SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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
FIRST MID-ILLINOIS BANCSHARES, INC.
(Name of Registrant as Specified in its Charter)
FIRST MID-ILLINOIS BANCSHARES, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
X No fee required.
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:
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>
First
[LOGO] Mid-Illinois
Bancshares
April 15, 1999
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of First Mid-
Illinois Bancshares, Inc., I cordially invite you to attend the Annual
Meeting of Stockholders of First Mid-Illinois Bancshares, Inc. to be held
at 4:00 p.m. on May 19, 1999, in the lobby of First Mid-Illinois Bank &
Trust, 1515 Charleston Avenue, Mattoon, Illinois.
The accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement discuss the business to be conducted at the meeting. We have
also enclosed a copy of the Company's 1998 Report to the Owners and its
Annual Report on Form 10-K for the recently completed fiscal year. At the
meeting we will report on Company operations and the outlook for the year
ahead. Directors and officers of the Company, as well as a representative
of KPMG LLP, the Company's independent auditors, will be present to respond
to any appropriate questions stockholders may have.
I encourage you to attend the meeting in person. WHETHER OR NOT YOU
PLAN TO ATTEND, HOWEVER, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ACCOMPANYING RETURN ENVELOPE AS PROMPTLY AS
POSSIBLE. This will ensure that your shares are represented at the
meeting. If you have any questions concerning these matters, please do not
hesitate to contact me at (217) 258-0493. We look forward with pleasure to
seeing and visiting with you at the meeting.
Very truly yours,
FIRST MID-ILLINOIS BANCSHARES, INC.
/s/ Daniel E. Marvin, Jr.
Daniel E. Marvin, Jr.
CHAIRMAN
1515 Charleston Avenue * P.O. Box 499 * Mattoon, IL 61938 * Phone: (217)
258-0493
<PAGE>
First
[LOGO] Mid-Illinois
Bancshares
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1999
FIRST MID-ILLINOIS BANCHARES, INC.
1515 Charleston Avenue, P.O. Box 499
Mattoon, Illinois 61938
(217) 258-0493
NOTICE IS HEREBY GIVEN, that the Annual Meeting of Stockholders of First
Mid-Illinois Bancshares, Inc. will be held in the lobby of First Mid-
Illinois Bank & Trust, 1515 Charleston Avenue, Mattoon, Illinois, on
Wednesday, May 19, 1999, at 4:00 p.m., local time.
The meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company; and
2. Such other matters as may properly come before the meeting or any
adjournments thereof.
The Board of Directors has fixed the close of business on April 1, 1999 as
the record date for the determination of the stockholders entitled to vote
at the meeting and any adjournments thereof.
You are requested to complete and sign the enclosed proxy card which is
solicited by the Board of Directors and to mail it promptly in the enclosed
return envelope.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Daniel E. Marvin, Jr.
Daniel E. Marvin, Jr.
CHAIRMAN
Mattoon, Illinois
April 15, 1999
1515 Charleston Avenue * P.O. Box 499 * Mattoon, IL 61938 * Phone: (217)
258-0493
<PAGE>
First
[LOGO] Mid-Illinois
Bancshares
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of First Mid-Illinois Bancshares, Inc.
to be voted at the Annual Meeting of Stockholders to be held in the lobby
of First Mid-Illinois Bank & Trust, 1515 Charleston Avenue, Mattoon,
Illinois, on Wednesday, May 19, 1999, at 4:00 p.m., local time. The Board
of Directors would like to have all stockholders represented at the
meeting. Please sign and return your proxy card in the enclosed return
envelope.
The accompanying Notice of Annual Meeting, this Proxy Statement and
the proxy card are first being mailed to stockholders on or about April 15,
1999. The Company's Annual Report on Form 10-K for the recently completed
fiscal year, which includes consolidated financial statements of the
Company, is also enclosed.
The Company is a diversified financial services company which serves
the financial needs of east central Illinois. The Company owns all the
outstanding capital stock of First Mid-Illinois Bank & Trust, N.A., a
national banking association with offices in Mattoon, Altamont, Arcola,
Effingham, Charleston, Sullivan, Tuscola, Urbana and Neoga, Illinois, and
Mid-Illinois Data Services, Inc., a data processing company ("Data
Services").
Only holders of record of the Company's Common Stock at the close of
business on April 1, 1999 (the "Record Date") will be entitled to vote at
the annual meeting or any adjournments or postponements of such meeting.
On the Record Date, the Company had 2,017,513 shares of Common Stock issued
and outstanding and 614 shares of Series A Preferred Stock issued and
outstanding. In the election of directors, and for any other matters to be
voted upon at the annual meeting, each issued and outstanding share of
Common Stock is entitled to one vote. Holders of the Series A Preferred
Stock are not entitled to vote their shares of Series A Preferred Stock at
the annual meeting.
Stockholders who execute proxies retain the right to revoke them at
any time. Unless so revoked, the shares represented by such proxies will
be voted at the annual meeting and all adjournments thereof. A stockholder
who has executed a proxy has the power to revoke it at any time before it
is voted by delivering written notice of revocation to the Secretary of the
Company at 1515 Charleston Avenue, P.O. Box 499, Mattoon, Illinois 61938,
by executing and delivering a subsequently dated proxy, or by attending the
annual meeting and voting in person. Proxies solicited by the Board of
Directors of the Company will be voted in accordance with the directions
given therein. WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED
FOR THE NOMINEES FOR DIRECTOR SET FORTH BELOW.
A quorum of stockholders is necessary to take action at the annual
meeting. The presence, in person or by proxy, of the holders of a majority
of the shares of Common Stock of the Company entitled to vote at the
meeting will constitute a quorum. Votes cast by proxy or in person at the
meeting will be tabulated by the inspector of election appointed for the
meeting and will be counted as present for purposes of determining whether
a quorum is present.
The expenses of solicitation, including the cost of printing and
mailing, will be paid by the Company. Proxies are being solicited
principally by mail and by telephone. In addition, directors, officers and
regular employees of the Company may solicit proxies personally, by
telephone, by fax or by special letter. The Company may also reimburse
brokers, nominees and other fiduciaries for their reasonable expenses in
forwarding proxy solicitation material to beneficial owners.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth, as of February 28, 1999, the number of
shares of Common Stock beneficially owned by each person known by the
Company to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock (who are not also directors), each
director nominee of the Company, each director, the "named executive
officers" (as defined below) and all director nominees, directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF COMMON
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP<F1> STOCK OUTSTANDING
<S> <C> <C>
PRINCIPAL STOCKHOLDERS:
Margaret Lumpkin Keon 138,520<F2> 6.8%
16 Miller Avenue, Suite 203
Mill Valley, California 94941
Mary Lumpkin Sparks 192,089<F3> 9.4%
2438 Campbell Road, N.W.
Albuquerque, New Mexico 87104
DIRECTOR NOMINEES, DIRECTORS AND
NAMED EXECUTIVE OFFICERS:
Charles A. Adams 136,779<F4> 6.5%<F16>
Kenneth R. Diepholz 32,461<F5> 1.6%<F16>
Richard Anthony Lumpkin 412,506<F6> 19.9%<F16>
Daniel E. Marvin, Jr. 34,797<F7> 1.7%<F16>
Gary W. Melvin 94,533<F8> 4.6%<F16>
William G. Roley 42,152<F9> 2.1%<F16>
William S. Rowland 11,835<F10> 0.6%<F16>
Ray Anthony Sparks 48,296<F11> 2.4%<F16>
John M. Remsen, Jr. 5,372<F12> 0.3%<F16>
Stanley E. Gilliland 8,414<F13> 0.4%<F16>
John R. Kuczynski 4,107<F14> 0.2%<F16>
All directors and executive officers as 832,079<F15> 37.1%<F17>
a group (13 persons)
</FN>
<F1> Unless otherwise indicated, the nature of beneficial ownership for
shares shown in this column is sole voting and investment power. The
information contained in this column is based upon information furnished
to the Company by the persons named above and the members of the
designated group.
<F2> The above amount includes 20,210 shares obtainable through the
conversion of Series A Preferred Stock held by Ms. Keon and 118,310
shares held under the Margaret L. Keon Trust, established under Article
5 of the Mary G. Lumpkin Trust dated January 31, 1984, of which trust
Ms. Keon is trustee and beneficiary.
<F3> The above amount includes 20,210 shares obtainable through the
conversion of Series A Preferred Stock and 118,824 shares held under the
Mary L. Sparks Trust, established under Article 5 of the Mary G. Lumpkin
Trust dated January 31, 1984, with respect to which shares Mrs. Sparks
has no voting or investment power. The shares held by this trust are
also included in the number of shares reported as beneficially owned by
Mr. Richard A. Lumpkin in this table. The above amount also includes
1,207 shares held directly by Mrs. Sparks and 51,848 shares held in
trust for the benefit of Richard Anthony Lumpkin's adult children for
which Mrs. Sparks serves as trustee and of which shares Mrs. Sparks
disclaims beneficial ownership.
<F4> The above amount includes 18,764 shares of Common Stock and 80,840
shares obtainable through the conversion of Series A Preferred Stock
held by a corporation which Mr. Adams is deemed to control. The above
amount also includes 2,086 shares held by Mr. Adams' spouse, over which
shares Mr. Adams has no voting and investment power, and options to
purchase 500 shares of Common Stock. The above amount does not include
1,640 shares held by adult children of Mr. Adams.
<F5> The above amount includes 14,147 shares obtainable through the
conversion of Series A Preferred Stock held by Mr. Diepholz and options
to purchase 1,500 shares of Common Stock.
<F6> The above amount includes 20,210 shares obtainable through the
conversion of Series A Preferred Stock held by the Richard A. Lumpkin
Trust, of which Mr. Lumpkin is trustee and beneficiary, and 14,231
shares held by The Lumpkin Foundation, of which Mr. Lumpkin serves as a
director. The above amount also includes 118,824 shares held under the
Richard A. Lumpkin Trust, and further includes 20,210 shares obtainable
through the conversion of Series A Preferred Stock and 118,824 shares
held under the Mary Lee Sparks Trust, of which Mr. Lumpkin is trustee.
Each such trust has been established under Article 5 of the Mary G.
Lumpkin Trust dated January 31, 1984. The above amount also includes
42,035 shares held by McLeod USA Inc., of which Mr. Lumpkin is Vice
Chairman of the Board, and of which shares beneficial ownership is
disclaimed. The above amount also includes 20,210 shares obtainable
through the conversion of Series A Preferred Stock and 45,924 shares
held under the Gail Lumpkin Trust, over which shares Mr. Lumpkin has no
voting or investment power and of which Mr. Lumpkin disclaims beneficial
ownership. The above amount also includes options to purchase 1,500
shares of Common Stock. The above amount does not include 72,430 shares
held by adult children of Mr. Lumpkin and 51,848 shares held in trust
for the benefit of Mr. Lumpkin's adult children of which trust Mr.
Lumpkin is not a trustee and of which shares beneficial ownership is
also disclaimed.
<F7> The above amount includes 4,850 shares obtainable through the conversion
of Series A Preferred Stock held by Mr. Marvin. The above amount also
includes 3,159 shares held by Mr. Marvin's spouse, over which shares Mr.
Marvin has no voting or investment power and of which Mr. Marvin
disclaims beneficial ownership, and 329 shares held by Mr. Marvin's
grandchildren, over which Mr. Marvin has shared voting and investment
power. The above amount also includes options to purchase 2,500 shares
of Common Stock.
<F8> The above amount includes 40,420 shares obtainable through the
conversion of Series A Preferred Stock held by Mr. Melvin. The above
amount also includes options to purchase 1,500 shares of Common Stock.
<F9> The above amount includes 4,042 shares obtainable through the conversion
of Series A Preferred Stock held by Mr. Roley. The above amount also
includes 4,042 shares obtainable through the conversion of Series A
Preferred Stock held by Mr. Roley's spouse and 13,399 shares held by
the Peggy A. Roley Trust, over which Mr. Roley has no voting or
investment power and of which Mr. Roley disclaims beneficial ownership.
The above amount also includes options to purchase 1,500 shares of
Common Stock.
<F10> The above amount includes 4,850 shares obtainable through the conversion
of Series A Preferred Stock held by Mr. Rowland. The above amount also
includes options to purchase 1,500 shares of Common Stock.
<F11> The above amount includes 7,291 shares held by Mr. Sparks' children,
over which Mr. Sparks shares voting and investment power. The above
amount also includes options to purchase 1,500 shares of Common Stock.
<F12> The above amount includes options to purchase 1,000 shares of Common Stock.
<F13> The above amount includes 2,021 shares obtainable through the conversion
of Series A Preferred Stock held by Mr. Gilliland and 977 shares held
by Mr. Gilliland and his spouse, over which Mr. Gilliland has shared
voting and investment power. The above amount also includes options to
purchase 750 shares of Common Stock.
<F14> The above amount includes options to purchase 500 shares of Common
Stock.
<F15> Includes an aggregate of 215,842 shares obtainable through conversion of
Series A Preferred Stock and an aggregate of 14,250 upon the exercise of
options.
<F16> Percentage is calculated on a partially diluted basis, assuming only the
conversion of Series A Preferred Stock held by such individual and the
exercise of stock options by such individual which are exercisable
within 60 days.
<F17> Percentage is calculated on a fully diluted basis, assuming the
conversion of all Series A Preferred Stock held by individuals (except
greater than 5% stockholders who are not also directors) included in the
above table the exercise of all stock options which are exercisable
within 60 days by individuals included in the above table.
</FN>
</TABLE>
As of February 28, 1999, the Bank acted as sole or co-fiduciary with
respect to trusts and other fiduciary accounts which own or hold 99,636 shares
or 4.9% of the outstanding Common Stock of the Company, over which the Bank has
sole voting and investment power with respect to 76,286 shares or 3.8% of the
outstanding Common Stock and shared voting and investment power with respect to
23,350 shares or 1.2% of the outstanding Common Stock.
PROPOSAL I - ELECTION OF DIRECTORS
At the annual meeting, the stockholders will be entitled to elect two
Class I directors for a term expiring in 2002. The Board of Directors has
nominated for election as directors Kenneth R. Diepholz and Gary W. Melvin.
The two individuals receiving the highest number of votes cast will be
elected as directors of the Company.
The directors of the Company are divided into three classes having
staggered terms of three years. Each of the nominees for election as Class
I directors is an incumbent director. The Company has no knowledge that
any of the nominees will refuse or be unable to serve, but if any of the
nominees becomes unavailable for election, the holders of the proxies
reserve the right to substitute another person of their choice as a nominee
when voting at the meeting. The two nominees, if elected at the annual
meeting, will serve as Class I directors for three year terms expiring in
2002.
The following table sets forth as to each nominee and director
continuing in office, his name, age, principal occupation and the year he
first became a director of the Company. Unless otherwise indicated, the
principal occupation listed for each person below has been his occupation
for the past five years.
<TABLE>
<CAPTION>
AGE AT APRIL YEAR FIRST YEAR
1, 1999 BECAME TERM
NAME PRINCIPAL OCCUPATION DIRECTOR EXPIRES
<S> <C> <C> <C> <C>
DIRECTOR NOMINEES
Kenneth R. Diepholz 60 Director of the Bank (since 1984) 1990 1999
and of the Company; President,
Diepholz Chevrolet, Oldsmobile,
Cadillac and Geo; Owner, D-Co Coin
Laundry and Diepholz Rentals.
Gary W. Melvin 49 Director of the Bank (since 1984) 1990 1999
and of the Company; Director of
Data Services (since 1987); Co-
Owner, Rural King Stores.
DIRECTORS CONTINUING IN OFFICE
Richard Anthony 64 Director of the Bank (since 1966) 1982 2000
Lumpkin and of the Company; former Chairman
of the Board of Consolidated
Communications Inc. (until 1997),
Director Ameren CIPS (since 1995);
Director of Illuminet Holdings,
Inc. (since 1989); Vice Chairman,
McLeod USA Inc. (since 1997);
Chairman, Illinois Consolidated
Telephone Company (since 1990).
William G. Roley 69 Director of the Bank (since 1992) 1985 2000
and of the Company; retired, former
owner of Roley Real Estate.
William S. Rowland 52 Executive Vice President (since 1991 2000
1997), Treasurer and Chief
Financial Officer (since 1989) and
Director of the Company; Director
of Data Services (since 1989);
Executive Vice President of the
Bank (since 1989).
Charles A. Adams 57 Director of the Bank (since 1989), 1984 2001
of Data Services (since 1987) and
of the Company; President, Howell
Paving, Inc.
Daniel E. Marvin, Jr. 60 Chairman, President, Chief 1982 2001
Executive Officer and Director of
the Company; Director (since 1980),
Chairman (since 1983), President
and Chief Executive Officer (1983-
1997) of the Bank; Director of Data
Services (1987-1992).
Ray Anthony Sparks 42 Director of the Bank (since 1997) 1994 2001
and of the Company; Director of
Data Services (since 1996); former
President of Elasco Agency Sales,
Inc. and Electrical Laboratories
and Sales Corporation; private
investor.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS
DIEPHOLZ AND MELVIN FOR A TERM OF THREE YEARS.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has established an audit
committee and a compensation committee. These committees are composed
entirely of outside directors. The Board has also created other company-
wide committees composed of officers of the Company and its subsidiaries.
The Company does not maintain any standing nominating committee. The full
Board acts on all matters relating to the nomination of individuals for
election as directors.
Members of the audit committee are Messrs. Adams, Diepholz, Lumpkin,
Melvin, Roley and Sparks. The audit committee reports to the Board of
Directors and has the responsibility to review and approve internal control
procedures, accounting practices and reporting activities of the Company's
subsidiaries. The committee also has the responsibility for establishing
and maintaining communications between the Board and the independent
auditors and regulatory agencies. The audit committee reviews with the
independent auditors the scope of their examinations, with particular
emphasis on the areas to which either the audit committee or the auditors
believe special attention should be directed. It also reviews the
examination reports of regulatory agencies and reports to the full Board
regarding matters discussed therein. Finally, it oversees the
establishment and maintenance of effective controls over the business
operations of the Company's subsidiaries. The audit committee met four
times in 1998.
The members of the compensation committee are Messrs. Adams, Diepholz,
Lumpkin, Melvin, Roley and Sparks. The compensation committee reports to
the Board of Directors and has responsibility for all matters related to
compensation of executive officers of the Company, including review and
approval of base salaries, conducting a review of salaries of executive
officers compared to other financial services holding companies in the
region, fringe benefits, including modification of the retirement plan, and
incentive compensation. The compensation committee met two times in 1998.
A total of 14 regularly scheduled and special meetings were held by
the Board of Directors of the Company during 1998. During 1998, all
directors attended at least 75 percent of the meetings of the Board and the
committees on which they served.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION INFORMATION. The following table summarizes
compensation for services to the Company and the Company's subsidiaries for
the years ended December 31, 1998, 1997 and 1996 paid to or earned by the
Chief Executive Officer of the Company and the four other most highly
compensated executive officers of the Company. These individuals are
sometimes herein referred to as the "named executive officers."
<TABLE>
<CAPTION>
ANNUAL SECURITIES ALL OTHER
NAME AND COMPENSATION<F1> UNDERLYING COMPEN-
PRINCIPAL POSITION YEAR SALARY<F2> BONUS OPTIONS (#) SATION
<S> <C> <C> <C> <C> <C>
Daniel E. Marvin, Jr., President and 1998 $ 170,338 $ 44,594 2,500 $ 26,238<F3>
Chief Executive Officer of the Company 1997 $ 170,338 $ 45,608 10,000 $ 27,093<F3>
1996 $ 170,338 $ 59,848 -- $ 26,390<F3>
William S. Rowland, Executive Vice 1998 $ 110,000 $ 21,828 2,000 $ 13,785<F4>
President, Treasurer and Chief 1997 $ 110,000 $ 21,450 6,000 $ 13,912<F4>
Financial Officer of the Company 1996 $ 105,338 $ 23,570 -- $ 13,517<F4>
John M. Remsen, Jr., Executive Vice 1998 $ 126,860 $ 24,539 2,000 $ 8,208<F6>
President of the Company and President 1997<F5> $ 55,573 $ 9,937 4,000 $ -
and CEO of the Bank 1996<F5> $ -- $ -- - $ -
Stanley E. Gilliland, Vice President 1998 $ 96,000 $ 13,286 1,000 $ 6,676<F6>
of the Company 1997 $ 96,000 $ 15,264 3,000 $ 6,686<F6>
1996 $ 91,338 $ 15,435 - $ 6,426<F6>
John R. Kuczynski, Vice President of 1998 $ 98,045 $ 22,226 1,000 $ 6,877<F6>
the Company 1997 $ 98,045 $ 16,569 2,000 $ 6,448<F6>
1996<F7> $ 51,625 $ 9,419 - $ --
<FN>
<F1> None of the named executive officers received any perquisites or other
personal benefits, securities, or property in an amount exceeding 10% of
his salary and bonus during 1998, 1997 and 1996.
<F2> Includes deferred amounts.
<F3> Represents the Company's contributions to its retirement plan for 1998,
1997 and 1996 of $12,957, $13,812 and $13,109, respectively, and premium
payments for an insurance policy purchased to fund a supplemental
retirement and death benefit for Mr. Marvin in the amount of $13,281 for
each year.
<F4> Represents the Company's contributions to its retirement plan for 1998,
1997 and 1996 of $7,887, $8,014 and $7,619, respectively, and an annual
premium payment for an insurance policy purchased to fund a supplemental
retirement and death benefit for Mr. Rowland in the amount of $5,898 for
each year.
<F5> John M. Remsen, Jr. joined the Company on August 15, 1997. The 1997
information for Mr. Remsen only reflects the period from August 15, 1997
to December 31, 1997.
<F6> Represents the Company's contributions to its retirement plan.
<F7> John R. Kuczynski joined the Company on June 3, 1996. The 1996
information for Mr. Kuczynski only reflects the period from June 3, 1996
to December 31, 1996.
</FN>
</TABLE>
The following table sets forth information regarding individual grants
of stock options made during 1998 to the named executive officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE
UNDERLYING GRANTED TO EXERCISE EXPIR-ATION APPRECIATION FOR
OPTIONS EMPLOYEES IN PRICE DATE OPTION TERM
NAME GRANTED(#)<F1> FISCAL YEAR PER SHARE 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Daniel E. Marvin, Jr. 2,500 29% $ 35.00 12/15/08 $ 55,025 $ 139,450
William S. Rowland 2,000 24% $ 35.00 12/15/08 $ 44,020 $ 111,560
John M. Remsen, Jr. 2,000 24% $ 35.00 12/15/08 $ 44,020 $ 111,560
Stanley E. Gilliland 1,000 12% $ 35.00 12/15/08 $ 22,010 $ 55,780
John R. Kuczynski 1,000 12% $ 35.00 12/15/08 $ 22,010 $ 55,780
<FN>
<F1> The options become exercisable with respect to 25% of the shares
covered thereby on each of the first four anniversaries of the date
of grant.
</FN>
</TABLE>
The following table sets forth information regarding the year-end values of
unexercised stock options held by the named executive officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY STOCK
STOCK OPTIONS AT FISCAL OPTIONS AT
YEAR END(#) FISCAL YEAR END<F1>
SHARES
ACQUIRED VALUE EXER- UNEXER-
NAME ON EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE CISABLE CISABLE
<S> <S> <C> <C> <C> <C>
Daniel E. Marvin, Jr. -- -- 2,500 10,000 $ 18,731 $ 56,194
William S. Rowland -- -- 1,500 6,500 $ 9,990 $ 29,970
John M. Remsen, Jr. -- -- 1,000 5,000 $ 4,995 $ 14,985
Stanley E. Gilliland -- -- 750 3,250 $ 4,995 $ 14,985
John R. Kuczynski -- -- 500 2,500 $ 2,498 $ 7,493
<FN>
<F1> This amount represents the difference between the market value of one share of the
Company's Common Stock on December 31, 1998 ($33.50) and the option exercise price
times the total number of shares subject to exercisable or unexercisable options.
</FN>
</TABLE>
EMPLOYMENT AGREEMENTS. In December, 1997, the Company entered into
employment agreements with Daniel E. Marvin, Jr. and William S. Rowland. The
employment agreements provide for an initial base salary, which may be increased
but not decreased, and a bonus of up to 35% of base salary for Mr. Marvin and
25% for Mr. Rowland. Each agreement has an initial term of three years, which
may be extended upon mutual agreement. In the event of termination of the
respective officer's employment by the Company without cause, the Company will
be obligated to pay to such officer an amount equal to one year's salary. In the
event such person's employment discontinues following a change in control of the
Company, the successor to the Company is obligated to make a lump sum payment to
such officer in amount equal to the greater of two years' base salary or the
aggregate base salary the officer would have received for the balance of the
three year term of the agreement. The employment agreements include a covenant
which limits the ability of each officer to compete with the Bank for a period
of two years following the termination of his employment. The Company has also
entered into a similar agreement with John M. Remsen, Jr., who became the Bank's
President in August, 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The members
of the compensation committee of the Board of Directors of the Company for the
fiscal year ended December 31, 1998 were Messrs. Adams, Diepholz, Lumpkin,
Melvin, Roley and Sparks. No such member of the compensation committee is a
former or current officer or employee of the Company or its subsidiaries.
COMPENSATION COMMITTEE REPORT. It is the compensation committee's
responsibility to evaluate the performance of management, review total
management compensation levels and consider management succession and other
related matters. The committee reviews and approves in detail all aspects of
compensation for the nine highest paid officers within the Company and uses
state, regional and national salary studies to ascertain existing market
conditions for personnel.
The compensation philosophy of the Company is that a portion of the annual
compensation of each officer relates to and must be contingent upon the
performance of the Company, as well as the individual contribution of each
officer. As a result, a portion of each executive officer's annual compensation
is based upon the officer's performance, the performance of the operating unit
for which the officer has primary responsibility and the performance of the
Company as a whole. In 1993, the formulas for measuring performance and
awarding bonuses were refined and improved so as to more objectively link
financial and individual performance with bonus amounts.
During 1998, the Company's net income amounted to $5,062,000, a $336,000
(7.1%) improvement from 1997's level. In addition, the Company's market share
increased and various other improvements were made in the Company's operating
and administrative functions. Accordingly, Messrs. Marvin, Rowland, Remsen,
Gilliland and Kuczynski were awarded incentive bonuses of $44,594, $21,828,
$24,539, $13,286 and $22,226, respectively. The relationships between the base
salaries and incentive compensation of Messrs. Marvin, Rowland, Remsen,
Gilliland and Kuczynski for 1998, 1997 and 1996 were as follows:
Incentive Compensation as a % of Base Salary
1998 1997 1996
Daniel E. Marvin, Jr. 26% 27% 35%
William S. Rowland 20% 20% 22%
John M. Remsen, Jr. 19% 18% N/A
Stanley E. Gilliland 14% 16% 17%
John R. Kuczynski 23% 17% 18%
This Compensation Committee Report is submitted by the compensation
committee of the Company.
COMMON STOCK PRICE PERFORMANCE GRAPH
The following Common Stock price performance graph compares the cumulative
total stockholder return on a $100 investment in the Company's Common Stock to
the cumulative total return of the S & P 500 Index and the Nasdaq Bank Stock
Index for the period December 31, 1993 through December 31, 1998. The amounts
shown assume the reinvestment of dividends.
[Graphic omitted]
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
<S> <C> <C> <C> <C> <C> <C>
First Mid-Illinois Bancshares, Inc. $100 $103 $136 $166 $264 $295
S & P 500 $100 $101 $139 $171 $229 $294
NASDAQ Bank Stocks $100 $100 $148 $196 $328 $325
</TABLE>
DIRECTORS' COMPENSATION
Directors of the Company received a $1,800 quarterly retainer for serving
on the Board of Directors in 1998. Directors who are not employees of the
Company also were granted in 1998 options to purchase 500 shares of the
Company's Common Stock at an exercise price of $35.00 per share. Such options
have terms of ten years and became exercisable on their date of grant.
Additionally, the Company provides retirement pension benefits to non-employee
directors who have attained the age of 70 and who have served as a director for
a minimum of ten years upon retirement. The pension is equal to 75% of the
compensation received by the director from the Company in the year before
retirement. Directors who are not employees of the Company also receive health
insurance.
TRANSACTIONS WITH MANAGEMENT
Directors and officers of the Company and its subsidiaries and their
associates, were customers of and had transactions with the Company and its
subsidiaries during 1998. Additional transactions may be expected to take place
in the future. All outstanding loans, commitments to loan, transactions in
repurchase agreements and certificates of deposit and depository relationships,
in the opinion of management, were made in the ordinary course of business, on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time or comparable transactions with other persons and did not
involve more than the normal risk of collectibility or present other unfavorable
features.
McLeod USA Inc., of which Richard A. Lumpkin is Vice Chairman and a
significant shareholder, provides certain telecommunication services to the
Company on an ongoing basis.
NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS OF DIRECTORS
Any stockholder wishing to nominate an individual for election as a
director must comply with certain provisions in the Company's Certificate of
Incorporation. The Company's Certificate of Incorporation establishes an
advance notice procedure with regard to the nomination, other than by or at the
direction of the Board of Directors of the Company, of candidates for election
as directors. Generally, such notice must be delivered to or mailed to and
received by the Secretary of the Company not fewer than 14 days nor more than 60
days before any meeting at which directors are to be elected. The stockholder
must also comply with certain other provisions set forth in the Company's
Certificate of Incorporation relating to the nomination of an individual for
election as a director. For a copy of the Company's Certificate of
Incorporation, which includes the provisions relating to the nomination of an
individual for election as a director, an interested stockholder should contact
the Secretary of the Company at 1515 Charleston Avenue, P.O. Box 499, Mattoon,
Illinois 61938.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of copies of Form 3, 4 and 5 beneficial ownership
reports and amendments thereto furnished to the Company, and written
representations that no other reports were required, the Company believes that
its directors, officers and greater than 10% stockholders complied with all
applicable requirements of Section 16(a) of the Securities Exchange Act of 1934
during the fiscal year ended December 31, 1998.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected KPMG LLP, independent certified public
accountants, to serve as the independent auditors of the Company and its
subsidiaries for the fiscal year ending December 31, 1999. KPMG LLP has served
as the Company's independent auditors since 1992. A representative from KPMG
LLP is expected to be present at the annual meeting, will have the opportunity
to make a statement and will be available to respond to appropriate questions.
INCLUSION OF STOCKHOLDER PROPOSALS IN PROXY MATERIALS
In order to be eligible for inclusion in the Company's proxy materials for
next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's main office at 1515
Charleston Avenue, P.O. Box 499, Mattoon, Illinois 61938, no later than December
17, 1999. Any such proposal shall be subject to the requirements of the proxy
rules adopted under the Securities Exchange Act of 1934.
OTHER MATTERS
The Board of Directors of the Company does not intend to present any other
matters for action at the annual meeting, and the Board has not been informed
that other persons intend to present any other matters for action at the annual
meeting. However, if any other matters should properly come before the annual
meeting, the persons named in the accompanying proxy intend to vote thereon,
pursuant to the proxy, in accordance with the recommendation of the Board of
Directors of the Company.
<PAGE>
Appendix - Proxy Card
PROXY FIRST MID-ILLINOIS BANCSHARES, INC PROXY
Proxy Is Solicited By the Board of Directors
For the Annual Meeting of Stockholders - May 19, 1999
The undersigned hereby appoints Stanley E. Gilliland, John M. Remsen, Jr.
and John R. Kuczynski, or any of them acting in the absence of the others, with
power of substitution, as attorneys and proxies, for and in the name and place
of the undersigned, to vote the number of shares of Common Stock that the
undersigned would be entitles to vote if then personally present and voting at
the Annual Meeting of the Stockholders of First Mid-Illinois Bancshares, Inc.,
to be held in the lobby of First Mid-Illinois Bank & Trust, 1515 Charleston
Avenue, Mattoon, Illinois, on Wednesday, May 19, 1999, at 4:00 p.m., local time,
or any adjournments or postponements thereof, upon the matters set forth in the
Notice of Annual Meeting and Proxy Statement (receipt of which is hereby
acknowledged) as designated on the reverse side and, in their discretion, upon
such other business as may come before the meeting.
New address:
(Continued and to be signed and
dated on the reverse side.)
<PAGE>
FIRST MID-ILLINOIS BANCSHARES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. Election as directors of all the nominees listed below --
[box] For All
[box] Withhold All
[box] For All Except
Nominees: Kenneth R. Diepholz, Gary W. Melvin
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name on the line below.
[line]
2. In their discretion, on such other matters that may properly come before the
meeting and any adjournment thereof.
[box] Check here if you plan to attend the meeting.
The Board of Directors recommends a vote FOR all the nominees.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATION MADE. IF NO CHOICE IS
INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES LISTED
HEREON.
DATED:
SIGNATURE(S):
NOTE: Please date and sign exactly as your name(s) appears. For joint
accounts, each owner should sign. When signing as executor, administrator,
attorney, trustee or guardian, etc., please give your full title.
[box] Check here for address change on reverse side.
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOP
