<PAGE>
SCHEDULE 14A
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 (S) 240.14a-11(c) or (S) 240.14a-12
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
FIRST OAK BROOK BANCSHARES INC.
--------------------------------------------------------------------------------
(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)(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:
-------------------------------------------------------------------------
(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:
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Notes:
<PAGE>
FIRST OAK BROOK BANCSHARES, INC.
1400 Sixteenth Street
Oak Brook, Illinois 60523
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 2, 2000
April 1, 2000
To the Shareholders of First Oak Brook Bancshares, Inc:
You are cordially invited to attend the Annual Meeting of the Shareholders
of First Oak Brook Bancshares, Inc. to be held in the Conference Center
located in the Lower Level of the Oak Brook Bank Building, 1400 Sixteenth
Street, Oak Brook, Illinois 60523, on Tuesday, May 2, 2000 at 10:00 A.M. for
the purposes of considering and acting on the following:
(1) Election of three (3) Class I directors;
(2) Ratification of the selection of KPMG LLP as independent auditors for
the Company; and
(3) Transaction of such other business that may properly come before the
Meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 17, 2000 will
be entitled to notice of and to vote at the Meeting.
All persons who find it convenient to do so are invited to attend the
Meeting in person. However, regardless of whether or not you attend the
meeting, it is important that your shares are represented and voted.
Therefore, please sign and return the enclosed Proxy promptly. If you attend
the Annual Meeting, you may vote in person if you wish, even though you
previously returned your Proxy.
By Order of the Board of Directors
William E. Navolio
Secretary
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of First Oak Brook Bancshares, Inc. (the "Company") of
proxies for use at the 2000 Annual Meeting of Shareholders to be held Tuesday,
May 2, 2000 and at any adjournment thereof. The Company will bear all costs in
connection with this solicitation. It is intended that proxies in the
accompanying form, when returned properly executed, will be voted at the
Meeting. If a choice on any matter has been specified by the shareholder, the
shares will be voted accordingly. If no choices are specified, the shares will
be voted FOR the item in question. Proxies may be revoked by notice to the
Company in writing or in open meeting at any time before they are exercised.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the inspector of election appointed for the Meeting who will determine whether
or not a quorum is present. The inspector of election will treat abstentions
as shares that are present and entitled to vote for purposes of determining
the presence of a quorum, but as unvoted for purposes of determining the
approval of any matter submitted to the shareholders for a vote. If a broker
indicates on the proxy that it does not have discretionary authority as to
certain shares to vote on a particular matter, such shares, or "broker non-
votes", will be considered as present for quorum purposes, but not entitled to
vote with respect to that matter.
Shareholders of record at the close of business on March 17, 2000 will be
entitled to vote. On that date, there were outstanding 6,445,782 shares of
Common Stock.
This Proxy Statement, Notice of Meeting and accompanying proxy card are
being mailed to shareholders on or about April 1, 2000.
ELECTION OF DIRECTORS
In accordance with the By-Laws of the Company, the Board of Directors has
fixed at nine, the number of directors of the Company, with three directors to
be elected at the Annual Meeting. The Board of Directors consists of three
separate classes and the three directors comprising Class I, namely Frank M.
Paris, Robert M. Wrobel and John W. Ballantine, have been nominated for
election to three year terms at the Annual Meeting. All of the nominees are
currently directors of the Company. Directors in Class II, consisting of three
directors, Richard M. Rieser, Jr., Stuart I. Greenbaum and Michael L. Stein
are serving terms that expire at the 2001 Annual Meeting of Shareholders; and
directors in Class III, consisting of three directors, Eugene P. Heytow,
Miriam Lutwak Fitzgerald, and Geoffrey R. Stone, are serving terms that expire
at the 2002 Annual Meeting of Shareholders.
Unless directed otherwise, the persons named as proxies intend to vote for
the election of Frank M. Paris, Robert M. Wrobel and John W. Ballantine as
directors to serve three year terms as Class I directors, each to hold office
until the Annual Meeting of Shareholders in 2003 and until his or her
successor is elected and qualified or until his or her earlier death, removal
or resignation. Each of the nominees have consented to serve as director if
elected.
Director Paris has served the Company as a director and executive officer
since its inception in 1983. Mr. Wrobel has served as a director since 1996.
Mr. Ballantine has served as a director since October 1999.
An affirmative vote of the holders of a plurality of the shares of Common
Stock, present and eligible to vote at the Meeting, will be required for a
nominee to be elected as a director; abstentions and shares for which
authority to vote is not given will thus have no effect on the election of
directors. Shares cannot be voted for more than three nominees; there is no
right to cumulative voting.
1
<PAGE>
INFORMATION CONCERNING SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth information concerning the beneficial
ownership of the Company's Common Stock, as of March 17, 2000, by: (1) each
person known to the Company to be the beneficial owner of more than 5% of its
Common Stock; (2) each director and named executive officer of the Company;
and (3) all directors and executive officers of the Company as a group.
Information relating to persons other than directors and executive officers of
the Company is taken from the most recent Schedule 13G filed by such persons
with the Securities and Exchange Commission. The address of all such persons
unless otherwise stated is c/o the Company, 1400 Sixteenth Street, Oak Brook,
Illinois 60523.
Security Ownership of Management(/1/)
<TABLE>
<CAPTION>
Amount and
Nature of Acquirable
Beneficial Within 60 Percent of
Title of Class Name of Beneficial Owner Ownership(/2/) Days(/3/) Class(/4/)
-------------- ------------------------ -------------- ---------- ----------
<S> <C> <C> <C> <C>
Common Eugene P. Heytow............................... 920(/5/) 73,417 1.10
Richard M. Rieser, Jr.......................... 355,030(/6/) 48,417 5.96
Frank M. Paris................................. 357,824(/7/) 40,250 5.88
Miriam Lutwak Fitzgerald....................... 616,246(/8/) 6,834 9.20
Geoffrey R. Stone.............................. 3,000 3,834 *
Robert M. Wrobel............................... 1,158 0 *
Michael L. Stein............................... 2,500 2,167 *
Stuart I. Greenbaum............................ 500(/9/) 2,167 *
John W. Ballantine............................. 1,000 0 *
George C. Clam................................. 23,794(/10/) 15,500 *
William E. Navolio............................. 283(/11/) 26,750 *
All Directors and Executive Officers as a Group
(12 Persons)................................... 1,372,255 237,836 23.77
</TABLE>
--------
*Denotes less than 1% ownership.
Security Ownership of Certain Beneficial Owners(/1/)
<TABLE>
<CAPTION>
Title
of Name and Address Amount and Nature Percent
Class of Beneficial Owner of Beneficial Ownership(/2/) of Class(/4/)
----- ------------------- ---------------------------- -------------
<S> <C> <C> <C>
Common Mitzi Heytow 679,548 10.03
c/o Amalgamated Bank of Chicago
One West Monroe Street
Chicago, Illinois 60603
</TABLE>
FOOTNOTES
(1) Shares of stock deemed beneficially owned at March 17, 2000.
(2) The nature of beneficial ownership for shares shown in an individual's
name is sole voting and investment power unless otherwise indicated.
(3) Reflects the number of shares that could be purchased by exercise of
options available as of March 17, 2000 or within 60 days thereafter under
the Company's 1987 Amended and Restated Stock Option Plan.
(4) The percentage of Common Stock ownership was calculated with an
outstanding share amount which included 326,811 shares which could be
acquired within 60 days under exercisable options.
2
<PAGE>
(5) Excludes 679,548 shares of Common Stock held solely by Mitzi Heytow, Mr.
Heytow's spouse, in and over which he disclaims beneficial interest and
voting and investment power.
(6) Includes 12,374 shares of Common Stock held in joint tenancy with Mr.
Rieser's spouse, which shares are deemed to be shared as to beneficial
interest and voting and investment power. Excludes 9,078 shares of Common
Stock held solely by Mr. Rieser's spouse in and over which he disclaims
beneficial interest and voting and investment power. Excludes 12,796
shares of Common Stock held by Mr. Rieser's adult children in and over
which he disclaims beneficial interest and voting and investment power.
Excludes 5,830 shares of Common Stock held by an irrevocable trust of
which Mr. Rieser is the co-trustee for the benefit of his son in which he
disclaims any present beneficial interest but over which he has shared
voting and investment power. Excludes 8,718 shares of Common Stock held by
Mr. Rieser's mother's testamentary trust in and over which he disclaims
any present beneficial interest but over which he has shared voting and
investment power.
(7) Excludes 11,248 shares of Common Stock held by Mr. Paris' adult children
in and over which he disclaims beneficial interest and voting and
investment power.
(8) Excludes 20,400 shares of Common Stock held by Dr. Fitzgerald as custodian
for the benefit of her minor children in which she disclaims beneficial
interest but over which she exercises voting and investment power.
Includes 615,638 shares of Common Stock of which 307,814 is held by an
irrevocable insurance trust and 307,824 is held by a revocable trust of
which Dr. Fitzgerald is the custodian for the benefit of her minor
children in which she disclaims any present beneficial interest but over
which she exercises voting and investment power.
(9) Represents 500 shares of Common Stock held solely by Mr. Greenbaum's
spouse.
(10) Includes 7,000 shares of Common Stock held solely by Mr. Clam's spouse.
(11) Excludes 240 shares of Common Stock held by Mr. Navolio's spouse in and
over which he disclaims beneficial interest and voting and investment
power.
3
<PAGE>
BOARD OF DIRECTORS
MEETINGS, FUNCTIONS AND COMPENSATION
During 1999 the Board of Directors met five (5) times. All directors
attended more than 75% of the meetings of the Board of Directors, except
Director Ballantine who was elected at the October 1999 board meeting. The
Company has the following committees: Executive, Audit, Compensation, Stock
Option Advisory and a Community Reinvestment Act Committee.
The Executive Committee meets in conjunction with the Board of Directors and
met four (4) times during 1999 and is comprised of Directors Heytow, Rieser
and Paris. The Executive Committee of the Company may exercise the full
authority of the Board of Directors in the management of the business and
affairs of the Company other than a power specifically prohibited by Delaware
Law. The Executive Committee also performs functions similar to a nominating
committee in that it nominates directors and officers.
The Audit Committee met four (4) times during 1999 and is comprised of
Director Rieser and independent Directors Fitzgerald, Stone, Greenbaum, Stein,
and Ballantine. The Audit Committee's functions include reviewing reports and
recommendations of the Company's inside and outside auditors and reviewing and
monitoring the internal controls of the subsidiary bank.
The Compensation Committee met once during 1999 and is comprised of Director
Heytow and independent Directors Fitzgerald, Stein and Greenbaum. The
Compensation Committee's functions include reviewing and approving
compensation and benefits for employees of the Company and its subsidiary and
the Company-wide percentage compensation increase for all employees. With
respect to senior executive officers, the Committee also sets compensation and
benefits.
The Stock Option Advisory Committee meets as needed. It met once in 1999 and
is comprised of independent Directors Fitzgerald, Stone, Stein and Greenbaum.
This Committee's primary function is to administer the Company's 1987 Amended
and Restated Stock Option Plan, the Company's Performance Bonus Plan and other
compensation and bonus issues requiring a Committee consisting solely of
independent directors.
The Community Reinvestment Act ("CRA") Committee meets in conjunction with
the Company-wide Regulatory Management Committee and met eight (8) times
during 1999. It is comprised of Directors Paris and Rieser and non-director
members Messrs. Navolio and Clam. This Committee's primary function is to
monitor and direct the CRA efforts of the subsidiary bank.
The Company pays an $8,000 annual retainer to its directors in quarterly
payments of $2,000. The directors of the Company also received $2,000 for each
regular quarterly meeting attended of the Board of Directors, $2,000 for a
special meeting of the Board of Directors held May 4, 1999 and $200 for each
Executive, Audit, Compensation and Stock Option Advisory Committee meeting.
The members of the Community Reinvestment Act Committee do not receive
compensation. The Company's subsidiary directors also receive $1,000 for each
quarterly meeting attended of the Board of Directors and $200 for each Trust
and Audit Committee meeting.
During 1999, the Company established the Directors Stock Plan under which up
to 25,000 shares of Common Stock may be issued to the Company's non-employee
directors who elect to receive their fees in the shares of Common Stock.
Unless the director has elected to defer receipt, shares are issued quarterly
based on the amount of retainer and fees earned during the quarter and the
closing price for the Common Stock as reported on the NASDAQ Stock Market as
of the last day of the preceding quarter. Deferred shares, together with
dividend equivalents, are paid at the date specified by the director or upon
cessation of service as a director.
Each non-employee director has also received an option to purchase 1,000
shares of Common Stock under the formula option provisions of the Company's
Amended and Restated 1987 Stock Option Plan. In addition, on the date of each
Annual Meeting of Stockholders, each non-employee director who is continuing
as a non-employee director receives an option to purchase 500 shares of Common
Stock under such formula option provisions.
4
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning the current directors
and executive officers of the Company. Directors Heytow, Rieser and Paris have
served the company as directors and executive officers since its inception in
1983. Dr. Fitzgerald has served as a director since 1988. Mr. Stone has served
as a director since 1992. Mr. Wrobel has served as a director since 1996.
Messrs. Stein and Greenbaum have served as directors since 1998. Mr.
Ballantine has served as director since October 1999. Directors Paris, Wrobel
and Ballantine are standing for re-election. Each executive officer has been
with the Company since its inception in 1983. Officer appointments are made
annually.
<TABLE>
<CAPTION>
Education, Principal
Occupation
Name and Age During Last Five Years, Other
Position with Company Directorships and Positions
--------------------- -----------------------------
<C> <S>
Directors and Officers
Eugene P. Heytow, 65............................ Harvard College, B.A. and
Chairman of the Board, Chief Executive Officer, University of Chicago Law
Chairman of the Executive Committee School, J.D.
Oak Brook Bank*: Chairman of
the Executive Committee.
Amalgamated Investments
Company, Chicago (holding
company of Amalgamated Bank
of Chicago)**:
Chairman of the Board.
Amalgamated Bank of
Chicago**: Chairman of the
Board.
AmalgaTrust Company, Inc.,
Chicago (a wholly owned
subsidiary of Amalgamated
Bank of Chicago)**: Chairman
of the Board.
Richard M. Rieser, Jr., 56...................... Brown University, B.A. and
President and Director University of Chicago Law
School, J.D.
Oak Brook Bank*: Chairman of
the Board of Directors, and
Chief Executive Officer.
Amalgamated Bank of
Chicago**: Senior Vice
President.
Family relationship: Mr.
Rieser is married to Mr.
Heytow's niece.
Frank M. Paris, 61.............................. Northwestern University, B.S.
Vice Chairman of the Board Oak Brook Bank*: Vice
Chairman of the Board.
Miriam Lutwak Fitzgerald, 42.................... Northwestern University, B.A.
Director and Chicago Medical School,
M.D.
Mimi S. Lutwak M.D.S.C.:
President.
Oak Brook Bank*: Director.
Amalgamated Bank of
Chicago**: Director.
Geoffrey R. Stone, 53........................... Wharton School of Finance and
Director Commerce, University of
Pennsylvania, B.S. and
University of Chicago Law
School, J.D.
The University of Chicago:
Provost.
Oak Brook Bank*: Director.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Education, Principal Occupation
Name and Age During Last Five Years, Other
Position with Company Directorships and Positions
--------------------- -------------------------------
<C> <S>
Robert M. Wrobel, 50.......................... Northwestern University, B.A.
Director Oak Brook Bank*: Assistant to
the Chairman and Director.
Amalgamated Investments
Company, Chicago (holding
company of Amalgamated Bank of
Chicago)**: President.
Amalgamated Bank of Chicago**:
President and Chief Executive
Officer.
AmalgaTrust Company, Inc.,
Chicago, (a wholly owned
subsidiary of Amalgamated Bank
of Chicago)**: President and
Chief Executive Officer.
Michael L. Stein, 59.......................... Brown University, B.A. and
Director University of Chicago Law
School, J.D.
Brownson, Rehmus & Foxworth,
Inc., Chicago, (Financial
Counseling): Executive Vice
President & Director.
Oak Brook Bank*: Director.
Stuart I. Greenbaum, 63....................... New York University, B.S. and
Director The Johns Hopkins University,
Ph.D., Economics
John M. Olin School of
Business, Washington
University: Dean.
Stifel Financial Corp.:
Director.
Reinsurance Group of America:
Director.
Oak Brook Bank*: Director.
John W. Ballantine, 54........................ Washington & Lee University,
Director B.A. and University of
Michigan, M.B.A.
Private Investor: 1998-present.
First Chicago NBD
Corporation/The First National
Bank of Chicago, Chicago, 1970-
1998, Executive Vice President
and Chief Risk Management
Officer 1996-1998.
Oak Brook Bank*: Director.
Other Executive Officers:
Rosemarie Bouman, 43 ......................... Indiana University, B.S.,
Vice President and Chief Financial Officer C.P.A.
Oak Brook Bank*: Vice President
and Chief Financial Officer.
George C. Clam, 50............................ Ripon College, B.A. and
Vice President and Chief Banking Officer Northwestern University, M.B.A.
Oak Brook Bank*: President.
William E. Navolio, 50........................ University of Notre Dame, B.A.
Vice President, General Counsel and Secretary and Georgetown University, J.D.
Oak Brook Bank*: Vice
President, Chief Legal Officer,
Secretary and Compliance
Officer.
</TABLE>
--------
* Subsidiary of the Company
* * Affiliate of the Company
6
<PAGE>
CERTAIN TRANSACTIONS
During 1999, directors and executive officers of the Company and their
associates were customers of and had transactions with the Company's
subsidiary bank. All such transactions were in the ordinary course of
business.
The subsidiary bank has made loans to certain of the directors and executive
officers of the Company. These loans were made in the ordinary course of
business and on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and do not involve more than the normal risk of collectibility
or present other unfavorable features.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Mr. Heytow, the Company's Chief Executive Officer, is a member of the
Company's Compensation Committee. Mr. Heytow participated in the deliberations
with regard to the compensation of the other named executive officers, but did
not participate in the Committee's deliberations with respect to his own
compensation.
The following report of the Compensation Committee and Stock Option Advisory
Committee and the Performance Graph included elsewhere in this Proxy Statement
do not constitute soliciting material and should not be deemed filed or
incorporated by reference into any other company filings under the Securities
Act of 1933 or the Securities Exchange Act of 1934 except to the extent the
Company specifically incorporates this Report or the Performance Graph by
reference therein.
REPORT OF COMPENSATION COMMITTEE AND STOCK OPTION
ADVISORY COMMITTEE ON EXECUTIVE COMPENSATION
AND OTHER COMPENSATION MATTERS
The Compensation Committee reviews and approves (a) compensation and
benefits for employees of the Company and its subsidiary earning $75,000 or
more, and (b) the company wide percentage compensation increase for all
employees. The Compensation Committee also sets compensation and benefits for
the three senior executive officers.
The Stock Option Advisory Committee's primary function is to administer the
Company's 1987 Amended and Restated Stock Option Plan, the Company's Amended
and Restated Performance Bonus Plan and other compensation matters requiring a
committee consisting solely of independent directors.
The Compensation Committee and Stock Option Advisory Committee have
furnished the following report on compensation:
SALARIES:
In determining salaries, the Compensation Committee reviews information
provided by Management and considers a wide variety of factors. With respect
to overall compensation and benefits, these include cost of living changes,
competitive pay scales and Company performance. With respect to individual
salaries, the factors include the level and complexity of the position,
education and special training necessary or helpful to the position,
promotions and growth in responsibility, relative pay within the Company,
competitive pay (as determined by independent compensation surveys targeting
national and local peer groups of financial institutions), cost of living
changes, and individual, departmental and Company performance.
With regard to the Company's Chief Executive Officer, Mr. Heytow's salary
and benefits were determined by the Compensation Committee based upon the
aforementioned considerations. In addition, his compensation
7
<PAGE>
was also in keeping with the Company's policy of compensating senior executive
officers based on the safety and soundness of the Company and subsidiary bank
and medium- and long- term growth and profitability. The Compensation
Committee approved salary and benefits for Mr. Heytow for 1999 as set forth in
the Compensation Table.
With regard to the Company's President, Mr. Rieser's salary and benefits
were also set by the Compensation Committee based upon the aforementioned
considerations. His compensation was also based upon the Compensation
Committee's determination of the importance of Mr. Rieser's involvement in the
day-to-day management and leadership of the Company, as evidenced by the
Company's overall safety and soundness and its medium- and long- term growth
and profitability. The Compensation Committee approved salary and benefits for
Mr. Rieser for 1999 as set forth in the Compensation Table.
BONUSES:
Currently the Company and its subsidiary utilize seven types of
bonus/incentive programs:
<TABLE>
<CAPTION>
Group Primary Basis of Bonus
----- ----------------------
<C> <S>
Senior Executive Group Formula as determined by Stock Option
Advisory Committee under the Performance
Bonus Plan.
Executive Group 50% of Senior Executive Group Formula
Department Heads and Managers Performance Scorecard. Percentage of
annual base salary as set by Compensation
Committee
Marketing Officers Incentive program
Mortgage Originators and Processors Formula based on volume
Discretionary All officers, including the groups set
forth in this chart, may receive
discretionary bonuses based on extra
effort and/or results
</TABLE>
Senior Executive Group:
The Company's Amended and Restated Performance Bonus Plan (the "Plan")
provides additional incentive to the Company's three senior executive officers
(Messrs. Heytow, Rieser and Paris) through an objective, performance-based
bonus payable only in the event that the Company's annual performance meets
certain levels, as measured by several criteria. The maximum bonus under the
Plan is two times annual salary. The Stock Option Advisory Committee limited
the maximum discretionary bonus award to one times the senior executive
officer's annual salary, providing a maximum overall bonus opportunity of
three times annual salary.
The Plan is administered by the Stock Option Advisory Committee consisting
of four independent directors. Pursuant to the Plan, the Stock Option Advisory
Committee established a number of objective performance goals (the "Targets")
for the calendar year 1999. The Targets are formulated using a minimum,
maximum and range of numeric standards for each of the performance measures,
and each performance measure is then assigned a relative percentage weighting
by the Stock Option Advisory Committee. The performance measures for the
Targets must be one, all or a combination of the following: return on assets
(ROA), return on equity (ROE), net income, market price of the Company's
Common Stock relative to the book value of such shares, the market price of
the Company's Common Stock, and the level of nonperforming assets. The numeric
standards for the Targets may be based on peer group results, the Company's
historical levels or such other standards as the Stock Option Advisory
Committee deems appropriate in light of the Company's objectives. Based on
1999 performance, the Stock Option Advisory Committee certified bonuses of
$352,285 for Mr. Heytow, $472,323 for Mr. Rieser and $130,476 for Mr. Paris.
8
<PAGE>
For the three senior executive officers, subjective, discretionary bonuses
may also be awarded. Such bonuses generally relate most closely to maintenance
of safety and soundness and to consistent medium- and longer-term Company
growth and profitability, areas of achievement that may not be reflected
within the objective criteria of the Performance Bonus Plan. In awarding
senior executive officers' subjective discretionary bonuses, the Stock Option
Advisory Committee's policy of emphasizing both safety and soundness and
consistent medium- and longer-term growth and profitability is predicated on
its recognition that commercial banking is a highly regulated industry in
which Management's ability to maintain safety and soundness is a necessary
condition to growth in assets and earnings. Thus, to evaluate the senior
executive officers' performance for this purpose, the Stock Option Advisory
Committee reviews the Company's overall safety and soundness, compliance with
laws and regulations, its current year's performance in relation to historical
performance, departmental performance and individual performance. Although the
Company maintained safety and soundness and experienced growth during the
year, the Stock Option Advisory Committee determined that no discretionary
bonuses be awarded for 1999.
Executive Group:
The Executive Group consists of executive officers George C. Clam, William
E. Navolio and Rosemarie Bouman. These executive officers earned discretionary
bonuses based on a modified version of the senior executive officers' Plan.
The executive officers could receive a maximum bonus of one times the
executive officer's annual salary.
A subjective, discretionary bonus may also be awarded and this bonus relates
most closely to extra performance or results as compared to established goals,
departmental business plans and budgets, and short- and medium- term Company
growth and profitability.
Department Heads and Managers:
In 1999, Management recommended and the Compensation Committee approved the
use of a formulaic approach to determine the discretionary bonuses for the
eighteen individuals who serve as heads or managers of departments. The
formula used a "Scorecard" which allows bonuses to be tied more objectively to
performance. The formula gives a relative percentage weighting to the
categories of individual performance, departmental performance and bank
performance. Bonuses are limited to a maximum percentage of base annual salary
as recommended by Management and approved by the Compensation Committee.
Marketing Officers:
Marketing officers, primarily in the Commercial Banking and Investment
Management and Trust Departments, have the opportunity to earn incentive pay.
Incentive pay programs use a specific formula which is tied most closely to
demand deposit funds and certain types of other business brought to the bank
by commercial bankers and new trust fees brought to the Trust Department by
trust marketing officers.
Mortgage Originators and Processors:
Within the Residential Mortgage Lending Department, the mortgage originators
and processors handle the origination of and the tracking, processing and
closing of mortgages, respectively. The originators receive compensation and
the processors receive bonuses that are based on formulas tied to volume.
Discretionary Bonuses:
All officers and staff, including the senior executive officers and
executive officers, may receive discretionary bonuses for any given year.
Generally these discretionary bonuses are tied to extra effort and/or results
and are largely based upon individual performance.
9
<PAGE>
STOCK OPTIONS:
The Stock Option Advisory Committee also reviewed and approved stock options
for certain officers. Messrs. Heytow and Rieser were each granted 20,000 stock
options in January 1999 and 3,600 stock options in January 2000. Certain
members of the Executive Group, Department Heads, Department Managers,
Marketing Officers and other officers of the subsidiary were also approved for
stock options in January 1999 and January 2000.
Section 162(m) of the Internal Revenue Code limits to $1 million the
Company's allowable Federal income tax deduction for compensation paid for a
calendar year to each of its Chief Executive Officer and four other most
highly compensated executive officers. The allowable deduction for certain
"performance-based" and other compensation is not, however, subject to the $1
million limitation. Based upon regulations, compensation attributable to the
Company's Stock Option Plan and Performance Bonus Plan should be exempt from
the deduction limitation as "performance-based." The Compensation Committee
has not made any changes in its policies relating to the other cash
compensation paid to the executive officers in response to the $1 million
deduction limitations because salary and discretionary bonuses which have been
or can be expected to be paid to the Company's executive officers do not
approach such level. Notwithstanding the above, the Compensation Committee or
Stock Option Advisory Committee may determine after consideration of
applicable circumstances that it would be in the best interests of the Company
to pay compensation in an amount or manner that does not satisfy such rules
governing deductibility.
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE STOCK OPTION ADVISORY COMMITTEE
<S> <C>
Eugene P. Heytow, Chairman Miriam Lutwak Fitzgerald, Chairman
Miriam Lutwak Fitzgerald Geoffrey R. Stone
Stuart I. Greenbaum Stuart I. Greenbaum
Michael L. Stein Michael L. Stein
</TABLE>
10
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the indicated compensation with respect to
each of the last three fiscal years for the Company's Chief Executive Officer
and its four other most highly compensated executive officers:
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------ All Other
Name and Principal Salary Bonus Other Annual Option Compensation
Position Year ($) (1) (2) ($) (2) Compensation (3) Awards (#) ($) (4)
------------------ ---- ----------- ------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Eugene P. Heytow 1999 291,332 352,285 -- 20,000 95,415
CEO.................... 1998 279,667 160,176 -- 8,000 120,494
1997 271,500 504,000 -- -- 84,486
Richard M. Rieser, Jr. 1999 383,260 472,323 -- 20,000 105,493
President.............. 1998 367,800 264,390 -- 8,000 136,530
1997 355,600 672,000 -- -- 85,312
Frank M. Paris 1999 122,473 130,476 -- 6,000 42,675
Vice Chairman.......... 1998 118,367 60,374 -- 4,000 55,144
1997 115,632 190,800 -- -- 38,967
George C. Clam 1999 153,828 98,322(/5/) 4,500 17,270
Vice President-Chief 1998 148,166 70,000(/5/) -- 2,000 17,201
Banking Officer........ 1997 137,660 66,000(/5/) -- -- 11,543
William E. Navolio 1999 139,500 91,541(/5/) -- 4,500 15,980
General Counsel, 1998 134,137 57,000(/5/) -- 2,000 15,545
Secretary.............. 1997 128,340 53,750(/5/) -- -- 11,403
</TABLE>
SUMMARY COMPENSATION TABLE FOOTNOTES
(/1/) This column includes annual base salary, directors' fees and committee
fees of the Company and its subsidiary.
(/2/) These columns include amounts elected to be deferred under the Company's
qualified and nonqualified deferred compensation plan.
(/3/) Each named executive officer received perquisites and personal benefits
in annual amounts below the applicable reporting threshold of the lesser
of $50,000 or 10% of the base salary and bonus reported for such year.
(/4/) This column includes: (i) the Company's contributions under its 401(k)
Savings Plan, Stock Bonus Plan and related nonqualified deferred
compensation plan; (ii) taxable income for life insurance benefits paid
by the Company with respect to insurance policies covering the life of
each named executive officer; and (iii) amounts paid to the named
executive officer with respect to certain life insurance agreements, as
set forth in the table below:
<TABLE>
<CAPTION>
(i) (ii) (iii)
------- ------- -------
<S> <C> <C> <C>
Mr. Heytow........................................... $34,832 $15,743 $44,840
Mr. Rieser........................................... $50,032 $10,621 $44,840
Mr. Paris............................................ $11,757 $ 2,598 $28,320
Mr. Clam............................................. $16,109 $ 1,161 --
Mr. Navolio.......................................... $14,529 $ 1,451 --
</TABLE>
(/5/) Includes award of annual discretionary bonus to the named executive
officer; however, at the election of the Company, payment of two-thirds
of the bonus is deferred and is payable in equal increments in the
following two years. The deferred amounts are subject to forfeiture upon
the executive officer leaving the Company prior to payment.
11
<PAGE>
TRANSITIONAL EMPLOYMENT AND OTHER AGREEMENTS WITH EXECUTIVE OFFICERS
The Company has entered into Transitional Employment Agreements with certain
of its executive officers. In the event of a change in control of the Company,
the Agreements provide for an employment term of three years from the date of
the change in control with compensation and benefits at the same level as in
effect immediately preceding the change in control. If the executive officer's
employment is involuntarily terminated by the Company or its successor (other
than for cause) during the three-year employment term or within six months
prior to and in connection with the change in control, or in the event of the
executive officer's resignation under circumstances which constitute a
constructive discharge, the executive officer is entitled to continue to
receive salary, directors' fees and bonus payments, and to continue or receive
the value of other benefits, for a period of 36 months from the date of such
termination of employment. For Messrs. Heytow, Rieser and Paris (the "Senior
Executive Officers"), the amount of such continuing salary, directors' fees
and bonus payments will be based upon the level in effect at the time of the
change in control, or if greater, termination of employment; but in either
event no less than the average of such amounts received during the five-year
period prior to the change in control. Salary and bonus continuation payments
for the other executive officers will be based on the average of the annual
salary and bonus payments received during the five year period prior to the
year in which the change in control occurs. The Agreements also provide for
payment of any accrued but unpaid bonuses, continuing access to the Company's
group and executive medical plans after expiration of the 36-month
compensation continuation period and continuing indemnification rights. In the
event of an executive officer's death during the 36-month continuation period,
the Agreements provide for a lump sum payment equal to the present value of
the remaining salary and directors fees, and continuation of bonus payments
and certain other benefits to the executive officer's designated beneficiary.
"Cause" is generally defined in the Agreements as a felony conviction
involving an act or acts of dishonesty or breach of trust or the continued and
willful failure of the executive officer to substantially perform the
officer's duties under the Agreement. "Constructive discharge" is defined
generally to include a breach of the Company's obligations under the
Agreement, a material diminution of the executive officer's duties and
responsibilities, a change of the executive officer's primary employment
location by more than 35 miles from the primary location in effect at the time
of the change in control or a significant change in the executive officer's
regularly-scheduled work hours from those in effect at the time of the change
in control. In the case of Senior Executive Officers' voluntary resignations
at any time during the first year of the employment terms, or in the case of
the other executive officers', voluntary resignation at any time during the
first year of the employment term but after the termination or the
announcement of the termination of Mr. Rieser's employment will also
constitute resignation under circumstances which constitute a constructive
discharge. Salary and bonus continuation payments to those executive officers
who are not Senior Executive Officers are subject to reduction to the extent
necessary so that no portion of those amounts will be subject to the excise
tax imposed under the Internal Revenue Code on payments which may be deemed to
be "excess parachute payments". The compensation and benefits payable to the
Senior Executive Officers under the Transitional Employment Agreements will be
increased to the extent necessary to gross-up such compensation and benefits,
or the compensation and benefits payable under any other plan or program of
the Company, to the extent the Senior Executive Officer would be subject to
the excise tax upon the receipt thereof.
The Company has also entered into Supplemental Pension Agreements with
Messrs. Heytow and Rieser. Under these Agreements, the Company is obligated to
provide at a prescribed retirement date, a supplemental pension in the form of
a life and 15-year certain annuity based upon a percentage of the executive
officer's final base salary. Mr. Heytow's retirement date is January 1, 2007
and the percentage of final base salary to be used in determining his benefit
is 25%; Mr. Rieser's retirement date is January 1, 2015 and the percentage of
final base salary is 50%. In the event of termination of employment prior to
the applicable retirement date, the supplemental pension payable at the
retirement date will be prorated based on years of service from October 1994
to the date of his termination of employment. No proration of the amount of
the supplemental pension payable is required, however, if the termination of
the executive officer's employment was involuntary (other than for cause) or
voluntary following an event that would constitute a constructive discharge as
defined in the
12
<PAGE>
Transitional Employment Agreements (without regard to whether or not a change
in control has occurred). An actuarially reduced supplemental pension may be
paid prior to the applicable retirement date to the executive officer in the
event of termination of employment prior to such date.
The Company has entered into Agreements Regarding Post-Employment
Restrictive Covenants with Messrs. Heytow, Rieser and Paris, under which the
executive officers agree that following termination of employment for any
reason other than death, the executive officer will not, for a period of
twenty-four months, directly or indirectly solicit any customer of the Company
or its affiliates not to do business with the Company or such affiliates or to
solicit or encourage any employee of the Company or its affiliates to
terminate his or her employment. In addition, the Agreements impose
confidentiality obligations on the executive officer. As consideration for the
restrictive covenants, the Company is obligated to pay 12 annual payments of
$80,000 each to Messrs. Heytow and Rieser and of $25,000 to Mr. Paris.
OPTION GRANTS TABLE
The following table sets forth certain information concerning grants of
stock options during the year ended December 31, 1999 to each of the executive
officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------
Number of
Securities Percent of Total
Underlying Options Granted
Options to Directors and Exercise
Granted Employees in Price Expiration Grant Date
Name (#) (1) Fiscal Year (2) ($/Sh) (3) Date Value ($) (4)
---- ---------- ---------------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Eugene P. Heytow........ 20,000 16.06 18.25 1/26/09 99,600
Richard M. Rieser, Jr... 20,000 16.06 18.25 1/26/09 99,600
Frank M. Paris.......... 6,000 4.82 18.25 1/26/09 29,880
George C. Clam.......... 4,500 3.61 18.25 1/26/09 22,410
William E. Navolio...... 4,500 3.61 18.25 1/26/09 22,410
</TABLE>
--------
(/1/) Represents stock options issued under the Company's Amended and Restated
1987 Stock Option Plan. The options were granted for a term of 10 years
subject to earlier termination because of death or permanent disability.
The options become 33.3% vested on the first anniversary date of grant
and vest an additional 33.3% on each subsequent anniversary; however, in
the event of a change in control, the options immediately become 100%
vested.
(/2/) The percentages shown in the table are based on total options granted to
directors and employees in 1999 of 124,500 shares of the Company's
Common Stock.
(/3/) The exercise price of each stock option was the closing market price of
Common Stock on the day preceding the date of grant.
(/4/) The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-
average assumptions for 1999 risk-free interest rate of 6.57%; dividend
yield of 2.8%; volatility factor of the expected market price of the
Company's Common Stock of 27.8%, and a weighted-average expected life of
the option of 5 years. The Black-Scholes option valuation model was
developed for use in estimating the fair value of traded options which
have no vesting restrictions and are fully transferable.
13
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND
YEAR-END OPTION VALUES
The following table sets forth the indicated year-end 1999 value and number
of unexercised options for each of the executive officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
12-31-99 12-31-99 (1)
------------- --------------
Shares Acquired Value Exercisable/ Exercisable/
on Exercise Realized Unexercisable Unexercisable
Name (#) ($) (#) ($)
---- --------------- -------- ------------- --------------
<S> <C> <C> <C> <C>
Eugene P. Heytow......... -- -- 65,150/37,600 657,415/88,360
Richard M. Rieser, Jr.... 25,000 316,063 40,150/37,600 331,977/88,360
Frank M. Paris........... -- -- 37,450/14,800 409,760/43,180
George C. Clam........... 7,000(/2/) 97,160 17,850/8,900 185,678/22,417
William E. Navolio....... -- -- 24,850/8,900 296,838/22,417
</TABLE>
--------
(/1/) Based on Company's Common Stock price on December 31, 1999 of $18.50 per
share.
(/2/) On January 10, 2000, Mr. Clam exercised options on 4,250 shares at a
price of $2.62 with realized value of $61,115. These shares are included
as owned by Mr. Clam in the Security Ownership of Management table which
is dated March 17, 2000. If Mr. Clam's exercise was reflected in this
table, his Unexercised Options would have been 13,600 rather than
17,850, and his Unexercised In-the-Money Options value would have been
$118,188 rather than $185,678.
14
<PAGE>
FIVE YEAR PERFORMANCE COMPARISON
The graph below provides an indicator of total return performance for the
Company's stock for the past five years as compared with the Center for
Research in Security Prices (CRSP) Index for the NASDAQ Stock MarketSM (U.S.
Companies) and a Peer Group, the CRSP Index for NASDAQ Bank Stocks.
[LINE CHART]
12/30/94 12/29/95 12/31/96 12/31/97 12/31/98 12/31/99
-------------------------------------------------------------------------------
$0
$100
$200
$300
$400
$500
$600
15
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 and regulations
thereunder require directors and certain officers of the Company and persons
who beneficially own more than 10% of the Company's stock to file initial
reports of ownership and reports of changes in ownership of the Company's
stock with the Securities and Exchange Commission and to furnish the Company
with copies of such reports. Based solely upon the review of copies of such
reports furnished to the Company and representations of reporting persons, all
reports were timely filed.
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP as independent auditors for the
Company for the year ending December 31, 2000. The Board recommends
ratification of this action. Representatives of KPMG LLP are expected to be
present at the Meeting and will be given the opportunity to make a statement
if they desire to do so. It is also expected that they will be available to
respond to appropriate questions from shareholders at the Meeting.
The Board of Directors recommends ratification of the selection of KPMG LLP
as independent auditors.
SHAREHOLDER PROPOSALS
For Inclusion in Proxy Statement
To be considered for inclusion in the Company's proxy and form of proxy
relating to the 2001 Annual Meeting of Shareholders, a stockholder proposal
must be received prior to December 4, 2000, by the Secretary of the Company at
the address set forth on the first page of this Proxy Statement. Any such
proposal will be subject to 17 C.F.R. Section 240.14a-8 of the Rules and
Regulations under the Securities Exchange Act of 1934.
Notice of Business to Be Conducted at an Annual Meeting
Pursuant to the By-laws, only business brought by or at the direction of the
Board of Directors may be conducted at an annual meeting. The By-laws of the
Company provide for an advance notice procedure for a shareholder to properly
bring business before an annual meeting. For the 2001 Annual Meeting, the
shareholder must give written advance notice to the Secretary of the Company
not later than January 2, 2001; provided, however, that in the event that the
date of the 2001 Annual Meeting is held before April 2, 2001 or after July 2,
2001, notice by the shareholder will be timely if it is received not later
than the close of business on the later of (a) 120 days prior to the date of
the Meeting or (b) the tenth (10th) day following the date on which notice of
the Annual Meeting date was publicly announced. The advance notice by a
shareholder must include the shareholder's name and address, as they appear on
the Company's record of shareholders, a brief description of the proposed
business, the reason for conducting such business at the Annual Meeting, the
class, the number of shares of the Company's capital stock that are
beneficially owned by such shareholder, any material interest of such
shareholder in the proposed business and whether the shareholder intends to
solicit proxies or participate in the solicitation of proxies in support of
such proposal. In the case of nominations to the Board of Directors, certain
information regarding the nominee must be provided. Nothing in this paragraph
shall be deemed to require the Company to include in its proxy statement or
the proxy relating to any annual meeting any shareholder proposal which does
not meet all of the requirements for inclusion established by the United
States Securities and Exchange Commission in effect at the time such proposal
is received.
16
<PAGE>
Other Matters Which May Properly Come Before the Meeting
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as stated in the Notice of
Annual Meeting of Shareholders. If, however, other matters are properly
brought before the Annual Meeting, it is the intention of the persons named in
the accompanying proxy to vote the shares represented thereby on such matters
in accordance with their best judgment.
By Order of the Board of Directors
William E. Navolio
Secretary
Oak Brook, Illinois
March 31, 2000
17
<PAGE>
PROXY
FIRST OAK BROOK BANCSHARES, INC.
1400 SIXTEENTH STREET, OAK BROOK, ILLINOIS 60523
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Eugene P. Heytow, Frank M. Paris and Richard
M. Rieser, Jr., or any one or more 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 the shares of Common Stock of First Oak Brook Bancshares,
Inc. held of record by the undersigned on March 17, 2000 at the Annual Meeting
of Shareholders to be held on May 2, 2000 or any adjournment thereof. A
majority (or if only one, then that one) of the above Proxies or their
substitutes who shall be present at the Meeting shall have all of the powers
conferred hereby.
<TABLE>
<S> <C> <C> <C>
1. Election of Directors. [_] FOR nominees listed below (except [_] WITHHOLD AUTHORITY to
as marked to the contrary below) vote for the nominees listed below
Robert M. Wrobel Frank M. Paris John W. Ballantine
(Instruction: to withhold authority to vote for an individual nominee, write that nominee's name
on the line below)
-------------------------------------------------------------
2. Ratification of the selection of KPMG LLP as independent auditors for the Company.
[_] FOR [_] AGAINST [_] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other business as may properly
come before the Meeting.
</TABLE>
(Continued and to be signed on reverse side)
<PAGE>
(Continued from other side)
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted FOR the election of the nominees named in part 1 and FOR the
ratification of KPMG LLP as independent auditors for the Company in part 2.
Dated:_______________________________, 2000
___________________________________________
___________________________________________
(Signature if held jointly)
Please sign exactly as name appears on
this Proxy. When shares are held by joint
tenants, 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.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED, PREPAID ENVELOPE.
