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:
[X] Preliminary Proxy Statement
[ ] 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 oer 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>2
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>3
PRELIMINARY PROXY SOLICITATION MATERIALS--
TO BE RELEASED ON OR ABOUT MARCH 6, 2000
LAFAYETTE BANCORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 10, 2000
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 10, 2000, at 2:30
p.m., Lafayette time, for the following purposes:
1. To elect one Director to hold office until the Annual Meeting of
Shareholders in the year 2003 and until his successor is elected
and has qualified.
2. To consider and vote upon an amendment to the Corporation's
Articles of Incorporation to increase the number of Common Shares,
no par value, that the Corporation is authorized to issue from
5,000,000 to 20,000,000.
3. To transact such other business as may properly come before the
meeting.
Holders of record of Common Shares of Lafayette Bancorporation at the
close of business on March 1, 2000, 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 6, 2000
Lafayette, Indiana
(ANNUAL REPORT ENCLOSED)
<PAGE>4
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF
LAFAYETTE BANCORPORATION
Parent of Lafayette Bank and Trust Company
April 10, 2000
This Proxy Statement is being furnished to shareholders on or about March
6, 2000, 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 10, 2000, 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, 2000, the record date for the Annual
Meeting, there were 3,586,125 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 DIRECTOR
Nominees
One Director is 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: 2000 -- Mr. Weeder; 2001
- -- Messrs. Boehning and Bonner; and 2002 -- Messrs. Hancock and Meeks.
<PAGE>5
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 Robert J.
Weeder, who is a Director whose present term expires this year. Mr. Weeder has
indicated that he will accept nomination and election as a Director. If,
however, he 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 NOMINEE
IDENTIFIED ABOVE. (ITEM 1 ON THE PROXY)
The following table presents certain information as of February 21, 2000,
regarding the current Directors of the Corporation, including the nominee
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 approximately 1.1 percent of the
Corporation's Common Shares, none of the persons named below beneficially owns
more than one percent of the Corporation's Common Shares. The Directors and
executive officers as a group beneficially own approximately 5.3 percent of the
Corporation's Common Shares. (Share amounts and percentages reflect the
three-for-two stock split paid on November 1, 1999, to shareholders of record on
September 30, 1999.)
<PAGE>6
<TABLE>
<CAPTION>
Name,
Present Principal Director Shares Beneficially
Occupation and Age Since 1 Owned
Directors:
<S> <C> <C>
Richard A. Boehning2 1992 12,4273
Partner, Bennett Boehning & Clary
(law firm), Age 62
Joseph A. Bonner4 1985 30,0185
Chairman of the Board of the Bank,
Age 68
Wilbur. L. Hancock6 1989 9,2157
Retired General Manager, Customer Operations
PSI Energy, A CINERGY Company, Age 61
Roy D. Meeks8 1981 40,7999
President and Owner of Nelmeeks, Inc.
d/b/a Radisson Inn, Age 67
Robert J. Weeder*10 1989 20,60011
Chief Executive Officer and President
of the Corporation and the Bank, Age 62
Named Executive Officer Who Is Not A Director:
Robert J. Ralston12 9,44613
Executive Vice President, Senior Operations
Officer and Secretary/Treasurer of the Bank,
Age 58
All Directors of the Corporation and Executive Officers 138,89114
as a Group (14 Persons)
</TABLE>
*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 3,510 shares held by the Albrecht Family Trust, for which
trust Mr. Boehning serves as trustee, and 7,188 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 12,952 shares held jointly by Mr. Bonner and his spouse,
8,788 shares held by Mr. Bonner's spouse, and 7,188 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 1,360 shares held jointly by Mr. Hancock and his spouse and
7,188 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.
<PAGE>7
9 Includes 22,810 shares held jointly by Mr. Meeks and his spouse, 2,178
shares held by Mr. Meeks' spouse, and 7,188 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 2,607 shares held jointly by Mr. Weeder and his spouse, 2,592
shares held by Mr. Weeder's spouse, and 11,682 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 1,724 shares held jointly by Mr. Ralston and his spouse,
2,813 shares held jointly by Mr. Ralston and his father, and 4,909
shares that Mr. Ralston has the right to acquire upon the exercise of
stock options.
14 Includes 59,259 shares that members of the group have the right to
acquire upon the exercise of stock options and 58,281 shares as to
which voting and investment powers are shared by members of the group
with their spouses or other family members.
<PAGE>
Committees and Attendance
The Boards of Directors of the Corporation and the Bank each held
thirteen meetings during 1999. 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 1999, 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.
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 two times during 1999, reviews audit reports, meets
quarterly with the audit staff, and recommends the selection of outside
auditors. 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 1999. 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 1999.
Compensation of Directors
During 1999, Directors of the Corporation received $300 per month
regardless of committee participation or attendance at meetings. Non-employee
Directors of the Bank received $1,400 per month and employee Directors of the
Bank received $525 per month. Outside Directors of the Bank received a $2,000
performance award and the Chairman received a performance award in the amount of
$10,000 for 1999. The grant of performance awards was based upon recommendations
of the Salary Committee based upon the criteria for the employees' performance
award program.
<PAGE>8
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, 1999, was 9.75 percent (Wall Street Prime Rate (8.25 percent) plus
150 basis points). All of the Directors of the Corporation and the Bank, except
for Mr. Kessler, a Director of the Bank, deferred 1999 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 officer, based on salary and bonus
earned during fiscal 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
- --------------------------------- ------------------------------------------- ------------------- ---------------------
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, 1999 $170,000 $60,000 1,215 $ 13,9781
President and Chief 1998 $143,308 $50,000 2,514 $ 14,297
Executive Officer 1997 $120,000 $25,000 4,719 $ 12,596
- --------------------------------- ---------- -------------- ----------------- ------------------- ---------------------
Robert J. Ralston, 1999 $105,000 $30,000 900 $ 2,5382
Executive Vice President, 1998 $102,808 $20,000 825 $ 2,304
Senior Operations 1997 $ 95,000 $15,000 4,085 $ 2,200
Officer and Secretary/
Treasurer of the Bank
================================= ========== ============== ================= =================== =====================
</TABLE>
1 Represents matching contributions of $2,859 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 $1,219.
2 Represents matching contributions under the 401(k) Plan.
<PAGE>9
Option/SAR Grants In Last Fiscal Year
The following table presents information on the stock option grants that
were made during 1999 pursuant to the Lafayette Bancorporation 1998 Nonqualified
Stock Option Plan (the "1998 Plan"). No SARs were granted during 1999.
<TABLE>
<CAPTION>
============================ ============================================================== =========================
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for
Option Term1
Individual Grants
- ---------------------------- ------------------ --------------- ------------- ------------- ------------ ------------
% of Total
Options2/
Number of SARs Granted
Securities to Employees Exercise or
Underlying in Fiscal Base Price
Options/SARs Year ($/Sh) Expiration
Name Granted2 Date 5% 10%
- ---------------------------- ------------------ --------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Weeder 1,215 10.5% $27.17 5/10/09 $20,764 $52,610
- ---------------------------- ------------------ --------------- ------------- ------------- ------------ ------------
Robert J. Ralston 900 7.8% $27.17 5/10/09 $15,381 $38,970
============================ ================== =============== ============= ============= ============ ============
</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 1999 were
granted on May 10, 1999, with an exercise price for each option being the
estimated fair market value of one Common Share on that date. During 1999,
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 1999 to Mr. Ralston,
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 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 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>10
Aggregated Option/SAR Exercises In Last Fiscal Year and
Fiscal Year-End Option/SAR Values
The following table sets forth information for 1999 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, 1999. (Numbers of
options and per share exercise prices have been retroactively adjusted to
reflect the 1999 stock split and previous 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>
Robert J. Weeder 10,500 43,029/7,918 $860,188/$61,324
$241,990
- ------------------------ ------------------ ------------------ --------------------------- ----------------------------
Robert J. Ralston 6,000 23,202/5,605 $470,305/$52,997
$138,280
======================== ================== ================== =========================== ============================
</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 28, 1999, which is the last sales price in 1999
known to the Corporation's management ($26.25), and the exercise price of
options/SARs having an exercise price less than that sales price,
multiplied by the number of options/SARs.
<PAGE>11
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 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: 14 years; and Mr. Ralston: 21 years.
<PAGE>12
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
$170,000 as Mr. Weeder's base salary for 1999.
<PAGE>13
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 1999 were increased over the amounts awarded in 1998. Mr. Weeder was awarded
a bonus for 1999 in the amount of $60,000.
Stock Option Awards
(Share amounts have been adjusted to reflect the 1999 stock split.)
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.
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 1999 an aggregate of 11,400 stock options were granted to 32
key employees of the Bank. Mr. Weeder was granted options to acquire 1,050
shares and Mr. Ralston was granted options to acquire 900 shares. (The 1998 Plan
provides for the grant of options to Directors as well as key employees. During
1999, Mr. Weeder also was granted options for 165 shares in his capacity as a
Director.) All of the key employee options granted in 1999 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
(Numbers of shares covered by SARs have been adjusted to reflect the 1999 stock
split.)
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 as an
executive officer in 1997. During 1999, Mr. Weeder exercised SARs covering
10,500 shares and received $241,990 and Mr. Ralston exercised SARs covering
6,000 shares and received $138,280.
<PAGE>14
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
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 three outside Directors and Mr. Bonner, the retired Chief Executive
Officer of the Corporation.
During 1999 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 2000. Mr. Boehning is a partner in the law firm of
Bennett, Boehning & Clary, which represented the Corporation as legal counsel in
certain matters during 1999, and the Corporation expects that the firm will
continue to represent the Corporation in similar matters in 2000.
Certain Business Relationships And Transactions
During 1999, 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
collectability or present other unfavorable features.
<PAGE>15
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.
[GRAPH NOT INCLUDED IN EDGAR FILING]
<TABLE>
<CAPTION>
Period Ending
Index 12/31/97 6/30/98 12/31/98 6/30/99 12/31/99
<S> <C> <C> <C> <C> <C>
Lafayette Bancorporation 100.00 127.84 134.93 142.81 141.90
NASDAQ - Total US* 100.00 120.25 140.91 172.46 254.57
SNL Midwest Bank Index 100.00 105.91 106.37 110.38 83.57
</TABLE>
*Source: CRSP, Center for Research in Security Prices, Graduate School of
Business, The University of Chicago 1999. Used with permission. All rights
reserved. crsp.com.
SNL Securities LC
(C) 2000
<PAGE>16
PROPOSAL 2
PROPOSAL TO AMEND ARTICLES OF INCORPORATION
TO INCREASE NUMBER OF AUTHORIZED SHARES
The Board of Directors of the Corporation has approved and adopted,
subject to shareholder approval, an amendment to the Corporation's Articles of
Incorporation that would provide for an increase in the number of Common Shares,
no par value per share, authorized to be issued by the Corporation from
5,000,000 shares to 20,000,000 shares. The proposed increase in the number of
authorized Common Shares would be accomplished by amending Section 5.1 of
Article V of the Corporation's Articles of Incorporation to read as follows:
"The total number of shares that the Corporation shall have authority
to issue shall be Twenty Million (20,000,000) shares without par
value."
The Board of Directors believes that the proposed increase in the
number of authorized Common Shares is in the best interest of the Corporation.
The availability of a reserve of authorized but unissued shares would provide
the Corporation with greater flexibility and the opportunity to effect stock
splits, to pay stock dividends, to make acquisitions, and to meet possible
future developments in which the issuance of Common Shares may be desirable, as
determined appropriate by the Board of Directors. The Corporation currently has
no agreements or arrangements or other specific plans for the issuance of the
additional Common Shares that would be available for issuance if the proposal is
approved. As is the case with the Corporation's presently authorized by unissued
Common Shares, the issuance of additional Common Shares, in most cases, would be
at the discretion of the Board of Directors without further action by the
shareholders. Pursuant to the Corporation's Articles of Incorporation and the
Indiana Business Corporation Law, the Board of Directors may issue Common Shares
as the Board may determine without any preemptive or other rights on the part of
holders of previously issued Common Shares to acquire upon issuance any such
newly authorized Common Shares. If the proposed increase is approved, the Board
could use the authorized but unissued shares, at its discretion, to resist the
consummation of certain acquisition attempts by, for example, diluting the
ownership of a substantial shareholder or substantially increasing the amount of
consideration necessary for a shareholder to obtain control. As of the date of
this Proxy Statement, the Board of Directors is not aware of any specific effort
to accumulate shares or otherwise obtain control of the Corporation.
<PAGE>17
For approval, the proposal to amend the Corporation's Articles of
Incorporation to increase the authorized number of Common Shares requires that
the number of votes properly cast in favor of the proposal exceed the number of
votes properly cast against the proposal. Shares present but not voted for the
proposal will not affect the determination of whether the proposal has been
approved. If approved by the shareholders at the Annual Meeting, the increase in
the number of authorized Common Shares would become effective upon the filing of
an amendment to the Corporation's Articles of Incorporation with the Indiana
Secretary of State.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
PROPOSAL TO AMEND THE CORPORATION'S ARTICLES OF INCORPORATION TO INCREASE THE
AUTHORIZED COMMON SHARES OF THE CORPORATION FROM 5,000,000 SHARES TO 20,000,000
SHARES. (ITEM 2 ON THE PROXY). UNLESS A SHAREHOLDER INDICATES OTHERWISE, PROXY
HOLDERS WILL VOTE FOR THE PROPOSED AMENDMENT.
APPOINTMENT OF AUDITORS
Crowe Chizek and Company LLP ("Crowe Chizek") served as auditors for
the Corporation in 1999 and has been selected to serve for 2000. Representatives
of Crowe Chizek will not be present at the Annual Meeting.
PRINCIPAL OWNERS OF COMMON SHARES
As of March 1, 2000, 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 ten 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 1999 were timely
made, except that the initial report on Form 3 for Daniel Gick was filed more
than ten days after he was promoted to an executive position.
<PAGE>18
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 2001 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 2001 must deliver the proposal so that it is received by the
Corporation no later than November 6, 2000. 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.
