-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, TNYlOHPEIQXq2U1+GtXSFPuLJJi06ODDt8eriZOBASkSDF0iKFWZQNsIXBfx4QsF WaLJ1cN19Rf8WVbOnRcvCA== 0000036340-94-000001.txt : 19940302 0000036340-94-000001.hdr.sgml : 19940302 ACCESSION NUMBER: 0000036340-94-000001 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940428 FILED AS OF DATE: 19940228 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREMIER FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0000036340 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 362852290 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRE 14A SEC ACT: 34 SEC FILE NUMBER: 000-13425 FILM NUMBER: 94513413 BUSINESS ADDRESS: STREET 1: 27 WEST MAIN ST STE 101 CITY: FREEPORT STATE: IL ZIP: 61032 BUSINESS PHONE: 8152333671 FORMER COMPANY: FORMER CONFORMED NAME: FIRST FREEPORT CORP DATE OF NAME CHANGE: 19840710 PRE 14A 1 1994 PROXY WITH TABLES - GRAPH FILED SEPARATELY NOTICE OF ANNUAL MEETING To The Stockholders of Premier Financial Services, Inc. The Annual Meeting of Stockholders of Premier Financial Services, Inc. a Delaware corporation (the "Company"), will be held at the Best Western Stephenson Hotel, 109 South Galena Ave., Freeport, Illinois, at 10:00 A.M., Freeport time, on Thursday, April 28, 1994 for the following purposes: 1. To elect three Class III directors for a term of three years. 2. To consider and vote upon a proposal to amend the Certificate of Incorporation to increase the number of authorized shares of the Company's Common Stock from 2,500,000 to 15,000,000, which proposal is more fully described in the Proxy Statement annexed to this notice. 3. To transact and act upon such other matters or business as may properly come before said meeting, or any adjournment or adjourn- ments thereof. The Board of Directors of the Company does not know of any other matters requiring action by the stockholders to come before the Annual Meeting. A complete list of stockholders entitled to vote at the meeting shall be open for examination by any stockholder for any purpose germane to the meeting, during ordinary business hours for a period of ten days prior to the meeting at Premier Financial Services, Inc.'s corporate office, 27 West Main Street, Suite 101, Freeport, Illinois. The close of business on February 28, 1994 has been selected by the Board of Directors as the record date for the determination of stockholders entitled to notice of and to vote at the meeting. BY ORDER OF THE BOARD OF DIRECTORS Michael J. Lester ***IMPORTANT*** Secretary WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE SIGN THE ACCOMPANYING PROXY AND MAIL IT NOW IN THE March 25, 1994 ENCLOSED ENVELOPE. PROXY STATEMENT GENERAL INFORMATION This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Premier Financial Services, Inc. (the "Company") for use at the 1994 Annual Meeting of Stockholders, (the "Annual Meeting"), and any adjournment or adjournments thereof, to be held on Thursday, April 28, 1994, at 10:00 A.M., Freeport time, at the Best Western Stephenson Hotel, 109 South Galena Ave., Freeport, Illinois. Only holders of record of shares of common stock of the Company (the "Common Stock") at the close of business February 28, 1994 will be entitled to notice of and to vote at the Annual Meeting, each share being entitled to one vote. On such date there were 2,163,107 shares of Common Stock outstanding. The presence at the Annual Meeting, either in person or by proxy, of the holders of a majority of the voting powers of the shares outstanding and entitled to vote is necessary to constitute a quorum for the transaction of business. The inspectors of election will treat abstentions (including broker non- votes) as shares present for purposes of determining the existence of a quorum. Any stockholder who executes the enclosed proxy may revoke it any time before it has been exercised by a later dated proxy or by giving notice of such revocation to the Company in writing or in an open meeting before such proxy is voted. Attendance at the meeting will not in and of itself constitute the revocation of a proxy. Otherwise, all properly executed proxies received at or before the meeting will be voted in accordance with the instructions contained therein. If no instructions are given, such proxies will be voted: (1) FOR the election of directors as stated below, (2) FOR the proposal to increase the number of shares of Common Stock the Company is authorized to issue from 2,500,000 to 15,000,000, and (3) in the discretion of the named proxies, upon such other matters as may properly come before the meeting. The cost of solicitation will be borne by the Company. In addition to the use of the mails, proxies may be solicited by persons regularly employed by the Company or its subsidiaries, by personal interview, telephone or telegraph. Arrangements may also be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of the stock held of record by such persons, and the Company may reimburse such brokerage houses, custodians, nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them in connection therewith. A copy of the Company's Annual Report for the year ended December 31, 1993, including audited financial statements has previously been sent to stockholders. The approximate date on which this proxy statement and form of proxy were first sent to stockholders was March 25, 1994. PROPOSAL 1: ELECTION OF DIRECTORS INFORMATION CONCERNING NOMINEES The Company's Restated Certificate of Incorporation provides that the Board of Directors shall consist of not fewer than five nor more than twenty directors, with the specific number to be fixed from time to time by a resolution adopted by at least a majority of the Board of Directors. The number of directors is currently fixed at eight. The Company's Restated Certificate of Incorporation further provides that the Board of Directors is to be divided into three classes that are to be as nearly equal in number as possible. The terms of four directors who are presently serving on the Board, Donald E. Bitz, David L. Murray, Joseph C. Piland and Harold L. Fenton, expire at the Annual Meeting. The Board of Directors has renominated Mr. Bitz, Mr. Murray and Mr. Piland for election as Class III directors for a term ending at the Annual Meeting in 1997 or until their successors are elected and qualified. Mr. Fenton intends to retire from the Board of Directors upon expiration of his term. Unless otherwise indicated, proxies will be voted for the election of the nominees below. If a nominee becomes unable or unwilling to serve, proxies will be voted for such persons, if any, as shall be designated by the Board. Each nominee has agreed to serve as a director, if elected, and the Board of Directors does not presently know of any circumstances which would render any nominee named herein unavailable. The Company's by-laws provide that all elections of directors shall be decided by a plurality vote. Since three positions are to be filled on the Board of Directors, the three nominees receiving the highest number of votes cast at a meeting at which a quorum is present will be elected as directors. Abstentions (including broker non- votes) will not be counted in determining the number of votes received by any nominee. Class III Nominees (If elected, term will expire in 1997) Principal Occupation and Year Name Age First Elected a Director (1) Donald E. Bitz 65 Retired Chairman of the Board and Chief Executive Officer, Economy Fire and Casualty Co. (insurance company) - 1979 David L. Murray 51 Executive Vice President and Chief Financial Officer of the Company - 1981 Joseph C. Piland 60 Educational Consultant and Retired President, Highland Community College - 1987 - - - - - - - - - - - - Continuing Directors - - - - - - - - - - - - - - Class I (Term expires 1995) Principal Occupation and Year Name Age First Elected a Director (1) Charles M. Luecke 64 President, Luecke Jewelers, Ltd. (jewelry store) - 1978 H. Barry Musgrove 59 Chairman of the Board & President, Frantz Manufacturing Company (manufacturer of overhead doors and antifriction products) - 1987 Class II (Term expires 1996) R. Gerald Fox (2) 57 President & Chief Executive Officer, F.I.A. Financial Publishing Company (publisher of financial books and periodicals) - 1993 Richard L. Geach 52 Chairman of the Board, President & Chief Executive Officer of the Company - 1978 Edward G. Maris 58 Vice President - Finance, Secretary and Treasurer, Northwestern Steel and Wire Company (raw steel production and finished steel/wire products) - 1990 (1) Each director has engaged in the principal occupation indicated for at least five years, except as follows: - Joseph C. Piland has been an Educational Consultant since 1992. Prior to 1992, he was President, Highland Community College, for more than five years. - Donald E. Bitz retired as Chairman of the Board & Chief Executive Officer, Economy Fire & Casualty Company in 1993, a position he had held for more than five years. (2) R. Gerald Fox was named to the Board of Directors in 1993 to fill the unexpired term of Thomas D. Flanagan, who was unable to continue for personal reasons. BOARD AND COMMITTEE MEETINGS During 1993, the Board of Directors held 9 meetings. Each Director attended more than 75% of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings held by all committees of the Board of Directors on which he served. The Board of Directors has established an Executive Committee, a Compensation Committee, and an Audit Committee to assist in the discharge of its responsibilities in situations where it is impractical and/or unnecessary to meet as a full Board of Directors. The current members of the Executive Committee are Messrs. Donald E. Bitz, Richard L. Geach, Joseph C. Piland and Harold L. Fenton, who is retiring from the Board of Directors when his term expires on April 28, 1994. Among other functions, the Committee serves as a nominating committee which selects and nominates members of the Board of Directors. Nominees recommended by stockholders in writing to the Secretary of the Company at 27 West Main Street, Suite 101, Freeport, Illinois 61032, in accordance with the procedures set forth below under "Notice Provisions for Stockholder Nominations of Directors", will be considered by the Committee. The Committee did not meet in 1993. The current members of the Compensation Committee are Messrs. Donald E. Bitz, Edward G. Maris and H. Barry Musgrove. Among other functions, the Committee makes recommendations to the Board of Directors as to the compensation of the Executive Officers and outside Directors as well as with respect to the Company's Benefit Programs. The Committee met twice in 1993. The current members of the Audit Committee are Messrs. Charles M. Luecke and Joseph C. Piland. The Committee reviews the financial audits of the Company and its subsidiaries, both internal and independent, and examines matters relating to the financial statements of the Company. The Committee met two times in 1993. DIRECTORS FEES AND COMPENSATION As of December 31, 1993, Directors who were not employees of the Company were paid an annual retainer fee of $3,000, directors' fees of $500 per meeting attended, and $250 per meeting attended for committee participation. EXECUTIVE OFFICERS The following table sets forth the names and ages of the executive officers of the Company, as well as their respective positions with the Company and its subsidiaries: (1) Name Age Position(s) (2) Richard L. Geach 52 Chairman of the Board, President, & Chief Executive Officer of the Company, Premier Acquisition Company, First Bank North, First Bank South, First National Bank of Northbrook, First Security Bank of Cary-Grove, and a director of all Subsidiary Companies. David L. Murray 51 Executive Vice President/Chief Financial Officer and a Director of the Company and of all Subsidiary Companies. Kenneth A. Urban 55 Division Head, Non-Bank Products Division of the Company, President, Premier Trust Services, Inc., and a Director of all Subsidiary Companies. Michael J. Lester 46 Division Head, Product and Sales Support Division of the Company, President, Premier Operating Systems, Inc. and a Director of all Subsidiary Companies. Lan Pinney 54 Division Head, Community Banking Division of the Company, and a Director of all Subsidiary Companies. Scott Dixon 39 Division Head, Retail Banking Division of the Company, and a Director of all Subsidiary Companies. Steve E. Flahaven 38 Division Head, Commercial Banking Division of the Company, and a Director of all Subsidiary Companies. (1) The Company's "subsidiaries" as used herein consist of First Bank North, First Bank South, First National Bank of Northbrook, First Security Bank of Cary-Grove, Premier Acquisition Company, Premier Trust Services, Inc., Premier Insurance Services, Inc., and Premier Operating Systems, Inc. (2) Each executive officer has held the position or office indicated [or other comparable responsible position(s)] for at least five years, except that all offices and positions with Premier Acquisition Company have been held only since 1992 when Premier Acquisition Company was organized, and all positions with First National Bank of Northbrook and First Security Bank of Carey- Grove have been held only since 1993 when such banks were acquired. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Under regulations of the Securities and Exchange Commission, persons who have power to vote or dispose of Common Stock, either alone or with others, are deemed to be beneficial owners of such Common Stock. Because the voting or dispositive power of certain shares of Common Stock listed in the following table is shared, the same shares in such cases are listed opposite more than one name in the table. The total number of shares of Common Stock stated in the Table as being owned, directly or indirectly, as of the date indicated, after elimination of such duplication is 1,006,626 shares; (40.91 %) of the outstanding Common Stock. The following table sets forth the holders of more than 5% of the voting securities of the Company, as known by the Company as of February 28, 1994: Amount & Title of Name and Address of Beneficial Nature of Per Cent Class Owner Beneficial of Class Ownership Common Premier Trust Services, Inc. 373,275 (1) 15.17% 110 West Main Street Freeport, IL 61032 Premier Financial Services, Inc. 218,441 (2) 8.88% Savings and Stock Plan c/o Premier Trust Services, Inc. 110 W. Main Street Freeport, IL 61032 NBD Bank N.A. 200,000 (3) 8.13% Trustee of the Thomas D. Flanagan Blind Voting Trust dated 7/15/93 P.O. Box 77975 Detroit, MI 48277 American Midwest Bank & Trust 189,873 (4) 7.72% Trustee of Trust Number 6486 u/t/a dated 7/15/93 1600 West Lake Street Melrose Park, IL 60160 Richard L. Geach 149,728 (5) 6.08% 1944 Mesa Drive Freeport, IL 61032 Harold L. Fenton 124,090 (6) 5.04% 101 East Point Drive Galena, IL 61036 (1) Includes 218,441 shares listed opposite Premier Financial Services, Inc. Savings and Stock Plan. ("Savings and Stock Plan"). The shares are held in various capacities with Premier Trust Services, Inc. The trust company had full investment power with regard to 287,609 shares (11.69%), shared investment power with regard to 5,505 shares (.22%), and no investment power with regard to the remaining 80,161 shares (3.26%). Such Trust Company had no voting authority with regard to any shares held. (2) Includes 88,154 shares in the Employee Stock Ownership portion of the Plan ("ESOP"), and 130,287 shares held in the 401(K) and profit sharing portions of the Plan. Investments in shares in the 401(K) and profit sharing portions of the Plan are discretionary with individual participants. The Company has no voting authority with respect to any shares held in the Savings and Stock Plan. (3) Represents shares of Common Stock issuable within 60 days upon the conversion of $5,700,000 of the Company's Series B Convertible (non- voting) Preferred Stock, which is convertible into Common Stock at $28.50 per share. Terms of the Trust direct that shares of Common Stock, (if any) be voted in proportion to all other shares of Common Stock with respect to any issue requiring a vote of the holders of the Common Stock. (4) Includes 181,102 shares of Common Stock and 8,771 shares of Common Stock, issuable upon the conversion of $250,000 of the Company's Series B Convertible (non-voting) Preferred Stock, which is convertible into Common Stock at $28.50 per share. Terms of the Trust direct that shares of Common Stock be voted in proportion to all other shares of Common Stock with respect to any issue requiring a vote of the holders of the Common Stock. (5) Includes 60,144 shares held by Janice (Mrs. Richard L.) Geach, 20,840 shares held in the Savings and Stock Plan, and 16,761 option shares which are exercisable within 60 days of February 28, 1994. Mr. Geach has full voting power over all shares held in the Savings and Stock Plan and investment power over the shares held in the 401(K) and profit sharing portions of the Plan. Mr. Geach disclaims beneficial ownership of the shares held by his wife. (6) Includes 25,685 shares held by Gwen (Mrs. Harold L.) Fenton. Mr. Fenton disclaims beneficial ownership of the shares held by his wife. The following table sets forth the number of shares of Common Stock owned beneficially, directly or indirectly, by directors and nominees of the Company, certain executive officers of the Company, and by directors, nominees and executive officers as a group as of February 28, 1994: Title of Name & Address of Amount & Nature of Per Cent Class Beneficial Owner Beneficial Ownership (1) of Class Common Richard L. Geach 149,728 (2) (3) 6.08% Edward G. Maris 772 * Donald E. Bitz 15,947 * David L. Murray 18,059 (2) (3) * Joseph C. Piland 2,444 * Harold L. Fenton 124,090 5.04% R. Gerald Fox 500 * Charles M. Luecke 6,010 * H. Barry Musgrove 7,819 * Kenneth A. Urban 22,114 * All 14 Directors, 431,607 (2) (3) 17.54% Nominees & Executive Officers as a group * Indicates less than 1% of class. (1) Includes 89,504 shares held by or for the benefit of wives and children or by relationship. Directors and officers disclaim beneficial ownership of such shares. (2) Includes shares held in the Savings and Stock Plan. Officers have full voting power over all shares and investment power over shares held in the 401(K) and profit sharing portions of the Plan. A summary of those shares is as follows: Name Number of Shares Richard L. Geach 20,840 David L. Murray 1,891 Kenneth A. Urban 7,134 All 7 executive officers as a 51,700 group (3) Includes shares issuable pursuant to stock options with respect to which individuals have a right to acquire beneficial ownership within 60 days of February 28, 1994. A summary of those shares is as follows: Name Number of Shares Richard L. Geach 16,761 David L. Murray 13,770 Kenneth A. Urban 11,778 All 7 executive officers as a 76,642 group EXECUTIVE COMPENSATION The following table sets forth a three-year summary of compensation for the Chief Executive Officer and each of the four most highly compensated executive officers of the Company whose total salary and bonus payments exceeded $100,000 in the year ended December 31, 1993. Total salary and bonus payments paid to two of the four most highly compensated officers of the Company in the year ended December 31, 1993 did not exceed $100,000. Annual Compensation Long Term Compensation __________________________________________ ___________________________
Awards Payouts ____________ ____________ Other Annual Long Term All Other Name and Compensation Stock Incentive Compensation Principal Position Year Salary ($) Bonus ($) (1) Options (#) Payouts ($) (2) ____________________ ____ ____________ ____________ ____________ ____________ ____________ ____________ Richard L. Geach, 1993 173,250.00 .00 4,800.00 4,550.00 .00 10,240.00 President & CEO 1992 157,450.00 55,459.00 4,800.00 .00 .00 14,117.00 of the Company 1991 154,118.00 58,493.00 3,594.00 4,851.00 .00 10,145.00 David L. Murray, 1993 113,940.00 .00 4,800.00 2,385.00 .00 7,050.00 Executive Vice 1992 104,980.00 35,026.00 4,800.00 .00 .00 9,259.00 President & Chief 1991 98,200.00 31,988.00 3,594.00 2,190.00 .00 6,673.00 Financial Officer of the Company Kenneth A. Urban, 1993 103,300.00 .00 4,800.00 1,682.00 .00 6,424.00 Division Head, 1992 98,992.00 30,019.00 4,800.00 .00 .00 8,688.00 Non-Bank Services 1991 92,873.00 29,229.00 3,594.00 1,401.00 .00 6,248.00 Division of the Company (1) Taxable allowance for use of automobiles owned by the executive officer for business purposes. (2) Amounts accrued for the benefit of the named individuals under the Company's Savings and Stock Plan.
The following table sets forth information regarding stock options exercised by each of the named executive officers during the year ended December 31, 1993, as well as the value of unexercised stock options outstanding at fiscal year end. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Number of Unexercised Value of Unexercised Options In-The-Money Options at Fiscal Year End (#) at Fiscal Year End ($) (1) Shares ___________________________ ___________________________ Acquired on Value Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable ____________________ ____________ ____________ ____________ _____________ ____________ _____________ Richard L. Geach - - 16,761 11,523 208,569 74,963 David L. Murray - - 13,770 6,447 174,635 45,372 Kenneth A. Urban - - 11,778 4,587 151,124 32,469 (1) Based on the fair market value (closing bid price) of the Common Stock of the Company on December 31, 1993, as reported on the National Association of Securities Dealers Automated Operations System-National Market System ("NASDAQ-NMS).
The following table sets for awards made under the Company' 1988 Non-Qualified Stock Option Plan during the fiscal year ended December 31, 1993:
STOCK OPTIONS GRANTED IN LAST FISCAL YEAR (1) Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Individual Grants Term (2) ________________________________________________________________________________ ___________________________ % of Total Options Granted to Exercise or Options Employees in Base Price Expiration Name Granted (#) Fiscal Year ($/Share)(2) Date 5 % ($) 10 % ($) ____________________ ____________ ____________ ____________ ____________ ____________ ____________ Richard L. Geach 4,550 31.32 21.50 09/28/03 61,516 155,883 David L. Murray 2,385 16.42 21.50 09/28/03 32,245 81,710 Kenneth A. Urban 1,682 11.58 21.50 09/28/03 22,741 57,625 (1) The Company's 1988 non-qualified stock option plan provides that the Board of Directors may grant options to key employees to purchase shares of Common Stock. Up to 127,338 shares of Common Stock have been authorized for issuance pursuant to the Plan. Options may be granted from time-to-time within 10 years of the effective date of the Plan (January 28, 1988) for any number of shares, and upon such terms and conditions, that the Board of Directors judges desirable. Each option granted under the Plan is evidenced by an agreement subject to, among others, the following terms and conditions; 1) the option price may not be less than the fair market value of the shares on the date of grant, 2) exercised options must be paid for in full in cash at the time of exercise, and 3) options granted will expire as specified in the agreement, but in no case later than 10 years from date of grant. (2) The fair market value of the Common Stock of the Company (i.e., the closing bid price) as reported on NASDAQ-NMS on September 28, 1993, the date of grant.
The following table sets forth awards made under the Company's 1990 Performance Unit Plan during the fiscal year ended December 31, 1993:
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR Estimated Future Payouts Under Non-Stock Price-Based Plans _______________ Performance or Other Period Number Until of Maturation Name Units (#) or Payout Target ($) (1) ____________________ ____________ _______________ _______________ Richard L. Geach 345 5 Years 3,140 David L. Murray 321 5 Years 2,921 Kenneth A. Urban 291 5 Years 2,648 (1) Payments under the Plan are based on improvement in weighted average earnings per share, with the grant year given a weighting of (1) and the fourth year following the year of grant a weighting of (5). Each unit is given a value of 10X five year weighted average earnings per share. There are no "threshold" (i.e., minimum) or maximum payout limits provided for by the plan. The "target" (i.e.,estimated) payout is based upon the following assumptions; a) Base weighted average earnings per share - $1.77. (Weighted average earnings per share for the 5 years ended December 31, 1992). c) Earnings per share in year one (1993) - $1.64. d) Assumed annual improvements in earnings per share; year 2, 40%, years 3-5, 10% per year.
The Company provides a defined benefit Pension Plan for its employees. Benefits are calculated under a career average formula ba the highest 25 years of salary. The formula provides that for each year of service a participant earns a benefit of 1.15% of compensation plus .65% of compensation in excess of the greater of one half of the covered compensation or $10,000 for a person reaching 65 in the related calendar year. Such covered compensation level in 1993 was $11,400. Compensation covered by the Plan includes cash and other annual compensation exclusive of any cash bonuses. Compensation covered by the Plan for the year ended December 31, 1993, as shown in the Executive Compensation Table, included $178,050 for Richard L. Geach, $118,740 for David L. Murray and $108,100 for Kenneth A. Urban As of December 31, 1993, Mssrs. Geach, Murray and Urban were credited with 12, 23, and 25 years of service respectively. The following table sets forth the estimated annual benefits payable upon retirement at age 65 to persons in certain specified compensation and years-of- service classifications: Compensation 15 years of 20 years of 25 years of service service and over $ 50,000 12,389 16,518 20,648 100,000 25,889 34,518 43,148 150,000 39,389 52,518 65,648 200,000 52,889 70,518 88,148 250,000 66,389 88,518 110,648 300,000 79,889 106,518 133,148 BOARD COMPENSATION COMMITTEE REPORT The Compensation Committee of the Board of Directors is responsible for establishing the policies and procedures which determine the compensation of the Company's Executive Officers. The Committee sets base cash compensation and potential bonus compensation annually for the Chief Executive Officer and other Executive Officers. In addition, the Committee has exclusive authority to grant stock options to Executive Officers. The Committee considers both internal and external data in determining officers' compensation, including input from outside compensation consultants and independent executive compensation data. In creating policies and making decisions concerning executive compensation, the Compensation Committee seeks to: 1. ensure that the executive team has clear goals and accountability with respect to expected corporate performance; 2. establish pay opportunities that are competitive within the Company's industry, consistent with it's position in the marketplace and the markets within which it operates; 3. assess results fairly and regularly in light of expected Company performance; and 4. align pay and incentives with the long-term interests of the Company's shareholders. The Chief Executive Officer (CEO) and all Executive Officers are included in a salary program adopted for all employees of the Company. The objective of the Company's salary program is to help ensure that the organization is able to attract, retain and motivate the employees necessary to achieve its goals while doing so in the most cost-effective way possible. It is our policy that a salary range be established for each position within the Company, and that these ranges be (a) internally equitable (i.e., fair in comparison to ranges established for other positions within the Company), and (b) competitive when compared with the rates paid and ranges utilized by other employers for comparable positions. Each range is divided into quartiles, with the midpoint approximating the average salary paid for comparable positions within the Industry. In determining Industry averages, the Committee reviews a number of external surveys, including surveys provided by banking industry trade groups as well as private firms specializing in compensation. Comparisons focus primarily on Banks and/or Bank Holding Companies of similar size and with similar geographic/market characteristics. It is also our policy that each employee will receive a rate of pay that falls within the range that has been established for his or her position. The placement of each employee's salary within the range that has been established for his or her position is based upon a formal evaluation of the employee's job performance. The committee reviews the internal equitability and external competitiveness of salary ranges anually. Performance Incentives The Company utilizes both a Short Term Incentive Program (i.e., Bonuses) and a Long Term Incentive Program (i.e., a combination of Stock Options and Performance Units). These programs are utilized to motivate the CEO and other executive officers to manage towards improved shareholder return. The Short Term Incentive Program rewards executive officers with cash bonuses for surpassing the annual financial plan with regard to earnings. Each year, a financial plan is approved by the Board of Directors. The executive bonus program is then approved based upon that plan, and provides for bonuses only if the financial plan is exceeded. The size of any bonus, which may range from 10.00% - 40.00% of salary, is dependent upon the amount by which actual financial performance exceeds the plan. The Long Term Incentive Program combines the use of Stock Options and Performance Units. Each executive officer may be granted a combination of options and performance units based upon a formula tied to salary. The maximum award ranges from 40.00% - 60.00% of salary depending upon salary range established for his or her position. Options: Options are granted at the current bid price of the Company's Common Stock at the time of the award. Executives are allowed to exercise the options on a vesting formula of 20% per year, and all options must be exercised within ten years or they expire. Performance Units: Performance Units provide for a cash bonus to participating executive officers. Payments for units, if any, represent the increase in their value over a five year period. The initial value (at time of issuance) and ending value of the units are determined by the average of five years earnings per share of the Company's Common Stock. CEO Compensation The compensation for the Chief Executive Officer is determined under the same policies and programs as outlined above for all executive officers. The maximum award under the Company's Short Term Incentive Program for the CEO is 40.00% of salary. The CEO may be awarded a combination of Options and Performance Units under the Long Term Incentive Program up to an aggregate of 60.00% of salary. The Board Compensation Committee assesses the CEO's performance with regard to Board Policies and goals, and evaluates the Company's performance versus peers and its financial plan. Salary is then determined as provided for under the Company's salary program. Total compensation, including incentives, is directly related to the Company's financial performance. COMPENSATION COMMITTEE: Donald E. Bitz Edward G. Maris H. Barry Musgrove The cumulative total return to shareholders performance graph is furnished to the Commission in paper form under cover of Form SE. The following table presents year-end cumulative total returns for the Company, U.S. stocks traded on the NASDAQ over-the-counter market and all Bank stocks traded on the NASDAQ over- the-counter market assuming $100.00 was invested on January 1, 1989 and all dividends were reinvested for the five year period ended December 31, 1993. Index 1989 1990 1991 1992 1993 Premier 128 102 161 238 254 U.S. NASDAQ Stocks 121 103 165 192 219 NASDAQ Bank Stocks 111 81 134 194 221 The Company's cumulative total return to shareholders has exceeded the cumulative total return of all Bank stocks traded on the NASDAQ over-the-counter market for the years 1989 through 1993. In 1989, 1992 and 1993 the Company's cumulative total return exceeded that of the U.S. NASDAQ stock market index and performed approximately the same as the U.S. NASDAQ stock market index in 1990 and 1991. Compensation Committee Interlocks and Insider Participation None of the members of the Compensation Committee is an officer, employee or former employee of the Company. Members of the Compensation Committee or their associates may have loans or loan commitments from the Company's subsidiary banks, but all such loans or loan commitments were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectability or present other unfavorable features. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Directors and executive officers of the Company and their associates were customers of, and have had transactions with, the Company and in particular its subsidiary banks from time to time in the ordinary course of business. Additional transactions may be expected to take place in the ordinary course of business in the future. All loans and loan commitments included in such transactions were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than normal risk of collectability or present other unfavorable features. PROPOSAL 2: AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK At present, the Company's Restated Certificate of Incorporation authorizes the issuance of a total of 3,500,000 shares of stock, of which 1,000,000 shall be preferred stock of the par value of $1.00 per share and 2,500,000 shares shall be Common Stock of the Par Value of $5.00 per share. The Board of Directors unanimously approved and recommends that the stockholders adopt, an amendment to the Certificate of Incorporation to increase the total number of authorized shares to 16,000,000, of which 1,000,000 shares shall be preferred stock of the par value of $1.00 per share and 15,000,000 shares shall be Common Stock of the par value of $5.00 per share. If the proposed amendment is adopted, the first paragraph of the Article Fourth of the Restated Certificate of Incorporation of the Company, as amended, will read, in its entirety, as follows: "ARTICLE FOURTH. Authorized Stock. The total number of shares of Stock which the Corporation shall have authority to issue is Sixteen Million (16,000,000) shares, of which One Million (1,000,000) shares shall be shares of Preferred Stock of the par value of $1.00 per share (hereinafter sometimes referred to as "Preferred Stock"), and Fifteen Million (15,000,000) shares shall be shares of Common Stock of the par value of $5.00 per share (hereinafter sometimes referred to as "Common Stock")." As of February 28, 1994, 2,163,107 shares of Common Stock were issued and outstanding, 208,771 shares of Common Stock were reserved for issuance upon the conversion of 5,950 issued and outstanding shares of Series B Perpetual Preferred Stock of the Company (the "Series B Preferred Stock"), and 137,094 shares of Common Stock were reserved for issuance upon the exercise of outstanding options to acquire shares of Common Stock. As of that same date, a total of 16,200 shares of Preferred Stock were issued and outstanding, consisting of 5,000 shares of Series A Perpetual Preferred Stock, 5,950 shares of Series B Preferred Stock, 1,950 shares of Series C Perpetual Preferred Stock, and 3,300 shares of Series D Perpetual Preferred stock (the "Series D Preferred Stock"). An additional 1,300 shares of Series B Preferred Stock were reserved for issuance upon the conversion of shares of Series D Preferred Stock into shares of Series B Preferred Stock in accordance with the terms of the Certificate of Designations of the Series D Preferred Stock. The purpose of the proposed amendment is as follows: 1. To make available additional shares of Common Stock for possible use as stock dividends. 2. To enable the Company to convert up to $1,300,000 of currently outstanding shares of Series D Preferred Stock into Series B Preferred Stock. 3. To make available additional shares of Common Stock for use in connection with any other proper corporate purpose, including, for example, the issuance of such shares for cash or in connection with possible future acquisitions or other forms of business combinations, or for issuance with respect to Plans adopted by the Company such as the 1988 Non-qualified Stock Option Plan. The Board of Directors has awarded options for all 127,338 shares of Common Stock reserved for issuance under the Company's 1988 Non-qualified Stock Option Plan. The Board is currently contemplating alternatives for a Plan under which additional options may be granted in the future. If such a Plan is adopted by the Board of Directors, it will be subject to approval by Stockholders, including the number of shares of Common Stock for such purpose. It is uncertain as of the date hereof as to the timing or extent of any possible stock dividend, but adoption of the proposed increase in the number of authorized shares of the Corporation's Common Stock will provide the Board of Directors with greater flexibility in considering such timing and extent. The Board of Directors believes it is in the best interests of the Company to convert $1,300,000 of currently outstanding shares of Series D Preferred Stock into $1,300,000 of Series B Preferred Stock. Series D Preferred Stock is perpetual with a current and projected dividend rate of 9.00%. Series B Preferred Stock is convertible into Common Stock at $28.50 per share, with a current and projected dividend rate of 7.50%. Under the terms of the Certificate of Designations of the Series D Preferred Stock, the Company is obligated to convert 1,300 of the currently outstanding shares of Series D Preferred Stock into Series B Preferred Stock as of the last day of the calendar quarter in which the Company files an amendment to its Certificate of Incorporation increasing the number of authorized shares of Common Stock to a number sufficient to permit the Company to reserve the number of shares of Common Stock that the Company would be required to issue upon the conversion of an additional 1,300 shares of Series B Preferred Stock at a conversion rate of $28.50 per share. If the proposed increase in the number of shares of stock the Company is authorized to issue is adopted, the Board of Directors intends to convert 1,300 shares of Series D Preferred Stock into the same number of shares of Series B Preferred Stock as of June 30, 1994. A total of 45,614 shares of Common Stock would be reserved for issuance upon the conversion of such additional shares of Series B Preferred Stock. If the proposed increase in the Company's authorized stock is adopted, the additional authorized shares will be available for issuance by the Board of Directors, for such consideration as the Board of Directors in its discretion deems adequate, without further approval by the Company's stockholders (unless such approval is required by law or as a condition to continued inclusion in NASDAQ- NMS or listing on any stock exchange on which the Company's stock may in the future be listed). NASDAQ rules currently require stockholder approval as a condition of continued eligibility for designation as a National Market System security in several instances, including the issuance of shares in an acquisition transaction where the number of shares of Common Stock outstanding, as the result of such transaction, could increase by 20% or more. Although the decision of the Board of Directors to propose an amendment increasing the number of shares of Common Stock authorized for issuance did not result from any effort by any person to accumulate the Company's stock or to effect a change in control of the Company, one result of an increase may be to help the Board of Directors discourage or render more difficult a change in control. The additional shares could be used under certain circumstances to dilute the voting power of, create voting impediments for, or otherwise frustrate the efforts of persons seeking to effect a takeover or gain control of the Company, whether or not the change of control is favored by a majority of unaffiliated stockholders. For example, such shares of Common Stock could be privately placed with purchasers who might side with the Board of Directors in opposing a hostile takeover bid. The issuance of any additional shares of Common Stock could also have the effect of diluting the equity of existing holders and the earnings per share of existing shares of stock. As promptly as practicable following stockholder approval of the proposed amendment, the Company will cause a Certificate of Amendment of its Restated Certificate of Incorporation, with respect to such amendment, to be filed with the Secretary of State of the State of Delaware. The amendment will become effective on the date of such filing. The affirmative vote of the holders of a majority of the outstanding shares of Common Stock, whether or not present or voting at the Annual Meeting, is required to approve the proposed amendment to the Company's Certificate of Incorporation. Shares abstaining and shares for which brokers do not authorize a vote by proxy on the proposed amendment because they lack authority will have the same effect as if voted against the proposed amendment. The Board of Directors unanimously recommends a vote FOR the adoption of the proposed amendment to the Company's Certificate of Incorporation. AUDITORS KPMG PEAT MARWICK, independent certified public accountants, have served as the Company's public accountants for the fiscal year ended December 31, 1993, and prior years, and have been selected to serve in that capacity again for the fiscal year ending December 31, 1994. Representatives of KPMG PEAT MARWICK, are expected to be present at the meeting with the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions. NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS OF DIRECTORS The Company's Restated Certificate of Incorporation establishes an advance notice procedure with respect to the nomination of directors, other than by or on behalf of the Board of Directors. Under such nomination procedure, any stockholder of the Company who is entitled to vote for the election of directors and who wishes to nominate a candidate for election as a director must give advance written notice to the Company of such nomination. Such notice must be delivered or mailed by first class United States mail, postage prepaid, to the Secretary of the Company, not fewer than 14 days nor more than 60 days prior to any meeting of the stockholders called for the election of directors. In the event that fewer than 21 days' notice of the meeting is given to stockholders, such written notice must be delivered or mailed in accordance with the preceding sentence not later than the close of business on the 7th day following the day on which notice of the meeting was mailed to the stockholders. Each such notice must set forth (i) the name, age, business address and, if known, residence address of each nominee proposed in the notice, (ii) the principal occupation or employment of each such nominee, and (iii) the number of shares of stock of the Company beneficially owned by each such nominee and by the nominating stockholder. The chairman of a meeting at which directors are to be elected may, if the facts so warrant, determine that a nomination was not made in accordance with the foregoing procedure, and, if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. OTHER BUSINESS Management does not intend to present, and does not have reason to believe others will present, any items of business at the Annual Meeting other than those mentioned in the Notice of the Meeting. However, if any other matters are properly presented for a vote, the proxies will be voted on such matters according to the judgment of the persons named as proxies therein. STOCKHOLDER PROPOSALS Stockholders desiring to submit proposals to be voted upon by stockholders at the 1995 Annual Meeting must submit their proposals to the Company's Secretary no later than November 25, 1994. BY ORDER OF THE BOARD OF DIRECTORS, Michael J. Lester Secretary Dated: March 25, 1994 -----END PRIVACY-ENHANCED MESSAGE-----