def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to Section 240.14a-12
Central Federal Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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Check box if any part of the fee is offset as provided by Exchange Act rule
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2923 Smith
Road
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Fairlawn,
Ohio 44333
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(330) 666-7979
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April 19, 2011
Fellow Stockholders:
You are cordially invited to attend the Annual Meeting of
Stockholders of Central Federal Corporation which will be held
at Fairlawn Country Club, located at 200 North Wheaton Road,
Fairlawn, Ohio, on Thursday, May 19, 2011 at
10:00 a.m., local time.
The attached notice of the Annual Meeting and proxy statement
describe the formal business to be transacted at the Meeting.
Directors and officers of the Company, as well as a
representative of Crowe Horwath LLP, the Companys
independent registered public accounting firm, will be present
at the Meeting to respond to any questions stockholders may have
regarding the business to be transacted. In addition, the
Meeting will include managements report on the
Companys financial performance for 2010. Attendance at the
Meeting is limited to stockholders of record as of the close of
business on April 8, 2011, their duly appointed proxies and
guests of management.
The Board of Directors of Central Federal Corporation has
determined that matters to be considered at the Annual Meeting
are in the best interests of the Company and its stockholders,
and the Board unanimously recommends that you vote
FOR each of the proposals identified in the
accompanying proxy statement.
Your vote is very important. Whether or not you expect to attend
the Meeting, please read the enclosed proxy statement and then
complete, sign and return the enclosed proxy card promptly in
the postage-paid envelope provided so that your shares will be
represented. If you attend the Meeting, you may vote in person
even if you have previously mailed a proxy card.
On behalf of the Board of Directors and all of the employees,
thank you for your continued interest and support.
Sincerely yours,
Eloise L. Mackus
Chief Executive Officer, General Counsel and Corporate Secretary
TABLE OF CONTENTS
2923 Smith Road
Fairlawn, Ohio 44333
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on May 19, 2011
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
of Central Federal Corporation will be held Thursday,
May 19, 2011 at the Fairlawn Country Club, located at 200
North Wheaton Road, Fairlawn, Ohio at 10:00 a.m., local
time.
The purpose of the Meeting is to consider and vote upon the
following matters:
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1.
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The election as Directors of the two nominees for terms of three
years each, or until their successors are elected and qualified;
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2.
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The approval, in a non-binding advisory vote, of the
compensation of executives disclosed in the proxy statement;
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3.
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The ratification of the appointment of Crowe Horwath LLP as
independent registered public accounting firm for the Company
for the year ending December 31, 2011; and
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4.
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Such other matters as may properly come before the Meeting. The
Board of Directors is not currently aware of any other business
to come before the Meeting.
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Record holders of the common stock of Central Federal
Corporation at the close of business on April 8, 2011 are
entitled to receive notice of and to vote at the Meeting and any
adjournment(s) or postponement(s) of the Meeting. The Meeting
may, for example, be adjourned to permit the Company to solicit
additional proxies in the event that there are insufficient
shares present or represented at the Meeting for a quorum or
insufficient votes to approve or ratify any of the
aforementioned proposals at the time of the Meeting. A list of
stockholders entitled to vote will be available at the Meeting
and for the ten days preceding the Meeting at CFBank, 2923 Smith
Road, Fairlawn, Ohio 44333.
By the Order of The Board of Directors
Eloise L. Mackus
Chief Executive Officer, General Counsel and
Corporate Secretary
Fairlawn, Ohio
April 19, 2011
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE
COMPANY THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO
ENSURE A QUORUM. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
INFORMATION
CONCERNING SOLICITATION AND VOTING
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors of Central Federal
Corporation (the Company) of proxies to be voted at
the Annual Meeting of Stockholders of the Company (the
Meeting) to be held at Fairlawn Country Club, 200
North Wheaton Road, Fairlawn, Ohio, at 10:00 a.m. local
time on May 19, 2011, and at any and all postponements or
adjournments thereof. Your vote is very important. This proxy
statement, proxy card and 2010 Annual Report are being first
sent or given on or about April 19, 2011 to stockholders of
record at the close of business on April 8, 2011. The Board
of Directors encourages you to read this proxy statement
thoroughly and to take this opportunity to vote on the matters
to be decided at the Meeting. This proxy statement and the form
of proxy card and 2010 Annual Report are also available at
www.CFBankonline.com/secproxy. The Companys principal
executive offices are located at 2923 Smith Road, Fairlawn, Ohio
44333.
VOTING
PROCEDURES AND ATTENDING THE MEETING
WHO MAY
ATTEND THE MEETING?
If you are a stockholder of record as of the close of business
on April 8, 2011, you are entitled to attend the Meeting.
Please note, however, that if you hold your shares in street
name (i.e., you are a beneficial owner of shares of Company
common stock that are held by a broker, bank or other nominee),
you will need proof of ownership to be admitted to the Meeting.
See HOW DO I VOTE and MUST I VOTE BY PROXY OR MAY I VOTE IN
PERSON AT THE ANNUAL MEETING?
WHO IS
ENTITLED TO VOTE?
You are entitled to vote your shares of common stock if the
Companys records show that you held your shares as of the
close of business on April 8, 2011. As of the close of
business on that date, a total of 4,127,798 shares of
common stock were outstanding and entitled to vote. Each share
of common stock is entitled to one vote on each matter presented
at the Meeting, except that, as provided in the Companys
Certificate of Incorporation, record holders of common stock
that is beneficially owned, either directly or indirectly, by a
person (either a natural person or an entity) who, as of the
close of business on April 8, 2011, beneficially owned a
total number of shares of common stock in excess of 10% of the
outstanding shares of common stock (the 10% limit)
are not entitled to any vote of their shares that are in excess
of the 10% limit, and those shares are not treated as
outstanding for voting purposes.
A person is deemed to beneficially own shares owned by an
affiliate of, as well as by persons acting in concert with, such
person. The Companys Certificate of Incorporation
authorizes the Board of Directors (i) to make all
determinations necessary to implement and apply the 10% limit,
including determining whether persons are acting in concert, and
(ii) to demand that any person who is reasonably believed
to beneficially own stock in excess of the 10% limit supply
information to the Company to enable the Board of Directors to
implement and apply the 10% limit.
As of the record date, April 8, 2011, there were three
persons that were known to the Company to be the beneficial
owner of more than 5% of the Companys outstanding common
stock, and there was no person known to the Company to be
subject to the 10% limit. See SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS on page 17 of this proxy statement.
1
HOW DO I
VOTE?
If you were a stockholder of record as of April 8, 2011,
you may vote in person by attending the Meeting or you may vote
by completing the enclosed proxy card and returning it signed
and dated in the enclosed postage-paid envelope. If you hold
your shares through a broker, bank or other nominee, you are
considered to hold your shares in street name, and
you will receive separate instructions from the nominee
describing how to vote your shares. Please note that if you hold
your shares in street name and wish to vote those shares in
person at the Meeting, you will need to obtain a written proxy
from the broker, bank or other nominee that holds those shares
for you.
MUST I VOTE
BY PROXY OR MAY I VOTE IN PERSON AT THE ANNUAL MEETING?
You may vote in person at the Meeting if you are a stockholder
of record and you provide at the Meeting the identification
required for admission. To be admitted at the Meeting, you may
need to present personal photo identification. If your shares
are held in street name (i.e., the shares are not registered in
your name), you must (1) bring personal photo
identification and proof of stock ownership to the Meeting to be
admitted, and (2) obtain and bring with you to the Meeting
a proxy from your broker, bank or other institution in whose
name your shares are held in order to vote those shares at the
Meeting. A copy of your account statement or a letter from your
broker, bank or other institution reflecting the number of
shares of common stock you owned as of April 8, 2011
constitutes adequate proof of stock ownership.
WHAT ARE
THE MATTERS TO BE PRESENTED?
Three proposals will be presented for you to consider and vote
on at the Meeting:
1) the election as directors of the two nominees;
2) to approve, in a non-binding advisory vote, the
compensation of executives disclosed in this proxy
statement; and
3) ratification of the appointment of the independent
registered public accounting firm for 2011.
WHAT ARE THE VOTING RECOMMENDATIONS OF THE BOARD OF DIRECTORS?
The Board of Directors unanimously recommends that you
vote:
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FOR EACH NOMINEE TO THE BOARD OF DIRECTORS;
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FOR THE APPROVAL OF THE COMPENSATION OF
EXECUTIVES AS DISCLOSED IN THIS PROXY STATEMENT; AND
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FOR RATIFICATION OF CROWE HORWATH LLP AS THE
COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
THE 2011 FISCAL YEAR.
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WHAT VOTE
IS REQUIRED FOR EACH PROPOSAL?
In voting on the election of directors (Proposal 1), you
may vote in favor of any or all of the nominees or withhold
authority to vote for any or all of the nominees. Directors are
elected by a plurality of the votes cast. This means that the
nominees receiving the greatest number of votes will be elected.
Votes that are withheld and broker non-votes (see definition
below) will have no effect on the outcome of the election.
In voting on the approval of the executive compensation
(Proposal 2), the ratification of Crowe Horwath LLP as
independent registered public accounting firm for the Company
(Proposal 3) and all other matters that may properly
come before the Meeting, you may vote in favor of the proposal,
vote against the proposal or abstain from voting. Under the
Companys Bylaws, an affirmative vote of the holders of a
majority of the votes cast at the Meeting is required to approve
these proposals. Shares in excess of the 10% limit will not be
counted as present and entitled to vote or as votes cast, and,
accordingly, such shares will have no effect on the outcome.
Abstentions and broker non-votes (see definition below) are not
counted as votes for or against these proposals and will have no
effect on the outcome of these proposals.
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IS THE
BOARD OF DIRECTORS AWARE OF ANY OTHER MATTERS THAT WILL BE
PRESENTED AT THE ANNUAL MEETING?
The Company is not aware of any other matters to be presented at
the Meeting. If any matters not described in this proxy
statement are properly presented at the Meeting, the persons
named in the proxy card will use his or her best judgment to
determine how to vote your shares. This includes a motion to
adjourn or postpone the Meeting in order to solicit additional
proxies.
WHAT IS A
BROKER NON-VOTE?
A broker non-vote occurs when a broker, bank, or other nominee
holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have
discretionary voting power with respect to the item and has not
received voting instructions from the beneficial owner of the
shares it holds.
WHAT
CONSTITUTES A QUORUM FOR THE MEETING?
A quorum exists if a majority of the outstanding shares of
common stock entitled to vote (after subtracting any shares in
excess of the 10% limit) at the Meeting is present in person or
represented by proxy at the Meeting. The Meeting will be held if
a quorum exists at the Meeting. If you return valid proxy
instructions or attend the Meeting in person, your shares will
be counted for purposes of determining whether there is a
quorum, even if you abstain from voting. Broker non-votes also
will be counted for purposes of determining a quorum. If there
are not sufficient shares present or represented by proxy at the
Meeting to provide a quorum or to approve or ratify any proposal
at the time of the Meeting, the Meeting may be adjourned or
postponed in order to permit the further solicitation of proxies.
CAN I
REVOKE OR CHANGE MY VOTE AFTER I SUBMIT MY PROXY?
You may revoke your proxy at any time before the vote is taken
at the Meeting. To revoke your proxy, you must either advise the
Corporate Secretary of the Company in writing before your shares
have been voted at the Meeting, deliver to the Company another
proxy that bears a later date, or attend the Meeting and vote
your shares in person. Attendance at the Meeting will not in
itself revoke your proxy. If your shares are held in street name
and you wish to change your voting instructions after you have
returned your voting instruction form to your broker or bank,
you must contact your broker or bank. Please note that if the
Meeting is postponed or adjourned, your shares may be voted by
the persons named on the proxy card on the new Meeting date as
well, unless you have revoked your proxy.
WHO WILL
COUNT THE VOTE?
The Companys transfer agent, Registrar and Transfer
Company, will tally the vote, which will be certified by an
independent Inspector of Election. The Board of Directors has
designated John A. Lende, Vice President and Controller of the
Company, to act as the Inspector of Election. Mr. Lende is
an officer of the Company, an officer and employee of the
Companys wholly owned operating subsidiary, CFBank, a
federally chartered savings association, and an officer of two
other wholly owned subsidiaries of the Company, for one of which
subsidiaries he also serves as a director. After the final
adjournment of the Meeting, the proxies will be returned to the
Company.
Important Notice Regarding the Availability of Proxy
Materials
for the Stockholder Meeting to Be Held on May 19,
2011.
The Proxy Statement, Form of Proxy and 2010 Annual Report are
available at
www.CFBankonline.com/secproxy.
3
DIRECTOR
INDEPENDENCE
The Board of Directors of the Company has determined that all of
its directors are independent directors, as that
term is defined by applicable listing standards of the NASDAQ
Marketplace Rules and by the Securities and Exchange Commission.
The directors are Jeffrey W. Aldrich, Thomas P. Ash, William R.
Downing, Gerry W. Grace and Jerry F. Whitmer.
The NASDAQ independence definition includes a series of
objective tests, such as that the director is not an employee of
the Company and has not engaged in various types of business
dealings with the Company. As required by the NASDAQ Marketplace
Rules, the Board of Directors has made a subjective
determination as to each independent director that no
relationships exist that, in the opinion of the Board, would
interfere with the exercise of his independent judgment in
carrying out the responsibilities of a director. In making these
determinations, the Board of Directors reviewed and discussed
information provided by the directors and the Company with
regard to each directors business and personal activities
as they may relate to the Company and its management.
BOARD
LEADERSHIP STRUCTURE
The Board of Directors has placed the responsibilities of
Chairman with an independent nonexecutive member of the Board,
which we believe provides better accountability between the
Board and our management team. We believe it is beneficial to
have an independent Chairman whose sole responsibility to us is
leading our Board members as they provide leadership to our
executive team. Our Chairman is responsible for providing
leadership to the Board of Directors and facilitating
communication among the directors; setting the Board meeting
agendas in consultation with the Chief Executive Officer; and
presiding at Board meetings, executive sessions and stockholder
meetings. This delineation of duties allows the Chief Executive
Officer to focus her attention on managing the
day-to-day
business of the Company. We believe this structure provides
strong leadership for our Board of Directors while positioning
our Chief Executive Officer as the leader of the Company in the
eyes of our customers, employees, stockholders and other
stakeholders. The independent directors meet without management
in attendance twice annually, with our non-executive Chairman of
the Board chairing the meetings.
BOARD ROLE
IN RISK OVERSIGHT
The Board of Directors is responsible for consideration and
oversight of risks facing the Company and CFBank and is
responsible for ensuring that material risks are identified and
managed appropriately. The Audit Committee meets at least eight
times annually and with management for a portion of each meeting
in order to review our major financial risk exposures and the
steps management is taking to monitor and control such
exposures. Directors also serve on committees that focus on
major areas of risk in the Company and CFBank that include loans
and compensation. Directors discuss risk and risk mitigation
strategies with management within these committees. All risk
oversight discussions are included in committee and other
reports to the full Board of Directors.
BOARD
MEETINGS AND COMMITTEES
The Board of Directors of the Company holds four regular
meetings annually and special meetings as called from time to
time under the Bylaws of the Company. During fiscal 2010, the
Companys Board of Directors held ten meetings, six of
which were special meetings, and the independent directors held
two meetings without management present. The Board of Directors
of CFBank has the same composition as the Board of the Company
and holds regular meetings monthly and special meetings as
called from time to time under the Bylaws of the Bank. During
fiscal 2010, CFBanks Board of Directors held fourteen
meetings, two of which were special meetings. No director during
the period he served attended less than 75% of the Company Board
of Directors meetings, CFBank Board meetings, and any
committees on which he served.
4
The Company Board of Directors principal standing
committees during fiscal 2010 were the Audit Committee, the
Compensation and Management Development Committee, and the
Corporate Governance and Nominating Committee. Information
regarding the functions of the Board of Directors
committees, their present membership and the number of meetings
held by each committee during fiscal 2010 is set forth below.
All committees operate under formal written charters adopted by
the Board of Directors.
AUDIT COMMITTEE. The Audit Committee is appointed by
the Board of Directors to provide assistance to the Board in
fulfilling its oversight responsibility relating to the
integrity of our consolidated financial statements and the
financial reporting processes, the systems of internal
accounting and financial controls, compliance with legal and
regulatory requirements, the annual independent audit of our
consolidated financial statements, the qualifications and
independence of our independent registered public accounting
firm, the performance of our internal audit function and of our
independent registered public accounting firm, and any other
areas of potential financial risk to the Company as specified by
its Board of Directors. The Audit Committee also is responsible
for the appointment, retention and oversight of our independent
registered public accounting firm, including pre-approval of all
audit and non-audit services to be performed by the independent
registered public accounting firm, and for the review and
approval, on an ongoing basis, of all related-party transactions
for potential
conflict-of-interest
situations. The Audit Committee Report appears on page 8 of
this proxy statement.
During fiscal 2010, the members of the Audit Committee were
Thomas P. Ash (Chair), Gerry W. Grace and Jerry F. Whitmer. All
members of the Audit Committee (i) are independent as
defined under Rule 4200(a)(15) of the NASDAQ Marketplace
Rules; (ii) meet the criteria for independence set forth in
Securities and Exchange Commission
Rule 10A-3(b)(1);
(iii) have not participated in the preparation of the
financial statements of the Company or any of its current
subsidiaries at any time during the past three years; and
(iv) are able to read and understand fundamental financial
statements, including our balance sheet, income statement and
cash flow statement. Additionally, Thomas P. Ash has employment
and executive experience that results in his financial
sophistication, enabling him to be the Audit Committees
financial expert. Further, the Board of Directors has determined
that all of the members of the Audit Committee are able to read
and understand fundamental financial statements within the
meaning of the NASDAQ Audit Committee requirements. The Board of
Directors believes that by satisfying the requirements of the
NASDAQ listing standards with a member of the Audit Committee
who has the requisite financial sophistication qualification,
coupled both with employment experience and with the industry
experience each committee member has as a result of his
substantial tenure on the Board, the Audit Committee has the
financial expertise necessary to fulfill the duties and
obligations of the Committee. During fiscal 2010, the Audit
Committee held eight meetings.
COMPENSATION AND MANAGEMENT DEVELOPMENT
COMMITTEE. The Committee has overall responsibility
for reviewing, evaluating and approving the director and officer
compensation plans, policies and programs of the Company and
CFBank. The Compensation and Management Development Committee is
responsible for administering our equity compensation plans and
for establishing compensation and benefits for the Chief
Executive Officer.
During fiscal 2010, the members of the Compensation and
Management Development Committee were William R. Downing
(Chair), Thomas P. Ash and Jerry F. Whitmer. All members of the
Committee are independent as defined under the NASDAQ
Marketplace Rules. During fiscal 2010, the Compensation and
Management Development Committee held three meetings.
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE. The
Committee is responsible for identifying individuals qualified
to serve as Board members and recommending to the Board of
Directors the director nominees for election or appointment to
the Board. The Corporate Governance and Nominating Committee has
not formalized its nomination review practices into a written
policy. The Committee periodically reviews the size and
composition of the Board of Directors and determines whether to
add or replace directors. The Corporate Governance and
Nominating Committee may employ professional search firms, for
which the Company would pay a fee to assist in identifying
potential members of the Board of Directors with the desired
skills and disciplines. Final approval of director nominees is
determined by the full Board of Directors, based on the
recommendation of the Corporate Governance and Nominating
Committee.
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The Corporate Governance and Nominating Committee recommends
candidates, including incumbents, for election and appointment
to the Board of Directors, subject to the provisions set forth
in the Companys Certificate of Incorporation and Bylaws,
based on the criteria the Committee deems appropriate, which may
include: business experience, education, integrity and
reputation, independence, conflicts of interest, diversity, age,
number of other directorships and commitments (including
charitable obligations), tenure on the Board, attendance at
Board and committee meetings, stock ownership, specialized
knowledge (such as an understanding of banking, accounting,
marketing, finance, regulation and public policy) and a
commitment to the Companys communities and shared values,
as well as overall experience in the context of the needs of the
Board as a whole. Nominations from stockholders will be
considered and evaluated using the same criteria as all other
nominations.
Nominations, other than those made by the Board of Directors
after its review of the recommendations of the Corporate
Governance and Nominating Committee, must be made by timely
notice in writing to the Corporate Secretary as set forth in
Article I, Section 6(c) of the Companys Bylaws.
In general, to be timely, a stockholders notice must be
received by the Company not less than ninety days before the
date of the scheduled annual meeting; however, if less than one
hundred days notice or prior disclosure of the date of the
scheduled annual meeting is given by the Company, the
stockholder has until the close of business on the tenth day
following the day on which notice or prior disclosure of the
date of the scheduled annual meeting was made. The
stockholders notice must include all the information set
forth in Article I, Section 6(c) of the Companys
Bylaws, which includes the following:
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(i)
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As to each person whom a stockholder proposes to nominate for
election as a director:
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All information relating to the proposed nominee that is
required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (including such persons written
consent to being named in the proxy statement as a nominee and
to serving as a director if elected); and
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(ii)
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As to the stockholder giving the notice:
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The name and address of the stockholder as they appear on the
Companys books; and
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The class and number of shares of the Companys capital
stock that are beneficially owned by the stockholder.
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The description above is a summary of the Companys
nominating process. Any stockholder wishing to propose a
director candidate to the Company should review and must comply
in full with the procedures set forth in the Companys
Certificate of Incorporation and Bylaws, the Security and
Exchange Commissions proxy rules, and Delaware law. During
fiscal 2010, the members of the Corporate Governance and
Nominating Committee were Jerry F. Whitmer (Chair), Jeffrey W.
Aldrich and Gerry W. Grace. All members of the Committee are
independent as defined in the NASDAQ Marketplace Rules. The
Corporate Governance and Nominating Committee met twice during
fiscal 2010.
COMMITTEE CHARTERS. The full responsibilities of the
Audit, Compensation and Management Development, and Corporate
Governance and Nominating Committees are set forth in their
charters, which are posted in the Investor Relations section of
our website at www.cfbankonline.com.
CODE OF ETHICS AND BUSINESS CONDUCT. The Board of
Directors has adopted a Code of Ethics and Business Conduct,
which applies to all of our directors, officers and employees,
including directors, officers and employees of our subsidiaries
and other affiliates. Our Code of Ethics and Business Conduct is
posted in the Investor Relations section of our website at
www.cfbankonline.com.
BOARD MEMBER ATTENDANCE AT ANNUAL STOCKHOLDER
MEETINGS. Although the Company does not have a formal
policy regarding director attendance at annual stockholder
meetings, directors are expected to attend these meetings absent
extenuating circumstances. All of our directors except Jeffrey
W. Aldrich attended last years annual meeting of
stockholders.
6
PROPOSAL 1 ELECTION OF DIRECTORS
The number of directors is fixed at five. Two directors,
Mr. Downing and Mr. Grace, have been nominated to be
elected to hold office until the Annual Meeting in 2014 or until
his successor is duly qualified and elected. Should any nominee
decline or be unable to accept such nomination or be unable to
serve, an event which the Board of Directors does not now
expect, the Board of Directors reserves the right in its
discretion to substitute another person as a nominee or to
reduce the number of nominees. In this event, the proxy holders
may vote your shares in their discretion for any substitute
nominee proposed by the Board of Directors unless you have
withheld authority.
All nominees currently are directors of the Company. There are
no family relationships among any of the directors and executive
officers. No directors hold directorships in other public or
registered investment companies. No person being nominated as a
director is being proposed for election pursuant to any
agreement or understanding between any such person and the
Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR THE ELECTION OF EACH OF THE NOMINEES NAMED IN
THIS PROXY STATEMENT.
The Board of Directors codified standards for directors in the
Boards Corporate Governance Guidelines. These guidelines
provide that the Board of Directors should encompass, among
other things, a diverse range of viewpoints, backgrounds,
experiences and demographics sufficient to build a Board that is
effective, collegial and responsive to the Companys
operations and interests. The Corporate Governance Guidelines
also provide that Board membership be based on judgment,
character, expertise, skills and knowledge useful to the
oversight of the Companys business as well as on business
or other relevant experience. Further, at all times a majority
of the Board must be independent directors, as
defined from time to time by the listing requirements of the
Nasdaq®
Stock Market, Inc. and any specific requirements established by
the Board. Each director also is expected to:
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provide loyalty, direction and oversight to the business and
management of the Company;
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establish strategic direction of the Company;
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exercise business judgment in the best interests of the Company;
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review at least annually a management succession plan to ensure
continuity in senior management;
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evaluate the principal executive officer;
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review and evaluate significant transactions;
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possess sufficient familiarity with the Companys principal
operational and financial objectives and plans to ensure active
and effective participation in the deliberations of the Board of
Directors and each committee on which the director
serves; and
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possess the capacity to obtain a basic understanding of the
Companys results of operations and financial condition.
|
The Corporate Governance Guidelines are posted in the Investor
Relations section of our website at www.cfbankonline.com.
The following is information regarding each nominee and each
director continuing in office. Unless otherwise stated, each
employed individual has held his current occupation for at least
five years.
NOMINEES
William R. Downing has been President of R.H. Downing, Inc., an
automotive supply, sales and marketing agency in Akron, Ohio,
since June 1973. He is also Chairman and Chief Executive Officer
of JohnDow Industries, Inc., a manufacturer and distributor of
lubrication and fluid handling equipment, which he founded in
1988, and Chairman of Dowco, LLC, a manufacturer and processor
of tire cord for use in the power transmission belt industry,
which he
7
acquired in 2006. He does not serve, and has not served in the
last five years, on the board of directors of any other public
company. Mr. Downing is the only director currently
involved in the manufacturing industry and is able to bring his
success as a businessman and his business judgment to activities
on the Board of Directors. Age 65. Director since 2003.
Gerry W. Grace, retired, was President of Grace Services, Inc.,
a weed and pest control company located in Canfield, Ohio, from
April 1980 through 2005. He was the Chairman of CFBank, then
known as Central Federal Savings & Loan Association of
Wellsville, from 1994 to early 2003, and the Chairman of Central
Federal Corporation, then known as Grand Central Financial
Corp., from 1998 to early 2003. Mr. Grace also served as a
Trustee of Ellsworth Township, Ohio from 1976 through 2005. He
does not serve, and has not served in the last five years, on
the board of directors of any other public company.
Mr. Grace is well known to many long-standing stockholders
of the Company and customers of CFBank. His long-term management
of a local business organization and his many years of public
service at the local level give him a solid basis for
understanding the needs of community bank clients. Age 72.
Director since 1986.
CONTINUING
DIRECTORS
Jeffrey W. Aldrich, retired, was President and Chief Executive
Officer of Sterling China Co., a dishware manufacturing company
in Wellsville, Ohio, from November 1970 through 2005. His many
years as a senior executive of a local business allow him to
bring important perspective to the Board in connection with its
oversight of the Companys relationships with local
business customers, plus he does not serve, and has not served
in the last five years, on the board of directors of any other
public company. He now resides in Columbus, Ohio, and so has
perspective on both the Columbiana County and Franklin County
constituencies. Age 68. Director since 1979. Current term
as director expires on the date of the Annual Meeting in 2012.
Thomas P. Ash has been Director of Governmental Relations at the
Columbus, Ohio-based Buckeye Association of School
Administrators since August 2005. Prior to that time,
Mr. Ash was Superintendent of Schools, Mid-Ohio Educational
Service Center in Mansfield, Ohio from January 2000 through July
2005. Mr. Ash was the Superintendent of Schools, East
Liverpool City School District in East Liverpool, Ohio from
August 1984 to December 1999. As Superintendent at Mid-Ohio
Educational Service Center and East Liverpool City School
District, his experience included financial reporting and
analysis, supervising and directing financial staff members,
implementing and complying with U.S. generally accepted
accounting principles (GAAP) reporting requirements, and
developing internal controls. He does not serve, and has not
served in the last five years, on the board of directors of any
other public company. Mr. Ashs public-sector and
advocacy experience, both on the local level in Columbiana
County and on the state level, lends a perspective unique to the
Board of Directors. Age 61. Director since 1985. Current
term as director expires on the date of the Annual Meeting in
2013.
Jerry F. Whitmer is Of Counsel to Brouse McDowell, LPA, a law
firm headquartered in Akron, Ohio, where he was a shareholder
from 1971 through 2005. Mr. Whitmer served as Managing
Partner of the firm from 1997 through 2005. He is a shareholder
and officer of Mutual Oil & Gas Company, which invests
in a corporation engaged in the drilling and operation of oil
and gas wells. He does not currently hold, and has not held
within the last five years, a director position with any other
public company, although more than five years ago he was a
director for another publicly traded financial institution.
Mr. Whitmers professional service background,
primarily in northeast Ohio, permits him to provide insights
from the perspective of one who has consistently advised
financial institution and other commercial clients, including
borrowers. Age 75. Director since 2003. Current term as
director expires on the date of the Annual Meeting in 2013.
AUDIT
COMMITTEE REPORT
The Board of Directors has determined that each Audit Committee
member is independent in accordance with the listing standards
of the
Nasdaq®
Stock Market, Inc. The Companys management is responsible
for the Companys internal controls and financial reporting
process. The independent registered public accounting firm is
responsible for performing an independent audit of the
Companys consolidated financial statements and issuing an
opinion on the conformity of those financial statements with
GAAP. The Audit Committee oversees the Companys internal
controls and financial reporting process on behalf of the Board
of Directors.
8
In this context, the Audit Committee has met and held
discussions with management and representatives of the
independent registered public accounting firm. Management
represented to the Audit Committee that the Companys
consolidated financial statements were prepared in accordance
with GAAP, and the Audit Committee has reviewed and discussed
the audited consolidated financial statements with management
and the independent registered public accounting firm. The Audit
Committee discussed with the independent registered public
accounting firm the matters required to be discussed by
Statement on Auditing Standards No. 61, as amended, as
adopted by the Public Company Accounting Oversight Board in
Rule 3200T, including the quality, not just the
acceptability, of the accounting principles, the reasonableness
of significant judgments and the clarity of the disclosures in
the financial statements.
In addition, the Audit Committee has received the written
disclosures and the letter from the independent registered
public accounting firm required by the Public Company Accounting
Oversight Board regarding the independent registered public
accounting firms communications with the Audit Committee
concerning independence, and has discussed with the independent
registered public accounting firm that firms independence.
In concluding that the accountants are independent, the Audit
Committee considered, among other factors, whether the non-audit
services provided by the independent registered public
accounting firm were compatible with its independence.
The Audit Committee discussed with representatives of the
Companys independent registered public accounting firm the
overall scope of plans for their audit. The Audit Committee
meets with such representatives, with and without management
present, to discuss the results of their examination, their
evaluation of the Companys internal controls and the
overall quality of the Companys financial reporting.
In performing all of these functions, the Audit Committee acts
only in an oversight capacity. In its oversight role, the Audit
Committee relies on the work and assurances of the
Companys management, which has a primary responsibility
for financial statements and reports, and of the independent
registered public accounting firm which, in its report,
expresses an opinion on the conformity of the Companys
financial statements to GAAP. The Audit Committees
oversight does not provide it with an independent basis to
determine that management has maintained appropriate accounting
and financial procedures designed to assure compliance with
accounting standards and applicable laws and regulations.
Furthermore, the Audit Committees considerations and
discussions with management and the independent registered
public accounting firm do not assure that the Companys
financial statements are presented in accordance with GAAP, that
the audit of the Companys financial statements has been
carried out in accordance with generally accepted auditing
standards or that the Companys independent registered
public accounting firm is, in fact, independent.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board
has approved, that the audited consolidated financial statements
be included in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2010 for filing with the
Securities and Exchange Commission. The Audit Committee and the
Board of Directors also have approved the selection of the
Companys independent registered public accounting firm.
Thomas P. Ash, Chairman, Gerry W. Grace and Jerry F. Whitmer
COMMUNICATIONS WITH DIRECTORS
The Board of Directors has adopted a process by which
stockholders and other interested parties may communicate with
the Board, any individual director, any committee chair or the
non-management directors as a group by
e-mail or
regular mail. Communications by
e-mail
should be sent to EllyMackus@CFBankmail.com. Communications by
regular mail should be sent to the attention of the Board of
Directors; any individual director by name; Chair, Audit
Committee; Chair, Compensation and Management Development
Committee; Chair, Corporate Governance and Nominating Committee
or to the Non-Management Directors,
c/o Corporate
Secretary, Central Federal Corporation, 2923 Smith Road,
Fairlawn, Ohio 44333. Management will pass on all communications
received to the appropriate director or directors.
9
DIRECTORS
COMPENSATION
DIRECTORS FEES. Each director is paid an
annual retainer in the amount of $15,000, which includes a
retainer of $3,000 for service as a director of the Company and
a retainer of $12,000 for service as a director of CFBank. The
Chairman of the Board receives an additional $9,500 per year,
and the Audit Committee Chairman, who is also the
Committees financial expert, receives an additional $3,000
per year. The Chairman of the Board received an additional
$40,000 during the period June through December 2010.
STOCK BASED COMPENSATION PLANS. The Company
maintains the 2009 Equity Compensation Plan for the benefit of
employees and outside directors of the Company and CFBank. For
more information on this plan, see Note 15 to our
consolidated financial statements included in our annual report
on
Form 10-K
for the year ended December 31, 2010.
10
DIRECTOR COMPENSATION TABLE. The following
table summarizes compensation paid to each director who is not a
named executive officer during the year ended December 31,
2010. Director compensation for Mr. Allio, the former
Chairman of the Board and Chief Executive Officer, is included
in the Summary Compensation Table.
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Director Compensation for 2010
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Fees Earned
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or Paid in
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All Other
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Name
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Cash ($) (1)
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Compensation ($) (2)
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Total ($)
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Jerry F. Whitmer
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$
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60,542
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$
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$
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60,542
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Jeffrey W. Aldrich
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15,000
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4,306
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19,306
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Thomas P. Ash
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18,000
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1,233
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19,233
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William R. Downing
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15,000
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15,000
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Gerry W. Grace
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15,000
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15,000
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(1) |
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The Fees Earned column for Mr. Ash includes
$3,000 in fees related to service as the Audit Committee
Chairman, and for Mr. Whitmer, $45,542 in fees related to
service as Chairman of the Board. |
|
(2) |
|
The amounts shown in the All Other Compensation
column represent costs associated with life insurance benefits
for Messrs. Aldrich and Ash. |
As of December 31, 2010, each director had a total of 600
options outstanding scheduled to vest on October 31, 2011,
and a total of 5,000 options outstanding. No director held any
unvested restricted stock awards. No stock or option awards were
granted in 2010.
11
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE. The following table
summarizes compensation for our Chief Executive Officer, our two
most highly compensated executive officers other than the CEO
and the former Chief Executive Officer for the years ended
December 31, 2010 and 2009.
Summary
Compensation Table for 2010
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Stock
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Option
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All Other
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Name and Principal
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Awards
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Awards
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Compensation
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Position
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Year
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Salary ($)
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($) (1)
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($) (2)
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($) (3)
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Total ($)
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Eloise L. Mackus
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2010
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159,167
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21,750
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7,597
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2,248
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190,762
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Chief Executive Officer,
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2009
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120,000
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2,340
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122,340
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General Counsel and Corporate Secretary
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Therese A. Liutkus
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2010
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154,167
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21,750
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7,597
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1,417
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184,931
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President, Treasurer and
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2009
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115,000
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1,082
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116,082
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Chief Financial Officer
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Corey D. Caster
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2010
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100,000
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184,879
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284,879
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Vice President, Mortgage
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2009
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100,000
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130,007
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230,007
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Division, CFBank
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Mark S. Allio(4)
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2010
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116,249
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12,297
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128,546
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Former Chairman of the Board
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2009
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225,000
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29,044
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254,044
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and Chief Executive Officer
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(1) |
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The amounts included in the Stock Awards column
represent the aggregate grant date fair value of awards granted
during the year related to non-option stock awards, computed in
accordance with FASB ASC Topic 718. For a discussion of the
assumptions we used to calculate the value of non-option stock
awards, see Note 15 to our consolidated financial
statements on pages 62-63 of our annual report on
Form 10-K
for the year ended December 31, 2010. |
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(2) |
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The amount included in the Option Awards column
represents the aggregate grant date fair value of awards granted
during the year related to stock options, computed in accordance
with FASB ASC Topic 718. For a discussion of the assumptions we
used to calculate the value of option awards, see Note 15
to our consolidated financial statements on pages 62-63 of
our annual report on
Form 10-K
for the year ended December 31, 2010. |
|
(3) |
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The amounts shown in the All Other Compensation
column are as follows: |
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For Ms. Mackus, $298 dividends on unvested non-option stock
awards in 2009, and $2,348 and $2,042 employer 401(k) plan match
in 2010 and 2009, respectively. |
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For Ms. Liutkus, $244 dividends on unvested non-option
stock awards in 2009, and $1,417 and $838 employer 401(k) plan
match in 2010 and 2009, respectively. |
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For Mr. Caster, $4,125 employer 401(k) plan match in 2010
and 2009, and $180,754 and $125,882 in commissions on sales of
mortgage loans in 2010 and 2009, respectively. |
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For Mr. Allio, $892 dividends on unvested non-option stock
awards in 2009, $2,089 and $3,652 employer 401(k) plan match in
2010 and 2009, respectively, and $10,208 and $24,500 in
directors fees, including $3,958 and $9,500 in fees he received
as Chairman of the Board in 2010 and 2009, respectively. |
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(4) |
|
Compensation for Mr. Allio includes his salary and other
compensation earned through May 20, 2010, at which time he
resigned from his positions as Chairman of the Board and Chief
Executive Officer of the Company and CFBank. |
12
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END. The
following table shows information regarding equity awards
outstanding to our named executive officers as of
December 31, 2010.
Outstanding
Equity Awards at Fiscal Year-End for 2010
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Option Awards
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Stock Awards
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Number of
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Number of
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Market
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Number of
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Securities
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Shares or
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Value of
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Securities
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Underlying
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|
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Units of
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Shares or
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Underlying
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Unexercised
|
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|
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|
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Stock That
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Units of
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|
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Unexercised
|
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Options (#)
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|
Option
|
|
Option
|
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Have Not
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Stock That
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|
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Options (#)
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Unexercisable
|
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Exercise
|
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Expiration
|
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Vested (#)
|
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Have Not
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Name
|
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Exercisable
|
|
(1)
|
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Price ($)
|
|
Date
|
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(2)
|
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Vested ($) (3)
|
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Eloise L. Mackus
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7,000
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$
|
12.70
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|
|
7/7/13
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|
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16,334
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|
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$
|
8,330
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|
|
|
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7,500
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|
|
|
|
|
|
12.60
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|
4/15/14
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3,000
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|
10.42
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5/19/15
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|
|
|
1,750
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|
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|
|
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|
|
7.35
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|
|
|
2/15/17
|
|
|
|
|
|
|
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|
|
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|
|
2,666
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|
|
1,334
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|
|
4.03
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|
|
|
3/20/18
|
|
|
|
|
|
|
|
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|
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|
7,000
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|
|
|
3,000
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|
|
|
3.29
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|
|
10/16/18
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
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|
|
|
1.45
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|
|
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7/15/20
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|
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Therese A. Liutkus
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|
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7,000
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|
|
|
|
|
|
|
13.76
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|
|
3/18/14
|
|
|
|
16,084
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|
|
|
8,203
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|
|
|
|
7,500
|
|
|
|
|
|
|
|
12.60
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|
|
|
4/15/14
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|
|
|
|
|
|
|
|
|
|
|
|
3,000
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|
|
|
|
|
|
|
10.42
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5/19/15
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|
|
|
|
|
|
|
|
|
|
|
1,250
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|
|
|
|
|
|
|
7.35
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|
|
|
2/15/17
|
|
|
|
|
|
|
|
|
|
|
|
|
2,166
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|
|
|
1,084
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|
|
|
4.03
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|
|
|
3/20/18
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
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|
|
|
2,500
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|
|
|
3.29
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|
|
|
10/16/18
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
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|
|
|
1.45
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|
|
|
7/15/20
|
|
|
|
|
|
|
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Corey D. Caster
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|
|
340
|
|
|
|
160
|
|
|
|
3.29
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|
|
|
10/16/18
|
|
|
|
|
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|
|
|
|
|
|
|
(1) |
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The unexercisable Option Awards as of December 31, 2010
have a vesting date or will vest as follows: |
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|
|
|
|
|
|
|
Date
|
|
Ms. Mackus
|
|
Ms. Liutkus
|
|
Mr. Caster
|
|
2/28/11
|
|
|
1,334
|
|
|
|
1,084
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|
|
|
|
|
6/30/11
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
|
|
9/30/11
|
|
|
3,000
|
|
|
|
2,500
|
|
|
|
160
|
|
6/30/12
|
|
|
5,000
|
|
|
|
5,000
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|
|
|
|
|
6/30/13
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,334
|
|
|
|
18,584
|
|
|
|
160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) |
|
The Stock Awards that have not vested as of December 31,
2010 have a vesting date or will vest as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Ms. Mackus
|
|
|
Ms. Liutkus
|
|
|
Mr. Caster
|
|
|
2/28/11
|
|
|
1,334
|
|
|
|
1,084
|
|
|
|
|
|
6/30/11
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
|
|
6/30/12
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
|
|
6/30/13
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,334
|
|
|
|
16,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
Based on the $.51 closing price of our common stock as of
December 31, 2010. |
13
EQUITY COMPENSATION PLAN INFORMATION. The following
table sets forth information about Company common stock that may
be issued upon exercise of options, warrants and rights under
all of the Companys equity compensation plans as of
December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
Securities to be
|
|
|
|
|
|
Securities
|
|
|
|
Issued Upon
|
|
|
Weighted-Average
|
|
|
Remaining
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Available for Future
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
Issuance under
|
|
|
|
Options, Warrants
|
|
|
Options, Warrants
|
|
|
Equity Compensation
|
|
Plan Category
|
|
and Rights
|
|
|
and Rights
|
|
|
Plans
|
|
|
Equity compensation plans approved by stockholders
|
|
|
269,776
|
|
|
$
|
6.04
|
|
|
|
1,105,162
|
|
Equity compensation plans not approved by stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
269,776
|
|
|
$
|
6.04
|
|
|
|
1,105,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE. Section 16(a) of the Securities
Exchange Act of 1934 requires the Companys executive
officers and directors and persons who own more than 10% of any
registered class of the Companys equity securities to file
reports of ownership and changes in ownership with the
Securities and Exchange Commission. Executive officers,
directors and greater than 10% stockholders are required by
regulations of the Securities and Exchange Commission to furnish
the Company with copies of all Section 16(a) reports they
file.
Based solely on a review of the copies of all such reports of
ownership furnished to the Company, or written representations
that no forms were necessary, we believe there were no known
failures to file a required report for the year ended
December 31, 2010. There was one filing that was not made
in a timely manner, for Mr. Ash, which related to the
purchase of the Companys stock. The late transaction was
subsequently reported on Form 4.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS. CFBank policy and Federal regulations
related to insured financial institutions require that any and
all loans or extensions of credit made by CFBank to related
persons of the Company or CFBank, including executive officers,
directors or their immediate family members, (i) be made in
the ordinary course of business on substantially the same terms,
including interest rates and collateral, as those prevailing at
the time for comparable transactions with persons not related to
CFBank, (ii) do not involve more than the normal risk of
collectability and (iii) do not present any other
unfavorable features. All outstanding loans or extensions of
credit made by CFBank to such related persons comply with these
regulations and policies. In addition, loans made to a director
or executive officer in an amount that, when aggregated with the
amount of all other loans to such person and his or her related
interests, exceed the greater of $25,000 or 5% of CFBanks
capital and surplus (up to a maximum of $500,000) must be
approved in advance by a majority of the disinterested members
of the Board of Directors. Total loans outstanding to such
related persons totaled $1.8 million at December 31,
2010, were approved by a majority of disinterested members of
the Board of Directors, and were performing in accordance with
their terms at that date.
14
PROPOSAL 2 NON-BINDING ADVISORY VOTE APPROVING EXECUTIVE
COMPENSATION
ARRA requires that during the period in which any obligation
arising from financial assistance provided to a recipient under
TARP remains outstanding, any proxy statement for an annual
meeting of stockholders of that TARP recipient at which
directors are to be elected must provide the recipients
stockholders with a so-called say on pay. This means
that the recipient has to provide for a separate stockholder
vote to approve the compensation of the recipients
executives, as disclosed pursuant to the applicable compensation
disclosure rules of the Securities and Exchange Commission. The
Company, which has received funds under TARP, is complying with
the say on pay requirement through the presentation
of this Proposal 2.
The purpose of the Companys compensation policies and
procedures is to attract and retain experienced, highly
qualified executives critical to the Companys long-term
success and enhancement of stockholder value. Those policies and
procedures also should strongly align the interests of our
executives with the interests of our stockholders in building
the long-term value of the Company. The Board of Directors and
the Compensation and Management Development Committee believe
that the Companys compensation policies and procedures
achieve these objectives and that our compensation levels,
policies and procedures, as disclosed and discussed in this
Proxy Statement, are reasonable. In addition, the Compensation
and Management Development Committee, as required in connection
with our participation in TARP, has certified to the Department
of the Treasury and to the Office of Thrift Supervision, our
primary federal regulator, that it has conducted a review of our
senior executive inventive programs from a risk perspective and
concluded they do not encourage unnecessary or excessive risk.
Accordingly, the Company presents the following advisory
proposal for stockholder approval:
Resolved, that the stockholders approve the
compensation of the Companys executive officers, as set
forth in the compensation tables and any related disclosures or
discussion in this Proxy Statement.
Your vote on this proposal is advisory and is not binding on the
Company or its Board of Directors. The Board of Directors may,
however, take into account the outcome of the vote when
considering future executive compensation decisions.
Vote
Necessary to Approve Proposal 2
The affirmative vote of the holders of a majority of the votes
cast on the proposal is required for approval of this
Proposal 2.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR THE PROPOSAL TO APPROVE
THE COMPENSATION OF THE COMPANYS EXECUTIVE OFFICERS AS
DISCLOSED IN THIS PROXY STATEMENT.
15
PROPOSAL 3 RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee, with the approval of the Board of
Directors, has appointed Crowe Horwath LLP to be the
Companys independent registered public accounting firm for
2011, subject to ratification by stockholders. A representative
of Crowe Horwath LLP is expected to be present at the Meeting to
respond to appropriate questions from stockholders and will have
the opportunity to make a statement should he or she desire to
do so.
The Companys Audit Committee must pre-approve all
engagements of the independent registered public accounting firm
by the Company and its subsidiaries, including CFBank, as
required by the Audit Committees charter and the rules of
the Securities and Exchange Commission. Prior to the beginning
of each fiscal year, the Audit Committee approves an annual
estimate of fees for engagements, taking into account whether
the services are permissible under applicable law and the
possible impact of each non-audit service on the independent
registered public accounting firms independence from
management. In addition, the Audit Committee evaluates known
potential engagements of the independent registered public
accounting firm, including the scope of the proposed work to be
performed and the proposed fees, and approves or rejects each
service. Management may present additional services for approval
at subsequent committee meetings. The Audit Committee has
delegated to the Audit Committee Chairman the authority to
evaluate and approve engagements on behalf of the Audit
Committee in the event a need arises for pre-approval between
Committee meetings and in the event the engagement for services
was within the annual estimate but not specifically approved. If
the Chairman so approves any such engagements, he reports that
approval to the full Committee at the next Committee meeting.
Since the effective date of the Securities and Exchange
Commissions rules that strengthen independent registered
public accounting firm independence, all audit, audit-related,
tax and other services, if applicable, as provided by Crowe
Horwath LLP, have been pre-approved in accordance with the Audit
Committees policies and procedures.
If stockholders do not ratify the appointment of Crowe Horwath
LLP as the Companys independent registered public
accounting firm for 2011, the Audit Committee may replace them
with another independent registered public accounting firm for
the balance of the year or may continue to use Crowe Horwath LLP
if the Audit Committee deems it to be in the best interest of
the Company under the circumstances.
Vote
Necessary to Approve Proposal 3
The affirmative vote of the holders of a majority of votes cast
on the proposal is required for approval of this Proposal 3.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR RATIFICATION OF THE APPOINTMENT OF CROWE HORWATH
LLP AS THE COMPANYS INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR 2011.
The following table sets forth the fees billed to the Company
for 2010 and 2009 by Crowe Horwath LLP:
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
Audit fees
|
|
$
|
104,100
|
|
|
$
|
106,300
|
|
Audit-related fees (1)
|
|
|
|
|
|
|
1,400
|
|
Tax fees
|
|
|
|
|
|
|
|
|
All other fees (2)
|
|
|
2,423
|
|
|
|
3,467
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
106,523
|
|
|
$
|
111,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes fees related to the filing of
Form S-8
for the Companys equity compensation plans in 2009. |
|
(2) |
|
Includes fees related to the Companys subscription to
accounting research products. |
16
STOCK
OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table provides information as of March 15,
2011 about the persons known by the Company to be beneficial
owners of more than 5% of the Companys outstanding common
stock. A person may be considered to beneficially own any shares
of common stock over which he or she has, directly or
indirectly, sole or shared voting or investment power.
|
|
|
|
|
|
|
|
|
|
|
Amount and
|
|
|
|
|
|
|
Nature of
|
|
|
Percent of
|
|
|
|
Beneficial
|
|
|
Common Stock
|
|
Name and Address of Beneficial
Owner
|
|
Ownership
|
|
|
Outstanding
|
|
|
Uni Capital LP(1)
|
|
|
409,784
|
|
|
|
9.93
|
%
|
Uni Capital GP LLC
|
|
|
|
|
|
|
|
|
Reid S. Buerger
|
|
|
|
|
|
|
|
|
7111 Valley Green Road
|
|
|
|
|
|
|
|
|
Fort Washington, PA 19304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MacNealy Hoover Investment Management, Inc.(2)
|
|
|
366,701
|
|
|
|
8.88
|
%
|
Harry C.C. MacNealy
|
|
|
|
|
|
|
|
|
200 Market Avenue North, Suite 200
|
|
|
|
|
|
|
|
|
Canton, OH 44702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wellington Management Company, LLP(3)
|
|
|
333,088
|
|
|
|
8.07
|
%
|
75 State Street
|
|
|
|
|
|
|
|
|
Boston, MA 02109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States Department of the Treasury(4)
|
|
|
336,568
|
|
|
|
7.54
|
%
|
1500 Pennsylvania Avenue NW
|
|
|
|
|
|
|
|
|
Washington, DC 20220
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Based on information contained in a
statement on Schedule 13D/A dated March 25, 2010 and
filed March 25, 2010, this group has sole voting power and
sole investment power over 409,784 shares of the
outstanding common stock of the Company.
|
|
(2)
|
|
Based in information contained in a
statement on Schedule 13D dated December 15, 2009 and
filed December 17, 2009, MacNealy Hoover Investment
Management, Inc. has shared voting power and shared investment
power over 366,701 shares of the outstanding common stock
of the Company.
|
|
3)
|
|
Based on information contained in a
statement on Schedule 13G/A dated December 31, 2007
and filed February 14, 2008, Wellington Management Company,
LLP has shared voting power over 251,388 shares of the
outstanding common stock of the Company and shared investment
power over 333,088 shares of the outstanding common stock
of the Company.
|
|
(4)
|
|
Represents the warrant for
336,568 shares of common stock of the Company acquired by
Treasury in connection with its purchase of shares of preferred
stock of the Company in TARP. The Treasury may exercise the
warrant and may sell the warrant or the underlying warrant
shares anytime before December 15, 2018. Treasury has
agreed not to vote the warrant shares, but that agreement would
not apply to any subsequent holder.
|
17
SECURITY
OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as of March 15,
2011 with respect to the number of shares of Company common
stock considered to be owned by each director or nominee for
director of the Company, by each executive officer named in the
Summary Compensation Table, and by all directors and executive
officers of the Company as a group. A person may be considered
to own any shares of common stock over which he or she has,
directly or indirectly, sole or shared voting or investment
power.
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of Beneficial Ownership
|
|
|
|
Shares
|
|
|
Percent
|
|
|
Jerry F. Whitmer, Chairman of the Board, Director (1)
|
|
|
12,400
|
|
|
|
0.3
|
%
|
Jeffrey W. Aldrich, Director (1)(2)
|
|
|
29,996
|
|
|
|
0.7
|
%
|
Thomas P. Ash, Director (1)(3)
|
|
|
30,878
|
|
|
|
0.7
|
%
|
William R. Downing, Director (1)(4)
|
|
|
38,592
|
|
|
|
0.9
|
%
|
Gerry W. Grace, Director (1)(5)
|
|
|
51,707
|
|
|
|
1.3
|
%
|
Eloise L. Mackus, Chief Executive Officer, General Counsel
and Corporate Secretary (6)
|
|
|
66,500
|
|
|
|
1.6
|
%
|
Therese A. Liutkus, President, Treasurer and Chief Financial
Officer (7)
|
|
|
55,000
|
|
|
|
1.3
|
%
|
Corey D. Caster, Vice President, Mortgage Division, CFBank (8)
|
|
|
2,640
|
|
|
|
0.1
|
%
|
All directors and executive officers as a group (9 persons)
(9)
|
|
|
302,163
|
|
|
|
7.2
|
%
|
|
|
|
(1)
|
|
Includes 4,400 shares which
may be acquired by exercising stock options within 60 days.
|
|
(2)
|
|
Includes 23,322 shares owned
by Jean Aldrich, Mr. Aldrichs spouse.
|
|
(3)
|
|
Includes 20,000 shares that
Mr. Ash has pledged as security.
|
|
(4)
|
|
Includes 16,192 shares owned
by R.H. Downing, Inc., which is 100% owned by Mr. Downing,
and 10,000 shares owned by Mary Downing Trust, of which
Mr. Downing is trustee.
|
|
(5)
|
|
Includes 2,790 shares owned by
Janet Grace, Mr. Graces spouse.
|
|
(6)
|
|
Includes 15,000 shares awarded
to Ms. Mackus pursuant to the Companys equity
compensation plans which have not yet vested, but as to which
she may provide voting recommendations. Includes
30,250 shares which may be acquired by exercising stock
options within 60 days.
|
|
(7)
|
|
Includes 15,000 shares awarded
to Ms. Liutkus pursuant to the Companys equity
compensation plans which have not yet vested, but as to which
she may provide voting recommendations. Includes
28,000 shares which may be acquired by exercising stock
options within 60 days.
|
|
(8)
|
|
Includes 340 shares which may
be acquired by exercising stock options within 60 days.
|
|
(9)
|
|
Includes 30,000 shares awarded
to all directors and executive officers as a group pursuant to
the Companys equity compensation plans which have not yet
vested, but as to which they may provide voting recommendations.
Includes 91,540 shares which may be acquired by exercising
stock options within 60 days.
|
MISCELLANEOUS
The Company will pay the cost of this proxy solicitation. 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
Companys common stock. Directors, officers and regular
employees of the Company may also solicit proxies personally or
by telephone and will not receive additional compensation for
these activities.
STOCKHOLDER
PROPOSALS
If a stockholder desires to have a proposal included in the
Companys proxy statement and form of proxy for the 2012
annual meeting of stockholders, the proposal must conform to the
requirements of the Securities Exchange Act of 1934
Rule 14a-8
and other applicable proxy rules and interpretations of the
Securities and Exchange Commission concerning the submission and
content of proposals and must be received by the Company, at
2923 Smith Road, Fairlawn, Ohio 44333, prior to the close of
business on December 21, 2011.
The Companys Bylaws provide an advance notice procedure
for a stockholder to properly bring business before an annual
meeting of stockholders. For business to be properly brought
before an annual meeting by a stockholder the
18
business must relate to a proper subject matter for stockholder
action and the stockholder must have given timely notice thereof
in writing to the Corporate Secretary of the Company. To be
timely, a stockholders notice must be delivered or mailed
to and received at the principal executive offices of the
Company not less than 90 days prior to the date of the
annual meeting; provided, however, that in the event that less
than 100 days notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be received not later than
the close of business on the 10th day following the day on
which such notice of the date of the annual meeting was mailed
or such public disclosure was made. A stockholders notice
to the Corporate Secretary shall set forth as to each matter
such stockholder proposes to bring before the annual meeting:
(i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting
such business at the annual meeting; (ii) the name and
address, as they appear on the Companys books, of the
stockholder proposing such business; (iii) the class and
number of shares of the Companys capital stock that are
beneficially owned by such stockholder; and (iv) any
material interest of such stockholder in such business.
Assuming that the 2012 annual meeting of stockholders is held on
the third Thursday of May 2012 as has been the Companys
recent practice, and that such date is announced at least
100 days in advance, a stockholders proposal for that
meeting must be received by the Company at 2923 Smith Road,
Fairlawn, Ohio 44333, not later than the close of business on
February 8, 2012, in order to be considered timely. If any
such proposal is received after such date, it will be considered
untimely, and the persons named in the proxies solicited by the
Board of Directors of the Company may exercise discretionary
voting power with respect to that proposal.
Stockholder nominations for director are discussed above under
the caption CORPORATE GOVERNANCE AND NOMINATING COMMITTEE.
A COPY OF THE
FORM 10-K
(WITHOUT EXHIBITS) FOR THE YEAR ENDED DECEMBER 31, 2010, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
FURNISHED WITHOUT CHARGE TO STOCKHOLDERS OF RECORD UPON WRITTEN
REQUEST TO THE CORPORATE SECRETARY, CENTRAL FEDERAL CORPORATION,
2923 SMITH ROAD, FAIRLAWN, OHIO 44333.
BY ORDER OF THE BOARD OF DIRECTORS
Eloise L. Mackus
Chief Executive Officer, General Counsel and
Corporate Secretary
Fairlawn, Ohio
April 19, 2011
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
YOU ARE REQUESTED TO SIGN, DATE AND PROMPTLY RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
Unless we have received contrary instructions, we send a single
copy of the annual report, proxy statement and notice of annual
meeting to any household at which two or more stockholders
reside if we believe the stockholders are members of the same
family. Each stockholder in the household will continue to
receive a separate proxy card. This process, known as
householding, reduces the volume of duplicate
information received at those households and helps reduce our
expenses.
If you would like to receive your own set of the annual report,
proxy statement and notice of annual or special meetings this
year or in future years, follow the instructions described below:
If your shares are registered in your own name, please contact
our transfer agent, Registrar & Transfer Company, and
inform them of your request to revoke householding by calling
them at 1.800.368.5948 or
19
writing to them at Registrar & Transfer Company, 10
Commerce Drive, Cranford, NJ 07016. Within 30 days of your
revocation, we will send to you individual documents.
If a bank, broker or other nominee holds your shares, please
contact your bank, broker or other nominee directly.
If two or more stockholders residing in the same household
individually receive copies of the annual report, proxy
statement and notice of annual or special meeting and as a
household wish to receive only one copy, you may contact our
transfer agent at the address and telephone number listed in the
preceding paragraph in the case of registered holders, or your
bank, broker or other nominee directly if such bank, broker or
other nominee holds your shares, and request that householding
commence as soon as practicable.
20
CENTRAL FEDERAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
MAY 19, 2011
10:00 A.M. LOCAL TIME
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the Board of Directors of Central Federal Corporation, with full
power of substitution, as proxies for the undersigned, and to vote all shares of common stock of
Central Federal Corporation which the undersigned is entitled to vote at the Annual Meeting of
Stockholders, to be held at the Fairlawn Country Club located at 200 North Wheaton Road, Fairlawn,
Ohio on Thursday, May 19, 2011 at 10:00 a.m., local time, and at any and all adjournments or
postponements thereof as follows:
(1) |
|
The election as directors of all nominees listed (except as marked to the contrary below). |
William R. Downing
Gerry W. Grace
|
|
|
|
|
|
|
FOR
|
|
|
VOTE WITHHELD
|
|
|
FOR ALL EXCEPT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE, MARK FOR ALL EXCEPT AND WRITE
THAT NOMINEES NAME ON THE LINE PROVIDED BELOW.
(2) |
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Approval of the following advisory (non-binding) proposal: Resolved, that the stockholders
approve the compensation of the Companys executive officers, as set forth in the compensation
tables and any related disclosures or discussion in this Proxy Statement. |
(3) |
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Ratification of the appointment of Crowe Horwath LLP as independent registered public
accounting firm for the Company for the year ending December 31, 2011. |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE LISTED
PROPOSALS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS LISTED. IF ANY OTHER BUSINESS IS
PRESENTED AT THE ANNUAL MEETING, INCLUDING WHETHER OR NOT TO ADJOURN THE MEETING, THIS PROXY
WILL BE VOTED BY THE PROXIES IN THEIR BEST JUDGEMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
The undersigned acknowledges receipt from the Company prior to the execution of this proxy
of a Notice of Annual Meeting of Stockholders, a Proxy Statement dated April 19, 2011 and
the 2010 Annual Report to Stockholders. The undersigned hereby revokes any proxies
submitted previously.
Please sign exactly as your name appears on this card. When signing as attorney, executor,
administrator, trustee or guardian, please give your full title. If shares are held
jointly, each holder may sign but only one signature is required.
Dated:
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE