def14a
SCHEDULE 14A
United States
Securities and Exchange Commission
Washington, D.C. 20549
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. _____)
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only |
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Definitive Proxy Statement
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(as permitted by Rule 14a-6(e)(2)) |
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Definitive Additional Materials |
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Soliciting Material Pursuant to Rule
14a-11(c) or Rule 14a-12 |
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Harleysville Savings Financial Corporation
(Name of Registrant as Specified in Its Charter)
n/a
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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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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Proposed maximum aggregate value of transaction:
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Total fee paid: |
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Fee paid previously with preliminary materials. |
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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.
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Amount previously paid: |
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Form, Schedule or Registration Statement No.: |
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Date filed: |
December 18, 2009
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of Harleysville Savings
Financial Corporation, the holding company for Harleysville Savings Bank. The meeting will be held
at the Indian Valley Country Club, located at 650 Bergey Road, Telford, Pennsylvania 18969, on
Wednesday, January 27, 2010 at 9:30 a.m., local time. The matters to be considered by stockholders
at the annual meeting are described in the accompanying materials.
It is very important that your shares be voted at the annual meeting regardless of the number
you own or whether you are able to attend the meeting in person. We urge you to mark, sign, and
date your proxy card today and return it in the envelope provided, even if you plan to attend the
annual meeting. This will not prevent you from voting in person, but will ensure that your vote is
counted if you are unable to attend.
Your continued support of and interest in Harleysville Savings Financial Corporation is
sincerely appreciated.
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Sincerely,
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Edward J. Molnar
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Chairman of the Board |
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HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
271 Main Street
Harleysville, Pennsylvania 19438
(215) 256-8828
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 27, 2010
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of Harleysville Savings
Financial Corporation (the Company) will be held at the Indian Valley Country Club, located at
650 Bergey Road, Telford, Pennsylvania 18969, on Wednesday, January 27, 2010 at 9:30 a. m., local
time, for the following purposes, all of which are more completely set forth in the accompanying
proxy statement:
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To elect three directors for a three-year term and in each case until their
successors are elected and qualified; |
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To consider and approve the Harleysville Savings Financial Corporation 2009 Stock
Incentive Plan; |
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To ratify the appointment of ParenteBeard LLC as the Companys independent
registered public accounting firm for the year ending September 30, 2010; and |
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To transact such other business as may properly come before the meeting or any
adjournment thereof. Management is not aware of any other such business. |
The board of directors has fixed December 4, 2009 as the voting record date for the
determination of stockholders entitled to notice of and to vote at the annual meeting and at any
adjournment thereof. Only those stockholders of record as of the close of business on that date
will be entitled to vote at the annual meeting or at any such adjournment.
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By Order of the Board of Directors
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Adrian D. Gordon
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Senior Vice President and Corporate Secretary |
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Harleysville, Pennsylvania
December 18, 2009
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT YOUR SHARES BE
REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO BE PRESENT, YOU ARE URGED TO
COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU
ATTEND THE MEETING, YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY
YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 27, 2010
General
This proxy statement is furnished to holders of common stock, $.01 par value per share, of
Harleysville Savings Financial Corporation (the Company), the bank holding company for
Harleysville Savings Bank (the Bank). Proxies are being solicited on behalf of the board of
directors of the Company to be used at the annual meeting of stockholders to be held at the Indian
Valley Country Club, located at 650 Bergey Road, Telford, Pennsylvania 18969, on Wednesday, January
27, 2010 at 9:30 a.m., local time, and at any adjournment thereof for the purposes set forth in the
Notice of Annual Meeting of Stockholders. This proxy statement is first being mailed to
stockholders on or about December 18, 2009.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of
Stockholders to be Held on January 27, 2010. This proxy statement and the Annual Report on Form
10-K for the year ended September 30, 2009 as well as driving directions to the annual meeting are
available on our website at www.harleysvillesavings.com under the tabs About Us Annual Meeting
Materials.
Voting Rights
Only stockholders of record at the close of business on December 4, 2009 will be entitled to
notice of and to vote at the annual meeting. At such date, there were 3,638,205 shares of common
stock issued and outstanding and the Company had no other class of equity securities outstanding.
Each share of common stock is entitled to one vote at the annual meeting on all matters
properly presented at the meeting. The presence in person or by proxy of at least a majority of
the issued and outstanding shares of common stock entitled to vote is necessary to constitute a
quorum at the annual meeting. Directors are elected by a plurality of the votes cast with a quorum
present. The affirmative vote of a majority of the total votes cast is required for approval of
the proposals to approve the Companys 2009 Stock Incentive Plan and to ratify the appointment of
the Companys independent registered public accounting firm.
Under rules applicable to broker-dealers, the proposal to ratify the independent registered
public accounting firm is considered a discretionary item upon which brokerage firms may vote in
their discretion on behalf of their client if such clients have not furnished voting instructions.
The election of directors and the proposal to approve the 2009 Stock Incentive Plan are considered
non-discretionary and, thus, there may be broker non-votes at the meeting. Abstentions and
broker non-votes will be counted for purposes of determining the presence of a quorum at the annual
meeting. However, because of the required votes, abstentions and broker non-votes will have no
effect on the voting for the election of directors, the proposal to approve the 2009 Stock
Incentive Plan or the proposal to ratify the appointment of the Companys independent registered
public accounting firm.
Proxies
The proxy solicited hereby, if properly signed and returned to the Company and not revoked
prior to its use, will be voted in accordance with the instructions contained therein. If no
contrary instructions are given, each proxy received will be voted (i) FOR the nominees for
director described herein; (ii) FOR approval of the 2009 Stock Incentive Plan; (iii) FOR
ratification of ParenteBeard LLC as the Companys independent registered public accounting firm for
the year ending September 30, 2010; and (iv) upon the transaction of such other business as may
properly come before the meeting, in accordance with the best judgment of the persons appointed as
proxies. Any stockholder giving a proxy has
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the power to revoke it at any time before it is exercised by (i) filing with the secretary of
the Company written notice thereof (Adrian D. Gordon, Senior Vice President and Corporate
Secretary, Harleysville Savings Financial Corporation, 271 Main Street, Harleysville, Pennsylvania
19438); (ii) submitting a duly-executed proxy bearing a later date; or (iii) appearing at the
annual meeting and giving the secretary notice of his or her intention to vote in person. Proxies
solicited hereby may be exercised only at the annual meeting and any adjournment thereof and will
not be used for any other meeting.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
DIRECTORS WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS
Election of Directors
The articles of incorporation of the Company provide that the board of directors of the
Company shall be divided into three classes which are as equal in number as possible, and that the
members of each class are to be elected for a term of three years and until their successors are
elected and qualified. One class of directors is to be elected annually and stockholders are not
permitted to cumulate their votes for the election of directors. No nominee for director is
related to any other director or executive officer of the Company by blood, marriage or adoption.
Unless otherwise directed, each proxy executed and returned by a stockholder will be voted for
the election of the nominees for director listed below. If any person named as nominee should be
unable or unwilling to stand for election at the time of the annual meeting, the proxies will
nominate and vote for any replacement nominee or nominees recommended by the board of directors.
At this time, the board of directors knows of no reason why any of the nominees listed below may
not be able to serve as a director if elected.
The following tables present information concerning the nominees for director and each
director whose term continues, including his or her tenure as a director of the Company.
Nominees for Director for a Three-Year Term Expiring in 2013
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Principal Occupation During |
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the Past Five Years |
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Sanford L. Alderfer
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57 |
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Mr. Alderfer is President
and Chief Executive
Officer of Alderfer
Auction Company, located
in Hatfield, Pennsylvania.
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2001 |
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Mark R. Cummins
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53 |
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Mr. Cummins is Executive
Vice President, Chief
Investment Officer and
Treasurer of Harleysville
Insurance Companies
located in Harleysville,
Pennsylvania.
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1995 |
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Ronald B. Geib
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55 |
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Mr. Geib has served as the
President and Chief
Executive Officer of the
Company and the Bank since
January 2007. Previously,
Mr. Geib served as
President and Chief
Operating Officer of the
Company and the Bank from
November 2002 until
January 2007. Mr. Geib
also previously served as
Executive Vice President
and Chief Operating
Officer of the Company and
the Bank from 1999 to
November 2002. Mr. Geib
served as the Banks
Senior Vice President,
Treasurer, and Chief
Financial Officer from
1980 to 1999. Mr. Geib
joined the Bank in 1976.
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The Board of Directors Recommends a Vote FOR Election of the Nominees for Director.
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Members of the Board of Directors Continuing in Office
Directors With Terms Expiring in 2011
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Principal Occupation During |
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Director |
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the Past Five Years |
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Edward J. Molnar
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69 |
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Mr. Molnar has served as
the Chairman of the Board
of the Company and the
Bank since January 2007.
Prior to his retirement as
an officer in January
2007, Mr. Molnar served as
Chief Executive Officer of
the Company from February
2000 until January 2007
and as President of the
Company from February 2000
until November 2002. Mr.
Molnar also served as the
Banks Chief Executive
Officer from 1967 until
January 2007 and as the
Banks President from 1976
to November 2002. Mr.
Molnar joined the Bank in
1967.
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1968 |
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Charlotte A. Hunsberger
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40 |
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Ms. Hunsberger is a
partner in the law firm of
Bricker, Landis &
Hunsberger, LLP, located
in Souderton,
Pennsylvania.
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Directors With Terms Expiring in 2012
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Principal Occupation During |
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Director |
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the Past Five Years |
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George W. Meschter
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57 |
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Mr. Meschter is the
President of Meschter
Insurance Group, an
insurance agency located
in Collegeville,
Pennsylvania.
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1981 |
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James L. Rittenhouse
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48 |
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Mr. Rittenhouse is a
certified public
accountant, certified
valuation analyst,
certified forensic
financial analyst and a
shareholder in the firm
Detweiler, Hershey &
Associates, P.C., located
in Souderton,
Pennsylvania.
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2005 |
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Thomas D. Clemens
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50 |
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Mr. Clemens is a Senior
Vice President of Clemens
Food Group, a meat
processing company located
in Hatfield, Pennsylvania.
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2009 |
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Includes service as a director of the Bank. |
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Stockholder Nominations
Article III, Section 3.12 of the Companys bylaws governs nominations for election to the
board and requires all such nominations, other than those made by the board, to be made at a
meeting of stockholders called for the election of directors, and only by a stockholder who has
complied with the notice provisions in that section. Stockholder nominations must be made pursuant
to timely notice in writing to the secretary of the Company. To be timely, a stockholders notice
must be delivered to, or mailed and received at, the principal executive offices of the Company not
later than (i) with respect to an election to be held at an annual meeting of stockholders, 90 days
prior to the anniversary date of the mailing of proxy materials by the Company for the immediately
preceding annual meeting, and (ii) with respect to an election to be held at a special meeting of
stockholders for the election of directors, the close of business on the tenth day following the
date on which notice of such meeting is first given to stockholders.
Each written notice of a stockholder nomination shall set forth: (a) the name and address of
the stockholder who intends to make the nomination and of the person or persons to be nominated;
(b) a representation that the stockholder is a holder of record of stock of the Company entitled to
vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all arrangements or understandings
between the stockholder and each nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to be made by the stockholder; (d)
such other information regarding each nominee proposed by such stockholder as would be required to
be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange
Commission; and (e) the consent of each nominee to serve as a director of the Company if so
elected. The presiding officer of the meeting may refuse to acknowledge the nomination of any
person not made in compliance with the foregoing procedures. The Company did not receive any
nominations from stockholders for the annual meeting.
The Board of Directors and Its Committees
Regular meetings of the board of directors of the Company and the Bank are typically held on a
monthly basis and special meetings of the board of directors are held from time-to-time as needed.
There were 12 meetings of the board of directors of the Company held during fiscal 2009. No
director attended fewer than 75% of the aggregate of the total number of meetings of the board of
directors and the total number of meetings of committees of the board on which the director served
during the year.
The board of directors of the Company has established various committees, including Audit,
Compensation and Human Resources and Corporate Governance and Nominating Committees.
The Compensation and Human Resources Committee, which met three times during fiscal 2009,
reviews the Companys compensation programs and recommends salary and benefits for the Companys
employees. The members of the committee are currently Messrs. Alderfer, Cummins and Meschter. The
Compensation and Human Resources Committee operates pursuant to a written charter, a copy of which
is available on the Companys website at www.harleysvillesavings.com.
The Corporate Governance and Nominating Committee, which met two times during fiscal 2009 with
respect to nominations for directors for the annual meeting, advises the board of directors with
respect to nominations of directors and recommends candidates to the board of directors as nominees
for election, reviews existing corporate governance documents and establishes corporate governance
principles for the Company, reviews nominations for director submitted by stockholders pursuant to
the Companys bylaws and identifies and recommends to the board the selection of qualified
individuals to serve as officers of the Company. The members of the Corporate Governance and
Nominating Committee are currently Messrs. Clemens and Meschter and Ms. Hunsberger. Each of these
persons is independent within the meaning of the rules of the NASDAQ Stock Market. The Corporate
Governance and Nominating Committee operates pursuant to a written charter, a copy of which is
available on the Companys website at www.harleysvillesavings.com.
The Corporate Governance and Nominating Committee will also consider candidates for director
suggested by its stockholders. A stockholder who desires to recommend a prospective nominee for
director should submit in writing the name and qualifications, including place of principal
residence and place of employment, of such persons to the Corporate Governance and Nominating
Committee no later than July 31st of any year. Submissions shall be made sent to
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the Corporate Governance and Nominating Committee, Harleysville Savings Financial Corporation,
Corporate Secretary, 271 Main Street, Harleysville, Pennsylvania 19438. The Corporate Governance
and Nominating Committee also considers whether to nominate any person nominated pursuant to the
provision of the Companys articles of incorporation relating to stockholder nominations, which is
described above under - Stockholder Nominations. The Corporate Governance and Nominating
Committee has the authority and ability to retain a search firm to identify or evaluate potential
nominees if it so desires.
The charter of the Corporate Governance and Nominating Committee sets forth certain criteria
the committee may consider when recommending individuals for nomination as director including: (a)
ensuring that the board of directors, as a whole, is diverse and consists of individuals with
various and relevant career experience, relevant technical skills, industry knowledge and
experience, financial expertise (including expertise that could qualify a director as a financial
expert, as that term is defined by the rules of the SEC), local or community ties and (b) minimum
individual qualifications, including strength of character, mature judgment, familiarity with our
business and industry, independence of thought and an ability to work collegially. The committee
also may consider the extent to which the candidate would fill a present need on the board of
directors.
The charter of the Corporate Governance and Nominating Committee also provides that a director
should have:
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a solid understanding of general management best practices and their application; |
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a history of making good business decisions; |
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the ability to read a balance sheet, income statement, cash flow statement and
understand the use of financial ratios and other indicators for evaluating Company
performance; |
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the ability and the time to perform during periods of both short-term and prolonged
crises; |
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an understanding of what it takes to attract, motivate and energize a
high-performance leadership team; |
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an understanding of the importance of the strategic planning process in creating a
competitive advantage through strategy; |
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a good reputation for high ethical standards and integrity in their personal and
professional dealings; |
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mature confidence and value board and team performance over individual performance;
respects others, is open to the opinions of others, has good listening skills, is
confident enough to ask tough questions, and can communicate persuasively; |
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a history of high performance standards as reflected in the persons history of
achievements; |
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high intelligence, exhibit wisdom and will be expected to exercise prudence and care
in carrying out the responsibilities of the position; and |
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no existing or potential conflict of interest situation. |
In addition, a director must be:
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a citizen of the United States of America and shall have his or her primary
residence and place of employment within the Banks market area; |
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a person who has a reputation for being trusted with confidential information; and |
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a person who will faithfully attend board meetings, committee meetings and the
annual meeting of the shareholders and takes the time to prepare for meaningful
discussion. |
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Once the Corporate Governance and Nominating Committee has identified a prospective nominee,
the committee makes an initial determination as to whether to conduct a full evaluation of the
candidate. This initial determination is based on whatever information is provided to the
committee with the recommendation of the prospective candidate, as well as the committees own
knowledge of the prospective candidate, which may be supplemented by inquiries to the person making
the recommendation or others.
The Audit Committee reviews the records and affairs of the Company to determine its financial
condition, reviews with management and the Companys independent registered public accounting firm
the systems of internal control, monitors the Companys adherence in accounting and financial
reporting to generally accepted accounting principles, and performs such other duties deemed
appropriate by the board of directors. The Audit Committee met four times in fiscal 2009. Messrs.
Cummins and Rittenhouse and Ms. Hunsberger served on the Audit Committee in fiscal 2009. The
members the Audit Committee are independent as defined in the listing standards of the NASDAQ Stock
Market. The Audit Committee operates pursuant to a written charter, a copy of which is available
on the Companys website at www.harleysvillesavings.com.
The board of directors has determined that Messrs. Cummins and Rittenhouse, members of the
Audit Committee, meet the requirements adopted by the Securities and Exchange Commission for
qualification as an audit committee financial expert. An audit committee financial expert is
defined as a person who has the following attributes: (i) an understanding of generally accepted
accounting principles and financial statements; (ii) the ability to assess the general application
of such principles in connection with the accounting for estimates, accruals and reserves; (iii)
experience preparing, auditing, analyzing or evaluating financial statements that present a breadth
and level of complexity or accounting issues that are generally comparable to the breadth and
complexity of issues that can reasonably be expected to be raised by the registrants financial
statements, or experience actively supervising one or more persons engaged in such activities; (iv)
an understanding of internal controls and procedures for financial reporting; and (v) an
understanding of audit committee functions.
The identification of a person as an audit committee financial expert does not impose on such
person any duties, obligations or liability that are greater than those that are imposed on such
person as a member of the Audit Committee and the board of directors in the absence of such
identification. Moreover, the identification of a person as an audit committee financial expert
for purposes of the regulations of the Securities and Exchange Commission does not affect the
duties, obligations or liability of any other member of the Audit Committee or the board of
directors. Finally, a person who is determined to be an audit committee financial expert will not
be deemed an expert for purposes of Section 11 of the Securities Act of 1933.
Report of the Audit Committee
The Audit Committee has reviewed and discussed the audited financial statements with
management. The Audit Committee has discussed with the independent registered public accounting
firm the matters required to be discussed by Statement on Auditing Standards No. 61 Communication
with Audit Committees, as amended. The Audit Committee has received the written disclosures and
the letter from the independent registered public accounting firm required by the applicable
requirements of the Public Company Accounting Oversight Board regarding the independent
accountants communications with the Audit Committee concerning independence, and has discussed
with the independent registered public accounting firm, the independent registered public
accounting firms independence. Based on the review and discussions referred to above in this
report, the Audit Committee recommended to the board of directors that the audited financial
statements be included in the Companys Annual Report on Form 10-K for the year ended September 30,
2009 for filing with the Securities and Exchange Commission.
Mark R. Cummins
Charlotte A. Hunsberger
James L. Rittenhouse
6
Executive Officers Who Are Not Directors
The following table sets forth certain information with respect to the executive officers of
the Company and the Bank who are not directors or nominees.
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Position(s) with the Company and Principal Occupation |
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During the Past Five Years |
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Brendan J. McGill
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41 |
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Mr. McGill has served as the Companys Executive Vice President,
Treasurer and Chief Financial Officer since May 2009. From February
2000 until May 2009, Mr. McGill served as the Companys Senior Vice
President, Treasurer and Chief Financial Officer. Mr. McGill
joined the Bank in September 1999 as Senior Vice President, Chief
Financial Officer and Treasurer. |
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Stephen J. Kopenhaver
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47 |
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Mr. Kopenhaver has served as Senior Vice President and Chief Lending
Officer for the Company and the Bank since December 2006. Mr.
Kopenhaver was Senior Vice President/Commercial Services for the
Company and the Bank from January 2006 to December 2006. Mr.
Kopenhaver joined the Bank in 2006 and has 23 years of commercial
banking experience. |
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Adrian D. Gordon
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39 |
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Mr. Gordon has served as Senior Vice President/Chief Information
Officer for the Company and the Bank since January 2006. Mr. Gordon
also serves as the Corporate Secretary of the Company and the Bank.
Mr. Gordon joined the Bank in 1995 serving as Loan Servicing
Manager/Data Information Coordinator until 1997, as Information
Systems Manager from 1997 until 1999, as Assistant Vice President
from 1999 until 2000 and as Vice President from 2000 until January
2006. |
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Sheri Strouse
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46 |
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Ms. Strouse has served as Senior Vice President and Chief Retail
Officer for the Company and the Bank since January 2006. Ms.
Strouse previously served as Vice President of the Bank from 2000
until January 2006 and has been with the Bank since 1997. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Companys
executive officers and directors, and persons who own more than 10% of the common stock to file
reports of ownership and changes in ownership with the Securities and Exchange Commission and the
NASDAQ Stock Market. Officers, directors and greater than 10% stockholders are required by
regulation to furnish the Company with copies of all Section 16(a) forms they file. The Company
knows of no person who owns 10% or more of the common stock. Based solely on review of the copies
of such forms furnished to the Company, the Company believes that during the year ended September
30, 2009, all Section 16(a) filing requirements applicable to its executive officers and directors
were met.
7
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the common stock as of the record
date, and certain other information with respect to (i) the only persons or entities, including any
group as that term is used in Section 13(d)(3) of the Exchange Act, who or which was known to the
Company to be the beneficial owner of more than 5% of the issued and outstanding common stock on
the record date, (ii) each director and nominee for director of the Company, (iii) certain named
executive officers of the Company, and (iv) all directors, nominees for director and executive
officers of the Company as a group.
|
|
|
|
|
|
|
|
|
Name of Beneficial |
|
Amount and Nature of Beneficial |
|
|
Owner or Number of |
|
Ownership as of |
|
Percent of |
Persons in Group |
|
December 4, 2009(1)(2) |
|
Common Stock |
|
Harleysville Savings Financial
Corporation Employee Stock
Ownership Pension Plan
271 Main Street
Harleysville, Pennsylvania 19438 |
|
|
209,524 |
(3) |
|
|
5.8 |
% |
|
|
|
|
|
|
|
|
|
Directors and Nominees for Director: |
|
|
|
|
|
|
|
|
Sanford L. Alderfer |
|
|
14,492 |
(4)(5) |
|
|
* |
|
Thomas D. Clemens |
|
|
2,500 |
|
|
|
* |
|
Mark R. Cummins |
|
|
130,561 |
(5)(6) |
|
|
3.6 |
|
Ronald B. Geib |
|
|
118,687 |
(7) |
|
|
3.2 |
|
Charlotte A. Hunsberger |
|
|
6,926 |
(8) |
|
|
* |
|
George W. Meschter |
|
|
52,616 |
(5)(9) |
|
|
1.4 |
|
Edward J. Molnar |
|
|
102,870 |
(10) |
|
|
2.8 |
|
James L. Rittenhouse |
|
|
7,540 |
(11) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
Named Executive Officers: |
|
|
|
|
|
|
|
|
Brendan J. McGill |
|
|
29,291 |
(12) |
|
|
* |
|
Stephen J. Kopenhaver |
|
|
3,401 |
(13) |
|
|
* |
|
|
|
|
|
|
|
|
|
|
All directors, nominees for Director
and executive officers as a group
(12 persons) |
|
|
493,600 |
(14) |
|
|
13.4 |
|
|
|
|
* |
|
Less than 1% of the outstanding common stock. |
|
(1) |
|
Based upon filings made pursuant to the Exchange Act and information furnished by the
respective individuals. Under regulations promulgated pursuant to the Exchange Act, shares of
common stock are deemed to be beneficially owned by a person if he or she directly or
indirectly has or shares (i) voting power, which includes the power to vote or to direct the
voting of the shares, or (ii) investment power, which includes the power to dispose or to
direct the disposition of the shares. Unless otherwise indicated, the named beneficial owner
has sole voting and dispositive power with respect to the shares. |
|
(2) |
|
Under applicable regulations, a person is deemed to have beneficial ownership of any shares
of common stock which may be acquired within 60 days of the record date pursuant to the
exercise of outstanding stock options. Shares of common stock which are subject to stock
options are deemed to be outstanding for the purpose of computing the percentage of
outstanding common stock owned by such person or group but not deemed outstanding for the
purpose of computing the percentage of common stock owned by any other person or group. |
8
|
|
|
(3) |
|
Includes 209,524 shares held in the Companys Employee Stock Ownership Pension Plan (ESOP)
allocated to the account of employees, who may direct the voting of such shares. |
|
(4) |
|
Includes 5,466 shares held jointly with Mr. Alderfers wife, 7,776 shares held in the Sanford
Alderfer Auction Company, Inc. Profit Sharing Plan, for which Mr. Alderfer is a trustee, and
1,250 shares which may be acquired within 60 days of the record date pursuant to vested stock
options. |
|
(5) |
|
Does not include the shares held in the ESOP as to which Messrs. Alderfer, Cummins and
Meschter serve as trustees and disclaim beneficial ownership. |
|
(6) |
|
Includes 5,000 shares held jointly with Mr. Cummins wife and 123,748 shares owned by the
Harleysville Insurance Companies of which Mr. Cummins is the Executive Vice President, Chief
Investment Officer and Treasurer, and as such, Mr. Cummins has the power to direct the voting
and disposition of these shares. Mr. Cummins disclaims beneficial ownership of these 123,748
shares. Also includes 2,083 shares which may be acquired within 60 days of the record date
pursuant to vested stock options. |
|
(7) |
|
Includes 69,066 shares held by Mr. Geib under the ESOP and 18,167 shares which may be
acquired within 60 days of the record date pursuant to vested stock options. |
|
(8) |
|
Includes 6,501 shares held jointly with Ms. Hunsbergers husband and 425 shares which may be
acquired within 60 days of the record date pursuant to vested stock options. |
|
(9) |
|
Includes 12,250 shares owned by Meschter Insurance Group of which Mr. Meschter is President,
7,640 shares held in a trust which Mr. Meschter is trustee, 1,667 shares held by Mr.
Meschters wife as custodian for their child and 2,083 shares which may be acquired within 60
days of the record date pursuant to vested stock options. |
|
(10) |
|
Includes 37,484 shares held by Mr. Molnars wife and 12,833 shares which may be acquired
within 60 days of the record date pursuant to vested stock options. |
|
(11) |
|
Includes 1,312, shares held by Mr. Rittenhouses children and 425 shares which may be
acquired within 60 days of the record date pursuant to vested stock options. |
|
(12) |
|
Includes 2,190 shares held by Mr. McGill under the ESOP and 13,917 shares which may be
acquired within 60 days of the record date pursuant to vested stock options. |
|
(13) |
|
Includes 691 shares held by Mr. Kopenhaver in the ESOP. |
|
(14) |
|
Includes 57,817 shares subject to outstanding stock options which are exercisable within 60
days of the record date and 77,370 shares held in the ESOP for the account of all executive
officers and directors as a group. |
9
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Executive Compensation
The following table sets forth a summary of certain information concerning the compensation
awarded to or paid by the Company or its subsidiaries for services rendered in all capacities
during the last fiscal year to our principal executive officer as well as our two other highest
compensated executive officers. We refer to these individuals throughout this proxy statement as
the named executive officers.
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
Nonqualified |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
Deferred |
|
All Other |
|
|
Name and Principal |
|
Fiscal |
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Compen- |
|
Compensation |
|
Compen- |
|
|
Position |
|
Year |
|
Salary(1) |
|
Bonus |
|
Awards |
|
Awards(2) |
|
sation(3) |
|
Earnings |
|
sation(4) |
|
Total |
Ronald B. Geib |
|
|
2009 |
|
|
$ |
258,566 |
|
|
|
|
|
|
|
|
|
|
$ |
17,895 |
|
|
$ |
62,056 |
|
|
|
|
|
|
$ |
42,748 |
|
|
$ |
381,265 |
|
President and Chief |
|
|
2008 |
|
|
|
242,931 |
|
|
|
|
|
|
|
|
|
|
|
12,984 |
|
|
|
53,445 |
|
|
|
|
|
|
|
37,637 |
|
|
|
349,997 |
|
Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brendan J. McGill |
|
|
2009 |
|
|
|
167,198 |
|
|
|
|
|
|
|
|
|
|
|
13,753 |
|
|
|
40,128 |
|
|
|
|
|
|
|
15,625 |
|
|
|
236,704 |
|
Executive Vice |
|
|
2008 |
|
|
|
155,062 |
|
|
|
|
|
|
|
|
|
|
|
10,618 |
|
|
|
34,114 |
|
|
|
|
|
|
|
13,652 |
|
|
|
213,446 |
|
President and Chief
Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen J. Kopenhaver |
|
|
2009 |
|
|
|
159,595 |
|
|
|
|
|
|
|
|
|
|
|
13,976 |
|
|
|
38,303 |
|
|
|
|
|
|
|
15,043 |
|
|
|
226,917 |
|
Senior Vice |
|
|
2008 |
|
|
|
148,894 |
|
|
|
|
|
|
|
|
|
|
|
10,946 |
|
|
|
32,977 |
|
|
|
|
|
|
|
13,197 |
|
|
|
207,014 |
|
President and Chief
Lending Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes amounts deferred and contributed to the 401(k) Plan by the named executive officer. |
|
(2) |
|
Reflects the amount expensed in accordance with U.S. generally accepted accounting principles
during fiscal 2009 with respect to awards of stock options with respect to each of the named
executive officers. For a discussion of the assumptions used to establish the valuation of
the stock options, reference is made to Note 2 of the Notes to the Consolidated Financial
Statements of the Company included in the Companys Annual Report on Form 10-K for the year
ended September 30, 2009. Additional information is also included in the table entitled
Grants of Plan-Based Awards. |
|
(3) |
|
Reflects cash bonuses paid to executive officers under the Companys Profit Sharing Incentive
Plan for fiscal 2009. |
|
(4) |
|
In fiscal 2009, includes amounts paid by the Company to the accounts of Messrs. Geib, McGill
and Kopenhaver pursuant to the 401(k) Plan of $9,360, $6,039 and $5,777, respectively, and
allocations under the ESOP of $13,800, $9,586 and $9,266, respectively. Also includes the
payment of $17,600 in directors fees to Mr. Geib and perquisites and other benefits in the
amount of $1,988 for the cost of the personal use of a Company-provided automobile in fiscal
2009. |
10
Equity Compensation Plans
The following table sets forth information concerning grants of awards pursuant to the
Companys Profit Sharing Incentive Plan and stock option plans made to the named executive officers
during the year ended September 30, 2009. There were no equity incentive awards granted during the
year ended September 30, 2009.
Grants of Plan-Based Awards for the Year Ended September 30, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Exercise or |
|
Grant Date |
|
|
|
|
|
|
Estimated Future Payouts Under Non- |
|
Securities |
|
Base Price |
|
Fair Value |
|
|
|
|
|
|
Equity Incentive Plan Awards |
|
Underlying |
|
of Option |
|
of Option |
Name |
|
Grant Date |
|
Threshold |
|
Target |
|
Maximum |
|
Options(1) |
|
Awards(2) |
|
Awards(3) |
Ronald B. Geib |
|
|
11/1/2008 |
|
|
|
|
|
|
$ |
62,056 |
|
|
$ |
129,283 |
|
|
|
17,173 |
|
|
$ |
12.60 |
|
|
$ |
24,558 |
|
Brendan J. McGill |
|
|
11/1/2008 |
|
|
|
|
|
|
|
40,128 |
|
|
|
83,599 |
|
|
|
10,962 |
|
|
|
12.60 |
|
|
|
15,675 |
|
Stephen J. Kopenhaver |
|
|
11/1/2008 |
|
|
|
|
|
|
|
38,303 |
|
|
|
79,798 |
|
|
|
10,596 |
|
|
|
12.60 |
|
|
|
15,153 |
|
|
|
|
(1) |
|
The stock options vest on January 1, 2014.
|
|
(2) |
|
Based upon the fair market value of a share of Company common stock on the date of grant. |
|
(3) |
|
The fair value of the stock options granted is computed in accordance with U.S. generally
accepted accounting principles. |
11
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning outstanding equity awards held by each
named executive officer as of September 30, 2009. There were no equity incentive awards
outstanding as of September 30, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Number of Securities Underlying |
|
|
|
|
|
|
Unexercised Options |
|
Option Exercise |
|
Option Expiration |
Name |
|
Exercisable(1) |
|
Unexercisable |
|
Price(2) |
|
Date |
Ronald B. Geib |
|
|
2,500 |
|
|
|
|
|
|
$ |
10.60 |
|
|
|
1/2/2012 |
|
|
|
|
5,000 |
|
|
|
|
|
|
|
13.13 |
|
|
|
1/1/2013 |
|
|
|
|
5,333 |
|
|
|
|
|
|
|
17.16 |
|
|
|
1/1/2014 |
|
|
|
|
5,333 |
|
|
|
|
|
|
|
17.79 |
|
|
|
1/1/2015 |
|
|
|
|
|
|
|
|
4,000 |
(3) |
|
|
18.00 |
|
|
|
1/1/2016 |
|
|
|
|
|
|
|
|
10,000 |
(3) |
|
|
17.68 |
|
|
|
1/3/2017 |
|
|
|
|
|
|
|
|
16,906 |
(3) |
|
|
12.50 |
|
|
|
1/3/2018 |
|
|
|
|
|
|
|
|
17,173 |
(3) |
|
|
12.60 |
|
|
|
11/11/2018 |
|
Brendan J. McGill |
|
|
417 |
|
|
|
|
|
|
|
8.10 |
|
|
|
1/3/2010 |
|
|
|
|
1,833 |
|
|
|
|
|
|
|
10.60 |
|
|
|
1/2/2012 |
|
|
|
|
3,667 |
|
|
|
|
|
|
|
13.13 |
|
|
|
1/1/2013 |
|
|
|
|
4,000 |
|
|
|
|
|
|
|
17.16 |
|
|
|
1/1/2014 |
|
|
|
|
4,000 |
|
|
|
|
|
|
|
17.79 |
|
|
|
1/1/2015 |
|
|
|
|
|
|
|
|
3,000 |
(3) |
|
|
18.00 |
|
|
|
1/1/2016 |
|
|
|
|
|
|
|
|
10,000 |
(3) |
|
|
17.68 |
|
|
|
1/3/2017 |
|
|
|
|
|
|
|
|
10,791 |
(3) |
|
|
12.50 |
|
|
|
1/3/2018 |
|
|
|
|
|
|
|
|
10,962 |
(3) |
|
|
12.60 |
|
|
|
11/11/2018 |
|
Stephen J. Kopenhaver |
|
|
|
|
|
|
10,000 |
(3) |
|
|
17.45 |
|
|
|
1/26/2016 |
|
|
|
|
|
|
|
|
3,000 |
(3) |
|
|
17.68 |
|
|
|
1/3/2017 |
|
|
|
|
|
|
|
|
10,432 |
(3) |
|
|
12.50 |
|
|
|
1/3/2018 |
|
|
|
|
|
|
|
|
10,596 |
(3) |
|
|
12.60 |
|
|
|
11/11/2018 |
|
|
|
|
(1) |
|
Except as otherwise noted, the stock options were exercisable on September 30, 2009. |
|
(2) |
|
Based upon the fair market value on the date of grant. |
|
(3) |
|
The stock options vest five years from the date of grant. |
12
Option Exercises and Stock Vested
The following table sets forth certain information with respect to stock options exercised by
the named executive officers during the year ended September 30, 2009.
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
Name |
|
Number of Shares Acquired On Exercise |
|
Value Realized On Exercise |
Ronald B. Geib |
|
|
|
|
|
|
|
|
Brendan J. McGill |
|
|
3,511 |
|
|
$ |
49,119 |
|
Stephen J. Kopenhaver |
|
|
|
|
|
|
|
|
Employment Agreement
The Company and the Bank have entered into an employment agreement with Mr. Geib pursuant to
which the Company and the Bank agreed to employ Mr. Geib as President and Chief Executive Officer.
The agreement provides for Mr. Geib to serve as President and Chief Executive Officer of the
Company and the Bank, at a current base salary of $256,600 per year. The term of the agreement is
five years, which term extends automatically on May 1st of each year to continue for a
five year term unless the board of directors of the Company, the Bank or Mr. Geib gives advance
notice not to extend the term.
The agreement is terminable with or without cause by the Company and the Bank. Mr. Geib will
have no right to compensation or other benefits pursuant to the agreement for any period after
voluntary termination or termination by the Company and the Bank for cause, retirement or death.
If Mr. Geibs employment is terminated due to disability, he will be entitled to a declining
percentage of his base salary for the remaining term of the agreement.
If prior to a change in control of the Company or the Bank either (i) Mr. Geib terminates his
employment as a result of certain adverse actions by the Company or the Bank or (ii) the agreement
is terminated by the Company and the Bank other than for cause, disability, retirement or death,
then Mr. Geib will be entitled to a lump sum cash severance amount equal to his base salary for the
remaining term of the agreement or, if greater, for 2.99 years, with such base salary to be
discounted to present value, plus a lump sum cash payment equal to the projected cost of providing
continued benefits (other than insurance benefits or benefits under retirement plans, stock
compensation plans or cash compensation plans) to Mr. Geib for the lesser of the remaining term of
his agreement or three years. If Mr. Geibs employment is terminated concurrently with or
subsequent to a change in control of the Company or the Bank, as defined, by either (a) the Company
or the Bank for other than cause, disability, retirement or death or (b) Mr. Geib as a result of
certain adverse actions by the Company or the Bank, then Mr. Geib will be entitled to a cash
severance amount equal to three times his annual compensation. Annual compensation is defined as
the average aggregate annual compensation paid to Mr. Geib and includible in his gross income for
federal income tax purposes during the five calendar years preceding the year in which the date of
termination occurs, and such compensation includes among other things salary, bonuses and income
related to the exercise of stock options. In addition, in any of the termination events set forth
in this paragraph, Mr. Geib will also be entitled to the continuation of insurance benefits similar
to those he is receiving at the time of such termination for periods specified in the agreement or
until he obtains full-time employment with another employer providing similar benefits, whichever
occurs first, plus a lump sum cash payment equal to the projected cost of providing continued
benefits (other than insurance benefits or benefits under retirement plans, stock compensation
plans or cash compensation plans) to Mr. Geib for the lesser of the remaining term of his agreement
or three years.
The employment agreement provides that in the event any of the payments to be made thereunder
or otherwise upon termination of employment are deemed to constitute parachute payments within
the meaning of Section 280G of the Code, then such payments and benefits received thereunder shall
be reduced by the minimum amount necessary to result in no portion of the payments and benefits
being non-deductible by the Company and the Bank for federal income tax purposes. Parachute
payments generally are payments equal to or greater than three times the executives base
amount, which is defined to mean the executives average annual compensation from the employer
includable in the executives gross income during the most recent five taxable years ending before
the year in which a change in control of
13
the employer occurs. Recipients of parachute payments are subject to a 20% excise tax on the
amount by which such payments exceed the base amount, in addition to regular income taxes, and
payments in excess of the base amount are not deductible by the employer as compensation expense
for federal income tax purposes.
Change in Control Agreements
The Company and the Bank have entered into change of control agreements with Messrs. McGill,
Kopenhaver, Gordon and Ms. Strouse in order to assist the Company and the Bank in maintaining a
stable and competent management base. The agreements provide for a three-year term, and subject to
satisfactory performance reviews, among other things, shall extend on each anniversary date for an
additional year so that the remaining term will be three years, unless either the boards of
directors of the Company or the Bank or the executive provides contrary written notice to the other
not less than 30 days in advance of such anniversary date. The agreements are automatically
extended for an additional one year upon a change in control of the Company or the Bank, as
defined. In the event that the executives employment is terminated or other certain adverse
actions are taken with respect to the executives employment within 18 months subsequent to a
change in control, the agreements provide that the executive would receive a severance payment in
the amount of two times the executives annual compensation (defined as the highest annual salary
plus average bonus during the last three years), the continued participation in all group, life,
health, accident and disability insurance for the lesser of 36 months or until the executives full
time employment by another employer, and a cash amount equal to the projected cost of benefits
provided to the executive under certain employee benefit plans for 36 months. The total amount of
payments under the agreements shall be reduced by the amount necessary to result in no portion of
the payments being parachute payments and non-deductible to the Company pursuant to Section 280G
of the Internal Revenue Code.
Employee Stock Ownership Pension Plan
The board of directors of the Company have adopted an Employee Stock Ownership Pension Plan
(ESOP). The trustees of the ESOP are Messrs. Alderfer, Cummins and Meschter. The trustees also
serve as the administrators of the ESOP. The trustees hold, invest, reinvest, manage, administer
and distribute the assets of the ESOP for the exclusive benefit of participants, retired
participants and their beneficiaries in accordance with the terms of the ESOP and the Employee
Stock Ownership Trust (Trust) established pursuant to the ESOP. All of the assets of the ESOP
are held in the Trust, which is managed by the trustees. The ESOP is subject to the participation,
vesting, fiduciary responsibility, reporting, and disclosure and claims procedure requirements of
ERISA. All officers and employees of the Company who work 1,000 hours or more in a plan year, who
have attained the age of 21 and have completed 12 months of service may participate in the ESOP.
In general, the ESOP requires the Company to contribute to the Trust in cash each year an
amount which is not less than the amount required to enable the Trust to discharge its current
obligations. The Company may make additional contributions in cash, shares of the common stock or
other property, which shall be valued at its fair market value, as the Companys board of directors
may determine.
Contributions of the Company in cash and other cash received by the Trust will be applied to
pay any current obligations of the Trust incurred for the purchase of common stock, or may be
applied to purchase additional shares of common stock from current stockholders or from the
Company. The investment policy of the ESOP is to invest primarily in common stock of the Company;
however, the ESOP permits the investment of contributions to the ESOP into other assets, including
certificates of deposit and securities issued by the U.S. government or its agencies.
The ESOP requires the Company to pay all costs of administering the ESOP and any similar
expenses of the trustees, excluding normal brokerage charges which are included in the costs of
stock purchased. All shares of common stock which are allocated to participants stock accounts
shall be voted by the trustees in accordance with instructions from the participants. All
unallocated shares of common stock held by the Trust or in a suspense account shall be voted by the
trustees.
Participation in the ESOP terminates as of the anniversary date coinciding with or next
following a participants death, disability or retirement. Upon termination of a participants
employment for any reason other than death, disability or retirement, or upon a break in service,
the participant shall have vested rights in a portion of his or her stock
14
and investment accounts based upon the participants years of credited service at his or her date
of termination. A participant is fully vested in his stock and investment accounts after three
years of plan participation.
Vested benefits under the ESOP will normally be distributed in a single distribution as soon
as possible following a participants separation from service. Distribution of benefits under the
ESOP may be made in cash or in a combination of shares of common stock and cash.
The Companys contributions to the ESOP are deductible by the Company to the extent provided
by the Code and the ESOP will not be subject to federal income tax on its income and gain. A
participant will not be taxed on contributions made by the Company or earnings on such
contributions until he receives a distribution under the ESOP.
During fiscal 2009, the Company contributed $235,708 to the Trust which was allocated to
participants accounts according to the terms of the plan. The amounts allocated to executive
officers under the ESOP in fiscal 2009 are included in the Summary Compensation Table above.
401(k) Plan
The Company maintains the Harleysville Savings 401(k) Plan, a deferred salary savings plan.
All officers and employees working 1,000 hours or more in a plan year, who have attained the age of
21 and have completed 12 months of service, may participate in the 401(k) Plan on an optional
basis. Under the plan, participants may defer a portion of their salary by payroll deduction. The
Company or its subsidiaries make a matching contribution of 100% of the first 3% of the
participants contribution. All contributions are invested via a plan trust. The Companys
matching contributions are vested at 100% after three years of service. All contributions are
invested via a plan trust at the direction of the participant among several options, including
several different mutual funds. Benefit payments normally are made in connection with a
participants retirement. Under current Internal Revenue Service regulations, the amount
contributed to the plan and the earnings on those contributions are not subject to Federal income
tax until they are withdrawn from the plan. The amount of the matching contributions by the
Company under the 401(k) Plan to the executive officers in fiscal 2009 are included in the Summary
Compensation Table above.
Profit Sharing Incentive Plan
The Company maintains the Profit Sharing Incentive Plan which is designed to provide cash
incentive payments to the Companys officers and employees when the Company exceeds certain
performance criteria. All of the Companys employees participate in the profit sharing plan,
including the named executive officers. The profit sharing plan provides that the Company will
make allocations to a bonus pool provided certain performance criteria are satisfied. For fiscal
2009, the bonus pool was based upon achieving levels of basic earnings per share (the target
earnings). Awards from the bonus pool are based on each participants base earnings as a
percentage of the total base earnings of all participants, and a weighing factor which recognizes
that the Companys senior management, middle management and other employees have varying levels of
responsibility for the Companys overall performance. The amounts paid to the named executive
officers under the profit sharing plan for fiscal 2009 are included in the Summary Compensation
Table above. The total amount of incentive payments made to all employees (114 people) who
received payments pursuant to the profit sharing plan for the year ended September 30, 2009 was
$487,495.
Directors Compensation
Directors of the Company received an annual fee of $8,400, plus $700 for each regular board
meeting attended during fiscal 2009. Directors of the Company, with the exception of executive
officers, received $400 and the chairman of each committee received $800 for each committee meeting
attended during fiscal 2009. The chairman of the Audit Committee received $1,200 and each member
of the Audit Committee received $800 for each meeting attended in fiscal 2009.
15
The following table sets forth information concerning compensation paid or accrued by the
Company and its subsidiaries to each member of the board of directors during the year ended
September 30, 2009. Mr. Geib has been omitted from the table as his compensation is fully reported
in the Summary Compensation Table above.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified |
|
|
|
|
|
|
Earned or |
|
|
|
|
|
|
|
|
|
Non-Equity |
|
Deferred |
|
|
|
|
|
|
Paid in |
|
Stock |
|
Option |
|
Incentive Plan |
|
Compensation |
|
All Other |
|
|
Name |
|
Cash(1) |
|
Awards |
|
Awards(2) |
|
Compensation |
|
Earnings |
|
Compensation |
|
Total |
Sanford L. Alderfer |
|
$ |
18,850 |
|
|
$ |
|
|
|
$ |
1,908 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
20,758 |
|
Thomas D. Clemens |
|
|
13,850 |
|
|
|
|
|
|
|
257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,107 |
|
Mark R. Cummins |
|
|
23,250 |
|
|
|
|
|
|
|
1,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,158 |
|
David J. Friesen(3) |
|
|
6,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,850 |
|
Charlotte A. Hunsberger |
|
|
22,450 |
|
|
|
|
|
|
|
1,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,358 |
|
George W. Meschter |
|
|
19,250 |
|
|
|
|
|
|
|
1,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,158 |
|
Edward J. Molnar |
|
|
40,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,500 |
|
James L. Rittenhouse |
|
|
22,450 |
|
|
|
|
|
|
|
1,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,358 |
|
|
|
|
(1) |
|
Include payment of directors fees for service on the board of the Company and the Bank.
Also includes the payment of fees for attendance at meeting of committees of the board that
the director serves on as well as fees for service as chairman of a board committee. |
|
(2) |
|
Reflects the amount expensed in accordance with U.S. generally accepted accounting principles
during fiscal 2009 with respect to the grants of stock options. For a discussion of the
assumptions used to establish the valuation of the stock options, reference is made to Note 2
of the Notes to the Consolidated Financial Statements of the Company included in the Companys
Annual Report on Form 10-K for the year ended September 30, 2009. |
|
(3) |
|
Mr. Friesen retired as a director in January 2009. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In accordance with applicable federal laws and regulations, the Bank offers mortgage loans to
its directors, officers and employees for the financing of their primary residences as well as
various business and consumer loans. These loans are generally made on substantially the same
terms as those prevailing at the time for comparable transactions with non-affiliated persons. It
is the belief of management that these loans neither involve more than the normal risk of
collectibility nor present other unfavorable features.
Section 22(h) of the Federal Reserve Act generally provides that any credit extended by a
savings institution to its executive officers, directors and, to the extent otherwise permitted,
principal stockholder(s), or any related interest of the foregoing, must (i) be on substantially
the same terms, including interest rates and collateral, as those prevailing at the time for
comparable transactions by the savings association with non-affiliated parties; (ii) be pursuant to
underwriting standards that are no less stringent than those applicable to comparable transactions
with non-affiliated parties; (iii) not involve more than the normal risk of repayment or present
other unfavorable features; and (iv) not exceed, in the aggregate, the institutions unimpaired
capital and surplus, as defined.
16
The Bank offers certain loans to its directors, executive officers and employees. It is the
belief of management that these loans do not involve more than the normal risk of collectibility.
These loans are made on substantially the same terms as those prevailing at the time for comparable
transactions with nonaffiliated persons. Directors, executive officers and employees of the Bank
receive no discount from the market interest rate for loans made by the Bank. As of September 30,
2009, two of the Companys directors and executive officers had loans outstanding with a balance in
excess of $120,000, which amounted to $803,211 in the aggregate.
PROPOSAL TO APPROVE THE 2009 STOCK INCENTIVE PLAN
General
Our board of directors has adopted the 2009 Stock Incentive Plan which is designed to attract
and retain qualified personnel in key positions, provide directors, officers and key employees with
a proprietary interest in the Company as an incentive to contribute to the success of the Company
and reward directors, officers and employees for outstanding performance. The plan provides for
the grant of incentive stock options intended to comply with the requirements of Section 422 of the
Code (incentive stock options), non-incentive or compensatory stock options, stock appreciation
rights and share awards of restricted stock, which may be based upon performance goals
(collectively Awards). Awards will be available under the plan for grant to officers, key
employees and directors of the Company and its subsidiaries.
Description of the 2009 Stock Incentive Plan
The following description of the 2009 Stock Incentive Plan is a summary of its terms and is
qualified in its entirety by reference to the plan, a copy of which is attached to this proxy
statement as Appendix A.
Administration. The 2009 Stock Incentive Plan will be administered and interpreted by a
committee of the board of directors that is comprised solely of two or more non-employee directors.
The Compensation Committee of the board, which is currently comprised of Messrs. Alderfer, Cummins
and Meschter, will administer the plan.
Stock Options. Under the 2009 Stock Incentive Plan, the board of directors or the committee
will determine which officers, key employees and non-employee directors will be granted options,
whether such options will be incentive or compensatory options (in the case of options granted to
employees), the number of shares subject to each option, the exercise price of each option, whether
such options may be exercised by delivering other shares of common stock and when such options
become exercisable. The per share exercise price of a stock option shall be at least equal to the
fair market value of a share of common stock on the date the option is granted. Non-employee
directors are not eligible to receive incentive stock options under the plan.
All options granted to participants under the 2009 Stock Incentive Plan shall become vested
and exercisable at the rate, and subject to such limitations, as specified by the board of
directors or the committee at the time of grant. Notwithstanding the foregoing, no vesting shall
occur on or after a participants employment or service with the Company or a subsidiary company is
terminated for any reason other than his death, disability or retirement. Unless the committee or
board of directors shall specifically state otherwise at the time an option is granted, all options
granted to participants shall become vested and exercisable in full on the date an optionee
terminates his employment or service with the Company or a subsidiary company because of his death,
disability or retirement. In addition, all stock options will become vested and exercisable in
full upon a change in control of the Company, as defined in the plan.
Each stock option or portion thereof shall be exercisable at any time on or after it vests and
is exercisable until the earlier of ten years after its date of grant or three months after the
date on which the employees employment or non-employee directors service is terminated, unless
extended by the committee or the board of directors to a period not to exceed five years from such
termination. Unless stated otherwise at the time an option is granted, (i) if an employee
terminates his employment with the Company or a subsidiary company as a result of disability or
retirement without having fully exercised his options, the optionee shall have one year following
his termination due to disability or retirement to exercise such options, and (ii) if an employee
terminates his employment or a non-employee director terminates his service with the Company or a
subsidiary company following a change in control of the Company without having fully exercised his
options, the optionee shall have the right to exercise such options during the remainder of the
17
original ten year term of the option. However, failure to exercise incentive stock options
within three months after the date on which the optionees employment terminates may result in
adverse tax consequences to the optionee. If an optionee dies while serving as an employee or a
non-employee director or terminates employment or service as a result of disability or retirement
and dies without having fully exercised his options, the optionees executors, administrators,
legatees or distributees of his estate shall have the right to exercise such options during the one
year period following his death, provided no option will be exercisable more than ten years from
the date it was granted.
Stock options are non-transferable except by will or the laws of descent and distribution.
Notwithstanding the foregoing, an optionee who holds non-qualified options may transfer such
options to his or her spouse, lineal ascendants, lineal descendants, or to a duly established trust
for the benefit of one or more of these individuals. Options so transferred may thereafter be
transferred only to the optionee who originally received the grant or to an individual or trust to
whom the optionee could have initially transferred the option. Options which are so transferred
shall be exercisable by the transferee according to the same terms and conditions as applied to the
optionee.
Payment for shares purchased upon the exercise of options may be made (i) in cash or by check,
(ii) by delivery of a properly executed exercise notice, together with irrevocable instructions to
a broker to sell a sufficient number of shares and then to properly deliver to the Company the
amount of sale proceeds to pay the exercise price, all in accordance with applicable laws and
regulations, (iii) at the discretion of the board or the committee, by delivering shares of common
stock (including shares acquired pursuant to the exercise of an option) equal in fair market value
to the purchase price of the shares to be acquired pursuant to the option, (iv) at the discretion
of the board or the committee, by withholding some of the shares of common stock which are being
purchased upon exercise of an option, or (v) any combination of the foregoing. With respect to
subclause (iii) hereof, the shares of common stock delivered to pay the purchase price must have
either been (x) purchased in open market transactions or (y) issued by the Company pursuant to a
plan thereof, in each case more than six months prior to the exercise date of the option.
Share Awards. Under the 2009 Stock Incentive Plan, the board of directors or the committee is
authorized to grant share awards, which are a right to receive a distribution of shares of common
stock. Shares of common stock granted pursuant to a share award will be in the form of restricted
stock which shall vest upon such terms and conditions as established by the committee. The board
or the committee will determine which officers, key employees and directors will be granted share
awards, and the number of shares subject to each share award. The number of shares available to be
issued as share awards will not exceed 75,000 shares, or 25% of the total number of shares
available for issuance under the plan.
If the employment or service of a share award recipient is terminated before the share award
is completely earned, the recipient will forfeit the right to any shares subject to the share award
that have not been earned, except as set forth below. All shares subject to a share award held by a
recipient whose employment or service with the Company or a subsidiary company terminates due to
death or disability will be deemed fully earned as of the recipients last day of employment or
service. In addition, all shares subject to a share award held by a recipient will be deemed to be
fully earned as of the effective date of a change of control of the Company.
A recipient of a share award will not be entitled to receive any dividends declared on the
common stock and will not be entitled to any voting rights with respect to an unvested share award
until it vests. Share awards are not transferable by the recipient, and shares subject to a share
award may only be earned by and paid to the recipient who was notified in writing of such award by
the committee.
The committee may determine to make any share award a performance share award by making such
award contingent upon the achievement of a performance goal, or any combination of performance
goals. Each performance share award will be evidenced by a written agreement setting forth the
performance goals applicable to such award. All determinations regarding the achievement of any
performance goal will be made by the committee. Each performance share award will be granted and
administered to comply with the requirements of Section 162(m) of the Code. Notwithstanding
anything to the contrary in the 2009 Stock Incentive Plan, a recipient of a performance award shall
have no rights as a stockholder until the shares of common stock covered by the performance share
award are issued to the recipient according to the terms thereof.
18
Number of Shares Covered by the 2009 Stock Incentive Plan. A total of 300,000 shares of
common stock, which is equal to approximately 8% of the issued and outstanding common stock, has
been reserved for future issuance pursuant to the plan. No more than 75,000, or 25%, of the shares
reserved under the plan may be granted as share awards to all participants in the plan. In the
event of a stock split, reverse stock split, subdivision, stock dividend or any other capital
adjustment, the number of shares of common stock under the plan, the number of shares to which any
Award relates and the exercise price per share under any option or stock appreciation right shall
be adjusted to reflect such increase or decrease in the total number of shares of common stock
outstanding or such capital adjustment. The closing price of the common stock was $13.17 per share
on December 1, 2009 as reported by the NASDAQ Stock Market.
Amendment and Termination of the 2009 Stock Incentive Plan. The board of directors may at any
time terminate or amend the 2009 Stock Incentive Plan with respect to any shares of common stock as
to which Awards have not been granted, subject to any required stockholder approval or any
stockholder approval which the board may deem to be advisable. The board of directors may not,
without the consent of the holder of an Award, alter or impair any Award previously granted or
awarded under the plan except as specifically authorized by the plan.
Unless sooner terminated, the 2009 Stock Incentive Plan shall continue in effect for a period
of ten years from September 16, 2009, the date that the plan was adopted by the board of directors.
Termination of the plan shall not affect any previously granted Awards.
Awards Granted or Available Under Existing Plans. As of September 30, 2009, options covering
405,271 shares of common stock and no shares of restricted stock were issued and outstanding under
the Companys existing stock plans and only 76,911 shares remained available for the grant of stock
options under such plans.
The following table sets forth certain information for all equity compensation plans (other
than the proposed 2009 Stock Incentive Plan) and individual compensation arrangements (whether with
employees or non-employees, such as directors) in effect as of September 30, 2009.
Equity Compensation Plan Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities remaining |
|
|
|
Number of securities to be |
|
|
Weighted-average |
|
|
available for future issuance under |
|
|
|
issued upon exercise of |
|
|
exercise price of |
|
|
equity compensation plans (excluding |
|
|
|
outstanding options, warrants |
|
|
outstanding options, |
|
|
securities reflected in the first |
|
Plan Category |
|
and rights |
|
|
warrants and rights |
|
|
column) |
|
Equity compensation
plans approved by
security holders |
|
|
405,271 |
|
|
$ |
14.75 |
|
|
|
76,911 |
|
Equity compensation
plans not approved
by security holders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
405,271 |
|
|
$ |
14.75 |
|
|
|
76,911 |
|
|
|
|
|
|
|
|
|
|
|
Awards to be Granted. The Company has not yet made any determination as to the timing or
recipients of grants of Awards under the plan.
Federal Income Tax Consequences. Set forth below is a summary of the federal income tax
consequences under the Internal Revenue Code relating to awards which may be granted under the 2009
Stock Incentive Plan.
Incentive Stock Options. No taxable income is recognized by the optionee upon the grant or
exercise of an incentive stock option that meets the requirements of Section 422 of the Code.
However, the exercise of an incentive stock option may result in alternative minimum tax liability
for the optionee. If no disposition of shares issued to an optionee pursuant to the exercise of an
incentive stock option is made by the optionee within two years from the date of grant or within
one year after the date of exercise, then upon sale of such shares, any amount realized in excess
of the exercise price (the amount paid for the shares) will be taxed to the optionee as a long-term
capital gain and any loss sustained will be a long-term capital loss, and no deduction will be
allowed to the Company for federal income tax purposes.
19
If shares of common stock acquired upon the exercise of an incentive stock option are disposed
of prior to the expiration of the two-year and one-year holding periods described above (a
disqualifying disposition), the optionee generally will recognize ordinary income in the year of
disposition in an amount equal to the excess (if any) of the fair market value of the shares on the
date of exercise (or, if less, the amount realized on an arms length sale of such shares) over the
exercise price of the underlying options, and the Company will be entitled to deduct such amount.
Any gain realized from the shares in excess of the amount taxed as ordinary income will be taxed as
capital gain and will not be deductible by the Company.
An incentive stock option will not be eligible for the tax treatment described above if it is
exercised more than three months following termination of employment, except in certain cases where
the incentive stock option is exercised after the death or disability of the optionee. If an
incentive stock option is exercised at a time when it no longer qualifies for the tax treatment
described above, the option is treated as a nonqualified stock option.
Nonqualified Stock Options. No taxable income is recognized by the optionee at the time a
nonqualified stock option is granted under the plan. Generally, on the date of exercise of a
nonqualified stock option, ordinary income is recognized by the optionee in an amount equal to the
difference between the exercise price and the fair market value of the shares on the date of
exercise, and the Company receives a tax deduction for the same amount. Upon disposition of the
shares acquired, an optionee generally recognizes the appreciation or depreciation on the shares
after the date of exercise as either a short-term or long-term capital gain or loss depending on
how long the shares have been held. In general, common stock issued upon exercise of a
non-qualified stock option granted under the plan will be transferable and not subject to a risk of
forfeiture at the time issued.
Share Awards. Upon the vesting of a share award, the holder will realize income for federal
income tax purposes equal to the amount received, whether in cash, shares of stock or both, and the
Company will be entitled to a deduction for federal income tax purposes in the same amount.
Pursuant to Section 83 of the Code, recipients of share awards will recognize ordinary income in an
amount equal to the fair market value of the shares of common stock granted to them at the time
that the shares vest and become transferable. A recipient of a share award may also elect,
however, to accelerate the recognition of income with respect to his or her grant to the time when
the share award is first granted, notwithstanding the vesting schedule of such awards. The Company
will be entitled to deduct as a compensation expense for tax purposes the same amounts recognized
as income by recipients of share awards in the year in which such amounts are included in income.
Deduction Limit for Certain Executive Officers. Section 162(m) of the Code generally limits
the deduction for certain compensation in excess of $1 million per year paid by a publicly-traded
corporation to its chief executive officer and the next three other most highly compensated
executive officers other than the chief financial officer (covered executives). Certain types of
compensation, including compensation based on performance goals, are excluded from the $1 million
deduction limitation. In order for compensation to qualify for this exception: (i) it must be
paid solely on account of the attainment of one or more preestablished, objective performance
goals; (ii) the performance goal must be established by a compensation committee consisting solely
of two or more outside directors; (iii) the material terms under which the compensation is to be
paid, including performance goals, must be disclosed to and approved by stockholders in a separate
vote prior to payment; and (iv) prior to payment, the compensation committee must certify that the
performance goals and any other material terms were in fact satisfied.
The 2009 Stock Incentive Plan has been designed to meet the requirements of Section 162(m) of
the Code and, as a result, the Company believes that compensation attributable to performance share
awards rights granted under the plan in accordance with the foregoing requirements will be fully
deductible under Section 162(m) of the Code. If the non-excluded compensation of a covered
executive exceeds $1 million, however, compensation attributable to other awards, such as
non-performance based restricted stock, may not be fully deductible unless the grant or vesting of
the award is contingent on the attainment of a performance goal determined by the committee meeting
specified requirements and disclosed to and approved by the stockholders of the Company. The board
of directors believes that the likelihood of any impact on the Company from the deduction
limitation contained in Section 162(m) of the Code is remote at this time.
20
Section 409A of the Internal Revenue Code. The Committee will administer and interpret the
2009 Stock Incentive Plan and all Awards in a manner consistent with the intent to satisfy the
requirements of Section 409A of the Internal Revenue Code to avoid any adverse tax results
thereunder to a holder of an Award.
The above description of tax consequences under federal income tax law is necessarily general
in nature and does not purport to be complete. Moreover, statutory provisions are subject to
change, as are their interpretations, and their application may vary in individual circumstances.
Finally, the consequences under applicable state and local income tax laws may not be the same as
under the federal income tax laws.
Accounting Treatment. U.S. generally accepted accounting principles requires the Company to
recognize the cost of employee services received in share-based payment transactions, including
Awards under the 2009 Stock Incentive Plan, and measure the cost on the grant-date fair value of
the Award. The cost will be recognized over the period during which an employee is required to
provide service in exchange for the Award, which may result in compensation expense charged against
the Companys reported earnings.
Stockholder Approval. No Awards will be granted under the 2009 Stock Incentive Plan unless
the plan is approved by stockholders. Stockholder ratification of the plan will satisfy listing
requirements of the Nasdaq Stock Market and certain federal tax requirements applicable to
incentive stock options.
The Board of Directors recommends that stockholders vote FOR approval of the 2009 Stock
Incentive Plan.
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
General
The Audit Committee of the board of directors of the Company has appointed ParenteBeard LLC as
the independent registered public accounting firm for the Company for the year ending September 30,
2010. The board of directors has directed that the selection of the accounting firm be submitted
for ratification by the stockholders at the annual meeting. The Company has been advised by
ParenteBeard that neither the firm nor any of its associates has any relationship with the Company
or its subsidiaries other than the usual relationship that exists between independent registered
public accounting firm and clients. ParenteBeard will have representatives at the annual meeting
who will have an opportunity to make a statement, if they so desire, and will be available to
respond to appropriate questions.
Change in Auditors
The Companys financial statements for the fiscal years ended September 30, 2008 and 2007 were
audited by Beard Miller Company LLP. In October 2009, Beard Miller was combined with ParenteBeard
and ParenteBeard was engaged by the Audit Committee as the independent registered public accounting
firm of the Company for the fiscal year ended September 30, 2009. In connection with their audit
for the years ended September 30, 2008 and 2007 and during the subsequent interim period until the
engagement of ParenteBeard, there were no disagreements with Beard Miller on any matter of
accounting principles or practices, financial statement disclosures, or auditing scope or
procedure. Beard Millers report on the financial statements for fiscal 2008 and 2007 did not
contain an adverse opinion or disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principles. During fiscal 2008 and 2007, ParenteBeard did
not advise, and has not indicated to the Company that it had reason to advise, the Company of any
reportable event, as defined in Item 304(a) of Regulation S-K of the Exchange Act. During fiscal
2008 and 2007, the Company had not consulted ParenteBeard regarding the application of accounting
principles, either contemplated or proposed, the type of audit opinion that might be rendered on
the Companys financial statements or any other matters of a reportable event.
Auditor Fees
The following table sets forth the aggregate fees paid by us to ParenteBeard and Beard Miller
in fiscal 2009 and 2008, respectively, for professional services in connection with the audit of
the Companys consolidated financial
21
statements, and the fees paid by us to ParenteBeard and Beard Miller for audit-related services,
tax services and all other services during fiscal 2009 and 2008, respectively.
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended September 30, |
|
|
|
2009 |
|
|
2008 |
|
Audit fees (1) |
|
$ |
103,300 |
|
|
$ |
98,650 |
|
Audit-related fees (2) |
|
|
|
|
|
|
364 |
|
Tax fees |
|
|
|
|
|
|
|
|
All other fees (3) |
|
|
1,500 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
104,800 |
|
|
$ |
99,014 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes professional services rendered by the auditor of the Companys annual financial
statements and review of financial statements included in Forms 10-Q, or services normally
provided in connection with statutory and regulatory filings, including out-of-pocket
expenses. |
|
(2) |
|
Assurance and related services reasonably related to the performance of the audit or review
of financial statements. |
|
(3) |
|
Assistance with affirmative action plan. |
Pre-Approval Policy and Procedures
The Audit Committee selects the Companys independent registered public accounting firm and
pre-approves all audit services to be provided by it to the Company. The Audit Committee also
reviews and pre-approves all audit-related, tax and all other services rendered by our independent
registered public accounting firm in accordance with the audit committees charter and policy on
pre-approval of audit-related, tax and other services. In its review of these services and related
fees and terms, the audit committee considers, among other things, the possible effect of the
performance of such services on the independence of our independent registered public accounting
firm. Pursuant to its policy, the audit committee pre-approves certain audit-related services and
certain tax services which are specifically described by the Audit Committee on an annual basis and
separately approves other individual engagements as necessary. The pre-approval requirements do not
apply to certain services if: (i) the aggregate amount of such services provided to the Company
constitutes not more than five percent of the total amount of revenues paid by the Company to its
independent auditor during the year in which the services are provided; (ii) such services were
not recognized by the Company at the time of the engagement to be other services; and (iii) such
services are promptly brought to the attention of the committee and approved by the committee or by
one or more members of the committee to whom authority to grant such approvals has been delegated
by the committee prior to the completion of the audit. The Audit Committee may delegate to one or
more designated members of the committee the authority to grant required pre-approvals. The
decisions of any member to whom authority is delegated to pre-approve an activity shall be
presented to the full committee at its next scheduled meeting.
During the fiscal year ended September 30, 2009, each new engagement of the independent
registered public accounting firm was approved in advance by the Audit Committee, and none of those
engagements made use of the de minimis exception to pre-approval contained in the SECs rules.
The Board of Directors recommends that you vote FOR the ratification of the appointment of
ParenteBeard LLC as our independent registered public accounting firm for the year ending September
30, 2010.
STOCKHOLDER PROPOSALS AND STOCKHOLDER
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Any proposal which a stockholder wishes to have included in the proxy materials of the Company
relating to the next annual meeting of stockholders of the Company, which is scheduled to be held
in January 2011, must be received at the principal executive offices of the Company, 271 Main
Street, Harleysville, Pennsylvania 19438, Attention: Corporate Secretary, no later than August 20,
2010. If such proposal is in compliance with all of the requirements of Rule 14a-8 of the Exchange
Act, it will be included in the proxy statement and set forth on the form of proxy issued for such
annual meeting of stockholders. It is urged that any such proposals be sent certified mail, return
receipt requested.
22
Stockholder proposals which are not submitted for inclusion in the Companys proxy materials
pursuant to Rule 14a-8 of the Exchange Act may be brought before an annual meeting pursuant to the
Companys Bylaws, which provides that business must be (a) specified in the notice of meeting (or
any supplement thereto) given by or at the direction of the board of directors, or (b) otherwise
properly brought before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely notice thereof in
writing to the Secretary of the Company. To be timely a stockholders notice must be delivered to
or mailed and received at the principal executive offices of the Company not later than ninety days
prior to the anniversary date of the mailing of proxy materials by the Company in connection with
the immediately preceding annual meeting of stockholders. A stockholders notice to the Secretary
shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a
brief description of the business desired to be brought before the annual meeting, (b) the name and
address, as they appear on the Companys books, of the stockholder proposing such business, (c) the
class and number of shares of the Company which are beneficially owned by the stockholder, and (d)
any material interest of the stockholder in such business. To be timely with respect to the next
annual meeting of stockholders of the Company, a stockholders notice must be received by the
Company no later than September 19, 2010.
The board of directors of the Company has adopted a process by which stockholders may
communicate directly with members of the board. Stockholders who wish to communicate with the
board may do so by sending written communications addressed to the Board of Directors, c/o Adrian
D. Gordon, Corporate Secretary, Harleysville Savings Financial Corporation, 271 Main Street,
Harleysville, Pennsylvania 19438.
ANNUAL REPORTS
A copy of the Companys Annual Report on Form 10-K for the year ended September 30, 2009
accompanies this proxy statement. Such annual report is not part of the proxy solicitation
materials.
Upon receipt of a written request, the Company will furnish to any stockholder without charge
a copy of the exhibits to the Companys Annual Report on Form 10-K for the year ended September 30,
2009. Such written requests should be directed to the Corporate Secretary, Harleysville Savings
Financial Corporation, 271 Main Street, Harleysville, Pennsylvania 19438.
OTHER MATTERS
Management is not aware of any business to come before the annual meeting other than the
matters described above in this proxy statement. However, if any other matters should properly
come before the meeting, it is intended that the proxies solicited hereby will be voted with
respect to those other matters in accordance with the judgment of the persons voting the proxies.
The cost of the solicitation of proxies will be borne by the Company. The Company will
reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses
incurred by them in sending the proxy materials to the beneficial owners of the common stock. In
addition to solicitations by mail, directors, officers and employees of the Company may solicit
proxies personally or by telephone without additional compensation.
23
APPENDIX A
HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
2009 STOCK INCENTIVE PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Harleysville Savings Financial Corporation (the Corporation) hereby establishes this 2009
Stock Incentive Plan (the Plan) upon the terms and conditions hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
The purpose of this Plan is to improve the growth and profitability of the Corporation and its
Subsidiary Companies by providing Employees and Non-Employee Directors with a proprietary interest
in the Corporation as an incentive to contribute to the success of the Corporation and its
Subsidiary Companies, and rewarding Employees and Non-Employee Directors for outstanding
performance and the attainment of targeted goals. All Incentive Stock Options issued under this
Plan are intended to comply with the requirements of Section 422 of the Code and the regulations
thereunder, and all provisions hereunder shall be read, interpreted and applied with that purpose
in mind.
ARTICLE III
DEFINITIONS
3.01 Award means an Option or Share Award granted pursuant to the terms of this Plan.
3.02 Bank means Harleysville Savings Bank, the wholly owned subsidiary of the Corporation.
3.03 Beneficiary means the person or persons designated by a Recipient or Optionee to
receive any benefits payable under the Plan in the event of such Recipients death. Such person or
persons shall be designated in writing on forms provided for this purpose by the Committee and may
be changed from time to time by similar written notice to the Committee. In the absence of a
written designation, the Beneficiary shall be the Recipients surviving spouse, if any, or if none,
his estate.
3.04 Board means the Board of Directors of the Corporation.
3.05 Change in Control shall mean a change in the ownership of the Corporation or the Bank,
a change in the effective control of the Corporation or the Bank or a change in the ownership of a
substantial portion of the assets of the Corporation or the Bank, in each case as provided under
Section 409A of the Code and the regulations thereunder.
3.06 Code means the Internal Revenue Code of 1986, as amended.
3.07 Committee means a committee of two or more directors appointed by the Board pursuant to
Article IV hereof, each of whom shall be a Non-Employee Director as defined in Rule 16b-3(b)(3)(i)
of the Exchange Act or any successor thereto and an outside director within the meaning of Section
162(m) of the Code and the regulations promulgated thereunder.
3.08 Common Stock means shares of the common stock, $.10 par value per share, of the
Corporation.
3.09 Disability means in the case of any Optionee or Recipient that the Optionee or
Recipient (i) is unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any
medically determinable physical or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an accident and health plan
covering employees of the Corporation or the Bank (or would have received such benefits for at
least three months if he had been eligible to participate in such plan).
A-1
3.10 Effective Date means the day upon which the Board adopted this Plan.
3.11 Employee means any person who is employed by the Corporation or a Subsidiary Company,
or is an Officer of the Corporation or a Subsidiary Company, but not including directors who are
not also Officers of or otherwise employed by the Corporation or a Subsidiary Company.
3.12 Exchange Act means the Securities Exchange Act of 1934, as amended.
3.13 Fair Market Value shall be equal to the fair market value per share of the
Corporations Common Stock on the date an Award is granted. For purposes hereof, the Fair Market
Value of a share of Common Stock shall be the closing sale price of a share of Common Stock on the
date in question (or, if such day is not a trading day in the U.S. markets, on the nearest
preceding trading day), as reported with respect to the principal market (or the composite of the
markets, if more than one) or national quotation system in which such shares are then traded, or if
no such closing prices are reported, the mean between the high bid and low asked prices that day on
the principal market or national quotation system then in use. Notwithstanding the foregoing, if
the Common Stock is not readily tradable on an established securities market for purposes of
Section 409A of the Code, then the Fair Market Value shall be determined by means of a reasonable
valuation method that takes into consideration all available information material to the value of
the Corporation and that otherwise satisfies the requirements applicable under Section 409A of the
Code and the regulations thereunder.
3.14 Incentive Stock Option means any Option granted under this Plan which the Board intends
(at the time it is granted) to be an incentive stock option within the meaning of Section 422 of
the Code or any successor thereto.
3.15 Non-Employee Director means a member of the Board of the Corporation or Board of
Directors of the Bank who is not an Officer or Employee of the Corporation or any Subsidiary
Company.
3.16 Non-Qualified Option means any Option granted under this Plan which is not an Incentive
Stock Option.
3.17 Officer means an Employee whose position in the Corporation or Subsidiary Company is
that of a corporate officer, as determined by the Board.
3.18 Option means a right granted under this Plan to purchase Common Stock.
3.19 Optionee means an Employee or Non-Employee Director or former Employee or Non-Employee
Director to whom an Option is granted under the Plan.
3.20 Performance Share Award means a Share Award granted to a Recipient pursuant to Section
9.06 of the Plan.
3.21 Performance Goal means an objective for the Corporation or any Subsidiary Company or
any unit thereof or any Employee of the foregoing that may be established by the Committee for a
Performance Share Award to become vested, earned or exercisable. The establishment of Performance
Goals are intended to make the applicable Performance Share Awards performance based compensation
within the meaning of Section 162(m) of the Code, and the Performance Goals shall be based on one
or more of the following criteria:
|
(i) |
|
net income, as adjusted for non-recurring items; |
|
|
(ii) |
|
cash earnings; |
|
|
(iii) |
|
earnings per share; |
|
|
(iv) |
|
cash earnings per share; |
|
|
(v) |
|
return on average equity; |
|
|
(vi) |
|
return on average assets; |
|
|
(vii) |
|
assets; |
|
|
(viii) |
|
stock price; |
A-2
|
(ix) |
|
total stockholder return; |
|
|
(x) |
|
capital; |
|
|
(xi) |
|
net interest income; |
|
|
(xii) |
|
market share; |
|
|
(xiii) |
|
cost control or efficiency ratio; and |
|
|
(xiv) |
|
asset growth. |
3.22 Recipient means an Employee or Non-Employee Director who receives a Share Award or
Performance Share Award under the Plan.
3.23 Retirement means (a) a termination of employment which constitutes a retirement under
the qualified retirement plan maintained by the Corporation or a Subsidiary Corporation, or, if no
such plan is applicable, which would constitute retirement under the Corporations qualified
retirement plan, if such individual were a participant in that plan, provided, however, that the
provisions of this subsection (a) will not apply as long as an Optionee continues to serve as a
Non-Employee Director, and (b) with respect to Non-Employee Directors, a separation from service
on the Board of Directors of the Corporation and any applicable Subsidiary Company or any
successors thereto (including service as a director emeritus or advisory director to the
Corporation or any Subsidiary Company) after reaching age 65 and having served as a member of the
Board of Directors of the Corporation and/or the Bank for a period of 5 years or more.
3.24 Share Award means a right granted under this Plan to receive a distribution of shares
of Common Stock upon completion of the service and other requirements described in Article IX and
includes Performance Share Awards.
3.25 Subsidiary Companies means those subsidiaries of the Corporation, including the Bank,
which meet the definition of subsidiary corporations set forth in Section 424(f) of the Code, at
the time of granting of the Option in question.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Duties of the Committee. The Plan shall be administered and interpreted by the
Committee, as appointed from time to time by the Board pursuant to Section 4.02. The Committee
shall have the authority to adopt, amend and rescind such rules, regulations and procedures as, in
its opinion, may be advisable in the administration of the Plan, including, without limitation,
rules, regulations and procedures which (i) deal with satisfaction of an Optionees tax withholding
obligation pursuant to Section 12.02 hereof, (ii) include arrangements to facilitate the Optionees
ability to borrow funds for payment of the exercise or purchase price of an Award, if applicable,
from securities brokers and dealers, and (iii) include arrangements which provide for the payment
of some or all of such exercise or purchase price by delivery of previously-owned shares of Common
Stock or other property and/or by withholding some of the shares of Common Stock which are being
acquired. The interpretation and construction by the Committee of any provisions of the Plan, any
rule, regulation or procedure adopted by it pursuant thereto or of any Award shall be final and
binding in the absence of action by the Board.
4.02 Appointment and Operation of the Committee. The members of the Committee shall be
appointed by, and will serve at the pleasure of, the Board. The Board from time to time may remove
members from, or add members to, the Committee, provided the Committee shall continue to consist of
two or more members of the Board, each of whom shall be a Non-Employee Director, as defined in Rule
16b-3(b)(3)(i) of the Exchange Act or any successor thereto. In addition, each member of the
Committee shall be an outside director within the meaning of Section 162(m) of the Code and
regulations thereunder at such times as is required under such regulations. The Committee shall
act by vote or written consent of a majority of its members. Subject to the express provisions and
limitations of the Plan, the Committee may adopt such rules, regulations and procedures as it deems
appropriate for the conduct of its affairs. It may appoint one of its members to be chairman and
any person, whether or not a member, to be its secretary or agent. The Committee shall report its
actions and decisions to the Board at appropriate times but in no event less than one time per
calendar year.
A-3
4.03 Revocation for Misconduct. The Board or the Committee may by resolution immediately
revoke, rescind and terminate any Option, or portion thereof, to the extent not yet exercised,
previously granted or awarded under this Plan to an Employee who is discharged from the employ of
the Corporation or a Subsidiary Company for cause, which, for purposes hereof, shall mean
termination because of the Employees personal dishonesty, incompetence, willful misconduct, breach
of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order. Options granted to a Non-Employee Director who is removed for cause
pursuant to the Corporations Articles of Incorporation and Bylaws or the Banks Charter and Bylaws
shall terminate as of the effective date of such removal.
4.04 Limitation on Liability. Neither the members of the Board nor any member of the
Committee shall be liable for any action or determination made in good faith with respect to the
Plan, any rule, regulation or procedure adopted by it pursuant thereto or any Awards granted under
it. If a member of the Board or the Committee is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of anything done or not done by him in such capacity
under or with respect to the Plan, the Corporation shall, subject to the requirements of applicable
laws and regulations, indemnify such member against all liabilities and expenses (including
attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in the best interests of the Corporation and its Subsidiary Companies
and, with respect to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
4.05 Compliance with Laws and Regulations. All Awards granted hereunder shall be subject to
all applicable federal and state laws, rules and regulations and to such approvals by any
government or regulatory agency as may be required. The Corporation shall not be required to issue
or deliver any certificates for shares of Common Stock prior to the completion of any registration
or qualification of or obtaining of consents or approvals with respect to such shares under any
federal or state law or any rule or regulation of any government body, which the Corporation shall,
in its sole discretion, determine to be necessary or advisable. Moreover, no Option may be
exercised if such exercise would be contrary to applicable laws and regulations.
4.06 Restrictions on Transfer. The Corporation may place a legend upon any certificate
representing shares acquired pursuant to an Award granted hereunder noting that the transfer of
such shares may be restricted by applicable laws and regulations.
4.07 No Deferral of Compensation Under Section 409A of the Code. All Awards granted under the
Plan are designed to not constitute a deferral of compensation for purposes of Section 409A of the
Code. Notwithstanding any other provision in this Plan to the contrary, all of the terms and
conditions of any Option granted under this Plan shall be designed to satisfy the exemption for
stock options set forth in the regulations issued under Section 409A of the Code. Both this Plan
and the terms of all Options granted hereunder shall be interpreted in a manner that requires
compliance with all of the requirements of the exemption for stock options set forth in the
regulations issued under Section 409A of the Code. No Optionee shall be permitted to defer the
recognition of income beyond the exercise date of a Non-Qualified Option or beyond the date that
the Common Stock received upon the exercise of an Incentive Stock Option is sold, and no Recipient
shall be permitted to defer the recognition of income beyond the date that a Share Award or
Performance Share Award shall be deemed earned pursuant to Article IX of this Plan.
ARTICLE V
ELIGIBILITY
Awards may be granted to such Employees and Non-Employee Directors of the Corporation and its
Subsidiary Companies as may be designated from time to time by the Board or the Committee. Awards
may not be granted to individuals who are not Employees or Non-Employee Directors of either the
Corporation or its Subsidiary Companies. Non-Employee Directors shall not be eligible to receive
Incentive Stock Options under the Plan.
A-4
ARTICLE VI
COMMON STOCK COVERED BY THE PLAN
6.01 Number of Shares. The aggregate number of shares of Common Stock which may be issued
pursuant to this Plan, subject to adjustment as provided in Article IX, shall be 300,000. None of
such shares shall be the subject of
more than one Award at any time, but if an Award as to any shares is surrendered before exercise or
vesting, or expires or terminates for any reason without having been exercised in full, or for any
other reason ceases to be exercisable, the number of shares covered thereby shall again become
available for grant under the Plan as if no Awards had been previously granted with respect to such
shares.
6.02 Source of Shares. The shares of Common Stock issued under the Plan may be authorized but
unissued shares, treasury shares or shares purchased by the Corporation on the open market or from
private sources for use under the Plan.
ARTICLE VII
DETERMINATION OF
AWARDS, NUMBER OF SHARES, ETC.
7.01 Determination of Awards. The Board or the Committee shall, in its discretion, determine
from time to time which Employees and Non-Employee Directors will be granted Awards under the Plan,
the number of shares of Common Stock subject to each Award, whether each Option will be an
Incentive Stock Option or a Non-Qualified Stock Option, the exercise price of an Option and whether
a Share Award will be a Performance Share Award. In making all such determinations there shall be
taken into account the duties, responsibilities and performance of each Optionee, his present and
potential contributions to the growth and success of the Corporation, his salary or other
compensation and such other factors deemed relevant to accomplishing the purposes of the Plan.
7.02 Limitation on Share Awards. Notwithstanding anything contained in this Plan to the
contrary, the maximum number of shares of Common Stock to which Share Awards may be issued under
this Plan shall be 75,000, or 25% of the total number of shares available for issuance under this
Plan. None of such shares shall be the subject of more than one Award at any time, but if a Share
Award as to any shares is surrendered before vested, or expires or terminates for any reason
without vesting in full, the number of shares covered thereby shall again become available for
grant under the Plan as if no Awards had been previously granted with respect to such shares.
7.03 Maximum Awards to any Person. Notwithstanding anything contained in this Plan to the
contrary, the maximum number of shares of Common Stock to which Awards may be granted to any
individual in any calendar year shall be 50,000.
ARTICLE VIII
OPTIONS
Each Option granted hereunder shall be on the following terms and conditions:
8.01 Stock Option Agreement. The proper Officers on behalf of the Corporation and each
Optionee shall execute a Stock Option Agreement which shall set forth the total number of shares of
Common Stock to which it pertains, the exercise price, whether it is a Non-Qualified Option or an
Incentive Stock Option, and such other terms, conditions, restrictions and privileges as the Board
or the Committee in each instance shall deem appropriate, provided they are not inconsistent with
the terms, conditions and provisions of this Plan. Each Optionee shall receive a copy of his
executed Stock Option Agreement. Any Option granted with the intention that it will be an Incentive
Stock Option but which fails to satisfy a requirement for Incentive Stock Options shall continue to
be valid and shall be treated as a Non-Qualified Option.
A-5
8.02 Option Exercise Price.
(a) Incentive Stock Options. The per share price at which the subject Common Stock may be
purchased upon exercise of an Incentive Stock Option shall be no less than one hundred percent
(100%) of the Fair Market Value of a share of Common Stock at the time such Incentive Stock Option
is granted, except as provided in Section 8.09(b).
(b) Non-Qualified Options. The per share price at which the subject Common Stock may be
purchased upon exercise of a Non-Qualified Option shall be established by the Committee at the time
of grant, but in no
event shall be less than one hundred percent (100%) of the Fair Market Value of a share of Common
Stock at the time such Non-Qualified Option is granted.
8.03 Vesting and Exercise of Options.
(a) General Rules. Incentive Stock Options and Non-Qualified Options shall become vested and
exercisable at the rate, to the extent and subject to such limitations as may be specified by the
Board or the Committee. Notwithstanding the foregoing, no vesting shall occur on or after an
Employees employment or service as a Non-Employee Director with the Corporation and all Subsidiary
Companies is terminated for any reason other than his death, Disability, Retirement or a Change in
Control. In determining the number of shares of Common Stock with respect to which Options are
vested and/or exercisable, fractional shares will be rounded up to the nearest whole number if the
fraction is 0.5 or higher, and down if it is less.
(b) Accelerated Vesting. Unless the Committee or Board shall specifically state otherwise at
the time an Option is granted, all Options granted under this Plan shall become vested and
exercisable in full on the date an Optionee terminates his employment with the Corporation or a
Subsidiary Company or service as a Non-Employee Director because of his death, Disability or
Retirement. In addition, all outstanding Options shall become immediately vested and exercisable
in full as of the effective date of a Change in Control.
8.04 Duration of Options.
(a) General Rule. Except as provided in Sections 8.04(b) and 8.09, each Option or portion
thereof shall be exercisable at any time on or after it vests and remain exercisable until the
earlier of (i) ten (10) years after its date of grant or (ii) three (3) months after the date on
which the Employee or Non-Employee Director ceases to be employed by or serve the Corporation and
all Subsidiary Companies, or any successor thereto, unless the Board or the Committee in its
discretion decides at the time of grant to extend such period of exercise upon termination of
employment or service to a period not exceeding five (5) years.
(b) Exceptions. Unless the Board or the Committee shall specifically state otherwise at the
time an Option is granted, if an Employee terminates his employment with the Corporation or a
Subsidiary Company as a result of Disability or Retirement without having fully exercised his
Options, the Employee shall have the right, during the one (1) year period following his
termination due to Disability or Retirement, to exercise such Options.
Unless the Board or the Committee shall specifically state otherwise at the time an Option is
granted, if an Employee or Non-Employee Director terminates his employment or service with the
Corporation or a Subsidiary Company following a Change in Control without having fully exercised
his Options, the Optionee shall have the right to exercise such Options during the remainder of the
original ten (10) year term (or five (5) year term for Options subject to Section 8.09(b) hereof)
of the Option from the date of grant.
If an Optionee dies while in the employ or service of the Corporation or a Subsidiary Company
or terminates employment or service with the Corporation or a Subsidiary Company as a result of
Disability or Retirement and dies without having fully exercised his Options, the executors,
administrators, legatees or distributees of his estate shall have the right, during the one (1)
year period following his death, to exercise such Options.
In no event, however, shall any Option be exercisable more than ten (10) years (or five (5)
years for Options subject to Section 8.09(b) hereof) from the date it was granted.
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8.05 Nonassignability. Options shall not be transferable by an Optionee except by will or the
laws of descent or distribution, and during an Optionees lifetime shall be exercisable only by
such Optionee or the Optionees guardian or legal representative. Notwithstanding the foregoing,
or any other provision of this Plan, an Optionee who holds Non-Qualified Options may transfer such
Options to his or her spouse, lineal ascendants, lineal descendants, or to a duly established trust
for the benefit of one or more of these individuals. Options so transferred may thereafter be
transferred only to the Optionee who originally received the grant or to an individual or trust to
whom the Optionee could have initially transferred the Option pursuant to this Section 8.05.
Options which are transferred pursuant to this Section 8.05 shall be exercisable by the transferee
according to the same terms and conditions as applied to the Optionee.
8.06 Manner of Exercise. Options may be exercised in part or in whole and at one time or from
time to time. The procedures for exercise shall be set forth in the written Stock Option Agreement
provided for in Section 8.01 above.
8.07 Payment for Shares. Payment in full of the purchase price for shares of Common Stock
purchased pursuant to the exercise of any Option shall be made to the Corporation upon exercise of
the Option. All shares sold under the Plan shall be fully paid and nonassessable. Payment for
shares may be made by the Optionee (i) in cash or by check, (ii) by delivery of a properly executed
exercise notice, together with irrevocable instructions to a broker to sell a sufficient number of
shares and then to properly deliver to the Corporation the amount of sale proceeds to pay the
exercise price, all in accordance with applicable laws and regulations, (iii) at the discretion of
the Board or the Committee, by delivering shares of Common Stock (including shares acquired
pursuant to the exercise of an Option) equal in Fair Market Value to the purchase price of the
shares to be acquired pursuant to the Option, (iv) at the discretion of the Board or the Committee,
by withholding some of the shares of Common Stock which are being purchased upon exercise of an
Option, or (v) any combination of the foregoing. With respect to subclause (iii) hereof, the
shares of Common Stock delivered to pay the purchase price must have either been (x) purchased in
open market transactions or (y) issued by the Corporation or pursuant to a plan thereof, in each
case more than six months prior to the exercise date of the Option.
8.08 Voting and Dividend Rights. No Optionee shall have any voting or dividend rights or
other rights of a stockholder in respect of any shares of Common Stock covered by an Option prior
to the time that his name is recorded on the Corporations stockholder ledger as the holder of
record of such shares acquired pursuant to an exercise of an Option.
8.09 Additional Terms Applicable to Incentive Stock Options. All Options issued under the
Plan as Incentive Stock Options will be subject, in addition to the terms detailed in Sections 8.01
to 8.08 above, to those contained in this Section 8.09.
(a) Amount Limitation. Notwithstanding any contrary provisions contained elsewhere in this
Plan and as long as required by Section 422 of the Code, the aggregate Fair Market Value,
determined as of the time an Incentive Stock Option is granted, of the Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by the Optionee during any
calendar year under this Plan, and stock options that satisfy the requirements of Section 422 of
the Code under any other stock option plan or plans maintained by the Corporation (or any parent or
Subsidiary Company), shall not exceed $100,000.
(b) Limitation on Ten Percent Stockholders. The price at which shares of Common Stock may be
purchased upon exercise of an Incentive Stock Option granted to an individual who, at the time such
Incentive Stock Option is granted, owns, directly or indirectly, more than ten percent (10%) of the
total combined voting power of all classes of stock issued to stockholders of the Corporation or
any Subsidiary Company, shall be no less than one hundred and ten percent (110%) of the Fair Market
Value of a share of the Common Stock of the Corporation at the time of grant, and such Incentive
Stock Option shall by its terms not be exercisable after the earlier of the date determined under
Section 8.04 or the expiration of five (5) years from the date such Incentive Stock Option is
granted.
(c) Notice of Disposition; Withholding; Escrow. An Optionee shall immediately notify the
Corporation in writing of any sale, transfer, assignment or other disposition (or action
constituting a disqualifying disposition within the meaning of Section 421 of the Code) of any
shares of Common Stock acquired through exercise of
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an Incentive Stock Option, within two (2) years
after the grant of such Incentive Stock Option or within one (1) year after the acquisition of such
shares, setting forth the date and manner of disposition, the number of shares disposed of and the
price at which such shares were disposed of. The Corporation shall be entitled to withhold from
any compensation or other payments then or thereafter due to the Optionee such amounts as may be
necessary to satisfy any withholding requirements of federal or state law or regulation and,
further, to collect from the Optionee any additional amounts which may be required for such
purpose. The Committee may, in its discretion, require shares of Common Stock acquired by an
Optionee upon exercise of an Incentive Stock Option to be held in an escrow arrangement for the
purpose of enabling compliance with the provisions of this Section 8.09(c).
ARTICLE IX
SHARE AWARDS
9.01 Share Award Notice. As promptly as practicable after the granting of a Share Award
pursuant to the terms hereof, the Board or the Committee shall notify the Recipient in writing of
the grant of the Share Award, the number of shares covered by the Share Award, whether the Share
Award is a Performance Share Award and the terms upon which the shares subject to the Share Award
shall be distributed to the Recipient. The Board or the Committee shall maintain records as to all
grants of Share Awards and Performance Share Awards under the Plan.
9.02 Earning Plan Shares; Forfeitures.
(a) General Rules. Subject to the terms hereof, Share Awards granted hereunder shall be
earned at the rate and to the extent as may be specified by the Committee at the date of grant
thereof. If the employment of an Employee is terminated before the Share Award has been completely
earned for any reason (except as specifically provided in subsections (b) and (c) below), the
Recipient shall forfeit the right to any shares subject to the Share Award which have not
theretofore been earned. In the event of a forfeiture of the right to any shares subject to a
Share Award, such forfeited shares shall become available for grant pursuant to Articles VI and VII
as if no Share Award had been previously granted with respect to such shares. No fractional shares
shall be distributed pursuant to this Plan.
(b) Exception for Termination Due to Death or Disability. Notwithstanding the general rule
contained in Section 9.02(a), all shares subject to a Share Award held by a Recipient whose
employment or service with the Corporation or any Subsidiary Company terminates due to death or
Disability shall be deemed fully earned as of the Recipients last day of employment or service
with the Corporation or any Subsidiary Company and shall be distributed as soon as practicable
thereafter.
(c) Exception for a Change in Control. Notwithstanding the general rule contained in Section
9.02(a), all shares subject to a Share Award held by a Recipient shall be deemed to be fully earned
as of the effective date of a Change in Control.
9.03 Dividends and Voting. A Recipient shall not be entitled to receive any cash dividends
declared on the Common Stock with respect to any unvested Share Award. A Recipient shall not be
entitled to any voting rights with respect to any unvested Share Award which has not yet been
earned and distributed to him or her pursuant to Section 9.04.
9.04 Distribution of Plan Shares.
(a) Timing of Distributions: General Rule. Subject to the provisions of Section 9.06 hereof,
shares shall be distributed to the Recipient or his Beneficiary, as the case may be, as soon as
practicable after they have been earned.
(b) Form of Distributions. All shares shall be distributed in the form of Common Stock. One
share of Common Stock shall be given for each share earned and distributable.
(c) Restrictions on Selling of Plan Shares. Share Awards may not be sold, assigned, pledged
or otherwise disposed of prior to the time that they are earned and distributed pursuant to the
terms of this Plan. Upon
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distribution, the Board or the Committee may require the Recipient or his
Beneficiary, as the case may be, to agree not to sell or otherwise dispose of his distributed
shares except in accordance with all then applicable federal and state securities laws, and the
Board or the Committee may cause a legend to be placed on the stock certificate(s) representing the
distributed shares in order to restrict the transfer of the distributed shares for such period of
time or under such circumstances as the Board or the Committee, upon the advice of counsel, may
deem appropriate.
9.05 Rights of Recipients. Notwithstanding anything to the contrary herein, a Participant who
receives a Share Award payable in Common Stock shall have no rights as a stockholder until the
Common Stock is issued pursuant to the terms of the Award Agreement.
9.06 Performance Awards
(a) Designation of Performance Share Awards. The Committee may determine to make any Share
Award a Performance Share Award by making such Share Award contingent upon the achievement of a
Performance Goal or any combination of Performance Goals. Each Performance Share Award shall be
evidenced by a written agreement (Award Agreement), which shall set forth the Performance Goals
applicable to the Performance Share Award, the maximum amounts payable and such other terms and
conditions as are applicable to the Performance Share Award. Each Performance Share Award shall be
granted and administered to comply with the requirements of Section 162(m) of the Code, if
applicable.
(b) Timing of Grants. Any Performance Share Award shall be made not later than 90 days after
the start of the period for which the Performance Share Award relates and shall be made prior to
the completion of 25% of such period. All determinations regarding the achievement of any
Performance Goals will be made by the Committee. The Committee may not increase during a year the
amount of a Performance Share Award that would otherwise be payable upon achievement of the
Performance Goals but may reduce or eliminate the payments as provided for in the Award Agreement.
(c) Restrictions on Grants. Nothing contained in the Plan will be deemed in any way to limit
or restrict the Committee from making any Award or payment to any person under any other plan,
arrangement or understanding, whether now existing or hereafter in effect.
(d) Distribution. No Performance Share Award or portion thereof that is subject to the
attainment or satisfaction of a condition of a Performance Goal shall be distributed or considered
to be earned or vested until the Committee certifies in writing that the conditions or Performance
Goal to which the distribution, earning or vesting of such Award is subject have been achieved.
9.07. Nontransferable. Share Awards and Performance Share Awards and rights to shares shall
not be transferable by a Recipient, and during the lifetime of the Recipient, shares which are the
subject of Share Awards may only be earned by and paid to a Recipient who was notified in writing
of a Share Award by the Committee pursuant to Section 9.01. No Recipient or Beneficiary shall have
any right in or claim to any assets of the Plan nor shall the Corporation or any Subsidiary Company
be subject to any claim for benefits hereunder.
ARTICLE X
ADJUSTMENTS FOR CAPITAL CHANGES
10.01 General Adjustments. The aggregate number of shares of Common Stock available for
issuance under this Plan, the number of shares to which any outstanding Award relates, the maximum
number of shares that can be covered by Awards granted to a person in any calendar year, and the
exercise price per share of Common Stock under any outstanding Option shall be proportionately
adjusted for any increase or decrease in the total number of outstanding shares of Common Stock
issued subsequent to the Effective Date of this Plan resulting from a split, subdivision or
consolidation of shares or any other capital adjustment, the payment of a stock dividend, or other
increase or decrease in such shares effected without receipt or payment of consideration by the
Corporation.
10.02 Adjustments for Mergers and Other Corporate Transactions. If, upon a merger,
consolidation, reorganization, liquidation, recapitalization or the like of the Corporation, the
shares of the Corporations Common Stock
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shall be exchanged for other securities of the Corporation
or of another corporation, each Award shall be converted, subject to the conditions herein stated,
into the right to purchase or acquire such number of shares of Common Stock or amount of other
securities of the Corporation or such other corporation as were exchangeable for the number of
shares of Common Stock of the Corporation which such Optionees would have been entitled to purchase
or acquire except for such action, and appropriate adjustments shall be made to the per share
exercise price of outstanding Options, provided that in each case the number of shares or other
securities subject to the substituted or assumed stock option and the exercise price thereof shall
be determined in a manner that satisfies the requirements of Treasury Regulation §1.424-1 and the
regulations issued under Section 409A of the Code so that the substituted or assumed option is not
deemed to be a modification of the outstanding Options. Notwithstanding any provision to the
contrary herein, the term of any Option granted hereunder and the property which the Optionee shall
receive upon the exercise or termination thereof shall be subject to and be governed by the
provisions regarding the treatment of any such Options set forth in a definitive agreement with
respect to any of the aforementioned transactions entered into by the Corporation to the extent any
such Option remains outstanding and unexercised upon consummation of the transactions contemplated by
such definitive agreement.
ARTICLE XI
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time terminate or amend the Plan with respect to any
shares of Common Stock as to which Awards have not been granted, subject to any required
stockholder approval or any stockholder approval which the Board may deem to be advisable for any
reason, such as for the purpose of obtaining or retaining any statutory or regulatory benefits
under tax, securities or other laws or satisfying any applicable stock exchange listing
requirements. The Board may not, without the consent of the holder of an Award, alter or impair
any Award previously granted or awarded under this Plan except as specifically authorized herein.
ARTICLE XII
EMPLOYMENT AND SERVICE RIGHTS
Neither the Plan nor the grant of any Awards hereunder nor any action taken by the Committee
or the Board in connection with the Plan shall create any right on the part of any Employee or
Non-Employee Director to continue in such capacity.
ARTICLE XIII
WITHHOLDING
13.01 Tax Withholding. The Corporation may withhold from any cash payment made under this
Plan sufficient amounts to cover any applicable withholding and employment taxes, and if the amount
of such cash payment is insufficient, the Corporation may require the Optionee to pay to the
Corporation the amount required to be withheld as a condition to delivering the shares acquired
pursuant to an Award. The Corporation also may withhold or collect amounts with respect to a
disqualifying disposition of shares of Common Stock acquired pursuant to exercise of an Incentive
Stock Option, as provided in Section 8.09(c).
13.02 Methods of Tax Withholding. The Board or the Committee is authorized to adopt rules,
regulations or procedures which provide for the satisfaction of an Optionees tax withholding
obligation by the retention of shares of Common Stock to which the Employee would otherwise be
entitled pursuant to an Award and/or by the Optionees delivery of previously-owned shares of
Common Stock or other property.
ARTICLE XIV
EFFECTIVE DATE OF THE PLAN; TERM
14.01 Effective Date of the Plan. This Plan shall be come effective on the Effective Date,
and Awards may be granted hereunder no earlier than the date that this Plan is approved by
stockholders of the Corporation and prior to the termination of the Plan, provided that this Plan
is approved by stockholders of the Corporation pursuant to Article XV hereof.
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14.02 Term of the Plan. Unless sooner terminated, this Plan shall remain in effect for a
period of ten (10) years ending on the tenth anniversary of the Effective Date. Termination of the
Plan shall not affect any Awards previously granted and such Awards shall remain valid and in
effect until they have been fully exercised or earned, are surrendered or by their terms expire or
are forfeited.
ARTICLE XV
STOCKHOLDER APPROVAL
The Corporation shall submit this Plan to stockholders for approval at a meeting of
stockholders of the Corporation held within twelve (12) months following the Effective Date, in
order to meet the requirements of: (i) Section 422 of the Code and regulations thereunder, (ii)
Section 162(m) of the Code and regulations thereunder, and (iii) the NASDAQ Stock Marker for
listing of the Common Stock on the NASDAQ Stock Market.
ARTICLE XVI
MISCELLANEOUS
16.01 Governing Law. To the extent not governed by federal law, this Plan shall be construed
under the laws of the Commonwealth of Pennsylvania.
16.02 Pronouns. Wherever appropriate, the masculine pronoun shall include the feminine
pronoun, and the singular shall include the plural.
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HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
HARLEYSVILLE, PENNSYLVANIA
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REVOCABLE PROXY |
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HARLEYSVILLE SAVINGS
FINANCIAL CORPORATION FOR USE ONLY AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JANUARY 27,
2010 AND AT ANY ADJOURNMENT THEREOF.
The undersigned, being a stockholder of Harleysville Savings Financial Corporation (the
Company), hereby appoints the Board of Directors, or any successors in their respective
positions, as proxy, with full powers of substitution, and hereby authorizes the Board to represent
and vote, as designated below, all the shares of common stock of the Company held of record by the
undersigned on December 4, 2009 at the Annual Meeting of Stockholders to be held at the Indian
Valley Country Club, located at 650 Bergey Road, Telford, Pennsylvania 18969, on January 27, 2010
at 9:30 a.m., local time, or any adjournment thereof.
1. ELECTION OF DIRECTORS:
Nominees for a three year term: Sanford L. Alderfer, Mark R. Cummins and Ronald B. Geib
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FOR all nominees listed above
(except as marked to the
contrary below) o
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WITHHOLD AUTHORITY (to
vote for all nominees
listed above) o |
INSTRUCTIONS: To withhold authority to vote for any one or more individual nominee, write the name
of such nominee(s) in the space provided below:
2. Proposal to approve the Harleysville Savings Financial Corporation 2009 Stock Incentive Plan.
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o FOR
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o AGAINST
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o ABSTAIN |
3. Proposal to ratify the appointment of ParenteBeard LLC as the Companys independent registered
public accounting firm for the year ending September 30, 2010.
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o FOR
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o AGAINST
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o ABSTAIN |
4. In their discretion, the proxies are authorized to vote upon such other business as may properly
come before the Annual Meeting as described in the accompanying Proxy Statement.
If not otherwise specified, this proxy will be voted FOR the election of the Board of
Directors nominees to the Board of Directors named in proposal 1, FOR the approval of the 2009
Stock Incentive Plan and FOR the ratification of the independent registered public accounting firm
and otherwise at the discretion of the proxies. In their discretion, the proxies are authorized to
vote with respect to approval of the minutes of the last meeting of stockholders, the election of
any person as director if a nominee is unable to serve or for good cause will not serve, matters
incident to the conduct of the meeting and upon such other business as may properly come before the
meeting. This proxy may be revoked at any time prior to the time it is voted at the Annual Meeting.
The undersigned hereby acknowledges receipt of a
Notice of Annual Meeting of Stockholders of
Harleysville Savings Financial Corporation, to be
held on January 27, 2010, or any adjournment
thereof, and a Proxy Statement for the Annual
Meeting, prior to the signing of this proxy.
Date:
__________________________________
Signature:
______________________________
Signature:
______________________________
Please sign exactly as your name(s) appear(s) on
this Proxy. When signing in a representative
capacity, please give title. When shares are held
jointly, both should sign.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of
Stockholders to be held on January 27, 2010. This proxy statement and the Annual Report on Form
10-K for the year ended September 30, 2009 as well as driving directions to the annual meeting are
available on our website at www.harleysvillesavings.com under the tabs About Us Annual Meeting
Materials.