<PAGE>
FREEPORT, ILLINOIS
MARCH 22, 1996
TODAY'S BANCORP, INC.
50 WEST DOUGLAS STREET
FREEPORT, ILLINOIS 61032
PROXY STATEMENT AND NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 18, 1996
To the Stockholders of
TODAY'S BANCORP, INC.:
The Annual Meeting of Stockholders of TODAY'S BANCORP, INC. (the "Corporation"),
will be held in the Business Conference Center, Building H, of the Highland
Community College, 2998 West Pearl City Road, Freeport, Illinois, on Thursday,
April 18, 1996, at 10:00 A.M., for the purpose of considering and voting upon
the following matters:
1. To elect three Class III Directors for a term of three years;
2. To ratify the appointment of KPMG Peat Marwick LLP as independent public
accountants for the Corporation for the fiscal year ending December 31, 1996;
and
3. To transact such other business as may properly be brought before the Annual
Meeting or any adjournment thereof.
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED POSTAGE
PAID ENVELOPE AS PROMPTLY AS POSSIBLE WHETHER YOU PLAN TO ATTEND THE MEETING IN
PERSON. IT IS HOPED THAT YOU WILL BE ABLE TO ATTEND THE MEETING, AND IF YOU DO
YOU MAY VOTE YOUR STOCK IN PERSON IF YOU WISH. THE PROXY MAY BE REVOKED AT ANY
TIME PRIOR TO ITS EXERCISE.
<PAGE>
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of the Corporation of proxies for use at the Annual
Meeting of Stockholders of the Corporation to be held in the Business Conference
Center, Building H, of the Highland Community College, 2998 West Pearl City
Road, Freeport, Illinois, on April 18, 1996, at 10:00 A.M. The record date for
determining stock ownership is March 15, 1996. Only Stockholders of record as
of March 15, 1996, will be entitled to notice of, and to vote at, the Annual
Meeting. As of March 15, 1996, the Corporation had issued and outstanding
2,748,698 shares of Common Stock with a par value of $5.00 per share. In the
election of the Board of Directors, and for all other matters to be voted upon
at the Annual Meeting, each issued and outstanding share is entitled to one
vote.
The 1995 Annual Report of the Corporation, including financial statements
consolidated with those of its subsidiaries, is being transmitted to each
Stockholder on or about March 22, 1996, along with this Proxy Statement (and the
accompanying proxy).
Your proxy is being solicited by the Board of Directors of the Corporation.
The cost of soliciting proxies will be borne by the Corporation. In addition to
use of the mails, proxies may be solicited personally or by telephone or
telegraph by officers, Directors and certain employees of the Corporation who
will not be specially compensated for such soliciting. The Corporation will, at
its expense, upon the receipt of a request from brokers and other custodians,
nominees and fiduciaries, forward proxy soliciting material to the beneficial
owners of shares held of record by such persons.
Stockholders are urged to specify the way they wish to vote their shares by
marking the appropriate boxes on the enclosed proxy. Shares represented by
proxies which are properly executed and returned will be voted at the Annual
Meeting as specified on the proxy. If no choice is specified, the shares will
be voted FOR the nominees listed under Proposal 1 and FOR Proposal 2 in this
Proxy Statement. It is not anticipated that any action will be asked of the
Stockholders other than that set forth herein; proxies in the enclosed form,
however, will confer discretionary voting authority on the individuals specified
in the enclosed proxy regarding any other matters which may properly come before
the Annual Meeting.
Any Stockholder giving a proxy will have the right to revoke it at any time
prior to the voting thereof by filing a revoking instrument or a duly executed
proxy bearing a later date with the Secretary of the Corporation or by attending
the Annual Meeting and voting in person.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the Judge of Election appointed by the Board of Directors for the Annual Meeting
and will determine whether a quorum is present. The Judge of Election will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum 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
as to certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
1
<PAGE>
PROPOSAL NO. 1
DIRECTORS AND EXECUTIVE OFFICERS
The Corporation has a staggered Board of Directors divided into three
classes. One class is elected annually to serve for three years. At the Annual
Meeting of Stockholders on April 18, 1996, three Class III Directors will be
elected for terms of three years or until their successors are elected and
qualified. The three nominees are indicated in the table below. The proxy
provides instructions for voting for all Director nominees or for withholding
authority to vote for one or more Director nominees. Unless instructed to the
contrary, the persons acting under the proxy solicited hereby will vote for the
nominees named as Class III Directors. The Corporation has no knowledge that
any of the nominees will refuse or be unable to serve, but if any of the
nominees becomes unavailable for election, the holders of the proxies reserve
the right to substitute another person of their choice as a nominee when voting
at the Annual Meeting. To be elected a Director, each Director nominee must
receive the favorable vote of a plurality of the shares represented and entitled
to vote at the Annual Meeting.
NOMINEES
The following persons, if elected at the Annual Meeting of Stockholders, will
serve as Class III Directors for three years.
<TABLE>
<CAPTION>
NAME, AGE AND YEAR BECAME PRINCIPAL OCCUPATION
DIRECTOR OF THE CORPORATION AND OTHER INFORMATION
- ---------------------------- ---------------------
CLASS III (TERM EXPIRES 1999)
- ----------------------------
<S> <C>
Michael A. Cavataio, Sr. (1) Real Estate Developer; Director of
Age 52 - 1996 TODAY'S BANK - East; Director of
Pioneer Financial Services, Inc. and
AON Asset Management Fund, Inc.
J. Michael Hillard Chief Operating Officer, Tri-State
Age 44 - 1994 Tours/River Trails (Tours and
Transportation Co.); Director of the
Corporation and TODAY'S BANK-West.
R. William Owen Executive Vice President, Chief Financial
Age 56 - 1986 Officer and Director of the Corporation;
Executive Vice President of TODAY'S BANK-
East; Director of TODAY'S BANK-West.
- ----------------------------------------
(1) James C. Skyrms, a Class III Director of the Corporation since 1983,
will retire as a Director of the Corporation on April 18, 1996. The Board of
Directors has slated Michael A. Cavataio, Sr. as a Class III Director nominee to
replace Mr. Skyrms.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
CONTINUING DIRECTORS
- --------------------
CLASS I (TERM EXPIRES 1997)
- ---------------------------
<S> <C>
Allen E. Fehr Retired Consulting Engineer, since 1992;
Age 61 - 1993 prior thereto, Partner, Fehr-Graham &
Associates(Engineering/Consulting firm);
Director of the Corporation.
Thomas A. Ferguson, Jr. President and Chief Operating Officer,
Age 48 - 1988 Newell Companies (Manufacturer); Director
of the Corporation.
Frank E. Furst Chairman and Chief Executive Officer,
Age 56 - 1980 Furst-McNess Company (Manufacturer);
Director of the Corporation.
Ruth Mercedes Smith President, Highland Community College;
Age 62 - 1993 Director of the Corporation.
CLASS II (TERM EXPIRES 1998)
- ----------------------------
Craig D. Hartman President and Chief Executive Officer,
Age 53 - 1986 Plansmith Corporation (Bank Consulting);
Director of the Corporation.
Dan Heine President, Chief Executive Officer and
Age 49 - 1983 Director of the Corporation; Chairman,
Director and Chief Executive Officer of
TODAY'S BANK-East; Chairman and Director
of TODAY'S BANK-West.
Edward D. Higgins Retired Vice President and Secretary,
Age 70 - 1980 Borchers, Inc. (Retail Clothing); Director
of the Corporation.
Raymond E. Johnson Partner, McGreevy, Johnson & Williams (Law
Age 57 - 1988 Firm); Director of the Corporation and
TODAY'S BANK-East.
</TABLE>
3
<PAGE>
OTHER EXECUTIVE OFFICERS
Set forth below are the executive officers of the Corporation not listed above.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE CORPORATION
- --------------------------------------------------------------------------------
<S> <C> <C>
Douglas M. Cross 43 President and Chief Operating Officer and
Director of TODAY'S BANK-East.
Daniel M. Lashinski 46 Vice President, Secretary and Treasurer of
the Corporation.
Douglas L. Mitchell 52 Executive Vice President of TODAY'S BANK-
East.
Jeffrey P. Mozena 41 President and Chief Executive Officer and
Director of TODAY'S BANK-West.
C. Brad Zulke 35 Executive Vice President of TODAY'S BANK-
East;President and Director of TODAY'S Trust
Company Company
</TABLE>
All of the Corporation's Directors hold office for the terms indicated, or
until their respective successors are duly elected and qualified, and all of the
executive officers hold office for a term of one year. There are no
arrangements or understandings between any of the Directors, executive officers
or any other person pursuant to which any of the Directors or executive officers
have been selected for their respective positions, except with respect to the
employment agreements with Messrs. Heine and Owen (see "Employment Agreements")
and severance agreements with Messrs. Cross, Mitchell, Mozena and Zulke (see
"Severance Agreements").
BOARD COMMITTEES AND MEETINGS
The Corporation has a standing audit and compensation committee but does
not have a nominating committee. The Board of Directors functions as a
nominating committee.
The current members of the audit committee are Messrs. Furst, Hillard,
Johnson and Skyrms. Mr. Owen is a nonvoting member of the audit committee. The
functions of the audit committee consist of recommending the appointment of
auditors to the Board of Directors and reviewing, with the Corporation's
internal auditor as well as the independent auditors, the scope and results of
the Corporation's procedures for internal auditing, the scope and results of the
auditing engagement and the adequacy of the Corporation's system of internal
controls (see "APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS"). This committee
met two times during 1995.
The members of the compensation committee are Ms. Smith and Messrs.
Ferguson, Furst, and Higgins. Messrs. Heine and Owen are non-voting members of
the compensation committee. The primary function of the compensation committee
is the administration of salaries and incentive compensation for senior
management of the Corporation and its subsidiaries. This committee met five
times during 1995.
4
<PAGE>
The Board of Directors functions as a nominating committee and will
consider nominees recommended by the Stockholders. Recommendations should be
forwarded to the Secretary of the Corporation.
The Board of Directors of the Corporation met twelve times during 1995.
All Directors attended at least seventy-five percent of the meetings of the
Board and the committees on which they served during 1995, with the exception of
Edward D. Higgins, who attended 71% of such meetings.
DIRECTOR'S FEES
In 1995, Directors received a $4,000 per year retainer and $500 for each
meeting of the Board of Directors whether or not they attend. Non-officer
Directors receive $100 for each committee meeting they attend. The Board of
Directors of the Corporation has adopted and the Corporation administers a
Directors' Deferred Compensation Plan (the "Deferred Plan") in which
participation is voluntary. The Deferred Plan is not a "qualified plan" within
the meaning of Section 401(a) of the Internal Revenue Code (the "Code").
Directors' fees paid to participants are placed in a cash reserve account and
earn interest equal to that paid on fixed rate individual retirement account
deposits held by TODAY'S BANK-East. The Deferred Plan allows participants to
request that all or a portion of the amounts deferred be deemed invested in the
Corporation's Common Stock. Any shares acquired in this regard are held of
record by TODAY'S Trust Company. Any cash dividends paid on such shares are
credited to the participants cash reserve account. Currently, eight Directors,
Ms. Smith and Messrs. Fehr, Ferguson, Furst, Higgins, Hillard, Johnson and
Skyrms, participate in the Deferred Plan.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
The Directors, executive officers and beneficial owners of 10% or more of
the equity securities of the Corporation are required to file certain reports
with Securities and Exchange Commission (the "SEC") pursuant to Section 16(a) of
the Securities Exchange Act of 1934, as amended (the "1934 Act"). A Form 3 must
be filed with the SEC within 10 days after the event by which the person becomes
a "reporting person" (i.e., director, executive officer, 10% owner); a Form 4
must be filed with the SEC on or before the tenth day after the end of the month
in which a change in beneficial ownership has occurred for a reporting person;
and a Form 5 must be filed with the SEC on or before the forty-fifth day after
the end of the Corporation's fiscal year for transactions or holdings that
should have been reported but were not reported. For the Corporation's fiscal
year ended December 31, 1995, all Forms 3, 4 and 5 were timely filed with the
SEC and the Corporation knows of no failure to file a required form by any
reporting person.
EXECUTIVE COMPENSATION
The following table sets forth compensation information about the
Corporation's Chief Executive Officer and the four other highest paid officers
of the Corporation or one of its subsidiaries who received more than $100,000 in
salary and bonus during 1995.
5
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------
Other Stock
Name and Annual Options All Other
Principal Position Year Salary Bonus Compensation (1) Granted Compensation (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dan Heine, 1995 $196,900 $-0- $17,500 17,250 $13,441
President and
Chief Executive 1994 184,875 -0- 17,600 1,750 189,850(3)
Officer
1993 173,575 78,109 18,500 -0- 7,292
R. William Owen, 1995 $128,648 $-0- $13,600 11,950 $25,158(3)
Executive Vice
President and 1994 123,700 -0- 14,600 1,150 113,121(3)
Chief Financial
Officer 1993 116,140 43,553 15,500 -0- 6,155
Douglas M. Cross, 1995 $105,610 $-0- $3,900 2,800 $49,665(3)
President and Chief
Operating Officer, 1994 100,610 18,487 6,100 700 21,081(3)
TODAY'S BANK-East
1993 92,610 34,729 3,500 -0- 12,189
C. Brad Zulke 1995 $98,375 $-0- $-0- 4,450 $16,807(3)
Executive Vice President,
TODAY'S BANK-East 1994 93,000 17,089 -0- 500 35,070(3)
1993 87,000 32,625 -0- -0- 7,496
Douglas L. Mitchell, 1995 $91,900 $-0- $4,400 -0- $23,162(3)
Executive Vice President,
TODAY'S BANK-East 1994 89,225 13,350 10,600 7,160 35,096(3)
1993 87,475 6,561 13,300 -0- 20,177(3)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents director's fees paid by the Corporation and its subsidiaries.
(2) All other compensation represents contributions by the Corporation to
the Corporation's Employee Stock Ownership Plan and amounts received upon the
exercise of stock options. The above amount does not include the amount of the
contribution made by the Corporation to its Pension Plan for any of the named
executives. The regular actuaries for the Pension Plan have indicated that the
amount of such contribution or accrual in respect of a specified person is not
and cannot readily be separated or individually calculated under the actuarial
cost method used in determining aggregate contribution requirements for the
Pension Plan. For the three years ending December 31, 1995, the Corporation
contributed a total of $728,117 to the Pension Plan.
(3) The amounts include funds received upon the exercise of nonqualified
stock options for the years indicated as follows: Heine-1994, $179,789;
Owen-1995, $18,574 and 1994, $106,763; Mitchell-1995, $15,454, 1994,
$26,685 and 1993, $13,310; and Cross-1995, $43,493 and 1994, $15,540;
Zulke-1995, $8,940 and 1994, $13,380.
6
<PAGE>
<TABLE>
<CAPTION>
Nonqualified Options Exercised During 1995 and
Option Value Table as of December 31, 1995
Value of
Unexercised
Number of In-the-Money
Unexercised Non-qualified
Shares Nonqual. Options Options at
Acquired Value at Dec. 31, 1995 Dec. 31, 1995
Name on Exercise Realized(2) Exercisable(1) Exercisable(1)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dan Heine -0- $-0- 24,345 $103,093
R. William Owen 2,833 18,574 13,100 71,144
Douglas M. Cross 6,276 43,493 5,650 18,564
C. Brad Zulke 1,000 8,940 9,450 24,609
Douglas L. Mitchell 2,606 15,454 2,900 12,760
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) The initial option price of the nonqualified options was 100% of the fair
market value of the Common Stock as of the grant date. All of the nonqualified
options are fully vested and can be exercised by the named executives. For "In-
the-Money Options," the "Value of Unexercised In-the-Money Options at December
31, 1995" represents the difference between the closing price ($22.19) of the
Corporation's Common Stock on December 31, 1995, and the exercise price of the
underlying options, multiplied by the number of applicable options.
(2) The value realized represents the difference between the exercise price of
the nonqualified options and the market value of the Common Stock on the
exercise date.
7
<PAGE>
EMPLOYMENT AGREEMENTS
On February 28, 1989, the Corporation entered into employment agreements
with Messrs. Heine and Owen. The agreements expired on December 31, 1995, but
automatically renewed for a one-year term. The agreements will continue to
automatically renew for successive one-year terms unless either the Corporation
or the executive gives written notice to the other within 45 days of the
expiration of the agreement. Messrs. Heine and Owen are to receive salaries
equal to what they are currently being paid; the amount of their salaries may be
increased (but not decreased) by the Board of Directors of the Corporation from
time to time. In addition, they are entitled to participate in all programs
offered by the Corporation to its executive officers.
Under the terms of each agreement, if the executive is terminated by the
Corporation, he shall be entitled to receive the salary and benefits due him
under the agreement for the remainder of the term of the agreement. The
executive shall be deemed to have been terminated by the Corporation if he: (a)
is terminated other than for "cause"; (b) resigns after his removal from the
position he currently holds with the Corporation; (c) resigns after a material
change in his duties; (d) is involuntary transferred outside of Freeport,
Illinois; (e) resigns following the transfer of all or substantially all of the
Corporation's assets, the liquidation, dissolution, consolidation or merger of
the Corporation where the Corporation is not the survivor, provided any such
action is not deemed a "change in control"; or (f) if he dies or becomes
disabled. If the executive is terminated for "cause", he shall not be entitled
to receive any compensation under the agreement. "Cause" is defined as personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful violation
of any law, rule or regulation or a material breach of the agreement.
If the executive is terminated without "cause" within two years of a
"change in control" of the Corporation, he shall be entitled to receive a
severance payment equal to 250% of the total of his base salary, incentive
compensation and bonus paid to him by the Corporation in the calendar year prior
to the year in which the change in control occurred. These payments, however,
shall not exceed an amount which, under the Internal Revenue Code, is deemed an
"excess parachute payment."
A "change in control" shall be deemed to occur upon the acquisition of 25%
or more of the voting securities of the Corporation by any person or persons
acting as a group, or the acquisition of more than 10% but less than 25% of the
voting securities of the Corporation by any person or persons acting as a group
if the Board of Directors of the Corporation makes a determination that such
action constitutes or will constitute a change in control of the Corporation. A
change in control shall also mean a merger or consolidation where the
Corporation is not the survivor, a merger or consolidation where the Corporation
is the survivor but more than 50% of the stock following the consummation of the
transaction is held by a person or persons who were not stockholders of the
Corporation during the two years preceding the announcement of such merger or
consolidation, a sale of all or substantially all of the Corporation's assets, a
replacement of a majority of the members of the Board of Directors of the
Corporation over a two year period unless the newly elected directors were
nominated by at least two-thirds of the Board members sitting at the beginning
of the
8
<PAGE>
period, or the filing of a change of control notice with the Board of Governors
of the Federal Reserve System. The executive shall be deemed to have been
terminated by the Corporation if he is terminated (as defined above) other than
for "cause" within two years of a change in control. In addition, he shall be
deemed to have been terminated if the Corporation elects not to renew the
agreement for the first two full calendar years following the year in which the
change in control occurs.
SEVERANCE AGREEMENTS
On November 21, 1995, the Corporation entered into severance agreements
with Messrs. Cross, Mitchell, Mozena and Zulke ("Executive"). In the event
there is a change of control and the Executive is terminated other than for
"cause" or if the Executive's duties and responsibilities are substantially
reduced within 12 months of the Change of Control, the Executive shall be
entitled to severance pay equal to 100% of the base salary, incentive
compensation and bonus payments paid to the Executive by the Company in the
calendar year prior to the year the Change of Control occurs.
A substantial change in the Executive duties is defined as: (a) a change in
the Executive's supervisor from an officer of the Company to a non-officer; (b)
a 50% or greater reduction in the number of subordinates reporting to the
Executive; (c) a demotion in job title or reduction in compensation; or (d) if
the Corporation demands that the Executive transfer to a different work location
located more than 50 miles from the Executive's current work location. "Cause"
is defined as personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform duties,
willful violation of any law, rule or regulation or a final cease and desist
order.
A "change in control" shall be deemed to occur upon the acquisition of 25%
or more of the voting securities of the Corporation by any person or persons
acting as a group, or the acquisition of more than 10% but less than 25% of the
voting securities of the Corporation by any person or persons acting as a group
if the Board of Directors of the Corporation makes a determination that such
action constitutes or will constitute a change in control of the Corporation. A
change in control shall also mean a merger or consolidation where the
Corporation is not the survivor, a merger or consolidation where the Corporation
is the survivor but more than 50% of the stock following the consummation of the
transaction is held by a person or persons who were not stockholders of the
Corporation during the two years preceding the announcement of such merger or
consolidation, a sale of all or substantially all of the Corporation's assets, a
replacement of a majority of the members of the Board of Directors of the
Corporation over a two year period unless the newly elected directors were
nominated by at least two-thirds of the Board members sitting at the beginning
of the period, or the filing of a change of control notice with the Board of
Governors of the Federal Reserve System.
9
<PAGE>
DEFINED BENEFIT PENSION PLAN
The Corporation operates a Pension Plan for its employees. Based on
certain assumptions, including continuance of the Pension Plan, the following
table shows the estimated annual pension benefits, before any applicable offset
for social security benefits, which would be payable to employees, including
officers, at a normal retirement (age 65), after various years of service at
selected salary levels. (Benefits are payable for life, or if spousal benefits
are elected, a reduced amount is payable for the life of the employee and of the
surviving spouse.) The estimated credited years of service for the five
individuals named in the Summary Compensation Table is as follows: Heine - 26
years; Owen - 9 years; Cross - 9 years ; Zulke - 5 years; and Mitchell - 11
years.
PENSION TABLE
ANNUAL RETIREMENT BENEFITS BASED UPON
YEARS OF SERVICE
<TABLE>
<CAPTION>
REMUNERATION 10 15 20 25 30
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$125,000 $20,496 $30,744 $40,992 $51,240 $61,488
150,000-500,000 24,922 37,382 49,843 62,304 74,765
</TABLE>
"Remuneration" is determined by calculating the individual's successive
highest five years' base salary in the ten years preceding retirement and is
determined substantially on the basis of the salary included in the "Summary
Compensation Table."
The above table reflects benefit amounts being equal from $150,000 to
$500,000 of salary due to the $150,000 compensation limit required by Code
Section 401(a)(17). This limitation became effective January 1, 1994.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, Dan Heine, President and Chief Executive Officer of the
Corporation, and R. William Owen, Executive Vice President and Chief Financial
Officer of the Corporation, served as non-voting members of the compensation
committee of the Board of Directors.
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The Compensation Committee of the Board of Directors (the "Committee") is
composed of four independent outside directors, all with past or present
experience with executive compensation policy-setting for large businesses. The
Committee is responsible for setting and administering salaries, benefits and
incentive plans for senior management of the Corporation and its subsidiaries.
Professional services of independent compensation consultants are utilized on a
regular basis to assist the Committee in this function.
COMPENSATION PHILOSOPHY
The Corporation has long believed that a strong relationship should exist
between executive compensation and the Corporation's value to stockholders.
Among the factors considered to preserve and enhance stockholder value are:
financial soundness; earnings per share growth; dividend growth; market
appreciation; and stock liquidity.
10
<PAGE>
In designing its compensation programs, the Corporation has acted on the
premise that all compensation should reflect the value that is created for
stockholders within the framework of working toward the Corporation's strategic
goals. Supporting goals and beliefs regarding the Corporation's compensation
programs are reflected below:
- Compensation should be related meaningfully to improving the factors
indicated above;
- Compensation should support the short- and long-term strategic goals and
objectives of the Corporation; and
- Compensation should play a key role in attracting, developing and retaining
people of the highest character and competence.
PAY MIX AND MEASUREMENT
The Corporation's executive compensation is based on three components.
(1) BASE SALARY
Base salary levels are established through extensive research and
review of comparative information from similar peer-group companies.
Established base salaries are designed to be externally competitive and
internally compatible.
Salaries for executives are reviewed by the Committee on an annual
basis and may be adjusted at that time based on the Committee's agreement that:
(a) the individual's contribution to the Corporation has increased; (b)
competitive pay levels have increased; and (c) the predetermined goals for the
Corporation and the individual have been met.
For example, the 1995 base salary compensation for the President and
Chief Executive Officer, Mr. Dan Heine, was $196,900, an increase of 6.5% over
the 1994 base amount. The increase reflected Mr. Heine's successful individual
contributions in carrying out the Corporation's strategic objectives and also an
increase in competitive base pay levels for the comparable executive positions
of similarly-sized banking companies. A similar process was followed for other
executive officers in 1995.
(2) ANNUAL INCENTIVES
Through this short-term compensation plan, many key officers of the
Corporation - not just the CEO - are motivated to enhance stockholder value by
maximizing total earnings and also the quality of those earnings. Accordingly,
the annual incentive compensation plan is funded from a pre-set portion of the
Corporation's net income which exceeds established thresholds for net income,
return on assets, return on equity, and growth. The percentage and thresholds
are established at the beginning of the fiscal year and reflect the earnings per
share improvement target set by the Committee. Individual awards are based upon
a predetermined percentage of salary, the individual's position and the
Committee's assessment of the individual's contribution in his or her position.
The Corporation believes that the annual incentive program provides an
excellent link between the value created for stockholders and the incentive paid
to executives. Under this plan, executives do not receive any incentive
compensation unless pre-established threshold targets
11
<PAGE>
are met. After that point, additional returns are allocated on a consistent
basis to stockholders and the incentive management pool.
During 1995 and 1994, management did not meet the minimum incentive
compensation threshold targets set by the Board of Directors. Although earnings
per share increased from $1.37 per share in 1994 to $1.79 in 1995, no incentive
compensation was paid. However, incentive compensation was awarded in years
1990 through 1993 when earnings per share grew from $1.22 in 1990 to $1.65 in
1993 as the result of minimum thresholds being met.
Under the annual incentive program, the Chief Executive Officer's
payout can reach a maximum of 52.5% of annual base salary if threshold
requirements are substantially exceeded. The CEO's incentive compensation
represented 0% of base salary in 1994 and 1995. Other executives in the annual
incentive plan have opportunity for increases that range from 20% to 52.5% of
base pay.
(3) LONG TERM INCENTIVES
Stock options have been granted to the named executives and others
under the Nonqualified Stock Option Plan. This component is intended to retain
and motivate executives to improve long-term stock market performance.
Stock options are granted at the prevailing market value and will have
value if the Corporation's stock price increases. Grants are vested one year
after they are awarded and exercisable within six years after grant. Executives
must be employed by the Company at the time of vesting in order to exercise the
options.
The Committee determines the number of options to be granted based on
the executive's position within the Corporation and in recognition of
outstanding historical performance. In 1995, 48,700 stock options were granted.
As of December 31, 1995, 217,510 stock options have been awarded, of which
111,821 have been awarded to the named executive officers.
To evaluate management's performance objectively and fairly, various safety
and soundness and profitability ratios are carefully analyzed. They include
capital, asset quality, earnings, and liquidity. Both federal and state
regulators provide reports to the full Board to further validate comparative
performance.
During 1993, the Corporation reviewed and revised its salary administration
program with the assistance of a well-respected consulting firm and in 1994 and
1995, utilized independent outside consulting services to review its
compensation and benefits package. The Committee feels secure that the
Corporation's salary administration is externally competitive, internally
equitable and supports the Corporation's Compensation philosophy and strategic
plan.
COMPENSATION COMMITTEE
Thomas A. Ferguson, Jr., Chairman
Frank E. Furst
Edward D. Higgins
Ruth Mercedes Smith
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors and executive officers of the Corporation and their associates
were customers of, and have had transactions with, the Corporation and its
subsidiaries in the ordinary course of business during 1995. Comparable
transactions may be expected to take place in the future.
All outstanding loans, commitments to loan, transactions in repurchase
agreements and certificates of deposit and depository relationships in such
ordinary course of business, were on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for transactions
with other persons and, in the opinion of management of the Corporation, did not
involve more than the normal risk of collectibility or present other unfavorable
features. See Annual Report of the Corporation, Note 4 of Notes to Consolidated
Financial Statements.
13
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 15, 1996, the total number of
shares of Common Stock of the Corporation beneficially owned, and the percent of
such shares so owned, by each person known to the Corporation to be the
beneficial owner of more than 5% of the Common Stock of the Corporation, and by
each Director, each executive officer named in the "Summary Compensation Table"
and all Directors and executive officers of the Corporation as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OR NUMBER OF OF BENEFICIAL PERCENT OF
PERSONS IN GROUP OWNERSHIP(1) CLASS
- --------------------------------------------------------------------------------
<S> <C> <C>
Cede & Co. and Howe & Co. 253,653 (2) 9.23%
% TODAY'S Trust Company
50 West Douglas Street
Freeport, Illinois 61032
Pioneer Financial Services, Inc. 225,207 8.19%
1750 E. Golf Road
Schaumburg, Illinois 60173
Michael A. Cavataio, Sr. 25,699 (3) .94%
Allen E. Fehr 1,472 (3)(4) .42%
Thomas A. Ferguson 6,857 (3) .25%
Frank E. Furst 18,192 (3)(5) .66%
Craig D. Hartman 180 .0% (6)
Dan Heine 32,587 (3)(7) 1.18%
Edward D. Higgins 15,144 (3)(8) .55%
J. Michael Hillard 1,071 (3) .0% (6)
Raymond E. Johnson 23,355 (9) .85%
R. William Owen 42,225 (3)(10) 1.53%
James C. Skyrms 18,194 (3) .66%
Ruth Mercedes Smith 1,312 (3) .0% (6)
Douglas M. Cross 23,755 (3)(11) .86%
C. Brad Zulke 17,067 (3) .62%
Douglas L. Mitchell 16,817 (3)(12) .62%
All executive officers and 274,357 9.75%
Directors(17 persons) as a group
</TABLE>
14
<PAGE>
(1) The information contained in this column is based upon information
furnished to the Corporation by the individuals named above or was ascertained
from an examination of the Corporation's stock records. The nature of
beneficial ownership for shares shown in this column is sole voting and
investment power, except as set forth in the footnotes below.
(2) Cede & Co. and Howe & Co. hold the stock as record owner on behalf of
TODAY'S Trust Company. TODAY'S Trust Company has sole voting and investment
power with respect to 101,543 of these shares (40%). The remaining 152,110
shares (60%) are voted as directed by the beneficiaries of the trusts.
(3) Includes shares held by TODAY'S Trust Company under the Director's
Deferred Compensation Plan as follows: Michael A. Cavataio, Sr. - 283 shares;
Douglas M. Cross - 1,088 shares; Allen E. Fehr - 7,392 shares; Thomas A.
Ferguson, Jr. - 2,968 shares; Frank E. Furst - 3,054 shares; Edward D. Higgins -
12,024 shares; J. Michael Hillard - 771 shares; R. William Owen - 2,135 shares;
James C. Skyrms - 8,714 shares; and Ruth M. Smith - 912 shares. Includes shares
held in the Corporation's Employee Stock Ownership Plan as follows: Douglas M.
Cross - 3,538 shares; Dan Heine - 6,192 shares; Douglas L. Mitchell - 4,591
shares; R. William Owen - 4,521 shares; and C. Brad Zulke - 2,832 shares.
Includes shares that can be acquired by the exercise of options granted by the
Corporation as follows: Douglas M. Cross - 5,650 shares; Dan Heine - 24,345
shares; Douglas L. Mitchell - 2,900 shares; R. William Owen - 13,100 shares; and
C. Brad Zulke - 9,450 shares. Does not include 21,930 shares held by the
Corporation's Pension Plan. Messrs. Owen and Mitchell serve as co-trustees of
the Pension Plan along with other employees.
(4) Includes 339 shares held by Mr. Fehr's spouse for which he disclaims
beneficial ownership.
(5) Includes 708 shares held by Mr. Furst's spouse for which he disclaims
beneficial ownership and 12,180 shares held in trust over which Mr. Furst has
investment authority.
(6) Less than 0.01%.
(7) Includes 1,000 shares held by Mr. Heine's spouse for which he disclaims
beneficial ownership. Includes 45 shares held by Mr. Heine as custodian for one
of his children over which Mr. Heine has sole voting and investment power.
(8) Includes 3,000 shares held in joint tenancy by Mr. Higgins with his spouse.
These shares are deemed shared as to voting and investment power. Includes 120
shares held by Mr. Higgin's spouse for which he disclaims beneficial ownership.
(9) Includes 300 shares held by Mr. Johnson's spouse for which he disclaims
beneficial ownership.
(10) Includes 204 shares held by Mr. Owen's spouse for which he disclaims
beneficial ownership. Includes 21,508 shares held in joint tenancy by Mr. Owen
and his spouse. These shares are deemed shared as to voting and investment
power.
(11) Includes 10,726 shares held in joint tenancy by Mr. Cross and his spouse.
These shares are deemed shared as to voting and investment power.
(12) Includes 30 shares held by Mr. Mitchell's spouse for which he disclaims
beneficial ownership.
15
<PAGE>
CORPORATION PERFORMANCE
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Corporation's Common Stock during the five years
ended December 31, 1995 with the cumulative total return of the NASDAQ Stock
Market Index and the NASDAQ Banks Stocks Index. The comparison assumes $100.00
was invested on December 31, 1990 in the Corporation's Common Stock and in each
of the foregoing indices and assumes reinvestment of dividends.
Comparison of Five Year-Cummulative Total Returns
Performance Graph for
TODAY'S BANCORP, INC.
Prepared by the Center for Research in Security Prices
Produced on 02/21/96 including data to 12/29/95.
[Performance graph appears here]
<TABLE>
<CAPTION>
CRSP Total
Returns Index
for: 12/31/90 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
TODAY'S BANCORP INC. 100.0 118.4 181.8 219.3 220.7 292.4
- --------------------------------------------------------------------------------------------------------
NASDAQ Stock Market
(US Companies) 100.0 160.5 186.9 214.5 209.7 296.5
- --------------------------------------------------------------------------------------------------------
NASDAQ
Bank Stocks
SIC 6020-6029,
6710-6719
US Foreign 100.0 164.1 238.9 272.4 271.4 404.3
- --------------------------------------------------------------------------------------------------------
</TABLE>
A. The lines represent monthly index levels derived from compounded daily
returns that include all divedends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/90.
16
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT
PUBLIC ACCOUNTANTS
During 1995, the Corporation engaged KPMG Peat Marwick LLP, its independent
public accountants, to audit the Corporation and to provide nonaudit services.
The appointment of the auditors is approved annually by the Board of Directors
and ratified by the Stockholders. The decision of the Board of Directors is
based on the recommendation of the Audit Committee. In making its
recommendation, the Audit Committee reviews both the audit scope and estimated
fees for professional services for the coming year. Subject to ratification by
the Stockholders, the Board of Directors has appointed KPMG Peat Marwick LLP for
the year 1996. In order to ratify the appointment, the proposal must receive
the favorable vote of a plurality of the shares represented and entitled to vote
at the Annual Meeting.
Coopers & Lybrand LLP served as the Corporation's independent accountants
for a number of years, including the fiscal year ending December 31, 1993. The
Corporation had no disagreements with Coopers & Lybrand LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure which disagreements if not resolved to their satisfaction
would have caused them to make reference in connection with their opinion to the
subject matter of the disagreement. For the fiscal year ending December 31,
1993, Coopers & Lybrand's report on the financial statements contained no
adverse opinion and no disclaimer of opinion and was not qualified as to
uncertainty, audit scope or accounting principles.
Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting of Stockholders on April 18, 1996, and will be given an opportunity to
make a statement if they desire to do so and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF KPMG PEAT
MARWICK LLP AS INDEPENDENT PUBLIC ACCOUNTANTS (PROPOSAL NO. 2).
STOCKHOLDERS' PROPOSALS FOR 1996 ANNUAL MEETING
Stockholders may submit proposals appropriate for Stockholder action at the
1997 Annual Meeting consistent with the regulations of the Securities and
Exchange Commission. All such proposals should be directed to Daniel M.
Lashinski, Vice President, Secretary and Treasurer, TODAY'S BANCORP, INC., 50
West Douglas Street, Freeport, Illinois 61032, by November 22, 1996.
BY ORDER OF THE
BOARD OF DIRECTORS
/s/ Daniel M. Lashinski
DANIEL M. LASHINSKI
VICE PRESIDENT, SECRETARY AND TREASURER
--------------------------
ALL STOCKHOLDERS ARE URGED TO SIGN
AND MAIL THEIR PROXIES PROMPTLY
17
<PAGE>
[FRONT]
PROXY FOR SHARES OF COMMON STOCK SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF THE
STOCKHOLDERS OF TODAY'S BANCORP, INC.,
TO BE HELD ON APRIL 8, 1996
The undersigned hereby appoints Daniel M. Lashinski and R. William Owen, or
either one of them acting in the absence of the other, with power of
substitution, attorneys and proxies, for and in the name and place of the
undersigned, to vote the number of shares of Common Stock that the undersigned
would be entitled to vote if then personally present at the Annual Meeting of
Stockhoders of TODAY'S BANCORP, INC., to be held in the Business Conference
Center, Building H, of the Highland Community College, 2928 West Pearl City
Road, Freeport, Illinois, on Thursday, April 18, 1996, at 10:00 A.M., local
time, or any adjournment thereof, upon the matters set forth in the Notice of
Annual Meeting and Proxy Statement, receipt of which is hereby acknowledged, as
follows:
<PAGE>
[BACK]
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE NOMINEES LISTED UNDER PROPOSAL 1 AND FOR PROPOSAL 2.
Please mark your vote as indicated in this example: / X /
1. ELECTION OF DIRECTORS:
FOR ALL NOMINEES WITHHOLD Michael A. Cavataio, Sr.
LISTED TO THE RIGHT AUTHORITY J. Michael Hillard
(EXCEPT AS MARKED TO VOTE FOR ALL NOMINEES R. William Owen
TO THE CONTRARY) LISTED TO THE RIGHT
/ / / /
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
----------------------------------------------------------------------------
2. TO RATIFY AS ACCOUNTANTS KPMG
Peat Marwick LLP for the ensuing year:
FOR AGAINST ABSTAIN
/ / / / / /
3. In accordance with their discretion, upon all other matters that may properly
come before said Meeting and any adjournment thereof.
Please
-------------------------------------------------------------------------
Sign
---------------------------------------------------------------------------
Here
---------------------------------------------------------------------------
Dated: , 1996
-------------------------------------------------------------------
NOTE: Please date proxy and sign it exactly as name or names appear above. All
joint owners of shares should sign. State full title when signing as executor,
administrator, trustee, guardian, etc. Please return signed proxy in the
enclosed envelope.
