<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. ___ )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FIRST COMMONWEALTH, INC.
------------------------
(Name of Registrant as Specified In Its Charter)
N/A
---
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] 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:
N/A
2) Aggregate number of securities to which transaction applies:
N/A
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):
N/A
4) Proposed maximum aggregate value of transaction:
N/A
5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
N/A
<PAGE>
FIRST COMMONWEALTH, INC.
444 North Wells Street
Suite 600
Chicago, Illinois 60610
April 26, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of First Commonwealth, Inc., a Delaware corporation, to be held at 10:00 a.m.
(local time) on Thursday, June 3, 1999 at Westin-Michigan Avenue, 909 North
Michigan Avenue, Chicago, Illinois 60611.
The formal notice of the meeting and Proxy are enclosed. The matters to be
considered at the meeting are described in the accompanying Proxy Statement.
Regardless of your plans for attending in person, it is important that your
shares be represented at the meeting. Therefore, please complete, sign, date
and return the enclosed proxy card in the enclosed, post-paid envelope. This
will enable you to vote on the business to be transacted whether or not you
attend the meeting.
In addition, enclosed is the Company's 1998 Annual Report on Form 10-K,
which constitutes the Company's Annual Report to Stockholders for 1998.
Supplemental 1998 annual report information is available on our web site at
www.firstcommonwealth.net.
We are pleased to report that 1998 was another excellent year of growth and
financial performance for First Commonwealth. The Company continued its track
record of meeting analyst earnings per share expectations for 13 consecutive
quarters since the Company's initial public offering in 1995. Consider the
following accomplishments in the three years since the Company's public
offering in November 1995:
. Revenue has increased by 93% from year end 1995
. Total membership is up 109%
. Net income has grown by 99%
. Earnings per share has increased by 60%
. The Company's network of participating providers has increased by 76%
. The Company has expanded from operations in Illinois in 1995 to become a
leading regional carrier in five states in the upper Midwest
In short, the Company has virtually doubled its revenue, membership and net
income in the past three years and significantly expanded its market presence
to five states.
Despite these accomplishments, management has been frustrated with the lack
of share price appreciation. Management believes that investor concerns over
industry performance and stock market conditions for small capitalization
companies are the primary reasons for the lack of share price appreciation. We
want our shareholders to understand that as the co-founders of First
Commonwealth, we retain substantial equity holdings in the Company and will
continue to work hard to create long-term shareholder value.
Financial Performance
Revenues in 1998 grew by 13% to $64.2 million, up from $56.6 million in
1997. Operating income grew 16% to $6 million in 1998, up from $5.1 million in
1997. Net income increased by 20% to $4 million up from $3.3 million in 1997.
Earnings per share also increased 20% to $1.07, up from $.89 in 1997. The
Company's balance sheet remains strong with over $14 million in unrestricted
cash and investments and no debt.
<PAGE>
A significant factor in the Company's financial success in 1998 was
improvement of overall gross margin. Managed Care gross margin improved from
36.9% to 37.8% as a result of important benefit plan changes the Company
successfully implemented during the year. Indemnity/PPO gross margin improved
significantly from the second half of 1997 and stabilized for the year at
14.6%. We are pleased that our management has responded to the challenge to
increase provider compensation yet maintain strong gross margin performance.
Template Plan Products
The managed care benefit plan changes implemented in 1998 represent a new
generation of "template" products for the Company. The new product design
simplifies communication of benefits to our enrollees, simplifies
administration of benefit plan renewals, and positions the Company to respond
timely to increases in provider costs. It has also given the Company the
ability to standardize its benefit levels across all markets. These are
important building blocks for future growth.
Industry Trends
According to the National Association of Dental Plans, demand for managed
dental care products continued to grow at a strong pace in 1998, with Dental
PPO growth outstripping dental HMO growth. Management believes, however, that
the significantly higher costs of traditional indemnity plans, including those
with a PPO option, creates a fertile environment for future dental HMO growth.
Indemnity plans cost, on average, 50%-75% more than dental HMO plans. We
believe this price/value "gap" is an important factor to increase dental HMO
growth in the future.
Investing for the Future
Management believes First Commonwealth is well positioned for continued
growth and success in our existing markets as well as for future expansion. We
have taken recent steps to significantly increase sales related staffing,
particularly in our non-Illinois markets. We will continue to expand sales
staffing throughout 1999 as we seek to execute our growth strategy and enhance
shareholder value.
Thank you for your interest in First Commonwealth.
Sincerely,
/s/ Christopher C. Multhauf /s/ David W. Mulligan
- --------------------------- ---------------------
Christopher C. Multhauf David W. Mulligan
Chairman and Chief Executive Officer President and Chief Operating Officer
2
<PAGE>
FIRST COMMONWEALTH, INC.
444 North Wells Street
Suite 600
Chicago, Illinois 60610
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 3, 1999
To the Stockholders of
FIRST COMMONWEALTH, INC.
The 1999 Annual Meeting of Stockholders of First Commonwealth, Inc. a
Delaware corporation (the "Company"), will be held at Westin-Michigan Avenue,
909 North Michigan Avenue, Chicago, Illinois 60611, on Thursday, June 3, 1999,
at 10:00 a.m., local time, for the following purposes:
1. to elect one Class I director; and
2. to transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on April 15, 1999 as
the record date for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting.
Your attention is directed to the accompanying Proxy Statement. Whether or
not you plan to attend the meeting in person, you are urged to complete, sign,
date and return the enclosed proxy card in the enclosed, post-paid envelope. If
you attend the meeting and wish to vote in person, you may withdraw your proxy
and vote your shares personally.
This Notice of Annual Meeting of Stockholders is first being sent to
stockholders on or about April 26, 1999.
By Order of the Board of Directors,
/s/ David W. Mulligan
---------------------
David W. Mulligan
President, Secretary and Chief
Operating Officer
April 26, 1999
<PAGE>
FIRST COMMONWEALTH, INC.
444 North Wells Street
Suite 600
Chicago, Illinois 60610
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 3, 1999
GENERAL INFORMATION
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of First Commonwealth, Inc., a Delaware
corporation (the "Company"), for use at the 1999 Annual Meeting of
Stockholders (the "Annual Meeting") to be held at 10:00 a.m. (local time) on
June 3, 1999, at Westin-Michigan Avenue, 909 North Michigan Avenue, Chicago,
Illinois 60611.
The Board of Directors has fixed the close of business on April 15, 1999 as
the record date for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting. On March 31, 1999 the Company had
outstanding 3,727,900 shares of common stock, par value $.001 per share
("Common Stock"). A list of stockholders of record entitled to vote at the
Annual Meeting will be available for inspection by any stockholder, for any
purpose germane to the meeting, during normal business hours, for a period of
10 days prior to the meeting, at the office of the Company located at 444
North Wells Street, Suite 600, Chicago, Illinois.
Whether or not you plan to attend the Annual Meeting, please sign, date and
mail your proxy in the enclosed postage prepaid envelope to First
Commonwealth, Inc., c/o First Chicago Trust Company of New York, a division of
Equiserve, P.O. Box 8068, Edison, New Jersey 08818-8068. The proxies will vote
your shares according to your instructions. If you return a properly signed
and dated proxy card but do not mark a choice on one or more items, your
shares will be voted in accordance with the recommendation of the Board of
Directors as set forth in this Proxy Statement. The proxy card gives authority
to the proxies to vote your shares in their discretion on any other matter
presented at the Annual Meeting.
You may revoke your proxy at any time prior to voting at the Annual Meeting
by delivering written notice to the Secretary of the Company, by submitting a
subsequently dated proxy or by attending the Annual Meeting and voting in
person at the Annual Meeting.
This Proxy Statement is first being sent or given to stockholders on or
about April 26, 1999.
<PAGE>
VOTING INFORMATION
Each holder of outstanding shares of Common Stock is entitled to one vote
for each such share held in such holder's name with respect to all matters on
which holders of Common Stock are entitled to vote at the Annual Meeting. A
holder of Common Stock may, with respect to the election of the Class I
director, vote FOR the election of the director nominee or WITHHOLD authority
to vote for such director nominee. If no direction is made on a proxy, such
proxy will be voted FOR the election of the named director nominee to serve as
a Class I director. If a proxy indicates that all or a portion of the votes
represented by such proxy are not being voted with respect to a particular
matter, such non-votes will not be considered present and entitled to vote on
such matter, although such votes may be considered present and entitled to
vote on other matters and will count for purposes of determining the presence
of a quorum. A quorum will be present if a majority of the shares of Common
Stock are represented in person or by proxy at the Annual Meeting.
The election of the Class I director requires the affirmative vote of a
plurality of votes cast by holders of Common Stock present in person or
represented by proxy and entitled to vote on such matter at the Annual
Meeting. Accordingly, if a quorum is present at the Annual Meeting, the
persons receiving the greatest number of votes by the holders of Common Stock
will be elected to serve as the Class I director. Since the election of a
director requires only the affirmative vote of a plurality of the votes cast
by holders of Common Stock present in person or represented by proxy and
entitled to vote with respect to such matter, withholding authority to vote
for a nominee and non-votes with respect to the election of a director will
not affect the outcome of the election of directors.
PROPOSAL 1
ELECTION OF DIRECTORS
The business of the Company is managed under the direction of the Company's
Board of Directors. The Board of Directors is presently composed of five
directors, divided into three classes. At the 1999 Annual Meeting, one Class I
director will be elected to serve until the Annual Meeting in the year 2002,
or until his successor is elected and qualified. The nominee for election as
Class I director is identified below. In the event the nominee, who has
expressed an intention to serve if elected, fails to stand for election, the
persons named in the proxy presently intend to vote for a substitute nominee
designated by the Board of Directors.
Nominee
The following person, if elected at the 1999 Annual Meeting, will serve as
Class I director until the 2002 Annual Meeting of Stockholders, or until his
successor is elected and qualified.
CLASS I DIRECTOR--TERM SCHEDULED TO EXPIRE IN 2002
William J. McBride, age 54, has been the Chairman of Novaeon, Inc., a health
care consulting firm since 1997. Between August 1986 and December 1995, Mr.
McBride was President of Value Health, Inc., a company which provides managed
health care services primarily in pharmacy and mental health. He is also
Chairman of the Audit Committee and a member of the Stock Option Compensation
Committee of the Board of Directors of the Company. Mr. McBride is a Director
of InteCardia, Inc. AMERICAID, Inc., Vista Care, Inc., and National Healthnet
Corporation.
The Board of Directors of the Company recommends a vote "FOR" the nominee
for Class I director.
Other Directors
The following persons are currently directors of the Company whose terms
will continue after the 1999 Annual Meeting.
2
<PAGE>
CLASS II DIRECTORS--TERMS SCHEDULED TO EXPIRE IN 2000
David W. Mulligan, age 41, is President, Chief Operating Officer and
Secretary of the Company. Mr. Mulligan is one of the founders of the Company
and has been a Director, Chief Operating Officer and Secretary of the Company
since 1986. He has been the Company's President since 1995. Between 1986 and
1995, he was the Executive Vice President of the Company. Mr. Mulligan is a
member of the Executive Committee of the Board of Directors of the Company.
Mr. Mulligan is also past President of the Virginia HMO Association and the
former Chairman of the National Association of Dental Plans. He holds a Master
of Business Administration degree from Samuel Johnson Graduate School of
Business, Cornell University. Pursuant to an employment agreement between the
Company and David W. Mulligan, the Company is required to take all reasonable
efforts to cause Mr. Mulligan to continue to be elected to the Board of
Directors of the Company. See "Executive Compensation and Other Information--
Employment Agreements."
Jackson W. Smart, Jr., age 68, has been a Director of the Company since
1988. He is Chairman of the Executive Committee and the Compensation Committee
of the Board of Directors of the Company, and is a member of the Audit
Committee of the Board of Directors of the Company. From October 1998 to
December 1997, Mr. Smart was the Chairman and Chief Executive Officer of MSP
Communications, Inc., a radio broadcasting company. Mr. Smart is a Director of
Federal Express Corporation and Evanston Northwestern Healthcare, and a
Trustee of the Goldman Sachs Trust, Goldman Sachs Equity Portfolios Inc., and
Goldman Sachs Money Market Trust.
CLASS III DIRECTORS--TERM TO EXPIRE IN 2001
Christopher C. Multhauf, age 44, is one of the Company's founders and has
been the Company's Chairman of the Board of Directors and Chief Executive
Officer since 1986. He was also the President between 1986 and 1995. He is a
member of the Executive Committee of the Board of Directors of the Company.
Mr. Multhauf is a former member of the board of directors of the National
Association of Dental Plans. He holds a Master of Business Administration
degree from Samuel Johnson Graduate School of Business, Cornell University.
Pursuant to an employment agreement between the Company and Christopher C.
Multhauf, the Company has agreed to employ Mr. Multhauf as its Chairman of the
Board of Directors and Chief Executive Officer. See "Executive Compensation
and Other Information--Employment Agreements."
Richard M. Burdge, Sr., age 72, is one of the founders of the Company and
has been a Director of the Company since 1987. He is a member of the
Compensation Committee, and is the Chairman of the Stock Option Compensation
Committee of the Board of Directors of the Company. Mr. Burdge has been self-
employed as a financial consultant for more than six years. Mr. Burdge was
formerly the Executive Vice President of CIGNA Corporation. Mr. Burdge is a
director of Pacificare Health Systems, a provider of managed health care and
insurance products.
Meetings and Committees
The Board of Directors of the Company held five meetings during 1998. Each
director attended at least 75% of the meetings in 1998.
The Board of Directors does not presently have a formal nominating
committee.
The Audit Committee of the Board of Directors recommends the firm to be
appointed as independent accountants to audit financial statements and to
perform services related to the audit, reviews the scope and results of the
audit with the independent accountants, reviews with management and the
independent accountants the Company's year-end operating results and considers
the adequacy of the internal accounting procedures. The Audit Committee
consists of Messrs. William J. McBride (Chairman) and Jackson W. Smart, Jr.
The Audit Committee held one meeting in 1998, which was attended by both
members of the committee.
The Compensation Committee, which consists of Messrs. Jackson W. Smart, Jr.
(Chairman) and Richard M. Burdge, Sr., reviews and recommends the compensation
arrangements for all officers, approves such
3
<PAGE>
arrangements for other senior level employees, and currently administers and
takes such other action as may be required in connection with certain
compensation plans of the Company and its subsidiaries, other than plans which
are administered by the Stock Option Compensation Committee. The Compensation
Committee held one meeting in 1998, which was attended by both members of the
committee.
The Stock Option Compensation Committee of the Board of Directors consists
of Richard M. Burdge, Sr. (Chairman) and William J. McBride, each of whom are
"outside directors" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended, and "Non-Employee Directors" within the
meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended.
The Stock Option Compensation Committee administers and takes such other
action as may be required in connection with certain stock option and long-
term incentive plans of the Company. The Stock Option Compensation Committee
held one meeting in 1998, which was attended by both members of the committee.
The Executive Committee of the Board of Directors consists of Jackson W.
Smart, Jr. (Chairman), Christopher C. Multhauf and David W. Mulligan. The
Executive Committee may exercise during intervals between the meetings of the
Board of Directors all the powers vested in the Board of Directors, except as
expressly limited by the Delaware General Corporation Law or otherwise
delegated to the other committees described above. The Executive Committee
held two meetings in 1998, both of which were attended by all members of the
committee.
Compensation of Directors
Non-employee directors receive an annual fee of $10,000 ($12,000 beginning
in 1999) for service as directors of the Company. In addition, non-employee
directors who serve as chairmen of the Executive, Audit and Compensation
Committees, respectively, receive an additional annual fee of $5,000 ($6,000
beginning in 1999) for service in such capacity. Beginning in 1999, the non-
employee director who serves as chairman of the Option Committee will receive
an additional annual fee of $2,000, the non-employee directors will also
receive $2,000 per Board and Executive Committee meeting attended, and the
non-employee directors will receive $1,000 per other committee meetings.
Directors who are officers or employees of the Company or its subsidiaries
receive no compensation for serving as directors. All directors receive
reimbursement for out-of-pocket expenses incurred in connection with
attendance at meetings of the Board of Directors and meetings of committees of
the Board of Directors.
Under the Company's 1995 Long-Term Incentive Plan, on the date of each
annual meeting of stockholders of the Company, each person who is a non-
employee director immediately after such annual meeting of stockholders will
be granted a nonqualified option to purchase 1,000 shares of Common Stock and,
on the date on which a person is first elected or begins to serve as a non-
employee director, each such new employee director will be granted a
nonqualified option to purchase 10,000 shares of Common Stock. The per share
exercise price of such options will be equal to the fair market value of the
Common Stock on the date of grant of such option. See "Executive Compensation
and Other Information--1995 Long-Term Incentive Plan."
EXECUTIVE OFFICERS
The following sets forth certain information with respect to executive
officers of the Company who are not identified above under "Election of
Directors."
Gregory D. Stobbe, age 44, is Senior Vice President, Operations, of the
Company. He joined the Company in 1989 and is responsible for the Company's
key provider relations, member services and operations and processing
departments. Mr. Stobbe was appointed Senior Vice President, Operations in
1993. Mr. Stobbe is a graduate of the DePaul University College of Law.
Mark R. Lundberg, age 46, is Vice President, Sales, of the Company. Mr.
Lundberg joined the Company in July 1994. Prior to joining the Company, Mr.
Lundberg was National Accounts Director for HealthCare COMPARE between 1992
and July 1994. Prior to that time, he was Director of Business Development of
MEDSTAT Systems between 1990 and 1992. Mr. Lundberg holds a Masters in Health
Services Administration degree from the University of Michigan.
4
<PAGE>
Scott B. Sanders, age 38, is Chief Financial Officer and Treasurer of the
Company. He is also Assistant Secretary of the Company. Mr. Sanders joined the
Company in May 1995. Mr. Sanders previously served as the Chief Financial
Officer for Dental Care Plus Management Corp., a managed dental care company,
between 1992 and 1995. Prior to that, Mr. Sanders was a Senior Associate at
ICF/The Smock Quinn Group, a consulting firm, between 1990 and 1992 and a
Senior Associate at Technology Solutions Company, a computer consulting firm,
during 1992. Mr. Sanders holds a Master of Management degree from the J.L.
Kellogg School of Management at Northwestern University.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
Summary Compensation. The following summary compensation table sets forth
certain information concerning compensation for services rendered in all
capacities awarded to, earned by or paid to the Company's Chief Executive
Officer and the other named executive officers during the years ended December
31, 1998, 1997 and 1996.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------------------ ------------
Name and Securities
Principal Other Annual Underlying All Other
Position Year Salary Bonus Compensation Options Compensation(1)
--------- ---- ------ -------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Christopher
C. Multhauf
Chairman
and Chief 1998 $139,728 $100,000 $ 4,800 -- $2,795
Executive 1997 135,000 -- 4,800 -- 8,563
Officer 1996 135,000 35,000 4,800 -- 1,188
David W.
Mulligan
President,
Secretary
and
Chief 1998 $134,544 $100,000 $ 4,800 -- $2,553
Operating 1997 130,000 -- 4,800 -- 3,300
Officer 1996 130,000 35,000 4,800 -- 3,813
Gregory D.
Stobbe
Senior Vice 1998 $ 95,600 $32,000 $ 3,600 3,000 $1,813
President, 1997 90,000 -- 3,600 2,500 2,240
Operations 1996 90,000 22,000 3,600 -- 2,374
Mark R.
Lundberg
Vice 1998 $111,700 $23,000 $ 3,600 3,000 $2,126
President, 1997 107,112 -- 3,600 2,500 2,417
Sales 1996 107,112 13,986 3,600 -- 2,392
Scott B.
Sanders
Chief
Financial
Officer 1998 $102,827 $30,000 $ 720 3,000 $1,949
and 1997 98,000 -- -- 12,500(2) 2,300
Treasurer 1996 95,615 17,000 -- 12,500(2) 2,209
</TABLE>
- --------
(1) Represents the Company contribution with respect to the named executive
officer under the Company's 401(k) salary deferral plan. See "Executive
Compensation and Other Information--Retirement Plan" below. Does not
include the value of any perquisites and other personal benefits,
securities or property, since the aggregate amount of such compensation is
the less than the lesser of either $50,000 or 10% of the total of annual
salary and bonus reported for the named executive officers above.
(2) Options with respect to 12,500 shares granted in 1996 were canceled in
exchange for options with respect to 12,500 shares in 1997.
5
<PAGE>
General Information Regarding Options. The following tables show information
regarding stock options held by the executive officers named in the Summary
Compensation Table.
Option Grants in 1998
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed
Annual Rate of
Number of Stock Price
Securities % of Total Appreciation for
Underlying Options Option Terms(2)
Options Granted to Exercise Expiration ----------------
Name Granted Employees Price Date 5% 10%
- ---- ---------- ---------- -------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Gregory D. Stobbe (1)... 3,000 5% $11.250 1/12/08 $21,225 $ 53,789
Mark Lundberg (1)....... 3,000 5% $11.250 1/12/08 $21,225 $ 53,789
Scott B. Sanders (1).... 3,000 5% $11.250 1/12/08 $21,225 $ 53,789
----- --- ------- --------
Total............... 9,000 15% $63,675 $161,367
===== === ======= ========
</TABLE>
- --------
(1) The exercise price of the options is equal to the fair market value of a
share of Common Stock on the date of grant. The stock options vest 50% on
the date of grant and with respect to 25% of the options first and second
anniversaries of the date of grant, and are exercisable until the tenth
anniversary of the date of grant. See "Executive Compensation and Other
Information--1995 Long-Term Incentive Plan" below.
(2) According to the requirements of the Securities and Exchange Commission,
represents the hypothetical realizable value of each grant of stock
options, assuming that the market price of the shares underlying the
options appreciates in value from the award date to the end of the option
term at the indicated annualized rates.
Aggregated Option Exercises in 1998
and Year End 1998 Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised
Options as of Value of Options as of
1998 December 31, 1998 December 31, 1998(1)
-------------------- -------------------------- ---------------------------
Shares
Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Christopher C. Multhauf
ISO-1987 Plan (2)...... 35,000 $408,231 -- -- -- --
David W. Mulligan
ISO-1987 Plan (2)...... -- -- 35,000(4) -- $413,700(4) --
Gregory D. Stobbe
NSO-1987 Plan (2)...... -- -- 24,500 -- $293,675 --
NSO-1995 Plan (3)...... -- -- 5,875 4,625 $ 3,938 $ 5,812
Mark R. Lundberg
NSO-1987 Plan (2)...... 500 $ 6,088 8,500 -- $ 65,325 $25,125
NSO-1995 Plan (3)...... -- -- 2,125 3,375 $ 3,938 $ 5,812
Scott B. Sanders
NSO-1995 Plan (3)...... -- -- 19,000 11,500 $ 12,375 $12,375
</TABLE>
- --------
(1) Represents the aggregate dollar value of in-the-money, unexercised options
held at the end of the year, based on the difference between the exercise
price and $13.25, the closing price for the Common Stock as of December
31, 1998, as reported for Nasdaq National Market Issues in The Wall Street
Journal.
(2) The exercise price of the above incentive stock options ("ISOs") granted
under the 1987 Plan is equal to 110% of the fair market value of the
Common Stock on the date of grant, and the exercise period is five
6
<PAGE>
years from the date of grant. The exercise price of the above non-qualified
options ("NSOs") granted under the 1987 Plan is equal to the fair market
value of such shares of Common Stock on the date of grant. The above NSOs
become exercisable in cumulative increments of one-fourth of the number of
shares granted annually commencing on the date of grant and are exercisable
until the tenth anniversary of the date of grant. All stock options granted
under the 1987 Plan will become immediately exercisable upon certain
changes of control of the Company. See discussion under "1987 Statutory-
Nonstatutory Stock Option Plan" below for a description of the 1987 Plan.
(3) The exercise price of the NSOs granted under the 1995 Plan is equal to the
fair market value of a share of Common Stock on the date of grant.
Typically, such stock options vest with respect to 25% of the options on
the first, second, third and fourth anniversaries of the date of grant or
the assigned anniversary dates, and are exercisable until the tenth
anniversary of the date of grant, however, see "Option Grants in 1998".
All stock options granted under the 1995 Plan will become immediately
exercisable upon certain changes of control of the Company. See discussion
under "1995 Long-Term Incentive Plan" below for a description of the 1995
Plan.
(4) Exercised on January 5, 1999.
Employment Agreements
The Company has entered into employment agreements with each of Christopher
C. Multhauf, Chairman of the Board of Directors and Chief Executive Officer,
David W. Mulligan, President, Secretary and Chief Operating Officer, Gregory
D. Stobbe, Vice President, Operations, Mark R. Lundberg, Vice President,
Sales, and Scott B. Sanders, Chief Financial Officer and Treasurer, as
described below.
Employment Agreement with Christopher C. Multhauf. This agreement, as
amended, provides that Mr. Multhauf will be employed as the Company's Chairman
of the Board and Chief Executive Officer at an annual salary of $160,000,
which will be reviewed annually, plus a performance bonus under the Company's
Management Bonus Plan and a car allowance. The employment agreement provides
for continuation of base salary, bonus and benefits for two years (i)
following termination of employment without cause, (ii) in the event of a
breach by the Company, (iii) death, (iv) long-term disability or (v) upon
termination of employment for any reason at the end of the six-month period
following a change in control of the Company, or earlier with good cause such
as diminution of responsibility or reduction of benefits. The Company may
terminate the employment of Mr. Multhauf for cause at any time. The employment
agreement also includes certain non-competition and confidentiality
provisions.
Employment Agreement with David W. Mulligan. This agreement, as amended,
provides that Mr. Mulligan will be employed as the Company's President and
Chief Operating Officer at an annual salary of $155,000, which will be
reviewed annually, plus a performance bonus under the Company's Management
Bonus Plan and a car allowance. The employment agreement provides for
continuation of base salary, bonus and benefits for two years (i) following
termination of employment without cause, (ii) in the event of a breach by the
Company, (iii) death, (iv) long-term disability or (v) upon termination of
employment for any reason at the end of the six-month period following a
change in control of the Company, or earlier with good cause such as
diminution of responsibility or reduction of benefits. The Company may
terminate the employment of Mr. Mulligan for cause at any time. The employment
agreement also includes certain non-competition and confidentiality
provisions.
Employment Agreement with Gregory D. Stobbe. This agreement, as amended, may
be terminated upon the death or total disability of Mr. Stobbe, for good cause
by the Company, without cause by the Company resulting in continuation of base
salary for one year and without cause by Mr. Stobbe upon 60 days' notice.
During the term of this agreement, as amended, Mr. Stobbe is entitled to an
annual gross base salary of $115,000, subject to annual reviews, and is
eligible for an annual bonus based on the achievement of objectives as
approved by the Board of Directors.
Employment Agreement with Mark R. Lundberg. This agreement, as amended, may
be terminated upon the death or total disability of Mr. Lundberg, for good
cause by the Company, without cause by the Company
7
<PAGE>
resulting in continuation of base salary for one year and without cause by Mr.
Lundberg upon 60 days' notice. During the term of the agreement, Mr. Lundberg
is entitled to an annual gross base salary of $118,500, subject to annual
reviews, and is eligible for an annual bonus based on the achievement of
objectives as approved by the Board of Directors.
Employment Agreement with Scott B. Sanders. This agreement, as amended, may
be terminated upon the death or total disability of Mr. Sanders, for good
cause by the Company, without cause by the Company resulting in continuation
of base salary for one year and without cause by Mr. Sanders upon 60 days'
notice. During the term of the agreement, Mr. Sanders is entitled to an annual
gross base salary of $120,000, subject to annual reviews, and is eligible for
an annual bonus based on the achievement of objectives as approved by the
Board of Directors.
Management Bonus Plan
The Chief Executive Officer and each of the other executive officers named
in the Summary Compensation Table above are eligible to participate in the
Company's Management Bonus Plan. Under this bonus program each executive
officer is entitled to receive a bonus based on three components (1) Company
performance compared to budget, (2) personal performance and (3) a
discretionary award. Awards are determined by the Compensation Committee.
Retirement Plan
The Company has a 401(k) salary deferral plan in which all employees of the
Company who have completed at least ninety days of service are eligible to
participate. Under the plan through December 31, 1998, the Company provides a
matching contribution of $.50 for every dollar an employee invests in the plan
up to an annual maximum of 2% (increased to 2 1/2% effective January 1, 1999)
of the employee's compensation for the year. The Company may make additional
discretionary contributions to the plan.
1995 Long-Term Incentive Plan
Under the Company's 1995 Long-Term Incentive Plan, as amended (the "1995
Plan"), the Company may grant incentive stock options or nonqualified options,
stock appreciation rights, bonus stock awards which are vested upon grant,
stock awards which may be subject to a restriction period or specified
performance measures or both, and performance shares. Subject to the terms of
the 1995 Plan, the Stock Option Compensation Committee is authorized to select
eligible officers and other key employees and independent contractors for
participation in the 1995 Plan and to determine the number of shares of Common
Stock subject to the awards granted thereunder, the exercise price, if any,
the time and conditions of exercise, and all other terms and conditions of
such award. A total of 350,000 shares of Common Stock have been reserved for
issuance under the 1995 Plan, of which 50,000 shares are available for stock
awards, subject to adjustment in the event of a stock split, stock dividend or
other changes in capital structure. No grants may be made under the 1995 Plan
after November 16, 2005.
1987 Statutory-Nonstatutory Stock Option Plan
Under the Company's 1987 Statutory-Nonstatutory Stock Option Plan, as
amended (the "1987 Plan"), up to 250,000 shares of Common Stock (as adjusted
for the ten-for-one stock split in 1991) were originally authorized for
issuance upon the exercise of stock options granted under the 1987 Plan. These
stock options may be either incentive stock options or nonqualified options.
Under the terms of the 1987 Plan, no stock options which are incentive stock
options may be granted under the 1987 Plan after October 1, 1996. Subject to
the terms of the 1987 Plan, the committee which administers the 1987 Plan is
authorized to select eligible officers and other key employees for
participation in the 1987 Plan and to determine the number of shares of Common
Stock subject to each option granted thereunder, the exercise price of such
option, the time and conditions of exercise of such option and all other terms
and conditions of such option. The Stock Option Compensation Committee of the
Board of Directors currently administers the 1987 Plan.
8
<PAGE>
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
All compensation decisions for the Chief Executive Officer and each of the
other executive officers named in the Summary Compensation Table are currently
made by the Compensation Committee of the Board of Directors and by the Stock
Option Compensation Committee of the Board of Directors. The Compensation
Committee consists of Messrs. Jackson W. Smart, Jr. (Chairman) and Richard M.
Burdge, Sr. Each member of the Compensation Committee is a non-employee
director who has not previously been an officer or employee of the Company.
The Stock Option Compensation Committee of the Board of Directors consists of
Messrs. Richard M. Burdge, Sr. (Chairman) and William J. McBride, each of whom
are "outside directors" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended, and "Non-Employee Directors" within the
meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended.
Executive Officer Compensation Report
This report is submitted by the Compensation Committee and the Stock Option
Compensation Committee of the Board of Directors.
All compensation decisions for the Chief Executive Officer and each of the
other executive officers named in the Summary Compensation Table are made by
the Compensation Committee of the Board of Directors except that the Stock
Option Compensation Committee administers and takes such other action as may
be required in connection with certain stock option and long-term incentive
plans of the Company. The Compensation Committee consists of Messrs. Jackson
W. Smart, Jr. (Chairman) and Richard W. Burdge, Sr. Each member of the
Compensation Committee is a non-employee director who has not previously been
an officer or employee of the Company. The Stock Option Compensation Committee
of the Board of Directors consists of Messrs. Richard M. Burdge, Sr.(Chairman)
and William J. McBride, each of whom are "outside directors" within the
meaning of Section 162(m) of the Code and "Non-Employee Directors" within the
meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended.
Executive compensation consists of both annual and long-term compensation.
Annual compensation consists of a base salary and bonus. Long-term
compensation is generally provided through the 1987 Plan and the 1995 Plan.
See "Executive Compensation and Other Information--1987 Statutory and
Nonstatutory Stock Option Plan" and "--1995 Long-Term Incentive Plan."
The Compensation Committee's approach to annual base salary is to offer
competitive salaries in comparison with market practices. The base salary of
each officer is set at a level considered to be appropriate in the judgment of
the Compensation Committee based on an assessment of the particular
responsibilities and performance of such officer taking into account the
performance of the Company, other comparable companies, the dental care
industry, the economy in general and such other factors as the Compensation
Committee may deem relevant. The comparable companies considered by the
Compensation Committee may include companies included in the peer group index
discussed below and/or other companies in the sole discretion of the
Compensation Committee. No specific measures of Company performance or other
factors are considered determinative in the base salary decisions of the
Compensation Committee. Instead, substantial judgment is used and all of the
facts and circumstances are taken into consideration by the Compensation
Committee in its executive compensation decisions.
The current base salary of the Chairman of the Board and Chief Executive
Officer was determined pursuant to an employment agreement entered into as of
September 21, 1995. This agreement provides that Mr. Multhauf will be employed
as the Company's Chairman of the Board and Chief Executive Officer at an
annual salary of $135,000, which will be reviewed annually, plus a performance
bonus under the Company's Management Bonus Plan and a car allowance. See
"Executive Compensation and Other Information--Employment Agreements."
Pursuant to such employment agreement, the Compensation Committee may increase
(but not decrease) the base salary of the Chairman of the Board and Chief
Executive Officer. The Compensation Committee reviewed the base salary of the
Chairman of the Board and Chief Executive Officer on February 8, 1999 and
determined to increase his base salary from $139,728 to $160,000 retroactive
to January 1, 1999.
9
<PAGE>
The Company has also entered into employment contracts with each of the
other named executives officers. See "Executive Compensation and Other
Information--Employment Agreements."
In addition to base salary, the Chief Executive Officer and each of the
other executive officers named in the Summary Compensation Table above are
eligible to participate in the Company's Management Bonus Plan. Under this
bonus program each executive officer is entitled to receive a bonus based on
three components (1) Company performance compared to budget, (2) personal
performance and (3) a discretionary award. Bonuses are determined in the sole
discretion of the Compensation Committee. The Compensation Committee awarded
management bonuses for 1998 and are shown for the Chairman of the Board and
the other named executive officers are reported above under "Summary
Compensation Table."
The executive officers are eligible to participate in the Company's 1987
Plan and 1995 Plan. Such plans are administered by the Stock Option
Compensation Committee. Subject to the terms of such plans, the Stock Option
Compensation Committee is authorized to select eligible officers and other key
employees for participation in the 1995 Plan and to determine the number of
shares of Common Stock subject to the awards granted thereunder, the exercise
price, if any, the time and conditions of exercise, and all other terms and
conditions of such award. The purposes of such plans are to align the
interests of the Company's stockholders and the recipients of grants under
such plans by increasing the proprietary interest of such recipients in the
Company's growth and success and to advance the interests of the Company by
attracting and retaining officers and other key employees. The terms and the
size of the option grant to each executive officer will vary from individual
to individual in the Stock Option Compensation Committee's sole discretion. No
specific factors are considered determinative in the grants of options to
executive officers by the Stock Option Compensation Committee. Instead, all of
the facts and circumstances are taken into consideration by the Stock Option
Compensation Committee in its executive compensation decisions. Grants of
options are based on the judgment of the members of the Stock Option
Compensation Committee considering the total mix of information.
In 1998, the Stock Option Compensation Committee granted options to purchase
shares of Common Stock to three executive officers named in the Summary
Compensation Table as set forth above. See "Option Grants in 1998." Each of
the options has an exercise price equal to the fair market value on the date
of grant, has a ten-year term and will become exercisable with respect to 50%
of the Common Shares subject to the option on the date of grant and with
respect to 25% on the first and second anniversaries of the option's date of
grant.
Section 162(m) of the Code. Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), generally limits to $1 million the amount that
a publicly held corporation is allowed each year to deduct for the
compensation paid to each of the corporation's chief executive officer and the
corporation's four most highly compensated officers other than the chief
executive officer, subject to certain exceptions. The Company does not believe
that the $1 million deduction limitation should have any material effect on
the Company in the near future. If the $1 million deduction limitation is
expected to have any material effect on the Company in the future, the Company
will consider ways to maximize the deductibility of executive compensation,
while retaining the discretion the Company deems necessary to compensate
executive officers in a manner commensurate with performance and the
competitive environment for executive talent.
This Executive Officer Compensation Report is submitted by the Compensation
Committee of the Board of Directors, Jackson W. Smart, Jr. (Chairman) and
Richard M. Burdge, Sr.; and by the Stock Option Compensation Committee of the
Board of Directors, Richard M. Burdge, Sr. (Chairman) and William J. McBride.
Performance Graph
The rules of the Securities and Exchange Commission ("SEC") require each
public company to include a performance graph comparing the cumulative total
stockholder return on such company's common stock for the five preceding
fiscal years, or such shorter period as the registrant's class of securities
has been registered with the SEC, with the cumulative total returns of a broad
equity market index and a peer group or similar index. The Common Shares began
trading on the Nasdaq Stock Market under the symbol "FCWI" on November 17,
1995. Accordingly, the performance graph included in this Proxy Statement
shows the period from November 17, 1995 through December 31, 1998.
10
<PAGE>
The following chart graphs the performance of the cumulative total return to
stockholders (stock price appreciation plus dividends) between November 17,
1995 and December 31, 1998 in comparison to The Nasdaq Stock Market-U.S. Index
and The Nasdaq Health Services Stock Index.
COMPARISON OF CUMULATIVE TOTAL RETURN
Among First Commonwealth, Inc., The Nasdaq Stock Market-U.S. Index and
The Nasdaq Health Services Stock Index
[Graph of Data Points]
<TABLE>
<CAPTION>
November 17, December 31, December 31, December 31, December 31,
1995 1995 1996 1997 1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
First Commonwealth,
Inc.................... $100.00 $173.33 $131.67 $ 78.33 $ 88.33
The Nasdaq Stock Market-
U.S. Index............. $100.00 $100.80 $123.95 $152.07 $213.77
The Nasdaq Health
Service Stock Index.... $100.00 $112.94 $112.76 $114.92 $ 98.54
</TABLE>
Assumes $100 invested on November 17, 1995 in First Commonwealth, Inc.
Common Stock, The Nasdaq Stock Market-U.S. Index and The Nasdaq Health Service
Stock Index. Cumulative total return assumes reinvestment of dividends.
11
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 31, 1999, by (i) each
person who is known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each of the executive officers named in the Summary Compensation Table and
(iv) all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount of Percent
Beneficial of
Name of Beneficial Owner(1) Ownership Class(2)
--------------------------- ---------- --------
<S> <C> <C>
David W. Mulligan (3)................................ 367,287 9.4%
Gotham Capital/Joel M. Greenblatt (4)................ 336,122 8.6
Christopher C. Multhauf (5).......................... 329,788 8.4
Marathon Capital Partners (6)........................ 327,300 8.4
Les Daniels (7)...................................... 260,345 6.6
Investment Advisors, Inc. (8)........................ 259,800 6.6
Cerberus Partners/Stephen Feinberg (9)............... 251,300 6.4
Richard M. Burdge, Sr. (10).......................... 88,040 2.2
Jackson W. Smart, Jr. (11)........................... 38,500 1.0
Gregory D. Stobbe (12)............................... 28,250 *
Scott B. Sanders (13)................................ 19,850 *
William J. McBride (14).............................. 14,000 *
Mark R. Lundberg (15)................................ 12,000 *
All executive officers and directors as a group (8
persons) (16)....................................... 897,715 22.9%
</TABLE>
- --------
*Less than 1%.
(1) Except as set forth in the footnotes to this table and subject to
applicable community property laws, the persons named in the table above
have sole voting and investment power with respect to all shares shown as
beneficially owned by them.
(2) Applicable percentage of ownership is based on 3,915,615 shares of Common
Stock outstanding on March 31, 1999, including 187,715 shares of Common
Stock subject to options exercisable within 60 days of March 31, 1999.
(3) Mr. Mulligan is a director and President, Secretary and Chief Operating
Officer of the Company. The business address of Mr. Mulligan is 444 North
Wells Street, Suite 600, Chicago, Illinois 60610.
(4) Based on a Schedule 13G dated March 16, 1999. This Schedule 13G was filed
on behalf of Gotham Capital V, L.L.C., Gotham Capital VI, L.L.C., Gotham
Capital VII, L.L.C., and Joel M. Greenblatt (collectively, "Gotham").
Such Schedule 13G reports shared voting power and shared dispositive
power with respect to 330,066 shares and sole voting power and sole
dispositive power with respect to 6,056 shares. The business address of
Gotham is 100 Jericho Quadrangle, Suite 212, Jericho, New York 11753.
(5) Mr. Multhauf is Chairman of the Board of Directors and Chief Executive
Officer of the Company. The business address of Mr. Multhauf is 444 North
Wells Street, Suite 600, Chicago, Illinois 60610.
(6) Based on a Schedule 13D (Amendment No. 1) dated March 31, 1998. This
Schedule 13D was filed on behalf of Marathon Capital Partners, L.P.,
Marathon Capital Management Group, LLC and Peter Gardiner
12
<PAGE>
(collectively, "Marathon"). Such Schedule 13D reports shared voting power
and shared dispositive power with respect to 327,300 shares. The business
address of Marathon is 9595 Wilshire Boulevard, Suite 700, Beverly Hills,
California 90212.
(7) Based on a Schedule 13D (Amendment No. 1) dated April 21, 1998. This
Schedule 13D amendment was filed by Leslie B. Daniels on behalf of
himself and the Daniels Family Trust; Daniels Family Foundation;
Elizabeth L. Daniels; Paul B. Daniels; Leslie B. Daniels, Co-Trustee,
Burdge, Daniels & Co. Money Purchase Plan; and Leslie B. Daniels,
Trustee, Richard and Natasha Burdge Irrevocable Family Trust
(collectively, "Daniels"). Such Schedule 13D reports shared voting power
and shared dispositive power with respect to 177,515 shares and sole
voting power and sole dispositive power with respect to 83,830 shares.
The business address of Daniels is 767 Fifth Avenue, 5th floor, New York,
New York 10028.
(8) Based on a Schedule 13G dated January 29, 1999. This Schedule 13G was
filed by Investment Advisers, Inc. on behalf of itself ("IAI"). Such
Schedule 13G reports shared voting power and shared dispositive power
with respect to 50,800 shares and sole voting power and sole dispositive
power with respect to 209,000 shares. The business address of IAI is 3700
First Bank Place, Minneapolis, Minnesota 55440.
(9) Based on a Schedule 13D dated March 16, 1999. This Schedule 13D was filed
on behalf of Cerberus Partners, L.P., Cerberus International, Ltd and
Stephen Feinberg (collectively, "Cerberus"). Such Schedule 13D reports
sole voting power and sole dispositive power with respect to 251,300
shares. The business address of Cerberus is 450 Park Avenue, 28th Floor,
New York, New York 10022.
(10) Mr. Burdge is a director of the Company. Includes 4,000 shares of Common
Stock, issuable upon exercise of outstanding stock options which are
currently exercisable or exercisable within 60 days and 5,000 shares held
by his spouse.
(11) Mr. Smart is a director of the Company. Includes 11,500 shares of Common
Stock, issuable upon exercise of outstanding stock options which are
currently exercisable or exercisable within 60 days.
(12) Mr. Stobbe is Senior Vice President, Operations, of the Company. Includes
24,250 shares of Common Stock, issuable upon exercise of outstanding
stock options which are currently exercisable or exercisable within 60
days.
(13) Mr. Sanders is Chief Financial Officer and Treasurer of the Company.
Includes 19,750 shares of Common Stock, issuable upon exercise of
outstanding stock options which are currently exercisable or exercisable
within 60 days.
(14) Mr. McBride is a director of the Company. Includes 12,000 shares of
Common Stock, issuable upon exercise of outstanding stock options which
are currently exercisable or exercisable within 60 days and 2,000 shares
held by his children.
(15) Mr. Lundberg is Vice President, Sales, of the Company. Includes 12,000
shares of Common Stock, issuable upon exercise of outstanding stock
options which are currently exercisable or exercisable within 60 days.
(16) Includes 83,500 shares of Common Stock issuable upon exercise of
outstanding stock options which are currently exercisable or exercisable
within 60 days.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations thereunder require the
Company's directors and officers and persons who are deemed to own more than
ten percent of the Common Shares (collectively, the "Reporting Persons"), to
file certain reports ("Section 16 Reports") with the SEC with respect to their
beneficial ownership of Common Shares. The Reporting Persons are also required
to furnish the Company with copies of all Section 16 Reports they file. Based
on a review of copies of Section 16 Reports and representations to the
Company, the Company believes that all Section 16 filing requirements
applicable to the Reporting Persons during and with respect to 1998 were
complied with on a timely basis, except as disclosed below.
13
<PAGE>
During or with respect to 1998, a certain officer was not timely in
reporting the appropriate Form 4 regarding a transaction involving the
Company's stock. The following filing for the following individual was late
during or with respect to 1998. Mark Lundberg filed Form 5 on February 12,
1999 reporting the following Form 4 transaction: the sale of 500 shares of
Common Stock which should have been filed by September 10, 1998.
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of Arthur Andersen LLP, who served as the Company's
independent public accountants for the last fiscal year, are expected to be
present at the Annual Meeting of Stockholders and will have an opportunity to
make a statement and to respond to appropriate questions raised by
stockholders at the Annual Meeting or submitted in writing prior thereto.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
In order to be considered for inclusion in the Company's proxy materials for
the 2000 Annual Meeting of Stockholders, any stockholder proposal must be
addressed to First Commonwealth, Inc., 444 North Wells Street, Suite 600,
Chicago, Illinois 60610, Attention: Secretary, and must be received no later
than December 28, 1999.
Pursuant to the Company's Bylaw, proposals by stockholders intended to be
presented at the 2000 Annual Meeting of Stockholders must be received by the
Company at its principal executive offices no later than January 27, 2000 for
consideration at the 2000 Annual Meeting of Stockholders, except if the date
of the 2000 Annual Meeting of Stockholders is changed by more than thirty
calendar days from the date of the 1999 Annual Meeting of Stockholders,
stockholder proposals must be received by the Company a reasonable time before
the Company solicits proxies for the 2000 Annual Meeting of Stockholders.
Except with respect to shareholder proposals which the Company receives notice
on a timely basis as described in the preceding sentence, the proxy solicited
by the Board of Directors for the 2000 Annual Meeting will confer
discretionary authority to vote on matters properly presented at such meeting,
to the extent permitted by law.
EXPENSES OF SOLICITATION
Your proxy is solicited by the Board of Directors and its agents and the
cost of solicitation will be paid by the Company. Officers, directors and
regular employees of the Company, acting on its behalf, may also solicit
proxies by telephone, facsimile transmission or personal interview. The
Company will, at its expense, request brokers and other custodians, nominees
and fiduciaries to forward proxy soliciting material to the beneficial owners
of shares of record by such persons. The Company has retained Corporate
Investor Communications, Inc. to aid in solicitation of proxies for a fee of
$1,500 plus out-of-pocket expenses.
EXHIBITS TO ANNUAL REPORT ON FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1998 IS ENCLOSED AS THE COMPANY'S ANNUAL REPORT TO STOCKHOLDERS
FOR 1998. IN ADDITION, PURSUANT TO THE REQUIREMENTS OF THE SEC, THE COMPANY
WILL FURNISH, WITHOUT CHARGE, COPIES OF SUCH FORM 10-K UPON WRITTEN REQUEST TO
STOCKHOLDERS AS OF THE RECORD DATE. THE COMPANY WILL PROVIDE COPIES OF THE
EXHIBITS TO THE REPORT UPON PAYMENT OF A REASONABLE FEE THAT WILL NOT EXCEED
THE COMPANY'S REASONABLE EXPENSES INCURRED IN CONNECTION THEREWITH. REQUESTS
FOR SUCH MATERIALS SHOULD BE DIRECTED TO FIRST COMMONWEALTH, INC., 444 NORTH
WELLS STREET, SUITE 600, CHICAGO, ILLINOIS 60610, TELEPHONE (312) 644-1800,
ATTENTION: SCOTT B. SANDERS.
14
<PAGE>
OTHER BUSINESS
It is not anticipated that any matter will be considered by the stockholders
other than those set forth above, but if other matters are properly brought
before the Annual Meeting, the persons named in the proxy will vote in
accordance with their best judgment.
By order of the Board of Directors,
/s/ David W. Mulligan
David W. Mulligan
President, Secretary and Chief
Operating Officer
ALL STOCKHOLDERS ARE URGED TO SIGN, DATE
AND MAIL THEIR PROXIES PROMPTLY.
15
<PAGE>
ANNEX I
P FIRST COMMONWEALTH, INC.
R 444 NORTH WELLS, SUITE 600
O CHICAGO, ILLINOIS 60610
X
Y
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Christopher C. Multhauf and David W.
Mulligan, or either of them acting in the absence of the other, with power of
substitution, attorneys and proxies for and in the name and place of the
undersigned, to vote the number of shares of Common Stock that the undersigned
would be entitled to vote if then personally present at the 1999 Annual Meeting
of the Stockholders of First Commonwealth, Inc., or at any adjournment thereof,
upon the matters as set forth in the Notice of Annual Meeting and Proxy
Statement, as designated on the reverse side hereof.
(change of address/comments)
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card)
SEE REVERSE
SIDE
<PAGE>
Please mark your
/ X / votes as in this
example
This proxy, when properly executed, will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR the nominee in proposal 1.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR the nominee in proposal 1.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of Director / / / / William J. McBride
2. In accordance with their discretion, upon all other matters that may properly
come before said Annual Meeting and any adjournment thereof.
Change of Address/Comments on
Reverse Side
/ /
The signer hereby revokes all proxies heretofore
given by the signer to vote at said meeting or
any adjournments thereof.
Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such.
--------------------------------------
--------------------------------------
SIGNATURE(S) DATE
