<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 [X]
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
Irwin Financial Corporation
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Irwin Financial Corporation
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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
Irwin Financial Corporation 500 Washington Street, Columbus, Indiana 47201
- --------------------------------------------------------------------------------
March 27, 1997
Notice of Annual Meeting of Shareholders
- --------------------------------------------------------------------------------
To the Shareholders:
The Annual Meeting of Shareholders of Irwin Financial
Corporation (the "Corporation") will be held at the main
offices of the Corporation, 500 Washington Street, Columbus,
Indiana, on Tuesday, April 29, 1997 at 4:00 p.m., Columbus
time, for the following purposes:
1. to elect a Board of Directors to serve for the ensuing year;
2. to act upon the confirmation of independent auditors for the
calendar year 1997;
3. to approve the Irwin Financial Corporation 1997 Stock Option
Plan;
4. to hear such reports as may be presented; and
5. to transact such other business as may properly come before
the meeting or any adjournment thereof.
Registration of shareholders will start at 3:15 p.m. and the
meeting will start at 4:00 p.m. Following the meeting,
refreshments will be served.
I encourage you to date, sign, and mail the enclosed proxy in
the postpaid envelope that is provided. If you are present at
the meeting and desire to do so, you may revoke your proxy and
vote in person.
A copy of the Corporation's Annual Report to Shareholders for
1996 is enclosed and a Proxy Statement accompanies this
notice.
By Order of the Board of Directors
MATTHEW F. SOUZA, Secretary
<PAGE> 3
Proxy Statement of Irwin Financial Corporation
- --------------------------------------------------------------------------------
For Annual Meeting of Shareholders to be held April 29, 1997
General Information
- --------------------------------------------------------------------------------
This proxy statement and the accompanying form of proxy is
furnished in connection with the solicitation by the Board of
Directors of Irwin Financial Corporation (the "Corporation")
of proxies to be used at the Corporation's Annual Meeting of
Shareholders on Tuesday, April 29, 1997, at the main offices
of the Corporation, Columbus, Indiana, at 4:00 p.m., Columbus
time, or any adjournment thereof.
The costs of the solicitation of proxies in the accompanying
form will be borne by the Corporation. The solicitation of
proxies will be limited to the use of the mails.
A shareholder who signs and returns a proxy in such form will
have the power to revoke it at any time before it is exercised
by giving notice of revocation to the Secretary of the
Corporation. All shares represented by the accompanying proxy,
if the proxy is executed and returned, will be voted as
directed by the shareholder. If a shareholder executes and
returns a proxy, but makes no direction as to such
shareholder's vote, then the shares will be voted on each
matter to come before the meeting in accordance with the
recommendation of the Board of Directors.
The main offices of the Corporation are located at 500
Washington Street, Columbus, Indiana 47201.
This proxy statement will be mailed to shareholders on or
about March 27, 1997.
1.
<PAGE> 4
Voting Securities and Principal Holders
- --------------------------------------------------------------------------------
Only shareholders of record at the close of business on March
11, 1997, will be entitled to vote. On March 11, 1997, there
were 11,329,062 common shares outstanding and entitled to
vote. Each common share is entitled to one vote on each matter
to be voted on at the meeting.
The following information is given as of March 11, 1997 for
persons known by management to beneficially own more than 5%
of the common shares of the Corporation. All of the shares
listed are beneficially owned through voting and investment
power held solely by the reported owner, except as otherwise
indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Title of Amount and Nature of
Class Name and Address Beneficial Ownership % of Class
<S> <C> <C> <C>
----------------------------------------------------------------------------------
Common Irwin Financial 2,580,296(1) 22.78%
Shares Corporation Trust
Irwin Miller, Trustee
301 Washington Street
Columbus, Indiana
Common Irwin Miller 2,646,823(1,2) 23.36%
Shares 301 Washington Street
Columbus, Indiana
Common William I. Miller 5,362,663(1,3) 47.34%
Shares 500 Washington Street
Columbus, Indiana
----------------------------------------------------------------------------------
</TABLE>
1. Certain shares owned by the Irwin Financial Corporation Trust
(2,580,296 shares which were transferred to the Trust by the
Estate of Mrs. Clementine Tangeman) and Mr. Irwin Miller
(2,580,272 shares) are subject to an irrevocable proxy held by
Mr. William I. Miller to vote such shares. Mr. William I.
Miller holds a right to acquire these same 5,160,568 shares,
pursuant to options purchased by Mr. Miller from Mrs.
Clementine Tangeman and Mr. Irwin Miller, within 60 days but
subject to certain contingencies.
2. Includes 60,000 shares owned by Mr. Irwin Miller's wife,
Xenia S. Miller, as to which Mr. Miller holds no voting or
investment power and for which Mr. Miller expressly disclaims
any beneficial interest, 3,024 shares as to which Mr. Miller
holds voting and investment power, and 3,527 shares held for
the account of Mr. Irwin Miller under the Corporation's
Outside Director Restricted Stock Compensation Plan as to
which Mr. Miller holds sole voting power but no investment
power. See "Outside Director Restricted Stock Compensation
Plan."
3. See Footnote 1 above. Includes 9,894 shares that Mr. Miller
is the custodian of on behalf of his children and for which
Mr. Miller expressly disclaims any beneficial interest and
100,575 shares which Mr. Miller has the right to acquire
within 60 days of the record date through the exercise of
stock options.
2.
<PAGE> 5
Security Ownership
of Management: The following information is given as of March 11, 1997 for the
nominees for director, individually, and all executive officers
of the Corporation as a group.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Title of Name of Amount and Nature of
Class Beneficial Owner Beneficial Ownership(4) % of Class
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Shares Sally A. Dean(3) 3,678 .03%
Common Shares David W. Goodrich(3) 11,334 .10%
Common Shares John T. Hackett(3) 13,260 .12%
Common Shares William H. Kling(3) 3,404 .03%
Common Shares Brenda J. Lauderback(3) 1,144 .01%
Common Shares John C. McGinty, Jr.(3) 5,779 .05%
Common Shares Irwin Miller(3) 2,646,823(1) 23.36%
Common Shares William I. Miller(3) 5,362,663(2) 47.34%
Common Shares John A. Nash(3) 320,725 2.83%
Common Shares Lance R. Odden(3) 4,892 .04%
Common Shares James T. Sakai 6,550 .06%
Common Shares Theodore M. Solso(3) 8,659 .08%
Common Shares Director Nominees and
Executive Officers as a
Group (22 persons) 6,079,788(5) 53.67%
---------------------------------------------------------------------------------
</TABLE>
1. See Footnotes 1 and 2 under "Voting Securities and Principal
Holders."
2. See Footnotes 1 and 3 under "Voting Securities and Principal
Holders."
3. Director nominee.
4. For director nominees, Dean (1,678 shares), Goodrich (3,354
shares), Hackett (2,436 shares), Kling (2,404 shares),
Lauderback (1,144 shares), McGinty (4,343 shares), Irwin
Miller (3,527 shares), Odden (4,076 shares), and Solso (2,659
shares), and director Sakai (1,520 shares), includes shares
as to which the director nominee holds sole voting power but
no investment power under the Corporation's Outside Director
Restricted Stock Compensation Plan.
5. Includes shares which the following director nominees and
executive officers have the right to acquire within 60 days
of the record date through the exercise of stock options:
William Miller (100,575 shares), Nash (130,725 shares), and
other executive officers (121,125 shares). Also includes an
aggregate of 25,621 shares held for the accounts of nine
director nominees as to which the director nominees hold sole
voting power, but limited or no investment power. See
"Outside Director Restricted Stock Compensation Plan" and
Footnote 4 above.
3.
<PAGE> 6
1. Election of Directors
- --------------------------------------------------------------------------------
Eleven directors are to be elected to the Corporation's Board
of Directors at the Annual Meeting. Proxies granted for use at
the Annual Meeting cannot be voted for more than eleven
nominees.
Directors are elected annually to hold office until the next
Annual Meeting of Shareholders and until their successors are
elected and have qualified. The persons named as Proxies in
the accompanying form of proxy will, unless otherwise
indicated in the form of proxy, vote the shares covered by
proxies for the election of the nominees named in the
following table. Management has no reason to believe that any
nominee named herein will be unable to serve. However, should
any nominee for director become unavailable for election, and
unless the Board of Directors or the Executive Committee shall
reduce the size of the Board to a number that shall be equal
to the number of nominees who are able and willing to serve,
the persons named in the accompanying form of proxy will vote
for a substitute who will be designated by the Board of
Directors or the Executive Committee.
The following table sets forth, as of March 11, 1997: (a) the
name, age, year in which the nominee was first elected as a
director of the Corporation or of Irwin Union Bank and Trust
Company, and principal occupation for the past five years of
each nominee for election as a director; (b) the percentage of
the total number of meetings of the Board of Directors of the
Corporation, and meetings of committees of the Board of
Directors of the Corporation of which the director is a
member, attended by each director during 1996; and (c) all
other directorships held by each nominee in other corporations
subject to the reporting requirements of the Securities
Exchange Act of 1934 and in any investment company. There are
no family relationships among any of the director nominees or
executive officers, except that William I. Miller is the son
of Irwin Miller.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Name, Age, Directorships
Year of Appointment, % of 1996 in Other Public
and Meetings Corporations and
Principal Occupation Attended Other Positions
-----------------------------------------------------------------------------------
<S> <C> <C>
Sally A. Dean, 48, 1995 100% President of the Board of
Retired Senior Vice President, Dillon, Trustees, Randolph-Macon
Read & Co. Inc. Woman's College
-----------------------------------------------------------------------------------
David W. Goodrich, 49, 1986 73% Vice Chairman of Clarion
Executive Vice President and Treasurer, Health Partners, Inc.;
F.C. Tucker Company, Inc. (realty Board Member of Citizens
company) Gas and Coke Utility;
American United Life
Insurance Company;
President of Society of
Industrial and Office
Realtors
-----------------------------------------------------------------------------------
*John T. Hackett, 64, 1981 91% Board Member of Meridian
Managing General Partner, CID Equity Insurance Group, Inc.;
Partners, L.P. (a private equity Wabash National Corp.; Ball
investment partnership) Corporation
-----------------------------------------------------------------------------------
</TABLE>
4.
<PAGE> 7
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
<S> <C> <C>
William H. Kling, 54, 1993 63% Board Member of The St.
President, Minnesota Public Radio 1966 Paul Companies; The Wenger
to present (regional network of 30 Corporation; several Funds
public radio stations) President, of the American Funds
Greenspring Company 1987 to present family of the Capital Group
(diversified media, direct marketing
and mail order company)
-----------------------------------------------------------------------------------
Brenda J. Lauderback, 46, 1996 100% Board Member of Arthur Ashe
President, Wholesale Group, Nine West Institute for Urban
Group Inc. (manufacturer, wholesale and Development; Children's
retail distributor of women's shoes and Wish Foundation
accessories)
-----------------------------------------------------------------------------------
*John C. McGinty, Jr. 46, 1991 100% Chairman of the Board of
President, Southeastern Indiana Health Voluntary Hospitals of
Management, Inc. (health care America Tri-State; Board
management company); President, Member of The Greeley
Columbus Regional Hospital Company
-----------------------------------------------------------------------------------
Irwin Miller, 87, 1939(1) 22% Board Member of Cummins
Former Chairman of Cummins Engine Engine Company, Inc.;
Company, Inc. (manufacturer of diesel Member of the Business
engines) Council; The American
Academy of Arts and
Sciences; American
Philosophical Society
-----------------------------------------------------------------------------------
*William I. Miller, 40, 1985 100% Board Member of Cummins
Chairman of the Corporation Engine Company, Inc.; The
Tennant Company; New
Perspective Fund, Inc.;
Board Chairman of Public
Radio International;
Trustee of EuroPacific
Growth Fund; Taft School
-----------------------------------------------------------------------------------
*John A. Nash, 59, 1972 100% Chairman of the Columbus
Chairman of the Executive Committee and Indiana Economic
President of the Corporation Development Board; Trustee
of the Columbus Regional
Hospital
-----------------------------------------------------------------------------------
Lance R. Odden, 57, 1991 89% Trustee of The National
President, Taft School (private Association of Independent
educational institution), Headmaster Schools; The Gunnery
since 1972 School; The Mattuck Museum
-----------------------------------------------------------------------------------
</TABLE>
5.
<PAGE> 8
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
<S> <C> <C>
*Theodore M. Solso, 50, 1993 100% Board Member of Cyprus AMAX
President and Chief Operating Officer; Minerals Company; Cummins
Executive Vice President and Chief Engine Company, Inc.;
Operating Officer, 1994-1995; Executive Amoco; Trustee of DePauw
Vice President--Operations, 1992-1994, University
Cummins Engine Company, Inc.
(manufacturer of diesel engines)
-----------------------------------------------------------------------------------
</TABLE>
* Member of the Executive Committee
1. Includes service as a director of Irwin Union Bank and Trust
Company prior to the formation of the Corporation in 1972.
Mr. James T. Sakai will retire from the Board in April, 1997
after 21 years of service. In recent years, Mr. Sakai served
as Chairman of the Audit Committee of the Board.
In August, 1996, the Board of Directors, pursuant to the
By-Laws of the Corporation, increased the number of Director
positions on the Corporation's Board of Directors to twelve.
Immediately thereafter, Ms. Brenda J. Lauderback became a
Director, by action of the Board of Directors, to fill the
vacancy created on the Board by the increase in the number of
Director positions.
There are no material proceedings to which any director,
executive officer or affiliate of the Corporation, any owner
of record or beneficial owner of more than five percent of any
class of voting securities of the Corporation, or any
associate of any such director, executive officer, affiliate
or security holder is a party adverse to the Corporation or
any of its subsidiaries or has a material interest adverse to
the Corporation or any of its subsidiaries.
Compliance with
Section 16(a) of the
Securities Exchange
Act of 1934 Section 16(a) of the Securities Exchange Act of 1934 requires
the Corporation's directors and executive officers, and
persons who own more than ten percent of a registered class of
the Corporation's equity securities, to file with the
Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of common shares
and other equity securities of the Corporation. Executive
officers, directors and greater than ten percent shareholders
are required by SEC regulation to furnish the Corporation with
copies of all Section 16(a) forms they file.
To the Corporation's knowledge, based solely on a review of
the copies of such reports furnished to the Corporation and
written representations that no other reports were required,
all Section 16(a) filing requirements applicable to its
executive officers, directors and greater than ten percent
shareholders were met with the exception of a transaction
involving the sale of 100 common shares of the Corporation by
Elena Delgado, President of Irwin Home Equity Corporation. The
transaction was executed by an immediate family member of Ms.
Delgado. Upon her discovery of the transaction, Ms. Delgado
reported it immediately to the Corporation.
6.
<PAGE> 9
Director Meetings and Committees
- --------------------------------------------------------------------------------
The Board of Directors of the Corporation held six meetings in
1996.
The Corporation's Audit Committee has primary responsibility
for the discharge of the following functions: recommendation
of the firm to be employed as the Corporation's independent
auditors; consultation with the independent auditors with
regard to the plan of audit; review, in consultation with the
independent auditors, of the report of audit, or proposed
report of audit, and the accompanying management letter, if
any; review and direction of the work performed by the
internal audit department of the Corporation; review of
regulatory examination reports received by the Corporation and
its subsidiaries; and consultation with the independent and
internal auditors with regard to the adequacy of internal
controls. In 1996, the Audit Committee was composed of
directors Dean, Hackett, McGinty, Jr. and Sakai. The Committee
held four meetings during 1996.
The Corporation's Compensation Committee reviews and considers
recommendations from management concerning the executive
compensation policies, employee benefit plans and salary
administration program of the Corporation, which includes an
annual review of the total compensation and recommended
adjustments for all officers of the Corporation and its
subsidiaries. The Committee administers the Management
Performance Plan and the Long-Term Performance Plan. The
Committee also administers existing stock option and employee
savings plans. The deliberations of the Committee are reported
to the Board of Directors for review and approval. In 1996,
the members of the Committee were directors Goodrich, Kling
and Sakai. The Compensation Committee held two meetings in
1996.
The Corporation's Nominating Committee makes recommendations
to the Board of Directors regarding general qualifications for
nominees as directors, desired areas of community and business
representation, size of the Board of Directors, director
compensation, and the retirement policy for directors. On the
basis of these general determinations, the Committee
recommends qualified individuals to serve as directors.
Shareholder recommendations for nominees will be accepted by
the Committee; however, no formal procedures have been
developed to consider such recommendations. In 1996, the
members of the Nominating Committee were directors Irwin
Miller, Goodrich, McGinty, Jr., W. Miller, Nash and Odden. The
Nominating Committee held three meetings in 1996.
The Corporation's Executive Committee acts on the Board's
behalf at such times as may be designated by the Board
pursuant to the conduct of the business of the Board. In 1996,
the members of the Executive Committee were directors Hackett,
McGinty, Jr., W. Miller, Nash and Solso. The Executive
Committee held one meeting in 1996.
Outside Director
Restricted Stock
Compensation Plan:The Outside Director Restricted Stock Compensation Plan (the
"Plan") covers only non-employee directors of the Corporation
and its subsidiaries. Under the outside directors' fee
schedule, effective January 1, 1996, each outside director of
the Corporation may earn a retainer of $8,000 for one year's
service. The retainer is payable in cash or in common shares
issued pursuant to the Plan. The Plan allows an outside
director to elect to receive an annual retainer and meeting
fees
7.
<PAGE> 10
in cash or in common shares with a market value equivalent to the cash retainer.
The Plan permits the grant of up to 270,000 common shares over a ten-year
period. Grants under the Plan may be for one or more years of future service,
and in such cases, the common shares granted under the Plan are forfeitable
until vested in accordance with the Plan.
The Plan is administered by a Committee, appointed by the
Board of Directors. Directors may elect vesting of common
shares issued pursuant to multiple-year grants in equal
amounts at the end of each year covered by the grant or they
may defer vesting until the end of the grant period. Common
share certificates issued by the Plan Committee are held by
the Corporation for at least two years prior to their delivery
to participants. Upon cessation of a participant's service as
an outside director for any reason other than ordinary
retirement, permanent disability or death, non-vested common
shares will revert to the Corporation. Directors have voting
and dividend rights with respect to granted shares commencing
on the date of grant, but may not sell, pledge or otherwise
transfer or encumber any such shares until they are vested or
the director receives certificates representing such shares
from the Corporation, whichever is later.
During 1996, director nominees Dean, Goodrich, Hackett, Kling,
Lauderback, McGinty, Jr., Irwin Miller, Odden and Solso
participated in the Plan. At present, a total of 25,621 common
shares are registered in the names of the participating
director nominees. Other grants made under the Plan since its
inception in 1989 total 42,044 common shares. A total of
67,665 shares have been granted to participants in the plan.
Directors' Fees: In addition to the annual retainer described above, in 1996
each outside director of the Corporation received $1,000 for
attendance at each meeting of the Board of Directors of the
Corporation, $750 for attendance at each meeting of a
subsidiary Board, $500 for attendance at each meeting of a
committee of the Board of Directors and $350 for attendance at
each meeting of a committee of the Board of Directors of a
subsidiary company.
No other fees are paid to directors for services rendered in
that capacity. Directors who are officers of the Corporation
or any of its subsidiaries do not receive any directors' fees.
8.
<PAGE> 11
Executive Compensation and Other Information
- --------------------------------------------------------------------------------
Summary of Cash and Certain Other Compensation
- --------------------------------------------------------------------------------
The following table provides certain summary information
concerning compensation paid or accrued by the Corporation and
its subsidiaries, to or on behalf of the Corporation's
Chairman (the Corporation does not formally use the title of
Chief Executive Officer) and each of the four other most
highly compensated executive officers of the Corporation for
the fiscal years ended December 31, 1994, 1995 and 1996:
SUMMARY COMPENSATION TABLE
--------------------------------------------------------------
<TABLE>
<CAPTION>
Long-Term
Compensation All Other
Annual Compensation(1,4) Awards Compensation(7)
-----------------------------------------------------------------------------------------------
Name & Principal Position Year Salary(2) Bonus(3) Option/SAR(#)
(a) (b) (c) (d) (g) (i)
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------
William I. Miller 1996 $347,200 $437,588 20,700 $ 49,328(5,6)
Chairman 1995 $296,667 $301,250 27,400 $ 37,524(5,6)
1994 $260,000 $266,328 33,200 $ 37,080(5,6)
------------------------------------------------------------------------------------------
John A. Nash 1996 $273,000 $239,250 16,900 $150,752(5,6)
President 1995 $261,000 $232,362 20,600 $132,057(5,6)
1994 $240,000 $214,816 23,600 $118,950(5,6)
------------------------------------------------------------------------------------------
Rick L. McGuire(7) 1996 $185,000 $226,700 3,400 $ 9,772(6,8)
President -- Inland 1995 $170,000 $184,908 3,600 $ 6,772(6,8)
Mortgage Corporation 1994 $155,000 $128,150 6,600 $ 7,635(6,8)
------------------------------------------------------------------------------------------
Thomas D. Washburn 1996 $161,667 $125,606 7,400 $ 2,445(6)
Senior Vice President and 1995 $151,000 $117,153 7,600 $ 3,600(6)
Chief Financial Officer 1994 $140,333 $109,710 10,700 $ 3,600(6)
------------------------------------------------------------------------------------------
Elena Delgado 1996 $159,583 $103,600 0 $ 3,600(6)
President -- Irwin Home 1995 $150,000 $ 73,643 0 $ 3,600(6)
Equity Corporation 1994 $ 44,500 $ 0 0 $0
------------------------------------------------------------------------------------------
</TABLE>
1. Amounts other than salary are reported on an accrual basis.
2. Includes amounts directed by the executive officer to be
contributed on a pre-tax basis to Corporation savings plans.
3. Includes short-term bonus payments from the Corporation and
certain subsidiaries.
4. With respect to each individual named in the Summary
Compensation Table, there were no perquisites or other
personal benefits, securities or property which, in the
aggregate, exceeded either $50,000 or 10% of the total of
such individual's annual salary and bonus.
5. Includes accruals made under a Supplemental Retirement
Benefit Plan. See "Supplemental Retirement Benefit Plan."
(See Note 7.)
6. Includes contributions by the Corporation or certain
subsidiaries to qualified savings plans. (See Note 7.)
7. Detailed information relevant to the "All Other Compensation"
column in the Summary Compensation Table above is shown in
the following table.
8. Excludes compensation payable to Rick L. McGuire under the
terms of the Inland Mortgage Corporation Long-Term Incentive
Plan disclosed elsewhere herein. (See Long-Term Incentive
Plans.)
9.
<PAGE> 12
---------------------------------------------------------------
<TABLE>
<CAPTION>
Qualified Corporate Life
Name SERP Savings Plan Insurance
-----------------------------------------------------------------------------------------
1996 1996 1996
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
William I. Miller $ 45,728 $3,600 0
John A. Nash $147,152 $3,600 0
Rick L. McGuire 0 $7,000 $2,772
Thomas D. Washburn 0 $2,445 0
Elena Delgado 0 $3,600 0
-----------------------------------------------------------------------------------------
</TABLE>
Stock Options and Stock Appreciation Rights
---------------------------------------------------------------
The following table contains information concerning the grant
of stock options and tandem limited stock appreciation rights
("SARs") under the Corporation's 1992 Stock Option Plan to the
named executive officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
--------------------------------------------------------------
<TABLE>
<CAPTION>
Percent of Alternative to (f)
Total and (g):
Options/SARs Exercise Grant Date Value
Options/ Granted to or Base -------------------
SARs Employees Price Expiration Grant Date
Name Granted(1)(#) in Fiscal Year ($/SH) Date Present Value(2)
(a) (b) (c) (d) (e) (h)
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
William I. Miller 20,700 20% $21.31 4/18/06 $188,991
John A. Nash 16,900 16% $21.31 4/18/06 $154,297
Rick L. McGuire 3,400 3% $21.31 4/18/06 $ 31,042
Thomas D. Washburn 7,400 7% $21.31 4/18/06 $ 67,562
Elena Delgado 0 0 n/a n/a 0
</TABLE>
---------------------------------------------------------------
1. All grants are subject to a vesting schedule where 25% of
each grant is vested on the date of the grant and 25% of each
grant vests on the anniversary date of each grant in each of
the three years following the grant.
2. Total option values shown in Column (h) were derived using
the Binomial option pricing model. Assumptions used in the
valuation included an expected volatility factor of 0.2284, an
expected future dividend yield of 0.0125, and a risk-free rate
of return of 0.0675. The Binomial model suggests a valuation
of $9.13 per share under these assumptions. The Black-Scholes
option pricing model would suggest a valuation of $9.07 per
share under these same assumptions. The use of a single value
as shown in the table above implies a precision to stock
option valuation which the Corporation does not believe exists
and which therefore may cause the above table to be
misleading. Accordingly, there is no assurance that the value
realized on the options, if any, will be at or near the value
estimated by the Binomial option pricing model. Future
compensation resulting from option grants is based solely upon
the performance of the Corporation's stock price.
10.
<PAGE> 13
Option/SAR Exercises and Holdings
- --------------------------------------------------------------------------------
The following table provides information, with respect to the
named executive officers, concerning the exercise of options
and/or SARs during the last fiscal year and unexercised
options and SARs held as of the end of the fiscal year:
AGGREGATED OPTIONS/SARs EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
SHARES
ACQUIRED NUMBER OF UNEXERCISED
ON OPTIONS/SARS AT FISCAL VALUE OF UNEXERCISED
EXERCISE VALUE YEAR-END IN-THE-MONEY OPTIONS/SARS
NAME (#) REALIZED (#) AT FISCAL YEAR-END(1)
-------------------------------------------------------------------------------------------------------
(D) (E)
(A) (B) (C) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------
William I. Miller n/a n/a 100,575 37,525 $1,396,629 $288,499
John A. Nash 3,000 $112,125 137,725 28,875 $2,366,517 $215,803
Rick L. McGuire n/a n/a 18,800 6,000 $ 315,605 $ 47,144
Thomas D. Washburn 18,500 $757,502 44,075 12,025 $ 699,590 $ 89,292
Elena Delgado n/a n/a 0 0 0 $ 0
---------------------
</TABLE>
1. The 1996 year-end stock price was $24.75 per share.
Long-Term Incentive Plans
- --------------------------------------------------------------------------------
The following table provides information concerning an award
made during the last fiscal year under the Inland Mortgage
Corporation Long-Term Incentive Plan to named executive Rick
McGuire. The award represents an accrued liability. This award
is performance based with targets established by the Board of
Directors of Inland Mortgage Corporation.
LONG-TERM INCENTIVE PLANS AWARDS IN LAST FISCAL YEAR
--------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
Shares, Performance or
Units or Other Period Until Estimated Future Payouts
Other Maturation or Under Non-Stock Price-Based
Name Rights Payout Plans ($ or #)
(a) (b) (c) (d)
<S> <C> <C> <C>
----------------------------------------------------------------------------------
Rick L. McGuire $53,268 Deferrable Compensation $53,268
under Terms of the Plan
----------------------------------------------------------------------------------
</TABLE>
11.
<PAGE> 14
PENSION PLAN TABLE
--------------------------------------------------------------
<TABLE>
<CAPTION>
Years of Service
-------------------------------------------------------------------------------
Remuneration 15 20 25 30 35
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 50,000 11,900 15,900 19,900 20,600 21,400
75,000 19,200 25,700 32,100 33,600 35,200
100,000 26,600 35,400 44,300 46,600 49,000
125,000 33,900 45,200 56,500 59,600 62,800
150,000 41,200 54,900 68,600 72,600 76,600
175,000 41,200 54,900 68,600 72,600 76,600
200,000 41,200 54,900 68,600 72,600 76,600
-------------------------------------------------------------------------------
</TABLE>
Pension Plan: A non-contributory qualified defined benefit Employees'
Pension Plan is maintained by the Corporation and certain of
its subsidiaries. The Plan provides principally for retirement
benefits to substantially all of the officers and employees of
these companies. Under the provisions of the Plan,
participating companies will contribute assets sufficient to
pay all benefits to Plan participants. Contributions to the
Plan are actuarially determined to fund the Plan's current
service cost on a current basis and to fund initial past
service costs over a period of 30 years. Employees who have
completed one year of service (1,000 hours worked during a
12-month period) are eligible for participation. Benefits vest
after five years credited service. In addition to benefits
paid to retiring employees, death and deferred termination
benefits are available to employees who meet certain
conditions under the Plan.
The table above shows the estimated annual benefits payable,
based on the assumptions indicated, under the Plan as in
effect on December 31, 1996. Basic wages considered for the
Plan are for the five consecutive Plan years of highest
compensation, and include basic compensation, commissions and
payments from short-term bonus plans.
The current years of service at December 31, 1996, for the
individuals named in the compensation tables above, are as
follows: Mr. Nash (30), Mr. Washburn (20) and Mr. Miller (6).
Mr. McGuire and Ms. Delgado are not covered by the Plan.
The Plan was amended effective January 1, 1994. For service
after January 1, 1994, Mr. Washburn will receive an additional
benefit accrual equal to 45% of his usual benefit. For service
after January 1, 1994, Mr. Miller will receive an additional
benefit accrual equal to 75% of his usual benefit.
Supplemental Retirement Benefit Plan
- --------------------------------------------------------------------------------
On May 19, 1992, the Board of Directors approved the
Compensation Committee's recommendation to provide a
supplemental executive retirement benefit to William I.
Miller. A similar Plan was approved prior to 1992 for John A.
Nash. The Plan provides Mr. Miller with an amount of company-
provided benefits not provided under the Pension Plan because
of the limitations imposed by Sections 415 and 401(a)(17) of
the Internal Revenue Code of 1986, as amended. Criteria used
to determine amounts payable under the supplemental Plan are
the same as those used by the Pension Plan; that is, service
with the
12.
<PAGE> 15
Corporation, age at retirement and earnings. Benefits are
measured in the same manner as under the Pension Plan, using
credited service with the Corporation. Method of
payment of the supplemental benefit is a monthly annuity
payable for life, with a guarantee of 180 payments.
Compensation Committee Interlocks and Insider Participation
- --------------------------------------------------------------------------------
No member of the Compensation Committee of the Corporation's
Board of Directors was, during 1996, an officer or employee of
the Corporation or any of its subsidiaries.
Board Compensation Committee Report On Executive Compensation
- --------------------------------------------------------------------------------
Executive compensation is reviewed and approved annually by
the Compensation Committee of the Board of Directors. Each
member of the Compensation Committee is a non-employee
Director. Members of the Committee are Mr. David W. Goodrich,
Mr. William H. Kling and Mr. James T. Sakai. Set forth below
is a report submitted by Messrs. Goodrich, Kling and Sakai in
their capacity as the Board's Compensation Committee
addressing the Corporation's compensation policies for 1996.
The Corporation does not formally use the title "Chief
Executive Officer." The principal executive officer of the
Corporation is the Chairman, Mr. William I. Miller.
I. Compensation Policy for Executive Officers
-------------------------------------------------------------------------
The Compensation Committee believes that compensation plans
make up only one element in the overall management system of
the Corporation. Furthermore, appropriate compensation
policies are a necessary, but not sufficient, condition for
achieving the Corporation's goals. A good compensation system
will not guarantee that we achieve our goals, but a poor
system can result in those goals not being achieved.
This interdependence requires that the Corporation's
compensation system grow out of and be consistent with our
corporate philosophies and strategy. Accordingly, the kind of
company we want the Corporation to be, the strategic direction
we are pursuing, and the kinds of people needed to bring that
vision to life are the starting points for developing our
philosophy and system of compensation.
The Corporation's executive compensation system focuses on the
total compensation package of the Corporation's top
executives. The Corporation's objective is to correlate total
compensation with company performance so that median
performance relative to similar companies in its industry will
produce median total compensation for individuals relative to
comparable positions in peer companies; inferior performance
will produce below median compensation; and superior
performance will produce above median compensation.
This approach requires that the Corporation start by defining
the appropriate peer group, both for individual positions and
the Corporation as a whole. For individual positions, this
decision is based on the relative level and scope of
13.
<PAGE> 16
responsibilities inherent in the position, and the talent and
skills required for success. The traditional measure for the
scope of responsibilities in commercial banks and bank holding
companies is asset size. Mortgage banking companies generally
look at both loan closing volume and loan servicing size. The
Corporation's strategy is to enhance capital productivity,
which is defined as generating proportionately larger streams
of revenues and profits from a given capital and asset base.
Accordingly, asset growth in itself is not one of the
strategic objectives of the Corporation, and the Corporation's
success at pursuing its strategy is not best defined by asset
size. As a result, in calibrating the scope of responsibility
of a given position, the Corporation looks at comparable
positions in other companies in multiple asset size groups as
well as peer companies defined by other measures (such as
total market capitalization or revenues) when they are
available.
Performance comparisons are generally made from the
shareholder's perspective. That is, groups of companies are
selected that may be seen as alternative investments by
current and prospective investors. Even so, the Corporation's
most direct competitors for executive talent are not
necessarily all of the companies that would be included in a
peer group selected to compare shareholder returns. Thus,
although there may be some overlap, the surveys selected for
compensation review purposes do not contain information on the
same companies as those found in the peer group indices in the
Comparison of Five-Year Cumulative Total Return graph included
in this proxy statement.
All of the Corporation's operating companies (including the
Corporation as a separate entity) use multiple sources of both
compensation and performance data. This is because experience
has shown that results can vary greatly from one survey to the
next. In the case of compensation market data, the
Compensation Committee is provided with multiple sources of
data on each executive position reviewed. When available, the
information is in the form of 25th percentile, median, and
75th percentile compensation. Four different market
compensation comparisons were considered for the Chairman in
1996.
Historically, total compensation has been defined in surveys
to include only base salary and the annual bonus. As reliable
information on the present value of long-term grants becomes
more available, it will be used as additional support for
compensation decisions.
The percent of total compensation that is variable increases
with the executive's position with the Corporation. This is
consistent both with the individual's influence on results and
his/her economic capacity to tolerate volatility in
compensation levels.
In addition to information on the market level of
compensation, members of the Committee review a summary of
individual performance over the past year including key
accomplishments, strengths, and weaknesses. They also may
consider their own subjective assessments of an executive's
performance and relative contribution to the organization.
14.
<PAGE> 17
II. The Elements of Executive Compensation and Corporate Performance
-------------------------------------------------------------------------
A. Base Salary
Turning to a review of each of the elements of the total
compensation package, base salary is important in achieving
one of the Corporation's compensation goals which is
attracting and retaining qualified executives. Base salary is
generally targeted to be at the median of similar positions in
the industry. Exceptions may exist when a higher level of base
salary would be required to attract or retain a uniquely
qualified executive officer. In order to maintain the target
position, annual increases are approximately equal to the
median increases in the respective industries in which our
operating companies compete unless the growth of the company
warrants comparison with a larger peer group within that
industry. The total base salary paid to the Chairman in 1996
was $347,200, up 17% from 1995.
B. Annual Short-Term Bonus
The annual bonus is the component that provides a current cash
compensation reward for above median current performance. Each
executive officer participating in the annual bonus plan has a
payment target expressed as a percentage of base salary. The
Corporation believes that, when combined with properly
selected performance targets, this rewards managers for making
investments in future performance, valuing consistency, and
managing risk.
Operating company heads receive part of their target annual
bonus based upon the performance of their company, and part
based upon consolidated performance of the Corporation. In
this way, they have a financial incentive to achieve potential
synergies between operating companies.
We believe that the best performance targets are those which
are objectively and consistently measured, as well as easily
understood by participants. Most of the bonus plans of the
Corporation and its operating companies include return on
equity as the key performance measure. Specific performance
targets for each year are approved by the board of directors
of each operating company and of the Corporation and are based
upon a variety of factors including historical and expected
industry performance, the estimated required rate of return by
investors, and the prior year's budgeted and actual
performance.
Payments under the annual bonus plans vary with company
performance. The formulas used to calculate payouts are based
on changes in proportion with performance between three
defined points: a threshold, the target, and two-times target.
Included below is an illustrative diagram showing the general
structure of our annual bonus plan payout formulas. It does
not represent the actual formula for any specific plan.
15.
<PAGE> 18
Example Annual Bonus Payout Formula
There is no payout until a minimum threshold of performance is
achieved. Payments increase proportionately until they reach
target payout at target performance. Performance above target
increases payments proportionately until they reach twice the
target level. This point is chosen with the intent of aligning
total relative compensation with relative performance. Plan
payments are not capped, but the rate of increased payment
slows considerably at performance levels above the level
required for twice the target amount.
C. Long-Term Incentives
Long-term incentive plans are provided to supplement the
incentive provided by annual bonus plans for building the
value of the Corporation over the long term. Operating company
heads may receive the majority of their long-term compensation
based upon growth in the value of their subsidiary operating
company. Certain holding company executive officers and some
operating company executive officers are provided with
long-term incentive compensation through grants of
nonqualified stock options. Existing stock option plans of the
Corporation include the ability to grant stock appreciation
rights in addition to options.
16.
<PAGE> 19
III. Formulation of the Chairman's Compensation
-------------------------------------------------------------------------
The Chairman's current compensation package includes a base
salary of $365,800, plus an annual bonus at target performance
of 55% of base salary or $201,190. As noted above, there is no
single, clear measure of market compensation for executive
positions in the Corporation. The Compensation Committee used
four different market surveys for the Chairman's position in
1996. Based on these surveys, estimates of the 25th
percentile, median, and 75th percentile points of total annual
compensation were made.
Actual total cash compensation paid to the Chairman for 1996
was $784,788, up 31.3% from 1995. Return on average equity for
1996 was 20.58%, compared to 22.60% in 1995. We believe that
both returns are in the top decile of peer performance. Total
shareholder return (including dividends and price
appreciation) was 25.3% for 1996 and 50.9% for 1995 for Irwin
Financial. This compares to 27.0% in 1996 and 38.9% in 1995
for the Russell 2000 Financial Services Sector Index.
For long-term incentive compensation purposes, the Chairman
received an option grant of 20,700 shares in 1996 at an
exercise price of $21.31 per share (representing the mean
between the bid and asked prices on the grant date). The
Chairman also received a grant of 27,400 shares in 1995 at an
exercise price of $15.69 per share. The Chairman also received
a grant of 33,200 shares in 1994 at an exercise price of
$11.38 per share, a grant of 28,800 shares in 1993 at an
exercise price of $11.06 per share, and a grant of 28,000
shares in 1992 at an exercise price of $5.91 per share. These
five grants are the only long-term grants outstanding for the
Chairman. Through employment of the "Black-Scholes" and
"Binomial" option pricing models, respectively, we estimate
that the present value of the 1996 options at grant date was
$187,749 to $188,991.
David W. Goodrich William H. Kling James T. Sakai
17.
<PAGE> 20
Comparison of Five-Year Cumulative Total Return
Irwin Financial Corporation, Russell 2000 & Russell 2000 Financial Services
Sector1
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MEASUREMENT PERIOD IRWIN RUSSELL RUSSELL
(FISCAL YEAR COVERED) FINANCIAL 2000 2000
FINANCIAL
SERVICES
SECTOR
<S> <C> <C> <C>
1991 100 100 100
1992 291 118 148
1993 321 141 182
1994 348 138 183
1995 525 178 254
1996 659 207 323
</TABLE>
1. The Corporation is included in both the Russell 2000 and the Russell 2000
Financial Services indices.
Interest of Management in Certain Transactions
- --------------------------------------------------------------------------------
Certain directors and officers of the Corporation or its subsidiaries, and the
associates of such persons, were customers of and had transactions with
subsidiaries of the Corporation in the ordinary course of business during the
past year, including insurance services, corporate and personal trust services
and general commercial and mortgage banking business. Additional transactions
may be expected to take place between such persons and these subsidiaries. All
outstanding loans and commitments included in such transactions were made in the
ordinary course of business and on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more than the normal risk of
collectibility or present other unfavorable features.
Companies controlled by Irwin Miller, the Irwin Financial Corporation Trust and
William I. Miller purchased commercial paper from the Corporation from time to
time during the year. The maximum amount outstanding during 1996 was
$25,653,369.49 and the amount outstanding at year end was $14,963,693.95. In the
opinion of management, the rates paid by the Corporation on these commercial
paper transactions were comparable to the prevailing rates for such transactions
at the time of the respective transactions.
In addition to corporate and personal trust services and general banking
business, companies owned or controlled by Messrs. Miller and the Irwin
Financial
18.
<PAGE> 21
Corporation Trust purchased insurance services (offered by a
subsidiary of Irwin Union Bank, Irwin Union Insurance, Inc.,
to the companies and to the public, generally, as a regular
service) for the sale of which Irwin Union Insurance, Inc.
received gross commissions in 1996 of approximately
$19,167.23. The commissions paid were at the same rate as
those prevailing on comparable sales to the general public.
During 1996, the Corporation made payments totaling $43,800 to
a company controlled by Messrs. Miller and the Irwin Financial
Corporation Trust in exchange for the administrative and
support services of an employee of such company. In the
opinion of management, such payment was comparable to, or more
favorable to the Corporation than, the cost of hiring an
additional employee.
In 1979, Irwin Union Insurance, Inc., as an independent
property/casualty insurance agency, was appointed to represent
and offer property/casualty and liability products of The St.
Paul Companies to its customers. Director Nominee Kling is
also a director of The St. Paul Companies. In 1996, Irwin
Union Insurance, Inc. received gross agency commissions of
$52,369 from The St. Paul Companies. Director Nominee Hackett
is a director of Meridian Insurance Group, Inc. In 1996, Irwin
Union Insurance, Inc. received gross agency commissions of
$88,633.22 from Meridian Insurance Group, Inc.
2. Confirming Appointment of Auditors
- --------------------------------------------------------------------------------
The Board of Directors recommends confirmation of the
appointment of Coopers & Lybrand L.L.P., certified public
accountants, to audit the books and accounts of the
Corporation for 1997. No member of the firm has any material
interest, financial or otherwise, in the Corporation or any of
its subsidiaries.
In accordance with past practice, management has invited
representatives of Coopers & Lybrand L.L.P. to be present at
the Annual Shareholders' Meeting. Management expects the
representatives to attend the meeting. If present, these
representatives will have an opportunity to make a statement,
if they so desire, and will be available to respond to
appropriate questions from shareholders.
See "Director Meetings and Committees" for information
regarding the Corporation's Audit Committee.
3. Proposal to Approve the 1997 Irwin Financial Corporation Stock Option Plan
- --------------------------------------------------------------------------------
Subject to approval by the shareholders, the Board of
Directors has approved the Irwin Financial Corporation 1997
Stock Option Plan (the "Plan") pursuant to which incentive
stock options, nonqualified stock options, and stock
appreciation rights ("SARs") may be granted to officers, key
employees and non-employee directors of the Corporation and
its subsidiaries. It is intended that the incentive stock
options will be qualified as such under the Internal Revenue
Code of 1986, as amended (the "Code") and will, therefore, be
subject to certain restrictions and qualify for favorable tax
treatment. Options granted pursuant to the Plan may not be
exercised until all applicable federal and state securities
requirements pertaining to the offer and sale of securities
issued under the Plan have been met.
19.
<PAGE> 22
The essential features of the Plan are summarized below, and
copies of the Plan may be obtained by any shareholder upon
written request to Matthew F. Souza, Secretary of the
Corporation.
Purpose The purpose of the Plan is to encourage certain officers,
other key employees and non-employee directors of the
Corporation and its subsidiaries to own common shares of the
Corporation, to participate in any increase in the price of
the common shares, and thereby to promote the success of the
Corporation and attract and retain high quality executive
personnel and non-employee directors.
Reservation of Shares
The Plan permits the grant of options to purchase up to
700,000 common shares, without par value of the Corporation
and up to 700,000 SARs. Authorized but unissued shares and
treasury shares may be made available for issuance under the
Plan. In the event of corporate changes affecting the common
shares of the Corporation such as share splits, combinations,
reclassifications, stock dividends, mergers or consolidations,
appropriate adjustments will be made in the number of common
shares for which options may thereafter be granted under the
Plan and the option price and the number of common shares
subject to outstanding options granted pursuant to the Plan.
The number of SARs that may be granted under the Plan and the
grant price and the number of SARs granted prior to any such
corporate changes will be similarly adjusted to account for
the changes. The shares which are subject to any option
granted under the Plan which expires or terminates for any
reason without having been fully exercised shall again be
available for grants.
Administration The Plan will be administered, construed and interpreted by a
Committee of two or more members of the Board of Directors of
the Corporation (the "Committee") who shall be "Non-Employee
Directors" within the meaning of Rule 16b-3 of the Securities
and Exchange Commission or such other committee to whom the
Board may delegate this function. Consistent with the terms of
the Plan, the Committee will select the employees and
non-employee directors to whom options and SARs will be
granted, will determine whether the option will be an
incentive stock option or a nonqualified stock option, and
will determine the time of grant, the number of SARs granted
or common shares to be covered by each option, the exercise
price, the period within which the option or SAR may be
exercised, and any other terms and conditions of options or
SARs granted. No option granted under the Plan will have a
price of less than 100% of the fair market value of the shares
on the date the option is granted or a term in excess of ten
years. Each SAR granted under the Plan will represent the
right to receive cash in an amount equal to the excess of the
fair market value, on the date the SAR is exercised, of one
common share over the grant price of the SAR as determined by
the Committee.
Eligibility Options or SARs may be granted to officers, other key
employees and non-employee directors of the Corporation or its
subsidiaries. It is not possible at this time to state the
number of persons who may receive grants of options or SARs in
the future or the number of shares for which such options or
SARs may be granted to any eligible individual.
However, it is expected that the Committee, in determining
such number of persons and number of shares will act so as to
effect a reasonably broad
20.
<PAGE> 23
distribution among key employees consistent with attaining the
objectives of the Plan.
Terms of the Options
Option Price. The price to be paid for common shares upon the
exercise of each option pursuant to the Plan may not be less
than the fair market value of such shares on the date on which
the option is granted, as determined by the Committee.
Payment of Option Price. Upon exercise, the option price shall
be paid either in cash or, if lawful and permitted by the
Committee, (a) by the transfer to the Corporation of a number
of common shares of the Corporation previously acquired by the
optionee, the fair market value of which, determined by the
Committee plus an appropriate amount of cash, if any, is equal
to the purchase price; or (b) in installments upon such terms
as required by law, established by the Committee, or otherwise
required by the Plan. If the option price is paid in
installments, the Plan requires the optionee to pledge the
shares purchased to the Corporation to secure payment of the
entire purchase price.
The Plan also permits optionees who exercise options to elect
to have the Corporation withhold a portion of the option
shares purchased in order to satisfy any federal, state or
local tax liability imposed on the optionee by virtue of the
exercise of the option.
Period of Option. Each option granted under the Plan shall be
effective for a period of ten years from the date of grant
thereof, unless the period is reduced because of death or
termination of the optionee's employment, except that any
incentive stock option granted to a person owning more than
10% of the outstanding common shares of the Corporation must
terminate not later than five years from the date of grant.
Exercise of Option. Each option may only be exercised up to
25% in the first year following the grant thereof, up to 50%
in the second year, up to 75% in the third year, and after the
third year up to 100%. This limitation shall not be effective
in the event of the death of an optionee while serving on the
Board of Directors or in the employ of the Corporation or its
subsidiaries. In the event of the death of an optionee while
serving as a non-employee director or in the employ of the
Corporation or its subsidiaries, options theretofore granted
to such optionee shall be exercisable only within a period of
twelve months after the date of death. Upon termination of
service as a non-employee director or employment with the
written consent of the Corporation or its subsidiaries due to
disability or retirement, the optionee may exercise any
nonqualified stock option only within three years of the date
of termination, or may exercise any incentive stock option
only within three months of the date of termination, to the
extent such optionee was otherwise entitled to exercise such
options. Upon termination of optionee's service as a non-
employee director or employment with the Corporation or its
subsidiaries for any reason other than death, disability or
retirement, options theretofore granted to such optionee may
be exercised only within three months of the date of
termination. In no case shall the period for exercise extend
beyond the expiration date of an option.
Nontransferability of Option. Incentive stock options may not
be transferred except by will or the laws of descent and
distribution. Nonqualified stock options may be
21.
<PAGE> 24
transferred only to a member of optionee's immediate family or
as described above for incentive stock options.
Amendment and
Termination The Board of Directors may at any time alter, amend, suspend
or discontinue the Plan, with respect to any shares for which
an option or SAR has not been granted and may modify the Plan
to include additional equity-based compensation programs,
except that the Board may not, without the approval of the
holders of a majority of the outstanding common shares of the
Corporation (i) increase the maximum number of common shares
or SARs that may be issued under the Plan (other than to
reflect a stock split, stock dividend or other
recapitalization); (ii) change the class of shares that may be
issued under the Plan; (iii) change the designation of the
persons or class of persons eligible to receive shares or SARs
under the Plan; (iv) change the provisions of the Plan
concerning the option price; or (v) otherwise modify or change
the Plan pursuant to Section 424(h) of the Code. Unless
earlier terminated by the Board of Directors, the Plan will
terminate on the tenth anniversary of the date of its adoption
by the Board of Directors.
Compliance with
Legal RequirementsThe Corporation shall not be required to sell or issue any
common shares in connection with any option granted under the
Plan and may postpone the issuance and delivery of
certificates representing common shares until (a) the
admission of the option shares to listing on any exchange on
which common shares of the Corporation are then listed or, if
not listed, qualification of such shares for inclusion in such
trading market or quotation system on which the common shares
of the Corporation are then traded or quoted; and (b) the
completion of such registration or other qualification of the
common shares under any state or federal law, rule, or
regulation as deemed necessary by the Corporation. Any person
acquiring shares upon the exercise of an option may be
required to make such representations and furnish such
information as may, in the opinion of the Corporation, be
appropriate to permit the Corporation to determine the
necessity or registration of the common shares under the
Securities Act of 1933, as amended, or any similar state
statute.
The Plan is intended to qualify for the exemption from the
short-swing profits liability imposed by Section 16(b) under
the Securities Exchange Act of 1934, as amended, provided by
Rule 16b-3 of the Securities and Exchange Commission. To the
extent any provision of the Plan or any action by the
Committee does not comply with the requirements of Rule 16b-3,
it shall be deemed inoperative to the extent permitted by law
and deemed advisable by the Committee. In the event Rule 16b-3
is revised or replaced, the Committee may exercise its
discretion to modify the Plan in any respect necessary to
satisfy the requirements of the revised exemption or its
replacement, subject to the termination provisions of the
Plan.
Grants of options and/or SARs under the Plan are intended to
comply with and be construed in accordance with the
performance-based compensation provisions applicable to grants
of options and SARs under Section 162(m) of the Code and the
regulations thereunder.
22.
<PAGE> 25
Federal Income Tax
Consequences The federal income tax consequences to the Corporation and the
optionee arising out of the grant and exercise of incentive
stock options and nonqualified stock options and out of the
subsequent sale of the shares acquired pursuant thereto and
out of the grant and exercise of an SAR are discussed below.
Incentive Stock Options. Pursuant to Code Section 422, the
grant of an incentive option under the Plan will have no
income tax consequences to the Corporation or the optionee.
Except for alternative minimum tax purposes, the exercise of
an incentive stock option pursuant to the Plan will have no
federal income tax consequences to the Corporation or the
optionee, provided the option is exercised by an optionee who
was an employee of the Corporation or any of its subsidiaries
on the date the option was granted and who remained in the
employ of the Corporation or its subsidiary until (a) the date
of exercise; (b) a date within one year of the date of
exercise if the optionee's employment is terminated due to
permanent and total disability (within the meaning of Code
Section 22(e)(3); or (c) a date within three months of the
date of exercise if the optionee retires with the consent of
his or her employer or if the Committee otherwise permits the
terminated optionee to exercise options. The option will be
treated as a nonqualified stock option for purposes of
computing the optionee's alternative minimum tax. See
"Nonqualified Stock Options."
If the optionee exercises an incentive stock option pursuant
to the Plan for cash within the required exercise period, the
optionee's basis in the shares acquired will equal the option
price. If the optionee uses shares of the Corporation as
payment for shares acquired in exercising an incentive stock
option pursuant to the Plan, the optionee's basis in the
shares acquired generally will equal the optionee's basis in
the shares surrendered plus any gain recognized on the
exchange, plus any cash paid at the time of exercise. In
addition, any gain or loss on the difference between the basis
in the shares surrendered and the fair market value of those
shares at the time of the exchange generally will not be
recognized for federal income tax purposes under Code Section
1036, provided that the shares surrendered, if acquired
pursuant to the exercise of an incentive stock option, were
held until a date two years after the grant of that option and
one year after its exercise.
An optionee generally will recognize capital gain or loss upon
the sale of shares that he or she acquires in exercising an
incentive stock option, provided the shares are sold at least
one year after the optionee receives the shares and the
optionee is not a dealer in securities. Any such capital gain
may increase the amount of capital loss, if any, deductible by
the optionee in the year of that gain under Code Section 1211.
An optionee generally will recognize ordinary income upon the
sale of shares he or she acquired in exercising an incentive
stock option if the sale is made within two years of the date
the option was granted or within one year of the date the
shares were transferred to the optionee. The amount of
ordinary income recognized will equal the lesser of (a) the
excess of the fair market value of the shares acquired on the
date of exercise over the option price, and (b) the gain
realized upon disposition of the shares. Officers and
directors subject to Section 16(b) of the Exchange Act may
have additional tax consequences in connection with the
exercise of options and the sale of shares acquired thereby.
If
23.
<PAGE> 26
appropriate withholdings are made and certain other conditions are met, the
Corporation will be entitled to an income tax deduction in the amount of the
ordinary income recognized by the optionee. If the excess of the fair market
value of the shares over the option price is the basis for determining the
amount of ordinary income recognized by the optionee, any additional gain
recognized by the optionee on the disposition of the shares generally will be
capital gain if the optionee is not a dealer in securities.
Nonqualified Stock Options. The grant of a nonqualified stock
option pursuant to the Plan generally will have no income tax
consequences to the Corporation or the optionee. However, upon
exercising a nonqualified stock option granted pursuant to the
Plan, an optionee (with the exception, under certain
circumstances, of an optionee who is an officer, director or
beneficial owner of more than 10% of the Corporation's
outstanding common shares (collectively, "Insiders")) is
deemed to have received ordinary income in an amount equal to
the excess of the fair market value of the shares acquired on
the date of exercise over the option price, and, if
appropriate withholdings are made and other conditions are
met, that amount is deductible by the Corporation. As
indicated, under certain circumstances, an optionee who is an
Insider may be subject to the restrictions on transfer of
shares imposed by Section 16(b) of the Exchange Act. In that
case, optionees who are Insiders will be deemed to have
received ordinary income in an amount equal to the excess of
the fair market value of the acquired shares on the date the
Section 16(b) restrictions lapse over the option price.
Pursuant to Code Section 83(b) and the Treasury Regulations
thereunder, Insiders may elect in the alternative to include
in income the excess of the fair market value of the shares on
the date of exercise over the option price. An election
pursuant to Code Section 83(b) may not be revoked without the
consent of the Commissioner of the Internal Revenue Service
and must be made in writing within 30 days of the transfer to
the optionee of shares acquired pursuant to the exercise of an
option.
The optionee's basis in the shares acquired in exercising a
nonqualified stock option is equal to the fair market value of
the shares at the date used to determine the amount to be
included in the optionee's income as ordinary income. Upon the
disposition of shares acquired in exercising a nonqualified
stock option granted pursuant to the Plan, the optionee
generally will recognize capital gain or capital loss, as the
case may be, to the extent of the difference between the
optionee's basis in the shares and the sale price, provided
the optionee is not a dealer in securities.
SARs. The grant of an SAR pursuant to the Plan generally will
have no federal income tax consequences to the Corporation or
the recipient of the SAR. Upon the exercise of an SAR and the
receipt of money, the recipient will recognize income subject
to federal income tax on an amount equal to the money
received. Any such income will be ordinary income taxable at
ordinary income tax rates. If appropriate withholdings are
made and certain other conditions are met, the Corporation
will be entitled to an income tax deduction in the amount of
the ordinary income recognized by the recipient.
The Board of Directors recommends that shareholders vote FOR
approval of this Plan.
24.
<PAGE> 27
Vote Required for Approval
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Shareholders owning a majority of all the common shares
outstanding must be present in person or represented by proxy
in order to constitute a quorum for the transaction of
business. Thus, approximately 5,664,532 common shares will be
required at the meeting for such quorum. The eleven nominees
receiving the greatest number of votes at the meeting, either
in person or by proxy, will be elected as directors for the
ensuing year. In order to confirm the appointment of Coopers &
Lybrand as the Corporation's principal auditors, a majority of
the votes present at the meeting, either in person or by
proxy, will be required. In order to adopt the 1997 Irwin
Financial Corporation Stock Option Plan, a majority of the
votes present at the meeting, either in person or by proxy,
will be required.
Annual Report on Form 10-K
- --------------------------------------------------------------------------------
Management will furnish to any shareholder, without charge, a
copy of the Corporation's Annual Report on Form 10-K for 1996,
together with all financial statements, the schedules thereto
and a list of the Exhibits filed therewith. If any shareholder
wishes a copy of the Exhibits filed with the Corporation's
Annual Report on Form 10-K, the Corporation will furnish the
Exhibits without charge. All requests for copies should be in
writing and directed to Thomas D. Washburn, Chief Financial
Officer, Irwin Financial Corporation, P.O. Box 929, Columbus,
Indiana 47202. The Annual Report on Form 10-K will be
available to requesting shareholders on or about March 31,
1997.
Deadline for Shareholder Proposals for 1998 Annual Meeting
- --------------------------------------------------------------------------------
As required by law, all proposals of shareholders of the
Corporation which are otherwise eligible for inclusion in the
Corporation's proxy material must be received at the
Corporation's principal executive offices, 500 Washington
Street, Columbus, Indiana 47201, prior to November 28, 1997,
in order for the proposals to be considered for inclusion in
the Corporation's proxy statement and form of proxy for the
1998 Annual Meeting.
Miscellaneous
- --------------------------------------------------------------------------------
As of the date of this proxy statement, the Board of Directors
of the Corporation has no knowledge of any matters to be
presented for consideration at the meeting other than the
matters described herein. If (a) any matters not within the
knowledge of the Board of Directors as of the date of this
proxy statement should properly come before the meeting; (b) a
person not named herein is nominated at the meeting for
election as a director because a nominee named herein is
unable to serve or for good cause will not serve; (c) any
proposals properly omitted from this proxy statement and the
form of proxy should come before the meeting; or (d) any
matters should arise incident to the conduct of the meeting,
then the proxies will be voted in accordance with the
recommendation of the Board of Directors of the Corporation.
MATTHEW F. SOUZA, Secretary
March 27, 1997
25.
<PAGE> 28
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- --------------------------------------------------------------------------------
IRWIN FINANCIAL CORPORATION PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
PROXY SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The undersigned does hereby nominate, constitute, and appoint John A.
Nash and William I. Miller and each of them (with full power to
act without the other), with full power of substitution to each,
the true and lawful Proxies of the undersigned to attend the
Annual Meeting of the Shareholders of the Corporation, to be held
at the main offices of the Corporation, 500 Washington Street,
Columbus, Indiana, on Tuesday, April 29, 1997, at 4:00 p.m.
(Columbus time), or at any adjournment thereof, and to vote all
shares of the Corporation which the undersigned is entitled to
vote upon the matters referred to in this proxy and in the notice
of said meeting to the same extent and with all the powers the
undersigned would possess if personally present and voting at such
meeting or at any adjournment thereof, and the Proxies are
directed to:
1. Vote FOR [ ] or WITHHOLD AUTHORITY to vote for [ ] the election of the
11 directors listed below. (The Board of Directors recommends a VOTE
FOR this proposal.) S.A. Dean; D.W. Goodrich; J.T. Hackett; W.H.
Kling; B.J. Lauderback, J.C. McGinty, Jr.; Irwin Miller; W.I. Miller;
J.A. Nash; L.R. Odden and T.M. Solso.
Instructions: to withhold authority to vote for any individual nominee,
print that nominee's name in the space provided below.
------------------------------------------------------------------
2. Vote FOR [ ] or AGAINST [ ] or ABSTAIN from voting for [ ]
confirmation of the appointment of the firm of Coopers & Lybrand,
certified public accountants, as the Corporation's independent
auditors. (The Board of Directors recommends a VOTE FOR this
proposal.)
3. Vote FOR [ ] or AGAINST [ ] or ABSTAIN from voting for [ ] approval of
the Irwin Financial Corporation 1997 Stock Option Plan. (The Board of
Directors recommends a VOTE FOR this proposal.)
4. Vote in their discretion upon such other business as may properly come
before the meeting or any adjournments thereof.
(Continued on other side)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Continued from other side)
THIS PROXY WILL BE VOTED AS YOU SPECIFY ON THE REVERSE SIDE OF THIS PROXY
CARD. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THE
PROXY WILL BE VOTED FOR THE DIRECTORS NAMED IN THE PROXY
STATEMENT, FOR THE CONFIRMATION OF THE APPOINTMENT OF COOPERS &
LYBRAND AS THE CORPORATION'S INDEPENDENT AUDITORS, FOR APPROVAL OF
THE 1997 STOCK OPTION PLAN, AND THE PROXIES MAY VOTE IN THEIR
DISCRETION UPON SUCH OTHER MATTERS AS PROPERLY MAY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
The undersigned acknowledges receipt of notice of said meeting and the
accompanying proxy statement and hereby revokes all proxies
heretofore given by the undersigned for said meeting.
<TABLE>
<S> <C>
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE VOTING Dated: 1997
THEREOF. ------------------------------------------------
SIGN EXACTLY AS NAME(S) APPEARS HERE. ------------------------------------------------
------------------------------------------------
(Please sign exactly as name appears on stock
certificate. If there are two or more co-owners,
all must sign.)
IMPORTANT: Please sign, date and return this
proxy promptly in the enclosed envelope. No
postage required if mailed in the United States.
</TABLE>
