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 (Amendment No. _______)
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a 6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Emclaire 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:
EMCLAIRE FINANCIAL CORP.
612 MAIN STREET
EMLENTON, PENNSYLVANIA 16373
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF EMCLAIRE FINANCIAL CORP.:
Notice is hereby given that the Annual Meeting of Shareholders of
Emclaire Financial Corp. (the "Corporation") will be held at 9:00 a.m., local
time, on Wednesday, April 22, 2009, at the Farmers National Bank of Emlenton,
612 Main Street, Emlenton, Pennsylvania 16373, for the following purposes:
1. To elect four (4) directors to serve for three-year terms and
until their successors are duly elected and qualified;
2. To ratify the selection of Beard Miller Company LLP, Certified
Public Accountants, as the independent auditors of the Corporation for the
fiscal year ending December 31, 2009;
3. To approve, on a non-binding advisory basis, the compensation of
the Corporation's named executive officers as described in the proxy statement;
and
4. To transact such other business as may properly come before the
Annual Meeting and any adjournment or postponement thereof.
Only those shareholders of record at the close of business on March 2,
2009 will be entitled to notice of and to vote at the Annual Meeting.
A copy of the Corporation's Annual Report for the fiscal year ended
December 31, 2008 is being mailed with this notice.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 22, 2009
The proxy materials for the Annual Meeting of Shareholders of Emclaire
Financial Corp., including the proxy statement and the Corporation's Annual
Report for the fiscal year ended December 31, 2008, are available over the
Internet at www.emclairefinancial.com.
You are urged to mark, sign, date and promptly return your proxy in the
enclosed envelope so that your shares may be voted in accordance with your
wishes and in order that the presence of a quorum may be assured. The prompt
return of your signed proxy, regardless of the number of shares you hold, will
aid the Corporation in reducing the expense of additional proxy solicitation.
The giving of such proxy does not affect your right to vote in person if you
attend the meeting.
By Order of the Board of Directors,
/s/ William C. Marsh
------------------------------------------------
William C. Marsh
Chairman, President and Chief Executive Officer
March XX, 2009
PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD APRIL 22, 2009
GENERAL
Introduction, Date, Place and Time of Meeting
This Proxy Statement is being furnished for the solicitation by the
Board of Directors of Emclaire Financial Corp. (the "Corporation"), a
Pennsylvania business corporation, of proxies to be voted at the Annual Meeting
of Shareholders of the Corporation to be held at the main office of the Farmers
National Bank of Emlenton (the "Bank"), 612 Main Street, Emlenton, Pennsylvania
16373, on Wednesday, April 22, 2009, at 9:00 a.m. local time, or at any
adjournment or postponement of the annual meeting.
The main office of the Corporation is located at 612 Main Street,
Emlenton, Pennsylvania 16373. The telephone number for the Corporation is (724)
867-2311. All inquiries should be directed to William C. Marsh, Chairman,
President and Chief Executive Officer. This Proxy Statement and the enclosed
form of proxy are first being sent to shareholders of the Corporation on March
XX, 2009. This Proxy Statement and the Annual Report for the fiscal year ended
December 31, 2008 are available at www.emclairefinancial.com.
Solicitation
The proxy solicited hereby, if properly signed and returned to us and
not revoked prior to its use, will be voted in accordance with your instructions
contained in the proxy. If no contrary instructions are given, each proxy signed
and received will be voted in the manner recommended by the Board of Directors
and, upon the transaction of such other business as may properly come before the
annual meeting, in accordance with the best judgment of the persons appointed as
proxies. Proxies solicited hereby may be exercised only at the annual meeting
and any adjournment of the annual meeting and will not be used for any other
meeting. Execution and return of the enclosed proxy will not affect a
shareholder's right to attend the annual meeting and vote in person.
The cost of preparing, assembling, mailing and soliciting proxies will
be borne by the Corporation. In addition to the use of the mail, certain
directors, officers and employees of the Corporation intend to solicit proxies
personally, by telephone and by facsimile. Arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries to forward proxy
solicitation material to the beneficial owners of stock held of record by these
persons, and, upon request there for, the Corporation will reimburse them for
their reasonable forwarding expenses.
Right of Revocation
A shareholder who returns a proxy may revoke it at any time before
it is voted by: (1) delivering written notice of revocation to Raymond M.
Lawton, Secretary, Emclaire Financial Corp., 612 Main Street, Post Office Box D,
Emlenton, Pennsylvania 16373, telephone: (724) 867-2311; (2) executing a
later-dated proxy and giving written notice thereof to the Secretary of the
Corporation or (3) voting in person after giving written notice to the Secretary
of the Corporation.
1
Voting Securities and Quorum
At the close of business on March 2, 2009, the voting record date, the
Corporation had outstanding 1,431,404 shares of common stock, $1.25 par value
per share. A majority of the outstanding shares in person or by proxy will
constitute a quorum at the annual meeting.
Only our shareholders of record, at the close of business on the voting
record date, will be entitled to notice of and to vote at the annual meeting. On
all matters to come before the annual meeting, each share of common stock is
entitled to one (1) vote.
Directors are elected by a plurality of the votes cast with a quorum
present. The persons receiving the greatest number of votes of the holders of
common stock represented in person or by proxy at the annual meeting will be
elected director. The affirmative vote of a majority of the total votes present
in person or by proxy is required for approval of the proposal to ratify the
appointment of the independent registered public accounting firm and the
proposal to approve, on a non-binding advisory basis, the compensation of the
Corporation's named executive officers.
With regard to the election of directors, you may vote in favor of or
withhold authority to vote for one or more nominees for director. Votes that are
withheld in connection with the election of one or more nominees for director
will not be counted as votes cast for such individuals and accordingly will have
no effect. An abstention may be specified on the proposal to ratify the
appointment of Beard Miller Company LLP as our independent registered public
accounting firm for 2009. Abstentions will have the effect of a vote against
this proposal. There are no proposals to be considered at the annual meeting
which are considered "non-discretionary" and, as a result, there will be no
"broker non-votes".
2
PRINCIPAL BENEFICIAL OWNERS OF THE CORPORATION'S COMMON STOCK
Persons and groups owning in excess of 5% of the common stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The following
table sets forth, as of the voting record date, certain information as to the
common stock beneficially owned by (i) persons or groups who own more than 5% of
the common stock, (ii) the directors of the Corporation, (iii) certain executive
officers of the Corporation named in the Summary Compensation Table, and (iv)
all directors and executive officers of the Corporation and the Bank as a group.
Other than as noted below, management knows of no person or group that owns more
than 5% of the outstanding shares of common stock at the voting record date.
Percent of Outstanding
Amount and Nature of Common Stock Benefically
Name and Address Beneficial Ownership Owned
----------------------------------------------------------------------------------------------
Mary E. Dascombe 91,000(2) 6.36%
Raleigh, NC 27609
Directors:
George W. Freeman 81,305(3) 5.68%
Ronald L. Ashbaugh 12,500(4) *
Brian C. McCarrier 2,377(4) *
Robert L. Hunter 15,659(5) *
John B. Mason 6,702(6) *
James M. Crooks 18,371(7) *
Mark A. Freemer 4,000(1) *
David L. Cox 13,580(4) *
William C. Marsh 15,600(8) *
Executive Management:
Raymond M. Lawton 1,200(1) *
Amanda L. Engles - *
All directors and executive officers
as a group (11 persons) 171,294 11.97%
(Footnotes on the following page)
3
(1) Based upon information provided by the respective beneficial owners and
filings with the Securities and Exchange Commission ("SEC") made pursuant
to the 1934 Act. For purposes of this table, pursuant to rules promulgated
under the 1934 Act, an individual is considered to beneficially own shares
of common stock if he or she directly or indirectly has or shares (1)
voting power, which includes the power to vote or to direct the voting of
the shares, or (2) investment power, which includes the power to dispose or
direct the disposition of the shares. Unless otherwise indicated, an
individual has sole voting power and sole investment power with respect to
the indicated shares.
(2) Of the 91,000 shares beneficially owned by Mrs. Dascombe, 2,677 shares are
owned jointly with her spouse, and 23,937 shares are owned individually by
her spouse.
(3) Of the 81,305 shares beneficially owned by Mr. Freeman, 2,500 shares are
owned jointly with his spouse, 1,000 shares are owned jointly with his
spouse in a family limited partnership and 37,805 shares are owned
individually by his spouse.
(4) All shares owned jointly with spouse.
(5) Of the 15,659 shares beneficially owned by Mr. Hunter, 5,304 shares are
owned individually by his spouse.
(6) Of the 6,702 shares beneficially owned by Mr. Mason, 687 shares are held as
custodian for his daughter.
(7) Of the 18,371 shares beneficially owned by Mr. Crooks, 3,273 shares are
owned jointly with his spouse and 135 shares are held individually by his
spouse.
(8) Of the 15,600 shares beneficially owned by Mr. Marsh, 650 shares are owned
individually by his wife.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The common stock is registered pursuant to Section 12(g) of the 1934
Act. The officers and directors of the Corporation and beneficial owners of
greater than 10% of the common stock are required to file reports on Forms 3, 4,
and 5 with the SEC disclosing changes in beneficial ownership of the common
stock. Based on the Corporation's review of such ownership reports, to the
Corporation's knowledge, no executive officer, director, or 10% beneficial owner
of the Corporation failed to file such ownership reports on a timely basis for
the fiscal year ended December 31, 2008.
4
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
Election of Directors
The Corporation has a classified Board of Directors with staggered
three-year terms of office. In a classified board, the directors are generally
divided into separate classes of equal number. The terms of the separate classes
expire in successive years. Thus, at each annual meeting of shareholders,
successors to the class of directors whose term shall then expire shall be
elected to hold office for a term of three years, so that the office of one
class shall expire each year.
A majority of the members of our Board of Directors are independent
based on an assessment of each member's qualifications by the Board, taking into
consideration the Nasdaq Stock Market's requirements for independence. The Board
of Directors has concluded that Messrs. Freemer, Crooks, Hunter, Freeman,
McCarrier and Ashbaugh do not have any material relationships with the
Corporation that would impair their independence. There are no arrangements or
understandings between the Corporation and any person pursuant to which such
person has been elected a director. Shareholders of the Corporation are not
permitted to cumulate their votes for the election of directors.
No director or executive officer of the Corporation is related to any
other director or executive officer of the Corporation by blood, marriage or
adoption, and each of the nominees currently serve as a director of the
Corporation.
Unless otherwise directed, each proxy executed and returned by a
shareholder will be voted for the election of the nominees for director listed
below. If the person named as nominee should be unable or unwilling to stand for
election at the time of the annual meeting, the proxies will nominate and vote
for one or more replacement nominees recommended by the Board of Directors. At
this time, the Board of Directors knows of no reason why the nominees listed
below may not be able to serve as a director if elected.
Any vacancy occurring on the Board of Directors of the Corporation for any
reason may be filled by a majority of the directors then in office until the
expiration of the term of office of the class of directors to which he or she
was appointed. The Board of Directors recommends that its nominees be elected as
directors. Ages are reflected as of December 31, 2008.
5
Nominees for Director for Three-Year Term Expiring in 2012
Principal Occupation Director Since
Name Age for Past Five Years Bank/Corporation
--------------------- --------- --------------------------------------------- -------------------
Ronald L. Ashbaugh 73 Retired, former President of the Bank and the 1971/1989
Corporation.
George W. Freeman 78 Owner of Freeman's Tree Farm. 1964/1989
William C. Marsh 42 Since January 1, 2009, Chairman, President 2006/2006
and Chief Executive Officer of the Bank and
Corporation; From July 2007 to December
2008, President and Chief Executive Officer
of the Bank and Treasurer and Chief
Financial Officer of the Corporation; from
June 2006 through June 2007, Executive Vice
President and Chief Financial Officer of the
Corporation and the Bank; from February 2006
through June 2006, Executive Vice President
and Chief Financial Officer of Allegheny
Valley Bancorp, Inc. and Allegheny Valley
Bank of Pittsburgh; from March 2005 through
February 2006, Chief Financial Officer of
InterTECH Security, LLC; from October 2003
through February 2005, Senior Vice President
and Chief Financial Officer of NSD Bancorp,
Inc. and North Side Bank. Mr. Marsh is a
certified public accountant.
Brian C. McCarrier 45 President, Interstate Pipe and Supply Company 1997/1997
Directors Whose Terms Expire in 2011
Principal Occupation Director Since
Name Age for Past Five Years Bank/Corporation
--------------------- ---------- ------------------------------------------- --------------------
James M. Crooks 56 Owner, F.L. Crooks Clothing Company, Inc., 2004/2004
Retail Sales
Robert L. Hunter 67 Truck Dealer; President of: Hunter Truck Sales 1974/1989
& Service, Inc.; Hunter Leasing, Inc.; Hunter
Keystone Peterbilt, LLP; Hunter Erie Truck
Sales LLP; Hunter Jersey Peterbilt, LLC ;
Hunter Services Inc.
John B. Mason 60 President, H. B. Beels & Son, Inc. 1985/1989
6
Directors Whose Terms Expire in 2010
Principal Occupation Director Since
Name Age for Past Five Years Bank/Corporation
--------------------- ---------- ------------------------------------------- -------------------
David L. Cox 58 Since January 1, 2009, Vice Chairman of the 1991/1991
Bank and Corporation; from July 2007 to
December 2008 , Chairman of the Bank and
Chairman, President and Chief Executive
Officer of the Corporation. Prior to July
2007, Chairman, President and Chief Executive
Officer of the Bank and Corporation since
1997.
Mark A. Freemer 49 Partner, Clyde, Ferraro & Co., LLP, Certified 2004/2004
Public Accountants
Director's Attendance at Annual Meetings
All directors are expected to attend the Corporation's annual meeting
of shareholders. All of the directors of the Corporation at the time attended
the Corporation's 2008 annual meeting of shareholders.
Committees and Meetings of the Corporation and the Bank
During 2008, the Board of Directors of the Corporation held five
regular meetings and five special meetings and the Board of Directors of the
Bank held 13 regular meetings. Each of the directors attended at least
seventy-five percent (75%) of the combined total number of meetings of the
Corporation's and Bank's Board of Directors and of the committees on which they
serve.
Membership on Certain Board Committees. The Board of Directors of the
Corporation has established an audit committee, executive committee and a human
resources committee. The human resources committee functions as the
Corporation's compensation committee. The Corporation does not have a standing
nominating committee and, instead, director nominations are considered by the
entire Board. The Corporation's director nomination process is described below.
The following table sets forth the membership of such committees as of
the date of this proxy statement.
Human
Directors Audit Executive Resources
------------------- -------- ---------------- ---------------------
David L. Cox *
Mark A. Freemer ** * *
James M. Crooks *
Robert L. Hunter * * **
John B. Mason *
Ronald L. Ashbaugh * *
George W. Freeman * *
William C. Marsh *
Brian C. McCarrier *
______________________
* Member
** Chairman
7
Audit Committee. The audit committee of the Board is composed of five
members and operates under a written charter adopted by the Board of Directors.
During 2008, the audit committee consisted of Messrs. Freemer (Chairman),
Ashbaugh, Hunter, McCarrier and Crooks. The Board of Directors has identified
Mark A. Freemer as an audit committee financial expert. The audit committee met
four times in 2008. The Board of Directors has determined that each committee
member is "independent," as defined by Corporation policy, SEC rules and the
NASDAQ listing standards.
The audit committee charter adopted by the Board sets out the
responsibilities, authority and specific duties of the audit committee. The full
text of the audit committee charter is available on our website at
www.emclairefinancial.com. Pursuant to the charter, the audit committee has the
following responsibilities:
o To monitor the preparation of quarterly and annual financial
reports;
o To review the adequacy of internal control systems and financial
reporting procedures with management and independent auditors;
and
o To review the general scope of the annual audit and the fees
charged by the independent auditors.
Human Resources Committee. The human resources committee of the Board
functions as the compensation committee and has the responsibility to evaluate
the performance of and determine the compensation for the Chairman of the Board,
the President and Chief Executive Officer of the Bank, to approve the
compensation structure for senior management, to review the Bank's salary
administration program, and to review and administer the Corporation's bonus
plans, including the management incentive program.
The human resources committee, composed entirely of independent
directors, administers the Corporation's executive compensation program. The
members of the human resources committee, Messrs. Hunter (Chairman), Freeman,
Freemer and Mason, meet all of the independence requirements under the listing
requirements of the Nasdaq Stock Market. None of the members is a current or
former officer or employee of the Corporation or any of its subsidiaries.
The human resources committee is committed to high standards of
corporate governance. The human resources committee's charter reflects the
foregoing responsibilities and commitment, and the human resources committee and
the Board will periodically review and revise the charter, as appropriate. The
full text of the human resources committee charter is available on our website
at www.emclairefinancial.com. The human resources committee's membership is
determined by the Board. There were nine meetings of the full human resources
committee in 2008.
The human resources committee has exercised exclusive authority over
the compensation paid to the Corporation's Chairman of the Board, President and
Chief Executive Officer and reviews and approves salary increases and bonuses
for the Corporation's other executive officers as prepared and submitted to the
human resources committee by the Chairman of the Board, President and Chief
Executive Officer. Although the human resources committee does not delegate any
of its authority for determining executive compensation, the human resources
committee has the authority under its charter to engage the services of outside
advisors, experts and others to assist the human resources committee.
8
Nomination Process. The goal of the Board of Directors has been, and
continues to be, to identify nominees for service on the Board of Directors who
will bring a variety of perspectives and skills from their professional and
business experience. Depending upon the current needs of the Board of Directors
and the Corporation, certain factors may be weighed more or less heavily. The
Board of Directors identifies nominees by first evaluating, on an informal
basis, the current members of the Board of Directors willing to continue in
service. Current members of the Board of Directors with skills and experience
that are relevant to the Corporation's business and/or unique situation who are
willing to continue in service are considered for re-nomination, balancing the
value of continuity of service by existing members of the Board of Directors
with that of obtaining a new perspective or skill set. If any member of the
Board of Directors does not wish to continue in service or if the Board of
Directors decides not to re-nominate a member for re-election, the Board of
Directors will then determine if there is a need to replace that director or
reduce the number of directors serving on the Board of Directors, in accordance
with the Corporation's bylaws. If the Board of Directors determines a need to
replace a non-continuing director, it identifies the desired skills and
experience in light of the criteria set forth above. Current members of the
Board of Directors are polled for suggestions as to individuals meeting those
criteria, and research may also be performed to identify qualified individuals.
To date, the Board of Directors has not formally engaged third parties to assist
in identifying or evaluating potential nominees, although the Board of Directors
reserves the right to do so in the future.
Section 10.1 of the Corporation's bylaws contains provisions addressing
the process by which a shareholder may nominate an individual to stand for
election to the Board of Directors at the Corporation's Annual Meeting.
Historically, the Corporation has not had a formal policy concerning shareholder
recommendations for nominees. Given the size of the Corporation, the Board of
Directors does not feel that such a formal policy is warranted at this time. The
absence of such a policy, however, does not mean that a reasonable shareholder
recommendation will not be considered, in light of the particular needs of the
Corporation and the policies and procedures set forth above. The Board of
Directors will reconsider this matter at such time as it believes that the
Corporation's circumstances, including its operations and prospects, warrant the
adoption of such a policy.
Executive Officers Who are Not Directors
Set forth below is information with respect to the principal
occupations during at least the last five years for the current executive
officers of the Corporation and the Bank who do not serve as directors. All
executive officers of the Corporation and the Bank are elected annually by the
Board of Directors and serve at the discretion of the Board. There are no
arrangements or understandings between the executive officers and the
Corporation and any person pursuant to which such persons have been selected
officers. Ages are reflected as of December 31, 2008.
Raymond M. Lawton, age 54. Mr. Lawton is Senior Vice President, Chief
Lending Officer and Secretary of the Corporation. Mr. Lawton has been Senior
Vice President and Secretary since 2003 and Chief Lending Officer since 2002 and
Chief Credit Officer since 1999.
Amanda L. Engles, age 30. Ms. Engles is Principal Accounting Officer
and Treasurer of the Corporation. Ms. Engles has been Vice President and
Controller of the Bank since October 2007. She previously served as Accounting
Manager of the Bank from December 2006 through October 2007; and Staff
Accountant of the Bank from January 2004 through December 2006.
9
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth a summary of certain information
concerning the compensation awarded to or paid by the Corporation or its
subsidiaries for services rendered in all capacities during 2008 to our
principal executive officer as well as our two other highest compensated
executive officers.
Changes in
Pension
Value and
Nonqualified
Deferred All
Option Stock Compensation Other
Name and Principal Position (1) Year Salary Bonus (2) Awards (3) Awards (3) Earnings (4) Compensation (5) Total
-------------------------------------------- ------- -------- --------- ---------- ---------- ------------ ---------------- --------
David L. Cox, Chairman, 2008 $173,000 $ 51,900 $ 26,851 $ 438 $ 45,571 $ 97,112(6) $394,871
President and Chief 2007 $168,000 $ 50,400 $ 7,489 $ - $ 44,011 $ 19,120 $289,020
Executive Officer
William C. Marsh, Treasurer 2008 $157,000 $ 47,100 $ 20,416 $ 438 $ 22,060 $ 21,088 $268,102
and Chief Financial Officer 2007 $142,000 $ 42,600 $ 5,617 $ - $ 21,280 $ 18,080 $229,577
Raymond M. Lawton, Senior 2008 $110,000 $ 27,500 $ 13,481 $ - $ 27,778 $ 5,450 $184,208
Vice President and Chief 2007 $105,000 $ 26,250 $ 3,744 $ - $ 26,758 $ 4,200 $165,952
----------------------------------------
(1) Effective January 1, 2009, William C. Marsh was appointed the,
Chairman, President and Chief Executive Officer of the
Corporation and the Bank and David L. Cox became Vice Chairman of
the Corporation and the Bank.
(2) Bonuses were paid in 2009 for 2008 performance pursuant to the
Corporation's Management Incentive Program.
(3) Reflects the dollar amount recognized for financial statement
reporting purposes for 2008 in accordance with FAS 123(R) of
awards pursuant to the 2007 Stock Incentive Plan and Trust
adopted in 2007.
(4) Reflects the increase in the actuarial present value of the named
executive officer's accumulated benefits under the Corporation's
defined benefit pension plan and supplemental executive
retirement plan at the relevant measurement date used for
financial reporting purposes for 2008 compared to 2007 and for
2007 compared to 2006.
(5) Includes director's fees from the Corporation and the Bank
totaling $12,600 in 2008 and $12,000 in 2007, and matching
amounts under the Corporation's 401(k) plan.
(6) Amount reported includes $75,000 paid to Mr. Cox pursuant to the
Farmers National Bank of Emlenton Deferred Compensation Plan. See
page 11 of this Proxy Statement for a description of this plan
and the two additional payments to be paid to Mr. Cox after the
year ended December 31, 2008.
Pension Plan
The Bank maintains a defined benefit pension plan for all eligible
employees. An employee becomes vested in the plan after five years. Upon
retirement at age 65, a terminated participant is entitled to receive a monthly
benefit. Prior to a 2002 amendment to the plan, the benefit formula was 1.1% of
average monthly compensation plus .4% of average monthly compensation in excess
of six hundred seventy five ($675) multiplied by years of service. In 2002, the
plan was amended to change the benefit structure to a cash balance formula under
which the benefit payable is the actuarial equivalent of the hypothetical
account balance at normal retirement age. However, the benefits already accrued
by the employees prior to the amendment were not reduced. In addition, the prior
benefit formula continues through December 31, 2012, as a minimum benefit. In
2008, the Bank contributed $360,000 to the pension plan.
401(k) Plan
The Bank provides a match of an employee's contribution to the 401(k)
plan up to 4% of the participant's salary.
10
Supplemental Retirement Agreements
In October 2002, following Board of Director approval, the Bank entered
into supplemental retirement agreements with Messrs. Cox and Lawton and in June
2006 with Mr. Marsh ("Supplemental Agreements"). The Supplemental Agreements are
non-qualified defined benefit plans and are unfunded. The Supplemental
Agreements have no assets, and the benefits payable under the Supplemental
Agreements are not secured. The Supplemental Agreement participants are general
creditors of the Corporation in regards to their vested Supplemental Agreement
benefits. The Supplemental Agreements provide for retirement benefits upon
reaching age 65, and participants are fully vested five years after the
inception of the Supplemental Agreements. Upon attaining the age of 65, Messrs.
Cox, Marsh and Lawton would be entitled to $520,000, $1.1 million and $720,000,
respectively, over a 20 year period under their Supplemental Agreements. The
Corporation accrued $19,920, $10,020 and $17,820 in expense for the Supplemental
Agreements for Messrs. Cox, Marsh and Lawton, respectively, for the year ended
December 31, 2008.
Each of the Supplemental Agreements provides that in the event of a
change of control of the Corporation (as defined in the agreements), the officer
(i) if he has not yet qualified for retirement benefits, shall have the right to
demand his withdrawal benefits (which is an amount equal to the present value of
the normal retirement benefit, using a 7% discount rate and monthly compounding
of interest) in a single lump sum payment, or (ii) if he has qualified for
retirement benefits or has begun receiving a retirement benefit under the
Supplemental Agreement, shall have the right to demand his benefits in a single
lump sum payment in an amount equal to the normal retirement benefit. In the
event of a change in control on December 31, 2008, Messrs. Cox, Marsh, and
Lawton could have been entitled to lump sum payments of $175,485, $122,115 and
$182,790, respectively. Such payments could be limited if they are deemed
"parachute payments" under Section 280G of the Internal Revenue Code, as
amended.
The Farmers National Bank of Emlenton Deferred Compensation Plan
In December 2008, the Board of Directors adopted The Farmers National
Bank of Emlenton Deferred Compensation Plan (the "Deferred Compensation Plan"),
and named David L. Cox as the sole participant. The purpose of the Deferred
Compensation Plan is to promote the continued success of the Corporation by
providing to David Cox a deferred benefit in recognition of his 35 years of
service as an executive officer of the Corporation and the Bank. The Deferred
Compensation Plan satisfies the requirements of Section 409A of the Internal
Revenue Code of 1986, as amended, and the regulations promulgated thereunder,
and is an unfunded, unsecured promise to pay on the part of the Corporation. For
purposes of the Employment Retirement Income Security Act of 1974 ("ERISA"), the
Deferred Compensation Plan is an unfunded plan solely for the benefit of the
participant for the purpose of qualifying the Deferred Compensation Plan for the
"top hat" plan exception under sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA. Pursuant to the Deferred Compensation Plan, the Corporation paid Mr. Cox
$75,000 in December 2008, $210,000 in January 2009 and a third installment of
$165,000 is scheduled to be paid in January 2010 without regard to Mr. Cox's
continued employment with the Corporation.
11
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth, with respect to the executive officers named in
the Summary Compensation Table, information with respect to the number of
options and awards held as of December 31, 2008. All options and awards were
granted pursuant to the Corporation's 2007 Stock Incentive Plan and Trust
adopted in 2007 and approved by shareholders at the 2007 annual meeting.
Option Awards
---------------------------------------------------------------------------
Number of
Securities Underlying Unexercised
Options
------------------------------------
Name Exercisable Unexercisable Exercise Price Option Expiration Date
---- ----------- ------------- -------------- ----------------------
David L. Cox -- 20,000 (1) $ 26.00 6/20/2017
William C. Marsh -- 15,000 (1) $ 26.00 6/20/2017
William C. Marsh -- 5,000 (2) $ 22.50 11/19/2018
Raymond M. Lawton -- 10,000 (1) $ 26.00 6/20/2017
Raymond M. Lawton -- 1,000 (2) $ 22.50 11/19/2018
-----------------------
(1) Options become fully vested and exercisable on June 20, 2010.
(2) Options become fully vested and exercisable on November 19, 2011.
Stock Awards (1)
--------------------------------------------------------------------------
Number of Market Value of Equity Incentive Plan Awards
Shares of Stock Shares of Stock Unearned Shares or Other Rights
--------------------------------------
Name Not Vested Not Vested Not Vested Market Price
---- ---------- ---------- ---------- ------------
David L. Cox 500 $22.50 -- --
William C. Marsh 500 $22.50 -- --
---------------------------------
(1) Stock awards become fully vested on November 19, 2011.
Employment and Change of Control Agreements
Effective July 1, 2007, the Corporation and the Bank entered into
employment agreements with Messrs. Cox and Marsh. These agreements replace prior
change in control agreements with such individuals. The agreements have an
initial term ending on June 30, 2010, provided that such terms shall be
automatically renewed for successive one-year periods each July 1 unless notice
to the contrary is provided at least 30 days prior to the renewal. The
agreements also provide that if the individual is terminated by the Corporation
or the Bank for other than cause, disability, retirement or the individual's
death or the individual terminates employment for good reason (as defined in the
agreements) after a change in control of the Corporation, the individual will be
entitled to the payment of a cash severance amount equal to three times the
individual's average annual compensation and the maintenance of insurance and
other benefits, provided that such payments will be limited if they are deemed
"parachute payments" under Section 280G of the Internal Revenue Code, as
amended. In connection with Mr. Cox entering into the Deferred Compensation Plan
and his transition to a part-time employee, the Corporation, the Bank and Mr.
Cox have mutually agreed to terminate his employment agreement.
In addition, effective July 1, 2007, the Corporation and the Bank
entered into a change in control agreement with Raymond M. Lawton, Senior Vice
President of the Corporation and the Bank. The agreement with Mr. Lawton
replaces his prior change in control agreement with the Bank. The agreement has
an initial term ending on June 30, 2009, provided that such term shall be
automatically renewed for successive one-year periods each July 1 unless notice
to the contrary is provided at least 30 days prior to the renewal. The agreement
also provides that if the individual is terminated by the Corporation or the
Bank (or any successor) within 24 months subsequent to a change in control of
the Corporation for other than cause, disability, retirement or the individual's
death or the individual terminates employment for good reason (as defined in the
agreement) after a change in control of the Corporation, the individual will be
entitled to the payment of a cash severance amount equal to two times the
individual's average annual compensation and the maintenance of insurance and
other benefits, provided that such payments will be limited if they are deemed
"parachute payments" under Section 280G of the Internal Revenue Code, as
amended.
12
Certain Transactions
Other than as set forth below, there have been no material
transactions, proposed or consummated, between the Corporation and the Bank with
any director or executive officer of the Corporation or the Bank, or any
associate of the foregoing persons.
The Bank, like many financial institutions, has followed a written
policy of granting various types of loans to officers, directors, and employees
and under such policy grants a discount of 100 basis points on loans extended to
all employees, including executive officers. With the exception of such policy,
all loans to executive officers and directors of the Corporation and the Bank
have been made in the ordinary course of business and on substantially the same
terms and conditions, including interest rates and collateral, as those
prevailing at the time for comparable transactions with the Bank's other
customers, and do not involve more than the normal risk of collectibility nor
present other unfavorable features. All of such loans are approved by the board
of directors. The following table presents a summary of the only loan in excess
of $120,000 extended by the Bank to any of the Corporation's directors, nominees
for director, executive officers or immediate family members of such
individuals.
Highest
Principal Amount Paid
Balance During Year
During Balance ------------------ Interest
Name and Position Type Year Made Year 12/31/08 Principle Interest Rate
--------------------------------------------------------------------------------------------------------------
David L. Cox Residential Mortgage 2003 $138,854 $130,940 $7,915 $7,630 5.63%
Chairman, President
and Chief Executive Officer (1)
---------------------
(1) Effective January 1, 2009, Mr. Cox became the Vice Chairman of the Corporation and the Bank.
Director Compensation
During 2008, directors received $1,050 per month for their services as
a director of the Bank regardless of attendance at board meetings. The Chairman
of the Audit Committee received an additional $100 per month for his services as
Audit Committee Chairman. No additional compensation is paid for service as a
director of the Corporation. In addition, outside directors received $240 for
each Bank committee meeting that they attended during 2008. During 2008, total
fees paid to all non-employee directors amounted to $139,350.
13
The following table sets forth information concerning compensation paid
or accrued by the Corporation and the Bank to each non-officer member of the
Board of Directors during the year ended December 31, 2008.
Fees Earned Option
Name or Paid in Cash Awards (1) Total
------------------------ ------------------ ---------- -----------
Ronald L. Ashbaugh $ 19,800 $ 3,123 $ 22,923
James M. Crooks 14,520 3,123 17,643
George W. Freeman 20,520 3,123 23,643
Mark A. Freemer 17,400 3,123 20,523
Robert L. Hunter 15,480 3,123 18,603
J. Michael King 15,630 3,123 18,753
John B. Mason 20,760 3,123 23,883
Brian C. McCarrier 15,240 3,123 18,363
(1) Reflects the dollar amount recognized for financial statement reporting
purposes for 2008 in accordance with FAS 123(R) of awards pursuant to the
2007 Stock Incentive Plan and Trust.
14
RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The audit committee of the Board of Directors appointed Beard Miller
Company LLP as the independent registered public accounting firm to audit the
Corporation's financial statements for the year ending December 31, 2009. The
audit committee considered the compatibility of the non-audit services provided
to the Corporation by Beard Miller Company LLP in 2008 described below on the
independence of Beard Miller Company LLP from the Corporation in evaluating
whether to appoint Beard Miller Company LLP to perform the audit of the
Corporation's financial statements for the year ending December 31, 2009.
The following table sets forth the aggregate fees paid by us to Beard
Miller Company LLP for professional services rendered by Beard Miller Company
LLP in connection with the audit of the Corporation's consolidated financial
statements for 2008 and 2007, as well as the fees paid by us to Beard Miller
Company LLP for audit-related services, tax services and all other services
rendered by Beard Miller Company LLP to us during 2008 and 2007.
2008 2007
---- ----
Audit Fees (1) $ 55,500 $ 51,100
Audit Related Fees(2) 47,435 6,000
------------------ --------------------
Total $ 102,935 $ 57,100
================== ====================
-----------------------------
(1) The audit fees include only fees that are customary under generally
accepted auditing standards and are the aggregate fees the Corporation
incurred for professional services rendered for the audit of the
Corporation's annual financial statements for fiscal years 2008 and
2007 and the reviews of the financial statements included in the
Corporation's Quarterly Reports on Forms 10-Q for fiscal years 2008 and
2007.
(2) In both years, audit-related services included audits of the
Corporation's benefit plans. In addition, 2008 audit-related fees
include fees paid for services rendered associated with the
Corporation's public stock offering. These audit-related services are
assurance and related services that are reasonably related to the
performance of the audit or review of the Corporation's financial
statements.
The audit committee selects the Corporation's independent registered
public accounting firm and separately pre-approves all audit services to be
provided by it to the Corporation. The audit committee also reviews and
separately pre-approves all audit-related, tax and all other services rendered
by our independent registered public accounting firm in accordance with the
audit committee's charter and policy on pre-approval of audit-related, tax and
other services. In its review of these services and related fees and terms, the
audit committee considers, among other things, the possible effect of the
performance of such services on the independence of our independent registered
public accounting firm.
Since May 6, 2003, the effective date of SEC rules stating that an
auditor is not independent of an audit client if the services it provides to the
client are not appropriately approved, each new engagement of Beard Miller
Company LLP was approved in advance by the audit committee, and none of those
engagements made use of the de minimus exception to pre-approval contained in
the SEC's rules.
15
REPORT OF THE AUDIT COMMITTEE
In discharging its oversight responsibility, the audit committee has
met and held discussions with management and Beard Miller Company LLP, the
independent auditors for the Corporation. Management represented to the audit
committee that all consolidated financial statements were prepared in accordance
with accounting principles generally accepted in the United States of America,
and the audit committee has reviewed and discussed the consolidated financial
statements with management and the independent auditors.
In addition, the audit committee has discussed with the independent
auditors the auditors' independence from management and the Corporation, and has
received and discussed with the independent auditors the matters in the written
disclosures required by the Independence Standards Board and as required under
the Sarbanes-Oxley Act of 2002, including considering the permissibility of
nonaudit services with the auditors' independence.
The audit committee also obtained from the independent auditors a
formal written statement describing all relationships between the Corporation
and Beard Miller Company LLP that bear on the auditors' independence consistent
with the applicable requirements of the Public Company Accounting Oversight
Board regarding the independent accountant's communications with the audit
committee concerning independence. The audit committee discussed with the
independent auditors any relationships that may impact the firm's objectivity
and independence and satisfied itself as to the auditors' independence.
Based on these discussions and reviews, the audit committee recommended
that the Board of Directors approve the inclusion of the Corporation's audited
consolidated financial statements in its Annual Report on Form 10-K for the year
ended December 31, 2008, for filing with the SEC.
Respectfully submitted by the members of the audit committee of the Board of
Directors:
Mark A. Freemer, Chairman
Ronald L. Ashbaugh
James M. Crooks
Robert L. Hunter
Brian C. McCarrier
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Unless instructed to the contrary, it is intended that votes will be
cast pursuant to the proxies for the ratification of the selection of Beard
Miller Company LLP, Certified Public Accountants, of Wexford, Pennsylvania, as
the Corporation's independent public accountants for its fiscal year ending
December 31, 2009. The Corporation has been advised by Beard Miller Company LLP
that none of its members have any financial interest in the Corporation.
Ratification of Beard Miller Company LLP will require an affirmative vote of a
majority of the shares of common stock cast at the Annual Meeting.
In addition to performing customary audit services related to the audit
of the Corporation's financial statements, Beard Miller Company LLP will assist
the Corporation with the preparation of its federal and state tax returns and
will perform required retirement plan audits, charging the Corporation for such
services at its customary hourly billing rates.
16
Representatives of Beard Miller Company LLP will be present at the
annual meeting, will be available to respond to your questions and will be able
to make such statements as they desire.
The Board of Directors recommends that the shareholders vote FOR the
ratification of the selection of Beard Miller Company LLP as the auditors for
the Corporation for the year ending December 31, 2009.
It is understood that even if the selection of Beard Miller Company LLP
is ratified, the Board of Directors, in its discretion, may direct the
appointment of a new independent auditing firm at any time during the year if
the Board of Directors determines that such a change would be in the best
interest of the Corporation and its shareholders.
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Corporation is asking shareholders to approve the compensation of
the Corporation's named executive officers as described under "Executive
Compensation" and the tabular disclosure regarding named executive officer
compensation (together with the accompanying narrative disclosure) in this Proxy
Statement (see pages 10 to 14).
Background of the Proposal
The American Recovery and Reinvestment Act of 2009 (the "ARRA") was
signed into law on February 17, 2009, and imposes significant new requirements
for and restrictions relating to the compensation arrangements of financial
institutions that received government funds through the Troubled Asset Relief
Program ("TARP"). These new executive compensation compliance requirements will
be effective for both new and existing TARP recipients until a participant
repays the financial assistance received through TARP, including the TARP
Capital Purchase Program ("CPP"). The Corporation is a TARP recipient because of
its participation in the CPP, pursuant to which the Corporation issued preferred
stock and warrants to purchase the Corporation's common stock to the U.S.
Department of the Treasury.
The ARRA requires, among other things, that all participants in the
TARP permit a non-binding shareholder vote to approve the compensation of the
Corporation's executives, commonly referred to as "Say-on-Pay" proposal.
As provided in the ARRA, the vote is not binding on the Corporation's
Board of Directors and may not be construed as overruling a decision by the
Board of Directors, nor creating or implying any additional fiduciary duty by
the Board of Directors, nor be construed to restrict or limit the ability of
shareholders to make proposals for inclusion in proxy materials related to
executive compensation.
Shareholders are encouraged to carefully review the "Executive
Compensation" section of this Proxy Statement and the tabular disclosure
regarding named executive officer compensation for a detailed discussion of the
Corporation's executive compensation program.
The purpose of the Corporation's compensation policies and procedures
is to attract and retain experienced, highly qualified executives critical to
the Corporation's long-term success and enhancement of shareholder value. The
Board of Directors believes the Corporation's compensation policies and
procedures achieve this objective, and are strongly aligned with the long-term
interests of shareholders. The Corporation is providing shareholders the
opportunity to endorse or not endorse the Corporation's executive compensation
policies and procedures through the following resolution:
17
"RESOLVED, that the shareholders of the Corporation approve the
compensation of the Corporation's executives named in the Summary Compensation
Table of the Corporation's Proxy Statement for the 2009 Annual Meeting of
Shareholders, including the Executive Compensation section and the tabular
disclosure regarding named executive officer compensation (together with the
accompanying narrative disclosure) in this Proxy Statement."
Vote Required; Effect
Approval of the Corporation's executive compensation policies and
procedures would require the affirmative vote of a majority of the total votes
entitled to be cast by the holders of the Corporation's Common Stock represented
in person or by proxy at the Annual Meeting. Proxies received by the Corporation
and not revoked prior to or at the Annual Meeting will be voted in favor of this
non-binding proposal unless otherwise instructed by the shareholder.
Abstentions, and shares not voted by shareholders of record present or
represented at the Annual Meeting and entitled to vote, will have the same
effect as a vote cast against the proposal. Because the shareholder vote is
advisory, it will not be binding upon the Board of Directors. However, the Human
Resources Committee may take into account the outcome of the vote when
considering future executive compensation arrangements.
Board Recommendation
The Board of Directors unanimously recommends a vote "FOR" approval of
the compensation of executive officers as described in the Executive
Compensation section and the tabular disclosure regarding named executive
officer compensation (together with the accompanying narrative disclosure) in
this Proxy Statement.
ANNUAL REPORT
A copy of the Corporation's Annual Report for its fiscal year ended
December 31, 2008, is being mailed with this Proxy Statement and is available
over the Internet at www.emclairefinancial.com. Such Annual Report is not to be
treated as part of the proxy solicitation material or having been incorporated
herein by reference.
18
SHAREHOLDER PROPOSALS
Any shareholder who, in accordance with and subject to the provisions
of the proxy rules of the SEC, wishes to submit a proposal for inclusion in the
Corporation's proxy statement for its 2009 Annual Meeting of Shareholders must
deliver such proposal in writing to the Secretary of Emclaire Financial Corp. at
the principal executive offices of the Corporation at 612 Main Street, Post
Office Box D, Emlenton, Pennsylvania 16373, no later than November XX, 2009.
Under the Corporation's current bylaws, business proposal nominations
for directors other than those to be included in the Corporation's proxy
materials following the procedures described in Rule 14a-8 under the 1934 Act,
may be made by shareholders entitled to vote at the meeting if notice is timely
given and if the notice contains the information required by the bylaws.
Nominations must be received no less than sixty (60) days prior to the annual
meeting.
In the event the Corporation received notice of a shareholder proposal
to take action at next year's annual meeting of shareholders that is not
submitted for inclusion in the Corporation's proxy material, or is submitted for
inclusion but is properly excluded from the proxy material, the persons named in
the proxy sent by the Corporation to its shareholders intend to exercise their
discretion to vote on the shareholder proposal in accordance with their best
judgment.
SHAREHOLDER COMMUNICATION WITH THE BOARD
The Corporation does not have a formal procedure for shareholder
communication with its Board of Directors. In general, officers are easily
accessible by telephone or mail. Any matter intended for the Board, or for any
individual member or members of the Board, should be directed to the President
with a request to forward the same to the intended recipient. In the
alternative, shareholders can send correspondence to the Board to the attention
of the Board Chairman, William C. Marsh, or to the attention of the Chairman of
the Audit Committee, Mark A. Freemer, in care of the Corporation at the
Corporation address. All such communications will be forwarded unopened.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented for
consideration other than the matters described in the Notice of Meeting, but if
any matters are properly presented, it is the intention of the persons named in
the accompanying proxy to vote on such matters in accordance with their
judgment.
ADDITIONAL INFORMATION
Upon written request, a copy of the Corporation's Annual Report on Form
10-K may be obtained, without charge from William C. Marsh, President and Chief
Executive Officer, Emclaire Financial Corp., 612 Main Street, Post Office Box D,
Emlenton, Pennsylvania 16373. In addition, the Corporation files reports with
the SEC. Free copies can be obtained from the SEC website at www.sec.gov or on
the Corporation's website at www.emclairefinancial.com.
19