THIS DOCUMENT IS A CONFIRMING ELECTRONIC COPY
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
Section 240-14a-11(c) or Section 240.14a-12
Inter-Regional Financial Group, Inc.
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(Name of Registrant as Specified in its Charter)
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than the Registrant)
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<PAGE>
IFG
Inter-Regional Financial Group, Inc.
Dain Bosworth Incorporated
Rauscher Pierce Refsnes, Inc.
IFG Asset Management Services, Inc.
Regional Operations Group, Inc.
1996 Notice of Annual Meeting
and Proxy Statement
<PAGE>
March 28, 1996
To Our Stockholders,
You are cordially invited to attend the Annual Meeting of
IFG's Stockholders, which will be held at Joe C. Thompson
Amphitheater, Cityplace Conference Center, 2711 North
Haskell Avenue, Dallas, Texas, on Wednesday, May 1, 1996, at
3:00 p.m.
This booklet contains your official notice of the 1996
Annual Meeting and a Proxy Statement which includes
information about the matters to be acted upon. Members of
the management and Board of Directors of IFG will be on hand
at the meeting to answer questions and to discuss any
matters relating to IFG that may properly arise.
Whether or not you plan to attend the 1996 Annual Meeting in
person, we urge you to participate by reading the Proxy
Statement and completing and returning your proxy card as
promptly as possible. This will ensure that your vote is
recorded on the matters brought before the meeting.
Sincerely,
Irving Weiser
-------------------------------------
Irving Weiser
Chairman, President and Chief
Executive Officer
<PAGE>
Official Notice of 1996 Annual Meeting of Stockholders
The 1996 Annual Meeting of Stockholders of Inter-Regional
Financial Group, Inc. ("IFG" or the "Company") will be held
at Joe C. Thompson Amphitheater, Cityplace Conference
Center, 2711 North Haskell Avenue, Dallas, Texas, on
Wednesday, May 1, 1996, at 3:00 p.m. for the following
purposes:
1. To elect eight directors to hold office for the ensuing
year;
2. To approve the IFG 1996 Stock Incentive Plan, which
would permit the issuance of up to 3,000,000 shares of IFG
Common Stock;
3. To amend IFG's Restated Certificate of Incorporation to
increase the number of authorized shares of IFG Common
Stock from 20,000,000 to 30,000,000;
4. To ratify the selection of KPMG Peat Marwick LLP as
independent auditors of IFG for the fiscal year ending
December 31, 1996; and
5. To transact such other business as may properly come
before the meeting or any adjournments thereof.
Only holders of record of IFG's Common Stock at the close of
business on March 13, 1996, will be entitled to receive
notice of and to vote at the meeting. A list of such
holders will be available for examination by any stockholder
for any purpose germane to the meeting during ordinary
business hours for ten days prior to the meeting at the
headquarters of IFG's subsidiary, Rauscher Pierce Refsnes,
Inc., Cityplace Center East, Suite 2400, 2711 North Haskell
Avenue, Dallas, Texas.
By Order of the Board of Directors
Carla J. Smith
---------------------------
Carla J. Smith
Secretary
<PAGE>
Minneapolis, Minnesota
March 28, 1996
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS WEDNESDAY, MAY 1, 1996
This Proxy Statement is bring furnished in connection with
the solicitation of proxies by the Board of Directors of
Inter-Regional Financial Group, Inc. ("IFG" or the
"Company") for use at the 1996 Annual Meeting of
Stockholders to be held on Wednesday, May 1, 1996, and at
any adjournments thereof. This Proxy Statement and the
accompanying proxy card are being mailed on or about March
28, 1996, to holders of record of shares of the Common Stock
of IFG as of the close of business on March 13, 1996. If
the enclosed proxy card is completed, signed and returned to
IFG prior to the 1996 Annual Meeting, it will be voted as
specified. Any stockholder who signs and returns a proxy
may revoke it at any time before it is voted by giving
written notice to the Secretary of IFG.
On March 13, 1996, IFG had outstanding 12,093,319 shares
of common stock, par value $.125 per share (the "Common
Stock"). Each holder of record of such shares as of the
close of business on March 13, 1996, will be entitled to one
vote for each share of Common Stock held on such date on all
matters being presented at the meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information concerning the
beneficial ownership of IFG's Common Stock by all persons
known by IFG to beneficially own more than five percent of
IFG's Common Stock, by IFG's directors and director
nominees, by the current executive officers of IFG named in
the Summary Compensation Table appearing on page 8 and by
all directors and executive officers of IFG as a group.
Except as otherwise indicated, such information is provided
as of March 13, 1996, and the named beneficial owner
possesses sole voting and investment power with respect to
all shares. All share amounts have been adjusted to reflect
the three-for-two split of IFG's Common Stock effected
December 20, 1995.
<TABLE>
<CAPTION>
Amount and Nature
Name of Beneficial Title of of Beneficial
Owner of Class Class Ownership Percent
- ------------------ -------- ----------------- -------
<S> <C> <C> <C>
FMR Corp. Common 690,700 (1) 5.71%
John C. Appel Common 103,275 (2)(3)(4) *
J. Evans Attwell Common 5,000 *
Susan S. Boren Common 9,781 (2)(5) *
F. Gregory Fitz-Gerald Common 16,500 (2) *
Lawrence Perlman Common 15,300 (2) *
C.A. Rundell, Jr. Common 8,500 (2) *
Robert L. Ryan Common 9,000 (2) *
Arthur R. Schulze, Jr. Common 18,211 (2)(5) *
Irving Weiser Common 192,215 (2)(3)(4)(6) 1.59%
Louis C. Fornetti Common 18,300 (7) *
Jerry W. Hayes Common 20,383 (2)(3)(4) *
J. Scott Spiker Common 5,803 (2)(3)(4) *
All directors and
executive officers
as a group (15 persons) Common 428,775 (1)(2)(3)(4)
(5)(6)(7) 3.5%
_____________
* Less than 1%
</TABLE>
[FN]
(1) Information is based solely on a Schedule 13G filed with the
Securities and Exchange Commission by FMR Corp. ("FMR"), 82
Devonshire Street, Boston, Massachusetts 02109, with respect to
shares owned as of December 31, 1995. FMR reports that it has (a)
sole power to vote or direct the vote of 213,450 shares, 188,850
of which are held in institutional accounts managed by its bank
subsidiary, Fidelity Management Trust Company, and 24,600 of
which are held or controlled by its affiliate, Fidelity
International Limited, which provides investment advisory
services to non-U.S. investment companies, and (b) sole power to
dispose of or direct the disposition of 690,700 shares, 402,950
of which are held in registered investment companies managed by
its subsidiary, Fidelity Management Research Company, a
registered investment adviser, 263,150 of which are held in
institutional accounts managed by Fidelity Management Trust
Company and 24,600 of which are held or controlled by Fidelity
International Limited.
(2) Includes the following number of shares issuable upon
exercise of currently exercisable options granted pursuant to
IFG's 1986 Stock Option Plan: Mr. Appel, 25,950; Ms. Boren,
9,000; Mr. Fitz-Gerald, 10,500; Mr. Perlman, 10,500; Mr. Rundell,
7,500; Mr. Ryan, 7,500; Mr. Schulze, 10,500; Mr. Weiser, 96,750;
Mr. Hayes, 5,850; Mr. Spiker, 1,200; and all directors and
executive officers as a group (15 persons), 187,875.
(3) Includes the following number of shares held in the IFG Stock
Bonus Plan: Mr. Appel, 14,714; Mr. Weiser, 17,241; Mr. Hayes,
1,498; Mr. Spiker, 64; and all directors and executive officers
as a group (15 persons), 37,172. Shares held in the Stock Bonus
Plan are allocated to the accounts of participating employees at
the end of each fiscal quarter. As a result, ownership amounts
for shares held by participating employees in the Stock Bonus
Plan are provided as of December 31, 1995. As of February 29,
1996, a total of 4,420,395 shares of Common Stock, or 36.6
percent of the outstanding shares of Common Stock, were held in
the Stock Bonus Plan. Voting of shares held in the Stock Bonus
Plan is passed through to the participating employees.
Participating employees are also entitled to determine, on a
confidential basis, whether shares held in the Stock Bonus Plan
for their benefit will be tendered in a tender or exchange offer.
Vested shares held in the Stock Bonus Plan for participating
employees may be distributed subject to in-service loan and
distribution rules or after certain events of maturity
(separation from service, death or disability).
(4) Includes the following number of shares held for the account
of such executive officer pursuant to the IFG Executive Deferred
Compensation Plan: Mr. Appel, 32,386; Mr. Weiser, 42,016; Mr.
Hayes, 13,035; Mr. Spiker, 4,539; and all directors and executive
officers as a group (15 persons), 91,976. As of February 29,
1996, 268,378 shares of Common Stock, or 2.2 percent of the
outstanding shares, were held in the Executive Deferred
Compensation Plan. Shares held in the Executive Deferred
Compensation Plan are credited to the accounts of the respective
participating employees annually following payment of bonuses for
the preceding year. All shares held for the accounts of
participants under the Executive Deferred Compensation Plan will
be voted by the trustee of the related trust in its sole
discretion on all matters. Participants are not entitled to
encumber or borrow against shares held for their accounts under
the Executive Deferred Compensation Plan, and all such shares are
subject to the claims of IFG's general unsecured creditors in the
event of its insolvency or bankruptcy. Each participating senior
executive must elect prior to the beginning of each year in which
a bonus is earned whether the shares purchased with the deferred
portion of such bonus and the vested portion of any related
employer-matching contributions will be distributed during
employment or following retirement. Participants may change
their investment election with respect to a year's deferred bonus
amount and the vested portion of any related employer-matching
contribution from IFG Common Stock to an alternate fixed income
investment, but any such change would result in the forfeiture of
the unvested portion of any related employer-matching
contribution.
(5) Includes the following number of shares received in lieu of
cash compensation pursuant to the IFG Restricted Stock Plan for
Non-Employee Directors: Ms. Boren 481; Mr. Schulze, 961; and all
directors and executive officers as a group (15 persons), 1,442.
Voting of restricted shares held pursuant to the Restricted Stock
Plan for Non-Employee Directors is passed through to the
participating directors. Participants are not entitled to dispose
of or pledge shares held pursuant to the plan until such shares
are fully vested, and unvested shares are subject to forfeiture
in certain circumstances. Such shares become fully vested over a
five-year period with 20 percent, an additional 30 percent and
the remaining 50 percent becoming vested on each of the third,
fourth and fifth anniversaries, respectively, of the grant date.
(6) Includes 2,400 shares held in trust accounts for the benefit
of Mr. Weiser's children for which Mr. Weiser has voting and
dispositive power and excludes 420 shares beneficially owned by
Mr. Weiser's spouse and disclaimed by Mr. Weiser
(7) Includes 18,300 shares of restricted stock issued to Mr.
Fornetti upon commencement of his employment. Mr. Fornetti is not
entitled to dispose of or pledge such shares, and such shares are
subject to forfeiture in certain circumstances until such shares
are fully vested. Mr. Fornetti is, however, entitled to vote such
shares and receive distributions thereon. Such shares become
vested 50 percent on each of December 31, 1996 and 1997, subject
to acceleration in certain circumstances.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF
1934
Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), requires IFG's directors and executive
officers and all persons who beneficially own more than 10
percent of the outstanding shares of IFG's Common Stock to file
with the Securities and Exchange Commission and the New York
Stock Exchange initial reports of ownership and reports of
changes in ownership of such Common Stock. Officers, directors
and greater-than-10-percent beneficial owners are also required
to furnish IFG with copies of all Section 16(a) forms they file.
To IFG's knowledge, based upon a review of the copies of such
reports furnished to IFG and written representations that no
other reports were required, during the fiscal year ended
December 31, 1995, all Section 16(a) filing requirements
applicable to IFG's directors, executive officers and greater-
than-10-percent beneficial owners were satisfied.
Proposal 1 - Election of Directors
NOMINEES
Eight individuals have been nominated for election to IFG's Board
of Directors at the 1996 Annual Meeting of Stockholders to hold
office until the next annual meeting of stockholders or until
their successors are duly elected and qualified (except in the
case of earlier death, resignation or removal). Two of the
nominees for election are officers of IFG and/or its
subsidiaries, Dain Bosworth Incorporated ("DBI") and Rauscher
Pierce Refsnes, Inc. ("RPR").
The accompanying proxy is intended to be voted FOR the election
of the nominees named below, unless authority to vote for one or
more of such nominees is withheld as specified in the proxy card.
If an executed proxy card is returned and no instruction is
given, the shares of IFG Common Stock represented by such proxy
will be voted in favor of such election. If an executed proxy
card is returned and authority to vote with respect to any or all
of the nominees is withheld as specified in the proxy card, the
shares of IFG Common Stock represented by such proxy will be
considered present at the meeting for purposes of determining a
quorum and for purposes of calculating the vote with respect to
such nominee or nominees, but will not be considered to have been
voted in favor of such nominee or nominees.
The accompanying proxy may not be voted for more than eight
directors. The affirmative vote of a majority of the shares of
Common Stock represented at the meeting and entitled to vote is
required for the election of each director, and cumulative voting
is not permitted. In the event that any nominee becomes unable
or unwilling to serve as a director for any reason, the
accompanying proxy will be voted by the persons named therein in
accordance with their best judgment. The Board of Directors has
no reason to believe that any nominee will be unable or unwilling
to serve as a director if elected.
Each nominee has furnished the following information to IFG with
respect to his or her principal occupations or employment during
the last five years and his or her directorships of other
companies subject to the reporting requirements of the Exchange
Act or the Investment Company Act of 1940, as amended.
[PHOTO] JOHN C. APPEL
President and
Chief Operating Officer
Dain Bosworth Incorporated
John C. Appel, 47, was named President and Chief Operating
Officer of DBI in February 1994. Prior to that time, Mr.
Appel had served as Chief Financial Officer of IFG since
1986 and of DBI since 1990. Mr. Appel has also been an
Executive Vice President of IFG since 1990. Prior to
joining IFG in 1986, Mr. Appel was a partner with the
accounting firm of Deloitte Haskins & Sells (now Deloitte &
Touche). Mr. Appel also serves as a director of Smith
Breeden Associates, a registered investment adviser.
[PHOTO] J. EVANS ATTWELL
Attorney at Law
Vinson & Elkins LLP
J. Evans Attwell, 64, has been nominated to stand for
election as a director of IFG at the 1996 Annual
Stockholders' Meeting. Mr. Attwell is an attorney with the
Houston-based law firm of Vinson & Elkins LLP. He has been a
partner in the firm since 1965 and served as its Managing
Partner from October 1981 through December 1991. Mr. Attwell
also serves as a director of American General Corporation
and Seagull Energy Corporation.
[PHOTO] SUSAN S. BOREN
Organizational Consultant
Susan S. Boren, 49, is currently acting as a private
organizational consultant. From 1981 through 1995, Ms. Boren
held various positions with Dayton Hudson Corporation and
its Department Store Division: from 1994 through 1995, she
was Senior Vice President, Customer Development/Direct
Response; from 1991 through 1994, she was Group Vice
President of Stores; and from 1987 through 1991, she was
Senior Vice President of Human Resources. Ms. Boren has
been a director of IFG since February 1993. She is also a
director of The Valspar Corporation.
[PHOTO] F. GREGORY FITZ-GERALD
President
The ANSR Company, LLC
F. Gregory Fitz-Gerald, 54, is President of The ANSR
Company, LLC, a private company engaged in investment
research using genetic algorithms and evolutionary
computation. From 1991 to 1995, Mr. Fitz-Gerald was a
private investor and financial consultant. From 1989 to
1991, Mr. Fitz-Gerald was a Principal of Ocean Capital
Corporation, a private investment banking firm headquartered
in New York City. Previously, he held senior executive
positions with Commercial Credit Company and Primerica
Corporation, American Express Company, American Express
Credit Corporation, and Merrill Lynch & Co., Inc. Mr. Fitz-
Gerald has been a director of IFG since 1987.
[PHOTO] C. A. RUNDELL, JR.
Private Investor
Financial Consultant
Rundell Enterprises
C. A. Rundell, Jr., 64, has been a private investor and
financial consultant, doing business as Rundell Enterprises,
since he retired as the Chairman of the Board, President and
Chief Executive Officer of Cronus Industries in 1988,
positions that he had held since 1977. Mr. Rundell has been
a director of IFG since February 1994. Mr. Rundell also
serves as chairman of NCI Building Systems, Inc. and as a
director of Tyler Corporation, Tandy Brands Accessories,
Inc., Eljer Industries, Inc., and Redman Industries, Inc.
[PHOTO] ROBERT L. RYAN
Senior Vice President
Chief Financial Officer
Medtronic, Inc.
Robert L. Ryan, 52, has been Senior Vice President and
Chief Financial Officer of Medtronic, Inc. since April 1993.
Prior to joining Medtronic, he had been Vice President,
Finance, and Chief Financial Officer of Union Texas
Petroleum Corp. since 1984. Mr. Ryan has been a director of
IFG since February 1994. Mr. Ryan also is a director of
Riverwood International Corporation, TECO Energy, Inc. and
Tampa Electric Company.
[PHOTO] ARTHUR R. SCHULZE, JR.
Former Vice Chairman of the Board
General Mills, Inc.
Arthur R. Schulze, Jr., 65, retired from his position as
Vice Chairman of the Board of General Mills, Inc. in January
1993, a position he had held since 1989. He previously
served as Executive Vice President of General Mills, Inc.
and President of its Grocery Products Food Group. Mr.
Schulze has been a director of IFG since 1987. Mr. Schulze
is also a director of Tennant Co., Inc. and Sealright Co.,
Inc.
[PHOTO] IRVING WEISER
Chairman, President and Chief Executive Officer
Inter-Regional Financial Group, Inc.
Chairman and Chief
Executive Officer
Dain Bosworth Incorporated
Chairman and Acting Chief
Executive Officer
Rauscher Pierce Refsnes, Inc.
Irving Weiser, 48, has been chairman of IFG since May
1995, Chief Executive Officer of IFG since 1990 and
President of IFG since 1985. Mr. Weiser has also been
Chairman and Chief Executive Officer of DBI since April
1990, and was President of DBI from 1990 until 1994. Mr.
Weiser has also been Chairman of RPR since September 1995,
and acting Chief Executive Officer and President of RPR
since October 1995. Prior to 1985, Mr. Weiser was a partner
in the law firm of Dorsey & Whitney LLP. Mr. Weiser has
been a director of IFG since 1985.
BOARD OF DIRECTORS COMMITTEES AND MEETINGS
IFG has an Audit Committee and a Compensation and Organization
Committee. The Audit Committee reviews and monitors accounting
policies and control procedures of IFG, including recommending
the engagement of the independent auditors and reviewing the
scope of the audit, and generally assists the Board of Directors
in fulfilling its fiduciary responsibilities relating to
accounting, financial and reporting policies and practices. The
Compensation and Organization Committee determines the policies
for and structure and amount of compensation for members of the
executive managements of IFG and its operating subsidiaries. The
Compensation and Organization Committee also administered the IFG
1986 Stock Option Plan, administers the IFG Executive Deferred
Compensation Plan and will administer the IFG 1996 Stock
Incentive Plan if it is approved by IFG's stockholders at the
1996 Annual Meeting (see "Proposal 2 - Approval of IFG 1996 Stock
Incentive Plan").
The Compensation and Organization Committee also acts as a
nominating committee by reviewing candidates for election as
director and by annually recommending a slate of directors for
approval by the Board of Directors and election by the
stockholders. The Compensation and Organization Committee will
consider qualified nominees recommended by stockholders. Any
stockholder wishing to recommend a nominee must submit the name
of such nominee in writing to the Secretary of IFG, together with
a statement of the nominee's qualifications.
The Audit Committee, on which retiring director Lawrence Perlman
(chairman) and Messrs. Fitz-Gerald and Rundell served, held three
meetings in 1995. The Compensation and Organization Committee,
on which Messrs. Schulze (chairman) and Ryan and Ms. Boren
served, held six meetings in 1995. The Board of Directors met
five times in 1995. During 1995, no director, other than Mr.
Perlman, attended fewer than 75 percent of the meetings of the
Board of Directors and Committees upon which such director
served. Mr. Perlman attended five of eight total meetings (62.5
percent) for the year.
Compensation
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Compensation Philosophy
The Compensation and Organization Committee (the "Committee")
determines the policies for and structure and amount of
compensation for members of the executive managements of IFG and
its subsidiaries (collectively, the "Senior Executives"),
including the Chief Executive Officer and the other executive
officers of IFG named in the accompanying tables. The
Committee's mission is to establish compensation policies and
programs that will attract and retain highly qualified executives
and will provide an incentive to such executives to focus their
efforts on long-term strategic goals by aligning their financial
interests closely with long-term stockholder interests. The
Committee is composed entirely of independent directors who are
not employees of IFG or any of its subsidiaries.
The most significant component of IFG's Senior Executive
compensation is cash remuneration in the form of base salaries
and annual discretionary bonuses. Bonuses are determined based
upon the performance of IFG, the individual executive, his or her
department or areas of responsibility and his or her employing
company during the fiscal year and are awarded in February of the
following year. In evaluating performance, both the achievement
of annual financial and nonfinancial objectives and progress
toward long-term strategic objectives are considered. Base
salaries generally represent a relatively small portion of total
cash remuneration capable of being earned and are average
relative to comparable firms in the industry. Bonuses make up a
significant portion of the Senior Executives' total cash
compensation and, in 1995, constituted as much as 85 percent of a
Senior Executive's total cash compensation. The Committee
believes that basing a substantial portion of a Senior
Executive's compensation on individual, departmental and company
performance contributes to the executive's motivation to perform
at the highest possible level and is consistent with the building
of long-term stockholder value.
As a central component of the IFG Long-Term Incentive Program,
the Committee annually awards to the Senior Executives options to
acquire shares of IFG's Common Stock. Such options were
previously awarded under the IFG 1986 Stock Option Plan, which
terminated by its terms on February 11, 1996. Hereafter, the
Committee will award options under the IFG 1996 Stock Incentive
Plan, provided such Plan is approved by IFG's stockholders at the
1996 Annual Meeting of Stockholders. See "Proposal 2 - Approval
of IFG 1996 Stock Incentive Plan." The Committee believes that
stockholder approval of such Plan is critical to its ability to
administer an appropriate Senior Executive compensation program
for the benefit of IFG's stockholders. The Committee believes
that stock options provide a highly efficient form of
compensation from both a cost and accounting perspective, and
that such awards align the long-term financial interests of the
Senior Executives with the interests of IFG's stockholders, thus
providing the kind of incentives necessary to achieve IFG's
longer-term strategic goals.
The level of options awarded to each Senior Executive is linked
to performance in that the award is generally determined by
applying a Long-Term Incentive Percentage approved by the
Committee for such Senior Executive to the amount of total cash
compensation (including discretionary bonus compensation)
approved by the Committee for such Executive. The range of Long-
Term Incentive Percentages was initially approved by the
Committee upon the recommendation of an independent firm of
management compensation consultants. The range of Long-Term
Incentive Percentages was established with a goal of providing
long-term compensation opportunities to IFG's Senior Executives
competitive with those of the executives of other well-performing
regional brokerage firms. These percentages are reviewed
periodically by the Committee for appropriateness and
competitiveness and currently range from 8 to 20 percent of total
cash compensation.
An additional component of the IFG Long-Term Incentive Program is
the IFG Executive Deferred Compensation Plan (the "Deferred
Plan"). The Deferred Plan is a voluntary, non-tax-qualified,
deferred compensation plan that encourages IFG's Senior
Executives to invest their own capital in IFG Common Stock.
Under the Deferred Plan, each Senior Executive may elect, prior
to the beginning of a fiscal year, to defer up to 30 percent of
his or her discretionary bonus compensation for that year. The
deferred amount may be invested either in IFG Common Stock or in
an alternate fixed income investment, but the participating
Senior Executive will receive an employer-matching contribution
only on amounts invested in IFG Common Stock. For 1995, such
matching contribution was set at a level equal to 50 percent of
the deferred bonus amount. Participating Senior Executives vest
in these employer-matching contributions after four years of
continued service, subject to acceleration upon death, permanent
disability, retirement under certain conditions or a change in
control of IFG.
The Committee believes that the two components of IFG's Long-Term
Incentive Program described above have increased and will
continue to increase over time the levels of stock ownership of
IFG's Senior Executives, thus aligning the interests of those
persons who have the greatest ability to affect IFG's financial
results closely with the interests of IFG's stockholders. The
Committee also believes that significant levels of stock
ownership and ownership potential will assist IFG in retaining
the services of such Senior Executives.
Determination of 1995 Senior Executive Compensation
The Committee met three times in January and February 1996 to
determine annual discretionary bonuses and long-term incentive
compensation for the Senior Executives for 1995. In preparation
for these meetings, the Committee reviewed the overall
profitability, growth and financial performance of IFG, its
subsidiaries and their various business lines.
Chief Executive Officer Compensation. In determining Mr.
Weiser's bonus, the Committee reviewed four key factors it had
identified to measure profitability and growth. With respect to
profitability, the Committee reviewed IFG's 1995 earnings and
return on average equity; and with respect to growth, it reviewed
the three-year compounded growth rates in IFG's revenues and
stock price. The Committee then reviewed similar information for
the most recently available periods for a selected group of
publicly held regional brokerage firms believed by the Committee
and management of IFG to be comparable with IFG and its
significant subsidiaries. All of such firms are included in the
Regional Sub-Index of the Lipper Analytical Brokerage Stock Price
Index used in the Comparative Stock Performance graph appearing
on page 11. The Committee reviewed the overall performance of
IFG and its subsidiaries relative to the performance of such
other companies giving equal weight to all four of such factors.
The Committee also reviewed data from the most recent publicly
available proxy statements for certain of such comparable firms
in order to determine competitive compensation levels for other
chief executive and chief operating officers within the industry.
The Committee compared this information to the relative
performance of such firms based on the factors referred to above.
The Committee also compared the financial performance of IFG
during 1995 against the objectives set by management and the
Board of Directors at the beginning of the year. Based on this
information, the Committee determined a compensation range that
it believed fairly reflected IFG's overall and relative financial
performance and was reasonably competitive with other comparable
firms in the industry.
The Committee then reviewed the specific nonfinancial objectives
for IFG recommended by management and approved by the Board of
Directors at the beginning of the year. The Committee evaluated
Mr. Weiser's performance with respect to these and certain other
personal, nonfinancial objectives.
After consideration of all of the above financial and
nonfinancial performance factors, the Committee, in its
discretion, determined the amount of Mr. Weiser's annual bonus.
After approval of the bonus, the Committee determined Mr.
Weiser's stock option award level based on the application of his
Long-Term Incentive Percentage to his total cash compensation as
described above. The Committee determined to no longer grant
additional stock options to Mr. Weiser since the special grants
of the last several years had increased his level of potential
ownership to the desired level.
Compensation of Other Senior Executives. The Committee approved
individual bonus amounts for each of the Senior Executives other
than Mr. Weiser following a detailed presentation by Mr. Weiser
of his evaluation of each Senior Executive's individual,
departmental and company performance and his recommendation of a
bonus amount for each such Senior Executive. In developing his
evaluation of and bonus recommendations for the Senior
Executives, Mr. Weiser obtained advice from other appropriate
individuals, including, in particular, Mr. Appel with respect to
DBI Senior Executives. In reviewing departmental and company
financial performance for each of such Senior Executives, Mr.
Weiser looked to the key components of profitability and growth
identified by the Committee. He reviewed with the Committee
information concerning the revenues, contributions and profit
margins of each of the business lines over the prior three years,
and similar information available to the Company for a select
group of regional firms. Mr. Weiser also summarized for the
Committee the performance of each Senior Executive relative to
the financial and nonfinancial objectives established for such
Executive at the beginning of the year. The Committee was also
provided historical compensation information prepared by a third-
party organization for a group of 15 to 20 regional brokerage
firms, including the group of comparable publicly held regional
firms referred to above, for background on competitive salary
levels within the industry. With respect to Mr. Weiser and Mr.
Appel, the Committee also reviewed the more current publicly
available proxy statement information with respect to comparable
officers of the group of comparable publicly held regional firms.
After the Committee approved the Senior Executive bonus amounts,
stock option award levels were determined by application of the
applicable Long-Term Incentive Percentage to each Senior
Executive's total cash compensation as described above.
The Committee also reviews and approves the terms of specific
compensation arrangements being entered into by IFG and/or its
subsidiaries with certain individual Senior Executives. The terms
of Mr. Smith's severance agreement and the terms of Mr.
Fornetti's offer of employment, in each case as described more
fully below under "Other Executive Officer Compensation
Arrangements," were among the specific compensation arrangements
approved by the Committee during 1995. The Committee believes
such arrangements are consistent with IFG's overall compensation
philosophy.
Application of Section 162(m). Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code") generally limits
corporate deductions to $1,000,000 for compensation paid to each
named Senior Executive. Regulations under Section 162(m) permit
stock options to be excluded from compensation if certain
conditions are met. Because IFG's 1986 Stock Option Plan
satisfies, and the proposed IFG 1996 Stock Incentive Plan, if
approved by IFG's stockholders at the 1996 Annual Meeting of
Stockholders, will satisfy these conditions, and because of the
voluntary deferrals made pursuant to the IFG Executive Deferred
Compensation Plan, the Company does not anticipate that any named
Senior Executive will receive compensation during calendar 1996
which will exceed $1,000,000 for purposes of Section 162(m) of
the Code.
Arthur R. Schulze, Jr., Chairman
Susan S. Boren
Robert L. Ryan
Members of the Compensation and
Organization Committee
Other Executive Officer Compensation Arrangements
David A. Smith resigned as President and Chief Executive Officer
of RPR and as Executive Vice President and a member of the
Executive Committee of IFG effective September 30, 1995. Under
the terms of an agreement dated September 26, 1995, between Mr.
Smith and IFG, IFG agreed to pay Mr. Smith a bonus for 1995 of
$400,000. In addition, IFG agreed to pay Mr. Smith $200,000 per
year during each of 1996 and 1997 and $100,000 during 1998 in
exchange for (and conditioned upon) Mr. Smith's agreement not to
compete with IFG, directly or indirectly, through the close of
business on December 31, 1998 by (i) becoming employed or in any
manner affiliated with any of a list of specified brokerage firms
or any other firm engaging primarily in the general retail or
institutional investment banking or securities brokerage or
trading business in any state in which RPR maintains an office
(unless such firm's total revenues from all such activities do
not exceed $5 million) or (ii) assisting or encouraging any
employee or client of RPR to leave the firm or transfer or
materially reduce any investment account held with RPR. Mr.
Smith has the right to terminate his obligations under such non-
competition agreement for all or any portion of 1998 in exchange
for forfeiting a pro-rata portion of the $100,000 otherwise due
him for such year and a payment to IFG of an additional $100,000.
IFG may terminate the agreement upon a breach or violation of any
material obligation imposed by the agreement. IFG also agreed to
accelerate the vesting dates of certain unvested options Mr.
Smith held as of the date of his resignation. As a result of this
agreement, Mr. Smith became fully vested in options to purchase
29,910 shares of IFG Common Stock at prices ranging from $11.75
to $20.83 per share that otherwise would have vested in February
1996, and options to purchase 48,690 shares at prices ranging
from $13.50 to $20.83 per share that otherwise would have been
vested in February 1997. IFG also accelerated the expiration
dates on all outstanding options held by Mr. Smith (including
those for which the vesting dates were accelerated) to March 1,
1996.
Effective July 17, 1995, Louis C. Fornetti was named Executive
Vice President, Treasurer and Chief Financial Officer of IFG.
Under the terms of Mr. Fornetti's offer of employment, Mr.
Fornetti's annualized base salary was set at $175,000. Mr.
Fornetti was guaranteed a bonus of $400,000 for 1995 and a
minimum combined base and bonus compensation of $500,000 for
1996, assuming in each case that Mr. Fornetti is employed by IFG
at the time bonus payments are made and that he has performed in
a satisfactory and ethical manner. In addition, upon
commencement of his employment, Mr. Fornetti was granted 10-year,
non-qualified options to purchase 37,500 shares of IFG Common
Stock at a purchase price of $20.417 per share under the IFG 1986
Stock Option Plan and was issued 18,300 restricted shares of IFG
Common Stock. The options become vested 20 percent, an additional
30 percent and the remaining 50 percent on July 31 in each of
1997, 1998 and 1999, respectively, assuming Mr. Fornetti is
still employed on such dates. The restricted shares, which were
granted to compensate Mr. Fornetti for comparable long-term
incentive payments he would have been eligible to receive from
his former employer, become vested 50 percent on December 31 in
each of 1996 and 1997. The restricted shares are subject to
forfeiture in the event Mr. Fornetti resigns from or abandons his
position with IFG or is terminated by IFG for misconduct prior to
the vesting dates. The vesting of the restricted shares will be
accelerated in the event that, prior to the applicable vesting
dates, Mr. Fornetti dies or becomes disabled or his employment is
terminated by IFG for reasons other than misconduct, or there is
a change in control of IFG.
Mr. Spiker joined IFG as Senior Vice President and Director of
Strategic Planning and Corporate Development on February 1, 1994.
In January 1995, he was appointed Chief Executive Officer and
President of IFG Asset Management Services, Inc. ("AMS") and
became a member of IFG's Executive Committee. He continues to
serve as a Senior Vice President of IFG. Under the terms of Mr.
Spiker's offer of employment, he was guaranteed a total cash
compensation for 1994 of $300,000 assuming that certain
conditions were satisfied. In addition, Mr. Spiker was paid
$75,000 pursuant to a loan agreement that provides that IFG would
forgive such amount in equal installments of $25,000 on each of
March 1, 1995, 1996 and 1997 if he is still employed by IFG on
such dates. If Mr. Spiker ceases to be employed by IFG prior to
March 1, 1997, the remaining principal balance of the loan,
together with interest thereon, will become immediately due and
payable. Mr. Spiker was also granted 10-year, non-qualified
options under the IFG 1986 Stock Option Plan to purchase 6,000
shares of IFG Common Stock at a purchase price of $20.833 upon
commencement of his employment. Such options become vested 20
percent, an additional 30 percent and the remaining 50 percent on
February 1 in each of 1996, 1997 and 1998, respectively, assuming
Mr. Spiker is still employed as of such dates.
SUMMARY COMPENSATION TABLE
The following table summarizes, for each of the last three fiscal
years of IFG, the compensation paid to or earned by and awarded
to the Chief Executive Officer of IFG, each of the four other
most highly compensated executive officers of IFG serving at
December 31, 1995 and one former executive officer of IFG.
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
Securities All
Name & Res- Underlying Other
Principal tricted Options Compensa-
Positions Year Salary Bonus(1)(2) Stock /SARs(1) tion(3)
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Irving 1995 $250,000 $800,000 - 24,300 $167,338
Weiser,
Chairman,
Pres. &
CEO, IFG; 1994 250,000 525,000 - 49,500 105,688
Chairman &
CEO, DBI(4) 1993 250,000 950,000 - 60,000 173,946
John C.
Appel, 1995 $175,000 $625,000 - 13,900 $132,688
Pres. &
COO, DBI; 1994 175,000 425,000 - 33,000 77,457
Exec. VP,
IFG(4)(5) 1993 150,000 450,000 - 30,000 90,301
Louis C.
Fornetti, 1995 $73,580 $400,000 18,300 37,500 -
Exec. VP.,
Treas. 1994 - - - - -
& CFO,
IFG(6) 1993 - - - - -
Jerry W.
Hayes, 1995 $142,000 $258,000 - 4,600 $59,840
Chairman,
Pres. &
CEO, 1994 136,000 174,000 - 4,050 34,406
ROG(7) 1993 136,000 214,000 - 3,750 27,657
J. Scott
Spiker, 1995 $150,000 $225,000 - 4,300 $39,365
Pres. &
CEO, AMS; 1994 110,000 190,000 - 10,050 75,000
Sr. VP,
IFG(8) 1993 - - - - -
Former IFG Executive Officer:
David A.
Smith, 1995 $200,000 $400,000 - - $72,482
Chairman,
Pres. &
CEO, 1994 200,000 400,000 - 33,000 74,807
RPR;
Exec.VP,
IFG(9) 1993 200,000 825,000 - 45,300 169,564
</TABLE>
[FN]
(1) Awarded with respect to such year in January or February of
the following year. See "Report of Compensation Committee on
Executive Compensation - Compensation Philosophy." All options
are 10-year options, vesting over four years, having an exercise
price equal to the closing price per share of IFG Common Stock on
the date of grant as reported on the New York Stock Exchange.
The number of options shown as having been awarded in 1994 and
1993 have been adjusted to reflect a three-for-two split of IFG's
Common Stock effected December 20, 1995.
(2) For 1995, 1994 and 1993, respectively, includes the following
amounts voluntarily deferred by the following named executive
officers pursuant to the IFG Executive Deferred Compensation
Plan: Mr. Weiser, $240,000, $127,500 and $225,000; Mr. Appel,
$187,500, $127,500 and $135,000; Mr. Hayes, $77,400, $52,200 and
$64,200; Mr. Spiker (1995 only), $67,500; and Mr. Smith, $85,000,
$85,000 and $247,500. The IFG Executive Deferred Compensation
Plan is a voluntary non-tax-qualified, deferred compensation plan
in which the executive officers of IFG and certain other
managerial or highly compensated employees of IFG or its
subsidiaries (the "Senior Executives") may participate. Under
the IFG Executive Deferred Compensation Plan, each Senior
Executive may elect, prior to the beginning of a fiscal year, to
defer up to 30 percent of his or her discretionary bonus for that
year. The deferred amounts may be invested either in shares of
IFG Common Stock or in an alternate fixed income investment, but
the participating Senior Executive will only receive an employer-
matching contribution on amounts invested in shares of IFG Common
Stock. The employer-matching contribution was equal to 50
percent for 1995 and 33 1/3 percent for each of 1994 and 1993 of
the deferred amount. For 1995, each named executive officer
participating elected to have all deferred amounts invested in
shares of IFG Common Stock. Participants vest in employer-
matching contributions after four years and are immediately
vested with respect to deferred amounts. Messrs. Fornetti and
Spiker were not eligible to participate in the IFG Executive
Deferred Compensation Plan in 1995 and 1994, respectively.
(3) Represents for each of 1995, 1994 and 1993, respectively: (a)
contributions in the following aggregate amounts made during the
fiscal year ended December 31 by IFG and/or its subsidiaries
pursuant to the IFG Profit Sharing Plan, Stock Bonus Plan and
Deferred Compensation Plan for Excess Contributions: Mr. Weiser,
$47,338, $63,230 and $99,021; Mr. Appel, $38,938, $34,999 and
$45,346; Mr. Hayes, $21,140, $20,500 and $6,278; Mr. Spiker (1995
only), $5,615; and Mr. Smith, $29,982, $46,502 and $87,146; and
(b) matching contributions in the following amounts made by IFG
and/or its subsidiaries for such executives pursuant to the IFG
Executive Deferred Compensation Plan on bonus amounts earned by
such executives for the fiscal year ended December 31, but
voluntarily deferred: Mr. Weiser, $120,000, $42,458 and $74,925;
Mr. Appel, $93,750, $42,458 and $44,955; Mr. Hayes, $38,700,
$13,906 and $21,379; Mr. Spiker (1995 only), $33,750; and Mr.
Smith, $42,500, $28,305 and $82,418. Messrs. Fornetti and Spiker
were not eligible to participate in the IFG Profit Sharing Plan,
Stock Bonus Plan, Deferred Compensation Plan for Excess
Contributions or Executive Deferred Compensation Plan in 1995 and
1994, respectively.
Each of the IFG Profit Sharing Plan and Stock Bonus Plan is, and
the Deferred Compensation Plan for Excess Contributions was, a
broad-based plan in which all employees of IFG and its
subsidiaries may participate (subject to certain eligibility
requirements). Under the IFG Profit Sharing Plan, IFG and each
participating subsidiary annually contributes a percentage of
all participants' eligible compensation. The board of directors
of each company determines the level of such company's
contribution to such Plan, subject to a 3-percent minimum
contribution requirement. Such discretionary contributions for
all IFG companies equaled 4.6 percent, 5 percent and 8 percent of
all eligible compensation as defined for 1995, 1994 and 1993,
respectively. Under the IFG Stock Bonus Plan, participating
employees receive employer-matching contributions at a rate of 40
percent on voluntary, before-tax contributions of up to 5 percent
of their eligible compensation (subject to federal tax law
limitations) made by such employees to their accounts under the
Plan. Participants vest in employer contributions after five
years of continuous employment under the IFG Profit Sharing Plan,
Stock Bonus Plan and Deferred Compensation Plan for Excess
Contributions.
(4) Mr. Weiser also became acting President and Chief Executive
Officer of RPR effective October 1995 upon the resignation of Mr.
Smith, who formerly held such positions. Mr. Weiser served as
President and Chief Operating Officer of DBI until February 3,
1994, when Mr. Appel was named to such positions.
(5) Effective February 3, 1994, Mr. Appel was named President and
Chief Operating Officer of DBI and resigned his former positions
as Chief Financial Officer of each of IFG and DBI. Mr. Appel
remained an Executive Vice President and member of the Executive
Committee of IFG.
(6) Effective July 17, 1995, Mr. Fornetti was named Executive
Vice President, Treasurer and Chief Financial Officer of IFG.
For a description of certain compensation arrangements under the
terms of Mr. Fornetti's offer of employment, including the grant
of restricted shares of IFG Common Stock, see "Other Executive
Officer Compensation Arrangements" above.
(7) Mr. Hayes was named President and Chief Executive Officer of
IFG's operations and clearing subsidiary, Regional Operations
Group, Inc. ("ROG"), in May 1992. He became a member of the
Executive Committee of IFG effective January 1, 1995.
(8) Mr. Spiker joined IFG as Senior Vice President and Director
of Strategic Planning & Corporate Development on February 1,
1994. In January 1995, he was appointed Chief Executive Officer
and President of IFG Asset Management Services, Inc. ("AMS"), a
subsidiary of IFG. He continues to serve as a Senior Vice
President and a member of the Executive Committee of IFG. For a
description of certain compensation arrangements under the terms
of Mr. Spiker's offer of employment, see "Other Executive Officer
Compensation Arrangements" above.
(9) Mr. Smith resigned as President and Chief Executive Officer
of RPR and as Executive Vice President and a member of the
Executive Committee of IFG effective September 30, 1995. For a
description of certain compensation arrangements with Mr. Smith
under the terms of his severance agreement, see "Other Executive
Officer Compensation Arrangements" above.
OPTIONS AND STOCK APPRECIATION RIGHTS
The following tables summarize option grants made to the current
executive officers and former executive officer named in the
Summary Compensation Table with respect to the year ended
December 31, 1995, option exercises by such persons during the
year ended December 31, 1995, and the potential realizable value
of the options held by such persons at December 31, 1995. No
stock appreciation rights ("SARs") have been granted to any of
the named persons.
<TABLE>
Option/SAR Grants With Respect to
Year Ended December 31, 1995
<CAPTION>
% of Totals
Options/SARs
Granted Potential Realizable
to Value At Assumed
Number of Emplo- Annual Rates of Stock
Securities yees Exercise Price Appreciation
Underlying With or Base for Option Term(2)
Options Respect Price Expir-
/SARs to <per ation 5% 10%
Name Granted(1) 1995 share)(1) Date ($36.45) ($58.03)
- ------- ---------- ---- --------- ---- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Irving
Weiser 24,300 12.1% $22.375 2/7/2006 $342,023 $866,417
John C.
Appel 13,900 6.9% $22.375 2/7/2006 $195,643 $495,605
Louis C.
Fornetti 37,500 18.7% $20.417 7/31/2005 $481,613 $1,220,363
Jerry W.
Hayes 4,600 2.3% $22.375 2/7/2006 $64,745 $164,013
J. Scott
Spiker 4,300 2.1% $22.375 2/7/2006 $60,523 $153,317
Former IFG Executive Officer:
David A.
Smith - - - - - -
</TABLE>
[FN]
(1) All of these options were granted on February 7, 1996, based
upon 1995 performance, except for 37,500 shares granted to Mr.
Fornetti on July 31, 1995, in connection with the commencement of
his employment by IFG. See "Report of Compensation Committee on
Executive Compensation - Compensation Philosophy" and "Other
Executive Officer Compensation Arrangements." All such options
become exercisable as follows: 20 percent of such option shares
on the second anniversary of the date of grant; an additional 30
percent of such option shares on the third anniversary of the
date of grant; and the remaining 50 percent of such option shares
on the fourth anniversary of the date of grant. All options were
granted with an exercise price equal to the closing price per
share of IFG's Common Stock on the date of grant as reported on
the New York Stock Exchange. All share amounts and per-share
exercise prices shown have been adjusted to reflect the three-
for-two split of IFG's Common Stock effected December 20, 1995.
(2) The "potential realizable value" shown represents the
potential gains based on annual compound stock price appreciation
of 5 percent and 10 percent from the date of grant through the
full 10-year option term. The amount in parentheses indicates
what the price would be for one share of IFG Common Stock at the
end of such 10-year period for the options granted February 7,
1996, at such rates of appreciation. With respect to the options
granted to Mr. Fornetti on July 31, 1995, the value of one share
of IFG Common Stock at the end of such 10-year period at such
assumed rates of appreciation would be $33.26 and $52.96,
respectively. The amounts given represent assumed rates of
appreciation only. Actual gains, if any, on option exercises
will depend on future performance of the IFG Common Stock and
overall stock market conditions. There can be no assurance that
the amounts reflected in this table will be achieved.
<TABLE>
Aggregate Option/SAR Exercises
In Year Ended December 31, 1995ts
and Value of Options/SARs Held at
December 31, 1995
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Securities Options/
Underlying SARs at
Options/ December 31,
SARs Held at 1995
Shares December 31 1995 (Exercisable
Acquired on Value (Exercisable/ /Unexercis-
Name Exercise(1) Realized(2) Unexercisable)(3) able)(2)(3)
- ------ ----------- ----------- ---------------- ------------
(s> <C> <C> <C> <C>
Irving
Weiser 6,000 $97,500 96,750/134,250 $1,409,810/$1,109,970
John C.
Appel 5,100 $76,500 25,950/69,450 $300,916/$563,057
Louis C.
Fornetti - - -/37,500 -/$181,238
Jerry W.
Hayes - - 9,600/8,400 $132,928/$67,252
J. Scott
Spiker - - 1,200/8,850 -/$59,340
Former IFG Executive Officer:
David A.
Smith 131,250 $1,422,565 -/- -/-
</TABLE>
[FN]
(1) All share amounts have been adjusted to reflect the three-
for-two split of IFG's Common Stock effected December 20, 1995.
(2) "Value" has been determined based upon the difference between
the per-share option exercise price and the closing price per
share of IFG Common Stock as reported on the New York Stock
Exchange on the date of exercise or December 31, 1995.
(3) Does not include the number or value of unexercisable options
granted subsequent to December 31, 1995, included in the Option
Grant table above.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total stockholder return
on IFG's Common Stock for the last five fiscal years with the
cumulative total return on the S&P 500 Index and the Regional
Sub-Index of the Lipper Analytical Brokerage Stock Price Index
over the same period (assuming the investment of $100 in each on
December 31, 1990, and the reinvestment of all dividends).
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
IFG $100.00 $337.49 $363.65 $573.54 $473.24 $815.05
Regional 100.00 263.49 294.44 386.88 327.75 467.13
S&P 500
Index 100.00 130.40 140.32 154.25 156.28 214.93
</TABLE>
(1) Total return calculations on the S&P 500 Index were performed
by Standard & Poor's Compustat Services, Inc.
(2) Total return calculations on the Regional Sub-Index of the
Lipper Analytical Brokerage Stock Price Index were performed by
Lipper Analytical Securities Corporation. This index is composed
of 15 publicly held regional securities firms, including IFG, and
has been weighted based upon the market capitalizations of such
firms in accordance with Securities and Exchange Commission
rules.
COMPENSATION OF DIRECTORS
IFG's non-employee director compensation currently consists of
(a) base compensation in the amount of $15,000 per year; (b) $500
for attendance at each Board of Directors or Committee meeting;
(c) an additional $1,500 per year for each of the chairman of the
Audit Committee and the chairman of the Compensation and
Organization Committee; and (iv) per diem compensation of $500
per half day or $1,000 per whole day for significant additional
time spent on Company matters beyond the scope of normal
preparation for and attendance at Board and Committee meetings.
In addition, in order to provide additional incentive for its
non-employee directors to serve for significant periods, IFG has
entered into retirement agreements with each of such directors.
Such agreements provide that, upon retirement from the Board
after at least five years of service as a director, a non-
employee director will be paid an annual retainer fee for the
number of years served (up to a maximum of ten years). The
amount of the retainer is determined by multiplying the annual
base compensation rate in effect at the time of retirement by a
percentage equal to 10 percent for each fiscal year served (up to
a maximum of ten years).
Pursuant to the now expired IFG 1986 Stock Option Plan, each non-
employee director of IFG was also automatically granted, upon
election or reelection to IFG's Board of Directors, a five-year,
non-qualified option to purchase 2,000 shares of IFG's Common
Stock which vested in full six months after the date of grant.
Such options were granted with an exercise price equal to the
closing price per share of IFG Common Stock as reported on the
New York Stock Exchange on the date of grant. The number of
shares to be received upon exercise and the per- share exercise
price of all such options outstanding on December 20, 1995, were
adjusted in accordance with their terms to reflect the three-for-
two split of IFG's Common Stock effected on such date. Under the
terms of the IFG 1996 Stock Incentive Plan, each non-employee
director of IFG will automatically be granted, upon each election
or reelection to IFG's Board of Directors, a five-year, non-
qualified option to purchase 2,000 shares of IFG's Common Stock,
which will become vested in full six months after the date of
grant. Such options will be granted with an exercise price equal
to the closing price per share of IFG Common Stock as reported on
the New York Stock Exchange on the date of grant. See "Proposal
2 - Approval of IFG 1996 Stock Incentive Plan."
Additionally, pursuant to the IFG Restricted Stock Plan for Non-
Employee Directors (the "Restricted Stock Plan") approved by
IFG's stockholders in 1994, non-employee directors have been
offered the opportunity to elect to receive restricted shares of
IFG Common Stock in lieu of all or 50 percent of the $15,000
annual base compensation referred to above. Directors who have
elected to participate in the Plan received restricted shares of
IFG Common Stock having a market value, based on the closing sale
price per share of IFG Common Stock on the New York Stock
Exchange on the date of grant, equal to 110 percent of the base
compensation foregone. The Restricted Stock Plan provides for
vesting of such restricted shares over a five-year period, as
follows: 20 percent on the third anniversary of the annual
meeting with respect to which the director has made the election;
an additional 30 percent on the fourth anniversary of such date;
and the remaining 50 percent on the fifth anniversary of such
date. Such shares also vest automatically if the participating
director dies, becomes permanently disabled or retires in
accordance with IFG's then current Board retirement policy. Upon
approval of the 1996 Stock Incentive Plan by IFG's stockholders,
the Restricted Stock Plan will be merged into the 1996 Stock
Incentive Plan. The 1996 Stock Incentive Plan will likewise offer
non-employee directors the opportunity to elect to receive
restricted shares of IFG Common Stock in lieu of all or 50
percent of the $15,000 annual base compensation referred to
above. Such shares would also have a market value on the date of
grant equal to 110 percent of the compensation foregone, however,
all such shares would become fully vested on the first
anniversary of the date of grant rather than from three to five
years after the date of grant as provided under the Restricted
Stock Plan. Such vesting would also be accelerated in the event
the participating director dies, becomes disabled or retires in
accordance with IFG's then current Board retirement policy or
upon a change in control of IFG. See "Proposal 2 - Approval of
1996 Stock Incentive Plan."
CERTAIN TRANSACTIONS
DBI and RPR are broker-dealers who extend credit from time to
time under Federal Reserve Regulation T to certain of IFG's
directors and executive officers and members of their immediate
families. All such loans are made in the ordinary course of
business and on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for
comparable transactions with other persons and do not involve
more than normal risk of collectability or present other
unfavorable features.
Under the terms of Mr. Spiker's offer of employment, he was paid
$75,000 pursuant to a loan agreement providing that $25,000 of
such amount will be forgiven on each of March 1, 1995, 1996 and
1997, if he is still employed on such dates. See "Other Executive
Officer Compensation Arrangements."
Proposal 2 - Approval of IFG 1996 Stock Incentive Plan
The Board of Directors, upon the recommendation of the
Compensation and Organization Committee, approved the adoption of
the IFG 1996 Stock Incentive Plan (the "Plan") effective as of
March 22, 1996, subject to the approval of the Plan by IFG's
stockholders at the 1996 Annual Meeting. The following is a
description of the material terms and conditions of the Plan.
Copies of the Plan may be obtained, without charge, upon request
to Carla J. Smith, the Secretary of IFG, at IFG's principal
executive offices, Dain Bosworth Plaza, 60 South Sixth Street,
P.O. Box 1160, Minneapolis, MN 55440-1160, and will also be
available for inspection at the 1996 Annual Meeting of
Stockholders.
The purpose of the Plan is to promote the interests of IFG and
its stockholders by aiding IFG in attracting and retaining
management personnel and non-employee directors capable of
providing strategic direction to, and assuring the future success
of, IFG. Awards under the Plan will offer such personnel and
directors and other employees as determined by the Committee from
time to time incentives to put forth maximum efforts for the
success of IFG's business and an opportunity to acquire a
proprietary interest in IFG, thereby aligning their interests
with the interests of IFG's stockholders. These goals are
consistent with the principles of IFG's executive compensation
program described above in "Report of Compensation Committee on
Executive Compensation." If approved by IFG's stockholders, the
Plan will become an important component of that program. The Plan
replaces the IFG 1986 Stock Option Plan, which terminated by its
terms on February 11, 1996. As described below under "Non-
Employee Directors - Merger of Restricted Stock Plan," the Plan
will also supersede the Restricted Stock Plan.
Administration
With the exception of the provisions applicable to non-employee
directors, which are discussed below, the Plan is administered by
the Compensation and Organization Committee of the Board of
Directors (the "Committee"). The Committee has the authority to
select the individuals to whom awards are granted, to determine
the types of awards to be granted and the number of shares of
IFG's Common Stock covered by such awards, to set the terms and
conditions of such awards, and to determine whether the payment
of any amounts received under any award shall or may be deferred.
The Committee has the authority to establish rules for the
administration of the Plan; determinations and interpretations
with respect to the Plan are at the sole discretion of the
Committee, whose determinations and interpretations are binding
on all interested parties. The Committee may delegate its powers
and duties under the Plan to one or more officers with respect to
individuals who are not subject to Section 16 of the Exchange
Act; provided, however, that the Committee may not delegate any
of its powers and duties under the Plan in such a manner as would
fail to comply with any of the requirements of Section 162(m) of
the Code.
Eligible Participants
Any employee, officer, consultant or independent contractor of
IFG and its affiliates selected by the Committee is eligible to
receive an award under the Plan. The Plan will be used to grant
options to Senior Executives under the IFG Long-Term Incentive
Program and will become a central component of such program. See
"Report of Compensation Committee on Executive Compensation -
Compensation Philosophy" above. The Plan is also intended to be
used to grant options to other employees of IFG and its
subsidiaries pursuant to award programs such as the IFG 1% Club
and as otherwise determined from time to time by the Committee.
The Plan will also be used to grant options automatically to non-
employee directors upon each election or reelection to the Board
and to grant restricted shares of IFG Common Stock to non-
employee directors electing to receive such shares in lieu of all
or 50 percent of the base compensation otherwise payable to such
director, in each case as described under "Non-Employee
Directors" below. The amount, type and recipients of awards under
the Plan, other than awards automatically granted or offered to
non-employee directors, have not yet been determined.
Terms of the Plan
The Plan permits the granting of a variety of different types of
awards: (a) stock options, including incentive stock options
meeting the requirements of Section 422 of the Code, and stock
options that do not meet such requirements (non-qualified stock
options); (b) stock appreciation rights (SARs); (c) restricted
stock and restricted stock units; (d) performance awards; (e)
dividend equivalents; (f) other stock grants; and (g) other
awards valued in whole or in part by reference to or otherwise
comprised of or based upon IFG's Common Stock ("other stock-based
awards"). Awards may be granted alone, in addition to, in tandem
with, or in substitution for any other award granted under the
Plan or any other plan. Awards may be granted for no cash
consideration or for such minimal cash consideration as may be
required by applicable law. Awards may provide that upon the
grant or exercise thereof the holder will receive cash, shares of
Common Stock or other securities, awards or property, or any
combination thereof, as the Committee shall determine. The
exercise price per share under any stock option, the grant price
of any SAR, and the purchase price of any security which may be
purchased under any other stock-based award under the Plan may
not be less than 100 percent of the fair market value of IFG's
Common Stock on the date of the grant of such option, SAR or
other stock-based award. Determinations of fair market value
under the Plan are made in accordance with methods and procedures
established by the Committee.
Options may be exercised by payment in full of the exercise
price, either in cash or, at the discretion of the Committee, in
whole or in part by the tendering of shares of Common Stock or
other consideration having a fair market value on the date the
option is exercised equal to the exercise price. The Plan
provides that the Committee may grant "reload options,"
separately or together with another option, and may establish the
terms and conditions of such reload options. Pursuant to a
reload option, the optionee would be granted a new option when
the payment of the exercise price of the option to which such
reload option relates is made by using shares of Common Stock
owned by the optionee. The new option granted upon such exercise
would be an option to purchase the number of shares not exceeding
the sum of (a) the number of shares of Common Stock tendered as
payment upon the exercise of the option to which such reload
option relates and (b) the number of shares of Common Stock
tendered or withheld as payment of the amount to be withheld
under applicable tax laws in connection with the exercise of the
option to which such reload option relates. Reload options may
be granted with respect to options previously granted under the
Plan or any other stock option plan of IFG, and may be granted in
connection with any option granted under the Plan or any other
such plan at the time of such grant. Such reload options shall
have a per-share exercise price equal to the fair market value as
of the date of grant of the new option. Any such reload option
shall be subject to availability of sufficient shares for grant
under the Plan. Shares surrendered as part or all of the
exercise price of the option to which it relates that have been
owned by the optionee less than six months will not be counted
for purposes of determining the number of shares that may be
purchased pursuant to a reload option.
The holder of an SAR is entitled to receive the excess of the
fair market value (calculated as of the exercise date or, if the
Committee shall so determine, as of anytime during a specified
period before or after the exercise date) of a specified number
of shares over the grant price of the SAR.
Shares of restricted stock and restricted stock units will be
subject to such restrictions as the Committee may impose
(including any limitations on the right to vote or the right to
receive dividends), which restrictions may lapse separately or in
combination at such time or times, in such installments or
otherwise as the Committee may determine. Restricted stock may
not be transferred by the holder until the restrictions
established by the Committee lapse. Holders of restricted stock
units have the right, subject to any restrictions imposed by the
Committee, to receive unrestricted shares of Common Stock at some
future date. Upon termination of the holder's employment during
the restriction period, restricted stock and restricted stock
units are forfeited, unless the Committee determines otherwise.
Performance awards provide the holder thereof the right to
receive payments, in whole or in part, upon the achievement of
such goals during such performance periods as the Committee shall
establish. A performance award granted under the Plan may be
denominated or payable in cash, shares of Common Stock or
restricted stock or restricted stock units, or other securities,
awards or property. Dividend equivalents entitle the holder
thereof to receive payments (in cash, shares or otherwise, as
determined by the Committee) equivalent to the amount of cash
dividends with respect to a specified number of shares. The
Committee is also authorized to establish the terms and
conditions of other stock and stock-based awards.
Restrictions on Awards and Transfers
Under the Plan, no person who is an employee of IFG at the time
of grant may be granted any award or awards, the value of which
is or are based solely on an increase in the value of shares of
IFG Common Stock after the date of grant, of more than 150,000
shares, in the aggregate, in any calendar year. The foregoing
annual limitation specifically includes the grant of any awards
representing "qualified performance-based compensation" within
the meaning of Section 162(m) of the Code.
No award granted under the Plan may be assigned, transferred,
pledged or otherwise encumbered by the individual to whom it is
granted, otherwise than by will or the laws of descent and
distribution, except that the Committee may permit the
designation of a beneficiary. Each award is exercisable, during
such individual's lifetime, only by such individual, or, if
permissible under applicable law, by such individual's guardian
or legal representative.
The aggregate number of shares of IFG's Common Stock which may be
issued under all awards granted under the Plan is 3,000,000
(subject to adjustment as described below). If any shares of
Common Stock subject to any award or to which an award relates
are not purchased or are forfeited, or if any such award
terminates without the delivery of shares, the shares previously
set aside for such awards will be available for future awards
under the Plan. Notwithstanding the foregoing, the total number
of shares of Common Stock that may be purchased upon exercise of
incentive stock options granted under the Plan may not exceed
3,000,000, subject to adjustment as described below and in
Section 422 or 424 of the Code or any successor provision.
Shares relating to awards which allow the holder to receive or
purchase shares will be counted against the aggregate number of
shares available for granting awards under the Plan.
If any dividend or other distribution, recapitalization, stock
split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or
exchange of shares of Common Stock or other securities of IFG,
issuance of warrants or other rights to purchase shares of Common
Stock or other securities of IFG, or other similar corporate
transaction or event affects the shares of Common Stock so that
an adjustment is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan, the Committee shall, in such
manner as it deems equitable, adjust any or all of (a) the number
and type of shares (or other securities or property) which
thereafter may be made the subject of awards, (b) the number and
type of shares (or other securities or property) subject to
outstanding awards and (c) the exercise price with respect to any
award.
Termination
The Plan terminates on March 21, 2006, and no awards may be made
after that date. However, unless otherwise expressly provided in
the Plan or an applicable award agreement, any award granted may
extend beyond the end of such period.
Amendment
The Board of Directors may amend, alter or discontinue the Plan
at any time, provided that stockholder approval must be obtained
for any such action that, absent such stockholder approval, would
(a) cause Rule 16b-3 under the Exchange Act to become unavailable
with respect to the Plan; (b) violate the rules or regulations of
the New York Stock Exchange or any other securities exchange on
which IFG's Common Stock may then be listed, or any rules or
regulations of the National Association of Securities Dealers,
Inc. or other self-regulatory body applicable to IFG; or (c)
cause IFG to be unable, under the Code, to grant incentive stock
options under the Plan. The Committee may correct any defect,
supply any omission, or reconcile any inconsistency in the Plan
or any award agreement in the manner and to the extent it shall
deem desirable to carry the Plan into effect. The Committee may
waive any condition of or any rights of IFG under any outstanding
award other than any award of a non-qualified option or
restricted stock to a non-employee director, prospectively or
retroactively, but the Committee may not amend or terminate any
outstanding award, prospectively or retroactively, without the
consent of the holder or beneficiary of the award.
The closing price per share of IFG's Common Stock on March 13,
1996, as reported on the New York Stock Exchange, was $21.
Non-employee Directors
Automatic Option Grants. If the Plan is approved by IFG's
stockholders, each non-employee director will automatically be
granted upon each election or reelection to IFG's Board of
Directors a non-qualified option to purchase 2,000 shares of
Common Stock at an exercise price equal to 100 percent of the
fair market value per share on the date of grant. Such options
shall become vested in full six months after the date of grant
and shall terminate on the fifth anniversary of the date of
grant.
Merger of Restricted Stock Plan. If the Plan is approved by IFG's
stockholders, IFG will merge the Restricted Stock Plan into the
Plan. The Restricted Stock Plan, which was approved by IFG
stockholders in 1994, currently permits and, if approved by
IFG's stockholders, the Plan will permit non-employee directors
to irrevocably elect, once per year, to receive, in lieu of 50
percent or 100 percent of the annual cash base compensation such
director would otherwise be entitled to receive for serving on
IFG's Board of Directors for the year, restricted shares of IFG's
Common Stock having a market value on the date of grant (based
upon the closing price per share as reported on the New York
Stock Exchange) equal to 110 percent of the base compensation
foregone, rounded up to the nearest whole number of shares.
Restricted shares issued pursuant to the Restricted Stock Plan
vest 20 percent , an additional 30 percent and the remaining 50
percent on each of the third, fourth and fifth anniversaries of
the date of grant. Restricted shares issued pursuant to the Plan
will vest 100 percent on the first anniversary of the date of
grant. The proposed reduction in the vesting period would enable
participating non-employee directors to obtain unrestricted
shares after one year rather than over a three- to five-year
period as provided in the Plan, but would deny them the ability
to defer the recognition of ordinary income for such three- to
five-year period (see "Federal Tax Consequences").
Elections by non-employee directors to receive restricted shares
in lieu of fees under either the Restricted Stock Plan or the
Plan may be made annually and must be made at least six months
prior to the annual meeting of stockholders at which such non-
employee director is elected in order to qualify for certain
transaction exemptions under the federal securities laws.
Restricted shares to be issued pursuant to irrevocable elections
made by Mr. Schulze to receive restricted shares in even lieu of
100 percent and Ms. Boren to receive restricted shares in lieu of
50 percent of base compensation otherwise payable for service on
IFG's Board during 1996 will be issued pursuant to and contain
the reduced vesting provision set forth in the Plan. IFG may
either issue new shares of Common Stock or purchase shares of
Common Stock in the open market to fulfill the requirements of
the Plan.
Certificates representing shares of restricted stock granted to
participating non-employee directors will be issued as of the
date of the annual meeting of IFG's stockholders in advance of
which a deferral election has been made in the name of each
electing non-employee director with appropriate legends
concerning applicable restrictions and will be held by IFG until
such restrictions have been satisfied or the shares have been
forfeited. Restricted stock granted to any participating non-
employee director under the Plan shall be subject to forfeiture
until vested. Except as otherwise provided in the Plan, a
participating non-employee director will have all voting,
dividend, liquidation and other rights with respect to restricted
stock issued to the participating non-employee director under the
Plan as if such participating non-employee director were a holder
of record of unrestricted shares; provided that, if any dividend
is declared and paid by IFG in any form other than cash, such
non-cash dividend shall be subject to the same vesting schedule,
forfeiture terms and transferability restrictions as are
applicable to the restricted stock on which such dividends were
paid.
Except as otherwise set forth below, the holder of restricted
stock may not sell, transfer, pledge, subject to lien, assign or
otherwise hypothecate such restricted stock until vested.
Restricted stock granted under the Plan shall be entirely
forfeited (but any cash dividends previously paid with respect
thereto shall be retained by the non-employee director) in the
event that the participating non-employee director ceases to be a
director for any reason other than as set forth below prior to
becoming fully vested. A breach by a non-employee director of the
terms and conditions of the Plan shall cause a forfeiture of all
restricted stock which has not vested as of the date of such
breach.
All restrictions on restricted stock issued to a non-employee
director under the Plan lapse upon the earliest to occur of the
following: (i) the first anniversary of the date of grant; (ii)
the date of the holder's death or disability; (iii) the date on
which the holder retires from the Board of Directors in
accordance with IFG's then current Board retirement policy; or
(iv) the tenth day following the date on which a "Change of
Control" has occurred. "Change of Control" events include: (a) a
person or group becoming the beneficial owner of 35 percent or
more of the voting power of all of the outstanding IFG voting
securities; (b) IFG's stockholders having approved either a
merger in which IFG is not the surviving entity, a sale of all or
substantially all of IFG's assets, or a plan of liquidation or
dissolution of IFG; (c) the directors who are unaffiliated with
an "Acquiring Person" (as defined in the Plan) and who were
members of the Board of Directors at the time the Plan was
adopted, or were nominated by such directors (collectively, the
"Continuing Directors"), are no longer a majority of the Board;
or (d) a majority of Continuing Directors determine, in their
sole discretion, that there has been a change of control of IFG.
Upon the lapsing of the restrictions on any shares of restricted
stock, such shares will become unrestricted shares vested in the
participating non-employee director, and any legends regarding
the restrictions affixed to the certificates representing such
shares will be removed. A participating non-employee director is
entitled to request delivery of the certificate or certificates
representing such unrestricted shares at any time after such
vesting has occurred. IFG will cause delivery of such certificate
or certificates to be made as soon as practicable after the
lapsing of all restrictions. A participating non-employee
director will be entitled to designate a beneficiary to receive
the restricted stock that has vested upon such director's death.
In the event of a participating non-employee director's death,
payment of any amounts due under the Plan will be made to such
director's legal representatives.
Federal Tax Consequences
The following is a summary of the principal federal income tax
consequences generally applicable to awards under the Plan.
The grant of an option or SAR is not expected to result in any
taxable income to 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 IFG will
not be entitled to a tax deduction when an incentive stock option
is exercised. Upon exercising a non-qualified 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 IFG will be
entitled at that time to a tax deduction in the same amount.
Upon exercising a SAR, the amount of any cash received and the
fair market value on the exercise date of any shares of Common
Stock received are taxable to the recipient as ordinary income
and deductible by IFG. The tax consequence to an optionee upon a
disposition of shares acquired through the exercise of an option
or SAR 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 non-qualified stock option or
SAR. Generally, there will be no tax consequence to IFG in
connection with disposition of shares acquired under an option,
except that IFG may be entitled to a tax deduction in the case of
a disposition of shares acquired under an incentive stock option
before the applicable incentive stock option holding periods set
forth in the Code have been satisfied.
With respect to other awards granted under the Plan that are
payable either in cash or shares of Common Stock that are either
transferable or not subject to substantial risk of forfeiture,
the holder of such an award must recognize ordinary income equal
to the excess of (a) the cash or the fair market value of the
shares of Common Stock received (determined as of the date of
such receipt) over (b) the amount (if any) paid for such shares
of Common Stock by the holder of the award, and IFG will be
entitled at that time to a deduction for the same amount. With
respect to shares of restricted stock awarded to participating
non-employee directors in lieu of base compensation and any other
award that is payable in shares of Common Stock that are
restricted as to transferability and subject to substantial risk
of forfeiture, unless a special election is made pursuant to the
Code, the holder of the award must recognize ordinary income
equal to the excess of (i) the fair market value of the shares of
Common Stock received (determined as of the first time the shares
become transferable or not subject to substantial risk of
forfeiture, whichever occurs earlier) over (ii) the amount (if
any) paid for such shares of Common Stock by the holder, and IFG
will be entitled at that time to a tax deduction in the same
amount.
Special rules may apply in the case of individuals subject to
Section 16 of the Exchange Act. In particular, unless a special
election is made pursuant to the Code, shares received pursuant
to the exercise of a stock option or SAR may be treated as
restricted as to transferability and subject to a substantial
risk of forfeiture for a period up to six months after the date
of exercise. Accordingly, the amount of any ordinary income
recognized, and the amount of IFG's tax deduction, are determined
as of the end of such period.
Under the Plan, the Committee may permit participants (other than
non-employee directors) receiving or exercising awards, subject
to the discretion of the Committee and upon such terms and
conditions as it may impose, to surrender shares of Common Stock
(either shares received upon the receipt or exercise of the award
or shares previously owned by the optionee) or other property to
IFG to satisfy federal and state tax obligations. In addition,
the Committee may grant, subject to its discretion and such rules
as it may adopt, a bonus to a participant in order to provide
funds to pay all or a portion of federal and state taxes due as a
result of the receipt or exercise of (or lapse of restrictions
relating to) an award. The amount of any such bonus will be
taxable to the participant as ordinary income, and IFG will have
a corresponding deduction equal to such amount (subject to the
usual rules concerning reasonable compensation).
Board Recommendation
The Board of Directors recommends a vote FOR Proposal 2 to adopt
the IFG 1996 Stock Incentive Plan. The affirmative vote of a
majority of the shares of IFG Common Stock present and entitled
to vote at the 1996 Annual Meeting is necessary to approve
Proposal 2. Proxies will be voted in favor of Proposal 2 unless
otherwise specified. If an executed proxy card is returned and
no instruction is given, the shares of IFG Common Stock
represented by such proxy will be voted in favor of Proposal 2.
If an executed proxy card is returned and the stockholder has
abstained from voting on Proposal 2, the shares of IFG Common
Stock represented by such proxy will be considered present at the
meeting for purposes of determining a quorum and for purposes of
calculating the vote with respect to Proposal 2, but will not be
considered to have been voted in favor of Proposal 2. If an
executed proxy is returned by a broker holding shares in street
name and the broker does not vote with respect to Proposal 2
because the beneficial owner of the shares represented by such
proxy has not given the broker authority to do so, such shares
will be considered present at the meeting for purposes of
determining a quorum, but will not be considered to be
represented at the meeting for purposes of calculating the vote
with respect to Proposal 2.
Proposal 3 - Approval of Amendment to Restated Certificate of
Incorporation to Increase Authorized Common Stock
The IFG Board of Directors has determined that Article Fourth of
IFG's Restated Articles of Incorporation should be amended and
has voted to submit an amendment to IFG's stockholders for
adoption. The proposed amendment to Article Fourth would
increase the number of authorized shares of Common Stock, par
value $.125, from 20,000,000 to 30,000,000 and the total number
of shares of stock which IFG has the authority to issue from
22,501,940 to 32,501,940.
As of March 13, 1996, there were 12,093,319 shares of Common
Stock outstanding, 159,000 shares reserved for future issuance
pursuant to the IFG Stock Bonus Plan, 2,198,309 shares reserved
for future issuance upon exercise of options granted under the
IFG 1986 Stock Option Plan and 148,558 shares reserved for
future issuance pursuant to the Restricted Stock Plan. As of
March 13, 1996, there were no shares of any class of Preferred
Stock outstanding.
The additional shares of Common Stock for which authorization is
sought would be a part of the existing class of Common Stock and,
if and when issued, would have the same rights and privileges as
the shares of Common Stock presently outstanding. Such
additional shares would not (and the shares of Common Stock
presently outstanding do not) entitle the holders thereof to
preemptive or cumulative voting rights.
Purposes and Effects of the Amendment
The Board of Directors believes that additional authorized shares
of Common Stock will enable IFG to issue additional shares of
Common Stock pursuant to the proposed IFG 1996 Stock Incentive
Plan and to take timely advantage of market conditions and the
availability of favorable financing and acquisition opportunities
without the delay and expense associated with convening a special
stockholders' meeting (unless otherwise required by the rules of
any stock exchange on which IFG's Common Stock may then be
listed). The shares of Common Stock could be used for the grant
of stock options, acquisition by IFG of businesses or properties,
equity financing, stock dividends and other general corporate
purposes.
Unless required by law or by the rules of any stock exchange on
which IFG's Common Stock may in the future be listed, no further
authorized vote by the stockholders will be sought for any
issuance of shares of Common Stock. Under existing New York
Stock Exchange, Inc. regulations, approval by a majority of the
holders of Common Stock would nevertheless be required in
connection with any transaction or series of related transactions
that would result in the original issuance of additional shares
of Common Stock, other than in a public offering for cash, (a) if
such additional shares of Common Stock (including securities
convertible into or exercisable for Common Stock) has, or will
have upon issuance, voting power equal to or in excess of 20
percent of the voting power outstanding before the issuance of
the Common Stock; (b) if the number of such additional shares of
Common Stock is or will be equal to or in excess of 20 percent
of the number of shares of Common Stock outstanding before the
issuance of such additional shares; or (c) if the issuance would
result in a change in control of IFG.
Although the increase in authorized but unissued shares of Common
Stock is designed to enable IFG to grant stock options under the
IFG 1996 Stock Incentive Plan, to consider potential acquisitions
and to use for general corporate purposes, the increase in the
authorized but unissued shares of Common Stock could make a
change in control of IFG more difficult to achieve. Under
certain circumstances, such shares of Common Stock could be used
to create voting impediments to frustrate persons seeking to
effect a takeover or otherwise gain control of IFG. Such shares
could be sold privately to purchasers who might side with the
Board of Directors in opposing a takeover bid that the Board
determines is not in the best interests of IFG and its
stockholders.
The amendment also may have the effect of discouraging an attempt
by another person or entity, through acquisition of a substantial
number of shares of Common Stock, to acquire control of the
Company with a view to effecting a merger, sale of assets or a
similar transaction, since the issuance of new shares could be
used to dilute the stock ownership of such person or entity.
IFG's Restated Certificate of Incorporation currently requires a
two-thirds vote in order to approve certain business combinations
involving IFG and an interested stockholder of IFG. Although the
Board of Directors presently has no intention of doing so, shares
of authorized but unissued Common Stock could be issued to a
holder who would thereby have sufficient voting power to assure
that any such business combination or amendment to the Restated
Certificate of Incorporation would not receive the two-thirds
stockholder vote required for approval thereof. See "Security
Ownership of Certain Beneficial Owners and Management." The
issuance of additional shares of Common Stock may be used to
discourage takeovers that are not approved by the Board but in
which stockholders may receive a substantial premium above market
value for some or all of their shares at the time a tender offer
is made. Thus, stockholders who may wish to participate in such
a tender offer may be restricted in their opportunity to do so.
In addition, because the proposed amendment may enable IFG to
discourage tender offers, the amendment may make removal of the
Board of Directors or management more difficult. To the extent
that the adoption of the proposed amendment renders less likely a
merger or other transaction opposed by IFG's incumbent Board of
Directors, the effect of such adoption may be to assist the Board
of Directors and management in retaining their current positions.
Board Recommendation
The Board of Directors recommends a vote FOR Proposal 3 to amend
the IFG Restated Certificate of Incorporation to increase the
number of authorized shares of Common Stock. The affirmative
vote of a majority of the shares of IFG Common Stock present and
entitled to vote at the 1996 Annual Meeting is necessary to
approve Proposal 3. Proxies will be voted in favor of Proposal 3
unless otherwise specified. If an executed proxy card is
returned and no instruction is given, the shares of IFG Common
Stock represented by such proxy will be voted in favor of
Proposal 3. If an executed proxy card is returned and the
stockholder has abstained from voting on Proposal 3, the shares
of IFG Common Stock represented by such proxy will be considered
present at the meeting for purposes of determining a quorum and
for purposes of calculating the vote with respect to Proposal 3,
but will not be considered to have been voted in favor of
Proposal 3. If an executed proxy is returned by a broker holding
shares in street name and the broker does not vote with respect
to Proposal 3 because the beneficial owner of the shares
represented by such proxy has not given the broker authority to
do so, such shares will be considered present at the meeting for
purposes of determining a quorum, but will not be considered to
be represented at the meeting for purposes of calculating the
vote with respect to Proposal 3.
Proposal 4 -Ratification of Appointment of Auditors
The Board of Directors, based upon the recommendation of its
Audit Committee, has appointed KPMG Peat Marwick LLP as
independent auditors to audit the consolidated financial
statements of IFG and its subsidiaries for the current fiscal
year ending December 31, 1996, and to perform other appropriate
accounting services and recommends that the stockholders of IFG
ratify that appointment. KPMG Peat Marwick LLP has audited IFG's
financial statements for the fiscal years ended December 31, 1989
through 1995. Representatives of KPMG Peat Marwick LLP will be
present at the 1996 Annual Meeting, will have an opportunity to
make a statement if they desire to do so, and will be available
to respond to appropriate questions from stockholders.
The affirmative vote of a majority of the outstanding shares of
IFG Common Stock present and entitled to vote at the 1996 Annual
Meeting is required to approve Proposal 4 ratifying the
appointment of KPMG Peat Marwick LLP. Proxies will be voted in
favor of Proposal 4 unless otherwise specified. If an executed
proxy card is returned and no instruction is given, the shares of
IFG Common Stock represented by such proxy will be voted in favor
of Proposal 4. If an executed proxy card is returned and the
stockholder has abstained from voting on Proposal 4, the shares
of IFG Common Stock represented by such proxy will be considered
present at the meeting for purposes of determining a quorum and
for purposes of calculating the vote with respect to Proposal 4,
but will not be considered to have been voted in favor of
Proposal 4.
Deadline for Submission of Stockholder Proposals
Any proposal by a stockholder which may properly be presented at
the next annual meeting of IFG's stockholders must be received at
IFG's principal executive offices, Dain Bosworth Plaza, 60 South
Sixth Street, P.O. Box 1160, Minneapolis, Minnesota 55440-1160,
not later than November 28, 1996.
General
The Board of Directors of IFG does not know of any other business
to come before the 1996 Annual Meeting of Stockholders. If any
other matters are properly brought before the meeting, however,
the persons named in the accompanying form of proxy will vote
such proxy in accordance with their best judgment.
The entire cost of soliciting proxies for the 1996 Annual Meeting
will be borne by IFG. In addition to soliciting proxies by mail,
officers, directors and other regular employees of IFG or its
subsidiaries may solicit proxies on behalf of the Board of
Directors of IFG in person or by telephone. IFG will also
request that brokers or other nominees who hold shares of IFG
Common Stock in their names for the benefit of other persons
forward proxy materials to, and obtain voting instructions from,
the beneficial owners of such stock at IFG's expense.
Your cooperation in giving this matter your immediate attention
and in returning your proxy promptly will be appreciated.
By Order of the Board of Directors
Carla J. Smith
Secretary
March 28, 1996
Upon written request, Inter-Regional Financial Group, Inc., will
furnish, without charge, to persons solicited by this Proxy
Statement a copy of its Annual Report on Form 10-K (excluding
exhibits) filed with the Securities and Exchange Commission for
its fiscal year ended December 31, 1995. Requests should be
addressed to Inter-Regional Financial Group, Inc., P.O. Box 1160,
Minneapolis, Minnesota 55440-1160, Attention: Carla J. Smith,
Secretary.
<PAGE>
APPENDIX A
PROXY This Proxy is solicited on Behalf of the Board of
P.O. Box 1160 Directors. The undersigned hereby appoints
Minneapolis, Irving Weiser and Louis C. Fornetti, and each of
Minnesota them, with power to appoint a substitute, to vote
55440-1160 all shares the undersigned is entitled to vote at
the Annual Meeting of Stockholders of Inter-
[LOGO] Regional Financial Group, Inc. to be held on
May 1, 1996, and at all adjournments thereof, as
specified below on the matters referred to and in
their discretion upon any other matters which may
be brought before the meeting.
- ---------------------------------------------------------------------
1. Election of __ For all nominees __ Withhold Authority
Directors listed below (except to vote for all
as marked to the nominees listed
contrary)* below
J.C. Appel, J.E. Attwell, S.S. Boren, F.G. Fitz-Gerald,
C.A. Rundell, Jr., R.L. Ryan, A.R. Schulze, Jr., and I. Weiser
*(Instruction: To withhold authority to vote for any individual
nominee, draw a line through that nominee's name.)
- ---------------------------------------------------------------------
2. Approval of IFG 1996 Stock Incentive Plan __For __Against__Abstain
- ---------------------------------------------------------------------
3. Amendment of IFG's Restated Certificate of
Incorporation to increase the number of
authorized shares __For __Against__Abstain
- ---------------------------------------------------------------------
4. Ratification of appointment of auditors __For __Against__Abstain
- ---------------------------------------------------------------------
5. Discretionary authority to vote on any other business that may
properly come before the meeting.
- ---------------------------------------------------------------------
This proxy, where 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 all nominees named in
Item 1 and FOR Proposals 2,3,4 and 5.
Please sign exactly as name appears below: When shares are held
by joint tenants, both must sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
- -------------------------------------
Signature
- -------------------------------------
Signature (if held jointly)
Dated: __________________, 1996.
