TO: IFG Senior Executive Group
DBI & RPR Senior Management Councils
IFG, ROG & AMS Senior Managers
DBI & RPR Branch Managers
DATE: April 19, 1996
RE: Questions Concerning Proxy Items
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There have been some questions from employees concerning the 1996
Stock Incentive Plan and increase in IFG's authorized common
stock (Proposals #2 and #3 in the proxy statement). The
following information should assist you in responding to these
questions.
PURPOSE OF THE PLAN
The 1996 Stock Incentive Plan replaces the 1986 Stock Option
Plan that expired by its terms on February 11, 1996. Just
as under the 1986 Plan, the shares issuable under the new
Plan will be used to attract and retain key management
personnel and non-employee directors to help IFG fulfill its
growth objectives. Options and other stock-based awards are
a highly efficient form of compensation from both a cost and
an accounting perspective and align the long-term financial
interest of recipients with that of IFG's shareholders.
Under this Plan, options or other stock-based awards are
permitted to be granted to any employees of the IFG
companies as a part of the 1% Club or other employee award
programs.
SIZE OF PLAN AND POTENTIAL FOR DILUTION
The Plan is a ten-year plan, just as was the 1986 Plan. The
3,000,000 shares reserved for the Plan is comparable to the
number of shares authorized under the 1986 Plan after
adjusting for the stock split:
<TABLE>
<CAPTION>
1986 Stock
Option Plan 1986 Plan
Prior to After
3 for 2 3 for 2 Incentive
Stock Split Stock Split Plan
------------ ----------- -----------
<S> <C> <C> <C>
No. of Shares in Plan 2,000,000 3,000,000 3,000,000
No. of Shares Outstanding 8,100,000 12,150,000 12,100,000
No. of Authorized 20,000,000 20,000,000 30,000,000*
Common Shares
</TABLE>
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[FN]
* If increase in authorized common shares is approved by IFG's
stockholders
Of the 3,000,000 shares authorized under the 1986 Plan,
805,442 shares had been issued as of March 31, 1996 and
1,354,063 shares were reserved for issuance pursuant to
outstanding options. As for potential dilution, however,
you should note that IFG also repurchased over 998,000
shares of its common stock through its ongoing stock
repurchase program and other repurchases during the term of
the 1986 Plan, more than offsetting any potential dilution
from the issuance of shares pursuant to stock options.
CONCENTRATION OF STOCK
Under the 1986 Plan the largest single award ever granted
was an option for 73,500 shares (post-split). No individual
grant in the last three years has exceeded the level of
option awards to named executives shown on page 8 of the
proxy statement. The aggregate number of options granted
during 1995 to IFG's senior executives, outside directors
and 1% Club winners was 357,900.
INCREASE IN AUTHORIZED COMMON
The increase in the number of authorized shares from
20,000,000 to 30,000,000 restores to the pre-stock-split
level the cushion between IFG's authorized and its
outstanding common stock. This gives us the appropriate
room to issue additional common shares under the 1996 Stock
Incentive Plan AND to use our stock to take advantage of
business opportunities such as acquisitions, equity
financings, payment of stock dividends or other general
corporate purposes.
Thank you for passing this information along if any of your
employees has questions.
