SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 Section 240.14a-11(c) or Section 240.14a-12
ANB CORPORATION
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(Name of Registrant as Specified In Its Charter)
- ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(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
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[ ] 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.
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<PAGE>
ANB CORPORATION
120 WEST CHARLES STREET
MUNCIE, INDIANA 47305
(765) 747-7575
NOTICE
OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 21, 1998
The Annual Meeting of Shareholders of ANB Corporation will be held at the
Horizon Convention Center, 401 South High Street, Muncie, Indiana on April 21,
1998 at 4:00 p.m., local time, for the following purposes:
(1) To elect three Directors to serve terms which will expire in 2001;
and,
(2) To transact any other business as may properly come before the
meeting.
Only holders of Common Stock of record at the close of business on March
6, 1998 are entitled to notice of, and to vote at, the Annual Meeting or any
adjournment thereof.
A Proxy Statement appears on the following pages.
By Order of the Board of Directors
/S/ JAMES W. CONVY
----------------------------------------
James W. Convy, Corporate Secretary
March 19, 1998
Muncie, Indiana
IMPORTANT-PLEASE MAIL YOUR PROXY PROMPTLY
IN ORDER THAT THERE MAY BE PROPER REPRESENTATION AT THE
MEETING, YOU ARE URGED TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE PROVIDED. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
ANB CORPORATION
120 WEST CHARLES STREET
MUNCIE, INDIANA 47305
(765) 747-7575
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of proxies to be voted at the Annual Meeting of
Shareholders of ANB Corporation to be held on April 21, 1998 at 4:00 p.m.,
local time, in the Horizon Convention Center, 401 South High Street, Muncie,
Indiana, and at any and all adjournments of such meeting. A Notice of Annual
Meeting and Form of Proxy accompany this Proxy Statement. The approximate date
on which this Proxy Statement and Form of Proxy for the 1998 Annual Meeting of
Shareholders is first being sent or given to shareholders is March 19, 1998.
ANB Corporation (the "Company") is a multibank holding company which owns
one hundred percent (100%) of the outstanding stock of American National Bank
and Trust Company of Muncie ("American National"), American National Trust And
Investment Management Company ("American National Trust") and Peoples Loan and
Trust Bank ("Peoples"). American National owns one hundred percent (100%) of
the outstanding stock of ANB Financial Planning Services. American National
Trust owns fifteen percent (15%) of the outstanding stock of Indiana Trust &
Investment Management Company.
Any shareholder giving a proxy has the right to revoke it by written
notice delivered to James W. Convy, Secretary of the Company, 120 West Charles
Street, Muncie, Indiana 47305, or in person at the meeting, at any time before
such proxy is exercised. All proxies will be voted in accordance with the
directions of the shareholder and, to the extent no directions are given, will
be voted FOR item 1 set forth on the accompanying Notice. If any other matters
should properly come before the meeting, it is intended that the proxies will
be voted, with respect to these matters, in accordance with the recommendations
of the Board of Directors. Except with respect to procedural matters incident
to the conduct of the meeting, management of the Company is not aware of any
additional matters that may properly come before the Annual Meeting.
The Company will bear the entire cost of soliciting proxies in the
enclosed form. Solicitation will be by mail, and Directors and officers of the
Company and its subsidiaries may solicit proxies personally or by telephone,
facsimile or other written means of communication. Such persons will not be
specially compensated for such services.
VOTING SECURITIES
Only shareholders of record at the close of business on March 6, 1998 will
be eligible to vote at the Annual Meeting or at any adjournment thereof.
The voting securities of the Company entitled to be voted at the Annual
Meeting consist only of Common Stock, of which 4,549,874 shares were issued
and outstanding on the record date of March 6, 1998. The Company has no other
class of stock that is outstanding. Each shareholder of record on the record
date will be entitled to one vote for each share registered in the
shareholder's name. The presence, in person or by proxy, of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum. Shares
voting, abstaining or withholding authority to vote on any issue will be
counted as present for purposes of determining a quorum. The election of
Directors will be determined by a plurality of the votes cast. Action on any
other matters to come before the meeting must be approved by an affirmative
vote of a majority of the shares present in person or by proxy. Abstentions,
broker non-votes, and instructions on the accompanying proxy card to withhold
authority to vote for one or more of the nominees will result in the
respective nominees receiving fewer votes.
Where authorized by law or the governing instrument, shares of the
Company's Common Stock held by American National Trust in regular, nominee and
street name accounts will be voted for the election of the three named
nominees for Director.
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table presents certain information with respect to those
persons who are known by the Company to have been the beneficial owners of
more than five percent (5%) of the Company's Common Stock as of March 6, 1998:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) PERCENT OF CLASS
- ------------------------------------ ------------------------ ----------------
<S> <C> <C>
John W. and Janice B. Fisher (2) 364,226 8.01
P.O. Box 832
Burlington Drive
Muncie, Indiana 47308
</TABLE>
(1) The information contained in this column is based upon shareholder
records of the Company and information furnished to the Company by
the shareholders named above.
(2) Mr. Fisher holds 256,926 shares (5.65%) and Mrs. Fisher holds
107,300 shares (2.36%). Mr. and Mrs. Fisher each disclaim beneficial
ownership of the shares held by the other.
ITEM 1 - ELECTION OF DIRECTORS
The first item of business to be acted upon at the Annual Meeting of
Shareholders is the election of three Directors. The Articles of Incorporation
of the Company provide that the Board of Directors shall consist of three
classes of Directors, each class as nearly equal in number as possible. One
class of Directors is to be elected each year with terms extending to the
third succeeding Annual Meeting after such election.
The nominees for election as Director are nominated to serve for terms to
expire in 2001. Each nominee is currently a Director of the Company whose
current term as a Director will expire in 1998. The following information is
provided concerning the nominees:
<TABLE>
<CAPTION>
NOMINEES FOR TERMS TO EXPIRE IN 2001
------------------------------------
PRINCIPAL OCCUPATION SERVED AS DIRECTOR
NAME AGE DURING PAST 5 YEARS CONTINUOUSLY SINCE
- ---- --- ------------------- ------------------
<S> <C> <C> <C>
Ben E. Delk 52 President, Standt's Fine Jewelry 1985
Kelly N. Stanley 54 President and Chief Executive Officer, 1986
Ontario Corporation
Leon V. Towne 67 Management Advisor and Consultant 1985
</TABLE>
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES. It is intended that the proxies given to the person
named in the accompanying Form of Proxy will, unless otherwise indicated
therein, be voted for the election of the nominees named above. Although
management has no reason to believe that any nominee will be unable to serve,
in the event any nominee should become unavailable for election, and unless
the Board of Directors reduces the size of the Board to a number which would
be equal to the number of nominees who are able and willing to serve, the
proxy will be voted for a substitute who will be designated by the Board of
Directors.
2
<PAGE>
OTHER INCUMBENT MEMBERS OF THE BOARD OF DIRECTORS
The following is provided concerning incumbent Directors whose terms
expire at the Annual Meetings in 1999 and 2000:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION SERVED AS DIRECTOR TERM
NAME AGE DURING PAST 5 YEARS CONTINUOUSLY SINCE EXPIRES
- ---- --- ------------------- ------------------ -------
<S> <C> <C> <C> <C>
Madelyn K. Ferris 42 Senior Vice President, 1996 1999
Paws Incorporated
R. David Hoover 52 Vice-Chairman, Chief Financial 1993 1999
Officer and Director,
Ball Corporation;
Director, Datum Inc.
William L. Peterson 68 Chairman of the Board and 1985 2000
Director, Alltrista Corporation
Donald A. Ross 54 President, A.L. Ross & Sons, Inc. 1985 1999
James R. Schrecongost 52 Vice-Chairman, President and 1985 2000
Chief Executive Officer, the Company;
Vice-Chairman and Chief Executive
Officer, American National
Chris L. Talley 52 President and Chief Executive Officer, 1994 2000
Peoples
</TABLE>
EXECUTIVE OFFICERS
The Executive Officers of the Company, who consist of Mr. Schrecongost,
Mr. Talley, Paul L. Sehnert, Jr., Jerome J. Gassen and Larry E. Thomas, hold
office for a term of one year or until their respective successors are duly
elected and qualified. The Company has entered into employment agreements with
the Executive Officers. See "EXECUTIVE COMPENSATION -- Employment Contracts
and Change in Control Arrangements." Mr. Schrecongost has served as president
and chief executive officer of the Company since 1987. He served as president
and chief executive officer of American National from 1987 to March 3, 1997,
and is currently vice-chairman and chief executive officer of American
National. Mr. Talley has served as president and chief executive officer of
Peoples since 1984. Mr. Sehnert, age 49, has served as president and chief
executive officer of American National Trust since 1990. Mr. Gassen, age 48,
was elected president and chief operating officer of American National
effective March 3, 1997. During the five-year period prior to being elected
president and chief operating officer of American National, Mr. Gassen served
as president, chief executive officer and chairman of the board of directors
of Firstar Bank Ottumwa (a wholly owned subsidiary of Firstar Corporation of
Iowa). He also served in various other capacities assigned to him from time to
time, such as market president and regional administrative officer, for
Firstar Corporation of Iowa. Mr. Thomas, age 56, has served as treasurer and
chief financial officer of the Company since 1992.
BOARD MEETINGS AND COMMITTEES
The Executive/Strategic Planning/Nominating Committee (the "Executive
Committee"), created during 1995, has as one of its responsibilities the
nomination of individuals for the office of Director of the Company. The
Executive Committee met two times in 1997. Individuals nominated for election
in 1998 were nominated by the Board of Directors as a whole on February 12,
1998. During the 1997-1998 board year, the Executive Committee consisted of
the following members of the Board: Messrs. Stanley (Chairman), Delk, Hoover,
Peterson, Ross and Towne. Under the Company's By-Laws, nominations other than
those made by or on behalf of existing management of the Company must be made
in writing and delivered or mailed to the President of the Company not less
than ten days nor more than fifty days prior to any meeting of shareholders
called for the election of Directors. Notification must contain the following
information to the extent known by the notifying shareholder: (a) the name and
address of each proposed nominee; (b) the principal occupation of each
proposed nominee; (c) the name and resident address of the notifying
shareholder; and (d) the number of shares of capital stock of the Company
owned by the notifying shareholder.
3
<PAGE>
Nominations not made in accordance with these provisions may be disregarded
by the Chairman of the meeting and, upon his instructions, the vote tellers
may disregard all votes cast for such nominee.
The Audit Committee oversees and appraises the quality and conduct of the
audit program of the Company. The Audit Committee meets quarterly and met four
times in 1997. During the 1997-1998 board year, the Audit Committee consisted
of the following members of the Board: Messrs. Towne (Chairman), Hoover,
Peterson, Ross, Stanley, and Mrs. Ferris.
The Compensation/Pension/Benefits Committee (the "Compensation
Committee"), among its other responsibilities, overviews the compensation of
the officers of the Company and of subsidiary banks. The Compensation
Committee meets on call and met four times in 1997. During the 1997-1998 board
year, the Compensation Committee consisted of the following members of the
Board: Messrs. Hoover (Chairman), Delk, Peterson, Ross, Stanley and Towne.
The Board of Directors met eight times in 1997. All Directors attended at
least seventy-five percent (75%) of the aggregate of the total number of
meetings of the Board of Directors and the total number of the meetings held
by all committees of the Board upon which each served during this period.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 6, 1998 the total number of
shares of Company Common Stock beneficially owned by each Director of the
Company and by all Directors and Executive Officers as a group. The number of
shares shown as being beneficially owned by each Director are those over which
he/she has sole or shared voting or investment power.
<TABLE>
NAME OF BENEFICIAL OWNER SHARES BENEFICIALLY OWNED (1) PERCENT OF CLASS
- ------------------------ ----------------------------- ----------------
<S> <C> <C>
Ben E. Delk 25,256 (2) .55
Madelyn K. Ferris 1,342 (3) .03
Jerome J. Gassen 900 (4) .02
R. David Hoover 4,040 (2) .09
William L. Peterson 13,280 (2) .29
Donald A. Ross 11,888 (2) .26
James R. Schrecongost 91,904 (5) 1.99
Paul L. Sehnert, Jr. 31,147 (6) .68
Kelly N. Stanley 12,169 (2) .27
Chris L. Talley 11,749 (7) .26
Larry E. Thomas 52,209 (8) 1.14
Leon V. Towne 23,200 (2) .51
All Directors and Executive
Officers as a group
(12 individuals) 279,084 5.96
</TABLE>
(1) The information contained in this column is based upon shareholder
records of the Company and information furnished to the Company by
the individuals identified.
(2) Includes 3,000 shares that such individual has the right to acquire
through the exercise of stock options granted under the ANB
Corporation 1996 Directors' Stock Option Plan.
4
<PAGE>
(3) Includes 1,000 shares which Mrs. Ferris has the right to acquire
through the exercise of stock options granted under the ANB
Corporation 1996 Directors' Stock Option Plan.
(4) Includes 750 shares which Mr. Gassen has the right to acquire
through the exercise of stock options granted under the ANB
Corporation 1995 Stock Option Plan.
(5) Includes 70,375 shares which Mr. Schrecongost has the right to
acquire through the exercise of stock options granted under the ANB
Corporation Stock Option Plan and the ANB Corporation 1995 Stock
Option Plan.
(6) Includes 28,175 shares which Mr. Sehnert has the right to acquire
through the exercise of stock options granted under the ANB
Corporation Stock Option Plan and the ANB Corporation 1995 Stock
Option Plan.
(7) Includes 1,500 shares which Mr. Talley has the right to acquire
through the exercise of stock options granted under the ANB
Corporation Stock Option Plan and the ANB Corporation 1995 Stock
Option Plan.
(8) Includes 12,625 shares which Mr. Thomas has the right to acquire
through the exercise of stock options granted under the ANB
Corporation Stock Option Plan and the ANB Corporation 1995 Stock
Option Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and officers, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission ("SEC") initial reports of ownership and
reports of changes in ownership of Company Common Stock and other equity
securities of the Company. Officers, Directors and greater than ten-percent
shareholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file. To the best knowledge of the
Company, during the fiscal year ended December 31, 1997, all statements of
beneficial ownership required to be filed with the SEC were timely filed.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors and Executive Officers of the Company and their associates are
customers of, and have had transactions with, the Company or its subsidiary
banks from time to time in the ordinary course of business. Similar
transactions may be expected to take place in the ordinary course of business
in the future. Such transactions have been and will continue to be made on
substantially the same terms, including interest rates and collateral on
loans, as those prevailing at the time for comparable transactions with other
persons. Such transactions did not and will not involve more than the normal
risk of collectibility or present other unfavorable features. There are no
arrangements or understandings between any of the Directors, Executive
Officers or any other persons pursuant to which any of the Company's Directors
or Executive Officers have been selected for their respective positions.
COMPENSATION OF DIRECTORS
Except as set forth below, during 1997, non-employee Directors of the
Company received an annual retainer of $3,000 and were also compensated at the
rate of $400 per board meeting attended and $300 per committee meeting
attended. Committee chairmen received $350 for each meeting attended.
Effective January 1, 1998, the annual retainer for non-employee Directors of
the Company was increased to $5,000 and the board meeting fee for meetings
attended by non-employee Directors was increased to $450. Directors of the
Company who are also employees of the Company or its subsidiaries receive no
additional compensation as Directors of the Company or its subsidiaries.
Mr. Peterson served as Chairman of the Board of the Company until the
Company's Annual Meeting of Directors on May 20, 1997. While serving as
Chairman in 1997, Mr. Peterson received a monthly retainer of $1,250. Mr.
5
<PAGE>
Peterson continues to serve as a Director of the Company and receives the
standard board and committee meeting fees as outlined.
Mr. Stanley served as Vice-Chairman of the Board of the Company until the
Company's Annual Meeting of Directors on May 20, 1997 when he was elected
Chairman of the Board. While serving as Vice-Chairman in 1997, Mr. Stanley
received a quarterly retainer of $1,250 (for an aggregate retainer of $2,500)
along with standard board and committee meeting fees. While serving as
Chairman in 1997, Mr. Stanley received a monthly retainer of $1,250. He also
received standard board fees for each board meeting he attended in excess of
four and standard committee fees for each committee meeting he attended in
excess of four. Effective January 1, 1998, the Chairman's retainer was
increased to $18,000, payable in monthly installments of $1,500.
Mr. Ross, who is Chairman of the Board of American National, in addition
to being a Director of the Company, received an annual fee of $12,000 from
American National and did not receive any other fees as a Director of the
Company or American National. Effective January 1, 1998, the annual retainer
for Mr. Ross, in his role as Chairman of the Board of American National, was
increased to $15,000, payable in monthly installments of $1,250. In 1998, Mr.
Ross will also receive the standard board meeting fee for his attendance at
any special meetings of the Company's Board of Directors.
Mr. Delk, who is a Director of the Company and of American National,
receives fees as a Director of American National and for his attendance at any
special meetings of the Company's Board of Directors. American National pays
its Directors $400 per board meeting attended and $300 per committee meeting
attended.
On May 1, 1997, each Director who then held office as a Director was
granted the right under the ANB Corporation 1996 Directors' Stock Option Plan
("Directors' Plan") to acquire 4,000 shares of the Company's Common Stock at
$18.625 per share. Under the terms of the Directors' Plan, each Director in
office is granted an option to purchase four thousand (4,000) shares of Common
Stock of the Company on the first day of the month following the month in
which the Annual Meeting of Shareholders of the Company is held. The price to
be paid upon exercise of these options will be no less than the mean between
the reported closing bid and ask price for shares of Common Stock of the
Company as quoted by NASDAQ on the date the option is granted. The Directors'
Plan received shareholder approval in April 1996.
EXECUTIVE COMPENSATION
Decisions on compensation of the Company's Executive Officers are made by
the Compensation Committee of the Board. Each member of the Compensation
Committee is a non-employee director. All decisions by the Compensation
Committee relating to the compensation of the Company's Executive Officers are
reviewed by the full Board, except for decisions about awards under the
Company's stock-based compensation plan, which are made solely by the
Compensation Committee in order for the grants under such plan to satisfy
Securities Exchange Act Rule 16b-3. As required by regulations of the
Securities and Exchange Commission, set forth below is a report submitted by
Messrs. Hoover, Delk, Peterson, Ross, Stanley and Towne in their capacity as
the Board's Compensation Committee during 1997, addressing the Company's
compensation policies for 1997 as they affected the Company's Executive
Officers.
COMPENSATION COMMITTEE REPORT
Compensation Policies Toward Officers. The Compensation Committee's
officer compensation policies are designed to provide competitive levels of
compensation that integrate pay with the Company's annual performance goals,
reward above-average corporate performance, recognize individual initiative
and achievements, and assist the Company in attracting and retaining qualified
officers. The salary portions of the Executive Officers' compensation are
intended to be consistent with others' in the Company's industry, but overall
compensation is also impacted by programs contingent upon the Company's
performance. All officers of the Company's subsidiaries are eligible as
participants in the Company's Incentive Bonus Plan, but typically receive a
larger percentage of their compensation in the form of salary than do the
Executive Officers. As a result of tying executive compensation to corporate
performance, in any particular year the Company's or its subsidiaries'
officers may be paid more than the
6
<PAGE>
average salary of officers in comparable positions with the Company's
competitors, depending upon the Company's performance.
The Compensation Committee also endorses the position that stock ownership
by management is beneficial in aligning managements' and shareholders'
interest in the enhancement of shareholder value. Thus, the Compensation
Committee also utilizes stock ownership elements in designing the compensation
packages of the Company's and its subsidiaries' officers.
BASE SALARY. The salary portion of total compensation for all employees of
the Company and its subsidiaries is structured so that an employee who meets
certain objective performance criteria (which are established jointly by the
employee and his or her supervisor at the beginning of the year) will
typically receive a salary in the following year generally comparable to the
average salary range paid to other employees with similar responsibilities in
other financial institutions of similar size located in Indiana and the
Midwest, as reported by independent surveys (the "Average Salary"). Employees
who fail to meet the objective performance criteria discussed above will
typically receive a salary in the following year in an amount less than the
Average Salary. The Compensation Committee believes that determining salaries
in this manner enables the Company to attract and retain qualified employees
by paying competitive salaries which are impacted by personal performance.
ANNUAL INCENTIVE COMPENSATION. The Incentive Bonus Plan of the Company
("Bonus Plan") is structured so that employees of the Company and its
subsidiaries will receive a bonus equal to a specified percentage of their
salary if the Company achieves a certain level of net operating income (as
adjusted per the Bonus Plan).
The Bonus Plan requires that each subsidiary of the Company recommend a
"target level" and minimum/maximum range for net operating income (as
adjusted) for the ensuing year based upon annual performance goals, which
level and range must be approved by the Compensation Committee of the Company
and by the board of directors of the subsidiary. The sum of the "target
levels" of the subsidiaries comprises the "target level" under the Bonus Plan
of the Company. If the subsidiaries achieve an aggregate level of net
operating income (as adjusted) which is within the minimum/maximum range
defined by the Bonus Plan, each employee receives a bonus based upon the level
of net operating income (as adjusted) attained.
The amount of bonus paid, which is determined as a percentage of salary,
is dependent upon the amount by which the Company exceeds or fails to attain
the target levels for net operating income (as adjusted). If the exact target
levels are attained, employees receive a specified percentage of salary as
bonus ("Bonus Percentage"), the highest Bonus Percentage being thirty percent
(30%) which is the Bonus Percentage for Mr. Schrecongost. If the highest
amount of the target range (or greater) is attained, all employees will
receive twice the amount of Bonus Percentage received at the target level,
e.g., Mr. Schrecongost would receive a bonus equal to sixty percent (60%) of
his salary. At the minimum of the target range or lower, employees, including
Mr. Schrecongost, receive no bonus. If the Company attains other levels of
performance within the target range, employees receive a bonus determined by
adjusting the Bonus Percentage proportionally to the amount by which the
target levels are, or are not, attained. Under the American National Incentive
Bonus Plan, Mr. Gassen (who does not participate in the Bonus Plan of the
Company) receives a bonus determined in the same manner as that determined for
Mr. Schrecongost pursuant to the Bonus Plan of the Company. Under the Peoples
Incentive Bonus Plan, Mr. Talley (who does not participate in the Bonus Plan
of the Company) receives a bonus determined in the same manner as that
determined for Mr. Schrecongost pursuant to the Bonus Plan of the Company.
Under the American National Trust Incentive Bonus Plan, Mr. Sehnert (who does
not participate in the Bonus Plan of the Company) receives a bonus determined
in the same manner as that determined for Mr. Schrecongost pursuant to the
Bonus Plan of the Company.
STOCK OPTION PLANS. The long-term incentive component of the Executive
Officers' 1997 compensation was provided pursuant to the ANB Corporation Stock
Option Plan ("Stock Option Plan") and ANB Corporation 1995 Stock Option Plan
("1995 Stock Option Plan"), which were approved by the shareholders of the
Company in 1990 and 1995, respectively. These stock option plans permit the
Compensation Committee to grant stock options to key employees of the Company.
Awards of stock options under the Stock Option Plan and 1995 Stock Option Plan
are designed to provide a direct link between the long-term interests of the
Company's officers and its shareholders and assist in the retention of
officers. (See the table under "Executive Compensation -- Option Grants In Last
Fiscal Year" indicating sample potential future values of such options
assuming various rates of growth in the Company's stock price and a discussion
of the material terms of the Stock Option Plan and 1995 Stock Option Plan.)
7
<PAGE>
LIFE INSURANCE PLAN. In 1993, the Company approved a split-dollar life
insurance program for certain officers and other key employees of the Company
and its subsidiaries. Under the program, the employee is covered by a whole
life insurance policy, with current compensation the equivalent of term
insurance premiums. The remainder of the premium is paid by the Company, which
will recover its premium costs after fifteen years, or out of proceeds from
the insurance in the event of the employee's death prior to this period. The
employee is the owner of the policy and the cash value in excess of Company
premiums.
OTHER COMPENSATION PLANS. At various times in the past the Company has
adopted certain broad-based employee benefit plans in which the Executive
Officers are permitted to participate on the same terms as other employees of
the Company and its subsidiaries who meet applicable eligibility criteria,
subject to any legal limitations on the amounts that may be contributed or the
benefits that may be payable under the plans.
So as to further align employees' and shareholders' long term financial
interests, the Company maintains an employee stock purchase plan ("Stock
Investment Plan") in which eligible employees may voluntarily participate by
redirecting a portion of their salary (not to exceed $200.00 per month)
towards the purchase of Common Stock of the Company. Each subsidiary makes a
contribution to the Stock Investment Plan equal to twenty percent (20%) of the
amount contributed by participating employees. The Company also maintains the
ANB Corporation Savings and Incentive Plan ("Savings Plan") in which all
eligible employees can make salary savings contributions to the Savings Plan
on a pre-tax basis of from two percent (2%) to fifteen percent (15%) of the
employee's total compensation (as defined). The Company may make a
discretionary matching contribution, which currently is at a rate equal to
fifty percent (50%) of the first four percent (4%) of an employee's
compensation. The Company believes that the Stock Investment Plan and the
Savings Plan are effective means of attracting and assisting in the retention
of qualified employees.
The Company also maintains the ANB Corporation Supplemental Executive
Retirement Plan ("Supplemental Plan") which is designed to provide benefits
that (i) would be accrued by a participant but may not be paid under the ANB
Corporation Employees' Pension Plan ("Pension Plan") or the Savings Plan
because of the limitations imposed by Section 415 of the Internal Revenue Code
("Code"), and (ii) would have accrued under the Pension Plan and/or the
Savings Plan but for the limitation of Code Section 401(a)(17).
BENEFITS. The Company provides medical and pension benefits to the
Executive Officers that are generally available to employees of the Company
and its subsidiaries. The amount of perquisites, as determined in accordance
with the rules of the SEC relating to executive compensation, did not exceed
ten percent (10%) of the salaries and bonuses of the individual Executive
Officers.
MR. SCHRECONGOST'S 1997 COMPENSATION. Regulations of the SEC require the
Compensation Committee to disclose its basis for compensation reported for Mr.
Schrecongost in 1997. Mr. Schrecongost's salary and bonus are determined in
the manner discussed on previous pages of this document. During 1997, the
Compensation Committee granted Mr. Schrecongost options for 15,000 shares
under the 1995 Stock Option Plan. The Compensation Committee believes that
this grant epitomizes its compensation policies by encouraging long-term
performance and promoting management retention while further aligning
shareholders' and managements' interests in the performance of the Company's
Common Stock.
SUBMITTED BY THE COMPENSATION
COMMITTEE OF THE COMPANY'S BOARD
OF DIRECTORS
R. David Hoover, Chairman
Ben E. Delk
William L. Peterson
Donald A. Ross
Kelly N. Stanley
Leon V. Towne
8
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth for the fiscal years ended December 31,
1997, 1996 and 1995, the cash compensation paid by the Company, as well as
certain other compensation paid or awarded during those years, to Messrs.
Schrecongost, Gassen, Sehnert and Talley, the only Executive Officers of the
Company whose individual salaries and bonuses exceeded $100,000 in 1997.
Although other officers of the Company received an annual salary and bonus
exceeding $100,000, in the aggregate, during the fiscal year ended December
31, 1997, such officers were not considered Executive Officers of the Company.
<TABLE>
----------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
----------------------------------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND SALARY BONUS COMPENSATION OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) (1) ($) (2) ($) (#) (3) ($)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James R. Schrecongost 1997 $230,000 $ 88,320 --- 15,000 $41,014
Vice-Chairman, 1996 221,000 62,433 --- 6,000 40,932
President and Chief 1995 213,000 106,500 --- 12,000 32,004
Executive Officer
ANB Corporation
- ----------------------------------------------------------------------------------------------------
Jerome J. Gassen (4) 1997 $140,000 $ 31,258 --- 8,000 $ 0
President and Chief
Operating Officer
American National
- ----------------------------------------------------------------------------------------------------
Paul L. Sehnert, Jr. 1997 $150,000 $ 39,600 --- 5,000 $ 9,159
President and Chief 1996 131,500 20,711 --- 4,500 10,649
Executive Officer 1995 123,000 31,180 --- 6,000 10,361
American National Trust
- ----------------------------------------------------------------------------------------------------
Chris L. Talley 1997 $112,000 $ 0 --- 5,000 $ 2,864
President and Chief 1996 100,000 24,300 --- 4,500 2,575
Executive Officer 1995 93,600 4,830 --- 6,000 2,350
Peoples
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) The bonus amounts are payable pursuant to the Company's Incentive
Bonus Plan as described in the "Board Compensation Committee Report
on Executive Compensation."
(2) While officers enjoy certain perquisites, such perquisites do not
exceed the lesser of $50,000 or 10% of such officer's salary and
bonus and are not required to be disclosed by applicable rules of
the Securities and Exchange Commission.
(3) These amounts represent (a) Company contributions under the
Company's Savings and Incentive Plan, (b) Company contributions
under the Company's Stock Investment Plan, (c) the value of life
insurance benefits under the Company's Life Insurance Program, and
(d) Company contributions under the Supplemental Plan, as described
in the "Board Compensation Committee Report on Executive
Compensation."
Company contributions under the Savings and Incentive Plan accrued
during fiscal 1997 were as follows: $3,200 to Mr. Schrecongost,
$3,200 to Mr. Sehnert and $2,386 to Mr. Talley.
Company contributions under the Stock Investment Plan accrued during
fiscal 1997 were as follows: $478 to Mr. Schrecongost, $478 to Mr.
Sehnert and $478 to Mr. Talley.
9
<PAGE>
The value of term life insurance and Company paid premiums under the
Company's Life Insurance Program during 1997 was $9,422 for Mr.
Schrecongost and $5,481 for Mr. Sehnert. The Company contribution
under the Supplemental Plan accrued during fiscal 1997 was $22,844
for Mr. Schrecongost.
Also included for Mr. Schrecongost is the amount of $5,070, which
represents the premium paid by the Company in 1997 on a Supplemental
Disability Income Insurance Plan which is designed to provide income
replacement for Mr. Schrecongost in the event of a disability, as
defined by the Plan.
(4) Mr. Gassen was elected president and chief operating officer of
American National on March 3, 1997.
STOCK OPTION PLANS
The Company currently sponsors for its employees the ANB Corporation Stock
Option Plan ("Stock Option Plan") and the ANB Corporation 1995 Stock Option
Plan ("1995 Stock Option Plan"). Both of these plans provide key employees of
the Company and its subsidiaries selected by the Compensation Committee and
who are materially responsible for the management or operation of the business
of the Company or the subsidiary an opportunity to acquire Common Stock of the
Company, thus providing a long-term incentive for these employees to enhance
shareholder value and encouraging such employees to make a career commitment
to the Company. The Stock Option Plan received shareholder approval in March
1990 and the 1995 Stock Option Plan received shareholder approval in April
1995.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides details regarding stock options granted to
Messrs. Schrecongost, Gassen, Sehnert and Talley in 1997. In addition, in
accordance with rules of the Securities and Exchange Commission, there are
shown the hypothetical gains or "option spreads" that would exist for
respective options. These gains are based on assumed rates of annual compound
stock price appreciation of five percent (5%) and ten percent (10%) from the
date the options were granted over the full option term.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
RATES OF STOCK APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (1)
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF PERCENT
SHARES OF TOTAL MARKET
UNDERLYING OPTIONS EXERCISE PRICE
OPTIONS GRANTED IN OR BASE ON DATE EXPIRATION
GRANTED FISCAL YEAR PRICE OF GRANT DATE 0% 5% 10%
NAME (#) (%) ($/SH) ($/SH) (MM/DD/YY) ($) ($) ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James R. Schrecongost 15,000 31.25% 26.500 26.500 12/15/07 0 249,986 633,513
- ---------------------------------------------------------------------------------------------------------------------
Jerome J. Gassen 3,000 6.25% 18.625 18.625 04/22/07 0 35,139 89,050
5,000 10.42% 26.500 26.500 12/15/07 0 83,329 211,171
- ---------------------------------------------------------------------------------------------------------------------
Paul L. Sehnert, Jr. 5,000 10.42% 26.500 26.500 12/15/07 0 83,329 211,171
- ---------------------------------------------------------------------------------------------------------------------
Chris L. Talley 5,000 10.42% 26.500 26.500 12/15/07 0 83,329 211,171
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Gains are reported net of the option exercise price, but before any
effect of taxes. In assessing these values, it should be kept in
mind that no matter what value is placed on a stock option on the
date of grant, its ultimate value will be dependent on the market
value of the Company's stock at a future date, and that value would
depend on the efforts of such executive to foster the future success
of the Company for the benefit of all shareholders. The amounts
reflected in this table may not necessarily be achieved.
10
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES TABLE
The following table shows the number of shares acquired on exercise and
shares covered by both exercisable and non- exercisable stock options by
Messrs. Schrecongost, Gassen, Sehnert and Talley as of December 31, 1997. Also
reported are the values for "in-the-money" options which represent the
positive spread between the exercise price of any such existing stock options
and the closing bid price of the Company's Common Stock at December 31, 1997.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR END AT FISCAL YEAR END
ACQUIRED VALUE (#) ($)
ON EXERCISE REALIZED --------------------------------------------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James R. Schrecongost - 0 - N/A 70,375 28,125 $1,248,344 $126,094
- ---------------------------------------------------------------------------------------------------------------
Jerome J. Gassen - 0 - N/A - 0 - 8,000 $ 0 $ 22,500
- ---------------------------------------------------------------------------------------------------------------
Paul L. Sehnert, Jr. 750 $11,766 28,175 12,375 $ 476,759 $ 65,219
- ---------------------------------------------------------------------------------------------------------------
Chris L. Talley - 0 - N/A 5,625 11,875 $ 59,156 $ 58,344
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
PENSION PLAN
The following table shows the estimated pension benefits payable to a
covered participant at normal retirement age under the Company's qualified
defined benefit pension plan, based on compensation that is covered by such
plan and years of service with the Company or its subsidiaries. The
participant's covered compensation under the pension plan is his/her average
base salary as represented in the Summary Compensation Table.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
AVERAGE ANNUAL COMPENSATION
YEARS OF -----------------------------------------------------------------
SERVICE $70,000 $90,000 $110,000 $130,000 $160,000 OR MORE
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10 10,870 14,520 18,170 21,820 27,295
- ------------------------------------------------------------------------------
20 22,265 29,715 37,165 44,615 55,790
- ------------------------------------------------------------------------------
30 33,661 44,911 56,161 67,411 84,286
- ------------------------------------------------------------------------------
40 43,733 58,133 72,533 86,933 108,533
- ------------------------------------------------------------------------------
</TABLE>
All employees of the Company (and its subsidiaries) are eligible to
participate in the Company's tax-qualified defined benefit pension plan known
as the ANB Corporation Employees' Pension Plan (the "Pension Plan") on the
January 1 or July 1 coincident with or next following the employee's
attainment of age 21 and completion of one year of eligibility service (1,000
hours of employment as defined). The Pension Plan is funded entirely by
Company contributions, as determined by an actuary, sufficient to provide
benefits thereunder. The Pension Plan provides for a normal retirement benefit
upon attainment of age 65. The standard form of benefit under the Pension Plan
is a monthly pension for the participant's life based on the participant's
five-year average salary (as defined), his benefit service with the Company
(as defined) and his covered compensation (as defined). The standard
retirement benefit for married participants is payable in the form of a
qualified joint and 50% survivor annuity in an amount actuarially equivalent
to the standard form of benefit. Participants may also, with spousal consent,
elect an actuarially equivalent optional form of payment as follows: a life
annuity; a joint and 50%, 66-2/3% or 100% survivor annuity; or a life annuity
with 120 or 240 minimum guaranteed monthly payments. Benefit amounts are not
subject to deduction for Social Security. The following table provides certain
information with respect to Messrs. Schrecongost, Gassen, Sehnert and Talley.
11
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------
YEARS OF BENEFIT SERVICE ESTIMATED ANNUAL BENEFITS
NAME AT NORMAL RETIREMENT AGE UPON RETIREMENT
- ------------------------------------------------------------------------------
<S> <C> <C>
James R. Schrecongost 39.66 $105,677
- ------------------------------------------------------------------------------
Jerome J. Gassen 18.17 $ 27,843
- ------------------------------------------------------------------------------
Paul L. Sehnert, Jr. 29.95 $ 68,774
- ------------------------------------------------------------------------------
Chris L. Talley 17.00 $ 26,085
- ------------------------------------------------------------------------------
</TABLE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
In addition to the Pension Plan and the Savings Plan, each of which is
intended to meet the requirements applicable to a "qualified plan" under
Section 401(a) of the Internal Revenue Code, as amended (the "Code"), the
Company also maintains the ANB Corporation Supplemental Executive Retirement
Plan ("Supplemental Plan"). Because Section 415 of the Code limits the maximum
amount of benefits that may be paid from or contributed to a qualified plan
and Section 401(a)(17) of the Code limits to $160,000 the amount of
compensation received by an employee that may be taken into account under a
qualified plan, the Supplemental Plan was adopted by the Company, effective
January 1, 1994, for certain employees adversely affected by these provisions
of the Code. The Supplemental Plan is designed to provide benefits that (i)
would be accrued by a participant but may not be paid under the Pension Plan
or the Savings Plan because of the limitations imposed by Code Section 415 and
(ii) would have accrued under the Pension Plan and/or the Savings Plan but for
the limitation of Code Section 401(a)(17).
Mr. Schrecongost is currently the only employee eligible to participate in
the Supplemental Plan. The estimated annual net benefit for Mr. Schrecongost
is as follows: 39.66 years of benefit service at normal retirement age with
estimated annual benefits upon retirement of $39,603.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL ARRANGEMENTS
Messrs. Schrecongost, Gassen, Sehnert, Talley and Thomas have each entered
into an agreement with the Company which provides severance protection under
certain circumstances following a change in control of the Company. Under this
agreement, if, following a change in control, the executive is terminated from
employment other than for death, disability, retirement or cause, or he
terminates his employment for unreasonable changes made in his employment
relationship, he is entitled to receive an amount in cash equal to two hundred
ninety-nine percent (299%) of the "base amount" as defined under Section 280G
of the Internal Revenue Code, payable in equal installments over a period of
36 months. The executive is also entitled, under certain circumstances, to
continue to participate in the life, health, accident and disability plans of
the Company or to receive equivalent benefits of such participation, at no
cost to the executive, until the third anniversary of the date of termination.
Unexercised options are also exercisable at any time during the 30-day period
following the day on which a change in control (as defined in the respective
stock option plans of the Company) occurs.
12
<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Company's Common Stock over the last five fiscal years with the returns of
the CRSP Total Return Index for the NASDAQ Stock Market (US) and the CRSP
Total Return Index for the NASDAQ Bank Stocks.
<TABLE>
- ----------------------------------------------------------------------------
INDEX 1992 1993 1994 1995 1996 1997
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPANY 100 121 114 154 201 271
- ----------------------------------------------------------------------------
NASDAQ Market 100 115 112 159 195 240
- ----------------------------------------------------------------------------
NASDAQ Banks 100 114 114 169 224 377
- ----------------------------------------------------------------------------
</TABLE>
The graph assumes $100 was invested on December 31, 1992 in the Company's
Common Stock, and in each of the two indexes shown, and the reinvestment of
all dividends.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Proposals submitted by shareholders and to be presented at the next Annual
Meeting, currently scheduled to be held in April 1999 must be received by the
Company at its principal office for inclusion in the Proxy Statement and form
of proxy relating to that meeting no later than November 19, 1998. Any such
proposals should be sent to the attention of the Secretary of the Company, 120
West Charles Street, Muncie, Indiana 47305.
INDEPENDENT ACCOUNTANTS
The Board of Directors appointed Geo. S. Olive & Co. LLC., Certified
Public Accountants, as independent accountants to audit the books, records and
accounts of the Company for 1997. Representatives of Geo. S. Olive & Co. LLC.
are expected to be in attendance at the annual meeting and will be provided an
opportunity to make a statement should they desire to do so and to respond to
appropriate inquiries from the shareholders. Geo. S. Olive & Co. LLC. have
been independent accountants for the Corporation since 1984. The Board of
Directors anticipates it will appoint an independent public accountant to
audit the books, records, and accounts of the Company for 1998 in April 1998.
13
<PAGE>
ANNUAL REPORT
UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH SHARE-
HOLDER, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WHICH WILL BE FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31,
1997. ADDRESS ALL REQUESTS TO:
JAMES W. CONVY, SECRETARY
ANB CORPORATION
120 WEST CHARLES STREET
MUNCIE, INDIANA 47305
OTHER MATTERS
The Board of Directors of the Company does not know of any matters for
action by shareholders at such Annual Meeting other than the matters described
in the notice. However, the enclosed proxy will confer discretionary authority
with respect to matters which are not known to the Board of Directors at the
time of the printing hereof and which may properly come before the meeting. It
is the intention of the person named in the proxy to vote pursuant to the
proxy with respect to such matters in accordance with his best judgement.
It is important that proxies be returned promptly. SHAREHOLDERS, WHETHER
OR NOT THEY EXPECT TO ATTEND IN PERSON, ARE REQUESTED TO RETURN THEIR PROXIES
IN ORDER THAT A QUORUM MAY BE ASSURED. Return may be made in the enclosed
envelope, to which no postage need be affixed.
14
<PAGE>
PROXY ANB CORPORATION
Muncie, Indiana 47305
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Stephen R. Miller, M.D., as Proxy, with the
power to appoint his substitute, and hereby authorizes him to represent and to
vote, as designated below, all shares of common stock of ANB Corporation which
the undersigned is entitled to vote at the Annual Meeting of Shareholders to
be held on Tuesday, April 21, 1998 at 4:00 p.m., local time, or any
adjournment thereof, on the following matters:
1. Election of Directors
[ ] For the nominees listed below (except as marked to the contrary
below).
[ ] Withhold authority to vote for the nominees listed below:
Ben E. Delk Kelly N. Stanley Leon V. Towne
(INSTRUCTION: To withhold authority to vote for any individual,
write the nominee's name on the space provided below.)
______________________________________________________
2. In his discretion, on such other matters as may properly come before the
meeting.
Please sign on reverse side hereof.
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR IF NO DIRECTION
IS INDICATED, WILL BE VOTED FOR THE NOMINEES LISTED IN ITEM 1.
Please sign exactly as name appears below. If there are two or more owners,
both should sign. When signing as attorney, executor, administrator, trustee,
or guardian, please give full title as such. If a corporation, please sign in
full corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Dated _____________________________, 1998
_________________________________________
_________________________________________
Joint owners should each sign.
Your vote is important. Please mark, sign,
date and return this Proxy promptly using
the enclosed envelope.
