SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
First Financial Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: *1
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
*1 Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] 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:
-----------------------------------------------------------------------
<PAGE>
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
[First Financial Corporation Logo]
First Financial Center
1305 Main Street
Stevens Point, WI 54481
(715) 341-0400
March 10, 1997
Dear Stockholder:
The 1997 annual meeting of stockholders of First Financial Corporation
will be held on April 22, 1997, at 10:00 a.m. at the Holiday Inn Convention
Center, 1501 North Point Drive, Stevens Point, Wisconsin 54481.
At this meeting you will be asked to vote, in person or by proxy, on
the election of three directors for three-year terms and on a proposal to reduce
the minimum size of the board of directors from 12 members to 7 members. A proxy
statement describing these proposals and providing other information about First
Financial Corporation is enclosed.
It is important that your shares be represented at the 1997 annual
meeting, whether or not you are personally able to attend. You are urged to
complete, sign and mail the enclosed proxy card as soon as possible.
Sincerely,
Robert S. Gaiswinkler
Chairman of the Board
<PAGE>
FIRST FINANCIAL CORPORATION
1305 Main Street
Stevens Point, Wisconsin 54481
(715) 341-0400
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 22, 1997
NOTICE IS HEREBY GIVEN that the 1997 annual meeting of stockholders
(the "Annual Meeting") of First Financial Corporation ("FFC") will be held on
Tuesday, April 22, 1997, at 10:00 a.m., at the Holiday Inn Convention Center,
1501 North Point Drive, Stevens Point, Wisconsin 54481, for the following
purposes:
(1) To elect three directors for three-year terms;
(2) To amend FFC's Articles of Incorporation to reduce the minimum size of
FFC's Board of Directors from 12 directors to 7 directors; and
(3) To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Pursuant to FFC's bylaws, the Board of Directors has fixed the close of
business on February 19, 1997 as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting. Only
holders of record of FFC common stock at the close of business on that date will
be entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
In the event that there are not sufficient votes to approve any one or
more of the foregoing proposals at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit further solicitation of proxies by
FFC.
By order of the Board of Directors of
FIRST FINANCIAL CORPORATION
Robert S. Gaiswinkler
Chairman of the Board
Stevens Point, Wisconsin
March 10, 1997
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
FIRST FINANCIAL CORPORATION
1305 Main Street
Stevens Point, Wisconsin 54481
----------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 1997
----------------------
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This proxy statement is furnished to stockholders of First Financial
Corporation ("FFC") in connection with the solicitation by the Board of
Directors of FFC of proxies to be used at the annual meeting of stockholders
(the "Annual Meeting") to be held on Tuesday, April 22, 1997, at 10:00 a.m., at
the Holiday Inn Convention Center, 1501 North Point Drive, Stevens Point,
Wisconsin, and at any adjournments thereof.
If the enclosed form of proxy is properly executed and returned to FFC
in time to be voted at the Annual Meeting, the shares represented thereby will
be voted in accordance with the instructions marked thereon. Executed but
unmarked proxies will be voted: (i) FOR the election of each of the three
nominees of the Board of Directors to serve as directors until the 2000 annual
meeting; and (ii) FOR the proposal to reduce the minimum size of FFC's Board of
Directors from 12 directors to 7 directors. If any other matters are properly
brought before the Annual Meeting, proxies will be voted in the discretion of
the proxy holders. FFC is not aware of any such matters that are proposed to be
presented at its Annual Meeting.
The presence of a stockholder at the Annual Meeting will not
automatically revoke the stockholder's proxy. However, stockholders may revoke a
proxy at any time prior to its exercise by filing with the secretary of FFC a
written notice of revocation, by delivering to FFC a duly executed proxy bearing
a later date, or by attending the Annual Meeting and voting in person.
The cost of soliciting proxies in the form enclosed herewith will be
borne by FFC. In addition to the solicitation of proxies by mail, directors,
officers and regular employees of FFC, without extra remuneration, may solicit
proxies personally, by telephone, telegram, or otherwise. FFC will also utilize
the services of D. F. King & Co., Inc. to provide proxy solicitation, broker
search and proxy distribution services at an approximate cost of $5,000 plus
reimbursement of out-of-pocket expenses. FFC will request persons, firms and
corporations holding shares in their names or in the names of their nominees,
which are beneficially owned by others, to send proxy material to and obtain
proxies from the beneficial owners and will reimburse the holders for their
reasonable expenses in doing so. This proxy statement is being mailed to
stockholders on or about March 10, 1997.
<PAGE>
The securities which can be voted at the Annual Meeting consist of
shares of common stock of FFC. Each share entitles its owner to one vote on each
matter presented to the stockholders. The articles of incorporation and bylaws
of FFC do not authorize cumulative voting. The close of business on February 19,
1997 has been fixed by the Board of Directors as the record date for the
determination of stockholders entitled to vote at the Annual Meeting. There were
approximately 4,255 record holders of FFC's common stock on February 19, 1997
and the number of shares outstanding as of that date was 36,785,101 shares. (All
share amounts used herein reflect the December 30, 1996 5-for-4 stock split.)
The presence, in person or by proxy, of at least a majority of the total number
of outstanding shares of common stock is necessary to constitute a quorum at the
Annual Meeting. Stockholders' votes will be tabulated by the persons appointed
by the Board of Directors to act as inspectors of election for the Annual
Meeting. Abstentions and broker nonvotes are included in the determination of
shares present for purposes of whether a quorum exists. Neither abstentions nor
broker nonvotes are counted in determining whether a matter has been approved.
Abstentions and broker nonvotes have the same effect as a negative vote with
respect to Item 2 on the proxy (Proposal to Amend FFC's Articles of
Incorporation to Reduce Minimum Size of Board of Directors; see pp 17-18 below),
because the affirmative vote of two-thirds of all outstanding FFC shares is
required for passage.
A copy of the Annual Report to Stockholders for the fiscal year ended
December 31, 1996 accompanies this proxy statement. FFC is required to file an
Annual Report on Form 10-K for its fiscal year ended December 31, 1996 with the
Securities and Exchange Commission ("SEC"). Stockholders may obtain, free of
charge, a copy of the Annual Report on Form 10-K by writing to First Financial
Corporation, 1305 Main Street, Stevens Point, Wisconsin 54481, Attention:
Investor Relations.
2
<PAGE>
STOCK OWNED BY MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of February 19, 1997 with
respect to (i) persons known to FFC to be the beneficial owners of more than
five percent of FFC's outstanding common stock, (ii) the amount of FFC's common
stock beneficially owned by each director of FFC and each of the five most
highly compensated executive officers (the "named executive officers") of FFC or
First Financial Bank (the "Bank") (FFC and the Bank are collectively referred to
as "the Company") whose salary and bonus exceeded $100,000 during 1996 and (iii)
the amount of FFC's common stock owned by the directors and all executive
officers of the Company as a group. Share amounts reflect the December 30, 1996
5-for-4 stock split. Except as indicated otherwise, all director and executive
officer positions listed are for both FFC and the Bank.
<TABLE>
<CAPTION>
Amount and Percentage of
Nature of Common Stock
Name of Beneficial Owner Beneficial Ownership(a) Outstanding
- ------------------------ ----------------------- -------------
(i)
<S> <C> <C>
FFC 401(k) Profit Sharing Plan and Trust (b)
Marshall & Ilsley Corporation, trustee 2,830,727 7.69
770 North Water Street
Milwaukee, WI 53202
The Capital Group Companies, Inc. (c) 1,884,620 5.12
333 South Hope Street
Los Angeles, CA 90071
(ii)
Robert S. Gaiswinkler 145,868 *
Chairman of the Board
John C. Seramur 907,038 2.47
President, Chief Executive Officer
and Director
Gordon M. Haferbecker 60,077 *
Director
James O. Heinecke 65,426 *
Director
Robert T. Kehr 60,600 *
Director
Robert P. Konopacky 83,750 *
Director
Dr. George R. Leach 67,695 *
Director
Ignatius H. Robers 43,000 *
Director
John H. Sproule 81,500 *
Director
Ralph R. Staven 218,695 *
Director
Norman L. Wanta 83,700 *
Director
Arlyn G. West 37,000 *
Director
Donald E. Peters 160,327 *
Executive Vice President
of the Bank
3
<PAGE>
<CAPTION>
Amount and Percentage of
Nature of Common Stock
Name of Beneficial Owner Beneficial Ownership(a) Outstanding
- ------------------------ ----------------------- --------------
Thomas H. Neuschaefer 73,241 *
Vice President and Treasurer
of FFC and Executive Vice
President of the Bank
Robert M. Salinger 89,857 *
Secretary and General Counsel
of FFC and Executive Vice
President of the Bank
Harry K. Hammerling 69,838 *
Executive Vice President
of the Bank
(iii)
All directors and executive officers 2,326,773 6.33
as a group (17 persons)
____________ *Less than one percent
</TABLE>
(a) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, a person is deemed to be the beneficial owner of a security for
purposes of such Rule if he or she has or shares voting power or investment
power with respect to such security or has the right to acquire such
ownership within 60 days of February 19, 1997. The table includes shares
owned jointly or directly by spouses, controlled revocable trusts,
individual retirement accounts, other immediate family members or others,
and as to which the persons named in the table possess shared voting and/or
investment power as follows: Mr. Haferbecker - 9,525 shares; Mr. Heinecke -
31,250 shares; Dr. Leach - 53,945 shares; Mr. Kehr - 23,100 shares; Mr.
Robers - 29,250 shares; Mr. Staven - 217,445 shares; Mr. Wanta - 2,200
shares; Mr. Peters - 20,375 shares; Mr. Neuschaefer - 27,130 shares; and
Mr. Hammerling - 275 shares. The table also includes 579,187 shares held in
FFC's 401(k) Profit Sharing Plan and Trust (based on the latest available
information) for the following: Mr. Seramur - 429,926 shares; Mr. Peters -
42,085 shares; Mr. Neuschaefer - 12,017 shares; Mr. Salinger - 38,860
shares; Mr. Hammerling - 30,638 shares; and one other executive officer -
25,661 shares. Except as otherwise indicated, all other shares included in
this table are held by persons who have sole voting and investment power.
The table includes 442,829 shares subject to outstanding stock options
which are exercisable by current directors and executive officers within 60
days from February 19, 1997.
(b) The FFC shares held by the First Financial Corporation 401(k) Profit
Sharing Plan and Trust are beneficially owned by FFC employees. According
to an amended Schedule 13G dated February 14, 1997, Marshall & Ilsley
Corporation is the parent holding company for Marshall & Ilsley Trust
Company, trustee for the FFC 401(k) Profit Sharing Plan and Trust, with
sole power to vote or direct the vote over 2,801,602 shares of FFC common
stock, shared power to vote or direct the vote over 29,125 shares of FFC
common stock, sole power to dispose or direct the disposition of 79,305
shares of FFC common stock and shared power to dispose or direct the
disposition of 2,750,922 shares of FFC common stock.
(c) An amended Schedule 13G dated February 12, 1997 was filed by The Capital
Group Companies, Inc. The Capital Group Companies, Inc. is the parent
holding company of a group of investment management companies that hold
investment power and, in some cases, voting power over shares of FFC common
stock. According to the amended Schedule 13G, The Capital Group Companies,
Inc. has sole voting power over 467,750 shares of FFC common stock and sole
dispositive power over 1,884,620 shares of FFC common stock.
4
<PAGE>
ELECTION OF DIRECTORS
(Item 1 on Proxy)
FFC's directors serve three-year terms which are staggered to provide
for the election of approximately one-third of the Board of Directors each year.
There are no arrangements or understandings between FFC and any person pursuant
to which that person has been selected as a director or nominee. Unless
otherwise instructed on the proxy, it is the intention of the persons named in
the proxy to vote the shares represented by each properly executed proxy for the
election of directors of the three nominees listed below. The Board of Directors
believes that all such nominees will stand for election and will serve if
elected. However, if any person nominated by the Board of Directors fails to
stand for election or is unable to accept election, proxies will be voted by the
proxy holders for the election of such other person or persons as the Board of
Directors may recommend. Assuming the presence of a quorum at the Annual
Meeting, directors will be elected by a plurality vote.
INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS
Set forth below is certain information with respect to the nominees of
the Board of Directors for election as directors of FFC at the Annual Meeting
and other directors whose terms do not expire until subsequent annual meetings.
All of the FFC directors are also members of the Board of Directors of the Bank.
Gordon M. Haferbecker, a current director, has indicated his intention to retire
from the Board of Directors of FFC and the Bank upon the expiration of his term
at the Annual Meeting on April 22, 1997. If the proposed amendment to FFC's
articles of incorporation being considered at the Annual Meeting is not adopted,
Mr. Haferbecker's resignation will result in a vacancy on the Board, which
vacancy the Board intends to fill in accordance with the bylaws. Under any
circumstances, the proxies solicited hereby cannot be voted for more than three
nominees. See "Proposed Amendment to Articles of Incorporation" at page 17 for
more information.
<TABLE>
<CAPTION>
Age at
Nominees for December 31, Director For Term
Three-Year Terms 1996 Since(a) to Expire
---------------- ------------ -------- ---------
<S> <C> <C> <C>
Robert S. Gaiswinkler (b)(d).................. 64 1977 2000
Dr. George R. Leach (b)(e).................... 72 1965 2000
John C. Seramur (b). . . ..................... 54 1967 2000
Continuing Directors
James O. Heinecke............................. 66 1965 1998
Robert T. Kehr (b)(c) . . ................... 69 1980 1999
Robert P. Konopacky (b)(e).................... 73 1978 1999
Ignatius H. Robers (d)(e). ................... 63 1966 1998
John H. Sproule (b)(c)(d)..................... 69 1977 1998
Ralph R. Staven (b)(d) . . ................... 75 1959 1999
Norman L. Wanta (b)(e)........................ 74 1965 1998
Arlyn G. West (e). . . . ..................... 82 1965 1999
- --------
(a) Date from which first elected to the Board of Directors of FFC or the Bank (including its predecessors).
(b) Member of executive committees of the Boards of Directors of FFC and the Bank.
(c) Member of stock plan committee of the Board of Directors of FFC.
(d) Member of compensation committee of the Board of Directors of the Bank.
(e) Member of audit committee of the Board of Directors of FFC.
</TABLE>
5
<PAGE>
ROBERT S. GAISWINKLER is chairman of the board of both FFC and the Bank. He
was vice chairman of the board of both FFC and the Bank during 1988. From 1977
through March 1988 he served as president and chief executive officer of
National Savings & Loan Association which merged into the Bank at such time. He
is past chairman of America's Community Bankers and former member of the
Advisory Committees of the Federal Home Loan Bank Board and Federal National
Mortgage Association. He is also a past chairman of the board of directors of
Channels 10/36 Friends, Inc., a citizens group supporting public broadcasting.
Mr. Gaiswinkler also served as a member of the State of Wisconsin Savings and
Loan Review Board.
DR. GEORGE R. LEACH is presently retired. Before retirement in 1993, he
practiced as an optometrist in Stevens Point, Wisconsin since 1949. He is a
Fellow Emeritus of the American Academy of Optometry and a past president of the
Wisconsin Optometric Association.
JOHN C. SERAMUR is president, chief executive officer and chief operating
officer of both FFC and the Bank. He served as president and chief executive
officer of one of the predecessor institutions to the Bank. He served as a
director of the Federal Home Loan Bank of Chicago, is a former member of the
Savings Association Insurance Fund Industry Advisory Committee, and is past
chairman of the Wisconsin League of Financial Institutions. Mr. Seramur also
serves as a director of Northland Cranberries, Inc.
JAMES O. HEINECKE previously served as a regional vice president of the
Bank. Mr. Heinecke was president of Home Savings and Loan of LaCrosse from 1969
through 1983, when Home Savings was merged into a predecessor institution of the
Bank. Mr. Heinecke has over 40 years of experience in the banking and thrift
industry.
ROBERT T. KEHR is president of Kehr Brothers in Watertown, Wisconsin. Kehr
Brothers is a mechanical contractor specializing in heating, air conditioning
and plumbing. Kehr Brothers has been in business since 1906. Mr. Kehr has been
president of Kehr Brothers since 1969.
ROBERT P. KONOPACKY is the retired president of Mid-State Photo, Inc., which
was merged into a subsidiary of Fuqua Industries. Mr. Konopacky was president of
Mid-State Distributors, a wholesale beverage distributor in Stevens Point,
Wisconsin, from 1974 through 1987.
IGNATIUS H. ROBERS is a professional engineer and registered land surveyor.
He is senior project manager at Graef Anhalt Schloemer and Associates Inc. in
Burlington, Wisconsin. He also owned and operated his own engineering and
surveying firm, Robers & Boyd, Inc., from 1963 through 1988, and served as
Wisconsin regional manager of Baxter & Woodman, Inc., a consulting civil
engineering and land surveying firm, from 1988 through 1992.
JOHN H. SPROULE has been retired from Envirex, Inc., a Rexnord Company,
since May 1, 1987 after more than 34 years of service to Rexnord. He was
president of Envirex, Inc., Waukesha, Wisconsin, a manufacturer of water and
waste water treatment equipment, from 1983 through October 1986. From 1978 until
September 1983, he was executive vice president and general manager of Envirex,
Inc.
RALPH R. STAVEN served as chairman of the board of FFC and the Bank from
1984 through 1988. He was also chairman of the board, president and chief
executive officer of predecessor savings institutions to the Bank and was chief
executive officer of FFC and the Bank from 1984 through 1986. Mr. Staven has
over 50 years of experience in the thrift industry. He has served as president
of the Wisconsin Savings League (1973), as director of the Federal Home Loan
Bank of Chicago (1973-1977), and as the representative from the Chicago District
on the Federal Home Loan Bank Board Advisory Committee (1976-1979).
6
<PAGE>
NORMAN L. WANTA is a retired attorney. From 1946 through 1982, he engaged in
the general practice of law in the City of Stevens Point and served as corporate
counsel to one of the predecessor savings institutions of the Bank for 17 years.
ARLYN G. WEST is presently retired. Mr. West performed fee appraisals for a
predecessor savings institution to the Bank until November 1979. He was formerly
in partnership with his brother as owners and operators of West's Dairy in
Stevens Point for 26 years.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION
OF THE BOARD'S NOMINEES FOR DIRECTORS
COMPENSATION OF DIRECTORS
Directors' Fees. The directors of FFC are paid $600 for each FFC Board of
Directors meeting attended, and as directors of the Bank they receive a monthly
retainer fee of $2,100 plus $800 for each Bank Board of Directors meeting
attended. Nonemployee directors of FFC and the Bank receive $500 ($900 for
nonemployee chairmen) for each FFC or Bank committee meeting attended.
Nonemployee directors who serve as members of the boards of the Bank's
subsidiaries receive $500 ($900 for nonemployee chairmen) for each subsidiary
board meeting attended.
Directors' Retirement Plan. The Board of Directors of FFC adopted a
directors' retirement plan ("Retirement Plan"), effective November 18, 1992,
which provides retirement benefits upon termination of service to directors who
are not employees pursuant to an employment agreement. The Retirement Plan
replaced and is substantially identical to an earlier director's retirement plan
of the Bank which had been in effect since 1988. A nonemployee director who has
attained the age of 70 and has completed 10 or more years of credited service on
the board is entitled to a maximum monthly retirement benefit equal to 1/12th of
the annual director's retainer fee in effect at the time of retirement.
Directors become vested in the Retirement Plan at a rate of 10% for each year of
credited service on the board, with full vesting occurring at 10 years.
Retirement benefits are decreased by 5% per year (to a maximum of 90%) for each
year a director's age at retirement is less than 70. An employee director begins
accumulating years of service for Retirement Plan vesting purposes upon ceasing
employment. Monthly benefits continue for 180 months or until the director's
death, whichever first occurs. No death benefits are payable. In 1996, a total
of $93,000 was paid to six retired directors pursuant to the Retirement Plan.
In the event the Retirement Plan is terminated or modified to diminish
benefits, a retired director has the option of receiving a lump sum equal to
benefits payable before the modification or termination as calculated under the
formula described in the Retirement Plan. Retirement Plan benefits are paid
directly by FFC which is not required to segregate such payments on its books.
In the event a former director who is receiving retirement benefits under the
Retirement Plan becomes an employee of the Bank or any of its affiliates, or
returns to serve as a nonemployee director, payments under the Retirement Plan
will be suspended until such time as such employment is again terminated or such
nonemployee director retires. Monthly retirement benefits after such suspension
of payments will be modified in accordance with the formula described in the
Retirement Plan. Retired directors must be available for consultation and may
not, without the consent of FFC, serve as director, officer or employee of any
affiliated or unaffiliated institution or holding company thereof.
7
<PAGE>
The Retirement Plan provides that directors who are involuntarily removed
from the board within 24 months following a change of control of the Bank or FFC
will receive maximum monthly Retirement Plan benefits without reduction on
account of vesting or age. A "change of control" of FFC will be deemed to have
occurred if (i) any person becomes the beneficial owner of 25% or more of the
total number of outstanding voting shares of FFC; (ii) any person becomes the
beneficial owner of 10% or more, but less than 25%, of the total number of
outstanding shares of FFC if the Board of Directors of FFC determines that such
beneficial ownership constitutes or will constitute control of FFC; (iii) any
person (other than the persons named as proxies solicited on behalf of the Board
of Directors of FFC) holds revocable or irrevocable proxies, as to the election
or removal of two or more directors of FFC, for 25% or more of the total number
of outstanding voting shares of FFC; (iv) any person has commenced a tender or
exchange offer or entered into an agreement or received an option to acquire
beneficial ownership of 25% or more of the total number of outstanding voting
shares of FFC and the Board of Directors of FFC determines that such action
constitutes or will constitute a change in control; (v) as a result of, or in
connection with, any cash tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any combination of the
foregoing transactions, the persons who were directors of FFC before such
transaction shall cease to constitute at least two-thirds of the Board of
Directors of FFC or any successor company; or (vi) any person has received
certain regulatory approvals to acquire FFC. A "change in control" of the Bank
will be deemed to have taken place if FFC's beneficial ownership of the total
number of outstanding voting shares of the Bank is reduced to less than 50%.
Consulting Agreement. On January 1, 1993, FFC and Mr. Gaiswinkler entered
into a consulting and noncompetition agreement pursuant to which FFC agreed to
pay Mr. Gaiswinkler $100,000 per year through December 31, 1997 together with
medical and dental insurance coverage until Mr. Gaiswinkler's 65th birthday. No
death benefits are payable. Under the agreement, Mr. Gaiswinkler provides
consulting services to FFC and undertakes not to provide material assistance to
any competitor of the Company during the term of the agreement or for three
years thereafter. The agreement may be terminated by FFC with or without cause,
but payments continue for the remaining term unless Mr. Gaiswinkler is
terminated for cause (as defined) or in certain events specified by federal
regulations.
BOARD OF DIRECTOR'S COMMITTEES AND NOMINATIONS BY STOCKHOLDERS
The Board of Directors of FFC acts as the nominating committee for selecting
the management nominees for election as directors, and met once for that purpose
in 1996. Except in the case of a nominee substituted as a result of the death or
other incapacity of a management nominee, the bylaws of FFC require that the
nominating committee submit nominations to the secretary of FFC at least 30 days
prior to the date of the annual meeting. The nominations of the nominating
committee for the Annual Meeting have already been submitted.
Stockholders of FFC may nominate directors pursuant to timely notice in
writing to the secretary of FFC in accordance with FFC's bylaws. To be timely,
notice must be delivered to or mailed to and received at the principal executive
offices of FFC not less than 30 days prior to the Annual Meeting; provided,
however, that if less than 45 days' notice or prior public disclosure of the
date of the meeting is given or made to stockholders, notice to be timely must
be received by FFC not later than the close of business on the 15th day
following the day on which notice of the date of the meeting was mailed or such
public disclosure was made.
8
<PAGE>
Public disclosure of the date of the Annual Meeting was made February 19, 1997
by the issuance of a press release. Under the bylaws, stockholder nominations
for the Annual Meeting are required to be received on or before March 23, 1997
in order to be timely. A stockholder's notice of nomination must set forth
certain information specified in Article 3, section 3.5 of FFC's bylaws
concerning each person the stockholder proposes to nominate for election and the
stockholder giving the notice. The bylaws provide that no person shall be
elected as a director unless nominated in accordance with the procedures set
forth in the bylaws.
The Board of Directors of FFC has standing executive, audit and stock plan
committees. The Board of Directors of the Bank has standing executive and
compensation committees. In 1996, the FFC audit committee met four times and the
FFC stock plan committee met once. The FFC executive committee did not meet. The
compensation committee met twice and the Bank executive committee met six times
during 1996.
The audit committee reviews the quarterly and annual consolidated financial
statements of FFC and the scope of the annual audit. It also reviews regulatory
compliance and the independent accountants' letter to management concerning the
effectiveness of the Company's internal financial and accounting controls and
management's response to the letter. In addition, the committee reviews and
recommends to the Board of Directors the firm to be engaged as FFC's independent
accountants. The committee may also examine and consider any other matters
relating to the financial affairs of the Company as it determines appropriate.
The stock plan committee has authority to administer FFC's stock option
plans, to grant options thereunder, and also to preapprove investments in FFC
stock by executive officers in connection with any Company benefit plan
permitting such an investment alternative. The compensation committee
establishes compensation for directors and Company officers on an annual basis
and reviews the combination of benefits offered to all employees of the Company.
The executive committees of FFC and the Bank are authorized to exercise the
powers of the boards of directors of FFC and the Bank, respectively, between
regular meetings of such boards. The executive committee of the Bank also
reviews the origination and administration of large commercial real estate loans
on a regular basis.
During the year ended December 31, 1996, FFC's Board of Directors held four
regular meetings and one organizational meeting. No incumbent director attended
fewer than 75 percent of the total number of meetings of the Board of Directors
and the total number of meetings held by all committees of the Board of
Directors on which he served.
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the Company's last three fiscal years to the Company's Chief
Executive Officer and each of the four most highly compensated executive
officers whose cash compensation exceeded $100,000, based on salary and bonus
earned during fiscal 1996. The Company has not granted any stock appreciation
rights (SARs). Share amounts reflect the December 30, 1996 5-for-4 stock split.
9
<PAGE>
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Awards
------
Securities
Underlying
Name and Principal Options/ All Other
Position Year Salary($) Bonus($) (a) SARs (#) Compensation ($)
------------------------ ---- --------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C>
John C. Seramur 1996 720,000 288,000 -0- 257,177 (b)
President, Chief Executive 1995 680,000 272,000 -0- 242,544
Officer and Director of 1994 650,000 181,000 12,500 226,243
FFC and the Bank
Donald E. Peters 1996 261,500 62,999 -0- 58,165 (c)
Executive Vice 1995 250,000 60,000 -0- 51,615
President of the Bank 1994 238,000 38,675 5,000 58,252
Thomas H. Neuschaefer 1996 170,000 50,000 -0- 38,576 (d)
Vice President and 1995 150,100 45,000 -0- 29,627
Treasurer of FFC and 1994 122,100 22,750 30,000 25,475
Executive Vice
President of the Bank
Robert M. Salinger 1996 194,000 48,500 -0- 42,775 (e)
General Counsel and 1995 186,500 46,625 -0- 37,721
Secretary of FFC and 1994 178,000 28,925 5,000 40,726
Executive Vice
President of the Bank
Harry K. Hammerling 1996 172,000 42,100 -0- 38,389 (f)
Executive Vice 1995 164,500 41,124 -0- 33,001
President of the Bank 1994 157,000 25,513 5,000 36,289
- -------------
</TABLE>
(a) Includes full bonus amounts earned during specified fiscal year; all or part
of these amounts may have been deferred by the executive for payment in a
different year.
(b) Consists of $10,235 in Company contributions to the Employee Stock Ownership
Plan, $14,734 in Company contributions to the 401(k) Plan, $163,354 in Company
contributions to the Executive Profit Sharing Plan, $32,754 in Company-paid
premiums for term life insurance and for the Executive Supplemental Life
Insurance Plan, and $36,100 in directors' fees.
(c) Consists of $10,235 in Company contributions to the Employee Stock Ownership
Plan, $14,834 in Company contributions to the 401(k) Plan, $32,712 in Company
contributions to the Executive Profit Sharing Plan, and $384 for Company-paid
term life insurance.
(d) Consists of $10,235 in Company contributions to the Employee Stock Ownership
Plan, $14,734 in Company contributions to the 401(k) Plan, $13,223 in Company
contributions to the Executive Profit Sharing Plan, and $384 for Company-paid
term life insurance.
(e) Consists of $10,235 in Company contributions to the Employee Stock Ownership
Plan, $14,820 in Company contributions to the 401(k) Plan, $17,336 in Company
contributions to the Executive Profit Sharing Plan, and $384 for Company-paid
term life insurance.
(f) Consists of $10,235 in Company contributions to the Employee Stock Ownership
Plan, $14,834 in Company contributions to the 401(k) Plan, $12,936 in Company
contributions to the Executive Profit Sharing Plan, and $384 for Company-paid
term life insurance.
10
<PAGE>
OPTION GRANTS DURING 1996 FISCAL YEAR
No options or SARs were granted during 1996 to Mssrs. Seramur, Peters,
Neuschaefer, Salinger or Hammerling.
OPTION EXERCISES DURING 1996 AND YEAR END OPTION VALUES
The following table provides information related to options exercised by
the named executive officers during the 1996 fiscal year and the number and
value of options held at year end. The Company has not granted any SARs. Share
amounts reflect the December 30, 1996 5-for-4 stock split.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs In-The Money Options/
at FY-End (#) SARS at FY-End ($)(c)
Shares Acquired Value ------------- ---------------------
Name on Exercise (#)(a) Realized ($)(b) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------------ --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John C. Seramur 25,000 329,188 39,500 -0- 621,300 -0-
Donald E. Peters -0- -0- 70,200 41,050 1,346,296 674,548
Thomas H. Neuschaefer 7,500 101,727 34,094 21,532 569,943 273,457
Robert M. Salinger 3,750 49,219 50,800 25,450 925,779 410,127
Harry K. Hammerling -0- -0- 38,925 25,450 682,747 410,127
- -------------
</TABLE>
(a) Each of the options exercised during fiscal 1996 was held by the named
executive officer for a period of at least two years.
(b) Value realized is calculated based on the difference between the option
exercise price and the average high and low market price of the underlying FFC
common stock on the date of exercise.
(c) Value is calculated based on the difference between the option exercise
price and the closing market price of the underlying FFC common stock on
December 31, 1996.
11
<PAGE>
EMPLOYMENT AND CHANGE OF CONTROL AGREEMENTS, AND COMPENSATION PURSUANT TO PLANS
Employment Agreement. In February 1989, FFC and the Bank entered into an
employment agreement with John C. Seramur pursuant to which he serves as
president and chief executive officer of FFC and the Bank. The initial term of
the agreement was through December 31, 1993, but the term of the agreement may
be extended upon the third and each subsequent anniversary of the agreement for
an additional year by both of the Board of Directors of FFC and the Bank and has
been so extended until December 31, 1999. Mr. Seramur's current base salary
under the agreement is $745,000. The agreement provides, among other things, for
participation in stock options, profit sharing, group life insurance, medical
coverage, education and other retirement or employee benefits applicable to
executive personnel.
The agreement provides for termination for cause (as defined) and in certain
events specified by federal regulations. The agreement is also terminable by the
Bank without cause whereupon Mr. Seramur would be entitled to the full amount of
salary remaining under the term of the agreement. The agreement provides for
payments to the employee in the event there is a change in control of FFC or of
the Bank (as defined in the Directors' Retirement Plan--see "Election of
Directors--Compensation of Directors--Directors' Retirement Plan") if employment
is terminated involuntarily in connection with such change of control other than
for cause. Such termination payments are also provided on a similar basis in
connection with a voluntary termination of employment following a change in
control. The amount of these payments equals three times the average annual
compensation which was includable in the employee's gross income for federal
income tax purposes with respect to the five most recent tax years ending prior
to the change in control, less one dollar. In 1997, such lump sum payment would
be $2,544,332.
Change of Control Agreements. FFC and the Bank have entered into severance
agreements with certain executive officers (the "Severance Agreements") which
provide for benefits only in the event of termination of employment within 24
months following a "change of control" (as defined in Director's Retirement
Plan-- see "Election of Directors--Compensation of Directors--Directors'
Retirement Plan"). The Severance Agreements also provide for benefits if the
officer resigns within 24 months following a change of control for "good reason"
as defined therein, including reduction in compensation, benefits or
responsibilities, or relocation by more than 50 miles of the primary worksite of
the officer. Benefits under the Severance Agreements are equal to twice the
officer's average annual compensation for the five most recent tax years
preceding the change of control. The Severance Agreements provide for no
benefits in the event the officer is terminated for cause (as defined), in
certain events specified under federal regulations, or if the officer is
terminated without cause, dies, or becomes permanently disabled prior to a
change of control. The initial term of the Severance Agreements is for a three
year period, commencing January 1989, which may be extended upon the second and
each subsequent anniversary of the Severance Agreements for an additional year
by both of the boards of directors of FFC and the Bank. The Severance Agreements
have been extended through December 31, 1998. The executive officers who have
entered into such Severance Agreements are Mssrs. Peters, Neuschaefer, Salinger,
Hammerling and two officers of the Bank. In 1997, in the event of a change in
control resulting in a termination of employment, Mssrs. Peters, Neuschaefer,
Salinger and Hammerling would receive $527,517, $299,156, $411,451 and $371,638,
respectively, under the Severance Agreements.
Supplemental Executive Retirement Plan. Effective August 1, 1989, the Board
of Directors of the Bank adopted a supplemental executive retirement plan (the
"SER Plan") to provide additional retirement benefits to certain key employees
selected by the compensation committee of the Bank. Currently, the participants
are Messrs. Seramur, Peters, Neuschaefer, Salinger, Hammerling and one other
senior officer of the Bank. Under the SER Plan, participants receive a monthly
supplemental retirement benefit equal to 60% of the participant's average
monthly compensation received during the three calendar years of employment in
which the participant's annual compensation was at the highest level ("Highest
Average Compensation") less 50% of the participant's monthly primary social
security benefit, and less the monthly benefit payable under the participant's
regular employee profit sharing plan, and increased by three-fourths of one
percent (0.0075)
12
<PAGE>
for each year of service at the Bank in excess of 25 (the "Supplemental
Benefit"). In the event the participant retires after reaching the age of 55 and
completion of ten years of service with the Bank, but before reaching the age of
62, the Supplemental Benefit will be decreased by 2.5% for each full or partial
year by which the commencement of payment precedes the date of the participant's
62nd birthday. If a participant terminates employment prior to retirement or
death, the Highest Average Compensation is multiplied by a fraction, the
numerator of which is the participant's actual years of service, not to exceed
25, and the denominator of which is 25, prior to calculation of the Supplemental
Benefit, and benefit payments commence on the first day of the month following
the date on which the participant attains age 62 (unless termination is on
account of total permanent disability, in which case benefit payments commence
immediately). If the participant's employment is terminated within 24 months
following a change in control (as defined in the Directors' Retirement Plan--see
"Election of Directors--Compensation of Directors--Directors' Retirement Plan"),
monthly benefits equal the actuarial equivalent of the Supplemental Benefit,
crediting the participant with seven years of service or the participant's
actual years of service, whichever is greater. In the event a participant's
employment terminates due to disability, retirement, death or a change in
control, he is 100% vested in his Supplemental Benefit. Otherwise, a participant
will become partially vested after three years of employment, with such vested
percentage increasing until fully vested after seven years of employment.
However, if a participant is terminated for cause as defined in the SER Plan,
both the participant and his beneficiary will forfeit any rights to receive
benefits under the SER Plan. In the event of the participant's death while
employed by the Bank, or after the termination of employment but before benefits
begin under the SER Plan, the Bank will pay a survivor benefit to the
participant's beneficiaries approximately equal to the actuarial equivalent lump
sum present value of the participant's benefit under the SER Plan. Supplemental
Benefits under the SER Plan are paid in the form of a 10 year certain life
annuity with payments continuing to a participant's beneficiaries for the
balance of the 10 year period if the participant dies before receiving payments
for 10 full years.
The Bank has purchased life insurance on the executives who participate in
the SER Plan in amounts such that if assumptions as to mortality experience,
policy dividends and other factors are realized, the benefits payable under
those insurance policies will reimburse to the Bank all premiums paid and pay
the participant all benefits under the SER Plan.
Based on most recent annual compensation levels, it is estimated that the
SER Plan would pay an annual retirement benefit at age 62 to Messrs. Seramur,
Peters, Neuschaefer, Salinger and Hammerling of $343,551, $89,352, $83,645,
$51,030 and $69,708, respectively.
REPORT OF THE COMPENSATION AND STOCK PLAN COMMITTEES
The Company's compensation program is administered by the compensation
committee comprised of four nonemployee members of the Bank's Board of
Directors. All decisions by the committee relating to the compensation of
executive officers are reviewed by the full board. In addition, the FFC stock
plan committee, consisting of two disinterested nonemployee directors, makes all
decisions concerning stock option grants. The decisions of the stock plan
committee are taken into account by the compensation committee in the course of
its analysis of appropriate compensation levels.
The Company's executive compensation program provides competitive levels of
compensation designed to integrate pay with the Company's annual and long-term
performance goals. Underlying this objective are the following concepts:
supporting an individual pay-for-performance policy that differentiates
compensation levels based on corporate, business unit and individual
performance; motivating key senior officers to achieve strategic business
objectives and rewarding them for that achievement; providing compensation
opportunities which are competitive to those offered in the marketplace, thus
allowing the Company to compete for and retain talented executives who are
critical to the Company's success; and aligning the interests of executives with
the long-term interests of the Company's stockholders.
13
<PAGE>
Executive compensation consists of four components: base salary; annual
incentive bonus; stock options; and executive benefits.
Base Salary. In the course of setting 1996 base salaries for the named
executive officers, the compensation committee at its November 1995 meeting
compared the officers' 1995 base salaries with those paid to executives of
companies with assets of $2 billion to $5.9 billion as reflected in the Watson
Wyatt Worldwide Financial Institutions Compensation Survey, as well as base
salaries paid by certain selected publicly held midwestern thrifts with assets
from $2.5 billion to $12 billion. The Watson Wyatt survey peer group and the
self-selected peer group used for salary comparison purposes are not identical
to the group of companies included in the S&P Financial Index used in the stock
performance chart (page 16), because reliable compensation information with
respect to the latter was not readily available. The Watson Wyatt survey and the
self-selected peer group survey showed the named executive officers' base
salaries ranged from the 50th to the 90th percentile for comparable positions.
Based upon this peer group information and the Company's performance for 1995,
the committee determined that Mr. Neuschaefer's base salary should be increased
13% to better position him in comparison with his peers, and that the other
named executive officers' base salaries should be increased 4.0 - 4.6% as
reflected in the Summary Compensation Table at page 10.
Incentive Bonus. The bonus component is calculated upon a formal written
plan which has been in place since 1988. It is structured to pay bonuses only
upon fulfillment of predetermined corporate, business unit and individual goals.
Targets for annual bonus payouts range from 10% of base pay for Bank assistant
vice presidents to 45% for the CEO. Targeted bonus payouts are made only if the
Company's core income targets and all business unit and individual goals are
met. If all goals are exceeded, additional bonus amounts may be paid pursuant to
a schedule contained in the bonus plan. Extraordinary or one-time earnings, or
earnings based upon unbudgeted acquisition activity, are not taken into account.
Partial payouts of bonuses are available if 80% or more of budgeted core
profitability is attained. The Company's profit goal is aggressively set each
year and as a result bonus payouts from 1988 through 1991 and in 1994 were paid
at only partial levels even though record profits were achieved by the Company
in those years. Profit goals were met in 1992, 1993 and 1995 and, as a result,
bonuses were paid at or near full targeted amounts. In 1996, the compensation
committee determined that bonuses would be paid at full levels because the
corporate goal for core earnings set in late 1995 was met and the Company again
recorded record core profits.
Stock Options. To encourage growth and shareholder value, stock options are
granted from time to time under the Company's option plans to key management
personnel who are in a position to make substantial contributions to the
long-term success of the Company. The stock plan committee believes that this
focuses attention on managing the Company from the perspective of an owner with
an equity state in the business. Based on option grants made in prior years, the
stock plan committee determined that proper incentives were currently in place
and that no further options would be granted to the named executive officers
during 1996.
Executive Benefits. Like all Company employees, the named executive officers
participate in the FFC retirement plans. In 1996, in addition to a contribution
to the Profit Sharing Plan, all Company employees participated in the Employee
Stock Ownership Plan ("ESOP") which the Company acquired in the FirstRock
Bancorp merger. The executive officers also receive a contribution to the
Executive Profit Sharing Plan as reflected herein in the Summary Compensation
Table at page 10. In total, the percentage of contributions to these retirement
plans, in the aggregate, was slightly lower in 1996 than prior years as provided
in the budget plan set in late 1995. In addition, the named executive officers
receive all normal employee fringe benefits as well as supplementary retirement
benefits designed to encourage them to remain with the Company on a long-term
basis. For example, the supplementary executive life insurance and retirement
plans contain provisions for substantial reductions in benefits if an executive
officer leaves the Company prior to normal retirement age.
14
<PAGE>
CEO Compensation. In the course of setting Mr. Seramur's 1996 base salary,
the compensation committee at its November 1995 meeting evaluated Watson Wyatt
survey data and selected peer group data (as noted above), as well as the
Company's record performance. Based on the growth of the Company and the
continued improvements in all profitability measurements during fiscal 1995,
including an increase in core earnings over 1994 as well as the improvement in
the efficiency ratio (which measures controllable overhead expenses as a
percentage of recurring income), the compensation committee determined that Mr.
Seramur's base salary should be positioned in the upper range of his peers to
properly reflect the Company's standing and performance. As a result, the
compensation committee approved an increase in Mr. Seramur's base salary to
$720,000 for fiscal 1996.
As described above, awards under the Company's Incentive Bonus Plan are
based on the accomplishment of individual and corporate goals. Mr. Seramur's
individual goals were established at the end of 1995 relating to company
profitability, return on equity, return on assets, capital levels and dividends
paid to stockholders. The goals established by the compensation committee were
consistent with the stated corporate goals reflected in the Company's Annual
Report to Shareholders. The compensation committee determined that all of Mr.
Seramur's individual goals had been met in 1996 and that the 1996 corporate core
profit goal had been met, and as a result a full targeted bonus payout of
$288,000 would be made at year-end 1996.
All of the compensation paid to Mr. Seramur in 1996 was deductible as
compensation expense to the Company under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"). It is the intention of the Company and
Mr. Seramur to take all necessary actions so that substantially all compensation
payments to Mr. Seramur remain deductible to the Company under Section 162(m) of
the Code.
The compensation committee believes Mr. Seramur's leadership has positioned
the Company as an industry leader and it has established his compensation
package accordingly. The committee believes the package is competitive with
other industry leaders and appropriately rewards Mr. Seramur for the results he
has achieved.
Respectfully submitted,
Stock Plan Committee Compensation Committee
-------------------- ----------------------
John H. Sproule, Chairman John H. Sproule, Chairman
Robert T. Kehr Robert S. Gaiswinkler
Ignatius H. Robers
Ralph R. Staven
COMPENSATION COMMITTEE INTERLOCKS AND INSIDE PARTICIPATION
Two members of the compensation committee are former officers of the Bank or
predecessors of the Bank. Compensation committee members Ralph R. Staven and
Robert S. Gaiswinkler formerly served as officers of the Bank or predecessors to
the Bank prior to 1988 and 1993, respectively.
15
<PAGE>
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the cumulative
total stockholder return on the FFC's common stock during the five fiscal years
ended December 31, 1996 with the cumulative total return on the S&P 500 Index
and the S & P Financial Index. The comparison assumes $100 was invested on
December 31, 1991 in the FFC's common stock and in each of the foregoing indices
and assumes reinvestment of dividends.
[Chart contains years ended 1991, 1992, 1993, 1994, 1995 and 1996 on
horizontal axis and price of $100, $200, $300, $400, $500 and $600 on
vertical axis. Plot points are as follows: First Financial Corporation --
100, 207.42, 302.24, 254.64, 436.87 and 597.00; S&P 500 Index -- 100,
107.62, 188.46, 120.03, 165.13 and 203.05; and S&P Financial Index -- 100,
123.37, 137.06, 132.22, 204.11 and 275.89.]
OFFICER, DIRECTOR, AND EMPLOYEE MORTGAGES
The Bank offers loans to its officers, directors and employees. Loans are
made on substantially the same terms and conditions as those prevailing at the
time for comparable transactions with unaffiliated persons. Pursuant to the
Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"),
which became effective on August 9, 1989, loans made by the Bank to its
executive officers and directors must comply with the requirements of Section
22(h) of the Federal Reserve Act. Among other things, Section 22(h) prohibits
the Bank from making a loan to any executive officer or director on preferential
terms, i.e., terms that would not be offered to an unaffiliated borrower of
comparable credit standing seeking a comparable loan. The management of the Bank
believes that all loans to the Company's directors and executive officers 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
comparable transactions with other persons and did not involve more than the
normal risk of collectibility or present other unfavorable features, and that
all such loans comply with applicable regulatory requirements.
16
<PAGE>
PROPOSED AMENDMENT TO ARTICLES OF INCORPORATION
(ITEM 2 ON PROXY)
As set forth in Article 6 of FFC's Articles of Incorporation, the internal
affairs of the Corporation shall be under the direction of a board of directors
consisting "of not less than twelve (12) nor more than twenty-four (24)
directors." The proposed amendment to Article 6 is to decrease the minimum size
of FFC's Board of Directors from twelve directors to seven directors. Such
decrease will be effected by amending the second sentence of Article 6 to read
as follows:
"The board of directors shall consist of not less than
seven (7) nor more than twenty-four (24) directors."
FFC's Board of Directors currently consists of twelve directors. However,
director Gordon M. Haferbecker has announced his decision to retire from the
board concurrently with the Annual Meeting to be held on April 22, 1997. At that
time, FFC's Board of Directors may have at least one vacancy unless the proposed
amendment is adopted by FFC's shareholders at the Annual Meeting. If the
proposed amendment is not adopted, FFC's Board of Directors intends to act
pursuant to Section 3.6 of FFC's Bylaws to fill the vacancy, until the next
succeeding Annual Meeting, by an affirmative vote of a majority of directors
then in office. At this time, the Board of Directors has made no decision as to
who it will nominate or elect to fill such vacancy, if it occurs. If the
proposed amendment is duly approved by FFC's shareholders, no such vacancy will
exist upon director Haferbecker's retirement and FFC's Board of Directors will
consist of eleven directors. As of the date hereof, FFC is not aware of any
third party attempts to acquire control of the Company or otherwise exert
influence over FFC's Board of Directors.
FFC's Board of Directors believes that approval of the proposed amendment
will permit it to function in a more efficient manner. The board also believes
that the current provision in Article 6 requiring that the board consist of at
least twelve directors has outlived its usefulness. These beliefs are based on a
number of factors.
First, a smaller board can act more efficiently and operate at lower expense
levels. This, the Board of Directors believes, is in the best interests of FFC's
shareholders.
Second, by maintaining the current requirement of a maximum board size of 24
directors, FFC retains flexibility to structure future mergers and acquisitions.
The negotiations surrounding such transactions, particularly in stock-for-stock
merger transactions such as those FFC has done in recent years, often involve
the need to achieve a continuity of interests for the merging company's
shareholders. This might be accomplished by establishing additional FFC board
seats to accommodate certain members from the board or management of the merging
company.
Third, current requirement that the FFC board consist of 12 to 24 directors
was established in 1984 when First Financial Savings and First State Savings
combined and formed FFC as a multiple holding company. Twelve directors from
each institution were designated to sit on FFC's board, and FFC's Articles of
Incorporation were fashioned accordingly. Through attrition, FFC's current board
membership was reduced to its current 12 directors. It is believed that this
minimum requirement of 12 directors, established over a decade ago to facilitate
a merger, has outlived its usefulness.
Fourth, reducing the minimum FFC board size to seven directors would conform
FFC's Articles of Incorporation with the federal stock charter of First
Financial Bank, FFC's wholly owned banking subsidiary. The Bank's charter,
pursuant to applicable OTS regulations, provides that the Bank's Board of
Directors shall consist of not less than 7 directors. Since the primary business
of FFC is the business of the Bank, it is believed that aligning membership on
the respective Boards of Directors makes sound business sense.
17
<PAGE>
Finally, the average board size of publicly traded companies has been
decreasing in recent years. For example, according to two recent studies
conducted by Korn/Ferry International and Watson Wyatt Worldwide, the average
number of directors sitting on boards of directors, in all industry sectors
combined, is 11, which is down from prior years. FFC's Board of Directors
believes that FFC's Articles of Incorporation should be amended to reflect this
current trend.
The affirmative vote of not less than two-thirds of the total votes eligible
to be cast at the Annual Meeting is required to adopt the proposed amendment to
Article 6 of FFC's Articles of Incorporation. If approved by stockholders, the
proposed amendment to Article 6 will become effective upon the filing of the
amendment with the office of the Secretary of State of Wisconsin.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THIS
AMENDMENT.
SECTION 16(a) DISCLOSURE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than ten percent of a registered class
of FFC's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten percent shareholders are required by SEC regulation to furnish
FFC with copies of all Section 16(a) forms they file. Based solely on its review
of the copies of such forms received by it, or written representations from
certain reporting persons that no Forms 5 were required for those persons, the
Company believes that during fiscal 1996 all filing requirements applicable to
its executive officers, directors and greater than ten percent beneficial owners
were complied with.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has renewed the appointment of Ernst & Young LLP to
act as the Company's independent public accountants for 1997. Representatives of
Ernst & Young LLP will be present at the Annual Meeting. They will be given an
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
TO BE INCLUDED IN PROXY MATERIALS
Any stockholder of FFC who intends to present a proposal for action at the
1998 annual meeting of stockholders must forward a copy of the proposal or
proposals to FFC's corporate offices. Any such proposal or proposals intended to
be presented at the 1998 annual meeting and included in FFC's proxy statement
and form of proxy relating to that meeting must be received by FFC by November
10, 1997.
The bylaws of FFC provide that any director nominations and new business
submitted by shareholders must be filed with the secretary of FFC at least 30
business days prior to the date of the meeting. If notice of the meeting is
given less than 45 days before the meeting, such submissions must be filed not
later than 15 days after notice of the meeting is given.
18
<PAGE>
OTHER BUSINESS TO BE TRANSACTED
As of the date of this proxy statement, the Board of Directors of FFC knows
of no other business which may come before the Annual Meeting. If any other
business is properly brought before the Annual Meeting, it is the intention of
the proxy holders to vote or act in accordance with their best judgment with
respect to such matters.
By order of the Board of Directors of
FIRST FINANCIAL CORPORATION
/s/ Robert S. Gaiswinkler
Robert S. Gaiswinkler
Chairman of the Board
Stevens Point, Wisconsin
March 10, 1997
19
<PAGE>
REVOCABLE PROXY
PROXY
ANNUAL MEETING OF SHAREHOLDERS OF FIRST FINANCIAL CORPORATION
John H. Sproule and Ralph R. Staven, and each of them, are hereby appointed
proxies, with full power of substitution, to vote all shares of stock the
undersigned is entitled to vote at the annual meeting of shareholders of First
Financial Corporation, to be held at the Holiday Inn Convention Center, 1501
North Point Drive, Stevens Point, Wisconsin, on April 22, 1997 at 10:00 a.m.,
Local Time, and at any adjournments thereof, as follows, hereby revoking any
proxy heretofore given.
1. ELECTION OF THREE DIRECTORS:
Robert S. Gaiswinkler, Dr. George R. Leach
and John C. Seramur
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees listed
above
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below).
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CHOICE IS INDICATED, WILL BE
VOTED FOR ITEMS 1 AND 2.
2. AMENDMENT OF ARTICLE 6 OF THE ARTICLES OF INCORPORATION REGARDING
THE MINIMUM BOARD SIZE:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion on such other matters as may properly come before the
meeting, all set out in the Notice and Proxy Statement relating to the meeting,
receipt of which are hereby acknowledged.
Dated: , 1997
------------------------
-------------------------------------
-------------------------------------
(Please sign exactly as name appears
hereon. If stock is owned by more
than one person, all owners should
sign. If signing as attorney,
administrator, executor, guardian or
trustee, please indicate such
capacity. A proxy given by a
corporation should be signed by an
authorized officer.)
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THIS CORPORATION
