NOTICE OF ANNUAL MEETING
To The Stockholders of
Premier Financial Services, Inc.
The Annual Meeting of Stockholders of Premier Financial Services,
Inc. a Delaware corporation (the "Company"), will be held at the Best
Western Stephenson Hotel, 109 South Galena Ave., Freeport, Illinois,
at 10:00 A.M., Freeport time, on Wednesday, May 15, 1996 for the
following purposes:
1. To elect three Class II directors for a term of three years.
2. To transact and act upon such other matters or business as may
properly come before said meeting, or any adjournment or adjourn-
ments thereof. The Board of Directors of the Company does not
know of any other matters requiring action by the stockholders to
come before the Annual Meeting.
A complete list of stockholders entitled to vote at the meeting
shall be open for examination by any stockholder for any purpose
germane to the meeting, during ordinary business hours for a period of
ten days prior to the meeting at Premier Financial Services, Inc.'s
corporate office, 27 West Main Street, Suite 101, Freeport, Illinois.
The close of business on March 18, 1996 has been selected by the Board
of Directors as the record date for the determination of stockholders
entitled to notice of and to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Michael J. Lester ***IMPORTANT***
Secretary WHETHER OR NOT YOU EXPECT TO
ATTEND THE MEETING IN PERSON,
PLEASE SIGN THE ACCOMPANYING
PROXY AND MAIL IT NOW IN THE
April 12, 1996 ENCLOSED ENVELOPE.
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of Premier
Financial Services, Inc. (the "Company") for use at the 1996 Annual
Meeting of Stockholders, (the "Annual Meeting"), and any adjournment
or adjournments thereof, to be held on Wednesday, May 15, 1996, at
10:00 A.M., Freeport time, at the Best Western Stephenson Hotel, 109
South Galena Ave., Freeport, Illinois.
Only holders of record of shares of common stock of the Company
(the "Common Stock") at the close of business on March 18, 1996 will
be entitled to notice of and to vote at the Annual Meeting, each share
being entitled to one vote. On such date there were 6,550,113 shares
of Common Stock outstanding. The presence at the Annual Meeting,
either in person or by proxy, of the holders of a majority of the
shares of Common Stock outstanding and entitled to vote is necessary
to constitute a quorum for the transaction of business. The
inspectors of election will treat abstentions as shares present for
purposes of determining the existence of a quorum.
Any stockholder who executes the enclosed proxy may revoke it any
time before it has been exercised by a later dated proxy or by giving
notice of such revocation to the Company in writing or in an open
meeting before such proxy is voted. Attendance at the meeting will
not in and of itself constitute the revocation of a proxy. Otherwise,
all properly executed proxies received at or before the meeting will
be voted in accordance with the instructions contained therein. If no
instructions are given, such proxies will be voted: (1) FOR the
election of directors as stated below, and (2) in the discretion of
the named proxies, upon such other matters as may properly come before
the meeting.
The cost of solicitation will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by persons
regularly employed by the Company or its subsidiaries, by personal
interview, telephone or telegraph, without compensation, other than
the compensation such persons otherwise receive for their services as
employees. Arrangements may also be made with brokerage houses and
other custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of the stock held of
record by such persons, and the Company may reimburse such brokerage
houses, custodians, nominees and fiduciaries for reasonable out-of-
pocket expenses incurred by them in connection therewith.
A copy of the Company's Annual Report for the year ended December
31, 1995, including audited financial statements has previously been
sent to stockholders. The approximate date on which this proxy
statement, and form of proxy were first sent to stockholders was April
12, 1996.
ELECTION OF DIRECTORS
INFORMATION CONCERNING NOMINEES
The Company's Restated Certificate of Incorporation provides that
the Board of Directors shall consist of not fewer than five nor more
than twenty directors, with the specific number to be fixed from time
to time by a resolution adopted by at least a majority of the Board of
Directors. The number of directors is currently fixed at eight. The
Company's Restated Certificate of Incorporation further provides that
the Board of Directors is to be divided into three classes that are to
be as nearly equal in number as possible. The terms of three
directors who are presently serving on the Board, R. Gerald Fox,
Richard L. Geach and Edward G. Maris, expire at the Annual Meeting.
The Board of Directors has renominated Messrs. Fox, Geach and Maris
for election as Class II directors for a term ending at the Annual
Meeting in 1999 or until their successors are elected and qualified.
Unless otherwise indicated, proxies will be voted for the
election of the nominees below. If a nominee becomes unable or
unwilling to serve, proxies will be voted for such persons, if any, as
shall be designated by the Board. Each nominee has agreed to serve as
a director, if elected, and the Board of Directors does not presently
know of any circumstances which would render any nominee named herein
unavailable.
The Company's by-laws provide that all elections of directors
shall be decided by a plurality vote. Since three positions are to be
filled on the Board of Directors, the three nominees receiving the
highest number of votes cast at a meeting at which a quorum is present
will be elected as directors. Abstentions (including broker non-
votes, if any) will not be counted in determining the number of votes
received by any nominee.
Class II Nominees (If elected, term will expire in 1999)
Principal Occupation and Year
Name Age First Elected a Director (1)
R. Gerald Fox 59 President & Chief Executive
Officer, F.I.A. Publishing
Company. (publisher of financial
books and periodicals) - 1993
Richard L. Geach 54 Chairman of the Board, President &
Chief Executive Officer of the
Company - 1978
Edward G. Maris 60 Private Investor - 1990
- - - - - - - - - - - - Continuing Directors - - - - - - - - - - - - -
Class III (Term expires 1997)
Principal Occupation and Year
Name Age First Elected a Director (1)
Donald E. Bitz 67 Retired Chairman of the Board &
Chief Executive Officer, Economy
Fire and Casualty Co. (insurance
company) - 1979
David L. Murray 53 Executive Vice President and Chief
Financial Officer of the Company
- 1981
Joseph C. Piland 62 Educational Consultant and Retired
President, Highland Community
College - 1987
Class I (Term expires 1998)
Charles M. Luecke 66 President, Luecke Jewelers, LTD.
(jewelry store) - 1978
H. Barry Musgrove 61 Chairman of the Board and
President, Frantz Manufacturing
Company. (manufacturer of anti-
friction products) - 1987
(1) Each director has engaged in the principal occupation indicated
for at least five years, except as follows:
- Prior to 1996, Edward G. Maris was Senior Vice President, Chief
Financial Officer, Secretary & Treasurer, Northwestern Steel
and Wire Company, a position he had held for more than five
years.
- Donald E. Bitz retired as Chairman of the Board & Chief
Executive Officer, Economy Fire & Casualty Company in 1993, a
position he had held for more than five years.
- Joseph C. Piland has been an Educational Consultant since 1992.
Prior to 1992, he was President, Highland Community College, a
position he had held for more than five years.
BOARD AND COMMITTEE MEETINGS
During 1995, the Board of Directors held 8 regular meetings.
Each Director attended more than 75% of the aggregate of the total
number of meetings of the Board of Directors and the total number of
meetings held by all committees of the Board of Directors on which he
served except Donald E. Bitz.
The Board of Directors has established several committees to
assist in the discharge of its responsibilities.
The Executive Committee meets in situations where it is
impractical and/or unnecessary to meet as a full Board of Directors.
The Committee may consist of any five directors, one of whom must be
Richard L. Geach or David L. Murray. The Committee did not meet in
1995.
The Governance Committee evaluates and makes recommendations
regarding Board composition, qualifications of directors and other
administrative issues with respect to the Board and Boards of
Directors of the Company s subsidiaries. Current members are R.
Gerald Fox and Joseph D. Piland. Among other functions, the Committee
serves as a nominating committee which selects and nominates members
of the Board of Directors. Nominees recommended by stockholders in
writing to the Secretary of the Company at 27 West Main Street, Suite
101, Freeport, Illinois 61032, in accordance with the procedures set
forth below under "Notice Provisions for Stockholder Nominations of
Directors", will be considered by the Committee. The Committee met
three times in 1995.
The current members of the Compensation Committee are Messrs.
Donald E. Bitz, Edward G. Maris and H. Barry Musgrove. Among other
functions, the Committee makes recommendations to the Board of
Directors as to the compensation of the Executive Officers and outside
Directors as well as with respect to the Company's benefit programs.
The Committee also interprets and administers the Company's benefit
plans. The Committee met once in 1995.
The Audit Committee consists of two permanent members and one
other outside director on a rotating basis. Messrs. Charles M.
Luecke and Joseph C. Piland currently serve as permanent members. The
Committee reviews the financial audits of the Company and its
subsidiaries, both internal and independent, and examines matters
relating to the financial statements of the Company. The Committee
held eight meetings in 1995.
DIRECTORS FEES AND COMPENSATION
As of December 31, 1995, Directors who were not employees of the
Company were paid an annual retainer fee of $ 9,000 and $ 400 per
meeting attended for committee participation. Employees of the
Company are not compensated separately for their services as
directors.
EXECUTIVE OFFICERS
The following table sets forth the names and ages of the
executive officers of the Company, as well as their respective
positions with the Company and its subsidiaries: (1)
Name Age Position(s) (2)
Richard L. Geach 54 Chairman of the Board, President,
& Chief Executive Officer of the
Company and Premier Acquisition
Company,and a director of all of
the Company s subsidiaries.
David L. Murray 53 Executive Vice President/Chief
Financial Officer and a Director
of the Company and of Premier
Acquisition Company, President,
Premier Operating Systems, Inc.,
and a Director of all of the
Company s subsidiaries.
Kenneth A. Urban 57 Division Head, Non-Bank Products
Division of the Company,
President, Premier Trust Services,
Inc., and a Director of all of the
Company s subsidiaries.
Michael J. Lester 48 Division Head, Product and Sales
Support Division of the Company,
and a Director of all of the
Company s subsidiaries.
Lan Pinney 56 President, Region 3 Banking/Sales
Offices and a Director of all of
the Company s subsidiaries.
Scott Dixon 41 President, Region 2 Banking/Sales
Offices and a Director of all of
the Company s subsidiaries.
Steve E. Flahaven 40 President, Region 1 Banking/Sales
Offices and a Director of all of
the Company s subsidiaries.
(1) The Company's "subsidiaries" as used herein consist of First
Bank North, First Bank South, First National Bank of Northbrook,
First Security Bank of Cary-Grove, Premier Trust Services, Inc.,
Premier Insurance Services, Inc., and Premier Operating Systems,
Inc.
(2) Each executive officer has held the position or office indicated,
or other comparable responsible position(s) with the Company, for
at least five years, except that all offices and positions with
Premier Acquisition Company have been held only since 1992 when
Premier Acquisition Company was organized, and all positions with
First National Bank of Northbrook and First Security Bank of
Cary-Grove have been held only since 1993 when such banks
were acquired.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Under regulations of the Securities and Exchange Commission,
persons who have power to vote or dispose of Common Stock, either
alone or with others, are deemed to be beneficial owners of such
Common Stock. Because the voting or dispositive power of certain
shares of Common Stock listed in the following table is shared, the
same shares in such cases are listed opposite more than one name in
the table.
The following table sets forth the holders of more than 5% of the
voting securities of the Company, as known by the Company as of
February 29, 1996:
Amount &
Title of Name and Address of Beneficial Nature of Per
Class Owner Beneficial Cent of
Ownership Class
Common Premier Trust Services, Inc. 1,166,371 (1) 17.81%
110 West Main Street
Freeport, IL 61032
Premier Financial Services, Inc. 697,817 (2) 10.65%
Savings and Stock Plan
c/o Premier Trust Services, Inc.
110 W. Main Street
Freeport, IL 61032
Thomas D. Flanagan and NBD Bank 736,842 (3) 10.11%
N.A., Trustee of the Thomas D.
Flanagan Blind Voting Trust
dated 7/15/93
P.O. Box 77975
Detroit, MI 48277
James M. Flanagan and American 569,621 (4) 8.66%
Midwest Bank & Trust, Trustee of
Trust Number 6486
u/t/a dated 7/15/93
1600 West Lake Street
Melrose Park, IL 60160
Richard L. Geach 478,715 (5) 7.22%
1944 Mesa Drive
Freeport, IL 61032
Harold L. Fenton 372,270 (6) 5.68%
16640 Bobcat Court
Fort Myers, FL 33908
(1) The shares listed in the table are held in various capacities
with Premier Trust Services, Inc. ( Premier Trust ) and include
697,817 shares listed opposite the Premier Financial Services, Inc.
Savings and Stock Plan (the Savings and Stock Plan ) for which
Premier Trust serves as trustee. Of the 1,166,371 shares listed
in the table, Premier Trust has sole investment power with
respect to 468,173 shares, shared investment power with respect
to 467,948 shares (including 449,933 shares held in individual
participant accounts in the 401(k) and profit sharing portion of
the Savings and Stock Plan), and no voting power with respect to
any of the shares (other than the shares held in the Saving and
Stock Plan in the event that the failure to vote such shares
would be inconsistent with Premier Trust s fiduciary obligations,
as described in Note 2, below).
(2) Includes 247,884 shares in the Employee Stock Ownership portion of
the Plan (the "ESOP"), and 449,933 shares held in individual
participant accounts in the 401(k) and profit sharing Portion of
the Savings and Stock Plan for which Premier Trust serves as
trustee. Participants are entitled to direct the trustee as to
the voting of shares held in their accounts in either the ESOP or
401(k) portion of the Savings and Stock Plan. Shares held in
individual participant accounts for which no directions are received
will not be voted by the trustee, unless such failure to vote
would be inconsistent with the trustee s fiduciary responsibilities.
Particiants have the right to direct the disposition of shares held
in the 401(k) and profit-sharing portion of the Savings and Stock
Plan, but no right to direct the disposition of shares held in the
ESOP portion until such time as an individual participant has a
right to the distribution of such shares under the terms of the
ESOP. Premier Trust, as trustee, has the right to determine whether
or not to tender any of the shares held in the Savings and Stock
Plan.
(3) Represents shares of Common Stock issuable within 60 days upon the
conversion of $ 7,000,000 of the Company's Series B Convertible
(non-voting) Preferred Stock, which is convertible into Common Stock
at $ 9.50 per share. Terms of the trust direct that shares of
Common Stock, if any, be voted in proportion to all other shares
of Common Stock with respect to any issue requiring a vote of
the holders of the Common Stock. Thomas D. Flanagan has full
investment power over the shares of stock held in the trust.
(4) Includes 26,315 shares of Common Stock issuable within 60 days upon
conversion of $250,000 of the Company's Series B Convertible (non-
voting) Preferred Stock, which is convertible into Common Stock at
$ 9.50 per share, and 543,306 shares of Common Stock currently held
in the Trust. Terms of the trust direct that shares of Common Stock
be voted in proportion to all other shares of Common Stock with
respect to any issue requiring a vote of the holders of the Common
Stock. James M. Flanagan has full investment power over the
shares of stock held in the trust.
(5) Includes 180,432 shares held by Janice (Mrs. Richard L.) Geach,
70,446 shares held in the Savings and Stock Plan, and 76,751
shares issuable pursuant to options which are exercisable within
60 days of February 29, 1996. Mr. Geach has sole voting power and
shared investment power over all shares held in the Savings and
Stock Plan. Mr. Geach disclaims beneficial ownership of the shares
held by his wife. The shares listed do not include 43,856 shares
held in the trust established pursuant to the Senior Leadership
and Directors Deferred Compensation Plan over which the Company
shares investment power with the trustee. Mr. Geach, as a director
and Chief Executive Officer of the Company, may be deemed to share
the Company s investment power with the other members of the Board
of directors with respect to those shares.
(6) Includes 77,055 shares held by Gwen (Mrs. Harold L.) Fenton. Mr.
Fenton disclaims beneficial ownership of the shares held by his
wife.
The following table sets forth the number of shares of Common
Stock owned beneficially, directly or indirectly, by directors and
nominees of the Company, certain executive officers of the Company,
and by directors, nominees and executive officers as a group as of
February 29, 1996:
Title of Name & Address of Amount & Nature of Per Cent
Class Beneficial Owner Beneficial Ownership of Class
(1) (2)
Common Richard L. Geach 478,715 (1) (2) (3) (4) 7.22%
Edward G. Maris 2,316 (1) *
Donald E. Bitz 47,841 (1) *
David L. Murray 69,028 (1) (2) (3) (5) 1.04%
Joseph C. Piland 7,762 (1) (6) *
R. Gerald Fox 36,032 (1) *
Charles M. Luecke 18,030 (1) *
H. Barry Musgrove 26,457 (1) (7) *
Kenneth A. Urban 110,196 (1) (2) (3) 1.67%
Steve E. Flahaven 49,941 (2) (3) *
All 13 Directors, 1,100,114 (1) (2) (3) (8) 16.05%
Nominees &
Executive Officers
as a group
* Indicates less than 1% of class.
(1) The shares listed do not include 43,856 shares held in the trust
established pursuant to the Senior Leadership and Directors
Deferred Compensation Plan over which the Company shares investment
power with the trustee. Each of the directors of the Company, in
his capacity as a director, may be deemed to share the Company s
investment power with the other members of the board of directors
with respect to those shares.
(2) Includes shares held in the Savings and Stock Plan over which the
individual executive officer has sole voting power and shared
investment power as follows: Mr. Geach, 70,446 shares; Mr. Murray,
5,677 shares; Mr. Urban, 53,527 shares; Mr. Flahaven, 11,028
shares; all executive officers and directors as a group,
129,086 shares. See also Note 2 to the Beneficial Ownership
Table on page 9.
(3) Includes shares that could be acquired within 60 days of February
29, 1996, pursuant to the exercise of stock options as follows;
Mr. Geach, 76,751 shares; Mr. Murray, 57,354 shares; Mr. Urban,
47,063 shares; Mr. Flahaven, 37,350 shares; all executive officers
and directors as a group, 303,592 shares.
(4) Includes 180,432 shares held by Mr. Geach s spouse as to which
Mr. Geach disclaims beneficial ownership.
(5) Includes 5,997 shares held by Mr. Murray s spouse as to which Mr.
Murray disclaims beneficial ownership.
(6) Includes 762 shares held by Mr. Piland s spouse as to which Mr.
Piland disclaims beneficial ownership.
(7) Includes 3,000 shares held by Mr. Musgrove s spouse as to which
Mr. Musgrove disclaims beneficial ownership.
(8) Includes 196,857 shares held by or for the benefit of spouses or
children of directors or executive officers as to which such
directors or executive officers disclaim beneficial ownership.
EXECUTIVE COMPENSATION
The following table sets forth a three-year summary of
compensation for the Chief Executive Officer and each of the three
most highly compensated executive officers of the Company whose total
salary and bonus payments exceeded $100,000 in the year ended December
31, 1995. Total salary and bonus payments paid to each of the other
officers of the Company in the year ended December 31, 1995 did not
exceed $100,000.
<TABLE>
Annual Compensation Long Term Compensation
Awards Payouts
Other Annual Securities Long Term All Other
Name and Compensation Underlying Incentive Compensation
Principal Position Year Salary ($) Bonus($) ($) Options (#) Payouts ($)
(1) (2) (3)
<S> <C> <C> <C> <C> <C> <C> <C>
Richard L. Geach, 1995 176,292 0 4,800 15,000 0 8,296
President & CEO 1994 176,292 0 4,800 0 36,838 9,335
of the Company 1993 173,250 0 4,800 4,550 0 10,240
David L. Murray, 1995 130,008 0 4,800 11,100 0 8,296
Executive Vice 1994 123,495 0 4,800 0 27,963 7,551
President & Chief 1993 113,940 0 4,800 2,385 0 7,050
Financial Officer
of the Company
Kenneth A. Urban, 1995 108,960 0 4,800 9,200 0 7,852
Division Head, 1994 107,651 0 4,800 0 26,752 6,516
Non-Bank Products 1993 103,300 0 4,800 1,682 0 6,424
Division of the
Company
Steve E. Flahaven, 1995 110,608 0 4,800 8,600 0 6,087
President, Region 1 1994 103,453 0 4,800 0 22,208 3,905
Banking/Sales 1993 95,735 0 4,800 1,538 0 4,882
Offices
</TABLE>
(1) Taxable allowance for use of automobiles owned by the executive
officer for business purposes.
(2) The Company terminated its 1990 Performance Unit Plan in 1994. The
amount shown for each Named individual was the discounted
present value, as determined by the Board of Directors, of
outstanding grants as of December 31, 1994. No payouts were
made prior to 1994, and subsequent to payment all outstanding
grants were canceled.
(3) Amounts accrued for the benefit of the named individuals under the
Company's Savings and Stock Plan and Senior Leadership and
Directors Deferred Compensation Plan.
The following table sets forth information regarding stock
options exercised by each of the named executive officers during the
year ended December 31, 1995, as well as the value of unexercised
stock options outstanding at fiscal year end.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND
FISCAL YEAR-END OPTION VALUES
Number of Unexercised Total Value of Unexercised
Securities Underlying In-The-Money Options
Options at Fiscal Year End ($)
at Fiscal Year End (#) (1)
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C>
Richard L. Geach - - 73,751 26,101 392,636 53,217
David L. Murray - - 55,134 16,707 303,815 33,058
Kenneth A. Urban - - 45,223 13,069 252,945 25,664
Steve E. Flahaven - - 35,630 12,072 195,133 23,413
</TABLE>
(1) Based on the fair market value (closing bid price) of the Common
Stock of the Company on December 31, 1995, as reported on
The Nasdaq Stock Market's National Market.
The following table sets forth awards made under the Company's
1995 Non-Qualified Stock Option Plan during the fiscal year ended
December 31, 1995:
<TABLE>
STOCK OPTIONS GRANTED IN LAST FISCAL YEAR (1)
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for Option
Individual Grants Term (2)
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/Share)(2) Date 5 % ($) 10 % ($)
<S> <C> <C> <C> <C> <C> <C>
Richard L. Geach 15,000 22.06 6.88 01/26/05 64,901 164,473
David L. Murray 11,100 16.32 6.88 01/26/05 48,027 121,710
Kenneth A. Urban 9,200 13.53 6.88 01/26/05 39,806 108,877
Steve E. Flahaven 8,600 12.65 6.88 01/26/05 37,210 94,298
</TABLE>
(1) The Company s 1995 Non-Qualified Stock Plan provides that the Board
of Directors may grant options to key employees to purchase shares
of Common Stock. Up to 200,000 shares of Common Stock have been
authorized for issuance pursuant to the Plan. Options may be
granted from time-to-time for any number of shares, and upon such
terms and conditions that the Board of Directors judges desirable,
provided that no options may be granted after December 31, 2004.
Each option granted under the Plan is evidenced by an agreement
subject to, among others, the following terms and conditions; 1)
the option price may not be less than the fair market value of the
shares on the date of grant, 2) exercised options must be paid for
in full at the time of exercise in a form as specified in the
Plan, and 3) options granted will expire as specified in the
agreement, but in no case later than 10 years from the date of
grant.
(2) The fair market value of the Common Stock of the Company (i.e.
the average of the high and low sales prices per share of Common
stock) as reported on The Nasdaq Stock Market s National Market
on January 26, 1995, the date of grant.
The Company terminated its 1990 Performance Unit Plan in
December, 1994, and does not have any other long-term incentive plans.
Consequently, no awards under any long-term incentive plan were made
during the fiscal year ended December 31, 1995.
The Company provides a defined benefit Pension Plan for its
employees. Benefits are calculated under a formula based upon the 5
highest of the last 10 years of service . Effective July 1, 1994,
benefits accumulating to Plan participants were frozen. Accrued
benefits as of that date were fully funded. The following table sets
forth the annual benefits payable upon retirement at age 65 to Messrs.
Geach, Murray, Urban, and Flahaven:
Name Amount Payable
Annually upon
Retirement
Richard L. Geach $ 26,342
David L. Murray 30,122
Kenneth A. Urban 29,052
Steve E. Flahaven 10,350
The Company has entered into Change in Control and Termination
Agreements ("Agreements") dated January 20, 1995 with certain
executive officers, including Messrs. Geach, Murray, Urban and
Flahaven. Each Agreement has a term of 36 months, subject to
automatic extension, unless either party gives the other party notice
if its election to terminate such automatic extension. If such notice
is given, the Agreement will terminate 36 months from the date such
notice is given. The agreements provide for certain benefits during a
severance period (12 months) following either 1) a change of control
and termination of employment for any reason other than good cause (as
defined in the Agreements) at any time during the 24 months after a
change of control occurs, or 2) termination of employment by the
executive officer for good reason (as defined in the Agreements) at
any time during the 24 months following a change of control.
Subsequent to such change of control and termination, the
executive is entitled to receive the following benefits; 1) a lump sum
payment equal to monthly base salary at the date of termination
multiplied by
12, 2) continuation of coverage for the executive, his or her spouse
and dependents (for 12 months) under all Company Welfare Plans in
which the executive participated prior to termination, except that
substantially identical benefits will be provided for any welfare plan
in which participation is no longer possible, 3) a lump sum payment
equal to the amount of a bonus that would have been paid under any
Incentive Plan during the year of termination, pro rated for the
number of months actually employed, plus an amount equal to the
average bonus paid to the executive for the three years preceding
termination, 4) any benefits accrued under any Retirement, Welfare or
Incentive Plan in which the executive participated at date of
termination, 5) a lump sum payment
equal to the amount which the Company would have contributed to the
Senior Leadership and Directors Deferred Compensation Plan had
termination not occurred, and 6) immediate and full vesting of all
options so that such options become exercisable on the date of
termination or for 200 days thereafter, or, if such acceleration is
not permissible under a Plan, a payment equal to the excess, if any,
of the aggregate fair market value of all stock of the Company subject
to options held by the Executive less the aggregate exercise price of
such stock on the date of termination. If the executive officer dies
during the severance period, his or her spouse or beneficiary will
receive the remainder of all unpaid benefits provided under the
Agreements.
BOARD COMPENSATION COMMITTEE REPORT
The Compensation Committee of the board of Directors is
responsible for establishing the policies and procedures which
determine the compensation of the Company's executive officers. The
Committee sets base cash compensation and potential bonus compensation
annually for the Chief Executive Officer (CEO) and other executive
officers. In addition, the Committee has exclusive authority to grant
stock options to executive officers. The Committee considers both
internal and external data in determining officers' compensation,
including input from outside compensation consultants and other
independent executive compensation data.
In creating policies and making decisions concerning executive
compensation, the Compensation Committee seeks to:
1. ensure that the executive team has clear goals and
accountability with respect to expected corporate
performance;
2. establish pay opportunities that are competitive within the
Company's industry and consistent with its position in the
marketplace and the markets within which it operates;
3. assess results fairly and regularly in light of expected
Company performance; and
4. align pay and incentives with the long-term interests of the
Company's shareholders.
The objective of the Company's salary program is to help ensure
that the organization is able to attract and retain motivated
individuals necessary to achieve its goals in the most cost-effective
way possible.
It is our policy that a salary range be established for each
position within the Company, and that these ranges be (a) internally
equitable (i.e., fair in comparison to ranges established for other
positions within the Company), and (b) competitive when compared with
the rates paid and ranges utilized by other employers for comparable
positions. Each range is divided into quartiles, with the midpoint
approximating the average salary paid for comparable positions within
the banking industry. In determining industry averages, the Committee
reviews a number of external surveys, including surveys provided by
banking industry trade groups as well as private firms specializing in
compensation. Comparisons focus primarily on banks and/or bank
holding companies of similar size and with similar geographic/market
characteristics. It is also our policy that each employee will
receive a rate of pay that falls within the range that has been
established for his or her position. Executive officers, including
the CEO, may defer up to 20% of their salary each year. The Company
matches amounts deferred at 25%.
Performance Incentives
The Company utilizes both short-term and long-term incentive
programs, in tandem with base salaries, to closely tie overall
executive compensation to the interests of the Company's shareholders.
Executive officer base salaries are set at average or below average
rates as compared to peer. The Company's Incentive Programs are then
designed to motivate the CEO and other executive officers to manage
towards improved shareholder return.
The Short-Term Incentive Program (i.e. cash bonuses) rewards
executive officers for surpassing the annual financial plan with
regard to earnings. Each year, a financial plan is approved by the
Board of Directors. The executive bonus program is then approved
based upon that plan and provides for bonuses only if the financial
plan is exceeded. The size of any bonus, which may range from
15.00% - 60.00% of salary, is dependent upon the amount by which
actual financial performance exceeds the plan. Executive officers,
including the CEO, may defer up to 50% of any bonus. The Company
matches amounts deferred at 25%. No bonuses were awarded under the
Short-Term Incentive Plan in 1995.
The Long-Term Incentive Program uses Stock Options to correlate
executive compensation with shareholder value. Executive officers may
be granted options as determined by the Compensation Committee.
Options are granted at the fair market value of the Company's Common
Stock at the time of the award. Executives are allowed to exercise
the options on a vesting formula of 20% per year, and all options must
be exercised within ten years or they expire. The potential value of
options is dependent upon increasing total return (i.e. stock price
appreciation plus dividends) to shareholders over time.
CEO Compensation
The compensation for the Chief Executive Officer is determined
under the same policies and programs as outlined above for all
executive officers. The maximum award under the Company's Short Term
Incentive Program for the CEO is 60.00% of salary. The CEO may be
awarded Options under the Long Term Incentive Program as determined by
the Compensation Committee.
The Compensation Committee assesses the CEO's performance with
regard to Board Policies and goals, and the Company's performance
versus peers and its financial plan. Salary is set at a level below
peer average, with overall compensation closely tied to performance
through cash bonuses (for exceeding financial plan) and stock
options.
COMPENSATION COMMITTEE:
Donald E. Bitz
Edward G. Maris
H. Barry Musgrove
The cumulative total return to shareholders performance graph is
furnished to the Commission in paper form under cover of Form SE. The
following table presents year-end cumulative total returns for the
Company, U.S. stocks traded on the Nasdaq over-the-counter market
assuming $100.00 was invested on January 1, 1991 and all dividends
were reinvested for the five year period ended December 31, 1995.
Index 1991 1992 1993 1994 1995
Premier $ 159 $ 213 $ 227 $ 227 $ 285
Nasdaq Bank 164 239 272 271 404
Stocks
U.S. Nasdaq 161 187 215 210 296
Stocks
The Company's cumulative total return to shareholders has exceeded the
cumulative total return of the U.S. Nasdaq stock market index for the
years 1992 through 1994. In 1991 and 1995 the Company's cumulative
total return was slightly less than the U.S. Nasdaq stock market
index. The Company's cumulative total return has not exceeded that of
Bank Stocks traded on the Nasdaq over-the-counter market for the years
1991 through 1995.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee is an officer,
employee or former employee of the Company. Members of the
Compensation Committee or their associates may have loans or loan
commitments from the Company's subsidiary banks, but all such loans or
loan commitments were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more
than the normal risk of collectability or present other unfavorable
features.
Compliance with Section 16(a) of the Exchange Act
Pursuant to Securities and Exchange Commission regulations, the
Company must disclose the names of persons who failed to file or filed
late a report required under Section 16(a) of the Securities Exchange
Act of 1934. Generally, the reporting regulations under Section 16(a)
require directors and executive officers to report changes in
ownership in the Company's equity securities. Based solely on a
review of Forms 3, 4 and 5, including amendments thereto, all such
Forms were filed on a timely basis by reporting persons.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors and executive officers of the Company and their
associates were customers of, and have had transactions with, the
Company and in particular its subsidiary banks from time to time in
the ordinary course of business. Additional transactions may be
expected to take place in the ordinary course of business in the
future. All loans and loan commitments included in such transactions
were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more than normal
risk of collectability or present other unfavorable features.
AUDITORS
KPMG PEAT MARWICK, independent certified public accountants, have
served as the Company's public accountants for the fiscal year ended
December 31, 1995 and prior years, and have been selected to serve in
that capacity again for the fiscal year ending December 31, 1996.
Representatives of KPMG PEAT MARWICK, are expected to be present at
the meeting with the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate
questions.
NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS OF DIRECTORS
The Company's Restated Certificate of Incorporation establishes
an advance notice procedure with respect to the nomination of
directors, other than by or on behalf of the Board of Directors.
Under such nomination procedure, any stockholder of the Company who is
entitled to vote for the election of directors and who wishes to
nominate a candidate for election as a director must give advance
written notice to the Company of such nomination. Such notice must be
delivered or mailed by first class United States mail, postage
prepaid, to the Secretary of the Company, not fewer than 14 days nor
more than 60 days prior to any meeting of the stockholders called for
the election of directors. In the event that fewer than 21 days'
notice of the meeting is given to stockholders, such written notice
must be delivered or mailed in accordance with the preceding sentence
not later than the close of business on the 7th day following the day
on which notice of the meeting was mailed to the stockholders. Each
such notice must set forth (i) the name, age, business address and,
if known, residence address of each nominee proposed in the notice,
(ii) the principal occupation or employment of each such nominee, and
(iii) the number of shares of stock of the Company beneficially owned
by each such nominee and by the nominating stockholder. The chairman
of a meeting at which directors are to be elected may, if the facts so
warrant, determine that a nomination was not made in accordance with
the foregoing procedure, and, if he should so determine, he shall so
declare to the meeting and the defective nomination shall be
disregarded.
OTHER BUSINESS
Management does not intend to present, and does not have reason
to believe others will present, any items of business at the Annual
Meeting other than those mentioned in the Notice of the Meeting.
However, if any other matters are properly presented for a vote, the
proxies will be voted on such matters according to the judgment of the
persons named as proxies therein.
STOCKHOLDER PROPOSALS
Stockholders desiring to submit proposals to be voted upon by
stockholders at the 1997 Annual Meeting must submit their proposals to
the Company's Secretary no later than December 10, 1996.
BY ORDER OF THE BOARD OF DIRECTORS,
Michael J. Lester
Secretary
Dated: April 12, 1996
