<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [ ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CORUS BANKSHARES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
<TABLE>
<S> <C> <C>
CORUS LOGO ROBERT J. GLICKMAN 3959 N. Lincoln Ave.
President and CEO Chicago, IL 60613
</TABLE>
March 17, 1999
TO OUR SHAREHOLDERS:
I would like to invite you to attend the 1999 Annual Meeting of Shareholders of
CORUS BANKSHARES, INC., to be held on Wednesday, April 28, 1999 at 10:00 a.m. at
the CORUS BANK, N.A. branch at 4800 N. Western Avenue, Chicago, Illinois.
The primary purpose of the Annual Meeting will be to elect eight directors,
ratify the appointment of Arthur Andersen LLP as independent public accountants
for 1999 and approve the CORUS BANKSHARES, INC. 1999 Stock Option Plan. We will
also be sharing with you information about our performance during 1998.
Additionally, the Annual Meeting will give you an opportunity to meet our
Directors and our Senior Officers.
WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING OR NOT, PLEASE DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE ACCOMPANYING ENVELOPE. YOUR VOTE IS VERY
IMPORTANT REGARDLESS OF HOW MANY SHARES YOU OWN. If you do attend the Annual
Meeting and wish to vote in person, you may do so, even though you have
previously sent in a proxy.
I look forward to seeing you at the Meeting.
Very truly yours,
LOGO
<PAGE> 3
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Directors of CORUS
BANKSHARES, Inc. (CORUS) for use at the Annual Meeting of Shareholders, to be
held on April 28, 1999, at 10:00 a.m., in the branch of CORUS BANK, N.A., 4800
N. Western Avenue, Chicago, Illinois, or at any adjournment of such meeting.
Each proxy received from shareholders will be voted at the meeting and, if
specified, as directed, by the shareholder. Unless contrary instructions are
given, the proxy will be voted at the meeting for the election of the nominees
for the office of Director, as set forth below, the adoption of the CORUS
BANKSHARES, INC. 1999 Stock Option Plan, the ratification of Arthur Andersen LLP
as independent public accountants, and, in accordance with the best judgment of
the holders thereof, any other business which may properly come before the
meeting and be submitted to a vote of the shareholders. Shares represented by
proxies which are marked "withholding authority" with respect to the election of
one or more nominees for election as directors, proxies which are marked
"abstain" on other proposals, and proxies which are marked deny discretionary
authority on other matters WILL NOT be counted in determining whether a majority
vote was obtained in such matters. With respect to brokers who are prohibited
from exercising discretionary authority for beneficial owners who have not
returned proxies to the brokers, those shares WILL NOT be included in the vote
totals. A proxy may be revoked at any time prior to its exercise by means of a
written revocation or a properly executed proxy bearing a later date.
Shareholders having executed and returned a proxy who attend the meeting and
desire to vote in person are requested to so notify the Secretary of CORUS prior
to or at the time of a vote taken at the meeting. The cost of soliciting proxies
in the accompanying form has been or will be borne by CORUS.
OUTSTANDING VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
CORUS has 14,519,890 shares of $0.05 par value Common Stock outstanding. Each
share is entitled to one vote. Shareholders of record as of the close of
business on February 28, 1999 are entitled to vote at the meeting. So far as is
known to CORUS, as of February 28, 1999, the following shareholders owned
beneficially or of record more than five percent (5%) of the Common Stock of
CORUS:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
SHAREHOLDER (1) BENEFICIAL OWNERSHIP PERCENT
- --------------- -------------------- -------
<S> <C> <C>
R.J. Glickman 2,911,018(2) 19.6%
J.C. and B.R. Glickman 2,151,117(3) 14.5%
E.W. Glickman 1,313,843(4) 8.9%
M.L. and E.G. Galinson 1,043,857(5) 7.0%
</TABLE>
- ---------------
(1) Shareholder addresses: CORUS BANK, N.A., 3959 N. Lincoln Ave., Chicago, IL
60613
(2) Includes 230,000 shares subject to employee stock options exercisable
currently. Also includes: 355,160 shares held as sole trustee of various
trusts for the benefit of his children; and 59,126 shares owned by the
Robert and Caryn Glickman Foundation of which Robert J. Glickman is a
director and an officer. R.J. Glickman is the son of J.C. and B.R. Glickman.
(3) Includes 2,150,967 shares held as co-trustee of the Glickman Family Trust,
dated April 21, 1983. Of the aforesaid shares, 1,031,226 shares are
attributable to B.R. Glickman, the wife of J.C. Glickman, and 1,119,741
shares are attributable to J.C. Glickman. B.R. Glickman and
<PAGE> 4
J.C. Glickman, under the terms of the Glickman Family Trust, share the
voting and investment control over the above described 2,150,967 shares.
(4) Includes 391,527 shares held in trust for the benefit of E.W. Glickman with
R.J. Glickman as trustee; 39,070 shares held as trustee for the benefit of
various relatives of Joseph C. Glickman under Glickman Family Trusts dated
September 21, 1987 and March 9, 1992; and, 6,000 shares held as trustee for
the benefit of his children. E.W. Glickman is the son of J.C. and B.R.
Glickman.
(5) Includes 389,690 shares held as co-trustee of their family trust; 391,527
shares held for the benefit of E.G. Galinson with R.J. Glickman as trustee;
142,640 shares held as trustee for the benefit of their children or a family
partnership; and, 120,000 shares held as co-trustee for various charitable
trusts or foundations. E.G. Galinson is the daughter of J.C. and B.R.
Glickman.
PROPOSAL ONE: ELECTION OF DIRECTORS
The Bylaws of CORUS provide that the "Board shall consist of not less than five
nor more than thirteen in number as may be determined at each Annual Meeting of
the Shareholders of the Company". The Bylaws also state that at the Annual
Meeting of Shareholders the concurrence of a majority of all the issued and
outstanding stock entitled to vote thereat shall be required for taking any
action by the shareholders including the election of directors. At the meeting,
it will be proposed to elect eight directors to hold office until the next
Annual Meeting of Shareholders and until their successors are elected and
qualify. Shareholders of CORUS have no cumulative voting rights with respect to
the election of directors.
2
<PAGE> 5
The following individuals are nominees for election. All of the nominees have
indicated a willingness to serve, but in case any of the nominees is not a
candidate at the Annual Meeting, it is the intention of the proxy holders to
vote in favor of the remainder of those named and to vote for substitute
nominees in their discretion. Information regarding these eight nominees and the
number of shares of Common Stock beneficially owned by them as of February 28,
1999, is set forth below:
DIRECTOR NOMINEES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
NAME, AGE AND PERIOD OF PRINCIPAL OCCUPATION AND
SERVICE AS A DIRECTOR DIRECTORSHIPS FOR PAST FIVE YEARS
- -----------------------------------------------------------------------------------------------------
<S> <C>
JOSEPH C. GLICKMAN (83) Chairman of the Board of Directors of CORUS.
Director since 1958
- -----------------------------------------------------------------------------------------------------
ROBERT J. GLICKMAN (52) President, Chief Executive Officer and Director of CORUS.
Director since 1972 Director CORUS BANK, N.A. Son of J.C. Glickman.
- -----------------------------------------------------------------------------------------------------
STEVEN D. FIFIELD (51) President and Chief Executive Officer, Fifield Realty
Director since 1997 Corp.
Real estate development and construction.
- -----------------------------------------------------------------------------------------------------
KARL H. HORN (75) Consultant, Zenith Electronics Corporation.
Director since 1980
- -----------------------------------------------------------------------------------------------------
MICHAEL LEVITT (54) President, Consolidated Currency Exchanges, Inc.
Director since 1990 Owns and operates check cashing businesses.
- -----------------------------------------------------------------------------------------------------
RODNEY D. LUBEZNIK (51) President and Director, Restaurant Management Corp.
Director since 1994 Owns and operates restaurants.
- -----------------------------------------------------------------------------------------------------
MICHAEL TANG (44) Vice Chairman, National Material, L.P. Holding company
Director since 1995 for a group of metals related manufacturing,
distribution and
processing companies. Previously, Chief Executive
Officer,
Midwest Metallics, L.P.
- -----------------------------------------------------------------------------------------------------
WILLIAM H. WENDT, III (56) President and Director, Midwest Metal Products.
Director since 1980 Manufacturer and distributor of metal products.
- -----------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 6
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
OF COMMON SHARES
DIRECTOR NOMINEES ADDRESS AT FEBRUARY 28, 1999 PERCENT
- ----------------- ------- -------------------- -------
<S> <C> <C> <C>
Robert J. Glickman Winnetka, Illinois 2,911,018(1) 19.6%
Joseph C. Glickman La Jolla, California 2,151,117 14.5%
Steven D. Fifield Chicago, Illinois 10,000 0.1%
Karl H. Horn Jackson, Tennessee 1,200 *
Michael Levitt Chicago, Illinois 8,000 0.1%
Rodney D. Lubeznik Michigan City, Indiana 1,400 *
Michael Tang Elk Grove Village, Illinois 1,000 *
William H. Wendt, III Long Beach, Indiana 10,000 0.1%
OTHER NAMED EXECUTIVE OFFICERS
- --------------------------------------------------------------
David H. Johnson III Hinsdale, Illinois 19,000(2) 0.1%
Richard J. Koretz Highland Park, Illinois 7,400(3) *
Michael G. Stein Skokie, Illinois 6,600(4) *
Directors and all Executive
Officers as a Group (15 in
total) 5,160,635 34.8%
</TABLE>
- ---------------
* Represents less than 0.1% of total common shares outstanding
(1) Includes 230,000 vested stock options
(2) Includes 13,200 vested stock options
(3) Includes 6,400 vested stock options
(4) Includes 4,000 vested stock options
All of the Directors attended at least 75% of all Board meetings in 1998. The
entire Board of Directors are members of the Compensation Committee. J.C.
Glickman and R.J. Glickman abstain from votes of the CORUS Board of Directors
regarding their compensation as officers of CORUS. Directors J.C. Glickman, Horn
and Levitt served on the Stock Option Committee. At the Board's February 17,
1999 meeting, Director J.C. Glickman stepped down from the Stock Option
Committee and Director Steven Fifield was appointed to the Stock Option
Committee. Directors J.C. Glickman, R.J. Glickman and Levitt serve on the
Nominating Committee. The functions of the Nominating Committee are to identify
and recommend to the Board of Directors candidates for director nomination. The
Stock Option and Nominating Committees did not meet in 1998 because all matters
that would normally be discussed by those committees were discussed by the full
Board of Directors, including the approval of all stock options granted during
the year.
The Audit Committee includes Directors Horn, Levitt and Lubeznik. In addition to
reviewing internal control reports and regulatory examination reports, the Audit
Committee recommends the independent auditors for appointment by the Board of
Directors and reviews the results of the audit engagement. There were three
Audit Committee meetings held in 1998 with all committee members present, with
the exception of Director Horn who was absent once.
4
<PAGE> 7
PROPOSAL TWO: APPROVAL OF CORUS BANKSHARES, INC.
1999 STOCK OPTION PLAN
The Board of Directors has adopted, subject to shareholder approval, the CORUS
BANKSHARES, INC. 1999 Stock Option Plan (the "Plan") as described below. In the
event that shareholder approval is received, the Plan would read as set forth in
Exhibit A. The purpose of the Plan is to promote the long-term interests of
CORUS by providing an incentive for certain Key Employees to maintain and
enhance the performance and profitability of CORUS and to give them a
proprietary interest in the success of CORUS. "Key Employees" are defined as
employees of the Company or its Subsidiaries, including an employee who is an
officer or director of the Company or one of its Subsidiaries, who in the
opinion of the members of the Committee (as defined below) can contribute
significantly to the growth and profitability of the Company. Key Employee also
may include employees identified by the Committee in situations concerning
extraordinary performance, retention or recruitment. Currently, approximately
138 employees would be eligible to receive Awards under the Plan. No decision
has been made yet as to grants under the Plan if shareholder approval is
obtained.
ADMINISTRATION. The Plan is administered by the Stock Option Committee of the
Board of Directors of CORUS (the "Committee"). The Plan requires the Stock
Option Committee consist of not less than two directors, each of whom must be a
"non-employee director" for purposes of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, and an "outside director," as defined in the
final regulations or other guidance issued under Section 162(m) of the Internal
Revenue Code of 1986 as amended ("Code"). The Committee has, subject to the
express limitations of the Plan, the full power to (1) select which key
employees will receive Awards, (2) fix the number of shares in each Award, (3)
establish the time and conditions of vesting and delivery of any Award, (4)
establish the specific type of Award granted: Incentive Stock Options ("ISO"),
Non-Qualified Stock Options, Stock Appreciation Rights ("SAR") or Restricted
Stock, (5) amend the terms and conditions of any outstanding Award, (6) supply
such other terms and conditions as are not inconsistent with the Plan, and (7)
interpret and implement the Plan and make all determinations necessary and
advisable in administering the Plan.
STOCK OPTIONS. All Awards of Stock Options or SARs shall specify an exercise
price, which is payable upon the exercise of the Award. The option price shall
be established by the Committee or shall be determined by a method established
by the Committee at the time the Award is granted; except that the exercise
price shall not be less than 100% of the fair market value of the underlying
Common Stock on the date of grant as determined by the Stock Option Committee
(in the case of an ISO, 110% of the fair market value of the Common Stock on the
date of grant in the event the grantee is greater than a 10% shareholder). No
Option granted as an ISO will be exercisable more than ten (10) years after the
date of grant, provided that ISOs granted to holders of more than 10% of the
voting stock of the Company or a Subsidiary may not be exercised more than five
(5) years from the date of grant. The aggregate fair market value (determined at
the time of grant) of shares issuable upon the exercise of ISOs that become
exercisable for the first time during any one calendar year shall not exceed
$100,000. Awards may be settled through cash payments, the delivery of shares of
Common Stock, or any combination thereof as the Committee shall determine.
The Shares with respect to which Awards may be made under the Plan include
Shares which are currently authorized but unissued or currently held. The
maximum number of Shares available for grant under the Plan is 1,000,000. (As of
December 31, 1998, under CORUS' current plan, options to purchase 431,815 shares
of Common Stock were outstanding. Corus will not grant any additional
5
<PAGE> 8
awards under the current plan subsequent to shareholder approval of the new
Plan.) To the extent any Shares covered by an Award are not delivered to a
Participant or beneficiary because the Award is forfeited, terminated, lapses or
expires, or the Shares are not delivered because the Award is settled in cash or
used to satisfy the applicable tax withholding obligation, such Shares shall
nevertheless be deemed delivered for purposes of determining the maximum number
of Shares available for delivery under the Plan. If the exercise price of any
option is satisfied by tendering Shares to the Company, the total number of
Shares issued shall be deemed delivered for purposes of determining the maximum
number of shares available for delivery under the Plan. The maximum number of
Shares that may be issued by Options intended to be ISOs shall be 100,000
Shares. The maximum number of shares that may be covered by Awards (in the form
of Options or SARs) granted to any one individual shall be 250,000 Shares during
any one calendar year period. The maximum number of Shares that may be awarded
in the form of Restricted Stock shall be 100,000 Shares plus any shares that are
reacquired by the Company.
Upon exercise, the option price may be paid in cash, or if permitted by the
Committee in shares of CORUS common stock having a fair market value equal to
the option price, or in a combination thereof as determined and permitted by the
Committee. Under the Plan (unlike the current plan), the Committee may also
allow the "cashless" exercise of options, subject to applicable rules and
regulations.
STOCK APPRECIATION RIGHTS. The stock appreciation rights may contain such
other terms, provisions and conditions not inconsistent with the Plan as the
Committee may determine. Upon exercise of a stock appreciation right, the holder
shall be paid the excess of the then fair market value of the number of shares
of Company common stock to which the right relates over the Exercise Price of
such number of shares at the date of grant of the right as determined by the
Committee. Such amount shall be paid in cash or in shares of CORUS common stock
having a fair market value equal to such excess, or in such combination thereof,
as the Committee shall determine and permit in its sole discretion upon exercise
of the right.
RESTRICTED STOCK AWARDS. Restricted stock awards consisting of shares of CORUS
common stock may be made under the Plan. Such awards shall be contingent on the
employee's continuing employment with the Company or its Subsidiaries or
affiliates for a period to be specified in the award, and may be subject to such
additional terms and conditions as the Committee deems appropriate. The holder
of a restricted stock award shall have the right to vote the restricted shares
and to receive dividends thereon, unless and until such shares are forfeited. If
all conditions to which such award is subject have been satisfied, the holder
shall be entitled to such shares free of all restrictions.
TERMINATION OF EMPLOYMENT. If a participant's employment is terminated by
reason of death or disability, any outstanding stock options or SARs shall
immediately become vested and exercisable at any time prior to the expiration
date of the stock options or SARs or within 90 days after the such date of
termination of employment, whichever is shorter. In the case of Incentive Stock
Options, the favorable tax treatment prescribed under Section 422(b) of the Code
may not be available if the options are not exercised within the Section 422(b)
prescribed time period after termination of employment for death, disability or
retirement. If employment is terminated for any other reason, all outstanding
options and SARS that have not become vested and exercisable as of his date of
termination shall terminate immediately on that date. All outstanding options
and SARS that had become vested and exercisable as of his date of termination
will be exercisable for one month or for the remaining term of the stock option
or SAR, whichever is shorter. In its discretion, the Committee may extend the
exercisability of any
6
<PAGE> 9
outstanding option or SAR that was vested and exercisable as of the date of the
termination for up to 90 days, but in no event beyond the expiration date of the
Option. Employees terminated for "cause" will forfeit immediately all rights to
exercise stock options or SARs. Cause shall mean: gross misconduct, conviction
of a felony, or suspension due to the direction of any bank regulatory agency.
Except as otherwise provided by the Committee in the applicable Award agreement,
stock options and SARs are not transferable except by will or the laws of
descent and distribution.
CHANGE IN CONTROL. In the event of a change in control of CORUS, all Awards
under the Plan will become fully exercisable or nonforfeitable, as appropriate.
A change in control is deemed to occur when the ownership of fifty (50%) or more
of the outstanding voting stock of CORUS changes or upon approval by CORUS'
shareholders of certain merger or sale transactions.
AMENDMENTS. With the approval of the Board, at any time and from time to time,
the Committee may terminate, amend or modify the Plan. Without the approval of
the shareholders of the Company, however, no such amendment may increase the
amount of stock which may be issued under the Plan in the aggregate or to an
individual, change the class of employees eligible to participate in the Plan,
or change the provisions of the Plan regarding Option Price.
TAX CONSEQUENCES. Under the current Federal income tax laws, Awards under the
Plan will have the following tax consequences: A person who is granted a stock
option under the Plan will not be subject to federal income tax at the time of
grant, and CORUS will not be entitled to a tax deduction by reason of such
grant. Upon exercise of a nonqualified option, the difference between the
exercise price and the fair market value of the stock on the date of exercise
will be taxable as ordinary income in the taxable period in which the exercise
occurs and CORUS will be entitled to a corresponding deduction, to the extent
permitted under Section 162(m). CORUS' deduction will be equal to the amount of
ordinary income recognized by the employee at the same time the employee
recognizes such income, provided the Company reports such income recognition to
the Internal Revenue Service.
The exercise of an ISO will not result in taxable income to the employee (and
CORUS will not be entitled to a tax deduction) provided that the employee was,
without a break in service, an employee of the Company or a subsidiary during
the period beginning on the date of the grant of the option and ending on the
date three months prior to the date of exercise (one year prior to the date of
exercise if the employee is disabled, as that term is defined in the Internal
Revenue Code). The excess of the fair market value of the shares at the time of
the exercise of an ISO over the exercise price is an adjustment that is included
in the calculation of the employee's alternative minimum taxable income for the
tax year in which the ISO is exercised. For purposes of determining the
employee's alternative minimum tax liability for the year of disposition of the
shares acquired pursuant to the ISO exercise, the employee will have a basis in
those shares equal to those shares equal to the fair market value of the shares
at the time of exercise.
Upon the sale or other disposition of the ISO shares after the later of (i) two
years after the grant date or (ii) one year after the purchase date, any gain or
loss will be treated as long-term capital gain or loss. The tax basis of the
option shares in such case generally equals the exercise price. CORUS will not
be entitled to a tax deduction with respect to the ISO shares under these
circumstances. If stock purchased pursuant to the exercise of an ISO is sold
within two years from the date of grant of the option or within one year after
the transfer of stock to the employee pursuant to exercise of the ISO, then the
difference between the exercise price and the lesser of (i) fair market value of
CORUS' Common Stock at the date of exercise or (ii) the amount realized upon the
disposition of the shares, will be considered ordinary income and CORUS will be
entitled to a corresponding deduction, to the extent permitted
7
<PAGE> 10
under Section 162(m). If the amount realized exceeds the value of the shares on
the date of exercise, any additional amount will be a capital gain. If the
amount realized is less than the exercise price, the participant will recognize
no income, and a capital loss will be recognized equal to the excess of the
exercise price over the amount realized upon the disposition of the shares. If
the Committee elects to settle all or any portion of an employee's vested
options in cash, the amount of such payment will be taxable as ordinary income.
In both such circumstances, CORUS may deduct, in the year the employee
recognizes income, an amount equal to the ordinary income recognized by the
employee. The grant of SARs creates no taxable income. Any amounts ultimately
paid on exercise of SARs will be ordinary income to the participant and CORUS
will receive a corresponding tax deduction. The use of Common Stock as a payout
medium does not change the tax treatment.
A participant who has been granted a restricted stock award will not realize
taxable income at the time of grant, and the Company will not be entitled to a
deduction at that time, assuming that the restrictions constitute a "substantial
risk of forfeiture" for Federal income tax purposes. Upon the vesting of shares
subject to an award, the holder will realize ordinary income in an amount equal
to the then fair market value of those shares, and the Company will be entitled
to a corresponding deduction. Gains or losses realized by the participant upon
disposition of such shares will be treated as capital gains and losses, with the
basis in such shares equal to the fair market value of the shares at the time of
vesting. Dividends paid to the holder during the restriction period will also be
compensation income to the participant and deductible as such by the Company.
A participant may elect pursuant to section 83(b) of the Internal Revenue Code
to have the income recognized and measured at the date of grant of restricted
stock and to have the applicable capital gain holding period commence as of that
date, as described below.
A participant who has been granted a stock award that is not subject to a
substantial risk of forfeiture for Federal income tax purposes (for example,
bonus stock) will realize ordinary income in an amount equal to the fair market
value of the shares at such time, and the Company will be entitled to a
corresponding deduction.
SECTION 83(B) ELECTION. If a participant is granted shares of Stock that are
subject to a substantial risk of forfeiture, recognition of income may be
accelerated to the date of grant if the participant files an election under
Internal Revenue Code section 83(b). Such an election must be filed with the IRS
not later than 30 days after the date the property was transferred (i.e., the
date of grant), and may be filed prior to the date of transfer. A copy of the
election should be filed with the Company. If such an election is properly filed
in a timely manner: (i) the Company will be entitled to a deduction at the time
of grant and in an amount equal to the fair market value of the shares at the
time of grant (determined without regard to forfeiture restrictions and other
non-permanent restrictions), (ii) dividends paid to such holder during the
restriction period will be taxable as dividends to such holder and not
deductible by the Company, and (iii) there will be no further tax consequences
when the restrictions lapse. Gains or losses realized by the participant upon
disposition of such shares will be treated as capital gains and losses, with the
basis in such shares equal to the fair market value of the shares at the time of
grant. If a participant who has made such an election subsequently forfeits the
shares, the participant will not be entitled to any deduction or loss.
As described above, CORUS is generally entitled to an income tax deduction for
any compensation income taxed to participants in the Plan. Under Section 162(m)
of the Code, however, unless the compensation meets the stockholder approval and
other requirements of Section 162(m), CORUS would not be entitled to a deduction
for compensation paid to certain covered executives to the extent
8
<PAGE> 11
the compensation paid to any such person exceeds $1 million. With respect to
stock options and SARS (but not restricted stock awards) the Plan is designed to
meet the requirements of Section 162(m).
PLAN BENEFITS. The Plan is subject to stockholder approval at the Annual
Meeting. Following stockholder approval, the Committee may make awards, in its
discretion, under the Plan. Awards made may not be indicative of awards for all
of 1999 or awards in any fiscal year.
OTHER INFORMATION
Approval of the Plan will require the affirmative vote of the holders of shares
of CORUS representing a majority of the shares represented in person or by proxy
and entitled to vote at the Annual Meeting, with the result that shares which
abstain from voting would count as votes against the Plan and broker non-votes
would have no effect on the outcome. Proxies not limited to the contrary will be
voted for approval of the Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE CORUS
BANKSHARES 1999 STOCK OPTION PLAN.
PROPOSAL THREE: APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
On February 17, 1999, the Audit Committee and Board of Directors of CORUS
recommended that the shareholders ratify Arthur Andersen LLP at the 1999 Annual
Meeting as independent public accountants of CORUS for the year ending December
31, 1999.
One or more representatives of Arthur Andersen LLP will be present at the
meeting and will have the opportunity to make a statement if they desire to do
so. Arthur Andersen LLP representatives will be available to respond to
appropriate questions that shareholders may have.
Audit fees for the current fiscal year are expected to be approximately $166,000
unless there are additional acquisitions by CORUS. Existing policy requires that
all services furnished to CORUS by its independent public accountants be
furnished at customary rates and terms.
9
<PAGE> 12
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation for services in all
capacities to CORUS and its subsidiaries during the last three fiscal years by
CORUS' Chairman of the Board and Chief Executive Officer and includes the five
highest-paid executive officers, who were serving as executive officers at
December 31, 1998, as measured by 1998 compensation levels.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
LONG-TERM COMPENSATION
--------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- --------------------------- ----------
(A) (B) (C) (D) (E) (G) (H)
OTHER (F) SECURITIES (I)
ANNUAL RESTRICTED UNDERLYING ALL OTHER
COMPEN- STOCK OPTIONS/ LTIP COMPEN-
NAME AND PRINCIPAL SALARY BONUS SATION AWARDS SARS PAYOUTS SATION(1)
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joseph C. Glickman 1998 150,000 250,000 0 0 0 0 0
Chairman of the Board 1997 150,000 250,000 0 0 0 0 0
1996 150,000 250,000 0 0 0 0 0
- -------------------------------------------------------------------------------------------------------------------------------
Robert J. Glickman 1998 500,000 500,000 0 0 0 0 0
President and CEO 1997 500,000 500,000 0 0 0 0 0
1996 450,000 500,000 0 0 0 0 0
- -------------------------------------------------------------------------------------------------------------------------------
David H. Johnson III 1998 235,000 130,000 0 0 6,000 0 1,500
Executive Vice 1997 225,000 130,000 0 0 6,000 0 750
President 1996 200,000 130,000 0 0 6,000 0 750
- -------------------------------------------------------------------------------------------------------------------------------
Richard J. Koretz 1998 150,000 180,000 0 0 2,000 0 1,500
Senior Vice 1997 140,000 180,000 0 0 2,000 0 750
President -- CORUS 1996 120,000 180,000 0 0 2,000 0 750
BANK, N.A.
- -------------------------------------------------------------------------------------------------------------------------------
Michael G. Stein 1998 200,000 362,791 0 0 0 0 1,500
Executive Vice 1997 150,000 791,263 0 0 0 0 750
President -- CORUS 1996 120,000 431,551 0 0 0 0 750
BANK, N.A
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents 401(k) matching contributions.
10
<PAGE> 13
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides stock options granted in 1998 to the named
executive officers.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
- ------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
- ------------------------------------------------------------------------------------------------------------------
(A) (B) (C) (D) (E) (F) (G)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS
OPTIONS/SARS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#) 1998 ($/SH) DATE 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Glickman 0 N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
Michael G. Stein 0 N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
David H. Johnson III 6,000 13.23 37.88 11/30/2008 142,916 362,178
- ------------------------------------------------------------------------------------------------------------------
Richard J. Koretz 2,000 4.41 37.88 11/30/2008 47,639 120,726
- ------------------------------------------------------------------------------------------------------------------
Michael G. Stein 0 N/A N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
The options in the table above were granted November 18, 1998. The options vest
20% per year over a five-year period.
11
<PAGE> 14
AGGREGATED OPTION/SAR EXERCISES AND YEAR-END VALUES
The following table summarizes stock options that were exercised by each of the
named executives during 1998 and the number and value of stock options that were
unexercised at December 31, 1998.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR VALUES
- ---------------------------------------------------------------------------------------------------------------------
(A) (B) (C) (D)
NUMBER OF (E)
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES DECEMBER 31, 1998 (#) DECEMBER 31, 1998 ($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Joseph C. Glickman 0 0 0/0 0/0
- ---------------------------------------------------------------------------------------------------------------------
Robert J. Glickman 0 0 230,000/20,000 4,015,000/260,000
- ---------------------------------------------------------------------------------------------------------------------
David H. Johnson 0 0 12,800/17,200 134,020/44,740
III
- ---------------------------------------------------------------------------------------------------------------------
Richard J. Koretz 0 0 5,600/6,400 60,800/23,980
- ---------------------------------------------------------------------------------------------------------------------
Michael G. Stein 0 0 3,200/800 43,520/10,880
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
The numbers and amounts in the preceding table represent non-qualified stock
options. There have been no SARs or incentive stock options granted since the
inception of the Plan to date.
LONG-TERM INCENTIVE PLAN AWARDS TABLE
<TABLE>
<CAPTION>
PERFORMANCE OR ESTIMATED MAXIMUM FUTURE
OTHER PERIOD UNTIL PAYOUTS UNDER NON-STOCK
NAME MATURATION OR PAYOUT PRICE-BASED PLANS
- ---- -------------------- ------------------------
<S> <C> <C>
Michael G. Stein 3 years(1) $685,658(2)
</TABLE>
The long-term incentive awards detailed in the above table relate to the CORUS
BANK, N.A. Bonus Program for the Commercial Loan Officers (the "CLO Bonus
Program"). The adoption of the CLO Bonus Program was approved by CORUS'
shareholders at CORUS' May 20, 1998 annual shareholder meeting.
The purpose of the CLO Bonus Program is to reward commercial loan officers for
new business development on the basis of each officer's loan volume generation,
the potential profitability and the loan loss experience of such officer's loan
portfolio, thereby more closely aligning the goals of the loan officers with the
interests of CORUS and its shareholders. The CLO Bonus Program is also intended
to help attract and retain qualified loan officers. All commercial loan officers
of Corus Bank are eligible to participate in the CLO Bonus Program. Currently
there are approximately 15 officers of CORUS eligible to participate, including
Michael G. Stein.
The CLO Bonus Program provides for deferred payment of a portion of annual
commercial loan officer bonuses, which are calculated in accordance with the
formula set forth in the CLO Bonus Program, and permits participants to elect to
receive deferred payments either in the form of a note payable or shares
12
<PAGE> 15
of CORUS' Common Stock. In addition, those electing to receive shares would be
entitled to receive a cash payment at the end of the deferral period equal to
the amount of dividends that would have been paid during the deferral period on
that number of shares actually received. The deferred bonus amounts generally
become payable at the end of a three-year deferral period and are subject to
reduction during such period in the event of certain circumstances relating to
loan losses and nonperforming loans.
(1) The deferral period may be, under certain circumstances, extended beyond the
original 3 year term by the administrator of the CLO Bonus Program, CORUS'
CEO Robert J. Glickman.
(2) The deferred bonus is subject to reduction in the event of loan losses prior
to the expiration of the deferral period under certain circumstances as
described above (e.g., losses on any loans which are used in calculating
bonuses under the CLO Bonus Program). Mr. Stein elected to have his deferred
bonus deferred in the form of 20,316 shares of CORUS Common Stock. The
20,316 figure was arrived at by dividing the deferred bonus of $685,658 by
CORUS' Common Stock price of $33.75 at December 15, 1998 (the date
prescribed in the CLO Bonus Program for deferral calculations). As Mr. Stein
has elected to have his deferred bonus deferred in the form of Corus stock,
the amount ultimately paid to Mr. Stein will depend upon both the price of
Corus stock at the time of payout and any losses, on loans which are used in
calculating bonuses for Mr. Stein under the CLO Bonus Program, that occur
between the time of deferral and the ultimate payout of the deferred bonus.
BENEFIT PLANS
Upon attainment of normal retirement date, a participant is entitled to receive
a monthly benefit for life equal to 22.5% of final monthly average compensation
up to covered compensation, plus 37.5% of such participant's final monthly
compensation in excess of covered compensation, decreased proportionately for
less than 30 years of credited service. The maximum level of annual compensation
for computing retirement benefits in both 1998 and 1997 was $160,000. An
employee is vested in the plan after five years of service. J.C. Glickman does
not participate in this plan.
The following table has built in reasonable increases in compensation on the
existing salary ranges up to a maximum final average compensation level of
$200,000, indexed for the respective years and sets forth the estimated annual
benefits payable upon retirement at age 65 for the specified compensation and
years of service. The pension benefits are on the basis of a straight life
annuity and are not reduced for social security or other benefits received by
participants. Annual pension benefits remain fixed after 30 years of service.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
YEARS OF SERVICE
FINAL AVERAGE --------------------------------------------------------------------------------------------------------
COMPENSATION (1) 10 15 20 25 30
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$125,000 $12,745 $19,118 $25,490 $31,863 $38,235
- ------------------------------------------------------------------------------------------------------------------------------
150,000 15,870 23,805 31,740 39,675 47,610
- ------------------------------------------------------------------------------------------------------------------------------
175,000 17,120 25,680 34,240 42,800 51,360
- ------------------------------------------------------------------------------------------------------------------------------
200,000 17,120 25,680 34,240 42,800 51,360
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The average annual compensation includes the participant's salary and bonus.
Robert J. Glickman, David H. Johnson III, Richard J. Koretz and Michael G.
Stein all had salary and bonus in excess of $160,000, and as such, are
covered only up to the maximum average compensation of $160,000. Joseph C.
Glickman is not covered under CORUS' retirement plan.
13
<PAGE> 16
The years of credited service as of December 31, 1998 for the individuals in the
cash compensation table are as follows: Robert J. Glickman, 29.0 years; David H.
Johnson III, 7.0 years; Richard J. Koretz, 7.0 years; and, Michael G. Stein, 7.5
years.
The CORUS BANKSHARES Employees' Savings Plan & Trust ("the 401(k) Plan") is a
defined contribution plan which is offered to employees who have completed one
year of service and who are at least 21 years in age. Under the 401(k) Plan an
employee may contribute up to 15% of compensation, not to exceed $10,000 in
1998, into a retirement investment program. Employees are vested in the matching
contributions and the interest thereon after five years of credited service in
the 401(k) Plan. In 1998, CORUS matched 20% of pretax contributions to a maximum
contribution of $1,500 per person. Matching contributions for D.H. Johnson III,
R.J. Koretz and M.G. Stein were $1,500 per person in 1998. J.C. Glickman and
R.J. Glickman did not participate in CORUS' 401(k) Plan in 1998.
R.J. Glickman, D.H. Johnson III, R.J. Koretz and M.G. Stein are covered under
the medical and dental insurance plans offered by CORUS to all of its full-time
employees.
COMPENSATION OF DIRECTORS
No fees were paid to J.C. Glickman and R.J. Glickman for directors or committee
meetings in 1998. All other directors were paid $3,500 per Board of Directors
meeting attended for the first two meetings of 1998 and $4,000 per Board of
Directors meeting attended for the last two meetings of 1998. Directors Horn,
Levitt and Lubeznik were paid $1,000 per audit committee meeting attended in
1998.
CHANGE-IN-CONTROL AGREEMENTS
CORUS currently has Change-In-Control Employment Agreements ("Agreements") with
Messrs. D.H. Johnson III, R.J. Koretz, M.G. Stein and five other executive
officers ("Covered Executives") not named in the Summary Compensation Table. The
purpose of the Agreements is to provide severance compensation to each covered
executive officer in the event of the voluntary or involuntary termination after
a change in control of CORUS. "Change-in-Control" generally occurs on the date
when an individual, corporation or partnership (with certain exceptions) becomes
a beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934), directly or indirectly, of the stock of CORUS representing 50% or more
of the total voting power of CORUS' then outstanding stock. Neither J.C.
Glickman nor R.J. Glickman have change-in-control agreements.
Compensation provided to the Covered Executives would be in the form of a lump
sum payment equal to (1) 150%-300% of the Covered Executive's annual base salary
if that person resigns for good reason or if that person is terminated by CORUS
(other than for cause) plus a proration of any prior year's bonus paid, or any
bonus paid in the year before the Change-in-Control, if greater, for the amount
of time employed in the year of termination, or (2) 75%-150% of the Covered
Executive's annual base salary if the executive initiates termination during the
30-day period following the first anniversary of the change in control. "Good
reason" means (i) any failure by CORUS to comply with the provisions of the
Agreement relating to compensation and benefits, or (ii) CORUS' relocation of
the executive's principal job location to a location, other than CORUS'
headquarters on the date of the Change-in-Control, more than 35 miles from his
principal job location on the date of the Change-in-Control. However, no
severance compensation is due the Covered Executive if employment is terminated
for cause. Additionally, no severance compensation would be due after the death
of a Covered Executive. In the event the Covered Executive obtains other
employment prior to the first anniversary of the date
14
<PAGE> 17
of his termination of employment with CORUS, he shall repay CORUS an amount
equal to 50% of any compensation received from such employment during the twelve
month period following termination from CORUS but not more than the lump sum
payment, if any, received by the Covered Executive. Additionally, severance
payments will be reduced and/or eliminated if the payments are prohibited by any
banking regulations.
The term of all of the Agreements expire on January 31, 2000; provided, however,
that on such date and on each January 31st thereafter, the term of the
Agreements shall automatically be extended for one additional year unless, not
later than thirty days prior to the expiration of the term, either party shall
have given notice that such party does not wish to extend the term. Further, if
a Change-in-Control shall have occurred during the original or any extended term
of the Agreements, the term of the Agreements shall continue for a period of
thirty-six calendar months beyond the calendar month in which such
Change-in-Control occurs.
REPORT ON REPRICING OF OPTIONS/SARS
At no time during the fiscal year ended December 31, 1998 did CORUS adjust or
amend the exercise price of existing stock options or SARs.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
CORUS' entire Board of Directors participates in determining executive officer
compensation and, therefore, CORUS has no compensation committee. J.C. Glickman
and R.J. Glickman abstain from votes of the CORUS Board of Directors regarding
their compensation as officers of CORUS. CORUS' Board of Directors had no
compensation committee interlocks with any other entity. In the case of the 1999
Stock Option Plan, only the Stock Option Committee will make awards under the
Plan.
BOARD REPORT ON EXECUTIVE COMPENSATION
OVERALL COMPENSATION PHILOSOPHY
CORUS' executive compensation objective is to link compensation with corporate
and individual performance in a manner which, recognizing the marketplace
practices of other bank holding companies, will retain and attract executives
who can achieve the short and long term goals of CORUS. The policy is to provide
for competitive base salaries which reflect individual levels of responsibility
and performance, annual bonuses based upon achievement of annual corporate
performance, and awards of stock-based incentive opportunities. The combined
result is a strengthening of the mutuality of interest in CORUS' long-term
performance between its executive officers and CORUS' shareholders.
TIMING OF THE BOARD OF DIRECTOR COMPENSATION REVIEW
The Board of Directors (the "Board") awarded 1998 bonuses at its November 18,
1998 meeting and set 1998 base salaries at its November 19, 1997 meeting. This
report is based upon the decisions made at those meetings. To the extent that
specific performance factors were discussed, the Board considered CORUS' actual
performance for the nine months ended September 30, 1998 and projections for the
entire fiscal year.
15
<PAGE> 18
CORUS' entire Board participates in determining executive officer compensation.
CORUS does not have a separate compensation committee. In the case of the
proposed 1999 Stock Option Plan, only the Stock Option Committee will act.
PEER GROUP COMPARISONS
At various stages of this report, the members of the Board assess CORUS'
performance relative to its peer publicly traded bank holding companies ranging
in size of $2 to $5 billion in the current year and over time. This peer group
is the appropriate group to utilize when assessing comparative performance
factors and the peer group is a subset of the NASDAQ BANK STOCKS indices used in
the performance graph on page 20.
BASE SALARIES
A base salary has been established for each executive officer. These base
salaries are established in relation to the external marketplace and internal
factors including but not limited to the following factors: (1) the compensation
history of the individual officer, (2) the individual's years of experience with
CORUS and in the industry, (3) the performance and contribution of the officer
relative to their job responsibility, (4) the achievement of certain financial
performance ratios as they relate to the respective executive officers' job
responsibilities (see specific factors discussed in relation to the CEO in the
"CEO Compensation" section below), and (5) the current financial condition of
CORUS.
Additionally, the Board also considers various qualitative factors including,
but not limited to, knowledge of the banking industry, the ability to recruit
and build a management team, commitment and dedication, and entrepreneurial
spirit. As a matter of policy, the Board does not assign weights to the factors
above for any of its executive officers due to the belief that the evaluation
and awarding of compensation to the executive officer group cannot be simplified
to a mathematical computation. As such, the compensation policy used by the
Board to set base salaries is considered subjective.
BONUSES
Executives may earn cash bonuses on an annual basis (the "Bonus Program"). The
Bonus Program is designed to promote a pay-for-performance philosophy by placing
a significant portion of total compensation "at risk" while rewarding
outstanding performance or achievement. The Board considers the achievements of
each executive officer for that year. The achievements may be quantitative or
qualitative. Qualitative factors include but are not limited to commitment,
dedication, or a demonstration of the entrepreneurial spirit. The Board is of
the opinion that CORUS is still small enough an organization to know what
contribution an executive officer has made in a given year.
STOCK OPTIONS
Until shareholder approval of the 1999 Stock Option Plan, CORUS may continue to
grant stock options pursuant to the 1990 Stock Option Plan, which was approved
by the shareholders in 1991. In 1998, D.H. Johnson III and R.J. Koretz were
granted 6,000 and 2,000 stock options, respectively. No other named executives
were granted options during 1998. All named executive officers presently hold
stock options, except for J.C. Glickman who does not participate in CORUS' 1990
Stock Option Plan. The Board felt that the present level of options, after
consideration of the 1998 grants, was appropriate. Upon
16
<PAGE> 19
approval of the 1999 Stock Option Plan, the Stock Option Committee may grant
awards under that Plan.
The Stock Option Committee will not assign specific company or individual
objectives when evaluating the awarding of stock options for the CEO or its
other executive officers; and, as such, the compensation policies used by the
Stock Option Committee when determining stock option awards will be considered
subjective.
COMMERCIAL LOAN OFFICER BONUS PROGRAM
As cited, CORUS also has the CORUS BANK, N.A. CLO Bonus Program. The purpose of
the CLO Bonus Program is to reward commercial loan officers for new business
development on the basis of each officer's loan volume generation, the potential
profitability and the loan loss experience of such officer's loan portfolio,
thereby more closely aligning the goals of the loan officers with the interests
of CORUS and its shareholders. The CLO Bonus Program is also intended to help
attract and retain qualified loan officers. All commercial loan officers of
Corus Bank are eligible to participate in the CLO Bonus Program. Currently there
are approximately 15 officers of CORUS eligible to participate, including
Michael G. Stein.
CEO COMPENSATION
The factors discussed above in the "Base Salary" section are the basis for
determining the base salary level of the CEO, Mr. Robert J. Glickman. Mr.
Glickman's salary did not change from 1997 to 1998.
The 1998 bonus amount to the CEO was based on his leadership in attaining, among
other criteria, the following:
(1) For the nine months ended September 30, 1998, CORUS' 1998 return on
average assets and return on average equity were 1.69% and 13.72%,
respectively. At the November, 1998 Board meeting, the members
considered these actual performance factors along with annual
projections which indicated similar ratios for the entire fiscal
year. By comparison, our peer group had performance ratios of
approximately 1.24% and 14.10%, respectively, for the same period in
1998. These two performance measures traditionally have placed CORUS
near the top of its peer group.
(2) CORUS' efficiency ratio for the first nine months of 1998 was
approximately 41%, whereas our peer group experienced an efficiency
ratio of approximately 59%. The efficiency ratio is a banking
industry measure which is calculated by dividing noninterest expenses
less goodwill amortization by the sum of noninterest income (net of
security gains) and fully tax-equivalent net interest income. A ratio
of less than 50% is generally considered excellent in the banking
industry. As such, CORUS' ratio in 1998 continues to be considered
outstanding by the Board.
(3) The Board noted the success of the investment in the bank stock
portfolio. It was noted that the idea of creating a bank stock
portfolio was the CEO's. It was also noted that the CEO was in charge
of all investment decisions related to this stock portfolio. At
November 6, 1998, the unrealized gains in the portfolio were $61
million and the realized gains, since inception of the portfolio in
mid 1994, were over $21 million. While the
17
<PAGE> 20
unrealized gains are not included in net income until the securities
are sold, they represent an economic gain to shareholders. In
addition, these unrealized gains had the effect of lowering the
performance ratios mentioned in item (1) above as the unrealized
gains are excluded from net income, but are included in shareholders'
equity, net of tax. Successful management and prudent deployment of
capital enabled management to generate an outstanding return on this
portfolio.
(4) Over the past five years, the total return of CORUS' stock has not
performed as well as the NASDAQ STOCK MARKET index and the NASDAQ
BANK STOCK index as reflected in the performance graph on page 20.
However, the related appreciation of CORUS' stock price over the past
five-year period equates to a gain to its shareholders in excess of
$184 million. The Board believes that CORUS is well positioned for
future growth and stock price appreciation.
(5) The members of the Board have determined that R.J. Glickman is a
person with extreme dedication to the success of CORUS and has
exhibited such dedication through his entrepreneurial spirit, hard
work ethic, knowledge of the banking industry and his ability to
recruit a management team with the same characteristics.
TAX CONSIDERATIONS
The Board has considered the provisions of Section 162(m) of the Internal
Revenue Code which, except in the case of "performance-based compensation" and
certain other types of compensation, limit to $1,000,000 the amount of CORUS'
federal income tax deduction for compensation paid to any of the chief executive
officer and the other four most highly paid executive officers. The Board
believes that CORUS' current compensation arrangements, which are primarily
based upon performance measures expected to be reflected in increasing
stockholder value over time, should not be altered to artificially maintain or
reduce executive compensation at or below the deduction limit specified in
Section 162(m). However, in order to maximize CORUS' corporate tax deduction, it
is the Board's policy to administer executive compensation in conformance with
the provisions of Section 162(m), except where, in the Board's judgment, the
interest of CORUS and its stockholders are better served by a different
approach.
CONCLUSION
The Board believes the executive officers' individual compensation programs
discussed in this report are designed in a manner which is consistent with
CORUS' overall compensation philosophy. As such, the compensation provided to
CORUS' CEO, Mr. R. J. Glickman, and to the other executive officers is deemed
appropriate.
JOSEPH C. GLICKMAN
ROBERT J. GLICKMAN
STEVEN D. FIFIELD
KARL H. HORN
MICHAEL LEVITT
RODNEY D. LUBEZNIK
MICHAEL TANG
WILLIAM H. WENDT, III
18
<PAGE> 21
PERFORMANCE GRAPH
The performance graph on the following page compares the yearly percentage
change in CORUS' cumulative shareholder return on common stock compared with the
cumulative total return on composites of 1) all NASDAQ stocks for United States
companies (broad market index) and 2) all NASDAQ bank stocks (peer group index)
over the last five years. Cumulative shareholder return is computed by dividing
the sum of the cumulative amount of dividends for the measurement period and the
difference between the registrant's share price at the end and beginning of the
measurement period by the share price at the beginning of the measurement
period. The NASDAQ Stock Market for United States Companies index comprises all
domestic common shares traded on the NASDAQ National Market and the NASDAQ
Small-Cap Market. The NASDAQ Bank Stocks index comprises all banks traded on the
NASDAQ National Market and NASDAQ Small-Cap Market.
19
<PAGE> 22
The following graph compares the five year cumulative total return of CORUS'
common stock with the Nasdaq Stock Market (U.S.) and the Nasdaq Bank Stocks
indices. The return assumes a $100 investment made on December 31, 1993 and the
reinvestment of all dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
CORUS BANKSHARES, INC., NASDAQ STOCK MARKET (U.S.) AND
NASDAQ BANK STOCKS
LOGO
<TABLE>
<CAPTION>
DOLLAR VALUE OF INVESTMENT AT DECEMBER 31
--------------------------------------------
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Nasdaq Stock Market (US) $100 $ 98 $138 $170 $209 $293
Nasdaq Bank Stocks 100 100 148 196 328 325
CORUS BANKSHARES, INC. 100 88 140 180 224 186
</TABLE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Certain Directors and Executive Officers are, at present, customers of CORUS'
subsidiary bank and have transactions with the bank in the ordinary course of
business. Such transactions have been and will continue to be on the same terms,
including interest rates and collateral on loans, as those prevailing at the
time for comparable transactions with other persons. Such transactions did not,
and will not, involve more than the normal risk of collectability nor present
other unfavorable features.
20
<PAGE> 23
SECTION 16 FILINGS
Section 16 of the Securities Exchange Act requires directors, certain officers
and certain other owners to periodically file notices of changes in beneficial
ownership of Common Stock with the Securities and Exchange Commission. To the
best of CORUS' knowledge, during 1998 all required filings were submitted in a
timely manner.
FUTURE PROPOSALS
Shareholders' proposals intended to be included in the Proxy statement and Form
of Proxy Card for CORUS' 2000 Annual Meeting, including nominees for director to
be considered by the Nominating Committee, in accordance with SEC Rule 14a-8,
must be received in writing by the Secretary of CORUS no later than November 24,
1999, in order to be considered for inclusion in the proxy material for that
meeting.
A stockholder that intends to present business at the 2000 Annual Meeting other
than pursuant to Rule 14a-8 must comply with the requirements set forth in Rule
14a-4(c). Among other things, to bring business before an annual meeting, a
stockholder must give written notice thereof to the Company not later than 45
days prior to the anniversary date of the immediately preceding annual meeting
of the stockholders. Therefore, because the Company anticipates holding its 1999
annual meeting on April 28, 1999, the Company must receive notice of a
stockholder proposal submitted other than pursuant to Rule 14a-8 no later than
March 15, 2000.
OTHER BUSINESS
CORUS is unaware of any other matter to be acted upon at the meeting for
shareholder vote. In case of any matter properly coming before the meeting for
shareholder vote, the proxy holders named in the proxy accompanying this
statement shall vote them in accordance with their best judgment.
By order of the Board of Directors,
JAMES KOLOVAS SIG.
James Kolovos
Secretary
March 17, 1999
21
<PAGE> 24
EXHIBIT A
CORUS BANKSHARES, INC.
1999 STOCK OPTION PLAN
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND EFFECTIVE DATE OF PLAN
1.1 Establishment of the Plan. CORUS BANKSHARES, INC. (hereinafter referred to
as the "Company"), hereby establishes an incentive compensation plan to be known
as the "1999 Stock Option Plan" (hereinafter referred to as the "Plan"), as set
forth in this document. The Plan permits the grant of incentive stock options,
nonqualified stock options, stock appreciation rights, and restricted stock to
Key Employees. Subject to ratification by a majority of the shareholders of the
Company at the Company's 1999 annual meeting of its Shareholders, the Plan shall
become effective as of February 17, 1999 (the "Effective Date"), and shall
remain in effect as provided in Section 1.3 herein. Awards may be granted
hereunder on or after the Effective Date, but in no event be exercisable or
payable to a Participant prior to such stockholder approval; and, if such
approval is not obtained within twelve (12) months after the Effective Date,
such awards shall be of no force and effect.
1.2 Purpose of the Plan. The purpose of the Plan is to promote the success of
the Company by providing incentives to Key Employees that will link their
personal interests to the long-term financial success of the Company and to the
growth in shareholder value. The Plan is intended to provide flexibility to the
Company in its ability to motivate, attract, and retain the services of Key
Employees upon whose judgment, interest, and special effort the successful
conduct of its operation is largely dependent.
1.3 Duration of the Plan. The Plan shall commence on the Effective Date, as
described in Section 1.1. herein, and shall remain in effect, subject to the
right of the Board of Directors to terminate the Plan at any time pursuant to
Article 12, until all Stock subject to it shall have been purchased or acquired
according to the provisions herein. However, in no event may an Award be granted
under the Plan on or after the tenth (10th) anniversary of the Plan's Effective
Date.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1 Definitions. Whenever used in the Plan, the following terms shall have the
meanings set forth below and, when the meaning is intended, the initial letter
of the word is capitalized:
(a) "Award" means, individually or collectively, a grant under this Plan of
Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation
Rights or Restricted Stock.
(b) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(c) "Board" or "Board of Directors" means the Board of Directors of the
Company.
(d) "Change in Control" shall be deemed to have occurred if the conditions
set forth in any one of the following paragraphs shall have been
satisfied:
(i) a change in the ownership of fifty percent (50%) or more of the
Corporation's outstanding common stock, within a twelve month
period; or,
1
<PAGE> 25
(ii) The stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than a merger or
consolidation which would result in the Voting Stock outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity) at least 80% of the total voting power
represented by the Voting Stock or the voting securities of such
surviving entity outstanding immediately after such merger or
consolidation, or
(iii) The stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the
Company's assets.
However, in no event shall a Change in Control be deemed to have
occurred, with respect to a Participant, if the Participant is part of a
purchasing group which consummates the Change in Control transaction.
The Participant shall be deemed "part of a purchasing group . . ." for
purposes of the preceding sentence if the Participant is an equity
participant or has agreed to become an equity participant in the
purchasing company or group (except for (a) passive ownership of less
than 5% of the Stock of the purchasing company or (b) ownership of
equity participation in the purchasing company or group which is
otherwise not deemed to be significant, as determined prior to the
Change in Control by a majority of the nonemployee continuing
directors). The Board has final authority to determine the exact date on
which a change in control has been deemed to have occurred under (i),
(ii), and (iii) above.
(e) "Cause" means:
(i) misappropriation of any funds or property of the Corporation; or
(ii) attempting to obtain any personal profit from any transaction in
which the Participant has a personal financial interest, unless
the Participant shall have first obtained the consent of the Board
of Directors; or
(iii) material neglect or refusal to perform the duties reasonably
assigned to the Participant, or (iv) participating in a course
of conduct which is injurious to the reputation of the Company or
its subsidiaries; or
(v) being convicted of a felony; or
(vi) being adjudicated a bankrupt, or
(vii) suspension due to the direction of any authorized bank regulatory
agency.
(f) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(g) "Committee" means the Stock Option Committee of the Board, or any
other committee appointed by the Board to administer the Plan pursuant
to Article 3 herein.
(h) "Company" means CORUS BANKSHARES, INC., a bank holding corporation or
any successor thereto as provided in Article 15 herein.
2
<PAGE> 26
(i) "Disability" means a permanent and total disability as determined by
the Committee in good faith, upon receipt of sufficient competent
medical advice.
(j) "Fair Market Value" on a specified date means the average of the bid
and asked closing prices at which one Share is traded on the
over-the-counter market on that date, as reported on the National
Association of Securities Dealers Automated Quotation system ("NASDAQ"),
or the closing price at which a Share is listed if listed as a national
market security on NASDAQ or on a national securities exchange on which
Shares are primarily traded; but if no Shares were traded on such date,
then on the last previous date on which a Share was so traded, or if
none of the above is applicable, the value of a Share as established by
the Committee for such date using any reasonable method of valuation.
(k) "Incentive Stock Option" or "ISO" means an Option, granted under
Article 6 herein, which is designated as an Incentive Stock Option and
is intended to meet the requirements of Section 422(b) of the Code.
(l) "Key Employee" means an employee of the Company or one of its
Subsidiaries, including an employee who is an officer or a director
of the Company or one of its Subsidiaries, who, in the opinion of
members of the Committee, can contribute significantly to the growth
and profitability of the Company. "Key Employee" also may include
those employees, identified by the Committee, in situations
concerning extraordinary performance, promotion, retention, or
recruitment. The granting of an Award under this Plan shall be deemed
a determination by the Committee that such employee is a Key
Employee.
(m) "Nonqualified Stock Option" or "NSO" means an Option, granted under
Article 6 herein, which is not intended to be an Incentive Stock
Option.
(n) "Option" means an Incentive Stock Option or a Nonqualified Stock
Option. Subject to the terms and conditions of the Plan (including but
not limited to Section 6.12) and of the relevant Option agreement, the
grant of an Option entitles the Participant to purchase Shares at an
Exercise Price established by the Committee.
(o) "Participant" means a Key Employee of the Company who has been
granted an Award under the Plan.
(p) "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is restricted, during which the Participant
is subject to a substantial risk of forfeiture, pursuant to Article 8
herein.
(q) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a group as defined in Section 13(d).
(r) "Plan" means the CORUS BANKSHARES, INC. 1999 Stock Option Plan, as
herein described.
(s) "Restricted Stock" means a Stock Award granted to a Participant
pursuant to Article 8 herein.
(t) "Stock" or "Shares" means the common stock of the Company.
3
<PAGE> 27
(u) "Stock Appreciation Right" and "SAR" mean the right to receive a
payment from the Company equal to the excess of the Fair Market Value
of a share of Stock at the date of exercise over a specified price
fixed by the Committee, which shall not be less than 100% of the Fair
Market Value of the Stock on the date of grant.
(v) Subsidiary means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the
time of the granting of the Option, each of the corporations, other
than the last corporation in the unbroken chain owns stock possessing
50 percent or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
2.2 Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
2.3 Severability. In the event any provision of the Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.
ARTICLE 3. ADMINISTRATION
3.1 The Committee. The authority to control and manage the operation and
administration of the Plan shall be vested in a committee (the "Committee")
consisting of not less than two directors who shall be appointed from time to
time by, and shall serve at the discretion of, the Board of Directors. Each
member of the Committee shall be a "non-employee director" for purposes of Rule
16b-3 promulgated under the Securities Exchange Act of 1934 and an "outside
director" for purposes of Code Section 162(m) and the regulations thereunder.
3.2 Authority of the Committee. Subject to the provisions of the Plan, the
Committee shall have full power to construe and interpret the Plan; to
establish, amend or waive rules and regulations for its administration; to make
all other determinations that may be necessary or advisable for the
administration of the Plan; to accelerate the exercisability of any Award or the
end of a Period of Restriction or the termination of any Award Agreement, or any
other instrument relating to an Award under the Plan; and (subject to the
provisions of Article 12 herein) to amend the terms and conditions of any
outstanding Option, or Restricted Stock Award to the extent such terms and
conditions are within the discretion of the Committee as provided in the Plan.
Notwithstanding the foregoing, no action of the Committee may, without the
consent of the person or persons entitled to exercise any outstanding Option or
to receive payment of any other outstanding Award, adversely affect the rights
of such person or persons.
3.3 Selection of Participants. The Committee shall have the authority to grant
Awards under the Plan, from time to time, to such Key Employees (including
officers and directors who are employees) as may be selected by it, in its
discretion and to determine the time or times of receipt, to determine the types
of Awards, and the number of Shares covered by the Awards, to establish the
terms, conditions, performance criteria, restrictions and all other terms,
conditions and provisions of such Awards. The Committee shall select
Participants from among those whom they have identified as being Key Employees.
4
<PAGE> 28
3.4 Decisions Binding. All interpretations, determinations and decisions made by
the Committee pursuant to the provisions of the Plan shall be final, conclusive
and binding on all persons, including the Company, its Subsidiaries,
stockholders, Employees, Participants and their estates and beneficiaries.
3.5 Delegation of Certain Responsibilities. The Committee may, in its sole
discretion, delegate to appropriate officers of the Company the administration
of the Plan under this Article 3, provided that the Committee may not delegate
its authority to correct errors, omissions or inconsistencies in the Plan. All
authority delegated by the Committee under this Section 3.5 shall be exercised
in accordance with the provisions of the Plan and any guidelines for the
exercise of such authority that may from time to time be established by the
Committee.
3.6 Procedures of the Committee. All determinations of the Committee shall be
made by not less than a majority of its members present at the meeting (in
person or otherwise) at which a quorum is present. A majority of the entire
Committee shall constitute a quorum for the transaction of business. Any action
required or permitted to be taken at a meeting of the Committee may be taken
without a meeting if a unanimous written consent, which sets forth the action,
is signed by each member of the Committee and filed with the minutes for
proceedings of the Committee. No member of the Committee shall be liable, in the
absence of bad faith, for any act or omission with respect to his or her other
services on the Committee. Service on the Committee shall constitute service as
a director of the Company so that members of the Committee shall be entitled to
indemnification (as provided in Article 14 herein), and limitation of liability
and reimbursement with respect to their services as members of the Committee to
the same extent as for services as directors of the Company.
3.7 Award Agreements. Each Award under the Plan shall be evidenced by an award
agreement which shall be signed by an officer of the Company and by the
Participant, and shall contain such terms and conditions as may be approved by
the Committee, which need not be the same in all cases. Any award agreement may
be supplemented or amended in writing from time to time as approved by the
Committee, provided that the terms of such agreements as amended or
supplemented, as well as the terms of the original award agreement, are not
inconsistent with the provisions of the Plan.
Nothing contained in the Plan or any resolutions adopted or to be adopted by the
Board of Directors or by the stockholders of the Company shall constitute the
granting of an Award under the Plan. An Employee who receives an Award under the
Plan will not, with respect to such Award, be deemed to have become a
Participant, or to have any rights with respect to such Award, unless and until
such Employee has executed an award agreement or other instrument evidencing the
Award and shall have delivered an executed copy thereof to the Company, and has
otherwise complied with the applicable terms and conditions of the Award.
3.8 Form and Time of Elections. Unless otherwise specified herein, each election
required or permitted to be made by any Participant or other person entitled to
benefits under the Plan, and any permitted modification, or revocation thereof,
shall be in writing filed with the Committee at such times, in such form, and
subject to such restrictions and limitations, not inconsistent with the terms of
the Plan, as the Committee shall require.
3.9 Information to be Furnished to the Committee. The Company shall furnish the
Committee with such data and information as it determines may be required for it
to discharge its duties. The records of the Company as to an Employee's or
Participant's employment, termination of employment, leave of absence,
reemployment and compensation shall be conclusive on all persons unless
determined to be incorrect. Participants and other persons entitled to benefits
under the Plan must furnish the Committee
5
<PAGE> 29
such evidence, data or information as the Committee considers desirable to carry
out the terms of the Plan.
ARTICLE 4. STOCK SUBJECT TO THE PLAN
4.1 The Shares with respect to which Awards may be made under the Plan shall be
Shares currently authorized but unissued.
4.2 Subject to the following provisions of this subsection 4.2, the maximum
number of Shares that may be granted to Participants and their beneficiaries
under the Plan shall be 1,000,000 Shares.
(a) To the extent provided by the Committee, any Award may be settled in
cash rather than Stock. To the extent any Shares covered by an Award
are not delivered to a Participant or beneficiary because the Award
is forfeited, terminated, lapses or expires, or the Shares are not
delivered because the Award is settled in cash or used to satisfy the
applicable tax withholding obligation, such Shares shall nevertheless
be deemed delivered for purposes of determining the maximum number of
Shares available for delivery under the Plan.
(b) If the exercise price of any stock option granted under the Plan or
any Prior Plan is satisfied by tendering Shares to the Company
pursuant to Section 6.6(b), the total number of Shares issued shall be
deemed delivered for purposes of determining the maximum number of
Shares available for delivery under the Plan.
(c) Subject to paragraph 4.2(d), the following additional maximums are
imposed under the Plan.
(i) The maximum number of Shares that may be issued by Options
intended to be ISOs shall be 100,000 Shares.
(ii) The maximum number of Shares that may be covered by Awards granted
to any one individual pursuant to Article 6 and Article 7
(relating to Options and SARs) shall be 250,000 Shares during any
one calendar-year period. To the extent required by Section 162(m)
of the Code and so long as 162(m) is applicable to persons
eligible to participate in the Plan, Shares of Stock subject to
the foregoing limit with respect to which the related Award is
terminated, surrendered or canceled shall not again be available
for grant under this limit.
(iii) The maximum number of Shares that may be issued in conjunction
with Awards granted pursuant to Article 8 (relating to Other
Stock Awards) shall be 100,000 Shares.
(d) Adjustments in Authorized Shares. In the event of any merger,
reorganization, split-up, spin-off, consolidation, recapitalization,
separation, liquidation, extraordinary cash dividend, Stock dividend,
Stock split, share combination, exchange of shares, or other change in
the corporate structure of the Company affecting the Stock, such
adjustment shall be made in the number and class of Shares which may
be granted and delivered under the Plan, and in the number and class
of and/or price of Shares subject to outstanding Options, SARs and
Restricted Stock Awards granted under the Plan, as may be determined
to be appropriate and equitable by the Committee, in its sole
discretion, to prevent dilution or enlargement of rights; and
6
<PAGE> 30
provided that the number of Shares subject to any Award shall always be
a whole number. Any adjustment of an Incentive Stock Option under this
paragraph shall be made in such a manner so as not to constitute a
"modification" within the meaning of Section 424(h)(3) of the Code.
4.3. General Restrictions. Delivery of Shares or other amounts under the Plan
shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company shall
have no liability to deliver any shares of Stock under the Plan or
make any other distribution of benefits under the Plan unless such
delivery or distribution would comply with all applicable laws
(including, without limitation, the requirements of the Securities
Act of 1933), and the applicable requirements of any securities
exchange or similar entity.
(b) To the extent that the Plan provides for issuance of stock
certificates to reflect the issuance of Shares, the issuance may be
effected in the discretion of the Committee on a non-certificated
basis, to the extent not prohibited by applicable law or the
applicable rules of any stock exchange.
4.4. Grant and Use of Awards. In the discretion of the Committee, a Participant
may be granted any Award permitted under the provisions of the Plan, and more
than one Award may be granted to a Participant. Awards may be granted as
alternatives to or replacement of awards granted or outstanding under the Plan,
or any other plan or arrangement of the Company (including a plan or arrangement
of a business or entity, all or a portion of which is acquired by the Company).
Subject to the overall limitation on the number of Shares that may be delivered
under the Plan, the Committee may use available Shares in the form of payment
for compensation, grants or rights earned or due under any other compensation
plans or arrangements of the Company, including the plans and arrangements of
the Company assumed in business combinations.
4.5. Settlement and Payments. Awards may be settled through cash payments, the
delivery of Shares, the granting of replacement Awards, or combination thereof
as the Committee shall determine. Any Award settlement, may be subject to such
conditions, restrictions and contingencies as the Committee shall determine.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1 Eligibility. Persons eligible to participate in this Plan include all
employees of the Company or a Subsidiary who, in the opinion of members of the
Committee, are Key Employees. "Key Employees" may include employees who are
members of the Board, but may not include directors who are not full-time
employees.
5.2 Actual Participation. Subject to the provisions of the Plan, the Committee
may from time to time select from Key Employees, those to whom Awards shall be
granted and determine the nature and amount of each Award. No employee shall
have any right to be granted an Award under this Plan.
ARTICLE 6. STOCK OPTIONS
6.1 Grant of Options. Subject to the terms and provisions of the Plan, Options
may be granted to Key Employees at anytime and from time to time as shall be
determined by the Committee. Subject to
7
<PAGE> 31
Article 4, the Committee shall have complete discretion in determining the
number of Shares subject to Options granted to each Participant. The Committee
may grant any type of option to purchase Stock that is permitted by law at the
time of grant including, but not limited to, ISOs and NSOs. However, no employee
may receive an Award of Incentive Stock Options that are first exercisable
during any calendar year to the extent that the aggregate Fair Market Value of
the Stock (determined at the time the options are granted) exceeds $100,000.
Nothing in this Article 6 shall be deemed to prevent the grant of NSOs in excess
of the maximum established by Section 422(d) of the Code.
6.2 Option Agreement. Each Option grant shall be evidenced by an Option
agreement that shall specify the type of Option granted, the Exercise Price, the
duration of the Option, the number of Shares to which the Option pertains, and
such other terms and provisions as the Committee shall determine. The Option
agreement shall specify whether the Option is intended to be an Incentive Stock
Option within the meaning of Section 422(b) of the Code, or a Nonqualified Stock
Option whose grant is intended not to fall under the Code provisions of Section
422(b). Unless otherwise expressly provided at the time of grant, Options
granted under the Plan will be NSOs.
6.3 Exercise Price. The "Exercise Price" of each Option and SAR granted under
this Article 6 and Article 7 shall be established by the Committee or shall be
determined by a method established by the Committee at the time that the Option
or SAR is granted; except that the Exercise Price shall not be less than 100% of
the Fair Market Value of a Share on the date of grant.
An Incentive Stock Option granted to an Employee who, at the time of grant, owns
(within the meaning of Section 424(d) of the Code) Stock possessing more than
10% of the total combined voting power of all classes of Stock of the Company,
shall have an exercise price which is at least 110% of the Fair Market Value of
the Stock subject to the Option.
6.4 Duration of Options. Each Option shall expire at such time as the Committee
shall determine at the time of grant provided, however, that (i) subject to
clause, (ii) no ISO shall be exercisable later than the tenth (10th) anniversary
date of its grant; and (ii) in the case of an individual described in the second
paragraph of Section 6.3, no ISO shall be exercisable later than the fifth (5th)
anniversary date of its grant.
6.5 Exercise of Options. Options granted under the Plan shall be exercisable, on
such terms and conditions and during such periods as the Committee shall in each
instance establish, which need not be the same for all Participants.
6.6 Payment. Options shall be exercised by the delivery of a written notice to
the Company setting forth the number of Shares of Stock with respect to which
the Option is to be exercised, accompanied by full payment for the Shares,
subject to the following:
(a) the full Exercise Price for Shares purchased upon the exercise of any
Option shall be paid at the time of such exercise (except that, in
the case of an exercise arrangement approved by the Committee and
described in paragraph (c), payment may be made as soon as
practicable after the exercise).
(b) The Exercise Price shall be payable in cash or, if permitted by the
Committee, by tendering, by either actual delivery of Shares or by
attestation, Shares acceptable to the Committee in its discretion,
and valued at Fair Market Value as of the day of exercise, or in any
combination of cash and shares thereof, as determined and permitted
by the Committee.
8
<PAGE> 32
(c) The Committee may, in its discretion, permit a Participant to elect
to pay the Exercise Price upon the exercise of an Option by
irrevocably authorizing a third party to sell Shares (or a sufficient
portion of the Shares) acquired upon exercise of the Option and remit
to the Company a sufficient portion of the sale proceeds to pay the
entire Exercise Price and any tax withholding resulting from such
exercise.
The proceeds from such a payment shall be added to the general funds of the
Company and shall be used for general corporate purposes.
As soon as practicable, after receipt of written notification and payment, the
Company shall deliver to the Participant Stock certificates in an appropriate
amount based upon the number of Options exercised, issued in the Participant's
name.
Notwithstanding the foregoing, the Committee may permit the Participant to defer
the delivery of such shares on such terms and conditions as the Committee shall
establish.
6.7 Restrictions on Stock Transferability. The Committee shall impose such
restrictions on any Stock acquired pursuant to the exercise of an Option under
the Plan as it may deem advisable, including, without limitation, restrictions
under applicable Federal securities law, under the requirements of any stock
exchange upon which such Stock is then listed and under any blue sky or state
securities laws applicable to such Shares.
6.8 Termination of Employment Due to Death or Disability. In the event the
employment of a Participant is terminated by reason of death, any outstanding
Options shall become 100% vested and immediately exercisable at any time prior
to the expiration date of the Options or within 90 days after such date of
termination of employment, whichever period is shorter, by such person or
persons as shall have acquired the Participant's rights under the Option by will
or by the laws of descent and distribution. In the event the employment of a
Participant is terminated by reason of Disability, any outstanding Options shall
become 100% vested and immediately exercisable at any time prior to the
expiration date of the Options or within 90 days after such date of termination
of employment, whichever period is shorter. In the case of Incentive Stock
Options, the favorable tax treatment prescribed under Section 422(b) of the
Internal Revenue Code of 1986, as amended may not be available if the options
are not exercised within the Section 422(b) prescribed time period after
termination of employment for death, disability, or retirement.
6.9 Termination of Employment for Other Reasons. If the employment of a
Participant shall terminate for any reason other than death, disability or for
Cause, all outstanding Options that have not become vested and exercisable as of
his date of termination shall terminate immediately on that date. All
outstanding Options that have become vested and exercisable as of his date of
termination shall terminate one month after such date of termination. In its
sole discretion, the Committee may extend the exercisability of any outstanding
Option that was vested and exercisable as of his date of termination for up to
90 days, but in no event beyond the expiration date of the Option.
If the employment of a Participant shall terminate for Cause, rights under all
outstanding Options shall be immediately terminated upon termination of
employment.
6.10 Nontransferability of Options. Except as otherwise provided by the
Committee in the applicable Option agreement, no Option granted under the Plan
may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, otherwise than by will or by the laws of descent and distribution.
Unless otherwise determined by the Committee in accordance with the provisions
of the immediately
9
<PAGE> 33
preceding sentence, an Award may be exercised during the lifetime of a
Participant only by the Participant or during the period that the Participant is
under a legal disability by the Participant's guardian or legal representative.
6.11 Rule 16b-3 Requirements. Notwithstanding any other provision of the Plan,
the Committee may impose such conditions on exercise of an Option (including
without limitation the right of the Committee to limit the time of exercise to
specified periods) as may be necessary to satisfy the requirements of Rule
16b-3.
6.12 Settlement in Cash. Pursuant to, and not in limitation of, Sections 4.2(a)
and 4.5, upon the exercise of an Option by a Participant, the Committee may in
its discretion pay to the Participant in lieu of Shares, an amount in cash equal
to the excess of (a) the Fair Market Value at the time of exercise of the number
of Shares of Stock with respect to which the Participant is exercising his
Option; over (b) the total Exercise Price for such Shares established by the
Committee; reduced by (c) withholding for all applicable taxes.
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1 Grant of Stock Appreciation Rights. Subject to the provisions of Articles 1
and 4, Stock Appreciation Rights ("SARs") may be granted to Participants at any
time and from time to time as shall be determined by the Committee.
7.2 Exercise of SARs. SARs may be exercised upon whatever terms and conditions
the Committee, in its sole discretion, imposes upon the SARs.
7.3 Payment of SAR Amount. Upon exercise of the SAR, the holder shall be
entitled to receive payment of an amount (subject to Section 7.5 below)
determined by multiplying:
(a) The difference between the Fair Market Value of a share of Stock at
the date of exercise over the Exercise Price (determined at Section 6.3)
by
(b) The number of Shares with respect to which the Stock Appreciation
Right is exercised.
7.4 Form and Timing of Payment. At the discretion of the Committee, payment for
SARs may be made in cash or Stock, or in a combination thereof.
7.5 Limit on Appreciation. At the time of grant, the Committee may establish in
its sole discretion, a maximum amount per share which will be payable upon
exercise of an SAR.
7.6 Rule 16b-3 Requirements. Notwithstanding any other provision of the Plan,
the Committee may impose such conditions on exercise of an SAR (including,
without limitation, the right of the Committee to limit the time of exercise to
specified periods) as may be required to satisfy the requirements of Rule 16b-3.
7.7 Term of SAR. The term of an SAR granted under the Plan shall not exceed 20
years.
7.8 Termination of Employment. In the event the employment of a Participant is
terminated by reason of death, Disability, Retirement, or any other reason, any
SARs outstanding shall terminate in the same manner as specified for Options
under Sections 6.8 and 6.9 herein.
10
<PAGE> 34
7.9 Nontransferability of SARs. Except as otherwise provided by the Committee in
the applicable Award agreement, no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Unless
otherwise determined by the Committee in accordance with the provisions of the
immediately preceding sentence, an Award may be exercised during the lifetime of
a Participant only by the Participant or during the period that the Participant
is under a legal disability by the Participant's guardian or legal
representative.
ARTICLE 8. RESTRICTED STOCK
8.1 Grant of Restricted Stock. Subject to the terms and provisions of the Plan,
the Committee, at any time and from time to time, may grant Shares of Restricted
Stock under the Plan to such Participants and in such amounts as it shall
determine.
8.2 Restricted Stock Agreement. Each Restricted Stock grant shall be evidenced
by a Restricted Stock Agreement that shall specify the Period of Restriction, or
periods, the number of Restricted Stock Shares granted, and such other
provisions as the Committee shall determine.
8.3 Transferability. Except as provided in this Article 8, the Shares of
Restricted Stock granted hereunder may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the termination of the
applicable Period of Restriction or for such period of time as shall be
established by the Committee and as shall be specified in the Restricted Stock
Agreement, or upon earlier satisfaction of other conditions as specified by the
Committee in its sole discretion and set forth in the Restricted Stock
Agreement. All rights with respect to the Restricted Stock granted to a
Participant under the Plan shall be exercisable during his lifetime only by such
Participant.
8.4 Other Restrictions. The Committee shall impose such other restrictions on
any Shares of Restricted Stock granted pursuant to the Plan as it may deem
advisable including, without limitation, restrictions under applicable Federal
or state securities laws, and may legend the certificates representing
Restricted Stock to give appropriate notice of such restrictions.
8.5 Certificate Legend. In addition to any legends placed on certificates
pursuant to Section 8.4 herein, each certificate representing Shares of
Restricted Stock granted pursuant to the Plan shall bear the following legend:
"The sale or other transfer of the Shares of Stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is subject
to certain restrictions on transfer set forth in the 1999 Stock Option Plan of
CORUS BANKSHARES, INC., in the rules and administrative procedures adopted
pursuant to such Plan, and in a Restricted Stock Agreement dated ________. A
copy of the Plan, such rules and procedures, and such Restricted Stock Agreement
may be obtained from the Secretary of CORUS BANKSHARES, INC."
8.6 Removal of Restrictions. Except as otherwise provided in this Article,
Shares of Restricted Stock covered by each Restricted Stock grant made under the
Plan shall become freely transferable by the Participant after the last day of
the Period of Restriction. Once the Shares are released from the restrictions,
the Participant shall be entitled to have the legend required by Section 8.5
removed from his Stock certificate.
11
<PAGE> 35
8.7 Voting Rights. During the Period of Restriction, Participants holding Shares
of Restricted Stock granted hereunder may exercise full voting rights with
respect to those Shares.
8.8 Dividends and Other Distributions. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect to
those Shares while they are so held. If any such dividends or distributions are
paid in Shares of Stock, the Shares shall be subject to the same restrictions on
transferability as the Shares of Restricted Stock with respect to which they
were paid.
8.9 Termination of Employment Due to Death or Disability. In the event a
Participant's employment is terminated because of death or Disability during the
Period of Restriction, any remaining Period of Restriction applicable to the
Restricted Stock pursuant to Section 8.3 herein shall automatically terminate
and, except as otherwise provided in Section 8.4, the Shares of Restricted Stock
shall thereby be free of restrictions and fully transferable.
8.10 Termination of Employment for Other Reasons. In the event that a
Participant terminates his employment with the Company for any reason other than
for Death or Disability as set forth in Section 8.9 herein, during the Period of
Restriction, then any Shares of Restricted Stock still subject to restrictions
as of the date of such termination shall automatically be forfeited and returned
to the Company; provided, however, that, in the event of an involuntary
termination of the employment of a Participant by the Company other than for
Cause, the Committee, in its sole discretion, may waive the automatic forfeiture
of any or all such Shares and may add such new restrictions to such Shares of
Restricted Stock as it deems appropriate.
8.11 Nontransferability of Restricted Stock. No shares of Restricted Stock
granted under the Plan may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, otherwise than by will or by the laws of descent and
distribution until the termination of the applicable Period of Restriction. All
rights with respect to Restricted Stock granted to a Participant under the Plan
shall be exercisable during his lifetime only by such Participant.
ARTICLE 9. BENEFICIARY DESIGNATION
9.1 Beneficiary Designation. Each Participant under the Plan may, from time to
time, name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in case of his
death before he receives any or all of such benefit. Each designation will
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Committee, and will be effective only when filed by the
Participant in writing with the Committee during his lifetime. In the absence of
any such designation, benefits remaining unpaid at the Participant's death shall
be paid to the Participant's estate.
ARTICLE 10. RIGHTS OF EMPLOYEES
10.1 Participation. No Employee shall have a right to be selected as a
Participant, or having been so selected, to be selected again as a Participant.
Neither a Participant nor any other person shall, by reason of participation in
the Plan, acquire any right in or title to any assets, funds or property of the
Company whatsoever, including, without limitation, any specific funds, assets,
or other property which the Company or any subsidiary, in its sole discretion,
may set aside in anticipation of a liability under the Plan. A Participant shall
have only a contractual right to the Stock or amounts, if any, payable under
12
<PAGE> 36
the Plan, unsecured by any assets of the Company, and nothing contained in the
Plan shall constitute a guarantee that the assets of the Company shall be
sufficient to pay any benefits to any person.
10.2 Employment. Nothing in the Plan shall interfere with or limit in any way
the right of the Company to terminate any Participant's employment at any time,
nor confer upon any Participant any right to continue in the employ of the
Company. Except as otherwise provided in the Plan, no Award under the Plan shall
confer upon the holder thereof any rights as a shareholder of the Company prior
to the date on which the individual fulfills all conditions for receipt of such
rights.
ARTICLE 11. CHANGE IN CONTROL
11.1 In General. In the event of a Change in Control of the Company as defined,
all Awards under the Plan shall vest 100%, whereupon all Options shall become
exercisable in full, the restrictions applicable to Restricted Stock shall
terminate, and SARs shall be paid out.
ARTICLE 12. AMENDMENT, MODIFICATION, AND TERMINATION
12.1 Amendment, Modification, and Termination. With the approval of the Board,
at any time and from time to time, the Committee may terminate, amend, or modify
the Plan. However, without the approval of the stockholders of the Company no
such termination, amendment or modification may:
(a) Increase the total number of Shares of Stock which may be issued
under this Plan, either in the aggregate or to an individual, except
as provided in Section 4.2(d) herein;
(b) Change the class of Employees eligible to participate in the Plan; or
(c) Change the provisions of the Plan regarding Option Exercise Price.
12.2 Awards, Previously Granted. No termination, amendment or modification of
the Plan shall in any manner adversely affect any Award theretofore granted
under the Plan, without the written consent of the Participant.
ARTICLE 13. WITHHOLDING
13.1 Tax Withholding. All distributions under the Plan are subject to
withholding of all applicable taxes, and the Committee may condition the
delivery of any cash, Shares or other benefits under the Plan on satisfaction of
the applicable withholding obligations. The Company shall have the power and the
right to deduct or withhold, or require a Participant to remit to the Company,
an amount sufficient to satisfy Federal, State and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any grant, exercise, or payment made under or as a result of this Plan.
13.2 Stock Withholding Elections. Subject to the consent of the Committee, due
to the exercise of a (a) Nonstatutory (Nonqualified) Stock Option, (b) lapse of
restrictions on Restricted Stock, or (c) the issuance of any other Stock Award
under the Plan, a Participant may make an irrevocable election to (i) have
shares of Stock otherwise issuable under (a) withheld, or (ii) tender back to
the Company shares of Stock received pursuant to (a), (b), or (c), or (iii)
deliver back to the Company previously-acquired shares of Stock (by actual
delivery or attestation) having a Fair Market Value sufficient to satisfy all or
part of the Participant's estimated total federal, state, and local tax
obligations associated with the transaction. Such elections must be made by a
Participant on or prior to the date of exercise.
13
<PAGE> 37
The Committee may disapprove of any election, may suspend or terminate the right
to make elections, or may provide with respect to any Award under the Plan that
the right to make elections shall not apply to such Awards.
ARTICLE 14. INDEMNIFICATION
14.1 Indemnification. Each person who is or shall have been a member of the
Committee, or of the Board, shall be indemnified and held harmless by the
Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be a party or in which he
may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him in settlement thereof, with
the Company's approval, or paid by him in satisfaction of any judgment in any
such action, suit, or proceeding against him, provided he shall give the Company
an opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the
Company may have to indemnify them or hold them harmless.
ARTICLE 15. SUCCESSORS
15.1 Successors. All obligations of the Company under the Plan, with respect to
Awards granted hereunder, shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation or otherwise, of all or substantially all of the
business and/or assets of the Company.
ARTICLE 16. REQUIREMENTS OF LAW
16.1 Requirements of Law. The granting of Awards and the issuance of Shares of
Stock under this Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
16.2 Governing Law. The Plan, and all agreements hereunder, shall be construed
in accordance with and governed by the laws of the State of Illinois.
14
<PAGE> 38
CORUS BANKSHARES, INC.
3959 North Lincoln Avenue
Chicago, Illinois 60613
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED, revoking previous proxies for such stock, hereby appoints J.C.
Glickman and R. J. Glickman and each of them the proxy of the undersigned with
full power of substitution, to vote all of CORUS BANKSHARES, Inc. which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of said
Corporation TO BE HELD IN THE OFFICE OF CORUS BANK, N.A., 4800 N. WESTERN
AVENUE, CHICAGO, ILLINOIS 60625, at 10:00 a.m. on April 28, 1999, and at any
adjournment thereof:
(CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
- FOLD AND DETACH HERE -
<PAGE> 39
<TABLE>
<S> <C> <C>
Please mark
your votes as [X]
indicated in
this sample
1. Election of Directors
FOR all nominees WITHHOLD (INSTRUCTIONS: To withhold authority to vote for any individual nominee strike
listed to the right AUTHORITY a line through the nominee's name in the list below.
(except as marked to vote for all
to the contrary) nominees listed to
the right Joseph C. Glickman Karl H. Horn Michael Tang
Robert J. Glickman Michael Levitt William H. Wendt, III
[ ] [ ] Steven D. Fifield Rodney D. Lubeznik
2. Proposal to approve the CORUS 3. Proposal to approve the appointment In their discretion, the proxies are
BANKSHARES, INC. 1999 Stock of Arthur Andersen LLP as the authorized to vote upon such other
Option Plan Independent public accounts of the business as may properly come before
Company. the meeting. THIS PROXY WILL BE VOTED
AS DIRECTED. UNLESS OTHERWISE MARKED,
PROXIES WILL BE VOTED AS DIRECTED.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN UNLESS OTHERWISE MARKED, PROXIES WILL
BE VOTED FOR THE ELECTION OF DIRECTORS
[ ] [ ] [ ] [ ] [ ] [ ] AND RATIFICATION OF AUDITORS, AND IN
ACCORDANCE WITH THEIR BEST JUDGEMENT
UPON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE SAID MEETING OR ANY
ADJOURNMENT THEREOF.
The undersigned, may, at any time prior
to the Annual Meeting of Shareholders,
revoke this Proxy.
Dated: ,1999
----------------------------
---------------------------------------
Signature
---------------------------------------
Signature, if held jointly
(The shareholder's signature should be
exactly as it appears on stock certificate.
In case stock is held jointly, all parties
should sign. If you sign as an attorney,
trustee, administrator, executor or guardian,
please give full title as such. Corporations
should sign by duly authorized officer and
affix seal.)
- ------------------------------------------------------------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
</TABLE>
