SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[Amendment No. _____________]
Filed by the Registrant
Filed by a Party other than the Registrant
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
(Name of Registrant as Specified in Its Charter)
GERMAN AMERICAN BANCORP
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
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>
PRELIMINARY PROXY SOLICITATION MATERIALS
INTENDED TO BE RELEASED ON OR ABOUT MARCH 30, 1998
GERMAN AMERICAN BANCORP
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1998
The Annual Meeting of Shareholders of German American Bancorp (the
"Corporation") will be held at the principal office of The German American Bank,
711 Main Street, Jasper, Indiana, on Thursday, April 23, 1998, at 10:00 a.m.,
Jasper time, for the following purposes:
1. To elect six Directors to hold office until the Annual Meeting of
Shareholders in the year 2000 and until their successors are elected
and have qualified.
2. To consider and vote upon an amendment to Article V of the
Corporation's Articles of Incorporation to change the per share par
value of the Corporation's shares from $10.00 to no par value.
3. To transact such other business as may properly come before the
meeting.
Holders of record of Common Shares of German American Bancorp at the
close of business on March 1, 1998, are entitled to notice of and to vote at the
Annual Meeting.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ALL
SHAREHOLDERS, EVEN IF THEY PLAN TO ATTEND THE MEETING, ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board
of Directors
URBAN R. GIESLER
Secretary
March 30, 1998
Jasper, Indiana
(ANNUAL REPORT ENCLOSED)
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF
GERMAN AMERICAN BANCORP
April 23, 1998
This Proxy Statement is being furnished to shareholders on or about
March 30, 1998, in connection with the solicitation by the Board of Directors of
German American Bancorp (the "Corporation"), 711 Main Street, Jasper, Indiana
47546, of proxies to be voted at the Annual Meeting of Shareholders to be held
at 10:00 a.m., Jasper time, on Thursday, April 23, 1998, at the foregoing
address. The Corporation is the parent holding company for The German American
Bank, Jasper, Indiana ("German American"); The Peoples National Bank and Trust
Company of Washington, Washington, Indiana ("Peoples"); Community Trust Bank,
Otwell, Indiana ("Community"); and First State Bank, Southwest Indiana, Tell
City, Indiana ("First State Bank"). At times herein, German American, Peoples,
Community, and First State Bank are referred to collectively as the "Banks."
At the close of business on March 1, 1998, the record date for the
Annual Meeting, there were 5,350,161 Common Shares outstanding and entitled to
vote at the Annual Meeting. On all matters, including the election of Directors,
each shareholder will have one vote for each share held.
If the enclosed form of proxy is executed and returned, it may
nevertheless be revoked at any time insofar as it has not been exercised. The
proxy may be revoked by either (a) filing with the Secretary (or other officer
or agent of the Corporation authorized to tabulate votes) (i) a written
instrument revoking the proxy or (ii) a subsequently dated proxy, or (b)
attending the Annual Meeting and voting in person. Unless revoked, the proxy
will be voted at the Annual Meeting in accordance with the instructions of the
shareholder as indicated on the proxy. If no instructions are given, the shares
will be voted as recommended by the Directors.
PROPOSAL 1
ELECTION OF DIRECTORS
Nominees
Six Directors are to be elected at the Annual Meeting. The Board of
Directors, which currently consists of twelve members, is divided into two
classes of equal size with the terms of one class expiring each year. Generally,
each Director serves until the annual meeting of the shareholders held in the
year that is two years after such Director's election and thereafter until such
Director's successor is elected and has qualified. The terms of the current
Directors expire as follows: 1998 -- Directors Mehne, Ruckriegel, Schroeder,
Seger, Steurer, and Thompson; 1999 --Directors Astrike, Buehler, Graham,
Hoffman, Lett and Place.
Each Director will be elected by a plurality of the votes cast in the
election. Shares present but not voted for any nominee do not affect the
determination of whether a nominee has received a plurality of the votes cast.
It is the intention of the persons named in the accompanying form of
proxy to vote such proxy for the election to the Board of Directors of Gene C.
Mehne, Robert L. Ruckriegel, Mark A. Schroeder, Larry J. Seger, Joseph F.
Steurer and Chet L. Thompson, each of whom is now a Director whose present term
expires this year. Each such person has indicated that he will accept nomination
and election as a Director. If, however, any such person is unable or unwilling
to accept nomination or election, it is the intention of the Board of Directors
to nominate such other person as a Director as it may in its discretion
determine, in which event the shares subject to the proxy will be voted for that
person.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE SIX NOMINEES
IDENTIFIED ABOVE. (ITEM 1 ON THE PROXY)
<PAGE>
The following table presents certain information as of January 1, 1998,
regarding the current Directors of the Corporation, including the six nominees
proposed by the Board of Directors for election at this year's Annual Meeting.
Unless otherwise indicated in a footnote, the principal occupation of each
Director has been the same for the last five years and such Director possesses
sole voting and investment powers with respect to the shares indicated as
beneficially owned by such Director. Unless specified otherwise, a Director is
deemed to share voting and investment powers over shares indicated as held by a
spouse, children or other family members residing with the Director. None of the
persons named below beneficially owns more than one percent of the Common
Shares, except for the following: Mr. Buehler (5.8%); Mr. Lett (4.0%); Mr.
Graham (1.6%); Mr. Hoffman (1.6%); and Mr. Ruckriegel (4.4%). (Numbers of shares
have been adjusted to reflect our November 1997 stock split and December 1997
five percent stock dividend and fractional shares have been rounded to the
nearest whole share.)
<TABLE>
<CAPTION>
Name, Present Principal Director
Occupation and Age Since (1) Shares Beneficially Owned
<S> <C> <C>
Directors:
George W. Astrike 1982 25,125 (3)
Chairman of the Board and Chief
Executive Officer of the Corporation (2)
61
David G. Buehler 1984 309,294 (4)
President/CEO of Buehler Foods, Inc.
57
David B. Graham 1997 85,962 (5)
Chairman of the Board of
Graham Farms, Inc. and
Graham Cheese Corporation
70
William R. Hoffman 1986 86,964 (6)
Farmer; Director of
Patoka Valley Feeds, Inc.
59
Michael B. Lett 1993 213,757 (8)
Attorney, Lett & Jones (7)
52
Gene C. Mehne* 1979 20,082 (9)
President and Manager of
Mehne Farms, Inc.
52
A. Wayne ("Skip") Place, Jr. 1990 50,523 (10)
President and Chief Executive Officer
of Jasper Rubber Products, Inc.
49
Robert L. Ruckriegel* 1983 233,940 (11)
President of B. R. Associates, Inc.
(restaurants)
61
Mark A. Schroeder* 1991 21,254 (13)
President and Chief Operating
Officer of the Corporation (12)
43
Larry J. Seger* 1990 51,296 (14)
Sales Manager and Secretary/Treasurer
of Wabash Valley Produce, Inc.
(egg and turkey production)
46
Joseph F. Steurer* 1983 28,828 (15)
Chairman and Chief Executive Officer
of JOFCO, Inc. (office furniture)
60
Chet L. Thompson* 1997 12,495 (16)
President of Thompson
Insurance, Inc.
60
Named Executive Officer Who Is Not A Director:
Stan J. Ruhe - - - 7,455 (17)
All Directors of the Corporation and
Executive Officers as a Group (15 persons) (18) 721,992
*Nominee
</TABLE>
1 Includes service on the Board of German American prior to the organization
of the Corporation. Does not include prior service on the Board of
Directors of the Banks subsequently acquired by the Corporation.
2 Mr. Astrike also serves as Chairman of the Board of German American, a
Director of each of the Banks, and an officer and/or a Director of all
nonbank affiliates of the Corporation.
3 Includes 10,421 shares that Mr. Astrike has the right to purchase upon the
exercise of stock options.
4 Includes 265,085 shares owned by Buehler Foods, Inc., of which Mr. Buehler
is President and majority shareholder and with respect to which Mr. Buehler
shares voting and investment powers; 6,407 shares held jointly by Mr.
Buehler and his wife; and 37,800 shares held by the David G. Buehler
Charitable Trust. Mr. Buehler, his wife, Buehler Foods, Inc., and Joseph E.
Buehler, Mr. Buehler's brother, who beneficially owns 263 shares directly,
beneficially own as a group 309,557 shares.
5 Includes 16,125 shares owned by Mr. Graham's wife.
6 Includes 7,463 shares owned jointly by Mr. Hoffman and his wife, and 18,761
shares owned by Mr. Hoffman's wife.
7 Mr. Lett and his brother and law partner, J. David Lett, also serve as
Directors of Peoples. Lett & Jones represents the Union Banking Division of
Peoples as legal counsel.
8 Includes 624 shares owned jointly by Mr. Lett and his wife, 504 shares held
by Mr. Lett's wife, who also holds 359 shares as custodian for their son;
203,602 shares held by Mr. Lett's mother; and 4,725 shares held by Mr.
Lett's brother and his brother's wife, with all of whom Mr. Lett may be
deemed to act as a group.
9 Includes 14,118 shares held by the estate of Mr. Mehne's mother; 1,731
shares owned by Mr. Mehne's wife; and 1,197 shares held by German American
as trustee for the Mehne Farms, Inc. Qualified Plan.
10 Includes 7,579 shares owned jointly by Mr. Place and his wife; 1,361 shares
which Mr. Place holds as custodian for his son and two daughters; and
21,418 shares owned by Jasper Rubber Products, Inc., of which Mr. Place is
President and Chief Executive Officer.
11 Includes 1,800 shares owned jointly by Mr. Ruckriegel and his wife, and
74,555 shares owned by Mr. Ruckriegel's wife.
12 Mr. Schroeder was named President and Chief Operating Officer of the
Corporation effective July 1, 1995, after having served as President of
German American since January 1991. Mr. Schroeder also is a Director of
each of the Banks, and an officer and/or a Director of the Corporation's
nonbank affiliates.
13 Includes 4,559 shares that Mr. Schroeder has the right to purchase upon the
exercise of stock options.
14 Includes 25,517 shares owned by certain corporations of which Mr. Seger is
an executive officer and a shareholder.
15 Includes 4,338 shares owned by Mr. Steurer's wife.
16 Includes 4,964 shares owned jointly by Mr. Thompson and his wife, and 1,959
shares owned by Mr. Thompson's wife.
17 Includes 2,374 shares that Mr. Ruhe has the right to acquire upon the
exercise of stock options.
18 Includes 20,482 shares that Directors and Executive Officers have the right
to acquire upon the exercise of stock options and shares as to which voting
and investment powers are shared by members of the group with spouses or
others.
<PAGE>
Committees and Attendance
The Board of Directors of the Corporation held seven meetings during
1997. The Corporation has standing audit and compensation committees but does
not have a nominating committee. The Audit Committee, consisting of Directors
Hoffman, Lett, Mehne and Seger, met four times in 1997. The Audit Committee
reviews with the Corporation's independent auditors the scope of the audit to be
undertaken and the results of the audit and also reviews the results of internal
audits. The Corporation's Human Resources Committee (previously named the
Compensation Committee), consisting of Directors Astrike, Buehler, Graham,
Place, Ruckriegel, Schroeder and Steurer, met four times in 1997. The
Corporation's Human Resources Committee makes salary and bonus recommendations
to the Board of Directors and administers the Stock Option Plan. Each of the
Directors attended at least 75 percent of the aggregate number of meetings of
the Board of Directors of the Corporation and the committees on which he served
during 1997.
Compensation of Directors
Prior to May 1997, each Director of the Corporation, including Directors
who were salaried officers of the Corporation, received $250 per quarter,
regardless of meeting attendance. Beginning in May 1997, the amount received by
each Director of the Corporation, including salaried officers of the
Corporation, was increased to $1,000 per quarter. Outside Directors also receive
$100 for each committee meeting attended. All Directors receive an additional
$100 for attending a special meeting of the Corporation's Board of Directors.
All of the members of the Corporation's Board also served on the Board
of at least one of the Banks and received compensation for such service during
1997. German American pays each Director a monthly retainer of $500 and $100 for
every regular and special Board meeting and committee meeting attended. Outside
Directors who serve on the Boards of Directors of Community, Peoples and First
State Bank receive a monthly $500 retainer and do not receive any additional
amounts for attending meetings. Salaried officers of the Corporation do not
receive any additional compensation for serving on the Boards of Directors of
Community, Peoples and First State Bank.
In 1992 the German American Board of Directors approved a Director
Compensation Deferral Program. A Director who chooses to participate in the
program may defer 100 percent (not to exceed $6,600 per year) of his Board fees
for five years. Interest accumulates on deferred amounts at the greater of eight
percent or the five-year moving average of German American's return on equity,
subject, however, to a maximum rate of twelve percent. The accumulated amounts
are paid to the Director, or the Director's designated beneficiary, upon the
retirement, disability or death of the Director, or, subject to German
American's approval, in the event of an unforeseeable financial emergency
experienced by the Director. All of the Directors deferred Director fees under
the program in 1997.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation paid
for the fiscal years indicated to the Corporation's Chief Executive Officer and
the Corporation's other most highly compensated executive officers, based on
salary and bonus earned during fiscal 1997.
<TABLE>
<CAPTION>
Summary Compensation Table
============================== ------------------------------------------------- ----------------- ==================
Long Term
Compensation
Annual Compensation Awards
============================== --------------- ----------------- --------------- ----------------- ==================
Securities
Underlying
Name and Options/ All Other
Principal Position Year Salary Bonus SARs (1) Compensation
============================== --------------- ----------------- --------------- ----------------- ==================
<S> <C> <C> <C> <C> <C>
George W. Astrike, 1997 $178,000 $46,280 10,418 $44,402 (2)
Chairman and 1996 $168,000 $47,040 6,483 $33,739
C.E.O. of the 1995 $168,000 $39,480 4,160 $38,472
Corporation
and Chairman
of the Bank
============================== --------------- ----------------- --------------- ----------------- ==================
Mark A. Schroeder, 1997 $125,000 $32,506 5,895 $26,296 (3)
President and C.O.O. 1996 $110,000 $30,800 1,985 $24,629
of the Corporation 1995 $110,000 $25,850 2,205 $25,512
============================== =============== ================= =============== ================= ==================
Stan J. Ruhe, 1997 $ 98,000 $21,070 3,375 $11,907
Executive Vice 1996 $ 96,500 $22,436 2,850 $11,894 (4)
President of the 1995 $ 95,000 $21,138 0 $11,712
Corporation and
German American
============================== =============== ================= =============== ================= ==================
</TABLE>
1 The numbers of shares underlying options have been adjusted to reflect the
November 1997 stock split and December 5 percent stock dividend and are
rounded to the nearest whole share.
2 Represents contributions of $11,300 under the Profit Sharing Plan, matching
contributions of $8,000 under the 401(k) Plan, Director fees in the amount
of $8,180, and $ 16,922 in above-market interest credited on deferred
salary and Director fees.
3 Represents contributions of $7,937 under the Profit Sharing Plan, matching
contributions of $7,937 under the 401(k) Plan, Director fees in the amount
of $8,200, and $2,222 in above-market interest credited on deferred
Director fees.
4 Represents contributions of $5,954 under the Profit Sharing Plan and
matching contributions of $5,953 under the 401(k) Plan.
In 1992 the German American Board of Directors entered into a Deferred
Compensation Agreement with Mr. Astrike. A primary purpose of the Agreement,
like that of the Director Compensation Deferral Program, is to provide a
long-term incentive to maximize shareholder value through increases in German
American's return on equity. The Agreement was amended in 1996 to permit Mr.
Astrike to defer in advance up to $180,000 (the previous maximum amount was
$150,000) of the compensation that he would otherwise be entitled to receive
from German American. Interest is credited to the amounts deferred by Mr.
Astrike at the rate of the greater of eight percent or the five-year moving
average of German American's return on equity, subject, however, to a maximum
rate of twelve percent. The amounts deferred by Mr. Astrike are unfunded and Mr.
Astrike's rights to such deferred amounts are those of an unsecured general
creditor of German American. Mr. Astrike elected to defer a portion of his 1997
salary. Mr. Astrike is not eligible to receive profit sharing and matching
contributions pursuant to the German American Profit Sharing and 401(k) Plan on
deferred compensation.
Option/SAR* Grants In Last Fiscal Year
The following table presents information on the stock option grants that
were made during 1997 pursuant to the German American Bancorp 1992 Stock Option
Plan. The only stock options granted during the year were replacement options
that were granted to optionees who tendered already owned Common Shares of the
Corporation in payment of the exercise price for options that had been granted
to them in 1993. (Numbers of options and per share exercise prices have been
retroactively adjusted to reflect subsequent stock splits and dividends and
fractional shares have been rounded to the nearest whole share.)
<TABLE>
<CAPTION>
=========================================================================================== =========================
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for
Individual Option Term (1)
Grants
======================== ---------------- ------------------ -------------- --------------- ------------ ============
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted Fiscal Year ($/Sh) Date 5% 10%
======================== ---------------- ------------------ -------------- --------------- ------------ ============
<S> <C> <C> <C> <C> <C> <C> <C>
George W. Astrike 5,622 (2) 23.6% $17.79 4/19/2003 $35,643 $81,463
======================== ---------------- ------------------ -------------- --------------- ------------ ============
4,796 20.1% $17.74 4/19/2003 $30,359 $69,302
======================== ---------------- ------------------ -------------- --------------- ------------ ============
Mark A. Schroeder 3,505 (2) 14.7% $17.79 4/19/2003 $22,222 $50,787
======================== ---------------- ------------------ -------------- --------------- ------------ ============
2,390 10.0% $19.40 4/19/2003 $14,770 $33,197
======================== ---------------- ------------------ -------------- --------------- ------------ ============
Stan Ruhe 2,371 10.0% $17.79 4/19/2003 $15,032 $34,356
======================== ================ ================== ============== =============== ============ ============
1,004 4.2% $19.40 4/19/2003 $6,205 $13,946
======================== ================ ================== ============== =============== ============ ============
*The Corporation does not grant Stock Appreciation Rights ("SARs").
</TABLE>
1 The amounts in the table are not intended to forecast possible future
appreciation, if any, of the Corporation's Common Shares. Actual gains,
if any, are dependent upon the future market price of the Corporation's
Common Shares and there can be no assurance that the amounts reflected
in this table will be achieved.
2 Incentive stock options previously granted under the Stock Option Plan
were exercised by Mr. Astrike on January 16 and 28, 1997, and by Mr.
Schroeder and Mr. Ruhe on January 16, 1997 and August 1, 1997. The
options had been granted on April 20, 1993, at the estimated aggregate
fair market value of the Common Shares covered by each option on that
date. The Stock Option Plan provides that if the optionee tenders
Common Shares of the Corporation already owned by the optionee as
payment, in whole or in part, of the exercise price for the shares the
optionee has elected to purchase under the option, then the Corporation
is obligated to use its best efforts to issue a replacement option of
the same type (incentive or non-qualified option), with the same
expiration date as the option that was exercised, and covering a number
of Common Shares equal to the number of Common Shares tendered. The per
share exercise price of the replacement option is the fair market value
of a Common Share of the Corporation on the date of exercise of the
original option. Replacement options are not exercisable for a period
of twelve months following their date of grant and are subject to
cancellation if during such twelve-month period the optionee sells any
Common Shares of the Corporation other than in payment of the exercise
price of another option under the Stock Option Plan. Upon the exercise
of options in January 1997, Mr. Astrike was granted replacements
options covering a total of 10,418 shares. Upon the exercise of options
in January 1997 and August 1997, Mr. Schroeder was granted replacements
options covering a total of 5,895 shares and Mr. Ruhe was granted
replacement options covering a total of 3,375 shares. The exercise
prices for the replacement options (subject to adjustment pursuant to
the Stock Option Plan) are as follows: January 16, 1997--$17.79;
January 28, 1997--$17.74; and August 1, 1997--$19.40. The Stock Option
Plan also provides that if a corporate reorganization would result in
the termination of the Plan and unexercised options, then all
unexercised options will become immediately exercisable regardless of
any vesting requirements.
Aggregated Option/SAR Exercises In
Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table sets forth information with respect to options that
have been granted to Messrs. Astrike, Schroeder and Ruhe pursuant to the German
American Bancorp 1992 Stock Option Plan and the option exercises that occurred
during 1997. (Numbers of options and per share exercise prices have been
retroactively adjusted to reflect subsequent stock splits and dividends.)
<PAGE>
<TABLE>
<CAPTION>
========================== =============== ================ ------------------------------ =================================
Number of Unexercised Value of Unexercised
Options/SARs at Fiscal In-the-Money Options/SARs at
Year-End (#) Fiscal Year-End ($)
========================== =============== ================ ------------------------------ =================================
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
========================== =============== ================ ------------------------------ =================================
<S> <C> <C> <C> <C> <C>
George W. Astrike 13,354 $51,528 10,421/0 options (1) $148,322/$0 (4)
========================== =============== ================ ------------------------------ =================================
Mark A. Schroeder 9,034 $57,147 8,031/2,390 options (2) $145,673/$30,111 (4)
========================== =============== ================ ============================== =================================
Stan Ruhe 4,929 $29,360 4,457/1,004 options (3) $80,922/$12,648 (4)
========================== =============== ================ ============================== =================================
</TABLE>
<PAGE>
1 In 1993 Mr. Astrike was granted an option to purchase 6,000 Common
Shares at an exercise price of $32.50 per share, which, as a result of
adjustments for subsequent stock splits and stock dividends, currently
would be equivalent to an option for 20,837 Common Shares at an
exercise price of $9.36 per share. The option became exercisable with
respect to one-half of the shares immediately upon grant and became
exercisable with respect to the other one-half of the shares on April
20, 1994. The original option has been fully exercised by Mr. Astrike;
all of the remaining options are replacement options.
2 In 1993 Mr. Schroeder was granted an option to purchase 5,000 Common
Shares at an exercise price of $32.50 per share, which, as a result of
adjustments for subsequent stock splits and stock dividends, currently
would be equivalent to an option for 17,364 Common Shares at an
exercise price of $9.36 per share. The option becomes exercisable with
respect to twenty percent of the shares covered by the option on each
of the five anniversary dates beginning on the first anniversary date
after the grant of the option. Of the shares covered by the option,
3,474 remain unexercised; Mr. Schroeder's other unexercised options are
replacement options.
3 In 1993 Mr. Ruhe was granted an option to purchase 3,000 Common Shares
at an exercise price of $32.50 per share, which, as a result of
adjustments for subsequent stock splits and stock dividends, currently
would be equivalent to an option for 10,419 Common Shares at an
exercise price of $9.36 per share. The option becomes exercisable with
respect to twenty percent of the shares covered by the option on each
of the five anniversary dates beginning on the first anniversary date
after the grant of the option. Of the shares covered by the option,
2,085 remain unexercised; Mr. Ruhe's other unexercised options are
replacement options.
4 Represents the difference between the last per share trade price of the
Corporation's Common Shares as reported on NASDAQ on December 31, 1997
($32.00), and the exercise price of those options having an exercise
price less than the last trade price, multiplied by the number of
options.
<PAGE>
Committee Report
on Executive Compensation
Overall Compensation Policy
The Human Resources Committee (the "Committee") of the Board of
Directors of the Corporation (formerly called the Compensation Committee) has
the responsibility for recommending the salaries, bonuses and other compensation
to be paid to the executive officers of the Corporation. The Committee's
recommendations as to compensation are submitted to the full Board of Directors
for approval. The Committee is composed of seven members, consisting of five
independent, outside directors and two executive officers of the Corporation,
Mr. Astrike and Mr. Schroeder. Messrs. Astrike and Schroeder absent themselves
from, and do not participate in, any Committee proceedings relating to the
determination of their own compensation. The primary goals of the Committee in
determining compensation policy are to provide a level of compensation that will
attract, motivate and help retain well-qualified executive officers and to
further enhance shareholder return by more closely aligning the interests of
executive officers with the interests of the Corporation's shareholders. The
Committee attempts to attain these goals by setting total compensation at
competitive levels considering an executive officer's individual performance
while also providing effective incentives tied to the Corporation's overall
financial performance. The executive compensation program consists of three
basic elements: (1) base salary, (2) annual incentive bonus awards, and (3)
stock option awards.
Base Salary
The Corporation attempts to provide Mr. Astrike and the other executive
officers with a base salary that is competitive with the salaries offered by
other bank holding companies of comparable size in Indiana and the surrounding
states. Each year the Committee reviews salary surveys provided by trade
associations and accounting firms. Increases in base compensation are not
automatically based on increased compensation at comparable institutions,
however, but also reflect the performance of the individual executive officer
and of the Corporation.
Based on an evaluation of individual performance, the performance of the
Corporation in 1996 and on information provided by salary surveys, the Committee
recommended, and the Board approved the recommendation, that the base salary of
Mr. Astrike for 1997 be increased by $10,000 to $178,000.
Annual Incentive Bonus Awards
Annual bonuses are awarded based on the extent that the Committee
believes that they are merited based on the attainment of certain goals relating
to the Corporation's return of equity and return on assets. Based on these
criteria, the bonus awarded for 1997 to Mr. Astrike was similar in amount to the
bonus he received for 1996.
Stock Option Awards
In 1992 the Corporation adopted a Stock Option Plan that provides for
the award of incentive stock options and non-qualified stock options. The
purpose of granting options is to provide long-term incentive compensation to
complement the short-term focus of annual incentive bonus awards. The size of
stock option awards depends upon the executive officer's level of responsibility
and individual performance. Stock options are granted at the estimated fair
market value of a Common Share of the Corporation on the date of grant.
The five independent outside directors on the Committee also serve as
the Stock Option Committee of the Corporation, which administers the Stock
Option Plan. In April 1993 incentive stock options were awarded to Mr. Astrike
and four other executive officers. Mr. Astrike was granted options covering
20,837 shares and the options granted the other executive officers ranged in
amount from 5,209 shares to 17,364 shares each (all share amounts have been
adjusted to reflect subsequent stock splits and stock dividends and have been
rounded to the nearest whole number). The option granted to Mr. Astrike vested
immediately with respect to half of the shares covered by the option in
recognition of his past years of service as Chief Executive Officer of the
Corporation and vested with respect to the other half of the shares on April 20,
1994. The options granted to the other executive officers vest in twenty percent
increments beginning one year after the date of grant and become fully
exercisable on April 20, 1998, the fifth anniversary of the grant date.
The only options granted under the Stock Option Plan during 1997 were
replacement options. The Stock Option Plan provides that if an optionee tenders
Common Shares of the Corporation already owned by the optionee in whole or
partial payment of the exercise price of an option, the Corporation will use its
best efforts to grant the optionee a replacement option covering a number of
shares equal to the number of already owned shares tendered. A replacement
option is of the same type (incentive or non-qualified option) and has the same
expiration date as the option exercised. The per share exercise price of a
replacement option is the fair market value of a Common Share of the Corporation
on the date of exercise of the original option. Replacement options were granted
to Mr. Astrike on January 18, 1997, and January 28, 1997, and to the other named
executive officers on January 16, 1997, and August 1, 1997.
The Omnibus Budget Reconciliation Act enacted by the United States
Congress in August 1993 amended the Internal Revenue Code of 1986 to disallow a
public company's compensation deduction with respect to certain highly-paid
executives in excess of $1 million unless certain conditions are satisfied. The
Corporation presently believes that this provision is unlikely to become
applicable in the near future to the Corporation because (a) the levels of base
salary and annual incentive bonus awards of the Corporation's executive officers
are substantially less than $1 million per annum, and (b) the law generally does
not apply to stock option plans that require that options be granted at not less
than fair market value, subject to certain conditions. Therefore, the
Corporation has not taken any action to adjust its compensation plans or
policies in response to the adoption of this law.
<PAGE>
SUBMITTED BY THE MEMBERS OF THE Committee:
George W. Astrike Robert Ruckriegel
David Buehler Mark A. Schroeder
A. Wayne ("Skip") Place Joseph Steurer
David B. Graham
Committee Interlocks and Insider Participation
Two of the persons who served during 1997 on the Committee of the
Corporation's Board of Directors, Messrs. Astrike and Schroeder, are executive
officers of the Corporation. Messrs Astrike and Schroeder were not present for,
and did not participate in, any Committee proceedings relating to the
determination of their own compensation. None of the other five members of the
Committee is, or previously was, an officer or employee of the Corporation. Mr.
Buehler, a member of the Committee, is a principal shareholder, officer and
director of Buehler Foods, Inc., which subleases space for three branch banking
facilities to two of the Banks.
Certain Business Relationships And Transactions
During 1997, the bank subsidiaries of the Corporation had (and expect to
continue to have in the future) banking transactions in the ordinary course of
business with Directors, officers and principal shareholders of the Corporation
and their associates. These transactions have been made on substantially the
same terms, including interest rates, collateral and repayment terms on
extensions of credit, as those prevailing at the same time for comparable
transactions with others and did not involve more than the normal risk of
collectibility or present other unfavorable features.
<PAGE>
Stock Performance Graph
The SEC requires the Corporation to include in this proxy statement a
line-graph presentation comparing the Corporation's cumulative, five-year
shareholder returns with market and industry returns. The following graph
compares the Corporation's performance with the performance of the NASDAQ Stock
Market (U.S. Companies), NASDAQ Bank Stocks, and a peer group of bank holding
companies headquartered in Southern Indiana. The peer group includes the
following: AMBANC Corp.; CNB Bancshares, Inc.; First Financial Corporation;
Indiana United Bancorp; National City Bancshares, Inc.; and Old National
Bancorp. The returns of each company in the peer group have been weighted to
reflect the company's market capitalization.
<TABLE>
<CAPTION>
[TABLE SUBSTITUTED FOR GRAPH IN EDGAR FILING]
GAB Peer Market
<S> <C> <C> <C> <C>
12/31/92 100.00 100.00 100.00
12/31/93 147.22 126.50 114.80
12/31/94 152.44 131.38 112.21
12/31/95 158.93 138.47 158.70
12/31/96 216.52 183.01 195.19
12/31/97 389.30 254.44 239.52
</TABLE>
<PAGE>
PROPOSAL 2
PROPOSAL TO AMEND ARTICLES OF INCORPORATION
TO ELIMINATE PAR VALUE
Currently, the Corporation's Articles of Incorporation provide that the
Corporation's shares have a par value of $10.00 per share. The Board of
Directors of the Corporation has approved and adopted, subject to shareholder
approval, an amendment to the Corporation's Articles of Incorporation that would
change the per share par value from $10.00 to no par value, except that, for
certain limited purposes, the shares would be deemed to have a "stated value" of
$1.00 per share. The proposed amendment would result in the elimination of the
concept of par value with respect to the Corporation's shares. The proposed
change would be accomplished by amending Article V of the Corporation's Articles
of Incorporation to read as follows:
"The total number of shares of capital stock that the Corporation has
authority to issue shall be 20,500,000 shares consisting of 20,000,000
common shares (the "Common Shares") and 500,000 preferred shares (the
"Preferred Shares"). The Corporation's shares shall have no par value.
Solely for the purpose of any statute or regulation imposing any tax or
fee based upon the capitalization of the Corporation, however, all of
the shares shall be deemed to have a stated value of $1.00 per share."
The Board of Directors believes that the proposed change in par value is
in the best interests of the Corporation. The amendment would serve to conform
the Corporation's Articles of Incorporation to current Indiana law and clarify
the circumstances under which the Corporation may pay dividends or other
distributions to shareholders. The Indiana Business Corporation Law, which
became effective in 1987 (the "IBCL"), revised and restated substantially all of
the Indiana law governing general business corporations. In 1987, the
Corporation amended its Articles of Incorporation to reflect a number of the
changes made by the IBCL, but no change was made at that time to the par value
of the Corporation's shares. The prior law incorporated the concepts of par
value, stated capital, capital surplus and earned surplus and utilized such
concepts to determine a corporation's ability to pay dividends. The IBCL
recognized that such concepts were complex and confusing and failed to serve the
original purpose of protecting creditors and senior security holders. The IBCL
eliminated these concepts entirely and substituted a simpler, more flexible,
two-step test for judging distributions and redemptions. Under the IBCL, a
corporation may make a dividend or other distribution to shareholders if,
following the distribution, the corporation would be able to pay its debts as
they become due in the ordinary course and the corporation's total assets would
be greater than its total liabilities. The proposed amendment conforms the
Corporation's Articles of Incorporation to these provisions of the IBCL. Neither
the present "par value" nor the proposed "stated value" will have any effect on
the Corporation's legal ability to pay dividends and make distributions. The
Corporation does not anticipate that the amendment would affect the frequency or
amount of dividends paid by the Corporation.
For approval, the proposal to amend the Corporation's Articles of
Incorporation to change the par value of the shares requires that the number of
votes properly cast in favor of the proposal exceed the number of votes properly
cast against the proposal. Shares present but not voted for or against the
proposal (including shares that abstain from voting and broker non-votes) will
not count as negative votes and will not affect the determination of whether the
proposal has been approved. If approved by the shareholders at the Annual
Meeting, the change in par value of the Corporation's shares would become
effective upon the filing of an amendment to the Corporation's Articles of
Incorporation with the Indiana Secretary of State.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
PROPOSAL TO AMEND THE CORPORATION'S ARTICLES OF INCORPORATION TO CHANGE THE PER
SHARE PAR VALUE OF THE CORPORATION'S SHARES FROM $10.00 TO NO PAR VALUE. (ITEM 2
ON THE PROXY). UNLESS A SHAREHOLDER INDICATES OTHERWISE, PROXY HOLDERS WILL VOTE
FOR THE PROPOSED AMENDMENT.
APPOINTMENT OF AUDITORS
Crowe, Chizek and Company LLP ("Crowe Chizek") served as auditors for
the Corporation in 1997. Although it is anticipated that Crowe Chizek will be
selected, the Audit Committee has not yet considered the appointment of auditors
for 1998. The Audit Committee expects to make a recommendation to the Board
following the Audit Committee's April 1998 meeting. Representatives of Crowe
Chizek will be present at the Annual Meeting, will have the opportunity to make
a statement if they desire to do so and will be available to respond to
appropriate questions.
PRINCIPAL OWNERS OF COMMON SHARES
The following table sets forth information as of January 1, 1998,
relating to every person, including any group, known by management to
beneficially own more than five percent of the Corporation's outstanding Common
Shares and the beneficial ownership of the Corporation's Common Shares by all
Directors and officers as a group.
<PAGE>
<TABLE>
<CAPTION>
Name and Address Percent
of Beneficial Owner Amount and Nature of of
or Identity of Group Beneficial Ownership Class
<S> <C> <C>
Buehler Group (1) 309,557 5.8%
c/o David G. Buehler
1227 West 31st Street
Jasper, Indiana 47546
1 The Buehler Group consists of David G. Buehler, Brenda Buehler, Buehler
Foods, Inc. and the David G. Buehler Charitable Trust. Buehler Foods,
Inc., which owns of record 265,085 of these shares, is owned by David
G. Buehler and his brother, Joseph E. Buehler, who share voting and
investment power with respect to such shares. Mr. David Buehler owns 2
shares, he and his wife, Brenda Buehler, jointly own 6,407 shares, and
the David G. Buehler Charitable Trust holds 37,800 shares. Mr. Joseph
Buehler owns 263 shares.
</TABLE>
OTHER MATTERS
<PAGE>
The Board of Directors knows of no matters, other than those reported
above, that are to be brought before the Annual Meeting. However, if other
matters properly come before the Annual Meeting, it is the intention of the
persons named in the enclosed form of proxy to vote such proxy in accordance
with their judgment on such matters.
EXPENSES
All expenses in connection with this solicitation of proxies will be
borne by the Corporation.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
A shareholder desiring to submit a proposal for inclusion in the
Corporation's proxy statement for the 1999 Annual Meeting of Shareholders must
deliver the proposal so that it is received by the Corporation no later than
December 1, 1998. Proposals should be mailed to Urban R. Giesler, Secretary of
the Corporation, 711 Main Street, Jasper, Indiana 47546, by certified mail,
return receipt requested.
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
FOR THE 1998 ANNUAL MEETING OF SHAREHOLDERS OF
GERMAN AMERICAN BANCORP
I hereby appoint David G. Buehler and A. Wayne ("Skip") Place, Jr., and
each of them, my proxies, with power of substitution, to vote all Common Shares
of German American Bancorp that I am entitled to vote at the Annual Meeting of
Shareholders to be held at the principal office of The German American Bank, 711
Main Street, Jasper, Indiana, on April 23, 1998, at 10:00 a.m., Jasper time, and
any adjournments thereof, as provided herein.
THIS PROXY WILL BE VOTED AS SPECIFIED. IN THE ABSENCE OF SPECIFICATIONS,
THIS PROXY WILL BE VOTED FOR ITEMS 1 AND 2. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR ITEMS 1 AND 2.
This proxy may be revoked at any time prior to its exercise upon compliance
with the procedures set forth in the Corporation's Proxy Statement, dated March
30, 1998.
SHAREHOLDERS SHOULD MARK, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED POST-PAID ENVELOPE.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below, as set forth in the
Corporation's Proxy Statement, dated March 30, 1998
(except as marked to the contrary below--see
"Instructions")
Gene C. Mehne Robert C. Ruckriegel Mark A. Schroeder Larry J. Seger
Joseph F. Steurer Chet L.Thompson
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above
(Instructions: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
2. PROPOSAL TO AMEND ARTICLES OF INCORPORATION TO ELIMINATE PAR VALUE OF
COMMON SHARES
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Dated:
Signature or Signatures
(Please sign exactly as your name appears on this proxy. If
shares are issued in the name of two or more persons, all
such persons should sign. Trustees, executors and others
signing in a representative capacity should indicate the
capacity in which they sign.)
