SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ANB CORPORATION
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(Name of Registrant as Specified In Its Charter)
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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 27, 1999
The Annual Meeting of Shareholders of ANB Corporation will be held at the
Horizon Convention Center, 401 South High Street, Muncie, Indiana on April 27,
1999 at 4:00 p.m., local time, for the following purposes:
(1) To elect three Directors to serve terms which will expire in 2002;
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
12, 1999 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 25, 1999
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 27, 1999 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 1999 Annual Meeting of Shareholders is
first being sent or given to shareholders is March 25, 1999.
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 at any time
before such proxy is exercised (i) by written notice delivered to James W.
Convy, Secretary of the Company, 120 West Charles Street, Muncie, Indiana 47305,
(ii) in person at the meeting, or (iii) by duly executing a proxy bearing a
later date. 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 12, 1999 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 4,571,107 shares were issued and
outstanding on the record date of March 12, 1999. 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 12, 1999:
<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) 364,279 7.97
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 256,979 shares (5.62%) and Mrs. Fisher holds 107,300
shares (2.35%). 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 2002. Each nominee is currently a Director of the Company whose
current term as a Director will expire in 1999. The following information is
provided concerning the nominees:
NOMINEES FOR TERMS TO EXPIRE IN 2002
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION SERVED AS DIRECTOR
NAME AGE DURING PAST 5 YEARS CONTINUOUSLY SINCE
- ---- --- --------------------- ------------------
<S> <C> <C> <C>
Madelyn K. Ferris 43 Senior Vice President, Paws Incorporated 1996
R. David Hoover 53 Vice-Chairman, Chief Financial Officer 1993
and Director, Ball Corporation;
Director, Datum, Inc.
Donald A. Ross 55 President, A.L. Ross & Sons, Inc. 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 2000 and 2001:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION SERVED AS DIRECTOR TERM
NAME AGE DURING PAST 5 YEARS CONTINUOUSLY SINCE EXPIRES
- ---- --- -------------------- ------------------ -------
<S> <C> <C> <C> <C>
Ben E. Delk 53 President, Standt's Fine Jewelry 1985 2001
William L. Peterson 69 Chairman of the Board and 1985 2000
Director, Alltrista Corporation
James R. Schrecongost 53 Vice-Chairman, President and 1985 2000
Chief Executive Officer, the Company;
Vice-Chairman and Chief Executive
Officer, American National
Kelly N. Stanley 55 President and Chief Executive Officer, 1986 2001
Ontario Corporation
Chris L. Talley 53 President and Chief Executive Officer, 1994 2000
Peoples
Leon V. Towne 68 Management Advisor and Consultant 1985 2001
</TABLE>
EXECUTIVE OFFICERS
The Executive Officers of the Company, who consist of James R.
Schrecongost, Chris L. 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 50, has served as president and
chief executive officer of American National Trust since 1990. Mr. Gassen, age
49, 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 57, 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 did not meet in 1998. Individuals nominated for election in
1999 were nominated by the Board of Directors as a whole on February 15, 1999.
During the 1998-1999 board year, the Executive Committee consisted of the
following members of the Board: Messrs. Stanley (Chairman), Delk, Hoover,
Peterson, Ross, Schrecongost, Towne and Mrs. Ferris. 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.
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.
3
<PAGE>
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 1998. During the 1998-1999 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 three times in 1998. During the 1998-1999 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 nine times in 1998. 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 12, 1999 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.
NAME OF BENEFICIAL OWNER SHARES BENEFICIALLY OWNED (1) PERCENT OF CLASS
- ------------------------ ----------------------------- ----------------
Ben E. Delk 29,391 (2) 0.64
Madelyn K. Ferris 3,154 (3) 0.07
Jerome J. Gassen 3,096 (4) 0.07
R. David Hoover 7,500 (5) 0.16
William L. Peterson 23,816 (6) 0.52
Donald A. Ross 15,253 (7) 0.33
James R. Schrecongost 102,419 (8) 2.20
Paul L. Sehnert, Jr 34,413 (9) 0.75
Kelly N. Stanley 16,354 (10) 0.36
Chris L. Talley 15,260 (11) 0.33
Larry E. Thomas 56,211 (12) 1.23
Leon V. Towne 24,100 (13) 0.53
All Directors and Executive Officers
as a group (12 individuals) 330,967 7.00
(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 6,000 shares that Mr. Delk has the right to acquire through
the exercise of stock options granted under the ANB Corporation 1996
Directors' Stock Option Plan.
(3) Includes 3,000 shares that 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 2,750 shares that Mr. Gassen has the right to acquire through
the exercise of stock options granted under the ANB Corporation 1995
Stock Option Plan.
4
<PAGE>
(5) Includes 6,000 shares that Mr. Hoover has the right to acquire through
the exercise of stock options granted under the ANB Corporation 1996
Directors' Stock Option Plan. Also includes 260 shares held by his
spouse, Suzanne A. Hoover, in which he disclaims beneficial ownership.
(6) Includes 6,000 shares that Mr. Peterson has the right to acquire
through the exercise of stock options granted under the ANB Corporation
1996 Directors' Stock Option Plan. Also includes 7,536 shares held by
his spouse, Jane Peterson, in which he disclaims beneficial ownership.
(7) Includes 6,000 shares that Mr. Ross has the right to acquire through
the exercise of stock options granted under the ANB Corporation 1996
Directors' Stock Option Plan. Also includes 2,986 shares held by his
spouse, Trula A. Ross.
(8) Includes 78,250 shares that 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. Also
includes 484 shares held by his spouse, Cathy R. Schrecongost.
(9) Includes 28,800 shares that 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.
(10) Includes 6,000 shares that Mr. Stanley has the right to acquire through
the exercise of stock options granted under the ANB Corporation 1996
Directors' Stock Option Plan. Also includes 120 shares held by his
spouse, Donna M. Stanley, in which he disclaims beneficial ownership.
(11) Includes 3,875 shares that 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.
(12) Includes 10,500 shares that 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.
(13) Includes 3,000 shares that Mr. Towne has the right to acquire through
the exercise of stock options granted under the ANB Corporation 1996
Directors' Stock Option Plan. Also includes 5,300 shares held by his
spouse, Helen L. Towne, in which he disclaims beneficial ownership.
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, 1998, all statements of beneficial ownership required to
be filed with the SEC were timely filed with the exception of one late filing,
which reported one transaction, submitted by Mr. Talley.
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.
5
<PAGE>
COMPENSATION OF DIRECTORS
Except as set forth below, during 1998, non-employee Directors of the
Company received an annual retainer of $5,000 and were also compensated at the
rate of $450 per board meeting attended and $300 per committee meeting attended.
Committee chairmen received $350 for each meeting attended. Effective January 1,
1999, the annual retainer for non-employee Directors of the Company was
increased to $6,000, payable in equal quarterly installments. 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. Stanley, the Chairman of the Board of the Company, received an annual
fee of $18,000 in 1998. He also received standard board or committee meeting
fees for each board or committee meeting he attended in excess of eight during
the year. Effective January 1, 1999, the Chairman's retainer was increased to
$20,000, payable in equal monthly installments.
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 $15,000 from American
National. He also received the standard board meeting fee for his attendance at
any special meetings of the Company's Board of Directors. Effective January 1,
1999, the annual retainer for Mr. Ross, in his role as Chairman of the Board of
American National, was increased to $16,000, payable in equal monthly
installments. In 1999, Mr. Ross will again 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. During 1998, non-employee
Directors of American National received an annual retainer of $3,300 and were
compensated at the rate of $400 per board meeting attended and $300 per
committee meeting attended. Effective January 1, 1999, the annual retainer for
non-employee Directors of American National was increased to $4,000, payable in
equal quarterly installments.
On May 1, 1998, each Director who then held office as a Director was
granted the right under the ANBCorporation 1996 Directors' Stock Option Plan
("Directors' Plan") to acquire 4,000 shares of the Company's Common Stock at
$28.75 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 1998, addressing the Company's compensation
policies for 1998 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
6
<PAGE>
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 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. The bonus for Mr. Thomas is determined in the same manner as that
determined for Mr. Schrecongost pursuant to the Bonus Plan of the Company. 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' 1998 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 toward the purchase of Common Stock of the
Company. In 1998, the maximum amount an employee could redirect for stock
purchase under the Stock Investment Plan was $200 per month. Effective January
1999, the maximum was increased to $300 per month. 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, during 1998, equaled fifty percent (50%) of the
first four percent (4%) of an employee's compensation. Effective January 1999,
the discretionary matching contribution was increased to seventy-five percent
(75%) 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 1998 COMPENSATION. Regulations of the SEC require the
Compensation Committee to disclose its basis for compensation reported for Mr.
Schrecongost in 1998. Mr. Schrecongost's salary and bonus are determined in the
manner discussed on previous pages of this document. During 1998, the
Compensation Committee granted Mr. Schrecongost options for 7,500 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,
1998, 1997 and 1996, the cash compensation paid by the Company, as well as
certain other compensation paid or awarded during those years, to Messrs.
Schrecongost, Gassen, Sehnert, Talley and Thomas. Although other officers of the
Company received an annual salary and bonus exceeding $100,000, in the
aggregate, during the fiscal year ended December 31, 1998, such officers were
not considered Executive Officers of the Company.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
- ------------------------------------------------------------------------------------------------------
ALL OTHER
NAME AND SALARY BONUS OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) (1) ($) (#) (2) (3) ($)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
James R. Schrecongost 1998 $242,000 $ 57,354 7,500 $ 44,930
Vice-Chairman, President and Chief 1997 230,000 88,320 15,000 41,014
Executive Officer 1996 221,000 62,433 6,000 40,932
ANB Corporation
Jerome J. Gassen (4) 1998 $150,000 $ 13,275 3,500 $ 6,340
President and Chief Operating Officer 1997 115,769 31,258 8,000 0
American National
Paul L. Sehnert, Jr 1998 $160,000 $ 32,880 3,500 $ 9,947
President and Chief Executive Officer 1997 150,000 39,600 5,000 9,159
American National Trust 1996 131,500 20,711 4,500 10,649
Chris L. Talley 1998 $120,000 $ 15,840 3,500 $ 2,888
President and Chief Executive Officer 1997 112,000 0 5,000 2,864
Peoples 1996 100,000 24,300 4,500 2,575
Larry E. Thomas 1998 $ 95,000 $ 7,505 0 (5) $ 8,409
Treasurer and Chief Financial Officer 1997 86,539 11,077 3,000 8,919
ANB Corporation 1996 83,366 9,604 2,500 9,498
- ------------------------------------------------------------------------------------------------------
</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 1998 were as follows: $3,200 to Mr. Schrecongost,
$1,505 to Mr. Gassen, $3,200 to Mr. Sehnert, $2,410 to Mr. Talley and
$2,024 to Mr. Thomas.
9
<PAGE>
Company contributions under the Stock Investment Plan accrued during
fiscal 1998 were as follows: $478 to Mr. Schrecongost, $405 to Mr.
Gassen, $478 to Mr. Sehnert, $478 to Mr. Talley, and $478 to Mr.
Thomas.
The value of term life insurance and Company paid premiums under the
Company's Life Insurance Program during 1998 was $8,513 for Mr.
Schrecongost, $4,430 for Mr. Gassen, $6,269 for Mr. Sehnert, and
$5,907 for Mr. Thomas.
The Company contribution under the Supplemental Plan accrued during
fiscal 1998 was $27,650 for Mr. Schrecongost.
Also included for Mr. Schrecongost is the amount of $5,089, which
represents the premium paid by the Company in 1998 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. As such, the amount reported as
salary for 1997 reflects the salary Mr. Gassen actually received
during such year.
(5) Mr. Thomas did not receive a stock option grant in 1998. He did,
however, receive a grant of 3,000 shares on February 15, 1999.
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 1998. 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. Mr. Thomas did not receive a
stock option grant in 1998.
10
<PAGE>
<TABLE>
<CAPTION>
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 7,500 16.48% 24.0625 24.0625 12/21/08 0 113,496 287,621
Jerome J. Gassen 3,500 7.69% 24.0625 24.0625 12/21/08 0 52,965 134,223
Paul L. Sehnert, Jr 3,500 7.69% 24.0625 24.0625 12/21/08 0 52,965 134,223
Chris L. Talley 3,500 7.69% 24.0625 24.0625 12/21/08 0 52,965 134,223
- ---------------------------------------------------------------------------------------------------------------
</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.
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, Talley and Thomas as of December 31, 1998. 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, 1998.
<TABLE>
<CAPTION>
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 3,000 $ 69,188 78,250 24,750 $1,095,438 $ 35,813
Jerome J. Gassen -0- NA 2,000 9,500 $ 3,937 $ 11,813
Paul L. Sehnert, Jr 1,750 $ 39,703 31,300 11,000 $ 409,850 $ 20,531
Chris L. Talley 6,125 $ 31,250 3,875 11,000 $ 16,594 $ 20,531
Larry E. Thomas 9,200 $150,675 10,500 5,000 $ 88,344 $ 17,031
- -------------------------------------------------------------------------------------------------------------
</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.
11
<PAGE>
AVERAGE ANNUAL COMPENSATION
YEARS OF ---------------------------------------------------------------------
SERVICE $70,000 $90,000 $110,000 $130,000 $160,000 OR MORE
- ------------------------------------------------------------------------------
10 10,577 14,177 17,777 21,377 26,777
20 21,853 29,253 36,653 44,053 55,153
30 33,130 44,330 55,530 66,730 83,530
40 43,143 57,493 71,843 86,193 107,718
- ------------------------------------------------------------------------------
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, Talley and Thomas.
YEARS OF BENEFIT SERVICE ESTIMATED ANNUAL BENEFITS
NAME AT NORMAL RETIREMENT AGE UPON RETIREMENT
- -------------------------------------------------------------------------------
James R. Schrecongost 39.66 $105,573
Jerome J. Gassen 18.17 $ 38,034
Paul L. Sehnert, Jr 29.95 $ 71,931
Chris L. Talley 17.00 $ 28,216
Larry E. Thomas 46.33 $ 63,501
- -------------------------------------------------------------------------------
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 $47,611.
12
<PAGE>
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.
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.
[GRAPH APPEARS HERE]
INDEX 1993 1994 1995 1996 1997 1998
- ------------------------------------------------------------------------
COMPANY 100 93.58 126.95 166.19 223.73 210.13
NASDAQ Market 100 97.75 138.26 170.02 208.58 293.21
NASDAQ Banks 100 99.64 148.38 195.91 328.02 324.90
The graph assumes $100 was invested on December 31, 1993 in the Company's
Common Stock, and in each of the two indexes shown, and the reinvestment of all
dividends.
13
<PAGE>
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Proposals submitted by shareholders and to be presented at the next Annual
Meeting, currently scheduled to be held in April 2000 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 26, 1999. 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 Olive LLP, Certified Public Accountants,
as independent accountants to audit the books, records and accounts of the
Company for 1998. Representatives of Olive LLP 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. Olive LLP have been independent accountants for the Corporation
since 1984. The Board of Directors anticipates it will appoint Olive LLP to
audit the books, records, and accounts of the Company for 1999 in April 1999.
ANNUAL REPORT
UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH
SHAREHOLDER, 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, 1998. 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 were not known to the Board of Directors at least
45 days before the date this Proxy Statement and Form of Proxy were first sent
or given to shareholders 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>
REVOCABLE PROXY
SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF ANB CORPORATION
PLEASE MARK VOTES
/X/ AS IN THIS EXAMPLE
ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 1999
The Annual Meeting of Shareholders of ANB Corporation (Cusip: 001926104)
will be held at the Horizon Convention Center, 401 South High Street, Muncie,
Indiana on April 27, 1999 at 4:00 p.m., local time for the following purposes:
(1) To elect three Directors to serve terms which will expire in 2002; 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
12, 1999 are entitled to notice of, and to vote at, the Annual Meeting or any
adjournment thereof.
Please be sure to sign and date
this Proxy in the box below. Date
- -----------------------------------------------------------------------------
Stockholder sign above Co-holder (if any) sign above
- -----------------------------------------------------------------------------
The undersigned hereby appoints Jerry L. Bland 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, or any
adjournment thereof, on the following matters:
For With- For All
1. Election of Directors hold Except
/ / / / / /
Nominees:
Madelyn K. Ferris R. David Hoover Donald A. Ross
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- -----------------------------------------------------------------------------
2. On such other matters as may properly come before the meeting.
Please sign exactly as your name appears on this card. All owners 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.
THIS PROXY WHEN PROPERLY EXECUTIED WILL BE VOTED AS DIRECTED OR IF NO
DIRECTION IS INDICATED WILL BE VOTED FOR THE NOMINEES LISTED IN ITEM 1.
Detach above card, sign, date and mail in postage paid envelope provided.
ANB CORPORATION
Muncie, Indiana
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
