UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 28, 2013
CAMCO FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
| DELAWARE | 0-25196 | 51-0110823 | ||
| (State or other jurisdiction of incorporation) | (Commission File No.) | (IRS Employer I.D. No.) |
814 Wheeling Avenue, Cambridge, Ohio 43725
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (740) 435-2020
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 5 – Corporate Governance and Management
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e) On May 28, 2013, the Compensation Committee and the Board of Directors of Camco Financial Corporation (“Camco”) approved the Regulatory Compliance Incentive Plan (the “Plan”). The Plan provides an award for James E. Huston, the Chief Executive Officer (“CEO”), and certain other Senior Officers of Camco and its subsidiaries as designated by the CEO, including David S. Caldwell and Laurence S. Christ, based on the achievement of established goals regarding regulatory compliance.
The Plan provides for three incentive awards for the CEO based on the achievement of three specific goals. The first goal is achieved when Advantage Bank, Camco’s wholly owned subsidiary, meets any regulatory capital ratios established by its regulators. Currently, the only capital ratios required are those established by the consent order that the Board of Directors of Advantage Bank entered into with the Federal Deposit Insurance Corporation (“FDIC”) and the State of Ohio, Division of Financial Institutions (“Ohio Division”) on February 9, 2012 (the “Consent Order”). The Consent Order requires regulatory capital ratios of 9% for the Tier 1 Leverage Capital Ratio and 12% for the risked-based capital ratio. When Advantage Bank has met these required capital ratios, or any lesser or greater ratios that may be established, for two consecutive months, the CEO earns an incentive award of $50,000 cash and 35,000 unrestricted shares of Camco common stock. The second goal is achieved when the FDIC and Ohio Division have agreed to cancel the Consent Order, assuming it is either replaced with a lesser order or agreement or not replaced at all. Upon such cancellation, the CEO earns an incentive award of $50,000 cash. The third goal for the CEO is the cancellation and elimination of all regulatory orders, agreements and understandings of any kind with the Federal Reserve Board of Governors, FDIC or Ohio Division at both Camco and Advantage Bank. Upon achieving this goal, the CEO earns an incentive award of $50,000 cash.
The Plan also provides an incentive award for certain other Senior Officers of Camco and its subsidiaries as designated by the CEO, including Messrs. Caldwell and Christ, upon the cancellation of the Consent Order. Upon the cancellation of the Consent Order, each such designated Senior Officer earns an incentive award of $2,000 cash.
If there is a Change of Control, as such term is defined in Mr. Huston’s employment agreement, all regulatory compliance goals will be deemed to have been achieved upon the consummation of such Change of Control.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits. |
| Exhibit Number |
Description | |
| 10.1 | Regulatory Compliance Incentive Plan | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CAMCO FINANCIAL CORPORATION | ||
| By: | /s/ James E. Huston | |
| James E. Huston | ||
| Chief Executive Officer | ||
Date: May 31, 2013
Exhibit 10.1
Regulatory Compliance Incentive
Camco and Advantage Bank were placed under regulatory order(s) beginning in 2009. The result has been a significant restriction on allowed activities for the company and a primary focus on attaining regulatory goals. The Board of Directors in 2008 and 2009 recognized that the existing management team would likely not succeed, in a timely fashion, in the attainment of new regulatory requirements and thus orchestrated a significant turnover in the senior management team. Since the initiation of that change, the new management team, despite what many thought were insurmountable issues, has made material progress in managing the company to earn elimination of regulatory orders.
The Board recognizes that the task of exiting these orders and returning to normal operations is not yet complete and in fact is not a certain event. In that regard, the Board believes it in the best interest of all constituents (shareholders, regulators, employees, customers, etc) if the management team is further incented to complete this task as quickly as possible. The Board also recognizes the CEO of the company will have the largest impact on implementing this desired requisite, although certain members of the senior team will also impact attainment of that objective. Accordingly the Board has implemented a Regulatory Compliance Incentive as follows:
| Cash | Equity | |||||||
| CEO Incentive | ||||||||
| 1. Regulatory Required Capital Ratios |
$ | 50,000 | 35,000 shares | |||||
| 2. Cancellation/elimination of Consent Order |
$ | 50,000 | ||||||
| 3. Cancellation/elimination of all Orders |
$ | 50,000 | ||||||
| Senior Officer (CEO designees) Incentive | ||||||||
| 1. Cancellation/elimination of Consent Order |
$ | 2,000 | ||||||
At present, the Advantage Bank Consent Order requires Advantage’s Tier 1 Leverage Capital Ratio to be 9% and the risk based capital to be 12%. This incentive (CEO goal #1 above) reflects the required regulatory capital ratios under any order then in effect for each month (whether higher, lower, or the same as present) and achieved as of the end of each of 2 consecutive months. In addition, if there is a difference in required Capital Ratios in effect between the regulators, the Regulatory Required Capital Ratios incentive (#1 CEO above) is attained when all regulatory capital ratio targets are achieved for Camco and Advantage as of the end of each of 2 consecutive months.
The cancellation/elimination of the Consent Order for both the CEO (#2) and Senior Officers (#1) is achieved upon cancellation of the Consent Order or a downgrade in the Consent Order. For further clarification, a cancellation/elimination is not achieved when management believes it is in perceived compliance or there is acknowledged compliance with any regulatory issues but is achieved when the existing Consent Order is terminated by the FDIC and Ohio Division, even if the Consent Order is replaced. However, if there is a replacement of the Consent Order, achievement of both the CEO (#2) and Senior Officers (#1) only occurs if the replacement is with an order commonly known to be of lower significance, which by example could include a Memorandum of Understanding. It is understood a substitution of the existing Consent Order with another Consent Order, even if there are fewer exceptions or the exceptions are different in the new Consent Order, does not constitute an event which satisfies these goals. It is understood that if the company is moved directly to #3 (CEO) above, then CEO #2 and Senior Officers #1 goals are also attained at that time and all incentives for CEO #2, CEO #3 and Senior Officer #1 goals will be paid.
It is also understood that CEO goal #3, cancellation/elimination of all Orders, requires that all orders, agreements or understandings of any kind, including Consent Orders, Written Orders or Orders of lower significance (such as Memorandum of Understanding), at both Camco and Advantage with the Federal Reserve, FDIC, or State of Ohio Division of Financial Institutions be terminated.
Payment as applicable for satisfaction of any of the Regulatory Compliance Incentives shall be made within 30 days of receiving or filing independent evidence the Incentive has been achieved. This would include but not be limited to audited financial statements, SEC filings as applicable, written documents from any and all regulatory agencies (as appropriate), internal generated financial statements provided in the normal course of business to the Board of Directors, etc. The award of unrestricted shares shall be made under one of Camco’s existing Equity Plans. If there is a Change of Control as defined in the CEO employment agreement, all Regulatory Compliance Incentives will be deemed achieved upon the consummation of the Change of Control.