FIRST BANKING CENTER, INC.
400 Milwaukee Avenue
Burlington, Wisconsin 53105
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
April 22, 1997
The Annual Meeting of Stockholders of First Banking Center, Inc. (the
"Corporation") will be held at 1:30 P.M. on April 22, 1997, at First Banking
Center, Inc., 400 Milwaukee Avenue, Burlington, for the purposes set forth in
the attached Notice of Annual Meeting. The accompanying Proxy is solicited on
behalf of the Board of Directors of the Corporation in connection with such
meeting or any adjournment(s) thereof. The approximate date on which the
Proxy statement and form of Proxy are expected to be sent to security holders
is March 17, 1997.
VOTING OF PROXIES AND REVOCABILITY
When the Proxy is properly executed and returned to the Secretary of the
Corporation, it will be voted as directed by the Stockholder executing the
Proxy unless revoked. If no directions are given, the shares represented by
the Proxy will be voted FOR the election of the nominees listed in the Proxy
Statement. If additional matters are properly presented, the persons named in
the Proxy will have discretion to vote in accordance with their own judgment
in such matters. Any person giving a Proxy may revoke it at any time before
it is exercised by the execution of another Proxy bearing a later date, or by
written notification to the Secretary of the Corporation, Mr. John S. Smith,
Secretary of First Banking Center, Inc., 400 Milwaukee Avenue, Burlington,
Wisconsin 53105. Stockholders who are present at the Annual Meeting may
revoke their Proxy and vote in person if they so desire.
VOTING SECURITIES, PERSONS ENTITLED TO VOTE AND VOTES REQUIRED
As of January 11, 1997, there were 1,476,198 shares of Common Stock ($1.00
par value) of the Corporation outstanding. The Board of Directors has fixed
March 3, 1997 as the record date and only stockholders whose names appear of
record on the books of the Corporation at the close of business on March 3,
1997, will be entitled to notice of and to vote at the Annual Meeting or any
adjournment(s) thereof. A stockholder is entitled to one vote for each share
of stock registered in his or her name. A majority of the outstanding Common
Stock will constitute a quorum for the transaction of business at the Annual
Meeting. Abstentions will be treated 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
shareholders for a vote. The eight nominees for director who receive the
largest number of affirmative votes cast at the Annual Meeting will be
elected as directors.
THE COST OF SOLICITATION OF THE PROXIES WILL BE BORNE BY FIRST BANKING
CENTER, INC. IN ADDITION TO USE OF THE MAILS, PROXIES MAY BE SOLICITED
PERSONALLY BY THE OFFICERS OF FIRST BANKING CENTER, INC., AND BY TELEPHONE.
The complete mailing address of First Banking Center, Inc. is 400 Milwaukee
Avenue, P.O. Box 660, Burlington, Wisconsin, 53105.
PRINCIPAL HOLDERS OF SECURITIES
As of January 28, 1997, the Trust Department of a wholly-owned subsidiary of
the Corporation owned in a fiduciary capacity 158,767 shares of Common Stock,
constituting 10.8% of the Corporation's outstanding shares entitled to vote.
Sole voting and investment power is held with respect to 59,806 of such
shares. With the exception of the persons named in Table I, no person is
known to the Corporation to own beneficially more than 5% of the outstanding
shares entitled to vote.
PROPOSAL 1
ELECTION OF DIRECTORS
It is the recommendation of the Board of Directors that 8 Directors be
elected to serve during the ensuing year and until their successors have been
duly elected and qualified. Unless authority is withheld by your proxy, it is
intended that the shares represented by the proxy will be voted FOR the 8
nominees listed in Table I. All listed nominees are incumbent directors. If
any nominee is unable to serve for any reason, the proxies will be voted for
such person as shall be designated by the Board of Directors to replace such
nominee. The Board has no reason to expect that any nominee will be unable to
serve. There is no arrangement or understanding between any nominee and any
other person or persons (other than officers or directors of First Banking
Center, Inc., acting solely in their capacities as such) pursuant to which
such nominee has or is to be elected as a director. No family relationship
exists between any of the nominees.
BOARD OF DIRECTORS AND COMMITTEES OF
FIRST BANKING CENTER, INC.
The Board of Directors of First Banking Center, Inc., held four meetings
during the year of 1996.
All Directors attended at least 75% of the meetings of the Board of Directors
and committees of which they were a member.
There are several committees of the Corporation's Board (membership thereon
is set forth in Table I). They meet periodically during the year, and include
the Compensation Committee, the Audit Committee, and the Nominating
Committee. In addition, Directors of the Corporation serve as Directors and
committee members of the Corporation's subsidiaries.
The Compensation Committee's function is to define personnel needs, establish
compensation and fringe benefit guidelines, and evaluate senior management
performance. The committee makes its recommendations to the full Board for
their approval. During the year 1996, the Compensation Committee met three
times.
The Audit Committee's function is to verify and evaluate operational systems
in the Corporation and to determine that proper accounting and audit
procedures are being followed as established by company policies.
Additionally, the Audit Committee makes recommendations as to the engagement
of independent auditors. During the year 1996, the Audit Committee met four
times.
The Nominating Committee is responsible for the selection of nominees to the
Board of Directors. The Nominating Committee will consider nominees to the
Board submitted by stockholders in writing to the Secretary-Treasurer of
First Banking Center, Inc. During the year 1996, the Nominating Committee met
once.
The following table sets forth information as of January 8, 1997 as to the
beneficial ownership of the Common Stock of the Corporation by all nominees
named in this Proxy Statement, along with their principal occupation and
history of service with the Corporation and its subsidiaries.
<TABLE>
TABLE I
<CAPTION>
Capital Stock
directly, in-
directly, or
Name and Other Period of beneficially
Position with Service as owned as of Percent of
First Banking Age Director 1/8/97 (1) Outstanding Committee
Center, Inc.
<S> <C> <C> <C> <C> <C>
Roman F. Borkovec 65 Aug. 1981 82,242 (2) 5.7% Building, Trust,
President, to date Loan, and
Chairman, Chief and Nominating
Executive Officer
John S. Smith 37 Dec. 1992 13,217 (3) .9% Trust, Loan,
Secretary/Treas. to date and Nominating
Richard McKinney 59 May 1988 7,232 (4) .5% Audit, CRA,
to date and Compensation
Melvin W. Wendt 58 Oct. 1989 9,482 (5) .6% Audit, Trust,
Vice Chairman of to date and Nominating
the Board
John M. Ernster 47 Apr. 1992 1,196 (6) .08% Audit, Nominating,
to date and Examination
David Boilini 44 Dec. 1993 8,871 (7) .6% Nominating, Loan,
to date and Compensation
Charles Wellington 47 Jun. 1996 2,000 (8) .1% Planning and
to date Audit
Patrick Sebranek 50 Dec, 1996 2,222 (9) .2% Trust and
to date Compensation
<FN>
ALL DIRECTORS AND EXECUTIVE OFFICERS OF THE CORPORATION AS A GROUP (8 IN
NUMBER INCLUDING THE ABOVE) OWN 126,462 SHARES OF COMMON STOCK OF THE
CORPORATION OR 8.57% OF THE TOTAL STOCK OUTSTANDING.
NOTES TO TABLE I
<F1>
(1) Except as stated in the following footnotes, each director has sole
voting and investment powers over the shares stated as beneficially
owned by him. Beneficial ownership includes shares issuable within
60 days upon exercise of incentive stock options owned by certain
named individuals.
<F2>
(2) Consists of 74,091 shares held directly by Mr. Borkovec, and 8,151
shares held by his wife in which shares Mr. Borkovec disclaims
voting or investment powers.
Mr. Borkovec has been CEO of First Banking Center - Burlington, and
Chairman of the Board of First Banking Center -Burlington and First
Banking Center, Inc. since 1995. Mr. Borkovec served as President
of First Banking Center - Burlington from 1974 to 1994. He served
as Vice Chairman of the Board of First Banking Center - Burlington
and First Banking Center, Inc. from 1994 to 1996. He has served as
Trust Officer of First Banking Center - Burlington since 1973. He
has been President and CEO of First Banking Center, Inc. since
1982. Mr. Borkovec has been Chairman of the Board of First Banking
Center - Albany since 1989.
<F3>
(3) Consists of 13,217 shares held directly by Mr. Smith.
Mr. Smith has been President and Trust Officer of First Banking
Center-Burlington, Burlington, Wisconsin, since April 1994. He has
been a director of First Banking Center-Burlington since August
1992 and was Executive Vice President of First Banking Center -
Burlington from 1990 to 1994.
<F4>
(4) Consists of 2,452 shares held in joint tenancy with his wife in
which shares Mr. McKinney shares voting and investment powers,
3,682 shares held directly by Mr. McKinney, and 1,098 shares held
by his wife in which Mr. McKinney disclaims voting or investment
powers.
Mr. McKinney has been a director of First Banking Center-
Burlington, Burlington, Wisconsin, since May 1988. He has been
president of Tobin Drugs, Inc., Burlington, Wisconsin since 1981;
President of Amy's Hallmark, Burlington, Wisconsin, since 1985 and
owner of Sue's Hallmark, Lake Geneva, Wisconsin, since 1993.
<F5>
(5) Consists of 8,138 shares held in joint tenancy with his wife in
which shares Mr. Wendt has shared voting and investment powers and
1,344 shares held directly by Mr. Wendt.
Mr. Wendt has been a director of First Banking Center-Burlington,
Burlington, Wisconsin, since October 1, 1989. Mr. Wendt is also
Vice-Chairman of the Board of Directors of First Banking Center-
Burlington. He had previously served on the Wind Lake (a branch of
First Banking Center-Burlington) Advisory Board. He has been Owner
of Melvin Wendt Realty, a real estate brokerage firm, since 1964.
<F6>
(6) Consists of 1,196 shares held directly by Mr. Ernster.
Mr. Ernster has been a director of First Banking Center-Burlington,
Burlington, Wisconsin, since May 1991. He served as Southern
Regional Manager of Wisconsin Electric Power Company from 1990-1994
and has been Manager of Customer Services from 1994 to present. He
has been on the Board of Directors of the Racine Area Manufacturers
and Commerce (RAMAC) from 1991 to present and Chairman of the
Manufacturer's Association from 1994 to present.
<F7>
(7) Consists of 6,993 shares held directly by Mr. Boilini, and 1,878
shares owned by J. Boilini Farms in which Mr. Boilini has shared
voting and investment powers.
Mr. Boilini was appointed to the Board in December of 1993. He has
been a director of First Banking Center-Burlington, Burlington,
Wisconsin, since February 1993. Since 1979 Mr. Boilini has been
President of J. Boilini Farms, a diversified commercial operation
involved in the growing of vegetables and grain, as well as the
production of mint for the flavoring industry.
<F8>
(8) Consists of 2,000 shares held directly by Mr. Wellington.
Mr. Wellington was appointed to the Board in June of 1996. He has
been a director of First Banking Center-Albany, Albany, Wisconsin,
since January 1989. Mr. Wellington has been a partner in the law
firm of Kittleson, Barry, Ross, Wellington, and Thompson since
1981.
<F9>
(9) Consists of 33 shares held directly by Mr. Sebranek and 2,189
shares held in joint tenancy with his wife in which shares Mr.
Sebranek shares voting and investment powers.
Mr. Sebranek was apointed to the Board in December of 1996. He has
been a director of First Banking Center-Burlington, Burlington,
Wisconsin, since September 1995. Since 1976 Mr. Sebranek has been
owner and editorial director of the Write Source, an educational
development house for English text books.
</FN>
</TABLE>
COMPENSATION OF DIRECTORS
Fees
Directors of the Corporation are paid the following fees for their services:
$425.00 per directors meeting, and $75.00 per committee meeting attended. If
the Corporation's Board meetings are held in conjunction with subsidiary
Company Board meetings, the fee is $100.00 per meeting attended.
Pension Plan
First Banking Center-Burlington (the "Bank"), a wholly-owned subsidiary of
the Corporation, has entered into pension and death benefit agreements with
its directors. Pursuant to the agreement, pension benefits accrue at the rate
of $10,000 for each full year a director serves on the board for the first
six years of service. Upon completing six full years of service, the director
is entitled to ten annual payments of ten thousand dollars each. Payments
will commence in January of the year in which the director attains the age of
65 years. Payments under the plan are funded through the purchase of life
insurance. The Bank is the owner and beneficiary of such life insurance
policies and is responsible for payment of the premium on such policies.
Total deferred liability expense for the Directors' pension and death benefit
agreements was $55,000, $104,000, and $95,000, respectively, for 1996, 1995,
and 1994.
Deferred Compensation Plan
The Bank has also established a deferred compensation plan for its directors
pursuant to which a director may have a portion of his/her director's fees
deferred. Upon attaining the age of 65 or normal retirement, the Bank will
pay monthly benefits for a period of 15 years. The amount of such payment is
determined in each case by the amount of fees deferred and length of
participation in the deferred compensation plan. Total deferred liability
expense was $18,000, $43,000 and $41,000, respectively, for 1996, 1995, and
1994. Deferred directors' fees in each of the respective years were $12,000,
$21,000 and $21,000.
Stock Option Plan
For a description of the Stock Option Plan see "EXECUTIVE COMPENSATION -
Incentive Stock Option Plan."
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid or
accrued for services rendered in all capacities to the Corporation and its
affiliates for the fiscal years ended December 31, 1996, 1995 and 1994 of the
person who was, on December 31, 1996, the Chief Executive Officer of the
Corporation.
No other executive officer received a total annual salary and bonus in excess
of $100,000 in 1996, and no disclosure is provided for such other executive
officers.
<TABLE>
Summary Compensation Table
Long-Term
Annual Compensation Compensation
Awards
Securities
Name and Salary Bonus Other Underlying All Other
Principal Year ($) ($) Annual Options/SARs Comp.
Position Comp.(1) (#)
<S> <C> <C> <C> <C> <C>
Roman 1996 $176,000 $22,000 700 $26,000 (2)
Borkovec, 1995 $158,000 $14,000 1,400 $31,000 (3)
President, 1994 $158,000 $14,000 1,200 $29,000 (4)
CEO and
Chairman of
the Board*
<FN>
* Mr. Borkovec also serves in various capacities as an officer of the
Corporation's subsidiaries.
<F1>
(1) Aggregate amount of other annual compensation does not exceed the
lesser of $50,000 or 10% of executive officer's salary and bonus,
and therefore no disclosure is made.
<F2>
(2) Contribution to the Corporation's Defined Contribution (401(k)) Plan of
$8,000; payments from the the deferred compensation plan of $7,000; and
accrued liability of $5,000 and $6,000, respectively, under the
Directors' Deferred Compensation Plan and Directors' Pension Plan of
First Banking Center-Burlington, a wholly owned subsidiary of the
Corporation.
<F3>
(3) Contribution to the Corporation's Defined Contribution (401(k))
Plan of $8,000; accrued liability of $4,000 and $19,000,
respectively, under the Directors' Deferred Compensation Plan and
Directors' Pension Plan of First Banking Center-Burlington, a
wholly owned subsidiary of the Corporation.
<F4>
(4) Contributions to the Corporation's Defined Contribution (401(k))
Plan of $7,000; accrued liability of $4,000 and $18,000,
respectively, under the Directors' Deferred Compensation Plan and
Directors' Pension Plan of First Banking Center-Burlington.
</FN>
</TABLE>
Employment Agreement and Salary Continuation Agreement
Effective July 1, 1994, First Banking Center, Inc. ("Corporation") and Roman
Borkovec entered into an employment agreement ("Employment Agreement"). Mr.
Borkovec presently serves as President, Chief Executive Officer and Chairman
of the Corporation, and as a director and officer of the subsidiaries of the
Corporation. The Employment Agreement has a term of three years.
Under the Employment Agreement, Mr. Borkovec will perform the customary
duties of the chief executive officer of the Corporation, as further set
forth in the Corporation's bylaws and as may, from time to time, be
determined by the Corporation's Board of Directors. As compensation for such
service, the Corporation will pay Mr. Borkovec the greater of $150,000
annually or compensation as may be established from time to time during the
employment period by the Board of Directors of the Corporation. During the
employment period, Mr. Borkovec is entitled to participate in such other
benefits of employment as are generally made available to executive officers
of the Corporation and its subsidiaries.
If the Employment Agreement is terminated by the Corporation other than for
reasons of Mr. Borkovec's death, disability or retirement, or without "cause"
as defined in the Employment Agreement; or if Mr. Borkovec terminates the
Employment Agreement for "cause" as defined in the Employment Agreement; or
if Mr. Borkovec terminates the Employment Agreement following a "change in
control" as defined in the Employment Agreement, then Mr. Borkovec shall be
entitled to receive severance payments equal to the salary at the time of
termination for the unexpired term of the employment period, except that, in
case of termination due to change in control, such unexpired term shall be
extended to a date three years from the last anniversary date preceding the
effective date of the change in control. In addition to the aforementioned
severance payments, Mr. Borkovec will be entitled to fringe benefits for the
remaining term of the Agreement.
If Mr. Borkovec is terminated due to disability, as defined in the Employment
Agreement, he will be entitled to payment of his salary for one year at the
rate in effect at the time notice of termination is given. If termination
occurs for any reason other than those enumerated, the Corporation would be
obligated to pay the compensation and benefits only through the date of
termination.
The Employment Agreement provides that during the employment period and for
(1) year thereafter, Mr. Borkovec shall not engage in any activity which will
result in his competing with the Corporation or its subsidiaries.
To further the objective of providing continued successful operation of the
Corporation and its subsidiaries and to provide additional incentive for Mr.
Borkovec to enter into the Employment Agreement, the Corporation and Mr.
Borkovec have entered into a Salary Continuation Agreement (the "Continuation
Agreement") as of September 12, 1994. The Continuation Agreement provides for
monthly payments of $5,850.00, commencing on August 1, 1997, one month after
the expiration of the Employment Agreement. In the event of Mr. Borkovec's
termination of employment after the expiration of the Employment Agreement
("late retirement"), the aforedescribed payments will be increased by a
factor of .00416 for each month that Mr. Borkovec's employment continues
beyond the expiration of the Employment Agreement. Following retirement,
payments will continue for the remainder of Mr. Borkovec's life with a
guarantee of 180 such monthly payments to Mr. Borkovec, his surviving wife or
his estate. If Mr. Borkovec dies before July 1, 1997, payment in the amount
of $5,850.00 per month to Mr. Borkovec's beneficiary will commence
immediately and will continue for a period of 180 months.
Upon Mr. Borkovec's voluntary termination of employment prior to the
expiration of the Employment Agreement for reasons other than death or
disability or upon Mr. Borkovec's discharge for cause as defined in the
Employment Agreement at any time, the Corporation will not be obligated to
pay any benefits pursuant to the Continuation Agreement; however, if Mr.
Borkovec incurs voluntary or involuntary termination of employment prior to
the expiration of the Employment Agreement for reasons other than death,
disability, or discharge for cause, but on or after a change in control, as
defined in the Employment Agreement, Mr. Borkovec will be entitled to the
benefits payable under the Continuation Plan.
The benefits provided in the Continuation Agreement will be funded through
the purchase of single premium life insurance policies with cash value
sufficient to fund the payments required under the Continuation Agreement.
The Board of Directors of the Corporation has determined that the Employment
Agreement and Continuation Agreement are in the best interest of the
Corporation, its subsidiaries and its shareholders for the following reasons:
a) Mr. Borkovec has been employed by the Corporation and its subsidiaries in
an executive capacity for a number of years; b) during his employment with
the Corporation and its subsidiaries Mr. Borkovec has contributed to the
successful and profitable operation of the Corporation and its subsidiaries;
c) such contribution by Mr. Borkovec has resulted in substantial enhancement
of shareholder value; and d) the Corporation desires to provide for
management continuity and stability by retaining an individual with a proven
record of performance.
401(k) Profit Sharing Plan
The Corporation has a trusteed 401(k) profit sharing plan covering
substantially all employees of the Corporation and its subsidiaries. The plan
allows for voluntary employee contributions. Total contributions to the
401(k) Plan by the Corporation were $98,000 in 1996, $92,000 in 1995 and
$94,000 in 1994.
Incentive Stock Option Plan
The following table presents information about stock options granted during
1996 to the executive officer named in the Summary Compensation Table.
Stock Option Grants in 1996
Individual Grants
Number of Percent of Total
Securities Options Granted
Underlying to Employees in Exercise Expiration
Name Options(1) Fiscal Year (1) Price Date
Roman 700 4.7% $25.50 12/31/01
Borkovec
(1) All options granted in 1996 were granted under the 1994 Incentive
Stock Option Plan.
The following table presents information concerning stock options exercised
during 1996. Also shown is information on unexercised options as of December
31, 1996.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Number of Value of Exercised,
Shares Value Unexercised In-the-Money Options
Name Acquired Realized Options at FY End at FY End
On Exercise (1)(2) Exercisable/ Exercisable/
Unexercisable Unexercisable
Roman
Borkovec 2,861 $28,000 867 / 2,033 $4,200 / $5,800
(1) The exercise price for each grant was 100% of the market value of
the shares on the date of grant.
(2) Represents market price at date of exercise, less option price,
times number of shares.
On August 8, 1994, the Board of Directors of the Corporation adopted the
First Banking Center, Inc. 1994 Incentive Stock Option Plan (the "Plan"),
which was approved by the shareholders on April 11, 1995.
The Plan replaced the 1984 Incentive Stock Option Plan, which terminated in
April 1994. The purpose of the Plan is to advance the interests of the
Corporation and its subsidiaries by encouraging and providing for the
acquisition of an equity interest in the Corporation by key employees and by
enabling the Corporation and its subsidiaries to attract and retain the
services of employees upon whose skills and efforts the success of the
Corporation depends. In addition the Plan is designed to promote the best
interests of the Corporation and its shareholders by providing a means to
attract and retain competent directors who are not employees of the
Corporation or any of its subsidiaries.
The following summary description of the Plan is qualified in its entirety by
reference to the full text of the Plan, a copy of which may be obtained upon
request directed to the Corporation's Secretary at First Banking Center,
Inc., 400 Milwaukee Avenue, Burlington, WI 53105.
The Plan is administered by the Compensation Committee of the Board,
consisting of not less than three (3) directors (the "Committee"). The
Committee is comprised of directors who are disinterested persons within the
meaning of Rule 16b-3 as promulgated by the Securities and Exchange
Commission. Subject to the terms of the Plan and applicable law, the
Committee has the authority to: establish rules for the administration of the
Plan; select the individuals to whom options are granted; determine the
numbers of shares of Common Stock to be covered by such options; and take any
other action it deems necessary for administration of the Plan.
Participants in the Plan consist of all members of the Board of Directors of
the Corporation who are not employees of the Corporation or its subsidiaries,
and individuals selected by the Committee. Those selected individuals may
include any executive officer or employee of the Corporation or its
subsidiaries and non-employee directors of the subsidiaries who, in the
opinion of the Committee, contribute to the Corporation's growth and
development.
Subject to adjustment for dividends or other distributions, recapitalization,
stock splits or similar corporate transactions or events, the total number of
shares of Common Stock with respect to which options may be granted pursuant
to the Plan is 300,000. The shares of Common Stock to be delivered under the
Plan may consist of authorized but unissued stock or treasury stock.
Options may be granted by the Committee to key employees and non-employee
directors (other than directors of the Corporation) as determined by the
Committee. The Committee has complete discretion in determining the number of
options granted to each such grantee. The Committee also determines whether
an option is to be an incentive stock option within the meaning of Section
422 of the Internal Revenue Code or a nonqualified stock option. Following
the first grant of options in December 1994, each director of the Corporation
will automatically be granted a nonqualified stock option to purchase 100
shares of Common Stock in December of each succeeding year.
The exercise price for all options granted pursuant to the Plan is the fair
market value of the Common Stock on the date of grant of the option; however,
in case of options granted to a person then owning more than 10% of the
outstanding Common Stock, the option price will not be less than 110% of the
fair market value on such date. The Committee will determine the method and
the form of payment of the exercise price. The payment may be in form of
cash, common Stock, other securities or other property having a fair market
value equal to the exercise price.
Except for options granted to directors of the Corporation, options granted
pursuant to the Plan expire at such time as the Committee determines at the
time of grant, provided that no option may be exercised after the fifth
anniversary date of its grant. Options granted to directors of the
Corporation expire on the fifth anniversary of the date of grant. Options are
exercisable in increments of one-third on the first, second and third
anniversaries of the date of grant.
Stock acquired pursuant to the Plan may not be sold or otherwise disposed of
within 5 years from the date of exercise, except by gift, bequest or
inheritance or in case of participant's disability or retirement. The
Corporation also has a "right of first refusal" pursuant to which any shares
of Common Stock acquired by exercising an option must first be offered to the
Corporation before they may be sold to a third party. The Corporation may
then purchase the offered shares on the same terms and conditions (including
price) as applied to the potential third-party purchaser.
The Board of Directors of the Corporation may terminate, amend or modify the
Plan at any time, provided that no such action of the Board, without approval
of the shareholders may: increase the number of shares which may be issued
under the Plan; materially increase the cost of the Plan or increase benefits
to participants; or change the class of individuals eligible to receive
options.
The following is a summary of the principal federal income tax consequences
generally applicable to awards under the Plan. The grant of an option is not
expected to result in any taxable income for the recipient. The holder of an
Incentive Stock Option generally will have no taxable income upon exercising
the Incentive Stock Option (except that a liability may arise pursuant to the
alternative minimum tax), and the Corporation will not be entitled to a tax
deduction when an Incentive Stock Option is exercised. Upon exercising a
nonqualified stock option, the optionee must recognize ordinary income equal
to the excess of the fair market value of the shares of common stock acquired
on the date of exercise over the exercise price, and the Corporation will be
entitled at that time to a tax deduction for the same amount. The tax
consequences to an optionee upon disposition of shares acquired through the
exercise of an option will depend on how long the shares have been held and
upon whether such shares were acquired by exercising an Incentive Stock
Option or by exercising a nonqualified stock option. Generally, there will be
no tax consequences to the Corporation in connection with the disposition of
shares acquired under an option.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
General Policy
The compensation objective of the Corporation and its subsidiaries is to link
compensation with corporate and individual performance in a manner which will
attract and retain competent personnel with leadership qualities. The process
gives recognition to the marketplace practices of other banking
organizations.
Toward the end of achieving long-term goals of the shareholders, the
compensation program ties a significant portion of total compensation to the
financial performance of the Corporation in relation to its peer group. The
Compensation Committee makes recommendations on the compensation of the
Corporation's officers to the Board of Directors. The Compensation
Committee's recommendations reflect its assessment of the contributions to
the long-term profitability and financial performance made by individual
officers. In this connection, the Committee considers, among other things,
the type of the officer's responsibilities, the officer's long-term
performance and tenure, compensation relative to peer group and the officer's
role in ensuring the financial success of the Corporation in the future.
Financial performance goals considered by the Committee include earnings per
share, return on assets, return on equity, asset quality, growth and expense
control.
In addition to measuring performance in light of these financial factors, the
Committee considers the subjective judgment of the Chief Executive Officer in
evaluating performance and establishing salary, bonus and long-term incentive
compensation for individual officers, other than the Chief Executive Officer.
The Committee independently evaluates the performance of the Chief Executive
Officer, taking into consideration such subjective factors as leadership,
innovation and entrepreneurship in addition to the described financial goals.
Base Salary
In determining salaries of officers, the Committee considers surveys and data
regarding compensation practices of financial institutions of similar size,
adjusted for differences in product lines, nature of geographic market and
other relevant factors. The Committee also considers the Chief Executive
Officer's assessment of the performance, the nature of the position and the
contribution and experience of individual officers (other than the Chief
Executive Officer). The Committee independently evaluates the Chief Executive
Officer's performance and compares his compensation to peer group data.
Annual Bonuses
Officers and employees of the Corporation and its subsidiaries are awarded
annual bonuses at the end of each year at the discretion of the Committee.
The amount of the bonus, if any, for each officer (other than the Chief
Executive Officer) is recommended to the Committee by the Chief Executive
Officer based upon his evaluation of the achievement of corporate and
individual goals and his assessment of subjective factors such as leadership,
innovation and commitment to the corporate advancement. The Corporation's
annual incentive bonus is based on meeting specific financial performance
targets pursuant to a bonus plan. The plan provides for a range of bonus
awards based, among other things, upon return on assets. The minimum target
goal for return on assets is 1%, which is required for payment of a bonus.
Chief Executive Officer Compensation
The compensation for the Chief Executive Officer was established at a level
which the Committee believed would approximate the compensation of chief
executive officers of similar organizations and would reflect prevailing
market conditions. The Committee also took into consideration a variety of
factors, including the achievement of corporate financial goals and
individual goals. The financial goals included increased earnings, return on
assets, return on equity and asset quality. No formula assigning weights to
particular goals was used, and achievement of other corporate performance
goals was considered in general. The Committee also considered the Chief
Executive Officer's years of service to the Corporation and his past
performance record. The Chief Executive Officer was also awarded incentive
stock options under the Corporation's Incentive Stock Option Plan. Based upon
its review of the Corporation's performance, the Committee believes that the
total compensation awarded to the Chief Executive Officer for 1996 is fair
and appropriate under the circumstances.
Stock Options
The Committee administers the 1994 Incentive Stock Option Plan. Stock options
are designed to furnish long-term incentives to the officers of the
Corporation to build shareholder value and to provide a link between officer
compensation and shareholder interest. The Committee made awards under the
Stock Option Plan to the officers of the Corporation and its subsidiaries in
1996. Awards were based upon performance, responsibilities and the officer's
relative position and ability to contribute to future performance of the
Corporation. In determining the size of the option grants (except grants to
the Chief Executive Officer), the Committee considered information and
evaluations provided by the Chief Executive Officer. The award of option
grants to the Chief Executive Officer was based on the overall performance of
the Corporation and on the Committee's assessment of the Chief Executive
Officer's contribution to the Corporation's performance and his leadership.
The Committee
The Compensation Committee currently has three members. No member of the
Committee is an employee or officer of the Corporation or any of its
subsidiaries. None of the Committee members has interlocking relationships as
defined by the Securities and Exchange Commission, with the Corporation or
its subsidiaries. The Committee is aware of the limitations imposed by
Section 162(m) of the Internal Revenue Code of 1986, as amended, on the
deductibility of compensation paid to certain senior executives to the extent
it exceeds $1 million per executive. The Committee's recommended compensation
amounts meet the requirements for deductibility.
The Compensation Committee:
David Boilini Patrick Sebranek Richard McKinney
PERFORMANCE TABLE
The following table shows the cumulative total stockholder return on the
Company's Common Stock over the last five fiscal years compared to the
returns of the Standard & Poor's 500 Stock Index and the NASDAQ Bank Index:
Cumulative Total Return
Assumes Dividends & Capital Gains Reinvested
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
FBC, Inc. 100 111 138 183 205 243
S&P 500 100 108 118 120 165 203
NASDAQ Bank Index 100 146 166 165 245 316
ADDITIONAL INFORMATION ON MANAGEMENT
Transactions With Directors and Officers
Certain directors and executive officers of the Corporation, and their
related interests had loans outstanding in the aggregate amounts of
$1,065,000 and $765,000 at December 31, 1996 and 1995, respectively. During
1996, $837,000 of new loans were made and repayments totaled $537,000. These
loans were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the same time for comparable transactions
with other persons and did not involve more than normal risks of
collectability or present other unfavorable features. The loans to directors
and executive officers and their related business interests at December 31,
1996 represented 4.06% of stockholders equity.
Section 16 Reports
Under Section 16(a) of the Securities Exchange Act of 1934, as amended, the
Corporation's directors and executive officers and shareholders holding more
than 10% of the outstanding stock of the Corporation (the "insiders") are
required to report their initial ownership of stock and any subsequent change
in such ownership to the Securities and Exchange Commission and the
Corporation (the "16(a) filing requirement"). Specific time deadlines for the
16(a) filing requirements have been established by the Securities and
Exchange Commission.
To the Corporation's knowledge, and based solely upon a review of the copies
of such reports furnished to the Corporation, all 16(a) filing requirements
applicable to Insiders during 1996 were satisfied on a timely basis.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Conley, McDonald and Company performed a complete audit of First Banking
Center, Inc. during 1996 and provided a certified financial statement for the
years ended December 31, 1994 and 1995.
Conley, McDonald and Company also performed a non-audit function for the
Corporation consisting of the preparation of the Corporation's 1996 Income
Tax returns. No representative of Conley, McDonald and Company will be
present at the Annual Stockholders' Meeting on April 22, 1997. The Board of
Directors will engage the services of a public accounting firm to provide a
certified financial statement for 1997. The Board will select such accounting
firm at its annual Directors Meeting.
PROPOSALS BY STOCKHOLDERS
Shareholders' proposals to be presented at the 1998 Annual Stockholders'
Meeting must be received by the Corporation at its principal office, 400
Milwaukee Avenue, Burlington, Wisconsin, on or before November 3, 1997.
MISCELLANEOUS
Management does not intend to bring any other matters before the meeting and
knows of no matters to be brought before the meeting by others. If any other
matters properly come before the meeting, it is the intention of the persons
named in the accompanying proxy to vote said proxy in accordance with their
best judgment.
A COPY OF THE FIRST BANKING CENTER, INC. ANNUAL REPORT ON FORM 10-K INCLUDING
FINANCIAL STATEMENTS AND SCHEDULES FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934 WILL BE MADE AVAILABLE
TO STOCKHOLDERS UPON WRITTEN REQUEST AT NO CHARGE. REQUESTS SHOULD BE
ADDRESSED TO: Mr. John S. Smith, Secretary, First Banking Center, Inc., 400
Milwaukee Avenue, P.O. Box 660, Burlington, Wisconsin, 53105.
BY ORDER OF THE BOARD OF DIRECTORS
JOHN S. SMITH, SECRETARY
Burlington, Wisconsin
March 3, 1997
