-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Sw91ldGuzDm6B2RDmsmESJGrVVCs3xcoqPpxRjF/6vZnVB+zynquwbNdF0G6RwzQ H00/Kwesj/n1quebjHcbIw== 0000941965-97-000021.txt : 19970312 0000941965-97-000021.hdr.sgml : 19970312 ACCESSION NUMBER: 0000941965-97-000021 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970424 FILED AS OF DATE: 19970311 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GERMAN AMERICAN BANCORP CENTRAL INDEX KEY: 0000714395 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 351547518 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRE 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-11244 FILM NUMBER: 97554632 BUSINESS ADDRESS: STREET 1: 711 MAIN ST STREET 2: P O BOX 810 CITY: JASPER STATE: IN ZIP: 47546 BUSINESS PHONE: 8124821314 MAIL ADDRESS: STREET 1: 711 MAIN STREET CITY: JASPER STATE: IN ZIP: 47546 FORMER COMPANY: FORMER CONFORMED NAME: GAB BANCORP DATE OF NAME CHANGE: 19950510 PRE 14A 1 PRELIMINARY PROXY SOLICITATION MATERIALS COVER 1 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 [Amendment No. _____________] Filed by the Registrant Filed by a Party other than the Registrant Check the appropriate box: [X] Preliminary Proxy Statement [ ] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 GERMAN AMERICAN BANCORP (Name of Registrant as Specified in Its Charter) GERMAN AMERICAN BANCORP (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): No fee required. Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title of each class of securities to which transaction applies: 2) Aggregate number of securities to which transaction applies: 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): 4) Proposed maximum aggregate value of transaction: Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the COVER 2 filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: 2) Form Schedule or Registration Statement No.: 3) Filing Party: 4) Date Filed: 1 PRELIMINARY PROXY SOLICITATION MATERIALS DATED MARCH 11, 1997 [PRELIMINARY -- SUBJECT TO COMPLETION] GERMAN AMERICAN BANCORP NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 24, 1997 The Annual Meeting of Shareholders of German American Bancorp (the "Corporation") will be held at the principal office of The German American Bank, 711 Main Street, Jasper, Indiana, on Thursday, April 24, 1997, at 10:00 a.m., Jasper time, for the following purposes: 1. To elect six Directors to hold office until the 1999 Annual Meeting of Shareholders and until their successors are elected and have qualified. 2. To consider and approve or disapprove the proposed amendment of the Corporation's Articles of Incorporation to increase the number of Common Shares, $10.00 par value per share, of the Corporation that the Corporation is authorized to issue from 5,000,000 to 20,000,000. 3. To transact such other business as may properly come before the meeting. Holders of record of Common Shares of German American Bancorp at the close of business on March 1, 1997, are entitled to notice of and to vote at the Annual Meeting. SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ALL SHAREHOLDERS, EVEN IF THEY PLAN TO ATTEND THE MEETING, ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. By Order of the Board of Directors URBAN R. GIESLER Secretary March 31, 1997 Jasper, Indiana (ANNUAL REPORT ENCLOSED) 2 PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS OF GERMAN AMERICAN BANCORP April 24, 1997 This Proxy Statement is being furnished to shareholders on or about March 31, 1997, in connection with the solicitation by the Board of Directors of German American Bancorp (the "Corporation"), 711 Main Street, Jasper, Indiana 47546, of proxies to be voted at the Annual Meeting of Shareholders to be held at 10:00 a.m., Jasper time, on Thursday, April 24, 1997, at the foregoing address. The Corporation is the parent holding company for The German American Bank, Jasper, Indiana ("German American"); The Peoples National Bank and Trust Company, Washington, Indiana ("Peoples"); Community Trust Bank, Otwell, Indiana ("Community"); and First State Bank, Southwestern Indiana, Tell City, Indiana ("First State Bank"). At times herein, German American, Peoples, Community, and First State Bank are referred to collectively as the "Banks." At the close of business on March 1, 1997, the record date for the Annual Meeting, there were 2,541,684 Common Shares outstanding and entitled to vote at the Annual Meeting. On all matters, including the election of Directors, each shareholder will have one vote for each share held. If the enclosed form of proxy is executed and returned, it may nevertheless be revoked at any time insofar as it has not been exercised. The proxy may be revoked by either (a) filing with the Secretary (or other officer or agent of the Corporation authorized to tabulate votes) (i) a written instrument revoking the proxy or (ii) a subsequently dated proxy, or (b) attending the Annual Meeting and voting in person. Unless revoked, the proxy will be voted at the Annual Meeting in accordance with the instructions of the shareholder as indicated on the proxy. If no instructions are given, the shares will be voted as recommended by the Directors. PROPOSAL 1 ELECTION OF DIRECTORS Nominees Six Directors are to be elected at the Annual Meeting. The Board of Directors, which currently consists of 3 twelve members, is divided into two classes of equal size with the terms of one class expiring each year. Generally, each Director serves until the annual meeting of the shareholders held in the year that is two years after such Director's election and thereafter until such Director's successor is elected and has qualified. The terms of the current Directors expire as follows: 1997 - -- Directors Astrike, Buehler, Graham, Hoffman, Lett and Place; 1998 -- Directors Mehne, Ruckriegel, Schroeder, Seger, Steurer, and Thompson. Each Director will be elected by a plurality of the votes cast in the election. Shares present but not voted for any nominee do not affect the determination of whether a nominee has received a plurality of the votes cast. It is the intention of the persons named in the accompanying form of proxy to vote such proxy for the election to the Board of Directors of George W. Astrike, David G. Buehler, David B. Graham, William R. Hoffman, Michael B. Lett and A. Wayne ("Skip") Place, Jr., each of whom is now a Director whose present term expires this year. Each such person has indicated that he will accept nomination and election as a Director. If, however, any such person is unable or unwilling to accept nomination or election, it is the intention of the Board of Directors to nominate such other person as Director as it may in its discretion determine, in which event the shares subject to the proxy will be voted for that person. THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE SIX NOMINEES IDENTIFIED ABOVE. (ITEM 1 ON THE PROXY) The following table presents certain information as of March 5, 1997, regarding the current Directors of the Corporation, including the six nominees proposed by the Board of Directors for election at this year's Annual Meeting. Unless otherwise indicated in a footnote, the principal occupation of each Director has been the same for the last five years and such Director possesses sole voting and investment powers with respect to the shares indicated as beneficially owned by such Director. Unless specified otherwise, a Director is deemed to share voting and investment powers over shares indicated as held by a spouse, children or other family members residing with the Director. (Fractional shares have been rounded to the nearest whole share.) 4
Shares Benefi- cially Owned Name, (Percentage Present Principal Director of Outstanding Occupation and Age Since (1) Common Shares) George W. Astrike* 1982 11,839 (3) Chairman of the Board and Chief (0.5%) Executive Officer of the Corporation (2) 61 David G. Buehler* 1984 144,940 (4) President of Buehler Foods, Inc. (5.7%) 57 David B. Graham* 1997 (5) 40,936 Retired President, Graham (1.6%) Cheese Corporation [age] William R. Hoffman* 1986 41,412 (6) Farmer; Vice-President and Director of (1.6%) Patoka Valley Feeds, Inc. 59 Michael B. Lett* 1993 102,354 (8) Attorney, Lett & Jones (7) (4.0%) 52 Gene C. Mehne 1979 20,925 (9) Vice President and Manager of (0.8%) Mehne Farms, Inc. 52 A. Wayne ("Skip") Place, Jr.* 1990 15,709 (10) President and Chief Executive Officer (0.6%) of Jasper Rubber Products, Inc. 49 5 Robert L. Ruckriegel 1983 105,258 (11) President of B. R. Associates, Inc. (4.1%) (restaurants) 61 Mark A. Schroeder 1991 5,779 (13) President and Chief Operating (0.2%) Officer of the Corporation (12) 43 Larry J. Seger 1990 23,410 (14) Vice President of Wabash Valley (0.9%) Produce, Inc. (egg and turkey production) 46 Joseph F. Steurer 1983 13,228 (15) Chairman and Chief Executive Officer (0.5%) of JOFCO, Inc. (office furniture) 60 Chet L. Thompson 1997(5) 5,933 (0.2%)
*Nominee (1) Includes service on the Board of German American prior to the organization of the Corporation. Does not include prior service on the Board of Directors of the Banks subsequently acquired by the Corporation. (2) Mr. Astrike also serves as Chairman of the Board of German American, a Director of each of the Banks, and an officer and/or a Director of all nonbank affiliates of the Corporation. (3) Includes 6,360 shares that Mr. Astrike has options to purchase. (4) Includes 123,765 shares owned by Buehler Foods, Inc., of which Mr. Buehler is President and majority shareholder and with respect to which Mr. Buehler shares voting and investment powers; 3,051 shares held jointly by Mr. Buehler and his wife; and 18,000 shares held by the David G. Buehler Charitable Trust. Mr. Buehler, his wife, Buehler Foods, Inc., and Joseph E. Buehler, Mr. Buehler's brother, who owns 123 shares directly, beneficially own as a group 144,940 shares. (5) Mr. Graham and Mr. Thompson, who have been members of the Board of Directors of Peoples since 19____ and 19____, respectively, were appointed to the Corporation's Board of Directors by action of the 6 Board of Directors effective March ____, 1997, pursuant to the Corporation's agreement with Peoples to place two mutually-agreeable representatives of the Peoples Board on the Corporation's Board promptly following the Corporation's acquisition of Peoples. (6) Includes 3,554 shares owned jointly by Mr. Hoffman and his wife, and 8,934 shares owned by Mr. Hoffman's wife. (7) Mr. Lett and his brother and law partner, J. David Lett, also serve as Directors of Peoples. Lett & Jones represents the Union Banking Division of Peoples as legal counsel. (8) Includes 240 shares held by Mr. Lett's wife, who also holds 171 shares as custodian for their son; 98,207 shares held by Mr. Lett's mother; and 1,858 shares held by Mr. Lett's brother, with all of whom Mr. Lett may be deemed to act as a group. (9) Includes 19,149 shares held by Mr. Mehne's mother; 530 shares owned by Mr. Mehne's wife; and 370 shares held by German American as trustee for the Mehne Farms, Inc. Qualified Plan. (10) Includes 3,507 shares owned jointly by Mr. Place and his wife; 300 shares which Mr. Place holds as custodian for his son and two daughters; and 2,730 shares owned by Jasper Rubber Products, Inc., of which Mr. Place is President and Chief Executive Officer. (11) Includes 840 shares owned jointly by Mr. Ruckriegel and his wife, and 32,334 shares owned by Mr. Ruckriegel's wife. (12) Mr. Schroeder was named President and Chief Operating Officer of the Corporation effective July 1, 1995, after having served as President of German American since January 1991. Mr. Schroeder also is a Director of each of the Banks, and an officer and/or a Director of the Corporation's nonbank affiliates. (13) Includes 2,205 shares that Mr. Schroeder has options to purchase. (14) Includes 11,552 shares owned by certain corporations of which Mr. Seger is an executive officer and a shareholder. (15) Includes 2,066 shares owned by Mr. Steurer's wife. 7 Committees and Attendance The Board of Directors of the Corporation held six meetings during 1996. The Corporation has standing audit and compensation committees but does not have a nominating committee. The Audit Committee, consisting of Directors Hoffman, Lett, Mehne and Place, met five times in 1996. The Audit Committee reviews with the Corporation's independent auditors the scope of the audit to be undertaken and the results of the audit and also reviews the results of internal audits. The Corporation's Compensation Committee, consisting of Directors Astrike, Buehler, Place, Ruckriegel, Schroeder and Steurer, met three times in 1996. The Corporation's Compensation Committee makes salary and bonus recommendations to the Board of Directors and administers the Stock Option Plan. Each of the Directors attended at least 75 percent of the aggregate number of meetings of the Board of Directors of the Corporation and the committees on which he served during 1996. Compensation of Directors Each Director of the Corporation, including Directors who are salaried officers of the Corporation, receives $250 per quarter, regardless of meeting attendance. All of the members of the Corporation's Board also serve on the Board of at least one of the Banks and received compensation for such service during 1996. German American pays each Director a monthly fee of $400 in addition to $100 for every regular Board meeting attended and $80 for each committee meeting attended (for a maximum of five committee meetings per month). Peoples pays each Director a fee of $______________ per month and [here describe regular and committee meeting fees and whether such fees are paid regardless of attendance]. The Union Bank (which merged into Peoples effective March 4, 1997) paid each Director a fee of $300 per month, and an additional $75 for each meeting attended and $50 for each committee meeting attended. Community pays Directors a monthly fee of $375 ($300 if the Director fails to attend a regular meeting of the Board) and $50 for each committee meeting attended per month (for a maximum of three committee meetings per month). First State Bank pays each Director $300 per month plus $100 for each Board meeting attended. In 1992 the German American Board of Directors approved a Director Compensation Deferral Program. A Director who chooses to participate in the program may defer 100 percent (not to exceed $6,600 per year) of his Board fees for five years. Interest accumulates on deferred amounts at the greater of eight percent or the five-year moving average of German American's return on equity, subject, however, to a maximum of 12 percent. 8 The accumulated amounts are paid to the Director, or the Director's designated beneficiary, upon the retirement, disability or death of the Director, or, subject to German American's approval, in the event of an unforeseeable financial emergency experienced by the Director. All of the Directors deferred Director fees under the program in 1996. EXECUTIVE COMPENSATION The following table sets forth information regarding compensation paid for the fiscal years indicated to the Corporation's Chief Executive Officer and the Corporation's other most highly compensated executive officers, based on salary and bonus earned during fiscal 1996. Summary Compensation Table
Securities Underlying Name and Options/ All Other Principal Position Year Salary Bonus SARs(1) Compensation George W. Astrike, 1996 $168,000 $47,040 3,087 $33,739 (2) Chairman and 1995 $168,000 $39,480 1,981 $38,472 C.E.O. of the 1994 $158,800 $32,420 1,136 $26,561 Corporation and Chairman of the Board Mark A. Schroeder, 1996 $110,000 $30,800 945 $24,629 (3) President and 1995 $110,000 $25,850 1,050 $25,512 C.O.O. of the 1994 $ 92,200 $18,919 1,050 $21,281 Corporation Stan Ruhe, 1996 $ 96,500 $22,436 1,357 $11,894 (4) Executive Vice 1995 $ 95,000 $21,138 0 $11,712 President of the 1994 $ 85,000 $17,441 0 $10,344 Corporation and German American
(1) The numbers of shares underlying options have been adjusted to reflect the December 1996 five percent stock dividend and are rounded to the nearest whole share. 9 (2) Represents contributions of $7,500 under the Profit Sharing Plan, matching contributions of $7,500 under the 401(k) Plan, Director fees in the amount of $8,760, and $9,979 in above-market interest credited on deferred salary and Director fees. (3) Represents contributions of $7,107 under the Profit Sharing Plan, matching contributions of $7,107 under the 401(k) Plan, Director fees in the amount of $9,120, and $1,295 in above-market interest credited on deferred Director fees. (4) Represents contributions of $5,947 under the Profit Sharing Plan and matching contributions of $5,947 under the 401(k) Plan. In 1992 the German American Board of Directors entered into a Deferred Compensation Agreement with Mr. Astrike. A primary purpose of the Agreement, like that of the Director Compensation Deferral Program, is to provide a long-term incentive to maximize shareholder value through increases in German American's return on equity. The Agreement was amended in 1996 to permit Mr. Astrike to defer in advance up to $180,000 (the previous maximum amount was $150,000) of the compensation that he would otherwise be entitled to receive from German American for his services. Interest is credited to the amounts deferred by Mr. Astrike at the rate of the greater of eight percent or the five-year moving average of German American's return on equity, subject, however, to a maximum to twelve percent. The amounts deferred by Mr. Astrike are unfunded and Mr. Astrike's rights to such deferred amounts are those of an unsecured general creditor of German American. Mr. Astrike elected to defer a portion of his 1996 salary. Mr. Astrike is not eligible to receive profit sharing and matching contributions pursuant to the German American Profit Sharing and 401(k) Plan on deferred compensation. Option/SAR* Grants In Last Fiscal Year The following table presents information on the stock option grants that were made during 1996 pursuant to the German American Bancorp 1992 Stock Option Plan. The only stock options granted during the year were replacement options that were granted to optionees who tendered already owned Common Shares of the Corporation in payment of the exercise price for options that had been granted to them in 1993. (Numbers of options and per share exercise prices have been retroactively adjusted to reflect subsequent stock splits and dividends.) 10
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Individual Grants Option Term % of Total Options/SARs Number Granted Securities to Underlying Employees Options/ in Exercise or SAR/s Fiscal Base Price Expiration Name Granted Year ($/Sh) Date 5% 10% George W. Astrike 3,087(2) 46% $29.76 4/19/2003 $39,514 $92,950 Mark A. Schroeder 945(2) 14% $32.86 4/19/2003 $12,285 $28,511 Stan Ruhe 763 11% $29.76 4/19/2003 $ 9,766 $22,974 Stan Ruhe 593 9% $32.86 4/19/2003 $ 7,709 $17,891
*The Corporation does not grant Stock Appreciation Rights ("SARs"). (1) The amounts in the table are not intended to forecast possible future appreciation, if any, of the Corporation's Common Shares. Actual gains, if any, are dependent upon the future market price of the Corporation's Common Shares and there can be no assurance that the amounts reflected in this table will be achieved. (2) Incentive stock options previously granted under the Stock Option Plan were exercised by Mr. Astrike on January 9, 1996, by Mr. Schroeder on July 15, 1996, and by Mr. Ruhe on January 9, 1996 and July 15, 1996. The options had been granted on April 20, 1993, at the estimated aggregate fair market value of the Common Shares covered by each option on that date. The Stock Option Plan provides that if the optionee tenders Common Shares of the Corporation already owned by the optionee as payment, in whole or in part, of the exercise price for the shares the optionee has elected to purchase under the option, then the Corporation is obligated to use its best efforts to issue a replacement option of the same type (incentive or non-qualified option), with the same expiration date as the option that was exercised, and covering a number of Common Shares equal to the number of Common Shares tendered. The per share exercise price of the replacement option is the fair market value of a Common Share of the Corporation on the date of 11 exercise of the original option. Replacement options are not exercisable for a period of twelve months following their date of grant and are subject to cancellation if during such twelve-month period the optionee sells any Common Shares of the Corporation other than in payment of the exercise price of another option under the Stock Option Plan. Upon the exercise of options on January 9, 1996, Mr. Astrike was granted a replacement option for 3,087 shares and Mr. Ruhe was granted a replacement option for 763 shares. Upon the exercise of options on July 15, 1996, Mr. Schroeder was granted a replacement option for 945 shares and Mr. Ruhe was granted a replacement option for 593 shares. The replacement options granted on January 9, 1996, have an exercise price of $29.76 per share, subject to adjustment pursuant to the Stock Option Plan, and became exercisable in full on January 10, 1997. The replacement options granted on July 15, 1996, have an exercise price of $32.86 per share, subject to adjustment pursuant to the Stock Option Plan, and become exercisable on July 16, 1997. The Stock Option Plan also provides that if a corporate reorganization would result in the termination of the Plan and unexercised options, then all unexercised options will become immediately exercisable regardless of any vesting requirements. Aggregated Option/SAR Exercises In Last Fiscal Year and Fiscal Year-End Option/SAR Values The following table sets forth information with respect to options that have been granted to Messrs. Astrike, Schroeder and Ruhe pursuant to the German American Bancorp 1992 Stock Option Plan and the option exercises that occurred during 1996. (Numbers of options and per share exercise prices have been retroactively adjusted to reflect subsequent stock splits and dividends.)
Shares Value Acquired on Realized Exercisable/ Exercisable/ Name Exercise (#) ($) Unexercisable Unexercisable George W. Astrike 4,961 $50,106 6,360/0 options(1) $55,909/$0(4) Mark A. Schroeder 1,654 $21,833 2,205/4,253 options(2) $20,218/$65,526(4) Stan Ruhe 2,150 $24,794 763/2,578 options(3) $6,287/$39,453(4)
12 (1) In 1993 Mr. Astrike was granted an option to purchase 6,000 Common Shares at an exercise price of $32.50 per share, which, as a result of adjustments for a subsequent stock split and stock dividends, currently provides for 9,923 Common Shares at an exercise price of $19.66 per share. The option became exercisable with respect to one- half of the shares immediately upon grant and became exercisable with respect to the other one- half of the shares on April 20, 1994. On January 9, 1996, Mr. Astrike exercised the option with respect to 4,961 shares and was granted a replacement option to cover the 3,087 shares that he had tendered in partial payment of the exercise price. The replacement option is for a price of $29.76 per share and became exercisable on January 10, 1997. (2) In 1993 Mr. Schroeder was granted an option to purchase 5,000 Common Shares at an exercise price of $32.50 per share, which, as a result of adjustments for a subsequent stock splits and stock dividends, currently provides for 8,269 Common Shares at an exercise price of $19.96 per share. The option becomes exercisable with respect to twenty percent of the shares covered by the option on each of the five anniversary dates beginning on the first anniversary date after the grant of the option. On July 15, 1996, Mr. Schroeder exercised the option with respect to 1,654 shares that were then exercisable and was granted a replacement option to cover the 945 shares that he had tendered in partial payment of the exercise price. The replacement option is for a price of $32.86 per share and becomes exercisable on July 16, 1997. (3) In 1993 Mr. Ruhe was granted an option to purchase 3,000 Common Shares at an exercise price of $32.50 per share, which, as a result of adjustments for a subsequent stock split and stock dividends, currently provides for 4,961 Common Shares at an exercise price of $19.66 per share. The option becomes exercisable with respect to twenty percent of the shares covered by the option on each of the five anniversary dates beginning on the first anniversary date after the grant of the option. On January 9, 1996, Mr. Ruhe exercised the option with respect to 1,157 of the shares that were then exercisable and received a replacement option for 763 shares. The January 9, 1996 replacement option is for a price of $29.76 per share and became exercisable on January 10, 1997. On July 15, 1996, Mr. Ruhe exercised the option for an additional 993 shares and received a replacement option for 593 shares. The July 15, 1996 replacement option has 13 an exercise price of $32.86 per share and becomes exercisable on July 16, 1997. (4) Represents the difference between the last per share trade price of the Corporation's Common Shares as reported on NASDAQ on December 31, 1996 ($38.00), and the exercise price of those options having an exercise price less than the last trade price, multiplied by the number of options. Compensation Committee Report on Executive Compensation Overall Compensation Policy The Compensation Committee of the Board of Directors of the Corporation has the responsibility for recommending the salaries, bonuses and other compensation to be paid to the executive officers of the Corporation. The Compensation Committee's recommendations as to compensation are submitted to the full Board of Directors for approval. The Compensation Committee is composed of six members, consisting of four independent outside directors and two executive officers of the Corporation, Mr. Astrike and Mr. Schroeder. Messrs. Astrike and Schroeder absent themselves from, and do not participate in, any Compensation Committee proceedings relating to the determination of their own compensation. The primary goals of the Compensation Committee in determining compensation policy are to provide a level of compensation that will attract, motivate and help retain well-qualified executive officers and to further enhance shareholder return by more closely aligning the interests of executive officers with the interests of the Corporation's shareholders. The Compensation Committee attempts to attain these goals by setting total compensation at competitive levels considering an executive officer's individual performance while also providing effective incentives tied to the Corporation's overall financial performance. The executive compensation program consists of three basic elements: (1) base salary, (2) annual incentive bonus awards, and (3) stock option awards. Base Salary The Corporation attempts to provide Mr. Astrike and the other executive officers with a base salary that is competitive with the salaries offered by other bank holding companies of comparable size in Indiana and the surrounding states. Each year the Compensation Committee reviews salary surveys provided by trade associations and accounting firms. Increases in base compensation are not automatically based on increased compensation at comparable institutions, however, but also reflect the 14 performance of the individual executive officer and of the Corporation. Based on an evaluation of individual performance, the performance of the Corporation in 1995 and on information provided by salary surveys, the Compensation Committee recommended, and the Board approved the recommendation, that the base salary of Mr. Astrike be set at the same amount for 1996 as it had been for the previous year. Annual Incentive Bonus Awards Annual bonuses are awarded based on the extent that the Compensation Committee believes that they are merited based on the attainment of certain goals relating to the Corporation's return of equity and return on assets. Based on these criteria, the bonus awarded for 1996 to Mr. Astrike was higher than those awarded to him in 1995 and 1994. Stock Option Awards In 1992 the Corporation adopted a Stock Option Plan that provides for the award of incentive stock options and non-qualified stock options. The purpose of granting options is to provide long-term incentive compensation to complement the short-term focus of annual incentive bonus awards. The size of stock option awards depends upon the executive officer's level of responsibility and individual performance. Stock options are granted at the estimated fair market value of a Common Share of the Corporation on the date of grant. The four independent outside directors on the Compensation Committee also serve as the Stock Option Committee of the Corporation, which administers the Stock Option Plan. In April 1993 incentive stock options were awarded to Mr. Astrike and four other executive officers. Mr. Astrike was granted options covering 9,922 shares and the options granted the other executive officers ranged in amount from 2,481 shares to 8,269 shares each (all share amounts have been adjusted to reflect the December 1996 five percent stock dividend and have been rounded to the nearest whole number). The option granted to Mr. Astrike vested immediately with respect to half of the shares covered by the option in recognition of his past years of service as Chief Executive Officer of the Corporation and vested with respect to the other half of the shares on April 20, 1994. The options granted to the other executive officers vest in twenty percent increments beginning one year after the date of grant and become fully exercisable on the fifth anniversary of the grant date. 15 The only options granted under the Stock Option Plan during 1996 were replacement options. The Stock Option Plan provides that if an optionee tenders Common Shares 15 of the Corporation already owned by the optionee in whole or partial payment of the exercise price of an option, the Corporation will use its best efforts to grant the optionee a replacement option covering a number of shares equal to the number of already owned shares tendered. A replacement option is of the same type (incentive or non- qualified option) and has the same expiration date as the option exercised. The per share exercise price of a replacement option is the fair market value of a Common Share of the Corporation on the date of exercise of the original option. Replacement options were granted to Mr. Astrike on January 9, 1996, to one of the named executive officers on July 15, 1996, and to the remaining named executive officer on January 9, 1996, and July 15, 1996. The Omnibus Budget Reconciliation Act enacted by the United States Congress in August 1993 amended the Internal Revenue Code of 1986 to disallow a public company's compensation deduction with respect to certain highly-paid executives in excess of $1 million unless certain conditions are satisfied. The Corporation presently believes that this provision is unlikely to become applicable in the near future to the Corporation because (a) the levels of base salary and annual incentive bonus awards of the Corporation's executive officers are substantially less than $1 million per annum, and (b) the law generally does not apply to stock option plans that require that options be granted at not less than fair market value, subject to certain conditions. Therefore, the Corporation has not taken any action to adjust its compensation plans or policies in response to the adoption of this law. SUBMITTED BY THE MEMBERS OF THE COMPENSATION COMMITTEE: George W. Astrike Robert Ruckriegel David Buehler Mark A. Schroeder A. Wayne Place Joseph Steurer Compensation Committee Interlocks and Insider Participation Two of the persons who served during 1996 on the Compensation Committee of the Corporation's Board of Directors, Messrs. Astrike and Schroeder, are executive officers of the Corporation. Messrs Astrike and 16 Schroeder were not present for, and did not participate in, any Compensation Committee proceedings relating to the determination of their own compensation. None of the other four members of the Compensation Committee is, or previously was, an officer or employee of the Corporation. Mr. Buehler, a member of the Compensation Committee, is a principal shareholder, officer and director of Buehler Foods, Inc., which subleases space for two branch banking facilities to the German American Bank. On March 1, 1996, German American Bank exercised its option to renew one of the subleases for an additional fifteen-year term that will expire on February 28, 2011. Scheduled rents payable to Buehler Foods, Inc. over this renewal term will be, in the aggregate, approximately $274,500.00. Certain Business Relationships And Transactions During 1996, the bank subsidiaries of the Corporation had (and expect to continue to have in the future) banking transactions in the ordinary course of business with Directors, officers and principal shareholders of the Corporation and their associates. These transactions have been made on substantially the same terms, including interest rates, collateral and repayment terms on extensions of credit, as those prevailing at the same time for comparable transactions with others and did not involve more than the normal risk of collectibility or present other unfavorable features. Stock Performance Graph The SEC requires the Corporation to include in this proxy statement a line-graph presentation comparing the Corporation's cumulative, five-year shareholder returns with market and industry returns. The following graph compares the Corporation's performance with the performance of the NASDAQ Stock Market (U.S. Companies), NASDAQ Bank Stocks, and a peer group of bank holding companies headquartered in Southern Indiana. The peer group includes the following: AMBANC Corp.; CNB Bancshares, Inc.; First Financial Corporation; Indiana United Bancorp; National City Bancshares, Inc.; and Old National Bancorp. The returns of each company in the peer group have been weighted to reflect the company's market capitalization. 17 German American 100.00 122.8 180.8 187.2 195.2 265.9 Bancorp Southern Indiana 100.00 126.6 160.2 166.3 175.3 213.7 Bank Peer Group NASDAQ Stock 100.0 116.4 133.6 130.6 184.7 227.2 Market (U.S. Companies)
Companies in Southern Indiana Bank Peer Group: AMBANC Corp. (AMBK); CNB Bancshares, Inc. (BNK); First Financial Corp. (THFF); Indiana United Bancorp (IUBC); National City Bancshares, Inc. (NCBE); Old National Bancorp (OLDB). PROPOSAL 2 PROPOSAL TO AMEND ARTICLES OF INCORPORATION TO INCREASE NUMBER OF AUTHORIZED SHARES The Board of Directors of the Corporation has approved and adopted, subject to shareholder approval, an Amendment to the Corporation's Articles of Incorporation that would provide for an increase in the number of Common Shares, $10.00 par value per share, authorized to be issued by the Corporation from 5,000,000 shares to 20,000,000 shares. The proposed increase in the number of authorized Common Shares would be accomplished by amending Article V of the Corporation's Articles of Incorporation to read as follows: "The total number of shares of capital stock that the Corporation has authority to issue shall be 20,500,000 shares consisting of 20,000,000 common shares (the "Common Shares") and 500,000 preferred shares (the "Preferred Shares"). The Corporation's shares shall have a par value of ten dollars ($10.00) per share." The Board of Directors believes that the proposed increase in the number of authorized Common Shares is in the best interests of the Corporation. An increase in the number of authorized Common Shares would provide the Corporation with greater flexibility in making acquisitions, effecting stock splits, paying stock dividends, and responding to possible future developments in which the issuance of Common Shares may be desirable, as determined appropriate by the Board of Directors. The Corporation currently has no agreements or arrangements 18 or other specific plans for issuance of Common Shares in excess of the shares currently authorized but unissued, other than pursuant to its regular five percent annual stock dividend program. The Corporation continues to pursue acquisition opportunities aggressively, however, which could result in the issuance of additional shares. As is the case with the Corporation's presently authorized but unissued Common Shares, the issuance of additional Common Shares, in most cases, would be within the discretion of the Board of Directors without further action by the shareholders. The Corporation's Articles of Incorporation provide that authorized but unissued Common Shares may be issued as the Board of Directors may determine without any preemptive or other right on the part of holders of previously issued Common Shares or other shares of the Corporation, by reason of such ownership, to acquire upon issuance any such newly authorized Common Shares. If the proposed increase is approved, the Board could use the authorized but unissued shares, at its discretion, to resist the consummation of certain acquisition attempts, by, for example, diluting the ownership of a substantial shareholder or substantially increasing the amount of consideration necessary for a shareholder to obtain control. As of the date of this Proxy Statement, the Board of Directors is not aware of any specific effort to accumulate shares or otherwise obtain control of the Corporation. For approval, the proposal to amend the Corporation's Articles of Incorporation to increase the authorized number of Common Shares requires that the number of votes properly cast in favor of the proposal exceed the number of votes properly cast against the proposal. Shares present but not voted for the proposal (including shares that abstain from voting and broker non-votes) will not count as negative votes and will not affect the determination of whether the proposal has been approved. If approved by the shareholders at the Annual Meeting, the increase in the number of authorized Common Shares would become effective upon the filing of an amendment to the Corporation's Articles of Incorporation with the Indiana Secretary of State. THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE PROPOSAL TO AMEND THE CORPORATION'S ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED COMMON SHARES OF THE CORPORATION FROM 5,000,000 SHARES TO 20,000,000 SHARES. (ITEM 2 ON THE PROXY). UNLESS A SHAREHOLDER INDICATES OTHERWISE, PROXY HOLDERS WILL VOTE FOR THE PROPOSED AMENDMENT. 19 APPOINTMENT OF AUDITORS Crowe, Chizek and Company LLP ("Crowe Chizek") served as auditors for the Corporation in 1996. Although it is anticipated that Crowe Chizek will be selected, the Audit Committee has not yet considered the appointment of auditors for 1997. Representatives of Crowe Chizek will be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions. PRINCIPAL OWNERS OF COMMON SHARES The following table sets forth information as of March 5, 1997, relating to every person, including any group, known by management to beneficially own more than five percent of the Corporation's outstanding Common Shares and the beneficial ownership of the Corporation's Common Shares by all Directors and officers as a group.
Name and Address Percent of Beneficial Owner Amount and Nature of of or Identity of Group Beneficial Ownership Class Buehler Group (1) 144,940 5.7% c/o David G. Buehler 1227 West 31st Street Jasper, Indiana 47546 All Directors and 543,961(3) 21.3% officers as a group, consisting of 16 persons(2)
(1) The Buehler Group consists of David G. Buehler, Brenda Buehler, Buehler Foods, Inc. and the David G. Buehler Charitable Trust. Buehler Foods, Inc., which owns of record 123,765 of these shares, is owned by David G. Buehler and his brother, Joseph E. Buehler, who share voting and investment power with respect to such shares. Mr. David Buehler owns one share, he and his wife, Brenda Buehler, jointly own 3,051 shares, and the David G. Buehler Charitable Trust holds 18,000 shares. Mr. Joseph Buehler owns 123 shares. (2) Includes the beneficial ownership as of March 5, 1997, of Directors Graham and Thompson, who were 20 appointed to the Board of Directors effective March ____, 1997. (3) Includes 10,476 shares that officers have options to purchase that are exercisable within 60 days and 338,504 shares as to which voting and investment powers are shared by members of the group with spouses or others. OTHER MATTERS The Board of Directors knows of no matters, other than those reported above, that are to be brought before the Annual Meeting. However, if other matters properly come before the Annual Meeting, it is the intention of the persons named in the enclosed form of proxy to vote such proxy in accordance with their judgment on such matters. 21 EXPENSES All expenses in connection with this solicitation of proxies will be borne by the Corporation. SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING A shareholder desiring to submit a proposal for inclusion in the Corporation's proxy statement for the 1998 Annual Meeting of Shareholders must deliver the proposal so that it is received by the Corporation no later than December 1, 1997. Proposals should be mailed to Urban R. Giesler, Secretary of the Corporation, 711 Main Street, Jasper, Indiana 47546, by certified mail, return receipt requested. 22 [APPENDIX TO EDGAR FILING] PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE 1997 ANNUAL MEETING OF SHAREHOLDERS OF GERMAN AMERICAN BANCORP I hereby appoint Larry J. Seger and Joseph F. Steurer, and each of them, my proxies, with power of substitution, to vote all Common Shares of German American Bancorp that I am entitled to vote at the Annual Meeting of Shareholders to be held at the principal office of The German American Bank, 711 Main Street, Jasper, Indiana, on April 24, 1997, at 10:00 a.m., Jasper time, and any adjournments thereof, as provided herein. THIS PROXY WILL BE VOTED AS SPECIFIED. IN THE ABSENCE OF SPECIFICATIONS, THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2. This proxy may be revoked at any time prior to its exercise upon compliance with the procedures set forth in the Corporation's Proxy Statement, dated March 31, 1997. SHAREHOLDERS SHOULD MARK, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POST-PAID ENVELOPE. 1. ELECTION OF DIRECTORS /__/ FOR all nominees listed below, as set forth in the Corporation's Proxy Statement, dated March 31, 1997 (except as marked to the contrary below--see "Instructions") George W. Astrike William R. Hoffman David G. Buehler Michael B. Lett David B. Graham A. Wayne ("Skip") Place, Jr. /__/ WITHHOLD AUTHORITY to vote for all nominees listed above (Instructions: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.) _________________________________________________ 2. PROPOSAL TO AMEND ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED COMMON SHARES FROM 5,000,000 TO 20,000,000 /__/ FOR /__/ AGAINST /__/ ABSTAIN 23 3. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. Dated:_____________ _______________________ _______________________ Signature or Signatures (Please sign exactly as your name appears on this proxy. If shares are issued in the name of two or more persons, all such persons should sign. Trustees, executors and others signing in a representative capacity should indicate the capacity in which they sign.) -----END PRIVACY-ENHANCED MESSAGE-----