<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
FIRST FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
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 19, 2000
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 19, 2000 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 Thomas T. Dinkel, Mari H. George, Norman L. Lowery, Patrick
O'Leary and Chapman J. Root II to the Board of Directors of the Corporation for
a three (3) year term to expire in 2003; 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 15, 2000 will
be entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
/s/ DONALD E. SMITH
-----------------------------------
Chairman of the Board and President
March 24, 2000
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.
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 19, 2000
<PAGE> 3
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 19, 2000, 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, 2000.
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, First Crawford State Bank, The
Morris Plan Company of Terre Haute, Inc., and First Financial Reinsurance
Company, Ltd.
Only shareholders of record as of March 15, 2000, will be entitled to
notice of, and to vote at, the Annual Meeting. As of March 15, 2000, the
Corporation had issued and outstanding 6,778,938 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.
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
five (5) 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 discretion.
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
<PAGE> 4
nominees for election as director are nominated to serve for terms to expire in
2003. Each nominee is currently a director of the Corporation whose current term
as a director will expire in 2000. The following information is provided
concerning each nominee and each incumbent director continuing in office.
<TABLE>
<CAPTION>
NOMINEES FOR TERMS TO EXPIRE IN 2003
- ------------------------------------
NAME, AGE AND PRINCIPAL OCCUPATION SHARES OF COMPANY COMMON STOCK
DURING THE PAST FIVE YEARS BENEFICIALLY OWNED ON MARCH 10, 2000 (1)
NUMBER PERCENT OF CLASS
<S> <C> <C> <C>
Thomas T. Dinkel, 49 1989 4,884 .07%
President of Sycamore Engineering, Inc.
Mari H. George, 65 1989 231 .01%
Chairman of Indianapolis Motor Speedway Corp.
Norman L. Lowery, 53, Vice Chairman 1989 13,137 .19%
of the Board; President of Terre Haute First
(effective January, 1, 1996); Attorney-at-Law
with Wright Shagley & Lowery through 1995
Patrick O'Leary, 63 1983* 25,000 .37%
President of Contract Services, LLC
Chapman J. Root II, 50 1989 16,970 .25%
President of Root Organization;
Director of International Speedway Corp.
INCUMBENT MEMBERS OF THE BOARD OF DIRECTORS
WHOSE TERMS EXPIRE IN 2001
- --------------------------
Walter A. Bledsoe, 84 1983* 14,991 .22%
Personal Investments
Max L. Gibson, 59 1983* 119,185 1.76%
President of Majax Company; Director,
IPALCO, Inc.
William A. Niemeyer, 77 1983* 11,880 .18%
President of Niemeyer Coal Co.
Donald E. Smith, 73, Chairman of the Board 1983* 82,467 1.22%
and President; President of Terre Haute
First National Bank through 1995
INCUMBENT MEMBERS OF THE BOARD OF DIRECTORS
WHOSE TERMS EXPIRE IN 2002
- --------------------------
B. Guille Cox, Jr., 54 1987 42,170 .62%(2)
Attorney-at-Law with Cox Zwerner Gambill & Sullivan
Anton H. George, 40 1989 309 .01%
President of Indianapolis Motor Speedway Corp.;
Director of Indiana Energy, Inc.
Gregory L. Gibson, 37 1994 32,949 .49%
President of ReTec, Inc.
John W. Ragle, 73 1983* 58,043 .86%
President of Ragle & Company, Inc.
Virginia L. Smith, 52 1987 3,067 .05%
President of R.J. Oil, Inc.
* First Financial Corporation was formed in 1983.
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
OTHER EXECUTIVE OFFICERS OF THE CORPORATION
- -------------------------------------------
NAME, AGE AND PRINCIPAL OCCUPATION SHARES OF COMPANY COMMON STOCK
DURING THE PAST FIVE YEARS BENEFICIALLY OWNED ON MARCH 10, 2000 (1)
NUMBER PERCENT OF CLASS
<S> <C> <C>
John W. Perry, 56, Secretary 11,688 .17%
Senior Vice President of Terre Haute First National Bank
W. Edward Jukes, 57, Chief Credit Officer 12,619 .19%
Senior Vice President of Terre Haute First National Bank
Michael A. Carty, 49, Treasurer 5,518 .08%
Senior Vice President of Terre Haute First National Bank
</TABLE>
All Directors and Executive Officers as a group have 455,018 shares, which is
6.71% of the shares outstanding. This includes shares held for the accounts of
Donald E. Smith, Norman L. Lowery, John W. Perry, Michael A. Carty and W. Edward
Jukes in the First Financial Corporation Employee Stock Ownership Plan.
(1) 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.
(2) Mr. Cox, under certain circumstances, has the power, with the consent
of others, to vote an additional 189,402 shares (2.79%). These shares are
not reflected in the amount on the previous page.
ADDITIONAL INFORMATION CONCERNING BOARD OF DIRECTORS
- ----------------------------------------------------
ATTENDANCE AT MEETINGS. During 1999, the Board of Directors of the
Corporation held 12 regular meetings and a total of 19 meetings. No director
standing for re-election attended fewer than 75% of the aggregate number of
Board meetings and meetings of committees on which he or she served except Mari
H. George who attended 42% of the meetings and Chapman J. Root II, who attended
58% of the meetings.
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 committee
or any committee performing similar functions during 1999; such functions are
performed by the Board of Directors as a whole.
The Corporation's Examining Committee, which consisted of John W. Ragle,
Max Gibson and Patrick O'Leary in 1999, 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 four times during 1999.
The Corporation's Compensation Committee, which consists of Messrs. A.
George, M. Gibson, O'Leary, Lowery, Niemeyer, D. Smith and V. Smith, 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
1999.
<PAGE> 6
COMPENSATION OF DIRECTORS. Directors of the Corporation received a fee of
$500 per meeting during 1999. Each individual director who is not an officer of
the Corporation or its subsidiaries and is a member of the Board of Directors of
a subsidiary is compensated by that subsidiary for their service to that
subsidiary. All directors of the Corporation are also directors of Terre Haute
First. As directors of Terre Haute First, they received a fee in 1999 of $500
for each meeting attended and a semi-annual fee of $2,500. 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 and $500
for each Compensation Committee meeting attended. Directors of Terre Haute First
who 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 1999, the allocated cost of the deferred director's
fees was $50,049.58, which is funded by Terre Haute First with insurance
products.
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), A. George, M. Gibson, Lowery, Niemeyer, D. Smith and
V. Smith in their capacity as the Board's Compensation Committee addressing the
Corporation's compensation policies for 1999 as they affected Mr. Smith and
Messrs. Lowery, Perry, Jukes and Carty, the other executive officers other than
Mr. Smith who, for 1999, 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 1999, Mr. Smith received a bonus of $125,000 and Messrs. Lowery, Perry,
Jukes and Carty each received a bonus equal to 30%, 12%, 12%, and 12% of their
respective salaries, or $75,000, $18,458, $14,701, and $13,748, 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
<PAGE> 7
salary and bonus for fiscal 1999.
MR. SMITH'S 1999 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 1999. Mr. Smith's salary and
bonus are determined in the same manner as discussed above for other executives,
except that $75,000 of Mr. Smith's $125,000 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 1999 COMPENSATION COMMITTEE
Anton H. George Max L. Gibson Norman L. Lowery
William A. Niemeyer Patrick O'Leary Donald E. Smith
Virginia L. 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,
1999, 1998 and 1997 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, 1999.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL ANNUAL COMPENSATION (1)
POSITION YEAR SALARY BONUS (2) ALL OTHER COMPENSATION(3)
<S> <C> <C> <C> <C>
Donald E. Smith 1999 $318,779 $125,000 $17,081 (4)
President, CEO 1998 $306,158 $125,000 $12,879
and Chairman 1997 $285,114 $115,000 $10,879
Norman L. Lowery 1999 $247,520 $ 75,000 $ 4,895 (4)
Vice Chairman 1998 $238,000 $ 40,000 $ 4,395
1997 $208,000 $ 25,000 $ 4,395
John W. Perry 1999 $153,817 $ 18,458 $ 2,500 (4)
Secretary 1998 $147,901 $ 16,269 $ 1,354
1997 $142,556 $ 11,500 $ 1,247
W. Edward Jukes 1999 $122,511 $ 14,701 $ 1,800 (4)
Chief Credit Officer 1998 $117,779 $ 11,780 $ 1,650
</TABLE>
<PAGE> 8
1997 $113,268 $ 11,326 $ 1,394
Michael A. Carty 1999 $114,572 $ 13,748 $ 1,200 (4)
Treasurer 1998 $100,550 $ 10,050 $ 918
1997 $ 96,683 $ 9,668 $ 354
(1) 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.
(2) The bonus amounts are payable pursuant to determinations made by the
Compensation Committee of the Corporation, as described in the
"Compensation Committee Report."
(3) 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 that were 55 or older, and at age 60 for those who are
less than 55 years of age at the time the program was stated. The annual
cost of this insurance for those reported (except for Mr. Smith) was as
follows: $4,895 for Mr. Lowery; $2,500 for Mr. Perry; $1,800 for Mr. Jukes;
and $1,200 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 1999, which will continue to be in effect following
his retirement as an executive officer of the Corporation and Terre Haute
First. In 1999, 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 $17,081 (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.
(4) Allocations to the named individual's respective account in the
Corporation's Employee Stock Ownership Plan ("ESOP") for 1999, which are
properly includable in this column, were not calculable as of the date of
this Proxy Statement. Such amounts for 1998 were as follows: $8,206 for Mr.
Smith; $8,206 for Mr. Lowery; $8,206 for Mr. Perry; $6,858 for Mr. Jukes
and $5,755 for Mr. Carty.
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.
All 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
<PAGE> 9
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, 1999, the Corporation contributed $750,000
to the ESOP. The cash will be allocated to the individual ESOP accounts of the
participants effective as of December 31, 1999, 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.
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.
ESTIMATED MINIMUM ANNUAL RETIREMENT BENEFIT
-------------------------------------------
FINAL AVERAGE ANNUAL COMPENSATION
<TABLE>
<CAPTION>
YEARS OF
BENEFIT
SERVICE 70K 100K 130K 160K 190K 220K 250K 300K OR MORE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10 $16,269 $24,219 $32,169 $ 40,119 $ 48,069 $ 56,019 $ 63,969 $ 77,219
</TABLE>
<PAGE> 10
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
20 32,537 48,437 64,337 80,237 96,137 112,037 127,937 154,437
30 41,806 62,656 83,506 104,356 125,206 146,056 166,906 201,656
40 42,940 64,765 86,590 108,415 130,240 152,065 173,890 210,265
</TABLE>
Maximum benefits under the Pension Plan are subject to the annual
limitation ($130,000 for 1999) imposed on qualified plans by the Internal
Revenue Code ("IRK"). 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 1999. 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 - 31 years; John W.
Perry - 25 years; Michael A. Carty - 23 years; W. Edward Jukes - 10 years; and
Norman L. Lowery - 4 years.
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 1999. Comparable
transactions may be expected to take place in the future.
During 1999 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 B. Guille Cox,
Jr. is a partner, were paid legal fees by the Corporation and its subsidiaries
for the fiscal year ending December 31, 1999.
COMPARATIVE STOCK 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. Also included are the Russell 2000
Index, comprised of the smallest 2000 companies in the Russell 3000 Index of the
3000 largest market capitalization corporations and the SNL $1B-$5B Bank Index
developed by SNL Securities LC, which includes all bank stocks with total assets
in this size range. In future proxy statements the Russell 2000 Index and the
SNL $1B-$5B Bank Index will replace the other two as management believes the
performance of these indices will provide a more relevant comparison to the
performance of our organization than the NASDAQ Stock Market and NASDAQ Bank
indices. The graph assumes $100.00 was invested on January 1, 1995, in the
Corporation's common stock and in each of the indices shown, and the
reinvestment of all dividends.
<PAGE> 11
NASDAQ NASDAQ FCC SNL $1B - Russell
Market Stock Stock $5B Index $2K Index
Dec 94 100 100 100 100 100
Dec 95 141.33 148.14 108.39 134.48 126.21
Dec 96 173.89 195.60 133.66 174.33 144.84
Dec 97 213.07 327.48 217.44 290.73 174.56
Dec 98 300.18 325.21 187.18 290.06 168.54
Dec 99 545.67 312.79 158.18 266.58 201.61
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 Chairman of the Board, 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.
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
<PAGE> 12
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 $971,750, plus
all other amounts he would otherwise be due under the Employment Agreement for
the balance of its term.
PRINCIPAL SHAREHOLDERS
The following table contains information concerning individuals or
entities who, to the knowledge of the Corporation, beneficially owned on March
12, 2000, more than 5% of the common stock of the Corporation:
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES BENEFICIALLY OWNED PERCENT OF CLASS
OF BENEFICIAL OWNER
<S> <C> <C>
First Financial Corporation 444,960(1) 6.56%
Employee Stock Ownership Plan ("ESOP")
One First Financial Plaza
Terre Haute, Indiana 47807
T. Rigasco Trust Co-Trustees: 480,229 7.08%
National City Bank of Indiana
One National City Center
Indianapolis, Indiana 46255
Jack R. Snyder
One American Square
Indianapolis, Indiana 46282
Princeton Mining Company 657,357 9.70%
State Road 46 South
Terre Haute, Indiana 47803
</TABLE>
(1) Represents shares held in trust by the Corporation's subsidiary, Terre
Haute First.
The Trust Departments of five (5) subsidiary banks of the Corporation which
have trust departments hold, as of March 1, 2000, 959,890 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 1,030,752 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.
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 Crowe, Chizek and Company, LLP as
independent accountants on
<PAGE> 13
August 6, 1999, to audit the books, records and accounts of the Corporation for
1999. The Board of Directors anticipates that it will appoint an independent
public accountant to audit the books, records, and accounts of the Corporation
for 2000 in April 2000. Representatives of Crowe, Chizek 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. Prior to 1999 the Corporation's independent accountants
were PriceWaterhouseCoopers, L.L.P. (PWC).
The audit reports of PWC on the registrant's consolidated financial
statements as of and for the years ended December 31, 1998 and 1997 did not
contain an adverse opinion or disclaimer of opinion, and were not qualified or
modified as to uncertainty, audit scope or accounting principle. During 1998 and
1997 and the subsequent period through August 6, 1999 (date of dismissal), there
were no disagreements between the registrant and PWC on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which, if not resolved to the satisfaction of PWC, would have caused
PWC to make reference to the subject matter of the disagreement in connection
with its audit report.
SHAREHOLDERS PROPOSALS
Any proposals which shareholders desire to present at the 2001 Annual
meeting must be received by the Corporation at its principal executive offices
on or before November 24, 2000, to be considered for inclusion in the
Corporation's proxy material for that meeting.
ANNUAL REPORT TO SHAREHOLDERS
The 1999 Annual Report to Shareholders, containing financial statements for
the year ended December 31, 1999, and other information concerning the
operations of the Corporation are 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, 1999. 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
/s/ DONALD E. SMITH
-----------------------------------
Chairman of the Board and President
<PAGE> 14
[FIRST FINANCIAL CORPORATION LOGO]
FIRST FINANCIAL CORPORATION
One First Financial Plaza
P.O. Box 540
Terre Haute, Indiana 47808
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James E. Brown and Ronald K. Rich, or
either of them as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all
shares of common stock of First Financial Corporation which the undersigned is
entitled to vote at the Annual Meeting of Shareholders to be held at One First
Financial Plaza, Terre Haute, Indiana on Wednesday, April 19, 2000, at
11:00 a.m. (local time), or any adjournment thereof, on the following matters:
1. Election of Directors
/ / FOR all nominees listed below for a three-year term to expire in 2003
(except as marked to the contrary below)
/ / WITHHOLD AUTHORITY to vote for all nominees listed below:
Thomas T. Dinkel Mari H. George Norman L. Lowery
Patrick O'Leary Chapman J. Root, II
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL, STRIKE A
LINE THROUGH THE NOMINEES' NAME IN THE LIST ABOVE.)
2. In their discretion, on such matters as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR IF NO
DIRECTION IS INDICATED, WILL BE VOTED FOR PROPOSAL NO. 1.
Please sign exactly as name appears below. If there are two or more
owners, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated: , 2000 -----------------------------------
------------------ (Signature)
-----------------------------------
(Signature, if held jointly)
YOUR VOTE IS IMPORTANT. PLEASE MARK,
SIGN, DATE AND RETURN THIS PROXY
PROMPTLY, USING THE ENCLOSED ENVELOPE.
