UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-12
MSB FINANCIAL CORP.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11. (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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(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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(3) Filing Party:
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(4) Date Filed:
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February 11, 2008
Dear Fellow Stockholders:
On behalf of the Board of Directors and management of MSB Financial Corp. (the
"Company"), I cordially invite you to attend our Annual Meeting of Stockholders
(the "Meeting") to be held at the Old Mill Inn, 225 Route 202, Basking Ridge,
New Jersey 07920, on March 10, 2008, at 3:00 p.m. The attached Notice of Annual
Meeting of Stockholders and Proxy Statement describe the formal business to be
transacted at the Meeting.
The business to be conducted at the Annual Meeting consists of the election of
three directors, the ratification of the appointment of independent auditors for
the year ending June 30, 2008 and the approval of the MSB Financial Corp. 2008
Stock Compensation and Incentive Plan. The Company's Board of Directors
unanimously recommends a vote "FOR" each matter to be considered. As discussed
further under "Proposal III - Approval of the MSB Financial Corp. 2008 Stock
Compensation and Incentive Plan" on page 4, the Company's largest outside
stockholder, the PL Capital Group, has informed the Company of its intention to
vote "FOR" the 2008 Stock Compensation and Incentive Plan.
Even if you plan to attend the meeting, please sign, date and return the proxy
card in the enclosed envelope immediately. This will not prevent you from voting
in person at the Meeting, but will assure that your vote is counted if you are
unable to attend the Meeting.
Sincerely,
/s/Gary T. Jolliffe
Gary T. Jolliffe
President and Chief Executive Officer
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MSB FINANCIAL CORP.
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1902 LONG HILL ROAD
MILLINGTON, NEW JERSEY 07946
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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TO BE HELD ON MARCH 10, 2008
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of MSB Financial Corp. (the "Company") will be held at the Old Mill Inn, 225
Route 202, Basking Ridge, New Jersey 07920, on March 10, 2008, at 3:00 p.m. The
Meeting is for the purpose of considering and acting upon the following matters:
1. The election of three directors of MSB Financial Corp.;
2. The ratification of the appointment of Beard Miller Company LLP as
the Company's independent auditor for the year ending June 30,
2008; and
3. The approval of the MSB Financial Corp. 2008 Stock Compensation
and Incentive Plan.
The transaction of such other business as may properly come before the
Meeting, or any adjournments thereof, may also be acted upon. The Board of
Directors is not aware of any other business to come before the Meeting.
The Board of Directors of the Company has determined that the matters
to be considered at the Meeting, described in the accompanying Notice of Annual
Meeting and Proxy Statement, are in the best interest of the Company and its
stockholders. For the reasons set forth in the Proxy Statement, the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.
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Action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. Pursuant to the
Company's bylaws, the Board of Directors has fixed the close of business on
January 29, 2008 as the record date for determination of the stockholders
entitled to vote at the Meeting and any adjournments thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO
SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. You
may revoke your proxy by filing with the Secretary of the Company a written
revocation or a duly executed proxy bearing a later date. If you are present at
the Meeting, you may revoke your proxy and vote in person on each matter brought
before the Meeting. However, if you are a stockholder whose shares are not
registered in your own name, you will need additional documentation from your
record holder to vote in person at the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Nancy E. Schmitz
Nancy E. Schmitz
Corporate Secretary
Millington, New Jersey
February 11, 2008
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IMPORTANT: PROMPTLY RETURNING THE ENCLOSED PROXY CARD WILL SAVE THE COMPANY THE
ADDITIONAL EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM
AT THE MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
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PROXY STATEMENT
OF
MSB FINANCIAL CORP.
1902 LONG HILL ROAD
MILLINGTON, NEW JERSEY 07946
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ANNUAL MEETING OF STOCKHOLDERS
March 10, 2008
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GENERAL
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This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of MSB Financial Corp. (the "Company") to
be used at the Annual Meeting of Stockholders of the Company which will be held
at the Old Mill Inn, 225 Route 202, Basking Ridge, New Jersey 07920, on March
10, 2008, at 3:00 p.m. (the "Meeting"). The accompanying Notice of Annual
Meeting of Stockholders and this Proxy Statement are being first mailed to
stockholders on or about February 11, 2008.
At the Meeting, stockholders will consider and vote upon (i) the
election of three directors of the Company; (ii) the ratification of the
appointment of Beard Miller Company LLP as the Company's independent auditor for
the fiscal year ending June 30, 2008 and (iii) the approval of the MSB Financial
Corp. 2008 Stock Compensation and Incentive Plan. At the time this Proxy
Statement is being mailed, the Board of Directors knows of no additional matters
that will be presented for consideration at the Meeting. If any other business
may properly come before the Meeting or any adjournment thereof, proxies given
to the Board of Directors will be voted by its members in accordance with their
best judgment.
The Company is the parent company of Millington Savings Bank (the
"Bank"). The Company is the majority-owned subsidiary of MSB Financial, MHC a
federally-chartered mutual holding company.
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VOTING AND REVOCABILITY OF PROXIES
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Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Company at the address above or by the filing of
a later dated proxy prior to a vote being taken on a particular proposal at the
Meeting. A proxy will not be voted if a stockholder attends the Meeting and
votes in person.
Proxies solicited by the Board of Directors will be voted as specified
thereon. If no specification is made, the signed proxies will be voted "FOR" the
nominees for director as set forth herein, "FOR" the approval of the MSB
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Financial Corp. 2008 Stock Compensation and Incentive Plan and "FOR" the
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ratification of the appointment of Beard Miller Company LLP as the Company's
independent auditor for the fiscal year ending June 30, 2008. The proxy confers
discretionary authority on the persons named thereon to vote with respect to the
election of any person as a director where the nominee is unable to serve, or
for good cause will not serve, and with respect to matters incident to the
conduct of the Meeting.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on January 29, 2008
(the "Record Date"), are entitled to one vote for each share of the common stock
of the Company, par value $0.10 per share (the "Common Stock"), then held. As of
the Record Date, the Company had 5,620,625 shares of Common Stock issued and
outstanding.
The presence in person or by proxy of at least a majority of the
outstanding Common Stock entitled to vote is necessary to constitute a quorum at
the Meeting. With respect to any matter, broker non-votes (i.e., shares for
which a broker indicates on the proxy that it does not have discretionary
authority as to such shares to vote on such matter) will be considered present
for purposes of determining whether a quorum is present.
As to the election of directors (Proposal I), the proxy provided by the
Board of Directors allows a stockholder to vote for the election of the
nominees, or to withhold authority to vote for the nominees being proposed.
Under the Company's bylaws, directors are elected by a plurality of votes cast,
without regard to either (i) broker non-votes or (ii) proxies as to which
authority to vote for the nominees being proposed is withheld.
As to the approval of the MSB Financial Corp. 2008 Stock Compensation
and Incentive Plan (Proposal III) by checking the appropriate box, a stockholder
may: vote "FOR" the Plan, vote "AGAINST" the Plan, or "ABSTAIN" with respect to
the item. Approval of the Plan requires the affirmative vote of both (i) a
majority of the votes cast, in person or by proxy, by the stockholders of the
Company at the Meeting without regard to broker non-votes or proxies marked
"ABSTAIN" and (ii) a majority of the votes eligible to be cast by stockholders
of the Company at the Meeting other than MSB Financial, MHC.
Concerning all other matters that may properly come before the Meeting,
including the ratification of the independent auditors (Proposal II), by
checking the appropriate box, a stockholder may: vote "FOR" the item, vote
"AGAINST" the item, or "ABSTAIN" with respect to the item. Unless otherwise
required by law, all such matters shall be determined by a majority of votes
cast affirmatively or negatively without regard to broker non-votes or proxies
marked "ABSTAIN" as to that matter.
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of the Record Date, the ownership of
persons and groups known by the Company to own in excess of 5% of the Common
Stock.
Percent of Shares
Amount and Nature of of Common
Name and Address of Beneficial Owner Beneficial Ownership Stock Outstanding
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PL Capital Group
20 E. Jefferson Avenue
Naperville, Illinois 60540 422,973 7.5%
MSB Financial MHC
1902 Long Hill Road
Millington, New Jersey 07946 3,091,344 55.0%
2
Security Ownership of Management
The following table provides information as of the Record Date
concerning ownership of the Company's common stock by the Company's directors
and certain executive officers, including shares held directly as well as shares
for which the individuals are deemed to have indirect beneficial ownership, such
as shares held by spouses or minor children, in trust, and other forms of
indirect beneficial ownership. The aggregate ownership of the following
individuals amounts to 141,612 shares, representing approximately 2.5% of the
shares outstanding.
Number of
Beneficial Owner Shares
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E. Haas Gallaway, Jr. 20,000
W. Scott Gallaway 11,112
Gary T. Jolliffe 22,040
Thomas G. McCain 20,064
Albert N. Olsen 36,101
Ferdinand J. Rossi 10,000
Michael A. Shriner 20,295
Jeffrey E. Smith 2,000
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PROPOSAL I - ELECTION OF DIRECTORS
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The Company's Charter requires that the Board of Directors be divided
into three classes, as nearly equal in number as possible, each class to serve
for a three-year period, with approximately one-third of the directors elected
each year. The Board of Directors currently consists of seven members. Three
directors will be elected at the Meeting, to serve for a three-year term and
until their successors have been elected and qualified.
E. Haas Gallaway, Jr., W. Scott Gallaway and Michael A. Shriner have
been nominated by the Board of Directors to serve as directors. Each nominee is
currently a member of the Board of Directors. It is intended that proxies
solicited by the Board of Directors will, unless otherwise specified, be voted
for the election of the named nominees. If any of the nominees is unable to
serve, the shares represented by all valid proxies will be voted for the
election of such substitute as the Board of Directors may recommend or the size
of the Board may be reduced to eliminate the vacancy. At this time, the Board of
Directors knows of no reason why any of the nominees might be unavailable to
serve.
The Board of Directors unanimously recommends that stockholders vote
"FOR" the election of the nominees.
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PROPOSAL II - RATIFICATION OF APPOINTMENT OF AUDITORS
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The Audit Committee of the Board of Directors of the Company has
appointed Beard Miller as the Company's independent auditor for the fiscal year
ending June 30, 2008. A representative of Beard Miller is expected to be present
at the Meeting, will have the opportunity to make a statement if he or she so
desires, and is expected to be available to respond to appropriate questions.
3
The Board of Directors unanimously recommends that stockholders vote
"FOR" the ratification of the appointment of Beard Miller Company LLP as the
Company's auditors for the 2008 fiscal year.
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PROPOSAL III - APPROVAL OF THE MSB FINANCIAL CORP.
2008 STOCK COMPENSATION AND INCENTIVE PLAN
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At the time of its initial public offering, which was completed in
January 2007, the Company stated that it intended after the passage of at least
six months from the offering to establish both (1) a stock option plan providing
for the award of options equal to 4.9% of the total shares outstanding after the
offering, and (2) a restricted stock plan providing for the award of shares
equal to 1.96% of the total shares outstanding after the offering. In early
January 2008, the Company prepared its proxy materials for the Annual Meeting of
Stockholders, which was scheduled to be held on February 11, 2008. The 2008
Stock Compensation and Incentive Plan as presented in those proxy materials
provided for the award of both stock options and restricted stock. On January 9,
2008, the PL Capital Group, which is the Company's largest outside stockholder,
mailed a letter to the Company's stockholders stating its concerns with the 2008
Stock Compensation and Incentive Plan. The Company subsequently initiated
discussions with the PL Capital Group, and the result of these discussions was
that the Company revised the 2008 Stock Compensation and Incentive Plan to
remove the authority to award shares of restricted stock. The PL Capital Group,
in turn, modified its position and informed the Company of its intention to vote
in favor of the 2008 Stock Compensation and Incentive Plan, as revised. The
Company may in the future present to its stockholders for approval a plan that
includes the authority to issue restricted stock. The Company's revision to the
2008 Stock Compensation and Incentive Plan was announced on January 29, 2008 and
the press release included the following statements:
o MSB Financial Corp. Chief Executive Officer Gary Jolliffe commented,
"We are pleased to have the support of PL Capital and on behalf of the
Board of Directors, I would like to express my sincere appreciation to
all of our stockholders for their support. MSB remains committed to
enhancing stockholder value and we are working diligently to make that
happen for all stockholders."
o "We think the revised Plan is appropriate and beneficial for the
Company and its stockholders, and we are pleased to vote in favor of
the revised Plan," stated PL Capital principal Richard Lashley. He
also noted, "Importantly, PL Capital and other stockholders retain the
right to review MSB Financial's actions to create shareholder value in
2008 before deciding whether to vote for a restricted stock plan in
the future."
The description of the Plan as provided in this Proxy Statement
reflects the revised 2008 Stock Compensation and Incentive Plan. The Plan, as
revised, provides that the Board of Directors or the Compensation Committee of
the Board of Directors may grant stock options to officers, employees and
directors as determined by the Compensation Committee. The number of shares of
common stock to be reserved and available for delivery upon the exercise of
stock options awarded under the Plan is 275,410 shares, representing 4.9% of the
total shares outstanding at the time the Plan was approved by the Board of
Directors.
4
Summary Description of the Plan
The following is a general description of the material features of the
Plan. This description is qualified in its entirety by reference to the full
text of the Plan, a copy of which is attached to this Proxy Statement as an
appendix.
Purposes. The purpose of the Plan is to provide incentives and rewards
to officers, employees and directors that contribute to the success and growth
of the Company and its subsidiaries or affiliates, and to assist the Company in
attracting and retaining directors, officers and other key employees with
experience and ability in order to aid the Company in rewarding such individuals
who provide substantial services to the Company or its subsidiaries or
affiliates, and who promote the creation of long-term value for the Company's
shareholders by closely aligning the interests of participants with those of
shareholders.
Types of Awards. The Plan provides that the Committee may grant stock
option awards to participants selected by the Committee. Options awarded under
the Plan may be either options that qualify as incentive stock options ("ISOs")
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
or options that do not, or cease to, qualify as incentive stock options under
the Code ("non-statutory stock options" or "NSOs").
Eligibility for Awards. Within the sole discretion of the Board or the
Committee, Awards may be granted under the Plan to officers, employees and
outside directors of the Company.
Administration. The Plan will be administered by the Board of Directors
or the Compensation Committee appointed by the Board. Members of the Committee
shall be "Non-Employee Directors" within the meaning of Rule 16b-3 under to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). A majority of
the members of the Committee shall constitute a quorum and the action of a
majority of the members present at any meeting at which a quorum is present
shall be deemed the action of the Committee.
Subject to certain regulatory requirements of the Office of Thrift
Supervision (the "OTS") with respect to plan administration, the Committee has
broad authority under the Plan with respect to Awards granted thereunder,
including, without limitation, the authority to:
o select the individuals to receive Awards under the Plan;
o determine the type, number, vesting requirements and other features
and conditions of individual Awards;
o interpret the Plan and Award Agreements issued with respect to
individual Awards; and
o make all other decisions related to the operation of the Plan.
Each Award granted under the Plan will be evidenced by a written award
agreement that sets forth the terms and conditions of each Award and may include
additional provisions and restrictions as determined by the Committee. Decisions
of the Committee shall be final, conclusive, and binding upon all persons with
respect to Awards issued under the Plan. The Board of Directors may, in the
exercise of its discretion, by resolution, undertake, perform or exercise any
function or authority with respect to administration of the Plan.
5
Shares Available; Adjustments. The number of shares ofo common stock to
be reserved and available for delivery upon the exercise of stock options
awarded under the Plan is 275,410 shares, representing 4.9% of the total shares
outstanding at the time the Plan was approved by the Board of Directors.
Shares delivered in accordance with the Plan shall be either authorized
and unissued shares, shares purchased in the market or treasury shares, or
partly out of each, as shall be determined by the Board. Shares subject to an
award under the Plan that is canceled, expired, forfeited, or otherwise
terminated without a delivery of shares or consideration to the participant will
again be available for awards. The Committee will determine the appropriate
adjustments, if any, to the number of shares available under the Plan and to
awards under the Plan in the case of recapitalization, forward or reverse split,
stock dividend, reorganization, merger, consolidation, spin-off, combination,
repurchase, share exchange, liquidation, dissolution or other similar corporate
transaction.
Terms of Stock Options. A Stock Option gives the recipient the right to
purchase shares of Common Stock at a future date at a specified price per share
(the "exercise price"). The per share exercise price of a Stock Option may not
be less than the Fair Market Value of a share of Common Stock on the date of
grant. For the purposes of the Plan, "Fair Market Value" means the closing sales
price reported on The Nasdaq Stock Market (as published by The Wall Street
Journal, if published) on such date or, if the Common Stock was not traded on
such date, on the immediately preceding day on which the Common Stock was traded
thereon. The Committee may impose additional conditions upon the right of an
optionee to exercise any Option granted hereunder which are not inconsistent
with the terms of the Plan. If such Option is intended to qualify as an
Incentive Stock Option, within the meaning of Section 422 of the Internal
Revenue Code, then such Awards will also comply with additional restrictions
under Section 422 of the Internal Revenue Code as set forth in the Plan. (See
"Federal Income Tax Treatment of Awards under the Plan" below).
Minimum Option Exercise Price. The exercise price of any Options that
may be awarded during calendar year 2008 or 2009 shall not be less than $10.00
per share, subject to adjustment for stock splits, extraordinary dividends and
similar transactions in accordance with the Plan.
Exercise of Options. No shares of Common Stock may be issued upon the
exercise of an Option until the Company has received full payment of the
exercise price, and no optionee shall have any of the rights of a stockholder of
the Company until shares of Common Stock are issued to such optionee. Upon the
exercise of an Option by an optionee (or the optionee's personal
representative), the Committee, in its sole and absolute discretion, may make a
cash payment to the optionee, in whole or in part, in lieu of the delivery of
shares of Common Stock. Such cash payment to be paid in lieu of delivery of
Common Stock shall be equal to the difference between the Fair Market Value of
the Common Stock on the date of the Option exercise and the exercise price per
share of the Option. Such cash payment shall be in exchange for the cancellation
of such Option. Such cash payment shall not be made in the event that such
transaction would result in liability to the optionee and the Company under
Section 16(b) of the Exchange Act or any related regulations promulgated
thereunder.
Option Grants to Outside Directors. Pursuant to the terms of the Plan,
Non-Statutory Stock Options to purchase shares of Common Stock may be granted to
each outside director of the Company at an exercise price equal to the Fair
Market Value of the Common Stock on the date of grant. Options granted to
outside directors will remain exercisable for up to ten years from the date of
grant. Upon the death or disability of a director or director emeritus, such
Options shall be deemed immediately 100% exercisable for their remaining term.
6
Vesting of Awards. Awards under the Plan generally will vest at the
rate of 20% per year over a period of five years beginning one year from the
date of grant. The Company may, however, consider acceleration of such vesting
schedule, provided that such action is not contrary to the regulations of the
OTS then in effect.
Award Payouts. The Company may make payouts related to Awards in the
form of cash, Common Stock or combinations of cash and stock, as determined by
the Committee.
Effect of Termination of Service on Awards. Generally, the Committee
will determine the impact of a termination of service upon an Award at the time
of such Award. Generally, except as may otherwise be determined by the Committee
at the time of the Award, an Incentive Stock Option may only be exercised while
the optionee serves as an employee of the Company or within three months after
termination of employment for a reason other than death or disability (but in no
event after the expiration date of the Option).
Effect of Death or Disability on Awards. Generally, the Committee will
determine the impact of death or disability upon an Award at the time of such
Award. In the event of the death or disability of an optionee during employment,
an exercisable Incentive Stock Option will continue to be exercisable for one
year and two years, respectively, to the extent exercisable by the optionee
immediately prior to the optionee's death or disability but only if, and to the
extent that, the optionee was entitled to exercise such Incentive Stock Options
on the date of termination of employment.
Acceleration of Awards. Unless otherwise determined by the Committee,
upon a Change in Control of the Company or the Bank, each Stock Option then
outstanding shall become fully vested and remain exercisable for its remaining
term.
Other Forfeiture Provisions. In addition to any forfeiture or
reimbursement conditions the Committee may impose upon an award, a participant
may be required to forfeit an award, or reimburse the Company for the value of a
prior award, by virtue of the requirement of Section 304 of the Sarbanes-Oxley
Act of 2002 (or by virtue of any other applicable statutory or regulatory
requirement), but only to the extent that such forfeiture or reimbursement is
required by such statutory or regulatory provision.
Compliance with Legal and Other Requirements. No shares, or payments of
other benefits under any award will be issued until completion of such
registration or qualification of such shares or other required action under any
federal or state law, rule or regulation, listing or other required action with
respect to any stock exchange or automated quotation system upon which the
shares are listed or quoted, or compliance with any other obligation of the
Company, as the Committee may consider appropriate. The Plan will be
interpreted, applied and administered so as to remain fully compliant with all
applicable provisions of law; all requirements of any stock exchange or
automated quotation system upon which the shares covered by the Plan are listed
or quoted; and all other obligations of the Company. Awards are subject to the
discretion of the Board.
Transfer Restrictions. Unless otherwise determined by the Committee, an
individual may not transfer, assign, hypothecate, or dispose of an Option in any
manner, other than by will or the laws of intestate succession. The Committee
may provide for the transfer or assignment of a non-statutory stock option if it
determines that the transfer or assignment is for valid estate planning
purposes.
Amendment or Termination of the Plan. The Committee may amend, modify
or terminate the Plan, except that no such amendment may have the effect of
repricing the exercise price of Options and any material amendments to the Plan
shall be subject to a ratification vote by the Company's stockholders.
7
Possible Dilutive Effects of the Plan. The Common Stock to be issued
upon the exercise of Options awarded under the Plan may either be authorized but
unissued shares of Common Stock or shares purchased in the open market. Since
the stockholders of the Company do not have preemptive rights, to the extent
that the Company funds the Plan, in whole or in part, with authorized but
unissued shares, the interests of current stockholders may be diluted. The
Company can avoid dilution resulting from awards under the Plan by delivering
shares repurchased in the open market upon the exercise of Options.
Federal Income Tax Treatment of Awards Under the Plan
The following discussion of the general tax principles applicable to
the Plan summarizes the federal income tax consequences of the Plan under
current federal law, which is subject to change at any time. This summary is not
intended to be exhaustive and, among other considerations, does not describe
state or local tax consequences.
Non-Statutory Stock Options. The optionee generally recognizes taxable
income in an amount equal to the difference between the Option exercise price
and the Fair Market Value of the shares at the time of exercise. The Company
will receive a tax deduction equal to the ordinary income recognized by the
optionee. Employees exercising non-statutory stock options are also subject to
federal, state, and local (if any) tax withholding on the option income. Outside
directors are not subject to tax withholding.
Incentive Stock Options. The optionee generally does not recognize
taxable income upon exercise of an Incentive Stock Option. If the optionee does
not dispose of the Common Stock acquired upon exercise for the required holding
periods of two years from the date of grant and one year from the date of
exercise, income from a subsequent sale of the shares is treated as a capital
gain for tax purposes. However, the difference between the Option exercise price
and the Fair Market Value of the Common Stock on the date of Option exercise is
an item of tax preference, which may, in certain situations, trigger the
alternative minimum tax for an optionee. However, if the optionee disposes of
the shares prior to the expiration of the required holding periods, the optionee
has made a disqualifying disposition of the stock. Upon a disqualifying
disposition, the optionee will recognize taxable income equal to the difference
between the exercise price and the Fair Market Value of the Company Common Stock
on the date of exercise, and the Company will receive a tax deduction equal to
the ordinary income recognized by the optionee. Currently, the Internal Revenue
Service does not require tax withholding on disqualifying dispositions.
In accordance with Section 162(m) of the Internal Revenue Code, the
Company's tax deductions for compensation paid to the most highly paid
executives named in the Company's Proxy Statement may be limited to no more than
$1 million per year, excluding certain "performance-based" compensation. The
Company intends for the award of Options under the Plan to comply with the
requirement for an exception to Section 162(m) of the Internal Revenue Code
applicable to stock option plans so that the amount of the Company's deduction
for compensation related to the exercise of Options would not be limited by
Section 162(m) of the Internal Revenue Code.
Benefits to Named Executive Officers and Others
Awards, if any, will be granted under the Plan only after the Plan is
approved by stockholders. All awards under the Plan will be made at the
discretion of the Committee or under delegated authority. Accordingly, it is not
possible to determine the benefits or amounts that will be received by any
individuals or groups pursuant to the Plan in the future, or the benefits or
amounts that would have been received by any individuals or groups for the last
completed fiscal year if the Plan had been in effect. The exercise price of any
options granted during 2008 or 2009 will not be less than $10.00 per share.
Shares
8
subject to Options granted to outside directors in the aggregate under the Plan
will not exceed more than 35% of the total number of shares authorized for
delivery under the Plan. Furthermore, Shares subject to Options granted to any
single outside director under the Plan will not exceed more than 7% of the total
number of shares authorized for delivery under the Plan. Shares subject to
Options granted to any single employee-participant will not exceed more than 25%
of the total number of shares authorized for delivery under the Plan.
Shareholder Approval
Shareholder approval of the Plan is being sought in accordance with the
listing standards of The Nasdaq Stock Market and OTS regulations. Shareholder
approval of the Plan is also required to permit the Options to qualify as
Incentive Stock Options in accordance with the Internal Revenue Code and to meet
the requirements for the tax-deductibility of certain compensation items under
Section 162(m) of the Internal Revenue Code. Shareholder approval of the Plan
will enable recipients of Stock Options to qualify for certain exemptive
treatment from the short-swing profit recapture provisions of Section 16(b) of
the Exchange Act. The OTS does not endorse or approve the Plan in any way.
The Board of Directors unanimously recommends that stockholders vote
"FOR" approval of the MSB Financial
Corp. 2008 Stock Compensation and Incentive Plan.
--------------------------------------------------------------------------------
INFORMATION ABOUT DIRECTORS AND OFFICERS OF THE COMPANY
--------------------------------------------------------------------------------
Set forth below is information about the Company's and the Bank's
directors and executive officers and other senior management employees. Each
director serves as a director of the Company and the Bank as well as MSB
Financial, MHC.
Age Expiration
(as of Date of
June 30, Current
2007) Title Term
----- ----- ----
Directors:
----------
E. Haas Gallaway, Jr. 65 Director 2007
W. Scott Gallaway 61 Director 2007
Gary T. Jolliffe 63 President, Chief Executive Officer and Director 2009
Thomas G. McCain 69 Director 2008
Albert N. Olsen 72 Chairman of the Board 2009
Ferdinand J. Rossi 65 Director 2008
Michael A. Shriner 43 Director, Executive Vice President and Chief Operating Officer 2007
Senior Management:
------------------
Linda W. Psillakis 49 Vice President and Chief Risk Officer NA
Nancy E. Schmitz 51 Vice President, Chief Lending Officer and Corporate Secretary NA
Jeffrey E. Smith 58 Vice President and Chief Financial Officer NA
Susan M. Schumann 56 Vice President NA
Betty Zangari 63 Vice President and Assistant Corporate Secretary NA
E. Haas Gallaway, Jr. is president and manager of Gallaway and Crane
Funeral Home with principal offices located in Basking Ridge and a branch
location located in Bernardsville. This firm was founded by his father, E. Haas
Gallaway, Sr., in Millington in 1935 and moved to its present location in
Basking Ridge in 1936. Mr. Gallaway has been associated with the firm since
1960, purchased a minority position in the firm in 1963 and the remainder of the
corporation in 1976. He is a licensed funeral director in the states of New
Jersey and Florida. Mr. Gallaway is a member and past president of
9
the Morris County Funeral Directors' Association, member of The New Jersey State
Funeral Directors' Association, member of National Funeral Directors'
Association, and member and past president of the Bernardsville Rotary Club,
former director and past president of the Somerset Hills YMCA, and a past
president of the Board of Directors of Honesty House formerly of Stirling. He is
a member of The Florida Funeral Director's Association.
W. Scott Gallaway founded Gallaway Associates, a real estate brokerage
and appraisal firm in 1975 and sold the brokerage portion to Remax Properties
Unlimited in 2000. He remains a broker/sales agent with Remax Properties
Unlimited. Mr. Gallaway is a licensed real estate appraiser and has served as
president and/or an officer of numerous professional organizations and as a
member and past president of the Bernardsville Rotary Club. Mr. E. Haas
Gallaway, Jr. and Mr. W. Scott Gallaway are brothers.
Gary T. Jolliffe joined the Bank in 1986 as its executive vice
president and was appointed as its president in 1990. In 1992, he was also
appointed to the position of chief executive officer and became a director. Mr.
Jolliffe was a member of the Board of Governors of the New Jersey League of
Community Bankers from 1999 through 2007 serving in numerous positions,
including chairman of the New Jersey League of Community Bankers from 2004 to
2005. Mr. Jolliffe is a member of the Board of Trustees of Freedom House
Foundation, Glen Gardner, New Jersey, and a member of the Bernardsville Rotary
Club in which he has held the positions of director, president, vice president
and treasurer.
Dr. Thomas G. McCain became principal of the Fairmount Avenue School in
Chatham, New Jersey in 1964 after having taught in Berlin, Connecticut. He left
Chatham nine years later to become assistant superintendent of schools in
Freeport, New York and in 1978 was appointed superintendent of schools in
Bernardsville, New Jersey, the district from which he retired from public
education in 1988. Since then Mr. McCain has been president and sole owner of
Learning Builders, a firm that provides planning and training services to
schools and businesses in several states.
Albert N. Olsen was elected chairman of the Board in 1999. He is a
certified public accountant and is president of Olsen & Thompson, P.A., a CPA
firm established in 1961. In addition, he is a member of Olsen & Thompson
Investment Advisory Services, LLC. Mr. Olsen is a member of the New Jersey
Society of Certified Public Accountants and has served in various positions with
the Society, including chairman of the Committee for Management of Accounting
Practices, trustee, treasurer, vice president, president of the
Morris-Sussex-Warren Chapter and chairman of the Board and trustee of the
Society's Insurance Trust. Mr. Olsen is also a member of the American Institute
of Certified Public Accountants, a past trustee and past chairman of the Board
of the Midland School Foundation and a past board member of Mrs. Wilson's
(Halfway House). He is a member and past president of the Bernardsville Rotary
Club.
Ferdinand (Fred) J. Rossi is currently the township administrator for
the Township of Morris in Morris County, New Jersey and has held that office
since 1995. Previously, Mr. Rossi served as the county administrator for Morris
County, New Jersey for 15 years, and the township clerk and then administrator
for the Township of Long Hill (formerly Passaic Township) for 12 years. He has
served as president of the New Jersey Association of County Administrators and
Managers and is a former member and president of the Bernardsville Rotary Club.
Michael A. Shriner has been employed by the Bank since 1987 and became
a vice president in 1990, a senior vice president in 1997, the executive vice
president in 2002 and the chief operating officer in 2006. He was appointed to
the Board of Directors in 1999. Mr. Shriner currently serves as chairman of the
Mortgage Steering Committee of the New Jersey League of Community Bankers and is
also a member of the Residential Lending and Affordable Housing Committee and a
former member of the Consumer Lending and CRA Committee. Mr. Shriner is a
graduate of The National School of Banking
10
(Fairfield University). He is currently the financial secretary for the Knights
of Columbus in Roselle Park, New Jersey.
Linda W. Psillakis has been employed by the Bank since 2005 and
currently serves as a vice president and the chief risk officer, responsible for
compliance and training. Ms. Psillakis has over 20 years of banking/accounting
experience, beginning as an auditor for The Howard Savings Bank in Newark, New
Jersey in 1981. Ms. Psillakis currently serves on the BSA Subcommittee,
Compliance and CRT Committee of the New Jersey League of Community Bankers.
Nancy E. Schmitz has been employed by the Bank since 1997 and currently
serves as the Bank's corporate secretary and chief lending officer. She
currently serves as vice chairman of the Consumer Lending Committee of the New
Jersey League of Community Bankers. Ms. Schmitz has over 25 years banking
experience, beginning as a branch loan officer for Lloyds Bank California in
1978.
Susan Schumann has been employed by the Bank since 1984 and currently
serves as a vice president, responsible for business development and marketing.
She also manages security for the Bank. Ms. Schumann is the vice chair of the
Public Relations/Marketing Committee of the New Jersey League of Community
Bankers and also sits on the League's Bank Security Committee.
Jeffrey E. Smith has been employed by the Bank since 1996. He was
appointed as controller for the Bank in 1998, became a vice president in 2002,
and in 2006 became chief financial officer. Mr. Smith previously served as a
vice president and the controller for United National Bank in Plainfield, New
Jersey where he was employed for 11 years.
Betty Zangari has been employed by the Bank since 1992. She began as a
teller and was promoted to head teller in 1996. In 1998, Ms. Zangari became
assistant corporate secretary. She was appointed operations supervisor in 2005
and became a vice president of the Bank in 2006.
--------------------------------------------------------------------------------
CORPORATE GOVERNANCE
--------------------------------------------------------------------------------
Meetings and Committees of the Board of Directors
The Board of Directors conducts its business through meetings of the
Board and through activities of its committees. The Board maintains an Audit
Committee, an Asset/Liability Management Committee, an Asset/Quality Committee,
a Compensation Committee and a Nominating Committee. During the fiscal year
ended June 30, 2007, the Board of Directors held 13 meetings. No director
attended fewer than 75% of the total meetings of the Board and committees on
which such director served during the fiscal year ended June 30, 2007.
The Audit Committee, a standing committee, is comprised of Directors
Albert N. Olsen, E. Haas Gallaway, Jr., W. Scott Gallaway, Thomas G. McCain and
Ferdinand J. Rossi. Mr. Olsen is the Audit Committee's financial expert. Each of
the members of the Audit Committee is an independent director. The Audit
Committee recommends engagement of independent auditors, receives the internal
and independent audit reports and recommends appropriate action. The Audit
Committee met four times during the fiscal year ended June 30, 2007.
The Board of Directors has reviewed, assessed the adequacy of and
approved a formal written charter for the Audit Committee, a copy of which is
attached as an appendix to this Proxy Statement.
11
Report of the Audit Committee
For the fiscal year ended June 30, 2007, the Audit Committee (i)
reviewed and discussed the Company's audited financial statements with
management, (ii) discussed with the Company's independent auditor, Beard Miller
Company LLP ("Beard Miller"), all matters required to be discussed under
Statement on Auditing Standards No. 61 (as amended), and (iii) received from
Beard Miller disclosures regarding the independence of Beard Miller as required
by Independence Standards Board Standard No. 1 and discussed with them the
independence of Beard Miller. Based on its foregoing review and discussions, 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-KSB for the
fiscal year ended June 30, 2007.
Audit Committee:
Albert N. Olsen, E. Haas Gallaway, Jr., W. Scott Gallaway, Thomas G. McCain
and Ferdinand J. Rossi.
Principal Accounting Fees and Services
The Securities and Exchange Act of 1934 requires all auditing services
and non-audit services provided by an issuer's independent auditor to be
pre-approved by the issuer's audit committee. The Company's Audit Committee has
adopted a policy of approving all audit and non-audit services prior to the
service being rendered. All of the services provided by the Company's
independent auditor, Beard Miller Company LLP ("Beard Miller"), for 2006 and
2007 were approved by the Audit Committee prior to the service being rendered.
Audit Fees. The fees incurred by the Company for audit services
provided by Beard Miller for the fiscal years ended June 30, 2007 and 2006 were
$68,000 and $37,000, respectively. These fees include professional services
rendered for the audit of the Company's annual consolidated financial statements
and review of consolidated financial statements included in the Company's
Quarterly Reports on Form 10-Q, and services normally provided in connection
with statutory and regulatory filings, including out-of-pocket expenses.
Audit Related Fees. The Company incurred $8,000 in fees for assurance
services provided by Beard Miller reasonably related to the performance of the
audit, including the reading of the Company's Form 10-KSB, for the fiscal year
ended June 30, 2007. No audit related fees were incurred for fiscal 2006.
Tax Fees. The fees incurred by the Company for services provided by
Beard Miller related to the preparation of state and federal tax returns for the
fiscal years ended June 30, 2007 and 2006 were $7,000 and $6,000, respectively.
All Other Fees. The Company incurred $70,000 in other fees for services
provided by Beard Miller related to the Company's initial public stock offering
for the fiscal year ended June 30, 2007. There were no other fees incurred for
fiscal 2006.
12
Director Nomination Process
The Nominating Committee, a standing committee, is comprised of
Directors Albert N. Olsen, E. Haas Gallaway, Jr., W. Scott Gallaway, Thomas G.
McCain and Ferdinand J. Rossi. The Nominating Committee recommends to the full
Board of Directors persons for selection as the Board's nominees for election as
directors. The Committee met one time during the fiscal year ended June 30,
2007. Each member of the committee is an independent director. The
responsibilities of the members of the Nominating Committee are set forth in a
charter, a copy of which is attached as an appendix to this Proxy Statement.
The Company does not pay fees to any third party to identify or
evaluate or assist in identifying or evaluating potential nominees. The process
for identifying and evaluating potential nominees of the Board includes
soliciting recommendations from directors and officers of the Company and the
Bank. Additionally, the Board will consider persons recommended by stockholders
of the Company in selecting nominees of the Board for election as directors. In
the Board's selection of nominees of the Board, there is no difference in the
manner of evaluation of potential nominees who have been recommended by
directors or officers of the Company and the Bank versus evaluation of potential
nominees who have been recommended by stockholders. The Committee seeks nominees
with excellent decision-making ability, business experience, personal integrity
and reputation who are knowledgeable about the business activities and market
areas in which the Company and the Bank engage.
To be considered in the Committee's selection of individuals the
Committee recommends to the Board for selection as the Board's nominees,
recommendations from shareholders must be received by the Company in writing by
at least 120 days prior to the date the proxy statement for the previous year's
annual meeting was first distributed to shareholders. Recommendations should
identify the submitting shareholder, the person recommended for consideration
and the reasons the submitting shareholder believes such person should be
considered.
Stockholder Communications
The Board of Directors does not have a formal process for stockholders
to send communications to the Board. In view of the infrequency of stockholder
communications to the Board of Directors, the Board does not believe that a
formal process is necessary. Written communications received by the Company from
stockholders are shared with the full Board no later than the next regularly
scheduled Board meeting. The Board of Directors does not have a formal written
policy regarding director attendance at annual meetings. However, the Board
encourages directors to attend all annual meetings.
Certain Relationships and Related Transactions and Director Independence
No directors, executive officers or their immediate family members were
engaged, directly or indirectly, in transactions with the Company or any
subsidiary during any of the three years ended June 30, 2007 that exceeded
$120,000 (excluding loans with Millington Savings Bank).
Millington Savings Bank makes loans to its officers, directors and
employees in the ordinary course of business. All directors and employees are
offered a 50 basis point reduction on interest rates for consumer loans or
primary residence mortgage loans. Such loans do not include more than the normal
risk of collectibility or present other unfavorable features.
Other than Mr. Jolliffe and Mr. Shriner, who are employees of the Bank,
all of the directors are independent directors.
13
--------------------------------------------------------------------------------
COMPENSATION DISCUSSION AND ANALYSIS
--------------------------------------------------------------------------------
Executive Compensation
The following table sets forth information regarding compensation of
the principal executive officer, the principal financial officer and certain
other executive officers of the Company or the Bank for the fiscal year ended
June 30, 2007.
Non-Equity
Incentive Plan All Other
Salary Bonus Compensation(1) Compensation(2) Total
------ ----- --------------- --------------- -----
Gary T. Jolliffe $197,496 $5,000 $ - $42,701 $245,197
President and CEO
Michael A. Shriner $142,064 $5,000 $ - $24,086 $171,150
Executive Vice President and COO
Jeffrey E. Smith $101,036 $6,000 $ - $12,166 $119,202
Vice President and CFO
---------------------
(1) No awards were made under the Executive Incentive Retirement Plan for
fiscal 2007.
(2) All Other Compensation for Mr. Jolliffe consists of $991 for life
insurance, an employer contribution to the 401(k) Plan in the amount of
$30,026 and the Bank's contribution to the Directors Consultation and
Retirement Plan in the amount of $11,684. All Other Compensation for Mr.
Shriner consists of $159 for life insurance, an employer contribution to
the 401(k) Plan in the amount of $21,063 and the Bank's contribution to the
Directors Consultation and Retirement Plan in the amount of $2,864. All
Other Compensation for Mr. Smith consists of $619 for life insurance and an
employer contribution to the 401(k) Plan in the amount of $11,547.
Executive Incentive Retirement Plan. The Bank's executive incentive
retirement plan provides for equal annual installments for a period of 15 years
commencing on the first day of the calendar month following the termination of
employment due to retirement, resignation, disability or death. All payments
under the plan are in accordance with Code Section 409A. The amount payable is
based on the vested balance of the executive's accumulated awards plus interest
at the prime rate published in The Wall Street Journal, credited quarterly, but
no less than 4% or greater than 12%. The annual awards are based upon the
executive's base salary in effect at the beginning of the plan year and the
Bank's net income for the prior fiscal year. The percentage vested is based on
the sum of the executive's age and years of service. The participant becomes
fully vested at age 65, death, disability or upon a change in control of the
Bank. Upon the death of the participant, the beneficiary shall receive the
remaining balance paid in a lump sum.
No awards were made under the executive incentive retirement plan for
the year ended June 30, 2007.
Split Dollar Life Insurance Agreement. The Bank has entered into Life
Insurance Agreements with Officers Jolliffe, Shriner and Smith, which provide a
death benefit equal to the following: if the executive is: (i) employed by the
Bank at the time of his or her death, (ii) has retired from employment with the
Bank after completion of not less than twenty (20) years of service with the
Bank, or (iii) has retired from employment with the Bank and at such date of
retirement the sum of the executive's age and years of service equals not less
than 70, then the executive's beneficiary is entitled to payment of an amount
equal to 200% of the executive's highest annual base salary (not including
bonus, equity compensation, deferred compensation or any other forms of
compensation) in effect at the Bank at any time during the three calendar years
prior to the date of death of the executive. The maximum death
14
benefits for Officers Jolliffe, Shriner and Smith are approximately $407,000,
$293,000 and $208,000, respectively.
If a change in control of the Bank shall occur prior to the
executive's termination of employment or retirement, then the death benefit
coverage shall remain in effect until the executive's death, unless the
agreement is otherwise terminated pursuant to its terms prior to such date of a
change in control. Coverage under the agreement for the executive who terminates
employment with the Bank (for reasons other than death or a change in control of
the Bank) prior to completion of at least ten years of service with the Bank
(and prior to the occurrence of a change of control) will cease on his or her
last day of employment with the Bank.
401(k) Savings and Profit Sharing Plan ("401(k) Plan"). The Millington
Savings Bank 401(k) Plan is a tax-qualified defined contribution savings plan
with a profit sharing component for the benefit of all eligible employees. The
401(k) Plan has a profit-sharing component and an annual contribution is made by
the Bank to the 401(k) Plan for all employees who have completed twelve months
of service. In addition, employees may also voluntarily elect to defer between
1% and 80% of their compensation as 401(k) savings under the 401(k) Plan, not to
exceed applicable limits under federal tax laws. All eligible employees receive
the profit-sharing contribution regardless of whether they defer salary under
the 401(k) Plan. The 401(k) Plan also provides for matching contributions up to
a maximum of 50% of the first 6% of a person's salary for each participant.
Employee contributions are immediately fully vested. Matching contributions and
the annual profit-sharing contribution are vested at a rate of 20% per year
after two years and completely vested after six years of service.
Employee Stock Ownership Plan ("ESOP"). The Bank has established the
Millington Savings Bank ESOP for the exclusive benefit of participating
employees of Millington Savings Bank. Participating employees are salaried,
full-time employees who have completed at least one year of service and have
attained the age of 21. Benefits may be paid either in shares of the common
stock or in cash. Contributions to the ESOP and shares released from the
suspense account will be allocated annually among participants on the basis of
compensation. Participant benefits become fully vested in their ESOP allocations
following five years of service. Employment service before the adoption of the
ESOP is credited for the purposes of vesting. Contributions to the ESOP by
Millington Savings Bank are discretionary, but are anticipated to be sufficient
in amount necessary for the ESOP to meet the debt service obligations on the
ESOP loan.
As of June 30, 2007, no allocation had yet been made under the ESOP.
Employment Agreements
The Bank has entered into employment agreements with Messrs. Jolliffe,
Shriner and Smith. Mr. Jolliffe's, Mr. Shriner's and Mr. Smith's current base
salaries are $203,000, $146,000, $104,000, respectively. Mr. Jolliffe's and Mr.
Shriner's employment agreements have terms of three years while Mr. Smith's
agreement has a term of one year. Each of the agreements provides for an annual
one-year extension of the term of the agreement upon determination of the Board
of Directors that the executive's performance has met the requirements and
standards of the Board, so that the remaining term of the agreement continues to
be three years, in the case of Messrs. Jolliffe and Shriner, and one year, in
the case of Mr. Smith. If the Bank terminates Messrs. Jolliffe, Shriner or Smith
without "just cause" as defined in the agreement, they will be entitled to a
continuation of their salary from the date of termination through the remaining
term of their agreement, but in no event for a period of less than 12 months and
during the same period, the cost of obtaining all health, life, disability, and
other benefits at levels substantially equal to those being provided on the date
of termination of employment. Messrs. Jolliffe, Shriner and Smith's employment
agreements provide that if their employment is terminated without just cause
within twenty-
15
four months of a change in control, they will be paid a lump sum amount equal to
approximately three times their base salary for Messrs. Jolliffe and Shriner and
one year in the case of Mr. Smith. If change in control payments had been made
under the agreements as of June 30, 2007, the payments would have equaled
approximately $610,000, $439,000 and $104,000 to Mr. Jolliffe, Mr. Shriner and
Mr. Smith, respectively.
Director Compensation
The following table sets forth information regarding the compensation
of the Company's directors for the fiscal year ended June 30, 2007. The amounts
shown under "All Other Compensation" represent the Bank's contribution to the
Directors Consultation and Retirement Plan for that individual for the year. Mr.
Jolliffe and Mr. Shriner also serve as directors, however, their compensation is
detailed above under "Executive Compensation." Messrs. Jolliffe and Shriner do
not receive board fees but do participate in the Directors Consultation and
Retirement Plan.
Board All Other
Fees Compensation Total
---- ------------ -----
E. Haas Gallaway, Jr. $31,900 $15,454 $47,354
W. Scott Gallaway $31,900 $ 6,129 $38,029
Thomas G. McCain $31,900 $10,815 $42,715
Albert N. Olsen $60,200 $16,505 $76,705
Ferdinand J. Rossi $31,900 $15,846 $47,746
Board Fees. Directors currently are compensated only for their service
as directors of the Bank, and no additional compensation is paid for serving on
the Boards of MSB Financial Corp. or MSB Financial, MHC. For the year ended June
30, 2007, the Bank paid a fee of $2,200 per board meeting. The chairman of the
Board of Directors currently is paid a fee of $4,400 per board meeting. The
Board has regular meetings on a monthly basis and annually holds a special
strategic planning meeting, for a total of 13 meetings per year. Directors are
paid a flat monthly fee of $300 for their committee participation.
Directors Consultation and Retirement Plan (the "DCRP".) This plan
provides retirement benefits to the directors of the Bank based upon the number
of years of service to the Bank's board. To be eligible to receive benefits
under the DCRP, a director generally must have completed at least 10 years of
service and must not retire from the board prior to reaching 65 years of age. If
a director agrees to become a consulting director to the Bank's board upon
retirement, he will receive a monthly payment equal to 30-60% of the highest
Bank's board fee and retainer in effect during the three-year period prior to
the date of retirement based on the number of years of service as a director.
Benefits under the DCRP begin upon a director's retirement and are paid for 120
months; provided, however, that in the event of a director's death prior to the
receipt of all monthly payments, payments shall continue to the director's
surviving spouse or estate until 120 payments have been made. The retirement
benefit amount is payable to the participant for an additional period of 24
months for each additional period of five years of service completed by the
director in excess of twenty years of service as of their actual retirement
date. In the event there is a change in control (as defined in the DCRP), all
directors will be presumed to have 20 years of service and attained age 65 under
the DCRP and each director will receive a lump sum payment equal to the present
value of future benefits payable. All payments under the plan need to be in
accordance with Code Section 409A. Benefits under the DCRP are unvested and
forfeitable until retirement at or after age 65 with at least 10 years of
service, termination of service following a change in control, disability
following at least 10 years of service or death.
16
--------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
--------------------------------------------------------------------------------
Stockholder proposals, in order to be considered for inclusion within
the Company's proxy materials for the next Annual Meeting of Stockholders, must
be received at the Company's executive office at 1902 Long Hill Road,
Millington, New Jersey 07946 by September 11, 2008. Any other stockholder
proposals will only be considered at such meeting if the stockholder submits
notice of the proposal to the Company at least five days before such meeting.
--------------------------------------------------------------------------------
OTHER MATTERS
--------------------------------------------------------------------------------
At the time this Proxy Statement is being mailed, the Board of
Directors knows of no additional matters that will be presented for
consideration at the Meeting. If any other business may properly come before the
Meeting or any adjournment thereof less than a reasonable time before the
Meeting or any adjournment thereof, proxies given to the Board of Directors will
be voted by its members in accordance with their best judgment.
--------------------------------------------------------------------------------
MISCELLANEOUS
--------------------------------------------------------------------------------
The cost of soliciting 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 proxy materials
to the beneficial owners of the Common Stock. In addition to solicitations by
mail, directors, officers, and regular employees of the Company may solicit
proxies personally or by telephone without additional compensation. The Company
has retained Georgeson Inc., a proxy solicitation firm, to assist with the
solicitation of proxies by the Company for a fee of approximately $6,500, plus
reimbursement of reasonable out-of-pocket expenses. Approximately 30 persons
will be used by Georgeson in such solicitation.
--------------------------------------------------------------------------------
FORM 10-KSB
--------------------------------------------------------------------------------
A copy of the Company's Annual Report on Form 10-KSB for the fiscal
year ended June 30, 2007 accompanies this Proxy Statement.
17
APPENDIX A
MSB Financial Corporation
Millington Savings Bank
Audit Committee Charter & Policy Statement
Purpose
The Audit Committee ("Committee") is appointed by the Board of Directors of MSB
Financial Corporation (the "Company") and serves as a joint committee of the
Boards of Directors of both the Company and its wholly-owned subsidiary,
Millington Savings Bank (the "Bank"). The Committee is responsible for
overseeing the accounting and financial reporting processes of the Company, the
Bank, their subsidiaries and MSB Financial, MHC (referred to hereinafter
collectively as "MSB"). The Committee is also responsible for overseeing audits
of MSB's financial statements.
The Committee's primary duties and responsibilities are to:
o Monitor the integrity of MSB's systems of internal controls regarding
finance, accounting, and compliance; including the review and approval of
10K/10Q SEC filings.
o Monitor the independence and performance of the external audit firm and the
internal audit and compliance functions.
o Monitor compliance with legal and regulatory requirements.
o Monitor and manage a whistleblower program.
o Provide an avenue of communication among the external audit firm,
management and the Board of Directors.
The Committee has the authority to conduct any investigation appropriate to
fulfilling its responsibilities, and it has direct access to the external audit
firm as well as anyone in the MSB organization. The Committee has the ability to
retain, at the Company's expense, special legal, accounting, or other
consultants or experts it deems necessary in the performance of its duties. The
Committee has the authority to determine appropriate funding, at the Company's
expense, for payment of ordinary administrative expenses of the Committee that
are determined by the Committee to be necessary or appropriate in carrying out
the duties of the Committee. This charter will be recorded in the Company's and
the Bank's minutes, available in written form upon request.
A-1
Audit Committee Composition and Meetings
The Committee shall be comprised of three or more directors as appointed by the
Board of Directors, each of whom shall be non-executive directors and shall not
accept any consulting, advisory or other compensatory fees, other than director
fees, from MSB. Additionally, the committee shall be comprised of individuals
who are not officers or employees of any of MSB's affiliates and who are
independent, as defined by the rules of NASDAQ. All members of the Committee
shall have an understanding of financial statements. At least one member shall
have past employment experience in finance or accounting, required professional
certification in accounting, or any other comparable experience or background
which results in the individual's financial sophistication, including but not
limited to being or having been a chief executive officer, chief financial
officer or other senior officer with financial oversight responsibilities. At
least one member of the Committee shall be a financial expert as defined by the
Securities and Exchange Commission. The Committee Chair shall be elected by the
Committee.
The duties and responsibilities of a member of the Committee are in addition to
those duties set out for a member of the Board of Directors.
The Committee shall meet at least monthly, or more frequently as circumstances
dictate, or as determined by the Board of Directors, the Committee Chair, or the
Chief Executive Officer. Minutes of meetings will be approved by the Committee
and maintained.
Responsibilities
The Committee shall review and reassess the adequacy of this Charter at least
annually.
The Committee shall have responsibilities in four areas:
1. Audited Financial Statements;
2. External Audit Firm (as pertinent to the Audit Committee's
responsibilities);
3. Internal Audits; and 4. Compliance, including whistleblower procedures.
Audited Financial Statements
o Review the fiscal year-end audited financial statements;
o Recommend to the Board of Directors for its approval the financial
statements which the Committee has reviewed and found to be accurate,
timely, and containing all appropriate disclosures;
o Obtain satisfactory response from management concerning issues raised by
regulators, the external audit firm, or the internal audit function as they
relate to financial reporting; and
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External Audit Firms
o Be responsible for the appointment, compensation and oversight of external
audit firms;
o Determine appropriate funding to pay for audit, review or attest services
performed by external audit firms;
o Approve the audit plan of external audit firms;
o Approve all non-audit services, including tax services, prior to the
engaging the external audit firm to perform such services. The Committee
may delegate this responsibility to an individual Committee member or group
of Committee members. Non-audit services performed by any party other than
the external audit firm need not be approved by the Committee pursuant to
this section; and
o Review and discuss with the external audit firms on an annual basis all
significant relationships they have with the Bank that could impair the
external audit firm's independence and receive from the external audit firm
a written statement delineating all relationships between the external
audit firm and MSB.
Internal Audit Function
o Approve the annual audit plan, any subsequent changes, and ensure that the
scope of the audit activities have not been restricted by management;
o Approve the appointment, performance, and replacement of the audit
outsource provider, if applicable;
o Review significant audit findings, recommendations, and management's
corresponding responses and the implementation plan of significant audit
recommendations; and
o Direct that special studies, examinations and/or reviews be performed.
Compliance Function
o Approve a regulatory compliance program annually;
o Review legal and regulatory matters within the scope of any review that may
have a material effect on MSB, compliance with MSB's policies and
procedures, and reports received by regulators; and
o Discuss significant review findings, recommendations, and management's
corresponding responses and the implementation plan of significant audit
recommendations.
o Establish and maintain procedures for (i) the receipt, retention and
treatment of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters and (ii) the confidential,
anonymous submission by employees of concerns regarding questionable
accounting or auditing matters.
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Internal Controls
The Committee will review MSB's internal control system and the resolution of
identified material weaknesses and reportable conditions in the internal control
system, including the prevention or detection of management overrides or
compromise of the internal control system.
Publication of Charter
Pursuant to the rules of the Securities and Exchange Commission promulgated
under the Securities Exchange Act of 1934, as amended, a copy of this charter
shall be included as an appendix to the Company's annual meeting proxy statement
at least once every three fiscal years.
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APPENDIX B
MSB FINANCIAL CORP.
NOMINATING COMMITTEE CHARTER
Purpose:
Acting pursuant to Section 10 of Article IV of the Bylaws of MSB
Financial Corp. (the "Company"), the Board of Directors has established a
Nominating Committee whose purpose is to seek and recommend to the Board
qualified nominees for election or appointment to the Company's Board of
Directors.
Membership:
The Committee will consist of a minimum of two members of the Board of
Directors, and each committee member must be an independent director. Applicable
laws and regulations, including the regulations of the Nasdaq Stock Market, as
they may be amended from time to time, will be followed in evaluating a
director's independence. The members of the Committee will be appointed by and
serve at the discretion of the Board of Directors.
Nomination/Appointment Policy:
The Committee believes that it is in the best interest of the Company
and its shareholders to obtain highly-qualified persons to serve as members of
the Board of Directors. The Committee will seek nominees with excellent
decision-making ability, business experience, personal integrity and reputation
who are knowledgeable about the business activities and market areas in which
the Company and its subsidiaries engage.
The Committee's process for identifying and evaluating potential
nominees will include soliciting recommendations from directors and officers of
the Company and its wholly-owned subsidiary, Millington Savings Bank.
Additionally, the Committee will consider persons recommended by shareholders of
the Company in selecting the individuals the Committee recommends to the Board
for selection as the Board's nominees. The Committee will evaluate persons
recommended by directors or officers of the Company or Millington Savings Bank
and persons recommended by shareholders in the same manner.
To be considered in the Committee's selection of individuals the
Committee recommends to the Board for selection as the Board's nominees,
recommendations from shareholders must be received by the Company in writing by
at least 120 days prior to the date the proxy statement for the previous year's
annual meeting was first distributed to shareholders. Recommendations should
identify the submitting shareholder, the person recommended for consideration
and the reasons the submitting shareholder believes such person should be
considered.
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Responsibilities:
The responsibilities of the Nominating Committee shall include, but not
be limited to:
o Assist to identify, interview and recruit individuals for selection as
Board nominees for election as directors.
o Annually present to the Board a list of individuals recommended for
selection by the Board as the Board's nominees for election at the annual
meeting of shareholders.
o Regularly review and make recommendations about changes to the charter
of the Nominating Committee.
o Any other duties or responsibilities expressly delegated to the
Committee by the Board from time to time.
Meetings and Reports:
The Committee will meet at least once annually to evaluate and make a
recommendation to the Board of individuals for selection as the Board's nominees
for election at the annual meeting of shareholders. Additional meetings may
occur as the Committee or its chair deems advisable. The committee shall keep
regular minutes of the transactions of its meetings and shall cause them to be
recorded in books kept for that purpose in the office of the Company.
Nomination Procedures:
Except in the case of a nominee substituted as a result of the death or
other incapacity of a Board nominee, the Committee shall deliver written
nominations to the Secretary of the Company at least 20 days prior to the date
of the Company's annual meeting of shareholders. Upon delivery to the Secretary,
the Secretary shall post such nominations in a conspicuous place in the
principal place of business of the Company.
No nominations for directors except those made by the Committee shall
be voted upon at the Company's annual meeting of shareholders unless other
nominations by shareholders are made in writing and delivered to the Secretary
of the Company at least five days prior to the date of such meeting. Upon
delivery to the Secretary, the Secretary shall post such nominations in a
conspicuous place in the principal place of business of the Company.
Ballots bearing the names of all persons nominated by the Committee and
by shareholders shall be provided for use at the Company's annual meeting of
shareholders. However, if the Committee shall fail or refuse to act at least 20
days prior to the Company's annual meeting of shareholders, nominations for
directors may be made at the annual meeting by any shareholder entitled to vote
and shall be voted upon.
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Resources and Authority:
The Committee shall have the resources and authority appropriate to
discharge its duties and responsibilities, including the authority to select,
retain, terminate and approve the fees and other retention terms of special
counsel and other experts or consultants as it deems appropriate, without
seeking approval of the Board or management. With respect to consultants or
search firms used to identify director nominees, this authority shall be vested
solely in the Committee.
Publication of Charter:
Pursuant to the rules of the Securities and Exchange Commission
promulgated under the Securities Exchange Act of 1934, as amended, a copy of
this charter shall be included as an appendix to the Company's annual meeting
proxy statement at least once every three fiscal years.
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APPENDIX C
MSB FINANCIAL CORP.
2008 STOCK COMPENSATION AND INCENTIVE PLAN
1. PURPOSE OF PLAN.
The purpose of this 2008 Stock Compensation and Incentive Plan is to
provide incentives and rewards to officers, employees and directors that
contribute to the success and growth of MSB Financial Corp., and its Affiliates,
and to assist these entities in attracting and retaining directors, officers and
other key employees with necessary experience and ability required to aid the
Company in increasing the long-term value of the Company for the benefit of its
shareholders.
2. DEFINITIONS.
"Affiliate" means any "parent corporation" or "subsidiary corporation"
of the Company, as such terms are defined in Sections 424(e) and 424(f) of the
Code. The term Affiliate shall include the Bank..
"Award" means a Stock Option or Stock Options, as set forth at Section
6 of the Plan.
"Bank" means Millington Savings Bank, and any successors thereto.
"Beneficiary" means the person or persons designated by the Participant
to receive any benefits payable under the Plan in the event of such
Participant's death. Such person or persons shall be designated in writing by
the Participant and addressed to the Company or the Committee on forms provided
for this purpose by the Committee, and delivered to the Company or the
Committee. Such Beneficiary designation may be changed from time to time by
similar written notice to the Committee. A Participant's last will and testament
or any codicil thereto shall not constitute written designation of a
Beneficiary. In the absence of such written designation, the Beneficiary shall
be the Participant's surviving spouse, if any, or if none, the Participant's
estate.
"Board of Directors" means the board of directors of the Company.
"Cause" means the personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profits, intentional
failure to perform stated duties, willful violation of a material provision of
any law, rule or regulation (other than traffic violations and similar offense),
or a material violation of a final cease-and-desist order or any other action
which results in a substantial financial loss to the Company or its Affiliates.
"Change in Control" shall mean: (i) the sale of all, or a material
portion, of the assets of the Company or its Affiliates; (ii) the merger or
recapitalization of the Company whereby the Company is not the surviving entity;
(iii) a change in control of the Company, as otherwise defined or determined by
the Office of Thrift Supervision or regulations promulgated by it; or (iv) the
acquisition, directly or indirectly, of the beneficial ownership (within the
meaning of that term as it is used in Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder) of twenty-five percent (25%) or
more of the outstanding voting securities of the Company by any person, trust,
entity or group. This limitation shall not
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apply to the purchase of shares by underwriters in connection with a public
offering of Company stock, or the purchase of shares of up to 25% of any class
of securities of the Company by a tax-qualified employee stock benefit plan
which is exempt from the approval requirements, set forth under 12 C.F.R.
Section 574.3(c)(1)(vii) as now in effect or as may hereafter be amended. The
term "person" refers to an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein. A
Change in Control shall not include a transaction whereby the MHC shall merge
into the Company or the Bank and a new Parent of the Company or the Bank is
formed.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Board of Directors of the Company or the
administrative committee designated, pursuant to Section 3 of the Plan, to
administer the Plan.
"Common Stock" or "Shares" means shares of common stock of the Company.
"Company" means MSB Financial Corp., and any successor entity or any
future parent corporation of the Bank.
"Director" means a person serving as a member of the Board of Directors
of the Company from time to time.
"Director Emeritus" means a person serving as a director emeritus,
advisory director, consulting director or other similar position as may be
appointed by the Board of Directors of the Company or the Bank from time to
time.
"Disability" means (a) with respect to Incentive Stock Options, the
"permanent and total disability" of the Employee as such term is defined at
Section 22(e)(3) of the Code; and (b) with respect to other Awards, a condition
of incapacity of a Participant which renders that person unable to engage in the
performance of his or her duties by reason of any medically determinable
physical or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than
twelve (12) months.
"Effective Date" shall mean the date of stockholder approval of the
Plan by the stockholders of the Company.
"Eligible Participant" means an Employee or Outside Director who may
receive an Award under the Plan.
"Employee" means any person employed by the Company or an Affiliate.
Directors who are also employed by the Company or an Affiliate shall be
considered Employees under the Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Price" means the price at which an individual may purchase a
share of Common Stock pursuant to an Option.
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"Fair Market Value" means a) for a security traded on a national
securities exchange, including the Nasdaq Global market, the last reported sales
price reported on such date or, if the Common Stock was not traded on such date,
on the immediately preceding day on which the Common Stock was traded thereon or
the last previous date on which a sale is reported; b) if the Shares are not
traded on a national securities exchange, but are traded on the over-the-counter
market, if sales prices are not regularly reported for the Shares for the
trading day referred to in clause (a), and if bid and asked prices for the
Shares are regularly reported, the mean between the bid and the asked price for
the Shares at the close of trading in the over-the-counter market on the
applicable date, or if the applicable date is not a trading day, on the trading
day immediately preceding the applicable date; and (c) in the absence of such
markets for the Shares, the Fair Market Value shall be determined in good faith
by the Committee.
"Incentive Stock Option" means a Stock Option granted under the Plan,
that is intended to meet the requirements of Section 422 of the Code.
"MHC" means MSB Financial, MHC, the mutual holding company of the Bank.
"Non-Statutory Stock Option" means a Stock Option granted to an
individual under the Plan that is not intended to be and is not identified as an
Incentive Stock Option, or an Option granted under the Plan that is intended to
be and is identified as an Incentive Stock Option, but that does not meet the
requirements of Section 422 of the Code.
"Option" or "Stock Option" means an Incentive Stock Option or a
Non-Statutory Stock Option, as applicable.
"Outside Director" means a member of the Board of Directors of the
Company who is not also an Employee.
"Parent" means any present or future corporation which would be a
"parent corporation" of the Bank or the Company as defined in Sections 424(e)
and (g) of the Code.
"Participant" means an individual who is granted an Award pursuant to
the terms of the Plan; provide, however, upon the death of a Participant, the
term "Participant" shall also refer to a Beneficiary designated in accordance
with the Plan.
"Plan" means this MSB Financial Corp. 2008 Stock Compensation and
Incentive Plan.
3. ADMINISTRATION.
(a) Committee. The Committee shall administer the Plan. The Committee
shall consist of two or more disinterested directors of the
Company, who shall be appointed by the Board of Directors. A
member of the Board of Directors shall be deemed to be
disinterested only if he or she satisfies: (i) such requirements
as the Securities and Exchange Commission may establish for
non-employee directors administering plans intended to qualify
for exemption under Rule 16b-3 (or its successor) of the Exchange
Act and (ii) and to the extent deemed appropriate by the Board of
Directors, such requirements as the Internal Revenue Service may
establish for outside directors acting under plans intended to
qualify for exemption under Section 162(m)(4)(C) of the Code;
provided, however, a failure to comply with the
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requirements of subparagraphs (i) and (ii) shall not disqualify
any actions taken by the Committee. A majority of the entire
Committee shall constitute a quorum and the action of a majority
of the members present at any meeting at which a quorum is
present shall be deemed the action of the Committee. In no event
may the Committee revoke outstanding Awards without the consent
of the Participant. All decisions, determinations and
interpretations of the Committee shall be final and conclusive on
all persons affected thereby.
(b) Authority of Committee. Subject to paragraph (a) of this Section
3, the Committee shall:
(i) select the individuals who are to receive grants of Awards
under the Plan;
(ii) determine the type, number, vesting requirements,
acceleration of vesting and other features and conditions of
Awards made under the Plan;
(iii) interpret the Plan and Award Agreements (as defined below);
and
(iv) make all other decisions and determinations that may be
required or as the Committee deems necessary or advisable
related to the operation of the Plan.
(c) Awards. Each Award granted under the Plan shall be evidenced by a
written agreement (i.e., an "Award Agreement"). Each Award
Agreement shall constitute a binding contract between the Company
or an Affiliate and the Participant, and every Participant, upon
acceptance of an Award Agreement, shall be bound by the terms and
restrictions of the Plan and the Award Agreement. The terms of
each Award Agreement shall be set in accordance with the Plan,
but each Award Agreement may also include any additional
provisions and restrictions determined by the Committee. In
particular, and at a minimum, the Committee shall set forth in
each Award Agreement:
(i) the type of Award granted;
(ii) the Exercise Price for any Option;
(iii) the number of shares or rights subject to the Award;
(iv) the expiration date of the Award;
(v) the manner, time and rate (cumulative or otherwise) of
exercise or vesting of the Award; and
(vi) the restrictions, if any, placed on the Award, or upon
shares which may be issued upon the exercise or vesting of
the Award.
The Chairman of the Committee and/or the President of the Company
are hereby authorized to execute Award Agreements on behalf of
the Company or an Affiliate and to cause them to be delivered to
the Participants granted Awards under the Plan.
(d) Six-Month Holding Period. Subject to vesting requirements, if
applicable, except in the event of death or Disability of the
Participant or a Change in Control of the Company, a minimum of
six months must elapse between the date of the grant of an Option
and the date of the sale of the Common Stock received through the
exercise of such Option.
4. ELIGIBILITY.
Subject to the terms of the Plan, Employees and Outside Directors, as
the Committee shall determine from time to time, shall be eligible to receive
Awards in accordance with the Plan.
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5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE LIMITS.
5.1 Shares Available. Subject to the provisions of Section 7, the
Common Stock that may be delivered under this Plan shall be shares of the
Company's authorized but unissued Common Stock, shares of Common Stock purchased
in the open-market by the Company or any Trust established for purposes of
administration of the Plan and any shares of Common Stock held as treasury
shares.
5.2 Share Limits. The maximum number of shares of Common Stock that may
be delivered pursuant to Awards granted under this Plan (the "Share Limit")
equals 275,410 shares.
5.3 Awards Settled in Cash, Reissue of Awards and Shares. To the extent that an
Award is settled in cash or a form other than shares of Common Stock, or if
shares of Common Stock are withheld from an Award for tax purposes, then the
shares that would have been delivered had there been no such cash or other
settlement shall be counted against the shares available for issuance under this
Plan. Shares that are subject to or underlie Awards which expire or for any
reason are cancelled or terminated, are forfeited, fail to vest, or for any
other reason are not paid or delivered under this Plan shall again be available
for subsequent Awards under this Plan.
5.4 Reservation of Shares; No Fractional Shares; Minimum Issue. The
Company shall at all times reserve a number of shares of Common Stock sufficient
to cover the Company's obligations and contingent obligations to deliver shares
with respect to Awards then outstanding under this Plan. No fractional shares
shall be delivered under this Plan. The Committee may pay cash in lieu of any
fractional shares in settlements of Awards under this Plan. No fewer than 100
shares may be purchased on exercise of any Stock Option unless the total number
purchased or exercised is the total number at the time available for purchase or
exercise by the Participant.
6. AWARDS.
6.1 Stock Options.
The Committee may, subject to the limitations of this Plan and
the availability of shares of Common Stock reserved but not
previously awarded under the Plan, grant Stock Options to
Employees and Outside Directors, subject to terms and conditions
as it may determine, to the extent that such terms and conditions
are consistent with the following provisions:
(i) Exercise Price. The Exercise Price of Stock Options shall
not be less than one hundred percent (100%) of the Fair
Market Value of the Common Stock on the date of grant. The
Exercise Price of any Options awarded during calendar year
2008 or 2009 shall not be less than $10.00 per share,
subject to adjustment in accordance with Sections 8.1 and
8.3 herein.
(ii) Terms of Options. In no event may an individual exercise an
Option, in whole or in part, more than ten (10) years from
the date of grant.
(iii) Non-Transferability. Unless otherwise determined by the
Committee, an individual may not transfer, assign,
hypothecate, or dispose of an Option in any manner, other
than by will or the laws of intestate succession. The
Committee may,
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however, in its sole discretion, permit the transfer or
assignment of a Non-Statutory Stock Option, if it determines
that the transfer or assignment is for valid estate planning
purposes and is permitted under the Code and Rule 16b-3 of
the Exchange Act. For purposes of this Section 6.1, a
transfer for valid estate planning purposes includes, but is
not limited to, transfers:
(1) to a revocable inter vivos trust, as to which an
individual is both settlor and trustee;
(2) for no consideration to: (a) any member of the
individual's Immediate Family; (b) a trust solely for
the benefit of members of the individual's Immediate
Family; (c) any partnership whose only partners are
members of the individual's Immediate Family; or (d)
any limited liability corporation or other corporate
entity whose only members or equity owners are members
of the individual's Immediate Family.
For purposes of this Section 6.1, "Immediate Family"
includes, but is not necessarily limited to, a
Participant's parents, grandparents, spouse, children,
grandchildren, siblings (including half brothers and
sisters), and individuals who are family members by
adoption. Nothing contained in this Section 6.1 shall
be construed to require the Committee to give its
approval to any transfer or assignment of any Non-
Statutory Stock Option or portion thereof, and
approval to transfer or assign any Non-Statutory
Stock Option or portion thereof does not mean that such
approval will be given with respect to any other
Non-Statutory Stock Option or portion thereof. The
transferee or assignee of any Non-Statutory Stock
Option shall be subject to all of the terms and
conditions applicable to such Non-Statutory Stock
Option immediately prior to the transfer or assignment
and shall be subject to any other conditions
prescribed by the Committee with respect to such Non-
Statutory Stock Option.
(iv) Special Rules for Incentive Stock Options.
Notwithstanding the foregoing provisions, the following
rules shall further apply to grants of Incentive Stock
Options:
(1) If an Employee owns or is treated as owning,
for purposes of Section 422 of the Code,
Common Stock representing more than ten
percent (10%) of the total combined voting
securities of the Company at the time the
Committee grants the Incentive Stock Option
(a "10% Owner"), the Exercise Price shall
not be less than one hundred and ten percent
(110%) of the Fair Market Value of the
Common Stock on the date of grant.
(2) An Incentive Stock Option granted to a 10%
Owner shall not be exercisable more than
five (5) years from the date of grant.
(3) To the extent the aggregate Fair Market
Value of shares of Common Stock with respect
to which Incentive Stock Options are
exercisable for the first time by an
Employee during any calendar year, under the
Plan or any other
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stock option plan of the Company, exceeds
$100,000, or such higher value as may be
permitted under Section 422 of the Code,
Incentive Stock Options in excess of the
$100,000 limit shall be treated as Non-
Statutory Stock Options. Fair Market Value
shall be determined as of the date of grant
for each Incentive Stock Option.
(4) Each Award Agreement for an Incentive Stock
Option shall require the individual to
notify the Committee within ten (10) days of
any disposition of shares of Common Stock
under the circumstances described in Section
421(b) of the Code (relating to certain
disqualifying dispositions).
(5) Incentive Stock Options may only be awarded
to an Employee of the Company or its
Affiliates.
(v) Option Awards to Outside Directors. Subject to the
limitations of Section 6.4(a), the Committee may award
Non-Statutory Stock Options to purchase shares of
Common Stock to each Outside Director of the Company at
an Exercise Price equal to the Fair Market Value of the
Common Stock on such date of grant. The Options will be
first exercisable at the rate of 20% on the one year
anniversary of the date of grant of such Award and 20%
annually thereafter during periods of continuing
service as a Director or Director Emeritus. Upon the
death or Disability of the Director or Director
Emeritus, such Option shall be deemed immediately 100%
exercisable. Such Options shall continue to be
exercisable for a period of ten years following the
date of grant without regard to the continued services
of such Director as a Director or Director Emeritus. In
the event of the Director's death, such Options may be
exercised by the Beneficiary or the personal
representative of his estate or person or persons to
whom his rights under such Option shall have passed by
will or by the laws of descent and distribution.
Options may be granted to newly appointed or elected
Outside Directors within the sole discretion of the
Committee. The Exercise Price per share of such Options
granted shall be equal to the Fair Market Value of the
Common Stock at the time such Options are granted. All
outstanding Awards shall become immediately exercisable
in the event of a Change in Control of the Bank or the
Company. Unless otherwise inapplicable, or inconsistent
with the provisions of this paragraph, the Options to
be granted to Outside Directors hereunder shall be
subject to all other provisions of this Plan.
6.2 Award Payouts. Awards may be paid out in the form of cash, Common
Stock, or combinations thereof as the Committee shall determine in its sole
discretion, and with such restrictions as it may impose.
6.3 Consideration for Stock Options. The Exercise Price for any Stock
Option granted under this Plan may be paid by means of any lawful consideration
as determined by the Committee, including, without limitation, one or a
combination of the following methods:
(a) cash, check payable to the order of the Company, or
electronic funds transfer;
(b) the delivery of previously owned shares of Common Stock; or
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(c) subject to such procedures as the Committee may adopt,
pursuant to a "cashless exercise" with a third party who
provides financing for the purposes of (or who otherwise
facilitates) the purchase or exercise of such Stock Option.
In no event shall any shares newly-issued by the Company be issued for less than
the minimum lawful consideration for such shares or for consideration other than
consideration permitted by applicable state law. In the event that the Committee
allows a Participant to exercise an Option by delivering shares of Common Stock
previously owned by such Participant, any such shares delivered which were
initially acquired by the Participant from the Company (upon exercise of a stock
option or otherwise) must have been owned by the Participant for at least six
months prior to such date of delivery. Shares of Common Stock used to satisfy
the Exercise Price of an Option shall be valued at their Fair Market Value on
the date of exercise. The Company will not be obligated to deliver any shares
unless and until it receives full payment of the Exercise Price and any related
withholding obligations under Section 9.5 have been satisfied, or until any
other conditions applicable to exercise or purchase have been satisfied. No
Shares of Common Stock shall be issued until full payment has been received by
the Company, and no Participant shall have any of the rights of a stockholder of
the Company until shares of Common Stock are issued upon the exercise of such
Stock Options. Unless expressly provided otherwise in the applicable Award
Agreement, the Committee may at any time within its sole discretion eliminate or
limit a Participant's ability to pay the purchase or Exercise Price of any Award
by any method other than a cash payment to the Company.
6.4 Limitations on Awards.
(a) Stock Option Award Limitations. In no event shall Shares
subject to Options granted to Outside Directors in the
aggregate under this Plan exceed more than 35% of the total
number of shares authorized for delivery under this Plan.
Furthermore, in no event shall Shares subject to Options
granted to any single Outside Director under this Plan
exceed more than 7% of the total number of shares authorized
for delivery under this Plan. In no event shall Shares
subject to Options granted to any single Employee exceed
more than 25% of the total number of shares authorized for
delivery under this Plan.
(b) Vesting of Awards. Except as otherwise provided by the terms
of the Plan or by action of the Committee at the time of the
grant of an Award, Stock Options will be first earned and
exercisable at the rate of 20% of such Award on the one year
anniversary of the date of grant and 20% annually thereafter
during such periods of service as an Employee, Director or
Director Emeritus.
7. EFFECT OF TERMINATION OF SERVICE ON AWARDS.
7.1 General. The Committee shall establish the effect of a termination
of employment or service on the continuation of rights and benefits available
under an Award, and, in so doing, may make distinctions based upon, inter alia,
the recipient of such Award, the cause of termination and the type of the Award.
Notwithstanding the foregoing, the terms of Awards shall be consistent with the
following, as applicable:
(a) Termination of Employment. In the event that any
Participant's employment with the Company shall terminate
for any reason, other than Disability or death, all of any
such Participant's Incentive Stock Options, and all of any
such Participant's rights to purchase or receive shares of
Common Stock pursuant thereto, shall automatically terminate
on (A) the earlier of (i) or (ii): (i) the respective
expiration dates of any such Incentive Stock Options, or
(ii) the expiration of not more than three (3) months after
the date of such termination of employment; or (B) at such
later date as is determined by the Committee at
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the time of the grant of such Award based upon the
Participant's continuing status as a Director or Director
Emeritus of the Bank or the Company, but only if, and to the
extent that, the Participant was entitled to exercise any
such Incentive Stock Options at the date of such termination
of employment, and further that such Award shall thereafter
be deemed a Non-Statutory Stock Option.
(b) Disability. In the event that any Participant's employment
with the Company shall terminate as the result of the
Disability of such Participant, such Participant may
exercise any Incentive Stock Options previously granted to
the Participant pursuant to the Plan at any time prior to
the earlier of (i) the respective expiration dates of any
such Incentive Stock Options or (ii) the date which is one
(1) year after the date of such termination of employment,
but only if, and to the extent that, the Participant was
entitled to exercise any such Incentive Stock Options at the
date of such termination of employment.
(c) Death. In the event of the death of a Participant, any
Incentive Stock Options previously granted to such
Participant may be exercised by the Participant's
Beneficiary or the person or persons to whom the
Participant's rights under any such Incentive Stock Options
pass by will or by the laws of descent and distribution
(including the Participant's estate during the period of
administration) at any time prior to the earlier of (i) the
respective expiration dates of any such Incentive Stock
Options or (ii) the date which is two (2) years after the
date of death of such Participant, but only if, and to the
extent that, the Participant was entitled to exercise any
such Incentive Stock Options at the date of death. For
purposes of this Section 7.1(c), any Incentive Stock Option
held by an Participant shall be considered exercisable at
the date of his death if the only unsatisfied condition
precedent to the exercisability of such Incentive Stock
Option at the date of death is the passage of a specified
period of time. At the discretion of the Committee, upon
exercise of such Options, the Beneficiary may receive Shares
or cash or a combination thereof. If cash shall be paid in
lieu of shares of Common Stock, such cash shall be equal to
the difference between the Fair Market Value of such Shares
and the exercise price of such Options on the exercise date.
7.2 Events Not Deemed Terminations of Employment or Service. Unless
Company policy or the Committee provides otherwise, the employment relationship
shall not be considered terminated in the case of (a) sick leave, (b) military
leave, or (c) any other leave of absence authorized by the Company or the
Committee; provided that, unless reemployment upon the expiration of such leave
is guaranteed by contract or law, such leave is for a period of not more than 90
days. In the case of any Employee on an approved leave of absence, continued
vesting of the Award while on leave may be suspended until the Employee returns
to service, unless the Committee otherwise provides or applicable law otherwise
requires. In no event shall an Award be exercised after the expiration of the
term set forth in the Award Agreement.
7.3 Effect of Change of Affiliate Status. For purposes of this Plan and
any Award, if an entity ceases to be an Affiliate of the Company, a termination
of employment or service shall be deemed to have occurred with respect to each
individual who does not continue as an Employee or Outside Director with another
entity within the Company after giving effect to the Affiliate's change in
status.
C-9
8. ADJUSTMENTS IN CAPITAL STRUCTURE; ACCELERATION UPON A CHANGE IN CONTROL.
8.1 Adjustments in Capital Structure. Upon any reclassification,
recapitalization, stock split (including a stock split in the form of a stock
dividend) or reverse stock split ("stock split"); any merger, combination,
consolidation, or other reorganization; any spin-off, split-up, or similar
extraordinary dividend distribution with respect to the Common Stock (whether in
the form of securities or property); any exchange of Common Stock or other
securities of the Company, or any similar, unusual or extraordinary corporate
transaction affecting the Common Stock; or a sale of all or substantially all
the business or assets of the Company in its entirety; then the Committee shall
proportionately adjust the Plan and the Awards thereunder in such manner, to
such extent and at such times, as is necessary to preserve the benefits or
potential benefits of such Awards, including:
(a) proportionately adjust any or all of: (1) the number and type of
shares of Common Stock (or other securities) that thereafter may
be made the subject of Awards (including the specific Share
Limits, maximums and numbers of shares set forth elsewhere in
this Plan); (2) the number, amount and type of shares of Common
Stock (or other securities or property) subject to any or all
outstanding Awards; (3) the grant, purchase, or Exercise Price of
any or all outstanding Awards; (4) the securities, cash or other
property deliverable upon exercise or payment of any outstanding
Awards; or (5) the performance standards applicable to any
outstanding Awards; or
(b) make provision for a cash payment or for the assumption,
substitution or exchange of any or all outstanding Awards, based
upon the distribution or consideration payable to holders of the
Common Stock.
8.2 The Committee may adopt such valuation methodologies for
outstanding Awards as it deems reasonable in the event of a cash or property
settlement and, in the case of Options, may base such settlement solely upon the
excess, if any, of the per share amount payable upon or in respect of such event
over the Exercise Price or base price of the Award. With respect to any Award of
an Incentive Stock Option, the Committee may make an adjustment that causes the
Option to cease to qualify as an Incentive Stock Option without the consent of
the affected Participant.
8.3 Upon any of the events set forth in Section 8.1, the Committee may
take such action prior to such event to the extent that the Committee deems the
action necessary to permit the Participant to realize the benefits intended to
be conveyed with respect to the Awards in the same manner as is or will be
available to stockholders of the Company generally. In the case of any stock
dividend, stock split or reverse stock split, if no action is taken by the
Committee, the proportionate adjustments contemplated by Section 8.1(a) above
shall nevertheless be made.
8.4 Automatic Acceleration of Awards. Unless otherwise determined by
the Committee, ,upon a Change in Control of the Company or the Bank, each Stock
Option then outstanding shall become fully earned and exercisable and remain
exercisable for its remaining term.
8.5 Acceleration of Vesting. The Committee shall at all times have the
power to accelerate the exercise date of Options with respect to previously
granted Awards; provided that such action is not contrary to regulations of the
Office of Thrift Supervision or other appropriate banking regulatory agency then
in effect.
C-10
9. MISCELLANEOUS PROVISIONS.
9.1 Compliance with Laws. This Plan, the granting and vesting of Awards
under this Plan, the offer, issuance and delivery of shares of Common Stock, the
acceptance of payment of money under this Plan or under Awards are subject to
compliance with all applicable federal and state laws, rules and regulations
(including, but not limited to, state and federal securities laws) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. The person acquiring any securities under this Plan will, if
requested by the Company, provide such assurances and representations to the
Company as may be deemed necessary or desirable to assure compliance with all
applicable legal and accounting requirements.
9.2 Claims. No person shall have any claim or rights to an Award (or
additional Awards, as the case may be) under this Plan, subject to any express
contractual rights to the contrary (set forth in a document other than this
Plan).
9.3 No Employment/Service Contract. Nothing contained in this Plan (or
in any other documents under this Plan or in any Award Agreement) shall confer
upon any Participant any right to continue in the employ or other service of the
Company, constitute any contract or agreement of employment or other service or
affect an Employee's status as an employee-at-will, nor interfere in any way
with the right of the Company to change a Participant's compensation or other
benefits, or terminate his or her employment or other service, with or without
cause. Nothing in this Section 9.3, however, is intended to adversely affect any
express independent right of such Participant under a separate employment or
service contract other than an Award Agreement.
9.4 Plan Not Funded. Awards payable under this Plan shall be payable in
shares of Common Stock or from the general assets of the Company. No
Participant, beneficiary or other person shall have any right, title or interest
in any fund or in any specific asset (including shares of Common Stock, except
as expressly provided otherwise) of the Company by reason of any Award
hereunder. Neither the provisions of this Plan (or of any related documents),
nor the creation or adoption of this Plan, nor any action taken pursuant to the
provisions of this Plan shall create, or be construed to create, a trust of any
kind or a fiduciary relationship between the Company and any Participant,
Beneficiary or other person. To the extent that a Participant, Beneficiary or
other person acquires a right to receive payment pursuant to any Award
hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Company.
9.5 Tax Matters; Tax Withholding.
(a) Tax Withholding. Upon any exercise, vesting, or payment of
any Award, the Company shall have the right, within its sole
discretion, to:
(i) require the Participant (or the Participant's personal
representative or Beneficiary, as the case may be) to
pay or provide for payment of at least the minimum
amount of any taxes which the Company may be required
to withhold with respect to such Award or payment; or
(ii) deduct from any amount otherwise payable in cash to the
Participant (or the Participant's personal
representative or Beneficiary, as the case may be) the
C-11
minimum amount of any taxes which the Company may be
required to withhold with respect to such cash payment,
or
(iii) in any case where tax withholding is required in
connection with the delivery of shares of Common Stock
under this Plan, the Committee may, in its sole
discretion, pursuant to such rules and subject to such
conditions as the Committee may establish, reduce the
number of shares to be delivered to the Participant by
the appropriate number of shares, valued in a
consistent manner at their Fair Market Value as
necessary to satisfy the minimum applicable withholding
obligation. In no event shall the shares withheld
exceed the minimum whole number of shares required for
tax withholding under applicable law.
(b) Required Notification of Section 83(b) Election. In the
event a Participant makes an election under Section 83(b) of
the Code in connection with an Award, the Participant shall
notify the Company of such election within ten days of
filing notice of the election with the Internal Revenue
Service or other governmental authority, in addition to any
filing and notification required pursuant to regulations
issued under Section 83(b) of the Code or other applicable
provision.
(c) Requirement of Notification Upon Disqualifying Disposition
Under Section 421(b) of the Code. If any Participant shall
make any disposition of shares of Stock delivered pursuant
to the exercise of Incentive Stock Options under the
circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions), such
Participant shall notify the Company of such disposition
within ten days thereof.
9.6 Effective Date, Termination and Suspension, Amendments.
(a) Effective Date and Termination. This Plan is effective upon
the later of approval of the Plan by the Board of Directors
of the Company or the vote of approval by the stockholders
of the Company ("Approval Date"). Unless earlier terminated
by the Board, this Plan shall terminate at the close of
business on the day before the tenth anniversary of the
Approval Date. After the termination of this Plan either
upon such stated expiration date or its earlier termination
by the Board, no additional Awards may be granted under this
Plan, but previously granted Awards (and the authority of
the Committee with respect thereto, including the authority
to amend such Awards) shall remain outstanding in accordance
with their applicable terms and conditions and the terms and
conditions of this Plan.
(b) Board Authorization. Subject to applicable laws and
regulations, the Board of Directors may, at any time,
terminate or, from time to time, amend, modify or suspend
this Plan, in whole or in part; provided, however, that no
such amendment may have the effect of repricing the Exercise
Price of Options. No Awards may be granted during any period
that the Board of Directors suspends this Plan.
(c) Stockholder Approval. The Plan must be approved by a
majority of votes cast by stockholders of the Company
(including votes cast by MSB Financial, MHC under Nasdaq
rules), by a majority of the total votes of the Company
eligible to be cast (including votes eligible to be cast by
MSB Financial, MHC) and by a majority of votes cast by
stockholders of the Company (excluding shares voted by MSB
Financial, MHC) or such other approval vote as may be
required by the Office of Thrift Supervision.
C-12
(d) Limitations on Amendments to Plan and Awards. No amendment,
suspension or termination of this Plan or change affecting
any outstanding Award shall, without the written consent of
the Participant, affect in any manner materially adverse to
the Participant any rights or benefits of the Participant or
obligations of the Company under any Award granted under
this Plan prior to the effective date of such change.
Changes, settlements and other actions contemplated by
Section 8 shall not be deemed to constitute changes or
amendments for purposes of this Section 9.6.
9.7 Governing Law; Compliance with Regulations; Construction;
Severability.
(a) Construction. This Plan, the Awards, all documents
evidencing Awards and all other related documents shall be
governed by, and construed in accordance with, the laws of
the United States and the laws of the State of New Jersey to
the extent not preempted by Federal law.
(b) Compliance with Regulations. This Plan will comply with the
requirements set forth in 12 C.F.R. Section 563b.500.
Notwithstanding any other provision in this Plan, no shares
of Common Stock shall be issued with respect to any Award to
the extent that such issuance would cause the MHC to fail to
qualify as a mutual holding company of the Bank under
applicable federal laws or regulations.
(c) Severability. If a court of competent jurisdiction holds any
provision invalid and unenforceable, the remaining
provisions of this Plan shall continue in effect.
(d) Section 16 of Exchange Act. It is the intent of the Company
that the Awards and transactions permitted by Awards be
interpreted in a manner that, in the case of Participants
who are or may be subject to Section 16 of the Exchange Act,
qualify, to the maximum extent compatible with the express
terms of the Award, for exemption from matching liability
under Rule 16b-3 promulgated under the Exchange Act.
Notwithstanding the foregoing, the Company shall have no
liability to any Participant for Section 16 consequences of
Awards or events affecting Awards if an Award or event does
not so qualify.
(e) Compliance with Law. Shares of Common Stock shall not be
issued with respect to any Award granted under the Plan
unless the issuance and delivery of such shares shall comply
with all relevant provisions of applicable law, including,
without limitation, the Securities Act of 1933, as amended,
the rules and regulations promulgated thereunder, any
applicable state securities laws and the requirements of any
stock exchange upon which the shares may then be listed.
(f) Necessary Approvals. The inability of the Company to obtain
any necessary authorizations, approvals or letters of
non-objection from any regulatory body or authority deemed
by the Company's counsel to be necessary to the lawful
issuance and sale of any shares of Common Stock issuable
hereunder shall relieve the Company of any liability with
respect to the non-issuance or sale of such shares.
(g) Representations and Warranties of Participants. As a
condition to the exercise of any Option or the delivery of
shares in accordance with an Award, the Company may require
the person exercising the Option or receiving delivery of
the shares to make such
C-13
representations and warranties as may be necessary to assure
the availability of an exemption from the registration
requirements of federal or state securities law.
(h) Termination for Cause. Notwithstanding anything herein to
the contrary, upon the termination of employment or service
of a Participant by the Company or an Affiliate for "cause"
as defined at 12 C.F.R. Section 563.39(b)(1) as determined
by the Board of Directors or the Committee, all Awards held
by such Participant which have not yet been delivered shall
be forfeited by such Participant as of the date of such
termination of employment or service.
(i) Cash Payment in Lieu of Delivery of Shares. Upon the
exercise of an Option, the Committee, in its sole and
absolute discretion, may make a cash payment to the
Participant, in whole or in part, in lieu of the delivery of
shares of Common Stock. Such cash payment to be paid in lieu
of delivery of Common Stock shall be equal to the difference
between the Fair Market Value of the Common Stock on the
date of the Option exercise and the exercise price per share
of the Option. Such cash payment shall be in exchange for
the cancellation of such Option. Such cash payment shall not
be made in the event that such transaction would result in
liability to the Participant or the Company under Section
16(b) of the Exchange Act and regulations promulgated
thereunder, or subject the Participant to additional tax
liabilities related to such cash payments pursuant to
Section 409A of the Code.
(j) Certain Regulatory Matters. In the event that the Bank shall
be deemed critically undercapitalized (as defined at 12
C.F.R. Section 565.4), is subject to enforcement action by
the Office of Thrift Supervision, or receives a capital
directive under 12 C.F.R. Section 565.7, then all Options
awarded to executive officers or Directors of the Company or
its Affiliates must exercise such Options or forfeit such
Options.
(k) Forfeiture of Awards in Certain Circumstances. In addition
to any forfeiture or reimbursement conditions the Committee
may impose upon an Award, a Participant may be required to
forfeit an Award, or reimburse the Company for the value of
a prior Award, by virtue of the requirement of Section 304
of the Sarbanes-Oxley Act of 2002 (or by virtue of any other
applicable statutory or regulatory requirement), but only to
the extent that such forfeiture or reimbursement is required
by such statutory or regulatory provision. Unless otherwise
determined by the Committee, in the event of a forfeiture of
an Award with respect to which a Participant paid cash
consideration, the Participant shall be repaid the amount of
such cash consideration.
9.8 Captions. Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of this Plan or any provision thereof.
9.9 Non-Exclusivity of Plan. Nothing in this Plan shall limit or be
deemed to limit the authority of the Board of Directors or the Committee to
grant Awards or authorize any other compensation, with or without reference to
the Common Stock, under any other plan or authority.
9.10 Limitation on Liability. No Director, member of the Committee or
the Trustee shall be liable for any determination made in good faith with
respect to the Plan, the Trust or any Awards granted. If a Director, member of
the Committee or the Trustee is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by any reason of anything done or not
done by him in such capacity under or with respect to
C-14
the Plan, the Company shall indemnify such person against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such action, suit or
proceeding if he or she acted in good faith and in a manner he or she reasonably
believed to be in the best interests of the Company and its Affiliates and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful.
C-15
--------------------------------------------------------------------------------
MSB FINANCIAL CORP.
1902 LONG HILL ROAD
MILLINGTON, NEW JERSEY 07946
ANNUAL MEETING OF STOCKHOLDERS
March 10, 2008
--------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors of MSB Financial
Corp. (the "Company"), or its designee, with full powers of substitution, to act
as attorneys and proxies for the undersigned, to vote all shares of Common Stock
of the Company, which the undersigned is entitled to vote at the Annual Meeting
of Stockholders (the "Meeting"), to be held at the Old Mill Inn, 225 Route 202,
Basking Ridge, New Jersey 07920, on March 10, 2008, at 3:00 p.m. and at any and
all adjournments thereof, in the following manner:
FOR WITHHELD
--- --------
1. The election as director of the nominees
listed with terms to expire in 2010
(except as marked to the contrary below): [_] [_]
E. Haas Gallaway, Jr. W. Scott Gallaway
Michael A. Shriner
INSTRUCTIONS: To withhold your vote for any nominee, write the nominee's name on
the line provided below.
--------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of the appointment of
Beard Miller Company LLP as the
Company's independent auditor for the
fiscal year ending June 30, 2008. [_] [_] [_]
3. The approval of the MSB Financial Corp.
2008 Stock Compensation and Incentive Plan [_] [_] [_]
The Board of Directors recommends a vote "FOR" all of the above listed
nominees and proposals.
--------------------------------------------------------------------------------
THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR THE NOMINEES LISTED AND ALL OF
THE PROPOSALS STATED. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS
SIGNED PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT.
AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE
PRESENTED AT THE MEETING.
--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting, or
at any adjournments thereof, and after notification to the Secretary of the
Company at the Meeting of the stockholder's decision to terminate this Proxy,
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned may also revoke this Proxy by filing a
subsequently dated Proxy or by written notification to the Secretary of the
Company of his or her decision to terminate this Proxy.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders and a
Proxy Statement.
[_] Check Box if You Plan
Dated: to Attend the Annual Meeting.
------------------------
------------------------------- ------------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
------------------------------- ------------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this Proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
--------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
--------------------------------------------------------------------------------
[MSB FINANCIAL CORP. LETTERHEAD]
TO: Participants in the Millington Savings Bank Savings Plan
Date: February 11, 2008
As described in the enclosed materials, your voting instructions are being
requested as a participant under the Millington Savings Bank Savings Plan (the
"401K Plan") in connection with an upcoming Annual Meeting of Stockholders of
MSB Financial Corp. ("Company"). The Annual Meeting is for the purpose of
considering and acting upon the following matters:
1. The election of three directors of MSB Financial Corp.;
2. Ratification of the appointment of Beard Miller Company LLP as
the Company's independent auditor for the year ending June 30,
2008; and
3. The approval of the MSB Financial Corp. 2008 Stock Compensation
and Incentive Plan.
We hope you will take advantage of the opportunity to direct the manner in which
shares of Company common stock allocated to your account under the 401K Plan
will be voted.
Enclosed with this letter are a Proxy Statement, the Company's Annual Report for
the fiscal year ended June 30, 2007, and a 401K Plan Voting Instruction Form,
which will permit you to vote the shares allocated to your 401K Plan account.
After you have reviewed the Proxy Statement, we urge you to vote your shares
held pursuant to the 401K Plan by marking, dating, signing and returning the
enclosed voting instruction ballot in the enclosed, postage-paid Return Envelope
addressed to: 401K Plan Vote Tabulation c/o __________("Vote Tabulator"). Please
mail the voting instruction form in this Return Envelope as addressed so that it
is received no later than February __, 2008. Your voting instructions will be
received by the Vote Tabulator, who will tabulate the voting instructions
received, and then furnish it to the 401K Plan Trustees. The Vote Tabulator and
the 401K Plan Trustees will maintain the confidentiality of your personal voting
instructions. The 401K Plan Trustees will certify the totals to the Company for
the purpose of having those shares voted.
We urge each of you to vote, as a means of participating in the governance of
the affairs of the Company. If your voting instructions for the 401K Plan are
not received in a timely manner, the shares allocated to your account will be
voted by the 401K Plan Trustees at the direction of the Company's Board of
Directors serving as the 401K Plan Administrator. While I hope that you will
vote in the manner recommended by the Board of Directors, the most important
thing is that you vote in whatever manner you deem appropriate. Please take a
moment to do so.
Please note the enclosed material relates only to those shares that have been
allocated to your account under the 401K Plan. You will receive other voting
material for those shares owned by you individually and not under the 401K Plan.
Sincerely,
/s/Gary T. Jolliffe
Gary T. Jolliffe
President and Chief Executive Officer
401K PLAN VOTING INSTRUCTION FORM
MSB Financial Corp.
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF SHAREHOLDERS FOR WITHHELD
MARCH 10, 2008 1. The election as director [ ] [ ]
of the nominees listed with
The undersigned hereby instructs the Trustees of the Millington terms to expire in 2010
Savings Bank Savings Plan ("401K Plan") to vote, as designated (except as marked to the
below, all the shares of Common Stock of MSB Financial Corp. contrary below):
("Company") allocated to the undersigned pursuant to the 401K Plan
as of January 29, 2008, at the Annual Meeting of Stockholders (the E. Haas Gallaway, Jr.
"Meeting"), to be held at the Old Mill Inn, 225 Route 202, Basking W. Scott Gallaway
Ridge, New Jersey 07920, on March 10, 2008, at 3:00 p.m. and at Michael A. Shriner
any and all adjournments thereof, in the following manner:
INSTRUCTION: To withhold authority to vote for a listed
nominee(s), write the nominee's name in the line provided
below.
FOR AGAINST ABSTAIN
2. Ratification of the [ ] [ ] [ ]
appointment of Beard
Miller Company LLP
as the Company's independent
Auditors for the year ending
June 30, 2008.
3. Approval of the MSB [ ] [ ] [ ]
Financial Corp. 2008
Stock Compensation and
Incentive Plan.
If you return this 401K Plan Voting Instruction Form
properly signed, but you do not otherwise specify, shares
allocated to your 401K Plan account will be voted "FOR" the
above listed nominees and proposals. If you do not return this
401K Plan Voting Instruction Form, your shares will be
voted by the Trustees at the direction of the Company's Board
of Directors serving as the 401K Plan Administrator.
The Company's Board of Directors recommends a vote "FOR"
the above listed nominees and proposals. It is anticipated
that, subject to its fiduciary duty, the Company's Board of
Directors serving as the 401K Plan Administrator will
instruct the 401K Plan Trustees to vote the all shares for
which no timely voting direction is received "FOR" the above
listed nominees and proposals.
Dated:________________, 2008 ______________________
Signature
Print Name: _____________________
PLEASE ACT PROMPTLY
SIGN, DATE AND RETURN THIS 401K PLAN VOTING INSTRUCTION FORM TODAY IN THE
ENCLOSED FORM ADDRESSED TO THE VOTE TABULATOR.