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-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 14, 2000
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 17, 2000, 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 1999 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) 258-0415 or Christie Burich, Manager of Shareholder Services, 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/ William S. Rowland
William S. Rowland
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
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 17, 2000
FIRST MID-ILLINOIS BANCSHARES, 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 17,
2000, 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 3, 2000 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/ William S. Rowland
William S. Rowland
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Mattoon, Illinois
April 14, 2000
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 17, 2000, 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 14, 2000.
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 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, Charleston, Effingham, Altamont, Neoga,
Sullivan, Arcola, Taylorville, Tuscola, Monticello, Deland and Urbana, 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 3, 2000 (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 2,272,043 shares of Common 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.
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 March 1, 2000, 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.
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF COMMON
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP{(1)} STOCK OUTSTANDING
<S> <C> <C>
PRINCIPAL STOCKHOLDERS:
Margaret Lumpkin Keon 141,208{(2)} 6.2%
21 Windward Road
Belvedere, California 94920
Mary Lumpkin Sparks 170,679{(3)} 7.5%
2438 Campbell Road, N.W.
Albuquerque, New Mexico 87104
DIRECTOR NOMINEES, DIRECTORS AND
NAMED EXECUTIVE OFFICERS:
Charles A. Adams 145,801{(4)} 6.4%{(15)}
Kenneth R. Diepholz 32,961{(5)} 1.5%{(15)}
Steven L. Grissom 2,515{(6)} 0.1%
Richard Anthony Lumpkin 421,591{(7)} 18.5%{(15)}
Daniel E. Marvin, Jr. 37,265{(8)} 1.6%{(15)}
Gary W. Melvin 71,469{(9)} 3.1%{(15)}
William S. Rowland 14,110{(10)} 0.6%{(15)}
Ray Anthony Sparks 50,486{(11)} 2.2%{(15)}
Stanley E. Gilliland 10,835{(12)} 0.5%{(15)}
John R. Kuczynski 5,570{(13)} 0.2%{(15)}
All directors and executive officers as 793,624{(14)} 34.6%{(16)}
a group (13 persons)
</TABLE>
____________________________
(1) 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.
(2) The above amount includes 141,208 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.
(3) The above amount includes 141,729 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 27,723 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.
(4) The above amount includes 103,220 shares of Common Stock held by a
corporation which Mr. Adams is deemed to control. The above amount also
includes 2,118 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 1,666 shares
held by adult children of Mr. Adams.
(5) The above amount includes options to purchase 2,000 shares of Common
Stock.
(6) The above amount represents shares held by Mr. Grissom and his spouse,
over which Mr. Grissom has shared voting and investment power.
(7) The above amount includes 18,739 shares held by The Lumpkin Foundation,
of which Mr. Lumpkin serves as a director, and of which shares
beneficial ownership is disclaimed. The above amount also includes
141,729 shares held under the Richard A. Lumpkin Trust and 141,729
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 38,409 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 67,685 shares held under the
Gail Lumpkin Trust, over which shares Mr. Lumpkin has no voting or
investment power. The above amount also includes options to purchase
2,000 shares of Common Stock. The above amount does not include 122,416
shares held by adult children of Mr. Lumpkin and 27,723 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.
(8) The above amount includes 4,327 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 531 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
6,125 shares of Common Stock.
(9) The above amount includes options to purchase 2,000 shares of Common
Stock.
(10) The above amount includes options to purchase 3,500 shares of Common
Stock.
(11) The above amount includes 7,843 shares held by Mr. Sparks' children,
over which Mr. Sparks shares voting and investment power. The above
amount also includes options to purchase 2,000 shares of Common Stock.
(12) The above amount includes 992 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 1,750 shares of
Common Stock.
(13) The above amount includes options to purchase 1,250 shares of Common
Stock.
(14) Includes an aggregate of 21,125 shares obtainable upon the exercise of
options.
(15) Percentage is calculated on a partially diluted basis, assuming only the
exercise of stock options by such individual which are exercisable
within 60 days.
(16) Percentage is calculated on a fully diluted basis, assuming the exercise
of all stock options which are exercisable within 60 days by individuals
included in the above table.
As of March 1, 2000, the Bank acted as sole or co-fiduciary with respect to
trusts and other fiduciary accounts which own or hold 283,588 shares or 12.3% of
the outstanding Common Stock of the Company, over which the Bank has sole voting
and investment power with respect to 94,753 shares or 4.1% of the outstanding
Common Stock and shared voting and investment power with respect to 188,834
shares or 8.2% of the outstanding Common Stock.
PROPOSAL I - ELECTION OF DIRECTORS
The directors of the Company are divided into three classes having
staggered terms of three years. At the annual meeting, the stockholders will be
entitled to elect two Class II directors for a term expiring in 2003. Following
the death of William G. Roley (who had served as a Class II director), the Board
of Directors reduced the number of directors from eight to seven, which resulted
in a reduction in the number of Class II directors from three to two. The Board
of Directors subsequently increased the size of the board back to eight on March
22, 2000, thereby increasing the number of Class I directors from two to three.
Steven L. Grissom was appointed by the Board of Directors to fill the vacancy
created by such increase. Mr. Grissom will stand for re-election along with the
other Class I directors at the 2002 annual stockholders meeting.
For this year's annual stockholders meeting, the Board of Directors has
nominated for election as Class II directors Richard Anthony Lumpkin and William
S. Rowland. Messrs. Lumpkin and Rowland have served as directors of the Company
since 1982 and 1991, respectively. The two individuals receiving the highest
number of votes cast will be elected as directors of the Company and will serve
as Class II directors for three year terms expiring in 2003. 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 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.
<PAGE>
<TABLE>
<CAPTION>
AGE AT APRIL YEAR FIRST YEAR
1, 2000 BECAME TERM
NAME PRINCIPAL OCCUPATION DIRECTOR EXPIRES
<S> <C> <C> <C> <C>
DIRECTOR NOMINEES
Richard Anthony 65 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 S. Rowland 53 Chairman, President, Chief 1991 2000
Executive Officer and Director of
the Company; Executive Vice
President (1997-1999), Treasurer
and Chief Financial Officer (1989-
1999) of the Company; Director of
Data Services (since 1989);
Director (since 1999), Chairman
(since 1999) and Executive Vice
President (1989-1999) of the Bank.
DIRECTORS CONTINUING IN OFFICE
Charles A. Adams 58 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. 61 Retired; Chairman, President, Chief 1982 2001
Executive Officer (1983-1999) and
Director of the Company; Director
(since 1980), Chairman (1983-1999),
President and Chief Executive
Officer (1983-1997) of the Bank;
Director of Data Services (1987-
1992).
Ray Anthony Sparks 43 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.
Kenneth R. Diepholz 61 Director of the Bank (since 1984) 1990 2002
and of the Company; President,
Diepholz Chevrolet, Oldsmobile,
Cadillac and Geo; Owner, D-Co Coin
Laundry and Diepholz Rentals.
Steven L. Grissom 47 Director of the Bank and the 2000 2002
Company (since 2000); Treasurer of
Illinois Consolidated Telephone
Company (since 1989);
Administrative Officer of SKL
Investment Group, LLC (since 1997).
Gary W. Melvin 50 Director of the Bank (since 1984) 1990 2002
and of the Company; Director of
Data Services (since 1987); Co-
Owner, Rural King Stores.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS
LUMPKIN AND ROWLAND 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
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 1999.
The members of the compensation committee are Messrs. Adams, Diepholz,
Lumpkin, Melvin, Marvin and Sparks. Mr. Marvin joined the compensation committee
in June, 1999 following his retirement in May, 1999 as Chairman, President and
Chief Executive Officer of the Company. 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 one time in 1999.
A total of 14 regularly scheduled and special meetings were held by the
Board of Directors of the Company during 1999. During 1999, 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, 1999, 1998 and 1997 paid to or earned by any person
serving as the Chief Executive Officer of the Company and the two other most
highly compensated executive officers of the Company whose salary and bonus
exceeded $100,000 for the year ended December 31, 1999. These individuals are
sometimes herein referred to as the "named executive officers."
<TABLE>
<CAPTION>
ANNUAL SECURITIES ALL OTHER
NAME AND COMPENSATION{(1) } UNDERLYING COMPEN-
PRINCIPAL POSITION Year Options (#) sation
<S> <C> <C> <C> <C> <C>
SALARY{(2)} BONUS
William S. Rowland, Chairman, 1999 $ 138,662 $ --{(3)} 5,500{(3)} $ 15,527{(4)}
President and Chief Executive Officer
of the Company from May 19, 1999 to
December 31, 1999
1998 $ 110,000 $ 21,828 2,000 $ 13,785{(4)}
1997 $ 110,000 $ 21,450 6,000 $ 13,912{(4)}
Daniel E. Marvin, Jr., Chairman, 1999 $ 106,303 $ 22,960 -- $ 31,776{(5)}
President and Chief Executive Officer
of the Company from January 1, 1999 to
May 19, 1999
1998 $ 170,338 $ 44,594 2,500 $ 26,238{(5)}
1997 $ 170,338 $ 45,608 10,000 $ 27,093{(5)}
Stanley E. Gilliland, Vice President 1999 $ 103,000 $ 15,903 1,000 $ 6,977{(6)}
of the Company
1998 $ 96,000 $ 13,286 1,000 $ 6,676{(6)}
1997 $ 96,000 $ 15,264 3,000 $ 6,686{(6)}
John R. Kuczynski, Vice President of 1999 $ 101,045 $ 13,419 1,000 $ 7,396{(6)}
the Company
1998 $ 98,045 $ 22,226 1,000 $ 6,877{(6)}
1997 $ 98,045 $ 16,569 2,000 $ 6,448{(6)}
</TABLE>
____________________________
(1) 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 1999, 1998 and 1997.
(2) Includes deferred amounts.
(3) In lieu of a cash bonus in 1999, Mr. Rowland was awarded in January, 2000
options to purchase 3,000 shares of Common Stock, in addition to the
options to purchase 2,500 shares of Common Stock awarded in December, 1999.
See discussion below under "Compensation Committee Report."
(4) Represents the Company's contributions to its retirement plan for 1999,
1998 and 1997 of $9,629, $7,887 and $8,014, 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.
(5) Represents the Company's contributions to its retirement plan for 1999,
1998 and 1997 of $10,304, $12,957 and $13,812, 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. For 1999, this amount also includes $8,191 for prepaid social
security taxes.
(6) Represents the Company's contributions to its retirement plan.
The following table sets forth information regarding individual grants of
stock options made for 1999 to the named executive officers.
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF POTENTIAL REALIZABLE
SECURITIES TOTAL OPTIONS VALUE
UNDERLYING GRANTED TO EXERCISE EXPIR- AT ASSUMED ANNUAL RATES
OPTIONS EMPLOYEES IN PRICE ATION OF STOCK PRICE APPRECIA-
NAME GRANTED FISCAL YEAR PER SHARE DATE TION FOR OPTION TERM
(#){(1)} 5% 10%
<S> <C> <C> <C> <C> <C> <C>
William S. Rowland 2,500 38% $ 34.50 12/13/09 $ 54,250 $ 137,450
3,000{(2)} N/A $ 34.50 01/18/10 $ 65,100 $ 164,940
Stanley E. Gilliland 1,000 15% $ 34.50 12/13/09 $ 21,700 $ 54,980
John R. Kuczynski 1,000 15% $ 34.50 12/13/09 $ 21,700 $ 54,980
</TABLE>
_________________________
(1) 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.
(2) In lieu of a cash bonus in 1999, Mr. Rowland was awarded in January, 2000
options to purchase 3,000 shares of Common Stock.
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{(1)}
SHARES
ACQUIRED VALUE EXER- UNEXER-
NAME on Exercise(#) Realized EXERCISABLE UNEXERCISABLE CISABLE CISABLE
<S> <C> <C> <C> <C> <C> <C>
William S. Rowland -- -- 3,500 7,000{(2)} $ 24,250 $ 25,500
Daniel E. Marvin, Jr. -- -- 5,625 6,875 $ 44,675 $ 44,675
Stanley E. Gilliland -- -- 1,750 3,250 $ 12,125 $ 12,625
John R. Kuczynski -- -- 1,250 2,750 $ 6,380 $ 6,880
</TABLE>
________________________
(1) This amount represents the difference between the market value of one share
of the Company's Common Stock on December 31, 1999 ($35.00) and the option
exercise price times the total number of shares subject to exercisable or
unexercisable options.
(2) Does not include the options to purchase 3,000 shares of Common Stock
awarded to Mr. Rowland in January, 2000.
EMPLOYMENT AGREEMENTS. In June, 1999, following his appointment as
Chairman, President and Chief Executive Officer of the Company, the Company
entered into a new employment agreement with William S. Rowland. The employment
agreement generally provides for an initial base salary, which may be increased
but not decreased, and a bonus of up to 35% of base salary, as well as other
benefits under the agreement. The agreement has an initial term of three years,
which may be extended upon mutual agreement. In the event of termination of Mr.
Rowland's employment by the Company without cause, the Company will be obligated
to pay an amount equal to one year's salary. Under certain circumstances, if Mr.
Rowland's employment discontinues following a change in control of the Company,
the successor to the Company is obligated, among other things, to make a lump
sum payment in amount equal to two years' base salary. The employment agreement
includes a covenant which limits the ability of Mr. Rowland 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 W. Hedges, who
became the Bank's President in October, 1999.
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, 1999 were Messrs. Adams, Diepholz, Lumpkin,
Melvin, Marvin and Sparks. Mr. Marvin joined the compensation committee in June,
1999 following his retirement in May, 1999 as Chairman, President and Chief
Executive Officer of the Company. No other 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 executive compensation
be linked to the interests of the Company's shareholders and 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 1999, the Company's net income amounted to $5,232,000, a $170,000
(3.4%) improvement from 1998'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, Gilliland and
Kuczynski were awarded incentive bonuses of $22,960, $15,903 and $13,419,
respectively. To more directly link Mr. Rowland's compensation with the
interests of shareholders, Mr. Rowland was awarded a supplemental grant of 3,000
incentive stock options in lieu of a cash bonus. These options are generally
subject to the same terms and conditions as the option grants made at the end of
fiscal 1999.
The relationships between the base salaries and incentive compensation of
Messrs. Rowland, Marvin, Gilliland and Kuczynski for 1999, 1998 and 1997 were as
follows:
Incentive Compensation as a % of Base Salary
1999 1998 1997
William S. Rowland --%{(*)} 20% 20%
Daniel E. Marvin, Jr. 22% 26% 27%
Stanley E. Gilliland 15% 14% 16%
John R. Kuczynski 13% 23% 17%
________________
* In lieu of a cash bonus, Mr. Rowland was awarded additional options. See
above discussion.
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, 1994 through December 31, 1999. The amounts
shown assume the reinvestment of dividends.
[graphic omitted]
<TABLE>
<CAPTION>
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First Mid-Illinois Bancshares, Inc. $100 $132 $161 $256 $287 $295
S & P 500 $100 $138 $169 $226 $290 $351
NASDAQ Bank Stocks $100 $149 $197 $329 $327 $314
</TABLE>
DIRECTORS' COMPENSATION
Directors of the Company received a $1,800 quarterly retainer for serving
on the Board of Directors in 1999. Directors who are not employees of the
Company also were granted in 1999 options to purchase 500 shares of the
Company's Common Stock at an exercise price of $34.50 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 1999. 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.
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, 2000. 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
16, 2000. 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.
