SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[Amendment No. ]
Filed by the Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
X Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
First Financial Corporation
(Name of Registrant as Specified in Its Charter)
First Financial Corporation
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
X $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
Item 22(a)(2) of Schedule 14A.
$500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
Fee paid previously by written 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 FINANCIAL CORPORATION
One First Financial Plaza
P.O. Box 540
Terre Haute, Indiana 47808
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held April 15, 1998
Notice is hereby given that, pursuant to the call of its Directors, an
Annual Meeting of Shareholders of First Financial Corporation ("Corporation")
will be held on April 15, 1998 at 11:00 o'clock a.m., local time, at One First
Financial Plaza, Terre Haute, Indiana.
The purposes of the meeting are:
(1) To elect Walter A. Bledsoe, Max L. Gibson, William A.
Niemeyer and Donald E. Smith to the Board of Directors
of the Corporation for a three (3) year term to expire
in 2001; and
(2) To transact such other business as may properly be presented
at the meeting.
Only shareholders of record at the close of business on March 17,
1998 will be entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
DONALD E. SMITH
Chairman of the Board and President
March 24, 1998
IMPORTANT - PLEASE MAIL YOUR PROXY PROMPTLY
IN ORDER THAT THERE MAY BE PROPER REPRESENTATION AT THE
MEETING, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
<PAGE>
PROXY STATEMENT OF
FIRST FINANCIAL CORPORATION
One First Financial Plaza
P.O. Box 540
Terre Haute, Indiana 47808
(812) 238-6000
_______________________
ANNUAL MEETING OF SHAREHOLDERS
to be held April 15, 1998
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of First Financial Corporation (the "Corporation") of
Proxies for use at an Annual Meeting of Shareholders of the Corporation to be
held on April 15, 1998 at 11:00 a.m. at One First Financial Plaza, Terre Haute,
Indiana, and at any and all adjournment of such meeting. This Proxy Statement
and accompanying form of proxy were first mailed to the shareholders on or
about March 24, 1998.
The Corporation is a multi-bank holding company which owns Terre Haute
First National Bank ("Terre Haute First"), First State Bank, First Citizens
State Bank, First Farmers State Bank, First Ridge Farm State Bank, First Parke
State Bank, First National Bank of Marshall and First Crawford State Bank.
Only shareholders of record as of March 17, 1998, will be entitled to
notice of, and to vote at, the Annual Meeting. As of March 17, 1998, the
Corporation had issued and outstanding 7,225,483 shares of common stock, which
were held by approximately 1,109 shareholders of record. There are no other
outstanding securities of the Corporation entitled to vote. For the matters to
be voted on at this Annual Meeting, each share is entitled to one vote,
exercisable in person or by proxy.
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock is necessary to constitute a quorum. Shares voting,
abstaining or withholding authority to vote on any issue will be counted as
present for purposes of determining a quorum. Approval of a plurality of the
votes cast at the meeting, assuming a quorum is present, is required for
election of each nominated director. Action on any other matters to come
before the meeting must be approved by an affirmative vote of a majority of the
shares present, in person, or by proxy. Abstentions, broker non-votes, and
instructions on the accompanying proxy card to withhold authority to vote for
one or more of the named nominees will result in the respective nominee
receiving fewer votes.
The cost of soliciting proxies will be borne by the Corporation. In
addition to use of the mails, proxies may be solicited personally or by
telephone by officers, directors and certain employees who will not be
specially compensated for such soliciting.
Any shareholder giving a proxy has the right to revoke it at any time
before it is exercised. Therefore, execution of the proxy will not affect the
shareholder's right to vote in person if he or she attends the meeting.
Revocation may be made prior to the meeting (i) by written notice sent to John
W. Perry, Secretary, First Financial Corporation, One First Financial Plaza,
P.O. Box 540, Terre Haute, Indiana 47808, (ii) personally upon oral or written
request at the Annual Meeting, or (iii) by duly executing a proxy bearing a
later date.
1<PAGE>
The shares represented by proxies will be voted as instructed by the
shareholders giving the proxies. In the absence of specific instructions to
the contrary, proxies will be voted in favor of the election as directors of
the four (4) persons named as nominees in this Proxy Statement. If for any
reason any of the director/nominees becomes unable or is unwilling to serve at
the time of the meeting (an event which the Board of Directors does not
anticipate), the persons named as proxies in the accompanying form of proxy
will have discretionary authority to vote for a substitute nominee or nominees
named by the Board of Directors if the Board of Directors elects to fill such
nominees' positions. Any other matters that may properly come before the
meeting will be acted upon by the persons named as proxies in the accompanying
form of proxy in accordance with their discret
ELECTION OF DIRECTORS
The Board of Directors is currently composed of fourteen (14) members.
The Corporation's Articles of Incorporation divide the Board of Directors into
three classes, as nearly equal in size as possible, with one class of directors
elected each year for a term extending to the third succeeding Annual Meeting
after such election. The nominees for election as director are nominated to
serve for terms to expire in 2001. Each nominee is currently a director of the
Corporation whose current term as a director will expire in 1998. The
following information is provided concerning each nominee and each incumbent
director continuing in office.
<TABLE>
Nominees for Terms to Expire in 2001
<CAPTION>
Name and Age Year Became Title or Principal Occupation for the Last Term
a Director Position Five Years Expires
<S> <C> <C> <C> <C>
Walter A. Bledsoe, 82 1983<F1> Director Personal Investments 1998
Max L. Gibson, 57 1983<F1> Director President of Majax Company; Director, 1998
IPALCO, Inc.
William A. Niemeyer,75 1983<F1> Director President of Niemeyer Coal Co. 1998
Donald E. Smith, 71 1983<F1> Chairman of President of Terre Haute First 1998
the Board and National Bank through 1995; Director
President of Southern Indiana Gas and Electric
Company
<F1> First Financial Corporation was formed in 1983.
</TABLE>
<TABLE>
Other Incumbent Members of the Board of Directors
<CAPTION>
Name and Age Year Became Title or Principal Occupation for the Last Term
a Director Position Five Years Expires
<S> <C> <C> <C> <C>
B. Guille Cox, Jr., 52 1987 Director Attorney-At-Law with Cox Zwerner 1999
Gambill & Sullivan
Thomas T. Dinkel, 47 1989 Director President of Sycamore Engineering, 2000
Inc.
Anton H. George, 38 1987 Director President of Indianapolis Motor 1999
Speedway Corp.; Director of Indiana
Energy, Inc.
Mari H. George, 63 1989 Director Chairman of Indianapolis Motor 2000
Speedway Corp.
Gregory L. Gibson, 35 1994 Director President of ReTec, Inc. 1999
Norman L. Lowery, 51 1989 Vice-Chairman President of Terre Haute First 2000
of the Board (effective January 1, 1996);
Attorney-At-Law with Wright Shagley &
Lowery through 1995
Patrick O'Leary, 61 1983<F2> Director President of Contract Services, LLC 2000
John W. Ragle, 71 1983<F2> Director President of Ragle & Company, Inc. 1999
Chapman J. Root, II, 48 1989 Director President of Root Organization; 2000
Director of International Speedway
Corp.
Virginia L. Smith, 50 1987 Director President of R.J. Oil Co., Inc. 1999
<F2> First Financial Corporation was formed in 1983.
</TABLE>
2<PAGE>
Additional Information Concerning Board of Directors
Attendance at Meetings. During 1997, the Board of Directors of the
Corporation held 12 regular meetings and a total of 16 meetings. No director
standing for re-election attended fewer than 75% of the aggregate number of
Board meetings and meetings on committees on which he or she served.
Certain Relationships. Certain family relationships exist among the
directors of the Corporation. Donald E. Smith is the father of Virginia L.
Smith and father-in-law of Norman L. Lowery. Mari H. George is the mother of
Anton H. George. Max L. Gibson is the father of Gregory L. Gibson. There are
no arrangements or understandings between any of the directors pursuant to
which any of them have been selected for their respective positions.
Committees. The Board of Directors had no standing nominating or any
committee performing similar functions during 1997; such functions are
performed by the Board of Directors as a whole.
The Corporation s Examining Committee, which consists of John W.
Ragle, Max Gibson, and Patrick O Leary, reviews the Corporation s accounting
functions, operations and management and the adequacy and effectiveness of the
internal controls and internal auditing methods and procedures. This Committee
recommends to the Board the appointment of the independent public accountants
for the Corporation. This Committee met twice during 1997.
The Corporation s Compensation Committee, which consists of Messrs.
O Leary, Smith, M. Gibson, Niemeyer, A. George, and Lowery, overviews the
compensation of the officers of subsidiary banks and recommends salaries and
bonus amounts to the full Board of Directors. Such Committee met four times
in 1997.
Compensation of Directors. Directors of the Corporation received a
fee of $100 per meeting during 1997 if the meeting was held as a joint meeting
with the Board of Directors of Terre Haute First. Only one meeting of the
Board of Directors of the Corporation was not held as a joint meeting with the
Board of Directors of Terre Haute First during 1997. For meetings of the Board
of Directors of the Corporation which were not joint meetings with the Board of
Directors of Terre Haute First, directors received a fee of $500 per such
meeting attended.
Directors of Terre Haute First, a wholly-owned banking subsidiary of
the Corporation, received a fee in 1997 of $500 for each meeting attended and a
semi-annual fee of $2,300. In addition, Directors of Terre Haute First, other
than those employed by Terre Haute First, receive a fee of $300 for each Loan
Discount Committee meeting attended. Directors of Terre Haute First that are
not yet seventy (70) have the option of participating in a deferred director s
fee program, pursuant to which each year, for five years, $6,000 of director s
fees are deferred until the participant reaches the age of sixty-five (65) or
seventy (70), at which point the director may elect to receive payments over a
ten year period. For 1997, the allocated cost of the deferred director s fees
was $138,469, which is funded by Terre Haute First with insurance products.
Directors of First State Bank, a wholly-owned banking subsidiary of
the Corporation, received a fee of $200 for each meeting attended.
Directors of First Citizens State Bank, a wholly-owned banking
subsidiary of the Corporation, received a fee of $300 for each meeting
attended.
Directors of First Farmers State Bank, a wholly-owned banking
subsidiary of the Corporation, received a fee of $200 for each meeting
attended.
Directors of First Ridge Farm State Bank, a wholly-owned banking
subsidiary of the Corporation, received a fee of $200 for each meeting
attended.
Directors of First Parke State Bank, a wholly-owned banking subsidiary
of the Corporation, received a fee of $200 for each meeting attended.
Directors of First National Bank of Marshall, a wholly-owned banking
subsidiary of the Corporation, received a fee of $325 for each meeting
attended.
Directors of First Crawford State Bank, a wholly-owned banking
subsidiary of the Corporation, received a fee of $500 for each meeting
attended.
3<PAGE>
EXECUTIVE OFFICERS OF THE CORPORATION
The executive officers of the Corporation, all of whom serve for a one
year term, consist of Donald E. Smith, Chairman of the Board and President;
Norman L. Lowery, Vice Chairman; John W. Perry, Secretary; Michael A. Carty,
Treasurer; and W. Edward Jukes, Chief Credit Officer. Mr. Perry, age fifty-
four, was Treasurer of the Corporation from 1983 through 1990 and has been
Secretary from 1990 through the present. For the past eleven years, Mr.
Perry s principal occupation has been as the Senior Vice President of Terre
Haute First. Mr. Carty, age forty-seven, has been Senior Vice President of
Terre Haute First since 1990 and was Vice President of Terre Haute First from
1983 until 1990. Mr. Jukes, age fifty-five, has been Senior Vice President of
Terre Haute First since 1989. For additional information concerning Messrs.
Smith and Lowery, see ELECTION OF DIRECTORS.
COMPENSATION OF OFFICERS
Compensation Committee Report
Decisions on compensation of the Corporation s executives are made by
the Compensation Committee of the Board, which also serves as the Compensation
Committee of Terre Haute First. Each member of the Compensation Committee,
except Mr. Smith and Mr. Lowery, was a non-employee director. All decisions of
the Compensation Committee relating to the compensation of the Corporation s
executive officers are reviewed by the full Board. Pursuant to rules of the
Securities and Exchange Commission designed to enhance disclosure of
corporation policies toward executive compensation, set forth below is a report
submitted by Messrs. O Leary (Chairman), Smith, Gibson, Niemeyer, A. George and
Lowery in their capacity as the Board s Compensation Committee addressing the
Corporation's compensation policies for 1997 as they affected Mr. Smith and
Messrs. Lowery, Perry, Jukes and Carty the other executive officers other than
Mr. Smith who, for 1997, were the Corporation s most highly paid executive
officers whose total annual salary and bonus exceeded $100,000.
Compensation Policies Toward Executive Officers. The Compensation
Committee s executive compensation policies are designed to provide competitive
levels of compensation to the executive officers and to reward officers for
satisfactory individual performance and for satisfactory performance of the
Corporation as a whole. There are no established goals or standards relating
to performance of the Corporation which have been utilized in setting
compensation of individual employees.
Base Salary. Each executive officer is reviewed individually by the
Compensation Committee, which review includes an analysis of the performance of
the Corporation and Terre Haute First. In addition, the review includes, among
other things, an analysis of the individual s performance during the past
fiscal year, focusing primarily upon the following aspects of the individual s
job or characteristics of the individual exhibited during the most recent
fiscal year: quality and quantity of work; supervisory skills; dependability;
initiative; attendance; overall skill level; and overall value to the
Corporation.
Annual Bonus Amounts. The Compensation Committee determines whether a
bonus should be paid based primarily upon the overall performance of the
Corporation. For 1997, Mr. Smith received a bonus of $115,000 and Messrs.
Lowery, Perry, Jukes and Carty each received a bonus equal to 12%, 8%, 10%, and
10% of their respective salary, or $25,000, $11,500, $11,326, and $9,668,
respectively.
Other Compensation Plans. At various times in the past the
Corporation has adopted certain broad-based employee benefit plans in which the
executive officers are permitted to participate on the same terms as other
corporation employees who meet applicable eligibility criteria, subject to any
legal limitations on the amount that may be contributed or the benefits that
may be payable under the plans.
Benefits. The Corporation provides medical and pension benefits to
the executive officers that are generally available to other Corporation
employees. The amount of perquisites, as determined in accordance with the
rules of the Securities and Exchange Commission relating to executive
compensation, did not exceed 10% of salary and bonus for fiscal 1997.
4<PAGE>
Mr. Smith s 1997 Compensation. Regulations of the Securities and
Exchange Commission require that the Compensation Committee disclose the
Committee s basis for compensation reported for Mr. Smith in 1997. Mr. Smith s
salary and bonus are determined in the same manner as discussed above for other
executive, except that $75,000 of Mr. Smith s $115,000 bonus was made in
connection with an employment agreement providing for a split-dollar life
insurance arrangement between the Corporation, Terre Haute First and Mr. Smith.
The Compensation Committee believes that Mr. Smith has managed the Corporation
well.
MEMBERS OF THE 1997 COMPENSATION COMMITTEE
Anton H. George Max L. Gibson Norman L. Lowery
William A. Niemeyer Patrick O'Leary Donald E. Smith
Compensation Committee Insider Participation
During the past fiscal year, Mr. Smith, the Chief Executive Officer
and Mr. Lowery, the Vice-Chairman, served on the Compensation Committee but did
not participate in any discussion or voting with respect to the salaries or
bonuses of either Mr. Smith or Mr. Lowery. Moreover, Mr. Smith and Mr. Lowery
excused themselves from the room during the discussion by the Compensation
Committee of the compensation of both Mr. Smith and Mr. Lowery.
Summary Compensation Table
The following table sets forth for the fiscal years ending December
31, 1997, 1996, and 1995 the cash compensation paid by the Corporation, as well
as certain other compensation paid or awarded during those years, to the Chief
Executive Officer and any other executive officer whose total annual salary and
bonus exceeded $100,000 during the fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>
Name and Principal Year Annual Compensation <F1> All Other Compensation <F3>
Position Salary Bonus <F2>
<S> <C> <C> <C> <C>
Donald E. Smith 1997 $285,114 $115,000 $10,879<F4>
President, CEO and 1996 $274,148 $115,000 $17,135
Chairman 1995 $263,604 $115,000 $14,997
Norman L. Lowery 1997 $208,000 $25,000 $ 4,395<F4>
Vice Chairman <F5> 1996 $200,000 $20,000 $15,395
John W. Perry 1997 $142,556 $11,500 $ 1,247<F4>
Secretary 1996 $137,075 $13,707 $ 9,914
1995 $131,801 $12,673 $ 8,643
W. Edward Jukes 1997 $113,268 $11,326 $ 1,394<F4>
Chief Credit Officer 1996 $108,912 $10,891 $ 7,973
1995 $104,723 $10,069 $ 7,185
Michael A. Carty 1997 $96,683 $9,668 $ 354<F4>
Treasurer 1996 $92,964 $9,296 $ 5,856
1995 $89,389 $8,595 $ 5,127
<F1> While officers enjoy certain perquisites, such perquisites do not
exceed the lesser of $50,000 or 10% of such officer s salary and bonus
and are not required to be disclosed by applicable rules of the
Securities and Exchange Commission.
<F2> The bonus amounts are payable pursuant to determinations made by the
Compensation Committee of the Corporation, as described in the
Compensation Committee Report.
5<PAGE>
<F3> These amounts include Corporation payments for the years noted on
behalf of the above-named individuals (except Mr. Smith) pursuant to a
life insurance program ( Life Insurance Program ) for the executive
officers of Terre Haute First. Under the Life Insurance Program,
Terre Haute First purchased a life insurance policy on behalf of each
executive officer of Terre Haute First. The policy is owned by the
individual and will be paid at age 65 for those presently 55 or older,
and at age 60 for those who are less than 55 years of age. The annual
cost of this insurance for those reported (except for Mr. Smith) was
as follows: $4,395 for Mr. Lowery; $1,247 for Mr. Perry; $1,394 for
Mr. Jukes; and $354 for Mr. Carty.
Mr. Smith no longer participates in the group term life insurance
policy of the Corporation (which coverage would terminate upon his
retirement). The Corporation paid for its portion of a separate
split-dollar life insurance policy for Mr. Smith in 1997, which will
continue to be in effect following his retirement as an executive
officer of the Corporation and Terre Haute First. In 1997, the dollar
value of the benefit to Mr. Smith of the premium paid by the
Corporation and Terre Haute First in connection with such policy,
which was issued pursuant to an Employment Agreement between the
Corporation, Terre Haute First, and Mr. Smith, was $10,879 (which
amount is included in the amount reported for Mr. Smith above). The
Corporation expects to recover the premiums it pays for this split-
dollar policy from the proceeds of such policy.
Because Mr. Lowery was not eligible for the ESOP in 1996, a non-
qualified deferred compensation program was established. A
contribution of $11,000 was made in 1996 to this non-qualified plan on
behalf of Mr. Lowery, but no such contribution was made in 1997.
<F4> Allocations to the named individual s respective account in the
Corporation s Employee Stock Ownership Plan ( ESOP ) for 1997, which
are properly includable in this column, were not calculable as of the
date of this Proxy Statement. Such amounts for 1996 were as follows:
$7,947 for Mr. Smith; $7,947 for Mr. Perry; $6,579 for Mr. Jukes and
$5,502 for Mr. Carty.
<F5> Did not become an executive officer of the Corporation until January
1, 1996.
</TABLE>
Employee Benefit Plans
Employee Stock Ownership Plan. The Corporation sponsors the First
Financial Corporation Employee Stock Ownership Plan ( ESOP ) and the First
Financial Corporation Employees Pension Plan ( Pension Plan ) for the benefit
of substantially all of the employees of the Corporation and its subsidiaries.
As discussed below, these plans constitute a floor-offset retirement program.
The Pension Plan is a defined benefit floor plan which provides each
participant with a minimum benefit or floor which is offset by the benefit
provided by the ESOP. Thus, if a participant s benefit under the ESOP is
insufficient to fund the minimum floor of benefits specified by the Pension
Plan, the Pension Plan will make up the difference. If a participant s benefit
under the ESOP is higher than the minimum or floor benefit under the Pension
Plan, the participant receives the higher benefit under the ESOP.
A l l employees of the Corporation and its subsidiaries become
participants in the ESOP after completing one year of service for the
Corporation or its subsidiaries and attaining age 21. Under the terms of the
ESOP, the Corporation or its subsidiaries, as participating employers, may
contribute Corporation common stock to the ESOP or contribute cash to the ESOP
which will be primarily invested in the Corporation s common stock. The amount
of contributions, when they are made, is determined by the Board of Directors
of the Corporation. No participant contributions are required or allowed under
the ESOP.
For a discussion of the forms in which benefits may be distributed
under the ESOP, see the discussion under Defined Benefit Plan below.
Participants have the right to direct the voting of the shares of the
Corporation s stock allocated to their accounts under the ESOP on all corporate
matters.
For the year ended December 31, 1997, the Corporation contributed
$726,000 to the ESOP. The cash will be allocated to the individual ESOP
accounts of the participants effective as of December 31, 1997, although no
allocation to the individual accounts had been made or calculated as of the
date of mailing of this Proxy Statement.
Defined Benefit Plan. As described above, the Pension Plan was
adopted in conjunction with, but is separate from, the ESOP. Employees become
participants in the Pension Plan after completing one year of service for the
Corporation or its subsidiaries and attaining age 21. All employees of the
Corporation and its subsidiaries are eligible to become participants. No
participant contributions are required or allowed under the Pension Plan. The
Pension Plan, in conjunction with the ESOP, is designed to provide participants
with a minimum retirement benefit.
6<PAGE>
The monthly guaranteed minimum benefit under the Pension Plan is
reduced by the monthly benefit derived from the participant s vested portion of
his ESOP account balance, calculated by the actuary for the Pension Plan as a
single life annuity. The normal retirement benefit will begin at age 65 and be
paid monthly for as long as the participant lives.
The normal form of retirement benefit under the ESOP and Pension Plan
is a monthly life annuity. A married participant will receive an actuarially
equivalent joint and 50% survivor annuity (a monthly payment for the
participant s life with the surviving spouse receiving 50% of that amount for
life), unless the participant otherwise elects and the participant s spouse
consents to such election. A participant may also elect to receive his
retirement income from the ESOP and Pension Plan in the form of: a monthly
income payable for life; a monthly income payable for life with either 50%,
66-2/3%, or 100% of the participant s benefit paid to the participant s
designated beneficiary starting upon the participant s death and continuing for
as long as the beneficiary lives; or a monthly income payable for life with 60,
120 or 180 monthly payments guaranteed, provided that the number of guaranteed
monthly payments cannot be for a period greater than the joint life expectancy
of the participant and his spouse. The ESOP also provides that a participant s
benefit may be distributed in a single lump sum or substantially equal monthly,
quarterly or annual installments over a period which does not exceed the
participant s life expectancy (or the joint life expectancy of the participant
and his spouse). However, a participant may deem that all or any part of the
distribution from the ESOP be made in whole shares of the Corporation s common
stock prior to the date specified for distribution, with any fractional shares
distributed in cash.
The following table shows the estimated annual benefits payable under
the Pension Plan upon retirement at age 65 for various periods of Benefit
Service at specified levels of remuneration. The benefit amounts presented in
the totals are annual straight life annuity amounts without deduction for
social security or other offset amounts. A participant s Final Average Annual
Compensation shown under the Pension Plan is generally based on the
compensation set forth in the Summary Compensation Table.
<TABLE>
Estimated Minimum Annual Retirement Benefit
Final Average Annual Compensation
<CAPTION>
Years of
Benefit 70K 100K 130K 160K 190K 220K 250K 300K or
Service more
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 $16,600 $24,550 $32,500 $40,450 $48,400 $56,350 $64,300 $77,550
20 33,200 49,100 65,000 80,900 96,800 112,700 128,600 155,100
30 42,800 63,650 84,500 105,350 126,200 147,050 167,900 202,650
40 44,100 65,925 87,750 109,575 131,400 153,225 175,050 211,425
</TABLE>
Maximum benefits under the Pension Plan are subject to the annual
limitation ($130,000 for 1998) imposed on qualified plans by the Internal
Revenue Code ("IRC"). The maximum compensation which may be taken into account
for any purpose under the Pension Plan is limited by the Internal Revenue Code
to $160,000 for 1998. The Corporation implemented a nonqualified supplemental
retirement plan effective January 1, 1997 to replace benefits lost due to the
IRC limitations on benefits and compensation noted above. The above table
includes benefits from both the qualified and nonqualified plans. Hence,
neither limit has been taken into account in the calculation of the estimated
annual retirement benefits shown.
Under the Pension Plan, the executive officers of the Corporation
named in the Summary Compensation Table under COMPENSATION OF OFFICERS have
the following current years of benefit service: Donald E. Smith - 29 years;
John W. Perry - 23 years; Michael A. Carty - 21 years; W. Edward Jukes - 8
years; and Norman L. Lowery - 2 years.
7<PAGE>
TRANSACTIONS WITH MANAGEMENT
Directors and principal officers of the Corporation and their
associates were customers of, and have had transactions with, the Corporation
and its subsidiary banks in the ordinary course of business during 1997.
Comparable transactions may be expected to take place in the future.
During 1997 various directors and officers of the Corporation and
their respective associates were indebted to the subsidiary banks from time to
time. These loans were made in the ordinary course of business on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for similar transactions with other persons and did not
involve more than the normal risk of collectability or present other
unfavorable features.
The law offices of Cox Zwerner Gambill & Sullivan, in which Mr. Cox
is a partner, were paid $21,837 in legal fees by the Corporation and its
subsidiaries for the fiscal year ending December 31, 1997.
COMPARATIVE PERFORMANCE GRAPH
The following graph compares cumulative total shareholder return on
the Corporation s common stock over the last five fiscal years with the returns
of the CRSP Total Return Index for the NASDAQ Stock Market (U.S.) and the CRSP
Total Return Index for NASDAQ bank stocks. The graph assumes $100.00 was
invested on January 1, 1992 in the Corporation s common stock and in each of
the two indices shown, and the reinvestment of all dividends.
<TABLE>
[INSERT GRAPH]
<CAPTION>
Index 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Corporation 100 143.87 135.37 146.71 180.92 294.38
NASDAQ Market 100 114.8 112.21 158.7 195.19 239.53
NASDAQ Banks 100 114.04 113.63 169.22 223.41 377.44
</TABLE>
EMPLOYMENT CONTRACTS
On January 3, 1995, the Corporation, Terre Haute First, and Mr. Smith
entered into an Employment Agreement ("Agreement") whose term expires on
December 31, 2000 (although the Agreement may be renewed for successive one (1)
year terms as agreed upon by the parties). The Agreement provides that Mr.
Smith will serve as President and Chief Executive Officer of the Corporation
during the term of the agreement and perform such other duties as may be
established by the Board of Directors of the Corporation and Terre Haute First.
Under the terms of the Agreement, Mr. Smith will be paid an annual salary as
set by the Board of Directors of the Corporation and Terre Haute First. In
addition, the Agreement requires that the Corporation and Terre Haute First
establish a split-dollar life insurance arrangement with Mr. Smith which will
insure the lives of Mr. Smith and his spouse. Under the terms of the
Agreement, the Corporation and Terre Haute First expect to recover the premiums
they pay for such policy from the proceeds of such policy.
8<PAGE>
Effective January 1, 1997, Terre Haute First entered into an
Employment Agreement with Norman L. Lowery, its President and Chief Executive
Officer. The Employment Agreement is a five-year agreement and extends
annually for an additional one-year term to maintain its five-year term if
Terre Haute First s Board of Directors determines to so extend it. Under the
Employment Agreement, Mr. Lowery receives an initial annual salary equal to his
current salary subject to increases approved by the Board of Directors. The
Employment Agreement also provides, among other things, for Mr. Lowery s
participation in other bonus and fringe benefit plans available to the
Corporation s and Terre Haute First s employees. Mr. Lowery may terminate his
employment upon ninety (90) days prior written notice to Terre Haute First.
Terre Haute First may discharge Mr. Lowery for just cause (as defined in the
Employment Agreement) at any time or in certain events specified by applicable
law or regulations.
If Terre Haute First terminates Mr. Lowery s employment for other than
just cause or Mr. Lowery is constructively discharged and such termination does
not occur within twelve months after a change in control of Terre Haute First
or the Corporation, the Employment Agreement provides for Mr. Lowery s receipt
in a lump-sum or periodic payments of an amount equal to the sum of (A) Mr.
Lowery s base salary through the end of the then-current term, plus (B) in Mr.
Lowery s sole discretion and in lieu of continued participation in Terre Haute
First s fringe benefit and retirement plans, cash in an amount equal to the
cost of obtaining all health, life, disability, retirement and other benefits
which Mr. Lowery would otherwise be eligible to receive if he continued to
participate in those plans through the end of the then-current term. In the
event Terre Haute First terminates Mr. Lowery s employment for other than just
cause or Mr. Lowery is constructively discharged within twelve months following
a change in control of Terre Haute First or the Corporation, the Employment
Agreement provides for Mr. Lowery s receipt of a lump-sum payment of an amount
equal to the difference between (A) the product of 2.99 times his "base amount"
(as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as
amended (the "Code")) and (B) the sum of any other parachute payments, as
determined under Section 280G(b)(2) of the Code, in addition to the benefits
described above which he would receive if the termination did not occur within
12 months following a change in control.
If the payments provided for under the Employment Agreement, together
with any other payments made to Mr. Lowery by Terre Haute First, are determined
to be payments in violation of the "golden parachute" rules of the Code, such
payments will be reduced to the largest amount which would not cause Terre
Haute First to lose a tax deduction for such payments under those rules. As of
the date hereof, the cash compensation that would be paid to Mr. Lowery under
the Employment Agreement if such agreement were terminated within 12 months
after a change in control of Terre Haute First would be $711,620, plus all
other amounts he would otherwise be due under the Employment Agreement for the
balance of its term.
PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table contains information concerning individuals or
entities who, to the knowledge of the Corporation, beneficially owned on March
17, 1998, more than 5% of the common stock of the Corporation:
<TABLE>
<CAPTION>
Name and Address of Shares Beneficially Owned Percent of Class
Beneficial Owner
<S> <C> <C>
First Financial Corporation 443,372 <F1> 6.14%
Employee Stock Ownership
Plan ("ESOP")
One First Financial Plaza
Terre Haute, Indiana 47807
National City Bank of Indiana 480,229 6.65%
One National City Center
Indianapolis, IN 46255
Jack R. Snyder
One American Square
Indianapolis, IN 46282
Co-Trustees fo the T. Rigasco Trust
Princeton Mining Company 646,267 8.94%
State Road 46 South
Terre Haute, Indiana 47803
<F1> Represents shares held in trust by the Corporation's subsidiary, Terre
Haute First.
</TABLE>
9<PAGE>
The Trust Departments of five (5) subsidiary banks of the Corporation
which have trust departments hold, as of March 17, 1998, 1,116,472 shares of
the Corporation s common stock for the beneficiaries of certain trusts, estates
and agencies administered by the subsidiary banks. The respective trust
departments are authorized to vote 379,409 shares of the Corporation s common
stock which such trust departments hold of record, either in person or by
proxy, so long as each vote is in the best interest of any such trust, estate
or agency and the beneficiaries or principals thereof. All shares held by such
trust departments will be voted in accordance with the instructions of
co-fiduciaries, beneficiaries or principals, as applicable.
Security Ownership Management
The following table sets forth as of March 17, 1998 the total number
of shares of common stock of the Corporation beneficially owned by each
Director and certain executive officers of the Corporation and by all Directors
and executive officers as a group. The number of shares shown as being
beneficially owned by each Director and executive officer are those over which
he or she has sole or shared voting or investment power.
<TABLE>
<CAPTION>
Name of Beneficial Owner Shares Beneficially Owned <F1> Percent of Class
<S> <C>
Walter A. Bledsoe 14,991 .21%
B. Guille Cox, Jr. 42,748 .59% <F2>
Thomas T. Dinkel 4,684 .06%
Anton H. George 309 .01%
Mari H. George 231 .01%
Gregory L. Gibson 32,801 .45%
Max L. Gibson 119,185 1.65%
Norman L. Lowery 12,554 .17%
William A. Niemeyer 7,128 .10%
Patrick O'Leary 24,300 .34%
John W. Ragle 58,043 .80%
Chapman J. Root, II 306,243 4.24% <F3>
Donald E. Smith 67,261 .93%
Virginia L. Smith 2,967 .04%
John W. Perry 11,042 .15%
W. Edward Jukes 11,919 .16%
Michael A. Carty 5,137 .07%
All Directors and Executive Officers
as a group (17 individuals)<F4> 721,543 9.99%
<F1> The information contained in this column is based upon stockholder
records of the Corporation and information furnished to the
Corporation by the individuals identified above.
<F2> Mr. Cox, under certain circumstances, has the power, with the consent
of others, to vote an additional 229,534 shares (3.18%). These shares
are not reflected in the above amount.
<F3> Includes 305,861 shares held by the 1992 Root Children s Business
Trust, of which Mr. Root is a trustee. Mr. Root disclaims beneficial
ownership with respect to all such shares in the trust except those in
which he is the beneficiary.
<F4> Excludes 229,534 shares over which Mr. Cox may, under certain
circumstances, exercise voting control. Includes shares held for the
accounts of Donald E. Smith, John W. Perry, Michael A. Carty, and W.
Edward Jukes in the First Financial Corporation Employee Stock
Ownership Plan described above.
</TABLE>
10<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Corporation s directors and executive officers, and persons who own more than
ten percent of a registered class of the Corporation s equity securities, to
file with the Securities and Exchange Commission ( SEC ) initial reports of
ownership and reports of changes in ownership of Corporation common stock and
other equity securities of the Corporation. Officers, directors and greater
than ten-percent shareholders are required by SEC regulations to furnish the
Corporation with copies of all Section 16(a) forms they file. To the best
knowledge of the Corporation, during the most recent fiscal year all officers,
directors and greater than ten-percent beneficial owners of the Corporation
timely filed all statements of beneficial ownership required to be filed with
the SEC.
INDEPENDENT ACCOUNTANTS
The Board of Directors appointed Coopers & Lybrand L.L.P., Certified
Public Accountants as independent accountants to audit the books, records and
accounts of the Corporation for 1997. The Board of Directors anticipates that
it will appoint an independent public accountant to audit the books, records,
and accounts of the Corporation for 1998 in April, 1998. Representatives of
Coopers & Lybrand L.L.P. are expected to be in attendance at the annual meeting
and will be provided an opportunity to make a statement should they desire to
do so and to respond to appropriate inquiries from the shareholders. Coopers &
Lybrand L.L.P. have been independent accountants for the Corporation since
1984.
SHAREHOLDERS PROPOSALS
Any proposals which shareholders desire to present at the 1999 Annual
meeting must be received by the Corporation at its principal executive offices
on or before November 24, 1998 to be considered for inclusion in the
Corporation s proxy material for that meeting.
ANNUAL REPORT TO SHAREHOLDERS
The 1997 Annual Report to Shareholders, containing financial
statements for the year ended December 31, 1997, and other information
concerning the operations of the Corporation is enclosed herewith, but is not
to be regarded as proxy soliciting material.
UPON WRITTEN REQUEST, THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO
EACH REQUESTING SHAREHOLDER, A COPY OF THE CORPORATION S ANNUAL REPORT ON FORM
10-K WHICH IS REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED DECEMBER 31, 1997. ADDRESS ALL REQUESTS TO:
MICHAEL A. CARTY, TREASURER
FIRST FINANCIAL CORPORATION
ONE FIRST FINANCIAL PLAZA
P.O. BOX 540
TERRE HAUTE, INDIANA 47808
OTHER MATTERS
The Annual Meeting is called for the purposes set forth in the Notice.
The Board of Directors of the Corporation does not know of any matters for
action by shareholders at such Annual Meeting other than the matters described
in the notice. However, the enclosed Proxy will confer discretionary authority
with respect to matters which are not known to the Board of Directors at the
time of the printing hereof and which may properly come before the Annual
Meeting. It is the intention of the persons named in the Proxy to vote
pursuant to the Proxy with respect to such matters in accordance with their
best judgment.
By Order of the Board of Directors
DONALD E. SMITH
Chairman of the Board and President
11<PAGE>
