WSFS Financial Corporation
838 Market Street
Wilmington, Delaware 19801
(302) 792-6000
March 29, 2006
Dear Stockholder:
I am pleased to invite you to attend the Annual Meeting of Stockholders of WSFS
Financial Corporation (the "Company"), to be held at the Hotel duPont, Eleventh
and Market Streets, Wilmington, Delaware 19801 on Thursday, April 27, 2006 at
4:00 p.m. Parking validation will be available for the Hotel duPont garage or
valet. Sign interpretation will be provided upon request. Please send your
request to the address shown on page two of the Proxy statement.
At this meeting, stockholders will be asked to consider a proposal to re-elect
four directors whose terms are expiring, and to ratify the appointment of
independent auditors.
Your vote is important regardless of how many shares of Company stock you own.
If you hold stock in more than one account or name, you will receive a proxy
card for each account. Please sign and return each card since each represents a
separate number of shares. Postage-paid envelopes are provided for your
convenience.
You are cordially invited to attend the Annual Meeting. REGARDLESS OF WHETHER
YOU PLAN TO ATTEND THE ANNUAL MEETING, WE URGE YOU TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD AS SOON AS POSSIBLE. This will not prevent you from voting
in person but will assure that your vote is counted if you are unable to attend
the meeting.
Sincerely,
/s/Marvin N. Schoenhals
Marvin N. Schoenhals
Chairman, President and Chief Executive Officer
WSFS Financial Corporation
838 Market Street
Wilmington, Delaware 19801
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on April 27, 2006
To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of WSFS Financial
Corporation (the "Company") will be held at the Hotel duPont, Eleventh and
Market Streets, Wilmington, Delaware 19801 on Thursday, April 27, 2006, at 4:00
p.m. The meeting will be held for the purpose of considering and acting upon the
following:
1. Election of four directors for terms of three years each;
2. Ratification of the appointment of independent auditors for the fiscal year
ending December 31, 2006; and
3. Such other matters as may properly come before the meeting or any
adjournment thereof.
Any action may be taken on any one of the foregoing proposals at the Annual
Meeting on the date specified above or any date or dates to which, by original
or later adjournment, the Annual Meeting may be adjourned. The Board of
Directors has fixed the close of business on March 7, 2006, as the record date
for the determination of stockholders entitled to notice of, and to vote, at the
Annual Meeting and any adjournment thereof.
You are requested to fill in and sign the enclosed form of proxy which is
solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote in person at the
Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/Mark A. Turner
Mark A. Turner
Chief Operating Officer and Secretary
March 29, 2006
--------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE YOUR COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
--------------------------------------------------------------------------------
WSFS Financial Corporation
838 Market Street
Wilmington, Delaware 19801
(302) 792-6000
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 27, 2006
This Proxy Statement and the accompanying proxy card are being furnished to
stockholders of WSFS Financial Corporation (the "Company") by the Board of
Directors in connection with the solicitation of proxies for use at the Annual
Meeting of Stockholders of the Company to be held on April 27, 2006, and at any
adjournments or postponements thereof (the "Annual Meeting"). This Proxy
Statement and the accompanying proxy card are first being mailed to stockholders
on or about March 29, 2006.
VOTING AND REVOCABILITY OF PROXIES
Proxies solicited by the Board of Directors of the Company will be voted in
accordance with the directions given therein. Where no instructions are
indicated, properly signed proxies will be voted FOR the nominees for directors
and for the other proposal as set forth herein. By signing, dating and returning
the enclosed proxy, you will give us the discretionary authority to vote your
shares for the election of any person we choose as a director in the event that
any nominee is unable or refuses to serve as a director. You will also give us
the discretionary authority to vote on any matters relating to the conduct of
the Annual Meeting. If any other business is presented at the Annual Meeting,
proxies will be voted by those named herein in accordance with the determination
of a majority of the Board of Directors.
Stockholders who execute proxies retain the right to revoke them at any time.
Unless so revoked, the shares represented by properly executed proxies will be
voted at the Annual Meeting and any adjournments or postponements thereof.
Proxies may be revoked by written notice to the Secretary of the Company sent to
the address above or by the filing of a later dated proxy prior to a vote being
taken on the proposal at the Annual Meeting. A proxy will not be voted if a
stockholder attends the Annual Meeting and votes in person. The presence of a
stockholder at the Annual Meeting alone will not revoke such stockholder's
proxy.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The securities entitled to vote at the Annual Meeting consist of the Company's
common stock, $.01 par value per share (the "Common Stock"), the holders of
which are entitled to one vote for each share of Common Stock held, except in
elections of directors, in which holders have cumulative voting rights. The
close of business on March 7, 2006 has been fixed as the record date for
determination of stockholders entitled to notice of, and to vote at, the Annual
Meeting (the "Record Date"). As of the Record Date, the Company had 6,595,411
shares of Common Stock outstanding. The presence, in person or by proxy, of the
holders of a majority of the
1
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
required for a quorum.
As to the election of directors, as set forth in Proposal 1, the proxy being
provided by the Board enables a stockholder to vote for the election of the
nominees proposed by the Board, or to withhold authority to vote for the
nominees being proposed. Directors are elected by a plurality of votes of the
shares present, in person or represented by proxy, at a meeting and entitled to
vote in the election of directors, without regard to either (i) broker non-votes
or (ii) proxies as to which authority to vote for the nominee being proposed is
withheld. The proxy confers discretionary authority on the persons named therein
to vote with respect to the election of any person as a director should the
nominee be unable to serve, or for good cause, will not serve.
In accordance with Company policy, in an uncontested election, any nominee for
director who receives a greater number of votes "withheld" from his or her
election than votes "for" such election will promptly tender his or her
resignation following certification of the shareholder vote. The Corporate
Governance Committee will consider the resignation offer and recommend to the
Board of Directors whether to accept it. The Board will act on the Corporate
Governance Committee's recommendation within 90 days following certification of
the shareholder vote. Thereafter, the Board of Directors will promptly disclose
their decision whether to accept the director's resignation offer (and the
reasons for rejecting the resignation offer, if applicable) in a Company press
release. Any director who tenders his or her resignation pursuant to this
provision will not participate in the Corporate Governance Committee
recommendation or Board action regarding whether to accept the resignation
offer.
As to the ratification of independent auditors as set forth in Proposal 2, by
checking the appropriate box, a stockholder may: (i) vote "FOR" ratification,
(ii) vote "AGAINST" ratification, or (iii) vote to "ABSTAIN" on this item.
Unless otherwise required by law, Proposal 2 and any other matters shall be
determined by a majority of votes cast affirmatively or negatively without
regard to (a) Broker Non-Votes or (b) proxies marked "ABSTAIN" as to that
matter.
SOLICITATION OF QUESTIONS BY THE BOARD OF DIRECTORS
The Board of Directors recognizes that the annual meeting is an opportunity
where the Board is available to its stockholders in a public forum. The Board of
Directors invites stockholders to submit questions for the Board in advance of
the meeting. While legal and timing issues may prevent the Board of Directors
from answering all questions submitted, the Board believes such dialogue will be
helpful in increasing communication between stockholders and the Board of
Directors.
Any stockholder wishing to present a question to the Board of Directors is
invited to send questions to:
WSFS Financial
Corporation Investor Relations 838 Market St.
Wilmington, DE 19801
or
stockholderrelations@wsfsbank.com
2
The Board will attempt to answer as many of the questions received as is
possible and post the responses on our website: www.wsfsbank.com.
Stock Ownership of Certain Beneficial Owners
Persons and groups beneficially owning in excess of 5% of the Common Stock are
required to file certain reports with respect to such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The following
table sets forth, as of the Record Date, certain information as to those persons
who have filed the reports required of persons beneficially owning more than 5%
of the Common Stock or who were known to the Company to beneficially own more
than 5% of the Company's Common Stock outstanding at the Record Date.
Amount and Nature
of Beneficial Percent
Name Ownership (1) of Class
---- ------------- --------
Private Capital Management (2) 586,702 shares 8.90 %
8889 Pelican Bay Boulevard
Naples, FL 34108
Barclays Global Investors, NA (3) 467,638 shares 7.09 %
45 Fremont Street
San Francisco, CA 94105
Wellington Management Company, LLP (4) 399,700 shares 6.06 %
75 State Street
Boston, MA 02109
(1) In accordance with Rule 13d-3 under the Exchange Act, for the purposes
of this table, a person is deemed to be the beneficial owner of any
shares of Common Stock if he or she has or shares voting and/or
investment power with respect to such Common Stock or has a right to
acquire beneficial ownership at any time within 60 days from the Record
Date. As used herein, "voting power" is the power to vote or direct the
voting of shares and "investment power" is the power to dispose or
direct the disposition of shares. Except as otherwise noted, ownership
is direct, and the named individuals and groups exercise sole voting
and investment power over the shares of the Common Stock.
(2) According to the Statement on Schedule 13G/A of Private Capital
Management filed on February 14, 2006, shares are held by its
investment advisory clients as to which it shares voting and investment
power.
(3) According to the Statement on Schedule 13G of Barclays Global
Investors, NA filed on February 10, 2006, the shares reported are held
by Barclays Global Investors, NA and its affiliates.
(4) According to the Statement on Schedule 13G/A of Wellington Management
Company, LLP filed on February 14, 2006, shares are held by its
investment advisory clients as to which it shares voting and/or
investment power.
3
PROPOSAL 1 -- ELECTION OF DIRECTORS
The number of Directors is currently fixed at thirteen members. Because Mr.
Weaver is not seeking re-election to the Board, the Board of Directors is
reducing the number of members to twelve effective with the start of the Annual
Meeting of Shareholders on April 27, 2006. The Board of Directors is divided
into three classes. The members of each class are elected for a term of three
years and until their successors are elected and qualified; provided that in the
event the number of directors has been increased during the preceding year and
such new directorships have been filled by action of the Board of Directors, the
terms of those newly appointed directors expire at the annual meeting when the
class to which they have been elected expires. Each of the current members of
the Board of Directors of the Company also serves on the Board of Directors of
the Company's principal subsidiary, Wilmington Savings Fund Society, Federal
Savings Bank ("WSFS" or the "Bank"). Directors of the Company are elected by a
plurality vote of the outstanding shares of Common Stock present in person or
represented by proxy at the Annual Meeting.
Pursuant to the Company's Certificate of Incorporation, every stockholder voting
for the election of directors is entitled to cumulate his or her votes by
multiplying his or her shares times the number of directors to be elected. Each
stockholder will be entitled to cast his or her votes for one director or
distribute his or her votes among any number of the nominees being voted on at
the Annual Meeting. The Board of Directors intends to vote the proxies solicited
by it equally among the four nominees of the Board of Directors. Stockholders
may not cumulate their votes on the form of proxy solicited by the Board of
Directors. In order to cumulate votes, stockholders must attend the meeting and
vote in person or make arrangements with their own proxies. Unless otherwise
specified in the proxy, however, the right is reserved, in the sole discretion
of the Board of Directors, to distribute votes among some or all of the nominees
of the Board of Directors in a manner other than equally so as to elect as
directors the maximum possible number of such nominees.
At the Annual Meeting, it is expected that four directors will be elected for
terms of three years each and until their successors have been elected and
qualified. The Board of Directors has nominated Linda C. Drake, David E.
Hollowell, Scott E. Reed and Claibourne D. Smith, all of whom are currently
directors, for election as directors at the Annual Meeting. If any nominee is
unable to serve, the shares represented by all properly executed proxies will be
voted for the election of such substitute as the Board of Directors may
recommend. Alternatively, the Board of Directors may elect to reduce the number
of authorized directors to eliminate the vacancy.
The Board of Directors Recommends Voting "FOR" the Directors Nominated in
Proposal 1.
4
Directors and Nominees
The following table sets forth information for each nominee and each
director continuing in office. It includes their name, age (as of December 31,
2005), year first elected or appointed as a director of the Company, year of
expiration of current term as a director of the Company, principal occupation
for at least the last five years and directorships in subsidiaries of the
Company and in other companies:
Year First Current
Elected or Term
Appointed to
Name Age Director Expire Principal Occupation Directorship(s) (1)
---- --- -------- ------ -------------------- -------------------
NOMINEES FOR A TERM TO EXPIRE IN 2009
Linda C. Drake 57 1999 2006 Founder and Chair WSFS;
TCIM Services, Inc. TCIM Services, Inc.;
(business services and software LTD Direct
technology companies)
David E. Hollowell 58 1996 2006 Executive Vice President and WSFS
University Treasurer
University of Delaware
Scott E. Reed 57 2005 2006 Senior Executive Vice President WSFS
and Chief Financial Officer,
BB&T Corporation (financial
holding company and parent of
Branch Banking and Trust
Company) (1972-2005) (retired)
Claibourne D. Smith 67 1994 2006 Vice President - Technology and WSFS
Professional Development, E.I.
duPont de Nemours & Company,
Incorporated, (multinational
chemical and energy company)
(1964-1998) (retired)
DIRECTORS CONTINUING IN OFFICE
John F. Downey 68 1998 2007 Executive Director of the WSFS
Office of Thrift Supervision (OTS),
1989-1998 (retired)
Thomas P. Preston 59 1990 2007 Partner, Blank Rome, LLP; WSFS
previously Partner,
Reed Smith, LLP and
Duane, Morris & Heckscher LLP
(Law firms)
5
DIRECTORS CONTINUING IN OFFICE (Continued)
Year First Current
Elected or Term
Appointed to
Name Age Director Expire Principal Occupation Directorship(s)
---- --- -------- ------ -------------------- ---------------
Marvin N. Schoenhals 58 1990 2007 Chairman of WSFS Financial WSFS and affiliates (1);
Corporation since 1992; President Federal Home Loan Bank
and Chief Executive Officer of of Pittsburgh (Chairman);
WSFS Financial Corporation Brandywine Fund, Inc. and
since November 1990 affiliates (2);
Delaware State Chamber of
Commerce
R. Ted Weschler 44 1992 2007 Managing Member, WSFS;
Peninsula Capital Advisors, LLC, First Avenue Networks, Inc.
an investment advisory firm; Wilsons The Leather
October 1989 to December 1999, Experts, Inc.
Partner and Officer of Quad-C,
Inc., a Delaware corporation which
acts as the general partner for
several investment partnerships
Charles G. Cheleden 62 1990 2008 October 1992 to present: Vice WSFS
Chairman of WSFS Financial
Corporation; Lead Director;
Former Chairman, WSFS
Financial Corporation;
Self-employed attorney
Joseph R. Julian 68 1983 2008 Chairman and CEO, JJID, Inc. WSFS;
(highway construction company) JJID, Inc.
Dennis E. Klima 61 2004 2008 President and CEO, Bayhealth, Inc. WSFS;
CEO and Chairman, Bayhealth, Inc.;
Bayhealth Medical Center, Inc. Bayhealth Medical Center, Inc.
Calvert A. Morgan, Jr. 57 2004 2008 Consultant; WSFS;
Chairman, President and CEO Chesapeake Utilities
PNC Bank, Delaware (retired) Corporation
(1) WSFS affiliates include: WSFS Credit Corporation, WSFS Investment Group,
Inc., WSFS Reit, Inc. and Montchanin Capital Management, Inc. and are
subsidiaries of the Company. It also includes WSFS Foundation, Inc., a
charitable foundation associated with the Company.
(2) Brandywine Fund, Inc. affiliates include: Brandywine Blue Fund, Inc. and
Brandywine Advisors Fund, Inc.
6
Stock Ownership of Management
The following table sets forth, as of the Record Date, the amount of Common
Stock beneficially owned by the Company's directors, by each of the named
executive officers in the Summary Compensation Table, and by all directors and
named executive officers as a group:
Amount and Nature
of Beneficial Percent
Name Ownership (1) of Class (2)
---- ----------------- ------------
Charles G. Cheleden (3)(4) 14,700 shares *
John F. Downey (4)(5) 10,000 shares *
Linda C. Drake (6) 9,500 shares *
David E. Hollowell (7) 14,760 shares *
Joseph R. Julian (4) 68,776 shares 1.04%
Dennis E. Klima (8) 2,850 shares *
Calvert A. Morgan, Jr. (9) 3,200 shares *
Thomas P. Preston (10) 10,072 shares *
Scott E. Reed 600 shares *
Marvin N. Schoenhals (11) 220,845 shares 3.26%
Claibourne D. Smith (4) 10,630 shares *
Eugene W. Weaver (12) 14,220 shares *
R. Ted Weschler (4)(13) 209,600 shares 3.18%
Karl L. Johnston (14) 18,692 shares *
Mark A. Turner (15) 104,988 shares 1.57%
Stephen A. Fowle (16) 3,081 Shares *
Deborah A. Powell (17) 17,654 shares *
Directors and executive officers
as a group (17 persons) 734,168 shares 10.63%
-----------------
* Less than 1.0%.
(1) For purposes of this table, a person is deemed to be the beneficial owner
of any shares of Common Stock over which he or she has or shares voting
and/or investment power or of which he or she has the right to acquire
beneficial ownership within 60 days of the Record Date. As used herein,
"voting power" is the power to vote or direct the voting of shares and
"investment power" is the power to dispose or direct the disposition of
shares. Other than as noted below, all persons shown in the table above
have sole voting and investment power, except that the following directors
and executive officers held the following numbers of shares jointly with
their respective spouses: Mr. Cheleden, 2,600 shares; Mr. Downey, 3,900
shares, Ms Drake, 5,000 shares; Mr. Hollowell, 7,000 shares; Mr. Julian,
59,676 shares; Mr. Johnston, 6,350 shares; Mr. Turner, 7,780 shares; and
Mr. Fowle, 2,100 shares.
(2) In calculating the percentage ownership of each named individual and the
group, the number of shares outstanding is deemed to include any shares of
the Common Stock which the individual or the group has the right to acquire
within 60 days of the Record Date.
(3) Includes 6,600 shares of Common Stock held in an Individual Retirement
Account ("IRA").
(4) Includes 5,500 shares of Common Stock that may be acquired through the
exercise of options within 60 days of the Record Date.
(5) Includes 600 shares of Common Stock held in an IRA.
(6) Includes 4,500 shares of Common Stock that may be acquired through the
exercise of options within 60 days of the Record Date.
(7) Includes 3,660 shares of Common Stock that may be acquired through the
exercise of options within 60 days of the Record Date.
(8) Includes 200 shares of Common Stock that may be acquired through the
exercise of options within 60 days of the Record Date.
(9) Includes 1,200 shares of Common Stock that may be acquired through the
exercise of options within 60 days of the Record Date and 900 shares of
Common Stock held in an IRA.
(Footnotes continued on next page)
7
(10) Includes 2,820 shares of Common Stock that may be acquired through the
exercise of options within 60 days of the Record Date and 1,275 shares of
Common Stock held in an IRA.
(11) Includes 21,095 shares of Common Stock held in Mr. Schoenhals' account in
the Company's 401(k) Plan and 171,040 shares of Common Stock that may be
acquired through the exercise of options within 60 days of the Record Date.
(12) Includes 2,620 shares of Common Stock that may be acquired through the
exercise of options within 60 days of the Record Date, 1,000 shares of
Common Stock held in an IRA and 800 shares of Common Stock held by Mr.
Weaver's wife. Mr. Weaver disclaims beneficial ownership of his wife's
shares.
(13) Includes 200,000 shares held by Peninsula Investment Partners, L.P., an
investment firm managed by Peninsula Capital Advisors, LLC of which Mr.
Weschler is the Managing Member. Mr. Weschler disclaims beneficial
ownership of the shares held by Peninsula Partners, L.P.
(14) Includes 32 shares of Common Stock held in Mr. Johnston's account in the
Company's 401(k) Plan and 12,310 shares of Common Stock that may be
acquired through the exercise of options within 60 days of the Record Date.
(15) Includes 9,619 shares of Common Stock held in Mr. Turner's account in the
Company's 401(k) Plan, 2,500 shares of Common Stock held in an IRA and
77,590 shares of Common Stock that may be acquired through the exercise of
options within 60 days of the Record Date.
(16) Includes 381 shares of Common Stock held in Mr. Fowle's account in the
Company's 401(k) Plan and 600 shares of Common Stock that may be acquired
through the exercise of options within 60 days of the Record Date.
(17) Includes 1,994 shares of Common Stock held in Ms Powell's account in the
Company's 401(k) Plan and 9,840 shares of Common Stock that may be acquired
through the exercise of options within 60 days of the Record Date.
Position and Duties of the Lead Director
The Board of Directors has designated Charles G. Cheleden, Vice Chairman, as
Lead Director. The Lead Director is an outside and independent director
designated by the Board of Directors of the Company to lead the Board to fulfill
its duties effectively, efficiently and independent of management.
The responsibilities of the Lead Director include: (1) Enhancing Board
effectiveness, (2) Managing the Board and (3) Acting as a liaison between the
Board, management and major shareholders.
o Responsibilities for enhancing Board effectiveness include ensuring
the Board has adequate training and resources to carry out its duties.
o Responsibilities for managing the Board include: providing input on
Board and Committee meeting agendas; consulting with Chairman on
effectiveness of Board Committees; ensuring that Directors have
adequate opportunities to meet to discuss issues without management's
presence; chairing Board meetings in the absence of the Chairman;
ensuring that Committee functions are carried out and reported to the
Board. In addition the lead director has the authority to call
meetings of the independent directors.
o Responsibilities as liaison include: communicating to management, as
appropriate, to discuss the results of private discussions among
independent directors to resolve conflicts; and being available, as
necessary, for consultation and direct communication with major
shareholders.
Meetings and Committees of the Board of Directors
The Board of Directors conducts its business through its meetings and
the meetings of its committees. During the year ended December 31, 2005, the
Board of Directors held ten (10) meetings. All directors attended more than 75%
of the total aggregate meetings of the Board of Directors and committees on
which such Board member served during this period.
8
A list of the Committees of the Board of Directors and a general description of
their respective duties follows.
Executive Committee. The Executive Committee is scheduled to meet one time each
month, or more frequently if required, and exercises the powers of the Board of
Directors between meetings of the Board. The primary activity of the Committee
has been to review loan applications needing board approval. The Executive
Committee is presently composed of Marvin N. Schoenhals, Chairman, Charles G.
Cheleden, David E. Hollowell, Calvert A. Morgan, Jr. and R. Ted Weschler. The
Executive Committee met twenty-seven (27) times during 2005.
Corporate Governance and Nominating Committee. The Corporate Governance and
Nominating Committee consists of directors who are independent in accordance
with the listing requirements of the Nasdaq Stock Market. The purpose of this
committee is: (i) to recommend to the Board the corporate governance guidelines
and policies applicable to the Company; (ii) to assist the Board by identifying
individuals qualified to become Board members, (iii) to recommend to the Board
the director nominees for the next annual meeting of stockholders, (iv) to lead
the Board in its annual review of the Board's performance, and (v) to recommend
to the Board director nominees to each committee. The Committee will also
consider nominees recommended by stockholders in accordance with the procedures
set forth in the bylaws of the Company. Members of the Corporate Governance and
Nominating Committee are Charles G. Cheleden, Chairman, John F. Downey, Linda C.
Drake, Dennis E. Klima and Thomas P. Preston. Each member of the Corporate
Governance and Nominating Committee is "independent" as defined in the listing
standards of the National Association of Securities Dealers. The Corporate
Governance and Nominating Committee met one (1) time during 2005. The Corporate
Governance and Nominating Committee has adopted a written charter governing the
Committee's responsibilities. A copy of the Corporate Governance and Nominating
Committee Charter is available on the Company's website at www.wsfsbank.com.
Director Nomination Process. The Company does not currently pay fees to any
third party to identify, evaluate or assist in identifying or evaluating
potential nominees for the Board of Directors. The Committee's process for
identifying and evaluating potential nominees includes soliciting
recommendations from directors and officers of the Company and its wholly-owned
subsidiary, Wilmington Savings Fund Society, FSB. Additionally, the Committee
will consider persons recommended by stockholders of the Company in selecting
the Committee's nominees for election. There is no difference in the manner in
which the Committee evaluates persons recommended by directors or officers and
persons recommended by stockholders in selecting Board nominees.
To be considered in the Committee's selection of Board nominees, recommendations
from stockholders must be received by the Company in writing not less than 60
days nor more than 90 days prior to the anniversary date of the mailing date of
the proxy statement for the previous year's annual meeting. Recommendations
should identify as to the stockholder giving notice and for each person the
stockholder proposes to recommend as a nominee to the Board (1) the name, age,
business address of such person; (2) the principal occupation or employment of
such person; (3) the Class and number of shares of the Company's Voting Stock
(as defined in the Company's Bylaws) which are beneficially owned by such
stockholder on the date of such notice; and (4) any other information required
to be included in such notice pursuant to the Company's Bylaws or disclosed in
solicitations of proxies with respect to nominees for election of directors set
forth in the Securities Exchange Act of 1934.
9
Persons recommended for consideration as nominees by the Board are subject to
the director qualification requirements set forth in Article II, Sections 6 and
7 of the Company's Bylaws, which require that (i) directors must be shareholders
of the Company; and (ii) directors must be persons of good character and
integrity and must also have been nominated by persons of good character and
integrity.
The Board desires that its membership be geographically diverse and as a result,
potential directors should enhance the Board's statewide representation. The
Board also desires that its membership have expertise in a diversity of business
sectors. As a commitment to this diversification, the Board believes potential
directors should be knowledgeable about the business activities and market areas
in which the Company and its subsidiaries engage.
Stockholder Communications. The Board of Directors does not have a formal
process for stockholders to send communications to the Board. In view of the
infrequency of stockholder communications to the Board of Directors, the Board
does not believe that a formal process is necessary. The Board, however,
strongly encourages communications from stockholders and gives such
communications its prompt attention. As part of this process, the Board of
Directors solicits questions from stockholders. Information for submitting
questions to the Board of Directors in advance of the Annual Meeting of
Shareholders is addressed on page two of this Proxy. Written communications
received by the Company from stockholders are shared with the full Board no
later than the next regularly scheduled Board meeting. In addition, Directors
are accessible to shareholders on an informal basis throughout the year and
formally at the Annual Meeting. The Board encourages, but does not require,
directors to attend the Annual Meeting of Stockholders. All of the then current
Board Members attended the 2005 Annual Meeting of Stockholders.
Audit Committee. The Audit Committee is comprised of directors who are not
officers of the Company. The Board of Directors has adopted a written charter
for the Audit Committee. The Committee oversees the audit program and reviews
the financial statements of the Company and its subsidiaries. It reviews the
examination reports of federal regulatory agencies as well as reports of the
internal auditors and independent auditors. It also meets quarterly with the
internal loan review department. The Audit Committee meets quarterly with the
head of the Audit Department and representatives of the Company's independent
auditors, with and without representatives of management present, to review
accounting and auditing matters, and to review financial statements prior to
their public release. They also meet annually to review the Company's risk
analysis and associated audit plan. The Board of Directors appoints the
independent auditors upon the recommendation of the Audit Committee. Present
members of the Audit Committee are John F. Downey, Chairman, Joseph R. Julian,
Dennis E. Klima, Claibourne D. Smith and Eugene W. Weaver. Each member of the
Audit Committee is "independent" as defined in the listing standards of the
Nasdaq Stock Market. The Audit Committee met nine (9) times during fiscal year
2005. The Board of Directors has determined that Mr. Weaver, a member of the
Company's Audit Committee, is an "Audit Committee Financial Expert" as that term
is defined in the Securities Exchange Act of 1934. The Board of Directors has
determined that Mr. Weaver is independent as that term is used in item
7(d)(3)(iv)(A) of Schedule 14A of the Securities Act of 1934.
Personnel and Compensation Committee. The Personnel and Compensation Committee
("Personnel Committee") is comprised of directors who are independent in
accordance with the listing standards of the Nasdaq Stock Market. The Personnel
Committee reviews and recommends to the Board of Directors, for their approval,
the compensation and benefits of the executive officers and broad guidelines for
the salary and benefits administration of other officers and Associates. In
addition, the
10
Personnel Committee is responsible for the overseeing the administration of the
1997 Stock Option Plan, the 2005 Incentive Plan and the executive incentive
plans, including recommendations to the Board of Directors for awards under such
plans.
The Personnel Committee discussed and approved, in advance, the use of chartered
aircraft to facilitate a portion of business travel for Mr. Schoenhals including
travel to board meetings of the Federal Home Loan Bank of Pittsburgh where Mr.
Schoenhals serves as Chairman. Chartered flights have been approved in instances
where commercial flight times (and attendant delays) would have an adverse
impact on other business activities and where travel is for the benefit of the
Company. The Company did not pay for personal use of chartered aircraft. The
Company incurred an expense of approximately $41,000 in 2005 for chartered
flights.
Present members of the Personnel Committee are David E. Hollowell, Chairman,
Linda C. Drake, Claibourne D. Smith, and R. Ted Weschler. The Personnel
Committee met three (3) times during 2005.
Directors' Compensation. During 2005, each non-Associate director received an
annual retainer of $15,500 plus 600 shares of the Company's Common Stock and a
grant of 1,000 options under the 2005 Incentive Plan. Audit Committee members
received an additional annual retainer of $10,000. Chairpersons of board
committees received an additional annual retainer as follows: Audit Committee,
$5,000; Corporate Governance and Nominating Committee and Personnel and
Compensation Committee, $3,000. Each member of a committee received $650 for
each meeting attended. Directors did not receive meeting fees for Board
meetings. The Lead Director received an additional monthly fee of $1,500. Mr.
Schoenhals does not receive director fees as Chairman, President and Chief
Executive Officer.
EXECUTIVE OFFICERS
Marvin N. Schoenhals, age 58, has served as President and Chief Executive
Officer of the Company since November 1990 and was elected Chairman in October
1992. Mr. Schoenhals was elected to the Board of Directors of the Federal Home
Loan Bank of Pittsburgh in 1997 and currently serves as its Chairman. Since
1998, he has served on the Boards of Directors of Brandywine Fund, Inc.,
Brandywine Blue Fund, Inc. and Brandywine Advisors Fund, Inc. He is a board
member of the Delaware State Chamber of Commerce as well as numerous other
community-based organizations.
Karl L. Johnston, age 57, serves as Chief Operating Officer and Chief Lending
Officer. He was appointed Chief Operating Officer in 2001. Mr. Johnston joined
the Bank in May 1997 as Chief Lending Officer. Before joining the Bank, Mr.
Johnston spent his banking career at the Delaware Trust Company where he was
Executive Vice President and Commercial Banking Group executive. When Delaware
Trust was merged into CoreStates Bank, he was a Senior Vice President
responsible for middle-market business relationships for the State of Delaware,
Delaware County, Pennsylvania and northern Maryland and Virginia.
Mark A. Turner, age 42, serves as Chief Operating Officer and Corporate
Secretary. He was appointed Chief Operating Officer in 2001. From 1998 to 2004,
he also served as Chief Financial Officer. Mr. Turner joined the Company in 1996
as Managing Vice President and Controller. From 1994 to 1996 Mr. Turner was Vice
President of Finance for the Capital Markets Division of Meridian Bank, and Vice
President of Corporate Development for Meridian Bancorp, both in Reading,
Pennsylvania. Before that, he was a Senior Audit Manager with KPMG LLP in
Philadelphia, Pennsylvania.
11
Stephen A. Fowle, age 40, was appointed Executive Vice President and Chief
Financial Officer in January 2005. From 2000 to 2004, Mr. Fowle was Chief
Financial Officer at Third Federal Savings and Loan Association of Cleveland,
MHC, in Cleveland, Ohio. From 1994 to 2000, Mr. Fowle was Vice President of
Corporate Finance at Robert W. Baird & Co, Incorporated in Milwaukee, Wisconsin,
a regional investment banking firm.
Deborah A. Powell, age 49, has served as Executive Vice President and
Director of Human Resources since May 2000. From 1997 to 2000, Ms Powell was
Vice President of Human Resources at Huffy Service First, a national retail
services company. From 1996 to 1997, she was Human Resources Manager of The
Limited-Alliance Data System, a retail call-center operation. From 1991 to 1996,
she was National Practice Director of Midwest Resources, Inc., a Human Resources
and Organizational Development consulting practice.
Audit Committee Report
In accordance with rules established by the SEC, the Audit Committee has
prepared the following report for inclusion in this proxy statement:
As part of its ongoing activities, the Audit Committee has:
o Reviewed and discussed with management the Company's audited consolidated
financial statements for the fiscal year ended December 31, 2005;
o Discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communications with
Audit Committees, as amended; and
o Received the written disclosures and the letter from the independent
accountants required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and has discussed with the
independent accountants their independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2005 for filing with the SEC.
The Audit Committee comprised of Messrs. Downey, Julian, Klima, Smith and Weaver
has provided this report.
Personnel and Compensation Committee Report on Executive Compensation
Overview and Philosophy. The Personnel Committee oversees the Company's
executive compensation programs. The Personnel Committee's responsibilities
include reviewing and making recommendations to the Board of Directors regarding
compensation of the Chief Executive Officer and reviewing and approving the
compensation paid to other executive officers of the Company (the "Named
Executive Officers") listed in the "Summary Compensation Table" that follows
this report. The Committee also administers stock option and incentive plans and
is responsible for compliance with Rule 16b-3 of the Exchange Act.
The objective of the compensation program is to establish levels of
compensation sufficient to attract and retain highly qualified and motivated
executives. The program also seeks to align the interests of
12
the Company's executive management with those of stockholders through the use of
both incentive-based compensation for achieving specific performance based
criteria and stock-based compensation for building long-term stockholder value.
In setting the compensation levels of senior executives of the Company, the
Committee evaluates many different sources of information. These include, but
are not limited to, the experience level of the executive; the executive's
performance in the current as well as prior years; an assessment of the
executive's potential for future development; and the executive's immediate
level of responsibility. In addition, the Committee regularly monitors the
compensation program of similar sized institutions that are generally high
performing in nature. This peer group consists of public companies in the $1 to
$3 billion size category that are usually in the upper quintile of performance
with respect to return on equity, return on assets, and growth in earnings per
share. Approximately every three to four years, the Committee retains an outside
consultant to review the Company's executive compensation program. In
intervening years, the Committee uses proxy data from several financial
institutions identified as high-performing to assess appropriateness of senior
executive salaries.
The Executive Vice President of Human Resources assists the Committee in
developing a "request for proposal" for the external consultant candidates. She
provides information to the successful bidder and reviews the final document
with the chairperson of the Committee. The Executive Vice President of Human
Resources may also serve as a subject matter expert to the Committee to respond
to general questions about the survey process.
The Committee retained a consultant during 2004 and previously had retained a
consultant in February 2002. The Consultant's study compared the WSFS
compensation levels for eight senior positions to similar positions at high
performing institutions over a three-year period, ending with 2003. The
conclusion of the Consultant's study is that the compensation practices of WSFS,
for the eight senior positions, are competitive. While there were minor
deviations, total compensation for each position approximated the fiftieth
percentile of the high performing peer group comparison. The Consultant did
recommend that WSFS consider enhancing the long-term incentive component of its
Executive Compensation Program. After careful consideration, the Committee
concluded that the total compensation program was functioning appropriately and
consequently made no changes in the long-term incentive component of executive
compensation.
Compensation Program Elements. The Company's executive compensation program
consists of base salaries, a short-term cash incentive plan, a stock option plan
and miscellaneous other fringe benefits.
Base Salary. Base salary levels are determined by the Personnel Committee
with reference to corporate and individual performance in relation to
strategic goals established each year, competitive market trends and
special circumstances particular to the Company's staffing needs. As
discussed above, the Personnel Committee evaluates many different sources
of information to determine appropriate levels of base salaries for its
executives. The Company's executive compensation philosophy suggests a base
salary that is competitive and market responsive, but not excessive.
Short-Term Incentive Plan. The Board of Directors approved a Management
Incentive Program (MIP) designed to reward the accomplishment of specific
corporate and individual performance criteria. This program is formulaic
and capped as a percentage of salary based on the level of the executive
participating in the program. For 2005, the corporate performance criteria
were: return on assets, return on equity and growth in earnings per share.
Plan
13
participants include members of management from certain senior vice
presidents to the Chief Executive Officer. Each year the Personnel
Committee establishes a bonus pool based on the level and quality of the
Company's earnings as compared to its plan. A total of 15 executives,
including the Named Executive Officers, participated in this plan during
2005.
Individual awards are earned for successfully attaining objectives based on
the three criteria above, and in completion of specific individual
performance criteria. Total awards earned under the MIP during 2005 were
approximately $1.5 million and were paid in cash during 2006.
For the Chief Executive Officer, MIP awards are based on company-wide
financial results. For the Chief Operating Officers, MIP awards are based
on 75% company-wide financial results and 25% individual performance
measures. For Executive Vice Presidents, MIP awards are based on 65%
company-wide financial results and 35% individual performance measures.
Personal performance measures are identified each year by the executive and
his or her immediate supervisor.
In addition to the awards program described above, the Corporation provides
cash incentives to executive managers of certain subsidiaries and divisions
who do not participate in the MIP. These cash incentives are generally
based on achieving specific performance targets.
Stock Options. As a performance incentive, to encourage ownership of Common
Stock and to further align the interests of management and stockholders,
the Personnel Committee issues stock options under the 1997 Stock Option
Plan and the 2005 Incentive Plan. Under those plans, the Personnel
Committee issued 109,847 stock options in 2005. The Personnel Committee
periodically reviews and awards stock options to management based on
factors it deems important; however, the Personnel Committee is not
required to issue awards on an annual basis. Awards are influenced by
bonuses received under the MIP and the long-term potential of the Associate
as recommended by the CEO and approved annually by the Personnel and
Compensation Committee, typically at the end of the calendar year.
Stock options are the primary non-cash form of compensation offered to WSFS
executives. Other forms include country club membership, primarily for the
purpose of developing new business; and financial planning services, to
encourage strong personal financial habits.
The Company's compensation policy allows for material changes to an Executive's
compensation package. Factors that would influence a material change include:
major changes in job responsibilities, internal equity or market/competitive
adjustments.
Compensation of the Chief Executive Officer. For fiscal year 2005, Mr.
Schoenhals earned $416,667 in base salary. Mr. Schoenhals earned $350,000 in
bonus (MIP award) for fiscal year 2005 under the MIP that was paid after the end
of the fiscal year. This bonus reflects the Company's achievement of specific
financial goals for the 2005 fiscal year as well as the Personnel Committee's
assessment of Mr. Schoenhals' contribution to the achievement of those goals.
Factors considered by the Personnel Committee in assessing Mr. Schoenhals'
contribution included his leadership role in formulating and executing the
Company's business strategy. In addition to the foregoing cash compensation, Mr.
Schoenhals was awarded options to purchase 13,100 shares of Common Stock under
the 2005 Incentive Plan representing 11.9% of the regular options granted to all
Associates during the year.
14
Compensation of Special Advisor to Management. In 2004, Calvert A. Morgan, Jr.
was elected a Director of WSFS Financial Corporation and serves in a consulting
capacity as a Special Advisor to Management. In his role as a Special Advisor to
Management, Mr. Morgan performs such duties as requested by the Board of
Directors and the Chairman to assist in improving the performance of WSFS
Financial Corporation. In addition to his Director fees, Mr. Morgan receives an
annual base consulting fee of $100,000, with the opportunity to earn a
supplemental payment ranging from 0% to 100% of the base fee, with the amount to
be determined at the discretion of the Chairman, based on the overall results of
WSFS for the year, loan and deposit growth, and the Chairman's subjective
assessment of Mr. Morgan's overall contribution to those results. Mr. Morgan
earned a supplemental payment of $35,000 for fiscal year 2005 that was paid
after the end of the fiscal year. Additionally, Mr. Morgan is provided with
other benefits including stock option awards (1,400 options were awarded during
2005). As part of the terms of his consulting engagement with the Company, Mr.
Morgan is also entitled to a separation payment of up to $110,000, based on the
length of the term of his engagement.
During 2005, Mr. Morgan was deemed not "independent" as defined in the listing
standards of the National Association of Securities Dealers. The Board of
Directors weighed the benefits of retaining Mr. Morgan and determined that his
extraordinary industry background, market knowledge, customer relationships and
community involvement would be invaluable to both the Board of Directors and
management. Mr. Morgan was formerly Chairman, President and CEO of PNC Bank,
Delaware and has 36 years experience in the banking industry in Delaware.
Compensation Committee Interlocks and Insider Participation. The Company had no
"interlocking" relationships existing on or after December 31, 2005 in which (i)
any executive officer is a member of the Board of Directors of another financial
institution, one of whose executive officers is a member of the Company's Board
of directors, or where (ii) any executive officer is a member of the
compensation committee of another entity, one of whose executive officers is a
member of the Company's Board of Directors. See "Business Relationships and
Related Transactions" for information regarding other relationships such persons
may have with the Company.
Present members of the Personnel Committee are David E. Hollowell, Chairman,
Linda C. Drake, Claibourne D. Smith and R. Ted Weschler, each of whom are
directors of the Company.
15
COMPARATIVE STOCK PERFORMANCE GRAPH
The graph and table which follow show the cumulative total return on the Common
Stock of the Company over the last five years compared with the cumulative total
return of the Dow Jones Total Market Index and the Nasdaq Bank Index over the
same period as obtained from Bloomberg L.P. Cumulative total return on the
Common Stock or the index equals the total increase in value since December 31,
2000, assuming reinvestment of all dividends paid into the Common Stock or the
index, respectively. The graph and table were prepared assuming $100 was
invested on December 31, 2000 in the Common Stock of the Company and in each of
the indexes. There can be no assurance that the Company's future stock
performance will be the same or similar to the historical stock performance
shown in the graph below. The Company neither makes nor endorses any predictions
as to stock performance.
CUMULATIVE TOTAL SHAREHOLDER RETURN
COMPARED WITH PERFORMANCE OF SELECTED INDEXES
December 31, 2000 through December 31, 2005
[GRAPHIC OMITTED]
Cumulative Total Return
----------------------------------------------
2000 2001 2002 2003 2004 2005
----------------------------------------------
WSFS Financial Corporation $100 $136 $260 $355 $477 $489
Dow Jones Total Market Index 100 87 67 86 94 99
Nasdaq Bank Index 100 113 120 160 181 177
16
SUMMARY COMPENSATION TABLE
The following table sets forth compensation for the years ended December 31,
2005, 2004 and 2003 for the Company's Chief Executive Officer and the four other
most highly compensated executive officers of the Company whose salary and bonus
earned in 2005 exceeded $100,000 (herein referred to as "Named Executive
Officers").
Long Term
Compensation
Other Awards
Annual Securities
Name and Compen- Underlying All Other
Principal Position Year Salary Bonus (1) sation (2) Options (3)(4)(5) Compensation (6)
------------------ ---- ------ --------- ---------- ----------------- ----------------
Marvin N. Schoenhals 2005 $ 416,667 $354,500 24,593 13,100 $14,700
Chairman of the Board, 2004 397,708 400,000 28,603 9,500 18,350
President and Chief 2003 384,375 536,250 13,363 12,650 18,000
Executive Officer
Karl L. Johnston 2005 229,166 165,702 20,617 5,650 14,700
Chief Operating Officer 2004 217,667 200,000 25,428 5,750 18,350
and Chief Lending Officer 2003 205,000 198,000 10,361 5,350 18,000
Mark A. Turner 2005 238,333 165,000 13,120 8,700 14,700
Chief Operating Officer and 2004 217,667 180,000 18,120 5,950 18,350
Secretary 2003 205,000 270,000 4,108 7,700 18,000
Stephen A. Fowle 2005 180,000 110,000 77,288 6,800 6,266
Executive Vice President and 2004 - - - - -
Chief Financial Officer 2003 - - - - -
Deborah A. Powell 2005 158,550 80,000 16,624 2,700 14,700
Executive Vice President, 2004 150,500 94,000 17,696 2,000 18,290
Director, Human Resources 2003 147,500 90,000 16,505 1,750 18,658
(1) For each fiscal year, includes bonuses not paid until the following fiscal
year under the Company's Management Incentive Program. For 2003, includes
special bonuses paid resulting from the extraordinary performance of the
Company in that year.
(2) For Mr. Fowle, Other Annual Compensation includes $74,962 for relocation
services.
(3) Represents stock options granted in 2005 under the Company's 1997 Stock
Option Plan and the 2005 Incentive Plan. For Mr. Fowle, 800 stock options
were granted in 2006, but were related to his 2005 performance.
(4) The grant date fair value of these awards, computed in accordance with the
Company's past practice under FAS 123, that would have been expensed during
2005 was $4,339 for Mr. Schoenhals, $1,875 for Mr. Johnston, $2,875 for Mr.
Turner, $20,458 for Mr. Fowle and $903 for Mrs. Powell.
(5) Options granted under the 1997 Stock Option Plan expire ten years from
grant date and become exercisable at the rate of 20% per year beginning one
year from grant date. Options granted under the 2005 Incentive Plan expire
five years from grant date and become exercisable at the rate of 25% per
year beginning one year from grant date. The shortened expiration date and
vesting schedule results in a lesser option valuation. As a result, more
options were granted to participants in 2005 compared to 2004 to compensate
for the change in value.
(6) Represents contributions made by the Company to the individual's account in
the Company's 401(k) Plan.
17
The following table sets forth total compensation for the Company's Named
Executive Officers for the years ended December 31, 2005, 2004 and 2003.
Total Compensation
For the Years ended December 31,
Name 2005 2004 2003
---- ---- ---- ----
Marvin N. Schoenhals $ 810,460 $ 830,911 $ 951,988
Karl L. Johnston 430,185 411,445 431,361
Mark A. Turner 431,153 434,137 497,107
Stephen A. Fowle 373,554 - -
Deborah A. Powell 269,874 266,486 272,663
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock options
under the Company's 2005 Incentive Plan to the Chief Executive Officer and each
of the other Named Executive Officers during 2005.
Potential Realizable Value at Assumed
Number of % of Total Annual Rates of Stock
Securities Options Price Appreciation
Underlying Granted to for Option Term (3)
Options Associates in Exercise Expiration -------------------
Name Granted (1) Fiscal Year Price (2) Date 5% 10%
---- ----------- ----------- --------- ---- --- --- -
Marvin N. Schoenhals 13,100 11.9 % $63.67 12/15/2010 $ 233,172 $ 512,660
Karl L. Johnston 5,650 5.1 63.67 12/15/2010 100,567 221,109
Mark A. Turner 8,700 7.9 63.67 12/15/2010 154,854 340,468
Stephen A. Fowle 3,000 2.7 60.00 01/03/2015 112,571 285,871
3,000 2.7 63.67 12/15/2010 53,398 117,403
Deborah A. Powell 2,700 2.5 63.67 12/15/2010 48,058 105,662
(1) Options granted under the 2005 Incentive Plan vest and become exercisable
at the rate of 25% per year beginning one year from grant date, and expire
five years from the grant date. To the extent not already exercisable, the
options generally become immediately exercisable in the event of a change
in control of the Company, generally defined as the acquisition of
beneficial ownership of 25% or more of the Company's voting securities by
any person or group of persons. The Company has previously adopted a
program permitting the award of a reload option that allows for the
additional grant of options under certain circumstances. If the grantee
uses cash to exercise options within one year of the options becoming
vested, the optionee may, within the discretion of the Stock Option
Committee, receive an equivalent number of additional options (at the then
current market price). All shares must be held for two years from the date
of receipt for the reload options to vest. The reload options also vest in
25% annual increments. Reload options will not be granted if no shares are
available for issuance under the 2005 Incentive Plan. All option grants to
Named Executive Officers were made on December 15, 2005 except for Mr.
Fowle who received 3,000 option grants on January 3, 2005 and 3,000 option
grants on December 15, 2005.
(2) In each case, the exercise or base price was no lower than the fair market
value of the Common Stock on the date of grant.
18
(3) The potential realizable dollar value of a grant consists of the product
of: (a) the difference between (i) the product of the per share market
price at the time of grant and the sum of 1 plus the adjusted stock price
appreciation rate (the assumed rate of appreciation compounded annually
over the term of the option) and (ii) the per share exercise price of the
option; and (b) the number of securities underlying the grant at fiscal
year-end.
OPTION EXERCISES AND YEAR-END OPTION VALUE
The following table sets forth information concerning the exercise of
options by the Chief Executive Officer and the other Named Executive Officers
during the last fiscal year, as well as the value of such options held by such
persons at the end of the fiscal year.
Value of Securities
Number of Securities Underlying Unexercised
Underlying Unexercised In-the Money Options
Shares Options at Fiscal Year End (1) at Fiscal Year End (2)
Acquired Value ------------------------------ ----------------------
Name at Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
Marvin N. Schoenhals 58,241 $ 2,697,273 171,040 40,270 $7,572,477 $571,060
Karl L. Johnston 65,529 2,997,722 5,310 30,060 96,689 753,918
Mark A. Turner 53,320 2,203,785 75,590 31,440 3,264,827 597,297
Stephen A. Fowle - - - 6,000 - 3,750
Deborah A. Powell 9,080 455,714 9,840 8,610 356,486 138,167
(1) For Mr. Schoenhals, 97,720 options expire February 24, 2010, all of which
are exercisable; 35,240 options expire November 16, 2010, all of which are
exercisable; 13,100 options expire December 15, 2010, all of which are
unexercisable; 24,740 options expire December 19, 2011, of which 21,040 are
exercisable and 3,700 are unexercisable; 18,360 options expire December 19,
2012, of which 10,080 are exercisable and 8,280 are unexercisable; 12,650
options expire December 18, 2013, of which 5,060 are exercisable and 7,590
are unexercisable; 9,500 options expire December 16, 2014, of which 1,900
are exercisable and 7,600 are unexercisable.
For Mr. Johnston, 5,650 options expire December 15, 2010, all of which are
unexercisable; 5,000 options expire April 26, 2011, all of which are
unexercisable; 3,560 options expire December 19, 2011, all of which are
unexercisable; 4,000 options expire February 29, 2012, all of which are
unexercisable; 6,060 options expire December 19, 2012, of which 2,020 are
exercisable and 4,040 are unexercisable; 5,350 options expire December 18,
2013, of which 2,140 are exercisable and 3,210 are unexercisable; 5,750
options expire December 16, 2014, of which 1,150 are exercisable and 4,600
are unexercisable.
For Mr. Turner, 4,280 options expire May 19, 2009, all of which are
exercisable; 9,413 options expire November 18, 2009, all of which are
exercisable; 11,087 options expire January 26, 2010, all of which are
exercisable; 16,000 options expire November 16, 2010, all of which are
exercisable; 8,700 options expire December 15, 2010 all of which are
unexercisable; 21,000 options expire December 19, 2011, of which 16,800 are
exercisable and 4,200 are unexercisable; 10,000 options expire February 29,
2012, of which 6,000 are exercisable and 4,000 are unexercisable; 12,900
options expire December 19, 2012, of which 7,740 are exercisable and 5,160
are unexercisable; 7,700 options expire December 18, 2013, of which 3,080
are exercisable and 4,620 are unexercisable.
For Mr. Fowle, 3,000 options expire December 15, 2010, of which all are
unexercisable; 3,000 options expire January 13, 2015, of which 600 are
exercisable and 2,400 are unexercisable.
For Mrs. Powell, 2,700 options expire December 15, 2010, of which all are
unexercisable; 7,700 options expire December 19, 2011, of which 6,160 are
exercisable and 1,540 are unexercisable; 4,300 options expire December 19,
2012, of which 2,580 are exercisable and 1,720 are unexercisable; 1,750
options expire December 18, 2013, of which 700 are exercisable and 1,050
are unexercisable; 2,000 options expire December 16, 2014, of which 400 are
exercisable and 1,600 are unexercisable.
(2) Based on the closing price of $61.25 per share as reported for the Common
Stock on the Nasdaq National Market on December 31, 2005 less the exercise
price. Options are considered in-the-money if the market value of the
underlying securities exceeds their exercise prices.
19
SEVERANCE POLICY
WSFS has a severance policy that provides benefits to its Chief Operating
Officers and Executive Vice Presidents (collectively, the "Executives"). The
policy provides for payments in the event of being released without cause or
following a change of control.
Release without cause - In the event an Executive is released without cause, a
minimum of six months severance and one year of professional level outplacement
will be offered. If the former Executive does not find new employment within six
months after termination, severance pay would continue for another six months,
or until the former Executive found employment, whichever occurs first. If the
former Executive finds another job at a lower rate of pay than previously
received at WSFS, then WSFS would make up the difference until the second
six-month period ends. Health benefits would continue at the Associate rate
through the severance period.
Change in control - Benefits would be paid to an Executive released without
cause within one year of change in control or if offered a position that is not
within 35 miles of their current work-site and at their current WSFS salary and
bonus opportunity. The Executive would receive 24 months base salary severance
offset by the value arising from the acceleration of stock option vesting
triggered by the change in control. The value of the accelerated vesting would
account for no more than 12 months of the 24-month minimum commitment. Twelve
months of executive level outplacement will be offered and health benefits would
continue at the Associate rate through the 24-month period.
In the event an Executive decides to leave WSFS after being offered the same
salary and bonus opportunity and the position is within 35 miles of their work
location, then the value of the severance benefit will equal at least 12 months
base pay. The severance benefit calculation includes the value of accelerated
vesting of stock options. If the value of the accelerated vesting of stock
options is less than 12 months of base pay, then severance pay will be added to
the value of the accelerated options so that it equals 12 months of base pay. No
additional severance will be paid if the value of accelerated options is greater
than, or equal to, 12 months of base pay. Six months of professional level
outplacement will be offered and health benefits would continue at the Associate
rate through the 12-month period.
Based on salary levels at December 31, 2005, the maximum benefit that would be
received by each Executive under the WSFS severance policy, exclusive of health
benefit and executive outplacement costs, would be as follows: Mr. Johnston
$462,000, Mr. Turner $484,000, Mr. Fowle $360,000 and Ms Powell $320,120.
20
NON-ASSOCIATE DIRECTOR COMPENSATION
The following table sets forth compensation for the year ended December 31, 2005
for the Company's non-Associate directors.
Fees
earned or Stock Option All Other
Name Total paid in cash Awards Awards (1) Compensation (2)
---- ----- ------------ ------ ---------- ----------------
Charles G. Cheleden $87,020 $ 52,100 $ 34,920 $ - $ -
John F. Downey 73,220 38,300 34,920 - -
Linda C. Drake 54,220 19,300 34,920 - -
David E. Hollowell 73,470 38,550 34,920 - -
Joseph R. Julian 69,520 34,600 34,920 - -
Dennis E. Klima 59,320 24,400 34,920 - -
Calvert A. Morgan, Jr. 199,220 23,300 34,920 - 141,000
Thomas P. Preston 52,370 17,450 34,920 - -
Scott E. Reed - - - - -
Claibourne D. Smith 69,420 34,500 34,920 - -
Eugene W. Weaver 76,020 41,100 34,920 - -
R. Ted Weschler 66,570 31,650 34,920 - -
(1) The grant date fair value of these awards, computed in accordance with the
Company's past practice under FAS 123, that would have been expensed during 2005
would have been $465.
(2) Mr. Morgan's compensation as a special advisor to management is discussed on
page 14.
BUSINESS RELATIONSHIPS AND RELATED TRANSACTIONS
During 2005, Thomas P. Preston was a partner with the law firm of Blank Rome,
LLP. The law firm represented the Company and its affiliates in certain matters
during fiscal year 2004. The Company expects Mr. Preston's firm to continue such
representation in fiscal year 2006.
Certain directors and executive officers of the Company and their associates
were customers of, and had transactions with, the Company and the Bank in the
ordinary course of business during fiscal year 2005. Similar transactions may be
expected to take place with the Company and the Bank in the future. Loans and
commitments included in such transactions were made on substantially the same
terms, including interest rate and collateral, as those prevailing at the time
for comparable transactions with other persons and did not involve more than the
normal risk of collectibility, nor did such loans present other unfavorable
features to the Company. Loans and commitments to directors and executive
officers of the Company by the Bank are subject to limitations and restrictions
under Federal banking laws and regulations with which the Bank believes it has
complied in all material respects.
21
PROPOSAL 2 -
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company, upon recommendation of the Audit
Committee, has re-appointed, subject to stockholder ratification, KPMG LLP, as
independent auditors of the Company for the year ending December 31, 2006. KPMG
LLP has served as the Company's independent auditors since 1994. A
representative of KPMG LLP is expected to be present at the Annual Meeting to
respond to appropriate questions and will have the opportunity to make a
statement if they desire to do so.
Principal Accounting Firm Fees
In connection with the audit of the 2005 financial statements, the Company
entered into an engagement letter with KPMG LLP that sets forth the terms by
which KPMG will perform audit services for the Company. That agreement is
subject to alternative dispute resolution procedures and an exclusion of
punitive damages.
Audit Fees. The aggregate fees billed by KPMG LLP for professional services
rendered for the audit of the Company's annual consolidated financial statements
and for the review of the consolidated financial statements included in the
Company's quarterly reports on Form 10Q for the fiscal years ended December 31,
2005 and 2004 were $700,000 and $648,000, respectively. In each of the years
2005 and 2004, the costs associated with the Company's compliance with Section
404 of the Sarbanes-Oxley Act of 2002 were $400,000.
Audit Related Fees. The aggregate fees billed by KPMG LLP for assurance and
related services primarily related to the audit of the financial statements, the
review of the quarterly financial statements and due diligence activities on
proposed transaction for the years ended December 31, 2005 and 2004 were $17,000
and $16,000, respectively.
Tax Fees. The aggregate fees billed by KPMG LLP for professional services
rendered for tax compliance, tax advice or tax planning for the years ended
December 31, 2005 and 2004 were $63,000 and $90,000, respectively.
All Other Fees. The aggregate fees billed by KPMG LLP for professional services
rendered for services or products other than those listed under the captions
"Audit Fees," "Audit-Related Fees," and "Tax Fees" for both the years ended
December 31, 2005 and 2004, were $0.
The Audit Committee has determined that the non-audit services performed by its
principal accountants during 2005 were compatible with maintaining the principal
accountants' independence.
It is the Audit Committee's policy to approve all audit and non-audit services
prior to the engagement of the Company's independent auditor to perform any
service. Under certain circumstances, management is authorized to spend up to 5%
of the total audit fees as approved by the Audit committee in the Engagement
Letter without obtaining any additional approval. These additional fees are
reported to the Audit Committee on a timely basis. Additional audit fees ranging
from 5% to 10% of the total audit fees as approved by the Audit Committee in the
Engagement Letter require the approval of the Chairman of the Audit Committee
prior to the engagement. These additional fees are reported to the other
Committee members on a timely basis. Additional audit fees which exceed 10% of
the total audit fees
22
as approved by the Audit Committee in the Engagement Letter require the approval
of the full Audit Committee prior to the engagement.
No services were approved pursuant to the de minimus exception of the
Sarbanes-Oxley Act of 2002. All of the services listed above for 2005 were
approved by the Audit Committee prior to the service being rendered.
KPMG LLP has advised the Company that neither the firm, nor any member of the
firm, has any financial interest, direct or indirect, in any capacity in the
Company or its subsidiaries.
The Board of Directors Recommends Voting "FOR" Proposal 2.
23
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to regulations promulgated under the Exchange Act, the Company's
officers and directors and all persons who beneficially own more than ten
percent of the Common Stock ("Reporting Persons") are required to file reports
with the SEC detailing their ownership and changes of ownership in the Common
Stock and to furnish the Company with copies of all such ownership reports that
are filed. Based solely on the Company's review of the copies of such ownership
reports which it has received in the past fiscal year or with respect to the
past fiscal year, or written representations from the Reporting Persons that no
annual report of changes in beneficial ownership were required, the Company
believes that during fiscal year 2005 the Reporting Persons have complied with
such reporting requirements.
ADVANCE NOTICE OF CERTAIN MATTERS
TO BE CONSIDERED AT AN ANNUAL MEETING
The bylaws of the Company provide an advance notice procedure for certain
business, or nominations to the Board of Directors, to be brought before the
Annual Meeting. In order for a stockholder to properly bring business before the
Annual Meeting or to propose a nominee to the Board of Directors, the
stockholder must give written notice to the Secretary of the Company not less
than sixty nor more than ninety days prior to the anniversary date of the
mailing date of the Company's proxy statement for the immediately preceding
Annual Meeting. The notice must include the stockholder's name and address as
they appear on the records of the Company, number of shares beneficially owned
by the stockholder, a brief description of the proposed business, the reasons
for bringing the business before the Annual Meeting and any material interest of
the stockholder in the proposed business. In the case of nominations to the
Board of Directors, certain information regarding the nominee must also be
provided.
STOCKHOLDER PROPOSALS FOR 2007 ANNUAL MEETING
It is anticipated that the proxy statement and form of proxy for the 2007 Annual
Meeting of Stockholders will be mailed during March of 2007. Stockholder
proposals intended to be presented at the 2007 annual meeting of stockholders of
WSFS Financial Corporation must be received by November 24, 2006, to be
considered for inclusion in the proxy statement and form of proxy relating to
such meeting and should be addressed to the Secretary at the Company's principal
office.
ADDITIONAL INFORMATION
No matters other than those set forth in the Notice of Meeting accompanying this
Proxy Statement are expected to be presented to stockholders for action at the
Annual Meeting other than matters incident to the conduct of the Annual Meeting.
However, if other matters are presented which are proper subjects for action by
stockholders, and which may properly come before the meeting, it is the
intention of those named in the accompanying proxy to vote such proxy in
accordance with the determination of a majority of the Board of Directors upon
such matters.
24
MISCELLANEOUS
The expenses of the solicitation of the proxies, including the cost of preparing
and distributing the Company's proxy materials, the handling and tabulation of
proxies received and charges of brokerage houses and other institutions,
nominees or fiduciaries in forwarding such documents to beneficial owners, will
be paid by the Company. In addition to the mailing of the proxy materials,
solicitation may be made in person or by telephone or other modes of electronic
communication by the Company. The Company's directors and management will
receive no compensation for their proxy solicitation services other than their
regular salaries and overtime, if applicable, but may be reimbursed for
out-of-pocket expenses.
ANNUAL REPORT, FINANCIAL STATEMENTS AND CODE OF ETHICS
The Company's Annual Report to Stockholders for the fiscal year ended December
31, 2005, including financial statements prepared in conformity with generally
accepted accounting principles, accompanies this Proxy Statement. Such Annual
Report is not part of the Company's proxy materials. A copy of the Company's
Annual Report on Form 10-K for the Fiscal Year Ended December 31, 2005 (without
exhibits) as filed with the SEC will be furnished without charge to stockholders
as of the Record Date upon written request to: Investor Relations Department,
WSFS Financial Corporation, 838 Market Street, Wilmington, Delaware, 19801.
The Company has adopted a Code of Ethics that applies to its principal executive
officer, principal financial officer, principal accounting officer or controller
or persons performing similar functions. A copy of the Code of Ethics is
available on the Company's website at www.wsfsbank.com or available free upon
request by writing to: Investor Relations Department, WSFS Financial
Corporation, 838 Market Street, Wilmington, Delaware 19801.
25
This Proxy is Solicited on Behalf of the Board of Directors
WSFS FINANCIAL CORPORATION
for the
2006 Annual Meeting of Stockholders
The undersigned hereby appoints Marvin N. Schoenhals and Mark A. Turner, or
either of them, with full power of substitution, to act as attorneys and proxies
for the undersigned and to vote all shares of Common Stock of WSFS Financial
Corporation, which the undersigned is entitled to vote, at the Annual Meeting of
Stockholders to be held on April 27, 2006 at 4:00 p.m., or at any adjournments
thereof, as specified on the reverse side:
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY.
ANNUAL MEETING OF STOCKHOLDERS OF
WSFS FINANCIAL CORPORATION
April 27, 2006
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
---------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES AND ITEMS LISTED BELOW.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
---------------------------------------------------------------------------------
1. Election of Directors:
NOMIMEES:
[_] FOR ALL NOMINEES O Linda C. Drake
O David E. Hollowell
[_] WIHHOLD AUTHORITY O Scott E. Reed
FOR ALL NOMINEES O Claibourne D. Smith
[_] FOR ALL EXCEPT Each for a three year term
(See instructions below) expiring 2009
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: O
FOR AGAINST ABSTAIN
2. Ratification of the appointment of KPMG, LLP [_] [_] [_]
as independent auditors for the fiscal year ending
December 31, 2006.
The proxy is revocable and, when properly executed will be voted in the manner
directed hereby by the undersigned. If no directions are made, this proxy will
be voted FOR each of the nominees and the other proposals. The undersigned, by
executing and delivering this proxy, revokes the authority given with respect to
any earlier dated proxy submitted by the undersigned.
Unless contrary direction is given, the right is reserved in the sole discretion
of the Board of Directors to distribute votes among some or all of the above
nominees in a manner other than equally so as to elect as directors the maximum
possible number of such nominees.
In their discretion the proxies are authorized to vote upon such other business
as may properly come before the Annual Meeting.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders, a Proxy Statement and Annual Report of WSFS Financial Corporation.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED
ENVELOPE. FOR AGAINST ABSTAIN FOR ALL NOMINEES WITHHOLD AUTHORITY FOR ALL
NOMINEES FOR ALL EXCEPT (See instructions below)
Signature of Stockholder ____________________ Date: _________ Signature of Stockholder ____________________ Date: _________
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.
To change the address on your account, please check the box at right and [_]
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted
via this method.