SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[Amendment No. _____________]
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
(Name of Registrant as Specified in Its Charter)
LAFAYETTE BANCORPORATION
(Name of Person(s) Filing Proxy Statement)
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:
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 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:
<PAGE>
DEFINITIVE PROXY SOLICITATION
MATERIALS - - TO BE RELEASED ON
OR ABOUT 3/9/98
LAFAYETTE BANCORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 13, 1998
The Annual Meeting of Shareholders of Lafayette Bancorporation (the
"Corporation") will be held in the Board Room located on the Seventh Floor of
the principal office of the Corporation and Lafayette Bank and Trust Company,
133 North Fourth Street, Lafayette, Indiana, on Monday, April 13, 1998, at 2:30
p.m., Lafayette time, for the following purposes:
1. To elect two Directors to hold office until the Annual Meeting of
Shareholders in the year 2001 and until their successors are elected and
have qualified.
2. To consider and approve the adoption of the 1998 Lafayette Bancorporation
Nonqualified Stock Option Plan.
3. To transact such other business as may properly come before the meeting.
Holders of record of Common Shares of Lafayette Bancorporation at the
close of business on March 2, 1998, 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
ROBERT J. WEEDER
President and Chief Executive Officer
March 9, 1998
Lafayette, Indiana
(ANNUAL REPORT ENCLOSED)
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF
LAFAYETTE BANCORPORATION
Parent of Lafayette Bank and Trust Company
April 13, 1998
This Proxy Statement is being furnished to shareholders on or about March
9, 1998, in connection with the solicitation by the Board of Directors of
Lafayette Bancorporation (the "Corporation") at 133 North Fourth Street,
Lafayette, Indiana of proxies to be voted at the Annual Meeting of Shareholders
to be held at 2:30 p.m., Lafayette time, on Monday, April 13, 1998, in the Board
Room on the Seventh Floor of the principal office of the Corporation. The
Corporation is the parent holding company for Lafayette Bank and Trust Company.
At the close of business on March 2, 1998, the record date for the Annual
Meeting, there were 2,164,195 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
Two Directors are to be elected at the Annual Meeting. The Board of
Directors, which currently consists of five members, is divided into three
classes of near-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 three years after such Director's election and
thereafter until such Director's successor is elected and has qualified or until
the earlier of the Director's resignation, disqualification, removal or death.
The terms of the current Directors expire as follows: 1998 -- Messrs. Boehning
and Bonner; 1999 -- Messrs. Hancock and Meeks; and 2000 -- Mr. Weeder.
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.
Proxies marked as "vote withheld" and shares held in street name that are
designated by brokers on proxy cards as not voted will be treated as shares
present for the purpose of determining whether a quorum is present. Shares
present but not voted for any nominee do not influence in any manner 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 Richard A.
Boehning and Joseph A. Bonner, 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 TWO NOMINEES
IDENTIFIED ABOVE. (ITEM 1 ON THE PROXY)
<PAGE>
The following table presents certain information as of February 1, 1998,
regarding the current Directors of the Corporation, including the two nominees
proposed by the Board of Directors for election at this year's Annual Meeting,
and the most highly compensated executive officer who is not a Director of the
Corporation. 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. Except
for Mr. Meeks, who beneficially owns 1.1 percent of the Corporation's Common
Shares, none of the persons named below beneficially owns more than one percent
of the Corporation Common Shares. (All shares and percentage amounts reflect the
ten percent stock dividend paid on November 1, 1997, to shareholders of record
on September 30, 1997.)
<TABLE>
<CAPTION>
Name,
Present Principal Director Shares Beneficially
Occupation and Age Since (1) Owned
<S> <C> <C>
Directors:
Richard A. Boehning* (2) 1992 6,405 (3)
Partner, Bennett Boehning & Clary
(law firm), 60
Joseph A. Bonner* (4) 1985 18,194 (5)
Chairman of the Corporation and
the Bank, 66
Wilbur. L. Hancock (6) 1989 5,395 (7)
Retired General Manager, Customer Operations
PSI Energy, A CINERGY Company, 59
Roy D. Meeks (8) 1981 24,710 (9)
President and Owner of Nelmeeks, Inc.
d/b/a Radisson Inn, 65
Robert J. Weeder (10) 1989 10,337 (11)
Chief Executive Officer and President
of the Corporation and the Bank, 60
Named Executive Officer Who Is Not A Director:
Robert J. Ralston (12) 3,252 (13)
Executive Vice President, Senior Operations
Officer and Secretary/Treasurer of the Bank, 56
All Directors of the Corporation and Executive Officers 70,973 (14)
as a Group (12 Persons)
</TABLE>
<PAGE>
*Nominee
(1) Includes service on the Board of the Bank prior to the Corporation's
becoming a holding company for the Bank in 1985.
(2) Mr. Boehning has served as a Director of the Bank since 1992 and as a
Director of the Corporation since 1994.
(3) Includes 1,000 shares held by the Albrecht Family Trust, for which trust
Mr. Boehning serves as trustee, and 4,356 shares that Mr. Boehning has the
right to acquire upon the exercise of stock options.
(4) Mr. Bonner has served as a Director of the Bank since 1985 and as a
Director of the Corporation since 1987. On January 31, 1997, Mr. Bonner
retired as President and Chief Executive Officer of the Corporation and the
Bank.
(5) Includes 8,635 shares held jointly by Mr. Bonner and his spouse, 5,201
shares held by Mr. Bonner's spouse, and 4,356 shares that Mr. Bonner has
the right to acquire upon the exercise of stock options.
(6) Mr. Hancock has served as a Director of the Bank since 1989 and of the
Corporation since 1992. From October 1996 through March 1997, when he
retired, Mr. Hancock served as Northwest Region Manager and District
Manager -- Lafayette for PSI Energy and prior to that time he served as
Acting General Manager, Corporate Customer Operations of PSI Energy.
(7) Includes 634 shares held jointly by Mr. Hancock and his spouse and 4,356
shares that Mr. Hancock has the right to acquire upon the exercise of stock
options.
(8) Mr. Meeks has served as a Director of the Bank since 1981 and as a Director
of the Corporation since 1985.
(9) Includes 13,807 shares held jointly by Mr. Meeks and his spouse, 1,320
shares held by Mr. Meeks' spouse, and 4,356 shares that Mr. Meeks has the
right to acquire upon the exercise of stock options.
(10) Mr. Weeder has served as a Director of the Bank since 1989 and as a
Director of the Corporation since 1990. Mr. Weeder has served as President
of the Bank since August 1996 and as President of the Corporation since
September 1996. He assumed the positions of Chief Executive Officer of the
Corporation and the Bank upon Mr. Bonner's retirement in January 1997. Mr.
Weeder had served as Executive Vice President since 1992.
(11) Includes 1,617 shares held jointly by Mr. Weeder and his spouse, 1,571
shares held by Mr. Weeder's spouse, and 4,894 shares that Mr. Weeder has
the right to acquire upon the exercise of stock options.
(12) Mr. Ralston served as Senior Vice President Operations until his
appointment to his current position in December 1996. He has served as
Secretary/Treasurer of the Bank since September 1996.
(13) Consists of 924 shares held jointly by Mr. Ralston and his spouse, 1,584
shares held jointly by Mr. Ralston and his father, and 744 shares that Mr.
Ralston has the right to acquire upon the exercise of stock options.
(14) Includes 25,545 shares that members of the group have the right to acquire
upon the exercise of stock options and 27,269 shares as to which voting and
investment powers are shared by members of the group with their spouses.
<PAGE>
Committees and Attendance
The Boards of Directors of the Corporation and the Bank each held
fourteen meetings during 1997. All of the Directors of the Corporation are also
members of the Board of Directors of the Bank. The Corporation does not have any
standing committees except for the Stock Option Committee. The members of the
Stock Option Committee are Mr. Boehning, who serves as Chairman, and Messrs.
Bonner, Hancock, and Meeks, all of whom are Directors of the Corporation and the
Bank. The Stock Option Committee, which met twice in 1997, supervises the
administration of the Corporation's Stock Option Plan and recommends for Board
approval grants of options to key employees.
The committees of the Board of Directors of the Bank include standing
audit and salary committees. The members of the Audit Committee are Mr. Bonner,
who became Chairman of the Audit Committee in January 1998 upon the retirement
of Charles E. Maki, Messrs. Bonner and Hancock, both of whom are Directors of
the Corporation and the Bank, and Messrs. Robert T. Jeffares, Vernon N. Furrer,
and Jeffrey L. Kessler, all three of whom are Directors of the Bank. The Audit
Committee, which met four times during 1997, reviews audit reports, meets
quarterly with the audit staff, and recommends the selection of outside
auditors. 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 1997. The members of the Salary Committee
are Mr. Hancock, who serves as the Chairman, and Messrs. Bonner, Meeks, Weeder
and Mr. Furrer. The Salary Committee meets in November each year to determine
compensation for officers of the Corporation and the Bank (officers of the
Corporation receive their compensation from the Bank). The Salary Committee met
once during 1997.
Compensation of Directors
During 1997, Directors of the Corporation received $250 per month
regardless of committee participation or attendance at meetings. Non-employee
Directors of the Bank received $1,350 per month and employee Directors received
$525 per month. Outside Directors also received a performance award in the
amount of $1,250. The grant of this performance award was based upon
recommendations of the Salary Committee in conjunction with the employees'
performance award program criteria which references the overall Bank's
performance.
All of the Bank's Directors participated in one of two deferred
compensation plans maintained by the Bank in 1997. In December, 1987, the Bank
established an unfunded deferred compensation plan for Directors of the Bank
(the "1987 Plan"). The 1987 Plan provides that on or before December 31 of any
year, a director of the Bank may elect in writing to defer receipt of his
Director fees for the succeeding calendar year. At the end of each year for
which a Director has elected to defer fees under the 1987 Plan, the Bank credits
interest on the deferred fees at the rate of interest the Bank paid on
twelve-month certificates of deposit issued by the Bank on the first business
day of such year. Mr. Maki, who retired in January 1998, was the only director
who participated in the 1987 Plan during 1997. In October, 1994, the Bank
adopted a deferred compensation plan for Directors through Bank Compensation
Strategies Group, Inc. (the "1994 Plan"). To fund the 1994 Plan, the Bank
purchased single-premium universal life insurance policies for each of the
participants. The interest rate payable under the 1994 Plan is tied to the Wall
Street Prime Rate plus 150 basis points, and is adjusted on September 30 of each
calendar year. The adjusted interest rate as of September 30, 1997, was 10.25%
(Wall Street Prime Rate (8.75%) plus 150 basis points). All of the Directors of
the Corporation and the Bank, except for Mr. Maki, deferred 1997 Director fees
pursuant to the 1994 Plan.
<PAGE>
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 other most highly compensated executive officers, based on salary and bonus
earned during fiscal 1997.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
Annual Compensation Awards
Securities
Underlying
Name and Options/ All Other
Principal Position Year Salary Bonus SARs Compensation
<S> <C> <C> <C> <C> <C>
Robert J. Weeder, 1997 $120,000 $25,000 2,860 $ 12.596 (1)
President and Chief 1996 $105,893 $15,000 2,112 $ 11,288
Executive Officer 1995 $ 96,300 $10,000 4,646
Robert J. Ralston, 1997 $ 95,000 $15,000 2,475 $ 2,200 (2)
Executive Vice President, 1996 $ 90,570 $10,000 1,980 $ 1,408
Senior Operations 1995 $ 86,670 $ 7,500 871
Officer and Secretary/
Treasurer of the Bank
Joseph A. Bonner 1997 $12,667 (3) (3) (3) $ 42,930 (4)
Chairman of the Boards 1996 $146,600 $25,000 2,244 $ 11,835
of Directors of the 1995 $140,250 $15,000 4,937
Corporation and the Bank (3)
</TABLE>
(1)Represents matching contributions of $2,732 under the Lafayette Bank and
Trust Company Employees' Salary Savings Plan (the "401(k) Plan"), Bank
Director fees in the amount of $6,300, Corporation Director fees of $3,000,
and above-market interest credited on deferred Director fees in the amount
of $564.
(2)Represents matching contributions of $ $2,200 under the 401(k) Plan.
(3)Mr. Bonner retired from his positions as CEO and President in January 1997.
(4)Represents matching contributions of $253 under the 401(k) Plan, Bank
Director fees in the amount of $39,275, Corporation Director fees of
$3,000, and above-market interest credited on deferred Director fees in the
amount of $402.
<PAGE>
Option/SAR Grants In Last Fiscal Year
The following table presents information on the stock option grants that
were made during 1997 pursuant to the Lafayette Bancorporation Non-Qualified
Stock Option Plan.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for
Option Term1
Individual Grants
% of Total
Options (2)/
Number of SARs Granted
Securities Granted to Exercise
Underlying Employees or Base
Options/SARs in Fiscal Price Expiration
Name Granted (2) Year ($/Sh) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Robert J. Weeder 2,860 10.2% $24.20 5/12/07 $43,529 $110,310
Robert J. Ralston 2,475 8.8% $24.20 5/12/07 $37,670 $ 95,461
</TABLE>
(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)The options granted during 1997 to Messrs. Weeder and Ralston have the same
terms. The options were granted on May 12, 1997, at the estimated fair
market value of one Common Share on that date. The options become
exercisable in twenty percent increments, with twenty percent becoming
exercisable one year from the grant date and an additional twenty percent
becoming exercisable on the four subsequent anniversaries of the grant
date; provided, however, that all options become immediately exercisable
upon the earlier occurrence of (a) the optionee's 65th birthday, if the
optionee is an employee; (b) the optionee's 70th birthday, if the optionee
is a Director; or (c) an "Applicable Event," which is defined in the Option
Plan as (i) the expiration of a tender offer or exchange offer (other than
an offer by the Corporation) pursuant to which at least 50 percent of the
Corporation's issued and outstanding stock has been purchased, or (ii) the
approval by the shareholders of the Corporation of an agreement to merge or
consolidate the Corporation with or into another entity where the
Corporation is not the surviving entity, or an agreement to sell or
otherwise dispose of all or substantially all of the Corporation's assets
(including a plan of liquidation). The options expire ten years from the
date of grant unless terminated earlier upon the death, retirement or
termination of employment of the optionee. The options are nontransferable
and may be exercised only by the optionee during his lifetime. No SARs were
granted during 1997.
<PAGE>
Aggregated Option/SAR Exercises In Last Fiscal Year and
Fiscal Year-End Option/SAR Values
The following table sets forth information for 1997 with respect to SAR
exercises by the executive officers named in the Summary Compensation Table and
the value of unexercised options and SARs as of December 31, 1997. There were no
option exercises by the named executive officers during 1997. (Numbers of
options and per share exercise prices have been retroactively adjusted to
reflect stock dividends.)
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options/SARs at Fiscal In-the-Money Options/SARs
Year-End (#) at Fiscal Year-End ($)
Shares
Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Robert J. Weeder 0 0 30,256 / 4,724 $699,062 / $43,187
Robert J. Ralston 0 0 20,307 / 4,582 $504,067 / $43,565
Joseph A. Bonner 0 $547,537 4,356 / 0 $56,149 / $0
</TABLE>
<PAGE>
(1)The Option Plan provides for the grant of non-qualified options to Directors
and key employees. Options granted to Directors vest immediately upon
grant. Options granted to key employees vest in twenty percent increments,
with twenty percent vesting one year from the date of grant and an
additional twenty percent vesting on each of the four subsequent
anniversaries of the grant date. See also the discussion of the options in
Note 1 to the Option/SAR Grants In Last Fiscal Year table above. Messrs.
Bonner and Weeder have received option grants in their capacities as both
Directors and key employees. The Lafayette Bancorporation Officers' Stock
Appreciation Rights Plan, as amended (the "SAR Plan"), provides for the
grant of SARs from time to time to executive and senior management officers
of the Corporation in the sole discretion of the Stock Option Committee.
Each SAR is granted at a base value equal to the fair market value of one
Common Share on the date of grant and has a subsequent value equal to 100
percent (or such other percentage specified by the Stock Option Committee)
of the excess of the then-current fair market value of one Common Share
over the base price of the SAR. The SARs granted to Messrs. Weeder, Ralston
and Bonner vested in annual twenty percent increments and are fully vested.
SARs become fully exercisable without regard to vesting restrictions,
however, upon the occurrence of (i) the expiration of a tender offer or
exchange offer (other than an offer by the Corporation) pursuant to which
at least 5 percent of the Corporation's issued and outstanding stock has
been purchased, or (ii) the approval by the shareholders of the Corporation
of an agreement to merge or consolidate the Corporation with or into
another corporation where the Corporation is not the surviving corporation,
or an agreement to sell or otherwise dispose of all or substantially all of
the Corporation's assets (including a plan of liquidation). SARs also
became fully vested when an officer reaches age 62.
(2)Represents the difference between the last per share sales price of a Common
Share on December 31, 1997, known to the Corporation's management ($31.75)
and the exercise price of options/SARs having an exercise price less than
that sales price, multiplied by the number of options/SARs.
<PAGE>
Pension Plan
The Bank maintains a noncontributory defined benefit pension plan, the
Lafayette Bank and Trust Company Employees' Pension Plan (the "Pension Plan").
All employees who have attained the age of 21 and have completed one year of
service are eligible to participate in the Pension Plan. The following table
indicates the estimated annual benefits payable under the Pension Plan to a
participant at the normal retirement age of 65 who has the specified
remuneration and years of service.
<TABLE>
<CAPTION>
Pension Plan Table 1
Years of Service
-----------------------------------------------------------------------------
Pay 15 20 25 30 35
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
25,000 7,440 9,920 12,400 14,880 17,360
50,000 15,690 20,920 26,150 31,380 36,610
75,000 23,940 31,920 39,900 47,880 55,860
100,000 32,190 42,920 53,650 64,380 75,110
125,000 40,440 53,920 67,400 80,880 94,360
150,000 48,690 64,920 81,150 97,380 113,610
160,000 51,990 69,320 86,650 103,980 121,310
200,000 51,990 69,320 86,650 103,980 121,310
</TABLE>
(1)Pay limited to statutory IRC ss. 401(a)(17) limit in calculation of benefits.
Federal law limits annual compensation taken into account for benefit
purposes to $160,000 for plan years beginning 1/1/97 and thereafter, until
indexed to the next $10,000 increment. (IRC ss.401(a)(17)).
The retirement benefit formula used for the Pension Plan is based upon a
participant's average monthly compensation for the five consecutive calendar
years that produce the highest average and the participant's years of service
with the Bank. The retirement benefit formula is composed of two parts, a "base
benefit" and an "excess benefit." The base benefit is equal to 1.6 percent of a
participant's average monthly compensation during the applicable five year
period multiplied by the participant's number of years of service. The excess
benefit is equal to 0.6 percent of the amount by which the participant's average
monthly compensation exceeds $750.00 multiplied by the participant's number of
years of service (not to exceed 35 years). A participant's compensation is based
on total taxable wages or salary (including any overtime and bonuses) plus any
salary reduction contributions made by the participant under the Bank's 401(k)
plan and any contribution made to a section 125 plan maintained by the Bank.
Federal law limits the amount of annual compensation that can be counted for
some highly compensated employees. The years of credited service for years of
service through the end of 1997 applicable for determining the retirement
benefits for the executive officers named in the Summary Compensation Table are
as follows: Mr. Bonner: 28 years; Mr. Weeder: 12 years; and Mr. Ralston: 19
years.
<PAGE>
Report on Executive Compensation
Overall Compensation Policy
The executive officers of the Corporation also serve as the executive
officers of the Bank. The executive officers of the Corporation do not receive
any compensation (other than pursuant to the Stock Option Plan, as discussed
below) from the Corporation.
The Salary Committee of the Board of Directors of the Bank is responsible
for recommending to the Board of Directors the salaries, bonuses and other
compensation to be paid to the executive officers of the Bank. The Salary
Committee is composed of three outside Directors (one of whom is the Chairman),
Mr. Weeder (the Corporation's Chief Executive Officer), and Mr. Bonner (who
retired as Chief Executive Officer in January 1997). Mr. Weeder absents himself
from, and does not participate in, any Salary Committee proceedings relating to
the determination of his own compensation. The primary goals of the Salary
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 aligning the
interests of executive officers with the interests of the Corporation's
shareholders. The Salary 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
financial performance of the Bank. The executive compensation program consists
of four basic elements: (1) base salary, (2) annual incentive bonus awards, (3)
stock option awards, and (4) stock appreciation right awards. At its annual
meeting in November each year, the Salary Committee reviews with management the
officers' evaluations and management's recommendations and then makes
compensation recommendations for Mr. Weeder and the other officers.
Base Salary
The Bank attempts to provide Mr. Weeder and the other officers with base
salaries that are competitive with the salaries offered by other bank and bank
holding companies of comparable size in Indiana and the surrounding states,
based on information that the Salary Committee obtains from Crowe Chizek and
Company LLP and the Indiana Bankers Association. Increases in base compensation
are not automatically based on increased compensation at comparable
institutions, but also reflect the Corporation's, the Bank's and the individual
executive officer's performance for the year.
The Salary Committee recommended (and the Board approved) that Mr. Weeder's
base salary for 1997 be set at $120,000.
<PAGE>
Annual Incentive Bonus Awards
Annual bonuses are awarded based on the extent that the Salary
Committee believes that they are merited based on the Bank's performance.
Bonuses awarded for 1997 were increased over the amounts awarded in 1996.
Stock Option Awards
In 1995 the Corporation adopted the Lafayette Corporation Non-Qualified
Stock Option Plan (the "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 share of the Corporation's Common Stock on the date of grant.
The Stock Option Committee of the Board of Directors of the Corporation
administers the Stock Option Plan. All of the members of the Stock Option
Committee are independent outside Directors of the Corporation. During 1997 an
aggregate of 28,160 stock options were granted to twenty-eight key employees of
the Bank. Mr. Weeder was granted options to acquire 2,860 shares and Mr. Ralston
was granted options to acquire 2,475 shares. All of the options granted in 1997
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.
Stock Appreciation Rights Awards
The Lafayette Bancorporation Officers' Stock Appreciation Rights Plan
(the "SAR Plan") provides for the award from time to time to officers of stock
appreciation rights ("SARs") payable in cash. The only grants that have been
made under the SAR Plan were made in 1992 to Messrs. Weeder, Ralston and Bonner.
Mr. Bonner exercised all of the SARs granted to him upon his retirement in 1997
as an executive officer.
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.
<PAGE>
SUBMITTED BY THE MEMBERS OF THE SALARY AND STOCK OPTION COMMITTEES:
Salary Committee Stock Option Committee
W.L. Hancock, Chairman Richard A. Boehning
Joseph A. Bonner Joseph A. Bonner
Vernon N. Furrer W.L. Hancock
Roy D. Meeks Roy D. Meeks
Robert J. Weeder
Compensation Committee Interlocks and Insider Participation
Mr. Weeder, the Corporation's Chief Executive Officer, and Mr. Bonner, who
retired as Chief Executive officer in January 1997, serve on the Salary
Committee together with three outside Directors. The Stock Option Committee is
composed of four outside Directors.
During 1997 the Bank made payments for title services to Tippecanoe
Title Services, Inc., a company owned by Mr. Boehning, who serves as a Director
of the Corporation and the Bank and as a member of the Salary Committee. The
Bank charges its lending customers for the title services and then pays the
title company for the services. The Bank expects to continue the use of such
title services during 1998. Mr. Boehning is a partner in the law firm of
Bennett, Boehning & Clary, which represented the Corporation as legal counsel in
certain matters during 1997, and the Corporation expects that the firm will
continue to represent the Corporation in similar matters in 1998.
Certain Business Relationships And Transactions
During 1997, the Bank had 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.
<PAGE>
Stock Performance Graph
The SEC requires the Corporation to include in this proxy statement a
line-graph presentation comparing the Corporation's cumulative, shareholder
returns with market and industry returns. The following graph compares the
Corporation's performance with the performance of the NASDAQ- Total US index and
the SNL Midwest Bank index. The returns of each company in the peer group have
been weighted to reflect the Corporation's market capitalization.
(Source: SNL Securities)
<TABLE>
<CAPTION>
[TABLE SUBSTITUTED FOR GRAPH IN EDGAR-FILED DOCUMENT]
Period Ending
Index 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lafayette Bancorporation 100.00 109.37 120.57 130.04 152.48
NADSAQ - Total US 100.00 94.58 111.92 130.85 122.71
SNL Midwest Bank Index 100.00 103.64 120.59 141.85 162.14
</TABLE>
<PAGE>
PROPOSAL 2
PROPOSAL TO ADOPT LAFAYETTE BANCORPORATION 1998
NONQUALIFIED STOCK OPTION PLAN
The Board of Directors has adopted, subject to shareholder approval, the
Lafayette Bancorporation 1998 Nonqualified Stock Option Plan (the "1998 Plan").
The primary purpose of the 1998 Plan is to advance the interests of the
Corporation and its shareholders by affording to key management employees of the
Corporation and the Bank an opportunity to acquire or increase their proprietary
interest in the Corporation by the grant of stock options. By encouraging such
employees to become owners of the Corporation, the Corporation seeks to attract,
motivate, reward and retain those highly competent individuals upon whose
judgment, initiative, leadership, and efforts the success of the Corporation
depends. Directors and managerial and other key employees of the Corporation or
any of its subsidiaries (currently approximately 40 persons) will be eligible
for grants under the 1998 Plan. Options may be granted under the 1998 Plan until
the fifth anniversary date of the effective date of the 1998 Plan.
The following is a summary of the material features of the 1998 Plan.
Shares Subject to the 1998 Plan
The 1998 Plan authorizes the grant of options covering up to 15,000
shares to Directors of the Corporation and the Bank and options covering up to
42,000 shares to employees, subject to adjustment as appropriate to reflect any
future stock splits, stock dividends, or other changes in the capitalization of
the Corporation. Options granted under the 1998 Plan will be in the form of
nonqualified options (referred to as "nonqualified" because they are not
intended to qualify under the provisions of Section 422 of the Internal Revenue
Code of 1986, as amended).
Administration
The 1998 Plan provides that it is to be administered by a Committee of
at least two individuals who are members of the Board of Directors of the
Corporation and who are not officers and who otherwise qualify as non-employee
Directors within the meaning of Rule 16b-3 adopted under the Securities Exchange
Act of 1934. The Committee has sole discretion and authority to determine from
time to time the individuals to whom options may be granted under the 1998 Plan,
the number of shares covered by each option, the period during which an option
may be exercised and the price at which an option may be exercised, subject to
the limitations discussed below.
Option Features
The 1998 Plan provides that the exercise price for an option is to be
the fair market value of the shares of common stock covered by the option at the
time of grant. The period for exercising an option granted under the 1998 Plan
may not exceed ten years from the date of grant. The 1998 Plan also provides
that options granted to Directors become fully exercisable on the date that is
two years from the date of grant and that options granted to employees become
exercisable in 20 percent increments, with the first 20 percent becoming
exercisable on the first anniversary of the date of grant and with the option
becoming fully exercisable on the date that is five years after the date of
grant. The Committee has the discretion, however, to accelerate the
exercisability of granted options. Also, the 1998 Plan provides that all options
granted under the Plan, regardless of the vesting schedule included in the
option grant, become fully exercisable upon the earlier of the optionee's 65th
birthday, if the optionee is an employee, or the optionee's 70th birthday, if
the optionee is a Director; the death of the optionee; the total disability of
the optionee; or the occurrence of an "Applicable Event," which is defined in
the 1998 Plan as (i) the expiration of a tender offer or exchange offer (other
than an offer by the Corporation) pursuant to which at least 50 percent of the
Corporation's issued and outstanding stock has been purchased or (ii) the
approval by the shareholders of the Corporation of an agreement to merge or
consolidate the Corporation with or into another entity where the Corporation is
not the surviving entity or pursuant to which more than 50 percent of the
Corporation's issued and outstanding shares has been transferred, or an
agreement to sell or otherwise dispose of all or substantially all of the
Corporation's assets (including a plan of liquidation).
Payment for Shares
The Committee, in its discretion, may determine whether the exercise
price for an option may be paid in cash or by delivering shares of the
Corporation's common stock previously acquired by the optionee and having an
aggregate fair market value equal to the exercise price, or a combination of
cash and previously owned shares of the Corporation's common stock.
<PAGE>
Transferability of Options; Termination of Employment
Options granted under the 1998 Plan are transferable during the
optionee's lifetime only by the optionee, or the optionee's guardian or legal
representative, and in the event of the optionee's death, by will or the laws of
descent and distribution. The Committee, in its discretion, also may permit
options to be transferred to immediate family members of the optionee,
partnerships consisting of immediate family members, trusts for the benefit of
immediate family members, or as otherwise specifically permitted in the stock
option agreement with the optionee.
If the optionee's employment is terminated as a result of the optionee's
death, or the optionee dies within three months after the termination of his
employment, then the person or persons to whom the optionee's rights to the
options pass by will or the laws of descent and distribution may be exercised at
any time prior to the date that is one year from the date of the optionee's
death, including any options that would have expired earlier had the optionee
lived. If an optionee's termination of employment results from the optionee's
retirement or disability, then the optionee has the right to exercise any
options for a period of one year from the date of such retirement or disability.
If an optionee's status as a Director or employee terminates for any reason
other than death, retirement, or disability, then any options held by the
Director or employee may be exercised for three months following the date of
such termination. Termination, Amendment and Modification of 1998 Plan
The Board of Directors of the Corporation may at any time and in any
respect amend, modify or terminate the 1998 Plan, except that no such amendment,
modification or termination may be made without the approval of the
Corporation's shareholders if such action would increase the total number of
shares of common stock subject to the 1998 Plan, withdraw administration of the
Plan from the Committee, change the terms by which an option may be exercised,
change the price at which the option may be exercised, or affect any stock
option agreement previously executed pursuant to the 1998 Plan unless the
optionee consents to such action.
Certain Federal Income Tax Consequences Under Current Law
Under current federal tax law, the options granted under the 1998 Plan
will not result at the time of grant in any taxable income to the optionee or
any tax deduction to the Corporation. Upon the exercise of an option, the excess
of the market value of the shares acquired over the cost of those shares will be
taxable to the optionee as compensation income and generally will be deductible
by the Corporation. The optionee's tax basis for the shares acquired upon the
exercise of an option will be the market value of the shares at the time of
exercise.
The 1998 Plan is not subject to any provisions of ERISA and is not
qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended.
Shareholder Approval
To become effective, the 1998 Plan must be approved by the affirmative
vote of the holders of a majority of the outstanding shares of common stock of
the Corporation represented at the meeting and entitled to vote. Proxies marked
as abstentions and shares held in street name that are designated by brokers on
proxy cards as not voted will therefore have the same effect as a vote against
approval of the 1998 Plan. Proxies marked as abstentions and broker non-votes,
however, will be treated as shares present for the purpose of determining
whether a quorum is present.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
PROPOSAL TO APPROVE THE 1998 STOCK OPTION PLAN (ITEM 2 ON THE PROXY).
<PAGE>
APPOINTMENT OF AUDITORS
Crowe, Chizek and Company LLP ("Crowe Chizek") served as auditors for
the Corporation in 1997 and have been selected to serve for 1998.
Representatives of Crowe Chizek will not be present at the Annual Meeting.
PRINCIPAL OWNERS OF COMMON SHARES
As of March 1, 1998, the Corporation had no knowledge of any shareholder
or group of shareholders who beneficially owned more than five percent of the
Corporation's Common Shares.
SECTION 16(a): BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's Directors and executive officers and persons who beneficially own
more than 10 percent of the Corporation's Common Shares to file with the
Securities and Exchange Commission reports showing ownership of and changes in
ownership of the Corporation's Common Shares and other equity securities. On the
basis of reports and representations submitted by the Corporation's Directors,
executive officers, and greater-than-ten-percent owners, the Corporation
believes that all required Section 16(a) filings for fiscal 1997 were timely
made. One Director, Mr. Meeks, filed an amendment to his initial report on Form
3 to correctly reflect the number of shares owned by him and his spouse.
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.
EXPENSES
All expenses in connection with this solicitation of proxies will be
borne by the Corporation.
SHAREHOLDER PROPOSALS FOR 1999 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
November 9, 1998. Proposals should be mailed to Michelle Turnpaugh, Secretary of
the Corporation, P.O. Box 1130, 133 North Fourth Street, Lafayette, Indiana
47902, by certified mail, return receipt requested.
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE 1998 ANNUAL
MEETING OF SHAREHOLDERS OF LAFAYETTE BANCORPORATION TO BE HELD APRIL 13, 1998.
KNOW ALL MEN BY THESE PRESENT that I, the undersigned Shareholder of Lafayette
Bancorporation, Lafayette, Indiana, do hereby acknowledge receipt of the Notice
of Annual Meeting and Proxy Statement dated March 9, 1998, and do hereby
nominate, constitute, and appoint Michael A. Strauch and Edward Chosnek or any
one of them (with full power to act alone), my true and lawful attorney(s) with
full power of substitution, for me and in my place and stead to vote all the
Common Capital Stock of said Corporation, standing in my name on its books on
March 2, 1998, at the Annual Meeting of its Shareholders to be held in the Board
of Directors' Room at the main office of Lafayette Bank and Trust Company, 133
North Fourth Street, Lafayette, Indiana, on Monday, April 13, 1998, at 2:30 p.m.
EST, or at any adjournment thereof, with all the powers the undersigned would
possess if personally present as follows:
THE BOARD OF DIRECTORS OF LAFAYETTE BANCORPORATION RECOMMENDS A VOTE "FOR" THE
PROPOSALS LISTED.
For Against
[ ] [ ] 1. ELECTION OF DIRECTORS. To elect the two persons listed in the
Proxy Statement (except as marked to the contrary below)
RICHARD A. BOEHNING
JOSEPH A. BONNER
(INSTRUCTIONS: To withhold authority to vote for any
individual nominee, write that nominee's name in the space
provided below.)
--------------------------------------
[ ] [ ] 2. APPROVAL OF STOCK OPTION PLAN. To approve the Lafayette
Bancorporation 1998 Nonqualified Stock Option Plan.
[ ] [ ] 3. In their discretion, on such other matters as may properly
come before the meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NOT OTHERWISE DIRECTED, THIS PROXY
WILL BE VOTED "FOR" APPROVAL OF THE MATTERS DESCRIBED ABOVE.
SHAREHOLDERS SHOULD MARK, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED POST-PAID ENVELOPE. THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS
EXERCISE.
DATED:______________________ SIGNATURE(S) OF SHAREHOLDER(S)
-----------------------------------------
-----------------------------------------
(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.)
