of the fiscal year) and our principal financial officer as well as
our three other highest compensated executive officers. We refer to these
individuals throughout this proxy statement as the "named executive officers."
Summary Compensation Table
Non- Change in
Equity Pension Value
Incentive and Nonquali-
Plan fied Deferred All Other
Name and Principal Fiscal Stock Option Compen- Compensation Compen-
Position Year Salary(1) Bonus Awards Awards(2) sation(3) Earnings sation(4) Total
--------------------- ------- ---------- --------- --------- ----------- ----------- ------------- ---------- ----------
Ronald B. Geib(5) 2007 $221,250 $ -- $ -- $ 8,284 $ -- $ -- $ 33,144 $262,678
President and Chief
Executive Officer
Edward J. Molnar(5) 2007 102,955 -- -- -- -- -- 41,422 144,377
Chairman of the Board
Brendan J. McGill 2007 145,250 -- -- 7,618 -- -- 12,218 165,086
Senior Vice
President and
Chief Financial
Officer
Adrian D. Gordon 2007 101,250 -- -- 8,046 -- -- 8,420 117,716
Senior Vice
President/Chief
Information Officer
Stephen J. Kopenhaver 2007 136,250 -- -- 8,046 -- -- 1,087 145,383
Senior Vice President
and Chief Lending
Officer
Sheri Strouse 2007 95,230 -- -- 8,046 -- -- 7,651 110,927
Senior Vice
President/Branch
Administrator
------------------
(1) Includes amounts deferred and contributed to the 401(k) Plan by the named
executive officer.
(2) Reflects the amount expensed in accordance with Statement of Financial
Accounting Standards No. 123(R) during fiscal 2007 with respect to awards
of stock options with respect to each of the named executive officers. For
a discussion of the assumptions used to establish the valuation of the
stock options, reference is made to Note 2 of the Notes to the
Consolidated Financial Statements of the Company included in the Company's
2007 Annual Report to Stockholders. Additional information is also
included in the table entitled "Grants of Plan-Based Awards."
(3) No cash bonuses were paid to executive officers under the Company's Profit
Sharing Incentive Plan in fiscal 2007.
(4) Includes amounts paid by the Company to the accounts of Messrs. Geib,
Molnar, McGill, Gordon and Kopenhaver and Ms. Strouse pursuant to the
401(k) Plan of $6,638, $1,872, $4,358, $3,038, $1,087 and $2,857,
respectively, and allocations under the ESOP of $10,800, $14,761, $7,860,
$5,382, $0 and $4,794, respectively. Also includes the payment of $13,800
and $24,300 in directors fees to Messrs Geib and Molnar, respectively, and
perquisites and other benefits in the amount of $1,906 and $481 for
Messrs. Geib and Molnar, respectively, for the cost of the personal use of
a Company-provided automobile in fiscal 2007.
(5) Mr. Molnar served as chief executive officer until his retirement on
January 24, 2007.
16
Equity Compensation Plans
The following table sets forth information concerning grants of awards
pursuant to the Company's Profit Sharing Incentive Plan and stock option plans
made to the named executive officers during the year ended September 30, 2007.
There were no equity incentive awards granted during the year ended September
30, 2007.
Grants of Plan-Based Awards for the Year Ended September 30, 2007
All Other
Option
Estimated Possible Payouts Awards:
Under Non-Equity Number of Exercise or Grant Date
Incentive Plan Awards(1) Securities Base Price Fair Value
----------------------------- Underlying of Option of Option
Name Grant Date Threshold Target Maximum Options(2) Awards(3) Awards(4)
--------------------- ---------- --------- ------ -------- ----------- ----------- ----------
Ronald B. Geib 1/3/2007 $ -- $ 44,200 $ 66,375 10,000 $ 17.68 $ 28,100
Edward J. Molnar -- -- -- -- -- -- --
Brendan J. McGill 1/3/2007 -- 29,050 43,575 10,000 17.68 28,100
Adrian D. Gordon 1/3/2007 -- 20,250 30,375 3,000 17.68 8,430
Stephen J. Kopenhaver 1/3/2007 -- 27,250 40,875 3,000 17.68 8,430
Sheri Strouse 1/3/2007 -- 19,046 28,569 3,000 17.68 8,430
---------
(1) No awards were paid under the Profit Sharing Incentive Plan in fiscal
2007. For a3 description of the plan, see "-Compensation Discussion and
Analysis - Bonuses."
(2) The stock options vest on January 3, 2012, which is five years from the
date of grant.
(3) Based upon the fair market value of a share of Company common stock on the
date of grant.
(4) The fair value of the stock options granted is computed in accordance with
Statement of Financial Accounting Standards No. 123(R).
17
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning outstanding equity
awards held by each named executive officer as of September 30, 2007. There were
no equity incentive awards outstanding as of September 30, 2007.
Option Awards
---------------------------------------------------------------------
Number of Securities Underlying
Unexercised Options
---------------------------------
Option Exercise Option Expiration
Name Exercisable(1) Unexercisable Price(2) Date
------------------- -------------- ------------- --------------- -----------------
Ronald B. Geib 2,333 $ 8.70 1/2/2011
2,500 10.60 1/2/2012
5,000 13.13 1/1/2013
5,333 17.16 1/1/2014
5,333 17.79 1/1/2015
4,000 (3) 18.00 1/1/2016
10,000 (3) 17.68 1/3/2017
Edward J. Molnar 7,333 17.79 1/1/2015
5,500 18.00 1/1/2016
Brendan J. McGill 13,167 9.19 9/14/2009
417 8.10 1/3/2010
1,833 10.60 1/2/2012
3,667 13.13 1/1/2013
4,000 17.16 1/1/2014
4,000 17.79 1/1/2015
3,000 (3) 18.00 1/1/2016
10,000 (3) 17.68 1/3/2017
Adrian D. Gordon 1,667 9.60 6/1/2009
550 8.70 1/2/2011
583 10.60 1/2/2012
1,167 13.13 1/1/2013
1,167 17.16 1/1/2014
1,167 17.79 1/1/2015
850 18.00 1/1/2016
10,000 (3) 17.45 1/26/2016
3,000 (3) 17.68 1/3/2017
Stephen J. Kopenhaver 10,000 (3) 17.45 1/26/2016
Sheri Strouse 4,583 12.80 1/2/2008
467 8.70 1/2/2011
500 10.60 1/2/2012
1,000 13.13 1/1/2013
1,000 17.16 1/1/2014
1,000 17.79 1/1/2015
750 18.00 1/1/2016
10,000 (3) 17.45 1/26/2016
3,000 (3) 17.68 1/3/2017
----------------
(1) Except as otherwise noted, the stock options were exercisable on September
30, 2007.
(2) Based upon the fair market value on the date of grant.
(3) The stock options vest five years from the date of grant.
18
Option Exercises and Stock Vested
The following table sets forth certain information with respect to stock
options exercised by the named executive officers during the year ended
September 30, 2007. There were no stock awards that vested during the year ended
September 30, 2007.
Option Awards
-----------------------------------------------------------
Number of Shares Acquired
Name On Exercise Value Realized On Exercise
------------------- ------------------------------ --------------------------
Ronald B. Geib -- $ --
Edward J. Molnar -- --
Brendan J. McGill -- --
Adrian D. Gordon 833 8,655
Stephen J. Kopenhaver -- --
Sheri Strouse -- --
Employment Agreements
The Company and the Bank have entered into an employment agreement with
Mr. Geib pursuant to which the Company and the Bank agreed to employ Mr. Geib as
President and Chief Executive Officer. For additional information, see "-
Compensation Discussion and Analysis - Employment Agreements."
19
Potential Payments upon Termination of Employment or a Change in Control
Ronald B. Geib. The following table shows the potential payments to Ronald
B. Geib, our President and Chief Executive Officer, upon an assumed termination
of employment or a change in control as of September 28, 2007.
Involuntary
Termination
Without Cause
or Termination
by the Executive
for Good Change in
Reason Absent a Control With
Voluntary Termination Change in Termination of Death or
Payments and Benefits Termination for Cause Control Employment Disability (k) Retirement
----------------------------------- ----------- --------- ---------------- --------------- -------------- ----------
Accrued vacation pay (a) $ 2,260 $ -- $ 2,260 $ 2,260 $ 2,260 $ 2,260
Severance payments and benefits:(b)
Cash severance(c) -- -- 901,622 495,704 728,500(k) --
Health insurance benefits (d) -- -- 40,366 40,366 -- --
Life insurance benefits (e) -- -- 3,079 3,079 -- --
Automobile expenses (f) -- -- 5,718 5,718 -- --
ss.280G tax gross-up (g) -- -- -- 185,336 -- --
Equity awards: (h)
Unvested stock options (i) -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total payments and benefits (j) $ 2,260 $ -- $ 953,045 $ 732,463 $ 730,760 $ 2,260
========== ========== ========== ========== ========== ==========
-------------------
(a) Employees are credited with vacation time each calendar year based on
position and tenure. If an employee voluntarily resigns, dies or retires
during the year, he or she is paid for a portion of the current year's
unused vacation time. A payment also would be made if employment was
involuntarily terminated without cause or by an executive for good reason.
If an employee's employment is terminated for cause or if an employee does
not give the Bank at least 14 days advance notice of his or her voluntary
termination, no payment will be made for any unused vacation time.
Employees may carryover a maximum of five vacation days to the following
year. The amounts shown represent Mr. Geib's accrued but unused vacation
time as of September 28, 2007.
(b) These severance payments and benefits are payable if Mr. Geib's employment
is terminated prior to a change in control either (i) by the Company or
the Bank for any reason other than cause, disability, retirement or death
or (ii) by Mr. Geib if the Company or the Bank takes certain adverse
actions (a "good reason" termination). The severance payments and benefits
are also payable if Mr. Geib's employment is terminated during the term of
his employment agreement following a change in control.
(c) The amount in the Involuntary Termination column represents a lump sum
payment equal to Mr. Geib's current base salary from the Company and the
Bank payable for the remaining term of his employment agreement,
discounted to present value, while the amount in the Change in Control
column represents a lump sum payment equal to 3.00 times his average
taxable income from the Company and the Bank for the five years preceding
the year in which the date of termination occurs.
(d) In the Involuntary Termination and Change in Control columns, represents
the estimated cost of providing continued medical coverage for three
years. In each case, the benefits will be discontinued if Mr. Geib obtains
full-time employment with a subsequent employer which provides
substantially similar benefits. The estimated costs assume the current
insurance premiums or costs increase by 10% on January 1 in each of 2008,
2009 and 2010. The estimated costs have not been discounted to present
value.
(e) In the Involuntary Termination and Change in Control columns, represents
the estimated cost of providing continued life insurance coverage for
three years. In each case, the benefits will be discontinued if Mr. Geib
obtains full-time employment with a subsequent employer which provides
substantially similar benefits. The estimated costs assume the current
insurance premiums increase by 10% on January 1 in each of 2008, 2009 and
2010. The estimated costs have not been discounted to present value.
20
(f) Represents the estimated costs of paying automobile leases and related
expenses for the remaining term of Mr. Geib's employment agreement, based
on the amounts paid in 2006. The amounts have not been discounted to
present value.
(g) The payments and benefits in the Change in Control column are subject to a
20% excise tax to the extent the parachute amounts associated therewith
under Section 280G of the Code equal or exceed three times Mr. Geib's
average taxable income for the five years ended December 31, 2006. His
payments exceed this threshold. If a change in control was to occur, the
Company believes that the Section 280G gross-up payments could be reduced
or even eliminated if the timing of the change in control permitted tax
planning to be done. However, if the excise tax cannot be avoided, then
the Company has agreed in its employment agreement with Mr. Geib to pay
the 20% excise tax and the additional federal, state and local income
taxes and excise taxes on such reimbursement in order to place him in the
same after-tax position he would have been in if the excise tax had not
been imposed. The estimated cost of this tax gross-up payment is shown in
the table.
(h) Of the 20,499 vested stock options held by Mr. Geib at September 28, 2007,
options for 9,833 shares had an exercise price below the September 28,
2007 closing sales price of $13.71 per share, and these in the money
options had an aggregate value of $22,438 based on such closing sales
price. Such value can be obtained in the event of termination due to
voluntary termination, death, disability, retirement or cause only if Mr.
Geib actually exercises the vested options in the manner provided for by
the relevant option plan and subsequently sells the shares received for
$13.71 per share. In the event of a termination of employment, Mr. Geib
(or his estate in the event of death) will have the right to exercise
vested stock options for the period specified in his option grant
agreement. If the termination of employment occurs following a change in
control, Mr. Geib can exercise the vested stock options for the remainder
of the original ten-year term of the option.
(i) All 14,000 unvested stock options will become fully vested upon an
executive's death, disability or retirement after age 59 1/2 or upon a
change in control. Mr. Geib had not reached age 59 1/2 as of September 28,
2007. However, these unvested stock options have an exercise price higher
than the September 28, 2007 closing sales price of $13.71 per share.
(j) Does not include the value of the vested stock options shown in footnote
(h) above or the vested benefits to be paid under our tax-qualified 401(k)
plan and ESOP. Also does not include earned but unpaid salary and
reimbursable expenses.
(k) If the employment of Mr. Geib is terminated due to disability, he would
receive disability benefits pursuant to his employment agreement equal to
100% of his base salary for the first six months, 75% of his base salary
for the next 12 months, and thereafter he would receive disability
benefits pursuant to his employment agreement equal to 60% of his base
salary for the remaining term of his employment agreement, minus the
amounts payable under any disability insurance policy, workmen's
compensation provision or Social Security disability benefits. The amount
shown in the table reflects the total disability benefits for the
remaining term of the agreement, which amount has not been discounted to
present value. In addition, if the employment of Mr. Geib is terminated
due to death, his beneficiary or estate will receive life insurance
proceeds of $50,000.
21
Directors' Compensation
Directors of the Company received an annual fee of $6,000, plus $650 for
each regular board meeting attended during fiscal 2007. Directors of the
Company, with the exception of executive officers, received $325 and the
chairman of each committee received $650 for each committee meeting attended
during fiscal 2007. The chairman of the Audit Committee received $975 and each
member of the Audit Committee received $650 for each meeting attended in fiscal
2007.
The following table sets forth information concerning compensation paid or
accrued by the Company and its subsidiaries to each member of the board of
directors during the year ended September 30, 2007. Messrs. Geib and Molnar have
been omitted from the table as their compensation is fully reported in the
Summary Compensation Table above.
Change in
Pension
Value and
Fees Nonqualified
Earned or Non-Equity Deferred
Paid in Stock Option Incentive Plan Compensation All Other
Name Cash(1) Awards Awards(2) Compensation Earnings Compensation Total
------------------------ -------------- ------------- ------------- -------------- -------------- -------------- ------------
Sanford L. Alderfor $ 15,505 $ -- $ 1,908 $ -- $ -- $ -- $ 17,413
Philip A. Clemens 16,510 -- 1,908 -- -- -- 18,418
Mark R. Cummins 20,750 -- 1,908 -- -- -- 22,658
David J. Friesen 15,820 -- 1,908 -- -- -- 17,728
Charlotte A. Hunsberger 19,100 -- 1,908 -- -- -- 21,008
George W. Meschter 16,165 -- 1,908 -- -- -- 18,073
James L. Rittenhouse 18,460 -- 1,908 -- -- -- 20,368
---------------
(1) Include payment of directors' fees for service on the board of the Company
and the Bank. Also includes the payment of fees for attendance at meeting
of committees of the board that the director serves on as well as fees for
service as chairman of a board committee.
(2) Reflects the amount expensed in accordance with Statement of Financial
Accounting Standards No. 123(R) during fiscal 2007 with respect to the
grants of stock options. No stock options were granted to non-employee
directors in fiscal 2007. For a discussion of the assumptions used to
establish the valuation of the stock options, reference is made to Note 2
of the Notes to the Consolidated Financial Statements of the Company
included in the Company's 2007 Annual Report to Stockholders.
Employee Stock Ownership Pension Plan
The board of directors of the Company have adopted an Employee Stock
Ownership Pension Plan ("ESOP"). The trustees of the ESOP are Messrs. Alderfer,
Clemens, Cummins and Meschter. The trustees also serve as the administrators of
the ESOP. The trustees hold, invest, reinvest, manage, administer and distribute
the assets of the ESOP for the exclusive benefit of participants, retired
participants and their beneficiaries in accordance with the terms of the ESOP
and the Employee Stock Ownership Trust ("Trust") established pursuant to the
ESOP. All of the assets of the ESOP are held in the Trust, which is managed by
the trustees. The ESOP is subject to the participation, vesting, fiduciary
responsibility, reporting, and disclosure and claims procedure requirements of
ERISA. All officers and employees of the Company who work 1,000 hours or more in
a plan year, who have attained the age of 21 and have completed 12 months of
service may participate in the ESOP.
In general, the ESOP requires the Company to contribute to the Trust in
cash each year an amount which is not less than the amount required to enable
the Trust to discharge its current obligations. The Company may make additional
22
contributions in cash, shares of the common stock or other property, which shall
be valued at its fair market value, as the Company's board of directors may
determine.
Contributions of the Company in cash and other cash received by the Trust
will be applied to pay any current obligations of the Trust incurred for the
purchase of common stock, or may be applied to purchase additional shares of
common stock from current stockholders or from the Company. The investment
policy of the ESOP is to invest primarily in common stock of the Company;
however, the ESOP permits the investment of contributions to the ESOP into other
assets, including certificates of deposit and securities issued by the U.S.
government or its agencies.
The ESOP requires the Company to pay all costs of administering the ESOP
and any similar expenses of the trustees, excluding normal brokerage charges
which are included in the costs of stock purchased. All shares of common stock
which are allocated to participants' stock accounts shall be voted by the
trustees in accordance with instructions from the participants. All unallocated
shares of common stock held by the Trust or in a suspense account shall be voted
by the trustees.
Participation in the ESOP terminates as of the anniversary date coinciding
with or next following a participant's death, disability or retirement. Upon
termination of a participant's employment for any reason other than death,
disability or retirement, or upon a break in service, the participant shall have
vested rights in a portion of his or her stock and investment accounts based
upon the participant's years of credited service at his or her date of
termination. A participant is fully vested in his stock and investment accounts
after three years of plan participation.
Vested benefits under the ESOP will normally be distributed in a single
distribution as soon as possible following a participant's separation from
service. Distribution of benefits under the ESOP may be made in cash or in a
combination of shares of common stock and cash.
The Company's contributions to the ESOP are deductible by the Company to
the extent provided by the Code and the ESOP will not be subject to federal
income tax on its income and gain. A participant will not be taxed on
contributions made by the Company or earnings on such contributions until he
receives a distribution under the ESOP.
During fiscal 2007, the Company contributed $174,675 to the Trust which
was allocated to participants' accounts according to the terms of the plan. The
amounts allocated to executive officers under the ESOP in fiscal 2007 are
included in the Summary Compensation Table above.
401(k) Plan
The Company maintains the Harleysville Savings 401(k) Plan, a deferred
salary savings plan. All officers and employees working 1,000 hours or more in a
plan year, who have attained the age of 21 and have completed 12 months of
service, may participate in the 401(k) Plan on an optional basis. Under the
plan, participants may defer a portion of their salary by payroll deduction. The
Company or its subsidiaries make a matching contribution of 100% of the first 3%
of the participant's contribution. All contributions are invested via a plan
trust. The Company's matching contributions are vested at 100% after three years
of service. All contributions are invested via a plan trust at the direction of
the participant among several options, including several different mutual funds.
Benefit payments normally are made in connection with a participant's
retirement. Under current Internal Revenue Service regulations, the amount
contributed to the plan and the earnings on those contributions are not subject
to Federal income tax until they are withdrawn from the plan. The amount of the
matching contributions by the Company under the 401(k) Plan to the executive
officers in fiscal 2007 are included in the Summary Compensation Table above.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In accordance with applicable federal laws and regulations, the Bank
offers mortgage loans to its directors, officers and employees for the financing
of their primary residences as well as various business and consumer loans.
These loans are generally made on substantially the same terms as those
prevailing at the time for comparable transactions with non-affiliated persons.
It is the belief of management that these loans neither involve more than the
normal risk of collectibility nor present other unfavorable features.
23
Section 22(h) of the Federal Reserve Act generally provides that any
credit extended by a savings institution to its executive officers, directors
and, to the extent otherwise permitted, principal stockholder(s), or any related
interest of the foregoing, must (i) be on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions by the savings association with non-affiliated parties;
(ii) be pursuant to underwriting standards that are no less stringent than those
applicable to comparable transactions with non-affiliated parties; (iii) not
involve more than the normal risk of repayment or present other unfavorable
features; and (iv) not exceed, in the aggregate, the institution's unimpaired
capital and surplus, as defined.
The Bank offers certain loans to its directors, executive officers and
employees. It is the belief of management that these loans do not involve more
than the normal risk of collectibility. These loans are made on substantially
the same terms as those prevailing at the time for comparable transactions with
nonaffiliated persons. Directors, executive officers and employees of the Bank
receive no discount from the market interest rate for loans made by the Bank. As
of September 30, 2007, one of the Company's directors and executive officers had
loans outstanding with a balance in excess of $120,000, which amounted to
$167,000 in the aggregate.
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
General
The Audit Committee of the board of directors of the Company has appointed
Beard Miller Company LLP as the independent registered public accounting firm
for the Company for the year ending September 30, 2008. The board of directors
has directed that the selection of the accounting firm be submitted for
ratification by the stockholders at the annual meeting. The Company has been
advised by Beard Miller that neither the firm nor any of its associates has any
relationship with the Company or its subsidiaries other than the usual
relationship that exists between independent registered public accounting firm
and clients. Beard Miller will have representatives at the annual meeting who
will have an opportunity to make a statement, if they so desire, and will be
available to respond to appropriate questions.
Change in Auditors
The Company's financial statements for the fiscal year ended September 30,
2006 and prior years were audited by Deloitte & Touche LLP. In January 2007, the
engagement of Deloitte & Touche was terminated by the Audit Committee of the
board of directors upon completion of the audit of the Company's financial
statements for the year ended September 30, 2006 and Beard Miller was engaged as
the independent registered public accounting firm of the Company. In connection
with their audit for the years ended September 2006 and 2005 and during the
subsequent interim period preceding the replacement of Deloitte & Touche, there
were no disagreements with Deloitte & Touche on any matter of accounting
principles or practices, financial statement disclosures, or auditing scope or
procedure. Deloitte & Touche's report on the financial statements for fiscal
2006 and 2005 did not contain an adverse opinion or disclaimer of opinion and
was not qualified or modified as to uncertainty, audit scope or accounting
principles. During fiscal 2006 and 2005, Deloitte & Touche did not advise, and
has not indicated to the Company that it had reason to advise, the Company of
any reportable event, as defined in Item 304(a) of Regulation S-K of the
Exchange Act. During fiscal 2006 and 2005, the Company had not consulted Beard
Miller regarding the application of accounting principles, either contemplated
or proposed, the type of audit opinion that might be rendered on the Company's
financial statements or any other matters that would be required to be reported
herein.
Auditor Fees
The following table sets forth the aggregate fees paid by us to Beard
Miller for professional services in connection with the audit of the Company's
consolidated financial statements for fiscal 2007 and the fees paid by us to
Beard Miller for audit-related services, tax services and all other services
during fiscal 2007 and as well as the fees paid by us to Deloitte & Touche for
services rendered in connection with the audit of the Company's financial
statements for fiscal 2006, audit-related services, tax services and all other
services during fiscal 2006.
24
Fiscal Year Ended
September 30,
----------------------------
2007 2006
------------ ------------
Audit fees (1) ................................. $ 93,313 $ 173,600
Audit-related fees ............................. -- --
Tax fees ....................................... -- --
All other fees ................................. -- --
------------ ------------
Total ...................................... $ 93,313 $ 173,600
============ ============
----------------
(1) Includes professional services rendered by the auditor of the Company's
annual financial statements and review of financial statements included in
Forms 10-Q, or services normally provided in connection with statutory and
regulatory filings, including out-of-pocket expenses.
Pre-Approval Policy and Procedures
The Audit Committee selects the Company's independent registered public
accounting firm and pre-approves all audit services to be provided by it to the
Company. The Audit Committee also reviews and pre-approves all audit-related,
tax and all other services rendered by our independent registered public
accounting firm in accordance with the audit committee's charter and policy on
pre-approval of audit-related, tax and other services. In its review of these
services and related fees and terms, the audit committee considers, among other
things, the possible effect of the performance of such services on the
independence of our independent registered public accounting firm. Pursuant to
its policy, the audit committee pre-approves certain audit-related services and
certain tax services which are specifically described by the Audit Committee on
an annual basis and separately approves other individual engagements as
necessary. The pre-approval requirements do not apply to certain services if:
(i) the aggregate amount of such services provided to the Company constitutes
not more than five percent of the total amount of revenues paid by the Company
to its independent auditor during the year in which the services are provided;
(ii) such services were not recognized by the Company at the time of the
engagement to be other services; and (iii) such services are promptly brought to
the attention of the committee and approved by the committee or by one or more
members of the committee to whom authority to grant such approvals has been
delegated by the committee prior to the completion of the audit. The Audit
Committee may delegate to one or more designated members of the committee the
authority to grant required pre-approvals. The decisions of any member to whom
authority is delegated to pre-approve an activity shall be presented to the full
committee at its next scheduled meeting.
During the fiscal year ended September 30, 2007, each new engagement of
Beard Miller was approved in advance by the Audit Committee, and none of those
engagements made use of the de minimis exception to pre-approval contained in
the SEC's rules.
The Board of Directors recommends that you vote FOR the ratification of
the appointment of Beard Miller Company LLP as our independent registered public
accounting firm for the year ending September 30, 2008.
STOCKHOLDER PROPOSALS AND STOCKHOLDER
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which is scheduled to be held in January 2009, must be received at
the principal executive offices of the Company, 271 Main Street, Harleysville,
Pennsylvania 19438, Attention: Corporate Secretary, no later than August 23,
2008. If such proposal is in compliance with all of the requirements of Rule
14a-8 of the Exchange Act, it will be included in the proxy statement and set
forth on the form of proxy issued for such annual meeting of stockholders. It is
urged that any such proposals be sent certified mail, return receipt requested.
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 of the Exchange Act may be
brought before an annual meeting pursuant to the Company's Bylaws, which
provides that business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the
25
board of directors, or (b) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Company. To be timely a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Company not later than ninety days prior to the anniversary date of the mailing
of proxy materials by the Company in connection with the immediately preceding
annual meeting of stockholders. A stockholder's notice to the Secretary shall
set forth as to each matter the stockholder proposes to bring before the annual
meeting (a) a brief description of the business desired to be brought before the
annual meeting, (b) the name and address, as they appear on the Company's books,
of the stockholder proposing such business, (c) the class and number of shares
of the Company which are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business. To be timely with respect
to the next annual meeting of stockholders of the Company, a stockholders notice
must be received by the Company no later than September 22, 2008.
The board of directors of the Company has adopted a process by which
stockholders may communicate directly with members of the board. Stockholders
who wish to communicate with the board may do so by sending written
communications addressed to the Board of Directors, c/o Adrian D. Gordon,
Corporate Secretary, Harleysville Savings Financial Corporation, 271 Main
Street, Harleysville, Pennsylvania 19438.
ANNUAL REPORTS
A copy of the Company's annual report to stockholders for the year ended
September 30, 2007 accompanies this proxy statement. Such annual report is not
part of the proxy solicitation materials.
Upon receipt of a written request, the Company will furnish to any
stockholder without charge a copy of the Company's Annual Report on Form 10-K
for the year ended September 30, 2007 required to be filed with the Securities
and Exchange Commission under the Exchange Act. Such written requests should be
directed to the Corporate Secretary, Harleysville Savings Financial Corporation,
271 Main Street, Harleysville, Pennsylvania 19438. The Form 10-K is not part of
the proxy solicitation materials.
OTHER MATTERS
Management is not aware of any business to come before the annual meeting
other than the matters described above in this proxy statement. However, if any
other matters should properly come before the meeting, it is intended that the
proxies solicited hereby will be voted with respect to those other matters in
accordance with the judgment of the persons voting the proxies.
The cost of the solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending the proxy
materials to the beneficial owners of the common stock. In addition to
solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
26
HARLEYSVILLE SAVINGS FINANCIAL CORPORATION REVOCABLE PROXY
HARLEYSVILLE, PENNSYLVANIA
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
HARLEYSVILLE SAVINGS FINANCIAL CORPORATION FOR USE ONLY AT THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON JANUARY 23, 2008 AND AT ANY ADJOURNMENT THEREOF.
The undersigned, being a stockholder of Harleysville Savings Financial
Corporation (the "Company"), hereby appoints the Board of Directors, or any
successors in their respective positions, as proxy, with full powers of
substitution, and hereby authorizes the Board to represent and vote, as
designated below, all the shares of common stock of the Company held of record
by the undersigned on December 12, 2007 at the Annual Meeting of Stockholders to
be held at the Indian Valley Country Club, located at 650 Bergey Road, Telford,
Pennsylvania 18969, on January 23, 2008 at 9:30 a.m., local time, or any
adjournment thereof.
1. ELECTION OF DIRECTORS:
Nominees for a three year term: Edward J. Molnar and Charlotte A.
Hunsberger
FOR all nominees listed above WITHHOLD AUTHORITY (to
(except as marked to the vote for all nominees
contrary below) [_] listed above) [_]
INSTRUCTIONS: To withhold authority to vote for any one or more individual
nominee, write the name of such nominee(s) in the space provided below:
-------------------------------------------------------------------------------
2. Proposal to ratify the appointment of Beard Miller Company LLP as the
Company's independent registered public accounting firm for the year ending
September 30, 2008.
[_]FOR [_]AGAINST [_]ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting as described in the
accompanying Proxy Statement.
If not otherwise specified, this proxy will be voted FOR the election of
the Board of Directors' nominees to the Board of Directors named in proposal 1,
FOR the ratification of the independent registered public accounting firm and
otherwise at the discretion of the proxies. In their discretion, the proxies are
authorized to vote with respect to approval of the minutes of the last meeting
of stockholders, the election of any person as director if a nominee is unable
to serve or for good cause will not serve, matters incident to the conduct of
the meeting and upon such other business as may properly come before the
meeting. This proxy may be revoked at any time prior to the time it is voted at
the Annual Meeting.
The undersigned hereby acknowledges
receipt of a Notice of Annual Meeting of
Stockholders of Harleysville Savings
Financial Corporation, to be held on
January 23, 2008, or any adjournment
thereof, and a Proxy Statement for the
Annual Meeting, prior to the signing of
this proxy.
Date:
-----------------------------------
Signature:
------------------------------
Signature:
------------------------------
Please sign exactly as your name(s)
appear(s) on this Proxy. When signing in
a representative capacity, please give
title. When shares are held jointly,
both should sign.
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.