<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MIDWEST BANC HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
MIDWEST BANC HOLDINGS, INC.
501 WEST NORTH AVENUE
MELROSE PARK, ILLINOIS 60160
FELLOW STOCKHOLDERS:
You are cordially invited to attend the annual meeting of stockholders (the
"Annual Meeting") of Midwest Banc Holdings, Inc. (the "Company"), Melrose Park,
Illinois, which will be held on May 5, 1999, at 2:00 p.m., Chicago time, at
Elmcrest Banquets by Biancalana, 7370 West Grand Avenue, Elmwood Park, Illinois
60707.
The attached Notice of the Annual Meeting and the Proxy Statement describe
the formal business to be transacted at the Annual Meeting. Directors and
officers of the Company will be present at the Annual Meeting to respond to any
questions that our stockholders may have regarding the business to be
transacted.
The Board of Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interests of the Company and
its stockholders. FOR THE REASONS SET FORTH IN THE PROXY STATEMENT, THE BOARD
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE MATTERS TO BE CONSIDERED.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOUR COOPERATION
IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK MUST BE REPRESENTED, EITHER
IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE CONDUCT OF BUSINESS.
On behalf of the Board of Directors and all of the employees of the
Company, I thank you for your continued interest and support.
Sincerely yours,
ROBERT L. WOODS
President and Chief Executive Officer
March 26, 1999
<PAGE> 3
MIDWEST BANC HOLDINGS, INC.
501 WEST NORTH AVENUE
MELROSE PARK, ILLINOIS 60160
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 5, 1999
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the "Annual
Meeting") of Midwest Banc Holdings, Inc. (the "Company") will be held on May 5,
1999, at 2:00 p.m., Chicago time, at Elmcrest Banquets by Biancalana, 7370 West
Grand Avenue, Elmwood Park, Illinois 60707.
The purpose of the Annual Meeting is to consider and vote upon the
following matters:
1. The election of two (2) members of the Company's Board of Directors to
three-year terms of office;
2. The ratification of the appointment of Crowe, Chizek and Company LLP as
independent auditors of the Company for the fiscal year ending December
31, 1999; and
3. Such other matters as may properly come before the Annual meeting and at
any adjournments thereof, including whether or not to adjourn the
meeting.
The Board of Directors has established March 17, 1999 as the record date
for the determination of stockholders entitled to receive notice of and to vote
at the Annual Meeting and at any adjournments thereof. Only record holders of
the common stock of the Company as of the close of business on such record date
will be entitled to vote at the Annual Meeting or any adjournments thereof. In
the event there are not sufficient votes for a quorum, the Annual Meeting may be
adjourned in order to permit further solicitation of proxies by the Company. A
list of stockholders entitled to vote at the Annual Meeting will be available at
Midwest Banc Holdings, Inc., 501 West North Avenue, Melrose Park, Illinois
60160, for a period of ten days prior to the Annual Meeting and will also be
available at the Annual Meeting itself.
By Order of the Board of Directors
DANIEL NAGLE
Secretary
Melrose Park, Illinois
March 26, 1999
<PAGE> 4
MIDWEST BANC HOLDINGS, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1999
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is being furnished to stockholders of Midwest Banc
Holdings, Inc. (the "Company") in connection with the solicitation by the Board
of Directors ("Board of Directors" or "Board") of proxies to be used at the
annual meeting (the "Annual Meeting") of stockholders to be held on May 5, 1999
at 2:00 p.m., Chicago time, at Elmcrest Banquets by Biancalana, 7370 West Grand
Avenue, Elmwood Park, Illinois 60707, and at any adjournments thereof. The 1998
Annual Report to Stockholders, including consolidated financial statements for
the fiscal year ended December 31, 1998, and a proxy card, accompanies this
Proxy Statement, which is first being mailed to record holders of Common Stock
of the Company ("Common Stock") on or about March 26, 1999
Stockholders are requested to vote by completing the enclosed proxy card
and returning it signed and dated in the enclosed postage-paid envelope.
Stockholders are urged to indicate their vote in the spaces provided on the
proxy card. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN
ACCORDANCE WITH THE DIRECTIONS GIVEN THEREIN. WHERE NO INSTRUCTIONS ARE
INDICATED, SIGNED PROXY CARDS WILL BE VOTED FOR THE ELECTION OF THE TWO NOMINEES
FOR DIRECTOR NAMED IN THIS PROXY STATEMENT AND FOR THE RATIFICATION OF CROWE,
CHIZEK AND COMPANY LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1999.
Other than the matters listed on the attached Notice of Annual Meeting of
Stockholders, the Board of Directors knows of no additional matter that will be
presented for consideration at the Annual Meeting. EXECUTION OF A PROXY,
HOWEVER, CONFERS ON THE DESIGNATED PROXY HOLDERS DISCRETIONARY AUTHORITY TO VOTE
THE SHARES IN ACCORDANCE WITH THEIR BEST JUDGMENT ON SUCH OTHER BUSINESS, IF
ANY, THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND AT ANY ADJOURNMENTS
THEREOF, INCLUDING WHETHER OR NOT TO ADJOURN THE ANNUAL MEETING.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Secretary of the Company, by delivering to
the Company a duly executed proxy bearing a later date, or by attending the
Annual Meeting and voting in person. However, if you are a stockholder whose
shares are not registered in your own name, you will need appropriate
documentation from your record holder to vote personally at the Annual Meeting.
The cost of solicitation of proxies on behalf of management will be borne
by the Company. In addition to the solicitation of proxies by mail, proxies may
be solicited personally or by telephone by directors, officers and other
employees of the Company and its subsidiaries, without additional compensation
therefor. The Company will also request persons, firms and corporations holding
shares in their names, or in the name of their nominees, which are beneficially
owned by others, to send proxy materials to and obtain proxies from such
beneficial owners, and will reimburse such holders for their reasonable expenses
in doing so.
VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of shares
of Common Stock, with each share entitling its owner to one vote on all matters
to be voted on at the Annual Meeting.
The close of business on March 17, 1999, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 11,102,796 shares.
The presence, in person or by proxy, of the holders of at least a majority
of the total number of the outstanding shares of Common Stock entitled to vote
is necessary to constitute a quorum at the Annual Meeting. Abstentions will be
treated as shares present and entitled to vote for purposes of determining
whether
<PAGE> 5
a quorum is present, but as unvoted for purposes of determining the approval of
any matter submitted to the stockholders for a vote. If a broker indicates on
the proxy that it does not have discretionary authority to vote certain shares
on a particular matter, such shares, or "non-votes," will be considered to be
present for the purpose of determining whether a quorum is present, but will not
be considered as present and entitled to vote with respect to that matter. In
the event that there are not sufficient votes for a quorum at the time of the
Annual Meeting, the Annual Meeting may be adjourned in order to permit the
further solicitation of proxies.
As to the election of directors, the proxy card being provided by the Board
of Directors enables a stockholder to vote "FOR ALL" to vote in favor of the
nominees proposed by the Board of Directors, "WITHHELD FOR ALL" to vote against
all of the nominees being proposed, or "FOR ALL EXCEPT" to withhold authority to
vote for any individual nominee by writing the nominee's name in the space
provided. Under Delaware law and the Company's By-laws, an affirmative vote of
the holders of a plurality of shares, present at the Annual Meeting, represented
in person or by proxy, and entitled to vote is required for a nominee to be
elected as a Director.
As to the approval of Crowe, Chizek and Company LLP as independent auditors
of the Company by checking the appropriate box, a stockholder may: (i) vote
"FOR" the item; (ii) vote "AGAINST" the item; or (iii) "ABSTAIN" from voting on
such item. Under Delaware law, an affirmative vote of the holders of a majority
of the shares of Common Stock present at the Annual Meeting, represented in
person or by proxy, and entitled to vote, is required to constitute stockholder
approval of Proposal 2.
Proxies solicited hereby will be returned to the Company's transfer agent,
Harris Trust and Savings Bank. The Board of Directors has also designated Harris
Trust and Savings Bank to act as inspectors of election and to tabulate the
votes at the Annual Meeting. After the final adjournment of the Annual Meeting,
the proxies will be returned to the Company.
INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
All persons standing for election as director were unanimously nominated by
the Board of Directors. No person being nominated as a director is being
proposed for election pursuant to any agreement or understanding between any
such person and the Company.
INFORMATION WITH RESPECT TO BENEFICIAL OWNERS, NOMINEES FOR DIRECTOR AND CERTAIN
EXECUTIVE OFFICERS
The following table sets forth as of the Record Date information for: (i)
those people believed by management to be the beneficial owners of more than
5.0% of the Company's Common Stock; (ii) the nominees and continuing directors
of the Board of Directors of the Company; and (iii) certain executive officers
of the Company. The table includes, with respect to directors, the year in which
each became a director of the Company and the year in which their terms as
director of the Company will expire. The table also sets forth the amount of
Common Stock and the percent thereof beneficially owned by each person and all
directors and executive officers as a group as of the Record Date. Ownership
information is based upon information furnished by the respective individuals.
<TABLE>
<CAPTION>
SHARES OF
EXPIRATION COMMON STOCK
DIRECTOR OF OF TERM BENEFICIALLY PERCENT
NAME(1) AGE COMPANY SINCE AS DIRECTOR OWNED(2) OF CLASS
------- --- ------------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C>
NOMINEES
Robert L. Woods...................... 69 1983 1999 383,416(3) 3.5%
Robert D. Small...................... 68 1983 1999 158,544(4) 1.4%
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
SHARES OF
EXPIRATION COMMON STOCK
DIRECTOR OF OF TERM BENEFICIALLY PERCENT
NAME(1) AGE COMPANY SINCE AS DIRECTOR OWNED(2) OF CLASS
------- --- ------------- ----------- ------------ --------
<S> <C> <C> <C> <C> <C>
CONTINUING DIRECTORS
E.V. Silveri......................... 68 1983 2001 1,658,886(5) 14.9%
Angelo DiPaolo....................... 60 1983 2000 497,622(6) 4.5
Daniel Nagle......................... 65 1983 2001 313,500 2.8
Joseph Rizza......................... 56 1997 2000 295,280(7) 2.7
LeRoy Rosasco........................ 66 1983 2001 1,002,450(8) 9.0
Leon Wolin........................... 72 1991 2000 328,802(9) 3.0
NON-DIRECTOR, EXECUTIVE OFFICERS
Edward H. Sibbald.................... 50 -- -- 17,150(10) *
Brad A. Luecke....................... 48 -- -- 112,402(11) 1.0
James I. McMahon..................... 45 -- -- 19,476(11)(12) *
Stephen M. Karaba.................... 41 -- -- 14,790(11)(13) *
All directors and executive officers as
a group (13 persons)................. 4,904,100(14) 44.2%
</TABLE>
- -------------------------
* Less than one percent.
(1) The address of each principal stockholder is 501 West North Avenue, Melrose
Park, Illinois 60160.
(2) Unless otherwise stated below, each person has sole voting and investment
power with respect to all such shares.
(3) Represents shares held by trusts for which Mr. Woods or his spouse acts as
trustee.
(4) Includes the indirect ownership of 122,400 shares held in a retirement
trust account for the benefit of Mr. Small.
(5) Includes 113,680 shares held by trusts for which Mr. Silveri acts as
trustee; 34,716 shares held directly by Mr. Silveri's spouse; 2,100 shares
held by trusts for which Mr. Silveri's spouse acts as trustee; and 948,494
shares held by Go-Tane Service Stations, Inc., a company controlled by Mr.
Silveri, and the Go-Tane Pension Plan.
(6) Includes 1,140 shares held by Mr. DiPaolo's minor grandchild.
(7) Includes 84,480 shares held by a trust for which Mr. Rizza acts as trustee.
(8) Includes 220,880 shares held by trusts for which Mr. Rosasco acts as
trustee and 168,000 shares held directly by Mr. Rosasco's spouse.
(9) Includes 308,782 shares held by a trust for which Mr. Wolin acts as trustee
and 19,220 shares held in a IRA account by Midwest Trust Services, Inc. for
the benefit of Mr. Wolin.
(10) Includes 4,750 shares subject to currently exercisable options and the
indirect ownership of 4,300 shares held in a retirement trust account for
the benefit of Mr. Sibbald.
(11) Includes 6,750 shares subject to currently exercisable options.
(12) Includes 4,126 shares held directly by Mr. McMahon's spouse and 6,800
shares held in a IRA account for the benefit of Mr. McMahon's spouse.
(13) Includes 2,000 shares held directly by Mr. Karaba's spouse.
(14) Includes an aggregate of 25,000 shares subject to currently exercisable
options. Includes 101,282 shares held in the Company's 401(k) Plan, for
which Midwest Trust Services, Inc., a subsidiary of the Company, acts as
trustee. The trustee under the 401(k) Plan has sole voting and investment
power with respect to such shares.
Nominees
Robert L. Woods has served as President and Chief Executive Officer and as
a Director of the Company since 1983. Previously, he was the President of
Midwest Bank and Trust Company from 1967 to 1992.
3
<PAGE> 7
Mr. Woods also serves as Chairman of the Board of Directors of Midwest Bank. In
addition, he is a director of Midwest Bank and Trust Company, Midwest One
Mortgage Services, Inc. and First Midwest Data Corp.
Robert D. Small has served as a Director of the Company since 1983. He was
originally elected to serve as a director of Midwest Bank and Trust Company in
1974. He has previously served as President and director of Midwest Bank of
McHenry County from 1989 to 1993. Mr. Small has been President of Small's
Furniture City since 1980.
Continuing Directors
E.V. Silveri has served as Chairman of the Board of the Company since 1983.
Mr. Silveri was elected a director of Midwest Bank and Trust Company in 1972 and
has been Chairman of the Board of Midwest Bank and Trust Company since 1975. He
is also a member of the board of directors of Midwest Bank, and serves as
Chairman of the Board of Directors of First Midwest Data Corp., Midwest Trust
Services, Inc. and Midwest One Mortgage Services, Inc. Since 1984, Mr. Silveri
has been the President and also a director of Go-Tane Service Stations, Inc., a
firm he co-founded in 1966.
Angelo DiPaolo has served as a Director of the Company since 1983. He has
also served as a director of Midwest Bank and Trust Company since 1982. He has
served as President of DiPaolo Company, a heavy construction company, and
DiPaolo Center, a commercial complex in Glenview, Illinois, since 1963.
Daniel Nagle has served as Corporate Secretary and a Director of the
Company and as a director of Midwest Bank and Trust Company since 1983 and 1975,
respectively. Mr. Nagle is Chairman of the Audit Committee of the Company. He
also has served as a director of Midwest Bank since 1991 and Midwest Trust
Services, Inc. since 1994. Mr. Nagle is an attorney with the law firm of Nagle &
Nagle.
Joseph Rizza has served as a Director of the Company since April 1997. He
was elected a director of Midwest Bank in 1994. Mr. Rizza is the owner of Joe
Rizza Enterprises which owns several automobile dealerships and financial
service companies in the Chicago metropolitan area.
LeRoy Rosasco has served as a Director of the Company since 1983. He has
also served as a director of Midwest Bank and Trust Company since 1969. Mr.
Rosasco has been the owner and President of ProTacTic Golf, Inc. since 1996.
Prior thereto, Mr. Rosasco was a private investor with LPR Enterprises, Inc., a
real estate investment firm, for 10 years.
Leon Wolin has served as a Director of the Company since 1991. He was
elected a director of Midwest Bank and Trust Company in 1989. Mr. Wolin has
served as a director of Midwest Bank since 1996. Mr. Wolin has been President of
both Wolin-Levin, Inc., a real property management and consulting firm, and
Price Associates, Inc., a real estate appraisal and consulting firm, since 1950.
PROPOSAL 1. -- ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of eight (8)
directors and is divided into three classes. Directors are elected for staggered
terms of three years each, with the term of office of only one of the three
classes of directors expiring each year. Directors serve until their successors
are elected and qualified.
The nominees proposed for election at this Annual Meeting are Mr. Robert L.
Woods and Mr. Robert D. Small.
In the event that Mr. Woods or Mr. Small is unable to serve or declines to
serve for any reason, it is intended that the proxies will be voted for the
election of such other person as may be designated by the present Board of
Directors. The Board of Directors has no reason to believe that Mr. Woods or Mr.
Small will be unable or unwilling to serve. UNLESS AUTHORITY TO VOTE FOR THE
NOMINEES IS WITHHELD, IT IS INTENDED THAT THE SHARES REPRESENTED BY THE ENCLOSED
PROXY CARD, IF EXECUTED AND RETURNED, WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES PROPOSED BY THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
NOMINEES NAMED IN THIS PROXY STATEMENT.
4
<PAGE> 8
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the Board
of Directors and through activities of its committees. The Board of Directors
meets regularly and may schedule special meetings as needed. During fiscal year
1998, the Board of Directors of the Company held ten meetings primarily related
to general Company matters. Each of the directors of the Company attended at
least 75% of the total number of the Company's Board meetings held and committee
meetings on which such directors served during fiscal year 1998.
The Board of Directors of the Company maintains an Audit Committee. The
Audit Committee recommends the annual appointment of the Company's auditors and
reviews the scope and results of the audit and other services provided by the
Company's independent auditors. The Audit Committee consists of Messrs. Nagle,
Rosasco, Small, Wolin, DiPaolo and Rizza. The Audit Committee met three times in
fiscal year 1998. The Board of Directors also functions as a Compensation
Committee for the purpose of administering the Company's 1996 Stock Option Plan,
and otherwise is responsible for determining the compensation of the Company's
executive officers.
DIRECTORS' COMPENSATION
All Directors of the Company receive a retainer of $12,000 per year for
serving on the Board and receive $500 per Board meeting attended. Except for
Joseph Rizza and Robert Small, all Directors of the Company are also members of
the board of directors of Midwest Bank and Trust Company. Six Directors serve as
members of the Audit Committee and receive annual fees of $3,000. Five Directors
of the Company also serve on the board of directors of Midwest Bank. Each
director of the Company's subsidiaries received between $4,200 and $8,400 per
year in base directors' fees. Each subsidiary maintains its own fee structure
for director compensation. Certain subsidiaries also provide fees for director
participation in specific board of directors committees (such as loan
committees, audit committees and executive committees) which range between $420
and $6,400 annually. One Director of the Company, Daniel Nagle, also serves as
Secretary and received a fee of $16,500 for legal services rendered to the board
of directors of Midwest Bank and Trust Company and Midwest Bank.
EXECUTIVE COMPENSATION
The following table shows, for the years ended December 31, 1998, 1997 and
1996, the cash compensation paid by the Company, as well as certain other
compensation paid or accrued for those years, to the President and Chief
Executive Officer and other executive officers of the Company in fiscal years
1998, 1997 and 1996 ("Named Executive Officers"). No other executive officer of
the Company earned and/or received salary and bonus in excess of $100,000 in
fiscal year 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------------------ SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
------------------ ---- --------- -------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Woods............ 1998 325,000 75,000 37,879(1) 60,000 12,200(2)
President and Chief 1997 325,000 150,000 39,550(1) 0 12,072(2)
Executive Officer 1996 300,000 150,000 30,950(1) 0 11,462(2)
Edward H. Sibbald.......... 1998 158,500 25,500 14,200(3) 15,000 7,163(4)
Executive Vice President 1997 133,500 29,931 13,650(3) 7,000 6,160(4)
and Chief Financial Officer 1996 126,000 25,313 13,300(3) 6,000 5,815(4)
Brad A. Luecke............. 1998 175,000 24,225 18,355(5) 10,000 6,394(4)
President, Midwest Bank 1997 165,000 23,967 19,530(5) 7,000 6,029(4)
and Trust Company 1996 155,000 31,140 15,325(5) 10,000 5,938(4)
</TABLE>
5
<PAGE> 9
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------------------ SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
------------------ ---- --------- -------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
James I. McMahon........... 1998 160,000 24,900 19,543(6) 10,000 4,615(4)
President, Midwest Bank 1997 150,000 29,462 15,920(6) 7,000 4,327(4)
1996 140,000 28,584 10,566(6) 10,000 4,318(4)
Stephen M. Karaba.......... 1998 120,000 20,025 12,400(7) 10,000 6,238(8)
President, Midwest Bank 1997 100,000 29,082 9,000(7) 7,000 4,231(8)
of McHenry County 1996 90,000 18,325 7,300(7) 10,000 4,214(4)
</TABLE>
- -------------------------
(1) Consists of directors' fees of $31,200, $34,150 and $26,150 in 1998, 1997
and 1996 respectively, and an automobile allowance of $6,679, $5,400 and
$4,800 in 1998, 1997 and 1996, respectively.
(2) Consists of a matching contribution made by the Company pursuant to the
Company's 401(k) Plan of $8,500, $8,414 and $7,917 in 1998, 1997 and 1996,
respectively, and life insurance premiums paid by the Company on behalf of
Mr. Woods in the amount of $3,700, $3,658 and $3,545 in 1998, 1997 and 1996,
respectively.
(3) Consists of directors' fees of $9,800, $8,850 and $8,500 in 1998, 1997 and
1996, respectively, and an automobile allowance of $4,400 in 1998 and $4,800
in each of 1997 and 1996.
(4) Consists of a matching contribution made by the Company pursuant to the
Company's 401(k) Plan.
(5) Consists of directors' fees of $13,200, $13,900 and $11,900 in 1998, 1997
and 1996, respectively, and membership fees of $5,155, $5,630 and $3,425 in
1998, 1997 and 1996, respectively.
(6) Consists of directors' fees of $4,200, $4,200 and $3,600 in each of 1998,
1997 and 1996, respectively, membership fees of $2,200, $2,885 and $2,220 in
1998, 1997 and 1996, respectively, and tuition reimbursement of $13,143,
$8,835 and $4,746 in 1998, 1997 and 1996, respectively.
(7) Consists of directors' fees of $8,000, $4,200 and $3,800 in 1998, 1997 and
1996, respectively, and an automobile allowance of $4,400, $4,800 and $3,500
in 1998, 1997 and 1996, respectively.
(8) Consists of a matching contribution of $5,854 made by the Company pursuant
to the Company's 401(k) Plan and $620 in life insurance premiums paid by the
Company.
The information presented below summarizes certain information about the
Common Stock underlying options which were granted in 1998 by the Company to the
Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
---------------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE VALUE AT
NUMBER OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OF FOR OPTION TERM(2)
OPTION EMPLOYEES IN BASE PRICE EXPIRATION -----------------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ------------ ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Woods........... 60,000 42.4% 17.88 2008 674,400 1,710,000
Edward H. Sibbald......... 15,000 10.6 17.88 2008 168,600 427,500
Brad A. Luecke............ 10,000 7.1 17.88 2008 112,400 285,000
James I. McMahon.......... 10,000 7.1 17.88 2008 112,400 285,000
Stephen M. Karaba......... 10,000 7.1 17.88 2008 112,400 285,000
</TABLE>
- -------------------------
(1) All options were granted on April 9, 1998 and become exercisable in
cumulative annual installments of 25 percent of the shares covered thereby
on each of the first, second, third and fourth anniversaries on the grant
date. No stock appreciation rights (SARs) were granted to the Named
Executive Officers during fiscal 1998.
(2) The amounts set forth represent the value that would be received by the
Named Executive Officer upon exercise of the option on the day before the
expiration date of the option based upon assumed annual
6
<PAGE> 10
growth rates in the market value of the Company's Common Stock of 5 percent and
10 percent, rates prescribed by applicable Securities and Exchange Commission
rules. Actual gains, if any, on stock option exercises are dependent on the
future performance of the Company's Common Stock and other factors such as
the general condition of the stock markets and the timing of the exercise
of the options. The Company did not use an alternative formula for a
potential realizable value as the Company is not aware of any formula that
will determine with reasonably accuracy a present value based on future
unknown or volatile factors.
The following table summarizes the number and value of stock options
relating to Common Stock that were unexercised at December 31, 1998. No stock
options were exercised by the Named Executive Officers during 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES VALUE OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
ACQUIRED ON REALIZED YEAR-END(#) FISCAL YEAR-END($)(1)
NAME EXERCISE(#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Robert L. Woods................. 0 0 0/60,000 0/0
Edward H. Sibbald............... 0 0 4,750/23,250 25,735/34,485
Brad A. Luecke.................. 0 0 6,750/20,250 39,975/48,725
James I. McMahon................ 0 0 6,750/20,250 39,975/48,725
Stephen M. Karaba............... 0 0 6,750/20,250 39,975/48,725
</TABLE>
- -------------------------
(1) Options are considered "in-the-money" if the fair market value of the
underlying Common Stock exceeds the exercise price of the related stock
option. The value of the unexercised options at the end of fiscal 1998 is
based on the closing price of $15.25 reported on the Nasdaq National Market
on December 31, 1998, the last trading day of fiscal 1998.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION FOR 1998 PERIOD
The Board of Directors is responsible for making decisions regarding
executive officers' compensation, including bonuses and other benefits. The full
Board also acts as the Compensation Committee for purposes of administering the
Company's 1996 Stock Option Plan and determines the awards granted thereunder.
The Board of Directors has developed a compensation program which is
comprised of salary, annual cash incentive bonuses, long-term incentives in the
form of stock options and other benefits typically offered to executives by
corporations similar to the Company. The Board of Directors recognizes that
attracting and retaining key executives is critical to the Company's long term
success. The Board has set certain guidelines regarding executive officers'
compensation. Each executive officer is reviewed annually, and that officer's
compensation is based on that individual's contribution to the Company.
The Board of Directors has reviewed compensation structures and other
information from various sources, including, among others, The Illinois Bankers
Association, SNL Securities and Sheshunoff Information Services. Although no
company is an exact match, consideration was given to salaries and bonuses that
are paid to executives at similar community bank holding companies. Additional
considerations were the greatly increased responsibilities of running a public
company, the individual's contributions to the Company and the individual's
experience and tenure with the Company.
The salary of Mr. Robert L. Woods, the Company's Chief Executive Officer,
was set at $325,000 for fiscal 1998, which is the same amount of salary paid to
Mr. Woods in 1997. His salary was determined based on corporate results over the
past five years, plus a review of his individual performance. Mr. Woods also
received a bonus of $75,000 in 1998 and a grant of 60,000 non-qualified stock
options under the 1996 Stock Option Plan. In making decisions regarding CEO
compensation, the Board of Directors took into account
7
<PAGE> 11
results of operations of the Company, conditions in the banking industry as a
whole and Mr. Woods' long-term contributions to the Company. Mr. Woods has been
with the Company for over 38 years.
The Internal Revenue Code limits the deductions a publicly held company may
take for compensation paid to its most highly paid executive officers.
Typically, salaries and bonuses in excess of $1 million (excluding
performance-based compensation) which are paid in one tax year cannot be
deducted. The Board of Directors did not consider this section of the Internal
Revenue Code when establishing compensation because current executive salaries
and bonuses are well below the $1 million threshold.
COMPENSATION COMMITTEE
E.V. Silveri
Robert L. Woods
Angelo DiPaolo
Daniel Nagle
Joseph Rizza
LeRoy Rosasco
Robert D. Small
Leon Wolin
EMPLOYMENT AGREEMENTS
The Company and certain subsidiaries of the Company have entered into
separate Transitional Employment Agreements with each of the Named Executive
Officers and certain other officers of the Company's subsidiaries. The
Transitional Employment Agreements are designed to minimize the impact of change
in control transactions on the performance of key officers and executives. In
the event of a "change in control" (generally, the acquisition of 50% or more of
the voting power or the sale of more than 40% of the assets of the Company or
the relevant subsidiary), the agreements require the Company, the relevant
subsidiary or any successor, as the case may be, to continue the employment of
the affected officers for either 12 or 24 months in their respective positions
and at their respective salaries (including directors' fees, if any) with the
right to participate in new or continuing bonus, incentive, benefit and other
plans. In the event the employment of an officer is terminated by (i) the
officer for any reason during the first year following the change in control
(subject to the requirement that certain officers must wait 90 days following
the change of control to exercise such right of termination), (ii) by an
acquiror for any reason other than death, disability or cause, or (iii) due to
constructive discharge (e.g., a reduction in salary or benefits, a material
diminution in title, duties or responsibilities, or a significant change in
hours worked or location), the acquiror is obligated to continue the affected
officer's salary (including directors' fees, if any) for 12 or 24 months after
the termination of employment.
1996 STOCK OPTION PLAN
Under the Company's 1996 Stock Option Plan (the "Plan"), incentive stock
options and nonqualified stock options may be granted to executives, key
personnel, consultants and nonemployee directors of the Company. The incentive
stock options granted under the Plan will be qualified as such under the
Internal Revenue Code of 1986, as amended (the "Code"). The purpose of the Plan
is to offer executives, key personnel, consultants and nonemployee directors
stock-based incentives in the Company, thereby giving them a stake in the
Company's growth and prosperity and encouraging them to continue their services
with the Company and its subsidiaries. The Plan permits the grant of options to
purchase up to 500,000 shares of Common Stock. In the event of corporate changes
affecting the Common Stock such as stock splits, stock dividends,
reorganizations, mergers or consolidations, appropriate adjustments will be made
in the number of shares for which options may thereafter be granted under the
Plan and the option price and the number of shares subject to outstanding
options granted pursuant to the Plan. Incentive stock options may be granted
only to employees of the Company. Nonqualified stock options may be granted to
all employees of, and consultants who provide services to, the Company or its
subsidiaries. Options may be granted to employees or consultants at any time and
from time to time in the sole discretion of the Board of Directors acting as the
8
<PAGE> 12
Compensation Committee. The full Board of Directors currently serves as the
Compensation Committee. No employee or consultant may receive options covering
more than 100,000 shares in any single fiscal year.
401(K) PLAN
The Company maintains a 401(k) Plan, which is designed to be qualified
under Section 401(k) of the Code. An employee is eligible to participate in the
401(k) Plan following attainment of the age of 21 and the completion of one year
of service with the Company (1,000 hours within a twelve-month period). Under
the 401(k) Plan, subject to the limitations imposed under Section 401(k) and
Section 415 of the Code, a participant is able to elect to defer not more than
15% of his or her compensation by directing the Company to contribute such
amount to the 401(k) Plan on such employee's behalf. The Company may elect to
make matching contributions equal to the participating employee's contribution
plus 1%, subject to a maximum matching contribution of no more than 5% of the
participant's salary.
Under the 401(k) Plan, a separate account is established for each employee.
Participants are 100% vested at all times in their contributions and vest in
employer matching contributions in one-third increments, becoming fully vested
in employer contributions after 3 years of service. Distributions from the
401(k) Plan are made upon termination of service, retirement, disability or
death in a lump sum or in annual installments. Midwest Trust Services, Inc., a
subsidiary of the Company, acts as trustee for the 401(k) Plan. Participants in
the 401(k) Plan can choose from a number of investment vehicles, including
investment in the Company's Common Stock. The trustee has sole voting and
investment power with respect to all shares of the Company's Common Stock held
in each participant's account under the 401(k) Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors functions as the Compensation Committee for purposes
of administering the Company's 1996 Stock Option Plan, and otherwise is
responsible for determining the compensation of the Company's executive
officers. Robert L. Woods, President and Chief Executive Officer of the Company,
serves on the Board of Directors.
Angelo DiPaolo, a Director of the Company, and four companies controlled by
Mr. DiPaolo received loans and lines of credit from the Company which had an
aggregate outstanding loan balance of $5.3 million as of December 31, 1998. Each
loan was made in the ordinary course of business on terms substantially the same
as those prevailing at the time for comparable transactions with unaffiliated
persons and did not involve more than the normal risk of collectibility or
present other unfavorable features. Midwest Bank and Trust Company contracted
with a general construction contractor for renovations at its Elmwood Park
location. A company controlled by Angelo DiPaolo was a subcontractor for the
renovation project. Mr. DiPaolo's company received $208,000 in payments for work
performed on the renovation project.
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires directors, certain officers and certain other owners
to periodically file notices of changes in beneficial ownership of Common Stock
with the Securities and Exchange Commission. To the best of the Company's
knowledge, during 1998 all required filings were timely submitted, except as
follows. During 1998, one filing representing one transaction was not timely
submitted due merely to an administrative oversight by the Company on behalf of
the following persons: Director E.V. Silveri, Director Angelo DiPaolo and
Director Daniel Nagle. The proper filings have subsequently been made. In
addition, Leon Wolin amended his Form 3 to report holdings which were
inadvertently unreported in the original filing due to an administrative
oversight.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Company's current policy provides that all loans made by the Company to
its directors and executive officers are made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and do not involve more than the
normal risk of collectibility or present other unfavorable features. At December
31, 1998, the Company's directors and
9
<PAGE> 13
executive officers had loans outstanding, whose individual aggregate
indebtedness to the Company exceeded $60,000, totaling approximately $9.9
million in the aggregate, which represented 12.7% of total stockholders equity
as of that date. Such loans were made by the Company in the ordinary course of
business, were not made with favorable terms, and did not involve more than the
normal risk of collectibility or present other unfavorable features.
PERFORMANCE GRAPH
The graph below sets forth a comparison of the percentage change in the
cumulative total shareholder return for the period beginning February 24, 1998
and ending December 31, 1998 for the Company's Common Stock, the Russell 2000
Index and a Peer Group, the CRSP Index for Nasdaq Bank Stocks.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
02/24/98 03/31/98 06/30/98 09/30/98 12/31/98
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Midwest Banc Holdings, Inc. $100.00 $100.12 $ 98.81 $89.81 $86.70
- --------------------------------------------------------------------------------------------------------------
Russell 2000 Index 100.00 105.81 100.68 80.03 92.88
- --------------------------------------------------------------------------------------------------------------
Nasdaq Bank Stocks 100.00 105.56 103.55 87.33 98.94
- --------------------------------------------------------------------------------------------------------------
</TABLE>
PROPOSAL 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Crowe, Chizek and Company LLP as
independent auditors for the Company for the year ending December 31, 1999,
subject to ratification of such appointment by the stockholders.
Representatives of Crowe, Chizek and Company LLP will be present at the
Annual Meeting. They will be given an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions from
stockholders present at the Annual Meeting.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED PROXY
CARD WILL BE VOTED FOR RATIFICATION OF THE APPOINTMENT OF CROWE, CHIZEK AND
COMPANY LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE
APPOINTMENT OF CROWE, CHIZEK AND COMPANY LLP AS THE INDEPENDENT AUDITORS OF THE
COMPANY.
10
<PAGE> 14
ADDITIONAL INFORMATION
STOCKHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy and form of proxy
relating to the 2000 Annual Meeting of Stockholders, a stockholder proposal must
be received prior to December 16, 1999, by the Secretary of the Company at the
address set forth on the first page of this Proxy Statement. Any such proposal
will be subject to Rule 14a-8 under the Exchange Act.
NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING
The By-laws of the Company set forth the procedures by which a stockholder
may properly bring business before a meeting of stockholders. Pursuant to the
By-laws, only business brought by or at the direction of the Board of Directors
may be conducted at an annual meeting. The By-laws of the Company provide an
advance notice procedure for a stockholder to properly bring business before an
annual meeting. For the 2000 Annual Meeting, the stockholder must give written
advance notice to the Secretary of the Company by January 4, 2000; provided,
however, that in the event the Company publicly announces or discloses less than
one hundred thirty (130) days prior to the meeting that the date of the 2000
Annual Meeting is to be held on a date other than May 3, 2000, notice by the
stockholder will be timely if received not later than the close of business on
the tenth (10th) day following the date on which the Company's notice to
stockholders of the annual meeting date was mailed or such public disclosure was
made. The advance notice by a stockholder must include the stockholder's name
and address, as they appear on the Company's record of stockholders, a brief
description of the proposed business, the reason for conducting such business at
the annual meeting, the class and number of shares of the Company's capital
stock that are beneficially owned by such stockholder and any material interest
of such stockholder in the proposed business. In the case of nominations to the
Board of Directors, certain information regarding the nominee must be provided.
These requirements apply to any matter that a stockholder wishes to raise at an
annual meeting, including those matters raised other than pursuant to the
procedures of Rule 14a-8 under the Exchange Act. Nothing in this paragraph shall
be deemed to require the Company to include in its proxy statement or the proxy
relating to any annual meeting any stockholder proposal which does not meet all
of the requirements for inclusion established by the United States Securities
and Exchange Commission in effect at the time such proposal is received.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
11
<PAGE> 15
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are then present at the Annual
Meeting and wish to vote your shares in person, your original proxy may be
revoked by voting at the Annual Meeting.
By Order of the Board of Directors
DANIEL NAGLE
Secretary
Melrose Park, Illinois
March 26, 1999
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO
SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
12
<PAGE> 16
<TABLE>
<S><C>
PROXY PROXY
MIDWEST BANC HOLDINGS, INC.
501 WEST NORTH AVENUE
MELROSE PARK, ILLINOIS 60160
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) of Midwest Banc Holdings, Inc., a Delaware
corporation (the "Company"), does (do) hereby constitute and appoint Londi J.
Arquilla, Robert Figarelli and Michelle T. Holman, and each of them, the true
and lawful attorney of the undersigned with full power of substitution, to
appear and act as the proxy or proxies of the undersigned at the Annual Meeting
of Stockholders of said corporation to be held at Elmcrest Banquets by
Biancalana, 7370 West Grand Avenue, Elmwood Park, Illinois 60707, on May 5,
1999, at 2:00 p.m. and at any adjournment thereof, and to vote all the shares
of Midwest Bank Holdings, Inc. standing in the name of the undersigned, or
which the undersigned may be entitled to vote, as fully as the undersigned
might or could do if personally present, as set forth below.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder(s). If no direction is made, this proxy will be
voted "FOR ALL" of the two nominees for director and "FOR" the ratification
of the appointment of Crowe, Chizek and Company LLP as independent auditors of
the Company for the fiscal year ending December 31, 1999.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reverse)
- -----------------------------------------------------------------------------
MIDWEST BANC HOLDINGS, INC.
PLEASE MARK VOTE IN SQUARE IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
For Withhold For All
All All Except
1. Election of Two (2) Directors--For a / / / / / /
Three-Year Term
Nominees: Robert L. Woods and
Robert D. Small.
Instructions: To withhold authority to
vote for any individual nominee, write
that nominee in the space provided below.
________________________________________
For Against Abstain
2. Ratification of the appointment of Crowe, / / / / / /
Chizek and Company LLP as independent
auditors of the Company for the fiscal
year ending December 31, 1999.
Dated: ___________________, 1999
Signature: ____________________________________________
Signature, if held jointly: ___________________________
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If
a corporation, please sign the full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
</TABLE>
