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
[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.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] 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:
<PAGE>
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 SENT TO
SHAREHOLDERS ON OR
ABOUT MARCH 9, 1999
LAFAYETTE BANCORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 12, 1999
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 12, 1999, 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 2002 and until their successors are
elected and have qualified.
2. 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 1, 1999, 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 8, 1999
Lafayette, Indiana
(ANNUAL REPORT ENCLOSED)
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF
LAFAYETTE BANCORPORATION
Parent of Lafayette Bank and Trust Company
April 12, 1999
This Proxy Statement is being furnished to shareholders on or about March
8, 1999, in connection with the solicitation by the Board of Directors of
Lafayette Bancorporation (the "Corporation"), 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 12, 1999, 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 1, 1999, the record date for the Annual
Meeting, there were 2,385,219 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.
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: 1999 -- Messrs. Hancock
and Meeks; 2000 -- Mr. Weeder; and 2001 -- Messrs. Boehning and Bonner.
<PAGE>
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 Wilbur L.
Hancock and Roy D. Meeks, 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)
The following table presents certain information as of February 1, 1999,
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 officers who are not Directors 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. The Directors and executive officers as a
group beneficially own 3.5 percent of the Corporation's Common Shares. (All
shares and percentage amounts reflect the ten percent stock dividend paid on
November 2, 1998, to shareholders of record on September 30, 1998.)
<PAGE>
Name,
Present Principal Director Shares Beneficially
Occupation and Age Since 1 Owned
Directors:
Richard A. Boehning2 1992 7,0453
Partner, Bennett Boehning & Clary
(law firm), Age 61
Joseph A. Bonner4 1985 20,0135
Chairman of the Board of the Bank,
Age 67
Wilbur. L. Hancock*6 1989 6,0447
Retired General Manager, Customer Operations
PSI Energy, A CINERGY Company, Age 60
Roy D. Meeks*8 1981 27,2009
President and Owner of Nelmeeks, Inc.
d/b/a Radisson Inn, Age 66
Robert J. Weeder10 1989 12,52711
Chief Executive Officer and President
of the Corporation and the Bank, Age 61
Named Executive Officers Who Are Not Directors:
Robert J. Ralston12 4,74913
Executive Vice President, Senior Operations
Officer and Secretary/Treasurer of the Bank,
Age 57
Earl James Brisco, Jr.14 93415
Senior Vice President and Manager,
Mortgage Loan Department of the Bank,
Age 46
All Directors of the Corporation and Executive Officers 85,33416
as a Group (12 Persons)
*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 1,100 shares held by the Albrecht Family Trust, for which trust
Mr. Boehning serves as trustee, and 4,792 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 9,498 shares held jointly by Mr. Bonner and his spouse, 5,721
shares held by Mr. Bonner's spouse, and 4,792 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 807 shares held jointly by Mr. Hancock and his spouse and 4,792
shares that Mr. Hancock has the right to acquire upon the exercise of stock
options.
<PAGE>
8 Mr. Meeks has served as a Director of the Bank since 1981 and as a Director
of the Corporation since 1985.
9 Includes 15,207 shares held jointly by Mr. Meeks and his spouse, 1,452
shares held by Mr. Meeks' spouse, and 4,792 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 1,778 shares held jointly by Mr. Weeder and his spouse, 1,728
shares held by Mr. Weeder's spouse, and 6,541 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 1,016 shares held jointly by Mr. Ralston and his spouse, 1,742
shares held jointly by Mr. Ralston and his father, and 1,991 shares that
Mr. Ralston has the right to acquire upon the exercise of stock options.
14 Mr. Brisco served as Vice President from April 1995 until he assumed his
current position in December 1996. Prior to April 1995 he was a Vice
President of Huntington Bank of Indiana.
15 Consists of shares Mr. Brisco has the right to acquire upon the exercise of
stock options.
16 Includes 34,525 shares that members of the group have the right to acquire
upon the exercise of stock options and 30,062 shares as to which voting and
investment powers are shared by members of the group with their spouses or
other family members.
Committees and Attendance
The Boards of Directors of the Corporation and the Bank each held
fourteen meetings during 1998. 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 Stock Option
Committee, which met three times in 1998, supervises the administration of the
Corporation's stock option plans and recommends for Board approval grants of
options to key employees. Two outside Directors, Messrs. Hancock and Meeks,
serve as the members of the Stock Option Committee. Messrs. Boehning, Bonner and
Weeder serve as ex officio members and participate in discussions but do not
vote on the grant recommendations made to the Board.
<PAGE>
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 serves as Chairman, and Mr. 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 1998, 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 1998. The members of the Salary Committee
are Mr. Hancock, who serves as the Chairman, and Messrs. Bonner, Meeks, Weeder
and 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 1998.
Compensation of Directors
During 1998, Directors of the Corporation received $300 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 $1,500 performance award for
1998 and the Chairman received $5,000. The grant of performance awards was based
upon recommendations of the Salary Committee in conjunction with the employees'
performance award program criteria, which are keyed to the Bank's performance.
All but one of the Bank's Directors participated in one of two deferred
compensation plans maintained by the Bank in 1998. 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 1998. 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, 1998, was 9.75% (Wall
Street Prime Rate (8.25%) plus 150 basis points). All of the Directors of the
Corporation and the Bank, except for Mr. Maki and Mr. Kessler, a Director of the
Bank, deferred 1998 Director fees pursuant to the 1994 Plan.
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 1998.
<PAGE>
<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, 1998 $143,308 $50,000 1,676 $14,2971
President and Chief 1997 $120,000 $25,000 3,146 $12,596
Executive Officer 1996 $105,893 $15,000 2,323 $11,288
Robert J. Ralston, 1998 $102,808 $20,000 550 $ 2,3042
Executive Vice President, 1997 $ 95,000 $15,000 2,723 $ 2,200
Senior Operations 1996 $ 90,570 $10,000 2,178 $ 1,408
Officer and Secretary/
Treasurer of the Bank
Earl James Brisco, Jr. 1998 $ 74,510 $30,000 550 $ 2,0903
Senior Vice President 1997 $ 66,750 $15,000 2,057 $ 1,635
and Manager, Mortgage 1996 $ 63,000 $ 2,200 1,307 $ 472
Loan Department
</TABLE>
1 Represents matching contributions of $3,200 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 $3,600,
and above-market interest credited on deferred Director fees in the amount
of $1,197.
2 Represents matching contributions under the 401(k) Plan.
3 Represents matching contributions under the 401(k) Plan.
<PAGE>
Option/SAR Grants In Last Fiscal Year
The following table presents information on the stock option grants that
were made during 1998 pursuant to the Lafayette Bancorporation 1998 Nonqualified
Stock Option Plan (the "1998 Plan"). No SARs were granted during 1998.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for
Option Term1
Individual Grants
% of Total
Options2/
Number of SARs Granted
Securities to Employees Exercise or
Underlying in Fiscal Base Price
Options/SARs Year ($/Sh) Expiration
Name Granted2 Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Robert J. Weeder 1,676 18.8% $34.55 6/15/08 $36,419 $92,281
Robert J. Ralston 550 6.2% $34.55 6/15/08 $11,952 $30,283
Earl James Brisco, Jr. 550 6.2% $34.55 6/15/08 $11,952 $30,283
</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 1998 Plan provides for the grant of options to Directors and key
employees. Except for vesting provisions, the terms of Director and key
employee options are identical. All options granted during 1998 were
granted on June 15, 1998 at the estimated fair market value of one Common
Share on that date. During 1998, Mr. Weeder received option grants both as
a Director and as a key employee. Director options become fully
exercisable on the date that is two years from the date of grant or upon
the earlier occurrence of a Director's 70th birthday. The options granted
during 1998 to Messrs. Ralston and Brisco, and the options granted to Mr.
Weeder as a key employee, have the same terms. The key employee 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 the optionee's 65th birthday or
(b) 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.
<PAGE>
Aggregated Option/SAR Exercises In Last Fiscal Year and
Fiscal Year-End Option/SAR Values
The following table sets forth information for 1998 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, 1998. (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
on Exercise (#) Value Exercisable/ Exercisable/
Name Realized ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Robert J. Weeder 0 0 34,439 / 5,715 $1,032,072 / $72,831
Robert J. Ralston 5,500 $161,750 18,186 / 4,418 $559,714 / $71,388
Earl James Brisco 0 0 934 / 2,980 $17,034 / $44,306
</TABLE>
1 The 1998 Option Plan provides for the grant of nonqualified options to
Directors and key employees. For a discussion of the material terms of
options granted under the 1998 Plan, see Note 2 to the Option/SAR Grants
In Last Fiscal Year table above. Mr. Weeder has received option grants in
his capacities as both a Director and key employee. 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 and Ralston vested in annual twenty percent
increments and are now fully vested. SARs become fully exercisable without
regard to vesting restrictions 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 become 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 30, 1998, which is the last sales price in 1998
known to the Corporation's management ($38.25), 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.
Pension Plan Table 1
<TABLE>
<CAPTION>
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 but
excluding proceeds received through the exercise of SARs) 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 1998 applicable for determining the retirement benefits for
the executive officers named in the Summary Compensation Table are as follows:
Mr. Weeder: 13 years; Mr. Ralston: 20 years; and Mr. Brisco: 3 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 plans, 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),
in addition to 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 banks 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 the amount of
$143,308 as Mr. Weeder's base salary for 1998.
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 1998 were increased over the amounts awarded in 1997. Mr. Weeder was awarded
a bonus in the amount of $50,000.
Stock Option Awards
In 1995 the Corporation adopted the Lafayette Corporation Nonqualified
Stock Option Plan (the "1995 Plan"), and in 1998, the Corporation adopted the
Lafayette Bancorporation 1998 Nonqualified Stock Option Plan (the "1998 Plan").
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.
<PAGE>
The Stock Option Committee of the Board of Directors of the Corporation
administers the 1995 Plan and the 1998 Plan. Two outside Directors, Messrs.
Hancock and Meeks, serve as the members of the Stock Option Committee and
recommend for Board approval grants of options to key employees. Messrs.
Boehning, Bonner and Weeder, who serve as ex officio members of the Stock Option
Committee, attend meetings but do not vote on the grant recommendations made to
the Board. During 1998 an aggregate of 7,700 stock options were granted to 24
key employees of the Bank. Mr. Weeder was granted options to acquire 440 shares,
and Messrs. Ralston and Brisco each were granted options to acquire 550 shares.
(The 1998 Plan provides for the grant of options to Directors as well as key
employees. During 1998, Mr. Weeder also was granted options for 1,236 shares in
his capacity as a Director.) All of the key employee options granted in 1998
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. (Director
options granted to Mr. Weeder will become vested two years after the date of
grant.)
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. During 1998 Mr. Ralston exercised SARs covering 5,500
shares and received $161,750.
The Omnibus Budget Reconciliation Act enacted by the United States
Congress in August 1993 amended the Internal Revenue Code of 1986 to disallow a
public company's compensation deduction with respect to certain highly-paid
executives in excess of $1 million unless certain conditions are satisfied. The
Corporation presently believes that this provision is unlikely to become
applicable in the near future to the Corporation because (a) the levels of base
salary and annual incentive bonus awards of the Corporation's executive officers
are substantially less than $1 million per annum, and (b) the law generally does
not apply to stock option plans that require that options be granted at not less
than fair market value, subject to certain conditions. Therefore, the
Corporation has not taken any action to adjust its compensation plans or
policies in response to the adoption of this law.
SUBMITTED BY THE MEMBERS OF THE SALARY AND STOCK OPTION COMMITTEES:
Salary Committee Stock Option Committee
W.L. Hancock, Chairman W.L. Hancock
Joseph A. Bonner Roy D. Meeks
Vernon N. Furrer Ex officio:
Roy D. Meeks Richard A. Boehning
Robert J. Weeder Joseph A. Bonner
Robert J. Weeder
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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 two outside Directors. Messrs. Weeder, Bonner and Boehning serve as
ex officio members and attend meetings of the Stock Option Committee but do not
vote on grant recommendations made to the Board.
During 1998 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 1999. Mr. Boehning is a partner in the law firm of
Bennett, Boehning & Clary, which represented the Corporation as legal counsel in
certain matters during 1998, and the Corporation expects that the firm will
continue to represent the Corporation in similar matters in 1999.
Certain Business Relationships And Transactions
During 1998, 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.
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 SUBSTITUTED FOR GRAPH IN EDGAR FILING]
Period Ending
Index 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98
Lafayette Bancorporation 100.00 109.71 127.21 143.42 135.40
NASDAQ - Total US 100.00 117.01 120.39 108.99 140.57
SNL Midwest Bank Index 100.00 109.60 105.91 92.43 106.37
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APPOINTMENT OF AUDITORS
Crowe, Chizek and Company LLP ("Crowe Chizek") served as auditors for
the Corporation in 1998 and have been selected to serve for 1999.
Representatives of Crowe Chizek will not be present at the Annual Meeting.
PRINCIPAL OWNERS OF COMMON SHARES
As of March 1, 1999, 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 (the Bank's Trust Department, however, holds more
than five percent of the Corporation's Common Shares in its fiduciary capacity).
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 1998 were timely
made, except that the filing to report a purchase by one Bank Director, Mr.
Meister, was inadvertently not filed on time even though Mr. Meister had
notified the Corporation of the purchase.
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.
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EXPENSES
All expenses in connection with this solicitation of proxies will be
borne by the Corporation.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
A shareholder desiring to submit a proposal for inclusion in the
Corporation's proxy statement for the Annual Meeting of Shareholders to be held
in the year 2000 must deliver the proposal so that it is received by the
Corporation no later than November 8, 1999. Proposals should be mailed to
Michelle D. Turnpaugh, Secretary of the Corporation, P.O. Box 1130, 133 North
Fourth Street, Lafayette, Indiana 47902, by certified mail, return receipt
requested.
